Annual Report 2016
ANNUAL REPORT 2016 Customer-centric innovation
THE TITLE OF THIS YEAR’S ANNUAL REPORT points to the very core of our business strategy, which is that we strive to help our customers develop value- adding digital services - services that enable our customers to offer a better customer experience and so become more attractive and competitive. Our aim is to be one of the leading knowledge businesses in the Nordic region and to possess the insight, expertise and concepts needed to build a bridge between technology and business strategy.
FROM COST-EFFECTIVE CLOUD TECHNOLOGY to modernisation and innovation, EVRY seeks to be a catalyst for its customers’ digital change journeys. We work with our customers to create digital advantages, and so our value proposition is “Digital Advantage”.
THIS ANNUAL REPORT SETS out not only our strategy, organisational structure and financial results, but also other matters that are important to EVRY, from our effect on wider society to our business plan and internal matters. It consequently provides integrated reporting on sustainability and corporate social responsibility, and is intended to provide an overview of our business as it is today and to show where we are heading over the coming years.
This annual report is published in both Norwegian and English. In the event of any discrepancy between the two versions, the Norwegian version shall prevail. Contents
STRATEGY CEO letter 8 Vision, values and business goals 12 Our strategy – Digital Advantage 14 Cases – Customer-centric innovation 18 Intensified focus on cloud services 30
BUSINESS REPORT About EVRY 36 Organisational structure 38 Executive management of EVRY 40 CFO letter 42 Main features 2016 44 EVRY Financial Services 46 EVRY Norway 50 EVRY Sweden 54 Key figures 58 Alternative performance measures 60
BUSINESS PLAN Accelerated growth 66 Get the basics right 68 Operational excellence 72 Customer centricity 76 Employee engagement and culture 80
FROM THE BOARDROOM The Board of Directors of EVRY 86 Corporate governance 88 Report from the Board of Directors 2016 94
ANNUAL ACCOUNTS AND NOTES Group annual accounts 105 Annual accounts EVRY AS 150 Auditor’s report 160 Important features in 2016 Key figures
OPERATING REVENUE 2016 JANUARY EVRY Norway 46% NOK 20.8 BN EVRY Sweden 26% Order backlog BN Aibel and EVRY enter NOK 12.2 EVRY Financial Services 26% into a global agreement Center of Excellence for Other 2% digital transformation launched
28% EVRY and Method launch Percentage of women the Strategic Design Lab EVRY acquires IT Nor
EVRY Cloud Google and EVRY enter Services launched 2016 77 into a strategic partnership A-rated Customer satisfaction OUR ENVIRONMENTAL PERFORMANCE 2015 Carbon Disclosure Project (CDP) 97 Telenor and EVRY scores, which indicate companies’ 2014 EVRY announces its acquisition of enter into an agreement 91 environmental performance. Gecko Informasjonssystemer 89 2013 2012 8 864 EVRY becomes a partner for 78 Employees Norway Post and EVRY Workplace by Facebook enter into an agreement
EVRY acquires NetRelations Operating revenue NOK mill Adjusted EBITA NOK mill Adjusted cash flow SpareBank 1 and EVRY from operations NOK mill enter into an agreement
Handelsbanken and EVRY 1 300
enter into an agreement 13 000 1 200 1 200 Amazon and EVRY enter 12 500 1 000 1 000 into a strategic partnership EVRY and IBM expand 12 000 800 800 their strategic partnership 11 500 600 600
11 000 400 400
10 500 200 200
DECEMBER 10 000 0 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Strategy
CEO letter 8 Vision, values and business goals 12 Our strategy – Digital Advantage 14 Cases – Customer-centric innovation 18 Intensified focus on cloud services 30 8 Taking EVRY to the next level 9
Digital transformation is on the agenda in all industries and sectors. For EVRY, this means great opportunities for growth and development. Our challenge is to meet the market’s requirements in terms of knowledge, insight and vision; in the future growth will not come from within traditional IT but from digital business development.
“Our goal is to The opportunity space that exists can be illustrated by reference to innovation and the use of cognitive technologies. Research com- be closer to our pany Gartner predicts that in 2020 25% of service functions and customers’ customers” customer support processes will be handled by virtual assistants. This would represent more than a tenfold increase in the space of five years. On a global basis, Gartner predicts the annual level of Björn Ivroth investment in introducing smart machines to increase from USD CHIEF EXECUTIVE OFFICER (CEO) 1 billion in 2016 to USD 30 billion in 2021.
In order to respond to these technological developments, EVRY has undergone an extensive change process since 2015. One of the first areas that we addressed was our strategy in the infrastruc- ture area. Developing technology in-house was demanding and risky, and was not making us sufficiently competitive. EVRY therefore chose partnerships as its main strategy, and we have entered into strategic collaboration agreements with IBM, Microsoft, Google and Amazon Web Services. This has reduced our risk exposure and we now offer world-leading technology as well as processes for transitioning to cloud-based solutions, which we combine with our local presence, our market understanding and storage solutions that are located in Norway and Sweden. In 2016 we set up a new unit, EVRY Cloud Services, to further strengthen our focus on cloud services.
EVRY’s aim going forward is to help our customers transition to modern, scalable and efficient infrastructure platforms. This is a complicated operation for many organisations. It is consequently an advantage that EVRY knows the “old world” as well and is familiar with the steps required to ensure a successful transition. STRATEGY STRATEGY 10 STRATEGY “Our desire is to focus our resources onwhatcreates customer value, and this strong internalengagement.” more major contracts, asignificant increase incustomer satisfactionand has already hadapositive impactin the form of improved operational quality, competitiveness. create better services andincrease their advice onhow digitalsolutions can are to amuchgreater extent seeking greater uncertainty today, andcustomers and specific requirements. There is come to us with clear requests, setneeds change quickly. Customers used to market andcustomers’ expectations in what isademandingmarket. Both the to maintainandstrengthen our position that we need to aimeven higher if we are EVRY. We need,however, to recognise In short,2016 was a very good year for ahead. the years expand our expertise into new areas in engagement iscrucialas we will need to and strong internal engagement.Internal nificant increase incustomer satisfaction tional quality, more major contracts, asig- impact in the form of improved opera- value, and this hasalready hadapositive our resources on what creates customer customer-oriented. Our desire is to focus structure andbecome more market and operate, simplifiedour organisational also improved the efficiency of how we As partof our changejourney we have player in fintech in the Nordic region. business and to become the leading ahead. Our ambitionis to expand our will affect thebankingsector in the years learning andautomation, allof which Payment Services Directive 2,machine in areas includingblockchain, the EU’s We are buildingknowledge and insight extended arangeof customer contracts. banking solution,andhave renewed and into developing anext-generation core have invested significant resources In the FinancialServices segment, we CHIEF EXECUTIVE OFFICER(CEO) Björn Ivroth proposition is“Digital Advantage”. saymean whenweouris whatwe value competitiveness for our customers. This customer satisfaction, value creation and collaboration partner that helpsimprove have in-depthunderstandingand to bea our customers’ customers. We need to towards isaboutbecoming closer to parameters, but the level we are striving profitability are importantmeasurement elements in this, andgrowth and mental the quality of our deliveries are funda - next level. Operational excellence and journeyOurchange will takeEVRY to the add value and to exploit itif itdoes. to discover whether ithasreal potential to opportunity has to beassessedinorder world, the practicalreality of every into trial projects. Inarapidly changing insight and thentocreating, turnthis is ers and what strategic opportunities this driving changeatour customers’ custom- approach is to startby lookingat what is understanding inanentirely new way. Its technology, design thinking andstrategic Strategic Design Labcombines collaboration with Method. The EVRY up the EVRY Strategic Design Lab in understanding andinsight.In2016 we set to aneven greater extent with strategic combine toknowledge,need whichwe EVRY possessesextensive technical
11 STRATEGY 12 Vision, values and business goals EVRY HAS THE FOLLOWING BUSINESS GOALS:
DIGITAL ADVANTAGE
Continuously enhance and increase Continue to increase profitability customer satisfaction across all across all business areas by BUSINESS CONCEPT VALUES business areas deploying best practices and We bring information to > Anticipate needs exploiting innovations and new life, creating value for our > Go beyond expectations technologies customers for the benefit > Perform together of society. > Empower and inspire
Leverage our extensive customer Attract, develop and retain base and strong portfolio of products the most highly motivated, and services across all business areas committed and skilled employees to further accelerate organic growth in the industry
The starting point for EVRY’s vision, values and business goals Our values, which are “Anticipate needs”, “Go beyond is its customers and how we can help them fulfil their ambitions. expectations”, “Perform together” and “Empower and inspire”, Our vision, which is “Embrace infinite opportunities”, serves as stem from our closeness and dedication to our customers, and a reminder that technology enlarges the opportunity space and from how we work together with them to create the greatest describes how we go to great lengths to find solutions that possible customer value. EVRY’s values are thoroughly embed- benefit our customers; it is by leveraging this opportunity ded at the organisation. Work is continuously undertaken on space that we create digital advantage for our customers. Our developing the company’s corporate culture, and as part of this business concept, “We bring information to life, creating value there is a particular emphasis on performance and improve- for our customers for the benefit of society”, refers to how we ment. This work is an integral part of EVRY’s program for new use digitalisation and smart solutions to create value for our employees and also forms part of employees’ annual appraisal EVRY is working in a targeted way on achieving these business goals and made strong progress in 2016. Detailed information on the measures customers and to contribute to society. meetings.
STRATEGY that have been implemented and EVRY’s success at meeting its goals can be found in the “Business plan” chapter of this report. 14 15 OUR STRATEGY – DIGITAL ADVANTAGE When the customer’s customer decides
Technology is developing rapidly. Virtual reality, augmented reality and artificial intelligence are areas of technology that most of us will become more familiar with over the next few years. At EVRY, our motivation is to develop solutions that make everyday life simpler for the public, enhance the ability of businesses to compete and improve society.
The internet, sensor technologies, which cloud services play a crucial role mobile data communications and cloud in terms of ensuring availability. services have developed in ways that mean we now have greater access to At the same time, we recognise that our data, applications and processing power customers operate in a range of different than ever before. The opportunities are realities, have systems with varying virtually limitless. The challenge is to levels of complexity, and are subject to leverage the technology and to create different legal requirements in terms of solutions that deliver added value. At security, data protection and data storage. EVRY, we are passionately committed We are consequently committed to to high-quality solutions and therefore optimising our customers’ systems work very closely with our customers. based on their needs and choices. Our ambition is to transform insight into Working closely with a wide range of ideas, and ideas into concrete solutions. leading global suppliers is therefore an important pillar in EVRY’s strategy STRATEGIC PARTNERSHIPS to deliver integrated solutions that are EVRY has entered into strategic partner- well-suited to each customer. ships with global companies such as IBM, Microsoft, Google, Amazon Web DIGITAL TRANSFORMATION Services and Facebook. This gives us Digitalisation and digital business access to technology and specialist development represent a change journey expertise and constitutes a platform for that can affect every aspect of an the solutions we deliver. We think that organisation, from its business model the cloud will be central to the solutions and strategy to its employees, collaboration of tomorrow. Cloud services offer partners and customers. Companies financial flexibility, scalable services, that create high-quality dialogue with their and access to the applications and customers, collate and process information, computing power needed for even and tailor their offer and react quickly to the most advanced solutions. Artificial the information available achieve a intelligence is an example of an area in significant competitive advantage. STRATEGY STRATEGY 16 “At EVRY, we are passionately committed to high-quality solutions 17 and therefore work very closely with our customers. Our ambition is to transform insight into ideas, and ideas into concrete solutions.”
Similarly, public sector organisations that During the course of 2016, the EVRY manage to modernise, adapt and improve Strategic Design Lab welcomed a num- the efficiency of the services they offer can ber of customers, and worked with them make significant savings and so free up on topics that included the future of valuable resources. Value-adding solutions banks, the smart cities of tomorrow, and all have one important thing in common: the future of retailing and customer ser- end-users see them as relevant and as vice. We have been involved with both adding value. new and existing customers in stimulat- ing discussions, ambitious projects and DIGITAL ADVANTAGE DESIGN THINKING value-adding solutions. SYMBOL We have created a specially designed In 2016 EVRY entered into a partnership symbol for the Digital Advantage strategic with Method Inc., one of the best-known DIGITAL ADVANTAGE message. The symbol represents the companies in design thinking inter- THAT LEAVES ITS MARK digital advantages that EVRY creates for its nationally. The reason for this was the In the years ahead EVRY will strengthen customers and also their customers. recognition that more than just technical its strategy of creating digital advantages know-how is needed to create digital that leave their mark. This will require big advantage for customers; doing so changes at EVRY. We need to dedicate also requires an understanding of what significant resources to developing our solutions end-users, which is to say our expertise and also to work proactively customers’ customers, want and see a on attracting new talent. We need to need for now and in future. We work by change the way we work and to improve acquiring insight into such questions the quality of the advice and solutions we and then building a bridge between offer our customers. 2016 was the year in strategic choices and the technological which we put in place the partnerships opportunity space. In 2016 we set up the and methodologies that will make us EVRY Strategic Design Lab in collabora- a more valuable collaboration partner. tion with Method. This unit gives us the However, the final proof of this will as tools and methods with which to build ever be in the quality and value contribution bridges between research into ideas, of the solutions we deliver. We need to strategy and technology. Trial projects always aim higher to earn our place as a and pilot testing are a key part of this digital solutions partner. methodology. We think that the winners of the future will be characterised by their ability and desire to test out ideas at an early stage. EVRY is seeking to be a partner that enables organisations to do this innovatively and with as little risk as possible. STRATEGY STRATEGY The banking services of the future, today
EVRY supports banks in their management of continuous change and facilitates the next generation of banking services.
CHATBOT – Marit, 66, has her purse stolen. With the help of a chatbot, she gets her card MACHINE LEARNING – Bjørn, blocked without having to make a call and 53, buys a flight to Svalbard. His to wait on hold. PAYMENT – Maja, 18, buys a new dress. On bank sees this and, with the help the basis of data from the card transaction, of machine learning, suggests she is informed that there are matching shoes buying a winter coat. for sale at a reduced price in the shop next door.
SAVING – Tommy, 27, buys a frap- puccino and a muffin. He needs to save money to get a mortgage, and his savings app sends him a friendly reminder of this. MORTGAGE – Vegard, 32, is viewing a property. He informs his mortgage broker that he is interested, and receives a mortgage offer and details of his application there and then. 20 CUSTOMER CASE: SPAREBANK 1 “In EVRY we have a collaboration partner that thinks long-term and that understands the 21 mechanisms in the banking market and our needs. We are now well-equipped to meet our Proximity and security in a digital world customers’ requirements in the future as well.” Øyvind Aass – CEO OF THE SPAREBANK 1 ALLIANCE
SPAREBANK 1
>> Collaboration between 14 banks >> 7,500 employees >> 300 branches across the whole of Norway
SpareBank 1 and EVRY The banking sector is going through a EQUIPPED TO MEET ITS RELEVANT DIGITAL SERVICES MORE USER-FRIENDLY FOR STANDARDISED SERVICE customer-driven digital transformation CUSTOMERS’ NEEDS EVRY can offer assistance with thinking CUSTOMERS PLATFORM extended their collaboration and is being significantly affected by the The use of digital services has exploded, innovative thoughts and generating ideas Automated processes and digital EVRY is establishing its new core banking in 2016. With EVRY´s rapid pace of technological change. Bank and banks operate in a competitive that change how businesses operate solutions make better business models solution as a service platform using customers are constantly demanding market that requires them to be focused and compete. SpareBank 1 is strongly possible. Integration with Norway’s pub- industry-standard components. EVRY’s assistance, the SpareBank 1 new, user-friendly services. In order to on costs. Banks need to become more committed to providing its customers lic registers enables SpareBank 1 to make development strategy and implementa- alliance, which consists of meet new customer requirements and competitive through a combination of with user-friendly and efficient digital the lending process simpler for both tion methodology are firmly based on the ensure they are quick to market with new simpler digital solutions for customers and services. Thanks to EVRY’s assistance, customers and the banks in the alliance. company’s close collaboration with the 14 independent savings services, banks need a modern and flexible automating their back-office processes. SpareBank 1 now has more efficient Another example is digital electronic Banking Industry Architecture Network banks, is building self- platform. Collaborating with EVRY will systems of higher quality. This is helping real estate transactions through collab- (BIAN), of which EVRY is the only mem- give SpareBank 1 banking services, core “SpareBank 1’s ability to adopt new to ensure its customers have simpler oration between real estate agents and ber that is a Nordic IT service provider. service solutions and new banking solutions and payment solutions technology is of crucial importance in and more flexible solutions. EVRY is the banks, with electronic processing for The use of modern architecture and customised services to meet that are next-generation. order for us to be a leading banking alliance helping SpareBank 1 with its efforts to real estate settlement. This enables faster standards ensures that EVRY’s solutions and to offer industry-leading services to modernise, simplify and become more settlement between buyers and sellers are flexible, cost-effective and adapted to the needs of tomorrow. our customers. Our values are based on cost-efficient, and will also help make the of real estate, while the banks benefit international requirements. closeness, local expertise and security in bank even better equipped to respond from a faster loan approval process with every-day digital life”, comments Øyvind to the market’s demand for services that digital real estate settlement, based on Aass, CEO of the SpareBank 1 alliance. are more relevant and more personal in a the Norwegian Mapping Authority’s
STRATEGY digital world. digitalised solutions. STRATEGY Solutions for a digital everyday life
EVRY is contributing to the digital transformation, which is providing better services that are more customised, relevant and competitive.
CATCH REPORTING – Per, 48, has landed a good catch of fish CUSTOMER SERVICE – Espen, 63, and reports his record catch of telephones his energy company, and its cod to the Norwegian Directorate customer service desk automatically brings of Fisheries via eCatch. up all his customer data and previous correspondence in order to provide him with the best possible service.
BILL OVERVIEW – Hanne, 24, uses her mobile to log into the ‘My account’ section of her telecom INTERNET-CONNECTED CAR provider’s website where she can – Preben, 37, gets in his Tesla view all her bills. and goes online to check the local driving conditions. 24 CUSTOMER CASE: TELENOR 25 Telenor – Solutions for customers’ digital day-to-day
Telenor’s goal is to become its customers’ preferred partner for their digital journeys. As a result, more and more is being asked of its systems for exchanging information and data in real time. As is the case for other companies, it is important for Telenor to have efficient and cost- optimal IT solutions that offer a high degree of availability, self-service and scalability. EVRY is an important service provider and collaboration partner in relation to improving the efficiency of and digitalising Telenor’s interaction with its customers – and the IT systems that are needed to achieve this.
“The customer journey is important EVRY has delivered services to Telenor transformation. The agreement includes PRIMARY LOCATION IN FET TECHNOLOGY THAT BENEFITS Norway for many years, and is an cloud services, infrastructure and data The primary location will be EVRY’s THE CUSTOMER to Telenor, and the digitalisation TELENOR important collaboration partner that is centre services. EVRY has delivered new data centre in Fet outside Oslo, Telenor is a company capable of adopt- and automation of business- responsible for ensuring business-critical IT services to Telenor Norway for many which uses leading cloud services, IT ing new technology that delivers benefits critical processes is crucial to >> 4,000 employees in Norway, value chains are always available. It does years with a target of delivering continual security and data storage technology. It for its customers. The new agreement 33,000 globally Telenor preserving its position in so across applications, security and infra- cost reductions, high availability and also meets the requirement for data to will enable Telenor to offer its customers structure, in a landscape that features a operational stability. The new agree- be stored on Norwegian soil, which is a more unified cross-Nordic platform with the market. It is important for us >> 3 million subscribers range of providers and official regulations ment is wider in scope and includes not a requirement set by the authorities in international capabilities and serves as a to ensure our suppliers support in Norway in Norway and beyond. only Telenor Norway but also Telenor in Norway. The data centre is world-class good example of how EVRY creates dig- and help develop and deliver the Sweden as well as other Telenor units in in terms of data security, and it also uses ital advantage for its customers through customer journey.” DEDICATED CLOUD SERVICES the Nordic region. The cloud service will only half as much energy as a traditional cost-effective, automated and flexible >> 214 million subscribers Telenor and EVRY entered into a new support Telenor’s security and scalability data centre, due in part to an entirely solutions. in total
agreement in 2016 for EVRY to mod- requirements, and will provide cost- new air-cooling system and modern, Berit Svendsen ernise Telenor’s IT infrastructure in order effective production for the company’s virtualised and energy-efficient servers CEO OF TELENOR NORWAY to accelerate the company’s digital IT portfolio. STRATEGY STRATEGY Smarter cities
EVRY develops and delivers IT services that make cities smarter and everyday life easier for residents.
ELECTRONIC PLANNING APPLICATION – Lisbeth, 47, submits a digital planning application for an extension to her house using her PC.
DIGITAL BOOKING – Gustav, 19, uses his mobile to book his local sports hall for an upcoming floorball tournament on the way to a training session.
E-HEALTH – Malin, 31, finds a new regular primary care doctor, as she has recently moved to the municipality.
ELECTRONIC REPORTING DIGITAL APPLICATION PROCESS – Robert, 51, uses his mobile to – Adrian, 36, uses his tablet to apply report how much water he has for a school place for his used in the most recent period. five-year-old daughter. The process is very easy thanks to the new system. 28 CUSTOMER CASE: NACKA MUNICIPALITY “Building solutions of this type is not a question of being daring, but rather of fulfilling our vision of being open and 29 diverse. This vision is even more important in today’s network-based society in which fulfilling requirements and A smarter municipality expectations regarding the openness and accessibility of businesses and organisations is crucial for credibility. As a municipality, our success depends on our residents trusting us.” Mats Bohman – ADMINISTRATIVE DIRECTOR, NACKA MUNICIPALITY, CITY EXECUTIVE OFFICE
NACKA MUNICIPALITY
>> 99,000 residents >> One of the fastest growing municipalities in Sweden >> Population expected to exceed 113,000 in 2020 >> 15–20 minutes from central Stockholm
In order to interact more While municipalities’ websites are often AN OPEN DIGITAL PRESENCE DIGITAL COLLABORATION need and viewing up-to-date information. A set of principles was drawn up for the closely with its residents, simply channels for providing information, Nacka Municipality wanted to create an The entirety of the solution is flexible and The more internal parts of nacka.se have work on Nacka Municipality’s digital Nacka Municipality took the opposite innovative digital experience for its own secure, and it means that Nacka Municipality replaced the municipality’s old intranet presence, which was carried out by Nacka Municipality in approach, which is to say that its new employees as well as the municipality’s is able to adopt new technology in and are built around the tasks that the EVRY’s subsidiary NetRelations. Sweden has created a website is an interactive channel that service users. It sought to engage in a order to create innovative solutions for municipality’s employees have to carry These were that the solution would: residents can use in order to interact process of continuous dialogue with interfacing with its residents, employees, out. Taking employees’ needs and work future-oriented, transparent directly with the municipality’s services. both internal and external stakeholders and business and industry. What is at situations as the starting point ensured >> Have a common portal regardless of the type of user (resident, employee etc.) and open web solution that The entire portal was built around the to ensure the service was developed col- stake is the creation of one Nacka where that they would be able to complete individual resident’s journey through the laboratively. Its goal was to use modern residents, the municipality itself and other their tasks as efficiently and effectively as >> Create the conditions for everyone to is both an external website municipality’s services. service design in order to transition from stakeholders can collaborate in order to possible, even when working away from make their own choices operating a cumbersome patchwork of create a successful municipality. the office using a mobile device. and an internal digital >> Signal openness, trust and long-term Nacka Municipality expects significant technologies to having an open digital The digital workplace facilitates the work commitment to improvement workplace. growth in its population in the coming presence. It was also important for Nacka of the municipality’s employees and years. Its ambition is for more digitalisa- Municipality to create a personalised and reflects their actual physical workplace. >> Promote collaboration, knowledge sharing and dialogue tion to help it to maintain and strengthen task-focused digital workplace, both to Employees are able to use the solution its service offering without it having to increase collaboration between its own for everything they would otherwise do >> Be the obvious access point for increase employee numbers. employees and to ensure openness with physically in terms of sharing knowledge services and self-service STRATEGY the population. with colleagues, accessing the tools they STRATEGY 30 STRATEGY solutions architecture, implementation, availableoptions to them,through to this process, from analysing all the cloud egies that cover all the steps involved in with itscustomers to produce cloudstrat- regulatory questions.EVRY collaborates legacy systems, security, compliance and into the complexity associated with understand andhave particular insight quickly aspossible. At the same time, we as muchpossible to the cloudas therefore that customers shouldmove applications. Our recommendation is and offer quickaccess to innovative Cloud services are flexible andscalable faster andso to create business value. efficiency of their operations, to innovate EVRY helpsitscustomers to increase the NEWBUSINESS AREA and India. certified consultants in Norway, Sweden for arangeof cloudplatforms usingour implementation andoperationsservices offers consultancy, architecture, design, more cost-efficient andscalable.EVRY more and to have infrastructure that is forneeded foundationinnovate themto their own servers to the cloudlay the elements of their IT portfolios from organisations thattransferand companies and digitalbusinessprocesses. Those capable of supportingnew technology need infrastructure services that are Today’s companies andorganisations and itis well-equipped to meet the increased demand. a year in which itintensified its focus oncloudcomputing, becoming more mature. EVRY looksbackon2016as The market for cloudservicesisgrowing quickly and on cloudservices Intensified focus CLOUD SERVICES
be quicker to market with new services. agility as they digitalise, and the ability to market-leading infrastructure, greater global presence. This gives customers IBM’s innovative cloud technology and services, anditcombines these with to lead the development of value-adding ern cloudservices. EVRY iscontinuing now beable to enjoy the benefitsof mod- in 2016so that allEVRY’s customers will expanded IBM was collaboration with being moved to the cloud.EVRY’s EVRY’s largest customers are currently being setupin the Nordic market, and has led to new world-class cloudsolutions well-received by EVRY’s customers. It structure services in2015. This hasbeen strategic collaboration for basicinfra- EVRY andIBMentered into along-term EXPANDING ON THE IBMSUCCESS new cloudspecialistsduring2017. cloud. EVRY’s ambitionis to recruit 100 customers transitionto the help and to further develop EVRY’s service offering recruitment process was launched to and capacity in this area, andalarge-scale EVRY to have market-leading knowledge in the autumnof 2016.Itisessential for the EVRY CloudServices businessarea it seesin the Nordic market, EVRY setup In order to capture the growth potential services on their behalf. migration andmanaging their cloud
31 STRATEGY 32 STRATEGY Microsoft Azure or IBMBluemix. dedicated datacentres with either to have private cloudscandoso via Google and IBM.Customers that need so via Microsoft, Amazon Web Services, wishing to use the cloudare able to do cloud providers have to offer. Customers leading ofbest thatthe advantage the partner that isable to helpcustomers take its capacity asanindependent technology leading Nordic cloudservices provider in EVRY hasachieved itsgoalof being the and Amazon Web Services. As aresult, partnerships with IBM,Microsoft, Google region, EVRY hasentered into strategic cloud services provider in the Nordic In order to positionitself as the leading AGREEMENTS STRATEGIC COLLABORATION choose –onNordic soil. cloud architecture the customer may availability andglobalscalability for any efficient implementation,secure Bluemix platform – aplatform that offers offers direct access to theglobalIBM -leading private cloudplatform, italso not only provides access to anindustry The partnershipbetween IBMandEVRY Ambition: Position: position developcontinue to this in the Nordics, and will EVRY is the #1partner on the Bluemix platform Nordic datacentre based IBM, providing the only partnership withStrategic
INVESTMENT IN THE CLOUD customers are notrestricted to asingle than oneprovider to combined, so that as itenablescloudplatforms from more regard to usingDevOps methodology puts customers inabetter position with platforms in the world. The collaboration service supportsall the leadingcontainer its container managementservice. This world’s leadingsuppliersin the area with with Rancher Labs, which isoneof the this area by entering into apartnership its expertise anddelivery capabilitiesin type of task. EVRY hasstrengthened important toolsforare containers this services. DevOps methodology and the benefitsoffered by moderncloud the cloudso they canmake the mostof to move their businessapplications to customers face is whether they are able One of the biggestchallengesEVRY’s A CATALYST FOR CUSTOMERS’ cloud efficiently. to move itscustomers’ solutions to the Management Platform, EVRY isable or publiccloudservices. With itsCloud their traditional IT setup to either private that wish to migrate selected partsof hybrid cloudsolutionsandcustomers EVRY alsoserves customers that need on Azure Stackon Azure Nordics providing services the first companies in the EVRY aims to beoneof partners in the Nordics EVRY isoneof the largest
Nordics in2017 the largest partnersin the EVRY aims to beoneof partners inNorway EVRY isoneof the largest bility for their IT services. its customers, and to take full responsi- hybrid or multi-cloudenvironments for ments. EVRY isalsoable to administer customers’ specificneedsand require- on which solutionbestsuitseachof its is able to provide high-quality advice independent approach meansEVRY company’stechnology-size. The every organisation, regardless of type or it isable to deliver the rightplatform for nership work anddelivery modelmean cloud offer on themarket. EVRY’s part- genuinelyand technology-independent that EVRY now has the mostextensive Amazon Web Services, itbecomes clear EVRY’s partnerships with Google and EVRY’s partnership with IBM,as well as stack. When this isseenin the context of deliver services onaMicrosoft Azure first companies in the Nordic region to today, andits target is to beone of the Microsoft partners in the Nordic region EVRY isalready oneof the largest STRONGLY POSITIONED regardless of the cloudplatform. solution, administer single a containers in allowscustomers to which service, EVRY will provide adistributed container provider. As partof this collaboration, in 2017 partners in the Nordics top AWSthe consulting EVRY aims to beamongst and Public Sector Partner Global ChannelPartner conclusion as ALLSKOG,conclusion whichwasthat available to it,andcame to the same the organisation’s needsand the options cloud-based solution.EVRY analysed ing initsown solutions,or opting for a an operatingservices partner, invest- of continuing with outsourcing from ALLSKOG evaluated the alternatives need for significantinvestment. that increase productivity without the to beable to quickly provide services spond to these changes,itisimportant try ischangingquickly. Inorder to re- Like other industries, the forestry indus- finally chosen. before acloud-basedsolution was es. A rangeof options were assessed support and were tying upresourc- existing solutionsrequired alotof the organisation’s IT services, asits forest owners), wanted to modernise ALLSKOG (a regional cooperative of Eirik Wean, who is the IT Manager at offering thebest catch atany given time. caught, and which fishing grounds are of catches, what types of fish are being to beable to quickly have anoverview tion. Furthermore, the industry needs as well ascommercially usefulinforma- submitted to the Directorate of Fisheries mandatory reports that have to be way of gatheringdata to generate the companies needasimpleandefficient M Google G Suite. Dualog with cloudservices from from fishing vessels. EVRY assisted for gatheringanddistributingdata to this work isitselectronic system tion in the fishing industry. Central Dualog hasstartedadigitalrevolu- Cloud servicesmakingday-to-day life simpler for fishermen CUSTOMER CASE The cloudmaking forestry operationsmore efficient CUSTOMER CASE asters ofasters fishing andfishing vessels data in the cloud”, comments Eirik Wean. is nolonger any scepticism abouthaving and more stable, than before, and there are asquickandstable,if notquicker access wherever users are located. They tools andother applicationsare easy to mapping SuperOffice, Visma, various solutions are on Azure. Office programs, the majority of our business-critical IT “Following the migrationprocess, came superfluous to requirements. SharePoint andSkype for Business be- servers that hadpreviously runemail, to Office 365, whichmeant thatsome organisationover same timethewent virtual machinesandmonitoring. At the with Azure-based services, including operating environment was replaced daily operations. ALLSKOG’s existing it was carriedout with noimpacton tion process was carefully planned,and EVRY’s consultants ensured the migra- Azure would be the bestoption. a cloud-basedsolution from Microsoft data itreceives to monitor stocks and “The Directorate of Fisheriesuses the Director atDualog. of Fisheries”, comments Silje Moan, Sales reportingNorwegianDirectorate to the information, andsimplify the process of ing companies with better management day-to-daylife for provide fishermen, fish- “We are sure that eCatch will simplify to the Directorate of Fisheries. catch.com, which isused to submitdata fishing vessels to use,andaportal, mye- installed on tablets for masters onboard This solutionconsists of anapp that is oped eCatch. To address these needsDualog devel- in the field”, comments Eirik Wean. enable entirely new ways of working out PowerApps,Microsoft whichwould also thinking aboutstarting to use better oversight andcontrol. We are time-keeping system that will provide decision supportsystems andanew and we are also further developing our contract solution for useoutin forests, new services, includinganiPad-based “We have now started developing development projects. time that canbeused to focus on that the cloud-basedsolution frees up One of the mostsignificantbenefitsis comments Silje Moan. better decisionsmore quickly”, sales andobjections,also to make purposes of documentation,planning, myecatch.com customer portal for the the information that accumulates in the fishing vessels and fishing companiesuse catches and fishing activities. Masters of to keep acheckon the fishing fleet’s
33 STRATEGY Business Report
About EVRY 36 Organisational structure 38 Executive management of EVRY 40 CFO letter 42 Main features 2016 44 EVRY Financial Services 46 EVRY Norway 50 EVRY Sweden 54 Key figures 58 Alternative performance measures 60 ABOUT EVRY Central provider for digital life 36 37 Digital Advantage Over five million people in the Nordics use services delivered by EVRY every day. The company is the force behind a whole range of innovations that have transformed the way people access services. Through our insight, solutions and technology, we contribute to the development of the digital society of the future, for the benefit of our customers and society as a whole.
