Capital Market Day 16 February 2012

Transcription

1 Capital Market Day 16 February 2012

2 Overall agenda CMD Registration & Lunch Introduction, Terje Mjøs, CEO of EDB ErgoGroup ASA Strategy and Financial targets 2015, Terje Mjøs IT Operations, Thorolf Thorstensen, EVP IT Operations Coffee break Consulting in Norway, Hans-Henrik-Merckoll, EVP Consulting Solutions in Norway, Håvard Larsen, EVP Solutions Financial Services, Wiljar Nesse, EVP Financial Services Sweden, Niclas Ekblad, EVP Sweden Coffee break Key financial targets, CFO Eli Giske Closing remarks, Terje Mjøs Q&A Buffet/ Executive Management team available for interviews and informal discussions CMD, 16 February

3 CEO Terje Mjøs Overview, strategy and financial targets 2015 CMD, 16 February

4 Agenda 1 Key performance metrics Introduction to EDB ErgoGroup 3 Strategic direction 4 Financial targets CMD, 16 February

5 2011 Revenue by business area in 2011 IT Operations 43% Solutions 31% Consulting 26% Delivered on strategy in 2011 EBITA +42% Y/Y in line with our full year guiding Organic growth +3% and gaining share in Sweden +9% Synergy program continues to drive profitability Increased run-rate to NOK 360 mill (325) by Q and NOK 400+ by end 2012 Managed risk and reduced cost in Digoff project (NOK million) * Y/Y Revenue % EBITA % EBITA-margin 6.1% 4.4% CAPEX Employees *Pro forma Before elimination CMD, 16 February

6 Key figures 2011 Positive cash-flow development in 2 nd half of 2011 o MNOK 623 before restructuring in Q Proposed dividend NOK 0,35/share Revised competitive Global sourcing strategy Strong contribution from our motivated organization: o Completing largest merger in IT Industry o Building customer oriented culture Key Performance (NOK million) EBITA EBITA margin, Operations 5,5% 5,4% EBITA-margin, Solutions 4,5% 8,1% EBITA-margin, Consulting 5,9% 5,9% Capex, %, Group 4,1% 3,4% Capex, %, Operations 4,2% 4,5% Capex, %, Solutions 4,7% 2,2% Working capital, % na 6,5% Gearing ratio 3.24(*) 2,27 *Per 3Q 2010 CMD, 16 February

8 Making a difference in the Nordics Close to our customers 50 cities with capacity to deliver 11 regional offices with specialist competencies Cultural affinity Local languages Business made easy Diversity and business agility Empowered local management Enthusiastic and motivated employees Delivery models for any segment Meeting the needs and expectations of Large and SME customers <25 employees employees 100+ employees Critical importance for society as a whole Banking & finance Public sector CMD, 16 February 2012

9 SW/HW IT services Market size and market shares Market size Nordic (BNOK) IT Services Nordic (%) 11.6 Cust Supp 19 Outsourcing Projects 47 Prime market for EDB ErgoGroup ~BNOK IBM EDB Logica ErgoGroup Tieto HP/EDS CSC Accenture Fujitsu KMD Atea IT Services Norway (%) IT Services Sweden (%) EDB ErgoGroup IBM Atea Accenture Logica CapGemini Steria CSC HP Logica IBM HP/EDS EDB Tieto ErgoGroup Capgemini Atea Fujitsu VolvoIT KnowIT CMD, 16 February 2012 Source: IDC

10 Sweden Norway Targeting the Nordic market with a balanced and integrated portfolio Bordering Industry Operational Areas Consulting 26% 42% Solutions 30% IT Operations 44% 58% Hardware/ Software Outsourcing Development Projects Industry Value Chain Revenue Split IDC (EEG prime market) CMD, 16 February 2012 Source: IDC 2011, EDB ErgoGroup 2011 results

11 Segment contents and key figures Key figures IT Operations Delivery models for Large and SME 2,555 employees # 2 Nordic marketshare 9% Revenue distribution 7% 11% 13% 70% Large NO Large SE Regions/SME NO Regions/SME SE EBITA-margin (%) Revenue(NOKb) (MNOK 4900) (MNOK 1100) 14% 34% 66% 86% Large Large Regions/SME Regions/SME CMD, 16 February 2012

