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Vitec Software Group B — Interim / Quarterly Report 2016
Jul 14, 2016
2988_ir_2016-07-14_2cfe9b31-b229-410b-9a56-154920b50813.pdf
Interim / Quarterly Report
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Interim report January - June 2016
Revenue growth and stronger cash flow
SUMMARY FOR JANUARY – JUNE 2016
- Net sales SEK 318 M (296)
- Profit before tax SEK 40,5 M (43,8)
- Operating margin 13,6 % (15,8)
- Earnings per share before dilution SEK 1,08 (1,15)
- Cash flow from operations SEK 105,8 M (99,4)
SUMMARY FOR APRIL - JUNE 2016
- Net sales 161 M (153)
- Profit before tax SEK 22,5 M (22,2)
- Operating margin 14,8 % (15,4)
- Earnings per share before dilution SEK 0,60 (0,57)
- Cash flow from operations SEK 21,8 M (25,8)
- New Head of Business Area Finance & Insurance in Denmark
CEO's comments
The second quarter lacks major events and the period's characteristic is daily work with deliveries, development, sales, and continuous strive for efficiency. Unrealized currency effects affected the operating profit negative with SEK 6 million for the first six months of 2016 compared with the same period last year, of which SEK 4 million refers to for the second quarter. The underlying business developed better than the marginal improvement in operating income in the second quarter.
The number of ongoing acquisition dialogues has increased during the latter part of the quarter, and we continue to devote significant resources in
maintaining and further developing these dialogues. After the end of the period, this has resulted in the acquisition of the Finnish company Tietomitta OY. Vitec's financial position and readiness for future acquisitions is good, and with a prospect list of hundreds of companies
in the Nordic region, we see good opportunities for further acquisition-based growth.
Vitec's business model with the pursuit of a high proportion of recurring revenues has received a downward adjustment in the quarter to 75.4 % (78.9 %) despite that recurring revenues has increased. The decrease is due to increased service revenues mainly in the business areas Real Estate and Auto. Auto operations in Denmark has a portfolio of services and Real Estate has a high number of rollout projects.
With a clear shift from traditional license sales to a subscription model (cloud-based systems), the proportion of recurring revenues and the operating margins increase at the same time. This, together with the employees' great capacity to innovate and integrate acquisitions, provides good conditions for long-term development of our business. With the acquisition of well-established companies and a high proportion of recurring revenues, Vitec continues on this path, to act in several independent and specialized niches to achieve sustainable profitable growth.
Lars Stenlund, CEO
January - June 2016
The Vitec Group continues to grow during the first six months compared to last year. Business Area Estate Agent has decreased in size but at the same time Business Area Auto more than doubled. The Group has thus gained a better balance between the various business areas and a now has a significantly better risk diversification.
Business Area AUTO
Business Area Auto, which offers business systems for the automotive sector in Norway and Denmark, develops strongly. Compared with last year, both sales and operating profit more than doubled
Business Area ENERGY
Business Area Energy develops in a stable way and continues to invest in resources and methodologies for the effective processing of the European energy market. A cloud-based offering that quickly and through the recently acquired operations in Denmark and Norway which now have been integrated into the Group.
effectively is deployed for customers in Europe is now ready for delivery. During the first six months they have signed agreements with 14 new customers.
Business Area REAL ESTATE
The business area is growing and maintaining its focus on delivering upgrades of its most modern product offerings. Deployment, implementation and training of the new systems continues at a high speed. The business area has in the quarter continued to win new customers where more and more are choosing the cloud-based service that has a positive effect on our recurring revenues.
Business Area FINANCE & INSURANCE
Business Area Finance & Insurance in Sweden have now completed the delivery of a pension plan supporting system to Länsförsäkringar Fondliv. In Denmark, the rollout of the latest version of the portfolio management system Portman continues. More than 80 % of the customer base now updated to the latest
Business Area HEALTH
The business area continues to have full focus on delivery and further development of its system to a few major customers. Roll-out projects will be continued intensively with sprints throughout 2016. In the short term, this affects profitability negatively, but in the long term, it strengthens the business area by increased recurring revenues. During the quarter,
version, which gives our customers benefits in their operations and us a more efficient delivery. In Norway, there are three major implementation projects of the product Nice4Net. Lead times for sales processes against established non-life insurance companies are long.
we intensified marketing of our SMS-service where doctors can notify patients about visiting hours. The growth of the service during the quarter developed very positively albeit from low levels.
Business Area MEDIA
Business Area Media has remained stable, but profitability has been negatively affected by a continued decline in demand for services from the larger
Business Area ESTATE AGENT
Two larger Swedish customers has now fully switched to using proprietary solutions. This has led to a decreased revenue compared with last year. Meanwhile, the success of Vitec Express has continued and more brokerage chains and individual brokers have chosen Vitec new cloud-based solution. In customers who have Managed Applications. After the period, the main part of the business was sold to XLENT Consulting Holding AB.
Norway, we modernize our brokerage offer to a completely cloud-based service that builds on the Norwegian platform and Vitec Express. The caution we saw in Q1 of the Norwegian housing market has turned in Q2 and we have seen an increase in transactions through our systems.
Financial information
SALES AND RESULTS
April-June 2016
REVENUES
Net sales for the period amounted to SEK 161,3 million (152,7), which represents an increase of 6%. Recurring revenue for the period increased by 1 % from the previous year and amounted to SEK 121,6 million (120,5), corresponding to 75,4 % (78,9) of net sales. License revenue declined marginally from the previous year and amounted to SEK 5,7 million (5,8). Service revenues increased by 25 % from the previous year and amounted to SEK 31,8 M (25,3).
RESULTS
Operating profit amounted to SEK 23,9 million (23,5) with an operating margin of 14,8 % (15,4). Profit after tax amounted to SEK 17,7 million (16,7). Earnings per share before dilution were SEK 0,60 (0,57).
