Q Interim Report January-September 2014

Transcription

1 Q3 214 Interim Report January-September 214 I am very pleased to see EBITDA growth of 3%. The EBITDA improvement has been achieved through a combination of double-digit revenue growth, improved margins and a continued focus on operational efficiency Steinar Sønsteby CEO of Atea

2 Highlights Revenue of NOK 5,173.5 million, up 1.9% y-o-y EBITDA* of NOK 25.2 million, up 29.5% y-o-y EBITDA* margin of 4.%, up from 3.4% y-o-y Cash flow from operations of NOK million, up from NOK million y-o-y Acquisition of Datatech AS in Norway Revenue EBITDA* Cash flow from operations Key figures -5 Q3 Q3 YTD YTD Full year Group revenue () 5, , , , ,95.8 Gross margin (%) EBITDA* () EBITDA* margin (%) EBIT () Earnings per share (NOK) Diluted earnings per share (NOK) Cash flow from operations () Free cash flow () Sept Sept Dec 213 Net financial position () Liquidity reserve** () 1, ,325.7 Working capital*** () Working capital*** in relation to annualized revenue (%) Equity ratio (%) Number of full-time employees 6,158 6,42 6,28 * Before share-based compensation, expenses/income related to acquisitions and restructuring ** Limited by 2.5 debt covenant ratio (net debt/last twelve months EBITDA) *** Non-interest-bearing current assets less non-interest-bearing current liabilities 2

3 Financial review Q3 214 Group Atea reported strong growth in revenue and profitability during the third quarter of 214, driven by increased sales of hardware, higher product margins and improved operating efficiency. Both revenue and operating profits were at record high levels for the third quarter of the year. Group revenue was up 1.9% (up 1.% in constant currency) from NOK 4,663.6 million in Q3 213 to NOK 5,173.5 million in Q Hardware revenue was up 17.1%, software revenue was down 1.6% and services revenue was up 1.8%. Currency effects had a positive impact of.9% in Q Organic revenue was up 9.6% in constant currency. The increase in hardware revenue was driven by growing demand for clients (PCs, tablets and smartphones). Q3 is the seasonal low point in the software business with fewer high-volume orders. The decrease in software revenue is temporary and was affected by a couple of large orders in Q3 last year. Despite 15 fewer consultants this year than last year (over 4% reduction), services revenue increased slightly due to continued growth in contracted services. EBITDA* in Q3 214 increased by 29.5% to NOK 25.2 million, up from NOK million in Q The improvement in profitability reflects double-digit revenue growth combined with improved product margin and a high focus on operational costs. The EBITDA* margin increased to 4.%, up from 3.4% last year. For the year to date 214, Atea s group revenue was NOK 17,39.1 million, an increase of 11.7% compared with the same period last year (up 8.% in constant currency). Hardware revenue was up 13.9%, software revenue was up 13.% and services revenue was up 5.1%. Currency effects have had a positive impact of 3.7% during the year to date 214. Organic revenue growth in constant currency was 7.5%. The company s EBITDA* for the year to date 214 was NOK million, up 28.% y-o-y, reflecting strong revenue growth, higher product margins, and improved operating efficiency. Hardware revenue and growth ,3% ,1% +14,5% +9,9% Q4 Q1 Q2 Q3 Comparable Quarter Latest Quarter Software revenue and growth ,% ,2% ,7% ,6% Q4 Q1 Q2 Q3 Comparable Quarter Latest Quarter Services revenue and growth ,% +13,1% +,8% ,8% Q4 Q1 Q2 Q3 Comparable Quarter Latest Quarter * Before share-based compensation, expenses/income related to acquisitions and restructuring costs 3

