Systematic CEO hands over with fantastic financial results
For FY 2022/2023, software company Systematic is again posting record results with revenue totalling EUR 192 million, an operating profit of EUR 35 million and cash reserves of EUR 84 million.
It is with an air of calm and some satisfaction that Systematic’s CEO Michael Holm is able to pass on the baton to his successor after the company has posted its best ever financial results.
Revenue, up from EUR 178 million in 2021/2022 to EUR 192 million in 2022/2023, is primarily driven by international sales and many different contracts, with several stretching years into the future.
“They are our best financial results to date. It’s all down to the fact that the total profit is based on many contracts which all the company’s business units have contributed to – and not like in previous years, where a few big contracts dominated the picture,” says Michael Holm.
Sustainable business model based on massive investments and product sales
In spite of the fact that Systematic is continuing to invest massively in its product portfolio, this year’s operating profit totalled EUR 35 million, which corresponds to an EBIT margin of 18.5% compared with 13.0% last year.
“We have gradually built up a portfolio of solid and tried-and-tested products which can be taken down from the shelf and implemented in hospitals, in the defence sector, at offshore wind farms, in the care sector and at libraries in Denmark and abroad. Evolving from a pure product development company to a largely product-centred enterprise has created a healthy and robust business," he says and continues:
"Moreover, our business model is sustainable in the sense that we generate earnings for innovation and development through increased sales of product licences and service agreements for our existing solutions,” says Michael Holm.
Keen interest in defence software
Just over half of the company’s orders still come from abroad.
They include a large contract with the British Army, which has significantly increased its use of Systematic’s SitaWare software. Poland’s armoured forces have acquired SitaWare Frontline as a command-and-control system for their new Abrams battle tanks. And as part of the ongoing digital transformation of Germany’s armed forces, the Bundeswehr signed a seven-year framework agreement with Systematic. The German Navy also acquired a SitaWare Maritime Headquarters solution, with specially developed functions for the maritime domain which will be implemented on both the German frigates and on all land and monitoring centres.
However, maritime innovation is not confined to Systematic’s own activities. Together with Odense Maritime Technology (OMT), Systematic has established a new joint venture, CUBEDIN A/S, which supplies a modular software and integration concept for the flexible naval vessels of the future.
In February, Danish Defence signed a 20-year framework agreement, and in so doing consolidated its long-term strategic partnership with Systematic. Over the next 20 years, Systematic will thus occupy a central role in the digitalisation of Danish Defence with the development of security and infrastructure solutions.
Global geopolitical developments also explain why the defence business accounts for such a big chunk of the order book, but the company’s other business units are also seeing growth.
IT solutions for hospitals, offshore wind farms and libraries
In the healthcare sector, the adaptation of our electronic health record (EHR), Columna CIS, continues at all the hospitals in Central Denmark Region, Region of Southern Denmark and North Denmark Region. With three new municipalities placing orders, 36 of Denmark’s 98 municipalities are now using the care record Columna Cura in the social and healthcare sectors. Together, these 36 municipalities account for half of Denmark’s population. Systematic has also been selected as a strategic supplier as part of a large joint tender to supply IT services to the healthcare sector in all five Danish regions.
Internationally, the healthcare business continues to grow, for example in the Netherlands and Finland, where several hospitals have expanded their use of the Columna Flow solution.
The implementation of Systematic’s marine coordination solution for offshore wind farms is in full swing in the USA, where Dominion Energy – as the first US customer – has entered into an agreement on SITE for the biggest offshore wind farm in the country off the coast of Virginia.
In Norway, the library software solution Cicero has been successfully implemented at all the libraries in the City of Oslo. In addition, Cicero is attracting considerable interest in the rest of the Norwegian market, and also from several other countries which have become aware that Denmark is the only country in the world with a national IT solution for all libraries.
“We’re entering the new year with a positive market outlook. In spite of the fact that costs are under pressure due to inflation, we will continue to invest heavily in product development, employee learning and development as well as infrastructure so that we can maintain and ideally extend our competitive advantages,” says Michael Holm.
The massive demand – especially for defence software – has sent Systematic on the hunt for 200 new employees and a new office to house many of them in Copenhagen. In 2022/2023, Systematic has recruited 203 new employees and more than 80 interns and student assistants, and Michael Holm is particularly proud of the company’s low employee turnover rate.
“In relation to the industry, we have a relatively low employee turnover, as only 9.7% of our employees have chosen new pastures. This is not a problem for us at all, because they often return – in this financial year, 9.6% of our new employees were former colleagues. It tells me that we’re doing something right,” he says.
Stepping down as CEO after 38 years heading Denmark’s largest privately owned software company
14 December will be Michael Holm’s last day as CEO at Systematic. After 38 years heading Denmark’s largest privately owned software company, he is passing the CEO baton and thus daily management of the company to Nikolaj Bramsen, Senior Vice President for People & Culture. At the same time, Michael Holm is joining the Board of Directors as a working chair, focusing on strategy and international development.
“It’s the perfect time to be passing on the baton, because Systematic has never been in a stronger position than it is at the moment. We have some incredibly skilled and dedicated employees. We’re delivering products to all our business units, our order book is full, and we’re busy with lots of interesting development projects. It is still hugely exciting and difficult to let go, but now is the right moment. I will continue to contribute and draw on my international network and support Nikolaj in being a successful CEO,” says Michael Holm, who sends heartfelt thanks to all the employees who have been part of Systematic’s development over the past 38 years:
“I’ve been incredibly fortunate to have had so many extremely competent and committed colleagues on board over the years. It is very humbling to look back at all that we have achieved ever since I sat as a one-man band at home, coding for the Admiral Danish Fleet, as it was then known. Without everyone, the idea would never have grown into what we are today, and I’m incredibly grateful for that,” he concludes.
See Systematic's annual reports here
| 2022/23 EURm | 2021/22 EURm | Change | |
| Revenue | 192 | 178 | +8% |
| EBIT | 35 | 23 | +53% |
| Profit after tax | 27 | 19 | +40% |
| Return on equity | 28,8% | 23,3% | +5,5 percentage points |
