EVRY ASA Q1 2018 PRESENTATION CEO BJÖRN IVROTH CFO HENRIK SCHIBLER 1
Agenda Group highlights ▪ Business update ▪ Financial highlights ▪ Business area performance ▪ Targets and Concluding remarks ▪ Q&A ▪ 2
Group highlights REVENUE EBITA Backlog (NOKm) (NOKm) 2 (NOKbn) 3,208 320 17.8 FINANCIALS ORGANIC GROWTH 1 EBITA MARGIN 2 0.5% 10.0% M&A ▪ Organic growth, despite less working days and ▪ Maintain a strong backlog through renewals and Easter seasonality extensions of a mix of small and larger strategic ▪ Stable double digit EBITA margin contracts BUSINESS ▪ Financial Services continue to grow with Progressing on the T&T 3 project and implementing new ▪ UPDATE sustainable margin above group average SME delivery model ▪ High utilisation within consultancy and strong Acquisition of Findwise AB ▪ underlying fundamentals 1) ADJUSTED FOR CURRENCY EFFECTS, ACQUISITIONS AND DIVESTMENTS 2) BEFORE OTHER INCOME AND EXPENSES 3 3) T&T: TRANSITION AND TRANSFORMATION
Status on Samlink transaction Background Status ▪ The Board of Samlink notified EVRY on 12 April 2018 that EVRY has over the last months been in negotiations with the they had decided to invite other potential buyers into the owners of Samlink Oy for a potential acquisition of the transaction process company and to enter into long term service contracts with the banks Consequences ▪ EVRY will now consider its options, but in light of the new development, the likelihood of acquiring Samlink is reduced ▪ The strategy to grow the EVRY Financial Services business still remain high and the developments on this transaction has not changed that ambition 4
Business update
Digital Advantage is a business management priority KEY NEEDS AREAS 3x growth 1 in business-driven investment in IT in FOR BUSINESS MANAGEMENT the Nordics Customer Cognitive Application of emerging technology is receiving insight & experience solutions increased attention from business management Partnerships both with suppliers and with Data management & Automation customers are the main driver for successful & RPA analytics business development Digital Consulting and industry knowledge of increased importance to enable Digital Advantage + 14,6% 1 growth in consulting within emerging tech/ digital ▪ + 1,0% 1 growth in consulting within mature IT-services ▪ 7 1) RADAR ECOSYSTEMS SPECIALISTS – STATE OF THE REGION 2018 – OUTLOOK 2018-2020
Digital Advantage is a business management priority KEY NEEDS AREAS 3x growth 1 in business-driven investment in IT in FOR BUSINESS MANAGEMENT the Nordics Customer Cognitive Application of emerging technology is receiving insight & experience solutions increased attention from business management Partnerships both with suppliers and with Data management & Automation customers are the main driver for successful & RPA analytics business development Digital Consulting and industry knowledge of increased importance to enable Digital Advantage + 14,6% 1 growth in consulting within emerging tech/ digital ▪ + 1,0% 1 growth in consulting within mature IT-services ▪ 8 1) RADAR ECOSYSTEMS SPECIALISTS – STATE OF THE REGION 2018 – OUTLOOK 2018-2020
Driving scale, efficiency and capabilities throughout the Nordics ▪ Credible and sustainable domain and industry knowledge Critical mass ▪ Attractiveness and relevance to our customers and partners WHY ▪ Increased agility and competitiveness Economies of scale ▪ Leverage partnerships Market Units DPS 1 ▪ Understand our customers, and their customers through deeper industry knowledge Market ▪ Service integration with industry specific solutions HOW ▪ Cross company service lines Delivery ▪ Cross company consulting practices 9 1) DPS = DIGITAL PLATFORM SERVICES
One of the largest T&T projects in Europe has been exposed to challenges, but are now progressing according to plan Challenges Actions Results Process ▪ Accelerate the digital journey ▪ Top down/ bottom up – Standardise ▪ High stability in production Tools ▪ EVRY’s historical SME approach has ▪ Improving delivery on change orders been a people oriented delivery ▪ Automation and Cognitive solutions ▪ Moving customers to cloud/ cloud model enabled People ▪ Up-sale potential on SMEs still to be Extended and integrated governance ▪ materialized → delay in 2018 model (with partners) 10
