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Vitec Software Group B — Interim / Quarterly Report 2017
Apr 25, 2017
2988_10-q_2017-04-25_43cc8cb0-b18e-454f-8795-84cb6c6fe1e0.pdf
Interim / Quarterly Report
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Interim report January-March 2017
Earnings per share up 33%
Summary for January-March 2017
- Net sales SEK 192 M (157)
- Profit before tax SEK 24,4 M (18,0)
- Operating margin 13,7 % (12,4)
- Earnings per share before dilution SEK 0,64 (0,48)
- Cash flow from operations SEK 98,8 M (84,0)
- Vitec is traded on Mid Cap Nasdaq Stockholm
CEO's comments
The year starts with a positive trend, for the first quarter cash flow as well as earnings and sales increases, making the quarter the historically strongest first quarter.
No major events for the first quarter, the period has been characterized by daily work with deliveries, development, sales and a continuous pursuit of increased efficiency. With Vitec's niche-oriented operations, in relatively mature markets, demand is both long-term and sustainable. In such markets, efficiency and focus are key prerequisites for good and increasing profitability. We rarely face major unexpected changes in the market, which also means that the company's development is largely in our own hands. Therefore, focus and efficiency will always remain key issues in the business.
The operating margin is for the quarter below our target of fifteen percent, but the trend is currently positive and the target for the operating margin is intact.
The number of active acquisition dialogues remains high, and we continuously put resources in place to maintain and further develop these dialogues. Vitec's financial position and readiness for future acquisitions are good, and we see good conditions for continued acquisition-based growth.
A clear shift from traditional license sales to subscription of cloud-based systems reduces reliance on individual license sales, which increases our long-term ability to control our business. This, together with our people's capacity to innovate and integrate acquisitions, provides good conditions for longterm development of our business. With the acquisition of well-established companies and a high proportion of recurring revenues, Vitec continues the path to act in several independent and specialized niches to achieve sustainable profitable growth.
Lars Stenlund, CEO
January-March 2017
For the period, Vitec reports continued revenue growth, with an operating profit that grows faster than revenue. Our continuous efforts in all business areas, to become more efficient and move the business toward recurring revenue strengthen the Group's performance and predictability. All business areas show better comparative figures than for the same period in 2016, except for Health and Estate Agents. For Health and Estate Agents we follow our plans to restore profitability.
Business Area Auto
The business area reported increased profits and revenue compared to the same period 2016. In Norway Vitec Autodata AS and Vitec Info Easy AS has initiated an initiative to create a joint offering for the Norwegian market. Our business in Denmark is progressing according to plan, noteworthy is that during the period we have signed an initial agreement on the independent WeDo module for collection systems. The cloud-based offering from Futursoft OY continued positive development in Finland.
Business Area Energy
Business area Energy reports revenue on a par with improved operating profit compared to the same period 2016. Sales and delivery has developed according to plan. During the first quarter, Energy have focused on improvement of forecast quality for our Aiolos customers and targeted sales to small and medium-sized district heating company. The latter initiative has given a good outcome for our GIS system.
Business Area Real Estate
Business Area Real Estate reports revenue growth and improved operating profit compared with the same period in 2016. Plania AS, acquired in December 2016, is now in integration phase. Our Swedish business continues to develop well with strong sales and a continued shift toward cloud-based delivery with increasing recurring revenues.
Business Area Finance & Insurance
Business Area Finance & Insurance reports revenue growth with improved operating profit compared to the same period last year. For the Swedish market have we released a new product named Wealth Planning. The target group are banks, financial institutions and insurance companies that work with private counseling. In our Danish business have we made a few changes in our organization in order to better serve our existing client base with additional software. In Norway have we successfully moved the server operations of our software to our new data center in Oslo.
Business Area Health
Business Area Health reports increased sales with a slightly lower operating profit compared with the same period in 2016. Final delivery of the major projects that have been running in 2016 continues according to plan, final delivery will take place during the first half of 2017. Recurring revenue continues to increase in the company and increase the period of just over 8%
Business Area Environment
Business Area Environment, new from second half of 2016, has no comparative figures for the quarter. The business provide software for waste management in Finland. The integration of the business is running according to plan so also the daily operations. During the quarter, the business area delivered a new solution that makes our products even more mobile, which facilitates customers to conduct their work in a more flexible manner.
