YEAR-END REPORT
JANUARY–DECEMBER 2014
Significant improvement in earnings
FINANCIAL AND OPERATIONAL HIGHLIGHTS
OCTOBER–DECEMBER 2014 (FOURTH QUARTER)
●
License revenue amounted to SKr 185 million (Q4 '13: SKr 207 million), a decrease of 15 percent currency adjusted.
●
Maintenance revenue was SKr 274 million (Q4 '13: SKr 234 million), an improvement of 11 percent currency adjusted.
●
Consulting revenue amounted to SKr 402 million (Q4 '13: SKr 337 million), an increase of 14 percent currency adjusted.
●
Net revenue totaled SKr 867 million (Q4 '13: SKr 782 million), an improvement of 5 percent currency adjusted.
●
Adjusted EBITDA was SKr 135 million (Q4 '13: SKr 126 million). EBIT amounted to SKr 117 million (Q4 '13: SKr 162 million).
●
Cash flow after investments was SKr 97 million (Q4 '13: SKr 74 million).
●
Earnings per share after full dilution amounted to SKr 4.32 (Q4 '13: SKr 4.99).
JANUARY–DECEMBER 2014 (FULL YEAR)
●
License revenue amounted to SKr 558 million ('13: SKr 535 million), an increase of 1 percent currency adjusted.
●
Maintenance revenue was SKr 1,037 million ('13: SKr 902 million), an improvement of 11 percent currency adjusted.
●
Consulting revenue amounted to SKr 1,427 million ('13: SKr 1,256 million), an increase of 11 percent currency adjusted.
●
Net revenue totaled SKr 3,034 million ('13: SKr 2,704 million), an improvement of 9 percent currency adjusted.
●
Adjusted EBITDA was SKr 365 million ('13: SKr 279 million). EBIT amounted to SKr 275 million ('13: SKr 202 million).
●
Cash flow after investments was SKr 269 million ('13: SKr 122 million).
●
Earnings per share after full dilution amounted to SKr 8.45 ('13: SKr 5.72).
●
Proposed dividend for 2014 amounting to SKr 4.50 per share ('13: SKr 3.50).
OUTLOOK
For 2015, IFS expects good growth in both license revenue and EBIT.
INQUIRIES
IFS
Alastair Sorbie, President & CEO
Paul Smith, Chief Financial Officer
Frédéric Guigues, Investor Relations
HUDSON SANDLER – Financial & Corporate Communications
Tel: +44 1494 42 89 00
Tel: +44 1494 42 89 00
Tel: +46 8 58 78 45 00
Andrew Hayes / Wendy Baker
INDUSTRIAL AND FINANCIAL SYSTEMS, IFS AB (publ.)
Tel: +44 207 796 41 33
YEAR-END REPORT 2014
CHIEF EXECUTIVE SUMMARY
Significant improvement in earnings
Net revenue for the year increased by 9 percent, currency
adjusted, with license revenue being affected in the last
quarter by the timing of deals that moved into 2015. Even
though it meant we did not achieve the license-growth target
for the year, it points to the fact that we are targeting
increasingly larger deals, by their nature the timing of which is
harder to predict. To a limited degree there has also been an
impact resulting from the drop in oil price. This may reduce
future investment in a number of oil and gas related industries
but the overall impact is expected to be limited due to our
broad and strong presence in other sectors—infrastructure,
transportation, project-based industries, manufacturing, and
service management—most of which are likely to benefit from a
lower oil price. In particular, our execution in service
management has improved considerably, with Gartner now
rating us as a leader in its Magic Quadrant for Field Service
Management.
Maintenance revenue for the year increased by
11 percent, currency adjusted, resulting from license sales and
strong customer loyalty, the ongoing development of which
remains a priority. Customers extending their use of IFS
Applications within their global organizations will continue to
contribute to our future growth. The maintenance margin
increased to 75 percent ('13: 72 percent) resulting from
investments in improving efficiency within our global support
operation.
Consulting revenue for the year increased by 11 percent,
currency adjusted, with a steadily larger proportion of services
being delivered from our growing partner ecosystem. We
continue to invest in our ecosystem to offer customer choice,
create go-to-market alliances, and increase scalability within
our business. We added a number of new strategic partners in
2014 that have contributed to our global implementation
capability. Despite the higher proportion of services being
delivered by partners, the consulting margin increased to
20 percent ('13: 19 percent).
2
We continue to see a steady increase of interest in clouddeployed systems, especially where IFS Applications is offered
in partnership with Microsoft on their Azure Cloud. We cater for
all interests, whether off or on premise, and in the latter choice
we launched ‘IFS in a Box’ in co-operation with Oracle to allow
a simplified and even easier option to deploy our solution.
During the year, companies in need of consolidating their
business solution or expanding its functionality moved forward
with their investments and the gradual improvement of the
buying environment seen over the last couple of years
continued. However, based on preliminary figures, the ERP
market as a whole did not perform in 2014 as well as originally
projected and grew by around 4 percent. Industry analyst firms
such as Gartner expect this trend of rather slight overall growth
to persist in 2015.
We expect 2015 will be a year when we will see further
benefit from our investment in sales and marketing, which is
continuing to gain us recognition as being the intelligent
alternative to the global giants for internationally-deployed
solutions delivered in our target markets. Also in 2015 we will
have our release to market of our latest version of
IFS Applications; in this release we have a number of exciting
new features and an enhanced architecture designed to better
enable our partners to work with our product. On the back of
our strong cash flow and finances we are actively searching the
market for acquisitions we believe will strengthen our portfolio
and create value. We expect to see good growth in both license
revenue and EBIT in 2015.
