Vitec Software Group B — Annual Report 2017

Mar 29, 2018

Annual Report 2017

This is Vitec

Vitec is the market leading software company in Vertical Market Software in the Nordic region. We develop and supply standard programs for various niches, our growth takes place through acquisitions of well-managed and established software companies. The Group's overall processes together with the employees' in-depth knowledge of the customer's business create good conditions for development and continued innovation.

Contents

THE GROUP'S OPERATIONS

This is Vitec	2
2017 in brief	3
CEO's comments	4
Our position	6
Business model and growth strategy	7
Our Business Areas	9
Sustainability Report	12
History	18
The share and the shareholders	20

ANNUAL REPORT

Administration Report	24
Corporate Governance Report	30
- Chairman's comments	30
- Members of the Board	33
- Members of Group management	37
Multi-year summary	39
Proposed allocation of profits	40
Financial statements	42
- Consolidated income statement	42
- Consolidated statement of comprehensive income	42
- Consolidated statement of financial position	44
- Consolidated statement of changes in equity	46
- Consolidated statement of cash flows	47
Income statement, Parent Company	49
Balance sheet, Parent Company	50
- Changes in equity, Parent Company	52
- Cash flow statement, Parent Company	54
Notes	57
Signatures	88
Auditor's Report	89
Auditor's report on the statutory sustainability report	92
Key performance indicator definitions	93
Shareholder information	95

Mission

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

Core values

Our corporate culture has become a central part of the Group's management, with continuous dialog on our value-generating KPIs, focus on the development of standard products, regular best practice meetings and our fundamental core values.

Our products - our foundation

Vertical Market Software

Keep it simple

Simple solutions succeed

Trust and transparency

Collaboration and commitment favor fortune

Text and production: Vitec.

Images: Photographer Edel Puntonet, except for the picture of Tom-Arild Bonnegolt on page 14, which is taken by Knut Neerland, and the pictures on pages 18 and 30, which are taken by Magnus Svensson. The people shown in the pictures are Vitec employees, except for page 10.

Cover photo: Åsa Rosén and Johan Hammarlund, Stockholm. Printing: TMG Tabergs.

Paper: Munken, eco-labelled.

2017 in brief

Most significant events

Viktor Naeslund, Birgitta Knutsson-Hjelmze, Ida Eriksson and Mahmoud Oubaid, Stockholm

• Vitec share was moved from Small Cap to Mid Cap on Nasdaq Stockholm.
• We increased our credit facility for acquisition with SEK 200 million.
• We invested around SEK 100 million in our own software.
• Vitec acquired the Danish software company MV-Nordic.
• We decided on a convertible program for the employees of Vitec.

	2017	2016
Net sales (TSEK)	855,029	675,414
Operating profit (TSEK)	106,702	88,305 Förnyelsebara energikällor
Profit after financial items (TSEK)	98,127	81,942
Operating margin (%)	12	13
Return on equity (%)	22	22
Return on capital employed (%)	14	14
Equity/assets ratio (%)	32	30 Non
Adjusted equity per share (SEK)	13.34	renewable 11.37
Earnings per share (SEK)	2.70	2.27
Dividend per share (SEK) Proposed dividend 2018 SEK 1.10 per
share	1.00	0.90
Average number of employees	540	467

Key figures

Sales per market

CEO's comments

Continued growth with focus on corporate culture and efficiency

Vitec continues to grow and 2017 was no exception from previous years. Cash flow is growing strongly. Earnings, however, are also improving, but are not in pace with cash flow.

The highlights of 2017 were the move to the Stockholm Stock Exchange's Mid Cap list, almost doubling the acquisition facility by SEK 200 million to a total of SEK 450 million and the acquisition of MV-Nordic in Denmark. Risk diversification in the Group continued to improve in 2017. Sales of SEK 855 million are now distributed over 15 operating units, each of which account for no more than 18 percent of total sales.

Corporate culture

With 600 employees in four countries in nearly 20 offices, our internal communication has become ever more important. Continuously discussing our value-generating KPIs, focusing on the development of standard products, regularly identifying best practices and making reality out of our fundamental core values: "Our products - our foundation", "Keep it simple" and "Transparency and trust". All of this has made our work with the corporate culture a central part of managing the Group. Our brand promise "To rely on – Today and Tomorrow" together with the core values and our central KPIs give us the right ingredients to build a strong corporate culture. This also makes it possible to keep our decentralized model while maintaining high growth. A strong corporate culture, decentralized decisions, motivated employees and a well-defined business model help us strengthen our competitiveness for the future.

Efficiency

With Vitec's niche-oriented business in relatively mature markets, demand is both long term and sustainable. In these markets, efficiency and focus are central prerequisites for strong and growing profitability. Major unexpected shifts in the market are rare, however, meaning that the company's growth is largely up to us. Focus and efficiency will therefore always be central issues for our business.

Recurring revenue accounts for 70 percent of the Group's total revenue. Vitec continues to convert to a steadily increasing share of Software as a Service (SaaS) agreements in new sales or when existing customers upgrade. The customer benefits of the SaaS model are becoming increasingly well known as digitalization gains speed, a general trend that strengthens our specific possibilities of transforming our business model.

Higher dividend for the 16th consecutive year

The proposed dividend for the year of SEK 1.10 is an increase of 10 percent, making 2017 the 16th year in a row that our dividend has increased. Vitec is now mentioned among companies such as Hufvudstaden and Atlas Copco for consistently increasing dividends. Still, there is a long way to go to be called a dividend aristocrat, which means 25 years of continuous increases in the dividend.

Acquisition strategy

The number of active acquisition dialogues remains high and we continuously devote resources to maintaining and furthering these dialogues. Our financial position and preparedness for future acquisitions is strong, and we see good possibilities for continued acquisition-based growth.

Sustainable profitable growth

A clear shift from traditional license sales to subscriptions of cloud-based systems which reduces dependence on individual license sales, improves the long term ability to manage the business. Combined with our employees' tremendous capacity for renewal and integrating acquisitions, this offers an excellent footing for long-term development throughout our entire organization. Backed by acquisitions of well-established companies and a growing share of recurring revenue, Vitec continues on the path to act in several independent and specialized niches to achieve sustainable and profitable growth.

Lars Stenlund, CEO

Our position on the software market

Vitec focuses on vertical markets

Vitec is the market leader in Vertical Market Software in the Nordic region. We develop and supply standard products for various niches. 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

Our standardized products are cost-effective for our customers since they can assimilate developments and upgrades made for the entire industry. In this way, we 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. The Group's overall processes together with the employees' many years of experience and in-depth knowledge of the customers' business create good conditions for development and continued innovation. 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. At the same time, the vertical markets are relatively small and the replacement cost for the customer is high, which reduces the chance for a new player to achieve a return on investments made. 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. We always strive for a leading position in the verticals we are active in. This provides significant economies of scale that enable longterm 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 on a long term basis. It also makes the Group less sensitive to temporary declines in individual companies. The software is increasingly delivered as a cloud-based subscription. For our customers, this means low investment costs and that costs for development, operation, maintenance, upgrading and support are included in the ongoing agreement. They receive a secure overall offering at a known cost.

Change in the type of revenue

Growth through acquisition 1 500

Vitec is an industrial player that has a long-term perspective. We are mainly growing through acquisitions of well-managed software companies in vertical markets in Nordic countries. We acquire established companies with well-known products in mature markets, which means that the Group's organic growth is relatively low. The acquisition work is governed by a number of specific criteria that entirely determine if the companies are a good fit with Vitec. 0 500 1 000 2012 2013 2014 2015 2016 2017 Number of shares traded per month TSEK OMXSEK Vitec SEK

Acquire

In Vitec, we have many years of experience and a high level of expertise in the development, sales and support of niche software. This makes it possible for us to identify acquisition targets that are fully in line with our strategy based on

a number of important aspects. One decisive factor is that the acquisition must contribute to increasing the Group's earnings per share. Good profitability and positive cash flows are therefore important.

The acquisitions made in our existing verticals contribute to increased market share, while acquisitions in new sectors leads to increased risk diversification. We continuously have a hundred interesting software companies on the prospect list. Before we decide for an acquisition, we spend a great deal of time and commitment in personal meetings with people in the companies. It is important that we agree on fundamental values, the business model and strategies since the acquisitions take place based on the companies staying in the Group.

Refine

The acquired companies are profitable and well-managed companies. Therefore, it is important to maintain the smooth functioning of the business and the important local industry knowledge after the acquisition. 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 management requires that all managers have understood and act on the basis of the Group's strategy and corporate culture.

Acquired sales

The acquired companies' collective annual sales at the time of the respective acquisition.

Strategy for brands and products in acquisitions

All operations within the Group contribute to strengthening the Vitec brand. 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 names of the products, which are communicated to the market together with the brand Vitec. Acquisitions may mean that we offer products in an industry with partly overlapping functionality or even competing products. In such cases, we make no immediate changes, but instead evaluate in upcoming new development if there is a possibility to create components with support for all product lines. In this way, work begins that future-proofs the products and creates a new, joint product line for all customers within the specific industry.

Our suppliers

Our main purchases concern such areas as offices, data centers, electricity supply, information services, travel, electronics, computers, telephony, office supplies and software components. A well-functioning purchasing process is important to achieve cost-efficient purchases and to ensure that the suppliers meet our sustainability requirements. Among those that meet the requirements, the choice is then based on business grounds. Purchasing also takes place in a way that does not lock us into specific suppliers, but allows us to change to an alternative supplier without major disruptions in the operations.

Our Business Areas

Our business areas support business processes for the vertical they are operating in, and yet they share logic and conditions for the production of software. Niches in the same vertical or that otherwise belong together are reported together as a business area on a Nordic level. No business area represents more than 22 % of sales resulting in a healthy risk diversification within the Group.

Business Area Auto

Vitec develops software for the automotive and machinery sector in Denmark, Finland, Norway and Sweden. The products support work processes, including vehicle sales, workshops, tire storage and distribution of auto parts.

The business area increased profit and sales compared with 2016. In Denmark, we launched a few complementary products that strengthen our offering. In Finland, our cloud-based offering had a positive effect in 2017. In Norway, the companies Vitec Autodata AS and Vitec Infoeasy AS created a common offering to the market since their products complement each other in a positive way.

Examples of customers: Nelleman and Terminalen in Denmark, Incar, Autoklinikka and Firststop in Finland, Mekonomen, Nettbuss and Torghatten ASA in Norway and KG Busservice in Sweden.

Business Area Energy

In 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 comprises the Nordic countries, the Baltic states, the rest of Europe and the Middle East.

In 2017, the business area had largely unchanged sales and a higher operating profit compared with 2016. Our efforts on the European energy market that began a few years ago has been successful. With a high pace in our production development, we have continued to have considerable demand for our Aiolos forecast system, which is now at the customers in more than 20 European countries, even if the volumes are still relatively low.

Examples of customers: Fingrid, Svenska kraftnät and Vattenfall.

Business Area Real Estate

Vitec develops software for the construction and real estate sector in Norway and Sweden. This includes comprehensive business systems for e.g. leasing, sales, customer service, finance, technical management and energy monitoring.

The business area increased profit and sales compared with 2016. The integration of Norwegian Plania AS went as planned and the business had a stable development during the year. In Sweden, sales were high with an increase in cloud-based deliveries and recurring revenue. Vitec has also developed unique software that provides real estate companies in Sweden the ability to publish available rental apartments on the marketplace boplatssverige.se. Development was positive during the year here as well.

Examples of customers: Statens vegvesen, Avinor, Norsea Group AS , Universitetssykehuset Nord-Norge in Norway and Botkyrkabyggen, PEAB, and Rikshem in Sweden.

Business Area Finance & Insurance

In Business Area Finance & Insurance, Vitec develops software for banks, financial institutions and insurance companies in Denmark, Norway and Sweden.

The business area increased profit and sales compared with 2016. The organization in our Danish operation was fine-tuned during the year to provide existing customers even better service. We made several large customer deals during the year and our standardized product that facilitates the introduction of the new financial regulations MiFID 2 was also well-received by our customers. In Norway, we lost one major customer during the year, which had an impact in the third quarter. In Sweden, we had major focus on new products and Capitex Asset Planning evoked considerable interest in the market. Fredrik Glifberg joined as new CEO for the Swedish business in January 2017.

Examples of customers: Danske Bank, EIKA Boligkreditt, Nordea and Pension Danmark in Denmark, Eika in Norway and PayDrive, Länsförsäkringar Fondliv, Min Pension, Nordea and SEB in Sweden.

Business Area Environment

Vitec develops market leading products in private and municipal waste and resource management in Finland. The products manage the entire chain from weighing waste and driving schedules to billing, accounting and reporting.

The business area increased profit and sales compared with 2016. In 2017, we delivered a solution that made our products even more mobile, which increased flexibility for our customers. We had a strong demand for our products during the year.

Examples of customers: Lakeuden Etappi, Jätekukko and Remeo.

Business Area Estate Agents

Vitec develops software for estate agents in Norway and Sweden. Our products support estate agents in all stages throughout the business process.

The business area had decreased profit and sales compared with 2016. Both in Sweden and Norway, we are in the middle of a generational change to new modern versions of our applications for estate agents. The new web-based applications were well-received in the market and in Sweden more than 50 percent of the active estate agents already use our new product. Norway is slightly behind in the development process, but in 2017 we signed contracts with some of the major players in the market. Both of the countries are now entering a consolidation phase with extensive opportunities for rationalization in the transition to one platform instead of several in each country.

Torbjörn Abrahamsson joined as new CEO for the Swedish business in October 2017.

Examples of customers: DNB Eiendom and Eiendomsmegler Krogsveen in Norway and Husman Hagberg, Länsförsäkringar Fastighetsförmedling and SkandiaMäklarna in Sweden.

Business Area Education & Health

Business Area Health changed name to Education & Health in connection with the acquisition of the Danish company MV-Nordic A/S. The company develops software for people with reading and writing difficulties in Denmark, Norway and Sweden. The products are used by both public and private education companies. The business area also includes the development of software for healthcare companies in Finland. The products are completely web-based and are used by medical centers, hospitals, physiotherapy and rehabilitation centers, as well as occupational health services and public sector organizations.

The business area increased profit and sales compared with 2016. MV- Nordic is included as of the third quarter. In Finland, the large installation projects we were working on throughout 2016 were completed. Demand for our cloud-based product remained high.

Examples of customers: In Education, we have customers such as the Ministry of Education in Denmark and Malmö Municipality in Sweden. In Health, Orton, the Finnish Student Health Service, as well as Tampere and Helsinki municipalities' occupational health services are examples of a few of our customers.

Net Sales Share of net sales Omsättning, fördelning AO MSEK

Nettomsättning

25 Rörelseresultat 156 142 150

Education & Health 10 % Estate Agents 5 % Operating profit Share of operating profit RR, fördelning AO Education & 29,0

0 5 10 15 20 25 30 35 Health 7 % Finance & Rörelsemarginal

Operating margin Share of recurring revenue Andel repetitiva intäkter av omsättningen

Our office in Kalmar

Sustainability Report

In our sustainability work, we have six prioritized focus areas in social, financial and ecological sustainability. They are developed by Group management in dialog with the business area managers and based on the Group's mission and brand promise. On the next few pages, the focus areas are described in more detail.

Our products

Our products are the most important contribution in our sustainability work. The products are our foundation and core business, that´s why we don´t handle them as a separate focus area. They contribute to sustainability by supporting necessary functions in society and enabling more efficient processes. One of our many examples is our product for energy follow-up, which creates conditions for property owners to streamline the energy use in their properties. Another example is the product JHL, which administers waste and resource management where a map system with real-time data transfer shows the trucks the most efficient route based on destination, type of waste, etc. A third example is the products IntoWords and CD-Ord. These two products are modern digital tools that make work and school possible for those with reading and writing difficulties. IntoWords and

CD-Ord are used both in grade school and college. Many of our products also support digital signing and e-invoicing. Read more about our products at vitecsoftware.com.

Decentralization and management by objectives

Just like other operating activities, the sustainability work is conducted locally in respective business area. The business area managers report to Group management and the sustainability work is followed up based on the common focus areas. The CEO has the overall responsibility for the sustainability work and reports to the Board. Read more about our risk and uncertainty factors in the Administration Report on page 24.

With a focus on sustainable business, every day and in every relationship we generate opportunities to meet our brand promise: To rely on – Today and Tomorrow "

Lars Stenlund, CEO

Our focus areas

Social sustainability

Our internal and external relationships are based on transparency and trust. In 2017, we began working on a common Code of Conduct for the entire Group, which will be adopted in 2018. We have clear ethical frameworks and approaches for our operations and towards the parties we cooperate with. They are governed by our Code of Conduct and guidelines in the areas of human rights, anti-corruption, environment, personnel-related issues and the prudence principle. The Code of Conduct gives us an ethical framework, rooted in our values, on which we will base our decisions and behavior in the daily work.

Focus area 1: Employee responsibility

Vitec is constantly growing. In 2017, we welcomed 140 new employees in connection with our corporate acquisitions and recruitments. At the end of the year, we were around 600 employees throughout the Nordic region.

Focus area 2: Customer responsibility

Our products are business critical for the customers. Our most important customer responsibility is that the products are accessible and process the customers' information in a secure and reliable manner.

Focus area 3: Supplier responsibility

For our business to be sustainable in every phase, we choose suppliers that act professionally, sustainably and ethically correct based on human rights and anti-corruption, among others.

Financial sustainability

The Group's overall processes together with the employees' in-depth knowledge of the customer's business create good conditions for development, continued innovation and long-term sustainable product development. One of our core values is to keep it simple. Not complicating matters and instead striving to keeping it simple contributes to a cost awareness of each employee.

Focus area 4: Long-term sustainable profitability

Our business model is based on offering software according to a subscription model. It is a financially sustainable business model that provides the conditions on a long term basis.

Ecological sustainability

We have a responsibility for our operations having as little negative impact on the environment as possible. Our assessment is that the areas in which Vitec has the largest negative impact on the environment are through emissions and waste. The emission come indirectly through electricity consumption in data centers and offices and through the personnel's business travel. Waste is mainly in the form of electronics scrap.

Focus area 5: Reduced energy consumption

To continuously reduce our energy consumption, we work to improve the efficiency of our data centers and offices. We have also begun work to transition to 100 % renewable energy sources in our electricity subscriptions.

Focus area 6: Reduced waste and more recycling

We have begun work on a Group-wide standard for re-use and recycling.

Employee responsibility

Vitec is constantly growing. In 2017, we welcomed 140 new employees in connection with our corporate acquisitions and recruitments. At the end of the year, we were around 600 employees throughout the Nordic region.

