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Proact IT Group Earnings Release 2024
3095_10-q_2024-05-07_a80db3b0-b873-4212-9e07-407414b2a8e5.pdf
Earnings Release
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Continued growth in the service business and increased profitability
January - March 2024
- Revenues decreased by 2.4 per cent to SEK 1,191.3 million (1,220.3).
- Adjusted EBITA increased by 66.4 per cent and amounted to SEK 94.5 million (56.8), corresponding to an adjusted EBITA margin of 7.9 per cent (4.7).
- Earnings before tax amounted to SEK 76.2 million (37.3).
- Earnings after tax amounted to SEK 60.7 million (27.9).
- Earnings per share amounted to SEK 2.22 (1.02).
- New contracts relating to cloud services worth SEK 182.7 million (116.6) were contracted, an increase by 56,7 per cent.
- Recurring revenues (revenues from cloud and support services) amounted to SEK 441.5 million (399.1), corresponding to an annualized rate of SEK 1,766.1 million (1,596.4) and an increase of 10.6 per cent.
- During the quarter, 289 242 shares have been acquired within the buy-back program that was launched in 2023.
Financial summary
| Jan-Mar | Jan-Mar | Rolling 12 | Jan-Dec | |
|---|---|---|---|---|
| Amounts in SEK million | 2024 | 2023 | months | 2023 |
| Total Revenues | 1,191.3 | 1,220.3 | 4,818.3 | 4,847.3 |
| Growth, % | -2.4 | 14.6 | -1.9 | 1.9 |
| of which currency rate effects, % | 0.6 | 3.7 | 3.0 | 3.8 |
| of which effects from acquisitions and divestments, % | -0.2 | 2.5 | -2.1 | 0.5 |
| Organic growth, %¹ | -2.8 | 8.5 | -2.8 | -2.3 |
| Adjusted EBITA² | 94.5 | 56.8 | 339.8 | 302.1 |
| Adjusted EBITA margin, % | 7.9 | 4.7 | 7.1 | 6.2 |
| Operating profit (EBIT) | 80.8 | 43.1 | 267.5 | 229.8 |
| Operating margin (EBIT), % | 6.8 | 3.5 | 5.6 | 4.7 |
| Earnings before tax | 76.2 | 37.3 | 256.9 | 218.3 |
| Net Margin, % | 6.4 | 3.1 | 5.3 | 4.5 |
| Earnings after tax | 60.7 | 27.9 | 205.7 | 173.1 |
| Profit Margin, % | 5.1 | 2.3 | 4.3 | 3.6 |
| Earnings per share (outstanding shares), SEK³ | 2.22 | 1.02 | 7.49 | 6.29 |
| Return on capital employed, %⁴ | - | - | 17.9 | 16.3 |
| Cash flow from operations | 103.7 | 30.1 | 605.7 | 532.0 |
1) Organic growth refers to growth excluding currency rate effects and acquired and divested companies.
2) EBITA before items affecting comparability.
3) Proact has long-term performance-based share programs that could result in dilution of maximum 1.84 percent.
The company has bought back own shares which affects the key ratios above. 4) Calculated only for full year and rolling 12 months
About Proact
Proact is Europe's leading specialist in data and information management with a focus on cloud services and data centre solutions. We help our customers to store, connect, protect, secure and drive value through their data whilst increasing agility, productivity and efficiency.
We have completed thousands of successful projects around the world, have more than 4 000 customers and currently manage hundreds of petabytes of information in the cloud. We employ over 1 200 people in 12 countries in Europe and in North America.
Founded in 1994, our parent company, Proact IT Group AB (publ) was listed on Nasdaq Stockholm in 1999 (under the symbol PACT).
Comments from the CEO of Proact
2024 has begun strongly and we are delivering a first quarter with continued growth in the service business and very good growth in profitability. The macro-economic conditions seem to have stabilized with a lower inflation rate and improved demand in most of our markets and we also expect a better development on the German market.
Revenues for the quarter amounted to SEK 1,191 million (1,220), corresponding to a decrease of 2.4 per cent compared to a strong first quarter previous year, driven by high system sales.
The turnover from the system business amounted SEK 638.2 million (699.3) decreased with 8.7 per cent and organically 9.0 per cent.
The services business continues to develop well and grew by 6.0 per cent to SEK 550.5 million (519) and 5.4 per cent organically, driven by the sales of contracted cloud and support services, which compensated for a weaker development of consulting services, mainly within Business Unit Central.
Recurring revenues from cloud and support services, grew by 10.6 per cent to an annual rate of SEK 1,766 million (1,596). The positive trend for cloud services continued during the quarter where new agreements amounted to SEK 183 million (117) were signed, of which the majority was in Business Unit UK, followed by Business Unit Nordic & Baltics and Business Unit West.
During the first quarter, we closed and delivered a number of highmargin system deals, which together with efficiencies and growth in the service business contributed to an increased gross margin before depreciation of 28.9 per cent (24.9).
Adjusted EBITA during the quarter increased to SEK 94.5 million (56.8) corresponding to a margin of 7.9 per cent (4.7).
The development during the first quarter has further strengthened our balance sheet with a positive cashflow from operating activities of SEK 104 million, and we have acquired own shares within the mandate of the buyback program that was initiated in the fourth quarter of
- A total of 507,924 shares has been acquired and the company currently has approx. 1 million shares in its own custody. The board has proposed that the Annual General Meeting decide on the cancellation of 600,000 shares. Remaining shares are planned to be used for, among other things, future payments within the framework of the company's performance share program.
Cyber security continues to be an increasingly prioritized area for our customers and Proact's offering, and specialist expertise is well in line with their needs. During the first quarter, Proact has deepened the collaboration with the global cyber security specialist Arctic Wolf with the aim of elevating cyber security services in the Nordic market. Also, Proact has specialist expertise in Microsoft Cloud Security, and the other week, we were able to announce that Proact will be the world's first partner to deliver the NetApp Data Protection and Security Assessment service, which further strengthens our portion in cyber security.
We continue to develop our partnerships to ensure we can meet our customers' needs and drive development forward. The latest example is our new collaboration with Broadcom, which enables Proact to continue to deliver products and services based on VMware's technologies even after Broadcom's acquisition of VMware.