MARKET SEGMENTS
EVRY EVRY EVRY EVRY is a leading IT company in the EVRY Norway and EVRY Sweden. EVRY Norway Sweden Financial Nordic region and has a strong local and Financial Services delivers services regional presence. It delivers business- to the banking and finance sector Services critical solutions to more than 10,000 internationally, while EVRY Norway and customers in business and industry and EVRY Sweden serve all other sectors the public sector. The company develops in their respective markets. new customer-centric solutions that SERVICE AREAS ACROSS INDUSTRIES 10,000 customers give our customers a digital advantage, We offer our customers both local and modernise business processes and make global delivery models. The three market Cloud Services Digital Services IT operating services more efficient. segments provide infrastructure and out- sourcing services through Operations, Operations Global Delivery Every second, day and night, people which also has delivery capacity in the are logging into their internet banking, form of offshoring in India, nearshoring retrieving important work documents, in Ukraine and first-line customer service or just checking the time of the next train in Latvia. Cloud Services develops Offices in 9 countries home. EVRY is the force behind services concepts and provides advice on cloud LEVERAGING STRATEGIC PARTNERS such as these that are of great value to services. As an integral part of its service society. offering EVRY has entered into strategic collaborations with leading global com- Our employees are highly qualified and panies such as IBM, Microsoft, Google, have in-depth expertise and extensive Amazon, Apple, Facebook and Method. Method experience. Making use of our strong Digital Services offers specialist local knowledge and drawing on our digital expertise to help customers international resources has allowed us to develop new business models and develop a unique position in the Nordic innovative solutions for their end-users. market. We provide both industrialised IT services to organisations that need EVRY has 8,864 full-time employees standard solutions as well as solutions that located across Norway, Sweden, are adapted to meet industry-specific Denmark, Finland, India, Great Britain, and regulatory requirements. Ukraine, Latvia and Bulgaria. EVRY’s head office is located at Fornebu, EVRY is divided into the following market outside Oslo. segments: EVRY Financial Services, BUSINESS REPORT BUSINESS REPORT Organisational structure
38
The EVRY Group Björn Ivroth*
Group Finance Group Strategy and M&A Henrik Schibler* Björn Martinsson*
Human Resources Communications and marketing Trond Vinje* Unni Strømstad (1 June 2017)
EVRY Norway EVRY Sweden EVRY Financial Services EVRY Operations EVRY Cloud Services Kolbjørn Haarr Fredrik Almén Wiljar Nesse Morten Sæther Tuomo Louhivuori
Staff and support areas Business areas * Executive Group Management
EVRY’s organisational structure and operational structure are EVRY’s executive management team meets once a month to intended to ensure the Group is able to adapt quickly and discuss strategy and to make decisions regarding individual efficiently to changes in the market and customer requirements. business areas. EGM (Executive Group Management), which The company’s staff and support areas are responsible for oper- consists of the CEO, the CFO and the executive vice presidents ational tasks and group services. The EVRY Financial Services, for strategy and business development and Human Resources, EVRY Norway and EVRY Sweden business areas are responsible meet every fortnight and hold separate decision-making for EVRY’s relationships with its customers and for providing meetings about overall key initiatives for the business. services to customers. Deliveries from EVRY Operations and EVRY Cloud Services form an integral part of the business areas’ service offerings. BUSINESS REPORT Executive management of EVRY
40 41
1 Björn Ivroth 2 Henrik Schibler 3 Björn Martinsson CHIEF EXECUTIVE OFFICER – CEO CHIEF FINANCIAL OFFICER – CFO EXECUTIVE VICE PRESIDENT, HEAD OF GROUP STRATEGY AND M&A Experience: Björn Ivroth has more than 30 years’ Experience: Henrik Schibler has been CFO at ISS experience from top management positions at Norway, regional CFO at ISS Central Europe, and Experience: Björn Martinsson has more than 16 CGI, IBM and Accenture and from having worked Finance Manager at ISS Group Operations. He has years experience in investment banking across as a consultant at McKinsey. From 2012 to 2014 he also worked at the FisherThermo Scientific/Nunc Europe and Asia, with particular knowledge of was the Managing Director of CGI Sweden, where Group and at Egmont. the technology sector, having advised numerous he led the company’s business transformation. clients on strategic M&A, divestitures and capital Education: A Master’s degree in Economics raisings. Before joining EVRY, he was Executive Education: A Master’s degree in Business and Business Administration from Copenhagen Director of Nomura, Nordic Investment Banking / Economics from the School of Business, Business School, with specialisation in EMEA Software & IT Services. Economics and Law at the University of Management, Accounting and Control. Gothenburg. Education: A Master’s degree in Finance from the Stockholm School of Economics.
1 2 3 4 Wiljar Nesse 5 Kolbjørn Haarr 6 Fredrik Almén EXECUTIVE VICE PRESIDENT, EXECUTIVE VICE PRESIDENT, EVRY NORWAY EXECUTIVE VICE PRESIDENT, EVRY SWEDEN EVRY FINANCIAL SERVICES Experience: Kolbjørn Haarr has been Executive Experience: Fredrik Almén has been Vice Experience: Wiljar Nesse was previously Head Vice President for Central Europe, Russia and President for Business Process Services and of the Bank and Finance business area at EDB Norway at Tieto, Managing Director of Tieto Software Business at CGI, COO at CGI Sweden, Business Partner. He has also worked at Elkem and Norway, and a member of the Tieto Corporate and Vice President for Business Consulting. He has AP Dow Jones, and as chief executive and part Management Team as Executive Vice President for also been CEO of Antula Healthcare International, owner of Manamind AS. Telecom, Media, Energy and New Markets. He has COO of KIN Group, Procurement Director at Eniro also held several senior positions at HP, including and a Management Consultant at Accenture. Education: A Master’s degree in Business Director of HP Technology Services in Northern Economics from the Norwegian School of Education: A Master’s degree in Finance Europe and Director of HP Services in Norway. Economics. and Business Administration from Stockholm Education: Trained as an engineer at the Stavanger University. College of Engineering.
4 5 6 7 Tuomo Louhivuori 8 Morten Sæther 9 Trond Vinje EXECUTIVE VICE PRESIDENT, EXECUTIVE VICE PRESIDENT, EXECUTIVE VICE PRESIDENT, EVRY CLOUD SERVICES EVRY OPERATIONS HUMAN RESOURCES
Experience: Tuomo Louhivuori has been Vice Experience: Morten Sæther has held several senior Experience: Trond Vinje has been HR Director at President Sales at Tieto leading sales in the management positions at Telenor. He joined EDB CGI Norway, HR Director at Scandic Hotels, and Telecom, Media and Energy industry group. At in 2004 and then started at ErgoGroup in 2005. HR Manager and Quality Manager at ISS Facility Tieto he had a number of other roles including Services. He has also held senior management Education: A Bachelor’s degree in Computer leading strategic sales, establishing global service positions at Accenture and the Norwegian Science from Sør-Trøndelag University College. practice and business development. Tax Administration, and his background is as a consultant at the PA Consulting Group. Education: A Master’s degree in Industrial Engineering and Management from Lappeenranta Education: A Master’s degree in Political Science, University of Technology, Finland. specialising in Management and Organisation, from the University of Oslo and Manchester Metropolitan University. 7 8 9
BUSINESS REPORT BUSINESS REPORT Accelerated organic growth
42 43 EVRY is working in a targeted way on becoming the leading IT company in the Nordic region. We made significant progress towards this in 2016.
Henrik Schibler A fundamental element in recent years has been optimising CHIEF FINANCIAL OFFICER (CFO) EVRY’s cost structure. Clear and targeted measures have been implemented to simplify EVRY’s organisational structure, cut its “Nothing is more natural in administrative costs and reduce its fixed costs in relation to its infrastructure business. The strategic partnerships we have entered a performance culture than into with several large technology companies, particularly IBM, have aiming higher” also enabled us to modernise our business cost-effectively, and have strengthened our focus on creating value-adding services. These strategic partnerships give EVRY access to first-class technology solutions, and enable it to offer competitive cloud services and 2015 2016 hybrid solutions to small, medium and large organisations.
* Cost Opex as % 60.5% At EVRY there is a focus on ensuring responsibilities are clearly Structure of Revenues 55.9% allocated and on creating a strong performance culture. After Optimisation implementing numerous organisational measures in 2015, EVRY was able to focus on customers and the market to a much greater extent Strategic Capex as % of in 2016. Contracts totalling NOK 14.0 billion were signed during the Outsourcing & Revenues 3.4% Infrastructure 2.9% course of the year, representing an increase of 40% from 2015. This Improvements record-high level of sales meant that EVRY ended 2016 with a record order backlog of NOK 20.8 billion, an increase of NOK 3.7 billion Adjusted 10.8% from the end of 2015. 6.3% Superior EBITA Margin Profitability & Cash Flow EVRY has also worked systematically on delivering operational excel- Generation Cash 108.0% 97.8% Conversion lence across the business, particularly by optimising its resource use. The monthly billable utilisation rate increased to 82.4% in 2016 from 74.4% in 2015. In short, the improvement measures helped EVRY Return to Q4 Revenue achieve an adjusted EBITA margin of 10.8% in 2016, up from 6.3% in Organic Growth 2.2% Growth 2015.
* Includes total personnel costs and The challenge for EVRY in the years ahead will be to serve our other operating expenses (- 2.7%) shareholders by ensuring profitable growth. The company’s ability to manage change and its performance in 2016 give us grounds to believe that this is a realistic ambition. The numerous opportunities Sales NOK BN Order backlog NOK BN in the market and the company’s record-high order backlog, good cost structure and lower risk profile are important building blocks. 25 25 EVRY reported organic growth of -0.9% in 2016, but we saw a clear 20.8 positive trend through the year, with the company achieving organic 20 20 17.1 growth of 1.5% in the second half of the year and 2.2% in the final
15 14.0 15 three months. 10.1 10 10 EVRY also improved its position with its customers and employees 5 5 well as other stakeholders in 2016, and we are achieving improved 0 0 scores on both customer and employee satisfaction surveys. In 2017 we will take the next steps on our transformation journey, as BUSINESS REPORT BUSINESS REPORT 2015 2016 2015 2016 nothing is more natural in a performance culture than aiming higher. Bil, one of the largest private car dealerships operations, monitoring and backup services for in Sweden. The agreement involves EVRY the company’s IT platform. Main features taking total responsibility for the company’s IT >> SINTEF and EVRY sign an agreement for EVRY to operations, including Service Desk and its support set up and operate world-leading cloud services 44 function. 45 2016 with modern data storage technology and >> EVRY becomes the first IT company in the Nordic automated solutions. The agreement is intended FIRST QUARTER: INNOVATION AND SALES region to launch “Workplace by Facebook”, to simplify day-to-day activities for SINTEF’s making internal communication at EVRY more researchers, and to provide quicker innovation >> At the start of January, Aibel extends and expands transparent and dynamic. processes. Key agreements in 2016 its agreement with EVRY, who is the operations partner, integrator and technical administrator for >> EVRY and Storebrand enter into a group-wide >> EVRY enters into a global partnership agreement the company’s IT services. EVRY’s deliveries now CaaS agreement – PCs as a service. The with Facebook and “Workplace by Facebook”. cover all of Aibel's global activities. agreement involves EVRY administering and >> EVRY enters into a partnership agreement with managing all Storebrand’s laptops and desktop the leading international technology provider >> Nye Veier AS chooses EVRY for consultancy, PCs, as well as user support. operations and management for the company’s Giesecke & Devrient in the area of mobile IT portfolio, including its telephony service, >> The Central Norway Regional Health Authority payment solutions. operating platform, hardware and networks. expands its portfolio of services from EVRY, and >> Sparebanken Sør launches a new mobile payment starts using EVRY Multichannel to simplify and service for its customers. The new payment >> The Norwegian State Railway’s Passenger Train digitise its interaction with the public and with service is based on NFC and EVRY’s mobile Division starts using a mobile ticket-sales solution business and industry. SpareBank 1 Telenor from EVRY. Nearly 1,300 hand-held sales terminals payment platform. with new software will make on-board ticket sales >> Sparebanken Vest, Sparebanken Møre and >> Norway Post chooses EVRY as its supplier of IT NOK NOK simpler and more efficient. Sparebanken Sør enter into an agreement with EVRY 3,000 million 1,190 million infrastructure and cloud services in Norway. covering the use of a payment app called SPING. >> EVRY launches a Center of Excellence for digital >> EVRY unites with the Swedish digital agency transformation, thereby investing further in >> EVRY is awarded second place in the “Consulting NetRelations to become one of the leading realising its customers’ digital opportunities. Services” category of the annual Radar survey, players in digital business in Sweden. which ranks Sweden’s IT providers for customer >> EVRY’s comprehensive IT support agreement satisfaction and quality. >> SpareBank 1 extends its collaboration with with Timrå Municipality in Sweden is extended. EVRY in banking services and core banking and >> Sweden’s fastest growing company, Infrastructure payment solutions. >> ONE Nordic extends its collaboration with EVRY. Services Group, chooses EVRY as a cloud Norway Post Handelsbanken Norway The new agreement will further modernise the services provider. >> Frende Forsikring chooses EVRY as its strategic company’s IT environment. NOK NOK partner for its investment in a new core solution for 810 million 700 million THIRD QUARTER: LARGE CONTRACTS AND group life and pension insurance solutions. >> EVRY signs an agreement with Mälarenergi NEW VENTURES AB in Sweden for a comprehensive solution for >> Handelsbanken Norway and EVRY launch a bank customised invoicing and SMS services. >> EVRY announces its acquisition of Gecko card for contactless payments. Informasjonssystemer AS. The acquisition forms SECOND QUARTER: NEW PARTNERS AND part of EVRY’s strategy to become a leading >> Fredrikstad municipality launches a new digital LARGE CUSTOMERS supplier of archiving and case management solution for whistleblowing provided by EVRY. >> EVRY enters into a collaboration with Method, and solutions to the public sector. Greater Stockholm >> The Norwegian National Courts Administration Ellevio the EVRY Strategic Design Lab is set up. Public Transport >> The Norwegian Government Agency for Financial signs an agreement with EVRY for operating NOK >> Västra Götaland Regional Council chooses EVRY Management (DFØ) chooses EVRY as its partner services together with modernisation and NOK 240million 320 million and Orbit to operate a shared IT system for the for operating services for its SAP solution. digitalisation of the Administration’s services. region’s hospitals. >> EVRY launches EVRY Cloud Services in order >> EVRY and New Wave launch a new digital web >> Ellevio, one of Sweden’s largest electricity to capture the growth potential in the market for platform for creative solutions and visual profiling. distribution companies, chooses EVRY as its main cloud services. >> EVRY expands its collaboration with Norway Post supplier of IT services. >> Byggmax in Sweden extends its collaboration with and will now develop cloud solutions for Digipost. >> EVRY acquires IT Nor, strengthening the position EVRY, signing a contract for operating services for >> EVRY and Handelsbanken Norway enter into a of the company’s ERP team as the market leader Byggmax’s applications and IT environment. comprehensive strategic agreement for EVRY to in Norway. >> Telenor chooses EVRY as its collaboration partner deliver core banking and payment solutions. >> Det Digitale Vest-Agder (an intermunicipal IT for its digital transformation. EVRY will now supply >> EVRY’s successful collaboration with IBM for basic collaboration) chooses EVRY as its strategic IT infrastructure and cloud services to Telenor infrastructure services is expanded, allowing all collaboration partner for work on digitalisation. throughout the Nordic region. customers to benefit from IBM’s innovative cloud >> EVRY and mCASH launch a bill payment service >> EVRY launches new cloud solutions based on IBM technology and EVRY’s value-adding services. for mobile devices that does away with the need Cloud that combine global capacity with secure >> EVRY further strengthens its focus on cloud services for customer ID numbers. data storage in Norway. by entering into a new collaboration with Amazon. >> EVRY enters into an agreement with Sweden’s >> Google and EVRY enter into an important >> EVRY and Fana Sparebank enter into a new Riksdag Administration to implement and deliver strategic partnership to take advantage of the agreement for banking and operations services, the Primula HR and payroll system. growth potential in the market for cloud services in the Nordic countries. core banking and payment solutions, and new >> A comprehensive agreement is signed to provide self-service solutions for the bank’s customers. IT operating services to the construction and real FOURTH QUARTER: GROWTH ACCELERATES >> NordPool extends its agreement with EVRY for estate development company NCC. >> Wilhelmsen IT Services extends its operating services for the company’s IT platform. collaboration with EVRY. The contract is for
BUSINESS REPORT >> EVRY enters into an agreement with Holmgrens BUSINESS REPORT EVRY FINANCIAL SERVICES A market leader and a motor 47 for innovation
EVRY Financial Services is a complete industry vertical and is responsible for the Group’s deliveries to bank and finance customers. The business area offers a broad and comprehensive portfolio of solutions to support banks in their management of continuous change and to facilitate the next generation of banking services.
The banking and finance industry is going through a significant trans- formation. New legislation and rules and increased digitalisation are putting pressure on banks. The market is becoming more and more competitive, and the fast pace of technological development is leading to end-customers having entirely new expectations. EVRY has the experience, resources and expertise that banks and financial institutions need to adapt to these changes. Through its in-depth industry knowledge, EVRY helps its customers to do things differently and to generate new ideas that change how they operate and compete, with its services ranging from developing the customer experience to modernising and simplifying key IT systems and improving an organisation’s cost efficiency by automating its processes.
EVRY Financial Services operates a delivery model that is fully integrated with the company’s global delivery unit in order to meet customer needs and adapt to market developments. An important element in Wiljar Nesse EVRY Financial Services’ strategy is expanding and strengthening the EXECUTIVE VICE PRESIDENT, business area’s geographic footprint in the Nordic market. We will also EVRY FINANCIAL SERVICES continue to expand outside the Nordic region in selected areas such as card services, fraud prevention, lending systems and ATM services.
“We are having a lot of SERVICE PLATFORM success in the race to It is crucial for banks to provide both their customers and employees with user-friendly banking services with state-of-the-art functionality. deliver next-generation EVRY’s significant investment in next-generation banking and payment core banking and payment solutions is therefore strategically important for the company. EVRY has signed a number of important customer agreements, and its new core solutions. The market banking solutions are accordingly being established as an industrialised offers continuing new service platform. The use of modern architecture and standards ensures that EVRY’s solutions are flexible, cost-effective and adapted to interna- opportunities, and we are tional requirements. EVRY’s development strategy and implementation well-positioned to capitalise methodology are firmly based on the company’s close collaboration with the Banking Industry Architecture Network (BIAN), of which EVRY is the on them” only member that is a Nordic IT service provider. The solutions can be delivered as SaaS services from EVRY, or as components installed at banks. BUSINESS REPORT MARKET POSITION: SUCCESS IN THE MARKET EVRY is having a good deal of success in the Norwegian market with its next-generation core banking and payment solutions, and has entered into extensive long-term
48 delivery agreements with the SpareBank 1 Alliance, Handelsbanken, Sparebanken 49 Sør, Sparebanken Sogn og Fjordane, Helgeland Sparebank, Gjensidige Bank, De Number 1 in banking and Samarbeidende Sparebankene (an alliance of nine savings bank that have a joint finance solutions in the collaboration agreement) and Sparebanken Møre. The EVRY Strategic Design Lab has Nordic region been an important initiative for EVRY Financial Services and it is attracting a lot of interest from customers. EVRY’s investment in it has helped EVRY to build closer relationships with board members and senior executives at its customers.
The market offers continuing new opportunities, and EVRY is well-positioned to capitalise on them. Gartner estimates that the Nordic market for IT services and software for banks will grow on average by 5.7% annually, taking it from NOK 33.7 billion in 2016 to Number 1 in banking and NOK 42.0 billion in 2020. finance solutions in Norway EVRY Financial Services has 1,238 employees with in-depth insight into the opportunities and challenges that characterise the bank and finance market. EVRY Financial Services has significant experience from executing major and important projects, giving it the expertise and delivery capabilities needed to deliver on customer requirements.
150 customers in 12 countries FOCUS AREAS IN FINANCIAL SERVICES:
>> Next-generation core banking and >> Financial Services Labs payment solutions >> Open API Banking >> EVRY Strategic Design Lab >> Card services and mobile payment >> Digital Design & Insight >> Quality and continuity Market leader in card services in the Nordic region
Operating revenue Operating revenue NOK millions Adjusted EBITA NOK millions
500 4 000
3 500 400 3 000
2 500 300
2 000 26% 200 1 500 of total revenue 1 000 100 500
0 0 BUSINESS REPORT BUSINESS REPORT 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 EVRY NORWAY A market leader and a driver 51 for digitalisation
EVRY delivers innovative and operationally critical solutions to the largest private sector businesses and public sector organisations in Norway, and is also a clear market leader in the SMB market. The business area is responsible for approximately one-third of all IT service deliveries in Norway.
EVRY has a flexible delivery model and is represented in over 20 Norwegian towns and cities. The company focuses on selected indus- tries such as the public sector, the healthcare sector, insurance, tele- coms and logistics, manufacturing companies, the energy industry, and trading companies. With a customer-centric approach in combination with extensive experience and a high level of expertise, EVRY achieves significant digital gains for its customers. EVRY modernises business processes and makes IT operations more efficient, and is the force behind a whole range of innovations that are shaping and developing Norwegian society every day.
In each industry EVRY is a full-service provider of IT services throughout the whole value chain, from infrastructure and operations services to business process systems, applications, consulting services, collab- oration solutions and innovation support. EVRY has dedicated and highly-trained employees with in-depth technical insight and industry Kolbjørn Haarr expertise. Over the last year EVRY has further strengthened its focus on EXECUTIVE VICE PRESIDENT, EVRY NORWAY consultancy services, particularly in digitalisation. It is no longer correct to label EVRY Norway as an operating services company; it now derives 40% of its revenue in Norway from infrastructure services. “We have built up a unique position in the Norwegian THE DIGITAL SHIFT Digitalisation is high on the agenda in the public sector, and EVRY is market, and we further contributing to this with innovative services that automate and increase strengthened our position the efficiency of the sector. EVRY is helping most of Norway’s munici- palities and county authorities to improve their service offering and to in 2016. Our strengthened automate and simplify how they communicate with the local population, service offering and greater as well as with standardising and increasing the efficiency of their exist- ing solutions. EVRY’s new solution that automates building applications delivery capabilities provide is an example of this. This solution simplifies the process for residents, fertile ground for growth and saves time for case managers and ensures everyone receives the same treatment – regardless of where they live. The solution’s value to society further development.” is enhanced by the fact that it is available to all municipalities, bringing public sector collaboration opportunities. It is also an example of how EVRY wishes to contribute to the digitalisation of the public sector for BUSINESS REPORT MARKET POSITION: the benefit of Norway, its municipalities and, not least, its population. This is how EVRY is helping to turn digitalisation into a genuine digital advantage for Norway.
RENEWED CONFIDENCE IN ALL SEGMENTS 52 53 In the SMB segment, EVRY delivers complete and cost-efficient solutions through its extensive local presence. The company has dedicated teams that know the opportunities Number 1 in the overall IT and challenges facing local businesses. In addition, EVRY has a unique partner network services market that ensures its customers have access to leading technology and specialist expertise and the flexibility to choose the best solution for their organisation.
EVRY’s reorganisation is delivering results; it is now a more proactive and relevant company, and it has entered into a range of new agreements. In 2016, agreements were signed with customers including Aibel, Nye Veier, Storebrand, the Central Norway Regional Health Authority, the Norwegian Government Agency for Financial Management, Telenor, Number 1 in the SMB Wilhelmsen IT Services, Norway Post, Frende forsikring, Digitale Vest-Agder (an IT collabo- segment ration), the municipality of Fredrikstad, the Norwegian Courts Administration and Nordpool.
NEW ACQUISITIONS Two acquisitions were also made that further strengthen EVRY’s position in the Norwegian market: IT Nor, which strengthens the position of the company’s ERP team as a market leader, and Gecko Informasjonssystemer, which is part of EVRY’s strategy to be the leading supplier of core systems (case management) to the public sector.
Market share of 29% in the EVRY is well-positioned for organic growth. Forecasts by the market intelligence compa- local government market ny IDC indicate that the market for IT services in Norway will grow by 1.9% annually, taking it from NOK 32.8 billion in 2016 to NOK 35.2 billion in 2020.
EVRY Norway has 2,361 employees with in-depth insight into the opportunities and chal- lenges that characterise the Norwegian market. Thanks to its strong delivery capabilities and dedicated teams with extensive experience from large and complex projects, EVRY Norway is an attractive collaboration partner to customers in all the company’s focus industries. Market share of 21% in healthcare FOCUS AREAS IN THE NORWEGIAN MARKET:
>>eInsuranc >> Oil and gas >> Healthcare >> Retailing and logistics >> Manufacturing industry >> Local government >> Energy >> National government
Operating revenue Operating revenue* NOK millions Adjusted EBITA* NOK millions
500 8 000
7 000 400 6 000
5 000 300
4 000 46% 200 3 000 of total revenue 2 000 100 1 000
0 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 BUSINESS REPORT BUSINESS REPORT * incl Global Delivery for the years 2012–2014 EVRY SWEDEN Positioned for growth 55
EVRY is the largest supplier of IT services to the SMB segment in Sweden, and it also has a strong market position for large organisations in the private and public sectors. The business area offers its customers cloud services, business process modernisation services, and solutions that create digital advantage.
Swedish customers are demanding consultants who have techno- logical and commercial expertise in their own industries and organi- sations. EVRY has in-depth business understanding and expertise in most industry verticals. With a range of industry-specific solutions and a broad spectrum of services, EVRY meets the market’s needs. EVRY Sweden intensified its focus on building strong industry-verticals in 2016. EVRY’s regional offices enable it to take full responsibility for its customers’ investment in IT, from identifying their needs to realising the benefits of their investment and following up on the results.
EVRY Sweden has a unique regional position and offers everything from strategic advice and consulting services through to complete solutions and IT operating services. EVRY Sweden operates from regional offices in 23 towns and cities, and has the delivery capabilities to serve small, medium-sized and large customers. Customers are demanding collaboration partners that have a high level of industry Fredrik Almén knowledge while also being competitive on price and quality, and EXECUTIVE VICE PRESIDENT, EVRY SWEDEN EVRY meets their demands. Thanks to its experience and in-depth expertise in business-critical services, including in data storage, cloud “We have significantly services, applications operations, service desk and network operations strengthened our expertise with communications, EVRY is a reliable full service provider. and delivery capabilities for A MOTOR FOR DIGITAL TRANSFORMATION digital services, and we are Our customers are intensifying their focus on digitalisation and its impact on their businesses and applications. EVRY Sweden is active in well-positioned for growth.” all areas of interest to its customers namely cloud services, applications management, business process management solutions, analytics, automation, information logistics, the internet of things, security and mobility. Digitalisation is having a big impact on customers, and this is creating sizeable commercial opportunities in the Swedish market. EVRY is able to offer both efficient and reliable infrastructure services and value-adding services that support customers on their digital change journeys. Its intensified focus on cloud services and out- sourcing is an integral part of this offering.
BUSINESS REPORT MARKET POSITION: A DIGITAL POWERHOUSE EVRY entered into a range of new agreements in 2016 with customers such as the construction and real estate development giant NCC, ONE Nordic, Storstockholms
56 Lokaltrafik (Greater Stockholm Public Transport), Mälarenergi AB, Västra Götalandsregionen 57 (the Västra Götaland Regional Council), Ellevio, Riksdagsförvaltningen (the Riksdag Administration) and Infrastructure Services Group. EVRY Sweden’s acquisition of Number 1 in the NetRelations, which took place in 2016, significantly strengthened its expertise in and SMB segment delivery capabilities for digital services. EVRY is well-positioned for future growth in the Swedish market. Its greatest competitive advantage is its ability to combine its local knowledge and presence with EVRY’s international resources for systems development.
Forecasts by the market intelligence company IDC indicate that the market for IT services in Sweden will grow by 2.2% annually, taking it from NOK 63 billion in 2016 Number 4 in the overall to NOK 68.9 billion in 2020. IT services market EVRY Sweden has 1,778 employees with in-depth insight into the opportunities and challenges that characterise the Swedish market. Thanks to its experience from a range of large and important projects, EVRY Sweden has strong expertise as well as the delivery capabilities required to meet the needs of the market it serves.
FOCUS AREAS IN THE SWEDISH MARKET: Strong industry verticals in the public sector >> Public sector >> Primary industries >> The healthcare sector >> Transportation and logistics >> Grocery retailing >> The processing & manufacturing industry
Strong specialist teams in areas such as security & mobility
Operating revenue Operating revenue NOK millions Adjusted EBITA NOK millions
4 000
3 500 400 3 000
2 500 300
2 000 26% 200 1 500 of total revenue 1 000 100 500
0 0 BUSINESS REPORT BUSINESS REPORT 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Key figures Key figures for the Group
2016 2015 2014 2013 * 2012 ** 58 59
KEY FIGURES (NOK MILLION) Operating revenue 12 246 12 860 12 773 12 600 12 731 EBITDA 1 217 -938 1 020 1 128 1 010 EBITDA margin 9.9 % -7.3 % 8.0 % 8.9 % 7.9 % Adjusted EBITDA 1 583 1 278 1 290 1 219 1 141 Adjusted EBITDA margin 12.9 % 9.9 % 10.1 % 9.7 % 9.0 % EBITA 947 -1 405 543 673 484 EBITA margin 7.7 % -10.9 % 4.2 % 5.3 % 3.8 % Key figures by segment Adjusted EBITA 1 322 811 813 764 691 Adjusted EBITA margin 10.8 % 6.3 % 6.4 % 6.1 % 5.4 % Number of employees 8 864 9 422 10 350 10 323 9 873 Order backlog 20 800 17 100 18 000 16 600 15 300 NOK million 2016 2015 2014 2013 2012
KEY FIGURES PER SHARE (NOK) EVRY FINANCIAL SERVICES Earnings per share 1.12 -5.28 -3.26 -0.29 0.60 Operating revenue 3 133 3 613 3 682 3 554 3 339 Adjusted earnings per share 2.18 1.15 1.85 1.49 1.16 Adjusted EBITA 415 392 371 326 314 Free cash flow per share 3.61 2.22 2.44 1.77 1.11 Adjusted EBITA-margin 13.2 % 10.9 % 10.1 % 9.2 % 9.4 % Book equity per share 0.73 8.03 16.02 20.04 20.46 Operational investments (CAPEX) incl in-house developed software 182 205 115 188 199 Average number of shares outstanding 267 187 441 267 187 441 266 994 898 266 798 981 266 421 202 Number of employees 1 238 1 299 1 457 1 490 1 490 SOLVENCY EVRY NORWAY* Equity ratio 2 % 19 % 40 % 45 % 45 % Operating revenue 5 669 5 761 6 093 6 180 6 607 Gearing 31.17 1.87 0.60 0.55 0.55 Adjusted EBITA 430 111 322 359 356 Net interest-bearing liabilities (NOK million) 6 041 4 008 2 568 2 966 3 007 Adjusted EBITA-margin 7.6 % 1.9 % 5.3 % 5.8 % 5.4 % Operational investments (CAPEX) incl in-house developed software 64 130 255 334 209 LIQUIDITY (NOK MILLION) Number of employees Norway 2 361 2 660 3 344 3 378 3 457 Cash and bank deposits 990 900 616 683 561 Number of employees Global Delivery 3 103 2 861 2 440 Liquidity reserve 2 799 2 209 2 414 2 145 2 013 * incl Global Delivery for the years 2012–2014 Cash flow from operations 306 217 973 1 027 723 Adjusted cash flow from operations 1 280 1 002 1 068 1 099 807 Investments in fixed assets 161 297 398 484 425 EVRY SWEDEN Investments in in-house developed software 189 147 93 143 86 Operating revenue 3 245 3 430 3 472 3 293 3 307 Sale of tangible operating assets (sales proceeds) 35 34 75 - 1 Adjusted EBITA 305 232 255 213 234 Free cash flow 964 592 652 473 297 Adjusted EBITA-margin 9.4 % 6.8 % 7.3 % 6.5 % 7.1 % Cash conversion 108.0 % 97.8 % 93.9 % 104.5 % 88.9 % Operational investments (CAPEX) incl in-house developed software 53 65 80 66 61 Cash conversion ex CAPEX 88.0 % 65.8 % 61.7 % 53.2 % 44.2 % Number of employees 1 778 1 939 2 218 2 308 2 305
* The financial figures for 2013 are restated due to implementation of IFRS 11 Joint Arrangements with effect from 1 January 2014 and the classification of EVRY Danmark A/S as discontinued operations. ** The financial figures for 2012 are restated due to implementation of IAS 19 Employee Benefits with effect from 1 January 2013.
Definitions of key figures
EBITDA EQUITY RATIO OPERATIONAL CASH FLOW CASH CONVERSION CASH FLOW PER SHARE ADJUSTED EARNINGS PER SHARE Earnings before interests and tax, and Total equity as a percentage of total equity and Cash flow from operational activities. Adjusted operational cash flow (excl finance) Net cash flow from operations divided by average Profit/-loss for the year attributable to shareholders depreciation, amortisation and write-downs of liabilities. divided by Adjusted EBITDA. number of shares outstanding. (owners of the parent company) adjusted for other tangible and intangible assets. ADJUSTED OPERATIONAL CASH FLOW income and expenses after tax divided by the GEARING Operational cash flow before other income and CASH CONVERSION EX CAPEX EARNINGS PER SHARE average number of shares outstanding over ADJUSTED EBITDA Net interest-bearing liabilities divided by total expenses. Adjusted operational cash flow (excl interest Profit/-loss for the year attributable to shareholders the year. EBITDA before other income and expenses. book equity. payments) less CAPEX divided by Adjusted (owners of the parent company) divided by the FREE CASH FLOW EBITDA. average number of shares outstanding over the year.
NET INTEREST-BEARING LIABILITIES Adjusted operational cash flow less investment EBITA Total of current and non-current interest-bearing spending (CAPEX) (excl sales). Earnings before interests and tax, and liabilities less liquid assets. amortisation, and write-downs of intangible assets.
BUSINESS REPORT BUSINESS REPORT Alternative performance measures
60 61
EVRY Group’s financial information is prepared in accordance ORGANIC GROWTH Organic growth is a measure of the company’s ability to grow organically through with International Financial Reporting Standards (IFRS). In additional net sales to existing and new customers as opposed to through acquired addition to the ordinary financial performance measures growth. Organic growth is defined as revenue adjusted for the effects of material acquisitions, divestments and foreign currency effects. Organic growth is an important prepared in accordance with IFRS, it is management’s intent key figure to EVRY and to the users of the financial statements as it illustrates the to provide alternative performance measures to enhance underlying operational growth by excluding effects not related to operations. the understanding of the Group’s underlying performance. These alternative performance measures take into consideration NOK million 2016 2015 Growth in %
other income and expenses, which are defined as items Reported revenues 12 246.4 12 859.5 -4.8 % Currency effects - 51.4 0.4 % considered to be special due to their nature and include, Basis for organic growth 12 246.4 12 910.9 -4.4 % Loss of DNB non-mainframe contract - -548.0 -3.5 % inter alia, provisions for restructuring, write-downs, strategic Basis for organic growth adjusted for DNB 12 246.4 12 362.9 -0.9 % processes and refinancing.
NOK million 2015 2014 Growth in %
Reported revenues 12 859.5 12 773.0 0.7 % Currency effect - 140.5 -1.1 % Basis for organic growth 12 859.5 12 913.5 -0.4 %
ADJUSTED EBITA AND EBITDA Earnings before interest, tax and amortisation of customer contracts and write-downs of other intangible assets (EBITA) is an important performance measure for EVRY. EBITDA excludes depreciation and write-downs of tangible assets and in-house developed soft- ware. Adjusted EBITA/EBITDA is defined as EBITA/EBITDA less items defined as other income and expenses, which includes, inter alia, write-downs and restructuring. These performance measures are considered useful to the users of the financial statements when evaluating operational profitability on a more variable cost basis as they exclude amortisation and depreciation expense related to capital expenditure, and also items not considered to be part of ordinary operations.
