Company reg. no: 15 50 52 81 Company Announcement Company Announcement no. 12/2018 November 9, 2018 SimCorp reports revenue growth of 11% and EBIT margin of 21% for the first nine months of 2018 2018 highlights: Reported revenue was EUR 253.5m, an increase of 10.6% when compared with, and an increase of 13.7% when measured in local currencies. As SimCorp Italiana, acquired in August, accounted for 5.5%-points of the increase, organic revenue growth was 8.2%. Q3 2018 revenue in reported currency was EUR 80.7m, 0.5% lower than in Q3. EBIT was EUR 52.5m compared with EUR 43.0m in. Currency fluctuations impacted EBIT negatively by EUR 3.6m during the first nine months of the year. EBIT margin was 20.7% compared with 18.8% in, driven by revenue growth, SimCorp Italiana contribution, and general cost focus. Measured in local currencies, the EBIT margin was 21.5% and the underlying organic EBIT margin was 20.6%. Net profit was EUR 39.3m compared with EUR 31.1m in. Total order intake* from new and add-on licenses was EUR 40.4m, an increase of EUR 7.8m or 24% compared with the same period last year. The order intake in Q3 2018 of EUR 14.5m includes signing of a new client for a subscription agreement in North America and three larger add-on license agreements in Central Europe, Northern Europe and North America. At September 30, 2018, the order book* amounted to EUR 30.3m, an increase of EUR 15.1m when compared with the order book at September 30,. The order book increased by EUR 4.5m in Q3 2018, primarily due to new client driven development orders signed in Southern Europe and North America, where income will be recognized when the software is delivered. Free cash flow was EUR 64.3m compared with EUR 36.1m in due to positive working capital development in receivables and prepayments from clients. Financial guidance SimCorp maintains its expectations for revenue growth and EBIT margin measured in local currencies for 2018. Revenue growth measured in local currencies is expected to be between 10% and 15%, while the expectation for EBIT margin measured in local currencies remains between 24.5% and 27.5%. Klaus Holse, SimCorp CEO comments: While Q3 was slow in terms of order intake and license revenue, we are pleased with the signing of a new client in North America. We delivered against our targets of double-digit growth and improved EBIT margin for the first nine months, and with a strong order book and sales pipeline, the outlook for Q4 remains positive. * For comparison reason, the order intake and order book do not include SimCorp Italiana (Sofia).
Investor presentation SimCorp s Executive Management Board will present the report at a conference call Monday, November 12, 2018 at 11:00 am (CET). Please use any of the following phone numbers to dial in to the conference call: From Denmark: +45 3515 8049 From USA: +1 929-477-0324 From other countries: +44 (0)330 336 9105 Pin code to access the call: 6030407 At the end of the presentation there will be a Q&A session. It will also be possible to follow the presentation via this link: https://edge.media-server.com/m6/p/dkpk8i9u. The presentation will be available prior to the conference call via SimCorp s website www.simcorp.com. Enquiries regarding this announcement should be addressed to: Investor contacts: Klaus Holse, Chief Executive Officer, SimCorp A/S (+45 3544 8802, +45 2326 0000) Michael Rosenvold, Chief Financial Officer, SimCorp A/S (+45 3544 8800, +45 5235 0000) Anders Hjort, Head of Investor Relations, SimCorp A/S (+45 3544 8822, +45 2892 8881) Media contact: Anders Crillesen, Group Communications Director, (+45 3544 6474, +45 2779 1286) Company Announcement no. 12/2018 Page 2 of 22
Financial highlights and key ratios for the SimCorp Group EUR 000 INCOME STATEMENT Revenue 80,677 81,048 253,522 229,222 343,405 Earnings before interest, tax, depreciation, and amortization (EBITDA) 16,312 20,666 55,948 45,782 92,851 Operating profit (EBIT) 15,137 19,633 52,497 43,027 88,894 Financial items, net 739-35 225-908 -1,204 Profit before tax 15,876 19,598 52,722 42,119 87,690 Profit for the period 11,807 14,161 39,321 31,070 66,497 BALANCE SHEET Share capital 5,441 5,467 5,441 5,467 5,467 Total equity 130,030 85,903 130,030 85,903 116,581 Bank loan 10,000 30,000 10,000 30,000 30,000 Total intangible assets 42,461 44,730 42,461 44,730 44,256 Total property, plant, and equipment 4,888 5,778 4,888 5,778 5,528 Receivables 70,261 74,711 70,261 74,711 86,080 Contracts assets 60,891 33,596 60,891 33,596 49,946 Cash and cash equivalents 41,305 21,764 41,305 21,764 31,412 Total assets 234,394 198,735 234,394 198,735 230,616 CASH FLOW Cash flow from operating activitites 18,618 14,186 65,241 39,811 55,532 Cash flow from investing activities -195-28,830-878 -34,787-26,930 Cash flow from financing activities -20,000 25,028-54,570-22,836-28,294 Free cash flow 18,385 13,596 64,286 36,133 51,317 Change in cash and cash equivalents -1,577 10,384 9,793-17,812 308 EMPLOYEES Number of employees at the end of the