4 Norway Atea Norway reported a large increase in profitability during the third quarter of 214, based on higher product margins and lower personnel and operating expenses. Revenue in Q3 214 was NOK 1,513.9 million, up 1.% compared with Q Hardware revenue was up 5.4%, software revenue was down 16.3%, while services revenue was down.7%. Organic revenue increased by 1.%. The growth in hardware revenue was driven by increased sales within the client business (PCs, tablets and smartphones). Software revenue was impacted by fewer high-volume orders this year than last year. The decline in services revenue mainly reflects 5 fewer consultants this year than last year Revenue EBITDA* On 11 September Atea AS completed the acquisition of Datatech AS. Datatech is a Norwegian company with 16 employees working out of Ålesund on the West Coast of Norway. The company is a supplier of IT infrastructure to the maritime and offshore industries, which offers its customers significant added value through specialized solutions. In 213 Datatech reported revenue of NOK 37 million and EBITDA of NOK 7 million. The acquisition of Datatech will strengthen Atea's solution offering to customers within the maritime and offshore industries. Furthermore, the company has a strong position in the north-west part of Norway with several large international customers, which Atea will be able to offer a wider portfolio of products and solutions. Atea acquired all shares in the company and all employees will continue in Atea in order to strengthen Atea's competences. The enterprise value was NOK 3 million EBITDA* in Q3 214 increased to NOK 57.4 million, up from NOK 45.5 million in Q3 213, reflecting improved gross margin and reduced operating expenses. Product margin increased to 14.1%, up from 13.3% in Q3 213, as a result of fewer highvolume cases with low margin. The total gross margin increased to 26.2%, up from 25.9% in Q Operating expenses fell by.9%, mainly due to a decrease in the average workforce of 116 full-time employees, as result of the cost reduction program carried out in Q The EBITDA* margin increased to 3.8%, up from 3.% last year. * Before share-based compensation, expenses/income related to acquisitions and restructuring costs 4

5 Sweden Atea Sweden reported very high growth in product sales during the third quarter of 214, driving a large increase in operating profit. Demand was strong across regions, and within both hardware and software product areas. Revenue in Q3 214 was SEK 1,972. million, up 14.1% compared with last year. Hardware revenue was up 18.7%, software revenue was up 11.3%, while services revenue was up 3.7%. Organic revenue increased by 14.1%. The strong growth in the hardware revenue reflects higher demand from both the private and the public sector. The increase in software revenue was driven by growth in the private sector. Despite 38 fewer consultants this year than last year, services revenue grew due to strong demand for contracted services. SEK in million EBITDA* SEK in million Revenue EBITDA* in Q3 214 increased to SEK 51.2 million, up from SEK 34.9 million in Q3 213, reflecting revenue growth and improved product margin, as well as fewer employees. Product margin increased to 14.4%, up from 12.7% in Q3 213, based on a higher proportion of smaller, higher margin orders. The total gross margin increased to 23.4% for Q3 214, up from 23.2% in Q The average workforce for Q3 214 decreased by 61 full-time employees compared with last year, as result of the cost reduction program carried out in Q The EBITDA* margin increased to 2.6%, up from 2.% last year. * Before share-based compensation, expenses/income related to acquisitions and restructuring costs 5

6 Denmark Atea Denmark saw revenue accelerate during the third quarter of 214, based on increased demand for products and a large hardware deal. As a result of higher sales and reduced operating expenses, Atea Denmark reported a strong improvement in operating profit. Revenue in Q3 214 was DKK 1,282.8 million, up 17.5% compared with last year. Hardware revenue was up 23.8%, software revenue was up 12.8%, while services revenue was up 3.6%. Organic revenue increased by 17.5%. DKK in million EBITDA* The increase in hardware revenue was partially driven by a high-volume low-margin agreement within the client business. Software revenue was affected by a few new large orders in the public sector. Despite 43 fewer consultants this year than last year, services revenue increased. DKK in million Revenue EBITDA* in Q3 214 increased to DKK 77.1 million, up from DKK 58.6 million in Q3 213, reflecting revenue growth combined with lower personnel and operating expenses. Product margins were 9.4%, down from 11.6% in Q3 213, as a result of highvolume deals with low gross margin. The total gross margin ended at 22.4% for Q3 214, down from 25.8% in Q Operating costs in Denmark decreased by 5.8%, mainly due to a reduction of 11 full-time employees, as part of the cost reduction program carried out in Q The EBITDA* margin increased to 6.%, up from 5.4% last year. * Before share-based compensation, expenses/income related to acquisitions and restructuring costs 6

