Half-yearly financial Report as of 30 June 2013 digi tal pio neer ing
Q1 2 2013 Key figures according to IFRS (not certified) Half-year 01/01/ 30/06/2013 01/01/ 30/06/2012 Change Income Statement Revenue m 114.19 116.38-1.9% Earnings before interest, taxes, depreciation and amortisation (EBITDA) m 6.09 4.43 37.5% Earnings before interest and taxes (EBIT) m 5.36 3.67 46.0% Earnings before taxes (EBT) m 5.50 3.78 45.4% Net income m 4.36 2.36 84.7% Balance Sheet Other non-current assets m 47.90 45.40 5.5% Cash, cash equivalents and securities m 27.71 30.40-8.9% Other current assets m 57.95 54.41 6.5% Assets m 133.56 130.21 2.6% Non-current liabilities m 6.34 8.15-22.2% Current liabilities m 48.57 48.90-0.7% Shareholders equity m 78.65 73.16 7.5% Shareholders equity and liabilities m 133.56 130.21 2.6% Equity ratio % 59% 56% 4.8% Cash flow Cash flow from operating activities m -8.83-5.56 59.0% Cash flow from investing activities m 0.87-0.57-252.6% Cash flow from financing activities m -1.35-3.48-61.3% Employees Number of permanent employees (as of 30 June) no. 1,503 1,371 9.6% Share Earnings per share 0.17 0.09 84.7% Average number of outstanding shares (undiluted) 26,325,946 26,325,946 0.0% (Rounding differences in the Consolidated Interim Management Report due to presentation in million possible)
Highlights 1 The GFT Group closed the first six months of 2013 with solid revenue growth and a strong improvement in earnings. For the second half of 2013, the Executive Board expects a further positive development of business and anticipates an additional growth impetus from the acquisition of the Italian company Sempla. For the financial year 2013, the Executive Board now expects revenue of 260 million and has upgraded its forecast for earnings before taxes (EBT) to at least 15 million. Earnings before interest, taxes, depreciation and amortisation (EBITDA) are expected to reach at least 19 million in 2013. Revenue Earnings before taxes million 2012 2013 Q4 56.08 Q3 58.23 Q2 58.73 58.68 Q1 57.65 55.51 230.69 114.19 million 2012 2013 Q4 4.31 Q3 4.02 Q2 2.51 3.95 Q1 1.27 1.55 12.11 5.50 Contents Consolidated Interim Management Report 2 Notes to the Interim Financial Statements 23 Consolidated Interim Financial Statements 16
2 Q1 2 2013 Group Management Report of GFT Technologies Aktiengesellschaft as of 30 June 2013 (not certified) Business environment Economic environment Macroeconomic development The global economy will be less prone to fluctuation and enjoy moderate growth in future. This is the forecast of the World Bank. Whereas the economists predicted global economic growth of 2.4% in January 2013, they downgraded their expectations to 2.2% on completion of the first six months of 2013. Although the US economy is still performing well in comparison to other major economic regions, both the World Bank and International Monetary Fund (IMF) believe slower growth in the emerging nations represents a serious danger. The latter were a vital motor of global growth during the financial crisis of 2008. Two of the heavyweights, China and Brazil, are now experiencing economic difficulties. According to both institutes, the main burden to growth is still the recession in Europe. The eurozone crisis has lasted five years already and affected almost all member states. Even such major economies as France, Italy and Spain are now mired in recession. All three of these countries are suffering their highest ever levels of unemployment. It was only in July 2013, that European Central Bank (ECB) boss Mario Draghi calmed the markets somewhat by promising that the ECB would buy an unlimited number of bonds from the troubled nations if necessary. In early May, the ECB had already reduced interest rates in the eurozone to a new historic low of 0.5% in an attempt to kick-start the recovery. According to Draghi, this effect is now expected to gradually and very slowly materialise towards the end of the year. The ongoing uncertainty in the eurozone region was also felt in Germany during the second quarter of 2013. Although the IMF was still optimistically assuming growth of 0.6% for the full year in April, it downgraded its forecast to 0.3% after the first six months. The Institute believes that growth will be driven exclusively by domestic forces in both the current and coming years. Head of Business Cycle Analysis at the ifo Institute, Kai Carstensen, is somewhat more optimistic. Although the economic repercussions of Germany s catastrophic floods during the second quarter are still not clear, German managers are generally upbeat. This was the conclusion of ifo s Business Climate Index conducted in June. Sector development In the first six months of 2013, the global IT market was unable to fully escape the effects of the downbeat economic mood around the world. According to the international market research institute IDC, IT expenditure already fell short of expectations in the first quarter of 2013. As a result, the institute reduced its growth forecast for global IT spending in 2013 from 5.5% at the beginning of the year to 4.9% in May 2013. The main culprit is falling demand for IT hardware. Demand for IT services, how - ever, remains strong. The German Federal Association for Information Technology, Telecommunications and New Media (BITKOM) reports more positive figures for Germany. Its survey of market sentiment in July 2013 showed that most suppliers of information technology, telecommunication and entertainment electronics were satisfied with business in the first half-year. 57% succeeded in raising sales. Business was even better for IT service providers 70% of whom reported increased revenues. This upbeat mood is expected to continue in the second half of the year. This is also reflected by the BITKOM Index, which remains high and continues to exceed expectations for the economy as a whole (ifo Index). According to the sector organisation, demand for skilled staff is still strong. 55% of companies believe the current situation represents an obstacle to further growth. The sector investing most heavily in IT is the financial services industry also of particular importance to GFT. This was the conclusion of a survey conducted by Forrester Research Inc. examining companies in the Americas, Europe and Asia. One key reason was the level of compliance regulations requiring IT support.
