Report Third quarter 2012 evry.com
About EVRY EVRY is one of the leading IT companies in the Nordic countries, with a strong local and regional presence in 50 Nordic towns and cities. Through its knowledge, solutions and technology, EVRY contributes to the develop ment of the information society of the future, and so creates value for the benefit of its customers and for society as a whole. EVRY combines in-depth industry knowledge and technological expertise with a local delivery model and international strength. EVRY has some 10,000 employees, and the company is committed to demonstrating that Nordic customers are best served by a supplier that understands Nordic business from the inside. EVRY reports annual turnover approaching NOK 13 billion. EVRY ASA is listed on the Oslo Stock Exchange with ticker code EVRY and operates from headquarters in Oslo, with major activities in both the Norwegian and Swedish markets. EVRY is the result of the merger in 2010 of Norway s two leading IT companies, EDB Business Partner and ErgoGroup. The company changed its name from EDB ErgoGroup ASA to EVRY ASA on 23 April 2012.
Highlights of the THIRD quarter of 2012 Operating revenue NOK 2,882 million (NOK 2,913 million in the third quarter of 2011) Continuing good growth in Sweden, 6% organic growth EBITA NOK 184 million (pro forma NOK 199 million for the third quarter of 2011 before pension effect) Cash flow from operations NOK 171 million (NOK 272 million for the third quarter of 2011) Key figures NOK million Q3 2012 Q3 2011* 1.1-30.9.2012 1.1-30.9.2011 2011** Operating revenue 2 882 2 913 9 483 9 323 12 801 Operating costs 2 589 2 573 8 666 8 426 11 548 Operating profit bef. depr. and non-recurring items (EBITDA) 293 341 817 898 1 253 Depreciation 109 114 332 349 472 Operating profit bef. amort. and non-recurring items (EBITA) 184 227 484 549 781 EBITA % 6.4 % 7.8 % 5.1 % 5.9 % 6.1 % EBIT before non-recurring items 171 209 447 497 712 Non-recurring items - 47-36 47 88 EBIT 171 162 483 450 624 Net financial items -43-68 -134-203 -272 Profit before tax 128 93 348 247 352 Cash flow from operations before restructuring 171 272 121 52 676 Operational investment (CAPEX)*** 126 117 378 297 439 EPS before non-recurring items (NOK) 0,27 0,38 0,49 0,75 1,13 EPS (NOK) 0,27 0,22 0,59 0,59 0,86 No. of employees**** 9 827 10 036 9 827 10 036 9 518 * Proforma figures for the comparable period 2011. The figures for 2011 are incl a pension effect of NOK 28 mill in third quarter an NOK 84 mill as of 30. September. ** Proforma figures for the year 2011 *** Incl investments in in-house developed software **** Actual reported figures
4 Quarterly report Third quarter 2012 Summary of the third quarter of 2012 The group launched its new brand in March 2012, and changed its name to EVRY. The parent company, EDB ErgoGroup ASA, changed its name to EVRY ASA at the Annual General Meeting held on 23 April 2012. The term organic growth is defined as follows: Change in revenue corrected for acquisitions and disposals of businesses, and also corrected for movements in exchange rates. The group reported operating revenue for the third quarter of 2012 of NOK 2,882 million, equivalent to a drop in organic revenue of 0.6 % relative to the third quarter of 2011. The group s activities in Sweden reported organic growth of 6%, while the activities in Norway reported a drop in revenue of 3%. The Consulting segment reported organic growth of 5% in the third quarter of 2012, while the Solutions and IT Operations segments reported reductions in revenue of 2% and 3% respectively. The group s order backlog amounted to NOK 15.0 billion at 30 September 2012, representing a reduction of NOK 0.3 billion from 30 June 2012. The group reported operating profit before amortisation of intangible assets and before non-recurring items (EBITA) for the third quarter of 2012 of NOK 184 million, as compared to pro forma NOK 227 million for the third quarter of 2011. The accounts for the third quarter of 2011 included a positive pension effect of NOK 28 million arising from an actuarial gain. There are no such pension effects in 2012. EBITA margin for the third quarter of 2012 was 6.4% compared to 7.8% for the same quarter last year. After adjusting for the pension effect, EBITA margin for the third quarter of 2011 was 6.8%. The Consulting segment reported an improvement in profit for the third quarter of 2012 of NOK 2 million relative to the third quarter of 2011. For both the Swedish and Norwegian activities, July had one working day more and September had two working days less in the third quarter of 2012 than in the third quarter of 2011. After adjusting for holiday leave taken in July, these differences in working days had a negative effect on operating profit in the order of NOK 18 million. The Solutions segment reported a reduction in profit of NOK 9 million compared to the third quarter of 2011. The figures reported for the third quarter of 2011 included NOK 23 million of positive EBITA effect from sales of election solutions. IT Operations reported a reduction in profit of NOK 7 million. 