7 Finland Atea Finland continued to execute its turnaround strategy, and reported improved revenue and profit performance during the third quarter of 214. Revenue in Q3 214 was EUR 38.5 million, up 19.2% compared with last year. Revenue grew organically by 13.7%, with the remaining growth coming from the acquisition of BCC Finland Oy in April 214. Revenue growth was driven by higher sales of clients, particularly toward the private sector. Hardware revenue was up 32.6%, software revenue was down.7%, while services revenue was up 6.%. The Baltics Atea Baltic reported flat sales and lower profitability during the third quarter of 214, as regional macroeconomic uncertainties impacted demand for IT investments. Revenue in Q3 214 was EUR 21. million, in line with last year. Organic revenue fell by 2.7%, with the remaining revenue coming from the acquisition of CRC SIA in December 213. The Euro adoption in Lithuania from January 215 is contributing to challenging market conditions in the region. Furthermore, 214 is a transition year between two five-year EU funding programmes. EUR in million Revenue EUR in million Revenue As a result of increased hardware sales within the revenue mix, total gross margin ended at 19.8%, compared with 2.9% last year. Based on revenue growth and cost containment, EBITDA* in Q3 214 increased to EUR.6 million, up from EUR.2 million in Q Total EBITDA* margin increased to 1.5%, compared with.5% last year. EBITDA* in Q3 214 fell to EUR.9 million, compared with EUR 1.7 million in Q This decline in EBITDA* was caused by lower gross margin, which fell to 2.2%, compared with 23.7% last year. Last year s gross margin benefited from higher margin projects related to the EU presidency in Lithuania during 213. Total EBITDA* margin fell to 4.2%, compared with 8.% last year. EUR in million EBITDA* EUR in million EBITDA* * Before share-based compensation, expenses/income related to acquisitions and restructuring 7

8 Balance sheet and cash flow As of 3 September 214, Atea had total assets of NOK 9,263.4 million. Current assets such as cash, receivables and inventory represented NOK 4,86.8 million of this total. Non-current assets represented NOK 4,42.5 of this total, and primarily consisted of goodwill (NOK 3,45. million), deferred tax assets (NOK million), and fixed assets. Additional information on the deferred tax assets can be found in Note 8 to the financial statements. Atea had total liabilities of NOK 5,879.7 million as of 3 September 214, of which NOK 4,661.3 million were current liabilities. Shareholders equity was NOK 3,383.7 million, corresponding to an equity ratio of 36.5%. This is down from a 4.8% equity ratio on 3 September 213, due to payment of dividends including an extraordinary dividend in November 213. Cash flow from operations was NOK million in Q3 214, compared with NOK million in Q For the year to date, cash flow from operations was NOK million, compared to NOK million last year. This significant improvement in cash flow from operations reflects increased earnings and a reduction in net working capital balances. Cash flow from investments was NOK million in Q3 214, compared with NOK million last year. Capital expenditures were NOK 48.7 million, compared with NOK 44.6 million last year, mostly related to facilities, internal systems and the development of Atea s hosting centers. In addition to capital expenditures, Atea invested NOK 3.8 million in the acquisition of Datatech in Norway during Q Shares Atea ASA had 7,221 shareholders at 3 September 214 compared with 7,751 shareholders at 3 September 213. The 1 largest shareholders at 3 September 214 were: Main Shareholders * Shares % Systemintegration APS ** 25,112, % State Street Bank & Trust Co. *** 8,583, % Folketrygdfondet 4,912, % RBC Investor Services Trust *** 4,178, % JPMorgan Chase Bank N.A. London *** 3,52, % JPMorgan Chase Bank N.A. London *** 2,875, % Skandinaviske Enskilda Banken AB *** 2,614, % JPMorgan Chase Bank N.A. London *** 2,253, % State Street Bank & Trust Co. *** 2,167, % State Street Bank & Trust Co. *** 2,144, % Other 46,72, % Total number of shares 13,966,535 1.% * Source: Verdipapirsentralen ** Includes shares held by Ib Kunøe *** Includes client nominee accounts At 3 September 214, Chairman Ib Kunøe and close associates control a total of 24.5% of the shares, including the shares held by Systemintegration ApS. Cash flow from financing was NOK million in Q3 214, as the Group drew on its credit facilities. At quarter end, the Group had a cash balance of NOK million. At the end of Q3 214, the Group s net financial position was NOK million, up from NOK million at the end of Q The Group s liquidity reserves at 3 September 214 were NOK 1,298.2, including unutilized credit facilities. The Group s debt covenants require a maximum net interest bearing debt of 2.5x EBITDA at quarter-end. 8

