Proact IT Group: Fiscal 4Q13 Financial Results

Proact IT Group announced its financial results for the fourth quarter    of 2013 and year 2013.
 
2013 in brief

• Income fell by 5% to SEK 2,305 (2,433) million, adjusted for currency effects, and disposals of businesses reduced income by 1%.
• EBITDA fell by 11% to SEK 128.0 (144.5) million.
• Profit before tax fell by 28% to SEK 43.7 (61.0) million.
• Profit after tax fell by 35% to SEK 27.2 (41.8) million.
• Earnings per share fell to SEK 2.36 (3.96).
• Return on equity amounted to 11.6 (18.9).
• Non-recurring items attributable to reduction of the overall cost structure within the company have adversely affected operating profit in the sum of SEK 30.3 million. Intangible assets relating to the business in the Czech Republic have also been written down by SEK 5.2 million. Operating profit has been affected positively by SEK 9.2 million on account of disposals of businesses.
• The board of directors proposes that the annual general meting should elect to pay a dividend of SEK 1:20 (1:10) per share.

Fourth quarter in brief

• Income increased by 4% to SEK 737 (712) million, adjusted for currency effects, and disposals of businesses increased income by 7%.
• EBITDA increased by 4% to SEK 40.5 (38.8) million.
• Profit before tax increased by 34% to SEK 23.0 (17.2) million.
• Profit after tax increased by 13% to SEK 12.1 (10.7) million.
• Profit per share increased to SEK 1.24 (1.08).
• Non-recurring items attributable to cloud services have adversely affected operating profit in the sum of SEK 6.3 million.

Martin Ödman, MD, Proact, said: “I am very pleased that we have managed to improve our profit and increase our revenues in the fourth quarter, compared with the same period last year. This is a clear show of strength from our organisation, as the opinion of industry analysts is that market conditions have not improved during the period. 2013 as a whole has largely been characterised by various measures for enhancing the company’s profitability. The cost savings programme implemented in the first six months of 2013 has reduced the company’s total costs by SEK 40 million on an annual basis. Costs for the supply of cloud services have also fallen in the fourth quarter, which will have a positive effect on the company’s future profita-bility level. Integrated systems and cloud services are growing enormously, even though 2013 has seen weak market development in terms of finance. These fields currently constitute a fairly small part of the company’s total revenues. However, I feel that our strategic choice to focus on these fields will have positive effects on profits in the future. Besides the above, digital business-critical information has also continued to grow at a tremendous pace. As a result of all this, I am of the opinion that the company, as an independent integrator, is maintaining its strong market position and has plenty of potential for growth on the European market.“

Total revenues increased by 7% and profit before tax increased by 34% in the fourth quarter, compared with the same period last year. Sales of Proact’s cloud services have developed well during the quarter as a number of major contracts with terms of three to five years and worth SEK 34 million have been concluded. Total income relating to cloud services has increased by 35%. System sales have increased by 10% over the period, and total service income has remained unchanged.

For the 2014 business year, Proact’s objective is to improve its profitability by means of measures such as increasing sales within the two growth areas cited above. The measures implemented during the fourth quarter have reduced costs for cloud services, and this will have a positive impact on profitability.