Consolidated Interim Management Report 3 Course of business Despite the ongoing weakness of the eurozone econo - mies, the GFT Group can look back on a satisfactory first six months to 2013. With consolidated revenue of 114.19 million (prev. year: 116.38 million), the Group fell 2% short of the prior-year figure. Adjusted for the planned reduction of revenue from its Third Party Management business amounting to 9.03 million, however, the Group s core business grew by 6% in the first six months. Pre-tax earnings (EBT) increased by 46% to 5.50 million (prev. year: 3.78 million). This figure includes income of 1.18 million from the adjustment of the purchase price for Asymo AG, Switzerland, acquired in 2011, as well as costs for the CODE_n12 innovation drive amounting to 0.90 million (prev. year: 1.32 million). There was particularly encouraging growth in the GFT solutions division, which raised revenue by 14% to 69.14 million (prev. year: 60.85 million). This positive development was helped by increased compliance requirements for the finance sector as well as projects connected with the introduction of the Single Euro Payments Area (SEPA). The growing demand for outsourcing services, as well as solutions for investment banking and mobile banking, boosted sales in the UK and Germany. Due to a high degree of capacity utilisation and positive margin effects, segment earnings rose by 63% to 6.93 million (prev. year: 4.25 million). Due to the positive development of business and high utilisation of capacity in the GFT Solutions division, headcount at the Spanish development centres was increased strongly. GFT employed more than 1,500 full-time staff as of 30 June 2013. With the acquisition of an 80% stake in the com pany Sempla S.R.L., Milano, Italy, on 30 May 2013, the GFT Group took a further important step towards the internationalisation of its GFT Solutions division. Sempla is one of Italy s leading IT consultancies, specialising in commercial and private banking. With its 460 employees, it generated revenue of over 44 million and pre-tax earnings of 4.08 million in 2012. Sempla s product range fits well with the portfolio of GFT and adds top-quality consultancy know-how on the Italian market and acclaimed expertise in the general banking sector. This provides synergies for the further development of the Italian market and offers GFT growth opportunities with existing and new clients in Europe and the USA. The acquisition of Sempla was closed on 3 July 2013 so that the effects from the takeover will become effective for the GFT Group s accounts as of the 3rd quarter of 2013. The emagine division, whose realignment is continuing in 2013, posted revenue of 45.04 million 19% down on the previous year ( 55.53 million). Revenue from helping companies recruit IT and engineering specialists for technology projects fell by 2% to 43.70 million (prev. year: 44.59 million). The division s low-margin Third Party Management business only contributed 1.34 million to segment revenue (prev. year: 10.94 million). In 2013, the planned reduction in revenue from this business will amount to around 15 million. Segment earnings of the emagine division were burdened by realignment costs and amounted to 0.00 million (prev. year: 1.15 million).
4 Q1 2 2013 gft share following a slightly positive sideways movement in the first quarter of 2013, the international stock markets were marked by strong volatility in the second quarter. Tension between North and south Korea as well as forecasts of weaker growth for China and the global economy as a whole put pressure on the leading indices during April. The german blue-chip DAX index was also weakened by a disappointing labour market report in late March and fell below 7,600 points. After poor economic data and growing eurozone unemployment had prompted the ECB to reduce interest rates on 2 May, a turnaround was reached. The consequence was new record-highs on the world s stock markets. On 3 May, the Dow Jones succeeded in breaking the 15,000-mark for the first time and the DAX (Performance Index) reached an all-time-high of 8,530.89 points on 22 May after hitting new record levels on twelve successive days. This euphoria was dealt its first blow in early June, caused by concerns about the world s second-largest economy: China. The us federal Reserve also declared that it would only provide support to the economy until us unemployment had fallen to 6.5%. Although ECB President Draghi gave assurances that there were still sufficient funds to support markets, the EuRO stoxx, DAX and TecDAX indices fell strongly, while the us markets suffered only moderate losses. following growth of 6% in the first quarter, the gft share was largely unaffected by the general market turbulence in the second quarter. Despite the highly volatile stock market environment, the share succeeded in keeping its basic price above the moving average of the 38-day-line ( 3.45). The share started in April at the prior-month closing price of 3.44 and subsequently climbed to a month-high of 3.64. On presentation of the latest company figures in May, this upward trend was solidified and continued. By 15 May, the share had reached a preliminary month-high price of 3.85. The dividend payout of 0.15 on the following day had no effect on the further development. Compared to the preceding month, daily trading volumes were increased strongly and averaged 34,135 traded shares. The reporting month of May closed at 4.00 an increase of 12.99% over the prior-month closing rate. This healthy upward trend also continued in June with the share reaching its highest level of the first half-year on 19 June. The price only weakened somewhat towards the end of the month. Although the reporting month June proved turbulent for the market as a whole, the gft share closed at 4.09 representing growth of 27% for the first six months. Shareholder structure There were no changes in the shareholder structure of gft Technologies Aktiengesellschaft in the period under review. 28.08% of shares are still held by company founder ulrich Dietz. Maria Dietz owns 9.68% of shares, while former supervisory Board member Dr Markus Kerber holds 5.00%. The free float portion comprises 57.24% of all gft shares. Shareholder structure % ulrich Dietz 28.08 Maria Dietz 9.68 Dr Markus Kerber 5.00 free float 57.24
Consolidated Interim Management Report 5 Share performance indexed 130 Technology All Share Performance Index GFT share 100 2 January 2013 (closing price Xetra) 3.22 = 100% 28 June 2013 (closing price Xetra) 4.09 Information on the GFT share H1 2013 H1 2012 Year-opening quotation (daily closing prices Xetra) 3.22 2.75 Closing quotation on 30 June (daily closing prices Xetra) 4.09 2.90 Percentage change +27% +5% Highest price (daily closing prices Xetra) Lowest price (daily closing prices Xetra) 4.20 (19/06/2013) 3.20 (03/01/2013) (07/01/2013) 3.20 (02/03/2012 13/ 16/03/2012 20/ 21/03/2012) 2.75 (02/01/2012) Number of shares on 30 June 26,325,946 26,325,946 Market capitalisation on 30 June 107.67 million 76.35 million Average daily trading volume in shares (Xetra and Frankfurt) 24,669 12,954 Earnings per share 0.17 0.09 ISIN DE 0005800601 Initial stock market quotation 28/06/1999 Market segment Prime Standard
