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DGAP-News: adesso SE / Key word(s): Quarterly / Interim Statement
adesso SE continues its strong growth with new quarterly high, increasing sales by 29 % to EUR 496.2 million after first nine months of year / EBITDA increases significantly by 72 % to EUR 81.2 million and also disproportionately even when adjusted for one-off effect (34 % to EUR 63.3 million)
- Sales up by 26 % to EUR 173.8 million in third quarter
- Q3 EBITDA on a par with previous quarterly high at EUR 25.5 million (before one-off effects)
- Sales after nine months up 29 % to EUR 496.2 million
- EBITDA increases to EUR 81.2 million (before one-off effect: EUR 63.3 million, previous year: EUR 47.1 million)
- Profitability up with capacity utilisation in IT service business remaining positive (12.8 % EBITDA margin before one-off effect)
- Full-year sales and EBITDA guidance raised
adesso SE increased its sales revenues quarter on quarter and year on year to a new record level of EUR 173.8 million in the third quarter of 2021. Due to the high levels of capacity utilisation and booking intensity in IT service business and the third quarter having the highest number of working days, adesso SE achieved growth of 26 % compared to the same quarter the previous year. Revenues were increased by 29 % over the nine-month period to EUR 496.2 million, 21 percentage points of which through organic growth. Even without additional, significant licence agreements being concluded in product business, adesso SE still managed to generate third-quarter EBITDA of EUR 25.5 million. This figure was on a par with the previous year's quarter, which saw record-breaking licence revenues. As a result, adesso's cumulative EBITDA has risen by 72 % year on year to a total of EUR 81.2 million (before one-off effect: +34 % to EUR 63.3 million; previous year: EUR 47.1 million). The EBITDA margin (adjusted for the one-off effect) increased year on year from 12.3 % to 12.8 %. On this basis, the Executive Board raised its full-year sales and EBITDA guidance for 2021 after publishing the preliminary figures.
The adesso business model continues to prove resilient in the current pandemic. Demand in the area of digitalisation remains at a high level. Dynamic, double-digit sales growth (between 11 % and 54 %) was achieved in all core industries in which adesso operates. The still relatively new core industries Automotive & Transportation and Manufacturing Industry showed growth rates of over 50 %. Both core industries contributed over 5 % of total sales. The two industries in which adesso generates the most sales, insurance and banks, reported growth of 24 % and 18 % respectively. Even though no further significant licence agreements were able to be concluded in the third quarter, the volume remained slightly up on the previous year's figure. Maintenance revenues were also able to be increased.
The number of employees (expressed as full-time equivalents, or FTEs) increased by 1,153, or 26 %, year on year to stand at 5,624 as at the reporting date. The number of employees abroad increased just as strongly, by 24 %, due to the further internationalisation of adesso. Outside Germany, adesso now employs a total of 1,009 people (FTEs). Germany accounted for the largest share of sales growth, at 32 %, while sales generated abroad climbed by 19 %.
Even without any significant licence revenues, adesso SE generated third-quarter EBITDA of EUR 25.5 million, which was on a par with the same quarter of the previous year -which itself featured the highest licence revenues ever achieved - and marked the best quarterly EBITDA performance in adesso's history (excluding the high one-off effect from the sale of the e-Spirit companies in the first quarter of 2021). As a result, adesso was able to increase its cumulative EBITDA by 72 % year on year to a total of EUR 81.2 million. Adjusted for the one-off effect, cumulative EBITDA came to EUR 63.3 million and rose more sharply than sales at 34 % (previous year: EUR 47.1 million). Alongside the ongoing high capacity utilisation and booking intensity, other operating expenses have also been a major contributing factor in the earnings situation. They increased by just 8 % and therefore much less significantly than sales and employee numbers, with many business activities taking place remotely under pandemic-related restrictions. This effect is losing significance, since the situation from the second quarter of the previous year onward was comparable. Other operating expenses climbed to EUR 43.5 million from EUR 40.2 million in the previous year. With restrictions on social contact gradually being eased, travel expenses rose again in the third quarter of 2021 but, at EUR 2.8 million, remain significantly down on the previous year's level. adesso SE, the largest operating unit in the adesso Group, saw its earnings improve significantly (adjusted for the one-off effect) compared to the first nine months of the previous year. The established companies in Switzerland, Austria and Turkey also succeeded in increasing their earnings contribution year on year.
Gross profit rose slightly less sharply than sales, by 28 % to EUR 433.1 million. Personnel costs increased by 29 % to EUR 331.0 million and in proportion to sales.
