Interim / Quarterly Report • Aug 29, 2014
Interim / Quarterly Report
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SimCorp A/S Weidekampsgade 16 2300 Copenhagen S Denmark Telephone: +45 35 44 88 00 Telefax: +45 35 44 88 11 E-mail: [email protected] www.simcorp.com
Company reg. no: 15 50 52 81
Company Announcement no. 34/2014 29 August 2014
SimCorp signed five new contracts in the second quarter of the year – four related to SimCorp Dimension and one related to the recently acquired SimCorp Coric.
Revenue for H1 2014 increased 7% measured in local currencies and 5% in EUR and amounted to EUR 108.4m, EUR 5.3m higher than for the same period last year.
EBIT for the six-month period was EUR 16.8m, compared with EUR 18.3m the year-earlier period. Currency exchange rate fluctuations have impacted EBIT positively by EUR 0.1m in the six-month period.
Net profit for H1 2014 was EUR 12.7m compared with EUR 12.9m in H1 2013.
SimCorp now expects revenue growth measured in local currencies to be 8-10% (previously 10%) including the impact of the Equipos acquisition. The expectation for EBIT margin is increased by around half a percentage point in both local and reported currencies and is now around 24.5% (previously 24%) and around 24.3% (previously 23.8%), respectively.
At 30 June 2014, contracts equaling EUR 193m of the projected 2014 revenue had been secured, EUR 10m more than at the same point in time last year.
Klaus Holse, SimCorp CEO comments: "The sale of new licenses picked up in Europe during Q2 after a slow start to the year. The challenges in the North American market are expected to continue into 2015, but with our new head of North America on board from September we have taken an important step to address the situation in this key market".
SimCorp A/S – Interim report January to June 2014
SimCorp's Board of Directors today considered and approved the Group's interim report for the six months ended 30 June 2014. Highlights of the report are:
SimCorp A/S – Interim report January to June 2014
SimCorp's Executive Management Board will present this interim report at an investor meeting Monday 1 September 2014 at 9:00 a.m. at the company's headquarters, Weidekampsgade 16, 2300 Copenhagen S. The meeting will be open to the public, and a live webcast of the presentation can be followed via this link, where it will be possible to ask questions online: http://www.media-server.com/m/p/7rqrqb2d.
The presentation will be available afterwards via SimCorp's website www.simcorp.com.
Klaus Holse, Chief Executive Officer, SimCorp A/S (+45 3544 8802, +45 2326 0000) or Thomas Johansen, Chief Financial Officer, SimCorp A/S (+45 3544 6858, +45 2811 3828)
Company Announcement no. 34/2014
SimCorp A/S – Interim report January to June 2014
| Financial highlights and key ratios |
for | the | SimCorp | Group | |
|---|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | 2013 | |
| Q2 | Q2 | H1 | H1 | FY | |
| DKK/EUR rate of exchange end of period | 7.4557 | 7.4588 | 7.4557 | 7.4588 | 7.4603 |
| Income statement, EUR'000 | |||||
| Revenue | 58,751 | 54,104 108,365 | 103,073 | 225,129 | |
| Earnings bef. interest, tax, depreciation and amortization (EBITDA) | 12,708 | 12,055 | 18,204 | 19,823 | 57,085 |
| Profit from operations (EBIT) | 11,889 | 11,321 | 16,775 | 18,285 | 54,236 |
| Financial items | -29 | -78 | 37 | -74 | -230 |
| Profit before tax | 11,860 | 11,243 | 16,812 | 18,211 | 54,006 |
| Profit for the period | 9,120 | 7,892 | 12,744 | 12,912 | 39,336 |
| Balance sheet, EUR'000 | |||||
| Share capital | 5,576 | 5,844 | 5,576 | 5,844 | 5,844 |
| Equity | 51,376 | 65,722 | 51,376 | 65,722 | 71,556 |
| Property, plant and equipment | 5,411 | 4,429 | 5,411 | 4,429 | 4,839 |
| Cash and cash equivalents | 19,518 | 46,277 | 19,518 | 46,277 | 47,106 |
| Total assets | 100,736 | 109,245 100,736 | 109,245 | 117,469 | |
| Cash flows, EUR'000 | |||||
| Cash flow from operating activities | -2,435 | 6,042 | 15,782 | 22,439 | 47,447 |
| Cash flow from investing activities | -757 | -489 | -8,371 | -677 | -2,843 |
| Cash flow from financing activities | -29,087 | -17,550 | -36,908 | -34,039 | -55,850 |
| Net change in cash and cash equivalents | -32,279 | -11,997 | -29,497 | -12,277 | -11,246 |
| Average number of employees | 1,195 | 1,081 | 1,179 | 1,083 | 1,093 |
| Key ratios | |||||
| EBIT margin (%) | 20.2 | 20.9 | 15.5 | 17.7 | 24.1 |
| ROIC (return on invested capital) (%) | 147.7 | 201.0 | 104.2 | 133.4 | 158.8 |
| Debtor turnover rate | 8.8 | 10.6 | 8.1 | 10.1 | 8.6 |
| Equity ratio (%) | 51.0 | 60.2 | 51.0 | 60.2 | 60.9 |
| Return on equity (%) | 72.9 | 46.1 | 41.1 | 32.0 | 46.8 |
| Per share data | |||||
| Basic earnings per share - EPS (EUR) | 0.22 | 0.19 | 0.31 | 0.30 | 0.93 |
| Diluted earnings per share - EPS-D (EUR) | 0.22 | 0.18 | 0.31 | 0.30 | 0.92 |
| Cash flow per share - CFPS (EUR) | -0.06 | 0.14 | 0.38 | 0.53 | 1.13 |
| Average number of shares (m) | 41.0 | 42.5 | 41.1 | 42.5 | 42.1 |
| Average number of diluted shares (m) | 41.7 | 43.1 | 41.7 | 43.0 | 43.6 |
The key ratios have been calculated in accordance with IAS 33 and "Recommendations and Ratios 2010" issued by the Danish Association of Financial Analysts. Please refer to the definition of ratios on page 59 of the Annual Report 2013. The interim report is unaudited and has not been reviewed by external auditors.