12 Revenue analysis IS Partner Revenue trend IT Operations 6,693 6,296 6,029 6, % 1.5% 5,813 5,522 5,485 5,569 Sharply declining revenue from IS Partner customers is a major factor for total revenue decrease IT Operations revenues excluding IS Partner have developed in line with the outsourcing market Several wins in SME and Public sector in 2 nd half of 2011 and beginning of IS Partner have offset decline -4 Growth YoY Market Development 2011 IT Operations excluding IS Partner Source: IDC CMD, 16 February

13 Segment content and key figures Key figures Revenue distribution Solutions 2,108 employees Nordic 2,011 employees Global sourcing # 1 Banking & Finance Solutions Nordic # 1 Municipalities Norway 38% 10% 10% 20% 21% 21% 10% Public sector Horizontal offerings Global sourcing Other verticals Bank & Finance 22% 68% #1 Elections Norway EBITA-margin (%) Revenue(NOKb) Vertical (MNOK 450) 43% 57% SME Sweden Health sector Horizontal (MNOK 1350) 15% 23% 31% 31% Mobility Information Services Application managament Emerging Solutions CMD, 16 February 2012

14 Segment contents and key figures Key figures Revenue distribution Consulting 2,571 employees 25% 18% 19% 9% Oslo incl. SAP BEKK Regions/SME NO Regions/SME SE Stockholm/Göteborg # 1 Consulting Norway 28% #3 Consulting Sweden EBITA-margin (%) Revenue(NOKb) (MNOK 2200) (MNOK 1400) 17% 34% 27% 55% 50% 18% Oslo incl. SAP Stockholm Regions/SME Göteborg BEKK Regions/SME CMD, 16 February 2012

15 NOKb NOKb Segment content and key figures IT Operations Solutions ,9 4,5 % ,3 8,1 % % 10% 8 % 10% 6 % 4 % 2 % 22% 0 % 20% 38% Bank & Finance Public sector Horisontal offerings Vertical offerings Application management Consulting 4 3,6 3,6 8 % 6 % 3 5,9 % 5,9 % 2 4 % 1 2 % 0 0 % EBITA-margin (%) Revenue(NOKb) 25% 18% 19% 28% 9% Oslo BEKK Regions NO Regions SE Stockholm/Gøteborg CMD, 16 February 2012

16 Country position and key figures Key figures Position # 1 Total market share 33% 4,893 Employees 21 Cities # 1 Bank & finance 37% # 1 Public sector solutions 21% # 1 Outsourcing 42% # 1 Consulting 21% Revenue distribution % 20% % % 80% EBITA-margin (%) 2011 Revenue(NOKb) 0 Consulting Solutions Large SME IT Operations CMD, 16 February 2012

17 Country position and key figures Key figures Position 2,434 Employees 25 Cities # 4 Total market share 8% # 1 SME market 17% # 5 Outsourcing 6% # 3 Consulting 7% Revenue distribution % 38% 54% 46% EBITA-margin (%) 2011 Revenue(NOKb) % Consulting Solutions Large SME IT Operations CMD, 16 February 2012

18 NOKb NOKb Nordic summary 4, Employees Cities # 1 Total market share 33% # 1 Bank & finance 37% # 1 Public solutions 21% # 1 Outsourcing 42% # 1 Consulting 21% ,4 3,5 % ,3 5,4 % % 22% 30% 2, Employees Cities # 5 Total market share 7% # 1 SME market 17% # 5 Outsourcing 6% # 3 Consulting 7% 4 3, ,3 % EBITA-margin (%) 3,5 7,8 % % Revenue(NOKb) 30% 38% 32% Consulting Solutions IT Operations Revenue 2011 Denmark: 101 MNOK Significant SAP player Revenue 2011 Finland: 60 MNOK Revenue 2011 India: 142 MNOK Revenue 2011 Ukraine: 206 MNOK Employees Cities SME business Employees Cities CMD, 16 February 2012

