RESULTS dELivEREd by ibS
2009 IBS continued its focus on core operations
Annual Report 2009
IBS in brief 1
2009 in brief 2
Corporate governance of IBS 3
The IBS share 6
Five-year summary 8
Key figures and data per share 9
The Board and Auditors 10
IBS Group Management 11
Board of Directors’ report 12
The group’s statements 19
The parent company’s statements 21
Accounting principles and notes 25
Audit report 48
Annual meeting and financial calendar 50
IBS Annual Report 2009 1
IBS in brief
IBS develops and supplies international business systems, implementation, maintenance and
professional services, and has more than 4 000 customers in some 40 countries, with a local
presence in four geographical areas: nordics, europe, americas and asia Pacific. With a strong
global organization, prominent international partnerships and efficient software, IBS helps its
customers reduce their costs and optimize their operations. after more than 30 years in the
industry, IBS has acquired the necessary experience to be able to offer extraordinary customer
value. the company’s expertise focuses on four main areas.
IBS ProfeSSIonal ServIceS IBS SaleS & marketIng
IBS Professional Services is not only the area that accounts for the IBS’ customers require products and services that are often
largest percentage of the company’s sales, namely professional complex and are always extremely important to them. IBS’ sales
services revenues, it is also the area in which an increasing number and marketing staff ensure that the company’s customers are well-
of customers receive the greatest value from their partnership with informed and know which solutions IBS provides, which options
IBS. The reason for this is IBS’ employees and their business-related suit them and their operations best, and what IBS can offer to
and technical experience, their commitment in combination with enable the customer to grow in the future. As part of the dialog
their desire to deliver the best results. with customers, IBS defines the products of the tomorrow to meet
future business requirements.
IBS Product develoPment
The core of IBS’ solutions is the IBS Enterprise system and the IPtor
industry-specific solutions known as IBS Pharma, IBS Bookmaster, To be able to utilize IBS’ solutions, certain infrastructure is required.
IBS Electro and IBS Rental. IBS Product Development is responsible IBS has always supplied the necessary server or servers. This meant
for these, as well as for identifying and compiling customers’ that customers only needed one supplier. This has developed into
business requirements and translating them into technology – a separate division, Iptor, that currently offers various types of in-
and back again. The secret lies in offering solutions to business tegration and professional services solutions. The components are
problems and removing responsibility for the complex technology configured to suit the customer’s individual needs, regardless of
involved from the user. whether the customer owns and operates the hardware themselves
or whether IBS operates, maintains and supports all aspects of the
2 IBS Annual Report 2009
2009 in brief
Because the global market for business systems declined and most industries were impacted by difficult financial
challenges, IBS focused its organization on its core operations, particularly deliveries of software solutions to
wholesalers and distributors worldwide. the company’s strategy of having a small and flexible organization has
started to yield results, primarily in the form of increased productivity and license sales.
n New license sales globally grew 30%, with the Americas market showing the biggest increase.
n The strategic initiative announced 23 September 2008 was completed in the first half of the year, with reduction in headcount of 35%.
n Productivity increased throughout IBS with revenue per employee increasing by 26%.
n Full-year EBITDA*) amounted to SEK 75 m (81).
n EBITDA*) per employee improved compared to 2008.
n The company reported a net loss for the year of SEK 443 m (loss: 274). Included in the loss were several non-operational transactions
such as goodwill impairment charges totaling SEK 131 m (53), restructuring costs of SEK 128 m (170) and impairment losses on defer-
red tax assets totaling SEK 76 m (26).
n A new division within IBS, Iptor, was established to focus on offerings in areas such as storage capacity, technical infrastructure, content
management and system integration services.
revenue SPlIt Summary – fInancIal data
SEK million 2009 2008
Software licenses 476 419
Professional services 969 1 150
Hardware and other revenue 374 464
Total revenue 1 819 2 034
Operating income –326 –283
Net income for the year –433 –274
EBITDA*) 75 81
Number off employees at year end 1 114 1 377
■ Professional services, 50%
■ Software licenses, 30% *) EBITDA: earnings before interest, taxes, depreciation, amortization, res-
■ Hardware and other revenue, 20% tructureing costs and loss/gain from sale of subsidiaries/operations.
IBS Annual Report 2009 3
Corporate governance of IBS
SWedISH code of corPorate governance George Ho withdrew on his own request and the Board has since
IBS has endeavored to apply the Swedish Code of Corporate Gov- consisted of five Board members. Ann-Mari Öhman, IBS employee
ernance (“the Code”) since the 2006 fiscal year. A basic principle of representative, withdrew from the Board in January 2010 and was
the Code is that the rules are to be complied with or the deviations replaced by Ulf Eriksson and deputy Harry Greijer. No other deputy
explained. members were elected and the CEO is to be co-opted at Board
lIStIng Company employees participated in Board meetings in a report-
In 2009, the Board of Directors decided to transfer trading of the ing or administrative capacity. The Company’s auditing firm, KPMG,
company’s share from NASDAQ OMX Nordic to NASDAQ OMX First presented its findings from the audit during the Board meeting held
North. The IBS Class B share has been listed on NASDAQ OMX First on February 11, 2010.
North since May 11, 2009.
annual general meetIng The Board has elected specific committees to address matters per-
The Annual General Meeting for 2009 was held at the Nordic Sea taining to remuneration, strategy and audit.
Hotel in Stockholm on May 7, 2009. A total of 23 shareholders,
including proxies, were present at the meeting, representing 83.6 remuneration committee
percent of the votes and 78.0 percent of the capital. The Board of The Remuneration Committee is charged with handling salary and
Directors and management of IBS, along with the auditor of the other incentives, employment terms and conditions, and pension
company, were present at the meeting. issues pertaining to senior executives in the IBS Group, as well as
The Annual General Meeting for 2010 will be held at Solna Sum- ensuring that the Company complies with requirements regard-
mit Gate in Solna on May 6, 2010. ing public disclosure related to remuneration to senior executives.
The Committee comprises Gunnel Duveblad (Chairman), Dr. Pallab
eXtraordInary general meetIngS Chatterjee and Bertrand Sciard. The Remuneration Committee held
In 2009, one Extraordinary General Meeting was held on January three meetings during the year.
15. In total, 64 shareholders, including proxies, were present at the
meeting, representing 86.5 percent of the votes and 85.1 percent Strategy committee
of the capital. The meeting resolved to introduce three long-term In October 2009, IBS established a Strategy Committee to assess, on
employee stock option programs directed in part at the CEO and in a continuous basis, the company’s strategic position in the markets
part at senior executives and key persons as well as Board members. in which it is active. The Committee serves an exclusively analytical
The meeting also resolved to approve a directed issue of warrants to and investigative function and reports its conclusions to the Board,
ensure the programs and the transfer of warrants for the fulfillment which then makes the necessary decisions. The Strategy Committee
of the undertakings pursuant to the programs. The meeting also comprises three members: Vinit Bodas (Chairman), Pallab Chatter-
resolved to discontinue the incentive program and associated buy- jee and Christian Paulsson.
back program adopted by the 2008 Annual General Meeting.
SHareHolderS’ rIgHt to SuBmIt ProPoSalS The Audit Committee normally meets in connection with interim
All shareholders are entitled to submit proposals to the Annual Gen- reports and the year-end report. The Committee’s main assignment
eral Meeting. is to prepare material for the Board to ensure a high level of quality
of the company financial reporting and continuously consult with
nomInatIon commIttee the company’s auditors regarding internal and external auditing as
In 2008, Deccan Value Advisors, the single largest shareholder in well as company risk. The Audit Committee follows the instructions
IBS, stated that they did not intend to participate in the work of for its work established by the Board of Directors.
a nomination committee, but rather present its own proposals in During 2009, the Committee comprised Christian Paulsson
connection with the Annual General Meeting. Hence, the establish- (Chairman) and Gunnel Duveblad. The company thereby deviates
ment of a nomination committee was deemed to be inapplicable. from the Code since the Committee consists of two members in-
Thus, the company deviates from the rules contained in the Code stead of three. Auditor Åsa Wirén Linder from KPMG and the Com-
concerning nomination committees. pany’s Chief Financial Officer participate in all meetings held by the
Proposals and opinions from the other shareholders are more Audit Committee. The Audit Committee held three meetings during
than welcome. A shareholder that wishes to nominate a Board 2009.
member may contact the Chairman of the Board of Directors, Dr.
Pallab Chatterjee. Board of dIrectorS’ Work
The work of the Board is conducted in accordance with the Swed-
Board of dIrectorS ish Companies Act, the NASDAQ OMX First North’s rules for issuers
The Annual General Meeting elected Dr. Pallab Chatterjee (Chair- and other applicable rules and regulations, as well as the formal
man), Vinit Bodas, Gunnel Duveblad, George Ho, Christian Paulsson, work plan for the Board of Directors. The formal work plan was
Bertrand Sciard and Ann-Mari Öhman to the Board. On August 13, established at the statutory Board meeting in conjunction with the
4 IBS Annual Report 2009
Annual General Meeting on May 7, 2009. The Board of Directors IBS group management during 2009
also establishes a financial policy that stipulates appropriate levels CEO Mike Shinya 1 Jan – 31 Dec
of risk for financing, interest rates, liquidity, credit and currencies, CFO Lennart Bernard 1 Jan – 7 Apr
as well as an information policy. Reviews of the work plan for the
CFO Mark Williams 8 Apr – 31 Dec
Board, associated instructions and the information policy are made
annually. Other instructions are reviewed as needed. SVP Communications Oskar Ahlberg 1 Jan – 31 Dec
According to the current work plan, the Board shall normally hold SVP Human Resources and
six Board meetings per year, in addition to the statutory meeting Administrations Doreena Ross 1 Jan – 31 Dec
in conjunction with the Annual General Meeting. At each ordinary
meeting, the company’s financial reports and operational reporting Internal control
are addressed. One meeting shall focus on strategic issues and one Introduction
shall focus on the budget for the coming fiscal year. Under the Swedish Companies Act, the Board has the ultimate re-
The Chairman of the Board leads and directs the work of the sponsibility for the internal control of the company, which is also
Board. The Chairman follows the business in collaboration with the stated and clarified by the Code. The organization of internal con-
President and ensures that other members of the Board receive the trol is described below, particularly with regard to the financial
information and documentation required for high-quality discus- reporting within IBS. The report is not part of the formal Annual
sions and decisions. The Chairman is also responsible for leading Report documentation and has not been audited by the company’s
the evaluation of the President and is involved in the evaluation auditors.
and development issues concerning the Board and the President. In short, the Code specifies that the Board shall ensure that the
The Chairman represents the company in matters concerning the company’s organization, by involving Company Management and
shareholders. other employees, is designed so that the accounting, financial re-
During 2009, the Board held 13 meetings, of which six were ordi- porting and the company’s financial position is adequately moni-
nary meetings in connection with interim reports, budget approval tored.
and the Annual General Meeting. One of the Board meetings main-
ly focused on the company’s strategic and long-term development, control environment
and one meeting was a statutory meeting in conjunction with the The basis of financial reporting is the control environment, which
2009 Annual General Meeting. The meetings followed an approved comprises the following components:
agenda preceded by proposals and documentation for each item on
the agenda, which was sent out to the Board members. n The Board’s work processes. The Board’s formal work plan defines
the division of duties between the Board, Committees, the Chair-
evaluatIon of tHe Board of dIrectorS and PreSIdent man and the President.
During 2009, the Chairman of the Board was evaluated in accord- n Organizational structure. Roles, responsibilities and processes are
ance with the Code’s guidelines. No evaluation of the Board was clarified through organizational charts and descriptions.
conducted. n Control documents. Internal policies, handbooks, manuals and
guidelines contain instructions for the reporting and accounting
audItorS of financial data, descriptions of external accounting regulations
The 2008 Annual General Meeting elected the auditing firm KPMG and other guidelines, such as financial and investment policies.
AB as the company’s auditors for the period until the 2012 Annual Policies pertaining to HR, IT and communication are also defined
General Meeting. The authorized accountant in charge is Åsa Wirén and used in the business.
Linder. n Appropriate internal reporting. IBS’ internal financial reports con-
taining outcomes, budgets, forecasts, analyses of essential key
IBS grouP management durIng 2009 figures, sales and market analyses and the status of product de-
The President leads and directs the work of the Group Management velopment are regularly submitted to the Board and senior execu-
and makes decisions in consultation with the other members. IBS tives.
Group Management comprises Mike Shinya (President and CEO), n Competent and reliable personnel. Measures to recruit, retain
Doreena Ross (SVP Human Resources and Administration), Oskar and further develop employees with appropriate qualifications
Ahlberg (SVP Communications) and CFO. CFO Lennart Bernard provide the foundation for the operation’s favorable develop-
was a member of Group Management from January 1, 2009 up ment.
to and including April 7, 2009, CFO Mark Williams was a mem-
ber of Group Management from April 8, 2009 up to and including
December 31, 2009. At the beginning of March 2010, Fredrik San-
delin assumed the position of Executive Vice President and CFO and
is a member of Group Management. Christian Paulsson is a mem-
ber of Group Management from February 2010 and comprises the
position of Executive Vice President and Corprate Development and
M&A. Group Management regularly participates in business reviews
under the leadership of the President.
IBS Annual Report 2009 5
Members of the Participation in Participation in
Board during Participation in Remuneration Audit Committee Independent
the following Board meetings Committee meet- meetings Company/ Shares Options
Board members periods in 2009 (total of 13) ings (total of 3) (total of 3) Owners held in IBS held in IBS 5)
Dr. Pallab Chatterjee 1 Jan – 31 Dec 12/13 3/3 - Yes/Yes 50 0002) 600 000
Bertrand Sciard 1 Jan – 31 Dec 13/13 3/3 - Yes/Yes 0 100 000
Gunnel Duveblad 1 Jan – 31 Dec 13/13 3/3 3/3 Yes/Yes 20 000 2) 100 000
Vinit Bodas 1 Jan – 31 Dec 11/13 - - Yes/No 01) -
Christian Paulsson 3) 1 Jan – 31 Dec 12/13 - 3/3 No/No 5 0002) 302 872
George Ho 1 Jan – 13 Aug 5/8 - - Yes/No N /A -
Ann-Mari Öhman 4) 1 Jan – 31 Dec 13/13 - - No/Yes N/A -
As President and Chief Investment Officer in Deccan Value Advisors, Vinit Bodas represents Deccan Value Advisors’ entire holding of IBS shares.
The total shares held amounts to 4,650,000 Class A shares and 87,486,700 Class B shares as per December 31, 2009.
Class B shares
Christian Paulsson has been employed by IBS since February 2010. During 2009 Christian was employed by Deccan Value Advisors.
Ann-Mari Öhman withdrew from the Board in January 2010 and was replaced by Ulf Eriksson and deputy Harry Greijer.
Options held as per April 21, 2010.
IBS continuously reviews the company’s processes in order to iden- Updates of accounting procedures and principles, reporting
tify the manner in which the risk of errors in the financial reporting and requests for information are continuously made available and
is to be minimized. In this context, items in the income statement brought to the attention of personnel concerned.
and balance sheet that have an elevated risk of error are identified. The company has an information policy for external communica-
The IBS Board has identified a number of processes for which it is tion and contacts with analysts.
vital that risk management is described and developed further, such Internal communication primarily takes place over the intranet,
as the invoicing process. and IBS’ goal is for employees to understand the business operation
and vision, as well as the IBS core values. Every month, business
control activities areas report their income and business situation to Company Man-
Risk assessment results in a number of control activities aimed at agement, in the form of a structured debriefing.
managing the risks. For example, it is vital for IBS that approval,
accuracy and completeness characterize the handling of contracts, follow-up
invoices, revenue recognition, project follow-up, purchasing, pay- Management’s follow-up of the functionality of the control struc-
ments, salaries, taxes and fees. Controls shall also be in place with ture is partly implemented through reports from controller follow-
the aim of minimizing risks for the misappropriation of assets and of up of subsidiaries. The Audit Committee receives continuous reports
improper favors being granted at the expense of the company. Sub- and assessments on the financial situation from the CFO and audi-
sidiaries must have appropriate processes for accounting, balance- tors, and the CFO and auditors then continuously update the Board
sheet analysis and reporting. The process for the Group’s external in its entirety.
financial reporting (quarterly reports and annual reports) must be
subject to control. need for internal audit function
In 2009, internal audits were conducted in selected areas that the
Internal information and communication Board wished to inspect in particular. This work was led by the
Company Management has compiled policies, guidelines and rules Chairman of the Audit Committee and reporting was made direct-
in electronic manuals on the Company’s intranet. Furthermore, ly to the Board. The objective of the internal audit function is to
management continuously updates employees on the status and identify risks and improve internal control and the processes in the
outcome with regard to financial developments. Group. The Board does not deem it necessary to establish a special
internal audit function.
6 IBS Annual Report 2009
The IBS share
the IBS share has been listed on the naSdaQ omX first north since may 11, 2009. the share was previously
listed on the naSdaQ omX nordic exchange since may 20, 1986.
PrIce trend and lIQuIdIty WarrantS Program
The value of the IBS share rose by 21 percent during the year. The On January 15, 2009, an Extraordinary General Meeting was held
highest price paid for the share was SEK 8.50 on February 10 and which resolved to introduce share-based incentive programs for the
the lowest was SEK 5.20 on March 13, measured on closing price. Board of Directors, the President and certain senior executives and key
The annual turnover of the IBS share decreased during 2009 to SEK employees. The meeting also resolved to approve an issue of a maxi-
61 m. The average daily turnover was SEK 0.2 m and the IBS market mum of 11 518 500 warrants. At December 31, 2009, 1 711 250
value on December 31 was SEK 842 m. employee stock options were outstanding (also refer to Note 2).
oWnerSHIP Structure dIvIdend PolIcy
On December 31, the number of shareholders amounted to 4 759. The long-term objective of the Board of Directors is to distribute not
The largest shareholder in IBS is Deccan Value Advisors, which held less than 20 percent of after-tax profit to shareholders in the form
72.8 percent of the capital and 79.2 percent of the votes on Decem- of dividends. When proposing dividends, the Board also takes into
ber 31, 2009. At year-end, the ten largest shareholders accounted consideration the company’s requirements for consolidation, liquid-
for 83.1 percent of the share capital and 87.3 percent of the votes. ity and capital for future expansion.
SHare caPItal dIvIdend
IBS’ share capital is distributed across 4 725 000 Class A shares and The Board proposes that no dividend be paid for the 2009 fiscal year.
121 849 374 Class B shares. Each Class A share carries ten votes
and each Class B share one vote. The quotient value of both share rePurcHaSe of treaSury SHareS
classes is SEK 0.20 per share, making a total of SEK 25 314 875 in No repurchase of shares took place in 2009. In total, IBS has
registered share capital. 2 303 800 shares in its possession, which were repurchased at an
Via a profit-sharing fund for personnel established by IBS AB, average share price of SEK 21.70 per share, corresponding to a total
the employees’ shareholding in IBS AB amounts to 226 000 shares. amount of SEK 50 m. According to a resolution passed by the An-
However, the employees cannot exercise any direct voting rights for nual General Meeting in 2006, the acquired shares may be used as
said shares. payment for, or the financing of, company acquisitions.
In 2009, no change in the share capital took place.
lIStIng The IBS website www.ibs.net/en/about-us/investors/ contains infor-
In 2009, the Board of Directors decided to transfer trading of the mation on the IBS share price trend, lists of analysts, interim reports,
company’s share from NASDAQ OMX Nordic to NASDAQ OMX First annual reports and press releases. This information is continuously
North. The IBS Class B share has been listed on NASDAQ OMX First updated. In connection with the first distribution of financial infor-
North since May 11, 2009. mation, IBS offers all shareholders the opportunity to actively decide
whether they want to continue receiving this information by post.
The ten largest shareholders in IBS, December 31, 20091)
Shareholder Class A shares Class B shares Holding,% Votes, %
Deccan Value Advisors 4 650 000 87 486 700 72.8 79.2
LGT Bank in Liechtenstein Ltd 0 3 000 000 2.4 1.8
Didner & Gerge Aktiefond 0 2 542 750 2.0 1.5
Brohuvudet AB 0 2 100 000 1.7 1.2
Olof Andersson Förvaltnings Aktiebolag 75 000 769 142 0.7 0.9
Mike Shinya 0 1 167 250 0.9 0.7
Residenset Capital Management S.A 0 1 047 558 0.8 0.6
Avanza Pension 0 813 300 0.6 0.5
Mats Nilsson 0 759 500 0.6 0.5
Mark Williams 0 736 755 0.6 0.4
Total, largest shareholders 4 725 000 100 422 955 83.1 87.3
Other 2) 0 21 426 419 16.9 12.7
Total 4 725 000 121 849 374 100.0 100.0
Information obtained from Euroclear Sweden.
Including IBS repurchase of own shares 2 303 800.
IBS Annual Report 2009 7
key figures ownership per the largest coun- ownership structure,
2009 2008 tries, december 31, 2009 (votes)* december 31, 2009*
Average number of shares (thousand) 124 271 104 185
Earnings per share –3.49 –2.63
Cash flow per share –0.80 0.73
Share price at year-end 6.65 5.50
Proposed dividend per share - -
Average share price 6.79 9.87
Market capitalization (SEK m) 842 696
Share price development
Share turnover, 000s /month ■ USA, 79% ■ Non-Swedish registered
IBS B OMX S
■ Sweden, 14% institutions and funds, 81%
40 40 000
■ UK, 2% ■ Non-Swedish resident
35 35 000 private owners, 1%
■ Liechtenstein, 2%
■ Swedish resident
■ Other, 3%
30 30 000 private owners, 8%
■ Swedish registered institutions
25 25 000 and funds, 10%
20 20 000
distribution of shareholdings per december 31, 2009*
15 15 000
No. of Owners, No. of Capital,
10 10 000
Size owners % shares %
5 5 000 1–1 000 3 184 66.9 1 162 055 0.9
1 001–10 000 1 310 27.5 4 485 325 3.5
2004 2005 2006 2007 2008 2009 2010 10 001–100 000 230 4.8 6 515 125 5.1
100 001–1 000 000 28 0.6 10 159 311 8.0
1 000 001– 7 0.2 104 252 5581) 82.4
Total 4 759 100 126 574 374 100
Including repurchase of own shares.
Share capital development
Year Event Share capital No of A shares No of B shares
1978 IBS founded 50 000 1 000
1984 Split 10:1 50 000 1 000 9 000
1984 New issue of Class B shares 1:3 and 1:5 80 000 1 000 15 000
1985 Bond issue 89:1 7 200 000 90 000 1 350 000
1986 New issue of Class B shares 1:5 8 550 000 90 000 1 620 000
1989 New issue of Class B shares 1:5 10 260 000 90 000 1 962 000
1989 New issue of Class B shares via convertible notes 10 418 000 90 000 1 999 500
1990 New issue of Class B shares via convertible notes 10 696 000 90 000 2 049 204
1996 Directed new share issue 11 571 020 90 000 2 224 204
1997 Split 5:1 11 571 020 450 000 11 121 020
1997 New share issue 1:5 13 867 418 540 000 13 327 418
1998 New share issue 1:6 14 823 306 630 000 14 193 306
2000 Directed new share issue 15 323 306 630 000 14 693 306
2000 Split 5:1 15 323 306 3 150 000 73 466 530
2000 Conversion of warrants 15 821 606 3 150 000 75 958 030
2001 Non-cash issue of Class B shares 15 921 606 3 150 000 76 458 030
2006 Conversion of warrants 16 721 606 3 150 000 80 458 030
2008 New share issue 1:2 25 082 409 4 725 000 120 687 045
2008 Directed new share issue 25 314 875 4 725 000 121 849 374
*) Information obtained from Euroclear Sweden
8 IBS Annual Report 2009
Sek million 2009 2008 2007 2006 5) 2005 5)
Total revenue 1 819.2 2 033.8 2 259.3 2 278.0 2 376.0
Gross profit 584.8 643.7 793.4 859.0 854.9
Operating profit –325.7 –283.3 37.5 –6.6 639.2
(excluding one-off items, see notes below) –68.91) –58.01) 39.92) 112.4 3) 68.14)
Profit after financial items –322.5 –272.8 26.7 –6.2 653.7
Tax –100.9 –1.6 –30.5 –1.1 –31.6
Net earnings for the year –433.4 –274.4 –3.8 –7.3 622.1
Intangible assets 609.0 748.7 801.3 740.4 689.5
Tangible assets 67.0 87.1 93.1 97.5 104.1
Financial assets 9.8 11.2 12.7 17.2 15.7
Deferred tax receivables 56.0 136.4 135.0 146.1 135.2
Inventories 2.1 7.0 16.6 8.5 6.8
Current receivables 682.0 801.4 892.7 845.3 820.7
Cash and cash equivalents 135.1 312.7 186.3 405.4 676.4
TOTAL ASSETS 1 561.0 2 104.5 2 137.7 2 260.4 2 448.4
Total equity 644.3 1 073.2 956.1 953.2 1 173.1
Long-term liabilities 97.2 112.4 101.1 174.5 171.8
Short-term liabilities 819.5 918.9 1 080.5 1 132.7 1 103.5
TOTAL EQUITY AND LIABILITIES 1 561.0 2 104.5 2 137.7 2 260.4 2 448.4
caSH floW analySIS
Cash flow from operating activities –99.3 76.5 90.2 53.2 80.5
Cash flow from investing activities –87.7 –109.7 –174.3 –142.1 330.1
Cash flow from financing activities 12.8 140.0 –142.1 –166.1 104.5
Cash flow for the year –174.2 106.8 –226.2 –255.0 515.1
Translation differences cash equivalents –3.4 19.6 7.1 –16.0 7.8
Cash and cash equivalents, end of year 135.1 312.7 186.3 405.4 676.4
Excluding restructuring costs, capital loss from sale of subsidiaries, currency translation differences in receivables/liabilities of an operating character and impairment of goodwill.