9 Business review Background Atea is the leading provider of IT infrastructure and related services to organizations within the Nordic and Baltic regions. The company is the largest player by far in its local markets, with approximately 16% market share in 213. Roughly half of Atea s sales are to the public sector, with the remainder of sales to private companies. The market for IT infrastructure in the Nordic and Baltic regions has grown steadily during the last several years, despite challenging conditions in the global economy. According to estimates from IDC, the market for IT infrastructure and related services has grown at an average rate of 3% per year from Atea s competence and leading market position in IT infrastructure has enabled the company to grow organically at a rate significantly higher than that of the market. Since 27, the company has averaged an organic revenue growth rate of 4-5% per year. In addition to organic growth, Atea has successfully pursued an M&A strategy to strengthen and consolidate its market position. Atea s current organization structure is the result of the merger of the leading IT infrastructure companies in Denmark, Norway, Sweden and Finland and the Baltics in 26 and 27. Since 27, Atea has acquired more than 5 companies, at valuation mutiples significantly below the Group. Atea s market share in the Nordic and Baltic regions far exceeds that of other IT infrastructure providers. Today, the company operates 84 offices in the Nordic and Baltic region, with nearly 6,5 employees. This scale provides Atea with critical competitive advantages in purchasing, local market presence, breadth and depth of product offering, system integration competence, and efficient shared service and logistics functions. To address the needs of the Nordic and Baltic markets, Atea works closely with leading international IT companies, such as Microsoft, Cisco, HP, IBM, Apple, Lenovo, VMWare, Citrix, Symantec and EMC. These companies view the Nordic region as a critical market for the early adoption of new technologies, and work closely with Atea to penetrate these markets. In recent years, Atea s cooperation with its technology partners has intensified. This enables Atea to stay at the forefront of the latest IT trends, and to offer its customers new and innovative IT solutions. Market The market for information technology is in the midst of revolutionary change, which is transforming society and the workplace. Across private enterprise and throughout the public sector, organizations are increasingly relying on new and innovative IT solutions to improve productivity and living standards. While the specific applications for information technology are unique for each organization, the changing demands on internal IT departments follow several common themes. Organizations require their IT infrastructure to efficiently and securely capture, process and store ever larger amounts of data from diverse sources. This information must be available wherever it may be required, within or outside the workplace. Finally, IT systems must allow individuals to communicate, collaborate and be productive across a broad range of technology platforms. As a result of these trends, the number of unique devices for capturing or receiving data is exploding, and the amount of data which is transferred between them and the data center is increasing exponentially. At the same time, the risk of security breaches becomes ever greater. All of this creates a level of complexity which IT departments struggle to support. Through its breadth and depth of competency and its system integration expertise, Atea supports IT departments in adapting to the rapid growth and complexity of today s IT infrastructure requirements. Atea helps its customers to design, implement and support IT solutions tailored for their organization. In recent years, the company has invested in expanding its offering within a number of areas which are of growing interest for customers. These include: Mobility solutions Employees expect to access information wherever they are and on whatever device they find appropriate, including smartphones, tablets and notebook computers. Atea provides a broad range of IT infrastructure, from clients to software to data center solutions, which enable IT departments to securely meet these mobility requirements. Collaboration tools As employees become more mobile and spread across geographies, organizations are relying more heavily on collaboration tools to enable teams to work together productively. Atea has been on the forefront of this trend, and provides a full range of collaboration solutions for the workplace and data center, including solutions for information sharing, conferencing systems, and work coordination tools. 9

10 Business review (cont d) Market (cont d) Cloud computing Cloud computing is a model for IT service delivery in which IT infrastructure and applications are accessed remotely via the internet. In many cases, the service is delivered by a third party under an IT as a Service model. When implemented effectively, cloud computing can reduce an organization s IT costs, improve performance, and greatly enhance access to information. At the same time, cloud computing creates legitimate concerns about security, integration, and the loss of control over data. During the last years, Atea has invested in stateof-the-art data centers in the Nordic region for cloud based IT service delivery. The services which Atea provides through the cloud are highly differentiated from the simple and standardized offerings provided by large international vendors. Atea works with its customers to create cloud based IT solutions tailored to the customer s specific needs and system integration requirements. These cloud solutions can be implemented at the customer s own data center or from Atea s data centers with information stored locally and at an established level of security. Atea has seen growing customer interest in its cloud computing offering and views this area as a large business opportunity. IT as a Service IT as a Service is a commercial model in which organizations procure IT solutions from a service provider at a fixed fee for use (e.g., monthly fee per user). The service provider is then responsible from delivering the IT solution and maintaining an agreed service level. Business Outlook Management expects that the market for IT infrastructure will continue to grow as organizations invest in new IT solutions to enhance productivity. This trend will be particularly rapid in the Nordic markets, which are early technology adopters and can benefit most from productivity gains due to high labor costs. The adoption of new technologies will continue to drive increased complexity for IT departments, with growing requirements for system integration, mobility, communication and security. This trend greatly benefits Atea, as a system integrator with expertise across multiple platforms. Based on its competitive advantages and leading market position in the Nordic and Baltic regions, Management believes Atea will maintain a growth rate faster than the IT infrastructure market. At the same time, Management expects Atea to improve its operating margins through revenue growth and a strong focus on cost containment. Management believes that there are still opportunities for M&A and market consolidation in the Nordic region. The company will continue to be an active but disciplined buyer of IT companies which are attractively priced and can provide synergies with the group. Atea s business model generates strong cash flow, due to its sustained profitability, low capital expenditures and low net working capital requirements. This cash flow enables a high annual dividend payout to shareholders. In 214, Atea will pay a dividend of NOK 6. per share to shareholders in two equal installments in May and October 214. IT as a Service is particularly popular among small- and midsize organizations, as it enables these organizations to procure IT without high upfront investments or large IT organizations, and in a way which is flexible to their changing needs. Atea is well-positioned to take advantage of the IT as a Service trend, with its strong market position, local service delivery organizations, and system integration expertise. The company plans to expand its IT as a Service offering to several new product concepts. 1