period 1,617 1,550 1,617 1,550 1,547 Average number of employees - FTE 1,560 1,486 1,539 1,379 1,421 FINANCIAL RATIOS EBIT margin (%) 18.8 24.2 20.7 18.8 25.9 ROIC (return on invested capital) (%) 55.6 91.8 61.2 62.2 107.4 Receivables turnover ratio 7.7 9.1 8.0 8.6 7.6 Equity ratio (%) 55.5 43.2 55.5 43.2 50.6 Return on equity (%) 38.4 74.6 39.0 73.2 64.5 SHARE PERFORMANCE Earnings per share - EPS (EUR) 0.30 0.36 0.99 0.79 1.69 Diluted earnings per share - EPS-D (EUR) 0.30 0.36 0.98 0.78 1.67 Cash flow per share - CFPS (EUR) 0.47 0.36 1.62 1.01 1.41 MARKET VALUE RATIOS Average number of shares (m) 39.5 39.3 39.8 39.5 39.4 Average number of shares - diluted (m) 40.0 39.8 40.2 39.9 39.9 EUR/DKK rate of exchange at end of period 7.4564 7.4423 7.4564 7.4423 7.4449 2018 Q3 Q3 2018 FY Please refer to the definition of ratios on page 74 of the Annual Report. The interim report is unaudited and has not been reviewed by external auditors. Page 3 of 22
Management s report nine months ended September 30, 2018 Development in sales and orders In Q3 2018, one new SimCorp Dimension contract was signed in North America and three larger add-on orders were signed in Central Europe, Northern Europe and North America. Q3 2018 order intake was EUR 14.5m compared with EUR 15.9m in the same period last year. Order intake from client driven development (CDD) accounted for EUR 4.5m compared with EUR 0.3m in the same period last year. 2018 order intake was EUR 40.4m compared with EUR 32.6m in the same period last year, of which order intake from CDD accounted for EUR 6.6m compared with EUR 0.8m in the same period last year. A total of four new subscription based SimCorp Dimension license contracts were signed in 2018. Several existing customers have also added to their current agreements, including a number of larger perpetual add-on SimCorp Dimension contracts in Central Europe, Northern Europe and North America. In addition, a number of SimCorp Coric subscription agreements were renewed in 2018 in the UK and in North America. The order book of EUR 30.3m at September 30, 2018 is an increase of EUR 15.1m compared with same time last year. EUR 9.0m of the order book is related to CDD orders, where income will be recognized when the software is delivered, compared with EUR 1.4m at the same time last year. * Order intake and order book include licenses to new clients as well as add-on licenses to existing clients. For comparison reason the order intake and order book only include SimCorp Dimension and SimCorp Coric and not SimCorp Italiana (Sofia). The order book is the total aggregated license value of signed subscription and perpetual license agreements, including CDD orders, that have not yet been recognized in income. Page 4 of 22
Revenue 2018 revenue of EUR 253.5m was up 10.6%. Measured in local currencies the increase was 13.7% and the underlying organic revenue growth was 8.2% in 2018, reflecting a 5.5%-point positive impact from the acquisition of SimCorp Italiana, acquired in August. Revenue recognized from subscription-based licenses and from perpetual add-on licenses totalled EUR 38.8m, EUR 4.6m more than in. The annual renewal of SimCorp Italiana s subscription-based agreements is predominantly in the first quarter of a year, and it accounted for EUR 4.5m of the increase in 2018. Q3 2018 revenue in reported currency was EUR 80.7m, 0.5% lower than in Q3. Measured in local currencies the increase was 0.2%, while the underlying organic revenue decreased by 1.3% in Q3 2018. In Q3 2018, revenue recognized from subscription-based licenses and perpetual add-on licenses totalled EUR 9.8m, EUR 4.4m less than in Q3. The currency and M&A impact on revenue growth is shown below: 2018 revenue growth revenue growth 5.5% (3.1)% 1.0% (0.5)% 8.2% 13.7% 10.6% 9.9% 10.9% 10.4% Organic M&A impact Local currencies FX impact Reported Organic M&A impact Local currencies FX impact Reported Q3 2018 revenue growth Q3 revenue growth 2.6% (1.7)% (1.3)% 1.5% 0.2% (0.7)% (0.5)% 5.2% 7.8% 6.1% Organic M&A impact Local currencies FX impact Reported Organic M&A impact Local currencies FX impact Reported Page 5 of 22
The development and distribution of quarterly revenue is shown below: revenue revenue 2018 revenue Growth Growth local currency Organic growth local currency EURm Revenue 2018 Revenue Licenses - new sales 11.2 4.4% 12.9 5.6% -13.4% -8.7% -8.7% Licenses - additional sales 27.6 10.9% 21.3 9.3% 29.1% 31.8% 11.4% Software updates and support* 110.6 43.6% 103.2 45.0% 7.2% 10.0% 7.2% Professional services 95.5 37.7% 85.7 37.4% 11.5% 14.9% 8.6% ASP hosting and training fees 8.6 3.4% 6.1 2.7% 41.5% 45.1% 44.8% Total revenue 253.5 100.0% 229.2 100.0% 10.6% 13.7% 8.2% * Maintenance revenue has been renamed Software updates and support to better reflect the nature of the revenue. Q3 revenue revenue Q3 2018 revenue Q3 Growth Q3 Growth local currency Q3 Organic growth local currency Q3 EURm Revenue Q3 2018 Revenue Q3 Licenses - new sales 3.7 4.6% 6.4 7.9% -42.5% -43.6% -43.6% Licenses - additional sales 6.1 7.6% 7.8 9.6% -22.1% -20.3% -20.9% Software updates and support* 37.8 46.8% 34.7 42.8% 9.1% 10.3% 9.1% Professional services 30.6 37.9% 29.7 36.7% 3.0% 3.6% 0.9% ASP hosting and training fees 2.5 3.1% 2.4 3.0% 1.4% -1.4% -1.6% Total revenue 80.7 100.0% 81.0 100.0% -0.5% 0.2% -1.3% * Maintenance revenue has been renamed Software updates and support to better reflect the nature of the revenue. Page 6 of 22