We have a positive view of the market and our ability to meet customers' needs in cloud solutions, security and AI.
Solna 7 May, 2024
Jonas Hasselberg CEO
The Group's development January-March
Revenues and result
For the first quarter, total revenues amounted to SEK 1,191.3 million (1,220.3), a decrease by 2.4 per cent. Currency rate effects affected positively by 0.6 per cent, and acquisitions and divestments affected negatively by 0.2 per cent, and organically revenues decreased by 2.8 per cent.
System revenues decreased by 8.7 per cent to SEK 638.2 million (699.3) and organically by 9.0 per cent, compared to the same period previous year, primarily due to a strong comparison quarter.
Service revenues increased by 6.0 per cent to SEK 550.5 million (519.4) and organically by 5.4 per cent, as result of contracts from previous quarters and continued good demand on support and cloud business during quarter. Service revenues accounted for 46.2 per cent (42.6) of the company´s total revenues for the quarter.
New contracts relating to cloud services worth SEK 182.7 million (116.6) were contracted during the quarter. The contracts normally have a term of three to five years. Total revenues from cloud services increased by 10.1 per cent and amounted to SEK 288.2 million (261.8). Organically they increased by 8.8 per cent. Recurring revenues, revenues from cloud and support services, amounted to SEK 441.5 million (399.1), corresponding to an annualized rate of SEK 1,766.1 million (1,596.4). This corresponds to an increase of 10.6 per cent, of which the organic increase was 10.0 per cent.
The gross margin increased in the quarter, compared to the same period previous year, and amounted to 25.8 per cent (21.7), driven by a high margin within the system business and an increased margin in the service business as a result of growth combined with previous and continuous efficiencies.
.
Revenues Adjusted EBITA
Recurring Revenues Profit per share, and return on equity 12 months, %
The Group's development January-March
Revenues and result, cont.
Sales and administration expenses increased organically by 1.6 per cent.
Adjusted EBITA amounted to SEK 94.5 per cent (56.8), an increase by 66.4 per cent compared to the same period previous year, as a result of a higher gross margin within both the systems- and services business. The adjusted EBITA margin increased to 7.9 per cent (4.7). Earnings before tax amounted to SEK 76.2 million (37.3).
Proact reports items affecting comparability separately to show the development in the underlying business. Items affecting comparability refer to items that are non-recurring and deviate from the normal business. During the first quarter of 2024, non-recurring items in EBITA amounted to SEK 0.0 million (0.0).
Revenue by industry
| Amounts in | Jan-Mar Jan-Mar | Rolling 12 Jan-Dec | ||
|---|---|---|---|---|
| SEK million | 2024 | 2023 | months | 2023 |
| Telecom | 87.8 | 75.5 | 368.4 | 356.1 |
| Bank, Finance | 113.7 | 63.6 | 343.8 | 293.7 |
| Energy | 75.2 | 102.8 | 238.5 | 266.0 |
| Manufacturing | 135.0 | 130.7 | 536.3 | 532.0 |
| Media | 31.1 | 30.7 | 128.7 | 128.3 |
| Trading & Services | 231.2 | 241.5 | 977.4 | 987.7 |
| Public sector | 356.5 | 350.3 | 1,576.5 | 1,570.3 |
| Other | 160.9 | 225.2 | 648.9 | 713.2 |
| Total revenue | 1,191.3 | 1,220.3 | 4,818.3 | 4,847.3 |
| Jan-Mar | Jan-Mar | Rolling 12 | Jan-Dec | |
|---|---|---|---|---|
| Amounts in SEK million | 2024 | 2023 | months | 2023 |
| Total Revenues | 1,191.3 | 1,220.3 | 4,818.3 | 4,847.3 |
| Cost of goods and services sold, excl. amortisations and depreciations |
-846.5 | -916.2 | -3,527.9 | -3,597.6 |
| Gross profit excl. amortisations and depreciations | 344.8 | 304.1 | 1,290.4 | 1,249.7 |
| Gross margin excl. amortisations and depreciations, % | 28.9 | 24.9 | 26.8 | 25.8 |
| Operational expenses, excl. amortisations and depreciations | -210.5 | -204.4 | -781.3 | -775.2 |
| Adjusted EBITDA¹ | 134.2 | 99.7 | 509.1 | 474.5 |
| Adjusted EBITDA margin, % | 11.3 | 8.2 | 10.6 | 9.8 |
| Depreciations and write-downs of tangible assets | -39.7 | -42.9 | -169.3 | -172.4 |
| Adjusted EBITA¹ | 94.5 | 56.8 | 339.8 | 302.1 |
| Adjusted EBITA margin, % | 7.9 | 4.7 | 7.1 | 6.2 |
| Amortizations and write-downs of intangible assets | -13.7 | -13.8 | -55.6 | -55.7 |
| Items affecting comparability in EBITA | - | - | -16.7 | -16.7 |
| Operating profit/loss (EBIT) | 80.8 | 43.1 | 267.5 | 229.8 |
| Operating margin (EBIT), % | 6.8 | 3.5 | 5.6 | 4.7 |
1) EBITDA and EBITA before items affecting comparability
Cash flow
January - March
Cash flow for the quarter was SEK 41.0 million (-2.8), of which SEK 103.7 million (30.1) from operating activities. Cash flow from changes in working capital amounted to SEK -15.1 million (-60.2), primarily due to decreased accounts payable and operating liabilities partly offset by decreased operating receivables.
Cash flow from investments amounted to SEK -10.6 million (-23.5) and cash flow from financing activities amounted to SEK -52.1 million (-9.4), mainly due to buyback of shares of SEK 30.6 million, and amortization of leasing debts of SEK 19.2 million.
Investments
During the first quarter 2024, SEK 11.6 million (14.9) has been invested in fixed assets, of which SEK 4.2 million (0.0) in Proact Finance for customer deliveries.
Financial position
Cash and cash equivalents amounted to SEK 606.1 million as of March 31, 2024, compared to SEK 501.1 million previous year. Of the total bank overdraft facility of SEK 159.1 million, none was utilized. Bank loans amounted to SEK 230.5 million and relate to a three-year credit facility of EUR 20 million from Svensk Exportkredit (Swedish Export Credit Corporation), and to a three-year revolving credit facility that Proact signed during the third quarter of 2021. The facility amounts to a total of SEK 600 million, of which SEK 0.0 million was utilized as of March 31, 2024. And it has been extended by a maximum of two years, which means that it runs until the third quarter of 2026.
