software publishers (5112) - 2011

T r e n d s o f Y o u r B u s i n e s s

E x c l u s i v e l y d i s t r i b u t e d b y

Romania, 2011

Please address all comments and enquiries to: [email protected]

Software Publishers

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Software Publishers

Contents Page

1. Macroeconomic Scenario - 4

2. Analysis of Investment Attractiveness - 5

- Attractiveness Indicators - 5

- Driving Forces of Attractiveness - 5

- Risk-Profitability Maps - 7

3. Concentration in the Sector - 9

4. Analysis of Financial Ratios - 10

- Distributions of Financials - 10

- General Indicators - 11

- Profitability Ratios - 14

- Liquidity Ratios - 16

- Financial Cycles - 18

- Financial Leverage Ratios - 19

- Production Factors - 21

- Costs - 24

- Structure of Current Assets - 26

- DuPont’s Pyramid - 28

5. Companies from the Sector - 29

- Top Players from the Sector - 29

- Listed Companies from the Sector - 30

- Mergers and Acquisitions - 31

6. Key Concepts - 32

- Definitions of Indices - 32

- Definitions of Selected Concepts - 34

! This report has been compiled to the best of the authors’ knowledge, using information originating from verified

sources. The authors of the report take no responsibility for the consequences of any decisions and actions taken as a

result of the use of this report. This report refers to the Romanian economy.



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Software Publishers

EconTrends for Romania is the unique tool for analyzing various Romanian industries. It contains description of

macroeconomic environment, analysis of investment attractiveness, detailed analysis of revenue as well as in-depth

analysis of a wide scope of financial ratios. The report covers not the full sector but only its major part, since it is build

on the bottom-up aggregated financial data from Creditinfo Romania and CCIR (Chamber of Commerce and Industry).

Profitability of a given industry is evaluated on the basis of average forecasted dynamics of EBIT in two following

years. Every industry has a granted profitability mark that ranges from 1 up to 5, which reflects its profitability versus

other industries. Higher mark indicates higher profitability. Risk of an industry in turn is measured by the standard

deviation of forecasted Profitability Index. Every industry has also an assigned risk mark that ranges from 1 up to 5,

which reflects its risk versus other industries. Higher mark means here lower risk. Each industry is at the end

characterized by the following two parameters – its profitability and risk. They are used for evaluation of the short term

investment attractiveness, that reflects preferences of investors seeking to maximize their rates of return and to

minimize the risk they face.

The final Short-Term Investment Attractiveness Ranking of an analyzed industry explains its relative attractiveness

comparing to other sectors. The lower a position within the ranking the higher is attractiveness of an industry. Changes

in this position replicate either changes in profitability or in risk. Additionally like in the case of profitability and risk

measurement the final attractiveness is graded from 1 to 5, where the highest grade means the highest attractiveness.

Lower grade means worse “investment-weather conditions”, so either lower profitability or higher risk. The Short-Term

Investment Attractiveness Ranking is presented according to the structure of the North American Industry

Classification System (NAICS). However the used system of industry classification is not fully compatible with the

Romanian Classification of Activities due to Romanian statistics - specific factors.

The Short-Term Investment Attractiveness Ranking developed for Romania under the EconTrends ® methodology is

based on the so called Profitability Index, that shows forecasted dynamics of EBIT. It serves as a proxy for dynamics

of dirty cash flows in enterprises from a given industry. Fundamental components of the Profitability Index like net

sales and EBIT margin, are forecasted using econometric models. The behavior over time of all these categories is

illustrated using appropriate pictograms in the “Map of Forces”.

Analysed sector:

Class Software Publishers

There are no subclasses in analysed

class.

Only the subclasses marked by an arrow are covered by EconTrends reports.



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Software Publishers

Macroeconomic Scenario Period 2009 2010 2011 2012 2013

Nominal GDP Growth 97.4 104.3 110.7 106.5 103.8

Real GDP Growth 93.4 98.3 102.5 100.9 101.8

Inflation (CPI) 105.6 106.1 105.8 103.3 103.3

Inflation (PPI) 101.9 106.3 108.9 106.2 104.5

USD/RON exchange rate 3.05 3.18 3.05 3.47 3.35

Datasource: ISI, EMIS, CEIC

-> expected fall of

GDP nominal growth

in 2013

-> expected slight

fall of GDP real

growth in 2013

-> expected slight

fall of CPI inflation

in 2013

-> expected slight

fall of PPI inflation in

2013

-> expected

weakening of

USD/RON exchange

rate in 2013

0

20

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Gro

wth

Period

Nominal GDP Growth

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114

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Period

Inflation (CPI)

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Period

Inflation (PPI)

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Software Publishers

Analysis of Investment Attractiveness

Attractiveness Indicators

Driving Forces of Attractiveness

- Profitability Index - y/y dynamics

- Net Revenue per Company - y/y dynamics

- EBIT Margin - y/y dynamics

Current situation e e eForecasted situation b b b

Map of forces for the sector Net revenue - Y/Y dynamics EBIT margin - Y/Y dynamicsProfitability index - Y/Y

dynamics

"+""-""o"

▲▼■

Positive dynamics of "driving force"

Negative dynamics of "driving force"

Close to zero dynamics of "driving force"

Fall of dynamics comparing to previous year

Stabilisation of dynamics comparing to previous year

Symbol’s orientation Rise of dynamics comparing to previous year

Neutral impact on profit’s dynamics

Symbol’s sign

Symbol's colour Dynamics of profit

Positive impact on profit’s dynamics

Negative impact on profit’s dynamics

-50%

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Profi

tabilit

y in

dex -

Y/Y

dynam

ics

Net

revenue p

er c

om

pany -

Y/Y

dynam

ics

Period

Net revenue per company - Y/Y dynamics

Net revenue per company - Y/Y dynamics Profitability index - Y/Y dynamics

D

Forecast

5 0

4 1

3 1

2 1

1 1

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recaste

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Profi

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isk

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Forecasted Attractiveness5 0