Business Area Estate Agents
Business Broker reports lower profit and revenue compared with the same period in 2016. In Sweden, the period characterized by a high rate of development of Vitec Express. In March we signed a contract with SkandiaMäklarna to upgrade their system to Vitec Express. With that contract are now the majority of brokers in Sweden using Vitec Express. In Norway, are we still in an intense period of development of our new product for the Norwegian market, Vitec Next. The new product is gaining a great deal of attention in the Norwegian market and we have already started to roll Vitec Next to customers.
Financial information
Sales and results
January-March 2017
Revenues
Net sales for the period amounted to SEK 191,5 million (157,1), which represents an increase of 22 %. Recurring revenue for the period increased by 16 % from the previous year and amounted to SEK 143,2 million (123,0), corresponding to 74,8 % (78,3) of net sales. License increased from the previous year and amounted to SEK 8,3 million (3,6). Service revenues increased by 29 % from the previous year and amounted to SEK 37,5 M (29,0).
Results
Operating profit amounted to SEK 26,2 million (19,5) with an operating margin of 13,7 % (12,4). Profit after tax amounted to SEK 18,8 million (14,0). Earnings per share before dilution were SEK 0,64 (0,48).
Liquidity and financial status
The Group's cash and cash equivalents, including short-term investments, at end of period amounted to SEK 130,4 million (125,8). In addition to these cash and cash equivalents, was a bank overdraft facility of SEK 20 million, and SEK 26,1 million in an unused credit facility of SEK 250 million. During the period, SEK 20,0 million was repaid to the facility. Cash flow from operating activities was SEK 98,8 million (84,0). Investments totaled SEK 23,9 million in capitalized work, SEK 0,2 million in other intangible assets and SEK 0,5 million in tangible assets.
Total interest-bearing liabilities amounted on March 31, 2017 to SEK 354,7 million (251,8) distributed on long term debt SEK 264,7 million (222,8) and short-term interest-bearing liabilities SEK 89,9 million (29,0). During the period, the additional purchase price for Futursoft and the promissory note for Nice were reclassified from long to short-term debt when the due date is within 12 months. In addition, a part of the used credit facility was reclassified to short-term debt since it will be repaid during the second quarter.
Equity attributable to Vitec's shareholders amounted to SEK 351,1 million (291,4). The equity ratio was 32 % (33). Proposed dividend amounts to SEK 1,00 per share, totaling SEK 29,4 million.
Operations
Vitec Group operations are controlled and organized in seven segments (business areas). For more information on each business area, refer to vitecsoftware.com. The business areas are; Auto, Energy, Real Estate, Finance & Insurance, Health, Environment and Estate Agent.
| Finance & | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Auto | Energy | Real Estate | Insurance | Health | Environment | Estate Agent | ||||||||
| Jan-Mar | Jan-Mar | Jan-Mar | Jan-Mar | Jan-Mar | Jan-Mar | Jan-Mar | ||||||||
| 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | |
| Recurring revenues | 31,4 | 19,5 | 4,6 | 4,4 | 26,2 | 21,4 | 26,1 | 23,8 | 14,1 | 13,0 | 7,9 | 1,1 | 33,0 | 39,8 |
| License revenue | 2,2 | 0,6 | 0,1 | 0,0 | 4,1 | 1,6 | 0,1 | 1,0 | 0,2 | 0,0 | 1,7 | 0,0 | 0,0 | 0,4 |
| Services revenue | 5,1 | 3,4 | 1,6 | 2,0 | 18,7 | 14,4 | 7,1 | 4,2 | 1,6 | 2,1 | 1,8 | 0,8 | 1,5 | 2,1 |
| Other income | 1,5 | 1,1 | 0,1 | 0,0 | 0,0 | 0,0 | 0,1 | 0,1 | 0,0 | 0,1 | 0,6 | 0,0 | 0,1 | 0,1 |
| Net sales | 40,2 | 24,5 | 6,4 | 6,4 | 48,9 | 37,4 | 33,3 | 29,1 | 15,9 | 15,2 | 12,0 | 1,9 | 34,6 | 42,4 |
| Recurring revenue as a | ||||||||||||||
| percentage of net sales | 78% | 79% | 73% | 68% | 53% | 57% | 78% | 82% | 89% | 85% | 66% | 58% | 95% | 94% |
| Operating profit | 5,0 | 2,8 | 2,1 | 1,9 | 9,3 | 5,7 | 7,6 | 3,4 | 0,2 | 0,5 | 2,2 | 0,3 | -0,1 | 4,8 |
| Operating margin | 13% | 12% | 33% | 29% | 19% | 15% | 23% | 12% | 1% | 4% | 18% | 14% | 0% | 11% |
Business Area Auto
In Business Area Auto, Vitec offers software for the automotive and machinery sector in Denmark, Estonia, Finland, Norway and Sweden. The products support work processes, including vehicle sales, workshops, tire storage and distribution of spare parts. The segment consists of Vitec AutoData AS, Vitec Datamann A/S, Vitec Infoeasy AS and Futursoft OY. Operations in Futursoft was consolidated as of September 7 2016.
