ANNUAL REPORT 2018 Picking up speed through collaboration ANNUAL REPORT 2018 Picking up speed through collaboration Picking up speed through collaboration EVRY seeks to have a customer-centric and partner-driven approach as well as a corporate culture that supports innovation and collaboration. In order for EVRY to pick up speed and succeed in a market characterised by a fast pace of innovation, close collaboration is crucial. This applies in relation to internal collaboration at the company as well as to our collaboration with our partners and, not least, with our customers. In 2018 EVRY therefore put extra emphasis on collaboration, as indicated by the title of this year’s annual report. 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. ABOUT EVRY EVRY is a leading Nordic IT services and software company aiming to create Digital Advantage for people, businesses and society as a whole. Rooted in our Nordic values and combining business understanding, technology expertise and local proximity we strive to enable our customers to make use of technology in the best possible way. We leverage our Nordicness to do business in more than 18 countries and our 8 800 employees are passionate about shaping the future – today. This annual report is published in English. The EVRY Annual Report 2018 is available at investor.evry.com EVRY IN BRIEF EVRY IN BRIEF EVRY IN BRIEF CEO letter 06 Contents Vision, values and business goals 10 Main features in 2018 12 Case study: Financial Services 14 01 Case study: EPIM 18 Case study: Volvo 22 BUSINESS PLAN BUSINESS PLAN BUSINESS PLAN BUSINESS PLAN BUSINESS PLAN Our framework 28 Get the basics right 30 Operational excellence 36 Customer centricity 42 02 Employee engagement & culture 48 Innovation 56 INVESTOR INFORMATION INVESTOR INFORMATION INVESTOR INFORMATION INVESTOR INFORMATION INVESTOR INFORMATION CFO letter 66 The EVRY share 68 Key figures 74 03 Alternative performance measures 76 BUSINESS REPORT BUSINESS REPORT BUSINESS REPORT BUSINESS REPORT BUSINESS REPORT About EVRY 82 EVRY’s executive management team 88 04 Key figures by business area 90 FROM THE BOARDROOM FROM THE BOARDROOM FROM THE BOARDROOM FROM THE BOARDROOM FROM THE BOARDROOM EVRY´s Board of Directors 94 Corporate governance 96 05 Report from the Board of Directors 2018 102 FINANCIAL NOTES STATEMENTS & ANNUAL ACCOUNTS AND NOTES FINANCIAL STATEMENTS & NOTES FINANCIAL NOTES STATEMENTS & FINANCIAL STATEMENTS & NOTES Group financial statements & notes 113 EVRY ASA financial statements & notes 162 06 Independent auditor's report 172 Key figures 2018 2017 2016 2015 2014 2013 2012 Operating revenue (NOK million) 12 912 12 596 12 246 12 860 12 773 12 600 12 731 EBITA1) (NOK million) 1 582 1 569 1 322 811 813 764 691 EBITA-margin1) 12.3 % 12.5 % 10.8 % 6.3 % 6.4 % 6.1 % 5.4 % Free cash flow (NOK million) 997 913 964 592 652 473 297 Order backlog (NOK bn) 19.4 18.0 20.8 17.1 18.0 16.6 15.3 No. of employees 8 807 8 545 8 864 9 422 10 350 10 323 9 873 Employee satisfaction (total score 100) 81.7 81.6 80 .1 75.4 n/a n/a n/a Environmental performance (CDP) A A- A 97 91 89 78 OPERATING REVENUE NOK MILLION EBITA1) NOK MILLION FREE CASH FLOW NOK MILLION 1 582 13 000 12 912 1 600 1 200 997 12 500 1 400 1000 12 000 1 200 800 11 500 1 000 600 11 000 800 400 10 500 600 200 10 000 400 0 2016 2017 2018 2016 2017 2016 2017 2018 2012 2013 2014 2015 2012 2013 2014 2015 2018 2012 2013 2014 2015 1) Before other income and expensed 2 | ANNUAL REPORT 2018 EVRY IN BRIEF EVRY IN BRIEF OUR INDUSTRIES > Financial Services Innovating IT today, defining banking for tomorrow > Insurance Digital insurance operations that support innovation and growth BUSINESS PLAN > Public Services Digitalization partner for the benefit of citizens and public sector organisations > Healthcare Solutions for simplifying and increasing the safety of patient care BUSINESS PLAN > Retail Smart solutions for a seamless customer experience > Logistics Creating sustainable and intelligent logistics for more demanding customer requirements > Energy A complete spectrum of services adapted to the sector’s needs > Industry & Manufacturing Increasing productivity through digital business processes INVESTOR INFORMATION > Communications, Media & Tech Creating digital advantage by focusing on the customer’s customer > Professional Services Transformative solutions for leveraging digitalisation INVESTOR INFORMATION OPERATING REVENUE 2018 bn nok 19.4 EVRY Norway 46% ORDER BACKLOG BN BUSINESS REPORT NOK 12.9 EVRY Sweden 27% EVRY Financial Services 27% BUSINESS REPORT 12.3% EBITA MARGIN1) FROM THE BOARDROOM OUR ENVIRONMENTAL PERFORMANCE A 2018 A- 2017 FROM THE BOARDROOM A 2016 8 800+ 97 2015 NUMBER OF EMPLOYEES 91 2014 FINANCIAL NOTES STATEMENTS & Carbon Disclosure Project (CDP) 89 2013 FINANCIAL NOTES STATEMENTS & scores, which indicate companies´ 2012 environmental performance. 