2011. Of this, depreciation of software developed in-house accounted for NOK 9 million compared to NOK 11 million in the third quarter of 2011. Amortisation of other intangible assets amounted to NOK 13 million in the third quarter of 2012, as compared to NOK 18 million in the third quarter of 2011. Investment in operational fixed assets totalled NOK 126 million in the third quarter of 2012 as compared to NOK 117 million in the third quarter of 2011. Investment in software developed in-house amounted to NOK 22 million in the third quarter of 2012 compared to NOK 9 million in the third quarter of 2011. The operating result for the third quarter of 2012 before nonrecurring items (EBIT) was a profit of NOK 171 million compared to a profit of pro forma NOK 209 million in the third quarter of 2011, including the positive pension effect of NOK 28 million. No non-recurring items were recognised in the accounts for the third quarter of 2012. Non-recurring items totalling NOK 47 million were recognised in the accounts for the third quarter of 2011, of which NOK 18 million related to restructuring measures. In addition, NOK 29 million of goodwill was written down in connection with the sale of the Ukrainian company Miratech. Net financial expenses were NOK 43 million in the third quarter of 2012 compared to NOK 68 million in the third quarter of 2011. Net interest expense totalled NOK 50 million in the third quarter of 2012, in line with the third quarter of 2011. Currency effects recognised to the accounts in the third quarter of 2012 represented net income of NOK 7 million, as compared to a net negative currency effect of NOK 18 million in the third quarter of 2011. Reported earnings per share for the third quarter of 2012 was NOK 0.27. Reported earnings per share for the third quarter of 2011 was NOK 0.22. After adjusting for non-recurring items, earnings per share for the third quarter of 2011 was NOK 0.38. The group s headcount at 30 September 2012 was 9,827 as compared to 9,624 at the end of June 2012. In the group s Nordic activities, there was some increase in headcount in the Consulting and Solutions segments, but headcount reduced in the Norwegian activities of IT Operations. Headcount in the group s global sourcing activities in the Ukraine and India has increased by 189 since the end of June 2012. Depreciation was NOK 109 million for the third quarter of 2012, which was NOK 5 million lower than in the third quarter of
Quarterly report Third quarter 2012 5 The Group s segments The group s activities are divided into three reporting segments. The segments are structured on the basis of the products and services they deliver, and correspond with the structure used for routine reporting to the group s senior decision makers. The three segments are: IT Operations, Solutions and Consulting. In addition, reporting of the segments shows a geographic analysis between Norway and Sweden. Service segments IT Operations The IT Operations segment comprises network services, operation of infrastructure and applications, data communications, local user support, security services and cloud based services. IT Operations delivers accessible and reliable systems operation for its customers to ensure that their employees and customers can use the systems at all times. The activities of the IT Operations segment cover most industries and sectors, and it operates in Norway and Sweden. The IT Operations segment reported operating revenue of NOK 1,401 million for the third quarter of 2012, as compared to NOK 1,440 million for the third quarter of 2011. IT Operations in Sweden reported organic revenue growth of 15%. Revenue from the Norwegian part of the segment showed a decline of 6%, which relates largely to the enterprise segment with a fall in revenue from the former IS Partner activities, in addition to a reduction in revenue of NOK 20 million in the quarter as the result of price reductions. The third quarter of 2011 also included sales of hardware to the SMB segment totalling NOK 47 million, as compared to NOK 5 million in the third quarter of 2012. Cost of goods sold was NOK 539 million in the third quarter of 2012, representing a reduction of 3% from the third quarter of 2011 in line with the reduction in revenue. Salaries and related costs in the third quarter of 2012 were 1% higher than in the third quarter of 2011. The Norwegian part of IT Operations reported a reduction in fixed salary costs relative to the third quarter of 2011 due to a reduction in headcount as part of the synergy program. The Swedish part of IT Operations reported an increased level of activity, with a consequent increase in headcount and accordingly in salaries and related costs. Depreciation for the third quarter of 2012 was NOK 7 million lower than in the third quarter of 2011 as a result of a reduced level of investment over the course of 2009 and 2010. The IT Operations segment reported operating profit before amortisation of intangible assets (EBITA) of NOK 107 million in the third quarter of 2012, as compared to NOK 114 million in the third quarter of 2011. Earnings for the third quarter were adversely affected by the drop in revenue experienced principally for the former IS Partner activities and price reductions as mentioned above, but the negative effect on earnings was offset to some extent by the synergy measures that have been implemented. In addition, a charge of NOK 15 million was recognised in the accounts in respect of losses incurred on a project. EBITA margin for the third quarter of 2012 was 7.7% compared to 8.0% in the third quarter of 2011. IT Operations NOK million Q3 2012 Q3 2011 1.1.-30.9.2012 1.1.-30.9.2011 2011 Operating revenue 1 401 1 440 4 364 4 451 6 021 Cost of goods sold 539 554 1 639 1 672 2 269 Salaries and related costs 465 459 1 580 1 567 2 123 Other operating costs 213 229 718 721 976 Total operating costs 1 217 1 242 3 937 3 960 5 368 Operating profit before depreciation (EBITDA) 184 198 427 491 653 Ordinary depreciation 76 83 221 250 331 Operating profit before amortisation (EBITA) 107 114 206 241 322 EBITA % 7.7 % 8.0 % 4.7 % 5.4 % 5.4 % Operational investment (CAPEX) 80 84 254 189 276 No. of employees 2 508 2 601 2 508 2 601 2 555
