2

INTERIM REPORT Q3 2016

STRONG LICENSE GROWTH IN A SEASONALLY SLOW QUARTER

ALASTAIR SORBIE, CEO & PAUL SMITH, CFOOctober 20, 2016

A strong quarter for IFS in which all revenues, profit, and cash flow improved. Despite there being economic challenges in all our geographies and in all our target sectors we have managed to grow our license sales by 27 percent, currency adjusted. This indicates that we are able to continue to win business against our giant competitors by virtue of our strong industry solutions for our target sectors and our strong references. Not only is there good growth in new customer revenue but also through existing customers extending their investment in IFS with additional users and new components.

Our partner ecosystem continues to develop strongly and there is also ongoing improvement in both our maintenance and support margin and consulting margin. We continue to seek further growth through acquisitions as we look to broaden our geographical coverage and to deepen our product functionality.

The ERP market remains strong. Industry analysts such as Gartner expect it to grow by 6 percent in 2016 and to accelerate slightly to 7 percent in 2017.

IFS continues to support an outlook that expects growth in both product revenue and EBIT.

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CHIEF EXECUTIVE SUMMARY STRONG LICENSE GROWTH IN SEASONALLY SLOW QUARTER

JULY–SEPTEMBER 2016 (THIRD QUARTER)

● License revenue amounted to SKr 176 million (Q3 '15: SKr 141 million),

an increase of 27 percent, currency adjusted.

● Maintenance revenue was SKr 317 million (Q3 '15: SKr 293 million),

an improvement of 11 percent, currency adjusted.

● Consulting revenue amounted to SKr 355 million (Q3 '15: SKr 335 million),

an increase of 7 percent, currency adjusted.

● Net revenue totaled SKr 860 million (Q3 '15: SKr 772 million),

an improvement of 13 percent, currency adjusted.

4

FINANCIAL AND OPERATIONAL HIGHLIGHTSSTRONG LICENSE GROWTH IN SEASONALLY SLOW QUARTER

JANUARY–SEPTEMBER 2016 (NINE MONTHS)

● License revenue amounted to SKr 468 million (YTD '15: SKr 437 million),

an increase of 11 percent, currency adjusted.

● Maintenance revenue was SKr 913 million (YTD '15: SKr 871 million),

an improvement of 8 percent, currency adjusted.

● Consulting revenue amounted to SKr 1,180 million (YTD '15: SKr 1,105 million),

an increase of 10 percent, currency adjusted.

● Net revenue totaled SKr 2,594 million (YTD '15: SKr 2,421 million),

an improvement of 10 percent, currency adjusted.

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FINANCIAL AND OPERATIONAL HIGHLIGHTSSTRONG LICENSE GROWTH IN SEASONALLY SLOW QUARTER

6

FINANCIAL OVERVIEWA GROWING BUSINESS

0

200

400

600

800

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 R12

LICENSES

0

350

700

1 050

1 400

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 R12

MAINTENANCE

800

1 000

1 200

1 400

1 600

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 R12

CONSULTING

20%

35%

45%

REVENUE MIX R12

License Maintenance Consulting

LICENSE SALES

● IFS continues to be selected thanks to its ability to deliver

solutions to its target sectors and global projects with a lower

cost of ownership than its larger competitors.

● IFS offers a flexible and modern solution that is easy to

implement, especially for businesses that need a reliable and

cost-effective solution in a dynamic and challenging market.

MAINTENANCE REVENUE

● Strong loyalty of customers who continue to contribute to the

future growth by extending their use of IFS Applications.

● Improving cost efficiencies from IFS’s global support initiative.

● ‘Churn’ in the customer base remains very low.

7

PRODUCT REVENUEA STRONG CUSTOMER BASE

0

500

1 000

1 500

2 000

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15R12

PRODUCT REVENUE

CONSULTING REVENUE

● As a trend, product revenue is set to grow faster than consulting revenue.

● Larger proportion of services being delivered from the partner ecosystem.

● Over time, customers will increasingly contract with partners, resulting in a slow down in

the growth of IFS delivered services revenue.

PARTNER PROGRAM—INCREASING MOMENTUM

● Offer customer choice and greater global reach for international projects.

● Create go-to-market alliances and thereby increase market penetration.

● New partners signed and deepened co-operation with existing ones such as Accenture.

● Offer greater business scalability and better manage peaks in demand.

8

CONSULTING REVENUEINCREASED PARTNERING ACROSS THE GROUP

MARKET OUTLOOK—THE ANALYSTS’ VIEW

Despite experiencing some headwind, the ERP market’s

performance remains solid. Industry analysts such as Gartner

have revised their estimates slightly downwards, with somewhat

lower expectations for the Western European market, in

particular the United Kingdom following the Brexit referendum.

The ERP market’s development is expected to grow by 6 percent

in 2016 and to accelerate a little to 7 percent in 2017.

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MARKET UPDATETHIRD QUARTER

INVEST IN A STRATEGY TO:

● Deliver global projects on time and on budget with a lower TCO.

● Focus on specific sectors that see sustained long-term investment.

● Work close with customers, to share ideas and have an ‘open’ customer-centric R&D

organization.

● Have an ‘open’ technology that seeks to enable customers to benefit from new

innovations and not aim to achieve ‘lock-in.’

● Grow the business organically and profitably, using the cash generated to undertake

complimentary M&A.