Favorable industry dynamics within the Financial Services industry Continued Investments in Legacy combined International competition New entrants Cross industry shift & payments focus on regulation automation and with emerging tech & opportunities challenging incumbents advanced data analytics ▪ PSD2/Open APIs ▪ Customer service ▪ Rip and replace not ▪ Bank collaboration ▪ Global big- tech’s ▪ Mobile payments (Open banking) and back office an feasible option automation ▪ Anti Money ▪ Flexible service ▪ Modernizing core ▪ International ▪ Fintech startups and ▪ Retail convergence Laundering development banking systems opportunities for niche players into financial services payment solutions Established players New players 11
Financial highlights
Group financial highlights Q1 2018 quarter on quarter performance FINANCIAL EVRY Group NORWAY SWEDEN SERVICES Q1 2018 Q1 2017 Q1 2018 Q1 2017 Q1 2018 Q1 2017 Q1 2018 Q1 2017 REVENUE Consulting 3 208 3 177 1 465 1 508 839 852 819 779 NOKm Services -4.1% ORGANIC REVENUE GROWTH ORGANIC 0.5% 4.8% -2,8% 4.7% -3.8% 2.8% 4.7% 2.1% GROWTH 1 Application Services EBITA 2 8.4% 320 345 117 152 65 83 92 85 NOKm Digital EBITA Platform 10.0% 10.9% 8.0% 10.1% 7.7% 9.8% 11.2% 11.0% MARGIN 2 Services -1.9% CASH CONVERSION FREE CASH FLOW ADJ. EPS BACKLOG Fulfilment Services 70.3% LTM Mar. 2018 NOK -320m Q1 2018 NOK 0.53 Q1 2018 NOK 17.8bn 31 Mar. 2018 -9.5% 1) ADJUSTED FOR CURRENCY EFFECTS, ACQUISITIONS AND DIVESTMENTS 13 2) BEFORE OTHER INCOME AND EXPENSES
Organic growth of 0.5% despite a quarter negatively impacted by less working days Organic growth ▪ Revenue growth above internal objectives Revenue ▪ High utilisation in the consultancy business across the Nordics -1.1% 1.9% 4.8% 3.7% 0.5% ▪ Financial Services continue to grow, especially within the Card Service area ▪ 3 bank holidays more in Q1 2018 vs. Q1 2017 have negative impact on the revenue generation from the consultancy business 3 413 3 208 3 177 3 089 2 917 ▪ Note that Q2 2018 has two more working days in Norway compared to Q2 2017 (one day in Sweden), but the consultancy business could be negatively impacted the national days in Norway and Sweden in May and June Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 14
Underlying performance stable with double digit profitability EBITA margin 1 LTM EBITA 1 % LTM margin +0.8p.p. LTM EBITA -0.9p.p. 12.5% 12.2% 11.4% 11.9% 11.4% 14.5% 14.0% 12.5% 1 569 1 544 10.9% 10.8% 10.4% 1 477 10.0% 1 410 1 413 Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 FY’17 FY’16 Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 15 1) BEFORE OTHER INCOME AND EXPENSES
Implemented more granularity in revenue mix where seasonality explains the reduced relative share of Consultancy revenue Consulting Services Application Services Digital Platform Services Fulfilment Services 6% Consulting Services 32% -4.1% 33% 34% 38% ORGANIC REVENUE GROWTH Application Services 63% 8.4% 27% 21% 31% 29% Digital Platform Services -1.9% 27% 31% 28% 28% 31% Fulfilment Services 14% 10% -9.5% 9% 8% Q1 2017 Q1 2018 Norway Sweden Financial Services Q1 2018 Q1 2018 Q1 2018 16
Expenses driven by restructuring and the T&T infrastructure project are declining, and trading according to the outlook for 2018 443 Restructuring 55 Transaction costs, IPO and refinancing IBM outsourcing agreement Other 298 33 260 31 213 3 184 389 153 35 4 125 230 210 87 136 56 40 125 48 112 21 11 41 31 36 9 7 4 Q1’16 Q2’16 Q3’16 Q4’16 Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 17
Working capital outflow and increased net leverage a result of quarter end mid Easter Free Cash Flow (FCF 3 ) Net leverage multiples (post IPO) 1 2.55x 2.38x 2.38x 1 030 2.09x 964 913 713 621 571 946 4,413 4,247 654 NIBD 2 3,936 3,807 22 -25 -29 -320 Q4’16 Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’17 Q3’17 Q4’17 Q1’18 FCF (LTM) FCF (quarterly) 1) NIBD/ LTM EBITDA BEFORE OTHER INCOME AND EXPENSES 2) NIBD = NET INTEREST-BEARING LIABILITIES REPRESENTS CURRENT AND NON-CURRENT INTEREST-BEARING LIABILITIES LESS BANK DEPOSITS 18 3) BEFORE OTHER INCOME AND EXPENSES
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