Vitec Software Group B — Interim / Quarterly Report 2021

Oct 14, 2021

Interim report January– September 2021

This is Vitec

We are the Nordic market leader in Vertical Market Software. We develop and deliver standardized software for various functions in society. They can be found at the heart of a variety of businesses and activities, including pharmacies, banks, car repair shops, property management, health care and education. Our products enable us to help our customers achieve greater efficiency and to generate societal benefit. The Group's overall processes, combined with the in-depth knowledge of our employees regarding our customers' operations, create the conditions for improvement, continuous innovation and sustainable product development. Vitec is listed on Nasdaq Stockholm.

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.

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.

Value-driven organization

Within the framework of our decentralized organization, the corporate culture plays a significant role in corporate governance and is important for our long-term success. Our values, brand promise and Code of Conduct are the three cornerstones of our corporate culture. Through an array of forums, we create conditions for employees and leaders to become part of our corporate culture.

Vitec's business concept

To offer customers business-critical and proprietarily developed software, and thus provide them with the best conditions to develop their operations.

Vitec's brand promise

To rely on – today and tomorrow

Summary of interim period, January–September 2021

• Net sales SEK 1,150 million (951), an increase of 21%
• Recurring revenues SEK 975 million (796), an increase of 22% including 9% organic
• EBITA was SEK 327 million (247), with an EBITA margin of 28% (26)
• Operating profit was SEK 213 million (158), with an operating margin of 18% (17)
• Earnings per share before dilution SEK 4.55 (3.51)
• Cash flow from operating activities SEK 430 million (375)

Summary of interim period, July–September 2021

• Net sales SEK 380 million (321), an increase of 19%
• Recurring revenues SEK 336 million (277), an increase of 21% including 8% organic
• EBITA was SEK 109 million (86), with an EBITA margin of 29% (27)
• Operating profit was SEK 71 million (61), with an operating margin of 19% (19)
• Earnings per share before dilution SEK 1.48 (1.32)
• Cash flow from operating activities SEK 89 million (73)
• Directed share issue of SEK 920 million, acquisitions of Ecclesia and Vabi

Acquisition outside the Nordics and share issue

We have been extremely busy during the third quarter, which is usually dominated by holiday periods. We completed two acquisitions, first Ecclesia, an add-on acquisition that is an excellent complement to our offering in vertical software for church-related administration in Norway. This acquisition is an example of how we can also add small businesses to existing business units. The other acquisition is our first outside the Nordic countries, Vabi in the Netherlands. The Dutch market leader in building simulation, energy certification and energy advisory software within the real estate market, Vabi enables its customers to meet increasingly ambitious environmental targets that are set in-house or by the authorities. We also completed a directed share issue that added SEK 920 million before issuing costs, which strengthens our balance sheet and provides a solid base that enables us to continue to be a profitable growth company in vertical software with a clear acquisition strategy. The significantly oversubscribed issue broadened our ownership base and we are pleased to welcome several new well-known Nordic financial institutions as owners.

A lower new case rate and relaxed restrictions in the countries in which we operate bring opportunities to meet with our customers and colleagues once again, both physically and digitally. The takeaway from our work during the pandemic includes many good examples of how we can run our businesses more sustainably, with less travel, increased focus and more efficient meetings. Based on these lessons learned and combined with the innovative power of human encounters, we see a bright future with continued growth for Vitec moving forward.

The share of recurring revenues is 88% for the period and 85% cumulatively, which is fully in line with our aims. We also see that our organic growth remains relatively steady, well ahead of growth in the economy at large. This trend is due to a number of factors, including increased customer inflow, additional sales to existing customers and increases in our volume-dependent services such as digital signing and messaging services.

Regarding earnings, we can once again report a quarter with increased margins compared with the same period last year, although our overhead expenses are still a bit too low. The increased margins are the result of the efforts of all business units to grow their businesses, involving many small continuous improvements and a long-term perspective. That is how we foster continued sustainable growth at Vitec.

Olle Backman, CEO

"Regarding earnings, we can once again report a quarter with increased margins compared with the same period last year, although our overhead expenses are still a bit too low. The increased margins are the result of the efforts of all business units to grow their businesses, involving many small continuous improvements and a long-term perspective. That is how we foster continued sustainable growth at Vitec."

Olle Backman, CEO

Group financial information

NET SALES AND EARNINGS

January–September 2021

Net sales

Net sales for the period totaled SEK 1,149.9 million (950.7) and included recurring revenues of SEK 974.5 million (795.8), license revenues of SEK 19.6 million (5.7), service revenues of SEK 135.7 million (129.1) and other revenues of SEK 20.0 million (20.0).

Comments on sales

Net sales rose a total of 21% for the period; recurring revenues rose 22%, including 9% organically. Aggregate recurring revenues amounted to SEK 1,375 million on a rolling 12-month basis, corresponding to organic growth of 8%. Other revenues totaled SEK 20.0 million, which is unchanged compared with the corresponding period last year. Licensing increased by 246%, mainly attributable to our newly acquired companies. Service revenues gained 5%, compared with the corresponding period in 2020. Recurring revenues accounted for 85% of net sales, compared with 84% for the corresponding period in 2020. During the year acquired companies contributed SEK 106.5 million in net sales.

Earnings

EBITA was SEK 326.9 million (246.8), with an EBITA margin of 28% (26). Operating profit was SEK 212.7 million (157.5), with an operating margin of 18% (17). Profit after tax for the period amounted to SEK 151.3 million (114.2). Earnings per share before dilution totaled SEK 4.55 (3.51).

Comments on earnings

EBITA gained 32%, compared with the corresponding period in 2020. We estimate that about 1 percentage point of the improved margin represents temporary positive effects from factors such as reduced travel, canceled trade fairs and other customer-related activities. The impact of IFRS 16 on leases amounts to SEK 33 million (30) in operating profit, and to SEK -35 million (-26) in depreciation. The net of capitalized development costs and amortization and impairment losses on intangible fixed assets had a negative effect on operating profit of SEK 6.7 million, compared with negative SEK 15.4 million the corresponding period last year.

July–September 2021

Net sales

Net sales for the period totaled SEK 380.4 million (320.9) and included recurring revenues of SEK 335.8 million (276.8), license revenues of SEK 4.3 million (1.2), service revenues of SEK 34.4 million (38.8) and other revenues of SEK 5.9 million (4.1).

Comments on sales

Net sales rose a total of 19% for the period; recurring revenues rose 21%, including 8% organically. Other revenues rose by 43% from SEK 4.1 million to SEK 5.9 million. Licensing increased by 251%, mainly attributable to our newly acquired companies. Service revenues decreased 11%, compared with the corresponding period in 2020. Recurring revenues accounted for 88% of net sales, compared with 86% for the corresponding period in 2020. During the year acquired companies contributed SEK 42.7 million in net sales.