Investments in IT equipment for the cloud operations are financed through leasing agreements.
The Group's equity ratio at the end of the period was 24.9 per cent (23.9).
Net debt
| Mar 31 Dec 31 | Mar 31 Dec 31 | |||
|---|---|---|---|---|
| Amounts in SEK million | 2024 | 2023 | 2023 | 2022 |
| Cash and cash equivalents | 606.1 | 547.9 | 501.1 | 505.7 |
| Bank overdraft facilities | - | - | - | - |
| Liabilities to credit institutions, excl. liabilities related to financial leasing -231.2 |
-221.9 | -453.8 | -442.1 | |
| Net cash (+)/Net debt (-) excl. financial leasing |
375.0 | 326.0 | 47.3 | 63.6 |
| Financial leasing liabilities | -262.3 | -246.4 | -296.6 | -290.6 |
| Net cash (+)/Net debt (-) incl. financial leasing |
112.7 | 79.6 | -249.2 | -227.0 |
| Unutilized bank overdraft facility | 159.1 | 154.5 | 164.4 | 159.2 |
| Total bank overdraft facility | 159.1 | 154.5 | 164.4 | 159.2 |
Income tax
The Group's tax expense includes the sum of current tax and deferred tax calculated on the basis of current tax rates in each country. The reported tax expense for the quarter amounted to SEK 15.5 million (9.4), corresponding to an efficient tax rate of 20.3 per cent (25.3).
Buy-back of own shares
The Annual General Meeting on May 4, 2023, authorized the Board to acquire up to 10.0 percent of the company's shares until the next Annual General Meeting. As of March 31 2024, 507,742 shares have been acquired within the authorization.
As of March 31 2024, the company holds 1,009,452 shares in own repository, which corresponds to 3.6 per cent of the total number of shares.
Employees
The company had 1,168 employees (1,237) as of March 31 2024.
Parent Company in brief
The Parent Company's total revenues for the period amounted to SEK 37.9 million (38.0). Profit before tax amounted to SEK 22.4 million (11.3).
The Parent Company's liabilities in a joint group currency account amounted to SEK 455.4 million (285.2) as of 31 March 2024.
At the end of the period, the number of people employed by the parent company totalled 20 (23).
The Parent Company's operations have remained unchanged during the period. There have been no significant transactions with related parties.
Business Units
Nordic & Baltics Denmark, Estonia, Finland, Latvia, Lithuania (divested August 28, 2023), Norway, Sweden and the US
Jan-Mar 2024
Revenues and result
January – March
In Nordic & Baltics, revenues decreased by 5.2 per cent during the quarter and organically by 4.5 per cent, where the difference is explained by exchange rate effects and the effect from the divested of the business in Lithuania during the third quarter 2023. System revenues decreased by 11.7 per cent and organically by 11.2 per cent, which primarily is a consequence of a strong comparison quarter. Service revenues increased by 9.9 per cent and organically by 11.1 per cent, with good growth in support- and cloud services.
Adjusted EBITA amounted to SEK 65.3 million (41.8) and the EBITA margin was 10.9 per cent (6.6) for the quarter. EBITA and EBITA margin increased as a result of an increasing gross margin driven by lower cost and efficiency improvements, partly offset by primarily increased sales costs.
| Jan-Mar | Jan-Mar | Change, | Rolling 12 | Jan-Dec | |
|---|---|---|---|---|---|
| Amounts in SEK million | 2024 | 2023 | % | months | 2023 |
| System revenues | 390.3 | 441.8 | -11.7 | 1,789.0 | 1,840.5 |
| Service revenues | 205.7 | 187.2 | 9.9 | 793.9 | 775.4 |
| of which support revenue | 96.1 | 82.1 | 17.1 | 369.2 | 355.2 |
| of which revenue from cloud services | 62.8 | 57.2 | 9.8 | 243.5 | 237.9 |
| of which consulting revenue | 46.8 | 47.8 | -2.1 | 181.3 | 182.3 |
| Other | 1.6 | 1.2 | 33.3 | 3.7 | 3.3 |
| Total Revenues | 597.6 | 630.2 | -5.2 | 2,586.7 | 2,619.3 |
| Adjusted EBITA | 65.3 | 41.8 | 56.3 | 230.4 | 206.9 |
| Margin, % | 10.9 | 6.6 | 8.9 | 7.9 |
Revenues and result
January - March
In UK, revenues increased by 17.1 per cent during the quarter and organically by 12.5 per cent, where the difference is explained by currency rate effects. System revenues increased by 28.4 per cent and organically by 23.6 per cent. Service revenues increased by 8.0 per cent and organically by 3.9 per cent, driven by growth in support and cloud services, while revenues from consulting declined.
Adjusted EBITA amounted to SEK 8.1 million (4.3) and the EBITA margin was 4.4 per cent (2.7) for the quarter. EBITA and EBITA margin increased as a result of increased revenues and an increasing gross margin, partly offset by higher sales and administration costs.
| Jan-Mar | Jan-Mar | Change, | Rolling 12 | Jan-Dec | |
|---|---|---|---|---|---|
| Amounts in SEK million | 2024 | 2023 | % | months | 2023 |
| System revenues | 88.1 | 68.6 | 28.4 | 301.8 | 282.3 |
| Service revenues | 96.0 | 88.9 | 8.0 | 386.5 | 379.4 |
| of which support revenue | 24.6 | 22.9 | 7.3 | 108.1 | 106.5 |
| of which revenue from cloud services | 62.3 | 55.5 | 12.3 | 246.1 | 239.2 |
| of which consulting revenue | 9.1 | 10.5 | -13.3 | 32.3 | 33.7 |
| Other | - | - | - | - | - |
| Total Revenues | 184.1 | 157.2 | 17.1 | 688.7 | 661.7 |
| Adjusted EBITA | 8.1 | 4.3 | 88.1 | 25.1 | 21.3 |
| Margin, % | 4.4 | 2.7 | 3.6 | 3.2 |
Revenues Adjusted EBITA
Revenues and result
January - March
In West, revenues increased by 5.1 per cent during the quarter and increased organically by 4.4 per cent, where the difference is due to currency rate effects. System revenues increased by 8.2 per cent and organically by 7.3 per cent, due to continued good demand. Service revenues increased by 3.8 per cent and organically by 3.0 per cent where the cloud services continue to show good growth as a result of strong demand and previously won contracts. The support services also increased linked to system deals won, while consulting revenues are decreasing mainly as a result of lack of personnel in certain areas of expertise.
