Quarterly Report • May 30, 2023
Quarterly Report
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The Retail Innovators
| 31.03.2023 | 31.03.2022 | 31.12.2022 | 2023/2022 changes |
||
|---|---|---|---|---|---|
| in % | |||||
| Turnover | EUR K | 38,178 | 39,815 | 152,054 | (4.1) |
| Operating income | EUR K | 38,178 | 39,815 | 152,054 | (4.1) |
| Overall revenue | EUR K | 39,347 | 41,112 | 158,220 | (4.3) |
| EBIT | EUR K | (15,659) | 8,130 | 16,779 | <(250) |
| EBIT margin (on turnover) | % | (41.0) | 20.4 | 11.0 | – |
| EBITDA | EUR K | (13,784) | 9,857 | 24,764 | (239.8) |
| EBITDA margin (on turnover) | % | (36.1) | 24.8 | 16.3 | – |
| EBT | EUR K | (15,603) | 7,869 | 16,911 | <(250) |
| Annual net profit/loss | EUR K | (14,667) | 7,645 | 11,359 | <(250) |
| Earnings per share (weighted) | EUR K | (6.48) | 3.39 | 4.99 | <(250) |
| Earnings per share (diluted) | EUR K | (6.48) | 3.22 | 4.84 | <(250) |
| Equity ratio | % | 47.8 | 58.2 | 57.8 | – |
| Employees | 1,234 | 1,090 | 1168 | 13.2 |
Operational growth largely offsets the loss of classical income from licences
The first quarter of 2023 was shaped by two substantial factors. On the one hand, we were able to continue our growth pattern according to plan even without strong income from licences, while on the other hand the result was significantly impacted by costs relating to Fujitsu's offer to the Company shareholders. This meant that, with a revenue from turnover of EUR 38.18 million, we were not quite able to reach the previous year's figure of EUR 39.82 million; however, 2022 was marked by the conclusion of a major classical licence agreement, which made up more than 15 percent of the revenue for the quarter alone. A comparison of both quarters, leaving out the licensing business from the previous year, clearly shows that we have achieved a growth of 15.5 percent in the area of recurring and repeatable turnover, placing us within the corridor of our growth forecast.
On the earnings side, the result was strongly influenced by the costs from the Fujitsu transaction. Overall, provisions of EUR 16.70 million were set aside for consultancy services relating to the transaction and other associated costs, which were reflected accordingly in the result. Due to these costs and the lack of licence income compared to the previous year, the EBITDA lay at EUR (13.78) million in the first quarter, significantly lower than the previous year's figure of EUR 9.86 million. The operating result (EBIT) thus amounted to EUR (15.66) million. (Q1 2022: EUR 8.13 million). The EBIT margin on turnover thus lay at (41.0) percent. Without the one-off impact of the Fujitsu transaction, the EBIT margin would have been 2.7 percent.
For the rest of the year, we hope to be able to compensate even better for the transaction-related impact as we still have a very well-filled sales pipeline with interesting opportunities, which affords us a great deal of confidence with regard to the further sales of our range of solutions.
To further support our globally-aligned sales and delivery strategy, we have opened new branches and offices in Poland and Romania over the last few months and expect this to improve our chances of attracting qualified specialists, especially in the area of consulting and development. The development of our Singapore subsidiary, which already has a significant sales pipeline, was encouraging. We expect the rapid development of the strategic partnership with Fujitsu to provide further impetus in this area in the future.
In the area of corporate development, the first quarter was largely shaped by the voluntary public offer made by Fujitsu ND Solutions AG, a fully-owned subsidiary of Fujitsu Ltd. On 18 May 2023, the offeror announced that, after the extended offer phase, it holds 68.03 percent of GK Software shares. In addition, on 17 May 2023, it published the offer document for a public delisting offer, under which it offered all shareholders EUR 190.00 per share in cash. This offer is valid until 14 June 2023. In connection with this, GK Software SE entered into a delisting agreement with Fujitsu Ltd. and its fully-owned subsidiary Fujitsu ND Solutions AG, on the basis of which the Company is going to submit an application for the revocation of the listing of the GK shares on the regulated market. At the same time, it was agreed to take economically reasonable measures, which are necessary and possible for the Company, to terminate the inclusion of the GK shares in trading on the open market.