Excluding capital loss from sale of operations and currency translation differences in receivables/liabilities of an operating character.
Excluding restructuring costs and capital gain from sale of subsidiaries.
Excluding capital gain from sale of subsidiaries.
2005 and 2006 are not restated according to the same principle for function cost allocation as 2008 and 2007.
IBS Annual Report 2009 9
Key figures and data per share
2009 2008 2007 2006 2005
Average number of employees 1 145 1 612 1 815 1 873 1 874
Revenue per employee (SEK thousand) 1 589 1 262 1 245 1 216 1 286
Value added per employee (SEK thousand) 566 534 720 638 1 043
Operating margin, % –17.9 –13.9 1.7 –0.3 26.9
Operating margin, %
(excluding one-off items, see notes below) –3.81) –2.81) 1.7 2) 4.9 3) 2.9 4)
Capital turnover ratio 1 1 1 1 1
Return on total capital, % –17.6 –12.2 2.1 0 33
Return on capital employed, % –33.2 –21.0 3.5 0 54
Return on equity, % –50.7 –27.3 –0.4 –1 73
Ratio of risk capital, % 42 51 45 43 49
Liquidity, % 100 121 100 110 136
Equity to total assets ratio, % 41 50 44 42 48
Interest cost cover ratio –32 –20 2 0 68
DSO (Days of sales outstanding) 76 68 66 52 56
Interest-bearing net debt –14 –206 150 65 –217
key fIgureS Per SHare
Earnings per share –3.49 –2.63 –0.04 –0.09 7.81
Earnings per share after dilution –3.49 –2.63 –0.04 –0.09 7.58
Adjusted equity 5.18 8.64 11.44 11.69 14.74
Adjusted equity after dilution 5.18 8.64 11.44 11.69 14.67
Cash flow from operating activities –0.80 0.73 1.07 0.65 1.01
Cash flow from operating activities after dilution –0.80 0.73 1.07 0.64 0.98
p/e ratio neg. neg. neg. neg. 3.14
p/e ratio after dilution neg. neg. neg. neg. 3.23
Dividend - - - - 2.00
Stock price at year end 6.65 5.50 13.00 26.20 24.50
Average stock price 6.79 9.87 20.88 26.04 18.97
Market capitalization, SEK million 845 696 1 087 2 190 1 950
P/S, market cap./total revenue 0.5 0.3 0.5 0.9 0.8
Average number of shares, thousand 124 271 104 185 84 399 85 110 79 608
Average number of shares after dilution, thousand 124 271 104 185 84 399 85 862 82 026
Total no. of shares, thousand 124 271 124 271 81 304 81 532 79 608
Total no. of warrants, thousand 11 519 - - - 4 000
Excluding restructuring cost, capital costs, capital loss from sale of subsidiaries, currency translation differences in operating receivables/liabilities and impairment of goodwill.
Excluding capital loss from sale of operations.
Excluding restructuring costs and capial gain from sale of subsidiaries.
Excluding capital gain from sale of subsidiaries.
10 IBS Annual Report 2009
The Board and Auditors
Education and work experience: Master’s Education and work experience: Graduated
and Ph.D. degrees in electrical engineering from in law; Previous positions include CEO and
the University of Illinois, USA; Several executive President of Intentia, Executive Vice President
positions at Texas Instruments, including Presid- of GEAC, European MD of JBA Plc, President
ent Personal Productivity Products Group, Chief and CEO of Presys as well as several senior roles
Information Officer and Senior Vice President at IBM.
of Research and Development and Chief Present employment: CEO and President of
Technology Officer; Chief Executive Officer i2 Aldata Solution Oyj, listed on the OMX Nordic
Technologies Inc. Exchange in Helsinki.
Dr. Pallab Chatterjee,
Present employment: Managing Director and Bertrand Sciard
Board assignments: On the board of Aldata
Operating Partner at Symphony Technology Solution Oyj.
Chairman Born: 1953
Born: 1950 Board assignments: General Motors Advisory Board member since: Bertrand Sciard is independent of the company
Board member since: board, MSC Software, Optimal Solutions, Serus 2007 and its senior management, as well as of major
2007 and Chairman of Teleca AB. Shares: 0 shareholders in the company.
Shares: 50 000 B shares Options: 100 000
Options: 600 000 Dr. Pallab Chatterjee is independent of the
company and its senior management, as well as
of major shareholders in the company.
Education and work experience: Studies in
Computer Science at University of Umeå,
Sweden; Former President of EDS Northern
Europe. 25 years of experience from IBM,
Education and work experience: MBA from
including several executive positions.
University of Texas at Austin, USA; Previous
Board assignments: Member of the Board of
partner in Brandes Investment Partners,
Posten, HiQ, Sweco and Ruter Dam.
San Diego, USA.
Present employment: Chief Investment
Gunnel Duveblad is independent of the comp-
Officer, Deccan Value Advisors.
Gunnel Duveblad any and its senior management, as well as of
major shareholders in the company.
Vinit Bodas is independent of the company and Born: 1955
its senior management and dependent as of Board member since:
major shareholders in the company. 2007
Born: 1962 Shares: 20 000 B shares
Options: 100 000
Board member since:
(incl. family holdings)1)
Education and work experience: Masters of
Science degree in Industrial Economics at the
Royal Institute of Technology (KTH) Stockholm,
Sweden. 25 years of experience from ERP
Education and work experience: BBA,
business systems from Industri-Matematik
European University. Christian Paulsson was
previously employed by Deccan Value Advisors
and prior to that Managing Director of Lage Jo-
Present employment: Senior Project Manager,
nason AB. He has also worked within corporate
IBS Sverige AB, PS Nordics.
finance at Booz Allen & Hamilton, Alfred Berg
Fondkommission AB & ABN Amro and Mangold Ulf Eriksson
Ulf Eriksson is Employee representative.
Fondkommission AB. He has also worked as Born: 1952
controller in Akzo Nobel Industrial Coatings. Board member since:
Other assignments: Chariman of the Board in 2010
Cross Sportsware International AB and board Shares: 2 000 B shares
member and chairman in numerous subsidiaries
Board member since: within the IBS Group.
2008 Present employment: Executive Vice Precident
Shares: 5 000 B shares Coroporate Development and M&A at IBS AB.
Options: 302 872
Christian Paulsson is considered dependent in
relation to the company and its senior mana-
gement and dependent in relation to major
shareholders in the company. Auditors
KPMG AB, Åsa Wirén Linder, Authorized Public Accountant.
As President and Chief Investment Officer in Deccan Value Advisors, Vinit Bodas represents Deccan Value Advisors whole holdings of IBS shares.
The total shares owned is 4 650 000 A shares and 87 486 700 B shares.
IBS Annual Report 2009 11
IBS Group Management
Mike Shinya, born 1957, is President and CEO. Fredrik Sandelin, born 1962, is Executive Vice
President and Chief Financial Officer since
Prior to joining IBS he was CEO of Sherwood March 2010 and part of Group Management.
International Plc., and most recently Chief Ope-
rating Officer of Micro Focus International Plc. Fredrik joined IBS from A-Com, the largest
Prior to these engagements, Mike was Head independent communications services network,
of Global Worldwide Sales operations at Baan where he was CEO since 2002. Previous exp-
Company, a Dutch ERP software company, and eriences include Senior Vice President Hilton In-
before that he held senior executive positions ternational Nordic Region, CFO Scandic Hotels
Mike Shinya, at Oracle Corporation and IBM. Mike is a British Fredrik Sandelin, and CFO for Swedish private equity company
President and CEO national, graduated from the University of East Executive Vice Ratos. Fredrik has a degree corresponding to
Shares: 1 167 250 Anglia UK, in Economic & Social Sciences. President and CFO Master of Science in Economics and Business
B shares Joined IBS: March 8, 2010 Administration, Stockholm School of
Options: 611 250 Economics.
Doreena Ross, born 1962, is Senior Vice Presi- Oskar Ahlberg, born 1971, is Senior Vice
dent of Human Resources and Administration President Corporate Communications and part
and part of Group Management. of Group Management.
In this role she is responsible for global Human Oskar is responsible for IR, PR and internal com-
Resources strategy and operations. Doreena munications at IBS. Oskar joined IBS in 2004
is a British national who has lived and worked as product manager and later as international
outside of the UK for many yaers. She has sales director. Prior to this, he was Sales and
solid international HR and business experience Marketing director at EHAND AB. Before that,
Doreena Ross, and prior to joining IBS, she held global and Oskar Ahlberg, Oskar was employed as Java developer in Ger-
Senior Vice President pan-european executive positions with Micro Senior Vice President many and then pre-sales consultant in the UK.
of Human Resources Focus, Opentext, Interwoven, Documentum of Corporate Commu- Oskar holds a Master of Science degree in Elec-
and Administration and Sybase. nications tronical Engineering from KTH in Stockholm.
Shares: - Shares: 10 000 B shares
Options: 75 000 Options: 40 000
Christian Paulsson, born 1975, is Executive Vice
President and Corporate Development and
M&A since February 2010 and part of Group
Christian Paulsson was previously employed by
Deccan Value Advisors and prior to that Mana-
ging Director at Lage Jonason AB. He has also
worked at Booz Allen & Hamilton, Alfred Berg
Christian Paulsson Fondkommission AB & ABN Amro and Mangold
Executive Vice President Fondkommission AB and Akzo Nobel Industrial
and Corporate Deve- Coatings. Christian has a BBA from European
lopment and M&A. University.
Shares: 5 000 B shares
Options: 302 872
12 IBS Annual Report 2009
Board of Directors’ Report
The Board of Directors and the President of IBS AB (556198-7289) offerings to the market. Hardware revenues declined, mainly due to
hereby submit the Board of Directors’ report for the 2009 fiscal year. lower demand for IBM’s iSeries servers.
IBS AB is a public limited liability company.
InformatIon aBout tHe BuSIneSS Mark Williams joined IBS as Chief Financial Officer, effective April 8.
the group Trading of shares in IBS AB started on NASDAQ OMX First North
IBS offers integrated IT solutions and professional services that help on May 11.
customers in selected market segments to improve profitability and The cost-reduction program was completed during the second
increase customer service. IBS business systems are specially de- quarter, and a Java/Windows version of the IBS Enterprise business
veloped for efficient business and supply chain management, cus- system was accessible and sold in its entirety to a first customer.
tomer relationship management, purchasing coordination, logistics, Focus on existing customers, primarily in goods distribution in-
demand-driven manufacturing, integration, financial control and dustries, resulted in increased revenues from new sales of software
business analysis. Efforts to further develop sector-specific business licenses. Professional and hardware revenues continued to decline,
systems continued during the year. Through its Parent Company, however, due to the smaller organization and weaker demand for
subsidiaries and business partners, IBS engages in the development, IBM iSeries servers.
sale, installation, operation and maintenance of business systems.
The Group also offers professional services and sales of comput- Second half of the year
ing equipment and network solutions. IBS had an average of 1 145 After the share listing change in the second quarter, the Board of Di-
employees (1 612) during 2009, and the Group is represented by rectors of IBS resolved to report financial information to the market
subsidiaries in 20 countries. semi annually, instead of quarterly, in accordance with the regula-
tions on NASDAQ OMX First North.
ImPortant eventS durIng tHe 2009 fIScal year A new division, Iptor, was established to focus on offerings in ar-
During 2009, IBS completed the strategic activities that were an- eas such as storage capacity, technical infrastructure, content man-
nounced on September 23, 2008. In summary, the activities focused agement, HW hosting and system integration services.
on distribution markets, an offering of business systems for Java/Win- During December the Danish payroll division was sold.
dows and securing operational cost efficiency through cost-saving The goodwill value of several businesses, primarily in Australia,
measures and cutbacks in the workforce involving as many as 500 Portugal, France and Italy, were impaired in the balance sheet due
persons worldwide, including attrition, liquidation of business units, to lower forcasted growth and earnings.
withdrawals from certain markets and job termination notices. More License revenues remained stronger compared with the corre-
clearly defined organizational divisions of the business areas were sponding period in the preceding year, and new sales of licenses
also implemented, resulting in the establishment of the new Iptor di- increased. IBS booked a number of large license orders with a com-
vision, which is focused on offerings in such areas as storage capacity, bined value of SEK 20 m and another order valued at SEK 50 m from
technical infrastructure, content management and system integra- a major European customer during the period.
tion services. Professional services and hardware revenues remained lower
The strategic initiative created a more focused Group with fewer compared with the corresponding period of the preceding year.
employees. Revenue declined as a result of lower sales from hard- Chief Financial Officer Mark Williams and IBS reached an agree-
ware and professional services, while revenues from sales of new ment whereby Mark Williams would leave his position effective De-
licenses increased during the year. Sales per employee rose, as did cember 31, 2009.
professional services revenues per consultant. Profitability was im-
pacted negatively, however, by lower total revenue, restructuring commentS on tHe Income Statement
costs and goodwill impairment. The strategic initiative was launched in order to focus the business
on core products and industries, and to improve profitability during
first quarter the years ahead. The effects of the programs were reflected during
An Extraordinary General Meeting in the first quarter approved 2009 in the form of lower personnel costs and lower other operat-
three employee stock option programs for CEO, senior executives ing costs.
and Board members. A decision was also made to issue 11 518 500 Professional services revenues declined 16 percent compared
warrants to guarantee the programs. A maximum of 2 658 292 with the preceding year, while the number of consultants decreased
warrants may be used to cover the social security contributions as- by slightly more than 25 percent. Hardware revenues continued to
sociated with the programs. decline. License revenues rose 14 percent and revenues from new
The Board decided to apply for the listing of IBS Class B shares on license sales increased by 30 percent. However, total revenues de-
First North, and a corresponding delisting from NASDAQ OMX. clined 11 percent to SEK 1 819 m (2 034).
Stronger focus on existing customers led to higher earnings and IBS reported an operating loss of SEK 326 m (loss: 283) for
license revenues during the quarter. Professional services revenues full-year 2009, down SEK 43 m compared with 2008. The result
declined overall, and in most markets, with the exception of North for 2009 includes restructuring costs totaling SEK 128 m (170)
and South America, due to fewer consultants in a smaller and and other operating costs amounting to SEK 129 m (56). Other
more focused organization, and due to reduction in the number of operating costs consist of goodwill impairment charges totaling
IBS Annual Report 2009 13
SEK 131 m (53), capital gains from the sale of subsidiaries amount- Sales per employee rose 26 percent compared with the preced-
ing to SEK 4 m (loss: 8 m) and translation differences in operating ing year.
receivables/liabilities amounting to negative SEK 2 m (pos: 6). The
operating loss excluding the items above was SEK 69 m, compared Analysis of change In sales revenues
with a loss of SEK 58 m in 2008, down SEK 11 m. The loss after
09/08 08/07 07/06
financial items amounted to SEK 333 (loss: 273) and the net loss for
the year totaled SEK 433 m (loss 274). Earnings for the year were Volume growth (average number
charged with a tax expense of SEK 101 (expense: 2), with most of employees), % –25 –9 –1
of the charge comprising impairment of deferred tax totaling SEK Acquisitions/divestments, % –2 –2 –1
76 m (26). Price and efficiency change, % 7 0 1
Earnings improvements compared with the preceding year were
Internally generated growth, % –20 –11 –1
achieved in the European region. However, trends in the regions of
other segments were negative compared with the preceding year. Exchange-rate effect, % 9 1 0
Total growth rate, % –11 –10 –1
Software license sales increased 14 percent compared with the
preceding year to SEK 476 m (419). New license sales amounted operating costs, excluding cost of goods and service sold
to SEK 195 m (150), while renewal license sales amounted to SEK Operating costs declined during the year to SEK 654 m (702). The
281 m (269). The license margin rose two percentage points to 92 operating costs do not include restructuring costs of SEK 128 m
percent. (170), impairment of goodwill totaling SEK 131 m (53), capital gains
The increase in new sales was attributable to the new strategy, from sales of subsidiaries amounting to SEK 4 m (loss: 8) or transla-
which created greater focus on goods distribution companies and tion differences of an operating character amounting to negative
generated increased sales in all geographic regions. SEK 2 m (pos: SEK 6). Operating costs expressed as a percentage
of sales rose one percentage point to 36 percent (35) in 2009.
Professional services The increase was mainly due to higher product development costs
Professional services revenues decreased by 16 percent compared amounting to SEK 255 m (207) due to lower capitalization of prod-
with the preceding year to SEK 969 m (1 150). The number of con- uct development costs totaling SEK 75 m (89) and higher depre-
sultants declined to 677 (899), down by 222 persons, or 25 percent, ciation costs for previously capitalized product development costs
compared with the preceding year. The decline was a direct result of amounting to SEK 95 m (84), or SEK 20 m (4) net. Sales and market-
the restructuring program. Professional services revenues declined ing costs declined 16 percent to SEK 219 m (259) and administrative
in all regions. The professional services margin was down eight expenses declined 23 percent to SEK 180 m (236). The value of
percentage points, mainly because a larger share of administrative SEK relative to the IBS Group’s currency basket declined during the
costs was allocated to this business area. Based on the same calcula- year, and costs increased 7 percent during 2009 as a result of the
tion principle used in the preceding year, the professional services exchange-rate effect.
margin amounted to 15 percent, thus decreasing one percentage
point. It should also be noted that costs for provisions for risk in Operating costs as a percentage of sales
2009 2008 2007
Hardware and other revenues Product development costs, % 14 10 9
Hardware and other revenues during 2009 declined 19 percent to Sales and marketing costs, % 12 13 12
SEK 374 m (464). The gross margin increased by one percentage Administrative costs, % 10 12 12
point to 18 percent (17). Hardware sales were impacted mainly Totalt, % 36 35 33
by lower global demand for IBM’s iSeries servers, and the weaker
Capitalized product development costs relate to software for the
IBS Group’s future product launches. During 2009, SEK 255 m (212)
2009 2008 2007 was invested in product development, of which SEK 75 m (89) was
License margin, % 92 90 92 capitalized. Capitalized expenditure for product development was
Professional services margin, % 8 16 20 recognized in the balance sheet as a net asset of SEK 338 m (358)
at December 31.
Hardware margin, % 18 17 18
IBS’ overall strategy is to continue strengthening its position as
Total Gross margin, % 32 32 35 the leading international supplier of software and professional serv-
ices in the area of distribution management solutions. IBS devel-
oped the next version of IBS Enterprise during 2009 and plans to
analysis of change in sales revenues
launch the product in 2010. Focus areas have been the creation of
Sales declined 11 percent compared with 2008 due to lower hard-
functions that strengthen the competitiveness and cash flows of
ware and professional services revenues, while license revenues in-
distribution customer companies.
creased. Sales were also impacted by workforce reductions follow-
Innovative solutions during 2009 increased the flexibility of IBS’
ing the decision to implement a restructuring program as part of
offerings. Customers are now able to choose whether they wish to
the company’s efforts to increase profitability. Excluding divestments
operate IBS solutions in proprietary environments, outsource or use
and acquisitions during 2009 and 2008, the net effect was a 2 per-
a Software as a Service (SaaS) solution. They can also choose be-
cent decline in sales. The value of SEK relative to the IBS Group’s cur-
tween different platforms now comprising IBS Power and Windows/
rency basket declined during the year, and sales increased 9 percent
Intel. A new pre-configured “FasTrax” solution for distribution com-
during 2009 as a result of the exchange-rate effect.
panies also provides faster customer implementations and returns.
14 IBS Annual Report 2009
In order to deliver complete customer solutions, in parallel with a liabilities to credit institutions
sharp focus on “core business,” IBS strengthened its cooperation Total liabilities to credit institutions rose to SEK 121 m (107) as a
with several different partners during 2009. The cooperation with result of utilized overdraft facilities. The unutilized credit facilities
HCL in India noted significant success, and programs of cooperation declined to SEK 45 m (248), partly as a result of reduced credit
with different “best of breed” suppliers were initiated as part of the facilities.
company’s efforts to launch completely integrated solutions that
cover the business system requirements of IBS’ customers. Provisions
Product development costs recognized in profit and loss totaled This item consists mainly of restructuring provisions. Provisions
SEK 255 m (207), 39 percent (29) of total operating costs. The high- amounted to SEK 170 m and SEK 123 m, respectively, in 2008 and
er cost in 2009 was due mainly to lower capitalization of costs total- 2009. Of the total remaining provision amounting to SEK 97 m
ing SEK 75 m (89) and higher amortization of previously capitalized (148) at December 31, 2009, SEK 49 m (42) is classified as long-
costs for product development totaling SEK 95 m (84). term. Other long-term provisions comprise guarantee provisions to-
taling SEK 10 m (3) and a pension provision amounting to SEK 5 m
commentS on tHe Balance SHeet (10). Provisions are specified in greater detail in Note 24.
goodwill and other intangible assets
Goodwill items amounted to SEK 255 m (363). The decline was due fInancIal PoSItIon
mainly to goodwill impairment totaling SEK 131 m (53) related to Equity amounted to SEK 644 m (1,065), and the equity/assets ratio
operations focused on the products e42 and ECP, as well as opera- declined from 51 percent to 41 percent during the year. Cash and
tions in Portugal, France and Italy. Other intangible assets of SEK cash equivalents at year-end amounted to SEK 135 m (313), ex-
17 m (28) are capitalized investments in software. Each intangible cluding unutilized credit facilities totaling SEK 45 m (248). Liquidity
asset item is assessed separately on a continuous basis, as shown declined compared with the preceding year to 100 percent (121).
in Note 12. Interest-bearing liabilities at year-end rose to SEK 121 m (107), yield-
ing an interest-bearing net asset of SEK 14 m (206).
deferred tax assets
The IBS Group’s loss carryforward amounted to SEK 682 m (592), commentS on tHe caSH floW Statement
of which SEK 146 m (446) constituted the basis for capitalization Provisions utilized for restructuring had an impact of negative SEK
of deferred tax assets. The tax value of capitalized deficits was SEK 174 m (neg: 87) on cash flow during the year. Cash flow from oper-
41 m (124). In total, deferred tax assets amounted to SEK 56 m ating activities, before changes in working capital, declined by SEK
(142). An assessment during the year indicated that IBS will not be 176 m to negative SEK 99 m. Changes in working capital for the
able to utilize part of the collective loss carryforwards in Sweden, year affected cash flow by negative SEK 6 m (pos: 97). Accounts
Italy, France, Portugal and Australia against future profits and, ac- receivable in the Group decreased compared with 2008 as a result
cordingly, an impairment loss on deferred tax assets totaling SEK of lower sales, as well as more efficient procedures for invoicing
76 m (26) was recognized in the fourth quarter. The IBS Group’s tax- and cash collection compared with the preceding year. Cash flow
able earnings are expected to improve during the coming years, and from investing activities amounted to negative SEK 88 m (neg: 110).
actions have been taken to gradually even out surpluses and defi- Reduced capitalization in product development during the year had
cits. Most of the Group’s loss carryforwards have long or indefinite a favorable impact on cash flow compared with the preceding
durations, and IBS’ assessment is that remaining loss carryforwards year. The impact of product development investments on cash flow
will be utilized for deductions against future profits. This balance amounted to negative SEK 82 m (neg: 98). Investments in tangible
sheet item is specified in Note 23. assets were also lower compared with 2008. Net change in loans
amounted to SEK 13 m (neg: 247). Cash flow from total financing
current assets activities amounted to SEK 13 m (140). During 2008, the rights is-
Accounts receivable amounted to SEK 583 m (645). The volume sues affected cash flow by SEK 387 m.
of accounts receivable is linked to sales, which declined compared
with the preceding year. Other receivables decreased to SEK 90 m Parent comPany
(123), due to a lower percentage of accrued income, which is also a The Parent Company, IBS AB, has overall management responsi-
consequence of the lower sales volume in 2009. bility for the Group. The Parent Company is financed primarily
Inventories totaling SEK 2 m (7) consisted of hardware purchased through management fees and royalties, as well as from dividends
on behalf of customers and external software products for custom- and Group contributions from subsidiaries. Net sales in the Parent
ers scheduled for delivery and invoicing in January 2010. Company during 2009 totaled SEK 92 m (98), and the income after
Cash and cash equivalents declined, compared with the preced- financial items amounted to a loss of SEK 325 m (loss: 39). The
ing year, amounting to SEK 135 m (313). Cash and cash equiva- result includes impairment losses on shares in subsidiaries totaling
lents at December 31, 2008 were unusually high following the new SEK 174 m (78). The result was impacted by dividends from sub-
rights issue that raised SEK 387 m after issue costs. sidiaries amounting to SEK 0 (93). Investments in tangible and in-
tangible assets totaled negative SEK 136 m (neg: 144). The Parent
current liabilities Company’s cash and cash equivalents at year-end amounted to SEK
Accounts payable increased marginally compared with the preced- 40 m (192).
ing year, totaling SEK 176 m (167). Renewal fees invoiced toward
year-end are included in total deferred income amounting to SEK risks and uncertainty factors
200 m (263). These fees are normally accrued over the life of the Information on risks and uncertainty factors are the same for the
renewal period, and the portion pertaining to the following fiscal Parent Company and the entire IBS Group. Details on risks and un-
year is recognized as prepaid income at year-end. The value of these certainty factors are presented below.
agreements was unchanged compared with 2008. Accrued costs
amounted to SEK 219 m (233), consisting mainly of staff-related
costs such as social security expenses, pension expenses, variable
remunerations and vacation pay liabilities.