6 Q1 2 2013 Development of revenue In the first six months of 2013, the gft group generated consolidated revenue of 114.19 million, some 2% below the prior-year figure ( 116.38 million). The planned reduction in low-margin Third Party Management business amounted to 9.03 million in the first six months. Adjusted for this discontinued revenue contribution, the group s core business grew by 6% year on year. Revenue by segment The GFT Solutions division achieved revenue growth of 14% to 69.14 million (prev. year: 60.85 million) in the first six months of 2013. Revenues in this division were driven by growing compliance requirements in the finance sector and especially projects relating to the introduction of the single Euro Payments Area (sepa). growth was helped further by rising demand for solutions in the field of investment banking and mobile banking. The division s share of consolidated revenue rose to 61% (prev. year: 52%). In the emagine division, revenue was 19% down on the previous year at 45.04 million for the first six months of 2013 (prev. year: 55.53 million). This figure includes the planned reduction of revenues in the lower-margin Third Party Management business of 9.03 million. With its consultancy services for the staffing of technology projects with highly skilled IT and engineering experts, the emagine division reported a decline in revenues of 2% to 43.70 million (prev. year: 44.59 million). The division s low-margin Third Party Management business contributed 1.34 million (prev. year: 10.94 million) to segment revenue. All in all, this division s share of consolidated revenue fell to 39% (prev. year: 48%). Revenue by country The region Germany, which is affected most by the withdrawal from Third Party Management business, reported a fall in revenue of 10% to 40.18 million (prev. year: 44.72 million). The gft solutions division enjoyed strong growth. The region remained the gft group s largest sales market with a share of total revenue of 35% (prev. year: 38%). Revenue by segment Revenue by country H1 2013 million H1 2013 million gft solutions 61% 69.14 emagine 39% 45.04 Others 0% 0.01 germany 35% 40.18 uk 23% 25.94 france 18% 20.66 spain 12% 13.21 switzerland 4% 4.37 usa 4% 4.29 Other countries 4% 5.54
Consolidated Interim Management Report 7 The GFT Group recorded its strongest revenue growth in the UK during the first half of 2013. Driven by strong demand from the investment banking industry, revenues here rose by 43% to 25.94 million (prev. year: 18.11 million). This positive development was driven by both the GFT Solutions division and the emagine division. This region s share of Group revenue rose to 23% (prev. year: 16%). Business in France also made encouraging progress. Strong demand for IT and engineering specialists in the industrial and service sectors helped raise revenue by 4% to 20.66 million (prev. year: 19.92 million). The region accounted for 18% (prev. year: 17%) of total Group revenue. In Spain, the GFT Group posted revenue of 13.21 million and was thus just 5% down on the previous year ( 13.95 million). At 12%, the country s contribution to total revenue remained unchanged (prev. year: 12%). Revenue generated in Switzerland amounted to 4.37 million, corresponding to a year-on-year decline of 29% ( 6.19 million). The region s share of Group revenue fell to 4% (prev. year: 5%). The decline is due to reduced capacity utilisation in the GFT Solutions division and the discontinuation of local emagine business in the third quarter of the previous year. In the USA, revenue fell by 28% to 4.29 million (prev. year: 5.96 million). Revenue from other countries reached 5.54 million (prev. year: 7.53 million), corresponding to a decline of 26%. Revenue by industry At the beginning of financial year 2013, revenue by industry was reclassified in order to reflect business in the relevant target markets more transparently. Prior-year figures were adjusted accordingly. With a 64% share of the GFT Group s total revenue (prev. year: 61%), the financial service providers sector remained the most important industry for GFT in the first half of 2013. Revenue losses from discontinued Third Party Management business were completely offset in this sector by strong revenue growth in the GFT Solutions segment. All in all, revenue in this sector increased by 2% to 72.66 million (prev. year: 70.96 million). The proportion of revenue contributed by the sector other service providers fell to 14% (prev. year: 17%). Revenues were down by 17% to 16.32 million (prev. year: 19.63 million) due to lower sales in both the emagine segment and GFT Solutions segment. Revenue in the other industries sector fell by 2% to 25.21 million (prev. year: 25.79 million) and accounted for 22% of Group sales (as in the previous year). Revenue by industry H1 2013 million Financial service providers 64% 72.66 Other industries 22% 25.21 Other service providers 14% 16.32
8 Q1 2 2013 Earnings position In the first six months of 2013, earnings before taxes (EBT) of the GFT Group amounted to 5.50 million and were thus 46% up on the previous year ( 3.78 million). The operating margin before taxes improved strongly by 1.5 %-points, from 3.3% in the previous year to 4.8%. These half-year figures include income from the adjustment of the expected remaining purchase payment for Asymo of 1.18 million. Earnings before interest and taxes (EBIT) amounted to 5.36 million in the first six months and were thus 46% above the prior-year figure ( 3.67 million). Earnings before interest, taxes, depreciation and amortisation (EBITDA) rose by 37% to 6.09 million (prev. year: 4.43 million). In the first half-year, the GFT Group generated earnings after taxes of 4.36 million, corresponding to year-on-year growth of 85% ( 2.36 million). This strong improvement benefited from a reduction in the calculated tax ratio from 38% in the previous year to 21% in the first six months, as well as from improved earnings of the»others«division. Earnings per share rose by 0.08 to 0.17 (prev. year: 0.09 per share) based on 26,325,946 outstanding shares. Consolidated earnings position by segment In the first half of 2013, the earnings contribution of the GFT Solutions segment rose by 63% to 6.93 million (prev. year: 4.25 million), corresponding to an increase in the operating margin to 10.0% (prev. year: 7.0%). This year-on-year rise in earnings results mainly from the very positive development of business in the UK und Germany. Earnings of the emagine segment amounted to 0.00 million after the first six months of 2013 (prev. year: 1.15 million). This figure was burdened by expenses involved with the division s realignment and the establishment of the brand in the target markets Germany, France and the UK. Due to reduced revenues and low earnings, the operating margin deteriorated by 2 %-points (prev. year: 2.1%). The»others«category comprises balance sheet effects, costs of the holding company and consolidation amounts which cannot be directly charged to either of the two aforementioned divisions. At -1.43 million, pre-tax earnings of this division were up 11% on the previous year ( -1.62 million). As in the previous year, the largest individual item in this category was the cost for the CODE_n project and CeBIT fair presence. Earnings by segment GFT Solutions emagine others Total million H1 2012 H1 2013 H1 2012 H1 2013 H1 2012 H1 2013 H1 2012 H1 2013 4.25 6.93 1.15 0.00-1.62-1.43 3.78 5.50
