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Formpipe Software

Quarterly Report Oct 26, 2017

3159_10-q_2017-10-26_302f18e8-d97c-4d92-bec2-15630ab4c234.pdf

Quarterly Report

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Interim report January – September 2017

PERIOD JULY 1 – SEPTEMBER 30, 2017

  • Net sales SEK 88.0 m (SEK 83.2 m)
  • System revenue SEK 56.7 m (SEK 56.2 m)
  • Recurring revenue in percentage of net sales 57 % (54 %)
  • EBITDA SEK 22.1 m; 25.1 % (SEK 19.9 m; 23.9%)
  • EBITDA-adj. SEK 13.3 m; 15.1% (SEK 10.8 m; 13.0 %)
  • EBIT SEK 11.1 m; 12.7 % (SEK 6.2 m; 7.5 %)
  • Net profit SEK 6.5 m; 7.3 % (SEK 5.6 m; 6.7 %)
  • EPS before dilution SEK 0.12 (SEK 0.10)
  • Cash flow from operating activities SEK 16.9 m (SEK 9.0 m)

PERIOD JANUARY 1 – SEPTEMBER 30, 2017

  • Net sales SEK 279.8 m (SEK 272.0 m)
  • System revenue SEK 180.5 m (SEK 175.3 m)
  • Recurring revenue in percentage of net sales 52 % (49 %)
  • EBITDA SEK 59.9 m; 21.4 % (SEK 57.8 m; 21.2 %)
  • EBITDA-adj. SEK 31.5 m; 11.3 % (SEK 29.3 m; 10.8 %)
  • EBIT SEK 23.0 m; 8.2 % (SEK 13.8 m; 5.1 %)
  • Net profit SEK 14.4 m; 5.1 % (SEK 11.3 m; 4.2 %)
  • EPS before dilution SEK 0.28 (SEK 0.21)
  • Cash flow from operating activities SEK 34.3 m (SEK 25.3 m)

INCOME STATEMENT - SUMMARY

Jul-Sep Jan-Sep Rolling 12 Full
year
(SEK Million) 2017 2016 2017 2016 months 2016
Net sales 88,0 83,2 279,8 272,0 386,5 378,7
whereof recurring revenue 49,9 45,3 144,1 133,3 189,4 178,6
EBITDA 22,1 19,9 59,9 57,8 90,2 88,0
EBITDA-adj 13,3 10,8 31,5 29,3 53,1 50,8
EBIT 11,1 6,2 23,0 13,8 38,8 29,7

Comments from the Groups CEO

In accordance with our long-term strategy, the transformation from traditional license sales to cloudbased license sales (Software as a Service) continues to take place at an accelerating rate. In the third quarter, around 20 new contracts were closed as cloud services, and the license value for these new contracts, if they had instead been sold as traditional license, had been approximately 4 MSEK.

This shift has a clear negative impact on our short-term margins, but will over time bring positive effects for us since it will generate higher proportions of recurring revenue for many years going forward. Our recurring revenue for the third quarter is 10 % higher than for the same period last year.

The realization of our ambition to deliver higher margins is challenged by the above transformation in business model. Therefore, it is satisfying that we for the third quarter and the full year as well, perform better on all profit lines (operating profit, EBITDA, etc.) compared to last year. We consider it possible to continue this trend in the future. It does, however, look

challenging for the fourth quarter due to the fact that we made an unusually strong quarter last year thanks to a large license revenue being recognised from the Stockholm project.

We are still experiencing a challenging market for municipalities in Denmark. During the third quarter the National Appeals Board in Denmark commented on the association of some Danish municipalities that we consider infringing on the public procurement process and thereby preventing fair competition. The National Appeals Board stated the construction to be in violation of current Danish law. How this decision will affect the market situation is still very unclear. We continue our strategy to focus on and strengthen our relations to our existing customers within this market space.

Market

Enterprise content management (ECM) is used to create, store, distribute, discover, archive and manage digital content (such as scanned documents, email, reports, medical images and office documents), and ultimately analyze usage to enable organizations to deliver relevant content to users where and when they need it. It is in the ECM market that Formpipe has emerged as the market leader in the public sector, as a challenger in e.g. life sciences and legal as well as cross-industry for parts of the product range.

