Vitec Software Group B — Annual Report 2016

Apr 4, 2017

Annual Report 2016

This is Vitec

Who we are

Vitec is a Nordic software company. Vitec was established in 1985 as a spin-off company from the University of Umeå. Today, the Group has 500 employees and had 2016 a turnover of SEK 675 million. We grow through acqusitions of well-managed software companies in line with our business model and corporate culture. Vitec is listed on Nasdaq Stockholm.

What we do

We develop and supply business critical, standardized software for specific industries, Vertical Market Software. Our software are delivered as standardized products for the different industries.

Vision

To be a growth company in the mature part of the software industry.

Objective

To consolidate and professionalize vertical segments in th software industry.

Mission

Enabling customers to maximize their opportunities and to develop and secure their business through business critical software.

Contents

THE GROUP´S OPERATIONS

Vitec at a Glance	2
2016 in brief	3
CEO´s comments	4
Our position on the software market	6
Business model and growth strategy	7
Financial targets and outcomes	8
Our Business Areas	10
Employees	14
History	18
The share	20

ANNUAL REPORT

Derictors' Report	24
Corporate Governance Report	30
Board of Directors	33
Group Management	37
Multi-year summary	39
Proposed allocation of profits	40
Consolidated statement of com prehensive income	41
Consolidated statement of financial position	42
Consolidated statement of changes in equity	44

Consolidated statement of cash flows	45
Income statement, Parent Company	47
Balance sheet, Parent Company	48
Changes in equity, Parent Company	50
Cash flow statement, Parent Com.	51
Notes	53
Proposed allocation of the company´s profit	85
Auditor´s Report	86
Shareholder information	89

2016 in brief

Q1	Energy forecasting seminar in Stockholm ƒ arranged by Vitec attracts delegates from 22 countries. Magnus Persson is new head of Business ƒ Area Real Estate in Sweden. Vitec's principal owners Lars Stenlund ƒ and Olov Sandberg together reclassi fies 500,000 A-shares to B-shares. All of these B shares are sold to Nordea Small Cap Fund Sweden and Nordea Small Cap Fund Nordic. ƒ Janne Vainio is new head of Business Area Health in Finland.	507 Co-workers 109 Norway	210 Sweden	91 Finland
Q2 Nettomsättning	ƒ Kim Møller Jensen is new head of Busi ness Area Finance & Insurance in Den mark.	97 Denmark
MSEK Q3 200 158 150 119 100 50 26	ƒ Vitec Veriba AB is sold to XLENT Con sulting Holding AB and Business Area Media is wound up. 155 ƒ The Finnish company Tietomitta Oy is 127 acquired and the new Business Area En vironment is formed. ƒ The Finnish company Futursoft Oy is ac 66 quired and added to the Business Area Auto. 18 5	Omsättning, fördelning AO Business Area share of net sales Estate Agents 23 % Environment 3 % Media 1 % Health 10 %		Auto 18 % Energy 4 % Real Estate 23 %
0 Auto Energy Q4 Rörelseresultat MSEK 30	Real Finance & Health Media Environ Estate Estate Insurance ment Agents The Norwegian company Plania AS is ac ƒ quired and added to the Business Area Real Estate. The company Pension Danmark choos ƒ es the product PORTMAN from Vitec for Asset Management. 29,8 Summa	Finance & Insurance 19 % RR, fördelning AO Key figures	2016	2015
25		Net sales (TSEK)	675,414	618,385
19,2 20	20,3	Estate Agents 12 % Operating profit (TSEK) Environment 3 %	88,305	100 607 Auto 21 %
		Profit after financial items (TSEK) Media 1 %	81,942	94,686
15	11,1	Health 2 % Operating margin (%)	13	16
10 7,3		Return on equity (%)	22	29 Energy 8 %
5		Return on capital employed (%) Finance &	14	21
	2,4 1,9 1,0	Equity/assets ratio (%) Insurance 22 %	30	31
0 Auto Energy	Real Finance & Health Media Environ Estate	Adjusted equity per share (SEK)	11.37	Real Estate 32 % 9.24
	Estate Insurance ment Agents	Earnings per share (SEK)	2.27	2.66
Rörelsemarginal		Dividend paid per share (SEK) Proposed dividend 2017 SEK 1.00 per share	0.90	0.67

P/E ratio 33.22 28.20 Average number of employees 467 422

Andel repetitiva intäkter av omsättningen

Auto 21 %

Energy 8 %

Real Estate 32 %

CEO's comments

Strong and well-rooted business model

In 2016, Vitec continued to grow, and in January 2017, we were moved up to the MidCap list for the medium-sized Swedish listed companies.

In terms of earnings, 2016 was an off year even if the currency-adjusted operating profit was a bit better than the previous year. Cash flow continued to strengthen, however. The Group's risk spread over countries and business areas improved further during the year. Sweden's share of the Group's sales was 42 percent in 2016 compared with 50 percent with the previous year. The percentage of recurring revenue decreased somewhat to 77 percent (78) although the decrease was less than what we assessed a year ago. The business model is strong and well-rooted in the Group. It has a momentum that drives internal culture and business in the desired direction more strongly that we had previously dared to hope.

The operating margin for the whole year was 13.1 percent, which is below our target of 15 percent. Market demand in our niches is, however, long term and sustainable, which means that conditions are good to continue working with greater efficiency and profitability.

Continued acquisitions

In the third quarter, the Business Area Media was divested, a unique event for Vitec. Over time, the operations in Media came to primarily consist of customized application development, which meant a significantly higher share of service sales than the rest of the Group. The divestment was made to a consulting company where Media's customers and employees fit in well.

Just after the divestment of Media, Tietomitta OY was acquired, forming a new business area - Environment. In September, Futursoft OY was acquired that is a part of the Business Area Auto and in December Plania AS in Stavanger, Norway was acquired and placed with Business Area Real Estate. Together, the new operations contribute around SEK 110 million to the Group's sales with good profitability.

Increased dividend – again

The proposed dividend for the year of SEK 1.00 is an increase of 11 percent, and means that the dividend to our shareholders has risen for the15th consecutive year. When Vitec first paid a dividend as a listed company in 2002, the equivalent of SEK 0.05 was paid out per share.

Acquisition strategy

The number of active acquisition dialogs remains high and we are continuously devoting resources to maintaining and furthering these dialogs. Vitec's financial position and preparedness for future acquisitions is good, and we see good possibilities for continued acquisition-based growth.

Sustainable and profitable growth

With a clear shift from traditional license sales to subscriptions of cloud-based systems, the dependence on individual license sales is decreasing, which increases the long-term capacity to manage the business. Together with our employees' tremendous capacity for renewal and integrating acquisitions, this provides an excellent footing for long-term development throughout our entire organization. With acquisitions of well-established companies and a growing proportion of recurring revenue, Vitec will continue along its fixed path: to operate in a number of independent and specialized niche markets in order to achieve sustainable and profitable growth.

Lars Stenlund, CEO

Our position on the software market

Vitec focuses on vertical markets

Vitec is a Nordic software company that develops software for specific industries, Vertical Market Software. This means that our offering is tailored to the unique needs and requirements of companies within a specific sector in order to manage and develop their business activities.

Vitec offers standardized products

We deliver standardized products for the different sectors. This is cost-effective for our customers since they can assimilate developments and upgrades made for the entire industry. In this way, we wish to provide our customers with maximum opportunities to develop and future-proof their business.

Vitec has a high proportion of proprietary products

We are specialists in the circumstances and needs of the various industries. Our organizational structure means that our employees focus on a specific sector in one country. Through their many years of experience, they are experts within their niche and understand which functions the customers need to handle all aspects of their business. Product development based on real customer benefits provides supportive and sustainable software over time.

A position with high barriers to entry

Each individual vertical requires a high level of specialization. This requires large investments for a new player to establish itself and often long lead times in product development. The vertical markets are relatively small and the replacement cost for the customer is high, which reduces the possibilities of achieving a return on investments.

Within each vertical, there are often a few smaller players specializing in industry specific software. The more general software usually provides less cost-effective solutions for the unique needs of vertical markets.

Vitec always strives for a leading position in the verticals we choose to go into. This provides significant economies of scale that enable long-term profitability.

Business model and growth strategy

High proportion of recurring revenue

Our business model is based on a high proportion of recurring revenue. This gives us stable and predictable cash flows that create opportunities to act in the long term. We also become less sensitive to temporary declines in individual companies. Nowadays, software functions are delivered with increasing frequency over the Internet via cloud-based services. This means that our offering is being expanded to also encompass IT-operation and storage. When traditional license sales are replaced by a subscription model (SaaS) both the operating margin and the proportion of recurring revenue increase. For our customers, this means low investment costs and that costs for development, operation, maintenance, upgrading and support are included in the ongoing agreement. A secure overall offering at a known cost.

Growth through acquisition

Vitec grows through acqusitions of well-managed software companies in vertical markets in the Nordic countries. There are mature companies with mature products in mature markets, thus organic growth is relatively low. We are an industrial player that acts for the long term and retains the acquired companies in the Group. It requires a thorough acquisition process and responsible management of the companies.

Acquire

In Vitec, we have many years of experience and expertise in the development, sales and support of vertical market software. This makes it possible to identify acquisition targets that, based on a number of important aspects, are fully in line with our strategy. Throughout the Nordic region we continuously target a hundred or so software companies as potential acquisitions. The acquisitions made in existing verticals contribute to increased market share, while the acquisition of entirely new sectors leads to increased risk diversification within the Group. One decisive factor in the decision-making process is that the acquisition must contribute to the earnings per share increasing in the Group. Therefore, it is important that the company has good profitability and positive cash flows. We also invest a lot of time and commitment in personal meetings with people in the company before deciding on an acquisition. Because we buy companies to keep them in the Group, it is important to agree on fundamental values, business model and strategies.

Refine

The acquired companies are profitable and well-managed. Therefore, it is important to maintain the smooth functioning of the business and the important local industry knowledge. The local management is supported by processes and infrastructure that exist in the Group. All companies are followed up with common key figures that govern the strategic direction towards a high proportion of recurring revenue and focus on good cash flows. In the Group, we have common principles for how the product development should be planned and implemented to ensure that our offering is relevant in the future. The decentralized leadership requires that local leaders are familiar with and act on the basis of the Group's strategy and corporate culture.

Brand and product strategy

All operations within the Group must contribute to strengthening the Vitec brand. As a rule, we put Vitec in front of the name of the acquired company and gradually change over to Vitec as the only logo. We retain the name of the product, which is communicated to the market together with the brand Vitec.

Acquisitions may mean that we are offering products with partly overlapping functionality or even competing products. When this happens, we make no immediate changes. In case of later new developments we evaluate the possibility of creating components with support for all product lines. In this way, a process is initiated that future-proofs the products and creates a new, joint product line for all customers within the specific industry.

Sustainable business

Our software often enables increased efficiency and reduced use of energy and paper for our customers, for example by mobile solutions and e-signature. An important part of our business includes the operation of data centers for propriety and customer software. Here we strive to use 100 % renewable energy and make efficient use of our resources. For example, we use so-called free cooling, which means that during the winter months we take advantage of the natural cold of the outside air. We also largely use server virtualization that provides lower energy consumption and reduced consumption of hardware.

The use of modern technology also enables a rational approach and a more sustainable situation for both employees and the climate. One example is our video conference facilities and webinars which results in less traveling. Another function is secured print-outs in our office printer that provides both improved security and reduced consumption of paper and ink cartridges.

Financial targets and outcomes

Growth

Target: Sustainable and profitable growth.

Operating margin

Target: Operating margin 15 %.

400 Dividend policy

100 200 Lorem ipsum Target: At least 33 % of annual net profit should be distributed to shareholders.

Our business areas

Our Group consists of around 30 different companies, se page 74. The business operations are run locally with separate management for each vertical in the different countries. To obtain a comparable and manageable overview, we aggregate the figures and report each industry at Nordic level as one business area. No business area represents more than 25 % of sales resulting in healthy risk diversification within the Group. Business Area Media was wound up in 2016 when the company Vitec Veriba was sold. Instead, the new Business Area Environment was added with the acquisition of the Finnish company Tietomitta OY.

Business Area Auto

In Business Area Auto, Vitec offers software for the automotive and machinery sector in Denmark, Estonia, Finland, Norway and Sweden. The products support work processes, including vehicle sales, workshops, tire storage and distribution of spare parts. The business area has had a stable development in 2016 and the acquisition of Futursoft OY in Finland has contributed to the increased sales. In Norway, we have focused on product development based on new legal requirements. This has been an important undertaking in order to future-proof our customer offering. In Denmark, we have continued to deliver new modules and supplementary products to existing customers. Some examples of our clients are Terminalen and Nelleman in Denmark, Alppilan and Koneliike Olenius in Finland, Mekonomen, Nettbuss and Torghatten ASA in Norway and KG Busservice in Sweden.

Business Area Energy

Vitec develops advanced forecasting systems for electricity traders, as well as calculation and map systems for owners of electricity and district heating networks. The geographic market for the business area comprises the Nordic countries, the Baltic states, the rest of Europe and the Middle East. Development has been stable during 2016 with several new customers across Europe. This is a result of having invested in resources and methodology for efficient processing of the European energy market. During the year we have, among other things, arranged two international seminars in which energy companies from around 20 different countries have participated. Examples of our customers are Fingrid, Vattenfall, Svenska Kraftnät and Axpo Group.

Business Area Real Estate

Vitec offers software for the construction and real estate sector in Sweden and Norway. This includes comprehensive business systems for our customers' main processes, such as leasing, sales, customer service, finance, technical management and energy monitoring. During 2016, both sales and profit grew for the business area. In Sweden, we have continued to provide upgrades for existing customers and sales to new customers have also been strong. More and more customers choose our cloud service, which means that we can maintain an even better level of service. This has also had a positive effect on recurring revenue. In December, the Norwegian company Plania AS was acquired and thereby the business area now also has operations in the Norwegian market. Our customers are private and municipal construction and real estate companies such as PEAB, Rikshem and Botkyrkabyggen in Sweden. Some examples of our customers in Norway are Avinor, Finnmarkssykehuset and Notura.

Vitec has developed an unique software that provides real estate companies in Sweden with the ability to simply publish available rental apartments on the web-based marketplace boplatssverige.se. The marketplace is one of a kind since it provides a broad overview of available rental apartments from both municipal and private property owners. Boplats Sverige has developed positively during the year with 20 new property owners who have joined the marketplace.

Business Area Finance & Insurance

In Business Area Finance & Insurance, Vitec delivers software to banks and insurance companies in Denmark, Norway and Sweden. In 2016, all countries have developed in line with our expectations. In Denmark and Norway, we have renowned products for portfolio management, trade and order management. During the year we launched the latest version of the Portman portfolio management system, which provides customers with increased business benefits and a future-proof product. We also develop software for insurance companies in Norway, Denmark and Sweden. Within that area, we have performed several major implementation projects during the year.

In Sweden, our products for pension calculations and mortgage calculations hold a market-leading position. Several new interesting business opportunities have been initiated, including the final delivery of a pension solution for Länsförsäkringar Fondliv. Some of our other customers are BEC, Nordea, and Danske Bank in Denmark, Nordea, SEB and Min Pension in Sweden as well as Eika and DNB in Norway.

"As an industrial player, it is crucial for us that the companies we acquire fits well into our business model, and that they share our basic values. All three companies acquired in 2016 is very well managed companies with a business model and a product offering that is completely in line with our growth strategy. "

Lars Eriksson, M & A Vitec

Business Area Health

In Business Area Health we provide software for health care companies in Finland. The product is completely web based and is for example used by medical centers, occupational health, hospitals, physiotherapy and rehabilitation centers. Both in private and public organizations. During the year we have strongly focused on further development and final delivery to two of our major customers. In the short term, the project has a negative impact on profitability but from the long term perspective it strengthens the business area with increased recurring revenue. Our SMS service has had a positive development due to strengthened marketing during the year. The Finnish Student Health Service (FSHS), Orton as well as Tammerfors and Helsinki Municipality occupational health services are examples of our customers.

Business Area Environment

In 2016, Vitec acquired the Finnish company Tietomitta OY whose products are propriety software for waste management in Finland. The acquisition means a new vertical market for Vitec and the business expanded with Business Area Environment. The product is a market leader in Finland and manages the entire chain within waste management, from pick-up to billing, accounting and reporting. We have experienced a strong demand for our products and the business area has entered into agreements with a number of new customers during the year. Our customers are both private and municipal companies, such as Jätekukko, Paperinkeräys and Etappi.

Business Area Estate Agents

Business Area Estate Agents offers software for real estate agents in Norway and Sweden. Our products support estate agents in all stages throughout the entire business process. In the Swedish market, we have had a big demand for the webbased product Vitec Express. However, net sales and profit have been lower compared with the previous year. This is due to the readjustment that the business area has made in Sweden because we lost a couple of major customers who have chosen to develop their own propriety software. In Norway, there has been an intensive effort with the modernization of our offering to the entirely cloud-based product Next. The product is built on the Norwegian platform in conjunction with the Swedish product Vitec Express. While this has been an arduous business year, we can welcome the fact that we are finishing the year with a strong offering. Through our intensive development work, we are the market-leaders and have the most modern solutions for estate agents in Norway and Sweden. Our products – Next and Express – are fully mobile and suitable for all types of computers, tablets and mobile phones, with open integration options for supplementary systems. Among our customers, we have Eiendomsmegler Krogsveen and DNB Eiendom in Norway as well as Länsförsäkringar Fastighetsförmedling and Husman Hagberg in Sweden.

More information

Net sales Nettomsättning MSEK Nettomsättning Nettomsättning

Operating profit Rörelseresultat 29,8 ³⁰ Summa 29,8 MSEK Rörelseresultat Rörelseresultat ³⁰ Summa 29,8 MSEK

16 % Rörelsemarginal Auto 16 %

Share of net sales Omsättning, fördelning AO Omsättning, fördelning AO Omsättning, fördelning AO

Share of operating profit RR, fördelning AO RR, fördelning AO RR, fördelning AO

Andel repetitiva intäkter av omsättningen Andel repetitiva intäkter av omsättningen Andel repetitiva intäkter av omsättningen Operating margin Recurring revenue's share of business area sales Andel repetitiva intäkter av omsättningen

A part of something larger

Values and corporate culture

Vitec is a constantly growing corporate group. In 2016, we welcomed several new employees in connection with our corporate acquisition and other recruitments. At the end of the year, we were 507 employees throughout the Nordic region. Once a year, we invite new employees from throughout the Nordic region to introduction days in Umeå. The objective of these days is to spread knowledge about the Group as a whole and to establish our corporate culture and our fundamental values.

We also have recurring management conferences in Umeå. There, managers from the entire Group gather together with the company's founders and the rest of Group management. The managers are important bearers of culture and the conferences are of major important to understanding and establishing our core values.

Developing skill sharing

On a general level, there are many common issues where we can benefit from the collective competence and experience that exists in the Group. We therefore work with something we call collegial levels. They are internal networks based on professional roles where we are inspired and share each other's experiences across country borders and between individuals. For example, our development managers meet a few times a year to exchange experiences. Similar exchanges take place between the Group's accountants, marketing officers and employees in IT operations. These are areas where we see good effects of cross-contacts in the Group. In these forums, representatives from newly acquired companies quickly gain a valuable network.

Preventive health care

Many of our employees have sedentary jobs. ActiVitec is a joint effort in the Group driven by employees to inspire exercise and movement. The offices have their own representatives for Acti-Vitec that coordinate voluntary activities. There is a wide variety of different forms of exercise, such as running, floorball, yoga and strength training.

Value-guided leadership

Experienced, confident managers are important for our success and for our corporate culture. Good managers help employees to grow, and ensure that the focus is on those tasks that create value. The managers are faced with similar issues and challenges, regardless of the country or operation. Within Vitec, we are constantly working with managerial development in various forms. One example is Vitec Leadership Training, which relates to leadership based on values, where the lecturers are mainly individuals from the Group management. The training provides the participants with a good insight into what is expected of managers within Vitec. In addition, the Group management and participating managers from several countries have the opportunity to get to know each other even better. Important networks are built and the conditions are created for an exchange that benefits the entire Group.

To make the managers' day-to-day work easier, the HR depart-

ment provides readily accessible courses online, for example prior to development appraisals and salary reviews. There are also clear HR processes for both recruitment of new employees and in transitions if we are forced to reduce the staffing after events in our surroundings. In both cases, it is important to reduce uncertainty and facilitate necessary decisions with retained respect and consideration of every individual. This makes changes both time-efficient and cost-effective, which benefits all parties.

Managers are often recruited internally, which is why we keep a look-out for individuals with leadership potential in many of our recruitments. Our employees gradually build their expertise and become increasingly valuable. It is therefore important to make the most of the opportunity when we can match an employee's skills and desire for development with a vacant position internally. As an employer, Vitec has the task of continuously developing and challenging our employees to ensure that new doors can be opened internally.

Convertible program

Through convertibles, the employees gain the possibility to share in the value growth in Vitec at the same time that the consequences of a possible negative price trend can be minimized. At present, there is an on-going program that has been targeted at our employees.

Management conference in Umeå in June 2016.

Technical expertise and specific business knowledge

Vitec offers products that are developed for the unique needs of specific industries. Our organizational structure means that our employees focus on a specific sector. This way, they gain many years of experience from the customers' business and become experts in their niche. It provides valuable expertise as specialists and our product development is based on real customer benefit, which provides sustainable software over time. Here, some of our specialists tell about their work in Vitec.

"My interest in software was born when I was working as an accountant. Then I chose to study further in systems science. My expertise in accounting gives me a deeper understanding of what the customer is looking for, and I can work out details and make suggestions before the development work begins. Basically, make sure that the right things are done the right way.

One of the most enjoyable parts of my job is the creative phase. That's when I can combine my knowledge of the customer's day-to-day activities with my technical expertise and continue to develop the product by doing so. Our customers shouldn't have to spend time and energy on things that the software can take care of. Good business knowledge provides a high quality and efficiency in the entire development process."

Leif Olsson Business Area Real Estate Sweden Senior Product Developer with an accounting background. Specialist on accounting software for the real estate sector.

"I've worked for 21 years with customers in the auto parts trade. It's mainly been about issues concerning user experience and new functionality. In my years in the industry, both the surroundings and the technology have changed a great deal. So in order to stay informed and understand our customers' needs, I keep a frequent dialog going with the customers. When necessary, I also use other experts from Vitec, such as colleagues from development or sales.

It's a question of looking at the customer's situation from a holistic perspective. Then it's important to balance customer needs, technical possibilities and financial conditions to optimize customer benefit. In my job as a support technician, I benefit a great deal from having worked so long in the same industry. I can contribute the customer perspective and am therefore an important link between the customers and the other functions in Vitec."

Camilla Larsen Business Area Auto Norway Support Manager. Specialist on software for the auto parts trade.

"I began at Futursoft in 1998, a company acquired by Vitec in autumn 2016. I've now gathered 20 years' experience of working with software for the auto industry, mainly for repair shops and spare parts stores. The products are developed in close cooperation with our customers.

The best aspect of my job is meeting the customer's challenges. After having worked so long with the auto industry, I understand what the customers need in their day-to-day activities. It feels great knowing that the products I develop actually help other people and make their jobs easier for them.

Toni Kuutti Business Area Auto Finland Senior Product Developer. Specialist on software for the auto industry.

"My daily work consists of close customer relationships and logical problem solving. I'm constantly thinking about what needs are behind a specific question from a customer and how we can develop our products further to meet those needs. My 17 years' experience of the finance and insurance sector and development of business support software is of great

help in this work. I understand the customers' business and their processes. I'm driven by creating simple solutions to complex problems. In an industry governed by many different regulatory frameworks, I want to build the product so that it helps the customer do the right thing. The product should simply point out when something isn't done right. I think that brilliant solutions are always simple."

Claus Hermansen Business Area Finance & Insurance Denmark Senior Product Developer. Specialist on software for the finance sector.

Our history

Vitec was established in 1985 as a spin-off company from the University of Umeå. Today, the company is a Nordic software Group listed on Nasdaq Stockholm with 507 employees in the Nordic countries. The head office and a major part of the executive management team is still located in Umeå, which is an important part of our cuture.

How it all started…

"Hey, man," Olov said as we stood in line at Snabben, the lunch place at Universum in Umeå, "I've got an idea." Is that so, I thought, my mind mostly on which variation of beef stew was on the menu this fall day of 1984.

"Yeah," he continued. "You can program, of course, and I can come up with the money for one of those new PCs! Then you can teach me programming, and at the same time maybe we can put together some program that somebody will want to buy."

No sooner said than done. I needed a hobby aside from research and the same went for Olov. Pretty soon a beige Ericsson PC stood on my desktop at home and another the following week at Olov's. We developed in Turbo Pascal – the world's fastest development environment crammed into an inconceivable 39 kB on a floppy disk.

The program we developed stemmed from Olov's idea about property owners' need for a better way to check on their energy consumption and the fact that modern tools were needed for this.

The mission was clear as day! By programming at the hobbyist level in Turbo Pascal, we'd save Sweden from the energy crisis that arose in the aftermath of the 1970's oil crisis. Yep! The hobby project proceeded at turbo speed, and in the spring of 1985 there was interest out in the market to "do business" with us and, in fact, to buy the revolutionary system that we'd developed. Several screenshots were ready, though the functionality behind them was a little iffy. Most of the buttons you clicked on caused the data to freeze. But it looked nice – and surely you had to allow for some bugs and teething problems, right? In any case, we needed to start a company so that we could get out the program and save Sweden from the energy crisis. That's how Vitec was started in May 1985.

/Lars Stenlund, founder and CEO Vitec.

Milestones

Vitec has been in constant growth and has been profitable every year. Here are a few events that have been important and critical to our success over the years.

1985

Vitec was established. The first software was a product for monitoring energy usage in properties.

1990

The operation was scaled up and the Board of Directors was strengthened with external members.

1991

The company was named Vitec. The invented name Vitec won the voting among the employees.

1992

Vitec moved into the energy sector with a software for calculating short-term forecasts for energy requirements in large energy systems.

1998

Vitec was listed on Innovationsmarknaden.

1999

Vitec was listed on AktieTorget. A number of acquistions were conducted in Sweden.

2002

For fiscal year 2002 the company for the first time released a dividend. That was unique among IT-companies in Sweden, the year when the IT-bubble burst.

2003

An analysis of how the existing business had grown profitably through the years

resulted in the acquisition-driven growth strategy, that still applies today.

2005

Business Area Media was established when Vitec acquired the company Veriba AB. The product was mainly targeted at newspaper publishers. Vitec also acquired IBS Vertex and became the most dominant software supplier in the real estate sector.

2007

Vitec acquired Svensk FastighetsData, the market leader software supplier for estate agents in Sweden. Thereby, Business Area Estate Agents was established.

2010

Business Area Finance & Insurance was established when Vitec acquired Capitex AB. The products were software for calculating estimates for banks and insurance companies, they also developed software for estate agents and the real estate industry.

2011

Vitec was listed on Nasdaq Stockholm. During the year, IT Makeriet A/S in Norway with software for estate agents was acquired. This was Vitec's first acquisitions outside Sweden. The Business Area Estate Agents was now represted in both Sweden and Norway.

2012

Vitec acquires the listed subsidiary 3L System AB (publ). Thus, 3L System was de-listed from First North.

2013

Business Area Helath was established when the Finnish company Acute FDS Oy was acquired, with software for the health care industry in Finland.

2014

Vitec acquired the Norwegian company AutoData Norge AS, which offers an industry-specific software for the Norwegian auto parts. Thus, the Business Area Auto was established. Business Area Finance & Insurance extended to Denmark with the acquisition of the Danish company Aloc A/S.

