ifs | interim report january–june 2014 · 2014-10-24 · interim report january –june 2014 ....

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INTERIM REPORT Q2 2014

© 2014 IFS

Alastair Sorbie, CEO and Paul Smith, CFO

JULY 17, 2014

FINANCIAL AND OPERATIONAL HIGHLIGHTS

© 2014 IFS

CONTINUED GROWTH FROM A WORKING STRATEGY

INTERIM REPORT JANUARY–JUNE 2014

APRIL–JUNE 2014 (SECOND QUARTER)

License revenue amounted to SKr 134 million (Q2 '13: SKr 128 million), an increase of 5 percent currency adjusted.

Maintenance revenue was SKr 256 million (Q2 '13: SKr 226 million), an improvement of 11 percent currency adjusted.

Consulting revenue amounted to SKr 354 million (Q2 '13: SKr 329 million), an increase of 6 percent currency adjusted.

Net revenue was SKr 745 million (Q2 '13: SKr 686 million), an improvement of 7 percent currency adjusted.

EBIT amounted to SKr 70 million (Q2 '13: SKr 66 million).

Cash flow after investments was SKr 30 million (Q2 '13: SKr 9 million).

Earnings per share after full dilution was SKr 1.91 (Q2 '13: SKr 1.71).

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FINANCIAL AND OPERATIONAL HIGHLIGHTS

© 2014 IFS

CONTINUED GROWTH FROM A WORKING STRATEGY


JANUARY–JUNE 2014 (SIX MONTHS)

License revenue amounted to SKr 241 million (YTD '13: SKr 214 million), an increase of 13 percent currency adjusted.

Maintenance revenue was SKr 505 million (YTD '13: SKr 447 million), an improvement of 12 percent currency adjusted.

Consulting revenue amounted to SKr 689 million (YTD '13: SKr 633 million), an increase of 9 percent currency adjusted.

Net revenue was SKr 1,439 million (YTD '13: SKr 1,299 million), an improvement of 10 percent currency adjusted.

EBIT amounted to SKr 95 million (YTD '13: SKr -25 million).

Cash flow after investments was SKr 163 million (YTD '13: SKr 86 million).

Earnings per share after full dilution was SKr 2.50 (YTD '13: SKr -1.23).

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PRODUCT GROWTH

© 2014 IFS

THE INTELLIGENT ALTERNATIVE CHOICE


LICENSE SALES—STRONG GROWTH 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 Good customer retention, scalable, and improving margins. Product revenue (R12) is now 54 percent of total revenue mix. Over the longer term, product revenue is expected to grow at least at twice the rate of consulting.

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

MAINTENANCE MARGIN (R12)

CONSULTING REVENUE

© 2014 IFS

AN EVOLVING BUSINESS


CONSULTING REVENUE AND MARGIN

Consulting not expected to grow at the same rate as product revenue due to:

reduced effort required to implement IFS Applications and

changing mix of skills and increased involvement of partners.

Increased level of variable cost from the use of external partners.

PARTNER PROGRAM—INCREASING MOMENTUM

Greater global reach—able to serve larger customers.

Greater 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.

Additional partners added recently (e.g. Capgemini, Deloitte Consulting).

Strong license sales has the strategic benefit of increasing interest in IFS.

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FINANCIAL OVERVIEW

© 2014 IFS


A GROWING BUSINESS

7

20%

34%

46%

REVENUE MIX R12

License Maintenance Consulting

margin

91%

margin

75%

margin

19%

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

MARKET AND PRODUCT UPDATE

© 2014 IFS

2ND QUARTER


IFS SIGNS PARTNERSHIP AGREEMENT WITH CAPGEMINI IN SPAIN IFS has signed an agreement with Capgemini Spain, making the consulting, technology, and outsourcing firm its partner for the sale and implementation of IFS Applications in Spain. Through the agreement, IFS acquires greater commercial reach and additional implementation resources that will allow the company to meet the demanding schedule of expected growth.