Alastair Sorbie
PRESIDENT & CEO
Industrial and Financial Systems, IFS AB (publ.) | Registration number 556122-0996
YEAR-END REPORT 2014
SIGNIFICANT EVENTS DURING THE QUARTER
A number of significant agreements were signed in the quarter, including:
Aerospace and Defense
WNA
Advanced Integration Technology
Zeon Advanced Polymix Co.
Babcock Marine Division
Oil and Gas
Forsvaret / Norwegian Armed Forces
British Engines
Saab
BW Offshore Norway
Asset Intensive
Ceona Services
Forest-Papír
Mermaid Marine Australia
Automotive
Rosenberg WorleyParsons
Huf Hülsbeck & Fürst
Shawcor
Schlemmer
Process Manufacturing
Toyota Lanka
American Iron & Metal Company
Volvo Lastvagnar
Cisbio Bioassays
Volvohandelns Utvecklings AB
EP Minerals
Construction and Contracting
Grecian Delight Foods
Serimax Holdings
Legacy Pharmaceuticals International
Systra
Marabu
Energy and Utilities
Omega Protein
CYPC Jinsha River Hydropower
Prince Minerals
Mørenett
Probiotics International
SDIC Qinzhou Electric Power Co.
Rovese
TrønderEnergi Kraft
William Grant & Sons
High Tech
Retail
Fr. Sauter
Gina Tricot
Habia Cable
Midcounties Co-operative
Integrated Microwave Technologies (IMT)
Oriflame Cosmetics
NEC Corporation
Swedish Orphan Biovitrum (SOBI)
Trüb
Service Providers
Young Innovations
Advanced Technology Services
Industrial Manufacturing
Dataprev
Avanco
Eltel Networks Infranet
Baier + Köppel
Loomis Sverige
Dankotuwa Porcelain
PHS Group
Hypnos
SSI Services
Jamestown Metal Marine Sales
United Subcontractors
Moelven Industrier
Wilhelmsen Ships Service
Nidec Minster Corporation
Other
PIPE Sistemas Tubulares
Beijing Mass Transit Railway Operation Corp.
Robertson Fuel System
Evry
Stolle Machinery Company
SEFI Transmission
Tatsuno Engineering & Service Co.
Toronto Transit Commission
V-Zug
Industrial and Financial Systems, IFS AB (publ.) | Registration number 556122-0996
3
YEAR-END REPORT 2014
Launch of IFS Academy to certify partners
IFS partners with Deloitte Consulting in South Korea
October 7. IFS launched IFS Academy—an initiative to deliver
training for technicians, developers and consultants working
with IFS Applications. The aim of IFS Academy is to equip
partners with the skills and knowledge they need to ensure
customers realize the most value from IFS Applications.
December 3. IFS announced that it has signed an agreement
with Deloitte Consulting, making the professional services firm
its strategic partner for the deployment of IFS Applications in
the oil & gas, construction, EPC and project-based
manufacturing industries in South Korea. IFS is thereby
acquiring greater commercial reach and additional
implementation resources to meet the increase in demand.
IFS named a ‘Leader’ in two Gartner Magic Quadrants
On November 26, Gartner released its Magic Quadrant for
Single-Instance ERP for Product-Centric Midmarket Companies,
in which IFS was named as a leader for the second consecutive
year, improving its position on the ‘completeness of vision’ and
‘ability to execute’ axis. On December 22, IFS was again
recognized as a leader, this time in the Gartner Magic
Quadrant for Field Service Management.
4
Industrial and Financial Systems, IFS AB (publ.) | Registration number 556122-0996
YEAR-END REPORT 2014
FINANCIAL OVERVIEW
SKr million
Q4
2014
Q4
2013
Full year
2014
Full year
2013
Net revenue
whereof
License revenue
Maintenance and support revenue
Consulting revenue
867
782
3,034
2,704
185
274
402
207
234
337
558
1,037
1,427
535
902
1,256
Gross earnings
whereof
Licenses
Maintenance and support
Consulting
469
439
1,556
1,388
177
198
94
196
175
67
505
773
278
495
648
241
EBIT
EBIT margin
117
13%
162
21%
275
9%
202
7%
Earnings before tax
Earnings for the period
119
107
160
126
258
211
184
143
97
74
269
122
Cash flow after investment operations
All comments refer to figures for the quarter unless otherwise stated.
Revenue
Earnings
Net revenue amounted to SKr 867 million (782), an increase of
5 percent, currency adjusted. Europe North and Americas
contributed most to the increase, primarily through higher
consulting and maintenance revenue. License revenue
decreased by 15 percent, currency adjusted, due to lower sales
in Europe Central and Asia, Africa and Pacific as a result of the
timing on some deals.
Adjusted EBITDA increased to SKr 135 million (126) whereas
EBIT decreased to SKr 117 million (162).
Earnings before tax amounted to SKr 119 million (160).
Net financial items amounted to SKr 2 million (-2), whereof
SKr 3 million (0) pertain to exchange gains/losses. Interest
expenses were SKr -2 million (-3).
Earnings for the period amounted to SKr 107 million
(126).
