Annual Report • Feb 9, 2023
Annual Report
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SimCorp A/S Weidekampsgade 16 2300 Copenhagen S Denmark
Company reg. no: 15505281 simcorp.com
The world of investment management is defined by ever increasing complexity and pressure to generate alpha. Every day, our clients are faced with new demands, instruments, regulations, and technologies. But the real problem is when the tools and services designed to deal with this rapidly evolving set of challenges introduce yet more fragmentation and complexity. Complexity that ties up resources and prevents clients from reaching their full potential and exploiting new opportunities.
That is why the SimCorp platform is designed to empower the world's institutional investors to simplify their operating models so they can seize opportunities and grow profitably.
54 — 101 Consolidated financial statements
Remuneration Report 2022 https://www2.simcorp.com/RemunerationReport2022
SimCorp offers an industry-leading front-to-back investment management platform and ecosystem comprising partners, services and third-party connectivity. Be it on our software as a service (SaaS) platform or as an on-premise solution, we offer clients the operating efficiency and flexibility they need to succeed in an increasingly complex world.
40%
300+
clients
of the top 100 global asset managers/
trillion managed on our platform
SimCorp delivered solid performance and progress on its strategic priorities in 2022. We achieved our financial guidance for the year, added 11 new clients, and strengthened existing client relations. We are well-positioned to continue our growth trajectory in the years ahead.
With Annual Recurring Revenue (ARR) (backward-looking) comprising more than half of total revenue, we are progressing well in our transformation of SimCorp into a technology-enabled service company. ARR (backwardlooking) constituted 57.4% of total revenue in 2022 compared with 55.9% in 2021.
Subscriptions
50% clients on
subscriptions in 20221
(88% of new clients)
1 SimCorp Dimension only.
Solid financial performance
23.4% 12.1%
EBIT margin (in local currencies)
Revenue growth (in local currencies)
ARR (backwardlooking) growth (in local currencies)
2022 was a defining year for SimCorp as we continue to strengthen our front-to-back offering, delivering the industry's strongest platform and partner ecosystem. Although the year was characterized by turbulence and increasing geopolitical turmoil, we expanded our engagement with existing and new clients, delivering revenue of EUR 561.0 million, ARR-growth (backward-looking) of 16.1% and EBIT of EUR 125.9 million.
Christian Kromann Chief Executive Officer
Peter Schütze Chair of the Board of Directors
In 2022, we took additional steps to focus our business. To ensure that SimCorp has the right structure and people as it transforms to a SaaS company, 2022 saw continued investments into our SaaS operations and innovation. As our SaaS and tech-enabled services business continues to gain momentum, a key priority is to continuously strengthen our foundation and lay the steppingstones for the next phases of our growth journey. As part of that, we have sharpened our core value proposition in 2022, equipping clients with an ever-increasing array of choice when making key infrastructure decisions and futureproofing their technology platforms. Among other things, this was illustrated by a significant front-to-back deal with a tier one US financial
institution for our full SaaS product suite. In total, we added 11 new logos to our client portfolio in 2022.
With the institutional investment industry facing new demands as a result of market turbulence, inflationary pressure and added operational and strategic complexity, we implemented several key initiatives to expand our offering. This included a number of new tech-enabled business service solutions designed to remove complexity from our clients' non-core operations, as exemplified by the comprehensive investment operations services deal with US asset manager Intech.
Having aligned our delivery roadmap with current market needs during the year, we are in a strong position to continue our growth and our journey towards 2025.
Across all markets in general, we signed a number of full front-to-back SaaS deals, and, during the year, we also signed our first-ever clients in Africa and Malaysia, with that continuing to increase our market presence in both EMEA and APAC. In the latter, we also entered into a strategic partnership with Challenger, a leading Australian investment firm, to form a stand-alone investment operations company. Moreover, the signing of a number of significant clients in the US resulted in a stronger footprint in North America,
and at the turn of the year, we have leveraged now our offering towards new and broader market segments.
2022 was also a year marked by the war in Ukraine. With more than 240 colleagues based in Kyiv, we were shocked and saddened to witness the Russian invasion. The safety and wellbeing of our employees remains a key priority, and we have done and will continue to do whatever we can to safeguard and support our colleagues and their families, i.e. by offering relocation and additional flexibility and support.
It remains a testament to the resilience and determination of our Ukranian colleagues that our development saw minimal short-term and no sustained disruption – and we thank them all for this.
We extend our admiration, thoughts and support, not only to our strong Ukrainian employees, but to all the people of Ukraine in these difficult times.
As we ramp up and continue to invest in our SaaS offering, we are well positioned reach our strategic ambitions towards 2025, on which we made solid progress in 2022. With more than 50 clients already running on our SaaS platform, and a growing number of clients either joining or migrating to our SaaS offerings, we continue to progress our transformation.
Looking ahead, we see several attractive growth drivers, and the strong fit between our products and general industry trends means that we continue to widen our target addressable market, yielding a substantial potential for new
client deals in the years to come. In addition, we continue to see very high client retention rates and growing potential for upselling within our existing client base.
To ensure that we further extend the breadth and depth of our SaaS offering, leveraging the strongest and most versatile front to back platform in the industry, we are investing in three growth levers. These are explained in greater detail on page 15:
As we continue our transformation towards 2025, the continued delivery of these three core priorities will allow us to offer the optimal platform for supporting our clients' evolving operating models, enabling them to seize business opportunities and support their operating model of choice.
In 2022, we took important steps on our sustainability journey to gain more data and knowledge, create more transparency, and – ultimately - achieve bigger impact. Our sustainability agenda and our business strategy are fully aligned, and we are integrating sustainability steadily in all our business operations, client offerings, and in our commitment to our people and stakeholders.
We see a convergence of our goals and values with those of our clients, investors, and other stakeholders, and with the commitment of our employees to always do the right thing, we are confident that we can reach new important milestones in the coming year.
In 2022, we paid dividends of EUR 39.9 million, equal to DKK 7.50 per share, and acquired treasury shares for EUR 20 million. Based on the financial performance in 2022, the Board of Directors intends to propose to shareholders at the AGM a dividend of EUR 39.7 million, equal to DKK 7.50 per share, for the financial year 2022. We will continue to maintain a conservative financial policy, and we will allocate the necessary capital to successfully drive our transformation and sharpen our run-rate cost-efficiency.
Our highly committed and skilled staff remains the foundation for us as a company. Our ability to deliver value to our clients, to grow, to innovate and ultimately to deliver sustained long-term growth is based on the contribution of our many colleagues around the world. We thank everyone at SimCorp for your loyal commitment, true engagement, and relentless hard work, demonstrating the culture of our company as captured in "the 5Cs", by being caring, customer success driven, collaborative, curious, and courageous.
Our thanks also goes to our shareholders for their support of our strategy and to our business partners for their trust and co-operation, all helping us in our efforts to increase our value creation. Last but by no means least, we extend our gratitude to our clients, new as well as existing ones, who continue to show strong commitment to our company in times of uncertainty.
| EUR '000 | 2022 | 2021 | 2020 | 2019 | 2018 |
|---|---|---|---|---|---|
| Income statement | |||||
| Revenue | 560,968 | 496,274 | 455,970 | 454,531 | 382,626 |
| Earnings before interest, tax, depreciation, and amortization (EBITDA) | 140,739 | 147,796 | 140,390 | 142,576 | 109,268 |
| Operating profit (EBIT) | 125,856 | 132,417 | 124,296 | 127,824 | 103,345 |
| Financial items, net | 2,292 | 5,001 | -8,200 | -23 | -809 |
| Profit before tax | 128,148 | 137,418 | 116,096 | 127,801 | 102,536 |
| Profit for the year | 99,254 | 109,992 | 88,258 | 96,901 | 76,971 |
| Statement of financial position | |||||
| Share capital | 5,441 | 5,441 | 5,441 | 5,441 | 5,441 |
| Equity | 375,557 | 323,107 | 278,250 | 230,020 | 169,059 |
| Bank loan/credit facility | 6,724 | - | - | 20,000 | - |
| Intangible assets | 88,984 | 92,691 | 95,725 | 99,557 | 40,444 |
| Property, plant, and equipment1 | 41,459 | 43,692 | 47,650 | 55,650 | 5,377 |
| Receivables | 112,378 | 96,543 | 82,513 | 81,804 | 79,165 |
| Contract assets | 292,903 | 221,000 | 175,928 | 151,774 | 85,684 |
| Cash and cash equivalents | 40,546 | 47,692 | 53,051 | 31,851 | 47,500 |
| Total assets | 604,328 | 526,312 | 470,842 | 437,912 | 270,267 |
| Cash flow | |||||
| Cash flow from operating activities | 60,340 | 90.696 | 104,565 | 82,505 | 82,215 |
| Cash flow from investing activities | -2,767 | -5,675 | -2,681 | -60,214 | -1,720 |
| Cash flow from financing activities | -64,822 | -90,996 | -80,242 | -38,249 | -64,444 |
| Free cash flow | 47,155 | 78,628 | 91,809 | 70,903 | 80,153 |
| Investment in property, plant, and equipment | 1,524 | 1,259 | 2,399 | 1,722 | 1,950 |
| Net change in cash and cash equivalents | -7,249 | -5,975 | 21,642 | -15,958 | 16,051 |
| EUR/DKK rate of exchange at December 31 | 7.4365 | 7.4365 | 7.4393 | 7.4697 | 7.4673 |
Revenue (EUR million)
EBIT (EUR million)
1 2018 does not include right-of-use-assets.
| EUR '000 | 2022 | 2021 | 2020 | 2019 | 2018 |
|---|---|---|---|---|---|
| Other non-IFRS measures | |||||
| Ratable revenue (EUR '000) | 489,065 | 451,202 | 431,816 | 388,441 | 346,888 |
| Order book value2 (EUR '000) | 109,500 | 72,953 | 56,069 | 38,182 | 45,508 |
| Order intake2 (EUR '000) | 190,600 | 137,604 | 115,102 | 99,679 | 105,877 |
| Annual Recurring Revenue (ARR) (forward-looking) (EUR '000) | 338,480 | 302,912 | - | - | - |
| Annual Recurring Revenue (ARR) (backward-looking) (EUR '000) | 321,948 | 277,352 | 250,902 | 220,943 | - |
| Financial ratios | |||||
| Revenue growth (%) | 13.0 | 8.8 | 0.3 | 18.8 | 11.4 |
| Organic3 revenue growth (%) | 9.4 | 8.7 | -0.1 | 15.5 | 9.5 |
| Ratable revenue growth (%) | 8.4 | 4.5 | 10.4 | 12.0 | - |
| Organic3 ratable revenue growth (%) | 5.3 | 4.5 | 10.2 | 8.8 | 6.2 |
| ARR (backward-looking) growth (%) | 16.1 | 10.5 | 13.7 | - | - |
| Organic3 ARR (backward-looking) growth (%) | 12.1 | 10.3 | 14.6 | - | - |
| ARR (backward-looking) as share of total revenue (%) | 57.4 | 55.9 | 55.0 | 48.6 | - |
| EBITDA margin (%) | 25.1 | 29.8 | 30.8 | 31.4 | 28.6 |
| EBIT margin (%) | 22.4 | 26.7 | 27.3 | 28.1 | 27.0 |
| Cash conversion | 47.5 | 71.5 | 104.0 | 73.3 | 104.1 |
| ROIC (return on invested capital) (%) | 35.6 | 44.7 | 46.6 | 65.3 | 82.4 |
| Receivables turnover ratio | 8.4 | 8.9 | 8.7 | 9.3 | 8.2 |
| Equity ratio (%) | 62.1 | 61.4 | 59.1 | 52.5 | 62.6 |
| Return on equity (%) | 26.0 | 35.4 | 33.4 | 46.5 | 59.7 |
| Employees | |||||
| Number of employees at year-end | 2,245 | 1,998 | 1,901 | 1,871 | 1,660 |
| Average number of employees – FTE | 2,067 | 1,871 | 1,840 | 1,703 | 1,554 |
2 2019 order book and order intake have been restated to include Subscription Services such as Datacare and
Regulatory Reporting Platform (RRP), and 2018 order intake has been restated to include SimCorp Italiana (Sofia). 3 Organic figures adjust for M&A impact and currency impact.
| 2022 | 2021 | 2020 | 2019 | 2018 | |
|---|---|---|---|---|---|
| Share performance | |||||
| Earnings per share – EPS (EUR) | 2.52 | 2.76 | 2.22 | 2.44 | 1.95 |
| Diluted earnings per share – EPS-D (EUR) | 2.50 | 2.74 | 2.20 | 2.42 | 1.93 |
| Cash flow per share – CFPS (EUR) | 1.53 | 2.27 | 2.64 | 2.08 | 2.08 |
| Book value per share at year-end – BVPS (EUR) | 9.55 | 8.11 | 7.02 | 5.81 | 4.27 |
| Dividend per share – DPS (EUR) | 1.01 | 1.01 | 1.01 | 0.90 | 0.87 |
| Dividend per share – DPS (DKK) | 7.50 | 7.50 | 7.50 | 6.75 | 6.50 |
| Dividend payout ratio (%) | 39.9 | 36.4 | 45.2 | 37.0 | 44.7 |
| Total payout ratio (%) | 60.3 | 72.9 | 56.5 | 49.9 | 44.7 |
| Market value ratios | |||||
| Share price at year-end – EUR | 64.30 | 96.12 | 121.72 | 101.41 | 59.67 |
| Share price at year-end – DKK | 478.2 | 714.8 | 909.5 | 757.5 | 445.6 |
| Price/book value per share – P/BV (EUR) | 6.73 | 11.9 | 17.3 | 17.5 | 14.0 |
| Diluted price earnings (P/E diluted) | 25.5 | 34.8 | 55.2 | 41.9 | 30.9 |
| Price/cash flow (P/CF) | 42.0 | 42.2 | 46.2 | 48.7 | 28.6 |
| Share capital (million) | 40.5 | 40.5 | 40.5 | 40.5 | 40.5 |
| Average number of shares (million) | 39.3 | 39.9 | 39.7 | 39.7 | 39.5 |
| Average number of shares – diluted (million) | 39.7 | 40.1 | 40.0 | 40.1 | 39.9 |
| Market capitalization – EUR million | 2,529 | 3,831 | 4,826 | 4,016 | 2,362 |
Market capitalization (EUR million)
Total
SimCorp market shares and target addressable market1
Macroeconomic and geopolitical turmoil impacted the investment management industry in 2022. Changing market environments, new regulatory expectations and increasing complexity accelerated the need for investment firms to optimize operating models and transform their business. As a result, the demand for cloud and SaaS offerings continues to grow.
Although 2022 saw significant market turbulence, the EMEA business unit reported good traction within new and existing client segments, including the largest SaaS migration to date. Across most countries and jurisdictions in the region, we see a strong fit between our solutions and our clients' needs, coupled with a high and increasing market penetration, illustrated by the signing of a deal with a central bank and the successful closing of a deal with a client in Africa.
In North America and APAC, market activity is also picking up, and we continue to make significant investments into our market profile and our capacity to further boost our commercial execution. For both regions, the SimCorp service offering has strong market potential, demonstrated by a breakthrough in Malaysia and a number of comprehensive deals with large institutions in the US.
For most players in the market, SaaS is now becoming a matter of "when" rather than "if", and the long-term growth potential in all three regions remains strong with SimCorp well positioned to increase its market share.
Asset management Fund management Insurance Asset servicing Life/pension
Treasury Central banks Sovereign wealth Wealth management
271 of 1,815 potential clients
potential clients
64 of 760 potential clients
20 of 250 potential clients
Global investment management is shaped by several macro trends, which impact clients' strategies and result in a growing need to future-proof operating models and drive efficiencies.
Overall, 2022 emphasized the constantly evolving need for future-proof tools and technology, adding pressure on clients and prospects who have yet to invest in long-term platform solutions. The current macroeconomic environment accelerates the industry's pursuit of scale benefits and strategic ambitions to focus on core business activities. With added regulatory complexity and changing customer expectations, clients' efforts to digitize are advancing, leading to more interest in integrated platform solutions and technology-enabled outsourcing of business processes.
Global investment managers are experiencing increasingly complex strategic and operational environments, rooted in a range of internal and external factors, including:
As we progress our SaaS transformation, SimCorp has continued to strengthen its value proposition to match this overall market development, with our offering catering well for the operating models of tomorrow and those firms in the industry looking to optimize their investment infrastructure and platforms.
Market drivers
Clients' strategic priorities
SimCorp's business model empowers global institutional investors to tackle the growing complexity of the world around us. Offering scale, efficiency, and choice, all based on solid data, our business model supports investment decisions with an integrated front-to-back platform and the industry's broadest ecosystem of partnerships.
From front office to back office, SimCorp offers full coverage across our clients' investment management value chain. We support key workflows and functions from portfolio construction to accounting and reporting.
Based on a strong data core comprising our market-leading investment book of record (IBOR) and accounting book of record (ABOR), our platform solves our clients' data and integration challenges. Providing new insights for investment decisions and process efficiency, we constantly evolve our data management services to replace complexity with simplicity.
With new as well as existing clients who are accelerating their SaaS transformation, we continue to see high demand
for SaaS services. Today, our SaaS value proposition is stronger than ever and offers unparalleled flexibility to clients' operating environment.
Our technology-enabled business services help our clients optimize their operations and allow them to focus on valuecreation in their core business, while we take responsibility for their non-core business processes. In 2022, we have
made significant strides within managed business services, successfully going live with Investment Accounting Services and Investment Operations Services.
Our platform is uniquely enhanced and expanded through our partner ecosystem, which offers an unparalleled choice of market-leading tools and third-party data and analytics, all seamlessly embedded and integrated into our offering.
As our transformation accelerates, we remain fully committed to our strategic ambition of offering everything as a service. Our principal objective remains to provide the investment industry with market leading operating model optionality through a superior SaaS platform and services offering. This strategy was first launched in 2019 and, since then, we have been continuously progressing on our priorities, achieving several milestones over the past years. With the implementation of a new operating model program well underway, we are reaching new maturity levels for our SaaS and Business Process as a Service (BPaaS) offerings and are optimizing our ways of executing and prioritizing.
In 2022, we accelerated our SaaS transformation, making significant progress in the ways we work and deliver value to clients. Looking to build on this momentum and further ensure the continuous crystallization of our strategy into outcomes, we have revisited our strategic imperatives during 2022.
Having entered a full SaaS paradigm, our overall imperatives have thus been further calibrated to cater for the rapidly changing client needs and an operating environment that is changing at an ever-increasing pace. Continuing our growth journey towards 2025, we will be guided by three strategic growth levers, designed to deliver the best possible business outcomes for clients:
SaaS acceleration
Ecosystem scaling
Platform leadership – a market leading front-to-back platform
Our platform remains our stronghold, and with its natively integrated front-to-back functionality, it remains the backbone of our value proposition for our clients. In 2022, we have continued to invest a large portion of our R&D capacity into our platform and the four key offers Data
Management, Front Office, Operations and Accounting and Client Communications
supporting all asset classes • Several front office deals signed in 2022 Today our value proposition is as relevant as ever, representing an optimal route for clients looking to ensure operational efficiency based on consistent data and a single version of the truth for investment decisions, compliance, and reporting. With full asset class and functional coverage, we offer the only truly front-to-back platform providing seamless integration across clients' value chain. Looking to 2025, a key focus for SimCorp will be to build on our front-office capabilities and invest significantly into the SaaS platform, with that further optimizing our technology backbone.
SaaS acceleration - enabling an agile
In 2019, we identified a series of strategic opportunities, marking the beginning of our journey to become a full technology-enabled services provider, and since then we have remained fully committed to execute on this strategy. With the implementation of our operating model well progressed in 2022, we are now a more outcome-focused partner to our clients, delivering value through our full SaaS platform and substantial BPaaS engine.
operating model • +50 SaaS clients Today, our SaaS value proposition is stronger than ever, designed to remove complexity and offer flexibility to clients' operating models. Our SaaS and BPaaS offerings enable clients to substantially increase competitiveness through unique possibilities for scaling and simplification without foregoing the value that only a fully integrated data foundation can deliver.
The issue now faced by clients is that of addressing the fundamental question of which mission critical infrastructure serves them best in the next 10-15 years. As a result, many are now advancing their evaluations of which underlying technology platform they need to continually evolve their business. To cater for that, we continue to invest in our engineering platform and the extended use of technology to further scale and accelerate our innovation speed, with that continue to create value for clients and their needs – today and as they evolve.
Ecosystem scaling – the power of open
Our architecture is based on a core conviction that openness offers improved choice, flexibility and innovation. We call it "the power of open", and that mindset is deeply embedded into our offerings, ultimately designed to play a key role in clients' wider technology ecosystems.
From open innovation with fintech partners, co-creation with clients, and connectivity with many players in the broader capital markets ecosystem, our strategic focus on creating a truly open platform remains integral to our strategy and our value proposition.
Through our platform, we offer interoperability and unparalleled optionality, while also leveraging technology partnerships such as Microsoft Azure for cloud solutions and Snowflake for data solutions. Through that, we offer enhanced competitiveness rooted in strong native solution coupled with a truly open platform and seamless ecosystem.
In doing so, we adopt external innovation to strengthen our own offering. Providing clients with the best of both worlds, we have combined state of the art technology and integrated partner solutions in the SimCorp Platform, offering the market the full depth of our platform along with third-party innovation. Combined with joint ventures and channel partnerships, our ecosystem scaling strengthens our core value proposition.
With more than 40 years of experience, the Abu Dhabi Investment Authority (ADIA) is one of the world's leading institutional investors.
ADIA continually assesses how the external environment, and the business of investing is changing, looking beyond passing trends and market cycles to focus on how ADIA can evolve and prepare for the future.
This long-term outlook requires an operating model that embraces the latest technology to enable greater agility, scale and efficiency.
"ADIA has continued to adapt to the evolving nature of the global investment landscape since its creation in 1976, and we recognize that the pace of change today is faster than ever before. To sustain success in this dynamic environment, we have pursued numerous initiatives aimed at increasing agility and efficiency, including the adoption of new technologies to build new operational capabilities" - ADIA
A core element of this ongoing, multi-year project has been to develop a operating model powered by a cloud infrastructure and services to help scale and secure investment operations. SimCorp's SaaS platform plays an important part in ADIA's consolidation of its operations across multiple asset classes, with its data management services ensuring high quality data.
ADIA expects to achieve significant optimization in IT administration, development and testing time.
In doing so, ADIA aims to continually intensify the pace and agility of execution, while simplifying
and optimizing the overall investment transaction technology architecture. A prerequisite for those objectives is a solid data foundation across all asset classes with a modern cloud infrastructure that facilitates ongoing innovation.
"ADIA has continued to adapt to the evolving nature of the global investment landscape since its creation in 1976, and we recognize that the pace of change today is faster than ever before. To sustain success in this dynamic environment, we have pursued numerous initiatives aimed at increasing agility and efficiency, including the adoption of new technologies to build new operational capabilities".
Read more about our services here https://www2.simcorp.com/our-services
The current transformation to a full-scale SaaS provider is materially changing the revenue, cost and profitability structure of the company. The mid-term financial target is to generate double-digit average growth rates and return to record-high profitability (above 28% EBIT-margin).
The growth potential stems from the development of the core platform combined with expansion opportunities in SaaS and BPaaS offerings. SaaS and BPaaS clients initially require higher cost to serve while building capabilities and scale. The larger share of revenue from SaaS and BPaaS combined with accelerated investments to build scale are drivers of the current profitability development.
These negative margin drivers are targeted to be more than offset by future scale and efficiency in the SaaS and BPaaS offerings combined with an acceleration of revenue growth. Founded in these drivers, SimCorp targets to return to record-high profitability at a significantly higher revenue level.
The gross margin of the SaaS offering has steadily improved since SimCorp onboarded its first SaaS customer. Today, SimCorp has made the offering profitable through initial automation and experience but with significant further potential.
The drivers of the SaaS gross margin are a combination of both time and number of clients (scale). By investing in product enhancements and automation, costs related to infrastructure and managed services reduce. This enables service of a growing client base with fewer FTEs per client, while maintaining the highest service quality.
This development represents a key milestone for achieving record-high profitability such that the initial negative impact from the adverse revenue mix is more than offset by a steadily increasing SaaS gross margin.
The investments in SaaS are enabling growth potential across the strategic pillars. Additional investments in Front Office and the revamp of the commercial organization are key enablers for growth in SimCorp's core stronghold, full front-to-back functionality deals. The increasing growth momentum is evidenced by two large and front-to-back deals signed in Q4 2022, in EMEA and US respectively.
The SaaS investments will enable SimCorp to accommodate the continued market demand for cloud solutions and tech-enabled services. SimCorp continues to target new clients within the SaaS and BPaaS offerings, upsell of additional functionalities and more than 10 conversions of current on-premise customers to the SaaS platform per year.
Finally, SimCorp is entering new Fintech partnerships and strives to grow from ecosystem scaling growth and expanding offering and market reach. In January 2023, SimCorp's Joint Venture with Challenger was formally established with an already growing pipeline of customers.
The financial outlook for 2023 represents the ongoing SaaS transformation, with accelerated transformation investments, and the initiation of a new cost efficiency programme. The investments are expected to generate solid business growth in 2023, while the profitability deterioration from investments is roughly offset by the cost efficiency program. SimCorp is building scale and is targeting to return to increasing margin development and operating leverage in coming years.
Forward-looking ARR was EUR 338.5 million by the end of 2022, representing organic growth of 11.7% compared to ARR by the end of 2021. The business is expected to continue to grow at accelerating growth rates throughout 2023, ending with forward-looking ARR growth of 12-17% by the end of 2023.
With the strong finish of 2022, SimCorp enters 2023 with signed revenue of EUR 364 million for 2023, compared with EUR 323 million at the same time in 2022. Ratable revenue is expected to grow by 6-11% in 2023. Reported revenue growth is expected to be in line with Ratable revenue growth.
The EBIT-margin is impacted by a number of factors. The positive impact from revenue growth (operating leverage)
| Financial Outlook for 2023 | ||
|---|---|---|
| ---------------------------- | -- | -- |
| All numbers in local currencies, excluding special items |
2022 Achieved |
2023 Financial Outlook |
|---|---|---|
| Forward-looking ARR growth, (%) | 11.7% | 12-17% |
| Ratable revenue growth (%) | 5.3% | 6-11% |
| Total cost growth (incl. investments) (%) | 14.3% | 7-15% |
| EBIT-margin (%) | 24.2% | 21-24% |
will be partly offset by the current inflationary environment, including high cost increases related to salaries, cloud storage and offices. More revenue is also expected to be derived from SaaS and BPaaS with relatively lower gross margin and, simultaneously, SimCorp is ramping up and front-loading new SaaS and BPaaS customers (such as Intech) creating a time lag between cost incurred and revenue generation.
Finally, SimCorp's accelerated investments are expected to add costs corresponding to 3.5%-points to the current run-rate. These investments are more than offset by the cost efficiency program targeting EUR 25 million of in-year cost reductions, equivalent to approximately 4%-points EBIT-margin effect.
Based on the exchange rates at the end of January 2023, it is estimated that the foreign exchange rate development will impact revenue negatively by 1-2% and EBIT-margin negatively by 0-1%.
| Main currencies EUR per 100 |
Exchange rates January 31, 2023 |
Average rates 2022 |
Average rates 2021 |
|---|---|---|---|
| USD | 92.31 | 95.43 | 84.65 |
| CAD | 68.63 | 73.05 | 67.52 |
| AUD | 64.62 | 66.04 | 63.39 |
| SGD | 70.09 | 69.17 | 63.02 |
| GBP | 113.54 | 117.03 | 116.52 |
| CHF | 99.68 | 99.90 | 92.60 |
| NOK | 9.17 | 9.90 | 9.85 |
| SEK | 8.81 | 9.39 | 9.85 |
The EMEA business unit performed well with total revenue increasing by 17% compared with 2021. Three new SimCorp Dimension clients were signed, of which most notable is an asset owner to leverage on SimCorp's full front-to-back product suite across the institution's entire range of assets, including public and private markets. The move to SimCorp will enable the client more efficient execution of its global investment strategies, streamlining and consolidating the institution's solution landscape and setup - driving efficiency and ensuring agility. Furthermore, SimCorp signed a new standalone front-office client in Luxembourg highlighting SimCorp's competitiveness within front office. Finally, SimCorp signed its first client in Africa in 2022 to automate the client's front-to-back operations.
After a difficult 2021 due to COVID-19, the activity in North American business unit has returned throughout 2022. Total revenue increased by 5% compared with 2021. SimCorp signed five new clients in North America in 2022. In the beginning of the year, SimCorp signed its first Investment Operations Service (IOS) client with a Canadian Asset manager. In late 2022, SimCorp signed its second IOS client with an US based asset manager. The agreements cover the integration of SimCorp's full lifecycle management service to support all of Intech's post-trade, performance, compliance, and IBOR-related activities. Furthermore, SimCorp signed a new SimCorp Dimension full front-to-back SaaS client in the US. The client selected SimCorp in order to modernize its infrastructure and enabling innovation to keep up with new investment mandates and regulatory requirements. In addition, the client expects to reduce operational complexity and costs. Finally, a US based asset manager selected SimCorp for client reporting in order to reduce operational complexity.
The APAC business units total revenue increased by 25% y-o-y in 2022 with two new clients signed. Both of the new clients signed in 2022 are based in Malaysia and covers front-to-back delivered as SaaS. The clients have selected a full front-to-back SaaS offering that will provide a flexible and scalable investment monitoring solution with full transparency on exposure and financial returns, all consolidated into one automated platform. SimCorp also signed a strategic partnership with Australian based investment manager Challenger to launch a new standalone company. The new company will be Australia's first cloud-based front-to-back investment operations platform, providing fully integrated investment administration services for asset managers and owners across Australia and APAC. Two SimCorp Dimension clients canceled their contracts, bringing the total number of clients to 20.
SimCorp Sofia delivered a solid performance in 2022, driven by continued performance within professional services mainly focused by the concentration of IFRS 9 with projects for several insurance clients. SimCorp Sofia signed two new clients in 2022 in Italy confirming the competitiveness of SimCorp Sofia as the main investment management system for the Italian insurers. Four clients canceled their contracts.
| EUR million 2022 |
2021 | Change | EUR million | 2022 | 2021 | Change | EUR million | 2022 | 2021 | Change | EUR million | 2022 | 2021 | Change |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total segment revenue 418.5 |
357.6 | 17% | Total segment revenue |
120.1 | 114.9 | 5% | Total segment revenue |
58.5 | 46.3 | 25% | Total segment revenue |
23.6 | 23.6 | 0% |
SimCorp generated revenue of EUR 561.0 million in 2022, an increase of 13.0% compared with 2021 and Annual Recurring Revenue (ARR) (backwardlooking) of EUR 321.9 million, a growth of 16.1%. The order intake was EUR 190.6 million an increase of EUR 53.0 million or 38.5% compared with 2021, and the order book increased in 2022 by EUR 36.5 million to EUR 109.5 million, contributing to positive business growth. SimCorp generated EBIT of EUR 125.9 million. The EBIT margin was 22.4%.
2022 was characterized by unusually high macroeconomic turmoil. The increase in inflation and interest rates combined with the Russian invasion in Ukraine negatively impacted the business environment and customers from the beginning of the year. The deal activity was low in the first half of 2022 but improved during the year and ended with a strong fourth quarter, both with respect to number of deals signed and revenue.
SimCorp was shocked and saddened by the Russian invasion. The safety of our employees has been top priority throughout the year, and SimCorp has offered all the help and support it can. SimCorp offered relocation to all affected employees and their families at the outbreak of the invasion and again during the winter period. SimCorp remains fully committed to its employees and presence in Ukraine, where SimCorp has been for the last 15 years.
2022 was also a year where additional investments were made in the SaaS transformation to expand the long-term business opportunities and further enhance competitiveness. The investments related predominantly to the SaaS offering including initiation of technology-enabled services offerings (BPaaS). As part of the transformation, SimCorp also implemented a large operating model restructuring to change the
| In local currencies |
Achieved 2022 |
Annual Report 2021 Feb. 15, 2022 |
|---|---|---|
| Revenue growth | 9.4% | 7-12% |
| ARR (backward looking) growth |
12.1% | 10-15% |
| EBIT margin | 23.4% | 23-26% |
leadership structure and improve collaboration and integration of functions.