11 Condensed financial information for the nine months ended 3 September 214 Consolidated income statement * Q3 Q3 YTD YTD Full year Note Revenue 2 5, , , , ,95.8 Cost of goods sold 3,9.7 3, ,1.8 11, ,776.2 Personnel costs* ,93.5 2, ,766.4 Other operating expenses* EBITDA (adjusted)* Restructuring costs Share based compensation Expenses/income related to acquisitions EBITDA Depreciation and amortisation Operating profit/loss (EBIT) Net financial items Profit/loss before tax, continued operations Tax on continued operations Profit/loss for the period from continued operations Of which non-controlling ownership interests Earnings per share - earnings per share for continued operations diluted earnings per share for continued operations Consolidated statement of comprehensive income Q3 Q3 YTD YTD Full year Profit/loss for the period from continued operations Currency translation differences Forward contracts - cash flow hedging Income tax OCI relating to items that may be reclassified to profit or loss Items that may be reclassified subsequently to profit or loss Other comprehensive income Total comprehensive income for the period Of which non-controlling ownership interests * Before share-based compensation, expenses/income related to acquisitions and restructuring 11

12 Consolidated statement of financial position Note 3 Sept Sept Dec 213 ASSETS Property, plant and equipment Deferred tax assets Goodwill 3,45. 3,78.9 3,132.4 Other intangible assets Other long-term receivables Non-current assets 4,42.5 4,45.3 4,536. Inventories Trade receivables 3,176. 3, ,751.3 Other receivables Other financial assets Cash and cash equivalents Current assets 4,86.8 4,538. 6,651.4 Total assets 9, , ,187.4 EQUITY AND LIABILITIES Share capital and premium 3 1, , ,92.2 Other unrecognised reserves Retained earnings 1, , ,52.7 Equity 3, , ,532.8 Interest-bearing long-term liabilities 1, ,18.7 Other long-term liabilities Retirement benefit obligations Deferred tax liabilities Non-current liabilities 1, , ,249.2 Trade payables 2, , ,847.4 Interest-bearing current liabilities VAT, taxes and government fees Provisions Other current liabilities 1, , ,687.4 Other financial liabilities Current liabilities 4, ,2.5 6,45.4 Total liabilities 5, , ,654.6 Total equity and liabilities 9, , ,

13 Consolidated statement of changes in equity 3 Sep Sep 213 Equity at start of period 3, ,815.8 Currency translation differences Forward contracts - cash flow hedging Other comprehensive income Profit/loss for the period Total recognised income/expense for the year Employee share-option schemes Dividends paid Issue of share capital Equity at end of period 3, ,644.4 Consolidated statement of cash flow Q3 Q3 YTD YTD Cash earnings Changes in work. cap./accr. items Cash flow from operations Capital expenditures Purch./sale of subs./assoc./investm Cash flow from investments Change in debt Equity transactions Cash flow from financing Change in cash Cash, start of period Currency effects on cash and cash equivalents Cash, end of period