NOK million 2016 2015
Adjusted EBITA 1 321.6 811.0 Provisons for restructuring -77.9 -510.2 Provisons for premises - -100.2 Write-down of Future Proof - -156.8 Write-down of other balance sheet items/projects -26.1 -87.0 IBM outsourcing agreement -249.8 -1 234.2 Strategic processes/refinancing -21.1 -128.1 Reported EBITA 946.7 -1 405.4 BUSINESS REPORT BUSINESS REPORT 62 63
NOK million 2016 2015 CASH CONVERSION Cash conversion measures how EBITDA is converted into cash and is defined as Reported EBITA 946.7 -1 405.4 adjusted operational cash flow before interest payments divided by adjusted EBITDA. Depreciation and write-down of tangible assets and in-house In addition, cash conversion is also calculated after investments in tangible operating developed software 270.3 467.4 Reported EBITDA 1 216.9 -938.1 assets and in-house developed software and sales of tangible assets. Provisons for restructuring 77.9 510.2 Provisons for premises - 100.2 Write-down of Future Proof - 156.8 NOK million 2016 2015 Write-down of other balance sheet items/projects 17.3 87.0 IBM outsourcing agreement 249.8 1 234.2 Adjusted operational cash flow 1 280.2 1 002.1 Strategic processes/refinancing 21.1 128.1 Paid interests 428.9 248.2 Adjusted EBITDA 1 583.0 1 278.3 Adjusted EBITDA 1 583.0 1 278.3 Cash conversion (in percent) 108 % 98 % Investment in tangible operating assets -161.1 -296.6 Investment in in-house developed software -189.4 -146.7 Sale of tangible operating assets 34.5 33.7 Cash conversion after capex (in percent) 88 % 66 % ADJUSTED OPERATIONAL CASH FLOW Adjusted operational cash flow is defined as cash flow from operating activities less the cash effect from other income and expenses. EVRY is of the opinion that this performance measure provides a better expression of the underlying cash flow from operations as it takes into consideration cash effects of items not directly related to its ADJUSTED EARNINGS PER SHARE underlying operations, which will be useful to the users of the financial statements in Adjusted earnings per share is calculated as profit/-loss for the year attributable to share- analysing the company’s operational profitability. holders (owners of the parent company) adjusted for other income and expenses after tax divided by the average number of shares outstanding over the year.
NOK million 2016 2015
Adjusted operational cash flow 1 280.2 1 002.1 NOK million 2016 2015 Payments related to restructuring processes -368.2 -231.4 Payments related to strategic processes/refinancing -51.2 -180.3 Profit/-loss for the year attributable to shareholders Payments related to IBM outsourcing agreement -594.9 -356.3 (owners of the parent company) 300.1 -1 410.7 Cash flows from operations in discontinued operations -0.8 -16.8 Other income and expenses (note 2) 374.9 2 352.3 Effect of new companies acquired 40.7 - Tax effect other income and expenses -93.7 -635.1 Reported operational cash flow* 305.9 217.3 Adjusted total profit/-loss for the year attributable to shareholders (owners of the parent company) 581.3 306.5
* Equals net cash flow from operations in the cash flow statement. Average number of shares outstanding 267 187 441 267 187 441 Adjusted earnings per share 2.18 1.15
FREE CASH FLOW Free cash flow represents the cash flow that EVRY is able to generate after the necessary investments have been made. Free cash flow is defined as operational cash flow adjusted for the cash effect of other income and expenses less investments in tangible operating assets and in-house developed software and sales of tangible assets.
NOK million 2016 2015
Adjusted operational cash flow 1 280.2 1 002.1 Investment in tangible operating assets -161.1 -296.6 Investment in in-house developed software -189.4 146.7 Sale of tangible operating assets 34.5 33.7 Free cash flow 964.2 592.5 BUSINESS REPORT BUSINESS REPORT Business plan
Accelerated growth 66 Get the basics right 68 Operational excellence 72 Customer centricity 76 Employee engagement and culture 80 ACCELERATED GROWTH High ambitions and efficient execution
66 EVRY was acquired by new owners in the first quarter of 2015, for growth and development. A range of improvement measures 67 and a new CEO was appointed shortly after this change. A were implemented without delay, starting in the second quarter thorough review of the company was then initiated, which of 2015. concluded that its costs and expenses were out of line with its market position and rate of growth. Also, its organisational model A new business plan was launched with four areas of action: was unnecessarily complicated and its reporting lines were not Get the basics right, Operational excellence, Customer centricity, sufficiently clear. At the same time, employee satisfaction was and Employee engagement and culture. There is also a fifth area, lower than was desirable and customer satisfaction levels were Innovation & Quality, which is an integral part of the other areas. Innovation & Quality very variable. EVRY therefore implemented a turn-around to We base our reporting on these areas of action. adapt the company to the market and ensure it was positioned
EVRY worked in a targeted way on these areas in 2016, and achieved good results:
>> Reaped the benefits of its new strategy and >> Implemented cost reductions and signed major >> Launched a new growth initiative by setting Get the Basics Right Operational Excellence simplified operating model customer agreements up the Strategic Design Lab, which is helping to redefine customers’ business processes, to >> Accelerated the transformation of its >> Made strategic acquisitions that have create better customer experiences, and to infrastructure services based on its global strengthened EVRY’s market position in Norway increase innovation and competitiveness partnership with IBM and Sweden
>> Secured operational stability with a more >> Revitalised its focus on cloud services by setting proactive focus on quality and deliveries up Cloud Services and global partnerships
Employee Engagement Customer Centricity & Culture BUSINESS GOALS 2015 RESULTS 2016 RESULTS
Continuously enhance and increase Customer satisfaction Customer satisfaction customer satisfaction across all business areas. 75 77
Continue to increase profitability across Order backlog Order backlog all business areas by deploying best practices and exploiting innovations and NOK 17.1BN NOK 20.8 BN new technologies.
Leverage our extensive customer base and strong portfolio of products and Adjusted EBITA margin Adjusted EBITA margin services across all business areas to further % % accelerate organic growth. 6.3 10.8
Attract, develop and retain the most highly motivated, committed and skilled Employee satisfaction Employee satisfaction employees in the industry. 75.4 points 80.1 points BUSINESS PLAN BUSINESS PLAN Get the basics right
68 A range of initiatives were implemented in 2016 to strengthen 69 EVRY’s foundations. The most important measures were organisational in nature, and these have already had a positive effect.
A number of measures were taken to optimising EVRY’s cost structure, these simplify EVRY’s organisational structure measures have been a fundamental in 2015. In 2016 EVRY worked on a range element in EVRY’s business plan. of growth initiatives, on building up its expertise, on focusing its resources and CLEAR RESPONSIBILITIES IN THE on further developing a culture of per- NEW STRUCTURE formance. Three key strategies were de- Two very important measures were sim- fined to ensure that the company delivers plifying EVRY’s organisational structure on its ambitious goals and is equipped for and increasing its efficiency by combin- further organic growth: ing the Industries Norway and Regions Norway divisions. Synergies have also >> Set up a management team with a been achieved following the introduction focus on commercial and operational of a new and simpler operating model in capabilities Sweden. One of the measures taken in >> Build a profitable, competitive and Sweden in order to harmonise operations future-oriented infrastructure and increase efficiency was to reduce >> Modernise the company’s core the number of legal entities in use. The banking platform to create future company’s sales and administrative costs growth potential have also been reduced by increasing the efficiency of staff and support functions at After implementing numerous organisational EVRY has delivered in all three areas: the Group and divisional levels. measures, EVRY was able to focus on customers the company has a new executive management team, it has entered into EVRY has also streamlined its business and the market to a much greater extent in 2016. important strategic partnerships that give model by reducing the number of it robust, future-oriented infrastructure market units to three (EVRY Financial solutions, and it has invested heavily to Services, EVRY Norway and EVRY develop next-generation core banking Sweden) and by making these responsi- and payment solutions. In order to be an ble for customer dialogue and customer attractive partner to our customers and development. There has also been a to secure growth, EVRY also worked on focus throughout EVRY’s transformation attracting new talent, and a number of on ensuring there is a clear allocation of skilled employees at both the tech- responsibilities and on creating a perfor- nology and management levels joined mance culture. After implementing nu-
BUSINESS PLAN the company in 2016. Along with merous organisational measures in 2015, BUSINESS PLAN EVRY IS CERTIFIED IN ACCORDANCE WITH THE FOLLOWING STANDARDS: EVRY now offers its customers world-leading technology as well as processes that enable customers to transition to cloud-based solutions on their own terms. ISO 9001; 2015 EVRY Norway 2018 – 11 EVRY Operations 2018 – 11 EVRY Financial Services Operations 2019 – 11 70 71 ISO 27001; 2013 EVRY Norway 2018 – 11 EVRY Operations 2018 – 11 EVRY Financial Services Operations 2019 – 11
ISO 14001; 2015 EVRY IOS Enterprise, Sweden 2018 – 11
PCI DSS EVRY Financial Services 2017 a risk management system in order to and to develop the right attitudes among their own supply and distribution chains. support the risk management process employees in order to ensure compli- EVRY has strict environmental require- and ensure traceability and aggregation ance. Employees in doubt about whether ments in relation to recycling, cleaning, of various risk exposures. In addition to a particular situation or gift is permissible low energy consumption and environ- Continuous improvement is an important part of EVRY’s corporate management system. producing aggregated risk reporting, this are also able to seek guidance from mental certification. Environmental crite- Customer feedback on quality is measured and monitored via dedicated customer system provides detailed information on the company’s compliance unit. EVRY ria are an important factor when contracts surveys. EVRY also has a separate process for customer complaints, as part of which vulnerabilities, which risks the vulner- has well-established ‘whistle-blower’ are being awarded. EVRY subscribes to reports are produced for senior managers. In 2016, EVRY’s systematic quality work abilities affect and what measures the arrangements as well as procedures for an international database that requires delivered good results, with a reduction seen in the total number of critical incidents. organisation has implemented to reduce dealing with any suspicion of corruption suppliers to renew their qualifications ev- unacceptable risk exposure. This helps at its businesses. EVRY received several ery year by confirming in detail that their line management to follow up on the whistle-blower notifications in 2016, none practices comply with and satisfy specific status of measures that are implement- of which related to corruption. guidelines and principles. This is used ed, with ready access to information on to provide periodic reporting. Based on prioritised tasks. RESPONSIBILITY AND SUSTAINABILITY IN an assessment of the risk associated with THE SUPPLY CHAIN the industry and the market or continent EVRY was able to focus on customers RISK-REDUCTION MEASURES ETHICS EVRY requires its suppliers to act in in which a company operates, EVRY has and the market to a much greater extent It is important for EVRY to have good EVRY’s Code of Conduct sets the frame- accordance with high ethical standards a mandate to carry out a more in-depth in 2016. This resulted in clear improve- oversight and control of risk exposure, work for how each employee should and sets similarly high standards for its audit. Under EVRY’s contractual terms, ments in profitability as well as in as well as the ability to apply this when relate to customers and business part- employees’ interaction with suppliers. serious breaches of its guidelines give it customer and employee satisfaction. making management decisions. The ners, work to create a good and inclusive The company’s procurement policy and the right to terminate an agreement with overall objective of risk management at working fellowship, ensure diversity and processes are intended to ensure its a supplier. PARTNERSHIPS TO BOOST INNOVATION EVRY is to identify and quantify risks. This contribute to achieving high environ- employees adhere to the principles of AND DEVELOPMENT provides a basis for correct decision mak- mental standards. The Code of Conduct equality, fair competition, anti-corruption INTELLECTUAL PROPERTY Technology is developing at a fast pace, ing. Carefully considering the company’s is available on the Group’s website and and transparency when interfacing with EVRY’s intellectual property includes and this makes in-house development a risk exposure during decision-making intranet. Managers and employees of all suppliers. Those suppliers that form part copyright-protected logos, brands, demanding and risky task. This, in com- processes enables risk control and levels at the company read through the of EVRY’s supply chain, both in Norway domain names, trade secrets, databas- bination with the fact that EVRY did not risk management to form part of value Code of Conduct each year in connec- and internationally, have to undertake es and proprietary source code. The achieve sufficient competitiveness in the creation. Risk management is an integral tion with their appraisal meetings. to comply with the guidelines set by the company’s brands are registered with the infrastructure area, led to the company part of the company’s management company in a number of areas, namely Norwegian Industrial Patent Office and adopting a partnership model as its model and of its financial reporting. The ANTI-CORRUPTION human rights, a responsible working envi- are thus protected in accordance with ap- principal strategy. EVRY has now set up key areas of risk that the business units EVRY works actively to combat all forms ronment as embodied in the International plicable copyright law. EVRY’s name and strategic cloud collaboration agreements consider to be material are monitored of corruption. E-learning programs and Labour Organisation’s declaration, logo are registered in Norway, Sweden, with IBM, Microsoft, Google and Amazon as part of the executive management’s training courses are organised to ensure HSE, work against human trafficking, Denmark, Finland, Great Britain, Latvia, Web Services. This has reduced the com- routine supervision of the business areas employees are trained to act in accor- anti-corruption, social responsibility and Ukraine and India. The name of and logo pany’s risk exposure. EVRY now offers its and key financial metrics. In operational dance with the Group’s guidelines. This working for a sustainable environment. for EVRY’s “Digital Advantage” value customers world-leading technology as terms, the company’s objective is to applies in relation to the guidelines on By signing the EVRY Supplier Conduct proposition are registered in Norway and well as processes that enable customers integrate systematic risk management accepting gifts and on travel and other Principles, suppliers commit to com- have been submitted for registration in to transition to cloud-based solutions on into the Group’s business processes, benefits or activities, with training also plying with these principles and also to other jurisdictions where EVRY’s name their own terms. In 2016 EVRY also set as well as to support its customers in provided on how to distance oneself mirroring them to their sub-suppliers. In is registered. EVRY also owns the Bekk up a new unit, EVRY Cloud Services, the risk management they carry out in from all forms of bribery and corruption. 2016 EVRY’s requirements led to large Consulting brand. The Buypass brand to further strengthen its focus on cloud relation to their value chains and value The compliance unit at the company Norwegian businesses establishing com- is owned through a joint venture with services. constellations. EVRY has established works proactively to increase awareness parable principles and mirroring these to Norsk Tipping. BUSINESS PLAN BUSINESS PLAN Operational excellence
72 EVRY looks back on 2016 as a year in which it made significant 73 operational progress. From major organisational changes to smaller measures that oiled the machinery, the work that was carried out helped make the company significantly more profitable.
EVRY operates in a rapidly changing transition from traditional IT operating market segment and is obliged to adapt services to dynamic and scalable cloud quickly to the fast pace of technological services. developments and changes in customer requirements. EVRY implemented a EVRY entered into a collaboration with new operating model in 2016, which Method in 2016. The purpose of this was it will adjust yearly in order to adapt to create a strategic design team, which to changing market needs. EVRY’s we have called the EVRY Strategic organisational structure has been Design Lab. This new unit brings together significantly simplified as a result of teams with expertise in management Global Delivery being integrated into consultancy, service design, user the EVRY Financial Services, EVRY experience and digital solutions. Its goal Norway and EVRY Sweden business is to help organisations create better areas. The Swedish business area also user experiences and to assist them with became better adapted to the market in innovation and improving their competi- 2016, and its operating model has also tiveness. The team also seeks to capture been restructured to make it much less the growth opportunities associated complicated. The Industries Norway and with adapting products and services for Regions Norway business areas were the digital customer. combined in 2015. This contributed to simplifications and synergies in Norway OPERATIONALISING EVRY’S that had a positive impact in 2016. COLLABORATION WITH IBM As part of the company’s partnership INVESTMENT IN IMPORTANT strategy, EVRY and IBM entered into a AREAS OF FOCUS unique and long-term basic infrastruc- EVRY’s aim is to leverage its experience from the In addition to simplifying its organi- ture services collaboration in 2015. The sational structure, EVRY invested in collaboration has led to new world-class infrastructure area and to combine this with its several exciting areas of focus in 2016. cloud solutions being set up for the deliveries of leading cloud service technology. Most organisations are considering Nordic market. EVRY has significantly transitioning to cloud services. To exploit simplified its organisational structure the greater demand for consultancy and and cost structure in connection with services in cloud computing, Cloud the collaboration. This has included Services was set up in 2016. EVRY’s consolidating EVRY’s infrastructure aim is to leverage its experience from activities in relation to both data centres the infrastructure area and to combine and software. this with its deliveries of leading cloud service technology. By intensifying its The IBM agreement entered into force focus on this area, EVRY is ensuring in December 2015 and was operation- it is positioned to help organisations alised in 2016. It was well received by BUSINESS PLAN BUSINESS PLAN EVRY has reduced its greenhouse gas emissions by 50% in five years; EVRY is below the 1.5 °C target
74 75
INFORMATION SECURITY customers, and the collaboration is deliveries in the Nordic region. EVRY’s complying with the EU’s new General reducing business travel and rigorous rating, making it the only organisation in The media reported on several serious regarded as very successful. A meth- global delivery centres thus provide Data Protection Regulation (GDPR), procurement policies, as well as waste Norway to achieve the highest possible security incidents in 2016. EVRY works odology for migrating customers over customers with cost-efficient delivery which is due to enter into force on management with a high level of reuse rating. Across the Nordic region, 14 to be at the forefront of developments to IBM has been set up with a separate models that allow them to be more agile 25 May 2018. EVRY has appointed a and recycling. companies received an A rating, while and to implement preventive mea- governance structure. The agreement in how they operate and also facilitate separate Data Protection Officer, and it 193 did so globally. CDP describes what sures. In their threat assessments, the means that EVRY is moving away from greater scalability. One of EVRY’s has drawn up a plan and is taking action In 2016 EVRY placed its work on CSR this rating means as follows: “A high Norwegian National Security Authority being a provider of operations ser- targets has been to increase the use it in order to comply with the Regulation. and the environment into a broader score signals that a company is measur- and the Norwegian Police Security vices, with its role instead consisting makes of its offshoring services, and it We have also put data protection on context. The UN has established 17 ing, verifying and managing its carbon Service have highlighted computer of monitoring the agreement with IBM was successful in this in 2016. the agenda at our customers through a sustainable development goals. EVRY emissions, for example by achieving network operations and cyber security and delivering value-adding services. In special program that ensures customers is helping to achieve these goals both emissions reductions by implementing threats as areas that could be used to 2016 EVRY maintained and improved and other stakeholders receive the help through its own activities and its deliv- programs to reduce emissions in both its cause significant harm. EVRY plays a operations quality for its customers. they need. eries to customers. We are focusing direct operations and its supply chain.” 82.4% significant role in terms of operating sys- in particular on the climate action and tems that are critical for society across all The IBM agreement originally only Our activities also mean that we have partnerships goals. Our greenhouse gas We are a global company and collabo- 74.4% sectors. There is thus a clear expectation applied to EVRY’s large customers, but a significant responsibility to society in emissions have fallen continually in recent ration between specialist groups across that we will deliver secure and stable in 2016 EVRY and IBM expanded it to relation to information security and data years. EVRY has now implemented international borders is important to operations, and EVRY works closely with include regional customers/SMB cus- protection. The ways in which we meet measures that satisfy the 1.5 oC target EVRY’s commercial success. EVRY suppliers and customers. Through sys- tomers in the Nordic region as well. this responsibility include by organising agreed by the UN and world leaders. ensures that this collaboration takes tematic information security work EVRY talks, publishing articles and proactively place digitally to a very large extent, with has implemented the measures needed HIGHER BILLABLE engaging in dialogue with organisations EVRY is consolidating its data centre only occasional travel between EVRY’s to protect the confidentiality, integrity UTILISATION RATES from the information security area. operations, which involves migrating locations in exceptional circumstances. and accessibility of data. Information The billable utilization rates for EVRY’s EVRY is also one of the key collaboration from our older data centres to a new
2015 2016 security breaches can have significant consultants improved markedly partners for the HackCon IT security state-of-the-art data centre at Fet. This consequences for both customers and between 2015 and 2016, from 74.4% to conference. data centre uses an entirely new and Billable utilisation rates EVRY. We are well-equipped to meet 82.4%. EVRY has adapted its organisa- for EVRY’s consultants innovative air cooling system to remove the constantly increasing threat level tion to the market and has focused on CLIMATE AND ENVIRONMENT waste heat from hardware. The new thanks to the systematic information services for which there is a good level EVRY is committed to being an import- world-class air cooling system, com- security work we undertake in relation to of demand. This increase in the billable LOWER SG & A EXPENSES ant part of the solution to the climate bined with EVRY’s use of low-energy customers as well as internally. utilization rate demonstrates that there EVRY operates in an international and and environment challenges facing servers, make this one of the most EVRY recognises the importance of is significant market demand for EVRY’s competitive market in which there is sig- the world. Its objective is to contribute energy efficient and sustainable data continuing to improve expertise in the expertise, and higher utilisation made a nificant downward pressure on prices. to the creation of a low-carbon society centres in the world. The efficiency of information security area. We have a positive contribution to the company’s Therefore, to ensure it is profitable, it is while also reducing its own greenhouse data centres is measured by reference to target of helping to improve exper- profitability in 2016. crucial that it keeps the administrative gas emissions. Over the last five years, their PUE (Power Utilization Efficiency), tise both internally and in society in part of its business simple and does not EVRY has reduced its greenhouse gas and EVRY’s new data centre has a PUE general. To this end, we collaborate with GREATER USE OF OFFSHORING have too high staff costs. EVRY has emissions by 50%. Measures that are factor of 1.1. For comparison, traditional educational institutions and specialist EVRY’s global delivery centres have made progress in becoming more market- currently being implemented have a data centres typically have PUE factors networks. EVRY collaborates extensively developed unique expertise and insight oriented and focused on customers, target of reducing EVRY’s greenhouse of between 1.8 and 2. on security matters with national and in- into the Nordic market as a result of the and today it is a more streamlined and gas emissions by a further 30%. ternational organisations and authorities hundreds of assignments they have adaptable organisation than it was a EVRY has produced and submitted EVRY received an A rating for 2016, making it in the information security area. carried out. In addition, our global few years ago. Its SG & A expenses as a We work in a systematic and long-term climate reports to the investor-led the only organisation in Norway to achieve the highest possible rating. Across the Nordic delivery centres in India and Ukraine percentage of total operating revenue way on reducing our impact on the Carbon Disclosure Project (CDP) since DATA PROTECTION region, 14 companies received an A rating, have over 20 years of experience with were 1.2 percentage points lower in environment to an absolute minimum. 2013. As a consequence, the company’s EVRY focuses on data protection in while 193 did so globally. both Fortune 100 and SMB customers 2016 than in 2015. The decrease was The most important measures we take reporting is of a far higher quality and its capacity as a data processor for its in North America and in Europe. This achieved at both the central group staff internally are energy efficiency mea- is much more comprehensive. In the customers and has started work on experience is also leveraged into our and divisional levels. sures, digital collaboration solutions, 2016 assessment EVRY received an A BUSINESS PLAN BUSINESS PLAN Customer centricity
76 One of EVRY’s key strategies is to become a more customer- 77 centric company. Organisational and market-related initiatives have been implemented to help achieve this, and these have had a sizeable impact in the form of new contracts and an improvement in customer satisfaction.
It is crucial for EVRY to be close to its “Collaboration” and “Cultural change”. customers. This is important to our The three Cs illustrate the change journey ability to develop value-adding services that is essential in order for EVRY to that enable our customers to offer their transition from being a traditional IT customers more attractive products company to a digital transformation and services as well as a better user provider. experience. EVRY is committed to focusing the company’s resources IMPROVED CUSTOMER on what creates customer value. The SATISFACTION digital shift currently taking place is EVRY worked in a targeted way on creating a whole range of opportunities. improving customer satisfaction in 2016, This is leaving many customers unsure and this was rewarded in the form of about what they should and can do. strong progress in recent customer Against this backdrop, EVRY wants to surveys. For the Group as a whole, EVRY worked in a targeted way on be a high-quality advisor. The company customer satisfaction increased from therefore needs to be at the forefront of 69 points in 2012 to 77 points in 2016. improving customer satisfaction in technological developments and close This is EVRY’s best-ever result, and all 2016, and this was rewarded in the to its customers. Historically, the IT business units made solid progress. industry has focused on its own products EVRY Financial Services made particularly form of strong progress in recent and services. EVRY is no exception strong progress, with customer satisfac- customer surveys. to this, but it is now in the process of tion rising from 73 in 2015 to 77 in 2016. adopting the opposite way of thinking. This involves engaging customers in Customer feedback shows that EVRY dialogue on their own terms, taking the also became more inspiring and even digital opportunities that are available to easier to collaborate with. As “Be them as the starting point. inspiring” and “Collaborate” are two of EVRY’s core values, this is a sign In order to make a success of this that EVRY is realising its values in a approach, EVRY has introduced the targeted way. EVRY’s ability to inspire,
BUSINESS PLAN three Cs: “Customer-centricity”, to work closely with customers, to be BUSINESS PLAN 77 Customer satisfaction 75 73
70 69
2016 78 2015 79 2014 2013 2012
a reliable collaboration partner and to companies in order to strengthen its in the Nordics use services delivered EVRY offer reliable services contributed to deliveries, provide more comprehen- by EVRY every day. With customer this progress. EVRY’s ambition is to sive services and offer greater customer deliveries of such great importance to make additional progress and to further value. EVRY’s acquisition of IT Nor, society, we depend on having close improve in these areas, and it regards which delivers the entire portfolio of relationships with our customers and on taking a proactive approach and being UNIT4 products, including payroll and operating reliable, high-quality systems 77 77 as relevant as possible to customers as accounting services, strengthened the and processes. EVRY pays great atten- 76 76 76 76 essential to this. position of the company’s ERP team as tion to its relationships with its custom- 75 7474 the market leader in Norway. Acquiring ers, its role in society, the environment 7373 INDUSTRY EXPERTISE Gecko confirmed EVRY’s position as and its employees. EVRY’s customers 70 EVRY has in-depth insight into its the leading supplier of cloud-based case can be confident that the services they 69 customers’ industry segments. In 2016 management systems in Norway. Case use are provided by a sustainable and 68 it increased its focus on widening the management is the process at the core reliable company. range and depth of its industry exper- of the public sector and, with around 30 64 tise, and adopted a target of offering new employees from Gecko, EVRY is MAKING CUSTOMERS MORE leading comprehensive solutions that able to offer its customers even better ENVIRONMENTALLY FRIENDLY are adapted to each industry. EVRY solutions than before. With the UN’s sustainable development has taken those industry areas in which goals as its starting point, EVRY works in it is particularly skilled and has worked EVRY also acquired NetRelations in a targeted way on reducing the compa- on further strengthening them. An 2016, and this significantly strengthened ny’s impact on the environment. EVRY’s example of this is case management and its expertise and delivery capabilities in most important contribution to climate archiving for the public sector, where digital services in Sweden. Following change is achieved when it digitalises EVRY Financial Services EVRY Norway EVRY Sweden EVRY’s acquisition of Gecko has further this acquisition, EVRY is a leader in an and collaborates on projects at its cus- strengthened and modernised an area area of strategic importance to custom- tomers. With around 10,000 customers in which EVRY was already a leading ers and has a dedicated team that con- in the Nordic region, the contribution supplier. sists of more than 400 employees who it makes in this way is significant. EVRY work together with EVRY’s customers to digitalises its customers’ business The organisational changes that EVRY develop innovative services that create processes and provides environmentally has made have helped support its focus high value. EVRY offers its customers in friendly solutions that have a positive on industry verticals. EVRY is a mar- the Swedish market specialist exper- effect on its customers’ impact on the ket-leader in a range of industries and tise in digital business development, environment. EVRY’s contribution par- focuses particularly on segments strategy, experience design and project ticularly relates to reducing paper usage including banking and finance, national management, as well as technical exper- and travel and transport. Win rate government, local government, tise in implementing solutions. healthcare, insurance, manufacturing In addition to solutions that help create 53% 49% businesses, energy, oil and gas, retailing THE IMPORTANCE OF EVRY’S a low-carbon society, EVRY delivers 2016 2015 and logistics, grocery retailing, primary DELIVERIES TO SOCIETY solutions that facilitate increased industries, and transport and logistics. EVRY is the force behind a whole participation in democratic processes, range of solutions that are critical to the promote inclusion, and help improve ACQUISITIONS TO STRENGTHEN operations of private sector companies health. EVRY’S CUSTOMER OFFERING and municipal and national public sector
BUSINESS PLAN In 2016 EVRY acquired a number of organisations. Over five million people BUSINESS PLAN Employee engagement and culture
80 Businesses need a high level of employee engagement 81 to succeed. EVRY worked proactively on employee engagement in 2016 and made good progress throughout the year in terms of employee engagement and company performance. EVRY also worked actively on creating a more performance-based culture with greater proximity to customers and more collaboration.
EVRY’s corporate culture inspires its employees to be enter- prising and to focus on ideas and innovation without being afraid of failure. We want to be a business partner that challenges its customers and brings ambitious but realistic ideas to the table. EVRY’s transformation process has included a particular EVRY launched a new value focus on creating a much more performance-based culture proposition “Shape the future whose starting point is the creation of greater customer value today”, for existing and potential and better commercial results. employees in 2016 – and is succeeding in the battle for talent. ATTRACTIVE WORKING ENVIRONMENT FOR BOTH EXISTING EMPLOYEES AND NEW TALENT Developing and retaining talent is critical to EVRY. The company has high ambitions for its customers, and this is also reflected in the company’s internal ambitions. In addition to working on the company’s vision and values, in 2016 EVRY also produced a new value proposition for all employees, which is “Shape the future today”.