In the 2021 Annual Report, SimCorp announced 2022 expectations for revenue growth measured in local currencies of between 7% and 12%, backward-looking ARR growth of between 10% and 15% and an EBIT margin measured in local currencies of between 23% and 26%.
During 2022, SimCorp announced that exceptional costs would impact EBIT with EUR 3 – 5 million related to the support of our Ukrainian colleagues and with additional EUR 8 – 10 million in one-off costs related to the operating model restructuring program. Excluding these costs, the financial results were in line with expectations.
The realised revenue growth measured in local currencies was 9.4%, backward-looking ARR growth was 12.1% and EBIT margin before exceptional costs measured in local currencies was 23.4%. Reported EBIT margin was 22.4%. The financial guidance and the realized financial results can be seen in the table on page 23.
(%)
In 2022, total order intake of EUR 190.6 millon was an increase of EUR 53.0 million compared with 2021. The increase was primarily due to higher order intake for SimCorp Dimension, primarily driven by several significant deals signed with existing clients.
Datacare order intake was EUR 6.0 million compared with an order intake of EUR 17.5 million in 2021.
SimCorp Dimension license solutions were sold to eight new clients in 2022, all except one on subscription-based terms, with a total order intake of EUR 17.0 million, compared with sales to four new clients in 2021 with a total order intake of EUR 16.4 million. The average size of initial SimCorp Dimension license deals decreased from EUR 4.1 million in 2021 to EUR 2.1 million in 2022. Of the initial SimCorp Dimension license orders entered into in 2022, three of the orders were signed in North America, two orders in APAC and three orders in EMEA.
EUR 93.5 million of the additional order intake was due to eighteen clients converting their perpetual contracts to subscription-based license contracts. For the eighteen clients converting in 2022, the annual subscription-based payments will be higher than the software updates and support fees under the perpetual contracts due to the sale of additional functionality in connection with the conversions, but the annual software updates and support fees will be around EUR 15.3 million lower, as the subscription license revenue under IFRS 15 is recognized up-front on contract completion.
Total order book increased by EUR 36.5 million from January 1, 2022 to EUR 109.5 million on December 31, 2022. The order book includes SimCorp license solutions EUR 56.3 million, SimCorp Dimension Client-Driven Development (CDD) of EUR 9.2 million and EUR 44.6 million related to subscription services. The order book is a consequence of
income recognition being deferred until certain conditions are fulfilled or subscription services revenue recognized over the contract period.
The total value of the installed SimCorp Dimension license base is EUR 926 million in 2022 compared with EUR 934 million in 2021. The total value of the installed license base for SimCorp Dimension clients who have an installed license base above EUR 2 million accounted for 93% of the value of the total installed license base compared with 92% in 2021.
The share of subscription-based license agreements in the installed SimCorp Dimension license base increased from 35% at the end of 2021 to 50% at the end of 2022. In total, 103 (equivalent to 50%) out of 207 SimCorp Dimension clients are on subscription-based license agreements, while the remaining 104 SimCorp Dimension clients are on a perpetual license agreement. In comparison, 79 (equivalent to 38%) out of 206 SimCorp Dimension clients were on subscription-based license agreements in 2021.
At year-end 2022, the average length of subscription-based license agreements at signing was around six years for SimCorp Dimension, around five years for SimCorp Coric, around six years for SimCorp Gain, and approximately one year for SimCorp Sofia. The remaining average length before renewal was 3.7 years for SimCorp Dimension, 2.7 years for SimCorp Coric, 5.6 years for SimCorp Gain, and around one year for SimCorp Sofia as most agreements are renewed annually at the beginning of the year.
Total contract value outstanding, excluding as a Service offering, at December 31, 2022, was around EUR 567 million (December 31, 2021: EUR 423 million), of which around EUR 144 million is payable in 2023 (2021: EUR 107 million payable in 2022).
At the end of 2022, 64 clients covering Dimension, Coric, and Gain, are as a Service clients on a SaaS solution.
In 2022, six clients canceled SimCorp Dimension and three clients canceled SimCorp Gain contracts. The annual software updates and support fee for the canceled contracts amounted to EUR 4.3 million, equivalent to 0.7% of 2022 revenue compared with EUR 1.8 million in 2021, equivalent to 0.4% of 2021 revenue.
SimCorp is transforming from a traditional Software company to a full-scale Software-as-a-Service provider. As a consequence of the transformation to a SaaS company, SimCorp will steadily change its business focus from license and maintenance revenue to subscription, hosting and technologyenabled services. SimCorp is converting perpetual license contracts to SaaS subscription agreements, and the gradual transition into a full SaaS business will inherently be a multi-year journey. Therefore SimCorp has changed it revenue segmentation to reflect the transformation.
In 2022, the ARR was EUR 321.9 million, which was equivalent to 57.4% of total revenue. In 2021, the ARR was EUR 277.4 million, which was equivalent to 55.9% of total revenue. The ARR growth in 2022 was 16.1% in EUR, and 12.1% in local currencies. The current ARR is based on the backward-looking revenue. In 2023, SimCorp will report on a forward-looking ARR (see definition on page 63).
SimCorp generated total revenue of EUR 561.0 million in 2022 compared with EUR 496.3 million in 2021, equivalent to an increase of 13.0%. Exchange rate fluctuations for the period had a positive impact on revenue of 3.6%. Measured in local currencies, revenue thus increased organically by 9.4%.
Total on-premise revenue was EUR 308.4 million, an increase of EUR 31.6 million or 11.4% compared with 2021. On-premise revenue consists of on-premise license sales from initial licenses to new clients and additional licenses to existing clients and on-premise software updates and support revenue.
On-premise license sales was EUR 140.1 million corresponding to a growth of 25.0% compared with 2021.
On-premise software updates and support revenue was License revenue split EUR 168.4 million or 2.3% higher than last year. Growth in on-premise software updates and support from new and existing customers is partly offset by customer conversions from on-premise to SaaS.
Total SaaS revenue was EUR 88.7 million an increase of EUR 21.0 or 31.1% compared with 2021 mainly driven by SaaS services with the completion and implementation of new client installations and new functionalities to existing clients. SaaS revenue consists of SaaS license sales and SaaS Services including software updates and support. SaaS License sales was EUR 17.0 million a decline of EUR 0.7 million compared with last year.
| License revenue split | ||||
|---|---|---|---|---|
| Revenue | Share of revenue |
Share of revenue |
Revenue | Revenue growth local |
||
|---|---|---|---|---|---|---|
| EUR '000 | 2022 | 2022 | 2021 | 2021 | growth | currencies |
| On-premise initial licenses | 14,045 | 2.5% | 15,679 | 3.2% | -10.4% | -4.6% |
| On-premise additional licenses | 117,612 | 21.0% | 84,107 | 16.9% | 39.8% | 37.4% |
| On-premise other licenses | 8,411 | 1.5% | 12,403 | 2.5% | -32.2% | -33.5% |
| On-premise software updates and support | 168,367 | 30.0% | 164,645 | 33.2% | 2.3% | -1.2% |
| Total on-premise revenue | 308,435 | 55.0% | 276,834 | 55.8% | 11.4% | 8.9% |
| SaaS initial licenses | 3,831 | 0.7% | 5,854 | 1.2% | -34.6% | -39.2% |
| SaaS additional licenses | 7,784 | 1.4% | 8,399 | 1.7% | -7.3% | -14.9% |
| SaaS other licenses | 5,371 | 1.0% | 3,466 | 0.7% | 55.0% | 45.5% |
| Saas services incl. software updates and support | 71,704 | 12.8% | 49,944 | 10.1% | 43.6% | 36.8% |
| Total SaaS revenue | 88,690 | 15.9% | 67,663 | 13.7% | 31.1% | 24.2% |
| Professional services | 163,843 | 29.1% | 151,777 | 30.5% | 7.9% | 3.9% |
| Total revenue | 560,968 | 100.0% | 496,274 | 100.0% | 13.0% | 9.4% |
SaaS Services including software updates and support was EUR 71.7 million corresponding to a growth of 43.6% compared with last year driven by completion and implementation of new client installations and new functionalities to existing clients.
Professional Services which now mainly consists of implementation of new or existing clients was EUR 163.8 million compared to EUR 151.8 million in 2021.
The ten largest clients generated 25% (2021: 23%) of SimCorp's total revenue. In 2022, the largest client accounted for 5.8% (2021: 4.0%) of the revenue. SimCorp entered 2023 with
signed revenue for the full year of EUR 364 million – an increase of EUR 41 million or 12.6% compared with the beginning of 2022.
Total operating costs and other operating costs (including depreciation and amortization) increased by 16.8% from EUR 364.6 million in 2021 to EUR 426.0 million excluding EUR 9.9 million in special items. Currency fluctuations decreased the total operating costs by 2.5%. Measured in local currencies, the operating costs increased by 14.3% compared with 2021. The increase in operating costs was primarily a result of increased staffing and an increase of around 5% in annual salaries. The average number of full-time employees increased by 196 or 10.5% from 1,871 in 2021 to 2,067 in 2022. The number of employees (headcount) was 2,245 at the end of 2022 compared with 1,998 at the end of 2021, an increase of 247 employees. 67% of SimCorp's total operating costs were directly related to employees compared with 70% in 2021.
Cost of sales increased by 16.0% to EUR 228.6 million. Measured in local currencies, the organic increase in cost of sales was 12.7%. The increase was partly related to an increase in the new SaaS operations. Cost of sales represented 40.7% of revenue compared with 39.7% in 2021.
Research and development costs increased by 15.8% to EUR 106.3 million. Measured in local currencies, research and development costs increased by 15.7%. The increase was due to continued investment in our offerings. Research and development costs were 18.9% of revenue in 2022, compared with 18.5% in 2021.
Sales and marketing costs increased by 20.6% to EUR 60.6 million. Measured in local currencies, sales and marketing costs increased by 15.9%. The cost increase primarily relates to higher staff costs, user meetings, and higher travel and meeting activities. Sales and marketing costs represented 10.8% of revenue compared with 10.1% in 2021.
Administrative expenses increased by 19.2% to EUR 30.5 million. Measured in local currencies, administrative expenses Increased by 18.8%. Administrative expenses were 5.4% of revenue compared with 5.2% in 2021.
| EUR million | Reported costs FY 2022 |
Special items FY 2022 |
Costs excl. special items FY 2022 |
Costs FY 2021 |
Growth FY 2022 |
Growth local currencies FY 2022 |
|---|---|---|---|---|---|---|
| Cost of sales | 228.6 | - | 228.6 | 197.0 | 16.0% | 12.7% |
| Research and development costs | 107.0 | 0.7 | 106.3 | 91.8 | 15.8% | 15.7% |
| Sales and marketing costs | 61.5 | 0.9 | 60.6 | 50.2 | 20.6% | 15.9% |
| Administrative expenses | 35.9 | 5.4 | 30.5 | 25.6 | 19.2% | 18.8% |
| Other operating costs | 2.9 | 2.9 | - | - | - | - |
| Total operating costs | 435.9 | 9.9 | 426.0 | 364.6 | 16.8% | 14.3% |
Other operating costs of 2.9 million occurred in 2022, are related to help and support for our Ukrainian colleagues.
SimCorp generated an EBIT of EUR 125.9 million compared with EUR 132.4 million in 2021, a decrease of EUR 6.5 million. The reported EBIT margin was 22.4% compared with the EBIT margin of 26.7% in 2021. When measured in local currencies, the EBIT margin was 21.6% in 2022.
EBIT adjusted for special items (EUR 9.9 million), covering costs related to the operating model programme for the transformation to a SaaS company, EUR 7.0 million and support of our Ukrainian colleagues EUR 2.9 million, was EUR 135.7 million. The adjusted EBIT margin was 24.2% and measured in local currencies, the adjusted EBIT margin was 23.4%.
Share of profit after tax in associates of EUR 0.1 million, financial income of EUR 3.2 million, and financial expenses of EUR 1.0 million resulted in a net financial income of EUR 2.3 million in 2022 compared with a net financial income of EUR 5.0 million in 2021. The net financial income in 2022 and 2021 were primarily related to foreign exchange adjustments.
Profit before tax was EUR 128.1 million against EUR 137.4 million in 2021. The estimated tax charges for 2022 amounted to EUR 28.9 million against EUR 27.4 million in 2021. The effective tax rate was 22.5% compared with 20.0% in 2021, the effective tax rates were impacted by refunds of withholding taxes related to prior years. The effective tax rate of 22.5% was slightly lower than the expectation announced in the 2021 Annual Report of an expected effective tax rate for 2022 of between 23% and 25%. The Group profit after
tax was EUR 99.3 million compared with EUR 110.0 million in 2021. After the net effect of foreign currency translation differences and remeasurements of defined benefit plans of EUR 0.1 million, the total comprehensive income amounted to EUR 99.4 million against EUR 114.0 million in 2021.
SimCorp had total assets of EUR 604.3 million at December 31, 2022 compared with EUR 526.3 million at December 31, 2021. The increase of EUR 78.0 million was primarily related to changes in contract assets of EUR 71.9 million. Cash holdings decreased by EUR 7.2 million from EUR 47.7 million at December 31, 2021 to EUR 40.5 million.
Compared with December 31, 2021 contract assets increased by EUR 71.9 million from EUR 221.0 million to EUR 292.9 million. New and additional subscription-based licenses added EUR 133.9 million to contract assets, foreign exchange adjustments added EUR 6.6 million, and finance income recognized added EUR 2.2 million. Reductions in 2022 stem from invoiced subscription-based license fees of EUR 70.8 million. There was no change to expected credit loss provision in 2022.
Receivables increased by EUR 15.9 million from EUR 96.5 million at December 31, 2021 to EUR 112.4 million. In accordance with IFRS 9 'Financial Instruments', SimCorp has made an expected credit loss provision of EUR 1.3 million related to contract assets and receivables at December 31, 2022 (December 31, 2021: EUR 1.4 million).
The Group's total non-current assets were EUR 142.4 million compared with EUR 147.3 million on December 31, 2021. Goodwill was EUR 61.3 million at December 31, 2022
compared with EUR 61.6 million at December 31, 2021. No impairment of goodwill was made in 2022.
The carrying amount of acquired software was EUR 8.1 million compared with EUR 9.8 million at the end of 2021 and the value of client relationships was EUR 19.6 million compared with EUR 21.2 million at the end of 2021. The decreases were due to amortization.
The carrying amount of leasehold assets was EUR 38.3 million compared with EUR 40.1 million at the end of 2021. The decreases were due to amortization. Other property, plant, and equipment amounted to EUR 3.2 million compared with EUR 3.6 million at the end of 2021. Other financial assets amounted to EUR 4.8 million. Deferred tax assets were EUR 2.8 million compared with EUR 3.1 million at the end of 2021.
SimCorp's total liabilities were EUR 228.8 million at December 31, 2021, compared with EUR 203.2 million a year earlier. The increase relates mainly to higher trade payables.
The Group's equity amounted to EUR 375.6 million on December 31, 2022. This was an increase of EUR 52.5 million compared with December 31, 2021. Equity was reduced by the purchase of treasury shares of EUR 20.0 million and dividends of EUR 39.9 million. Equity was increased by comprehensive income in 2022 of EUR 99.4 million as well as effects of share-based remuneration of EUR 12.9 million, net of tax.
Operating activities generated a net cash inflow of EUR 60.3 million against EUR 90.7 million last year.
Changes in contract assets were EUR 70.6 million compared with EUR 44.9 million in 2021, due to higher subscriptionbased license revenue in 2022 than in 2021. Changes in working capital were negative at EUR 4.7 million. Payment of income taxes amounted to EUR 22.3 million, against EUR 23.3 million in 2021. Other non-cash items of EUR 4.0 million were primarily related to unrealized exchange gains and other adjustments. There was a net cash outflow of EUR 2.8 million from investing activities compared with EUR 5.7 million in 2021.
Free cash flow (cash flow from operations reduced by CAPEX and lease payments) was EUR 47.2 million compared with EUR 78.6 million in 2021, a decrease of EUR 31.4 million. Cash conversion, defined as free cash flow divided by profit for the year, was 48% compared with 71% in 2021. The cash conversion of 48% was below the expectation announced in the 2021 Annual Report of an expected cash conversion for 2022 of between 70% and 80%.
The lower cash conversion was primarily due to lower profit for the year and larger effect on the cash generation from change in contract assets (higher effect of IFRS 15 upfront revenue recognition in 2022 compared to 2021).
Cash used in financing activities in 2022 of EUR 64.8 million related to dividend payments of EUR 39.9 million, purchase of treasury shares of EUR 20.0 million, repayment of lease liabilities of EUR 11.7 million, proceeds from credit facilities / loans of EUR 26.9 million and repayment from credit facilities of EUR 20.1 million. Cash used in financing activities in 2021 of EUR 91.0 million was dividends of EUR 40.1 million, purchase of treasury shares of EUR 40.1 million, and repayment of lease liabilities of EUR 10.8 million in 2021.
In 2022, SimCorp purchased 269,795 treasury shares with a nominal value of DKK 1 at an average price of DKK 514.47 per share, totaling EUR 20.0 million. SimCorp delivered 134,558 treasury shares with a nominal value of DKK 1 on the vesting of restricted stock units.
Furthermore, 2,532 treasury shares will be delivered after publication of this annual report as remuneration to the Board of Directors in accordance with a resolution adopted by shareholders at the Annual General Meeting 2022.
Purchase of treasury shares
At December 31, 2022, SimCorp held 1,228,084 treasury shares with a nominal value of DKK 1 each (3.0% of the total share capital) at a cost of EUR 98.1 million and a market value of EUR 79.0 million. At December 31, 2021, SimCorp held 1,072,118 treasury shares with a nominal value of DKK 1 each (2.6% of the total share capital) at a cost of EUR 85.6 million and a market value of EUR 103.1 million.
In 2022, the parent company generated revenue of EUR 263.4 million, an increase of EUR 13.2 million compared with 2021. The parent company received dividends totalling EUR 31.5 million from subsidiaries in 2022 compared with EUR 20.3 million in 2021. Profit before tax for the year was EUR 108.5 million against EUR 110.7 million in 2021. Income tax amounted to EUR 16.1 million compared with EUR 15.8 million in 2021. Net profit was EUR 92.4 million compared with EUR 94.9 million in 2021. Equity increased from EUR 291.2 million at December 31, 2021 to EUR 336.7 million at December 31, 2022.
The Board of Directors intends to recommend to shareholders at the Annual General Meeting 2023 that, of the total recognized comprehensive income of EUR 92.5 million, dividends of EUR 39.7 million be declared, representing DKK 7.50 per share of DKK 1, and that EUR 52.7 million be transferred to retained earnings.
As SimCorp operates in a continually changing and volatile business environment, its Board of Directors and management regard it as essential that its enterprise risk exposure is thoroughly assessed, monitored and controlled on an ongoing basis. This happens through a structured and constantly improved enterprise risk management process, which is closely linked to our strategy execution, applying a framework of risk policies and risk mitigating procedures.
The Board of Directors and management are deeply committed to prepare the company for different risks and uncertainties which could, in circumstances we may or may not be able to accurately predict, recognize, or control, have a material adverse effect on our business, reputation, future activities, results and liquidity.
An Enterprise Risk Management process is applied to identify relevant risks in SimCorp's major units.
SimCorp management continually monitor risk development in the SimCorp Group.
03 Risk control
The Audit and Risk Committee oversees the ongoing process for identifying, managing and reporting risks.
| Risk category | Risk mitigation | |
|---|---|---|
| Cyber attack | As a software company with a core business based on modern information technology, a failure to adequately protect itself against IT security risks would represent a particular risk. Cybercrime, including unauthorized access to SimCorp's network and data that could endanger SimCorp's infrastructure and applications. This also applies to malware attacks and theft of code or know-how which could also result in prolonged system breakdowns impairing productivity and potentially rendering SimCorp unable to service its clients. |
SimCorp monitors its technical infrastructure to identify and minimize risk to the company's production and operations. Established procedures and solutions enable a quick restoration of critical business services. SimCorp upholds a high data security level and strict access control to the environments and network. Controls are moni tored and reviewed to improve information security, and SimCorp regularly employs third-party testers to perform penetration testing, security reviews and auditing. |
| SimCorp currently delivers SimCorp Dimension as a Service (hosted) for 34 clients, operating the clients' systems in a third-party hosted environment. Any failure of the hosting provider could result in prolonged system breakdowns that would impair |
SimCorp reviews third-party hosting providers' compliance with security commitments, and we receive and review third-party assurance and penetration testing reports. |
|
| productivity and potentially render SimCorp unable to service clients. | SimCorp management and employees are regularly updated on new potential cybercrime threats and how to minimize the risk of phishing and hacking. SimCorp has a disaster recovery plan for restoring all critical business services. |
|
| People and | SimCorp's business is based on specialized expertise and innovation. It is imperative that SimCorp continues to attract, develop, and retain skilled employees and |
To strengthen SimCorp's employer brand and this way increase awareness of what SimCorp has to offer as an employer, an 'Employer Value Proposition' (EVP) program |
| corporate culture | management talent. Failure to do so constitutes a risk to the Group. | has recently been developed. Furthermore, to retain talent in SimCorp, substantial resources have been allocated to mentoring and leadership programs in 2022. |
| The supply of talent is provided internally through development as well as from the market. For some roles, there is fierce competition for talent. Hence, SimCorp's ability to successfully attract, hire, onboard and retain our talent – and do this in a scalable and efficient way – is critical for our long-term success. For us to be able to attract and retain the right talent, we must offer a diverse, |
Culture and behaviors are key and our focus is both on adapting our culture to support our growth, as a company as well as how we operate around the world. Actively listening to the voice of the organization is key to preserve our culture and ensuring retention. Hence, in 2022, we have introduced a number of councils and boards in the People and Culture area, a number of employee resource groups have |
|
| equitable and inclusive workplace and culture. We have a strong culture today and that culture has brought us to where we are and made us perform and win. |
been formed and we are doing bi-monthly pulse surveys with all employees – all these initiatives are put in place to collect feedback and input from employees across SimCorp. |
|
| In order to map where we lack critical resources, a company-wide capability review has been rolled-out and a gap analysis is being created. A new leadership model focusing on improving the entire leadership skillset, including talent enablement, has been developed and is being implemented. |
||
| To ensure SimCorp's business is conducted in accordance with corporate values, a Guideline for Good Business Behavior for all employees and a Code of Conduct for Suppliers has been established, and annual online training is conducted. In addition, SimCorp maintains a whistleblower system as a means of increasing focus on transpa rency and enabling reporting and action on any suspected irregularities. |
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Risk category Risk mitigation Markets and clients Responding timely to investment management market trends is critical to SimCorp's ability to stay competitive. Failing to spot these trends represents a risk. Competitors' expansion of service-offerings and distribution could also endanger SimCorp's market-leading position. New local requirements or legislation may also influence the demand for SimCorp's offerings. Through extensive ongoing market research and industry analysis, SimCorp keeps abreast of trends and movements in the global financial markets. Its close and longstanding client relationships allow SimCorp to anticipate and respond to new preferences and requirements. In addition, SimCorp actively monitors contracts to manage risks. Although 40% of SimCorp's clients are among the top 100 global investment managers, the SimCorp Group has no client with revenue of more than 5.8% (2021: 4.0%) of total revenue. Political and pandemic risks With offices and sales across the world, SimCorp is from time to time affected by geopolitical uncertainties and unrest. Since 2007, SimCorp has had a development unit based in the Ukraine. The possible close down of countries due to pandemic, terror, war etc. could pose a threat to SimCorp's product offering, sales, and service efforts. The same goes for our employees' well-being. Potential political and economic unrest in countries and regions where SimCorp operates or plans to operate is monitored and fully considered when making operational and strategic decisions. SimCorp continuously monitors the political situation in countries where we and our clients operate. The situation in Ukraine is being monitored closely, and we have business continuity plans for operations and our employees. Structured sales reviews, the ability to do remote demos and implementations, as well as our standard platform initiative mitigate the risk of discontinuity. Finally, SimCorp has a Group Policy on restricted countries and parties in place to ensure compliance with international sanctions, export controls and requirements of our internal and external stakeholders. Regulatory issues and fiscal policies Protecting SimCorp's long-term business interests is vital to its continued operations. This includes legal risk that may impact SimCorp's business. Failure to meet or implement regulatory requirements in a timely fashion with respect to, for instance, data protection, confidentiality agreements, IPR, corruption and fraud constitutes a risk. SimCorp is subject to tax and fiscal policies in the countries in which the Group operates. Changes in local jurisdictions may affect SimCorp's tax and fiscal position. As SimCorp operates in multiple countries, the Group is exposed to changes in currency exchange rates. SimCorp ensures that all contracts entered into are carefully worded. SimCorp's due diligence and procurement processes, as well as the 'Guideline for Good Business Behavior' and Code of Conduct for Suppliers, ensure that the company's values are adhered to, including safeguarding against corruption. SimCorp's Group Finance department manages the company's currency and financial exposures pursuant to the treasury policy approved by the Board of Directors, including keeping overall currency and financial exposure within defined limits. Furthermore, Group Finance ensures that SimCorp is at all times tax compliant in the countries in which SimCorp conducts business. SimCorp's Group Legal and Compliance department monitors and ensures data privacy compliance, including compliance with GDPR and data privacy regulation in jurisdictions outside of the EU. Both in terms of handling of employee and client data, SimCorp has in place adequate technical and administrative processes including security measures, data processing agreements and due diligence and audit of suppliers.
| Risk category | Risk mitigation | |
|---|---|---|
| Software implementation |
Implementation projects not being priced correctly or clearly scoped poses a risk of cost overruns, as well as causing delivery risk. |
SimCorp professional services apply a global delivery model leveraging a standard methodology based on industry best practices and standard components. This approach includes comprehensive project plans and regular client meetings. It is key |
| and services | After going live with the solution, the most apparent risk is possible breach of service level agreements, security requirements, or other committed standards. |
for SimCorp to provide standardized end-to-end serviced solutions, both during implementation, and after clients have gone live. |
| Offering SimCorp Dimension as a Service introduces operational risks from running clients' operational IT environments. This in turn exposes SimCorp to potential financial and reputational risks should operations be negatively impacted by errors or downtime. |
SimCorp has established various measures to control both external and internal risk to the provision of full-service packages. Externally, a due diligence process is conducted on each subcontractor to ensure it meets SimCorp's requirements; financially, organizationally, and product-wise. Internally, a clear description and overview of each delivery component allows for a clear segregation of duties. |
|
| Services are provided by subcontractors engaged by SimCorp. If SimCorp fails to balance the requirements of clients and agreements with these subcontractors, SimCorp risks impairing the clients' businesses as well as its own. |
SimCorp's consultants undergo regular training, and have relevant industry standard and SimCorp specific certifications, to maintain and develop the required knowledge and experience in relation to the operational services. |
|
| Larger complex implementation contracts are evaluated, approved, and monitored using a Group standard. |
||
| SimCorp regularly receives independent assurance reports from our third-party service providers, and the hosting providers have undergone due diligence performed by SimCorp and its external partners. SimCorp has a targeted security awareness program on secure development standards. Patch and upgrade servers are part of the product and are protected like other servers. |
||
| Product innovation and quality |
Product innovation, improved technical infrastructure, and enhanced technical capabilities are fundamental to meeting new system requirements in the market and this continues to be a risk for SimCorp. Being unable to deliver those elements in a timely fashion could mean that SimCorp's product and services would end up as legacy offerings. |
Quarterly, SimCorp offers updated versions of SimCorp Dimension, including enhanced system functionality and technical infrastructure based on a systematic prioritization of client and market requirements. A best-practice agile development method enables quick adaptation to change in market and client demands. This also shortens the period of extensive testing prior to new version releases, securing an even better software quality. |
| SimCorp's ability to offer clients the best software with the highest possible configurability and flexibility is paramount. Inadequate quality control and testing prior to the release of new software versions could increase the risk of reduced client satisfaction and loyalty. To enable optimal use of resources, lower the total cost of operations (TCO), ease upgrade, and make cloud benefits available for our clients in an efficient manner, we need SimCorp Dimension to operate in a 3-tier deployment model, on premises, in private, and in the public cloud. |
SimCorp continually raises and follows up on internal quality targets and has been able to minimise the number of errors in new software releases. As part of our transition to cloud, we have laid out the technical needs, ensured feasibility, done extensive estimation, and established burndown measurements. In addition, we have increased our efforts to meet staff needs in all our locations, and we are engaging with subcontractors to increase our capacity. |
|
| The 3-tier deployment model is the first step in our cloud lift and is paramount for this transition. The main risk associated with the transition is the lack of necessary development capacity or capabilities. |
In recent years, we made good progress on the cloud lift to move SimCorp Dimension, a journey that will continue. |
| Risk category | Risk mitigation | |
|---|---|---|
| Security breaches in products supported by SimCorp |
SimCorp sells software services to on-premise and cloud-based clients. Clients being affected by security incidents directly from our product stack or supply chain poses a significant risk. Furthermore, data breaches, including personal information and market sensitive information, remain one of the top concerns for our clients. |
SimCorp's products are subject to a range of security controls prior to release, including peer review and static code analysis by automated code review tools. We recommend clients use Citrix as an additional protection layer. Governance of third-party software components is performed, the suppliers of such software are diligently screened, using both expert assessments of the product as well as in-house proof of concept and on-going automated review. |
| Business Processes as a Service |
With Data Management Services (DMS) and Investment Account Services (IAS) SimCorp has two BPaaS services in the market today. Both services have satisfied clients using them. In the next phase of the lifetime of these services we need to further grow the client base and achieve the needed economies of scale. Not reaching economies of scale will put the margin of the services under pressure or make us vulnerable against low price competition. |
We have sales teams around the world to focus on the sales of these services stand alone or in connection with SimCorp Dimension. In addition, we invest in marketing and branding to make ourselves better known in this space. To create the economies of scale we leverage the usage of our own technology to produce these services and continuously automate our processes and reduce the need for additional headcount. |
| Strategy execution | SimCorp is going through transformational change. To succeed with our transformation, our organization at all levels needs to understand and embrace our corporate strategy and associated change agenda. Failing to do this will put the overall transformation and hence medium-long term company performance at risk. The strategy execution can also be hindered by inefficient change management across the organization. |
SimCorp is increasing strategy and transformation communication and enablement via a combination of more frequent, more targeted and granular, and more leadership-driven communication and people engagement. This entails providing more information about the strategic journey, how we progress, why we are winning, and how it affects every individual in the company. Moreover, we are embedding change leadership into our talent and leadership development programs as well as building a "change community" to support change efforts across the organization by providing training and guidance to the business/ project leaders owning the various transformation activities. Additionally, we are implementing a new strategy execution governance framework to drive the necessary focus and progress. |
SimCorp's Board of Directors has reviewed each of the recently revised recommendations on corporate governance issued by Nasdaq Copenhagen and has concluded that, with one exception (severance payments), SimCorp is in full compliance with the recommendations. The Board has decided on specific measures on the exception.
SimCorp's Corporate Governance Guidelines are intended to ensure an efficient and adequate management of SimCorp within the framework defined by applicable legislation, rules, and recommendations for listed companies in Denmark and by SimCorp's Articles of Association, vision, and values. The Statutory Report on the Recommendation on Corporate Governance 2021 demonstrates that, with one exception (severance payments), SimCorp is in full compliance with the recommendations.
SimCorp's overall management objective is to promote the long-term interests of the company, and thus of all stakeholders. Achieving this objective assumes that SimCorp establishes lasting and constructive relationships with the Group's primary stakeholders: clients, employees, shareholders, and society. As part of its annual strategy objective setting, the Board of Directors (BoD) considered SimCorp's purpose of "enabling a prosperous life in a liveable world" and agreed it is in support of the long-term value creation of the company and should be pursued on a daily basis.
The BoD is a collective body for promoting the long-term interests of the company. The BoD has as its main three responsibilities to ensure: (i) that the company at all times has the right Executive Management Board (EMB); (ii) that the strategic direction of the company is set; and (iii) that the financial and managerial control of the Group is conducted adequately.
The BoD is constituted to ensure its independence, adequate collective competences, and experiences within executive management disciplines related to global corporations, information technology, and business-to-business sale and deployment of software and delivery of technology-enabled services, and to comprise a sufficient number of members to enable an appropriate distribution of tasks and an effective decision-making process. As provided in the company's articles of association, SimCorp's BoD consists of between four and eight members elected by the company's shareholders in addition to members elected by and among the company's employees. The current BoD consists of six shareholder-elected members and three employee-elected members. During 2022, 3 new employee-elected members joined the BoD.
