Vitec Software Group B — Interim / Quarterly Report 2019

Jul 11, 2019

Interim report January–June 2019

Vitec in brief

Vertical markets

Vitec is the Nordic market leader in Vertical Market Software. We develop and deliver standardized software aimed at various niche markets. This entails tailoring our offering to the unique needs and requirements of companies operating within specific nisch markets, to enable the management and development of their business operations.

Standardized products

Our standardized products are cost-efficient for our customers, as they allow for the assimilation of industry-wide developments and upgrades. This enables us to provide our customers with the optimal conditions to develop and future-proof their operations.

Recurring revenues

Our business model is based on a high percentage of recurring revenues. This provides us with stable and predictable cash flows that create the prerequisites for a long-term approach. It also makes the Group less sensitive to temporary declines within individual business units.

Growth by acquisition

Vitec has an explicit acquisitions-based growth strategy with a sharp focus on profitability and stable cash flows. Our focus on strong cash flows creates the financial prerequisites for continued acquisition-driven growth.

Continued growth and strong cash flow

Summary of interim period, January–June 2019

• Net sales SEK 569.8 million (465.2)
• EBITA SEK 125.3 million (94.7), with an EBITA margin of 22.0% (20.4)
• Operating profit SEK 73.2 million (53.2), with an operating margin of 12.8% (11.4)
• Profit after net financial items was SEK 67.8 million (48.1)
• Earnings per share before dilution SEK 1.56 (1.29)
• Cash flow from operating activities SEK 185.4 million (119.8)

Summary of the period, April–June 2019

• Net sales SEK 290.8 million (242.8)
• EBITA SEK 66.8 million (50.1), with an EBITA margin of 23.0% (20.6)
• Operating profit SEK 37.3 million (25.9), with an operating margin of 12.8% (10.7)
• Profit after net financial items was SEK 34.4 million (23.0)
• Earnings per share before dilution SEK 0.76 (0.62)
• Cash flow from operating activities SEK 3.0 million (6.9)
• Acquisition of WIMS AS and Odin Systemer AS

CEO's comments

We see a favorable trend in the second quarter with stronger margins and higher sales. The percentage of recurring revenues continues to grow, which is in line with our strategy. Essentially all parts of the Group are delivering better earnings and sales than the same period last year. There is no single explanation for the improved performance, but rather it is the result of diligent and focused efforts throughout the Group.

From this report onwards, we are presenting an additional performance measure, EBITA. EBITA is often used when analyzing companies that include acquisitions as an important aspect of their growth strategy. An explanation and calculation can be found on page 25 of this report.

We made two acquisitions during the second quarter. On May 8 we acquired the Norwegian software company WIMS AS, which develops software to the insurance industry in Norway and Sweden. On June 12, we acquired the Norwegian software company Odin Systemer AS, which offers products for hair and beauty salons in Norway.

With these acquisitions, we have continued to strengthen our position as the Nordic region's leading vertical-market software company, while gaining more than SEK 85 million in annual sales and about 50 new employees. We now operate

through 21 business units in an equal number of vertical software segments, which gives a good risk diversification.

With our solid financial position, we are well prepared for future acquisitions and for continued acquisition-based growth. Supported by acquisitions of well-established companies and a high and increasing percentage of recurring revenues, Vitec will stay on its course – to be a vertical software company with excellent risk diversification, as well as sustainable and profitable growth.

Lars Stenlund, CEO

Group financial information

Net sales and earnings

January–June 2019

Revenues

Net sales for the period totaled SEK 569.8 million (465.2), corresponding to a 22% increase. Recurring revenues for the period rose 24% from the year-earlier period and totaled SEK 434.8 million (349.9), corresponding to 76.3% (75.2) of net sales. License revenues declined 21% year-on-year, totaling SEK 10.7 million (13.4). Service revenues increased 17% from the year-earlier period, totaling SEK 86.7 million (74.0). Other revenues rose to 35% a total of SEK 37.6 million (27.9). The acquired company, Avoine Oy, which was consolidated as of March 5, contributed SEK 10.0 million in net sales during the period. The acquired company, VIMS AS, which was consolidated as of May 8, contributed SEK 4.4 million in net sales during the period and the acquired company Oden Systemer AS, which was consolidated as of June 12, contributed SEK 5.2 million in net sales during the period.

Earnings

EBITA was SEK 125.3 million (94.7), with an EBITA margin of 22.0% (20.4). Operating profit was SEK 73.2 million (53.2), with an operating margin of 12.8% (11.4). Profit after tax for the period amounted to SEK 50.3 million (38.4). Earnings per share before dilution totaled SEK 1.56 (1.29).

April–June 2019

Revenues

Net sales for the period totaled SEK 290.8 million (242.8), corresponding to a 20% increase. Recurring revenues for the period rose 22% from the year-earlier period and totaled SEK 227.9 million (186.9), corresponding to 78% (77.0) of net sales. License revenues declined 24% year-on-year, totaling SEK 4.4 million (5.8). Service revenues increased 16% from the year-earlier period, totaling SEK 42.1 million (36.4). Other revenues rose 19% to a total of SEK 16.4 million (13.7). The acquired company, Avoine Oy, which was consolidated as of March 5, contributed SEK 7.4 million in net sales during the period. The acquired company, WIMS AS, which was consolidated as of May 8, contributed SEK 4.4 million in net sales during the period and the acquired company Oden Systemer AS, which was consolidated as of June 12, contributed SEK 5.2 million in net sales during the period.

Earnings

EBITA was SEK 66.8 million (50.1), with an EBITA margin of 23.0% (20.6). Operating profit was SEK 37.3 million (25.9), with an operating margin of 12.8% (10.7). Profit after tax for the period amounted to SEK 24.6 million (18.6). Earnings per share before dilution totaled SEK 0.76 (0.62).

Liquidity and financial position

The Group's cash and cash equivalents, including current investments at the end of the period, totaled SEK 78.6 million (65.9). In addition to cash and cash equivalents, Vitec had overdraft facilities of SEK 20 million and SEK 92.5 million in unutilized portions of the credit facility.

During the period, SEK 237.0 million of the credit facility was utilized to finance acquisitions and SEK 284.7 million pertaining to previous acquisitions was repaid to the credit facility. Amortization of bank loans amounted to SEK 1.9 million, amortizations of leasing amounted to SEK 14.8 Million. Cash flow from operating activities was SEK 185.4 million (119.8). Investments totaled to SEK 69.2 million in capitalized work, SEK 0.6 million in other intangible assets and SEK 8.6 million in property, plant and equipment. The acquisition of Avoine Oy, WIMS AS and Odin Systemer AS generated SEK 279.5 million in product rights, brands, customer agreements and goodwill.

At June 30, 2019, interest-bearing liabilities totaled SEK 498.8 million (522.8) and comprised SEK 493.2 million (492.2) in non-current interest-bearing liabilities and SEK 5.6 million (30.6) in current interest-bearing liabilities. During the period SEK 1.0 million was paid as final settlement of the supplementary purchase consideration for the acquisition of Vitec PP7 AB.