Growth in the ECM market is fueled in large part by the organizational and corporate wide need to streamline operations and meet legal requirements and regulations. Making business value from the information requires applications and services to search, analyze, process and distribute data and content. Growth drivers continually gain strength as the sheer amount of data and information increases and ECM remains a highly prioritized investment area. Gartner's forecast on ECM software revenue is a Compound Annual Growth Rate of 10.6%, 2015-2020. The ECM market is large and fragmented, with a total addressable market (systems revenue) of 7 billion dollars in 2017 (Source: Gartner, Enterprise Software Markets, Worldwide, 2013-2020, 4Q16 update).

A CHANGING MARKET

The ECM market is changing from the centralized, backend, command and control of unstructured content to integrated, purpose-built, cloud based solutions that prioritizes content usability, processing and analyzing content from one or several sources, to get business insights and business value. Control, file synchronization and sharing will be a standard capability of ECM offerings.

This change is well in line with the Formpipe's strategy, as more and more of the company's customers choose to switch to cloud solutions for the standard products, as well as with the company development of applications and modules with the ability to process information from both Formpipe's existing systems or from other systems.

The development for ECM software is towards cloud based solutions and Gartner predicts that at least 50% of the leading ECM software providers will have rearchitected their offerings to cloud based platform by the end of 2018. But even if the trend is towards the cloud, the license revenues from on-premise will play an important role for years to come.

FORMPIPES OFFERINGS IN ECM:

CA S E A N D DO C U M E N T MA N A G E M E N T

Case and Document Management is about managing documents and information in cooperation, over functional boundaries, with version management, management of rights, traceability and automation of the work flows. This provides lower costs, minimized risk exposure and structured information. In the area of Case and Document Management, Formpipe addresses the public sector in Sweden and Denmark, as well as the industries of Life Science and Legal.

GR A N T S MA N A G E M E N T

Grants Management automates the whole life cycle for applications and grants for both grant funding bodies and recipients, from requests for proposals by the program to measurement and reporting of the outcome of the effort. Formpipes Grants Management products are currently sold to the public sector and it is the leading system with national authorities.

C U S T O M E R C O M M U N I C A T I O N S MA N A G E M E N T

With CCM products, content is produced, individualized, formatted and distributed from different systems and data sources to the format that best suits the company in its communication with customers or other business partners. Formpipe's CCM product Lasernet is mainly tied to sales of ERP systems

ST R U C T U R E D DA T A AR C H I V I N G

Structured data archiving is the ability to index and move important operating data from active business systems, or systems being discontinued. It provides control and makes the data available in its context, reduces storage costs and the amount of data in the daily production environment. Formpipe's product Long-Term Archive is currently sold to the public sector in Sweden where there is a high level of activity.

The Future

Formpipe is well-positioned to be able to develop and strengthen its leading position as ECM provider while retaining good profitability levels. The company sees good opportunities to continue to utilize its experience from its successes in order to target new markets and customer segments. A solid product development and product strategy creates good conditions to be able to efficiently develop market-leading offerings and meet up with sector-specific requirements also in the future.

The board believes that Formpipe, which is one of the largest European-based ECM suppliers, is wellpositioned with a stabile customer base, a high share of recurring revenue and a focus on customer segments with a high need for ECM solutions.

Financial Information

REVENUE

July – September 2017

Net sales for the period totalled to SEK 88.0 million (83.2 million), which corresponds to an increase of 6 %. System revenue increased by 1 % from the previous year and totalled to SEK 56.7 million (56.2 million). Total recurring revenue for the period increased by 10 % from the previous year and totalled to SEK 49.9 million (45.3 million), which is equivalent to 57 % of net sales (54 %). Exchange rate effects have affected net sales positively by SEK 0.9 million in comparison with the previous year.

January – September 2017

Net sales for the period totalled to SEK 279.8 million (272.0 million), which corresponds to an increase of 3 %. System revenue increased by 3 % from the previous year and totalled to SEK 180.5 million (175.3 million). Total recurring revenue for the period increased by 8 % from the previous year and totalled to SEK 144.1 million (133.3 million), which is equivalent to 52 % of net sales (49 %). Exchange rate effects have affected net sales positively by SEK 3.0 million in comparison with the previous year.