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. The segment consists of Vitec Energy AB.
Business Area Real Estate
Vitec offers software for the construction and real estate sector in Sweden and Norway. This includes comprehensive business systems for our customers´ main processes, such as leasing, sales, customer service, finance, technical management and energy monitoring. The segment consists of Vitec Förvaltningssystem, AB Vitec Fastighetssystem AB, Vitec Capifast AB, Vitec Software AB and Vitec Plania AS. Operations in Plania was consolidated as of December 5, 2016.
Business Area Finance & Insurance
In Business Area Finance & Insurance, Vitec delivers software to banks and insurance companies in Denmark, Norway and Sweden. The segment consists of Vitec Capitex AB, the Group Aloc A / S and Vitec Nice AS.
Business Area Health
The software in our Business Area Health is developed for health care companies in Finland. The product is completely web based and is for example used by medical centers, occupational health, hospitals, physiotherapy and rehabilitation centers. The segment consists of the Group Acuvitec Oy
Business Area Environment
In 2016, Vitec acquired the Finnish company Tietomitta OY whose products are proprietary software for waste management in Finland. The acquisition meant a new vertical market for Vitec and the business expanded with Business Area Environment. The product is a market leader in Finland and manages the entire chain within waste management, from pick-up to billing, accounting and reporting. The segment also includes the operations that previously formed the segment Media. Recurring revenue and operating profit for Media during the period amounted to SEK 0,2 million. Comparative figures for January-March 2016 relate entirely to Media. Comparative figures for the full year 2016 include SEK 4,6 million in sales and SEK 1,0 million in operating income relating to Media. The segment consists of Tietomitta OY, which was consolidated as of July 5, 2016 and 3L Media.
Business Area Estate Agents
Business Area Estate Agents offers software for real estate agents in Norway and Sweden. Our product support estate agents in all stages throughout the entire business process. The segment consists of Vitec Mäklarsystem AB, Capitex AB, Vitec IT-Makeriet AS, Vitec Megler AS, Vitec Megler AB, Vitec Fox AS and ADservice Scandinavia AB.
Net sales January-March 2017 (MSEK) Operating profit January-March 2017 (MSEK)
Result overview for segments
| Profit before acqusition related costs | ||||||
|---|---|---|---|---|---|---|
| BUSINESS AREA | Net sales (MSEK) | (MSEK) | ||||
| 2017 | 2016 | 2016 | 2017 | 2016 | 2016 | |
| Jan-Mar | Jan-Mar | Jan-Dec | Jan-Mar | Jan-Mar | Jan-Dec | |
| Auto | 40,2 | 24,5 | 119,2 | 5,0 | 2,8 | 19,2 |
| Energy | 6,4 | 6,4 | 25,9 | 2,1 | 1,9 | 7,3 |
| Real Estate | 48,9 | 37,4 | 158,4 | 9,3 | 5,7 | 29,8 |
| Finance & Insurance | 33,3 | 29,1 | 126,6 | 7,6 | 3,4 | 20,3 |
| Health | 15,9 | 15,2 | 66,2 | 0,2 | 0,5 | 1,9 |
| Environment | 12,0 | 1,9 | 23,0 | 2,2 | 0,3 | 3,4 |
| Estate Agent | 34,6 | 42,4 | 155,3 | -0,1 | 4,8 | 11,1 |
| Shared | 0,2 | 0,2 | 1,0 | - | - | - |
| Vitec Group | 191,5 | 157,1 | 675,4 | 26,4 | 19,5 | 93,1 |
| Acquisition-related costs | -0,2 | 0,0 | -4,8 | |||
| Operating profit after acquisition-related costs | 26,2 | 19,5 | 88,3 | |||
| Net financial income/expence | -1,8 | -1,5 | -6,4 | |||
| Profit before tax | 24,4 | 18,0 | 81,9 |
Sales per 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) | |||||
|---|---|---|---|---|---|---|
| 2017 Jan-Mar |
% | 2016 Jan-Mar |
% | 2016 Jan-Dec |
% | |
| Sweden | 70,7 | 36,9% | 70,7 | 45,0% | 284,7 | 42,2% |
| Denmark | 32,8 | 17,1% | 28,9 | 18,4% | 154,6 | 22,9% |
| Finland | 42,2 | 22,0% | 16,1 | 10,2% | 106,0 | 15,7% |
| Norway | 44,7 | 23,4% | 40,6 | 25,8% | 119,5 | 17,7% |
| Rest of Europe | 1,1 | 0,6% | 0,8 | 0,5% | 10,4 | 1,5% |
| Rest of world | 0,1 | 0,1% | 0,0 | 0,0% | 0,2 | 0,0% |
| SUM | 191,5 | 100,0% | 157,1 | 100,0% | 675,4 | 100,0% |
- Sweden 37%
- Denmark 17%
- Finland 22%
- Norway 23%
- Rest of Europe 1%
Significant events during the fourth quarter
January 3: Vitec moves from Small Cap to Mid Cap on Nasdaq Stockholm
Vitec Software Group AB's class B share (VIT B) has moved from the Small Cap segment to the Mid Cap segment of Nasdaq Stockholm as a result of Nasdaq's annual review of market cap values on the Nordic markets. The Vitec shares trades in the Mid Cap segment as of January 2, 2017. The Mid Cap segment includes companies with a market capitalization between EUR 150 million and EUR 1 billion.