IBS Annual Report 2009 15
InformatIon on rISkS and uncertaInty factorS is a result of the strategic restructuring that was initiated in the
The single largest revenue item in the IBS Group derives from pro- preceding year.
fessional services, accounting for 53 percent of net sales. With a Information on the number of employees in and outside Swe-
large consulting organization, and thus high personnel costs, the den, along with salaries, social security expenses and pensions, is
company is exposed to a risk of lower sales if the market declines. presented in Note 2. IBS is a knowledge company whose success
Accordingly, the analysis below is focused on this revenue flow. is highly dependent on the skills and expertise of its employees.
Each component in the analysis was calculated separately based on Annual career-development talks contribute to continuous skills de-
the assumption that other parameters remained unchanged. velopment and support evaluations of work performance standards.
For additional information on IBS employees, refer to Note 2.
Effect on outlook for 2010
operating Operations in 2010 will continue to be impacted by the prevail-
Parameter Change earnings, SEK m ing economic conditions, most notably with regard to uncertainties
related to sales, accounts receivable and deferments of investment
Number of workdays/years +/− 1 day +/− 4 decisions by client companies. The restructuring program that was
Personnel costs +/− 1% −/+ 9 included in the strategic initiative has been completed and the in-
Professional services, hourly fee +/− 1% +/− 9 crease in license sales during 2009 is expected to provide a solid
Degree of utilization +/− 1p.u. +/− 8 base for 2010. IBS has a large and loyal customer base and, with its
SEK/EUR +/− 1% +/− 0.6 smaller and more focused organization and solid financial position,
the Group is well-equipped to meet the year’s challenges.
IBS’ business operations are conducted primarily through subsidiar-
ies that apply standardized, Group-wide contract terms in their busi- SHareS and oWnerSHIP Structure
ness relations. These terms are weighted to achieve a reasonable IBS’ share capital is distributed across 4 725 000 Class A shares and
balance of responsibilities between the parties. The technical busi- 121 849 374 Class B shares. Each Class A share carries ten votes
ness risk in customer projects is limited significantly by the Group’s and each Class B share one vote. The quotient value of both share
utilization of proven technology. In addition, the Group is insured classes is SEK 0.20 per share, making a total of SEK 25 314 875 in
for a portion of the subsidiary risks in conjunction with commer- registered share capital.
cial commitments for installations of business systems. Provisions Via a profit sharing fund for personnel established by IBS AB in
for project miscalculations and bad debt write-offs are continuously 1998, employee shareholdings in IBS AB amount to 226 000 shares.
based on individual risk assessments. Since hardware purchases in However, the employees cannot exercise any direct voting rights for
connection with customer projects are made only against firm cus- their shares.
tomer orders, IBS is seldom exposed to price or obsolescence risk. IBS holds 2 303 800 Class B shares that were repurchased dur-
Customer credit is normally only granted after conventional evalu- ing 2006 and 2007. The quotient value of these shares is SEK
ations of credit ratings. Like all process changes, any transfer of 460 760 representing 1.8 percent of total share capital. The shares
programming services to low and mid-cost countries in particular were repurchased for an average price of SEK 21.70 per share, a
involves both opportunities and risks. This also applies to the strate- total of SEK 50 m. According to a resolution approved by the 2006
gic initiative program approved in September 2008, which called for Annual General Meeting, the acquired shares may be used as pay-
the elimination of approximately 500 full-time positions. Refer also ment for, or financing of, company acquisitions.
to the section entitled “Restructuring provision for action program” The largest shareholder is Deccan Value Advisors holding 72.8%
in Note 36. of the shares and 79.2% of the votes. There have been no major
changes in the structure in 2009. For information about the 10 larg-
fInancIal rISkS and PrIncIPleS aPPlIed for fInancIal est shareholders per 31 December 2009 refer to the ‘IBS share’,
rISk control page 7.
The Group is exposed to various types of financial risks through its
operations. The purpose of risk management is to identify, quantify electIon of Board memBerS and artIcleS of aSSocIatIon
and reduce or eliminate risks. IBS’ policy for financial risk manage- Members of the Board of Directors are elected annually at the Annual
ment is based on profits generated by the business operations, not General Meeting for a period up until the next Annual General Meet-
on investments in financial instruments. Accordingly, only low-risk ing. A qualified majority (that is, a two-thirds majority of both listed
investments are permissible. The objective of financial activities con- votes and the shares represented at the Annual General Meeting) is
ducted in IBS is to support the Group’s commercial operations and required to change the Articles of Association, with the exception
to identify and, in the best possible way, limit the Group’s financial of changes stated in the Articles of Association in accordance with
risks. These activities are organized and managed in the Parent Com- Chapter 7, Sections 43–45 of the Swedish Companies Act.
pany’s finance function. Through centralization and coordination,
significant economies of scale are achieved with regard to terms eventS after tHe cloSe of tHe fIScal year
and conditions received for financial transactions and financing. The Fredrik Sandelin was named Executive Vice President and CFO on
goal of the financing activities is to clarify the Group’s risk exposure January 15, 2010.
and to create predictability in terms of financial results. The financial Ann-Mari Öhman, IBS’ employee representative on the Board of Di-
risks are managed in accordance with the finance policy established rectors, left the Board on January 29, 2010 and was replaced by Ulf
by the Board of Directors. Also see Note 21, Risk analysis. Eriksson and deputy member Harry Greijer.
On February 8, 2010, IBS announced that operations related to
PerSonnel and non-fInancIal reSult IndIcatorS activities focused on the products e42 and ECP, which were special-
The number of employees at December 31, 2009 was 1 114 (1 377), ized for the car dealership market, were sold to Pentana Solutions,
down 263 positions, or 19 percent. The number of consultants was an Australian software company.
677 (899). The average number of employees during 2009 was On February 23, 2010, IBS Consist was acquired by Unit4, a soft-
1 145 (1 612), a reduction of 467 persons. The reduced workforce ware company in the Netherlands.
16 IBS Annual Report 2009
On January 8, 2010, the Board announced that after being con- excluding the CEO, shall have a bonus level in the range from 40
tacted by third parties, possible strategic divestment options were percent to a maximum of 70 percent of base salary, relative to their
evaluated. On April 7, 2010, the Board announced all such discus- position. The CEO shall have a target bonus of 100 percent of base
sions concluded and that no further discussions were ongoing. salary, which may be increased to 150 percent of the base salary if
targets are exceeded. The CFO shall have a target bonus, which may
guIdelIneS for comPenSatIon for SenIor eXecutIveS be increased to a maximum of 88 percent if company targets are
reSolved By tHe 2009 annual general meetIng exceeded. These are also the levels that apply today.
The Board of Directors and its Remuneration Committee decide on
the format of the remuneration system and the size and structure of Pensions
remuneration of senior executives. The Board of Directors proposed The company shall make contributions for the Executives into de-
that the Annual General Meeting establish the following guidelines fined contribution schemes, which shall be in the range of 8–25
for determining remuneration and other terms of employment for percent of the salary. The pensionable age for Swedish citizens is
the executive management of the group which includes the CEO 65 years while other executives follow the rules of their respective
and all persons reporting directly to the CEO (“Executives”). The countries of residence.
guiding principles will be valid for employment agreements entered
into after the meeting and for any changes made to existing em- other benefits
ployment agreements thereafter. It is proposed that the Board is Other benefits, such as company cars and health, medical and sick-
given the possibility to deviate from the below stated guidelines in ness related insurance schemes, should be in line with the market
individual cases where specific reasons exist. practice for the respective geographic market.
guidelines Stock based incentive program
It is of fundamental importance to the group and its shareholders An incentive scheme based on stock options and aimed at the CEO
that the principles for compensation and other employment condi- and senior management of the IBS Group was resolved by an Extra-
tions for the Executives of the group aims to, in the short and long ordinary General Meeting of Shareholders 15 January 2009. Total
term, attract, motivate and retain high performance executives. To cost for the program has been calculated based on a valuation
obtain this goal, it is important to ensure fairness and internally made by external advisors with the Black-Scholes valuation model.
balanced conditions, while maintaining market competitiveness of Future stock option grants will be considered annually during the
the structure, scope and level of executive compensation. Employ- term of the incentive scheme.
ment conditions for the executive management should comprise a
balanced mix of fixed salary, annual bonuses, long term incentives, notice periods and severance agreements
pension and other benefits as well as notice of termination. The employment of the CEO and President of the company may
Total target cash compensation, i.e. fixed salary and bonuses to- end at any time upon the initiative of him or the company with 3
gether should be competitive in the geographic market where the months notice. Other senior executives must provide a period of
employee is resident or active. The level of total cash should be between 3 and 12 months notice to the company while the notice
reviewed annually to ensure that it is in line with similar positions in required from the company is between 6 and 12 months. Sever-
the relevant market. Compensation should be highly performance ance agreements will in principle not be signed, with the exception
driven and therefore the target annual bonus should be a high por- for the CEO and President who may be granted a maximum of 12
tion of the total compensation. months severance pay. In a redundancy situation, the current prac-
tice in the geographic market where the executive is resident will
compensation components apply. The same principles shall apply under these guidelines.
The group compensation system comprises different forms of com-
pensation in order to create a well balanced remuneration which earlier decisions on remuneration that has not fallen due
strengthens and underpins long- and short-term objective setting The decisions already taken on remuneration to Executives that
and attainment. have not fallen due do not deviate from these guidelines.
fixed salary ProPoSed dIStrIButIon of earnIngS
The fixed salary shall be individual and based on the scope and re- The following amounts are at the disposal of the Annual General
sponsibility of the role as well as the individual’s competence and Meeting: premium reserve SEK 429 426 700, translation reserve
experience in relation to the role held. SEK 24 832 507, retained earnings SEK 410 013 839 and net loss
for the year SEK 356 366 372, a total of SEK 507 906 674. The
annual bonus Board of Directors proposes that no dividend be paid for the 2009
Executives shall have an annual bonus with annual measurement fiscal year and that the funds be distributed as follows: premium
and payment. The annual bonus shall be structured as a variable reserve SEK 429 426 700, translation reserve SEK 24 832 507 and
component of the total cash remuneration package and shall pri- retained earnings SEK 53 647 467.
marily be related to the achievement of common group financial
performance goals. The goals for the annual incentive shall be es-
tablished annually by the Board so as to sustain the business strat-
egy and objectives.
Looking forward, the Board recognizes that the Executives of the
company will face serious challenges in returning the company to
sustained profitability. To motivate them appropriately and at the
same time to limit the company’s fixed payroll costs, the Board
takes a view that wherever appropriate, it should seek to minimize
the fixed element of cash compensation and maximize the bonus
element of performance related cash compensation. Executives,
IBS Annual Report 2009 17
Income statement, Group
SEK million 2009 2008
Software licenses 476.2 419.3
Professional services 968.8 1 150.4
Hardware and other revenue 374.2 464.1
Total revenue Note 1 1 819.2 2 033.8
Cost of Revenue
Software licenses –38.9 –43.1
Professional fees –889.1 –963.5
Hardware and other revenue –306.4 –383.5
Total cost of revenue –1 234.4 –1 390.1
Gross profit 584.8 643.7
Product development costs –254.7 –207.0
Sales and marketing costs –218.7 –259.1
General and administrative costs –180.3 –235.6
Other operating income Note 6 4.3 5.6
Other operating costs Note 6 –133.2 –61.3
Restructuring costs Note 24 –127.9 –169.6
Operating income Note 1, 2, 3, 4, 5 –325.7 –283.3
finanCial items Note 7
Financial income 3.0 23.7
Financial expenses –9.8 –13.2
Income after financial items –332.5 –272.8
Taxes Note 10 –100.9 –1.6
Net income for the year –433.4 –274.4
Attributable to parent company shareholders –433.4 –274.4
Attributable to minority 0.0 0,0
Earnings per share (SEK) Note 11 –3.49 –2.63
Earnings per share after dilution (SEK) –3.49 –2.63
Average number of shares (thousands) Note 11 124 271 104 185
Average number of shares after dilution (thousands) 124 271 104 185
otheR CompRehensive inCome, GRoup
SEK million 2009 2008
Net income for the year –433.4 –274.4
Other comprehensive income
Exchange differences 11.9 1.9
Other comprehensive income for the period 11.9 1.9
Total comprehensive income for the year –421.5 –272.5
Attributable to parent company shareholders –421.5 –272.5
Attributable to minority 0.0 0.0
18 IBS Annual Report 2009
Balance sheet, Group
SEK million 31 Dec 2009 31 Dec 2008
Intangible assets Note 12
Capitalized product development costs 337.7 357,9
Goodwill 254.5 363.3
Aquired software 16.8 12.5
Other intangible assets 0.0 14.9
Total intangible assets 609,0 748.7
Tangible assets Note 13 67.0 87.1
Participations in associated companies Note 16 - -
Other long-term receivables Note 17 9.8 11.2
Total financial assets 9.8 11.2
Deferred tax receivables Note 23 56.0 136.4
Total fixed assets 741.8 983.4
Inventory Note 18 2.1 7.0
Accounts receivable 582.7 644.9
Tax receivables 9.4 33.7
Prepaid expenses and accrued income Note 19 55.8 98.7
Other receivables 34.1 24,1
Cash and cash equivalents Note 20 135.1 312.7
Total current assets 819.2 1 121.1
TOTAl ASSETS 1 561.0 2 104.5
eQuitY anD liaBilities
Parent company shareholders
Share capital 25.3 25.3
Other capital contribution 949.5 949.5
Translation reserve 16.0 5.5
Retained earnings incl. net income for the year –346.6 92.8
Minority interests 0.1 0.1
Equity Note 22 644.3 1 073.2
Liabilities to credit institutions Note 25 22.9 46.8
Deferred tax liabilities Note 23 4.9 4.2
Provisions Note 24 63.6 55.0
Other long-term liabilities 5.8 6.4
Total long-term liabilities 97.2 112.4
Liabilities to credit institutions Note 26 98.1 60.1
Provisions Note 24 48.4 106.5
Accounts payable 175.8 166.8
Income tax liability 2.3 5.5
Accrued expenses and prepaid income Note 28 418.7 481.0
Other liabilities 76.2 99.0
Total short-term liabilities 819.5 918.9
Total liabilities 916.7 1 031.3
TOTAl EQuITY AND lIAbIlITIES 1 561.0 2 104.5
IBS Annual Report 2009 19
Change in equity, Group
Equity attributable to parent company’s
Share contribu- Translation profit for Minority Total
SEK million capital tion reserve the year Total interests Equity
Opening balance 2008-01-01 16.7 570.3 2.2 366.8 956.0 0.1 956.1
Change in accounting principle –6.9 –6.9 –6.9
Adjusted opening balance 2008-01-01 16.7 570.3 2,2 359.9 949.1 0.1 949.2
Comprehensive income for the year 1.9 –274.4 -272.5 –272.5
Rights issue 8.6 399.5 408.1 408.1
Costs related to rights issue –20,3 -20.3 –20.3
balance at 2008-12-31 25.3 949.5 4.1 85.5 1 064.4 0.1 1 064.5
Opening balance 2009-01-01 25.3 949.5 4.1 85.5 1 064.4 0.1 1 064.5
Comprehensive income for the year 11.9 –433.4 -421.5 0.0 –421.5
Share-based payments 1.3 1.3 1.3
balance at 2009-12-31 25.3 949.5 16.0 –346.6 644.2 0.1 644.3
pleDGeD assets anD ContinGent liaBilities
Pledged assets Note 29
Corporate mortgages 0.3 0.3
Shares in subsidiaries 160.8 83.8
Assets charged with ownership reservation 49.9 113.7
Contingent liabilities Note 29
Other contingent liabilities 8.8 12.4
20 IBS Annual Report 2009
Cash flow analysis, Group
SEK million 2009 2008
Income after financial items –332.5 –272.8
Adj. to reconcile profit after financial items to cash Note 30 221.5 264.3
Tax paid 6.1 –12.2
Cash flow from operating activities before change in working capital –104.9 –20.7
Changes in working capital
Increase (–) decrease (+) in inventories 4.9 10.0
Increase (–) decrease (+) in current assets 66.8 167.4
Increase (+) decrease (–) in current liabilities –66.1 –80.9
Cash flow from operating activities –99.3 76.5
Acquisition, intangible assets –81.8 –98.0
Acquisition, tangible assets –8.9 –15.5
Change, financial assets 0.2 0.4
Acquisition of subsidiaries and operations Note 32 - –2.0
Sale of subsidiaries and operations Note 33 2.8 5.4
Cash flow from investing activities –87.7 –109.7
Rights issue - 408.1
Costs related to rights issue - –21.0
Own shares aquired - -
New loans 41.7 9.6
Amortization of loans –28.9 –256.7
Cash flow from financing activities 12.8 140.0
Cash flow for the year –174.2 106.8
Cash and cash equivalents, beginning of the year 312.7 186.3
Translation difference –3.4 19.6
Cash and cash equivalents, end of the year 135.1 312.7
IBS Annual Report 2009 21
Income statement, Parent Company
SEK million 2009 2008
Software licenses 5.5 7.8
Professional services 7.0 7.0
Hardware and other revenue 79.0 83.1
Total revenue Note 1 91.5 97.9
Cost of Revenue
Software licenses –6.8 –6.9
Professional services –3.4 –4.0
Hardware and other revenue 0.0 0.0
Total cost of revenue –10.2 –10.9
Gross profit 81.3 87.0
Product development costs –86.0 –65.9
Sales and marketing costs - -
General and administrative costs –126.4 –74.0
Restructuring costs Note 24 –16.6 –15.2
Other operating income/costs*) 7.1 9.2
Operating income Note 1, 2, 3, 4, 5 –140.6 –58.9
Financial income Note 7 12.2 28.7
Financial expenses Note 7 –3.2 –19.2
Result from participations in subsidiaries Note 8 –178.4 10.9
Income after financial items –310.0 –38.5
Transfers from untaxed reserves Note 9 0.0 1.6
Income before tax –310.0 –36.9
Taxes Note 10 –46.3 11.3
Net income for the year –356.3 –25.6
*) Currency translation differences in operating receivables/liabilities.
22 IBS Annual Report 2009
Balance sheet, Parent Company
SEK million 31 Dec 2009 31 Dec 2008
Intangible assets Note 12
Capitalized product development costs 320.8 328.3
Acquired software 1.0 1.5
Total intangible assets 321.8 329.8
Tangible assets Note 13
Equipment 4.4 5.1
Total tangible assets 4.4 5.1
Participation in subsidiaries Note 14 356.7 439.3
Receivables from subsidiaries Note 15 144.9 132.2
Deferred tax receivables Note 23 0.8 45.6
Financial investments Note 16 0.0 0,0
Total financial assets 502.4 617,1
Total fixed assets 828.6 952.0
Inventory Note 18 1.1 4.7
Accounts receivables 1.7 3.2
Tax receivables 1.8 1.2
Receivables from subsidiaries 219.1 210.6
Prepaid expenses, accrued income Note 19 5.8 4,1
Other receivables 20.4 2.3
Short-term investments Note 20
Cash and cash eqvivalents Note 20 39.8 191.7
Total current assets 289.6 417.8
TOTAl ASSETS 1 118.2 1 369.8
eQuitY anD liaBilities
EQuITY Note 22
Share capital 25.3 25.3
Statutory reserve 318.7 318.7
Share premium reserve 429.4 429.4
Translation reserve (Fair value fund) 24.8 0.5
Retained earnings 410.0 434.9
Net income for the year –356.3 –25.6
Total equity 851.9 1 183.2
Accumulated excess depreciation 0.4 0.4
Total untaxed reserves 0.4 0.4
Liabilities to credit institutions Note 25 5.2 26.0
Total long-term liabilities 5.2 26.0
Liabilities to credit institutions Note 26 67.2 20.8
Provisions 5.0 8.6
Accounts payable 7.6 13.3
Current liabilities to subsidiaries 157.1 83.5
Accrued expenses, prepaid income Note 28 23.9 17.5
Other current liabilities 0.0 16.5
Total short-term liabilities 260.8 160.2
Total liabilities 266.0 186.2
TOTAl EQuITY AND lIAbIlITIES 1 118.2 1 369.8
IBS Annual Report 2009 23
Change in equity, Parent Company
Share Statutory Premium Translation- earnings incl.
SEK million capital reserve reserve reserve1) net earnings Total
Opening balance 2008-01-01 16.7 318.7 29.8 6.6 455.2 827.0
booked directly against equity –6.1 –6.1
Net earnings for the year –25.6 –25.6
Total equity transactions, excluding - - - –6.1 –25.6 –31.7
transactions with the company owners
Rights issue 8.6 399.6 408.2
Cost related to rights issue –20.3 –20.3
balance at 2008-12-31 25.3 318.7 429.4 0.5 409.3 1 183.2
Opening balance 2009-01-01 25.3 318.7 429.4 0.5 409.3 1 183.2
booked directly against equity 24.3 24.3
Net earnings for the year –356.3 –356.3
Total equity transactions, excluding - - - 24.3 –356.3 –332.0
transactions with the company owners
Share-based payments 0.7 0.7
balance at 2009-12-31 25.3 318.7 429.4 24.8 38.6 851.9
Translation reserve form part of Fair value fund.
pleDGeD assets anD ContinGent liaBilities
Pledged assets Note 29
Corporate mortgages 0.3 0.3
Shares in subsidiaries 61.4 58.2
Contingent liabilities Note 29
Guarantees, subsidiaries 35.1 49.6
24 IBS Annual Report 2009
Cash flow analysis, Parent Company
SEK million 2009 2008
Income after financial items –310.0 –38.5
Adj. to reconcile profit after financial items to cash Note 30 256.9 158.0
Tax paid –2.1 0.4
Cash flow from operating activities before changes in working capital –55.2 119.9
Changes in working capital
Increase (–) decrease (+) in inventories 3.5 2.4
Increase (–) decrease (+) in current assets –51.6 –0.1
Increase (+) decrease (–) in current liabilites 104.1 –17.3
Cash flow from operating activities 0.8 104.9
Acquisition, intangible assets –78.8 –83.9
Acquisition, tangible assets –1.2 –3.0
Change, financial assets –56.6 –57.5
Cash flow from investing activities –136.6 –144.4
Rights issue - 408.1
Costs related to rights issue - –21.0
Own shares aquired - -
Amortization of loans –16.1 –213.1
Cash flow from financing activities –16.1 174.0
Cash flow for the year –151.9 134.5
Cash and cash equivalents, beginning of the year 191.7 57.2
Cash and cash equivalents, end of the year 39.8 191.7
IBS Annual Report 2009 25
Accounting policies and notes
GENERAL in a separate statement called the statement of comprehensive income,
The consolidated accounts were prepared in accordance with the Inter- which is presented directly after the income statement. Amended IAS 1
national Financial Reporting Standards (IFRS) issued by the International also includes voluntary new names for the financial statements. IBS has
Accounting Standards Board (IASB) plus the statements on interpretation chosen to mainly keep the old names. Comparative periods have been
issued by the International Financial Reporting Interpretations Committee changed throughout the Annual Report so that they comply with the
(IFRIC) as adopted by the EU. In addition, Recommendation RFR 1.2 Sup- new presentation format. Since these changes only affect the presenta-
plementary Accounting Rules for Groups issued by the Swedish Financial tion, no amounts have been changed, neither with regard to earnings
Reporting Board was applied. per share or other items in the financial statements.