6 Quarterly report Third quarter 2012 Investment in operational fixed assets in the third quarter of 2012 totalled NOK 80 million compared to NOK 84 million in the third quarter of 2011. The IT Operations segment s order backlog was NOK 9.6 billion at 30 September 2012, representing a reduction of NOK 0.2 billion from the end of the second quarter of 2012. Solutions The Solutions segment offers a broad portfolio of software solutions, principally in Norway and Sweden. Solutions has a complete solutions suite for the bank ing and finance sector in the Nordic countries. In Norway, Solutions offers ERP solutions, case management, document handling and election solutions for the public sector. Solutions Norway also offers application services and information solu tions that cover all types of sector and industry. In Sweden, Solutions offers ERP solutions for a broad range of sectors and industries, as well as niche solutions for municipalities, the health sector and the forest products industry. In addition, Solutions includes the group s Global Sourcing businesses in the Ukraine and India. The Solutions segment reported operating revenue of NOK 969 million in the third quarter of 2012, as compared to NOK 996 million in the third quarter of 2011. Operating revenue reported for the third quarter of 2011 was positively affected by sales of solutions in relation to the municipal and county elections totalling NOK 65 million. The Swedish activities reported organic revenue growth of 2%. The comparable figures reported for 2011 have been adjusted for the sale of Miratech that took place in the third quarter of 2011. Solutions achieved increased sales of industry-specific solutions to Nordic banking and finance customers, and sales to the Norwegian public sector also showed a high level of activity. Cost of goods sold in the third quarter of 2012 was NOK 254 million, down by 21% from the same quarter in 2011. The reduction was related to sales of election solutions, as well as lower product sales by the Financial Services industry vertical. Salaries and related costs were 8% higher in the third quarter of 2012 than in the third quarter of 2011. The increase is due to growth in headcount for both the Nordic activities of the business area and its Global Sourcing activities, as well as the general annual increase in salary levels. Depreciation for the third quarter of 2012 totalled NOK 16 million compared to NOK 18 million in the third quarter of 2011. Depreciation of software developed in-house amounted to NOK 8 million in the third quarter of 2012 compared to NOK 11 million in the third quarter of 2011. Costs of NOK 21 million in respect of in-house software for the Financial Services vertical were capitalised in the third quarter of 2012, as compared to NOK 9 million in the third quarter of 2011. Investment spending in the third quarter of 2012 related to new functionality for the company s banking applications. The Solutions segment produced operating profit before amortisation of intangible assets (EBITA) of NOK 87 million for the third quarter of 2012. EBITA for the third quarter of 2011 was NOK 98 million, of which sales of election solutions had a positive EBITA effect of NOK 23 million. Sales of election solutions also had a positive EBITA effect in the fourth quarter of 2011 of NOK 15 million. EBITA margin for the third quarter of 2012 was 8.9%, as compared to 9.8% for the third quarter of 2011. After adjusting for the sales of election solutions, the EBITA margin for the third quarter of 2011 was 8.0%. The Solutions segment s order backlog was NOK 4.6 billion at 30 September 2012, which was a decline of NOK 0.1 billion at the end of June 2012. Solutions NOK million Q3 2012 Q3 2011* 1.1.-30.9.2012 1.1.-30.9.2011* 2011** Operating revenue 969 996 3 266 3 079 4 252 Costs of goods sold 254 323 890 891 1 207 Salaries and related costs 430 397 1 415 1 286 1 769 Other operating costs 183 160 622 599 839 Total operating costs 867 880 2 927 2 776 3 815 Operating profit before depreciation (EBITDA) 103 116 339 302 437 Ordinary depreciation 16 18 66 61 90 Operating profit before amortisation (EBITA) 87 98 272 242 347 EBITA % 8.9 % 9.8 % 8.3 % 7.8 % 8.2 % Operational investment (CAPEX) 35 17 79 64 91 No. of employees Nordics 2 160 2 087 2 160 2 087 2 108 No. of employees Global Sourcing 2 327 2 083 2 327 2 083 2 011 Hardware sales 30 31 155 109 157 * Proforma figures for the comparable period 2011 ** Proforma figures for the year 2011