SimCorp A/S – Interim report January to June 2014
Overall, SimCorp's business performed in line with expectations in the first six months of 2014, however, the lack of signing of new license deals in North America is not satisfactory. As a consequence of the lack of performance in North America the senior management team has been changed and a new Managing Director for the North American unit will start on 3 September 2014.
With no new license contracts signed in North America in neither Q1 or Q2 SimCorp takes comfort in the sales activities in Europe which developed satisfactorily in Q2, resulting in four new SimCorp Dimension license contracts signed; the new contracts were signed with clients in France, Netherlands, Luxembourg and Switzerland, making sales to new clients in H1 2014 14% above H1 2013. Sales to existing clients in H1 decreased by 15% compared with the same period last year.
One new customer for SimCorp Coric was signed in the UK in Q2. SimCorp Coric contracts are based on a subscription model, typically with a length of 3 to 5 years.
H1 order inflow was EUR 9.1m compared with EUR 15.2m in the same period last year, a decrease of 40%. The orders signed in 2014 had a lower value than orders signed in 2013. Q2 order inflow was EUR 7.1m, compared with EUR 5.8m in Q2 2013.
The order book decreased by EUR 4.3m in the first six months, representing the difference between actual order inflow and income recognized from software licenses adjusted for the effect of exchange rate changes. The order book stood at EUR 9.6m at 30 June 2014, EUR 5.1m lower than at the yearearlier date.
SimCorp Dimension licenses, quarterly order inflow and order book (aggregate new licenses and add-on licenses)*, 2013-2014
*) Order inflow and order book include licenses to new customers as well as add-on licenses to existing customers. The order book is the total license value of signed license agreements that has not yet been recognized in income.
SimCorp A/S – Interim report January to June 2014
Group H1 revenue was up 5.1% y/y to EUR 108.4m, including EUR 2.0m related to SimCorp Coric. Measured in local currencies revenue was 7.4% higher than in the same period of 2013. Exchange rate changes have had a net negative impact on revenue of 2.3% points.
Q2 revenue was 8.6% higher than Q2 2013 and amounted to EUR 58.8m including EUR 1.5m from SimCorp Coric. Measured in local currencies the increase amounted to 10.7% compared with the same period of 2013. Exchange rate changes have had a net negative impact on revenue of 2.1% points for the quarter.
In H1 2014, income recognized from license sales amounted to EUR 14.2m, a decrease of 1% y/y. Income recognized from license sales in Q2 2014 was EUR 10.4m, up by 22% compared with the year-earlier period. While the signing of four new SimCorp Dimension contracts in Q2 has had a positive impact on the license revenue for the quarter, SimCorp also met a major acceptance milestone on a large implementation project allowing SimCorp to income recognize a large part of the original software license contract from the order book in the quarter.
Fees from professional services amounted to EUR 38.4m in H1 2014, which was 8% higher than in the same period of 2013 including the impact of SimCorp Coric which accounted for 2.5% points of the increase. Professional service fees in Q2 2014 amounted to EUR 20.2m, an increase of 6% compared with Q2 last year of which 0.5% point can be related to SimCorp Coric. Revenue from professional services is negatively impacted from a number of larger SimCorp Dimension fixed fee implementation projects. This has impacted the growth of professional services revenue over 2013 negatively by 5% point. These projects are gradually being concluded during Q3 and Q4 and some have been concluded in Q2 2014.
Regular maintenance income, which increases as the completion and implementation of new customer installations take place, was EUR 54.2m in H1 2014, up 5% on the same period last year. Maintenance income in Q2 2014 was up 6% on the same period last year to EUR 27.5m. Other income including course fees amounted to EUR 1.6m in H1 and to EUR 0.7m in Q2.
SimCorp A/S – Interim report January to June 2014
| EURm | Revenue H1 2014 |
Share of revenue H1 2014 |
Revenue H1 2013 |
Share of revenue H1 2013 |
Growth relative to H1 2013 |
|---|---|---|---|---|---|
| Licenses - new sales | 7.9 | 7 % | 7.0 | 7% | 14 % |
| Licenses - additional sales | 6.3 | 6 % | 7.4 | 7% | -15 % |
| Professional services | 38.4 | 35 % | 35.7 | 35% | 8 % |
| Maintenance | 54.2 | 50 % | 51.5 | 50% | 5 % |
| Training activities etc. | 1.6 | 2 % | 1.5 | 1% | 8 % |
| Total | 108.4 | 100.0 % | 103.1 | 100% | 5 % |
The distribution of H1 2014 revenue is shown in the table below:
The distribution of Q2 revenue is shown in the table below:
| Revenue | Share of revenue | Revenue | Share of revenue | Growth relative | |
|---|---|---|---|---|---|
| EURm | Q2 2014 | Q2 2014 | Q2 2013 | Q2 2013 | to Q2 2013 |
| Licenses - new sales | 6.0 | 10 % | 4.0 | 8% | 50 % |
| Licenses - additional sales | 4.4 | 8 % | 4.5 | 8% | -2 % |
| Professional services | 20.2 | 34 % | 19.0 | 35% | 6 % |
| Maintenance | 27.5 | 47 % | 25.9 | 48% | 6 % |
| Training activities etc. | 0.7 | 1 % | 0.7 | 1% | 0 % |
| Total | 58.8 | 100 % | 54.1 | 100% | 9 % |
SimCorp's total operating costs (including depreciation and amortization) in the first six months of 2014 were EUR 91.6m, an increase of 8.0% relative to the same period last year, including operating costs of EUR 3.4m related to SimCorp Coric of which EUR 0.4m were of non-recurring character. Excluding the costs related to SimCorp Coric the increase in costs was 4.5% relative to H1 2013.
The total costs (including depreciation and amortization) in Q2 were EUR 46.9m, including costs related to SimCorp Coric of EUR 2.5m, an increase of EUR 4.1m compared to Q2 2013.
Costs
SimCorp A/S – Interim report January to June 2014
Salaries and staff-related costs, which accounted for about 75% of total costs, have increased by EUR 5.1m, or 8%, compared with H1 2013. Around EUR 1.8m relates to SimCorp Coric and another EUR 1.0 can be attributed to redundancy costs related to changes in management setup. Excluding the impact of SimCorp Coric and redundancy costs salaries and staff related costs grew by 4% in H1 primarily attributed to general salary increases. In the same period FTE´s – excluding the impact from SimCorp Coric grew 6% in H1 2014 compared to last year.