14 NOTES NOTE 1 General information and Accounting Policy The condensed third quarter interim financial statements for the nine months ending 3 September 214 were approved for publication by the Board of Directors on October 21, 214. These Group financial statements have not been subject to audit or review. Atea ASA is a public limited company incorporated and domiciled in Norway whose shares are listed on the Oslo Stock Exchange. Atea (the Group) consists of Atea ASA (the Company) and its subsidiaries. Atea is the leading provider of IT infrastructure and related services to organizations within the Nordic and Baltic region. The financial statements have been prepared in accordance with International Financial Reporting Standard (IFRS), IAS 34 Interim Financial Reporting. The condensed interim financial statements do not include all information and disclosures required in the annual financial statement, and should be read in accordance with the Group s Annual Report for 213, which has been prepared according to IFRS. The accounting policies applied by the Group in these interim financial statements are the same as those applied by the Group in its consolidated financial statements for the year ended 31 December 213. There are no changes in accounting policy effective from 1 January 214 that have impact on the Group accounts. In the interim financial statements for 214, judgements, estimates and assumptions have been applied that may affect the use of accounting principles, book values of assets and liabilities, revenues and expenses. Actual values may differ from these estimates. The major assumptions applied in the interim financial statements for 214 and the major sources of uncertainty in the statements are similar to those found in the annual accounts for 213. The Board confirms that these interim financial statements have been prepared on a going concern basis. As a result of rounding differences numbers or percentages may not add up to the total. The carrying amounts of Financial assets and Financial liabilities recognized in the Consolidated statement of financial position approximate their fair values, according to Management s assessment. NOTE 2 Operating segment information Atea is present in 84 cities in Norway, Sweden, Denmark, Finland, and the Baltic countries of Lithuania, Latvia and Estonia, with approximately 6,5 employees. For management and reporting purposes, the Group is organized within these geographical areas. The performance of these geographical areas are evaluated on a regular basis by Atea s Senior Management Group. In addition to the geographical areas, the Group operates Shared Services functions (Atea Logistics and Atea Global Services) and central administration. These costs are reported separately as Group Shared Service and Group cost. Transfer prices between operating segments are on arm s length basis in a manner similar to transactions with third parties. 14

15 NOTE 2 Operating segment information (cont d) Operating segment information NOK * Revenue Q3 Q3 % YTD YTD % Full year change change 213 Norway 1, , % 4, , % 6,569.5 Sweden 1, , % 6,235. 5, % 7,952.1 Denmark 1, , % 4,46.3 3, % 5,68.7 Finland % 1,233. 1, % 1,396. The Baltics % % Group Shared Services 1, , % 3, , % 3,844.3 Eliminations* -1, ,22.2-3, ,85.5-3,952.8 Atea Group 5, , % 17, , % 22,95.8 EBITDA** Q3 Q3 % YTD YTD % Full year change change 213 Norway % % Sweden % % Denmark % % Finland % % 7.7 The Baltics % % 4. Group Shared Services % % 33.7 Group cost % % -37. EBITDA** % % 8.3 EBITDA** margin (%) 4.% 3.4% 3.3% 2.9% 3.6% EBIT Q3 Q3 % YTD YTD % Full year change change 213 Norway % % Sweden % % 135. Denmark % % 13.9 Finland The Baltics % % 16.9 Group Shared Services % % 25.1 Group cost % % Operating profit/loss (EBIT) % % Financial income % % 86.4 Financial expenses % % 135. Profit/loss before tax, continued operations % % 36.4 Quarterly revenue and contribution/margin Q3 Q3 % YTD YTD % Full year change change 213 Product revenue 4,81.1 3, % 13, , % 17,315. Services revenue 1,92.2 1, % 3,568. 3, % 4,774.9 Total revenue 5, , % 17, , % 22,95.8 Gross contribution 1, ,19. 7.% 4,28.3 3, % 5,319.7 Product margin 13.4% 12.8% 12.4% 12.3% 12.% Services margin 66.5% 68.1% 66.1% 68.4% 67.7% Gross margin 24.6% 25.5% 23.6% 24.7% 24.1% Q3 Q2 Q1 Q4 Q3 Q2 Q Product revenue 4,81.1 4, ,63.4 5,46.6 3,59.8 4, ,975.7 Services revenue 1,92.2 1, ,254. 1,381. 1,72.8 1, ,19. Total revenue 5, , , , , ,51.8 5,84.8 Gross contribution 1, , , , ,19. 1, ,259.2 Product margin 13.4% 12.% 12.% 11.5% 12.8% 11.7% 12.3% Services margin 66.5% 66.1% 65.7% 66.% 68.1% 67.7% 69.3% Gross margin 24.6% 23.% 23.4% 22.6% 25.5% 24.1% 24.8% * Most of Atea s internal sales are related to Group Shared Services, which consists of Atea Logistics and Atea Global Services ** Before share-based compensation, expenses/income related to acquisitions and restructuring 15

