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Vitec Software Group B — Interim / Quarterly Report 2018
Jul 12, 2018
2988_ir_2018-07-12_46f15175-5339-473b-81d8-c39c8e55d817.pdf
Interim / Quarterly Report
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Interim Report January-June 2018
Vitec in brief
Industry-specific business systems
Vitec is the Nordic market leader in Vertical Market Software. We develop and supply standard products for various niches. This means that our offering is tailored to the unique needs and requirements of companies within a specific sector in order to manage and develop their business activities.
Standardized software
Our standardized products are cost-effective for our customers since they can assimilate developments and upgrades made for the entire industry. In this way, we provide our customers with maximum opportunities to develop and future-proof their business.
Business model with recurring revenue
Our business model is based on a high proportion of recurring revenue. This gives us the opportunities to act on a long term bases, as we are less sensitive to temporary downturns within individual companies.
Growth through acquisitions
Vitec has a pronounced acquisition-based growth strategy, with focus on profitability and stable cash flows. By focusing on strong cash flows, we are creating the financial conditions for continued acquisition-driven growth.
Recurring revenues in strong growth
Summary for January-June 2018
- Net sales MSEK 465 (388)
- Profit before tax MSEK 48,1 (54,2)
- Operating margin 11,4 % (14,9)
- Earnings per share before dilution SEK 1,29 (1,44)
- Cash flow from operations MSEK 119,8 (134,1)
Summary for April-June 2018
- Net sales MSEK 243 (197)
- Profit before tax MSEK 23,0 (29,8)
- Operating margin 10,7 % (16,1)
- Earnings per share before dilution SEK 0,62 (0,80)
- Cash flow from operations MSEK 6,9 (35,3)
- Acquisition of PP7 Affärssystem AB, Agrando AS and Cito IT A/S
CEO's comments
Recurring revenues grew by more than 26 percent in the second quarter while sales increased by just over 23 percent. We continue to prioritize growth in recurring revenue in order to further reduce dependency on non-recurring license- and volatile service-revenues. At the moment we are challenged in streamlining operations as fast as the business model changes towards an increasing share of recurring revenues. This means that profitability development for the first half of the year is weak and, in the short term, unsatisfactory. Continuous internal work on efficiency, however, has a natural longer perspective than a single quarter and that work continues with unabated strength and focus.
In the second quarter, we have completed three acquisitions. On April 9, we acquired the Swedish software company PP7 Affärssystem, with software the construction and installation market in Sweden. On April 19, we acquired the Norwegian software company Agrando, whose software is for church operations in the Nordic countries with Norway and Sweden as main markets. On May 31, we acquired the Danish company Cito IT, whose product is an industry-specific software for the pharmacy market in Denmark.
With these acquisitions, we continue to strengthen our position as the Nordic region's leading vertical software company, while adding over 85 MSEK in annual sales and 70 new employees.
The acquisition intensity in the quarter also entails significant acquisition-related costs, approximately SEK 4 million, which has an impact on earnings compared with the same period last year.
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 is good, which provides for continued acquisition-based growth. With the acquisition of well-established companies and a high proportion of recurring revenues, Vitec continues on the path to act in several independent and specialized niches, to achieve sustainable profitable growth.
Lars Stenlund, CEO
Group Financial information
Sales and results
January-June 2018
Revenues
Net sales for the period amounted to SEK 465,2 million (388,5), which represents an increase of 20 %. The increase in net sales is primarily attributable to acquisitions. Organic growth for the period is 1,6 %. Recurring revenues for the period increased by 20 % compared to previous year and amounted to SEK 349,9 million (291,4), corresponding to 75,2 % (75,0) of net sales. License revenues decreased by 6 % compared to previous year and amounted to SEK 13,4 million (14,3). Service revenues decreased by 5 % compared to previous year and amounted to SEK 74,0 million (78,0). Other revenues increased by 468 % compared to previous year and amounted to SEK 27,9 million (4,9).
The acquired company PP7 Affärssystem AB, which was consolidated from April 9, contributed with net sales of SEK 2,0 million during the period. The acquired group Agrando AS, which was consolidated from April 19, contributed with net sales of SEK 8,1 million and the acquired company Cito IT A/S which was consolidated from May 31, contributed with SEK 2,1 million.
Profit
Operating profit amounted to SEK 53,2 million (57,9) with an operating margin of 11,4 % (14,9). Profit after tax was SEK 38,4 million (42,4). Earnings per share before dilution were SEK 1,29 (1,44).
April-June 2018
Revenues
Net sales for the period amounted to SEK 242,8 million (197,0), which represents an increase of 23 %. The increase in net sales is primarily attributable to acquisitions. Organic growth for the period is 1,1 %. Recurring revenues for the period increased by 26 % compared to previous year and amounted to SEK 186,9 million (148,1), corresponding to 77,0 % (75,2) of net sales. License revenues decreased by 3 % compared to previous year and amounted to SEK 5,8 million (6,0). Service revenues decreased by 10 % compared to previous year and amounted to SEK 36,4 million (40,4). Other revenues increased by 456 % compared to previous year and amounted to SEK 13,7 million (2,5).
The acquired company PP7 Affärssystem AB, which was consolidated from April 9, contributed with net sales of SEK 2,0 million during the period. The acquired group Agrando AS, which was consolidated from April 19, contributed with net sales of SEK 8,1 million and the acquired company Cito IT A/S which was consolidated from May 13, contributed with SEK 2,1 million.
Profit
Operating profit amounted to SEK 25,9 million (31,7) with an operating margin of 10,7 % (16,1). Profit after tax was SEK 18,6 million (23,6). Earnings per share before dilution were SEK 0,62 (0,80).
Liquidity and financial status
The Group's cash and cash equivalents, including short-term investments, at the end of the period amounted to SEK 65,9 million (49,0). In addition to these cash and cash equivalents, was a bank overdraft facility of SEK 20 million, and SEK 62,4 million in unused credit facilities. Total credit facility amounts to SEK 450 million. During the period SEK 149,7 million was used from the facility to finance acquisitions and SEK 51,2 million was repaid to the facility. Amortization of bank loans amounted to SEK 3,8 million. Cash flow from operating activities was SEK 119,8 million (134,1). Investments totaled SEK 62,6, million in capitalized work, SEK 0,6 million in other intangible assets and SEK 7,2 million in tangible assets. Through the acquisitions of PP7 Affärssystem AB, Agrando AS and Cito IT A/S SEK 149,6 million was invested in product rights, brands, customer agreements and goodwill.
Total interest-bearing liabilities amounted on June 30 2018 to SEK 522,8 million (302,6) distributed on long term debt SEK 492,2 million (257,5) and short-term interest-bearing liabilities SEK 30,6 million (45,1). During the period, the additional purchase prices for the acquisitions of Futursoft Oy and Fox Publish AS was finalized, SEK 22,9 million was paid for Futursoft and SEK 1,4 million was paid for Fox Publish.
