adesso sees high sales and earnings growth in first half of 2018

Dortmund | 31. August 2018

  • Sales grow by 19 % to EUR 177.5 million
  • EBITDA comes to EUR 12.1 million (+59 %)

adesso Group increased sales year on year in the first half of 2018 by 19 % to EUR 177.5 million. Almost all of this growth was achieved organically. Business was bolstered by ongoing investment from companies and public-sector authorities in digital transformation, increased efficiency through the modernisation of IT systems and e-commerce activities. Additional drivers of growth include new approaches and technologies such as business intelligence based on big data, machine learning and artificial intelligence, the internet of things (IoT) and blockchain. adesso Group holds a strong market position in these areas with a wide range of products and solutions. In the first half of 2018, projects involving intelligent chatbots and augmented reality in the automotive sector, for example, were brought to a successful close. An order to develop a financial transaction platform using blockchain technology was also landed. While mainly smaller proofs of concept and demos were developed in previous years, the size of these innovation projects is now significant. adesso Group has secured an important new client with a leading company from the energy sector. Plans call for the joint development of everything from e-mobility concepts to white-label settlement platforms based on IoT approaches.

All established adesso subsidiaries (Germany, Switzerland, Austria and Turkey) increased sales year on year. Based on volume, adesso Group once again achieved the biggest rise in sales in Germany, which benefited from very strong headcount growth in the past 18 months and the ability to secure a variety of projects in all key industries. Sales growth in banking was particularly significant. In Austria, the positive trend from the second half of 2017 continued, with sales rising by 20 %. The establishment of subsidiaries in Bulgaria and Spain has laid the foundation for additional growth in years ahead. Both subsidiaries have already hired a number of employees and received their first smaller orders.

Business with the in|sure product family for companies from the insurance sector also experienced positive development. The first half of 2018 saw the landing of DKV – one of the largest private health insurance companies – as a client, which will be implementing in|sure Health Claims for nursing care insurance. Another key contract for in|sure Health Claims was signed, although it can only be recognised as relevant to sales in the fourth quarter of 2018 at the earliest given non-utilisation of rights of withdrawal.

Within the first half of the year, EUR 88.6 million in sales was generated in the first quarter and EUR 88.9 million in the second quarter (previous year: EUR 75.7 million and EUR 74.0 million).

Results of operations

adesso Group’s operating result, namely earnings before interest, taxes, depreciation and amortisation (EBITDA), came to EUR 12.1 million in the first half of 2018, up 59 % year on year. During the previous year, the second quarter in particular delivered a weaker performance. Compared to the second half of 2017 and the guidance for 2018 as a whole, EBITDA actually achieved by the Group falls well within the expected range.

While higher costs were incurred in the previous year for the establishment and expansion of new locations, employer branding and recruitment, and while the billable customer hours per employee in Germany were too low, investments in strong growth paid off in the first half of 2018. The billable customer hours in Germany have returned to a normal level. Other operating expenses per employee fell year on year by 9 %.

In the first half of 2018, the first quarter generated EBITDA of EUR 7.2 million (previous year: EUR 5.2 million) and the second quarter generated EBITDA of EUR 4.9 million (previous year: EUR 2.5 million). The lower earnings in the second quarter were mainly due to the lower number of working days. While the main part of earnings growth was generated by the adesso subsidiary in Germany, Turkey and Austria were responsible for boosting earnings considerably in terms of percentage. At 7 % higher depreciation and amortisation, pre-tax profit was up EUR 4.2 million, or 120 %, on the previous year and therefore grew more sharply than EBITDA. Consolidated earnings amounted to EUR 5.0 million (previous year: EUR 2.2 million) and earnings per share stood at EUR 0.81 (previous year: EUR 0.36).

As at the reporting date, adesso held liquid assets of EUR 39.7 million (previous year: EUR 28.1 million; 31 December 2017: EUR 46.5 million). Net liquidity less financial liabilities amounted to EUR -7.5 million as at the reporting date (previous year: EUR -17.7 million). The decline in liquid assets over the first half of the year is in line with the development of liquidity in previous years and was largely due to the scheduled payment of variable salary components for the previous year and the payment of dividends. However, cash flow from operating activities was already in positive territory in the first half of the year at EUR 2.2 million (previous year: EUR -3.5 million).

The business operations acquired from FABIS during the reporting period will strengthen the in|sure product portfolio with regard to the calculation of commissions. While the additional functionality and expertise of the employees gained in this process are of great benefit, their impact on the consolidated key figures for sales and earnings was minor.

In the first half of 2018, business grew by 19 %, with sales continuing to increase far in excess of the market as a whole as the year progressed. Incoming orders, order backlog and capacity utilisation are at good levels as at the reporting date, and sales are expected to continue to improve in the second half of the year. The aim is to recruit additional employees at all adesso subsidiaries. The sales target for 2018 of more than EUR 350 million seems to be feasible. Efforts are under way to pursue a number of sales opportunities for the in|sure insurance software that could result in the signing of contracts whose sales might still apply to 2018. In comparison to the first half of the year, EBITDA is expected to increase in the second half of 2018. adesso Group stands by its earnings forecast for 2018 as a whole in terms of EBITDA of more than EUR 27.7 million (first half of 2018: EUR 12.1 million) and an EBITDA margin target of at least 7.5 %.

The complete half-year report and an overview of key performance indicators in table form are available in the Investor Relations section on the website

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