16 NOTE 2 Operating segment information (cont d) Operating segment information local currency * Revenue Q3 Q3 % YTD YTD % Full year Local currency in million change change 213 Norway NOK 1, , % 4, , % 6,569.5 Sweden SEK 1,972. 1, % 6,86.7 6, % 8,816. Denmark DKK 1, , % 4,2.1 3, % 5,359. Finland EUR % % The Baltics EUR % % 86.9 Group Shared Services NOK 1, , % 3, , % 3,844.3 Eliminations* NOK -1, ,22.2-3, ,85.5-3,952.8 Atea Group NOK 5, , % 17, , % 22,95.8 EBITDA** Q3 Q3 % YTD YTD % Full year Local currency in million change change 213 Norway NOK % % Sweden SEK % % Denmark DKK % % Finland EUR % % 1. The Baltics EUR % % 5.1 Group Shared Services NOK % % 33.7 Group cost NOK % % -37. EBITDA** NOK % % 8.3 EBITDA** margin (%) 4.% 3.4% 3.3% 2.9% 3.6% EBIT Q3 Q3 % YTD YTD % Full year Local currency in million change change 213 Norway NOK % % Sweden SEK % % Denmark DKK % % 99.3 Finland EUR The Baltics EUR % % 2.2 Group Shared Services NOK % % 25.1 Group cost NOK % % Operating profit/loss (EBIT) NOK % % Financial income NOK % % 86.4 Financial expenses NOK % % 135. Profit/loss before tax, continued operations NOK % % 36.4 * Most of Atea s internal sales are related to Group Shared Services, which consists of Atea Logistics and Atea Global Services ** Before share-based compensation, expenses/income related to acquisitions and restructuring 16

17 NOTE 3 Share capital and premium Number of shares Issued Whole figures Treasury shares Whole figures Share capital Issued NOK in million Treasury shares NOK in million Share premium NOK in million Total paid-in equity NOK in million At 1 January ,181,2-73,61 1, ,92.2 Issue of Share capital * 785, At 3 September ,966,535-73,61 1, ,129.9 * Issue of Share capital is related to Share options for the Management and selected employees. NOTE 4 Business combinations Acquisitions in 214 Atea has acquired two companies during the first nine monts of 214. The financial performance from the acquisition date to the end of the quarter for the acquired companies is considered to be immaterial from a Group perspective. BCC Finland Oy: Atea acquired BCC Finland Oy in April 214. The acquisition will strengthen Atea s market position in western and eastern Finland in the hardware segment, and will provide additional scale to Atea s service operations in this region. Datatech AS: Atea acquired Datatech AS in September 214. The acquisition of Datatech will strengthen Atea's solution offering to customers within the maritime and offshore industries in Norway. The business combination of Datatech AS was effected at the end of Q Therefore it has not been possible to provide information related to fair value of acquired assets in the balance sheet, net assets acquired and net cash payment for the acquisition before the Q3 214 report was approved. The total cost price of NOK 32.5 has provisionally been entered as Other long term receivables in the balance sheet at 3 September 214. Allocation of purchase price Due to the high knowledge and low capital requirements for operating an IT sales and consulting organization, acquisitions within this sector will typically result in a goodwill balance. This goodwill balance represents the surplus of the purchase price compared with the accounting value of the net fixed and intangible assets of the acquired company. The fair values have been determined on provisional basis because new information may occur. BCC Finland Oy Acquisition date 8 April 214 Country Finland Voting rights/ownership interest 1% Acquisition cost: Consideration 1) 2.9 Total acquisition cost 2.9 Net assets acquired at carrying value of equity (see table below) 2.6 Identification of excess value: Fair value of net assets acquired, excluding goodwill 2.6 Controlling ownership interests 2.6 Non-controlling ownership interest - Goodwill.3 17

18 NOTE 4 Business combinations (cont d) Assets and liabilities related to the acquisitions in 214 are as follows: BCC Finland Oy Deferred tax assets.3 Computer software and rights. Property, plant and equipment 1.2 Other long-term interest-bearing receivables.1 Other long-term receivables.1 Inventories.9 Trade receivables 5.9 Provisions for losses on receivables -.2 Other current receivables and investments.8 Cash and cash equvalents 1.1 Other long-term liabilities and provisions -.7 Trade payables -5.1 Other current liabilities and provisions -1.9 Net assets acquired 2.6 Net cash payments in connection with the acquisitions are as follows: BCC Finland Oy Considerations and costs in cash and cash equivalents 2.9 Cash and cash equivalents in acquired companies -1.1 Net cash payments for the acquisitions 1.8 Pro Forma income statement If all acquired entities had been consolidated from 1 January 213, the consolidated proforma income statements for 214 would show revenue and profit as follows: Operating revenue 17, ,332.9 Operating profit/loss (EBIT) YTD YTD NOTE 5 Related parties Note 25 in the Annual Report for 213 provides details of related party transactions. For new transactions with effect for 214, see below: In Q2 214 Atea has been invoiced a consultant fee of NOK.2 million from Consolidated Holdings A/S. Consolidated Holding A/S is controlled by Ib Kunøe who is the Board Chairman and the largest shareholder of Atea ASA through the company Systemintegration ApS. In Q Atea has entered into an agreement to lease premises from Sonex Consulting in Lithuania. Sonex Consulting is controlled by Arunas Bartusevicius who is the General Manager of Atea Baltic UAB. The rent for 214 amount is NOK 1.3 million and will be adjusted according to the consumer price index during the following years. The agreement can be cancelled by both parties from 1 August

