EVRY ASA Q1 2019 PRESENTATION CEO PER HOVE CFO HENRIK SCHIBLER
Group highlights Agenda Business update Financial highlights Concluding remarks Q&A
Group highlights EBITA 2 (NOKm) REVENUE (NOKm) BACKLOG (NOKbn) 3 330 332 18.6 FINANCIALS ORGANIC GROWTH 1 EBITA MARGIN 2 Cash conversion (LTM) 3.6% 10.0% 97.0% Continuing organic growth and stable EBITA margin improvements activities on track in Sweden Utilization rate Q1’19 was 78.5% from more activities in Norway, offset by lower activity level in Sweden Increased cash conversion in Q1’19 to 97.0%, up from 70.3% in Q1’18 BUSINESS Financial Services continues to achieve revenue growth, driven by demand across all solution and service areas UPDATE Established a Nordic consulting organisation with seven practices Announced a Nordic initiative to leverage the growth potential based on data economy drivers Signed the biggest public tender contract in Norway within RPA 3 with the municipality of Stavanger Karin Schreil and Johan Torstensson will join the company as, EVP Sweden and EVP DPS 4 , respectively in Q2’19 1) ADJUSTED FOR CURRENCY EFFECTS, ACQUISITIONS AND DIVESTMENTS 3) RPA = ROBOTICS PROCESS AUTOMATION 2) BEFORE OTHER INCOME AND EXPENSES 3 4) DPS = DIGITAL PLATFORM SERVICES
EVRY #1 in customer satisfaction in Sweden General customer satisfaction in sourcing, Sweden (percent) 1. EVRY, 79 2. TCS, 79 3. Telenor 78 4. Accenture, 77 5. Salesforce, 73 6. Microsoft, 73 7. CGI, 72 8. SAP, 71 9. Wipro, 71 10. Atos, 71 11. Telia, 71 12. Capgemini, 70 13. Atea, 70 14. HCL, 67 15. DXC, 65 16. Fujitsu, 65 17. IBM, 65 18. Tieto, 60 19. Oracle, 53 4 SOURCE: WHITELANE AND PA CONSULTING (24 APRIL 2019)
Business update Photo: EVRY Innovation Hub 5
Seven consulting practices supporting the customer journey Photo: EVRY Innovation Hub, interns 2018
Our 7 practices support needs throughout the entire customer journey Clarity of Realizing Understanding Enabling value Sustaining direction creation potential of possibilities performance Digital Experience Business Consulting AI, Analytics & Insight Application Innovation Business Applications Security & Risk Cloud & Infrastructure 7
Achieving more with less through Robotics automation of Public Services Clarity of Realizing Understanding Enabling value Sustaining direction creation potential of possibilities performance Leverage learning to Increased design Pilot run to productivity for requirements build insight in digital citizen Robotics services – Need to merge capabilities “New three munici- Automation of Stavanger” palities migration with Robotics (RPA) 8
Strengthening innovativeness to meet an unpredictable energy future Clarity of Realizing Understanding Enabling value Sustaining direction creation potential of possibilities performance De-regulation Co-innovation & changing lab piloted customer behavior Ramping up for increased innovation Decision to Strategic effectiveness invest in options – how «innovation to meet the lab as-a- future service» capabilities 9
Innlandskraft AS and EVRY establish EnergiLab! Managing Director for Innlandskraft, Maren Kyllingstad, says that the need for increased competition in a market that is in the process of being consolidated is an important reason for the collaboration with EVRY and EnergiLab. "We see that profitable customer growth must take place through the development of new products and services that support the core business stream“ , says Kyllingstad "Our goal is that customers, as a consequence of EnergiLab, and our new way of working with innovation, will perceive our brand Eidsiva Energi and Gudbrandsdal Energi as exciting and forward-looking energy companies that offer “something extra ". Through the job done for phase 0, we are confident that EVRY will provide us with the necessary expertise and methodology to achieve this goal.“ , adds Arne Grini, Head of Development and Service Delivery in Eidsiva Market. 10 PRESS-RELEASE 6 MAY 2019
The future of retail – AI enabled recommendation of the best wines Clarity of Realizing Understanding Enabling value Sustaining direction creation potential of possibilities performance Prototyping Rapid shifts in the future customer Increased end store behaviour customer satisfaction – “Impress the Tomorrows customer” Wine Expert Understanding gets AI- of new retail enabled trends 11
Nordic initiative to leverage data economy drivers
