VINCIT PLC
BUSINESS REVIEW
Q1 2024
1 January-31 March 2024 (unaudited)
- Vincit Oyj 2023 Visiokatu 1, 33720 Tampere Business ID: 2113034-9 +358 3 217 3762 info@vincit.f
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VINCIT PLC'S BUSINESS REVIEW 1 JANUARY-31 MARCH 2024 (UNAUDITED)
Figures in brackets refer to the corresponding period in the previous year, unless otherwise stated. Percentages and fgures presented herein may include rounding diferences and therefore may not add up precisely to the totals presented.
Revenue decreased as expected, EBITA 3.2%
January-March 2024
- Revenue was EUR 23.0 (27.8) million. Revenue declined by EUR 4.8 million, or 17.2% (+58.6%).
- EBITA was EUR 0.7 (2.5) million, or 3.2% (9.0%) of revenue.
- EBIT was EUR -0.3 (1.5) million, or -1.2% (5.5%) of revenue.
- Earnings per share were EUR -0.02 (0.07).
- Total capacity (FTE) averaged 685 (841) over the reporting period, of which subcontracting was 67 (87) FTEs.
- At the end of the review period, the Group employed a total of 639 (788) people.
Outlook for 2024 (unchanged)
With a lower headcount than last year, revenue in 2024 is expected to be lower than in 2023, but relative proftability is expected to improve year-on-year.
Financial targets for the strategy period 2023-2025
In the strategy period 2023-2025, Vincit aims to achieve 20% annual revenue growth. The goal is to achieve the growth targets with a combination of organic growth and inorganic growth focused outside Finland. The adjusted EBITA (operating proft before goodwill depreciation) target level is over 10% of revenue during the whole strategy period. The company continues its internationalization and aims for revenue from the USA to represent around 30% of Group revenue by the end of the strategy period. The company aims to keep its equity ratio above 60%.
© Vincit Plc 2023 | Visiokatu 1, 33720 Tampere | Y-tunnus:2113034-9 | +358 3 217 3762 | info@vincit.f
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Key fgures
Group
EUR 1,000 | 1-3/2024 | 1-3/2023 | Change % | 2023 | |
Revenue | 22,982 | 27,765 | −17.2% | 98,085 | |
EBITDA¹⁾ | 782 | 2,563 | −69.5% | 1,968 | |
% of revenue | 3.4% | 9.2% | 2.0% | ||
EBITA¹⁾ | 728 | 2,503 | −70.9% | 1,721 | |
% of revenue | 3.2% | 9.0% | 1.8% | ||
EBIT | −268 | 1,538 | −117.4% | −2,196 | |
% of revenue | −1.2% | 5.5% | −2.2% | ||
Proft/loss for the period | -385 | 1,197 | -132.2% | -2,853 | |
Equity ratio % | 63.1% | 68.1% | -7.4% | 63.4% | |
ROE % | -2.5% | 14.0% | -117.9% | -7.5% | |
ROI % | -2.0% | 15.0% | -113.3% | -5.1% | |
Net Debt % | - | 30.4% | -23.9% | 27.0% | -33.4% |
Number of personnel at period end | 639 | 788 | −18,9% | 720 | |
EPS, EUR | −0.02 | 0.07 | −128.6% | −0.17 | |
- The company presents alternative performance measures EBITDA and EBITA to better describe the fnancial development of its business.
© Vincit Plc 2023 | Visiokatu 1, 33720 Tampere | Y-tunnus:2113034-9 | +358 3 217 3762 | info@vincit.f
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Vincit CEO Julius Manni
The frst quarter of 2024 was in line with our expectations in a still challenging environment. The year-on-year decrease in revenue reflects the market downturn in the custom software development business and the planned reduction in Vincit's headcount, which was due to the decline in demand for custom software development services. At the same time, Vincit's strategic transformation journey is moving in the right direction as we seek to apply our expertise more deeper into our customers' business-critical operations. To support this, we are currently recruiting across a broad front for more than 40 open specialist positions.
In the Nordics, our digital commerce-focused business continues to grow, and the foundation for growth and demand for the SAP S/4HANA business is solid. To strengthen our strategic position, we created a new business unit focused on data, analytics and AI. Proftability trend in the Nordic countries improved compared to the second half of last year and we will only take on projects where long-term price levels are sustainable. We will continue to focus on business-driven solution selling and end-to-end project deliveries.
In the US, we continued our disciplined approach to customer acquisition with a sharpened customer ofering and announced signifcant customer contract renewals during the period. Our billing rates in the US are still low, but as new projects materialize, our proftability can quickly turn positive. We still see great potential for Vincit in the US market.
Vincit is now at a turning point in many areas of its business. However, it takes time for our change to have an impact on earnings, and sales cycles for larger projects are currently signifcantly longer due to the uncertainty caused by the general economic situation.
