Q2 2015 - NewsWeb

Transcription

Q2 2015 - NewsWeb
Q2 2015
Interim Report
January - June 2015
“Atea had strong growth in revenue during the second quarter of 2015, but with lower
operating profits due to reduced profitability in the Norwegian and Danish business
units. We are taking steps to restore profitability in these business areas.”
Steinar Sønsteby
CEO of ATEA
Atea Interim Report Q2 2015
Highlights
•
•
•
•
•
Revenue of NOK 6,842 million, up 14.4% y-o-y
EBITDA* of NOK 157 million, down 11.2% y-o-y
EBITDA* margin of 2.3%, down from 3.0% last year
Cash flow from operations of minus NOK 22 million, down from NOK 425 million last year
Acquisition of Baltneta in Lithuania
Revenue
EBITDA*
Cash flow from operations
NOK in million
NOK in million
NOK in million
7,549
8,000
6,498
5,981
6,000
6,842
500
1100.0
396
900.0
400
5,173
700.0
300
4,000
200
786
177
205
202
157
500.0
425
300.0
2,000
100
25
100.0
0
0
Q2 14
Q3 14
Q4 14
Q1 15
Q2 15
Q2 14
Q3 14
Q4 14
Q1 15
Q2 15
-100.0
Q2 14
Q3 14
-103
Q4 14
Q1 15
Q2 15
-22
-300.0
-500.0
Key figures
Q2
Q2
H1
H1
2015
2014
2015
2014
2014
6,842
5,981
13,340
11,866
24,588
Gross margin (%)
22.5
23.0
23.1
23.2
23.3
EBITDA (NOK in million) *
157
177
359
357
958
EBITDA margin (%) *
2.3
3.0
2.7
3.0
3.9
EBIT (NOK in million)
57
89
156
180
584
Group revenue (NOK in million)
Full year
Net profit (NOK in million)
24
55
93
125
429
Earnings per share (NOK)
0.23
0.53
0.89
1.21
4.14
Diluted earnings per share (NOK)
0.23
0.52
0.88
1.21
4.10
-22
425
3
275
959
-160
364
-194
141
617
30 Jun 2015
30 Jun 2014
31 Dec 2014
Cash flow from operations (NOK in million)
Free cash flow (NOK in million) **
Net financial position (NOK in million)
-1,508
-554
-829
Liquidity reserve (NOK in million) ***
907
1,389
1,628
Working capital (NOK in million) ****
-486
-328
-497
Working capital in relation to annualized revenue (%)
-1.8
-1.4
-1.9
Equity ratio (%)
25.2
30.4
28.1
Number of shares
105,170,711
103,966,535
104,168,164
Diluted number of shares (YTD)
106,525,402
104,107,443
104,739,264
6,818
6,155
6,504
Number of full-time employees
* Before share-based compensation and expenses related to acquisitions
** Defined as cash flow from operations, less capital expenditures. Capital expenditures include assets acquired through cash
purchases and through financial leasing agreements
*** Limited by 2.5 debt bond covenant ratio (net debt/last twelve months pro forma EBITDA)
**** Non-interest-bearing current assets less non-interest-bearing current liabilities
2
Atea Interim Report Q2 2015
Hardware revenue and growth
NOK in million
Financial review
Q2 2015 and H1 2015
5000.0
+14.3%
4500.0
4000.0
+12.5%
+17.1%
3500.0
+17.7%
3000.0
2500.0
2000.0
1500.0
Group
2,929
3,430
3,908
4,468
3,283
3,695
3,031
3,568
1000.0
500.0
Atea achieved strong growth in revenue during the
second quarter of 2015. Operating margins fell from
last year, due to lower profitability in the Norwegian
and Danish business units.
Q3
Q4
Q1
Comparable Quarter
Group revenue was up 14.4% (up 12.3% in
constant currency) from NOK 5,981 million in Q2
2014 to NOK 6,842 million in Q2 2015. Hardware
revenue was up 17.7%, software revenue was up
8.2% and services revenue was up 14.8%.
Currency effects had a positive impact of 2.1% in
Q2 2015. On a pro forma basis**, revenue growth
was 7.7% in constant currency.
Q2
Latest Quarter
Software revenue and growth
NOK in million
2,000
+8.2%
1,800
+5.5%
+11.1%
1,600
1,400
1,200
1,000
800
-1.6%
1,553 1,638
600
400
The increase in hardware revenue was driven by
several factors, including growing demand for
datacenter and communication products. The
increase in software revenue was driven by strong
sales in Denmark and Sweden. The increase in
services revenue was based on growth in
contracted services, which in Q2 constituted more
than 42% of total services revenue.
661
1,347
1,497
1,729
1,871
651
200
Q3
Q4
Q1
Comparable Quarter
Services revenue and growth
NOK in million
1,600
EBITDA* in Q2 2015 decreased by 11.2% to NOK
157 million, from NOK 177 million in Q2 2014.
Higher EBITDA* in Sweden, Finland and the Baltics
was not enough to offset lower profitability in
Denmark and Norway. The EBITDA* margin ended
at 2.3%, down from 3.0% last year.
+4.6%
+4.2%
1,400
1,200
Q2
Latest Quarter
+14.8%
+1.8%
1,000
800
600
1,381 1,444
1,073 1,092
1,254 1,307
1,222
1,403
400
EBIT in Q2 2015 ended at NOK 57 million,
compared with NOK 89 million in Q2 2014. Net
financial items were an expense of NOK 25 million,
compared with an expense of NOK 26 million last
year.
200
Q3
Q4
Comparable Quarter
Q1
Q2
Latest Quarter
Year-to-date 2015
Group revenue in H1 2015 was NOK 13,340 million,
up 12.4% (up 10.7% in constant currency)
compared with the same period last year. Hardware
revenue was up 15.0%, software revenue was up
9.5% and services revenue was up 9.4%. The
currency effects had a positive impact of 1.7% in H1
2014. On a pro forma basis**, revenue growth was
6.4% in constant currency.
Profit before tax was NOK 31 million, compared
with NOK 63 million last year. Income tax expense
was NOK 7 million, compared with NOK 8 million
last year (see Note 5).
Net profit after tax fell to NOK 24 million, compared
with NOK 55 million last year.
EBITDA* in H1 2015 ended at NOK 359 million, up
0.5% y-o-y, reflecting a strong performance in Q1
and a decline in Q2 based on lower profitability in
Denmark and Norway.
*
Before share-based compensation and expenses related to acquisitions
** Pro forma revenue growth includes revenue from companies acquired during 2014 and 2015 in both the current and prior full year
3
Atea Interim Report Q2 2015
Norway*
Atea Norway increased its revenue in Q2 2015, but
had lower profitability due to a decline in gross
margins and an increased cost level compared with
last year. Revenue growth was driven by the
hardware and services segments, as well as by the
acquisition of two companies during 2014.
