asseco group results · asseco group results fy 2014 warsaw, 16 march 2015 2. solutions for...

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Asseco Group ResultsFY 2014

2Warsaw, 16 March 2015


3

• Record-breaking revenues of the Group

• Stabilization of margins and improved profitability

• Positive effects of foreign investments

• Development of products and services – successful cooperation

with clients

• Building of shareholder value – higher share price and dividend

Asseco Group in 2014


4

Consolidated financial highlights for FY 2014

PLN 6,232 mSales revenues

+8%

PLN 637 mEBIT

+6%

PLN 358 mNet profit

+17%

PLN 4,999 mProprietary software and services

+8%

PLN 893 mEBITDA

+5%

PLN 4,430 mOrder backlog for 2015

+17%


5

Asseco Group in 2014 - summary

Group sales revenues PLN 6,232 million

Polish market

PLN 1,677 m -5%

Israeli market

PLN 2,951 m +14%

Central European market

PLN 492 m +24%

Eastern European market

PLN 152 m

South Eastern European market

PLN 499 m +6%

Western European market

PLN 460 m -5%

5

+74%

Polish marketNew significant contracts in the sectors of public administration and enterprises. Strengthening cooperation with our existing clients.

Israeli marketStrong sales in the local market and in America.

Central European market Higher revenues in the public administration sector. Very good development of the ERP business (Asseco Solutions).

South Eastern European marketNew contracts in the banking sector and dynamic growth in the outsourcing of payment processes

Western European marketPositive effects of reorganization in Spain. Favourable results and prospects for growth in DACH markets.

Eastern European marketHigher sales to the banking sector in Russia.


6

Revenue structure – higher share of foreign operations

73%27%

Sales revenuesPLN 6,232 m

+8%

3,374 3,915 4,017 4,555

1,5871,614

1,7631,677

2011 2012 2013 2014

Revenues from foreign operations* Revenues from Poland*

* Sales to external customers


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Revenue structure – strong diversification into sectors

40%

36%

24%Sales revenuesPLN 6,232 m

+8%

2,106 2,364 2,258 2,513

1,602 1,854 2,0312,214

1,2531,311 1,491

1,505

2011 2012 2013 2014

General Business Banking and Finance Public Institutions


Our business sectors

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Business sectors - strong diversification of operations

Banks

Insurance

Brokerage houses

Investment funds

Leasing companies

Factoring companies

Central administration

Local administration

Healthcare

International organizations

Social insurance

Uniformed services

Education

Telecommunication

Energy industry

Municipal utilities

Gas industry

Manufacturing, trade and

services

FMCG

Multimedia

Banking & Finance Public Institutions General Business

9


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General Business Sector

2014 2013 Change

Polish market 502.6 471.9 +6%

Israeli market 1,398.8 1,181.0 +18%

Central European market 206.9 148.6 +39%


94.2 107.2 -12%

Western European market 314.1 358.4 -12%

Eastern European market 2.5 1.5 +69%

Asseco Group 2,512.8 2,258.4 +11%

Summary

Continued strengthening of cooperation with strategic clients in the energy industry and telecommunications

Energy industry – execution of billing system projects for Tauron Group, implementation of Customer Service System for Enea Group, deployment of AUMS systems for telecommunication operators beginning their electricity distribution operations

Telecommunications market – expansion of cooperation with Orange Poland by outsourcing of advanced T processes, new contract and further cooperation with Polkomtel (Cyfrowy Polsat Group)

Successful business development at Asseco Solutions as well as at Asseco Business Solutions

Future outlook

Growing share of Asseco Poland in the market for IT solutions for the distributors of electric energy

Increasing interest in IT outsourcing services in the telecommunications industry

Sales of proprietary solutions in foreign markets (AUMS)

2,1062,364 2,258

2,513

2011 2012 2013 2014

Sales revenues (in PLN millions)


11

Banking and Finance Sector

2014 2013 Change

Polish market 452.8 492.0 -8%

Israeli market 1,119.6 986.8 +13%

Central European market 88.1 101.7 -13%


338.5 301.9 +12%

Western European market 102.2 89.1 +15%


Asseco Group 2,213.9 2,031.1 +9%

Summary

Carrying out many development projects for clients using our flagship def3000 system