The Parent Company applied the same accounting policies as the Group Segment disclosures
except in the cases described below in the section Parent Company Since January 1, 2009, the Group has applied the new IFRS 8 Operating
accounting policies. The differences between the policies applied for the Segments, which replaces IAS 14 Segment Reporting. The application of
Parent Company and the Group are due to limitations in the ability to IFRS 8 has not entailed any change in the division into segments; the pri-
apply IFRS in the Parent Company resulting from the Swedish Annual mary segments identified in accordance with IAS 14 coincided with those
Accounts Act and the Act on Safeguarding of Pension Commitments, as monitored internally. The company continues to apply the same account-
well as tax issues in certain cases. ing policies in the operating segments as in the consolidated financial
statements, namely IFRS. Accordingly, none of the amounts presented
PREREQUISITES FOR PREPARING THE PARENT COMPANY AND CONSOLI- has changed compared with previously presented amounts.
DATED FINANCIAL STATEMENTS
The Parent Company’s functional currency is SEK, which is also the re- Disclosures regarding financial instruments
porting currency for the Parent Company and the Group. This means that Changes in IFRS 7 Financial Instruments: Disclosures applicable as of
the financial statements are presented in SEK. Unless otherwise specified, January 1, 2009 affect IBS’ financial reporting as of the 2009 Annual
all amounts are rounded to the nearest million with one decimal. Assets Report. The changes primarily entail new disclosure requirements regard-
and liabilities are recognized at historical cost, except for financial assets ing financial instruments measured at fair value. These instruments are
and liabilities that are measured at fair value. Financial assets and liabili- divided into three levels depending on the quality of inputs in the meas-
ties measured at fair value consist of derivative instruments classified as urement. The division into levels determines how and which disclosures
financial assets that are measured at fair value in profit and loss. The shall be provided regarding the instruments, where level three with the
accounting policies below for the Group have been applied consistently lowest quality of inputs includes more disclosure requirements than other
for all periods presented in the consolidated financial statements, un- levels. These disclosure requirements affected Note 37 below. In addition,
less specified below. The Group’s accounting policies have been applied the change in IFRS 7 entails some changes with respect to disclosures of
consistently to the reporting and consolidation of the Parent Company, liquidity risk.
subsidiaries and associated companies. In accordance with the transitional provisions of IFRS 7, comparative
disclosures need not be provided during the first year of application for
CHANGED ACCOUNTING POLICIES the disclosures required by the changes. The company has chosen not
The changed accounting policies applied by the Group as of January to provide comparative information for 2008. Since the changes do not
1, 2009 are described below. Other changes in IFRS applicable as of affect how recognized amounts are to be established, amounts in the
2009 have not had any material effect on the consolidated financial financial statements have not been adjusted.
Other changes with potential effects on the consolidated financial
Principles for revenue recognition statements
IBS has revised its principle for revenue recognition in the U.S. with re- The Group has applied the amended IAS 23 Borrowing Costs since Janu-
gard to the renewal of licenses. The new principle means that license ary 1, 2009. This change means that the Group capitalizes the borrowing
revenues received are initially recognized as accrued income to then be costs in the acquisition cost for qualifying assets that have a commence-
allocated across the license period of 12 months. This change has been ment date on or after January 1, 2009. Borrowing costs have previously
applied retroactively, meaning that the following items have been af- been charged to earnings in the period in which they are attributable in-
fected in the opening balance for 2008: deferred tax assets decreased stead of being capitalized. In accordance with the transitional provisions
by SEK 4.6 m, other current liabilities increased by SEK 11.5 m and share- of IAS 23, this change is applied prospectively. In 2009, the amended
holders’ equity decreased by SEK 6.9 m. With regard to 2008, revenues accounting policy has not had any effect since IBS conducted no projects
increased by SEK 0.7 m, while tax for the year decreased by SEK 0.3 m, related to qualifying assets.
yielding a net effect on profit for the year of SEK 0.4 m. The translation Changes in IFRS 2 Share-based Payment that entered into effect on
reserve increased by SEK 1.4 m and other comprehensive income thereby January 1, 2009 with regard to ”vesting conditions and cancellations”
increased by SEK 1.8 m. The above change has not had any material have no effect since IBS does not have and has not had any terms that
effect on any item in the balance sheet, which is why the change does are not vesting conditions in the option programs.
not require that a balance sheet be presented as per the beginning of
the comparative period. NEW IFRS AND INTERPRETATIONS NOT YET APPLIED
In the preparation of the consolidated financial statements as of De-
Presentation of financial statements cember 31, 2009, standards and interpretations have been published
The IBS Group has applied the amended IAS1 Presentation of Finan- that have not yet entered into effect. In 2009, IBS applied no standards
cial Statements since January 1, 2009. The change has meant that the or interpretations in advance. The following are the changed IFRS with
year’s translation differences upon the translation of foreign operations advance application that may affect IBS’ accounting policies upon in-
that were previously recognized directly in shareholders’ equity are now troduction.
instead recognized in other comprehensive income, which IBS presents
26 IBS Annual Report 2009
Revised IFRS 3 Business Combinations and amended IAS 27 Consoli- Associated companies are companies in which the Group has a sig-
dated and Separate Financial Statements entail the following changes: nificant, but not a controlling influence over the company’s operational
the definition of a business change, transaction expenses in business and financial management, usually corresponding to a shareholding be-
combinations shall be expensed, contingent considerations shall be tween 20 and 50 percent of the voting rights. As of the date on which
measured at fair value on the acquisition date and effects of the revalua- the significant influence arises and up until it ceases, shares in associ-
tion of liabilities related to contingent considerations are recognized as ated companies are recognized in the consolidated accounts according
an income or expense in the profit/loss for the year. It is also new that to the equity method. The equity method means that the value of shares
there will be two alternative ways of recognizing non-controlling (minor- in associated companies recognized in the consolidated accounts cor-
ity) interests (NCI) and goodwill; either at fair value, which means that responds to the Group’s share of the associated company’s equity plus
goodwill is included in the NCI or alternatively that the NCI is comprised consolidated goodwill and other residual values from consolidated sur-
of a proportion of the net assets. The choice of these two methods will pluses and deficits.
be made individually for each acquisition. Furthermore, additional acqui- Inter-company receivables and liabilities, revenues and costs, and
sitions that take place after the controlling influence has been obtained unrealized gains and losses arising from transactions between Group
are considered to be owner transactions and recognized directly in share- companies are eliminated in their entirety in the consolidated accounts.
holders’ equity. The revised and amended standards will be applied as of
the next fiscal year, namely as of January 1, 2010. The changes will only REPORTING OF OPERATING SEGMENTS
have prospective effects on IBS. An operating segment is a part of the Group that conducts activities from
As of 2013, the new IFRS 9 Financial Instruments will replace IAS 39 which it can generate revenues and incur costs, and for which independ-
Financial Instruments: Recognition and Measurement. IASB has published ent financial information is available. An operating segment’s results are
the first of at least three parts that will jointly constitute IFRS 9. This first monitored by the company’s chief operating decision-maker to evaluate
part treats the classification and measurement of financial assets. The the results and to be able to allocate resources to the operating segment.
categories of financial assets that are in IAS 39 will be replaced by two Based on these starting points, IBS’ operating segments are comprised
categories, where measurement is done at fair value or amortized cost. of four geographic areas: Nordics which refers to Sweden, Norway,
Amortized cost is used for instruments held with the intent to obtain Denmark and Finland. Europe which refers to Belgium, the Netherlands,
the contractual cash flows, which shall constitute payment of loans and Germany, Switzerland, Poland, the UK, Spain, Portugal, Italy and France.
interest on loans. Other financial assets are recognized at fair value and Americas which refers to Brazil, Columbia, the U.S. and Mexico. Asia
the possibility of applying the fair value option is retained as in IAS 39. Pacific (APAC), which refers to Australia, Singapore, Malaysia and China.
Changes in fair value shall be recognized in profit/loss, with exception Refer to Note 1 for more details on the division and presentation of
for value changes of equity instruments held for sale and for which initial operating segments.
choices are made to recognize value changes in other comprehensive in-
come. Value changes of derivatives in hedge accounting are not affected CLASSIFICATION
by this part of IFRS 9, but rather recognized in accordance with IAS 39 Fixed assets and long-term liabilities consist in all essential respects of
until further notice. IBS has not decided whether the new policies will amounts that are expected to be recovered or paid more than 12 months
begin to be applied in advance or starting in 2013. from the closing date. Current assets and liabilities consist in all essential
Other new and amended accounting policies with future application respects of amounts that are expected to be recovered or paid less than
are preliminarily assessed not to have any accounting effect or entail a 12 months from the closing date.
need of further disclosures.
CONSOLIDATED ACCOUNTS Transactions in foreign currency
The consolidated accounts comprise the Parent Company IBS AB (publ.), Transactions in foreign currency are translated to the functional currency
and all subsidiaries and associated companies in Sweden and elsewhere. at the exchange rate applying on the transaction date. The functional cur-
The company’s shares are traded on NASDAQ OMX First North. IBS AB rency is the currency in the primary economic environments in which the
conducts its operations in the legal form of a limited liability company companies conduct their business. Monetary assets and liabilities in foreign
with registered offices in Stockholm, Sweden. The address of IBS’ head currency are translated to the functional currency at the exchange-rate
office is Hemvärnsgatan 8, SE-171 26 Solna, Sweden. The Corporate applying on the closing date. Exchange-rate differences arising through
Registration Number of IBS AB is 556198-7289. translation are recognized in profit and loss. Exchange-rate differences
The term subsidiaries refers to companies in which the Parent Com- relating to operational assets and liabilities are recognized in operating
pany, directly or indirectly, holds more than 50 percent of the voting earnings, whereas translation differences relating to financial assets and
rights, or by any other means exerts a controlling influence. When as- liabilities are recognized in net financial items. Non-monetary assets and
sessing whether a controlling influence exists, potential shares carrying liabilities that are recognized at their historical cost are translated at the
voting rights are taken into account if they can be exercised or con- exchange rate at the time of the transaction. Non-monetary assets and lia-
verted without delay. If companies are acquired during the year, they bilities that are recognized at fair value are translated to the functional cur-
are included in the consolidated accounts as of the acquisition date. rency at the rate that applied at the time of measurement at fair value.
Companies divested during the year are included up until the date that
the controlling influence ends. Financial reporting of foreign subsidiaries
The consolidated accounts have been prepared in accordance with Assets and liabilities in foreign subsidiaries, including goodwill and other
the purchase method. This means that the acquisition of a subsidiary is consolidated surpluses and deficits, are translated from the foreign sub-
considered as a transaction through which the Group indirectly acquires sidiary’s functional currency to the Group’s reporting currency SEK at
the subsidiary’s assets and assumes its debts and contingent liabilities. The the exchange rate applying on the closing date. Revenues and costs in
consolidated cost is determined through an acquisition analysis in conjunc- foreign operations are translated to SEK at an average rate that approxi-
tion with the acquisition. This analysis determines the cost of the shares mates the rates applying at each transaction date. Translation differences
or the operations, as well as the fair value on the acquisition date of the arising in the currency translation of foreign operations are recognized in
identifiable acquired assets and assumed debts and contingent liabilities. other comprehensive income and accumulated in a separate component
The cost of the shares in the subsidiary or the operations comprises the of shareholders’ equity, called the translation reserve.
fair value on the date of transfer of assets, assumed or arising debts and When foreign operations are divested, the accumulated translation
issued equity instruments transferred as payment in exchange for the differences attributable to the operation less any currency hedging are
acquired net assets plus transaction costs that are directly attributable to realized and reclassified to the consolidated income statement. Accu-
the acquisition. In cases where the acquisition cost for the acquired op- mulated translation differences are presented as a separate equity item
erations exceeds the net value of the acquired assets and assumed debts and include translation differences accumulated since January 1, 2004.
and contingent liabilities, the difference is recognized as goodwill. If the Accumulated translation differences prior to January 1, 2004 are distrib-
difference it negative, it is recognized directly in profit and loss. uted among other equity items and not recognized separately.
IBS Annual Report 2009 27
Net investments in foreign operations estimated useful life. The following percentages are applied to deprecia-
The Group comprises operations in several countries. In the consolidated tion/amortization:
balance sheet, investments in foreign operations are represented by net
assets recognized in subsidiaries, including monetary items that are part Intangible fixed assets
of the net investments in the companies. Translation differences from net Capitalized product development costs, % 20
investments are reversed and recognized in profit and loss when foreign Software and development tools, % 25
operations are divested. Acquired software rights, % 10
Other intangible assets, % 20
Intangible assets comprise capitalized product development costs, good- Tangible fixed assets
will and acquired software, as well as other intangible fixed assets that Computers, % 33
consist of the fair value of customer relations, brands and similar items Servers, % 25
acquired in conjunction with company acquisitions. Acquired customer Other equipment, % 17–20
relations and computer software are recognized at acquisition cost less
amortization and impairment losses. Acquired existing brands normally FINANCIAL ASSETS AND LIABILITIES
have an indefinite useful life and are recognized at cost less impairment Recognition and de-recognition from the balance sheet
losses. A financial asset or liability is recognized in the balance sheet when the
IBS develops and sells its proprietary standard software. Product de- company becomes a party to the instrument’s terms. Liabilities are rec-
velopment costs are capitalized in the balance sheet if the product is ognized when the counterparty has delivered and a contractual payment
technically and commercially usable and the required resources are avail- obligation exists, even if an invoice has not yet been received. A financial
able to complete its development and thereafter use and sell it. Costs for asset (or portion thereof) is eliminated from the balance sheet when the
system development are only capitalized subject to the condition that the rights according to the contract are realized or expire or the company
expense is expected to result in an identifiable economic benefit in the essentially transfers the risks and benefits associated with ownership.
future. The carrying amount includes costs that are directly attributable A financial liability (or portion thereof) is eliminated from the balance
to the asset. Other development expenses are recognized in profit and sheet when the contractual obligation is fulfilled or otherwise expires.
loss as costs as they are incurred. Costs for research intended to acquire Acquisition and divestment of financial assets is recognized on the
new scientific or technical knowledge are expensed as they occur. Insofar transaction date, which is the date on which the company pledges to
as development projects out of necessity take a significant amount of acquire or divest the assets. A financial instrument is offset and recognized
time to complete and costs paid amount to significant amounts, borrow- in a net amount in the balance sheet only when there is a legal right to
ing costs are capitalized in the project’s acquisition cost. offset the amount and there is an intention to settle the item with a net
Goodwill represents the difference between the cost of an acquired amount or to simultaneously realize the asset, thus settling the debt.
business operation and the fair value of the acquired identifiable assets,
assumed debts and contingent liabilities. Classification and valuation
In the transition to IFRS, goodwill attributable to acquisitions that Financial instruments are initially recognized at a cost corresponding to
took place prior to January 1, 2004, is recognized at cost less accumu- the asset’s fair value plus transaction costs for all financial instruments
lated amortization and impairment losses up to December 31, 2003. As except those belonging to the category financial assets recognized at
of January 1, 2004, and onward, the carrying amount consists of the fair value in profit and loss, which are recognized at fair value exclud-
consolidated cost after impairment testing. ing transaction costs. On the first reporting date, financial assets are
Goodwill is measured at cost less any accumulated impairment losses. recognized based on the intention in acquiring the asset, which affects
Goodwill is distributed among cash-generating units and tested each subsequent reporting.
year for impairment requirements (see the section Impairment losses Fair value of listed financial assets corresponds to the asset’s listed
below). market price on the closing date.
Fair value of unlisted financial assets is determined by using valuation
TANGIBLE FIXED ASSETS methods, such as deriving the price from recently completed transac-
Tangible assets are recognized at cost less accumulated depreciation and tions, the price of similar instruments and discounted cash flows.
possible impairment losses. The cost includes the purchase price, includ-
ing costs directly attributable to putting the asset in place in a state suit- Accounts receivable and other current and long-term receivables
able for its intended use. This balance sheet item includes PCs, servers, Receivables that are not derivatives with payments that can be deter-
network equipment, office equipment, investments in rented premises mined and that are not listed in an active market are recognized in the
and financial leasing agreements. loan receivables and accounts receivable category at amortized cost.
Amortized cost is calculated on the basis of the initial effective interest
LEASING on the receivable. Accounts receivable and other current receivables that
IBS is a lessee and leasing contracts are classified either as finance or normally have a remaining duration of less than 12 months are recog-
operating leases in the consolidated accounts. Financial leasing applies nized at nominal value. Receivables are assessed individually with regard
when the economic risks and benefits associated with ownership in all to anticipated risk of loss and are recognized in the amounts that are
significant respects have been transferred to IBS. If this is not the case, expected to be received. Write-downs of operating-related receivables
it is an operating lease. Finance leases are recognized as a fixed asset are recognized under operating costs, while others are included in net
initially measured at the lower of the leased item’s fair value and the financial items.
present value of the minimum leasing fee at the date of contract. The
present value of remaining future lease payments are recognized as a Financial investments
liability among interest-bearing current and long-term liabilities. The Financial investments are included in the category Financial assets meas-
asset is depreciated over its useful life, which normally corresponds to ured at fair value in profit and loss. This category consists of two sub-
the leasing period, with consideration taken to possible residual value at groups, financial assets held for sale and other financial assets that the
the end of the period. Leasing payments are distributed between interest company initially elected to place in this category. A financial asset is
and amortization of the liability. For operating leases, leasing fees are classed as held for sale if it was acquired with the intention of selling it
distributed straight line over the leasing period. over the short term. Financial investments also include derivative instru-
ments, such as stock options that are held with the objective of achiev-
DEPRECIATION PRINCIPLES FOR FIXED ASSETS ing an increase in value. Financial investments are measured on the first
Tangible fixed assets are depreciated and intangible assets with deter- reporting date and continuously thereafter at fair value with changes in
minable useful lives are amortized from the date on which they become value recognized in profit and loss among net financial items.
available for use. Depreciation and amortization are straight line over the
28 IBS Annual Report 2009
Derivative instruments (cash-generating units). An impairment loss is recognized when the value
Derivative instruments belong to the valuation category financial assets of an asset or a cash-generating unit exceeds the recoverable amount.
and liabilities measured at fair value in profit and loss and the subgroup The impairment loss is recognized in profit and loss.
financial instruments held for sale. Derivative instruments primarily com- For goodwill and other intangible assets with indefinite useful lives
prise currency hedging contracts that cover the risk of exchange-rate and intangible assets not yet ready for use, the recoverable amount is
changes. Derivative instruments are measured on the first reporting date calculated at least once a year, as well as when there is any indication
and continuously thereafter at fair value, with changes in value recog- that a need to recognize an impairment loss exists.
nized as revenues or costs under operating earnings or under net finan- Impairment of assets attributable to a cash-generating unit (group
cial items, depending on the objective for using the derivative instrument of units) is primarily allocated to goodwill. Thereafter, impairment losses
and whether their use relates to an operating or a financial item. are distributed proportionately among other assets included in the unit
(group of units).
Receivables and liabilities in foreign currency
For hedging of currency risks associated with receivables and liabilities Impairment testing of financial assets
in foreign currency, forward contracts are used. Hedge accounting is not On each reporting date, the Company determines if there is any objective
applied, since the exchange rate effects from both the hedged item and evidence that a need exists to recognize an impairment loss on any finan-
the hedging instrument are recognized in profit and loss. In this way, cial asset or group of assets. For the financial assets held by IBS, objective
the Group achieves essentially the same profit matching as with hedge evidence comprises observable circumstances that have occurred and
accounting. have a negative impact on the ability to recover the cost.
During the fiscal year and the comparison year, the Group had an The recoverable amount of assets belonging to the category loan
insignificant amount of currency derivates and did not apply any hedge claims and accounts receivable that are recognized at amortized cost is
accounting. calculated as the present value of future cash flows discounted by the
effective interest rate that applied when the asset was recognized for
Cash and cash equivalents the first time. Assets with short maturity periods are not discounted. An
Cash and cash equivalents include cash and immediately available funds impairment loss is recognized in profit and loss.
in banks and corresponding institutes, as well as current liquid invest-
ments with a maturity period of less than three months from the acqui- Reversal of impairment losses
sition date and for which the risk of fluctuation in value is insignificant. An impairment loss is reversed if there is both an indication that the
Cash and bank balances are recognized at nominal value. The definition need to recognize an impairment loss no longer exists and if a change
of cash and cash equivalents is the same in the balance sheet as in the has occurred in the assumptions on which calculation of the recoverable
cash-flow statement. amount was based. Reversal only takes place to the extent that the as-
set’s carrying amount does not exceed the carrying amount that would
Interest-bearing liabilities have been recognized, less depreciation as applicable, if an impairment
Interest-bearing liabilities are included in the category other liabilities. loss had not been recognized. Impairment of goodwill is never reversed.
Borrowing is initially recognized at an acquisition cost corresponding to Impairments of loan claims and accounts receivable are reversed if a sub-
the fair value of what was received less transaction costs and any sur- sequent increase of the recoverable amount can be objectively attributed
pluses or deficits. Thereafter, borrowing is recognized at amortized cost to an event that occurred after the impairment loss was recognized.
according to the effective interest method, meaning that the value is
adjusted by distributing any premiums or discounts in conjunction with INVENTORY
raising the loan and costs for borrowing over the anticipated maturity Inventory is recognized at the lower of cost according to the first-in, first-
period. Distribution of these amounts is calculated on the basis of the out (FIFO) principle and the net selling value, with consideration taken
loan’s initial effective interest. Gains and losses arising when loans are to the risk of obsolescence. Inventory consists of third-party software
repaid are recognized in profit and loss at the date on which the loan licenses and hardware that has not yet been delivered.
Accounts payable and other operating liabilities A contingent liability is recognized when there is a possible obligation
Accounts payable and other operating liabilities are recognized at amor- attributable to an arising circumstance the occurrence of which is only
tized cost as determined based on the effective interest calculated on the confirmed by one or more uncertain future events, or when there is an
acquisition date. The maturity period is normally short, which normally obligation that is not recognized as a liability or provision because of
entails recognition at the nominal value. The liabilities are included in the doubt that an outflow of resources will be necessary.
category other liabilities.
IMPAIRMENT LOSSES Net sales refers to invoiced professional services in the form of consult-
The carrying amounts of the Group’s assets are assessed on each clos- ing fees, software license revenues (gross), sales revenues from IBM and
ing date to determine if there is any need to recognize an impairment other hardware, and revenues for re-invoiced goods and services.
loss. With respect to assets other than financial instruments, inventories,
available-for-sale assets, disposal groups recognized in accordance with The criteria for booking license revenues are:
IFRS 5, and deferred tax assets, IAS 36 is applied to determine the need ■ a written contract, signed by both parties
for impairment losses. For assets that are not subject to IAS 36, impair- ■ delivery has taken place
ment testing is applied in accordance with each applicable standard. ■ the license fee is a fixed amount or can be calculated reliably
■ the credit period may not exceed 12 months
Impairment testing of tangible and intangible assets and ■ the customer has limited opportunities of cancelling the contract
participations in subsidiaries and associated companies ■ receipt of payment is ensured.
If such a need is indicated, the recoverable amount is calculated in
accordance with IAS 36 as the higher of the asset’s value in use or fair If no significant adaptations are stipulated, the license – more specifically,
value less selling expenses. the right of use – is considered delivered when the software has been
In calculating value in use, future cash flows are discounted at an transferred to the customer and the license fee has been fully recognized
interest rate before tax that takes into consideration the market’s assess- as revenue, provided that other criteria for revenue recognition have
ment of risk-free interest and the risk linked to the specific assets. In im- been fulfilled. If significant adaptations are included in the commitment
pairment testing, if it is not possible to determine materially independent under the agreement with the customer, the initial license fees are rec-
cash flows for an individual asset, the assets are grouped at the lowest ognized as revenue in pace with completion. Invoiced, non-performed
level at which it is possible to identify materially independent cash flows revenue is recognized as deferred income.