Costs
Total costs amounted to SKr 750 million (620), an increase of
14 percent currency adjusted. The total costs in the fourth
quarter in the previous year were positively affected by a oneoff item of SKr 47 million relating to the reorganization and
acquisition of IFS Defence. The increase in total costs adjusted
for this one-off item was 5 percent, currency adjusted. Direct
costs increased by 2 percent, currency adjusted, as a result of
third-party costs relating to the continued transition towards a
higher degree of partners implementing IFS Applications.
Indirect costs, excluding the one-off item mentioned above,
increased by 6 percent, currency adjusted. The increase is
mainly related to higher personnel costs, due to inflation and
the continued investment in the sales and marketing and R&D
departments.
Cash flow and investments
Cash flow after investments amounted to SKr 97 million (74).
The change in working capital amounted to SKr 4 million (34).
Investments amounted to SKr -71 million (-124), whereof
capitalized product development was SKr -59 million (-48).
Cash and cash equivalents totaled SKr 489 million (354)
at the end of the period. Available liquid assets, including
unutilized lines of credit, amounted to SKr 859 million (657).
Liabilities to credit institutions were SKr 130 million (197) at
the end of the period.
OUTLOOK
For 2015, IFS expects good growth in both license revenue and
EBIT.
Industrial and Financial Systems, IFS AB (publ.) | Registration number 556122-0996
5
YEAR-END REPORT 2014
OTHER INFORMATION
Consolidated statement of cash flows
SKr million
Application of IFRS 11 “Joint Arrangements”
As of January 1, 2014, IFRS 11, “Joint Arrangements” joint
ventures must be consolidated according to the equity method.
Previously, assets, liabilities, revenue, and expenses were
recognized on the basis of the party’s interest according to the
proportional method. As the new principles affect reporting
retrospectively, the new standard has an impact on the
consolidation of the joint venture, IFS Defence Ltd. The holding
was restructured on December 31, 2013. Thereafter, neither
shares in IFS Defence Ltd nor earnings from shares in IFS
Defence Ltd are included. This change of principle has no
impact on net income or equity.
The effect of the change in accounting principle on
holdings in joint ventures is detailed in the following tables.
Consolidated income statement
SKr million
Q4
2013
Full year
2013
Net revenue
Direct expenses
-8
2
-36
19
Gross earnings
-6
-17
1
-55
58
10
-54
59
EBIT
-2
-2
Financing expenses and other financial
items, net
2
2
Earnings before tax
0
0
Product development, sales, marketing, and
administration expenses
Other operating revenue/expenses, net
Result from joint venture
Tax
Earnings for the period
-
-
0
0
Consolidated balance sheet
SKr million
Dec. 31
2013
Intangible fixed assets
Tangible fixed assets
Participation in joint venture
Deferred tax receivables
-
Non-current assets
-
Current assets
-
Assets
-
Shareholders' equity
Non-current liabilities
Current liabilities
-
Equity and liabilities
-
6
Cash flow from operations before change in
working capital
Change in working capital
Q4
2013
Full year
2013
5
8
8
18
13
26
-9
2
Cash flow for the period
52
63
Cash and cash equivalents at the beginning
of the period
-51
-63
Exchange rate differences in cash and cash
equivalents
-1
0
Cash and cash equivalents at the end of
the period
0
0
Cash flow from current operations
Cash flow after investment operations
Parent Company
Net revenue amounted to SKr 4 million (5), with earnings of
SKr 121 million (4) before tax. Available liquid assets, including
unutilized lines of credit, amounted to SKr 587 million (424).
During the quarter, 52,284 A shares were converted into
the same number of B shares. At the end of the period,
200,000 B shares were in the company’s own custody.
Legal dispute—Final award
As reported previously, IFS has since 2002 been involved in a
legal dispute concerning the partly-owned company IFS Sri
Lanka. In October 2012, the counterparty in the dispute
initiated arbitration proceedings against IFS with the Singapore
International Arbitration Centre, on the basis of a shareholders’
agreement between the parties.
In the arbitration proceedings, the counterparty initially
claimed compensation for damages in the amount of
US$ 76 million including interest. However, the claim was later
revised upwards. The revised claim was unspecified but could
be understood to mean that IFS’s half-owned company IFS Sri
Lanka be paid an amount in the range of US$ 237–535 million
including interest, and that an unspecified amount be
distributed as dividends to the owners.
Since the beginning of the legal dispute, IFS has deemed
the counterparty’s allegations as completely unsubstantiated
and without any merit and the claims raised in the arbitration
proceedings have been rejected by IFS in their entirety as being
frivolous and completely unmeritorious and unfounded.
The arbitral tribunal’s Final Award was received by IFS on
June 20, 2014. In the Final Award, the counterparty’s claims
have been completely rejected and it is declared that IFS did
not breach the shareholders’ agreement as alleged by the
counterparty. The counterparty has also been ordered to pay
for the main part of the fees of the arbitral tribunal and a
substantial portion of IFS’s legal costs in the proceedings.
Industrial and Financial Systems, IFS AB (publ.) | Registration number 556122-0996
YEAR-END REPORT 2014
Pensions
Dividend
The movements arising on the revaluation of defined-benefit
pension plans are booked in ‘Other comprehensive income.’
The downward revision is mainly due to the reduction in the
discount rate applied (in Sweden, from 4.6 percent to
3.4 percent in the year). The outcome for 2014 indicates a
SKr 100 million reduction in the actuarial valuation, whereof
SKr -91 million (+49) in Sweden and SKr -9 million (-5) in
Norway.
The Board of Directors is proposing a dividend for 2014
amounting to SKr 4.50 per share ('13: SKr 3.50).