This new value proposition defines both EVRY as an organ- isation and what its employees actually do. It also defines Developing and retaining talent is important aspects of EVRY’s corporate culture. Companies Norway’s most attractive employers in have no choice but to become digital if they are to maintain essential to EVRY. The company has 2016, according to a Universum survey: and strengthen their ability to compete; their future survival high ambitions for its customers, and depends on their ability to shape the future today. This is where IT PROFESSIONALS IT STUDENTS this is also reflected in the company’s EVRY wants to be a key partner to its customers. EVRY needs to 1. Google 1. Google attract new expertise and talent, and its new value proposition is internal ambitions. 2. Microsoft 2. Microsoft also intended to be relevant to this target audience, specifically 3. FINN.no 3. BEKK* 4. Telenor 4. Telenor to communicate how the company offers potential employees 5. DNB 5. Norwegian the opportunity to shape their career and future today. 6. BEKK* Armed Forces 7. EVRY 6. EVRY 8. Norwegian 7. Accenture WORKING ENVIRONMENT AND EMPLOYEE Armed Forces 8. DNB SATISFACTION 9. Knowit 9. FINN.no 10. Visma 10. Sopra Steria EVRY aims to be an attractive employer, and the Group’s working environment is good. Employee satisfaction is sur- veyed quarterly. The results of each survey are discussed by *Subsidiary of EVRY BUSINESS PLAN BUSINESS PLAN Percentage of women all of EVRY’s governing bodies as well as by its employee and EVRY EMPLOYEE ENGAGEMENT SURVEY 2016 At the end of 2016, EVRY’s executive management team to- management groups at all levels. The main topics assessed by talled eleven people, two of whom were women. The propor- the employee surveys are the Group’s working environment, tion of women on the Board of Directors of EVRY AS was 30%. 2015 2016 employee motivation, commitment, management, reputation and compliance with the company’s values. The survey leads to 80.1 ABSENCE DUE TO SICKNESS AND ACCIDENTS Norway: % % 79.3 25 25 the introduction of concrete improvement measures in EVRY’s 78.3 EVRY works in a systematic and long-term way on health, 77.5 Sweden: 26% 28% operating plans. EVRY worked in a targeted way on these areas 75.3 safety and the working environment. The primary focus of the 82 in 2016, with good progress achieved despite 2016 being a year company’s work in this area is on preventative measures to keep 83 Nordic: % % Overall 25 26 of significant change. The employee engagement survey for the sick leave at the lowest possible level, to avoid risks to life and score Group: 26% 28% final quarter of 2015 yielded a score of 75.3, which improved to health, to minimise adverse effects on the environment and a score of 80.1 in the final quarter of 2016. Improvements were to prevent accidents and injuries. The risk of serious injuries seen in all assessment areas in 2016, with the score for employ- Q4 Q1 Q2 Q3 Q4 and fires is considered to be extremely low. The preventative ee pride increasing strongly from a less than desirable 66.4 in 15 16 16 16 16 health measures include early intervention for health problems, the final quarter of 2015 to 75.1 in the final quarter of 2016. encouraging a healthy diet in EVRY’s canteens and organised sports activities. Percentage of women EMPLOYEE DEVELOPMENT 75.1 73.3 EVRY has well-established processes and systems for employee 71.6 INCLUSIVE WORKING ENVIRONMENT managers 70.0 development. These form an annual cycle with employee 66.4 EVRY focuses on encouraging a working environment that 2015 2016 appraisal meetings held in the first and third quarters. These Pride is free of discrimination, whether on grounds of religion, skin meetings are held to address where employees are in relation colour, gender, sexual orientation, age, functional disability, or Norway: % % 24 23 to the company’s career model, to set personal targets and to national or ethnic origin. The Norwegian part of the Group has Sweden: 27% 29% agree training requirements. In addition to the intensive training entered into an agreement for “Inclusive Working Environment” gained by completing demanding assignments and projects, Q4 Q1 Q2 Q3 Q4 to strengthen the focus on working environment programs, Nordic: % % 15 16 16 16 16 25 25 more formal training and certification opportunities are pro- measures to reduce absence due to sickness, and diversity. The vided by the EVRY Academy’s extensive offering. The EVRY Group collaborates with Telenor Open Mind and routinely offers Academy organises classroom and e-learning courses for all work experience placements for individuals with disabilities. employees, with some courses delivered by EVRY employees 79.6 80.3 78.1 78.8 and others by external experts. 75.4 HUMAN RIGHTS The most important human right for EVRY’s employees relates Our goal is to retain and develop our employees so they grow Commitment to data protection. EVRY focuses on this as the data controller Sick leave together with the business. We have set up processes to ensure for its own personal data. We have initiated work on complying this is a well-established part of the company’s operating model. with the EU’s new General Data Protection Regulation (GDPR), 2015 2016 There is also an emphasis on ensuring EVRY has a culture in Q4 Q1 Q2 Q3 Q4 which will enter into force on 25 May 2018. EVRY supports the which all employees are trusted knowledge workers whose 15 16 16 16 16 United Nations Universal Declaration of Human Rights and re- Norway: 3.4% 3.4% development and skills are material to EVRY’s success, both lated conventions. The company places particular emphasis on internally and externally. We see our organisational culture as protecting the fundamental rights of employees as embodied in Sweden: % % 3.0 3.4 our primary competitive advantage, and this requires continual the ILO core conventions. EVRY’s Code of Conduct is aligned 79.7 Latvia: % % and systematic attention to ensure we are in front. 78.8 79.3 with the UN’s Global Compact, which was signed by CEO Björn 3.1 3.1 77.8 77.1 Ivroth in 2016. This commits the company to following the 10 India: % % 1.4 2.0 GENDER EQUALITY AND DEMOGRAPHICS basic principles, which address labour rights and environmental Leadership Ukraine: 1.2% 1.1% The EVRY group employs more than 2,500 women, which in and social responsibility issues. EVRY’s suppliers have to satisfy total represents 28% of the workforce. Women represent 25% the standards EVRY itself observes in all areas related to Nordics: % % 3.3 3.4 of EVRY’s workforce in Norway and 28% in Sweden, making corporate social responsibility. EVRY one of the largest employers of women in IT in the Nordic Q4 Q1 Q2 Q3 Q4 region. EVRY’s male and female employees have equal access 15 16 16 16 16 to all types of position. The distribution of genders is also reflected in management, where the proportions of women are 23% in Norway and 29% in Sweden. EVRY has well-established personnel guidelines that ensure there is no discrimination 85.3 Average age 83.9 83.9 84.7 based on gender in matters such as salaries, promotion and 82.3 recruitment. The average salary for women is slightly lower than 2015 2016 that for men, with the annual salary for women representing 92.7% of men’s. This reflects the fact that the average age, and Execution years years 39 39 accordingly the seniority, of women is somewhat lower. In the capabilities recruitment process, emphasis is placed on attracting highly qualified employees of both genders. The Group’s employees
BUSINESS PLAN have extensive experience, and their average age is 39. Q4 Q1 Q2 Q3 Q4 BUSINESS PLAN 15 16 16 16 16 From the boardroom
The Board of Directors of EVRY 86 Corporate governance 88 Report from the Board of Directors 2016 94 The Board of 1 Salim Nathoo 5 Louise Sondergaard 9 Kristin Krohn Devold CHAIRMAN OF THE BOARD BOARD MEMBER ELECTED BY SHAREHOLDERS BOARD MEMBER ELECTED BY SHAREHOLDERS Experience: Salim Nathoo is a Partner in the Tech & Experience: Louise Sondergaard is a member of the Experience: CEO of the Norwegian Hospitality Directors of EVRY Telco team at Apax Partners and is based in London. Tech and Telco team at Apax Partners. She joined Association (NHO Reiseliv), Norwegian Minister of He joined Apax Partners in 1999 and specialises in Apax in 2014 and is based in London. Prior to joining Defense 2001 – 2005, Member of the Norwegian the Tech and Telecom space. Prior to joining Apax, Apax Partners, Louise Sondergaard was an Associate Parliament for the Conservative Party 1993-2005, Salim Nathoo was a consultant at McKinsey where he at McKinsey & Company in London, where she General Secretary of The Norwegian Trekking specialised in advising clients in the telecom sector. primarily worked on restructuring, transformation and Association 2006-2013. strategy topics. Education: An MBA from INSEAD and an MA in Education: Master, Norwegian School of Economics Mathematics from the University of Cambridge. Education: An MSc from London Business School and Business Administration, and Bachelor in (with distinction) and a BSc in International Business sociology from the University in Bergen. 1 86 from Copenhagen Business School. 87 2 Rohan Haldea 10 BOARD MEMBER ELECTED BY SHAREHOLDERS Eirik Bornø 6 Experience: Rohan Haldea is a Partner in the Tech & Göran Lindahl BOARD MEMBER ELECTED BY EMPLOYEES Telco team at Apax. He joined Apax Partners in 2007 BOARD MEMBER ELECTED BY SHAREHOLDERS Experience: Eirik Bornø is currently employed as a and is based in London. Prior to joining Apax, he was Experience: Göran Lindahl is Chairman of the Board Senior Employee Representative, Negotia in EVRY, an Associate at Bain Capital in their North American of Directors of IKEA Greentech AB and of LivSafe and has many years of experience as a DB2 systems private equity division in New York, where he Group, and a Board Member of INGKA Holding programmer. He has also been a premises manager specialised in evaluating and executing transactions BV. He was the CEO and president of the global in the company and is now second Vice President of in the industrial, distribution and retail sectors. Haldea technology and engineering group ABB Ltd from the Federation Board of Negotia. has also worked as a consultant at McKinsey in India. 1997 to 2000, and spent more than 30 years in various Education: Higher education qualifications in positions in the ABB Group. Göran has also previously Education: An MBA from Harvard Business School administrative data processing from Polytekniske served on the Boards of Atlas Copco AB, EI du Pont and a Bachelor of Technology in Manufacturing høyskolen (now Westerdals Oslo School of Arts, 2 3 4 de Nemours and Company, the Sony Corporation, Sciences and Engineering from the Indian Institute of Communication and Technology), and in human Ericsson and Saab. He has also worked as a special Technology, New Delhi. resource management and employment law from advisor to UN Secretary General Kofi Annan. Buskerud University College. 3 Francisco Menjibar Education: A Master’s degree in Electrical Engineering from Chalmers University of Technology 11 BOARD MEMBER ELECTED BY SHAREHOLDERS in Gothenburg, Sweden. Ingrid Lund Experience: Francisco Menjibar is a Principal in BOARD MEMBER ELECTED BY EMPLOYEES the Tech and Telco team at Apax and is based in Experience: Ingrid Lund is employed as a Senior 7 the London office, where he specialises in the Leif Teksum Consultant and has worked in the IT sector since technology and telecommunication sectors. He has BOARD MEMBER ELECTED BY SHAREHOLDERS 1985, holding various positions in both the private and previously worked at the private equity company Experience: Extensive banking experience in public sectors. Her previous board appointments Magnum Industrial Partners and the international specialist functions as well as Group Management include membership of the Boards of EDB Norway consulting company Oliver Wyman. in DNB over 23 years. International experience as and EDB ASA and as deputy representative on the 5 6 7 responsible for all of DNB’s business outside Norway. Board of the Telenor Pension Fund. Education: A Master’s degree in Computer Science Industry knowledge within the Shipping, Oil & gas, from the Centro Politécnico Superior de Zaragoza Education: A foundation course in law and l Seafood, Manufacturing, Real Estate and Service (Spain) and an MBA from The Wharton School of the egal science. sectors. Board member and Chairperson in a large University of Pennsylvania. number of corporations such as Yara International ASA (Chairman). Partner, Vest Corporate Advisors. 12 Jan Dahlström 4 Ellen de Kreij Education: Master in Economics, Norwegian School BOARD MEMBER ELECTED BY EMPLOYEES BOARD MEMBER ELECTED BY SHAREHOLDERS of Economics, Bergen. Experience: Jan Dahlström is a Senior Project Experience: Ellen de Kreij is a member of Apax Manager at EVRY. He has also held board Partners’ Investor Relations team in London and 8 Al-Noor Ramji appointments at various stock exchange listed focuses particularly on European investors. She is companies in Sweden. also responsible for the implementation of the Apax BOARD MEMBER ELECTED BY SHAREHOLDERS sustainability programme. She joined Apax Partners Experience: Al-Noor Ramji is Group Chief Digital Education: Higher education qualifications in 8 9 10 in 2002 as Director of Deal Generation and became a Officer at Prudential, responsible for developing and medicine from the University of Gothenburg and in Director in the Investor Relations team in 2010. executing an integrated, long-term digital strategy business engineering from the IHM Business School. for the Group. Before joining Prudential, he worked Education: An MA in Dutch Civil Law from the at Northgate Capital, where he ran the technology- University of Leiden and an MBA from Harvard 13 focused funds. He has also worked for Misys, the Ola Hugo Jordhøy Business School. financial services software group, and held leading BOARD MEMBER ELECTED BY EMPLOYEES technology and innovation roles at BT Group, Qwest Experience: Ola Hugo Jordhøy is a Chief Communications, Dresdner Kleinwort Benson and Consultant in Mobility and Communication at Swiss Bank Corporation. EVRY and has many years’ experience in IT and telecommunications. Jordhøy is the head of Tekna’s Education: CFA, BSc Electronics from the representation at EVRY. University of London. Education: A Master’s degree in Electrical Engineering from the Norwegian University of 11 12 13 Science and Technology, and post-graduate FROM THE FROM BOARDROOM THE FROM BOARDROOM teaching qualifications. 88 FROM THE BOARDROOM and initsbusiness activitiesasa whole Confidence inEVRY asa company February 2016. extraordinary generalmeetingon22 from apubliclimited company by an converted to aprivate limited company limited company. The company was EVRY AS isanunlisted Norwegian private porate governance onanannualbasis. and evaluation of the principles for cor- executive managementcarry outareview corporate governance. The Board and that the company practices good has the ultimate responsibility for ensuring EVRY’s Board of Directors (the “Board”) CORPORATE GOVERNANCE 1. IMPLEMENTATION AND REPORTING ON > > > > > Our principlesare: management. between shareholders, the Board of Directors andexecutive of corporate governance is to regulate the divisionof roles contributes to optimal value creation over time. The objective EVRY iscommitted to healthy corporate governance that Corporate governance > > > > > EVR EVR EVR EVR and itscorporate governance world about the company’s activities relevant outside communication to the EVR management of Directors and the executive responsibility between the Board management Board of Directors anditsexecutive its shareholders, the membersof its of interest between the interests of ensuring that there are noconflicts Group’s executive management autonomous, andindependentof the Y will provide open,reliable and Y will treat allshareholders equally Y will ensure aclear divisionof Y will pay particular attention to Y’s Board of Directors will be
other parties.” other companies andcollaboration with subsidiaries or through participationin carried outby the company itself, by its the foregoing. These activitiesmay be consultancy andany activitiesrelated to parties’ IT solutions, to sellservices and manage andoperate itsown andother “The company’s businessis to develop, Articles of Association, which state that: defined in Article3of the company’s The businessobjective of EVRY AS is 2. BUSINESS AS asitisan unlisted company. Board (NCGB) doesnotapply to EVRY Norwegian Corporate Governance Corporate Governance issuedby the The Norwegian Codeof Practice for responsibility anditsCodeof Conduct. company’s policy for corporate social concept as well information on the company’s corporate vision andbusiness provides more information about the EVRY’s website, www.evry.com, able approach to business. time promoting anethicalandsustain- external confidence, whileat thesame value creation andbuildsinternal and agement of the Group. This strengthens systems andprocedures for the man- EVRY iscommitted to opennessaboutits competitiveness. is essential for the Group’s continuing 89 FROM THE BOARDROOM 90 FROM THE BOARDROOM updated on3May 2016. Articles of Association were mostrecently EVRY’son website, www.evry.com. The EVRY’s Articles of Association are available and allshares have equal voting rights. impose any restrictions on voting rights (VPS). The Articles of Association donot via Verdipapirsentralenout carried ASA any purchases or salesof own shares are EVRY hasonly oneclassof shares, and CLOSEWITH ASSOCIATES AND TRANSACTIONSHOLDERS 4. EQUAL TREATMENT OF SHARE end of 2016. not holdany of itsown shares at the transactions in2016. The company did EVRY AS didnotcarry outany capital 2016. purchases of own shares at31December respect of increases inshare capitalor The Board didnotholdany mandates in granted at the Annual General Meeting. million, pursuant to the mandate it was per share, equivalent to NOK 1,906 an extraordinary dividendof NOK 7.13 in the springof 2016, the Board approved In connection with the company’s refinancing case by casebasis. circumstances, and will beevaluated ona dividends may bedistributed inparticular normalised post-tax profit. Extraordinary to shareholders equivalent to 20-50%of dend policy is to pay anannualdividend capital structure. The company’s divi- company’s future growth ambitionsand this will nothave anadverse effect on the proposes adividendif itissatisfied that tunities of comparable risk. The Board available onsimilar investment oppor price that isatleastinline with the return dividends andincreases in the share a return for itsshareholders through The company’s objective is to generate its objectives, strategy andriskprofile. kept under constant review inrelation to 1.9%. The Group’s capitaladequacy is million, representing anequity ratioof at 31December 2016 was NOK 193.8 The book value of the Group’s equity 3. EQUITY AND DIVIDENDPOLICY
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post uponrequest if they so wish. entitled to receive the documentsby by post.However, shareholders are still rather than beingsent to shareholders available on the company’s website considered atameetingcan bemade documents dealing with matters to be supporting stipulates thatthe Association meeting. Article 8of EVRY’s Articles of no later than one week inadvance of the February 2016 issent to allshareholders (www.evry.com) and with effect from available on the company’s website Extraordinary General Meeting ismade The notice calling the AGM andany held on3May. by company law. The 2016 AGM was June, which is the latest date permitted each year, andinany casenolater than 30 The AGM isusually heldbefore 1 June between shareholders and the Board. are aneffective forum for communication The Board strives to ensure that AGMs the company’s ultimate corporate body. The Annual General Meeting (“AGM”) is 5. GENERAL MEETINGS bycompany. the indirectly, inanagreement entered into they have any material interest, directly or executive personnelnotify the Board if ensure that membersof the Board and The company hasguidelinesinplace to parties. personnel or any closeassociates of such ers, membersof the Board, executive ers, parent companies of itssharehold- between the company anditssharehold- valuations for any material transactions The Board will obtainindependent with the othersowning a total of 0.2%. approximately 11.8%of the share capital, is aminority shareholder that controls among 534shareholders, of which one The remaining share capitalisspread 88.0% of the share capitalof EVRY AS. close of 2016,Lyngen Bidco AS held company’s shareholders equally. At the committed are toall the treating ment EVRY’s Board andexecutive manage- evry.com. published on the EVRY website at www. The minutes from generalmeetingsare presentation of the Group ateach AGM. Articles of Association. The CEO gives a with legislationand the company’s to shareholders’ interests inaccordance who iscapableof paying dueattention appoints achairperson for the meeting Companies Act. Eachgeneralmeeting quirements of the Private Limited Liability for the AGM are determined by the re- eral meetings. The mainagendaitems The Board decides the agenda for gen- CFO attending. with, ataminimum, the CEO and the ment isrepresented atgeneralmeetings attends the AGM. The executive manage- general meetings,and the auditor also Representatives from the Board attend vote oneachmatter to beconsidered. ers to specify how their proxy should for appointingaproxy allow sharehold - to appoint aproxy. The arrangements to attend ameetingare encouraged or e-mail.Shareholders who are unable ing, either by post,electronic registration their intention to attend ageneralmeet- Shareholders mustgive written notice of the meeting. can benoearlier than two days before in the notice calling the meeting, which notify the company by the deadlinegiven wishing to attend ageneralmeetingmust Articles of Association, shareholders ered. Inaccordance with the company’s form a view on the matters to beconsid- sufficient information for shareholders to The supportingdocumentationprovides including the Chairman,andany deputy holder-elected members of the Board, by the AGM for appointmentasshare- nominate candidates for consideration The ElectionCommittee’s dutiesare to term of office. Election Committee serve for a two-year Committee. The membersof the proposals madeby the current Election elected by the AGM after considering members of the ElectionCommittee are consisting of three members. The EVRY hasanElectionCommittee 6. ELECTION COMMITTEE board member who isconsidered by ed with anadditionalshareholder-elected 28 February 2017, the Board was expand- At anextraordinary generalmeetingheld foundation among the main trade unions. employee-elected membershave asolid Board’swork. for The perspectives the at the Group andcontribute important bers represent significant experience employees. The employee-elected mem- members of the Board are elected by company’s executive personnel.Four does notincludeany members from the material businesscontacts. The Board company, its mainshareholders andits the company to beindependentof the as at the endof 2016are considered by shareholder-elected board members and international businesses. Three bring experience from bothNordic technical speciality, and the members from relevant industriesandareas of represent varied andbroad experience ers. The shareholder-elected members of the Board were elected by sharehold- bers at the endof 2016.Eightmembers The Board of EVRY comprised 12mem- by the Annual General Meeting. The Board of Directors of EVRY iselected INDEPENDENCE COMPOSITION AND 7. BOARD OF DIRECTORS: > > > two years: Committee for a term of office of up to the following asmembersof the Election The 2015 AGM approved the electionof respect to the AGM. submitting specificproposals in this and deputy membersof the Board and the remuneration paid to the members sible for carryingoutanannualreview of The ElectionCommittee isalsorespon- composition of expertise on the Board. candidates to ensure anappropriate includes guidance onselectingsuitable The mandate for the ElectionCommittee members of the ElectionCommittee. bers, and to nominate candidates for the members for shareholder-elected mem- > > > M Arthur F rancisco Menjibar (Chair) ark Richard Brothag
a Compensation Committee to work on has appointed an Audit Committee and lating documents.Inaddition, the Board sions may bemade on the basisof circu- exceptional circumstances, Board deci- conducted as telephone conferences. In when required, and these are generally between the ordinary meetingsas and Extraordinary Board meetingsare held which are heldasphysical meetings. The Board holdsregular meetings, management of the Group. CEO isresponsible for the operational between the Board and the CEO. The appropriate divisionof responsibilities for the work of the CEO. There isan Directors. The Board issues amandate The CEO isappointed by the Board of and satisfactory manner. carries outriskmanagementinaprudent ny managesitsbusinessandassets comparesponsibilitiesensure- to thatthe addition, the Board exercises supervision and monitoring itsimplementation.In developing the company’s strategy and activitiesingeneral. This includes supervising itsday-to-day management for the managementof the Group and for The Board has the ultimate responsibility BOARDOFWORK8. THE THE the company’sthe at www.evry.com. website of the Board of EVRY AS isprovided on An up-to-date overview of the members management. trade unions,Board andexecutive by agreement between the company’s does nothave acorporate assembly interest or are otherwiseinvolved. EVRY matter in which they may have a financial Chairman if the Board is to consider any require that membersmustnotify the sional manner. The Board’s guidelines are identifiedand handled inaprofes est to ensure that any potential conflicts The Board hasrulesonconflicts of inter company’s shareholders. represents the bestinterests of all the EVRY believes that the Board asa whole material businesscontacts. company, itsmainshareholders andits the company to beindependentof the - -
91 FROM THE BOARDROOM 92 FROM THE BOARDROOM were: Committee asof 31December 2016 The membersof the Compensation also relevant for other employees. executive personnel. These proposals are remuneration of the CEO andother ment terms andconditions and total employon the proposalsBoard to the The CompensationCommittee makes Compensation Committee > > > > of 31December 2016 were: The membersof the Audit Committee as audit function. internal Internal Audit, who isresponsible for the addition, the company employs aheadof nal auditor and the results of the audit.In receives reports on the work of the exter business activities. The Audit Committee controls in the major areas of the Group’s dures for risk managementand financial Committee hasreviewed the proce- accepted accounting practice. The Audit condition inaccordance with generally Group’s andfinancial financial results annual accounts give a fair picture of the ensure and to thatthe independent is control,auditorensureinternal to thatthe are to supervise the Group’s systems for the Board, anditsmainresponsibilities The Audit Committee isappointed by Audit Committee successful. the company, noneof which were by the sameminority shareholder against well asinrelation to anumber of lawsuits meetings from aminority shareholder, as demands for extraordinary general for the Board inrelation to repeated was responsible for preparing issues also hadanadhoc working group that matters in these areas. In2016 the Board > > > > > > > > > > L Eirik Bornø R Salim N G R Salim N eif Teksum ohan Haldea ohan Haldea öran Lindahl athoo, Chair athoo, Chair - - all relevant governance documentsat control andriskmanagement comprises EVRY’s managementsystem for internal Management system measures. ment andmonitor appropriate follow-up commercial performance andimple- meetings review operational and meetings with eachbusinessarea. These The CEO andCFO holdregular status Operational control Regulations). customers of the company (the ICT Groupare the banks that through the Finanstilsynet can exercise control over Supervisory Authority of Norway), but vision by Finanstilsynet (the Financial EVRY isnotsubject to direct super 31000:2009. management process isbuiltonISO regulatory compliance risk.EVRY’s risk risk, technical risk,andlegislative and strategic risk, financial risk, reputational includes allcategories of risk,including ganised riskmanagementprocess that EVRY operates astructured and well-or carried out to maintainquality. ly, andcontinual improvement work is system. The controls are tested regular Governance RiskCompliance (GRC) ing atEVRY isdocumented inEVRY’s Internal control over financial report- reporting. compliance, and internal andexternal business ethics, legislative andregulatory cesses for EVRY’s strategy, operations, management systems consist of pro - framework. The internal control andrisk based onCOSO’s internal control and organisational structures, andare consist of asetof policies,procedures control andriskmanagementsystems management systems. EVRY’s internal for the Group’s internal control andrisk controlis function, the foundation which EVRY hasa well-established internal INTERNAL CONTROL 9. RISK MANAGEMENT AND > > > > K Ingrid L ristin Krohn Devold und
- - - accountancy and businessadvisory firm also entered into anagreement with the com). In2016, the Compliance function intranet andemail(compliance@evry. accessed by allemployees via EVRY’s whistle-blowing channelscanbeeasily advice inrelation to ethicalmatters. The Code of Conduct,or if they require could be incontravention of EVRY’s they wish to report acircumstance that for employees to usein the event that EVRY operates whistle-blowing channels business areas andgeographies. who are assigned to the Group’s different together with Compliance Managers of the Group Compliance Officer issues. The Compliance function consists is responsible for work onbusinessethics EVRY hasaCompliance function, which they have read andunderstood it. and have to signadeclarationconfirming Code aspartof their training program are provided with anintroduction to the derstood the Code. All new employees to confirm that they have read andun- required to signadeclarationeach year wholly owned subsidiary companies, are All employees, includingemployees of familiar with andcomply with the Code. processes to ensure allbusinessareas are Board. The Group carriesoutannual Code of Conductisapproved by the Group’s internal control system. EVRY’s Conduct isakey component of the Compliance with EVRY’s Codeof Business ethics tive managementmodel. ment work to ensure EVRY hasaneffec- system and to drive continual improve- regularly management maintain the to staffand functions. meets This forum representatives from allitsbusinessareas EVRY operates a forum that consists of development. rity, IT, quality, andstrategy andbusiness ethics, finance, sales,procurement, secu- ment system covers processes including the quality of itsdeliveries. The manage- which processes EVRY uses to maintain relevant legislation.Italsodocuments monitor customer requirements and Group to safeguard information and to EVRY, andisimportantinorder for the use by employees, customers, suppliers and other third-parties andprovides full channel through BDOin2016 that is for EVRY setupanew whistleblowing anonymity. remuneration paid to the Board in2016. accounts provide information on the company’s earnings. notes to the The of the Board isnotdependenton the The remuneration paid to the members Election Committee. having considered proposals by the of the Board isdecidedby the AGM The remuneration paid to the members ELECTION COMMITTEE BOARD OF DIRECTORS AND THE 10. REMUNERATION OF THE each businessarea. executive management’s reports on routine financial reporting and the risk managementatitsmeetings, through The Board receives regular reports on Annual review by the Board reports to the CFO onanongoingbasis. the Audit Committee twice a year, andit ports on the results of itsauditactivities to CFO and the Audit Committee. GIA re- drawn upannually andapproved by the approved by the Board. An auditplanis the Audit Committee. GIA’s charter is a dotted reporting line to the Board via GIA reports directly to the CFO andhas companies in the EVRY Group. mandate is to auditallmajority-owned the Institute of Internal Auditors. GIA’s uses isbasedonstandards produced by are implemented. The methodology GIA in internal control andriskmanagement up to check that areas for improvement objective assessmentandby following tured working methodology that ensures tems. GIA does this by applyingastruc- internal control andriskmanagementsys achieves itsgoalsby evaluating EVRY’s Audit (GIA) is to helpensure EVRY The mainpurposeof Group Internal Internal audit anonymously. channel use the whistle-blowingable to suppliers andother third partiesare all their anonymity. Employees, customers, to exchange information without losing users to enter into written dialogueand offers fullanonymity, andalsoallows whistle-blowing channel for EVRY that BDO, which involves BDOmanaginga
- of the Audit Committee. ofthe Audit accounts andparticipates atallmeetings consider ofBoardannual that the the ed. The auditor participates atmeetings company’s managementisnotrepresent- each yearthe at which Board the with The auditor attends atleastonemeeting Ernst & Young is the auditor for EVRY. 11. AUDITOR 93 FROM THE BOARDROOM Report from the Board of Directors 2016
EVRY reported increased profitability in 2016 and has strengthened its competitiveness, with strategic customers 94 choosing to renew long-term contracts and new customers 95 showing confidence in the company. At the start of 2017, EVRY’s backlog was at an all-time high.
EVRY started 2016 with a lower cost base 2015, representing a decrease in organic than the previous year. This was the result revenue of 4.4%. After adjusting for the of a number of cost reduction measures loss of revenue associated with the DNB that were implemented in 2015 in order non-mainframe contract, organic to strengthen the Group’s profitability and revenue was 0.9% lower than in 2015. long-term competitiveness. EVRY’s improved operational efficiency and The Group’s operating result before lower cost base contributed to significant amortisation of customer contracts and improvements in profitability being write-downs of intangible assets and achieved at all business areas in 2016. other income and expenses (adjusted In addition, EVRY’s new organisational EBITA) was a profit of NOK 1,321.6 million, structure, greater focus on the market as compared to a profit of NOK 811.0 and clearer prioritisation of resources million in 2015. The adjusted EBITA margin resulted in increased sales and several increased by 4.5 percentage points, customer wins of long-term strategic from 6.3% in 2015 to 10.8% in 2016. importance. The Group’s cash conversion ratio was The company continued in 2016 to focus 108.0% in 2016, an improvement of on investing in cloud-based infrastructure 10 percentage points from 2015. The solutions in order to offer its custom- Group’s free cash flow (adjusted for ers scalable, market-leading solutions other income and expenses) was NOK on global platforms. The process of 964.0 million in 2016, as compared to transferring EVRY’s customers over to NOK 592.0 million in 2015. IBM’s platform, which is an important part of the company’s cloud strategy, The Group’s order backlog at the end of is progressing in accordance with the December 2016 was NOK 20.8 billion, of plan. In addition, the Group entered into which NOK 7.6 billion is due for delivery a number of strategic partnership agree- in 2017. ments in 2016, including with Google, Microsoft, Amazon Web Services, Apple Earnings per share for 2016 was NOK and Facebook. These partnerships will 1.12 compared to NOK -5.28 in 2015. enable EVRY to offer its customers Adjusted earnings per share for 2016 scalable and innovative solutions for was NOK 2.18 compared to NOK 1.15 increasing their competitiveness. in 2015.
EVRY’s consolidated operating revenue For more detailed information, see pages 58-63 for 2016 was NOK 12,246.4 million Key figures and Alternative performance measures.