IBS Annual Report 2009 29
Professional service revenues are normally recognized as revenues as customary guarantees, has been provided and the assessment is that this
they are invoiced, meaning as work is performed. Maintenance and sup- could give rise to additional costs for IBS, a reserve is posted. The exact
port services are recognized as professional services straight line over the amount and the timing of any outflows from such provisions are subject
contract period under the heading Professional services. to uncertainty. The item ”other” comprises a provision for remuneration
Hardware and other sales are recognized as revenue upon delivery in connection with lay-offs.
and, as appropriate, at installation.
Revenue for fixed-price projects or those on current account with a PROVISION, RESTRUCTURING
pre-determined maximum cost is recognized according to the percentage- A provision for restructuring is recognized when the Group has estab-
of-completion method. Current accounts with pre-set limits are normally lished a detailed and formal restructuring plan, and the restructuring
invoiced on a monthly basis in arrears, according to work completed. At has either been initiated or announced publicly. No provision is made for
the end of a period, only that portion of the project’s net sales is recog- future operating expenses.
nized that corresponds to accrued costs as a percentage of estimated
total costs. For risk projects deemed to include potential losses, individual EMPLOYEE BENEFITS
provisions are recognized under Provisions in the balance sheet. Short-term remuneration
The right to utilize IBS software products is granted against license Short-term remuneration to employees, such as salaries, paid vacation,
fees (i) initially, (ii) whenever utilization is expanded, or (iii) periodically paid sick leave, etc., plus social security contributions, are recognized as
in the form of renewal fees. The two former types of revenue are recog- employees perform services for which remuneration is received.
nized in accordance with the policies described above. As regards renew-
al fees, customers have the right to cancel utilization rights not later than Termination benefits
three months prior to the next 12-month licensing period. If the contract Any cost resulting from the lay-off of personnel is recognized only if the
is not cancelled, the customer is obligated to pay the license fee for the company is unquestionably obligated, without any realistic opportunity
next 12-month period. These renewal fees, which are paid in advance, to retract, by a formal detailed plan, without terminating employment
are recognized as revenue straight line over the contract period. prior to the normal date. When payment is made as an offer to encour-
age voluntary resignation, a cost is recognized if it is probable that the
RECOGNITION OF COSTS IN AN INCOME offer will be accepted, and it is possible to reliably estimate the number
STATEMENT CLASSIFIED BY FUNCTION of employees who will accept the offer.
IBS’ internal accounting is based on an income statement based on type
of costs, while that classified by function is created by allocating the cost Pensions
of goods and services sold (direct costs) and indirect costs to the respec- Pension agreements and other remuneration after the end of employ-
tive function. Certain types of costs are allocated in their entirety to a ment are classified either as defined-contribution or defined-benefit
given function, while the allocation of shared costs takes place using a plans. Virtually all pension plans at IBS are defined-contribution plans,
distribution key based on the personnel mix. with defined-benefit plans only as an exception. Pension plans insured
with Alecta are defined-benefit plans comprising several employers,
Costs for software licenses but are recognized as defined-contribution plans due to an inability of
These costs relate to direct costs for goods and consist of costs for the making a breakdown by each employer. Obligations relating to fees for
purchase of third-party products that are subsequently sold to customers. defined-contribution plans are recognized as costs in profit and loss in
pace with vesting by the employees performing services for the company
Costs for professional services during a period of time.
Direct costs related to professional services consist of personnel costs for The information provided in a note form on defined-benefit pensions
the Company’s own consultants and their share of joint costs plus costs is limited, since this item is considered insignificant.
for external consultants used in customer projects. The Group’s net obligations relating to defined-benefit plans are cal-
culated separately for each plan by estimating the future compensation
Hardware and other costs that the employee has earned through service in both the current and
These costs consist of the cost of goods for hardware. This also includes previous periods. This compensation is discounted to a present value,
re-invoiced costs, such as travel costs. and the fair value of any plan assets is deducted. The discount rate is the
return on the closing date for Grade A corporate bonds with a maturity
Product development costs period corresponding to the Group’s pension obligations. If there is no
These costs include personnel costs for those employees who work with active market for such bonds, the market rate for government bonds
product development plus their proportional share of joint costs. In ad- with the corresponding maturity is used instead. The calculations are
dition, these costs include amortization of capitalized product develop- performed by a qualified actuary using what is called the projected unit
ment costs. credit method.
For actuarial gains and losses arising in the calculation of the Group’s
Sales and marketing costs obligations after January 1, 2004 according to the various pension plans,
These costs include direct sales and marketing costs, such as advertising the corridor rule is applied. The corridor rule means that the portion of
costs and costs for printed materials (product brochures and other cus- the accumulated actuarial gains and losses that exceeds 10 percent of
tomer material). Personnel costs for marketing and sales personnel plus the greater of the present value of the obligation and fair value of the
their share of joint costs are also included. plan assets is recognized in profit and loss over the average remaining
employment period for those employees covered by the plan. Actuarial
Administrative costs gains and losses are not considered in other respects.
This function includes costs for administrative personnel plus their share When the calculation results in an asset for the Group, the carrying
of joint costs. amount of the asset is limited to the net of unrecognized actuarial losses
plus unrecognized costs for employment during previous periods and
PROVISION, PROJECT RESERVE AND WARRANTY RESERVE the present value of future bonus payments from the plan or reductions
Estimated costs for product and project warranties are recognized as in future premium payments to the plan. When there is a difference
costs when deemed necessary. Such provisions are based on an individual between how pension costs are determined in a legal entity and in the
evaluation of each customer project. The assessment is based on the Group, a provision or a claim is recognized relating to the special em-
company having a formal or informal commitment following a given ployer’s contribution (a specific Swedish tax) based on that difference.
event, and where it is plausible that an outflow of resources will be nec-
essary to settle the commitment and a reliable estimate of the amount Share-based payments
can be made. In the event that projects in progress are subject to a fixed Options programs make it possible for the Board of Directors, President
final price and/or where a certain guarantee commitment, in addition to and other senior executives to acquire shares in IBS. The fair value of
30 IBS Annual Report 2009
allocated warrants is recognized as a personnel cost with a correspond- that degrade earnings per share after dilution, which e.g. is not the case
ing increase of shareholders’ equity. Their fair value is calculated using when the earnings for the year (from remaining operations) attributable
the Black-Scholes option pricing model at the time of allocation and is to the Parent Company’s ordinary shareholders are negative.
distributed over the vesting period. The cost recognized corresponds to
the fair value of an estimate of the number of warrants expected to be DIVIDENDS PAID AND REPURCHASE OF OWN SHARES
vested, considering the options programs’ requirements of continued Dividend payments are recognized as a liability after the Annual General
employment. This cost is adjusted in the ensuing periods to ultimately Meeting has approved the dividend. Repurchased shares are recognized
reflect the actual number of warrants vested. However, no adjustment as a deductible from shareholders’ equity. Payment for the divestment of
is made when unexercised warrants expire due to the redemption price such shares equity instruments is recognized as an increase in sharehold-
being higher than the market price. ers’ equity. Any transaction costs are recognized directly in shareholders’
Social security contributions attributable to the options programs are equity.
expensed across the same vesting period as the personnel cost for the
warrants in accordance with the previous paragraph. However, the provi- PARENT COMPANY ACCOUNTING POLICIES
sion for social security contributions is based on the warrants’ fair value The Parent Company prepares its Annual Report according to the Annual
at each reporting occasion. Effects of changes in fair value during and Accounts Act (1995:1554) and the Swedish Financial Reporting Board’s
after the vesting period are also recognized as a personnel cost. recommendation RFR 2.2 Accounting for Legal Entities. This recommen-
dation states that the Parent Company in the Annual Report of the legal
FINANCIAL INCOME AND EXPENSES entity must apply all of the IFRS rules and interpretations adopted by the
Financial income and expenses comprise interest income from invested EU as far as possible within the limits of the Annual Accounts Act and
funds, dividend income, and earnings from changes in value of financial with consideration taken to the relation between accounting and taxa-
assets and liabilities measured at fair value in profit and loss. tion. The recommendation specifies the exceptions and amendments to
Interest income from financial instruments is recognized according to IFRS that must be applied.
the effective interest method. Dividend income is recognized when the The differences between the accounting policies for the Group and
right to receive dividends has been established. Earnings from the divest- the Parent Company are described below. The accounting policies below
ment of a financial instrument are recognized when the risks and ben- for the Parent Company have been applied consistently for all periods
efits associated with ownership of the instrument have been transferred presented in the Parent Company’s financial statements, unless specified
to the buyer and the Group no longer has control of the instrument. below.
Financial expenses comprise interest expenses from loans, the effect
of the reversal of the present value computation of provisions, losses Changed accounting policies. In addition or contrast to the changed
from changes in the value of financial assets and liabilities, including accounting policies stated for the Group above, the following changes
derivatives, measured at fair value in profit and loss and impairment of affected the Parent Company in 2009.
financial assets. Borrowing costs are capitalized in the carrying amount Changes in IFRS 1 First-time Adoption of IFRS and IAS 27 Consoli-
of development projects insofar as IBS conducts development projects dated and Separate Financial Statements with regard to the ”cost of an
that necessarily take considerable time to complete and the project investment in a subsidiary, jointly-controlled entity or associate” have
expenditures are significant. Exchange gains and exchange losses are been applied since January 1, 2009. This change has meant that the Par-
recognized net. ent Company now always recognizes dividends from subsidiaries in their
The effective interest rate is the rate used to discount estimated fu- entirety as revenues in net profit for the year. Previously, dividends that
ture receipts and disbursements during a financial instrument’s expected are greater than profits accrued after the acquisition of the subsidiary
maturity period to the recognized net value of the financial asset or reduced the carrying amount of the participations in the subsidiary. The
liability. This calculation includes all fees that are paid or received by the change has not affected the present financial statements.
contracting parties that are part of the effective interest rate, transaction Classification and presentation The Parent Company’s income
costs and all premiums and discounts. statement and balance sheet are prepared in accordance with the sched-
ule of the Annual Accounts Act. The primary differences compared with
TAXES IAS 1 Presentation of Financial Statements, which is applied during the
Income tax is made up of current tax and deferred tax. Income tax is preparation of the Group’s financial statements, pertain to the reporting
recognized in the net profit for the year except when underlying transac- of financial income and expenses, appropriations and untaxed reserves,
tions are otherwise recognized in other comprehensive income or share- shareholders’ equity and the occurrence of provisions as a separate head-
holders’ equity whereby the associated tax effect is recognized in other ing in the balance sheet.
comprehensive income or in shareholders’ equity. Shares in subsidiaries and associated companies are recognized
Current tax comprises all tax to be paid or received for the current in the Parent Company according to the cost method. Dividends received
year, and includes adjustments of current tax attributable to previous pe- are recognized as revenue.
riods. Deferred tax is calculated according to the balance sheet method, Anticipated dividends from subsidiaries are recognized in cases
based on temporary differences between the carrying amount and value where the Parent Company has the sole right to determine the dividend
for tax purposes of assets and liabilities. amount and the Parent Company has taken the decision on this amount
Deferred tax receivables for deductible temporary differences and loss prior to the publication of its financial statements.
carryforwards are only recognized insofar as it is probable that they will Leased assets. In the Parent Company, all leases are recognized ac-
be able to be utilized. cording to the rules for operating leases.
Employee benefits. Other policies are applied in the Parent Com-
EARNINGS PER SHARE pany for calculating defined-benefit plans than those specified in IAS
The calculation of earnings per share is based on the consolidated net 19. The Parent Company follows the Swedish Act on Safeguarding of
profit for the year attributable to the Parent Company’s shareholders and Pension Commitments and the regulations issued by the Swedish Finan-
the weighted average number of shares outstanding during the year. In cial Supervisory Authority, since this is a prerequisite for deduction for
the calculation of earnings per share after dilution, the average number tax purposes. The most important differences, compared with the rules
of shares is adjusted to take effects of issued employee stock options into in IAS 19, are how the discount rate is determined, that the calculation
account. Dilution from options affects the number of shares and only of the defined-benefit obligation is based on current salary without as-
arises when the redemption price is lower than the market price. The sumptions regarding future salary increases and that all actuarial gains
dilution is greater, the larger the difference is between the redemption and losses are recognized in profit and loss when they arise.
and market prices. The redemption price is adjusted through an addition Share-based payments issued by the Parent Company to employ-
for the value of future services associated with the equity-regulated em- ees in the Parent Company are recognized in the same manner as for
ployee stock option program, which are recognized as share-based pay- the Group. However, share-based payments that the Parent Company
ments in accordance with IFRS 2. Dilution is only recognized for options has issued to employees in other Group companies are not recognized as
IBS Annual Report 2009 31
personnel costs in the Parent Company, but instead as an increase in the
value of shares in Group companies. This increase is allocated across the
same period as in the Group and with an offsetting entry as an increase
directly in shareholders’ equity.
Borrowing costs are charged to earnings during the period to which
they are attributable. No borrowing costs are capitalized on assets.
The Parent Company’s financial guarantee agreements consist of
sureties on behalf of subsidiaries. Financial guarantees entail that the
company has a commitment to reimburse the holder of an instrument
of debt for losses incurred by the holder due to a specified debtor not
fulfilling his payment obligations on maturity, according to the contrac-
tual terms and conditions. When reporting financial guarantee agree-
ments, the Parent Company applies a relaxation agreement issued by
the Swedish Financial Reporting Board for the rules of IAS 39, in respect
of financial guarantee agreements provided on behalf of subsidiaries.
The Parent Company recognizes financial guarantee agreements as a
provision in the balance sheet when the company has an obligation the
settlement of which will probably require a payment.
Taxes. The Parent Company reports untaxed reserves including de-
ferred tax liabilities. In the consolidated accounts, on the other hand,
untaxed reserves are divided between deferred tax liabilities and share-
The Company reports Group contributions and shareholder contri-
butions in accordance with the statement issued by the Swedish Finan-
cial Reporting Board (UFR 2). Shareholder contributions are recognized
directly in equity by the recipient and recognized against shares and
participations by the issuer to the extent that impairment losses are not
required. Group contributions are recognized in accordance with their
financial significance. Group contributions paid and received with the
aim of minimizing the Group’s total tax are charged directly against re-
tained earnings less their current tax effect. Group contributions that are
the equivalent of a dividend are recognized as a dividend. This means
that the Group contribution received and its tax effects are recognized in
profit and loss. Group contributions that are the equivalent of sharehold-
er contributions are recognized by the recipient directly against retained
earnings with consideration taken to the current tax effect. The issuer re-
ports Group contributions and their current tax effects as an investment
in participations in subsidiaries, unless impairment is needed.
32 IBS Annual Report 2009
Amounts in SEK million unless otherwise specified.
Note 1 INFORMATION ON SEGMENTS
SEGMENT ANALYSIS (PRIMARY) GEOGRAPHICAL AREAS
Nordics Europe Americas Asia Pasific adjustments Total
SEK m 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008
Net sales from external customers
Software licenses 117.9 119.1 246.0 211.8 50.8 37.5 61.6 50.7 0.0 0.2 476.3 419.3
Professional services 437.2 516.8 357.3 431.7 98.8 113.1 68.4 85.0 7.0 3.8 968.7 1 150.4
Hardware and other revenues 140.8 194.6 213.5 245.0 9.2 11.2 10.7 13.3 0.0 0.0 374.2 464.1
695.9 830.5 816.8 888.5 158.8 161.8 140.7 149.0 7.0 4.0 1 819.2 2 033.8
Net sales from other IBS segments 23.0 42.5 37.7 55.6 12.7 15.7 9.1 14.9 –82.5 –128.7 0.0 0.0
Net sales 718.9 873.0 854.5 944.1 171.5 177.5 149.8 163.9 –75.5 –124.7 1 819.2 2 033.8
Segment operating profit/loss –7.4 100.6 84.6 41.4 8.8 25.6 6.4 10.5 –290.2 –291.8 –197.8 –113.7
Restructuring costs –34.3 –38.2 –74.6 –97.3 –3.9 –33.4 –2.9 –4.4 –12.2 3.7 –127.9 –169.6
Segment operating profit/loss –41.7 62.4 10.0 –55.9 4.9 -7.8 3.5 6.1 –302.4 –288.1 –325.7 –283.3
Financial items –6.8 10.5
Taxes –100.9 –1.6
Net loss for the year –433.4 –274.4
Depreciation/amortization –3.2 –3.0 –19.4 –14.2 –2.8 –1.3 –10.4 –10.3 –110.2 –104.1 –145.9 –132.9
Impairment –0.5 - –49.9 –49.4 –0.2 –3.4 –80.7 - - - –131.3 –52.8
Other non-cash expenses –19.1 –0.2 –156.6 –75.8 - 0.0 - –0.6 174.0 74.4 –1.7 –2.2
REVENUES FROM EXTERNAL CUSTOMERS AND FIXED ASSETS BY SIGNIFICANT COUNTRY
Country 2009 2008 2009 2008
Sweden 431.3 512.4 44.0 28.9
Netherlands 288.1 314.6 178.4 211.9
Belgium 282.2 293.2 12.9 25.1
USA 146.4 152.7 22.9 27.3
Australia 125.1 137.9 183.8 156.5
Finland 121.9 146.8 11.0 18.3
Denmark 118.7 134.8 18.0 19.9
Other 305.5 341.5 293.3 495.5
Total 1 819.2 2 033.8 741.8 983.4
The Group’s internal reporting system is based on the follow-up of the pro- in its own particular country. The few projects that deviate from this policy
fitability of operations in different countries or different geographical areas account for less than 10 percent of the net sales.
and this is the reason why geographical areas constitute the primary basis Inter-segment pricing is based on market prices. Segment results include
of division. items that are directly attributable or can be allocated to a segment in a rea-
sonable and reliable way.
The following operating segments have been identified: Segment operating profit/loss for Parent Company incl. group adjust-
Nordics: Refers to Sweden, Denmark, Norway and Finland. ments, does not include the internal revenues from subsidiaries for royalties
Europe: Refers to the UK, the Netherlands, Belgium, France, Spain, Portugal, and management fees. It inclueds the intire impairment of goodwill.
Italy, Switzerland, Poland and Germany. Non-allocated items consist mainly of taxes and financial items. The seg-
Americas: Refers to USA, Mexico and Colombia. ment investments in tangible and intangible assets include all investments ex-
Asia Pacific: Refers to Australia, Singapore, Malaysia and China. cept investments in expendable equipment and equipment of minor value.
Information concerning the assets of the operating segments is not provi-
The same types of activities are conducted within the different geographical ded since the chief operating decision-maker does not monitor them.
areas, which means that subsidiaries sell, implement and maintain business
systems, primarily IBS’ own products, but also third-party products. The PARENT COMPANY
Group also offers professional services and sales of computing equipment The majority of the Parent Company’s revenues is derived from royalties and
and network solutions. management fees. These revenues per geographical area were; Nordics SEK
The division into segments is based on where the Group’s assets are 35.4 m (34.9), Europe SEK 34.2 m (35.5), Americas SEK 17.5 m (11.0) and
located, which in the case of IBS concurs with the customers’ locations. The Asia Pacific SEK 4.4 m (9.5).
Group’s policy is that each IBS company is responsible for the customers
IBS Annual Report 2009 33
Note 2 STAFF, STAFF COSTS AND REMUNERATION TO SALARIES, OTHER BENEFITS AND SOCIAL SECURITY
BOARD OF DIRECTORS 2009 2008
AVERAGE AND TOTAL NUMBER OF STAFF Group
Average no. Total no. Salaries and benefits 721.3 838.7
of whom, of whom, Dec. 31, Dec. 31, Social security contributions 183.4 220.7
2009 men 2008 men 2009 2008
(of which, pension expenses) 58.7 60.5
Parent Company: Total 904.7 1 059.4
Sweden 22 26% 26 23% 20 25
Subsidiary: Parent Company
Sweden 340 63% 425 74% 325 400 Salaries and benefits 12.8 20.8
Portugal 59 62% 211 62% 50 110 Social security contributions 7.5 13.1
Australia 78 53% 101 72% 80 91 (of which, pension expenses) 3.5 4.0
Belgium 126 84% 168 83% 121 145 Total 20.3 33.9
Netherlands 118 82% 137 85% 120 131
Finland 73 62% 103 68% 68 85 Of Parent Company pension expenses, SEK 1.9 m (2.4) were attributable to
the President and other senior executives. In the Parent Company, the pre-
USA 101 70% 114 51% 115 111
vious year’s termination cost (including cost for social security contributions
Denmark 58 74% 74 72% 55 65 and pension) for former President Erik Heilborn is included in the amount of
France 13 63% 23 49% 12 18 SEK 8.8 m.
Norway 16 80% 23 65% 14 23 Of consolidated pension expenses, SEK 5.6 m (8.8) was attributable to
UK 54 69% 58 74% 54 56 the President and other senior executives.
Italy 14 77% 20 81% 14 18
Germany 17 61% 21 71% 17 20
DISTRIBUTION OF SALARIES AND BENEFITS AMONG PARENT COMPANY,
Switzerland 9 78% 19 70% 6 19
SUBSIDIARIES, SENIOR EXECUTIVES AND OTHER EMPLOYEES
Poland 23 84% 36 85% 20 32
Spain 1 0% 9 43% 0 2 2009 2008
Brazil 0 0% 11 75% 0 0 Senior Senior execu-
Singapore 9 46% 8 49% 9 8 executives Other tives Other
(31 people)1) empl. Total (89 people)1) empl. Total
Colombia 9 46% 11 56% 9 10
Malaysia 0 0% 4 51% 0 0 Parent Company 8.2 4.6 12.8 13.8 7.0 20.8
Mexico 3 92% 6 100% 3 4 (of which perform-
0.0 0.0 0.0 1.4 0.2 1.6
China 2 50% 4 50% 2 4
Subsidiaries 48.2 660.3 708.5 85.7 732.2 817.9
Total in subsidiaries 1 123 69% 1 586 69% 1 094 1 352 (of which perform-
9.6 46.2 55.8 10.1 43.8 53.9
Total in Group 1 145 68% 1 612 70% 1 114 1 377 ance-based.)
Total, Group 56.4 664.9 721.3 99.5 739.2 838.7
(of which perform-
GENDER DISTRIBUTION IN CORPORATE MANAGEMENTS 9.6 46.2 55.8 11.5 44.0 55.5
Proportion of women 1)
In Parent Company there are three (four) senior executives.
Dec. 31, Dec. 31,
Other senior executives include individuals who are directly subordinated
Parent Company to the President of each company, such as financial managers, sales and
Board 33% 29% marketing managers and consulting managers. The item also includes
directors’ fees. A termination cost 2008 of SEK 5.6 m (including cost for so-
Other senior executives 0% 20% cial sec urity contributions and pension) for former President Erik Heilborn
is included in the Parent Company’s total costs.
Boards 26% 19% REMUNERATION OF THE BOARD OF DIRECTORS, PRESIDENT AND SENIOR
Other senior executives 13% 24% EXECUTIVES
SICKNESS ABSENCE IN PARENT COMPANYCONTRIBUTIONS Principles and decision-making process:
Remuneration of the Chairman and Board members is paid in accordance
with the resolutions at the AGM. (For information on the Board of Directors,
Total sickness absence as a proportion of normal refer to “Corporate governance”).
working hours 1.0% 1.0% There are no other obligations in the form of pension agreements,
severance pay or benefits to the Chairman and Board members. IBS has
Men 0.0% 0.0% a Remuneration Committee that handles issues regarding salaries and
Women 1.0% 1.0% pensions for the Group management. The members of the committee are
Gunnel Duveblad (Chairman), Pallab Chatterjee and Bertrand Sciard.