Equity attributable to Vitec's shareholders amounted to SEK 432,8 million (341,3). The equity ratio was 30 % (34). Paid dividend after the annual general meeting in April amounted to SEK 1,10 per share, totaling SEK 32,8 million.
Graphs Group
Net sales and recurring part Net sales and operating margin
Net sales (MSEK) Change in revenues
Recurring revenue License revenue Services revenue Other income
The acquired companies' total annual turnover at the time of acquisition
Acquired Net sales Net sales per market January-June
Significant events during the period
April 9: Vitec acquires the software company PP7 Affärssystem AB
Vitec Software Group AB (publ) has on April 9 agreed to acquire all shares in the Swedish software company PP7 Affärssystem AB. The company develops software for the construction and installation market in Sweden. The main product is a cloud-based software for project and business support that optimizes flows and routines for a specific project. The company had a turnover of close to SEK 8 million for the fiscal year 2017, with an EBITDA result of SEK 1,4 million.
April 19: Vitec acquires the software company Agrando AS
Vitec Software Group AB (publ) strengthens its Nordic position in Vertical Software by today, on April 19, acquiring 97,2% of the shares in the Norwegian software company Agrando AS. The company's product is an industry-specific software for the church market in the Nordic region with Norway and Sweden as main markets. The company and its subsidiaries had a turnover just above SEK 42 million with an EBITDA result of SEK 5,5 million for the financial year 2017.
May 31: Vitec acquires the Danish software company Cito IT A/S
Vitec Software Group AB (publ) strengthens its Nordic position in Vertical Software by today, on May 31, acquiring all of the shares in the Danish software company Cito IT A/S. The company's product is an industryspecific software for the pharmacy market in Denmark. The company had a turnover of MDKK 25,5 with an EBITDA result of MDKK 7,6 for the financial year 2016/17.
Business Areas January-June 2018
Four business areas are increasing their profit, while three reports lower profit compared to the corresponding period for 2017. The recurring revenues increases for all business areas except the business area Estate Agents. During the second quarter, we completed three acquisitions. In April we acquired PP7 Affärssystem that offers software to project companies in the construction and installation market in Sweden and Agrando that offers software for the church market in Norway and Sweden. In May, Cito IT was acquired. Cito IT offers software for the pharmacy market in Denmark.
Business Area Auto
Business area Auto increases its profit and turnover compared to the corresponding period in 2017. In Norway, Auto launched their new mobile client for workshop reporting during the second quarter. In Denmark have Auto recruited a new CEO when former CEO Stefan Hestbæk has chosen to retire. Henrik Johnsen, who last came from positions as CEO for MultiQ and Cleradium, replaces Stefan. In Finland, Auto continues to win new business in the second quarter. The business area's recurring revenues increased 12 % compared to the corresponding period 2017.
Business Area Energy
Business area Energy increases its profit and turnover compared to the corresponding period of 2017. Energy continues the first half of the year in the same positive spirit as the latter part of 2017. Energy has been working in the past year to refine its forecasts module and trim their deliveries. The work has been successful and collectively these changes provide good conditions for continued growth with good profitability. The business area's recurring revenues increased 3 % compared to the corresponding period 2017.
Business Area Real Estate
Business area Real Estate increases its profit and turnover compared to the corresponding period in 2017. Real Estate have great demand for their products and the efficiency of the delivery process is increasing. Growth is taking place under a constant change in the mix of our revenue categories. Recurring revenues are growing with two-digit percentages while the one time licensing revenue continues to decline. On April 9, PP7 Business Systems was acquired. PP7 offers software to project companies in the construction and installation market in Sweden. The business area's recurring revenues increased 15 % compared to the corresponding period 2017.
Net sales January-June 2018 Operating profit January-June 2018 Auto 18% Energy 3% Real Estate 22% Finance & Insurance 14% Media 0% Estate Agents 16% Education & Health 22% Education & Health - 6 % Auto 28% Energy 8% Real Estate 33% Finance & Insurance 11% Environment 4% Estate Agent 22%
Business Area Finance & Insurance
Business area Finance & Insurance reduces its profit and turnover compared with the corresponding period of 2017. The result for Finance & Insurance does not reach up to the same high level as the corresponding period in 2017. During the first half of 2017, the business area had large deliveries, especially in Denmark, which heavily increased service revenues. In 2018, these delivery projects will increase recurring revenues and reduce the dependence on service- and license-revenues. The rapid shift towards an increasing share of recurring revenues effects, short term, the profit in a negative way but will strengthen the business long term. In Norway, we have negative effects from a major customer who left in 2017, but during the second quarter, Finance & Insurance Norway have won one of these procurements and dialogs are still ongoing with more potential customers. The Swedish business have had a success with two new product lines, wealth planning and corporate loans. They have already signed one new contract and negotiations are ongoing with more customers. The business area's recurring revenues increased 11 % compared to the corresponding period 2017.
Business Area Environment
Business area Environment reduces its profit and sales compared to the same period in 2017. Environment is also in the middle of a planned shift from license revenues to a higher proportion of recurring revenues. The change will affect earnings in a negative way in the short term, but will strengthen us in the long term. During the second quarter a new CEO has been recruited to Environment, when the former CEO Timo Sivula has chosen to retire. New CEO is Tuomas Tokola. Tuomas was previously COO in the company. The business area's recurring revenues increased 10 % compared to the same period in 2017.
Business Area Estate Agents
Business area Estate Agents increases its profit and turnover compared to the same period in 2017. Estate Agents leave a stable half-year behind them. In Sweden have Estate Agents begun to shut down the former product Office in favor of the new product Express. During the launch of Express, Estate Agents have maintained two product lines. They can now focus the business to one product-line and continue to increase their efficiency. In Norway, development work is proceeding according to plan. The new product Next is being rolled out for production at Norway's largest broker. The business area's recurring revenues declined 5 % compared with the same period in 2017.
Business Area Education & Health
Business area Education & Health reduces its profit and increases sales compared to the corresponding period in 2017. Turnover and recurring revenues increase with large numbers now when Education Denmark for the first time is included throughout the period. Agrando and Cito IT are included in the business area from the date of acquisition. Education Denmark has a higher proportion of hardware sales than the Group in general, affecting the share of recurring revenues and profit margins. Furthermore, Education Denmark has a significant seasonal variation, as most of the income comes at the start of the autumn. . Health in Finland has begun to streamline its operations to concentrate its development to Tampere. The business area's recurring revenues increased 133 % compared to the same period in 2017.