Other long-term liabilities increased by SEK 56.3 million since December 31, 2018 as an effect of the introduction of IFRS 16 Leasing. Property, plant and equipment increased by SEK 55.9 million.

Equity attributable to Vitec's shareholders totaled SEK 696.5 million (432.8). The equity/assets ratio was 38 % (30). Paid dividend after the annual general meeting in April amounted to SEK 1.20 per share, totaling SEK 38.8 million.

Graphs group

SEK Million %

Breakdown of revenues January-June 2019 Breakdown of revenues over time

Acquired Net sales Net sales by market January-June 2019

Significant events during the period

4 April: Olle Backman new CFO of Vitec Software Group

Olle Backman is the new Chief Financial Officer (CFO) of Vitec. Olle has extensive experience and most recently held the position of CEO and President of Eitech AB, as well as CFO of a large business area within Vinci Energies Norden, the listed French group that acquired Eitech in 2018.

8 May: Vitec acquired WIMS AS

Vitec strengthened its position in the Nordic Vertical Software market through the acquisition of all shares in the Norwegian software company, Web Insurance Management Systems AS. The company's product is aimed for the insurance industry in Norway, Sweden and Denmark. The company reported sales of NOK 24.8 million, with an adjusted EBITDA of NOK 4.4 million for the 2018 financial year. A cash payment will be transacted on the date of the takeover. The acquisition is expected to yield an immediate increase in earnings per share for Vitec. Consolidation will commence as of the acquisition date.

12 June: Vitec acquired Odin Systemer AS

Vitec strengthened its position in the Nordic Vertical Software market through the acquisition of all shares in the Norwegian software company, Odin Systemer AS. The company's product is aimed for hairdressing and beauty salons in Norway. The company reported sales of NOK 62.2 million, with an adjusted EBITDA of NOK 13.0 million for the 2018 financial year. A cash payment will be transacted on the date of the takeover. The acquisition is expected to yield an immediate increase in earnings per share for Vitec. Consolidation will commence as of the acquisition date.

Operations January–June 2019

Compared with the corresponding period in 2018, net sales rose by 22%, operating profit before acquisitionrelated costs improved by 43%, and recurring revenues advanced 24%. Net sales rose in all segments and operating profit improved in six of seven segments. During the quarter we completed two corporate acquisitions in Norway. The software company WIMS AS offers products to the insurance industry in Norway, Denmark and Sweden, while software company Odin Systemer AS offers products to hair and beauty salons in Norway. WIMS is part of the Finance & Insurance segment and Odin Systemer is part of the Education & Health segment.

Auto

Profits and sales rose in the Auto segment, compared with the corresponding period in 2018. Updates of our products in Finland and Norway are progressing according to plan. The business situation is stable across the entire segment. Recurring revenues rose 10%, compared with the corresponding period in 2018.

Energy

Profits and sales rose in the Energy segment, compared with the corresponding period in 2018. Our software Aiolos Forecast Studio, with customers primarily among electricity trading companies and TSOs, is currently used in more than 20 countries. We see continued potential and have therefore increased our sales outside the Nordic region. We have arranged customer events during the period in countries such as Croatia, France and Poland. Recurring revenues rose 9%, compared with the corresponding period in 2018.

Real Estate

Profits and sales rose in the Real Estate segment, compared with the corresponding period in 2018. Operations in Sweden and Norway are performing well. The focus on sales and continual operational improvements continues. The shift toward a higher percentage of our deliveries based on the Software as a Service (SaaS) model continues. Recurring revenues advanced 15%, compared with the corresponding period in 2018.

Net sales January-June 2019 Operating profit January-June 2019

Finance & Insurance

Profits and sales rose in the Finance & Insurance segment, compared with the corresponding period in 2018. In May the vertical software company WIMS AS was acquired, with products for the insurance industry in Norway, Denmark and Sweden. The products are delivered based on the Software as a Service (SaaS) model, though also as local installations. Our Danish business, which offers Wealth Management software, signed an agreement in June with Oslo Pensjonsforsikring to deliver portfolio management software. Oslo Pensjonsforsikring has more than NOK 100 billion in assets under management. Recurring revenues rose 15%, compared with the corresponding period in 2018.

Environment

Profits and sales rose in the Environment segment, compared with the corresponding period in 2018. The segment increased its focus on sales in recent months and we can already see positive effects from this initiative. Recurring revenues rose 14%, compared with the corresponding period in 2018.

Estate Agents

Profits declined in the Real Estate Agents segment, compared with the corresponding period in 2018. Implementation for the customer Eiendomsmegler 1, which began during the first quarter, are progressing according to plan. All regions, according to our undertaking with Eiendomsmegler 1, now use Next in their operations and the project is reaching its conclusion. In both Sweden and Norway, we launched new features during the period to increase the degree of automation, with the aim of simplifying life for brokers. The new features have been well received and we continue to gain market share both in Sweden and Norway. Recurring revenues rose 15%, compared with the corresponding period in 2018.

Education & Health

The Education & Health segment increased its profits and sales, compared with the corresponding period in 2018. The segment continues to grow, most recently through the acquisition of Odin Systemer AS on June 12. Odin develops products for hair and beauty salons in Norway. The products are delivered exclusively online according to the Software as a Service model. The segment has focused on several integration projects, since we added several new operations over the past 12 months. Recurring revenues rose 70%, compared with the corresponding period in 2018.

Net sales, January–June 2019 Operating profit, January–June 2019

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
	2019	2018	2019	2018	2019	2018	2019	2018	2019	2018	2019	2018	2019	2018
Recurring revenues	77,7	70,8	10,6	9,7	69,7	60,6	66,1	57,3	20,9	18,3	75,3	65,7	114,4	67,4
License revenues	2,5	2,5	0,0	0,0	2,8	2,9	0,1	0,2	0,3	1,0	0,2	0,0	4,8	6,9
Services revenues	7,1	7,6	3,9	3,1	34,9	37,0	8,7	6,7	3,6	3,1	9,2	10,0	19,3	6,4
Other revenues	2,3	2,8	0,2	0,2	0,1	0,0	0,3	0,3	0,5	0,5	0,2	0,1	32,7	23,5
Net sales	89,7	83,8	14,7	13,0	107,4	100,5	75,2	64,4	25,3	22,9	84,9	75,9	171,1	104,2
Percentage of recurring revenues in net sales	87%	85%	72%	75%	65%	60%	88%	89%	83%	80%	89%	87%	67%	65%
Operating profit*	17,2	15,9	5,1	4,7	24,3	19,1	10,9	6,4	4,3	2,1	11,0	12,3	9,0	-3,2
Operating margin	19%	19%	35%	36%	23%	19%	14%	10%	17%	9%	13%	16%	5%	-3%

*The segment's operating profit is presented before acquisition-related costs

Risks and uncertainties

Material risks and uncertainties are described in the administration report of the of the 2018 Annual Report under "Risks and uncertainties" on pages 34-35, in Note 1, under the section, Assessments and estimates on pages 60-61, and in Note 11 "Financial risks and the management of such risks" on pages 93-95. No material changes have occurred since then.

