ifs | interim report january–september 2014 · 04/12/2014 · interim report january...

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INTERIM REPORT Q3 2014

© 2014 IFS

Alastair Sorbie, CEO and Paul Smith, CFO

OCTOBER 23, 2014

FINANCIAL AND OPERATIONAL HIGHLIGHTS

© 2014 IFS

STRONG EXECUTION CONTINUES TO DELIVER GROWTH

INTERIM REPORT JANUARY–SEPTEMBER 2014

JULY–SEPTEMBER 2014 (THIRD QUARTER)

License revenue amounted to SKr 132 million (Q3 '13: SKr 114 million), an increase of 8 percent currency adjusted.

Maintenance revenue was SKr 258 million (Q3 '13: SKr 221 million), an improvement of 10 percent currency adjusted.

Consulting revenue amounted to SKr 336 million (Q3 '13: SKr 286 million), an increase of 12 percent currency adjusted.

Net revenue totaled SKr 728 million (Q3 '13: SKr 623 million), an improvement of 11 percent currency adjusted.

Adjusted EBITDA was SKr 95 million (Q3 '13: SKr 76 million). EBIT amounted to SKr 63 million (Q3 '13: SKr 65 million).

Cash flow after investments was SKr 9 million (Q3 '13: SKr -38 million).

Earnings per share after full dilution were SKr 1.62 (Q3 '13: SKr 1.94).

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FINANCIAL AND OPERATIONAL HIGHLIGHTS

© 2014 IFS

STRONG EXECUTION CONTINUES TO DELIVER GROWTH


JANUARY–SEPTEMBER 2014 (NINE MONTHS)

License revenue amounted to SKr 373 million (YTD '13: SKr 328 million), an increase of 11 percent currency adjusted.

Maintenance revenue was SKr 763 million (YTD '13: SKr 668 million), an improvement of 11 percent currency adjusted.

Consulting revenue was SKr 1,025 million (YTD '13: SKr 919 million), an increase of 10 percent currency adjusted.

Net revenue totaled SKr 2,167 million (YTD '13: SKr 1,922 million), an improvement of 10 percent currency adjusted.

Adjusted EBITDA was SKr 230 million (YTD '13: SKr 153 million). EBIT amounted to SKr 158 million (YTD '13: SKr 40 million).

Cash flow after investments was SKr 172 million (YTD '13: SKr 48 million).

Earnings per share after full dilution were SKr 4.13 (YTD '13: SKr 0.71).

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PRODUCT GROWTH

© 2014 IFS

THE INTELLIGENT ALTERNATIVE CHOICE


LICENSE SALES—STRONG EXECUTION IN TARGET SECTORS Winning highly-competitive sales to new customers in our target sectors. Existing customers expanding their global use of IFS Applications. Increases interest in IFS and helps expand partner ecosystem.

MAINTENANCE REVENUE High level of customer retention, good growth in license sales, and higher margins from improvements to the global support operation. Product revenue (R12) is 54 percent of total revenue mix and is expected to grow at least at twice the rate of consulting over the longer term.

5

0

400

800

1,200

1,600

'09 '10 '11 '12 '13 R12

PRODUCT REVENUE

Maintenance Licenses

50%

55%

60%

65%

70%

75%

Q1'09

Q3 Q1'10

Q3 Q1'11

Q3 Q1'12

Q3 Q1'13

Q3 Q1'14

Q3

MAINTENANCE MARGIN (R12)

CONSULTING REVENUE

© 2014 IFS

AN EVOLVING BUSINESS


CONSULTING REVENUE AND MARGIN

Take up of customers contracting directly with partners slower than expected.

Over time, customers will increasingly contract with partners:

growth in services revenue will slow down

product revenue will continue to grow

PARTNER PROGRAM—INCREASING MOMENTUM

Greater global reach—able to serve larger customers.

Greater scalability from ability to manage peaks in demand.

Shift towards an increased use of partners is progressing but will need further work before it will perform to our expectations.

