Improved margin and increased profit
Summary for January-September 2018
- Net sales MSEK 727 (608)
- Profit before tax MSEK 86,3 (69,5)
- Operating margin 12,9 % (12,4)
- Earnings per share before dilution SEK 2,25 (1,83)
- Cash flow from operations MSEK 149 (158)
Summary for July-September 2018
- Net sales MSEK 262 (220)
- Profit before tax MSEK 38,1 (15,3)
- Operating margin 15,6 % (8,1)
- Earnings per share before dilution SEK 0,96 (0,39)
- Cash flow from operations MSEK 28,8 (24,0)
- Refinancing of the acquisition credit facility
CEO’s comments
Vitec has had a strong third quarter. Recurring revenues rose 25 percent, of which more than 6 percentage points derived from organic growth. Consolidated earnings rose sharply, mainly due to an improvement in operating profits. However, approximately SEK 7 million of the earnings increase was attributable to an improved balance between capitalization and depreciation/amortization, and to allocation differences between 2017 and 2018, which consequently did not contribute to cash flow for the period.
Overall, earnings and sales improved in most parts of the Group, compared with the year-earlier period. Although there is no singular explanation for the earnings improvement, it is a consequence of diligent and focused efforts throughout the Group.
We are prioritizing growth in recurring revenues, to reduce our dependency on one-off license revenues and volatile service revenues. Hence, we can now confirm that organic growth in recurring revenues was slightly more than 6 percent. Organic growth in recurring revenues is also a greater contributor to earnings than other revenue types and has continued to provide solid support to our business model.
To appreciate the potential of continued acquisitions, we continuously survey the vertical software company market in the Nordic region. Our current impression is that range of available companies matching our acquisition criteria is somewhat greater than we had previously anticipated. The overall market is considerably larger for vertical software companies, including those that do not sufficiently match our criteria. In the last four years, Vitec accounts for 10 percent of the total number of acquired vertical software companies in the Nordic region. Acquisitions implemented by parties other than Vitec comprise many purchasers of different natures, from purely financial players to major industrial enterprises acquiring a supplier.
The number of active acquisition dialogs remains high and we are continuously allocating resources to stay abreast of and further advance these dialogs. Our financial position is solid, and we are well prepared for future acquisitions and envisage conditions conducive to continued acquisition-based growth. Supported by acquisition of well-established companies and a high percentage of recurring revenues, Vitec will stay the course and operate within several independent and specialized niche markets to achieve sustainable and profitable growth.
/Lars Stenlund, CEO
For more information, please contact
Patrik Fransson, Investor Relations patrik.fransson@vitec.se +46-76-9428597
Disclaimer
This information is of such a kind that Vitec Software Group AB (publ.) is legally required to disclose pursuant to the EU’s Market Abuse Regulation and the Swedish Securities Market Act. The information was submitted for publication at 08:30 CET on Thursday, October 18, 2018.
About Vitec
Vitec is market leader for Vertical Market Software in the Nordic region. We develop and deliver standard niche software. Vitec grows through acquisitions of well-managed and well-established software companies. The Group's overall processes together with the employees' in-depth knowledge of the customer's local market enables continuous improvement and innovation. Our 650 employees are based in Denmark, Finland, Norway and Sweden. Vitec is listed on Nasdaq Stockholm and had net sales of SEK 855 million in 2017. Find more at www.vitecsoftware.com.