10

THE STRATEGY CONTINUESTO BE THE INTELLIGENT ALTERNATIVE

2009 2010 2011 2012 2013 2015 2016

LATINIFSDEFENCE

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CUSTOMER WINS IN THE PAST TWELVE MONTHS Aerospace and Defense

Sanken Overseas Teledyne Oil & Gas

Mahin Group Process Manufacturing Service Providers

Affinity Flying Training Services Skanska UK Telenot Electronic

Maurer Bronco Wine Company Anticimex

Babcock Marine Division VARD Group

Tomra Systems Moelven Industrier

Brugarolas APM Terminals Management

General Dynamics -

Information Systems &

Technology

VBMS Industrial Manufacturing

Morgan GRP Empire Teas Auto Windscreens

General Dynamics - Ordinance

and Tactical Systems (OTS)

VolkerWessels Telecom

AAR Supply Chain Newag

Evolution Idex énergies

Recaero VR Track

ACR II Aluminium Group

Cooperatief

Orion South

Instituto Butantan IP-Only Telecommunication

Networks Saab Energy and Utilities Aludium

Palimanan Jotun J Tomlinson

Terma Allinq

Aluminum Precision Products Prodomax Automation

LGC Lassila & Tikanoja

Asset Intensive Borås Energi och Miljö

Andersen Steel Robertson Fuel System

National Paints Holdings Medical & Pharmaceutical

Services BillerudKorsnäs Caruna

Anstee Ware Group Rol

New Pig Corporation Myanmar Industrial Port (MIP)

Hecla Mining Company Mälarenergi

ASMET spółka z ograniczoną

odpowiedzialnością

Roxtec International

Oxford Biomedica Niscayah Group

SSAB Europa MPK - Łódź Spółka

BRC Industrial (Saudi) RTI Remmele Engineering

PBI/Gordon Corporation Orbotech

Unimin Corporation Port of Duqm

Bugaboo Saueressig

Pukka Herbs Pirtek UK

Automotive Ragn-Sells Group IT

Callenberg Group Stahlwille Eduard Wille

Pukka Pies Reliance Comfort

AKO Group Satluj Jal Vidyut Nigam Ltd

(SJVNL)

Cappelen Holding

TC Thomas Consulting Richardson International RS Connect

Autohaus Jacob Fleischhauer SDIC Meizhouwan Power Co.

Chartco UTC CCS Manufacturing Polska Swedish Orphan Biovitrum

(SOBI)

Speed Wrench

CalsonicKansei North America Service Stream

Cincinnati Incorporated Völkl Sports

The Binding Site Group Spencer Technologies

Cauplas Statnett

Circor International Whirley Industries

Valeo Foods (Batchelors) Swedavia

Öhlins Racing Türksat Uydu Haberleşme

Kablo TV ve İşletme

DH Pace Company

Wingroup Volac International URB - Urbanismo de Recife

Rancon Automobiles Umeå Energi

EBARA International Corp.

Cryodynamics

Wren Living

W. M. Mendis Distilleries Wennstrom Fuel Systems

Runner Group Växjö Energi

Figeac Aéro Zero Zone

Warren Distribution Wilhelmsen Ships Service

Terex Advance Mixer High Tech General Dynamics - IS&T Oil and Gas

Whitford Xenex Disinfection Services

Zakład Metalowy Plast-Met Axis Communications

Hakama Bibby Offshore

Whitworths Other

Construction and Contracting Cimcorp

Huber BW Offshore Norway

Willamette Valley Company Foundation Garments

Arkon Prima Indonesia HIMA Paul Hildebrandt

IMI Critical Engineering Dixie Electric

William Grant & Sons Nhava Sheva (India) Gateway

Terminal CCN Yatirim Holding Jotron

IV Produkt Floatel International Retail and Wholesale Q-TC

H. Cegielski-Fabryka Pojazdow

Szynowych

Lab126 (A2Z Development

Center)

J & E Hall

Leopad AG Thames Holdings SII - Société pour l'informatique

industrielle HKC - Hala Ken Consulting Mafelec

Janoschka Kippenheim Maersk Supply Service

Bellman & Symfon Europe Sunshine Healthcare Lanka

Madic Particle Measuring Systems

JLA Group Petro Well Services

Plaček Thailand Institute of Nuclear

Techonology MCH Group Sartorius

Kosan Crisplant Rowan Companies

Rusta Tiga Pilar Sejahtera Food

Motrac Hydrauliek Sizewise Rentals

Leidos Innovations Wood Group Mustang Norway

Singer Sri Lanka Tubes International

NG Bailey Group Société Française Détecteurs

Infrarouges

Loram Maintenance of Way

Systembolaget Vektis

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STRONG UNDERLYING BUSINESSHIGHLY-COMPETITIVE CONTRACTS IN TARGET SECTORS

DH PACE INDUSTRIAL MANUFACTURING UNITED STATES

JOTUN PROCESS MANUFACTURING NORWAY

MADIC CONSTRUCTION AND CONTRACTING FRANCE

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OUTLOOK

FOR 2016, IFS EXPECTS

GROWTH IN BOTH

PRODUCT REVENUE AND EBIT.

COPYRIGHT © 2016 INDUSTRIAL AND FINANCIAL SYSTEMS, IFS AB. IFS AND ALL IFS PRODUCTS AND SERVICES NAMES ARE TRADEMARKS OF IFS. ALL

RIGHTS RESERVED. THIS DOCUMENT MAY CONTAIN STATEMENTS OF POSSIBLE FUTURE FUNCTIONALITY FOR IFS’S PRODUCTS AND TECHNOLOGY.

SUCH STATEMENTS ARE FOR INFORMATION PURPOSES ONLY AND SHOULD NOT BE INTERPRETED AS ANY COMMITMENT OR REPRESENTATION. THE

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

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