Respect and satisfaction

The individual companies in the Group are relatively small and consequently, every employee's contribution is central to the Group's success. Our foremost employee responsibility is therefore to recruit and retain employees who have the right expertise and who share our values. To be an attractive employer both today and tomorrow, it is important to have focus on a sustainable work environment. The work climate must be based both on respect for each other's competence and for each other as individuals.

Our employees' health and safety are prioritized when we e.g. design workplaces, choose equipment, create job descriptions and plan skills development. As an employer, we also encourage the employees to have a healthy lifestyle. We do so mainly by creating opportunities for a good balance between working life and private life. Within the Group, there is a voluntary health initiative, ActiVitec, which is driven by employees to inspire exercise and movement.

Recruitment and development

Recruitment, salaries and development opportunities are affected by the individuals qualifications, such as education, experience, competence, ability and performance. We work to promote diversity from several aspects in the Group. Examples of such measures are adaptation of job ads and greater awareness in recruitment. In 2017, we increasingly used an internal HR specialist in recruitment to ensure that we have the right focus throughout the process. Salary and development talks are held between managers and employees every year. These are important talks for feedback and to talk about future development based on the company's needs and the employee's desire for development. As an employer, Vitec has the task of continuously developing the employees; for example, our managers are often recruited internally.

Value-guided leadership

Our managers are central bearers of the company culture who contribute to understanding of and support for our core values. Experienced managers help employees to grow, and ensure that the focus is on those tasks that create value. In 2017, we held two networking meetings for business area and staff managers and we introduced an introduction program for new CEOs. We also implemented Leadership training, a recurring training program for managers throughout the Group. The speakers on such occasions are mainly people from Group management.

Linda Ångman System Developer in Real Estate in Sweden

"I began at Vitec in Umeå in 2005. For 12 years, I have focused and specialized in vertical systems for energy follow-up and technical property management. My unique industry knowledge gives me the possibility to fundamentally understand the customer's flows and processes. The result is that we can improve the efficiency of the customer's business through user friendly products. I love solving problems and the best thing about my job is that I get to solve complex problems and get immediate feedback every day. I am driven by our customers' gaining a simpler workday by using our products; the key words are user friendliness and usability. What I appreciate most about Vitec as an employer is the stability and security."

Tom-Arild Bonnegolt System Consultant in Finance & Insurance in Norway

"I have worked here for 17 years and I began as a system developer. Today, I work between the development department and the customers. My job is about understanding the customers' needs and translating that into technical solutions. I am driven by helping the customers and making their workday easier. To achieve a high level of quality in my work, I meet the customers at personal meetings to set the right expectations and capture the needs. A good customer dialog builds on transparency and trust. In my years here, I have developed a dual competence with the development of software and business knowledge in the insurance industry. My job satisfaction comes from my colleagues and the combination of flexibility and extensive responsibility for keeping our customers happy."

Here, conditions are created to build important networks for the exchanges that are of benefit to the whole Group. We also recruited an HR manager with a Nordic perspective to increase the management support throughout the Group.

Every employee also has a responsibility to follow our common corporate culture. Once a year, we gather our new employees where they receive an introduction by Group management. Knowledge about the Group, the corporate culture and fundamental values is on the agenda.

Convertible program

With the aim of providing our employees the possibility of long term part-ownership in Vitec, we implemented our ninth convertible program in 2017. The program applies with the same terms to all employees in Vitec. This way, all employees, regardless of role, 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.

Age distribution 2017

Total number	% women	% men
573	30	70
64	38	62
345	29	71
164	27	73
93	32	68
1	0	100
63	37	63
29	24	76

Average age 2017

	Total	Women	Men
Group	44	43	44

Customer responsibility

Our products are business critical for the customers. Every vertical in which we work requires us to be specialists and have good knowledge of the industry's conditions and needs. This gives us the possibility to offer products where the development is driven by customer benefit and time and energy is spent on what really makes a positive difference and streamlines the customer's processes. Our most important customer responsibility is that the products are accessible and process the customers' information in a secure and reliable manner. We do annual audits based on our security policy to be able to take possible steps early on.

Personnel turnover 2017

	Total number	% women	% men
Number of new employees
Total	54	33	67
Under 30	13	38	62
30-50	34	29	71
Over 50	7	43	57
Number who left
Total	24	8	92
Under 30	2	0	100
30-50	13	8	92
Over 50	9	11	89

Supplier responsibility

For our business to be sustainable in every phase, we choose suppliers that act professionally, sustainably and ethically correct based on human rights and anti-corruption, among others. Even if purchasing constitutes a very limited part of the Group's operations, it is important to ensure that we choose suppliers based on our core values. In 2017, we have therefore begun work on common guidelines and templates for procurements and purchasing where we clearly state what we expect of our suppliers for them to be approved according to our Code of Conduct.

Long-term sustainable profitability

Our business model is based on offering software according to a subscription model, which provides stable and predictable cash flows with recurring revenues. It is a financially sustainable business model that provides the conditions to act long term. It also makes the Group less sensitive to temporary declines in individual companies. Growth in the Group mainly takes place through business acquisitions; a crucial parameter is that the earnings per share will be impacted positively by the acquisition.

We have also chosen to not have bonus systems for senior executives; this is to ensure that the company is managed long term and to avoid short-term actions. MSEK

Target

Operating margin of at least 15 %.

Target 400

At least 33 % of the profit is paid out to the shareholders. Lorem ipsum Lorem ipsum 200

0,0 0,5 1,0 1,5 2,0 2,5 3,0 2013 2014 2015 2016 2017 SEK 47 % 38 % 34 % 44 % 41 %* Profit per share Revenue per share

* Proposed dividend SEK 1.10 (41 %)

Reduced energy consumption

To continuously reduce our energy consumption, we work to improve the efficiency of our data centers and offices. We use so-called free cooling, which means that the natural cold in the outdoor air can be used to reduce the temperature in the data centers. In cooperation with the landlords, excess heat from our data centers is used for heating other parts of the properties. For one of our data centers, we have our own solar panels that produce 25 % of the electricity used by that one server hall. When new hardware is bought, we require it to be an energy-efficient alternative. In 2017, we also began

work to transition to 100 % renewable energy sources in our electricity subscriptions. We also work to minimize the amount of business travel by creating conditions for efficient digital meetings through our common IT infrastructure.

Reduced waste and more recycling

In 2017, we began work on a Group-wide standard for electronics waste that enables measurement and follow-up of re-use and recycling. We also began a standard for follow-up of what waste should be recycled in our offices.

In 2017, we decided to follow our energy consumption in relation to the number of employees at our offices and the processing capacity of our data centers and how much of our consumption comes from renewable energy sources. These are new measurements and therefore we don´t have comparative figures from earlier years. Omsättning fördelning marknad

History

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

Milestones

1985

Vitec was founded by Lars Stenlund and Olov Sandberg. 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 acquisitions were conducted in Sweden.

2002

Vitec paid a dividend for the first time. This 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, whose 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 leading software supplier for estate agents in Sweden, resulting in the establishment of Business Area Estate Agents.

2010

Business Area Finance & Insurance was established when Vitec acquired Capitex AB. They developed software for calculating estimates for banks and insurance companies, as well as software for estate agents and the real estate industry.

2011

Vitec was listed on Nasdaq Stockholm. The Business Area Estate Agents added operations in Norway through the acquisition of IT Makeriet A/S, the first acquisition outside Sweden.

2012

The listed subsidiary 3L System AB (publ) was acquired, thereby being delisted from First North.

2013

Business Area Health was formed in connection with the acquisition of the Finnish company Acute FDS Oy with software for Finnish healthcare companies.

2014

Business Area Auto was formed through the acquisition of AutoData Norge AS with software for the Norwegian autoparts market. 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. Business Area Finance & Insurance was supplemented with operations in Norway 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. The new Business Area Environment was added with the acquisition of the Finnish company Tietomitta Oy. FuturSoft Oy in Finland and Plania AS in Norway were also acquired, supplementing the business areas Auto and Real Estate. 1,5 2,0 2,5 MSEK ¹⁰⁰⁰ Omsättning

2017

Vitec is moved from Small Cap to Mid Cap on Nasdaq Stockholm. The Danish software company MV-Nordic A/S with products for reading and writing difficulties was acquired and the Business Area Health changed name to Education & Health. Olov Sandberg, one of the founders of Vitec, wrapped up his final operating assignments in the company to retire. Olov remains as one of the company's main owners. 0,0 0,5 2013 2014 2015 2016 2017 47 % 38 % Profit per share Revenue per share 0 200 400 1985 1989 1993 1997 2001 2005 2009 2013 2017

Linda Ångman and Maja Jonsson, Umeå

The share and the shareholders

In January 2017, Vitec moved from Small Cap to Mid Cap at Nasdaq Stockholm. During the year, the share price increased by 15.2 % to SEK 87.00. The total market cap was SEK 2,596 million at year-end. For the 16th consecutive year, the Board is proposing to increase the dividend, the proposal to the AGM is a dividend of SEK 1.10.

Turnover and price trend

During 2017, shares were traded at a total value of SEK 304.5 million. The average turnover per trading day amounted to 15,991 shares at a value of SEK 1.2 million. The closing price for the year was SEK 87.00 and the total market value amounted to SEK 2,596 million at year-end. For the share, the highest price paid was SEK 91.50 on December 5 and the lowest SEK 65.00 on April 3.

Class A and B shares

In September, 150,000 Class A shares were converted to Class B shares in accordance with the conversion provision mentioned in the Articles of Association, §5 Share type. After reclassification, the number of Vitec Class A shares amounted to 3,350,000. In December, personnel convertibles were converted to 442,210 new Class B shares. The number of Class B shares then amounted to 26,488,900. The total number of shares in Vitec at the end of the financial year amounted to 29,838,900. A preemptive rights clause exists for the Class A shares. The share capital amounts to approximately SEK 3.0 million and the nominal value is SEK 0.10 per share.

Convertibles 2018-2020

At the Extraordinary General Meeting held on November 1 2017, a resolution approved a convertible program for employees. The subscription amount became SEK 20.8 million with a conversion price of SEK 104. At full conversion, this corresponds to a dilution of the share capital in an amount of 0.68 % and 0.34 % of the number of votes.

Stock market

The Class B shares in Vitec Software Group AB are listed on Nasdaq Stockholm. The shares have the ticker Vit B and

Share price and turnover 2012-2017

ISIN code SE0007871363. The minimum trade is one (1) Class B share. In January 2017, the Vitec share was moved from Small Cap to Mid Cap.

Dividend policy

The shareholders of Vitec have received a dividend every year since 2003. Our goal is for the dividend to be at least one third of profit after tax. However, an assessment is always made considering the company's financial position.

Dividend

The Board proposes to the Annual General Meeting that a dividend of SEK 1.10 per share shall be paid, which corresponds to 41 % of the profit after tax for 2017.

Information to shareholders

Vitec aims to provide consistent, detailed and timely information about the Group's development and financial position to shareholders and the stock market. Our website vitecsoftware. com is the primary channel for information. There, we publish financial information, and other information that may be price sensitive, immediately after being made public. On the website, there are also presentations and films from AGMs, information on the company and share, financial calendar and information on corporate governance. There is also a possibility to order a subscription by e-mail to our press releases and reports and printed versions of our financial statements.

Analyses of Vitec

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

Quick facts
	2017	2016
Class B shares, quantity	26,488,900	25,896,690
Highest price, SEK	91.50	76.00
Lowest price, SEK	65.00	55.75
Closing price, SEK	87.00	75.50
Average daily trade, TSEK	1,213	1,039
Average daily trade, quantity	15,991	16,231
Stock market value, MSEK	2,596	2,219
Stock market	Nasdaq Stockholm	Nasdaq Stockholm
Segment	Mid Cap	Small Cap
Ticker	Vit B	Vit B
ISIN code	SE0007871363	SE0007871363

	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	Issue of new shares, incentive program	140,000	1,000	400
1990	Issue of new shares	156,000	1,160	400
1995	Issue of new shares, incentive program	164,000	1,160	480
1997	Bonus issue/split	328,000	23,200	9,600
1997	Issue of new shares, incentive program	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	Private placement Innovationsmäklarna AB and Innovationsmarknaden AB		900,000 10,000,000	8,000,000
1998	Issue of new shares at introduction on Innovationsmarknaden		1,500,000 10,000,000 20,000,000
1998	Non-cash issue at acquisition of Bra Administration AB (now Vitec Energy AB)		1,641,000 10,000,000 22,820,000
1999	Reverse share split at listing on Aktietorget	1,641,000	1,000,000	2,282,000
2000	Non-cash issue at acquisition of Minator AB (now Vitec Fastighetssystem AB)	1,732,000	1,000,000	2,464,000
2004	Conversion of personnel convertibles	1,786,100	1,000,000	2,572,200
2007	Conversion of personnel convertibles	1,808,000	1,000,000	2,616,000
2008	Non-cash issue in connection with acquisition of Vitec Mäklarsystem AB	1,883,000	1,000,000	2,766,000
2008	Conversion of Class A shares	1,883,000	800,000	2,966,000
2009	Conversion of convertible from acquisition of Vitec Veriba AB	1,916,350	800,000	3,032,700
2010	Conversion of convertible from acquisition of Vitec Mäklarsystem AB	2,025,725	800,000	3,251,450
2010	Private placement Avanza	2,125,725	800,000	3,451,450
2011	Conversion of personnel convertibles	2,183,538	800,000	3,567,075
2012	Conversion of personnel convertibles	2,213,252	800,000	3,626,504
2012	Non-cash issue in connection with acquisition of outstanding shares in 3L System AB	2,574,164	800,000	4,348,327
2013	Conversion of convertible from acquisition of Capitex AB	2,654,164	800,000	4,508,327
2014	Conversion of convertible from acquisition of IT-Makeriet AS	2,674,164	800,000	4,548,327
2014	Private placement (Book-building)	2,899,164	800,000	4,998,327
2014	Conversion of personnel convertibles	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
2017	Conversion of Class A shares	2,939,669		3,350,000 26,046,690
2017	Conversion of personnel convertibles	2,983,890		3,350,000 26,488,900

Share data 5

	2017	2016	2015	2014	2013
(SEK)	13.34	11.37	9.24	8.85	6.39
(SEK)	2.70	2.27	2.66	1.75	1.16
(SEK)	2.70	2.25	2.64	1.68	1.09
(SEK)	1.00	0.90	0.67	0.55	0.50
(SEK)	6.78	5.20	5.09	4.40	1.97
	32.23	33.22	28.20	15.12	15.31
	6.52	6.64	8.12	2.99	2.77

Shareholders

Shareholders by size of holding

Holding	% No. of sharehol 30 ders	No. of Class A shares	No. of Class B shares	Holding %	Votes %
1-500	25 2,734		372,414	1.25	0.62
501-1,000	20 438		369,896	1.24	0.62
1,001-5,000	15 721		1,692,120	5.67	2.82
5,001-10,000	10 132		981,968	3.29	1.64
10,001-15,000	5 45		569,401	1.91	0.95
15,001-20,000	0 39	2013 2014 2015 2016 2017	684,424	2.29	1.14
20,001-	137 SEK	3,350,000	21,818,677	84.35	92.21
Total 12/31/2017	3,0 4,246	3,350,000	26,488,900 Vinst per aktie	100.00	100.00

Foreign owned shares Largest shareholders 12/31/2017 1,5

1,0	No. of Class A	No. of Class B
0,5	shares	shares	Capital %	Votes %
Lars Stenlund* 0,0	1,570,000 2013 2014 2015 2016 2017	177,280	5.9	26.5
Olov Sandberg*	1,420,000	124,565	5.2	23.9
Jerker Vallbo*	360,000	126,405	1.6	6.2
Mawer Investment Management		1,863,278	6.2	3.1
Thomas Eklund		1,746,440	5.9	2.9
SEB fonder		1,395,051	4.7	2.3
Didner & Gerge fonder		1,267,000	4.2	2.1
Martin Gren (Grenspecialisten Förvaltning AB)		1,161,135	3.9	1.9
Utah Retirement Systems		1,105,026	3.7	1.8
Nils-Eric Öquist*		980,000	3.3	1.6
Others		16,542,720	55.4	27.6
	3,350,000	26,488,900	100.0	100.0

*Including family and/or ownership through companies

Market value
2013 2014 2015 2016 2017 SEK million	2017	2016	2015	2014	2013
Market value at the end of the year*	2,596	2,219	2,205	779	470

* Market value is calculated as the total number of issued Class A and B shares on the closing data times the share price on Nasdaq Stockholm at year-end.

Administration Report

The Board of Directors and CEO of Vitec Software Group AB (publ), corp. ID no. 556258-4804, with its registered office in Umeå, hereby submit the annual report, sustainability report and consolidated financial statements for the 2017 financial year.

This English version of the annual report is a translation of the original Swedish version. In the event of differences, the Swedish version shall take precedence over the English translation. In accordance with Chapter 6 Section 11 of the Annual Accounts Act, Vitec has chosen to prepare the statutory sustainability report as a report separate from the annual report, the content of which is presented on pages 12-17.

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 600 employees who generate annual sales of SEK 950 million. Vitec is listed on the Nasdaq Stockholm Stock Exchange:

• Business Area Auto In Business Area Auto, Vitec offers software for the automotive and machinery sector in Denmark, Finland, Norway and Sweden. The products support work processes, including vehicle sales, workshops, tire storage and distribution of auto parts.
• 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.
• Business Area Real Estate Vitec offers software for the construction and real estate sector in Sweden and Norway. This includes comprehensive business systems for e.g. leasing, sales, customer service, finance, technical management and energy monitoring.

• Business Area Finance & Insurance In Business Area Finance & Insurance, Vitec delivers software to banks, financial institutions and insurance companies in Denmark, Norway and Sweden.

• Business Area Environment Vitec develops market leading products in private and municipal waste and resource management in Finland. The products manage the entire chain from weighing waste and driving schedules to billing, accounting and reporting.

• Business Area Estate Agents Vitec develops software for estate agents in Norway and Sweden. Our products support estate agents in all stages throughout the business process.
• Business Area Education & Health Vitec develops software for people with reading and writing difficulties in Denmark, Norway and Sweden. The products are used by both public and private education companies. In this business area, Vitec also develops software for healthcare providers in Finland. The products are completely web based and are used by medical centers, hospitals, physiotherapy and rehabilitation centers, as well as occupational health services and public sector organizations.

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 33.4 percent, Denmark 25.6 percent, Finland 19.8 percent, Norway 20.5 percent and other countries 0.7 percent.

