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Tim Osler / Dawn Blenkiron / Benjamin Tranham
[email protected] / [email protected] / [email protected]
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GFT Group posts strong revenue and earnings growth in H1 2015 – full-year guidance upgraded

• Consolidated revenue up 57 percent to EUR 178.76 million
• Earnings (EBITDA) improved by 58 percent to EUR 19.80 million
• Full-year guidance for revenue and earnings upgraded

The GFT Group remains on its growth trajectory: in the first half of 2015, the technology group once again achieved significant increases in revenue and earnings. The key drivers were increasing regulatory compliance and digitisation in the banking sector. There was a particularly dynamic trend in revenue generated outside Germany. Due to the positive development of operating business, full-year guidance for revenue was increased to EUR 362 million and for EBITDA to EUR 43 million.

Strong growth of the GFT Group abroad

Compared to the same period last year, consolidated revenue rose by 57 percent to EUR 178.76 million (prev. year: EUR 114.08 million). This positive revenue trend resulted from the strong organic growth of the company’s IT solutions for the financial sector, as well as from the acquisition of the UK-based company Rule Financial Ltd. (Rule) in June 2014. Adjusted for revenue contributed by the former Rule companies of EUR 38.49 million (prev. year: EUR 0.00 million), the GFT Group’s operating business achieved organic growth of 23 percent. Revenue generated abroad rose by as much as 70 percent to EUR 158.23 million (prev. year: EUR 92.84 million), whereby revenue in the UK and USA more than doubled to EUR 80.71 million (prev. year: EUR 35.50 million) and EUR 18.45 million (prev. year: EUR 8.42 million), respectively. Due to the positive revenue trend and high capacity utilisation, earnings before interest, taxes, depreciation and amortisation (EBITDA) improved by 58 percent to EUR 19.80 million (prev. year: EUR 12.54 million). Pre-tax earnings (EBT) rose by 39 percent year on year to EUR 14.23 million (prev. year: EUR 10.24 million).

Personnel services provider emagine sold

As already announced on 27 July 2015, the GFT Group has sold its emagine division, which specialises in the staffing of technology projects. In accordance with IFRS regulations (IFRS 5), the revenue and earnings generated by emagine in the first six months of 2015 are therefore no longer disclosed in the GFT Group’s key financial figures. In line with IFRS 5, the prior-year figures were also adjusted accordingly.

Focus on GFT division

With the sale of the former personnel services division emagine, the GFT Group is now focusing on its high-growth GFT division. As the revenue generated by emagine in the first half of 2015 and the corresponding prior-year period are no longer included in consolidated revenue (in line with IFRS 5), revenue of the GFT division was largely identical with that of the GFT Group as a whole. Pre-tax earnings (EBT) of the GFT division rose by 33 percent to EUR 15.71 million in the first half of 2015 (prev. year: EUR 11.78 million). At 8.8 percent, the operating margin was slightly down on the previous year (10.3 percent) due primarily to purchase price allocation (PPA) effects from the acquisition of Rule.

“We want to drive the digital banking experience across all countries and expand our position as the leading provider of digital financial solutions. With the acquisition of the Spanish IT service provider Adesis Netlife in July 2015, we have significantly broadened our range of services in this field and strengthened our international presence in South America. We see great potential in this attractive future market,” says Ulrich Dietz, CEO of GFT Technologies AG.

Full-year guidance upgraded

Due to the sale of the emagine division and the application of IFRS regulations (IFRS 5), the full-year guidance issued in March 2015 was adjusted on 27 July 2015 after deducting the expected revenue and earnings of emagine. Following the acquisition of the Spanish IT service provider Adesis Netlife S.L. on 28 July 2015, additional revenue of around EUR 7 million is now expected in 2015. Due to the costs of integration and effects from purchase price allocation, Adesis will not yet make a significant contribution to earnings.

As a result of the positive development of operating business in the first half of 2015, the Executive Board is raising its full-year guidance for revenue of the GFT Group by a further EUR 15 million to EUR 362 million. Earnings before interest, taxes, depreciation and amortisation (EBITDA) are now expected to reach EUR 43 million (previously EUR 42 million) with pre-tax earnings (EBT) of EUR 30 million (previously EUR 29 million).

Headcount grows to around 3,400

As of 30 June 2015, the GFT Group had 3,421 full-time employees – representing growth of 19 percent year on year (30 June 2014: 2,885). These figures do not include employees of emagine. The increase is mainly attributable to new staff hired to handle the high level of capacity utilisation, especially at the nearshore development centres in Spain (plus 322 to 1,510) and Brazil (plus 128 to 351).

Additional key data

As of 30 June 2015, cash, cash equivalents and securities amounted to EUR 31.33 million and were thus EUR 6.92 million below the year-end figure for 2014 (31 December 2014: EUR 38.25 million). Equity as of 30 June 2015 amounted to EUR 113.13 million and was thus EUR 12.72 million up on year-end 2014 (31 December 2014: EUR 100.41 million). Total assets rose by EUR 25.46 million to EUR 327.11 million as of 30 June 2015 (31 December 2014: EUR 301.65 million). As a result of the increased balance sheet total and change in equity as of 30 June 2015, the equity ratio rose by two percentage points to 35 percent (31 December 2014: 33 percent).