Quarterly report Third quarter 2012 7 Consulting The Consulting segment offers consulting services within SAP, Microsoft, Oracle and IBM technology, as well as in project management, systems and applications development, digital business activities, and infrastructure consulting services. The segment also includes hardware product sales. The segment is well positioned with offices in 50 towns and cities across the Nordic countries. The Consulting segment reported operating revenue of NOK 777 million in the third quarter of 2012, equivalent to organic growth of 5% relative to the third quarter of 2011. The segment s Swedish activities reported organic growth of 8% in the quarter, while the segment s Norwegian activities reported organic growth of 3% in the quarter, due entirely to hardware sales. The billable utilisation rate (calculated on the basis of all employees) was 66.6% in the third quarter of 2012, as compared to 67.8% in the third quarter of 2011. The segment s activities in Norway reported a decrease in billable utilisation rate, but the utilisation rate in Sweden showed an improvement in the third quarter of 2012 relative to the same quarter in 2011. Compared to the third quarter of 2011, hourly charge-out rates in Norway were 5% higher in the third quarter of 2012, while hourly charge-out rates in Sweden were 2% higher. Cost of goods sold was 12% higher in the third quarter of 2012 compared to the third quarter of 2011. This was due to increased sales of products. The Consulting segment produced operating profit before amortisation of intangible assets (EBITA) of NOK 33 million for the third quarter of 2012, as compared to NOK 31 million for the third quarter of 2011. For both the Swedish and Norwegian activities, July had one working day more and September had two working days less than in the third quarter of 2011. After adjusting for holiday leave taken in July, these differences in working days had a negative effect on operating profit in the order of NOK 18 million. EBITA margin for the third quarter of 2012 was 4.2%, which was in line with the third quarter of 2011. The Consulting segment s order backlog was NOK 0.9 billion at 30 September 2012, which was the same level as at the end of June 2012. Support functions/ eliminations Elimination of internal revenue between the group s segments was NOK 266 million in the third quarter of 2012 compared to NOK 268 million in the third quarter of 2011. Support functions not allocated to the segments incurred an operating loss before amortisation of intangible assets (EBITA) of NOK 43 million in the third quarter of 2012, as compared to a loss of NOK 17 million in the third quarter of 2011. The third quarter of 2012 included synergy costs of NOK 13 million (including brand costs). The third quarter of 2011 included synergy program costs of NOK 18 million and a positive pension effect of NOK 28 million. Salaries and related costs showed a reduction of 2% in the third quarter of 2012 compared to the third quarter of 2011. This was due to a reduction in headcount. Consulting NOK million Q3 2012 Q3 2011 1.1.-30.9.2012 1.1.-30.9.2011 2011 Operating revenue 777 745 2 700 2 599 3 624 Costs of goods sold 233 208 803 731 1 110 Salaries and related costs 411 418 1 419 1 451 1 950 Other operating costs 96 82 305 265 332 Total operating costs 740 708 2 527 2 446 3 391 Operating profit before depreciation (EBITDA) 38 37 173 152 233 Ordinary depreciation 5 5 14 15 21 Operating profit before amortisation (EBITA) 33 31 158 137 212 EBITA % 4.2 % 4.2 % 5.9 % 5.3 % 5.9 % Operational investment (CAPEX) 4 4 12 14 28 No. of employees 2 553 2 597 2 553 2 597 2 571 Billable utilisation rate Norway 63.5 % 66.6 % 66.1 % 68.9 % 68.2 % Billable utilisation rate Sweden 70.5 % 69.4 % 71.7 % 72.3 % 71.7 % Billable utilisation rate total 66.6 % 67.8 % 68.6 % 70.4 % 69.7 % Working days Norway 65 66 189 189 253 Working days Sweden 65 66 189 190 254 Hardware sales 91 70 333 235 354
8 Quarterly report Third quarter 2012 Geographic segments Sweden Revenue in Sweden in the third quarter of 2012, including some revenue from Finland, was NOK 795 million. This is equivalent to organic growth of 6% from the third quarter of 2011. The Swedish activities carried out by all the segments reported organic revenue growth in the third quarter of 2012: IT Operations reported organic growth of 15%, Solutions 2% and Consulting 8%. Cost of goods sold increased by 12% in the third quarter of 2012 relative to the same period in 2011. This increase related to growth in revenue for IT Operations, as well as greater use of subcontractors by the consulting activities and increased product sales. Salaries and related costs were 7% higher in the third quarter of 2012 compared to the same period in 2011. This reflects an increase in headcount and the general annual increase in salaries. Depreciation in the third quarter of 2012 was NOK 12 million, in line with the third quarter of 2011. Reported EBITA for the Swedish activities in the third quarter of 2012 was NOK 58 million, in line with the third quarter of 2011. This resulted in an EBITA margin of 7.3% for the third quarter of 2012, as compared to 7.7% in the third quarter of 2011. The order backlog in Sweden was NOK 3.6 billion at 30 September 2012, in line with the close of the second quarter of 2012. Sverige NOK million Q3 2012 Q3 2011 1.1.-30.9.2012 1.1.