2015

During the year Vitec acquired two companies in Business Area Auto; the Norwegian software company Infoeasy AS and the Danish company Datamann A/S. That same year, Business Area Finance & Insurance expanded when the Norwegian company Nice AS was acquired.

2016

Business Area Media was wound up when Vitec Veriba AB was sold to XLENT Consulting Holding AB. In the same year Vitec acquired the Finnish company Tietomitta Oy and the new Business Area Environment was formed. Also, the Finnish company Futursoft Oy and the Norwegian company Plania AS were acquired during the year and were added to the business areas Auto and Real Estate.

The share

Vitec Class B shares are listed on Nasdaq Stockholm under the ticker VIT B. The share price was SEK 75.50 on December 31, 2016 and the total stock market value amounted to SEK 2,219.5 million.

Turnover and price trend

During the year, shares were traded at a total value of SEK 262.9 million. This meant that each business day, an average of 16,231 shares with a value of SEK 1,039,000 were traded and that 16 % of the shares were traded during the year. The closing price for the year was SEK 75.50 while in the previous year it was SEK 75.00. The total stock market value at the end of the year amounted to SEK 2,219.5 million. For the share the highest price paid was SEK 76.00 on December 29 and the lowest SEK 55.75 on 3 and 4 March.

Reclassification of Class A shares

In February, 500,000 Class A shares were converted to Class B shares in accordance with the split conditions mentioned in the Articles of Association, §5 Share type. After reclassification, the number of Vitec Class A shares amounted to 3,500,000 and the number of Class B shares 25,896,690. The total number of shares in Vitec is unchanged and at end of the financial year, the number of issued shares amounted to 29,396,690. A pre-emption clause exists for the Class A shares. The share capital amounts to SEK 2.9 million and the nominal value is SEK 0.10 per share.

25,896,690
76.00
55.75
75.50
16
1,039
16,231
2,219.5
Nasdaq Stockholm
Mid Cap
Vit B
SE0007871363

Share price and turnover 2012-2016

Stock market

The Class B shares in Vitec Software Group AB (publ) are listed on Nasdaq Stockholm. The shares have the ticker VIT B and ISIN code SE0007871363. The minimum trade is one (1) Class B share. In January 2017, shares were moved from Small Cap to Mid Cap.

Shareholder information

Vitec aims to provide consistent, detailed and timely information about the Group's development and financial position to shareholders and the stock market. Information is provided in the form of continuous reports, year-end reports, annual reports, interim reports, press releases and decisions at the

Annual General Meeting. All reports are published in Swedish and in English through GlobeNewswire (Nasdaq Stockholm's press release service). On vitecsoftware.com we have gathered reports, press releases and other information about the company, where there are also presentations and movies from the Annual General Meeting. On the website, it is also possible to order a subscription to our press releases via email. Shareholders who want a printed version of our reports sent to them via post can also order them on vitecsoftware.com.

Analyses of Vitec

During the year Vitec was monitored by ABG Sundal Collier and Remium.

Key figures

		2016	2015	2014	2013	2012
Adjusted equity per share	(SEK)	11.37	9.24	8.85	6.39	5.92
Earnings per share	(SEK)	2.27	2.66	1.75	1.16	1.30
Earnings per share after dilution	(SEK)	2.25	2.64	1.68	1.09	1.16
Paid dividend per share	(SEK)	0.90	0.67	0.55	0.50	0.40
Cash flow per share	(SEK)	5.20	5.09	4.40	1.97	2.25
P/E ratio		33.22	28.20	15.12	15.31	10.89
P/Ajusted equity		6.64	8.12	2.99	2.77	2.33

Share capital development

Year	Transaction	Total share capital	Total no. of Class A-shares	Total no. of Class B-shares
1985	Company founded	50,000	500	-
1990	Bonus issue	100,000	1,000	-
1990	New issue	156,000	1,160	400
1995	New issue	164,000	1,160	480
1997	Bonus issue/split	328,000	23,200	9,600
1997	New issue	340,000	23,200	10,800
1997	Split	340,000	4,640,000	2,160,000
1997	Conversion of Class A shares	340,000	4,000,000	2,800,000
1997	Bonus issue	850,000	10,000,000	7,000,000
1997	New issue	900,000	10,000,000	8,000,000
1998	New issue	1,500,000	10,000,000	20,000,000
1998	New issue	1,641,000	10,000,000	22,820,000
1999	Consolidation	1,641,000	1,000,000	2,282,000
2000	New issue	1,732,000	1,000,000	2,464,000
2004	New issue	1,786,100	1,000,000	2,572,200
2007	New issue	1,808,000	1,000,000	2,616,000
2008	New issue	1,883,000	1,000,000	2,766,000
2008	Conversion of Class A shares	1,883,000	800,000	2,966,000
2009	New issue	1,916,350	800,000	3,032,700
2010	New issue	2,125,725	800,000	3,451,450
2011	New issue	2,183,538	800,000	3,567,075
2012	New issue	2,574,164	800,000	4,348,327
2013	New issue	2,654,164	800,000	4,508,327
2014	New issue	2,674,164	800,000	4,548,327
2014	New issue	2,899,164	800,000	4,998,327
2014	New issue	2,939,669	800,000	5,079,338
2015	Split	2,939,669	4,000,000	25,396,690
2016	Conversion of Class A shares	2,939,669	3,500,000	25,896,690

Ownership structure

	Number of Class A-shares	Number of Class B-shares	Share Capital %	Voting rights %
Lars Stenlund*	1,570,000	327,280	6.5	26.3
Olov Sandberg*	1,570,000	124,565	5.8	26.0
Jerker Vallbo*	360,000	138,405	1.7	6.1
Thomas Eklund		1,746,440	5.9	2.9
SBB and Trust, Boston		1,536,315	5.2	2.5
Grenspecialisten Förvaltning AB		1,161,135	3.9	1.9
SEB Investment Management		1,149,946	3.9	1.9
NCT Exempt ACC US pension fund		1,105,026	3.8	1.8
Nils-Eric Öquist*		980,000	3.3	1.6
Fidelity Low-Priced Stockh Fund		900,000	3.1	1.5
Other shareholders		16,727,578	56.9	27.5
*includes family and/or ownership through companies	3,500,000	25,896,690	100.0	100.0

Ownership structure

	A-shares	No. of Class B-shares	Holding %	Voting rights % 500
1,652		309,583	1.1	0.5
419		361,779	1.2	0.6
746		1,744,229	5.9	0 2.9
2014 118	2015	905,516	3.1	1.5
41		507,847	1.7	0.8
28 OMX SEK		482,323	1.6	0.8
137	3,500,000	21,585,413	85.3	92.9
3,141	3,500,000	25,896,690	100.0	100.0
	No. of shareholders 2013 OMX SEK Vitec SEK	2014	2015	2016 2016 Number of sahres tradedd per month, 000-s Number of sahres tradedd per month, 000-s

Geographical ownership breakdown Development foreign ownership

30 %

Administration Report

The Board of Directors and CEO of Vitec Software Group AB (publ), org.no. 556258-4804, with its registered office in Umeå, hereby submit the annual report and consolidated financial statements for the 2016 financial year.

This English version of the annual report is a translation of the original Swedish version. In the event of variances, the Swedish version shall take precedence over the English translation.

The Business

Vitec is a software manufacturer that designs industry-specific business applications for the Nordic market. The company, with operations in Sweden, Norway, Finland and Denmark, is growing in the mature part of the software industry by consolidating vertical software segments. Our customers include real estate agents, construction firms, real estate companies, banks, insurance companies, energy providers, healthcare providers, auto part dealers and waste management specialists. The Group has around 500 employees who generate annual sales of SEK 750 million. Vitec is listed on the Nasdaq Stockholm Stock Exchange.

• Business Area Auto Business systems for the auto and machinery sector with support for sales, purchasing, inventory management, invoicing, accounting and payroll administration.
• Business Area Energy Business systems for forecasting wind power, electricity and heating needs, as well as for the technical management and maintenance of distribution networks.
• Business Area Real Estate Business systems for construction and real estate companies.
• Business Area Finance & Insurance Business systems for the finance and insurance industry, as well as standardized software for portfolio management, non-life insurance companies, tax calculations, pension calculations and housing calculations.
• Business Area Health Business systems for electronic handling of medical records for healthcare.
• Business Area Media Business systems for newspaper publishers and companies supplying special solutions within distribution. The operations in this business area were

divested during the year.

• Business Area Environment Business systems for the whole waste management chain, from collection to invoicing, accounting and reporting.
• Business Area Estate Agents Business systems for real estate agents.

Vitec has a growth-oriented strategy and is constantly on the lookout for new acquisitions. The objective is to be the market leader within the niche markets in which Vitec operates. The current market is made up of Sweden at 42.2 percent, Denmark 22.9 percent, Norway 17.7 percent, Finland 15.7 percent and other countries 1.5 percent.

Net sales and results

The Group's net sales totaled SEK 675.4 million (618.4) in 2016, an increase of 9 percent compared to 2015. The increased net sales can mainly be attributed to the acquisitions in the Auto and Environment business areas. Organic growth adjusted for acquisitions is -5 percent.

Operating profit amounted to SEK 88.3 million (100.6), which corresponded to an operating margin of 13 percent (16). The operating profit included depreciation and impairments totaling SEK 114.3 million (85.8).

Net financial items were negative, amounting to SEK -6.4 million (-5.9). Financial income amounted to SEK 0.8 million (0.8) and comprised interest on bank accounts. Financial expenses amounted to SEK -7.1 million (-6.7) and comprised interest on credit facilities and convertible bonds, as well as losses from the divestment of Business Area Media.

Profit for the year after tax amounted to SEK 66.8 million (78.2), of which SEK 66.8 million (78.2) was attributable to the Parent Company's shareholders.

Development of Business Areas

The Group's operations are organized into and managed based on the segments (business areas) Auto, Energy, Real Estate, Finance & Insurance, Health, Media, Environment and Estate Agents.

	External net sales		Growth		Operating profit before and after acquisition related expenses		Operating margin before and after acquisition related expenses
SEK million	2016	2015	2016	2016	2015	2016	2015
Auto	119.2	71.1	68 %	19.2	14.9	16 %	21 %
Energy	25.9	24.1	7 %	7.3	8.8	28 %	37 %
Real Estate	158.4	142.6	11 %	29.8	24.9	19 %	17 %
Finance & Insurance	126.6	101.2	25 %	20.3	13.9	16 %	14 %
Health	66.2	61.5	8 %	1.9	5.7	3 %	9 %
Media	4.6	10.5	-56 %	1.0	2.4	21 %	23 %
Environment	18.4	-	-	2.4	-	13 %	-
Estate Agents	155.3	207.0	-25 %	11.1	33.2	7 %	16 %
Joint	1.0	0.4	142 %	0.0	-	0 %	0 %
Group	675.4	618.4	9 %	93.1	103.9	14 %	17 %
Acquisition-related costs				-4.8	-3.2
Operating profit after acquisition-related expenses				88.3	100.6	13 %	16 %

Due to non-recurring acquisition related costs, development is difficult to follow. For this reason, the operating profit above is described before and after acquisition related costs.

Business Area Auto

This segment includes Vitec Autodata AS, Vitec Datamann A/S, Vitec Infoeasy AS and Futursoft OY. The operations in Datamann and Infoeasy were consolidated in the business area as of July 1 and July 2, 2015, respectively, and Futursoft was consolidated as of September 7, 2016. Recurring revenue increased by 61 percent to SEK 96.8 million (60.0), the license revenues increased by 452 percent to SEK 3.0 million (0.5) and services increased by 98 percent to SEK 14.1 million (7.1). Recurring revenue as a percentage of sales was 81 percent (84). The operating margin was 16 percent (21).

Business Area Energy

This segment includes Vitec Energy AB. Total revenues amounted to SEK 25.9 million (24.1), an increase of 7 percent. Recurring revenues increased by 6 percent to SEK 18.4 million. Service revenues increased by 12 percent to SEK 7.4 million. Recurring revenue as a percentage of sales was 71 percent (72). The operating margin decreased to 28 percent (37).

Business Area Real Estate

This segment includes Vitec Förvaltningssystem AB, Vitec Fastighetssystem AB, Vitec Capifast AB, Vitec Software AB, Vitec AB and Vitec Plania AS. Operations in Plania were consolidated in the business area as of December 5, 2016. Total revenues amounted to SEK 158.4 million (142.6), an increase of 11 percent. License revenues increased by 26 percent to SEK 11.5 million. Recurring revenues increased by 9 percent to SEK 89.2 million. Service revenues increased by 12 percent to SEK 55.2 million. Recurring revenue as a percentage of sales was 56 percent (58). The operating margin increased to 19 percent (17).

Business Area Finance & Insurance

This segment includes Vitec Capitex AB, the group Vitec Aloc A/S and Vitec Nice AS. Operations in Nice were consolidated in the business area as of December 7, 2015. Total revenues amounted to SEK 126.6 million (101.2), an increase of 25 percent. License revenues decreased by 10 percent to SEK 6.1 million. Recurring revenues increased by 29 percent to SEK 99.7 million. Service revenues increased by 23 percent to SEK 20.3 million. Recurring revenue as a percentage of sales was 79 percent (76). The operating margin increased to 16 percent (14).

Business Area Health

This segment includes the group Acuvitec Oy. Total revenues amounted to SEK 66.2 million (61.5), an increase of 8 percent. Recurring revenue increased by 13 percent to SEK 54.6 million (48.3), while services decreased by 7 percent to SEK 11.2 million (12.1). Recurring revenue as a percentage of sales was 83 percent (79). The operating margin was 3 percent (9).

Business Area Media

In July, the group Vitec Veriba AB was divested. Remaining in the segment are 3L Media AB and the profit contributed by the Veriba Group before the sale. Total revenues amounted to SEK 4.6 million (10.5). Recurring revenue as a percentage of sales was 58 percent (44). The operating margin was 21 percent (23).

Business Area Environment

This segment includes Tietomitta OY, which was acquired July 5, 2016. Total revenues amounted to SEK 18.4 million. Recurring revenue amounted to SEK 11.6 million, corresponding to 63 percent of sales. The operating margin was 13 percent.

Business Area Estate Agents

This segment includes Vitec Mäklarsystem AB, Capitex AB, Vitec IT-Makeriet AS, Vitec Megler AS, Vitec Megler AB, Vitec Fox AS and ADservice Scandinavia AB. Total revenues amounted to SEK 155.3 million (207.0), a decrease of 25 percent. License revenues decreased by 67 percent to SEK 1.8 million. Recurring revenues decreased by 24 percent to SEK 145.1 million. Service revenues decreased by 15 percent to SEK 7.8 million. Recurring revenue as a percentage of sales was 93 percent (92). The operating margin was 7 percent (16).

Acquisitions and changes to the legal structure during 2016.

Three acquisitions were conducted during 2016, resulting in changes to the legal structure. The Finnish company Tietomitta OY was consolidated on July 5. The Finnish company Futursoft OY was consolidated on September 7. On December 5, the Norwegian company Plania AS was consolidated. On July 1, the corporate group Vitec Veriba AB was divested.

Objectives

Vitec has a growth-oriented strategy and is constantly on the lookout for new acquisitions. Historic growth has amounted to 25 percent per year on average. The Board of Directors has set the financial target of achieving an operating margin of 15 percent and to continue the work of focusing on continual growth.

OUTCOME

	Average	2012	2013	2014	2015	2016
Sales growth	14 %	8 %	-5 %	32 %	26 %	9 %
Operating margin	13 %	11 %	11 %	14 %	16 %	13 %

Important events 2016

Q1

Increased number of shares and votes in Vitec

Vitec has conducted a share split 5-for-1, which means that each previous share is split into five shares of the same class. After the split, the total number of shares increased from 5,879,338 shares to 29,396,690 shares. The number of A shares has increased from 800,000 shares to 4,000,000 shares and the number of Bshares from 5,079,338 shares to 25,396,690 shares.

New Head of Business Area Real Estate

Magnus Persson is from February 1 the new head of Vitec Business Area Real Estate. Magnus, former Director of Sales in the business area is succeeding Johan Kull who after almost four years leaves for a new position within the parent company, Vitec Software Group AB (publ).

Great international interest for efficient energy

February 17 to 18th, the Nordic software company Vitec invited the energy sector to a two-day seminar on the topic of Efficient Energy Forecasting. Delegates from 35 companies and 22 different countries participated to take part of the eleven sessions given to cover the complexity of forecasting energy consumption and energy production. They also got a fundamental tour in the capacity of the Vitec software Aiolos Forecast Studio.

Reclassification of Class A shares into Class B shares and Nordea Small Cap Fund increases in Vitec

Owners of 500 000 A shares of Vitec have converted class A shares to class B shares in accordance with the conversion clause set out in the Articles of Association § 5 Classes of shares. The reclassification has been made by Lars Stenlund and Olov Sandberg and all of these B shares were sold to Nordea Small Cap Fund Sweden and Nordea Small Cap Fund Nordic. After conversion, the number of A shares of Vitec will amount to 3,500,000 shares while the number of B shares will amount to 25,896,690 shares. The total number of shares of Vitec, including both A and B shares is unchanged at 29,396,690 shares.

New Head of Business Area Health

Janne Vainio is from March 14 new Director of Vitec Business Area Health. Janne has 15 years within the business, the last years as account director, and he is well versed in the industry and in customer needs. Former Director Ilari Laaksonen will move forward to a different position in the Vitec Group but continue to work close to Janne in the organization.

Q2

New Head of Business Area Finance & Insurance in Denmark Kim Møller Jensen will September 1 assume a position as CEO of Vitec Business Area Finance & Insurance in Denmark. Kim has high qualifications and long experience in the IT industry. He currently holds a position as CIO within Siemens, prior to that he was Director within EG. Kim has extensive experience in running product development based on the unique circumstances of individual industries.

Q3

Vitec sells Media business to XLENT

July 1, Vitec agreed with XLENT Consulting Holding AB on the sale of the shares of Vitec AB Veriba which constitutes Vitec Media business. The business, with sales of approximately SEK 9 million per year, mainly includes custom application development, and has a significantly higher share of services sales than other parts of Vitec. The business has a good fit with XLENT, which has its focus on service sales, which will be beneficial for both employees and customers. Sales were made to the consolidated book values.

Vitec acquires Tietomitta OY in Finland

Vitec Software Group AB (publ) has on July 5 agreed to acquire 100 % of the shares in the Finnish software company Tietomitta OY, whose product is an industry-specific software for supporting waste-management in Finland. The company reported sales for the fiscal year 2015 of EUR 3.5 million, with approximately 65 % recurring revenue, and EBITDA of EUR 0.8 million. Payment is in cash at closing. Acquisition is expected to directly result in an increase in earnings per share for Vitec. Consolidation is done from the date of acquisition.

Vitec acquires Futursoft OY in Finland

Vitec Software Group AB (publ) has on September 7 agreed to acquire 100 % of the shares in the Finnish software company Futursoft OY specialized in software for the automotive and machinery industries. The company's customers are in the spare parts trade, maintenance and repair, and sales of heavy machinery and equipment. Overall, it has about 1,700 customers and 5,000 users in Finland, Sweden and Estonia. The company

reported sales for the fiscal year that ended 2015-09-30, of EUR 4.0 million, with approximately 69 % recurring revenue and EBITDA of EUR 1.1 million.

Payment is in cash at closing. Acquisition is expected to directly result in an increase in earnings per share for Vitec. Consolidation is from the acquisition date. The acquired company will be included in the Vitec business segment "Auto".

Q4

Pension Danmark chooses PORTMAN from Vitec

Vitec Aloc A/S has entered into an agreement with PensionDanmark, that PensionDanmark will use PORTMAN as their Portfolio Management system to manage PensionDanmarks investment portfolio of 200 Billion Danish Kroner. The signed deal has a revenue at approx. 8 MDKK, and a continuing annual subscription agreement.

PensionDanmark found that Vitec`s software solution is a perfect match to the demands and needs defined by a company as PensionDanmark, which gives them the possibility to handle multiple assets in one system.

Vitec acquires Plania AS in Norway

Vitec Software Group AB (publ) has on December 5 agreed to acquire 100 % of the shares in the Norwegian software company Plania AS, specialized in software for real estate administration, facility management and property maintenance. The company is expected to report sales of 28.4 MNOK for the fiscal year of 2016, with approximately 48 % recurring revenue and an EBIT-DA of 6.6 MNOK.

Payment is in cash at closing. Acquisition is expected to directly result in an increase in earnings per share for Vitec. Consolidation is from December 5. The acquired company will be included in the Vitec business segment "Real Estate".

Significant events after the end of the period

Vitec moves from Small Cap to Mid Cap on Nasdaq Stockholm Vitec Software Group AB's class B share (VIT B) has moved from the Small Cap segment to the Mid Cap segment of Nasdaq Stockholm as a result of Nasdaq's annual review of market cap values on the Nordic markets. The Vitec shares trades in the Mid Cap segment as of January 2, 2017. The Mid Cap segment includes companies with a market capitalization between EUR 150 million and EUR 1 billion.

Vitec appoints Patrik Fransson as new Investor Relations Officer Olov Sandberg, who together with Lars Stenlund founded Vitec Software Group in 1985, will leave his operational role in Vitec Software Group and retire from work. Olov will unchanged remain as one of the main owners of the company. The COO Patrik Fransson will succeed Olov Sandberg as IR-Officer from February 27 2017.

Liquidity, cash flow and financial status

The Group's cash and cash equivalents, including short-term investments, amounted to SEK 80.9 million (60.3) at the end of the period. In addition to these cash and cash equivalents there was a bank overdraft facility of SEK 20 million, and SEK 5 million as an unused portion of a credit facility totaling SEK 250 million.

• Cash flow from operating activities was SEK 158.5 million (139.8).
• Cash flow from investing activities was SEK -244.7 million (-167.6), divided between the acquisition of subsidiaries at SEK -156.1 million (-85.6), the sale of subsidiaries at SEK 4.2 million (0), intangible assets including capitalized work at SEK -83.8 million (-70.2) and investments in tangible assets at SEK -9.0 million (-11.8).
• The cash flow from financing activities amounted to SEK 109.1 million (11.9), divided between new bank loans at SEK 185.5 million (102.9), dividends at SEK -26.5 million (-19.7) and loan amortization at SEK -49.9 million (-34.5).

Total interest-bearing liabilities amounted to SEK 383.5 million (241.1) on December 31, 2016, distributed between long-term interest-bearing liabilities at SEK 339.4 million (207.2) and short-term interest-bearing liabilities at SEK 44.1 million (33.9). During the period, the convertible debenture was reclassified from a long-term to a short-term liability as the maturity date is in December 2017. In conjunction with the acquisition of Tietomitta OY, SEK 44.2 million was used from the credit facility. In conjunction with the acquisition of Futursoft OY, SEK 71.4 million was used and in conjunction with the acquisition of Plania AS, SEK 52.9 million was used. In addition, SEK 17 million was used for financing the previous year's acquisition of Fox. This loan was, however, repaid in its entirety later in the financial year. The Group's net interest-bearing assets and interest-bearing liabilities amounted to SEK -302.6 million (-180.8)

Equity attributable to Vitec's shareholders amounted to SEK 334.2 million (271.5). The equity/assets ratio was 30 percent (31). The payment of dividends after the Annual General Meeting in May 2015 amounted to SEK 0.90 per share, totaling SEK 26.5 million.

Investments

Investments amounted to SEK 83.8 million in intangible assets, divided between software at SEK 1.5 million and capitalized work at SEK 82.3 million, as well as SEK 9.0 million in tangible assets. Through the acquisitions of Tietomitta OY, Futursoft OY and Plania AS, SEK 195.9 million was added in product rights, brands, customer contracts and goodwill.

Research and development

Vitec develops and supplies niche-oriented software and Internet services. An aggressive development operation is an essential part of our strategy and a condition for long-term survival. Strategically focused development strengthens the existing operation and makes it possible for new products and services to be launched. This development comprises ongoing improvements within existing product areas. These improvements will benefit existing customers via maintenance agreements and SaaS agreements.

Intangible assets

The Group's intangible assets comprise goodwill, product rights, brands and customer contracts that arise through acquisitions as well as capitalized development work and software. As of December 31, 2016, the carrying amount of goodwill was SEK 240.4 million (202.1), product rights SEK 266.9 million (229.1),

capitalized development costs SEK 150.5 million (109.2), customer contracts SEK 77.8 million (62.3) and brands SEK 70.1 million (8.8).

Equity

Total equity amounted to SEK 334.2 million (271.5) as of December 31, 2016. Equity attributable to shareholders amounted to SEK 334.2 million (271.5).

As of December 31, there was an ongoing convertible program totaling SEK 13.8 million, which can be converted to a maximum of 442,210 Class B shares and increase the share capital by SEK 0.04 million.

Employees

During 2016, Vitec had an average of 467 employees (422), of whom 105 (112) were women. At the end of the year, the number of employees totaled 507 (433).

Information about non-financial profit indicators

The Group has a shared IT infrastructure where all employees have access to the same basic internal Group information. The structure includes tools for electronic communication. The shared IT infrastructure has an economic impact through increased efficiency, an environmental impact through reduced travel and a social impact through an increased sense of belonging to a team. Newly acquired companies are brought into the IT infrastructure as soon as possible.

The health and fitness venture ActiVitec continued in 2016. ActiVitec is a joint effort in the Group driven by employees to inspire exercise and movement. The offices have their own representatives for ActiVitec that coordinate voluntary activities. Good habits, balance in life and good health are important cornerstones in our culture within Vitec. Examples of activities in 2016 are running, floorball, yoga and strength training.

There are several collegial forums within the Group, i.e. internal networks based on our professional roles. In these, it is possible to exchange experiences and spread Vitec's culture.

Parent Company

The Parent Company's net sales amounted to SEK 69.9 million (66.8) and essentially comprised invoicing to subsidiary companies for executed intra-Group services in the form of premises, data communication and telephony, financial reporting, HR and management/business development. Profit after tax amounted to SEK 56.9 million (54.4), including anticipated dividends from subsidiaries.

The Parent Company's cash and cash equivalents amounted to SEK 60.6 million (45.3). Cash and cash equivalents comprise a Group currency account where the Parent company has the highest level account in relation to the bank. The subsidiaries' cash and cash equivalents consequently comprise receivables/ liabilities in relation to the Parent Company. The Parent Company has a bank overdraft facility of SEK 20 million (20) and a credit facility for acquisitions of SEK 250 million, of which SEK 5 million was unused on the balance sheet date.

Investments amounted to SEK 1.5 million (1.6) in intangible assets, SEK 0.0 million (0.8) in tangible assets and SEK 209.0 million (123.8) in shares in subsidiaries. The value of shares in subsidiaries was adjusted downward during the year regarding the conditional supplemental purchase consideration for AcuVitec OY by SEK 21.2 million and by SEK 1.5 million for Fox Publish AS. Short-term, non-interest bearing liabilities have decreased to a corresponding extent.

Long-term interest-bearing liabilities amounted to SEK 338.9 million (193.7) in the form of bank loans. In the previous year, there were also convertible debentures of SEK 13.5 million. Short-term interest-bearing liabilities amounted to SEK 44.1 million (33.3) with regard to convertible debentures at SEK 13.8 million (0) and bank loans at SEK 30.3 million (33.3). During the year, new loans have been taken out at a value of SEK 185.5 million.

In May, a share dividend of SEK 26.5 million (19.7) was paid out.

Risks and uncertainties

Through its operations, the Group is exposed to various risks, both in the form of risks in the business and in the form of financial risks. Below is a description of the most critical factors.