Breakdown of sales revenue, Jan–September 2017

Recurring revenue rolling 12-month, SEKm

COSTS

July – September 2017

The operating costs for the period decreased by 0 % and totalled to SEK 76.9 million (77.0 million). Personnel costs increased by 5 % and totalled to SEK 46.4 million (44.3 million). Selling expenses totalled to SEK 12.8 million (11.3 million). Other costs totalled to SEK 15.5 million (16.8 million).

January – September 2017

The operating costs for the period increased by 1 % and totalled to SEK 258.0 million (255.1 million). Personnel costs increased by 2 % and totalled to SEK 155.0 million (151.6 million). Selling expenses totalled to SEK 41.5 million (38.2 million). Other costs totalled to SEK 51.7 million (53.0 million). During the period a write-down of the remaining liability for additional purchase price from the acquisition of GxP Ltd. has been made by 0.5 million GBP (SEK 5.6 million). Related goodwill from the acquisition has also been written down by 0.4 million GBP (SEK 4.3 million) giving a positive net effect of items affecting comparability amounting to SEK 1.3 million.

Recurring revenues in relation to fixed operating costs, MSEK

EARNINGS

July – September 2017

Operating profit before depreciation and amortization and items affecting comparability (EBITDA) totalled to SEK 22.1 million (19.9 million) with an EBITDA margin of 25.1 % (23.9 %). Operating profit (EBIT) totalled to SEK 11.1 million (6.2 million) with an operating margin of 12.7 % (7.5 %). Net profit totalled to SEK 6.5 million (5.6 million). Exchange rate effects have affected EBITDA positively by SEK 0.2 million in comparison with the previous year.

January – September 2017

Operating profit before depreciation and amortization and items affecting comparability (EBITDA) totalled to SEK 59.9 million (57.8 million) with an EBITDA margin of 21.4 % (21.2 %). Operating profit (EBIT) totalled to SEK 23.0 million (13.8 million) with an operating margin of 8.2 % (5.1 %). Net profit totalled to SEK 14.4 million (11.3 million). Net profit from discontinued operations amounted to SEK - million (2.4 million). Exchange rate effects have affected EBITDA positively by SEK 0.7 million in comparison with the previous year.

Sales and EBITDA margin, SEKm

FINANCIAL POSITION AND LIQUIDITY

Cash equivalents

Cash and cash equivalents at the end of the period amounted to SEK 36.4 million (27.2 million). The company had interest-bearing debt at the end of the period totalling to SEK 94.5 million (110.8 million). The company's net interest-bearing debt thereby totalled to SEK 58.0 million (83.6 million).

The company has bank overdraft facilities for a total of SEK 10.0 million and for DKK 17.0 million, which were not utilized at the end of the period (- million).

Deferred tax asset

By the end of the period the company's deferred tax assets attributable to accumulated losses amounted to SEK 16.8 million (SEK 21.2 million).

Equity

Equity at the end of the period amounted to SEK 345.6 million (336.1 million), which was equivalent to SEK 6.66 (6.55) per outstanding share at the end of the period. The weakening of the Swedish krona has decreased the value of the group's net assets in foreign currencies by SEK -0.6 million (8.2 million) from the end of the year.

During the period the personnel warrant program 2014/2017 was exercised. A total of 599 417 new shares were issued from this program. After the issue of new shares, the total number of shares and votes in the Company amounts to 51 873 025 and the share capital to SEK 5 187 302.5.

Equity ratio

The equity ratio at the end of the period was 58 % (56 %).

CASH FLOW

Cash flow from operating activities

Cash flow from operating activities for the period January - September totalled to SEK 34.3 million (25.3 million).

Investments and acquisitions

Total investments for the period January - September amounted to SEK 30.6 million (29.4 million.

Investments in intangible assets totalled to SEK 28.6 million (28.5 million) and refer to capitalized product development costs.

Investments in tangible assets totalled to SEK 2.0 million (1.0 million).