Parent Company

Net sales totaled SEK 50.2 million (43.7) and essentially comprised invoicing to subsidiaries for services rendered. Profit after tax was SEK -16.5 million (-31.3). Parent Company earnings were charged with unrealized foreign-exchange losses totaling SEK -18.4 million. The Parent Company is generally exposed to the same risks and uncertainties as the Group; refer to the above section, Risks and uncertainties.

Related-party transactions

No significant related-party transactions occurred in the Group or Parent Company during the period.

Condensed consolidated statement of comprehensive income

	2019	2018	2019	2018	2018
OPERATING REVENUES	Apr-Jun	Apr-Jun	Jan-Jun	Jan-Jun	Jan-Dec
Recurring revenues	227 938	186 904	434 794	349 904	743 856
License revenues	4 402	5 804	10 685	13 448	34 988
Service revenues	42 143	36 383	86 724	73 970	148 700
Other revenues	16 362	13 708	37 620	27 894	89 219
NET SALES Capitalized development costs	290 845 35 211	242 798 32 516	569 823 69 248	465 215 62 598	1 016 763 127 549
Reversal of supplementary purchase consideration	-	43	-	2 375	6 402
TOTAL REVENUES	326 056	275 357	639 071	530 188	1 150 714
OPERATING EXPENSES
Goods for resale	-13 357	-10 971	-31 364	-22 633	-68 695
Subcontractors and subscriptions	-33 125	-26 778	-61 734	-51 019	-110 515
Other external expenses	-36 007	-38 092	-70 444	-71 437	-152 526
Personnel expenses	-149 038	-131 710	-295 770	-253 248	-526 367
Depreciation of property, plant and equipment	-12 139	-4 077	-22 240	-7 946	-16 411
Amortization and impairment of intangible fixed assets*	-38 550	-34 417	-76 125	-67 356	-142 052
Unrealized exchange-rate gains/losses (net)	215	625	424	687	-647
TOTAL EXPENSES	-282 000	-245 419	-557 252	-472 951	-1 017 213
OPERATING PROFIT BEFORE ACQUSITION-RELATED COSTS	44 056	29 938	81 819	57 237	133 501
Acquisition-related costs	-6 759	-4 032	-8 635	-4 032	-5 129
OPERATING PROFIT AFTER ACQUISITION-RELATED COSTS	37 297	25 906	73 184	53 205	128 372
Financial income	67	95	561	165	289
Financial expenses	-2 923	-2 958	-5 951	-5 259	-11 886
TOTAL FINANCIAL ITEMS	-2 857	-2 863	-5 391	-5 094	-11 597
PROFIT AFTER FINANCIAL ITEMS	34 440	23 043	67 793	48 111	116 775
Tax	-9 885	-4 417	-17 476	-9 681	-19 855
NET PROFIT FOR THE PERIOD	24 556	18 626	50 318	38 430	96 920
OTHER COMPREHENSIVE INCOME, ITEMS THAT MAY BE RECLASSIFIED IN
PROFIT OR LOSS
Restatement of net investments in foreign operations and hedge
accounting of the same	-3 493	8 606	12 873	29 075	12 443
OTHER COMPREHENSIVE INCOME FOR THE PERIOD	-3 493	8 606	12 873	29 075	12 443
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD	21 063	27 232	63 191	67 505	109 363
PROFIT FOR THE PERIOD ATTRIBUTABLE TO
-Parent Company shareholders	24 556	18 626	50 318	38 430	96 920
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ATTRIBUTABLE TO
-Parent Company shareholders	21 063	27 232	63 191	67 505	109 363
EARNINGS PER SHARE
-Before dilution (SEK)	0,76	0,62	1,56	1,29	3,23
-After dilution (SEK)	0,76	0,62	1,55	1,28	3,22
Average number of shares	32 338 900	29 838 900	32 338 900	29 838 900	30 016 982
Number of shares after dilution	32 827 891	30 273 505	32 800 848	30 243 628	30 436 771
*Of which acquisition related amortizations	22 699	20 149	43 516	37 451	78 396

Segment data

Operating profit before acqusition related costs (SEK
SEGMENT		million)
	2019	2018	2019	2018	2018	2019	2018	2019	2018	2018
	Apr-Jun	Apr-Jun	Jan-Jun	Jan-Jun	Jan-Dec	Apr-Jun	Apr-Jun	Jan-Jun	Jan-Jun	Jan-Dec
Auto	45,8	43,5	89,7	83,8	170,3	9,4	9,8	17,2	15,9	28,3
Energy	7,4	6,4	14,7	13,0	26,0	2,2	1,9	5,1	4,7	9,3
Real Estate	52,8	51,7	107,4	100,5	206,3	10,7	8,9	24,3	19,1	44,3
Finance & Insurance	40,4	32,7	75,2	64,4	132,2	7,4	2,7	10,9	6,4	12,7
Environment	13,1	11,4	25,3	22,9	45,9	2,6	1,2	4,3	2,1	5,5
Estate Agent	43,3	39,6	84,9	75,9	155,4	7,5	6,9	11,0	12,3	23,9
Education & Health	86,7	57,2	171,1	104,2	278,3	4,3	-1,5	9,0	-3,2	9,5
Shared	1,2	0,3	1,4	0,6	2,2	-	-	-	-	-
Vitec Group	290,8	242,8	569,8	465,2	1 016,8	44,1	29,9	81,8	57,2	133,5
Acquisition-related costs						-6,8	-4,0	-8,6	-4,0	-5,1
Operating profit after acquisition
related costs						37,3	25,9	73,2	53,2	128,4
Total financial expenses						-2,9	-2,9	-5,4	-5,1	-11,6
Profit after financial expenses						34,4	23,0	67,8	48,1	116,8

Vitec is a Nordic software company with customers located mainly in Sweden, Denmark, Finland and Norway, as well as a number of customers located in other parts of the world. Our net sales, distributed by country, is presented on the diagrams on page 5.

Net sales consist of the revenue groups presented in profit or loss: recurring revenues, license revenues, service revenues and other revenues. These revenues in turn consist of performance obligations.

Our performance obligations comprise support, maintenance and upgrades, fixed-period usufruct and operations, perpetual usufruct, services, information services, third-party usufruct, third-party maintenance, and other. Of the recurring revenues, SEK 231.8 million (172.6) pertain to support, maintenance and upgrades, SEK 125.1 million (115.6) to fixed-period usufruct and operation, SEK 70.4 million (53.6) to information services and SEK 7.5 million (8.1) to third-party maintenance. License revenues comprised SEK 10.5 million (12.7) in perpetual usufruct and SEK 0.2 million (0.7) third party usufruct.