Net sales and earnings

The Group's net sales totaled SEK 855.0 million (675.4) in 2017, an increase of 27 percent compared to 2016. The increased net sales are primarily attributable to acquisitions. Organic growth adjusted for acquisitions is 1.3 percent.

Operating profit amounted to SEK 106.7 million (88.3), which corresponded to an operating margin of 12 percent (13). The operating profit included depreciation and impairments totaling SEK 126.9 million (114.3).

Net financial items were negative, amounting to SEK -8.6 million (-6.4). Financial income amounted to SEK 0.3 million (0.8) and comprised interest on bank accounts. Financial expense amounted to SEK -8.9 million (-7.1) and comprised interest on credit facilities and convertible bonds.

Profit for the year after tax amounted to SEK 79.4 million (66.8), of which SEK 79.4 million (66.8) 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, Environment, Estate Agents and Education & Health.

	External net sales Growth		Operating profit before and after acquisition related costs		Operating margin before and after acquisition related costs
SEK million	2017	2016	2017	2017	2016	2017	2016
Auto	155.9	119.2	31 %	19.5	19.2	12 %	16 %
Energy	25.7	25.9	-1 %	8.0	7.3	31 %	28 %
Real Estate	190.1	158.4	20 %	32.2	29.8	17 %	19 %
Finance & Insurance	142.3	126.6	12 %	29.0	20.3	20 %	16 %
Environment	44.1	23.0	-	5.5	3.4	12 %	15 %
Estate Agents	138.0	155.3	-11 %	5.5	11.1	4 %	7 %
Education & Health	157.9	66.2	139 %	11.2	1.9	7 %	3 %
Joint	1.0	1.0	3 %	0.0	0.0	0 %	0 %
Group	855.0	675.4	27 %	110.9	93.1	13 %	14 %
Acquisition-related costs				-4.2	-4.8
Operating profit after acquisition-related				106.7	88.3	12 %	13 %
costs

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 FuturSoft were consolidated as of September 7, 2016. Total revenues amounted to SEK 155.9 million (119.2). Recurring revenues increased by 33 percent to SEK 128.6 million (96.8), the license revenues increased by 100 percent to SEK 6.1 million (3.0) and services increased by 15 percent to SEK 16.3 million (14.1). Recurring revenues decreased by 4 percent to SEK 5.0 million (5.2). Recurring revenues as a percentage of sales was 82 percent (81). The operating margin was 12 percent (16).

Business Area Energy

This segment includes Vitec Energy AB. Total revenues amounted to SEK 25.7 million (25.9), a decrease of 1 percent. Recurring revenues increased by 4 percent to SEK 19.1 million (18.4). Service revenues decreased by 12 percent to SEK 6.5 million (7.4). Recurring revenues as a percentage of sales was 74 percent (71). The operating margin increased to 31 percent (28).

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 as of December 5, 2016. Total revenues amounted to SEK 190.1 million (158.4), an increase of 20 percent. License revenues decreased by 25 percent to SEK 8.6 million (11.5). Recurring revenues increased by 22 percent to SEK 108.8 million (89.2). Service revenues increased by 26 percent to SEK 69.8 million (55.2). Recurring revenues as a percentage of sales was 57 percent (56). The operating margin decreased to 17 percent (19).

Business Area Finance & Insurance

This segment includes Vitec Capitex AB, the corporate group Vitec Aloc A/S and Vitec Nice AS. Total revenues amounted to SEK 142.3 million (126.6), an increase of 12 percent. Recurring revenues increased by 5 percent to SEK 104.4 million (99.7). License revenues increased by 24 percent to SEK 7.5 million (6.1). Service revenues increased by 47 percent to SEK 29.9 million (20.3). Recurring revenues as a percentage of sales was 73 percent (79). The operating margin increased to 20 percent (16).

Business Area Environment

This segment includes Tietomitta Oy, which was consolidated as of 5 July 2016 and 3L Media AB. In July 2016, the Veriba AB corporate group was divested. Veriba and 3L Media formed the earlier Business Area Media. As of 2017, the remaining operations in 3L Media are included in the Environment segment. Total revenues amounted to SEK 44.1 million (23.0). Recurring revenues amounted to SEK 32.6 million (14.3), corresponding to 74 percent of sales. The operating margin was 12 percent. In comparative figures for 2016, SEK 4.6 million pertains to sales and SEK 1.0 million pertains to profit in Media. Sales and earnings for Media amounted to SEK 0.5 million in 2017.

Business Area Estate Agents

This business area includes Vitec Mäklarsystem AB, Capitex AB, Vitec Megler AS, Vitec Megler AB and ADservice Scandinavia AB. Total revenues amounted to SEK 138.0 million (155.3), a decrease of 11 percent. License revenues decreased to SEK 0 million (1.8). Recurring revenues decreased by 9 percent to SEK 132.5 million (145.1). Service revenues decreased by 35 percent to SEK 5.1 million (7.8). Recurring revenues as a percentage of sales was 96 percent (93). The operating margin was 4 percent (7).

Business Area Education & Health

This segment includes the Group AcuVitec Oy and the Group Vitec MV A/S. The operations in Vitec MV are consolidated as of July 6, 2017. Total revenues amounted to SEK 157.9 million (66.2). Recurring revenues increased to SEK 83.7 million (54.6), services increased to SEK 12.2 million (11.2) and license revenues increased to SEK 13.8 million (0). Other revenues increased to SEK 48.2 million (0.3) and consist of product sales in Vitec MV A/S. Recurring revenue as a percentage of sales was 53 percent (83). The operating margin was 7 percent (3).

Acquisitions and changes to the legal structure during 2017

On January 1, 2017, the three companies in Business Area Estate Agents in Norway, Vitec IT-Makeriet AS, Vitec Fox AS and Vitec Megler AS, were merged. The merger means that Vitec Megler AS has taken over the submitting companies book keeping and tax position together with assets, rights and obligations.

One acquisition was conducted during 2017, resulting in changes to the legal structure. On July 6, the Danish software group MV-Nordic A/S was consolidated.

Objectives

Vitec has a growth-oriented strategy and is constantly on the lookout for new acquisitions. Historic growth has amounted to 18 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 2017 2016 2015 2014 2013
Sales growth	18 %	27 %	9 %	26 %	32 %	-5 %
Operating margin	13 %	12 %	13 %	16 %	14 %	11 %

Important events in 2017

Q1

Vitec was moved from Small Cap to Mid Cap on Nasdaq Stockholm

Vitec Software Group AB's Class B shares (VIT B) were 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.

New Head of Finance & Insurance in Sweden

In January, Fredrik Glifberg began as the new Head of Business Area Finance & Insurance.

Vitec named Patrik Fransson the new IR Director

Olov Sandberg, who founded Vitec in 1985 together with Lars Stenlund, left his operating role in the company to retire. However, he is staying on as one of the main owners of the company. Olov Sandberg's role as the IR Director was assumed by Patrik Fransson as of 27 February 2017.

Vitec signed a multi-year agreement with Väsbyhem Vitec signed a six-year agreement with the municipal housing company AB Väsbyhem regarding delivery of a new cloud-based accounting and property system.

Q2

SkandiaMäklarna chose Vitec after extensive procurement SkandiaMäklarna extended their cooperation with Vitec. Of the 20 largest national estate agent chains, 16 chose Vitec as the supplier of business systems.

Vitec expanded its acquisition credit facility

The existing acquisition credit facility in Nordea was increased by SEK 200 million. This credit will be used for acquisitions and will be gradually used.

Q3

Vitec acquired the software company MV-Nordic in Denmark On July 6, Vitec Software Group AB (publ) signed an agreement on the acquisition of all shares in the Danish software company MV-Nordic A/S. The company offers software to the education sector in Denmark, Norway and Sweden. The main product is a cloud-based service for people with reading and writing difficulties. MV-Nordic has annual sales of around MDKK 110 with an EBITDA of around MDKK 11.

Increased international ownership in Vitec

The main owners of Vitec, Olov Sandberg and Lars Stenlund, sold 300,000 Class B shares to a few institutional investors. The sale was made at equal parts by both of the main owners and at the current market price.

Q4

Vitec signs agreement with Danish SDC Danish SDC chose to replace its current software for portfolio management with Vitec's product PORTMAN.

New Head of Estate Agents in Sweden

In October, Torbjörn Abrahamsson took office as the new Business Area Manager for Estate Agents in Sweden.

Decision on convertible program for employees

On November 1, an Extraordinary General Meeting in Vitec Software Group AB (publ) was held and resolved to approve a convertible program for employees of no more than SEK 25,000,000. The subscription amount was SEK 20,830,000 with a conversion price of SEK 104. At full conversion, this corresponds to a dilution of the share capital in an amount of 0.68 percent and 0.34 percent of the number of votes.

Personnel convertibles 2015/2017 were converted in their entirety

Convertible bonds directed at employees of Vitec with a term of January 2015 – December 2017 were converted to Class B shares. The conversion meant that the number of Class B shares in Vitec increased by 442,210.

Important events after the end of the period

CFO utilizes options and buys 50,000 shares CFO Maria Kröger increased her shareholdings by 50,000 Class B shares on January 4, 2018. The acquisition was made through the redemption of personal options that Lars Stenlund and Olov Sandberg issued in January 2015.

Liquidity, cash flow and financial status

The Group's cash and cash equivalents, including short-term investments, amounted to SEK 57.9 million (80.9) at the end of the period. In addition to these cash and cash equivalents there was a bank overdraft facility of SEK 20.0 million, and SEK 178.6 million as an unused portion of a credit facility totaling SEK 450.0 million.

• Cash flow from operating activities was SEK 187.6 million (158.5).
• Cash flow from investing activities was SEK -198.1 million (-244.7), divided between the acquisition of subsidiaries at SEK -88.8 million (-156.1), the sale of subsidiaries at SEK 0 million (4.2), intangible assets including capitalized work at SEK -101.5 million (-83.8) and investments in tangible assets at SEK -7.8 million (-9.0).
• The cash flow from financing activities amounted to SEK -15.5 million (109.1), divided between new bank loans at SEK 109.1 million (185.5), dividends at SEK -29.4 million (-26.5) and loan amortization at SEK -95.3 million (-49.9).

Total interest-bearing liabilities amounted to SEK 406.1 million (383.5) on December 31, 2017, distributed between long-term interest-bearing liabilities at SEK 374.9 million (339.4) and short-term interest-bearing liabilities at SEK 31.2 million (44.1). During the year, the credit facility was increased by SEK 200 million. In conjunction with the acquisition of MV-Nordic A/S, SEK 87.7 million was used from the credit facility. SEK 65.5 million was repaid for earlier acquisitions. In conjunction with the acquisition of MV-Nordic A/S, a convertible of SEK 20.0 million was issued. After the calculation of option elements and interest, the convertible liability is valued at SEK 19.1 million. A convertible loan directed at employees at a value of SEK 14.0 million was converted to Class B shares. A new convertible program for employees was issued in an amount of SEK 20.8 million. After the calculation of option elements, the convertible liability is valued at SEK 19.7 million. During the period, the additional purchase prices for FuturSoft and Fox Publish were reclassified from longterm to short-term liabilities as the maturity date is within 12 months. The additional purchase price for Fox Publish was adjusted downwards by SEK 1.3 million after an agreement was signed on final settlement. The Group's net interest-bearing assets and interest-bearing liabilities amounted to SEK -348.2 million (-302.6).

Equity attributable to Vitec's shareholders amounted to SEK 398.2 million (334.2). The equity/assets ratio was 32 percent (30). The payment of dividends after the Annual General Meeting in May 2017 amounted to SEK 1.00 per share, totaling SEK 29.4 million (26.5).

Investments

Investments amounted to SEK 101.5 million in intangible assets, divided between capitalized work at SEK 97.2 million, software at SEK 1.5 million and product rights at SEK 2.8 million. SEK 7.8 million was invested in tangible assets. Through the acquisition of MV-Nordic A/S, SEK 142.8 million was invested in product rights, brands, customer agreements and goodwill. A correction of the acquisition of Plania AS contributed SEK 0.8 million in 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 agreements that arise through acquisitions as well as capitalized costs and software. As of December 31, 2017, the carrying amount of goodwill was SEK 282.6 million (240.4), product rights SEK 290.7 million (266.9), capitalized development costs SEK 197.9 million (150.5), customer agreements SEK 94.8 million (77.8), brands SEK 74.3 million (70.1) and software SEK 4.0 million (4.0).

Equity

Total equity amounted to SEK 398.2 million (334.2) as of December 31, 2017. Equity attributable to shareholders amounted to SEK 398.2 million (334.2).

As of December 31, there were two ongoing convertible programs totaling SEK 38.8 million, which can be converted to a maximum of 434,605 Class B shares and increase the share capital by SEK 0.04 million.

Employees

During 2017, Vitec had an average of 540 employees (467), of whom 144 (126) were women. At the end of the year, the number of employees totaled 573 (507).

Parent Company

The Parent Company's net sales amounted to SEK 79.9 million (69.9) 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 64.9 million (56.9), including anticipated dividends from subsidiaries.

The Parent Company's cash and cash equivalents amounted to SEK 51.6 million (60.6). 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 450 million, of which SEK 178.6 million was unused on the balance sheet date.

Investments amounted to SEK 0.9 million (1.5) in intangible assets, SEK 0.5 million (0.0) in tangible assets and SEK 109.1 million (209.0) in shares in subsidiaries. The value of shares in subsidiaries has been adjusted down by SEK 1.3 million during the year, in respect of the conditional purchase price for Fox Publish AS. Short-term, non-interest bearing liabilities have decreased to a corresponding extent.

Long-term interest-bearing liabilities amounted to SEK 374.6 million (338.9) in the form of bank loans at SEK 335.8 million (338.9) and convertible debentures at SEK 38.8 million (0). Short-term interest-bearing liabilities amounted to SEK 31.2 million (44.1) in the form of bank loans at SEK 31.2 million (30.3) and convertible debentures at SEK 0 million (13.8). During the year, new loans have been taken out at a value of SEK 88.3 million.

In May, a share dividend of SEK 29.4 million (26.5) 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. The Corporate Governance Report on pages 35-36 describes our internal controls and risk management.

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 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 the business areas Finance & Insurance, Education & Health and 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 7 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, customer agreements 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.

Environmental risks

Our assessment is that the areas in which Vitec has the largest negative impact on the environment are through emissions and waste. The emissions come indirectly through electricity consumption in server halls and offices and through the personnel's business travel. Waste is mainly in the form of electronics scrap. Our sustainability report on pages 12-17 describes our work to reduce the negative environmental impact.

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 annual 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 100.8 million annually. A change of 1 percent would affect profits by around SEK 0.8 million.
• Personnel costs represent the largest cost item in the Group, amounting to SEK 446.9 million. A change of 1 percent would affect profits by around SEK 3.5 million.
• Acquisitions are financed to a large extent by loans from banks or through convertible bonds. The interest rate is often variable. A change to the interest rate of one percentage point for existing interest-bearing liabilities as of December 31, 2017 would affect profits by SEK 2.9 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.

		profit, TSEK	Impact on	Impact on profit, SEK/share
Influencing factors	Change, %	2017	2016	2017	2016
Subcontractors and subscriptions	+/- 1	790	635	0.03	0.02
Personnel costs	+/- 1	3,478	2,940	0.12	0.10
Loan interest (change percentage point on loan interest)	+/- 1	2,863	3,125	0.10	0.11
Exchange rate change NOK, DKK and EUR	+/- 5	1,961	2,044	0.07	0.07

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 2017, the Board held nine meetings, of which some were phone conferences and one was a strategy meeting. With a few 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 issued 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 2017, one acquisition was carried out and a large part of the Board's work involved the implementation and follow-up of the acquisition process, as well as issues of relevant financing.

At the annual strategy meeting, which was held in Norway in 2017, 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 audit issues are handled by the Board as a whole. 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

External framework

The Companies Act, the Annual Accounts Act, Rule Book for Issuers, the Swedish Corporate Governance Code and other relevant rules and laws.

Mission, goals and strategies, the Articles of Association, the Board of Directors' rules of procedure, the Board's instructions for the

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
• 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 2017, Vitec had 4,246 shareholders. Lars Stenlund and Olov Sandberg were the largest owners, with 5.9 percent of the capital and 26.5 percent of the votes and 5.2 percent of the capital and 23.9 percent of the votes respectively. In total, the company's three largest owners owned 100 percent of the Class A shares and 2.0 percent of the Class B shares, while the 10 largest owners owned 37.5 percent of the Class B shares. At the same time, the total stock market value amounted

to SEK 2,596.0 million. The number of shares amounted to 29,838,900, of which 26,488,900 were Class B shares and 3,350,000 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.

2017 Annual General Meeting

The Annual General Meeting was held on April 25 at Väven in Umeå. The company's Board, management, Nomination Committee and auditor were present at the Meeting.

115 shareholders representing 67.0 percent of the votes were present. The minutes from the Annual General Meeting can be found on our website, vitecsoftware.com.

2018 Annual General Meeting

The 2018 Annual General Meeting will be held at 5:30 pm on April 23 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 the Nomination Committee applied rule 4.1 of the Swedish Corporate Governance Code as a diversity policy in the preparation of the proposal on the Board, with the aim of achieving a well-functioning Board composition regarding diversity and breadth, in terms of gender, nationality, age and industry experience. The Nomination Committee's ambition is to propose a Board composition where the Board members complement each other with their respective experience and expertise in a way that provides the Board a possibility to contribute to a positive development in the company. The Nomination Committee always focuses on diversity to ensure that the Board obtains different perspectives of the Board work and the considerations made. The Nomination Committee also takes into account the need for renewal, and carefully investigates whether or not the proposed Board members have the possibility of devoting enough time and care to the Board work. All shareholders have the possibility of turning to the Nomination Committee with proposals of Board members.

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 2017 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 23, 2018 are:

• Lars Stenlund, CEO Vitec. Holder of 1,570,000 Class A shares and 177,280 Class B shares (incl. family).
• Crister Stjernfelt, Chairman of the Board of Vitec. Holder of 8,000 Class B shares.
• Olov Sandberg. Holder of 1,420,000 Class A shares and 124,565 Class B shares (incl. family).
• Jerker Vallbo, CIO/CTO Vitec. Holder of 360,000 Class A shares and 126,405 Class B shares (incl. family).

The Nomination Committee has held one meeting prior to the 2018 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. Ever 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 each Board member, go to our website, vitecsoftware. com, Investor Relations, Corporate Governance.