-30.9.2011 2011 Operating revenue 795 751 2 692 2 500 3 521 Cost of goods sold 256 228 869 739 1 083 Salaries and related costs 362 339 1 220 1 184 1 615 Other operating costs 106 114 373 360 499 Total operating costs 725 681 2 463 2 283 3 196 Operating profit before depreciation (EBITDA) 70 71 229 218 325 Ordinary depreciation 12 12 34 37 50 Operating profit before amortisation (EBITA) 58 58 195 180 275 EBITA % 7,3 % 7,7 % 7,3 % 7,2 % 7,8 % Operational investment (CAPEX) 9 11 45 29 44 No. of employees 2 560 2 542 2 560 2 542 2 534 Norge NOK million Q3 2012 Q3 2011* 1.1.-30.9.2012 1.1.-30.9.2011* 2011** Operating revenue 2 087 2 162 6 791 6 823 9 279 Cost of goods sold 665 765 2 118 2 210 3 041 Salaries and related costs 958 906 3 222 3 041 4 132 Other operating costs 242 220 863 892 1 180 Total operating costs 1 864 1 892 6 203 6 143 8 352 Operating profit before depreciation (EBITDA) 223 270 587 680 927 Ordinary depreciation 97 101 298 311 422 Operating profit before amortisation (EBITA) 125 169 289 368 506 EBITA % 6,0 % 7,8 % 4,3 % 5,4 % 5,4 % Operational investment (CAPEX) 118 106 333 267 395 No. of employees Nordics 4 940 5 021 4 940 5 021 4 973 No. of employees Global Sourcing 2 327 2 473 2 327 1 852 2 011 * Proforma figures for the comparable period 2011 ** Proforma figures for the year 2011
Quarterly report Third quarter 2012 9 Norway Revenue in Norway, including Denmark and the Global Sourcing units in the Ukraine and India, was NOK 2,087 million in the third quarter of 2012, representing a reduction of 3% from the third quarter of 2011. After adjusting for revenue growth in Global Sourcing, the reduction in revenue for the quarter was 5%. The Consulting segment reported organic growth of 3% in the third quarter of 2012, while the IT Operations segment reported a reduction in revenue of 6% for the third quarter of 2012 relative to the same quarter last year. The Solutions segment reported a reduction in revenue of 8% (after adjusting for Global Sourcing) as the result of the revenue recognised in the third quarter of 2011 in relation to sales of solutions for the municipality and county elections totalling NOK 65 million. Cost of goods sold decreased by 13% in the third quarter of 2012 relative to the same period in 2011. This was the result of lower sales by the IT Operations segment, as well as lower sales of election solutions and of the Financial Services vertical s products. Salaries and related costs were 6% higher in the third quarter of 2012 than in the third quarter of 2011. Salaries and related costs were lower in IT Operations as the result of reductions in headcount in this area. Headcount for the Solutions segment was higher in the third quarter of 2012 than in the same quarter last year, resulting in an increase in salaries and related costs for this segment relative to the third quarter of 2011. The increase also reflects the general annual increase in salaries for the Norwegian activities that came into effect on 1 April 2012. Depreciation in the third quarter of 2012 totalled NOK 97 million compared to NOK 101 million in the third quarter of 2011. Reported EBITA for the Norwegian activities in the third quarter of 2012 was NOK 125 million, equivalent to an EBITA margin of 6.0%. The Norwegian activities reported EBITA of NOK 169 million for the third quarter of 2011, including a positive pension effect of NOK 28 million. After adjusting for the pension effect, the EBITA margin reported for the third quarter of 2011 was 6.5%. The EBITA margin for the third quarter of 2011 also includes a positive effect of NOK 23 million from the sale of election solutions, and was also positively affected by there being one more working day in the third quarter of 2011 than in the third quarter 2012. The order backlog in Norway was NOK 11.4 billion at 30 September 2012, representing a reduction of NOK 0.3 billion from the end of the second quarter of 2012. Financial information Cash flow and liquidity Cash flow from operations, before payments related to restructuring, was NOK 171 million in the third quarter of 2012, as compared to NOK 272 million for the third quarter of 2011. The reduction in cash flow relates to lower EBITDA in the third quarter 2012 than in the third quarter of 2011, as well as some large customer invoice payments being delayed until after the end of the quarter. Investment in operational fixed assets and in software developed in-house amounted to NOK 126 million in the third quarter of 2012, as compared to NOK 117 million in the same quarter of 2011. Investment in software developed in-house totalled NOK 22 million in the third quarter of 2012, as compared to NOK 9 million in the third quarter of 2011. Investment in software developed in-house in the third quarter of 2012 related to new functionality for the company s banking applications. Net interest-bearing liabilities totalled NOK 3,529 million at 30 September 2012, in line with the level at the end of the second quarter of 2012. The group s liquidity reserves at the close of September 2012 amounted to NOK 1,496 million, as compared to NOK 1,402 million at 30 June 2012. Undrawn credit facilities amounted to NOK 1,184 million at 30 September 2012. At the close of the third quarter of 2012, average working capital over the previous four quarters was equivalent to 6.3% of total revenue. This represents a reduction relative to the close of the second quarter of 2012, when average working capital was 6.8% of total revenue. The reduction is the result of changes to the classification of certain items in the statement of financial position. Other matters EVRY prepares its accounts in accordance with IFRS. The interim report has been produced using the same accounting principles and methodology as used for the annual report. The interim report is published in accordance with IAS 34 on interim reporting. Events after the balance sheet date As previously announced, the company has been working to evaluate whether to sell the DigOff-solution to new customers. The company has also stated that DigOff will not generate profit until revenue from sales of the solution increases. The Board of Directors of EVRY has now decided that the solution will not be sold to additional customers, but that the company will