Our most frequent contract types pertain to cloud SaaS, subscriptions, sales of licenses with traditional support and maintenance agreements, services for sale and information services. Contractual periods span from one month to one year and, in some cases even longer. Our recurring revenues are recognized using a flat distribution across the contractual period, upon the customer gaining control of the service and the fulfillment of performance obligations. Our licenses are recognized at a given date, our service revenues are recognized on a continuous basis upon the delivery of the services and the customer obtaining control and benefits.

Condensed consolidated statement of financial position

SEK thousands
	2019-06-30	2018-06-30	2018-12-31
ASSETS
FIXED ASSETS
Intangibles fixed assets	1 424 136	1 140 450	1 130 983
Property, plant and equipment	100 491	41 839	39 788
Financial fixed assets	1 951	1 894	947
Deferred tax assets	9 168	7 052	8 243
TOTAL FIXED ASSETS	1 535 746	1 191 236	1 179 961
CURRENT ASSETS
Inventories	5 395	5 077	5 302
Current receivables	191 089	170 264	255 083
Current investments	-	267	46
Cash and cash equivalents	78 643	65 633	235 256
TOTAL CURRENT ASSETS	275 127	241 240	495 687
TOTAL ASSETS	1 810 873	1 432 476	1 675 648
SHAREHOLDERS' EQUITY AND LIABILITIES
Equity attributable to Parent Company shareholders	696 460	432 846	669 628
Long-term interest-bearing liabilities	493 151	492 165	503 633
Deferred tax liabilities	170 048	148 593	152 887
Other long-term liabilities	77 902	21 499	5 837
TOTAL LONG-TERM LIABILITIES	741 101	662 257	662 357
Payables	37 564	43 089	39 910
Short-term interest-bearing liabilities	5 620	30 631	5 620
Other short-term liabilities	102 456	58 747	85 195
Accrued expenses	99 116	88 557	77 831
Prepaid recurring revenues	128 555	116 349	135 107
TOTAL SHORT-TERM LIABILITIES	373 311	337 373	343 663
TOTAL SHAREHOLDERS´ EQUITY AND LIABILITIES	1 810 873	1 432 476	1 675 648

Condensed consolidated statement of changes in equity

SEK thousands	2019	2018	2019	2018	2018
	Apr-Jun	Apr-Jun	Jan-Jun	Jan-Jun	Jan-Dec
EQUITY ATTRIBUTABLE TO PARENT COMPANY SHAREHOLDERS
Opening balance	711 757	438 437	669 628	398 164	398 164
Convertible debenture with stock options	2 448	-	2 448	-	-
New share issue and issuing costs*	-	-	-	-	194 924
Dividends paid	-38 807	-32 823	-38 807	-32 823	-32 823
Total comprehensive income	21 063	27 232	63 191	67 505	109 363
CLOSING BALANCE	696 460	432 846	696 460	432 846	669 628

*New share issues were recognized in their net amounts after issuing costs of SEK 2.3 Millions.

Condensed consolidated statement of cash flow

SEK thousands	2019	2018	2019	2018	2018
	Apr-Jun	Apr-Jun	Jan-Jun	Jan-Jun	Jan-Dec
OPERATING ACTIVITIES
Operating profit	37 296	25 906	73 184	53 205	128 373
Adjustments for non-cash items
Other operating revenues	-	-43	-	-2 375	-6 402
Depreciation/Amortization and impairment losses	50 689	38 493	98 364	75 302	158 463
Unrealised foreign exchange gains/losses	-215	-625	-424	-687	647
	87 770	63 731	171 124	125 445	281 081
Interest received	67	95	561	165	289
Interest paid	-2 131	-2 723	-4 457	-4 786	-10 675
Income tax paid	-10 030	-8 634	-19 810	-18 965	-30 218
CASH FLOW FROM OPERATING ACTIVITIES BEFORE
CHANGES IN WORKING CAPITAL	75 676	52 469	147 418	101 859	240 477
Changes in working capital
Increase/Decrease in inventories	843	872	586	-197	115
Increase/Decrease in accounts receivable	-4 072	-24 446	96 593	67 377	-18 982
Increase/Decrease in operating receivables	-6 722	-1 608	-23 097	-22 422	-21 543
Increase/Decrease in accounts payable	57	16 222	-6 125	6 240	3 807
Increase/Decrease in operating liabilities	-62 798	-36 566	-29 958	-33 052	-6 755
CASH FLOW FROM OPERATING ACTIVITIES	2 984	6 943	185 417	119 805	197 119
INVESTING ACTIVITIES
Acquisition of subsidiaries, net*	-141 112	-84 524	-159 745	-108 840	-134 285
Purchase of intangible fixed assets and capitalized development costs	-35 317	-33 021	-69 765	-63 184	-128 289
Purchase of property, plant and equipment	-1 820	-1 557	-8 614	-7 203	-14 346
CASH FLOW FROM INVESTING ACTIVITIES	-178 249	-119 102	-238 124	-179 227	-276 920
FINANCING ACTIVITIES
Dividends to Parent Company shareholders	-38 807	-32 823	-38 807	-32 823	-32 823
Borrowings	182 194	149 728	236 962	149 728	181 928
Repayment of loans	-20 939	-1 515	-301 492	-54 953	-90 023
New share issue	-	-	-	-	194 924
CASH FLOW FROM FINANCING ACTIVITIES	122 448	115 390	-103 337	61 952	254 006
CASH FLOW FOR THE PERIOD	-52 817	3 231	-156 044	2 530	174 205
OPENING CASH AND CASH EQUIVALENTS, INCLUDING CURRENT INVESTMENTS	129 356	60 391	235 302	57 968	57 968
Exchange-rate differences in cash and cash equivalents	2 104	2 278	-615	5 402	3 129
CASH AND CASH EQUIVALENTS INCLUDING CURRENT INVESTMENTS AT END OF
PERIOD**	78 643	65 900	78 643	65 900	235 302

*Payment pertaining to the acquisition of subsidiaries during the period, comprising Avoine Oy, WIMS AS and Odin Systemer AS. Net cash flow was SEK 158.8 million. The acquisition pertained to all shares outstanding in their entirety and entailed the gain of controlling influence. Furthermore, a final settlement of SEK 1.0 million was paid for the supplementary purchase consideration pertaining to PP7 Affärssystem AB. The payment did not entail any changes to controlling influence or the total number of shares.

Payments pertaining to the acquisition of subsidiaries in 2018, comprising PP7 Affärssystem AB, Agrando AS and Cito IT A/S. Net cash flow was SEK 84.5 million. The acquisition pertained to all shares outstanding in their entirety and entailed the gain of controlling influence. Furthermore, a final settlement of SEK 22.9 million was paid for a supplementary purchase consideration pertaining to Futursoft Oy and SEK 1.4 million for Fox Publish AS. The payments did not entail any changes to controlling influence or the total number of shares held.

