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Further increase in revenues despite difficult market conditions
Integralis Services continuing to grow / Earnings dragged down by exceptionals and prepayments / Strong order books and record total contract volumes again
In the first six months of the year, Integralis reported consolidated revenues of € 82.3 million (previous year € 80.4 million), materially underpinned once more by the recurring revenues generated by Integralis Services. Managed Services and Support Services were particularly strong with growth of almost 25 percent and over 10 percent, respectively, while consulting, integration and training also achieved an above-average increase in revenues. As expected, technology sales were down as the unfavourable economic conditions and the weakness of pound sterling exerted a more direct effect on this segment.
Regionally, the UK accounted for the lion's share of revenues. However, the weak pound and the large proportion of technology sales led to a decline to € 29.6 million (previous year € 34.8 million). On the other hand, Germany, Austria and Switzerland (GAS) reported an increase in revenues to € 22.1 million (previous year € 20.2 million), while top-line growth in the United States was even stronger in percentage terms, with revenues coming to € 17.5 million (previous year € 12.5 million). The most dynamic region addressed by the Integralis Group proved to be the UA Emirates, where revenues surged by 65.8 percent to € 3.5 million (previous year € 2.1 million).
The gross margin continued to widen in the first half and, at 34.1 percent, was well up on the year-ago figure of 32.6 percent. With the cost of materials remaining steady, the gross profit of € 28.1 million easily outstripped the previous year's figure of € 26.2 million.
However, earnings came under pressure from the substantial increase in staff costs to € 19.2 million (previous year € 17.8 million) and in other operating expenses to € 8.0 million (previous year: € 6.0 million). The higher staff costs are related to the acquisition of the Centris NOC in the United States, the geographic expansion in Singapore and business-related additional recruiting in the United States and the UA Emirates.
In the case of other operating expenses, a large part of the increase is due to the bidding process being overseen by management, which ultimately culminated in the submission of a voluntary takeover bid NTT Communications Corporation. In addition, currency translation effects exerted pressure on earnings in contrast to the year-ago period, in which they had boosted earnings.
Taking in account the adverse currency valuation effects and the one-off consultancy expenses related to the bidding process, the EBITDA shortfall versus first half of last year was down only € 0.1 million.
The heightened expenses caused EBITDA to decline substantially to € 0.9 million as of the end of June (previous year € 2.5 million).
With amortisation/depreciation expense rising slightly to € 1.1 million (previous year € 0.9 million), a loss of € 0.2 million was sustained at the EBIT level (previous year: EBIT of €1.6 million). A pre-tax loss of € 0.3 million arose on account of the small net borrowing costs (previous year EBT of € 1.6 million). This translated into a post-tax loss of € 0.4 million (previous year post-tax profit of € 1.6 million) due to the recognition of deferred taxes on temporary differences.
At € 19.2 million, the Group's order backlog was up 25 percent on the previous year (€ 15.4 million). Integralis' total order backlog reached a new record of € 96.4 million (previous year € 86.6 million).
The Management Board continues to project a slight increase in revenues this year. However, at this stage it does not expect the Company to repeat the previous year's record earnings on account of the expense arising in connection with the controlled sales process, which will come to a total of around € 2.0 million for the year as a whole.
On the other hand, it is very optimistic about the years ahead. "Looking forward, Integralis as NTT Com's IT security unit will assume group-wide responsibility for this segment. In this way, our employees will be able to demonstrate their acknowledged expertise and skills in substantially larger and more international projects," explains CEO Georg Magg. In my view, Integralis faces excellent prospects in the efforts which it has already commenced to build up its presence in Asia."
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