The Annual Report for 2014 will be available on IFS’s website,
www.ifsworld.com, and at the company’s headquarters no later
than March 4, 2015. There will be no hard-copy version of the
annual report for 2014.
Annual general meeting of shareholders
Miscellaneous
The annual general meeting of shareholders for 2015 will be
held on March 25, 2015 in Stockholm, Sweden. The board of
directors will submit the notification convening the annual
general meeting on February 25, 2015, at the latest.
Annual report
The report for the first quarter of 2015 will be published on
April 22, 2015.
Linköping, February 6, 2015
The Board of Directors
Audit report
This report has not been subject to review by the company’s auditors.
Industrial and Financial Systems, IFS AB (publ.) | Registration number 556122-0996
7
YEAR-END REPORT 2014
CONSOLIDATED INCOME STATEMENT
SKr million
Q4
2014
Q4
2013
Full year
2014
Full year
2013
License revenue
Maintenance and support revenue
Consulting revenue
Other revenue
185
274
402
6
207
234
337
4
558
1,037
1,427
12
535
902
1,256
11
Net revenue
867
782
3,034
2,704
License expenses
Maintenance and support expenses
Consulting expenses
Other expenses
-8
-76
-308
-6
-11
-59
-270
-3
-53
-264
-1,149
-12
-40
-254
-1,015
-7
Direct expenses
-398
-343
-1,478
-1,316
Gross earnings
469
439
1,556
1,388
Product development expenses
Sales and marketing expenses
Administration expenses
Other operating revenue*
Other operating expenses
Result from joint venture
-75
-181
-85
1
-12
-
-69
-179
-77
6
-16
58
-303
-635
-312
4
-35
-
-260
-591
-289
16
-121
59
Indirect expenses, net
-352
-277
-1,281
-1,186
EBIT
117
162
275
202
1
-2
3
1
-3
0
1
-8
-10
0
-10
-8
119
160
258
184
Result from associated companies
Interest expenses
Other financial items
Earnings before tax
Tax
-12
-34
-47
-41
Earnings for the period
107
126
211
143
Earnings for the period are allocated as follows:
Owners of the Parent Company (SKr million)
Non-controlling interests (SKr million)
109
-2
126
0
213
-2
144
-1
4.40
5.09
8.60
5.81
4.32
4.99
8.45
5.72
24,772
25,177
24,772
25,240
24,772
25,192
24,772
25,245
24,772
25,177
24,772
25,202
24,772
25,192
24,772
25,196
Earnings per share pertaining to Parent Company
shareholders (SKr)
Earnings per share pertaining to Parent Company
shareholders, after full dilution (SKr)
Number of shares (thousands)
At the end of the period
At the end of the period, after full dilution
Average for the period
Average for the period, after full dilution
* Other operating revenue includes exchange rate differences (net) and other operating revenue.
8
Industrial and Financial Systems, IFS AB (publ.) | Registration number 556122-0996
YEAR-END REPORT 2014
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
SKr million
Q4
2014
Earnings for the period
Q4
2013
Full year
2014
Full year
2013
107
126
211
143
-100
22
-100
44
-
-8
-
5
Items that can later be reversed in the income statement
Exchange rate differences
40
11
106
-4
Other comprehensive income for the period, net of
tax
-60
25
6
45
Total comprehensive income for the period
47
151
217
188
Total comprehensive income allocated as follows:
Owners of the Parent Company
Non-controlling interests
48
-1
151
0
219
-2
189
-1
Other comprehensive income
Items not to be reversed in the income statement
Revaluation of defined-benefit pension plans
Revaluation of defined-benefit pension plans
related to joint venture
Industrial and Financial Systems, IFS AB (publ.) | Registration number 556122-0996
9
YEAR-END REPORT 2014
CONSOLIDATED BALANCE SHEET
SKr million
Dec. 31
2014
Dec. 31
2013
ASSETS
Capitalized expenditure for product development
Goodwill
Other intangible fixed assets
Intangible fixed assets
608
452
84
594
398
111
1,144
1,103
Tangible fixed assets
115
96
Participations in associated companies
Deferred tax receivables
Other long-term receivables and other participations
4
146
28
3
132
23
Financial fixed assets
178
158
1,437
1,357
790
312
489
740
238
354
Current assets
1,591
1,332
Assets
3,028
2,689
499
694
169
499
701
37
1,362
1,237
Non-current assets
Accounts receivable
Other receivables
Cash and cash equivalents
EQUITY AND LIABILITIES
Share capital
Other capital contributed
Accumulated earnings, including earnings for the period and other reserves
Shareholders' equity pertaining to Parent Company shareholders
Non-controlling interests
-2
0
1,360
1,237
Liabilities to credit institutions
Pension obligations
Other provisions and other liabilities
0
168
14
0
39
52
Non-current liabilities
182
91
Accounts payable
Liabilities to credit institutions
Other provisions and other liabilities
127
130
1,229
111
197
1,053
Current liabilities
1,486
1,361
Liabilities
1,668
1,452
Equity and liabilities
3,028
2,689
903
17
721
21
Shareholders' equity
Pledged assets
Contingent liabilities
10
Industrial and Financial Systems, IFS AB (publ.) | Registration number 556122-0996
YEAR-END REPORT 2014
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Pertaining to parent company shareholders
SKr, million
Share
capital
Other
contributed
capital
Reserves
Profit
brought
forward
Total
Noncontrolling
interests
Total
stockholders'
equity
508
701
-90
17
1,136
1
1,137
-9
2
-2
-
-4
-
192
-87
9
188
2
-87