20 Three steps towards Nordic leadership Short term Customers & synergies Medium term Accelerate organic growth Long term Clear Nordic leadership 1. Stable operations 2. Running the business 3. Successful integration 4. Realizing synergies CMD, 16 February

21 Market assumptions Norway will perform better than Europe Significant opportunities for expansion in Sweden Public sector remains healthy in the Nordic region Banking & Finance will continue to outsource and invest SME segment will continue to grow faster than market average Consumerisation will drive demand Nordic IT Services market Actual and forecast (CAGR) -1,5% +4,1% +4,0% +3,5% +2,4% +3,5% Source: IDC 2011 CMD, 16 February 2012

22 Our key market priorities Norway: Sweden: Develop our market leadership Continue to attack we are the local alternative Banking & Finance: Further Nordic expansion Public sector: Target with strong solutions portfolio New verticals: SME: Develop 2-3 verticals with Nordic potential Utilize our unique business model CMD, 16 February 2012

23 Building a customer oriented company To be launched 19 March 2012 Anticipate needs Go beyond expectations Perform together Empower and inspire CMD, 16 February

24 Performance and customer orientation Shaping our customer focus Empower local decision making Quality and lean processes Our people strategy Attract and retain the best talents in our industry Scaling Global sourcing New ownership structure Revised methodology CMD, 16 February 2012

25 Key initiatives to improve profitability Complete synergy program Future proof IT Operations New growth sources Improve cost-efficiency Agile and focused Consulting Market focus for growth Leverage for profits Next generation Financial Services Time-to-market Innovation & Product development

27 Financial targets 1.3bn EBITA of NOK 1.3 bn in % Working capital reduced from current level of 6.5% in 2013 Invest for return CMD, 16 February 2012

28 EVP Thorolf Thorstensen IT Operations CMD, 16 February

29 Strategic role IT Operations is a vital part of an integrated IT provider, with capabilities to take on life-cycle responsibilities for customer systems and solutions Consulting Important for market visibility and economic stability Solutions Long term agreements with recurring revenues and cashflows IT Operations Established customer relations vital platform for added sales and cross sales of Solutions and Consulting engagements

30 IT Operations Consulting Solutions Operations Complex/Large Regional/SME 13% 7% 11% Large NO Large SE Regions/SME NO 70% Regions/SME SE White slices not covered in this presentation

31 Offerings

32 IT Operations Life Cycle deliveries Secure and stable operations according to agreements Customer upgrades Renewal of own infrastructure Change control Running operations Upgrades and renewals Projects Transitions Migration Integration IT Transformations Consultancy

33 Capabilities

34 Competencies and capacities Large Regional/ SME Large Regional/ SME Offshore locations Customer interface Application Operation Basic Operation Delivery Project managers/architects Total Servers Storage (TB) *) # of employees (ex Financial Services)

35 Markets and competition

36 Target customer segments and some competitors Enterprise Complex/Large Large Medium Regional/SME Small

37 Growth challenges In traditional home market segment Outsourcing market Norway Industry dynamics EDB ErgoGroup IBM CSC Logica Telecomputing Accenture Steria HP Capgemini Umoe IKT Others 3% 2% 42% 8% 33% 3% Very high market share, maintain position and focus profitability Imperative to get sufficient New business to mitigate negative effects Renegotiation Illustrative New business Order backlog Renegotiation Price reductions vs volume growth Illustrative Unity price Volume growth Cost of Technology 2013 Source: IDC 2011

38 Growth opportunities In Sweden and SME market Outsourcing Sweden SME market Norway Logica IBM HP/EDS Tieto EDBErgoGroup 17% 16% % +14% CSC Fujitsu Sigma VolvoIT TCS Others 3% 2% 2% 11% 8% 6% 3% 2% Positioned with scale to win market share in Sweden % Number one and outperforming vs competition in SME market EDB ErgoGroup 2010 Telecomputing Basefarm Source: IDC 2011

39 Business model/logic

40 Outsourcing business Business modell Key drivers Success factors Time & Material Volume based Fixed price Salaries Structure costs HW/SW costs Hourly rates Client growth New contracts Contracted reductions Loss of clients Project overrun SW cost increase Salary increase Social benefits Standardization FTE reduction Low cost labour Variabilization Segment prioritization New services Virtualization Lean Tools and automation Offshoring Active sourcing..

