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www.IFSWORLD.com
INTERIM REPORT Q2 2012
© 2012 IFS
JULY 19, 2012
Alastair Sorbie, CEO & Paul Smith, CFO
FINANCIAL AND OPERATIONAL HIGHLIGHTS
© 2012 IFS
STRONG FULL-YEAR OUTLOOK
INTERIM REPORT JANUARY–JUNE 2012
APRIL–JUNE 2012 (SECOND QUARTER)
License revenue amounted to SKr 92 million (Q2 '11: SKr 93 million), a decrease of 3 percent currency adjusted.
Maintenance revenue was SKr 232 million (Q2 '11: SKr 199 million), an improvement of 14 percent currency adjusted.
Consulting revenue amounted to SKr 327 million (Q2 '11: SKr 333 million), a decrease of 3 percent currency adjusted.
Net revenue was SKr 652 million (Q2 '11: SKr 628 million), an improvement of 2 percent currency adjusted.
EBIT amounted to SKr 26 million (Q2 '11: SKr 52 million).
Earnings per share after full dilution amounted to SKr 0.54 (Q2 '11: SKr 1.26).
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FINANCIAL AND OPERATIONAL HIGHLIGHTS
© 2012 IFS
STRONG FULL-YEAR OUTLOOK
INTERIM REPORT JANUARY–JUNE 2012
JANUARY–JUNE 2012 (SIX MONTHS) License revenue amounted to SKr 175 million (YTD '11: SKr 167 million), an increase of 3 percent currency adjusted.
Maintenance revenue was SKr 454 million (YTD '11: SKr 395 million), an improvement of 13 percent currency adjusted.
Consulting revenue amounted to SKr 662 million (YTD '11: SKr 668 million), a decrease of 2 percent currency adjusted.
Net revenue was SKr 1,295 million (YTD '11: SKr 1,235 million), an improvement of 3 percent currency adjusted.
EBIT amounted to SKr 38 million (YTD '11: SKr 62 million).
Cash flow after investments was SKr -68 million (YTD '11: SKr 43 million). Cash flow, adjusted for the Metrix acquisition, was SKr 50 million (YTD '11: SKr 43 million), an improvement of 16 percent.
Earnings per share after full dilution amounted to SKr 0.78 (YTD '11: SKr 1.41).
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COMMENTARY ON Q2 2012
© 2012 IFS
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SLOW FIRST SIX MONTHS
REVENUE Strong growth in product revenue from strengthened position in target markets and increased investment in sales, marketing, and partner ecosystem. Ever-increasing customer base leads to steady growth in maintenance revenue. Strong growth in sales pipeline.
MARGINS License and maintenance margins are steadily improving on R12 basis. Consulting margin affected by delays and lower utilization.
EARNINGS EBIT affected by planned increase in costs but improvement expected going forward.
CASH The acquisition of Metrix led to a negative cash flow after investments.
INTERIM REPORT JANUARY–JUNE 2012
80%
84%
88%
92%
96%
Q1'09
Q2 Q3 Q4 Q1'10
Q2 Q3 Q4 Q1'11
Q2 Q3 Q4 Q1'12
Q2
License margin (R12)
52%
56%
60%
64%
68%
Q1'09
Q2 Q3 Q4 Q1'10
Q2 Q3 Q4 Q1'11
Q2 Q3 Q4 Q1'12
Q2
Maintenance margin (R12)
ACQUISITION OF METRIX
© 2012 IFS
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PAVING THE WAY TO GLOBAL MARKET LEADERSHIP
INTERIM REPORT JANUARY–JUNE 2012
METRIX U.S.-based software company, established in 1982, offering advanced solutions for service management and mobility. Some 100 customers in industries like asset & capital equipment, telco, high tech & medical, defense, etc. Installed base includes brands like Ericsson, Motorola, Xerox, DHL, and ITT. Highly-regarded by analysts like Gartner and InfoTech Research Group.
ACQUISITION RATIONALE Paving the way to global market leadership Packaged, built-in and configurable mobile application Adds industry experience in the U.S.