-2
0
-1
-
187
2
-87
-2
0
Closing balance December 31, 2013
499
701
-94
131
1,237
0
1,237
Opening balance January 1, 2014
Total comprehensive income for the period
Share-based payments
Dividend
Repurchase of call options
499
-
701
4
-11
-94
106
-
131
113
-87
-
1,237
219
4
-87
-11
0
-2
-
1,237
217
4
-87
-11
Closing balance December 31, 2014
499
694
12
157
1,362
-2
1,360
Opening balance January 1, 2013
Total comprehensive income for the period
Share-based payments
Dividend
Repurchase of call options
Cancellation of repurchased shares
CONSOLIDATED STATEMENT OF CASH FLOWS
SKr million
Q4
2014
Q4
2013
Full year
2014
Full year
2013
Earnings before tax
Adjustments for items not included in the cash flow
119
45
160
4
258
192
184
152
Cash flow from operations before change in working
capital
164
164
450
336
Change in working capital
4
34
51
70
168
198
501
406
Acquisition of subsidiaries
Acquisition of intangible fixed assets
Cash flow from other investment operations
0
-56
-15
-107
-17
0
-192
-40
-242
-42
Cash flow after investment operations
97
74
269
122
Dividend distributed
Cash flow from other financing operations
1
60
-87
-77
-87
74
98
134
105
109
Cash and cash equivalents at the beginning of the period
Exchange rate differences in cash and cash equivalents
379
12
226
-6
354
30
253
-8
Cash and cash equivalents at the end of the period
489
354
489
354
Cash flow from current operations
Cash flow for the period
Industrial and Financial Systems, IFS AB (publ.) | Registration number 556122-0996
11
YEAR-END REPORT 2014
CONSOLIDATED ORGANIC NET REVENUE AND OPERATING EXPENSES
SKr, million
Q4
Actual
2014
Full year
Translation Structural
effect
changes
Adjusted
2014
Actual
2013
Actual
2014
Translation Structural
effect
changes
Adjusted
2014
Actual
2013
NET REVENUE
License revenue
Maintenance and support revenue
185
274
-10
-16
-4
-6
171
252
207
234
558
1,037
-19
-35
-10
-22
529
980
535
902
Total product revenue
459
-26
-10
423
441
1,595
-54
-32
1,509
1,437
Consulting revenue
Net revenue
(including other revenue)
402
-17
-6
379
337
1,427
-35
-25
1,367
1,256
867
-43
-15
809
782
3,034
-89
-58
2,887
2,704
Operating expenses
750
-40
-14
696
620
2,759
-81
-48
2,630
2,502
EBIT
117
-3
-1
113
162
275
-8
-10
257
202
-12
-1
0
-2
-
-1
0
-14
43
0
-7
-1
-24
-1
0
-3
-
-2
0
-27
43
0
-14
-4
1
0
-
-
-4
1
-2
8
-15
2
1
-
-
-14
2
-96
14
-45
-
-
-45
-39
-175
-
-
-175
-153
-9
-8
59
1
1
-
-
-8
-7
59
-8
-7
48
-38
-29
190
2
1
-
-1
-
-36
-29
190
-31
-28
188
Adjusted operating expenses
732
-41
-14
677
656
2,669
-81
-49
2,539
2,425
Adjusted EBITDA
Adjusted EBITDA/net revenue
135
16%
-2
-1
132
16%
126
16%
365
12%
-8
-9
348
12%
279
10%
OPERATING EXPENSES
Other operating income/costs net
Capital gains/losses
Exchange rate gains/losses
Restructuring costs/redundancy
costs
Reversal of restructuring costs
Amortization of capitalized product
development
Amortization of acquired
intangibles
Other amortization/depreciation
Capitalized product development
12
Industrial and Financial Systems, IFS AB (publ.) | Registration number 556122-0996
YEAR-END REPORT 2014
CONSOLIDATED SEGMENT REPORTING, FOURTH QUARTER
Europe North
2014
2013
SKr million
Europe West
2014
2013
Europe Central
2014
2013
License revenue
Maintenance and support revenue
Consulting revenue
Other revenue
46
95
184
4
40
85
158
0
40
59
56
2
34
46
45
3
32
26
52
0
53
23
40
0
Total external revenue
329
283
157
128
110
116
6
5
30
16
13
9
Total revenue
335
288
187
144
123
125
External operating expenses
Internal operating expenses
Other operating items, net
-195
-32
-1
-159
-23
2
-115
-11
-1
-81
-7
61
-74
-6
0
-78
-8
3
Operating expenses
-228
-180
-127
-27
-80
-83
EBIT, undistributed
107
108
60
117
43
42
Numbers of employees*
Average for the period
At the end of the period
464
465
446
437
328
327
321
323
231
229
198
197
Internal revenue
Europe East
2014
2013
SKr million
Americas
2014
2013
Africa, Asia, and Pacific
2014
2013
License revenue
Maintenance and support revenue
Consulting revenue
Other revenue
8
19
20
1
5
16
22
0
40
56
68
1
39
44
52
0
19
19
25
2
35
19
19
1
Total external revenue
74
48
43
165
135
65
Internal revenue
5
4
15
13
6
2
Total revenue
53
47
180
148
71
76
External operating expenses
Internal operating expenses
Other operating items, net
-43
-2
-10
-38
0
-12
-118
-7
0
-101
-4
0
-59
-3
-2
-58
-2
-1
Operating expenses
-55
-50
-125
-105
-64
-61
-2
-3
55
43
7
15
209
208
226
228
278
280
283
283
264
264
252
255
EBIT, undistributed
Numbers of employees
Average for the period
At the end of the period
Corporate items **
2014
2013
SKr million
License revenue
Maintenance and support revenue
Consulting revenue
Other revenue
Total external revenue
0
0
-3
-4
2014
GROUP
2013
1
1
1
0
185
274
402
6
207
234
337
4
782
-7
3
867
Internal revenue
-75
-49
-
-
Total revenue
-82
-46
867
782
-135
61
3
-153
44
-5
-739
-11
-668
48
Operating expenses
-71
-114
-750
-620
EBIT, undistributed
-153
-160
117
162
Numbers of employees
Average for the period
At the end of the period
925
934
886
893
2,699
2,707
2,612
2,616
External operating expenses
Internal operating expenses
Other operating items, net
* Employees previously reported in the segment Defense are included in the financial statements in Europe West.