Adjusted EBITA amounted to SEK 16.0 million (5.1) and the EBITA margin was 7.0 per cent (2.4) for the quarter. EBITA and EBITA margin increased as a result of increased revenues and an increasing gross margin, largely driven by growth from cloud services.
| Jan-Mar | Jan-Mar | Change, | Rolling 12 | Jan-Dec | |
|---|---|---|---|---|---|
| Amounts in SEK million | 2024 | 2023 | % | months | 2023 |
| System revenues | 70.4 | 65.1 | 8.2 | 205.8 | 200.5 |
| Service revenues | 158.7 | 153.0 | 3.8 | 628.2 | 622.4 |
| of which support revenue | 17.1 | 17.0 | 0.7 | 69.9 | 69.8 |
| of which revenue from cloud services | 107.3 | 100.3 | 7.0 | 427.1 | 420.1 |
| of which consulting revenue | 34.3 | 35.7 | -3.8 | 131.2 | 132.6 |
| Other | 0.2 | - | - | - | 0.2 |
| Total Revenues | 229.4 | 218.2 | 5.1 | 834.4 | 823.2 |
| Adjusted EBITA | 16.0 | 5.1 | 214.2 | 34.1 | 23.2 |
| Margin, % | 7.0 | 2.4 | 4.1 | 2.8 |
Revenues Adjusted EBITA
Revenues and result
January - March
In Central, revenues decreased by 14.8 per cent during the quarter and organically by 15.2 per cent, where the difference is due to currency rate effects. System revenues decreased by 27.8 per cent and organically by 27.9 per cent, mainly as a result of a strong comparative quarter and a continued challenging situation on the German market, where the outlook has, however, improved. Service revenues decreased by 0.9 per cent and organically by 1.6 per cent, where the growth within systems- and cloud services could not fully compensate for lower consulting revenues.
Adjusted EBITA amounted to SEK 2.1 million (6.3) and the EBITA margin was 1.0 per cent (2.7) for the quarter. In Central, EBITA was negatively affected by decreased revenues, which partly offset by increased gross margin and lower sales and administration costs.
| Jan-Mar | Jan-Mar | Change, | Rolling 12 | Jan-Dec | |
|---|---|---|---|---|---|
| Amounts in SEK million | 2024 | 2023 | % | months | 2023 |
| System revenues | 88.8 | 123.0 | -27.8 | 337.7 | 371.9 |
| Service revenues | 112.4 | 113.4 | -0.9 | 458.3 | 459.3 |
| of which support revenue | 15.9 | 14.9 | 6.7 | 64.4 | 63.4 |
| of which revenue from cloud services | 76.2 | 68.6 | 11.0 | 288.6 | 281.0 |
| of which consulting revenue | 20.3 | 29.9 | -32.1 | 105.3 | 114.9 |
| Other | 0.9 | 0.7 | 22.4 | 2.0 | 1.9 |
| Total Revenues | 202.0 | 237.0 | -14.8 | 798.1 | 833.2 |
| Adjusted EBITA | 2.1 | 6.3 | -66.7 | 29.8 | 34.0 |
| Margin, % | 1.0 | 2.7 | 3.7 | 4.1 |
Revenues Adjusted EBITA
Operating segments
Nordics & Baltics: Denmark, Estonia, Finland, Latvia, Lithuania (divested August 28, 2023), Norway, Sweden and USA | UK: United Kingdom | West: Belgium and the Netherlands | Central: Czech Republic and Germany |
| Jan-Mar 2024 | Nordics & | ||||||
|---|---|---|---|---|---|---|---|
| Amounts in SEK million | Baltics | UK | West | Central | Groupwide | Eliminations | Group |
| Total revenue | 597.6 | 184.1 | 229.4 | 202.0 | 46.9 | -68.8 | 1,191.3 |
| EBITDA before items affecting | |||||||
| comparability | 74.8 | 20.0 | 26.0 | 9.8 | 3.5 | - | 134.2 |
| Depreciations and write-downs on tangible | |||||||
| fixed assets | -9.5 | -12.0 | -10.0 | -7.7 | -0.5 | - | -39.7 |
| EBITA before items affecting comparability | 65.3 | 8.1 | 16.0 | 2.1 | 3.0 | - | 94.5 |
| Items affecting comparability | - | - | - | - | - | - | - |
| EBITA | 65.3 | 8.1 | 16.0 | 2.1 | 3.0 | - | 94.5 |
| Amortizations and write-downs on | |||||||
| intangible fixed assets | -1.4 | -1.3 | -2.0 | -7.3 | -1.6 | - | -13.7 |
| EBIT | 63.9 | 6.4 | 14.0 | -5.2 | 1.7 | - | 80.8 |
| Net Financial Items | -0.8 | -0.4 | -2.7 | -6.3 | 5.5 | - | -4.6 |
| Earnings before tax | 63.1 | 6.0 | 11.3 | -11.4 | 7.2 | - | 76.2 |
| Tax | -15.5 | ||||||
| Comprehensive income for the period | 60.7 |
| Jan-Mar 2023 | Nordics & | ||||||
|---|---|---|---|---|---|---|---|
| Amounts in SEK million | Baltics | UK | West | Central | Groupwide | Eliminations | Koncernen |
| Total revenue | 630.2 | 157.2 | 218.2 | 237.0 | 42.8 | -65.2 | 1,220.3 |
| EBITDA before items affecting | |||||||
| comparability | 51.8 | 17.9 | 16.7 | 13.8 | -0.5 | - | 99.7 |
| Depreciations and write-downs on tangible | |||||||
| fixed assets | -10.0 | -13.6 | -11.6 | -7.5 | -0.2 | - | -42.9 |
| EBITA before items affecting comparability | 41.8 | 4.3 | 5.1 | 6.3 | -0.7 | - | 56.8 |
| Items affecting comparability | - | - | - | - | - | - | - |
| EBITA | 41.8 | 4.3 | 5.1 | 6.3 | -0.7 | - | 56.8 |
| Amortizations and write-downs on | |||||||
| intangible fixed assets | -1.4 | -1.3 | -2.0 | -7.4 | -1.6 | - | -13.8 |
| EBIT | 40.4 | 3.0 | 3.1 | -1.0 | -2.4 | - | 43.1 |
| Net Financial Items | -1.3 | -0.7 | -2.1 | -4.2 | 2.7 | - | -5.7 |
| Earnings before tax | 39.0 | 2.2 | 0.9 | -5.2 | 0.4 | - | 37.3 |
| Tax | -9.4 | ||||||
| Comprehensive income for the period | 27.9 |
Market review
The IT market has been relatively resilient during a period of geopolitical and macroeconomic turmoil and we note an increased willingness to invest as inflation rates stabilise. Proacts robust position in the areas of security and hybrid cloud infrastructure has enabled the company to remain at the forefront of the key trends:
- Innovation through digitalisation and AI
- Enabling flexible and sustainable IT through hybrid clouds
- Cybersecurity due to the increasing cyberthreats
Digitalisation and AI
One of the most significant trends impacting the industry is the acceleration of digital transformation and innovation. Organisations are uncovering new opportunities for growth and development through IT-based innovation, often facilitated by IT-driven artificial intelligence (AI), automation, and data analytics. Proact has strong capabilities in providing customers with state-of-the-art solutions that propel their digital transformation initiatives.