Cost of sales, including implementation consultants, increased 8.0% in H1, primarily relating to increased capacity within consultancy activities from last year to this year. Compared with H1 2013 utilization ratio has decreased but remains at a high level.
As reported in Q1 the mix in implementation projects between "fixed fee" projects and "time and material" projects has changed compared to 2013 which has led to cost of sales increasing at a higher percentage than revenue from professional services. Overall the underlying profitability from professional services remains at a satisfactory level.
Research and development costs increased 6.7% compared with H1 last year driven by general salary increases and an increase in headcount in research and development.
Sales and marketing costs were up 4.7%, the increase was fully attributable to SimCorp Coric. Administrative expenses increased by EUR 1.4m, mainly as a result of redundancy costs related to changes in the management setup of around EUR 1.0m and non-recurring costs of EUR 0.4m related to the acquisition of Equipos Ltd. (SimCorp Coric).
At 30 June 2014 the Group had 1,252 employees, 128 more than 30 June 2013 including 52 employees who were added with the acquisition of SimCorp Coric. The remaining growth in employees is mainly within the market units where North America added 13 employees and Central Europe has added 14 employees compared to 30 June 2013. The additional employees were mainly added in the professional services part of the respective organizations. In the central functions research and development has net increased with 15 employees, 21 employees have been added in Kiev, Ukraine.
SimCorp's office in Kiev, Ukraine, is located around 15km outside the city centre. Despite the current turmoil in Ukraine SimCorp's ability to operate in Kiev has only been minimally impacted. Back up contingency plans are in place to ensure continued operations.
The Group had on average 1,179 full time equivalent employees in the first six months of 2014 compared with 1,083 in the same period last year. SimCorp Coric is included and accounts for an average of 33 full time equivalent employees in H1 2014.
For H1 2014, the Group posted EBIT of EUR 16.8m, EUR 1.5m lower than in the same period of 2013, including a negative impact from SimCorp Coric of EUR 1.0m. Q2 EBIT was EUR 11.9m, against EUR 11.3m in Q2 last year, SimCorp Coric impacted negatively with EUR 0.5m. Exchange rate fluctuations increased EBIT by EUR 0.1m for the first six months of the year and decreased EBIT by EUR 0.2m in the second quarter.
SimCorp A/S – Interim report January to June 2014
Associated companies contributed an accounting gain of EUR 0.6m, related to the acquisition of the remaining shares in Equipos Ltd. Cash holdings and foreign exchange adjustments generated financial income of EUR 0.5m and financial expenses related to foreign exchange adjustments amounted to EUR 1.1m, primarily related to exchange rate fluctuations on the Group's overseas assets.
For the first six months the Group posted a pre-tax profit of EUR 16.8m, against EUR 18.2m in H1 2013. The estimated tax charge totals EUR 4.1m equivalent to a tax rate of 24.2% against 29.1% in the same period last year as a result of a change in the revenue mix, where a lower proportion of the taxable income in H1 2014 came from North America compared with the same period last year. The Group's net profit for the first six months amounted to EUR 12.7m, against a net profit of EUR 12.9m in the same period last year.
Other comprehensive income related to re-measurement of defined benefit pension plans and exchange rate adjustments on translation of the Group's foreign investments amounted to a net income of EUR 0.6m in H1 compared with a net expense of EUR 0.9m in the same period last year. The exchange rate fluctuations are primarily due to the change in the GBP/EUR exchange rate and in the USD/EUR exchange rate.
Total comprehensive income for H1 was thus a net profit EUR 13.4m against net profit EUR 12.0m in the same period last year.
SimCorp A/S – Interim report January to June 2014
SimCorp's total assets stood at EUR 100.7m at 30 June 2014, including cash deposits amounting to EUR 19.5m, EUR 26.8m lower than a year earlier. Total receivables amounted to EUR 46.6m at 30 June 2014, representing an increase of EUR 6.6m of which SimCorp Coric amounted to EUR 1.0m compared with 30 June 2013.
Operating activities generated a cash inflow of EUR 15.8m in H1 against EUR 22.4m in the same period last year due to a temporary delay in the payment of certain account receivables. Payment of corporation tax amounted to EUR 6.8m against EUR 8.9m in the same period last year.
EUR 8.4m was spent on investing activites in H1, of which EUR 6.9m was related to the acquisition of Equipos Ltd., compared with investing activites of EUR 0.7m in H1 2013.
The financial activities generated a net cash outflow of EUR 36.9m against EUR 34.0m in the same period last year. Payment of dividend reduced liquidity by EUR 22.1m (2013: EUR 20.1m) and purchase of treasury shares reduced liquidity by EUR 14.9m (2013: EUR 20.3m), including EUR 7.0m purchased in Q2 (2013: EUR 14.6m), and the exercise of share options and sale of employee shares increased liquidity by EUR 0.1m compared with EUR 6.4m in the same period last year.
On 25 February 2014 SimCorp A/S acquired the remaining shares not owned in Equipos Ltd. for GBP 8.3m (EUR 10.0m).
Prior to the acquisition, SimCorp owned 20% of the company, which was recognized as an associated company in the Group financial statements using the equity method.
The acquisition of Equipos Ltd. is expected to have a positive impact on total revenue in 2014 of 2% points, and the EBIT margin is expected to be adversely affected by 0.5% point in 2014 due to nonrecurring costs relating to the acquisition. The impact is expected to be the same in both local and reported currencies.
The preliminary assessment of the fair value of the net assets acquired, consideration paid and goodwill arising on the transaction were reported in Q1. We are within the measurement period of 12 months after the acquisition date and accordingly could be subject to adjustments.
The fair value of the equity interest previously held in Equipos Ltd. was GBP 1,285,000 (EUR 1.5m).
The deferred purchase price that is conditional on the continued employement of the founders is in accordance with IFRS 3 treated as compensation for post acquisition services rather than part of the consideration for an acquisiton and will be expensed over three years.