As part of its annual cycle activities, the BoD carries out a self-assessment. In 2022, the Board decided to carry out the evaluation internally. The self-assessment comprised an evaluation of the work and contribution of the EMB, the BoD, the Audit and Risk Committee, the Nomination and Remuneration Committee and the Technology Committee within the areas of strategy, finance, risk management, sales, organization, management, operations and ESG.
| Board | Nomination | Tech | ||
|---|---|---|---|---|
| of | Audit | and Remu | nology | |
| Board of | Direc | and Risk | neration | Commit |
| Directors | tors | Committee | Committee | tee |
| Peter Schütze | 8/8 | 3/3 | 2/2 | |
| Morten Hübbe | 8/8 | 3/3 | ||
| Simon Jeffreys | 8/8 | 5/5 | ||
| Adam Warby*** | 8/8 | 5/5 | 2/2 | |
| Joan Binstock | 8/8 | 5/5 | 2/2 | |
| Susan Standiford | 8/8 | 2/2 | ||
| Charlotte S. Klausen* | 4/5 | |||
| Sven Rinke* | 5/5 | |||
| Neil Cook* | 5/5 | 1/1 | ||
| Else Braathen** | 3/3 | 1/1 | ||
| Vera Bergforth** | 3/3 | 1/1 | ||
| Hugues Chabanis** | 3/3 |
** Election period expired on 24 March 2022
*** Joined Nomination and Remuneration Committee on 24 March 2022
Each member of the BoD and EMB member provided written comments and feedback on a comprehensive questionnaire which included questions on, inter alia, cooperation within the BoD, the committees and between the BoD and EMB, quality and relevance of the material provided to the BoD, the time spent on various matters and the role of the chairmanship. This was followed up by a personal interview between each member of the BoD and EMB and the Chair of the Board and with a final report and discussion with the entire BoD and EMB.
The BoD also evaluated, whether the total number of functions, including their level and complexity, taken on by each board member was appropriate.
It was concluded that the BoD's work is effective, that the members collectively contribute to the required areas of expertise, and that none of the directors is over-boarded The BoD concluded that they possess the necessary competencies to and qualifications to perform their duties. The BoD also concluded that the diversity of the EMB and the BoD with regard to nationalities, educational backgrounds, gender, and age represented by its members is appropriate in light of the company's strategy and markets.
Finally, the BoD concluded that SimCorp complies with the Danish Corporate Governance Guidelines' recommendation that at least half of the members elected by the AGM are independent.
The BoD has overall responsibility for ensuring that SimCorp maintains appropriate procedures to monitor, measure, and manage the company's risks and that such procedures are firmly embedded in the company's organization. As part of its risk management, the EMB and the BoD have defined and described the most critical risks to SimCorp and the related mitigating actions. For a more detailed description, see 'Risk Management', pages 31-36.
Further, the company maintains a whistleblower hotline, which is intended to enable reporting on suspected irregularities in the business. SimCorp has engaged a third party, Got Ethics, who provides an internet-based reporting tool. Reports sent through the whistleblower hotline are electronically submitted directly to the Chair of the Audit and Risk Committee and another non executive.
→ Whistleblower Policy https://www2.simcorp.com/whistleblower-policy
The Nomination and Remuneration Committee assists the BoD with oversight of the competence profile and composition of the BoD, nomination of the BoD and committee members, succession plans for the EMB, remuneration packages and policies for the BoD and EMB, and other tasks on an ad-hoc basis as decided by the BoD. The Nomination and Remuneration Committee consists of four members elected by the BoD on a one-year term by and among the BoD. Further, SimCorp's CEO is a regular attendee at meetings of the Nomination and Remuneration Committee. In 2022, the committee held three meetings.
For one of the three existing executive services agreements, the total severance pay during the notice period exceeds the recommended two years' remuneration in the event of change of ownership as the severance payment is up to nine months, and the notice period is extended to 36 months for one executive. In future agreements, SimCorp will ensure the total remuneration does not exceed the recommended threshold. Refer to our Remuneration Report for more details on severance payments.
→ Remuneration Report 2022 https://www2.simcorp.com/Remunerationreport2022
The Audit and Risk Committee is responsible for assisting the BoD by monitoring SimCorp's financial reporting, its internal financial control and enterprise risk management, as well as the quality, effectiveness, and independence of the external auditors for the SimCorp Group of companies. The Audit and Risk Committee consists of three members elected on a one-year term by and among the BoD.
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Audit fees | 203 | 210 |
| Other service fees | 56 | 68 |
| Total auditor fee | 259 | 278 |
| Non-Audit Services (NAS)/Audit fee ratio | 28% | 32% |
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Audit fees | 557 | 521 |
| Tax and VAT advice fees | 17 | 34 |
| Other service fees | 62 | 71 |
| Total auditor fee | 636 | 626 |
| Non-Audit Services (NAS)/Audit fee ratio | 14% | 20% |
The Audit and Risk Committee meets as often as it and its Chair deem necessary, however, as a minimum, the Committee will meet four times a year at appropriate times in the reporting and audit cycle. In 2022 five meetings were held.
Danish corporate governance guidelines recommend that the majority of the members of the Committee qualify as independent, and that the committee should possess the necessary financial expertise. The members of the Audit and Risk Committee qualify, and are shown in the table on page 40. See SimCorp's Corporate Governance Guidelines for a full description of the Audit and Risk Committee's activities.
External auditor – tasks, objectivity, and independence The Audit and Risk Committee reviews and monitors the company's ongoing relations with and the independence of the external auditors. Based on recommendations from the Audit and Risk Committee and the external auditors, the Board of Directors decides whether there are areas to which the external auditors should pay special attention.
During the year, the Audit and Risk Committee has been informed about the external auditor's policies and procedures for safeguarding its objectivity and independence, and the audit partners and firm rotation requirements have been routinely observed. During the year, the Committee has approved audit-related and non-audit related services fees according to the Audit and Risk Committee guidelines for approval of non-audit services. Audit fees are for the audit of the consolidated and local company financial statements.
As part of its annual cycle activities, the Audit and Risk Committee reviews SimCorp's accounting policies, compliance with reporting requirements, risk policy and assessment, internal controls, whistleblower policy, insurance principles, and interim reports. It does deep-dives into specific topics, for example, risk associated with long-term contracts.
During 2022, the SimCorp Audit and Risk Committee was satisfied with auditor independence, and with the management of risks within the areas it monitors for the BoD.
The Technology Committee is responsible for assisting the BoD with respect to the overall role of technology in executing the business strategy, including, but not limited to, major technology investments, technology strategy and transformation, operational performance and technology trends that may affect SimCorp. The Technology Committee consists of four members elected on a one-year term by and among the BoD. The Technology Committee meets as often as it and its Chair deem necessary, however, as a minimum, the Technology Committee will meet four times a year as the the committee was formed in March 2022. In 2022, three meetings were held.
Statement on data ethics, cf. Section 99 d of the Danish Financial Statements Act.
→ Data Ethics Policy https://www2.simcorp.com/DataEthicsPolicy
SimCorp has adopted a Data Ethics Policy, the aim of which is to raise awareness of and enhance SimCorp's data ethical values and their anchoring in our organization. The policy is applicable to all types of data processing, regardless of whether it includes personal data. The policy is universal and aims to embrace all scenarios in which data ethics considerations are relevant.
SimCorp processes data on our employees, our clients' employees, our shareholders, and partners to administer our relationships and to support our decisions. The nature of the services which SimCorp provides requires that SimCorp processes transactional and portfolio data on behalf of our clients. SimCorp never engages in selling data which it has obtained through such processes.
Furthermore, SimCorp has adopted significant safeguards in order to provide a high degree of security and integrity of such data.
All new and existing employees will participate in training programs which include topics on data ethics.
Statement on corporate social responsibility, cf. Section 99 a of the Danish Financial Statements Act.
Corporate social responsibility (CSR) in SimCorp is firmly based on the Group's Sustainability Policy. SimCorp's commitment to corporate sustainable development is based on combining financial performance with socially responsible behavior and environmental awareness.
→ Sustainability Policy https://www2.simcorp.com/SustainabilityPolicy
SimCorp's commitment to CSR is described in its policies and codes of conduct, including the company's 'Sustainability Policy', 'Diversity, Equity and Inclusion Policy', 'Code of Conduct for Suppliers', 'Data Ethics Policy', 'Remuneration Guidelines', and 'Corporate Governance Guidelines'. These documents include guidelines on ethics, data privacy, human rights, the environment, stakeholder engagement, corporate governance, bribery, and anticorruption that govern our professional and commercial relations with internal and external stakeholders.
SimCorp joined the UN Global Compact in 2019 and commits to submitting an annual Communication on Progress (CoP) concerning our implementation of its Ten Principles. SimCorp's contribution to specific targets related to the UN's
Sustainable Development Goals and our achievements on a wide range of non-financial ESG targets and metrics are included in our Sustainability Report.
Our cloud transformation, new technologies, and people initiatives are key enablers of realizing our ambitions on sustainability, which aim to reduce our own and our clients' CO₂ emission, expand support for our clients' ESG investments, create a truly diverse, equitable, and inclusive workplace, and ensure meaning in work.
CO₂ emission is the key environmental impact affected by SimCorp's business model (see page 14). To reduce its own and its clients negative impact, SimCorp has a plan in place for moving its own operations from on-premise data centers to the cloud, offering its clients cloud hosting, and developing and offering energy-efficient services.
Due to the nature of its business model and its associated risks, SimCorp does not have a specific human rights policy. Our approach to human rights is outlined in our Guideline for Good Business Behavior and our Code of Conduct for Suppliers. It is part of the procurement process that suppliers are requested to confirm compliance with the Universal Declaration of Human Rights and the core Conventions of the International Labour Organization (ILO), and to respect an equal status between the sexes and between persons of different races and religion. Further,
→ Sustainability Report 2022 https://www2.simcorp.com/SustainabilityReport2022
SimCorp does not knowingly accept products and services which have directly or indirectly been designed, manufactured, produced, or procured in contravention of local environmental legislation or other legislation, or by means of corruption, bribery, or other fraudulent behavior.
→ Code of Conduct for Suppliers https://www2.simcorp.com/CodeofConductSuppliers
SimCorp maintains high standards on confidentiality and protection of personal data, which is ensured through compliance with technical data security standards and processes, as well as ongoing employee training on how to handle data confidentially. A framework is in place to ensure that SimCorp complies with the General Data Protection Regulation (GDPR) and other similar national regulations.
Report on the underrepresented gender and diversity, cf. Sections 99 b and 107 d of the Danish Financial Statements Act is included in our Sustainability Report 2022.
→ Sustainability Report 2022 https://www2.simcorp.com/SustainabilityReport2022
We acknowledge that gender diversity across SimCorp's organization is beneficial to our business and the societies we operate in, which is why it is part of our local and global sustainability targets and agenda. Increasing gender diversity increases diversity of thought and experiences, improving our ability to find solutions to challenges and strengthening our ability to transform our company sustainably into the future.
In addition to gender, SimCorp tracks, reports, and advocates for diversity of age and nationality globally, while encouraging local initiatives and foci for additional diversity dimensions.
We maintain our global, company-wide ambition to have a better gender balance across all levels of our organization and have publicly committed to a target of at least 40% of the underrepresented gender (women) by 2030.
Activities to help us reach our gender balance goals include: a women's mentorship program, increased attention to gender bias in people processes, and target-setting. In 2023, efforts in this area will continue, and the new legislation on the underrepresented gender will provide even more focus and structure to both targets and initiatives.
As part of our commitment, we have made internal and external commitments for gender representation at all levels.
Women are the underrepresented gender at SimCorp and we have a target to reach 36% women as a share of 1) the total full-time employee population, 2) people leaders, and 3) Global Management Committee (GMC) by 2025. By 2030, our target is 40% women in all three of these categories. Our Corporate Scorecard includes a target of at least 34% of promotions for women, as this is the equivalent to the actual percentage of women in our organization; in 2022, this target has been met.
In 2022, we maintained our target of at least two shareholderelected members from the underrepresented gender on our Board and women hold 33% of the BoD positions.
In 2021, we set a target of 25% women on the Executive Management Board (EMB), which has not been met to date. For the seven-member Executive Committee (ExCo), which includes the three EMB members, the 2022 gender split is 14% women and 86% men. For 2030, our gender target is 40% women and 60% men at all levels. There is significant
room for improvement in both the ExCo and GMC, and this will be a focus area going forward.
SimCorp's total employee population comprised 65.5% men (2021: 66.5%) and 34.3% women (2021: 33.3%) and 0.2% undeclared (2021: 0.2%).
Report on EU Taxonomy Eligibility 2022 is included in our Sustainability Report 2022
The EU Sustainable Finance Action Plan centers around the EU Taxonomy (Regulation (EU) 2020/852), which is a classification system for identifying environmentally sustainable economic activities. For 2022, SimCorp has identified hosting of its clients' operations of SimCorp services as the only Taxonomy-eligible activity related to its business model, which is considered relevant. Currently, SimCorp's Taxonomy-eligible hosting services are not Taxonomy-aligned. For our full EU Taxonomy disclosure, see our Sustainability Report 2022.
→ Sustainability Report 2022 https://www2.simcorp.com/SustainabilityReport2022
In 2022, SimCorp's share price declined by 31% after having increased 108% in the period 2017 to 2021. Liquidity in the SimCorp share measured by average daily trading turnover was down by 40% to DKK 37.2 million.
The share price at December 31, 2022 was DKK 478.20 per share, equal to a market capitalization of EUR 2.5 billion (DKK 18.8 billion). The share price declined by 31% in 2022. By comparison, the Nasdaq Copenhagen Large Cap index, which includes the SimCorp share, declined by 6%. In the period 2017 to 2021, the SimCorp share increased by 108%. Relative to 2021, the average daily turnover of SimCorp shares on Nasdaq Copenhagen declined by 40% to DKK 37.2 million, while the average number of trades per day declined by 29% to 1,496.
SimCorp's nominal share capital is DKK 40,500,000 divided into 40,500,000 shares of DKK 1. SimCorp holds 1,228,084 (2021: 1,071,389) treasury shares of DKK 1 equivalent to 3.0% (2021: 2.6%) of the share capital.
At December 31, 2022, SimCorp had more than 14,200 registered shareholders representing around 96% of the company's share capital, an increase of approximately 600 registered shareholders during the year.
Approximately 59% (2021: 58%) of the share capital was held or managed by the 25 largest shareholders, and around 81% (2021: 83%) of the registered share capital was held by shareholders based outside Denmark. At December 31, 2022, around 5% (2021: 5%) of the company's share capital was held by the company's management and employees. Furthermore, SimCorp estimates that Danish and foreign institutional investors held some 81% of the company's shares, an decrease compared with the 82% at year-end 2021. Around 36% (2021: 41%) of SimCorp shares were managed by investors who are also clients of SimCorp. In accordance with section 55 of the Danish Companies Act, the following investors have reported holding more than 5% of SimCorp's share capital:
In accordance with the remuneration policy, approved by the shareholders at the Annual General Meeting 2022, the Board of Directors approved the share-based LTIP for management and key employees based on restricted stock units. The fair value of the restricted stock units amounted to EUR 4.0m at the time of allotment, and a total of 60,227 restricted stock units of DKK 1 were granted, including
23,821 restricted stock units to the Executive Management Board and 187 restricted stock units to employee-elected members of the Board of Directors.
In addition, in December 2022, in connection with Michael Bjergby taking up the position as CFO, 446 restricted stock units were granted to him for the 2022 LTIP program. Furthermore, in connection with various appointments of senior employees during 2022, 6,438 restricted stock units were granted. The fair value of these amounted to EUR 0.5m at the time of allotment.
The above-mentioned LTIP restricted stock units will vest after three years, subject to continuing employment and are subject to conditions with respect to average annual minimum ARR growth and annual average net operating profit after tax for the financial years 2022-2024. If the two latter conditions are only partially met, the number of shares transferred after three years will be reduced, potentially to zero.
In addition, in December 2022, in connection with Michael Bjergby taking up the position as CFO, 9,515 restricted stock units were granted to him as part of his sign-on and his investment of EUR 0.3m in SimCorp shares. The fair value of the restricted stock units amounted to EUR 0.6m at the time of allotment. The restricted stock units will vest 1/3 after 3 years, 1/3 after 4 years and 1/3 after 5 years conditional upon continued service.
During 2022, 4,775 LTIP and 12,791 other incentive restricted stock units were canceled, including 8,171 incentive restricted stock units allotted to the former CFO Michael Rosenvold.
In addition, 64,620 restricted stock units relating to the corporate bonus program for 2021 were granted in 2022 and distributed among employees in the Group, including
Shareholder structure by geography 2022 Shareholder structure by category 2022
540 restricted stock units to employee-elected members of the Board of Directors. The restricted stock units will vest one third after one year, a further one third after two years, and the last third after three years, subject to vesting conditions. The fair value of the restricted stock units amounted to EUR 7.8m at the time of allotment
The share-based incentive program based on restricted stock units will continue in 2023 and comprises restricted stock units with a market value of approximately EUR 4.0m on the date of grant and for the corporate bonus program for 2022 the restricted stock units will have a market value of approximately EUR 7.9m on the date of grant.
SimCorp's share-based incentive schemes are further detailed in note 3.2 to the financial statements. In accordance with SimCorp's Remuneration Policy, members of the Board of Directors will in 2023 continue to receive SimCorp shares with a total value equal to one third of their total remuneration.
It is the assessment of the Board of Directors that these remuneration principles ensure an appropriate alignment of the interests of the Board of Directors with SimCorp's shareholders in general.
Financial calendar 2023 Share data 2022
March 23, 2023 Annual General Meeting 2023
March 28, 2023 Expected date for payout of dividend
May 17, 2023 Publication of interim financial report Q1 2023 (early morning)
August 11, 2023 Publication of interim financial report H1 2023 (early morning)
November 10, 2023 Publication of interim financial report 9 months 2023 (early morning)
All times are CET.
Stock exchange Nasdaq Copenhagen A/S
Index OMXC25
Sector Technology
ISIN code DK0060495240
Short code SIM
Share capital DKK 40,500,000
Nominal size DKK 1
Number of shares 40,500,000
Negotiable papers Yes
Restriction in voting rights No
As at December 31, 2022, the members of the company's Board of Directors held a total of 41,343 SimCorp shares and 1,202 restricted stock units were held by employeeelected members of the Board. The members of the Group's Executive Management Board held a total of 134,847 SimCorp shares and 60,098 restricted stock units.
Additional information on the holdings of SimCorp shares and restricted stock units by members of the Board of Directors, the Executive Management Board, and other related parties is disclosed in note 7.2 to the financial statements.
The Annual General Meeting of SimCorp A/S will be held on: Thursday, March 23, 2023 at 3pm at SimCorp's headquarters, Weidekampsgade 16, Copenhagen, Denmark.
It will also be possible to participate in Annual General Meeting via webcast. Agenda and proposed resolutions will be published on Tuesday, February 28, 2023.
→ Remuneration Policy 2022 https://www2.simcorp.com/RemunerationPolicy
The Board of Directors further intends to propose that the shareholders authorize the company to acquire treasury shares of up to 10% of the company's share capital. See section 198 of the Danish Companies Act.
Maintaining a sound liquidity buffer is vital to SimCorp's continued international expansion. Management considers this objective will be achieved when the cash holdings and credit lines exceed 10% of the projected costs for the coming year. On this basis, the company intends to pay dividends of at least 40% of the free cash flow. Additional cash will, unless other cash requirements are foreseen, be used to buy treasury shares. The purchase of treasury shares is expected to be carried out in compliance with the
provisions of Regulation No. 596/2014 of the European Parliament and of the Council on market abuse, the Market Abuse Regulation (MAR), and delegated legislation under MAR. The Board of Directors has considered SimCorp's cash position and liquidity forecast, and on the basis thereof, the Board of Directors intends to recommend to the shareholders at the Annual General Meeting that dividends of EUR 39.7 million, equal to DKK 7.50 per share of DKK 1, be distributed for the financial year 2023. The dividends of EUR 39.7 million are equivalent to 40.0% of Group profit for the year and 84.2% of free cash flow in 2022. In order to be eligible for dividends, shares must be registered before March 23, 2023. The ex- dividend date is March 24, 2023.
Dividends for the financial year 2022 are expected to be paid on March 28, 2023. Based on the current cash position and business outlook, SimCorp does not expect to initiate a share buyback program in 2023. Instead, SimCorp intends to invest excess proceeds into the SaaS transformation and future growth initiatives.
SimCorp pursues an open dialogue with investors and analysts about the company's business and financial performance. In order to ensure that all SimCorp's stakeholders have equal access to corporate information, news is released to Nasdaq Copenhagen, the media, and on SimCorp's website, where users can also subscribe to SimCorp's news service. SimCorp's Investor Relations team handles all contact with investors and the press on issues relating to the company's shares.
Please contact: Anders Hjort, Head of Investor Relations, phone: +45 35 44 88 00, [email protected], www.simcorp.com/en/investor/contact-investor-relations
Announcements to Nasdaq Copenhagen in 2022 can be found at www.simcorp.com/en/news-and-announcements
SimCorp Annual Report 2022
Chair
Personal and educational background Born 1948, Danish citizen, M.Sc. (Econ.).
Former CEO of Nordea Bank Danmark A/S. Chair of SimCorp A/S' Board of Directors since 2019 and Vice-chair 2012-2019. Member of SimCorp A/S' Nomination and Remuneration Committee since 2017 and SimCorp Technology Committee since 2022. Chair of the Board of Directors of DSB SOV, Nordea-fonden and Tietgenfonden. Vice-chair of Lundbeckfonden and Lundbeckfond Invest A/S. Member of Falck A/S, Axelfuture, the Systemic Risk Council, and Gösta Enboms Fond. Chair of the investment committee of Danish SDG Investment Fund and Dronning Margrethe den II's Arkæologiske Fond.
Independence
Is regarded as independent.
More than 30 years of management experience from an international financial company as well as several board positions both as chair and member. Involvement in IT development and trading operations in financial institutions.
Vice-chair
Personal and educational background Born 1972, Danish citizen, B.Sc. (Int. BA & Modern Languages), MSc (Fin. & Acc.).
Group CEO of Tryg since 2011. From 2002-2011 Group CFO of Tryg. Member of SimCorp A/S' Board of Directors since 2018 and Vice-chair since 2019. Chair of SimCorp A/S' Nomination and Remuneration Committee since 2019. Board member of TJM Forsikring. Chair of Conscia and Siteimprove.
Is regarded as independent.
Chief executive management experience from a listed company and solid know-how of working with key market players like investors and regulators.
Personal and educational background Born 1952, British citizen, B.Com (Hons) from University of Cape Town, CA(SA), FCA, CPA.
Formerly Chair of Aon UK Ltd. and Henderson International Income Trust plc, PwC Global Investment Management Leader and senior audit partner, and Chief Operating Officer of the Wellcome Trust. Member of SimCorp A/S' Board of Directors since 2011. Chair of SimCorp A/S' Audit and Risk Committee since 2013. Director and Chair of the Audit Committee of the Boards of Directors of St James's Place plc. Chair of the Audit and Risk Committees of Templeton Emerging Markets Investment Trust plc., and the Crown Prosecution Service.
Independence Is regarded as independent.
Group executive experience in a multinational corporation, including responsibility for strategy development and implementation, information technology and finance. Involved in the development and governance of companies with IT and consultancy activities.
Personal and educational background Born 1960, British citizen, B.Sc. in Mechanical Engineering from Imperial College, London.
Former CEO of Avanade Inc. (Microsoft & Accenture joint venture) from 2008-2019. Member of SimCorp A/S' Board of Directors since 2017. Member of SimCorp A/S' Audit Committee since 2019. Chair of the Board of Heidrick & Struggles. Chair of Junior Achievement Europe. Board Member of SoftwareONE Holding AG and Senior Advisor to KKR PE European Portfolio.
Is regarded as independent.
More than 30 years of international experience in the software and technology services industries, including responsibility for strategy, M&A, enterprise sales, consulting, and managed service delivery from a career spanning IBM, Microsoft, and Avanade.
Personal and educational background Born 1954, US citizen, MBA from NYU Stern School of Business, B.A. from State University of New York at Binghamton. Certified Public Accountant.
Former CFO and COO at Lord, Abbett & Co. LLC. (1999-2018). Prior to joining Lord Abbett, Joan worked inter alia for Goldman Sachs within the Capital Markets Group and for PricewaterhouseCoopers, LLC as a manager, Financial Services Audit Practice. Member of SimCorp A/S' Board of Directors and SimCorp A/S' Audit and Risk Committee since 2018. Member of the Board of Directors of Brown Brothers Harriman US Mutual Funds, KKR Real Estate Trust, and Morgan Stanley Direct Lending Funds.
Is regarded as independent.
Experience from the financial services industry within finance, risk management and operations, including software selection and implementation.
| Susan Standiford | Charlotte Søndergaard Klausen | Sven Rinke | Neil Cook |
|---|---|---|---|
| Personal and educational background Born 1967, US citizen, BA, Anthropology & Mathematics, University of Illinois, IL, USA |
Personal and educational background Born in 1993, Danish citizen, M.Sc. (Economics) from University of Copenhagen. |
Personal and educational background Born in 1974, German citizen, M.Sc. (Physics) from TU Dresden and Ph.D. (Physics) from Duke University. |
Personal and educational background Born in 1977, British Citizen. BSc in Information Systems from Canterbury Christ Church University. |
| Directorships Chief Product and Technology Officer, StepStone. Previous positions include Chief Technology Officer of IKEA IT AB and CTO and COO within international |
Directorships Employee-elected member of SimCorp A/S' Board of Directors since 2022. |
Directorships Former board member of a US-based food cooperative from 2002 – 2008. Employee-elected member of SimCorp A/S' Board of Directors |
Directorships Employee-elected member of SimCorp A/S' Board of Directors since 2022. |
| technology companies. | Relevant competences and experiences |
since 2022 | Relevant competences and experiences |
| Independence Is regarded as independent. |
Since 2018 working in the Investments Service Line of SimCorp's Consulting Services division (DACH). Previous |
Relevant competences and experiences More than 13 years' experience in |
Platform Development Line Manager in Product Division in London and 15 years +experience in the finance |
| Relevant competences and experiences 30 years of technical and managerial |
experience from Front Office and Product Lifecycle Management in Asset and Investment Management at |
positioning, selling, and delivering SimCorp's solutions across a broad range of institutions in the financial |
industry and a background in technology. |
| experience from various industries including software. Technology visionary leader with knowledge how to market and deliver innovative value-based solutions. |
leading Pension and Insurance Funds. | services industry. | |
Present position held since 2021
Michael Bjergby* Chief Financial Officer Employed since 2022 Present position held since 2022
Georg Hetrodt* Chief Operating Officer Employed since 1998 Present position held since 2022
Marlene Nyholm Voss Chief Human Resources Officer, Senior Vice President Employed since 2014 Present position held since 2019 5. Johan Rosengren Kringel Chief of Staff Employed since 2018 Present position held since 2018
Oliver Johnson Chief Commercial Officer Employed since 2017 Present position held since 2022
Chief Product Officer Employed since 1995 Present position held since 2022
* The Executive Committee members (see above) are also members of Executive Management Board.
The Board of Directors and Executive Management Board have today considered and adopted the Annual Report of SimCorp A/S for the financial year January 1 – December 31, 2022.
The Annual Report has been prepared in accordance with International Financial Reporting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act.
Christian Kromann Chief Executive Officer
Georg Hetrodt Chief Product Officer
Michael Bjergby
Chief Financial Officer
Peter Schütze
Chair
Morten Hübbe Vice-chair
Simon Jeffreys Adam Warby
a description of the most significant risks and elements of uncertainty facing the Group and the Parent Company.
In our opinion, the Annual Report of SimCorp A/S for the financial year January 1 – December 31, 2022 with the file name simcorp-2022-12-31-en.zip is prepared, in all material respects, in compliance with the ESEF Regulation.
We recommend that the Annual Report be adopted at the Annual General Meeting.
Copenhagen, 9 February 2023
for 2022.
Susan Standiford
In our opinion, the Consolidated Financial Statements and the Parent Company Financial Statements give a true and fair view of the financial position at December 31, 2022 of the Group and the Parent Company and of the results of the Group and Parent Company operations and cash flows
In our opinion, the Management Report includes a true and fair account of the development in the operations and financial circumstances of the Group and the Parent Company, of the results for the year and of the financial position of the Group and the Parent Company as well as
Joan Binstock Charlotte Søndergaard Klausen Sven Rinke Neil Cook
To the shareholders of SimCorp A/S
In our opinion, the Consolidated Financial Statements and the Parent Company Financial Statements give a true and fair view of the Group's and the Parent Company's financial position at 31 December 2022 and of the results of the Group's and the Parent Company's operations and cash flows for the financial year 1 January to 31 December 2022 in accordance with International Financial Reporting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act.
Our opinion is consistent with our Auditor's Long-form Report to the Audit Committee and the Board of Directors.
The Consolidated Financial Statements and Parent Company Financial Statements of SimCorp A/S for the financial year 1 January to 31 December 2022 comprise income statement and statement of comprehensive income, cash flow statement, statement of financial position, statement of changes in equity and notes, including summary of significant accounting policies for the Group as well as for the Parent Company. Collectively referred to as the "Financial Statements".
We conducted our audit in accordance with International Standards on Auditing (ISAs) and the additional requirements applicable in Denmark. Our responsibilities under those standards and requirements are further described in the Auditor's responsibilities for the audit of the Financial Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the Group in accordance with the International Ethics Standards Board for Accountants' International Code of Ethics for Professional Accountants (IESBA Code) and the additional ethical requirements applicable in Denmark. We have also fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. To the best of our knowledge and belief, prohibited non-audit services referred to in Article 5(1) of Regulation (EU) No 537/2014 were not provided.
We were first appointed auditors of SimCorp A/S on 31 March 2014 for the financial year 2014. We have been reappointed annually by shareholder resolution for a total period of uninterrupted engagement of 9 years including the financial year 2022.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Statements for 2022. These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
The Group and the Parent Company provide its products and services to customers in bundled packages as multi-element contracts, and recognition of revenue is subject to the inherent complexities in the software industry.
Revenue is recognized when control is passed and if the revenue criteria for recognizing revenue over time or at a point of time have been met.
We focused on this area due to the judgmental and complex nature of revenue recognition for multiple element arrangements that include identification of performance obligations in the contracts and allocation of the relative standalone selling prices to the identified performance obligations.
Further, we focused on presentation in the statement of financial position of contracts assets and revenue recognition for fixed fee projects due to the inherent estimation uncertainty. Refer to note 2.1 "Revenue", 2.2 "Segment information", 2.3 "Future performance obligations" and note 2.4 "Contract balances" in the Consolidated Financial Statements and note 2.1 "Revenue", 2.2 "Future performance obligations" and note 2.3 "Contract balances" in the Parent Company Financial Statements.
We performed risk assessment procedures to obtain an understanding of the IT systems, business processes and relevant controls over the Group's revenue cycle. We assessed whether the controls were designed and implemented to effectively address the risk of material misstatement. We tested relevant controls including application controls and Management's review controls. For revenue recognized we evaluated and challenged Management's assessment that the customers have the ability to direct use and obtain substantially all benefits for the licenses transferred.
For revenue recognized point in time we evaluated and challenged Management's documentation for right to payment and that the licenses have been transferred and made available to the customer. For revenue recognized over time we evaluated and challenged Management's assessment that customers over time consumes and benefit from the services delivered. For multi-element contracts, we evaluated and challenged Management's allocation of revenue to the identified performance obligations in the contracts and assessed the allocation of the standalone selling prices to the performance obligations including rebates, discounts, allowances, inherent interests and presentation in the Financial Statements.
We assessed the percentage of completion on specific fixed fee projects based on Management reports, project estimates and interview of project managers. We also assessed the outcome of prior period estimates.
The Group operates in a complex multinational tax environment and there are open tax and transfer pricing cases with domestic and foreign tax authorities.
We focused on this area as the amounts involved are material and the valuation of tax assets and liabilities are associated with estimation uncertainty and judgement.
Refer to note 4.1 "Income tax" and 4.2 "Deferred tax" in the Consolidated Financial Statements as well as in the Parent Company Financial Statements.