Business-related risks

Employees and recruitment

The Group is heavily dependent on skilled labor and specialist expertise. By being a modern employer that provides the opportunity for interesting work duties, flexible working hours, preventive health care, supplementary salary in the event of parental leave, development and career opportunities within the Group, etc., Vitec is able to attract and retain qualified employees. However, there is a risk that this will not be able to take place on acceptable terms, despite market-level remuneration, as there is stiff competition for experienced employees from other software and product development companies. Thanks to the Group's geographic spread, various positions can be located based on conditions on the labor market in various locations around Sweden and the Nordic region.

Customer-dependence

Vitec has entered into agreements with a large number of customers. The Board of Vitec considers that the Group is not dependent to a decisive extent on any one single customer. However, the customer structure can be more or less concentrated within the Group's various business areas. Within Business Area Estate Agents, there are individual major customers as well as framework agreements with customers on behalf of franchisees, which mean that customer-dependence can be considered higher than for the Group as a whole. No single customer is responsible for more than 5 percent of the Group's sales.

Supplier-dependence

Vitec purchases bandwidth from telecom operators. These telecom operators are important to Vitec to be able to conduct its business. Vitec also purchases support services that are integrated in the business systems, and such support services mainly comprise property-related information or the transfer of such information by text message. Vitec has alternative supplier solutions, but despite this is dependent on its suppliers' delivery reliability in order to avoid operational disruptions that could entail negative consequences for profit and financial status.

IT infrastructure

The IT infrastructure in the Group is centralized. Considerable emphasis is placed on organization and prevention with regard to this infrastructure, as operating outages can entail negative consequences to financial position and performance. The operation of the IT infrastructure is secured through redundancy and the geographic spreading of risks. An operational disruption procedure has been adopted by the Group management. In this, processes and information pathways have been determined in order to manage operational disruptions and disaster recovery. Training exercises are conducted once a year.

Acquisition and integration of implemented acquisitions

Vitec has conducted a number of acquisitions over the years. To varying extents, acquisition situations always entail risks that can have significant negative effects for the acquiring party. Risks linked to acquisitions include financial, legal and operational risks. There are many financial risks, but one particularly significant risk is the risk of paying too high a purchase sum. There are also risks that arise when financing the purchase sum, which can involve taking out or taking over an interest-bearing loan that adversely impacts on the Group's profit and financial status. There are many legal risks, but one particularly high risk is linked to the assumption of liability for the acquired company's or the acquired asset's commitments and historic operations, as well as the tax situation. The operational risks largely relate to integrating the acquired company or asset while retaining profitability. There are no guarantees that the prior anticipated positive operational or financial effects that normally give rise to an acquisition will actually be realized, or that it will not result in a negative impact on the Group's profits and financial status. Neither is there any guarantee that the Group's implemented acquisitions will result in positive effects for the Group. An assessment of the need for impairment is performed annually for acquired goodwill, brands and product rights. If these are not considered to have been correctly valued during such an assessment, this can result in an impairment, which could have a negative impact on results.

Investments in product development

Every year, Vitec invests significant resources in the development of new and existing products, which is a precondition for Vitec continuing to supply competitive business and operational systems.

It is extremely important for Vitec to be able to finance and achieve a return on the results of its product development. In order to plan, implement and follow up the Group's product development more successfully, the Group has a product investment plan that is adopted in the budget process each year and followed up monthly for each business area.

Fixed price projects

The business areas within the Group occasionally enter into agreements with customers regarding undertakings in project form at a predetermined fixed price, known as fixed price projects. Fixed price projects can result in significant losses if the work resources actually used exceed the work resources that were estimated to be required at the time of the tender. Companies in the Group may continue to take on fixed price projects, and there are no guarantees that such fixed price projects will not result in losses, which can have a negative impact on the Group's profits and financial status.

Industry and market-related risks

Economic situation

The Group's development and financial status are partially dependent on outside factors over which Vitec has no influence, such as the general economic situation, its customers' market conditions and the occurrence of new, competing products and services. Vitec offers operational systems that are often central and prioritized by customers. However, both the renewal of license agreements and new sales are affected by the commercial sector in general reducing its investments during economic downturns. Future economic downturns can consequently have a negative effect on the Group's operations, growth, profits and financial status.

Technical development

Technical and market development are ever-present within the software industry. It is important for Vitec to be able to predict changes in our customers' needs and adapt our offer accordingly if we are to continue to develop according to plan.

Intellectual property rights

Development-intensive software companies always run the risk of new or existing competitors copying developed solutions. For this reason, Vitec stores source codes for proprietary and acquired software in a secure manner.

Product liability

Any faults that may arise in the products could lead to claims for liability and damages. In projects relating to processes that are vital for our customers, test runs are performed in test environments at the customer before the start of production. Vitec also offers test operation in certain cases. All the companies in the Group have current insurance cover for product liability, so the direct risk is limited.

Other disputes

Disputes can arise in all commercial operations, for example as a result of parties' differing perceptions as regards liability, interpretations of liability, etc. As far as possible, Vitec employs industry-standard agreements with fines up to a limited amount. Major agreements that deviate from the standard are approved by the Group management and/or the Board of the Parent Company, along with insurance and legal experts. Vitec or its subsidiaries are currently not involved in any disputes, legal processes or arbitration processes.

Financial risks

Vitec's exposure to financial risks and the handling of such risks is described in Note 20.

Sensitivity analysis

Below is a presentation of how profit and earnings per share are altered by various factors.

• Vitec purchases services, subscriptions and statistical information from external suppliers to the value of SEK 82.0 million annually. A change of 1 percent would affect profits by around SEK 0.6 million.
• Personnel costs represent the largest cost item in the Group, amounting to SEK 380.0 million. A change of 1 percent would affect profits by around SEK 2.9 million.
• Acquisitions are financed to a large extent by loans from banks or through convertible bonds. The interest rate is often vari-

able. A change to the interest rate of one percentage point for existing interest-bearing liabilities as of December 31, 2016 would affect profits by SEK 3.1 million.

• Vitec's involvement in foreign subsidiaries is increasing, which entails increased currency and translation risks. The Group's current structure entails currency exposure in Norwegian kroner, Danish kroner and in relation to the euro. A 5 percent change to the exchange rate for these currencies this year would have affected the Group's profits by approx. SEK 2.0 million.

		Impact on profit, SEK 000s		Impact on profit, SEK/share
Influencing factors	Change, %	2016	2015	2016	2015
Subcontractors and subscriptions	+/- 1	635	633	0.02	0.02
Personnel costs	+/- 1	2,940	2,570	0.10	0.09
Loan interest (change percentage point on loan interest)	+/- 1	3,125	3,327	0.11	0.11
Exchange rate change NOK, DKK and EUR	+/- 5	2,044	191	0.07	0.01

Corporate governance

Corporate governance defines and allocates responsibilities and roles between shareholders, directors, management and other stakeholders.

Chairman's comments

The Board of Directors of Vitec consists of five members, two women and three men. The various areas of expertise and varying professional experience of the Board members provide a solid foundation for dynamic and active Board work. In 2016, the Board held ten meetings, of which some were phone conferences and one was a strategy meeting. With a few occasional exceptions, all members were present at all meetings. The meeting calendar is primarily linked to the quarterly interim reports, the year-end report and the Annual General Meeting. In addition to this, it is most often decisions regarding acquisitions or financing that give rise to additional Board meetings. The agenda has a fixed reporting component plus specific issues that require discussion and decisions. Vitec has a well-established growth strategy based on acquisitions. The Board continuously reviews the criteria that govern the selection of acquisition candidates and studies the "prospect list" current at every occasion. The

company has a strong cash flow, but also needs external financing to carry out acquisitions. In 2016, three acquisitions were carried out and a large part of the Board's work involved the implementation and follow-up of these deals, as well as issues of relevant financing. At the annual strategy meeting, which was held in Finland in 2016, a review is done of the companies acquired and additions to the acquisition strategy when necessary. Continuously new operations and strong growth are accompanied by a need to organize and adapt the Group. Organizational and recruitment issues are often recurring items on the Board's agenda. Remuneration and auditing issues are addressed by the Board as a whole, requiring no separate committees. Every year, the Chairman performs an evaluation of the Board's work and presents the results to the Nomination Committee.

Crister Stjernfelt, Chairman of the Board of Vitec.

Corporate governance in Vitec

Regulatory framework

The corporate governance of Vitec is based on Swedish legislation. The external framework mainly includes:

• the Swedish Companies Act
• the Annual Accounts Act
• regulations for issuers at Nasdaq Stockholm
• the Swedish Code of Corporate Governance.

The most important internal control instruments are the Articles of Association adopted by the Annual General Meeting, followed by the Board of Directors' rules of procedure and the Board's instructions for the CEO. In addition, the Board has established a number of policies, guidelines and instructions that are binding and that apply to the operations of the entire Group.

The Swedish Code of Corporate Governance is based on the "comply or explain" principle, which means that it is possible to deviate from the regulations, provided the company provides an explanation for the deviation and also presents the selected alternative. Vitec complies with the provisions, with the sole exception that the composition of the Nomination Committee does not follow the code (points 2.3 and 2.4). The Nomination Committee has appointed Olov Sandberg as Chairman of the Committee, as this can be deemed a natural choice bearing in mind the Vitec's ownership structure. The influence of the main owners is also so important that we have decided to allow them to be included in the Nomination Committee. The Nomination Committee's members consider that accepting this assignment does not give rise to any conflicts of interest.

The share and shareholders

The Class B shares in Vitec Software Group AB (publ) are listed on Nasdaq Stockholm. At the end of 2016, Vitec had 3,141 shareholders. Lars Stenlund and Olov Sandberg were the largest owners, with 6.5 % of the capital and 26.3 % of the votes and 5.8 % of the capital and 26.0 % of the votes respectively. In total, the company's three largest owners owned 100 % of the Class A shares and 2.0 % of the Class B shares, while the 10 largest owners owned 35.4 % of the Class B shares. At the same time, the

total stock market value amounted to SEK 2,219.5 million. The number of shares amounted to 29,396,690, of which 25,896,690 were Class B shares and 3,500,000 were Class A shares.

Annual General Meeting

The Annual General Meeting (AGM) is the company's highest decision-making body. At the AGM, all shareholders are given the opportunity to exercise the influence over the company represented by their respective shareholding. Each Class A share represents ten votes and each Class B share represents one vote. Shareholders who are registered in Euroclear Sweden's share register on the closing day, and who have applied to participate on time, are entitled to participate and vote at the Meeting. Shareholders who cannot attend have the opportunity to be represented by proxy. The AGM must be held within six months following the end of the financial year. Mandatory tasks at the AGM include adopting the balance sheet and income statement, as well as handling the results for the year. The AGM also decides on remuneration principles for senior executives and on discharge from liability for the Board members and the CEO. Following proposals from the Nomination Committee (see below), the AGM elects Board members up until the end of the next AGM. The Articles of Association may be amended by a resolution at the AGM in accordance with the rules set out in the Swedish Companies Act. The AGM is conducted in Swedish and will be broadcast live via our website, vitecsoftware.com

2016 Annual General Meeting

The Annual General Meeting was held on 11 May at Väven in Umeå. The company's Board, management, Nomination Committee and auditor were present at the Meeting. 104 shareholders representing 68.3 % of the votes were present. The minutes from the Annual General Meeting can be found on our website, vitecsoftware.com.

2017 Annual General Meeting

The 2017 Annual General Meeting will be held at 5.30 pm on 25 April at Väven in Umeå. Information regarding application can be found on our website, vitecsoftware.com.

Nomination Committee

The Nomination Committee's main task is to propose to the AGM candidates for election to the Board of Directors and the Chairman of the Board, as well as to propose candidates for selection as auditors in consultation with the Audit Committee.

The work of the Nomination Committee must be characterized by openness and discussion in order to achieve a well-balanced Board. The Nomination Committee has studied the Board evaluation that has been conducted. The Nomination Committee is also tasked with proposing a Chairman for the AGM, proposing the fees for the Board of Directors as well as any fees for committees, in addition to fees for the auditors.

The 2016 AGM resolved that the three largest shareholders would each appoint one member of the committee. It was also decided that the Nomination Committee shall consist of the Chairman and three members. The Nomination Committee's members ahead of the AGM on April 25, 2017 are:

• Lars Stenlund, CEO Vitec. Holder of 1,570,000 Class A shares and 327,280 Class B shares (incl. family).
• Crister Stjernfelt, Chairman of the Board of Vitec. Holder of 8,000 Class B shares.
• Olov Sandberg, Vice President Vitec. Holder of 1,570,000 Class A shares and 124,565 Class B shares (incl. family).
• Jerker Vallbo, CTO Vitec. Holder of 360,000 Class A shares and 138,405 Class B shares (incl. family).

The Nomination Committee has held one meeting prior to the 2017 AGM. No remuneration has been paid for work in the Nomination Committee.

Articles of Association

The Articles of Association stipulate that Vitec is a public limited company, whose operations involve purchasing, managing and selling fixed and loose property as well as conducting compatible operations. The share capital shall amount to a minimum of SEK 1,600,000 and a maximum of SEK 6,400,000. The company's shares shall be able to be issued in two series, Series A and Series B. During voting at the AGM, Series A shares (Class A shares) shall entail 10 votes and Series B shares (Class B shares) one vote. If shares of both types are issued, the number of shares of each series may amount to a maximum of ninety-nine hundredths of the entire number of shares in the company. Read the full Articles of Association on our website, vitecsoftware.com.

Board of Directors

The task of the Board of Directors is to manage the company's affairs on behalf of the owners. The Board's work is governed by applicable laws and recommendations as well as by the Board's rules of procedure, which include rules regarding the division of work between the Board and the CEO, financial reporting, investments and financing. The rules of procedure are determined annually at the statutory Board meeting, held in conjunction with the AGM.

Board of Directors' responsibilities

The Board of Directors has overall responsibility for the Group's organization and management, as well as for ensuring that guidelines for the management of the company's funds are structured appropriately. The Board is responsible for ensuring that Vitec is governed according to applicable laws and ordinances, and that it complies with the regulations for issuers that include the Swedish Code of Corporate Governance, as well as that the Group's established internal regulations are followed. The Board is also responsible for developing and following up the Group's strategies through plans and goals, for decisions regarding the acquisition and sale of operations, for major investments, for additions to and replacements for the Group management, and for continually monitoring operations during the year. Every year, the Board adopts the annual accounts, the applicable business plan, business-related policies and the CEO's rules of procedure. The Board must also determine the required guidelines for the company's actions in society, with the aim of safeguarding long-term value creation and ensuring that ethical guidelines are established for the company's behavior.

Composition

According to the Articles of Association, the Board of Directors of Vitec must comprise between three and seven members with a maximum of three deputies. The Board comprises five regular members and no deputies, and none of the Board members are employees of the company. The Board members are appointed by the shareholders at the AGM with a term of office of one year. The CEO is not included in the Board of Directors, but does attend all Board meetings to present reports, except on occasions when the work of the CEO is being evaluated. The CEO reports to the Board regarding the operational work in the Group, and ensures that the Board receives objective and relevant decision-making data.

The Board composition meets the requirements of Nasdaq Stockholm and the Swedish Corporate Governance Code concerning independent directors. For further information about the Board members, go to www.vitecsoftware.com, Investor Relations, Corporate Governance. All Board members meets the independence requirements in relation to Vitec Software Group, its management and major shareholders.

Chairman of the Board

The Chairman of the Board of Directors, Crister Stjernfelt, leads the Board's work to ensure it is conducted in accordance with laws and regulations. The Chairman monitors the operation in dialog with the CEO, and is responsible for ensuring that other Board members receive the information that is necessary for high-quality discussions and decisions. The Chairman is also involved in evaluation and development issues in respect of the Group's senior executives.

Kaj Sandart, Crister Stjernfelt, Jan Friedman, Anna Valtonen and Birgitta Johansson-Hedberg

Board of Directors

Crister Stjernfelt

Chairman since 2013, Director since 2009. Born 1943.

Economics Studies at Stockholm University.

Other assignments/positions: Chairman of Ortivus AB, AcelQ AB and Oryx Simulations Verklighetsmodeller i Sverige AB. Director of Digital Route AB, DGC One AB and Carmenta Sverige AB. Previously CEO of WM-Data AB and CEO of Logica AB.

Holdings in Vitec: 8,000 Class B shares, no convertibles.

Anna Valtonen

Director since 2012. Born 1974. PhD. Department of Industrial and Strategic Design, Helsinki, 2007.

Other assignments/positions: Dean of the Aalto University School of Arts, Design and Architecture in Helsinki, Finland and Vice President of Aalto University. Previously professor and President of the Umeå Institute of Design (2009-2014) and industry design in Nokia (1997-2009) e.g. Head of Design Research & Foresight. Also several international assignments and board positions.

Holdings in Vitec: No shares, no convertibles.

Kaj Sandart

Director since 1998. Born 1953. Master of Civil Engineering, KTH Royal Institute of Technology 1977. Other assignments/positions: Director of Hallvarsson & Halvarsson Group and deputy at Milox AB. Director of Baltic Sea Action Group Sweden. Previously

Communications Manager at ÅF and CEO of Svensk Energi-försörjning. Holdings in Vitec: 121,000 Class B shares (including family), no convertibles.

Jan Friedman

Director since 2010. Born 1952. MBA, Stockholm School of Economics 1978.

Other assignments/positions: Chairman of Sportamore AB (publ), Nordic Public

Affairs AB, Proffsmagasinet Svenska AB, Moment Group AB, MittMedia AB, Grönklittsgruppen AB and Ticmate AB. Director of Bindomatic AB and Malux AB. Many years' experience as CEO, board member and consultancy assignments. Holdings in Vitec: 258,650 Class B shares through companies, no convertibles.

Birgitta Johansson-Hedberg

Director since 2011. Born 1947. BA, Psychology Degree, Lund University 1972.

Other assignments/positions: Chairman of Sörmlands Sparbank, Almi Stockholm Sörmland AB and The Swedish Linnaeus Society. Director of Copenhagen Economics A/S and Hedberg Ekologkonsult AB. Previously CEO of Lantmännen, Föreningssparbanken and Liber.

Holdings in Vitec: 7,500 Class B shares, no convertibles.

Work of the Board of Directors

During a business year, Vitec holds at least seven regular Board meetings as well as a statutory meeting directly in conjunction with the AGM. Extraordinary Board meetings are held if necessary. A total of 10 Board meetings have been held during 2016, including the statutory meeting. All members elected by the AGM were present at all the Board meetings, with the exception of members Anna Valtonen and Birgitta Johansson-Hedberg who participated per capsulam at one meeting.

At the Board's minuted meetings, the Group's profits and status have been covered and interim reports and the annual report have been approved for publication. Future matters such as market assessments, potential acquisitions, the focus of business activities and organizational issues have been dealt with. All the meetings have followed an approved agenda that, together with supporting data for each item on the agenda, has been distributed to all Board members approximately one week before the meeting. The minutes have been sent to the members in accordance with the Swedish Code of Corporate Governance. The work of the Board of Directors was evaluated at the end of the year.

Evaluation

The work of the Board is evaluated once a year by the Board members answering a number of predefined questions relating to both formal and collaboration-oriented circumstances. The Chairman compiles the answers, including comments, and presents this material to the Nomination Committee. The evaluation of the 2016 business year indicates a well-functioning collaboration and good efficiency within the work of the Board. All members are positive with regard to continued involvement.

Important decisions

For the second time in the company's history Vitec reached an agreement on the sale of part of the business. All shares in the

The Board´s work Styrelsearbetets årscykel

company Vitec Veriba AB (Business Area Media) were sold on 1 July to XLENT Consulting Holding AB.

During the third quarter Vitec agreed on acquisitions in Finland. The first acquisition was Tietomitta OY, whose product is an industry-specific software for waste management in Finland and the Group thereby had a new segment, Business Area Environment. In 2015, the company had sales of EUR 3.5 million with approximately 65 % in the form of recurring revenues and an EBITDA of EUR 0.8 million. The acquisition brought some twenty employees to the Group. The second acquisition was in Business Area Auto, Futursoft OY. The software is specialized for the automotive and machinery industry and had sales for the financial year ending 09/30/2015 of EUR 4.0 million and an EBITDA of EUR 1.1 million. The number of employees amounted to 20 people. Both of the Finnish companies have their headquarters in Espoo.

In December, Vitec made its third acquisition for the year when 100 % of the shares in the Norwegian company Plania AS were purchased. The company's software is specifically developed for the construction and real estate industry in Norway. Sales for 2016 are expected to amount to approximately NOK 28.5 million with approximately NOK 6.6 million in EBITDA. 17 people work at Plania's headquarters in Stavanger.

The Board's rules of procedure

The Board of Directors' rules of procedure were adopted on May 11, 2016 and must be revised annually at the statutory Board meeting, besides being revised when required. The rules of procedure include the Board's responsibilities and work duties, the duties of the Chairman of the Board, audit issues, as well as specifying which reports and financial information the Board must procure prior to each regular Board meeting. The rules of procedure also include instructions for the CEO. Furthermore, the rules of procedure prescribe the Board's work as a remuneration committee.

Audit and Remuneration Committee

The Board of Directors as a whole acts as both an Audit and a Remuneration Committee. The description of the duties as regards the work as an Audit Committee is established as an appendix to the applicable rules of procedure. The work as a Remuneration Committee is regulated in the applicable rules of procedure. The rules of procedure and the appendix were adopted at the statutory Board meeting on May 11, 2016. During 2016, the Audit Committee has held three meetings and the Remuneration Committee has held meetings in conjunction with regular Board meetings.

CEO and Group management

The CEO is appointed by the Board of Directors. Lars Stenlund is the company's CEO, and Olov Sandberg (IR), Lars Eriksson (M&A) and Patrik Fransson (VPO) have all been appointed Vice Presidents. The CEO is responsible for the day-to-day administration of the company's and the Group's operations according to the Board of Directors' instructions and directives. For example, this entails responsibility for financial reporting, the production of information and decision-making data, as well as ensuring that agreements and other measures are not in conflict with applicable laws and regulations.

The Chairman of the Board holds annual evaluation discussions with the CEO in accordance with the CEO's instructions and the applicable specification of requirements.

The Group management works alongside the CEO, and together they are responsible for day-to-day operations. The Group management comprises the CEO, CFO, VPO and the person responsible for M&A. The Group management normally meets every month to go through the previous month's results, to update plans, guidelines and applicable decisions and to discuss strategic issues. An extended strategy meeting is held with the Board of Directors every year, and other meetings are held as necessary.

The Group management decides jointly, in accordance with the guidelines determined by the Board of Directors in the instruction regarding the division of work between the Board and the CEO, on issues within its area of expertise and issues that are long-term and strategic in nature, such as corporate development, marketing, financing, investments and environmental issues. The Group management also prepares issues that have to be decided by the Board. The table on page 37 presents the members of the Group management and their positions etc.

Auditors

The AGM annually elects one or two auditors or one or two registered auditing firms, with more than two deputies. The auditors review the company's annual report, financial statements and the Board's and CEO's management. At the 2016 AGM, Pricewaterhouse-Coopers AB was appointed with Niklas Renström as the auditor with overall responsibility.

The Group's auditors participate in all Audit Committee meetings and in particular report their observations in respect of internal control, the general review of the third quarter's interim accounts as well as the closing accounts.

Internal control

The Board of Directors is responsible for internal control in accordance with the Swedish Companies Act and the Swedish Code of Corporate Governance. The report regarding internal control and risk management in respect of financial reporting for the 2016 financial year has been prepared and submitted by the Board of Directors in accordance with Chapter 6 §6 of the Annual Accounts Act as well as section 7.4 of the Swedish Code of Corporate Governance.

The Board of Directors is responsible for the work in respect of corporate governance within Vitec, and consequently for the work with internal control. The overall purpose is to protect the Group's assets and thereby the shareholders' investments. The Board is also responsible for ensuring that financial reporting is drawn up in accordance with the applicable law. Quality assurance of the Group's financial reporting takes place by means of the Board handling all critical accounting issues as well as the financial reports that Vitec submits. This presupposes that the Board handles issues regarding internal control, compliance with regulations, significant uncertainties in reported values, any uncorrected errors, events after the closing date, changes to estimates and assessments, any observed irregularities and other circumstances that affect the quality of the financial statements.

Control environment

Active, committed Board work is the foundation for good internal control. The Board has established clear working processes and rules of procedure for its work. An important part of the Board's work is to draw up and approve a number of fundamental policies, guidelines and frameworks related to financial reporting. The company's steering documents are the "Board of Directors' rules of procedure" and the "CEO's instructions". The purpose of these rules of procedure and policies is, in part, to create the foundations for good internal control. Following up and revision are performed continually, and are communicated to all employees who are involved in the financial reporting. The Board continually evaluates the business's performance and results through an appropriate package of statements, including an income statement and key figures, as well as other significant operational and financial information. The Board of Directors in its entirety functions as the Audit Committee. During 2016, the entire Board has consequently monitored the systems for risk management and internal control. These systems are intended to ensure that the business is conducted in accordance with laws and ordinances and is effective, and that the financial reporting is reliable. The Board has studied and evaluated the procedures for accounting and financial reporting, as well as following up and evaluating the work, qualifications and independence of the external auditors. Other established policies that form the foundation for internal control within Vitec are the Finance policy, the Information policy, the Information security policy and the IT policy.

All the business areas work within, or are about to start working within, the same structures, financial systems, chart of accounts and policies, which facilitates the creation of suitable procedures and control systems. Each business area has a Board and rules of procedure determined by the Group management.

Risk assessment

Vitec applies a method for risk management and risk assessment to ensure that the risks to which the company is exposed, and which can influence internal control and financial reporting, are handled within the processes that have been adopted. Significant risks that are taken into consideration are market risks, operational risks such as risks associated with acquisitions and product development, as well as other risks that affect financial reporting. A systematic, documented updating of all identified risks is performed annually.

Vitec works continually and actively with risk analysis, risk assessment and risk management, to ensure that the risks to which the company is exposed are handled in a suitable manner within the frameworks that have been established. For example, the risk assessment looks at the company's administrative procedures in respect of invoicing and contract management. Significant risks that can affect financial reporting are items that are based on estimates and assessments, such as ongoing development projects, goodwill, etc.

Risk management

The risks are followed up in various ways and at various levels. At each Board meeting, the Board of Vitec receives a presentation of the Group's results and status, liquidity, key figures, etc. The Group management jointly analyses the results of all the reporting units every month. All investments in the Group are managed by the Group management, with product investment being the largest single item. Product investments have a separate process both in the budget work and in the following up such work. Monthly reporting is conducted monthly and is documented. Where required, we add a board for selected business areas. Such a board has at least one member of the group management team and meets 2-4 times a year; the Board meetings are minuted. The VPO and the Group's controller have a close dialog with each business area manager, and each month they conduct detailed reviews of major projects, product development, outstanding accounts receivable, etc. The handling of financial risks such as liquidity, currency, credit and refinancing risks is performed by the Group management, where the finance policy adopted by the Board is the governing factor.

Control activities

Control activities are used to handle the risks that the Board and the Group management deem to be significant for the business, the internal control and the financial reporting. Control structures are designed to handle the risks that the Board deems to be significant for the internal control of the financial reporting. These control structures comprise in part an organization with a clear division of responsibilities, clear procedures and clear work roles. Examples of control activities include reporting decision-making processes and arrangements for significant decisions (such a new, large customers, investments, agreements, etc.) as well as examining all financial statements that are presented. An ongoing analysis of the financial reporting, along with the analysis that is performed at Group level, is a very important element in ensuring that the financial reporting is free from material misstatements.

According to the Swedish Companies Act, the Board of Directors must appoint an Audit Committee. The Board has found it appropriate for the entire Board to make up the Audit Committee. The fact that the Board is relatively small is considered to make this work easier. Several of the Board's members possess auditing expertise.