Earnings

EBITA was SEK 109.4 million (86.1), with an EBITA margin of 29% (27). Operating profit was SEK 70.8 million (61.0), with an operating margin of 19% (19.0). Profit after tax for the period amounted to SEK 50.2 million (43.0). Earnings per share before dilution totaled SEK 1.48 (1.32).

Comments on earnings

EBITA gained 27%, compared with the corresponding period in 2020. Acquisition-related costs had an impact of SEK 3.6 million on earnings, compared with SEK 0 million in 2020. We estimate that about 1 percentage point of the improved margin represents temporary positive effects from factors such as reduced travel, canceled trade fairs and other customer-related activities. The impact of IFRS 16 on leases amounts to SEK 12 million (11) in operating profit, and to SEK -12 million (-9) in depreciation. The net of capitalized development costs and amortization and impairment losses on intangible fixed assets had a negative effect on operating profit of SEK 10.5 million, compared with negative SEK 6.9 million the corresponding period last year.

	2021 Jul-Sep	2020 Jul-Sep	Change	2021 Jan–Sep	2020 Jan–Sep	Change
Net sales, SEK million	380	321	19%	1,150	951	21%
Recurring share of net sales, %	88%	86%		85%	84%
EBITA, SEK million	109	86	27%	327	247	32%
EBITA margin, %	29%	27%		28%	26%
Operating profit/loss, SEK million	71	61	16%	213	158	35%
Operating margin, %	19%	19%		18%	17%
Net profit/loss for the period, SEK million	50	43	17%	151	114	32%
Earnings per share, SEK	1.48	1.32		4.55	3.51

Diagrams on Group trends

Sales by quarter EBITA and EBITA margin by quarter

Sales by market, January–September 2021 Breakdown of revenue, January–September 2021

Sales broken down by business unit and customer

Because we operate in a number of niche markets and countries, we have good diversification of revenue in terms of both geography and area of operation. Although we operate in several niche markets, we still engage in essentially the same business. We develop and deliver standardized software to meet the various needs of our customers. Some of our software products comprise complete enterprise systems, while

others provide support for specific aspects of our customers' operations. We serve a large number of customers with our products. No individual customer accounts for more than 1.6% of the Group's total revenues. As we continue to acquire profitable vertical software companies, we expect the distribution of risk to continue in a positive direction.

BREAKDOWN OF SALES

Our sales are evenly spread across our 31 business units. No individual business unit accounts for more than 12% of consolidated sales.

CUSTOMERS

We have about 22,000 customers. The Group's ten largest customers account for approximately 6% of sales. The single largest customer accounts for approximately 1.6% of sales.

Our business units

We conduct our operations through our 31 independent business units. Vitec develops and delivers software aimed at various functions in society. They can be found at the heart of a variety of businesses and activities, including pharmacies, banks, car repair shops, property management, health care and education. Our products enable us to help our customers achieve greater efficiency and to generate societal benefit. The diagram of the city on the right illustrates where our business units can be found and how we contribute to developments in society.

			Acquisi
			tion	Sales	Recurring,
Business unit	Software for:	Domicile	year	2020, SEKm	2020
Vitec Actor Smartbook	Municipal culture and recreation administration offices, as well as other visitor facilities in Norway and Sweden.	SE	2018	25	79%
Vitec Acute	Healthcare companies in Finland	FI	2013	66	89%
Vitec Agrando	Church-related administration in Norway.	NO	2018	31	88%
Vitec Aloc	Banking and finance industry in the Nordic countries and western Europe.	DK, NO	2014	109	89%
Vitec ALMA	Information management within the process industry and energy companies in Finland.	FI	2020	35	38%
Vitec Appva	Healthcare and social services sector in Sweden.	SE	2020	30	95%
Vitec Autosystemer	Automotive, transportation and machinery industry in Norway.	NO	2015	52	93%
Vitec Avoine	Local associations and national organizations in Finland.	FI	2019	30	83%
Vitec Bygg & Fastighet	Construction and property management industry in Sweden	SE	1985	196	69%
Vitec Capitex Finans system	Banking and finance industry, primarily in Sweden and with some establishment in Norway and Finland.	SE	2010	24	91%
Vitec Cito	Pharmacy market in Denmark.	DK	2018	42	67%
Vitec Datamann	Car dealers and auto repair shops in Denmark.	DK	2015	48	76%
Vitec Energy AB	Electricity traders and owners of electricity and district heat ing grids in 25 different countries.	SE	1998	30	81%
Vitec Fixit	Hair and beauty salons in Norway.	NO	2019	59	97%
Vitec Futursoft	Automotive industry and machinery sector in Finland and Sweden.	FI	2016	82	91%

			Acquisi
			tion	Sales	Recurring,
Business unit	Software for:	Domicile	year	2020, SEKm	2020
Vitec HK data	Health and welfare sector in Norway.	NO	2019	17	84%
Vitec Katrina	Church-related administration in Finland.	FI	2019	20	77%
Vitec Megler	Real estate agents in Norway.	NO	2012	82	93%
Vitec MV	Education sector in Denmark, Norway and Sweden.	DK, NO, SE	2017	56	84%
Vitec Mäklarsystem	Real estate agents in Sweden.	SE	2010	79	96%
Vitec Nexgolf	Golf courses in Finland.	FI	2020	13	77%
Vitec Nice	Liability insurance companies in Norway and Sweden.	NO	2015	15	68%
Vitec Nordman	Food and grocery retail industry in Sweden	SE	2021	20	88%
Vitec Plania	Building and facility management in Norway.	NO	2016	33	66%
Vitec Samfundssystem	Administrative services for churches and preschools in Sweden.	SE	2018	44	77%
Vitec Tietomitta	Private and municipal waste-and-resource processing in Finland.	FI	2016	54	85%
Vitec Travelize	Travel agencies, primarily in Scandinavia.	SE	2021	17	78%
Vitec Unikum	Retail trade and manufacturing industry in Sweden.	SE	2021	103	77%
Vabi	Sustainable energy management for the real estate and property management industry in the Netherlands.	NL	2021	70	95%
Vitec Visiolink	Media companies in Europe.	DK	2020	65	72%
Vitec WIMS	Insurance companies in Norway.	NO	2019	28	73%

Balance sheets and cash flow

CASH AND CASH EQUIVALENTS

The Group's cash and cash equivalents at the end of the period totaled SEK 465.2 million (165.9). In addition to cash and cash equivalents, Vitec has overdraft facilities of SEK 125.0 million and SEK 515.0 million in unutilized portions of the credit facility.

FINANCIAL LIABILITIES

At September 30, 2021, interest-bearing liabilities totaled SEK 1,060.4 million (586.7) and comprised SEK 1057.6 million (562.8) in non-current interest-bearing liabilities and SEK 2.8 million (23.9) in current interest-bearing liabilities.