Net sales January-June 2018 (MSEK) Operating profit January-June 2018 (MSEK)
before acquisition-related costs
| Auto | Energy | Real Estate | Finance & Insurance |
Environment | Estate Agent | Education & Health | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Jan-Jun | Jan-Jun | Jan-Jun | Jan-Jun | Jan-Jun | Jan-Jun | Jan-Jun | ||||||||
| 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |
| Recurring revenues | 70,8 | 63,1 | 9,7 | 9,4 | 60,6 | 52,8 | 57,3 | 51,7 | 18,3 | 16,6 | 65,7 | 68,8 | 67,4 | 28,9 |
| License revenue | 2,5 | 3,4 | 0,0 | 0,0 | 2,9 | 6,1 | 0,2 | 2,2 | 1,0 | 2,4 | 0,0 | 0,0 | 6,9 | 0,2 |
| Services revenue | 7,6 | 10,2 | 3,1 | 3,3 | 37,0 | 37,5 | 6,7 | 15,2 | 3,1 | 3,2 | 10,0 | 2,4 | 6,4 | 6,1 |
| Other income | 2,8 | 2,6 | 0,2 | 0,1 | 0,0 | 0,0 | 0,3 | 0,3 | 0,5 | 1,3 | 0,1 | 0,2 | 23,5 | 0,1 |
| Net sales | 83,8 | 79,3 | 13,0 | 12,8 | 100,5 | 96,4 | 64,4 | 69,4 | 22,9 | 23,4 | 75,9 | 71,4 | 104,2 | 35,2 |
| Recurring revenue as a | ||||||||||||||
| percentage of net sales | 85% | 80% | 75% | 73% | 60% | 55% | 89% | 74% | 80% | 71% | 87% | 96% | 65% | 82% |
| Operating profit* | 15,9 | 10,9 | 4,7 | 3,6 | 19,1 | 17,4 | 6,4 | 15,9 | 2,1 | 4,3 | 12,3 | 4,6 | -3,2 | 1,4 |
| Operating margin | 19% | 14% | 36% | 28% | 19% | 18% | 10% | 23% | 9% | 18% | 16% | 6% | -3% | 4% |
*Operating profit for segments are presented before acquisition-related costs
Risks and uncertainties
Vitec's significant risks and uncertainties are described in the Administration Report in the Annual Report for 2017 under the heading "Risks and uncertainties" on pages 27-29, in note 1 under "Assessments and estimates" on page 57 and in note 20, "Financial risks and the handling of such risks "on pages 77-82. No significant changes have occurred since then.
The Parent Company
Net sales amounted to SEK 43,7 million (38,4) and consisted primarily of sales to subsidiaries for services rendered. Profit after tax amounted to SEK -31,3 million (1,3). The profit for the parent company has been charged with unrealized exchange rate differences amounting to SEK 36,4 million. The value of shares in subsidiaries was during the period adjusted down by SEK 2,4 million relating to a downward adjustment of contingent consideration for Futursoft 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
| TSEK | |||||
|---|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | 2017 | |
| Apr-Jun | Apr-Jun | Jan-Jun | Jan-Jun | Jan-Dec | |
| OPERATING REVENUE | |||||
| Recurring revenues | 186 904 | 148 134 | 349 904 | 291 365 | 609 970 |
| License revenues | 5 804 | 5 953 | 13 448 | 14 251 | 39 563 |
| Service revenues | 36 383 | 40 431 | 73 970 | 77 958 | 145 672 |
| Other revenues | 13 708 | 2 464 | 27 894 | 4 908 | 59 824 |
| NET SALES | 242 798 | 196 982 | 465 215 | 388 482 | 855 029 |
| Capitalized development costs | 32 516 | 22 375 | 62 598 | 46 273 | 97 213 |
| Reversal of aditional purchase price | 43 | - | 2 375 | - | 1 343 |
| SUM | 275 357 | 219 357 | 530 188 | 434 755 | 953 585 |
| OPERATING EXPENSES | |||||
| Goods for resale | -10 971 | -2 764 | -22 633 | -6 075 | -48 394 |
| Subcontractors and subscriptions | -26 778 | -25 793 | -51 019 | -51 126 | -100 791 |
| Other external expenses | -38 092 | -28 681 | -71 437 | -54 427 | -120 597 |
| Staff costs | -131 710 | -102 156 | -253 248 | -209 291 | -446 917 |
| Depreciation of tangible assets | -4 077 | -2 568 | -7 946 | -5 256 | -13 514 |
| Amortization of intangible assets | -34 374 | -25 663 | -64 981 | -50 471 | -112 025 |
| Impairment | -43 | - | -2 375 | - | -1 343 |
| Unrealized exchange gains and losses | 625 | -60 | 687 | -31 | 862 |
| TOTAL COSTS | -245 419 | -187 685 | -472 951 | -376 677 | -842 719 |
| OPERATING PROFIT BEFORE ACQUSITION-RELATED COSTS | 29 938 | 31 672 | 57 237 | 58 078 | 110 866 |
| Acquisition-related costs | -4 032 | -12 | -4 032 | -224 | -4 164 |
| OPERATING PROFIT AFTER ACQUISITION-RELATED COSTS | 25 906 | 31 660 | 53 205 | 57 854 | 106 702 |
| Financial income | 95 | 83 | 165 | 105 | 328 |
| Financial expense | -2 958 | -1 910 | -5 259 | -3 757 | -8 903 |
| TOTAL FINANCIAL ITEMS | -2 863 | -1 827 | -5 094 | -3 652 | -8 575 |
| PROFIT BEFORE TAX | 23 043 | 29 833 | 48 111 | 54 202 | 98 127 |
| Tax | -4 417 | -6 239 | -9 681 | -11 833 | -18 701 |
| NET PROFIT | 18 626 | 23 594 | 38 430 | 42 369 | 79 426 |
| OTHER COMPREHENSIVE INCOME, ITEMS THAT MAY BE RECLASSIFIED TO PROFIT | |||||
| OR LOSS | |||||
| Currency translation differences | 8 606 | -3 972 | 29 075 | -5 870 | -2 285 |
| TOTAL OTHER COMPREHENSIVE INCOME FOR THE PERIOD | 8 606 | -3 972 | 29 075 | -5 870 | -2 285 |
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | 27 232 | 19 622 | 67 505 | 36 499 | 77 141 |
| PROFIT FOR THE PERIOD ATTRIBUTABLE TO* -Shareholders of the Parent Company |
18 626 | 23 594 | 38 430 | 42 369 | 79 426 |
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ATTRIBUTABLE TO* | |||||
| -Shareholders of the Parent Company | 27 232 | 19 622 | 67 505 | 36 499 | 77 141 |
| EARNINGS PER SHARE | |||||
| -Before dilution (SEK) | 0,62 | 0,80 | 1,29 | 1,44 | 2,70 |
| -After dilution (SEK) | 0,62 | 0,79 | 1,28 | 1,42 | 2,70 |
| Average number of shares | 29 838 900 | 29 396 690 | 29 838 900 | 29 396 690 | 29 424 555 |
| Number of shares after dilution | 30 273 505 | 29 838 900 | 30 243 628 | 29 838 900 | 29 538 825 |
*Profit for the period and total comprehensive income for minority interests amount to less than SEK 10 thousands.