Information and communication

Vitec's steering documentation, in the form of policies, guidelines and manuals relating to internal and external communication, is continually updated and communicated internally via relevant channels, such as internal meetings, internal news mails and the intranet. For communication with external parties, there is a clear established information policy specifying all the guidelines as to how information is to be provided. The purpose of the policy is to ensure that all information obligations according to the applicable regulations for issuers are complied with correctly and in full.

Information and communication of the essential policies, guidelines and manuals for Vitec are available on the intranet. There is also information about financial reporting in the form of instructions, manuals, schedules and checklists. The Group's accounting handbook is also a central part of the financial reporting and it is also available on the intranet and is continuously updated with the new applicable regulations, such as IFRS and Nasdaq Stockholm.

Following up and monitoring

Every month, the segments are followed up by the respective management (business area board or similar). The VPO and Group Controller analyze the results and report to the Group management. The Group management studies these analyses and in turn analyzes the Group's results compared to the previous year, the budget and expectations. The Group management's analyses and conclusions are submitted to the Board at each regular meeting.

The company continually evaluates the internal controls in respect of the financial reporting, and ensures that reporting to the Board is working successfully. This is achieved above all by asking questions and looking at the work of the CFO. The company's auditors take part on three occasions per year, notifying their observations about the company's internal procedures and control systems, and the Board's members have the opportunity to ask questions. Every year, the Board adopts a position regarding significant risk areas and evaluates the internal control.

Internal audit

Given the size and complexity of the operation, in combination with existing Board reporting and reporting to the Audit Committee, the Board has judged that it is not financially justifiable to establish a separate internal audit function. The internal control presented above is deemed to be sufficient to safeguard the quality of the financial reporting.

Guidelines regarding remuneration to senior executives

At the 2016 AGM, guidelines were established regarding remuneration to the CEO and other senior executives in Vitec. The decision by the AGM generally corresponds with previously applied principles for remuneration. The guidelines apply to agreements that are entered into after the 2016 AGM or where subsequent changes are made regarding remuneration. The Board of Directors has not appointed a Remuneration Committee, but instead the Board as a whole handles issues relating to remuneration and other employment conditions. The AGM decided that remuneration to senior executives should comprise fixed salary and pension. Pension benefits must be defined-contribution. The combined remuneration should be at the market-going rate and competitive, and should be in relation to responsibilities and authorization. When determining salaries, the individual's areas of responsibility, expertise and experience must be taken into account, and as a general rule these must be reassessed once a year. The Board may deviate from the guidelines if there is a particular reason to do so in an individual case.

Prior to the 2017 AGM, the Board has proposed unchanged conditions as regards guidelines for remuneration to the company's CEO and other senior executives.

Lars Eriksson, Lars Stenlund, Maria Kröger and Patrik Fransson

Group Management

Lars Stenlund

CEO and founder of Vitec together with Olov Sandberg. Director of Vitec 1985- 2009. Employed since 1985. Born 1958. Ph.D in Applied Physics (1987), University of Umeå.

Director of the University of Umeå, Algoryx Simulation AB and C4 Contexture AB. Previous experience: Worked at University of Umeå.

Holdings in Vitec: 1,570,000, Class A shares, 327,280 B shares (including family). No convertibles. No options.

Lars Eriksson

Vice President, M&A and Business development. Employed since 2011. Born 1955.

MSc, Industrial Economics, Linköping 1979.

Director of Affärskonsulting Lars Eriksson AB.

Previous experience: CEO and director of Företagsbyrån i Stockholm AB. Holdings in Vitec: 32,500 B shares. 3,140 convertibles 1501. No options.

Patrik Fransson

Vice President, VPO. Employed since 2011. Born 1966. Computer Science, University of Umeå 1990. MBA Executive program, Stockholm School of Economics. Previous experience: Outsourcing Director Logica, CIO H&M and CEO CodeFactory AB.

Holdings in Vitec: 99,711 B shares. 7,860 convertibles 1501. No options.

Maria Kröger

CFO. Employed since 2011. Born 1968. MBA, University of Umeå 1990. Previous experience: Authorized Public Accountant EY. Holdings in Vitec: 10,200 B shares. (including family). 7,860 convertibles 1501. Option holdings: 50,000

Lars Stenlund and Olov Sandberg have issued call options to Maria Kröger. All options run on the same terms, with each option, on January 1, 2018, entitle the holder to acquire one (1) share at a price of SEK 28.00 per share.

The share and the ownership structure

	No. of Class A shares	No. of Class B shares	Capital %	Votes %
Lars Stenlund*	1,570,000	327,280	6.5	26.3
Olov Sandberg*	1,570,000	124,565	5.8	26.0
Jerker Vallbo*	360,000	138,405	1.7	6.1
Thomas Eklund		1,746,440	5.9	2.9
SBB and Trust, Boston		1,536,315	5.2	2.5
Grenspecialisten Förvaltning AB		1,161,135	3.9	1.9
SEB Investment Management		1,149,946	3.9	1.9
NCT Exempt ACC US pension fund		1,105,026	3.8	1.8
Nils-Eric Öquist*		980,000	3.3	1.6
Fidelity Low-Priced Stockh Fund		900,000	3.1	1.5
Other shareholders		16,727,578	56.9	27.5
*Including family and/or ownership through companies	3,500,000	25,896,690	100.0	100.0

At the end of the financial year, the total number of issued shares totaled 29,396,690, of which 3,500,000 are Class A shares (35,000,000 votes) and the remaining 25,896,690 are Class B shares (25,896,690 votes). The share capital amounts to SEK 2.9 million and the nominal value is SEK 0.10 per share. The ownership structure and the Board's shareholding relate to the holding on December 31, 2016, to the best of Vitec's knowledge. There were 3,141 shareholders.

At the beginning of the financial year, 500,000 Class A shares were converted to Class B shares in accordance with the split conditions mentioned in the Articles of Association, §5 Share class.

There is a pre-emption reservation for Class A shares, although there are no other provisions limiting the right to transfer shares. There are no limits regarding how many votes each shareholder may exercise at the AGM. Board members and any deputies are appointed at the AGM for the period up to the next AGM. There are no provisions in the Articles of Association regarding the appointment and dismissal of Board members. Vitec Software Group AB (publ) has not entered into any agreements that will be affected by a possible purchase offer. Vitec Software Group AB (publ) does not hold any of its own shares.

Employees in Vitec Software Group AB (publ) do not hold shares where the voting rights for such shares cannot be exercised directly by the employees. As of December 31, there is an ongoing convertible program in relation to personnel.

There is authorization from the 2016 AGM that entitles the Board, on one or more occasions up to and including the next AGM, to decide on the issue of up to 2,500,000 Class B shares

deviating from the shareholders' preferential right. The reason why the Board might deviate from the shareholders' preferential right is to facilitate financing during the acquisition of companies or product rights in a cost-effective manner. During 2016, this authorization has not been utilized.

Vitec is listed on Nasdaq Stockholm, on the Small Cap list. The share price on December 31, 2016 was SEK 75.50 (75.00). The stock market value of the shares issued at year-end amounted to SEK 2219.5 million (2,204.8).

After the end of the financial year, Vitec's share was moved from the Small cap segment to the Mid Cap segment at Nasdaq Stockholm as a result of Nasdaq's annual review of the market values for the Nordic markets. The share is traded in the Mid Cap segment as of January 2, 2017. The Mid Cap segment includes companies with a stock market value between EUR 150 million and EUR 1 billion.

Multi-year summary

		2016	2015	2014	2013	2012	2011	2010
Net sales	(TSEK)	675,414	618,385	491,956	371,631	389,200	359,598	313,410
of which Business Area Auto	(TSEK)	119,171	71,082	28,302	-	-	-	-
of which Business Area Energy	(TSEK)	25,872	24,114	22,672	19,849	21,327	19,286	17,844
of which Business Area Real Estate	(TSEK)	158,357	142,557	134,315	130,718	120,086	120,140	108,118
of which Business Area Finance & Insurance	(TSEK)	126,567	101,219	55,004	13,704	12,950	14,208	7,522
of which Business Area Health	(TSEK)	66,203	61,492	43,627	-	-	-	-
of which Business Area Media	(TSEK)	4,570	10,547	21,759	26,128	65,233	70,583	97,338
of which Business Area Environment	(TSEK)	18,420	-	-	-	-	-	-
of which Business Area Estate Agents	(TSEK)	155,285	207,011	185,750	181,152	168,785	135,306	82,588
of which joint	(TSEK)	969	363	527	80	819	75	0
Growth	(%)	9	26	32	-5	8	15	117
Profit after financial items	(TSEK)	81,942	94,686	64,545	38,069	40,130	35,693	20,440
Profit for the year	(TSEK)	66,814	78,191	49,065	30,229	31,984	26,061	14,245
Profit attributable to Parent Company share holders	(TSEK)	66,814	78,191	49,065	30,229	31,183	24,654	14,089
Profit growth to Parent Company shareholders	(%)	-15	59	62	-3	26	75	5
Profit margin	(%)	10	13	10	8	8	7	4
Operating margin	(%)	13	16	14	11	11	11	7
Total assets	(TSEK)	1,096,691	872,019	772,901	387,981	429,133	327,743	293,308
Equity/assets ratio	(%)	30	31	34	44	36	40	37
Equity/assets ratios after full conversion	(%)	32	33	37	48	41	49	44
Debt/equity ratio	(times)	2.25	2.09	1.70	1.53	1.66	1.60	1.69
Return on capital employed	(%)	14	21	18	16	20	21	11
Return on equity	(%)	22	29	23	19	24	25	19
Sales per employee	(TSEK)	1,445	1,465	1,430	1,332	1,297	1,236	1,269
Value added per employee	(TSEK)	1,198	1,212	1,164	1,052	985	915	892
Personnel cost per employee	(TSEK)	813	797	801	793	732	706	728
Average number of employees	(people)	467	422	344	279	300	291	247
Adjusted equity per share	(SEK)	11.37	9.24	8.85	6.39	5.92	5.36	4.35
Earnings per share	(SEK)	2.27	2.66	1.75	1.16	1.30	1.21	0.71
Earnings per share after dilution	(SEK)	2.25	2.64	1.68	1.09	1.16	1.04	0.63
Dividend paid per share*	(SEK)	0.90	0.67	0.55	0.50	0.40	0.25	0.20
Cash flow per share**	(SEK)	5.20	5.09	4.40	1.97	2.25	2.17	1.38
P/E ratio		33.22	28.20	15.12	15.31	10.89	9.75	13.61
P/Adjusted equity per share		6.64	8.12	2.99	2.77	2.33	2.08	2.21
P/S		3.29	3.57	1.58	1.26	0.91	0.68	0.65
Calculation basis:
Profit when calculating earnings per share	(TSEK)	66,814	78,191	49,065	30,229	31,183	24,654	14,089
Cash flow when calculating cash flow per share**	(TSEK)	152,757	149,751	123,220	51,505	55,243	46,787	27,532
Average number of shares (weighted average)					(number) 29,396,690 29,396,690 28,003,405 26,141,635 24,604,375 21,546,315 19,936,940
Number of shares after dilution					(number) 29,838,900 29,788,016 29,431,975 28,175,425 27,338,170 24,172,025 23,041,270
Number of shares issued as of closing date					(number) 29,396,690 29,396,690 29,396,690 26,541,635 25,741,635 21,835,375 21,257,250
Share price at respective year-end	(SEK)	75.50	75.00	26.50	17.70	13.80	11.16	9.62

Definitions, see Note 29 Key performance indicator definitions

* The number of shares and key performance indicators based on this are recalculated based on the number of shares after the split.

** Cash flow from operating activities before changes in working capital was corrected in the comparative years when reclassification occurred of unrealized exchange rate differences

Proposed allocation of profits

The following amounts are at the disposal of the Annual General Meeting:

Profit brought forward	116,451,262
Share premium reserve	110,475,051
Profit for the year	56,934,955
	283,861,268

The Board proposes that the profit be allocated as follows:

	283,861,268
To be carried forward	143,989,527
To be carried forward to the share premi um reserve	110,475,051
To be distributed to shareholders at SEK 1.00 per share	29,396,690

Board's statement according to Chapter 18 §4 of the Swedish Companies Act (2005:551)

The Board proposes that shareholders at the AGM on April 25, 2017 should decide on a dividend payment amounting to a maximum of SEK 29,396,690. This statement has been produced in accordance with the provisions in Chapter 18 §4 of the Swedish Companies Act, and constitutes the Board's assessment of whether the proposed dividend is justifiable bearing in mind that specified in Chapter 17 §3 paragraphs 2 and 3 of the Swedish Companies Act.

The Board's assessment is that the size of the proposed dividend constitutes a satisfactory balance between the Group's capital structure and future growth opportunities. In the Board's opinion, the proposed dividend does not prevent the company or other companies included in the Group from fulfilling their obligations in the short and long term, and is thereby justifiable bearing in mind the Swedish Companies Act's 'precautionary rule' (Chapter 17 §3 of the Swedish Companies Act 2005:551).

Consolidated statement of earnings and other comprehensive income

Note	2016	2015
(1, 2) OPERATING INCOME
Recurring revenues	518,512	480,552
License revenues	24,789	23,098
Service revenues	121,116	106,191
Other	10,997	8,544
Net sales	675,414	618,385
Capitalized development costs	82,262	65,533
(5) Other operating income	22,695	11,213
TOTAL REVENUE	780,371	695,131
OPERATING EXPENSES
Goods for resale	-12,284	-6,835
Subcontractors and subscriptions	-82,024	-82,890
(7, 23) Other external expenses	-97,681	-88,211
(6, 21) Personnel costs	-380,023	-336,133
(12) Depreciation and impairment	-114,256	-85,838
(5) Other operating expenses	-5,798	5,383
TOTAL EXPENSES	-692,066	-594,524
OPERATING PROFIT	88,305	100,607
Financial income	773	826
Financial expense	-7,136	-6,747
(8) NET FINANCIAL ITEMS	-6,363	-5,921
PROFIT BEFORE TAX	81,942	94,686
(10) Tax	-15,128	-16,495
PROFIT FOR THE YEAR	66,814	78,191
Other comprehensive income that may be reclassified to the income statement	28,257	-26,320
Translation of net investment in foreign operations Hedging net investment in foreign operations	-7,999	8,177
Deferred tax on hedging of net investment in foreign operations	1,760	-1,799
	22,018	-19,942
Other comprehensive income that will not be reclassified to the income statement
Change in the value of net pension obligation	395	-
Deferred tax on change in net pension obligation	-95	-
	300	-
Other comprehensive income for the period	22,318	-19,942
	89,132	58,249
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD
Profit for the year attributable to:
Parent Company shareholders	66,814	78,191
Total comprehensive income attributable to:
Parent Company shareholders	89,132	58,249
(11) Earnings per share:
Before dilution	2.27	2.66
After dilution	2.25	2.64
Average number of shares	29,396,690	29,396,690
Number of shares after dilution	29,838,900	29,788,016

Vitec Annual Report 2016 41

Consolidated statement of financial position

	Note 12/31/2016 12/31/2015
ASSETS
(3, 12) Fixed assets
Intangible assets
Goodwill	240,444	202,103
Capitalized development costs	150,480	109,171
Software	3,971	3,860
Brands	70,097	8,793
Product rights	266,863	229,079
Customer contracts	77,757	62,321
	809,612	615,327
Tangible assets
Buildings	8,813	9,034
Investments in leased premises	3,659	4,438
Equipment	21,795	15,905
	34,267	29,377
Financial assets
Other long-term receivables	950	835
(10) Deferred tax	4,185	5,952
	5,135	6,787
Total fixed assets	849,014	651,491
Current assets
(15) Inventories
Goods for resale	1,031	399
	1,031	399
Current receivables
(16) Accounts receivable	137,336	129,107
Current tax	5,079	6,973
Other receivables	5,299	6,503
(17) Prepaid expenses and accrued income	18,012	17,278
	165,726	159,861
Short-term investments	43	-
(18) Cash and cash equivalents	80,877	60,268
Total current assets	247,677	220,528
TOTAL ASSETS	1,096,691	872,019

EQUITY AND LIABILITIES
Equity	(19)
Share capital		2,940	2,940
Other contributed capital		121,963	121,963
Reserves		-3,567	-25,885
Retained profits including profit for the year		212,877	172,520
Equity attributable to shareholders of the Parent Company		334,213	271,538
Long-term liabilities
Convertible debentures	(20)	-	13,513
Liabilities to credit institutes	(20)	339,396	193,709
Remuneration to employees after completed employment	(21)	7,679	8,033
Other long-term liabilities	(20)	28,765	4,779
Deferred tax	(10)	120,684	89,747
Total long-term liabilities		496,524	309,781
Short-term liabilities
Convertible debentures	(20)	13,786	-
Liabilities to credit institutes	(20)	30,340	33,845
Accounts payable		21,153	14,582
Tax liabilities		11,175	20,313
Other liabilities		47,115	89,488
Accrued expenses and prepaid income	(22)	142,385	132,472
Total short-term liabilities		265,954	290,700
TOTAL EQUITY AND LIABILITIES		1,096,691	872,019
Pledged assets Contingent liabilities	(24)	354,891 -	387,240 -

Consolidated statement of changes in equity

	Share capital	Other contributed capital	Reserves*	Retained profits	Total equity attributable to Parent Company shareholders
OPENING EQUITY 1/1/2015	2,940	121,963	-5,943	141,170	260,130
Profit for the year	-	-	-	78,191	78,191
Other comprehensive profit	-	-	-19,942	-	-19,942
Comprehensive income for the year	2,940	121,963	-25,885	219,361	318,379
Redemption of bonds				-27,145	-27,145
Dividend				-19,696	-19,696
CLOSING EQUITY 12/31/2015	2,940	121,963	-25,885	172,520	271,538
Profit for the year	-	-	-	66,814	66,814
Other comprehensive profit	-	-	22,318	-	22,318
Comprehensive income for the year	2,940	121,963	-3,567	239,334	360,670
Dividend				-26,457	-26,457
CLOSING EQUITY 12/31/2016	2,940	121,963	-3,567	212,877	334,213

* Reserves are made up actuarial changes of pension liabilities and translation differences when translating foreign operations as well as hedge accounting of these.

Consolidated statement of cash flows

	2016	2015
OPERATING ACTIVITIES
Operating profit	88,305	100,607
Adjustments for items not included in cash flow
Other operating income	-22,695	-11,213
Depreciation and impairment	114,256	85,838
Unrealized exchange rate differences*	5,798	-5,383
	185,664	169,849
Interest received	117	826
Interest paid	-5,553	-6,747
Income tax paid	-27,471	-14,177
CASH FLOW FROM OPERATING ACTIVITIES BEFORE CHANGES IN WORKING CAPITAL	152,757	149,751
Changes in working capital
Increase/decrease in inventories	95	51
Increase/decrease in accounts receivable*	2,659	-6,115
Increase/decrease in operating receivables	1,265	1,333
Increase/decrease in accounts payable*	3,534	-2,641
Increase/decrease in operating liabilities	-1,860	-2,587
CASH FLOW FROM CURRENT OPERATIONS	158,450	139,792
INVESTING ACTIVITIES
Acquisition of subsidiaries (net impact on liquidity)**	-156,112	-85,580
Sales of subsidiaries**	4,217	-
Acquisition of intangible assets and capitalized development costs	-83,763	-70,174
Acquisition of tangible assets	-9,046	-11,821
CASH FLOW FROM INVESTING ACTIVITIES	-244,704	-167,575
FINANCING ACTIVITIES	-26,457	-19,696
Dividend to shareholders of the Parent Company Redemption convertible loan	-	-36,781
New loans	185,466	102,901
Amortization of loans	-49,865	-34,478
CASH FLOW FROM FINANCING ACTIVITIES	109,144	11,946
CASH FLOW FOR THE YEAR	22,890	-15,837
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR	60,268	71,114
Exchange rate change in cash and cash equivalents	-2,238	4,991
CASH AND CASH EQUIVALENTS AT YEAR-END***	80,920	60,268

*As of 2016, changes in accounts payable and changes in accounts payable are reported separately. Adjustments for items not included in cash flow are not included in unrealized exchange rate differences. Comparative figures have been recalculated with regard to this, see table below.

**Disbursement regarding acquisitions of subsidiaries during the period was comprised of payment for Tietomitta OY, Futursoft OY and Plania AS. Net cash outflow amounted to SEK 141.2 million. All acquisitions related to the entire outstanding share capital and meant that control was obtained in all companies. In addition, SEK 2.9 million was paid out for Fox Publish AS and SEK 11.9 million for Acuvitec OY, which did not entail any change in controlling influence or share capital. Payment received for the sale of subsidiaries was comprised of payment for Vitec Veriba AB. The sale pertained to the whole outstanding share capital and meant a loss of controlling influence. Payment for acquisition of subsidiaries in 2015 consisted of proceeds for Fox Publish AS, ADservice Scandinavia AB, Datamann A/S, Infoeasy AS and Nice AS. Net cash outflow amounted to SEK 80.6 million. All acquisitions related to the entire outstanding share capital and meant that control was obtained in all companies. An additional payment of SEK 4.9 million was made for the acquisition of Aloc A/S. The payment did not result in any changes in share capital or control.

***Cash and cash equivalents are defined as funds for which there is an insignificant risk of value fluctuations and that can easily be converted to cash at a known amount. Short-term investments comprises funds that can be converted to cash at a known amount within one banking day.

Recalculation of comparative figures January-December 2015

	Previously reported value	Adjustment of oper ating liability and cash flow	Adjustment of operating receivable and cash flow	Reported value
Unrealized exchange rate differences	0	-5,383		-5,383
Cash flow from operating activities before changes in working capital	155,134	-5,383		149,751
Increase/decrease in accounts receivable	0		-6,115	-6,115
Increase/decrease in operating receivables	-4,281		5,614	1,333
Increase/decrease in accounts payable	0	-2,641		-2,641
Increase/decrease in operating liabilities	-10,611	8,024		-2,587
Cash flow from current operations	140,293	5,383	-501	139,792
Change in long-term receivables	-501		501	0
Cash flow from investing activities	-168,076		501	-167,575

Income statement, Parent Company

	Note	2016	2015
OPERATING INCOME
Net sales	(4)	69,923	66,720
Other operating income	(5)	28,414	33,706
OPERATING EXPENSES	(4)
Other external expenses	(7, 23)	-69,891	-45,030
Personnel costs	(6, 21)	-29,430	-27,720
Depreciation	(13)	-2,543	-2,744
OPERATING PROFIT		-3,527	24,932
PROFIT FROM FINANCIAL ITEMS:	(8)
Income from shares in Group companies		58,335	39,907
Interest income and similar profit/loss items		737	516
Interest expenses and similar profit/loss items		-6,382	-6,235
NET FINANCIAL ITEMS		52,690	34,188
PROFIT AFTER FINANCIAL ITEMS		49,163	59,120
Appropriations	(9)	7,781	-822
PROFIT BEFORE TAX		56,944	58,298
Tax	(10)	-9	-3,869
PROFIT FOR THE YEAR		56,935	54,429

Balance sheet, Parent Company

	Note 12/31/2016 12/31/2015
ASSETS
Fixed assets
(13) Intangible assets
Software	3,850	3,635
Product rights	92	192
	3,942	3,827
(13) Tangible assets
Buildings	8,795	8,963
Investments in leased premises	828	1,474
Equipment	2,392	2,742
	12,015	13,179
(13, 14) Financial assets
Shares in subsidiaries	864,833	685,879
Receivables from Group companies	8,968	9,019
	873,801	694,898
Total fixed assets	889,758	711,904
Current assets
Current receivables
Receivables from Group companies	75,280	40,185
Other receivables	3,391	57
(17) Prepaid expenses and accrued income	4,039	3,152
	82,710	43,394
Cash and bank	60,557	45,306
Total current assets	143,267	88,700
TOTAL ASSETS	1,033,025	800,604

	Note 12/31/2016 12/31/2015
EQUITY AND LIABILITIES
Restricted equity	(19)
Share capital	2,940		2,940
Statutory reserve	14,917		14,917
Total restricted equity	17,857		17,857
Non-restricted equity	(19)
Share premium reserve	110,475		110,475
Profit brought forward	116,451		88,479
Profit for the year	56,935		54,429
Total non-restricted equity	283,861		253,383
Total equity	301,718		271,240
(26, 27) Untaxed reserves	2,341		2,222
Long-term liabilities	(20)
Convertible debentures		-	13,513
Liabilities to credit institutes	338,941		193,709
Other long-term liabilities	28,765		4,779
Total long-term liabilities	367,706		212,001
Short-term liabilities
Convertible debentures	(20) 13,786		-
Liabilities to credit institutes	(20) 30,340		33,331
Accounts payable	2,467		2,621
Liabilities to Group companies	306,365		232,675
Current tax liabilities	2,097		2,755
Other short-term liabilities	1,329		38,824
Accrued expenses and prepaid income	(22) 4,876		4,935
Total short-term liabilities	361,260		315,141
TOTAL EQUITY AND LIABILITIES	1,033,025		800,604
Pledged assets	(24) 358,844		359,176
Contingent liabilities		-	-

Changes in equity, Parent Company

	Share capital	Share premium reserve	Non-registered share capital	Statutory reserve	Share premium reserve	Profit brought forward and profit for the year	Total equity
EQUITY 12/31/2015	2,940	0	0	14,917	137,620	108,175	263,652
Redemption convertible bond	-			-	-27,145	-	-27,145
Dividend	-			-	-	-19,696	-19,696
Profit for the year	-			-	-	54,429	54,429
EQUITY 12/31/2015	2,940	0	0	14,917	110,475	142,908	271,240
Dividend	-			-	-	-26,457	-26,457
Profit for the year	-			-	-	56,935	56,935
EQUITY 12/31/2016	2,940	0	0	14,917	110,475	173,386	301,718

Cash flow statement, Parent Company (indirect method)

	2016	2015
OPERATING ACTIVITIES
Operating profit	-3,527	24,932
Adjustments for items not included in cash flow
Depreciation	2,543	2,744
	-984	27,676
Received dividend subsidiaries	40,924	30,607
Interest received	737	516
Interest paid	-6,071	-6,235
Income tax paid	-1,370	-1,824
CASH FLOW FROM OPERATING ACTIVITIES BEFORE CHANGES IN WORKING CAPITAL	33,237	50,739
Changes in working capital	-11,006	9,962
Increase/decrease in operating receivables	81,382	34,892
Increase/decrease in operating liabilities	103,613	95,593
CASH FLOW FROM CURRENT OPERATIONS
INVESTING ACTIVITIES
Acquisition of subsidiaries*	-200,357	-128,713
Sales of subsidiaries	4,293	-
Acquisition of intangible assets	-1,475	-1,641
Acquisition of tangible assets	-18	-750
Change in long-term receivables	51	709
CASH FLOW FROM INVESTING ACTIVITIES	-197,506	-130,395
FINANCING ACTIVITIES
Redemption convertible loan	-	-36,782
Paid dividend	-26,457	-19,696
New loans	185,466	102,901
Amortization of debt	-49,864	-32,154
CASH FLOW FROM FINANCING ACTIVITIES	109,144	14,269
CASH FLOW FOR THE YEAR	15,251	-20,533
Cash and cash equivalents at the beginning of the year	45,306	65,839
CASH AND CASH EQUIVALENTS AT YEAR-END**	60,557	45,306

*Disbursement regarding acquisitions of subsidiaries in 2016 was comprised of payment for Tietomitta OY, Futursoft OY and Plania AS. Payments amounted to SEK 185.5 million. All acquisitions related to the entire outstanding share capital and meant that control was obtained in all companies. In addition, SEK 11.9 million was paid out for the acquisition of Acuvitec OY and SEK 2.9 million for Fox Publish AS, which did not entail any change in controlling influence or share capital.