For the first nine months, recognized revenue from new licenses was EUR 11.2m and recognized revenue from add-on licenses consisting of additional license sales, renewals of subscription licenses and conversion of perpetual licenses to subscription licenses was EUR 27.6m, of which EUR 4.5m related to the acquisition of SimCorp Italiana business. In total, the increase was 13.5% compared with and the underlying organic growth was 3.8%. In Q3 2018, revenue from new licenses was EUR 3.7m and add-on licenses EUR 6.1m compared with total licenses of EUR 14.2m in Q3 last year. In 2018, conversions accounted for less than 5% of the total add-on license sales, while renewals accounted for around 25% (of which approximately 15%-points related to SimCorp Italiana), and additional license sales accounted for more than 70%. In Q3 2018, there was no conversions, while renewals accounted for around 20% (of which approximately 5%-points related to SimCorp Italiana), and additional license sales accounted for around 80%. The split in add-on license sales is shown below: 2018 add-on license sales split ~15% ~10% <5% Q3 2018 add-on license sales split ~15% ~5% >70% Additional regular license sales Renewals of SimCorp Italiana (Sofia) Renewals of SimCorp Dimension and Coric Conversions ~80% Additional regular license sales Renewals of SimCorp Italiana (Sofia) Renewals of SimCorp Dimension and Coric Conversions Software updates and support revenue continue to increase with the completion and implementation of new client installations and new functionality to existing clients. This revenue was EUR 110.6m in 2018, up 7.2% on the same period last year. Currency fluctuations impacted the software updates and support revenue negatively by 2.8%, while the acquisition of SimCorp Italiana impacted the software updates and support revenue positively by 2.8%. Consequently, organic growth in software updates and support revenue was up 7.2%. In Q3 2018, revenue from software updates and support amounted to EUR 37.8m, an increase of 9.1% compared with Q3 last year, and measured organically the growth was also 9.1%. In 2018, revenue from professional services amounted to EUR 95.5m, which was an increase of 11.5% compared with EUR 85.7m in. Currency fluctuations impacted the professional services revenue negatively by 3.4%, while the acquisition of SimCorp Italiana impacted the professional services revenue positively by 6.3%. i.e. organic growth was 8.6%. In Q3 2018, revenue from professional services amounted to EUR 30.6m, an increase of 3.0% compared with Q3 last year, and measured organically the growth was 0.9%. Page 7 of 22
ASP hosting fees, other fees related to sale of third party solutions and training fees amounted to EUR 8.6m compared with EUR 6.1m in, and were EUR 2.5m in Q3 2018 compared with EUR 2.4m in Q3 last year. Operating costs SimCorp s total operating costs (including depreciation and amortization) amounted to EUR 201.3m in 2018, compared with EUR 186.3m in, an increase of 8.0%. Currency fluctuations reduced the total costs by 2.0%. Measured in local currencies and adjusted for the impact from the acquisition of SimCorp Italiana of 4.1%, the organic cost increase was 5.9%. The organic increase in costs was primarily related to the annual salary increase of around 3%, and an increase in the number of employees mainly due to the growth in the business activities within professional services. Salaries and staff related costs accounted for 70% of total costs compared with 69% in. In, operating costs included EUR 0.4m of one-time costs related to the acquisition of SimCorp Italiana (included in the cost line Administrative expenses ). In Q3 2018, total operating costs (including depreciation and amortization) amounted to EUR 65.7m compared with EUR 61.4m in Q3, an increase of 6.9%. Currency fluctuations reduced the total costs by 0.3%. Measured in local currencies and adjusted for the impact from the acquisition of SimCorp Italiana of 1.7%, the organic cost increase was 5.5%. The increase in operating costs is linked to the business growth mentioned above. The development and distribution of quarterly operating costs are shown in the tables below: Page 8 of 22