© Vincit Plc 2023 | Visiokatu 1, 33720 Tampere | Y-tunnus:2113034-9 | +358 3 217 3762 | info@vincit.f
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Financial review January-March 2024
Consolidated revenue
Revenue in January-March decreased by 17.2% to EUR 23.0 (27.8) million. Slow sales and reductions in FTE capacity in services business impacted revenue negatively in the frst quarter.
Group proftability and earnings development
EBITDA was EUR 0.8 (2.6) million or 3.4% (9.2%) of revenue during the review period. EBITA was EUR 0.7 million (2.5) or 3.2% (9.0%) of revenue during the review period. EBIT was EUR -0.3 million (1.5) or -1.2% (5.5%) of revenue. Year-on-year proftability impacted by decrease in revenue and project overruns.
The proft for January-March was EUR -0.4 (1.2) million.
Vincit's business areas
Vincit's business comprises two areas: the Service business in the Nordics (Vincit Nordics) and the US (Vincit USA), and the Product business focusing on the Finnish market. Customers include both enterprises and public sector actors.
Service business
Vincit aims to be a comprehensive technology and business partner for our clients to streamline business operations, transform commercial capabilities and accelerate digital development. Vincit's service ofering combines business-driven design, agile software development, data & AI capabilities, and extensive platform expertise especially in SAP ecosystem solutions.
MEUR | 1-3/2024 | 1-3/2023 | Change % | 2023 |
Revenue | 22.1 | 27.0 | −18.0% | 95.1 |
EBITA | 0.7 | 2.5 | −70.3% | 2.1 |
% of revenue | 3.3% | 9.2% | 2.2% | |
Revenue of the Service business in January-March was EUR 22.1 million (27.0), down 18.0% year-on-year.
During January-March, EBITA of the Service business was EUR 0.7 (2.5) million or 3.3% (9.2%) of revenue.
Vincit Nordics
Vincit Nordics revenue decreased year-on-year due to a signifcant reduction in FTE capacity. Proftability decreased year-on-year, but improved from the second half of 2023. Utilizations on average were on a good level. We continue to see ferce
© Vincit Plc 2023 | Visiokatu 1, 33720 Tampere | Y-tunnus:2113034-9 | +358 3 217 3762 | info@vincit.f
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price-driven competition in the custom software market, whereas demand is good in our Commerce and Core business areas that focus on business critical core processes and systems. Especially the SAP S/4HANA ERP related transformation projects are picking up speed and we are putting a lot of efort to succeed in sales in this area.
MEUR | 1-3/2024 | 1-3/2023 | Change % | 2023 |
Revenue | 20.2 | 24.1 | −16.4 % | 84.7 |
EBITA | 1.0 | 2.5 | −60.7% | 2.9 |
% of revenue | 4.8% | 10.2 % | 3.2% | |
Vincit Nordics' revenue in January-March was EUR 20.2 million (24.1), down 19.6% year-on-year.
During January-March, Vincit Nordics' EBITA was EUR 1.0 million (2.5) or 4.8% (10.2%) of revenue.
Vincit USA
Vincit USA revenue was signifcantly behind last year in the frst quarter, due to weak sales. Despite the cost saving measures the quarter was unproftable. During the quarter, a lot of efort was put into developing our commercial processes. Vincit USA also received two major purchase orders with a combined value of 4.4 million euros. The orders are continuations to product development work done for large technology company clients.
MEUR | 1-3/2024 | 1-3/2023 | Change % | 2023 |
Revenue | 2.0 | 2.8 | −31.3% | 10.4 |
EBITA | −0.2 | 0.0 | -1,562.2% | −0.9 |
% of revenue | −11.9% | 0.6% | -8.4% | |
Vincit USA's revenue in January-March was EUR 2.0 (2.8) million, down 31.3% year-on-year.
During January-March, Vincit USA's EBITA was EUR -0.2 (0.0) million or -11.9% (0.6%) of revenue.
Product business
Vincit's own product solution VincitEAM helps companies automate their maintenance operations and asset management.
© Vincit Plc 2023 | Visiokatu 1, 33720 Tampere | Y-tunnus:2113034-9 | +358 3 217 3762 | info@vincit.f
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VincitEAM business revenue grew in the frst quarter compared to last year. Revenue growth was driven by the new customers that started their journey with VincitEAM and increased the recurring revenue.
MEUR | 1-3/2024 | 1-3/2023 | Change % | 2023 |
Revenue | 0.9 | 0.8 | 8.4% | 3.0 |
EBITA | 0.0 | 0.0 | -138.0% | −0.3 |
% of revenue | −0.9% | 2.7% | -17.5% | |
Revenue of the Product business in January-March was EUR 0.9 million (0.8), up 8.4% year-on-year.