Payment for acquisition of subsidiaries in 2015 consisted of proceeds for Fox Publish AS, ADservice Scandinavia AB, Datamann A/S, Infoeasy AS and Nice AS. Payments amounted to SEK 123.8 million. All acquisitions related to the entire outstanding share capital and meant that control was obtained in all companies. An additional payment of SEK 4.9 million was made for the acquisition of Aloc A/S. The payment did not result in any changes in share capital or control.

**Cash and cash equivalents are defined as funds for which there is an insignificant risk of value fluctuations and that can easily be converted to cash at a known amount. Short-term investments comprises funds that can be converted to cash at a known amount within one banking day.

NOTE 1 ACCOUNTING AND VALUATION PRINCIPLES

General

The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), as well as the interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) as approved by the European Commission for application within the EU. The Swedish Financial Reporting Board's recommendation, RFR 1 Supplementary rules for consolidated financial statements, is also applied.

The Parent Company applies the same accounting principles as the Group, except in those cases specified below under the section "Parent Company's accounting principles".

The Annual Report and the consolidated financial statements have been approved for publication by the Board of Directors on March 29, 2017. The consolidated statement of comprehensive income and financial status, as well as the Parent Company's income statement and balance sheet, will be subject to adoption at the Annual General Meeting on April 25, 2017.

Preconditions for preparation of the statements Functional currency and presentation currency

The Parent Company's functional currency is the Swedish krona, which is also the presentation currency for the Parent Company and the Group. Financial statements are consequently presented in Swedish kronor. All amounts are rounded to the nearest thousand kronor (SEK thousand) unless otherwise indicated.

Valuation grounds

Assets and liabilities are valued at their historic acquisition values. No financial assets or liabilities are reported at a value that differs significantly from the fair value as of December 31, 2016.

• With regard to the additional purchase price for Fox Publish AS, there is a discrepancy between book value and fair value amounting to SEK 31 thousand, although this discrepancy is not deemed to be significant.
• With regard to the additional purchase price for Futursoft OY, there is a discrepancy between book value and fair value amounting to SEK 266 thousand, although this discrepancy is not deemed to be significant.
• With regard to the remaining purchase price for Nice AS, there is a discrepancy between book value and fair value amounting to SEK 6 thousand, although this discrepancy is not deemed to be significant.

Assessments and estimates

Preparing financial statements in accordance with IFRS entails the use of important accounting estimates. The Board of Directors and the management make certain assessments in the application of the company's accounting principles. These assessments and assumptions are based on historic experiences as well as other factors that are deemed reasonable under the prevailing circumstances. The actual results can differ from these assessments if other assumptions are made or other conditions exist. Principles for assumptions and assessments are reviewed

regularly. Up until the submission of the Annual Report, nothing has occurred that gives rise to any amendments.

The areas where assumptions and assessments are of particular importance for Vitec's consolidated accounts are:

• Capitalized development costs, product rights, customer contracts, brands and goodwill. This relates primarily to recovering the value of the development work, product rights and customer contracts, as well as impairment testing of brands and goodwill. The estimates and assumptions that entail a risk of significant adjustments in reported values for assets and liabilities over the next financial year are discussed below under the heading Intangible assets.
• Defined-benefit pension plans. This relates primarily to a pension plan in Norway and the actuarial assumptions that are used in the calculation. The relevant assumptions are presented in note 21, Pensions.
• Additional purchase prices when acquiring companies. This relates to acquisitions where the purchase price is divided into two or more parts. One part that is paid in conjunction with the acquisition and other parts that are paid if certain conditions are satisfied within a certain period of time after the acquisition. For example, growth in profit and/or sales as well as guarantee commitments. Regardless of these conditions, the purchase price will be entered at the fair value at the time of the acquisition. The acquisition analysis must be adopted within 12 months. After this, adjustments to the purchase price are recognized via profit for the year. As of December 31, 2016, there are two purchase prices in the balance sheet that are subject to assessments:
• Fox Publish AS, a purchase price that can generate a payment in March 2018.
• Futursoft OY, a purchase price that can generate a payment in the first quarter of 2018.

Significant applied accounting principles

The accounting principles described below have been applied consistently in the financial statements that have been submitted, unless otherwise indicated.

New or altered accounting principles, 2016 onwards

No accounting principles have been altered as from January 1, 2016. No changes by IFRS have had any significant impact on the Group's accounts.

New or altered accounting principles, 2017 onwards

A number of new or altered standards are entering into force as from 2018. These have not been applied in advance by Vitec. To the extent the anticipated effects of these are not described below, they are not expected to have any significant effect on the Group's accounts.

IFRS 15 Revenue from contracts with customers. This standard affects when and how a company should report revenue. The standard will affect aspects of revenue recognition as regards the timing of revenue recognition (fulfillment of the commitment) as well as how combined services, such as SaaS

services, should be distributed between different income types. Upon implementation of IFRS 15, a five-step model to analyze the revenues is used.

• 1. Identify contracts with customers.
• 1. Identify separate performance obligations.
• 1. Determine the transaction price.
• 1. Allocate the transaction price.
• 1. Recognize the revenue.

A project for IFRS 15 has begun where we have reviewed all invoicing units' revenue recognition and analyzed them based on the five steps.

We have chosen to group our contracts in a number of standard portfolios that contain the same components, and where the revenue is recognized in the same way. The largest portfolios are license sales with traditional support and maintenance contracts, cloud service SaaS, subscriptions, consulting services and transaction-based revenues.

We have then identified separate performance obligations in these portfolios. Common performance obligations are license, implementation, hosting, support, maintenance and consulting services. The cloud service portfolio includes several components that are combined into one or more performance obligations. Where applicable, calculations have been done to calculate stand-alone selling price. The method for this has been either market price or estimated cost with a surcharge.

According to IFRS 15, the revenue is recognized when the customer obtains control over the service and when the performance obligation is fulfilled. Our analysis of our contracts has not arrived at any significant differences based on how we recognize the revenue today. But, there may be small parts of our revenues that will be recognized earlier or later than today, and even some items that need to be reclassified between different income categories. At present, the Group cannot estimate the new rules' quantitative impact on the financial reports, but we will do a more detailed evaluation in our continued IFRS 15 project.

IFRS 9 Financial instruments. This standard covers the classification, measurement, reporting, impairment and conclusion of reporting of financial instruments. The standard also handles general rules for hedge accounting.

The new standard will have three valuation categories for financial assets; amortized cost, fair value via comprehensive income and fair value via profit or loss. Today, Vitec has financial assets in the category Loans receivable and accounts receivable according to IAS 39. They will probably be classified at fair value via profit or loss according to IFRS 9. Since the duration is short, fair value will match book value.

Investments in debt instruments are valued as before at amortized cost or fair value.

The mandatory application date for IFRS 9 is January 1, 2018.

IFRS 16 Leasing. This standard means that the difference between financial and operational leasing is removed. All leases exceeding 12 months must be recognized in the balance sheet. The standard will principally affect the reporting of future rental contracts for premises. Effective January 1, 2019.

At the closing date, the Group's non-cancellable operating leases amount to SEK 57.3 million, see Note 23. The leases are all future rental contracts concerning premises. The Group has not

yet evaluated the extent to which they will be recognized as an asset and liability and how this will affect the Group's profit and classification of the cash flows.

Classification of short-term and long-term items

Long-term receivables and liabilities are essentially the amounts that are expected to be due for payment later than one year from the end of the reporting period. Current receivables and liabilities are due for payment within one year from the end of the reporting period.

Operating segment reporting

The operations in Vitec are organized into and controlled on the basis of segments that are reported to the most senior decision-makers within Vitec. These make up the Group management, which evaluates the results and allocates resources to the operating segments. For more information about operating segments, see Note 2 Information about operating segments.

Consolidated financial statements

The Group covers all companies (including structured companies) over which the Group has control. The Group controls a company when it is exposed to or is entitled to a variable return from its holding in the company, and has the potential to affect the return through its influence in the company. Subsidiaries are included in the consolidated accounts from the day on which control is transferred to the Group. They are excluded from the consolidated financial statements from the day on which control ceases.

The acquisition of a subsidiary is viewed as a transaction through which the Group indirectly acquires the subsidiary's assets and assumes its liabilities. In the acquisition analysis, the fair value of the acquired assets and transferred liabilities on the acquisition date is determined. In addition, the value of any holdings without control is determined. Transaction charges that arise are recognized directly in profit for the year.

In the event of the acquisition of an operation where the transferred payment, any holding without control and the fair value of a previously owned share (in the case of acquisitions in stages) exceed the fair value of the acquired assets and transferred liabilities that are recognized separately, the difference is recognized as goodwill. When this difference is negative, referred to as an acquisition at a low price, this is recognized directly in profit for the year. The transferred payment in conjunction with the acquisition does not include payments relating to the regulation of previous business connections. This type of settlement is recognized in the profit.

Conditional transferred payments/additional purchase prices are recognized at their fair value at the time of the acquisition. In cases where the conditional transferred payment is classified as an equity instrument, no revaluation is performed and settlement is recognized directly against equity. For other conditional transferred payments, these are revalued at each reporting occasion and the change is recognized in profit for the year. Acquisitions from holdings without control are recognized as a transaction within equity, i.e. between the Parent Company's owners (within retained profits) and holdings without control. The change of

holdings without control is based on their proportional share of net assets. For this reason, goodwill does not occur in these transactions. Goodwill is not amortized, but is tested annually for any impairment. Subsidiaries' financial statements are included in the consolidated financial statements from the time of acquisition until the date when the control ceases.

Internal Group assets and liabilities, income and expenses, as well as unrealized gains and losses between Group companies, are eliminated. Unrealized losses are eliminated in the same way as unrealized gains, although only to the extent there is no impairment requirement. The Group's equity only includes that part of the subsidiaries' equity that has been added after the acquisition.

Internal pricing

When invoicing between Group companies, prices are set based on business terms in cases when the end customer is external. In cases where invoicing refers to internal Group services within the same country, invoice takes place at cost price. Decisions regarding which prices are to apply are taken by the Group management. Upon invoicing foreign subsidiaries or between foreign subsidiaries, the cost plus method is applied.

Revenue recognition Recurring revenue

Recurring revenue principally comprises annual agreements regarding SaaS, maintenance, support, license renewal, operation and statistical information. Income recognition of statistical information takes place on delivery, while income recognition of other agreements takes place linearly over time.

There are seasonal variations in the recurring revenue. This relates primarily to transaction-based income, which varies during the year.

License revenues

License revenues comprise one-off charges in conjunction with new sales of software licenses. The precondition for income recognition of the new sale of a software license is that installation must have taken place. At this point, income recognition is generally performed for the entire license. In the case of products with a significant proportion of customization, the standard part of the license is clearly defined with separate pricing in order to facilitate income recognition. Depending on the scope of any customization, income recognition for the entire license revenue is performed at installation if customization is not included or if it is not particularly extensive. If the proportion of customization is significant, successive income recognition of the license is performed based on the degree of completion of the customization. The degree of completion is assessed according to the proportion of the agreed delivery that has been completed, based on agreed and completed functionality. A combined risk assessment of the assignment as a whole is always performed on a case-bycase basis. The importance of license revenues in the traditional senses is declining, as many new deals are based on the Software as a Service (SaaS) business model.

Below are applicable criteria for revenue recognition of license revenue and, where applicable, service revenue:

Written agreement signed by both parties.

• The license fee must be a fixed amount or be calculated according to a reliable method and there must be no opportunity for termination, or the credit period is shorter than twelve months.
• It is probable that payment will be received.

Service revenues

The service revenues comprise consultancy services on an ongoing basis and at a fixed price. Consultancy services on an ongoing basis are subject to income recognition at their earned value in line with the provision of the services. Income that is not invoiced to the customer is recognized as accrued income in the balance sheet. Consultancy services at a fixed price are subject to income recognition with regard to the degree of completion of the assignment, also taking into account the amount of resources that are required to complete the assignment.

The degree of completion is assessed according to the proportion of the agreed delivery that has been completed, based on agreed and completed functionality, as well as actual time spent in relation to calculated time. Income that is not invoiced to the customer is recognized as accrued income in the balance sheet. If the invoiced amount exceeds the earned value determined in the final accounts, the excess invoicing is recognized as prepaid income. When it is probable that the total expenditure for completing the assignment will exceed the total revenues, the loss is recognized immediately.

Other

Other comprises mainly product sales of goods for resale, such as hardware and third party software, excluding OEM licenses which are recognized as license revenues. Income recognition takes place on delivery.

IFRS 15 Revenue from contracts with customers

IFRS 15 enters into effect January 1, 2018 and will affect our revenue recognition. The effects of this are described under the section New or altered accounting principles, 2017 onwards.

Other operating income

Other operating income consists mainly of adjustments of conditional supplemental purchase considerations entered as liabilities. They are recognized in accordance with IFRS 3:58 as other operating income. In earlier reports, unrealized exchange rate differences were presented as other operating income and expense. As of 2016, the whole effect is presented as an operating expense. Comparative figures have been recalculated. See also Note 5.

Leasing, rental agreements and other non-cancellable contracts

Operating leases, rental agreements, etc.

Costs for operating leases are recognized in profit for the year straight-line over the leasing period. Benefits obtained in conjunction with entering into an agreement are recognized in profit for the year as a decrease in leasing charges straight-line over the term of the lease. Variable charges are expensed in the periods in which they arise. In addition to these, there are future commitments in the form of non-cancellable contracts. These comprise

rental agreements for premises as well as agreements regarding telephony and data communication.

Finance leases

The obligation to pay future leasing charges for tangible finance leases is recognized as long-term and short-term liabilities when the amounts are significant. The leased assets are depreciated over the relevant asset's useful life, whereas the leasing payments are recognized as interest and repayment of the liabilities. The minimum leasing charges are distributed between interest expense and repayment of the outstanding liability. The interest expense is spread over the leasing period, so that each accounting period is subject to an amount corresponding to a fixed interest rate for the liability recognized during the relevant period. Variable charges are expensed in the periods in which they arise.

IFRS 16

IFRS 16 enters into effect on January 1, 2019. The effects of the new standard are described under the section New or altered accounting principles, 2017 onwards.

Financial income and expenses

Financial income comprises exclusively interest income on financial investments in the form of fixed interest investments, as well as dividends in the Parent Company. Dividends are recognized when the entitlement to receive a dividend has been established. Anticipated dividends are recognized in the Parent Company only when the company issuing the dividend is a wholly owned subsidiary. Financial expenses comprise interest expenses on loans and accounts payable. Loan costs are recognized in the results with the application of the effective interest method, except in those cases where they are directly attributable to the purchase, design or production of a qualified asset as they are included in the asset's acquisition value. Any gain or loss upon the divestment of subsidiaries is recognized as a financial income or expense when the amount is material.

Receivables and liabilities in a foreign currency

Operating receivables and operating liabilities in a foreign currency are translated at the exchange rate at the end of the reporting period, and exchange rate differences are recognized in operating profit.

Tax

The Group's total tax comprises current tax and deferred tax. Tax is recognized in profit for the year, except when underlying transactions are recognized in other comprehensive income or in equity, whereupon the associated tax effect is recognized in other comprehensive income or in equity. Current tax is tax that is to be paid or received with regard to the current year. This also includes the adjustment of current tax attributable to previous periods. Deferred tax is calculated according to the balance sheet method on the basis of temporary differences between recognized and taxable values of assets and liabilities. The amounts are calculated based on how the temporary differences are expected to be evened out, and with the application of the tax rates and tax rules that have been decided or notified at the end of the reporting period. Temporary differences are not taken into account in

consolidated goodwill, nor in differences attributable to shares in subsidiary and associated companies that are not expected to be taxed within the foreseeable future. Deferred tax receivables in deductible temporary differences and loss carry-forwards are only recognized to the extent it is likely that these will entail lower tax payments in future.

Deferred tax receivables and liabilities are offset when there is a legally enforceable right to do so for the tax receivables and tax liabilities in question, and when the deferred tax receivables and tax liabilities refer to tax charged by the same tax authority and relate either to the same taxable entity or different taxable entities, where the intention exists to settle the balances through net payments.

Intangible and tangible assets Intangible assets Goodwill

In the event of an acquisition, goodwill is recognized in those cases where the transferred payment exceeds the actual value of identifiable acquired assets and transferred liabilities. As regards goodwill attributed to acquisitions before January 1, 2004, Vitec has elected not to apply IFRS retroactively.

Goodwill is valued at acquisition value minus any accumulated impairment. Goodwill is distributed to cash-generating units and is assessed at least once a year for impairment, see heading Impairment of non-financial assets on page 58. The assessment is based on assumptions and estimates which are associated with an amount of uncertainty.

Capitalized development costs

Costs for software development are capitalized when it is probable that the project can become successful bearing in mind its commercial and technical potential, and when the costs can be reliably estimated. The development work comprises research and development. Only costs for development are capitalized as an asset in the balance sheet. The acquisition value of the asset comprises salaries and other costs that are directly related to its development. Capitalized development costs are written off over an estimated useful life of five years. Assessment of the asset's value takes place continually and per development project, after which impairment is performed if required. The asset is recognized at the acquisition value less accumulated depreciation and any impairment. The assessment is based on assumptions and estimates which are associated with an amount of uncertainty.

Software

The asset comprises the right of usage of standard software in the form of business systems, Group accounting systems, development environments and other administrative systems. The asset is written off over five years and recognized at the acquisition value less accumulated depreciation and any impairment.

Brands

Brands are normally deemed to have an indeterminate useful life. Brands are valued at acquisition value minus any impairment. Brands are distributed to cash-generating units and are assessed at least once a year for impairment. The assessment is based on assumptions and estimates which are associated with an amount of uncertainty. The Group only includes brands that have been

identified in acquisition analyses.

Product rights

Product rights principally comprise acquired source code. These are written off over 5-10 years. Depreciation is made according to a regressive depreciation model for acquisition from the fourth quarter 2016. For acquisitions prior to that date, depreciation is linear. The asset is recognized at the acquisition value less accumulated depreciation and any impairment. Assessment of the asset's value is performed through estimates of future discounted cash flows. This assessment is based on assumptions and estimates which are associated with an amount of uncertainty.

Customer contracts

Acquired customer contracts are written off over 8-10 years and recognized at the acquisition value less accumulated depreciation and any impairment.

Tangible assets

Tangible assets are recognized in the statement of financial position when it is probable that future economic benefits will flow to the company and the acquisition value of the asset can be calculated reliably. The tangible assets are recognized at the acquisition value after deductions for accumulated depreciation and any impairment. The acquisition value includes the purchase price and direct costs attributable to the asset for transporting it to site and in a condition that it can be utilized in the operation. Gains or losses that arise when disposing of or divesting tangible assets comprise the difference between the sale price and the recognized value, less direct sales expenses. The profit item is recognized as other operating income/expenses.

Depreciation of tangible assets has been based on the assets' depreciable amounts, which correspond with the original acquisition value, and constitutes 20-33 percent annually for computers and 10-20 percent annually for other equipment. Depreciation on investments in rented premises is written off over the remaining rental period. The Parent Company owns a condominium that is depreciated at 2 % per year.

Leased assets

Leases, where essentially all risks and benefits associated with ownership fall to the lessor, are classified as operating leases. Leases, where risks and benefits associated with ownership essentially fall to the lessee, are classified as finance leases. When reporting tangible finance leases, the asset is recognized as a fixed asset in the consolidated statement of financial position, valued at the present value of the minimum leasing charges when the agreement was entered into. The asset is written off over its useful life. Obligations regarding future leasing charges are recognized as short-term and long-term liabilities.

Financial instruments

Financial instruments that are recognized in the statement of financial position include interest-bearing receivables, other receivables, accounts receivable as well as cash and cash equivalents on the asset side. Accounts payable, accrued expenses and loans can be found on the liability side.

Reporting financial assets and liabilities

A financial asset or liability is included in the statement of financial position when the company becomes a party to the instrument's contractual terms and conditions. A receivable is included when the company has acted and there is a contractual liability for the other party to pay, even if the invoice has not yet been sent. Accounts receivable are included in the statement of financial position when the invoice has been sent. Liabilities are included when the other party has acted and there is a contractual liability to pay, even if the invoice has not yet been received. Accounts payable are included when the invoice has been received. A financial asset is removed from the statement of financial position when the rights in the agreement are realized, fall due or the company loses control of them. The same applies to a part of a financial asset. A financial liability is removed from the statement of financial position when the obligation in the agreement is fulfilled or ceases in some other way. The same applies to a part of a financial liability.

Classification and valuation (see Note 28 for the categories' values)

Financial instruments are initially recognized at the acquisition value corresponding to the instrument's fair value plus transaction costs, except for derivative instruments for which transaction costs are expenses immediately. A financial instrument is classified when recognized for the first time, including on the basis of the purpose for which the instrument was acquired. All financial assets and liabilities are classified in the following categories:

• Financial assets and liabilities valued at fair value via the income statement. Additional purchase prices in conjunction with acquisitions are included in this category.
• Investments that are held to maturity. Vitec has no financial instruments in this category.
• Loans receivable and accounts receivable. Vitec's accounts receivable, other receivables as well as cash and cash equivalents are included in this category.
• Financial assets that can be sold. Vitec has no financial assets in this category.
• Financial liabilities valued at their accrued acquisition value. Vitec's accounts payable, other liabilities, accrued expenses and loans are included in this category.

Loans receivable and accounts receivable

Loans receivable and accounts receivable are financial assets that are not derivatives, that have determined or determinable payments and that are not listed on an active market. These assets are valued at their accrued acquisition value. On each reporting occasion, an evaluation is carried out as to whether there are objective indications that a loan receivable is in need of impairment; loan receivables are assessed individually. Impairment of loan receivables is recognized as other operating expenses.

Accounts receivable are recognized at the amount that is expected to be received after deductions for doubtful receivables. A provision regarding reduction in value is made when the receivable is more than 90 days old, or earlier if the amount that is expected to be paid, after individual assessment, is below the asset's reported value. The anticipated duration of accounts receivable is short, which is why the value is recognized without discounting. When an account receivable cannot be collected, it is written off against the value reduction account for accounts receivable. Impairment of accounts receivable is recognized as other external expenses. The recovery of amounts that have previously been written off reduces the sales expenses in the results.

Cash and cash equivalents

The Parent Company's and the Group's cash and cash equivalents include the Group's balance in Group accounts and other bank accounts, including currency accounts and money in transit. Cash and cash equivalents are valued at their accrued acquisition value. The Group's cash and cash equivalents are exposed to the risk of exchange rate fluctuations, but can always be converted easily to cash at a known amount.

Short-term investments

Short-term investments comprise fixed interest investments or investments in money market funds. The investments can be converted to cash at a known amount within one banking day.

Financial liabilities valued at their accrued acquisition value

Accounts payable and loans are classified in the category other financial liabilities. Accounts payment have a short anticipated duration and are valued without discounting at a nominal amount. Loans are classified as other financial liabilities, which means that they are recognized at their accrued acquisition value according to the effective interest method.

Convertible debentures

Convertible debentures are reported both as a financial liability and as equity. The various parts are distributed after a valuation conducted in conjunction with a share issue. The interest expense is spread over the expected term of the loan.

Hedging net investment in foreign operations

The Group has taken out loans in foreign currencies (EUR, NOK and DKK) to hedge investments in foreign subsidiaries. The loans are valued at the exchange rate on the balance sheet date. The Group recognizes exchange rate differences directly to equity, after adjustment for the tax element. Any ineffective element of the exchange rate difference is recognized directly in the income statement as a financial item.

IFRS 9

IFRS 9 enters into effect on January 1, 2018. The effects of the new standard are described under the section New or altered accounting principles, 2017 onwards.

Earnings per share

Earnings per share before dilution are calculated as profit for the year attributable to shareholders of the Parent Company divided by the weighted average number of outstanding shares. When calculating earnings per share after dilution, the results are adjusted by the interest after tax that is attributable to the convertible bonds that may be converted. The number of shares is adjusted by the sum of the weighted average number of shares that can give rise to the dilution effect.

Provisions

A provision is recognized in the balance sheet when there is a formal or informal commitment as a result of a event that has occurred, and where it is probable that an outflow of resources is required to settle the commitment and a reliable estimate of the amount can be made. In cases where some or all of the amount that is required to settle a provision is expected to be paid by a third party, the reimbursement is recognized when, and only when, it is as good as certain that it will be received if the obligation is settled. The reimbursement is recognized as an asset in its own right in the balance sheet. The amount that is recognized for the reimbursement cannot exceed the provision. The cost for a provision is recognized in the income statement net following deductions for any reimbursement from a third party.

Contingent liabilities

A contingent liability is recognized where there is a possible commitment deriving from events that have occurred, and whose occurrence is confirmed only by one or more uncertain future events that do not lie entirely within the company's control occurring or failing to occur, or when there is a commitment that derives from occurred events but that has not been recognized as a liability or provision due to it being unlikely that an outflow of resources will be required to settle the commitment, or that that size of the commitment cannot be calculated with sufficient accuracy.

Inventories

Inventories are valued at the acquisition value or the net sales value, whichever is the lowest, and only exist to a minor extent.

Impairment of non-financial assets

The value of capitalized development costs, product rights, customer contracts, brands and goodwill is tested to determine any need for impairment. Goodwill and brands with an indeterminate useful life are assessed annually. This assessment takes place by means of the recognized value being compared with the recovery value, where the recovery value is defined as the asset's fair value (minus sales expenses) or the value in use, whichever is the higher. The value in use is calculated by discounting the future cash flows the asset it expected to generate, in perpetuity, by an interest rate based on the market's assessment of risk-free interest and risk. The cash flows are based on budgets/forecasts determined by the company management.

In the calculation, the assets are referred to the smallest cash-generating unit where an independent cash flow can be determined. The smallest cash generating unit is a business area. The discount rate after tax amounts to 9.23-9.50 percent, and is based on a risk-free bond yield with a duration of 10 years with an addition for assessed risk. The assessment is based on assumptions and estimates which are associated with an amount of uncertainty. An impairment is recognized when an asset's or cash-generating unit's recognized value exceeds the recovery value. An impairment is recognized as a cost in profit for the year. When the impairment requirement has been identified for a cash-generating unit, the impairment amount is distributed in the first instance to goodwill. After this, a proportional impairment of other assets included in the unit is performed. Vitec's most

recent assessment was conducted in conjunction with the preparation of the final accounts for 2016.

Remuneration to employees

Short-term remuneration is calculated without discounting, and is reported when the services are received. Costs for bonuses and other variable salary portions are recognized when a legal or informal obligation exists for the company to pay remuneration and the payment can be calculated reliably.

Pensions and other remuneration after completed employment can be classified as defined-contribution plans or defined-benefit plans. The majority of the Group's pension commitments comprise defined-contribution plans that are fulfilled through continual payments to independent authorities or bodies. Obligations for fees for defined-contribution plans are recognized as a cost in the income statement when they arise. There are a small number of employees with defined-benefit ITP plans with continual payments to Alecta. These are recognized as defined-contribution plans since Alecta does not supply the information that is required. As a result, we do not have the information that is required to recognize the plan as a defined-benefit plan. However, there is nothing to indicate any significant commitments exceeding that which is paid to Alecta. There are also a smaller number of employees in Norway who are associated with a defined-benefit plan.

Remuneration on termination of employment is recognized as a provision in conjunction with staff being given notice only if the company is demonstrably obliged to terminate an employment before the normal time, or when remuneration is paid as an incentive to encourage voluntary departure. When remuneration is paid as an incentive to encourage voluntary departure, a cost and a provision are recognized if it is likely that the offer will be accepted and if the number of employees who will accept the offer can be estimated reliably.

Parent Company's accounting principles

The Parent Company complies with the Annual Accounts Act and the Swedish Financial Reporting Board's recommendation, RFR 2 Reporting of legal entities. The application of RFR 2 means that the Parent Company must apply the same accounting principles as the Group as far as possible within the framework of the Annual Accounts Act, the Act on Safeguarding of Pension Commitments, and with respect to the correlation between accounting and taxation.