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Profi

tabilit

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isk

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4

5

Current Attractivenessexpected rise of

attractiveness in the

sector

-> expected rise of

profitability

-> expected rise of

risk (expected fall in

risk mark shown on

the chart)

expected fall in

dynamics of net

revenue in 2012

expected fall in

dynamics of net

revenue in 2013



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Software Publishers

-50%

-40%

-30%

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Profi

tabilit

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Y/Y

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EB

IT M

argin

-

Y/Y

dynam

ics

Period

EBIT Margin - Y/Y dynamics

EBIT Margin - Y/Y dynamics Profitability index - Y/Y dynamics

Forecast

expected fall in

dynamics of EBIT

margin in 2012

expected fall in

dynamics of EBIT

margin in 2013



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Software Publishers

Risk-Profitability Maps

-1.0

-0.5

0.0

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Pro

fita

bilit

y

Risk

Risk - Profitability Map (current situation)

All sectors Most efficient sectors

subclasses belonging to selected class Selected sector (Class): Software Publishers

Investors' utility function

0.0

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Pro

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Risk

Risk - Profitability Map (current situation)

Zoom




risk - profitability

map (current

situation)



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Software Publishers

-0.5

0.0

0.5

1.0

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2.0

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0.0 0.5 1.0 1.5 2.0 2.5

Pro

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Risk

Risk - Profitability Map (forecasted situation)




0.0

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Pro

fita

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Risk

Risk - Profitability Map (forecasted situation)

Zoom




risk - profitability

map (forecasted

situation)



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Software Publishers

Concentration in the Sector

0%

10%

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40%

50%

60%

70%

80%

90%

100%

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

Cu

mu

lati

ve

ma

rket

sh

are

Cumulative share of companies from lower market share

Distribution of net revenues in the sector (2011)

Gini Coefficient75.15%

Lorenz Curve

Perfect Inequality Line

Perfect Equality Line

Market power

concentration

measured by

Herfindahl-

Hirschman Index

was weak in 2011

Net sales of top five

companies in the

sector reached the

market share of

26.37% in 2011

Market share of top companies in the sector

Year 2011

Number of analysed companies 571

The Herfindahl-Hirschman Index 209

Top 1 company 9.04%

Top 2 companies 15.03%






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Software Publishers

Analysis of Financial Ratios

Distributions of Financials

20% 40% 60% 80%

2010 2011 I II III IV0 0

General Indicators

Number of companies 554 571

Y /Y dynamics of net revenue per company [%] -23.90% 9.64% -19.53% 1.50% 15.48% 33.72%

Y /Y dynamics of total operating cos t per company [%] -22.84% 8.91% -13.91% 2.24% 16.46% 36.82%

Y /Y dynamics of operating profit per company [%] -33.03% 16.86% -77.35% -18.80% 24.97% 108.89%

Y /Y dynamics of operating profit per profit-making company [%] -38.46% 26.44% -46.01% -6.89% 26.54% 93.85%

Y /Y dynamics of gross profit per company [%] -36.52% 16.13% -80.58% -19.82% 28.48% 118.44%

Y /Y dynamics of gross profit per profit-making company [%] -38.86% 22.07% -51.78% -9.29% 29.03% 118.31%

Y /Y dynamics of net profit per company [%] -37.67% 20.03% -81.76% -14.37% 35.59% 135.32%

Y /Y dynamics of net profit per profit-making company [%] -39.40% 24.81% -50.94% -3.39% 35.25% 142.24%

Profitability Ratios

O perating Sales Margin [%] 9.19% 9.85% 0.72% 5.00% 9.89% 21.16%

Net Sales Margin [%] 7.04% 7.77% 0.22% 3.14% 7.51% 17.76%

Return on Equity [%] 26.97% 30.74% 1.57% 16.24% 33.20% 64.61%

Return on A ssets [%] 9.11% 9.79% 0.03% 5.24% 15.12% 31.06%

Effec tive tax rate [%] 18.39% 16.19% 15.35% 16.28% 17.81% 23.22%

Share of profit-making companies [%] 84.48% 80.21%

Liquidity Ratios

C urrent ratio [%] 118.31% 123.22% 101.22% 164.05% 257.35% 514.56%

Q uick ratio [%] 111.91% 117.12% 88.94% 144.19% 242.41% 486.37%

Super quick ratio [%] 30.87% 25.04% 7.62% 33.50% 77.92% 168.80%

Receivables to liabilities ratio [%] 76.50% 88.60% 39.61% 84.13% 129.33% 252.08%

Financial Cycles

Days of coverage for C ash & Equivalent [days] -24 -8 -28 -1 26 68

Days of coverage for receivables [days] 106 133 28 52 83 148

Days of coverage for inventories [days] 9 9 0 0 0 8

Days of coverage for short term liabilities [days] 139 150 24 39 78 155

Financial Leverage Ratios

Debt to Equity ratio [%] 15.16% 31.38% 0.00% 0.00% 0.00% 9.12%

Equity to total assets ratio [%] 33.79% 31.84% 12.48% 41.00% 61.84% 81.14%

Long-term liabilities to total liabilities ratio [%] 5.12% 9.99% 0.00% 0.00% 0.00% 8.68%

Debt ratio [%] 56.16% 64.07% 16.97% 35.48% 53.53% 82.98%

O perating profit coverage [years ] 3.03 3.55 0.6 1.4 2.9 8.0

Production Factors

A verage employment per company [person] 28 46 6 12 23 52

Labour produc tivity [thou. RO N/person] 172.50 189.96 82.45 119.04 159.81 265.00

Labour cos t as the share in total operating cos ts [%] 35.38% 42.93% 12.25% 30.44% 53.05% 75.13%

Fixed assets per employee [thou. RO N/person] 57.32 49.96 2.15 6.45 15.66 67.37

Labour intens ity of produc tion [%] 32.12% 38.73% 11.50% 26.59% 47.11% 67.44%

Material & energy intens ity of produc tion [%] 4.46% 4.00% 0.56% 1.30% 2.31% 5.22%

Total assets turnover [%] 129.42% 126.93% 73.77% 145.29% 222.66% 359.92%

Fixed assets produc tivity [%] 382.82% 377.83% 237.92% 887.34% 2278.98% 5395.24%

Labour cos t per employee [thou. RO N/person] 60.12 73.55 20.38 36.25 60.11 87.53

Costs

Share of wages in total operating cos ts [%] 27.79% 33.67% 9.40% 23.75% 41.74% 58.77%

Share of soc ial contributions in total operating cos ts [%] 7.59% 9.27% 2.66% 6.40% 11.53% 16.05%