We performed risk assessment procedures in order to obtain an understanding of the IT systems and processes regarding the calculation and recognition of tax assets and liabilities that address the risk of material misstatement. In understanding and evaluating Management's judgement, we used our own tax specialists to consider the status of recent and current tax authority audits and enquiries, the outcome of previous claims, judgmental positions taken in tax returns and current year estimates and developments in the tax environment. We evaluated the adequacy of Management's significant assumptions to assess the valuation of deferred tax assets and read correspondence with tax authorities.
Management is responsible for Management Report.
Our opinion on the Financial Statements does not cover Management Report, and we do not express any form of assurance conclusion thereon.
In connection with our audit of the Financial Statements, our responsibility is to read Management Report and, in doing so, consider whether Management Report is materially inconsistent with the Financial Statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
Moreover, we considered whether Management Report includes the disclosures required by the Danish Financial Statements Act.
Based on the work we have performed, in our view, Management Report is in accordance with the Consolidated Financial Statements and the Parent Company Financial Statements and has been prepared in accordance with the requirements of the Danish Financial Statements Act. We did not identify any material misstatement in Management Report.
Management is responsible for the preparation of consolidated financial statements and parent company financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act, and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the Financial Statements, Management is responsible for assessing the Group's and the Parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless Management either intends to liquidate the Group or the Parent Company or to cease operations, or has no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements.
As part of an audit in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and, where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter.
As part of our audit of the Financial Statements we performed procedures to express an opinion on whether the annual report of SimCorp A/S for the financial year 1 January to 31 December 2022 with the filename simcorp-2022-12-31-en.zip is prepared, in all material respects, in compliance with the Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) which includes requirements related to the preparation of the annual report in XHTML format and iXBRL tagging of the Consolidated Financial Statements including notes.
Management is responsible for preparing an annual report that complies with the ESEF Regulation. This responsibility includes:
Our responsibility is to obtain reasonable assurance on whether the annual report is prepared, in all material respects, in compliance with the ESEF Regulation based on the evidence we have obtained, and to issue a report that includes our opinion. The nature, timing and extent of procedures selected depend on the auditor's judgement, including the assessment of the risks of material departures from the requirements set out in the ESEF Regulation, whether due to fraud or error. The procedures include:
In our opinion, the annual report of SimCorp A/S for the financial year 1 January to 31 December 2022 with the file name simcorp-2022-12-31-en.zip is prepared, in all material respects, in compliance with the ESEF Regulation.
PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab CVR no 3377 1231
Rasmus Friis Jørgensen State Authorised Public Accountant mne28705
Thomas Baunkjær Andersen State Authorised Public Accountant mne35483
SimCorp Annual Report 2022 Consolidated financial statements 54
| Statements | Section 2 Revenue and clients |
Section 4 Tax |
Section 6 Equity, capital structure and Financing items |
|---|---|---|---|
| 056 Income statement 056 Statement of comprehensive income 057 Cash flow statement 058 Statement of financial position 059 Statement of changes in equity 060 Notes 102 SimCorp A/S |
64 2.1 Revenue 67 2.2 Segment information 70 2.3 Future performance obligations 71 2.4 Contract balances 73 2.5 Receivables |
81 4.1 Income tax 82 4.2 Deferred tax |
90 6.1 Equity, treasury shares, and dividends 91 6.2 Risk 96 6.3 Financial assets and liabilities 97 6.4 Financial income and expenses |
| Section 1 | Section 3 | Section 5 | Section 7 |
| Basis of preparation | Employees | Invested capital | Other disclosures |
| 60 1.1 Accounting policies, estimates, and judgments |
74 3.1 Employee cost 75 3.2 Share based remuneration 78 3.3 Pension and similar liabilities 80 3.4 Provisions |
84 5.1 Acquisition of enterprises 85 5.2 Intangible assets 87 5.3 Property, plant, and equipment |
098 7.1 Earnings per share 099 7.2 Related party transactions 100 7.3 Special items 100 7.4 Auditors' remuneration 100 7.5 Contingent liabilities |
| EUR '000 | Note | 2022 | 2021 |
|---|---|---|---|
| Revenue | 2.1, 2.2 | 560,968 | 496,274 |
| Cost of sales | 3.1, 3.2, 5.2, 5.3 | 228,588 | 196,982 |
| Gross profit | 332,380 | 299,292 | |
| Other operating income | 830 | 709 | |
| Research and development costs | 3.1, 3.2, 5.2, 5.3 | 107,039 | 91,771 |
| Sales and marketing costs | 3.1, 3.2, 5.2, 5.3 | 61,534 | 50,230 |
| Administrative expenses | 3.1, 3.2, 5.2, 5.3 | 35,867 | 25,583 |
| Other operating costs | 2,914 | - | |
| Operating profit (EBIT) | 125,856 | 132,417 | |
| Share of profit after tax in associates | 122 | 174 | |
| Financial income | 6.4 | 3,191 | 5,774 |
| Financial expenses | 6.4 | 1,021 | 947 |
| Profit before tax | 128,148 | 137,418 | |
| Tax on the profit for the year | 4.1 | 28,894 | 27,426 |
| Profit for the year | 99,254 | 109,992 |
| EUR '000 | Note | 2022 | 2021 |
|---|---|---|---|
| Profit for the year | 99,254 | 109,992 | |
| Other comprehensive income | |||
| Items that will not be reclassified subsequently to the income statement: |
|||
| Remeasurements of defined benefit plans | 3.3 | 1,268 | 1,934 |
| Tax, remeasurement of defined benefit plans | -275 | -396 | |
| Items that may be reclassified subsequently to the income statement, when specific conditions are met: |
|||
| Foreign currency translation differences for foreign operations | -850 | 2,500 | |
| Other comprehensive income after tax | 143 | 4,038 | |
| Total comprehensive income | 99,397 | 114,030 |
| EUR '000 | Note | 2022 | 2021 |
|---|---|---|---|
| Earnings per share – EPS (EUR) | 7.1 | 2.52 | 2.76 |
| Diluted earnings per share – EPS-D (EUR) | 7.1 | 2.50 | 2.74 |
| EUR '000 | Note | 2022 | 2021 |
|---|---|---|---|
| Profit for the year | 99,254 | 109,992 | |
| Amortization and depreciation | 5.2, 5.3 | 14,883 | 15,379 |
| Share of profit after tax in associates | -122 | -174 | |
| Financial income | 6.4 | -3,191 | -5,774 |
| Financial expenses | 6.4 | 1,021 | 947 |
| Tax on profit for the year | 4.1 | 28,894 | 27,426 |
| Other non-cash items | 3,954 | 12,904 | |
| Adjustment share based remuneration | 13,527 | 11,332 | |
| Changes in provisions | 3.4 | -32 | -1,663 |
| Changes in contract assets | 2.4 | -70,576 | -44,861 |
| Changes in working capital | -4,756 | -11,169 | |
| Financial income received | 80 | 5 | |
| Financial expenses paid | -345 | -319 | |
| Income tax paid | 4.1 | -22,251 | -23,329 |
| Net cash from operating activities | 60,340 | 90,696 | |
| Purchase of property, plant, and equipment | 5.3 | -1,524 | -1,259 |
| Sale and purchase of financial assets, net | -1,377 | -4,507 | |
| Dividends from associates | 6.4 | 134 | 91 |
| Net cash used in investing activities | -2,767 | -5,675 | |
| Dividends paid | -39,836 | -40,086 | |
| Purchase of treasury shares | 6.1 | -20,049 | -40,102 |
| Repayment of lease liability | 5.3 | -11,661 | -10,808 |
| Proceeds, credit facilities / loans | 26,891 | - | |
| Repayment of credit facilities/loans | -20,167 | - | |
| Net cash used in financing activities | -64,822 | -90,996 | |
| Change in cash and cash equivalents | -7,249 | -5,975 | |
| Cash and cash equivalents at January 1 | 47,692 | 53,051 | |
| Foreign exchange adjustment of cash and cash equivalents | 103 | 616 | |
| Cash and cash equivalents at December 31 | 40,546 | 47,692 |
Cash flow 2022 (EUR '000)
| EUR '000 | Note | 2022 | 2021 |
|---|---|---|---|
| Assets | |||
| Goodwill | 5.2 | 61,266 | 61,645 |
| Software | 5.2 | 8,132 | 9,801 |
| Client relationships | 5.2 | 19,586 | 21,245 |
| Total intangible assets | 88,984 | 92,691 | |
| Leasehold | 5.3 | 38,259 | 40,095 |
| Technical equipment | 5.3 | 851 | 860 |
| Other equipment, fixtures, fittings and prepayments | 5.3 | 2,349 | 2,737 |
| Total property, plant and equipment | 41,459 | 43,692 | |
| Investments in associates | 827 | 909 | |
| Deposits | 6.3 | 3,517 | 2,123 |
| Deferred tax | 4.2 | 2,755 | 3,091 |
| Other financial assets | 4,843 | 4,843 | |
| Total other non-current assets | 11,942 | 10,966 | |
| Total non-current assets | 142,385 | 147,349 | |
| Receivables | 2.5 | 112,378 | 96,543 |
| Contract assets | 2.4 | 292,903 | 221,000 |
| Income tax receivables | 5,480 | 2,060 | |
| Prepayments | 10,636 | 11,668 | |
| Cash and cash equivalents | 40,546 | 47,692 | |
| Total current assets | 461,943 | 378,963 | |
| Total assets | 604,328 | 526,312 |
| EUR '000 | Note | 2022 | 2021 |
|---|---|---|---|
| Liabilities and equity | |||
| Share capital | 5,441 | 5,441 | |
| Exchange adjustment reserve | -3,075 | -2,225 | |
| Retained earnings | 333,459 | 280,003 | |
| Proposed dividend | 39,732 | 39,888 | |
| Total equity | 375,557 | 323,107 | |
| Lease liabilities | 5.3 | 29,437 | 32,088 |
| Deferred tax | 4.2 | 46,596 | 33,121 |
| Provisions | 3.4 | 9,132 | 9,743 |
| Total non-current liabilities | 85,165 | 74,952 | |
| Credit facilities/loans | 6.2 | 6,724 | - |
| Lease liabilities | 5.3 | 9,401 | 8,577 |
| Prepayments from clients | 2.4 | 35,975 | 31,239 |
| Trade payables | 6.2 | 33,351 | 29,126 |
| Other payables | 51,079 | 49,993 | |
| Income tax payables | 6,065 | 8,886 | |
| Provisions | 3.4 | 1,011 | 432 |
| Total current liabilities | 143,606 | 128,253 | |
| Total liabilities | 228,771 | 203,205 | |
| Total liabilities and equity | 604,328 | 526,312 |
| Statement of changes in equity | Exchange | ||||
|---|---|---|---|---|---|
| Share | adjustment | Retained | Dividends | ||
| EUR '000 | capital | reserve | earnings | for the year | Total |
| 2022 | |||||
| Equity at January 1 | 5,441 | -2,225 | 280,003 | 39,888 | 323,107 |
| Net profit for the year | - | - | 99,254 | - | 99,254 |
| Total other comprehensive income | - | -850 | 993 | - | 143 |
| Total comprehensive income for the year | - | -850 | 100,247 | - | 99,397 |
| Transactions with owners | |||||
| Dividends paid to shareholders | - | - | 52 | -39,888 | -39,836 |
| Share-based payment | - | - | 13,527 | - | 13,527 |
| Tax, share-based payment | - | - | -589 | - | -589 |
| Purchase of treasury shares | - | - | -20,049 | - | -20,049 |
| Proposed dividends to shareholders | - | - | -39,732 | 39,732 | - |
| Equity at December 31 | 5,441 | -3,075 | 333,459 | 39,732 | 375,557 |
| 2021 | |||||
| Equity at January 1 | 5,441 | -4,725 | 237,409 | 40,125 | 278,250 |
| Net profit for the year | - | - | 109,992 | - | 109,992 |
| Total other comprehensive income | - | 2,500 | 1,538 | - | 4,038 |
| Total comprehensive income for the year | - | 2,500 | 111,530 | - | 114,030 |
| Transactions with owners | |||||
| Dividends paid to shareholders | - | - | 39 | -40,125 | -40,086 |
| Share-based payment | - | - | 11,332 | - | 11,332 |
| Tax, share-based payment | - | - | -317 | - | -317 |
| Purchase of treasury shares | - | - | -40,102 | - | -40,102 |
| Proposed dividends to shareholders | - | - | -39,888 | 39,888 | - |
| Equity at December 31 | 5,441 | -2,225 | 280,003 | 39,888 | 323,107 |
Movements in equity 2022 (EUR '000)
This section provides an overview of the accounting policies and key accounting estimates. Accounting policies, management judgments and sources of estimation uncertainty are presented together with other related disclosures in the notes that deal with the relevant subject. Accounting policies, judgments and estimates that do not relate to a specific subject are presented in this section.
Accounting policies focus on the accounting choices within the framework of the prevailing IFRS and refrain from repeating the underlying promulgated IFRS guidance, unless considered particularly important to the understanding of a note's content.
Notes to the financial statements are grouped into seven sections with the aim of reducing complexity and improving the reader's experience. The notes are organized into the following sections:
| Section 1 | Basis of preparation |
|---|---|
| Section 2 | Revenue and clients |
| Section 3 | Employees |
| Section 4 | Tax |
| Section 5 | Invested capital |
| Section 6 | Equity, capital structure and financing items |
| Section 7 | Other disclosures |
The annual report for the period January 1 – December 31, 2022, includes the consolidated financial statements of SimCorp A/S (the Parent) and its subsidiary undertakings (the Group), as well as separate financial statements for SimCorp A/S. Reference is made to page 108 for the Parent's specific accounting policies. SimCorp A/S is incorporated and domiciled in Denmark.
The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the EU and additional requirements in the Danish Financial Statements Act.
On 9 February, 2023 the Board of Directors and the Executive Management Board considered and approved the annual report for 2022 of SimCorp A/S and the Group. The annual report will be presented to the shareholders for approval at the Annual General Meeting to be held on March 23, 2023. The directors have the power to amend and reissue the financial statements.
The financial statements are presented in EUR, rounded to the nearest EUR 1,000. The functional currency of the Parent is DKK.
The annual report has been prepared on a going concern basis and in accordance with the historical cost convention, except where IFRS explicitly requires use of other values.
The consolidated financial statements have been prepared by including the financial statements of the Parent and the subsidiaries, which have all been prepared in accordance with the Group's accounting policies. Subsidiaries are entities controlled by the Parent. Control is established when SimCorp A/S is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
On consolidation, intra-group income and expenses, shareholdings, balances, dividends and realized and unrealized gains and losses on intra-group transactions are eliminated. Unrealized gains and losses on transactions with associates are eliminated in proportion to the Group's shares in the associates.
Income and expenses and operating cash flows of foreign subsidiaries that use a functional currency other than the euro are translated at average rates of foreign exchange computed on a monthly basis. Exchange rate differences resulting from foreign currency transactions as well as from
the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currency, are recognized under financial income or financial expenses.
Other operating income consists of income of a secondary nature relative to the activities of the Group, including gains on sale of intangible assets and property, plant and equipment and government grants. Government grants relate to research and development funding in the United Kingdom and job growth incentive in Singapore. As the grant is compensation for costs incurred, it is recognized as other operating income in the period in which it is receivable.
Other costs comprise all the non-operating costs incurred for the supporting business operations.
Other comprehensive income consists of income and costs not included in the income statement, including exchange rate adjustments arising from the translation of foreign subsidiaries' financial statements into presentation currency, and actuarial gains or losses on defined benefit pension plans.
The cash flow statement is presented according to the indirect method commencing with the profit for the year. The cash flow statement shows how changes in items in the statement of financial position and income affect cash and cash equivalents.
Cash and cash equivalents consist of cash at bank and in hand. Cash flows in other currencies are translated into EUR at the average exchange rate for the respective year.
Cash from operating activities is assessed by converting income statement items from accrual to cash basis accounting. Starting with net profit, non-cash items are reversed, and actual payments included. In addition, the change in working capital and contract assets is taken into consideration as it represents cash withheld in the statement of financial position.
Cash from investing activities are related to the sale and purchase of long-term investments, including subsidiaries, fixed, intangibles and financial assets.
The financial statements separately present items considered individually material. Individually immaterial items are aggregated with other items of similar nature in the statements or in the notes.
Specific disclosures required by IFRS are presented, unless the information is considered immaterial to the economic decision making of the users.
Operating costs are allocated into cost of sales, research and development, sales and marketing costs, and administrative expenses.
Cost of sales cover costs incurred to achieve the year's revenue, including costs of delivering and implementing systems, hosting and infrastructure costs, third party costs, courses, and support. These primarily comprise salaries, share-based payments, other employee costs, external implementation consultants, hosting costs and other third-party costs, depreciation and amortization, and indirect costs, such as technological infrastructure.
Research and development costs comprise salaries, share-based payments, other employee related costs, depreciation and amortization, and other costs directly attributable to the Group's research and development activities. Research and development costs are expensed in the year in which they are incurred when they do not qualify for capitalization. For capitalization criteria see note 5.2.
Sales and marketing costs comprise salaries, commissions, bonuses, sharebased payments, and other sales employee related costs, travel and meeting expenses, marketing expenses, withholding taxes, depreciation and amortization, and indirect costs such as technological infrastructure directly or indirectly attributable to the Group's sales and marketing activities.
Administrative expenses comprise salaries, bonuses, share-based payments and other employee costs and expenses, office costs, depreciation and amortization, expected loss allowance, and indirect costs such as technological infrastructure directly or indirectly attributable to the Group's administrative activities.
While applying the Group's accounting policies, in addition to estimations, management makes other judgments that may impact the application of accounting policies and reported amounts of assets, liabilities, costs, cash flows, and related disclosures at the date of the financial statements.
The estimates and judgments applied are based on assumptions which management believes to be reasonable, but which are inherently uncertain and unpredictable. Such assumptions may be incomplete or inaccurate, and unexpected events or circumstances may arise.
In addition, the company is subject to risks and uncertainties encountered in the ordinary course of business that may cause actual results to deviate from the estimates. The notes to the financial statements contain information about the assumptions and the uncertainty of estimates at the statement of financial position date involving the risk of changes that could lead to adjustments to the carrying amounts of assets or liabilities within the upcoming financial year.
Management considers the following to be key accounting estimates and assumptions used in the preparation of the financial statements:
Risk factors specific to the Group are described in the management report on pages 31-35 and in note 6.2.
SimCorp has adopted relevant new or amended standards (IFRS) and interpretation (IFRIC) as adopted by the EU and which are effective for the financial year 1 January – 31 December 2022. SimCorp has assessed that the new or amended standards and interpretations have not had any material impact on SimCorp's annual report in 2022.
The IASB has issued a number of new standards and amendments not yet in effect or adopted by the EU and therefore not relevant for the preparation of the 2022 consolidated financial statements. SimCorp expects to implement the standards and amendments when they take effect.
None of the new standards issued are currently expected to have signifcant impact on the Group's financial statements when implemented amendments.
The 2022 Annual report is prepared in the XHTML format which can be displayed in a standard browser in line with the new European Single Electronic Format ('ESEF'). The primary statements are tagged using inline eXtensible Business Reporting Language (iXBRL) and comply with the ESEF taxonomy.
Where a line item is not defined in the ESEF taxonomy, an extension has been created and anchored to elements in the ESEF taxonomy, except for extensions which are subtotals. The annual report submitted to the Danish Financial Supervisory Authority consists of the XHTML document together with certain technical files.
Certain measures disclosed regarding the Group's financial performance, financial position and cash flows are not defined in IFRS.
These are defined under other non-IFRS measures and may not be defined and calculated by other companies in the same manner and may therefore not be comparable.
| Revenue growth | revenue current year x 100 / revenue last year |
|---|---|
| EBITDA | earnings before interest, tax, depreciation, and amortization |
| EBITDA margin (%) | EBITDA / revenue x 100 |
| EBIT margin (%) | operating profit (EBIT) / revenue x 100 |
| Invested capital | total assets – cash and cash equivalents – provisions – prepayments from clients – trade payables and other payables |
| ROIC (return on invested capital) |
EBITDA / average invested capital x 100 |
| Receivables turnover ratio | revenue / receivables at year-end |
| Equity ratio (%) | equity at year-end / total assets at year-end x 100 |
| Return on equity (ROE) (%) | profit for the year / average equity x 100 |
| Cash flow per share (CFPS) | cash flow from operating activities / average number of diluted shares |
|---|---|
| Book value per share (BVPS) | equity at year-end / average number of shares |
| Dividends per share (DPS) | dividends paid / number of shares at year-end |
| Dividends payout ratio (%) | dividends paid / profit for the year x 100 |
| Total payout ratio (%) | dividends paid plus value of share buybacks / profit for the year x 100 |
| Average number of shares | number of shares issued, excluding treasury shares, as an average for the year |
| Average number of diluted shares |
number of shares issued, excluding treasury shares, as an average for the year plus the average dilutive impact of outstanding restricted stock units |
| Price / Book value per share (P/ BV) |
price / book value (BVPS) |
|---|---|
| Price / Diluted price earnings (P/E Diluted) |
price / diluted earnings per share |
| Price / Cash flow (P/CF) | price / cash flow per share (CFPS) |
| License base | accumulated order value for SimCorp Dimension clients |
|---|---|
| Order intake | value of initial and additional licenses contracts, subscription services agreements and client driven development agreements entered into during the reporting period |
| Order book | accumulated order intake value, where revenue could not be recognized yet, but deferred to future periods because either the license has not been delivered, the software functionality has not been developed, released or accepted by client yet, or certain conditions must be met before delivery |
| Revenue signed | total revenue commitment for licenses, software updates and support fee, professional services, as a service offering, etc. |
| Revenue, operating cost, and EBIT growth and margin in local currencies |
effect of exchange rate movements is excluded by restating the measure for the current period at the previous year's average rates when calculating growth |
| Organic revenue, operating cost, and EBIT growth and margin in local currencies |
effect of acquisitions, and exchange rate movements are excluded when calculating growth and EBIT margin by restating the measure for the current period at the previous year's average rates and by excluding the effect of acquisitions in the first year the acquired company is included in the reported numbers |
| CAPEX | purchase of intangible fixed assets + purchase of property, plant, and equipment – proceeds from sale of property, plant, and equipment |
| Net cash position | cash and cash equivalents less bank loan/credit facility |
| Free cash flow | net cash from operating activities less CAPEX less principal payment on lease liabilities |
| Cash conversion (%) | free cash flow / profit for the year x 100 |
| Total contract value (TCV) | total contact value subscription-based solutions |
| Annualized contract value (ACV) | total contract value dived by contract term |
| Annual recurring revenue (ARR) (backward-looking) |
total revenue – total license fee + subscription based license fee – implementation services – other non-recurring fees. ARR is measured for last twelve months |
| Annual recurring revenue (ARR) (forward-looking) |
Annual recurring revenue is the total of the average monthly revenue of all contracts in force at a point in time multiplied by 12 |
| ARR (backward-looking) as share of total revenue (%) |
ARR (backward-looking) / total revenue x 100 |
| ARR (forward-looking) as share of total revenue (%) |
ARR (forward-looking) / total revenue x 100 |
| Ratable revenue | reported revenue adjusted for the change in Contract Assets (Contract Assets Closing Balance – Contract Assets Opening Balance) |
This section provides information related to contracts with clients. This includes information on how revenue is classified and recognized, segments and information about client related balances in the statement of financial position.
Accounting policies which relate to a particular note to the income statement have been included within each individual note.
In this section, the following notes are presented:
SimCorp is updating its revenue segmentation to reflect new structure for reporting revenue. The segmentation below show the new segmentation.
Revenue is categorized into three main types: Revenue from clients operating and maintaining their SimCorp solution Onpremise, revenue from clients that are on a SaaS (Software as a Service) solution and Professional Services. On-premise revenue is derived from license fees and software updates and support fees. SaaS revenue is derived from SaaS license fees and SaaS services which covers services and software updates fees, operating services including platform as a service/ hosting fees and BPaaS (business processes as a service) fees. Professional Service fees is derived primary from implementation.
License fees can be derived from subscription or from perpetual license agreements.
Software updates and support fees relate to contracts made on perpetual and subscription-based license terms. Software updates and support fees include both onpremise license and SaaS license-based software updates and support fees. Performance obligations include: unspecified future upgrades, maintenance and helpline support.
| Type | 2022 | 2021 |
|---|---|---|
| Conversions | 46% | 21% |
| Additional regular license | 19% | 32% |
| Renewals | 13% | 14% |
| Initial license | 11% | 16% |
| Other license | 11% | 17% |
SaaS revenue is derived from SaaS license revenue and SaaS services. SaaS service offerings provide the client with updates and support, infrastructure services, data management services, client reporting services and other services enabled from the partner ecosystem required to maximize the outcome of the SimCorp Dimension solution.
Professional services can include multiple performance obligations. The performance obligations are: implementation services and other non-recurring services.
Contracts can include several components, in this situation, the total contract consideration is allocated to the separate performance obligations for the purpose of revenue recognition.
Separate contracts with the same client are treated as one contract if entered into at or near the same time and economically interrelated. Contracts closed more than 6 months apart are not considered to be entered at the same time.
In determining whether the various contracts are interrelated judgment is required. Considerations include: whether the contracts were negotiated as a package with a single commercial objective, whether the amount of consideration on one contract is dependent on the performance of another contract, or if some or all offerings in the contract are a single performance obligation.
Additional agreements with existing clients can be a new contract or a modification to existing contracts. Judgments making this determination consider: the presence of a connection between the new agreement and pre-existing contracts, whether subscription fees, license fees, software updates and support fees or services under the new agreement are highly interrelated with the subscription fees, license fees and software updates and support fees or services sold under prior agreements, and how the subscription fees, license fees and software updates and support fees or services under the new agreement are priced. Conversion of a perpetual license agreement to a subscription-based license agreement is accounted for as a termination of the perpetual license agreement and a new subscription license agreement.
Contracts often include several components. License fees from new clients and to existing clients, software updates and support fees, fees from platform as a service, and fees from Client Reporting Services, Digital Portal Services, Investment Accounting Services (IAS), Investment
Operational Services (IOS), Data Management Services, Regulatory Reporting Platform Services (RRP), and other services, and furthermore licenses and services fees from the partner ecosystem and fees from implementation and onboarding services constitute the main performance obligations. The fees allocated to the different performance obligations are recognized separately.
The only performance obligation related to license agreements has been identified as the right to use the software. The right to use software license is considered a separate performance obligation when it satisfies the following conditions: can be delivered separately from other services, can be installed by a third party, can be used without upgrades, and is functional without upgrades or technical support.
Judgment is required in determining whether a component is considered a separate performance obligation, in particular, professional services for implementation and onboarding activities. Consideration is given as to whether the services significantly integrate, customize, or modify the software or platform as a service offering. In general, implementation services and onboarding activities go beyond setup and qualify as a separate performance obligation.
Options to acquire additional components such as renewals or additional volumes
require judgment in determining whether such options provide a material right to the client which the client would not receive without entering into that contract. In this judgment it is considered whether the options entitle the customer to a discount that exceeds the discount granted for the respective subscription fees, license fees, software updates and support fees sold with the option.
Estimate is applied in determining the amount to which SimCorp expects to be entitled in exchange for transferring licenses, and software updates and support and services to a customer.
The consideration attributable to license fees in subscription-based agreements are discounted to net present value when the value of the financing element is deemed significant. If the period between licenses transfer, software updates and support and payment from the clients is a year or less no financing component is recognized.
A hierarchy has been established to identify the standalone selling prices used to allocate the transaction price of a customer contract to the performance obligations in the contract.
Where standalone selling prices for a performance obligation are observable and reasonably consistent across customers, estimates are derived from SimCorp's pricing history. Using this approach, professional services stand-alone value is determined based on the hourly billing rate for the relevant market unit. Platform as a service is assumed to be quoted to the client at their stand-alone value if it is equal to or above costs.
| Dimension | Coric | Gain | Sofia | |
|---|---|---|---|---|
| Licenses | 50% | 75% | 50% | 50% |
| Software updates and support |
50% | 25% | 50% | 50% |
| Total apportionment |
100% | 100% | 100% | 100% |
Where sales prices are not directly observable or are highly variable across customers, estimation techniques are applied, such as a cost-plus-margin approach. This approach is often applied to third party products.
If not renewable, with highly variable pricing, and no substantial direct costs to estimate based on a cost-plus margin approach, allocation is achieved by applying a residual approach. We use this technique in particular for license and software updates and support.
Once the standalone price for other components are estimated, an apportionment is applied to allocate the price between license and software updates and support after deducting other performance obligations from the total consideration as follows:
Revenue recognition requires an agreement with the client which creates enforceable rights and obligations between the parties, has commercial substance, and identifies payment terms. In addition, it must be probable that the consideration determined in the contract will be collected.
Revenue is recognized when the client has obtained control of the license or service and has the ability to use and obtain substantially all the benefits from the license or service.
SimCorp has therefore assessed that the client obtains control of the license when all the following criteria are met: a binding contract is entered into; the license is delivered; and the client has the right to use it. License revenue is therefore generally recognized at that point-in-time.
When the contract contains functionality gaps or requires client acceptance of functionality, the revenue recognition will be deferred until the time of delivery or acceptance.
| Revenue | ||||||
|---|---|---|---|---|---|---|
| Revenue | Share of | Share of | growth | |||
| revenue | revenue | Revenue | local | |||
| EUR '000 | 2022 | 2022 | 2021 | 2021 | growth | currencies |
| On-premise initial licenses | 14,045 | 2.5% | 15,679 | 3.2% | -10.4% | -4.6% |
| On-premise additional licenses | 117,612 | 21.0% | 84,107 | 16.9% | 39.8% | 37.4% |
| On-premise other licenses | 8,411 | 1.5% | 12,403 | 2.5% | -32.2% | -33.5% |
| On-premise software updates | ||||||
| and support | 168,367 | 30.0% | 164,645 | 33.2% | 2.3% | -1.2% |
| Total on-premise revenue | 308,435 | 55.0% | 276,834 | 55.8% | 11.4% | 8.9% |
| SaaS initial licenses | 3,831 | 0.7% | 5,854 | 1.2% | -34.6% | -39.2% |
| SaaS additional licenses | 7,784 | 1.4% | 8,399 | 1.7% | -7.3% | -14.9% |
| SaaS other licenses | 5,371 | 1.0% | 3,466 | 0.7% | 55.0% | 45.5% |
| Saas services incl. software | ||||||
| updates and support | 71,704 | 12.8% | 49,944 | 10.1% | 43.6% | 36.8% |
| Total SaaS revenue | 88,690 | 15.9% | 67,663 | 13.7% | 31.1% | 24.2% |
| Professional services | 163,843 | 29.1% | 151,777 | 30.5% | 7.9% | 3.9% |
| Total revenue | 560,968 | 100.0% | 496,274 | 100.0% | 13.0% | 9.4% |
Revenue from software updates and support agreements is recognized on a straight-line basis over the contract period.
Client-driven development entails direct cooperation between SimCorp's development team and the client for a clientdefined software. Such agreements are individually evaluated to determine if revenue is recognized at a point in time or over time.
SaaS services covering infrastructure services, operating services, Digital Portal services, Investment Accounting Services (IAS), Investment Operational Services (IOS), Data Management Services and Regulatory Reporting Platform Services (RRP) are revenue recognized over the term of the service.
Professional services fees are recognized based on work performed for time and material contracts. Fixed fee agreements are recognized based on percentage of share of completion unless client acceptance is required.
The percentage-of-completion method requires estimation of total revenue and the stage of completion. The assumptions, estimates, and uncertainties inherent in determining the stage of completion affect the timing and amounts of revenue recognized.
Changes in estimates of progress towards completion and of contract revenue and costs are accounted for as cumulative catch-up adjustments to the reported revenue for the applicable contract.
| Revenue allocation | 2022 | 2021 | |||
|---|---|---|---|---|---|
| by country (significant) | EUR '000 | % | EUR '000 | % | |
| Germany | 103,847 | 18.5% | 68.049 | 13.7% | |
| USA | 83,404 | 14.9% | 81,695 | 16.5% | |
| Switzerland | 45,500 | 8.1% | 40,429 | 8.1% | |
| France | 25,293 | 4.5% | 31,665 | 6.4% | |
| Canada | 36,326 | 6.5% | 31,184 | 6.3% | |
| Italy | 31,182 | 5.6% | 30,566 | 6.2% | |
| Netherlands | 26,466 | 4.7% | 30,103 | 6.1% | |
| Denmark | 31,140 | 5.6% | 25,885 | 5.2% | |
| Other | 177,810 | 31.6% | 156,698 | 31.5% | |
| Total | 560,968 | 100.0% | 496,274 | 100.0% |
From the reported licenses on-premise SaaS – additional sales EUR 10.8 million is derived from perpetual sales (2021: EUR 23.9 million). The Group has no client contributing revenue of more than 5.8% (2021: 4.0%) of total revenue.