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

Members of the Board

Crister Stjernfelt

Chairman since 2013, Director since 2009. Born 1943. Economics Studies at Stockholm University. Other assignments/positions: Chairman of the Boards of AcelQ AB and Umeå Datakonsulter AB. Director of Carmenta AB. Previously CEO of WM-Data AB and CEO of Logica

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

Anna Valtonen

AB.

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

Other assignments/positions: Currently 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.

Birgitta Johansson-Hedberg

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

Other assignments/positions: Chairman of Sörmlands Sparbank. Director of Copenhagen Economics A/S and Hedberg Ekologkonsult AB. Former CEO of Lantmännen, Föreningssparbanken and Liber.

Holdings in Vitec: 7,500 Class B shares, 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, Moment Group AB, Grönklittsgruppen AB and Ticmate AB. Director of Malux AB. Many years' experience as CEO, board member and consultancy assignments.

Holdings in Vitec: 258,650 Class B shares through companies, 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 Energiförsörjning. Holdings in Vitec: 121,000 Class B shares (including family), no convertibles.

Work of the Board of Directors

During a business year, Vitec holds at least five 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 nine Board meetings have been held during 2017, including the statutory meeting. All members elected by the AGM were present at all Board meetings, except for Board members Jan Friedman and Birgitta Johansson-Hedberg who did not participate on two occasions and Anna Valtonen on one occasion.

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 2017 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

In June, Vitec increased its existing acquisition credit facility with Nordea by SEK 200 million. The facility is used as financing for acquisitions and provides Vitec the possibility to continue growing through acquisitions of vertically niched software companies.

In July, Vitec made its only acquisition for the year when 100 % of the shares in the Danish group MV-Nordic A/S were purchased. MV-Nordic offers software to the education sector in Denmark, Sweden and Norway. The software is specially developed for people with reading and writing difficulties, as well as dyslexia. Rolling 12-month sales are around SEK 140 million with an EBITDA of around SEK 14 million. 65 people work at MV-Nordic's headwaters in Odense.

The Board's rules of procedure

The Board of Directors' rules of procedure were adopted on April 25, 2017 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 April 25, 2017. During 2017, the Audit Committee held three meetings and the Remuneration Committee held meetings in conjunction with regular Board meetings.

Annual cycle of Board work

CEO and Group management

The CEO is appointed by the Board of Directors. Lars Stenlund is the company's CEO and Lars Eriksson (M&A) and Patrik Fransson (IR Director) have both been appointed as 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, M&A and IR Director. 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 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 2017 AGM, PricewaterhouseCoopers 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 2017 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 the 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 2017, 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, account plans 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 operational risks such as risks associated with acquisitions, product development and sustainability risks, as well as 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 every meeting, the Board of Vitec receives a presentation of the Group's position and performance, liquidity, KPIs, etc. Group management jointly goes through all reporting units' results 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, a board is appointed 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. Group management 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 Group's 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 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 business area management or similar. For some operating units, Group management has appointed an internal board. For strategically important issues, projects are established where Group management participates in the steering committee. Group management analyses the Group's outcome compared with the previous year, 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 2017 AGM, guidelines were established regarding remuneration to the CEO and other senior executives in Vitec. The decision by the AGM corresponds with previously applied principles for remuneration. The guidelines apply to agreements that are entered into after the 2017 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. Pensions 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 2018 AGM, the Board has proposed unchanged conditions as regards guidelines for remuneration to the company's CEO and other senior executives.

Lars Stenlund, Patrik Fransson, Maria Kröger and Lars Eriksson

Members of Group management Lars Stenlund

CEO and founder of Vitec together with Olov Sandberg. Lars has been a Board member at Vitec during the period 1985- 2009. Employed since 1985. Born 1958.

Ph.D in Applied Physics (1987) at the University of Umeå. Board member of the University of Umeå, Umeå Universitet Holding AB, Algoryx Simulation AB and C4 Contexture AB. Previous experience: Worked at University of Umeå. Holdings in Vitec: 1,570,000, Class A shares, 177,280 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: 25,640 Class B shares. 2,403 convertibles 1801. No options.

Maria Kröger

CFO. Employed since 2011. Born 1968. MBA, University of Umeå 1990. Previous experience: Authorized Public Accountant EY Holdings in Vitec: 16,590 Class B shares (including family). 2,403 convertibles 1801. Options: 50,000 shares (which were exercised on January 4, 2018).

Patrik Fransson

Vice President, IR Director. Employed since 2011. Born 1966. Computer Science, Umeå University 1990, MBA Executive program, Stockholm School of Economics. Previous experience: Outsourcing Director Logica, CIO H&M and CEO CodeFactory AB. Holdings in Vitec: 109,431 Class B shares. 2,403 convertibles 1801. No options.

The share and the ownership structure

At the end of the financial year, the total number of issued shares totaled 29,838,900, of which 3,350,000 are Class A shares (33,500,000 votes) and the remaining 26,488,900 are Class B shares (26,488,900 votes). The share capital amounts to approximately SEK 3.0 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, 2017, to the best of Vitec's knowledge. There were 4,246 shareholders.

In September, 150,000 Class A shares were converted to Class B shares in accordance with the split conditions mentioned in the Articles of Association, §5 Share type. In December, personnel convertibles were converted into 442,210 new Class B shares.

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. On November 1, 2017,

the Extraordinary General Meeting resolved to approve the issue of convertible bonds to employees in the Vitec Group. On December 15, convertibles at a value of SEK 20.8 million had been subscribed for by employees in the Group. The personnel convertibles registered at the Swedish Companies Registration Office on January 27, 2018 can be converted to a maximum of 200,288 Class B shares. Otherwise, there are no on-going convertible programs for employees.

There is authorization from the 2017 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. The Board of Directors used the authorization in the acquisition of Vitec MV A/S in July through the issue of convertible bonds at a value of SEK 20.0 million, which can be converted into a maximum of 234,317 shares.

Vitec is listed on Nasdaq Stockholm, on the Mid Cap list. The share price on December 31, 2017 was SEK 87.00 (75.50). Total stock market value of the shares issued at yearend amounted to SEK 2,596.0 million (2,219.5).

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

		2017	2016	2015	2014	2013	2012	2011
Net sales	(TSEK)	855,029	675,414	618,385	491,956	371,631	389,200	359,598
of which Business Area Auto	(TSEK)	155,920	119,171	71,082	28,302	-	-	-
of which Business Area Energy	(TSEK)	25,721	25,872	24,114	22,672	19,849	21,327	19,286
of which Business Area Real Estate	(TSEK)	190,111	158,357	142,557	134,315	130,718	120,086	120,140
of which Business Area Finance &	(TSEK)	142,293	126,567	101,219	55,004	13,704	12,950	14,208
Insurance
of which Business Area Environment	(TSEK)	44,051	22,990	10,547	21,759	26,128	65,233	70,583
of which Business Area Estate Agents	(TSEK)	138,019	155,285	207,011	185,750	181,152	168,785	135,306
of which Business Area Education &	(TSEK)	157,944	66,203	61,492	43,627	-	-	-
Health
of which Common	(TSEK)	969	969	363	527	80	819	75
Growth	(%)	27	9	26	32	-5	8	15
Profit after financial items	(TSEK)	98,127	81,942	94,686	64,545	38,069	40,130	35,693
Profit for the year	(TSEK)	79,426	66,814	78,191	49,065	30,229	31,984	26,061
Profit attributable to Parent Company shareholders	(TSEK)	79,426	66,814	78,191	49,065	30,229	31,183	24,654
Profit growth to Parent Company shareholders	(%)	19	-15	59	62	-3	26	75
Profit margin	(%)	9	10	13	10	8	8	7
Operating margin	(%)	12	13	16	14	11	11	11
Total assets	(TSEK)	1,261,970	1,096,691	872,019	772,901	387,981	429,133	327,743
Equity/assets ratio	(%)	32	30	31	34	44	36	40
Equity/assets ratios after full conversion	(%)	35	32	33	37	48	41	49
Debt/equity ratio	(times)	2.22	2.25	2.09	1.70	1.53	1.66	1.60
Return on capital employed	(%)	14	14	21	18	16	20	21
Return on equity	(%)	22	22	29	23	19	24	25
Sales per employee	(TSEK)	1,584	1,445	1,465	1,430	1,332	1,297	1,236
Value added per employee	(TSEK)	1,258	1,198	1,212	1,164	1,052	985	915
Personnel cost per employee	(TSEK)	828	813	797	801	793	732	706
Average number of employees	(people)	540	467	422	344	279	300	291
Adjusted equity per share	(SEK)	13.34	11.37	9.24	8.85	6.39	5.92	5.36
Earnings per share	(SEK)	2.70	2.27	2.66	1.75	1.16	1.30	1.21
Earnings per share after dilution	(SEK)	2.70	2.25	2.64	1.68	1.09	1.16	1.04
Dividend paid per share	(SEK)	1.00	0.90	0.67	0.55	0.50	0.40	0.25
Cash flow per share	(SEK)	6.78	5.20	5.09	4.40	1.97	2.25	2.17
P/E ratio		32.23	33.22	28.20	15.12	15.31	10.89	9.75
P/Adjusted equity per share		6.52	6.64	8.12	2.99	2.77	2.33	2.08
P/S		3.04	3.29	3.57	1.58	1.26	0.91	0.68
Calculation basis:
Profit when calculating earnings per share	(TSEK)	79,426	66,814	78,191	49,065	30,229	31,183	24,654
Cash flow when calculating cash flow per
share	(TSEK)	199,612	152,757	149,751	123,220	51,505	55,243	46,787
Average quantity of shares (weighted average)							(quantity) 29,424,555 29,396,690 29,396,690 28,003,405 26,141,635 24,604,375 21,546,315
Average quantity of shares after dilution							(quantity) 29,538,825 29,838,900 29,788,016 29,431,975 28,175,425 27,338,170 24,172,025
Number of shares issued as of closing
date							(number) 29,838,900 29,396,690 29,396,690 29,396,690 26,541,635 25,741,635 21,835,375
Share price at respective year-end	(SEK)	87.00	75.50	75.00	26.50	17.70	13.80	11.16

Definitions, see Key performance indicator definitions on page 93.

Proposed allocation of profits

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

64,945,008
126,637,558
143,989,527

THE BOARD PROPOSES THAT THE PROFIT BE ALLOCATED AS FOLLOWS:

	335,572,093
To be carried forward	176,111,745
To be carried forward to the share premium reserve	126,637,558
To be distributed to shareholders at SEK 1.10 per share	32,822,790

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 23, 2018 should decide on a dividend payment amounting to a maximum of SEK 32,822,790. 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 Section 3 of the Swedish Companies Act 2005:551).

Consolidated income statement

	Note	2017	2016
OPERATING INCOME	(1, 2)
Recurring revenue		609,970	518,512
License revenues		39,563	24,789
Service revenues		145,672	121,116
Other		59,824	10,997
Net sales		855,029	675,414
Capitalized development costs		97,213	82,262
Other operating income	(5)	1,343	22,695
TOTAL REVENUE		953,585	780,371
OPERATING EXPENSES
Goods for resale		-48,394	-12,284
Subcontractors and subscriptions		-100,791	-82,024
Other external expenses	(7, 23)	-124,761	-97,681
Personnel costs	(6, 21)	-446,917	-380,023
Depreciation, amortization and impairment	(12)	-126,882	-114,256
Other operating expenses	(5)	862	-5,798
TOTAL EXPENSES		-846,883	-692,066
OPERATING PROFIT		106,702	88,305
Financial income		328	773
Financial expense		-8,903	-7,136
NET FINANCIAL ITEMS	(8)	-8,575	-6,363
PROFIT BEFORE TAX		98,127	81,942
Tax	(10)	-18,701	-15,128
PROFIT FOR THE YEAR		79,426	66,814
Profit for the year attributable to:
Parent Company shareholders		79,426	66,814
Earnings per share:	(11)
Before dilution		2.70	2.27
After dilution		2.70	2.25
Average number of shares		29,424,555	29,396,690
Number of shares after dilution		29,538,825	29,838,900

Consolidated statement of comprehensive income

Note	2017	2016
PROFIT FOR THE YEAR	79,426	66,814
OTHER COMPREHENSIVE INCOME
Items that may be reclassified to the income statement
Translation of net investment in foreign operations	4,383	28,257
Hedging net investment in foreign operations	-7,993	-7,999
Deferred tax on hedging of net investment in foreign operations	1,758	1,760
	-1,852	22,018
Items that may not be reclassified to the income statement
Change in the value of net pension obligation	-563	395
Deferred tax on net pension obligation	129	-95
	-433	300
TOTAL OTHER COMPREHENSIVE INCOME	-2,285	22,318
TOTAL COMPREHENSIVE INCOME FOR THE YEAR	77,141	89,132
Total comprehensive income attributable to:
Parent Company shareholders	77,141	89,132

Consolidated statement of financial position

	Note 12/31/2017 12/31/2016
ASSETS
(3, 12) Fixed assets
Intangible assets
Goodwill	282,612	240,444
Capitalized development costs	197,907	150,480
Software	4,041	3,971
Brands	74,280	70,097
Product rights	290,650	266,863
Customer agreements	94,837	77,757
	944,327	809,612
Tangible assets
Buildings	8,676	8,813
Investments in leased premises	2,819	3,659
Equipment	26,461	21,795
	37,956	34,267
Financial assets
Other long-term receivables	1,791	950
(10) Deferred tax	6,714	4,185
	8,505	5,135
Total fixed assets	990,788	849,014
Current assets
(15) Inventories
Goods for resale	3,619	1,031
	3,619	1,031
Current receivables (16) Accounts receivable	172,450	137,336
Current tax	9,008	5,079
Other receivables	841	5,299
(17) Prepaid expenses and accrued income	27,296	18,012
	209,595	165,726
Short-term investments	44	43
(18) Cash and cash equivalents	57,924	80,877
Total current assets	271,182	247,677
TOTAL ASSETS	1,261,970	1,096,691

		Note 12/31/2017 12/31/2016
EQUITY AND LIABILITIES
Equity	(19)
Share capital		2,984	2,940
Other contributed capital		121,963	121,963
Reserves		-5,852	-3,567
Retained profits including profit for the year		279,069	212,877
Equity attributable to shareholders of the Parent Company		398,164	334,213
Long-term liabilities
Convertible debentures	(20)	38,789	-
Liabilities to credit institutes	(20)	336,129	339,396
Remuneration to employees after completed employment	(21)	8,225	7,679
Other long-term liabilities	(20)	3,270	28,765
Deferred tax	(10)	135,844	120,684
Total long-term liabilities		522,257	496,524
Short-term liabilities
Convertible debentures	(20)	-	13,786
Liabilities to credit institutes	(20)	31,180	30,340
Accounts payable		31,902	21,153
Tax liabilities		8,961	11,175
Other liabilities		77,122	47,115
Accrued expenses and prepaid income	(22)	192,384	142,385
Total short-term liabilities		341,549	265,954
TOTAL EQUITY AND LIABILITIES		1,261,970	1,096,691
Pledged assets Contingent liabilities	(24)	350,975 -	354,891 -

Consolidated statement of changes in equity

	Share capital	Other contribu ted capital	Reserves*	Retained profits	Total equity attributable to Parent Company shareholders
OPENING EQUITY 1/1/2016	2,940	121,963	-25,885	172,520	271,538
Profit for the year	-	-	-	66,814	66,814
Other comprehensive income	-	-	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
Profit for the year	-	-	-	79,426	79,426
Other comprehensive income	-	-	-2,285	-	-2,285
Comprehensive income for the year	2,940	121,963	-5,852	292,303	411,354
Option element convertible bonds	-	-	-	2,221	2,221
Redemption of bonds	44	-	-	13,942	13,986
Dividend	-	-	-	-29,397	-29,397
CLOSING EQUITY 12/31/2017	2,984	121,963	-5,852	279,069	398,164

* 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

	2017	2016
OPERATING ACTIVITIES
Operating profit	106,702	88,305
Adjustments for items not included in cash flow
Other operating income	-1,343	-22,695
Depreciation, amortization and impairment	126,882	114,256
Unrealized exchange rate differences	862	5,798
	233,103	185,664
Interest received	328	117
Interest paid	-8,438	-5,553
Income tax paid	-25,381	-27,471
CASH FLOW FROM OPERATING ACTIVITIES BEFORE CHANGES IN WORKING CAPITAL	199,612	152,757
Changes in working capital
Increase/decrease in inventories	8,836	95
Increase/decrease in accounts receivable	-20,754	2,659
Increase/decrease in operating receivables	2,233	1,265
Increase/decrease in accounts payable	6,839	3,534
Increase/decrease in operating liabilities	-9,136	-1,860
CASH FLOW FROM CURRENT OPERATIONS	187,630	158,450
INVESTING ACTIVITIES
Acquisition of subsidiaries (net impact on liquidity)*	-88,826	-156,112
Sales of subsidiaries	-	4,217
Acquisition of intangible assets and capitalized development costs	-101,500	-83,763
Acquisition of tangible assets	-7,750	-9,046
CASH FLOW FROM INVESTING ACTIVITIES	-198,076	-244,704
FINANCING ACTIVITIES
Dividend to shareholders of the Parent Company	-29,397	-26,457
New loans	109,129	185,466
Amortization of loans**	-95,275	-49,865
CASH FLOW FROM FINANCING ACTIVITIES	-15,543	109,144
CASH FLOW FOR THE YEAR	-25,989	22,890
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR	80,920	60,268
Exchange rate change in cash and cash equivalents	3,037	-2,238
CASH AND CASH EQUIVALENTS AT YEAR-END***	57,968	80,920

*Disbursement regarding acquisitions of subsidiaries during the period was comprised of payment for MV-Nordic A/S. Net cash outflow amounted to SEK 86.7 million. The acquisition related to the entire outstanding share capital and meant that control was obtained. Additionally, a promissory note signed in connection with the acquisition of Nice AS in an amount of SEK 2.1 million was dissolved. The disbursement did not entail any change in control or the total number of shares.

*Disbursement regarding acquisitions of subsidiaries in 2016 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 and SEK 11.9 million for AcuVitec Oy, which did not entail any change in controlling influence or share capital.

**Amortization consists of amortization of bank loans SEK 29.8 million (32.9) and repayment of credit facility SEK 65.5 million (17.0).