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FINANCIAL OVERVIEW

© 2014 IFS


A GROWING BUSINESS

7

300

400

500

600

'09 '10 '11 '12 '13 R12

LICENSES

500

600

700

800

900

1,000

'09 '10 '11 '12 '13 R12

MAINTENANCE

1,000

1,100

1,200

1,300

1,400

'09 '10 '11 '12 '13 R12

CONSULTING

0

50

100

150

200

250

300

350

'09 '10 '11 '12 '13 R12

EBIT

-50

0

50

100

150

200

250

'09 '10 '11 '12 '13 R12

CASH FLOW AFTER INVESTMENTS

20%

34%

46%

REVENUE MIX R12

License Maintenance Consulting

margin

18%

margin

90%

margin

75%

MARKET AND PRODUCT UPDATE

© 2014 IFS

3RD QUARTER


IFS IS THE LEADING SUPPLIER OF EAM SOFTWARE FOR THE OIL AND GAS INDUSTRY IFS has been identified for the third year running as the number one vendor in market share in enterprise asset management (EAM) and field service management (FSM) software for the oil and gas industry by ARC Advisory Group.

IFS LAUNCHES GLOBAL CLOUD SOLUTION ON MICROSOFT AZURE The cloud-based offer enables customers to easily increase the breadth of their deployment and scale the number of user seats in line with business growth, while avoiding many of the costs normally associated with on-premise solutions.

MARKET OUTLOOK—THE ANALYSTS’ VIEW Companies in need of consolidating their business solution or expanding its functionality are moving forward with their investments. The improvement of the buying environment is expected to continue and industry analyst firms such as Gartner expect the ERP market to grow in 2014 in the region of 6 to 7 percent.

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BUSINESS AND STRATEGY

© 2014 IFS

THE INTELLIGENT ALTERNATIVE CHOICE


IFS WILL CONTINUE TO SUCCEED BECAUSE: Implementation time is critical for customers with international operations; IFS’s component architecture and worldwide support can reduce this. IFS targets growing markets that are less exposed to economic fluctuations. Through close cooperation with our customers, IFS can offer differentiating industry solutions; we listen and respond rather than dominate and dictate. IFS’s agile open-technology platform enables customers to benefit from new IT developments rather than causing restrictive customer lock-in.

IFS WILL CONTINUE TO GROW THROUGH: cash-generating organic growth and targeted acquisitions.

2007 2009 2010 2011 2012

LATINIFS

9

2013

DEFENCE

CUSTOMER WINS IN 2014

© 2014 IFS

INTERIM REPORT JANUARY–SEPTEMBER 2014 10

Aerospace and Defense Serimax Holdings

SEAKR Engineering Teledyne ODI

Swedish Orphan Biovitrum (SOBI)

BAE Systems VWS Westgarth

Teledyne Oil & Gas Thalassa Holdings Service Providers

BAE Systems – Saudi Arabia Energy and Utilities Industrial Manufacturing Trelleborg Offshore Norway

Dover Harbour Board

General Dynamics IT Agder Energi

ACS Industries Wood Group Mustang Norway

DSL

Lockheed Martin JSF BaiYin Power

Advanced Integration Technology Process Manufacturing Landmark Information Group

Sporveien Oslo Brookfield Renewable Power

Allu Group Al Rabie

Polygon International

Asset-Intensive Central Nuclear Embalse

Aluminum Precision Products Benders Paper Cup Company

Swarco Nordic

Kangra Coal ENEA Wytwarzanie

Belvac Production Machinery Bronco Wine Company

Tatsuno Engineering & Service

Klondex Mines GDF Suez Énergie Services

Dipex Fundação Butantan

Tibah Airport Operations Co.

Unimin Corporation Hafslund

Eickhoff Guangzhou Grain Group

Veolia Water Solutions & Tech.

Automotive Jiangsu Ligang Power Station

Estudio Cerámico Guangzhou Taiqi Food Co. Other

Agility Fuel Systems Liberty Utilities (Canada) Corp.