Non-current interest-bearing liabilities comprised bank loans of SEK 991.7 million, as well as convertible debentures totaling SEK 65.9 million. Current interest-bearing liabilities comprised bank loans of SEK 2.8 million. During the period, convertible loan 1906 was converted to class B shares, which reduced financial liabilities by SEK 31.5 million. The terms and conditions of the company's credit agreement contain restrictions, known as covenants. The Group has fulfilled the terms and conditions in their entirety during the period.

Liabilities relating to finance leases are included in other non-current liabilities of SEK 82.2 million and in other current liabilities of SEK 38.0 million.

CASH FLOW AND INVESTMENTS

On August 25, a directed share issue was completed that raised SEK 905.1 million after issuing costs. Previously during the period, financing was arranged by using SEK 500 million from the credit facility and by taking out four convertible loans of SEK 32.0 million. A new loan was signed with Nordea and SEB amounting to SEK 500 million.

Repayment of the facility totaled SEK 0 million, amortization of bank loans amounted to SEK 2.1 million, and amortization related to leases was SEK 32.7 million. Cash flow from operating activities was SEK 430,0 million (375.1). Investments totaled SEK 152.5 million in capitalized work, SEK 0.2 million in other intangible assets and SEK 12.0 million in property, plant and equipment. Investments in right-of-use assets not affecting cash flow totaled SEK 96.7 million. Through the acquisitions of Unikum datasystem AB, Travelize International AB, Nordman & Co AB, Ecclesia Systemer AS and Vabi Holding B.V., SEK 1,352.4 million was invested in product rights, brands, customer agreements and goodwill.

The previously expensed contingent consideration for WIMS AS was adjusted downward by SEK 1.0 million. Pursuant to IFRS 3:58, the adjustment was recognized as other operating revenues, while an amortization of intangible assets was recognized simultaneously. The adjustment has had no impact on net profit/loss. During the period contingent considerations for the acquisitions of WIMS AS, M&V Software Oy and NexGolf

Oy were settled. A total of SEK 45.8 million was paid. Partial payments related to contingent considerations for ALMA Consulting Oy and Appva AB have been paid amounting to a total of SEK 13.1 million.

Proceeds for investments in associate companies were paid amounting to SEK 21.4 million.

The fourth and final payment of the dividend for financial year 2019 was made on March 30, 2021, when SEK 10.9 million was paid. Payments relating to the 2020 financial year were made on June 30 and September 30 in the amounts of SEK 13.5 million and SEK 14.3 million, respectively.

CONVERTIBLE DEBENTURES

Convertible debentures, including convertible employee programs, are included under non-current interest-bearing liabilities and total SEK 65.9 million.

Upon full conversion of all convertible debentures, the share capital may increase by a maximum of SEK 22.0 million. Dilution cannot exceed a maximum of 0.6% of capital and 0.4% of votes.

INCENTIVE PROGRAM

There are two ongoing warrant incentive programs aimed at 45 people in Sweden, Finland, Norway and Denmark.

Share capital can increase by a maximum of SEK 51.4 thousand upon conversion. When fully exercised, this corresponds to a dilutive effect of 1.5% on share capital and 0.8% of voting rights.

SHAREHOLDERS' EQUITY

Equity attributable to Vitec's shareholders totaled SEK 1,921.4 million (825.6). The equity/assets ratio is 48% (38). On April 28, the Annual General Meeting resolved to pay a dividend of SEK 1.64 per share, totaling SEK 58.4 million. The dividend will be divided up and paid on four payment dates: June 30, September 30, December 30 and March 30, 2022.

Participants in the TO 2021:1 incentive program were subsidized equivalent to net 50% of the option premiums, which had a negative impact on profit for the period of SEK 3.0 million. The fair value of the option premiums totals SEK 5.8 million and has been recognized in equity.

During the period, convertible loan 1906 was converted to class B shares. As a result of the conversion, the number of class B shares in Vitec increased by 260,480 and share capital in Vitec increased by SEK 26,048.

Based on the authorization granted to the Board of Directors by the Annual General Meeting on April 28, 2021, Vitec resolved on a directed issue of 2,000,000 Class B shares at a price of SEK 460 per share. As a result of the share issue, the number of shares in Vitec increased from 33,033,902 to 35,033,902 shares, including 3,050,000 Class A shares and 31,983,902 Class B shares. The Company's share capital increased from SEK 3.3 million to SEK 3.5 million. The share issue entails a dilutive effect of about 5.7 percent and 3.2 percent in relation to the total number of outstanding shares and votes, respectively, after the share issue.

Outstanding warrant programs:

TAXES

Current tax for the period amounted to SEK 42.8 million (38.6). Deferred tax totaled SEK 2.2 million (-6.0).

Warrants	Number of options	Grant date	Maturity date	Exercise price, SEK	Dilution capital	Dilution votes
TO 2020:1	251,000	Sep 16, 2020	Sep 1, 2023– Sep 15, 2023	333	0.7%	0.4%
TO 2021:1	263,000	June 15, 2021	June 3, 2024– June 14, 2024	463	0.8%	0.4%
Number of options	514,000				1.5%	0.8%

Convertible debentures:

Convertible debentures	Carrying amount, SEK million	Duration	Conversion period	Conversion price, SEK	Dilution capital	Dilution votes
Loan 2001 Acquisition Visiolink Manage ment ApS	13.4	Jan 30, 2020– Dec 30, 2022	July 1, 2021– Dec 30, 2022	230	0.2%	0.1%
Loan 2006 Acquisition Appva AB	7.6	June 17, 2020– Dec 30, 2022	Jan 1, 2022– Dec 30, 2022	240	0.1%	0.1%
Loan 2101 Acquisition Unikum datasystem AB	15.0	Jan 4, 2021– Dec 30, 2023	Jan 1, 2023– Dec 30, 2023	373	0.1%	0.1%
Loan 2102 Acquisition Travelize interna tional AB	6.7	Feb 3, 2021– Dec 30, 2023	Jan 1, 2023– Dec 30, 2023	362	0.1%	0.0%
Loan 2104 Acquisition Nordman & Co AB	2.3	April 26, 2021– June 30, 2024	Jan 1, 2024– June 30, 2024	468	0.0%	0.0%
Loan 2009 Convertible Employee Program	12.6	Sep 1, 2020– Sep 30, 2023	Sep 1, 2023– Sep 30, 2023	333	0.1%	0.1%
Loan 2021:1 Convertible Employee Pro gram	8.2	June 1, 2021– June 30, 2024	June 1, 2024– June 30, 2024	463	0.1%	0.0%
Total liability	65.9				0.6%	0.4%

Acquisitions during the period

INVESTMENTS IN MINORITY INTERESTS

Our subsidiary Malmkroppen AB aims to invest in Nordic software companies that are in an earlier phase than the software companies that are usually acquired. Investments during the period:

Voxo AB

On June 24 and August 20, investments were made in the Swedish software company Voxo AB. Voxo is a Swedish voice technology company specializing in conversation-based AI solutions. The company's platform of proprietary models processes, analyzes and visualizes voice conversation data. Customers are found in several industries, ranging from banking to retail. Vitec holds a 7.5% stake in the company after the investment.