Share of external services in total operating cos t [%] 45.34% 43.26% 14.79% 23.26% 39.13% 60.75%

Share of material & energy used in total operating cos ts [%] 4.91% 4.44% 0.59% 1.42% 2.57% 5.32%

Share of taxes & fees in total operating cos ts [%] 0.41% 0.34% 0.05% 0.16% 0.33% 0.76%

D I S T R I B U T I O N O F P A R A M E T E R S

(The distribution of financial indicators in the sector)

Average value for the

sector in

Source: ISI, EMIS, C reditinfo Romania, CCIR



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Software Publishers

General Indicators

Number of companies

Period 2008 2009 2010 2011

Value 278 277 554 571

Y/Y increase -1 -1 277 17

Net revenue per company [thou RON]

Period 2008 2009 2010 2011

Value [thou RON] 8 599.95 9 935.91 7 561.18 8 289.86

Y/Y dynamics [%] 33.14% 15.53% -23.90% 9.64%

Total operating cost per company [thou RON]

Period 2008 2009 2010 2011

Value [thou RON] 7 692.42 8 898.25 6 866.22 7 477.71

Y/Y dynamics [%] 36.73% 15.68% -22.84% 8.91%

rise of number of

companies covered

by database in 2011

comparing to the

value in 2010

rise of Y/Y dynamics

of net revenue per

company in 2011

comparing to the

value in 2010


of total operating

cost per company in

2011 comparing to

the value in 2010

0

2 000

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[th

ou

RO

N]

Net revenue & total operating costs per company

Net revenue per company [thou RON] Total operating cost per company [thou RON]

Operating profit per company [thou RON]

Period 2008 2009 2010 2011

Value [thou RON] 907.53 1 037.67 694.97 812.14

Y/Y dynamics [%] 8.89% 14.34% -33.03% 16.86%

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Operating profit per company [thou RON]

Operating profit per company [thou RON] Y/Y dynamics of operating profit per company [%]


of operating profit

per company in

2011 comparing to

the value in 2010




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Software Publishers

Operating profit per profit-making company [thou RON]

Period 2008 2009 2010 2011

Value [thou RON] 1 132.19 1 396.52 859.47 1 086.71

Y/Y dynamics [%] 6.22% 23.35% -38.46% 26.44%

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Period

Operating profit per profit-making company [thou RON]

Operating profit per profit-making company [thou RON] Y/Y dynamics of operating profit per profit-making company [%]

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Period

Gross profit per company [thou RON]

Gross profit per company [thou RON] Y/Y dynamics of gross profit per company [%]

Gross profit per company [thou RON]

Period 2008 2009 2010 2011

Value [thou RON] 863.91 1 050.45 666.85 774.41

Y/Y dynamics [%] 7.01% 21.59% -36.52% 16.13%


of operating profit

per company in

2011 comparing to

the value in 2010


of operating profit

per profit-making

company in 2011

comparing to the

value in 2010




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Software Publishers

Gross profit per profit-making company [thou RON]

Period 2008 2009 2010 2011

Value [thou RON] 1 079.94 1 380.25 843.95 1 030.21

Y/Y dynamics [%] 2.30% 27.81% -38.86% 22.07%

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%]

[th

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Period

Gross profit per profit-making company [thou RON]

Gross profit per profit-making company [thou RON] Y/Y dynamics of gross profit per profit-making company [%]

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[th

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Period

Net profit per company [thou RON]

Net profit per company [thou RON] Y/Y dynamics of net profit per company [%]

Net profit per company [thou RON]

Period 2008 2009 2010 2011

Value [thou RON] 697.58 854.21 532.42 639.08

Y/Y dynamics [%] 6.69% 22.45% -37.67% 20.03%


of gross profit per

company in 2011

comparing to the

value in 2010


of gross profit per

profit-making

company in 2011

comparing to the

value in 2010




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Software Publishers

Net profit per profit-making company [thou RON]

Period 2008 2009 2010 2011

Value [thou RON] 886.92 1 148.52 696.06 868.75

Y/Y dynamics [%] 0.91% 29.50% -39.40% 24.81%

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Period

Net profit per profit-making company [thou RON]

Net profit per profit-making company [thou RON] Y/Y dynamics of net profit per profit-making company [%]

Profitability Ratios

Share of profit-making companies [%]

Period 2008 2009 2010 2011

Value [%] 83.81% 79.06% 84.48% 80.21%

Y/Y increase [%] -2.93% -4.75% 5.42% -4.27%

74%

76%

78%

80%

82%

84%

86%

88%

Period




of net profit per

company in 2011

comparing to the

value in 2010

fall of share of profit-

making companies

in 2011 comparing

to the value in 2010




-15-

Software Publishers

Operating Sales Margin [%]

Period 2008 2009 2010 2011

Value [%] 10.57% 10.48% 9.19% 9.85%

Y/Y increase [%] -2.34% -0.09% -1.28% 0.66%

0%

2%

4%

6%

8%

10%

12%

14%

Period

Operating Sales Margin [%]

Net Sales Margin [%]

Period 2008 2009 2010 2011

Value [%] 8.10% 8.62% 7.04% 7.77%

Y/Y increase [%] -2.03% 0.52% -1.58% 0.73%

0%

2%

4%

6%

8%

10%

12%

Period

Net Sales Margin [%]

Return on Equity [%]

Period 2008 2009 2010 2011

Value [%] 27.47% 27.93% 26.97% 30.74%

Y/Y increase [%] -3.09% 0.46% -0.96% 3.77%

25%

26%

27%

28%

29%

30%

31%

32%

Period

Return on Equity [%]

rise of operating

sales margin in 2011

comparing to the

value in 2010

rise of net sales

margin in 2011

comparing to the

value in 2010

rise of return on

equity in 2011

comparing to the

value in 2010




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Software Publishers

Return on Assets [%]

Period 2008 2009 2010 2011

Value [%] 12.98% 12.10% 9.11% 9.79%

Y/Y increase [%] -1.89% -0.88% -2.99% 0.67%

0%

2%

4%

6%

8%

10%

12%

14%

16%

Period

Return on Assets [%]

Effective tax rate [%]