In June Equipos Ltd. and Equipos Inc. were renamed to SimCorp Coric Ltd. and SimCorp Coric Inc. respectively.
SimCorp A/S – Interim report January to June 2014
The net aggregate value of identifiable assets and liabilities measured in accordance with IFRS 3 is preliminary determined to GBP 4.5m (EUR 5.5m) and resulting in a goodwill of GBP 3.2m (EUR 3.8m). The goodwill is attributable to a well positioned business for reporting software capabilities, a highly skilled workforce, buyer synergies and the potential for significantly more clients to adopt the reporting functionality from SimCorp Coric under SimCorp's full ownership.
The acquisition has resulted in an accounting gain of EUR 0.6m in Q1 2014, which is the difference between the fair value and the carrying amount of the previously held equity. Transaction costs associated with the acquisition of EUR 0.4m are included in administration costs.
The Group's equity amounted to EUR 51.4m at 30 June 2014. This was a reduction of EUR 20.2m from 31 December 2013. Payment of dividends to shareholders amounting to EUR 22.1m and purchase of treasury shares amounting to EUR 14,9m reduced equity. Comprehensive income for the period of EUR 13.4m as well as share sales to employees, payments related to share option programs and share based remuneration of EUR 3,4m increased equity.
Equity decreased by EUR 14.3m compared with 30 June 2013.
SimCorp A/S – Interim report January to June 2014
SimCorp generated financial results in line with expectations in the first six months of 2014. Four new SimCorp Dimension software license contracts were signed in Europe in Q2 and one new software contract for SimCorp Coric was also signed in Europe in Q2. Furthermore, at the beginning of Q3 one new SimCorp Dimension contract was signed in Switzerland along with one new SimCorp Coric contract in the US. Outside North America, SimCorp's pipeline of potential license contracts develops satisfactorily, and SimCorp continues to experience a satisfactory diversified demand for its products and services.
During Q2 an additional amount of EUR 18m of total revenue for 2014 was contractually secured, against an amount of EUR 11m recorded in the same period last year, and SimCorp enters Q3 with secured contracts for EUR 193m of the revenue projected for 2014, EUR 10m more than at the same time last year.
Given the current situation in the North American market SimCorp sees increased uncertainty regarding the full year revenue for the Group and consequently changes its guidance for 2014 revenue growth in local currencies to be between 8% and 10% (previously 10%).
The gradual recovery of the North American market unit is expected to continue into 2015.
SimCorp has initiated a series of cost reduction initiatives to be executed during the remaining four months of the year that will improve the EBIT margin in local currencies by around half a percentage point to around 24.5% (previously 24%).
Based on the currency exchange rates at 31 July 2014 SimCorp now expects revenue growth in reported currency to be between 7% and 9% (previously 8.5%). The reported EBIT margin is now expected to be around 24.3% (previously 23.8%).
The guidance above includes the effects of the acquisition of Equipos Ltd. from 1 March 2014.
*) This announcement contains certain forward-looking statements and expectations in respect of the 2014 financial year. Such forward-looking statements are not guarantees of future performance, and involve risk and uncertainty, and actual performance may deviate materially from that expressed in such forward-looking statements due to a variety of factors. Readers are warned not to rely unduly on such forward-looking statements which apply only as at the date of this announcement. The Group's revenue will continue to be impacted by relatively few but large system orders, and such orders are expected to be won at relatively irregular intervals. The terms agreed in the individual license agreements will determine the impact on the order book and on license income for any specific financial reporting period. Accordingly, license revenue is likely to vary considerably from one quarter to the next. Unless required by law or corresponding obligations SimCorp A/S is under no duty and undertakes no obligation to update or revise any forward-looking statement after the distribution of this document, whether as a result of new information, future events or otherwise.
SimCorp A/S – Interim report January to June 2014
SimCorp operates in a dynamic and complex business environment, where performance relies heavily on the ongoing achievement of a number of success criteria. Pages 18-21 of SimCorp's Annual Report 2013 describe the most important general risk factors and the risk management measures used in everyday operations. Management believes the description of these potential risks still applies.
In accordance with the approval at the extraordinary general meeting on 14 May 2014 the Board of Directors has executed the capital reduction of DKK 2,000,000 by cancellation of treasury shares, after which the nominal share capital amounts to DKK 41,500,000. The reduction of shares took place on 14 June 2014.
7,500 stock options were exercised in Q1, and all stock options programs have now been fully completed and no further stock options are outstanding.
Since 2010 all stock based incentive programs have been based on restricted stock units.
In Q1 100,590 shares were transferred to the Executive Management Board and key employees, who participated in the long term incentive program in 2011 and have fulfilled the program's criteria. The actual number of shares allocated was determined based on the achieved average annual revenue growth and annual average net operating profit after tax for the financial years 2011 to 2013. The total number of shares was reduced by 21.3% compared to the potential maximum allotment under the program.
In accordance with the remuneration policy approved by the shareholders at the annual general meeting, the Board of Directors on 1 April 2014 undertook to grant restricted stock units. A total of 83,325 restricted stock units were granted, including 24,456 restricted stock units to the Executive Management Board. The fair value of these restricted stock units amounted to EUR 2.4m at the time of allotment. The value adjusted for dividends will be included in the income statement over the vesting period of three years. The restricted stock units will vest after three years, subject to continuing employment. Furthermore, the restricted stock units are subject to conditions with respect to average annual minimum revenue growth and annual average net operating profit after tax for the financial years 2014 to 2016. If the two last conditions are only partially satisfied, the number of shares transferred after three years will be reduced, and may possibly lapse completely.
SimCorp A/S – Interim report January to June 2014
In addition in Q1 144,718 restricted stock units relating to the corporate bonus program for 2013 were granted and distributed among Group employees, including 6,179 restricted stock units to the Executive Management Board and 1,084 restricted stock units to employees elected members of the Board of Directors. In Q2 1,144 restricted stock units were cancelled in relation to employees resigning from the Company. The restricted stock units will vest one third after one year, further one third after two years and the last third after three years subject to vesting conditions.