41 What s hot / Management focus

42 Future proof ITO Tapping into new sources of growth Improve cost efficiency in traditional services Migrating customers to new platforms Traditional IT Operation Mix/ hybrid Cloud New services Partnerships Datacenter consolidation Automation Global delivery model One to one IT spending One to many 42

43 Cloud computing Broad and general Microsoft offering (Public Cloud) Targeted offering to local government (Community Cloud) WEB hosting for highly digitized businesses Self service ordering, automated invoicing 800 customers, users Prime market SME Complement to traditional IT operations Growth without sales and implementation efforts 43

45 EVP Hans-Henrik Merckoll Consulting in Norway CMD, 16 February

46 Strategic role A strong Consulting practice Is a door-opener to new clients Differentiate generic services with value-adding content Can harvest on current long-term IT outsourcing and solutions contracts Solutions Consulting Strategic consulting engagements increase the chances of extending scale and scope of IT operations outsourcing contracts IT Operations System development projects can increase opportunity to add volumes and improve profitability in Application Management services

47 Consulting in Norway Consulting Solutions Operations National specialist Regional holistic 17% 50% 34% Oslo incl. SAP Regions/SME BEKK White slices not covered in this presentation

48 Offerings

49 Consulting Service Lines Business Consulting Project Management System Development DIGITAL BUSINESS COLLABORATION BUSINESS MGMT SYSTEMS INFRASTRUCTURE Content Mgmt Systems User Experience Self Service/XRM Social Media E-commerce Portals Unified Communications Document Management Customer Relations Mgmt (CRM) Enterprise Resource Planning (ERP) Business Intelligence (BI) Server/Storage Security Network/Communication System Integration System Administration Hardware/Lisence Mobility Cloud SMART concepts

50 Capabilities

51 Competencies, capacities and contracts Oslo Regions Business Consulting Project Managers Solution Consultants Infrastructure Consultants Total* Consultancy. Significant number of consultants engaged. Managed by our local offices in Bergen and Stavanger Consultancy. Delivered from offices in Bergen and Oslo Case handling system, product development, integration CRM Online. Cloud-based customer tracking system Resource Management + ipad app for the Mobile worker *) # of employees (ex Bekk)

53 Target customer segments and some competitors Enterprise National specialist Large Medium Regional holistic Small

54 Business model & logic

55 Consulting business Business modell Key drivers Success factors Fixed price Time & Material Salaries Structure costs Utilization Hourly rates Turnover Project overrun Salary increase Social benefits Low cost labour Produce once sell multiple Customer satisfaction Segment prioritisation Attract and retain Leverage Resource management Offshoring Methodologies Knowledge mgmt

57 Best practice Consulting Leverage model Deliver value to clients Ensure optimal cost-mix in engagements Develop talents Experience/ Salary Recruitment/on-boarding Resource management Competence management Offshoring

58 Building the new Consulting Oslo area Challenge acknowledged Merging cultures Establishing common structure, tools & methodologies Welcome new identity Implementing common set of values Approaching high schools and universities Boot camp for efficient on-boarding Attract and retain talent Turn-over positive developments Recruitment getting the best in the business Consulting academy

59 Packaged services Consise Value proposition Speedy implementation Pre-tested reduced risk for client Ease of sales Produce once sell multiple Value selling vs time&material Add-on consulting revenues

60 EVP Håvard Larsen Solutions in Norway CMD, 16 February

61 Strategic role With a strong Solutions practice EDB ErgoGroup is a strategic discussion partner with the customers based on knowledge and insight in customers business/value chain is essential Consulting With evolving relationships where business units are the new buyers, strong industry specific solutions are essential, preferably with elements of IPR for core components IT Operations Solutions Solutions engagements bring valuepricing and increased loyalty to commodity IT operations services