MARKET OUTLOOK The gradual improvement of the buying environment seen over the last couple of years is expected to continue, with growth coming from the replacement of legacy core ERP platforms as well as continued appetite for cloud-based extensions. This leads industry analyst firms such as Gartner to anticipate 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–JUNE 2014 10

Aerospace and Defense Construction and Contracting High Tech Oil and Gas Retail

BAE Systems Baltic Yachts

Axis Communications Apply Group

Assist Trend

BAE Systems – Saudi Arabia Eurofeu

Minco Products Archer Management

BYGGmax

Lockheed Martin JSF IHC Merwede Holding

Mitutoyo Odfjell Drilling

D Samson & Sons

Sporveien Oslo K-Híd

Renco Electronics PGS Geophysical

Oriflame Cosmetics

Asset-Intensive Serimax Holdings

Scanfil EMS Songa Offshore

Shanghai Garnor Sealing

Kangra Coal

VWS Westgarth SEAKR Engineering

Teledyne ODI Service Providers

Klondex Mines Energy and Utilities Industrial Manufacturing Thalassa Holdings

Dover Harbour Board

Unimin Corporation BaiYin Power

Aluminum Precision Products Trelleborg Offshore Norway

DSL

Automotive Brookfield Renewable Power

Dipex Process Manufacturing Landmark Information Group

Agility Fuel Systems ENEA Wytwarzanie

Estudio Cerámico Benders Paper Cup Company

Polygon International

CalsonicKansei North America GDF Suez Énergie Services

Hymer-Leichtmetallbau Bronco Wine Company Other

FEV Hafslund

Molins Tobacco Machinery Fundação Butantan

City of Uppsala

The Morgan Motor Company Jiangsu Ligang Power Station

Nova Werke Guangzhou Taiqi Food Co.

Établissements Darty et Fils

Toyota Lanka Liberty Utilities (Canada) Corp.

Promag Jotun

Evry

Toyota Material Handling Europe PGNIG Termika

ROL Nature's Path Foods

General Dynamics Information

Wright Bus

Renova Roxtec International

Omni Industries

SDIC BaiYin Power Co.

Samson Meß- und Regeltechnik Teknos Group

Warsaw Water and Sewerage Co.

Saueressig

Vitacress

Survitec Group

Whitworths

STRONG UNDERLYING BUSINESS

© 2014 IFS

HIGHLY-COMPETITIVE CONTRACTS IN TARGET SECTORS


LEADING PAINT MANUFACTURER JOTUN To support its ambitious growth targets and to maximize process efficiency and transparency, Jotun has decided to extend its central IFS ERP solution to include an additional 2,000 users.

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PROMINENT PULP AND PAPER COMPANY A Scandinavian pulp and paper manufacturer has decided to implement IFS Applications 8. The solution will be deployed to support business-critical processes at its HQ and across its production facilities.

FINANCIAL OVERVIEW

© 2014 IFS


2ND QUARTER JULY–JUNESKr million 2014 2013 2013/14 2012/13

Net revenue 745 686 2,884 2,665of which Licenses 134 128 562 508of which Maintenance and support 256 226 960 891of which Consulting 354 329 1,312 1,246Gross earnings 378 342 1,485 1,329of which Licenses 119 115 512 473of which Maintenance and support 194 160 719 616of which Consulting 66 63 253 228EBIT 70 66 322 134EBIT margin 9% 10% 11% 5%Earnings before tax 64 55 308 120Earnings for the period 48 42 238 84Cash flow after investments 30 9 199 119

CASH FLOW

© 2014 IFS


GROUP 2ND QUARTER JULY–JUNESKr million X 2014 2013 2013/14 2012/13

Cash flow before change in working capital 107 71 413 355Change in working capital -19 -12 64 -12Cash flow from current operations 88 59 477 343

Cash flow from investments -58 -50 -278 -224Cash flow after investments 30 9 199 119

Cash flow from financing -98 -55 -99 -73Cash flow for the period -68 -46 100 46

Cash and equivalents, beginning of period 431 314 272 234Exchange differences in cash and equivalents 7 4 -2 -8Cash and equivalents, end of the period 370 272 370 272

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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

ifs | interim report january–june 2014 · 2014-10-24 · interim report january –june 2014 ....

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