adesso SE

Earnings Release • May 15, 2014

News Details

Ireland | 15 May 2014 08:20

adesso AG: Successful first quarter of 2014 with sales, earnings and margin growth

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

15.05.2014 08:20

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

---

adesso AG: Successful first quarter of 2014 with sales, earnings and margin
growth

• New record set with sales up 18 % to EUR 37.8 million, growth purely
  organic

• EBITDA up 86 % to EUR 2.7 million

• Earnings per share at EUR 0.20 after three months (previous year: EUR
  0.13, full-year 2013: EUR 0.48)

Dortmund, 15 May 2014 - adesso AG considerably increased sales, earnings
and margin in the first quarter of 2014 compared to the previous quarter
and year on year. Sales revenues were increased by 18 % to EUR 37.8 million
in the first three months of the year, in particular as a result of the
continued dynamic and organic growth of core business activities in
Germany. Improved earnings contributions from the project business as well
as higher license sales revenues with own products led to a
disproportionately high rise in the operating result of 86 % to EUR 2.7
million.

Business development

Benefitting from a positive market environment, adesso increased sales from
IT consulting, software development and licenses for its own products by 18
% year on year to EUR 37.8 million in the first quarter, setting a new
quarterly record. This sales growth was generated purely organically as a
result of the expansion of the enterprise mobility, IT consulting and
software development segments in Germany. Although the personnel market
remains challenging, the average number of employees rose by 11 % year on
year to 1,233 as a result of new hires. The strategy of
internationalisation beyond German-speaking regions is also close to plan.
In Turkey, where adesso is currently founding another subsidiary, the sales
team was expanded and a number of smaller projects were acquired. In March,
the first major license sale was wrapped up in the product business in
adesso's new target market, the USA; it concerned the sale of a FirstSpirit
system for high-end content management to a renowned education company
together with a three-year maintenance agreement. In the Netherlands, the
first major license order was secured in the first quarter. Product
business in Great Britain fell short of expectations.

After capacity utilisation in Germany started to decline in the second half
of 2013 due to the increase in the number of employees, adesso was more
restrictive in creating new jobs in the first quarter, while increasing the
number of employees in sales at the same time. In total, the number of
employees increased by 1 % in the first quarter to 1,233 employees.

Income development

A new sales revenues record, coupled with a rise in gross income per
employee, meant that the operating result (EBITDA) climbed
disproportionately by 86 % to EUR 2.7 million in the first quarter of 2014.
Positive license sales revenues with own products were a main contributing
factor here, as they have a direct influence on income. At 7.2 %, the
EBITDA margin is up on the full-year target of at least 6 % (Q1 2013: 4.6
%, full-year 2013: 5.7 %).

Personnel costs increased as a result of the rise in the number of
employees and the increase in personnel costs per employee by 16 % year on
year to EUR 24.8 million. Other operating expenses increased by just 5 % to
EUR 6.9 million, positively impacting the margin as a result. 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 451 thousand (previous year: EUR 556
thousand), of which EUR 131 thousand pertained to scheduled amortisation on
purchase price components (previous year: EUR 240 thousand. Income from
financing and investment activities of EUR -62 thousand (previous year: EUR
-61 thousand) led to earnings before taxes of EUR 2.2 million (previous
year: EUR 0.9 million). At EUR 1.0 million, recognised tax expenses were
significantly higher than the maximum expected value determined using
applicable tax ratios. This is due to loss contributions from several
companies posted in earnings before taxes for which no deferred tax assets
on usable tax loss carry-forwards had been established. Consolidated
earnings came to EUR 1.3 million, up from EUR 0.7 million in the previous
year. After minority interests of EUR 0.1 million, this equates to earnings
per share of EUR 0.20 in the first quarter (previous year: EUR 0.13).

Additional figures

On 31 March 2014, adesso held liquid assets of EUR 18.5 million (previous
year: EUR 20.5 million; 31 December 2013: EUR 21.6 million). The net cash
position came to EUR 13.7 million, with repayments of loans taken out for
the acquisition of subsidiaries totalling EUR 0.5 million in the first
quarter. As in previous years, February and March saw over EUR 5 million
paid in variable salary components for the previous year. Receivables rose
in the first quarter by EUR 6.8 million to EUR 31.6 million, and the equity
ratio came to 47 %. These figures 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 high level. With the expansion of the sales team, the foundations have
been laid for further growth and stable capacity utilisation. Additional
license sales are expected in the USA. Promising initiatives in the
development of new solutions and business models will be pursued further.
In view of the sales and earnings figures recorded in the first quarter of
the year, it is anticipated that the full-year guidance for 2014 will be
achieved. The second quarter is expected to be weaker than the first
quarter due to the fact that the number of working days in this quarter is
considerably lower.

These and additional indicators for Q1 2014 are available in table form
under Investor Relations on the adesso website:
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 24
44269 Dortmund
Germany
T: +49 231 930-9330
F: +49 231 930-9331
ir@adesso.de
www.adesso-group.de/en/ | www.adesso.de/en/

15.05.2014 DGAP's Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de

---

Language: English
Company: adesso AG
Stockholmer Allee 24
44269 Dortmund
Germany
Internet: www.adesso-group.de

End of Announcement DGAP News-Service

---