62 Solutions in Norway Consulting Solutions Operations Industry specific Generic services 9% 6% 29% 23% 31% 15% 55% 31% Bank & finance Public sector Health sector SME Sweden Mobility Information Services Application management Emerging Solutions White slices not covered in this presentation

63 Market dynamics Public sector New European and Norwegian standards drive demand for next generation casehandling and archiving solutions Management of older solutions leads to limited available resources to address new solutions Bying IT-services, outsourcing and offshoring higher on the agenda Regulations for improved security drive renewal of legacy solutions Major players in public sector advocate for large Shared services initiatives Scarce resources in the sector lead to demand for a wide range of consultancy and potensial engagements in operations

64 Growth opportunities Public sector Norway EDB ErgoGroup Atea 12% IBM Accenture 12% Steria HP 6% CapGemini CSC Dell Logica Visma Bouvet Tieto Others Definite leader in Norway, and still room to grow Central government is the biggest spender, EDB ErgoGroup has so far limited part of this spend Municipalities vs Central 60% 20% 40% IT services spending 80% Municipalities Central gvmt EDB ErgoGroup Revenues 53% Total Public IT market Technology and market trends will encourage public sector to buy more IT-services Observation: Public sector have outsourced significantly less than the general market Source: IDC 2011

65 Offerings

66 Product i on t racking syst em Høyvol um el lerf ul farge Suites of offerings Mobility Field services solutions Content Everywhere Payment & loyality solutions Digitized Public Sector ERP ECM HR & Recruitment Public portals edialouge einvoice Digitized Public sector ECM solutions Internet ERP solutions Emerging Solutions Application Management Solutions Tracking Nettbank SMS Print Customers Hotell/Arkiv ERP System e-faktura B2B/B2G efaktura B2C EDI B2B/B2G SLA based AMS Multiple technologies Sustainable and cost effective solutions

67 Capabilities

68 Competencies, capacities and contracts Norway Industry specialists 336 Offshore locations Technical and solution specialists Solution architects 29 Project delivery and implementation HR-system to Oslo kommune System for taxation of damages and insurance claims Information Services Project managers 30 Total* ehelse MetaVision (acute care) einvoice, archieve and print *) # of employees (ex Financial Services)

70 Target customer segments and some competitors Enterprise Large Industry specific Medium Generic services Small

71 Business Model / Logic

72 Consulting model Fixed price Time & Material Salaries Structure costs Utilization Hourly rates Business modell Turn-over Project overrun Time & Material Salary increase Social benefits Low cost labour Produce once sell multiple Transaction based Fixed price Two distinct business models Key drivers Hourly rates Client growth New contracts Contracted reductions Loss of clients Project overrun Success factors Services model Segment prioritisation Customer intimacy Innovation Product development Partner relations Salaries Structure costs Operations costs Salary increase Social benefits Standardization Low cost labour Variabilization Lean (Continous improvement) Offshoring..

74 Application management Solid and expanding base of customers ~MNOK 500 Promising pipeline of prospects +MNOK 900 (TCV) Global Sourcing capabilities a critical factor and strategic asset Increased competition from global players

75 Approaching the Retailers Value proposition: Creating a better customer experience for Retailers Addressing identified Retail priorities Complementing basic solutions Capitalising on current offerings, capabilities and competencies Customer driven development of new concepts and solutions Retail solutions: einvoice / edioalouge Customer Experience Management (CEM) Customer Recruitment & Retention Rewards, Coupons, Vouchers 1:1 Digital Marketing Mobile currencies Digital Wallet Value adding services Data warehouse Customer behavior analysis Customer Intelligence

76 EVP Wiljar Nesse Financial Services CMD, 16 February

77 Strategic role Financial Services is a strategic business partner based on knowledge and insight in banking customers business/value chain Consulting Financial Services engagements represent long term relationships with sophisticated clients, requiring EDB ErgoGroup to assume responsibility for delivery and operation of highly available complex solutions IT Operations Solutions Financial Services portfolio of projects is a source for Consulting-engagements