Altered accounting principles and the differences between the Parent Company's and the Group's accounting principles are set out below.

• The Parent Company applies the change in RFR 2 regarding IRFS 12 Disclosure of Interests in Other Entities. The information requirements in RFR 2 can be found in Chapter 5 §8 of the Annual Accounts Act, and correspond with that which was previously included in RFR 2 regarding IAS 27. Unless otherwise indicated, the Parent Company's accounting principles have otherwise been amended in accordance with that which is described for the Group.
• For the Parent Company, an income statement is presented. For the Group, a statement of comprehensive income is presented. For the Parent Company, the designations balance sheet and cash flow statement are used for the reports that, for the Group, have the titles statement of financial status and statement of cash flows. For the Parent Company, the income statement and balance sheet are set out in accordance with the schedules in the Annual Accounts Act, while the statement of comprehensive income, the statement of changes in equity and the cash flow statement are based on IAS 1 Presentation of Financial Statements and IAS 7 Statement of Cash Flows. The differences compared to the Group's reports that apply in the Parent Company's income statement and balance sheet principally comprise the recognition of equity and the occurrence of provisions as a separate heading in the balance sheet.
• Shares in subsidiaries are recognized in the Parent Company according to the acquisition value method, and conditional purchase prices are valued on the basis of the likelihood that they will be paid. In the consolidated financial statements, conditional purchase prices are recognized at fair value with value changes through profit. For the Parent Company, transaction charges are included in the recognized value, which does not apply to the Group.
• In the Parent Company, all leases are recognized according to the rules for operating leases.
• In the Parent Company, untaxed reserves are recognized inclusive of deferred tax. In the Group, untaxed reserves are split into deferred tax and shareholders' equity.
• The anticipated dividend from subsidiaries is reported in those cases where the Parent Company has the sole right to decided on the size of the dividend. The Parent Company has booked a receivable for anticipated dividends from subsidiaries. This amounts to a total of SEK 56.6 million, divided between: Vitec Capitex AB SEK 4.7 million, Vitec Energy AB SEK 2.0 million, Capitex AB 24.1 million, Vitec Mäklarsystem AB SEK 5.7 million, Acuvitec OY SEK 1.7 million, Datamann A/S SEK 3.2 million, Vitec IT-Makeriet AS SEK 2.2 million, Vitec Megler AS SEK 10.3 million and Vitec Nice AS SEK 2.7 million.

NOTE 2 INFORMATION ABOUT OPERATING SEGMENTS

The Group management follows up and distributes resources based on operating segments. The Vitec Group's grounds for division in 2016 are the segments Auto, Energy, Real Estate, Finance & Insurance, Health, Media, Environment and Estate Agents.

• Auto Business systems for the auto and machinery sector with support for sales, purchasing, inventory management, invoicing, accounting and payroll administration.
• Energy Business systems for forecasting wind power, electricity and heating needs, as well as for the technical management and maintenance of distribution networks.
• Real Estate Business systems for construction and real estate companies.
• Finance & Insurance Business systems for the finance and insurance industry, as well as standardized software for portfolio management, non-life insurance companies, tax calcula-

tions, pension calculations and housing calculations.

• Health Business systems for electronic medical records handling for healthcare.
• Media Business systems for newspaper publishers and companies supplying special solutions within distribution.
• Environment Business systems for the whole waste management chain, from collection to invoicing, accounting and reporting.
• Estate Agents Business systems for real estate agents.

Geographic markets based on customers' registered offices

The following table shows the Group's net sales converted to SEK million for the period January - December in 2016 as well as 2015 based on our customers' registered offices. The distribution of fixed assets is also presented by geographic market.

MARKET

		Net sales		Fixed assets
	2016	2015	2016	2015
Sweden	284.7	308.1	175.1	184.0
Denmark	154.6	99.8	160.2	157.0
Finland	106.0	64.1	242.1	119.7
Norway	119.5	142.1	266.5	190.7
Rest of Europe	10.4	4.1	-	-
Rest of the world	0.2	0.1	-	-
	675.4	618.4	843.9	651.5

OPERATING SEGMENTS

							Finance and
	Auto		Energy		Real Estate		insurance		Health		Media
	2016	2015	2016	2015	2016	2015	2016	2015	2016	2015	2016	2015
Per operating segment (SEK million)
Recurring revenue	96.8	60.0	18.4	17.3	89.2	82.0	99.7	77.2	54.6	48.3	2.7	4.6
Licenses	3.0	0.5	0.0	-	11.5	9.2	6.1	6.8	-	0.3	-	0.8
Service revenues	14.1	7.1	7.4	6.6	55.2	49.3	20.3	16.5	11.2	12.1	1.9	5.2
Other	5.2	3.4	0.1	0.2	2.5	2.0	0.6	0.8	0.3	0.8	-	-
Internal sales	2.2	-	-	-	0.2	0.4	2.2	1.6	0.5	0.5	0.2	0.1
Net sales	121.3	71.1	25.9	24.1	158.5	142.9	128.8	102.8	66.7	62.0	4.8	10.6
Capitalized dev. costs	13.0	7.4	2.4	2.2	13.3	11.8	19.9	15.3	7.2	5.9	0.1	0.2
Depreciation	-14.7	-7.7	-1.9	-1.8	-11.9	-11.3	-17.4	-12.3	-12.4	-8.5	-0.1	-0.1
Operating profit	19.2	14.9	7.3	8.8	29.8	24.9	20.3	13.9	1.9	5.7	1.0	2.4
Financial items, net	-	-	-	-	-	-	-	-	-0.3	-0.3	-	-
Consolidated profit before
tax
Other information
Investments in fixed assets	125.0	81.0	2.4	2.2	67.9	11.8	20.8	43.1	7.2	6.9	0.1	0.2
Closing balance Goodwill	64.4	28.8	0.0	-	40.5	27.4	32.0	30.5	-	17.5	2.4	7.3
Closing balance Other tan gible and intangible assets	168.4	84.1	5.5	5.1	73.5	32.7	104.3	96.3	96.9	102.2	0.0	0.2

None of the Group's customers are responsible for more than 5 % of income.

OPERATING SEGMENTS, CONT.

	Environment		Estate Agents			Group-wide	Eliminations			Total
	2016	2015	2016	2015	2016	2015	2016	2015	2016	2015
Per operating segment (SEK million)
Recurring revenue	11.6	-	145.1	191.1	0.0	-	-	-	518.1	480.6
Licenses	2.4	-	1.8	5.6	0.4	-	-	-	25.2	23.1
Service revenues	3.1	-	7.8	9.2	0.2	0.1	-	-	121.1	106.2
Other	1.4	-	0.5	1.1	0.4	0.2	-	-	11.0	8.5
Internal sales	-	-	3.1	1.9	97.7	87.9	-105.9	-92.3	0.0	0.0
Net sales	18.4	0.0	158.3	209.0	98.6	88.3	-105.9	-92.3	675.4	618.4
Capitalized dev. costs	1.4	-	25.0	19.4	-	-	-	-	82.3	62.1
Depreciation	-1.3	-	-26.5	-26.4	-5.5	-6.5	0.1	-	-91.5	-74.6
Operating profit	2.4	-	11.1	33.2	-4.8	-3.2	-	-	88.3	100.6
Financial items, net	0.2	-	-	0.5	-6.3	-6.1	-	-	-6.4	-5.9
Consolidated profit before
tax									81.9	94.7
Other information
Investments in fixed assets	34.7	-	27.2	51.6	7.0	4.4	-	-	292.2	201.2
Closing balance Goodwill	8.5	-	92.5	90.6	-	-	-	-	240.4	202.1
Closing balance Other tan gible and intangible assets	25.5	-	107.7	98.6	21.6	23.4	-	-	603.4	442.6

NOTE 3 ACQUISITIONS AND DIVESTMENTS

Sale of Media

On July 1, all shares were divested in Vitec Veriba AB, which mainly makes up the Vitec Business Area Media. Since the business area is only a small part of the Group, the divestment is not assessed to be significantly material to be recognized as assets for sale under IFRS 5.

RECOGNIZED VALUES OF ASSETS AND LIABILITIES AT THE TIME OF SALE

	Veriba AB	Fair value, adjust ment	Fair value recognized in the Group
Intangible assets	588	-	588
Current receivables	1,507	-	1,507
Cash and cash equivalents	3,076	-	3,076
Short-term liabilities	-1,752	-	-1,752
Net identifiable assets and liabilities	3,419	0	3,419
Goodwill on consolidation			4,529
Total			7,948
Recognized value for net assets sold			7,948
Calculation of net cash outflow			Fair value
Purchase consideration received			7,293
Divested cash and cash equivalents			-3,076
Net cash outflow			4,217

Information on the sale	Fair value
Purchase consideration received	7,293
Recognized value for net assets sold	-7,948
Result from sale	-655

The Veriba Group's profit up to the sale date amounted to SEK 0.2 million and is included in operating profit for the Business Area Media.

Acquisition of Tietomitta OY

On July 5, all shares were acquired in the Finnish software company Tietomitta OY, the product of which is an industry-specific software for waste management in Finland.

The company is consolidated as from the acquisition date. The goodwill is not tax-deductible and is deemed to be attributable to the expected profitability, complementary expertise as well as anticipated synergies in the form of the joint development of our products. As the acquisition provides Vitec with a new business area, we deem that the Group's new composition reduces the total industry and market-related risks. The acquisition-related expenses amount to SEK 1.7 million as of December 31, and are recognized as other external costs through comprehensive income. From the acquisition date up to and including December 31, the revenues in the acquired company amount to SEK 18.4 million and profit after tax amount to SEK 2.8 million. If consolidation had occurred at the beginning of the year, the company would have brought the Group a further approx. SEK 14.9 million in revenue and SEK 1.7 million in losses after tax. The following purchase price allocation is preliminary until 12 months have passed since the acquisition date. The items that may be revalued are brands, product rights, customer contracts and goodwill.

PRELIMINARY ACQUISITION ANALYSIS

	Tietomitta OY	Fair value, adjust ment	Fair value recognized in the Group
Brands	-	470	470
Product rights	-	18,061	18,061
Customer contracts	-	4,936	4,936
Intangible assets	1,316	-	1,316
Tangible assets	107	-	107
Inventories	312	-	312
Current receivables	5,672	-	5,672
Cash and cash equivalents	15,915	-	15,915
Deferred tax liabilities	-	-4,693	-4,693
Short-term liabilities	-5,331	-	-5,331
Net identifiable assets and liabilities	17,991	18,774	36,765
Goodwill on consolidation			8,380
Total			45,145
The Group's acquisition value			45,145

Calculation of net cash outflow	Fair value
The Group's acquisition value	-45,145
Acquired cash and cash equivalents	15,915
Net cash outflow	-29,230

Acquisition of Futursoft OY

On September 7, all shares were acquired in the Finnish software company Futursoft OY, which is specialized in software for the auto and machinery industries.

The company is consolidated as from the acquisition date. The goodwill is not tax-deductible and is deemed to be attributable to the expected profitability, complementary expertise as well as anticipated synergies in the form of the joint development of our products. The acquisition-related expenses amount to SEK 2.2 million as of December 31, and are recognized as other external costs through comprehensive income. From the acquisition date

up to and including December 31, the revenues in the acquired company amount to SEK 18.8 million and profit after tax amount to SEK 4.1 million. If consolidation had occurred at the beginning of the year, the company would have brought the Group a further approx. SEK 32.5 million in revenue and SEK 6.9 million in profit after tax. The following purchase price allocation is preliminary until 12 months have passed since the acquisition date. The items that may be revalued are brands, product rights, customer contracts and goodwill. Expensed portion of conditional purchase price depends on EBITDA 201610--201709.

PRELIMINARY ACQUISITION ANALYSIS

	Futursoft OY	Fair value, adjust ment	Fair value recognized in the Group
Brands	-	41,317	41,317
Product rights	-	21,377	21,377
Customer contracts	-	14,277	14,277
Tangible assets	1,774	-	1,774
Inventories	414	-	414
Current receivables	2,428	-	2,428
Cash and cash equivalents	13,138	-	13,138
Deferred tax liabilities	-	-15,394	-15,394
Short-term liabilities	-5,273	-	-5,273
Net identifiable assets and liabilities	12,481	61,576	74,057
Goodwill on consolidation			33,064
Total			107,121
The Group's acquisition value			107,121

Calculation of net cash outflow	Fair value
The Group's acquisition value	-107,121
Expensed portion of conditional purchase price	23,501
Acquired cash and cash equivalents	13,138
Net cash outflow	-70,482

Plania AS

On December 5, all shares were acquired in the Norwegian software company Plania AS, the product of which is an industry-specific software for property management and operations and maintenance of properties.

The company is consolidated as from the acquisition date. The goodwill is not tax-deductible and is deemed to be attributable to the expected profitability, complementary expertise as well as anticipated synergies in the form of the joint development of our products. The acquisition-related expenses amount to SEK 1.3 million as of December 31, and are recognized as other external

costs through comprehensive income. From the acquisition date up to and including December 31, the revenues in the acquired company amount to SEK 2.2 million and profit after tax amount to SEK 0.0 million. If consolidation had occurred at the beginning of the year, the company would have brought the Group a further approx. SEK 27.6 million in revenue and SEK 5.0 million in profit after tax. The following purchase price allocation is preliminary until 12 months have passed since the acquisition date. The items that may be revalued are brands, product rights, customer contracts and goodwill.

PRELIMINARY ACQUISITION ANALYSIS

	Plania AS	Fair value, adjust ment	Fair value recognized in the Group
Brands	-	17,865	17,865
Product rights	-	15,822	15,822
Customer contracts	-	6,761	6,761
Tangible assets	652	-	652
Current receivables	3,313	-	3,313
Cash and cash equivalents	12,457	-	12,457
Deferred tax liabilities	-37	-9,708	-9,744
Short-term liabilities	-6,723	-	-6,723
Net identifiable assets and liabilities	9,663	30,740	40,403
Goodwill on consolidation			13,577
Total			53,980
The Group's acquisition value			53,980

Calculation of net cash outflow	Fair value
The Group's acquisition value	-53,980
Acquired cash and cash equivalents	12,457
Net cash outflow	-41,523

NOTE 4 INCOME AND EXPENSE BETWEEN GROUP COMPANIES

The Parent Company's net sales include invoicing to Group companies at 100 percent (99) and in operating costs it stands at 0 percent (1).

NOTE 5 OTHER OPERATING INCOME AND OTHER OPERATING EXPENSES

The conditional purchase considerations booked as liabilities for Fox Publish AS and Acuvitec OY were adjusted down by SEK 1.5 million and SEK 21.2 million, respectively, during the period. The corrections were recognized as other operating income in accordance with IFRS 3:58 and as an impairment of intangible assets.

Other operating expenses refer in their entirety to exchange rate differences attributable to operating receivables and liabilities. The Parent Company's other operating income comprises in its entirety unrealized exchange rate differences.

NOTE 6 EMPLOYEES, PERSONNEL COSTS AND REMUNERATION OF SENIOR EXECUTIVES

AVERAGE NUMBER OF EMPLOYEES

		Women	Men		Total
	2016	2015	2016	2015	2016	2015
Parent Company
Sweden	16	15	8	7	24	22
Subsidiaries
Sweden	47	45	139	150	186	195
Denmark	18	13	80	72	98	85
Finland	17	16	48	27	65	43
France	1	1	5	5	6	6
Norway	27	22	61	49	88	71
Group, total	126	112	341	310	467	422

At the end of the year, there were 507 employees (433).

GENDER DISTRIBUTION AMONG SENIOR EXECUTIVES

The Board of the Parent Company comprises five members, two of whom are women. The Group's management team comprises

four individuals, one of whom is a woman. The business area managers and presidents of subsidiaries are 14 men.

SALARIES AND OTHER REMUNERATION

	Salaries and other remuneration		Social security expenses		(of which pension premiums)
	2016	2015	2016	2015	2016	2015
Parent Company	18,143	16,895	9,674	9,011	3,336 *	3,116 *
Subsidiaries	253,987	229,965	76,091	70,276	25,984	22,053
Group, total	272,130	246,860	85,765	79,287	29,320 **	25,169 **

*Of the Parent Company's pension premiums, SEK 1,616 thousand (1,446) refers to senior executives.

** Of the Group's pension premiums, SEK 3,559 thousand (2,786) refers to senior executives.

SALARIES AND OTHER REMUNERATION DIVIDED BETWEEN BOARD MEMBERS, SENIOR EXECUTIVES AND OTHER EMPLOYEES

	Senior executives (of which bonuses etc.)			Other employees
	2016	2015	2016	2015
Parent Company	7,302 (0)	7,143 (0)	10,841	9,752
Subsidiaries	14,337 (0)	8,744 (0)	239,650	221,221
Group, total	21,639 (0)	15,887 (0)	250,491	230,973

Senior executives

Senior executives in the Parent Company comprise the Board and the Group management team.

Senior executives in subsidiaries consist of business area managers and CEO's in the subsidiaries that form their own reporting units.

Remuneration to Board members and senior executives in the Parent Company

All remuneration is deemed to be at the market-going rate. External members receive Board fees.

There is no variable remuneration. No consultancy agreements exist with any Board member or senior executive.

Board fees – Payment has taken place in accordance with the decision of the Annual General Meeting. The Chairman of the Board receives a fee of SEK 250 thousand per year. The other four Board members who are not employees of the company receive a combined fee of SEK 500 per year. In both cases, the remuneration level applies as from the date of the AGM.

The CEO's salary amounted to SEK 1,829 thousand, with no Board fee. The CEO's pension solution from the company includes the entitlement to an annual premium payment amounting to 35 percent of salary. In the event of notice from the company's side, salary will be payable for the notice period of 6 months, as well as a severance payment totaling 18 months' salary. The severance payment is offset against remuneration from another employer.

The pension plans are defined-contribution and are based on a retirement age of 65. The notice period set out in applicable legislation or an applicable collective bargaining agreement normally applies between Vitec and other senior executives. In the event of notice from Vitec's side, Maria Kröger and Patrik Fransson are entitled to 6 months' severance pay and Lars Eriksson is entitled to 9 months' severance pay.

There is an ongoing convertible program for employees and senior executives in the form of convertible debentures. The share issues have been implemented on market terms, which is why there is no benefit to be recognized as share-related remuneration. Board members' and senior executives' holdings of shares and convertible bonds can been seen in the Corporate Governance Report.

	Basic salary/ Board fees			Other benefits Pension premiums		Total
	2016	2015	2016	2015	2016	2015	2016	2015
Chairman of the Board, Crister Stjernfelt	250	230	-	-	-	-	250	230
Board member, Kaj Sandart	125	115	-	-	-	-	125	115
Board member, Jan Friedman	125	115	-	-	-	-	125	115
Board member, Birgitta Johansson Hedberg	125	115	-	-	-	-	125	115
Board member, Anna Valtonen	125	115	-	-	-	-	125	115
CEO, Lars Stenlund	1,829	1,836	-	-	649	648	2,478	2,484
*Other senior executives, Parent Company	4,723	4,617	13	14	967	798	5,704	5,429
Total	7,302	7,143	13	14	1,616	1,446	8,931	8,603

* Other senior executives in the Parent Company refer to Patrik Fransson, Lars Eriksson and Maria Kröger. Kaj Sandart and Jan Friedman have invoiced their fees plus payroll overheads and VAT via companies. This procedure is cost-neutral for Vitec.

NOTE 7 FEES AND REIMBURSEMENT OF COSTS TO AUDITORS

		Group	Parent Company
	2016	2015	2016	2015
PWC, auditing assignment	1,409	1,373	643	651
PWC, audit activities other than auditing assignment	269	117	-	-
PWC, tax consultancy	13	-	-	-
PWC, other assignments	117	18	117	18
Total audit fees	1,808	1,508	760	669

NOTE 8 NET FINANCIAL ITEMS

		Group	Parent Company
	2016	2015	2016	2015
Interest income	773	826	737	516
Dividend, subsidiaries	-	-	58,335	39,907
Other financial expenses	-40	-30	-	-
Interest expenses	-7,096	-6,717	-6,382	-6,234
Net financial items	-6,363	-5,921	52,690	34,189

NOTE 9 APPROPRIATIONS

	2016	2015
The difference between booked depreciation and depreciation according to plan	-119	278
Received Group contributions	7,900	-
Group contributions paid	-	-1,100
Total	7,781	-822

NOT 10 TAX

	Group			Parent Company
	2016	2015	2016	2015
Current tax
Current tax on profit for the year	-14,643	-22,374	-9	-3,946
Adjustment of current tax from previous years	83	-	-	77
	-14,560	-22,374	-9	-3,869
Deferred tax
Deferred tax for temporary differences	-1,126	2,011	-	-
Revaluation of deferred tax due to changed tax rates	559	3,868	-	-
	-567	5,879	0	0
Total recognized tax expense	-15,127	-16,495	-9	-3,869

RECONCILIATION BETWEEN APPLICABLE TAX RATE AND EFFECTIVE TAX RATE

		Group		Parent Company
	2016	2015	2016	2015
Recognized profit before tax	81,942	94,686	56,944	58,298
Of which in Sweden	46,219	93,239	-	-
Of which in Finland	4,598	-1,358	-	-
Of which in Norway	18,138	8,340	-	-
Of which in Denmark	12,983	-5,537	-	-
Tax according to applicable tax	-18,549	-21,131	-12,528	-12,826
Tax effect of:
- non-deductible expenses	-395	-428	-117	-134
- non-taxable income	255	6	12,834	8,780
- change in non-capitalized loss carry-forwards	-	-	-189	234
- correction of previous tax calculations and altered tax rates	3,563	5,058	-9	77
Recognized effective tax	-15,127	-16,495	-9	-3,869

RECOGNIZED DEFERRED TAX RECEIVABLES

	Group		Parent Company
	2016	2015	2016	2015
Deferred tax Aloc A/S for impaired capitalizations	1,871	3,871	-	-
Differences between booked value and taxable value of fixed assets in Aloc A/S	2,314	2,081	-	-
Closing balance	4,185	5,952	-	-

RECOGNIZED DEFERRED TAX LIABILITIES

	Group		Parent Company
	2016	2015	2016	2015
Product rights, customer contracts and brands	86,643	65,683	-	-
Capitalized development costs	32,997	24,099	-	-
Pension liability	-1,843	-2,008	-	-
Untaxed reserves	2,887	1,973	-	-
Deferred tax liabilities	120,684	89,747	0	0

CHANGES IN DEFERRED TAX LIABILITY IN TEMPORARY DIFFERENCES

	1/1/2016	Recognized in comprehensive income for the year	Recognized in other comprehensive income	Recognized in equity	12/31/2016
Acquired net assets	63,675	-11,564	3,718	28,412	84,241
Effect of altered tax rate	-	559	-	-	559
Hedge accounting	-	1,760	-	-1,760	0
Accumulated excess depreciation	1,973	914	-	-	2,887
Capitalized development costs	24,099	8,898	-	-	32,997
	89,747	567	3,718	26,652	120,684

There are no non-capitalized deferred tax receivables for loss carry-forwards.

NOTE 11 EARNINGS PER SHARE

		12/31/2016 12/31/2015
Earnings per share before dilution	2.27	2.66
Profit when calculating earnings per share	66,814	78,191
Average number of shares (weighted average)	29,396,690	29,396,690
Earnings per share after dilution	2.25	2.64
Profit when calculating earnings per share after dilution	67,086	78,500
Number of shares after dilution	29,838,900	29,788,016

NOTE 12 FIXED ASSETS, GROUP

INTANGIBLE ASSETS (SEK MILLION)

				Capitalized		Customer
		Goodwill		development costs	Software		Brands		Product rights		contracts		Total
	2016	2015	2016	2015	2016	2015	2016	2015	2016	2015	2016	2015	2016	2015
Opening acquisition value		216.7 195.6 229.5 164.0			19.4	9.9	10.1		7.8 325.9 272.7		75.1		55.1 876.9 705.1
Purchases*	55.0	29.1	82.3	65.5	1.5	1.6	59.7	2.9	55.3	67.5	26.0		24.2 279.7 190.9
Divestment	-4.9	-	-0.6	-	-	-	-	-	-2.3	-	-	-	-7.8	-
Acquisition of operations	-	-	-	-	-	8.6	-	-	1.4	-	-	-	1.4	8.6
Translation difference	6.7	-8.0	1.2	-	0.1	-0.7	0.4	-0.6	17.4	-14.3	4.4	-4.1	30.2	-27.8
Closing accumulated acquisition values		273.6 216.7 312.4 229.5			21.0	19.4	70.1			10.1 397.7 325.9 105.5			75.1 1180.4 876.9
Opening depreciation	-14.6		-4.7 -120.3	-87.4	-15.6	-6.7	-1.3	0.0	-96.9	-75.0	-12.8		-7.2 -261.5 -181.0
Acquisition of operations	-	-	-	-	-	-7.3	-	-	-	0.0	-	-	-	-7.3
Divestment	-	-	0.4	-	-	0.0	-	-	2.3	0.0	-	-	2.7	-
Translation difference	-1.3	-0.1	-0.4	-	-0.1	1.0	1.3	-	-3.9	2.3	-0.9	0.6	-5.3	3.8
Depreciation and impairment for
the year	-17.3	-9.9	-41.5	-32.9	-1.4	-2.5	-	-1.4	-32.4	-24.2	-14.1		-6.2 -106.6	-77.0
Closing accumulated depreciation	-33.2		-14.6 -161.8 -120.3		-17.1	-15.6	-0.1		1.3 -130.9	-96.9	-27.8		-12.8 -370.8 -261.5
Closing book value		240.4 202.1 150.5 109.2			4.0	3.9	70.1		8.8 266.8 229.0		77.7		62.3 809.6 615.3

*Goodwill, brands, customer contracts and product rights are attributable to acquisitions, whereas capitalized development costs are attributable to in-house time spent and, to a lesser extent, purchased consultancy services. Software is attributable to purchases.

Impairment testing of goodwill and brands

The most important assumptions in the impairment test are the assumptions regarding the revenue and cost trends. The cash flows that have been forecast have been based on an annual revenue growth of 2-3 percent. The cost trend for the segments has been forecast at 1.5 percent. The forecast cash flows have been calculated at their present value with a discount rate after tax amounting to 9.26-9.50 percent (approx. 8.63-9.43 percent before tax). The growth rate in the terminal value is estimated at 2 percent. An account of important assumptions per segment can be seen from the following table.

Vitec has conducted a sensitivity analysis regarding important assumptions, where the management has found that no reasonable changes to the assumptions produce any impairment as of December 31, 2016. All business areas demonstrate an adequate margin to impairment as of December 31, 2016.

In 2016, the conditional purchase considerations booked as liabilities for Fox Publish AS and Acuvitec OY were adjusted down by SEK 1.5 million and SEK 21.2 million, respectively. This resulted in an other operating income and an impairment of goodwill and brands.

		B.A.	B.A. Estate
%	B.A. Auto	B.A. Energy	B.A. Real Estate	B.A. F & F	B.A. Health	B.A. Media	Environment	Agents
Discount rate after tax	9.50 (9.16)	9.26 (8.63)	9.26 (9.16)	9.50 (8.63)	9.26 (8.63)	9.26 (9.43)	9.26 (0)	9.50 (8.63)
Growth rate	2.00 (2.00)	2.00 (2.00)	2.00 (2.00)	2.00 (2.00)	2.00 (2.00)	2.00 (2.00)	2.00 (0)	3.00 (2.00)
Cost changes	1.50 (1.50)	1.50 (1.50)	1.50 (1.50)	1.50 (1.50)	1.50 (1.50)	1.50 (1.50)	1.50 (0)	1.50 (1.50)
Sustainable operating margin	18.30	29.60	16.80	15.30	18.00	0.00	10.00	15.70

Goodwill

Goodwill amounts to SEK 240,444 thousand (202,103). Goodwill is divided between the segments/business areas Auto SEK 64,380 thousand (28,829), Real Estate SEK 40,548 thousand (27,426), Finance & Insurance SEK 32,011 thousand (30,509), Health SEK 0 thousand (17,452), Media SEK 2,442 thousand (7,306), Environment SEK 8,526 thousand (0) and Estate Agents SEK 92,537 thousand (90,581).