In connection with the appointment of a senior management employee in the UK 9,170 restricted stock units have been granted. The restricted stock units will vest after three years, subject to continuing employment. Furthermore, the restricted stock units are subject to conditions with respect to average annual revenue growth for the financial years 2014 to 2016. If the conditions are only partially satisfied, the number of shares transferred after three years will be reduced, and may possibly lapse completely.
In connection with the acquisition of Equipos Ltd. 8,341 restricted stock units have been granted to management and key employees of Equipos Ltd. These restricted stock units will vest after three years subject to continuing employment.
A total of 658,170 restricted stock units are in issue. These will be transferred in whole or in part between 2015 and 2017 to program participants subject to the vesting conditions and to the performance criteria.
| Board of Directors |
Executive Manage ment |
|||||
|---|---|---|---|---|---|---|
| Number of restricted stock units | Granted | Vesting | * | Board Employees | Total | |
| Corporate bonus 2011 | March 2012 | March 2015 | 0 | 2,810 | 28,010 | 30,820 |
| Executive Management and key employees | April 2012 | April 2015 | 0 | 34,600 | 94,880 | 129,480 |
| Senior employee in North America | April 2012 | April 2016/2017 | 0 | 0 | 15,000 | 15,000 |
| CEO - Klaus Holse | September 2012 September 2015/2016/2017 | 0 | 107,220 | 0 | 107,220 | |
| Corporate bonus 2012 | March 2013 | March 2016 | 0 | 0 | 14,350 | 14,350 |
| Executive Management and key employees | April 2013 | Februar 2016 | 0 | 33,300 | 83,590 | 116,890 |
| Senior employee in UK | February 2014 | March 2017 | 0 | 0 | 9,170 | 9,170 |
| Key employees in Equipos | March 2014 | March 2017 | 0 | 0 | 8,341 | 8,341 |
| Corporate bonus 2013 | March 2014 | March 2017 | 1,084 | 6,179 | 136,311 | 143,574 |
| Executive Management and key employees | April 2014 | Februar 2017 | 0 | 24,456 | 58,869 | 83,325 |
| Total number of restricted stock units 30 June 2014 | 1,084 | 208,565 | 448,521 | 658,170 |
*) Restricted stock units acquired by employee elected members of the Board of Directors of SimCorp A/S.
SimCorp A/S – Interim report January to June 2014
In Q1 the Company sold 7,500 treasury shares and transferred 100,590 treasury shares in relation to the restricted stock unit program for 2011, and in accordance with the approved remuneration and incentive policy for the Board of Directors 1,461 treasury shares in Q2 and a total of 2,891 treasury shares in H1 were transferred to the Board of Directors.
In Q2 the Company acquired 261,527 treasury shares at an average price of DKK 198.74 per share, in total EUR 6.9m. In total in H1 the Company acquired 540,885 treasury shares, at a total price of EUR 14.9m.
In Q2 the Company executed the capital reduction of DKK 2,000,000 equivalent to 2,000,000 shares of DKK 1 by cancellation of treasury shares.
At the end of Q2 the Company held 577,145 treasury shares equaling 1.33% of the Company's share capital.
| Percent | ||||
|---|---|---|---|---|
| Share | Number of | Acquisition value | of share | |
| Treasury shares | capital | Treasury shares | EUR'000 | capital |
| 2013 | ||||
| At 1 January 2013 | 45,000,000 | 2,444,020 | 33,448 | 5.4 |
| Foreign exchange adjustment | 1 | - | ||
| Cancellation | -1,500,000 | -1,500,000 | -20,693 | -3.4 |
| Purchases | 959,307 | 20,338 | 2.1 | |
| Delivery of shares, share-based payment | -556,960 | -6,422 | -1.2 | |
| Sold to employees | -63,350 | -837 | -0.1 | |
| At 30 June 2013 | 43,500,000 | 1,283,017 | 25,835 | 2.9 |
| Purchases | 922,344 | 22,512 | 2.1 | |
| Delivery of shares, share-based payment | -58,120 | -991 | -0.1 | |
| At 31 December 2013 | 43,500,000 | 2,147,241 | 47,356 | 4.9 |
| 2014 | ||||
| At 1 January 2014 | 43,500,000 | 2,147,241 | 47,356 | 4.9 |
| Cancellation | -2,000,000 | -2,000,000 | -43,677 | -3.4 |
| Purchases | 540,885 | 14,875 | 1.2 | |
| Delivery of shares, share-based payment | -110,981 | -2,742 | -0.3 | |
| At 30 June 2014 | 41,500,000 | 577,145 | 15,812 | 1.3 |
Based on the current business outlook and the cash position, the Company will initiate a new "Safe Harbour" program and acquire treasury shares at an amount of EUR 10m until the release of the Annual Report 2014.
SimCorp A/S – Interim report January to June 2014
The Board of Directors and the Executive Management Board have today considered and adopted the interim report for the period 1 January - 30 June 2014.
The interim financial report, which is unaudited and has not been reviewed by the company's auditors, is presented in accordance with IAS 34 "Interim financial reporting" as adopted by the EU and Danish disclosure requirements for listed companies.
In our opinion, the interim financial report gives a true and fair view of the Group's assets, liabilities and financial position as of 30 June 2014 and of the profit of the Group's operations and cash flow for the period 1 January - 30 June 2014.
Besides what has been disclosed in the interim report, no other significant changes in the Group's risks and uncertainties have occurred relative to what was disclosed in the consolidated annual report 2013.
Furthermore, the management's commentary gives a fair representation of the Group's activities and financial position as well as a description of the material risks and uncertainties which the Group is facing.