Segment information
| BUSINESS AREA | Net sales (MSEK) | Profit before acqusition related costs (MSEK) | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | 2017 | 2018 | 2017 | 2018 | 2017 | 2017 | |
| Apr-Jun | Apr-Jun | Jan-Jun | Jan-Jun | Jan-Dec | Apr-Jun | Apr-Jun | Jan-Jun | Jan-Jun | Jan-Dec | |
| Auto | 43,5 | 39,1 | 83,8 | 79,3 | 155,9 | 9,8 | 5,9 | 15,9 | 10,9 | 19,5 |
| Energy | 6,4 | 6,4 | 13,0 | 12,8 | 25,7 | 1,9 | 1,4 | 4,7 | 3,6 | 8,0 |
| Real Estate | 51,7 | 47,5 | 100,5 | 96,4 | 190,1 | 8,9 | 8,1 | 19,1 | 17,4 | 32,2 |
| Finance & Insurance | 32,7 | 36,1 | 64,4 | 69,4 | 142,3 | 2,7 | 8,3 | 6,4 | 15,9 | 29,0 |
| Environment | 11,4 | 11,4 | 22,9 | 23,4 | 44,1 | 1,2 | 2,1 | 2,1 | 4,3 | 5,5 |
| Estate Agent | 39,6 | 36,8 | 75,9 | 71,4 | 138,0 | 6,9 | 4,7 | 12,3 | 4,6 | 5,5 |
| Education & Health | 57,2 | 19,2 | 104,2 | 35,2 | 157,9 | -1,5 | 1,2 | -3,2 | 1,4 | 11,2 |
| Shared | 0,3 | 0,3 | 0,6 | 0,5 | 1,0 | - | - | - | - | - |
| Vitec Group | 242,8 | 197,0 | 465,2 | 388,5 | 855,0 | 29,9 | 31,7 | 57,2 | 58,1 | 110,9 |
| Acquisition-related costs | -4,0 | 0,0 | -4,0 | -0,2 | -4,2 | |||||
| Operating profit after acquisition-related costs | 25,9 | 31,7 | 53,2 | 57,9 | 106,7 | |||||
| Net financial income/expence | -2,9 | -1,8 | -5,1 | -3,7 | -8,6 | |||||
| Profit before tax | 23,0 | 29,8 | 48,1 | 54,2 | 98,1 |
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 diagram on page five shows the distribution of sales per country.
Net sales consist of recurring revenues, license revenues, service revenues and other revenues. These consist in turn of performance obligations.
Our performance obligations are support, maintenance and upgrades, time-limited right to use and hosting, perpetual right to use, services, information services, third party perpetual right to use, third party maintenance and other. Of recurring revenues SEK 172,6 million (151,4) are support, maintenance and upgrades, 115,6 million (83,6) are time-limited right to use and hosting, SEK 53,6 million (50,6) are information services and SEK 8,1 million (5,7) are third party maintenance. License revenues consist of SEK 12,7 million (13,4) perpetual right to use and SEK 0,7 million (0,9) third party perpetual right to use.
Our most common types of contracts are cloud services SaaS, subscriptions, sales of licenses with traditional support and maintenance agreements, service sales and sales of information services. The agreements run from one month to a year, and in some cases longer. Our recurring revenues are recognized evenly distributed over the term of the contracts as the customer receives control over the service and the performance obligation is fulfilled. Our license revenues are recognized at a given point in time, our service revenues are recognized continuously as the services are rendered and the customer receives control and benefit of them.
Consolidated statement of financial position
| TSEK | |||
|---|---|---|---|
| 2018-06-30 | 2017-06-30 | 2017-12-31 | |
| ASSETS | |||
| FIXED ASSETS | |||
| Intangibles assets | 1 140 450 | 801 629 | 944 327 |
| Tangible fixed assets | 41 839 | 31 373 | 37 956 |
| Financial assets | 1 894 | 1 920 | 1 791 |
| Deferred tax | 7 052 | 4 209 | 6 714 |
| TOTAL FIXED ASSETS | 1 191 236 | 839 131 | 990 788 |
| CURRENT ASSETS | |||
| Inventories | 5 077 | 688 | 3 619 |
| Receivables | 170 264 | 111 772 | 209 595 |
| Short-term investments | 267 | 43 | 44 |
| Cash and equivalents | 65 633 | 48 981 | 57 924 |
| TOTAL CURRENT ASSETS | 241 240 | 161 484 | 271 182 |
| TOTAL ASSETS | 1 432 476 | 1 000 615 | 1 261 970 |
| EQUITY AND LIABILITIES | |||
| Equity* | 432 846 | 341 315 | 398 164 |
| Long-term liabilities, interest bearing | 492 165 | 257 487 | 374 918 |
| Long-term liabilities, non-interest bearing | 170 092 | 129 261 | 147 339 |
| Short-term liabilities, interest bearing | 30 631 | 45 104 | 31 180 |
| Short-term liabilities, non-interest bearing | 306 742 | 227 448 | 310 369 |
| TOTAL EQUITY AND LIABILITIES | 1 432 476 | 1 000 615 | 1 261 970 |
*Equity attributable to minority interests is less than SEK 10 thousands.
Consolidated statement of changes in equity
| TSEK | 2018 | 2017 | 2018 | 2017 | 2017 |
|---|---|---|---|---|---|
| Apr-Jun | Apr-Jun | Jan-Jun | Jan-Jun | Jan-Dec | |
| EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT COMPANY* | |||||
| At beginning of period | 438 437 | 351 090 | 398 164 | 334 213 | 334 213 |
| Option element convertible bond | - | - | - | - | 2 221 |
| Conversion bonds | - | - | - | - | 13 986 |
| Dividend | -32 823 | -29 397 | -32 823 | -29 397 | -29 397 |
| Total comprehensive income for the period | 27 232 | 19 622 | 67 505 | 36 499 | 77 141 |
| AT END OF PERIOD | 432 846 | 341 315 | 432 846 | 341 315 | 398 164 |
*Equity attributable to minority interests is less than SEK 10 thousands.