FROM THE FROM BOARDROOM compared to NOK 12,859.5 million in THE FROM BOARDROOM Financial statements along with cost reduction initiatives to NOK 217.3 million in 2015. The in December 2015. Total non-current implemented in 2015 and 2016, increase in net cash flow from opera- assets amounted to NOK 7,180.4 million contributed to a significant improvement tions was largely due to the increase at 31 December 2016, of which goodwill OPERATING REVENUE in profitability. in the Group’s operating result before accounted for 78%. At the end of 2015, EVRY’s consolidated operating revenue depreciation, amortisation and write-downs non-current assets amounted to NOK in 2016 was NOK 12,246.4 million, as Depreciation of tangible assets and in- (EBITDA). Interest payments on the 7,434.6 million, of which goodwill compared to NOK 12,859.5 million house developed software amounted to Group’s borrowing portfolio increased accounted for 76%. in 2015, representing a decrease in NOK 270.3 million in 2016, with depre- by NOK 180.7 million in 2016 compared organic revenue of 4.4%. The decrease ciation of in-house developed software to 2015. The change in the Group’s The Group’s equity was NOK 193.8 million in operating revenue in 2016 was mainly accounting for NOK 45.4 million of this working capital in 2016 was NOK -433.3 at 31 December 2016, equivalent to an due to the loss of the DNB non-mainframe amount. On a comparable basis, depre- million, which was principally due to a equity ratio of 1.9%. This represents a 96 contract and, after adjusting for this, 97 ciation amounted to NOK 467.4 million reversal of provisions made in 2015 in decrease from NOK 2,145,6 million at organic revenue was 0.9% lower than in 2015, with depreciation of in-house relation to the IBM contract. the end of 2015, which was equivalent in 2015. The Group achieved positive developed software accounting for to an equity ratio of 19.4%. The Board organic revenue growth in both the third NOK 84.0 million of this amount. Investment in tangible assets totalled continuously evaluates the Group’s and fourth quarters of 2016. This growth NOK 161.1 million in 2016, down from equity position based on the underlying was mainly driven by the EVRY Financial The Group’s operating result (EBIT) in NOK 296.6 million in 2015. Investment asset values and the liquidity situation. Services segment, particularly in the 2016 was a profit of NOK 933.3 million, in software developed in-house totalled The Group’s equity has been negatively Nordic card services market. EVRY Financial Services compared to a loss of NOK 1,566.0 NOK 189.4 million in 2016, compared to impacted by currency fluctuations. The 2016 million in 2015. NOK 146.7 million in 2015. Investment fair value of the Group’s equity is consid- OPERATING RESULT BEFORE by the EVRY Financial Services segment ered satisfactory and liquidity is good. AMORTISATION OF CUSTOMER Amortisation of intangible assets Revenue was higher in 2016 than in 2015, and CONTRACTS AND WRITE-DOWNS NOK mill amounted to NOK 13.4 million in 2016 as 3,133 principally related to the development Net interest-bearing debt was NOK OF INTANGIBLE ASSETS (EBITA) Adjusted EBITA compared to NOK 24.6 million in 2015. NOK mill of new core banking and payment solutions 6,040.6 million at 31 December 2016, an The Group’s operating result before 415 Intangible assets were written down by Number of that are based on industry standards increase of NOK 2,032.4 million from 31 amortisation of customer contracts and 1,238 NOK 135.9 million in 2015, all of which employees such as ISO 20022, SOA and BIAN and December 2015. This represents a net write-downs of intangible assets (EBITA) related to the Future Proof program. are suitable for the international market. debt ratio of 31.17 at the close of 2016 as in 2016 was a profit of NOK 946.7 No material costs were recognised in compared with 1.87 at the close of 2015. million, as compared to a loss of NOK NET FINANCIAL ITEMS AND RESULT respect of research and development 1,405.4 million in 2015. EBITA was nega- FOR THE YEAR BEFORE AND AFTER TAX activities in 2016. REPORTING SEGMENTS tively impacted in 2016 by other income The Group had net financial expenses The Group reported for three segments and expenses totalling NOK 374.9 million, of NOK 513.0 million in 2016, while the Net cash flow from financing activities in 2016: EVRY Financial Services, EVRY of which NOK 249.8 million relates to result before tax from continuing oper- EVRY Norway was NOK 227.3 million in 2016. The Group Norway and EVRY Sweden. In 2016, the implementing the IBM agreement. In ations was a profit of NOK 420.4 million. refinanced parts of its borrowing portfolio EVRY Financial Services Segment ac- 2015, EBITA was negatively impacted 2016 The Group’s tax expense for the year in 2016 and, in connection with this, a counted for 26% of total revenues before by other income and expenses totalling totalled NOK 119.9 million in 2016, and dividend of NOK 1,906.1 million was internal netting, while the EVRY Sweden NOK 2,216.4 million, of which NOK Revenue the result for the year from continuing NOK mill paid to shareholders. Net new borrow- segment accounted for 26% and the 1,234.2 million related to write-downs 5,669 operations was a profit of NOK 300.5 Adjusted EBITA ing amounted to NOK 2,133.4 million EVRY Norway segment for 46%. of balance sheet items and provisions NOK 430 mill million. The result after tax from in 2016. The Group reported liquidity related to entering into the operations Number of discontinued operations in 2016 was 2,361 reserves of NOK 2,799.2 million at the Note 2 of the consolidated accounts provides agreement with IBM. In addition, costs employees a profit of NOK 0.1 million. end of 2016, whereof NOK 990.2 million more detailed information on the Group’s totalling NOK 510.2 million were rec- reporting segments. was bank deposits, compared to NOK ognised in connection with restructuring On a comparable basis, the Group had 2,209.2 million at the end of 2015. The measures, while balance sheet items re- net financial expenses of NOK 330.4 Group’s liquidity situation is regarded EVRY FINANCIAL SERVICES SEGMENT lated to the Future Proof program were million in 2015, while the result before as good. EVRY Financial Services offers a broad written down by a total of NOK 292.7 tax from continuing operations was a portfolio of solutions and services, and is million. See Note 2 to the consolidated loss of NOK 1,896.4 million. The Group’s The Group’s total assets amounted to a complete industry vertical responsible accounts for a more detailed breakdown EVRY Sweden tax expense for the year totalled NOK NOK 10,460.7 million at 31 December for all the company’s deliveries to bank of other income and expenses. 2016 -455.4 million in 2015, and the result for 2016, compared to NOK 11,077.5 and finance customers. The solutions the year from continuing operations was million at 31 December 2015. Intangible portfolio includes solutions for all core After adjusting for other income and a loss of NOK 1,441.0 million. The result Revenue assets were higher at year-end 2016 banking services, whether this relates to expenses, the Group reported an NOK 3,245 mill after tax from discontinued operations in due to a higher level of investment in interfaces with end-customers or solutions operating profit before amortisation Adjusted EBITA NOK mill 2015 was a profit of NOK 30.4 million. 305 in-house developed software, while to support a bank’s internal process- and write-downs of intangible assets of Number of tangible assets were lower due to a es and employees. The portfolio is NOK 1,321.6 million in 2016 as com- 1,778 CASH FLOW AND FINANCIAL POSITION employees lower level of investment in 2016 as well module-based, and includes banking pared to NOK 811.0 million in 2015. The Group’s net cash flow from operations as sales of equipment in connection services, transactions systems, payment Improvements in operational efficiency,
FROM THE FROM BOARDROOM was NOK 305.9 million in 2016, compared with the operations agreement with IBM solutions and card services. The portfolio THE FROM BOARDROOM also includes a unique value chain of card The EVRY Sweden segment reported from EVRY’s companies in India, Ukraine The overall Nordic IT services market a low-carbon society by implementing risk, reputational risk, operational risk, services that are delivered to banks in operating revenue of NOK 3,244.8 and Latvia to the Group’s Nordic organi- is estimated to be worth around NOK measures involving its own operations, technical risk and compliance risk. EVRY the Nordic countries and the United million in 2016, representing a 7.7% sation account for some 40% of total 168 billion. Figures from the market but also most importantly by working is committed to making risk management Kingdom. decrease in organic revenue. This was revenues for EVRY’s Global Sourcing intelligence firm IDC show that EVRY is in collaboration with customers on creat- an integral part of its corporate culture mainly due to lower revenue in the oper- businesses. The other revenue relates to currently the second largest vendor in ing a sustainable future. Annual targets and ensuring it supports all critical The EVRY Financial Services segment ating services area. other customers, and this ensures that the Nordic IT services market, the clear are set for these areas, with reports business processes. reported operating revenue of NOK the Global Sourcing businesses have a market leader in Norway and the fourth submitted to the executive manage- 3,133.4 million in 2016, representing a The EVRY Sweden segment generated profitable and scalable business model. largest vendor in the Swedish market. ment team. EVRY bases its ERM process on ISO decrease in organic revenue of 13.4% adjusted EBITA in 2016 of NOK 304.9 The Group’s market share is estimated 31000:2009. Risk assessment is the over- from 2015. The decrease was due million, representing an adjusted EBITA THE STRUCTURE OF EVRY IN 2016 to be 24.7% in Norway and 5.8% in See the “Business plan” section of this report all process of identifying, analysing and to a loss of revenue from DNB in the margin of 9.4%. Adjusted EBITA in 2015 EVRY AS is a private limited company Sweden. (pages 64 -83) for further information on the evaluating risk. The results of risk assess- 98 working environment, absence due to sickness 99 was NOK 241.2 million, with an adjusted ment are managed by the organisational non-mainframe area. After adjusting for and the company’s head office is at and the external environment. this, revenue was 2.0% higher than in EBITA margin of 7.0%. Fornebu outside Oslo. The company CORPORATE GOVERNANCE structure, with risk exposure ‘owned’ in 2015. The Nordic card services area con- was converted to a private limited com- The Board of EVRY is committed to accordance with the appropriate legal tinued to show strong growth in 2016. The EVRY Sweden segment’s contractually pany from a public limited company sound corporate governance practic- RISK EXPOSURE AND RISK structure. The EVRY Financial Services segment agreed order backlog at 31 December on 22 February 2016. The executive es, as this increases confidence in the MANAGEMENT generated adjusted EBITA of NOK 414.5 2016 was NOK 3.5 billion, of which NOK management team had eleven company and contributes to the highest The overall objective of risk management EVRY operates established risk reporting million in 2016, compared to NOK 335.2 1.5 billion is due for delivery in 2017. members in 2016 and was led by possible value creation over time. The at EVRY is to identify and quantify risks procedures for the appropriate million in 2015. Adjusted EBITA margin CEO Björn Ivroth. objective of corporate governance is to in order to provide a basis for decision management groups to report to for 2016 was 13.2% as compared to EVRY NORWAY SEGMENT regulate the division of roles between making. In addition, risk management executive management, the Board and 9.3% in 2015. The EVRY Norway segment offers The Group mainly carries out its activi- shareholders, the Board of Directors and forms part of the process of value the Audit Committee, and this involves consulting, infrastructure and operating ties through wholly-owned companies in executive management. creation by ensuring that risk exposure reporting all important and critical risk The EVRY Financial Services segment’s services. EVRY Norway has a significant Norway, Sweden, Denmark and Finland. is taken into account in the company’s exposure and ensuring that the owner- order backlog at 31 December 2016 was position in the local government and The Group also operates businesses in EVRY’s general corporate governance decision-making processes as well as ship of responsibility for the exposure NOK 8.9 billion, of which NOK 2.9 billion healthcare sectors, and is currently Great Britain, India, Ukraine and Latvia. principles are based on maintaining ensuring compliance with relevant is identified. EVRY has established a is due for delivery in 2017. Several strengthening its position in other industries open and reliable lines of communi- legislation and regulations. risk management system in order to strategically important customer including retail, oil and gas, and EVRY sees the Nordic region as its cation, having a Board that is autono- support the risk management process contracts were renewed in the EVRY insurance. Through its extensive activities, natural home market. The company mous and independent of the Group Risk management is an integral part of and ensure traceability and aggregation Financial Services segment in 2016 EVRY Norway has in-depth technical operates from locations in 50 Nordic management, having a clear division the company’s management model and of various risk exposures. In addition to (see customer case on page 20). expertise in specialist services that are towns and cities, principally in Norway of responsibility between the Board of its financial reporting. The key areas producing aggregated risk reporting, independent of geographic location and and Sweden, providing the expertise to and the executive management, and of risk that the business units consider to this system provides detailed informa- EVRY SWEDEN SEGMENT sector. This includes growth areas such serve customers locally. The company is treating all shareholders equally. Further be material are monitored as part of the tion on vulnerabilities, which risks the The EVRY Sweden segment offers as mobility, cloud-based solutions and committed to operating with a decen- information on the company’s corporate executive management’s routine vulnerabilities affect and what measures everything from strategic advice and Business Intelligence. tralised organisational structure that is bodies and their function and work can supervision of the business areas and the organisation has implemented to consulting services through to solu- able to respond rapidly to customers, be found in the Corporate Governance key financial metrics. In operational reduce unacceptable risk exposure. tions and IT operating services. EVRY The EVRY Norway segment reported and has therefore ensured that deci- report on page 88 of this annual report. terms, the company’s objective is to This helps line management to follow Sweden offers a significant portfolio of operating revenue of NOK 5,669.4 million sion-making authority is delegated integrate systematic risk management up on the status of measures that have industry vertical solutions that combine in 2016, which is a decrease of NOK appropriately. The company considers THE WORKING ENVIRONMENT, into the Group’s business processes, been implemented, with ready access to industry-specific insight and business 1.6% compared to 2015. it very important to ensure that the local THE EXTERNAL ENVIRONMENT as well as to support our customers in information on prioritised tasks. understanding with technological offices can draw upon the expertise AND EQUALITY the risk management they carry out in expertise. EVRY Sweden also delivers The EVRY Norway segment generated and strengths that the Group as a whole Implicit in EVRY’s new value proposition, relation to their value chains. MARKET RISK ANALYSIS specialist services independent of adjusted EBITA of NOK 430.1 million in represents. This is achieved through ap- “Shape the future today”, is the belief Market risk is an expression of the risk geographic location and sector based 2016, representing an adjusted EBITA propriate organisational and reporting that EVRY can help bring about positive EVRY has structured and organised its of market prices and fundamental on strong specialist expertise, for example margin of 7.6%. For comparison, arrangements and a group-wide pro- change for the future. This applies to approach to risk management through economic circumstances changing, ERP solutions, mobility, cloud-based adjusted EBITA was NOK 111.1 million gram, as well as through arrangements EVRY as a company, to its decision- Enterprise Risk Management (ERM), such as interest rates and exchange solutions and Business Intelligence. in 2015, representing an adjusted for marketing and customer relationship making bodies and to managers and which embeds risk management into rates. EVRY has established a strategy EVRY Sweden also has its own operating EBITA margin of 1.9%. management. In addition to its activ- employees across the organisation. businesses as a normal and routine part to manage its exposure to currency services organisation, which focuses on ities in the Nordic region, EVRY has Social responsibility is achieved by of activities at every level. ERM ensures a and interest rate risks arising from its medium-sized businesses and entities in The EVRY Norway segment’s order wholly-owned companies in India and group-wide targets, the commitment shared understanding of the concept of international investments. The strategy the private and public sectors. backlog at 31 December 2016 was NOK Ukraine that represent a major part of of individual employees, and close risk, defines a group-wide methodology is designed to ensure a high degree of 8.4 billion, of which NOK 3.3 billion is the company’s overall delivery capacity. cooperation with customers. The task for identifying, assessing, managing and predictability and the lowest possible A new simplified operating model was due for delivery in 2017. In order to make the best possible use of is to minimize EVRY’s impact on the monitoring risks, and also stipulates risk volatility in annual currency gains/losses implemented in the EVRY Sweden this competence base, these companies environment and to maximise the acceptance criteria and frames for risk and interest costs. segment in 2016 and the number of OTHER also have significant customer portfolios positive impact the company has on the ownership. legal units has been reduced in order to EVRY’s Global Sourcing activities in addition to their deliveries to EVRY for environment, working conditions, equal- EVRY is principally exposed to two types harmonise operations, create synergies accounted for approximately 7% of the its Nordic customers. ity, society, and customer satisfaction. Risk management includes all categories of currency risk: contractual purchases
FROM THE FROM BOARDROOM and increase efficiency. Group’s revenue in 2016. Deliveries EVRY makes its contribution to creating of risks such as strategic risk, financial or sales denominated in foreign currency, THE FROM BOARDROOM and foreign investments and future cash required to ensure the safety of its information, and to tailor their offer and December 2016, with 88.0% of the total No dividend is proposed in respect of flows from these investments. EVRY has employees. The political situation has, react quickly and agilely can achieve share capital. There were 535 share- the 2016 financial year. both revenue and costs denominated however, had only a limited effect on the significant competitive advantages. holders as of 31 December 2016. Further in foreign currencies, and this creates financial results reported by the Ukrainian Similarly, public sector organisations information is provided in Note 18 to the The Group has prepared its accounts some degree of natural hedging between operations for 2016. The Ukrainian authorities that are able to adapt, modernise and consolidated accounts. on the going concern assumption, financial transactions denominated in have ceased to allow money to be taken improve the efficiency of the services and the Board confirms in accordance foreign currency. The Group has also out of the country, which has made it they offer, can make significant savings ALLOCATION OF THE 2016 RESULT with Section 3-3 of the Norwegian established an arrangement for multi- impossible to use the liquid assets held and free up valuable resources. The parent company recorded a loss for Accounting Act that the going concern currency bank accounts for the Group, by the Ukrainian company freely in the the year of NOK 112.3 million in 2016, assumption is applicable. The Group’s and these accounts are used to reduce Group. In the years ahead EVRY will strengthen which is allocated against other equity. reported results, its business strategy exposure to currency risk at the Group its strategy of creating digital advantages and its current budgets and financing, 100 101 level. The Group hedges future receipts CREDIT RISK ANALYSIS that leave their mark. EVRY’s constantly The company’s dividend policy is to provide the basis for the going concern and payments denominated in foreign The Group’s total exposure to credit risk increasing competitiveness is a result of distribute a dividend equivalent to assumption. currency where the amount is greater at 31 December 2016 was NOK 1,641.0 the company’s ability to adapt and change 20-50% of the Group’s normalised than the equivalent of NOK 50 million, million. This includes accounts receivable in line with its customers’ present and profit. Extraordinary dividends may be by entering into forward contracts that and other receivables. The Group’s future needs. To build on this position, distributed in particular circumstances, mature on the settlement day for the exposure to counterparty risk is moderated the company continues to dedicate and will be evaluated on a case-by-case payment. At the end of 2016, the Group by the fact that it has a large number of significant resources to developing its basis. In connection with the company’s had borrowed SEK 1,038 million to hedge customers and its major customers are expertise and to attracting new talent. refinancing of parts its borrowing its investment in Sweden. Some of the judged to be very strong companies. portfolio in June 2016, an extraordinary Group’s debt financing is denominated No significant provisions were made for SHAREHOLDER INFORMATION dividend of NOK 7.13 per share was in euros, and the Group has entered into losses on accounts receivable in 2016. Lyngen Bidco AS, a company indirectly paid out, equivalent to NOK 1,906.1 currency exchange agreements for its controlled by private equity funds million, on the basis of the results for the euro-denominated debt to eliminate its LIQUIDITY RISK ANALYSIS managed by Apax Partners LLP, was the 2015 financial year. exposure to the euro. Cross-currency Liquidity risk arises if the cash flows largest shareholder in the company at 31 swaps have been entered into for generated by the Group are not sufficient EURNOK and EURSEK. to match its financial liabilities as they fall due. It is group policy to operate at EVRY has established subsidiaries in India all times with core long-term financing and Ukraine, and the revenue of these arrangements with its banks, in order to two companies is principally denominated make it possible to use bank facilities to in euros and US dollars. The Group’s finance investments. The Group restricts currency risk principally relates to the its use of short-term interest-bearing BÆRUM, 30 MARCH 2017, BOARD OF DIRECTORS OF EVRY AS Swedish krone, the euro and the US dollar. debt, other than its credit facility, in order to reduce its exposure to refinancing Interest rate risk is the risk that future cash risk. Financing for significant corporate flows will fluctuate as a result of changes acquisitions is evaluated on a case by in the general level of interest rates. The case basis. Group’s exposure to interest rate risk
relates principally to interest-bearing The Group monitors its liquidity daily, and Salim Nathoo Rohan Haldea Francisco Menjibar Ellen de Kreij Louise Sondergaard liabilities on floating interest rate terms. produces rolling liquidity forecasts on a CHAIRMAN OF The Group’s borrowing agreement sets twelve-monthly basis in order to identify THE BOARD a requirement for 50% of its borrowings liquidity requirements in future periods. to be hedged at fixed rates until April 2017. Interest rate risk is managed by MARKET OUTLOOK the use of financial hedging instruments Understanding how digital solutions, such as interest rate swaps to manage the new delivery models and network Göran Lindahl Leif Teksum Al-Noor Ramji Kristin Krohn Devold Eirik Bornø balance of fixed rate and floating interest effects can be used to engage with rate borrowings. customers and can change behaviours is central to the digital transformation. Note 4 to the consolidated accounts provides Digitalisation and digital transformation more detailed information on interest rate hedging are creating an increasing need for instruments, together with a sensitivity analysis of exposure to currency and interest rate movements. change and flexibility in both an organisational and technological Ingrid Lund Jan Dahlström Ola Hugo Jordhøy Björn Ivroth sense. Companies that are able to CEO The company follows the political situation create high-quality dialogue with their
FROM THE FROM BOARDROOM in Ukraine closely and takes the measures customers, to combine and process THE FROM BOARDROOM Annual accounts and notes
Group annual accounts 105 Annual accounts EVRY AS 150 Auditor’s report 160 104
ANNUAL ACCOUNTS AND NOTES 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 ccounting principles 2 1 Notes Group Consolidat Consolidat Consolidat Consolidated statement of comprehensive income GroupAnnual Accounts notes and accounts Annual
E Disput R Disc Classification of L Provisions Other S Bank deposits/ Other A Int P Intangible assets Earnings per Taxes Financial it Cost of Pensions Salaries andpersonnelc U Financial instruments M Segment inf A easing contracts hare capital,shareholders etc. roperty, plantandequipment vents after balance sheetdate elated parties ccounts receivable se of estimates anagement of capitalstructure and financial risk erests insubsidiaries,associated companies andjoint ventures ountinued Operations
current liabilities receivables es andother legalmatters ed statement of changesinequity ed statement of cash flow ed statement of financial position goodssoldandother operatingcosts
ems ormation share
guarantee liabilities
financial instrumentsanddetermination of fair value
osts
110 105 149 149 149 148 146 144 143 143 142 142 141 141 139 138 136 135 134 133 132 128 126 125 123 121 119 110 109 108 106 105 Auditor’s report 12 11 10 9 8 7 6 5 4 3 ccounting principles 2 1 EVRYNotes AS S S S Statement of comprehensive income EVRYAnnual Accounts AS tatement of changesinequity tatement of cash flow tatement of financial position
R Financial instruments S Intra-gr S G Taxes Financial it Other Inc Salaries andpersonnelc A hare capital,shareholders etc. hares insubsidiaries elated parties uarantee liabilities ome from investment insubsidiaries
operatingcosts oup accounts receivables andliabilities ems
osts
160 154 150 158 158 157 157 157 156 156 155 155 154 154 154 153 152 151 150 1 January -31 December 1 January GROUP 1) Consolidated statement of comprehensive income Salaries andpersonnelcosts Cost of goodssold Operating revenue (NOK million) Owners of the parent Profit/-loss for the year isallocatedas follows Actuarial gains/-lossesondefinedbenefitpensionplans Items whichwillnot be reclassified over profit andloss (after tax) Comprehensive income Owners of the parent Total profit/-loss for the year isallocatedas follows: Earnings per share (NOK) Earnings per share (basicanddiluted) Loss from saleof operatingassets intangible assets(EBITA) Operating profit/-loss before depreciation of customer contracts and write-down of Other operatingcosts Non-controlling interests Cash flowhedges Items whichmaybe reclassified over profit andlossinsubsequentperiods (after tax) Non-controlling interests Depreciation and write-down of tangible assetsandin-housedeveloped software Amortisation of customer contracts Currencydifferences translation Write-down of intangibleassets Total comprehensive income Operating profit/-loss (EBIT) Total profit/-loss for the year Financial income Financial expense Net financial itemsNet financial Net foreign exchange gain/-loss Profit/-loss before tax from continuing operations Taxes Profit/-loss for the year operations from continuing Profit/-loss after tax for the year from discontinued operations Discontinued operations Profit/-loss for the year
Including amortisationother
intangibleassets with the exception of customer contracts. 1) 12,13,21 Note 9,14 9,14 6,7 11 13 12 12 11 10 23 8 2 8 9 12 4 5 1 -186.7 -160.3 -346.1 -513.0
300.1 300.6 018.2 246.4 624.6 363.0 270.3 946.7 933.3 514.4 420.4 119.9 300.5 300.6 -46.0 -45.5 -45.5 -14.6 1.12 2016 23.7 13.4 16.0 0.5 0.5 0.9 0.1 - 12 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 4 7 1 -330.4 -455.4
877.9 859.5 097.6 724.0 467.4 410.7 133.1 405.4 138.2 410.7 133.1 120.6 135.9 277.6 566.0 133.1 390.5 896.4 441.0 410.7 -5.28 2015 18.7 98.1 24.6 19.8 40.2 30.4 - - 105 ANNUAL ACCOUNTS AND NOTES 106
ANNUAL ACCOUNTS AND NOTES As of 31 of December As Consolidated statement of financial position GROUP Other assets financial Other shareholdings Investment inassociated companies andjoint ventures Totalassets tangible Machinery, equipmentand fixtures Leased premises Total intangibleassets Other intangibleassets Deferredassets tax Goodwill Non-current assets (NOK million) Bank deposits Other current receivables Accounts receivable Inventories Current assets Total non-current assets Total non-current financial assets Other non-current receivables Total assets Total current assets
13,21 Note 3,17 14 13 12 10 12 16 15 16 4 11.0631.12.2015 31.12.2016 10 6 5 1 7 3 425.7 387.1 572.4 489.6
711 1 771.1 115.0 990.2 3. 6 5 639.7 577.7 7. 1 477.6 8. 7 180.4 6. 11 3 460.7 280.3 60.9 38.6 41.4 52.5 1.5 - 523.2 482.1 464.7 477.6
196.1 304.1 900.2 607.3 665.0 018.9 673.5 434.6 077.5 642.9 54.0 41.1 50.2 52.3 1.6 CHAIRMAN OF THE BOARD 31 of December As GROUP Consolidated statement of financial position Salim Nathoo BÆRUM, 30MARCH 2017,BOARD OF DIRECTORS OF EVRY AS Göran Lindahl Ingrid Lund Non-current non-interest bearingliabilities Non-current interest bearingliabilities Liabilities Total equity andnon-controlling interests Non-controlling interests Other equity Other paid-incapital Share capital (NOK million) Equity Pension liabilities Other current liabilities Deductions anddutiespayable Tax payable Accounts payable Total non-current liabilities Other provisions for liabilities Total equity andliabilities Total liabilities Total current liabilities
Rohan Haldea Leif Teksum Jan Dahlström Francisco Menjibar Al-Noor Ramji Ola Hugo JordhøyOla CEO Ellen deKreij Kristin Krohn Devold Björn Ivroth 2,21,22,23 Note 3,4 18 10 20 4 7 31.12.2016 10 10 6 7 1 3 Louise Sondergaard Eirik Bornø -274.7 193.8 467.8 174.9 897.8 877.7
217.6
808.1 237.3 460.7 266.9 029.6 201.5 52.6 36.7 0.6 - 31.12.2015 11 2 4 1 1 5 8 3 1 283.9
467.8 323.6 577.3
211.6
779.6 145.6 393.5 053.3 397.4 077.5 931.9 534.5 809.8 94.2 82.6 0.3 107 ANNUAL ACCOUNTS AND NOTES 108
ANNUAL ACCOUNTS AND NOTES 1 January -31 December 1 January GROUP Consolidated statement of cash flow Purchase/sale of own shares Dividends paid Borrowings repaid New borrowing Cash from/to financing: Investment in tangible operatingassets investments:Cash from/to Depreciation/write-downs Tax paidin the period Gain/-loss onsaleof tangible assets Profit/-loss before tax operations: Cash from/to (NOK million) Whereof restricted cash31December Bank depositsat31December Bank depositsat1 January Currency movement inliquidassets Net changeinliquidassetsover the year cash flowNet from financing Investment inin-housedeveloped software Net cash flowNet fromoperations Change in working capital Difference between pension cost andpayments Paid interests ItemsNet financial Net cash flowNet frominvestments Investment ingroup companies Sale of tangible operatingassets(sales proceeds)
12,13 Note 18 13 12 9 -1 -1 3 -161.1 -433.3 -428.9 -404.3 -189.4
405 -1 420.5 990.2 900.2 128.8 227.3 283.6 305.9 513.0 0. -1 -3 906.1 051.2 184.6 -80.0 -38.8 -88.3 23.7 34.5 2016 7.4 - - 4 1 -115.3 -296.6 -248.2 -406.0 -146.7
900.2 615.6 260.3 449.0
627.9 217.3 330.4 003.6 233.7 681.5 866.1 398.3 98.1 24.4 33.7 2015 -7.9 4.8 3.6 - GROUP 1 January -31 December 1 January Consolidated equity statement in of changes Allocation of equity Profit/-loss for the 2016 year Equity at31December 2016 Comprehensive income Aquisition of shares from minority Dividend Profit/-loss for the 2015 year Allocation of equity Comprehensive income Dividend Purchase of own shares Equity at31December 2015 Equity at1 January 2015 (NOK million)
capital 467.8 467.8 6. 053 -0.5 467.8 Share shares Own . 4.3 0.5 - - -1 -1 1 paid-in
equity 393.5 9. 40.6 393.5 980.2 6. 9. 1. 2. 4 122.6 415.3 -97.6 369.4 Other 161-1. 30193.1 83.0 -211.6 -146.1 - Fair value reserves 16709-6. -346.1 -160.3 0.9 -186.7 3. 87106277.6 120.6 18.7 138.2 Owners of the parent -1 -1 -1 1 1
equity 300.1 393.5 906.1 410.7 980.2 003.6 Other - - ifrne Total differences Translation 4. 2 243.2 -1 -1 -1
300.1 906.1 145.2 410.7 003.6 277.1 4.8 - - - Non-controlling Non-controlling interests 02-0.2 -0.2 06 193.8 0.6 05 300.6 0.5 03 2 0.3 03 4 0.3 ------1 -1 -1 -346.1
equity 906.1 145.6 277.6 410.7 003.6 277.4 Total 4.8 - - 109 ANNUAL ACCOUNTS AND NOTES 110
ANNUAL ACCOUNTS AND NOTES GROUP NOTE 1 NOTE Notes to Financial Accounts
• the Group isprovided at the endof note 1. A review of the standards andinterpretations that hadnotcomeinto force for the 2016 financial year but thatmay be relevant for The Group didnotapply early adoptionof any standards or interpretations for the accounting year 2016. • • commencing on1 January 2016: pretations issuedby IASB andapproved by the EU that are relevant to itsactivitiesand that were in force for the accounting year In preparing the accounts for the 2016 financial year, the Group hasimplemented all thenew and revised standards andinter- Segment information. organised andmanaged.Financial information about the segmentsandgeographic areas of activity ispresented innote 2: The Group’s businessis, for internal reporting requirements, dividedinto three strategic segments,eachof which isseparately Standards (IFRS)aspublishedby IASB andapproved by the EU. The consolidated annualaccountsof EVRY AS have beenprepared inaccordance with the International Financial Reporting 2.1 Basisof presentation 2. Significant accounting policies approval by the Annual General Meeting on16May 2017. The consolidated accountshave beenapproved for issuanceby the Board of Directors on30March 2017andissubject to outsourcing servicesandrelated to datacommunication,security andelectronic publishing. consulting services,as well as the centralisedanddecentralisedoperationof computer systems. Inaddition, the Group offers The mainactivitiesof the parent company EVRY AS anditssubsidiaries(the ‘Group’) are the saleof software, IT solutionsand company with effect from 22 February 2016. Thecompany alsochangeditsname from EVRY ASA to EVRY AS. office isat Snarøyveien 30A,NO-1360 Fornebu. Thecompany was converted from apubliclimited company to alimited EVRY AS isaNorwegian limited company, andissubject to the Limited Liability Companies Act. The company’s registered 1. General information ACCOUNTING PRINCIPLES
The amendments IA consolidated accounts for 2016isNOK 7.2millioninreduced amortisationexpense. on expected usefullife. The amendmentshave beenimplemented prospectively and the impact from this changeon the the amortisationmethod for the company’s own developed software from acash flow basedmethod to linear methodbased be usedin very limited circumstances to amortiseintangibleassets. The implementationof these amendments haschanged use of the asset. Thus, arevenue-based methodcannotbeused to depreciate property, plantandequipmentmay only ated from operatingabusiness(of which the assetisapart)rather than the economicbenefits thatare consumed through The amendmentsclarify Depreciation and IA joint operationduring the period. combinations accounting. The amendmentsdonothave any impacton the Group as there hasbeennointerest acquired ina which the jointoperationconstitutes abusiness,mustapply the relevant IFRS3Business Combinationsprinciples for business The amendments IFRS 11 cial statements in2016. disclose andhow to structure itin their financial statements. Theamendmentshave hadnoeffect on theconsolidated finan- S 1Presentation of FinancialStatements: Disclosure Initiative (Amendments to IAS 1) S 16Property, PlantandEquipment andIAS 38Intangible Assets: Clarification of Acceptable Methods of Joint Arrangements: Accounting for Acquisitions of Interestsin Joint Operations (Amendments to IFRS11) to IFRS11require that ajointoperator accounting for the acquisitionof aninterest inajointoperation, to IAS 1 further encouragecompanies to apply professional judgmentindetermining what information to Amortisation (Amendments to IAS 16andIAS 38) the principleinIAS 16andIAS 38 that revenue reflects apattern of economicbenefits thatare gener-
