GFT Technologies SE — Earnings Release 2012

May 10, 2012

News Details

Corporate | 10 May 2012 07:22

GFT Technologies AG: GFT on track in new financial year: investment in growth fields

GFT Technologies AG / Key word(s): Quarter Results

10.05.2012 / 07:22

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GFT on track in new financial year: investment in growth fields

• **Services division grows by 6 percent to EUR 30.49 million

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  - **Resourcing division revenue down on previous year at EUR 27.16 million due to focus on higher-margin technology projects

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  - **Total revenue of EUR 57.65 million confirms expectations

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  - **Pre-tax earnings (EBT) of EUR 1.27 million: investment in innovation topics in first quarter

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  - **Overwhelming international response to CODE_n innovation initiative

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  - Group forecast for 2012 confirmed: total revenue of EUR 250 million and EBT of EUR 12 million expected

Stuttgart, 10 May 2012 – The GFT Group has continued its development of the past financial year and got off to a solid start in its financial year 2012. The company's two business divisions reported operating growth in both revenue and earnings during the first three months. Due to a scheduled reduction in low-margin projects in the Resourcing division, consolidated revenue amounted to EUR 57.65 million (previous year: EUR 67.30 million). EBT reached EUR 1.27 million (previous year: EUR 2.02 million). This figure also includes significant investments of EUR 1.25 million for the international innovation initiative CODE_n. 'Our expectations for the first quarter were fulfilled. By focusing on digital business models and the flexible staffing of technology projects, we made a targeted investment in growth markets,' concludes GFT's CEO Ulrich Dietz. 'Consulting activities are likely to pick up over the remaining months of the year. We also expect a renewed increase in demand from financial service providers. Moreover, the growing need for highly skilled specialists will drive further growth in our Resourcing division.' GFT's Executive Board has confirmed its full-year forecast and continues to expect revenue of EUR 250 million and an EBT result of EUR 12 million for 2012 as a whole.

Revenue: segment revenue of Services division up 6 percent on previous year, segment revenue of Resourcing division down 29 percent

In the first three months of 2012, the GFT Group generated total revenue of EUR 57.65 million. This corresponds to a fall of 14 percent on the prior-year figure (EUR 67.30 million) and resulted from a reduction in revenue in the Resourcing segment. Following a decision to focus on higher-margin projects in the field of Resource Management, GFT significantly reduced revenue with clients in its Third Party Management business in financial year 2011. As a consequence, segment revenue fell by 29 percent to EUR 27.16 million in the first quarter of 2012 (previous year: EUR 38.41 million). Despite this burden, the division continued its successful development and was able to benefit from strong demand for freelance IT specialists and engineers, especially in the industrial sector. As a result, there was significant growth in the segment's Resource Management business during the first three months of 2012. Revenue generated with Third Party Management services fell to EUR 5.23 million (previous year: EUR 17.87 million), while revenue in the higher-margin Resource Management business grew to EUR 21.93 million (previous year: EUR 20.54 million). Due to the successful expansion of existing projects and acquisition of new clients, revenue in France leapt by 42 percent during the period under review. In Germany, the scheduled reduction in revenue from Third Party Management services led to a decline of 42 percent.

In the Services division, segment revenue increased to EUR 30.49 million (previous year: EUR 28.89 million). Although clients in the field of corporate and investment banking remained cautious in the early part of the year, the segment succeeded in raising the previous year's high revenue level by a further 6 percent. This growth was mainly due to stable demand for outsourcing services and IT solutions for the implementation of compliance requirements. There was also a positive effect from the acquisitions made in the USA and Switzerland in 2011.

In Switzerland, year-on-year growth amounted to 59 percent and in the USA to 61 percent. In the UK, the difficult market conditions in the finance sector observed in late 2011 continued to affect business in the first quarter of 2012. As a result, revenue fell slightly by 6 percent. The company's traditionally high level of revenue in Spain was raised by 2 percent thanks to stable long-term projects with European financial institutes.

EBT: year-on-year decline due to innovation investments; operating growth in both business divisions

Earnings before taxes in the first quarter reflected the positive development of both segments as well as the investments made in the field of innovation. At EUR 1.27 million for the period under review, pre-tax earnings lay below the prior-year figure (previous year: EUR 2.02 million). Investments in connection with the innovation and business platform CODE_n and its fair presence at the CeBIT 2012 represented a burden on EBT of EUR 1.25 million (previous year: EUR 0).

In the first three months of 2012, the Services division raised segment earnings by 26 percent to EUR 1.81 million. In addition to a slight increase in revenues, this improvement resulted from new client acquisitions and a high level of capacity utilisation in both nearshore and farshore operations in the UK, Spain, Brazil and the USA.

