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Vitec Software Group B — Interim / Quarterly Report 2016
May 11, 2016
2988_10-q_2016-05-11_94306d12-7f34-4e8f-bbf7-504dd13e9464.pdf
Interim / Quarterly Report
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STRONGER CASH FLOW DESPITE WEAKER MARGIN
SUMMARY FOR JANUARY-MARCH 2016
- Net sales SEK 157 M (143)
- Profit before tax SEK 18,0 M (21,6)
- Operating margin 12,4 % (16,1)
- Earnings per share before dilution SEK 0,48 (0,59)
- Cash flow from operations SEK 84,0 M (73,5)
- New managers in BA Real Estate and Health
CEO´S COMMENTS
In the first quarter, the Group can demonstrate an increase in sales and a strong cash flow compared with the previous year, despite an anticipated reduction in volume of business area Estate Agent in Sweden, an early Easter and a weakening of the Norwegian currency. During the quarter, new business managers were internally recruited and appointed to Real Estate and Health. The outgoing heads remain in the organization on new positions to capitalize on the experience gained in exploration, acquisition and group interaction.
Business area Health continues to have full focus on the development and delivery of its cloud-based systems, which negatively impacted profitability in the short term, but increased the proportion of recurring revenue to 85% (74) of sales. After the decrease in sales for the business area Estate Agent no area is now more than 30 % of total turnover, which gives greater stability and reduced sensitivity to market changes within individual business areas.
Vitec's financial position and preparedness for future acquisitions is good, and with a prospect list of hundreds of companies in the Nordic region, we therefore see good prospects for continued acquisition-based growth.
Vitec's business model with the pursuit of a high proportion of recurring revenues has to some extent continued to grow during the first quarter to 78.3% (77.6). Long term, recurring revenues - normally the character subscription type services - increase further. In the shorter term, particularly in business area Real Estate, there is a limit to further growth through adaptation and training services needed to integrate the area's business.
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 - March 2016
The Group's business areas enjoyed stable development with the exception of Business Area Estate Agent where, as previously mentioned, two major real estate agent chains in Sweden chose to gradually transition to proprietary solutions at the same time as the Norwegian housing market suffered negative impact from a weakening of the Norwegian currency.
Business Area Auto
The margin in the Norwegian operation has improved in relation to the previous year, despite a weakening of the Norwegian currency and the postponement of certain revenues until April due to an early Easter. The principal focus in Denmark continues to be deliveries of new modules and supplementary products to existing customers. The two most recent acquisitions Datamann (DK) and Infoeasy (NO) are gradually being integrated into the Group, which means the business area is now twice the size and has a dramatically increased operating profit.
Business Area Energy
Marketing efforts in the European market as regards network calculations resulted in four new customers in the UK during the quarter. Work on the creation of a new SaaS solution to facilitate commissioning by foreign customers is progressing and is anticipated to start full operation during the first half of the year. Interest remains high in Business Area Energy and the wind power forecasts in Croatia, Bulgaria, Germany and the UK. Hopefully, the majority of them will become customers during 2016.
Business Area Real Estate
The business area grew strongly and retains its focus on delivering upgrades of its most modern products. Commissioning, implementation and training in the new systems results in new service revenues while also requiring an increase in personnel resources. However, acclimatization and internal training of newly recruited personnel depresses the operating margin in the short term. Nevertheless, the cloud-based delivery model is enjoying increasing application and has an ongoing positive effect on recurring revenues.
Business Area Finance & Insurance
Finance & Insurance in Sweden is in the final phase of introducing a pension solution to Länsförsäkringar Fondliv. Commissioning, which is planned for the end of May, will boost recurring contract revenues. Many of the discussions in progress regarding renewal of existing pension arrangements with current customers are considered to have the potential to result in new product projects during the year. Roll-out of the latest version of the Portman portfolio management system continues in Denmark, and a number of new contracts were signed at the end of the first quarter. Three major Nice4Net implementation projects are in progress in Norway. Sales process lead times as regards established non-life insurance companies are usually long, but there are a number of newly established players for whom our offer is competitive. The new Group affiliation was very well received by existing customers.
Business Area Health
The business area continued to focus fully on delivery and further development of its system for two or three major customers. Deliveries to FSHS are approaching the completion phase while deliveries to the Diacor project are in progress. A significant part of the latter project includes new development charged to earnings in the short term. The project will remain at high intensity with deliveries throughout 2016. At the same time, there are a number of major companies in the Finnish market who are ready to renew their solutions, which in the light of the new reference projects provides excellent opportunities for continued success for the business area's modern SaaS product.
Business Area Media
A couple of minor product deliveries were completed during the quarter while recurring contractual revenues remained stable. Demand for services from one or two of the major contract customers was somewhat lower than
anticipated due to other projects' enjoying higher priority. This had a negative impact on sales and the operating profit.