March 13: Vitec invites to Annual General Meeting 2017
Shareholders of Vitec Software Group AB (publ), 556258-4804, are invited to participate in the Annual General Meeting to be held on Tuesday, April 25, 2017 at 5.30 p.m. at Väven (north entrancé), Storgatan 46 A, Umeå. Registration takes place between 4:30 p.m and 5:15 p.m. After the meeting a buffet will be served.
Significant events after the end of the period
April 4: Annual Report for 2016 has been published
A pdf-version of the Annual Report in Swedish is available for download from www.vitecsoftware.com. The printed version can be ordered from Vitec by E-mail to [email protected] or by letter to Vitec Software Group AB, Tvistevägen 47a, 907 29 Umeå Sweden.
An English version will be available in a few weeks from now.
Risks and uncertainties
Vitec's significant risks and uncertainties are described in the Administration Report in the Annual Report for 2016 under the heading "Risks and uncertainties" on pages 28-29, in note 1 under "Assessments and estimates" on page 53 and in note 20, "Financial risks and the handling of such risks "on pages 76-79. No significant changes have occurred since then.
The Parent Company
Net sales amounted to SEK 28,6 million (20,1) and consisted primarily of sales to subsidiaries for services rendered. Profit after tax amounted to SEK 2,5 million (-2,2). 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 (thousands) | |||
|---|---|---|---|
| 2017 | 2016 | 2016 | |
| Jan-Mar | Jan-Mar | Jan-Dec | |
| OPERATING REVENUE | |||
| Recurring revenues | 143 231 | 122 955 | 518 512 |
| License revenues | 8 298 | 3 553 | 24 789 |
| Service revenues | 37 527 | 29 026 | 121 116 |
| Other revenues | 2 444 | 1 592 | 10 997 |
| NET SALES | 191 500 | 157 126 | 675 414 |
| Capitalized development costs | 23 898 | 17 931 | 82 262 |
| Reversal of aditional purchase price | - | 1 519 | 22 695 |
| SUM | 215 398 | 176 576 | 780 371 |
| OPERATING EXPENSES | |||
| Goods for resale | -3 311 | -2 822 | -12 284 |
| Subcontractors and subscriptions | -25 333 | -17 461 | -82 024 |
| Other external expenses | -25 746 | -19 386 | -92 927 |
| Staff costs | -107 135 | -92 548 | -380 023 |
| Depreciation of tangible assets | -2 688 | -2 535 | -10 195 |
| Depreciation of intangible assets | -24 808 | -18 367 | -81 366 |
| Impairment | - | -1 519 | -22 695 |
| Unrealized exchange gains and losses | 29 | -2 442 | -5 798 |
| TOTAL COSTS | -188 992 | -157 080 | -687 312 |
| OPERATING PROFIT BEFORE ACQUSITION-RELATED COSTS | 26 406 | 19 496 | 93 059 |
| Acquisition-related costs | -212 | - | -4 754 |
| OPERATING PROFIT AFTER ACQUISITION-RELATED COSTS | 26 194 | 19 496 | 88 305 |
| Financial income | 22 | 73 | 773 |
| Financial expense | -1 847 | -1 554 | -7 136 |
| TOTAL FINANCIAL ITEMS | -1 825 | -1 481 | -6 363 |
| PROFIT BEFORE TAX | 24 369 | 18 015 | 81 942 |
| Tax | -5 594 | -3 972 | -15 128 |
| NET PROFIT | 18 775 | 14 043 | 66 814 |
| OTHER COMPREHENSIVE INCOME, ITEMS THAT MAY BE RECLASSIFIED TO PROFIT OR LOSS | |||
| Currency translation differences | -1 898 | 5 844 | 22 318 |
| TOTAL OTHER COMPREHENSIVE INCOME FOR THE PERIOD | -1 898 | 5 844 | 22 318 |
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | 16 877 | 19 887 | 89 132 |