Period 2008 2009 2010 2011

Value [%] 18.26% 17.54% 18.39% 16.19%

Y/Y increase [%] 1.52% -0.72% 0.85% -2.19%

Liquidity Ratios

15%

16%

16%

17%

17%

18%

18%

19%

19%

Period

Effective tax rate [%]

Current ratio [%]

Period 2008 2009 2010 2011

Value [%] 166.52% 156.64% 118.31% 123.22%

Y/Y increase [%] -6.08% -9.89% -38.33% 4.91%

0%

20%

40%

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100%

120%

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160%

180%

200%

Period

Current ratio [%]

rise of return on

assets in 2011

comparing to the

value in 2010

fall of effective tax

rate in 2011

comparing to the

value in 2010

rise of current ratio

in 2011 comparing





-17-

Software Publishers

Quick ratio [%]

Period 2008 2009 2010 2011

Value [%] 155.87% 146.91% 111.91% 117.12%

Y/Y increase [%] -5.85% -8.96% -35.01% 5.21%

Super quick ratio [%]

Period 2008 2009 2010 2011

Value [%] 45.08% 32.19% 30.87% 25.04%

Y/Y increase [%] -5.97% -12.89% -1.32% -5.83%

Receivables to liabilities ratio [%]

Period 2008 2009 2010 2011

Value [%] 106.12% 111.22% 76.50% 88.60%

Y/Y increase [%] -1.04% 5.10% -34.72% 12.10%

0%

20%

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180%

Period

Quick ratio [%]

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Period

Super quick ratio [%]

0%

20%

40%

60%

80%

100%

120%

Period

Receivables to liabilities ratio [%]

rise of quick ratio in

2011 comparing to

the value in 2010

fall of super quick

ratio in 2011

comparing to the

value in 2010

rise of receivables

to liabilities ratio in

2011 comparing to

the value in 2010




-18-

Software Publishers

Financial Cycles

Days of coverage for Cash & Equivalent [days]

Period 2008 2009 2010 2011

Value [days] 16 25 -24 -8

Y/Y increase [days] -2 9 -49 16

-30

-20

-10

0

10

20

30

Period

Days of coverage for Cash & Equivalent [days]

Days of coverage for receivables [days]

Period 2008 2009 2010 2011

Value [days] 96 133 106 133


0

20

40

60

80

100

120

140

Period

Days of coverage for receivables [days]

Days of coverage for inventories [days]

Period 2008 2009 2010 2011

Value [days] 10 12 9 9


0

2

4

6

8

10

12

14

Period

Days of coverage for inventories [days]

rise of days of

coverage for cash &

equivalent in 2011

comparing to the

value in 2010

rise of days of

coverage for

receivables in 2011

comparing to the

value in 2010

stabilisation of days

of coverage for

inventories in 2011

comparing to the

value in 2010




-19-

Software Publishers

Days of coverage for short term liabilities [days]

Period 2008 2009 2010 2011

Value [days] 90 119 139 150

Y/Y increase [days] -7 30 19 11

0

20

40

60

80

100

120

140

160

Period

Days of coverage for short term liabilities [days]

Financial Leverage Ratios

Debt to Equity ratio [%]

Period 2008 2009 2010 2011

Value [%] 17.57% 12.41% 15.16% 31.38%

Y/Y increase [%] 0.35% -5.16% 2.75% 16.23%

0%

5%

10%

15%

20%

25%

30%

35%

Period

Debt to Equity ratio [%]

Equity to total assets ratio [%]

Period 2008 2009 2010 2011

Value [%] 47.25% 43.32% 33.79% 31.84%

Y/Y increase [%] -1.40% -3.93% -9.53% -1.95%

0%

10%

20%

30%

40%

50%

60%

Period

Equity to total assets ratio [%]

rise of days of

coverage for short

term liabilities in

2011 comparing to

the value in 2010

rise of debt to equity

ratio in 2011

comparing to the

value in 2010

fall of equity to total

assets ratio in 2011

comparing to the

value in 2010




-20-

Software Publishers

Long-term liabilities to total liabilities ratio [%]

Period 2008 2009 2010 2011

Value [%] 8.30% 5.38% 5.12% 9.99%

Y/Y increase [%] -0.08% -2.93% -0.26% 4.87%

0%

2%

4%

6%

8%

10%

12%

Period

Long-term liabilities to total liabilities ratio [%]

Debt ratio [%]

Period 2008 2009 2010 2011

Value [%] 48.48% 52.08% 56.16% 64.07%

Y/Y increase [%] 0.70% 3.60% 4.08% 7.92%

0%

10%

20%

30%

40%

50%

60%

70%

Period

Debt ratio [%]

Operating profit coverage [years]

Period 2008 2009 2010 2011

Value [year] 2.59 3.11 3.03 3.55

Y/Y increase [year] 0.74 0.52 -0.08 0.52

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Period

Operating profit coverage [years]

rise of long-term

liabilities to total

liabilities ratio in

2011 comparing to

the value in 2010

rise of debt ratio in

2011 comparing to

the value in 2010

rise of operating

profit coverage in

2011 comparing to

the value in 2010




-21-

Software Publishers

Production Factors

Average employment per company [person]

Period 2008 2009 2010 2011

Value [person] 50 54 28 46

Y/Y dynamics [%] 7.68% 7.21% -47.68% 63.72%

-60%

-40%

-20%

0%

20%

40%

60%

80%

0

10

20

30

40

50

60

Y/

Y d

yn

am

ics o

f a

vera

ge e

mplo

ym

ent

pe

r c

om

pany [

%]

[p

erson

]

Average employment per company [person]

Average employment per company [person] Y/Y dynamics of average employment per company [%]

Labour productivity [thou. RON/person]

Period 2008 2009 2010 2011

Value [thou RON/person] 172.09 191.08 172.50 189.96

Y/Y dynamics [%] 22.30% 11.04% -9.72% 10.12%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

0

50

100

150

200

250

Y/

Y d

yn

am

ics o

f la

bou

r p

rodu

cti

vit

y

[%

]

[th

ou

RO

N/

pe

rson

]

Labour productivity [thou. RON/person]

Labour productivity [thou. RON/person] Y/Y dynamics of labour productivity [%]

Labour cost as the share in total operating costs [%]