Predge AB

On July 9 an investment was made in the Swedish software company Predge AB. Predge offers decision support for preventive maintenance based on advanced data analyses. The company mainly focuses on railways. Vitec holds a 7% stake in the company after the investment.

Tempus Information Systems AB

On July 13 an investment was made in the Swedish software company Tempus Information Systems AB. Tempus develops resource planning and scheduling software for preschools in Sweden. Vitec holds a 11% stake in the company after the investment.

COMPLETED ACQUISITIONS

Five acquisitions occurred during the period: Unikum datasystem AB, Travelize International AB, Nordman & Co AB, Ecclesia Systemer AS and Vabi Holding B.V. From the acquisition date up to and including September 30, revenues in the acquired companies totaled SEK 106.5 million in sales and SEK 34.8 million in profit before tax. If consolidation had occurred at the beginning of the year, the companies would have provided the Group with an additional approximately SEK 73.7 million in sales and SEK 30.3 million in profit before tax. The acquisition-related expenses are recognized in operating profit and total SEK 5.5 million.

Acquisition Unikum datasystem AB

On January 4, Vitec acquired all shares in the Swedish software company Unikum Datasystem AB.

Unikum offers the Pyramid Business Studio software, a complete business and enterprise management system for small and medium enterprises. The product offers functions such as project management, accounting, customer care and e-commerce. The company reported sales of SEK 103.1 million, with an adjusted EBITDA of SEK 42.9 million for the 2020 financial year. Vitec welcomes 90 new employees as part of the acquisition.

Payment was in cash and with a convertible, with deviation from shareholders' preferential rights in accordance with the authorization from the Annual General Meeting on June 23, 2020. The convertible matures in 36 months and at full conversion will have a dilutive effect on capital of 0.1%. The acquisition is expected to yield an immediate increase in earnings per share for Vitec. Consolidation will commence as of the acquisition date.

The goodwill item is not tax deductible and is deemed to be attributable to anticipated profitability and complementary expertise requirements, as well as anticipated synergy effects, in the form of the joint development of our products.

The acquisition of Unikum added SEK 63.4 million in product rights, SEK 5.2 million in brands, SEK 87.9 million in customer agreements and SEK 392.3 million in goodwill. The expensed convertible totals SEK 15.6 million.

Acquisition Travelize International AB

On February 3, Vitec acquired all shares in the Swedish software company Travelize International AB, with subsidiaries. Travelize reported sales of SEK 17.1 million, with an adjusted EBITDA of SEK 4.1 million for the 2020 financial year.

Travelize develops and provides a complete enterprise management system for small and medium-sized travel agencies, primarily in Scandinavia. The web-based software enables travel reservations, web publishing and administration. The system offers an array of functions for customer and payment management, as well as marketing. The company's approximately 300 customers are mainly located in Sweden, Denmark and Norway. Vitec welcomes eight new employees as part of the acquisition.

Payment was in cash and with a convertible, with deviation from shareholders' preferential rights in accordance with the authorization from the Annual General Meeting on June 23, 2020. The convertible matures in 36 months and at full conversion will have a dilutive effect on capital of 0.1%. The acquisition is expected to yield an immediate increase in earnings per share for Vitec. Consolidation will commence as of the acquisition date.

The goodwill item is not tax deductible and is deemed to be attributable to anticipated profitability and complementary expertise requirements, as well as anticipated synergy effects, in the form of the joint development of our products.

The acquisition of Travelize added SEK 8.7 million in product rights, SEK 0.5 million in brands, SEK 19.2 million in customer agreements and SEK 42.0 million in goodwill. The expensed convertible totals SEK 7.0 million. The expensed portion of the contingent consideration amounts to SEK 33.0 million and is subject to EBITDA improvements at December 31, 2021 and December 31, 2022. The supplementary purchase consideration is valued at maximum outcome.

Acquisition Nordman & Co AB

On April 26, Vitec acquired all shares in the Swedish software company Nordman & Co AB. The company reported sales of SEK 20.2 million, with an EBIT of SEK 3.8 million for the 2019/ 2020 financial year.

Nordman & Co AB develops and provides the software Argus CRM, a complete sales support system for food and grocery retail industry, service outlets, pharmacies, supermarkets and the construction market, primarily in the Nordic countries. The system, with several add-on modules, enables salespeople to plan and manage tasks such as store visits, orders, marketing activities, item information and presentations. The approximately 130 customers are mainly companies in Sweden and the rest of the Nordic region. Vitec welcomes 12 new employees as part of the acquisition.

Payment was in cash and with a convertible, with deviation from shareholders' preferential rights in accordance with the authorization from the Annual General Meeting on June 23, 2020. The convertible matures in 38 months and at full conversion will have a dilutive effect on capital of 0.02%. The acquisition is expected to yield an immediate increase in earnings per share for Vitec. Consolidation will commence as of the acquisition date.

The goodwill item is not tax deductible and is deemed to be attributable to anticipated profitability and complementary expertise requirements, as well as anticipated synergy effects, in the form of the joint development of our products.

The acquisition of Nordman added SEK 9.0 million in product rights, SEK 0.7 million in brands, SEK 4.4 million in customer agreements and SEK 21.8 million in goodwill. The expensed convertible totals SEK 2.4 million. The expensed portion of the contingent consideration amounts to SEK 11.0 million and is subject to EBITDA improvements at June 30, 2021. The supplementary purchase consideration is valued at maximum outcome.

Acquisition Ecclesia Systemer AS

On September 8, Vitec acquired all shares in the Swedish software company Ecclesia Systemer AS. The acquisition is an add-on acquisition to the business unit Vitec Agrando. Ecclesia Systemer reported sales of SEK 7 million for the 2020 financial year and after the acquisition the combined operations with a focus on churches in Norway will have sales of approximately SEK 33 million.

Ecclesia Systemer develops and provides a SaaS service for the administration of cemeteries, crematoria, graves, and grave monuments in Norway. The software offers invoicing and scheduling of funerals, ceremonies, and cremations. The approximately 260 customers mainly consist of "kirkelige fellesråd," which are joint committees between municipalities and parishes in Norway's municipalities. Vitec welcomes two new employees as part of the acquisition.

Payment was in cash. The acquisition is expected to yield an immediate increase in earnings per share for Vitec. Consolidation will commence as of the acquisition date.