Due to lower gross margin and higher operating
expenses, EBITDA* was NOK 40 million in Q2
2015, down from NOK 66 million last year. EBITDA*
margin ended at 2.3%, down from 4.1% last year.
EBITDA*
NOK in million
Revenue in Q2 2015 was NOK 1,713 million, up
6.1% compared with Q2 2014. Hardware revenue
was up 12.4%, software revenue was down 15.7%,
and services revenue was up 8.8%. On a pro forma
basis**, revenue was up 1.7% (adjusted for
acquisitions of Datatech in Q3 2014 and Imento in
Q4 2014).
100
80
57
1,622
Q1 15
Q2 15
0
Q2 14
Q3 14
Q4 14
Year-to-date 2015
For the first half of 2015, revenue was NOK 3,335
million, up 4.7% compared with the same period
last year. Hardware revenue was up 7.0%, software
revenue was down 4.1% and services revenue was
up 5.9%. On a pro forma basis**, revenue growth
was 0.3% (adjusted for acquisitions of Datatech in
Q3 2014 and Imento in Q4 2014). EBITDA* in H1
2015 decreased to NOK 80 million, down from NOK
105 million last year.
2,108
1,514
40
20
2,500
1,615
40
40
Revenue
2,000
66
60
Hardware revenue growth was primarily driven by
increased sales of clients, such as PC equipment.
The decline in the software business is due to last
year being positively affected by a few large one-off
datacenter orders to public customers. Growth in
services revenue was driven by increased sales of
contracted
services,
including
datacenter
outsourcing agreements.
NOK in million
113
120
1,713
1,500
1,000
500
0
Q2 14
Q3 14
Q4 14
Q1 15
Q2 15
Total gross margin decreased to 26.3%, down from
27.4% in Q2 2014. The product margin of 13.4%
was down from 13.9% in Q2 2014, as a result of a
change in the revenue mix towards more client
business, which has lower margins. Services
margin fell to 65.2% from 69.8% last year, due to
increased expenses from subcontractors.
Operating expenses grew by 9.0% to NOK 411
million, as the organization planned for a higher
activity level than it achieved in Q2. On a pro forma
basis, operating expenses increased by 5.7%, with
the remaining growth coming from acquisitions.
Towards the end of Q2 actions were taken to
reduce the cost base. These actions have included
the elimination of 50 positions (3% of employees)
and reduction in marketing and overhead expenses.
*
Before share-based compensation and expenses related to acquisitions
** Pro forma revenue growth includes revenue from companies acquired during 2014 and 2015 in both the current and prior full year
4
Atea Interim Report Q2 2015
Sweden*
Atea Sweden had rapid growth in product sales
during the second quarter of 2015, resulting a large
increase in EBITDA*. Revenue growth was strong
across regions and within both private and public
sectors.
EBITDA*
SEK in million
120
109
100
70
80
75
61
Revenue in Q2 2015 was SEK 3,010 million, up
17.3% compared with last year. Hardware revenue
was up 26.4%, software revenue was up 13.6%,
while services revenue was up 4.0%. On a pro
forma basis**, revenue growth was the same as
actual growth.
40
20
0
Q2 14
The strong growth in hardware revenue was driven
by higher sales of school PC’s, as well as
datacenter and communication products. The
increase in software revenue was driven by
increased activity from the public sector. Services
revenue increased, mainly due to growth in
contracted services.
3,500
3,000
Q4 14
Q1 15
Q2 15
EBITDA* in H1 2015 increased to SEK 145 million,
up from SEK 124 million last year, reflecting strong
growth in product revenue.
3,010
2,874
2,566
Q3 14
Year-to-date 2015
Revenue in H1 2015 was SEK 5,508 million, up
13.9% compared with the same period last year.
Hardware revenue was up 21.5%, software revenue
was up 11.7% and services revenue was flat. On a
pro forma basis**, revenue growth was the same as
actual growth. Growth was driven by strong
products sales within both private and public
sectors.
Revenue
SEK in million
51
60
2,498
2,500
1,972
2,000
1,500
1,000
500
0
Q2 14
Q3 14
Q4 14
Q1 15
Q2 15
Total gross margin fell to 19.2% for Q2 2015 from
20.3% in Q2 2014, mainly due to slightly lower
products margin and the higher proportion of
product sales within the revenue mix. Product
margin decreased to 11.4% from 11.7% in Q2
2014, mainly due to new customer acquisitions.
Services margin grew to 58.1% from 57.4% last
year due to a lower percentage of revenue from
subcontractors.
Operating costs scaled relative to the strong
revenue growth and increased by 9.5% to SEK 502
million, as an effect of 73 extra full time employees
and higher bonus accruals.
EBITDA* in Q2 2015 increased to SEK 75 million,
up from SEK 61 million in Q2 2014, reflecting strong
growth in product revenue. The EBITDA* margin
increased to 2.5%, up from 2.4% last year.
*
Before share-based compensation and expenses related to acquisitions
** Pro forma revenue growth includes revenue from companies acquired during 2014 and 2015 in both the current and prior full year
5
Atea Interim Report Q2 2015
Denmark
Atea Denmark increased its revenue and gross
profit during the second quarter of 2015. However,
EBITDA* fell from the prior year due to a large
increase in operating expenses.
EBITDA*
DKK in million
160
138
140
120
Sales in the last month of the quarter were
negatively affected by a bribery investigation, which
led to a postponement of order volumes. This
investigation is described in Note 8.
100
79
77
80
60
43
30
40
20
Despite the investigation, revenue in Q2 2015 was
DKK 1,508 million, up 11.4% compared with last
year. Revenue growth was driven by the acquisition
of Axcess in Q4 2014. Hardware revenue was up
5.8%, software revenue was up 12.3%, and
services revenue was up 24.0%. On a pro forma
basis**, revenue growth was 0.2% (adjusted for
Axcess acquisition).
0
Q2 14
Q4 14
Q1 15
Q2 15
Year-to-date 2015
Revenue in H1 2015 was DKK 3,065 million, up
12.0% compared with the same period last year.
Hardware revenue was up 10.7%, software revenue
was up 6.8% and services revenue was up 19.7%.
On a pro forma basis**, revenue growth was 2.1%
(adjusted for Axcess acquisition in Q4 2014).
EBITDA* in H1 2015 decreased to DKK 109 million,
down from DKK 111 million last year, reflecting
solid performance in Q1 but a decline in Q2.
The increase in hardware and software revenue
was based on higher sales of networking and
datacenter solutions, which offset lower sales of PC
equipment. The increase in services revenue was
based on growth in contracted services.
Revenue
DKK in million
2,000
1,800
1,600
1,400
1,200
1,000
Q3 14
1,783
1,353
1,557
1,508
Q1 15
Q2 15
1,283
800
600
400
200
0
Q2 14
Q3 14
Q4 14
Total gross margin increased to 23.0% for Q2 2015,
up from 21.4% in Q2 2014. Product margin was
9.0%, up from 8.9% in Q2 2014 as the proportion of
revenue from higher value added products grew.