Hybrid cloud adoption
Another pivotal trend is the strategic adoption of hybrid cloud environments. By seamlessly integrating on-prem, private and public cloud infrastructures, businesses can reap the benefits of flexibility, scalability, and cost-effectiveness. As experts within hybrid cloud
solutions Proact provide its customers with the distinct advantage of a customised approach to their cloud strategy.
Cybersecurity
Cybersecurity remains a top priority for businesses across all sectors. With the intensification of cyber threats, investment in advanced security solutions is crucial to safeguard sensitive data against evolving risks. Proact has a strong track record in providing its customers with robust security solutions that protect customer data and mitigate risk, all enabled from Proacts security operations centres and overall security first mind set.
In conclusion, Proact is well-positioned to continue to thrive within the dynamic IT market. Our expertise in security and hybrid cloud, combined with our commitment to remaining at the forefront of key market trends, will enable us to continue to deliver value to our customers and drive growth for our business.
Other information
Events after the balance sheet date
No events of significance to the Group have occurred since the end of the report period.
Transactions with related parties
No transactions between Proact and related parties, which have significantly affected the Group's position and profits, have taken place during the quarter.
Risks and uncertainty factors within the enterprise
Proact is not significantly affected by ongoing conflicts in the world. However, the development of the global economy, in the form of inflation, exchange rate fluctuations, lower economic growth and disturbances in supply chains, can entail increased risks for Proact. Delivery disruptions linked to the global semiconductor shortage at present has a limited effect on Proact, as the situation normalised during the second half of 2022, but new disturbances could negatively affect the ability for Proact to deliver customer orders received. Otherwise, no risks or uncertainties have changed in comparison to those described in the most recently published annual report. For a more detailed description of significant risks and uncertainty factors, please see Proact's annual report for 2023.
Alternative Performance Measures
.
The company presents financial key figures in the interim report that are not defined according to IFRS. The company believes that these key figures provide valuable supplementary information to investors and the company's management. For definitions of the financial ratios, see the Annual Report 2023.
Proposed appropriations of profits
The Board proposes a dividend of SEK 2.00 (1.85) per share to the Annual General Meeting for the 2023 business year, corresponding to SEK 54 million (51). This corresponds to 31 per cent (27) of the year's net profit, in line with Proact's dividend policy to distribute 25 – 35 per cent of profits after tax.
Annual General Meeting
The Annual General Meeting will be held at 4 pm on May 7, 2024, in Solna. The annual report and other documents for the Annual General Meeting are available on Proact's webpage, www.proact.eu.
Financial calendar
| 7 May 2024 | Annual General Meeting 2024 |
|---|---|
| 12 July 2024 | Interim Report Q2 2024 |
| 25 Oct 2024 | Interim Report Q3 2024 |
| 11 Feb 2025 | Interim Report Q4 2024 |
Solna 7 May, 2024 Proact IT Group AB (publ)
Jonas Hasselberg CEO
This interim report has not been audited.
Note
The information in this interim report is such information as Proact IT Group (publ) is obliged to publish pursuant to the EU Market Abuse Regulation, the Securities Market Act, and/or the Act on Trading in Financial Instruments. This information was submitted for publication at 8:00 (CET) on 7 May, 2024.