Period 2008 2009 2010 2011

Value [%] 38.15% 41.49% 35.38% 42.93%

Y/Y increase [%] -2.22% 3.34% -6.12% 7.56%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Labour cost as the share in total operating costs [%]

rise of average

employment per

company in 2011

comparing to the

value in 2010

rise of labour

productivity in 2011

comparing to the

value in 2010

rise of labour cost

as the share in total

operating costs in

2011 comparing to

the value in 2010




-22-

Software Publishers

Fixed assets per employee [thou. RON/person]

Period 2008 2009 2010 2011


Y/Y dynamics [%] 16.71% 1.26% 65.02% -12.84%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

0

10

20

30

40

50

60

70

Y/

Y d

yn

am

ics o

f fi

xed a

ssets

per

em

plo

yee [

%]

[th

ou

RO

N/

pe

rson

]

Fixed assets per employee [thou. RON/person]

Fixed assets per employee [thou. RON/person] Y/Y dynamics of fixed assets per employee [%]

Labour intensity of production [%]

Period 2008 2009 2010 2011

Value [%] 34.12% 37.16% 32.12% 38.73%

Y/Y increase [%] -1.04% 3.03% -5.03% 6.60%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Period

Labour intensity of production [%]

Material & energy intensity of production [%]

Period 2008 2009 2010 2011

Value [%] 4.16% 3.93% 4.46% 4.00%

Y/Y increase [%] 0.70% -0.22% 0.52% -0.45%

0%

1%

1%

2%

2%

3%

3%

4%

4%

5%

5%

Period

Material & energy intensity of production [%]

fall of fixed assets

per employee in

2011 comparing to

the value in 2010

rise of labour

intensity of

production in 2011

comparing to the

value in 2010

fall of material &

energy intensity of

production in 2011

comparing to the

value in 2010




-23-

Software Publishers

Total assets turnover [%]

Period 2008 2009 2010 2011

Value [%] 160.02% 140.72% 129.42% 126.93%

Y/Y increase [%] 13.11% -19.29% -11.30% -2.48%

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

Period

Total assets turnover [%]

Fixed assets productivity [%]

Period 2008 2009 2010 2011

Value [%] 507.88% 546.07% 382.82% 377.83%

Y/Y increase [%] 30.60% 38.19% -163.26% -4.99%

0%

100%

200%

300%

400%

500%

600%

Period

Fixed assets productivity [%]

Labour cost per employee [thou. RON/person]

Period 2008 2009 2010 2011


Y/Y dynamics [%] 17.71% 21.94% -15.31% 22.33%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

0

10

20

30

40

50

60

70

80

Y/

Y d

yn

am

ics o

f la

bou

r cost p

er

em

plo

yee [

%]

[th

ou

RO

N/

pe

rson

]

Labour cost per employee [thou. RON/person]

Labour cost per employee [thou. RON/person] Y/Y dynamics of labour cost per employee [%]

fall of total assets

turnover in 2011

comparing to the

value in 2010

fall of fixed assets

productivity in 2011

comparing to the

value in 2010

rise of labour cost

per employee in

2011 comparing to

the value in 2010




-24-

Software Publishers

Costs

Share of wages in total operating costs [%]

Period 2008 2009 2010 2011

Value [%] 30.09% 32.67% 27.79% 33.67%

Y/Y increase [%] -1.70% 2.59% -4.89% 5.88%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Period

Share of wages in total operating costs [%]

Period 2008 2009 2010 2011

Value [%] 8.06% 8.82% 7.59% 9.27%

Y/Y increase [%] -0.52% 0.75% -1.23% 1.68%

Share of social contributions in total operating costs [%]

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

Period

Share of social contributions in total operating costs [%]

Period 2008 2009 2010 2011

Value [%] 35.05% 41.81% 45.34% 43.26%

Y/Y increase [%] 0.48% 6.76% 3.53% -2.08%

Share of external services in total operating cost [%]

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Period

Share of external services in total operating cost [%]

rise of share of

wages in total

operating costs in

2011 comparing to

the value in 2010

rise of share of

social contributions

in total operating

costs in 2011

comparing to the

value in 2010

fall of share of

external services in

total operating cost

in 2011 comparing





-25-

Software Publishers

Period 2008 2009 2010 2011

Value [%] 4.78% 4.39% 4.91% 4.44%

Y/Y increase [%] 0.65% -0.38% 0.51% -0.47%

Share of material & energy used in total operating costs [%]

4%

4%

4%

4%

4%

5%

5%

5%

Period

Share of material & energy used in total operating costs [%]

Period 2008 2009 2010 2011

Value [%] 0.51% 0.50% 0.41% 0.34%

Y/Y increase [%] -0.05% -0.01% -0.08% -0.08%

Share of taxes & fees in total operating costs [%]

0%

0%

0%

0%

0%

1%

1%

Period

Share of taxes & fees in total operating costs [%]

fall of share of

material & energy

used in total

operating costs in

2011 comparing to

the value in 2010

fall of share of taxes

& fees in total

operating costs in

2011 comparing to

the value in 2010

cost of external

services dominates

in the cost structure


Costs structure [%]

Wages [%] 32.67% 27.79% 33.67%

Soc ial contributions [%] 8.82% 7.59% 9.27%

C ost of external services [%] 41.81% 45.34% 43.26%

Material and energy cos ts [%] 4.39% 4.91% 4.44%

Taxes and fees [%] 0.50% 0.41% 0.34%

O ther cos ts [%] 11.81% 13.96% 9.03%

Period 2009 2010 2011



-26-

Software Publishers

0%

20%

40%

60%

80%

100%

2009 2010 2011

Period

Costs structure [%]

Wages [%] Social contributions [%] Cost of external services [%]

Material and energy costs [%] Taxes and fees [%] Other costs [%]

33.7%

9.3%43.3%

4.4%0.3%

9.0%

Costs structure [%] (2011)

Wages [%] Social contributions [%] Cost of external services [%]

Material and energy costs [%] Taxes and fees [%] Other costs [%]

Structure of Current Assets


short-term

receivables

dominate in the

current assets

structure

Current assets structure [%]

Inventories [%] 6.21% 5.41% 4.95%

Short-term receivables [%] 71.01% 64.66% 71.91%

C ash and equivalent [%] 20.55% 26.09% 20.32%

O ther current assets [%] 2.24% 3.83% 2.82%

Period 2009 2010 2011



-27-

Software Publishers

0%

20%

40%

60%

80%

100%

2009 2010 2011

Period

Current assets structure [%]