** Undistributed corporate revenue and expenses, including eliminations.
Industrial and Financial Systems, IFS AB (publ.) | Registration number 556122-0996
13
YEAR-END REPORT 2014
CONSOLIDATED SEGMENT REPORTING, FULL YEAR
Europe North
2014
2013
SKr million
License revenue
Maintenance and support revenue
Consulting revenue
Other revenue
Europe West
2014
2013
Europe Central
2014
2013
149
361
649
5
140
343
579
1
124
224
188
3
104
174
152
6
61
98
178
2
66
87
145
1
1,164
1,063
539
436
339
299
21
20
89
51
36
42
1,185
1,083
628
487
375
341
External operating expenses
Internal operating expenses
Other operating items, net
-719
-105
-2
-653
-91
-42
-415
-40
-10
-318
-34
57
-269
-24
-1
-244
-21
-6
Operating expenses
-826
-786
-465
-295
-294
-271
EBIT, undistributed
359
297
163
192
81
70
Numbers of employees*
Average for the period
At the end of the period
452
465
479
437
327
327
328
323
212
229
198
197
Total external revenue
Internal revenue
Total revenue
Europe East
2014
2013
SKr million
License revenue
Maintenance and support revenue
Consulting revenue
Other revenue
Total external revenue
Americas
2014
2013
Africa, Asia, and Pacific
2014
2013
29
66
74
2
26
63
65
0
129
205
243
1
120
172
225
0
66
83
98
3
78
61
87
2
228
171
154
578
517
250
Internal revenue
21
17
58
58
24
17
Total revenue
192
171
636
575
274
245
External operating expenses
Internal operating expenses
Other operating items, net
-163
-3
-13
-171
-1
-20
-435
-29
7
-374
-33
0
-211
-11
-4
-183
-18
-6
Operating expenses
-179
-192
-457
-407
-226
-207
13
-21
179
168
48
38
215
208
248
228
281
280
283
283
257
264
262
255
EBIT, undistributed
Numbers of employees
Average for the period
At the end of the period
Corporate items **
2014
2013
SKr million
License revenue
Maintenance and support revenue
Consulting revenue
Other revenue
Total external revenue
0
0
-3
-4
2014
GROUP
2013
1
2
3
1
558
1,037
1,427
12
535
902
1,256
11
2,704
-7
7
3,034
Internal revenue
-249
-205
-
-
Total revenue
-256
-198
3,034
2,704
External operating expenses
Internal operating expenses
Other operating items, net
-516
212
-8
-513
198
-29
-2,728
-31
-2,456
-46
Operating expenses
-312
-344
-2,759
-2,502
EBIT, undistributed
-568
-542
275
202
Numbers of employees
Average for the period
At the end of the period
901
934
890
893
2,645
2,707
2,688
2,616
* Employees previously reported in the segment Defense are included in the financial statements in Europe West.