Consolidated Interim Management Report 9 Consolidated earnings position by income and expense items In the first half of 2013, other operating income rose to 2.42 million (prev. year: 1.46 million). This increase of 0.96 million was mainly due to the partial reversal of an earn-out provision for the Asymo acquisition as well as to other operating income. This other operating income was mostly generated via the CODE_n partnerships. The item cost of purchased services mainly comprising the use of external manpower fell by 6.44 million to 48.55 million (prev. year: 54.99 million) due to lower revenues in the Third Party Management business and the related purchase of external employees. The cost of materials ratio the relationship between cost of materials and revenue consequently fell year on year by 4 %-points to 43% (prev. year: 47%). In the reporting period, personnel expenses increased by 2.44 million to 48.86 million (prev. year: 46.42 million). As a proportion of revenue, personnel expenses were up slightly to 43% (prev. year: 40%). This increase of around 3 %-points was a result of the strongly increased revenue share of the more labour-intensive GFT Solutions segment to 61% (prev. year: 52%) and the related increase in headcount in this division during the first half of 2013. Depreciation of intangible and tangible assets fell slightly to 0.73 million in the first six months of 2013 ( 0.76 million). As in previous periods, this item had only a minor impact on ordinary operating profits. Other operating expenses rose by 8% to 13.00 million in the first half of 2013 (prev. year: 12.00 million). The main cost elements are operating, administrative and selling expenses, which rose by 0.79 million to 12.15 million (prev. year: 11.36 million). This item also includes exchange rate losses and other taxes. Income taxes amounted to 1.14 million in the first six months and were thus 0.28 million below the prior-year figure of 1.42 million. The calculated tax ratio fell strongly by 17 %-points to 21% (prev. year: 38%). This was due to a more even distribution of profits among the various national subsidiaries and the non-taxable adjustment to the Asymo earn-out provision during the reporting period. Financial position As of 30 June 2013, cash, cash equivalents and securities amounted to 27.71 million and were thus 12.71 million below the corresponding figure at the end of 2012 ( 40.42 million). The decline resulted from a significant fall in liquid funds, mainly due to the payment behaviour of certain clients, as well as from a reduction in payables of 9.44 million to 26.47 million. Due to the delayed receipt of payments, trade receivables rose by 10.2 million to 54.41 million as of 30 June 2013. At year-end 2012, the figure stood at 44.21 million. Trade payables consisting mainly of amounts owing to external employees amounted to 16.69 million on 30 June 2013. This corresponds to a reduction of 3.14 million compared to 31 December 2012 ( 19.83 million). Since the planned winding down of Third Party Management business last year, liabilities have remained relatively stable since the beginning of the year.
10 Q1 2 2013 Asset position Cash flows from operating activities amounted to -8.83 million (prev. year: -5.55 million) after the first six months. This difference is mainly due to the increase in receivables. Changes in trade receivables fell by 9.52 million compared to the prior-year figure ( -0.91 million), which was affected by short-term positive items. This effect was partially offset by the strongly reduced change in trade payables and other liabilities, which amounted to just -1.33 million in the reporting period (prev. year: -7.69 million). Working capital (the difference between current assets and current liabilities) amounted to 36.97 million as of 30 June 2013 and was thus 0.29 million below the yearend 2012 figure of 37.26 million. At 0.87 million, cash flows from investing activities were above the prior-year figure of -0.57 million. The purchase of a new administration building in Stuttgart as the Company s future head office amounting to 1.9 million was offset by proceeds from the disposal of financial investments, which was also responsible for the strong improvement in cash flow of 1.44 million. This item also includes smaller investments in tangible assets, including IT procurements. As of 30 June 2013, cash flows from financing activities amounted to -1.35 million (prev. year: -3.48 million). This figure concerns the use of short-term credit lines by a foreign subsidiary. As of the beginning of 2013, the requirements of IAS 19 (revised) have been applied. As a consequence, actuarial gains and losses must now be recognised in the balance sheet without an effect on profit or loss. This also necessitated a retroactive adjustment of various balance sheet items as of 31 December 2012. Further details on this topic are provided in the Notes to the Consolidated Interim financial Statements. The balance sheet total of the GFT Group increased slightly by 1.08 million and stood at 133.56 million as of 30 June 2013. At the end of the financial year 2012, the total had amounted to 132.48 million. Compared to 31 December 2012 ( 48.17 million), there was a minor decrease in non-current assets of 0.15 million to 48.02 million. This was largely due to a shift in certain items: a strong increase in tangible assets resulting mainly from the purchase of the new administration building and a decrease in securities. As of 30 June 2013, current assets amounted to 85.54 million and were thus 1.23 million above their year-end 2012 level ( 84.31 million). There was a sharp increase of 10.20 million in trade receivables to 54.41 million (31 December 2012: 44.21), which was opposed by a fall in liquid funds of 9.44 million to 26.47 million (31 December 2012: 35.91 million). At the end of the first half of 2013, equity amounted to 78.65 million and was thus 0.44 million above the corresponding figure on the balance sheet date of 31 December 2012 ( 78.21 million). The change was mainly due to a reduction in the balance sheet loss from -3.83 million to -3.42 million. As a consequence of this marginal difference, the current equity ratio remains unchanged from 31 December 2012 at 59%.