We included a medium-term forecast in the Annual Report for 2023, according to which we expect turnover to be within a corridor of EUR 193 to 205 million by the end of 2025, with a target EBIT margin of 15 percent at the end of this period. In this context, we are assuming that the EBIT margin will be slightly above 15 per cent by 2025. Based on the assumptions and influencing factors described in the last Annual Report, we expect the GK Software Group to achieve in the current fiscal year a further increase in revenue from turnover in the lower double-digit percentage range and a further improvement in EBIT towards achieving the medium-term target for 2023 (with a EBIT target margin on turnover of 15 percent). We are referring to the operational results only in this context. The corporate transaction burdens GK Software with substantial, one-off costs, which will
be significantly visible in the 2023 annual result for both the Group and the Company.
As in the previous year, the prospects for the retail industry in 2023 are to be evaluated differently according to sector. The German Trade Association (Handelsverband Deutschland, HDE) anticipates a nominal increase in turnover of around 2 percent in the retail sector.1 This year again, supply difficulties, which have been exacerbated by the war in Ukraine, a lack of skilled employees and high raw material prices will have an impact on retailers' business.2 High inflation is affecting consumer sentiment among the general population. Nevertheless, according to the Chamber of Industry and Commerce, food retailers, clothing retailers, DIY stores, and retailers of sports goods and stationery, in particular, have a positive outlook for 2023.3 In addition, the HDE highlights the opportunities for the retail sector in the area of digitalisation. Online retail is still considered a growth driver in 2023.4 The HDE expects a nominal increase in online retail sales for the whole of 2023 of around 8 percent compared with the previous year.
The HDE also anticipates that there will be further need for investment by the retail sector this year.5 Generally speaking, we still believe that new possibilities will open up for GK Software as digitalisation and omni-channel retailing have experienced a renewed surge.
At the end of 2022, GK Software had 1,168 employees on its payroll and currently has 1,234 employees (as of 31 March 2023). As such, the overall figure for the Group has increased by 13.2 percent compared to the previous year's figure (Q1 2022 = 1,090)
Of the main types of revenue, software-related sales were (23.1) percent lower in the first quarter than in the same period of the previous year. This was due to the sharp drop in licence revenue as there was no outstanding individual financial statement comparable with the previous year. In contrast, all other software-related types of revenue (subscriptions, platform extensions and smart extensions) showed a significant increase. Maintenance revenues rose by 14.8 percent and sales from retail consulting increased by 14.0 percent. Other revenues lay at 26.1 percent above the previous year.
Differentiated between the two geographical segments, Europe recorded a (9.8) percent drop. Yet, with the exception of the licence platform, nearly all types of revenue experienced double-digit growth here too. The development in the Americas, where turnover increased by 24.9 percent, was again encouraging.
Compared to the year end for 2022, the Group's liquid funds increased by EUR 6.09 million and now amount to EUR 43.74 million. This does not include additional short-term securities in the amount of EUR 24.86 million. The total amount of current and non-current bank liabilities decreased slightly by EUR 0.19 million.
There are no changes to the opportunities and risks for the company as stated in the last Annual Report.