Inventories [%] Short-term receivables [%] Cash and equivalent [%] Other current assets [%]

4.9%

71.9%

20.3%

2.8%

Current assets structure [%] (2011)

Inventories [%] Short-term receivables [%] Cash and equivalent [%] Other current assets [%]




-28

-

Soft

ware

Publishers

Du

Po

nt’

s P

yra

mid

Equit

y

per

com

pany

2011

2 0

79

2010

1 9

74

2009

3 0

59

2008

2 5

39

Leverage

2011

3.1

4

Assets

per

com

pany

2011

6 5

31

2010

2.9

6

2010

5 8

42

2009

2.3

1

2009

7 0

61

RO

E

2011

30.7

%

2008

2.1

2

TA

T

2011

1.2

7

2008

5 3

74

2010

27.0

%

2010

1.2

9

2009

27.9

%

2009

1.4

1

2008

27.5

%

RO

A

2011

9.8

%

2008

1.6

0

Net

revenue

per

com

pany

2011

8 2

90

2010

9.1

%

2010

7 5

61

2009

12.1

%

2009

9 9

36

2008

13.0

%

RO

S

2011

7.8

%

2008

8 6

00

2010

7.0

%

2009

8.6

%

2008

8.1

%

Net

profi

t

per

com

pany

2011

639

2010

532

2009

854

2008

698

Retu

rn o

n e

quit

y

RO

E =

RO

A *

levera

ge

Assets

turn

over

TAT =

Net

revenue p

er

com

pany /

Assets

per

com

pany

Retu

rn o

n a

ssets

RO

A =

RO

S *

TAT

Net

revenue p

er

com

pany (

*)

[thou R

ON

]

(*)

Net

pro

fit

per

com

pany o

r net

revenue p

er

com

pany fro

m a

giv

en y

ear

(**)

Valu

e o

f assets

per

com

pany o

r equit

y p

er

com

pany fro

m t

he e

nd o

f year

Equit

y p

er

com

pany (

**)

[thou R

ON

]

levera

ge =

Assets

per

com

pany /

Equit

y p

er

com

pany

Assets

per

com

pany (

**)

[thou R

ON

]

Retu

rn o

n n

et

sale

s

RO

S =

Net

pro

fit

per

com

pany

/ N

et

revenue p

er

com

pany

Net

pro

fit

per

com

pany (

*)

[thou R

ON

]

*

*

//

/



-29

-

Soft

ware

Publishers

Co

mp

an

ies f

ro

m t

he

Se

cto

r

To

p P

laye

rs f

ro

m t

he

Se

cto

r

impro

ve o

f

tax s

hie

ld

o ++ + + + + ++

++ o o +

levera

ge

incre

ase

+ ++ + + + o o ++

++ o ++

cost

cutt

ing

+ ++ o + o ++ + ++ o + o

incre

ase

of re

venue

+ ++ + o + + ++ o ++ o o ++

+ o

4.9

8%

32.4

9%

17.0

8%

16.0

9%

15.9

5%

17.5

7%

18.5

9%

18.3

1%

14.2

9%

14.1

1%

16.9

5%

RO

S

5.9

8%

0.1

2%

7.3

0%

6.2

5%

6.7

8%

3.3

8%

4.1

3%

3.9

5%

26.7

3%

4.7

5%

6.9

4%

TAT

1.1

1

0.5

9

1.0

2

1.6

9

1.2

2

1.2

0

0.4

7

4.0

6

0.8

4

2.3

2

1.4

5

RO

A

6.6

4%

0.0

7%

7.4

2%

10.5

4%

8.2

8%

4.0

7%

1.9

5%

16.0

0%

22.3

2%

11.0

3%

8.8

3%

levera

ge

4.9

6

-284.9

3

2.9

6

2.6

9

5.3

1

8.0

5

6.2

0

1.3

6

-1.4

5

8.6

9

-24.6

2

RO

E

32.9

4%

-20.6

8%

21.9

9%

28.3

3%

43.9

7%

32.7

6%

12.0

6%

21.7

3%

-32.3

8%

95.8

5%

23.6

6%

Em

plo

ym

ent

1715

1

964

150

285

370

99

807

590

209

519

Assets

[mn R

ON

]

385.6

7

482.4

2

201.7

0

108.7

6

121.7

6

112.6

4

234.2

5

21.1

9

94.0

7

31.4

1

179.3

9

Equit

y

[mn R

ON

]

77.7

1

-1.6

9

68.0

8

40.4

5

22.9

3

13.9

9

37.7

9

15.6

0

-64.8

4

3.6

2

21.3

6

Y/Y

dynam

ics

of net

pro

fit

123.1

3%

42.7

3%

15.8

3%

47.7

7%

352.5

1%

-49.2

2%

62.3

0%

35.2

5%

108.9

5%

82.1

4%

Net

Pro

fit

[mn R

ON

]

25.6

0

0.3

5

14.9

7

11.4

6

10.0

8

4.5

8

4.5

6

3.3

9

21.0

0

3.4

7

9.9

5

Y/Y

dynam

ics

of net

revenues

-9.2

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-11.1

5%

-21.5

7%

67.4

5%

11.1

5%

-45.6

5%

5.3

9%

32.4

3%

22.4

9%

5.6

9%

Net

Revenue

[mn R

ON

]

427.8

7

283.4

7

204.9

9

183.4

5

148.6

3

135.6

1

110.2

8

85.9

2

78.5

7

72.9

7

173.1

8

Mark

et

share

9.0

4%

5.9

9%

4.3

3%

3.8

8%

3.1

4%

2.8

6%

2.3

3%

1.8

2%

1.6

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1.5

4%

3.6

6%

Da

ta f

ro

m 2

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1

Sh

are o

f n

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top 1

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om

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th

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cle

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f p

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by t

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in

Cre

dit

info

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CC

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at

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on

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for:

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-30

-

Soft

ware

Publishers

Lis

ted

co

mp

an

ies f

ro

m t

he

se

cto

r (

BV

B/

Ra

sd

aq

; 1

st

an

d 2

nd

tie

r)