b) valuation unit for this purpose. of cash flow from other groupings of the same classof asset.Inmostcases, the Group’s businessareas represent the smallest there hasbeena fall in value isdetermined by the lowest level at which itis possible to identify incomingcash flow independent The smallestunitof aparticular asset which canbeseparately assessedasa valuation unit for the purpose of determining whether transaction between knowledgeable, willing parties, after deducting the estimated costsof disposal. sales value iscalculated as the amount that the company would expect to obtain from the disposalof anassetinarm’s length disposal. A calculated Weighted Costof Capital(WACC) isappliedas the discountrate used to calculate netpresent value. Net Value inuseiscalculated asnetpresent value of future cash flow from continuinguse,including cash flow arising from eventual the extent of the impairmentloss.Recoverable amountisdefinedas thehigher of value inuseand fair value lesscosts to sell. least at the endof each year. If there are suchindications, the recoverable amountof the assetisestimated inorder to determine The Group carriesoutgoodwillimpairment tests if there are any indications that suggest this isnecessary, andinany caseat goodwill basedon fair value is taken into accountincalculating the gainor lossondisposal. effects of thebusinesscombination thatgave rise to thegoodwill.Upondisposalof abusiness, thebusinessesproportion of of other assetsor groups of assets,andisassigned to the cashgeneratingunits that are expected to benefit from the synergy Goodwill that arisesasaresult of abusiness combinationisnotamortised.Goodwill doesnotgenerate cash flows independently assets that are notcapableof beingindividually identified andseparately recognised. acquired inabusinesscombinationrepresents apayment madeby the acquirer inanticipationof future economicbenefits from and liabilitiesinsubsidiariesat the date of acquisitionisrecognised asgoodwillin the statement of financial position. Goodwill ed to identifiable assetsandisdepreciated over their expected life. Excess value thatcannotbeattributed to identifiableassets against the subsidiary’s equity atacquisitiondate. Any excess value resulting from this treatment at the time of purchase isallocat- Subsidiaries are accounted for inaccordance with the acquisitionmethod, whereby the acquisitioncostof the shares isoffset Business combination andgoodwill and percentages reported donotnecessarily addup to the total shown. the annualaccountsare inmillionsof Norwegian kroner unlessotherwisestated. Rounding differences may mean thatamounts The group presents itsaccounts inNorwegian kroner (NOK). This isalso EVRY AS’s functional currency. The figures presented in Presentation and functional currency The material accountingprinciplesused to prepare the annualaccountsof EVRY AS are as follows: 2.3 Summary of significant accounting policies netted off in theaccounts. All intra-group transactions andbalances, purchases andsalesbetween companiesin the Group andunrealised internal gainsare consolidated accountsafter internal netting. each businesscombination. The share of profits iscalculated on thebasisof thesubsidiary’s post-tax profit, asincludedin the calculated either as their portionof identifiedassetsor to fair value. Thechoiceof methodismadeat thedate of acquisition for where this causesnon-controlling interests to be negative. At the time of acquisition,non-controlling ownership interests are The Group’s comprehensive incomeisattributed to the parent company’s owners and to the non-controlling interests, even that the Group ceased to have acontrolling influenceismeasured at fair value, andany gainor lossisrecognised in the accounts. non-controlling ownership interests andany accrued translation differences are reversed. The remaining investment at the time control of the subsidiary. If the Group ceases to have acontrolling influenceover asubsidiary, the subsidiary’s assets,liabilities, Consolidation of asubsidiary begins when the Group obtainscontrol over the subsidiary andceases when the Group loses c) a) assessing whether ithaspower to govern aninvestee, including: has less than amajority of the voting or similar rightsof aninvestee, the Group considersallrelevant facts andcircumstances in Generally, there isapresumption that amajority of voting rightsresult incontrol. To support this presumption and when the Group c) b) a) affect those returns through itspower over thecompany. Specifically, the Group controls acompany if, andonly if, the Group has: achieved when the Group isexposed or hasrights, to variable returns from itsinvolvement with the company andhas the ability to The consolidated accountsinclude the parent company EVRY AS anditssubsidiariesasof 31December 2016.Control is 2.2. Basis for consolidation
The G Rights arising The contractualarrangement The ability Exposur P ower to govern the company (i.e.,existing rights that give it the current ability to direct the relevant activitiesof the investee) roup’s voting rightsandpotential voting rights e, or rights, to variable returns from itsinvolvement with the company to useitspower to govern the company to affect its returns from other contractualarrangements with the other vote holdersof the company 111 ANNUAL ACCOUNTS AND NOTES 112
ANNUAL ACCOUNTS AND NOTES are classifiedascostof goodssold. The costsof employing external consultants that are used for the group’s normal operationsand that are re-charged to customers leasing of hardware andsoftware, as well as the costof consultingservices that are directly related to the turnover of the goods. Cost of goodssoldcomprisesdirectly allocated costsrelated to the delivery of goods, including maintenance andoperational delivered to date dividedby the total number of hoursestimated for the delivery in total. nised inline with the degree of completion. The degree of completioniscalculated on the basisof the number of hoursof work Revenue from consultingservicesisrecognised as the servicesare provided. Sales of servicesona fixed fee basisare recog- fordelivery the in total. pletion iscalculated on the basisof the number of hoursof work delivered to date dividedby the total number of hoursestimated specifically for customers is recognised over thedevelopment periodinline with thedegree of completion. Thedegree of com- maintenance revenue on the basisof aseparate pricingmodelandcontractualstructure. Revenue from software developed at which the software ismadeavailable to andcanbeusedby the customer. Revenue from salesof software isseparated from Sales of licencesandrights to usesoftware are recognised at the date the contractissignedsince this corresponds to the time include bothhardware andsoftware. Sales of goodsare recognised asrevenue at the time of delivery, i.e. when control andriskpasses to the purchaser. Goods in the accountsover the periodof the contract. Revenue from serviceandmaintenance contracts, as well as the expenses involved in carryingoutsuchcontracts,isrecognised total number of hoursestimated for the delivery in total. completion. The degree of completioniscalculated on the basisof the number of hoursof work delivered to date divided by the Revenue from a transition project that isnotrelated to anoperatingservicescontractisrecognised on the basisof the degree of of asubsequentoperatingservicescontractisrecognised onalinear basisover the periodof the operatingservicescontract. are recognised asrevenue on the basisof actualcustomer usage.Revenue from a transition project that isanintegrated part services by the customer, or onalinear basisover the periodof the contract for term-based contracts.Salesof dialogueservices Where operatingservicesare provided through volume-based contracts,revenue isrecognised on the basisof the actualuseof Recognition of revenue andcosts cumulative translation difference is recognised to profit andloss. loss. If partof areceivable/liability that is treated aspartof netinvestment ina foreign unitisrealised, aproportionate share of the Upon disposalof a foreign subsidiary, the cumulative translation difference in respect of thesubsidiary is recognised to profit and daily average exchange rate during the accountingperiod. the accountingperioddate at the exchange rate on the accountingperioddate, while profit andlossitems are translated at the Assets andliabilitiesof foreign subsidiaries that usea functional currency other than Norwegian kroner are (NOK) translated on a result of changesin the exchange rate between the date of the transaction and the payment date are recognised to profit andloss. Transactions in foreign currencies are translated at the exchange rate at the date of the transaction. Currency gains/losses that ariseas Transactions in foreign currency associate companiesor joint ventures. received by the Group reduce the carryingamountof the investment. Goodwill isincludedin the costpriceof investments in of the profit or lossof thecompany in whichithasinvested is recognised in theconsolidated incomestatement. Distributions carrying amountisadjusted to recognise the Group’s share of the profit or lossafter thedate of acquisition. The Group’s share method. When the equity methodisused, the investment in the associate company or joint venture isrecorded atcost,and the The Group’s investments inassociate companiesandjoint ventures are recognised in the Group’s accountsusing the equity when decisionsabout the relevant activitiesrequire the unanimous consent of the partiessharingcontrol. assets of the arrangement.‘Joint control’ is the contractually agreed sharingof control over ajointarrangement, which exists only A joint venture isajointarrangementin which the parties who have jointcontrol over the arrangementhave rights to the net Significant influenceisnormally deemed to exist where oneentity hasan ownership interest inanother of between 20%and50%. An associate company isacompany over whose financial andoperatingpolicy decisions thegroup hassignificantinfluence. Investments inassociatedcompanies andjoint venture subsequently bereversed, even though the reason for the impairmentlossnolonger applies. ment lossisidentified,and reduce thecarrying value of theasset by aneq for the riskassociated with the project inquestion. project, the estimated future cash flows associated with the project are discounted to present value usingarate of return adjusted revenue and/or reduction inoperatingcosts that will beachieved by carryingout the project. When calculating the profitability ofa in previous accountingperiods are notcapitalised. The evaluation of future commercial benefitisbasedon the expected license When all the above criteria are met, the costsrelating to development are capitalised.Costs that have beencharged as expenses - - d) - - b) a) A liability iscurrent when: The Group classifiesallother assetsare classifiedasnon-current. c) - Expenses relating to development are capitalisedif the following criteria are metin full: The Group’s intangibleassets with limited life largely consistof capitalisedcostsrelated to software developed in-house. Intangible assetswithlimitedlife The Group classifiesallother liabilitiesasnon-current. c) d) b) a) classified ascurrent whenitis: The Group presents assetsandliabilitiesin statement of financial positionbasedoncurrent/non-current classification. Anassetis Classification of currentandnon-currentitems average number of shares outstandingisadjusted for allshare options that have apotential dilutive effect. average number of ordinary shares outstandingover the courseof the period. When calculatingdiluted earningsper share, the Earnings per share iscalculated by dividing the parent company shareholders’ share of the profit/loss for the year by the weighted Earnings per share ment of comprehensive income. are applieddirectly to equity. Items that are reported as“comprehensive income” are presented onapost-tax basis in the state- Tax payable anddeferred tax liabilities/deferred tax assetsare applied directly to equity to the extent that they relate to items that the capitalised value of deferred tax asset to the extent that they are nolonger able to use the tax assetinquestion. from the review that the company inquestion will beable to make useof the deferred tax asset.Similarly, companies will reduce Deferred tax assetnotpreviously capitalised to the statement of financial positioniscapitalised to the extent thatitappearslikely Group carriesoutareview of deferred tax assetnotcapitalised to the statement of financial positionand their accounting value. in question will have sufficient taxable profit insubsequentperiods tomake use of thedeferred taxasset. Ateach year end, the Deferred tax assetiscapitalisedin the statement of financial position to the extent thatitisconsidered likely that thecompany system. The tax charge ismadeupof tax payable andchangesindeferred tax liabilities/deferred tax assets. tax rates at the time of reporting andnetted to the extent that temporary timing differences canbe reversed under thesame tax without beingdiscounted to present value. Deferred tax liabilitiesanddeferred tax assetsare calculated basedonapproved taxation values of assetsandliabilities(liability method). The amountprovided includesall types of difference, andiscalculated deferred tax assetsin the statement of financial positioniscalculated on thebasisof alldifferences between accountingand ties. With the exception of associated companies where the exemption methodisapplied, the value of deferred tax liabilities/ Tax payable in the financial statement ismeasured at theamount that thecompany expects to receive or pay to the taxauthori- Taxation
sufficient the asset the pr the the pr Ther It isdue It isheldprimarily It ise reporting period Cash or Expect H Expect eld primarily for the purposeof trading technical solution for the product hasbeendemonstrated e isnounconditionalright to defer the settlementof the liability for atleast twelve monthsafter the reporting period xpected to besettledinnormaloperatingcycle oduct or process will besoldor usedin the company’s operations oduct or process isclearly definedanditscostelementscanbeidentifiedmeasured reliably ed to berealised within twelve monthsafter the reporting period,or ed to berealised or intended to soldor consumedinnormaloperatingcycle cashequivalent unlessrestricted from beingexchanged or used to settlealiability for atleast twelve months after the to besettled within twelve monthsafter the reporting period,or will generate future economicbenefit;and technical, financial andother resources for completing theproject are present. for the purposeof trading 113 ANNUAL ACCOUNTS AND NOTES 114
ANNUAL ACCOUNTS AND NOTES income/financial expense. are classifiedas available for saleand valued at fair value. Changes in the fair value of suchderivatives are presented as financial or lossin the period where the hedged transactions affects profit or loss. Derivatives that are notclassifiedashedginginstruments reported in the statement of comprehensive incomeas“comprehensive income”. The fair value changes are reclassified to profit are recognised on the transaction date. Changesin fair value for derivatives that meet the requirements for cash flow hedgingare The Group’s financial derivatives consistalmostentirely of hedging derivatives. Allpurchases and sales of financialinstruments Financial derivatives shorter of the life of the leasingcontractand the depreciation periodapplied for equivalent assetsowned by the Group. If itisnotlikely that the Group will take over the assetupon the expiry of the leasingcontract, the assetisdepreciated over the liability. Leased assetsare depreciated over the expected usefullife inaccordance with the depreciation plan for owned assets. tion asa financial leaseliability. Lease payments are recognised in theaccountsasinterest expense anda reduction in thelease minimum payments under the terms of the leasecontract. The liability to the lessor isincludedin the statement of financial posi- the operatingasset’s fair value at the time the leasing contract was entered into or, if lower, the netdiscounted value of the future Financial leasingcontractsare capitalised asassetsandliabilitiesin the statement of financial positioninanamountequivalent to Financial leasing goods soldor other operatingcostsin the profit andlossaccount. The leasingcostsof operationalleasesare allocated onalinear basisover the periodof the lease,andare classifiedascostof Operational leasing contracts are treated as financial leasing. Theaccountingprincipledescribessituations where the Group is thelessee. Leasing of assets where the lessor retains the major partof riskandcontrol are classifiedasoperationalleases.Other leasing Leasing goodwill asaresult of deferred tax onexcess values is tested aspartof the cashgeneratingunit. discount rate that reflects current market assessmentsof the time-value of money and the risksspecific to theasset. Technical reference to discounted future netcash flows expected to begenerated by the asset.Cash flows are discounted usingapre-tax The recoverable amount is the higher of the asset’s netsellingpriceandits value inuse. The value inuseisdetermined by amount of the assetsexceeds the recoverable amount. for which there are separately identifiablecashinflows. Animpairmentlossis theamount by which thecarrying ing amountof anassetmay notberecoverable. For the purposesof assessingimpairment,assetsare grouped at the lowest levels Tangible assetsare reviewed for impairmentannually and whenever events or changesincircumstances indicate that the carry- improvements will atamaximumbe the remaining leaseperiod. reflect the expected usefullife of the assetsinquestion. This alsoapplies to disposal value. The depreciation period for leasehold The economiclife anddepreciation methodusedare reviewed regularly to ensure that the methodanddepreciation period - - - - applied onastraight-linebasis,after allowance for disposal value, over the following time periods: depreciation are removed from the accounts,andany gainor loss this causesare recognised to profit andloss. Depreciation is depreciation and write-down. When tangible operationalassetscease to be used, the historic purchase priceandaccumulated Tangible operatingassetsare carriedin the statement of financial positionathistoric purchase pricelessaccumulated ordinary Tangible assets Impairment lossesmay subsequently bereversed to the extent that the reason for the impairmentnolonger applies. are suchindications, the recoverable amountof the assetisestimated inorder to determine the extent of the impairmentloss. At eachreporting date the Group evaluates if there are identifiedindications thatintangibleassetsmay beimpaired. If there goodwill which isclassifiedasintangibleassetsin thebalancesheet. mercial reality of the intangibleassetinquestion. The Group doesnothave any intangibleassets with unlimited life other than The lengthof usefullife remaining and the methodof depreciation are subject to annualreview that takes into account the com- years dependingon the product type developed. Investment inother intangibleassetsisnormally depreciated onalinear basis. for intangibleassetsother than capitaliseddevelopments costs.For capitaliseddevelopment costs the depreciation periodis5-15 Intangible assets with limited life are amortisedover their expected usefullife. The depreciation periodusedisbetween 1-4 years
IT V M L easehold improvementseasehold ehicles equipment achinery/equipment/fixtures
5-10 y 3–5 y 3–7 y 5 y ears ears ears ears b earned against the likely accumulated pensionliability at the time the pensionis first drawn. The startingpoint for calculatingpensioncostsinrespect of the Group pensionschemesislinear applicationof pensionentitlement are reported assalary costsin the accounts. Pension assetsare valued at fair value on the accountingperioddate. Costsincurred inrelation to the Group’s pensionarrangements use the K2013 table for mortality risk. The risk table for disability, IR02,corresponds with the estimated riskof disability in the Group. about discountrates, the investment return onpensionassetsandexpected growth inearningsandpensions.Pension calculations which entitlementhasbeenearnedat the date of the statement of financial position,andiscalculated on thebasisof assumptions Liability inrespect of contractualpensionarrangementsin the Group is valued as the present value of the future pensionbenefits for Pension liabilities repaid isrecognised in the profit andlossaccount. amortised cost. When the liability isrepaid, in whole or part, the difference between thebook value of theliability and theamount On initialrecognition, liabilitiesare stated at fair value after deducting transaction costs,but thereafter liabilitiesare stated at Liabilities The fair value reserve includescumulative netchangesin fair value of financial instrumentsuntil theinvestment isdisposedof. Transaction costsinrelation to equity transactions are charged to equity after deducting tax. related to salesof own shares are recognised against other equity. directly to equity. If own shares are soldatapriceinexcess of costprice, the surplusisrecognised asother equity. Realised losses purchase priceinexcess of nominal value ischarged to share premium. Gains or losseson transactions inown shares are applied The nominal value of holdingsof own shares isreported in the statement of financial positionasadeduction to share capital. The Equity there isobjective evidence that the value of the assetisimpaired. provision for estimated lossesisincludedin the presentation of comprehensive income when alosscausingevent takes placeand Accounts receivable are recognised in the statement of financial positionatnominal value after adeduction for possiblelosses. A Accounts receivable cost price. price under normalcommercial conditions with adeduction for salescosts.Purchase priceisdetermined on the basisof average Inventories are valued at the lower of purchase priceandnetrealisable value. Net realisable value isdefinedas the expected sale Inventories Hedging instrumentsare classifiedasnon-interest bearingliabilitiesor receivables in thestatement of financialposition. value isrecognised as financial income/expense in theprofit andlossaccount. period in where profitthe affects loss hedged transactions loss.the or If the hedging is evaluated as not effective, the change in or profit to effective, thechangein value is recognised aspartof reclassified are “comprehensive income”.changes value fair The The hedginginstrumentsare recognised at fair value at the date of the financial positionstatement. If thehedgingis evaluated as hedging instruments form partof comprehensive income. currency andinterest onitsloans through cross currency swaps andinterest swaps. Changesin the value of derivatives classifiedas The Group hashedged(cash flow hedging)partof itsnetinvestment inSwedish kroner. The Group hasalsohedgeschanges in d) c) a) Derivative contractsare recognised ashedginginstrumentsif they satisfy the following criteria: and investments. The strategy isdesigned to ensure ahighdegree of predictability incurrency gains/lossesandinterest costs. The Group hasestablishedastrategy to hedge the currency andinterest rate risksrelated to the exposure to foreign currency Hedging )
hedging isr ther the eff hedged risk, with hedgeeffectiveness in therange80–125%, hedging ise e isadequate documentationonentry into the hedging to show that the hedgingishighly effective, ectiveness of the hedgingcanbereliably measured, eviewed regularly andhasproved effective throughout the reporting periods for whichit was intended. xpected to behighly effective inachieving offsettingchangesin fair value or cash flows attributable to the
115 ANNUAL ACCOUNTS AND NOTES 116
ANNUAL ACCOUNTS AND NOTES - The cash flow statement includesbusinessesdisposedof up to the date of disposal. statement, andamounts to the purchase price/sales priceless transferred cashanddeposits at the transaction date. and investment activities.Investment innew businessor saleof businessisclassifiedascash from/to investments, in thecash flow The cash flow statement ispresented using the indirect method. The Group’s activitiesare dividedinto operational, financing Cash flowstatement even if the liability isnotlikely to crystallise. chase of abusiness.Continentliabilitiesacquired aspartof the purchase of abusinessare recognised in the accountsat fair value Contingent liabilitiesare notrecognised in the accounts with the exception of contingentliabilitiesacquired aspartof the pur- - - Contingent liabilitiescomprise: Group.accrue to the are notincludedin the annualaccounts,butinformation isprovided if there isareasonable certainty that the benefitinquestion will occurrence or non-occurrence of oneor more uncertain future events, not wholly within the control of the entity. Contingentassets A contingentassetisdefinedasapossibleasset, thatarises from past events, and whose existence willbeconfirmedonly by the Contingent assetsandliabilities that the mainelements have beendisclosed to the affected parties. company will implement the restructuring. This meanseither that implementationof the restructuring program hascommencedor the costs that will beincurred anda time plan for implementation. There mustbeareal expectation by the partiesaffected that the will beaffected, thelocationsaffected, the functions andestimated number of employees due to receive termination payments, ognised in the accounts when the company hasadetailedplan for the restructuring in question that identifies whichbusinessareas mentation of the restructuring and which donotrelate to the continuingordinary activitiesof the company. Such provisions are rec - Provisions for restructuring costsonly includedirect expenses linked to the restructuring which are bothnecessary for the imple- lapse of time are reported asaninterest expense. calculation, the provision will represent the discounted present value of the future liability. Increases inliability causedsolely by the ficient, abestestimate isused. If the timeperiod to thedate at which theliability may lead to payment hasamaterial effect on the accounting periodandadjusted to reflect the available information about the provision. Where the information available isinsuf to apply financially measurable resources, and the liability canbe reasonably estimated. Provisions are evaluated at theendof each already happenedand where itislikely (more likely than not) that inorder to reduce or discharge the liability the company will have A provision isrecognised in the accountsonly when the company issubject to aliability that isaconsequenceof anevent that has Provisions costs through profit andloss. is therefore treated for accountingpurposesasadefinedcontributionpensionschemeand thepremiums paidare recognised as no reliable measurement andallocationof liabilitiesandassetbetween the companies that participate in the scheme. The scheme a multi-company definedbenefitscheme,andis financed by premium payments determined asa percentage ofsalary. There is The majority of the employees in the Group’s Norwegian companiesare membersof anearly retirement scheme(AFP), which is provided for asaliability in the consolidated statement of financial position. are usedas the basis to make provisions in the accountsso that the total compensationearned to date by employees atany time is parameters at the time of the change to the pensionarrangements. The accrual formula andprofile for thecompensationscheme scheme. The size of the compensationand the profile for itsaccrualare calculated on thebasisof astandard setof calculation The Group hasestablishedacompensationscheme for employees inconnection with the closure of adefinedbenefitpension calculation are accounted for as“comprehensive income” in the period that they occur. ortised over the expected average remaining serviceperiod. The effect of any changesinestimates, changesinassumptionsand of fully paid-uppoliciesisrecognised in the period the changeismade. The effect of other changesin thepensionschemeisam- in the accountingperiod when suchchange takes place. The effect of any changesin thepensionscheme thatleads to theissue pension schemes,includingschemeclosures andchanges that cause the issueof paid-uppolicies,are recognised in the accounts and the pensionrightsaccruedduring the year, less the return on the assetsprovided to fund pensions.Significant changes to the The costof pensionsiscalculated on the basisof the discounted pensionentitlementearnedat the beginningandendof the year
being made liabilities a pr a possibleobligationarisingasr esent obligation that isnotrecognised in the accountssinceitisnotprobable that the obligation will result in a payment that cannotbemeasured reliably esult of pastevents where the obligationdependsonsomeuncertain future event - ingly restated. The comparison figures in thestatement of financialpositionandin thestatement of cash flow are not restated. figures presented are exclusive of ‘discontinued operations’. Thecomparison figures in theincomestatement are correspond- statement andin the statement of financial position.‘Major’ meansaseparate segmentor asignificantasset. Thismeansallother company islost, the operationsinquestionare presented as‘discontinued operations’ inaseparate lineentry on the income If adecisionis taken to discontinueor to sellamajor partof the Group’s operationsor if control/significant influence over a Discontinued operations b) a) ject to changesarising from further detailedanalyses or additionalinformation beingmadeavailable to the Group in the future. assessment of all three aspectsof IFRS9. This preliminary assessmentisbasedoncurrently available information andmay besub- The Group plans to adoptIFRS 9on the required effective date. During 2016, the Group hasperformed ahigh-level impact For hedgeaccounting, the requirements are generally appliedprospectively, with somelimited exceptions. Except for hedgeaccounting,retrospective applicationisrequired, butproviding comparative information isnotcompulsory. application permitted. rules for hedgeaccountingandanew impairmentmodel for financial assets.IFRS9iseffective from 1 January 2018, withearly IFRS 9addresses the classification, measurement andderecognition of financialassetsand financial liabilities,introduces new IFRS 9-FinancialInstruments • • could beaffected: of IFRS15 to have asignificantimpacton the financialstatements. The Group has however identified the following areas that is notable to estimate the impactof the new ruleson the Group’s financial statements, butdoesnot expect theimplementation considering the clarificationsissued by theIASB in April2016and willmonitor any further developments. At thisstage, the Group streams. The assessmentisongoingandamore detailedanalysis will provide more information. Furthermore, the Group is During 2016, the Group hasperformed apreliminary assessmentof IFRS15and the possibleeffects on the Groups revenue 1 January 2018,buthasnot yet decidedon which implementation approach will beused. modified retrospective applicationis required. Early adoptionispermitted. The Group expects to apply IFRS15 witheffect from The standard iseffective for annualperiodsbeginningonor after 1 January 2018andeither a full retrospective applicationor a measurement of salesof somenon-financial assets (e.g., disposalsof property, plantandequipment). exchange for those goodsor services. The standard applies to allrevenue contractsandprovides amodel for the recognition and promised goodsor services to customers inanamount that reflects the consideration to which the entity expects to beentitledin replaces existing IFRSrevenue requirements. The core principleof IFRS15is that revenue isrecognised to depict the transfer of The IASB hasissuedanew revenue recognition standard, IFRS15Revenue from Contracts with Customers. The standard IFRS 15-Revenue from Contracts with Customers have not yet comeinto effect. The Group intends to adopt thesestandards when they becomeeffective. The following paragraphsprovide anoverview of changes to IFRS/IAS standards that are relevant to the Group’s activities,but 3. Standards issuedbutnot yet effective c)
effective hedges, the Group doesnot expect asignificantimpactas result of applyingIFRS9. still qualify for hedgeaccountingunder IFRS9. As IFRS9doesnotchange the generalprincipals of how anentity accounts for Impairment requirements inIFRS9.EVRY expects to continue to measuringat fair value its financial assetscurrently heldat fair value. The G H need to perform further analysis, including forward-looking elements to determine the extent of the impact. the Group doesnotexpect any significantimpactonitsequity due to thesecure nature of itsloansand receivables, but will The Group expects to apply the simplifiedapproach and record lifetime expected lossesonall trade receivables. However, IFRS 9r The G Classific T Sale of ransition projects –Identification of performance obligationsmightaffect the timing of the revenue recognition edge accounting roup believes that allexisting hedgerelationships that are currently designated ineffective hedging relationships will roup doesnotexpect any significantimpactonitsbalancesheetor equity applying theclassificationandmeasurement licenses/right to use–IFRS15may result inrevenue to berecognised over time instead of atapointin time equires the Group to record expected credit lossesonallits trade receivables, either ona12-monthor lifetime basis. ation andmeasurement 117 ANNUAL ACCOUNTS AND NOTES 118
ANNUAL ACCOUNTS AND NOTES In 2017, the Group plans to assess the potential effects of IFRS16onitsconsolidated financialstatements. retrospective or amodified retrospective approach. application ispermitted, butnotbefore anentity appliesIFRS15. A lesseecanchoose to apply the standard usingeither a full IFRS 16iseffective for annualperiodsbeginningonor after 1 January 2019. Thestandard isnot yet approved by theEU. Early leases using the sameclassificationprincipleasinIAS 17anddistinguishbetween two typesof leases:operatingand financeleases. Lessor accountingunder IFRS16issubstantially unchanged from today’s accountingunder IAS 17.Lessors will continue to classify all depreciation expense on the right-of-use asset. asset during the lease term. Lessees will berequired to separately recognise the interest expense on the leaseliability and the ment date the alessee will recognise aliability to make leasepayments andanassetrepresenting the right to use the underlying lessees –leasesof “low-value assets” andshort-term leases(i.e. with alease term of 12monthsor less). At the commence- on-balance sheetmodelsimilar to the accounting for financial leasesunder IAS 17. Thestandard introduces two exemptions for the recognition, measurement, presentation anddisclosure of leasesandrequires lessees to account for allleasesunder asingle IFRS 16 was issuedin January 2016andreplaces IAS 17Leases, IFRIC4andSIC1527.IFRS16setsout the principles for IFRS 16-Leases NOTE 2 NOTE
is made to the section key figures anddefinitions for further information onalternative performance measures. with the managementreporting structure in the Group, andare reported asaseparate linein the presentation below. Reference Other incomeandexpenses that are partof alternative performance measures are notdistributed to the segmentsinaccordance ment wants to provide alternative performance measures to enhance the understandingof the Group’s underlyingperformance. working capitaland the customer credit-time. Inaddition to the financial information prepared inaccordance withIFRS,manage- whole. Management alsomonitors eachsegmentin terms of other key figures suchasEBITDA, operationalinvestment spending, ment of revenue growth andEBITA isconsistent with the consolidated revenue andEBITA figures reported for the Group asa resource allocation. The performance of eachsegmentisevaluated on the basisof revenue growth and EBITA, and the measure- on aregular basisanduse this information to analyse the various segments’ operationalperformance and to make decisionson The Group’s chief operatingdecisionmakers (executive management) follow up the operatingprofit (EBITA) of eachsegment are includedin the lineother. segment includesrevenue andcostsrelated to transactions with other segmentsof the Group. Eliminationsbetween segments operating profit/-loss before amortisationof customer contractsand write-down of intangibleassets(EBITA) reported for each services between the segments ischarged atanagreed priceequivalent to the priceachieved by the bestcustomer. The software andother IT equipmentisbasedon the cost from anexternal supplier plusamargin. The purchase andsaleof consulting included in the lineother. Transactions between the businessareas are basedonmarket terms andconditions. The rental of Group’s Globaldelivery activities.Inadditionare financing andcentralgroup functions thatare notallocated to thesegments, The Group’s other activitiesare shown in the presentation below asother. These activitiesinclude for reporting purposes the geographic locationandsector. This includesgrowth areas suchasmobility, cloud-basedsolutionsandBusiness Intelligence. Through itsextensive activities,EVRY Norway hasin-depth technical expertise inspecialistservices that are independentof ment andhealthcare sectors, andiscurrently strengthening itsposition in other verticals includingretail, oil&gasandinsurance. consulting andsolutionsservices,as well asIT operatingservices.EVRY Norway hasasignificantpositionin thelocalgovern- combines industry insightandbusinessunderstanding with technological expertise. Customer deliveries cover abroad rangeof customers in the Norwegian publicandprivate sectors, andholds strong positionsinanumber of industry verticals where it The EVRY Norway segmentoffers consulting,infrastructure andoperatingservices.EVRY Norway hasalonghistory withleading entities in the private andpublicsectors. Intelligence. EVRY Sweden alsohasitsown operatingservicesorganisation, which focuses onmedium-sized businessesand that are independentof geographiclocationandsector, for example ERP solutions,mobility, cloud-basedsolutionsandBusiness business understanding with technological expertise. EVRY Sweden alsodelivers servicesbasedonstrong specialistexpertise ing services.EVRY Sweden hasasignificantportfolio of industry vertical solutions thatcombineindustry-specific insightand The EVRY Sweden segmentoffers everything from strategic adviceandconsultingservices through to solutionsandIT operat- countries andin the United Kingdom. services. The portfolio alsoincludesaunique value chainof card services that are delivered to banksin the Nordic and employees. The portfolio ismodule-based,andincludesbankingservices, transactions systems, payment solutionsandcard all core bankingservices, whether this relates to interfaces with end-customers or solutions to supportabank’s internal processes responsibility for all the company’s deliveries to bankand finance customers. Thesolutionsportfolio includessolutions for The EVRY Financial Servicessegmentoffers abroad portfolio of solutionsandservices,isacomplete industry vertical with from the 2015reporting. the executive management, which is the chief operatingdecisionmakers in the Group. The segmentstructure isunchanged segments isbasedon the mainmarkets served by the Group, andcorresponds with the structures used for internal reporting to The Group’s activitiesare dividedinto three segments for the purposeof reporting in2016. The allocationof activities to SEGMENT INFORMATION
119 ANNUAL ACCOUNTS AND NOTES 120
ANNUAL ACCOUNTS AND NOTES Other countriesare mainly related to USA andother European countriesbesideNorway, Sweden andFinland. The Group’s activitiesare dividedbetween Norway, Sweden (inclFinland) andother countries. Geographic segments consolidated accounts. There are nodifferences in themeasurement methodsappliedat thesegmentlevel ascompared to themethodsused for the 2015 Other income andexpenses 2016 Information about the Group’s segments for reporting purposesispresented below: transformations. In 2016a total of NOK 249.8millionhasbeenexpensed related to implementationof the IBMagreement andcustomer platforms for itsbasicoperationsservices. down by NOK 292.7million(includingimplementationprojects), as the company will in the future beusingIBM’s infrastructure covered by the conversion to IBM’s platform technology. Inaddition, the company’s investment related to Future Proof was written transitions andcustomer transformations needed to convert to IBM’s platform technology. In total approximately 200customers are In connection with the IBMagreement in2015,significantcosts were recognised asat31 December 2015in relation to theagreed EVRY Norway Total Other income andexpenses EVRY Norway EVRY Sweden Total Other income andexpenses Other EVRY Sweden EVRY FinancialServices (NOK million) Other EVRY FinancialServices (NOK million) Total other income andexpenses Strategic processes/refinancing IBM outsourcing agreement Write-down of other balance sheetitems Write-down of Future Proof Provisons forpremises Provisons forrestructuring (NOK million) Operating Operating 12 12 5 5 3 3 3 3 eeu EBITDA revenue EBITDA revenue