Services margin ended at 64.3%, up from 64.1%
last year based on lower subcontractor expenses.
Operating expenses grew significantly during the
quarter, as the organization had planned for higher
growth than it achieved in Q2 2015. In addition, the
personnel costs were affected by retention bonuses
issued to Atea Denmark employees. Operating
expenses grew by 27.7% to DKK 316 million. On a
pro forma basis, operating expenses increased by
10.8%, with the remaining growth coming from
acquisitions.
EBITDA* in Q2 2015 decreased to DKK 30 million,
down from DKK 43 million in Q2 2014, reflecting the
increase in the cost base. The EBITDA* margin
ended at 2.0%, down from 3.1% last year.
*
Before share-based compensation and expenses related to acquisitions
** Pro forma revenue growth includes revenue from companies acquired in 2014 and 2015 in both the current and prior full year
6
Atea Interim Report Q2 2015
Finland†
Atea Finland increased its revenue and EBITDA*
during the second quarter of 2015. Growth was
driven by higher hardware sales and improved
services margin.
1.8
1.4
1.2
1.0
0.8
60
0.4
0.2
0.0
Q2 14
Q3 14
Q4 14
Q1 15
Q2 15
Year-to-date 2015
Revenue in H1 2015 was EUR 117.1 million, up
6.0% compared with the same period last year. On
a pro forma basis**, revenue growth was the same
as actual growth. Growth was driven by a large new
public procurement contract within software and
growth in the datacenter and mobility products
within hardware.
65
52
0.7
0.6
0.4
Revenue
55
0.6
0.6
The increase in revenue was driven by some large
mobile phones agreements and higher sales of
datacenter products, which offset a decline in
software and services revenue. Hardware revenue
was up 12.9%, software revenue was down 10.2%,
while services revenue was down 3.1%.
70
1.6
1.6
Revenue in Q2 2015 was EUR 52.3 million, up
1.5% compared with last year. On a pro forma
basis**, revenue growth was the same as actual
growth.
EUR in million
EBITDA*
EUR in million
52
50
39
40
EBITDA* in H1 2015 ended at EUR 1.0 million, up
from EUR 0.9 million last year, reflecting higher
products sales.
30
20
10
0
Q2 14
Q3 14
Q4 14
Q1 15
Q2 15
Total gross margin was 15.7%, up from 15.5% last
year, driven by improved services margin.
EBITDA* in Q2 2015 increased to EUR 0.7 million,
up 14.8% from EUR 0.6 million last year, reflecting
higher revenue and a slightly improved gross
margin. The EBITDA* margin ended at 1.3%, up
from 1.1% last year.
* Before share-based compensation and expenses related to acquisitions
** Pro forma revenue growth includes revenue from companies acquired in 2014 and 2015 in both the current and prior full year
7
Atea Interim Report Q2 2015
The Baltics
On 8 April Atea completed the acquisition of
Baltneta, which is the leading cloud and IT
outsourcing provider in Lithuania. Baltneta has the
highest certified datacenter in Lithuania, in which
there is still significant vacant capacity. The
company's 120 employees and the datacenter
facilities are located in Vilnius. Since its
establishment in 1996 the company has had a
successful growth track record, and now has a solid
contract base containing more than 3,000
customers. The company delivered revenue of EUR
7.2 million and EBITDA of EUR 1.9 million in the
fiscal year ending 31 December 2014, and is
expected to deliver revenue of EUR 8.3 million and
EBITDA of EUR 2.2 million in 2015.
Atea Baltics achieved strong growth in revenue and
EBITDA* during the second quarter of 2015. Growth
was driven by a general improvement in market
conditions, which led to a multitude of small orders,
and by the acquisition of Baltneta in April 2015.
Revenue in Q2 2015 was EUR 24.5 million, up
25.7% compared with last year. On a pro forma
basis**, revenue growth was 15.5% (adjusted for
Baltneta acquisition in April 2015).
The strong growth in revenue was driven by higher
sales to the private sector. Hardware revenue was
up 19.5%, software revenue was up 2.9%, while
services revenue was up 61.9%.
Cloud is a strategic business area for Atea, and it is
therefore an important step in the development to be
able to offer customers datacenter capacity as
private, hybrid and public cloud solutions from the
Baltics. Baltneta is today selling its solutions
primarily to the SMB segment, and Atea therefore
sees good cross-selling possibilities to the current
customer base, which is primarily in the larger
enterprise and public segments.
Revenue
EUR in million
40
34
35
30
25
20
23
21
25
20
15
10
Atea acquired 100% of the shares from the Kazickas
family and management. All management team
members and key employees will continue in Atea.
The agreed enterprise value was EUR 10.4 million.
5
0
Q2 14
Q3 14
Q4 14
Q1 15
Q2 15
Total gross margin increased to 24.6% for Q2 2015,
up from 21.8% last year, primarily due to a higher
proportion of services in the revenue mix.
Year-to-date 2015
Atea Baltics revenue in H1 2015 increased to EUR
47.7 million, up 20.4% compared with the same
period last year. On a pro forma basis**, revenue
growth was 10.9% (adjusted for Baltneta acquisition
in Q2 2015). This growth was driven by higher
hardware sales to the private sector.
EBITDA* in Q2 2015 increased to EUR 1.3 million,
up 72.2% from EUR 0.8 million in Q2 2014,
reflecting strong revenue growth and acquisition of
Baltneta in Q2 2015. The EBITDA* margin increased
to 5.4%, up from 4.0% last year.
EBITDA* in H1 2015 increased to EUR 2.2 million,
up from EUR 1.6 million last year, reflecting strong
revenue growth and acquisition of Baltneta in April
2015.
EBITDA*
2.0
1.8
1.8
1.6
1.3
1.4
1.2
1.0
0.8
0.9
0.9
0.8
0.6
0.4
0.2
0.0
Q2 14
Q3 14
Q4 14
Q1 15
Q2 15
8
Atea Interim Report Q2 2015
Balance sheet and cash flow
Cash flow from financing was NOK 5 million in Q2
2015. The Group drew NOK 396 million on its credit
facilities, paid dividend of NOK 3.25 per share,
amounting to a total of NOK 384 million, and issued
754,987 new shares related to the share option
program together with a share buyback of 640,000
shares, amounting to a net total of NOK -7 million. At
quarter end, the Group had a cash balance of NOK
292 million.
As of 30 June 2015, Atea had total assets of NOK
11,525 million. Current assets such as cash,
receivables and inventory represented NOK 6,372
million of this total. Non-current assets
represented NOK 5,153 of this total, and primarily
consisted of goodwill (NOK 3,575 million),
deferred tax assets (NOK 545 million), and
property, plant and equipment (NOK 671 million).