__________________ ________________________ ___________________
__________________ ______________________ ___________________
29 August 2014
Executive Management Board:
Klaus Holse Georg Hetrodt Thomas Johansen Chief Executive Officer Chief Technology Officer Chief Financial Officer
Board of Directors:
Jesper Brandgaard Peter Schütze Hervé Couturier Chairman Vice Chairman
___________________ _____________________
___________________ _____________________
Simon Jeffreys Patrice McDonald
Jacob Goltermann Raymond John
SimCorp A/S – Interim report January to June 2014
| EUR'000 | 2014 | 2013 | 2014 | 2013 | 2013 |
|---|---|---|---|---|---|
| Q2 | Q2 | H1 | H1 | FY | |
| Revenue | 58,751 | 54,104 | 108,365 | 103,073 | 225,129 |
| Cost of sales | 21,949 | 20,795 | 43,264 | 40,074 | 80,883 |
| Gross profit | 36,802 | 33,309 | 65,101 | 62,999 | 144,246 |
| Other operating income | 36 | 3 | 41 | 6 | 52 |
| Research and development costs | 13,265 | 12,296 | 26,169 | 24,515 | 49,548 |
| Sales and distribution costs | 7,232 | 6,218 | 13,637 | 13,022 | 26,980 |
| Administrative expenses | 4,452 | 3,477 | 8,561 | 7,183 | 13,534 |
| Profit from operations (EBIT) | 11,889 | 11,321 | 16,775 | 18,285 | 54,236 |
| Share of profit after tax in associates | -4 | -48 | 643 | -186 | -111 |
| Financial income | 266 | 568 | 520 | 1,535 | 2,375 |
| Financial expenses | 291 | 598 | 1,126 | 1,423 | 2,494 |
| Profit before tax | 11,860 | 11,243 | 16,812 | 18,211 | 54,006 |
| Tax on profit | 2,740 | 3,351 | 4,068 | 5,299 | 14,670 |
| Net profit for the period | 9,120 | 7,892 | 12,744 | 12,912 | 39,336 |
| Earnings per share | |||||
| Basic earnings per share - EPS (EUR) | 0.22 | 0.19 | 0.31 | 0.30 | 0.93 |
| Diluted earnings per share - EPS-D (EUR) | 0.22 | 0.18 | 0.31 | 0.30 | 0.92 |
| EUR'000 | 2014 | 2013 | 2014 | 2013 | 2013 |
|---|---|---|---|---|---|
| Q2 | Q2 | H1 | H1 | FY | |
| Net profit for the period | 9,120 | 7,892 | 12,744 | 12,912 | 39,336 |
| Other comprehensive income | |||||
| Items that will not be reclassified subsequently to the income statement: | |||||
| Remeasurements of defined benefit pension plans | 17 | 16 | 33 | -246 | -487 |
| Tax | 13 | 8 | 9 | -64 | 127 |
| Items that will be reclassified subsequently to the income statement, | |||||
| when specific conditions are met: | |||||
| Foreign currency translation differences for foreign operations | 538 | -830 | 606 | -671 | -1,212 |
| Tax | 0 | 8 | 0 | 29 | 0 |
| Other comprehensive income after tax for the period | 542 | -830 | 630 | -882 | -1,572 |
| Total comprehensive income for the period | 9,662 | 7,062 | 13,374 | 12,030 | 37,764 |
SimCorp A/S – Interim report January to June 2014
| EUR'000 | 2014 | 2013 | 2013 |
|---|---|---|---|
| 30 June | 30 June | 31 December | |
| ASSETS | |||
| Non-current assets | |||
| Intangible assets | |||
| Goodwill | 4,740 | 793 | 792 |
| Software | 4,093 | 490 | 386 |
| Customer contracts | 3,431 | 0 | 0 |
| Total intangible assets | 12,264 | 1,283 | 1,178 |
| Property, plant and equipment | |||
| Leasehold improvements | 2,094 | 2,463 | 2,224 |
| Technical equipment | 3,140 | 1,498 | 2,431 |
| Other equipment, fixtures and fittings | 177 | 468 | 184 |
| Total property, plant and equipment | 5,411 | 4,429 | 4,839 |
| Other non-current assets | |||
| Investments in associates | 312 | 1,124 | 1,221 |
| Deposits | 2,193 | 2,117 | 2,111 |
| Deferred tax | 6,922 | 6,086 | 6,219 |
| Total other non-current assets | 9,427 | 9,327 | 9,551 |
| Total non-current assets | 27,102 | 15,039 | 15,568 |
| Current assets | |||
| Receivables | 46,568 | 39,948 | 49,336 |
| Receivables from associates Income tax receivables |
0 2,856 |
0 3,719 |
422 1,223 |
| Prepayments | 4,692 | 4,262 | 3,814 |
| Cash and cash equivalents | 19,518 | 46,277 | 47,106 |
| Total current assets | 73,634 | 94,206 | 101,901 |
| Total assets | 100,736 | 109,245 | 117,469 |
| LIABILITIES & EQUITY | |||
| Equity | |||
| Share capital | 5,576 | 5,844 | 5,844 |
| Exchange adjustment reserve Retained earnings |
-1,788 47,588 |
-1,882 61,760 |
-2,394 45,942 |
| Proposed dividend | 0 | 0 | 22,174 |
| Total equity | 51,376 | 65,722 | 71,566 |
| Liabilities | |||
| Non-current liabilities | |||
| Deferred tax | 215 | 348 | 213 |
| Provisions | 3,380 | 3,243 | 3,177 |
| Deferred purchase price | 1,072 | 0 | 0 |
| Employee bonds | 0 | 749 | 0 |
| Total non-current liabilities | 4,667 | 4,340 | 3,390 |
| Current liabilities | |||
| Prepayments from clients | 13,055 | 8,311 | 5,490 |
| Trade payables and other payables | 28,811 | 29,373 | 33,498 |
| Income tax | 2,008 | 1,422 | 2,640 |
| Provisions | 75 | 77 | 140 |
| Employee bonds | 744 | 0 | 745 |
| Total current liabilities | 44,693 | 39,183 | 42,513 |
| Total liabilities | 49,360 | 43,523 | 45,903 |
| Total liabilities and equity | 100,736 | 109,245 | 117,469 |
SimCorp A/S – Interim report January to June 2014
| EUR'.000 | 2014 | 2013 | 2014 | 2013 | 2013 |
|---|---|---|---|---|---|
| Q2 | Q2 | H1 | H1 | FY | |
| Profit for the period | 9,120 | 7,892 | 12,744 | 12,912 | 39,336 |
| Adjustments for non cash operating items | 4,809 | 4,838 | 8,855 | 8,398 | 20,789 |
| Changes in working capital | -13,912 | -3,077 | 1,181 | 9,615 | 1,186 |