6. 2. 1. 111.1 392.3 216.8 -938.1 129.2 859.5 327.9 288.3 521.5 761.2 429.9 613.4 430.1 102.2 1 215.4 246.4 532.3 337.7 198.8 497.5 669.4 244.8 133.4 50140.6 55.0 - -366.1 - - -2 -
216.4 216.9 Depreciation and Depreciation and rt on EBITA write downs EBITA write downs 6. -1 467.4 7. 946.7 270.3 5. 231.6 56.7 172.1 304.9 43.3 414.5 32.8 83.0 6. 76.0 64.6 . -374.9 8.8 - -2 -
405.4 216.4 349-2 -1 -374.9 -249.8 2. -128.1 -21.1 -510.2 -26.1 -77.9 2016 - -292.7 -100.2 - - CAPEX CAPEX 182.2 129.9 205.4 443.3 350.2 352.3 234.2 -87.0 64.7 51.1 53.1 63.9 43.2 2015 - - NOTE 3 NOTE
3. Liquidity risk 2. Credit risk 1. Market risk Financial riskisnormally dividedinto three groups: monitoring andmanaging financial riskis the responsibility of EVRY’s centralised treasury function. tive of financial riskmanagementis to identify, quantify andmanage exposure to financialrisks. Operational responsibility for The Group’s policies for the managementof financial riskare determined by theBoard of Directors of EVRY AS. Themainobjec- 2. Management of financial risk their surpluscapital to EVRY AS by meansof dividend,repayment of financing or group contributions. Subsidiary companieshave only limited authority to establishindependent financing arrangements,andare required to distribute cluding arrangement fees 1) deemed necessary. The fair value of the Group’s equity isconsidered satisfactory andliquidity isgood. The Board of directors iscontinuously monitoring the Group’s equity situationand will initiate measures to strengthen the equity if liabilities asaproportion of total equity (gearing). The Group monitors itscapitalstructure in terms of itsequity asaproportion of total assets(equity ratio) andnetinterest-bearing ment opportunitiesof comparablerisk. return for itsshareholders, through dividendspaidor share priceincreases, match or exceed the return available onsimilar invest- same time maintainingasound financial positionandagoodcredit rating. Theobjective isgenerate thebestpossiblelong-term EVRY’s mainobjective for the managementof itscapitalstructure is to maximise value creation for shareholders, to while at the 1. Management of capitalstructure RISK FINANCIAL AND CAPITAL OF STRUCTURE MANAGEMENT The Group doesnothave any singlecustomer that accounts for more than 10%of itsconsolidated revenue. Operating revenues Equity ratio Gearing Total assets Equity Current interest bearingliabilities Net interest bearingliabilities Bank deposits Non-current interest bearingliabilities (NOK million) Total Other countries Sweden Norway (NOK million)
Ex b. Curr a. Int erest rate risk ency risk 1) 11.0631.12.2015 31.12.2016 10 12 6 7 4 7 3.7 1.87 31.17 2 193.8
902 900.2 990.2 863 681.4 806.3 4. 4 040.6 6. 11 460.7 2. 4 027.6 4. 12 4 246.4 8 417.9 022.2 . 19.4% 1.9 % 2016 3.1
077.5 145.6 008.2 905.5 859.5 125.2 052.9 2015 3.0 121 ANNUAL ACCOUNTS AND NOTES 122
ANNUAL ACCOUNTS AND NOTES See alsonote 4 for more information on the Group’s exposure to liquidity risk. in futureperiods. The Group monitors itsliquidity daily, andproduces liquidity forecasts onaregular basisinorder to identify liquidity requirements ensure that the riskof refinancing are reduced. Financing for corporate acquisitions is evaluated independently. finance investments. The Group restricts its current interest-bearing debt to aminimuminaddition to thecredit facility inorder to Group policy to operate atall times with financing arrangements withitsbanksinorder to make itpossible to usebank facilities to Liquidity riskarisesif the cash flows generated by the Group are notsufficient to match its financialliabilitiesas they falldue.Itis 3. Liquidity risk See alsonote 15andnote 16 for more information on the Group’s exposure to credit risk. risk at31December 2016 was NOK 1,641million. No significantprovisions were required in2016 for losseson receivables from customers. The Group’s maximum exposure to credit Group. the unit within Group to suffer a financialloss. The responsibility for credit control andcollection of overdue amountsiscentralisedinaseparate Credit riskrelates to the risk that the Group’s counterparties fail to make the payments to which they are committed, causing the 2. Credit risk See alsonote 4 for more information on the Group’s exposure to currency risk. iii) ii) i) strategic risk: cash flows andon the Group’s financial condition.Currency riskcanbedividedinto i) transactionrisk,ii) translationriskandiii) The principalobjective for EVRY’s managementof currency riskis to reduce the effect of changesin exchange rates on future 1b. Currencyrisk See alsoNote 4 for more information on the Group’s exposure to interest rate risk. uses interest rate swaps to hedgeagainstlarge fluctuations incash flow. Group’s exposure to interest rate riskrelates principally to interest-bearing liabilitieson floating interest rate terms. The Group Interest rate riskis the risk that future cash flows will fluctuate asaresult of changesin the generallevel of interest rates. The 1a. Interestrate risk such aschangesininterest rates, exchange rates, pricesof inputsand the costof capital. The market riskis the riskof changesinmarket pricesandchangesin fundamental conditionsin the economy, 1. Market risk
EVR S S T EVR T dollar. The Group’s exposure to currency riskrelates principally to Swedish kroner Euro (SEK), (EUR)andUSdollar (USD). relation to strategic decisions. operations inlow-cost countries,importing from countries with low commodity pricesandother exposure to currency riskin swaps to eliminate all the Euro debtexposure, ref. note 4. Swedish kroner (net investment). The remaining partof the borrowings isinEuro. The Group hasentered into cross currency changes inexchange rates. equivalent of NOK 50millionby entering into forward contracts that mature on the settlementday for the payment. level. The Group hedges future receipts andpayments denominated in foreign currency where the amountisgreater than the for multicurrency bankaccounts for the Group, and these accountsare used to reduce exposure to currency riskat the group activity to hedge the foreign currency componentof financial transactions. The Group hasalsoestablishedanarrangement than the Group’s functional currency. as aresult of financial transactions thatinvolve agreement on future receivables or liabilities thatare settledinacurrency other ranslation riskrepresents the risk that assetsor liabilitiesmay beexposed to changesoncurrency conversion as the result of ransaction riskrepresents the risk that future cash flows may fluctuate as the result of changesinexchange rates, anditarises trategic riskisaconceptused to describe the long-term effects of changesin exchange rate, suchasestablishingbusiness ince the Group hasasignificantscaleof activitiesin Sweden, itarranges for partof its borrowings to bedenominated in Y hasestablishedsubsidiary companiesinIndiaandUkraine. These two companieshave incomemainly inEuro andUS Y hasbothrevenue andcostsdenominated in foreign currencies, accordingly itengagesinsomedegree of routine NOTE 4 NOTE
Interest rateswaps 31December 2016: changes in the market value of these swaps are recognised aspartof comprehensive income. rollover dates for the swap agreements correspond with the rollover dates for the borrowings. Hedge accountingisappliedand portfolio under SFA. The interest rate swap agreements are structured inrelation to specificborrowings inorder that thequarterly NOK 1,680andSEK 700million. As aresult of these agreements, the Group pays fixed interest rates on37%of its total borrowing In order to secure fixed interest rate terms, EVRY AS hasentered into interest rate swap agreements for principalamountsof Interest rateswap agreements liabilities to IBMFinancing were NOK 667,5million. lished with IBMFinancing. The financing agreement hasadurationof six years. By endof 2016 thenon-current interest bearing In connection with the outsourcing agreement with IBMstarting1December 2015,a vendor financing agreement was estab- recognised as financial expense asof 31 December 2016. Commitment fees andloansetup fees are includedin the amortisedcostcalculation.Of this amount,NOK 84million was est bearingdebtandadjusted EBITDA). The Group has througout 2016beenincompliance with its financial covenants. possibility for reduction given company performance. The covenants are basedongearingratio(baseddefinitons of netinter- The new financing ensures thatEVRY achieves financialheadroom atmarket rates withinitialmargins in therange of 4 to5%, with NOK 7.9billion,of which NOK 1.5billionisundrawn.No installmentsare paidon the loans which allmature in2022. institutions. The new financing consistsof various tranchesindifferent currencies (NOK/SEK/EUR) withanaggregate frame of was refinanced andinSeptember partsof theSFA were repriced. The facilitiesare syndicated to anumber of banksand financial DNB Bank,Nordea Bank, Bankof America Merrill Lynch, Credit Suisse andMizuhoBankasarrangers.In June 2016, the SFA In March 2015EVRY entered into anew financing arrangement-Senior Facility Agreement -(SFA) witha syndicate of banks with Non-current interest bearingliabilities A) Non-current interest bearingliabilitiesandinterest raterisk FINANCIAL INSTRUMENTS decrease in the company’s overall earnings. company incurssignificantinterest costsonitsborrowings, andachangeininterest rates would represent ansignificantincrease/ The Group’s exposure to interest riskisdependenton the general level of market interest rates (Nibor/Stibor/Euribor). The Interest rate risk–sensitivity analysis The average durationof interest rate swap agreements asat31December 2016 was 2.0 years. Interest rate swap Nomura Interest rate swap Nordea Interest rate swap Nordea Interest rate swap Nordea Interest rate swap Nordea Interest rate swap SEB Interest rate swap DNB Non-current interest bearingliabilities Arrangement fee financing Liabilities to credit institution Financial lease (NOK million) Interest rate swap Nordea Currency NOK NOK NOK NOK NOK NOK SEK SEK mutMtrt aeFixed interest rate Maturity date Amount 20 20.04.20 200 20 20.04.20 200 20 21.01.19 200 50 21.01.19 500 30 21.01.19 300 50 20.01.17 500 20 20.04.18 250 20 20.04.18 230 1.61 % 1.62 % 1.26 % 2.97 % 2.64 % 1.64 % 1.62 % 1.58 % 11.0631.12.2015 31.12.2016 6 7 295-125.8 -219.5
0. 4 4 808.1 008.8 18.9 Mtm value
779.6 883.4 -19.3 22.1 -2.8 -2.8 -6.3 -9.6 -0.6 -1.8 -1.5 123 ANNUAL ACCOUNTS AND NOTES 124
ANNUAL ACCOUNTS AND NOTES account: The table below shows the effect of anincrease of 100basispointsininterest rateson the consolidated profit andloss to floating interest rates. time the Group’s interest costs will riseasaresult of higher interest rates payable on the partof its total borrowings that issubject increase in the generalinterest rate will increase the value of the Group’s interest rate swaps (positive effect), whileat thesame The Group calculates the valuation effects onitsholdingsof financialinstruments by simulatingachangein the yieldcurve. An pays a fixed rate of interest onpartsof the financing. rates will causeanincrease ininterest expense, but the effect willbeoffset tosome extent by interest rate swaps as the Group The Group usesinterest rate swaps to hedgeagainstlarge fluctuations incash flow. An increase in the general level of interest Exchange ratesof relevance: The company has nomaterial balancesheetriskinrelation to other currencies. -90.8 millionat year end2016. loss in the period where the hedged transactions affects profit or loss. Themarket values of thesehedginginstruments were NOK value of hedginginstrumentsare recognised aspartof comprehensive income. The fair value changesare reclassified to profit or entered into bothinEURNOK andEURSEK for the total exposure and the hedgesare dueMarch 2020.Changesin the market cross currency swaps on this EURdebt with different banks, to eliminate theEUR exposure. Cross currency swaps have been Major partsof the Group long term financing agreement isdebtinEUR, total EUR608.6million. The Group hasentered into million. Accordingly, achangein the SEK/NOK exchange rate of 100basispoints would causeachangein the book value of NOK 3,6 Net exposure denominated inSEK amounted to NOK 36millionat31December 2016after hedgedamountsare deducted. recognised in2016amounted to NOK 57.2millionafter tax for the Swedish investment. respect of liabilitiesandreceivables due from foreign activitiesare appliedascomprehensive income. The translation difference At the endof 2016 the Group hadborrowed SEK 1,038million to hedgeitsinvestments inSweden. Translation differences in Financial itemsper currency 31December 2016: B) Exchange rateriskandcurrency hedge GBP USD EUR Net exposure financial position Non-current liabilities Bank deposits Accounts payable Accounts receivable (NOK million) Effect on total profit Change ininterest expenses after tax Change in fair value interes rate swaps (NOK million) SEK -584.1 139 063 231 13.072 12.3415 10.6130 11.3698 987.7 236.1 303.3 470.8 Average .93860 .798.8090 8.0739 8.6200 8.3993 .89906 .509.6190 8.9530 9.0863 9.2889 .84091 .521.0475 0.9572 0.9512 0.9814 SEK 2016 4. 152.4 45.1 20.1 68.0 93.0 USD 2016 Spot Average 190.8 30.6 69.1 EUR 2015 -29.2 2016 38.2 9.0 Other -15.6 74.0 39.6 14.1 2015 2015 48.4 39.0 54.6 Spot NOTE 5 NOTE
There are nomaterial estimates related to this asof 31December 2016. number of hoursdelivered asaproportion of the total estimated number of hours that will berequired for the delivery. Where servicesare recognised to revenue on the basisof the degree of completion, revenue isestimated on the basisof the usage during the period. for the periodisestimated on the basisof historic figures, adjusted for any known events/information thathave influenced of servicesby the customer. If there isnoreconciliation/account of actualuseat the endof the accountingperiod,revenue Where operatingservicesare provided through volume-based contracts,revenue isrecognised on the basisof the actualuse Income recognition was performed. capitalisation of development projects. There were noindicationsof impairmentat31December 2016andnoimpairment test Other intangibleassestsare tested for impairmentif there are indicationsof amaterial lossof value, seesectionbelow regarding Other intangibleassets See note 12 for further information onassessment of goodwill. increase in the yield requirement will, inisolation,cause alower value inuse which in turn will causea fall in the value of goodwill. of estimates. A changein the yield requirement used for discounting future cash flows will affect thebook value of goodwill. An calculations of value inuse. These calculationsare basedondiscounted cash flows that involve uncertainty andrequire the use against the value inuseof goodwillin these units. The recoverable amount from cashgenerating units isdetermined through The Group tests goodwill for impairmentannually. The book value of goodwillin the Group’s cash-generating units ismeasured Goodwill future.in the change that the Group considersreasonable inspecificcircumstances including evaluating how such factors may constant review on the basisof historical results andexperience, consultation with experts, trends, forecasts andother methods estimates basedonassumptionsabout future outcomes that are subject to uncertainty. The Group keeps suchestimates under requires subjective andcomplex evaluation by the company’s management, typically as the result of the need to determine such A key accountingestimate isanestimate that isimportant for the presentation of the Group’s financial position andprofit, and that ESTIMATES OF USE e basedoncurrent debtportfolio, current forward curve andcurrent margins. 1) Maturityprofile for liabilities: financial C) Liquidity risk Total liabilities financial Interests Other non-current provisions for liabilities Non-current non-interest bearingliabilities Maturitycredit facility Financial lease Other current liabilities Deductions anddutiespayable Accounts payable (NOK million) Liquidity reserve/Revenues last12months Liquidity reserve 31December (NOK million)
Estimat 1) 12 2 6
667.5 973.2 135.5 897.8 877.7 973.2 897.8 877.7 2. 9. 1 498.6 525.2 3. 3 434.9 339.1 18.9 oa 0-1 year Total
4. 2 247.3 - - - 667.5 135.5 - - 1- 5 year More than 5 years Morethan 5 year 1-
2. 6 729.8 914.2 2 12.6 29%17.2% 22.9 %
9. 2 799.2 2016 - 6 - - - - 112.4
457.8 339.1 209.2 2015 6.3 - - - - - 125 ANNUAL ACCOUNTS AND NOTES 126
ANNUAL ACCOUNTS AND NOTES NOTE 6 NOTE
Henrik Schibler started asCFO on1September 2015andhissalary for 2015comprise the period1September -31December. Björn Ivroth started asCEO on24March 2015andhissalary for 2015comprise the period24March -31December. Executive managementremuneration Salaries andpersonnelcosts COSTS PERSONNEL AND SALARIES indications of the need for write-down at31December 2016andnoimpairment test was therefore performed. when estimating future cash flows will affect theestimated value of thedevelopment project inquestion. There were no future cash flows that involve uncertainty andrequire the useof estimates. A changein the forecast revenue or margin used development project isdetermined on the basisof calculationsof value inuse. These calculationsare basedondiscounting development project, the recoverable amountis tested against the book value. The recoverable amountassigned to the based on the direct costsper employee. In the event of any indicationof the need for a write-down inrespect of anindividual When capitalisingdevelopment costs that relate to the useof internal resources, costsare estimated usinganhourly rate Capitalisation of development projects Other remuneration Pension earnedthrough thebenefits year Bonus Salary Henrik Schibler (CFO): (NOK million) Other remuneration Pension earnedthrough thebenefits year Bonus Salary Björn Ivroth (CEO): (NOK million) Total salariesandpersonnelcosts Other benefits Pension costs Average number of man years Average number of employees securitySocial tax Salaries (NOK million) 2.066 2.704 0.269 0.468 0.201 0.740 2.678 3.671 5 4 2016 2016
8 9 494.2 357.5 624.6 768.7 004.1 2016
814 100 7 5 10 0.900 0.055 0.156
9 0.281 0.518 2.710 485.9 420.4 850.9 097.6 340.3 2015 2015 2015
931 109 - - Other membersof the executive management2016 non-compete agreements. 6 and12months.Both the Chief Executive Officer and theother members of theExecutive Management are subject to Management are entitled to receive salary for periodsof between 0and12months following notice periodsof between entitled to receive salary for 3months following the normalnoticeperiodof 9months. The other membersof the Executive The CEO has waived the redundancy rightsprovided by Chapter 15of the Working Environment Act, cf. Section15-16.He is purchased atmarket prices. further information onEVRY AS’s ownership structure. Investment inshares have beenmadein2015and2016. The shares are opportunity to invest inshares inLyngen Topco AS, which indirectly owns 88%of the shares inEVRY AS. Seenote 18 for of EVRY AS, the Executive Management andcertainother key employees. Those includedin the program have beengiven the In 2015,along-term investment program was establishedby Lyngen Topco AS, for somemembersof the Board of Directors from retirement age. amount (G), cf. note 7 to the Annual Accounts. Rightsaccruedinrespect of the definedbenefitpensionscheme willbepaid uninsured definedbenefitpensionscheme for theportion of their salary that exceeds 12 times thenationalinsurancebase The Executive Management are membersof adefinedcontributionpensionscheme. They are additionally membersof an implement the above principles. bers of the Executive Management isup to 12months’ fixed salary. TheBoard of Directors hasestablisheddetailedguidelines to bonus entitlement for the CEO andCFO is18months’ fixed salary, while themaximumbonusentitlement for theother mem- Executive Management, whereby bonuses will bepaidbasedon the achievement of pre-determined targets. The maximum arrangements andseverance pay. The Board of EVRY AS hasapproved abonusscheme for the CEO andmembersof the benefits supplemented by performance-based bonuses,share-based long-term incentive schemes,pensionandinsurance The total remuneration of the CEO andother members of the Executive Management consistsof a fixed package of salary and Other membersof the executive management2015 emuneration figures are for the year asa whole, while the period refers to theperiod for which theemployee was amember of the executive management team. 1) Kurt Helland Håvard Larsen Niclas Ekblad Morten Søgård Anne-Cecilie Fagerlie Knut ERøsjorde Previous membersof the executive management Janne Marie Log Trond Vinje Fredrik Almén Morten Sæther Wiljar Nesse (NOK million) Anne Ivanoff Janne Marie Log Kolbjørn Haarr Trond Vinje Fredrik Almén Morten Sæther Wiljar Nesse (NOK million) Björn Martinsson Tuomo Louhivuori
R 1) 1) 1) 59-3.21690480110.111 0.101 0.438 0.519 0.345 17.8 -31.12 1.639 1.11 -31.12 15.9 -31.12 . 01 .7 .3 .6 0.162 1.149 1.066 0.143 0.739 0.062 2.570 1.970 0.131 3.679 0.350 1.1 -30.11 1.1 -30.11 0.262 0.199 1.441 1.822 1.9 -31.12 2.284 1.1 -31.12 0.155 0.190 0.944 0.131 0.213 0.433 0.185 0.253 0.103 0.151 0.279 0.259 0.079 1.504 0.539 2.500 1.1 -31.12 1.013 1.601 1.1 -31.12 2.188 1.1 -31.12 1.947 1.1 -31.12 2.528 1.1 -31.12 1.1 -31.12 . 11 0.712 1.025 1.8 -31.12 0.992 1.9 -31.12 1.5 -31.12 . 091991200130.272 0.392 0.153 0.042 0.042 1.220 0.198 2.431 3.404 1.521 1.919 1.513 1.1 -30.9 2.134 2.101 1.662 1.1 -15.9 1.491 1.1 -31.8 1.1 -31.8 eidSalary Period Salary Period Bonus Bonus - .6 0.051 0.044 0.060 0.017 - - - .2 0.416 0.227 - - .8 0.079 0.080 0.001 - - - eueainPensions remuneration Pensions remuneration Other Other - 0.117 - - 127 ANNUAL ACCOUNTS AND NOTES 128
ANNUAL ACCOUNTS AND NOTES NOTE 7 NOTE
Remuneration to the Board of Directors in2016 was paidoutas follows: Board of Directors management responsibilities. other than assetoutabove. No additionalpayments were made for specialservicesover andabove anindividual’s normal No member of the Executive Management received any remuneration or other benefits from any other company in the Group agreements for such pensionarrangementsat the date of termination. to provide for pensionpayments to employees who are membersof the schemeor who satisfy the requirements of collective In the event that the schemeis terminated, the participatingcompanieshave aduty to continue to make premium payments liability applies both to shortfallsinpremium payments andif the premium rate appliedproves insufficient to meet theliabilities. severally liable for two-thirds of the pensionpayments due to employees who satisfy the terms andconditionsatany time. The ensure sufficientbuffer capital tocope withincreased payments. Companies thatparticipate in the AFP scheme are jointly and underfunded, and the administrator (Fellesordningen for AFP) assumes that premiums will have to increase over time inorder to the socialsecurity baseamount(G) and7.1G. The equivalent premium rate for 2017 will beunchangedat 2.5%. The schemeis The premiums paidin2016 were setat2.5%of total salary payments for salary payments to the employer’s employees between pension schemeand the premiums paidare recognised ascosts through profit andloss withnoprovision madein theaccounts. panies that participate in the scheme. The new schemeis therefore treated for accountingpurposesasadefinedcontribution mined asapercentage of salary. There isas yet noreliable measurement and allocationof liabilitiesandassetsbetween the com- until 67 years of age. The schemeisamulti-company definedbenefitscheme,andis financed by premium payments deter- to draw the new AFP pension from 62 years of age,even if they continue to work, andadditionalrightscanbeearnedby working ment pensionarrangement.The schemegives alifelong supplement to the ordinary pension.Employees canchoose whether The majority of the employees of the Group’s Norwegian companiesismembersof the commonschemeof AFP early retire- Defined-Contribution Pensions Act. salaries between 6Gand12G.From 1.12017 the break pointismoved from 6G to 7.1Gasaconsequence of achangein the to this schemeare at the rates of 4% for salariesbetween oneandsix times the socialsecurity baseamount(G) and 8% for The Group’s Norwegian companies operate adefinedcontributionpension scheme for employees. Theannualcontributions contribution andmulti-company pensionschemes. pension arrangementsprovided by the Group. The figures therefore includeanumber of different definedbenefit, that includes1582employees. The presentation of pensioncostsandliabilitiessetoutbelow aggregates the various pensioners ininsured definedbenefitschemes.Inaddition the Group have various compensation-anduninsured pensionplans ments related at31December 2016 to 5698active employee membersof definedcontributionpensionschemesand583 The Group provides pensionsprincipally through insured collective schemes with life insurance companies.Pension arrange- PENSIONS The employee elected board membersreceive the renumeration from the board inaddition to ordinary salary from the company. The remuneration to the Board of Directors are determined inadvance andpaidoutevery sixmonth with onehalf each time. mployee elected board members 2) 1) Anne KathrineHaug Nordvang Kristin Margrethe Krohn Devold Leif Teksum Ingrid Lund DahlströmJan Anders Hugo JordhøyOla Eirik Bornø Göran Lindahl (NOK million) Total remuneration
E E mployee elected deputy board member 1) 1) 1) 1) 2)
Remuneration 0.144 0.144 0.328 0.288 0.260 0.348 0.328 1.869 0.029 Pension costs NOK 21.9millionat31December 2016. year. The accumulated accruedentitlement,includinginvestment return andemployer’s socialsecurity contributions, totalled bers of executive management. The annual return shallataminimumequal12monthsNIBORas31December of the previous annual pensionentitlementiscalculated as25%of salariesexceeding 12G for the Chief Executive Officer and theother mem- is notsubject to the legislationondefinedcontributionpensionsor thelegislationonenterprise pensions,andisnot funded. The The membersof executive managementare membersof apensionplan financed from operations. The operationspensionplan with the possibility of additionalcontributionsby agreement. treated in the accountsasadefinedcontributionscheme.ITPK isadefinedcontributionscheme withacontributionrate of 2% measurement andallocationof the company’s share of the overall assetsandliabilitiesof the scheme. The schemeis therefore the “basicincomeamount”. Full pensionentitlementisearnedafter 30 years of pensionableemployment. There isnoreliable between 7.5 times and20 times the “basicincomeamount” and32.5%of final salary for salary between 20 timesand30 times ment pensioncalculated as10%of final salary for salary up to 7.5 times the“basicincomeamount”, 65%of finalsalary for salary tion schemeandadefinedbenefit(ITPK andITP2 respectively). ITP2isamulti-company scheme that provides a retire- over this amount.Employees bornbefore 1979are membersof the oldscheme, which isacombinationof adefinedcontribu- tribution scheme, to which the employer contributes 4.5%of salary up to 7.5 times the “basicincomeamount” and30%of salary born in1979or later. All new employees becomemembersof the schemeat25 years of age. The ITP schemeisadefinedcon- r collective agreement between the Confederation of Swedish Enterprise and the Council for Negotiation andCo-operation Employees in the Group’s Swedish companiesare principally membersof the ITP pensionscheme. The ITP schemeisbasedon Change in fair value of planassets Change incalculatedpensionliabilities epresenting salariedemployees within the private sector. ITP cameinto operationon1 July 2007,andapplies to employees Fair value of planassets31December Pension costs charged to profit andloss Pension payments Pension premium paid Curtailment andsettlement Defined contribution schemesandearly retirement plans Actual return onplanassets Pension costs charged to profit andloss from definedbenefitplans Curtailments andsettlements Net interest onpensionliabilities Fair value of planassets 1 January (NOK million) Acquisition/sale of business,curtailmentandsettlement Actuariel gainsandlosses Interest onpensionliabilities Current value of pensionentitlementaccrued over the year Defined benefit obligations 1 January (NOK million) Current value of pensionentitlementaccrued over the year (NOK million) Defined benefitobligations31 December Pension payments . 11.061.1-31.12.2015 1.1 -31.12.2016 1.1-31.12.2015 1.1 -31.12.2016 651.6 357.5 336.5 660.5 822.3 818.6 -35.8 -44.2 2016 21.8 21.0 18.1 18.6 18.1 5.1 2.8 3.7 - - - 660.5 420.5 398.0 702.3 916.7 822.3
-36.9 -34.7 -40.8 -48.8 -45.9 2015 11.3 18.5 22.5 23.2 18.1 23.2 -4.4 3.7 129 ANNUAL ACCOUNTS AND NOTES 130
ANNUAL ACCOUNTS AND NOTES Pension liabilities Change inpensionliabilities The following assumptionsare usedin the actuarialcalculations: The summarisedinformation presented isbasedonannualcalculationscarriedoutby anindependentactuary. pension liability of NOK 1.4million,principally as the result of areduction inmembersof the pensionplans. The effect for the year of actuarialgainsandlosses recognised asother comprehensive income represented adecrease in disabled or dying within 12months,andalsoshows life expectancy. tables are provided below. The table shows the likelihood of anemployee inaspecifiedagegroup for menand women becoming risk table for disability, IR02, corresponds with the estimated riskof disability in the Group. Extractsof information from the risk Pension calculationsuse the K2013 table for mortality risk, which isbasedon the bestestimate of the populationinNorway. The interest rate as the basis for the discountrate. has for 2015and2016applied the parameters recommended by the NRS2015guidelines, which includesusing the covered bond rate onNorwegian government bonds.Basedonit’s assessmentof the depthin the Norwegian market for covered bonds,EVRY cepted the useof covered bondinterest rates as the basis for the discountrate for pensioncalculationsinstead of using the interest as at31December 2016.Over recent years, the Norwegian market for covered bondshasgrown strongly. NRShas therefore ac- The assumptionsused for pensioncalculations follow the guidelinesissuedby the Norwegian Accounting Standards Board (NRS) Pension liabilitiesin the statement of financial position Plan assetsin the statement of financial position Net pensionliability Effect of asset ceiling Fair value of planassets Gross liability to provide pensions(PBO) (NOK million) Pension liabilities31December Benefits paidand Paid-up policies Acquisition/sale of business Premium payments Effect of actuarialgainsandlosses recognised as comprehensive income Pension costs Pension liabilities1 January (NOK million) Mortality assumptions Staff turnover Annual increase inpensions Growth in the basicstate pension(G) Future salary inflation Discount rate . 11.061.1-31.12.2015 1.1 -31.12.2016 . 11.061.1-31.12.2015 1.1 -31.12.2016 Own table 0.00 % 2.25 % 2.50 % 2.60 % K2013 217.6 211.6 217.6 217.6 651.6 818.6 -50.6 2016 21.0 -8.4 -5.1 -1.4 - - Own table 0.00 % 2.25 % 2.50 % 2.70 % K2013 211.6 211.6 660.5 822.3 211.6 242.1 -49.8 -11.3 -22.6 2015 22.5 -9.7 -9.4 - Life expectancy The Group expects to pay approximately NOK 5.5millioninpension premiums to the Group’s definedbenefitplansin2017. investment basis. Pension assetsare invested inaccordance with the guidelinesapplying to life insurancecompanies. Norwegian and foreign equity securities. The currency hedgingpolicy for foreign equity securitiesisevaluated onanindividual and corporations.Bondsheldin foreign currencies are to alarge extent currency hedged.Pension assetsare invested bothin Pension assetsare invested inbondsissuedby the Norwegian government, Norwegian municipalities, financial institutions Investment category The planassetsasof 31December were invested as follows: uncertainty attaches to the amountscalculated, which principally vary inpace with the level of interest rates inNorway. Calculations of pensioncost for the year and the book value of pensionliability are basedon the assumptionsabove. Considerable Uncertainty of estimates Disabillity expectancy Mortality expectancy 60 40 20 Age 80 60 40 20 Age 80 60 40 20 Age Total Other Properties Equity securities Bonds 100 % 1.90 % 0.20 % 0.10 % 4.65 % 0.46 % 0.06 % 0.02 % 26 % 65 % 2016 89.3 86.0 87.0 88.6 3 % 6 % Men Men Men Women Women Women 2.90 % 0.30 % 0.10 % 3.18 % 0.31 % 0.04 % 0.01 % 100 % 29 % 62 % 2015 91.6 89.4 90.6 92.4 1 % 8 % 131 ANNUAL ACCOUNTS AND NOTES 132
ANNUAL ACCOUNTS AND NOTES NOTE 8 NOTE
basis infrastructure platforms. Other costof goodssoldare mainly related to the long-term partner agreement with IBM from 2015, where IBM operates EVRY’s Cost of goodssoldcomprise: COSTS OPERATING OTHER AND SOLD GOODS OF COST been significantly reduced following theclosure by the Group of anumber of definedbenefitpensionschemes over recent years. salary increases. Changesof this nature would causeanincrease inliability for the Group. However, riskexposure in this respect has reduction in the actualreturn earnedonpensionassets, interest rate level inNorway andrisksassociated with higher inflationand to the assumptionsappliedand future outcomes. The mostimportantareas of riskrelate to increasing life expectancy, the riskof a The Group isexposed to various risksinrelation to itsdefinedbenefitpensionarrangementsasa result of uncertainty in relation Risk assessment of the reporting period. carried outusingamethod that extrapolates the effect onpensionliabilitiesof achangein thecalculationparameters at the expiry schemes inNorway in the event of aonepercentage pointchangein the mostimportantparameters. This analysis hasbeen The table below shows the estimated percentage changeinpensionliability andpension cost for the definedbenefitpension Sensitivity analysis over the next 10 years isas follows: The weighted average durationof the Group’s pensionliabilitiesasat31December 2016 was 11.7 years, and the maturity structure Total cost of goodssold Other cost of goodssold Use of goods for resale Network capacity Consulting services Purchase andleaseof hardware Purchase andleaseof software (NOK million) Annual growth inpensions+1% Growth in the basicstate pension(G) +1% Growth in the basicstate pension(G) -1% Future salary inflation+1% Future salary inflation-1% Discount rate +1% Discount rate -1% Year 6-10 Year 5 Year 4 Year 3 Year 2 Year 1 (NOK million) 10.0 % 10.6 % -0.4 % -0.4 % -8.8 % 0.5 % 0.9 % PBO 4 1 1
018.2 615.5 076.4 244.9 556.9 112.3 412.3 2016 Pension costs 4 1 1 1
-1.1 % -1.6 % -1.6 % 877.9 634.2 238.5 286.1 415.9 237.0 066.1 228.6 1.2 % 2.0 % 1.6 % 2.4 % 2015 43.9 43.3 42.9 41.8 41.3 NOTE 9 NOTE
Other operatingcosts comprise: note 3in the group accounts for further information on the Group’s financing agreements. Increased interest expenses are due to the new financing agreement withanincreased gearingandhigher interest margins. See FINANCIAL ITEMS reinvoiced by the company. Fees for other assuranceservicesincludesattestation servicesrelated to ISAE 3402andSAS 70. These expenses are mainly and are exclusive of value added tax. invoiced inrespect of audit-related and tax-related services. The amountsshown includebothNorwegian and foreign subsidiaries, The following table shows remuneration to the Group’s auditor, EY, inrespect of auditservicesdelivered, including the amounts Auditor’s remuneration comprehensive income.Other consultingcostsare classifiedasother operatingcosts. Consulting costs which are reinvoiced asapartof acustomer contractare classifiedascostof goodssoldin thestatement of (NOK million) Net foreign exchange gain/-loss Currency losses Currency gains Total financial expense Other financial expenses Interest expenses Total income financial Other income financial Interest income (NOK million) Total remuneration Feesfor services tax Other fees Fees for other assurance services Audit fee (NOK million) Total other operatingcosts Other operatingcosts Travel costs Consulting costs Premises rental andother premises costs 1.7 15.140 19.377 1 242.0 227.4 514.4 431.5 2.463 2.835 6.342 7.737 363.0 369.6 135.4 259.7 598.4 -14.6 2016 82.9 16.0 15.1 2016 2016 0.9 1 0.891 1.162 4.260 8.827 497.1 537.3 390.5 106.4 284.1 724.0 402.2 178.7 441.3 701.9 2015 2015 2015 40.2 19.8 18.4 1.5 133 ANNUAL ACCOUNTS AND NOTES 134
ANNUAL ACCOUNTS AND NOTES NOTE 10NOTE
3-4 years. Based on the Group’s future budgetsandestimates onearnings,itisexpected that the lossescarried forward will beutilised within accounts at31December 2016.Corresponding amountat31December 2015 was NOK 97.7million. timing differences. Deferred taxassets totalling NOK 96.8million relating to taxlossescarried forward are not recognised in the activities and there are no time limits to carrying forward these losses.Losses carried forward are partially netted againstpositive related to these lossesamounted to NOK 626.6million. The lossescarried forward mainly relate to the operationof the Norwegian The Group had tax lossescarried forward at31December 2016 totalling NOK 2,638.0million,and the calculated deferred tax asset Taxation effects from items recognised as“Comprehensive income”: Deferred tax/tax assetarisesinrespect of the following timing differences: Deferred tax/tax assetiscalculated on the basisof the differences which exist at year-end between accountingand taxation values. TAXES Total Translation differences Pension estimate changes Market value of financial derivatives (NOK million) Deferred tax Deferredasset tax forBasis deferred tax/-deferredasset tax Lossescarried forward Grossdifferences timing Otherdifferences timing Items recognised as "comprehensive income" Profit andlossaccount Pension liabilities Tangible assets Intangible assets (NOK million) 11.0631.12.2015 31.12.2016 -2 -2 -365.6 -146.4 -133.7 489.6 192.1 1 827.6 4. -2 -2 445.9 638.0 -42.9 -75.8 -16.5 -59.3 53.1 2016 - - -186.6 -910.4 -129.0 -447.5 477.6
318.0 131.4 135.5
98.4 66.4
2015 45.2 48.1 -8.4 5.5 - NOTE 11NOTE
average weighted number of shares outstandingover the year. No shares have dilutive effect. Earnings per share iscalculated asprofit for the year attributable to shareholders (owners of theparent company) divided by the EARNINGS PER SHARE Tax of the year from discontinued operations Tax of the year from continuing operations Other permanentdifferences Under/over accrual of tax prior year Total tax of the year from continuing operations Under/over accrual of tax prior year Change indeferred tax Change indeferred tax in the statement of financial position Proposed dividendper share (NOK) Proposed total dividendpayment (NOK) (not recognised asaliability at31December) Dividend proposed for approval by the Annual General Meeting Earnings per share (NOK) Average number of shares in the period Total Profit for the year attributable to shareholders (owners of theparent) Share of comprehensive income attributable to shareholders (owners of the parent) Profit for the year attributable to shareholders (owners of theparent) (NOK) Effective rate tax Tax rate changeinNorway Losses/tax rate differences abroad Non-taxable income Expenses notdeductible 25 %of profit before tax Reconciliationofof tax the year Tax payable Tax cost for the year comprises Other changesindeferred tax not taken to profit andloss Deferred tax from discontinued operations Change indeferred tax to profit andloss (NOK million) Changes indeferred tax 267 300 346 -46
