RIB Software SE explains the effects of its YTWO joint ventureon the accounting of the RIB Group at the Annual General Meeting
Stuttgart, Germany, 01 June 2017. The Annual General Meeting of RIB Software SE resolved to approve the management's proposals at all agenda items, including the authorization to purchase and use treasury shares, with a majority of more than 98%. Only the proposed amendment to the 2015 Stock Option Plan, which intended to make the performance targets more flexible at an unchanged high level, did not reach the required majority of 75%.
At the same time, the Administrative Board of RIB Software SE used the Annual General Meeting to show in detail the effects of the last year concluded joint venture YTWO on the financial figures of the RIB Group. In September 2016, RIB formed a joint venture with Flex (NASDAQ: FLEX), one of the world's leading contract manufacturers, with the aim to transform the building and housing industry. The joint venture operates under the name “YTWO Formative” and provides an open, cloud-based software solution that combines the strength of RIB’s iTWO 5D BIM software capabilities with Flex’s manufacturing, supply chain management and logistics expertise.
Flex and RIB invested each USD 60 million for an equal investment to the joint venture. Moreover, RIB provides to the joint venture licences for a licence fee in the amount of USD 45 million based on a software license agreement. Specifically, the Group has committed to deliver a fixed number of 30,000 licenses, as well as up to 15,000 licenses under certain conditions. RIB has calculated for financial reporting purposes the total number of licenses based on a qualified estimate at 41,820 to be delivered. In the fiscal year 2016, 15,000 software licenses were already delivered to the joint venture YTWO.
The transaction has affected the accounting of RIB Group as follows:
- Revenue situation: The Group revenues in the fiscal year 2016 of EUR 97.9 million were not affected by transactions with the joint venture YTWO, because the sale of the licenses was in contractual connection with the investment into the joint venture. The operating EBITDA of EUR 33.0 million includes other operating income of EUR 7.7 million from the delivery of software licenses to the joint venture YTWO.
- Financial situation: The cash flow statement was on the one hand affected by a cash outflow of EUR 55.0 million (USD 60 million) to the joint venture YTWO and on the other hand by cash inflow of EUR 37.9 million from the sales of the software licenses to the joint venture YTWO.
- Asset situation: The transaction also leads to an increase of the investments accounted for using the equity method of EUR 49.2 million. Moreover, the deferred revenues increased by EUR 6.0 million and the payment in advance (shown under the other current liabilities) by EUR 16.6 million.
For further information please see our remarks in the consolidated group management report (Annual Report pages 42 ff.)