10 Quarterly report Third quarter 2012 continue to carry out the existing contracts for this solution. This decision is based on an overall evaluation of both risk and market prospects associated with additional sales of this solution. Following the decision on Digoff, EVRY will now focus on the Agresso Business World solution. EVRY continues to be fully committed to offering the market s best solutions portfolio and leading specialist environment for this type of solution for the public sector. This decision will have a negative non-recurring accounting effect of NOK 112 million in the fourth quarter of 2012, of which NOK 51 million relates to write-downs of current balance sheet items. The company has taken steps to reduce the costs associated with the solution, and these costs have been significantly reduced since the solution was transferred to operational management in the second quarter of 2011. However, the solution continues to generate a loss. The negative effect on profit for the first nine months of 2012 was NOK 30 million. The Board of Directors of EVRY ASA has also decided to reorganise major areas of the group s operations activities as well as the consulting and solutions activities. This is being carried out in order to reduce complexity in the operations area. In addition, the changes will create a more appropriate Go-to-market model through greater focus on verticals, industry-specific solutions and local presence. The new organisational structure will come into operation from 1 January 2013. The reorganisation will result in headcount reductions in staff and support functions and in middle management affecting an estimated 100 employees. This will require a provision in the fourth quarter 2012 accounts in the order of NOK 30-50 million. The new organisational structure will have an affect on EVRY s segment reporting, and information on this will be made available in connection with the publication of the interim report for the fourth quarter of 2012. The company outlook Following a positive trend for the IT services market in Norway and Sweden over the first half of this year, weaker conditions in the Swedish economy and general uncertainty had an adverse effect on EVRY in Sweden in the third quarter. The Norwegian market has continued to show moderate growth. We anticipate an increasing degree of uncertainty in the Swedish market over coming quarters. We saw in the third quarter that a number of customers in the Swedish market are holding back from decisions on launching projects. The Norwegian outsourcing market is cautious, with a number of major contract renegotiations underway. The market for project deliveries in Norway remains strong. EVRY believes that with its balanced portfolio in Norway and Sweden, the company is well-equipped to meet the challenges of what is expected to be a turbulent period. So far in 2012, the company has been able to meet these challenges. The organisational changes that have been decided will strengthen the company s focus and delivery capacity for the banking segment and further strengthen our position in the growing SMB market. With its greater focus on selected industries and sectors, EVRY is also well-positioned to win its share of growth in other attractive market segments. EVRY is carrying out organisational changes in the IT Operations segment to simplify its structure, and the main benefits of these changes will be improved cost effectiveness and a reduction in complexity. The transformation program for IT Operations (Future Proof), which was presented at the company s Capital Markets Day on 16 February this year, simultaneously facilitates a faster pace of investment in the development of new services and processes, together with the migration of customers to state-of-the-art operating platforms and data centres. These investments will be carried out over the period 2013-2015, with successive transformation starting in 2014. This process of transformation is essential in order to improve the profitability of IT Operations from its current level and to achieve the necessary improvements in quality. EVRY will work in the fourth quarter on the detail of the Future Proof program, which will also include migration to a new state-of-the-art data centre. The complete business case is expected to be completed for the presentation of the fourth quarter 2012 interim report. This program will also include a re-evaluation of the old solutions portfolio. In the light of weaker conditions than expected in 2012 in the IT