| Cash from operating activities before financial items | 17 | 9,653 | 22,780 | 30,925 | 61,311 |
| Financial income received | 9 | 112 | 127 | 653 | 973 |
| Financial expenses paid | -146 | -105 | -277 | -199 | -449 |
| Income taxes paid | -2,315 | -3,618 | -6,848 | -8,940 | -14,388 |
| Net cash flow from operating activities | -2,435 | 6,042 | 15,782 | 22,439 | 47,447 |
| Purchase of subsidiaries | 0 | 0 | -6,943 | 0 | 0 |
| Loan to associates | 0 | 0 | 0 | 0 | -422 |
| Repayment of loan, associates | 0 | 0 | 422 | 0 | 0 |
| Purchase of intangible fixed assets | -65 | -17 | -277 | -42 | -76 |
| Purchase of property, plant and equipment | -699 | -441 | -1,571 | -594 | -2,331 |
| Proceeds from sale of property, plant and equipment | 9 | 0 | 9 | 0 | 0 |
| Purchase of financial assets | -4 | -66 | -16 | -76 | -64 |
| Proceeds from sale of financial assets | 2 | 15 | 5 | 15 | 30 |
| Dividends from associates | 0 | 20 | 0 | 20 | 20 |
| Net cash flow from/(used) in investing activities | -757 | -489 | -8,371 | -677 | -2,843 |
| Net cash from operating and investing activities | -3,192 | 5,553 | 7,411 | 21,762 | 44,604 |
| Sale of employees shares | 0 | 0 | 0 | 498 | 498 |
| Exercise of options | 0 | 1,131 | 62 | 5,879 | 6,580 |
| Dividends paid | -22,095 | -4,049 | -22,095 | -20,078 | -20,078 |
| Acquisition of treasury shares | -6,992 | -14,632 | -14,875 | -20,338 | -42,850 |
| Net cash from/(used) in financing activities | -29,087 | -17,550 | -36,908 | -34,039 | -55,850 |
| Change in cash and cash equivalents | -32,279 | -11,997 | -29,497 | -12,277 | -11,246 |
| Total cash flows for the period | |||||
| Cash and cash equivalents at beginning of period | 51,781 | 58,609 | 47,106 | 58,897 | 58,897 |
| Cash and cash equivalents acquired Foreign exchange adjustment of cash and cash equivalents |
0 16 |
0 -335 |
1,885 24 |
0 -343 |
0 -545 |
| Cash and cash equivalents at 30 June | 19,518 | 46,277 | 19,518 | 46,277 | 47,106 |
SimCorp A/S – Interim report January to June 2014
| Exchange | |||||
|---|---|---|---|---|---|
| Share | adjustment | Retained | Proposed | ||
| EUR'000 Group |
capital | reserve | earnings | dividend | Total |
| Equity at 1 January 2013 | 6,045 | -1,182 | 61,036 | 19,965 | 85,864 |
| Comprehensive income for the period * | |||||
| Total comprehensive income for the period | 0 | -700 | 12,730 | 0 | 12,030 |
| Transactions with owners | |||||
| Cancellation of treasury shares | -201 | 0 | 201 | 0 | 0 |
| Dividends paid to shareholders | 0 | 0 | -113 | -19,965 | -20,078 |
| Share-based payment | 0 | 0 | 7,866 | 0 | 7,866 |
| Tax, share-based payment | 0 | 0 | 378 | 0 | 378 |
| Purchase of treasury shares | 0 | 0 | -20,338 | 0 | -20,338 |
| Equity at 30 June 2013 | 5,844 | -1,882 | 61,760 | 0 | 65,722 |
| Equity at 1 July 2013 | 5,844 | -1,882 | 61,760 | 0 | 65,722 |
| Comprehensive income for the period * | |||||
| Total comprehensive income for the period | 0 | -512 | 26,246 | 0 | 25,734 |
| Transactions with owners | |||||
| Dividends paid to shareholders | 0 | 0 | 5 | 0 | 5 |
| Share-based payment | 0 | 0 | 2,296 | 0 | 2,296 |
| Tax, share-based payment | 0 | 0 | 321 | 0 | 321 |
| Purchase of treasury shares | 0 | 0 | -22,512 | 0 | -22,512 |
| Proposed dividend to shareholders | 0 | 0 | -22,174 | 22,174 | 0 |
| Equity at 31 December 2013 | 5,844 | -2,394 | 45,942 | 22,174 | 71,566 |
| Equity at 1 January 2014 | 5,844 | -2,394 | 45,942 | 22,174 | 71,566 |
| Comprehensive income for the period * | |||||
| Total comprehensive income for the period | 0 | 606 | 12,768 | 0 | 13,374 |
| Transactions with owners | |||||
| Cancellation of treasury shares | -268 | 0 | 268 | 0 | 0 |
| Declared dividend to shareholders | 0 | 0 | 79 | -22,174 | -22,095 |
| Share-based payment | 0 | 0 | 3,396 | 0 | 3,396 |
| Tax, share-based payment | 0 | 0 | 10 | 0 | 10 |
| Purchase of treasury shares | 0 | 0 | -14,875 | 0 | -14,875 |
| Equity at 30 June 2014 | 5,576 | -1,788 | 47,588 | 0 | 51,376 |
* Please refer to Statement of comprehensive income page 17
SimCorp A/S – Interim report January to June 2014
The interim report is presented in accordance with IAS 34 "Interim financial reporting" as adopted by the EU and Danish disclosure requirements for interim reports of listed companies.
The accounting policies applied are consistent with those of the Annual Report 2013 except as set out below. See page 54 to 58 of the Annual Report 2013 for a comprehensive description of the accounting policies applied.
In May 2014, the IASB issued IFRS 15 (Revenue from Contracts with Customers). The standard becomes effective from January 1, 2017 with earlier application permitted. We are in the earlier stage of an analysis of the impact of the standard on SimCorp's Consolidated Financial Statements. The impact could be material, in particular in the timing of the revenue recognition. The standard have different alternative approaches for adoption of the new guidance. SimCorp are still analyzing these approaches.
Effective 1 January 2014, a number of new accounting standards and interpretations have been implemented which do not have any monetary effect on the SimCorp Group's result, assets, liabilities or equity.