Consolidated statement of cash flows
| TSEK | 2018 | 2017 | 2018 | 2017 | 2017 |
|---|---|---|---|---|---|
| Apr-Jun | Apr-Jun | Jan-Jun | Jan-Jun | Jan-Dec | |
| OPERATING ACTIVITIES | |||||
| Operating profit | 25 906 | 31 660 | 53 205 | 57 854 | 106 702 |
| Adjustments for items not included in cash flow | |||||
| Other operating income | -43 | - | -2 375 | - | -1 343 |
| Depreciation/amortisation and impairment | 38 493 | 28 232 | 75 302 | 55 728 | 126 882 |
| Unrealized exchange gains/losses | -625 | -60 | -687 | -31 | 862 |
| 63 731 | 59 832 | 125 445 | 113 551 | 233 103 | |
| Interest received | 95 | 83 | 165 | 105 | 328 |
| Interest paid | -2 723 | -1 839 | -4 786 | -3 618 | -8 438 |
| Tax paid | -8 634 | -8 018 | -18 965 | -15 511 | -25 381 |
| CASH FLOW FROM OPERATING ACTIVITIES BEFORE | |||||
| CHANGES IN WORKING CAPITAL | 52 469 | 50 058 | 101 859 | 94 527 | 199 612 |
| Changes in working capital | |||||
| Change in inventories | 872 | 341 | -197 | 343 | 8 836 |
| Change in accounts receivables | -24 446 | -5 237 | 67 377 | 61 436 | -20 754 |
| Change in operating receivables | -1 608 | 1 846 | -22 422 | -10 931 | 2 233 |
| Change in accounts payable | 16 222 | 7 712 | 6 240 | 186 | 6 839 |
| Change in operating liabilities | -36 566 | -19 451 | -33 052 | -11 447 | -9 136 |
| CASH FLOW FROM CURRENT OPERATIONS | 6 943 | 35 269 | 119 805 | 134 114 | 187 630 |
| INVESTMENT ACTIVITIES | |||||
| Acquisition of subsidiaries, net* | -84 524 | -2 081 | -108 840 | -2 081 | -88 826 |
| Acquisition of intangible assets and capitalized development costs | -33 021 | -23 838 | -63 184 | -47 916 | -101 500 |
| Acquisition of tangible assets | -1 557 | -1 207 | -7 203 | -1 677 | -7 750 |
| CASH FLOW FROM INVESTMENT ACTIVITIES | -119 102 | -27 126 | -179 227 | -51 674 | -198 076 |
| FINANCING ACTIVITIES | |||||
| Dividend | -32 823 | -29 397 | -32 823 | -29 397 | -29 397 |
| New loans | 149 728 | - | 149 728 | - | 109 129 |
| Amortisation of loans | -1 515 | -53 105 | -54 953 | -80 690 | -95 275 |
| CASH FLOW FROM FINANCIAL ACTIVITIES | 115 390 | -82 502 | 61 952 | -110 087 | -15 543 |
| CASH FLOW FOR THE PERIOD | 3 231 | -74 358 | 2 530 | -27 646 | -25 989 |
| CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD | 60 391 | 130 452 | 57 968 | 80 920 | 80 920 |
| Exchange-rate differences in cash and cash equivalents | 2 278 | -7 068 | 5 402 | -4 249 | 3 037 |
| CASH AND CASH EQUIVALENTS AT END OF PERIOD** | 65 900 | 49 026 | 65 900 | 49 025 | 57 968 |
* Payment for acquisition of subsidiaries consisted during the period of proceeds for PP7 Affärssystem AB, Agrando AS and Cito IT A/S. Net cash flow amounted to SEK 84,5 million. The acquisitions related to the entire outstanding share capital and meant that control was obtained in the companies. Final payments for additional purchase prices for Futursoft Oy SEK 22,9 million and Fox Publish AS SEK 1,4 million was also made. The payments did not result in any changes in share capital or control.
Payment for acquisition of subsidiaries 2017 consisted of a residual payment for Nice 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
| TSEK | 2018 | 2017 | 2018 | 2017 | 2017 |
|---|---|---|---|---|---|
| Apr-Jun | Apr-Jun | Jan-Jun | Jan-Jun | Jan-Dec | |
| Operating income | 21 939 | 19 354 | 43 721 | 38 372 | 79 990 |
| Operating costs | -23 284 | -17 354 | -41 255 | -33 389 | -69 796 |
| Unrealized currency exhange differences (net) | -11 344 | -1 806 | -36 385 | 246 | -7 058 |
| OPERATING RESULT | -12 690 | 194 | -33 920 | 5 229 | 3 136 |
| RESULT FROM FINANCIAL INVESTMENTS | |||||
| Income from shares in group companies | - | - | - | - | 64 898 |
| Financial income | 47 | 66 | 82 | 66 | 231 |
| Financial expense | -2 859 | -1 802 | -5 269 | -3 621 | -8 289 |
| PROFIT AFTER FINANCIAL NET | -15 501 | -1 542 | -39 106 | 1 674 | 59 976 |
| Appropriations | - | - | - | - | 4 912 |
| PROFIT BEFORE TAX | -15 501 | -1 542 | -39 106 | 1 674 | 64 888 |
| Tax | 2 595 | 340 | 7 788 | -368 | 57 |
| NET PROFIT | -12 906 | -1 202 | -31 318 | 1 306 | 64 945 |
The profit for the period are consistent with the total comprehensive income.
Balance sheet, Parent Company
| TSEK | 2018-06-30 | 2017-06-30 | 2017-12-31 |
|---|---|---|---|
| ASSETS | |||
| FIXED ASSETS | |||
| Intangible assets | 3 009 | 3 541 | 3 301 |
| Tangible assets | 11 745 | 11 780 | 11 432 |
| Financial assets | 1 151 536 | 865 057 | 980 278 |
| TOTAL FIXED ASSETS | 1 166 290 | 880 378 | 995 011 |
| CURRENT ASSETS | |||
| Receivables | 45 784 | 27 817 | 90 596 |
| Cash and equivalents | - | 42 533 | 51 616 |
| TOTAL CURRENT ASSETS | 45 784 | 70 350 | 142 212 |
| TOTAL ASSETS | 1 212 074 | 950 728 | 1 137 223 |
| EQUITY AND LIABILITIES | |||
| Equity | 289 332 | 273 996 | 353 473 |
| Untaxed reserves | 2 429 | 2 341 | 2 429 |
| Long-term liabilities | 509 197 | 259 973 | 374 611 |
| Short-term liabilities | 411 116 | 414 418 | 406 710 |
| TOTAL EQUITY AND LIABILITIES | 1 212 074 | 950 728 | 1 137 223 |
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 of existing standards, which entered into effect in 2018, have not had any impact on the Group's financial position or financial statements. The accounting principles and calculation methods remain unchanged compared with the description in the 2017 annual report.
IFRS 15 Revenue from Contracts with Customers enters into effect 1 January 2018 and Vitec applies the new standard. According to IFRS 15, the revenue is recognized when the customer obtains control over the service and when the performance obligation is fulfilled. Our analysis of our contracts has not arrived at any significant differences based on how we recognized the revenue before IFRS 15. The transition has therefore not had any effect on reported sales and profit, no adjustment of opening balance or recalculation of comparative figures have been made. A company may choose between applying the new standard with full retroactivity or with prospective application with further disclosures. We have chosen retroactive application.
The additional purchase price for Futursoft Oy has been adjusted downwards by SEK 2,4 million. This correction was recognized as other operating income in accordance with IFRS 3:58. At the same time, impairment of intangible assets has taken place. The adjustment has no effect on recognized profit.
Tax
Current tax for the period amounted to SEK 8,5 million (12,6). Deferred tax amounted to SEK 1,1 million (-0,8).