78 81.7points EMPLOYEE SATISFACTION ANNUAL REPORT 2018 | 3 EVRY IN BRIEF EVRY in 01 Brief BUSINESS PLAN 06 CEO letter 10 Vision, values and business goals INVESTOR INFORMATION 12 Main features in 2018 14 Case study: Financial Services 18 Case study: EPIM 22 Case study: Volvo BUSINESS REPORT FROM THE BOARDROOM FINANCIAL NOTES STATEMENTS & “EVRY is committed to being the Nordic alternative: close by, easy to work with, transparent with its customers and capable.” CEO LETTER Collaboration is the key to success EVRY has come a long way in terms of repositioning itself from an IT service provider into a business partner that creates digital advantage for, and together with, its customers. In 2018, EVRY took new and important steps to address the changes taking place in the market, and we see significant potential for the company in the years ahead. 6 | ANNUAL REPORT 2018 EVRY IN BRIEF Two big waves are closing in on the global IT landscape. A KNOWLEDGE INTENSIVE ORGANISATION The first wave, which has already reached us, is EVRY is a knowledge business, so access to leading about efficiency improvements, standardisation technology and industry expertise is business- and automation. Large global providers and scala- critical for us. We are building the weight of expertise ble cloud services are creating stiff competition in needed to digitalise the Nordic region. By recruiting infrastructure services. This means that the transaction- the right people and developing our employees’ oriented aspect of the IT industry is becoming a expertise, we can deliver comprehensive, future- mature market that is growing slowly and offering oriented solutions that benefit key sections of business decreasing margins. The next wave, which is racing and industry as well as society as a whole. One of toward the shore, is based on disruptive technology the major challenges for success going forward will BUSINESS PLAN and how this can create greater business value by be winning the battle for talent. EVRY has therefore radically changing the value propositions, processes established strong collaborations with educational and business models of our customers. institutions. We invested heavily in our workforce in 2018, and this included us taking our own medicine A BUSINESS PARTNER FOR DIGITAL and launching cognitive HR for both recruitment and TRANSFORMATION competence development. Using robotics to carry In the face of these waves, we have chartered a out personality and game-based ability assessments new course. Instead of continuing as an IT services means we can screen candidates objectively, company primarily focused on scale and cost and this is making the recruitment process more INVESTOR INFORMATION efficiency, we are working toward becoming a busi- efficient and helping us to select the right people. ness partner for our customers. EVRY’s knowledge Our solution, which we are now delivering to a of business, technology, customers and markets is number of customers, is helping us to employ enabling new value creation. In 2018 we worked on more women. 40 percent of the new graduates we shifting our focus from transaction-based IT services recruited in 2018 were women. to value-based services that offer greater profitability. We have increased our use of disruptive technology, A LEADING NORDIC CONSULTING COMPANY and are combining robotics, artificial intelligence Investment in technology is increasingly being and analytics, among other technologies, to support managed directly by companies’ business units, and our customers’ businesses. we now talk directly to the managers of business units Understanding business as well as technology to an increasing degree. This means that we need to will be an important requirement for our journey be experts in how new technology can create advan- BUSINESS REPORT over the coming years. EVRY is committed to being tages in the industries on which we have chosen to a partner for value creation and to contributing to focus. In 2018, we hired around 800 new employees the digitalisation of the Nordic region. We will also in Norway and Sweden, which has helped give us the seek, in conjunction with our partners, to deliver the injection of expertise we need to meet our custom- infrastructure services needed to make this possible. ers’ digital needs. We are now setting up seven Nordic-wide areas EVRY EMBRACES DIVERSITY of expertise to provide bigger and better specialist Our most important priority for the coming years is environments for our consultants: Digital Experience, to ensure that our employees have the right exper- Business Consulting, Business Applications, Cloud & tise for us to be relevant to our customers.