Capitalized development costs

Capitalized development costs comprises in-house time spent on

product development, as well as external consultancy services to a smaller extent. Depreciation is initiated cautiously when the capitalization is entered. All development projects are written off over 5 years.

Software

Software comprises acquired right of usage/program licenses, for example the Group's business systems and Group accounting systems as well as other administrative systems. The asset is written off over 5 years.

Brands

Brands amount to SEK 70,097 thousand (8,793). Brands are divided between the segments/business areas Auto SEK 44,774 thousand (3,027), Real Estate SEK 17,267 thousand (0), Finance & Insurance SEK 2,995 thousand (2,831), Health SEK 2,054 thousand (642), Environment SEK 478 thousand (0) and Estate Agents SEK 2,530 thousand (2,294). All the brands are identified in prepared acquisition analyses. The brands are deemed to have an indeterminate useful life, as they enjoy high recognition and have been established for a long time. There are currently no known legal, contractual or competitive factors that will limit the useful life. The value is assessed at least once a year for impairment.

Product rights

Product rights comprise acquired product rights (source code) The depreciation period is 5-10 years. The company management assesses the appropriated depreciation period on a caseby-case basis. Based on experience from the acquisitions that have been conducted, the company management can ascertain that a depreciation period of 10 years corresponds better with the actual circumstances regarding the lifetime of the rights, rather than the period of five years which is otherwise used in practice.

The acquisition values, residual values and remaining depreciation period for product rights of significant value amount to:

PRODUCT RIGHTS

	Acquisition value (TSEK)	Residual value (TSEK)	Remaining amortization period (years)
Auto
Autodata	17,873	12,589	5.3
Infoeasy	10,739	9,074	8.5
Datamann	30,589	27,058	8.5
Futursoft	21,377	20,426	9.7
Real Estate
Vitec Software	6,051	-	0
Plania	15,929	15,167	9.9
3L System	13,515	4,263	3
Capitex	5,859	2,050	3.5
Finance & Insurance
Capitex	8,091	2,833	3.5
Aloc	47,914	37,485	7.5
Nice	15,019	14,003	8.9
Health
Acuvitec	72,762	63,623	7.2
Environment
Tietomitta	19,400	18,796	9.5
Estate Agents
Mäklarsystem	15,700	1,570	1
Capitex	13,950	4,882	3.5
Vitec IT-Makeriet	7,531	3,320	4.5
Vitec Megler	37,229	20,904	5.7
Fox	11,120	8,820	8.2

Customer contracts

Customer contracts are identified in acquisition analyses. The depreciation period is 8-10 years. The useful life for customer contracts is based on the length of time net payments are expected to be received from these agreements, bearing in mind legal and economic factors. The customer contracts' acquisition values, residual values and remaining depreciation period amount to:

CUSTOMER CONTRACTS

	Acquisition value (TSEK)	Residual value (TSEK)	Remaining amortization period (years)
Auto
Autodata	10,950	7,011	5.3
Infoeasy	1,378	1,165	8.5
Datamann	11,472	10,148	8.5
Futursoft	14,277	13,896	9.7
Real Estate
Plania	6,761	6,436	9.9
Finance & Insurance
Aloc	8,550	6,132	5.5
Nice	4,435	4,135	8.9
Health
Acuvitec	26,807	16,673	5.2
Environment
Tietomitta	4,936	4,771	9.5
Estate Agents
Vitec Megler	4,613	1,932	3.7
Fox	6,671	5,291	8.2
Adservice	204	167	8.2

TANGIBLE ASSETS (SEK MILLION)

	Buildings		Investments in leased premises		Equipment, vehicles		Equipment*			Equipment, art						Total
	2016	2015	2016	2015	2016	2015	2016	2015	2016	2015	2016	2015
Opening acquisition value	9.6	9.4	7.7	10.4	2.1	0.4	41.7	52.4	0.2	0.6	61.3	73.1
Purchases*	0.0	0.2	0.6	4.2	-	-	8.4	5.9	-	-	9.0	10.3
Sales/retirement of assets	-	-	-	-6.7	-	-0.3	-1.7	-16.6	-	-0.1	-1.7	-23.7
Acquisition of operations	-	-	-	-	2.3	2.1	1.1	1.1	-	-	3.4	3.3
Translation difference	0.0	0.0	0.2	-0.2	0.1	-0.1	1.3	-1.1	0.0	-0.2	1.7	-1.5
Closing accumulated acquisition values	9.6	9.6	8.5	7.7	4.6	2.1	50.9	41.7	0.2	0.2	73.7	61.3
Opening depreciation	-0.6	-0.4	-3.3	-8.0	-1.3	-0.2	-26.8	-35.7	-0.4	-0.4	-32.4	-44.7
Sales/retirement of assets	-	-	-	6.7	0.0	0.0	2.5	16.5	-	-	2.5	23.2
Acquisition of operations	-	-	-	-	-0.5	-1.1	-0.5	-0.8	-	-	-1.0	-1.8
Translation difference	0.0	0.0	0.0	0.1	0.0	0.0	-0.7	0.7	-	-	-0.7	0.9
Depreciation and impairment for the
year	-0.2	-0.2	-1.5	-1.6	-0.5	-0.2	-5.5	-6.8	-	-	-7.7	-8.8
Closing accumulated depreciation	-0.9	-0.6	-4.8	-3.3	-2.3	-1.3	-31.0	-26.8	-0.4	-0.4	-39.3	-32.4
Closing book value	8.7	8.9	3.6	4.4	2.3	0.9	19.9	14.9	-0.2	-0.2	34.3	28.8

* Equipment also includes computers.

NOTE 13 FIXED ASSETS, PARENT COMPANY

INTANGIBLE ASSETS (SEK MILLION)

	Software		Product rights		Total
	2016	2015	2016	2015	2016	2015
Opening acquisition value	7.4	5.8	9.7	9.7	17.1	15.5
Purchases	1.5	1.6	-	-	1.5	1.6
Closing accumulated acquisition values	8.9	7.4	9.7	9.7	18.6	17.1
Opening depreciation	-3.8	-2.8	-9.6	-9.0	-13.3	-11.8
Depreciation for the year	-1.3	-1.0	-0.1	-0.5	-1.4	-1.5
Closing accumulated depreciation	-5.0	-3.8	-9.7	-9.5	-14.7	-13.3
Closing book value	3.8	3.7	0.1	0.2	3.9	3.9

TANGIBLE ASSETS (SEK MILLION)

	Buildings		premises	Investments in leased	Equipment*		Total
	2016	2015	2016	2015	2016	2015	2016	2015
Opening acquisition value	9.3	9.2	2.5	2.7	3.6	4.0	15.3	15.9
Purchases	0.0	0.0	0.0	0.3	0.0	0.4	0.0	0.8
Sales/retirement of assets	-	-	0.0	-0.6	0.0	-0.8	0.0	-1.4
Closing accumulated
acquisition values	9.3	9.3	2.5	2.5	3.6	3.6	15.4	15.3
Opening depreciation	-0.3	-0.2	-1.0	-0.9	-0.8	-1.3	-2.2	-2.3
Sales/retirement of assets	-	-	0.0	0.6	0.0	0.8	0.0	1.4
Depreciation for the year	-0.2	-0.2	-0.6	-0.7	-0.4	-0.4	-1.2	-1.2
Closing accumulated	-0.5	-0.3	-1.6	-1.0	-1.2	-0.8	-3.3	-2.2
depreciation
Closing book value	8.8	8.9	0.8	1.4	2.4	2.7	12.0	13.1

* Equipment also includes computers.

FINANCIAL ASSETS (SEK MILLION)

	Shares in subsidiaries
	2016	2015
Opening acquisition value	685.9	573.4
Acquisitions during the year	209.0	123.8
Adjustment of purchase price	-22.7	-11.2
Divested	-7.3	-
	864.8	685.9
Other financial receivables	9.0	9.0
Closing book value	873.8	694.9

NOTE 14 SHARES IN SUBSIDIARIES

Subsidiaries		Acquisi tions, year	% Capital	% Voting rights	Number of shares	Book value 12/31/2016	Book value 12/31/2015	Adjusted equity 12/31/2016
Vitec Plania AS	Software company	2016	100%	100%	330	53,980	-	9,387
Futursoft Oy	Software company	2016	100%	100%	100	109,305	-	16,704
Tietomitta Oy	Software company	2016	100%	100%	7,922	46,183	-	21,176
Vitec Nice AS	Software company	2015	100%	100%	40,000	26,045	26,041	9,463
Vitec Infoeasy AS	Software company	2015	100%	100%	1,000	16,849	16,849	3,088
Vitec Datamann A/S	Software company	2015	100%	100%	3,000	56,714	56,714	15,093
Vitec Fox AS	Software company	2015	100%	100%	1,000	22,259	23,771	4,575
ADservice Scandinavia AB	Software company	2015	100%	100%	1,000	400	400	996
Vitec Aloc A/S	Software company, Parent Company of Aloc AS.	2014	100%	100%	20,000	88,658	88,658	27,006
Vitec Autodata AS	Software company	2014	100%	100%	30,000	37,285	37,285	22,572
IMHO Oy	Holding company, owns 47% of the shares in AcuVitec	2014	100%	100%	19,800	34,282	49,598	2,868
AcuVitec Oy	Software company, Par ent Company of Acute France SARL	2014	100%	100%	85,714	38,658	45,016	10,717
Vitec Megler AS	Software company, Par ent Company of IT-Drift AS and Vitec Megler AB	2012	100%	100%	3,256,596	78,981	78,981	24,181
Vitec Capitex AB	Software company	2011	100%	100%	1000	8,289	8,289	5,167
Vitec IT-Makeriet AS	Software company	2011	100%	100%	300	20,707	20,707	13,435
Capitex AB	Software company	2010	100%	100%	5,000	17,527	17,527	27,400
3L System AB	Holding company, Parent company of 3L Media, Vitec Förvaltningssys tem and Vitec Capifast	2009	100%	100%	2,350,400	121,751	121,751	35,713
Vitec Mäklarsystem AB	Software company	2007	100%	100%	1,000	68,083	68,083	12,188
Vitec Software AB	Dormant company	2005	100%	100%	2,000	999	999	805
Vitec AB	Dormant company	2003	100%	100%	18,000	2,654	2,654	3,046
Vitec Fastighetssystem AB	Software company	2000	100%	100%	200,000	12,665	12,665	6,229
Vitec IT-Drift AB	Responsible for internal IT	1999	100%	100%	1,000	1,008	1,008	1,863
Vitec Energy AB	Software company	1998	100%	100%	1,000	1,551	1,551	5,357
VItec Veriba AB	Software company, divested 2016	2005	-	-	-	-	7,332	-

Total 864,833 685,879 279,029

Vitec continually acquires companies and operations, which either become separate business areas or are incorporated in existing business areas. The acquisitions are restructured from time to time, for example by means of the operations in two separate companies in the same business area being merged in one of the companies. On such occasions, the above book values may be corrected through the movement of assets identified at the time of the acquisition, in the form of goodwill, product rights, customer contracts and brands. When this occurs, it is described in the Annual Report.

Via subsidiaries, Vitec Software Group AB owns the following companies:

• Via 3L System AB 3L Media AB, Vitec Förvaltningssystem AB and Vitec Capifast AB (all are software companies).
• Via Vitec Megler AS Vitec IT Drift AS (responsible for server operation in Norway) and Vitec Megler AB (product development on behalf of the parent company Vitec Megler AS).
• Via AcuVitec Oy Acute France Sarl (product development on behalf of the parent company AcuVitec).
• Via IMHO Oy AcuVitec Oy (holding company).
• Via Aloc A/S Aloc AS (sales company)

INFORMATION ABOUT THE SUBSIDIARIES' CORPORATE REGISTRATION NUMBERS AND REGISTERED OFFICES:

	Corporate identity number	Registered office
Vitec Plania AS	841239172	Stavanger, Norway
Futursoft OY	14942533	Helsinki, Finland
Tietomitta OY	9060034	Espoo, Finland
Vitec Nice AS	844699832	Oslo, Norway
Vitec Infoeasy AS	981875923	Bergen, Norway
Vitec Datamann A/S	59943510	Søborg, Denmark
Vitec Fox AS	997102126	Oslo, Norway
ADservice Scandinavia AB	556659-1466	Stockholm
Vitec Megler AB	559035-4816	Kalmar
Vitec Aloc AS	976876768	Oslo, Norway
Vitec Aloc A/S	14788484	Odense, Denmark
Vitec Autodata AS	817159362	Oslo, Norway
IMHO Oy	25351376	Tampere, Finland
Acute France Sarl	483949459	Valbonne, France
AcuVitec Oy	18369420	Tampere, Finland
Vitec IT Drift AS	986363238	Oslo, Norway
Vitec Megler AS	944507302	Oslo, Norway
Vitec Capitex AB	556875-8105	Umeå
Vitec IT-Makeriet AS	974405229	Oslo, Norway
Vitec Capifast AB	556844-4110	Stockholm
Capitex AB	556197-8437	Kalmar
3L System AB	556321-2546	Stockholm
3L Media AB	556584-9931	Stockholm
Vitec Förvaltningssystem AB	556591-2101	Stockholm
Vitec Mäklarsystem AB	556367-6500	Umeå
Vitec Software AB	556443-2200	Umeå
Vitec AB	556571-5090	Umeå
Vitec Fastighetssystem AB	556563-7773	Umeå
Vitec IT-Drift AB	556459-9347	Umeå
Vitec Energy AB	556347-7073	Umeå

NOTE 15 INVENTORIES

Inventories have been valued according to the lowest value principle. Inventories comprise goods for resale and exist to a minor

extent. The value as of December 31, 2016 amounted to SEK 1,031 thousand (399).

NOTE 16 ACCOUNTS RECEIVABLE

The Group's accounts receivable as of December 31, 2016 amounted to SEK 137,336 thousand. Accounts receivable are initially recognized at fair value and thereafter at accrued acquisition value with the application of the effective interest method, less any provision regarding reduction in value. A provision regarding reduction in value is made when the receivable is more than 90 days old, or earlier if the amount that is expected to be paid, after individual assessment, is below the asset's reported value. The provision for doubtful accounts receivable amounts to SEK 1,542 thousand (688). The Group's established customer losses amount to SEK 219 thousand (305) for 2016.

AGE ANALYSIS FOR PROVISION FOR DOUBTFUL RECEIVABLES

	2016	2015
Due in less than 3 months	188	114
Due in 3-6 months	747	215
Due in more than 6 months	607	359
	1542	688

AGE ANALYSIS FOR DUE BUT NOT RESERVED ACCOUNTS RECEIVABLE

	2016	2015
Due in less than 3 months	10,721	7,310
Due in 3-6 months	1,990	1,384
Due in more than 6 months	1,136	627
	13,847	9,321

NOTE 17 PREPAID EXPENSES AND ACCRUED INCOME

	Group		Parent Company
		12/31/2016 12/31/2015 12/31/2016 12/31/2015
Accrued income	4,788	6,721	-	-
Prepaid rent	2,977	2,919	2,035	1,963
Prepaid insurance premiums	703	621	233	198
Other prepaid expenses	9,544	7,017	1,771	991
Total	18,012	17,278	4,039	3,152

NOTE 18 CASH AND CASH EQUIVALENTS

Cash and cash equivalents are defined as funds for which there is an insignificant risk of fluctuations in value. The Group's cash and cash equivalents amount to SEK 80,877 thousand in the form of bank balances and cash. The Group has a Group currency account.

NOTE 19 SHAREHOLDERS' EQUITY

Registered share capital on 12/31/2016 amounts to SEK 2,939,669 and comprises: Class A shares, 3,500,000 shares (35,000,000 votes), and Class B shares, 25,896,690 shares (25,896,690 votes). During the financial year, a dividend has been paid at SEK 0.90/share, totaling SEK 26,457,021. The proposed, although not yet adopted, dividend amounts to SEK 1.00/share, totaling SEK 29,396,690. The dividend is recognized as a liability after it has been approved by the AGM.

THE SHARE

		12/31/2016 12/31/2015
Shares at the start of the year
Vitec Class A	4,000,000	800,000
Vitec Class B	25,396,690	5,079,338
Total at the start of the year	29,396,690	5,879,338
Split 5-for-1		23,517,352
Restamping of Class A to Class B	-500,000
Restamping of Class A to Class B	500,000
Shares at the end of the year	29,396,690	29,396,690
Shares at the end of the year
Vitec Class A	3,500,000	4,000,000
Vitec Class B	25,896,690	25,396,690
Total at the end of the year	29,396,690	29,396,690

The management of shareholders' equity has the objective of safeguarding Vitec's financial stability, handling financial risks and ensuring the Group's short-term and long-term need for capital. Except for short periods, Vitec's indebtedness must not be so high that further financing cannot be arranged. The Group's capital structure is managed and adjusted in line with changes in economic conditions. The Group monitors capital usage with the aid of various key performance indicators, such as net liability,

return on capital employed and equity/assets ratio. Vitec's dividend policy means that the company's goal must be to distribute at least a 1/3 of profits after tax annually. When assessing the scope for this, however, consideration must always be given to the company's need for financing, its capital structure and its status otherwise. Vitec encourages employees to become shareholders by issuing convertible bonds. See also the Administration Report for further details.

NOTE 20 FINANCIAL RISKS AND THE HANDLING OF SUCH RISKS

The Group's policy for handling financial risks is based on profits being generated by the operating business and not through investments in financial instruments. Only low-risk investments are permitted. Financial activities are tasked with supporting the operating business as well as identifying and optimally limiting the financial risks. Financial activities are conducted in the Parent Company. Through centralization and coordination, economies of scale are made possible for obtained conditions for financial transactions and financing. The financial risks are handled according to the finance policy adopted by the Board.

Liquidity and financing risks

The Group's cash and cash equivalents amounted to SEK 100.9 million as of December 31, 2016, including unutilized overdraft facility. In addition, there is the unutilized portion of a credit facility for acquisitions, amounting to SEK 5.0 million. Vitec's finance policy specifies guidelines regarding how the Group's liquidity is to be managed. A low risk profile is sought, which entails investing in Swedish banks that have been granted permission by the Swedish Financial Supervisory Authority to conduct banking operations, or in foreign banks with similar permission. Investments in securities must take place in treasury bills, money market funds or in K1 rated interest-bearing securities. Liquidity must not be below two month's salary costs, and it must be possible to liquidate investments within one month.

Vitec has historically financed, and intends to continue financing, a certain part of the acquisitions through loans from credit institutes. Loan agreements may contain terms involving restrictions for the company (known as covenants). Such an agreement currently exists with the Group's bank. The Group's NetDebt/ EBITDA (interest-bearing liabilities including convertible bonds) in relation to EBITDA (operating profit before depreciation) must not exceed 1.75, and the equity/assets ratio must be at least 25 percent. In the event NetDebt/EBITDA exceeds 1.75 or the equity/assets ratio is below 25 percent, the company must renegotiate the contract terms. As of December 31, NetDebt/EBITDA amounted to 1.23 and the equity/assets ratio stood at 30 percent. The conditions were consequently satisfied on the balance sheet date. Borrowing entails certain risks for the company's shareholders. For example, in the event of dramatically altered circumstances on Vitec's markets, the company might experience problems obtaining new credit facilities and consequently might need to use a larger share of the cash flow for interest payments and repayments. This could have an adverse effect on the company.

Managing capital

Risk management

The Group's objectives for the capital structure are to safeguard the Group's ability to continue its business, so that it can continue to generate a return for the shareholders and benefit for other stakeholders, as well as to achieve an optimum capital structure in order to keep the costs for the capital down. The Group assesses the capital on the basis of the debt/equity ratio, in the same way as other companies in the sector. This key figure is calculated as net debt divided by total capital. Net debt is calculated as total

borrowing (encompassing the entries Short-term borrowing and Long-term borrowing in the Group's balance sheet) less cash and cash equivalents. Total capital is calculated as Equity in the Group's balance sheet plus net liability.

Vitec does not have any absolute measure of the debt/equity ratio, but the Group's guidelines state that indebtedness, except for short periods, must not be so high that further financing cannot be arranged in order to act quickly on investment opportunities that may arise.

DEBT/EQUITY RATIO

		12/31/2016 12/31/2015
Total borrowing	384	241
Deduction, cash and cash equivalents	-81	-60
Net liability	303	181
Total equity	334	272
Total capital	637	453
Debt/equity ratio, %*	48	40

*The debt/equity ratio in the multi-year summary in the Administration Report is calculated differently, see Note 29.

DIVIDEND

	2016	2015
Dividend paid amounted to SEK 0.90 per share (0.67)	26,457	19,696
Total expensed or paid dividends	26,457	19,696
For the 2016 financial year, the Board proposed a dividend of SEK 1.00 per share (0.90). The total amount of the proposed dividend is not recognized as a liability as of December 31, 2016, but is expected to be settled with
retained profits in April 2017.	29,397	26,457
	29,397	26,457

Credit risk

Accounts receivable are associated with a certain credit risk. Vitec's business model often entails prepayments and credit controls. Vitec has no significant concentration of credit risks in its accounts receivable. In the event Vitec's customers cannot pay their invoices on time, or at all, Vitec is at risk of incurring credit losses. It cannot be guaranteed that the credit losses will not increase, which can have a negative impact on Vitec's business, financial status and profits. The maximum exposure to credit risk corresponds to the Group's recognized value for receivables, which amounted to SEK 137,336 thousand on 12/31/2016 after provisions for estimated losses. For further information regarding accounts receivable, refer to Note 16. The Parent company does not have any external credit risks at the end of the year.

Currency risks

Currency risks can be divided into transaction exposure and translation risk. Via ownership of foreign subsidiaries in Norway, Denmark and Finland, and via transactions in Vitec Energy AB, Vitec's operations entail sales in various currencies to a certain extent, and hence transaction exposure principally in relation to Norwegian kroner, Danish kroner and the EUR. The Group has not performed any currency hedging in 2016.

Translation risk arises when translating subsidiaries' income statements and balance sheets to Swedish kronor from other currencies. As the subsidiaries report in their local currency, the Group is exposed to exchange rate fluctuations when consolidating these companies. The acquisitions of AcuVitec OY, Autodata

AS, Aloc A/S, Datamann A/S, Tietomitta OY, Futursoft OY and Plania AS were financed through loans in the local currencies in order to reduce the translation exposure.

In the event of currency translation of balance sheet items on the balance sheet date, December 31, 2016, the following exchange rates have been used:

NOK	1.0540
DKK	1.2868
EUR	9.5669

A 5 % change in the value of foreign currencies in 2016 would have affected the profit and equity for the year by approx. SEK 2.0 million, divided between NOK 0.8 million, DKK 0.4 million and EUR 0.9 million.

Interest risk

Vitec's interest risk for interest-bearing assets is settled by means of cash and cash equivalents being invested in such a way that the maturity date for the fixed interest term and the investment matches known outflows and/or the amortization of liabilities. Long-term financing takes place through loans from banks and financing institutes, as well as through convertible bonds. The interest rate for loans from banks and financing institutes is variable, while interest for convertible bonds is usually tied for 180-day intervals or fixed in exceptional cases. A change of 1 % in the interest rate for the existing loan portfolio would affect the profit and equity for the year by approximately SEK 3.1 million.

TERM ANALYSIS

		Group Parent Company
	2016	2015	2016	2015
Long-term interest-bearing liabilities
Liabilities to credit institutes	339,396	193,709	338,941	193,709
Convertible bonds	-	13,513	-	13,513
Total long-term interest-bearing liabilities	339,396	207,222	338,941	207,222
Long-term non interest-bearing liabilities
Other liabilities	28,765	4,779	28,765	4,779
Total long-term non interest-bearing liabilities	28,765	4,779	28,765	4,779
Total long-term liabilities	368,161	212,001	367,706	212,001
Short-term interest-bearing liabilities
Liabilities to credit institutes	30,340	33,845	30,340	33,331
Convertible bonds	13,786	-	13,786	-
Total short-term interest-bearing liabilities	44,126	33,845	44,126	33,331
Total interest-bearing liabilities	383,521	241,067	383,066	240,553
Short-term non interest-bearing liabilities
Accounts payable	21,153	14,582	2,467	2,621
Other liabilities	182	37,796	182	37,796
Accrued expenses	41,236	35,116	3,418	3,515
Total short-term non interest-bearing liabilities	62,571	87,494	6,067	43,932
Total financial liabilities	474,858	333,340	417,899	289,264
Term analysis
Long-term and short-term interest-bearing liabilities excluding convertible bonds (Capital amount)
Within 1 year after the balance sheet date	30,795	29,178	30,340	28,664
Longer than 1 year, but within 3 years after the balance sheet date	58,324	57,326	58,324	57,326
Longer than 3 years, but within 5 years after the balance sheet date	30,788	21,292	30,788	21,292
Longer than 5 years after the balance sheet date	249,829	119,758	249,829	119,758
*Convertible bonds (Capital amount)
Convertible bonds within 1 year after the balance sheet date	13,786	-	13,786	-
Convertible bonds longer than 1 year but within 3 years after the balance sheet date	-	13,513	-	13,513
**Interest rates
Within 1 year after the balance sheet date	6,796	5,146	6,796	5,146
Longer than 1 years, but within 3 years after the balance sheet date	12,029	8,140	12,029	8,140
Longer than 3 years, but within 5 years after the balance sheet date	6,459	2,192	6,459	2,192
Longer than 5 years after the balance sheet date	961	1,105	961	1,105
Non interest-bearing liabilities
Within 1 year after the balance sheet date	182	37,797	182	37,797
Longer than 1 years, but within 3 years after the balance sheet date	28,765	4,779	28,765	4,779
Total capital and interest
Within 1 year after the balance sheet date	51,559	72,121	51,104	71,607
Longer than 1 years, but within 3 years after the balance sheet date	99,119	83,758	99,119	78,979
Longer than 3 years, but within 5 years after the balance sheet date	37,247	23,484	37,247	23,484
Longer than 5 years after the balance sheet date	250,790	120,863	250,790	120,863

*The above assumptions regarding capital amounts are based on no conversions taking place.

**The above assumptions regarding interest payments are based on an average interest rate of 1.89 percent (1.35). Interest on unutilized component of the credit facility for acquisitions is included. Principal SEK 5.0 million, interest 0.45%.

Convertible debentures

Loan 1501 (Convertible program, personnel), short-term liability Convertible debenture 1501 amounts to a nominal SEK 14,070 thousand. The option element in the convertible loan is calculated at SEK 865 thousand. The option element is recognized as equity in accordance with IAS 32. The remainder of the loan, including interest (SEK 13,786 thousand) is recognized as a short-term liability. The term of the loan is January 1, 2015 – December 31, 2017, and the interest rate is Stibor 180. The conversion price is SEK 31.80. Conversion may be requested during the period 1 November to 30 November 2017. On conversion, the share capital may increase by a maximum of SEK 44,221. At full conversion of loan 1501 convertible program, staff, the dilution amounts to approx. 1.5 percent of the capital and 0.7 percent of the votes. The share issue has been conducted on market terms. In our assessment, therefore, there is no benefit for the participants in the convertible program.

In order to establish the value of the option element, the loan amount is discounted to the applicable interest rate and the market rate. The value of the option element comprises the difference between the two calculations. The interest rate at the time of the share issue has been used.