Expanding the scope of cooperation with cooperative banks: implementation of new def3000 modules, upgrading the functionality of the Internet Services Centre

Growth in the outsourcing of payment solutions in the South Eastern European region (ASEE)

Growth in the insurance industry solutions: new contracts from the largest insurers in Poland and stronger sales in the U.S. (Sapiens)

Future outlook

Tender for the new core banking system for BGK

Innovative products for banks: Universal Front End and Customer Banking Platform

Expansion into foreign markets with our financial industry systems

1,6021,854 2,031 2,214

2011 2012 2013 2014



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Public Institutions Sector

Summary

Adaptation to a smaller number of software development contracts from the Social Insurance Institution (ZUS), successful maintenance and support of their IT system

New significant contracts from our key clients: Agency for Restructuring and Modernization of Agriculture (ARiMR), and Agricultural Social Insurance Fund (KRUS)

Gaining new clients and contracts

Dynamic growth in the Polish market for healthcare systems (new AMMS system)

New significant contracts in Slovakia compensated for the prevailing difficult situation in the Czech Republic

Future outlook

New EU financial perspective for the years 2014-2020

Leveraging on the Group’s unique competence in the areas of security and defense

Entering into new business areas, including execution of projects for the European Space Agency (ESA)

2014 2013 Change

Polish market 726.1 806.0 -10%

Israeli market 432.6 412.4 +5%

Central European market 198.5 150.2 +32%


68.2 61.3 +11%

Western European market 44.3 35.0 +26%


Asseco Group 1,505.2 1,490.5 +1%

1,253 1,3111,491 1,505

2011 2012 2013 2014



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Contracts signed in 2014

Banking and Finance

3,863

General Business

1,727

Public Institutions

1,161

Number of contracts

signedin 2014 1

6,751

1) Asseco Group, excluding retail products. The figures include contracts, orders and annexes.


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In comparison to the order backlog presented in March 2014

Consolidated order backlog for 2015

3,799 4,430

2014 2015

Sales revenues

+17%

Figures in PLN millions; Value of the order backlog for 2015 as at 12 March 2015; Value of the order backlog for 2014 as at 18 March 2014; (adjusted for Slovanet company data)

3,427 3,993

2014 2015

Proprietary software and services

+17%


Products and services

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Products matching the needs of various clients

Designed to individual customer needs

Designed and developed for multiple large and medium-sized clients

Standard solutions for a large number of small and medium-sized customers

Solutions available online for many customers

Dedicated solutions

Central Information System Insurer (PZU)

Comprehensive Information System (ZUS)

Central Register of Vehicles and Drivers

(Ministry of the Interior)

Border Clearance System (National Border Guard)

Comprehensive solutions for

business sectors

Asseco def3000 (banking)

Asseco Utility Management Solutions

(energy industry)

Asseco Medical Management Solutions

(healthcare)

OTAGO System (administration)

Sapiens IDIT, ALIS (insurance)

Promak (brokerage houses)

Standard software packages

Asseco WAPRO ERP solutions

Asseco HR

Magic xpi Integration platform

Matrix42 Administration of IT infrastructure

Magic xpa Development platform

Cloud computing solutions

Asseco Mobile Touch(sales force)

def3000 REB / CEB (banking)

abStore Wapro(e-commerce)

wrotacelne.pl(customs documents)

Core Banking System Alnova (PKO BP)

BeSTI@ (Ministry of Finance)

Asseco Solutions ERP solutions


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Asseco products in key industry reports

AUMS for energy utilities in Gartner’s Magic QuadrantAsseco Poland has been classified among major providers of IT solutions for the Utilities sector

Forrester Research about def3000The solution has made a debut in the Forrester Research report on the major vendors of core banking platforms

Mobile Touch in Gartner’s reportThe solution developed by Asseco Business Solutions has been mentioned in the prestigious Gartner report as one of the global leading Sales Force Automation systems, bringing a significant competitive advantage

def3000 in Gartner’s Magic QuadrantAsseco Poland, as the only Polish company, has been included in the prestigious “Magic Quadrant for Trading Platforms” report published by Gartner research and advisory firm