Additional information on the deferred tax assets
can be found in Note 5 to the financial
statements.
At the end of Q2 2015, the Group’s net financial
position was NOK -1,508 million compared with NOK
-554 million at the end of Q2 2014. The Group’s bond
covenants require that the Group maintains a
maximum net interest bearing debt of 2.5x pro forma
EBITDA over the last twelve months. The Group is
currently well within this limit, and maintains liquidity
reserves, including unutilized credit facilities, of NOK
907 million at 30 June 2015.
Atea had total liabilities of NOK 8,617 million as of
30 June 2015, of which NOK 7,243 million were
current liabilities. Shareholders’ equity was NOK
2,908 million, corresponding to an equity ratio of
25.2%. This is down from a 30.4% equity ratio on
30 June 2014, due to payment of dividends and
the buyback of own shares.
Cash flow from operations was NOK -22 million in
Q2 2015, compared with NOK 425 million in Q2
2014. Cash flow from operations was slightly
positive with NOK 3 million in H1 2015, compared
with NOK 275 million in H1 2014.
Shares
Atea ASA had 7,344 shareholders on 30 June 2015
compared with 7,212 shareholders on 30 June 2014.
Changes in the accounts payable balance during
H1 2015 vs. H1 2014 represent NOK 227 million
of the NOK 272 million difference in cash flow
from operations between the periods. During the
first half of 2014, Atea benefited from an extention
in payment terms from key vendors, which had a
positive one-time effect on cash flow from
operations. Atea expects healthy free cash flow
for the full year 2015, in line with its overall
profitability.
The 10 largest shareholders as of 30 June 2015 were:
Main Shareholders *
Systemintegration APS **
Cash flow from investments was NOK -164 million
in Q2 2015, compared with NOK -53 million in the
corresponding quarter last year. Cash flow from
investments included capital expenditures of NOK
99 million, compared with NOK 49 million in the
corresponding quarter last year, related to
facilities, internal systems and the development of
Atea’s hosting centers. Investments within this
area were somewhat higher in current quarter,
following a relatively low investment level in Q1
2015. Capital expenditures in H1 2015 were NOK
135 million, compared with NOK 105 million in H1
2014. In addition to capital expenditures, Atea
paid NOK 65 million in acquisition cost and earnout to acquisitions in prior years. The material part
of this payment relates to the acquisition of
Baltneta UAB in Lithuania on 8 April 2015.
Additional information on Atea’s acquisitions can
be found in Note 4 to the financial statements.
Shares
%
25,889,832
24.6%
State Street Bank & Trust Co. ***
8,638,906
8.2%
Folketrygdfondet
6,600,383
6.3%
RBC Investor Services Trust ***
4,848,035
4.6%
JP Morgan Chase Bank, NA ***
3,318,217
3.2%
J.P. Morgan Chase Bank N.A. London ***
2,960,337
2.8%
J.P. Morgan Chase Bank N.A. London ***
2,895,215
2.8%
Skandinaviske Enskilda Banken AB ***
2,706,203
2.6%
Odin Norge
2,283,071
2.2%
State Street Bank and Trust Co. ***
2,017,544
1.9%
43,012,968
40.9%
105,170,711
100.0%
Other
Total number of shares
* Source: Verdipapirsentralen
** Includes shares held by Ib Kunøe
*** Includes client nominee accounts
As of 30 June 2015, Chairman Ib Kunøe and close
associates controlled a total of 24.9% of the shares,
including the shares held by Systemintegration ApS.
9
Atea Interim Report Q2 2015
Business overview
IT market trends
The market for information technology is in the midst
of revolutionary change, which is transforming society
and the workplace.
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 17% market share in 2014.
Roughly half of Atea’s sales are to the public
sector, with the remainder of sales to private
companies.
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.
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*7, the market for IT infrastructure and related
services has grown at an average rate of 3% per
year from 2007 – 2014.
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 in a secure manner, within or outside the
workplace. Finally, IT systems must allow individuals
to communicate, collaborate and be productive
across a broad range of technology platforms.
Atea’s competence and leading market position
in IT infrastructure has enabled the company to
grow at a rate significantly higher than that of the
market. Since 2007, the company has averaged
an organic revenue growth rate of 4-5% per
year.
As a result of these trends, the number of unique
devices for capturing or receiving data is rapidly
increasing, and the amount of data which is
transferred between them and the data center is
growing 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.
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,
Finland and the Baltics in 2006 and 2007. Since
2007, Atea has acquired more than 50
companies, at valuation multiples significantly
below the Group.
This presents a significant opportunity for Atea, as a
system integrator with expertise across multiple
platforms. Through its breadth of competency and
depth of system integration expertise, Atea supports
IT departments in adapting to the growing complexity
of today’s IT infrastructure and security. Atea helps its
customers to design, implement and support IT
solutions tailored for their organization.
Atea’s market share in the Nordic and Baltic
regions far exceeds that of other IT infrastructure
providers. Today, the company has offices in 90
cities in the Nordic and Baltic region, with over
6,500 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.
Based on its competitive advantages and leading
market position in the Nordic and Baltic regions, Atea
is well-positioned to maintain a long-term growth rate
faster than the IT infrastructure market. At the same
time, Management aims to improve Atea’s long-term
operating margins through revenue growth and a
strong focus on cost containment.
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.
* International IT research company, International Data Corporation
10
Atea Interim Report Q2 2015
Business overview (cont’d)
Denmark:
Denmark is Atea’s second largest market,
representing 27% of Group revenue in 1H 2015.
The Danish business has the most developed
operations within datacenter services across Atea.
Since the acquisition of Axcess in December 2014,
the company has also enhanced its leadership
position within communications and network
security.
Business outlook – 2H 2015 (cont’d)
While Atea’s competitive position is very
favorable, the Group’s financial performance in
any period is impacted by the overall growth in
the IT infrastructure market and by Atea’s ability
to execute its business strategy and manage
costs on a country and local level.
Atea Denmark has seen operating expenses
increase significantly during 2015. This growth was
mostly driven by the acquisition of Axcess (190
employees). In addition, the company has spent on
increased
staffing,
post-merger
integration
activities, and retention programs to Atea Denmark
employees during the last year.
On a country level, the Group faced operational
issues in its Norwegian and Danish businesses
during the second quarter of 2015. These
businesses are expected to show improved
performance in the coming quarters, but will
continue to have a negative impact on the
Group’s year-over-year financial performance for
the remainder of 2015.
During Q2 2015, Atea Denmark has seen revenue
growth slow, and flatten on a pro-forma basis
(adjusted for the Axcess acquisition). Much of this
slowdown was attributable to a bribery investigation
involving current and former Atea employees which
was announced in June 2015. The case resulted in
postponed shipments and lower order intake for
Atea during the end of Q2, which is normally a high
demand period for the company. The matter is
briefly summarized in Note 8 to the financial
statements.