Operations segment, especially for large companies (excluding bank and finance) and the public sector, taken together with the expected operational costs that will be associated with the implementation of Future Proof and essential quality improvements in the networks area, the company does not expect any improvement in profit in this segment in the fourth quarter relative to the fourth quarter of 2011. This is also expected to be the case for 2013 as a whole in relation to 2012. Accordingly, no improvement in profit from IT Operations is expected before 2014. The investments involved in Future Proof will cause a higher level of investment for EVRY in 2013 and 2014. However, investment will be in the high end of the targeted corridor of 3-5% of consolidated revenue that was announced at the Capital Markets Day on 16 February. In addition to the work on Future Proof, EVRY will intensify its focus on costs in order to offset the effects of weaker growth in some areas of its activities.
Quarterly report Third quarter 2012 11 Profit and loss account NOK million Q3 2012 Q3 2011 1.1.-30.9.2012 1.1.-30.9.2011 2011 Operating revenue 2 882 2 928 9 483 9 364 12 841 Cost of goods sold 922 1 008 2 987 2 998 4 176 Wages and salaries 1 313 1 256 4 435 4 254 5 775 Other operating costs 355 323 1 244 1 212 1 635 Operating profit bef. depreciation (EBITDA) 293 341 817 900 1 255 Depreciation of operating assets 100 103 287 307 408 Depreciation of own-developed software 9 11 45 42 64 Operating profit before depreciation of intangible assets (EBITA) 184 227 484 551 783 Non-recurring items - -47-36 -47-88 Depreciation of intangible assets 13 18 38 52 69 Operating profit (EBIT) 171 162 483 452 626 Net financial items -43-68 -134-203 -272 Profit before tax (EBT) 128 94 348 249 354 Tax on profit -57-33 -119-82 -112 Profit for the period 71 60 229 167 242 Other comprehensive income Cash flow hedges -5 21-3 7 0 Restatement differences 17 8-13 -68-22 Total comprehensive income 11 29-15 -61-21 Total profit for the period 83 89 214 106 221 Total profit for the period are allocated as follows Owners of the parent 83 87 212 94 213 Non-controlling interests - 3 2 12 9 Oslo, 22 October 2012 The Board of Directors of EVRY ASA Arve Johansen Chairman of the Board Eli Skrøvset Lisbeth Gustafsson Dag Mejdell Hilde Ringereide Anders Brandt Eirik Bornø Employee-elected member Sigmund Ørjavik Employee-elected member Ingrid Lund Employee-elected member Jan Anders Dahlström Employee-elected member Terje Mjøs Chief Executive Officer
12 Quarterly report Third quarter 2012 Statement of financial position NOK million 30.09.2012 30.09.2011 31.12.2011 Goodwill 6 870 6 769 6 817 Other intangible assets 413 435 432 Tangible assets 1 007 997 989 Non-current financial assets 172 28 23 Total non-current assets 8 463 8 230 8 261 Accounts receivable 1 836 1 803 2 066 Other current receivables 1 717 1 783 1 606 Bank deposits 312 393 694 Total current assets 3 865 3 979 4 366 Total assets 12 327 12 209 12 626 Equity 5 383 5 148 5 259 Non-controlling interests - 34 28 Total equity and non-controlling interests 5 383 5 182 5 287 Provision for liabilities 409 449 391 Non-current non-interest bearing liabilities 100 117 180 Non-current interest bearing liabilities 3 831 3 804 3 681 Total non-current liabilities 4 340 4 369 4 252 Accounts payable 507 580 754 Duties payable, vacation allowance 1 025 1 068 1 089 Current non-interest bearing liabilities 1 063 999 1 208 Current interest bearing liabilities 10 11 38 Total current liabilities 2 605 2 658 3 088 Total equity and liabilities 12 327 12 209 12 626
Quarterly report Third quarter 2012 13 Cash flow analysis NOK million Q3 2012 Q3 2011 1.1.-30.9.2012 1.1.-30.9.2011 2011 EBITDA 293 341 817 900 1 255 Net taxes / financial items paid -85-82 -233-228 -312 Change in accounts receivable 230 308 230 270 7 Change in accounts payable -91-13 -247-80 94 Change in other accruals -176-282 -446-809 -368 Operational cash flow before non-recurring items 171 272 121 52 676 Change in provision non-recurring items -13-23 -42-111 -144 Net cash flow from operations 157 249 78-58 531 Investment in fixed operating assets -104-108 -329-253 -378 Investment in in-house developed software -22-9 -49-44 -61 Sale of fixed operating assets 0 7 0 20 19 Investment in group companies -1-30 -90-60 -84 Sale of group companies 0 4 0 4 4 Net cash flow from investments -127-137 -468-333 -500 Borrowings repaid -119-103 -238-4 631-4 745 New borrowing - -3 350 3 910 3 910 Dividends paid 0 0-92 0 0 Share issues - - - - -10 Net cash flow from financing -119-106 20-721 -845 Net change in liquid assets -88 6-370 -1 113-814 Bank deposits at start of period 404 386 694 1 530 1 530 Currency translation in liquid assets -4 1-12 -24-22 Bank deposits at end of period 312 393 312 393 694 * Change in other accruals includes changes in the following statement of financial items: other current receivables, duties payable and other current liabilities