The Group's revenue arises primarily from the sale of software licenses and related services, and updates and support to clients refer section 2.1. The Group's operations are managed and organized into business units regularly reviewed by the Executive Management Board, who is responsible for assessing the Group's performance and making resource allocation decisions.
The sales organization comprises four business units. Three business units have been identified based on countries that share the same market conditions and one is dedicated to Sofia software.
In addition, the research and development business unit is responsible for all software development, except for Sofia. This segment derives revenue mainly from fees charged to other business units for the right to distribute SimCorp Dimension software.
Finally, the Group reports on corporate functions, which include shared services comprising administration, marketing, internal systems, global support and services division. These are managed on corporate level and costs are principally allocated and charged based on an allocation key for the segments. Consulting and support are charged on an hourly basis. External revenue originates from courses to clients.
| Segment information | Asia and | North | SimCorp | Research and | Corporate | Elimination/ | ||
|---|---|---|---|---|---|---|---|---|
| EUR '000 | EMEA | Australia | America | Sofia | development | functions | Not allocated | Group |
| 2022 | ||||||||
| On-premise initial licenses | 10,304 | 2,341 | 1,285 | 115 | - | - | - | 14,045 |
| On-premise additional licenses | 92,241 | 9,805 | 11,648 | 3,918 | - | - | - | 117,612 |
| On-premise other licenses | 6,276 | 654 | 1,481 | - | - | - | - | 8,411 |
| On-premise software updates and support | 128,173 | 11,471 | 21,827 | 5,242 | 1,364 | 290 | - | 168,367 |
| Total on-premise revenue | 236,994 | 24,271 | 36,241 | 9,275 | 1,364 | 290 | - | 308,435 |
| SaaS initial licenses | 509 | 388 | 2,934 | - | - | - | - | 3,831 |
| SaaS additional licenses | 2,289 | 724 | 4,771 | - | - | - | - | 7,784 |
| SaaS other licenses | 2,172 | 261 | 2,938 | - | - | - | - | 5,371 |
| SaaS services incl. software updates and support | 37,929 | 8,507 | 24,718 | 550 | - | - | - | 71,704 |
| Total SaaS revenue | 42,899 | 9,880 | 35,361 | 550 | - | - | - | 88,690 |
| Professional services | 93,540 | 18,400 | 38,172 | 13,731 | - | - | - | 163,843 |
| External revenue | 373,433 | 52,551 | 109,774 | 23,556 | 1,364 | 290 | - | 560,968 |
| Revenue between segments | 45,056 | 5,410 | 10,328 | 34 | 194,591 | 49,097 | -304,516 | - |
| Total segment revenue | 418,489 | 57,961 | 120,102 | 23,590 | 195,955 | 49,387 | -304,516 | 560,968 |
| EBITDA | 75,864 | 4,967 | 15,369 | 10,599 | 104,860 | -70,920 | - | 140,739 |
| Depreciation and amortization | 3,985 | 699 | 1,591 | 1,199 | 3,241 | 4,168 | - | 14,883 |
| Segment operating profit (EBIT) | 71,879 | 4,268 | 13,778 | 9,400 | 101,619 | -75,088 | - | 125,856 |
| Financial items, net | - | - | - | - | - | - | 2,292 | 2,292 |
| Profit before tax | - | - | - | - | - | - | - | 128,148 |
| Total assets | 316,081 | 58,706 | 112,150 | 50,217 | 60,418 | 3,554 | 3,202 | 604,328 |
Research and Development, corporate functions and elimination / not allocated are not operating segments but part of reconciliation of the segment data to the group income statement.
| Segment information | Asia and | North | SimCorp | Research and | Corporate | Elimination/ | ||
|---|---|---|---|---|---|---|---|---|
| EUR '000 | EMEA | Australia | America | Sofia | development | functions | Not allocated | Group |
| 2021 | ||||||||
| On-premise initial licenses | 11,687 | 1,473 | 2,519 | - | - | - | - | 15,679 |
| On-premise additional licenses | 64,961 | 4,914 | 7,692 | 6,540 | - | - | - | 84,107 |
| On-premise other licenses | 7,537 | 1,474 | 3,392 | - | - | - | - | 12,403 |
| On-premise software updates and support | 126,100 | 12,891 | 19,365 | 4,840 | 1,224 | 225 | - | 164,645 |
| Total on-premise revenue | 210,285 | 20,752 | 32,968 | 11,380 | 1,224 | 225 | - | 276,834 |
| SaaS initial licenses | 711 | 607 | 4,536 | - | - | - | - | 5,854 |
| SaaS additional licenses | 1,779 | 107 | 6,513 | - | - | - | - | 8,399 |
| SaaS other licenses | 599 | 115 | 2,752 | - | - | - | - | 3,466 |
| SaaS services incl. software updates and support | 24,347 | 5,323 | 19,904 | 198 | 116 | 56 | - | 49,944 |
| Total SaaS revenue | 27,436 | 6,152 | 33,705 | 198 | 116 | 56 | - | 67,663 |
| Professional services | 84,616 | 16,901 | 39,115 | 11,145 | - | - | - | 151,777 |
| External revenue | 322,337 | 43,805 | 105,788 | 22,723 | 1,340 | 281 | - | 496,274 |
| Revenue between segments | 35,238 | 2,480 | 9,113 | 887 | 204,079 | 52,816 | -304,613 | - |
| Total segment revenue | 357,575 | 46,285 | 114,901 | 23,610 | 205,419 | 53,097 | -304,613 | 496,274 |
| EBITDA | 46,301 | 2,319 | 10,969 | 11,890 | 118,879 | -42,562 | - | 147,796 |
| Depreciation and amortization | 4,414 | 694 | 1,321 | 1,413 | 1,812 | 5,725 | - | 15,379 |
| Segment operating profit (EBIT) | 41,887 | 1,625 | 9,648 | 10,477 | 117,067 | -48,287 | - | 132,417 |
| Financial items, net | - | - | - | - | - | - | 5,001 | 5,001 |
| Profit before tax | - | - | - | - | - | - | - | 137,418 |
| Total assets | 254,817 | 46,265 | 103,216 | 50,962 | 60,605 | 3,100 | 7,347 | 526,312 |
Research and Development, corporate functions and elimination / not allocated are not operating segments but part of reconciliation of the segment data to the group income statement.
The accounting policies of the reported segments are the same as the Group's described throughout the notes. Segment reporting shows revenue and operating profit together with total assets that can be directly related to the individual segments. Unallocated assets are headquarters' assets, cash, and investments in associates. Segment reporting is prepared in accordance with the Group's internal management reporting structure for performance management and resource allocation. Segment income and costs consist of transactions between the segments. Such transactions are made on market terms.
Research and development and Corporate functions are not operating segments, and the disclosure forms part of the reconciliation to Group totals rather than being information about operating segments.
Information about liabilities and additions to assets by segment are not regularly provided to the Executive Management Board.
| Non-current asset allocation | 2022 | 2021 | ||
|---|---|---|---|---|
| by country (significant) | EUR '000 | % | EUR '000 | % |
| Austria | 56,905 | 40.8% | 58,929 | 40.8% |
| Italy | 28,379 | 20.3% | 29,633 | 20.5% |
| Denmark | 22,150 | 15.9% | 23,707 | 16.4% |
| United Kingdom | 10,853 | 7.8% | 7,257 | 5.0% |
Geographical allocation of fixed assets is based on the country in which economic benefits are derived from the asset.
Significant countries are defined as countries representing 5.0% or more of the Group's non-current assets.
Non-current assets comprise intangible assets and property, plant and equipment owned by the segment/country, even if the income is earned outside the segment/ country that owns the asset. Furthermore, they include non-current financial assets other than deferred tax assets.
The amount of a customer contract's transaction price that is allocated to the remaining performance obligations represents contracted revenue that has not yet been recognized. Including amounts recognized as contract liabilities and amounts that are contracted but not yet delivered.
The transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as of December 31, 2022 is EUR 718.8 million (2021: EUR 554.8 million). This amount mostly comprises obligations to provide software updates, agreements which require client acceptance of functionality, and support or hosting subscriptions and support, as the respective contracts typically have durations of multiple years.
Management expects that EUR 212.8 million in 2022 (2021: EUR 141.3 million) of the amount allocated to the future performance obligations as of December 31, 2022 will be recognized during 2023. EUR 445.0 million (2021: EUR 342.3 million) is expected to be recognized as revenue within 2 to 5 years. The remaining part is expected to be recognized as revenue after 5 years. The Group applies the practical expedient in paragraph 121 of IFRS 15 and does not disclose information about remaining performance obligations that have original expected durations of one year or less.
This estimation is judgmental, as it needs to consider estimates of possible future contract modifications and the timing of satisfaction of performance obligations. The amount of transaction price allocated to the remaining performance obligations, and changes in this amount over time, are impacted by, among others, currency fluctuations and possible contract modifications.
Under the percentage-of-completion method used for fixed fee services agreements, recognition of profit is dependent upon the accuracy of a variety of estimates. Such estimates are based on various judgments with respect to multiple factors and are difficult to accurately determine until the project is significantly underway. Due to uncertainties inherent in the estimation process, it is possible that the actual timing of completion may vary from estimates.
Contract balances consist of client-related assets and liabilities.
Contract assets relate to the Group's rights to consideration for software licensed to clients under subscription agreements with future payments, when that right is conditional on SimCorp's future performance.
If the timing of payments specified in the contract provides the client with a significant financing benefit, the transaction price is adjusted to reflect this financing component.
Contract assets increased by EUR 71.9 million with subscription-based licenses adding EUR 133.9 million (2021: EUR 45.1
Changes in contract assets
million) and finance income recognized EUR 2.2 million (2021: EUR 2.0 million). Foreign exchange as well as adjustments also had a positive impact partly off-set by deduction of expected credit loss provision with overall positive impact of EUR 6.6 million (2021: EUR 8.6 million). The overall balance was reduced by invoiced subscriptionbased license fees of EUR 70.8 million (2021: EUR 50.3 million).
When a client pays consideration in advance, or an amount of consideration is due contractually before transferring of the license or service, then the amount received in advance is presented as a liability. Contract liabilities represent mainly
Invoiced
prepayments from clients for unsatisfied or partially satisfied performance obligations in relation to licenses, software updates and support, and services. Software updates and support and hosting billing generally occurs at periodic intervals (e.g. quarterly or yearly) prior to revenue recognition, resulting in liabilities.
The majority of license agreements are recognized as revenue in the year of sale. However, contracts with functionality gaps or acceptance criteria may have revenue recognition deferred, resulting in a contract liability when payment has occurred.
Contracts in progress relating to fixed fee professional services are measured at the
Financing
estimated sales value of the proportion of the contract completed at the statement of financial position date.
Periodic fixed fees for subscription services, software updates and support services, and other multiperiod agreements are typically invoiced yearly or quarterly in advance. Such fee prepayments account for the majority of our contract liability balance.
Fees based on actual transaction volumes for SCDaaS subscriptions and fees charged for non-periodical services are invoiced as the services are delivered. While payment terms and conditions vary by contract type and region, our terms typically require payment within 30 to 60 days.
| EUR '000 | 2022 | 2021 |
|---|---|---|
| 1 to 6 months | 45,821 | 31,893 |
| 7 to 12 months | 31,461 | 24,057 |
| 13 to 24 months | 68,839 | 50,456 |
| 25 to 36 months | 56,523 | 44,944 |
| 37 to 48 months | 40,046 | 32,656 |
| 49 to 60 months | 28,623 | 20,603 |
| After 60 months | 33,498 | 22,368 |
| Total contract assets (gross) | 304,811 | 226,977 |
EUR '000 Opening balance from opening balance Net additions Adjustments1 income recognized Closing balance 2022 Contract assets (gross) 226,977 -59,815 131,514 6,135 - 304,811 Contract interest element -4,717 - -8,582 440 2,183 -10,676 Loss allowance -1,260 - 28 - - -1,232 Contract assets (NPV) 221,000 -59,815 122,960 6,575 2,183 292,903 2021 Contract assets (gross) 182,537 -39,434 74,610 9,264 - 226,977 Contract interest element -5,435 - -624 -700 2,042 -4,717 Loss allowance -1,174 - -86 - - -1,260 Contract assets (NPV) 175,928 -39,434 73,900 8,564 2,042 221,000
1 Adjustments include: reclassifications, cancellations and foreign exchange adjustments and cumulative catch-up adjustments (including those arising from change in estimate of transaction price and contract modifications), change in time frame for a right to consideration to become unconditional or for a performance obligation to be satisfied.
| Changes in contract liabilities | Revenue recognized |
||||
|---|---|---|---|---|---|
| Opening | Net | from liability | Closing | ||
| EUR '000 | balance | additions | opening balance | Adjustments1 | balance |
| 2022 | |||||
| Contract liabilities – licenses | 3,123 | 1,618 | -2,444 | 7 | 2,304 |
| Contract liabilities – software updates and support | 6,597 | 5,634 | -6,178 | -5 | 6,048 |
| Contract liabilities – services | 7,860 | 14,531 | -6,568 | 137 | 15,960 |
| Contract liabilities – other | 13,659 | 10,834 | -12,904 | 74 | 11,663 |
| Contract liabilities (prepayments from clients) | 31,239 | 32,617 | -28,094 | 213 | 35,975 |
| 2021 | |||||
| Contract liabilities – licenses | 3,573 | 1,965 | -2,474 | 59 | 3,123 |
| Contract liabilities – software updates and support | 7,429 | 6,513 | -7,376 | 31 | 6,597 |
| Contract liabilities – services | 5,338 | 7,282 | -4,902 | 142 | 7,860 |
| Contract liabilities – other | 9,891 | 13,616 | -9,883 | 35 | 13,659 |
| Contract liabilities (prepayments from clients) | 26,231 | 29,376 | -24,635 | 267 | 31,239 |
1 Adjustments include: reclassifications, cancellations, foreign exchange adjustments and cumulative catch-up adjustments (including those arising from change in measurement of progress).
Amounts invoiced on account in excess of work completed are included in prepayments under current liabilities.
Contract assets from contracts with customers are measured at amortized cost less expected credit losses. Contract assets are within the scope of impairment requirements in IFRS 9.
For contract assets the simplified approach is used, and the expected loss provision is measured at the estimate of the lifetime expected credit losses.
Expected loss rates between 0.03% - 13.69% are applied (2021: 0.03% - 14.13%), based on average default rates by region as published by Standard & Poor. For additional information refer to note 6.2 Risk.
Judgment is required in determining whether a right to consideration is conditional and thus qualifies as contract assets. Estimates are made as to whether and to what extent subsequent concessions or payments may be granted to customers
and whether the customer is expected to pay the contractual fees. In this judgment, trading history is considered both with the respective customer and more broadly.
The Group expenses the incremental costs of obtaining a customer contract as incurred. The incremental costs of obtaining a customer contract primarily consist of sales commissions earned by the sales force. Commissions are typically related to the license fee which is recognized upfront upon delivery, consequently, we expense
sales commissions concurrently with revenue recognition.
The Group does not capitalize costs incurred to fulfil customer contracts. Direct costs for custom development and standard platform are expensed as incurred.
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Trade receivables from clients | 67,157 | 56,060 |
| Accrued revenue | 43,310 | 38,018 |
| Loss allowance | -81 | -116 |
| Other receivables | 1,992 | 2,581 |
| Total receivables at December 31 | 112,378 | 96,543 |
| Aging of trade receivables from clients at December 31 | ||
| Not due | 49,386 | 42,248 |
| Overdue between 1 and 30 days | 8,827 | 9,184 |
| Overdue between 31 and 90 days | 6,983 | 3,760 |
| Overdue over 90 days | 1,961 | 868 |
| Total trade receivables from clients | 67,157 | 56,060 |
Receivables are recognized when control over licenses or services, etc. is transferred to a client before the client pays consideration and the right to consideration is not conditional on SimCorp's future performance.
Trade receivables represent receivables which have been invoiced to clients and remain outstanding. Accrued revenue consists mainly of revenue from the sale of perpetual software licenses and receivables from professional services contracts in progress which are yet to be invoiced. Other receivables are mainly sales and payroll taxes.
Trade receivables for performance obligations satisfied over time are recognized steadily, as the performance obligation is satisfied and in full once the invoice is due.
Receivables are initially recognized at fair value, and subsequently carried at amortized cost less expected loss allowance. Expected loss allowance is recorded on a portfolio basis. The simplified approach is applied and on initial measurement of receivables, all credit losses expected during the lifetime of the receivables are considered.
Additionally, allowances for individual receivables are recognized if there is objective evidence of credit impairment. Account balances are written off either partially or in full if judged that the likelihood of recovery is remote.
Expected loss allowance and impairments are recognized in the income statement under operating expenses. No security has been received with respect to trade receivables.
For information about how the default risk for trade receivables is analysed and managed, how the loss rates for the provision matrix are determined, how credit impairment is determined and what the criteria for write offs are, see the section on credit risk in note 6.2.
No impairment was recognized for trade receivables in 2022 (2021: 0.0 million).
The Group's exposure to currency and credit risk for trade receivables is disclosed in note 6.2 Risk.
SimCorp Annual Report 2022 Consolidated financial statements Section 3 74
This section provides information related to employee compensation arrangements and it should be read in conjunction with the Remuneration Report and note 7.2 on related party transactions.
Accounting policies which relate to a particular note to the income statement have been included within each individual note.
In this section, the following notes are presented:
Employee costs consist of salaries, sales commissions, bonuses, pensions and social costs, share-based payments, vacation pay, and other benefits.
Salaries, bonuses, pensions and social costs, share-based payments, vacation pay, and other benefits are recognized in the year in which the associated services are rendered by the employees.
Management expects commissions paid to employees as a result of signing new client contracts to be recoverable. Such commissions are deferred and expensed when the related revenues are recognized. Deferred commissions are presented under prepayments in the statement of financial position.
Where SimCorp provides long-term incentives and benefits, costs are accrued to match the rendering of services by the employees. The accounting policy for sharebased remuneration is described in vw.
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Salaries | 224,559 | 197,601 |
| Defined contribution pension plans | 6,876 | 4,299 |
| Defined benefit pension plans | 1,058 | 801 |
| Share-based payments | 10,144 | 10,035 |
| Social security and other costs | 20,385 | 19,291 |
| Total employee cost | 263,022 | 232,027 |
| Number of employees at the end of the year | 2,245 | 1,998 |
| Average number of employees – FTE | 2,067 | 1,871 |
| Function | 2022 | 2021 |
|---|---|---|
| Professional services | 45% | 42% |
| Research and development | 32% | 35% |
| Internal support and service | 14% | 15% |
| Sales and sales support | 9% | 8% |
Obligations related to contribution-based pension schemes are recognized in the income statement under employee costs in the period for which the related service is provided.
The accounting treatment for defined benefit plans is described in note 3.3.
The Group Management Committee with 13 members in 2021 has changed to The Group Executive Management Committee with 7 members in 2022, incl. The Executive Management Board.
Remuneration to the Executive Management Board, the Executive Management Committee and Board of Directors is given below:
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Salaries | 1,913 | 2,494 |
| Other benefits (short-term benefits) | 110 | 171 |
| Share-based payment | 1,525 | 3,260 |
| Performance-related bonus (short-term benefits) | 956 | 1,513 |
| Executive Management Board total | 4,504 | 7,438 |
| Salaries | 1,032 | 3,341 |
| Other benefits (short-term benefits) | 78 | 167 |
| Share-based payment | 391 | 1,080 |
| Performance-related bonus (short-term benefits) | 282 | 1,122 |
| Executive Management Committee total1 | 1,783 | 5,710 |
| Board fees | 508 | 568 |
| Fees for committee work (short-term benefits) | 162 | 123 |
| Travel allowance (short-term benefits) | 106 | 18 |
| Share-based payment | 171 | 175 |
| Board of Directors total | 947 | 884 |
| Total | 7,234 | 14,032 |
1 The Group Executive Management Committee with 3 members in 2022 has changed from The Group Management Committee with 9 members in 2021.
SimCorp's Board of Directors has adopted an overall policy for remuneration and incentive programs. The policy has been approved by shareholders at the Annual General Meeting with the overall objective being to promote awareness of profitable growth and the Group's long-term goals.
Share-based payments comprise equitysettled restricted stock units (RSUs) issued to employees. The fair value of RSUs is measured at the grant date, adjusted for estimated dividends and recognized in the income statement as employee cost over the vesting period. Expenses are recognized as employee share-based payments and classified in the consolidated income statements according to the activities that the employees perform. The counter entry is recognized directly in equity.
Most of these awards are described in detail below. Other share-based payment plans not described below, are, individually and in aggregate, immaterial to our consolidated financial statements.
Assumptions are made in estimating the fair values for share-based payments, including number of RSUs expected to vest and number of employees estimated to become entitled to RSUs.
Upon resignation employees forgo all unvested RSUs, these are reported as canceled. The number of the RSUs is adjusted when performance conditions are only partly met, such adjustments are reported under performance adjustments. All adjustments are recognized in the income statement as employee cost.
In the 2022 financial year, EUR 10.1 million was charged to the income statement in respect of share-based remuneration: EUR 4.8 million related to issued RSUs, EUR 5.2 million related to corporate bonus 2022 provision, and EUR 0.2 million related to shares to the Board of Directors (2021: EUR 10.0 million charged to the income statement, of which EUR 5.3 million from RSUs, EUR 4.5 million from corporate bonus 2021 provision and EUR 0.2 million from shares to the Board of Directors).
As a result of the equity-settled share-based payments transactions, a commitment exists to grant SimCorp shares to employees. SimCorp meets these commitments using treasury shares to fulfil these obligations.
Members of the Board of Directors receive shares as a part of their overall remuneration. Shares are granted subject to approval at the Annual General Meeting. In the financial year January 1 to December 31, 2022, a cost of EUR 171 thousand (2021: EUR 175 thousand) was charged to the income statement in respect of this program.
The company will allot 2,532 treasury shares after publication of the Annual Report to members of the Board of Directors (2021: 1,697 treasury shares).
The Group grants RSUs to its employees and Executive Management Board (EMB) as part of its three incentive programs: longterm incentive program, corporate bonus, and special retention programs. The table which follows on the next page shows a summary of changes in the balance of outstanding RSUs from January 1, 2021 to December 31, 2022.
RSUs are granted annually to members of the EMB and key employees as part of the long-term incentive program. These vest three years after being granted subject to continuing employment and conditions with respect to average annual minimum ARR growth/business growth and net operating profit after tax for the three consecutive financial years, including the year of grant. If the two last conditions are only partially satisfied, the undertaking with respect to the number of shares transferred after three years is reduced (performance adjustment) and may possibly lapse completely.
Upon resignation employees forgo all unvested RSUs. These are reported as canceled. In 2022, 24,267 RSUs were
granted to Executive Management Board (2021: 21,459), 745 RSUs were granted to employee elected members of the Board of Directors (2021: 228) and 35,661 RSUs were granted to other employees (2021: 19,991). Fair value at grant date was EUR 4.8 million (2021: EUR 4.3 million), and EUR 1.2 million was charged to the income statement for 2022 (2021: EUR 1.1 million).
The annual corporate bonus program is linked to two key financial metrics: ARR growth/business growth and Group EBIT. Employees have the following options: receive the year's corporate bonus in cash; or waive their corporate cash bonus and elect to receive RSUs at a discount of 67%. Based on the waived bonus amount, the company grants RSUs to employees of the Parent company and its foreign subsidiaries. One third of these RSUs vest after one year, a further one third after two years, and the remaining third after three years, subject to continuing employment.
In 2022, 117,966 RSUs were granted including 1,067 RSUs to employee elected members of the Board of Directors. Fair value at grant date was EUR 5.8 million (2021: EUR 6.7 million). EUR 3.4 million was charged to the income statement for 2022 (2021: EUR 2.8 million).
In March 2023, the company will grant RSUs as part of its corporate bonus for 2022. EUR 1.7 million was charged to the income statement in 2022 (2021: EUR 1.6 million). These are not included in the specification on the next page.
RSUs with particular vesting conditions are occasionally granted to key personnel upon hiring as a part of a sign-on agreement, special performance incentives, or similar incentives. A short description of particular vesting conditions is provided below. Other share-based payment plans not described below, are, individually and in aggregate, immaterial to our consolidated financial statements.
In December 2022, 9,515 RSUs were granted to Michael Bjergby in connection with his appointment as CFO. The fair value of these RSUs amounted to EUR 0.6 million. The RSUs will vest 1/3 after three years, 1/3 after four years and 1/3 after five years conditional upon continued service and investment by Michael Bjergby of EUR 0.3 million in SimCorp shares. The investment was completed.
In addition, 446 restricted stock units were granted to Michael Bjergby for the 2022 LTIP program.
Furthermore during 2022, 6,438 RSUs were granted to senior employees in the Group as part of sign-on agreements and
incentive programs. Fair value at grant date was EUR 0.3 million.
The RSUs will vest after three years subject to continued employment and certain performance conditions for the financial years 2022 to 2025.
In 2022, 15,654 RSUs related to other incentive programs vested, including 5,959 RSUs to Christian Kromann.
24,306 RSUs were canceled due to employees discontinuing their employment with SimCorp in 2022.
| RSUs Number of RSUs |
Long term incentive |
Corporate bonus |
Other | Total | Board of Directors1 |
Executive Management Board |
Other employees |
|---|---|---|---|---|---|---|---|
| 2022 | |||||||
| Outstanding January 1, 2022 | 138,671 | 128,074 | 58,865 | 325,610 | 1,606 | 96,289 | 227,715 |
| Granted | 60,673 | 117,966 | 15,953 | 194,592 | 1,812 | 33,782 | 159,575 |
| Vested | -51,032 | -64,620 | -15,654 | -131,306 | -1,101 | -15,940 | -114,631 |
| Canceled/transferred | -4,775 | -6,740 | -12,791 | -24,306 | -1,115 | -54,033 | 30,631 |
| Outstanding December 31, 2022 | 143,537 | 174,680 | 46,373 | 364,590 | 1,202 | 60,098 | 303,290 |
| of which vesting: | |||||||
| 2023 | 44,854 | 79,687 | 3,053 | 127,594 | 516 | 9,680 | 117,398 |
| 2024 | 39,876 | 57,440 | 19,659 | 116,975 | 367 | 14,631 | 101,977 |
| 2025 | 58,807 | 37,553 | 13,464 | 109,824 | 319 | 25,590 | 83,915 |
| 2026 | - | - | 7,026 | 7,026 | - | 7,026 | - |
| 2027 | - | - | 3,171 | 3,171 | - | 3,171 | - |
| 2021 | |||||||
| Outstanding January 1, 2021 | 166,532 | 154,232 | 26,712 | 347,476 | 1,853 | 93,961 | 251,662 |
| Granted | 41,678 | 61,609 | 39,349 | 142,636 | 689 | 40,268 | 101,679 |
| Vested | -64,651 | -81,516 | -4,052 | -150,219 | -936 | -37,940 | -111,343 |
| Canceled/transferred | -4,888 | -6,251 | -3,144 | -14,283 | - | - | -14,283 |
| Outstanding December 31, 2021 | 138,671 | 128,074 | 58,865 | 325,610 | 1,606 | 96,289 | 227,715 |
| of which vesting: | |||||||
| 2022 | 51,032 | 65,263 | 18,044 | 134,339 | 735 | 30,847 | 102,757 |
| 2023 | 46,576 | 42,737 | 3,197 | 92,510 | 488 | 23,930 | 68,092 |
| 2024 | 41,063 | 20,074 | 26,062 | 87,199 | 383 | 29,950 | 56,866 |
| 2025 | - | - | 5,781 | 5,781 | - | 5,781 | - |
| 2026 | - | - | 5,781 | 5,781 | - | 5,781 | - |
| Charge to the income statement EUR million | |||||||
| 2022 | 3.80 | 3.44 | 1.05 | 8.29 | |||
| 2021 | 4.44 | 2.77 | 0.91 | 8.12 |
1 Board of Director's restricted stock units are acquired in the capacity of employees of SimCorp.
The Group has entered into pension and similar agreements with most employees. Obligations relating to defined-contribution plans are recognized in the income statement in the period in which they are earned, and payments due are recognized in the statement of financial position under other payables.
For defined-benefit plans, the net present value is only calculated for those benefits earned to date by employees. The present value of future pension payments is estimated actuarially and shown net of the fair value of any plan assets in the statement of financial position as pension obligations.
Differences between estimated pension assets and liabilities and their realized values are termed actuarial gains and losses. Actuarial gains and losses are recognized in the statement of other comprehensive income.
Changes in benefits earned to date are actuarially calculated and expensed immediately when the employees have already earned the right to the changed benefits. Otherwise, they are recognized in the income statement over the period during which the employees earn the right to the benefits.
For defined-benefit plans, annual actuarial calculations are made of the net present value of future benefits to be paid under the plan. The net present value is calculated based on assumptions of the future developments of salary, interest, inflation, and mortality rates.
Assumptions are assessed at reporting date and changes in these assumptions may significantly affect the liabilities and pension cost under defined benefit plans.
The pension obligations of the Parent company and most foreign subsidiaries (all those with defined-contribution plans) are covered by insurance. For a few foreign subsidiaries (those with defined benefit plans), the pension obligations are not covered or only partly covered by insurance.
Under defined-benefit plans, the employer is obliged to pay a defined benefit (for example a fixed percentage of an employee's final salary) to the employee after retirement. Under a defined-benefit plan, the Group carries the risk in respect of future developments in interest rates, inflation, mortality, or disability.
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Pension liabilities | ||
| At January 1 | 13,395 | 15,593 |
| Foreign exchange adjustment and other adjustments | 257 | 508 |
| Employee contributions | 348 | 304 |
| Expensed in the income statement | 1,058 | 801 |
| Calculated interest | 96 | 74 |
| Actuarial loss/(gain) change in demographic assumptions | - | -782 |
| Actuarial loss/(gain) change in financial assumptions | -3,618 | -762 |
| Actuarial loss/(gain) change in experience | -945 | -258 |
| Payroll taxes | -62 | -67 |
| Settlements | - | -2,367 |
| Benefits paid through pension assets | -318 | 351 |
| Present value of pension liabilities at December 31 | 10,211 | 13,395 |
| Fair value of plan assets | ||
| At January 1 | 10,969 | 11,299 |
| Foreign exchange adjustment | 219 | 340 |
| Calculated interest | 78 | 55 |
| Return on plan assets in addition to calculated interest | -3,295 | 138 |
| Employee contributions | 415 | 368 |
| Employer contributions | 846 | 811 |
| Settlements | - | -2,367 |
| Benefits paid through pension assets | -318 | 351 |
| Other | -34 | -26 |
| Fair value of plan assets at December 31 | 8,880 | 10,969 |
| Net liability included in the statement of financial position | 1,331 | 2,426 |
The plan entitles employees to defined future benefits. These primarily depend on number of years of service, salary level at retirement age, and the size of the national pension.
The actuarial assessments of assets and liabilities in the Norwegian defined-benefit plan have been prepared by Storebrand Pensjonstjenester AS (Norway).
For the Swiss defined-benefit plan, the actuarial assessments of assets and liabilities have been prepared by Allea Ltd (Switzerland).
For the Belgian defined-benefit plan, the actuarial assessments of assets and liabilities have been prepared by Willis Towers Watson (Belgium).
Significant actuarial assumptions for the determination of the pension benefit liability are discount rate and expected future remuneration increases. The sensitivity analysis below has been determined based on reasonable likely changes in assumptions occurring at the end of the period.