Interim CFO
Åsa Regen Jansson,
CONTACT Proact IT Group AB
Jonas Hasselberg, CEO +46 722 13 55 56 [email protected] Frösundaviks Allé 1, Solna +46 725 07 40 85 [email protected] Tel. +46 8 410 666 00 www.proact.eu
Org.nr: 556494-3446 | Reg Office: Solna
Financial reports
Consolidated statement of comprehensive income
| Amounts in SEK million | Jan-Mar 2024 |
Jan-Mar 2023 |
Rolling 12 months |
Jan-Dec 2023 |
|---|---|---|---|---|
| System revenue | 638.2 | 699.3 | 2,636.9 | 2,698.0 |
| Service revenue | 550.5 | 519.4 | 2,175.8 | 2,144.6 |
| of which support revenue | 153.3 | 137.3 | 611.2 | 595.2 |
| of which revenue from cloud services | 288.2 | 261.8 | 1,123.8 | 1,097.4 |
| of which consulting revenue | 108.9 | 120.3 | 440.8 | 452.1 |
| Other operating revenue | 2.6 | 1.6 | 5.6 | 4.7 |
| Total revenue | 1,191.3 | 1,220.3 | 4,818.3 | 4,847.3 |
| Cost of goods and services sold | -883.9 | -955.7 | -3,686.3 | -3,758.1 |
| Gross profit | 307.4 | 264.6 | 1,132.0 | 1,089.2 |
| Sales and marketing expenses | -132.2 | -129.7 | -507.0 | -504.5 |
| Administration expenses | -94.3 | -91.8 | -340.9 | -338.4 |
| Items affecting comparability | - | - | -16.7 | -16.7 |
| Operating profit/loss (EBIT) | 80.8 | 43.1 | 267.5 | 229.8 |
| Net financial items | -4.6 | -5.7 | -10.6 | -11.5 |
| Earnings before tax | 76.2 | 37.3 | 256.9 | 218.3 |
| Income tax | -15.5 | -9.4 | -51.2 | -45.2 |
| Comprehensive income for the period | 60.7 | 27.9 | 205.7 | 173.1 |
| Other comprehensive income | ||||
| Items which may be reveresed later in the income statement | ||||
| Change of hedging reserve (net investment in foreign operations) |
14.3 | 4.8 | 9.9 | 0.3 |
| Tax effect of change of reserve (net investment in foreign operations) |
-2.9 | -1.0 | -2.0 | -0.1 |
| Translation differences from remaining operations | 37.1 | -15.4 | 20.1 | 54.5 |
| Total items which may be reversed later in the income statement | 48.4 | -15.6 | 28.0 | 54.7 |
| Total comprehensive income for the period, net after tax | 109.1 | 16.3 | 233.7 | 227.8 |
| Comprehensive income attributable to: | ||||
| Shareholders of the Parent company | 60.7 | 27.9 | 205.1 | 172.6 |
| Holdings without a controlling influence | - | - | -0.1 | 0.5 |
| Total comprehensive income for the period attributable to: | ||||
| Shareholders of the Parent company | 109.1 | 16.2 | 233.7 | 228.1 |
| Holdings without a controlling influence | 0.0 | 0.1 | 0.0 | -0.3 |
| Jan-Mar | Jan-Mar | Rolling 12 | Jan-Dec | |
| Data per share¹ | 2024 | 2023 | months | 2023 |
| Earnings per share for the period attributable to the shareholders of the parent company, | ||||
| SEK | 2.22 | 1.02 | 6.00 | 6.29 |
| Equity per share attributable to the shareholders of the parent company, SEK |
39.69 | 34.62 | 37.37 | 36.97 |
| Cash flow from operations per share, SEK | 3.84 | 1.08 | 22.25 | 19.50 |
| Number of outstanding shares at end of period | 26,992,206 | 27,454,851 | 26,992,206 | 27,281,448 |
| Weigthed average number of outstanding shares | 27,391,294 | 27,454,851 | 27,393,829 | 27,466,985 |
1) Proact has a long-term performance-based share program that could give rise to dilution of maximum 1.84 per cent.
Consolidated Balance Sheet in brief
| Mar 31 | Mar 31 | 31 Dec | |
|---|---|---|---|
| Amounts in SEK million | 2024 | 2023 | 2023 |
| ASSETS | |||
| Fixed assets | |||
| Goodwill | 1,017.8 | 994.6 | 983.6 |
| Other intangible fixed assets | 170.1 | 219.8 | 177.3 |
| Tangible fixed assets | 341.0 | 378.3 | 319.3 |
| Other long-term receivables | 565.8 | 535.0 | 544.6 |
| Deferred tax receivables | 21.7 | 24.0 | 22.5 |
| Current assets | |||
| Inventories | 22.8 | 26.8 | 15.4 |
| Trade and other receivables | 1,342.5 | 1,297.0 | 1,433.9 |
| Cash and cash equivalents | 606.1 | 501.1 | 547.9 |
| Total assets | 4,087.9 | 3,976.7 | 4,044.4 |
| EQUITY AND LIABILITIES | |||
| Equity attributable to the shareholers of the parent company | 1,071.4 | 950.5 | 1,008.6 |
| Equity attributable to holdings without a controlling influence | - | 0.5 | - |
| Total equity | 1,071.4 | 951.1 | 1,008.6 |
| Long-term liabilities | |||
| Long-term liabilities, interest-bearing | 405.2 | 645.0 | 386.4 |
| Long-term liabilities, non-interest-bearing | 776.6 | 731.4 | 756.9 |
| Deferred tax liabilities | 56.8 | 70.8 | 58.2 |
| Short-term liabilities | |||
| Short-term liabilities, interest-bearing | 114.7 | 123.4 | 109.8 |
| Short-term liabilities, non-interest-bearing | 1,663.1 | 1,455.1 | 1,724.5 |
| Total equity and liabilities | 4,087.9 | 3,976.7 | 4,044.4 |
Consolidated statement of changes in Equity
| Mar 31 | Mar 31 | 31 Dec | |
|---|---|---|---|
| Amounts in SEK million | 2024 | 2023 | 2023 |
| At beginning of period | 1,008.6 | 923.4 | 923.4 |
| Total comprehensive income for the period | 109.1 | 16.3 | 227.8 |
| Dividend | - | - | -50.8 |
| Acquisition from holdings wihout a controlling influence | - | 8.1 | - |
| Share savings and share option programs | 0.4 | 3.2 | -28.0 |
| Buy-back of own shares | -30.6 | - | -19.6 |
| Utilized shares from holding of own shares | - | - | 2.7 |
| At end of period | 1,071.4 | 951.1 | 1,008.6 |
Holdings without a controlling influence: Proact Lietuva UAB 26.14 per cent, divested August 28, 2023.