Hymer-Leichtmetallbau Jotun

ADP Ingénierie

CalsonicKansei North America Nanjing Metro

Molins Tobacco Machinery Nature's Path Foods

CD Projekt

Dan T. Moore Company OKG Aktiebolag

Nova Werke Omega Protein

City of Uppsala

FEV Onesourcewater

Promag Omni Industries

Établissements Darty et Fils

The Morgan Motor Company PGNIG Termika

ROL Prince Minerals

Evry

Toyota Lanka Renova

Roxtec International Silvermill Holdings

Shantou Zhongyeda

Toyota Material Handling Europe SDIC BaiYin Power Co.

Samson AG Meß- und

Sumi Agro Europe

Wright Bus Teollisuuden Voima Oyj

Saueressig Teknos Group

Construction and Contracting Warsaw Water and Sewerage Co.

Survitec Group

Vitacress

Baltic Yachts High Tech WNA

Whitworths

Eurofeu Axis Communications Oil and Gas Retail

Grandweld Shipyards Genesis Technology USA

Apply Group Assist Trend

IHC Merwede Holding Minco Products

Archer Management BYGGmax

IMI Mitutoyo

Odfjell Drilling D Samson & Sons

K-Híd Olympus KeyMed

PGS Geophysical Oriflame Cosmetics

Pindan Group Renco Electronics

Songa Offshore Shanghai Garnor Sealing

STRONG UNDERLYING BUSINESS

© 2014 IFS

HIGHLY-COMPETITIVE CONTRACTS IN TARGET SECTORS


TEOLLISUUDEN VOIMA OYJ (TVO) TVO, a major Finnish nuclear power company, has chosen IFS Applications to streamline operations, support existing business applications, and replace legacy financials and material management systems.

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MAJOR ELECTRICAL DISTRIBUTOR IN CHINA The customer will strengthen its competitive edge and will benefit from centralized data to help improve business transparency and provide real-time decision making.

FINANCIAL OVERVIEW

© 2014 IFS


3RD QUARTER OCTOBER–SEPTEMBERSKr million 2014 2013 2013/14 2012/13

Net revenue 728 623 2,949 2,685of which Licenses 132 114 580 512of which Maintenance and support 258 221 997 894of which Consulting 336 286 1,362 1,268Gross earnings 374 333 1,526 1,364of which Licenses 119 107 524 476of which Maintenance and support 195 164 750 629of which Consulting 60 62 251 253EBIT 63 65 320 171EBIT margin 9% 10% 11% 6%Earnings before tax 54 63 299 154Earnings for the period 41 49 230 111Cash flow after investments 9 -38 246 98

CASH FLOW

© 2014 IFS


GROUP 3RD QUARTER OCTOBER–SEPTEMBERSKr million X 2014 2013 2013/14 2012/13

Cash flow before change in working capital 116 79 450 359Change in working capital -58 -75 81 -36Cash flow from current operations 58 4 531 323

Cash flow from investments -49 -42 -285 -225Cash flow after investments 9 -38 246 98

Cash flow from financing -10 -4 -105 -57Cash flow for the period -1 -42 141 41

Cash and equivalents, beginning of period 370 272 226 192Exchange differences in cash and equivalents 10 -4 12 -7Cash and equivalents, end of the period 379 226 379 226

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THIS DOCUMENT MAY CONTAIN STATEMENTS OF POSSIBLE FUTURE FUNCTIONALITY FOR IFS’S SOFTWARE PRODUCTS AND TECHNOLOGY. SUCH STATEMENTS OF FUTURE FUNCTIONALITY ARE FOR INFORMATION PURPOSES ONLY AND SHOULD NOT BE INTERPRETED AS ANY COMMITMENT OR REPRESENTATION. IFS AND ALL IFS PRODUCT NAMES ARE TRADEMARKS OF IFS. THE

NAMES OF ACTUAL COMPANIES AND PRODUCTS MENTIONED HEREIN MAY BE THE TRADEMARKS OF THEIR RESPECTIVE OWNERS.

© 2014 IFS

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