Page 98 - EVRY Annual Report 2012

Annual Accounts Group 98
Costs of NOK 86 million in respect of software developed in-house were capitalised in 2012, of which NOK 76 mil-
lion relates to investments carried out in the Solutions segment. These investments are mainly related to the con-
tinuing development of new credit solutions, payment systems and self-service solutions for a number of Nordic
banks. Other development work carried out in the group relates to customer-specific projects, where the income
derived from these projects exceeds the development costs. Accordingly, no material amount of costs for research
and develop­ment was recognised in 2012.
The Board of Directors of EVRY ASA has decided that the DigOff solution will not be sold to additional customers,
but that the company will continue to carry out the existing contracts for this solution. This decision was based on
an overall evaluation of both risk and market prospects associated with additional sales of this solution. In connec-
tion with this decision, software developed in-house was written down by NOK 3.0 million.
Allocation of goodwill to cash-generating units:
NOK million
IT Operations 2 519.9
Financial Services 879.5
Solutions 277.2
Consulting 1 160.0
Sverige 1 429.3
BEKK Consulting 381.8
Global Sourcing 179.4
Total 6 827.1
The group evaluates whether there are any indications of a possible impairment of goodwill on a quarterly basis.
The group also tests goodwill for impairment at other times if this becomes necessary as a result of indications of
possible impairment, and such tests are always carried out at year-end. Goodwill is tested for impairment for each
identified cash generating unit in the group. A “cash generating unit” represents the lowest identifiable group of
assets that generates cash inflow while being for all practical purposes independent of cash inflow generated by
other assets or other groups of assets.
The number of cash generating units in 2012 was 7, unchanged from the 2011 financial year.
The group uses value in use to determine the recoverable amount in respect of each cash generating unit. Value in
use is calculated as net present value of future cash flows. The estimates of future cash flows for all cash generating
units are based on the budget for 2013 as approved by the Board of Directors. In addition, for all cash generating
units except BEKK Consulting and Global Sourcing, the estimates of future cash flows also take into account the
Board-approved long-term strategic plans for 2014-2015. Future cash flows for the years after 2015 (terminal value)
are extrapolated from forecast cash flows for 2015, applying a rate of growth equivalent to the expected long-term
growth of the economy as a whole. In the case of the cash generating units BEKK Consulting and Global Sourcing,
future cash flows after 2013 are extrapolated from cash flows in 2013, applying a rate of growth equivalent to the
expected long-term growth of the economy as a whole.
The situation seen in 2012 and expectations for 2013 reflect differences in the macroeconomic situation be-
tween 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. The company’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 services, market conditions
are currently flat in overall terms, with growth in some market segments offset by declining revenue in other seg-
ments. 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 uncertain outlook in 2012 had a marked effect on the IT services market in Sweden in the second
half of 2012. Customers in Sweden were clearly taking a cautious approach, causing them to defer decisions on IT
investments with a resulting drop in demand for consultants and projects.