The Outlook by country is as follows:
Sweden:
Sweden is Atea’s largest market, representing
38% of Group revenue in 1H 2015. It is also the
business unit which currently has the strongest
organic growth rates.
The Swedish business has historically been
skewed toward the public sector (66% of
Swedish revenue last year). During 2015, growth
in Sweden has been particularly strong across
private sector customers, especially within the
largest cities. The strongest growth has been in
the product business driven by increased market
shares within datacenter and communication
solutions, as well as within PC’s. In addition,
there has been solid growth in contracted
services, driven by new IT-as-a-service
contracts.
Atea Denmark has already taken steps to manage
operating costs relative to demand and will take
further measures if necessary.
At this point, the business appears to be recovering
following the bribery investigation, and Atea
recently announced on July 8 that it had won a
large new frame agreement for delivery of PC
equipment to SKI (Statens og Kommunernes
Indkøbs Service A/S), the leading Danish public
sector procurement agency.
Atea expects continued strong performance from
its Swedish business in the second half of 2015,
with
growth
within
datacenter
and
communication solutions, school PC’s and IT-asa-service contracts. At the same time, we expect
operating expenses to scale relative to revenue
growth in Sweden, driving an improvement in
profit margins.
11
Atea Interim Report Q2 2015
Business overview (cont’d)
Growth in Atea Finland is expected to pick up in the
second half of 2015 due to higher demand from the
public sector.
Business outlook – 2H 2015 (cont’d)
Norway:
Norway represented 25% of Group revenue in
1H 2015. The Norwegian economy is heavily
exposed to the oil and gas industries, and a
decline in oil and gas prices has had an impact
on the market for IT infrastructure within Norway.
Baltics:
The Baltic region represented 3% of Group revenue
in 1H 2015. Atea Baltics has experienced strong
organic revenue growth during the first half of 2015.
In addition to weaker market performance, Atea
has seen its growth premium relative to the
market fall during the last few years. At the same
time, the company has seen costs increase over
the last year.
Revenue growth was driven by private sector
customers, offsetting lower demand from the public
sector. Growth in private sector was driven by
general pick-up in market conditions, which led to a
multitude of small orders. Public sector demand has
been temporarily impacted by fewer EU funded
projects, as one 5-year funding program from the
EU has recently terminated, and another has just
commenced in 2015. The first large projects on the
new EU funding program are expected to ship in
2016.
In April 2015, the Country Manager of Atea
Norway was replaced. Atea Group CEO Steinar
Sønsteby has temporarily taken the role of
Country Manager of Atea Norway, a position he
previously held during a period of rapid growth. A
recruitment process is underway with the
intention of appointing a full-time Country
Manager in early 2016.
Atea has invested heavily in its Baltic organization
as a result of demand growth, hiring 39 new
employees (representing 7% of total employees)
since the end of 2014. In addition, Atea acquired
Baltneta in April 2015. Baltneta is a leading provider
of IT outsourcing and cloud services in the Baltic
markets. This acquisition is further described in the
Financial Review section of this document.
Since April, Atea Norway has restructured parts
of its organization, in order to sharpen focus on
major growth opportunities in the Oslo area and
within the SMB segment. At the same time, the
company has eliminated 50 positions (3% of
employees). Furthermore, Atea Norway has cut
spending on overhead items, including event
marketing and promotional activity.
Atea expects strong growth in the Baltic region for
the remainder of 2015, driven by continued strong
demand from private sector customers, and growth
from the acquisition of Baltneta in April 2015.
These actions will take time to see full P&L
effect, but the company expects to see
performance gradually improve during the
remainder of 2015. By 2016, these cost
reduction initiatives are expected to reduce
operating expenses by approximately NOK 20
million per quarter.
Finland:
Finland represented 8% of Group revenue in 1H
2015. The Finnish economy has suffered from
an economic downturn during the last few years,
which has had a negative impact on demand for
IT infrastructure.
Sales growth within Atea Finland has slowed
following a strong 2014. Sales of products have
performed well, but have been offset by lower
service revenue. Atea’s services business in
Finland
is
presently
underdeveloped
(representing 9% of revenue in H1 2015). Atea
reorganized its services business in Finland
during the first half of 2015 and reduced staffing
to improve utilization rates.
12
Atea Interim Report Q2 2015
Condensed financial information for the
6 months ended 30 June 2015
Consolidated income*statement
Q2
Q2
H1
H1
Full year
NOK in million
Note
2015
2014
2015
2014
2014
Revenue
2, 6
6,842
5,981
13,340
11,866
24,588
Cost of goods sold
5,303
4,603
10,264
9,110
18,872
Personnel costs*
1,163
1,009
2,285
2,014
3,965
218
193
432
384
794
157
177
359
357
958
Other operating costs*
EBITDA (adjusted)*
2
Share based compensation
-1
7
9
14
28
1
0
2
-1
1
156
170
349
345
929
Depreciation and amortization
87
69
168
140
301
Amortization related to acquisitions
13
11
25
25
45
Expenses/income related to acquisitions
EBITDA
Operating profit/loss (EBIT)
2
57
89
156
180
584
-25
-26
-46
-36
-73
31
63
110
144
511
7
8
18
18
82
24
55
93
125
429
- earnings per share
0.23
0.53
0.89
1.21
4.14
- diluted earnings per share
0.23
0.52
0.88
1.21
4.10
Net financial items
Profit/loss before tax
Tax
5
Profit/loss for the period
Earnings per share
Consolidated statement of comprehensive income
Q2
Q2
H1
H1
Full year
2015
2014
2015
2014
2014
Profit/loss for the period
24
55
93
125
429
Currency translation differences
40
29
-62
-23
164
5
-12
-4
-14
-18
NOK in million
Forward contracts - cash flow hedging
Income tax OCI relating to items that may be reclassified to profit or loss
-5
1
4
10
-5
Items that may be reclassified subsequently to profit or loss