Financing

During the period January – September the company has amortized SEK 13.1 million (9.8 million) and the interestbearing debt amounted to SEK 94.5 million (110.8 million) at the end of the period.

As an outcome from the exercise of the personnel warrant program 2014/2017, 599,417 new shares was issued and payments amounting to SEK 3.8 million (7.5 million) has been added to the Company. At the same time the Company repurchased 392,583 warrants to a value of SEK 3.3 million (0.5 million).

During the period a new warrant program (2017/2020) has been issued to the company's personnel amounting to 500 000 warrants, which has provided the company with payments of SEK 0.4 million (0.3 million).

During the period dividends amounting to SEK 16.0 million (6.6 million) has been paid out to shareholders.

Other

EMPLOYEES

The number of employees at the end of the reporting period totalled to 236 persons (236 persons).

RISKS AND UNCERTAINTY FACTORS

The significant risk and uncertainty factors for the group and the parent company, which include business and financial risks, are described in the annual report for the last financial year. During the period there have been no changes in the risk and uncertainty factors for the group and the parent company.

TRANSACTIONS WITH RELATED PARTIES

No transactions with related parties have occurred during the period

ACCOUNTING POLICIES

The group's financial reports are prepared in accordance with International Financial Reporting Standards (IFRS) in the way in which they have been adopted by the European Union, the Swedish Annual Accounts Act, RFR 1 Additional Accounting Regulations for Groups issued by the Swedish Financial Reporting Board and in accordance with the regulations that the Stockholm Stock Exchange stipulates for companies listed on Nasdaq Stockholm. Preparing financial reports in accordance with IFRS requires that the company management makes accounting evaluations and estimates and makes assumptions that affect the application of the accounting policies and the reported values of assets, liabilities, income and costs. The actual result can differ from these estimates and evaluations. This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act. The interim report covers pages 1-12 and the interim report on pages 1-5 is thus an integral part of this financial report. The most important accounting policies according to IFRS, which constitute the accounting standard for the preparation of this interim report, are stated in the company's most recently published annual report

The financial reports of the parent company have been pre-pared in accordance with the Swedish Annual Accounts Act and RFR 2 Accounting for Legal Entities issued by the Swedish Financial Reporting Board. The same accounting policies and methods of calculation have been applied in the interim report and in the most recent annual report.

ABOUT FORMPIPE

Formpipe Software AB (publ) is a software company in the field of ECM (Enterprise Content Management). We develop and deliver ECM products for structuring information in larger companies, the public sector and organizations. Our software helps organizations to capture and place information in context. Reduced costs, minimized risk exposure and structured information are the benefits from using our ECM products.

Formpipe was founded in 2004 and has offices in Sweden, Denmark, United Kingdom, the Netherlands, Germany and USA. The Formpipe share is listed on Nasdaq Stockholm.

CALENDAR FOR FINANCIAL INFORMATION

February 14, 2018 Interim report Jan-Dec April 24, 2018 Interim report Jan-Mar April 25, 2018 Annual general meeting July 13, 2018 Interim report Jan-Jun October 23, 2018 Interim report Jan-Sep

FINANCIAL INFORMATION

Can be ordered from the below contact details. All financial information is published on www.formpipe.com immediately after being made public.

CONTACT INFORMATION

Christian Sundin, Managing Director Telephone: +46 70 567 73 85, +46 8 555 290 84 E-mail: [email protected]

Stockholm October 26, 2017 Formpipe Software AB The Board of Directors and the Managing Director

Formpipe Software AB (publ) Swedish company reg. no.: 556668-6605 Sveavägen 168 | Box 231 31 | 104 35 Stockholm T: +46 8 555 290 60 | F: +46 8 555 290 99 [email protected] | www.formpipe.se

Auditor's report

Introduction

We have reviewed the condensed interim financial information (interim report) of Formpipe Software AB as of 30 September 2017 and the nine-month period then ended. The board of directors and the CEO are responsible for the preparation and presentation of the interim financial information in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.

Scope of Review

We conducted our review in accordance with the International Standard on Review Engagements ISRE 2410, Review of Interim Report Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing, ISA, and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act, regarding the Group, and with the Swedish Annual Accounts Act, regarding the Parent Company.

