Orc holding steady in financial unrest – Unchanged dividend proposed

22 January 2009

The annualized value of existing customer contracts rose by SEK 82.6m, or 15%, compared to Q3 2008. To a large extent, the increase is due to strengthening of the US dollar and euro against the Swedish krona. Sales were on par with the previous quarter and exceeded reductions in customer contracts, although these were significantly higher than in any other quarter of recent years.

Operating income included costs of SEK 24.4m for the previously announced efficiency program. Operating margin, excluding costs for the efficiency program, was 23% for Q4 and 21% for the full year 2008.

The Board has decided to recommend that the AGM approve a dividend of SEK 4 (4) per share, amounting to a total distribution of SEK 60.8m (60.8).

The annualized value of existing customer contracts at the end of Q4 2008 was SEK 645.1m (488.4). An increase of SEK 156.8m, or 32%, compared to Q4 2007. On a fixed exchange rate basis the increase was SEK 74.4m, or 15%.

October – December 2008
• Net revenue of SEK 146.9m (139.2)
• Revenue growth of 6% (30)
• Operating income of SEK 8.9m (36.2)**
• Operating margin of 6% (26)**
• Income after tax of SEK 3.9m (23.0)**
• Basic earnings per share of SEK 0.26 (1.51)**

January – December 2008
• Net revenue of SEK 564.2m (508.7)
• Revenue growth of 11% (26)
• Operating income of SEK 93.3m (125.6)**
• Operating margin of 17% (25)**
• Income after tax of SEK 64.7m (101.3)*/**
• Basic earnings per share of SEK 4.25 (6.58)**

* The comparative figure includes a gain of SEK 15.5m on the divestment of shares in Infront AS
** The figures for 2008 include costs for the efficiency program amounting to SEK 24.4m

CEO Thomas Bill comments:
The global financial markets remained turbulent in the fourth quarter. In this uncertain market climate, it is satisfying to note that Orc achieved robust sales and a growing order book. Positive factors such as the signing of several important contracts during Q4 have outweighed events pushing Orc’s development in the opposite direction. Contract reductions by few major customers, such as a bank in financial difficulties and the Icelandic banks, have had a substantial negative impact on the order book value.

While small and mid-sized banks and trading firms generally account for the bulk of sales, the major banks continue to represent an important and active customer group from which we received several large orders during the quarter.

After several years of aggressive expansion, we chose to launch an efficiency program during Q4. The goal is to create an even stronger and more efficient organization with capacity for continued profitable development. The program will be completed in the first quarter and already during 2009 we expect to recover the one-time costs of SEK 24m that were recognized in Q4.

Despite a turbulent year, Orc’s order book and revenue continue to grow.

With an order book of SEK 645m based on a business model with subscription revenue that creates long-term stability, alongside our leading solutions for derivatives trading and an efficient organization, we are well poised for the coming year and expect to increase our order book, revenue and profit in 2009.


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