January-June 2016
REVENUES
Net sales for the period amounted to SEK 318,4 million (296,1), which represents an increase of 8 %. Recurring revenue for the period increased by 6 % from the previous year and amounted to SEK 244,6 million (231,8), corresponding to 76,8 % (78,3) of net sales. License revenue declined 11 % from the previous year and amounted to SEK 9,3 million (10,4). Service revenues increased by 18 % from the previous year and amounted to SEK 60,8 M (51,7).
RESULTS
Operating profit amounted to SEK 43,4 million (46,7) with an operating margin of 13,6 % (15,8). The decline in operating profit is attributable to higher depreciation on intangible assets and unrealized exchange losses. Profit after tax amounted to SEK 31,7 million (33,9). Earnings per share before dilution were SEK 1,08 (1,15).
LIQUIDITY AND FINANCIAL STATUS
The Group's cash and cash equivalents, including short-term investments, at end of period amounted to SEK 60,1 million (60,2). In addition to these cash and cash equivalents, was a bank overdraft facility of SEK 20 million, and SEK 170,8 million in an unused credit facility of SEK 250 million. During the period, SEK 17,0 million was repaid to the credit facility. Cash flow from operating activities was SEK 105,8 million (98,7). Investments totaled SEK 40,8 million in capitalized work, SEK 0,9 million in other intangible assets and SEK 2,4 million in tangible assets.
Total interest-bearing liabilities amounted on June 30, 2016 to SEK 230,4 million (178,7) distributed on long term debt SEK 200,9 million (149,0) and short-term interest-bearing liabilities SEK 29,5 million (29,7).
Equity attributable to Vitec's shareholders amounted to SEK 291,3 million (243,5). The equity ratio was 36 % (33). Payed dividend amounts to SEK 0,90 per share, totaling SEK 26,5 million.
Operations
Vitec Group operations are controlled and organized in seven segments (business areas). For more information on each business area, refer to www.vitecsoftware.com. The business areas are; Auto, Energy, Real Estate, Finance & Insurance, Health, Media and Estate Agent.
| Finance & | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| BUSINESS AREAS | Auto | Energy | Real Estate | Insurance | Health | Media | Estate Agent | |||||||
| 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |
| Jan | Jan | Jan | Jan | Jan | Jan | Jan | Jan | Jan | Jan | Jan | Jan | Jan | Jan | |
| Jun | Jun | Jun | Jun | Jun | Jun | Jun | Jun | Jun | Jun | Jun | Jun | Jun | Jun | |
| Recurring revenues | 39,1 | 19,6 | 8,9 | 8,5 | 43,1 | 40,2 | 47,5 | 37,9 | 26,1 | 23,0 | 2,2 | 2,4 | 77,5 | 100,1 |
| License revenue | 0,9 | 0,0 | 0,0 | 0,0 | 4,7 | 5,3 | 3,0 | 2,9 | 0,0 | 0,1 | 0,0 | 0,6 | 0,6 | 1,5 |
| Services revenue | 6,8 | 0,4 | 3,9 | 3,3 | 28,6 | 25,2 | 9,6 | 7,6 | 5,1 | 6,6 | 1,9 | 3,0 | 4,8 | 5,5 |
| Other income | 2,8 | 0,7 | 0,1 | 0,0 | 0,1 | 0,0 | 0,2 | 0,5 | 0,2 | 0,5 | 0,0 | 0,0 | 0,3 | 0,5 |
| Net sales | 49,6 | 20,7 | 13,0 | 11,9 | 76,5 | 70,7 | 60,3 | 49,0 | 31,4 | 30,1 | 4,2 | 6,1 | 83,3 | 107,5 |
| Recurring revenue as a percentage of net |
||||||||||||||
| sales | 79% | 95% | 69% | 72% | 56% | 57% | 79% | 77% | 83% | 76% | 54% | 40% | 93% | 93% |
| Operating profit | 7,9 | 3,9 | 3,7 | 4,2 | 11,7 | 11,9 | 8,2 | 5,7 | 0,7 | 2,2 | 0,7 | 1,6 | 10,7 | 17,4 |
| Operating margin | 16% | 19% | 28% | 35% | 15% | 17% | 14% | 12% | 2% | 7% | 16% | 26% | 13% | 16% |
Business Area AUTO
The segment consists of Vitec AutoData AS, Vitec Datamann A/S and Vitec Infoeasy AS. The business area offers business systems for the automotive sector with support for sales, purchasing, stock control, invoicing, accounting and pay administration. Datamann A/S and Infoeasy AS were consolidated as of July 1 and 2, 2015 and is the reason for the strong growth.
Business Area ENERGY
The segment consists of Vitec Energy AB. The business area offers business systems for forecasting wind power, electricity and heating needs, as well as for the technical management and maintenance of distribution networks.
Business Area REAL ESTATE
The segment consists of Vitec Fastighetssystem AB, Vitec Förvaltningssystem AB, Vitec Capifast AB and Vitec Software AB. The business area offers
business systems for construction and real estate companies.
Business Area FINANCE & INSURANCE
The segment consists of Vitec Capitex AB, the Group Aloc A / S and Vitec Nice AS. The business area offers business systems for the finance and
insurance industry, as well as standardized software for tax calculations, pension calculations an housing calculations.
Business Area HEALTH
The segment consists of the Group Acuvitec Oy. The business area offers business systems for electronic handling of medical records for healthcare.
Business Area MEDIA
The segment consists of 3L Media AB and the Group Vitec Veriba AB. The business area offers business
Business Area ESTATE AGENTS
The segment consists of Vitec Mäklarsystem AB, Capitex AB, Vitec IT-Makeriet AS, the Group Vitec Megler AS, Vitec Fox AS and ADservice Scandinavia
systems for newspaper publishers and companies supplying special solutions within distribution.
AB. The business area offers business systems for real estate agents.