Consolidated Interim Management Report 11 Group balance sheet structure ASSETS in million 31/12/ 30/06/ 30/06/ 31/12/ EQUITY & LIABILITIES in million 2012 2013 2013 2012 Cash, cash equivalents and securities 40.42 27.71 Other current assets 47.08 57.95 Other non-current assets 44.98 47.90 132.48 133.56 48.57 47.05 Current liabilities 6.34 7.22 Non-current liabilities 78.65 78.21 Equity capital 133.56 132.48 On the liabilities side, there was a rise in current liabilities of 1.52 million compared to 31 December 2012, mainly due to the increase in financial liabilities of 2.60 million and in current income tax liabilities of 1.29 million. The increase in financial liabilities results from a shortterm loan taken out by a subsidiary. This was opposed by a decline in trade payables of 3.14 million to 16.69 million. As of 31 December 2012, the figure had stood at 19.83 million. There was only a slight change in non-current liabilities during the period under review. As of 30 June 2013, they stood at 6.34 million and were thus down by 0.88 million compared to year-end 2012. This decrease was due to a reversal of provisions. The equity/non-current assets ratio the yardstick for solid balance sheet structures rose to 164% as of 30 June 2013 (year-end 2012: 162%). This ratio expresses the relationship between the balance sheet items»equity«and»non-current assets«and provides information about the Company s financial stability.
12 Q1 2 2013 Employees Research and development As of 30 June 2013, the GFT Group employed a total of 1,503 people. This corresponds to an increase of 132 persons or 10% compared to the same date last year. Headcount is calculated on the basis of full-time staff, whereby part-time staff are included on a pro rata basis. In the GFT Solutions division, the number of employees rose by 11%: from 1,220 at the end of the first half of 2012 to 1,360 on 30 June 2013. The strongest increase in headcount was in Spain (up 121 to 950 employees). The emagine division employed 94 people. The decrease of 11 persons corresponds to a 10% decline compared to the same date last year. The»others«category remained virtually unchanged at 49 employees, corresponding to a year-on-year increase of 3 persons or 7%. As of 30 June 2013, 274 people were employed in Germany (prev. year: 271). Comprising 1,229 persons, the proportion of GFT staff employed outside Germany amounted to 82% (prev. year: 80%). Employees by country as of 30 June 2013 2012 Germany 274 271 Brazil 158 150 France 18 16 UK 40 34 Switzerland 41 49 Spain 950 829 USA 22 22 Total 1,503 1,371 Employees by division as of 30 June The GFT Group invested a total of 1.02 million in research and development during the reporting period (prev. year: 0.72 million). The largest share of this total ( 0.88 million or 86%) was accounted for by personnel expenses (prev. year: 75%). In the first six months of 2013, the GFT Group concentrated its R&D efforts on the following strategic initiatives: At the SAP Competence Centre, experts develop tailored solutions for financial institutes, which help them integrate SAP software into their existing IT platform. One of the key topics in the first half of 2013 was the further development of possible uses for in-memory databases based on SAP HANA technology. This technology is integrated into client solutions in order to significantly reduce the computing time for complex simulations, thus enhancing its use in consultation sessions. Mobile Finance activities comprise the development of key applications for mobile devices in the financial services sector. In the first six months, investments were made for example in development and integration services for the field of Mobile Finance in order to design and implement tailored IT solutions and services for the finance sector. In its internal Applied Technologies Group, GFT pools all R&D activities in the field of applied innovation management. Based on the open innovation approach, the Applied Technologies Group initiates and coordinates innovation projects in line with the current solution needs of our clients. In order to ensure consistently high quality in its global development efforts, software development processes were further optimised in accordance with the international CMMI (Capability Maturity Model Integration) standard. 2013 2012 GFT Solutions 1,360 1,220 emagine 94 105 Others 49 46 Total 1,503 1,371 The number of freelance staff fell year on year by 73 to 949 persons (-7%).
Consolidated Interim Management Report 13 Subsequent events Forecast report In an agreement dated 30 May 2013, GFT Holding Italy S.R.L., Milano, Italy, acquired an 80% stake in the Italian IT service provider Sempla S.R.L. The acquisition of the company was closed on 3 July 2013 and GFT Holding Italy S.R.L. has controlled the acquired company since this date. Further information on this transaction is provided in the Consolidated Interim Financial Statements on page 35. Opportunity and risk report In the first six months of 2013, there were no material changes with regard to the comprehensive discussion of opportunities and risks provided in the Management Report accompanying the Consolidated Financial Statements for 2012. The risk position of the GFT Group is thus unchanged. Macroeconomic development According to the World Bank, the global economy will continue to gain stability but grow more slowly than expected. In its latest economic outlook of 12 June 2013, the Institute therefore downgraded its global forecast for 2013 from 2.4% to 2.2%. The experts pointed to a worse than expected recession in Europe and slower growth in major emerging nations, such as China, Brazil, India and Russia, which had driven the global economy over the past years. For 2014, the World Bank now forecasts global growth of 3%, rising to 3.3% in 2015. In its World Economic Outlook published on 16 April 2013, the International Monetary Fund (IMF) is somewhat more optimistic with a forecast for global economic growth of 3.5% in 2013 and 4% in 2014. Europe is still the main risk for global financial stability following its five rescue packages for member states so far. The IMF forecasts an overall decline in output for the eurozone of 0.3% in the current year and slight growth of 1.1% in 2014. In its Germany Report of 2 June 2013, the IMF downgraded its 2013 forecast of April from 0.6% to just 0.3% with reference to the ongoing uncertainty of the eurozone region. At the same time, however, the IMF claimed that the German financial sector had gained in solidity and resistance compared to the past.