14 Quarterly report Third quarter 2012 Key figures Q3 2012 Q3 2011 1.1.-30.9.2012 1.1.-30.9.2011 2011 Key figures per share (NOK): Earnings per share 0.27 0.22 0.85 0.58 0.88 Earnings before non-recurring items 0.27 0.38 0.76 0.71 1.15 EBITDA per share 1.10 1.28 3.07 3.37 4.72 Cash from operations b/f non-recurring items 0.64 1.02 0.45 0.20 2.54 Other key figures: EBITDA-margin 10.2 % 11.6 % 8.6 % 9.6 % 9.8 % EBITA-margin 6.4 % 7.8 % 5.1 % 5.9 % 6.1 % Return on invested capital (ROIC) 8.3 % 10.9 % 7.7 % 8.3 % 9.0 % Net working capital 958 931 620 Equity ratio 44 % 42 % 42 % Gearing 0.56 0.66 0.57 NIBD / EBITDA 2.85 2.27 Net interest bearing debt (NOK mill) 3 529 3 421 3 024 Average number of shares 266 575 338 266 249 497 266 386 837 266 793 976 265 912 188
Quarterly report Third quarter 2012 15 Reconciliation of changes in equity before non-controlling interests 30.09.2012 30.09.2011 31.12.2011 Equity at 01.01. 5 259 5 044 5 044 Total profit after tax 212 94 213 Dividends -93 - - Trade in own shares 5 10 10 Transactions with non-controlling interests - - -7 Equity at end of period 5 383 5 148 5 259 Order backlog by segment NOK million Order backlog 30.09.2012 Order backlog distributed 2012 2013 2014 2015 Later Operations 9 559 1 233 4 064 2 525 1 067 668 Solutions 4 550 761 1 973 1 409 254 153 Consulting 865 588 203 71 2 - Total order backlog 14 973 2 583 6 241 4 005 1 323 822 % of total 19 % 42 % 27 % 9 % 5 %
16 Quarterly report Third quarter 2012 Analysis by segment pro forma Operating revenue NOK million Q3'12 Q3'11 2011 Q2'12 Q1'12 Q4'11 Q3'11 Q2'11 Q1'11 Q4'10 Q3'10 IT Operations 1 401 1 440 6 021 1 514 1 449 1 570 1 440 1 517 1 495 1 603 1 436 Solutions 969 996 4 252 1 170 1 126 1 173 996 1 047 1 035 1 056 894 Consulting 777 745 3 624 928 994 1 026 745 923 930 1 020 725 Eliminations -266-268 -1 096-340 -241-291 -268-298 -240-329 -233 Total EVRY 2 882 2 913 12 801 3 272 3 328 3 478 2 913 3 189 3 221 3 350 2 823 Operating profit before amortisation (EBITA) NOK million Q3'12 Q3'11 2011 Q2'12 Q1'12 Q4'11 Q3'11 Q2'11 Q1'11 Q4'10 Q3'10 IT Operations 107 114 322 68 30 81 114 76 50 80 105 Solutions 87 98 347 98 88 106 98 79 64 15 21 Consulting 33 31 212 42 83 75 31 40 66 75 30 Support functions -43-17 -100-58 -50-29 -17-29 -24-70 -32 Total EVRY 184 227 781 150 151 232 227 165 157 100 124 EBITA margin NOK million Q3'12 Q3'11 2011 Q2'12 Q1'12 Q4'11 Q3'11 Q2'11 Q1'11 Q4'10 Q3'10 IT Operations 7.7 % 8.0 % 5.4 % 4.5 % 2.1 % 5.2 % 8.0 % 5.0 % 3.4 % 5.0 % 7.3 % Solutions 8.9 % 9.8 % 8.2 % 8.3 % 7.8 % 9.0 % 9.8 % 7.6 % 6.2 % 1.4 % 2.4 % Consulting 4.2 % 4.2 % 5.8 % 4.6 % 8.4 % 7.3 % 4.2 % 4.3 % 7.1 % 7.3 % 4.1 % Total EVRY 6.4 % 7.8 % 6.1 % 4.6 % 4.5 % 6.7 % 7.8 % 5.2 % 4.9 % 3.0 % 4.4 %
Quarterly report Third quarter 2012 17 Analysis by geographic segment pro forma Sweden* Operating revenue NOK million Q3'12 Q3'11 2011 Q2'12 Q1'12 Q4'11 Q3'11 Q2'11 Q1'11 Q4'10 Q3'10 IT Operations 305 269 1 120 315 299 305 269 282 265 270 242 Solutions 257 255 1 205 344 296 352 255 300 298 303 219 Consulting 294 274 1 433 383 374 439 274 373 348 393 245 Eliminations -61-47 -237-64 -51-74 -47-60 -56-53 -45 Total 795 751 3 522 978 919 1 021 751 895 854 913 660 Operating profit before amortisation (EBITA) NOK million Q3'12 Q3'11 2011 Q2'12 Q1'12 Q4'11 Q3'11 Q2'11 Q1'11 Q4'10 Q3'10 IT Operations 33 25 63 25 20 18 25 11 9 7 17 Solutions 18 26 128 30 23 40 26 28 33 44 23 Consulting 8 7 84 12 27 36 7 18 23 27 5 Support functions - - - - - - - - -6-3 Total 58 58 275 67 70 95 58 57 66 73 43 EBITA margin NOK million Q3'12 Q3'11 2011 Q2'12 Q1'12 Q4'11 Q3'11 Q2'11 Q1'11 Q4'10 Q3'10 IT Operations 10.8 % 9.3 % 5.6 % 7.9 % 6.6 % 6.0 % 9.3 % 3.9 % 3.4 % 2.7 % 7.1 % Solutions 6.9 % 10.3 % 10.6 % 8.7 % 7.9 % 11.5 % 10.3 % 9.3 % 11.2 % 14.5 % 10.7 % Consulting 2.6 % 2.6 % 5.9 % 3.2 % 7.2 % 8.2 % 2.6 % 4.8 % 6.7 % 7.0 % 2.0 % Total 7.3 % 7.7 % 7.8 % 6.8 % 7.6 % 9.3 % 7.7 % 6.4 % 7.7 % 8.0 % 6.5 % * incl Finland Norway* Operating revenue NOK million Q3'12 Q3'11 2011 Q2'12 Q1'12 Q4'11 Q3'11 Q2'11 Q1'11 Q4'10 Q3'10 IT Operations 1 096 1 171 4 901 1 199 1 150 1 265 1 171 1 235 1 230 1 333 1 194 Solutions 712 741 3 047 827 830 822 741 747 737 753 675 Consulting 484 471 2 191 545 620 587 471 550 583 627 480 Elimineringer -205-221 -860-276 -190-217 -221-238 -183-276 -187 Sum 2 087 2 162 9 279 2 295 2 409 2 456 2 162 2 294 2 367 2 438 2 162 Operating profit before amortisation (EBITA) NOK million Q3'12 Q3'11 2011 Q2'12 Q1'12 Q4'11 Q3'11 Q2'11 Q1'11 Q4'10 Q3'10 IT Operations 74 90 259 43 11 63 90 65 42 73 88 Solutions 69 72 219 68 65 65 72 51 31-29 -2 Consulting 25 24 128 30 56 39 24 22 43 47 25 Support functions -43-17 -100-58 -50-29 -17-29 -24-64 -29 Total 125 168 506 83 81 138 168 108 91 27 81 EBITA margin NOK million Q3'12 Q3'11 2011 Q2'12 Q1'12 Q4'11 Q3'11 Q2'11 Q1'11 Q4'10 Q3'10 IT Operations 6.8 % 7.6 % 5.3 % 3.6 % 0.9 % 5.0 % 7.6 % 5.3 % 3.4 % 5.5 % 7.4 % Solutions 9.7 % 9.7 % 7.2 % 8.2 % 7.8 % 7.9 % 9.7 % 6.9 % 4.2 % -3.8 % -0.3 % Consulting 5.2 % 5.2 % 5.8 % 5.5 % 9.0 % 6.6 % 5.2 % 3.9 % 7.4 % 7.7 % 5.2 % Total 6.0 % 7.8 % 5.5 % 3.6 % 3.4 % 5.6 % 7.8 % 4.7 % 3.8 % 1.1 % 3.8 % * incl other countries eks Sweden og Finland
Financial calendar Fourth quarter 2012 8 FEBRUARY 2013 First quarter 2013 8 may 2013 Annual General Meeting 13 may 2013 Second quarter 2013 16 july 2013 Third quarter 2013 22 october 2013 Fourth quarter 2013 11 february 2014 Contact details EVRY ASA Nedre Skøyen vei 26 PO Box 640 Skøyen 0214 Oslo Welcome back to the to fourth quarter 8 february 2013 Org. No: 934 382 404 MVA Telephone: (+47) 06500 Fax: (+47) 22 52 85 10 E-mail: evry@evry.com www.evry.com Design and production: Artbox AS Print: Printbox AS
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