Stuttgart, 12 May 2016 – GFT Technologies SE (GFT) made encouraging progress in the first quarter of 2016, posting solid growth in both revenue and earnings. Whereas the business division Continental Europe reported strong growth, momentum in the business division Americas & UK slowed somewhat. Once again, growth was driven by demand for solutions to digitise business processes and implement compliance requirements in the finance sector. Based on this positive performance in the seasonally weakest first quarter, GFT has confirmed its guidance for the full-year 2016.
Solid growth in revenue and earnings
Consolidated revenue rose year-on-year by 10 percent to EUR 97.39 million in the first quarter of 2016 (Q1/2015: EUR 88.52 million). Adjusted for the revenue contribution of the Spanish company Adesis Netlife S.L. (Adesis), acquired in July 2015, GFT’s organic growth amounted to 6 percent. Revenue generated with clients in the UK amounted to EUR 34.97 million in the first quarter of 2016 and was thus 13 percent down on the same period last year (Q1/2015: EUR 40.21 million). This was due to shifts in the budgets of certain clients from the UK to the USA, as well as to delays in project decisions in the field of investment banking. There was a corresponding increase in revenue generated in the USA by 40 percent to EUR 12.57 million (Q1/2015: EUR 9.01 million). In Spain, GFT achieved significant revenue growth of 85 percent to EUR 17.37 million (Q1/2015: EUR 9.38 million). Demand from retail banks for solutions to digitise their business processes remained strong in the first three months.
In the first quarter of 2016, earnings before interest, taxes, depreciation and amortisation (EBITDA) improved by 6 percent to EUR 10.15 million (Q1/2015: EUR 9.61 million). Pre-tax earnings (EBT) of EUR 7.04 million were slightly above the prior-year figure (Q1/2015: EUR 6.89 million). Earnings per share rose to EUR 0.21 (Q1/2015: EUR 0.18).
Change in segment reporting as of 1 January 2016
The segment reporting of GFT was changed with effect from 1 January 2016. As a result of the sale of the staffing services division emagine, the structure of those corporate components used to steer the segments has changed. The former GFT business division was divided into the segments Americas & UK and Continental Europe. The prior-year figures were adjusted accordingly. The Americas & UK segment comprises companies in the UK, USA, Canada, Brazil, Costa Rica, Mexico and Peru. The Continental Europe segment includes companies in Germany, Italy, Poland, Switzerland and Spain.
Revenue and earnings trend of the business divisions
In the first quarter of 2016, the business division Americas & UK posted revenue of EUR 51.18 million, which was thus virtually unchanged from the previous year (Q1/2015: EUR 51.46 million). The business division Continental Europe achieved revenue growth of 24 percent to EUR 46.05 million (Q1/2015: EUR 37.05 million).
The pre-tax earnings contribution (EBT) of the Americas & UK segment fell from EUR 3.24 million in the first quarter of 2015 to EUR 1.08 million in the reporting period. This decline resulted mainly from increased staffing at the UK and US business units for forthcoming projects not yet in the productive implementation phase. The segment Continental Europe reported pre-tax earnings of EUR 4.65 million (Q1/2015: EUR 3.92 million), corresponding to growth of 19 percent. Increased group cost allocations for the operating segments Americas & UK as well as Continental Europe had a positive impact on earnings of the Others category, which improved to EUR 1.31 million (Q1/2015: EUR -0.27 million).
Headcount grows to almost 4,200
As of 31 March 2016, GFT had a total of 4,159 full-time employees – corresponding to a year-on-year increase of 28 percent (31 March 2015: 3,257). The increase in headcount results from the acquisition of Adesis with 300 employees in Spain and Mexico, as well as from the hiring of new staff – above all at the company’s development centres in Spain, Brazil, Poland and Costa Rica.
“With revenue growth of 10 percent, our financial year 2016 got off to the expected good start and we continue to easily outpace the market as a whole. Gartner’s sector experts forecast that banks will increase their spending on IT services by 4.8 percent in 2016. We expect IT budgets for the implementation of compliance requirements in the finance sector to remain high with further growth in investments to digitise business processes. Against this backdrop, we are upholding our guidance for 2016,” says Ulrich Dietz, CEO of GFT.
GFT anticipates revenue of EUR 410.00 million for the full-year 2016. The company plans to reach EBITDA of EUR 48.50 million and EBT of EUR 35.00 million for the year as a whole.
Additional key data
As of 31 March 2016, cash, cash equivalents and securities amounted to EUR 42.88 million and were thus EUR 4.10 million below the year-end figure for 2015 (31 December 2015: EUR 46.98 million). Equity as of 31 March 2016 stood at EUR 124.77 million, corresponding to an increase of EUR 0.32 million since the end of the reporting period 2015 (31 December 2015: EUR 124.45 million). Total assets as of 31 March 2016 were down EUR 0.75 million at EUR 326.06 million (31 December 2015: EUR 326.81 million). As of 31 March 2016, the equity ratio was unchanged at 38 percent (31 December 2015: 38 percent).
Detailed financial figures can be found in the Investor Relations section of the GFT website.