**Cash and cash equivalents are defined as funds exposed to an insignificant risk of fluctuations in value, and which are easily convertible to cash at a known amount. Current investments comprise funds that are convertible to cash at a known amount within one bank day.

Parent company income statement, condensed

SEK thousands	2019	2018	2019	2018	2018
	Apr-Jun	Apr-Jun	Jan-Jun	Jan-Jun	Jan-Dec
Operating revenues	26 020	21 939	50 239	43 721	63 389
Operating expenses	-25 784	-23 284	-46 195	-41 255	-75 732
Unrealized exhange-rate gains/losses (net)	-5 287	-11 344	-18 432	-36 385	-16 574
OPERATING PROFIT/LOSS	-5 051	-12 690	-14 388	-33 920	-28 917
Profit/loss from financial investments
Income from participation in Group companies	-	-	-	-	77 599
Interest income	27	47	40	82	437
Interest expenses	-2 419	-2 859	-4 958	-5 269	-11 817
PROFIT AFTER FINANCIAL ITEMS	-7 443	-15 501	-19 306	-39 106	37 302
Appropriations	-	-	-	-	28 481
PROFIT BEFORE TAX	-7 443	-15 501	-19 306	-39 106	65 783
Tax	407	2 595	2 770	7 788	2 874
NET PROFIT FOR THE PERIOD	-7 036	-12 906	-16 536	-31 318	68 657

Profit/Loss for the period corresponds to total comprehensive income.

Condensed balance sheet, Parent Company

SEK thousands		2019-06-30 2018-06-30	2018-12-31
ASSETS
FIXED ASSETS
Intangible fixed assets	1 951	3 009	2 419
Property, plant and equipment	11 453	11 745	11 290
Financial fixed assets	1 486 515	1 151 536	1 189 019
TOTAL FIXED ASSETS	1 499 919	1 166 290	1 202 728
CURRENT ASSETS
Current receivables	52 734	45 784	98 710
Cash and cash equivalents	36 777	-	222 908
TOTAL CURRENT ASSETS	89 511	45 784	321 618
TOTAL ASSETS	1 589 430	1 212 074	1 524 346
SHAREHOLDERS´EQUITY AND LIABILITIES
Shareholders´ equity	531 337	289 332	584 231
Untaxed reserves	2 448	2 429	2 448
Non-current liabilities	508 945	509 197	503 537
Current liabilities	546 701	411 116	434 130
TOTAL SHAREHOLDERS´ EQUITY AND LIABILITIES	1 589 430	1 212 074	1 524 346

Supplementary disclosures

Accounting and valuation policies, and other comments

This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting. The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU, and the Swedish Annual Accounts Act. The Parent Company's accounts were prepared in accordance with the Annual Accounts Act and recommendation RFR 2 Accounting for Legal Entities. Of the new standards, amendments and interpretations of existing standards that have come into force in 2019, only IFRS 16 Leasing has had any impact on the Group's financial position or financial statements. Otherwise, the accounting policies and methods of calculation remain unchanged, in comparison with the description provided in the 2018 Annual Report.

IFRS 16 Leasing came into force on January 1, 2019. The new standard entails the elimination of any differences between operational and financial leasing. Leasing agreements exceeding 12 months are to be recognized in the balance sheet. The standard impacts how we recognize future lease agreements pertaining to premises.

Our lease agreements are recognized as assets and liabilities in the consolidated statement of financial position. Instead of leasing expenses, depreciation and interest expenses are recognized in the consolidated statement of comprehensive income. We apply the new standard by using the modified retrospective approach, for which reason comparative data are not restated. Outstanding leases as of January 1, 2019, are reported in accordance with the new standard.

The effect at the balance-sheet date is an increase of SEK 56.3 million in other non-current liabilities an increase of SEK 55.9 million in property, plant and equipment. In the statement of comprehensive income, SEK 13.1 million is recognized as depreciation for property, plant and equipment and SEK 13.6 million as reduced other external expenses. Financial expenses are SEK 0.8 million.

Taxes

Current tax for the period amounted to SEK 14.9 million (8.5). Deferred tax totaled SEK 2.6 million (1.1)

Investments

Investments totaled SEK 69.2 million for capitalized development costs, SEK 0.6 million for other intangible fixed assets and SEK 8.6 million for property, plant and equipment. The acquisition of Avoine OY, WIMS AS and Odin Systemer AS generated SEK 279.5 million in product rights, brands, customer agreements and goodwill.

Interest-bearing liabilities

Non-current interest-bearing liabilities comprised bank loans of SEK 422.6 million, as well as convertible debentures totaling SEK 70.5 million. Current interest-bearing liabilities comprised bank loans of SEK 5.6 million. The terms and conditions of the company's credit agreement with the bank comprises restrictions, known as covenants. The Group has fulfilled the terms and conditions in their entirety during the period.

Convertible debentures

Convertible debentures are included under non-current interest-bearing liabilities:

• loan 1707 (non-current liability, convertible, acquisition of MV Nordic) SEK 19.9 million. The duration of the loan is from July 6, 2017 – June 30, 2020. The interest rate is based on Stibor 180 (Stockholm Interbank Offered Rate). The conversion price is SEK 85.00. Conversion may be exercised from January 1, 2019 to June 30, 2020. upon which the share capital may increase by no more than SEK 23,432. Full conversion would entail a dilution of approximately 0.8% of the capital and 0.4% of the votes.

• loan 1801 (non-current liability, convertible program, employees). SEK 20.4 million. The duration of the loan is from January 1, 2018 to December 31, 2020. The interest rate is based on Stibor 180 (Stockholm Interbank Offered Rate). The conversion price is SEK 104.00. Conversion may be exercised between November 1 and November 30, 2020, upon which the share capital may increase by no more than SEK 20,029. Full conversion would entail a dilution of approximately 0.7 % of the capital and 0.3 % of the votes.

•loan 1906 (non-current liability, convertible, acquisition of Odin Systemer AS) SEK 30.2 million. The duration of the loan is from July 12, 2019 – June 30, 2022. The interest rate is based on Stibor 180 (Stockholm Interbank Offered Rate). The conversion price is SEK 125.00. Conversion may be exercised from January 1, 2021 to June 30, 2022, upon which the share capital may increase by no more than SEK 26,048. Full conversion would entail a dilution of approximately 0.8% of the capital and 0.4% of the votes.

Financial instruments

IFRS 9 Financial instruments came into force in 2018 and deals with the recognition of financial liabilities and assets. Vitec applies the new standard. The standard comprises other measurement categories for financial assets and a new model for impairment testing. The primary impact of the standard pertains to a partially new process with respect to loan losses. Vitec has applied the transition prospectively. Having taken into account historical bad-debt losses over a business cycle, we can state that the new standard does not materially impact the consolidated financial statements.