187 100 100 000 2016 1.12
4 267 -1 -277 441 -1 000 000 000 28.5 % 199 -455.4 119.9 -455.4 119.9 151 -513.8 105.1 - - -86 -497.4 -18.6 -75.8 5. -542.6 57.2 22.7 62.9 -542.6 57.2 2016 -0.7 -0.1 -0.1 -4.5 -7.4 4.9 - -
410 133
187 700 600 100 -5.28 47.7 90.8 45.2 2015 2015 -3.6 -3.6 -5.9
441 000 000 000 2.5 3.0 3.7 5.0 - - - 135 ANNUAL ACCOUNTS AND NOTES 136
ANNUAL ACCOUNTS AND NOTES NOTE 12NOTE
was five, inline with the Group’s businessstructure. purposes independentof cashinflow generated by other assetsor groups of assets. The number of cashgenerating unitsin2016 A ‘cash generatingunit’ represents the lowest identifiablegroup of assets thatgenerates cashinflow whilebeing for allpractical tests are always carriedoutat year-end. Goodwill is tested for impairment for eachidentifiedcashgeneratingunit in the Group. tests goodwill for impairmentatother times if this becomesnecessary asaresult of indicationsof possibleimpairment,andsuch The Group evaluates whether there are any indicationsof apossibleimpairmentof goodwillonaquarterly basis. The Group also Allocation of goodwill to cash-generatingunits: projects exceeds the development costs. Other development work carriedoutin the Group relates to customer-specific projects, where theincomederived from these company’s customers usingIBM’s technology (see alsonote 2). 2015 of NOK 135.9millionasaconsequense that the company in the future will deliver basicinfrastucture services to the intangible assets were written down by NOK 10million. The Future Proof program was written down entirely in the accounts for international market. Investments incustomer contracts andother intangible assets totalled NOK 34.2millionin2016.In2016, of anew core bankingandpayment solutions,builtonindustry standards suchasISO20022,SOA andBIANadapted to an related to investments carriedoutin the Financial Services segment. These investments are mainly related to the development Costs of NOK 189.4millioninrespect of in-housedeveloped software were capitalisedin2016,of which NOK 139.6million goodwill. allocated to 67.2 million,NOK 20.6millionandNOK 64.1millionrespectively. All excess values related to the acquisitionshave been The additionsof goodwillin2016are mainly related to the acquisitionsof IT Nor, EVRY Financing andNetRelations with NOK INTANGIBLE ASSETS Method of depreciation Useful life Book value at31December 2016 Translation differences Write-downs Depreciations Disposal/reclassification in the Disposal/reclassification in year Additions in the yearin Additions Book value at31December 2015 Translation differences Write-downs Depreciations Disposal/reclassification in the Disposal/reclassification in year the yearin Additions Total Global Delivery BEKK Consulting Sweden Norway Financial Services (NOK million) Book value at1 January 2015 (NOK million) Yearly Assessment Goodwill 5577.7 5665.0 5446.0 -242.5 155.2 208.3 10.7 ------5-15 years Developed Software In-house Linear 433.0 189.4 298.1 146.7 229.0 -45.4 -84.0 -9.1 6.4 - - - - 2 -10 years intangible -135.9 Linear 123.6 135.5 266.7 assets -10.0 -25.3 -47.4 Other 34.2 51.1 -0.9 -9.9 1.0 - 31.12.2016 assets allocated from assets and other intangible Customer contracts 5 1 1 1 168.4 381.8 577.7 638.4 776.5 612.7 4 -10 years acquisitions Linear -34 -84.1 -13.4 -46 -156.1 -24.6 1. 6150.1 16.0 3. 6129.6 31.1 4. 5991.4 49.8 -. -254.3 -1.8 18 217.5 1.8 42 212.6 4.2
- - - - - 31.12.2015 5 1 1 1 -135.9 186.5 381.8 665.0 798.7 685.3 612.7 378.8 -10.0 Total -9.9 - tainty. The assumptionsappliedare as follows: The estimates used to determine future cash flows and the discountrate used when calculating value inuseare subject to uncer- A reasonable changein the assumptions will notlead to a write down of goodwill. market positionandgrowth rate going forward. have beenimplemented and the outsourcing agreement entered into with IBM,created asound foundation for strengthening its delivered financial results for 2016 thatare inline with expectations andithas, together with thecost reduction measures that The impairment tests carriedoutat the endof 2016donotshow any need to write down the Group’s goodwill. The Group has budget for2017. the expected level of long-term revenue growth. Future cash flows have beendetermined on the basisof the Board-approved has beenassumed.Cash flows for after 2017(terminal values) have beenextrapolated from the cash flows for 2017, adjusted for ples. For BekkConsultingamultipleof 6xEBITDA in2016hasbeenassumed, while for GlobalDelivery amultipleof 5xEBITDA method. For the BekkConsultingandGlobalDelivery cashgeneratingunits, fair value hasbeencalculated using valuation multi- For the 2016 financial year the Group hasdetermined the value inuseof itscashgeneratingunitsusing thediscounted cash flow which the Group operates, indicating that the same WACC shouldapply to allcashgeneratingunits. value inuse. The observed level of riskexpressed in terms of equity betaisalsoconsidered to beclose to 1 for allsegmentsin since differences in future uncertainty are reflected in the expected cash flows that form thebasis for thecalculationof future ratio of 20%,anequity market premium of 6.5%andequity betaof 1.0. The same WACC isapplied for allcashgeneratingunits capital (WACC). For 2016,pre-tax WACC was assumed to be7.3%. This isbasedonarisk-free interest rate of 1.53%,agearing Future cash flows are discounted to present value usingadiscountrate basedonacalculationof a weighted average costof Discount rate units, andaccordingly CAPEX for this unitis forecast atahigher percentage of revenue. revenue will becarriedout. The cashgeneratingunitFinancial Servicesismore capitalintensive than the other cashgenerating operational investments andinvestments insoftware developed in-house that are necessary to achieve the expected growth in Calculations of value inuseassumeanormalisedrelationship between investment andoperatingrevenue. Itisassumed that the Investment (CAPEX) pected future EBITA margins. conditions. Programs to improve efficiency thatare approved andcommitted are taken into accountindetermining the ex- EBITA margins are basedon the volume/margins achieved historically, adjusted for expected future developments inmarket EBITA margin Board cannotbehigher than the long-term rate of growth in the economy where the businessoperates. which the businessoperates. The assumedlong-term growth rate beyond the budgetsandstrategic plansapproved by the Average rates of growth inoperatingrevenue are basedonmanagement’s expectations of future conditionsin the markets in Growth rate 137 ANNUAL ACCOUNTS AND NOTES 138
ANNUAL ACCOUNTS AND NOTES NOTE 13NOTE
PROPERTY, PLANT AND EQUIPMENT AND PROPERTY, PLANT es and fittings inleasedpremises are depreciated over the residual periodof theleaseif thisisshorter than the normaldepreciation period. 2) 1) Depreciation rates Accumulated depreciation/write-down at31December 2016 Translation differences Disposals Additionsacquisitions through Write-downs Depreciations Accumulated depreciation/write-down at31December 2015 Translation differences Disposals Write-downs Depreciations Accumulated depreciation/write-down at1 January 2015 Acquisition cost at31December 2016 Translation differences Disposals Additionsacquisitions through Additions Reclassifications Acquisition cost at31December 2015 Translation differences Disposals At 31December 2015 Additions At 31December 2016 Book value Reclassifications Depreciation method Acquisition cost at1 January 2015 (NOK million)
D Fixtur epreciation rates stated are valid for both2016and2015. 2) leased premises Improvements to 02 53 0%20-33% 20% 15-30% 10-20 % ierLna ierLinear Linear Linear Linear 0. 307 . 796 1 759.6 0.7 370.7 105.2 5. 483 . 981 1 918.1 1.1 448.3 155.0 4. 470 . 1 0.9 437.0 148.1 4. 521 . 943 1 954.3 1.7 562.1 143.9 9. 684 . 1 2.5 668.4 196.1 9. 742 . 1 2.3 704.2 198.3 5. -3. -. -5. -444.3 -254.5 -0.5 -131.4 -57.8 6. -3. -. -7. -474.9 -276.7 -1.0 -137.1 -60.1 4. 2. . 6. 523.2 260.4 1.5 220.2 41.1 3. 9. . 9. 425.7 194.7 0.9 191.4 38.7 16 77 . 212 330.9 231.2 0.4 87.7 11.6 01 1. -. -34 -35.0 -23.4 -0.1 -11.4 -0.1 48 8. -3. -731.6 -639.4 - -87.4 -4.8 01 1. -. -63 -40.9 -26.3 -0.2 -14.3 -0.1 49 -98.2 -4.9 . 6. 03 1. 188.8 116.0 0.3 64.4 8.1 . 1. -. 1. 29.5 18.5 -0.2 11.0 0.1 . 4. 03 84 126.9 78.4 0.3 47.0 1.3 . -. - - -6.7 6.7 . 1. 02 84 34.9 18.4 0.2 16.2 0.2 . 46.2 2.6 - - . 0.8 - - 0.8 - - - . 03 5.1 0.3 - 4.8 - 1) - Machinery/ fixtures - - . 3.4 3.4 - - - - . 5.6 5.6 - - 1) - Vehicles -5. -960.0 -857.0 - 183 247.1 198.3 - - - equipment
0. 1 302.2 7. 2 178.6 1. 2 818.8 IT IT
236.2 522.5 888.1 661.9 045.7 723.7 Total - - NOTE 14NOTE
in the company in2016. audit of the accounts. The company’s financial statements for 2016have thereby notbeen audited. There have beennooperations The subsidiary EVRY Financial ServicesUK Ltd has for 2016usedanexemption in the Companies Act (section 479A) relating to accounts inaccordance with the pastequity method: In addition to subsidiariesowned by the parent company, the following materialcompanies are consolidated in the Group EVRY Nordic Operations AS merged with EVRY Norge AS asacquiringcompany with accountingeffect from 1 January 2016. Shares insubsidiariesowned by parent company VENTURES JOINT AND COMPANIES ASSOCIATED SUBSIDIARIES, IN INTERESTS EVRYFinancing AS EVRYSweden AB Bekk Consulting AS Bekk Eye-share AS Span Systems CorporationInc EVRY IndiaPrivate Limited Infopulse Ukraina LLC EVRY Card Services AB EVRY AB Company EVRY Sweden Holding AB EVRYNorge AS Company Total EVRYØkonomitjenester AS EVRYDanmark A/S EVRY Card Services AS Stockholm, Sweden Stockholm, Sweden Stockholm, Sweden Viborg, Denmark New Jersey,USA Bangalore, India Registered office Registered office Kiev, Ukraina Jönköping Trondheim Stavanger Mo iRana Bærum Bærum Oslo Ownership share Ownership share 90.1 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % Voting share Voting share 90.1 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 139 ANNUAL ACCOUNTS AND NOTES 140
ANNUAL ACCOUNTS AND NOTES Summarised financial information - Buypass AS (000NOK): recognised in the consolidated accountsinaccordance with the equity method. The Group hasa50%share in the joint venture Buypass AS. The other 50 %share isheldby Norsk Tipping AS. The investment is Interests injoint ventures: Shares inassociated companiesare recognized in the consolidated accountsinaccordance with the equity method. Summarised financial information - Gecko Informasjonssystemer AS (000NOK): Norge AS in2017. The remaining shares inGecko Informasjonssystemer AS were acquires in January 2017. The company will bemerged with EVRY Shares inassociatedcompanies: Buypass AS Company Book value at31December 2016 Dividend The Group's share of this years profit/-loss Book value at1 January 2016 (NOK thousand) Buypass AS Company GeckoInformasjonssystemer AS Company Book value at31December 2016 Adjustment of previous years' share of profit/-loss The Group's share of this years profit/-loss Book value at1 January 2016 (NOK thousand) GeckoInformasjonssystemer AS Company 300 15 Assets Assets
552 919 Liabilities Liabilities 201 10
514 330 Norway Norway Country Country 99 Equity Equity 5
037 590 Ownership Ownership share share 50 % 34 % Operating Operating 212 revenue revenue 25
739 816 Informasjons- systemer AS Buypass AS Book value Book value (000 NOK) (000 NOK) Profit for -10 the year the year Loss for 30 58 350 58 14 53 -1 Gecko 2 2 2 -502
562 475 586 350 000 991 359 586 415 673
NOTE 16NOTE 15NOTE
Other non-current receivables OTHER RECEIVABLES Accounts receivable are recognised at their nominal value lessaprovision for losses. ACCOUNTS RECEIVABLE months isclassifiedascurrent, while the remaining amountisclassifiedas long-term in thestatement of financialposition. projects are reported netin the statement of financial position. Theproportion expected to beallocated over the following 12 are capitalisedon the balancesheetandallocated over the lifetime of the operationscontractinquestion.Implementation Implementation projects related to customer contracts which constitute anintegral partof subsequentoperationsdeliveries kortsiktigeAndre fordringer Age distributionaccounts receivable 31 December 2015 (NOK million) 31 December 2016 (NOK million) Implementation projects Deferred income (NOK million) Implementation projects Loss onreceivables to profit andloss Provision for lossesonreceivables Gross outstanding Total other current receivables Other current receivables Advanceincome tax Prepaid costs Other non-current receivables Net accounts receivable Total other non-current receivables overdue 80 % 78 % Not Less than overdue 30 days 13 % 14 % 30 -60days overdue 2 % 3 % 61 -90days vru 91-180days overdue 1 % 1 % 11.0631.12.2015 31.12.2016 31.12.2015 31.12.2016 11.0631.12.2015 31.12.2016 1 1
1 % 2 % 163.5 1 1 477.6 491.7 771.1 109.8 354.7 -14.0 65.9 19.7 77.2 32.9 52.5 1.6 180 days overdue More than 1 018.9
238.7 673.5 686.0 179.2 135.6 368.7 -12.4 10.7 57.5 29.2 23.1 52.3 4 % 2 % 141 ANNUAL ACCOUNTS AND NOTES 142
ANNUAL ACCOUNTS AND NOTES NOTE 18NOTE 17NOTE
The largest shareholders at31December 2016 were as follows: The company had535shareholders at the endof 2016. issued and fully paid-up. In accordance with the company’s Articles of Association, the number of shares is the sameas the number of ordinary shares The company hasonly oneclassof shares. All shares in the company have equal voting rightsandequal to dividends. The share capitalof EVRY AS consists of: SHARE CAPITAL, SHAREHOLDERS ETC. By endof 2016 this cashpositionamounted to NOK 124million. The Group hasactivity inUkraine and the authoritieshave implemented restrictions for transfer of cash from the country. The Group hasnorestricted depositsat31December 2016. December 2016. EVRY AS hasissuedparent company guarantees onbehalf of itssubsidiary companiesamounting to NOK 465millionasof 31 arising from the transition from definedbenefit todefinedcontribution pensionarrangements. guarantee of NOK 98millin favour of Norsk Tillitsmann Pensjon AS ascollateral for employees’ accruedcompensationrights NOK 197millionat31December 2016.Other bankguarantees amounted to NOK 168millionat31December 2016,includinga The Group hasissuedaguarantee inrespect of tax deductions from salariesdue to the tax authorities. The guarantee amount was sents the credit or debitbalancebetween DNBBank ASA andEVRY AS. other group companiesare sub-account holders. The bank netsallbalancesand withdrawals to create anetposition that repre- EVRY hasestablishedagroup bankaccountsystem inDNBBank ASA whereby EVRY AS operates the group account, while LIABILITIES DEPOSITS/GUARANTEE BANK yngen Bidco AS is wholly-owned by Lyngen Midco AS, which is wholly-owned by Lyngen Topco AS. Lyngen Topco AS iscontrolled by private equity funds advised 1) Total Other shareholders Polygon (PE)Holdings LTD Ordinary shares 31December 2016 Ordinary shares 1 January 2016 LyngenBidco AS Shareholder
by Apax Partners LLP. L 1) 267 267
338 338 Number
981 981 Par value (NOK) .5467 467 1.75 1.75
Book value
843 843 100.0 % Interest 88.0 % 11.8 % 0.2% (NOK)
217 217
NOTE 20 NOTE 19NOTE
Provision ismade for premises leases where the premises are notusedor are sub-letataloss. Premises sales andadministrative costsby improving the efficiency of itsstaff andsupport functionsatboth the Group anddivisional level. reduce the Group’s costbasein2016. The costreduction measures have continued in2016and the Group hasalsoreduced its en the Group’s profitability andlong-term competitiveness. Thesemeasures affected allbusiness areas and were intended to In 2015 there was a thorough review of the Group’s costbase. A rangeof costreduction measures was implemented to strength- Restructuring additional salesof this solution. contracts for this solution. This decision was basedonanoverall evaluation of bothriskandmarket prospects associated with that the DigOff solution would notbesold to additionalcustomers, but that thecompany would continue to carry out the existing The provision at31December 2016relates to the Group’s DigOff solution. TheBoard of Directors of EVRY AS decidedin2012 Onerous contracts PROVISIONS formations needed to convert to IBM’s platform technology. The reduction inaccruedexpenses ismainly related to significantcostsin2015 related to agreed transitionandcustomer trans- OTHER CURRENT LIABILITIES CURRENT OTHER Non-current at31December 2015 Non-current at31December 2016 Current at31December 2015 Current at31December 2016 Book value at31December 2016 Translation differences Provisions appliedin the year Additionsacquisitions through Provisions madein the year Book value at31December 2015 Translation differences Provisions appliedin the year Provisions madein the year Book value 1 January 2015 (NOK million) Current liabilities financial lease Provisions (note 20) Pre-invoicedcustomers to Accrued expenses (NOK million) Total other current liabilities Other current liabilities contracts Onerous- 1. 9. 29.7 399.5 19.8 1. 2. 29.4 56.8 126.7 126.7 13.8 13.8 1. 9. 0. 20 531.8 12.0 100.5 399.5 19.8 100.4 25.8 -. 374 -37 -. -392.9 -5.8 -43.7 -337.4 -6.0 -. 269 -. 17 -240.7 -1.7 -6.2 -226.9 -6.0 - - - -13.0 - - 77.7 100.2 - 15.8 - 510.2 - - Restruc- uigPremises turing - - - 7. 20 82.8 12.0 70.8 27.4 6.5 - - - - 11.0631.12.2015 31.12.2016 1 provisions 267.7 1048.4 228.3 776.3 0. 1 449.0 201.5 169.9 23.9 3.1 Other -. -13.6 -0.6 93 36.7 9.3 93 206.6 9.3 37 81.4 16.9 3.7 1.2 140.9 8.2 43 614.7 4.3 - - - 449.0 169.9
809.8 41.6 Total 3.0 - 143 ANNUAL ACCOUNTS AND NOTES 144
ANNUAL ACCOUNTS AND NOTES NOTE 21NOTE
Leasing costs are madeupas follows: financing opportunities related to theseleasingcontracts. facilities. The majority of these leasingcontractsincludeoptions to extend. There are norestrictions to the Group’s dividendor The Group hasentered into anumber of operationalleasingcontracts for software, IT equipment,officepremises andother Group aslessee–operationalleasing These leasingcontractsdonotimposeany restrictions on the company’s dividendpolicy or financing arrangements. Future minimum financial leasepayments: Assets leasedunder financial leasing contracts are as follows: 2022. The Group hasanoption to acquire the buildingof NOK 1after the expire of the leaseperiod. The Group hasentered into a financial agreement regarding leaseof datacenter atGjøvik. Thelease expires at31 December Group aslessee– financial leasing CONTRACTS LEASING Total leasingcosts Network capacity Software IT equipment, vehicles andother Office premises (NOK million) - noncurrent liabilities - current liabilities Of which: Present value of future minimumleasepayments Interest Total future minimumleasepayments After5 years 5 years to 1 1 year to Up (NOK million) Net book value Net Premises (data center) (NOK million) 1
1. 1 244.9 412.3 0. 2 305.0 218.5 429.3 2016 2016 2016 18.9 22.0 24.5 14.2 23.7 23.7 -2.5 3.1 6.5 3.8
286.1 417.0 461.7 270.7 105.9 2015 2015 2015 22.0 25.2 28.4 14.6 27.9 27.9 -3.2 3.0 9.9 3.9 responsible for maintaining the interior of the premises at the originalstandard. Total area of premises is4200m2. The leaseexpires in2035and the rent isadjusted annually inline with CPI.Rentalis payments are basedon tenant total m2.The Premises Data center -Fet responsible for maintaining the interior of the premises at the originalstandard. Total area of premises is5900m2. The leaseexpires in2020and the rent isadjusted annually inline with CPI.Rentalis payments are basedon tenant total m2.The Premises lease-Maskinveien, Stavanger responsible for maintaining the interior of the premises at the originalstandard. Total area of premises is6000m2. The leaseexpires in2023and the rent isadjusted annually inline with CPI.Rentalis payments are basedon tenant total m2.The Premises lease-Sluppen, Trondheim responsible for maintaining the interior of the premises at the originalstandard. Total area of premises is11000m2. The leaseexpires in2018and the rent isadjusted annually inline with CPI.Rentalis payments are basedon tenant total m2.The Premises lease-Sandslimarka, Bergen responsible for maintaining the interior of the premises at the originalstandard. Total area of premises is9500m2. The leaseexpires in2027and the rent isadjusted annually inline with CPI.Rentalis payments are basedon tenant total m2.The Premises lease-Solna,Stockholm responsible for maintaining the interior of the premises at the originalstandard. Total area of premises is27000m2. The leaseexpires in2023and the rent isadjusted annually inline with CPI.Rentalis payments are basedon tenant total m2.The Premises lease-Fornebu, Bærum 21 000m2issubleased. responsible for maintaining the interior of the premises at the originalstandard. Total area of premises is41000m The leaseexpires in2019and the rent isadjusted annually inline with CPI.Rental payments are basedon total m Premises lease-Skøyen, Oslo Significant leaseagreements cancellation option fall dueas follows: The minimum future operationalleasepayments inrespect of contracts with no 1 to 5 years to 1 Total future minimumleasepayments After5 years 1 year to Up (NOK million) 11.0631.12.2015 31.12.2016 9. 1 1 691.8 2. 3 1 3 822.8 1 321.1 809.9 2 2 , whereas . The tenant is tenant . The
817.9 678.7 263.9 596.9 145 ANNUAL ACCOUNTS AND NOTES 146
ANNUAL ACCOUNTS AND NOTES NOTE 22 NOTE
hierarchy. During the reporting period1 January 2016 to 31 December 2016, there were no transfers between the levels in the fair value As of 31December 2016: due to their short-term nature. Non-current interest bearingliabilitiesare measured atamortisedcost. For accountsreceivable, accountspayable andother short-term items, fair values are considered to beequal to carrying values L L Level 1: offair determination value. value hierarchy, which applies three levels/groups for financial instruments. Thelevels/groups reflect theinformation used for the Financial instruments that are valued at fair value in the statement of financial positionare grouped on thebasisof the following fair Fairhierarchy value FAIR OF VALUE DETERMINATION AND INSTRUMENTS FINANCIAL OF CLASSIFICATION Total liabilities Other current liabilities Total assets Deductions anddutiespayable Bank deposits Accounts payable Other current receivables Non-current non-interest bearingliabilities Accounts receivable Assets Non-current interest bearingliabilities Liabilities Other noncurrent receivables (NOK million) evel 3: evel 2:
specific/subjective information. Instruments Instruments Q uoted (unadjusted) pricesinactive markets for identicalassetsor liabilities. for which there isnoobservable market dataand the determination of fair value accordingly usescompany for which observable information isavailable, but for which there isnoactive market. value level Fair 155 - - - 135.5 2 Fair value through 155 - - - 135.5 OCI ------3 ------990.2 ------771.1 - - - - 1 ------54.1 - - Fair value and loss through through profit profit
Receivables Loans and
292.9 477.6
Available for sale - 9 - - 1 - - - 878 878 897.8 897.8 897.8 - - - 877 877 877.7 877.7 877.7 - - - - - 6 - - liabilities financial
785.1 0. 1 201.6 0. 6 808.1 Other - 3 - - 902 990.2 990.2 - - 711 771.1 771.1 - - 155 135.5 135.5 - - 1 - - 5. 54.1 54.1 -
9
0. 1 201.6 9. 3 292.9 7. 1 477.6 0. 6 808.1 2. 9 920.6 value book Total
201.6 292.9 477.6 808.1 920.6 920.6 value Fair As of 31December 2015: hierarchy. During the reporting period1 January 2015 to 31 December 2015, there were no transfers between the levels in the fair value Total assets Total liabilities Bank deposits Other current liabilities Other current receivables Deductions anddutiespayable Accounts receivable Accounts payable Other non-current receivables Non-current interest bearingreceivables Non-current non-interest bearingliabilities Non-current interest bearingliabilities Liabilities Other assets financial (NOK million) Assets Fair value level 9. 01 90.1 90.1 - - - - 90.1 2 161 - 196.1 2 Fair value through 161 - 4 - 196.1 9. 8 - - - 90.1 OCI - - 902 - - 902 900.2 900.2 - - 900.2 ------1 - - - - 1 ------1 - - - - 1 ------573 573 577.3 577.3 577.3 ------5. 11 51.1 51.1 - - 51.1 - - - - 12 - - 12 1.2 1.2 - - 1.2 ------4 - - - - profit and profit and Fair value through through loss Receivables Loans and
4. 3 - - 545.3 1. 1 - - 018.9 7. 1 - - 673.5 - Available for sale - - 161 196.1 196.1 - - liabilities financial
220.1 0. 1 809.8 5. 1 053.3 7. 4 779.6 Other 8
4. 3 841.1 0. 1 809.8 1 018.9 5. 1 053.3 1 673.5 7. 4 779.6 1. 8 310.2 value book Total
841.1 809.8 018.9 053.3 673.5 779.6 310.2 310.2 value Fair 147 ANNUAL ACCOUNTS AND NOTES 148
ANNUAL ACCOUNTS AND NOTES NOTE 23 NOTE Cash flow The result for EVRY Danmark A/S are presented below: no longer includedaspartof the EVRY Norway segment. arate lineentry in the incomestatement: “Profit/-loss after tax for the year from discontinuedoperations”. Theoperationissimilarly Because of this, the operatingresult for the company hasbeenstated separately inaccordance with IFRS5andisshown asasep- It was at the endof December 2014decided that the SAP operationsof EVRY Denmark A/S would undergo controlled closure. DISCOUNTINUED OPERATIONS Net cash flowNet Financing Investing Operating (NOK million) Total equity andliabilities Current liabilities Non-current liabilities Equity Total assets Current assets Non-current assets (NOK million) Profit/-loss before tax from discontinued operations itemsNet financial Operating profit Expenses Revenues (NOK million) 11.0631.12.2015 31.12.2016 2016 2016 -0.8 -0.8 -1.6 0.1 0.1 0.1 1.7 0.1 0.2 2.1 2.2 ------16.8 -14.5 2015 2015 28.3 39.6 30.4 38.9 26.0 11.5 -1.8 5.5 1.8 - - - - - NOTE 26 NOTE 25 NOTE 24NOTE There have beennoevents after 31 December that have amaterial effect on the financialstatement for 2016. DATE SHEET BALANCE AFTER EVENTS position, andnomaterial provisions have therefore been made related to these casesasof 31December 2016. information currently available, these matters will beresolved without causingany material impairment to the Group’s financial interpretation of contracts. While the outcome of these matters isuncertain,managementof the opinion that, on the basisof the EVRY is from time to time involved inanumber of disputes/legal proceedings inconnection with deliveries of products and the MATTERS LEGAL OTHER AND DISPUTES For information aboutremuneration to executive managementand the board of directors, seenote 6. The Group hasnothadany significant transactions with Lyngen Bidco or any other indirect shareholders in the ownership period. either the Posten group or the Telenor group. Telenor group have beencarriedoutonnormalcommercial terms. There are noguarantees for sales to any of the companiesin group mainly relate to communicationservices,network servicesand telephony. All transactions with Posten group and with the Posten group mainly relate to freight anddistribution.Servicespurchased by the EVRY group from companiesin the Telenor mainframe, UNIX,networks solutionsandofficeplatforms. Servicespurchased by the Group from companiesin the Posten group and to companiesin the Telenor group relate mainly to operatingservices for businesscriticalIT systems, including a number of companiesinboth the Posten group and the Telenor group. Servicesdelivered by the Group to companiesin the In the period that the Group was controlled by Posten and Telenor, the Group was party to agreements for the saleof services to owned 40.0%and30.2%respectively of the shares of EVRY AS. private equity funds advisedby Apax Partners LLP. Until16March 2015,Posten Norge AS and Telenor Business Partner Invest AS Lyngen Bidco AS controlled 88%of the shares inEVRY AS asof 31December 2016.Lyngen Bidco AS isindirectly controlled by PARTIES RELATED 149 ANNUAL ACCOUNTS AND NOTES 150
ANNUAL ACCOUNTS AND NOTES Statement of comprehensive income 1 January -31 December 1 January AS EVRY Total profit/-loss for the year Total comprehensive income Cash flowhedges Items whichmaybe reclassified over profit andlossinsubsequentperiods (after tax) Actuarial gains/-lossesondefinedbenefitpensionplans Items whichwillnot be reclassified over profit andloss (after tax) Comprehensive income Profit/-loss for the year Taxes Profit/-loss before tax itemsNet financial Financial expense Other income financial Income from investment insubsidiaries Operating profit/-loss Other operatingcosts Salaries andpersonnelcosts Operating revenue (NOK million)
Note 6 5 5 3 4 2 -299.1 -186.7 -186.7 -112.3 -147.2 -128.2 582.5 281.4 172.9 -34.9 -19.0 17.0 2016 2.0 - - -193.2 -246.5 -141.2 -105.3 137.6 138.2 658.1 365.6 151.3 103.9 -55.6 -53.4 2015 -0.7 1.4 - Statement of financial position Salim Nathoo BÆRUM, 30MARCH 2017,BOARD OF DIRECTORS OF EVRY AS As of 31 of December As AS EVRY CHAIRMAN OF THE BOARD Göran Lindahl Ingrid Lund Non-current assets Deferredliabilities tax Non-current non-interest bearingliailities Non-current interest bearingliabilities Liabilities Total equity Share capital Paid-in other equity Equity Other current receivables Current assets Total non-current assets Total financial non-current assets Other assets financial Shares insubsidiaries Total intangibleassets Deferredasset tax Non-current interest bearingreceivables (NOK million) Total non-current liabilities Total liabilitiesandequity Total liabilities Total current liabilities Other current liabilities Bank overdraft Deductions anddutiespayable Tax payable Accounts payable Total current assets Total assets
Rohan Haldea Leif Teksum Jan Dahlström Francisco Menjibar Al-Noor Ramji Ola Hugo JordhøyOla CEO Ellen deKreij Kristin Krohn Devold Björn Ivroth Note 11 10 6 9 8 6 9 9 7 6 Louise Sondergaard Eirik Bornø 31.12.2016 5 1 7 7 5 1 5 7 6 1 1 7 135.5 467.8
501 2 550.1
177.3 177.3 5. 3 158.8 1. 3 017.9 3. 7 7 1 435.9 5 356.7 390.5 965.7 1. 7 4 1 613.1 595.2 300.9 217.7 3 294.3 1. 7 613.1 79.2 79.2 77.6 -0.2 0.4 5.8 - - 31.12.2015
467.8
196.5 892.7
100.4 172.6 172.6 404.0 223.1 755.3 564.1 564.1 401.9 965.7 736.7 513.6 002.4 511.2 736.7 91.1 16.1 0.1 9.2 - - - 151 ANNUAL ACCOUNTS AND NOTES 152
ANNUAL ACCOUNTS AND NOTES Statement of cash flow 1 January -31 December 1 January AS EVRY Bank depositsat31.12. Currency movements inliquidassets Net cash flowNet fromoperations Bank overdraft at1.1. Change inother accruals Net changeinliquidassetsover the year Change inaccounts payable Net cash flowNet from financing Paid interests Group contribution received/paid Interest income/-expenses Purchase/sale of own shares Write-down of shares insubsidiaries Dividends paid Tax paidin the period Borrowings repaid Net cash flowNet frominvestments Share of profit/-loss insubsidiaries New borrowing (short andlong-term) Cash from/to financing: Investment ingroup companies Cash from/to investments:Cash from/to Profit/-loss before tax Cash from/to operations: Cash from/to (NOK million)
-1 -1 2 -343.8 -892.7 -351.2 -277.3 -958.7 -172.9 -147.2
217.7 137.2 301.1 906.1 720.2 -44.2 2016 26.2 -3.4 -7.4 ------1 -2 3 -892.7 -304.7 -454.9 -400.0 -144.6 -170.2 -151.3 -246.5
292.5 003.6 376.7 450.3 -37.8 -44.4 -10.3 -95.3 2015 4.8 - - - - Statement of changes in equity 1 January -31 December 1 January AS EVRY Equity at1 January 2015 (NOK million) Purchase of own shares Dividend Comprehensive income Profit/-loss for the 2015 year Allocation of equity Equity at31December 2015 Dividend Comprehensive income Profit/-loss for the 2016 year Allocation of equity Equity at31December 2016
Share capital 467.8 467.8 467.8 shares Own 053 -0.5 0.5 - - other equity -2 2 -446.4
Paid-in Paid-in 197.4 755.3 0. 2 205.2 550.1 4.3
-1 -1 -193.2 -186.7 -112.3
1. 4 612.8 0. -1 003.6 137.6 446.4 0. -1 906.1 205.2 equity Other Other - - 1 -
Total equity 3 -193.2 -186.7 -112.3
277.4 003.6 137.6 223.1 906.1 017.9 4.8 - - 153 ANNUAL ACCOUNTS AND NOTES 154
ANNUAL ACCOUNTS AND NOTES Notes to Financial Accounts EVRY AS EVRY NOTE 3 NOTE 2 NOTE 1 NOTE
accumulated during the periodof ownership by the parent company. Income from investment insubsidiariesboth2016and2015relates to received group contributionanddividends from equity SUBSIDIARIES IN INVESTMENT FROM INCOME See note 6-Group regarding remuneration to executive managementandBoard of Directors. The company didnothave any employees in2016nor in2015and the salariesandpersonnelcostsrelate to board fees. SALARIES AND PERSONNEL COSTS PERSONNEL AND SALARIES For information aboutaccountingprinciples,seegroup accountsnote 1. result from profits earnedduring theperiodof ownership. distributions accrued for in these companiesare recognised as financial incomein theperiod to the extent that they Shares insubsidiariesare recognised in the company’s accountsinaccordance with the costmethod.Dividendsandother profit - Financial instrumentsat fair value through profit or lossand financialinstruments available for sale are recognisedat fair value The financial statements are prepared using thehistorical costprinciples, with the exception of the following items: Norwegian Accounting Act andgenerally accepted accountingprinciples. principles follow the international accountingstandards (IFRS)andpresentation and the disclosures are inaccordance with the plication of simplifiedIFRS(2014)asprescribed by theMinistry of Finance 3 November 2014. Thismeans that theaccounting The accountsof EVRY AS are prepared inaccordance with the section3-9in the Norwegian Accounting Act andregulation onap- PRINCIPLES ACCOUNTING Total salariesandpersonnelcosts Charged other companies Social securitySocial tax Salaries andremuneration to Board of Directors (NOK million) 2016 2.0 0.6 1.4 - 2015 1.4 0.9 0.1 0.4 NOTE 5 NOTE 4 NOTE Other operatingcosts comprise: COSTS OPERATING OTHER FINANCIAL ITEMS reinvoiced by the company. Fees for other assuranceservicesincludesattestation servicesrelated to ISAE 3402andSAS 70. These expenses are mainly the amountsinvoiced inrespect of auditrelated and tax related services. The amountsshown are exclusive of value added tax. The following table shows remuneration to the Group’s auditor, Ernst & Young AS, inrespect of auditservicesdelivered, including Auditor’s remuneration (NOK million) Total other operatingcosts Other operatingcosts (NOK million) Total auditor's remuneration Feesfor services tax Fees for other assurance services Other fees Audit fee (NOK million) Consultant costs Total other financial expenses Other Write-down of shares insubsidiaries Currency losses External interest expenses Intra-group interest expense Total other financial income Currency gains External interest income Intra-group interest income 8.874 0.659 4.628 2.412 1.175 582.5 176.6 330.9 281.4 194.5 2016 2016 2016 17.0 17.0 66.2 12.7 74.2 8.9 - - 6.944 0.582 4.001 0.746 1.616 103.9 101.9 658.1 297.6 231.3 365.6 273.3 2015 2015 2015 62.2 53.0 13.9 13.6 78.7 2.0 155 ANNUAL ACCOUNTS AND NOTES 156
ANNUAL ACCOUNTS AND NOTES NOTE 7 NOTE 6 NOTE Deferred tax/tax assetarisesinrespect of the following differences asof 31 December: values. Deferred tax/tax assetiscalculated on the basisof the differences which exists at year-end between accountingand taxation TAXES See note 17-Group for information about the group banksystem. As of 31December 2016 the company hasnooverdraft on the group cashmanagementaccountarrangement. NOK 465million.Other bankguarantees amounted to NOK 29million. count arrangement.Inaddition, the company hasissuedparent company guarantees onbehalf of itssubsidiariesamounting to EVRY AS hasissuedaguarantee of NOK 350million for borrowings by subsidiariesaspartof the group cashmanagementac- LIABILITIES GUARANTEE Deferred tax/-deferredasset tax Grossdifferences timing Lossescarried forward Non-current receivables/loans Financial instruments Provisions (NOK million) Change indeferred tax Tax onequity transactions Change indeferred tax to profit andloss Changes indeferred tax forBasis payable tax Lossescarried forward Change in timing differences to profit andloss Permanent differences Profit before tax offorbase Calculation tax the year Totalcost tax Change indeferred tax Tax payable Tax cost for the year comprises Taxfor the year Expenses notdeductible Tax rate change 25% of profit/-loss before tax(27%in2015) Effect of permanentdifferences 11.0631.12.2015 31.12.2016 -330.0 -215.8 -135.6 -147.2 142.4 -79.2 -95.3 -60.4 -34.9 -34.9 -34.9 -34.9 -36.8 21.3 0.1 4.8 1.9 - - - - -246.5 111.5 127.8 -73.4 -53.4 -53.4 -53.4 -53.4 -66.6 64.3 16.1 32.7 73.4 48.7 45.4 12.2 -6.5 -4.6 0.9 - - NOTE 10NOTE 9 NOTE 8 NOTE See note 18-Group for information aboutshare capital,shareholders etc. SHARE CAPITAL, SHAREHOLDERS ETC. Non-current interest bearingreceivables are duein2019. LIABILITIES AND RECEIVABLES ACCOUNTS INTRA-GROUP The wholly-owned subsidiary EVRY Nordic Operations AS merged with EVRY Norge AS with accountingeffect from 1 January 2016. Shares insubsidiariesare recognised inaccordance with the costmethod. SHARES IN SUBSIDIARIES Total receivables EVRYØkonomitjenester AS EVRYDanmark A/S EVRY Card Services AS Total liabilities Other current non-interest bearingliabilities Accounts payable Liabilities Group contribution Current non-interest bearingreceivables Non-current interest bearingreceivables Receivables (NOK million) Total Fellesdata AS EVRY Sweden Holding AB EVRYNorge AS Stockholm, Sweden Viborg, Denmark Registered office Trondheim Mo iRana Bærum Bærum 100 % 100 % 100 % 100 % 100 % 100 % Share Voting 100 % 100 % 100 % 100 % 100 % 100 % 1 1
6. 1 1 563.4 172.9 390.5 2016 - - - - (NOK million) Book value 5 5
245.3 137.2 111.5 539.3 401.9 965.7 607.8 2015 42.3 43.5 1.1 0.2 1.1 - -
157 ANNUAL ACCOUNTS AND NOTES 158
ANNUAL ACCOUNTS AND NOTES NOTE 12NOTE 11NOTE See note 24-Group related parties for further information. For information aboutremuneration to executive managementandboard of directors, seenote 6-Group. There have beennosignificant transactions with theshareholders in2015or 2016. PARTIES RELATED See note 4-Group for information about financial instruments. end 2016. recognised aspartof comprehensive income. The market values of these hedginginstruments were NOK -90.8millionat year cross currency swaps on this EURdebt to eliminated the EURexposure. Changesin the market value of hedging instrumentsare Parts of the financing agreement isdebtinEUR, total EUR609million. Thecompany hasentered into EURNOK andEURSEK FINANCIAL INSTRUMENTS Total non-current interest bearingliabilities Arrangement fee financing Liabilities to credit institutions (NOK million) 11.0631.12.2015 31.12.2016 5 5 -192.6
5. 3 3 158.8 351.4
404.0 500.0 -96.0 159 ANNUAL ACCOUNTS AND NOTES 160
ANNUAL ACCOUNTS AND NOTES Auditor’s report Postboks 1156Sentrum,NO DronningEufemias gate 6, NO-0191 Oslo Ernst&Y Stats autoriserterevisorer oungAS
- 0107 Oslo
Medlemmerav dennorske revisorforening ww F T Foretaksregisteret:NO 976389 387 MVA ax: +4724 00 24 01 lf: w.ey.no +4724 00 24 00
161 ANNUAL ACCOUNTS AND NOTES 162
ANNUAL ACCOUNTS AND NOTES 163 ANNUAL ACCOUNTS AND NOTES ABOUT PRODUCTION
Project and text: EVRY and WergelandApenes Design and layout: Mission Layout Annual accounts and notes: Artbox Photo: CF-Wesenberg, John Angerson, GettyImages and Johnér Production and print: Runestein AS