adesso SE

Earnings Release • May 13, 2015

News Details

Ireland | 13 May 2015 07:30

adesso AG significantly increases sales revenues organically by 11 % in the first quarter of 2015 / Earnings impacted by investments and the license business

adesso AG / Release of an announcement according to Article 37x of the WpHG [the German Securities Trading Act]

13.05.2015 07:30

Interim report according to Article 37x of the WpHG, transmitted by
DGAP - a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

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adesso AG significantly increases sales revenues organically by 11 % in the
first quarter of 2015 / Earnings impacted by investments and the license
business

* Sales increased to a new quarterly record of EUR 42.1 million (+11 %,
purely organic)

* EBITDA of EUR 1.5 million (previous year: EUR 2.7 million, impacted by
high one-time license sales).

* Earnings per share amounted to EUR 0.07 after three months (previous
year: EUR 0.20)

* Outlook for the year is confirmed

adesso AG again increased sales revenues in the first quarter of 2015
compared to the previous quarter and year on year. Growth was mainly driven
by the core business of consulting and tailor-made software development in
Germany and Switzerland. The operating result (EBITDA) amounted to EUR 1.5
million after EUR 2.7 million in the first quarter of the previous year as
a result of investments made by various business areas in the establishment
of additional locations, among other things, as well as reduced license
income. As in the previous year, the guidance for the full year expects
significantly higher contributions to earnings in the second half of 2015.

Business development

Benefitting from a positive market environment, adesso increased sales from
IT consulting, software development and licenses for its own products by 11
% year on year to EUR 42.1 million in the first quarter, setting a new
quarterly record. This sales growth was generated purely organically, in
particular as a result of the expansion of the core business of IT
consulting and tailor-made software development segments in Germany and
Switzerland. The average number of employees rose faster than sales
revenues year on year as a result of new hires. A higher proportion of
employees was engaged in the development of own products and solutions.
Capacity utilisation was at a good level overall due to a number of new
project orders and new customers. However, due in part to the establishment
of new locations as well as changes in the project portfolio, capacity
utilisation in the e-commerce and enterprise mobility segments fell below
the very high level reported in the previous year.

The Swiss, Austrian and Turkish subsidiaries further increased sales
revenues. A total of 30 employees in Turkey are now engaged in the
exploitation of the dynamic Turkish market. As expected, the insurance
sector solutions business only generated limited license sales in the first
quarter. The teams working on developing and launching software for health
insurers and life insurers were expanded at the same time. The hosting and
cloud solutions business recorded disproportionate development. License
income from the in-house content management system FirstSpirit was down
year on year as some unusually high agreements were signed in the first
quarter of 2014. An additional new customer was signed up in the USA.
However, this business area got off to a more cautious start.

The continued success in winning orders in the core business, particularly
in Germany and Switzerland, means that adesso continues to pursue a dynamic
recruitment policy. The number of employees increased by 2.4 % in the first
quarter to 1,410 employees.

Income development

While sales revenues increased by 11 % to EUR 42.1 million and gross profit
also rose by 11 % to EUR 37.7 million, personnel costs and other operating
expenses both climbed disproportionately by 15 % each. Hence, the operating
result (EBITDA) declined by 45 % to EUR 1.5 million in the first quarter of
2015 compared to the particularly successful first quarter of 2014. In
previous year's first quarter 83 % of the actual half-year result had
already been achieved. At 3.6 %, the EBITDA margin is down on the full-year
target of at least 6 % (Q1 2014: 7.2 % / full-year 2014: 6.2 %). This
development was mainly due to reduced license sales from Content Solutions,
investments in the establishment of locations and the development of own
products as well as lower e-commerce and enterprise mobility capacity
utilisation.

Personnel costs increased by 15 % year on year to EUR 28.6 million as a
result of the rise in the number of employees and the 1.4 % increase in
personnel costs per employee. Other operating expenses also increased by 15
%, to EUR 7.9 million. There were no one-off expenses aside from scheduled
investment in internationalisation and the development of own solutions and
products. Depreciation and amortisation amounted to EUR 605 thousand
(previous year: EUR 451 thousand), of which EUR 95 thousand pertained to
scheduled amortisation on purchase price components (previous year: EUR 131
thousand). Income from financing and investment activities of EUR 44
thousand (previous year: EUR -62 thousand) led to earnings before taxes of
EUR 0.9 million (previous year: EUR 2.2 million). At EUR 0.5 million,
recognised tax expenses were significantly higher than the maximum expected
value determined using applicable tax ratios. As in the previous year, this
was mainly due to the current losses not recognisable for tax purposes of
some group companies. Consolidated earnings for the first three months came
to EUR 0.4 million (previous year: EUR 1.3 million). After minority
interests, this equates to earnings per share of EUR 0.07 in the first
quarter (previous year: EUR 0.20).

Additional figures

On 31 March 2015, adesso held liquid assets of EUR 21.9 million (previous
year: EUR 18.5 million; 31 December 2014: EUR 23.7 million). The net cash
position came to EUR 16.7 million (previous year: EUR 13.7 million), with
repayments of loans totalling EUR 0.4 million in the first quarter.
February and March saw over EUR 6 million paid in variable salary
components for the previous year. Cash flow from operating activities
amounted to EUR -0.3 million compared to EUR -2.1 million in the previous
year. Receivables rose again in the first quarter, by EUR 3.3 million to
EUR 33.2 million. The equity ratio came to 45 %. These figures again
provide adesso with a solid balance sheet structure and financial position.

Outlook

Both order intake and the development of the number of sales processes are
at a good level at all adesso subsidiaries. On account of ongoing
investment activities, e-commerce and enterprise mobility capacity
utilisation rose again following a weaker first quarter. While the Content
Solutions product business is currently going through a weaker phase, a
number of very promising sales approaches are being pursued for the
in-house life insurance system PSLife. The increase in shares in PSLife
GmbH from 50 % to 100 % means that the corresponding product business will
fully impact sales and earnings in the future. Deployment of PSLife
software will now be done by PSLife Consulting GmbH, which was founded in
cooperation with three partners in the first quarter (proportion allocated
to adesso AG: 70 %); this company has since become operational and reports
high levels of capacity utilisation. It is anticipated that the full-year
guidance for 2015 - which predicts sales revenues of EUR 166 million to EUR
171 million, EBITDA of EUR 9.8 million to EUR 10.5 million and an EBITDA
margin of at least 6 % - will be achieved. The first half of the year is
expected to be weaker due to the fact that the number of working days is
considerably lower and license income is generally weaker.

These and additional indicators for Q1 2015 are available in table form
under Investor Relations on the adesso website www.adesso-group.de/en/.

The Executive Board

Contact person for Investor Relations:
adesso AG
Christoph Junge
Member of the Executive Board
Stockholmer Allee 20
44269 Dortmund
Germany
T: +49 231 7000-7000
F: +49 231 7000-1000
ir@adesso.de
www.adesso-group.de/en/ | www.adesso.de/en/

13.05.2015 The DGAP Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de

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Language: English
Company: adesso AG
Stockholmer Allee 20
44269 Dortmund
Germany
Internet: www.adesso-group.de

End of Announcement DGAP News-Service

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