Aged 29 or younger 0.0% 1.0%
30–49 0.0% 0.0%
Aged 50 or older 2.0% 2.0%
Sickness absence > 60 days, as a proportion of total
sickness absence 38.0% 0.0%
34 IBS Annual Report 2009
REMUNERATION AND OTHER BENEFITS DURING 2009:
Directors’ Variable Share-based Other
2009 fees Basic salary remuneration payment Pension costs benefits Total
Chatterjee Pallab, Chairman May 09–May 10 0.8 0.2 1.0
Vinit Bodas May 09–May 10 0.2 0.2
George Ho May 09–Aug 09 0.1 0.1
Gunnel Duveblad May 09–May 10 0.5 0.0 0.5
Bertrand Sciard May 09–May 10 0.4 0.0 0.4
Christian Paulsson May 09–May 10 0.5 0.0 0.5
Ann-Marie Öhman May 09–Jan 10 - -
Board members 2.3 0.3 2.6
President Mike Shinya 4.0 0.4 1.3 0.4 6.1
Other senior executives in Parent Company 4.7 0.0 0.6 0.1 5.4
Other senior executives in Subsidiaries 7.5 0.6 0.1 0.4 0.2 8.8
Total 2.3 16.2 0.6 0.8 2.3 0.7 22.9
The above amounts have been expensed and charged against 2009 earnings President is eligible for an annual performance bonus for meeting or excee-
and pertain to the Board of Directors, the President and other senior executi- ding baseline business objectives. The maximum bonus is 150 percent of the
ves in IBS’ Group Management. Costs for the item “Other senior executives” basic salary if objectives are exceeded.
above include the following people: The Board of Directors is entitled to dismiss the President with immediate
• Senior Vice President, Communications Oskar Ahlberg (shares 10 000) effect. If this occurs, the President has a three-month period of notice. Remu-
• Senior Vice President, Human Resources Doreena Ross, (shares 0) neration in the form of salary and benefits is then paid during the period of
• Executive Vice President and Chief Financial Officer, Lennart Bernard notice and basic salary for an additional 12 months. The period of notice to
(employment ended April 7, 2009) (shares 7 500 including family holdings) be given by the President is three months.
• Executive Vice President and Chief Financial Officer, Mark Williams Other senior executives are subject to period of notice of 3 to 12 months.
(employed April 8–December 30, 2009) (shares 736 765) In case of dismissal given by the company, period of notice is 6 to 12
The costs for President Mike Shinya, Oskar Ahlberg and Lennart Bernard are For the senior executives above, pension benefits follow the normal ITP
included in the Parent Company, others are charged to subsidiaries. plan, including qualification for pension at the age of 65, apart from the Presi-
The above costs include severance pay to Lennart Bernard and Mark dent who has an individual pension agreement, for which the company pays
Williams. an amount corresponding to 25 percent of his basic salary after any gross
Mike Shinya joined IBS as CEO on October 16, 2008. He was born in salary deductions for pension. In the event that “ten-pointers” exist, the same
1957 and is a British national and a graduate of the University of East Anglia, premium is applied as for a traditional ITP plan. Pensionable income consists
UK, in Economics and Social Sciences. President Mike Shinya received a of fixed basic salary, variable remuneration and vacation salary, except for the
basic salary of SEK 4 048 000 in 2009. During the year, no variable remune- CFO, whose variable remuneration is not pensionable.
ration was paid for the President. There are no outstanding pension commitments to President or other
The basic salary of President Mike Shinya is EUR 30 000 per month. The senior executives as of December 31, 2009.
REMUNERATION AND OTHER BENEFITS DURING 2008:
2008 fees Basic salary remuneration Pension costs Other benefits Total
Chatterjee Pallab, Chairman May 08–May 09 0.8 0.8
Vinit Bodas May 08–May 09 0.3 0.3
Bo Petterson May 08–Sept 08 0.1 0.1
George Ho May 08–May 09 0.2 0.2
Fredrik Svensson May 08–Sept 08 0.1 0.1
Gunnel Duveblad May 08–May 09 0.4 0.4
Bertrand Sciard May 08–May 09 0.3 0.3
Christian Paulsson Sept 08–May 09 0.2 0.2
Ann-Marie Öhman May 08–Sept 08 - -
Board members 2.4 2.4
President Mike Shinya Oct 08–Dec 08 0.7 1.3 0.1 2.1
President Erik Heilborn Jan 08–Oct 08 8.2 - 1.7 0.1 10.0
Other senior executives in Parent Company 3.3 0.1 0.6 0.1 4.1
Other senior executives in Subsidiaries 6.4 - 0.9 0.5 7.8
Total 2.4 18.6 1.4 3.3 0.7 26.4
The above amounts have been expensed and charged against 2008 earnings • Senior Vice President, Sales & Marketing Mark Cockings (shares 25 000)
and pertain to the Board of Directors, the President and other senior executi- • (Mark Cockings has a new position as the Senior Vice President, Product
ves in IBS’ Group Management. Costs for the item “Other senior executives” Development since January 1, 2009)
above include the following people: • Senior Vice President, Professional Services Ole Fritze (shares 0)
• CFO Lennart Bernard (shares 7,500 including. family holdings) • Senior Vice President, IBS Technology and Services Henrik Stache
• Senior Vice President, Communications Oskar Ahlberg (shares 10 000) (shares 0)
• Senior Vice President, HR & Administration Jessika Axäll, 12 months (em-
ployment ended December 17) The expenses of all of the above individuals are included in the Parent Com-
• Senior Vice President, HR & Administration Doreena Ross, 1 month (position pany, with the exception of Kjell Nilson, Mark Cockings, Ole Fritze and Henrik
started December 18) (shares 0) Stache, whose expenses for 2008 are included in the subsidiary IBS Global
• Senior Vice President, Product Development Kjell Nilson, 10 months (posi- Functions AB.
tion ended October 31)
IBS Annual Report 2009 35
During 2008, President Mike Shinya received a basic salary totaling President Other
SEK 738 000. During the year, variable remuneration in the amount of SEK No. of Redemp- No. of Redemp-
1 300 000 was expensed for the President. warrants tion price warrants tion price
Former President Erik Heilborn whose position ended October 15, 2008,
Outstanding, January 1, 2009 0 9.64 0 7.67
received a basic salary totaling SEK 2 609 000 in 2008. In addition to this Erik
Heilborn received severance pay of SEK 5 622 000. Allocated 611 250 9.64 1 445 000 7.67
The basic salary of President Mike Shinya is EUR 30 000 per month. The Expired 9.64 –345 000 7.67
President is eligible for an annual performance bonus for meeting or excee- Outstanding Dec 31, 2009 611 250 9.64 1 100 000 7.67
ding baseline business objectives. The maximum bonus is 150 percent of the Redeemable Dec 31, 2009 0 0
basic salary if objectives are exceeded. In this case, the Board has deviated
from the guidelines approved by the 2008 Annual General Meeting. The remaning time to redemption is three years for all options.
The Board of Directors is entitled to dismiss the President with imme-
diate effect. If this occurs, the President has a 3-month period of notice.
Remu¬neration in the form of salary and benefits is then paid during the Note 3 REMUNERATION OF AUDITORS
period of notice and basic salary for an additional 12 months, which is shorter
than the 24 months stipulated in the guidelines. In other cases, the period of Group Parent company
notice to be given by the President is three months. 2009 2008 2009 2008
For the senior executives above, pension benefits follow the normal ITP
plan, including qualification for pension at the age of 65, apart from the Presi-
dent who has an individual pension agreement, for which the company pays Audits 5.9 4.1 1.6 0.9
an amount corresponding to 25 percent of his basic salary after any gross Other tasks 4.3 0.9 3.8 0.5
salary deductions for pension. The CFO also has an individual pension agree-
ment, for which the company pays an amount corresponding to 25 percent Other auditors
of his basic salary. The retirement age of the CFO is 65. Audits 0.3 0.9 - -
In the event that “ten-pointers” exist, the same premium is applied as for Other tasks 0.9 0.9 0.2 0.4
a traditional ITP plan. 11.4 6.8 5.6 1.8
Pensionable income consists of fixed basic salary, variable remuneration
and vacation salary, except for the CFO, whose variable remuneration is not Audits includes reviewing the Annual Report and accounts, the Board of Direc-
pensionable. tors’ and the President’s administration of the company and other audit tasks
There are no outstanding pension commitments to President or other that are assigned to the company’s auditors, as well as advisory or other sup-
senior executives as of December 31, 2008. port tasks that arise from observations made in connection with such a review
In the event of major changes in the ownership structure, the CFO is entit- or carrying out such tasks. All other assignments are other tasks.
led to terminate his employment contract and, in addition to his 12-month pe-
riod of notice, will also receive his basic salary for a maximum of 12 months.
Other senior executives (referred to above are subject to a period of notice
of six to 12 months. Note 4 DEPRECIATION/AMORTIZATION AND IMPAIRMENT
OF FIXED ASSETS
Options program Group Parent company
The Annual General Meeting in January 2009 resolved in principle to initiate 2009 2008 2009 2008
options programs during each of the upcoming four years, 2009–2012, direc-
ted at the President, senior executives and some Board members. The final Depreciation/amortization according
decision will mainly be made in March of each year regarding as to whether to plan. distributed per asset
and how many warrants will be allocated to whom. No share-based payments Capitalized product development costs –95.2 –84.9 –85.9 –65.9
exist from previous years. Other intangible assets –10.0 –8.5 –0.3 –0.3
During the period March–July 2009, agreements were entered into re-
Acquired software –2.0 –2.5 –0.3 –0.8
garding the first of the four options programs. The President was allocated
611 250 warrants (redemption price 9.64), four Board members were alloca- Finance leases –10.0 –10.8 - -
ted 330 000 warrants (redemption price SEK 7.67) and other senior execu- Equipment –21.7 –26.2 –1.9 –1.4
tives were allocated 1 115 000 warrants (redemption price SEK 7.67). The –138.9 –132.9 –88.4 –68.4
warrants, which entitle the holder to purchase shares at a fixed redemption
price, were allocated free-of-charge. The warrants may be exercised as of two Amortization pertaining to capitalized expenditure for product development is
years after allocation, on condition that the person concerned has not conclu- included in its entirety under the item product development costs.
ded his/her employment with or assignment for IBS. Accordingly, the vesting
period is two years from the time of allocation. Warrants may be redeemed Impairment losses distributed per asset
up to and including December 31, 2012. Other intangible assets –7.0 - - -
Since the allocation, four senior executives have resigned their positions
Goodwill –131.3 –52.8 - -
and 345 000 warrants have thereby expired.
During the year, SEK 1 251 000 was recognized as a personnel cost –277.2 –185.7 –88.4 –68.4
related to the value of the allocated warrants. The cost for social security
Depreciation according to plan,
contributions amounted to SEK 244 000.
distributed per function
The warrants’ fair value was established at the time of allocation using
the Black-Scholes option pricing model at the following amounts and with Total direct costs –25.6 –28.3 - -
the following inputs: Product development costs –101.3 –91.1 –86.0 65.9
Sales and marketing costs –5.8 –6.0 - -
President Other Administrative costs –6.2 –7.5 –2.5 2.5
–138.9 –132.9 –88.5 68.4
Fair value per warrant (weighted average), SEK 1.72 2.00
Share price (weighted average), SEK 6.90 6.70 Impairment losses by function
Redemption price, SEK 9.64 7.67 Other operating expenses, impairment
Anticipated volatility, % 45 45 of goodwill –138.3 –52.8 - -
Time to redemption (weighted average), years 3.70 4.00 –277.2 –185.7 –88.5 68.4
Anticipated dividend 0 0
During the year, impairment of goodwill was recognized with regard to a
Risk-free interest rate, % 0.00 0.00
divested division (the products e42 and ECP) as well as of amounts related
Anticipated volatility has been estimated based on historical volatility. No ad- to subsidiaries in France, Portugal and Italy. In 2008, impairment losses were
vance redemption has been assumed. recognized in France, Spain Brazil and Colombia.
36 IBS Annual Report 2009
Note 5 OPERATING COSTS DISTRIBUTED Note 7 PROFIT/LOSS FROM FINANCIAL ITEMS
PER TYPE OF COST
Group Parent company
Group Parent company 2009 2008 2009 2008
2009 2008 2009 2008
Interest income from receivables
Net sales 1 819.2 2 033.8 91.5 97.9 from Group companies - - 11.3 16.7
External interest income1) 3.0 6.9 0.9 4.5
Cost for 3rd-party licenses –38.9 –43.1 –6.8 –6.9
Net profit from the revaluation
Cost of goods, HW and other –306.4 –383.5 0.0 0.0 offinancial assets3) - 3.2 - 3.2
Cost of staff –1 066.7 –1 201.8 –29.9 –36.1 Financial exchange-rate diff.4) - 13.6 - 4.3
Sales and marketing costs –26.9 –44.7 0.0 0.0 Financial income 3.0 23.7 12.2 28.7
Rent and other office costs –128.0 –160.2 –16.2 –10.4
Depreciation –277.2 –185.7 –88.4 –68.4 Interest expenses related to
finance lease –1.5 –1.7 - 0.0
Administrative and other costs –177.2 –120.1 –74.2 –19.8
Interest expenses from liabilities to
–2 021.3 –2 139.0 –215.5 –141.6
Group companies - - –0.9 –5.6
Operating loss*) –202.1 –105.2 –124.0 –43.7 Impairment loss financial assets
Group companies - –5.1
*) excluding the gains/losses from the sale of subsidiaries and restructuring costs.
External interest expenses from
–2.8 –11.5 –1.0 –8.5
Operating lease costs are included in “rent and other office costs” above interest-bearing loans2)
and consist mainly of rent for premises. This year’s operating leases due for Financial exchange-rate diff.4) –5.5 - –1.2 0.0
payment per year are as follows: Financial expenses –9.8 –13.2 –3.1 –19.2
Group Group 1)
External interest income refers to interest on bank balances and receivables and securi-
ties recognized at amortized cost.
External interest expenses pertains to liabilities measured at amortized cost.
This year’s costs 78.7 This year’s costs 96.1 3)
Received purchase options on shares in IBS OPENSystems PLC, a company listed on
Future payments Future payments the London Stock Exchange. The options were received in connection with the sale of
2010 67.6 2009 90.6 the UK subsidiary Public Services Ltd (2005). The options are included in the valuation
category Financial assets measured at fair value in profit and loss, under the subcategory
2011 47.4 2010 66.0 held for sale, and are measured continuously at fair value, with changes in value recog-
2012 32.8 2011 47.2 nized in net financial items. The options were sold on the London Stock Exchange on
July 14, 2008.
2013 16.9 2012 31.9 4)
Exchange-rate differences in operating receivables/liabilities are included in operating
2014 14.2 2013 24.0 profit and not among financial items. In the Group’s case, operating profit includes in total
Later years 12.9 Later years 26.0 exchange-rate losses (the net of all exchange-rate gains and losses) of SEK 1.9 m (gain:
5.6). The operating profit of the Parent Company includes a total exchange-rate gain of
Total future payments 191.8 Total future payments 285.7 SEK 7.1 m (9.2).
Note 8 PROFIT/LOSS FROM PARTICIPATIONS
Note 6 OTHER OPERATING INCOME AND OTHER IN SUBSIDIARIES
Group 2009 2008
Dividends from subsidiaries - 93.4
Results from sale of operations 4.3 - Results from sale of operations 1.9 0.0
Exchange diff on operating assets and liabilities - 5.6 Group contribution received, recognized as dividend –6.3 –4.3
Other operating income 4.3 5.6 Impairment loss, shares in subsidiaries* –174.0 –78.2
Impairment of goodwill –131.3 –52.8
Translation loss on operating assets and liabilities –1.9 - *) The difference from the year-end report of more than 15 Mkr, i.e. a revenue increase,
is due to the correction of a partial divestment in connection with an internal transfer
Capital losses from sale of operations - –8.5
Other operating costs –133.2 –61.3
No dividend was received from subsidiaries in 2009. The Parent Company’s
The year’s results from sales refers to the sale of a division in Denmark. sales results refers to the sale of Iptor, which was spun off from the Parent
Capital losses for the year pertain to the sale of a Portuguese subsidiary Company and now forms a sub-group. Impairment of shares in subsidia-
division and the subsidiary in Brazil, also refer to Note 33. ries took place during the year with regard to holdings in Portugal, France,
Sweden (Java Solutions AB) and Italy. Impairment losses applied in 2008
pertained to Italy, France, Portugal, Spain and Australia.
Note 9 APPROPRIATION
Additional depreciation - 1.6
Note 10 TAX ON EARNINGS FOR THE YEAR
Group Parent company
2009 2008 2009 2008
Current tax –14.4 0.8 –1.5 –1.1
Deferred tax –86.5 –2.4 –44.8 12.4
–100.9 –1.6 –46.3 11.3
Deferred tax recognized directly against equity amounts to a charge of SEK
2.7 m (3.0).
IBS Annual Report 2009 37
RECONCILIATION OF EFFECTIVE TAX
2009 % 2008 %
Opening balance –379.3 –326.9 –151.2 –85.3
Disposed during the year 0.0 38.2 - -
Pre-tax loss –332.5 –272.8
Amortization for the year –95.2 –84.9 –86.0 –65.9
Expected income tax according to
Translation differences for the year 0.4 –5.7 - -
domestic corporation tax rate 87.5 26.3 76.2 28
–474.1 –379.3 –237.2 –151.2
Effect of tax rates in foreign
jurisdictions 17.5 5 15.6 6 Carrying amount at year-end 337.7 357.9 320.8 328.3
Tax attributable to previous years –1.3 0 4.8 2
Effect of changes in tax rate 0.0 0 –4.0 –1 During the year, SEK 235.1 m (212.2) was invested in product development,
Deficit for which tax value not of which SEK 75.2 m (89.4) was capitalized.
observed –58.3 –18 –17.7 –7
Impairment losses (–)1. Revalua- GOODwILL Group
tion (+) of deferred tax receivables –76.4 –23 –27.4 –10 2009 2008
Non-deductible costs and non-
taxable income –51.7 –16 –38.7 –14 Accumulated cost
Other, net –18.2 –5 –10.7 –4 Opening balance 419.5 422.5
Tax/effective tax rate, % –100.9 –30 –1.9 –1 Acquisitions for the year 0.0 7.3
Acquisitions/divestments 0.0 –16.5
Parent Company Translation differences for the year 22.5 6.2
2009 % 2008 % 442.0 419.5
Pre-tax loss –310.0 –36.9 Accumulated impairment losses
Expected income tax according to Opening balance –56.2 –3.4
domestic corporation tax rate 81.5 26 10.3 28 Impairment for the year –131.3 –52.8
Tax attributable to previous years –29.7 –10 –1.5 –4 –187.5 –56.2
Deficit for which tax value not
observed –44.8 –13 Carrying amount at year-end 254.5 363.3
Effect of changes in tax rate - - –2.1 –6
Non-deductible costs and non-
taxable income –53.3 –17 4.6 12 ACqUIRED SOFTwARE Group Parent Company
Tax/effective tax rate, % –46.3 –15 11.3 31 2009 2008 2009 2008
Note 11 EARNINGS PER SHARE Opening balance 35.0 26.2 5.0 5.3
Acquisitions for the year 9.0 9.2 0.1 -
EARNINGS PER SHARE
Disposals –0.1 –2.0 0.0 –0.3
Reclassification –4.7 - - -
Earnings per share before dilution Translation differences for the year –0.1 1.6 - -
Profit/loss for the period –433.4 –274.4 39.1 35.0 5.1 5.0
Basic avg. weighted no. of outstanding shares
124 271 104 185 Accumulated amortization
Earnings per share before dilution –3.49 –2.63 Opening balance –22.5 –20.5 –4.5 –3.9
Disposals 0.1 2.0 0.0 0.2
Earnings per share after dilution Amortization for the year –2.5 –2.5 –0.3 –0.8
Profit/loss for the period –433.4 –274.4 Reclassification 3.0 - - -
Basic avg. weighted no. of outstanding shares Translation differences for the year –0.5 –1.5 - -
124 271 104 185 –22.4 –22.5 –4.8 –4.5
Diluted weighted no. of shares for calculation of earn-
Carrying amount at year-end 16.7 12.5 0.3 0.5
ings per share 124 721 104 185
Earnings per share after dilution –3.49 –2.63
OTHER INTANGIBLE ASSETS Group Parent Company
During 2009 the CEO, Senior executives and some Board members, 2009 2008 2009 2008
received employee stock options. These options have not had a dilution
effect 2009. They will be diluted in the future if the Group show positive Accumulated cost
results and if the share price at the same time is higher than redemtion Opening balance 46.8 47.5 3.2 3.2
price, see note 2. Acquisitions for the year - - - -
Translation differences for the year 6.8 -0.7 - -
53.6 46.8 3.2 3.2
Note 12 INTANGIBLE ASSETS
CAPITALIZED PRODUCT DEVELOPMENT COSTS Accumulated amortization
Group Parent Company Opening balance –31.9 –23.8 –2.2 –1.9
2009 2008 2009 2008 Amortization for the year –10.0 –8.5 –0.3 –0.3
Impairment for the year –7.0 - - -
Translation differences for the year –4.7 0.4 - -
Opening balance 737.2 679.7 479.5 395.6
–53.6 –31.9 –2.5 –2.2
Capitalized during the year 75.2 89.4 78.5 83.9
Disposed during the year 0.0 –38.9 - - Carrying amount at year-end 0.0 14.9 0.7 1.0
Translation differences for the year –0.6 7.0 - -
811.8 737.2 558.0 479.5 This item originated from acquisition of subsidiaries and represents acquired
customer relations of SEK 0 m (11.0) and trademarks of SEK 0 m (3.9).
38 IBS Annual Report 2009
AMORTIZATION AND IMPAIRMENT OF INTANGIBLE ASSETS HOURLY RATE AND UTILIZATION
FOR THE YEAR BY FUNCTION Utilization is estimated on the basis of previous experience and historical
averages. The ability to maintain or increase the hourly rate is based on the
Group Parent Company
company’s market position, number of new establishments and the customer
2009 2008 2009 2009 offering. Management’s assessment is that increased focus on a few indu-
Costs of goods and services stries and vertical specialization will allow IBS to offer specialist expertise, thus
sold allowing a favorable price level to be maintained for services.
Software licenses - - - -
Professional services –11.2 –7.1 - -
Interest before tax calculated as a weighted average of cost of capital inclu-
Hardware and other costs - - - - ding a risk premium.
Product development costs –97.8 –85.7 –85.9 –65.9
Sales and marketing costs –2.6 –1.4 - - IMPAIRMENT FOR THE YEAR
Administrative costs –2.7 –1.7 0 –1.8 During fourth quarter, an impairment loss on goodwill amounting to SEK
131 m (53) was recognized where the test for Portugal, Brazil, France and
Accumulated amortization –107.3 –95.9 –85.9 –67.7
Spain showed that the calculated recoverable amount was less than the car-
Other costs (impairment of good- The present value of the forecasted cash flows was calculated in the
–131.3 –52.8 - -
will and other intangible assets) third quarter at a discount rate of 12.53 percent before tax. (9.15 percent
–245.6 –148.7 –85.9 –67.7 The 2009 year-end impairment test of goodwill did not show any further
impairment requirement, since the calculated recoverable amount exceeded
SPECIFICATION OF CASH-GENERATING UNITS FOR wHICH GOODwILL AND the total carrying amount for all cash-generating units.
OTHER INTANGIBLE ASSETS wITH INDEFINITE USEFUL LIVES ARE RECOGNIZED
Trade SENSITIVITY ANALYSIS
2009 Group Goodwill marks Total Management believes that any reasonable and possible change in the critical
variables described above would not have such a significant effect that any
IBS Nederland 98.1 98.1
individual change could reduce the recoverable amount to a level lower than
IBS Automotive Pty Ltd 9.6 0.0 9.6 the carrying amount for all the groups' goodwill.
IBS (Aust) Pty Ltd 60.6 0.0 60.6
QUATRO – Sistemas de Informação. SA 0.0 0.0 0.0
IBS France S.A.S 0.0 0.0 Note 13 TANGIBLE FIXED ASSETS
IBS Danmark A/S 19.0 19.0 EqUIPMENT
IBS (Portugal) Il-Solucoes Informaticas S.A. 0.0 0.0 Group Parent Company
IBS JavaSolutions AB 14.5 14.5 2009 2008 2009 2008
Other cash-generating units 52.7 52.7
254.5 0.0 254.5
Opening balance 312.9 313.9 14.2 11.3
This item comprises goodwill of SEK 254.5 m and is regularly tested for im- Acquisitions for the year 8.8 15.5 1.2 3.0
pairment. During the year, the value of brands was written down to zero. Disposals –54.9 –55.0 0.0 0.0
Reclassifications 4.7 - - -
Translation differences for the year –11.6 38.5 - -
2008 Group Goodwill marks Total
259.9 312.9 15.4 14.3
IBS Nederland 98.1 98.1
IBS Automotive Pty Ltd 75.3 1.6 76.9 Accumulated depreciation ac-
IBS (Aust) Pty Ltd 50.5 1.4 51.9 cording to plan
QUATRO - Sistemas de Informação, SA 0.0 0.9 0.9 Opening balance –257.6 –253.3 –9.1 –7.7
IBS France S.A.S 25.1 25.1 Disposals 51.9 53.9 - -
IBS Danmark A/S 19.8 19.8 Depreciation according to plan for
the year –21.7 –26.2 –1.9 –1.6
IBS (Portugal) Il-Solucoes Informaticas S.A. 16.8 16.8
Reclassifications –3.2 - - -
IBS JavaSolutions AB 14.5 14.5
Other cash-generating units 63.2 63.2 Translation differences for the year 9.8 –32.0 - -
363.3 3.9 367.2 –220.8 –257.6 –11.0 –9.3
Carrying amount at year-end 39.1 55.3 4.4 5.0
This item consists of goodwill of SEK 363.3 m and acquired trademarks SEK
3.9 m. They are not amortized according to plan but tested for impairment
on a regular basis.
