GFT posts Q3 earnings rise

Source: GFT Technologies

GFT Technologies AG has continued its positive development of the first six months and closed the third quarter of 2010 with significant increases in revenue and earnings.

"This represents a further consecutive quarter of strong organic growth with our best-ever quarterly result," states GFT's CEO Ulrich Dietz. In view of its encouraging order position and renewed demand for IT solutions and IT specialists from all sectors, the company has upgraded its forecast for revenue and earnings in 2010. The Executive Board now expects total revenue of EUR 245 million and earnings before taxes of between EUR 11 and EUR 12 million. "There is a broad base for our growth. The financial sector's demand for innovative IT solutions remains unbroken. The response to our recently unveiled solution for investment advice using iPads and flat-screen monitors has been particularly encouraging. At the same time, however, we see enormous potential for the placement of freelance IT specialists and engineers in the industrial sector. Our portfolio of services is closely aligned with market needs and we are well on the way towards achieving an impressive annual result for 2010 and further dynamic growth in 2011," says Dietz.

Earnings: year-on-year growth of 55 percent; high level of orders and capacity utilisation in Services division.

The GFT Group succeeded in maintaining its positive development of the first six months with year-on-year EBT growth of 55 percent to EUR 8.76 million for the first nine months of 2010 (prev. year: EUR 5.65 million). At EUR 7.71 million, the Services division accounted for the lion's share of total earnings. The division benefitted from very high capacity utilisation in connection with increased project volume with its existing clients. In the third quarter, it was able to build on the high order position achieved in the first half of the year and capitalise on the positive development in the financial sector. Compared to the first two quarters of the year, the Resourcing division succeeded in improving its result in the third quarter and contributed EUR 1.53 million (prev. year: EUR 1.74 million) to consolidated earnings for the first nine months. The ongoing recovery of the economy as a whole - and thus the growing demand for freelance IT specialists - did not have a significant impact on the division's earnings in the third quarter yet. This effect is expected, however, in the fourth quarter as revenues in this division begin to pick up again. In the third quarter, the GFT Group posted pre-tax earnings of EUR 4.12 million (prev. year: EUR 2.89 million) - the best quarterly result in the company's history.

Revenue: demand remains strong in the financial sector with significant growth in the UK, the USA and Spain

In the first nine months of 2010, the GFT Group generated total revenue of EUR 178.74 million - representing year-on-year growth of 13 percent (prev. year: EUR 158.90 million). The increase was largely due to the very encouraging development of revenue in the Services division. The division benefitted from the ongoing high level of demand in the financial sector and posted year-on-year growth in division revenue of 30 percent to EUR 86.14 million (prev. year: EUR 66.02 million). Growth was driven above all by strong demand for outsourcing services in Spain and for IT solutions in the field of corporate and investment banking in the UK and the USA. The Resourcing division remained the largest by revenue with stable sales of EUR 92.57 million (prev. year: EUR 92.88 million). The economic upswing was only noticeable in this division towards the end of the third quarter. The division's Third Party Management business generated slight growth in revenue to EUR 47.50 million with projects in the financial sector. The Resource Management business - whose clients are mostly in the industrial sector - posted stable revenue of EUR 45.07 million (prev. year: EUR 45.45 million). In view of the clearly visible improvement in the manufacturing sector, demand for freelance IT experts is expected to increase in the fourth quarter with a positive impact on revenue in the Resourcing division. Compared to the preceding quarters with EUR 54.43 million (Q1) and EUR 60.25 million (Q2), revenue was increased once again in the third quarter of 2010 to reach EUR 64.06 million (prev. year: EUR 53.84 million).

Further key figures: solid balance sheet structure, strong increase in headcount

The GFT Group generated net income of EUR 6.70 million in the nine months ending 30 September 2010, representing growth of 51 percent over the same period last year (EUR 4.44 million). Earnings per share improved to EUR 0.25 in the period under review, compared to EUR 0.17 in the previous year. There was a year-on-year increase in cash, cash equivalents and securities of 20 percent to EUR 32.68 million as of the balance sheet date (prev. year: EUR 27.33 million). Compared to last year, headcount increased by 257 persons. This was due to revenue growth and high capacity utilisation in the Services division, which led to new hirings at the Group's development centres in Spain and Brazil. As of 30 September 2010, the GFT Group employed 1,268 persons (prev. year: 1,011), including part-time staff calculated on a pro rata basis. This corresponds to year-on-year growth of 25 percent. The number of staff employed in Germany grew to 264 (prev. year: 251).

In line with the Group's strategic focus on the Resourcing and Services divisions, GFT sold the Software division on 17 May 2010. The disposed Software division is no longer included in the current key financial figures.

Outlook: revenue and earnings forecast for 2010 upgraded

"For GFT, 2010 is an important year on the path to sustainable growth. The results show that just one year after the economic and financial crisis we're back on track for success - and capable of building on this success," explains GFT's CEO Ulrich Dietz. He then adds that both divisions will continue to benefit from the economic recovery in the remaining months of 2010, as well as in early 2011. The financial sector's demand for innovative IT solutions will remain strong while dynamic growth is anticipated for the placement of freelance IT specialists. "We also expect our new multi-touch solution for investment advice to generate attractive growth. Banks will be using an increasing number of intelligent IT applications in future to support compliance with growing regulatory demands while also improving the quality of the advice they offer," explains Dietz. Against this backdrop, the Executive Board has upgraded its 2010 forecast for revenue and earnings. The Executive Board now expects total revenue to reach EUR 245 million in the current fiscal year with earnings before taxes of EUR 11 to EUR 12 million. "Our business model has proven to be perfectly in sync with market needs. We have been able to capitalise on the economic recovery and are now well placed to build on our excellent business development," says Ulrich Dietz.

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