| PROFIT FOR THE PERIOD ATTRIBUTABLE TO | |||
| -Shareholders of the Parent Company | 18 775 | 14 043 | 66 814 |
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ATTRIBUTABLE TO | |||
| -Shareholders of the Parent Company | 16 877 | 19 887 | 89 132 |
| EARNINGS PER SHARE | |||
| -Before dilution (SEK) | 0,64 | 0,48 | 2,27 |
| -After dilution (SEK) | 0,63 | 0,47 | 2,25 |
| Average number of shares | 29 396 690 | 29 396 690 | 29 396 690 |
| Number of shares after dilution | 29 838 900 | 29 838 900 | 29 838 900 |
Consolidated statement of financial position
| SEK (thousands) | |||
|---|---|---|---|
| 2017-03-31 | 2016-03-31 | 2016-12-31 | |
| ASSETS | |||
| FIXED ASSETS | |||
| Intangibles assets | 804 844 | 620 908 | 809 612 |
| Tangible fixed assets | 32 209 | 28 226 | 34 267 |
| Finacial assets | 947 | 855 | 950 |
| Deferred tax | 4 170 | 6 030 | 4 185 |
| TOTAL FIXED ASSETS | 842 170 | 656 019 | 849 014 |
| CURRENT ASSETS | |||
| Inventories | 1 030 | 364 | 1 031 |
| Receivables | 111 831 | 92 184 | 165 726 |
| Short-term investments | 43 | - | 43 |
| Cash and equivalents | 130 409 | 125 805 | 80 877 |
| TOTAL CURRENT ASSETS | 243 313 | 218 353 | 247 677 |
| TOTAL ASSETS | 1 085 483 | 874 372 | 1 096 691 |
| EQUITY AND LIABILITIES | |||
| Equity | 351 090 | 291 425 | 334 213 |
| Long-term liabilities, interest bearing | 264 721 | 222 802 | 339 395 |
| Long-term liabilities, non-interest bearing | 130 404 | 104 187 | 157 129 |
| Short-term liabilities, interest bearing | 89 934 | 29 009 | 44 126 |
| Short-term liabilities, non-interest bearing | 249 334 | 226 949 | 221 828 |
| TOTAL EQUITY AND LIABILITIES | 1 085 483 | 874 372 | 1 096 691 |
Consolidated statement of changes in equity
| SEK (thousands) | 2017 | 2016 | 2016 |
|---|---|---|---|
| Jan-Mar | Jan-Mar | Jan-Dec | |
| EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT COMPANY | |||
| At beginning of period | 334 213 | 271 538 | 271 538 |
| Dividend | - | - | -26 457 |
| Total comprehensive income for the period | 16 877 | 19 887 | 89 132 |
| AT END OF PERIOD | 351 090 | 291 425 | 334 213 |
Consolidated statement of cash flows
| SEK (thousands) | 2017 | 2016 | 2016 |
|---|---|---|---|
| Jan-Mar | Jan-Mar | Jan-Dec | |
| OPERATING ACTIVITIES | |||
| Operating profit | 26 194 | 19 496 | 88 305 |
| Adjustments for items not included in cash flow | |||
| Other operating income | - | -1 519 | -22 695 |
| Depreciation/amortisation and impairment | 27 496 | 22 421 | 114 256 |
| Unrealized exchange gains/losses | 29 | 3 894 | 5 798 |
| 53 719 | 44 292 | 185 664 | |
| Interest received | 22 | 73 | 117 |
| Interest paid | -1 779 | -1 487 | -5 553 |
| Tax paid | -7 493 | -14 132 | -27 471 |
| CASH FLOW FROM OPERATING ACTIVITIES BEFORE | |||
| CHANGES IN WORKING CAPITAL | 44 469 | 28 746 | 152 757 |
| Changes in working capital | |||
| Change in inventories | 2 | 35 | 95 |
| Change in accounts receivables | 66 673 | 67 840 | 2 659 |
| Change in operating receivables | -12 777 | -180 | 1 265 |
| Change in accounts payable | -7 526 | -4 226 | 3 534 |
| Change in operating liabilities | 8 004 | -8 168 | -1 860 |
| CASH FLOW FROM CURRENT OPERATIONS | 98 845 | 84 046 | 158 450 |
| INVESTMENT ACTIVITIES | |||
| Acquisition of subsidiaries, net* | - | -2 945 | -156 112 |