IFS LAUNCHES IFS APPLICATIONS 8
© 2012 IFS
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IFS’S MOST SIGNIFICANT PRODUCT INVESTMENT
INTERIM REPORT JANUARY–JUNE 2012
HEAVY MAINTENANCE
WORKFORCE MANAGEMENT
CONTRACTING
PROJECT FINANCIAL CONTROL
COMPONENT MRO
PROTOTYPE MANUFACTURING
TRADE MANAGEMENT WAREHOUSING
INVENTORY PLANNING
GLOBAL PROJECTS
FINANCIALS – HR
IFS LAUNCHES IFS APPLICATIONS 8
© 2012 IFS
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IFS’S MOST SIGNIFICANT PRODUCT INVESTMENT
INTERIM REPORT JANUARY–JUNE 2012
IMPROVE YOUR BUSINESS Major investment in all core solutions More than 780 new capabilities Consolidation of all previous product extensions
SMARTPHONES AND TABLETS
Apps for iPhone & Android IFS Enterprise Explorer designed for touch devices
MARKET AND PRODUCT UPDATE
© 2012 IFS
9
SECOND QUARTER 2012
IFS PRESENTS FASTEST-EVER REPLICATION SOLUTION FOR THE OIL AND GAS INDUSTRY IFS Instant Replication is a solution for replication of data between offshore rigs or vessels and onshore facilities. It replicates documents and transactional data in maintenance and logistics processes via satellite. Tests reveal a dramatic reduction in replication time, from over 24 hours to mere minutes or seconds.
IFS RELEASES NEW IFS TOUCH APP “NOTIFY ME” IFS Notify Me is a smartphone business app in the series IFS Touch Apps. Bringing the routine task of approving purchases and expenses to the ubiquitous smartphone, it helps companies save time and offer even better customer service. IFS Notify Me is available from Apple’s App Store and Android Market.
IFS INNOVATION AWARD LAUNCHED IFS is looking for a conceptual idea of how to apply technology in a new and innovative way to increase business value. The winner will receive a cash prize and the opportunity to see the idea converted into a prototype. The winner will be announced at the IFS World Conference on October 15th, 2012, in Gothenburg.
INTERIM REPORT JANUARY–JUNE 2012
FINANCIAL OVERVIEW
© 2012 IFS
10 INTERIM REPORT JANUARY–JUNE 2012
17%
33%
50%
0%
REVENUE MIX R12
License Maintenance Consulting Other1,700
1,900
2,100
2,300
2,500
2,700
'04 '05 '06 '07 '08 '09 '10 '11 R12
NET REVENUE
0
200
400
600
800
1,000
'04 '05 '06 '07 '08 '09 '10 '11 R12
MAINTENANCE SUPPORT REVENUE
-150
-50
50
150
250
'04 '05 '06 '07 '08 '09 '10 '11 R12
EBIT
-100
0
100
200
300
'04 '05 '06 '07 '08 '09 '10 '11 R12
CASH FLOW AFTER INVESTMENTS -400
-200
0
200
400
'04 '05 '06 '07 '08 '09 '10 '11 R12
NET DEBT
BUSINESS AND STRATEGY UPDATE
© 2012 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 implementation support can reduce this. IFS is targeting growing markets that are less exposed to the recent fluctuations in the world economy. 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 at profitable terms and conditions.
11 INTERIM REPORT JANUARY–JUNE 2012
CUSTOMER WINS IN Q1
© 2012 IFS
12 INTERIM REPORT JANUARY–JUNE 2012
Oil and Gas
Icon Engineering Petroleum Geo-Services
Viru Keemia Group Process Manufacturing
Bio Products Laboratory
drom fragrances
Hangzhou Wei Chuan Foods
Lantmännen
SCA
SIG
Vajda-Papír Retail
Apex Adelchi Footwear Eizo Europe
Khusheim Company Service Providers
Eltel
Get Miscellaneous
EHIRC
High Tech
Dainippon Screen MFG Informatyka/Cyfrowe Sieci
Uniden Corporation
Industrial Manufacturing
A E Atherton and Sons Alpha Technology
Amplitude
Bhilai Engineering Corporation
CDF Corporation
CeDo
Chemar Rurociągi
CKD Corporation
Firestone Polymers
Hoshizaki Co.
Metawater Co.