The trend for the 2023 fiscal year so far shows that, in terms of turnover and operating results, the Company is on track to achieve its forecast for 2023, which predicted a slight increase in turnover and a further increase in profitability towards the EBIT target margin
1 https://einzelhandel.de/presse/aktuellemeldungen/14050-hde-prognose-fuer-2023 preisbereinigt-gehen-die-umsaetze-im-einzelhandel-um-drei-prozent-zurueck
2 https://www.tagesschau.de/wirtschaft/konjunktur/einzelhandel-umsatzeinbruch-konsum-101.html
3 https://www.ihk.de/blueprint/servlet/resource/blob/5029530/1a92a405c11ecd0fbb5ca5b72b3970bc/flyer-wirtschaftslagebericht-der-ihk-heilbronn-franken-1-quartal-2023-data.pdf
4 https://einzelhandel.de/presse/aktuellemeldungen/14050-hde-prognose-fuer-2023 preisbereinigt-gehen-die-umsaetze-im-einzelhandel-um-drei-prozent-zurueck
5 https://einzelhandel.de/presse/aktuellemeldungen/14050-hde-prognose-fuer-2023 preisbereinigt-gehen-die-umsaetze-im-einzelhandel-um-drei-prozent-zurueck
of 15 percent (based on turnover) for the 2023 fiscal year. This forecast therefore remains unchanged.
Schöneck, 30 May 2023
The Management Board
Rainer Gläss André Hergert
Chief Executive Officer Chief Financial Officer
as of 31 March 2023
| EUR K | 31.3.2023 | 31.12.2022 |
|---|---|---|
| Tangible assets | 23,688 | 21,302 |
| Rights-of-use assets within the meaning of IFRS16 | 9,016 | 8,844 |
| Intangible assets | 22,245 | 22,829 |
| Financial assets | 17 | 6 |
| Deferred tax assets | 286 | 200 |
| Total non-current assets | 55,252 | 53,182 |
| Real estate held for sale | 2,550 | 2,550 |
| Goods | 101 | 81 |
| Down payments made | 21 | 22 |
| Receivables from deliveries and services | 21,159 | 24,571 |
| Contract generated current assets | 12,031 | 12,837 |
| Income-tax claims | 989 | 998 |
| Receivables from companies with which a shareholding relationship exists | 60 | 61 |
| Other receivable and assets | 12,477 | 9,778 |
| Securities | 24,862 | 24,916 |
| Cash and cash equivalents | 43,743 | 37,654 |
| Total current assets | 117,995 | 113,468 |
| Balance sheet total | 173,247 | 166,649 |
for the period from 1 January to 31 March 2023
| EUR K | 3M 2023 | 3M 2022 | FY 2022 |
|---|---|---|---|
| Revenue from turnover | 38,178 | 39,815 | 152,054 |
| Other earnings | 1,169 | 1,297 | 6,166 |
| of which exchange-rate earnings | 426 | 873 | 3,403 |
| Revenue from turnover and other earnings | 39,347 | 41,112 | 158,220 |
| Materials expenditure | (3,973) | (3,907) | (13,646) |
| Personnel expenditure | (32,226) | (21,841) | (89,562) |
| Depreciation and amortisation on non-financial assets | (1,875) | (1,727) | (7,985) |
| Losses from derecognition of financial assets | — | — | (89) |
| Other expenditure | (16,932) | (5,508) | (30,159) |
| of which exchange-rate expenditure | (288) | (270) | (2,304) |
| Total operating expenses | (55,006) | (32,982) | (141,441) |
| Operating results | (15,659) | 8,130 | 16,779 |
| Financial earnings | 262 | 123 | 429 |
| Negative interest on bank balances/deposit rates | — | (74) | (129) |
| Financial expenditure | (206) | (310) | (168) |
| Financial result | 56 | (262) | 132 |
| Earnings before income taxes | (15,603) | 7,869 | 16,911 |
| Income taxes | 936 | (224) | (5,553) |
| Consolidated surplus/shortfall for the period | (14,667) | 7,645 | 11,359 |
| of which attributable to non-controlling shares | 30 | (4) | 100 |
| EUR K | 3M 2023 | 3M 2022 | FY 2022 |
|---|---|---|---|
| Items that will be reclassified in the consolidated profit and loss statement in future under certain conditions |
|||
| Differences in exchange rates from recalculating foreign business operations |
(290) | 726 | (89) |