| Sale of subsidiaries | - | 4 217 | |
| Acquisition of intangible assets and capitalized development costs | -24 078 | -19 260 | -83 763 |
| Acquisition of tangible assets | -470 | -690 | -9 046 |
| CASH FLOW FROM INVESTMENT ACTIVITIES | -24 547 | -22 895 | -244 704 |
| FINANCING ACTIVITIES | |||
| Dividend | - | - | -26 457 |
| New loans | - | 17 000 | 185 466 |
| Amortisation of loans | -27 585 | -7 677 | -49 865 |
| CASH FLOW FROM FINANCIAL ACTIVITIES | -27 585 | 9 323 | 109 144 |
| CASH FLOW FOR THE PERIOD | 46 713 | 70 474 | 22 890 |
| CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD | 80 920 | 60 268 | 60 268 |
| Exchange-rate differences in cash and cash equivalents | 2 819 | -4 937 | -2 238 |
| CASH AND CASH EQUIVALENTS AT END OF PERIOD** | 130 452 | 125 805 | 80 920 |
*Payment for acquisition of subsidiaries in 2016 consisted of proceeds for Fox Publish AS. The payment did not result in any changes in share capital or control.
**Cash and cash equivalents are defined as funds for which there is an insignificant risk of value fluctuations and that can easily be converted to cash at a known amount. Short-term investments comprises funds that can be converted to cash at a known amount within one banking day.
Income statement, Parent Company
| SEK (thousands) | 2017 | 2016 | 2016 |
|---|---|---|---|
| Jan-Mar | Jan-Mar | Jan-Dec | |
| Operating income | 28 551 | 20 137 | 98 337 |
| Operating costs | -23 516 | -20 851 | -101 864 |
| OPERATING RESULT | 5 035 | -714 | -3 527 |
| RESULT FROM FINANCIAL INVESTMENTS | |||
| Income from shares in group companies | 0 | - | 58 335 |
| Financial income | 0 | 40 | 737 |
| Financial expense | -1 819 | -1 490 | -6 382 |
| PROFIT AFTER FINANCIAL NET | 3 216 | -2 164 | 49 163 |
| Appropriations | 0 | - | 7 781 |
| PROFIT BEFORE TAX | 3 216 | -2 164 | 56 944 |
| Tax | -708 | - | -9 |
| NET PROFIT | 2 508 | -2 164 | 56 935 |
The results of the period are consistent with the total comprehensive income.
Balance sheet, Parent Company
| SEK (thousands) | 2017-03-31 | 2016-03-31 | 2016-12-31 |
|---|---|---|---|
| ASSETS | |||
| FIXED ASSETS | |||
| Intangible assets | 3 750 | 3 900 | 3 942 |
| Tangible assets | 11 724 | 12 876 | 12 015 |
| Financial assets | 873 992 | 693 158 | 873 801 |
| TOTAL FIXED ASSETS | 889 466 | 709 934 | 889 758 |
| CURRENT ASSETS | |||
| Receivables | 79 719 | 49 081 | 82 710 |
| Cash and equivalents | 123 807 | 125 805 | 60 557 |
| TOTAL CURRENT ASSETS | 203 526 | 174 886 | 143 267 |
| TOTAL ASSETS | 1 092 992 | 884 819 | 1 033 025 |
| EQUITY AND LIABILITIES | |||
| Equity | 304 226 | 269 076 | 301 718 |
| Untaxed reserves | 2 341 | 2 222 | 2 341 |
| Long-term liabilities | 267 025 | 227 311 | 367 706 |
| Short-term liabilities | 519 400 | 386 209 | 361 260 |
| TOTAL EQUITY AND LIABILITIES | 1 092 992 | 884 819 | 1 033 025 |
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 2017, 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 2016. IFRS15 Revenues from contracts with customers enters into force 2018 and affects when and how a company should report revenue. A project for IFRS15 commenced last year and is described in the Annual Report for 2016. No significant changes has occurred since then.