Business Area Estate Agent
During the first quarter, the Swedish customers Fastighetsförmedling and Fastighetsbyrån have switched fully, and in the latter case partially, to using proprietary solutions. The main effect is a reduction in recurring revenues compared to the previous year. At the same time, the Vitec Express successes continued and many smaller chains and individual real estate agents have chosen the new cloud solution. We are currently upgrading our real estate agent offering in Norway to a fully cloud-based service that builds on the Norwegian platform in combination with the Vitec Express cloud service. Development of the new offering is taking place in both Norway and Sweden. At the same time, we have noted a distinct volume reduction in the property market in Norway since the weakening of the Norwegian currency. This has resulted in fewer properties for sale in the Norwegian market, which in turn affects the number of transactions for our Norwegian real estate agent customers, and thus us, negatively.
FINANCIAL INFORMATION
Sales and results
January-March 2016
Revenues
Net sales for the period amounted to SEK 157,1 million (143,4), which represents an increase of 10 %. License revenue declined 24 % from the previous year and amounted to SEK 3,6 million (4,6). Recurring revenue for the period increased by 11 % from the previous year and amounted to SEK 123,0 million (111,2), corresponding to 78,3 % (77,6) of net sales. Service revenues increased by 10 % from the previous year and amounted to SEK 29,0 M (26,3).
Results
Operating profit amounted to SEK 19,5 million (23,1) with an operating margin of 12,4 % (16,1). The decline in operating profit is attributable to higher depreciation on intangible assets and a weak Norwegian currency, which adversely affects operating profit compared with the previous year. If we adjust net profit by these factors, our operating profit this year would be 15% better than the same period last year. Profit after tax amounted to SEK 14,0 million (17,2). Earnings per share before dilution were SEK 0,48 (0,59).
Liquidity and financial status
The Group's cash and cash equivalents, including short-term investments, at end of period amounted to SEK 125,8 million (85,8). In addition to these cash and cash equivalents, was a bank overdraft facility of SEK 20 million, and SEK 155,0 million in an unused credit facility of SEK 250 million. During the period, SEK 17,0 million was used from the credit facility to finance the acquisition of Fox Publish AS. Cash flow from operating activities was SEK 84,0 million (73,5). Investments totaled SEK 18,8 million in capitalized work, SEK 0,4 million in other intangible assets and SEK 0,7 million in tangible assets.
Total interest-bearing liabilities amounted on March 31, 2016 to SEK 251,8 million (191,3) distributed on long term debt SEK 222,8 million (140,6) and short-term interest-bearing liabilities SEK 29,0 million (50,7).
Equity attributable to Vitec's shareholders amounted to SEK 291,4 million (250,3). The equity ratio was 33 % (33). Proposed dividend amounts to SEK 0,90 per share, totaling SEK 26,5 million.
SIGNIFICANT EVENTS DURING THE FIRST QUARTER
January: Increased number of shares and votes in Vitec
As previously announced, on December 17 2015, Vitec has conducted a share split 5-for-1, which means that each previous share is split into five shares of the same class. After the split, the total number of shares increased from 5,879,338 shares to 29,396,690 shares. The number of A shares has increased from 800,000 shares to 4,000,000 shares and the number of B shares from 5,079,338 shares to 25,396,690 shares.
February: New head of Business Area Real Estate
Magnus Persson is from February 1 the new head of Vitec Business Area Real Estate. Magnus, former Director of Sales in the business area is succeeding Johan Kull who after almost four years leaves for a new position within the parent company, Vitec Software Group AB (publ).
February: Reclassification of Class A shares into Class B shares
Vitec Software Group AB (publ) announced that owners of 500 000 A shares of Vitec have converted class A shares to class B shares in accordance with the conversion clause set out in the Articles of Association § 5 Classes of shares. After conversion, the number of A shares of Vitec will amount to 3,500,000 shares while the number of B shares will amount to 25,896,690 shares. The total number of shares of Vitec, including both A and B shares is unchanged at 29,396,690 shares.
February: Nordea Small Cap Fund increases in Vitec
Vitec's principal owners Olov Sandberg and Lars Stenlund, who earlier announced that they together reclassified 500,000 A-shares to B-shares announced that they have sold all of these B shares to Nordea Small Cap Fund Sweden and Nordea Small Cap Fund Nordic. After conversion, the number of A shares of Vitec, with a voting right of 10, will amount to 3,500,000 shares while the number of B shares, with a voting right of 1, will amount to 25,896,690 shares. The total number of shares of Vitec, including both A and B shares is unchanged at 29,396,690 shares.
March: New head of Business Area Health
Janne Vainio is from March 14 new Director of Vitec Business Area Health. Janne has 15 years within the business, the last years as account director, and he is well versed in the industry and in customer needs. Former Director Ilari Laaksonen will move forward to a different position in the Vitec Group but continue to work close to Janne in the organization.
March: Invitation to the Annual General Meeting 2016
Shareholders of Vitec Software Group AB (publ), 556258-4804, are invited to participate in the Annual General Meeting to be held on Wednesday, May 11, 2016 at 5.30 p.m. at Väven (P5), Storgatan 46 A, Umeå. Registration to the Annual General Meeting takes place between 4.30-5.15 p.m. After the meeting a buffet will be served.