Depreciation and amortisation in the first nine months of 2021 increased by 34 % to EUR 25.4 million (previous year: EUR 19.0 million). After deducting income from financing activities of EUR -1.0 million (previous year: EUR -1.8 million) and accounting for the significant decline in the tax rate to 22 % (previous year: 32 %), consolidated earnings stood at EUR 42.1 million (previous year: EUR 17.6 million). The decline in the tax rate was primarily due to the sale of e-Spirit companies, which generated income that is largely tax-free. Adjusted for this one-off effect, consolidated earnings would have amounted to EUR 24.4 million. Earnings per share stood at EUR 6.76 (before one-off effect: EUR 3.91; previous year: EUR 2.86)
Additional figures and information
The cost of materials, which primarily related to services from external providers purchased within the scope of customer projects, increased significantly more sharply than sales, rising by 41 % to EUR 63.1 million and standing at 13 % of sales. Gross profit, on the other hand, increased by 28 % to EUR 433.1 million. Annualised gross profit per employee in the first nine months of the year came to EUR 109 thousand (previous year: EUR 106 thousand). The most significant cost item, personnel costs, rose by 29 % to EUR 331.0 million in line with sales.
Depreciation and amortisation of EUR 25.4 million (previous year: EUR 19.0 million) includes depreciation and amortisation of rights of use from leases in the amount of EUR 13.3 million (previous year: EUR 10.6 million). Operating depreciation and amortisation rose by 11 % to EUR 7.5 million, while amortisation of intangible assets recognised in the course of mergers increased by 175 % to EUR 4.6 million. This increase was largely due to acquisitions in the fourth quarter of 2020 (Quanto/Bluegroup) and the second quarter of 2021 (KIWI).
Working capital increased by 33 % year on year to EUR 143.4 (previous year: EUR 108.1 million) and therefore by a greater margin compared to sales. As at 30 September 2021, equity rose by EUR 35.2 million to EUR 138.0 million compared to the 31 December 2020 figure as a result of the healthy consolidated earnings of EUR 42.1 million. The equity ratio increased by 27.6 % to 29.8 % compared to the figure reported on 31 December 2020, while liquid assets stood at EUR 38.8 million as at the reporting date (31 December 2020: EUR 55.1 million, 30 September 2020: EUR 32.0 million).
The significant rise in net operating assets and the payment of tax arrears for the previous year relating to the COVID-19 pandemic resulted in cash flow from operating activities standing at EUR 0.2 million, down from EUR 22.9 million in the previous year. Cash flow from investment activities amounted to EUR -17.5 million, declining from EUR -10.6 million in the previous year due to the increased investment in property, plant and equipment compared to the previous year (EUR 10.9 million, previous year: EUR 2.2 million) resulting from the acquisition of KIWI Consulting EDV-Beratung GmbH, which led to cash outflow of EUR -3.9 million despite cash inflow from the sale of e-Spirit. Cash flow from financing activities stood at EUR 1.1 million (previous year: EUR -26.0 million). This positive trend was due to new financial liabilities of EUR 36.3 million and came in spite of increased repayments of lease liabilities (EUR -11.6 million; previous year: EUR -9.9 million) and increased repayments of financial liabilities. Compared to 31 December 2020, financial liabilities rose by EUR 25.8 million net to EUR 86.5 million in the first half of 2021 as a result of ongoing repayments, new loans and other financial liabilities. Net liquidity came to EUR -47.7 million as at the reporting date (31 December 2020: EUR -5.6 million; 30 September 2020: EUR -14.2 million).
Business performance in the first nine months of the year exceeded expectations following the strong third quarter of 2021. As a result, the Executive Board raised its full-year guidance for sales and EBITDA following the publication of preliminary figures. adesso now anticipates sales of more than EUR 630 million (previously more than EUR 600 million), EBITDA of more than EUR 95 million (previously more than EUR 89 million) and a minimum EBITDA margin of more than 14 % (previously more than 12 %). Even though pandemic-related risks for adesso's business are gradually declining, it is still possible that the order and capacity utilisation situation will be adversely affected in the final quarter. As an example, noticeable investment in product business in the second half of 2021 has not yet led to the conclusion of significant licensing agreements as planned. With a solid number of orders in the pipeline, the final quarter also offers some opportunities to exceed the minimum targets by a more considerable margin, depending on possible licence sales.
The complete quarterly statement is available in the Investor Relations section of the adesso website at www.adesso-group.de/en/
15.11.2021 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
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