In connection with the acquisition of Equipos Ltd. SimCorp has updated its accounting policies for other intangible assets acquired in a business combination to include customer contracts. Intangible assets are amortized on a straight-line basis over the estimated useful life. Customer contracts up to 20 years.
The preparation of interim reports requires management to make accounting judgments and estimates that affect the use of accounting policies and recognized assets, liabilities, income and expenses. Actual results may differ from these estimates.
The most significant estimates made by management when using the Group's accounting policies and the most significant judgment uncertainties attached hereto are the same for the preparation of the interim report as for the preparation of the Annual Report 2013.
SimCorp A/S – Interim report January to June 2014
| EUR '000 | Nordic | Central | UK and | Benelux and |
Asia and | North | Software develop |
Corporate | Elimination/ not |
|||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1 April - 30 June 2014 | region | Europe | Ireland | France | Australia | America | ment | Coric*) | functions | Total | allocated | Group |
| Revenue external clients | 13,811 | 15,965 | 3,952 | 8,708 | 4,374 | 10,059 | 273 | 1,549 | 60 | 58,751 | 0 | 58,751 |
| Revenue between segments | 2,436 | 1,008 | 291 | 1,119 | 576 | 927 | 18,318 | 461 | 594 | 25,730 | -25,730 | 0 |
| Total segment revenue | 16,247 | 16,973 | 4,243 | 9,827 | 4,950 | 10,986 | 18,591 | 2,010 | 654 | 84,481 | -25,730 | 58,751 |
| Segment profit from operations (EBIT) | 3,580 | 3,446 | 77 | 1,252 | 840 | 380 | 2,216 | -455 | 553 | 11,889 | 0 | 11,889 |
| 1 January - 30 June 2014 | ||||||||||||
| Revenue external clients | 27,461 | 30,615 | 7,573 | 15,632 | 8,128 | 16,334 | 550 | 1,975 | 97 | 108,365 | 0 108,365 | |
| Revenue between segments | 4,844 | 1,915 | 611 | 1,802 | 1,152 | 1,411 | 33,232 | 472 | 594 | 46,033 | -46,033 | 0 |
| Total segment revenue | 32,305 | 32,530 | 8,184 | 17,434 | 9,280 | 17,745 | 33,782 | 2,447 | 691 | 154,398 | -46,033 108,365 | |
| Segment profit from operations (EBIT) | 7,422 | 5,865 | 41 | 1,852 | 1,226 | -1,430 | 1,922 | -573 | 450 | 16,775 | 0 | 16,775 |
| Total assets | 14,055 | 17,247 | 5,820 | 15,240 | 7,053 | 14,649 | 853 | 13,750 | 5,537 | 94,204 | 6,532 100,736 | |
| 1 April - 30 June 2013 | ||||||||||||
| Revenue external clients | 13,223 | 15,010 | 3,203 | 5,873 | 4,120 | 12,370 | 278 | - | 27 | 54,104 | 0 | 54,104 |
| Revenue between segments | 2,214 | 1,393 | 914 | 1,219 | 354 | 1,458 | 15,502 | - | 0 | 23,054 | -23,054 | 0 |
| Total segment revenue | 15,437 | 16,403 | 4,117 | 7,092 | 4,474 | 13,828 | 15,780 | - | 27 | 77,158 | -23,054 | 54,104 |
| Segment profit from operations (EBIT) | 5,731 | 3,207 | 59 | 545 | 397 | 1,039 | 1,433 | - | -1,090 | 11,321 | 0 | 11,321 |
| 1 January - 30 June 2013 | ||||||||||||
| Revenue external clients | 26,043 | 28,974 | 8,257 | 11,720 | 8,185 | 19,291 | 547 | - | 56 | 103,073 | 0 103,073 | |
| Revenue between segments | 3,344 | 2,885 | 2,141 | 1,933 | 986 | 3,241 | 32,437 | - | 0 | 46,967 | -46,967 | 0 |
| Total segment revenue | 29,387 | 31,859 | 10,398 | 13,653 | 9,171 | 22,532 | 32,984 | - | 56 | 150,040 | -46,967 103,073 | |
| Segment profit from operations (EBIT) | 7,820 | 6,164 | 1,569 | 1,248 | 877 | -42 | 3,290 | - | -2,641 | 18,285 | 0 | 18,285 |
| Total assets | 15,025 | 15,111 | 4,475 | 11,578 | 7,285 | 15,028 | 2,309 | - | 3,431 | 74,242 | 35,003 109,245 |
Revenue disclosures are based on SimCorp's market units and development activities while asset allocation is based on the physical location of the assets. Unallocated assets relate to non-current headquarter assets, cash, taxes and investments in associates.
| Reconciliation of the profit before tax | 2014 | 2013 | 2014 | 2013 |
|---|---|---|---|---|
| Q2 | Q2 | H1 | H1 | |
| EUR'000 | ||||
| Total segment profit reported (EBIT) | 11,889 | 11,321 | 16,775 | 18,285 |
| Share of profit after tax and gain on associates | -4 | -48 | 643 | -186 |
| Financial income | 266 | 568 | 520 | 1,535 |
| Financial expenses | 291 | 598 | 1,126 | 1,423 |
| Profit for the period before tax, see income statement | 11,860 | 11,243 | 16,812 | 18,211 |
The SimCorp Group does not hold assets under finance leases and has not provided assets as security.
No material changes have occurred to contingent liabilities referred to in the Annual Report 2013.
SimCorp A/S – Interim report January to June 2014
In connection with the appointment of new head of North America the Company has granted restricted stock units equivalent to EUR 200,000. These restricted stock units will vest after three years, subject to continuing employment as part of the sign on agreement.
In addition, the Company has granted 15,000 restricted stock units. These restricted stock units will vest end of February 2018, subject to continuing employment. Furthermore, the restricted stock units are subject to conditions with respect to annual revenue growth in North America for the financial years 2015 to 2017. If the conditions are only partially satisfied, the number of shares transferred after three years will be reduced, and may possibly lapse completely.
No other material events have occurred after the balance sheet date that have consequences for the interim report.
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