During the review period, EBITA of the Product business was EUR 0.0 (0.0) million or -0.9% (2.7%) of revenue.
© Vincit Plc 2023 | Visiokatu 1, 33720 Tampere | Y-tunnus:2113034-9 | +358 3 217 3762 | info@vincit.f
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Table section
Consolidated Income Statement (FAS)
EUR 1,000 | 1-3/2024 | 1-3/2023 | 2023 |
Revenue | 22,982 | 27,765 | 98,085 |
Other operating income | 4 | 0 | 147 |
Materials and services | |||
Purchases during the period | −662 | −415 | −1,939 |
External services | −3,015 | −3,522 | −13,458 |
Personnel expenses | |||
Salaries and fees | −12,344 | −14,064 | −52,162 |
Pensions | −1,914 | −2,281 | −8,450 |
Other indirect employee expenses | −153,0 | −488,2 | −1,848 |
Depreciation, amortization and impairment | |||
Depreciation according to plan | −153 | −135 | −585 |
Goodwill amortization | −897 | −891 | −3,579 |
Other operating expenses | −4,116 | −4,431 | −18,408 |
EBIT | −268 | 1,538 | −2,196 |
Financial income and expenses | |||
Interest income and other fnancial income | 93 | 52 | 213 |
Interest expenses and other fnancial expenses | −21 | −178 | −480 |
Proft / Loss after fnancial items | −196 | 1,412 | −2,463 |
Income taxes | −187 | −193 | −441 |
Non-controlling interest | −1 | −22 | 51 |
Proft/ Loss for the period | −385 | 1,197 | −2,853 |
© Vincit Plc 2023 | Visiokatu 1, 33720 Tampere | Y-tunnus:2113034-9 | +358 3 217 3762 | info@vincit.f
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Consolidated balance sheet (FAS)
EUR 1,000 | 31/3/2024 | 31/3/2023 | 31/12/2023 |
ASSETS | |||
Non-current assets | |||
Intangible assets | |||
Development expenditure | 1,355 | 716 | 1,225 |
Goodwill | 19,840 | 23,322 | 20,709 |
Other capitalized long-term expenditure | 319 | 474 | 350 |
Tangible assets | |||
Machinery and equipment | 523 | 699 | 557 |
Other tangible assets | 4 | 4 | 4 |
Investments | |||
Other shares and holdings | 30 | 15 | 20 |
Other non-current loan receivables | 297 | 282 | 295 |
Total non-current assets | 22,368 | 25,511 | 23,160 |
Current assets | |||
Non-current receivables | |||
Deferred tax assets | 142 | ||
Receivables from associates | 100 | ||
Loan receivables | 1,377 | 1,439 | 1,388 |
Total non-current receivables | 1,377 | 1,681 | 1,388 |
Current receivables | |||
Trade receivables | 16,230 | 20,362 | 16,927 |
Receivables from associates | 118 | ||
Loan receivables | 2 | 2 | |
Other receivables | 484 | 2,033 | 1,415 |
Prepayments and accrued income | 3,057 | 2,687 | 1,908 |
Total current receivables | 19,774 | 25,201 | 20,252 |
Cash in hand and in banks | 10,408 | 10,341 | 12,158 |
Total current assets | 31,558 | 37,223 | 33,798 |
TOTAL ASSETS | 53,927 | 62,735 | 56,958 |
EUR 1,000 | 3/2024 | 3/2023 | 2023 |
LIABILITIES |
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Equity | |||
Share capital | 545 | 545 | |
545 | |||
Reserve for invested unrestricted equity | 33,274 | 33,139 | 33,274 |
Retained earnings | 562 | 7,553 | 5,127 |
Proft for the period | −385 | 1,197 | −2,853 |
Total equity | 33,996 | 42,435 | 36,093 |
Non-controlling interest | 24 | 311 | 23 |
Liabilities | |||
Non-current liabilities | |||
Loans from fnancial institutions | 77 | 119 | 79 |
Total non-current liabilities | 77 | 119 | 79 |
Current liabilities | |||
Trade payables | 4,345 | 3,251 | 5,520 |
Loans from fnancial institutions | 8 | 27 | |
Liabilities to associates | 8 | 8 | |
Other liabilities | 3,463 | 3,921 | 3,504 |
Accrued expenses and deferred income | 12,021 | 12,682 | 11,704 |
Total current liabilities | 19,830 | 19,869 | 20,763 |
Total liabilities | 19,906 | 19,989 | 20,843 |
TOTAL LIABILITIES | 53,927 | 62,735 | 56,958 |
© Vincit Plc 2023 | Visiokatu 1, 33720 Tampere | Y-tunnus:2113034-9 | +358 3 217 3762 | info@vincit.f
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Vincit Group Oyj published this content on 25 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 April 2024 06:58:05 UTC.