SIGNIFICANT EVENTS AFTER THE END OF THE PERIOD
April: Vitecs Annual Report for 2016 has been published
A pdf-version of the Annual Report in Swedish is available for download from Vitec homepage at http://www.vitecs.se/Investerare/Rapporter/#årsredovisningar. The printed version in Swedish can be ordered from Vitec by E-mail to [email protected] or by letter to Vitec Software Group AB, Box 7965, 907 19 Umeå, Sweden.
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.
Segment Auto (BA Auto):
The segment consists of Vitec AutoData AS, Vitec Datamann A/S and Vitec Infoeasy AS. The business area offers industry specific business applications for the automotive sector with support for sales, purchasing, inventory control, billing, accounting and salary.
Segment Energi (BA Energy):
The segment consists of Vitec Energy AB. The business area offers a forecasting software system of electricity and heat demand, wind power, and software supporting the technical management and maintenance of the energy distribution networks.
Segment Fastighet (BA Real Estate):
The segment consists of Vitec Fastighetssystem AB, Vitec Förvaltningssystem AB, Vitec Capifast AB and Vitec Software AB. The business area offers software applications for property owners, construction and management companies, property managers and real estate developers.
Segment Finans & Försäkring (BA Finance & Insurance):
The segment consists of Vitec Capitex AB, the Group Aloc A / S and Vitec Nice AS. The business area offers systems for tax calculations, pension calculations and housing calculations and operational systems for the financial and insurance sector.
Segment Hälsa (BA Health):
The segment consists of the Group Acuvitec Oy. The business area offers software for electronic medical records used for health care.
Segment Media (BA Media):
The segment consists of 3L Media AB, Vitec Veriba AB and Retail i Linköping AB. The business area offers software for newspaper companies and a few managed solutions for distribution and retail.
Segment Mäklare (BA Estate Agent):
The segment consists of Vitec Mäklarsystem AB, Capitex AB, Vitec IT-Makeriet AS, the Group Vitec Megler AS, Vitec Fox AS and ADservice Scandinavia AB. The business area provides software for real estate agents.
Result overview for segments, Million SEK*
| PROFIT BEFORE ACQUISITION_RELATED COSTS |
||||||||
|---|---|---|---|---|---|---|---|---|
| SEGMENT | NET SALES (MSEK) | (MSEK) | ||||||
| 2016 | 2015 | 2015 | 2016 | 2015 | 2015 | |||
| Jan-Mar | Jan-Mar | Jan-Dec | Jan-Mar | Jan-Mar | Jan-Dec | |||
| BA Auto | 24,5 | 10,3 | 71,1 | 2,8 | 0,8 | 14,9 | ||
| BA Energy | 6,4 | 6,2 | 24,1 | 1,9 | 2,3 | 8,8 | ||
| BA Real Estate | 37,4 | 34,8 | 142,6 | 5,7 | 6,8 | 24,9 | ||
| BA Finance & Insurance | 29,1 | 23,9 | 101,2 | 3,4 | 2,5 | 13,9 | ||
| BA Health | 15,2 | 15,5 | 61,5 | 0,5 | 1,7 | 5,7 | ||
| BA Media | 1,9 | 3,4 | 10,5 | 0,3 | 1,1 | 2,4 | ||
| BA Estate Agent | 42,4 | 49,2 | 207,0 | 4,8 | 8,2 | 33,2 | ||
| Shared | 0,2 | 0,0 | 0,4 | - | - | - | ||
| Vitec Group | 157,1 | 143,4 | 618,4 | 19,5 | 23,2 | 103,9 | ||
| Acquisition-related costs | 0,0 | -0,1 | -3,2 | |||||
| Operating profit after acquisition | ||||||||
| related costs | 19,5 | 23,1 | 100,6 | |||||
| Net financial income/expence | -1,5 | -1,5 | -5,9 | |||||
| Profit before tax | 18,0 | 21,6 | 94,7 |
Due to non-recurring acquisition-related costs, progress in the business areas are difficult to follow. For this reason, the operating profit has been split into operating profit before and after acquisition-related costs.
Sales by geography
The table below shows the Group's net sales translated to MSEK based on the customer's location.
| MARKET | NET SALES (MSEK) | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2016 | 2015 | 2015 | |||||||
| Jan-Mar | % | Jan-Mar | % | Jan-Dec | % | ||||
| Sweden | 70,7 | 45,0% | 74,7 | 52,1% | 308,1 | 49,8% | |||
| Denmark | 28,9 | 18,4% | 18,5 | 12,9% | 99,8 | 16,1% | |||
| Finland | 16,1 | 10,2% | 16,3 | 11,4% | 64,1 | 10,4% | |||
| Norway | 40,6 | 25,8% | 33,0 | 23,0% | 142,1 | 23,0% | |||
| Rest of Europe | 0,8 | 0,5% | 0,7 | 0,5% | 4,1 | 0,7% | |||
| Rest of world | 0,0 | 0,0% | 0,2 | 0,1% | 0,1 | 0,0% | |||
| SUM | 157,1 | 100,0% | 143,4 | 100,0% | 618,4 | 100,0% |
Business Area Auto, January-March 2016
The total revenues amounted to SEK 24,5 million (10,3), an increase of 138 %. License revenues increased to SEK 0,6 Million. Recurring revenue increased 102 % to SEK 19,5 million, services increased 1036 % to SEK 3,4 million. Recurring revenue as a percentage of net sales was 79 % (94). Operating margin was 12 % (7). Operations in Datamann A / S and Infoeasy AS were consolidated in the business area as of July 1 and 2, 2015, and is the reason for the strong growth.