Impairment testing for all units is based on calculating value in use. This value
is based on future cash flows, where the first five years are obtained from the Equipment held under finance leases is included to
business plan established by company management. the following amounts
The number of forecast periods is assumed to be infinite, with cash Cost 46.9 49.9
flows further than five years in the future have been assigned an annual Accumulated depreciation –19.0 –18.1
growth of 1 percent. The present value of the forecasted cash flows was
calculated at year-end at a discount rate of 12.53 percent before tax. (9.15
percent after tax).
All assumptions and parameters in the impairment test are generalized Financial leasing includes primarily the leasing of cars and computer equip-
to all cash generating units. Critical variables in the five-year business plan, ment. For information about this year's payments and future payments, see
as well as the methods used to set their values, are described in the presen- Note 5.
Market share and volume growth A weighted average of analysis results
from the forecast institutes IDC, Gartner and AMR.
IBS Annual Report 2009 39
Note 14 PARTICIPATIONS IN SUBSIDIARIES
Opening balance 439.3 451.4
Shareholders’ contribution given/New share issue 108.9 4.4
Impairment loss, shares in subsidiaries*) –174.0 –74.7
Acquisition of shares in subsidiaries 0.1 61.8
Sale of shares in subsidiaries –18.2 –3.5
Reclassification 0.6 –0.1
Carrying amount at year-end 356.7 439.3
*) The difference from the year-end report of more than 15 Mkr, i.e. a revenue increase,
is due to the correction of a partial divestment in connection with an internal transfer
SPECIFICATION OF PARENT COMPANY AND GROUP HOLDINGS OF SHARES AND PARTICIPATIONS IN SUBSIDIARIES
Number of Holding, amount amount
Registration number Domicile shares % 2009 2008
Parent Company IBS AB's holdings 556198-7289 Stockholm, Sweden 126 574 374
IBS Sverige AB 556284-3812 Stockholm, Sweden 1 000 100 8.6 0.0
Iptor Holding AB 556794-0225 Stockholm, Sweden 100 000 100 0.1
Iptor Infrastructure AB (former Pixbo Programutveckling AB) 556688-9324 Stockholm, Sweden 1 000 100 3.8
Iptor Konsult AB (former IBS Konsult AB) 556494-8148 Gothenburg, Sweden 1 000 100 8.7
Iptor IT Solutions AB (former IBS Norra Norrland AB) 556303-1458 Umeå, Sweden 700 100 5.7
Iptor Oy (former Iteron Oy) 2 192 529-9 Lahti, Finland 100 100 0.0
Iptor Denmark Aps (new 2009) 32653375 Ballerup, Denmark 1 250 100
Iptor Belgium BVBA (new 2009) 0821.695.116 Sint-Martens-Latems, Belgium 1 000 100
Iptor UK Ltd (new 2009) 07067974 London, UK 1 100
Iptor Nederlands B.V. (new 2009) 30 275 711 Niewegein, Netherlands 180 100
IBS Global Functions AB (merger with IBS Sverige AB) 556590-4330 Stockholm, Sweden - - 8.7
IBS Java Solutions AB (dormant) 556598-2617 Stockholm, Sweden 1 250 100 0,0 15,0
IBS Verksamhetsutveckling AB 556640-9867 Stockholm, Sweden 1 000 100 0,1 0,1
IBS Norge A/S 936 723 349 Oslo, Norway 751 100 4.0 4.0
IBS Danmark A/S 71 13 32 14 Ballerup, Denmark 40 100 35.6 35.6
Oy International Business Systems AB 1 150 908 Helsinki, Finland 40 000 100 9.1 9.1
International Business Systems N.V. 426 362 015 Sint-Martens-Latems, Belgium 4 249 100 95.0 40.5
IBS Technology and Services N.V. (merger with IBS N.V.) 436 179 948 Zaventem, Belgium - - 54,5
IBS Netherland B.V. (former Benelux B.V.) 24 191 395 Nieuwegein, Netherlands 23 400 100 114.4 114.4
Consist B.V. (former IBS Nederland B.V.) 30 073 927 Nieuwegein, Netherlands 300 100
IBS France S.A.S 62 309 844 918 Paris, France 280 000 100 0.5 24.4
Excelsius Consulting Group S.A.S (dormant) 18 408 374 270 Paris, France 10 000 100 0.0 10.7
International Business Systems (IBS) GmbH HRB 51346 Hamburg, Germany - 100 11.1 5.3
IBS Polska Sp zoo 8951008330 Wroclaw, Poland 7 511 100 5.7 5.7
International Business Systems (IBS) Ltd 02670201 London, UK 4 890 000 100 7.9 7.9
IBS Italia S.p.a. 1594539 Milan, Italy - 100 0.0 3.5
IBS Switzerland Holding AG 035.3.013.178-0 Niederwangen, Switzerland 2 300 100 3.6 3.6
IBS Switzerland AG 035.3.002.298-5 Niederwangen, Switzerland 800 100
IBS (Portugal) Il-Solucoes Informaticas S.A. 502 183 012 Porto, Portugal 340 000 100 4.6 22.3
IBS Proyectos e Sistemas Informaticas España S.L. Tomo 11842 Folio 9 Madrid, Spain 40 000 100 0.0 0.0
GTM Consultores S.A. Tomo 26466, Folio Barcelona, Spain 12 000 100 0.0 0.0
128 Hoja B103765
IBS Australia Pty.Ltd. 090 079 208 Sydney, Australia 8 163 394 100 15.6 15.6
IBS (AUST) Pty Ltd 002 814 039 Sydney, Australia 10 800 000 100
IBS Automotive Pty Ltd 003 566 514 Sydney, Australia 7 504 058 100
IBS Network400 Pty, Ltd A.C.N. (dormant) 675 593 031 Melbourne, Australia 1 081 100 3.2 3.2
IBS Solutions Pty, Ltd (dormant) 084 987 477 Melbourne, Australia 2 100 0.0 0.0
IBS APCC Sdn Bhd 457 204 Singapore 2 100 0.0 0.0
International Business Systems (IBS) Singapore Pte Ltd 1 999 055 53G Singapore 2 100 0.0 0.0
IBS (Shanghai) Co. Ltd. 77714780-2 Shanghai, China 1 100 0.2 0.2
IBS Business Solutions S.A. 830060653-7 Bogotá, Colombia 292 425 173 94 1.5 1.5
IBS Solutions Mexico S.A.de C.V. ISM 000 919 6C2 Monterrey, Mexico 1 583 000 100 0.0 0.0
International Business Systems United States - Folsom, California, USA 50 000 100 35.3 35.3
40 IBS Annual Report 2009
Note 15 RECEIVABLES FROM SUBSIDIARIES Note 19 PREPAID EXPENSES AND ACCRUED INCOME
Parent Company Group Parent Company
2009 2008 2009 2008 2009 2008
Opening balance 132.2 174.0 Prepaid rent 7.1 8.0 2.5 1.8
Additional items 52.3 0.0 Other prepaid expenses 23.8 15.2 0.9 2.3
Settled items –39.6 –41.8 Accrued interest income 0.0 0.1 - 0.0
Carrying amount at year-end 144.9 132.2 Accrued software licenses income 12.0 7.6 - 0.0
Accrued professional services
Of the Parent Company’s sales during the fiscal year, which totaled SEK 91.5 income 9.5 43.4 - 0.0
m (97.9). SEK 85.1 m (90.9) is accounted for by sales to other Group compa-
Accrued hardware and other
nies, which consist largely of management fees and royalties. Of the Parent
income 1.3 14.0 - 0.0
Company’s purchases operating expenses account for SEK 221.9 m (145.8),
and purchases in the form of consultants contracted from other Group com- Other accrued income 2.1 10.4 2.4 0.0
panies for SEK 0.2 m (0.7). 55.8 98.7 5.8 4.1
Note 16 PARTICIPATIONS IN ASSOCIATED COMPANIES Note 20 CASH AND CASH EQUIVALENTS
Group Parent Company THE FOLLOWING COMPONENTS ARE INCLUDED IN CASH AND CASH
2009 2008 2009 2008
Group Parent Company
Accumulated cost 2009 2008 2009 2008
Opening balance - 0.2 - -
Additional participations - - - - Cash and bank balances 135.1 312.7 39.8 191.7
Participations disposed of and Current investments, equivalent
impairment losses - –0.2 - - to cash - - - -
Net profit for the year - - - - Total according to balance sheet 135.1 312.7 39.8 191.7
and cash-flow statement
Carrying amount at year-end - - - -
Current investments were classified as cash equivalents based on the
Note 17 OTHER LONG-TERM RECEIVABLES – The risk of fluctuations in value is insignificant
– They can easily be converted to cash
Group Parent Company – The maturity date is at most three months from the acquisition date
2009 2008 2009 2008
Opening balance 11.2 8.8 - -
Additional receivables 1.5 1.2 - - Note 21 RISK ANALySIS
Settled receivables –2.2 –1.2 - - FINANCE POLICY
Translation differences for the year –0.7 2.4 - - Through its business, the Group is exposed to various types of financial risks.
Carrying amount at year-end 9.8 11.2 - - Risk management is intended to identify, quantify and reduce or eliminate
risks. Financial risks refer to fluctuations in the company’s earnings and cash
flow resulting from changes in exchange rates, interest levels, refinancing
The item includes, among others, rental deposits and restricted pension and credit risks. A financial risk not only entails a risk of losses, but also an
assets. opportunity for profit. The IBS policy for management of financial risks is ba-
sed on profit being generated by operating units, not through investments in
financial instruments. This means that only low-risk investments are permitted.
Note 18 INVENTORy Financing activities within the IBS Group are intended to support the Group’s
business operations and to identify and limit the Group’s financial risks in
Group Parent Company
the best possible manner. These activities are organized and pursued in the
2009 2008 2009 2008 Parent Company’s finance function. Through centralization and coordination,
Software licenses. 3rd party 1.1 4.7 1.1 4.7 significant economies of scale are achieved in terms obtained for financial
transactions and financing. The aim of the financial activities is to clarify the
Hardware equipment 1.0 2.3 - -
Group’s risk exposure and to create predictability in terms of the financial
2.1 7.0 1.1 4.7 outcome. Financial risks are managed in accordance with the finance policy
established by the Board of Directors.
Hardware equipment consists of computers that have been delivered and
invoiced to customers in January 2009 (2008) and measured at cost.
In the event that the IBS Group’s equity/assets ratio should fall below 25
percent and internally generated profit is not considered adequate to be able
to finance continued expansion according to prevailing market prerequisites,
capital requirements should primarily be satisfied through a preferential new
issue to shareholders or directed issues to institutional investors.
IBS Annual Report 2009 41
LIQUIDITY RISK amounted to 41 percent (51) and 100 percent (121), respectively. Investments
Liquidity risk is the risk that the company experiences difficulty in maintaining of surplus liquidity are based on minimizing risk levels, while IBS strives to
cash and cash equivalents at a level corresponding to its commitments by maximize return within established risk limits. Surplus liquidity may only be
using financial instruments. The risk to which IBS is exposed is the risk that invested in short-term government securities or the most highly rated institu-
the company would not fulfill the covenants placed on it by banks, meaning tions. Borrowing is primarily affected at variable interest rates, meaning that
that the company does not achieve the financial targets agreed when loans or IBS is exposed to a cash flow risk in that interest rates may fluctuate.
credit facilities were raised. According to the established finance policy, there
should always be sufficient cash and cash equivalents and guaranteed credits SENSITIVITY ANALYSIS
to cover payment for the next month. To follow up on the need for liquidity IBS A 1 percent interest-rate change would result in a change in the net profit
prepares liquidity forecasts on a weekly and monthly basis. for the year of SEK 1.2 m (2.1) on the closing date.
TERMS, EFFECTIVE INTEREST AND MATURITY STRUCTURE
Within IBS, credit risk consists almost exclusively of accounts receivables.
2009 IBS has low bad debt losses. The company’s customers are large, well-es-
tablished companies with good payment ability that are spread over several
Nominal Effective period in 1 year 1–5 geographic markets. Credit assessments are performed at an early stage in
amount interest, % months or less years the business process. Unpaid customer invoices are followed up regularly,
and reserves are allocated for doubtful receivables immediately if there
Bank loans is a significant risk that payment will not be received or if the customer’s
– SEK 5 m (variable) 5.2 3.40 - - 5.2 payment is more than five months overdue. Apart from accounts receiv-
able with customary credit terms, the Group does not have any significant
– EUR 0.02 m (variable) 0.2 4.95 - - 0.2
financial assets. The maximum exposure to credit risk related to accounts
Financial leasing liabilities receivable comprises the carrying amount in the balance sheet.
(variable) 17.5 3.00 1 - 17.5
Financial leasing liabilities GEOGRAPHIC DISTRIBUTION OF CREDIT RISK
(variable) 10.7 3.00 1 10.7 -
Area Accounts receivable
Other short-term loans Nordics (incl IBS AB) 197.2
– SEK 20.8 m (variable) 20.8 3.40 - 20.8 - Europe 342.3
– CHF 0.09 m (fixed) 0.6 12.30 48 0.6 - Americas 47.6
– EUR 0.09 m (variable) 1.0 5.20 - 1.0 - Asia Pacific 42.1
Overdraftfacilities (variable) 65.0 4.58 1 65.0 -
Accounts payable 175.7 175.7
296.7 273.6 22.9 AGE ANALYSIS, ACCOUNTS RECEIVABLE
Non-overdue accounts receivable 288.8 346.6
Nominal Effective period in 1 year 1–5
amount interest, % months or less years Overdue accounts receivable 0–60 days 238.2 239.8
Overdue accounts receivable > 60–120 days 17.9 29.4
Overdue accounts receivable > 120–150 days 5.8 3.4
– SEK 26 m (variable) 26.0 3.40 - - 26.0
Overdue accounts receivable > 150 days 78.5 72.0
– EUR 0.06 m (variable) 0.6 2.99 - - 0.6
– EUR 0.08 m (variable) 0.8 2.67 - - 0.8
Financial leasing liabilities
(variable) 19.3 3.00 1 - 19.4 Provision for doubtful accounts receivable –46.5 –46.3
Financial leasing liabilities
(variable) 12.5 3.00 1 12.5 -
Other short-term loans 2009 2008
– SEK 20.9 m (variable) 20.8 3.40 - 20.9 -
Opening balance 46.3 29.4
– CHF 0.2 m (fixed) 1.3 12.30 48 1.3 -
Provisions for the year 45.4 51.2
– EUR 0.2 m (variable) 2.0 2.83 - 2.0 -
Reversal of previously made provisions –39.0 –22
– EUR 0.2 m (variable) 2.2 2.73 - 2.2 -
Actual bad debt losses –6.1 –12.3
Overdraftfacilities (variable) 21.2 6.62 1 21.2 - 46.6 46.3
Accounts payable 166.8 - - 166.8 -
273.6 226.9 46.9
This is the risk that assets and liabilities in foreign currency may change in
value as a result of exchange-rate fluctuations. The Group’s earnings and
INTEREST RATE RISK
shareholders’ equity are affected when the income statements and balance
Interest rate risk refers to the risk of a negative change in value when interest
sheets of foreign subsidiaries are translated to SEK, known as translation ex-
rates change, meaning that the value of interest-bearing liabilities increases
posure. For 2009, this translation difference in shareholders’ equity amounted
and the value of interest-bearing assets decreases. Since the degree of self-
to SEK 12 m (2). When the income statements were translated, currency ef-
financing is high within IBS, the interest rate risk is low. Cash and cash equi-
fects had a positive impact of SEK 160 m (neg: 27) on consolidated revenues.
valents amounted to SEK 135 m (313) at December 31, while interest-bearing
The groups income statement includes exchange losses of SEK 1.9 m (gain:
liabilities amounted to SEK 121 m (107). The equity/assets ratio and liquidity
5.6) in operating income and SEK 5.5 (gain: 13.6) in financial items.
42 IBS Annual Report 2009
TRANSLATION EXPOSURE shares are fully paid and have a par value of SEK 0.20 per share. The share
Net foreign assets (total assets less liabilities) are distributed as follows: capital trend is presented on page 7.
OTHER CAPITAL CONTRIBUTIONS
Currency Amount % Amount %
Other capital contributions refer to capital contributed by the owners. inclu-
EUR 186.1 84 163.4 68 ding share premium reserves that were transferred to statutory reserves on
USD 4.2 2 39.5 17 December 31, 2006. From January 1, 2006, provisions for share premium
DKK 22.0 10 17.6 7 reserves are also recognized as capital contributions.
GBP 43.9 20 33.5 14
Other –35.5 –16 –14.9 –6 The translation reserve includes all exchange-rate differences arising in the
220.7 100 239.1 100 translation of financial statements from foreign operations that prepare their
The company’s policy is not to hedge translation exposure in foreign currency. reports in a currency other than that in which the Group presents its financial
statements. The Parent Company and the Group present their reports in SEK.
SENSITIVITY ANALYSIS The translation reserve also comprises translation differences that arise during
At December 31, 2009, a 10% strengthening of the SEK in relation to the the revaluation of liabilities that have been recognized as a net investment in
Group’s currencies would result in a decline of SEK 31 m (decline: 33) in a foreign operation.
shareholders’ equity and an increase of SEK 7 m (7) in the net profit for the
year. 2009 2008
Translation reserve on opening date 4.1 2.2
Translation differences for the year 11.9 1.9
2009 Net flows 2008 Net flows
Currency SEK m/year SEK m/year Translation reserve closing balance 16.0 4.1
EUR 138.9 123.1 RETAINED EARNINGS, INCLUDING NET PROFIT FOR THE YEAR
AUD 1.4 0.2 Retained earnings including profit for the year comprises retained earnings
USD 11.5 62.2 in the Parent Company and its subsidiaries. Prior allocations to the statutory
reserve, excluding transferred premium reserves, are included in this capital
GBP 6.0 2.5
DKK 0.8 0.3
NOK 0.5 25.9 TREASURY SHARES
Other 4.0 2.4 Treasury shares (purchased 2007 and 2006) include the acquisition cost
163.1 216.6 of IBS shares held by the Parent Company. At December 31, 2009, the
Group’s holding of treasury shares amounted to 2 303 800.
The company’s policy in general is not to hedge transaction exposure in fo-
reign currency. In connection with major transactions, the company chooses Number of shares Value (SEK m)
to use forward contracts to hedge transaction exposure. At the accounting 2009 2008 2009 2008
year-end, there were no outstanding forward contracts.
Own shares. opening balance 2 303 800 2 303 800 50.0 50.0
FAIR VALUE Purchased during the year - - - -
The fair value of IBS’ financial assets, such as shares, participations and Disposed during the year - - - -
accounts receivable is the same as the carrying amount. The fair value of
Own shares. closing balance 2 303 800 2 303 800 50.0 50.0
financial liabilities, such as bank loans, accounts payable and financial leasing
liabilities, is also equal to the carrying amount. Official market listings are used
One of the aims of the repurchase of shares was to provide the Board of
to determine fair value. Bank loans are considered to carry market interest so
Directors with an opportunity to adjust the capital structure, thereby creating
the carrying amount corresponds to the fair value. (Also refer to Note 37.)
added value for the company’s shareholders.
STATUTORY RESERVES IN THE PARENT COMPANY
IBS works on risk management through a variety of quality processes and
The purpose of the statutory reserves is to save a portion of the net profit not
standardized contracts that are intended to guarantee business risks in the
required for covering accumulated losses.
various customer projects. Furthermore, IBS has developed Group-wide in-
surance solutions that provide coordination benefits and minimize the Group’s
SHARE PREMIUM RESERVE IN THE PARENT COMPANY
total risk of damage.
When shares are issued at a premium, which means that payment for the
shares exceeds the quotient value of the shares, an amount corresponding to
the amount received in excess of the quotient value of the shares is allocated
Note 22 SHAREHOLDERS’ EQUITy to the premium reserve. On December 31, 2005, the premium reserve was
transferred to statutory reserves in accordance with the Swedish Companies
CAPITAL MANAGEMENT Act. New amounts arising as of January 1, 2006 are entered in a new pre-
IBS defines its managed capital as the Group’s recognized shareholders’ mium reserve, which belongs to the unrestricted shareholders’ equity cate-
equity, which amounted to SEK 644.2 m (1 073.2) at year-end. The equity/ gory. However, as noted above, such premiums in the Group belong to the
assets ratio was 41 percent (50 percent). Liquidity amounted to 100 percent category of other capital contributions.
(121 percent). IBS’ basis for the Group’s financial strategy is to create safe
financial conditions for the operation and development of the Group. It is TRANSACTION RESERVE IN THE PARENT COMPANY
necessary for IBS to have a safe financial position with a strong equity/assets This comprises the translation differences occuring at the revaluation of liabi-
ratio and favorable liquidity. The financing activities within IBS AB monitor the lities used to finance an investment in foreign business.
Group’s capital structure. When managing the capital structure, the objective
is to create balance among shareholders’ equity. loan financing and liquidity RETAINED EARNINGS IN THE PARENT COMPANY
to enable financing of the operations at a reasonable capital cost. The mana- This comprises the preceding year’s unrestricted shareholders’ equity after
gement aim is also to ensure that the Group’s financing and refinancing risk any provisions to statutory reserves and after any dividends have been paid.
do not impede the Group’s planned and current operations. The Group’s goal
for the equity/ assets ratio is a minimum of 25 percent. DIVIDEND
The Board of Directors proposes that no dividend be paid for 2009.
According to the Articles of Association for IBS AB, the share capital
shall amount to a minimum of SEK 10 000 000 and a maximum of SEK
40 000 000. There are 126 574 374 shares, of which 4 725 000 are Class A
shares and 121 849 374 are Class B shares. Class A shares entitle the holder
to ten votes per share, while Class B shares carry one vote per share. All
IBS Annual Report 2009 43
PROJECT RESERVES, GUARANTEE COMMITMENTS AND OTHER PROVISIONS
Note 23 DEFERRED TAX ASSETS AND LIABILITIES
In the event that projects in progress are subject to a fixed final price and/or
Group where a certain guarantee commitment, in addition to customary guarantees,
Deferred tax Deferred tax has been provided and the assessment is that this could give rise to additional
asset liabilities Net costs for IBS, a reserve is posted. The provisions pertain to commitments in
2009 2008 2009 2008 2009 2008 Belgium, Germany, Sweden and Finland. The exact amount and the timing
of any outflows from such provisions are subject to uncertainty. The item
Fixed assets –5.8 –9.4 –5.8 –9.4 “other” comprises a provision for remuneration in connection with lay-offs.
Current assets 0.0 0.8 0.0 –0.7 0.0 0.1 However, our assessment is that the above reserves will be regulated within
Provisions and cur- a 12-month period.
rent liabilities 19.0 26.2 –3.1 –1.9 15.9 24.3
Tax allocation reserve –0.2 –0.7 –0.2 –0.7
The Group’s pensions are predominantly defined-contribution plans. A total
Capitalized tax loss 41.2 123.8 41.2 123.8 of SEK 58.7 m (65.5) was expensed during the year for defined-contribution
Total 60.2 150.8 –9.1 –12.7 51.1 138.1 plans. Commitments for retirement pensions and family pensions for salaried
Netting –4.2 –8.5 4.2 8.5 0.0 0.0 employees in Sweden are guaranteed through insurance in Alecta. According
Total according to 56.0 142.3 –4.9 –4.2 51.1 138.1 to a statement issued by the Swedish Financial Reporting Board, UFR 3, this
balance sheet is a defined-benefit pension plan that encompasses several employers.
Accordingly, the pension plan in ITP, which is guaranteed through insu-
rance in Alecta, is recognized as a defined-contribution plan. Fees for pension
Group insurance issued by Alecta amounted to SEK 15.8 m (11.3) during the year.