Stockholm, 26 October 2017

PricewaterhouseCoopers AB

Aleksander Lyckow

Authorized Public Accountant

CONSOLIDATED INCOME STATEMENT SUMMARY

Jul-Sep Jan-Sep
(SEK 000) 2017 2016 2017 2016
Net Sales 88 002 83 221 279 783 272 028
Sales expenses -12 772 -11 327 -41 504 -38 152
Other costs -15 530 -16 844 -51 732 -52 967
Personnel costs -46 428 -44 260 -155 024 -151 636
Capitalized work for own account 8 849 9 074 28 373 28 485
Operating profit/loss before depreciation/amortization 22 121 19 864 59 897 57 758
and non-comparative items (EBITDA)
Items affecting comparability - - 1 260 -3 118
Depreciation/amortization -10 976 -13 658 -38 152 -40 801
Operating profit/loss (EBIT) 11 145 6 206 23 004 13 839
Financial income and expenses -856 -1 111 -3 027 -3 517
Exchange rate differences -147 2 044 -799 2 208
Tax -3 678 -1 560 -4 799 -3 656
Net profit for the period from remaining business 6 464 5 579 14 379 8 874
Realization gains from discontinued business - - - 2 434
Net profit for the period 6 464 5 579 14 379 11 308
Of which the following relates to:
Parent company shareholders 6 444 5 290 14 347 10 420
Shareholding with no controlling influence 20 289 32 888
Other comprehensive income
Translation differences -2 759 717 -620 8 229
Other comprehensive income for the period, net after tax -2 759 717 -620 8 229
Total comprehensive income for the period 3 705 6 296 13 759 19 537
Of which the following relates to:
Parent company shareholders 3 685 6 007 13 727 18 649
Shareholding with no controlling influence 20 289 32 888
EBITDA margin, % 25,1% 23,9% 21,4% 21,2%
EBIT margin, % 12,7% 7,5% 8,2% 5,1%
Profit margin, % 7,3% 6,7% 5,1% 4,2%
Earnings per share attributable to the parent company's shareholders
during the period (SEK per share)
- before dilution 0,12 0,10 0,28 0,21
- after dilution 0,12 0,10 0,28 0,20
Average no. of shares before dilution, in 000 51 873 51 274 51 540 50 646
Average no. of shares after dilution, in 000 52 191 51 530 52 104 51 072

CONSOLIDATED BALANCE SHEET SUMMARY

Sep 30 Dec 31
(SEK 000) 2017 2016 2016
Intangible assets 457 442 476 722 470 396
Tangible assets 3 096 4 178 4 075
Financial assets 2 890 1 681 1 682
Deferred tax asset 16 777 21 157 17 332
Current assets (excl. cash equivalents) 82 197 75 455 94 870
Cash equivalents 36 388 27 192 60 890
TOTAL ASSETS 598 791 606 385 649 244
Equity 345 554 336 080 346 249
Shareholding with no controlling influence 2 106 2 687 2 706
- - -
Long-term liabilities 103 377 126 341 115 953
Current liabilities 147 754 141 277 184 337
TOTAL EQUITY AND LIABILITIES 598 791 606 385 649 244
Net interest-bearing debt (-) / cash (+) -58 081 -83 590 -45 626

