EVRY: Good organic growth and increased profitability

(Oslo, 31 October 2014) EVRY reports organic growth of 3%, taking operating revenue to NOK 2,893 million for the third quarter of 2014. EBITA rose by 10% to NOK 215 million in the same period, which corresponds to an EBITA margin of 7.4% for the third quarter of 2014.

"We are delighted that there has been top-line growth in all segments for four consecutive quarters. This goes to show that the growth initiative EVRY has launched is well-received in the market by our customers, and this approach will remain a high priority going forward. At the same time, we are delighted with the increase in profitability this quarter. We are seeing the results of the improvement measures the company has implemented. We operate in a dynamic industry, and it is important to be able to change and adapt to the market. It is for this reason that EVRY is continuing to implement improvement measures that will make the company more competitive", comments Terje Mjøs, CEO of EVRY.

Growth program delivering results

Demand is being driven by digitalisation in society. EVRY is well positioned to benefit from this due to its significant operations in Norway and Sweden and across the Nordic region as a whole in the bank and finance segment. End-customers increasingly want more digital solutions, ideally on mobile devices. The Norwegian Government showed in its recent State Budget proposal that it will prioritise technology in its efforts to increase efficiency in the public sector. EVRY's growth program targets profitable organic growth, and emphasises the importance of industry verticals where EVRY has an unique expertise and can differentiate itself from its competitors. EVRY's detailed growth plans were presented as part of the Capital Markets day held on 11 June 2014.

EVRY signed new contracts totalling NOK 2.2 billion in the third quarter. It ended the third quarter with a continuing high order backlog of NOK 17.3 billion.

Key figures and main features of the third quarter of 2014

Operating revenue NOK 2,893 million, representing organic growth of 3% from the third quarter of 2013
 All segments reported organic growth, with EVRY Sweden reporting the strongest growth of 5%
 EBITA of NOK 215 million (NOK 196 million in the third quarter of 2013)
 Earnings per share (EPS) of NOK 0.44 (NOK 0.37 for the third quarter of 2013)
 Cash flow from operations NOK 157 million (NOK 223 million for the third quarter of 2013)
 Group order backlog totalling NOK 17.3 billion at 30 September 2014 

Third quarter 2014 figures for EVRY's business areas

The EVRY Financial Services segment reports operating revenue of NOK 889 million for the third quarter of 2014 as compared to NOK 858 million for the third quarter of 2013, representing organic growth of 4%. EVRY Financial Services produced EBITA of NOK 115 million in the third quarter of 2014 compared to NOK 95 million in the third quarter of 2013.

The EVRY Sweden segment reports operating revenue of NOK 720 million for the third quarter of 2014 as compared to NOK 708 million for the third quarter of 2013, representing organic growth of 5%. EVRY Sweden produced EBITA of NOK 51 million in the third quarter of 2014 compared to NOK 43 million in the third quarter of 2013.

The EVRY Norway segment reports operating revenue of NOK 1,377 million for the third quarter of 2014 as compared to NOK 1,385 million for the third quarter of 2013, representing organic growth of 1%. EVRY Norway produced EBITA of NOK 82 million in the third quarter of 2014 compared to NOK 93 million in the third quarter of 2013.

Company outlook

The global economy has continued to grow moderately in the third quarter. Geopolitical risk remains high related to the conflict in Ukraine and the sanctions that have been implemented both against and by Russia. Confidence in the Eurozone's ability to continue to grow is falling, largely because of a fall in both consumer and retailer confidence. There are currently somewhat divergent views on the prospects for growth in the Norwegian economy. A recent survey of Norwegian CFOs commissioned by Deloitte concludes that they are now more pessimistic about the prospects for growth than they were in the second quarter, when they were relatively optimistic. In the Confederation of Norwegian Enterprise's survey of the Norwegian economy in the third quarter, member firms see a somewhat brighter overall picture for 2014 but still expect weak growth in 2015. This lack of confidence in the outlook for 2015 is a consequence of the fact that investment in the oil industry appears to be falling sharply without any signs of an increase in investment activities in the onshore economy. The fall in investment in the oil industry is impacting the IT services market both directly and indirectly.

In the case of the Swedish economy, the most recent survey by the National Institute of Economic Research indicates that the manufacturing industry is increasingly confident, with stronger growth both domestically and in the export market. The International Monetary Fund has recently downgraded its economic growth forecast for the Eurozone, while Statistics Norway and Statistics Sweden have left unchanged their forecasts for GDP growth in Norway and Sweden at approximately

2% and 2.5% respectively for the next two years. Turning to the IT services market, EVRY has seen a slight shift in companies' focus, with more companies now prioritising changes to their businesses and innovation over cost reduction. As a consequence of this, we are experiencing increased demand for new applications and software-based solutions. This trend has contributed to moderate growth in the IT services market in the Nordic region. Furthermore, there are clear signs that companies are choosing to purchase services rather than invest in their own hardware and software. This trend is particularly clear in relation to software, with cloud-based solutions increasingly favoured over traditional licensed software. EVRY's view is that the market for its services follows the trend of previous quarters. However, challenges remain in the consulting services area in some regions in Norway, particularly as a result of the reduced activity level of investment in the oil industry. Capacity adjustments of approximately 40 FTE's in Norway in the fourth quarter will be completed as a result of this. In Sweden, EVRY is growing strongly in consulting services in the bank and finance market, and is winning market share in a segment in which there is particularly strong competition for contracts. The market in general is characterised by pressure on prices, with hourly charge out rates (on average) appearing to track Inflation as measured by the consumer price index (CPI). With regard to the operating services market, strong growth continues for medium-sized companies in both Norway and Sweden, with services for large companies registering little growth due to any increases in sales volumes being offset by falling unit prices. However, It has taken longer than expected for Swedish consulting market in region West and South to turn and as a consequence capacity adjustments will be made also here in the fourth quarter of 2014. Automation and improvements are expected to increase efficiency within operations and adjustments will be done accordingly. In total this will lead to a reduction of approximately 70 FTE's in Sweden in fourth quarter of 2014. EVRY's consulting business in Denmark has been focused on SAP. This business has been loss making for several years and the outlook has further developed negatively. The financial results are also hampered by project losses. As a consequence, an assessment of various options has been initiated, including a controlled wind-down of EVRY Danmark AS. Related to this, non-recurring cost of approximately 20-30 NOK Million is expected in the 4th quarter of 2014 EVRY sees the outlook for the next quarter and the beginning of 2015 as moderately positive. The pressure on prices for consulting services and for basic operating services is expected to continue, with international competition being an important factor in this. EVRY is pursuing a strategy of specialising in specific industries and of having a local presence in regions that have good growth prospects, and has made organisational changes in order to further support these efforts. Expertise that is industry and customer-specific is highly sought after, and is significantly less vulnerable to competition from international suppliers. EVRY is seeing the results of this strategy, and this supports our vision for growing our consulting-based priority areas going forward. Demand from larger customers for large assignments is expected to remain weak, but EVRY sees good possibilities for additional business with existing customers. We are particularly experiencing a high level of activity and demand for mobility solutions to be included in services for which we have existing operations agreements, as well as in services provided to new customers.

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

Contact persons:

Terje Mjøs, CEO EVRY, Tel: +47 06500

Knut E. Røsjorde, CFO EVRY, Tel: +47 95205786

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.

 Presentation of 3rd quarter 2014
3rd quarter 2014


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Source: EVRY via Globenewswire
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