Investments
Investments amounted to SEK 62,6 million in capitalized work, SEK 0,6 million in other intangible assets and SEK 7,2 million in tangible assets. Through the acquisitions of PP7 Affärssystem AB, Agrando AS and Cito IT A/S SEK 149,6 million was invested in product rights, brands, customer agreements and goodwill.
Interest bearing liabilities
Long-term interest-bearing liabilities consist of bank loans of SEK 453,0 million and convertible debentures of SEK 39,2 million. Short-term interest-bearing liabilities consist of bank loans SEK 30,6 million. The company´s credit agreement with the bank include terms with restrictions, so-called covenants. The Group met these terms in their entirety for the period.
Convertible debenture
Convertible debentures are included in long-term interest bearing liabilities:
- Loan 1707 (long-term debt interest bearing liabilities, acquisition MV-Nordic A/S). SEK 19,3 million. Duration of the loan is July 6, 2017 - June 30, 2020. The interest rate is Stibor 180. The conversion price is SEK 85,00. Conversion may be requested 1 January 2019 to 30 June 2020. The share capital may upon conversion increase by a maximum of SEK 23 432. At full conversion the dilution of about 0,8 % of the share capital and 0,4 % of the votes
- Loan 1801 (long-term debt interest bearing liabilities, staff). SEK 19,8 million. Duration of the loan is January 1, 2018 December 31, 2020. The interest rate is Stibor 180. The conversion price is SEK 104,00. Conversion may be requested 1 November to 30 November 2020. The share capital may upon conversion increase by a maximum of SEK 20 029. At full conversion the dilution of about 0,7 % of the share capital and 0,3% of the votes.
Financial instruments
IFRS 9 Financial Instruments enters into effect in 2018 and addresses the recognition of financial assets and liabilities. Vitec applies the new standard as of January 1, 2018. The standard has different measurement categories for financial assets and a new model for impairment testing. The main impact of the standard refers to a partially new process for credit losses. Vitec will apply the transition forward and have taken into account historical customer losses over a business cycle and subsequently finds that the new standard has no material effect on the consolidated accounts.
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 and refers to additional purchase prices in connection with acquisitions.
| Recurring valuations at fair value, as at 30 June 2018 | ||||||
|---|---|---|---|---|---|---|
| Level 1 | level 2 | Level 3 | Book value | |||
| Additional purchase price PP7 Affärssystem AB | 4 000 | 4 000 | ||||
| Additional purchase price Cito IT A/S | 9 581 | 9 668 | ||||
| Total | 13 581 | 13 668 |
Acquisitions
Acquistion of PP7 Affärssystem AB
On April 9, all shares and votes were acquired in the Swedish software company PP7 Affärssystem AB. The company develops software for the construction and installation market in Sweden. The main product is a cloud-based software for project and business support that optimizes flows and routines for a specific project.
The company is consolidated as from the acquisition date. The goodwill is not tax-deductible and is deemed to be attributable to the expected profitability, complementary expertise as well as anticipated synergies in the form of the joint development of our products. From the acquisition date up to and including the June 30, the revenues of the acquired company amount to SEK 2,0 million and profit before tax to SEK 0,3 million. If consolidation had occurred at the beginning of the year, the company would have brought the Group a further approx. SEK 1,8 million in revenue and approx. SEK 0,3 million in profit before tax.
There are items in the purchase price allocation that may be revalued since the company have been in our possession for a short period of time. These items are brands, product rights, customer agreements and goodwill. For that reason, the purchase price allocation is preliminary until twelve months have passed since the acquisition date.
The debted conditional portion of purchase price is dependent on EBITDA improvement per December 31, 2018.
| Fair value | Fair value recognized | ||
|---|---|---|---|
| Preliminary purchase price allocation (SEK thousands) |
PP7 Affärssystem AB | adjustment | in the Group |
| Brands | - | 274 | 274 |
| Product Rights | - | 2 794 | 2 794 |
| Customer Agreement | - | 3 818 | 3 818 |
| Intangible fixed assets | 341 | - | 341 |
| Tangible fixed assets | 4 | - | 4 |
| Current receivables | 2 121 | - | 2 121 |
| Cash and cash equivalents | 4 204 | - | 4 204 |
| Deferred tax liabilities | - | -1 515 | -1 515 |
| Current liabilities | -2 200 | - | -2 200 |
| Long-term liabilities | -600 | - | -600 |
| Net identifiable assets and liabilities | 3 869 | 5 371 | 9 240 |
| Goodwill on consolidation | 5 560 | ||
| Total | 14 800 | ||
| The Group´s acquisition value | 14 800 | ||
| Calculation of net cash outflow | Fair value | ||
| Group´s acqcuisition value | -14 800 | ||
| Debt additional purchase price | 1 000 | ||
| Debt conditional portion of purchase price | 4 000 | ||
| Cash acquired | 4 204 | ||
| Net cash outflow | -5 596 |
Acquistion of Agrando AS
On April 19, 97,2 % of the shares and votes were acquired in the Norwegian software Group Agrando AS. Shortly after that, the remaining shares and votes were acquired. The company's product is an industry-specific software for the church market in the Nordic region with Norway and Sweden as main markets.
The Group is consolidated as from the acquisition date. The goodwill is not tax-deductible and is deemed to be attributable to the expected profitability, complementary expertise as well as anticipated synergies in the form of the joint development of our products. The acquisition-related costs amounted on June 30 to SEK 1,6 million, and are recognized as other external cost in the consolidated statement of comprehensive income. From the acquisition date up to and including the June 30, the revenues of the acquired company amount to SEK 8,1 million and profit before tax to SEK 2,0 million. If consolidation had occurred at the beginning of the year, the company would have brought the Group a further approx. SEK 7,4 million in revenue and approx. SEK 1,9 million in profit before tax.
There are items in the purchase price allocation that may be revalued since the company have been in our possession for a short period of time. These items are brands, product rights, customer agreements and goodwill. For that reason, the purchase price allocation is preliminary until twelve months have passed since the acquisition date.
| Fair value | Fair value recognized | ||
|---|---|---|---|
| Preliminary purchase price allocation (SEK thousands) |
Agrando AS | adjustment | in the Group |
| Brands | - | 1 501 | 1 501 |
| Product Rights | - | 13 709 | 13 709 |
| Customer Agreement | - | 21 160 | 21 160 |
| Tangible fixed assets | 214 | - | 214 |
| Financial fixed assets | 45 | - | 45 |
| Current receivables | 3 481 | - | 3 481 |
| Cash and cash equivalents | 61 174 | - | 61 174 |
| Deferred tax liabilities | - | -8 365 | -8 365 |
| Current liabilities | -34 774 | -1 522 | -36 297 |
| Net identifiable assets and liabilities | 30 140 | 26 483 | 56 622 |
| Goodwill on consolidation | 21 938 | ||
| Total | 78 560 | ||
| The Group´s acquisition value | 78 560 | ||
| Calculation of net cash outflow | Fair value | ||
| Group´s acqcuisition value | -78 560 | ||
| Cash acquired | 61 174 | ||
| Net cash outflow | -17 387 |
Acquistion of Cito IT A/S
On Maj 31, all shares and votes were acquired in the Danish software company Cito IT A/S. The company's product is an industryspecific software for the pharmacy market in Denmark.