** Undistributed corporate revenue and expenses, including eliminations.
14
Industrial and Financial Systems, IFS AB (publ.) | Registration number 556122-0996
YEAR-END REPORT 2014
INCOME STATEMENT OF THE PARENT COMPANY
SKr million
Q4
2014
Q4
2013
Full year
2014
Full year
2013
Net revenue
Administration expenses
Other operating revenue
4
-6
0
5
-10
-
19
-33
-
22
-40
-
EBIT
-2
-5
-14
-18
Result from participations in subsidiaries
Financial revenue
Financial expenses
118
14
-9
0
14
-5
118
58
-38
0
58
-23
Earnings before tax
121
4
124
17
-13
-1
-14
-4
108
3
110
13
Tax
Earnings for the period
BALANCE SHEET OF THE PARENT COMPANY
SKr million
Dec. 31
2014
Dec. 31
2013
ASSETS
Participations in subsidiaries
Deferred tax receivables
Receivables in subsidiaries
Other long-term receivables and other participations
994
0
57
2
992
10
73
2
Financial fixed assets
1,053
1,077
Non-current assets
1,053
1,077
851
6
217
867
10
121
Current assets
1,074
998
Assets
2,127
2,075
499
573
476
499
573
461
1,548
1,533
Provisions for pensions and similar commitments
7
7
Deferred tax liabilities
3
-
Receivables in subsidiaries
Prepaid expenses and accrued income
Cash and cash equivalents
EQUITY AND LIABILITIES
Share capital
Statutory reserve
Retained earnings, including earnings for the period and share premium reserve
Shareholders' equity
Non-current liabilities
10
7
Liabilities to credit institutions
Liabilities to subsidiaries
Other liabilities
130
409
30
197
312
26
Current liabilities
569
535
2,127
2,075
Shareholders' equity and liabilities
Industrial and Financial Systems, IFS AB (publ.) | Registration number 556122-0996
15
YEAR-END REPORT 2014
OUTSTANDING SHARES
Series A
Series B
TOTAL
Number of shares on January 1, 2014
Conversion of series-A shares into series-B shares
1,262,445
-178,342
23,709,385
178,342
24,971,830
-
Number of shares on December 31, 2014
1,084,103
23,887,727
24,971,830
-
-200,000
-200,000
1,084,103
1,084,103
23,687,727
2,368,773
24,771,830
3,452,876
Repurchase of shares, in own custody
Number of outstanding shares on December 31, 2014
Number of voting rights on December 31, 2014
Additional shares after full dilution
Number of shares on December 31, 2014 after full dilution
16
-
405,468
405,468
1,084,103
24,093,195
25,177,298
Industrial and Financial Systems, IFS AB (publ.) | Registration number 556122-0996
YEAR-END REPORT 2014
KEY FIGURES FOR THE GROUP
Q4
2014
Revenue indicator
Net revenue per employee
Expense and expenditure indicators
Product development expenses/net revenue
Sales and marketing expenses/net revenue
Administration expenses/net revenue
Amortization and depreciation
of which amortization of capitalized product
development expenditure
Capitalized product development expenditure
Margin indicators
License margin
Maintenance and support margin
Consulting margin
Gross margin
EBIT margin
Earnings margin
Return on average operating capital
Capital indicators
Equity/assets ratio
Accounts receivable (average 12 months)/
net revenue (rolling 12 months)
Interest-bearing liabilities
Liquidity indicators
Net liquidity
Debt/equity ratio
Q4
2013
Full year
2014
Full year
2013
SKr, '000
321
299
1,147
1,006
%
9%
21%
10%
-62
9%
23%
10%
-54
10%
21%
10%
-242
10%
22%
11%
-212
-45
59
-39
48
-175
190
-153
188
%
96%
72%
23%
54%
13%
14%
10%
95%
75%
20%
56%
21%
20%
15%
91%
75%
20%
51%
9%
9%
24%
93%
72%
19%
51%
7%
7%
19%
%
45%
46%
45%
46%
%
18%
298
18%
236
18%
298
19%
236
359
0.2
157
0.2
359
0.2
157
0.2
2,699
2,707
2,612
2,616
2,645
2,707
2,688
2,616
%
%
SKr, M
SKr, M
SKr, M
%
%
%
%
%
%
SKr, M
SKr, M
times
Employees
Average for the period
At the end of the period
DEFINITIONS
adjusted EBITDA. EBIT before depreciation, net of capitalized
product development and adjusted for non-recurring items.
available assets. Cash and cash equivalents plus unutilized lines
of credit.
consulting margin. Consulting revenue minus consulting
expenses in relation to consulting revenue. In addition to
expenses related to sub-contracted consultants, consulting
expenses include mainly payroll expenses, travel
expenses, and office rental pertaining to personnel staffing
the Consulting service.
debt/equity ratio. Interest-bearing liabilities in relation to equity,
at the end of the period.
earnings margin. Earnings before tax in relation to net revenue.
equity/assets ratio. Equity in relation to total assets, at the end
of the period.
interest-bearing liabilities. Liabilities to credit institutions and
pension obligations.
license margin. License revenue minus license expenses in
relation to license revenue. License expenses include only
expenses related to partners and third-party suppliers.
maintenance and support margin. Maintenance and support
revenue minus maintenance and support expenses in
relation to maintenance and support revenue. In addition
to external expenses related to partners and third-party
suppliers, maintenance and support expenses include
mainly payroll expenses, travel expenses, and office rental
pertaining to personnel staffing the Maintenance and
Support service.
net liquidity. Cash and cash equivalents minus interest-bearing
liabilities to credit institutions, at the end of the period.
non-recurring items. Non-recurring items comprise capital gains
and losses, impairment losses, restructuring programs
(costs for phasing out operations and personnel
redundancy costs), and other costs with the character of
not being part of normal daily operations.
organic change. Year-on-year figures adjusted for currency
effects on consolidation as well as changes in structure.
return on average operating capital. EBIT in relation to average
operating capital. Operating capital refers to total assets,
excluding liquid assets, and other interest-bearing assets,
less total liabilities excluding interest-bearing liabilities.