CHANGES IN CONSOLIDATED EQUITY

Equity attributable to the parent company's shareholders Share
Other Profit/loss holdings with
Share contributed Translation brought no controlling
(SEK 000) capital capital reserves forward Total influence Total
Balance at January 1, 2016 5 014 186 709 4 454 118 930 315 108 3 378 318 486
Comprehensive income
Net profit for the period - - - 10 420 10 420 888 11 308
Other comprehensive income items - - 8 229 - 8 229 - 8 229
Total comprehensive income - - 8 229 10 420 18 649 888 19 537
- - - - - - -
Transaction with owners - - - - - - -
Dividend - - - -5 014 -5 014 -1 579 -6 593
Share issue 113 7 425 - - 7 538 - 7 538
Repurchase of warrants - -466 - - -466 - -466
Employee warrant schemes - 265 - - 265 - 265
Total transaction with owners 113 7 224 - -5 014 2 323 -1 579 744
Balance at Sep 30, 2016 5 127 193 933 12 683 124 336 336 080 2 687 338 767
Balance at January 1, 2017 5 127 193 933 11 395 135 793 346 249 2 706 348 954
Comprehensive income
Net profit for the period - - - 14 347 14 347 32 14 379
Other comprehensive income items - - -620 - -620 - -620
Total comprehensive income - - -620 14 347 13 727 32 13 759
- - - - - - -
Transaction with owners - - - - - - -
Dividend - - - -15 382 -15 382 -632 -16 014
Share issue 60 3 782 - - 3 842 - 3 842
Repurchase of warrants - -3 282 - - -3 282 - -3 282
Employee warrant schemes - 400 - - 400 - 400
Total transaction with owners 60 900 - -15 382 -14 422 -632 -15 054
Balance at Sep 30, 2017 5 187 194 833 10 775 134 758 345 554 2 106 347 659

CASH FLOW STATEMENT SUMMARY*

Jul-Sep Jan-Sep
(SEK 000) 2017 2016 2017 2016
Cash flow from operating activities
before working capital changes 22 249 15 427 55 468 47 907
Cash flow from working capital changes -5 384 -6 467 -21 206 -22 594
Cash flow from operating activities 16 865 8 960 34 262 25 313
Cash flow from investing activities -10 527 -9 710 -30 565 -26 317
Cash flow from financing activities -4 948 -2 028 -28 173 -9 065
Cash flow for the period 1 390 -2 778 -24 476 -10 069
Change in cash and cash equivalent
Cash and cash equivalent at the beginning of the period 35 109 30 379 60 890 37 670
Translation differences -112 -409 -26 -409
Cash flow for the period 1 390 -2 778 -24 476 -10 069
Cash and cash equivalent at the end of the period 36 388 27 192 36 388 27 192

* Cash flow from internal development work (SEK 2,1 m for the year and 0,4 m for the quarter) previously included in the cash flow from operating activities has been re-classified to investment acitivies in last year's comparable period (in accordance with IAS 7).

8 QUARTERS IN SUMMARY*

(SEK 000) 2015 Q4 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3
Support and maintenance 40 893 42 150 40 542 42 478 42 309 43 572 42 406 44 091
Licenses 22 708 15 999 20 370 13 730 30 667 17 778 20 033 12 585
System revenue 63 602 58 149 60 912 56 208 72 976 61 350 62 439 56 676
whereof recurring revenue 43 603 44 806 43 146 45 338 45 318 47 521 46 706 49 884
Deliveries 29 522 29 126 40 619 27 013 33 720 33 372 34 620 31 326
Net sales 93 123 87 275 101 531 83 221 106 696 94 722 97 059 88 002
Sales expenses -14 033 -12 886 -13 939 -11 327 -14 287 -13 625 -15 107 -12 772
Other costs -17 757 -17 399 -18 724 -16 844 -18 621 -17 502 -18 700 -15 530
Personnel costs -51 607 -51 099 -56 277 -44 260 -52 220 -54 465 -54 130 -46 428
Capitalized development costs 11 957 10 524 8 887 9 074 8 718 9 632 9 892 8 849
Total operating expenses -71 440 -70 861 -80 053 -63 356 -76 410 -75 960 -78 046 -65 881
EBITDA 21 683 16 415 21 478 19 865 30 286 18 763 19 013 22 121
% 23,3% 18,8% 21,2% 23,9% 28,4% 19,8% 19,6% 25,1%
-3 905 -2 434
Items affecting comparability - - -3 118 - - 0 1 260 -
Depreciation/amortization -13 308 -13 584 -13 559 -13 658 -14 460 -14 356 -12 820 -10 976
EBIT 8 375 2 831 4 801 6 207 15 827 4 406 7 453 11 145
% 9,0% 3,2% 4,7% 7,5% 14,8% 4,7% 7,7% 12,7%
Discontinued business:
Net sales 2 165 - - - - -
EBITDA -43 - - - - -

* Adjusted to reflect the remaining business after disposal of customer specific consulting services in Denmark in 2015 Q4.