Operating profit* Jan-Jun (MSEK)
RESULT OVERVIEW FOR SEGMENTS, MILLION SEK
| BUSINESS AREA | NET SALES (MSEK) | PROFIT BEFORE ACQUISITION RELATED COSTS (MSEK) |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2016 Apr-Jun |
2015 Apr-Jun |
2016 Jan-Jun |
2015 Jan-Jun |
2015 Jan-Dec |
2016 Apr-Jun |
2015 Apr-Jun |
2016 Jan-Jun |
2015 Jan-Jun |
2015 Jan-Dec |
|
| Auto | 25,0 | 10,4 | 49,6 | 20,7 | 71,1 | 5,0 | 3,2 | 7,9 | 3,9 | 14,9 |
| Energy | 6,5 | 5,7 | 13,0 | 11,9 | 24,1 | 1,8 | 1,9 | 3,7 | 4,2 | 8,8 |
| Real Estate | 39,1 | 35,9 | 76,5 | 70,7 | 142,6 | 6,0 | 5,1 | 11,7 | 11,9 | 24,9 |
| Finance & Insurance | 31,2 | 25,0 | 60,3 | 49,0 | 101,2 | 4,8 | 3,2 | 8,2 | 5,7 | 13,9 |
| Health | 16,2 | 14,6 | 31,4 | 30,1 | 61,5 | 0,1 | 0,5 | 0,7 | 2,2 | 5,7 |
| Media | 2,2 | 2,6 | 4,2 | 6,1 | 10,5 | 0,4 | 0,5 | 0,7 | 1,6 | 2,4 |
| Estate Agent | 40,9 | 58,3 | 83,3 | 107,5 | 207,0 | 5,9 | 9,2 | 10,7 | 17,4 | 33,2 |
| Shared | 0,1 | 0,2 | 0,3 | 0,2 | 0,4 | - | - | - | - | - |
| Vitec Group | 161,3 | 152,7 | 318,4 | 296,1 | 618,4 | 23,9 | 23,5 | 43,4 | 46,8 | 103,9 |
SALES BY GEOGRAPHY
Vitec is a Nordic software company and our customers are mainly in Sweden, Denmark, Finland and Norway, we also have a number of customers in other parts of the world. The following table and pie chart shows the Group's revenue based on where the customer is established.
| MARKET | NET SALES (MSEK) | |||||||
|---|---|---|---|---|---|---|---|---|
| 2016 | 2015 | 2015 | ||||||
| Jan-Jun | % | Jan-Jun | % | Jan-Dec | % | |||
| Sweden | 145,5 | 45,7% | 153,8 | 51,9% | 308,1 | 49,8% | ||
| Denmark | 61,1 | 19,2% | 39,1 | 13,2% | 99,8 | 16,1% | ||
| Finland | 33,1 | 10,4% | 31,6 | 10,7% | 64,1 | 10,4% | ||
| Norway | 77,2 | 24,2% | 70,2 | 23,7% | 142,1 | 23,0% | ||
| Rest of Europe | 1,4 | 0,4% | 1,4 | 0,5% | 4,1 | 0,7% | ||
| Rest of world | 0,1 | 0,0% | 0,0 | 0,0% | 0,1 | 0,0% | ||
| SUM | 318,4 | 100,0% | 296,1 | 100,0% | 618,4 | 100,0% |
Significant events during the second quarter
MAY 31: New CEO of Vitec Business Area Finance & Insurance in Denmark
Kim Møller Jensen has September 1 assumed a position as CEO of Vitec Business Area Finance & Insurance in Denmark. Kim has long experience in the IT industry. He currently holds a position as CIO within Siemens, prior to that he was Director within EG. Kim has extensive experience in running product development based on the unique circumstances of individual industries.
-"In our opinion, Kim has both the experience and the knowledge to take this key role. He also shares our core values, which is important as a leader within Vitec", says Patrik Fransson, VP Operations Vitec.
Significant events after the end of the period
JULI 1: Vitec sells Media business to XLENT
Vitec did on July 1 agree with XLENT Consulting Holding AB on the sale of the shares of Vitec Veriba AB which constitutes most of Vitec Media business. The business, with sales of approximately SEK 9 million per year, mainly includes custom application development, and has a significantly higher share of
services sales than other parts of Vitec. The business has a good fit with XLENT, which has its focus on service sales, which will be beneficial for both employees and customers. Sale is made to the consolidated book values.
JULY 5: Vitec acquires Tietomitta OY in Finland
Vitec Software Group AB (publ) did on July 5 agree to acquire 100 % of the shares in the Finnish software company Tietomitta OY, whose product is an industry-specific software for supporting wastemanagement in Finland. The company reported sales
for the fiscal year 2015 of EUR 3.5 million, with approximately 65 % recurring revenue, and EBITDA of EUR 0.8 million. Payment is in cash at closing. Acquisition is expected to directly result in an increase in earnings per share for Vitec. Consolidation is done from the date of acquisition.
Risks and uncertainties
Vitec's significant risks and uncertainties are described in the Directors' Report in the Annual Report for 2015 under the heading "Risks and Uncertainties" on pages 32-33, in note 1 under "Assumptions and estimates" on page 50 and in note 20, "Financial risks and their management "on pages 63-65. No significant changes have occurred since then.
The Parent Company
Net sales amounted to SEK 40,6 million (43,5) and consisted primarily of sales to subsidiaries for services rendered. Profit after tax amounted to SEK -5,8 million (6,2). The value of shares in subsidiaries was during the period adjusted down by SEK 1,5 million and SEK 21,2 million relating to downward adjustments of contingent considerations for Fox Publish AS and Acuvitec OY. Short-term non-interest-bearing liabilities decreased correspondingly. The Parent Company is exposed to the same risks and uncertainties as the group in general, see above under section Risks and uncertainties.