40
18
-62
-27
141
Other comprehensive income
40
18
-62
-27
141
Total comprehensive income for the period
64
73
31
98
570
* Before share-based compensation and expenses related to acquisitions
13
Atea Interim Report Q2 2015
Consolidated statement of financial position
NOK in million
Note
30 Jun 2015
30 Jun 2014
31 Dec 2014
671
513
613
545
558
546
3,575
3,112
3,588
350
296
369
Shares in associated companies
8
0
9
Other long-term receivables
3
0
0
5,153
4,479
5,125
772
600
632
Trade receivables
4,400
3,715
5,496
Other receivables
901
791
777
6
2
11
292
462
583
6,372
5,569
7,498
11,525
10,049
12,624
1,180
1,130
1,140
ASSETS
Property, plant and equipment
Deferred tax assets
5
Goodwill
Other intangible assets
Non-current assets
Inventories
Other financial assets
Cash and cash equivalents
Current assets
Total assets
EQUITY AND LIABILITIES
Share capital and premium
3
Other unrecognised reserves
981
911
1,079
Retained earnings
747
1,017
1,330
Equity
2,908
3,058
3,549
Interest-bearing long-term liabilities
1,122
1,016
1,121
5
21
4
Other long-term liabilities
Deferred tax liabilities
247
207
246
Non-current liabilities
1,374
1,244
1,371
Trade payables
3,853
3,258
4,681
Interest-bearing current liabilities
678
0
291
VAT, taxes and government fees
567
506
667
Provisions
127
121
212
1,999
1,848
1,838
Other current liabilities
Other financial liabilities
Current liabilities
Total liabilities
Total equity and liabilities
14
19
13
13
7,243
5,747
7,704
8,617
6,991
9,074
11,525
10,049
12,624
Atea Interim Report Q2 2015
Consolidated statement of changes in equity
NOK in million
30 Jun 2015
30 Jun 2014
3,549
3,533
-59
-17
-3
-10
Equity at start of period
Currency translation differences
Forward contracts - cash flow hedging
Other comprehensive income
-62
-27
Profit/loss for the period
93
125
Total recognised income/expense for the year
31
98
7
11
-679
-622
Employee share-option schemes
Dividends
Changes related to own shares
Issue of share capital
Non-controlling interests from acquisitions
Equity at end of period
-42
0
45
38
-4
0
2,908
3,058
Consolidated statement of cash flow9
NOK in million
Profit/loss before taxes
Q2
Q2
H1
H1
2015
2014
2015
2014
144
31
63
110
Taxes paid
-15
-10
-38
-22
Depreciation and amortisation
100
81
193
165
Share based compensation
Cash earnings
Change account receivables
2
5
7
11
118
138
272
297
-791
-504
1,009
969
Change inventory
-57
-31
-143
-146
Change trade payables
539
629
-752
-525
Other changes in work. cap./accr. items
169
192
-382
-320
Cash flow from operations*
-22
425
3
275
Capital expenditures
-99
-49
-135
-105
Purch./sale of subs./assoc./investm.
-65
-5
-68
-9
Cash flow from investments
-164
-53
-203
-114
Payment of dividends
-384
-310
-384
-310
Other equity transactions
Change in debt
Cash flow from financing
Net cash flow
Cash start of period
Currency effects on cash
Cash end of period
-7
28
8
38
396
-141
312
-172
5
-423
-64
-444
-180
-52
-264
-283
461
509
583
746
11
6
-26
-0
292
462
292
462
* Cash flow from operations includes net interest expenses, in accordance with general accounting practice. In Atea financial
reports for Q1 and Q2 last year, net interest expenses were included in cash flow from financing. Net interest expenses were NOK
13 million in both Q1 and Q2 2015. In Q1 and Q2 2014 net interest expenses were NOK 8 million and NOK 24 million respectively.
Either treatment of net interest expenses in the cash flow statement is permitted under IFRS
15
Atea Interim Report Q2 2015
NOTES
NOTE 1 – General information and accounting policies
The condensed second quarter interim financial statements for the six months ending 30 June 2015 were
approved for publication by the Board of Directors on July 14, 2015. 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 2014, which has been prepared according to IFRS as adopted by EU.
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 2014. There are no
changes in accounting policy effective from 1 January 2015 that have impact on the Group accounts. See Note 7
regarding possible effects of new proposed leasing standard.
In the interim financial statements for 2015, 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
2015 and the major sources of uncertainty in the statements are similar to those found in the annual accounts for
2014. See Note 8 regarding possible bribery case in Atea Denmark.
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 located in 90 cities in Norway, Sweden, Denmark, Finland, and the Baltic countries of Lithuania, Latvia
and Estonia, with approximately 6,500 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.
16
Atea Interim Report Q2 2015
NOTE 2 – Operating segment information (cont’d)
Operating segment information – NOK*
Revenue
NOK in million
Norway
Sweden
Denmark
Finland
The Baltics
Group Shared Services
Eliminations*
Atea Group
Q2
2015
1,713
2,772
1,728
446
210
1,004
-1,031
6,842
Q2
2014
1,615
2,333
1,488
422
160
973
-1,009
5,981
%
change
6.1%
18.8%
16.1%
5.6%
31.1%
3.1%
EBITDA**
NOK in million
Norway
Sweden
Denmark
Finland
The Baltics
Group Shared Services
Group cost
EBITDA**
EBITDA** margin (%)
Q2
2015
40
69
34
6
11
6
-9
157
2.3%
Q2
2014
66
56
47
5
6
8
-10
177
3.0%
EBIT
NOK in million
Norway
Sweden
Denmark
Finland
The Baltics
Group Shared Services
Group cost
Operating profit/loss (EBIT)
Net financial items
Profit/loss before tax
Q2
2015
25
55
-18
3
-1
3
-9
57
-25
31
Q2
2015
5,439
1,403
0
6,842
1,539
11.6%
64.6%
22.5%
Quarterly revenue and gross margin
NOK in million
Product revenue
Services revenue
Other income
Total revenue
Gross contribution
Product margin
Services margin
Gross margin
Quarterly revenue and gross margin
NOK in million
Product revenue
Services revenue
Other income
Total revenue
Gross contribution
Product margin
Services margin
Gross margin
Q2
2015
5,439
1,403
0
6,842
1,539
11.6%
64.6%
22.5%
H1
2015
3,335
5,097
3,553
1,012
412
1,943
-2,011
13,340
H1
2014
3,184
4,470
3,036
914
328
2,006
-2,073
11,866
%
change
4.7%
14.0%
17.0%
10.6%
25.7%
-3.1%
%
change
-39.2%
24.4%
-26.5%
19.9%
80.2%
-27.0%
10.7%
-11.2%
H1
2015
80
135
126
9
19
10
-19
359
2.7%
H1
2014
105
114
123
8
13
17
-23
357
3.0%
%
change
-23.8%
17.7%
2.6%
14.7%
45.6%
-45.3%
18.0%
0.5%
Full year
2014
276
261
366
26
36
39
-45
958
3.9%
Q2
2014
49
38
8
2
-1
6
-12
89
-26
63
%
change
-49.0%
43.3%
n.a.