Taxes
Tax for the year amounted to SEK 6,0 million (3,6). Deferred tax amounted to SEK -0,4 million (0,4).
Investments
Investments amounted to SEK 23,9 million in capitalized work, SEK 0,2 million in other intangible assets and SEK 0,5 million in tangible assets.
Interest bearing liabilities
Long-term interest-bearing liabilities consists of bank loans SEK 264,7 million. Short-term interest-bearing liabilities consist of bank loans SEK 76,0 million and convertible debenture loan SEK 13,9 million. The company´s credit agreement with the bank contain terms with restrictions, covenants. The company has fulfilled the terms in its entirety for the period.
Long-term debt
Long-term interest-bearing debt consists of bank loans SEK 264,7 million. Long-term non-interest bearing liabilities consist of deferred taxes SEK 120,1 million, pension liability SEK 7,6 million and a non-current portion of additional purchase price Fox Publish SEK 2,7 million.
Convertible debenture
Convertible debentures are included in short-term interest bearing liabilities:
Loan 1501 (short-term debt interest bearing liabilities, staff). SEK 13,9 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 SEK 44 221. 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 March 31, 2017 was SEK 351,1 million.
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. Vitec has financial instrument in the categories loans receivable and accounts receivable, financial liabilities valued at fair value, and financial liabilities valued at their accrued acquisition value.
Financial 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 reported book value.
All of the company´s financial instruments that are subject to valuation at fair value are classified at level 3. The change for the period in respect of financial instruments at level 3 refers primarily to additional purchase prices for acquisitions. Conditional purchase prices are valued at fair value base 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% has been used. As the difference between fair value and book value is marginal, no correction has taken place.
The conditional additional purchase price for Fox Publish AS is subject to discrete events within a maximum period of 42 months after the acquisition date as of March 2, 2015. The conditional additional purchase price for Futursoft OY is dependent on EBITDA 201610-201709.
The following table shows the difference between fair value and booked value.
| Recurring valuations at fair value, as at 31 March 2017 | |||||||
|---|---|---|---|---|---|---|---|
| Level 1 | level 2 | Level 3 | Book value | ||||
| Additional purchase price Fox Publish AS | 2 671 | 2 707 | |||||
| Additional purchase price Futursoft OY | 23 866 | 23 866 | |||||
| Reidual purchase price Nice AS | 2 082 | 2 082 | |||||
| Total | 28 619 | 28 655 |
For all other financial assets and liabilities, booked value is consistent with fair value.
Signatures
Umeå April 25 2017
Lars Stenlund (CEO)
The board: Jan Friedman, Kaj Sandart, Birgitta Johansson-Hedberg, Crister Stjernfelt and Anna Valtonen.
Information
Publication
The information in this report is such a kind that Vitec Software Group AB (publ.) is legally required to disclose pursuant to the EU´s Market Abuse Regulation and the Swedish Securities Market Act. The information was released for publication on Tuesday April 25, 2017 at 13:00 CET.
Contact
CEO Lars Stenlund +46 70-659 49 39, [email protected]
Financial information
Can be ordered from:
Vitec Software Group AB (publ), Investor Relations, Tvistevägen 47 A, S-907 29 Umeå, Sweden.
Phone: +46 90-15 49 00
E-mail: [email protected]
Financial information is published on www.vitecsoftware.com immediately after publication.
The annual report is available at the company headquarters and on our website.
Financial calendar
2017-07-13 Interim report January-June 2017 (≈08:30) 2017-10-20 interim report January-September 2017 (≈08:30)
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
CFO Maria Kröger +46 70-324 66 58, [email protected]
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 equity
Reported profit after tax in relation to average shareholders´ equity attributable to Parent Company shareholders.
Return of capital employed
Profit before tax plus interest expenses in relation to average capital employed. Capital employed is defined as total assets less non-interest-bearing liabilities and deferred tax.
Value added per employee
Operating profit, plus depreciation and staff costs in relation to the average number of employees.
Adjusted equity per share (JEK)
Equity attributable to Parent Company shareholders in relation to the number of shares issued at the closing date.
Cash flow per share
Cash flow from operating activities before the change in operating capital in relation to the average number of shares.
Sales per employee
Net sales relation to average number of employees.
P/E ratio
Share price on the closing date in relation to earnings per share.
P/Adjusted equity per share
The share price on the closing date multiplied by the number of shares issued on the closing date in relation to the equity.