14 Q1 2 2013 Sector development In its latest forecast of 2 July 2013, the market research institute Gartner downgraded its growth outlook for global IT spending in 2013 from 4.1% to 2%. Gartner states that the strong downgrade is mainly due to fluctuations in dollar exchange rates. If exchange rates had remained stable, the revised growth forecast would have been 3.5%. Whereas spending growth is set to decline in most regions, the analysts see a slight increase in Western Europe. Despite the adverse economic outlook, there are still strategic IT initiatives in this region. For the coming year, growth in global IT spending is expected to pick up again and reach 4.1%. In its banking industry survey of 16 July 2013, Gartner expects growth in IT spending to exceed the general market level at 2.5% for the current year. In the second quarter, the market researchers of IDC also downgraded their 5.5% forecast for global IT spending made at the beginning of the year. In their forecast update of 15 May 2013, they now predict an increase in IT expenditure of 4.9%. In addition to the ongoing global uncertainty regarding future economic development, the IDC experts also foresee falling demand for IT hardware. According to IDC, however, demand for IT services will remain strong. The industry association BITKOM believes that the hightech industry will continue to be an important driver of the global economy in 2013. According to its latest economic outlook of 4 March 2013, the global market for products and services in the IT and telecommunication sector is expected to grow this year by 5.1% to 2.7 trillion. With a share of 21.8% and expected growth of 0.9%, the EU is still the second-largest ICT market after the USA with growth of 6.5% and a share of 26.8%. In Germany, BITKOM believes that the German ICT market will easily outpace the overall economy again with growth of 1.4% to 153 billion. According to the BITKOM forecast, the IT services business (projects, consulting and outsourcing) will grow by 2.5% to around 36 billion in the current year, following growth of 2.1% in the previous year. Following a strong first half-year, the German hightech industry is confident about its prospects for the remaining months. According to the sector barometer of 15 July 2013, around three quarters of all suppliers of information technology, telecommunication and entertainment electronics expect rising revenues in the six months ahead. Revenue and earnings forecast Following a first six months in line with expectations, the GFT Group is upholding its positive assessment of business prospects for the financial year 2013 in spite of the eurozone s continuing weakness. Due to the acquisition of a leading Italian IT service provider, the Executive Board has raised its forecast for revenue and earnings for 2013 as a whole. The GFT Solutions division is dedicated to delivering IT solutions for the finance sector and the Executive Board expects further solid organic growth for this business in the remaining six months, as well as a strong growth impetus from the acquisition of the Italian company Sempla. As of the second half of 2013, GFT Solutions will be present in Europe s fourth-largest IT market with some 500 employees, offering its extended portfolio of solutions to existing and new clients on the Italian market. GFT solutions expects further growth opportunities from the positioning of selected competencies of Sempla especially its expertise in general banking with its European clients.
Consolidated Interim Management Report 15 In the second half of 2013, demand for IT solutions to optimise core banking systems and implement new compliance regulations in the banking sector will continue to rise. One key driver will be the introduction of the single Euro Payments Area (sepa), which according to Eu ordinance must have been completed by 1 february 2014. further growth is expected to arise from increased competition in the finance sector. Established banks will face the challenge of adapting their business models to new technologic al developments. The Executive Board therefore expects banks to invest increasingly in new technologies for mobile payments and to use social media functionalities in the banking business. In the field of mobile banking, financial institutes will invest increasingly in intelligent and userfriendly security solutions. further growth opportunities will arise from the acquired consulting expertise and expanded solution portfolio in general banking of sempla. The emagine division will continue to drive its realignment as an expert for staffing technology projects with IT and engineering specialists in 2013. The division is focusing on those growth industries in germany, france and the uk which are expected to profit most from an economic upturn in the coming years. In the field of IT, emagine will concentrate on future topics and technology trends such as Big Data, Business Intelligence, social Media, IT security and Mobile Technologies, in order to tap new growth fields. In the field of engineering, emagine expects growth to be driven by a rising demand for highly skilled engineers in the field of plant and machine construction, as well as renewable energies. In the current financial year, emagine will not be able to fully compensate for revenue losses from the further reduction of its low-margin Third Party Management business. In 2013, the emagine division will also be burdened by costs for repositioning business under its own brand and for the realignment of its internal structures. following the scheduled progress of business in the first half of the year, the Executive Board raised its revenue forecast for the financial year 2013 from 238 million to at least 260 million with the announcement of the sempla acquisition on 30 May 2013. The Executive Board now expects earnings before taxes (EBT) to reach at least 15 million (formerly 12 to 13 million). Earnings before interest, taxes, depreciation and amortisation (EBITDA) are expected to reach at least 19 million. for the financial year 2015, the Executive Board continues to expect group revenue of around 400 million and an operating pre-tax profit margin of over 6%. The underlying business plan assumes steady organic growth in combination with targeted acquisitions in both business divisions. Stuttgart, 6 August 2013 gft Technologies Aktiengesellschaft The Executive Board Ulrich Dietz Jean-François Bodin Marika Lulay Dr. Jochen Ruetz Chairman of the Executive Board Member of the Executive Board Member of the Executive Board Member of the Executive Board