Transactions with related parties
No significant related party transactions have occurred in the Group and Parent Company during the period.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| Apr-Jun Apr-Jun Jan-Jun Jan-Jun Jan-Dec OPERATING REVENUE Recurring revenues 121 622 120 525 244 577 231 761 480 552 License revenues 5 735 5 750 9 288 10 398 23 098 Service revenues 31 791 25 341 60 817 51 688 106 191 Other revenues 2 175 1 090 3 767 2 272 8 544 NET SALES 161 323 152 706 318 449 296 119 618 385 Capitalized development costs 20 594 16 300 38 525 33 347 62 108 Reversal of aditional purchase price 21 176 - 22 695 - 11 213 SUM 203 093 169 006 379 669 329 466 691 706 OPERATING EXPENSES Goods for resale -3 238 -999 -6 060 -2 583 -6 835 Subcontractors and subscriptions -17 720 -23 143 -35 181 -42 233 -82 890 Other external expenses -21 261 -19 376 -40 647 -37 435 -81 542 Staff costs -91 001 -85 649 -183 549 -168 375 -336 133 Depreciation of tangible assets -2 356 -3 121 -4 891 -5 675 -11 233 Depreciation of intangible assets -18 812 -13 771 -37 179 -26 736 -63 392 Impairment of goodwill -21 176 - -22 695 - -11 213 Unrealized exchange gains and losses -3 585 578 -6 027 343 5 383 TOTAL COSTS -179 149 -145 481 -336 229 -282 694 -587 855 OPERATING PROFIT BEFORE ACQUSITION-RELATED COSTS 23 944 23 525 43 440 46 772 103 851 Acquisition-related costs -9 - -9 -114 -3 244 OPERATING PROFIT AFTER ACQUISITION-RELATED COSTS 23 935 23 525 43 431 46 658 100 607 Financial income 53 90 126 211 826 Financial expense -1 490 -1 438 -3 044 -3 072 -6 747 TOTAL FINANCIAL ITEMS -1 437 -1 348 -2 918 -2 861 -5 921 PROFIT BEFORE TAX 22 498 22 177 40 513 43 797 94 686 Tax -4 797 -5 522 -8 769 -9 897 -16 495 NET PROFIT 17 701 16 655 31 744 33 900 78 191 OTHER COMPREHENSIVE INCOME, ITEMS THAT MAY BE RECLASSIFIED TO PROFIT OR LOSS Currency translation differences 8 582 -3 835 14 426 -3 730 -19 942 TOTAL OTHER COMPREHENSIVE INCOME FOR THE PERIOD 8 582 -3 835 14 426 -3 730 -19 942 TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 26 283 12 820 46 170 30 170 58 249 PROFIT FOR THE PERIOD ATTRIBUTABLE TO -Shareholders of the Parent Company 17 701 16 655 31 744 33 900 78 191 TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ATTRIBUTABLE TO -Shareholders of the Parent Company 26 283 12 820 46 170 30 170 58 249 EARNINGS PER SHARE -Before dilution (SEK) 0,60 0,57 1,08 1,15 2,66 -After dilution (SEK) 0,59 0,56 1,06 1,14 2,64 Average number of shares 29 396 690 29 396 690 29 396 690 29 396 690 29 396 690 |
SEK (thousends) | 2016 | 2015 | 2016 | 2015 | 2015 |
|---|---|---|---|---|---|---|
| Number of shares after dilution | 29 838 900 | 29 838 900 | 29 838 900 | 29 738 730 | 29 788 016 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| SEK (thousends) | 2016-06-30 | 2015-06-30 | 2015-12-31 |
|---|---|---|---|
| ASSETS | |||
| FIXED ASSETS | |||
| Intangibles assets | |||
| Capitalized development costs | 130 423 | 97 268 | 109 171 |
| Product rights | 223 232 | 193 173 | 229 079 |
| Customer agreements | 61 026 | 50 682 | 62 321 |
| Brands | 8 491 | 7 331 | 8 793 |
| Goodwill | 183 674 | 197 957 | 202 103 |
| Software | 4 124 | 3 645 | 3 860 |
| Tangible fixed assets | |||
| Buildings | 8 915 | 9 056 | 9 034 |
| Equipment | 19 454 | 21 537 | 20 343 |
| Finacial assets | |||
| Other long-term receivables | 875 | 727 | 835 |
| Deferred tax | 6 165 | 5 916 | 5 952 |
| TOTAL FIXED ASSETS | 646 379 | 587 292 | 651 491 |
| CURRENT ASSETS | |||
| Inventories | 342 | 317 | 399 |
| Receivables | 103 773 | 99 078 | 159 861 |
| Short-term investments | - | 45 000 | - |
| Cash and equivalents | 60 122 | 15 158 | 60 268 |
| TOTAL CURRENT ASSETS | 164 237 | 159 553 | 220 528 |
| TOTAL ASSETS | 810 616 | 746 845 | 872 019 |
| EQUITY AND LIABILITIES | |||
| Equity | 291 251 | 243 459 | 271 538 |
| Long-term liabilities, interest bearing | 200 866 | 149 047 | 207 222 |
| Long-term liabilities, non-interest bearing | 106 584 | 93 640 | 102 559 |
| Short-term liabilities, interest bearing | 29 534 | 29 654 | 33 845 |
| Short-term liabilities, non-interest bearing | 182 381 | 231 045 | 256 855 |