Business Area Energy, January- March 2016
The total revenues amounted to SEK 6,4 million (6,2), an increase of 4 %. Recurring revenue increased 4 % to SEK 4,4 million. Service revenues increased 7 % to SEK 2,0 million. Recurring revenue as a percentage of net sales was 68 % (68). Operating margin decreased to 29 % (37).
Business Area Real Estate, January- March 2016
Total revenues amounted to SEK 37,4 million (34,8), an increase of 7 %. License revenues declined by 28 % and amounted to SEK 1,6 million. Recurring revenue increased 8 % to SEK 21,4 million. Services revenue increased by 13 % to SEK 14,4 million. Recurring revenue as a percentage of net sales was 57 % (57). Operating margin decreased to 15 % (19).
Business Area Finance & Insurance, January- March 2016
The total revenue amounted to SEK 29,1 million (23,9), an increase of 22 %. License revenues decreased 18 % to SEK 1,0 million. Recurring revenue increased by 26 % to SEK 23,8 million. Service revenues increased by 22 % to SEK 4,2 million. Recurring revenue as a percentage of net sales was 82 % (79). Operating margin increased to 12 % (10).
Business Area Health, January-March
Total revenues for the period amounted to SEK 15,2 million (15,5), a decrease of 2 %. License revenues decreased to SEK 0 million (0,1). Recurring revenue increased 15 % to SEK 13,0 million. Services decreased 45 % to SEK 2,1 million. Recurring revenue as a percentage of net sales was 85 % (73). The operating margin was 4 % (11).
Business Area Media, January-March 2016
The total revenues amounted to SEK 1,9 million (3,4), a decrease of 44 %. License revenue declined 100 % to SEK 0 million. Recurring revenue declined 11 % to SEK 1,1 million. Service revenues declined 51 % to SEK 0,8 million. Recurring revenue as a percentage of net sales was 58 % (36). Operating margin declined and amounted to 14 % (32).
Business Area Estate Agent, January-March 2016
Total revenues amounted to SEK 42,4 million (49,2) a decline of 14 %. License revenues decreased and amounted to SEK 0,4 million (0,6). Recurring revenue decreased by 14 % to SEK 39,8 million. Service revenue declined 17 % to SEK 2,1 million. Recurring revenue as a percentage of net sales was 94 % (94). Operating declined to 11 % (17).
| Finance & | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| SEGMENT | Auto | Energy | Real Estate Insurance |
Health | Media | Estate Agent | ||||||||
| 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |
| Jan-Mar | Jan-Mar | Jan-Mar | Jan-Mar | Jan-Mar | Jan-Mar | Jan-Mar | Jan-Mar | Jan-Mar | Jan-Mar | Jan-Mar | Jan-Mar | Jan-Mar | Jan-Mar | |
| Recurring revenues | 19,5 | 9,6 | 4,4 | 4,2 | 21,4 | 19,8 | 23,8 | 19,0 | 13,0 | 11,3 | 1,1 | 1,3 | 39,8 | 46,1 |
| License revenue | 0,6 | 0,0 | 0,0 | 0,0 | 1,6 | 2,2 | 1,0 | 1,2 | 0,0 | 0,1 | 0,0 | 0,6 | 0,4 | 0,6 |
| Services revenue | 3,4 | 0,3 | 2,0 | 1,9 | 14,4 | 12,8 | 4,2 | 3,5 | 2,1 | 3,8 | 0,8 | 1,6 | 2,1 | 2,5 |
| Net sales | 24,5 | 10,3 | 6,4 | 6,2 | 37,4 | 34,8 | 29,1 | 23,9 | 15,2 | 15,5 | 1,9 | 3,4 | 42,4 | 49,2 |
| Recurring revenue as a | ||||||||||||||
| percentage of net sales | 79% | 94% | 68% | 68% | 57% | 57% | 82% | 79% | 85% | 73% | 58% | 36% | 94% | 94% |
| Operating margin | 12% | 7% | 29% | 37% | 15% | 19% | 12% | 10% | 4% | 11% | 14% | 32% | 11% | 17% |
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 20,1 million (22,4) and consisted primarily of sales to subsidiaries for services rendered. Profit after tax amounted to SEK -2,2 million (3,9). The value of shares in subsidiaries was during the period adjusted down by SEK 1,5 million relating to a downward adjustment of contingent consideration for Fox Publish AS. Shortterm 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
| SEK (thousends) | 2016 | 2015 | 2015 |
|---|---|---|---|
| Jan-Mar | Jan-Mar | Jan-Dec | |
| OPERATING REVENUE | |||
| Recurring revenues | 122 955 | 111 236 | 480 552 |
| License revenues | 3 553 | 4 648 | 23 098 |
| Service revenues | 29 026 | 26 347 | 106 191 |
| Other revenues | 1 592 | 1 182 | 8 544 |
| NET SALES | 157 126 | 143 413 | 618 385 |
| Capitalized development costs | 17 931 | 17 047 | 62 108 |