The analysis considers the single change shown in the table with all other assumptions assumed to remain unchanged. In practice, changes in one assumption may be accompanied by offsetting changes in
| Switzerland | Norway | Belgium | |||
|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
| - | - | 6.8% | 6.8% | 3.5% | 3.5% |
| - | - | 63.7% | 63.7% | 83.7% | 85.1% |
| - | - | 16.1% | 16.1% | - | - |
| - | - | 13.4% | 13.4% | 12.8% | 11.4% |
| 100.0% | 100.0% | - | - | - | - |
| 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% |
| Norway | Belgium | ||||
| 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
| Switzerland |
| reported pension liabilities | Switzerland | Norway | Belgium | ||||
|---|---|---|---|---|---|---|---|
| EUR '000 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
| Discount rate +1% | -710 | -941 | -134 | -371 | -552 | -948 | |
| Discount rate -1% | 1,040 | 1,336 | 175 | 500 | 650 | 1,202 | |
| Future remuneration +1% | 183 | 230 | 61 | 225 | - | - | |
| Future remuneration -1% | -164 | -207 | -54 | -195 | - | - |
Discount rate 2.0% 0.4% 3.2% 1.5% 3.7% 0.9% Future salary increases 2.0% 1.3% 3.8% 2.5% - -
another assumption (although this is not always the case).
The Group expects to pay EUR 770 thousand to the defined-benefit pension plans in 2023 (2021: EUR 739 thousand for the year 2022).
For defined-contribution plans, the employer is obliged to pay a defined contribution (for example a fixed percentage of an employee's salary) to independent insurance companies.
For a defined-contribution plan, the Group runs no risk in respect of future developments in interest rates, inflation, mortality, or disability.
A provision is recognized when the Group has a legal or constructive obligation as a result of a past event and it is probable that an outflow of the Group's resources will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
In valuing provisions, the costs estimated to settle the liability are discounted if such discounting would have a material effect on the measurement of the liability. A pre-tax discount rate is used that reflects the level of interest rates with the liability. Changes in the discount element during the year are recognized as financial expenses. The present value of defined-benefit obligations and the related current service cost and past service cost were measured using the projected unit credit method.
This provision results from the Group's commitment of one month's pay in connection with employees' 25th and 40th anniversary.
In Italy, upon termination of employment for any reason, employers must pay a leaving indemnity ('Trattamento di fine Rapporto' or TFR).
Termination pay is calculated as 6.9% of each year's annual salary, revalued on the basis of 75% of the inflation rate plus a fixed rate of 1.5% during the period of accrual, and is paid as a lump sum when the employees leaves or transferred to private pension fund. The cost is accrued on a monthly basis representing 1/13 of the annual cost per month.
Refer to note 3.3 Pension and similar liabilities.
Other provisions contain, among others, the obligation to re-establish leased offices when the premises are vacated.
The present value of the re-establishment obligation is included in the cost of the property plant and equipment and depreciated accordingly.
Uncertainties exist with respect to pension obligation's timing as well as timing and amount of re-establishment costs and termination indemnity. Judgment is used to determine when and whether such obligations will crystallize.
| Anniversary | Termination | ||||
|---|---|---|---|---|---|
| EUR '000 | bonuses | Pension | indemnity | Other | Total |
| 2022 | |||||
| Liability at January 1 | 2,529 | 2,426 | 3,285 | 1,935 | 10,175 |
| Foreign exchange adjustment | 3 | 38 | - | -17 | 24 |
| Used during the year | -144 | - | -387 | -658 | -1,189 |
| Reversal of unused liabilities | -104 | -426 | - | -340 | -870 |
| Provisions for the year | 584 | -707 | 991 | 1,135 | 2,003 |
| Total provisions | 2,868 | 1,331 | 3,889 | 2,055 | 10,143 |
| Expected due dates for provisions: | |||||
| Falling due within 1 year | 220 | - | 341 | 450 | 1,011 |
| Falling due within 2 to 5 years | 977 | 883 | 648 | 376 | 2,884 |
| Falling due after 5 years | 1,671 | 448 | 2,900 | 1,229 | 6,248 |
| Total provisions | 2,868 | 1,331 | 3,889 | 2,055 | 10,143 |
| 2021 | |||||
| Liability at January 1 | 2,293 | 4,294 | 3,142 | 2,109 | 11,838 |
| Foreign exchange adjustment | 11 | 169 | - | 37 | 217 |
| Used during the year | -46 | - | -361 | -340 | -747 |
| Reversal of unused liabilities | -521 | -1,894 | - | -20 | -2,435 |
| Provisions for the year | 792 | -143 | 504 | 149 | 1,302 |
| Total provisions | 2,529 | 2,426 | 3,285 | 1,935 | 10,175 |
| Expected due dates for provisions: | |||||
| Falling due within 1 year | 181 | - | 76 | 175 | 432 |
| Falling due within 2 to 5 years | 964 | - | 304 | 759 | 2,027 |
| Falling due after 5 years | 1,384 | 2,426 | 2,905 | 1,001 | 7,716 |
| Total provisions | 2,529 | 2,426 | 3,285 | 1,935 | 10,175 |
This section contains all relevant disclosures and details regarding corporate income tax recognized within the financial statements. The total tax on Group profit for the year was EUR 28.9 million compared with EUR 27.4 million in 2021.
The Group's effective tax rate has increased to 22.5% in 2022 from 20.0% in 2021. Comparing effective tax rate exclusive other adjustments 2022 is in line with 2021 at 22.6%.
4.1 Income tax
4.2 Deferred tax
The income tax for the year comprises current and deferred tax, including adjustments to prior years. Tax is recognized in the income statement, except to the extent it relates to items recognized in other comprehensive income or directly in equity.
The tax deduction on share-based remuneration for the year is recognized as taxable income in the income statement to the extent that the tax deduction is attributable to the share-based payment expenses recognized in the income statement. The value of the excess tax reduction, if any, is recognized directly in equity.
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Tax for the year: | ||
| Tax on profit | 28,894 | 27,426 |
| Tax on other comprehensive income | 275 | 397 |
| Total tax | 29,169 | 27,823 |
| Tax on profit for the year breaks down as follows: | ||
| Current tax | 16,816 | 22,809 |
| Deferred tax | 12,145 | 4,200 |
| Prior-year adjustments | 11 | 372 |
| Changes in tax rates | -78 | 45 |
| Total tax on profit for the year | 28,894 | 27,426 |
| Tax paid during the year | 22,251 | 23,329 |
| Tax on profit for the year breaks down as follows: | ||
| Tax calculated on the year's pre-tax profit, 22% (2021: 22%) | 28,975 | 30,144 |
| Difference in tax in subsidiaries relative to 22% (2021: 22%) | 1,194 | 1,703 |
| Changes in tax rates | -78 | 45 |
| Tax effect: | ||
| Non-taxable income | -2,246 | -2,141 |
| Non-deductible expenses | 1,161 | 1,282 |
| Other, including prior-year adjustments | -112 | -3,607 |
| Total tax on profit for the year | 28,894 | 27,426 |
| Effective tax excl. Other, incl. prior-year adjustments, rate | 22.6% | 22.6% |
| Effective tax rate | 22.5% | 20.0% |
Deferred tax is calculated using the liability method on all temporary differences between the accounting and taxable values of assets and liabilities. Deferred tax assets are assessed yearly and recognized only to the extent that it is more likely than not that they can be utilized.
Deferred tax assets, including the tax value of tax losses carried forward, are recognized as other non-current assets and measured at the amount at which they are expected to be realized. These are either offset against deferred tax liability or against tax on future earnings within the same legal entity or a jointly taxed entity.
Deferred tax is measured based on the tax legislation and statutory tax rates in the respective countries that will apply under the legislation in force on the statement of financial position date when the deferred tax asset is expected to crystallize as current tax. Changes in deferred tax resulting from changes in tax rates are recognized in the income statement.
For jurisdictions where IFRS 15 is not applicable for tax purposes, the revenue is deferred, and the related income tax is recognized as deferred tax.
Deferred tax reflects assessment of future taxable income across all legal entities. Actual future taxes may deviate from these estimates.
In some jurisdictions the tax treatment related to the adoption of IFRS 15 is yet to be determined, management assesses the tax treatment for those legal entities yearly. Management assessed that, for those jurisdictions, the most likely outcome is a deferred income of subscription-based license fees for tax purposes, related income tax is thus recognized as deferred tax.
The uncertainty of the tax treatment of IFRS 15, to be classified as deferred tax, amounts to approximately EUR 40 million (2021: EUR 28 million), related to Parent company.
The Group recognizes deferred tax assets relating to losses carried forward, if management assesses that these can be offset against taxable income in the foreseeable future.
Tax value of the capitalized tax losses are expected to be realized within the foreseeable future, as the affected subsidiaries expect a sufficient future taxable income. In 2023, EUR 0.7 million (2022: EUR 0.3 million) of the deferred tax assets are expected to be utilized within the next 12 months. The tax value of tax losses not capitalized is EUR 0.6 million (2021: EUR 0.8 million).
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Deferred tax at January 1 | -30,030 | -24,150 |
| Foreign exchange adjustment | -4 | 139 |
| Net change of deferred tax, profit and loss | -12,145 | -4,200 |
| Prior-year adjustment, profit and loss | -762 | 173 |
| Change in tax rates | 78 | -45 |
| Adjustment of deferred tax, other comprehensive income | -275 | -397 |
| Adjustment of deferred tax, equity | -703 | -1,550 |
| Net deferred tax (liability)/asset at December 31 | -43,841 | -30,030 |
| Recognized in the statement of financial position as follows: | ||
| Deferred tax assets | 2,755 | 3,091 |
| Deferred tax liabilities | -46,596 | -33,121 |
| Net deferred tax (liability)/asset at December 31 | -43,841 | -30,030 |
SimCorp operates in more than 20 countries through sales companies, while development is carried out in a few countries, mainly Denmark and Ukraine, and support and services are delivered locally as well as from shared centers in primarily Poland and India. This leads to transactions between Group Companies. SimCorp follows the OECD principles in setting internal transfer prices for these transactions. This implies a tax risk, as the transactions are subject to judgment in each country. SimCorp has reduced its risk using bilateral advanced pricing agreements (APAs).
An APA is an agreement between a taxpayer and a tax authority determining the transfer pricing method for a taxpayer's international transactions for future years. The APA is for a certain period and based on certain terms and conditions. SimCorp has entered into bilateral APAs, which means agreements that are negotiated between tax authorities of the two countries that the transactions cover.
An APA provides assurance with respect to the tax outcome for the international transactions, by determining in advance arm's length pricing.
| Deferred tax | Recognized in: | |||||||
|---|---|---|---|---|---|---|---|---|
| Foreign | Other | |||||||
| EUR '000 | Balance January 1 |
exchange adjustment |
Profit and loss |
comprehensive income |
Equity | Balance December 31 |
||
| 2022 | ||||||||
| Intangible assets | -534 | 29 | 96 | - | - | -409 | ||
| Property, plant, and equipment, owned | -6,660 | -20 | 436 | - | - | -6,244 | ||
| Property, plant, and equipment, right-of-use | -8,888 | -4 | 438 | - | - | -8,454 | ||
| Contract assets | -31,167 | -22 | -13,012 | - | - | -44,201 | ||
| Lease liabilities, current | 2,149 | -13 | 119 | - | - | 2,255 | ||
| Current liabilities | 3,258 | 46 | 158 | - | - | 3,462 | ||
| Lease liabilities, non-current | 7,814 | 25 | -1,316 | - | - | 6,523 | ||
| Provisions, non-current | 49 | -58 | 725 | -275 | - | 441 | ||
| Share-based payment | 2,640 | - | -311 | - | -703 | 1,626 | ||
| Tax losses carry-forward | 1,309 | 13 | -162 | - | - | 1,160 | ||
| Total | -30,030 | -4 | -12,829 | -275 | -703 | -43,841 | ||
| 2021 | ||||||||
| Intangible assets | -7,024 | -42 | 6,532 | - | - | -534 | ||
| Property, plant, and equipment, owned | -1,030 | 11 | -5,641 | - | - | -6,660 | ||
| Property, plant, and equipment, right-of-use | -9,417 | -211 | 740 | - | - | -8,888 | ||
| Contract assets | -27,029 | -19 | -4,119 | - | - | -31,167 | ||
| Lease liabilities, current | 2,536 | 56 | -443 | - | - | 2,149 | ||
| Current liabilities | 2,561 | 88 | 609 | - | - | 3,258 | ||
| Lease liabilities, non-current | 7,698 | 176 | -60 | - | - | 7,814 | ||
| Provisions, non-current | 1,076 | 30 | -660 | -397 | - | 49 | ||
| Share-based payment | 3,964 | 1 | 225 | - | -1,550 | 2,640 | ||
| Tax losses carry-forward | 2,515 | 49 | -1,255 | - | - | 1,309 | ||
| Total | -24,150 | 139 | -4,072 | -397 | -1,550 | -30,030 |
SimCorp has entered into bilateral APAs with the tax authorities in the countries where internal transactions are most significant. Transactions covered by APAs are internal transactions between Denmark and the US and Germany, respectively.
SimCorp is subject to withholding taxes from various countries. The most significant withholding tax impact relates to France.
R&D Tax credit is based on tax incentive from the Danish Government. In 2021 and 2022, the qualifying R&D expenses can be deducted with 130%. The qualifying development must meet criteria's such as being new technological developments for the company, innovative and entail uncertainty.
SimCorp has applied the R&D tax credit of 130% for certain R&D expenses.
This section comprises notes which offer a thorough understanding of the Group's non-current assets. Additions in invested capital include separate asset acquisitions or business combinations. Furthermore, in this section are disclosed all lease related disclosures, including liabilities.
Additions to property, plant, and equipment amounted to EUR 10.5 million in 2022 (2021: EUR 7.0 million). Additions in 2022 comprise mainly lease extensions and purchase of equipment.
In this section, the following notes are presented:
Newly acquired or newly established enterprises are recognized in the consolidated financial statements from the effective dates of acquisition.
The takeover method is applied for acquisitions if the Parent company gains control of the entity.
The net aggregate value of identifiable assets and liabilities is measured in accordance with IFRS 3 Business Combinations.
Transaction costs related to acquisitions are charged to the income statement as administration expenses at the time of acquisition.
Provisional values are used for initial recognition where there is uncertainty regarding the identification and measurement of acquired assets, liabilities, and contingent liabilities at the date of acquisition. Such provisional values can be adjusted or additional assets or liabilities included until 12 months after the acquisition date if new information is available regarding circumstances that existed at the time of acquisition and which would have affected the fair value at the time of acquisition, had the information been known. Thereafter, no adjustments are made to goodwill, and changes in estimates of contingent consideration relating to business combinations are recognized in the income statement.
SimCorp did not enter into acquisitions in 2022 or 2021.
Initially, goodwill is recognized at cost. Subsequently, goodwill is measured at cost less accumulated impairment. Goodwill is not amortized.
The carrying amount of goodwill is tested for impairment at least annually. Impairment losses are recognized directly in profit for the year and are not subsequently reversed.
Intangible assets with limited economic lives are measured at cost less accumulated amortization and impairment losses. Intangible assets include proprietary and acquired software as well as client relationships. Amortization is provided on a straight-line basis over the estimated useful lives of the assets, which are as follows:
Costs of development projects for software for resale are recognized as intangible assets where they are clearly defined and identifiable, where there are sufficient resources to implement the projects, and where it is probable that identifiable future income or cost reductions will cover the development and future operating costs.
Capitalized development costs comprise salaries plus overheads. Overheads comprise staff costs, IT, and communications and amortization. Development costs comprise costs attributable to the Group's development functions, including salaries, and other employee costs and amortization. To the extent that the development costs are not capitalized, they are recognized as research and development costs in the income statement.
Software acquired is measured at cost less accumulated amortization and accumulated impairment losses.
Acquisition related client relationships are initially recognized at fair value at the acquisition date and subsequently carried at cost less accumulated amortization and any accumulated impairment losses. The value of client relationships is amortized on a straight-line basis, based on the estimated duration of the acquired relationship or other relevant period if deemed appropriate.
The carrying values of other intangible assets are reviewed annually for impairment to assess if there is an indication of impairment beyond what is expressed through normal amortization. If the carrying amount exceeds its recoverable amount, the carrying amount of the asset is written down to the recoverable amount.
| Intangible assets | ||||
|---|---|---|---|---|
| EUR '000 | Goodwill | Software | Client relationships |
Intangible assets total |
| 2022 | ||||
| Cost at January 1 | 61,645 | 24,158 | 28,628 | 114,431 |
| Foreign exchange adjustment | -379 | -196 | -179 | -754 |
| Disposals | - | -191 | - | -191 |
| Cost at December 31 | 61,266 | 23,771 | 28,449 | 113,486 |
| Amortization at January 1 | - | 14,357 | 7,383 | 21,740 |
| Foreign exchange adjustment | - | -168 | -87 | -255 |
| Amortization | - | 1,641 | 1,567 | 3,208 |
| Disposals | - | -191 | - | -191 |
| Amortization at December 31 | - | 15,639 | 8,863 | 24,502 |
| Carrying amount at December 31 | 61,266 | 8,132 | 19,586 | 88,984 |
| 2021 | ||||
| Cost at January 1 | 61,367 | 23,899 | 28,393 | 113,659 |
| Foreign exchange adjustment | 278 | 261 | 235 | 774 |
| Disposals | - | -2 | - | -2 |
| Cost at December 31 | 61,645 | 24,158 | 28,628 | 114,431 |
| Amortization at January 1 | - | 12,428 | 5,506 | 17,934 |
| Foreign exchange adjustment | - | 189 | 85 | 274 |
| Amortization | - | 1,742 | 1,792 | 3,534 |
| Disposals | - | -2 | - | -2 |
| Amortization at December 31 | - | 14,357 | 7,383 | 21,740 |
| Carrying amount at December 31 | 61,645 | 9,801 | 21,245 | 92,691 |
| Amortization period | Up to 10 years |
Up to 20 years |
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Cost of sales | 1,294 | 1,135 |
| Research and development costs | 931 | 1,031 |
| Sales and marketing costs | 576 | 827 |
| Administrative expenses | 407 | 541 |
| Total amortization | 3,208 | 3,534 |
All intangible assets apart from goodwill are considered to have limited useful economic lives.
For the SimCorp Group, the measurement of intangible assets, including goodwill, could be affected by significant changes in judgment and assumptions underlying their calculation.
The estimated useful life reflects the period over which the Group expects to derive economic benefit from intangible assets.
Determination of the useful life of client relationships at up to 20 years and software at up to 10 years is based on estimates regarding the period over which such assets are expected to produce economic benefits to the Group.
Goodwill is tested for impairment once a year, other intangible assets are tested when there is indication of impairment. No indication of impairment beyond what is expressed through normal amortization has been perceived in relation to software and client relationships.
| Discount | Annual | |||||
|---|---|---|---|---|---|---|
| Goodwill | rate after tax | average growth | ||||
| EUR '000 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
| SimCorp Dimension | 37,091 | 37,470 | 7% | 7% | 10% | 10% |
| SimCorp Sofia | 24,175 | 24,175 | 7% | 7% | 0% | 0% |
| Total carrying amount | 61,266 | 61,645 |
Discount rate before tax: SimCorp Dimension 9% (2021: 9%), SimCorp Sofia 10% (2021:10%).
When performing the impairment test, an assessment is made as to the ability of individual cash generating units (CGUs) to generate sufficient positive net cash flow in the future to support the value of the unit-value in use. The discount rate used in determining the value in use is based on the weighted average cost of capital (WACC).
Cash generating units are defined as the smallest group of identifiable assets which together generate incoming cash flow from continued operations. We have identified SimCorp Dimension and SimCorp Sofia as the CGUs.
For SimCorp Dimension the impairment testing for the intangible assets is based on testing for the business unit SimCorp Dimension and for SimCorp Sofia the impairment testing is based on testing the business unit.
The future cash flows are based on budgets and management's estimates of expected developments over the next five years. Revenue growth assumptions, EBIT, and discount rate constitute the most material parameters in the calculations.
At December 31, 2022, the carrying amount of goodwill was tested for impairment. The expected performance of SimCorp
Dimension was assessed for business unit SimCorp Dimension and the expected performance of SimCorp Sofia was assessed for SimCorp Italiana S.r.l. in order to verify if sufficient to offset the carrying amount of the cash generating units.
The impairment test at December 31, 2022 showed no indication of impairment for 2022 (2021: nil). Management's assessment is that currently no changes in key assumptions are reasonably likely to reduce the value in use below the carry value for any of the cash generating units.
For SimCorp Dimension, the expected growth rate is based on SimCorp's own market intelligence process, through which information is collected from all key markets to form the basis for future market growth expectations. The internal expectations are then verified against available market data from external resources, including global market intelligence and research companies.
For SimCorp Sofia, the estimated growth rate is based on management's expectations.
The Group chose to present right-of-use assets together with the underlying assets of the same nature which it owns.
Property, plant, and equipment are measured at cost less accumulated depreciation and accumulated impairment. Right-of-use assets are initially measured at cost consisting of the amount of the initial measurement of the leases liability, plus any lease payments made to the lessor at or before the commencement date less any lease incentives received and the initial estimate of refurbishment costs and any initial directs costs incurred by SimCorp as the lessee.
Leasehold includes right of use assets related to the rental of premises as well as improvements. The Group leases land and buildings for its office space for three to ten years.
Technical equipment includes IT and other equipment owned and leased. Other equipment includes leased cars and owned fixtures and fittings.
The Group leases vehicles and equipment with lease terms of three to five years. Agreements might include options to purchase assets at the end of the contract term or guarantees in relation to the residual value of the leased asset at the end of the contract term. The use of vehicles and equipment is monitored and the estimated amount payable reassessed at the reporting date to remeasure lease liabilities and right-of-use assets.
None of the Groups' right-of-use assets meet the definition of investment property.
Extension and termination options are included in a number of property and equipment leases across the group. These are used to maximize operational flexibility in terms of managing the assets used in the group's operations. The majority of extension and termination options held are exercisable only by the group and not by the respective lessor. The Group assesses at the lease commencement date whether it is reasonably certain to exercise such options and reassesses if there is a significant event.
Additionally, some leases provide for additional payments based on changes to local price indices, these amounts are generally determined annually.
Payments associated with short-term leases and leases of low-value assets are recognized on a straight-line basis as an expense in the income statement. Shortterm leases are leases with a term of 12 months or less. Low-value assets comprise IT-equipment and small items of office furniture.
Lease liabilities arise from the adoption of IFRS 16. Details on lease liabilities, amounts recognized in the income statement and statement of cash flow in relation to leases follow.
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Payable within 1 year | 9,895 | 8,577 |
| Payable within 2 to 5 years | 24,892 | 24,194 |
| Payable after 5 years | 5,085 | 8,191 |
| Total undiscounted lease liabilities | 39,872 | 40,962 |
| Total lease liabilities included in the statement of financial position | 38,838 | 40,665 |
| Current | 9,401 | 8,577 |
| Non-current | 29,437 | 32,088 |
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Interest on lease liabilities | 533 | 530 |
| Variable lease payments not included in the measurement of lease liabilities | 296 | 1,043 |
| Expenses related to short-term lease | 108 | 72 |
| Expenses related to low-value assets | 6 | 4 |
| Total recognized in profit and loss | 943 | 1,649 |
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Repayment of lease liability | 11,661 | 10,808 |
| Total recognized in statement of cash flow | 11,661 | 10,808 |
The basis of depreciation is calculated with due consideration to estimated residual value after the end of useful life and any prior impairment write down. The estimated useful life and the residual value after the end of useful life of each asset is determined at the date of acquisition and reassessed annually. When the estimated residual value after the end of useful life value equals the carrying amount of the asset, the asset ceases to be depreciated. Any change in depreciation period or scrap value is recognized as a change in accounting estimate.
Impairment, depreciation, and amortization are recognized in cost of sales, research and development costs, sales and marketing costs, or administrative expenses. Property, plant, and equipment are depreciated on a straight-line basis over the estimated useful lives of the assets, which are as follows:
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Cost of sales | 4,710 | 3,758 |
| Research and development costs | 3,389 | 3,476 |
| Sales and marketing costs | 2,095 | 2,787 |
| Administrative expenses | 1,481 | 1,824 |
| Total depreciation | 11,675 | 11,845 |
| Property, plant, and equipment | Leasehold | Other equipment, fixtures, fittings and prepayments |
||||||
|---|---|---|---|---|---|---|---|---|
| EUR '000 | Right-of-use | Improvements | Right-of-use | Owned | Right-of-use | Owned | Property, plant, and equipment total |
|
| 2022 | ||||||||
| Cost at January 1 | 64,359 | 7,707 | 459 | 8,792 | 2,823 | 5,100 | 89,240 | |
| Foreign exchange adjustment | -526 | -26 | 6 | -126 | -5 | -34 | -711 | |
| Additions | 8,023 | 412 | 92 | 961 | 486 | 563 | 10,537 | |
| Transfer | - | 258 | - | - | 0 | -258 | 0 | |
| Disposals | -6,230 | -1,318 | -11 | -993 | -310 | -862 | -9,724 | |
| Cost at December 31 | 65,626 | 7,033 | 546 | 8,634 | 2,994 | 4,509 | 89,342 | |
| Depreciation at January 1 | 26,170 | 5,801 | 189 | 8,202 | 1,483 | 3,703 | 45,548 | |
| Foreign exchange adjustment | -245 | -18 | 2 | 191 | -10 | -10 | -90 | |
| Depreciation | 9,500 | 564 | 183 | 343 | 622 | 463 | 11,675 | |
| Transfer | - | 14 | - | - | - | -14 | - | |
| Disposals | -6,068 | -1,318 | - | -781 | -312 | -771 | -9,250 | |
| Depreciation at December 31 | 29,357 | 5,043 | 374 | 7,955 | 1,783 | 3,371 | 47,883 | |
| Carrying amount at December 31 | 36,269 | 1,990 | 172 | 679 | 1,211 | 1,138 | 41,459 | |
| 2021 | ||||||||
| Cost at January 1 | 59,363 | 7,270 | 401 | 8,452 | 2,232 | 4,899 | 82,617 | |
| Foreign exchange adjustment | 1,474 | 269 | 14 | 139 | 4 | 110 | 2,010 | |
| Additions | 4,850 | 421 | 54 | 436 | 795 | 403 | 6,959 | |
| Disposals | -1,328 | -253 | -10 | -235 | -208 | -312 | -2,346 | |
| Cost at December 31 | 64,359 | 7,707 | 459 | 8,792 | 2,823 | 5,100 | 89,240 | |
| Depreciation at January 1 | 17,663 | 5,286 | 64 | 7,726 | 919 | 3,309 | 34,967 | |
| Foreign exchange adjustment | 492 | 294 | 2 | 109 | 1 | 83 | 981 | |
| Depreciation | 9,343 | 474 | 133 | 588 | 712 | 595 | 11,845 | |
| Disposals | -1,328 | -253 | -10 | -221 | -149 | -284 | -2,245 | |
| Depreciation at December 31 | 26,170 | 5,801 | 189 | 8,202 | 1,483 | 3,703 | 45,548 | |
| Carrying amount at December 31 | 38,189 | 1,906 | 270 | 590 | 1,340 | 1,397 | 43,692 | |
| Depreciation period | Up to 10 years | Up to 3 years | Up to 5 years |
This section presents how SimCorp manages its capital structure. SimCorp's capital structure management aims primarily to support business growth. It is the Group's policy that any excess capital present after 1) funding growth opportunities and 2) leaving remaining cash reserves that cover at least 10% of the following year's cost, be returned to investors.
In this section, the following notes are presented:
Treasury shares acquired by the Parent company are recognized in the statement of financial position at zero value. Dividends from such shares are recognized in equity.
On December 31, 2022, the share capital amounted to DKK 40,500,000 divided into 40,500,000 shares (unchanged from 2021). The company's shares are traded on Nasdaq Copenhagen in denominations of DKK 1. No shares confer any special rights upon any shareholder. No shares are subject to restrictions on transferability or voting rights.
The share capital may be increased in one or more issues by a total nominal amount of up to DKK 4,000,000 (4,000,000 shares of DKK 1 nominal value) as directed by the Board of Directors with respect to time and terms.
This authority is valid for a period of five years, expiring on March 1, 2025, and may be extended by the shareholders for one or more periods of up to five years at a time.
The capital increase may be affected by cash payment or otherwise. The capital increase may be affected without preemption rights to the company's existing shareholders, if the shares are issued at market price or as consideration for the company's acquisition of an existing operation or specific assets of a value that equals the value of the shares issued.
Except for the cases specified in the preceding period, the company's existing shareholders shall have a right to subscribe new shares proportionately to their existing holdings. The new shares shall be negotiable instruments, and no restrictions shall apply to the transferability of the shares. No shareholders shall be under an obligation to have their shares redeemed in full or in part by the company or any other party.
Unless Danish legislation provides for a greater majority or unanimity, the adoption of resolutions regarding amendments to the company's articles of association and the company's dissolution or merger with another company requires a majority of not less than two thirds of all the votes cast as well as of the voting share capital represented at the relevant general meeting, and that not less than 50% of the share capital is represented at the general meeting. Should less than 50% of the share capital be represented at the general meeting, and the resolution is adopted by not less than two thirds of the votes cast as well as of the voting share capital represented at the general meeting, another general meeting may be called within 14 days after the preceding general meeting. At the new general meeting, the resolution can be adopted by not less than two thirds of the votes cast as well as of the voting share capital represented at the general meeting. Refer to pages 41 to 44 for additional information.
The market value of treasury shares at December 31, 2022 was EUR 79.0 million (2021: EUR 103.1 million). The treasury shares are carried at EUR 0.0 million (2021: EUR 0.0 million) in the financial statements.
The Board of Directors has been authorized to let the company acquire treasury shares of up to a total nominal value of 10% of the company's share capital, including the company's current holding of treasury shares.
In 2022, SimCorp A/S acquired 289,795 treasury shares for EUR 20.0 million, at an average price of DKK 514.47 per share (2021: EUR 40.1 million at an average price of DKK
794.17 per share). In 2022, SimCorp A/S delivered 133,829 treasury shares as part of the share-based remuneration program for a nominal value of DKK 133,829 (2021: DKK 152,806) calculated at an average market price of DKK 586.26 per share (2021: DKK 813.55 per share), equal to a calculated price of EUR 10.5 million (2021: EUR 16.7 million).
The company acquires treasury shares to reduce share capital and to cover obligations arising from restricted stock unit programs.
The Board of Directors regularly assesses the need to adjust the capital structure,
| Treasury shares | Number of shares |
Acquisition value EUR '000 |
Percentage of share capital |
|---|---|---|---|
| 2022 | |||
| At January 1 | 1,072,118 | 85,609 | 2.6 |
| Foreign exchange adjustment | - | -26 | - |
| Purchases | 289,795 | 20,049 | 0.7 |
| Used RSU program | -133,829 | -7,507 | -0.3 |
| At December 31 | 1,228,084 | 98,125 | 3.0 |
| 2021 | |||
| At January 1 | 849,449 | 52,627 | 2.1 |
| Foreign exchange adjustment | - | 209 | - |
| Purchases | 375,475 | 40,102 | 0.9 |
| Used RSU program | -152,806 | -7,329 | -0.4 |
| At December 31 | 1,072,118 | 85,609 | 2.6 |
including the requirement for cash, credit facilities, and equity.
SimCorp intends to pay dividends of at least 40% of the Group free cash flow. In addition, the company buys treasury shares provided that it does not anticipate specific cash requirements.
SimCorp is predominantly equity financed and its guiding principle is that excess capital after funding of organic and acquisitive growth opportunities should be returned to investors.
In 2022, SimCorp acquired EUR 20.0 million in SimCorp shares as part of a share buyback program (2021: EUR 40.1 million). In 2023, there will be no share buyback.
Distribution of dividends to shareholders has no tax consequences for the company.
The Board of Directors intends to recommend to the shareholders at the Annual General Meeting that dividends of approximately EUR 39.7 million (2021: EUR 39.9 million), equal to DKK 7.50 (2021: DKK 7.50) per 1 share, be distributed and that the company be authorized to acquire treasury shares for up to 10% of the company's share capital.
Due to the nature of its operations, investments, and financing, the Group is exposed to changes in exchange rates and interest rates.
The Group's policy is to direct financial management towards the management of financial risks related to operations and finance. The Group's financial risks are managed centrally by the group finance according to policies committed in writing and approved by the Board of Directors. The purpose is to ensure efficient liquidity management. Excess liquidity is transferred to SimCorp A/S which operates as the internal bank for the Group.
The scope and nature of the Group's financial instruments appear from the income statement and the statement of financial position in accordance with the accounting policies applied.
This note provides information about factors that may influence amounts, time of payment, or reliability of future payments, where such information is not provided directly in the financial statements.