Nihon Kaiheiki
T.RAD North America
Thermisol Group
Aerospace and Defense
Lockheed Martin Asset-Intensive
Closed Loop
Orco Property Group Automotive
NGK Ceramics Polska Sumitomo Rubber Co. Ltd
Tokai Rubber Industries Construction and Contracting
IMCO Engineering & Construction Tebma Shipyards
Energy and Utilities
Jeumont Electric Lesedi Nuclear Services
Madhya Pradesh Power Generating
MPWiK Warszawie
Shanxi International Electricity Group
CUSTOMER WINS IN Q2
© 2012 IFS
13 INTERIM REPORT JANUARY–JUNE 2012
Aerospace and Defense
General Dynamics Advanced Systems SEAKR Engineering
Asset-Intensive
APM Terminals Billerud
Northland Resources Automotive
Rangs Limited
T-RAD North America Construction and Contracting
Dia Alt Yapi Yatirimlari
Graham
IMCO Engineering & Construction
ION Geophysical Corporation
Mostostal Zabrze Holding
Seaspan Marine Corporation Energy and Utilities
Brookfield Corporate Operations Ceylon Electricity Board
EmiTel
Energiselskapet Buskerud
Jammu & Kashmir State Power Co.
Jeumont Electric
MTN Cote-d'Ivoire
MTN Uganda
MTN Zambia
VA Tech Wabag
Vantaan Energia
Vattenfall High Tech
Baylan Ölçü Aletleri Particle Measuring Systems
Saudi Fal Co
Senior India
Sofradir Industrial Manufacturing
Aluminum Precision Products Arvind
AWG Fittings
Aydin Boru Endüstrisi
Bemis Manufacturing Company
Best Makina Cam İşleme Makinalari İ
Cleaver-Brooks
D. Samson Industries
EGE
FCPK-Bytów
Gamak Makina
GZ Digital Media
Hafi Industries
Khusheim Company
Libet
Maquinas San Martin
Pojazdy Szynowe PESA Bydgoszcz
Stolle Machinery Company Oil and Gas
Bergen Group Rosenberg BW Offshore
Process Group
Technip Flexi-France
Trans-Northern Pipelines Process Manufacturing
Al Rabie Saudi Foods Co
Inno-Comp
Atlas
Graal
Walcownia Metali Dziedzice Retail
Stadium Stafford Motor Co.
Service Providers
Vital Distribution Solutions Miscellaneous
Kollektivtransportproduksjon
Lagena
Oriflame
PrimeWine
PZ HTL
FINANCIAL TARGETS
© 2012 IFS
IFS’s board of directors has set long-term targets for growth, profitability, and financial leverage, and a policy for dividends and share repurchase.
Grow product revenue (licenses, maintenance, and support) through organic growth and acquisitions.
Improve the EBIT margin to 15% and achieve a return of 25% on average operating capital.
Increase dividends to 50% of earnings after tax.
Use additional surplus capital, which is not required for investments, expansion, and other needs relating to the financial position of the group, to repurchase shares.
14 INTERIM REPORT JANUARY–JUNE 2012
FINANCIAL OVERVIEW
© 2012 IFS
15 INTERIM REPORT JANUARY–JUNE 2012
GROUP APRIL–JUNE JULY–JUNE FULL YEARSKr million X 2012 2011 2011/12 2010/11 2011
Net revenue 652 628 2,636 2,576 2,576of which Licenses 92 93 439 401 431of which Maintenance and support 232 199 882 802 823of which Consulting 327 333 1,305 1,360 1,311Gross earnings 305 304 1,271 1,202 1,242of which Licenses 84 88 415 364 406of which Maintenance and support 160 134 600 518 551of which Consulting 61 81 114 141 283EBIT 26 52 209 211 233EBIT margin 4% 8% 8% 8% 9%Earnings before tax 21 47 195 186 218Earnings for the period 14 33 139 132 156Cash flow after investments -162 0 -17 111 94
CASH FLOW
© 2012 IFS
16 INTERIM REPORT JANUARY–JUNE 2012
GROUP JANUARY–JUNESKr million X 2012 2011
Cash flow before change in working capital 102 149Change in working capital 46 -1Cash flow from current operations 148 148
Cash flow from investments -216 -105Cash flow after investments -68 43
Cash flow from financing -3 -149Cash flow for the period -71 -106
Cash and cash equivalents at the beginning of period 374 445Exchange rate differences in cash and cash equivalents -1 -3Cash and cash equivalents at the end of the period 302 336
FULL-YEAR OUTLOOK REMAINS STRONG DESPITE SLOW FIRST SIX MONTHS.
© 2012 IFS
OUTLOOK
17 INTERIM REPORT JANUARY–JUNE 2012
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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.
© 2012 IFS