| Unrealized exchange gains | 2 997 | 1 874 | 25 718 |
| Reversal of aditional purchase price | 1 519 | - | 11 213 |
| SUM | 179 573 | 162 334 | 717 424 |
| OPERATING EXPENSES | |||
| Goods for resale | -2 822 | -1 584 | -6 835 |
| Subcontractors and subscriptions | -17 461 | -19 090 | -82 890 |
| Other external expenses | -19 386 | -18 059 | -81 542 |
| Staff costs | -92 548 | -82 726 | -336 133 |
| Depreciation of tangible assets | -2 535 | -2 552 | -11 233 |
| Depreciation of intangible assets | -18 367 | -12 967 | -63 392 |
| Impairment of Goodwill | -1 519 | - | -11 213 |
| Unrealized exchange losses | -5 439 | -2 109 | -20 335 |
| TOTAL COSTS | -160 077 | -139 087 | -613 573 |
| OPERATING PROFIT BEFORE ACQUSITION-RELATED COSTS | 19 496 | 23 247 | 103 851 |
| Acquisition-related costs | - | -114 | -3 244 |
| OPERATING PROFIT AFTER ACQUISITION-RELATED COSTS | 19 496 | 23 133 | 100 607 |
| Financial income | 73 | 121 | 826 |
| Financial expense | -1 554 | -1 634 | -6 747 |
| TOTAL FINANCIAL ITEMS | -1 481 | -1 513 | -5 921 |
| PROFIT BEFORE TAX | 18 015 | 21 620 | 94 686 |
| Tax | -3 972 | -4 375 | -16 495 |
| NET PROFIT | 14 043 | 17 245 | 78 191 |
| OTHER COMPREHENSIVE INCOME, ITEMS THAT MAY BE | |||
| RECLASSIFIED TO PROFIT OR LOSS | |||
| Currency translation differences | 5 844 | 105 | -19 942 |
| TOTAL OTHER COMPREHENSIVE INCOME FOR THE PERIOD | 5 844 | 105 | -19 942 |
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | 19 887 | 17 350 | 58 249 |
| PROFIT FOR THE PERIOD ATTRIBUTABLE TO | |||
| -Shareholders of the Parent Company | 14 043 | 17 245 | 78 191 |
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ATTRIBUTABLE | |||
| TO | |||
| -Shareholders of the Parent Company | 19 887 | 17 350 | 58 249 |
| EARNINGS PER SHARE | |||
| -Before dilution (SEK) | 0,48 | 0,59 | 2,66 |
| -After dilution (SEK) | 0,47 | 0,58 | 2,64 |
| Average number of shares | 29 396 690 | 29 396 690 | 29 396 690 |
| Number of shares after dilution | 29 838 900 | 29 637 450 | 29 788 016 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| SEK (thousends) | |||
|---|---|---|---|
| ASSETS | 2016-03-31 | 2015-03-31 | 2015-12-31 |
| FIXED ASSETS | |||
| Intangibles assets | |||
| Capitalized development costs | 118 595 | 87 221 | 109 171 |
| Product rights | 225 242 | 200 961 | 229 079 |
| Customer agreements | 61 478 | 52 712 | 62 321 |
| Brands | 8 617 | 8 110 | 8 793 |
| Goodwill | 203 037 | 199 146 | 202 103 |
| Software | 3 939 | 3 555 | 3 860 |
| Tangible fixed assets | |||
| Buildings | 8 975 | 9 102 | 9 034 |
| Equipment | 19 251 | 20 803 | 20 343 |
| Finacial assets | |||
| Other long-term receivables | 855 | - | 835 |
| Deferred tax | 6 030 | 5 843 | 5 952 |
| TOTAL FIXED ASSETS | 656 019 | 587 453 | 651 491 |
| CURRENT ASSETS | |||
| Inventories | 364 | 285 | 399 |
| Receivables | 92 184 | 96 649 | 159 861 |
| Short-term investments | - | 60 000 | - |
| Cash and equivalents | 125 805 | 25 811 | 60 268 |
| TOTAL CURRENT ASSETS | 218 353 | 182 745 | 220 528 |
| TOTAL ASSETS | 874 372 | 770 198 | 872 019 |
| EQUITY AND LIABILITIES | |||
| Equity | 291 425 | 250 335 | 271 538 |
| Long-term liabilities, interest bearing | 222 802 | 140 583 | 207 222 |
| Long-term liabilities, non-interest bearing | 104 187 | 94 176 | 102 559 |
| Short-term liabilities, interest bearing | 29 009 | 50 683 | 33 845 |
| Short-term liabilities, non-interest bearing | 226 949 | 234 421 | 256 855 |
| TOTAL EQUITY AND LIABILITIES | 874 372 | 770 198 | 872 019 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| SEK (thousands) | 2016 | 2015 | 2015 |
|---|---|---|---|
| Jan-Mar | Jan-Mar | Jan-Dec | |
| EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT COMPANY | |||
| At beginning of period | 271 538 | 260 130 | 260 130 |
| Conversion bonds | - | -27 145 | -27 145 |
| Dividend | - | - | -19 696 |
| Total comprehensive income for the period | 19 887 | 17 350 | 58 249 |
| At end of period | 291 425 | 250 335 | 271 538 |
CONSOLIDATED STATEMENT OF CASH FLOWS
| SEK (thousands) | 2016 | 2015 | 2015 |
|---|---|---|---|
| Jan-Mar | Jan-Mar | Jan-Dec | |
| OPERATING ACTIVITIES | |||
| Operating profit | 19 496 | 23 133 | 100 607 |