| Deferred taxes from differences in exchange rates when recalculating foreign business operations |
92 | (152) | (77) |
| Items that will not be reclassified in the consolidated profit and loss statement in future |
|||
| Actuarial profits/losses from defined-benefit pension plans | — | — | 1,541 |
| Deferred taxes on actuarial profits/losses from defined-benefit pension plans |
— | — | (452) |
| Overall result | (14,864) | 8,219 | 12,281 |
| of which attributable to non-controlling shares | 30 | (4) | 100 |
| of which attributable to GK Software SE stockholders | (14,894) | 8,223 | 12,182 |
| Earnings per share (EUR/share) from consolidated surplus for the period | |||
| – undiluted | (6.48) | 3.39 | 4.99 |
| Earnings per share (EUR/share) from consolidated surplus for the period – diluted |
(6.48) | 3.22 | 4.84 |
for the period from 1 January to 31 March 2023
| EUR K | 3M 2023 | 3M 2022 |
|---|---|---|
| Cash flow from operating activities | ||
| Surplus/shortfall for the period | (14,667) | 7,645 |
| Income taxes affecting results | (936) | 224 |
| Interest expenditure affecting results | 206 | 310 |
| Interest income affecting results | (262) | (123) |
| EBIT | (15,659) | 8,056 |
| Depreciation and amortisation | 1,875 | 1,727 |
| EBITDA | (13,784) | 9,783 |
| Share-option scheme (non-cash expenditure) | 133 | 91 |
| Profit/loss from the sale or disposal of tangible assets | 0 | (7) |
| Reversals of deferred public-sector subsidies | (20) | 40 |
| Write-downs recognised for receivables (including losses from receivables) | (78) | 10 |
| Reversals of impairment losses recognized for receivables | (24) | (209) |
| Other non-cash earnings and expenditure | 244 | 574 |
| Cash flow from operating business before the change in working capital | (13,529) | 10,280 |
| Changes in net current assets | ||
| Changes in trade receivables and other receivables | 1,842 | (2,242) |
| Changes in inventories | (19) | (216) |
| Changes in trade liabilities and other liabilities | 17,489 | 3,669 |
| Changes in contractual liabilities | 4,309 | 4,259 |
| Changes in provisions | (636) | 116 |
| Cash flow from ongoing business activities before taxes | 9,456 | 15,867 |
| Income taxes paid | (198) | (120) |
| Cash flow from ongoing business activities | 9,258 | 15,746 |
| 3M 2023 | 3M 2022 |
|---|---|
| 9,258 | 15,746 |
| (3,090) | (795) |
| 0 | 7 |
| 53 | — |
| 41 | 28 |
| 10 | — |
| (2,986) | (760) |
| 1,097 | — |
| (186) | (109) |
| (106) | (2,075) |
| (900) | (610) |
| (96) | (2,794) |
| 6,177 | 12,193 |
| 37,568 | 46,884 |
| 43,664 | 59,153 |
| (80) | 76 |
| 3M 2023 | 3M 2022 |
| 43,743 | 59,137 |
| (79) | 16 |
| 43,664 | 59,153 |
28.06.2023 Annual General Meeting 2023
29 August 2023 Interim Report as of 30 June 2023
27 – 29 November 2023 Equity Forum in Frankfurt/M.
28 November 2023 Quarterly Statement as of 30 September 2023
29 April 2024 Annual Report as of 31 December 2023
29 May 2024 Quarterly Statement as of 31 March 2024
20.06.2024 Annual General Meeting 2024
29 August 2024 Interim Report as of 30 June 2024
November 2024 Equity Forum in Frankfurt/M.
28 November 2024 Quarterly Statement as of 30 September 2024
GK Software SE Waldstr. 7 08621 Schöneck Germany T: +49 37464 84-0 F: +49 37464 84-15
www.gk-software.com [email protected]
Chair of the Supervisory Board Nicholas Fraser
Management Board Dipl.-Ing. Rainer Gläß, CEO Dipl.-Kfm. André Hergert, CFO
Chemnitz District Court, Commercial Register No. HRB 31501
VAT ID. DE 141 093 347
Photos Image archive GK Software SE
GK Software SE Dr. René Schiller Friedrichstr. 204 10117 Berlin
T: +49 37464 84-264 F: +49 37464 84-15
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