Vincit Oyj : Business review Q1

VINCIT PLC

BUSINESS REVIEW

Q1 2024

1 January-31 March 2024 (unaudited)

• Vincit Oyj 2023 Visiokatu 1, 33720 Tampere Business ID: 2113034-9 [phone] info@vincit.f

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VINCIT PLC'S BUSINESS REVIEW 1 JANUARY-31 MARCH 2024 (UNAUDITED)

Figures in brackets refer to the corresponding period in the previous year, unless otherwise stated. Percentages and fgures presented herein may include rounding diferences and therefore may not add up precisely to the totals presented.

Revenue decreased as expected, EBITA 3.2%

January-March 2024

• Revenue was EUR 23.0 (27.8) million. Revenue declined by EUR 4.8 million, or 17.2% (+58.6%).
• EBITA was EUR 0.7 (2.5) million, or 3.2% (9.0%) of revenue.
• EBIT was EUR -0.3 (1.5) million, or -1.2% (5.5%) of revenue.
• Earnings per share were EUR -0.02 (0.07).
• Total capacity (FTE) averaged 685 (841) over the reporting period, of which subcontracting was 67 (87) FTEs.
• At the end of the review period, the Group employed a total of 639 (788) people.

Outlook for 2024 (unchanged)

With a lower headcount than last year, revenue in 2024 is expected to be lower than in 2023, but relative proftability is expected to improve year-on-year.

Financial targets for the strategy period 2023-2025

In the strategy period 2023-2025, Vincit aims to achieve 20% annual revenue growth. The goal is to achieve the growth targets with a combination of organic growth and inorganic growth focused outside Finland. The adjusted EBITA (operating proft before goodwill depreciation) target level is over 10% of revenue during the whole strategy period. The company continues its internationalization and aims for revenue from the USA to represent around 30% of Group revenue by the end of the strategy period. The company aims to keep its equity ratio above 60%.

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Key fgures

Group

EUR 1,000	1-3/2024	1-3/2023	Change %	2023
Revenue	22,982	27,765	−17.2%	98,085
EBITDA¹⁾		782	2,563	−69.5%	1,968
% of revenue		3.4%	9.2%		2.0%
EBITA¹⁾		728	2,503	−70.9%	1,721
% of revenue		3.2%	9.0%		1.8%
EBIT		−268	1,538	−117.4%	−2,196
% of revenue		−1.2%	5.5%		−2.2%
Proft/loss for the period		-385	1,197	-132.2%	-2,853
Equity ratio %		63.1%	68.1%	-7.4%	63.4%
ROE %		-2.5%	14.0%	-117.9%	-7.5%
ROI %		-2.0%	15.0%	-113.3%	-5.1%
Net Debt %	-	30.4%	-23.9%	27.0%	-33.4%
Number of personnel at period end		639	788	−18,9%	720
EPS, EUR		−0.02	0.07	−128.6%	−0.17

1. The company presents alternative performance measures EBITDA and EBITA to better describe the fnancial development of its business.

© Vincit Plc 2023 | Visiokatu 1, 33720 Tampere | Y-tunnus:2113034-9 | [phone] | info@vincit.f

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Vincit CEO Julius Manni

The frst quarter of 2024 was in line with our expectations in a still challenging environment. The year-on-year decrease in revenue reflects the market downturn in the custom software development business and the planned reduction in Vincit's headcount, which was due to the decline in demand for custom software development services. At the same time, Vincit's strategic transformation journey is moving in the right direction as we seek to apply our expertise more deeper into our customers' business-critical operations. To support this, we are currently recruiting across a broad front for more than 40 open specialist positions.

In the Nordics, our digital commerce-focused business continues to grow, and the foundation for growth and demand for the SAP S/4HANA business is solid. To strengthen our strategic position, we created a new business unit focused on data, analytics and AI. Proftability trend in the Nordic countries improved compared to the second half of last year and we will only take on projects where long-term price levels are sustainable. We will continue to focus on business-driven solution selling and end-to-end project deliveries.

In the US, we continued our disciplined approach to customer acquisition with a sharpened customer ofering and announced signifcant customer contract renewals during the period. Our billing rates in the US are still low, but as new projects materialize, our proftability can quickly turn positive. We still see great potential for Vincit in the US market.