***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.

CHANGE IN LIABILITIES IN FINANCING ACTIVITIES, GROUP

	Long-term liabilities to credit institutions		Short-term liabilities to credit institutions		Convertible bonds
	2017	2016	2017	2016	2017	2016
OPENING BALANCE	339,396	193,709	30,340	33,845	13,786	13,513
Cash flow	44,280	135,602	-51,256	-	20,830	-
Non-cash changes:
Exchange-rate changes	4,342	5,306	208	1,337	-	-
Acquisition financing	-	-	-	-	20,008	-
Conversion	-	-	-	-	-13,994	-
Other	-	-344	-	-174	-1,841	272
Reclassification long/short	-51,889	4,668	51,889	-4,668	-	-
CLOSING BALANCE	336,129	338,941	31,180	30,340	38,789	13,786

Income statement, Parent Company

	Note	2017	2016
OPERATING INCOME
Net sales	(4)	79,868	69,923
Other operating income	(5)	31,208	28,414
OPERATING EXPENSES	(4)
Other external expenses	(7, 23)	-75,112	-69,891
Personnel costs	(6, 21)	-30,200	-29,430
Depreciation and amortization	(13)	-2,628	-2,543
OPERATING PROFIT		3,136	-3,527
PROFIT FROM FINANCIAL ITEMS:	(8)
Income from shares in Group companies		64,898	58,335
Interest income and similar profit/loss items		231	737
Interest expenses and similar expense items		-8,289	-6,382
NET FINANCIAL ITEMS		56,840	52,690
PROFIT AFTER FINANCIAL ITEMS		59,976	49,163
Appropriations	(9)	4,912	7,781
PROFIT BEFORE TAX		64,888	56,944
Tax	(10)	57	-9
PROFIT FOR THE YEAR		64,945	56,935

Balance sheet, Parent Company

	Note 12/31/2017 12/31/2016
ASSETS
Fixed assets
(13) Intangible assets
Software	3,301	3,850
Product rights	-	92
	3,301	3,942
(13) Tangible assets
Buildings	8,609	8,795
Investments in leased premises	641	828
Equipment	2,182	2,392
	11,432	12,015
(13, 14) Financial assets
Shares in subsidiaries	972,519	864,833
Receivables from Group companies	7,702	8,968
Deferred tax	57	-
	980,278	873,801
Total fixed assets	995,011	889,758
Current assets
Current receivables
Receivables from Group companies	81,349	75,280
Current tax	4,687	-
Other receivables	1,011	3,391
(17) Prepaid expenses and accrued income	3,549	4,039
	90,596	82,710
	51,616	60,557
Cash and bank Total current assets	142,212	143,267
TOTAL ASSETS	1,137,223	1,033,025

		Note 12/31/2017 12/31/2016
EQUITY AND LIABILITIES
Restricted equity	(19)
Share capital		2,984	2,940
Statutory reserve		14,917	14,917
Total restricted equity		17,901	17,857
Unrestricted equity	(19)
Share premium reserve		126,638	110,475
Profit brought forward		143,990	116,451
Profit for the year		64,945	56,935
Total unrestricted equity		335,572	283,861
Total equity		353,473	301,718
Untaxed reserves	(26, 27)	2,429	2,341
Long-term liabilities	(20)
Convertible debentures		38,789	-
Liabilities to credit institutes		335,822	338,941
Other long-term liabilities		-	28,765
Total long-term liabilities		374,611	367,706
Short-term liabilities
Convertible debentures	(20)	-	13,786
Liabilities to credit institutes	(20)	31,180	30,340
Accounts payable		3,872	2,467
Liabilities to Group companies		338,228	306,365
Current tax liabilities		-	2,097
Other short-term liabilities		27,217	1,329
Accrued expenses and prepaid income	(22)	6,213	4,876
Total short-term liabilities		406,710	361,260
TOTAL EQUITY AND LIABILITIES		1,137,223	1,033,025
Pledged assets	(24)	337,445	358,844
Contingent liabilities		-	-

Changes in equity, Parent Company

	Share capital	Statutory reserve	Share premi um reserve	Profit brought forward and profit for the year	Total equity
EQUITY 1/1/2016	2,940	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	14,917	110,475	173,386	301,718
Option element convertible bond	-	-	2,221	-	2,221
Conversion of bonds	44	-	13,942	-	13,986
Dividend	-	-	-	-29,397	-29,397
Profit for the year	-	-	-	64,945	64,945
EQUITY 12/31/2017	2,984	14,917	126,638	208,935	353,473

Cash flow statement, Parent Company (indirect method)

	2017	2016
OPERATING ACTIVITIES
Operating profit	3,136	-3,527
Adjustments for items not included in cash flow
Depreciation and amortization	2,628	2,543
	5,764	-984
Received dividend subsidiaries	56,811	40,924
Interest received	231	737
Interest paid	-7,909	-6,071
Income tax paid	-6,789	-1,370
CASH FLOW FROM OPERATING ACTIVITIES BEFORE CHANGES IN WORKING CAPITAL Changes in working capital	48,108	33,237
Increase/decrease in operating receivables	7,732	-11,006
Increase/decrease in operating liabilities	44,438	81,382
CASH FLOW FROM CURRENT OPERATIONS INVESTING ACTIVITIES	100,278	103,613
Acquisition of subsidiaries*	-91,169	-200,357
Sales of subsidiaries	-	4,293
Acquisition of intangible assets	-881	-1,475
Acquisition of tangible assets	-523	-18
Change in long-term receivables	-1,265	51
CASH FLOW FROM INVESTING ACTIVITIES FINANCING ACTIVITIES	-93,838	-197,506
Paid dividend	-29,397	-26,457
New loans	109,129	185,466
Amortization of debt**	-95,113	-49,864
CASH FLOW FROM FINANCING ACTIVITIES	-15,381	109,144
CASH FLOW FOR THE YEAR	-8,941	15,251
Cash and cash equivalents at the beginning of the year	60,557	45,306
CASH AND CASH EQUIVALENTS AT YEAR-END***	51,616	60,557

*Disbursement regarding acquisitions of subsidiaries in 2017 was comprised of payment for MV-Nordic A/S. Payment made amounted to SEK 88.8 million. The acquisition related to the entire outstanding share capital and meant that control was obtained. Additionally, a promissory note signed in connection with the acquisition of Nice AS in an amount of SEK 2.1 million was dissolved. The disbursement did not entail any change in control or the total number of shares. Legal fees for acquisitions from earlier years were paid in an amount of SEK 0.3 million.

*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.

**Amortization consists of amortization of bank loans SEK 29.6 million (32.9) and repayment of credit facility SEK 65.5 million (17.0).

***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.

CHANGE IN LIABILITIES IN FINANCING ACTIVITIES, PARENT COMPANY

		Long-term liabilities to credit institutions		Short-term liabilities to credit institutions	Convertible bonds
	2017	2016	2017	2016	2017	2016
OPENING BALANCE	338,941	193,709	30,340	33,331	13,786	13,513
Cash flow	44,442	135,602	-51,256	-	20,830	-
Non-cash changes:
Exchange-rate changes	4,328	5,306	208	1,337	-	-
Acquisition financing	-	-	-	-	20,008	-
Conversion	-	-	-	-	-13,994	-
Other	-	-344	-	340	-1,841	272
Reclassification long/short	-51,889	4,668	51,889	-4,668	-	-
CLOSING BALANCE	335,822	338,941	31,180	30,340	38,789	13,786

NOTE 1 ACCOUNTING AND VALUATION PRINCIPLES

General

The consolidated financial statements have been prepared in accordance with the Annual Accounts Act, 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 26, 2018. 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 23, 2018.

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, 2017.

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 agreements, brands and goodwill. This relates primarily to recovering the value of the development work, product rights and customer agreements, 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 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. This may for example involve profit growth, improved percentage of recurring revenues and/or guarantee commitments. The purchase price is recognized at fair value on the acquisition date. 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, 2017, there are two purchase prices in the balance sheet that are subject to assessments:
• Fox Publish AS, a purchase price that will generate a payment in the first quarter of 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, 2017 onwards

No accounting principles have been altered as of January 1, 2017. No changes by IFRS have had any significant impact on the Group's accounts.

New or revised accounting principles in 2018 and

onwards A number of new or revised standards enters into effect beginning in 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 enters into effect in 2018 and affects when and how a company recognizes revenue. Vitec will apply the new standard as of January 1, 2018.

Upon implementation of IFRS 15, a five-step model is used to analyze the revenues.

• 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 was conducted where we 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, service sales and information services. We have then identified separate performance obligations in these portfolios. Our performance obligations are support and maintenance, time-limited right to access and hosting, perpetual right of use, services, information services, third-party perpetual right of use, third-party maintenance and other. The cloud service and subscription portfolio includes components with multiple 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. Adaptations in our accounting system are made to enable follow-up by performance obligation and in 2018, revenue recognition will take place per obligation.

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. We deem that our current revenue recognition agrees well with IFRS 15. Our recurring revenues are recognized evenly distributed over the term of the contracts as the customer receives control over the service and the performance obligation is completed. Our licenses are recognized at a given point in time, our service revenues are recognized continuously as the services are rendered and the customer receives control and benefit of them. No adjustment of the opening balance will therefore be made. A company can choose between applying the new standard with full retroactivity or with prospective application with further disclosures. We will choose retroactive application.

IFRS 9 Financial Instruments enters into effect in 2018 and addresses the recognition of financial assets and liabilities. Vitec will apply the new standard as of January 1, 2018. The standard has different measurement categories for financial assets and a new model for impairment testing. The primary impact of the standard pertains to a partly new process regarding credit losses. Vitec will apply the transition prospectively and has taken into account historical bad debt losses over an economic cycle and can thereafter confirm that the new standard will not have any material effect on the Group's accounts.

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. It becomes effective on January 1, 2019.

On the balance sheet date, the Group's future commitments in the form of non-cancellable contracts amounted to SEK 50.6 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 managed based on segments that are reported to the highest decision makers within Vitec, which are comprised of 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 preferably applied.

Revenue recognition

Recurring revenue

Recurring revenue principally comprises annual agreements regarding SaaS, maintenance, support, operation and information services. Income recognition of information services 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 sales of software licenses. The precondition for income recognition of the sale of a software license is that installation must have taken place. At this point, income recognition is performed for the entire license.

Service revenues

The service revenues comprise consultancy services on an ongoing basis and consultancy services 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 third-party licenses which are recognized as license revenues. Income recognition takes place on delivery.

Other operating income

Other operating income consists mainly of adjustments of conditional supplemental purchase prices entered as liabilities. They are recognized in accordance with IFRS 3:58 as other operating income.

Leasing, rental agreements and other non-cancellable contracts

Operational leasing agreements, rental agreements, etc. Costs in respect of operational leasing agreements are recognized in profit for the year linearly 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 are comprised of rental agreements for premises.

Financial leasing agreements

The obligation to pay future leasing charges in respect of tangible financial leasing agreements is recognized as long-term and short-term liabilities in those cases where 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.

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 deficit deductions 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 1 January 2004, Vitec has elected not to apply IFRS retroactively.

Goodwill is valued at acquisition value less 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 62. 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 obtained until December 31, 2016 are written off over an estimated useful life of five years. Capitalized development costs obtained as of January 1, 2017 are written off over an estimated useful life of ten 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 amortization 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 amortization and any impairment.

Brands

Brands are normally deemed to have an indefinite useful life. Brands are valued at acquisition value less 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. Amortization takes place according to a declining balance model for acquisitions as of the fourth quarter of 2016. For acquisitions before this, amortization takes place straight-line. 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 agreements

Acquired customer agreements are written off over 8-10 years and recognized at the acquisition value less accumulated amortization and any impairment. Amortization takes place according to a declining balance model for acquisitions as of the fourth quarter of 2016. For acquisitions before this, amortization takes place straight-line.

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

Notes

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 revenue/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

Leasing agreements, where essentially all risks and benefits associated with ownership fall to the lessor, are classified as operational leasing. Leasing agreements, where risks and benefits associated with ownership essentially fall to the lessee, are classified as financial leasing. 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 expensed 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 is recognized as an income in profit or loss.

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 payable 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.

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 agreements, 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 is 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 Group 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 8.97-9.77 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 2017.

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 in respect of 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.

There have been no changes in the Parent Company's accounting principles. The differences between the Parent Company's and the Group's accounting principles are set out below.

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, 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.

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 2017 are the segments Auto, Energy, Real Estate, Finance & Insurance, Environment, Estate Agents and Education & Health.

• Auto Software for the automotive and machinery industry.
• Energy Advanced forecasting systems for electricity traders, and calculation and map systems for owners of electricity and district heating networks.
• Real Estate Software for the construction and real estate industries.
• Finance & Insurance Software for banks, financial insti-

tutions and insurance companies.

• Environment Products in private and municipal waste and resource management.
• Estate Agents Software for real estate agents.
• Education & Health Software for healthcare companies and the education sector.

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 2017 as well as 2016 based on our customers' registered offices. The distribution of tangible and intangible assets is also presented by geographic market.

MARKET

	Net sales		Fixed assets
	2017	2016	2017	2016
Sweden	285.8	284.7	178.5	175.1
Denmark	218.9	154.6	316.1	160.2
Finland	169.6	106.0	234.5	242.1
Norway	175.2	119.5	253.1	266.5
Rest of Europe	4.9	10.4	-	-
Rest of the world	0.7	0.2	-	-
	855.0	675.4	982.3	843.9

OPERATING SEGMENT

	Auto		Energy		Real Estate insurance		Finance and		Environment
	2017	2016	2017	2016	2017	2016	2017	2016	2017	2016
Per operating segment (SEK million)
Recurring revenues	128.6	96.8	19.1	18.4	108.8	89.2	104.4	99.7	32.6	14.3
Licenses	6.1	3.0	-	-	8.6	11.5	7.5	6.1	3.5	2.4
Service revenues	16.3	14.1	6.5	7.4	69.8	55.2	29.9	20.3	5.7	5.0
Other	5.0	5.2	0.1	0.1	2.9	2.5	0.5	0.6	2.2	1.4
Internal sales	0.3	2.2	-	-	-	0.2	1.6	2.2	0.6	0.2
Net sales	156.2	121.3	25.7	25.9	190.1	158.5	143.9	128.8	44.7	23.2
Capitalization, own work	14.0	13.0	2.9	2.4	19.0	13.3	20.3	19.9	2.3	1.5
Depreciation and amortization	-20.4	-14.7	-2.1	-1.9	-16.7	-11.9	-20.8	-17.4	-3.2	-1.3
Operating profit	19.5	19.2	8.0	7.3	32.2	29.8	29.0	20.3	5.5	3.4
Financial items, net	-	-	-	-	-	-	-	-	-	0.2
Consolidated profit before tax
Other information
Investments in fixed assets	16.2	125.0	2.9	2.4	19.9	67.9	20.6	20.8	2.3	34.8
Closing balance Goodwill	64.8	64.4	-	-	40.2	40.5	32.5	32.0	11.2	11.0
Closing balance Other tangible and intangible assets	165.3	168.4	6.3	5.5	58.1	73.5	129.4	104.3	25.1	25.5

None of the Group's customers are responsible for more than 7 % of income.

OPERATING SEGMENTS, CONT.

	Estate Agents		Education & Health		Group-Common		Eliminations			Total
	2017	2016	2017	2016	2017	2016	2017	2016	2017	2016
Per operating segment (SEK million)
Recurring revenue	132.5	145.1	83.7	54.6	0.2	-	-	-	609.9	518.1
Licenses	-	1.8	13.8	-	-	0.4	-	-	39.6	25.2
Service revenues	5.1	7.8	12.2	11.2	0.2	0.2	-	-	145.7	121.1
Other	0.4	0.5	48.2	0.3	0.5	0.4	-	-	59.8	11.0
Internal sales	4.6	3.1	3.5	0.5	110.0	97.7	-120.7	-105.9	0.0	0.0
Net sales	142.6	158.3	161.5	66.7	111.0	98.6	-120.7	-105.9	855.0	675.4
Capitalization, own work	22.7	25.0	16.0	7.2	-	-	-	-	97.2	82.3
Depreciation	-28.8	-26.5	-25.3	-12.4	-8.4	-5.5	0.3	0.1	-125.5	-91.5
Operating profit	5.5	11.1	11.2	1.9	-4.2	-4.8	-	-	106.7	88.3
Financial items, net	-	-	-0.4	-0.3	-8.2	-6.3	-	-	-8.6	-6.4
Consolidated profit before tax									98.1	81.9
Other information
Investments in fixed assets	23.6	27.2	169.5	7.2	11.5	7.0	-	-	266.5	292.2
Closing balance Goodwill	90.8	92.5	43.2	-	-	-	-	-	282.6	240.4
Closing balance Other tangible and intangible assets	90.6	107.7	198.2	96.9	26.5	21.6	-	-	699.7	603.4

NOTE 3 ACQUISITIONS

Acquisition of MV-Nordic A/S

On July 6, all shares and votes in the Danish software group MV-Nordic A/S were acquired. The company offers software to the education sector in Denmark, Norway and Sweden. The main product is a cloud-based service for people with reading and writing difficulties.

The corporate group 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 costs amount to SEK 3.9 million as of December 31, and are recognized as other external expenses through comprehensive income. As of the acquisition date until December 31,

the revenues in the acquired group amounted to SEK 89.0 million and profit before tax was SEK 8.1 million. Due to the application of other accounting principles and the broken financial year, information on revenues and earnings from the beginning of the year are deemed to not provide an accurate view. The inventories are valued at book value when it is considered to agree with fair value. The majority of the inventories were sold shortly after the acquisition at book value.

There are items in the acquisition analysis that may be revalued once the MV Group has been in our possession for a short time. These are brands, product rights, customer agreements and goodwill. For this reason, the acquisition analysis is preliminary until 12 months have passed since the acquisition date.

PRELIMINARY ACQUISITION ANALYSIS

	MV-Nordic A/S	Fair value, adjust ment	Fair value recognized in the Group
Brands	-	3,374	3,374
Product rights	-	67,510	67,510
Customer agreements	-	29,676	29,676
Intangible assets	5,345	-	5,345
Tangible assets	3,679	-	3,679
Deposits	1,261	-	1,261
Inventories	11,424	-	11,424
Current receivables	24,471	-	24,471
Cash and cash equivalents	1,678	-	1,678
Deferred tax liabilities	3,212	-22,123	-18,911
Short-term liabilities	-50,392	-11,395	-61,787
Long-term liabilities	-1,522	-	-1,522
Net identifiable assets and liabilities	-845	67,041	66,196
Goodwill on consolidation			42,235
Total			108,431
The Group's acquisition value			108,431

Calculation of net cash outflow	Fair value
The Group's acquisition value	-108,431
Convertible bonds	20,008
Acquired cash and cash equivalents	1,678
Net cash outflow	-86,745

The term of the convertible bond is July 6, 2017 – December 30, 2020, and the interest rate is Stibor 180. The conversion price is SEK 85.00. Conversion may be requested during the period January 1, 2019 to June 30, 2020. On conversion, the share capital may increase by a maximum of SEK 23,432.

