Revenues MNOK 1 086.0
Positive EBITDA MNOK 2.5
Result before taxes MNOK 25.4
Cash and cash equivalents MNOK 404.2
Sale of Avenir concluded in January 2006, cash proceeds MNOK 100.5
Major elements of restructuring plan implemented
Ementor and Topnordic agreed merger in February 2006, establishing Ementor as a leading Nordic infrastructure solutions and value added reseller
Merger expected to increase Ementor Group equity by MNOK 800
The result before taxes for continued operations in the fourth quarter is MNOK -61.4 compared to MNOK -59.3 in the third quarter.
Revenues amounted to MNOK 1 086.0 in the fourth quarter, down 7.9% from the corresponding period last year. The reduction is mainly related to relatively high product sales in Norway in the fourth quarter 2004 and the anticipated consequences of restructuring measures. Service revenues in the fourth quarter are up compared to both third quarter 2005 (8.1%) and fourth quarter 2004 (4.7%). Consulting revenues are down 5.8% compared with the fourth quarter 2004. The largest reduction is related to the Business Solutions area in Denmark, mainly reflecting the reduction in number of consultants. Fourth quarter year-on-year consulting revenues from the Infrastructure Solutions area are increased by 7.0%.
The gross margin of 36.8% in the fourth quarter has improved from 35.5% in the corresponding period last year. The reduction compared with the third quarter 2005 is mainly related to a larger product sale share of revenues.
Operating expenses excluding unusual items in the fourth quarter were MNOK 413.5, down MNOK 20.0 compared with the corresponding period last year. Fourth quarter operating expenses (excluding unusual items) are up MNOK 76.0 compared with the third quarter 2005, due primarily to the impact of holiday period costs.
Operating profit/loss in the fourth quarter was MNOK -53.5, compared to MNOK -81.4 in the corresponding quarter last year and MNOK -50.1 in the third quarter 2005. A restructuring charge of MNOK 40.2 has been recorded as an unusual item in the fourth quarter. These provisions are mainly related to restructuring measures in Norway and Sweden announced in connection with the third quarter reporting. Net financial items were MNOK -7.8 in the fourth quarter, compared to MNOK -7.0 in the same period last year. Profit/loss before taxes for continued operations in the fourth quarter was MNOK -61.4, compared to MNOK -88.5 in the same period last year. The sale of the outsourcing businesses in Norway and Sweden to ErgoGroup, generated a fourth quarter profit from discontinued operations of MNOK 86.8 (gain from the sale and one month consolidated profit/loss). Profit/loss before taxes in the fourth quarter was MNOK 25.4, compared to MNOK -59.0 in the same period last year.
Restructuring process
In connection with the second quarter reporting, the Group announced a plan to concentrate its strategic focus and build on its core strengths as an Infrastructure Solutions and Services provider in Scandinavia. It was announced that the Finnish subsidiary was likely to be divested, the underlying value within the outsourcing operations would be realised on a country by country basis, independent consulting businesses would be established in Norway and Denmark and the cost base would be reduced in line with the needs of the core business. The restructuring process started in earnest in the third quarter, and the following measures have been implemented:
Finnish subsidiary divested in the third quarter
Divestment of outsourcing businesses in Norway and Sweden agreed in the third quarter and completed in the fourth quarter, generating MNOK 130 in cash (payments of approx. MNOK 20 expected in the first quarter 2006) and a net profit from discontinued operations of MNOK 86.8
Necessary streamlining of organisation following initial restructuring implemented in the fourth quarter, including a manpower reduction of approx. 100 persons
Independent consulting businesses established in Norway (Avenir) and Denmark (Ementor Consulting) in the third and fourth quarter
On 16 January 2006 Ementor entered into an agreement with EDB Business Partner ASA to sell it’s Norwegian consulting entity, Avenir, with effect from 1 January 2006 at a net price of MNOK 100.5 (no material gain/loss is expected to be reported from the transaction in the first quarter of 2006)
The need for additional initiatives will be considered as a part of the Ementor and Topnordic merger.
Ementor and Topnordic merger
On 1 February 2006 the Board of Directors in Ementor approved an agreement to merge with Topnordic, establishing Ementor as a leading Nordic infrastructure solutions and value added reseller. Topnordic is a privately owned ICT product and infrastructure company, with subsidiaries in all Scandinavian countries, and 2005 proforma revenues of MNOK 3 066. The merged Group had proforma revenues in 2005 of MNOK 6 549. Topnordic shareholders will receive consideration in Ementor shares, through a placing in March 2006. An extraordinary general meeting in Ementor will be held on 3 March 2006 in order to approve the issuance of new shares. Based on the share price of Ementor on 1 February 2006, the book equity of Ementor will increase by about MNOK 800, and Topnordic shareholders will hold 49.9% of the combined company. Mr. Ib Kunøe, the majority shareholder of Topnordic, and the proposed new Chairman of Ementor, will control about 32% of the merged company.
Please go to
www.ementor.com/reports for the Q4 report, presentation and
www.ementor.com/webcast for video of the presentation.
For further information please contact:
Jo Lunder, President/CEO Ementor ASA, tel. +47 900 80 842
Rune Falstad, CFO Ementor ASA, tel. +47 906 14 482
Karine Mathiesen, Communication Director Ementor ASA, tel. +47 916 26 166