NOTE 21 PENSIONS

Vitec has both defined-contribution and defined-benefit pension plans. Defined-benefit plans are used in Sweden and Norway. The Swedish defined-benefit pension plan is safeguarded through an insurance policy with Alecta. For the 2016 financial year, the company has not had access to the information that would make it possible to report this plan as a defined-benefit plan. The pension plan according to Alecta ITP2 that is secured through an insurance policy with Alecta is therefore recognized as a defined-contribution plan. The collective solvency level for Alecta amounted to 149 percent in 2016 (153).

Defined-contribution plans

Defined-contribution pension plans entail that the company makes periodic payments to separate authorities or funds, and

OBLIGATIONS FOR EMPLOYEES, DEFINED-BENEFIT PLANS

the remuneration level is dependent on the return achieved on these investments. The charges for the year for defined-contribution pension insurance, including Alecta ITP2, amounted to SEK 28,102 thousand (23,002).

Defined-benefit plans

The pension plans refer to parts of the Norwegian subsidiaries and cover retirement pension in companies acquired during 2014. The employee must be affiliated to the plan for a certain number of years in order to achieve full entitlement to retirement pension. The funded pension obligations are secured by management assets. The contributions for the year for defined-benefit pensions amounted to SEK 1,474 thousand. The charges for 2017 are expected to amount to NOK 1,428 thousand.

		Group
		12/31/2016 12/31/2015
Other pension commitments, Norway	7,679	8,033
Total defined-benefit plans	7,679	8,033

DEFINED-BENEFIT OBLIGATIONS AND THE VALUE OF MANAGEMENT ASSETS

	Group
		12/31/2016 12/31/2015
Present value of funded, defined-benefit obligations in Norway	21,046	23,607
Management assets' fair value, Norway	-14,316	-16,659
Net	6,730	6,948
Estimated employer's contributions	949	1,085
Net liability funded obligations, Norway	7,679	8,033

RECONCILIATION OF NET AMOUNT FOR PENSIONS IN THE BALANCE SHEET

	Group
		12/31/2016 12/31/2015
Opening balance	8,033	12,225
Net pension expense for the year	71	2,110
Investments in pension funds incl. employer's contributions	-1,682	-1,867
Actuarial changes recognized in profit or loss	-	-3,464
Actuarial changes recognized in other comprehensive income	-395	-
Translation difference	1,651	-970
Total defined-benefit plans	7,679	8,033

CHANGES IN THE OBLIGATION FOR DEFINED-BENEFIT PLANS RECOGNIZED IN THE BALANCE SHEET

	Group
	12/31/2016 12/31/2015
Opening balance	23,607	27,497
Actuarial changes	-5,170	-4,490
Interest and fees	1,563	2,154
Pension payments for the year	-291	-90
Translation difference	1,335	-1,464
	21,046	23,607

CHANGE IN MANAGEMENT ASSETS

	Group
		12/31/2016 12/31/2015
Opening balance	16,659	15,272
Actuarial changes	-3,410	-734
Interest and fees	-49	-47
Investments in pension funds	1,474	1,637
Pension payments for the year	-291	-90
Change in value	138	319
Translation difference	-204	302
	14,316	16,659

ACTUARIAL ASSUMPTIONS

		Group
%	12/31/2016 12/31/2015
Discount rate	2.10	2.70
Anticipated return on the pension funds' assets	2.10	2.70
Future salary increases	2.25	2.50
Future increases in pensions	2.00	2.25
Future increases in income base amount	2.00	2.25
Personnel turnover	0.00	0.00
Payroll tax	14.10	14.10

NOTE 22 ACCRUED EXPENSES AND PREPAID INCOME

	Group			Parent Company
		12/31/2016 12/31/2015 12/31/2016 12/31/2015
Accrued salaries	32,101	28,419	2,241	2,288
Accrued special payroll tax	5,169	5,012	755	702
Prepaid income	81,259	78,518	-	-
Payroll overheads	14,756	13,826	704	719
Other prepaid expenses	9,100	6,697	1,176	1,227
Total	142,385	132,472	4,876	4,936

NOTE 23 LEASES AND SIMILAR FUTURE COMMITMENTS

Operating leases and future commitments in the form of non-cancellable contracts

There are currently no operating leases. Future commitments in the form of non-cancellable contracts comprise premises contracts as well as agreements for telephony and data communication. Variable charges and sub-letting to not occur. No

agreements include the potential to acquire the objects. All agreements can be extended. Index clauses are included in the premises contracts. There are no restrictions resulting from agreements entered into regarding dividends, loan options and further leasing agreements.

	Group		Parent Company
	2016	2015	2016	2015
Charges for the period	17,940	15,494	8,254	8,192
Charges within one year	17,858	17,838	7,419	8,914
Charges later than one year but within five years.	39,392	45,772	9,915	11,503
Charges later than five years	-	1,112	-	-

NOTE 24 PLEDGED ASSETS, GROUP AND PARENT COMPANY

PLEDGED ASSETS CONCERNING OWN LIABILITIES AND PROVISIONS

	Group		Parent Company
		12/31/2016 12/31/2015 12/31/2016 12/31/2015
Business mortgages	39,000	32,000	39,000	32,000
Shares in subsidiaries	315,891	355,240	319,844	327,176
Total	354,891	387,240	358,844	359,176

NOTE 25 RELATED PARTIES

There are no outstanding loans, guarantees or sureties from Vitec to the benefit of Board members, senior executives or auditors in Vitec. None of the Board members, senior executives or auditors in Vitec have had any direct or indirect involvement in business transactions with Vitec that are or were unusual in nature or with respect to their terms. The following related party transactions are reported:

Senior executives are covered by convertible programs in the form of convertible debentures, which are taken out on market

terms. The following senior executives are taking part in the ongoing convertible program 1501: Patrik Fransson SEK 250 thousand, Lars Eriksson SEK 100 thousand and Maria Kröger SEK 250 thousand.

All Swedish companies in the Group lease premises from the Parent Company through customary leasing agreements. All the companies that lease premises from the Parent Company are 100 percent owned by Vitec. In addition to costs for premises, the Parent Company also invoices for intra-group services.

NOTE 26 UNTAXED RESERVES

		12/31/2016 12/31/2015
The difference between booked depreciation and depreciation according to plan	2,341	2,222
Total	2,341	2,222

NOTE 27 DEFERRED TAX

Deferred tax at 22 percent (22) in the Parent Company's untaxed reserves amounts to SEK 515 thousand (489).

NOTE 28 FINANCIAL INSTRUMENTS

Classification and valuation

Financial instruments are initially recognized at their acquisition value corresponding to the instrument's fair value plus transaction costs. A financial instrument is classified when recognized for the first time, including on the basis of the purpose for which the instrument was acquired. All financial assets and liabilities are classified in the following categories:

• Financial assets and liabilities valued at fair value via the income statement. Additional purchase prices in conjunction with acquisitions are included in this category.
• Investments that are held to maturity. Vitec has no financial instruments in this category.
• Loans receivable and accounts receivable. Vitec's accounts receivable, other receivables as well as cash and cash equivalents are included in this category.
• Financial assets that can be sold. Vitec has no financial assets in this category.
• Financial liabilities valued at their accrued acquisition value. Accounts payable, other liabilities, accrued expenses and loans are included in this category.

	Note	Loans receivable and ac counts receivable		fair value	Financial liabilities valued at	value	Financial liabilities valued at their accrued acquisition
		2016	2015	2016	2015	2016	2015
Financial assets
Accounts receivable	16	137,336	129,107	-	-	-	-
Other receivables	-	5,299	6,503	-	-	-	-
Cash and cash equivalents	18	80,920	60,268	-	-	-	-
Financial liabilities
Convertible debentures (long-term)	20	-	-	-	-	-	13,513
Convertible debentures (short-term)	20	-	-	-	-	13,786	-
Liabilities to credit institutes (long-term)	20	-	-	-	-	339,396	193,709
Liabilities to credit institutes (short-term)	20	-	-	-	-	30,340	33,845
Other liabilities (long-term)		-	-	28,765	4,779	-	-
Other liabilities (short-term)		-	-	-	37,218	182	578
Accounts payable		-	-	-	-	21,153	14,582
Accrued expenses	22	-	-	-	-	41,236	35,116
Total		223,555	195,878	28,765	41,997	446,093	291,343

VALUATION CRITERIA ACCORDING TO IAS 39

Financial assets

Receivables

The Group's receivables principally comprise accounts receivable. Payment terms are normally 30 days net. Other receivables consist of tax accounts, current receivables from employees and other current receivables.

Cash and cash equivalents

The Group's cash and cash equivalents have been invested in banks or money market funds during the year.

Financial liabilities

Supplier credit

Supplier credit comprises normal accounts payable with payment terms of 30 days net.

Loans

The Group's loans comprise liabilities to credit institutes and convertible debentures. Some of the Group's borrowing in EUR, DKK and NOK, amounting to SEK 301,388 thousand, is identified as hedging of the net investment in the Group's subsidiaries in Norway, Finland and Denmark. The fair value of the borrowing as of December 31, 2016 stood at SEK 303,159 thousand. The exchange rate gain from the translation of the borrowing to Swedish kronor amounts to SEK 4,357 at the end of the reporting period, and is recognized in other comprehensive income after deductions for deferred tax.

Convertible debentures

In December 2014, the Parent Company issued 1,407 convertible bonds at SEK 10,000 each, with a nominal value of SEK 14,070 thousand. Conversion may be requested during the period 1–30 November 2017. The conversion price is SEK 31.80. Convertible bonds are recognized in the balance sheet as follows.

Nominal value of convertible bonds	14,070
Equity component	-865
Total	13,205
Interest expense*	605
Interest paid	-24

Liability component 13,786

*The interest expense is calculated by multiplying the estimated market interest rate (2 percent) by the liability component.

Other short-term liabilities

Parts thereof.

Accrued expenses

Salary liabilities and parts of other accrued expenses

Financial assets and liabilities valued at fair value

According to IFRS 7, information must be provided about the fair value of each financial asset and financial liability, irrespective of whether they are reported in the balance sheet or not. Vitec judges that the fair value of the financial assets/liabilities is close to the book value reported in the Annual Report.

According to the standard, financial assets and liabilities that are valued at fair value must be split into three levels. Level 1: Fair value of financial instruments that are traded on an

active market.

Level 2: Fair value of financial instruments that are not traded on

an active market, but that have been established with the aid of valuation techniques based on market information. Level 3: In cases where one or more items of essential input data are not based on observable market information.

All of the company's financial instruments that are subject to valuation at fair value are classified as level 3. The change for the year for financial instruments at level 3 refers primarily to additional purchase prices for acquisitions. Conditional purchase prices are valued at fair value based on available data, such as contractual terms, as well as relevant assessments for anticipated fulfillment of conditions. When calculating fair value, an assumed interest rate of 0.9% has been used. As the difference between fair value and book value is marginal, no correction has taken place.

The following table shows the difference between fair value and book value.

RECURRING VALUATIONS AT FAIR VALUE, AS OF DECEMBER 31, 2016

(TSEK)	Level 1	Level 2	Level 3	Book value
Additional purchase price Fox Publish AS			2,710	2,740
Additional purchase price Futursoft OY			23,651	23,917
Residual purchase price Nice AS			2,102	2,108
Total	-	-	28,463	28,765

RECURRING VALUATIONS AT FAIR VALUE, AS OF DECEMBER 31, 2015

(TSEK)	Level 1	Level 2	Level 3	Book value
Additional purchase price AcuVitec OY			33,346	33,395
Additional purchase price Fox Publish AS			6,333	6,690
Residual purchase price Nice AS			1,889	1,911
Total	-	-	41,568	41,997

NOTE 29 KEY PERFORMANCE INDICATOR DEFINITIONS

In this annual report, reference is made to non-IFRS measurements that Vitec and other parties use in the evaluation of the company's earnings. These measurements provide the management and investors with valuable information to analyze trends in the company's business operations. These non-IFRS

Recurring revenues' share of business area sales

Recurring revenue through net sales.

Profit margin Profit after tax through net sales.

Operating margin

Operating profit through net sales.

Equity/assets ratio

Shareholders' equity, including equity attributable to non-controlling interests, in relation to total assets.

Debt/equity ratio

Average liabilities in relation to average shareholders' equity and non-controlling interests.

Return on capital employed

Profit before tax plus interest expenses in relation to average capital employed. Capital employed is defined as total assets less non interest-bearing liabilities and deferred tax.

Return on equity

Reported profit after tax in relation to average shareholders' equity attributable to Parent Company shareholders.

Sales per employee

Net sales in relation to average number of employees.

measurements are intended to supplement, not replace, financial measurements presented in accordance with IFRS. Non-IFRS measurements that are presented in the multi-year summary on page 39 are defined as follows:

Value added per employee

Operating profit, plus depreciation and personnel costs in relation to the average number of employees.

Adjusted equity per share

Equity attributable to Parent Company shareholders in relation to the number of shares issued at the closing date.

Earnings per share

Profit for the year attributable to the Parent Company's shareholders in relation to the average number of shares.

Cash flow per share

Cash flow from operating activities before the change in operating capital in relation to the average number of shares.

P/E ratio

Share price on the closing date in relation to earnings per share.

P/Adjusted equity per share

The share price on the closing date multiplied by the number of shares issued on the closing date in relation to the equity.

P/S

The share price on the closing date multiplied by the average number of shares in relation to net sales.

Proposed allocation of the company's profit

THE FOLLOWING AMOUNTS ARE AT THE DISPOSAL OF THE ANNUAL GENERAL MEETING:

	283,861,268
Profit for the year	56,934,955
Share premium reserve	110,475,051
Profit brought forward	116,451,262

THE BOARD PROPOSES THAT THE PROFIT BE ALLOCATED AS FOLLOWS:

	283,861,268
To be carried forward	143,989,527
um reserve
To be carried forward to the share premi	110,475,051
To be distributed to shareholders at SEK 1.00 per share	29,396,690

With reference to that stated above and that which has otherwise come to the attention of the Board, it is the opinion of the Board that a comprehensive assessment of the company's and the Group's financial status entails that the dividend is justifiable with reference to those requirements that the business's nature, scope and risks business stipulate regarding the size of the company's and the Group's equity, as well as the company's and the Group's consolidation requirement, liquidity and status otherwise.

The consolidated financial statements and the Annual Report have been prepared in accordance with the international accounting standards referred to in Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards and good accounting practice, and provide a fair view of the Group's and the Parent Company's position and results. The Administration Report for the Group and the Parent Company provide a fair overview of the Group's and the Parent Company's operations, position and results, as well as describing significant risks and uncertainties facing the Parent Company and the companies included in the Group. As can be seen from Note 1, the Annual Report and the consolidated financial statements have been approved for issue by the Board of Directors on March 29, 2017. The consolidated statement of comprehensive income and the statement of financial status, as well as the Parent Company's income statement and balance sheet, will be subject to adoption at the Annual General Meeting on April 25, 2017.

Umeå, March 29, 2017

Crister Stjernfelt Chairman of the Board

Jan Friedman Board member

Kaj Sandart Board member Birgitta Johansson-Hedberg Board member

Anna Valtonen Board member

Lars Stenlund CEO

Our audit report was presented on April, 4, 2017

PricewaterhouseCoopers AB Niklas Renström Authorized Public Accountant Auditor-in-charge

Auditor's Report

To the general meeting of the shareholders of Vitec Software Group AB (publ), corporate identity number 556258-4804.

Report on the annual accounts and consolidated accounts Opinions

We have audited the annual accounts and consolidated accounts of Vitec Software Group AB (publ) for the year 2016 except for the corporate governance statement on pages 30-38. The annual accounts and consolidated accounts of the company are included on pages 24-29 and 39-85 in this document.

In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of parent company as of 31 December 2016 and its financial performance and cash flow for the year then ended in accordance with the Annual Accounts Act. The consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the group as of 31 December 2016 and their financial performance and cash flow for the year then ended in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU, and the Annual Accounts Act. Our opinions do not cover the corporate governance statement on pages 30-38. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts.

We therefore recommend that the general meeting of shareholders adopts the income statement and balance sheet for the parent company and the group.

Basis for opinions

We conducted our audit in accordance with International Standards on Auditing (ISA) and generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor's Responsibilities section. We are independent of the parent company and the group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.

Our audit approach

Audit scope

Vitec has a clear growth strategy, where growth is mainly achieved through the acquisition of mature software companies in the Nordic region. Through acquisitions, Vitec secures customer relationships and established brands and software specific to certain industries. Management continuously works to identify and evaluate suitable acquisition objects, based on a clearly defined profile. In the past two years, the Group has conducted eight acquisitions, of which three were in 2016. As of the closing date, December 31, 2016, the Group consisted of eight segments comprising 31 legal entities. Of these, three of the companies are large, with recognized sales in excess of SEK 80 million. Vitec's business model is largely dependent on sales of subscription agreements recognized in revenue on a straight-line basis over the contract duration, so-called recurring revenue. In 2016, the percentage of recurring revenue amounted to 77 percent of the Group's total recognized sales.

In addition to the three large subsidiaries, this year the Group

audit comprised of the Parent Company, Vitec Software Group AB and subsidiaries in Sweden, Norway and Denmark, corresponding to around 75 percent of the Group's external sales. In addition, all companies in the Group with external sales are subject to statutory audits carried out in conjunction with the Group audit.

We designed our audit by determining materiality and assessing the risks of material misstatement in the consolidated financial statements. In particular, we considered where management made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the group operates.

Materiality

The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall materiality for the financial statements as a whole. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole.

Key audit matters

Key audit matters of the audit are those matters that, in our professional judgment, were of most significance in our audit of the annual accounts and consolidated accounts of the current period. These matters were addressed in the context of our audit of, and in forming our opinion thereon, the annual accounts and consolidated accounts as a whole, but we do not provide a separate opinion on these matters.

Key audit matters

Acquisitions

During the past year, Vitec acquired both of the Finnish companies, Tietomitta OY and Futursoft OY, as well as the Norwegian company, Plania AS.

For each business combination, group management has to allocate the purchase price consideration between the identified surplus values in the acquired company a so called purchase price allocation. Identified surplus values in the acquired companies include product rights, customer relationships, brands and goodwill. If the share purchase agreement include additional consideration contingent on future earnings in the acquired company, management must make a best estimate of the outcome of the

additional purchase price, which is, then, recognized as a liability.

To determine the identified surplus values, company management must make judgments and prepare technically complex calculations based on estimates and forecasts regarding the acquired companies' future development. Customer relationships and product rights are amortized, unlike goodwill and brands, over their estimated useful lives. An incorrect allocation of surplus values in the acquisition analysis can, thereby, have a material impact on the financial statements, while an incorrect valuation of the contingent consideration price may mean that the total surplus values to be allocated are too high or too low.

During the year, company management evaluated the amortization model for product rights as identified in the purchase price allocation. This work resulted in Vitec shifting, as of the fourth quarter of 2016, from a straight-line to a regressive amortization model for acquired product rights. Group management deems that such an amortization model provides a more accurate view of the product life cycle. The effect of the new principle is apparent from the acquisition analysis for Futuresoft Oy, which has been updated according to the new model. The acquisition analysis for Plania AS, which was completed in December, is also prepared according to the new principle.

For more information on the above policies, please refer to page 57 and Note 1 in the Annual Report for 2016.

How our audit addressed the Key audit matter

We examined and evaluated the acquisition analyses with particular focus on the manner in which company management identified goodwill and other intangible assets, such as brands and product rights, as well as examining the valuation of additional purchase prices.

This was done by performing the following audit measures:

• Obtained the acquisition agreements and evaluated the agreement terms from an accounting perspective.
• Confirmed the paid purchase price against bank account statements.
• Reviewed the company's methods and assumptions for identifying intangible assets, such as product rights, brands and goodwill and the allocation of surplus values.
• Confirmed acquisition-related costs against underlying invoices.
• Verified the regressive model for amortization against historical product life cycles.
• Challenged management's underlying assessments in the valuation of the additional purchase prices.
• Based on materiality, confirmed that adequate disclosures were provided in the annual report.

Based on our audit, we have no material observations to report to the Audit Committee.

Other Information than the annual accounts and consolidated accounts

This document also contains other information than the annual accounts and consolidated accounts and is found on pages 1-23. The Board of Directors and the Managing Director are responsible for this other information.

Our opinion on the annual accounts and consolidated accounts does not cover this other information and we do not express any form of assurance conclusion regarding this other information.

In connection with our audit of the annual accounts and consolidated accounts, our responsibility is to read the information identified above and consider whether the information is materially inconsistent with the annual accounts and consolidated accounts. In this procedure we also take into account our knowledge otherwise obtained in the audit and assess whether the information otherwise appears to be materially misstated.

If we, based on the work performed concerning this information, conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Board of Directors and the Managing Director

The Board of Directors and the Managing Director are responsible for the preparation of the annual accounts and consolidated accounts and that they give a fair presentation in accordance with the Annual Accounts Act and, concerning the consolidated accounts, in accordance with IFRS as adopted by the EU. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error.

In preparing the annual accounts and consolidated accounts, The Board of Directors and the Managing Director are responsible for the assessment of the company's and the group's ability to continue as a going concern. They disclose, as applicable, matters related to going concern and using the going concern basis of accounting. The going concern basis of accounting is however not applied if the Board of Directors and the Managing Director intends to liquidate the company, to cease operations, or has no realistic alternative but to do so.

The Audit Committee shall, without prejudice to the Board of Director's responsibilities and tasks in general, among other things oversee the company's financial reporting process.

Auditor's responsibility

Our objectives are to obtain reasonable assurance about whether the annual accounts and consolidated accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and generally accepted auditing standards in Sweden will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual accounts and consolidated accounts. A further description of our responsibility for the audit of the annual accounts and consolidated accounts is available on Revisorsnämnden's website: www.revisorsinspektionen.se/rn/ showdocument/documents/rev_dok/revisors_ansvar.pdf. This description is part of the auditor´s report.

Report on other legal and regulatory requirements Opinions

In addition to our audit of the annual accounts and consolidated accounts, we have also audited the administration of the Board of Directors and the Managing Director of Vitec Software Group AB (publ) for the year 2016 and the proposed appropriations of the company's profit or loss.

We recommend to the general meeting of shareholders that the profit be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the Managing Director be discharged from liability for the financial year.

Basis for opinions

We conducted the audit in accordance with generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor's Responsibilities section. We are independent of the parent company and the group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.

Responsibilities of the Board of Directors and the Managing Director

The Board of Directors is responsible for the proposal for appropriations of the company's profit or loss. At the proposal of a dividend, this includes an assessment of whether the dividend is justifiable considering the requirements which the company's and the group's type of operations, size and risks place on the size of the parent company's and the group's equity, consolidation requirements, liquidity and position in general.

The Board of Directors is responsible for the company's organization and the administration of the company's affairs. This includes among other things continuous assessment of the company's and the group's financial situation and ensuring that the company's organization is designed so that the accounting, management of assets and the company's financial affairs otherwise are controlled in a reassuring manner. The Managing Director shall manage the ongoing administration according to the Board of Directors' guidelines and instructions and among other matters take measures that are necessary to fulfil the company's accounting in accordance with law and handle the management of assets in a reassuring manner.

Auditor's responsibility

Our objective concerning the audit of the administration, and thereby our opinion about discharge from liability, is to obtain audit evidence to assess with a reasonable degree of assurance whether any member of the Board of Directors or the Managing Director in any material respect:

• has undertaken any action or been guilty of any omission which can give rise to liability to the company, or
• in any other way has acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association.

Our objective concerning the audit of the proposed appropriations of the company's profit or loss, and thereby our opinion about this, is to assess with reasonable degree of assurance whether the proposal is in accordance with the Companies Act.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with generally accepted auditing standards in Sweden will always detect actions or omissions that can give rise to liability to the company, or that the proposed appropriations of the company's profit or loss are not in accordance with the Companies Act.

A further description of our responsibility for the audit of the administration is available on Revisorsnämnden's website: www. revisorsinspektionen.se/rn/showdocument/documents/rev_dok/ revisors_ansvar.pdf. This description is part of the auditor´s report.

The auditor's examination of the corporate governance statement

The Board of Directors is responsible for that the corporate governance statement on pages 30-38 has been prepared in accordance with the Annual Accounts Act.

Our examination of the corporate governance statement is conducted in accordance with FAR's auditing standard RevU 16 The auditor's examination of the corporate governance statement. This means that our examination of the corporate governance statement is different and substantially less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. We believe that the examination has provided us with sufficient basis for our opinions.

A corporate governance statement has been prepared. Disclosures in accordance with chapter 6 section 6 the second paragraph points 2-6 of the Annual Accounts Act and chapter 7 section 31 the second paragraph the same law are consistent with the other parts of the annual accounts and consolidated accounts and are in accordance with the Annual Accounts Act.

Stockholm, April 4, 2017 PricewaterhouseCoopers AB

Signature on original "Auditor's Report" in Swedish*

Niklas Renström Authorized Public Accountant

*) This is a translation of the original Auditor's Report in Swedish. In the event of any differences between this translation and the original report in Swedish, the Swedish version shall prevail.

Shareholder information

Annual General Meeting

Vitec Software Group's Annual General Meeting of shareholders 2017 will be held on Tuesday, April 25, 2017 at 5.30 p.m. at Väven, Vävenscenen, Strandgatan 10, Umeå. Registration takes place between 4:30 p.m and 5:15 p.m. After the meeting a buffet will be served.

Registration and notice of attendance

Shareholders who wish to attend the Annual General Meeting must

• be recorded in the share register kept by Euroclear Sweden AB, the Swedish securities registry, on April 19, 2017; and
• give notice of attendance to the Company at the latest on Wednesday April 19, 2017 3:00 p.m. Notice of attendance can be given by telephone +46 (0)90 15 49 00 on weekdays between 8 a.m. and 5 p.m. or on Vitec's website vitecsoftware.com.

Notice of attendance may also be given in writing to: Vitec Software Group AB "Annual General Meeting 2017" Tvistevägen 47 A S-907 29 Umeå Sweden.

When giving notice of attendance, please state name, personal- or corporate identity number, email address, telephone number and the number of any accompanying assistants, but no more than two.

The Annual General Meeting will be conducted in Swedish.

Shares registered in the name of a nominee

Shareholders whose shares are nominee registered must, no later than on Wednesday, April 19, 2017, temporarily be entered into the share register kept by Euroclear Sweden AB in their own name in order to be entitled to participate in the Annual General Meeting. A request for such re-registration must be submitted to the nominee well in advance of said date.

Proxy

Shareholders represented by proxy shall issue a power of attorney for the representative. A power of attorney issued by a legal entity must be accompanied by a copy of the entity's certificate of registration (should no such certificate exist, a corresponding document of authority must be submitted). In order to facilitate the registration at the Annual General Meeting, the power of attorney in the original, certificate of registration and other documents of authority should be sent to the Company in advance to the address above for receipt by April 24, 2017. Forms of power of attorney in Swedish and English are available on Vitec's website, vitecsoftware.com.

Documents

Complete documentation will latest by April 4, 2017 be held available at vitecsoftware.com. The documents will also be sent to shareholders who so request and state their postal address.

Interim reports 2017

Interim report January-March	04/25/2017
Interim report January-June	07/13/2017
Interim report January-September	10/20/2017

Dividend

The Board of Directors has decided to propose the Annual General Meeting to resolve on a dividend of SEK 1.00 per share.

Head office: Vitec, Tvistevägen 47 A, 907 29 Umeå, Sweden

Phone +46 (0)90-15 49 00 vitecsoftware.com

Text and production: Vitec. The people shown in the pictures are Vitec employees, except for pages 10, 11 and 20. Printing: TMG Tabergs.