78 Financial services Consulting Solutions Operations Banking services Transaction services 20% 10% 10% 21% 38% Financial services Horisontal offerings Global sourcing Other verticals Public sector White slices not covered in this presentation

79 Nordic banking landscape Tier 1 Tier 2 5,8 14,1 6,2 Finans 9,8 Total IT spending BNOK, source: IDC

80 Market dynamics Maintaining economy of scale Challenging nonstrategic operations Nordic Tier 1 -> Regional advantage Tier 2 -> Cooperation important Adapting standard functionality Share non-strategic with industry peers Industrialisation of the IT & back office processes Increased use of IT services and outsourcing Brand, content & value propositions will create the differentiation Compliance and regulation Technologies and new delivery models The compliance tsunami threatening the profitability Increasing challenge to keep up with new fast moving players New players entering the traditional FS market Rapid innovation within payments area Release costs from back-end services to invest in competitive digital services and customer insight

81 Offerings

82 Bank Internal Services Bank Customer Services Enabler for next generation banking Customer Centric Advising & Sales Daily Banking Self-service Channels ATM Cards Loans & Finance Payments Savings & Investments Insurance Issuing Loans Payments Deposits Life Acquiring Corporate Lending Cash Management Savings Property Casualty Card Production Finance Foreign Exchange Investments Health Switching Loan Servicing Messaging BI & Compliance Information Management Risk management Arrears Management Compliance Enterprise Centric Master Data Management Enterprise Content Mgnt Enterprise Resource Planning Sales Management Security Authentication Electronic Signature Card Security Fraud Prevention

83 Capabilities

84 Competencies, capacities and contracts Norway Sweden Offshore locations five Sweden Industry specialists System developers Project managers Total* *) # of employees

86 Nordic IT market, competitive position Norway Early adopters Next generation banking solutions Sophisticated end users Benefits through cooperation in nondifferentiated areas Customers moving from desktop to mobile and social plattforms Positioned as major provider of critical card infrastructure, reputation for leading industry expertise Growth opportunities in value adding services and differentiated delivery models Sweden 3% 1% % 6% 5% 5% 62% 3% IBM Logica Atea EDB ErgoGroup Tieto Accenture Dell CapGemini CSC Dustin Know IT Fujitsu Volvo IT Sigma Others Same market characteristics as Norway, but a higher degree of IT development and maintenance in-house HP *Ovum, 2010

87 Target customer segments and some competitors Bank internal IT Enterprise Banking services Large Medium Transaction services Small

88 Business model

89 Multiple delivery models to support customer flexibility Application Service Provider (ASP/SaaS) Asset based Appl. Development/Management Extended Application Lifecycle Management Business Process Outsourcing (BPO) AM Outsourcing IT Operational Outsourcing Global delivery capability is integrated into all delivery models. The blend of global delivery is determined in cooperation with the customer

90 What s hot

91 Transaction services Contactless Payments Delivering improved consumer experience Challenge & opportunity: Bridging different payment schemes Introducing new applications Transaction switching Strong market growth #1 position in Sweden Opportunities beyond Nordics 25 banks as debit card customers in UK Contactless pilots with UK banks

92 Banking services Digital Media Banking More visualization less words Wallet prepared Customer obsession Don t make me think Empowered byers Context based banking High focus on usability Keep it simple Social media banking If it s not fun for me it s not useful

93 EVP Niclas Ekblad Sweden CMD, 16 February

94 Snapshot of the Swedish market

95 Market outlook and major trends GDP vs IT services growth +4,1% GDP 0,6%* Growth projections differ between IT- and financial analysts Source: IDC 2011 & Swedbank IT managers priorities - Business Initiatives IT managers priorities - Technology Initiatives ERP systems Mobile solutions Business Intelligence Source: Radar group Outsourcing The predominant procurement trend Server virtualization Storage and backup Integration systems

96 EDB ErgoGroup in Sweden 3500 MNOK Consulting Solutions Operations National specialist Financial services Industry specific Complex/Large Regional holistic Generic services Regional/SME Consulting Solutions IT Operations Revenue split (%)