This note addresses only financial risks directly related to the Group's financial instruments as detailed in note 6.3 Financial assets and liabilities.
| Currency exposure | 2022 | 2021 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| EUR '000 | Receivables | Contract assets |
Cash/ equivalents |
Debt | Net position |
Receivables | Contract assets |
Cash/ equivalents |
Debt | Net position |
| USD/GBP | 2,231 | 20,140 | 540 | 1,543 | 21,350 | 3,629 | 13,915 | 1,483 | 1,888 | 17,139 |
| EUR/DKK | 7,591 | 7,914 | 3,721 | 5,586 | 13,640 | 6,869 | 1,393 | 2,516 | 1,433 | 9,345 |
| USD/SGD | 1,077 | 12,242 | 34 | - | 13,353 | - | 12,931 | 61 | - | 12,992 |
| CHF/EUR | -707 | 7,331 | -229 | 221 | 6,174 | -848 | 7,160 | -2,769 | 6 | 3,537 |
| CHF/GBP | 64 | 1,824 | - | - | 1,888 | - | 1,824 | - | - | 1,824 |
| CAD/USD | 596 | 530 | 604 | -42 | 1,772 | 524 | 669 | 56 | 189 | 1,060 |
| USD/DKK | 1,780 | - | 2,410 | 2,537 | 1,653 | 1,780 | - | - | 2,603 | -823 |
| EUR/SEK | 56 | 1,581 | 68 | 211 | 1,494 | 408 | 2,310 | 91 | 126 | 1,683 |
| USD/EUR | 76 | 359 | 1,051 | - | 1,486 | - | 492 | 802 | - | 1,294 |
| Currency exposure, subsidiaries | |||||
|---|---|---|---|---|---|
| EUR '000 | 2022 | 2021 | |||
| EUR/DKK | 84,076 | 44,854 | |||
| USD/DKK | 50,181 | 41,720 | |||
| SGD/DKK | 27,454 | 21,323 | |||
| CHF/DKK | 15,912 | 17,639 | |||
| GBP/DKK | 15,288 | 15,821 | |||
| AUD/DKK | 10,434 | 3,176 | |||
| CAD/DKK | 9,041 | 13,715 | |||
| SEK/DKK | 7,292 | 9,676 |
The Group's most important operational and commercial risk factors are described in more detail on pages 31-35 of the annual report.
Currency risk is the risk that arises from changes in exchange rates and affects the Group's result.
The Group's foreign subsidiaries are not severely impacted by foreign exchange fluctuations, as both income and costs are generally settled in the functional (local) currency of the individual entity and material cash balances are transferred to SimCorp A/S.
The consolidated income statement is impacted by changes in exchange rates. The results of foreign subsidiaries are
translated from their functional currency to EUR at the exchange rates ruling on the dates of underlying transactions. The average exchange rate for the month is used to reflect the transaction dates' exchange rates.
SimCorp A/S, the parent company, trades with it subsidiaries in their functional currencies, and is therefore also exposed to and impacted by currency fluctuations.
SimCorp A/S has entered into distribution agreements with its subsidiaries for SimCorp Dimension and received a product fee related to their distribution activities. SimCorp's subscription based agreements with clients have a duration of 5 to 10 years, SimCorp A/S' trade receivables with the subsidiaries have matching terms.
The currency exposure for the Group is shown in the table above and the currency exposure for the Subsidiaries is shown in the table to the right.
The exposure for the Group relates predominantly to USD/GBP and USD/SGD, as the subsidiaries in the UK and Singapore have entered into several contracts in USD.
The Group's currency exposure (excluding translation exposure) based on the functional currencies of the individual Group companies shows that the majority of the cross-currency exposure comes from the USD/GBP exchange rate: EUR 21.4 million (2021: EUR 17.1 million) and the USD/ SGD exchange rate: EUR 13.4 million (2021: EUR 13.0 million).
In addition, the Group has currency exposure on the Parent company trade receivables with its subsidiaries, in which much of the cross-currency exposure comes from USD/DKK: EUR 50.2 million (2021: EUR 41.7 million) and SGD/DKK: EUR 27.5 million (2021: EUR 21.3 million).
Based on the net exposure of the Group, the hypothetical impact of exchange rate fluctuations on the profit before tax for the year and equity would be EUR 2.1 million (2021: EUR 1.7 million) for a 10% change in the USD/GBP exchange rate and EUR 1.3 million (2021: EUR 1.3 million) for a 10% change in the USD/SGD exchange rate (an appreciation of the USD in relation to the GBP and the SGD would have positive impact, a depreciation would have a negative impact).
Based on the net exposure of the Group on the Parent company trade receivables with its subsidiaries the hypothetical impact of exchange rate fluctuations on the profit before tax for the year and equity would be EUR 5.0 million (2021: EUR 4.2 million) for a 10% change in the USD/DKK exchange rate and EUR 2.7 million (2021: EUR 2.1 million) for a 10% change in the SGD/DKK (an appreciation of the DKK in relation to the USD and the SGD would have negative impact, a depreciation would have a positive impact).
The Group's foreign exchange management policy is to balance incoming and outgoing payments in local currencies as much as possible and generally seek to ensure that an increasing number of contracts entered into are EUR-denominated.
When placing surplus funds, the Group generally seeks to minimize its net exposure in individual currencies. To match part of the USD surplus, we use USD in Ukraine for salaries.
Currency exposures from investments in subsidiaries have not been hedged. The related exchange rate adjustments are recognized in other comprehensive income.
The table at the top shows the change in average exchange rate for the main currencies impacting the Group's operating profit. The table at the bottom shows the Group Revenue split by currency.
| Functional currency | 2021 to 2022 |
2020 to 2021 |
|---|---|---|
| AUD | 4.17% | 5.01% |
| CAD | 8.18% | 3.82% |
| CHF | 7.88% | -0.80% |
| DKK | -0.04% | 0.22% |
| GBP | 0.44% | 3.60% |
| NOK | 0.50% | 6.12% |
| SEK | -4.70% | 3.22% |
| SGD | 9.76% | -0.54% |
| USD | 12.73% | -3.06% |
| Currency | 2022 | 2021 |
|---|---|---|
| EUR | 40% | 38% |
| USD | 17% | 18% |
| DKK | 8% | 7% |
| CHF | 8% | 8% |
| GBP | 8% | 8% |
| SGD | 5% | 5% |
| AUD | 4% | 3% |
| CAD | 4% | 5% |
| NOK | 3% | 3% |
| SEK | 3% | 4% |
The Group's interest rate risks are generally related to its bank deposits and credit facilities.
8%
8%
The Group had cash deposits of EUR 40.5 million on December 31, 2022 (2021: EUR 47.7 million) carrying a variable rate of interest based on the money market rate. The effective rate of interest varies with the currency and, made up at the statement of financial position date, fluctuated between -0.5% and 0.0% in 2022 (2021: -0.5% and 0.0%) for significant cash deposits.
4%
5% 4%
3%
3%
8%
17% 40%
In 2022, SimCorp has renewed the committed credit facility to EUR 37.0 million matures July 2025 with the opportunity to extend with one year, and a seasonal credit facility of EUR 33.6 million covering the period from March 15 to October 15, with same terms.
On December 31, 2022, there was EUR 6.7 million drawn on the credit facilities, and EUR 1.8 million was utilized for various guarantees. The Group had unused credit facilities in banks of EUR 28.5 million (2021: EUR 36.6 million).
SimCorp's cash flow is by nature impacted by the annual dividend payment, the seasonal credit facility is used to optimize the debt structure. See note 6.3 Financial assets and liabilities for additional information.
Exposure to interest risk arises from cash deposits and from draws on, the credit facility and seasonal facility. If interest rates increased by one percentage point, it would have a positive impact of EUR 0.3 million (2021: positive impact of EUR 0.5 million).
A corresponding decrease in interest rates would have the opposite impact. The impact of change in interest levels on the equity of the Group does not deviate significantly from the impact on the profit and loss for the year.
Group liquidity is managed by Group Treasury, with the objective of ensuring effective liquidity management by obtaining sufficient committed credit facilities to provide adequate financial resources. It is the Group's policy that cash reserves must exceed 10% of the coming year's expected costs. Cash reserve and expected cash flow for 2023 are considered to be adequate to meet the obligations of the Group as they fall due.
Cash reserve comprises cash and cash equivalent and unutilized credit facilities. The Group aims to have sufficient cash reserves to allow it to continue to operate
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Cash and cash equivalents | 40,546 | 47,692 |
| Trade receivables from clients | 67,157 | 56,060 |
| Accrued revenue | 43,310 | 38,018 |
| Contract assets (gross) | 304,811 | 226,977 |
| Other receivables | 1,992 | 2,581 |
| Maximum credit exposure | 457,816 | 371,328 |
adequately in case of unforeseen fluctuations in cash. Current and noncurrent financial liabilities are depicted below:
The maximum exposure to credit risk equals the following carrying amounts: The Group is not exposed to significant risks concerning individual clients or business partners as clients are generally major investment managers in the financial sector. Under the Group's policy for assuming credit risk, all major clients and other business partners are assessed prior to any contract being signed.
The Group primarily enters financial instruments and transactions with the Group's relationship banks. Group treasury monitors the Group's gross credit exposure to banks and operates with individual limits on banks based on rating and access to netting of assets and liabilities.
The main banking relationship is with Nordea Bank and their S&P rating is AA-.
In assessing expected credit loss of trade receivables and contract assets which comprises many small balances, the Group uses an allowance matrix. Expected loss rates are calculated separately for exposures in different segments based on common credit risk characteristics in relation to geographical region. Two factors are therefore considered when estimating expected loss rates: the actual credit loss experienced over the past seven years and a factor which reflects differences between economic conditions during the period over which the rates were collected, current conditions, and the Group's view of economic conditions over the expected life of the receivables.
Accumulated average corporate default rates by region as published by Standard & Poor are used as proxy for probability of loss as these provide an indication on counterpart default risk by region of origin. Higher expected loss rates are used for certain balances if individual assessment indicates a higher probability of default. Initially, an expected loss rate from 0.03% up to 2.44% (2021: 0.03% up to 2.50%) is applied for clients with investment grade rating depending on the length of the asset's lifetime and location.
| Financial liabilities – December 31 | Current | Non-current |
|---|---|---|
| 1 to 6 months | 7 to 12 months | 2 to 5 years | Later than 5 years | ||||||
|---|---|---|---|---|---|---|---|---|---|
| EUR '000 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
| Lease liabilities | 4,662 | 4,491 | 4,739 | 4,086 | 24,274 | 23,997 | 5,163 | 8,091 | |
| Credit facility | 6,724 | - | - | - | - | - | - | - | |
| Trade payables | 28,153 | 24,785 | 5,198 | 959 | - | 3,382 | - | - | |
| Other payables | 51,079 | 49,993 | - | - | - | - | - | - | |
| Total financial liabilities | 90,618 | 79,269 | 9,937 | 5,045 | 24,274 | 27,379 | 5,163 | 8,091 | |
For unrated clients and clients that do not have investment grade rating, an expected loss rate from 0.34% up to 13.69% (2021: 0.36% up to 14.13%) is applied depending on the length of the asset's lifetime and the client's geographical location. A higher rate might be applied to certain clients after individual assessment resulting in the weighted average expected loss rates depicted on the credit risk exposure on receivables and contract assets table.
If there is no reasonable expectation of recovery, the gross carrying amount is written-off. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in repayment plan with the Group, and a failure to make contractual payments for a period greater than three hundred and sixty days past due.
No client represents more than 6.0% (2021: 4.4%) of total receivables from clients.
Expected timing of invoicing for the contract assets balance can be found in note 2.4.
The table below depicts information about exposure to credit risk and expected credit loss for trade receivables, accrued revenue and contract assets (gross) on December 31:
| 2022 | 2021 | ||||
|---|---|---|---|---|---|
| Weighted average expected |
Loss allowance |
Carrying amount |
Weighted average expected |
Loss allowance |
Carrying amount EUR '000 |
| 0.33% | 1,280 | 385,545 | 0.44% | 1,316 | 301,170 |
| 0.19% | 17 | 8,810 | 0.58% | 53 | 9,131 |
| 0.07% | 5 | 6,977 | 0.11% | 4 | 3,757 |
| 0.56% | 11 | 1,957 | 0.33% | 3 | 903 |
| 0.33% | 1,313 | 403,289 | 0.44% | 1,376 | 314,961 |
| loss rate | EUR '000 | EUR '000 | loss rate | EUR '000 |
1 Includes allowance resulting from individual assessment of outstanding balances.
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Balance at January 1 | 1,376 | 1,425 |
| Foreign exchange adjustment | 31 | -18 |
| Net loss allowance recognized | -94 | -31 |
| Balance at December 31 | 1,313 | 1,376 |
All financial assets and liabilities are measured at amortized cost. The carrying amount of these approximate fair value. Financial assets which have been modified or renegotiated during the period are assessed individually for impairment.
Financial liabilities comprise lease liabilities, borrowings, trade payables and other payables.
Lease liabilities arise from the adoption of IFRS 16. For additional information on lease liabilities refer to notes 5.3.
Loans is initially recognized at fair value less transaction cost. Fair value does not materially differ from carrying amount since interest payable is close to current market rates.
A financial liability is derecognized when the obligation under the liability is discharged or canceled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the
derecognition of the original liability and the recognition of a new liability.
The difference in the respective carrying amounts is recognized in the income statement. After initial recognition, interestbearing loans and borrowings are subsequently measured at amortized cost using the effective interest rate method.
SimCorp has access to: 1) a multi-currency committed credit facility of EUR 37.0 million expiring July 31, 2025, 2) a seasonal facility of EUR 33.6 million covering the period from March 15 to October 15 expiring July 31, 2025. Together, they are available for general corporate purposes of the Group.
On December 31, 2022, the Group had a committed credit facility of EUR 37.0 million, of which EUR 6.7 million had been drawn and EUR 1.8 million used for guarantees.
Other payables include bonus and commission accruals, vacation pay obligations, payroll taxes and VAT. Payables are measured at cost.
Exposure to currency and liquidity risk for trade and other payables as well as borrowings is disclosed in note 6.2.
Financial assets comprise other financial assets, deposits, receivables and cash and cash equivalent. For additional information on receivables refer to note 2.5.
Deposits are primarily related to the leasing of offices. Security deposits which will not be returned within one year of the statement of financial position date are recognized as non-current assets. Commitments which require a deposit will initially be recorded to the deposit asset account. If the deposit is not recovered, it is charged to the income statement.
Other financial assets comprise investments in shares of unlisted entities.
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Cost at January 1 | 2,123 | 2,031 |
| Foreign exchange adjustment | 11 | 24 |
| Additions | 1,477 | 82 |
| Disposals | -94 | -14 |
| Carrying amount at December 31 | 3,517 | 2,123 |
| Measured | ||
|---|---|---|
| at amortized | Carrying | |
| EUR '000 | cost | amount |
| 2022 | ||
| Deposits | 3,517 | 3,517 |
| Other financial assets | 4,843 | 4,843 |
| Non-current financial assets | 8,360 | 8,360 |
| Receivables | 112,378 | 112,378 |
| Cash and cash equivalent | 40,546 | 40,546 |
| Current financial assets | 152,924 | 152,924 |
| Lease liabilities | 29,437 | 29,437 |
| Non-current financial liabilities | 29,437 | 29,437 |
| Lease liabilities | 9,401 | 9,401 |
| Trade payables | 33,351 | 33,351 |
| Other payables | 51,079 | 51,079 |
| Current financial liabilities | 93,831 | 93,831 |
| 2021 | ||
| Deposits | 2,123 | 2,123 |
| Other financial assets | 4,843 | 4,843 |
| Non-current financial assets | 6,966 | 6,966 |
| Receivables | 96,543 | 96,543 |
| Cash and cash equivalent | 47,692 | 47,692 |
| Current financial assets | 144,235 | 144,235 |
| Lease liabilities | 32,088 | 32,088 |
| Non-current financial liabilities | 32,088 | 32,088 |
| Lease liabilities | 8,577 | 8,577 |
| Trade payables | 29,126 | 29,126 |
| Other payables | 49,993 | 49,993 |
| Current financial liabilities | 87,696 | 87,696 |
Financial income and expenses include: interest income, interest expense, amortization of borrowing issue costs, realized and unrealized exchange gains and losses, refunds under the Danish tax prepayment scheme, changes to the fair value of derivative financial instruments, withholding tax, amortization of financial assets and liabilities, as well as surcharges under the Danish tax prepayment scheme.
Borrowing cost, except for commitment fees on credit facilities, are recognized in profit or loss using the effective interest method. Commitment fees on credit facilities are recognized on a straight-line basis over the term of the agreement.
Dividends on investments in associates are recognized in the Group's income statement in the financial year in which the dividends are declared.
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Interest income, financial assets carried at amortized cost | 80 | 5 |
| Dividends from associates | 134 | 91 |
| Foreign exchange gains, net | 2,977 | 5,678 |
| Total financial income | 3,191 | 5,774 |
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Interest expenses, financial assets carried at amortized cost | 35 | 32 |
| Interest expenses, financial liabilities carried at amortized cost | 329 | 303 |
| Interest expenses, pension | 16 | 16 |
| Interest expenses, lease | 533 | 570 |
| Interest expenses, re-establishment | 13 | 11 |
| Other financial expenses | 95 | 15 |
| Total financial expenses | 1,021 | 947 |
This section contains other required disclosures relevant for the understanding of the Groups' financial statements, but which are not essential for the understanding of the individual themes in the previous sections. It includes information pertaining to the Executive Management Board, Board of Directors and other corporate governance related topics.
In this section, the following notes are presented:
Earnings per share (EPS) and diluted earnings per share (EPS-D) are measured according to IAS 33.
| 2022 | 2021 | |
|---|---|---|
| Profit for the year (EUR´000) | 99,254 | 109,992 |
| Average number of shares | 40,500,000 | 40,500,000 |
| Average number of treasury shares | -1,170,078 | -646,387 |
| Average number of shares in circulation | 39,329,922 | 39,853,613 |
| Average dilutive impact of outstanding restricted stock units | 333,799 | 291,766 |
| Average number of diluted shares in circulation | 39,663,721 | 40,145,379 |
| Earnings per share – EPS (EUR) | 2.52 | 2.76 |
| Diluted earnings per share – EPS-D (EUR) | 2.50 | 2.74 |
In 2022, the performance conditions for the 2020 LTIP was met, i.e. no adjustment made in 2022 (2021: no performance adjustment). No adjustments to allotted restricted stock units in 2021 and 2022 programs as the conditions stipulated in note 7.1 are expected to be met. See also the Management report concerning share-based remuneration on pages 43-44.
SimCorp's related parties exercising a significant influence comprise the company's Board of Directors and Executive Management Board as well as relatives of these persons. Related parties also comprise companies in which the individuals mentioned above have material interests.
Other related parties are considered to be Group's associates. All agreements relating to these transactions are based on market price (arm's length).
Trade from associates amounted in 2022 to EUR 1,268 thousand compared with EUR 833 thousand in 2021.
The Group did not enter into any agreements, deals, or other transactions in 2022 in which the Parent company's Board of Directors or Executive Management Board had a financial interest, except for transactions following from the employment relationship. See note 3.2 and the Remuneration Report.
Key Management Personnel (cf. IAS 24) consists of the Board of Directors and the Executive Management Board. Remuneration to members of the Board of Directors and the Executive Management Board is disclosed in note 3.1 and the Remuneration Report.
Members of the Board of Directors are elected by the shareholders at the Annual General Meeting for terms of one year. Members of the Board of Directors elected by the employees are elected among all SimCorp Group employees every third year. Election was held in March 2022, the next election will be held in March 2025.
Refer to pages 45-47 for additional information on Board of Directors members. Interest in the company of members of the Board of Directors and the Executive Management Board:
| Number of shares | 2022 | 2021 |
|---|---|---|
| Board of Directors | ||
| Peter Schütze | 13,367 | 12,819 |
| Morten Hübbe | 7,878 | 7,470 |
| Simon Jeffreys | 12,542 | 12,241 |
| Adam Warby | 2,245 | 1,845 |
| Joan A. Binstock | 1,679 | 1,179 |
| Susan Standiford | 521 | 169 |
| Herve Couturier | - | 9,456 |
| Charlotte Søndergaard Klausen1 | 521 | - |
| Neil Cook1 | 1,220 | - |
| Sven Rinke1 | 1,370 | - |
| Else Braathen2 | - | 8,642 |
| Vera Bergforth2 | - | 2,606 |
| Hugues Chabanis2 | - | 2,740 |
| Board of Directors, total | 41,343 | 59,167 |
| Executive Management Board | ||
| Christian Kromann | 14,852 | 7,472 |
| Georg Hetrodt | 115,277 | 110,000 |
| Michael Bjergby3 | 4,758 | - |
| Michael Rosenvold4 | - | 17,524 |
| Klaus Holse5 | - | 90,111 |
| Executive Management Board, total | 134,887 | 225,107 |
| Total shareholdings by members of the Board of Directors and the Executive Management Board |
176,230 | 284,274 |
1 Elected 24 March, 2022.
2 Resigned 24 March, 2022.
4 Resigned 30 November, 2022.
5 Resigned 31 December, 2021.
3 Appointed 1 December, 2022.
| Number of restricted stock units | 2022 | 2021 |
|---|---|---|
| Board of Directors | ||
| Charlotte Søndergaard Klausen | 218 | - |
| Neil Cook | 901 | - |
| Sven Rinke | 83 | - |
| Else Braathen | - | 448 |
| Hugues Chabanis | - | 1,158 |
| Board of Directors, total | 1,202 | 1,606 |
| Executive Management Board | ||
| Christian Kromann | 36,534 | 29,680 |
| Georg Hetrodt | 13,603 | 13,394 |
| Michael Bjergby | 9,961 | - |
| Michael Rosenvold | - | 21,443 |
| Klaus Holse | - | 31,772 |
| Executive Management Board, total | 60,098 | 96,289 |
| Total restricted stock units granted to members of | ||
| the Board of Directors and the Executive Management Board | 61,300 | 97,895 |
The Group is party to legal proceedings and inquiries from authorities when investigating various issues. The outcome of such is not expected to have a significant effect on profit for the year and the assessment of the Group's financial position.
SimCorp A/S has financial commitments with suppliers for EUR 54 million (2021: EUR 65 million) mainly related to infrastructure services for the cloud solutions.
In January 2023 SimCorp A/S has invested in Artega Investment Administration. SimCorp A/S share is 20%.
No other material events have occurred after December, 31 2022, that has consequences for the annual report 2022.
The Group holds an ownership interest of 24.8% in Dyalog Ltd and 24.99% in Opus Nebula Ltd. SimCorp's investment in Dyalog Ltd, United Kingdom is a strategic investment as the company is an important supplier. The Group purchases APL licenses from Dyalog Ltd. both for SimCorp Dimension and SimCorp Sofia.
In 2022, the Group had one-off consultancy cost of EUR 2.7 million (2021: EUR 0 million) and redundancy cost of EUR 4.3 million (2021: EUR 0 million) to ensure that SimCorp has the right structure and people as it transforms to a SaaS company.
In 2022, audit fees included the audit of the consolidated and local financial statements, including additional audit procedures due to implementation of a new ERP system. In 2021, audit fees included the audit of the consolidated and local financial statements, including additional audit procedures due to implementation of a new ERP system. Tax fees related primarily to tax compliance service. Other service fee primarily related to advice on sustainability reporting.
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Audit fees | 557 | 521 |
| Tax and VAT advice fees | 17 | 34 |
| Other service fees | 62 | 71 |
| Total auditors' remuneration | 636 | 626 |
| Non-Audit Services (NAS)/ | ||
| Audit fee ratio | 14% | 20% |
In 2022, the Group established two new subsidiary, SimCorp Philippines Inc. in the Philippines and SimCorp Advanced for Information Technology in Saudi Arabia.
| Subsidiaries | Ownership interest | ||||
|---|---|---|---|---|---|
| Name | Registered office | 2022 | 2021 | Share capital | |
| SimCorp Ltd. | London, United Kingdom | 100% | 100% | 100,000 GBP | |
| SimCorp GmbH | Bad Homburg, Germany | 100% | 100% | 102,258 EUR | |
| SimCorp Österreich GmbH | Vienna, Austria | 100% | 100% | 17,500 EUR | |
| SimCorp Norge AS | Oslo, Norway | 100% | 100% | 1,000,000 NOK | |
| SimCorp Sverige AB | Stockholm, Sweden | 100% | 100% | 100,000 SEK | |
| SimCorp Benelux SA/NV | Brussels, Belgium | 100% | 100% | 62,000 EUR | |
| SimCorp USA Inc. | New York, USA | 100% | 100% | 7,010,000 USD | |
| SimCorp Schweiz AG | Zurich, Switzerland | 100% | 100% | 100,000 CHF | |
| SimCorp Asia Pty. Ltd. | Sydney, Australia | 100% | 100% | 999,992 AUD | |
| SimCorp Singapore Pte. Ltd. | Singapore, Singapore | 100% | 100% | 1 SGD | |
| SimCorp Ukraine LLC | Kiev, Ukraine | 100% | 100% | 2,968,254 | UAH |
| SimCorp Canada Inc. | Vancouver, Canada | 100% | 100% | 8,500,001 CAD | |
| SimCorp France S.A.S | Paris, France | 100% | 100% | 500,000 EUR | |
| SimCorp Hong Kong Ltd. | Hong Kong, China | 100% | 100% | 14,000,002 HKD | |
| SimCorp Coric Ltd. | Wolverhampton, United Kingdom | 100% | 100% | 120 GBP | |
| SimCorp Iberia S.L. | Barcelona, Spain | 100% | 100% | 3,000 EUR | |
| SimCorp Italiana S.r.l. | Milan, Italy | 100% | 100% | 2,100,000 EUR | |
| SimCorp Sp z.o.o. | Warsaw, Poland | 100% | 100% | 5,000 PLN | |
| SimCorp Luxembourg S.a.r.l. | Luxemburg, Luxemburg | 100% | 100% | 44,636 | EUR |
| SimCorp Japan KK | Tokyo, Japan | 100% | 100% | 1 | JPY |
| SimCorp India LLP | Noida, India | 100% | 100% | 100,000 | INR |
| SimCorp Philippines Inc. | Manila, Philippines | 99.99% | - | 5,000,000 | PHP |
| SimCorp Advanced for Information Technology | Riyadh, Saudi Arabia | 100% | - | 38,000 | SAR |
SimCorp Ltd. has a branch in the United Arab Emirates and in Azerbaijan.
SimCorp Sverige AB has a branch in Finland.
SimCorp Sverige AB owns 1% of SimCorp Benelux SA/NV and 1% of SimCorp India LLP.
SimCorp Benelux SA/NV has branches in the Netherlands, Luxembourg and France.
SimCorp USA Inc. has a branch in Canada.
SimCorp Coric Ltd. has a 100% owned subsidiary in the USA, SimCorp Coric Inc.
SimCorp Italiana S.r.l. had a 100% owned subsidiary in Italy; Sofia Online S.r.l. (merged at 31.12.2021).
SimCorp Luxembourg S.a.r.l has 100% owned subsidiaries in Luxemburg, Switzerland and Austria, and UK (under liquidation).
SimCorp Philippines Inc 0.01% is owned by management of the company.
108 Notes
109 2.1 Revenue
110 2.3 Contract balances 111 2.4 Receivables
120 6.1 Financial assets and liabilities 121 6.2 Financial income and expenses
108 1.1 Accounting policies, estimates, and judgments
112 3.1 Employee cost 113 3.2 Provisions
| EUR '000 | Note | 2022 | 2021 |
|---|---|---|---|
| Revenue | 2.1 | 263,438 | 250,191 |
| Cost of sales | 3.1,3.2,5.2,5.3 | 84,517 | 81,660 |
| Gross profit | 178,921 | 168,531 | |
| Other operating income | 36,490 | 29,945 | |
| Research and development costs | 3.1,3.2,5.2,5.3 | 79,233 | 58,491 |
| Sales and marketing costs | 3.1,3.2,5.2,5.3 | 13,762 | 19,066 |
| Administrative expenses | 3.1,3.2,5.2,5.3 | 48,035 | 35,458 |
| Operating profit (EBIT) | 74,381 | 85,461 | |
| Financial income | 6.2 | 34,903 | 25,842 |
| Financial expenses | 6.2 | 811 | 588 |
| Profit before tax | 108,473 | 110,715 | |
| Tax on the profit for the year | 4.1 | 16,086 | 15,767 |
| Profit for the year | 92,387 | 94,948 |
| EUR '000 | Note | 2022 | 2021 |
|---|---|---|---|
| Profit for the year | 92,387 | 94,948 | |
| Other comprehensive income | |||
| Items that will not be reclassified subsequently to the income statement: |
|||
| Foreign currency translation differences for foreign operations | 73 | 128 | |
| Other comprehensive income after tax | 73 | 128 | |
| Total comprehensive income | 92,460 | 95,076 | |
| Proposed distribution | |||
| Dividends | 39,732 | 39,888 | |
| Transferred to retained earnings | 52,728 | 55,188 | |
| 92,460 | 95,076 |
| EUR '000 | Note | 2022 | 2021 |
|---|---|---|---|
| Profit for the year | 92,387 | 94,948 | |
| Amortization and depreciation | 5.2, 5.3 | 3,821 | 3,982 |
| Financial income | 6.2 | -34,903 | -25,842 |
| Financial expenses | 6.2 | 811 | 588 |
| Tax on profit for the year | 4.1 | 16,086 | 15,767 |
| Other included in operating income | -23 | 3,810 | |
| Adjustment share-based remuneration | 13,527 | 11,332 | |
| Changes in provisions | 268 | -268 | |
| Changes in contract assets | -10,265 | 2,388 | |
| Changes in working capital | -48,556 | -36,784 | |
| Financial income received | 917 | 130 | |
| Financial expenses paid | -596 | -358 | |
| Income tax paid | 4.1 | -12,143 | -12,377 |
| Net cash from operating activities | 21,331 | 57,316 | |
| Investment in subsidiaries, net | 5.1 | -93 | 1 |
| Purchase of property, plant, and equipment | 5.3 | -333 | -149 |
| Sale and purchase of financial assets, net | -44 | -4,420 | |
| Dividends from associates | 6.2 | 68 | 50 |
| Dividends from subsidiaries | 6.2 | 31,487 | 20,275 |
| Net cash used in investing activities | 31,085 | 15,757 | |
| Dividends paid | -39,836 | -40,086 | |
| Purchase of treasury shares | -20,049 | -40,102 | |
| Repayment of lease liability | 5.3 | -3,458 | -3,433 |
| Loan proceeds | 26,891 | - | |
| Loan repayment | -20,167 | - | |
| Net cash used in financing activities | -56,619 | -83,621 | |
| Change in cash and cash equivalents | -4,203 | -10,548 | |
| Cash and cash equivalents at January 1 | 15,927 | 26,583 | |
| Foreign exchange adjustment of cash and cash equivalents | 0 | -108 | |
| Cash and cash equivalents at December 31 | 11,724 | 15,927 |
| EUR '000 | Note | 2022 | 2021 |
|---|---|---|---|
| Assets | |||
| Software | 2 | 11 | |
| Total intangible assets | 5.2 | 2 | 11 |
| Leasehold | 19,338 | 20,881 | |
| Technical equipment | 374 | 174 | |
| Other equipment, fixtures, fittings and prepayments | 952 | 1,199 | |
| Total property, plant, and equipment | 5.3 | 20,664 | 22,254 |
| Investments in subsidiaries | 5.1 | 137,967 | 137,874 |
| Investments in associates | 5.1 | 141 | 138 |
| Other financial assets | 4,843 | 4,843 | |
| Deposits | 6.1 | 1,483 | 1,442 |
| Total other non-current assets | 144,434 | 144,297 | |
| Total non-current assets | 165,100 | 166,562 | |
| Receivables | 2.4 | 250,948 | 192,274 |
| Contract assets | 2.3 | 18,270 | 8,107 |
| Income tax receivables | 3,899 | - | |
| Prepayments | 6,681 | 7,092 | |
| Cash and cash equivalents | 11,723 | 15,927 | |
| Total current assets | 291,521 | 223,400 | |
| Total assets | 456,621 | 389,962 |
| EUR '000 | Note | 2022 | 2021 |
|---|---|---|---|
| Liabilities and equity | |||
| Share capital | 5,441 | 5,441 | |
| Retained earnings | 291,547 | 245,878 | |
| Proposed dividends | 39,732 | 39,888 | |
| Total equity | 336,720 | 291,207 | |
| Lease liabilities | 5.3 | 16,179 | 18,023 |
| Deferred tax | 4.2 | 36,763 | 23,274 |
| Provisions | 3.2 | 2,183 | 1,991 |
| Total non-current liabilities | 55,125 | 43,288 | |
| Bank loan/credit facility | 6,724 | - | |
| Lease liabilities | 5.3 | 3,319 | 2,899 |
| Prepayments from clients | 2.3 | 3,232 | 2,626 |
| Debt to subsidiaries | 24,526 | 16,148 | |
| Trade payables | 13,521 | 15,014 | |
| Other payables | 13,292 | 14,205 | |
| Income tax payables | - | 4,489 | |
| Provisions | 3.2 | 162 | 86 |
| Total current liabilities | 64,776 | 55,467 | |
| Total liabilities | 119,901 | 98,755 | |
| Total liabilities and equity | 456,621 | 389,962 |
| Statement of changes in equity | Proposed | |||
|---|---|---|---|---|
| Share | Retained | dividends for | ||
| EUR '000 | capital | earnings | the year | Total |
| 2022 | ||||
| Equity at January 1 | 5,441 | 245,878 | 39,888 | 291,207 |
| Net profit for the year | - | 92,387 | - | 92,387 |
| Total other comprehensive income | - | 73 | - | 73 |
| Total comprehensive income for the year | - | 92,460 | - | 92,460 |
| Transactions with owners | ||||
| Dividends paid to shareholders | - | 52 | -39,888 | -39,836 |
| Share-based payment | - | 13,527 | - | 13,527 |
| Tax, share-based payment | - | -589 | - | -589 |
| Purchase of treasury shares | - | -20,049 | - | -20,049 |
| Proposed dividends to shareholders | - | -39,732 | 39,732 | - |
| Equity at December 31 | 5,441 | 291,547 | 39,732 | 336,720 |
| 2021 | ||||
| Equity at January 1 | 5,441 | 219,738 | 40,125 | 265,304 |
| Net profit for the year | - | 94,948 | - | 94,948 |
| Total other comprehensive income | - | 128 | - | 128 |
| Total comprehensive income for the year | - | 95,076 | - | 95,076 |
| Transactions with owners | ||||
| Dividends paid to shareholders | - | 39 | -40,125 | -40,086 |
| Share-based payment | - | 11,332 | - | 11,332 |
| Tax, share-based payment | - | -317 | - | -317 |
| Purchase of treasury shares | - | -40,102 | - | -40,102 |
| Proposed dividends to shareholders | - | -39,888 | 39,888 | - |
| Equity at December 31 | 5,441 | 245,878 | 39,888 | 291,207 |
Basis of preparation
SimCorp A/S is a public limited company based in Denmark. The Annual Report for the period January 1 – December 31, 2022 includes the financial statements of SimCorp A/S, the Parent company.
