Adesso : reports high growth in sales in the first half of 2017 / Operating result lower than previous year after strong expansion in headcount

adesso reports high growth in sales in the first half of 2017 / Operating result lower than previous year after strong expansion in headcount

- Sales increased by 26% to EUR 149.6 million

- EBITDA amounts to EUR 7.6 million (- 14%)

By releasing its half-year report, adesso AG confirms the preliminary figures published before. The adesso Group increased sales in the first half of 2017 by 26% compared to the previous year, marking a new half-year high of EUR 149.6 million. 19 percentage points of sales growth were achieved organically by expanding existing business activities successfully. However, investments in the strong growth have weighed on earnings and, together with a lower share of customer-billable hours, reduced earnings before interest, taxes, depreciation and amortization (EBITDA) by 14% compared to the previous year. In the second half of the year, the operating result is expected to increase.

The modernisation of information technology is of great importance for companies, authorities and organisations. adesso Group has once again gained market share in this positive market environment. With 19% organic growth adesso has proven, that the large number of the company's own growth initiatives can be transformed into increasing order intake. Sales in all reported regions (Germany, Austria, Switzerland and other) has been increased, with the highest growth in Germany. In Turkey, business is performing well with two major orders received from Turkish financial service providers and as well rising sales from projects in Germany and Switzerland. This leads to a positive half-year result of the Turkish subsidiary.

In view of the core industries served, almost all customer segments could be expanded. Business with banks has been increased the strongest. In the product segment, a first new customer was acquired for in|sure General, the Groups solution for the property insurance business.

Regarding the sales successes and the emerging opportunities, the efforts to attract new employees and to expand the regional coverage with new and enlarged existing business locations have been significantly increased in Germany 2017. While this leads into potential for increased earnings in the coming years, the costs as well as the times invested by involved employees are weighing on the current result. The share of customer-billable hours in Germany was below the previous year's figures.

As a result, EBITDA was down by 14% year-on-year with EUR 7.6 million. The number of employees rose by 24% to 2,448, the personnel expenses also increased by 24% and the other operating expenses by 33%. Consolidated net income amounted to EUR 2.2 million (previous year: EUR 4.0 million) and earnings per share came to EUR 0.36 (previous year: EUR 0.65).

At the balance sheet date, adesso had cash and cash equivalents amounting to EUR 28.1 million (previous year: EUR 15.0 million, as of 31.12.2016: EUR 43.1 million). The net cash position after deducting financial liabilities was EUR -17.7 million (previous year: EUR -28.8 million). The decrease in the first half of the year corresponds to the development of liquid assets in the previous periods and is mainly due to the scheduled payment of variable salary components for the previous year, the payment of dividends and investments in equipment for new or extended locations. In addition, EUR 5.5 million was paid as a purchase price for the acquisition of UnitCon GmbH.

In the past months, incoming orders have been generated to an extent that is likely to continue the dynamic development of sales, which is expected to reach the upper end of the sales forecast of EUR 300 million. Due to the weaker development of operating earnings in the first half of 2017, the full-year forecast for EBITDA was adjusted to EUR 20 to 24 million. The planned, significant increase in the operating result in the second half of the year is based in particular on an increase in the share of customer-billable hours in Germany and license fees from the in|sure product family for insurance companies, for which a number of promising sales processes exist.

The full half-year report and a tabular key figure overview are available in the Investor Relations section of the adesso website at http://www.adesso-group.de/en/investorrelations/.

adesso Group
With over 2,400 employees and annual sales of EUR 260.4 million in 2016, adesso Group is one of the largest German IT service providers and has outstanding opportunities for growth. At its own locations in Germany, Austria, Switzerland, Turkey, USA and the UK as well as at numerous customer sites, adesso offers consulting and software development services for optimising core business processes. adesso also offers ready-to-use software products for standard applications. The development of an own, industry-specific product-portfolio opens up additional growth and earnings opportunities and is another key element of the adesso strategy. 2016, adesso was awarded as the best employer in the german IT-sector.