Vincit is now at a turning point in many areas of its business. However, it takes time for our change to have an impact on earnings, and sales cycles for larger projects are currently signifcantly longer due to the uncertainty caused by the general economic situation.

© Vincit Plc 2023 | Visiokatu 1, 33720 Tampere | Y-tunnus:2113034-9 | [phone] | info@vincit.f

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Financial review January-March 2024

Consolidated revenue

Revenue in January-March decreased by 17.2% to EUR 23.0 (27.8) million. Slow sales and reductions in FTE capacity in services business impacted revenue negatively in the frst quarter.

Group proftability and earnings development

EBITDA was EUR 0.8 (2.6) million or 3.4% (9.2%) of revenue during the review period. EBITA was EUR 0.7 million (2.5) or 3.2% (9.0%) of revenue during the review period. EBIT was EUR -0.3 million (1.5) or -1.2% (5.5%) of revenue. Year-on-year proftability impacted by decrease in revenue and project overruns.

The proft for January-March was EUR -0.4 (1.2) million.

Vincit's business areas

Vincit's business comprises two areas: the Service business in the Nordics (Vincit Nordics) and the US (Vincit USA), and the Product business focusing on the Finnish market. Customers include both enterprises and public sector actors.

Service business

Vincit aims to be a comprehensive technology and business partner for our clients to streamline business operations, transform commercial capabilities and accelerate digital development. Vincit's service ofering combines business-driven design, agile software development, data & AI capabilities, and extensive platform expertise especially in SAP ecosystem solutions.

MEUR	1-3/2024	1-3/2023	Change %	2023
Revenue	22.1	27.0	−18.0%	95.1
EBITA	0.7	2.5	−70.3%	2.1
% of revenue	3.3%	9.2%		2.2%

Revenue of the Service business in January-March was EUR 22.1 million (27.0), down 18.0% year-on-year.

During January-March, EBITA of the Service business was EUR 0.7 (2.5) million or 3.3% (9.2%) of revenue.

Vincit Nordics

Vincit Nordics revenue decreased year-on-year due to a signifcant reduction in FTE capacity. Proftability decreased year-on-year, but improved from the second half of 2023. Utilizations on average were on a good level. We continue to see ferce

© Vincit Plc 2023 | Visiokatu 1, 33720 Tampere | Y-tunnus:2113034-9 | [phone] | info@vincit.f

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price-driven competition in the custom software market, whereas demand is good in our Commerce and Core business areas that focus on business critical core processes and systems. Especially the SAP S/4HANA ERP related transformation projects are picking up speed and we are putting a lot of efort to succeed in sales in this area.

MEUR	1-3/2024	1-3/2023	Change %	2023
Revenue	20.2	24.1	−16.4 %	84.7
EBITA	1.0	2.5	−60.7%	2.9
% of revenue	4.8%	10.2 %		3.2%

Vincit Nordics' revenue in January-March was EUR 20.2 million (24.1), down 19.6% year-on-year.

During January-March, Vincit Nordics' EBITA was EUR 1.0 million (2.5) or 4.8% (10.2%) of revenue.

Vincit USA

Vincit USA revenue was signifcantly behind last year in the frst quarter, due to weak sales. Despite the cost saving measures the quarter was unproftable. During the quarter, a lot of efort was put into developing our commercial processes. Vincit USA also received two major purchase orders with a combined value of 4.4 million euros. The orders are continuations to product development work done for large technology company clients.

MEUR	1-3/2024	1-3/2023	Change %	2023
Revenue	2.0	2.8	−31.3%	10.4
EBITA	−0.2	0.0	-1,562.2%	−0.9
% of revenue	−11.9%	0.6%		-8.4%

Vincit USA's revenue in January-March was EUR 2.0 (2.8) million, down 31.3% year-on-year.

During January-March, Vincit USA's EBITA was EUR -0.2 (0.0) million or -11.9% (0.6%) of revenue.

Product business

Vincit's own product solution VincitEAM helps companies automate their maintenance operations and asset management.