| Adjustments for items not included in cash flow | |||
| Other operating income | -1 519 | - | -11 213 |
| Depreciation/amortisation and impairment Unrealized exchange gains/losses* |
22 421 3 894 |
15 519 404 |
85 838 -5 383 |
| Interest received | 44 292 73 |
39 056 121 |
169 849 826 |
| Interest paid | -1 487 | -1 634 | -6 747 |
| Tax paid CASH FLOW FROM OPERATING ACTIVITIES BEFORE |
-14 132 | -4 738 | -14 177 |
| CHANGES IN WORKING CAPITAL | 28 746 | 32 805 | 149 751 |
| Changes in working capital | |||
| Change in inventories | 35 | 54 | 51 |
| Change in accounts receivables* | 67 840 | 60 536 | -6 115 |
| Change in operating receivables | -180 | -9 782 | 1 333 |
| Change in accounts payable* | -4 226 | -3 240 | -2 641 |
| Change in operating liabilities | -8 168 | -6 828 | -2 587 |
| CASH FLOW FROM CURRENT OPERATIONS | 84 046 | 73 545 | 139 792 |
| INVESTMENT ACTIVITIES | |||
| Acquisition of subsidiaries, net** | -2 945 | -14 392 | -85 580 |
| Acquisition of intangible assets and capitalized development costs | -19 260 | -17 617 | -70 174 |
| Acquisition of tangible assets | -690 | -2 558 | -11 821 |
| CASH FLOW FROM INVESTMENT ACTIVITIES | -22 895 | -34 567 | -167 575 |
| FINANCING ACTIVITIES | |||
| Dividend | - | - | -19 696 |
| Redemption convertible loan | - | -36 781 | -36 781 |
| New loans | 17 000 | 25 000 | 102 901 |
| Amortisation of loans | -7 677 | -12 725 | -34 478 |
| Issue of new share | - | - | - |
| CASH FLOW FROM FINANCIAL ACTIVITIES | 9 323 | -24 506 | 11 946 |
| CASH FLOW FOR THE PERIOD | 70 474 | 14 472 | -15 837 |
| CASH AND CASH EQUIVALENTS AT BEGINNING OF THE | |||
| PERIOD | 60 268 | 71 114 | 71 114 |
| EXCHANGE-RATE DIFFERENCES IN CASH AND CASH | |||
| EQUIVALENTS | -4 937 | 225 | 4 991 |
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | 125 805 | 85 811 | 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 an additional payment for the acquisition of Fox Publish AS. The payment 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 per March 2015
| Adjustment | Adjustment | |||
|---|---|---|---|---|
| Previously | Operating | Operating | ||
| Reported | liabilities and | receivables and | Reported | |
| Value | cash flow | cash flow | Value | |
| SEK (thousands) | 2015 | 2015 | ||
| Jan-Mar | Jan-Mar | |||
| Orealiserade valutakursdifferenser | 0 | 404 | 404 | |
| Betald inkomstskatt | -4 775 | 37 | -4 738 | |
| Cash flow from operating activities before | ||||
| changes in working capital | 32 364 | 441 | 32 805 | |
| Change in accounts receivables | 0 | 60 536 | 60 536 | |
| Change in operating receivables | 50 754 | -60 536 | -9 782 | |
| Change in accounts payable | 0 | -3 240 | -3 240 | |
| Change in operating liabilities | -9 627 | 2 799 | -6 828 | |
| Cash flow from current operations | 73 545 | 0 | 0 | 73 545 |
Restatement of comparative figures per December 2015
| Adjustment | Adjustment | |||
|---|---|---|---|---|
| Previously | Operating | Operating | ||
| Reported | liabilities and | receivables and | Reported | |
| Value | cash flow | cash flow | Value | |
| SEK (thousands) | 2015 | 2015 | ||
| Jan-Dec | Jan-Dec | |||
| Orealiserade valutakursdifferenser | 0 | -5 383 | -5 383 | |
| Betald inkomstskatt | -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 |
| Förändring av långfristiga fordringar | -501 | 501 | 0 | |
| Cash flow from investment activities | -168 076 | 501 | -167 575 |
INCOME STATEMENT, PARENT COMPANY
| SEK (thousands) | 2016 | 2015 | 2015 |
|---|---|---|---|
| Jan-Mar | Jan-Mar | Jan-Dec | |
| NET SALES | 20 137 | 22 427 | 100 426 |
| Operating costs | -20 851 | -15 945 | -75 494 |
| OPERATING RESULT | -714 | 6 482 | 24 932 |
| RESULT FROM FINANCIAL INVESTMENTS | |||
| Income from shares in group companies | - | - | 39 907 |
| Financial income | 40 | 89 | 516 |
| Financial expense | -1 490 | -1 613 | -6 235 |
| PROFIT AFTER FINANCIAL NET | -2 164 | 4 958 | 59 120 |
| Appropriations | - | - | -822 |
| PROFIT BEFORE TAX | -2 164 | 4 958 | 58 298 |
| Tax | - | -1 091 | -3 869 |
| NET PROFIT | -2 164 | 3 867 | 54 429 |
The results of the period are consistent with the total comprehensive income.
