adesso SE

Earnings Release • Nov 13, 2014

News Details

Ireland | 13 November 2014 07:30

adesso AG: Successful third quarter 2014 sets new records in sales and operating results

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

13.11.2014 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: Successful third quarter 2014 sets new records in sales and
operating results

• Q3 sets new sales and EBITDA records of EUR 40.4 million and EUR 3.7
  million; EBITDA margin of 9.1 %

• Sales up 15 % to EUR 115.0 million in the first nine months, all of
  which organic

• EBITDA 9M up 13 % to EUR 7.0 million

• Earnings per share amounted to EUR 0.36 after nine months (previous
  year: EUR 0.49)

• Guidance for full year is confirmed

adesso AG considerably improved its sales and operating results in the
third quarter of 2014 compared to the previous two quarters and year on
year, setting new records. In the first nine months, the dynamic
development of adesso's German business in particular boosted sales for the
first nine months by 15 % to EUR 115.0 million due to the organic expansion
of business activities. In line with sales growth, the operating result
rose by 13 % in the first nine months to EUR 7.0 million. Based on the
positive third quarter of 2014 as well as consistently positive capacity
utilisation and the expected licence sales in the fourth quarter, its
guidance for the full year is confirmed.

Business development in the third quarter

In the third quarter, adesso increased sales from IT consulting, software
development and licences for its own products by 10 % compared with the
previous quarter and by 15 % year on year to EUR 40.4 million, setting a
new quarterly record. The number of employees in the adesso Group rose by 4
% in the third quarter to 1,340. The higher number of working days as well
as organic headcount growth resulted in rising sales revenues in the IT
services segment in Germany as well as in Austria and Switzerland. IT
Solutions licence sales were also up EUR 0.4 million on the previous
quarter. The largest licence agreement for the year to date for in-house
high-end content management system FirstSpirit was signed in September with
another DAX group. No additional licence agreements were signed in the USA,
although service sales rose. The number of employees and sales revenues in
Turkey were increased in the third quarter. The positive development
applies to all core industries and business areas.

Earnings development in the third quarter

Stable capacity utilisation and the higher number of working days (Q3: 66;
Q2: 59), greater licence sales and profitable fixed-price projects led to a
leap in the operating result in the third quarter compared to the previous
quarter (EBITDA Q3 2014: EUR 3.7 million; Q2 2014: EUR 0.5 million). The
EBITDA margin came in at 9.1 %. Investment in the internationalisation of
products in the USA, the UK and Switzerland, the establishing of the
Turkish subsidiary, and business development in Austria exerted downward
pressure on earnings. The earnings situation continued to improve in
Austria.

Depreciation and amortisation amounted to EUR 486 thousand (previous year:
EUR 524 thousand), of which EUR 95 thousand pertained to scheduled
amortisation on purchase price components (previous year: EUR 174
thousand). Income from financing and investment activities of EUR 16
thousand (previous year: EUR -61 thousand) led to earnings before taxes of
EUR 3.2 million in the third quarter (previous year: EUR 2.7 million). Due
to the fact that not all deferred taxes on the negative earnings of some
group companies were capitalised, consolidated earnings amounted to EUR 1.6
million (previous year: EUR 1.8 million) despite the increase in earnings
before taxes. Earnings per share amounted to EUR 0.24 in the third quarter.

The first nine months of the year

Sales increased by 15 % year on year to EUR 115.0 million in the first nine
months of 2014. The sales growth was generated entirely organically by
acquiring new customers, increasing sales to existing customers and
developing new business models and opportunities. Mobile Solutions again
performed very well. At the same time, the average number of employees went
up by 139, or 12 %, due to new hires. adesso Group employed 1,340 people as
of the reporting date. Personnel costs amounted to EUR 74.1 million
compared to EUR 65.6 million in the previous year (+ 13 %). The gross
income margin declined by 2 percentage points to 88 % due to a rise in the
use of external employees in adesso projects. Other operating expenses
increased by 8 % to EUR 21.8 million. Operating earnings (EBITDA) came to
EUR 7.0 million in the first nine months of 2014 (previous year: EUR 6.2
million). This figure includes EUR 1.3 million in charges as a result of
internationalisation, especially in the USA, the UK and Turkey.

Earnings before taxes came to EUR 5.3 million (previous year: EUR 4.5
million) and consolidated earnings, dampened by tax effects, totalled EUR
2.6 million (previous year: EUR 3.0 million). As a result of this and an
increase in minority interests in earnings, earnings per share amounted to
EUR 0.36 (previous year: EUR 0.49).

Additional figures

On 30 September 2014, adesso held liquid assets of EUR 16.3 million
(previous year: EUR 14.9 million; 31 December 2013: EUR 21.6 million).
Liquid assets rose by EUR 4.0 million in the third quarter of 2014. The net
cash position increased by EUR 1.0 million year on year to EUR 10.2
million. A total of EUR 2.2 million in liabilities was taken on in the form
of long-term loans over terms of five and seven years. The funds were used
for the investment in new offices and were taken out at favourable interest
rate terms, at times less than 2 % p.a. The equity ratio came to 47 %.
These figures provide adesso with a solid balance sheet structure and
financial position. Liquid assets created by positive cash flow from
operating activities are expected to rise in the fourth quarter. However,
this increase will be lower due to expenditure relating to the office
equipment in the new Group headquarters in Dortmund, which the Group moved
into at the end of October.

Outlook

It is anticipated that the strong capacity utilisation seen in the third
quarter will continue into the fourth quarter. Additional new customers are
expected to be acquired in the USA; in other respects, the sales pipeline
in the area of licences is weaker. As the third quarter was a strong one,
adesso is expected to achieve its guidance for the full year.

These and additional figures for the first nine months of 2014 and the
third quarter of 2014 are available in table form on the adesso website
under Investor Relations: http://www.adesso-group.de/en/investorrelations/.

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/

13.11.2014 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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