Classification and measurement

Financial instruments are recognized initially at cost corresponding to the instrument's fair value plus transaction costs. A financial instrument is classified at initial recognition based on, among other factors, the purpose for which the instrument was acquired. Vitec has financial instruments under the categories, "loans and accounts receivable," "financial liabilities at fair value" and "financial liabilities measured at amortized cost."

Financial liabilities measured at fair value

In accordance with IFRS 7, the fair value of each financial asset and financial liability must be disclosed, regardless of whether they are recognized in the balance sheet. Vitec deems the fair value of the financial assets/liabilities to be close to the recognized carrying amount.

All of our financial instruments that are subject to measurement at fair value are classified as level 3 and pertain to supplementary purchase considerations in conjunction with acquisitions.

Recurring measurements at fair value, at June 30, 2019
				Carrying
	Level 1	level 2	Level 3	amount
Supplementary purchase consideration Cito IT A/S			9 902	9 902
Supplementary purchase consideration Avoine Oy			31 587	31 587
Supplementary purchase consideration Avoine Oy			5 279	5 279
Total			46 768	46 768

Acquisitions

Acquisition of Avoine OY

On March 5, Vitec acquired all shares and voting rights of the Finnish software company, Avoine Oy. Its product is aimed at sports clubs and labor unions in Finland. The application is delivered as Software as a Service (SaaS).

The company was consolidated as of the acquisition date. The goodwill item is not tax deductible and is deemed to be attributable to anticipated profitability, complementary expertise requirements, as well as anticipated synergy effects, in the form of the joint development of our products. At June 30, acquisition-related expenses totaled SEK 2.5 million and were recognized as other external expenses in the statement of comprehensive income. From the date of acquisition up to and including June 30, revenues in the acquired company totaled SEK 10.0 million and profit before tax was SEK 1.6 million. If consolidation had occurred at the beginning of the year, the company would have provided the Group with an additional approximately SEK 5.3 million in sales and SEK 1.0 million in loss before tax.

Some items in the acquisition plan may be remeasured, due to our brief ownership of the company. These comprise brands, product rights, customer agreements and goodwill. For this reason, the acquisition plan remains preliminary, until 12 months after the acquisition date.

The expensed portion of the contingent consideration will be subject to an EBITDA improvement at December 31, 2019 and is measured at maximum outcome.

		Fair value	Fair value recognized
Preliminary acquisition plan (SEK thousands)	Avoine Oy	adjustment	in the Group
Brands	-	743	743
Product rights	-	3 167	3 167
Customer agreements	-	10 834	10 834
Intangible fixed assets	1 334	-	1 334
Property, plant and equipment	572	-	572
Non-current receivables	1 058	-	1 058
Current receivables	2 258	-	2 258
Cash and cash equivalents	25 552	-	25 552
Deferred tax liabilities	-	-2 949	-2 949
Current liabilities	-18 016	-	-18 016
Net identifiable assets and liabilities	12 759	11 796	24 555
Consolidated goodwill			30 214
Total			54 768
Consolidated acquistion costs			54 768
Calculation of net cash outflow			Fair value
Consolidated acqcuisition costs			-54 768
Expensed portion of purchase consideration			5 292
Expensed portion of contingent purchase consideration			5 292
Acquired cash and cash equivalents			25 552
Net cash outflow			-18 633

Acquisition of WIMS AS

On May 8, Vitec acquired all shares and voting rights of the Norwegian software company, Web Insurance Management Systems AS. The product is aimed at the insurance industry in Norway, Denmark and Sweden.

The company was consolidated as of the acquisition date. The goodwill item is not tax deductible and is deemed to be attributable to anticipated profitability, complementary expertise requirements, as well as anticipated synergy effects, in the form of the joint development of our products. At June 30, acquisition-related expenses totaled SEK 1.5 million and were recognized as other external expenses in the statement of comprehensive income. From the date of acquisition up to and including June 30, revenues in the acquired company totaled SEK 4.4 million and profit before tax was SEK 1.5 million. If consolidation had occurred at the beginning of the year, the company would have provided the Group with an additional approximately SEK 9.0 million in sales and SEK 0.3 million in profit before tax.

Some items in the acquisition plan may be remeasured, due to our brief ownership of the company. These comprise brands, product rights, customer agreements and goodwill. For this reason, the acquisition plan remains preliminary, until 12 months after the acquisition date.

The expensed portion of the contingent consideration will be subject to EBITDA improvements at December 31, 2019 and December 31, 2020 and will be measured at maximum outcome.

		Fair value	Fair value recognized
Preliminary acquisition plan (SEK thousands)	WIMS AS	adjustment	in the Group
Brands	-	689	689
Product rights	-	8 173	8 173
Customer agreements	-	10 931	10 931
Property, plant and equipment	443	-	443
Current receivables	2 334	-	2 334
Cash and cash equivalents	11 254	-	11 254
Deferred tax liabilities	-	-4 355	-4 355
Long-term liabilities	-16		-16
Current liabilities	-7 449	-	-7 449
Net identifiable assets and liabilities	6 566	15 439	22 005
Consolidated goodwill			51 380
Total			73 385
Consolidated acquistion costs			73 385
Calculation of net cash outflow			Fair value
Consolidated acqcuisition costs			-73 385
Debt aditional purchase price			31 764
Acquired cash and cash equivalents			11 254
Net cash outflow			-30 368

Acquisition of Odin Systemer AS

On June 12, Vitec acquired all shares and voting rights of the Norwegian software company, Odin Systemer AS. The products are aimed at hair and beauty salons in Norway.

The company was consolidated as of the acquisition date. The goodwill item is not tax deductible and is deemed to be attributable to anticipated profitability, complementary expertise requirements, as well as anticipated synergy effects, in the form of the joint development of our products. At June 30, acquisition-related expenses totaled SEK 4.6 million and were recognized as other external expenses in the statement of comprehensive income. From the date of acquisition up to and including June 30, revenues in the acquired company totaled SEK 5.2 million and profit before tax was SEK 2.6 million. If consolidation had occurred at the beginning of the year, the company would have provided the Group with an additional approximately SEK 27.0 million in sales and SEK 3.9 million in profit before tax.

Some items in the acquisition plan may be remeasured, due to our brief ownership of the company. These comprise brands, product rights, customer agreements and goodwill. For this reason, the acquisition plan remains preliminary, until 12 months after the acquisition date.