The goodwill item is not tax deductible and is deemed to be attributable to anticipated profitability and complementary expertise requirements, as well as anticipated synergy effects, in the form of the joint development of our products.

The acquisition of Ecclesia Systemer added SEK 7.3 million in product rights, SEK 0.2 million in brands, SEK 1.3 million in customer agreements and SEK 35.0 million in goodwill.

Acquisition Vabi Holding B.V.

On September 10, Vitec acquired all shares in the Dutch software company Vabi Holding B.V. with subsidiaries. The companies reported sales of SEK 71.3 million, with an EBITDA of SEK 44.6 million for the 2020 financial year.

Vabi develops and provides software that contributes to sustainable and efficient energy management for the real estate and property management industry. The products have several functions such as decision support systems, userfriendly 3D simulations and energy certification for reduced climate impact. Vitec welcomes 32 new employees as part of the acquisition.

Payment was in cash. The acquisition is expected to yield an immediate increase in earnings per share for Vitec. Consolidation will commence as of the acquisition date.

The goodwill item is not tax deductible and is deemed to be attributable to anticipated profitability and complementary expertise requirements, as well as anticipated synergy effects, in the form of the joint development of our products.

The acquisition of Vabi added SEK 37.7 million in product rights, SEK 3.4 million in brands, SEK 129.3 million in customer agreements and SEK 483.2 million in goodwill.

Acquisition-driven growth

Vitec has an explicit acquisitions-based growth strategy with a sharp focus on profitability and stable cash flows. Our focus on strong cash flows through a high proportion of recurring revenues creates the financial foundation for continued acquisition-driven growth.

Acquired revenue

Each block illustrates an acquired company.

Effect of acquired units on sales

SEK million	Rolling 12 months, Oct. 20-Sept. 21	Rolling 12 months, Oct. 19-Sept. 20	Growth	2021 Jan-Sep	2020 Jan–Sep	Growth
Reported net sales	1,512	1,248	21%	1,150	951	21%
of which recurring revenues	1,259	1,032	22%	975	796	22%
Effect of acquired units	128	292		74	197
of which recurring revenues	115	238		69	165
Proforma net sales	1,640	1,541	6%	1,224	1,148	7%
Proforma recurring revenues (ARR)	1,375	1,270	8%	1,044	961	9%

Other significant events during the period

AUGUST 25: DIRECTED ISSUE RAISED SEK 920 MILLION

Based on the authorization granted to the Board of Directors by the Annual General Meeting on April 28, 2021, Vitec resolved on a directed issue of 2,000,000 Class B shares at a price of SEK 460 per share. The share issue will raise SEK 920 million for the company before issuing costs. The share issue entails an increase in the number of shares in Vitec

from 33,033,902 to 35,033,902 shares, including 3,050,000 Class A shares and 31,983,902 Class B shares. The Company's share capital will increase from SEK 3,303,390.20 to SEK 3,503,390.20. The share issue entails a dilutive effect of about 5.7 percent and 3.2 percent in relation to the total number of outstanding shares and votes, respectively, after the share issue.

Risks and uncertainties

Material risks and uncertainties are described in the administration report of the of the 2020 Annual Report under "Risks and uncertainties" on pages 48–50, in Note 1, under the section, Assessments and estimates on pages 76–77, and in Note 11 "Financial risks and the management of such risks" on pages 111–113. No material changes have occurred since then.

CORONAVIRUS PANDEMIC

In March 2020, the World Health Organization (WHO) declared the spread of the coronavirus and COVID-19 to be a pandemic. Shortly thereafter, Group Management appointed a work group that was responsible for organization, coordination and communication at the Group level. Most decisions involving operations, however, are taken by each business unit according to our decentralized governance model. The Group's decisions and communication are based on:

• Trust and respect for government and local authorities, as well as their appointed experts.
• Care for all employees and their health.

Parent Company

Net sales totaled SEK 97.2 million (86.6) and essentially comprised invoicing to subsidiaries for services rendered. Profit after tax was SEK -9.8 million (26.3). Parent Company earnings were charged with unrealized foreign-exchange

losses totaling SEK -13.1 million (28.9). 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 transactions with related parties occurred in the Group or Parent Company during the period.

• Our responsibility in society is to maintain functionality – our products support important societal functions.

Our focus continues to be on helping to reduce the risk of spreading the virus and protecting the health of our employees and customers, at the same time that we are working to minimize the impact on our business.

Early last spring we changed how we work and until this autumn, most employees worked from home. During this situation, we greatly benefited from our well-developed IT infrastructure, which enabled us to transition to a distributed workplace essentially overnight. Software development is carried out through our usual development environments, which can be accessed remotely and securely by our developers. In addition, our leaders have switched to lead their business units through collaboration and meeting platforms such as Teams. We have largely replaced physical trainings, gatherings and strategic meetings with equivalent digital solutions.

Working in a number of niche markets provides good risk diversification and our business model has proven to be both sustainable and expandable during the pandemic.

Accounting and measurement policies

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 No new or amended standards entered into force as of 2021 that are expected to affect the Group's accounts.

OPERATING SEGMENTS

Operating segments are defined as business units, of which there were 31 as at the balance-sheet date, each generating revenue and incurring costs. Their operating profit/loss is regularly followed up by the highest executive decision-maker, the CEO and group chief executive. Separate financial information is available for each unit. The operating segments form the operational structure for internal governance, follow-ups, and reporting. Based on the character of the services offered with their high proportion of recurring revenues, similar range of products, and similar financial characteristics, all of the group's operating segments/business units were aggregated into one operating segment in the financial reports as of 1 January 2020 in accordance with the rules of IFRS 8.

FINANCIAL INSTRUMENTS

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 company's financial instruments that are subject to measurement at fair value are classified as level 3 and pertain to contingent considerations in conjunction with acquisitions.