operating costs costs 2018 Revenue 2018 costs Revenue Growth Growth local currency Organic growth local currency EURm Costs 2018 Costs Cost of sales 106.2 52.7% 41.9% 96.8 52.0% 42.2% 9.7% 12.3% 8.7% Research and development costs 50.7 25.2% 20.0% 47.1 25.3% 20.6% 7.6% 8.0% 1.7% Sales and marketing costs 28.6 14.2% 11.3% 27.4 14.7% 11.9% 4.5% 7.6% 5.8% Administrative expenses 15.8 7.9% 6.2% 15.0 8.0% 6.6% 5.3% 6.0% 1.2% Total operating cost 201.3 100.0% 79.4% 186.3 100.0% 81.3% 8.0% 10.0% 5.9% Q3 operating costs costs Q3 2018 Revenue Q3 2018 costs Q3 Revenue Q3 Growth Q3 Growth local currency Q3 Organic growth local currency Q3 EURm Costs Q3 2018 Costs Q3 Cost of sales 34.4 52.4% 42.6% 32.4 52.7% 39.9% 6.3% 6.7% 5.3% Research and development costs 16.1 24.5% 20.0% 15.2 24.8% 18.8% 5.7% 5.8% 3.3% Sales and marketing costs 9.7 14.8% 12.0% 9.3 15.1% 11.5% 4.3% 4.4% 3.7% Administrative expenses 5.5 8.3% 6.8% 4.5 7.4% 5.6% 20.4% 20.6% 18.5% Total operating cost 65.7 100.0% 81.4% 61.4 100.0% 75.8% 6.9% 7.2% 5.5% Employees At September 30, 2018, the Group had 1,617 employees, 66 more than at 30 September,. On average, the Group had 1,539 full time equivalent employees during the first nine months of 2018, compared with 1,379 full time equivalent employees for the same period last year. Group performance For 2018, the Group posted EBIT of EUR 52.5m compared with EUR 43.0m in. Currency rate fluctuations decreased EBIT by EUR 3.6m for the first nine months of the year. EBIT margin increased from 18.8% in to 20.7% for the same period this year. When measured in local currencies the EBIT margin was 21.5% in 2018, main drivers behind the improved margin being revenue growth, SimCorp Italiana contribution and cost focus. The underlying organic EBIT margin was 20.6%. Q3 EBIT was EUR 15.1m against EUR 19.6m in Q3 last year. Currency rate fluctuations decreased EBIT by EUR 0.4m in Q3. EBIT margin was 18.8% compared with 24.2% in Q3. When measured in local currencies the EBIT margin was 19.1%. Likewise, the underlying organic EBIT margin was 19.1% as no impact from acquisitions on EBIT margin in Q3. Page 9 of 22
The currency and M&A impact on EBIT margin is shown below: 2018 EBIT margin EBIT margin 0.9% (0.8)% (0.8)% 0.5% 20.6% 20.6% 21.5% 20.7% 20.7% 19.1% 18.3% 18.3% 18.3% 18.8% Organic M&A impact Local currencies FX impact Reported Organic M&A impact Local currencies FX impact Reported Q3 2018 EBIT margin Q3 EBIT margin (0.7)% (0.1)% 0.0% (0.3)% 25.0% 24.3% 24.2% 19.1% 19.1% 18.8% Organic M&A impact Local currencies FX impact Reported Organic M&A impact Local currencies FX impact Reported The development in quarterly EBIT is shown below: Page 10 of 22
Profit before tax In 2018, financial income of EUR 4.4m and financial expenses of EUR 4.2m resulted in a net income of EUR 0.2m compared with a net expense of EUR 0.9m in the same period last year. Financial income and expenses are primarily related to foreign exchange adjustments and impacted by intercompany balances with parent company and the accounting for subscriptions agreements. The Group posted a pre-tax profit of EUR 52.7m against a pre-tax profit of EUR 42.1m in. The estimated tax charge of EUR 13.4m is equivalent to a tax rate of 25.4% compared with 26.2% in. Thus, the Group s net profit for 2018, amounted to EUR 39.3m compared with a net profit of EUR 31.1m for the same period last year. For Q3 2018, the Group realized a pre-tax profit of EUR 15.9m, against EUR 19.6m in Q3, and a net profit of EUR 11.8m compared with EUR 14.2m in the same quarter last year. Comprehensive income Exchange rate adjustments on translation of the Group s foreign assets and liabilities amounted to a net income of EUR 0.3m in 2018, compared with a net expense of EUR 2.1m in the same period last year, which is included in other comprehensive income., was impacted by the decrease in the exchange rates for GBP and USD DKK and EUR. Total comprehensive income for 2018, was EUR 39.6m compared with EUR 28.9m in the same period last year. For Q3 2018, the total comprehensive income was EUR 11.8m, against EUR 13.6m in same quarter last year. Balance sheet SimCorp s total assets were EUR 234.4m at September 30, 2018, compared with EUR 198.7m a year earlier. The increase is primary related to the increase in contract assets of EUR 27.3m, reflecting the accounting effect of signing new subscriptions agreements in the last 12 months, and an increase in cash holdings of EUR 19.5m. Cash holdings amounted to EUR 41.3m compared with EUR 21.8m a year earlier. The difference is mainly due to improved operating cash flow and no buyback program for treasury shares in 2018 due to repayment in Q3 2018 of EUR 20.0m of the EUR 30.0m loan obtained in connection with the acquisition of SimCorp Italiana. Receivables amounted to EUR 70.3m at September 30, 2018, compared with EUR 74.7m at September 30,. Receivables were EUR 15.8m lower than at December 31,. Contract assets increased by EUR 10.9m compared with December 31,, as new and additional subscription licenses added EUR 19.9m to contract assets in 2018, which exceeded invoiced subscription license fees of EUR 9.5m in 2018 and financial element adjustments of EUR 0.5m. SimCorp s total liabilities were EUR 104.4m at September 30, 2018, compared with EUR 112.8m a year earlier. The decrease is primarily related to the repayment of EUR 20.0m on loan in Q3 2018. The remaining EUR 10.0m are planned to be repaid in Q4 2018. Page 11 of 22