| TOTAL EQUITY AND LIABILITIES | 810 616 | 746 845 | 872 019 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| SEK (thousands) | 2016 | 2015 | 2016 | 2015 | 2015 |
|---|---|---|---|---|---|
| Apr-Jun | Apr-Jun | Jan-Jun | Jan-Jun | Jan-Dec | |
| EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT COMPANY | |||||
| At beginning of period | 291 425 | 250 335 | 271 538 | 260 130 | 260 130 |
| Conversion bonds | - | - | - | -27 145 | -27 145 |
| Dividend | -26 457 | -19 696 | -26 457 | -19 696 | -19 696 |
| Total comprehensive income for the period | 26 283 | 12 820 | 46 170 | 30 170 | 58 249 |
| AT END OF PERIOD | 291 251 | 243 459 | 291 251 | 243 459 | 271 538 |
CONSOLIDATED STATEMENT OF CASH FLOWS
| SEK (thousands) | 2016 Apr-Jun |
2015 Apr-Jun |
2016 Jan-Jun |
2015 Jan-Jun |
2015 Jan-Dec |
|---|---|---|---|---|---|
| OPERATING ACTIVITIES | |||||
| Operating profit | 23 935 | 23 525 | 43 431 | 46 658 | 100 607 |
| Adjustments for items not included in cash flow | |||||
| Other operating income | -21 176 | - | -22 695 | - | -11 213 |
| Depreciation/amortisation and impairment | 42 344 | 16 892 | 64 765 | 32 411 | 85 838 |
| Unrealized exchange gains/losses* | 3 585 | -561 | 6 027 | -157 | -5 383 |
| 48 688 | 39 856 | 91 528 | 78 912 | 169 849 | |
| Interest received | 53 | 90 | 126 | 211 | 826 |
| Interest paid | -1 490 | -1 438 | -2 977 | -3 072 | -6 747 |
| Tax paid | -1 461 | -2 097 | -15 593 | -6 835 | -14 177 |
| CASH FLOW FROM OPERATING ACTIVITIES BEFORE | |||||
| CHANGES IN WORKING CAPITAL | 45 790 | 36 411 | 73 084 | 69 216 | 149 751 |
| Changes in working capital | |||||
| Change in inventories | 22 | -32 | 57 | 22 | 51 |
| Change in accounts receivables* | -6 082 | -1 413 | 61 758 | 59 123 | -6 115 |
| Change in operating receivables | -5 530 | -1 742 | -5 710 | -11 524 | 1 333 |
| Change in accounts payable* | 3 503 | -258 | -723 | -3 498 | -2 641 |
| Change in operating liabilities | -15 934 | -7 844 | -22 650 | -14 672 | -2 587 |
| CASH FLOW FROM CURRENT OPERATIONS | 21 770 | 25 122 | 105 816 | 98 667 | 139 792 |
| INVESTMENT ACTIVITIES | |||||
| Acquisition of subsidiaries, net** | -11 932 | - | -14 877 | -14 392 | -85 580 |
| Acquisition of intangible assets and capitalized development costs | -22 449 | -17 385 | -41 709 | -35 002 | -70 174 |
| Acquisition of tangible assets | -1 724 | -2 837 | -2 414 | -5 395 | -11 821 |
| CASH FLOW FROM INVESTMENT ACTIVITIES | -36 105 | -20 222 | -59 000 | -54 789 | -167 575 |
| FINANCING ACTIVITIES | |||||
| Dividend | -26 457 | -19 696 | -26 457 | -19 696 | -19 696 |
| Redemption convertible loan | - | - | - | -36 781 | -36 781 |
| New loans | - | - | 17 000 | 25 000 | 102 901 |
| Amortisation of loans | -24 375 | -11 302 | -32 052 | -24 027 | -34 478 |
| CASH FLOW FROM FINANCIAL ACTIVITIES | -50 832 | -30 998 | -41 509 | -55 504 | 11 946 |
| CASH FLOW FOR THE PERIOD | -65 167 | -26 099 | 5 307 | -11 627 | -15 837 |
| CASH AND CASH EQUIVALENTS AT BEGINNING OF THE | |||||
| PERIOD | 125 805 | 85 811 | 60 268 | 71 114 | 71 114 |
| Exchange-rate differences in cash and cash equivalents | -516 | 446 | -5 453 | 671 | 4 991 |
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | 60 122 | 60 158 | 60 122 | 60 158 | 60 268 |
*Change in accounts receivable and change in accounts payable are from this report reported separately . The adjustments for items not included in cash flow includes unrealized foreign exchange differences. Comparative figures have been restated for this, see table on next page.
** Payment for acquisition of subsidiaries consisted of additional payments for the acquisition of Fox Publish AS SEK 2,9 million and Acuvitec OY SEK 11,9 million. The payments did not result in any changes in share capital or control.
Payment for acquisition of subsidiaries in 2015 consisted of proceeds for Fox Publish AS, ADservice Scandinavia AB, Datamann A/S, Infoeasy AS and Nice AS. Payment amounted to SEK 80,6 million. All acquisitions related to the entire outstanding share capital and meant that control was obtained in all companies. During the period an additional payment was made for the acquisition of Aloc A/S SEK 4,9 million. The payment did not result in any changes in share capital or control.