Recurring measurements at fair value, at September 30, 2021, SEK thousands

	Level 1	Level 2	Level 3	Book value
Contingent consideration, ALMA Consulting Oy			7,141	7,141
Contingent consideration Appva AB			45,000	45,000
Contingent consideration Travelize International AB			32,328	33,000
Contingent consideration Nordman & Co AB			11,000	11,000
Total			95,469	96,141

Signature

Umeå, October 14, 2021

Olle Backman CEO

Condensed consolidated statement of comprehensive income

SEK THOUSANDS	2021 Jul-Sep	2020 Jul-Sep	2021 Jan–Sep	2020 Jan–Sep	2020 Jan–Dec
OPERATING REVENUES
Recurring revenues	335,824	276,817	974,543	795,796	1,080,421
License revenues	4,299	1,223	19,645	5,680	14,682
Service revenues	34,370	38,793	135,683	129,149	189,238
Other revenues	5,874	4,115	19,993	20,045	28,449
NET SALES	380,367	320,948	1,149,864	950,670	1,312,789
Capitalized development costs	43,692	36,649	152,494	119,584	161,909
Reversal of supplementary purchase consideration	-	-	1,095		-
TOTAL REVENUES	424,059	357,597	1,303,453	1,070,254	1,474,697
OPERATING EXPENSES
Goods for resale	-8,275	-4,459	-19,837	-18,307	-24,761
Subcontractors and subscriptions	-43,039	-36,497	-133,137	-108,507	-146,993
Other external expenses	-36,909	-28,768	-116,928	-99,511	-138,325
Personnel expenses	-191,366	-171,744	-599,699	-505,325	-694,690
Depreciation of property, plant and equipment	-15,662	-12,041	-46,244	-35,743	-49,768
Amortization and impairment of intangible fixed assets	-19,224	-18,338	-59,217	-56,657	-75,420
Impairment of intangible assets	-	-	-1,095	-	-
Unrealized exchange-rate gains/losses (net)	-190	398	-378	596	46
TOTAL EXPENSES	-314,666	-271,448	-976,536	-823,454	-1,129,912
EBITA	109,393	86,149	326,917	246,801	344,786
Acquisition-related costs	-3,612	91	-14,317	-10,982	-12,933
Acquisition-related amortization	-34,995	-25,231	-99,939	-78,294	-109,419
OPERATING PROFIT/LOSS	70,785	61,009	212,660	157,525	222,434
Financial income	39	-135	231	523	313
Financial expenses	-5,726	-3,561	-16,569	-11,298	-15,115
TOTAL FINANCIAL ITEMS	-5,686	-3,695	-16,337	-10,775	-14,802
PROFIT AFTER FINANCIAL ITEMS	65,099	57,314	196,323	146,750	207,632
Tax	-14,882	-14,319	-45,058	-32,573	-46,922
NET PROFIT FOR THE PERIOD	50,217	42,995	151,265	114,177	160,710
OTHER COMPREHENSIVE INCOME, ITEMS THAT MAY BE RECLASSI FIED AS PROFIT/LOSS FOR THE YEAR
Restatement of net investments in foreign operations and hedge	11,093	-131	33,220	-34,771	-63,970
accounting of the same
OTHER COMPREHENSIVE INCOME FOR THE PERIOD	11,093	-131	33,220	-34,771	-63,970
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD	61,310	42,865	184,485	79,406	96,741
PROFIT FOR THE PERIOD ATTRIBUTABLE TO
– Parent Company shareholders	50,217	42,995	151,265	114,177	160,710
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ATTRIBUTABLE TO
– Parent Company shareholders	61,310	42,865	184,485	79,406	96,741

Condensed consolidated statement of financial position

SEK THOUSANDS	Sep 30, 2021	Sep 30, 2020	Dec 31, 2020
ASSETS
FIXED ASSETS
Goodwill	1,744,117	770,888	769,988
Other intangible fixed assets	1,340,448	929,968	917,372
Tangible property, plant and equipment	168,623	113,829	104,189
Financial fixed assets	24,887	1,660	1,325
Deferred tax assets	5,092	6,978	4,517
TOTAL FIXED ASSETS	3,283,166	1,823,324	1,797,391
CURRENT ASSETS
Inventories	2,737	2,978	2,958
Current receivables	201,647	163,529	271,731
Cash and cash equivalents	465,158	165,869	134,695
TOTAL CURRENT ASSETS	669,542	332,376	409,384
TOTAL ASSETS	3,952,709	2,155,700	2,206,775
SHAREHOLDERS' EQUITY AND LIABILITIES
Equity attributable to Parent Company shareholders	1,914,493	825,641	843,350
Non-current interest-bearing liabilities	1,057,647	562,752	555,327
Deferred tax	270,116	188,383	185,799
Other non-current liabilities	163,123	105,627	91,868
TOTAL NON-CURRENT LIABILITIES	1,490,887	856,762	832,994
Accounts payable	34,663	29,011	35,094
Current portion of interest-bearing liabilities	2,765	23,933	2,763
Other current liabilities	206,420	200,974	231,442
Accrued expenses	132,023	90,839	92,819
Prepaid recurring revenues	171,457	128,540	168,313
TOTAL CURRENT LIABILITIES	547,329	473,298	530,431
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES	3,952,709	2,155,700	2,206,775

Condensed consolidated statement of changes in equity

	2021	2020	2021	2020	2020
SEK THOUSANDS	Jul-Sep	Jul-Sep	Jan–Sep	Jan–Sep	Jan–Dec
EQUITY ATTRIBUTABLE TO PARENT COMPANY SHAREHOLDERS
Opening balance	947,844	786,620	843,350	759,432	759,432
Convertible debenture with stock options	-	997	1,624	2,718	2,658
Debenture conversion	-	-	31,468	-	21,213
New share issue after issuing costs*	905,105	-	905,105	-
Paid option premiums	-	6,235	5,104	6,235	7,279
Option premiums measured at fair value	-	-	682	-	-
Dividends paid	235	-11,075	-57,325	-22,150	-43,974
Total comprehensive income	61,310	42,865	184,485	79,406	96,741
CLOSING BALANCE	1,914,493	825,641	1,914,493	825,641	843,350

* Issuing costs total SEK 14,9 million.