SEGMENT SUMMARY

The Group's segments are divided according to which country they have their headquarters in and for which products that is accounted for. The segments are divided into Sweden, Denmark and Life Science. Segment Sweden comprises the Swedish companies and their products, segment Denmark consists of the Danish companies and their subsidiaries that accounts for products belonging to the Danish entities. Segment Life Science consists of the Group's total records related to life sciences customers for its products specifically designed for life science companies. Items related to life sciences are thus reported separately under its own segment and are not included in the other segments' reported amounts.

Jan-Sep 2017
Life
(SEK 000) Sweden Denmark Science Eliminations Group
Sales, external 121 302 150 714 7 767 - 279 783
Sales, internal 3 607 367 571 -4 545 -
Total sales 124 909 151 081 8 338 -4 545 279 783
Costs, external -84 234 -126 419 -9 233 - -219 886
Costs, internal -3 436 -531 -578 4 545 -
EBITDA 37 239 24 131 -1 473 - 59 897
% 29,8% 16,0% -17,7% 0,0% 21,4%
Jan-Sep 2016
Life
(SEK 000) Sweden Denmark Science Eliminations Group
Sales, external 109 477 155 234 7 317 - 272 028
Sales, internal 3 045 104 1 041 -4 190 -
Total sales 112 522 155 338 8 358 -4 190 272 028
Costs, external -78 911 -123 494 -11 865 - -214 270
Costs, internal -2 820 -383 -987 4 190 -
EBITDA 30 791 31 461 -4 494 - 57 758
% 27,4% 20,3% -53,8% 0,0% 21,2%

GROUP-WIDE INFORMATION

Revenues from all products and services are identified as follows:

Life
2017 Sweden Denmark Science Group
License 27 922 20 806 1 668 50 396
Support & Maintenance 67 936 59 871 2 262 130 069
Delivery 25 444 70 037 3 837 99 318
Net sales 121 302 150 714 7 767 279 783
Life
2016 Sverige Danmark Science Koncernen
License 23 433 24 613 2 053 50 099
Support & Maintenance 62 988 60 370 1 812 125 170
Delivery 23 056 70 251 3 452 96 759
Net sales 109 477 155 234 7 317 272 028

SALES ANALYSIS BY QUARTER

NUMBER OF SHARES

2013-01-01 2014-01-01 2015-01-01 2016-01-01 2017-01-01
2013-12-31 2014-12-31 2015-12-31 2016-12-31 2017-09-30
Number of outstanding shares at the beginning
of the period
48 934 588 48 934 588 50 143 402 50 143 402 51 273 608
Share issue from warrant programme - - - 1 130 206 599 417
Non-cash issue - 1 208 814 - - -
Number of outstanding shares at the end of
the period
48 934 588 50 143 402 50 143 402 51 273 608 51 873 025

KEY RATIOS FOR THE GROUP

Jan-Sep
2017 2016
Net sales, SEK 000 279 783 272 028
EBITDA, SEK 000 59 897 57 758
EBITDA-adj., SEK 000 31 523 29 273
EBIT, SEK 000 23 004 13 839
Net profit for the period, SEK 000 14 379 11 308
EBITDA margin, % 21,4% 21,2%
EBITDA-adj. margin, % 11,3% 10,8%
EBIT margin, % 8,2% 5,1%
Profit margin, % 5,1% 4,2%
Return on equity, %* 6,7% 5,6%
Return on working capital, %* 9,7% 5,4%
Equity ratio, % 58% 55%
Equity per outstanding share at the end of the period, SEK 6,66 6,55
Earnings per share - before dilution, SEK 0,28 0,21
Earnings per share - after dilution, SEK 0,28 0,20
Share price at the end of the period, SEK 14,90 8,90

* Ratios including P&L measures are based on the most recent 12-month period

PARENT COMPANY INCOME STATEMENT SUMMARY*

Jul-Sep Jan-Sep
(SEK 000) 2017 2016 2017 2016
Net sales 32 961 76 197 108 089 94 925
Operating expenses -3 809
Sales expenses -7 934 -14 854 -12 789
Other costs -8 213 -14 320 -22 895 -20 469
Personnel costs -15 652 -26 052 -48 809 -48 245
Depreciation/amortization -1 571 -1 595 -4 688 -4 708
Total operating expenses -29 244 -49 902 -91 247 -86 211
Operating profit/loss 3 717 26 295 16 843 8 714
Other financial items 714 2 978 1 737 4 110
Net profit for the period 5 599 29 273 19 747 15 744

* During the third quarter of 2016 the wholly owned Swedish subsidiaries were merged with the parent company. The merger of the subsidiaries had no effect on the group.