RESTATEMENT OF COMPARATIVE FIGURES APRIL-JUNE 2015
| Adjustment | Adjustment | |||
|---|---|---|---|---|
| Previously | Operating | Operating | ||
| Reported | liabilities and | receivables and | ||
| Value | cash flow | cash flow | Reported Value | |
| SEK (thousands) | 2015 | 2015 | ||
| Apr-Jun | Apr-Jun | |||
| Unrealized exchange gains/losses | 0 | -561 | -561 | |
| Tax Paid | -5 353 | 3 256 | -2 097 | |
| Cash flow from operating activities before changes in | ||||
| working capital | 33 716 | 2 695 | 36 411 | |
| Change in accounts receivables | 0 | -1 413 | 60 536 | |
| Change in operating receivables | 50 754 | 686 | -9 782 | |
| Change in accounts payable | 0 | -258 | -3 240 | |
| Change in operating liabilities | -9 627 | -2 437 | -6 828 | |
| Cash flow from current operations | 73 545 | 0 | -727 | 73 545 |
| Change in long-term receivables | -727 | 727 | 0 | |
| Cash flow from investment activities | -168 076 | 727 | -167 575 |
RESTATEMENT OF COMPARATIVE FIGURES JANUARY-JUNE 2015
| Adjustment | Adjustment | |||
|---|---|---|---|---|
| Previously | Operating | Operating | ||
| Reported | liabilities and | receivables and | ||
| Value | cash flow | cash flow | Reported Value | |
| SEK (thousands) | 2015 | 2015 | ||
| Jan-Jun | Jan-Jun | |||
| Unrealized exchange gains/losses | 0 | -157 | -157 | |
| Tax Paid | -10 128 | 3 293 | -6 835 | |
| Cash flow from operating activities before changes in | ||||
| working capital | 66 080 | 3 136 | 69 216 | |
| Change in accounts receivables | 0 | 59 123 | 59 123 | |
| Change in operating receivables | 48 326 | -59 850 | -11 524 | |
| Change in accounts payable | 0 | -3 498 | -3 498 | |
| Change in operating liabilities | -15 034 | 362 | -14 672 | |
| Cash flow from current operations | 99 394 | 0 | -727 | 98 667 |
| Change in long-term receivables | -727 | 727 | 0 | |
| Cash flow from investment activities | -55 516 | 727 | -54 789 |
RESTATEMENT OF COMPARATIVE FIGURES JANUARY-December 2015
| Adjustment | Adjustment | |||
|---|---|---|---|---|
| Previously | Operating | Operating | ||
| Reported | liabilities and | receivables and | ||
| Value | cash flow | cash flow | Reported Value | |
| SEK (thousands) | 2015 | 2015 | ||
| Jan-Dec | Jan-Dec | |||
| Unrealized exchange gains/losses | 0 | -5383 | -5383 | |
| Tax Paid | -14 177 | -14 177 | ||
| Cash flow from operating activities before changes in | ||||
| working capital | 155 134 | -5 383 | 149 751 | |
| Change in accounts receivables | 0 | -6 115 | -6 115 | |
| Change in operating receivables | -4 281 | 5 614 | 1 333 | |
| Change in accounts payable | 0 | -2 641 | -2 641 | |
| Change in operating liabilities | -10 611 | 8 024 | -2 587 | |
| Cash flow from current operations | 140 293 | 0 | -501 | 139 792 |
| Change in long-term receivables | -501 | 501 | 0 | |
| Cash flow from investment activities | -168 076 | 501 | -167 575 |
INCOME STATEMENT, PARENT COMPANY
| SEK (thousands) | 2016 Apr-Jun |
2015 Apr-Jun |
2016 Jan-Jun |
2015 Jan-Jun |
2015 Jan-Dec |
|---|---|---|---|---|---|
| NET SALES | 20 511 | 21 088 | 40 648 | 43 515 | 100 426 |
| Operating costs | -22 796 | -16 906 | -43 647 | -32 851 | -75 494 |
| OPERATING RESULT | -2 285 | 4 182 | -2 999 | 10 664 | 24 932 |
| RESULT FROM FINANCIAL INVESTMENTS | |||||
| Income from shares in group companies | - | - | - | - | 39 907 |
| Financial income | 40 | 53 | 80 | 142 | 516 |
| Financial expense | -1 412 | -1 294 | -2 902 | -2 907 | -6 235 |
| PROFIT AFTER FINANCIAL NET | -3 657 | 2 941 | -5 821 | 7 899 | 59 120 |
| Appropriations | - | - | - | - | -822 |
| PROFIT BEFORE TAX | -3 657 | 2 941 | -5 821 | 7 899 | 58 298 |
| Tax | - | -647 | - | -1 738 | -3 869 |
| NET PROFIT | -3 657 | 2 294 | -5 821 | 6 161 | 54 429 |
The results of the period are consistent with the total comprehensive income.
BALANCE SHEET, PARENT COMPANY
| SEK (thousands) | 2016-06-30 | 2015-06-30 | 2015-12-31 |
|---|---|---|---|
| ASSETS | |||
| FIXED ASSETS | |||
| Intangible assets | 4 087 | 3 645 | 3 827 |
| Tangible assets | 12 581 | 13 823 | 13 179 |
| Financial assets | 662 695 | 597 488 | 694 898 |
| TOTAL FIXED ASSETS | 679 363 | 614 956 | 711 904 |
| CURRENT ASSETS | |||
| Receivables | 19 435 | 56 900 | 43 394 |
| Short-term investments | 0 | 45 000 | - |
| Cash and equivalents | 60 122 | 15 158 | 45 306 |
| TOTAL CURRENT ASSETS | 79 557 | 117 058 | 88 700 |
| TOTAL ASSETS | 758 920 | 732 014 | 800 604 |
| EQUITY AND LIABILITIES | |||
| EQUITY | 238 963 | 224 710 | 271 240 |
| UNTAXED RESERVES | 2 222 | 2 500 | 2 222 |
| LONG-TERM LIABILITIES | 205 503 | 153 221 | 212 001 |
| SHORT-TERM LIABILITIES | 312 232 | 351 583 | 315 141 |
| TOTAL EQUITY AND LIABILITIES | 758 920 | 732 014 | 800 604 |
Annotations
ACCOUNTING AND VALUATION PRINCIPLES AND OTHER COMMENTS
This report has been prepared in accordance with IAS 34 Interim Financial Reporting. The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards, IFRS, as adopted by the EU and the Swedish Annual Accounts Act. The parent company's financial statements have been prepared in accordance with the Annual Accounts Act and recommendation RFR 2 Accounting for Legal Entities. The new standards, amendments and interpretations to existing standards that have entered into force in 2016, has had no impact on the consolidated financial position or financial reports. The accounting policies and calculation methods are unchanged from the one described in the Annual Report for 2015.
The additional purchase prices for Fox Publish AS and Acuvitec OY has during the period been adjusted down by SEK 1,5 million and SEK 21,2 million. The corrections have been recognized as revenue and as impairment of goodwill in accordance with IFRS 3:58. The corrections have no effect on reported profit.
TAXES
Tax for the year amounted to SEK 7,7 million (10,1). Deferred tax amounted to SEK 1,1 million (-0,2).