16 Q1 2 2013 Consolidated Income Statement for the period from 1 January to 30 June 2013, IFRS GFT Technologies Aktiengesellschaft, Stuttgart (not certified) Half-year Second quarter 01/01/ 30/06/2013 01/01/ 30/06/2012 01/04/ 30/06/2013 01/04/ 30/06/2012 Revenue 114,187,567.49 116,382,223.48 58,677,211.51 58,732,695.09 Other operating income 2,419,032.24 1,459,466.23 1,411,855.00 475,306.04 116,606,599.73 117,841,689.71 60,089,066.51 59,208,001.13 Costs of purchased services 48,551,814.16 54,990,146.54 24,338,538.58 27,520,553.68 Personnel expenses: a) Salaries and wages 40,763,972.68 39,095,860.22 21,249,425.92 19,491,095.98 b) Social security and expenditures for retirement pensions 8,100,583.85 7,321,879.99 4,285,749.15 3,697,032.99 48,864,556.53 46,417,740.21 25,535,175.07 23,188,128.97 Depreciation on non-current intangible assets and of tangible assets 727,098.59 763,090.09 371,509.67 392,554.19 Other operating expenses 12,998,010.60 11,999,147.35 5,880,852.79 5,573,747.07 Result from operating activities 5,465,119.85 3,671,565.52 3,962,990.40 2,533,017.22 Other interest and similar income 213,997.31 238,602.13 119,136.99 107,485.56 Profit share from associates -1,931.42-12,310.54-8,428.54-15,260.48 Depreciation on securities 105,370.88 0.00 105,370.88 0.00 Interest and similar expenses 72,175.84 115,246.54 16,051.87 112,161.55 Financial result 34,519.17 111,045.05-10,714.30-19,936.47 Earnings before taxes 5,499,639.02 3,782,610.57 3,952,276.10 2,513,080.75 Taxes on income and earnings 1,140,375.94 1,422,341.54 735,718.40 778,700.58 Net income 4,359,263.08 2,360,269.03 3,216,557.70 1,734,380.17 Net earnings per share undiluted 0.17 0.09 0.12 0.07 Net earnings per share diluted 0.17 0.09 0.12 0.07
Consolidated Interim Financial Statements 17 Consolidated Statement of comprehensive INCOME for the period from 1 January to 30 June 2013, IFRS GFT Technologies Aktiengesellschaft, Stuttgart (not certified) Half-year Second quarter 01/01/ 30/06/2013 01/01/ 30/06/2012 01/04/ 30/06/2013 01/04/ 30/06/2012 Net income 4,359,263.08 2,360,269.03 3,216,557.70 1,734,380.17 A.) Components never reclassified to the income statement Actuarial gains/losses 0.00-814,216.85 0.00-408,661.30 Income taxes on components of other result 0.00 225,344.94 0.00 111,789.39 Other (partial) result A.) 0.00-588,871.91 0.00-296,871.91 B.) Components that can be reclassified to the income statement Financial assets available for sale (securities): Change of fair value recognised in equity during the financial year 302,316.16 72,770.75 301,817.54-186,957.03 302,316.16 72,770.75 301,817.54-186,957.03 Exchange differences on translating foreign operations: Profits/losses during the financial year -229,881.24 366,860.49-278,476.88 324,286.22-229,881.24 366,860.49-278,476.88 324,286.22 Income taxes on components of other result -69,389.21 0.00-69,249.59 0.00 Other (partial) result B.) 3,045.71 439,631.24-45,908.93 137,329.19 Other result 3,045.71-149,240.67-45,908.93-159,542.72 Total result 4,362,308.79 2,211,028.36 3,170,648.77 1,574,837.45
18 Q1 2 2013 Consolidated Balance Sheet as at 30 June 2013, IFRS GFT Technologies Aktiengesellschaft, Stuttgart (not certified) Assets 30/06/2013 31/12/2012 adjusted * Non-current assets Intangible assets 638,035.70 737,212.65 Goodwill 35,836,429.16 35,949,217.28 Tangible assets 5,408,720.97 3,208,376.73 Securities 118,130.45 3,189,680.45 Financial assets, accounted for using the equity method 28,259.90 30,191.32 Other financial assets 608,660.88 410,502.75 Current tax assets 415,212.93 415,212.93 Deferred tax assets 4,961,584.85 4,231,941.18 48,015,097.84 48,172,335.29 Current assets Trade receivables 54,409,484.07 44,206,480.67 Securities 1,120,000.00 1,316,100.00 Current tax assets 1,007,274.92 918,103.24 Cash and cash equivalents 26,472,302.14 35,911,786.55 Others 790,128.73 416,363.25 Other assets 1,741,814.06 1,542,577.73 85,541,003.92 84,311,411.44 133,556,101.76 132,483,746.73 * We refer to Note 1 of the Consolidated Interim Financial Statements.
Consolidated Interim Financial Statements 19 Shareholders Equity and Liabilities 30/06/2013 31/12/2012 adjusted * Shareholders equity Share capital 26,325,946.00 26,325,946.00 Capital reserve 42,147,782.15 42,147,782.15 Retained earnings 15,243,349.97 15,243,349.97 Changes in equity not affecting net income Actuarial gains/losses -1,864,860.99-1,891,432.39 Foreign currency translations 349,061.86 578,943.10 Reserve of market assessment for securities -130,896.00-363,822.95 Consolidated balance sheet loss -3,416,976.05-3,827,347.23 78,653,406.94 78,213,418.65 Liabilities Non-current liabilities Provisions for pensions 3,812,799.70 3,687,637.36 Other provisions 2,181,945.68 2,934,677.79 Deferred tax liabilities 340,639.20 593,418.42 6,335,384.58 7,215,733.57 Current liabilities Other provisions 18,244,794.36 18,089,885.88 Current income tax liabilities 2,039,459.65 752,481.50 Financial liabilities 2,595,562.47 0.00 Trade payables 16,689,891.73 19,834,818.88 Other financial liabilities 675,940.55 685,418.71 Other liabilities 8,321,661.48 7,691,989.54 48,567,310.24 47,054,594.51 133,556,101.76 132,483,746.73 * We refer to Note 1 of the Consolidated Interim Financial Statements.