PARENT COMPANY BALANCE SHEET SUMMARY

Sep 30 Dec 31
(SEK 000) 2017 2016 2016
Intangible assets 15 785 21 290 19 856
Tangible assets 972 1 086 1 164
Financial assets 337 403 357 283 353 463
Deferred tax asset - 3 635 -
Current assets (excl. cash equivalents) 58 784 45 296 65 302
Cash and bank balances 27 563 24 047 45 369
TOTAL ASSETS 440 507 452 638 485 154
Restricted equity 22 878 22 818 22 818
Non-restricted equity 215 330 202 312 210 064
Total equity 238 208 225 130 232 882
Long-term liabilities 77 457 99 223 94 552
Current liabilities 124 842 128 285 157 720
TOTAL EQUITY AND LIABILITIES 440 507 452 638 485 154

PLEDGED ASSETS AND CONTINGENT LIABILITIES

Pledged assets refers to shares in subsidiaries as security for loans. The pledged assets in the Group is the same as disclosed for the Parent Company.

Sep 30 Dec 31
(SEK 000) 2017 2016 2016
Pledged assets 302 219 270 046 300 321
Contingent liabilities - - -

DEFINITIONS

Formpipe uses alternative key figures, also called APM (Alternative Performance Measures). From July 3rd 2016 new guidelines were implemented by the European Union regarding alternative APM's, which Formpipe uses in published reports. Formpipe's APM's is calculated from the financial reports, which are prepared in accordance with applicable rules for financial reporting, where prepared figures is altered by adding or subtracting amounts from the presented numbers. Below the alternative performance measures, that Formpipe uses in published reports, are defined and described

System revenue

The total of license revenue and revenue from support and maintenance contracts.

Recurring revenue

Revenue of an annually recurring nature such as support and maintenance revenue and revenue from SAAS services regarding license agreements.

Fixed operating expenses

Other costs and personnel costs

EBITDA

Earnings before depreciation, amortization, acquisitionrelated costs and other items affecting comparability.

EBITDA-adj.

EBITDA exclusive capitalized work for own account

Items affecting comparability

The item must be of a material nature to be reported separately and considered undesirable from the regular core operations and complicate the comparison. For example, acquisition-related items, restructuring-related items and write-downs

EBIT

Operating profit/loss

Operating margin before depreciation and amortization (EBITDA margin)

Earnings before depreciation, amortization, acquisitionrelated costs and other items affecting comparability as a percentage of net sales.

Operating margin before depreciation and amortization (EBITDA-adj margin)

Earnings before capitalized work for own account, depreciation, amortization, acquisition-related costs and other items affecting comparability as a percentage of net sales.

Operating margin (EBIT margin)

Operating profit/loss as a percentage of net sales.

Profit margin

Net profit/loss after tax as a percentage of sales at the end of the period.

Earnings per share - before dilution

Net profit/loss after tax divided by the average number of shares during the period.

Earnings per share - after dilution

Net proft/loss after tax adjusted for dilution effects divided by the average number of shares after dilution during the period.

Equity per share

Equity at the end of the period divided by the number of shares at the end of the period.

Return on equity

Profit/loss after tax as a percentage of average equity

Return on working capital

Operating profit/loss as a percentage of average working capital (balance sheet total less non-interest bearing liabilities and cash and bank balances).

Free cash flow

Cash flow from operating activities minus cash flow from investing activities excluding acquisitions.

Net interest-bearing debt

Interest bearing debts minus cash and cash equivalents

Equity ratio

Equity as a percentage of the balance sheet total.

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