INVESTMENTS
Investments amounted to SEK 40,8 million in capitalized work, SEK 0,9 million in other intangible assets and SEK 2,4 million in tangible assets.
LONG-TERM DEBT
Long-term interest-bearing debt consists of bank loans SEK 187,3 million and a convertible loan SEK 13,6 million. Long-term non-interest bearing liabilities consist of deferred taxes SEK 92,6 million, pension liability SEK 9,4 million, a non-current portion of additional purchase price Fox Publish 2,6 million and a promissory note signed in connection with the acquisition of Nice AS SEK 2,0 million.
CONVERTIBLE DEBENTURE
Convertible debentures are included in long-term interest bearing liabilities:
• Loan 1501 (long-term debt interest bearing liabilities, staff). SEK 13,6 million. Duration of the loan is January 1, 2015 - December 31, 2017. The interest rate is Stibor 180. The conversion price is SEK 31,80. Conversion may be requested 1 November to 30 November 2017. The share capital may upon conversion increase by a maximum of 44 221 SEK. At full conversion the dilution of about 1.5% of the share capital and 0.7% of the votes. The convertible program was registered by the Swedish Companies Registration Office February 11, 2015.
EQUITY
Consolidated shareholders' equity as of June 30, 2016 was SEK 291,3 million.
ACQUISITIONS AND SALES
Sale of business area Media
On July 1, all shares of Vitec Veriba AB were sold. The sale constitutes Vitec Media business. Sales are made to the consolidated book values. Since the business area is only a small part of the group, the sale is not material enough to be reported as assets for sale in accordance with IFRS 5.
Acquisition of Tietomitta OY
On July 5, all shares in the Finnish software company Tietomitta OY were acquired. The company´s product is an industry-specific software for the waste-management in Finland.
The company is consolidated as of the acquisition date. Goodwill is considered to be attributable to the expected profitability, complementing the skills needs and expected synergies in the form of joint development of our products. At the publication of this report, there are no financial statements that can be the basis for a detailed description of the acquisitions. For this reason, no information is presented about the purchased receivables and the fair value of acquired assets and liabilities. Additional items in a detailed acquisition analysis, will be product rights, brands and customer agreements.
Signatures
ASSURANCE OF THE BOARD
The Board of Directors and President hereby assure that the interim report provides a fair and true view of the company´s and the Group's operation, financial position and earnings, and describes the significant risks and uncertainties facing the company and the companies included in the Group.
_____________________________ _____________________________
Umeå July 14, 2016
_____________________________ _____________________________ Crister Stjernfelt (Chairman) Kaj Sandart
Birgitta Johansson-Hedberg Jan Friedman
_____________________________ _____________________________ Anna Valtonen Lars Stenlund (CEO)
The board: Crister Stjernfelt, Kaj Sandart, Anna Valtonen, Birgitta Johansson-Hedberg and Jan Friedman.
Information
PUBLICATION
The information in this report is such that Vitec Software Group AB (publ.) is obliged to publish under the Securities Market Act and the Financial Instruments Trading Act. The information was released for publication on July 14, 2016 at 08:30 CET.
CONTACT
CEO Lars Stenlund, +46 70-659 49 39, [email protected]
CFO Maria Kröger, +46 70-324 66 58, [email protected]
FINANCIAL INFORMATION
Can be ordered from: Vitec Software Group AB (publ), Investor Relations, PO-Box 7965, S-907 19 Umeå, Sweden Phone: +46 90-15 49 00
E-mail: [email protected] Financial information is published on www.vitecsoftware.com immediately after publication.
FINANCIAL CALENDAR
2016-10-20 Interim Report January-September 2016 (≈08:30 CET) 2017-02-16 Year End Report 2016 (≈08:30 CET)
This English version of the report is a translation of the original Swedish version; in the event of variances, the Swedish version shall take precedence over the English translation.
The auditors have not audited this report.
CORPORATE REGISTRATION
Vitec Software Group AB (publ.), Org.no. 556258-4804
Key figure definitions
In this interim report we refer to non-IFRS measures that Vitec and other parties use in evaluating the Company's results. These measures provide management and investors with meaningful information to analyze trends in the Company's business. These non-IFRS measure is intended to supplement, not replace, the financial measures presented in accordance with IFRS. Non-IFRS measures presented on the last page of this report are defined as follows.
RETURN ON CAPITAL EMPLOYED
Operating profit as a percentage of average capital employed attributable to parent company shareholders.
RETURN ON EQUITY
Profit/loss for the period, attributable to parent company shareholders, as a percentage of average shareholders' equity, attributable to parent company shareholders.
VALUE ADDED PER EMPLOYEE
Operating income plus depreciation and staff costs relative to the average number of employees.
ADJUSTED EQUITY PER SHARE
Equity attributable to shareholders in proportion to the number of shares issued at the closing-day.
CASH FLOW FROM OPERATING ACTIVITIES PER SHARE
Cash flow from operating activities divided by the average number of shares on the market during the period.
SALES PER EMPLOYEE
Net revenue, including other operating income in relation to average number of employees.
P/E RATIO
Share price at year-end divided by earnings per share.
P/ADJUSTED EQUITY PER SHARE
The share price at the balance sheet date multiplied by the number of shares issued on the closing date in relation to the equity attributable to the parent company's shareholders.
P/S
The share price at the balance sheet date multiplied by the average number of shares in relation to net sales.
EARNINGS PER SHARE
Profit/loss for the period, attributable to parent company shareholders, divided by the average number of shares on the market attributable to parent company shareholders.
OPERATING PROFIT
Operating profit as a percentage of net sales.
SOLIDITY
Shareholders' equity, including equity attributable to non-controlling interests in relation to total assets.
DEBT RATIO
Average liabilities in relation to average shareholders' equity and non-controlling interests.
PROFIT MARGIN
Net profit after tax through the net turnover.