Nordic initiative to leverage the growth potential based on data economy drivers and EVRY position KEY MODEL PRINCIPLES Customer-centric applications MARKET CUSTOMERS FOCUSED Value-adding data-driven services Access through EVRY Market Units and partners Platform and eco-system for innovation and new OPEN PLATFORM business models Value-adding services through OPEN Open for partnering (upstream & downstream) API mediation PLATFORM Driven by API mediation DATA AND SERVICE ASSETS Customer’s own data Sourced from EVRY and partners Data integrated from external sources FLEXIBLE Data managed by EVRY Internal meta-data 13
Financial highlights
Group financial highlights FINANCIAL EVRY GROUP NORWAY SWEDEN SERVICES Organic revenue growth Q1 2019 Q1 2019 Q1 2018 Q1 2019 Q1 2018 Q1 2019 Q1 2018 Q1 2019 Q1 2018 REVENUE Consulting 3 330 3 208 1 501 1 465 816 839 887 819 NOKm Services 7.6% ORGANIC 3.6% 0.5% 2.5% -2.8% -2.3% -3.8% 8.7% 4.7% GROWTH 1 Application Services EBITA 2 8.6% 332 320 157 117 31 65 94 92 NOKm Digital EBITA Platform 10.0% 10.0% 10.4% 8.0% 3.8% 7.7% 10.6% 11.2% MARGIN 2 Services 1.9% CASH CONVERSION FREE CASH FLOW (FCF) EPS 2 BACKLOG Fulfilment Services 97.0% LTM Mar’19 NOK -62m Q1’19 NOK 0.50 Q1’19 NOK 18.6bn 31 Mar’19 -21.3% 1) ADJUSTED FOR CURRENCY EFFECTS, ACQUISITIONS AND DIVESTMENTS 2) BEFORE OTHER INCOME AND EXPENSES 15 * CASH CONVERSION, FCF, EPS AND BACKLOG ARE COMPARED TO Q1 2018
Continuing organic growth on Group level, but still challenges in Sweden 7.5% Organic Organic 4.0% 3.6% 3.0% 0.5% 3.6% 0.4% growth 1 growth 1 3 330 3 208 8.7% -2.3% 2.5% 1 501 1 465 Revenue Revenue 12 912 split NOKm 3 413 NOKm 3 330 3 286 3 208 3 005 816 839 887 819 Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 FY’18 Year Year Q1’18 Norway Sweden Financial Q1’19 Services Norway Sweden Financial Other Services 16 1) ORGANIC GROWTH: ADJUSTED FOR CURRENCY EFFECTS, ACQUISITIONS AND DIVESTMENTS
The ongoing change in product mix is according to plan 5% Consulting Services 33% 33% 35% 7.6% 40% Application 64% Services 8.6% 27% 31% 32% 23% Digital Platform Services 1.9% 28% 28% 29% 27% Fulfilment 31% Services 12% -21.3% 8% 8% 6% Q1 2018 Q1 2019 Norway Sweden Financial Services Organic revenue growth Q1 2019 Q1 2019 Q1 2019 Q1’19 Consulting Services Application Services Digital Platform Services Fulfilment Services 17
Sweden diluting good momentum from the rest of the Group 13.9% 13.7% 12.3% 12.5% 11.4% EBITA 10.0% 10.0% margin 1 EBITA margin development (%) -0.2p.p. 11.2% 11.0% 0.0p.p. Financial Services 10.6% 10.9% Norway 10.4% 10.1% 10.0% Group 9.8% 10.0% EBITA 1 8.0% NOKm 1 582 1 569 475 7.7% 413 374 332 320 3.8% Sweden Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 FY ’18 FY ’17 Quarter/ Q1’17 Q1’18 Q1’19 year 18 1) EBITA: BEFORE OTHER INCOME AND EXPENSES
Other income and expenses is front loaded in 2019, but in line with guidance (NOKm) OIE with cash flow effect (NOKm) OIE with P&L effect 1 215 Sharebased options (STIP) 1 767 Payments related to 33 Other restructuring processes 195 Restructuring Transaction costs, IPO 241 and refinancing Transaction costs, 343 IPO and refinancing Payment related to former CEO Provisions to former CEO Payments related to IBM partner agreement 1 014 IBM partner agreement 560 15 368 661 941 375 51 1 229 82 22 26 78 545 21 595 557 88 250 75 5 46 14 84 15 Year FY 2016 FY 2017 FY 2018 Q1 2019 FY 2016 FY 2017 FY 2018 Q1 2019 19
Increase in cash conversion and high cash flow Cash 70.3% 78.3% 82.8% 86.2% 97.0% conversion 1 LTM Cash conversion as of 31 March 2019 ended at 97.0%, compared to 70.3% as of LTM 31 March 2018 Increase in cash conversion from reduced working capital 1 256 LTM outflow and higher EBITDA relative to operational cash flow 997 950 FCF 2 887 before paid interests for LTM ended 31 March 2018 572 Less negatively impacted by transition and transformation expenses related to the IBM partner agreement (reduced from Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 NOK 140m to NOK 46m) Quarter end on Yes Yes Yes No Yes weekend/ holiday 1) CASH CONVERSION: MEASURES HOW EBITDA IS CONVERTED INTO CASH AND IS DEFINED AS ADJUSTED OPERATIONAL CASH FLOW BEFORE PAID INTERESTS DIVIDED BY ADJUSTED EBITDA. IN ADDITION, CASH CONVERSION IS ALSO CALCULATED AFTER INVESTMENTS IN TANGIBLE OPERATING ASSETS AND IN-HOUSE DEVELOPED SOFTWARE AND SALE OF TANGIBLE ASSETS. 20 2) FREE CASH FLOW (FCF): IS DEFINED AS OPERATIONAL CASH FLOW ADJUSTED FOR CASH EFFECT OF OTHER INCOME AND EXPENSES LESS NET OPERATIONAL INVESTMENTS
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