Cash flow Operating activities in 2018 generated a cash inflow of EUR 65.2m compared with EUR 39.8m in last year due to positive working capital development in receivables and prepayments from clients. Payment of income taxes amounted to EUR 10.4m, against EUR 6.1m in. EUR 0.9m were spent on investing activites, compared with EUR 34.8m in, which included payment for SimCorp Italiana of EUR 28.2m and payment of the deferred consideration of EUR 2.9m related to the acquisition of SimCorp Coric in 2014. Free cash flow (cash flow from operations reduced by CAPEX) was EUR 64.3m compared with EUR 36.1m in the first nine months of. Cash used in financial activities in 2018, was for payment of dividends of EUR 34.6m and loan repayment of EUR 20.0m. In, cash used in financial activities was related to payment of dividends of EUR 33.3m and buyback of treasury shares, which reduced liquidity by EUR 19.6m. In Q3, EUR 30.0m loan was obtained for the acquisition of SimCorp Italiana. In Q3, EUR 8.3m of cash and cash equivalent was acquired in connection with the acquisition of SimCorp Italiana. Changes in equity The company s equity amounted to EUR 130.0m at September 30, 2018. This is an increase of EUR 13.4m from December 31,. For 2018, equity was increased by comprehensive income of EUR 39.6m as well as effects of share-based remuneration of EUR 8.3m. Equity was reduced by dividends of EUR 34.5m. Page 12 of 22
Outlook for the financial year 2018* SimCorp s financial results in the first nine months of 2018 were broadly in line with company expectations. SimCorp s intake of new customers varies considerably from one quarter to the next. The 2018 intake of orders was EUR 40.4m compared with EUR 32.6m for the same period last year. SimCorp enters Q4 2018 with EUR 321m of the projected 2018 revenue secured, EUR 30m or 10.3% higher than at the same time last year. SimCorp continues to experience a satisfactory, geographically diversified demand for its products and services. Based on the results for 2018, the performance to date in Q4 2018, and the pipeline for the rest of 2018, SimCorp maintains its expectations for full year revenue growth of between 10% and 15% and an EBIT margin of between 24.5% to 27.5%, all measured in local currencies. 3%-point of the expected revenue growth is related to the acquisition of SimCorp Italiana. Based on exchange rates prevailing at October 31, 2018, SimCorp estimates currency fluctuations to have a negative impact on revenue growth of around 2% (unchanged from previous reporting) and to have a negative impact on EBIT margin of around 0.5%-points (unchanged from previous reporting). * This announcement contains certain forward-looking statements and expectations in respect of the 2018 financial year. Such forward-looking statements are not guarantees of future performance, and involve risk and uncertainty, and actual performance may deviate materially from that expressed in such forward-looking statements due to a variety of factors. Readers are warned not to rely unduly on such forward-looking statements, which apply only as at the date of this announcement. The Group s revenue is expected to continue to be impacted by relatively few but large system orders, and such orders are expected to be won at relatively irregular intervals. The terms agreed in the individual license agreements will determine the impact on the order book and on license income for any specific financial reporting period. Accordingly, license revenue is likely to vary considerably from one quarter to the next. Unless required by law or corresponding obligations SimCorp A/S is under no duty and undertakes no obligation to update or revise any forward-looking statement after the distribution of this document, whether as a result of new information, future events or otherwise. Page 13 of 22
Other information Significant risk and uncertainty factors SimCorp operates in a dynamic and complex business environment where performance relies heavily on the ongoing achievement of a number of success criteria. Pages 23-26 of SimCorp s Annual Report describe the most important general risk factors and the risk management measures utilized in everyday operations. Management believes that the description of these potential risks still applies. Shareholder information Restricted stock units In Q3 2018, 746 restricted stock units have been granted to two employees related to incentive programs. The restricted stock units will vest after three years, subject to continuing employment. 