Results

Alternative performance measures

EVRY Group’s financial information is prepared in accordance with International Financial Reporting Standards (IFRS). In addition to the ordinary financial performance measures prepared in accordance with IFRS, it is management’s intent to provide alternative performance measures (APM) to enhance the understanding of the Group’s underlying performance. Financial APMs are intented to enhance comparability of the results and cash flows from period to period, and it is EVRY’s experience that these are frequently used by analysts, investors and other parties. These measures are adjusted IFRS measures, defined, calculated and used in a consistent and transparent manner over the years and across the company where relevant. The alternative performance measures take into consideration other income and expenses defined as items regarded as special due to their nature and include among others provision for restructuring, write-downs, strategic processes and refinancing.

Financial APMs should not be considered as a substitute for measures of performance in accordance with IFRS.

Organic revenue growth

Organic revenue growth is a measurement of the company’s ability to grow organically by additional net sales to existing and new customers as opposed to through growth. Organic growth is defined as revenue adjusted for the effects from material acquisitions, divestments and foreign currency effects. Organic growth is an important key figure to EVRY and to the users of the financial statements as it illustrates the underlying operational growth by excluding effects not related to the operations.

NOK million  2017  2016  Growth in percent 
Reported revenues  12 596.4   12 246.4   2.9 % 
Currency effects  -   -61.2   0.5 % 
Effects from acquistions  -   122.5   -1.0 % 
Basis for organic growth  12 596.4   12 307.6   2.4 % 

NOK million  2016  2015   Growth in percent 
Reported revenues  12 246.4   12 859.5   -4.8 % 
Currency effects  -   51.4   0.4 % 
Basis for organic growth  12 246.4   12 910.9   -4.4 % 
Loss of DNB non-mainframe contract  -   -548.0   -3.5 % 
Basis for organic revenue growth adjusted for DNB  12 246.4   12 362.9   -0.9 % 

Adjusted EBITA and EBITDA

Earnings before interests, tax and amortisation of customer contracts (EBITA) is an important performance measure for EVRY. EBITDA exlude depreciation and write-downs of tangible assets and in-house developed software. 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  2017  2016 
Adjusted EBITA  1 568.6   1 321.6  
Provisons for restructuring   -32.9   -77.9  
Write-down of other balance sheet items/projects  -   -26.1  
IBM outsourcing agreement  -940.9   -249.8  
Strategic processes/refinancing  -241.3   -21.1  
Reported EBITA  353.4   946.7  

NOK million  2017  2016 
Reported EBITA  353.4   946.7  
Depreciation and write-down of tangible assets and in-house developed software  275.6   270.3  
Reported EBITDA  629.0   1 216.9  
Provisons for restructuring   32.9   77.9  
Write-down of other balance sheet items/projects  -   17.3  
IBM outsourcing agreement  917.9   249.8  
Strategic processes/refinancing  241.3   21.1  
Adjusted EBITDA  1 821.2   1 583.0  

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 underlying operations, which will be useful to the users of the financial statements in analysing the company’s operational profitability.

NOK million  2017  2016 
Adjusted operational cash flow  1 272.2   1 280.2  
Payments related to restructuring processes  -195.2  -368.2 
Payments related to strategic projects/refinancing  -342.9  -51.2 
Payments related to IBM outsourcing agreement  -1 228.8   -594.9 
Cash flows from operations in discontinued operations  -0.8 
Effect of new companies acquired  40.7  
Reported operational cash flow*  -494.7  305.9 

* Equals net cash flow from operations in the cash flow statement.

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  2017  2016 
Adjusted operational cash flow  1 272.2   1 280.2 
Investment in tangible operating assets  -176.3   -161.1 
Investment in in-house developed software  -206.3   -189.4  
Sale of tangible operating assets  23.6   34.5  
Free cash flow  913.2   964.2  

Cash conversion

Cash conversion measures how EBITDA is converted into cash and is defined as adjusted operational cash flow before interest  payments divided by adjusted EBITDA. In addition, cash conversion is also calculated after investments in tangible operating assets and in-house developed software and sales of tangible operating assets.

NOK million  2017  2016 
Adjusted operational cash flow  1 272.2   1 280.2  
Paid interests  395.0   428.9  
Adjusted EBITDA  1 821.2   1 583.0  
Cash conversion (in percent)  92 %  108 % 
Investment in tangible operating assets  -176.3   -161.1  
Investment in in-house developed software  -206.3   -189.4  
Sale of tangible operating assets  23.6   34.5  
Cash conversion after capex (in percent)  72 %  88 % 

Adjusted earnings per share

Earnings per share is calculated as profit/-loss for the year attributable to shareholders (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  2017  2016 
Total profit/-loss for the year attributable to shareholders (owners of the parent company)  -262.2   300.1 
Other income and expenses (note 3)  1 215.1   374.9 
Finance costs related to new financing  313.0 
Tax effect other income and expenses  -366.8   -93.7  
Adjusted total profit/-loss for the year attributable to shareholders (owners of the parent company)  899.2   581.3  
Average number of shares outstanding  319 072 529  267 187 441  
Adjusted earnings per share  2.82  2.18