		Fair value	Fair value recognized
Preliminary acquisition plan (SEK thousands)	Odin Systemer AS	adjustment	in the Group
Brands	-	2 293	2 293
Product rights	-	20 234	20 234
Customer agreements	-	29 443	29 443
Property, plant and equipment	1 856	-	1 856
Financial fixed assets	1 164	-	1 164
Inventories	680	-	680
Current receivables	3 691	-	3 691
Cash and cash equivalents	30 827	-	30 827
Deferred tax liabilities	-	-11 433	-11 433
Current liabilities	-17 024	-	-17 024
Net identifiable assets and liabilities	21 195	40 536	61 730
Consolidated goodwill			111 402
Total			173 132
Consolidated acquistion costs			173 132
Calculation of net cash outflow			Fair value
Consolidated acqcuisition costs			-173 132
Convertible bond			32 560
Acquired cash and cash equivalents			30 827
Net cash outflow			-109 745

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 11, 2019

Crister Stjernfelt (Chairman) Kaj Sandart

_____________________________ _____________________________

_____________________________ _____________________________

_____________________________ _____________________________

Birgitta Johansson-Hedberg Jan Friedman

Anna Valtonen Lars Stenlund (CEO)

Board of Directors: Kaj Sandart, Anna Valtonen, Crister Stjernfelt, Birgitta Johansson-Hedberg and Jan Friedman.

Information

Publication

The information in this report is such that Vitec Software Group AB (publ) is obligated to publish in accordance with the EU Market Abuse regulation and the Securities Markets Act. This information was submitted for publication on Thursday July 11, 2019, at 08:30 CET

Contact information

VD Lars Stenlund +46 (0)70 659 49 39, lars.stenlund@vitec.se

CFO Olle Backman +46 (0)70 632 89 93, olle.backman@vitec.se

IR Patrik Fransson +46 (0)76 942 85 97, patrik.fransson@vitec.se

Financial information

Our website, vitecsoftware.com, is the premier IR information channel, where we publish financial information immediately upon release.

Information and reports can also be ordered from the following channels:

By e-mail: ir@vitec.se By post: Investor Relations, Tvistevägen 47 A, SE-907 29 Umeå, Sweden By telephone: +46 (0)90-15 49 00

Vitec's 2018 Annual Report is available at vitecsoftware.com

Financial calendar

Oct 17, 2019 January–September 2019 (≈ 08:30 hrs CET) Feb 13, 2020 January–December 2019 (≈ 08:30 hrs 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), corp. reg. no. 556258-4804

Definitions of key figures

This interim report refers to several financial measurements that are not defined under IFRS, known as alternative performance measures, in accordance with ESMA's guidelines. These measurements provide senior management and investors with significant information for analyzing trends in the company's business operations. Alternative performance measures are not always comparable with measurements used by other companies. They are intended to complement, not replace, financial measurements presented in accordance with IFRS. The key figures presented on the final page of this report are defined as follows:

Non-IFRS key indicators	Definition	Description of usage
Recurring revenues	Recurring contractual revenues with no direct relationship between our work efforts and the contracted price. The contractual amount is usually billed in advance and the revenues are recognized during the contract's term.	A key indicator for the management of operational activities.
Percentage of recurring revenues	Recurring revenues in relation to net sales.	A key indicator for the management of operational activities.
Growth	The trend of the company's net sales in relation to corresponding year-earlier period.	Used to monitor the company's sales trend.
Growth in recurring revenues	Trend in recurring revenues in relation to the corresponding year-earlier period.	Used to monitor the company's sales trend.
Organic growth in recurring revenues	Trend in the company's recurring revenues, excluding acquired companies during the period, in relation to the corresponding year-earlier period.	Used to monitor the company's sales trend.
EBITA	Earnings for the period before acquisition-related costs, net financial items and tax, as well as amortization of acquisition-related assets.	Shows the company's operating profit before acquisition related costs and amortization of acquisition-related assets.
EBITDA	Earnings before interest, tax, depreciation and amortization for the period.	Indicates the company's operating profit/loss before depreciation, amortization and impairment.
Earnings growth attributable to the Parent Company shareholders	The trend of the company's profit after tax in relation to the corresponding year-earlier period. Used to monitor the company's earnings trend.
EBITA margin	Operating profit before acquisition-related costs in relation to net sales	Used to monitor the company's earnings trend.
Operating margin	Operating profit in relation to net sales.	Used to monitor the company's earnings trend.
Profit margin	Profit after tax for the period, in relation to net sales.	Used to monitor the company's earnings trend.
Equity/assets ratio	Shareholders' equity, including equity attributable to non-controlling interests as a percentage of total assets.	This measurement is an indicator of the company's financial stability.
Equity/assets ratio after full conversion	Shareholders' equity and convertible debentures as a percentage of total assets.	This measurement is an indicator of the company's financial stability.
Debt/equity ratio	Average debt in relation to average shareholders' equity and non-controlling interests.	This measurement is an indicator of the company's financial stability.
Average shareholders' equity	The average between shareholders' equity for the period attributable to Parent Company shareholders and shareholders' equity for the preceding period attributable to Parent Company shareholders.	An underlying measurement on which the calculation of other key indicators is based.
Return on capital employed	Profit after net financial items plus interest expenses, as a percentage of average capital employed. Capital employed is defined as total assets less interest-free liabilities and deferred tax.	This measurement is an indicator of the company's profitability in relation to externally financed capital and shareholders' equity.
Return on equity	Reported profit/loss after tax in relation to average equity attributable to Parent Company shareholders.	This measurement is an indicator of the company's profitability and gauges the return on shareholders' equity.
Sales per employee	Net sales in relation to the average number of employees.	This metric is used to assess the company's efficiency.
Added value per employee	Operating profit/loss plus depreciation/amortization and personnel expenses in relation to average number of employees.	This metric is used to assess the company's efficiency.
Personnel expenses per employee	Personnel expenses in relation to average number of employees.	A key indicator used to measure operational efficiency.
Average no. of employees	The average number of employees in the Group during the period.	An underlying measurement on which the calculation of other key indicators is based.
AES (Adjusted equity per share)	Shareholders' equity attributable to Parent Company shareholders, in relation to the number of shares issued at the balance-sheet date.	This measurement indicates the equity per share at the balance-sheet date
Cash flow per share	Cash flow from operating activities before changes in working capital, in relation to the average number of shares.	Used to monitor the company's trend in cash flow per share.
Number of shares after dilution	The average number of shares during the period plus the number of shares added following the full conversion of convertibles.	An underlying measurement on which the calculation of other key indicators is based.
IFRS key indicators	Definition	Description of usage
Earnings per share	Profit after tax attributable to Parent Company shareholders, in relation to the average number of shares during the period.	IFRS key indicators
Earnings per share after dilution	Profit after tax attributable to Parent Company shareholders, plus interest expenses pertaining to convertible debentures, in relation to the average number of shares after dilution.	IFRS key indicators

	2019	2018	2019	2018	2018
Reconciliation of EBITA	Apr-Jun	Apr-Jun	Jan-Jun	Jan-Jun	Jan-Dec
Operating profit before acquisition-related costs	44 056	29 938	81 819	57 237	133 501
Amortization of acquisition related assets	22 699	20 149	43 517	37 451	78 396
EBITA	66 755	50 087	125 336	94 688	211 897

Segment descriptions

Vitec develops and delivers software aimed at various niche markets. Some of our software products comprise complete enterprise systems, while others provide support for specific aspects of our customers' operations. We report our operations under seven segments.