97 Competencies and capacities Stockholm Göteborg Regions Consulting IT Operations Solutions Financial Services 200 Finland 70 Other 200 <25 employees employees 100+ employees Total* *) # of employees

98 Approaching the SME market

99 Specific buying behaviour Defining the SME-segment Buying behaviour Business and process development Change management Segment adaption of products and services Seeking safety - partnership and long term Scarce resources and competencies Lacking methods and models Requesting adapted solutions Technical services Products

100 Specific SME buying behaviour Calling for a specific approach and offerings SME business model Partnership and management consulting skills Customer process Analysis and strategy Business development Delivery of solution Realisation of effects Consulting SME adapted solutions Solutions adapted to customer business Lösningsleverans Operations and infrastructure 100

102 Target customer segments and some competitors Enterprise National specialist Industry specific Large Medium Small Generic services Regional holistic

103 IT services market Sweden Well positioned for growth Outsourcing services 23.9 Logica 17% IBM HP/EDS Tieto 16% EDBErgoGroup CSC 11% Fujitsu 8% Sigma 6% 3% VolvoIT 2% TCS Others 31% 3% Positioned with scale to win market share Top three in attractive growth market Project services 4% 4% % 8% 7% 6% 5% 5% 45% 4% 4% Tieto Logica EDBErgoGroup Capgemini IBM Accenture HIQ Sogeti ework KnowIT Others IT services in the SME segment SME Large 24% 76% EDB ErgoGroup holds #1 position with 17% marketshare * Overall SME +2.2% +1.5% +4.9% +5.2% The SME segment has delivered higher growth than the overall market Source: IDC 2011

104 Major growth opportunities SME Consolidation #1 position Market less consolidated Experience from many mini-mergers Customer development clients Customers expect proactivity Capabilities of a big vendor IT Outsourcing Challenger Solid client references Scale from Nordic set-up

105 What s hot

106 Mobility Lifecycle management A secure management of mobility is in high demand Completeness of offering fundamental; Products & logistics Support & delivery Mobile applications Mobile consulting Growth over the last 5 years 30-70% (CAGR exkl. 2009) Great market potential, 4,8 BSEK Solid list of references Swedish Match, Stockholm stad, Unionen, Fortum, Ramirent etc.

107 Healthcare Improving efficiency Growth market driven by increased need for efficient care of elder population Close collaboration with customers leading to growing business Supporting core clinical processes Combining IT expertise and domain competence Integrating own and third party products best of breed One of the market leaders (+10% market share in Sweden) care staff users on our different installations

108 Summary Sweden

110 CFO Eli Giske Financial targets 2015 CMD, 16 February

111 Agenda 1 EBITA-margins 2 Cash generation and capital structure CMD, 16 February

112 EBITA margins Margins back to satisfying levels CMD, 16 February

113 EBITA MNOK EBITA (MNOK) Improvements made possible due to: i. Realizing synergy program ii. Strongest growth in high margin segments iii. iv. Future proof ITO Turnaround in underperforming Consulting units v. Steady market outlook vi. Continued innovation EBITA (MNOK) Pension effect 2011, inlcuded in sum 2011 of 783 EBITA-margin = EBITA/net revenue CMD, 16 February

114 Building future proof IT Operations EBITA (MNOK) EBITA-margin (%) Target EBITA is in the 7-9 % corridor to be reached The fastest growing segments have the highest margins i. Regional/SME ii. Sweden iii. Bank & finance Improvement initiatives includes: i. New services ii. Partnerships iii. Datacenter consolidation iv. Automation v. Global delivery model Target corridor EBITA-margin ,0 7,5 7,0 5,0 2,5 0,0 EBITA (MNOK) EBITA-margin (%) EBITA-margin = EBITA/net revenue CMD, 16 February

115 Solutions - growing revenue and margins EBITA (MNOK) EBITA-margin (%) Target EBITA is in the 10-15% corridor to be reached Solutions Sweden is already within the corridor Digoff project major reason for margin shortfall in Norway Future growth from i. Bank & Finance sector ii. New vertical initiatives Increased competitiveness from efficiency improvements and increased share of offshoring 600 Target corridor EBITA-margin EBITA (MNOK) EBITA-margin (%) , ,5 10,0 10 7,5 5,0 2,5 0,0 EBITA-margin = EBITA/net revenue CMD, 16 February