BALANCE SHEET, PARENT COMPANY
| SEK (thousands) | 2016-03-31 | 2015-03-31 | 2015-12-31 |
|---|---|---|---|
| ASSETS | |||
| FIXED ASSETS | |||
| Intangible assets | 3 900 | 3 765 | 3 827 |
| Tangible assets | 12 876 | 13 817 | 13 179 |
| Financial assets | 693 158 | 597 489 | 694 898 |
| TOTAL FIXED ASSETS | 709 934 | 615 071 | 711 904 |
| CURRENT ASSETS | |||
| Receivables | 49 081 | 56 231 | 43 394 |
| Short-term investments | - | 60 000 | - |
| Cash and equivalents | 125 805 | 25 811 | 45 306 |
| TOTAL CURRENT ASSETS | 174 886 | 142 042 | 88 700 |
| TOTAL ASSETS | 884 819 | 757 113 | 800 604 |
| EQUITY AND LIABILITIES | |||
| EQUITY | 269 076 | 241 464 | 271 240 |
| UNTAXED RESERVES | 2 222 | 2 500 | 2 222 |
| LONG-TERM LIABILITIES | 227 311 | 144 856 | 212 001 |
| SHORT-TERM LIABILITIES | 386 209 | 368 293 | 315 141 |
| TOTAL EQUITY AND LIABILITIES | 884 819 | 757 113 | 800 604 |
ANNOTATIONS
ANN 1 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 price for Fox Publish AS has during the period been written down by SEK 1,5 million. The correction has been recognized as revenue and as impairment of goodwill in accordance with IFRS 3:58. The correction has no effect on reported profit.
ANN 2 TAXES
Tax for the year amounted to SEK 3,6 million (4,8). Deferred tax amounted to SEK 0,4 million (-0,4).
ANN 3 INVESTMENTS
Investments amounted to SEK 18,8 million in capitalized work, SEK 0,4 million in other intangible assets and SEK 0,7 million in tangible assets.
ANN 4 LONG-TERM DEBT
Long-term interest-bearing debt consists of bank loans SEK 209,2 million and a convertible loan SEK 13,6 million. Longterm non-interest bearing liabilities consist of deferred taxes SEK 90,6 million, pension liability SEK 9,0 million, a noncurrent 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.
ANN 5 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.
ANN 6 EQUITY
Consolidated shareholders' equity as of March 31, 2016 was SEK 291,4 million.
SIGNATURES
Umeå, May 11 2016,
Lars Stenlund (CEO)
_____________________________
The Board: Jan Friedman, Kaj Sandart, Birgitta Johansson-Hedberg, Crister Stjernfelt (Chairman) and Anna Valtonen.
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 May 11, 2016 at 13:00 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
2016-07-14 Interim Report January-June 2016 ((≈08:30 CET) 2016-10-20 Interim Report January-September 2016 ((≈08:30 CET)
This English version of the year-end 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 report has not been audited by the auditors.
Corporate registration
Vitec Software Group AB (publ.). Org.no. 556258-4804
KEY FIGURE DEFINITIONS
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/JEK
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.
GRAPHS
Distribution Net Sales Jan-Mar 2016
Distribution Profit Jan-Mar 2016
Net Sales (MSEK)
A SOFTWARE COMPANY IN GROWTH
VERTICAL MARKET SOFTWARE
Vitec is a software company that offers industry specific business solutions to 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. Its clients include property management companies, construction and real estate companies, banks and insurance companies, energy companies, health companies, companies dealing with car parts and newspaper companies. Group turnover has an annual capacity of 670 million SEK and has approximately 450 employees. Vitec Software Group AB (publ.) is listed on Nasdaq, Stockholm.
Our mission is to provide industry-specific business solutions where our strategy is to focus on niches where there are needs that not as cost-effective can be met by general ERP-systems. In these niches we strive for a leading position. Our offer includes:
- proprietary software
- SaaS (Software as a Service), support and maintenance
- specialist services
The current market is made up to 45 % of Sweden, 26 % of Norway, 18 % of Denmark and 10 % of Finland.
LONG CUSTOMER RELATIONSHIPS
Vitec formed in 1985 and has since 1998 been a public company based on software solutions. With our products and related services, we act in the long term, build trust and create confidence among our customers. We create value for customers through a customer-focused approach and a well-tailored program offering that supports, develops and increases the profitability of our customers' daily work processes.