Condensed consolidated statement of cash flow

SEK THOUSANDS	2021 Jul-Sep	2020 Jul-Sep	2021 Jan–Sep	2020 Jan–Sep	2020 Jan–Dec
OPERATING ACTIVITIES
Operating profit	70,785	61,009	212,660	157,525	222,434
Adjustments for non-cash items
Other operating revenues	-	-	-1,095	-	-
Loss on decommissioning of equipment, fixtures and fittings	-	-		-	189
Depreciation/amortization and impairment losses	69,884	55,609	206,496	170,694	234,607
Unrealized foreign exchange gains/losses	190	-398	378	-596	-46
Option premiums	-	-	682	-	1,044
	140,859	116,220	419,121	327,623	458,228
Interest received	40	-135	232	523	313
Interest paid	-4,909	-2,486	-14,163	-8,298	-11,709
Income tax paid	-14,663	1,609	-45,839	-10,718	-17,539
CASH FLOW FROM OPERATING ACTIVITIES BEFORE CHANGES IN WORKING CAPITAL	121,327	115,208	359,351	309,130	429,293
Changes in working capital
Increase/decrease in inventories	-133	-301	238	803	823
Increase/decrease in accounts receivable	19,243	3,463	135,620	129,446	6,396
Increase/decrease in operating receivables	4,427	6,060	-20,018	6,877	22,416
Increase/decrease in accounts payable	3,926	1,523	-2,151	-9,122	-3,280
Increase/decrease in operating liabilities	-58,897	-52,642	-43,081	-62,068	-19,314
CASH FLOW FROM OPERATING ACTIVITIES	89,893	73,311	429,958	375,066	436,334
INVESTING ACTIVITIES
Acquisition of subsidiaries, net*	-658,503	-	-1,247,943	-148,252	-167,238
Acquisition of shares and participations in associated companies	-9,012	-	-21,429	-	-
Purchase of intangible fixed assets and capitalized development costs	-43,749	-36,693	-152,721	-119,773	-163,242
Purchase of property, plant and equipment	-2,516	-1,234	-11,998	-4,325	-9,648
CASH FLOW FROM INVESTING ACTIVITIES	-713,780	-37,927	-1,434,091	-272,350	-340,128
FINANCING ACTIVITIES
Dividends to Parent Company shareholders	-14,364	-11,075	-38,809	-22,150	-33,293
Borrowings	-	13,510	508,650	157,820	157,820
Repayment of loans	-12,969	-17,108	-34,751	-77,817	-92,269
New share issue	905,105	-	905,105	-	-
Paid option premiums	-	6,235	5,104	6,235	6,235
CASH FLOW FROM FINANCING ACTIVITIES	877,772	-8,438	1,345,298	64,089	38,493
CASH FLOW FOR THE PERIOD	253,885	26,946	341,166	166,805	134,699
OPENING CASH AND CASH EQUIVALENTS, INCLUDING CURRENT INVESTMENTS	210,713	139,880	134,695	16,658	16,659
Exchange-rate differences in cash and cash equivalents	561	-959	-10,703	-17,594	-16,662
CASH AND CASH EQUIVALENTS INCLUDING CURRENT INVEST MENTS AT THE END OF THE PERIOD**	465,159	165,869	465,159	165,869	134,695

*Payment for the acquisition of subsidiaries during the period consisted of cash for Unikum datasystem AB, Travelize International AB, Nordman & Co AB, Ecclesia Systemer AS and Vabi Holding B.V. Net cash flow was SEK 1,189 million. The acquisitions pertained to all shares outstanding in their entirety and entailed the gain of controlling influence. During the period contingent considerations were paid for the acquisitions of WIMS AS, M&V Software Oy, ALMA Consulting Oy, Appva AB and NexGolf Oy, totaling SEK 58.9 million. The payments did not entail any changes to controlling influence or the total number of shares held.

*Payment for the acquisition of subsidiaries during 2020 was in cash for

Visiolink ApS, ALMA Consulting Oy, LJ System AB and Appva AB. The net cash outflow was SEK 142.7 million. The acquisitions pertained to all shares outstanding in their entirety and entailed the gain of controlling influence. In addition, the final settlement of contingent consideration for Avoine Oy was SEK 5.5 million. The payment did not entail any changes to controlling influence or the total number of shares.

**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	2021 Jul-Sep	2020 Jul-Sep	2021 Jan–Sep	2020 Jan–Sep	2020 Jan–Dec
Operating revenues	32,230	30,202	97,160	86,586	110,618
Operating expenses	-25,668	-24,401	-81,946	-75,326	-100,218
Unrealized exchange-rate gains/losses (net)	-2,746	-938	-13,081	28,925	46,709
OPERATING PROFIT/LOSS	3,816	4,863	2,133	40,185	57,109
Income from participation in Group companies	-	-		-	177,692
Interest income	117	86	355	404	381
Interest expenses	-5,055	-3,213	-14,669	-9,608	-12,485
PROFIT AFTER FINANCIAL ITEMS	-1,122	1,736	-12,181	30,981	222,697
Appropriations	-	-		-	364
PROFIT/LOSS BEFORE TAX	-1,122	1,736	-12,181	30,981	223,061
Tax	183	-388	2,368	-4,673	-11,818
NET PROFIT FOR THE PERIOD	-939	1,348	-9,813	26,308	211,243

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

Condensed balance sheet, Parent Company

SEK THOUSANDS	Sep 30, 2021	Sep 30, 2020	Dec 31, 2020
ASSETS
FIXED ASSETS
Intangible fixed assets	827	1,101	1,036
Tangible property, plant and equipment	11,268	10,993	10,741
Financial fixed assets	3,200,797	1,814,759	1,852,355
TOTAL FIXED ASSETS	3,212,892	1,826,853	1,864,131
CURRENT ASSETS
Current receivables	38,606	48,758	213,310
Cash and cash equivalents	420,263	149,726	123,743
TOTAL CURRENT ASSETS	458,869	198,484	337,053
TOTAL ASSETS	3,671,761	2,025,337	2,201,185
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity	1,774,429	714,879	900,187
Untaxed reserves	1,677	2,042	1,677
Non-current liabilities	1,133,147	607,752	600,327
Current liabilities	762,507	700,664	698,994
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES	3,671,761	2,025,337	2,201,185

Acquired assets and liabilities 2021

PRELIMINARY ACQUISITION CALCULATIONS

During the period five acquisitions were completed: Unikum datasystem AB, Travelize International AB, Nordman & Co AB, Ecclesia Systemer AS and Vabi Holding B.V. Some items in the acquisition plans may be remeasured, due to our brief ownership of the companies. This applies to all acquired assets and liabilities, but mainly brands, product rights, customer agreements and goodwill. For this reason, the acquisition plans remain preliminary, until 12 months after the acquisition date.

Acquired assets and liabilities, SEK thousands	Book value	Fair value adjustment	Fair value recognized in the Group
Goodwill	-	974,322	974,322
Intangible fixed assets	8,398	378,116	386,515
Tangible property, plant and equipment	3,334	-	3,334
Financial fixed assets	4,217	-	4,217
Inventories	17	-	17
Current receivables	43,434	-2,550	40,884
Cash and cash equivalents	82,552	-	82,552
Deferred tax liabilities	-	-76,993	-76,993
Accounts payable	-1,773	-	-1,773
Other current liabilities	-70,609	-	-70,609
Other non-current liabilities	-1,825	-	-1,825
Total	67,744	1,272,894	1,340,639

Effect of acquisitions on cash flow, SEK thousands
Group's purchase costs	-1,340,639
Expensed portion of purchase considerations	44,000
Convertible debentures	25,000
Acquired cash and cash equivalents	82,552
Net cash outflow	-1,189,087

Allocation of revenues and date of revenue recognition

Allocation of revenues and date of revenue recognition, SEK million	2021 Jul-Sep	2020 Jul-Sep	2021 Jan–Sep	2020 Jan–Sep	2020 Jan–Dec
Recurring revenues	335.8	276.8	974.5	795.8	1,080.4
Other revenues	44.5	44.1	175.3	154.9	232.4
Net sales	380.4	320.9	1,149.9	950.7	1,312.8
Date of revenue recognition
Services transferred to customers over time, flat distribution	293.5	239.4	845.1	691.9	939.4
Services transferred to customers over time, in pace with use	76.7	76.3	265.1	233.1	330.3
Services transferred to customers at a given time	10.1	5.3	39.6	25.7	43.1
	380.4	320.9	1,149.9	950.7	1,312.8

Shareholder information

PUBLICATION

This information is such information that Vitec Software Group AB (publ) is required to disclose pursuant to the EU Market Abuse Regulation and the Swedish Securities Market Act. The information was submitted for publication, through the agency of the contact persons set out below, at 8:00 a.m. (CET) on Thursday, October 14, 2021.