433,377 restricted stock units are outstanding at September 30, 2018. The restricted stock units will be transferred in whole or in part between 2019 and 2022 to program participants still employed when the stock units vest, subject to performance conditions. Holding of treasury shares At September 30, 2018, the holding of treasury shares amounted to 917,718 treasury shares, equal to 2.27% of the Company s issued share capital. The total purchase value was EUR 46.5m with a market value of EUR 68.4m at September 30, 2018. Headquarter in Copenhagen SimCorp has in Q2 2018, extended the lease for its office in Copenhagen until April 30, 2029. The lease has been entered on market terms and with normal rent adjustment clauses. The extension of the lease increases rent commitments by EUR 35.5m. New market entry, partnership and awards In October 2018, SimCorp announced the opening of a new office in Japan. The Japanese investment management market is one of the most developed in APAC, and many firms are starting to invest outside the traditional, domestic market, which requires more advanced solutions. The market holds around 50 prospects for SimCorp Dimension. A new partnership with Qlik, a leading provider of data analytics and business intelligence (BI), enables SimCorp to now extend its Data Warehouse offering with Qlik s BI and analytics tools, providing clients with fast insights into their investment management operations, portfolio analytics and performance management. For the second consecutive year, SimCorp has been recognized with Waters Technology s Buy-Side Awards in the categories of Best Buy-Side IBOR (investment book of record) and Best Portfolio Accounting Platform. This is the fifth time in a row that SimCorp received the award for best IBOR. Page 14 of 22
Signatures The Board of Directors and the Executive Management Board have today considered and adopted the interim report for the period January 1 - September 30, 2018. The interim financial report, which is unaudited and has not been reviewed by the company s auditors, is presented in accordance with IAS 34 Interim financial reporting as adopted by the EU and Danish disclosure requirements for listed companies. In our opinion, the interim financial report gives a true and fair view of the Group s assets, liabilities and financial position as of September 30, 2018, and of the profit of the Group s operations and cash flow for the period January 1 - September 30, 2018. Besides what has been disclosed in the interim report, there are no significant changes to the Group s risks and uncertainties, as disclosed in the consolidated annual report. Furthermore, the management s commentary gives a fair representation of the Group s activities, financial position and description of the material risks and uncertainties which the Group is facing. November 9, 2018 Executive Management Board: Klaus Holse Georg Hetrodt Michael Rosenvold Chief Executive Officer Chief Technology Officer Chief Financial Officer Board of Directors: Jesper Brandgaard Peter Schütze Hervé Couturier Chairman Vice Chairman Simon Jeffreys Adam Warby Joan A. Binstock Morten Hübbe Else Braathen Vera Bergforth Ulrik Elstrup Hansen Page 15 of 22
Consolidated income statement EUR 000 2018 Q3 Q3 2018 FY Revenue 80,677 81,048 253,522 229,222 343,405 Cost of sales 34,404 32,363 106,216 96,796 132,528 Gross profit 46,273 48,685 147,306 132,426 210,877 Other operating income 146 28 276 109 211 Research and development costs 16,122 15,258 50,665 47,116 64,797 Sales and marketing costs 9,701 9,288 28,609 27,377 37,198 Administrative expenses 5,459 4,534 15,811 15,015 20,199 Operating profit (EBIT) 15,137 19,633 52,497 43,027 88,894 profit after tax in associates -7 18 38-10 51 Financial income 1,172 1,034 4,418 2,655 3,425 Financial expenses 426 1,087 4,231 3,553 4,680 Profit before tax 15,876 19,598 52,722 42,119 87,690 Tax on the profit for the period 4,069 5,437 13,401 11,049 21,193 Profit for the period 11,807 14,161 39,321 31,070 66,497 EARNINGS PER SHARE Earnings per share - EPS (EUR) 0.30 0.36 0.99 0.79 1.69 Diluted earnings per share - EPS-D (EUR) 0.30 0.36 0.98 0.78 1.67 Statement of comprehensive income EUR 000 Profit for the period 11,807 14,161 39,321 31,070 66,497 Other comprehensive income Items that will not be reclassified subsequently to the in Remeasurements of defined benefit plans 0 0-5 0-113 Tax 0 0 0 0 33 Items that may be reclassified subsequently to the income statement, when specific conditions are met: Foreign currency translation differences for foreign operations 42-526 250-2,142-2,663 Other comprehensive income after tax 42-526 245-2,142-2,743 Total comprehensive income 11,849 13,635 39,566 28,928 63,754 2018 Q3 Q3 2018 FY Page 16 of 22