19 NOTE 6 Legal disputes Disputes related to the invoicing of licences and the bankruptcy of IT Factory A/S Atea has received legal claims from Sydbank A/S, Krone Kapital A/S and Danske Bank A/S for compensation related to software licencing in connection with the bankruptcy of IT Factory A/S. Atea considers the claims to be unfounded. In 212, Sydbank A/S and Atea reached a settlement on compensation related to this claim. Atea s insurance company compensated Atea for the settlement costs. In 212, Krone Kapital A/S won a legal verdict on its claim against Atea in a Danish court. This case was appealed by Atea. Atea lost the appeal in Q4 213 and paid NOK 22.5 million to Krone Kapital A/S. In October 214, Danske Bank A/S and Atea reached a settlement on compensation related to this claim. The compensation has not yet been paid by Atea. Management is of the view that Atea s insurance covers direct losses resulting from all of the above claims. Atea s insurance company has compensated Atea for the settlement with Sydbank A/S, but has so far not agreed to cover Atea s losses from the remaining settlements with Krone Kapital A/S and Danske Bank A/S. The costs related to these settlements are approximately NOK 5 million in total. Atea has taken legal action against the insurance company for the outstanding amounts. Management considers it to be beyond reasonable doubt that its insurance will cover these claims. Therefore, no provisions have been set aside in the financial accounts for these claims. NOTE 7 Depreciation and amortisation For the year to date 214, depreciation and amortization expense of NOK million includes NOK 34.9 million related to amortisation of intangible assets from Business combinations. NOTE 8 Taxes Income tax expense is recognized based on management s estimate of the full year payable tax rate. The estimated payable tax rate used for the financial year 214 is 12.6%. All remaining income taxes are estimated to be covered by tax loss carryforwards held within the group s subsidiaries. As of 31 December 213, the Group s subsidiaries had a total of NOK 2,74 million in tax loss carryforwards. Nearly all of these tax loss carryforwards were held by subsidiaries in Norway. As of the year end 213, the estimated value of the tax loss carryforwards within the group was NOK 733. million, of which NOK 52.1 million was recognized as Deferred Tax Assets on the balance sheet. The remaining value of NOK million was not recognised on the balance sheet. At the end of each year, Management reassesses the value of tax loss carryforwards which will be recognized on the balance sheet. This assessment is made based on financial estimates of tax payments for the next five years. This annual assessment may have a material effect on reported Deferred Tax Assets and income tax expenses in the fourth quarter and full year accounts. NOTE 9 Events after the Balance Sheet Date There were no significant events after the balance sheet date which could affect the evaluation of the reported accounts. 19

20 Holding Atea ASA Brynsalleen 2 Box 6472 Etterstad NO-65 Oslo Tel: Org.no investor@atea.com Norway Atea AS Brynsalleen 2 Box 6472 Etterstad NO-65 Oslo Tel: Org.no info@atea.no Sweden Atea AB Kronborgsgränd 1 Box 18 SE Kista Tel: +46 () Org.no info@atea.se Denmark Atea A/S Lautrupvang 6 DK-275 Ballerup Tel: Org.no info@atea.dk Finland Atea Oy Jaakonkatu 2 PL 39 FI-1621 Vantaa Tel: () Org.no customercare@atea.fi Lithuania Atea UAB Laisves pr. 3 LT-4215 Vilnius Tel: Org.no info@atea.lt Latvia Atea SIA Unijas iela 11a LV-139 Riga Tel: Org.no info@atea.lv Estonia Atea AS Pärnu mnt. 139C, 1 EE-1317 Tallinn Tel: Org.no info@atea.ee Atea Logistics AB Smedjegatan 12 Box 159 SE Växjö Tel: +46 () Org.no customer.care@atea.se Atea Global Services SIA Skanstes Street 5 LV-113 Riga Tel: Org.no rigainfo@atea.com