Page 62 - EVRY Annual Report 2012

From the Boardroom 62
exposures. In addition to producing aggregated risk reporting,
this system provides detailed information on vulnerabilities,
identifying the risks affected and which measures the organi-
sation has implemented to reduce unacceptable risk exposure.
This helps line management to follow up on the status of
measures that have been implemented, with ready access to
information on prioritised tasks.
Market risk
EVRY has established a strategy to manage its exposure to
currency and interest rate risks arising from its international
investments. The strategy is designed to ensure a high degree
of predictability and the lowest possible volatility in annual
currency gains/losses and interest costs.
EVRY is principally exposed to two types of currency risk:
contractual purchases or sales denominated in foreign cur-
rency, and foreign investments and future cash flows from
these investments. Foreign investments are hedged by ar-
ranging financing in the same currency as the investment,
and at the end of 2012 the group had taken up a loan of SEK
1,050 million to hedge its investments in Sweden.
Interest rate risk is managed by the use of financial hedging
instruments such as interest rate swaps and by managing the
balance of fixed rate and floating interest rate borrowings.
In a normal situation, the group’s short-term borrowing
should not exceed more than 30% of total borrowing with
a weighted average interest rate fixing period between 1.5
and 2.5 years. As part of the Group’s Finance Policy, between
50% and 70% of long-term borrowings are to be on fixed
interest rate terms.
Note 23 to the consolidated accounts provides more detailed
information on interest rate hedging instruments, together
with sensitivity analysis of exposure to currency and interest
rate movements.
Credit risk
The group’s total exposure to credit risk at 31 December 2012
was NOK 2,306 million. This includes accounts receivable and
other receivables, excluding prepaid expenses and receiva-
bles due from government bodies. The group’s exposure to
counterparty risk is moderated by the fact that it has a large
number of customers and its major customers are very strong
companies. Losses on receivables recognised to profit and
loss in 2012 totalled NOK 0.5 million.
Liquidity risk
EVRY generated positive cash flow in aggregate from opera-
tions and investment activities in 2012, and held liquid assets
of NOK 561 million at the close of the year, as well as having
access to un-drawn credit facilities of NOK 1,452 million. The
company holds its liquid assets in the form of bank deposits
in a group account system with DnB, and its exposure to
liquidity risk is considered to be very limited.
In March 2011 EVRY established a new five-year credit facil-
ity of NOK 4.5 billion to replace its existing loan facilities,
thereby securing considerable financial room for manoeuvre
through the loan period. EVRY also has an overdraft facility
of NOK 450 million with DnB. The group’s liquidity situation
is thus regarded as satisfactory.
Company outlook
The situation seen in the second half of 2012 and expectations
for 2013 reflect differences in the macroeconomic situation
between Norway and Sweden. The Norwegian economy
continues to defy the weak global economic situation, and
Norwegian leading indicators strengthened in the fourth
quarter of 2012. Statistics Norway expects this positive trend
to continue in 2013. EVRY’s experience is that the IT services
market in Norway is growing in line with previous years,
driven by a high level of project activity and good utilisation
of consultants, and accompanied by a moderate increase in
hourly charges. In terms of outsourcing and IT operating ser-
vices, market conditions are currently flat in overall terms,
with growth in some market segments offset by declining
revenue in other segments. However, some large first-time
outsourcing tenders are now expected in the Norwegian
market.
Weaker economic conditions in the Euro zone had a marked
effect on the Swedish economy in the second half of 2012. The
Swedish National Institute of Economic Research reported
a fall of 0.3 points in its Economic Tendency Indicator in
January 2013, and the indicator now stands at 89.4%, which
is slightly more than 10 points below the historic average.
This indicates that growth in the Swedish economy is still
considerably weaker than normal. EVRY has seen that the
EVRY produced a climate
report in 2012 in
accordance with the
Greenhouse Gas Protocol
and participated in
the Carbon Disclosure
Project (CDP).