116 Consulting market focus and leverage Target EBITA is in the 9-12% corridor i. To be reached ii. Targeted EBITA is subject to 10 % or less hardware proportion Target already reached for parts of the business Parts of the Consulting business is lagging. Main actions; i. Reduce turnover, attract and ii. iii. iv. retain Increase utilisation and reduce structural costs Develop leverage model Increase the share of project sales EBITA (MNOK) 400 Target corridor EBITA-margin EBITA (MNOK) EBITA-margin (%) EBITA margin (%) 12,0 10,0 9,0 7,5 5,0 2,5 0,0 EBITA-margin = EBITA/net revenue CMD, 16 February

117 Consulting sensitivities The importance of operational and employee efficiency shown through a sensitivity analysis Consulting business sensitive to i. Utilisation rates ii. Charge out rates iii. Average working days Table to the right is change in EBITA (in NOK) and change in EBITA margin given the respective changes in the factors mentioned above EBITA-margin = EBITA/net revenue Factor Δ EBITA Δ EBITA % Utilisation rate + 1%-point +35 MNOK +1% Charge out rate + 10 NOK +27 MNOK 0,8% Avg working days MNOK 0,3% NB: Sensitivity analysis done partially, i.e. one factor at a time change to measure effect. Basis for analysis is 2011 figures. Utilisation rates 2011 Sweden 71,7 Norway 68,2 Total 69,7 CMD, 16 February

118 Agenda 1 EBITA-margins 2 Cash generation and capital structure CMD, 16 February

119 CAPEX Healthy capex to develop new solutions CMD, 16 February

120 CAPEX within target corridor EDB ErgoGroup Capex today is in the lower end of the target corridor The reduction is mainly due to less spending on software development within Solutions Fluctuations in capex spending New outsourcing agreements and the structure of these Development of software portfolio 0 CAPEX (MNOK) CAPEX-% 6 5 5,0 Target corridor CAPEX-% 4 3 3, EBITA (MNOK) CAPEX-% (%) EBITA-margin = EBITA/net revenue CMD, 16 February

121 All segments within target corridor Solutions IT Operations CAPEX (MNOK) CAPEX-% CAPEX (MNOK) CAPEX-% Target corridor CAPEX-% 6 6, , Target corridor CAPEX-% , , CAPEX (MNOK) CAPEX-% (%) CAPEX (MNOK) CAPEX-% (%) CAPEX %=CAPEX/net revenue CMD, 16 February

122 Working capital CMD, 16 February

123 Cash release through reduced working capital Current status: 6,5 %* Working capital improvement program Target working capital: 4% Included in management incentive programs All segments will be measured and followed up Tightening of customer credits in standard contracts Internal processes in invoicing and credit management will be evaluated and improved * Average of working capital for Q1, Q2, Q3 and Q4. Working capital% - in percentage of net revenue CMD, 16 February

124 Gearing ratio and capital structure Financial flexibility through debt reductions CMD, 16 February

125 Debt reduction increases flexibility Increased EBITA margins Healthy investment levels Release of cash through working capital improvements Target Gearing ratio < 2,0 Considerable headroom in long term financing Flexibility to pay dividends Flexibility to grow Policy Dividend 20-50% CMD, 16 February

126 CMD Closing remarks CMD, 16 February

127 Summary Delivered on strategy in 2011 with sharp EBITA improvement Positive cash-flow development in 2 nd half of 2011 o MNOK 623 before restructuring in Q Solid opportunity for growth in the Nordic market; CAGR 3,5% o Clear market priorities to obtain strong organic growth Financial targets o EBITA of NOK 1.3 bn in 2015 o Working capital reduced from 6.5% to 4.0% in 2013 o Invest for return CMD, 16 February 2012

128 Q&A CMD, 16 February

129 Building the strongest IT service provider in the Nordics Capital Markets Day 16 February 2012