Segment earnings in the Resourcing division amounted to EUR 0.68 million in the first quarter and were thus above the prior-year figure (EUR 0.65 million), in spite of much lower segment revenue. In addition to successful measures aimed at raising efficiency, the main reason was a shift in revenue volumes in favour of the higher-margin Resource Management business.

**Other key figures: solid balance sheet structure; increased headcount

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As of 31 March 2012, the GFT Group posted quarterly net income of EUR 0.63 million, corresponding to a year-on-year decline of 53 percent (previous year: EUR 1.35 million). Earnings per share for the period under review amounted to EUR 0.02, compared to EUR 0.05 in the same period last year. As of 31 March 2012, cash, cash equivalents and securities totalled EUR 27.52 million (previous year: EUR 38.27 million). The number of employees increased to 1,346 (previous year: 1,307), mainly as a result of acquisitions in Switzerland and the USA in the previous financial year. The number of people employed in Germany as of 31 March 2012 amounted to 275 – 7 persons below the prior-year figure.

Outlook: continued focus on growth markets; full-year forecast confirmed

'2012 will be a year of rapid technological progress. The ongoing transformation of the real economy into digital business models, for example, offers a host of opportunities. We have aligned our innovation management efforts with these developments and are capable of swiftly developing attractive and future-compliant business concepts,' explains GFT's CEO Ulrich Dietz. The Group sees great potential in the field of mobile finance applications. In its Services division, GFT also expects growing demand for intelligent IT solutions for corporate and investment banking in the second half of the year. Demand for outsourcing services and IT solutions to implement compliance regulations will remain strong throughout the year. In its Resourcing division, the Group expects high growth rates in the field of Resource Management.

The Executive Board of GFT is therefore upholding its forecast for the financial year 2012 as a whole and expects revenue of EUR 250 million with pre-tax earnings of EUR 12 million. As CEO Ulrich Dietz states: 'We will retain our focus on the finance industry and selected growth markets while continuing to strengthen our expertise in future markets during 2012.'

Detailed financial figures are available in the Investor Relations section of the GFT website at www.gft.com/ir .

Key figures in accordance with IFRS*:

IFRS figures in EUR million	01.01.-31.03.2012	01.01.-31.03.2011
Revenue	57.65	67.30
EBITDA	1.51	2.18
EBIT	1.14	1.86
Earnings before taxes (EBT)	1.27	2.02
Net income as of 31.03.	0.63	1.35
Earnings per share acc. to IAS 33 in EUR	0.02	0.05
Equity ratio in percent	59	56
Employees, absolute figure as of 31.03.	1,346	1,307

*Deviations possible due to rounding differences

About GFT:

As a strategic IT partner based in Stuttgart, Germany, the GFT Group helps companies optimize their business processes by providing intelligent IT systems and highly skilled specialists. Under the motto 'inspiring IT', GFT converts cutting-edge technological developments into sustainable business models.

GFT is one of the world's leading IT service suppliers for the finance sector. It enables financial institutes to quickly and securely utilize modern technologies in order to enhance their long-term competitive standing. GFT combines established technological experience with comprehensive industry expertise, in order to develop, implement and maintain customized IT solutions. With its international network of experts, GFT offers companies in all sectors the opportunity to flexibly manage the staffing of their technology projects.

For 25 years, GFT has stood for technological expertise, innovative strength and outstanding quality. Founded in 1987 by its current CEO, Ulrich Dietz, GFT achieved revenues of EUR 272 million in 2011. The GFT Group is represented in seven countries by its 22 local facilities. A global team of over 1,300 employees and 1,300 external consultants implement complex IT projects across various countries. The GFT share is listed on the Frankfurt Stock Exchange (Prime Standard: WKN 580 060, GEX).

Andrea Wlcek

Director of Global Marketing, Media & Investor Relations

GFT Technologies AG

Filderhauptstr. 142

70599 Stuttgart

T +49 711 62042-440

F +49 711 62042-301

andrea.wlcek@gft.com

www.gft.com

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Language:	English
Company:	GFT Technologies AG
	Filderhauptstr. 142
	70599 Stuttgart
	Germany
Phone:	+49 (0)711/62042-0
Fax:	+49 (0)711/62042-301
E-mail:	Investor-Relations@gft.com
Internet:	www.gft.com
ISIN:	DE0005800601
WKN:	580060
Listed:	Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin, Düsseldorf, Hamburg, München, Stuttgart

End of News	DGAP News-Service

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