Consolidated balance sheet EUR 000 2018 FY ASSETS Goodwill 28,001 28,035 28,009 Software 6,785 7,943 7,777 Client contracts 7,675 8,752 8,470 Total intangible assets 42,461 44,730 44,256 Leasehold improvements 2,658 3,501 3,295 Technical equipment 1,436 1,238 1,277 Other equipment, fixtures, fittings and prepayments 794 1,039 956 Total property, plant, and equipment 4,888 5,778 5,528 Investments in associates 885 815 854 Deposits 1,971 2,048 1,995 Deferred tax 3,008 6,890 3,123 Total other non-current assets 5,864 9,753 5,972 Total non-current assets 53,213 60,261 55,756 Receivables 70,261 74,711 86,080 Contracts assets 60,891 33,596 49,946 Income tax receivables 1,911 1,430 1,387 Prepayments 6,813 6,973 6,035 Cash and cash equivalents 41,305 21,764 31,412 Total current assets 181,181 138,474 174,860 Total assets 234,394 198,735 230,616 LIABILITIES AND EQUITY Share capital 5,441 5,467 5,467 Share premium 9,963 9,966 9,963 Exchange adjustment reserve -2,920-2,652-3,170 Retained earnings 117,546 73,122 69,751 Proposed dividend 0 0 34,570 Total equity 130,030 85,903 116,581 Deferred tax 7,976 3,491 8,514 Provisions 8,725 8,168 8,025 Total non-current liabilities 16,701 11,659 16,539 Bank loan 10,000 30,000 30,000 Prepayments from clients 21,402 16,510 11,969 Trade payables and other payables 48,048 43,125 50,358 Income tax payables 7,881 11,530 4,976 Provisions 332 8 193 Total current liabilities 87,663 101,173 97,496 Total liabilities 104,364 112,832 114,035 Total liabilities and equity 234,394 198,735 230,616 Page 17 of 22
Consolidated cash flow statement EUR 000 2018 Q3 Q3 2018 FY Profit for the period 11,807 14,161 39,321 31,070 66,497 Adjustments for non-cash operating items 7,306 7,615 25,255 20,602 33,905 Changes in contract assets -523 6,884-10,945 6,269-21,922 Changes in working capital 2,124-13,063 22,164-12,064-7,931 Cash from operating activities before financial items 20,714 15,597 75,795 45,877 70,549 Financial income received 4 88 36 234 180 Financial expenses paid -75-34 -202-208 -299 Income tax paid -2,025-1,465-10,388-6,092-14,898 Net cash from operating activities 18,618 14,186 65,241 39,811 55,532 Deferred payment, purchase of subsidiaries 0 0 0-2,931-2,931 Purchase of subsidiaries * 0-28,195 0-28,195-19,851 Purchase of intangible fixed assets -32 0-32 -1,134-1,362 Purchase of property, plant, and equipment -201-590 -923-2,553-3,162 Proceeds from sale of property, plant, and equipment 0 0 0 9 309 Purchase of financial assets -11-69 -25-103 -123 Proceeds from sale of financial assets 5 24 58 34 104 Dividends from associates 44 0 44 86 86 Net cash used in investing activities -195-28,830-878 -34,787-26,930 Net cash from operating and investing activities 18,423-14,644 64,363 5,024 28,602 Dividends paid 0 0-34,570-33,272-33,235 Purchase of treasury shares 0-4,972 0-19,564-25,059 Proceeds, loans 0 30,000 0 30,000 30,000 Repayment, loans -20,000 0-20,000 0 0 Net cash used in financing activities -20,000 25,028-54,570-22,836-28,294 Change in cash and cash equivalents -1,577 10,384 9,793-17,812 308 Cash and cash equivalents at beginning of period 42,832 3,139 31,412 31,590 31,590 Cash and cash equivalents acquired * 0 8,344 0 8,344 0 Foreign exchange adjustment of cash and cash equivalents 50-103 100-358 -486 Cash and cash equivalents end of period 41,305 21,764 41,305 21,764 31,412 * Purchase of subsidiaries and cash acquired reported net in FY. Page 18 of 22
Statement of changes in equity 2018 EUR '000 Share capital Share premium Exchange adjustment reserve Retained earnings Proposed dividends for the year Equity at January 1 5,467 9,963-3,170 69,751 34,570 116,581 Net profit for the period - - - 39,321-39,321 Total other comprehensive income - - 250-5 - 245 Total comprehensive income for the period - - 250 39,316-39,566 Transactions with owners Cancellation of treasury shares -26 - - 26-0 Dividends paid to shareholders - - - 75-34,570-34,495 Share-based payment - - - 7,273-7,273 Tax, share-based payment - - - 1,105-1,105 Equity at September 30 5,441 9,963-2,920 117,546 0 130,030 Equity at January 1 as previously reported 5,575 - -518 34,173 33,341 72,571 Adjustment related to IFRS 15 - - - 27,874-27,874 Tax, adjustment related to IFRS 15 - - - -6,967 - -6,967 Adjusted balance at January 1 5,575 - -518 55,080 33,341 93,478 Net profit for the period - - - 31,070-31,070 Total other comprehensive income - - -2,142 - - -2,142 Total comprehensive income for the period - - -2,142 31,070-28,928 Transactions with owners Issue of shares 26 9,963 11 - - 10,000 Cancellation of treasury shares -134 - - 134-0 Share-based payment - - - 5,890-5,890 Tax, share-based payment - - - 417-417 Purchase of treasury shares - - - -19,564 - -19,564 Dividends to shareholders - - - 95-33,341-33,246 Equity at September 30 5,467 9,963-2,649 73,122 0 85,903 Adjustment related to IFRS 15 - - - -233 - -233 Tax, adjustment related to IFRS 15 - - - 18-18 Adjusted balance at September 30 5,467 9,963-2,649 72,907-85,688 Net profit for the period - - - 35,427-35,427 Total other comprehensive income - - -521-80 - -601 Total comprehensive income for the period - - -521 35,347-34,826 Transactions with owners Dividends paid to shareholders - - - 106-106 Share-based payment - - - 1,661-1,661 Tax, share-based payment - - - -110 - -110 Purchase of treasury shares - - - -5,495 - -5,495 Proposed dividends to shareholders - - - -34,665 34,570-95 Equity at December 31 5,467 9,963-3,170 69,751 34,570 116,581 Total Page 19 of 22