P/S
The share price on the closing date multiplied by the average number of shares in relation to net sales.
Operating margin
Operating profit as a percentage of net sales.
Equity/assets ratio
Shareholders' equity, including equity attributable to noncontrolling interests in relation to total assets.
Debt/equity ratio
Average liabilities in relation to average shareholders' equity and non-controlling interests.
Earnings per share
Profit/loss for the period, attributable to thr Parent Company´s shareholders in relation to the average number of shares.
Profit margin
Profit after tax in relation to net sales.
Graphs
50 60 70 80 90 100 0 50 100 150 200 Q1-14 Q1-15 Q1-16 Q1-17 Net sales (MSEK) Recurring part (%)
Profit per share (SEK/share) Net sales (MSEK)
Net sales and recurring part Net sales and operating margin
Net sales January-March 2017 Operating profit January-March 2017
Vitec at a glance
Industry-specific business systems
Vitec develops and supplies business-critical standardized 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
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 approx. 500 employees.
Key figures
| 2017 | 2016 | 2016 | ||
|---|---|---|---|---|
| Jan-Mar | Jan-Mar | Jan-Dec | ||
| Net sales | (TSEK) | 191 500 | 157 126 | 675 414 |
| Business Area Auto | (TSEK) | 40 180 | 24 517 | 119 171 |
| Business Area Energy | (TSEK) | 6 363 | 6 409 | 25 872 |
| Business Area Real Estate | (TSEK) | 48 938 | 37 410 | 158 357 |
| Business Area Finance & Insurance | (TSEK) | 33 303 | 29 143 | 126 567 |
| Business Area Health | (TSEK) | 15 930 | 15 186 | 66 203 |
| Business Area Environment | (TSEK) | 11 960 | 1 921 | 22 990 |
| Business Area Estate Agent | (TSEK) | 34 594 | 42 386 | 155 285 |
| Shared | (TSEK) | 231 | 155 | 969 |
| Growth | (%) | 22% | 10% | 9% |
| Profit after financial items | (TSEK) | 24 369 | 18 015 | 81 942 |
| Profit after tax | (TSEK) | 18 775 | 14 043 | 66 814 |
| Profit after tax attributable to owners of the parent | (TSEK) | 18 775 | 14 043 | 66 814 |
| Profit growth attributable to owners of the parent | (%) | 34% | -19% | -15% |
| Profit margin | (%) | 10% | 9% | 10% |
| Operating margin | (%) | 14% | 12% | 13% |
| Total assets | (tkr) | 1 085 483 | 874 372 | 1 096 691 |
| Equity/assets ratio | (%) | 32% | 33% | 30% |
| Equity/assets ratio after full conversion | (%) | 34% | 35% | 32% |
| Debt/equity ratio | (times) | 2,05 | 2,04 | 2,25 |
| Return on capital employed* | (%) | 15% | 20% | 14% |
| Return on equity* | (%) | 22% | 28% | 22% |
| Sales per employee | (TSEK) | 384 | 349 | 1 445 |
| Value added per employee | (TSEK) | 322 | 290 | 1 198 |
| Personnel expenses per employee | (TSEK) | 215 | 206 | 813 |
| Average numbers of employees | (number) | 499 | 450 | 467 |
| Adjusted shareholders' equity per share (JEK)** | (SEK) | 11,94 | 9,91 | 11,37 |
| Earnings per share** | (SEK) | 0,64 | 0,48 | 2,27 |
| Earnings per share after dilution** | (SEK) | 0,63 | 0,47 | 2,25 |
| Paid dividends per share** | (SEK) | - | - | 0,90 |
| Cash flow per share** | (SEK) | 1,51 | 0,98 | 5,20 |
| P/E ratio** | 27,02 | 25,70 | 33,22 | |
| P/JEK** | 5,51 | 6,61 | 6,64 | |
| P/S** | 2,72 | 3,05 | 3,29 | |
| Calculation bases: | ||||
| Results used for the calculation of earnings per share | (TSEK) | 18 775 | 14 043 | 66 814 |
| Cash flow for the calculation of cash flow per share*** | (TSEK) | 44 469 | 28 746 | 152 757 |
| 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 | 29 838 900 | 29 838 900 |
| 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) | 65,75 | 65,50 | 75,50 |
* Values for rolling 12 months.
Vitec Software Group AB (publ) is a Nordic software company that develops and delivers standardized 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 approx. 500 employees and had 2016 a turnover of SEK 675 million. Vitec is listed on Nasdaq Stockholm.