ALIS Sapiens in Gartner’s Magic QuadrantThe policy administration system has been included in the report on major vendors of IT solutions for the insurance industry

ALIS Sapiens in CELENT reportsALIS system has been given recognition in two reports of CELENT research firm, analyzing insurance policy administration solutions dedicated for the US and EMEA

SII Engine for the insurance industry in Gartner’s reportThe system supporting the Solvency II operations has been included in Gartner’s report


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Awards and accolades

40th place on Rzeczpospolita 500 List

Book of Lists –Number 1 “Software Producer”

Asseco Poland reached the final of the Polish President’s Economic Prize for “Lasting Success”

37th place in the Forbes ranking of 100 Largest Companies in Poland

Main award in the “Polish Company –International Champion” competition organized by PwC, in the category of Investor, Polish Privately Owned Company

Asseco Poland listed in the ranking of “25 for 25 Years: Brands for Poland” prepared by Brief magazine on the 25th anniversary of Polish freedom

Asseco Poland won the Grand Prize of the 7th edition of IT@Bank 2014 ranking

The largest IT group in PolandIT company with the highest net earnings

The largest R&D spenderThe largest provider of IT solutions and services

for the industry and construction sectorsThe largest provider of IT solutions and services

for the healthcare sector

The largest provider of IT solutions and services for the public administration sectorThe largest provider of IT maintenance servicesThe largest provider of customer-tailored softwareThe second largest provider of IT solutions for the Banking sector

1st place among 500 largest information technology companies and groups operating in Poland


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Strengthening our position as a leading producer of software in Europe

Top 100 European Software Vendors

Asseco Group

The fastest growing

producer of software

in the Top 10

Rank Company

Sales revenues 2013

(software+ services)

[EUR millions]

Sales revenues 2012(software+ services)

[EUR millions]

Change

1 SAP 16,512.3 15,930.0 +3.6%

2 DASSAULT SYSTEMES 1,887.5 1,853.4 +1.8%

3 SAGE 1,522.6 1,591.4 -4.4%

4 HEXAGON 1,309.6 1,282.8 +2.1%

5 WINCOR NIXDORF 1,257.3 1,257.3 0.0%

6 ASSECO GROUP 1,063.0 1,002.1 +6.0%

7 SOFTWARE AG 856.5 922.2 -7.1%

8 DATEV 752.8 736.7 +2.2%

9 WOLTERS KLUWER 720.9 733.4 -1.7%

10 SWIFT 580.2 594.9 -2.5%

Source: Truffle 100

http://www.google.pl/url?sa=i&rct=j&q=truffle+100&source=images&cd=&cad=rja&docid=z1umkLApo9B7MM&tbnid=-t0b5SogobZrrM:&ved=0CAUQjRw&url=http://www.esi-group.com/corporate/news-media/press-releases/2008-english-pr/esi-group-strengthens-its-position-in-the-truffle-100-europe-2007&ei=ImJ6UeDrJ8Xkswak1ICQDA&bvm=bv.45645796,d.Yms&psig=AFQjCNEqFyj8pGdxXqLRfrUkJZu3MVBe6g&ust=1367061388567193

http://www.google.pl/url?sa=i&rct=j&q=truffle+100&source=images&cd=&cad=rja&docid=z1umkLApo9B7MM&tbnid=-t0b5SogobZrrM:&ved=0CAUQjRw&url=http://www.esi-group.com/corporate/news-media/press-releases/2008-english-pr/esi-group-strengthens-its-position-in-the-truffle-100-europe-2007&ei=ImJ6UeDrJ8Xkswak1ICQDA&bvm=bv.45645796,d.Yms&psig=AFQjCNEqFyj8pGdxXqLRfrUkJZu3MVBe6g&ust=1367061388567193


Shareholder value

20


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Consistent dividend policy

0..5 PLN 1.03 PLN1.47 PLN

1.80 PLN 2.19 PLN

2.41 PLN

2.60 PLN

2.90 PLN

1.1%1.4%

3.1% 2.9%

4.1%

5.0%

5.7%6.3%

2007 2008 2009 2010 2011 2012 2013 2014*DPS Dividend yield

Dividend yields are calculated based on the Asseco’s share price as at 31 December of the preceding year