Notes

NOTE 4 INCOME AND EXPENSE BETWEEN GROUP COMPANIES

The Parent Company's net sales include invoicing to Group companies at 100 percent (100) and in operating expenses it stands at 2 percent (0).

NOTE 5 OTHER OPERATING INCOME AND OTHER OPERATING EXPENSES

The expensed conditional purchase price for Fox Publish AS has been adjusted downwards by SEK 1.3 million. This correction was recognized as other operating income in accordance with IFRS 3:58. At the same time, an impairment of intangible assets was applied.

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
	2017	2016	2017	2016	2017	2016
Parent Company
Sweden	17	16	8	8	25	24
Subsidiaries
Sweden	41	47	146	139	187	186
Denmark	38	18	97	80	135	98
Finland	22	17	69	48	91	65
France	1	1	5	5	6	6
Norway	25	27	71	61	96	88
Group, total	144	126	396	341	540	467

At the end of the year, the number of employees totaled 573 (507).

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 16 men.

SALARIES AND OTHER REMUNERATION

	Salaries and other remuneration		Social security costs		(of which pension premiums)
	2017	2016	2017	2016	2017	2016
Parent Company	18,785	18,143	9,542	9,674	3,064 *	3,336 *
Subsidiaries	303,080	253,987	86,668	76,091	33,510	25,984
Group, total	321,865	272,130	96,210	85,765	36,574 **	29,320 **

*Of the Parent Company's pension premiums, SEK 1,669 thousand (1,616) refers to senior executives.

*Of the Group's pension premiums, SEK 3,958 thousand (3,559) 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
	2017	2016	2017	2016
Parent Company	8,119	7,302 (0)	10,666	10,841
Subsidiaries	19,220	14,337 (0)	283,860	239,650
Group, total	27,339	21,639 (0)	294,526	250,491

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 presidents 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 Directors' 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 thousands per year. In both cases, the remuneration level applies as from the date of the AGM.

The CEO's salary amounted to SEK 2,448 thousand, with no Board fee. The CEO's pension solution from the company includes the entitlement to an annual premium payment amounting to 35 per cent 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.

	Salary/Board fees		Other benefits		Pension premiums		Total
	2017	2016	2017	2016	2017	2016	2017	2016
Chairman of the Board, Crister Stjernfelt	250	250	-		-		250	250
Board member, Kaj Sandart	125	125	-		-		125	125
Board member, Jan Friedman	125	125	-		-		125	125
Board member, Birgitta Johansson Hedberg	125	125	-		-		125	125
Board member, Anna Valtonen	125	125	-		-		125	125
CEO, Lars Stenlund	2,448	1829	-		640	649	3,088	2,478
*Other senior executives, Parent Company	4,921	4723	13	13	1,029	967	5,963	5,704
Total	8119	7302	13	13	1669	1616	9801	8931

* 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
	2017	2016	2017	2016
PwC, auditing assignment	2,032	1,409	731	643
PwC, other statutory assignments	125	269	50	-
PwC, tax consultancy	64	13	-	-
PwC, other assignments	92	117	17	117
Other auditors, auditing assignments	363	-	-	-
Other auditors, other statutory assignments	-	-	-	-
Other auditors, tax consultancy and other assignments	94	-	-	-
Total audit fees	2,770	1,808	798	760

PwC Sweden accounts for SEK 731 million of audit assignments, SEK 50 million of other statutory assignments, SEK 0 million of fees for tax consultancy and SEK 17 million of other assignments.

NOTE 8 NET FINANCIAL ITEMS

	Group		Parent Company
	2017	2016	2017	2016
Interest income	328	773	231	737
Dividend, subsidiaries	-	-	64,898	58,335
Other financial expenses	-63	-40	-	-
Interest expenses	-8,840	-7,096	-8,289	-6,382
Net financial items	-8,575	-6,363	56,840	52,690

The Parent Company has booked a receivable for anticipated dividends from subsidiaries. This amounts to a total of SEK 64.9 million, divided between: FuturSoft Oy SEK 9.8 million, Tietomitta Oy SEK 3.9 million, Vitec Datamann A/S SEK 2.6 million, AcuVitec Oy SEK 2.5 million, Vitec Capitex AB SEK 5.0 million, Capitex AB SEK 2.4 million, 3L Media AB SEK 6.9 million, 3L System AB SEK 7.7 million, Capifast AB SEK 3.5 million, Vitec Förvaltningssystem AB SEK 7.7 million, Vitec Mäklarsystem AB SEK 4.2 million, Vitec Fastighetssystem AB SEK 2.8 million and Vitec Energy AB SEK 5.8 million.

NOTE 9 APPROPRIATIONS

	2017	2016
The difference between booked depreciation and depreciation according to plan	-88	-119
Received Group contributions	5,000	7,900
Total	4,912	7,781

NOTE 10 TAX

	Group		Parent Company
	2017	2016	2017	2016
Current tax
Current tax on profit for the year	-21,277	-14,643	-	-9
Adjustment of current tax from previous years	-267	83
	-21,544	-14,560	-	-9
Deferred tax
Deferred tax in respect of temporary differences	1,655	-1,126	57	-
Revaluation of deferred tax due to changed tax rates	1,188	559	-	-
	2,843	-567	57	-
Total recognized tax expense	-18,701	-15,127	57	-9

RECONCILIATION BETWEEN APPLICABLE TAX RATE AND EFFECTIVE TAX RATE

	Group		Parent Company
	2017	2016	2017	2016
Recognized profit before tax	98,127	81,942	64,888	56,944
Of which in Sweden	41,959	46,219	-	-
Of which in Finland	13,963	4,598	-	-
Of which in Norway	7,749	18,138	-	-
Of which in Denmark	34,456	12,983	-	-
Tax according to applicable tax rate	-21,524	-18,549	-14,275	-12,528
Tax effect of:
- non-deductible expenses	-571	-395	-135	-117
- non-taxable income	2,109	255	14,278	12,834
- change in non-capitalized loss carry-forwards			189	-189
- tax attributable to previous years	82	345		-9
- effect of changed tax rates	1,203	3,218	-	-
Recognized effective tax	-18,701	-15,127	57	-9

RECOGNIZED DEFERRED TAX RECEIVABLES

	Group			Parent Company
	2017	2016	2017	2016
Deferred tax for tax loss carry-forwards	6,297	1,871	57	-
Differences between booked value and taxable value of fixed assets	417	2,314	-	-
Closing balance	6,714	4,185	57	-

RECOGNIZED DEFERRED TAX LIABILITIES

	Group			Parent Company
	2017	2016	2017	2016
Product rights, customer agreements and brands	95,303	86,643	-	-
Capitalized development costs	43,010	32,997	-	-
Pension liability	-1,892	-1,843	-	-
Untaxed reserves	-577	2,887	-	-
Deferred tax liabilities	135,844	120,684	0	0

CHANGES IN DEFERRED TAX LIABILITY IN TEMPORARY DIFFERENCES

		Recognized in comprehensi ve income for	Recognized in other com prehensive	Recognized in
	1/1/2017	the year	income	equity	12/31/2017
Acquired net assets	84,241	-9,181	606	15,988	91,664
Effect of altered tax rate	559	1,188	-	-	1,747
Hedge accounting	-	1,758	-	-1,758	0
Accumulated excess depreciation	2,887	-3,464	-	-	-577
Capitalized development costs	32,997	10,013	-	-	43,010
	120,684	314	606	14,240	135,844

All deferred tax assets regarding tax loss carry-forwards have been activated.

CHANGES IN DEFERRED TAX ASSETS IN TEMPORARY DIFFERENCES

	1/1/2017	Recognized in comprehensi ve income for the year	Recognized in other com prehensive income	Recognized in equity	12/31/2017
Accumulated excess depreciation	4,185	2,529	-	-	6,714
	4,185	2,529	0	0	6,714

NOTE 11 EARNINGS PER SHARE

Earnings per share amounted to SEK 2.70 (2.27). Earnings per share after dilution amounted to SEK 2.70 (2.25). The financial instruments that can produce future dilution effects are made up entirely of the convertible debentures presented in Note 20.

		12/31/2017 12/31/2016
Earnings per share before dilution	2.70	2.27
Profit when calculating earnings per share	79,426	66,814
Average number of shares (weighted average)	29,424,555	29,396,690
Earnings per share after dilution	2.70	2.25
Profit when calculating earnings per share after dilution	79,814	67,086
Average number of shares after dilution	29,538,825	29,838,900

NOTE 12 FIXED ASSETS, GROUP

INTANGIBLE ASSETS (SEK MILLION)

	Goodwill		costs	Capitalized development	Software		Brands		Product rights		agreements	Customer	Total
	2017	2016	2017	2016	2017	2016	2017	2016	2017	2016	2017	2016	2017	2016
Opening acquisition value			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
Purchases*	42.6	55.0	97.2	82.3	1.5	1.5	3.8	59.7	70.3	55.3	29.7	26.0	245.1	279.7
Divestments/disposals	-	-4.9	-85.1	-0.6	-0.9	-	-	-	-4.8	-2.3	-	-	-90.8	-7.8
Acquisition of operations	-	-	-	-	-	-	-	-	5.3	1.4	-	-	5.3	1.4
Translation difference	-0.4	6.7	-0.5	1.2	-	0.1	0.4	0.4	1.2	17.4	0.8	4.4	1.4	30.2
Closing accumulated acquisition values			315.8 273.6 323.9 312.4		21.7	21.0	74.3	70.1						469.7 397.7 136.0 105.5 1341.5 1180.4
Opening amortization	-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
Divestments/disposals	-	-	87.4	0.4	0.9	-	-	-	-	2.3	-	-	88.2	2.7
Translation difference	-	-1.3	0.3	-0.4	0.0	-0.1	-	1.3	0.9	-3.9	-	-0.9	1.2	-5.3
Amortization and impair ment for the year	-	-17.3	-51.9	-41.5	-1.5	-1.4	0.0	0.0	-49.0	-32.4	-13.3		-14.1 -115.7	-106.6
Closing accumulated amortization	-33.2		-33.2 -126.0 -161.8		-17.7	-17.1	0.0		-0.1 -179.0 -130.9		-41.1		-27.8 -397.1 -370.8
Closing book value			282.6 240.4 197.9 150.5		4.0	4.0	74.3	70.1	290.7 266.8		94.8	77.7	944.4	809.6

*Goodwill, brands, customer agreements 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

Goodwill is not amortized continuously, but the value is tested at least annually in accordance with IAS 36. The testing was last done in December 2017. Goodwill is allocated to cash-generating units, which for Vitec are the same as operating segments, which match Vitec's business areas. The recoverable amount was calculated based on the value in use and proceed from the current assessment of the cash flows for the upcoming five-year period. Assumptions have been made regarding revenue growth, gross margins, expense increases, working capital requirements and investment requirements. The parameters have been set to match the budgeted profit for the 2018 financial year. In the remainder of the five-year period, a growth rate has been assumed of 2 percent (2) per year except for the Real Estate segment where the growth rate has been assumed to be 4 percent (2) per year. For cash flows beyond the five-year period, the growth rate has been assumed to be 2 percent (2). Cash flows have been discounted at a weighted average cost of capital (WACC) that corresponds to 10.9-12.2 percent before tax and 8.97-9.77 percent after tax. The weighted cost of capital has been adapted to the prevailing interest rate situation and the market risk premium in the Swedish stock market.

The calculation shows that the value in use exceeds the carrying amount at a segment level. A sensitivity analysis shows that the goodwill values are justifiable even if the discount interest rate were to be increased by one percentage point or if the sustained growth rate (beyond the five-year period) were to decrease to zero percent. The impairment testing resulted in no impairment requirement being identified for any of the segments.

In 2017, the conditional purchase price for Fox Publish AS booked as a liability were adjusted down by SEK 1.3 million. This resulted in an other operating income and an impairment of product rights.

Goodwill

Goodwill amounts to SEK 282,612 thousand (240,444). Goodwill is divided between the business areas Auto SEK 64,798 thousand (64,380), Real Estate SEK 40,194 thousand (40,548), Finance & Insurance SEK 32,470 thousand (32,011), Environment SEK 11,220 thousand (10,968), Estate Agents SEK 90,761 thousand (92,537) and Education & Health SEK 43,170 thousand (0).

Capitalized development costs

Capitalized development costs comprises in-house time spent on product development, as well as external consultancy services to a smaller extent. Amortization is initiated cautiously when the capitalization is entered. The amortization period is 5-10 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 74,281 thousand (70,097). The item brands is divided between the business areas Auto SEK 45,988 thousand (44,774), Real Estate SEK 492 thousand (17,267), Finance & Insurance SEK 19,438 thousand (2,995), Environment SEK 400 thousand (478), Estate Agents SEK 2,402 thousand (2,530) and Education & Health SEK 5,561 thousand (2,054). All brands are identified in the 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. Every year, brands are impairment tested at a segment level according to the same principles and at the same time as in the review of goodwill.

Customer agreements

Customer agreements are identified in acquisition analyses. The amortization period is 8-10 years. The useful life for customer agreements is based on the length of time net payments are expected to be received from these agreements, bearing in mind legal and economic factors. Amortization takes place according to a declining balance model for acquisitions as of the fourth quarter of 2016. For acquisitions before this, amortization takes place straight-line.

The customer agreements' acquisition values, residual values and remaining depreciation period amount to:

CUSTOMER AGREEMENTS

	Acquisition value (TSEK)	Residual value (TSEK)	Remaining amortization period (years)
Auto
Autodata	10,950	5,409	4.3
Infoeasy	1,378	976	7.5
Datamann	11,472	9,205	7.5
FuturSoft	14,277	13,048	8.7
Real Estate
Plania	6,761	5,491	8.9
Finance & Insurance
Aloc	8,550	5,157	4.5
Nice	4,435	3,487	7.9
Environment
Tietomitta	4,936	4,395	8.5
Estate Agents
Megler	11,284	5,745	7.2
Adservice	204	146	7.2
Education & Health
AcuVitec	26,807	14,213	4.2
MV	30,320	27,563	9.5

Product rights

Product rights comprise acquired product rights. The depreciation period is 5-10 years. The previously assumed useful lives for the product rights of five years are deemed to not provide an accurate view. Our history shows useful lives that exceed 10 years, but we have found that a uniformity between our proprietary software/capitalized development costs and the software/product rights we acquire are logical and have therefore chosen 10 years as the amortization period for both classes of assets. Amortization now takes place according to a declining balance model, which is deemed to reflect the actual use in a more relevant way as the product rights consist of several components and where each component can be presumed to have a life expectancy from three to 20 years. The declining balance model entails a higher amortization at the beginning of the useful life. The declining balance amortization method has been applied as of the fourth quarter of 2016. For acquisitions before this, amortization takes place straight-line.

The acquisition values, residual values and remaining amortization 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	10,322	4.3
Infoeasy	10,879	7,744	7.5
Datamann	31,843	25,797	7.5
FuturSoft	21,377	16,797	8.7
Real Estate
Vitec Software	6,051	-	0
Plania	15,889	11,253	8.9
3L System	13,573	2,760	2
Capitex	5,859	1,465	2.5
Finance & Insurance
Capitex	8,091	2,023	2.5
Aloc	47,914	33,395	6.5
Nice	15,019	11,808	7.9
Environment
Tietomitta	18,981	17,001	8.5
Estate Agents
Mäklarsystem	15,700	-	0
Capitex	13,950	3,488	2.5
Megler	55,880	24,851	7.2
Education & Health
AcuVitec	72,758	57,468	6.2
MV	70,749	64,478	9.5

TANGIBLE ASSETS (SEK MILLION)

		Buildings		Investments in leased premises		Equipment, vehicles	Equipment*		Equipment, art		Total
	2017	2016	2017	2016	2017	2016	2017	2016	2017	2016	2017	2016
Opening acquisition value	9.6	9.6	8.5	7.7	4.6	2.1	50.9	41.7	0.2	0.2	73.7	61.3
Purchases	0.1	-	0.6	0.6	0.5	-	11.3	8.4	-	-	12.5	9.0
Divestments/disposals	-0.1	-	-0.1	-	-1.6	-	-8.0	-1.7	-0.2	-	-10.0	-1.7
Acquisition of operations	-	-	-	-	-	2.3	12.5	1.1	-	-	12.5	3.4
Translation difference	-	-	0.1	0.2	0.1	0.1	-0.3	1.3	-	-	-0.1	1.7
Closing accumulated acquisi tion values	9.6	9.6	9.0	8.5	3.6	4.6	66.3	50.9	0.0	0.2	88.6	73.7
Opening 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
Divestments/disposals	0.2	-	0.1	-	1.0	1	6.9	2.5	0.4	-	8.7	2.5
Acquisition of operations	-	-	-	-	-	-0.5	-8.8	-0.5	-	-	-8.8	-1.0
Translation difference	-	-	-	-	-	-	-	-0.7	-	-	-0.1	-0.7
Depreciation and impairment for
the year	-0.2	-0.2	-1.4	-1.5	-0.5	-0.5	-8.9	-5.5	-	-	-11.0	-7.7
Closing accumulated depreci ation	-0.9	-0.9	-6.2	-4.8	-1.7	-2.3	-41.8	-31.0	0.0	-0.4	-50.6	-39.3
Closing book value	8.7	8.7	2.8	3.6	1.9	2.3	24.6	19.9	0.0	-0.2	38.0	34.3

* Equipment also includes computers.

