GFT Group continues its growth in first half of 2014

GFT Group continues its growth in first half of 2014

  • Consolidated revenue up 37 percent to EUR 156.74 million
  • Pre-tax earnings more than doubled to EUR 11.13 million
  • Business with investment banks in UK and USA key growth driver

Stuttgart, 7 August 2014 – The GFT Group continued its growth course in the first half of 2014 with an increase in revenue of 37 percent to EUR 156.74 million (prev. year: EUR 114.19 million). Adjusted for the revenue contribution of Sempla acquired in mid-2013 (now GFT Italia) amounting to EUR 22.53 million, the GFT Group achieved organic growth of 18 percent. The GFT Group enjoyed particularly strong revenue growth of 61 percent to EUR 41.70 million in the UK (prev. year: EUR 25.94 million) and the USA, where revenue rose by 96 percent to EUR 8.42 million (prev. year: EUR 4.29 million). Earnings before interest, taxes, depreciation and amortisation (EBITDA) improved to EUR 13.61 million (prev. year: EUR 6.09 million) in the first six months. Pre-tax earnings were also more than doubled to EUR 11.13 million (prev. year: EUR 5.50 million). With earnings after tax of EUR 7.32 million (prev. year: EUR 4.36 million), earnings per share rose to EUR 0.28 (prev. year: EUR 0.17).

The UK-based international Business and IT consultancy Rule Financial Ltd. was acquired on 26 June 2014. Due to the transaction date shortly before month-closing, the company is not yet included in the consolidated income statement – it is included, however, in the balance sheet and headcount figures.

Dedicated to delivering IT services for the finance sector, the GFT division raised revenues by 65 percent to EUR 114.07 million in the first half of 2014 (prev. year: EUR 69.14 million). Adjusted for the revenues of GFT Italia included in this division, GFT posted revenue growth of 32 percent. This encouraging organic growth resulted mainly from the ongoing progress in business with investment banks, as well as from projects for the implementation of banking compliance regulations. The GFT division’s share of consolidated revenue rose to 73 percent (prev. year: 61 percent).

In the first six months of 2014, the pre-tax earnings contribution (EBT) of the GFT segment rose by 72 percent to EUR 11.78 million (prev. year: EUR 6.86 million), corresponding to an increase in the operating margin to 10.3 percent (prev. year: 9.9 percent). Compared to revenue, this disproportionately strong rise in earnings resulted mainly from increased capacity utilisation and economies of scale.

With its services for the staffing of technology projects, the emagine division achieved revenue of EUR 42.66 million – 5 percent down on the previous year (EUR 45.04 million). The division’s share of total Group revenue fell to 27 percent (prev. year: 39 percent). Despite lower revenues, a greatly improved operating margin of 2.1 percent (prev. year: 0.1 percent) helped raise earnings to EUR 0.89 million (prev. year: EUR 0.06 million).

“The strong progress of our IT services for investment banks was a key growth driver in the first six months,” says Ulrich Dietz, CEO of GFT Technologies AG. “We expect that growing compliance requirements will continue to necessitate heavy investments in IT. The acquisition of Rule Financial has greatly strengthened our position in this field – both from the client and employee perspective. We are now represented in London by around 230 highly skilled Business and IT consultants and have more than tripled headcount in the USA to over 70. The acquisition of Rule has also provided us with two cost-efficient nearshore development centres in Poland – making us well equipped for further growth.”

Headcount grows to around 3,000

As of 30 June 2014, the number of full-time employees of the GFT Group almost doubled to 2,983 (including 662 FTE Rule Financial) compared with the previous year (30 June 2013: 1,503). This was due to the acquisition of Sempla in mid-2013 and of Rule Financial, as well as to numerous hirings at the development centres in Spain and Brazil due to high capacity utilisation.

Additional key data

Rule Financial was included in the consolidated financial statements of the GFT Group for the first time on 30 June 2014. The figures are preliminary and only contain the balance sheet figures. Due to the Rule acquisition, cash and cash equivalents fell to EUR 25.52 million as of 30 June 2014 (31 December 2013: EUR 48.63 million). Equity amounted to EUR 87.98 million on 30 June 2014 and was thus EUR 0.83 million above the year-end figure of 31 December 2013 (EUR 87.15 million). Total assets as of 30 June 2014 were up EUR 66.93 million to EUR 273.31 million (31 December 2013: EUR 206.38 million), of which EUR 33.96 million resulted from initial consolidation of Rule Financial. Due to the increased balance sheet total, the equity ratio decreased to 32 percent as of 30 June 2014 (31 December 2013: 42 percent).

Outlook

On the announcement of its acquisition of Rule Financial, the GFT Group adjusted its revenue and earnings guidance for the financial year 2014 stated in the Annual Report 2013. As a result of the acquisition, the GFT Group expects additional revenue of around EUR 42 million in the second half of 2014. This increases the GFT Group’s revenue expectations for the financial year 2014 to around EUR 352 million (previously EUR 310 million). The annual forecast for EBITDA has been upgraded by EUR 1.50 million to EUR 29.50 million (previously EUR 28.00 million). The GFT Group’s forecast for EBT remains unchanged at EUR 23.00 million. The earnings guidance stated above is subject to the final purchase price allocation in connection with the acquisition of Rule Financial.

The strong progress of our IT services for investment banks was a key growth driver in the first six months. We expect that growing compliance requirements will continue to necessitate heavy investments in IT. The acquisition of Rule Financial has greatly strengthened our position in this field.”
Ulrich Dietz CEO
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In EUR million

01.01.-30.06.2014

01.01.-30.06.2013

Key figures (unaudited) in accordance with IFRS
(deviations possible due to rounding differences)

 

Revenue

156.74 114.19

EBITDA

13.61

6.09

EBIT

11.40

5.36

Earnings before taxes (EBT)

11.13

5.50

Net income for the period

7.32 4.36

Earnings/share acc. to IAS 33 in EUR

0.28 0.17

Equity ratio

 32 percent
(30.06.2014)

42 percent
(31.12.2013)

Employees (full-time) as of 30 June

2,983

1,503