BUSINESS MODEL WITH RECURRING REVENUE
Recurring contract revenues are a central part of the Vitecs business model. Recurring contract revenue includes recurring revenues for the use of our software, access to our customer service and new refined versions of our software. Technology trend today is for a more modern model in which the functionality of the software is delivered over the Internet. This movement means that our offer is extended to include the operation of the software and the data storage. This increases the proportion of recurring revenue contracts, which gives us a stable, predictable and recurring revenue volume while providing our customers with a secure overall offering. A business model with a high proportion of recurring revenue also gives us a good annual operating capital and reduces sensitivity to economic downturns. High proportion of recurring revenue contracts also provide strong cash flows, which is an important prerequisite for continued growth.
PROFITABLE GROWTH
Vitec has a pronounced growth strategy with a combination of acquisitions and organic growth. Growth is important because it gives us energy and creates new opportunities. Acquisitions are also important to achieve cost and volume advantages and are also strategically important for the expansion to new markets and niches. Our acquisitions were initially made in Sweden in the niches in which we first appeared, but has gradually expanded to include new niches and new markets. Today we are a software company that offers specific business throughout the Nordic market and our business is established in Sweden, Norway, Finland and Denmark. We identify and evaluate acquisition targets in all Nordic countries. During our long history, we have been in constant growth and every year improved our results. We have, however, held on to our strategy to operate within specialized software niches to create sustainable and profitable growth.
KEY FIGURES
| 2016 | 2015 | 2015 | ||
|---|---|---|---|---|
| Jan-Mar | Jan-Mar | Jan-Dec | ||
| Net sales | (TSEK) | 157 126 | 143 413 | 618 385 |
| Business Area Auto | (TSEK) | 24 517 | 10 292 | 71 082 |
| Business Area Energy | (TSEK) | 6 409 | 6 181 | 24 114 |
| Business Area Real Estate | (TSEK) | 37 410 | 34 806 | 142 557 |
| Business Area Finance & Insurance | (TSEK) | 29 143 | 23 905 | 101 219 |
| Business Area Health | (TSEK) | 15 186 | 15 536 | 61 492 |
| Business Area Media | (TSEK) | 1 921 | 3 438 | 10 547 |
| Business Area Estate Agent | (TSEK) | 42 386 | 49 223 | 207 011 |
| Shared | (TSEK) | 155 | 32 | 363 |
| Growth | (%) | 10% | 42% | 26% |
| Profit after financial items | (TSEK) | 18 015 | 21 620 | 94 686 |
| Profit after tax | (TSEK) | 14 043 | 17 245 | 78 191 |
| Profit after tax attributable to owners of the parent | (TSEK) | 14 043 | 17 245 | 78 191 |
| Profit growth attributable to owners of the parent | (%) | -19% | 106% | 59% |
| Profit margin | (%) | 9% | 12% | 13% |
| Operating margin | (%) | 12% | 16% | 16% |
| Total assets | (tkr) | 874 372 | 770 198 | 872 019 |
| Solidity | (%) | 33% | 33% | 31% |
| Equity ratio after full conversion | (%) | 35% | 34% | 33% |
| Degree of indebtedness | (times) | 2,04 | 2,10 | 2,09 |
| Return on capital employed | (%) | 20% | 22% | 21% |
| Return on equity | (%) | 28% | 27% | 29% |
| Sales per employee | (TSEK) | 349 | 362 | 1 465 |
| Value added per employee | (TSEK) | 290 | 306 | 1 212 |
| Personnel expenses per employee | (TSEK) | 206 | 209 | 797 |
| Average numbers of employees | (number) | 450 | 397 | 422 |
| Adjusted shareholders' equity per share (JEK) | (SEK) | 9,91 | 8,52 | 9,24 |
| Earnings per share | (SEK) | 0,48 | 0,59 | 2,66 |
| Earnings per share after dilution | (SEK) | 0,47 | 0,58 | 2,64 |
| Paid dividends per share | (SEK) | - | - | 0,67 |
| Cash flow per share | (SEK) | 0,98 | 1,12 | 5,09 |
| P/E | 25,7 | 3,9 | 28,2 | |
| P/JEK | 6,61 | 0,91 | 8,12 | |
| P/S | 3,05 | 0,43 | 3,57 | |
| Calculation bases: | ||||
| Results used for the calculation of earnings per share | (TSEK) | 14 043 | 17 245 | 78 191 |
| Cash flow for the calculation of cash flow per share | (TSEK) | 28 746 | 32 805 | 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 | 29 637 449 | 29 788 016 |
| The number of shares issued on the closing date Number of shares after full conversion |
(psc) (st) | 29 396 6900 | 29 396 6900 | 29 396 6900 |
| Share price at end of period | (SEK) | 65,50 | 38,80 | 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 is a software company that offers industry specific business applications on 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. Clients 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. Vitec is listed on Nasdaq, Stockholm.
Contact: Lars Stenlund, CEO Mob: +46 70 659 49 39