Auto

Vitec's Auto segment includes our software for the automotive industry and machinery sector in Denmark, Finland, Norway and Sweden. Our products support work processes, such as vehicle sales, vehicle service centers, tire storage and the distribution of auto components. The segment includes Vitec Autodata AS, Vitec Datamann A/S, Vitec Infoeasy AS and Futursoft OY.

Energy

The Energy segment includes our advanced forecasting systems for electricity traders, as well as calculation and mapping systems for owners of electricity and district-heating grids. This segment comprises Vitec Energy AB.

Real Estate

Vitec offers complete enterprise-management systems for the construction and real estate sectors in Norway and Sweden, covering aspects such as project reporting, leasing, sales, customer service, accounting, technical property management and energy-consumption monitoring. This segment includes Vitec Förvaltningssystem AB, Vitec Fastighetssystem AB, Vitec Capifast AB, Vitec Software AB, Vitec Plania AS and Vitec PP7 AB. Vitec PP7 AB's operations were consolidated as of April 9, 2018.

Finance & Insurance

The Finance & Insurance segment includes our software for banks, financial institutions and insurance companies in Denmark, Norway and Sweden. The segment comprises Vitec Capitex AB, the Vitec Aloc A/S Group, Vitec Nice AS and Vitec Wims AS. Operations at Vitec Wims AS were consolidated as of May 8, 2019.

Environment

The Environment segment includes our software for private and municipal waste-and-resource processing in Finland. The products are used to manage the entire chain, from the weighing of waste and driving schedules, to invoicing, accounting and reporting. The segment includes operations that were previously under the Media segment. The segment comprises Tietomitta Oy and 3L Media AB.

Estate Agents

The Estate Agents segment includes our software for real estate agents in Norway and Sweden. Our products support estate agents at every step of their business process, from the registration of an object, to marketing, viewing, bidding, sale and contract. The segment comprises Vitec Mäklarsystem AB, Capitex AB, Vitec Megler AS, Vitec Megler AB and ADservice Scandinavia AB.

Education & Health

The Education & Health segment was expanded with three new operations in 2018, through the acquisition of the companies, Agrando AS, Cito IT A/S and Smart Visitor System AB. Agrando develops applications for churching operations in the Nordic region, with its primary markets comprising Norway and Sweden. Cito develops applications for the pharmacy market in Denmark. Its main product is an enterprise system for managing the entire chain of the Danish pharmacy workflow. Our company, Smart Visitor System, develops specific software for municipal leisure and cultural departments in Norway and Sweden.

This segment comprises applications designed for individuals with reading and writing difficulties, and are used by public and private education companies in Denmark, Norway and Sweden.

It also comprises applications for healthcare companies in Finland, which are wholly web-based enterprise systems used by district healthcare centers, hospitals, physiotherapy and rehabilitation facilities, as well as occupational health services and public organizations. In 2019 the segment was expanded with two additional businesses in conjunction with the acquisitions of Avoine Oy and Odin Systemer AS. Avoine's product is aimed at sports clubs and labor unions in Finland. Odin Systemer's products are aimed at hair and beauty salons in Norway.

The segment includes AcuVitec Oy, Avoine Oy, the Vitec Agrando AS Group, Vitec Cito A/S, the Vitec MV A/S Group, Vitec Smart Visitor System AB and Vitec Odin Systemer AS. Operations at Vitec Agrando AS were consolidated as of April 19, 2018. Vitec Cito A/S's operations were consolidated as of May 31, 2018. Vitec Smart Visitor System AB's operations were consolidated as of November 6, 2018, Avoine Oy's operations were consolidated as of March 5, 2019 and operations at Vitec Odin Systemer AS were consolidated as of June 12, 2019.

Key figures

	2019	2018	2018
	Jan-Jun	Jan-Jun	Jan-Dec
Net sales (SEK 000s)	569 823	465 215	1 016 763
Auto (SEK 000s)	89 706	83 750	170 311
Energy (SEK 000s)	14 743	13 005	26 031
Real Estate (SEK 000s)	107 442	100 507	206 326
Finance & Insurance (SEK 000s)	75 248	64 391	132 207
Environment (SEK 000s)	25 271	22 936	45 941
Estate Agent (SEK 000s)	84 909	75 857	155 407
Eduation & Health (SEK 000s)	171 149	104 197	278 323
Shared (SEK 000s)	1 354	572	2 218
Growth (%)	22%	20%	19%
EBITA (SEK 000s)	125 336	94 688	211 897
Operating profit (EBIT) (SEK 000s)	73 184	53 205	128 372
Profit after financial items (SEK 000s)	67 793	48 111	116 775
Profit after tax (SEK 000s)	50 318	38 430	96 920
Profit after tax attributable to the Parent Company shareholders (SEK 000s)	50 318	38 430	96 920
Earnings growth attributable to the Parent Company shareholders (%)	31%	-9%	22%
EBITA margin (%)	22%	20%	21%
Operating margin (%)	13%	11%	13%
Profit margin (%)	9%	8%	10%
Balance-sheet total (tkr)	1 810 873	1 432 476	1 675 648
Equity/assets ratio (%)	38%	30%	40%
Equity/assets ratio after full conversion (%)	42%	33%	42%
Debt/equity ratio (mulitple)	1,87	2,14	1,75
Return on capital employed (%)	14%	13%	13%
Return on equity (%)	19%	20%	18%
Sales per employee (SEK 000s)	853	781	1 658
Value added per employee (SEK 000s)	700	637	1 316
Personnel expenses per employee (SEK 000s)	443	425	858
Average number of employees (persons)	668	596	613
Adjusted equity per share (AES) (SEK)	21,54	14,51	20,71
Earnings per share (SEK)	1,56	1,29	3,23
Earnings per share after dilution (SEK)	1,55	1,28	3,22
Dividend paid per share (SEK)	1,20	1,10	1,10
Cash flow per share (SEK)	4,56	3,41	8,01
Basis of computation
Earnings from calculation of earnings per share (SEK 000s)	50 318	38 430	96 920
Cash flow from calculation of cash flow per share (SEK 000s)	147 418	101 859	240 477
Average number of shares (weighted) (share)	32 338 900	29 838 900	30 016 982
Average number of shares after dilution (share)	32 800 848	30 243 628	30 436 771
No. of shares issued at balance-sheet date (share) (st) Number of shares after full conversion	32 338 9000	29 838 9000	32 338 9000
Share price at close of the respective period (SEK)	106,00	85,80	77,60

Vitec is the Nordic market leader in Vertical Market Software. We develop and deliver standardized software aimed at various niche markets. Vitec grows through acquisitions of well-managed and established software companies. The Group's overall processes, combined with the in-depth knowledge of our employees regarding our customers' local markets, creates the conditions for improvement and continuous innovation. Our 700 employees are located in Denmark, Finland, Norway and Sweden. Vitec is listed on the Nasdaq Stockholm and had sales of SEK 1017 million in 2018. Read more about us at www.vitecsoftware.com.