The company is consolidated as from the acquisition date. The goodwill is not tax-deductible and is deemed to be attributable to the expected profitability, complementary expertise as well as anticipated synergies in the form of the joint development of our products. The acquisition-related costs amounted on June 30 to SEK 2,1 million, and are recognized as other external cost in the consolidated statement of comprehensive income. From the acquisition date up to and including the June 30, the revenues of the acquired company amount to SEK 2,1 million and profit before tax to SEK 0,6 million. Due to other accounting principles and the split fiscal year, information regarding income and earnings from the beginning of the year are not accurate.
There are items in the purchase price allocation that may be revalued since the company have been in our possession for a short period of time. These items are brands, product rights, customer agreements and goodwill. For that reason, the purchase price allocation is preliminary until twelve months have passed since the acquisition date.
The debted conditional portion of purchase price is dependent on EBITDA improvement per June 30, 2019.
| Fair value | Fair value recognized | ||
|---|---|---|---|
| Preliminary purchase price allocation (SEK thousands) |
Cito IT A/S | adjustment | in the Group |
| Brands | - | 1 024 | 1 024 |
| Product Rights | - | 4 355 | 4 355 |
| Customer Agreement | - | 14 538 | 14 538 |
| Tangible fixed assets | 1 051 | - | 1 051 |
| Inventories | 1 262 | - | 1 262 |
| Current receivables | 4 126 | - | 4 126 |
| Cash and cash equivalents | 16 260 | - | 16 260 |
| Deferred tax liabilities | - | -4 382 | -4 382 |
| Current liabilities | -8 120 | -1 609 | -9 729 |
| Net identifiable assets and liabilities | 14 580 | 13 926 | 28 506 |
| Goodwill on consolidation | 58 963 | ||
| Total | 87 469 | ||
| The Group´s acquisition value | 87 469 | ||
| Calculation of net cash outflow | Fair value | ||
| Group´s acqcuisition value | -87 469 | ||
| Debt conditional portion of purchase price | 9 668 | ||
| Cash acquired | 16 260 | ||
| Net cash outflow | -61 541 |
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 12, 2018
Crister Stjernfelt (Chairman) Kaj Sandart
_____________________________ _____________________________
_____________________________ _____________________________
_____________________________ _____________________________
Birgitta Johansson-Hedberg Jan Friedman
Anna Valtonen Lars Stenlund (CEO)
The board: Kaj Sandart, Anna Valtonen, Crister Stjernfelt, Birgitta Johansson-Hedberg and Jan Friedman.
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 Thursday July 12, 2018 at 08:30 CET.
Contact
CEO Lars Stenlund +46 70-659 49 39, [email protected]
Financial information
CFO Maria Kröger +46 70-324 66 58, [email protected]
Our website vitecsoftware.com is the premier IR information channel. There we publish financial information immediately after publication.
You can also order information and reports trough:
E-mail: [email protected] Mail: Vitec Software Group AB (publ), Investor Relations, Tvistevägen 47 A, S-907 29 Umeå, Sweden Phone: +46 90-15 49 00
The annual report is available on vitecsoftware.com
Financial calendar
2018-10-18 Interim report January-September 2018 (≈08:30 CET) 2019-02-13 Year-end report January-December 2018 (≈08:30 CET) 2019-04-10 Interim report January-March 2019 (≈13:00 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
This interim report refers to a number of financial measures that are not defined in accordance with IFRS, so-called alternative key figures according to ESMA guidelines. These measures provide management and investors with significant information for analyzing trends in the company´s business operations. The alternative key figures are not always comparable to those used by other companies. They are intended to supplement, not replace, financial measures presented in accordance with IFRS. Key figures presented on the last page of this report are defined as follows:
| Non-IFRS key figures | Definition | Description of use |
|---|---|---|
| Recurring revenue | Recurring, contractual income where there is no direct link between our work effort and the agreed price. The agreed amount is usually billed in advance and the income is recognized during the contract period. |
Key ratio for operating operations. |
| Recurring revenue portion of sales |
Recurring revenue through net sales. | Key ratio for operating operations. |
| Growth | Development of the company´s net sales in relation to the same period last year. |
Used to follow the company´s sales development |
| Organic growth | Development of the company´s net sales, excluding during the period acquired companies, in relation to the same period last year. |
Used to follow the company´s sales development |
| Profit growth to Parent Company shareholders |
Development of the company´s profit after tax in relation to the same period last year. |
Used to follow the company´s earnings development |
| Profit margin | Profit after tax in relation to net sales. | Used to follow the company´s earnings development |
| Operating margin | Operating profit in relation to net sales. | Used to follow the company´s earnings development |
| EBITDA | Earnings before interest, taxes, depreciation and amortization. | Shows the company´s operating profit before depreciation and amortization. |
| Equity/assets ratio | Shareholders 'equity, including equity attributable to non-controlling interests, in relation to total assets. |
The measure shows the company´s financial stability. |
| Equity/assets ratio after full conversion |
Shareholders 'equity, including convertible loans, in relation to total assets. |
The measure shows the company´s financial stability. |
| Debt/equity ratio | Average liabilities in relation to average shareholders 'equity and non-controlling interests. |
The measure shows the company´s financial stability. |
| Average shareholders equity | Average of the periods shareholders´ equity and the previous periods shareholders´ equity. |
Underlying measure used to calculate other key ratios. |
| Return on capital employed | Profit before tax plus interest expenses in relation to average capital employed. Capital employed is defined as total assets less non interest-bearing liabilities and deferred tax. |
The measure shows the company´s profitability. Indicates the company´s profitability in relation to externally financed capital and equity. |
| Return on equity | Reported profit after tax in relation to average shareholders 'equity attributable to Parent Company shareholders. |
The measure shows the company´s profitability and is a measure of the return on equity. |
| Sales per employee | Net sales in relation to average number of employees. | Used to assess the company´s efficiency |
| Value added per employee | Operation profit, plus depreciation, amortization and personnel costs in relation to the average number of employees. |
Used to assess the company´s efficiency |
| Personnel cost per employee Personnel cost in relation to the average number of employees. | Key figure for measuring efficiency in operations. | |
| Average number of employees |
Average number of employees for the year. | Underlying measure used to calculate other key ratios. |
| Adjusted equity per share | Equity attributable to Parent Company shareholders in relation to the number of shares issued at the closing date. |
The measure shows equity per share on the balance sheet date. |
| Cash flow per share | Cash flow from operating activities before the change in operating capital in relation to the average number of shares. |
Used to follow the company´s development of cash flow measured per share |
| P/E ratio | Share price on the closing date in relation to earnings per share. | Consistent measure to measure the share price in relation to profit after tax. |
| 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. |
Consistent measure to measure the share price in relation to adjusted equity. |
| P/S | The share price on the closing date multiplied by the average number of shares in relation to net sales. |
Consistent measure to measure the share price in relation to net sales |
| Average number of shares after dilution |
Average number of shares for the period with addition for shares attributable to full conversion of convertibles. |
Underlying measure used to calculate other key ratios. |
| IFRS key figures | Definition | Description of use |
|---|---|---|
| Earnings per share | Profit for the period attributable to the Parent Company´s shareholders in relation to the average number of shares for the period. |
IFRS-key figure |
| Earnings per share after dilution |
Profit for the period attributable to the Parent Company´s shareholders with addition for interest expenses regarding convertible loans, in relation to the average number of shares. |
IFRS-key figure |
Segment definitions
Vitec Group operations are controlled and organized in seven segments (business areas). The business areas are; Auto, Energy, Real Estate, Finance & Insurance, Education &Health, Environment and Estate Agent.