0 % 5 % 10 % 15 % 20 % 25 % 30 %
Graphs
Net Sales Jan-Jun 2016
Operating profit Jan-Jun 2016
Cash flow per share (SEK)
2009 2010 2011 2012 2013 2014 2015
Net Sales (MSEK)
JEK per share (SEK)
0,0 SEK 1,0 SEK 2,0 SEK 3,0 SEK 4,0 SEK 5,0 SEK 6,0 SEK 7,0 SEK 8,0 SEK 9,0 SEK 10,0 SEK
Vitec at a glance
INDUSTRY-SPECIFIC BUSINESS SYSTEMS
Vitec develops and supplies business-critical standardised software to satisfy industry-specific needs. Our growth is taking place through the acquisition of mature software companies in the Nordic region.
LONG-TERM CUSTOMER RELATIONS
We adopt a long-term approach, focusing on our customers' security. We create value through our supportive product offering, which facilitates development and increased profitability for our customers.
BUSINESS MODEL WITH RECURRING REVENUE
Our business model is based on a high proportion of recurring revenue. This creates the conditions to act in the long-term, as we are less sensitive to temporary downturns within individual companies.
GROWTH THROUGH ACQUISITIONS
Vitec has a pronounced acquisition-based growth strategy, with considerable focus on profitability and stable cash flows. By focusing on strong cash flows, we are creating the financial conditions for continued acquisition-driven growth.
HISTORY
Vitec was established in 1985 as a spin-off company from the University of Umeå, and since 1998 it has been a public company based on software. During our 30-year history, we have experienced continuous growth and have recorded a profit every year. Vitec is now a Nordic software Group with 450 employees.
Sender. Vitec Software Group AB (publ), Tvistevägen 47 A, 907 29 UMEÅ, SWEDEN
Key figures
| 2016 | 2015 | 2015 | ||
|---|---|---|---|---|
| Jan-Jun | Jan-Jun | Jan-Dec | ||
| Net sales | (TSEK) | 318 449 | 296 119 | 618 385 |
| Business Area Auto | (TSEK) | 49 553 | 20 691 | 71 082 |
| Business Area Energy | (TSEK) | 12 951 | 11 851 | 24 114 |
| Business Area Real Estate | (TSEK) | 76 487 | 70 716 | 142 557 |
| Business Area Finance & Insurance | (TSEK) | 60 322 | 48 954 | 101 219 |
| Business Area Health | (TSEK) | 31 401 | 30 109 | 61 492 |
| Business Area Media | (TSEK) | 4 156 | 6 058 | 10 547 |
| Business Area Estate Agent | (TSEK) | 83 285 | 107 505 | 207 011 |
| Shared | (TSEK) | 292 | 235 | 363 |
| Growth | (%) | 8% | 36% | 26% |
| Profit after financial items | (TSEK) | 40 513 | 43 797 | 94 686 |
| Profit after tax | (TSEK) | 31 744 | 33 900 | 78 191 |
| Profit after tax attributable to owners of the parent | (TSEK) | 31 744 | 33 900 | 78 191 |
| Profit growth attributable to owners of the parent | (%) | -6% | 83% | 59% |
| Profit margin | (%) | 10% | 11% | 13% |
| Operating margin | (%) | 14% | 16% | 16% |
| Total assets | (tkr) | 810 616 | 746 845 | 872 019 |
| Solidity | (%) | 36% | 33% | 31% |
| Equity ratio after full conversion | (%) | 38% | 34% | 33% |
| Degree of indebtedness | (times) | 1,91 | 2,10 | 2,09 |
| Return on capital employed | (%) | 21% | 21% | 21% |
| Return on equity | (%) | 28% | 28% | 29% |
| Sales per employee | (TSEK) | 705 | 746 | 1 465 |
| Value added per employee | (TSEK) | 585 | 623 | 1 212 |
| Personnel expenses per employee | (TSEK) | 407 | 424 | 797 |
| Average numbers of employees | (number) | 452 | 397 | 422 |
| Adjusted shareholders' equity per share (JEK) | (SEK) | 9,91 | 8,28 | 9,24 |
| Earnings per share | (SEK) | 1,08 | 1,15 | 2,66 |
| Earnings per share after dilution | (SEK) | 1,06 | 1,14 | 2,64 |
| Paid dividends per share | (SEK) | 0,9 | 0,67 | 0,67 |
| Cash flow per share | (SEK) | 2,49 | 2,35 | 5,09 |
| P/E | 25,3 | 22,1 | 28,2 | |
| P/JEK | 6,61 | 5,84 | 8,12 | |
| P/S | 3,01 | 2,49 | 3,57 | |
| Calculation bases: | ||||
| Results used for the calculation of earnings per share | (TSEK) | 31 744 | 33 900 | 78 191 |
| Cash flow for the calculation of cash flow per share | (TSEK) | 73 084 | 69 216 | 149 751 |
| Average number of shares (weighted average) | (psc) | 29 396 690 | 29 396 690 | 29 396 690 |
| The number of shares after dilution | (psc) | 29 838 900 | 29 738 731 | 29 788 016 |
| The number of shares issued on the closing date | (psc) | 29 396 690 | 29 396 690 | 29 396 690 |
| Share price at end of period | (SEK) | 65,50 | 48,40 | 75,00 |
* Values for rolling 12 months.
** Number of shares and key figures related to shares have been recalculated due to split.
*** Cash flow from operating activities before changes in working capital has been corrected for 2015 as unrealized foreign exchange differences have been reclassified.
Vitec Software Group AB (publ) is a Nordic software company that develops and delivers standardised software for industry specific needs. The Group has operations in Sweden, Denmark, Finland and Norway and grows in the mature part of the software industry by consolidating vertical software segments. Our customers include facility management companies, construction and real estate companies, banks and insurance companies, utilities and energy traders, healthcare companies, car spare part dealers and newspaper companies. The Group has 450 employees and had 2015 a turnover of SEK 618 million. Vitec is listed on Nasdaq Stockholm.
Interim report – January - June 2016 Page 24 av 24