* Amount of dividend recommended by the Management Board

PLN 241 m*PLN 830 million paid out in dividends during the last 5 years


Growth of shareholder value

37

39

41

43

45

47

49

51

53

55

01-2014 03-2014 05-2014 07-2014 09-2014 11-2014

Asseco Poland WIG20

17.5%increase in the share price of Asseco Poland in 2014

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Financial information

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Solid growth in revenues and profits

Figures in PLN millions

2014 2013 Δ Q4

2014Q4

2013Δ

Sales revenues 6,231.9 5,780.0 +8% 1,832.6 1,700.7 +8%

Proprietary software and services* 4,998.9 4,636.8 +8% 1,428.7 1,283.8 +11%

Gross profit (loss) on sales 1,519.8 1,426.9 +7% 436.1 365.5 +19%

Gross profit margin 24.4% 24.7% -0.3 pp 23.8% 21.5% +2.3 pp

Selling costs -393.8 -353.5 +11% -117.8 -84.1 +40%

General and administrative expenses -477.1 -457.0 +4% -129.1 -139.0 -7%

Other operating activities -12.2 -17.9 - -11.7 -16.4 -

Operating profit 636.7 598.5 +6% 177.5 126.0 +41%

Operating profit margin 10.2% 10.4% -0.1 pp 9.7% 7.4% +2.3 pp

Operating profit non-IFRS 738.5 697.5 +6% 204.2 151.3 +35%

Operating profit margin non-IFRS 11.9% 12.1% -0.2 pp 11.1% 8.9% +2.2 pp

EBITDA 892.5 846.3 +5% 245.6 191.4 +28%

EBITDA margin 14.3% 14.6% -0.3 pp 13.4% 11.3% +2.1 pp

* Figures for 2013 restated in accordance with a new approach to the division of sales revenues into own and third-party activities as adopted in 2014

Non-IFRS figures include adjustments for amortization charges on intangible assets recognized in purchase price allocation, for the costs of share-based payment transactions with employees, as well as for financial results recognized in accounting for mergers and acquisitions


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Solid growth in revenues and profits

2014 / Change 2014 vs. 2013

Sales revenuesProprietary software

and services**Operating profit

(non-IFRS)

Polish market 1,681.5 -5% 1,345.9 -4% 316.5 -2%

Israeli market 2,951.0 +14% 2,588.4 +15% 258.1 +11%

Central European market 493.5 +23% 393.4 +12% 55.4 -9%

South Eastern European market 500.9 +6% 277.7 +17% 46.0 +10%

Western European market 460.6 -5% 260.4 -18% 36.6 -5%

Eastern European market 151.9 +74% 137.4 +79% 25.8 +358%

Asseco Group* 6,231.9 +8% 4,998.9 +8% 738.5 +6%

Non-IFRS figures include adjustments for amortization charges on intangible assets recognized in purchase price allocation, for the costs of share-based payment transactions with employees, as well as for financial results recognized in accounting for mergers and acquisitions

* Figures after consolidation eliminations�** Revenues generated in individual markets include sales to external customers as well as inter-segment sales


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Reconciliation of operating profit and net profit

2014 2013 Δ Q4

2014Q4

2013Δ

Operating profit 636.7 598.5 +6% 177.5 126.0 +41%

Interest expense -29.3 -23.7 -6.0 -4.9

Foreign currency transactions 0.8 -2.5 -1.2 -0.6

Other 39.8 -14.9 8.7 -9.1

of which: result of transactions associated with company acquisitions

16.8 5.9 12.2 8.4

reversal (2014) / creation (2013) of allowances for receivables/commercial papers of PI

28.1 -14.3 0.0 -14.3

Pre-tax profit 648.1 557.4 +16% 179.0 111.4 +61%

Income tax -131.2 -112.4 +17% -34.7 -24.5 +42%

Share of profits/losses of associates 1.9 1.4 +36% 0.1 -1.9 -

Profit/loss from discontinued operations* 9.7 3.5 +177% 0.1 1.7 -94%

Net profit 528.5 449.9 +17% 144.5 86.7 +67%

Net profit attributable to shareholders of the parent company

358.4 306.4 +17% 89.9 45.3 +98%


* 2014: net profit of Slovanet Group along with the gain on disposal of Slovanet by ACE Group; 2013: net profit of Slovanet Group