Business Area Auto
In Business Area Auto, Vitec offers software for the automotive and machinery sector in Denmark, Finland, Norway and Sweden. The products support work processes, including vehicle sales, workshops, tire storage and distribution of spare parts. The segment consists of Vitec AutoData AS, Vitec Datamann A/S, Vitec Infoeasy AS and Futursoft OY.
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, Vitec Plania AS and Vitec PP7 AB. Operations in Vitec PP7 was consolidated as of April 9, 2018.
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 Education & Health
Our software in Business Area Education & Health are developed for health care companies in Finland, for pharmacy companies in Denmark, and the education sector in Denmark, Norway and Sweden. In Finland, our offer is completely web based and used by medical centers, occupational health, hospitals, physiotherapy and rehabilitation centers. Both in private and public organizations. For the education sector, we develop and distribute reading and writing tools for people with read/write disorders. Several elementary schools and other companies within the education sector use our products in their education and communication. The segment consists of Acuvitec Oy, Vitec Cito A/S and the Group Vitec MV A/S. Operations in Vitec MV was consolidated as of July 6, 2017. Operations in Vitec Cito A/S was consolidated as of May 31, 2018.
Business Area Education & Health also offers industry-specific software to church operations in the Nordic region, with Norway and Sweden as main markets. The product supports specific processes for those working in the church's operations. Some examples are graveyard administration, HR systems and online church service. The segment consists of the Group Vitec Agrando AS which was consolidated as of April 19, 2018.
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. The segment consists of Tietomitta Oy and 3L Media.
Business Area Estate Agents
Business Area Estate Agents offers software for real estate agents in Norway and Sweden. Our product supports estate agents in all stages throughout the entire business process. The segment consists of Vitec Mäklarsystem AB, Capitex AB, Vitec Megler AS, Vitec Megler AB and ADservice Scandinavia AB.
Key figures
| 2018 | 2017 | 2017 | ||
|---|---|---|---|---|
| Apr-Jun | Apr-Jun | Jan-Dec | ||
| Net sales | (TSEK) | 465 215 | 388 482 | 855 029 |
| Business Area Auto | (TSEK) | 83 750 | 79 329 | 155 920 |
| Business Area Energy | (TSEK) | 13 005 | 12 809 | 25 721 |
| Business Area Real Estate | (TSEK) | 100 507 | 96 396 | 190 111 |
| Business Area Finance & Insurance | (TSEK) | 64 391 | 69 443 | 142 293 |
| Business Area Environment | (TSEK) | 22 936 | 23 400 | 44 051 |
| Business Area Estate Agent | (TSEK) | 75 857 | 71 402 | 138 019 |
| Business Area Eduation & Health | (TSEK) | 104 197 | 35 175 | 157 944 |
| Shared | (TSEK) | 572 | 528 | 969 |
| Growth | (%) | 20% | 22% | 27% |
| Profit after financial items | (TSEK) | 48 111 | 54 202 | 98 127 |
| Profit for the year | (TSEK) | 38 430 | 42 369 | 79 426 |
| Profit attributable to Parent Company shareholders | (TSEK) | 38 430 | 42 369 | 79 426 |
| Profit growth to Parent Company shareholders | (%) | -9% | 33% | 19% |
| Profit margin | (%) | 8% | 11% | 9% |
| Operating margin | (%) | 11% | 15% | 12% |
| Total assets | (tkr) | 1 432 476 | 1 000 615 | 1 261 970 |
| Equity/assets ratio | (%) | 30% | 34% | 32% |
| Equity/assets ratio after full conversion | (%) | 33% | 35% | 35% |
| Debt/equity ratio | (times) | 2,14 | 1,86 | 2,22 |
| Return on capital employed* | (%) | 13% | 18% | 14% |
| Return on equity* | (%) | 20% | 24% | 22% |
| Sales per employee | (TSEK) | 781 | 777 | 1 584 |
| Value added per employee | (TSEK) | 637 | 646 | 1 258 |
| Personnel cost per employee | (TSEK) | 425 | 419 | 828 |
| Average number of employees | (number) | 596 | 500 | 540 |
| Adjusted equity per share | (SEK) | 14,51 | 11,61 | 13,34 |
| Earnings per share | (SEK) | 1,29 | 1,44 | 2,70 |
| Earnings per share after dilution | (SEK) | 1,28 | 1,42 | 2,70 |
| Dividend paid per share | (SEK) | 1,10 | 1,00 | 1,00 |
| Cash flow per share | (SEK) | 3,41 | 3,22 | 6,78 |
| P/E ratio* | 33,92 | 27,33 | 32,23 | |
| P/Adjusted equity per share | 5,91 | 6,20 | 6,52 | |
| P/S* | 2,75 | 2,84 | 3,04 | |
| Calculation bases: | ||||
| Profit when calculating earnings per share | (TSEK) | 38 430 | 42 369 | 79 426 |
| Cash flow when calculating of cash flow per share | (TSEK) | 101 859 | 94 527 | 199 612 |
| Average number of shares (weighted average) | (psc) | 29 838 900 | 29 396 690 | 29 424 555 |
| Average number of shares after dilution | (psc) | 30 243 628 | 29 838 900 | 29 538 825 |
| Number of shares issued as of closing date Number of shares after full conversion |
(psc) (st) | 29 838 9000 | 29 396 6900 | 29 838 9000 |
| Share price at respective periods end | (SEK) | 85,80 | 72,00 | 87,00 |
* Values for rolling 12 months.
Vitec is market leader for Vertical Market Software in the Nordic region. We develop and deliver standard niche software. Vitec grows through acquisitions of well-managed and well-established software companies. The Group's overall processes together with the employees' in-depth knowledge of the customer's local market enables continuous improvement and innovation. Our 650 employees are based in Denmark, Finland, Norway and Sweden. Vitec is listed on Nasdaq Stockholm and had net sales of SEK 855 million in 2017. Find out more at www.vitecsoftware.com.