44.0%
5.2%
-56.0%
25.7%
-36.6%
4.1%
-50.2%
H1
2015
48
104
22
3
-1
3
-22
156
-46
110
H1
2014
70
78
43
3
-1
13
-27
180
-36
144
%
change
-31.4%
32.7%
-50.2%
12.9%
-23.8%
-79.1%
18.4%
-12.9%
-27.5%
-23.1%
Full year
2014
204
190
193
15
7
29
-54
584
-73
511
Q2
2014
4,759
1,222
0
5,981
1,378
12.0%
66.1%
23.0%
%
change
14.3%
14.8%
H1
2015
10,631
2,709
0
13,340
3,076
12.2%
65.8%
23.1%
H1
2014
9,390
2,476
0
11,866
2,756
12.0%
65.9%
23.2%
%
change
13.2%
9.4%
Full year
2014
19,576
5,012
1
24,588
5,717
12.4%
65.5%
23.3%
14.4%
14.4%
11.6%
Q1
2015
5,191
1,307
0
6,498
1,538
12.7%
67.2%
23.7%
Q4
2014
6,105
1,444
0
7,549
1,689
12.5%
64.0%
22.4%
Q3
2014
4,081
1,092
0
5,173
1,273
13.4%
66.5%
24.6%
12.4%
12.4%
11.6%
Q2
2014
4,759
1,222
0
5,981
1,378
12.0%
66.1%
23.0%
Full year
2014
6,806
8,893
6,504
1,707
792
4,267
-4,381
24,588
Q1
2014
4,630
1,254
0
5,884
1,377
12.0%
65.7%
23.4%
* Most of Atea’s internal sales are related to Group Shared Services, which consists of Atea Logistics and Atea Global Services
**All EBITDA figures are before share-based compensation and expenses related to acquisitions
17
Atea Interim Report Q2 2015
NOTE 2 – Operating segment information (cont’d)
Operating segment information – local currency11
Revenue
Local currency in million
Norway
Sweden
Denmark
Finland
The Baltics
Group Shared Services
Eliminations*
Atea Group
EBITDA**
Local currency in million
Norway
Sweden
Denmark
Finland
The Baltics
Group Shared Services
Group cost
EBITDA**
EBITDA** margin (%)
EBIT
Local currency in million
Norway
Sweden
Denmark
Finland
The Baltics
Group Shared Services
Group cost
Operating profit/loss (EBIT)
Net financial items
Profit/loss before tax
NOK
SEK
DKK
EUR
EUR
NOK
NOK
NOK
NOK
SEK
DKK
EUR
EUR
NOK
NOK
NOK
NOK
SEK
DKK
EUR
EUR
NOK
NOK
NOK
NOK
NOK
Q2
2015
1,713
3,010
1,508
52
25
1,004
-1,031
6,842
Q2
2014
1,615
2,566
1,353
52
20
973
-1,009
5,981
%
change
6.1%
17.3%
11.4%
1.5%
25.7%
3.1%
H1
2015
3,335
5,508
3,065
117
48
1,943
-2,011
13,340
H1
2014
3,184
4,835
2,737
110
40
2,006
-2,073
11,866
%
change
4.7%
13.9%
12.0%
6.0%
20.4%
-3.1%
Q2
2015
40
75
30
1
1
6
-9
157
2.3%
Q2
2014
66
61
43
1
1
8
-10
177
3.0%
%
change
-39.2%
22.5%
-28.6%
14.8%
72.2%
-27.0%
10.7%
-11.2%
H1
2015
80
145
109
1
2
10
-19
359
2.7%
H1
2014
105
124
111
1
2
17
-23
357
3.0%
%
change
-23.8%
17.6%
-1.8%
9.8%
39.4%
-45.3%
18.0%
0.5%
Full year
2014
276
284
327
3
4
39
-45
958
3.9%
Q2
2015
25
59
-15
0
0
3
-9
57
-25
31
Q2
2014
49
42
7
0
0
6
-12
89
-26
63
%
change
-49.0%
41.1%
n.a.
37.6%
9.0%
-56.0%
25.7%
-36.6%
4.1%
-50.2%
H1
2015
48
113
19
0
-0
3
-22
156
-46
110
H1
2014
70
85
39
0
-0
13
-27
180
-36
144
%
change
-31.4%
32.6%
-52.3%
8.1%
-18.6%
-79.1%
18.4%
-12.9%
-27.5%
-23.1%
Full year
2014
204
207
172
2
1
29
-54
584
-73
511
14.4%
12.4%
Full year
2014
6,806
9,681
5,803
204
95
4,267
-4,381
24,588
NOTE 3 – Share capital and premium
Number of shares
Treasury
shares
Whole
figures
Issued
Whole
figures
At 1 January 2015
Share capital
Treasury
shares
NOK in
million
Issued
NOK in
million
Share
premium
NOK in
million
Total paidin equity
NOK in
million
104,168,164
-73,601
1,042
-1
99
1,140
1,002,547
-
10
-
35
45
Sales of Treasury shares ****
-
73,601
-
1
-
1
Purchase of Treasury shares *****
-
-640,000
-
-6
-
-6
105,170,711
-640,000
1,052
-6
134
1,180
Issue of Share capital***
At 30 June 2015
* Most of Atea’s internal sales are related to Group Shared Services, which consists of Atea Logistics and Atea Global Services
**All EBITDA figures are before share-based compensation and expenses related to acquisitions
*** Issue of Share capital is related to Share options for the Management and selected employees
**** Sales price for the Treasury shares was NOK 3 million (with remaining NOK 2 million affecting Other unrecognized
reserves) and related to exercise of options
***** The cost price for the shares was NOK 45 million (with remaining NOK 39 million affecting Other unrecognized reserves)
and related to share buyback program announced in June 2015
18
Atea Interim Report Q2 2015
NOTE 4 – Business combinations
Acquisitions in 2015
Atea has acquired one company during the first half of 2015. The financial performance from the acquisition date
to the end of the quarter for the acquired company is considered to be immaterial from a Group perspective.
•
UAB Baltnetos Komunikacijos (Baltneta):
Atea acquired Baltneta in April 2015. Cloud is a strategic business area for Atea, and the acquisition of
Baltneta enables Atea to offer its customers state-of-the-art cloud and IT outsourcing services from the
Baltic region.
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.
Breakdown of the acquired net assets and goodwill in 2015 is as follows:
NOK in million
Baltneta UAB
Acquisition date
8 Apr 2015
Country
Lithuania
Voting rights/ownership interest
100%
Acquisition cost:
Consideration 1)
69
Adjustment of cost price
4
Liabilities assumed
2
Total acquisition cost
75
Net assets acquired at carrying value of equity (see table below)
30
Identification of excess value:
Contracts and customer relationships
19
Deferred tax
-3
Net excess value
16
Fair value of net assets acquired, excluding goodwill
46
Controlling ownership interests
46
Goodwill
29
1) Consideration that is dependent on future results is recognised as an obligation based on the fair value at the time of
acquisition.