SimCorp A/S financial statements are presented in accordance with International Financial Reporting Standards (IFRS) as endorsed by the EU and additional requirements in the Danish Financial Statements Act.
The financial statements are presented in EUR, which is the presentation currency of the activities of the Parent, rounded to the nearest EUR 1,000. The functional currency of the Parent company SimCorp A/S is DKK.
Accounting policies are unchanged from last year.
The accounting policies are the same as for the consolidated financial statements, with exceptions described below. For a description of the accounting policies of the Group, please refer to the consolidated financial statements.
Foreign exchange adjustments of intragroup accounts are recognized in the income statement in SimCorp A/S' financial statements. Foreign exchange adjustments of intra-group accounts between SimCorp A/S and subsidiaries are considered part of the net investment in the subsidiaries concerned. Settlement of intra-group balances considered part of the net investment are not, per se, considered a partial divestment of a subsidiary.
Investments in subsidiaries and associates are measured at cost in the Parent company's financial statements.
Other operating income comprises income of a secondary nature relative to the activities of the Parent, including gains on the sale of intangible assets and property, plant, and equipment and income from subsidiaries for delivered services.
For information on risk refer to note 6.2 of the consolidated financial statements and overview of risk factors in "Risk management", pages 31-35.
A number of new standards and interpretations not applicable/mandatory for the preparation of the 2022 annual report have been published. The Parent expects to implement the new applicable and approved, not yet effective accounting standards and interpretations, as they take effect.
None of the other changed standards or interpretations are expected to have significant monetary effect on the statements of the Parent's results, assets and liabilities or the equity.
Revenue and clients
| EUR '000 | 2022 | 2021 |
|---|---|---|
| On-premise initial licenses | 21 | 78 |
| On-premise additional licenses | 15,988 | 4,874 |
| On-premise other licenses | 709 | 590 |
| On-premise software updates and support | 21,191 | 20,187 |
| Total on-premise revenue | 37,909 | 25,729 |
| SaaS initial licenses | - | 2 |
| SaaS additional licenses | 26 | 387 |
| SaaS other licenses | 12 | 43 |
| SaaS services incl. software updates and support | 2,847 | 2,463 |
| Total SaaS Revenue | 2,885 | 2,894 |
| Professional services | 6,285 | 7,208 |
| External revenue | 47,079 | 35,831 |
| Revenue from subsidiaries | 216,359 | 214,361 |
| Total revenue | 263,438 | 250,191 |
The transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as at December 31, 2022, is EUR 34.1 million (2021: EUR 19.7 million). This amount mostly comprises obligations to provide software updates and support, agreements which require client acceptance of functionality, and support or hosting subscriptions and support, as the respective contracts typically have durations of multiple years.
Management expects that EUR 15.2 million (2021: EUR 7.3 million) of the amount allocated to the future contract obligations as of December 31, 2022 will be recognized during 2023. EUR 18.9 million (2021: EUR 12.5 million) is expected to be recognized as revenue within 2 to 5 years.
For accounting policies, estimates and judgments, please refer to the consolidated financial statements note 2.3.
Contract balances consist of client-related assets and liabilities.
Contract assets relate to the Parent rights to consideration for software licensed to clients under subscription agreements with future payments, when that right is conditional on SimCorp's future performance.
Contract liabilities represent mainly prepayments from clients for unsatisfied or partially satisfied performance obligations in relation to licenses, software updates and support, and services. Software updates and support and hosting billing generally occur at periodic intervals (e.g. quarterly or yearly) prior to revenue recognition, resulting in contract liabilities.
The majority of licenses agreements is revenue recognized in the year of sale. However, contracts with functionality gaps or acceptance criteria may have revenue recognition deferred, resulting in a contract liability when billing has occurred.
Contracts in progress relating to fixed fee professional services are measured at the estimated sales value of the proportion of the contract completed at the statement of financial position date. Amounts invoiced on account in excess of work completed are included in prepayments under current liabilities.
For accounting policies, estimates and judgments please refer to the consolidated financial statements note 2.4.
Significant changes in contract assets and liabilities during the period are presented below.
Contract assets are expected to be realized within the Parent's normal operating cycle, 29.4% (2021: 49.1%) of it is expected to be realized within the next twelve months, 70.6% (2021: 50.9%) within the next 2 to 5 years.
| Invoiced | |||||
|---|---|---|---|---|---|
| Opening | Net | from opening | Closing | ||
| EUR '000 | balance | additions | balance | Adjustments1 | balance |
| 2022 | |||||
| Contract asset (gross) | 8,116 | 14,213 | -4,194 | 159 | 18,294 |
| Loss allowance | -9 | -15 | - | - | -24 |
| Contract asset (NPV) | 8,107 | 14,198 | -4,194 | 159 | 18,270 |
| 2021 | |||||
| Contract asset (gross) | 10,582 | 1,075 | -3,511 | -30 | 8,116 |
| Loss allowance | -16 | 7 | - | - | -9 |
| Contract asset (NPV) | 10,566 | 1,082 | -3,511 | -30 | 8,107 |
1 Adjustments include: reclassifications, foreign exchange adjustments, cumulative catch-up adjustments (including those arising from change in measurement of progress, change in estimate of transaction price and contract modifications), change in time frame for a right to consideration to become unconditional or for a performance obligation to be satisfied.
| Changes in contract liabilities | Revenue recognized |
||||
|---|---|---|---|---|---|
| Opening | Net | from opening | Closing | ||
| EUR '000 | balance | additions | balance | Adjustments | balance |
| 2022 | |||||
| Contract liabilities – licenses | 908 | 197 | -338 | - | 767 |
| Contract liabilities – software updates and support | 712 | 812 | -712 | - | 812 |
| Contract liabilities – services | 666 | 564 | -137 | - | 1,093 |
| Contract liabilities – other | 340 | 514 | -292 | -2 | 560 |
| Contract liabilities (prepayments from clients) | 2,626 | 2,087 | -1,479 | -2 | 3,232 |
| 2021 | |||||
| Contract liabilities – licenses | 321 | 908 | -321 | - | 908 |
| Contract liabilities – software updates and support | 524 | 712 | -524 | - | 712 |
| Contract liabilities – services | 1,237 | 379 | -950 | - | 666 |
| Contract liabilities – other | 98 | 339 | -97 | - | 340 |
| Contract liabilities (prepayments from clients) | 2,180 | 2,338 | -1,892 | - | 2,626 |
When estimating expected credit loss on receivables from subsidiaries, the threestage approach is applied while making use of the exception for low credit risk financial assets.
An expected loss rate of 0.03% - 0.82% (2021: 0.03% - 0.91%) is applied, based on corporate investment grade 1-year average default rates by region as published by Standard & Poor.
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Trade receivables from clients | 4,820 | 3,950 |
| Accrued revenue | 2,280 | 4,532 |
| Loss allowance | -3 | -3 |
| Receivables from subsidiaries | 243,273 | 183,795 |
| Other receivables | 578 | - |
| Total receivables at December 31 | 250,948 | 192,274 |
| The aging of trade receivables from clients was at December 31: | ||
| Not due | 3,829 | 3,226 |
| Not more than 30 days | 165 | 168 |
| More than 30 days but not more than 90 days | 541 | 21 |
| More than 90 days | 285 | 535 |
| Total trade receivables from clients | 4,820 | 3,950 |
Employees
Employee costs consist of salaries, sales commissions, bonuses, pensions and social costs, share-based payments, vacation pay, and other benefits.
For additional disclosures on share-based remuneration refer to note 3.2 of the consolidated financial statements. Please see remuniation report for further details.
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Salaries | 74,156 | 69,274 |
| Defined contribution pension plans | 1,807 | 1,729 |
| Share-based payments | 10,144 | 10,035 |
| Social security costs | 184 | 169 |
| Total employee costs | 86,291 | 81,207 |
| Number of employees at the end of the year | 618 | 587 |
| Average number of employees | 573 | 553 |
Remuneration to the Executive Management
Board and Board of Directors is given below:
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Salaries | 1,913 | 2,494 |
| Other benefits | 110 | 171 |
| Share-based payment | 1,525 | 3,260 |
| Performance-related bonus | 956 | 1,513 |
| Executive Management Board total1 | 4,504 | 7,438 |
| Board fees | 508 | 568 |
| Fees for committee work | 162 | 123 |
| Travel allowance | 106 | 18 |
| Share-based payment | 171 | 175 |
| Board of Directors total | 947 | 884 |
| Total | 5,451 | 8,322 |
1 In 2022, Executive Management Board were 3 members (2021: 4 members)
| Provisions | Re-establishment | ||
|---|---|---|---|
| costs for rented | Anniversary | ||
| EUR '000 | premises | bonuses | Total |
| 2022 | |||
| Liability at January 1 | 663 | 1,414 | 2,077 |
| Used during the year | - | -101 | -101 |
| Reversal of unused liabilities | - | -90 | -90 |
| Provisions for the year | 79 | 380 | 459 |
| Total provisions | 742 | 1,603 | 2,345 |
| Expected due dates for provisions: | |||
| Falling due within 1 year | - | 162 | 162 |
| Falling due within 2 to 5 years | - | 477 | 477 |
| Falling due after 5 years | 742 | 964 | 1,706 |
| Total provisions | 742 | 1,603 | 2,345 |
| 2021 | |||
| Liability at January 1 | 656 | 1,689 | 2,345 |
| Foreign exchange adjustment | - | 1 | 1 |
| Used during the year | - | -3 | -3 |
| Reversal of unused liabilities | - | -521 | -521 |
| Provisions for the year | 7 | 248 | 255 |
| Total provisions | 663 | 1,414 | 2,077 |
| Expected due dates for provisions: | |||
| Falling due within 1 year | - | 86 | 86 |
| Falling due within 2 to 5 years | - | 514 | 514 |
| Falling due after 5 years | 663 | 814 | 1,477 |
| Total provisions | 663 | 1,414 | 2,077 |
Re-establishment provisions cover the costs of restoring leasehold premises.
Provisions for anniversary bonuses result from the Company's commitment of one month's pay in connection with employees' 25th and 40th anniversaries.
SimCorp A/S' income taxes amount to EUR 16.1 million relative to EUR 15.8 million in 2021.
SimCorp A/S' effective tax rate increased to 14.8% from 14.2%.
The Danish corporate tax rate was 22% in 2022, which was unchanged from 2021.
Deferred tax has changed to EUR 36.8 million in 2022 from EUR 23.3 million in 2021, which mainly relates to increases in deferred tax on contract assets.
For accounting policies, estimates, and judgments, please refer to Section 4 of the consolidated financial statements.
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Tax for the year: | ||
| Tax on profit | 16,086 | 15,767 |
| Total tax | 16,086 | 15,767 |
| Tax on profit for the year breaks down as follows: | ||
| Current tax | 4,515 | 13,206 |
| Deferred tax | 11,793 | 2,565 |
| Prior-year adjustments | -222 | -4 |
| Total tax on profit for the year | 16,086 | 15,767 |
| Tax paid during the year | 12,143 | 12,377 |
| Tax on profit for the year breaks down as follows: | ||
| Tax calculated on the year's pre-tax profit, 22% (2021: 22%) | 23,865 | 24,295 |
| Dividends from subsidiaries and associates | -6,944 | -4,472 |
| Tax effect: | ||
| Non-taxable income | -2,110 | -2,749 |
| Non-deductible expenses | 1,602 | 1,417 |
| Other, including prior-year adjustments | -327 | -2,724 |
| Total tax on profit for the year | 16,086 | 15,767 |
| Effective tax rate | 14.8% | 14.2% |
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Net deferred tax (liability)/asset at January 1 | -23,274 | -19,121 |
| Foreign exchange adjustment | - | -9 |
| Net change of deferred tax, profit and loss | -11,793 | -2,565 |
| Prior-year adjustment, profit and loss | -993 | -29 |
| Adjustment of deferred tax, equity | -703 | -1,550 |
| Net deferred tax (liability)/asset at December 31 | -36,763 | -23,274 |
| Recognized in the statement of financial position as follows: | ||
| Deferred tax liabilities | -36,763 | -23,274 |
| Net deferred tax (liability)/asset at December 31 | -36,763 | -23,274 |
| Foreign | Recognition | ||||
|---|---|---|---|---|---|
| EUR'000 | Balance January 1 |
exchange adjustment |
in profit and loss |
Recognition in equity |
Balance December 31 |
| 2022 | |||||
| Intangible assets | -2 | - | 3 | - | 1 |
| Property, plant and equipment, owned |
360 | - | -43 | - | 317 |
| Property, plant and equipment, right-of-use |
-4,563 | - | 321 | - | -4,242 |
| Contract assets | -27,683 | - | -12,809 | - | -40,492 |
| Lease liabilities, current | 637 | - | 93 | - | 730 |
| Current liabilities | 982 | - | 276 | - | 1,258 |
| Lease liabilities, non-current | 3,965 | - | -406 | - | 3,559 |
| Provisions, non-current | 390 | - | 90 | - | 480 |
| Share-based payment | 2,640 | - | -311 | -703 | 1,626 |
| Total | -23,274 | - | -12,786 | -703 | -36,763 |
| 2021 | |||||
| Intangible assets | -27 | - | 25 | - | -2 |
| Property, plant and equipment, owned |
277 | - | 83 | - | 360 |
| Property, plant and equipment, right-of-use |
-5,095 | -2 | 534 | - | -4,563 |
| Contract assets | -24,961 | -9 | -2,713 | - | -27,683 |
| Lease liabilities, current | 689 | -1 | -51 | - | 637 |
| Current liabilities | 976 | - | 6 | - | 982 |
| Lease liabilities, non-current | 4,565 | 2 | -602 | - | 3,965 |
| Provisions, non-currrent | 491 | - | -101 | - | 390 |
| Share-based payment | 3,964 | 1 | 225 | -1,550 | 2,640 |
| Total | -19,121 | -9 | -2,594 | -1,550 | -23,274 |
5.1 Investments in associates and subsidiaries
The Parent accounts for its investments in subsidiaries and associates at cost. Please refer to note 7.7 in the consolidated financial statements for a list of subsidiaries. Additions to investments in subsidiaries in 2022 related to capital injection to SimCorp Philippines Inc. in the Philippines and SimCorp Advanced for Information Technology in Saudi Arabia.
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Cost at January 1 | 138 | 157 |
| Foreign exchange adjustment | - | 1 |
| Disposals/adjustments | 3 | -20 |
| Cost at December 31 | 141 | 138 |
| Carrying amount at December 31 | 141 | 138 |
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Cost at January 1 | 137,874 | 137,825 |
| Foreign exchange adjustment | - | 50 |
| Additions | 93 | - |
| Transfers | - | -1 |
| Cost at December 31 | 137,967 | 137,874 |
| Carrying amount at December 31 | 137,967 | 137,874 |
| Dividends received | 31,487 | 20,275 |
For a description of the accounting policies, please refer to the consolidated financial statements note 5.2 .
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Cost at January 1 | 8,053 | 8,050 |
| Foreign exchange adjustment | - | 3 |
| Cost at December 31 | 8,053 | 8,053 |
| Depreciation at January 1 | 8,042 | 7,929 |
| Foreign exchange adjustment | - | 3 |
| Depreciation | 9 | 110 |
| Depreciation at December 31 | 8,051 | 8,042 |
| Carrying amount at December 31 | 2 | 11 |
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Cost of sales | 2 | 28 |
| Research and development costs | 4 | 51 |
| Sales and marketing costs | 1 | 7 |
| Administrative expenses | 2 | 24 |
| Total amortization | 9 | 110 |
For a description of the accounting policies, please refer to the consolidated financial statements note 5.3. Lease liabilities, amounts recognized to the income statement and amounts recognized in the statement of cash flow are presented below.
| Property, plant, and equipment | Leasehold | Technical equipment |
Other equipment, fixtures, fittings and prepayments |
Property, plant, and equipment |
|||
|---|---|---|---|---|---|---|---|
| EUR '000 | Right -of-use | Improvement | Right-of-use | Owned | Right-of-use | Owned | total |
| 2022 | |||||||
| Cost at January 1 | 29,708 | 2,570 | 74 | 6,306 | 545 | 2,663 | 41,866 |
| Additions | 1,690 | - | - | 323 | 198 | 10 | 2,221 |
| Disposals | -922 | - | - | -278 | -187 | - | -1,387 |
| Cost at December 31 | 30,476 | 2,570 | 74 | 6,351 | 556 | 2,673 | 42,700 |
| Depreciation at January 1 | 9,255 | 2,142 | 34 | 6,172 | 296 | 1,713 | 19,612 |
| Depreciation | 3,175 | 58 | 26 | 97 | 142 | 313 | 3,811 |
| Disposals | -922 | - | - | -278 | -187 | - | -1,387 |
| Depreciation at December 31 | 11,508 | 2,200 | 60 | 5,991 | 251 | 2,026 | 22,036 |
| Carrying amount at December 31 | 18,968 | 370 | 14 | 360 | 305 | 647 | 20,664 |
| 2021 | |||||||
| Cost at January 1 | 29,697 | 2,569 | 74 | 6,212 | 415 | 2,605 | 41,572 |
| Foreign exchange adjustment | 11 | 1 | - | 2 | - | 1 | 15 |
| Additions | - | - | - | 92 | 268 | 57 | 417 |
| Disposals | - | - | - | - | -138 | - | -138 |
| Cost at December 31 | 29,708 | 2,570 | 74 | 6,306 | 545 | 2,663 | 41,866 |
| Depreciation at January 1 | 6,157 | 2,083 | 12 | 5,951 | 244 | 1,404 | 15,851 |
| Foreign exchange adjustment | 2 | 1 | -3 | 2 | -6 | 1 | -3 |
| Depreciation | 3,096 | 58 | 25 | 219 | 166 | 308 | 3,872 |
| Disposals | - | - | - | - | -108 | - | -108 |
| Depreciation at December 31 | 9,255 | 2,142 | 34 | 6,172 | 296 | 1,713 | 19,612 |
| Carrying amount at December 31 | 20,453 | 428 | 40 | 134 | 249 | 950 | 22,254 |
| Depreciation period | Up to 10 years | Up to 3 years | Up to 5 years |
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Cost of sales | 915 | 989 |
| Research and development costs | 1,820 | 1,808 |
| Sales and marketing costs | 194 | 246 |
| Administrative expenses | 882 | 829 |
| Total depreciation | 3,811 | 3,872 |
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Interest on lease liabilities | 206 | 223 |
| Variable lease payments not included in the measurement of lease liabilities | 21 | 27 |
| Total recognized in profit and loss | 227 | 250 |
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Repayment of lease liability | 3,458 | 3,433 |
| Total recognized in statement of cash flow | 3,458 | 3,433 |
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Payable within 1 year | 3,414 | 3,069 |
| Payable within 2 to 5 years | 12,415 | 11,805 |
| Payable after 5 years | 3,889 | 6,806 |
| Total undiscounted lease liabilities | 19,718 | 21,680 |
| Total lease liabilities included in the statement of financial position | 19,498 | 20,922 |
| Current | 3,319 | 2,899 |
| Non-current | 16,179 | 18,023 |
Financing items
All financial assets and liabilities are measured at amortized cost. The carrying amount of these approximate fair value. Financial assets which have been modified or renegotiated during the period are assessed individually for impairment.
Financial assets comprise deposits of EUR 1.5 million (2021: EUR 1.4 million), receivables of EUR 250.9 million (2021: EUR 192.3 million), and cash and cash equivalents of EUR 11.7 million (2021: EUR 15.9 million). For additional information on receivables refer to note 2.4.
Deposits are primarily related to leasing of offices. Security deposits which will not be returned within one year of the statement of financial position date are recognized as non-current assets.
Commitments which require a deposit will initially be recorded to the deposit asset account, if the deposit is not recovered it is charged to the income statement.
Other financial assets comprise investments in shares of unlisted entities.
Financial liabilities comprise lease liabilities of EUR 19.5 million (2021: EUR 20.9 million), and trade payables and other payables of EUR 26.8 million (2021: EUR 29.2 million).
Other payables include bonus and commission accruals, vacation pay obligations, payroll taxes and VAT. Payables are measured at cost.
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Cost at January 1 | 1,442 | 1,441 |
| Foreign exchange adjustment | - | 1 |
| Additions | 47 | - |
| Disposals | -6 | - |
| Carrying amount at December 31 | 1,483 | 1,442 |
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Interest income, subsidiaries | 873 | 130 |
| Interest income, financial assets carried at amortized cost | 44 | - |
| Dividends from subsidiaries | 31,487 | 20,275 |
| Dividends from associates | 68 | 50 |
| Foreign exchange gains, net | 2,431 | 5,387 |
| Total financial Income | 34,903 | 25,842 |
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Interest expenses, subsidiaries | 175 | 46 |
| Interest expenses, financial liabilities carried at amortized cost | 296 | 245 |
| Interest expenses, financial assets carried at amortized cost | 35 | 32 |
| Interest expenses, lease | 206 | 223 |
| Interest expenses, reestablishment | 9 | 7 |
| Other financial expenses | 90 | 35 |
| Total financial expenses | 811 | 588 |
For the Parent company, in addition to transactions with other related parties depicted in note 7.2 of the consolidated financial statements, related parties also comprise subsidiaries and associates in which SimCorp A/S has a controlling or significant influence.
The Parent company's outstanding balance with subsidiaries comprises receivables of EUR 243.3 million, current account EUR 97.1 million and non-current group contract asset EUR 146.2 million (2021: EUR 183.8 million, current account EUR 44.4 million and non-current group contract asset EUR 139.4 million) and payables of EUR 24.5 million (2021: EUR 16.1 million).
Balances with subsidiaries and associates comprise ordinary trade balances relating to the purchase and sale of services.
The current account balance carry interest and are subject to terms and conditions
identical to those made with the Parent company's and the Group's clients and suppliers.
Trading with subsidiaries and associates is conducted on arm's length terms. Ownership interests are shown in note 7.7 of the consolidated financial statements.
Interest on outstanding balances with subsidiaries and associates is specified in note 6.2 in the financial statements of the Parent company. In 2022, the Parent company has received dividends of EUR 31.5 million (2021: EUR 20.3 million) from subsidiaries and dividends of EUR 0.07 million from associates (2021: EUR 0.05 million).
The Parent company has provided delivery bonds to certain clients of its subsidiaries, and the Parent company has issued letters of support to certain subsidiaries, see note 7.3.
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Purchases of services from subsidiaries | 71,425 | 62,110 |
| Purchases of services from associates | 872 | 533 |
| Sale of services to subsidiaries | 252,469 | 224,064 |
In 2022, audit fees included the audit of the Parent company's financial statements. In 2021, audit fees included the audit of the Parent company's financial statements, including additional audit procedures due to implementation of a new ERP system.
| EUR '000 | 2022 | 2021 |
|---|---|---|
| Audit fees | 203 | 210 |
| Other service fees | 56 | 68 |
| Total | 259 | 278 |
| Non-Audit Services (NAS)/Audit fee ratio | 28% | 32% |
As part of building long-term client relationships, the company has made a commitment to, in some contracts, provide SimCorp Dimension product supports for up to ten years from the date of the contract.
SimCorp A/S has issued guarantees for its subsidiaries' delivery commitments to clients for a total of EUR 39.4 million (2021: EUR 49.2 million).
The Parent company expects to issue letters of support to certain subsidiaries.
The Parent company has provided guarantee for credit facilities totalling EUR 4.8 million (2021: EUR 4.4 million) to certain subsidiaries.
Bank guarantees have been provided for rent commitments in Australia, Belgium, France, Germany, Luxembourg, and USA.
The Parent company is from time to time party to legal proceedings and inquiries from authorities when investigating various issues. The outcome of such is not expected to have a significant effect on profit for the year and the assessment of the company's financial position.
SimCorp A/S has financial commitments with suppliers for EUR 54 million (2021: EUR 65 million) mainly related to infrastructure services for the cloud solutions.
In January 2023 SimCorp A/S has completed its investment in Artega Investment Administration. SimCorp A/S share is 20%.
No other material events have occurred after December, 31 2022, that has consequences for the annual report 2022.
SimCorp A/S Weidekampsgade 16 2300 Copenhagen S Denmark Phone +45 35 44 88 00
SimCorp Ukraine LLC V. Stusa 35-37, 2nd floor 03142 Kiev Ukraine Phone +380 44 594 95 60
SimCorp Sp. Z O.O. Ul. Puławska 182, 4th floor 02-670 Warsaw Poland Phone: +48 22 104 81 100
SimCorp Sverige AB Torsgatan 13 111 23 Stockholm Sweden Phone +46 8 528 015 00
(Finnish branch of SimCorp Sverige AB) C/O Spaces Tripla, Workery West 6th floor, Firdonkatu 2 T 63 00520 Helsinki Finland Phone +358 9685 2010
SimCorp Norge AS Biskop Gunnerusgate 14A 0051 Oslo Norway Phone +47 23 10 41 0
SimCorp GMBH Justus-von-Liebig-Straße 1 61352 Bad Homburg
Germany Phone +49 6172 9240-0
SimCorp Österreich GMBH Invalidenstrasse 2, 6th floor, 1030 Vienna Austria Phone +43 1 5120099
SimCorp Schweiz AG Sihlquai 253 8005 Zurich Switzerland Phone +41 44 360 59 00
SimCorp Benelux SA/NV Avenue Louise 143 1050 Brussels Belgium Phone +32 2 213 30 00
SimCorp Netherlands (Dutch branch of SimCorp Benelux SA/NV) Gustav Mahlerplein 109-111 1082 MS Amsterdam The Netherlands Phone: +31 (0)20 708 57 64
SimCorp Italiana S.R.L. Via Monferrato, 1 20144 Milano Italy Phone: +39 02 4855871 SimCorp Iberia S.L. Travessera de Gracia no. 11 Barcelona 08021 Spain Phone: +33 1 5535 5454
SimCorp France S.A.S. 19-23 Bis rue de Vienne 75008 Paris France Phone +33 1 5535 5454
SimCorp Luxembourg S.a.r.l. rue Eugène Ruppert 20 2453 Luxembourg Luxembourg Phone +352 26 49 35 65
SimCorp Ltd. Level 12 Two London Wall Place London, EC2Y 5AU United Kingdom Phone +44 20 7260 1900
SimCorp Ltd. Abu Dhabi World Trade Center, Level 17 The Office World Trade Center Tower (Arabtec Building), Central Market Al Markaziya, PO Box: 3876 Abu Dhabi Phone: +971 2 654 4004
SimCorp Coric Ltd. Level 12 Two London Wall Place London, EC2Y 5AU United Kingdom Phone +44 20 7260 1900 SimCorp Gain (Austria) GMBH Invalidenstrasse 2, 6th floor 1030 Vienna Austria Phone: +43 1 5120099
SimCorp Advanced for Information Technology Hamad Tower, 4th floor King Fahd Branch Road, Al Olaya Riyadh, 12212 Saudi Arabia
SimCorp USA Inc. One State Street Plaza 1 State Street, 29th Floor New York, NY 10004 USA Phone: +1 212 994 9400
SimCorp Canada Inc. 100 Wellington Street West TD West Tower, Suite 2204 (PO Box 123) Toronto, Ontario M5K 1H1 Canada Phone +1 647 591 9200
SimCorp Coric Inc. 100 Summer Street Suite 1950, 19th Floor Boston, MA 02110 USA Phone: +1 617 588 5141
SimCorp Singapore PTE. Ltd. 18 Robinson Road #21-02 Singapore 048547 Singapore Phone +65 6916 0483
SimCorp Asia PTY. Ltd. Level 17, 68 Pitt Street 2000 Sydney NSW Australia Phone +61 2 9240 3500
SimCorp Hong Kong Ltd. Level 19, Two International Finance Centre, 8 Finance Street, Central, Hong Kong Phone: +852 3101 7954
SimCorp Japan Level 27 Tokyo Sankei Building 1-7-2 Otemachi, Chiyoda-ku 100-0004 Tokyo Japan Phone: +81 3 3242 3263
SimCorp Philippines Inc. 24th Floor, Fort Legend Tower 3rd Avenue Corner 31st Street Taguig City1634 Philippines
SimCorp India LLP Unit No. 402 A 13/2/3, Highway Tower II Sector 62 Noida Gautam Buddha Nagar UP 201309 IN India Phone: +91-120-2401088
www.simcorp.com [email protected]
SimCorp offers industry-leading, integrated investment management solutions. Our platform and ecosystem, comprising partners, services, and third-party connectivity empowers us to provide 40% of the world's top 100 financial companies with the efficiency and flexibility needed to succeed. With over 25 offices around the world, and more than 2,200 employees, we are a truly global, collaborative team that connects every continent and industry seamlessly.
For more information, please visit www.simcorp.com
The contents of this publication are for general information and illustrative purposes only and are used at the reader's own risk. SimCorp uses all reasonable endeavors to ensure the accuracy of the information. However, SimCorp does not guarantee or warrant the accuracy, completeness, factual correctness, or reliability of any information in this publication and does not accept liability for errors, omissions, inaccuracies, or typographical errors. The views and opinions expressed in this publication are not necessarily those of SimCorp. © 2023 SimCorp A/S. All rights reserved.
Without limiting rights under copyright, no part of this document may be reproduced, stored in, or introduced into a retrieval system, or transmitted in any form, by any means (electronic, mechanical, photocopying, recording, or otherwise), or for any purpose without the express written permission of SimCorp A/S. SimCorp, the SimCorp logo, SimCorp Dimension, and SimCorp Services are either registered trademarks or trademarks of SimCorp A/S in Denmark and/or other countries. Refer to www.simcorp.com/trademarks for a full list of SimCorp A/S trademarks. Other trademarks referred to in this document are the property of their respective owners.
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