Consolidated Cash Flow Statement in brief
| Jan-Mar | Jan-Mar | Rolling 12 | Jan-Dec | |
|---|---|---|---|---|
| Amounts in SEK million | 2024 | 2023 | months | 2023 |
| CASH FLOW FROM OPERATIONS FOR THE YEAR | ||||
| Operating profit for the year | 80.8 | 43.1 | 267.5 | 229.8 |
| Adjustment for items not affecting cash flow: | ||||
| Reversal of depreciation and impairment of fixed assets | 53.4 | 56.6 | 225.0 | 228.2 |
| Financial leasing sales | 6.2 | 10.1 | 29.0 | 33.0 |
| Reversal of non-cash items | -6.6 | -2.2 | -13.4 | -9.0 |
| Change in provisions | 2.5 | 1.0 | 1.3 | -0.2 |
| Income tax paid | -17.5 | -18.3 | -53.9 | -54.7 |
| Cash flow from operating activities before changes in working capital | 118.8 | 90.3 | 455.6 | 427.0 |
| Cash flow from changes in working capital | ||||
| Inventories | -6.9 | 37.9 | 4.7 | 49.5 |
| Operating receivables | 94.7 | 220.7 | -61.5 | 64.6 |
| Operating liabilities | -102.9 | -318.8 | 206.9 | -9.1 |
| Cash flow from operating activities | 103.7 | 30.1 | 605.7 | 532.0 |
| INVESTMENT ACTIVITIES | ||||
| Acquisition of businesses | - | -8.3 | 0.3 | -8.0 |
| Capital expenditure on tangible fixed assets | -11.6 | -14.9 | -41.0 | -44.3 |
| Disposals of tangible fixed assets | - | 0.1 | 1.0 | 1.1 |
| Investments in intangible fixed assets | -0.3 | -0.2 | -1.1 | -1.0 |
| Increase / decrease, non current receivables | 1.3 | -0.2 | 1.8 | 0.3 |
| Cash flow from investing activities | -10.6 | -23.5 | -36.5 | -51.9 |
| FINANCING ACTIVITIES | ||||
| Dividend | - | - | -50.8 | -50.8 |
| Borrowings and repaid loans | - | 8.0 | -232.2 | -224.2 |
| Interest earned | 2.9 | 3.3 | 10.0 | 10.4 |
| Interest paid | -5.0 | -8.3 | -21.8 | -25.1 |
| Amortisation of leasing debt | -19.2 | -16.3 | -120.9 | -118.0 |
| Other cash flow from financing activities | -30.7 | 3.6 | -57.0 | -22.4 |
| Cash flow from financing activities | -52.1 | -9.4 | -472.7 | -430.1 |
| Total cash flow for the period | 41.0 | -2.8 | 96.4 | 50.0 |
| Cash and cash equivalents at beginning of the period | 547.9 | 505.7 | 501.1 | 505.7 |
| Currency translation difference in cash and cash equivalents | 17.2 | -1.7 | 8.6 | -7.8 |
| Cash and cash equivalents at end of the period | 606.1 | 501.1 | 606.1 | 547.9 |
Key ratios
| Jan-Mar | Jan-Mar | Rolling 12 | Jan-Dec | |
|---|---|---|---|---|
| Amounts in SEK million | 2024 | 2023 | months | 2023 |
| Total revenue | 1,191.3 | 1,220.3 | 4,818.3 | 4,847.3 |
| of which attributable to acquisition and divestments | -2.2 | 26.4 | -103.0 | 22.1 |
| of which currency effects | 7.3 | 39.3 | 147.3 | 179.3 |
| Total revenue, organic | 1,186.1 | 1,154.6 | 4,774.0 | 4,646.0 |
| Organic growth total revenue, % | -2.8 | 8.5 | -2.8 | -2.3 |
| System revenue | 638.2 | 699.3 | 2,636.9 | 2,698.0 |
| of which attributable to acquisition and divestments | -0.3 | 4.5 | -27.7 | -4.5 |
| of which currency effects | 2.3 | 19.1 | 53.0 | 69.8 |
| Total system revenue, organic | 636.2 | 675.7 | 2,611.6 | 2,632.8 |
| Organic growth system revenue, % | -9.0 | 10.1 | -11.4 | -8.0 |
| Services revenue | 550.5 | 519.4 | 2,175.8 | 2,144.6 |
| of which attributable to acquisition and divestments | -1.9 | 21.9 | -75.4 | 26.6 |
| of which currency effects | 5.0 | 20.1 | 94.2 | 109.3 |
| Total service revenue, organic | 547.3 | 477.3 | 2,157.0 | 2,008.7 |
| Organic growth service revenue, % | 5.4 | 6.0 | 101.7 | 6.3 |
| EBITDA | 134.2 | 99.7 | 492.4 | 457.9 |
| EBITDA margin, % | 11.3 | 8.2 | 10.2 | 9.4 |
| Depreciation and write-down on tangible assets | -39.7 | -42.9 | -169.3 | -172.4 |
| EBITA | 94.5 | 56.8 | 323.1 | 285.5 |
| EBITA margin, % | 7.9 | 4.7 | 6.7 | 5.9 |
| Amortization and write-down on intangible assets | -13.7 | -13.8 | -55.6 | -55.7 |
| EBIT | 80.8 | 43.1 | 267.5 | 229.8 |
| EBIT marginal, % | 6.8 | 3.5 | 5.6 | 4.7 |
| Earnings before tax | 76.2 | 37.3 | 256.9 | 218.3 |
| Net margin, % | 6.4 | 3.1 | 5.3 | 4.5 |
| Earnings after tax | 60.7 | 27.9 | 205.7 | 173.1 |
| Profit margin, % | 5.1 | 2.3 | 4.3 | 3.6 |
| Equity | 1,071.4 | 951.1 | 1,008.6 | 1,008.6 |
| Total assets | 4,087.9 | 3,976.7 | 4,044.4 | 4,044.4 |
| Equity ratio, % | 26.2 | 23.9 | 24.9 | 24.9 |
| Capital turnover rate, times¹ | - | - | 1.2 | 1.2 |
| Return on equity, %¹ | - | - | 20.4 | 18.2 |
| Financial costs included in net financial items | 8.6 | 9.4 | 39.2 | 40.0 |
| Capital employed | 1,591.3 | 1,719.4 | 1,591.3 | 1,504.8 |
| Return on capital employed, %¹ | - | - | 17.9 | 16.3 |
| Investments in fixed assets | 57.1 | 51.6 | 153.9 | 148.3 |
| Earnings before tax per employee, SEK thousands | 68.2 | 31.5 | 235.3 | 188.2 |
| Average number of employees | 1,116.6 | 1,184.9 | 1,091.7 | 1,160.0 |
1) Calculated only for full year and rolling 12 months.
For a five-year summary, see Note 2. For definitions of key ratios, see Annual Report 2023. The key ratios that Proact reports and monitors the business by are common key ratios used by the industry and by companies listed on Nasdaq Stockholm.