Industrial and Financial Systems, IFS AB (publ.) | Registration number 556122-0996
17
YEAR-END REPORT 2014
FINANCIAL TREND FOR THE GROUP
SKr million
2014
Q4
2014
Q3
2014
Q2
2014
Q1
2013
Q4
2013
Q3
2013
Q2
2013
Q1
2012
Q4
2012
Q3
2012
Q2
2012
Q1
License revenue
Maintenance and support revenue
Consulting revenue
Other revenue
185
274
402
6
132
258
336
2
134
256
354
1
107
249
335
3
207
234
337
4
114
221
286
2
128
226
329
3
86
221
304
2
183
231
353
2
109
224
268
11
92
232
327
1
83
222
335
3
Net revenue
867
728
745
694
782
623
686
613
769
612
652
643
License expenses
Maintenance and support expenses
Consulting expenses
Other expenses
-8
-76
-308
-6
-13
-63
-276
-2
-15
-62
-288
-2
-17
-63
-277
-2
-11
-59
-270
-3
-7
-57
-224
-2
-13
-67
-265
1
-9
-71
-256
-3
-7
-71
-270
-1
-6
-67
-229
-5
-8
-72
-266
-1
-6
-71
-282
-3
Direct expenses
-398
-354
-367
-359
-343
-290
-344
-339
-349
-307
-347
-362
Gross earnings
469
374
378
335
439
333
342
274
420
305
305
281
Product development expenses
Sales and marketing expenses
Administration expenses
Other operating revenue
Other operating expenses
Result from joint venture
-75
-181
-85
1
-12
-
-79
-158
-70
1
-5
-
-78
-146
-78
1
-7
-
-71
-150
-79
1
-11
-
-69
-179
-77
6
-16
58
-61
-138
-71
7
-6
1
-66
-138
-72
1
-1
0
-64
-136
-69
2
-98
0
-72
-175
-69
39
-12
-
-72
-136
-66
2
-4
-
-65
-138
-68
-2
-5
-
-61
-137
-71
3
-2
-
Indirect expenses, net
-352
-311
-308
-310
-277
-268
-276
-365
-289
-276
-278
-268
EBIT
Result from participations in
associated companies
Interest expenses
Other financial items
117
63
70
25
162
65
66
-91
131
29
27
13
1
-2
3
-1
-2
-6
1
-2
-5
0
-2
-2
1
-3
0
0
-3
1
0
-2
-9
-1
-2
0
0
-2
1
0
-2
2
0
-2
-3
0
-2
-2
Earnings before tax
119
54
64
21
160
63
55
-94
130
29
22
9
Tax
Earnings for the period
Cash flow after investment operations
Number of employees at the end of the
period
-12
-13
-16
-6
-34
-14
-13
20
-36
-7
-7
-2
107
41
48
15
126
49
42
-74
94
22
15
7
97
9
30
133
74
-38
9
77
55
-28
-162
94
2,707
2,673
2,622
2,628
2,616
2,613
2,656
2,738
2,829
2,839
2,851
2,822
Values are adjusted to conform with new IFRS11 as of Q1 2013.
18
Industrial and Financial Systems, IFS AB (publ.) | Registration number 556122-0996
YEAR-END REPORT 2014
RISKS AND UNCERTAINTIES
In its operations, the IFS Group is exposed to certain risks that
can affect earnings to a greater or lesser extent. Apart from the
general concern about the economy and the political unrest in
North Africa, the Middle East, and Ukraine, the assessment is
that no new significant risks or uncertainties have arisen. For a
detailed account of risks and uncertainty factors, please see
the annual report for fiscal 2013.
ESTIMATES AND CRITICAL ASSUMPTIONS
To present the financial reports in accordance with the IFRS,
the management must make certain estimates and
assumptions that affect the application of the accounting
principles and the reported amounts pertaining to assets,
liabilities, revenue, and expenses. Actuals may differ from the
estimates and assumptions.
The estimates and assumptions are regularly reviewed.
Changes in estimates are reported in the period in which the
change is made if the change affects only that period, or in the
period in which the change is made and future periods if the
change affects both the current and future periods.
ACCOUNTING PRINCIPLES
This consolidated report has been prepared in accordance with
International Financial Reporting Standards (IFRS) and the
interpretations issued by the International Financial Reporting
Interpretations Committee (IFRIC) as adopted by the EU. In
addition, recommendation RFR 1, Supplementary Accounting
Rules for Groups, of the Swedish Financial Reporting Board
(RFR) has been applied.
This interim report for the Group has been prepared in
accordance with the Swedish Annual Report Act and with
IAS 34, Interim Financial Reporting. For the Parent Company,
the Swedish Annual Report Act and RFR recommendation
RFR 2, Accounting for Legal Entities, have been applied.
As of January 1, 2014, the standard IFRS 11 “Joint
Arrangements” has come into force. According to this new
standard, an interest in a joint venture is to be recognized via
the equity method and the use of the proportional method is no
longer permitted. As a result of the new standard, accounting
principles for joint ventures have been changed compared with
the Group’s accounting principles in Annual Report 2013 and
in previously published interim reports in 2013. See section
“Other information” for the effect of the change in the
accounting principle.
For detailed information about the accounting principles:
see annual report 2013.
FINANCIAL INFORMATION 2015
Interim report January–March 2015
Interim report January–June 2015
Interim report January–September 2015
Year-end report 2015
Industrial and Financial Systems, IFS AB (publ.) | Registration number 556122-0996
April 22, 2015
July 21, 2015
October 22, 2015
February 2016
19
YEAR-END REPORT 2014
ABOUT IFS
IFS is a globally recognized leader in developing and delivering business software for enterprise resource planning (ERP), enterprise asset
management (EAM), and enterprise service management (ESM). IFS brings customers in targeted sectors closer to their business, helps them be
more agile, and enables them to profit from change. IFS is a public company (XSTO: IFS) that was founded in 1983 and currently has over
2,700 employees. IFS supports more than 2,400 customers worldwide from local offices and through partners in more than 60 countries.
www.IFSWORLD.com
IFS, BOX 1545, SE-581 15 LINKÖPING, SWEDEN
20
Industrial and Financial Systems, IFS AB (publ.) | Registration number 556122-0996