Proact: Fiscal 4Q12 Financial Results

Proact IT Group announced its financial results for the quarter and the year ended December 31, 2012.

2012 in brief

• Income rose by 9% to SEK 2,433 (2,232) million, with 10% adjustment for currency effects.
• Return on equity amounted to 18.9 (14.7)%.
• The board of directors proposes that the annual general meeting should elect to pay a dividend of SEK 1:10 (1.00) per share.
• EBITDA increased by 19% to SEK 144.5 (121.5) million.
• Profit before tax increased by 46% to SEK 61.0 (41.9) million.
• Profit after tax increased by 42% to SEK 41.8 (29.4) million
• Profit per share increased by 47% to SEK 3.96 (2.69).

The fourth quarter in brief

• Income rose by 2% to SEK 712 (699) million, with 4% adjustment for currency effects.
• Profit per share increased by 21% to SEK 1.08 (0.89).
• EBITDA increased by 3% to SEK 38.8 (37.5) million.
• Profit before tax increased by 34% to SEK 17.2 (12.8) million.
• Profit after tax increased by 30% to SEK 10.7 (8.2) million.

Martin Ödman, MD of Proact, comments:
"I am extremely proud of the efforts of Proact staff, as we have managed in 2012 to improve our profits and increase our net sales despite the weak economy. Proact is in a fantastic position. The company is the leading systems integrator on the European market, with a unique hybrid range of products and services comprising system solutions with associated services and cloud services.
"2012 has been largely characterised by ongoing integration work with regard to the companies acquired in 2011. The aim of this has been to enhance efficiency at the companies acquired and hence to return to the same level of efficiency that Proact was seeing prior to the acquisition. Overall service sales have increased by 15% over the year. New agreements relating to cloud services worth SEK 141 million have been entered into. Income from cloud services is distributed over the term of each contract -a period of three to five years – unlike traditional system sales, where the income is recognised in the income statement during the period.
"Sales of Proact’s cloud services have increased over the fourth quarter as a number of major agreements worth a total of SEK 53 million have been entered into. Total service growth over the period has amounted to 11%, compared with the same period last year. However, system sales have been adversely affected. This is due in part to the conversion from investments in systems for cloud services, along with the fact that many customers have been undergoing longer decision-making processes regarding major investments in new storage systems. This tendency was also apparent in the second and third quarters of the year. A gradual change from systems sales to a combination of systems sales and cloud services is entirely in line with the company’s strategy.
"Proact’s objective for 2013 is clear: to increase the company’s profitability by continuing to increase the volume of cloud services, to increase the synergies between the companies in the various countries, and to complete work on the integration of companies acquired."

Of the total turnover for the year, system sales amounted to SEK 1,647 (1,545) million, representing an increase of 7% compared with the same period last year. Revenues for service operations amounted to SEK 783 (682) million, representing an increase of 15%.

System sales over the fourth quarter amounted to SEK 498 (504) million, a reduction of 1% compared with the same period last year.

Revenues for service operations over the fourth quarter amounted to SEK 214 (193) million, representing an increase of 11%.

Agreements worth SEK 53 million relating to cloud services and with terms of three to five years have been entered into over the quarter.

The average number of employees over the year amounted to 660 (568), and 687 (627) over the fourth quarter. On 31 December, the company employed 702 (640) people.

Major events in the fourth quarter
A number of deals have been concluded over the past quarter with companies such as BTA Insurance in Latvia, Lithuanian Energy in Lithuania, Philips Healthcare and bol.com in the Netherlands, Shulman in Belgium, Mace in the United Kingdom, Lantmäteriet and ÖstgötaTrafiken in Sweden, Caixa de Engeniyers and BBraun in Spain, Schlumberger and Statoil in Norway, and DNA and Tieto in Finland.

Important deals in the fourth quarter

• Lundin transfers hundreds of terabytes
• Telecoms company purchases solution for compliance with Data Storage Directive
• CTB Flex chooses a Proact cloud service
• Update of FordonsData storage environment
• Stratiteq selects Proact as new partner