POSITIONED FOR FURTHER GROWTH
SimCorp saw continued growth in line with its goals and expectations for 2018. In a market impacted by new client demands and a changing competitive landscape, we continue to strengthen our market position.
In the year where SimCorp entered OMXC25, the index containing the 25 most traded shares at Nasdaq Copenhagen, it is a pleasure to report another satisfactory annual result for SimCorp. Delivering on our ambitious Vision 2020 targets of double-digit annual revenue growth and improved EBIT margin requires a dedicated focus on marketing and sales, a continued ability to develop and deliver solutions that meet our clients’ expectations, and a tight grip on cost. The management team and all employees have once again managed to balance these efforts and deliver solid results.
STRONG MARKET POSITION
The investment management vendor space has been impacted by M&A activity for a number of years. Continued industry consolidation has resulted in fewer independent vendors on the market, and only very few offer a truly integrated front-to-back solution. This, combined with the fact that more investment managers aim to simplify and consolidate their system landscape to achieve further automation and integration, puts SimCorp in a strong position.
The recent consolidation activity has been driven mainly by the aim of cost-cutting or by a wish to expand an existing offering by acquiring and integrating a supplementary solution. Expanding an existing solution through acquisition can be used as a strategy to achieve a front-to-back offering like SimCorp’s. However, this strategy is faced by the challenge to achieve our level of integration, automation, and efficiency, which has been integrated in our solution from conception, builds on a front-to-back investment book of record, and is the result of decades of extensive investment. While this competition should be taken seriously, SimCorp’s position and offering remain strong.
EVOLUTION OF STRATEGY
Since defining the long-term (2020) financial target in 2015 of delivering double-digit revenue growth and EBIT margin improvement year-on-year, we have maintained a steady focus on executing our strategy that enables us to achieve our long-term ambitions.
As part of our annual strategy review, the Board and SimCorp’s executive management team thoroughly assess current and emerging trends in the market to assure that we keep abreast of new developments. In 2019, the Board will start the process of defining the longer-term ambitions SimCorp should pursue beyond 2020.
DISTRIBUTION OF PROFIT
In 2018, we paid a dividend of EUR 34.4m, equal to DKK 6.50 per share. In addition, we repaid the EUR 30.0m borrowed in 2017 in connection with the acquisition of SimCorp Italiana.
According to our profit distribution policy, we intend to pay dividends of at least 40% of the annual net profit and use additional cash to buy treasury shares depending on other cash requirements. Based on the financial performance in 2018, the Board of Directors intends to propose to the shareholders at the Annual General Meeting (AGM) a dividend of EUR 35.9m, equal to DKK 6.75 per share, for the financial year 2018. Furthermore, based on the current business outlook and cash position, we expect to reintroduce a share buy-back program in 2019. We plan to introduce a new “Safe Harbour” program, acquiring treasury shares for a forecasted amount of EUR 25m in 2019, split into two programs of EUR 12.5m each.
As part of our efforts to optimize the Board’s work and adhere to guidelines for good corporate governance, SimCorp in 2018 formed a joint Nomination and Remuneration Committee. Among other tasks, this committee assists the Board with oversight of the composition of the Board and its committees, succession plans for the Executive Management Board, and remuneration packages and policies for the Board of Directors and Executive Management Board. The Committee consists of four members elected by the Board for a term of one year. In addition, SimCorp’s CEO regularly attends the Committee’s meetings.
Following the decision approved by the AGM in 2018 to increase the number of Board members elected by shareholders to between four and eight, SimCorp has welcomed two new members, Joan Binstock and Morten Hübbe, bringing the number of members elected by shareholders to seven.
This change ensures a sufficient number of suitable candidates for the Audit and Nomination and Remuneration Committees and a sound basis for successful Board succession. Further change will be proposed at the AGM 2019, as I have decided to resign from the Board after 12 years, 11 of these as Chairman. Peter Schütze, the Board’s Vice-chairman since 2012, will be proposed as the new Chairman, with Morten Hübbe as the new Vice-chairman. The Board does not propose any new members to the Board, which will bring the number of members elected by the shareholders back to six.
On behalf of the Board, I would like to thank all investors for their faith in SimCorp, our clients for partnering with us, and all SimCorp’s employees for their hard and dedicated work in the past year.
On a personal level, I would like to take this opportunity to extend my sincere gratitude to SimCorp’s investors for the trust they have shown in me during my time as Chairman. It has been an immense pleasure and privilege to serve this great company for so many years!
Chairman of the Board of Directors