© Vincit Plc 2023 | Visiokatu 1, 33720 Tampere | Y-tunnus:2113034-9 | [phone] | info@vincit.f

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VincitEAM business revenue grew in the frst quarter compared to last year. Revenue growth was driven by the new customers that started their journey with VincitEAM and increased the recurring revenue.

MEUR	1-3/2024	1-3/2023	Change %	2023
Revenue	0.9	0.8	8.4%	3.0
EBITA	0.0	0.0	-138.0%	−0.3
% of revenue	−0.9%	2.7%		-17.5%

Revenue of the Product business in January-March was EUR 0.9 million (0.8), up 8.4% year-on-year.

During the review period, EBITA of the Product business was EUR 0.0 (0.0) million or -0.9% (2.7%) of revenue.

© Vincit Plc 2023 | Visiokatu 1, 33720 Tampere | Y-tunnus:2113034-9 | [phone] | info@vincit.f

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Table section

Consolidated Income Statement (FAS)

EUR 1,000	1-3/2024	1-3/2023	2023
Revenue	22,982	27,765	98,085
Other operating income	4	0	147
Materials and services
Purchases during the period	−662	−415	−1,939
External services	−3,015	−3,522	−13,458
Personnel expenses
Salaries and fees	−12,344	−14,064	−52,162
Pensions	−1,914	−2,281	−8,450
Other indirect employee expenses	−153,0	−488,2	−1,848
Depreciation, amortization and impairment
Depreciation according to plan	−153	−135	−585
Goodwill amortization	−897	−891	−3,579
Other operating expenses	−4,116	−4,431	−18,408
EBIT	−268	1,538	−2,196
Financial income and expenses
Interest income and other fnancial income	93	52	213
Interest expenses and other fnancial expenses	−21	−178	−480
Proft / Loss after fnancial items	−196	1,412	−2,463
Income taxes	−187	−193	−441
Non-controlling interest	−1	−22	51
Proft/ Loss for the period	−385	1,197	−2,853

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Consolidated balance sheet (FAS)

EUR 1,000	31/3/2024	31/3/2023	31/12/2023
ASSETS
Non-current assets
Intangible assets
Development expenditure	1,355	716	1,225
Goodwill	19,840	23,322	20,709
Other capitalized long-term expenditure	319	474	350
Tangible assets
Machinery and equipment	523	699	557
Other tangible assets	4	4	4
Investments
Other shares and holdings	30	15	20
Other non-current loan receivables	297	282	295
Total non-current assets	22,368	25,511	23,160
Current assets
Non-current receivables
Deferred tax assets		142
Receivables from associates		100
Loan receivables	1,377	1,439	1,388
Total non-current receivables	1,377	1,681	1,388
Current receivables
Trade receivables	16,230	20,362	16,927
Receivables from associates		118
Loan receivables	2		2
Other receivables	484	2,033	1,415
Prepayments and accrued income	3,057	2,687	1,908
Total current receivables	19,774	25,201	20,252
Cash in hand and in banks	10,408	10,341	12,158
Total current assets	31,558	37,223	33,798
TOTAL ASSETS	53,927	62,735	56,958
EUR 1,000	3/2024	3/2023	2023
LIABILITIES

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Equity
Share capital		545	545
545
Reserve for invested unrestricted equity	33,274	33,139	33,274
Retained earnings	562	7,553	5,127
Proft for the period	−385	1,197	−2,853
Total equity	33,996	42,435	36,093
Non-controlling interest	24	311	23
Liabilities
Non-current liabilities
Loans from fnancial institutions	77	119	79
Total non-current liabilities	77	119	79
Current liabilities
Trade payables	4,345	3,251	5,520
Loans from fnancial institutions		8	27
Liabilities to associates		8	8
Other liabilities	3,463	3,921	3,504
Accrued expenses and deferred income	12,021	12,682	11,704
Total current liabilities	19,830	19,869	20,763
Total liabilities	19,906	19,989	20,843
TOTAL LIABILITIES	53,927	62,735	56,958

© Vincit Plc 2023 | Visiokatu 1, 33720 Tampere | Y-tunnus:2113034-9 | [phone] | info@vincit.f