βU

βL

βU

βL

P/B

VP/E

Δ%

P

(y/y

)P

++

+

++

+

RO

STAT

0.0

00

RO

A

-49.9

5%

levera

ge

1.1

86

RO

E

-59.2

5%

Book

Valu

e

[mn R

ON

]

4.0

6

Net

Pro

fit

[mn R

ON

]

-2.4

1

Net

Revenue

[mn R

ON

]

0.0

0

Mark

et

share

0.0

0%

RA

SD

AQ

Da

ta f

ro

m 2

01

1

Pic

on

Liq

uid

ity

Main

in

dic

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daily

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last

year

[thou

RO

N]



-31

-

Soft

ware

Publishers

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ers a

nd

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uis

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g o

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-32-

Software Publishers

Key Concepts Definitions of Indices

Number of companies Number of reporting companies V

Net revenue per company [mn RON]Net revenue

-----------------------------------------

Number of companies

V

---

V

Total operating cost per company [mn RON]

(including depreciation and amortization)

Total operating costs

---------------------------------------

Number of companies

V

---

V

Operating profit (EBIT) per company [mn RON]Operating profit - Operating loss

---------------------------------------

Number of companies

V

---

V

Operating profit (EBIT) per profit-making company [mn RON]Operating profit

---------------------------------------------

Number of profit-making companies

V

---

V

Gross profit per company [mn RON]Gross profit - Gross loss

---------------------------------------

Number of companies

V

---

V

Gross profit per profit-making company [mn RON]Gross profit

---------------------------------------------


V

---

V

Net profit per company [mn RON]Net profit - Net loss

---------------------------------------

Number of companies

V

---

V

Net profit per profit-making company [mn RON]Net profit

---------------------------------------------


V

---

V

Operating Sales Margin [%]Operating profit - Operating loss

-------------------------------------

Net revenue

V

---

V

Net Sales Margin [%]Net profit - Net loss

------------------------------------

Net revenue

V

---

V

Return on Equity [%]Net profit - Net loss

------------------------------------

Equity

V

---

V

Return on Assets [%]Net profit - Net loss

------------------------------------

Total assets

V

---

V

Effective tax rate [%]Gross profit - (Net profit - Net loss)

-------------------------------------------

Gross profit

V

---

V

Share of profit-making companies [%]Number of profit making companies

---------------------------------------------

Number of companies

V

-----

V

Current ratio [%]Current assets

------------------------

Short-term liabilities

V

---

V

Quick ratio [%]Current assets - Inventory

-------------------------------


V

---

V

Super quick ratio [%]Cash & Equivalent

------------------------------------


V

---

V

Receivables to liabilities ratio [%]Receivables

------------------------


V

---

V

Days of coverage for Cash & Equivalent [days](Receivables + Inventories - Short term liabilities) * 360

------------------------------------------------------------------

Net revenue of goods and services

V

---

V

Days of coverage for receivables [days]Receivables * 360

------------------------------------


V

---

V

Days of coverage for inventories [days]Inventories * 360

--------------------------------------


V

---

V

Days of coverage for short term liabilities [days]Short term liabilities * 360

--------------------------------------


V

---

V

Debt to Equity ratio [%]Long-term liabilities

-----------------------

Equity

V

---

V

Equity to total assets ratio [%]Equity

--------------

Total assets

V

---

V

Long-term liabilities to total liabilities ratio [%]Long-term liabilities

-----------------------

Total assets

V

---

V

Debt ratio [%]Total liabilities

-----------------

Total assets

V

---

V

Operating profit coverage [years]Total liabilities

----------------------------------------

Operating profit - Operating loss

V

-----

V

V - Value for a given year

Fin

an

cia

l cycle

s

Definition of index

Ge

ne

ra

l in

dic

es

Pro

fita

bil

ity r

ati

os

Liq

uid

ity r

ati

os

Fin

an

cia

l le

ve

ra

ge

ra

tio

s



-33-

Software Publishers

Average employment per company [person]Number of employees

--------------------------

Number of companies

V

---

V

Labour productivity [thou. RON/person]Net revenue

---------------

Employment

V

---

V

Labour cost as the share in total operating costs [%]Wages + Social insurance & other contributions to employees

----------------------------------------------------------------------


V

---

V

Fixed assets per employee [thou. RON/person]Fixed assets

------------------

Employment

V

---

V

Labour intensity of production [%]Wages + Social insurance & other contributions to employees

----------------------------------------------------------------------

Net revenue

V

---

V

Material & energy intensity of production [%]Material & energy costs

----------------------------

Net revenue

V

---

V

Total assets turnover [%]Net revenue

------------------

Total assets

V

---

V

Fixed assets productivity [%]Net revenue

------------------

Fixed assets

V

---

V

Labour cost per employee [thou. RON/person]Wages + Social insurance & other contributions to employees

----------------------------------------------------------------------

Employment

V

-----

V

Share of wages in total operating costs [%]Wages

-------------------------


V

---

V

Share of social contributions in total operating costs [%]Social insurance and other contributions to employees

--------------------------------------------------------------


V

---

V

Share of external services in total operating cost [%]External services

-------------------------


V

---

V

Share of material & energy used in total operating costs [%]Material & energy costs

-----------------------------


V

---

V

Share of taxes & fees in total operating costs [%]Taxes & fees

-------------------------


V

---

V

Co

sts

V - Value for a given year

Definition of indexP

ro

du

cti

on

fa

cto

rs



-34-

Software Publishers

Definitions of Selected Concepts

EconTrends for Romania are based to large extent on the structure of the North American Industry

Classification System (NAICS). Analyses made for respective industry divisions and groups are

consistent with this classification. However the used system of industry classification is not fully

compatible with the Romanian Classification of Activities due to Romanian statistics - specific factors.

Moreover the reports are based on the bottom-up aggregation of individual companies financial data

from the Creditinfo Romania and CCIR (Chamber of Commerce and Industry), which provides the

financials not for all, but for all major companies from the sector. Hence the report covers not the full

sector but only its major part.

Forecasting models used in EconTrends have a hierarchical structure. The first layer consists of

models that transmit behavior of macroeconomic variables like nominal GDP growth, increases in prices

to the behaviors of financial parameters like net sales per company and EBIT margin in all analyzed

economic divisions. EBIT margin should be understood as earnings before interest and taxes. The next

layer of models translates the behavior of the above parameters in economic divisions into the groups

within them, than into classess within groups and subclassess within classess. The econometric

models that are used in respective layers have a linear structure and belong to a well known group of

regression models.

