Page 56 - EVRY Annual Report 2012

From the Boardroom 56
On a comparable basis, net financial items were NOK -272
million in 2011, while profit before tax was NOK 354 million.
Tax on profit for the year in 2011 amounted to NOK 112
million, and profit for 2011 after tax was NOK 242 million.
Cash flow and financial position
The group’s net cash flow from operations was NOK 721
million in 2012 compared to NOK 531 million in 2011. The
improvement in the cash flow from operations is largely
due to improved collection of accounts receivable and
lower restructuring payments.
Investments in tangible fixed assets increased to NOK 425
million in 2012 from NOK 378 million in 2011, partly as a
result of less use of operational leasing in 2012 than in 2011.
Investment in software developed in-house increased to
NOK 86 million in 2012 from NOK 61 million in 2011 as a
result of increased investment in the Financial Services
industry vertical.
Net cash flow from financing in 2012 was NOK -243 million,
which included payment of a dividend totalling NOK 93
million. The group reported liquidity reserves of NOK 2,013
million at the end of 2012, including undrawn committed
credit facilities of NOK 1,452 million. This can be compared
with liquidity reserves of NOK 1,931 million at the end of
2011, including NOK 1,231 million in undrawn committed
credit facilities.
The group’s total assets amounted to NOK 12,114 million
at 31 December 2012, down from NOK 12,626 million at 31
December 2011. The reduction is largely due to reductions in
other current receivables and other current liabilities, as
well as repayment of borrowings and the corresponding
reduction in bank deposits. Total non-current assets
amounted to NOK 8,367 million at 31 December 2012.
Goodwill accounted for NOK 6,827 million, equivalent to
82% of total non-current assets. At the end of 2011, non-
current assets amounted to NOK 8,261 million of which
goodwill then accounted for 83%.
Working capital accounted for 3.6% of revenues at the close
of the year, while average working capital at the end of each
of the four quarters was equivalent to 6.0% of revenue. The
group has launched a working capital project aimed at reduc-
ing this to 4.0% in the course of 2013.
The group’s equity was NOK 5,322 million as at 31 December
2012, equivalent to an equity ratio of 44%. This was an in-
crease from NOK 5,287 million at the end of 2011, when the
equity ratio was 42%. The increase in equity largely reflects
improved results, while the rise in the equity ratio also re-
flects lower total assets.
Net interest-bearing debt was NOK 3,007 million at the
end of 2012, virtually unchanged from NOK 3,024 million
at the close of 2011. This represents a ratio between net
interest-bearing debt and EBITDA of 2.73 at the end of 2012 as
compared to 2.27 at the end of 2011 as measured in accord-
ance with the definition in the company’s loan agreement.
Interest cover was 2.03 at 31 December 2012, virtually
unchanged from the end of 2011.
Reporting segments
The group reports for the three segments IT Operations,
Solutions and Consulting. The IT Operations segment
accounted for 42% of total revenues before internal netting
in 2012, while the Solutions segment accounted for 32% and
the Consulting segment for 27%.
The report below focuses on revenue and results for 2012.
Note 3 to the consolidated accounts provides more detailed
information on the group segments subject to reporting for
2012, as well as reported figures for 2011 and 2010.
The IT Operations segment
IT Operations is one of the leading providers of IT operations
services in the Nordic countries, and is ranked second by IDC
with a market share of approximately 9.5% in the Nordic
market for outsourcing services of some NOK 66 billion. IT
Operations is market leader in outsourcing in Norway, with a
40%market share, while the corresponding market share in
Sweden is around 10%.
The IT Operations segment generates income from delivery
of network services, operation of infrastructure and applica-
tions, security services, user support and electronic business
support services, as well as product sales. IT Operations gives
customers available and stable IT systems via cloud services,
traditional operating models and hybrid solutions, so that
their employees and customers are ensured around the clock
availability. The activities of the IT Operations segment cover
most industries and sectors, and it operates principally in
Norway and Sweden. The segment also has a separate opera-
tions and delivery function focused on the SMB market,
which is based on EVRY’s strong local presence in Norway
and Sweden.
The IT Operations segment reported operating revenue of
NOK 5,848 million for 2012, representing negative organic
growth of 3% relative to 2011. Three out of four business areas
within the IT Operations segment reported positive organic
growth in 2012, and these areas account for approximately
75% of the segment’s total revenue. The IT Operations seg-
ment reported growth in revenue in 2012 from SMB custom-
ers, Bank & Finance customers and the Swedish market. The
challenges the segment faces relate to the Norwegian part of
the enterprise segment (excluding Bank & Finance) and the
public sector, very largely due to falling revenue from the
former IS Partner customer portfolio and lack of new invest-
ments from some large customers while they were carrying
out tendering for their IT requirements.