Parent Company's Income Statement, in brief
| Jan-Mar | Jan-Mar | Jan-Dec | |
|---|---|---|---|
| Amounts in SEK million | 2024 | 2023 | 2023 |
| Net sales | 37.9 | 38.0 | 152.0 |
| Cost of goods and services sold | - | - | - |
| Gross profit | 37.9 | 38.0 | 152.0 |
| Administration expenses | -37.1 | -40.8 | -151.9 |
| Operating profit | 0.8 | -2.7 | 0.1 |
| Net financial items | 21.6 | 14.0 | 142.2 |
| Earnings after financial items | 22.4 | 11.3 | 142.3 |
| Provisions | - | - | - |
| Earnings before tax | 22.4 | 11.3 | 142.3 |
| Income tax | -4.6 | -1.1 | -0.7 |
| Comprehensive income for the period | 17.8 | 10.2 | 141.5 |
Parent Company's Balance Sheet, in brief
| Mar 31 | Mar 31 | 31 Dec | |
|---|---|---|---|
| Amounts in SEK million | 2024 | 2023 | 2023 |
| ASSETS | |||
| Fixed assets | 1,157.2 | 1,062.7 | 1,143.8 |
| Current assets | 123.2 | 105.2 | 97.7 |
| Total assets | 1,280.4 | 1,167.9 | 1,241.6 |
| EQUITY AND LIABILITIES | |||
| Restricted Equity | 45.7 | 81.9 | 47.1 |
| Non-restricted Equity | 439.9 | 216.0 | 451.0 |
| Equity | 485.7 | 297.9 | 498.1 |
| Long-term liabilities | 244.0 | 465.3 | 234.7 |
| Short-term liabilities | 550.7 | 404.7 | 508.9 |
| Total equity and liabilities | 1,280.4 | 1,167.9 | 1,241.6 |
Explanatory information
Note 1. Accounting principles
The consolidated accounts for the interim report have been compiled in accordance with IAS 34 and the Swedish Annual Accounts Act. The Parent Company's accounts have been compiled in accordance with the Annual Accounts Act and the Swedish Financial Reporting Board's recommendation RFR 2 (Accounting for Legal Entities). The Group applies the same accounting principles as those described in the annual report for 2023.
Financial instruments
Proact's financial instruments consist of derivatives, accounts receivable, cash and cash equivalents, accounts payable, accrued trade creditors and interest-bearing liabilities. Derivative instruments are recognized in the balance sheet as per the contract date and are valued at fair value, both initially and in subsequent revaluations. All derivatives are reported continuously at fair value with the value changes reported in the statement of comprehensive income within cost of goods sold for those derivatives that are linked to accounts
payable and financial items for the derivatives that are linked to financial leasing contracts. Derivatives are valued at fair value within level 2, i.e. fair value determined on the basis of valuation techniques with observable market data, either directly (as price) or indirectly (hence to price). All other financial assets have been classified as loans and receivables, which includes accounts receivable and cash and cash equivalents. All other financial liabilities have been classified as other financial liabilities valued at amortised cost, which includes accounts payable, accrued supplier costs and liabilities to credit institutions. Liabilities to credit institutions run at variable interest rates and reported interest rates are on a par with current interest on liabilities to credit institutions and other financial assets and liabilities with short maturities. Based on this, the book values of all financial assets and liabilities are judged to be a reasonable estimate of fair value.
Note 2. Five-year summary
| Apr-Mar | Jan-Dec | Jan-Dec | Jan-Dec | Jan-Dec | |
|---|---|---|---|---|---|
| Amounts in SEK million | 23/24 | 2023 | 2022 | 2021 | 2020 |
| Total revenue | 4,818.3 | 4,847.3 | 4,756.8 | 3,525.0 | 3,633.1 |
| EBITDA | 492.4 | 457.9 | 473.2 | 348.6 | 369.6 |
| EBITDA margin, % | 10.2 | 9.4 | 9.9 | 9.9 | 10.2 |
| EBITA | 323.1 | 285.5 | 313.1 | 197.5 | 216.7 |
| EBITA margin, % | 6.7 | 5.9 | 6.6 | 5.6 | 6.0 |
| EBIT | 267.5 | 229.8 | 260.6 | 166.2 | 182.1 |
| EBIT margin, % | 5.6 | 4.7 | 5.5 | 4.7 | 5.0 |
| Earnings before tax | 256.9 | 218.3 | 244.2 | 151.9 | 167.7 |
| Net margin, % | 5.3 | 4.5 | 5.1 | 4.3 | 4.6 |
| Earnings after tax | 205.7 | 173.1 | 191.5 | 117.2 | 132.3 |
| Profit margin, % | 4.3 | 3.6 | 4.0 | 3.3 | 3.6 |
| Equity ratio, % | 26.2 | 24.9 | 21.8 | 21.0 | 20.7 |
| Capital turnover rate, times | 1.2 | 1.2 | 1.2 | 1.1 | 1.3 |
| Return on equity, % | 20.4 | 18.2 | 23.4 | 17.8 | 23.4 |
| Return on capital employed, % | 17.9 | 16.3 | 17.2 | 13.4 | 17.1 |
| Dividend to shareholders of the Parent company¹ | 50.8 | 50.8 | 41.2 | 41.2 | 22.9 |
| Investments in fixed assets | 153.9 | 148.3 | 397.5 | 550.7 | 269.1 |
| Financial costs included in net financial items | 39.2 | 40.0 | 26.7 | 19.8 | 20.7 |
| Earnings before tax per employee, SEK thousands | 235.3 | 188.2 | 210.6 | 147.9 | 172.3 |
| Average number of employees | 1,091.7 | 1,160.0 | 1,159.5 | 1,027.3 | 973.4 |
| Earnings per share for the period, SEK² | 7.49 | 6.29 | 6.97 | 4.27 | 4.80 |
1) Relates to the year in which the dividend was executed. For the fiscal year 2022 a
dividend of SEK 1.85, total SEK 50,8 million, was made. 2)Calculated on the basis of the weighted average number of outstanding shares. The comparative figures have been adjusted for the 1:3 share split that was implemented in May 2021. Proact has long-term performance-based share programs that could give rise to dilution of maximum 1.84 per cent.