Notes to the financial statements Accounting policies The interim report is presented in accordance with IAS 34 Interim financial reporting as adopted by the EU and Danish disclosure requirements for interim reports of listed companies. The accounting policies applied are consistent with those of the Annual Report except for the changes described below. See the Annual Report for a comprehensive description of the accounting policies applied. Change in accounting policies Effective January 1, 2018, IFRS 9 Financial Instruments was implemented, the standard contains requirements for the classification and measurement of financial assets and liabilities, impairment methodology and general hedge accounting. The implementation of IFRS9 and a number of other new accounting standards and interpretations have immaterial monetary effect on the SimCorp Group s result, assets, liabilities or equity. Judgments and estimates The preparation of interim reports requires management to make accounting judgments and estimates that affect the use of accounting policies and recognized assets, liabilities, income and expenses. Actual results may differ from these estimates. The most significant estimates made by management when using the Group s accounting policies and the most significant judgment uncertainties attached hereto are the same for the preparation of the interim report as for the preparation of the Annual Report. Page 20 of 22
Segment information EUR '000 Northern Europe Central Europe UK and Middle East Southern Europe Asia and Australia North Dimension America * SimCorp Coric SimCorp Sofia** Elimination/ Segments Corporate Not total Functions allocated July 1 - September 30 2018 External revenue 21,931 18,498 5,003 9,550 4,215 16,822 298 715 3,408 80,440 237-80,677 Revenue between segments 3,312 2,171 1,542 257 656 963 27,053 409 209 36,572 1,846-38,418 - Total segment revenue 25,243 20,669 6,545 9,807 4,871 17,785 27,351 1,124 3,617 117,012 2,083-38,418 80,677 EBITDA 1,907 1,714 732-21 491 1,819 16,066-964 451 22,195-5,882-16,313 Depreciation and amortization 26 12 79 8 16 88 33 142 361 765 411-1,176 Segment operating profit (EBIT) 1,881 1,702 653-29 475 1,731 16,033-1,106 90 21,430-6,293-15,137 January 1 - September 30 2018 External revenue 74,007 51,420 17,094 30,905 12,410 47,193 844 4,319 14,851 253,043 479-253,522 Revenue between segments 11,889 6,819 6,172 745 1,286 3,273 78,066 1,188 559 109,997 4,717-114,714 - Total segment revenue 85,896 58,239 23,266 31,650 13,696 50,466 78,910 5,507 15,410 363,040 5,196-114,714 253,522 EBITDA 7,333 4,927 1,729-2,268 1,068 3,762 45,019-158 6,465 67,877-11,928-55,949 Depreciation and amortization 80 27 239 124 41 258 91 430 982 2,272 1,180-3,452 Segment operating profit 7,253 4,900 1,490-2,392 1,027 3,504 44,928-588 5,483 65,605-13,108 (EBIT) - 52,497 Total assets 35,205 13,412 7,686 26,386 16,634 42,713 2,451 23,783 53,803 222,073 4,974 7,347 234,394 July 1 - September 30 External revenue 24,842 17,166 5,682 8,039 5,761 14,652 340 2,288 2,002 80,772 276 81,048 Revenue between segments 3,251 2,702 1,828-26 460 1,087 30,133 282 124 39,841 862-40,703 - Total segment revenue 28,093 19,868 7,510 8,013 6,221 15,739 30,473 2,570 2,126 120,613 1,138-40,703 81,048 EBITDA 2,618 2,081 1,603 119 616-251 13,892 2,568 245 23,491-2,825-20,666 Depreciation and amortization 29 11 79 42 12 76 31 138 220 638 395 1,033 Segment operating profit (EBIT) 2,589 2,070 1,524 77 604-327 13,861 2,430 25 22,853-3,220-19,633 January 1 - September 30 External revenue 68,502 49,634 19,636 22,083 14,535 44,107 1,006 7,164 2,002 228,669 553-229,222 Revenue between segments 10,429 6,673 6,861 150 1,441 4,041 84,402 911 124 115,032 2,348-117,380 - Total segment revenue 78,931 56,307 26,497 22,233 15,976 48,148 85,408 8,075 2,126 343,701 2,901-117,380 229,222 EBITDA 8,796 4,064 1,260 490 1,038 2,049 32,584 3,435 245 53,961-8,179-45,782 Depreciation and amortization 88 30 245 135 41 192 90 431 220 1,472 1,283-2,755 Segment operating profit (EBIT) 8,708 4,034 1,015 355 997 1,857 32,494 3,004 25 52,489-9,462-43,027 Total assets 25,073 12,946 10,204 19,448 7,009 38,786 1,058 25,812 50,837 191,173 7,172 390 198,735 * SimCorp Dimension includes all development cost for SimCorp Dimension ** SimCorp Sofia from August 1,. Group Revenue disclosures are based on SimCorp s market units and development activities while asset allocation is based on the physical location of the assets. Unallocated assets relate to non-current headquarter assets, cash, taxes and investments in associates. EUR '000 2018 Q3 Q3 2018 Segment operating profit (EBIT) 15,137 19,633 52,497 43,027 profit after tax on associates -7 18 38-10 Financial income 1,172 1,034 4,418 2,655 Financial expenses 426 1,087 4,231 3,553 Profit for the year before tax 15,876 19,598 52,722 42,119 Page 21 of 22
Property, plant and equipment and investment obligations The SimCorp Group does not hold assets under finance leases and has not provided assets as security. Contingent liabilities No material changes have occurred to contingent liabilities referred to in the Annual Report. Events after September 30, 2018 No significant events have occurred after the balance sheet date that affect the interim report. Page 22 of 22