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EVRY: Stronger EBITA and improved cash flow

October 22, 2013 - London

(Oslo, 22 October 2013) EVRY reports a 10% increase in EBITA to NOK 197 million for the third quarter of 2013. Cash flow from operations before restructuring costs was NOK 232 million for the third quarter of 2013, representing an improvement of NOK 61 million.

"We are pleased to see that the trend of improving profitability continued again in this quarter. We have applied cost controls, while at the same time working on developing greater focus on industry verticals and other measures to move EVRY higher up the value chain", comments Terje Mjøs, CEO of EVRY.

EBITA margin increased from 6.2% in the third quarter of 2012 to 6.9% in the third quarter of 2013. Pre-tax profit (EBT) increased from NOK 123 million in the third quarter of 2012 to NOK 138 million in the third quarter of 2013, equivalent to growth of 12%.

At the close of the third quarter, EVRY reports a significant reduction in the number of reported operational incidents affecting banking customers in Norway this year.

"We have made significant investment in our 'Turn every stone' program of quality improvement. It is pleasing to see that this is having the intended effect and that we can now report a marked improvement. We are committed to further improvement, and this has the highest priority", says Terje Mjøs, CEO of EVRY.

Strong growth for EVRY Financial Services

The group reports operating revenue for the third quarter of NOK 2,863 million, equivalent to a drop in organic revenue of 2%. The group's revenue was adversely affected by the previously communicated reduction in revenue generated by IT Operations from the large customer market in Norway (excluding the banking sector), and this accounts for the entire reduction in revenue of 2% for the quarter. Revenue was also adversely affected by the continuing challenging economic situation in Sweden.

EVRY Financial Services reports acceleration in its revenue growth, with 12% organic growth for the third quarter of 2013. Areas achieving good growth include self-service solutions, card services and ATM services in Sweden.

The SME market for IT operating services also reports a good performance, with revenue growth for the seventh successive quarter. EVRY operates a separate sales and delivery unit that focuses on SME and regional customers, and this unit won a number of important contracts in the third quarter that serve to strengthen the company's position in this growth market.

Key figures and main features

  • EBIT of NOK 197 million, an increase of 10% from the third quarter of 2012
  • Operating revenue NOK 2,863 million, an organic decline of 2% from the third quarter of 2012
  • Improvement in EBITA for the segments EVRY Norway and EVRY Financial Services
  • Cash flow from operations of NOK 232 million (NOK 171 million for the third quarter of 2012)
  • Free cash flow for the last four quarters was NOK 380 million as compared to NOK 33 million for the previous 12 months

Third quarter 2013 figures for EVRY's business areas

The EVRY Financial Services segment reports operating revenue of NOK 858 million for the third quarter of 2013 as compared to NOK 765 million in the third quarter of 2012. EVRY Financial Services produced operating profit before intangible asset amortisation (EBITA) of NOK 95 million in the third quarter of 2013, an increase of NOK 4 million from the third quarter of 2012.

The EVRY Sweden segment reports operating revenue of NOK 708 million for the third quarter of 2013 as compared to NOK 727 million in the third quarter of 2012. EVRY Sweden produced EBITA of NOK 43 million in the third quarter of 2013 compared to NOK 48 million in the third quarter of 2012.

The EVRY Norway segment reports operating revenue of NOK 1,404 million for the third quarter of 2013 as compared to NOK 1,487 million in the third quarter of 2012. EVRY Norway produced EBITA of NOK 94 million in the third quarter of 2013 compared to NOK 88 million in the third quarter of 2012.

Company outlook

The IT services market is currently affected by uncertainty in both Norway and Sweden. There continue to be marked differences in performance between the different segments of the market. Growth in demand for operating services and outsourcing is principally being driven by demand from customers in the SME market, where outsourcing is used as a tool to achieve cost savings and to free up resources. However, in the Swedish market it is apparent that the weak economic situation is having an adverse effect on the usual pattern of supplementary sales in the operating services area. The market for general consulting services is affected to some extent by the uncertain market outlook, with a trend towards shorter assignments and decisions to delay the start of new projects. However, there is still good demand for specific technological expertise in service areas that strengthen customers' competitiveness.

The IT services markets in Norway and Sweden are affected by global trends. This is driven to a large extent by two major trends that originate in the consumer market, namely the wider and greater use of mobile devices and growth in the use of mobile applications or 'apps'. Companies use cloud technology in addition to their traditional IT solutions to deliver these solutions. Against this background, EVRY anticipates good demand for expertise and advice on the implementation of new solutions, combined with demand for upgrading network infrastructure and the advanced security solutions that are required. Given its broad customer base, EVRY is well positioned to capture its share of the growth in demand driven by these trends. With our extensive expertise and understanding of crucial local factors, we are less exposed to downward pressure on prices from global competitors, and EVRY expects a stable outlook for the consulting area with a modest upward trend for hourly rates over the coming quarters. The increasing use of technology to support cloud-based solutions and mobile infrastructure also represents good opportunities to develop additional business with our existing operating services customers.

For the IT services market in Norway, we anticipate a high level of activity in the public sector. The views expressed by the new government in Norway support this view, with specific commitments on the launch of a number of major projects that will represent improved growth opportunities for EVRY. It also seems likely that the new government will open up new opportunities and greater interest in the use of outsourcing for operating services. EVRY offers efficient operating service concepts specifically designed for medium-sized companies, and the inflow of orders from this segment leads EVRY to expect continuing sound growth in this area. In the large customer segment of the market, EVRY's Future Proof operations concept has already proved attractive to a number of customers, but future prospects depend to some extent on the outcome of the renegotiation with DNB of its current contract. As previously communicated, the company does not expect any improvement in EBITA from the services area IT Operations in 2013 relative to 2012.

Conditions in the Swedish IT services market continue to be challenging even though the economic situation is showing steady improvement, albeit at a rather slow pace. The level of risk associated with the economic outlook is generally assumed to have reduced, principally in response to an easing in concern over the outlook for Europe. Some parts of the Swedish export industry are still affected by weak demand due to the weak economic situation in Europe. The general view is that the anticipated more marked improvement has been delayed, and is now not expected to materialise until the New Year. Customers continue to prioritise investments that will improve efficiency and save costs rather than investing in more growth-oriented areas. The anticipated upturn in the Swedish economy is taking longer than expected to materialise. Accordingly, we do not expect to see growth in the Swedish IT services market until 2014.

In respect of the overall future outlook for EVRY, the macroeconomic situation will be a crucially important factor. In a climate of greater optimism, increased demand from the SME market in particular will contribute to growth. However, more intense competition for assignments for large customers will continue to exert downward pressure on prices for operating services.

This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.

Contact persons:

Terje Mjøs, CEO EVRY, Tel: +47 06500

Eli Giske, CFO EVRY, tlf +47 908 44 189

Geir Remman, VP Corporate Communications, EVRY. Tel: + 47 970 55 017

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 development 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. The company is listed on the Oslo Stock Exchange and operates from headquarters at Fornebu in Bærum, with major activities in both the Norwegian and Swedish markets.

This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.

3rd quarter 2013
Presentation of 3rd quarter 2013

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Source: EVRY via Thomson Reuters ONE



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