The item equipment includes leasing objects that the Group holds under finance leases with the following amounts: (see Note 23 for further information)

LEASED ASSETS

	2017	2016
Opening acquisition value	0.0	0.0
Purchases	4.8	-
Acquisition of operations	4.8	-
Closing accumulated acquisition values	9.5	-
Opening depreciation	0.0	-
Acquisition of operations	-2.5	-
Depreciation and impairment for the year	-2.2	-
Closing accumulated depreciation	-4.7	-
Closing book value	4.8	-

NOTE 13 FIXED ASSETS, PARENT COMPANY

INTANGIBLE ASSETS (SEK MILLION)

	Software		Product rights		Total
	2017	2016	2017	2016	2017	2016
Opening acquisition value	8.9	7.4	9.7	9.7	18.6	17.1
Purchases	0.9	1.5	-	-	0.9	1.5
Closing accumulated acquisition values	9.7	8.9	9.7	9.7	19.5	18.6
Opening amortization	-5.0	-3.8	-9.7	-9.6	-14.7	-13.3
Amortization for the year	-1.4	-1.3	-0.1	-0.1	-1.5	-1.4
Closing accumulated amortization	-6.4	-5.0	-9.7	-9.7	-16.2	-14.7
Closing book value	3.3	3.8	0.0	0.1	3.3	3.9

TANGIBLE ASSETS (SEK MILLION)

	Buildings		premises	Investments in leased	Equipment*		Total
	2017	2016	2017	2016	2017	2016	2017	2016
Opening acquisition value	9.3	9.3	2.5	2.5	3.6	3.6	15.4	15.3
Purchases	-	-	0.4	-	0.1	-	0.5	-
Closing accumulated acquisi
tion values	9.3	9.3	2.8	2.5	3.7	3.6	15.9	15.4
Opening depreciation	-0.5	-0.3	-1.6	-1.0	-1.2	-0.8	-3.3	-2.2
Depreciation for the year	-0.2	-0.2	-0.6	-0.6	-0.3	-0.4	-1.1	-1.2
Closing accumulated depre	-0.7	-0.5	-2.2	-1.6	-1.5	-1.2	-4.4	-3.3
ciation
Closing book value	8.6	8.8	0.6	0.8	2.2	2.4	11.4	12.0

* Equipment also includes computers.

FINANCIAL ASSETS (SEK MILLION)

Shares in subsidiaries	2017	2016
Opening acquisition value	864.8	685.9
Acquisitions during the year	109.1	209.0
Adjustment of purchase price	-1.3	-22.7
Divested	-	-7.3
	972.5	864.8
Other financial assets
Deferred tax	0.1	-
Other financial receivables	7.7	9.0
	7.8	9.0
Closing book value	980.3	873.8

NOTE 14 SHARES IN SUBSIDIARIES

Subsidiaries		Acqui sitions, year	% Capital	% Voting rights	Number of shares	Book value 12/31/2017	Book value 12/31/2016	Adjusted equity 12/31/2017
Vitec MV A/S	Software company, Parent Company of Vitec MV AS and
	Vitec MV AB		2017 100 % 100 %		600	108,797	-	87
Vitec Plania AS	Software company		2016 100 % 100 %		330	54,190	53,980	9,245
FuturSoft Oy	Software company		2016 100 % 100 %		100	109,305	109,305	28,545
Tietomitta Oy	Software company		2016 100 %	100%	7,922	46,179	46,183	25,748
Vitec Nice AS	Software company	2015	100%	100%	40,000	26,045	26,045	7,017
Vitec Infoeasy AS	Software company	2015	100%	100%	1,000	16,930	16,849	3,913
Vitec Datamann A/S	Software company	2015	100%	100%	3,000	56,714	56,714	15,135
ADservice Scandinavia AB	Software company	2015	100%	100%	1,000	400	400	1,916
Vitec Aloc A/S	Software company, Parent Company of Aloc AS.	2014	100%	100%	20,000	88,658	88,658	46,070
Vitec Autodata AS	Software company	2014	100%	100%	30,000	37,010	37,285	20,877
IMHO Oy	Holding company, owns 47% of the shares in AcuVitec	2014	100%	100%	19,800	34,411	34,282	4,223
AcuVitec Oy	Software company, Parent Company of Acute France SARL	2014	100%	100%	85,714	38,804	38,658	14,313
Vitec Megler AS	Software company, Parent Company of IT-Drift AS and Vitec Megler AB	2012	100%	100%	3,256,596	120,548	121,947	28,592
Vitec Capitex AB	Software company	2011	100%	100%	1000	8,289	8,289	5,549
Capitex	Software company	2010	100%	100%	5,000	17,527	17,527	3,184
3L System AB	Holding company, Parent company of 3L Media, Vitec Förvaltningssystem and Vitec Capifast	2009	100%	100%	2,350,400	121,751	121,751	64,289
Vitec Mäklarsystem AB	Software company	2007	100%	100%	1,000	68,083	68,083	10,754
Vitec Software AB	Dormant company	2005	100%	100%	2,000	999	999	806
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	6,362
Vitec IT-Drift AB	Responsible for internal IT	1999	100%	100%	1,000	1,008	1,008	2,965
Vitec Energy AB	Software company	1998	100%	100%	1,000	1,551	1,551	6,211
Total						972,519	864,833	308,847

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 agreements and brands. When this occurs, it is described in the Annual Report. On January 1, 2017, the three companies in Business Area Estate Agents in Norway, Vitec IT-Makeriet AS, Vitec Fox AS and Vitec Megler AS, were merged. The merger means that Vitec Megler AS has taken over the submitting companies book keeping and tax position together with assets, rights and obligations. 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 Vitec Aloc A/S Vitec Aloc AS (sales company)
• Via Vitec MV A/S Vitec MV AB (sales company) and Vitec MV AS (sales company).

	Corporate identity number	Registered office
Vitec MV A/S	15314400	Odense, Denmark
Vitec MV AS	981205308	Oslo, Norway
Vitec MV AB	556438-3080	Malmö, Sweden
Vitec Plania AS	841239172	Stavanger, Norway
FuturSoft Oy	14942533	Espoo, 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
ADservice Scandinavia AB	556659-1466	Stockholm, Sweden
Vitec Megler AB	559035-4816	Kalmar, Sweden
Aloc AS	976876768	Oslo, Norway
Aloc A/S	14788484	Odense, Denmark
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, Sweden
Vitec Capifast AB	556844-4110	Stockholm, Sweden
Capitex AB	556197-8437	Kalmar, Sweden
3L System AB	556321-2546	Stockholm, Sweden
3L Media AB	556584-9931	Stockholm, Sweden
Vitec Förvaltningssystem AB	556591-2101	Stockholm, Sweden
Vitec Mäklarsystem AB	556367-6500	Umeå, Sweden
Vitec Software AB	556443-2200	Umeå, Sweden
Vitec AB	556571-5090	Umeå, Sweden
Vitec Fastighetssystem AB	556563-7773	Umeå, Sweden
Vitec IT-Drift AB	556459-9347	Umeå, Sweden
Vitec Energy AB	556347-7073	Umeå, Sweden

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

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, 2017 amounted to SEK 3,619 thousand (1,031).

NOTE 16 ACCOUNTS RECEIVABLE

The Group's accounts receivable as of December 31, 2017 amounted to SEK 172,450 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 669 thousand (1,542). The Group's established customer losses amount to SEK 595 thousand (219) for 2017.

AGE ANALYSIS IN RESPECT OF PROVISION FOR DOUBTFUL RECEIVABLES

	2017	2016
Due in less than 3 months	113	188
Due in 3-6 months	86	747
Due in more than 6 months	470	607
	669	1542

AGE ANALYSIS IN RESPECT OF DUE BUT NOT RESERVED ACCOUNTS RECEIVABLE

	2017	2016
Due in less than 3 months	16,843	10,721
Due in 3-6 months	2,630	1,990
Due in more than 6 months	-222	1,136
	19,251	13,847

NOTE 17 PREPAID EXPENSES AND ACCRUED INCOME

	Group		Parent Company
		12/31/2017 12/31/2016 12/31/2017 12/31/2016
Accrued income	6,673	4,788	-	-
Prepaid rent	4,307	2,977	2,062	2,035
Prepaid insurance premiums	-	703	-	233
Other prepaid expenses	16,316	9,544	1,487	1,771
Total	27,296	18,012	3,549	4,039

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 57,924 thousand in the form of bank balances and cash. The Group has a Group currency account.

NOTE 19 SHAREHOLDERS' EQUITY

Registered share capital on December 31, 2017 amounts to SEK 2,983,890 and comprises: Class A shares, 3,350,000 shares (33,500,000 votes), and Class B shares, 26,488,900 shares (26,488,900 votes). During the financial year, a dividend has been paid at SEK 1.00/share, totaling SEK

29,396,690. The proposed, although not yet adopted, dividend amounts to SEK 1.10/share, totaling SEK 32,822,790. The dividend is recognized as a liability after it has been approved by the AGM.

TYPES OF SHARES

	2017	2016
Shares at the start of the year
Vitec Class A	3,500,000	4,000,000
Vitec Class B	25,896,690	25,396,690
Total at the start of the year	29,396,690	29,396,690
Restamping of Class A to Class B	-150,000	-500,000
Restamping of Class A to Class B	150,000	500,000
Conversion of bonds Vitec Class B	442,210	-
Shares at the end of the year	29,838,900	29,396,690
Shares at the end of the year	2017	2016
Vitec Class A	3,350,000	3,500,000
Vitec Class B	26,488,900	25,896,690
Total at the end of the year	29,838,900	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 figures, 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 co-ordination, economies of scale are made possible in respect of 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 77.9 million as of December 31, 2017, including unutilized overdraft facility. In addition, there is the unutilized portion of a credit facility for acquisitions, amounting to SEK 178.6 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 fi-

nancing, a certain part of the acquisitions through loans from credit institutes. Loan agreements may contain terms involving restrictions for Vitec (known as covenants). Today, there is such an agreement with the Group's bank. At December 31, all covenants were met in their entirety. Borrowing entails certain risks for Vitec's shareholders. For example, in the event of dramatically altered circumstances on our 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 Vitec.

Managing capital

Risk management

The Group's objectives in respect of 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.

The debt/equity ratio at December 31, 2017 and 2016 were as follows:

DEBT/EQUITY RATIO

		12/31/2017 12/31/2016
Total borrowing	406	384
Deduction, cash and cash equivalents	-58	-81
Net liability	348	303
Total equity	398	334
Total capital	746	637
Debt/equity ratio, %*	47	48

*The debt/equity ratio in the multi-year summary in the Administration Report is calculated differently, see Note 30.

DIVIDEND

	2017	2016
Dividend paid amounted to SEK 1.00 per share (0.90)	29,397	26,457
Total expensed or paid dividends	29,397	26,457
For the 2017 financial year, the Board proposes a dividend of SEK 1.10 per share (1.00). The total amount of the proposed dividend is not recognized as a liability as of December 31, 2017, but is expected
to be settled with retained profits in April 2018.	32,823	29,397
	32,823	29,397

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 172,450 thousand on December 31, 2017 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 kronor, Danish kronor and the euro. The Group has not performed any currency hedging in 2017.

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, Plania AS and MV-Nordic A/S 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, 2017, the following exchange rates have been used:

NOK	1.0010
DKK	1.3228
EUR	9.8497

A 5 percent change in the value of foreign currencies in 2017 would have affected the profit and equity for the year by approx. SEK 2.0 million, divided between NOK 0.1 million, DKK 0.9 million and EUR 1.0 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 percent in the interest rate for the existing loan portfolio would affect the profit and equity for the year by approximately SEK 2.9 million.

TERM ANALYSIS

	Group		Parent Company
	2017	2016	2017	2016
Long-term interest-bearing liabilities
Liabilities to credit institutes	336,129	339,396	335,822	338,941
Convertible bonds	38,789	-	38,789	-
Total long-term interest-bearing liabilities	374,918	339,396	374,611	338,941
Long-term non interest-bearing liabilities
Other liabilities	3,270	28,765	-	28,765
Total long-term non interest-bearing liabilities	3,270	28,765	-	28,765
Total long-term liabilities	378,188	368,161	374,611	367,706
Short-term interest-bearing liabilities
Liabilities to credit institutes	31,180	30,340	31,180	30,340
Convertible bonds	-	13,786	-	13,786
Total short-term interest-bearing liabilities	31,180	44,126	31,180	44,126
Total interest-bearing liabilities	406,098	383,521	405,791	383,066
Short-term non interest-bearing liabilities
Accounts payable	31,902	21,153	3,872	2,467
Other liabilities	27,773	182	26,121	182
Accrued expenses	54,869	41,236	4,769	3,418
Total short-term non interest-bearing liabilities	114,544	62,571	34,762	6,067
Total financial liabilities	523,912	474,858	440,553	417,899
Term analysis
Long-term and short-term interest-bearing liabilities excluding convertible bonds (Capital amount)
Within 1 year after the balance sheet date	30,863	30,795	30,556	30,340
Longer than 1 year but within 3 years after the balance sheet date	48,377	58,324	48,377	58,324
Longer than 3 years but within 5 years after the balance sheet date	5,936	30,788	5,936	30,788
Longer than 5 years after the balance sheet date	282,133	249,829	282,133	249,829
*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	38,789	-	38,789	-
**Interest rates
Within 1 year after the balance sheet date	7,780	6,796	7,780	6,796
Longer than 1 year but within 3 years after the balance sheet date	13,731	12,029	13,731	12,029
Longer than 3 years but within 5 years after the balance sheet date	12,544	6,459	12,544	6,459
Longer than 5 years after the balance sheet date	904	961	904	961
Non interest-bearing liabilities	27,773	182	26,121	182
Within 1 year after the balance sheet date	3,270	28,766	-	28,766
Longer than 1 year but within 3 years after the balance sheet date
Total capital and interest
Within 1 year after the balance sheet date	66,416	51,559	64,457	51,104
Longer than 1 year but within 3 years after the balance sheet date	104,167	99,119	100,897	99,119
Longer than 3 years but within 5 years after the balance sheet date	18,480	37,247	18,480	37,247
Longer than 5 years after the balance sheet date	283,037	250,790	283,037	250,790

*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 1.96 percent (1.89). Interest on the unutilized component of the credit facility for acquisitions is included. Principal SEK 178.6 million, interest 0.69 percent.

Convertible debentures

Loan 1707 (convertible loan acquisition MV-Nordic), long-term liability

Convertible debenture 1707 amounts to a nominal SEK 20,008 thousand. The option element in the convertible loan is calculated at SEK 1,043 thousand. The option element is recognized as equity in accordance with IAS 32. The remainder of the loan, including interest (SEK 172 thousand) is recognized as a long-term liability. The term of the loan is July 6, 2017 – June 30, 2020, and the interest rate is Stibor 180. The conversion price is SEK 85.00. Conversion may be requested during the period January 1, 2019 to June 30, 2020. On conversion, the share capital may increase by a maximum of SEK 23,432. At full conversion of loan 1707 convertible loan acquisition MV, the dilution amounts to approx. 0.8 percent of the capital and 0.4 percent of the votes. The share issue has been conducted on market terms.

Loan 1801 (Convertible program, personell), long-term liability Convertible debenture 1801 amounts to a nominal SEK 20,830 thousand. The option element in the convertible loan is calculated at SEK 1,178 thousand. The option element is recognized as equity in accordance with IAS 32. The remainder of the loan is recognized as a long-term liability. The term of the loan is January 1, 2018 – December 31, 2020, and the interest rate is Stibor 180. The conversion price is SEK 104.00. Conversion may be requested during the period November 1 – November 30, 2020. On conversion, the share capital may increase by a maximum of SEK 20,029. At full conversion of loan 1801 convertible program, personell, the dilution amounts to approx. 0.7 percent of the capital and 0.3 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. The convertible program was registered by the Swedish Companies Registration Office on January 27, 2018.

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 2017 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 premiums for the defined-benefit retirement and family pension are individually calculated and are among other things dependent on the salary, previously vested pension and anticipated remaining service. Expected fees in the next reporting period for ITP2 insurance taken out with Alecta amount to SEK 2,612 thousand (2,398). The collective solvency level for Alecta amounted to 154 percent in 2017 (149).

Defined-contribution plans

Defined-contribution pension plans entail that the company makes periodic payments to separate authorities or funds, and 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 34,976 thousand (28,102).

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 1,174 thousand. The charges for 2018 are expected to amount to SEK 1,201 thousand.

OBLIGATIONS RESPECT OF EMPLOYEES, DEFINED BENEFIT PLANS

	Group
		12/31/2017 12/31/2016
Other pension commitments, Norway	8,225	7,679
Total defined-benefit plans	8,225	7,679

DEFINED-BENEFIT OBLIGATIONS AND THE VALUE OF PLAN ASSETS

	Group
		12/31/2017 12/31/2016
Present value of funded, defined-benefit obligations in Norway	20,926	21,046
Plan assets' fair value, Norway	-13,718	-14,316
Net	7,209	6,730
Estimated employer's contributions	1,016	949
Net liability funded obligations, Norway	8,225	7,679

RECONCILIATION OF NET AMOUNT FOR PENSIONS IN THE BALANCE SHEET

	Group
		12/31/2017 12/31/2016
Opening balance	7,679	8,033
Net pension expense for the year	1,710	71
Investments in pension funds incl. employer's contributions	-1,340	-1,682
Actuarial changes recognized in other comprehensive income	563	-395
Translation difference	-387	1,651
Total defined-benefit plans	8,225	7,679

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

		Group
		12/31/2017 12/31/2016
Opening balance	21,046	23,607
Actuarial changes	-391	-5,170
Interest and fees	1,527	1,563
Pension payments for the year	-197	-291
Translation difference	-1,058	1,335
	20,926	21,046

CHANGE IN PLAN ASSETS

		Group
		12/31/2017 12/31/2016
Opening balance	14,316	16,659
Actuarial changes	-885	-3,410
Interest and fees	-48	-49
Investments in pension funds	1,174	1,474
Pension payments for the year	-197	-291
Change in value	77	138
Translation difference	-719	-204
	13,718	14,316

ACTUARIAL ASSUMPTIONS

	Group
%		12/31/2017 12/31/2016
Discount rate	2.30	2.10
Anticipated return on the pension funds' assets	2.30	2.10
Future wage increases	2.50	2.25
Future increases in pensions	2.25	2.00
Future increases in income base amount	2.25	2.00
Personnel turnover	0.00	0.00
Payroll tax	14.10	14.10

NOTE 22 ACCRUED EXPENSES AND PREPAID INCOME

Group		Parent Company
37,590	32,101	2,385	2,241
3,662	5,169	695	755
117,061	81,259	-	-
16,792	14,756	749	704
17,279	9,100	2,384	1,176
192,384	142,385	6,213	4,876
			12/31/2017 12/31/2016 12/31/2017 12/31/2016

NOTE 23 LEASES AND SIMILAR FUTURE COMMITMENTS

Financial leasing agreements

Leases regarding tangible assets, where the Group receives the financial benefits and has the significant risks classified as financial leasing. The Group leases a large computer in Norway and a number of vehicles and other items in Denmark. The leases expire in two to four years and their carrying amount is SEK 4.8 million. According to the terms in the leases, the Group has the possibility of buying the leased assets at a low residual value.