19
Atea Interim Report Q2 2015
NOTE 4 – Business combinations (cont’d)
Assets and liabilities related to the acquisitions in 2015 are as follows:
NOK in million
Baltneta UAB
Deferred tax assets
0
Goodwill
14
Computer software and rights
0
Property, plant and equipment
34
Other long-term receivables
0
Inventories
1
Trade receivables
8
Other receivables
0
Cash and cash equivalents
6
Total asset
65
Non-current liabilities
-24
Current liabilities
-9
Interest-bearing current liabilities
-2
Total liabilities
-35
Net assets acquired
30
Net cash payments in connection with the acquisitions are as follows:
NOK in million
Baltneta UAB
Considerations and costs in cash and cash equivalents
69
Cash and cash equivalents in acquired companies
-6
Net cash payments for the acquisitions
63
If all acquired entities had been consolidated from 1 January 2014, the consolidated pro forma income statements
for 2015 would show revenue and profit as follows:
H1
NOK in million
Operating revenue
Operating profit/loss (EBIT)
H1
2015
2014
13,340
12,345
156
208
NOTE 5 – Taxes
Income tax expense is recognized based on management’s estimate of its weighted average tax rate for the full
year, less the value of additional tax loss carryforwards or other deferred tax items which are recognized on the
balance sheet during the period. The estimated tax rate used during the first half of 2015 is 16%.
As of the year end 2014, the tax value of the tax loss carried forward within the Group was NOK 671 million, of
which NOK 518 million was recognized as Deferred Tax Assets on the balance sheet. The remaining value of
NOK 153 million was not recognized on the balance sheet.
At the end of each year, Management reassesses the value of tax loss carried forward 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 Deferred tax
expense in the fourth quarter and full year accounts.
20
Atea Interim Report Q2 2015
NOTE 6 – Seasonality of operations
Atea’s revenue and cash flow are affected by the seasonality of demand for IT infrastructure investments.
Demand for IT infrastructure among Atea’s customers peaks in the fourth quarter of the year, leading to higher
revenue and cash flow for Atea in the fourth quarter. This demand seasonality is based on the procurement
cycles of large organizations in the Nordic and Baltic regions, and is particularly strong within the public sector.
NOTE 7 – Commitments
With reference to Note 24 – Commitments in the Annual report for 2014, Atea ASA has issued guarantees in
favour of financial institutions as security for the lending facilities provided to Atea ASA and subsidiaries. Part of
these commitments concern sublease facilities. At the end of Q2 2015, the Group had sublease commitments of
NOK 358 million to financial institutions which are not reported on-balance sheet.
Existing IFRS does not include specific guidance on the accounting for sublease commitments. Under a new
proposed leasing standard, the sublease commitments referred to above would be reflected as both an asset and
liability on the balance sheet. IASB currently plans to approve the new leasing standard before the end of 2015,
with implementation most likely by 2018 or 2019.
NOTE 8 – Risks and uncertainties
As described in the “Financial Summary” and “Business Outlook” sections of this report, Atea’s subsidiary in
Denmark was impacted in Q2 by a possible bribery case. This had a negative consequence for both revenue and
cost in Atea Denmark in Q2.
Two current employees of Atea Denmark have been charged in this case. The possible bribery case also involves
a competitor of Atea Denmark. Charges have been placed against three current executives of the competing
company. These executives all held leading positions within Atea Denmark prior to establishing their own
company.
Since the charges were announced, the Atea management has cooperated fully with Danish law enforcement in
the investigation. Atea has given transparent reports on the case to clients, suppliers, shareholders and
governmental agencies. Atea has also intensified corporate communication activities on the basis of being a
transparent company and with the purpose of protecting the Atea brand and company reputation.
Atea has updated its internal Code of Conduct. All employees are obliged to take an examination on this code
and agree to comply with it. Atea is also sharpening its control routines on expenses and on client events. Finally,
Atea has enhanced its “whistleblower” scheme for employees to report violations of the Code of Conduct or
relevant law. These reports can be given on an anonymous basis.
It is too early to assess the potential long term impact for Atea Denmark. However, charges have only been
placed against specific individuals and not against the company Atea Denmark. Atea continues to win new
business in Denmark, as evidenced by the recent announcement on July 8 that SKI (Statens og Kommunernes
Indkøbs Service A/S), the leading Danish public sector procurement agency, had awarded Atea a frame
agreement worth DKK 500 million over 3 years. Atea was allowed to win the agreement only after SKI had
reviewed the case and determined that there was no reason to withhold Atea from conducting business with the
public sector.
Other risk factors are described in the Board of Directors statement of the 2014 Annual Report.
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.
21
Atea Interim Report Q2 2015
Responsibility statement
We confirm to the best of our knowledge that the condensed set of financial statements for the period 1 January
to 30 June 2015, has been prepared in accordance with IAS 34 – Interim Financial Reporting, and gives a true
and fair view of the Group’s assets, liabilities, financial position and result for the period viewed in their entirety,
and that the interim management report, to the best of our knowledge, includes a fair review of any significant
events that arose during the six-month period and their effect on the half-yearly financial report, any significant
related parties’ transactions, and a description of the principal risks and uncertainties for the remaining six months
of the year.
Oslo, 14 July 2015
Sven Madsen
Marthe Dyrud
Morten Jurs
Ib Kunøe
Chairman of the Board
Truls Berntsen
Steinar Sønsteby
CEO
22
Saloume Djoudat
Stig Penne
Lisbeth T. Kvan
Holding
Atea ASA
Brynsalleen 2
Box 6472 Etterstad
NO-0605 Oslo
Tel: +47 22 09 50 00
Org.no 920 237 126
[email protected]
atea.com
Norway
Atea AS
Brynsalleen 2
Box 6472 Etterstad
NO-0605 Oslo
Tel: +47 22 09 50 00
Org.no 976 239 997
[email protected]
atea.no
Sweden
Atea AB
Kronborgsgränd 1
Box 18
SE-164 93 Kista
Tel: +46 (0)8 477 47 00
Org.no 556448-0282
[email protected]
atea.se
Denmark
Atea A/S
Lautrupvang 6
DK-2750 Ballerup
Tel:+45 70 25 25 50
Org.no 25511484
[email protected]
atea.dk
Finland
Atea Oy
Jaakonkatu 2
PL 39
FI-01621 Vantaa
Tel: + 358 (0)10 613 611
Org.no 091 9156-0
[email protected]
atea.fi
Lithuania
Atea UAB
J. Rutkausko st. 6
LT-05132 Vilnius
Tel: +370 5 239 7899
Org.no 122 588 443
[email protected]
atea.lt
Latvia
Atea SIA
Unijas iela 11a
LV-1039 Riga
Tel: +371 67 819050
Org.no 40003312822
[email protected]
atea.lv
Estonia
Atea AS
Pärnu mnt. 139C, 1
EE-1317 Tallinn
Tel: +372 610 5920
Org.no 10088390
[email protected]
atea.ee
Group Logistics
Atea Logistics AB
Smedjegatan 12
Box 159
SE-351 04 Växjö
Tel: +46 (0)470 77 16 00
Org.no 556354-4690
[email protected]
atealogistics.com
Group Shared Services
Atea Global Services SIA
Mukusalas Street 15
LV-1004 Riga
Org.no 40003843899
[email protected]
ateaglobal.com