2009 2008 Alecta’s surplus may be distributed to the policyholders and/or the insured.
Accumulated Tax value Accumulated Tax value At year-end 2009, Alecta’s surplus in the form of the collective funding ratio
loss carry (deferred tax loss carry (deferred tax was 141 percent (112 percent). The collective funding ratio corresponds to
forward asset) forward asset) the market value of Alecta’s assets as a percentage of insurance commit-
ments, calculated according to Alecta’s actuarial assumptions, which do not
Total tax loss car- comply with IAS 19. An exception is made for one person in IBS Sverige,
ryforward 681.9 195.3 591.6 168.8
whose pension is a defined-benefit plan measured at SEK 3.0 m (2.9). The
Less non-capital- information provided on defined-benefit pensions is limited, since this item is
izable tax loss and considered insignificant.
impairment losses –558.1 –154.1 –145.9 –45.0
Total 123.8 41.2 445.7 123.8 RESTRUCTURING RESERVE
This item consists mainly of restructuring provisions from the new strategic
In the years to come, the taxable earnings in the IBS Group are expected to initiative program 2008. Additional provisions for 2009 amounted to SEK 141
improve further. Measures have been taken to successively balance surplus m (189). During the Year SEK 173 m (88) was used while SEK 14 m (19) was
and deficit. Most of the Group’s loss carryforwards have a long or perpetual reversed. Of total restructuring reserve amounting to SEK 97.0 m, SEK 48.6
term and the assessment is that it will be possible to utilize a considerable is assessed to be utilized within a 12 month period.
portion within a future five-year period. During the year, it was possible to
utilize old loss carryforwards in several countries. In Sweden, France, Portugal RESTRUCTURING COST
and Italy, capitalized tax losses from previous years were written down. On
Group Parent Company
the basis of the conditions mentioned, IBS has capitalized taxable value for
2009 2008 2009 2008
the Group’s other loss carryforwards. The Parent Company’s deferred tax
asset of SEK 0.8 m (45.6) corresponds to capitalization of the tax value of Redundant staff –110.0 –97.4 –10,7 –6,5
the deficit. Total tax-related loss carryforwards for the Parent Company are Black office –12.9 –53.9 –4,4 –0,1
SEK 291.7 m (173.5).
Other –5.0 –18.3 –1,5 –8,5
Total –127.9 –169.6 –16,6 –15,2
Note 24 PROVISIONS
Group Parent Company
2009 2008 2009 2008
Project reserves and guarantee
10.0 2.9 - -
Restructuring reserve 97.0 148.2 5.0 8.6
Other 0.2 0.5 - -
Pension provisions 4.8 9.9 - -
112.0 161.5 5.0 8.6
reserves and Restruc-
Group commitments Other Pensions reserve Total
January 1 2.9 0.5 9.9 148.2 161.5
Amount attributable to
acquired or disposed
companies - 1.9 –1.9 - -
Provisions allocated during
the period 7.3 0.1 0.2 141.0 148.6
Amount utilized during the
period 0.0 –0.4 –1.4 –173.5 –175.3
Unutilized amount re-
versed during the period –0.2 0.0 –3.9 –13.6 –17.7
Translation differences 0.0 0.0 0.0 –5.1 –5.1
Carrying amount, 10.0 2.1 2.9 97.0 112.0
44 IBS Annual Report 2009
Note 25 LONG-TERM LIABILITIES TO CREDIT INSTITUTIONS Note 29 PLEDGED ASSETS AND CONTINGENT LIABILITIES
Group Parent Company
Group Parent Company Pledged assets 2009 2008 2009 2008
2009 2008 2009 2008
Corporate mortgages 0.3 0.3 0.3 0.3
Due date 1–5 years from closing Shares in subsidiaries 160.8 83.8 61.4 58.2
date Assets charged with ownership
Loan*) 5.4 27.5 5.2 26.0 reservation 49.9 113.7 - -
Finance leases 17.5 19.3 - - 211.0 197.8 61.7 58.5
Due date later than 5 years Collateral to secure liabilities (short and long term) to credit institutions is
from closing date included in ‘Assets charged with ownership reservation’ and ‘Shares in sub-
Loan*) - - - - sidiaries’.
22.9 46.8 5.2 26.0
Group Parent Company
*) Liabilities have terms and conditions linked to financial position and performance, known
Contingent liabilities 2009 2008 2009 2008
Guarantees subsidiaries - - 35.1 49.6
Collateral for overdraft facilities consists of shares in subsidiaries. Leases are Other contingent liabilities 8.8 12.4 - -
for company cars and computer equipment, which are also pledged as col-
8.8 12.4 35.1 49.6
lateral for these leases.
Other contingent liabilities consist of the Danish subsidiary’s fulfillment guaran-
tees related to IBM and Hertz financing. The amounts reflect the calculated
Note 26 SHORT-TERM LIABILITIES TO CREDIT INSTITUTIONS commitment at the closing day.
Group Parent Company
2009 2008 2009 2008 DISPUTES AND LEGAL PROCEEDINGS
There are no ongoing disputes or legal proceedings in which IBS and its sub-
Bank overdraft facilities granted 110.3 269.2 150.0 164.0 sidiaries are involved and which will have a material impact on IBS’ financial
Unused portion –45.3 –248.0 –103.6 –164.0 position, profit or cash flow.
Used overdraft facility*) 65.0 21.2 46.4 0.0
Finance leases 10.7 12.5 - - Note 30 ADJUSTMENTS fOR NON-CASH ITEMS
Other short-term loans*) 22.4 26.4 20.8 20.8
Group Parent Company
98.1 60.1 67.2 20.8
2009 2008 2009 2008
*) Liabilities have terms and conditions linked to result and financial position, known as Provisions –43.9 84.0 –3.7 8.6
277.4 185.8 260.6 152.6
Collateral for long term loans to credit institutes consists of shares in subsidia-
ries and accounts receivables. Leasing agreements are for company cars and Unrealized exchange-rate differ-
ences –7.7 –10.7 - -
company equipment, which are also given as security for the leases.
Capital loss from disposal of
subsidiaries –4.3 8.4 - -
Note 27 fINANCIAL LEASE OBLIGATIONS Value change in financial invest-
ments 0 –3.2 - –3.2
Payments for the year, along with future financial leases due for payment per
221.5 264.3 256.9 158.0
year as follows:
Payments for the year 10.8 Payments for the year 10.8 Note 31 INTEREST PAID AND DIVIDENDS RECEIVED
Within 1 year 8.1 Within 1 year 9.5 Koncernen Moderbolaget
Within 1–5 years 8.9 Within 1–5 years 12.4 2009 2008 2009 2008
More than 5 years 0.2 More than 5 years 0.3
Dividends received - - - 93.4
Total future payments 17.2 Total future payments 22.2
Interest received 2.5 7.7 12.0 21.2
2010 and forward 2009 and forward
Interest paid –4.4 –13.1 –2.0 –14.2
Finance leases are related to the leasing of cars and computer equipment. –1.9 –5.4 10.0 100.4
Note 32 ACQUISITION Of SUBSIDIARIES AND OPERATIONS
Note 28 ACCRUED EXPENSES AND DEfERRED INCOME
Group Parent Company No acquisitions of subsidiaries or operations took place during the year.
The SEK –2.0 m booking made in 2008 refers to an additional purchase
2009 2008 2009 2008
consideration of the subsidiary IBS USA.
Accrued interest expenses 0.9 0.8 - -
Accrued staff-related expenses 138.0 150.3 2.4 2.2
Other accrued expenses 80.3 81.9 19.8 8.9
Prepaid income 199.5 248.0 1.7 6.4
418.7 481.0 23.9 17.5
IBS Annual Report 2009 45
Board announced all such discussions concluded and that no further dicus-
Note 33 DISPOSAL Of SUBSIDIARIES AND OPERATIONS
sions were ongoing.
DISPOSED ASSETS AND LIAbILITIES Note 36 SIGNIfICANT ESTIMATES AND ASSESSMENTS
Intangible fixed assets - 7.6 When preparing the annual statements and the consolidated financial sta-
Tangible fixed assets - 1.5 tements, the Board of Directors and the President make various accounting
Financial fixed assets - - estimates pertaining to accounting policies and their application. Assump-
Other assets - 6.9 tions and assessments are usually based on historical experience as well as
Cash and cash equivalents - 1.4 expectations concerning future events regarded as reasonable under current
circumstances. If other assumptions and assessments were made, the results
Total assets - 17.4
could differ and, naturally, the actual outcome could vary from the estimated
Long-term liabilities - - outcome. The estimates and assessments are reviewed regularly. Changes
in estimates are recognized during the period when the change is made,
Short-term liabilities - 2.2
assuming that the change only affects that period, or in the period when the
Total liabilities 2.2 change is made and in future periods if the change affects both the current
and future periods. IBS has concluded that the accounting estimates and
Capital loss from sale of subsidiary operations 4.3 –8.5
assumptions – in cases where changes in them could result in significant
Sales price not paid –1.5 - adjustments of the carrying amounts for assets and liabilities and for earnings
Purchase consideration received 2.8 6.8 – are those that are reported and discussed below.
Less: Cash and cash equiv. in disposed operations - –1.4 GOODWILL
Change in Cash and cash equivalents 2.8 5.4 The Group’s goodwill is tested for impairment every year. This is achieved by
establishing the recoverable amount of the cash-generating units on which
the goodwill is allocated by calculating the value in use. When calculating
Note 34 RELATED PARTY DISCLOSURES the value in use, future cash flows are discounted. A more detailed account
is presented in Note 12, where the carrying amount of goodwill, SEK 255
The Parent Company has related-party relationships that include controlling m, is presented. During fourth quarter there an impairment loss of goodwill
influence over its subsidiaries and associated companies and key persons amounting to SEK 131 m (53) was applied, mainly due to the divestment of
in executive positions, see Note 14. the operations concerning the products e42 and ECP, as well as operations
Sale of Purchase of Debts to re- Claims on re- in Portugal, France and Italy. The current year goodwill impairment test did not
goods to re- goods to re- lated parties lated parties show any need for impairment, since the calculated recoverable amount ex-
lated parties lated parties Dec. 31 Dec. 31 ceeded the total carrying amount at the close of 2009. If the conditions upon
Subsidiaries 2009 171.9 3.6 157.1 219.1 which the assumptions and estimates for goodwill should change significantly
compared with what was considered reasonable when preparing the 2009
Subsidiaries 2008 90.8 4.7 83.5 210.6
accounts, this could have a significant effect on the value of goodwill.
The Parent Company’s sales to subsidiaries consist predominantly of ma-
nagement fees and royalties. Purchases comprise consulting services. Of
When preparing the financial statements, an assessment is made of the in-
the total liabilities of SEK 157.1 m (83.5), accounts payable account for SEK
come tax for each tax jurisdiction in which the Group is active, as well as
139.4 m (17.0). Of receivables totaling SEK 219.1 m (205.3), accounts recei-
of deferred tax liabilities and deferred tax assets attributable to temporary
vable account for SEK 219.1 m (152.0).
differences and loss carryforwards. On December 31, 2009, the Group re-
Interest income from subsidiaries amounted to SEK 11.3 m (16.7). Interest
cognized deferred tax assets of SEK 56 m and deferred tax liabilities of SEK
expenses to subsidiaries amounted to SEK –0.9 m (–5.6). The Parent Com-
5 m; see Note 23 for a more detailed description. Deferred tax assets attri-
pany did not receive dividends from the subsidiaries in 2009, and in 2008,
butable to tax loss carryforwards are included in the amount of SEK 41 m
the Parent Company received dividends of SEK 93.4 m. Transactions with the
(124). Deferred tax assets recognized as tax assets can be expected to be
subsidiaries take place at market-priced. The Parent Company has not been
utilized through offset against future taxable profits. In 2009, SEK 76 m (26)
involved in any related-party transactions with associated companies or key
was recognized as an impairment loss regarding Sweden, France, Portugal
persons in executive positions.
and Italy as it was assessed that it is likely that these entities will not be able to
The Group’s key persons include the Board of Directors and senior ex-
utilize loss carryforwards of this size against future profits. In the years ahead,
ecutives. Members of the Board of Directors and senior executives, including
taxable earnings in the IBS Group are expected to rise and actions will be
their families and via companies, hold 74 percent (73) of the shares and 80
taken to gradually equalize tax surpluses and deficits. Most of the Group’s tax
percent (79) of the votes in IBS. The Board of Directors is presented later on
loss carryforwards have a long or perpetual life. IBS’ assessment is that defer-
page 11 in the Annual Report.
red tax assets will probably be used to offset future taxable profits. However,
IBS’ senior executives include President and CEO Mike Shinya, Senior
changes in the assumptions regarding forecast future taxable revenues could
Vice President - Communications Oskar Ahlberg, Senior Vice President - Hu-
result in material differences in the valuation of deferred tax assets.
man Resources Doreena Ross, Executive Vice President and Chief Financial
Officer Fredrik Sandelin, Executive Vice President and Corporate Develop-
CAPITALIZED COSTS FOR DEVELOPMENT WORK
ment and M&A, Christian Paulsson.
The carrying amount for capitalized product development expenses amounts
Note 2 presents the salaries and other remuneration, costs, pension obli-
to SEK 338 m. Impairment testing was done as of the closing date in 2009
gations and similar benefits, as well as severance pay agreements, for the
with the conclusion that no impairment requirement is deemed to exist, con-
senior executives in office during the year.
sidering future anticipated cash flows related to capitalized product develop-
ment. Software under development is subject to technological and market-
related uncertainty, not least in terms of new functionality yet to be launched.
Note 35 EVENTS AfTER THE CLOSING DATE According to management, these risks, to the extent considered reasonable,
are being managed appropriately in terms of the valuation of capitalized de-
On January 15, Fredrik Sandelin was appointed Executive Vice President
velopment work and from an operational perspective.
On February 8, IBS announced that operations involved with activities
RESTRUCTURING RESERVE PERTAINING TO ACTION PROGRAM
concerning the products e42 and ECP, which were specialized for the market
During the full-year 2009, a total of SEK 128 m of the restructuring reserve
for car dealerships were sold to the Australian software company, Pentana
was reserved, of which SEK 97 m remained at December 31, 2009. The new
strategic initiative was launched September 23, 2008 and resulted in staff
Ann-Marie Öhman, IBS employee representative on the Board, withdrew
reductions of more than 500 employees worldwide, including voluntary exits
from the Board on January 29 and was replaced by Ulf Eriksson and deputy
and redundancies. In addition, a reduction of office space used throughout
member Harry Greijer.
the Group and other cost measures were implemented. The program to relo-
On February 23, IBS announced that the software company, Unit4, had
cate some of the product development, programming and customer support
acquired IBS Consist in the Netherlands.
resources to low-cost countries accelerated due to the off-shoring agreement
On January 8 the Board announced that after being contacted by third
with the Indian partner HCL.
parties, possible strategic divestment options were evaluated. On April 7 the
46 IBS Annual Report 2009
Note 37 fINANCIAL ASSETS AND LIABILITIES MEASURED AT fAIR VALUE
Financial assets measu-
red at fair value in profit Accounts and Investments held Total carrying
2009 and loss*) (Level 2) loanreceivables to maturity Other liabilities amount Fair value
Financial investments 2.7 2.7 2.7
Long-term receivables 7.1 7.1 7.1
Accounts receivable 582.7 582.7 582.7
Other assets 0.0 0.0
Current investments 135.1 135.1 135.1
Total 2.7 724.9 0.0 0.0 727.6 727.6
Long-term interest-bearing liabilities 22.9 22.9 22.9
Other long-term liabilities 5.8 5.8 5.8
Short-term interest-bearing liabilities 51.7 51.7 51.7
Accounts payable 175.8 175.8 175.8
Other liabilities 0.0 0.0
Total 0.0 0.0 256.2 256.2 256.2
Financial investments 0.0 0.0
Long-term receivables 0.0 0.0
Accounts receivable 1.7 1.7 1.7
Other assets 0.0 0.0
Current investments 39.8 39.8 39.8
Total 41.5 0.0 0.0 41.5 41.5
Long-term interest-bearing liabilities 5.2 5.2 5.2
Other long-term liabilities 0.0 0.0
Short-term interest-bearing liabilities 67.2 67.2 67.2
Accounts payable 7.6 7.6 7.6
Other liabilities 0.0 0.0
Total 0.0 0.0 80.0 80.0 80.0
*) Held for trading.
For definitions of fair value and carrying value, see “Accounting policies” and Note 21.
Financial assets measu-
red at fair value in profit Accounts and Investments held Total carrying
2008 and loss*) (Level 2) loanreceivables to maturity Other liabilities amount Fair value
Financial investments 4.7 4.7 4.7
Long-term receivables 6.2 6.2 6.2
Accounts receivable 644.9 644.9 644.9
Other assets 0.3 0.3 0.3
Current investments 312.7 312.7 312.7
Total 4.7 964.1 0.0 0.0 968.8 968.8
Long-term interest-bearing liabilities 53.8 53.8 53.8
Other long-term liabilities 6.3 6.3 6.3
Short-term interest-bearing liabilities 60.1 60.1 60.1
Accounts payable 166.8 166.8 166.8
Other liabilities 0.0 0.0
Total 0.0 0.0 0.0 287.0 287.0 287.0
Financial investments 0.0 0.0
Long-term receivables 132.2 132.2 132.2
Accounts receivable 3.2 3.2 3.2
Other assets 270.4 270.4 270.4
Current investments 135.6 135.6 135.6
Total 0.0 541.4 0.0 0.0 541.4 541.4
Long-term interest-bearing liabilities 26.0 26.0 26.0
Other long-term liabilities 0.0 0.0
Short-term interest-bearing liabilities 27.0 27.0 27.0
Accounts payable 13.3 13.3 13.3
Other liabilities 35.7 35.7 35.7
Total 0.0 0.0 0.0 102.0 102.0 102.0
*) Held for trading.
For definitions of fair value and carrying value, see “Accounting policies” and Note 21.
The table provides information on how fair value is determined for the financial instruments measured at fair value in the statement of financial position.
The division of how fair value is determined is done based on three tiers.
Level 1: according to prices listed on an active market for the same instrument
Level 2: based on directly or indirectly observable market data not included in level 1
Level 3: based on input data that is not observable on the market
IBS Annual Report 2009 47
The Annual Report was prepared in accordance with generally accepted accounting policies in Sweden and the consolidated accounts were prepared in accor-
dance with the international financial reporting standards referred to in the European Parliament and Council Regulation (EC) No. 1606/2002 on July 19, 2002,
concerning the application of international financial reporting standards.
The Annual Report and consolidated accounts provide a true and fair view of the financial position and earnings of the Parent Company and the Group. The
Board of Directors’ report for the Group and the Parent Company provides an accurate overview of the development of operations, financial position and earnings
of the Group and the Parent Company, and describes the material risks and uncertainty factors that the Parent Company and the Group companies face.
Solna April 21, 2010
Bertrand Sciard Christian Paulsson Gunnel Duveblad
Ulf Eriksson Mike Shinya Vinit Bodas
PRESIDENT AND CEO
Our audit report was submitted on April 21, 2010
Åsa Wirén Linder
AUTHORIZED PUBLIC ACCOUNTANT
As stated above, the Annual Report and the consolidated accounts were approved by the Board of Directors and by the President and CEO on April 21, 2010.
The consolidated and Parent Company income statements and balance sheets will be submitted for adoption at the Annual General Meeting on May 6, 2010.
48 IBS Annual Report 2009
To the annual meeting of the shareholders of IBS AB, corporate identity num- ned whether any board member or the President has, in any other way, acted
ber 556198-7289. in contravention of the Companies Act, the Annual Accounts Act or the Artic-
We have audited the annual accounts, the consolidated accounts, the les of Association. We believe that our audit provides a reasonable basis for
accounting records and the administration of the Board of Directors and the our opinion set out below.
President of IBS AB for the year 2009. The company’s annual accounts are The annual accounts have been prepared in accordance with the Annual
included in the printed versions of this document on pages 12–47. Accounts Act and give a true and fair view of the company’s financial position
The Board of Directors and the President are responsible for these ac- and results of operations in accordance with generally accepted accounting
counts and the administration of the company as well as for the application principles in Sweden. The consolidated accounts have been prepared in ac-
of the Annual Accounts Act when preparing the annual accounts and the cordance with International Financial Reporting Standards (IFRS) as adopted
application of International Financial Reporting Standards (IFRS) as adopted by the EU and the Annual Accounts Act and give a true and fair view of the
by the EU and the Annual Accounts Act when preparing the consolidated Group’s financial position and results of operations. The statutory administra-
accounts. Our responsibility is to express an opinion on the annual accounts, tion report is consistent with the other parts of the annual accounts and the
the consolidated accounts and the administration based on our audit. consolidated accounts.
We conducted our audit in accordance with generally accepted auditing We recommend to the Annual General Meeting of shareholders that the
standards in Sweden. Those standards require that we plan and perform the income statements and balance sheets of the Parent Company and the
audit to obtain high but not absolute assurance that the annual accounts and Group be adopted, that the profit of the Parent Company be dealt with in
the consolidated accounts are free of material misstatement. An audit inclu- accordance with the proposal in the administration report and that the mem-
des examining, on a test basis, evidence supporting the amounts and disclo- bers of the Board of Directors and the President be discharged from liability
sures in the accounts. An audit also includes assessing the accounting prin- for the financial year.
ciples used and their application by the Board of Directors and the President
and significant estimates made by the Board of Directors and the President Stockholm, April 21, 2010
when preparing the annual accounts and the consolidated accounts as well KPMG AB
as evaluating the overall presentation of information in the annual accounts
and the consolidated accounts. As a basis for our opinion concerning
discharge from liability, we examined significant decisions, actions taken and
circumstances of the company in order to be able to determine the liability, if Åsa Wirén Linder
any, to the company of any board member or the President. We also exami- Authorized Public Accountant
IBS Annual Report 2009 49
Adjusted equity mArket cApitAlizAtion
Equity attributable to Parent Company shareholders. Share price multiplied by the total number of shares.
AverAge credit period operAting mArgin
Average accounts receivable excluding VAT divided by total revenue, Operating profit as a percentage of total revenue.
multiplied by the number of days in the period.
BAlAnce sheet totAl Share price divided by profit per share.
profit per shAre
cApitAl turnover rAtio Net profit for the year attributable to Parent Company shareholders divided
Revenue for the year divided by average total assets. by the average number of shares for the year.
cApitAl employed profit per shAre After dilution
Total assets minus non-interest bearing liabilities. Net profit for the year attributable to Parent Company shareholders divided
by average number of shares for the year, adjusted for effects of potential
cAsh flow per shAre shares.
Cash flow from operating activities divided by average number of shares.
return on cApitAl employed
equity per shAre Net profit after reversal of financial expense as a percentage of the average
Equity attributable to Parent Company shareholders divided by the total capital employed during the year.
number of shares.
return on equity
equity per shAreAfter dilution Net profit for the year attributable to Parent Company shareholders as a
Equity attributable to Parent Company shareholders divided by the total percentage of average equity attributable to Parent Company shareholders.
number of shares, adjusted for effects of potential shares.
return on totAl cApitAl
equity/Assets rAtio Net profit after reversal of financial expense as a percentage of average total
Total equity as a percentage of total assets. assets during the year.
interest-BeAring net deBt revenue/employee
Interest-bearing liabilities plus interest bearing provisions less interest-bearing Total revenue divided by the average number of employees.
risk cApitAl rAtio
interest cost cover rAtio Total equity and accrued taxes as a percentage of total assets.
Net profit plus interest expenses less interest-bearing assets.
liquidity Operating profit after reversal of personnel costs.
Current assets minus inventories, as a percentage of current liabilities.
50 IBS Annual Report 2009
Annual General Meeting and
AnnuAl generAl meeting reAd more on the weB
IBS Annual General Meeting will be held on May 6, 2010 at 3.00 p.m. You can find the latest information by visiting our website www.ibs.net,
at Solna Summit Gate, Hemvärnsgatan 8 in Solna. where we publish our press releases on current events, our quarterly
Registration starts at 2.15 p.m. reports and much more information.
Annual General Meeting 2010 May 6 P.O. Box 1350, Hemvärnsgatan 8
Interim report January–June 2010 July 20 SE-171 26 Solna, Sweden
Year End Report 2010 February 2011 Phone:+46-8-627 23 00
IBS Annual Report 2009 51
52 IBS Annual Report 2009
IBS Annual Report 2009 53