Risk-profitability maps show the location of sectors depending on the value of profitability and risk

they achieve. Sectors singled out by being encircled by a red ring are most useful –„efficient” for

investors, due to the relatively highest return at the lowest variability of profit (relatively high value of

the Sharp’s index). On the basis of the coordinate values of „efficient” sectors, the preferences of

investors on the market are shown by a grey dotted line visible on the graphs – this is a level line of

the linear function of utility for investors (Investors Utility Function). The level line shows preferences

of the majority of investors with regard to achieved profitability at a given risk. Sectors, which are

placed above the linear function of usefulness are preferred by investors due to the possibility of

achieving a high profitability, at a particular level of risk. Sectors lying below the level line are not as

attractive for investors, due to the relatively high variability in profit as against their profitability.

The forces map shows decompositions of the profitability index into particular driving forces. The idea

of the strengths map is to show the effect of particular variables on the dynamics of profit both in

current and forecasted situation.

Several concentration measures are used to examine the degree of the market power concentration

within the analyzed sectors. The Herfindahl-Hirschman Index (known as HHI), is a measure of the size

of firms in relationship to the industry and an indicator of the amount of competition among them. It is

defined as the sum of the squares of the market shares of each individual firm: ie the average market

share, weighted by market share. As such, it can range from 0 to 10,000 moving from a very large

amount of very small firms to a single monopolistic producer. Decreases in the Herfindahl index

generally indicate a loss of market power and an increase in competition, whereas increases imply the

opposite. The Lorenz curve in turn, is a graph showing the proportion of the distribution assumed by

the bottom % market share values. It is used to represent market shares distribution, where it shows

for the bottom x% of companies in the sector, what percentage y% of the market share they have.

The percentage of companies is plotted on the x-axis, the percentage of market share on the y-axis.

It is considered it to be a measure of inequality of the market shares within the given sector. The Gini

coefficient is a measure of statistical dispersion in the market shares defined as the field between the

diagonal and the Lorentz curve. It is defined as a ratio with values between 0 and 1. A low Gini

coefficient indicates more equal market shares, while a high Gini coefficient indicates more unequal

distribution. 0 corresponds to perfect equality (all companies having exactly the same market share)

and 1 corresponds to perfect inequality (where one monopolist has all the market share, while

everyone else has zero share in the market).

Forecasting models

Risk-profitability maps

The forces map

Several concentration measures are used to examine the degree of the market power concentration

within the analyzed sectors.

The Herfindahl-Hirschman Index (known as HHI), is a measure of the size of firms in relationship to the

industry and an indicator of the amount of competition among them. It is defined as the sum of the

squares of the market shares of each individual firm: ie the average market share, weighted by market

share. As such, it can range from 0 to 10,000 moving from a very large amount of very small firms to a

single monopolistic producer. Decreases in the Herfindahl index generally indicate a loss of market

power and an increase in competition, whereas increases imply the opposite.

The Lorenz curve in turn, is a graph showing the proportion of the distribution assumed by the bottom

% market share values. It is used to represent market shares distribution, where it shows for the

bottom x% of companies in the sector, what percentage y% of the market share they have. The

percentage of companies is plotted on the x-axis, the percentage of market share on the y-axis. It is

considered it to be a measure of inequality of the market shares within the given sector.

Concentration measures

Herfindahl-Hirschman Index

Lorenz Curve



-35-

Software Publishers

The Gini coefficient is a measure of statistical dispersion in the market shares defined as the field

between the diagonal and the Lorentz curve. It is defined as a ratio with values between 0 and 1. A

low Gini coefficient indicates more equal market shares, while a high Gini coefficient indicates more

unequal distribution. 0 corresponds to perfect equality (all companies having exactly the same market

share) and 1 corresponds to perfect inequality (where one monopolist has all the market share, while

everyone else has zero share in the market).

Gini coefficient

Forecasts presented in EconTrends for Romania relate to a period of two years ahead in relation to

the end of the time period for which statistical data are available.

Liquidity (of public company) - ranked accordingly to the averaged daily shares' turnover from the last

year

Betas and Required Rates of Return - are calculated for listed companies under CAPM model.

- rate of return from investments in shares of an analysed company,

- Leveraged Beta,

- Unleveraged Beta,

- Required Rate of Return, where:

DuPont Pyramid is a very useful tool to decompose Return on Equity (ROA) into various ratios like:

Return on Assets (ROA), Return on Sales (ROS) and Total Assets Turnover (TAT). It enables easy

drawing of conclusions about the efficiency of an analyzed company in various areas of its activity.

- effective tax rate.

- required (by investors) rate of return from investments in the shares of an analysed company; i.e.

the expected rate of return when the market stays in equilibrium under CAPM assumptions,

- 5Y rate of return of a stock market index (BET),

- 5Y expected rate of return of the stock market index (BET),

- risk-free rate of return (of 12-month average Bucharest Interbank Bid Rate),

- debt to equity ratio,

Distributions of Financials present critical values of the distributions of various financials in the

analyzed sector. The presented critical values represent quartiles of the empirical distribution i.e. they

are calculated for 20%, 40%, 60% and 80% of the total population of companies from the given

sector. These distributions make possible easy comparison of an analyzed company to other

companies in the sector, looking at it from various financial angles.

Market multiples (P/E, P/BV) - are widely used for the valuation purposes. Price to Earnings (P/E) is

calculated by dividing closury company's capitalisation in the year after analysed year by the earnings

(net profits) from the last year. For the calculation of Price to Book Value (P/BV) the ending year book

value is taken.

Y/Y Increase, Y/Y Dynamics. Increases are calculated as absolute differences with respect to the

preceding year (Y/Y). Dynamics are calculated as relative [%] differences with respect to the

preceding year (Y/Y).

M

MiL

RVar

RRCov ,

E

DL

U

11

iR

iR

MR

MR

fR

E

D

fMfi RRRR

Y/Y Increase, Y/Y Dynamics

Forecasts

Distributions of Financials

DuPont Pyramid

Market multiples (P/E, P/BV)

Betas and Required Rates of Return

Liquidity



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