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 the English version of the report.

FINANCIAL CALENDAR

Year-end report January–December	Feb 11, 2022 8:00 a.m.
Interim report January–March	Apr 22, 2022 8:00 a.m.
Annual General Meeting	Apr 26, 2022 5:30 p.m.
Interim report January–June	Jul 15, 2022 8:00 a.m.
Interim report January–September	Oct 20, 2022 8:00 a.m.
Year-end report January–December	Feb 1, 2023 8:00 a.m.

FINANCIAL INFORMATION

Our website vitecsoftware.com is our primary channel for IR information, where we publish financial information immediately upon release.

We can also be contacted through the following channels: By e-mail: ir@vitecsoftware.com By post: Investor Relations, Tvistevägen 47 A, SE-907 29 Umeå, Sweden By telephone: +46 90 15 49 00

Vitec's 2020 annual report is available at vitecsoftware.com

CORPORATE REGISTRATION NUMBER

Vitec Software Group AB (publ), corp. reg. no. 556258-4804.

Olle Backman CEO +46 70 632 89 93 olle.backman@vitecsoftware.com

Sara Nilsson CFO +46 70 966 00 71 sara.nilsson@vitecsoftware.com

Patrik Fransson Investor Relations +46 76 76 942 85 97 patrik.fransson@vitecsoftware.com

Definitions of key indicators

This interim report refers to several financial measurements that are not defined under IFRS, known as alternative performance measures, in accordance with ESMA's is called alternative. 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 indicators presented on the last 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 corre sponding year-earlier period.	Used to monitor the compa ny's sales trend.
Growth in recurring revenues	Trend in recurring revenues in relation to the previous corresponding year.	Used to monitor the compa ny's sales trend.
Organic growth in recurring revenues	Development of the company's recurring revenues, ex cluding acquired companies during the period, in relation to the corresponding year-earlier period.	Used to monitor the compa ny's sales trend.
Proforma net sales, rolling 12 months	Net sales the past four quarters with addition of sales from acquired units for the time prior to the acquisition date.	Used to monitor the compa ny's sales trend.
ARR, Proforma recurring reve nues, rolling 12	ARR, Annual Recurring Revenues. Recurring revenues the past four quarters with addition of recurring revenues from acquired units for the time prior to the acquisition date.	Used to monitor the compa ny's sales trend.
Gross profit	The company's sales less the cost of goods purchased for resale and subcontractors and subscriptions.	Used to monitor the compa ny's dependence on external direct costs
Gross margin	Gross profit in relation to net sales.	Used to monitor the compa ny's dependence on external direct costs
EBITA	Net profit/loss for the period before acquisition-related costs, acquisition-related depreciation/amortization and impairment losses, net financial items and tax.	Indicates the company's net profit/loss for the period be fore acquisition-related costs, acquisition-related deprecia tion/amortization.
EBITDA	Earnings before interest, tax, depreciation and amortiza tion for the period.	Indicates the company's operating profit/loss before depreciation/amortization.
Acquisition-related costs	Costs such as broker fees, legal fees and stamp tax (tax on single property purchases).	Used to disclose items affect ing comparability.
Acquisition-related amortization	Amortization regarding product rights and customer agreements.	Used to disclose items affect ing comparability.
EBITA margin	Operating profit before acquisition-related costs in rela tion to net sales.	Used to monitor the compa ny's earnings trend.

Operating margin	Operating profit in relation to net sales.	Used to monitor the compa ny's earnings trend.
Profit margin	Profit after tax for the period, in relation to net sales.	Used to monitor the compa ny'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 share holders' 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 indi cator of the company's profit ability 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 employ ee	Personnel expenses in relation to average number of employees.	A key indicator used to mea sure 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 compa ny'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 sharehold ers, 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 share holders, plus interest expenses pertaining to convertible debentures, in relation to the average number of shares after dilution.	IFRS key indicators

Key indicators

		2021 Jan-Sep	2020 Jan–Sep	2020 Jan–Dec
Net sales	SEK 000s	1,149,864	950,670	1,312,789
Recurring revenues	SEK 000s	974,543	795,796	1,080,421
Recurring share of net sales	(%)	85%	84%	82%
Growth net sales	(%)	21%	11%	14%
ARR	SEK 000s	1,374,575	1,084,487	1,107,759
EBITA	SEK 000s	326,917	246,801	344,786
EBITA margin	(%)	28%	26%	26%
Growth EBITA	(%)	32%	27%	39%
Operating profit/loss (EBIT)	SEK 000s	212,660	157,525	222,434
Operating margin	(%)	18%	17%	17%
Profit after financial items	SEK 000s	196,323	146,750	207,632
Profit after tax	SEK 000s	151,265	114,177	160,710
Profit margin	(%)	13%	12%	12%
Balance-sheet total	SEK 000s	3,952,709	2,155,700	2,206,775
Equity/assets ratio	(%)	48%	38%	38%
Equity/assets ratio after full conversion	(%)	50%	43%	41%
Debt/equity ratio	(multiple)	1.23	1.51	1.56
Return on capital employed	(%)	13%	14%	17%
Return on equity	(%)	14%	17%	20%
Sales per employee	SEK 000s	1,173	1,169	1,593
Added value per employee	SEK 000s	1,053	1,039	1,413
Personnel expenses per employee	SEK 000s	612	621	843
Average no. of employees	(persons)	980	813	824
Adjusted equity per share (AES)	(SEK)	54.65	25.35	25.73
Earnings per share	(SEK)	4.55	3.51	4.93
Earnings per share after dilution	(SEK)	4.49	3.49	4.91
Resolved dividend per share	(SEK)	1.64	0.68	1.35
Cash flow per share	(SEK)	10.80	9.49	13.18
Basis of computation:
Earnings from calculation of earnings per share	SEK 000s	151,265	114,177	160,710
Cash flow from calculation of cash flow per share	SEK 000s	359,351	309,130	429,293
Weighted average number of shares (weighted average)	(thousands)	33,280	32,573	32,574
Number of shares after dilution	(thousands)	33,839	33,117	32,994
Number of shares issued at balance-sheet date	( thousands)	35,034	32,573	32,773
Share price at close of the respective period	(SEK)	478.00	296.50	341.00