27

Generated Cash FlowsAsseco Group

2014 2013

CFO 816.6 878.0

CAPEX* -204.1 -215.5

Free cash flow** 612.5 662.5

Cash conversion*** 83% 95%

Asseco Poland

2014 2013

CFO 253.5 319.2

CAPEX* -25.0 -64.2

Free cash flow** 228.5 255.0

Cash conversion*** 91% 95%


* Excluding investments in investment property, net of grants received

** CFO + CAPEX

*** Free cash flow / non-IFRS EBIT

Non-IFRS figures include adjustments for amortization charges on intangible assets recognized in purchase price allocation, for the costs of share-based payment transactions with

employees, as well as for financial results recognized in accounting for mergers and acquisitions

441

654 663613

722 756698 738

61%

86%95%

83%

0%

20%

40%

60%

80%

100%

0

200

400

600

800

1000

1200

2011 2012 2013 2014

Asseco Group

181231

255228

331 313268 251

55%

74%

95% 91%

0%10%20%30%40%50%60%70%80%90%100%

0

100

200

300

400

500

600

2011 2012 2013 2014

Asseco Poland

CFO+CAPEX EBIT non-IFRS Cash conversion


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Stable liquidity position (Asseco Poland)

As at 31 Dec. 2014

ST LT

Cash and financial assets 102.0 65.0

Debt and finance lease: -31.4 5.9

Bank loans -13.3 -89.9

Assets serving as bank loan collateral* 200.4

Finance lease liabilities -18.1 -104.6

Net cash (ST) 70.6

Inventories + ST receivables – ST liabilities** 346.0

Net operating assets (ST) 416.6

Available bank loan facilities 520.0


* The book value of real estate serving as bank loan collateral

** Inventories + short-term receivables + short-term prepayments – short-term liabilities excluding bank loans and finance lease liabilities


36%

40%24%

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Consolidated sales revenues by products and sectors


6,232

Banking and Finance 2,214 +9% 2,031

General Business 2,513 +11% 2,258

Public Institutions 1,505 +1% 1,491

Sales revenues 6,232 +8% 5,780

80%

8%

12%

0%

6,232

Proprietary software and services 4,999 +8% 4,637

Third-party software and services 465 +13% 411

Hardware and infrastructure 764 +5% 726

Other sales 4 -31% 6

Sales revenues 6,232 +8% 5,780

2014 %∆ 2013


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Financial results of subsidiaries*

* Financial results for the periods consolidated by Asseco Poland.** Net profit excluding dividends to be recognized as income of Asseco Poland.

Sales revenues Operating profit Net profit

2014 2013 2014 2013 2014 2013

Poland* 1,681.5 1,769.9 298.3 302.6 252.1 216.3

Asseco Poland 1,321.3 1,428.4 240.3 255.7 290.3 280.3

Asseco Business Solutions 145.0 146.0 34.2 31.8 28.6 26.8

Other 273.5 213.8 26.2 16.6 21.4 12.6

Consolidation eliminations -58.4 -18.3 -2.5 -1.5 -88.1 -103.4

Formula Group 2,951.0 2,580.3 204.4 183.5 63.2 58.6

Matrix IT 1,859.1 1,695.7 118.6 115.2 79.5 73.7

Magic Software 522.2 458.8 63.3 58.5 49.0 50.3

Sapiens Int. 500.4 428.5 45.5 38.1 44.1 37.3

Asseco Central Europe Group 493.5 400.6 50.3 54.7 52.5 47.5

Asseco South Eastern Europe Group 500.9 470.4 46.2 42.1 39.0 35.9

Western Europe 460.6 482.5 33.7 36.1 22.6 22.8

Other 151.9 87.1 20.5 0.6 17.1 0.4


Thank you

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asseco group results · asseco group results fy 2014 warsaw, 16 march 2015 2. solutions for...

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