	Group		Parent Company
	2017	2016	2017	2016
Fees within one year	2,588	-	-	-
Fees later than one year but within five years.	2,351	-	-	-
Fees later than five years	-	-	-	-
Total minimum leasing fees	4,939	-	-	-
Future financial expenses for finance leases	-255	-	-	-
Present value of liabilities for finance leases	4,684	-	-	-
Present value of finance lease liabilities is as follows:
Within one year	2,434	-	-	-
Later than one year but within five years	2,250	-	-	-
Later than five years	-	-	-	-
Total minimum leasing fees	4,684	-	-	-

Operational leasing agreements and future commitments in the form of non-cancellable contracts

There are currently no operational leasing agreements. Future assumptions in the form of non-cancellable contracts are comprised of local contracts. 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
	2017	2016	2017	2016
Fees for the period	18,733	17,940	8,349	8,254
Fees within one year	18,783	17,858	8,182	7,419
Fees later than one year but within five years.	31,845	39,392	7,506	9,915
Fees later than five years	-	-	-	-

NOTE 24 PLEDGED ASSETS, GROUP AND PARENT COMPANY

PLEDGED ASSETS CONCERNING OWN LIABILITIES AND PROVISIONS

	Group		Parent Company
			12/31/2017 12/31/2016 12/31/2017 12/31/2016
Business mortgages	39,000	39,000	39,000	39,000
Shares in subsidiaries	311,975	315,891	298,445	319,844
Total	350,975	354,891	337,445	358,844

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 1801: Patrik Fransson SEK 250 thousand, Lars Eriksson SEK 250 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 per cent owned by Vitec. In addition to costs for premises, the Parent Company also invoices for intra-group services.

NOTE 26 UNTAXED RESERVES

		12/31/2017 12/31/2016
The difference between booked depreciation and depreciation according to plan	2,429	2,341
Total	2,429	2,341

NOTE 27 DEFERRED TAX

Deferred tax at 22 percent (22) in the Parent Company's untaxed reserves amounts to SEK 534 thousand (515).

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.

VALUATION CRITERIA ACCORDING TO IAS 39

	Note	Loans receivable and ac counts receivable			Financial liabilities valued at fair value	Financial liabilities valued at their accrued acquisition value
		2017	2016	2017	2016	2017	2016
Financial assets
Accounts receivable	16	172,450	137,336	-	-	-	-
Other receivables	-	841	5,299	-	-	-	-
Cash and cash equivalents	18	57,968	80,920	-	-	-	-
Financial liabilities
Convertible debentures (long-term)	20	-	-	-	-	38,789	-
Convertible debentures (short-term)	20	-	-	-	-	-	13,786
Liabilities to credit institutes (long-term)	20	-	-	-	-	336,129	339,396
Liabilities to credit institutes (short-term)	20	-	-	-	-	31,180	30,340
Other liabilities (long-term)		-	-	-	28,765	3,270	-
Other liabilities (short-term)		-	-	25,925	-	1,848	182
Accounts payable		-	-	-	-	31,902	21,153
Accrued expenses	22	-	-	-	-	54,869	41,236
Total		231,259	223,555	25,925	28,765	497,987	446,093

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 338,742 thousand, is identified as hedging of the net investment in the Group's subsidiaries in Norway, Finland and Denmark. The exchange rate loss from the translation of the borrowing to Swedish kronor amounts to SEK 4,424 at the end of the reporting period, and is recognized in other comprehensive income after deductions for deferred tax.

Convertible debentures

In July 2017 in connection with the acquisition of MV-Nordic A/S, the Parent Company issued 2,000 convertible bonds at SEK 10,000 each, with a nominal value of SEK 20,008 thousand. Conversion may be requested during the period January 1, 2019 to June 30, 2020. The conversion price is SEK 85.00.

In December 2017, the Parent Company issued 2,083 convertible bonds at SEK 10,000 each, with a nominal value of SEK 20,830 thousand. Conversion may be requested during the period November 1-30, 2020. The conversion price is SEK 104.00.

Convertible bonds are recognized in the balance sheet as follows.

Nominal value of convertible bonds	40,838
Equity component	-2,221
Total	38,617
Interest expense*	172
Interest paid
Liability share	38,789

*The interest expense is calculated by multiplying the estimated market interest rate (1.8 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 in respect of 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 in respect of anticipated fulfillment of conditions. When calculating fair value, an assumed interest rate of 0.9 percent 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 AT DECEMBER 31, 2017

(TSEK)	Level 1	Level 2	Level 3	Book value
Additional purchase price Fox Publish AS			1,301	1,301
Additional purchase price FuturSoft Oy			24,624	24,624
Total	-	-	25,925	25,925

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

NOTE 29 EVENTS AFTER THE BALANCE SHEET DATE

CFO utilizes options and buys 50.000 shares

CFO Maria Kröger increased her shareholdings by 50,000 Class B shares on January 4, 2018. The acquisition was made through the redemption of personal options that Lars Stenlund and Olov Sandberg issued in January 2015.

Proposed allocation of profits

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

	335,572,093
Profit for the year	64,945,008
Share premium reserve	126,637,558
Profit brought forward	143,989,527

THE BOARD PROPOSES THAT THE PROFIT BE ALLOCATED AS FOLLOWS:

	335,572,093
To be carried forward	176,111,745
To be carried forward to the share premi um reserve	126,637,558
To be distributed to shareholders at SEK 1.10 per share	32,822,790

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 Directors' 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, the sustainability report and the consolidated financial statements have been approved for issue by the Board of Directors on March 26, 2018. 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 23, 2018.

Umeå, March 26, 2018

Crister Stjernfelt Chairman of the Board of Directors

Anna Valtonen Board member Birgitta Johansson-Hedberg Board member

Jan Friedman Board member

Kaj Sandart Board member Lars Stenlund CEO

Our audit report has been submitted on March 29, 2018

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

Auditor´s report

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 2017 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 42-88 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 2017 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 2017 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 consolidated statement of profit or loss and the consolidated balance sheet the group.

Our opinions in this report on the annual accounts and consolidated accounts are consistent with the content of the additional report that has been submitted to the parent company's Board of Directors in accordance with the Audit Regulation (537/2014) Article 11.

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. This includes that, based on the best of our knowledge and belief, no prohibited services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided to the audited company or, where applicable, its parent company or its controlled companies within the EU.

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 an expressed growth strategy whereby growth is primarily achieved through the acquisition of mature software companies in the Nordic region. Through these acquisitions, Vitec secures, amongst other things, client relationships and established brands and software specific to certain industries. Company management works on an ongoing basis with the identification and evaluation of appropriate acquisition targets on the basis of a clearly defined specification of requirements. As at year-end, 31 December 2017, the group was comprised of 30 subsidiaries within 7 segments. Of the subsidiaries, there are four companies reporting net sales in excess of MSEK 70 and which, in total, represent approximately 50 % of the group's net sales. Vitec's business model is based, primarily, on the sale of subscription agreements which are recognized in income on a straight-line basis over the tenor of the agreement, so-called recurring revenues. In 2017, recurring revenues accounted for 71 percent of the group's reported net sales.

In addition to four larger subsidiaries, the audit of the consolidated accounts has included, this year, the parent company, Vitec Software Group AB and the larger subsidiaries in Sweden, Norway and Denmark, equivalent to approximately 75 percent of the group's total external sales.

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 consolidated financial statements.

Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for the consolidated financial statements as a whole as set out in the table below. 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.

Acquisitions

During the year, Vitec completed the acquisition of the Danish company, MV Nordic A/S and its subsidiaries in Norway and Sweden.

For each business combination, company management prepares an acquisition analysis in which the difference between the net assets in the acquired company and the purchase price is allocated to identify intangible assets in the acquired company. The intangible fixed assets in acquired companies are comprised of product rights, client relationships and brands. Any excess value which does not refer to intangible assets is reported as goodwill. When the acquisition of MV Nordic was completed, the calculation was, still, preliminary which is the reason that an updating of the acquisition analysis was undertaken in conjunction with book closing.

In order to determine the value of e identified intangible assets, company management is required to undertake estimations and forecasts regarding the future development of the acquired companies. Client relationships and product rights are written off, in contrast to goodwill and brands, over their expected lifetimes. An incorrect allocation of the excess value in an acquisition analysis can, consequently, have a major impact on the financial reporting.

The company acquisitions are complex in nature and the reporting of these is dependent on the manner in which the acquisition agreement is formulated, and the reporting involves significant estimations on behalf of management. This is the reason we have deemed that the preparation of the acquisition analyses is a key audit area.

As regards the above-stated accounting principles, refer to page 72 and Note 1 in the 2017 annual report.

Nedskrivningsprövning

The group's balance sheet reports acquisition-related excess values and goodwill in a total amount of MSEK 746.

Goodwill and acquisition-related excess values are equivalent to the difference between the value of net assets and the purchase price paid for the acquisition. In contrast with other fixed assets, there is no write-down of goodwill and brands, rather these items are tested annually for impairment or when there is an indication of an impairment requirement. Other acquisition-related fixed assets are written off over their calculated useful lifetimes.

Testing, and thereby the reported values, are dependent on the Board of Directors' and management's assessments and assumptions regarding, amongst other things, growth and future profitability, and as regards the discount rate. Further events and new information can change these assessments and estimations and it is, therefore, particularly important that company management evaluates, on an ongoing basis, the reported value of acquisition-related intangible assets to ensure that such values can be motivated in consideration of any new information or circumstances. Company management's calculation of the useful lifetimes of the assets is based on the forthcoming year's budget and forecasts for the subsequent four years. A closer description of these assumptions is found in Note 12. Impairment testing involves, naturally, a large component of estimations and judgments on behalf of company management, which is the reason we have deemed this to comprise a key audit matter in our audit.

As regards the above-stated accounting principles, refer to page 72 and Note 1 in the 2017 annual report.

Key audit matter How our audit addressed the key audit matter

We have examined and evaluated the acquisition analyses with a special focus on the manner in which company management identify goodwill and other intangible assets, such as brands and product rights. We have undertaken this by, amongst other things, performing the following audit activities:

• Obtaining copies of the acquisition agreements and evaluating the terms of those agreements from an accounting perspective.
• Confirmed the paid purchase price against bank account excerpts.
• Assessed the company's methods and assumptions to identify intangible assets, such as product rights, brands and goodwill, and examined the allocation of the excess values of these items.
• Checked acquisition-related costs against underlying invoices.
• Verified the digressive model for depreciation against historical product lifetimes.
• Examined the updated acquisition analysis on the basis of Vitec's accounting principles through checking the calculation and reconciliation of these amounts against underlying client agreements.

Based on materiality, we have confirmed that appropriate disclosures regarding the acquisition have been provided in the annual report.

In our audit, we have placed a special focus on the manner in which the company management's testing of impairment requirements has been performed.

Amongst other things, we have executed the following audit activities:

• We have evaluated Vitec's process for testing any impairment requirement of goodwill.
• We have examined the manner in which company management identified cash generating units and compared them with how Vitec follows up goodwill internally.
• We evaluated the reasonability of the applied assumptions and executed sensitivity analyses as regards changed assumptions.
• We compared the calculated value in use with the stock exchange value as at 31 December 2017.
• We evaluated management's forecast capacity through comparing previously undertaken forecasts against actual outcome.

Based on materiality, we confirmed that sufficient disclosures had been provided in the Notes in the Annual Report.

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 2-23 and 39-41. 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 intend to liquidate the company, to cease operations, or has no realistic alternative but to do so.

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 Revisorsinspektionen's website: www.revisorsinspektionen. se/revisornsansvar. 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 2017 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.

A separate list of loans and collateral has been prepared in accordance with the provisions of the Companies Act.

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

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' 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 fulfill 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 Revisorsinspektionen's website: www.revisorsinspektionen.se/revisornsansvar. 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/ the Annual Accounts Act for Credit Institutions and Securities Companies/ the Annual Accounts Act for Insurance Companies.

PricewaterhouseCoopers AB, Torsgatan 21, 1139 97 Stockholm, was appointed auditor of Vitec Software Group AB (publ) by the general meeting of the shareholders on the 25 April 2017 and has been the company's auditor since the 6 May 2015.

Stockholm 29 March 2018 PricewaterhouseCoopers AB Niklas Renström Authorized Public Accountant

Auditor's report on the statutory sustainability report

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

Engagement and responsibility

It is the board of directors who is responsible for the statutory sustainability report for the year 2017 on pages 12-17 and that it has been prepared in accordance with the Annual Accounts Act.

The scope of the audit

Our examination has been conducted in accordance with FAR's auditing standard RevR 12 The auditor's opinion regarding the statutory sustainability report. This means that our examination of the statutory sustainability report is substantially different and 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 opinion.

Opinion

A statutory sustainability report has been prepared.

Stockholm den 29 mars 2018 PricewaterhouseCoopers AB Niklas Renström Authorized Public Accountant

Key performance indicator definitions

In this annual report, a number of financial measurements are referred to that are not defined under IFRS, so-called alternative performance measures according to ESMA's guidelines. These measurements provide the management and investors with valuable information to analyze trends in the company's business operations. The alternative performance measures are not always comparable with measures used by other companies. They are intended to supplement, not replace, financial measurements presented in accordance with IFRS. Key performance indicators that are presented in the multi-year summary on page 39 are defined as follows:

Non-IFRS perfor mance measures	Definition	Description of use
Recurring revenues	Recurring, contractual revenues where there is no direct connec tion between our work input and agreed price. The agreed amount is usually invoiced in advance and the revenue is booked during the contract period.	Key performance indicators for management of the operating activities.
Portion of recurring revenue	Recurring revenues in relation to net sales.	Key performance indicators for management of the operating activities.
Growth	Development of the company's net sales in relation to the same peri od of the previous year.	Used to monitor the company's sales growth.
Organic growth	Development of the company's net sales, excluding companies ac quired during the year, in relation to the same period of the previous year.	Used to monitor the company's sales growth.
Profit growth to Parent Company shareholders	Development of the company's profit after tax in relation to the same period of the previous year.	Used to monitor the company's profit growth.
Profit margin	The period's profit after tax in relation to net sales.	Used to monitor the company's profit growth.
Operating margin	Operating profit in relation to net sales.	Used to monitor the company's profit growth.
EBITDA	The profit for the period before net financial items, tax and deprecia tion/amortization.	Shows the company's operating profit before depreciation/ amortization and interest.
Equity/assets ratio	Shareholders' equity, including equity attributable to non-controlling interests, in relation to total assets.	The measure shows the compa ny's financial stability.
Equity/assets ratios after full conversion	Equity and convertible debentures in relation to total assets.	The measure shows the compa ny's financial stability.
Debt/equity ratio	Average liabilities in relation to average shareholders' equity and non-controlling interests.	The measure shows the compa ny's financial stability.
Average equity	Average of the period's equity attributable to the Parent Company shareholders and the previous period's equity attributable to the Parent Company shareholders.	The underlying measure used for the calculation of other key performance indicators.
Return on capital employed	Profit after financial items plus interest expenses in relation to aver age capital employed. Capital employed is defined as total assets less non interest-bearing liabilities and deferred tax.	This measure shows the com pany's profitability. Indicates the company's profitability in relation to externally financed capital and equity.
Return on equity	Reported profit after tax in relation to average shareholders' equity attributable to Parent Company shareholders.	The measure shows the compa ny's profitability and is a measu re of the return on equity.
Sales per employee	Net sales in relation to average number of employees.	Used to assess the company's efficiency.
Value added per employee	Operating profit, plus depreciation and personnel costs in relation to the average number of employees.	Used to assess the company's efficiency.
Personnel cost per employee	Personnel costs relative to the average number of employees	Key ratio to measure efficiency in operating activities.
Average number of employees	Average number of employees in the Group during the financial year.	The underlying measure used for the calculation of other key performance indicators.

Adjusted equity per share	Equity attributable to Parent Company shareholders in relation to the number of shares issued at the closing date.		The measure shows equity per share on the balance sheet date.
Cash flow per share	Cash flow from operating activities before the change in operating capital in relation to the average number of shares	share.	Used to monitor the company's development of cash flow per
P/E ratio	Share price on the closing date in relation to earnings per share.		Generally accepted measure to measure the share's price com pared with profit after tax.
P/Adjusted equity per share	The share price on the closing date multiplied by the number of sha res issued on the closing date in relation to the equity.		Generally accepted measure to measure the share's price com pared with adjusted equity.
P/S	The share price on the closing date multiplied by the average number of shares in relation to net sales.		Generally accepted measure to measure the share's price compared with sales.
Average number of shares after dilution	Average number of shares during the period with addition of the number of shares added after full conversion of convertibles.		The underlying measure used for the calculation of other key performance indicators.
IFRS performance measures	Definition		Description of use
Earnings per share	Profit after tax attributable to the Parent Company's shareholders in relation to the average number of shares during te period.	IFRS KPI
Earnings per share after dilution	Profit after tax attributable to Parent Company shareholders plus interest expenses regarding convertible debentures, in relation to average number of shares after dilution.	IFRS KPI
Calculations
Organic growth
			2017	2016
Net sales			855.0	675.4
Not included:
are unavailable.	Sales for the year of previous year's acquired companies, the months where corresponding sales in 2016		-85.7
	Sales for the year, companies acquired this year		-89.0
Sales, divested operations				-3.7
Net sales, net of acquisitions			680.3 1.3 %	671.7
Organic growth
	Average number of shares (weighted average)	Number of days	Number of shares	Weighted value
Number of shares, beginning of the year		342	29,396,690	27,544,296
12/08/2017 Conversion of bonds		23	29,838,900	1,880,259
Average number of shares				29,424,555
Average number of shares after dilution		Number of days	Number of shares	Weighted value
Number of shares, beginning of the year		342	29,396,690	27,544,296
12/08/2017 Conversion of bonds		23	29,838,900	1,880,259
7/6/2017 Dilution Convertibles		178	234,317	114,270
Average number of shares after dilution				29,538,825
	Profit when calculating earnings per share after dilution

Interest expenses, convertible debentures	388
	79,814

Shareholder information

Our website vitecsoftware.com is the main channel for information to shareholders and the stock market. There, we publish financial information, and other information that may be price sensitive, immediately after being made public.

Financial calendar

Annual General Meeting	4/23/2018
Interim report January-March	4/23/2018
Interim report April-June	7/12/2018
Interim report July-September	10/18/2018

Investor information on vitecsoftware.com

On vitecsoftware.com, there is also a possibility to order a subscription by e-mail of our press releases and printed versions of our financial statements, where there is also information prior to our General Meetings and much more.

If you have any questions, you are welcome to contact me. Patrik Fransson, Investor Relations patrik.fransson@vitecsoftware.com +46 76 942 85 97

Sent by: Vitec, Tvistevägen 47 A, 907 29 Umeå Tel +46-90-15 49 00 vitecsoftware.com