20 Q1 2 2013 Consolidated Statement of Changes in Equity as at 30 June 2013, IFRS GFT Technologies Aktiengesellschaft, Stuttgart (not certified) Notes Subscribed capital Capital reserve Retained earnings Other retained earnings As at 01/01/2012 3 26,325,946.00 42,147,782.15 12,743,349.95 Retroactive adjustment acc. to IAS 19R 1 Adjusted amount 01/01/2012 26,325,946.00 42,147,782.15 12,743,349.95 Retroactive adjustment acc. to IAS 19R Dividend payment May 2012 3 Total income and expenses for the period 01/01/ 30/06/2012 As at 30/06/2012 26,325,946.00 42,147,782.15 12,743,349.95 As at 01/01/2013 3 26,325,946.00 42,147,782.15 15,243,349.97 Retroactive adjustment acc. to IAS 19R Adjusted amount 01/01/2013 26,325,946.00 42,147,782.15 15,243,349.97 Effects from IAS 19R 1 Dividend payment May 2013 3 Total income and expenses for the period 01/01/ 30/06/2013 As at 30/06/2013 26,325,946.00 42,147,782.15 15,243,349.97 * Net income
Consolidated Interim Financial Statements 21 Foreign currency translations Other result Market assessment for securities Actuarial gains/losses Consolidated balance sheet loss Total share capital 728,294.52-615,885.24 0.00-5,713,702.92 75,615,784.46-720,874.64-720,874.64 728,294.52-615,885.24-720,874.64-5,713,702.92 74,894,909.82-588,871.91-588,871.91-3,948,891.90-3,948,891.90 366,860.49 72,770.75 2,360,269.03 * 2,799,900.27 1,095,155.01-543,114.49-1,309,746.55-7,302,325.79 73,157,046.28 578,943.10-363,822.95 0.00-3,827,347.23 80,104,851.04-1,891,432.39 0.00-1,891,432.39 578,943.10-363,822.95-1,891,432.39-3,827,347.23 78,213,418.65 26,571.40 26,571.40 0.00-3,948,891.90-3,948,891.90-229,881.24 232,926.95 0.00 4,359,263.08 * 4,362,308.79 349,061.86-130,896.00-1,864,860.99-3,416,976.05 78,653,406.94
22 Q1 2 2013 Consolidated cash flow statement for the period from 1 January to 30 June 2013, IFRS GFT Technologies Aktiengesellschaft, Stuttgart (not certified) Half-year Notes 01/01/ 30/06/2013 01/01/ 30/06/2012 Net income 4,359,263.08 2,360,269.03 Taxes on income and earnings 1,140,375.94 1,422,341.54 Interest income -34,519.17-110,145.05 Interest paid -11,144.17-4,071.58 Income taxes paid -1,182,937.65-1,655,063.07 Depreciation on intangible and tangible assets 727,098.59 763,090.09 Changes in provisions -352,217.80 906,466.68 Other non-cash expenses/income 94,289.10 300,380.06 Profit from the disposal of tangible and intangible assets as well as financial assets -41,628.72 4,551.00 Changes in trade receivables -10,426,760.11-907,531.17 Changes in other assets -1,770,710.31-946,453.26 Changes in trade liabilities and other liabilities -1,331,671.13-7,688,729.53 Cash flow from operating activities -8,830,562.35-5,554,895.26 Cash receipts from sales of tangible assets 7,000.00 0.00 Cash payments to acquire tangible assets -2,792,829.47-638,241.00 Cash payments to acquire non-current intangible assets 7-71,023.10-162,186.73 Cash receipts from sales of financial assets 3,517,950.00 0.00 Interest received 211,737.56 230,151.55 Cash flow from investing activities 872,834.99-570,276.18 Cash receipts from taking out short-term or long-term loans 2,595,562.47 464,399.51 Payments to shareholders -3,948,891.90-3,948,891.90 Cash flow from financing activities -1,353,329.43-3,484,492.39 Effect of exchange rate changes on cash and cash equivalents -128,427.62 115,493.07 Change in cash funds from cash-relevant transactions -9,439,484.41-9,494,170.76 Cash funds at the beginning of the period 35,911,786.55 32,472,593.37 Cash funds at the end of the period 26,472,302.14 22,978,422.61
Notes 23 Notes to the CONSOLIDATED Interim Financial Statements as at 30 June 2013, IFRS GFT Technologies Aktiengesellschaft, Stuttgart (not certified) 1. Fundamentals for the GFT Group s Interim Financial Statements These unaudited Interim Financial Statements of GFT Technologies Aktiengesellschaft (GFT AG) and its subsidiaries have been prepared in accordance with section 37w (3) of the German Securities Trading Act (WpHG) and International Accounting Standard (IAS) 34 Interim Financial Reporting. Compared to the Annual Financial Statements as at 31 December 2012, the Interim Financial Statements include condensed reporting in the Notes to the Financial Statements and comply with the International Reporting Standards (IFRS) as adopted by the European Union. With the exception of the changes stated below, the same accounting and valuation methods were used in these Interim Financial Statements as in the last Consolidated Financial Statements as at 31 December 2012. New or amended standards and interpretations to be applied as of the beginning of the financial year 2013 had the following impact on the Interim Financial Statements: In June 2011, the IASB published amendments to IAS 19»Employee Benefits«which were adopted by the EU in June 2012. Application of the amended standard is mandatory for all financial statements prepared for financial years beginning on or after 1 January 2013, and thus for the first time in the current financial year. The Group previously recognised pensions and similar obligations according to the corridor approach. With the mandatory adoption of IAS 19 revised as of 2013, the corridor approach is no longer to be used and actuarial gains and losses are now recognised in other comprehensive income. This leads to an increase in provisions for pensions and similar obligations as well as a decrease in equity. The Consolidated Income Statement will no longer contain actuarial gains and losses in future as these are now recognised in other comprehensive income. A further change is the introduction of the net interest rate. Net pension obligations are discounted with the underlying interest rate used for the valuation of gross pension obligations. Mandatory retrospective application in accordance with IAS 19R has resulted in the following changes to balance sheet items as at 31 December 2012: Effects on the Consolidated Balance Sheet from the amendment of IAS 19 thsd. 31/12/2012 01/01/2012 Equity 1,891.43-720.87 Pension provisions 2,612.14 996.29 Balance of deferred taxes -720.71-275.42 The effects on the Consolidated Income Statement for the first six months of financial year 2012 are only minor. There was no change in earnings per share. Maintaining the old version of IAS 19 would have resulted in the following changes to the Consolidated Balance Sheet and Consolidated Income Statement: Effects on the Consolidated Balance Sheet from the maintenance of IAS 19 thsd. 30/06/2013 Equity 52.36 Pension provisions -72.22 Balance of deferred taxes -19.86 Effects on the Consolidated Income Statement from the maintenance of IAS 19 thsd. 30/06/2013 EBT 72.22 Interest result 35.57 Income taxes 9.78 Group result 62.44 There would also have been no change in earnings per share as of the first six months of financial year 2013.