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Integralis reporting a steady rise in revenues and earnings
Further 8.9% increase in revenues / 39.8% improvement in operating profit / Substantial rise in recurring revenues / Another record in order backlog and total contract volumes achieved
Figures at a glance:
January - September 2008 January - September 2007 Change %
Revenues EUR mn 120.9 / 111.0 / 8.9
EBITDA EUR mn 4.3 / 3.8 / 11.1
EBIT EUR mn 3.0 / 2.1 / 39.8
EBIT margin % 2.4 / 1.9 / 28.4
Net profit for period EUR mn 2.8 / 2.8 / Unch.
Earnings per share* EUR 0.26 / 0.26 / Unch.
For the first nine months of the year, Integralis achieved consolidated revenues of EUR 120.9 million (previous year EUR 111.0 million), thus continuing the favourable trend emerging in the first half of the year. However, at EUR 40.4 million, the year-ago quarter's high figure (EUR 43.0 million) was not repeated, although there was a substantial improvement in the structure of revenues. This is reflected in the sharp rise in recurring consolidated revenues in the Support Services and Managed Security Services segments in the third quarter. The United Kingdom and the GAS region (Germany, Austria, Switzerland) were again the main sources of revenues and also made the greatest contribution to earnings. The signs of stabilisation already emerging in the previous quarter in US business continued to strengthen. The structural improvement in the revenues mix and the sharp rise in more lucrative services are also reflected in the gross margin, which widened to 35.2% in the third quarter (previous year 32.1%). The margin in the first nine months came to 33.5% (previous year 34.9%).
The fact that the margin for the first nine months was slightly smaller is due to the high proportion of technology sales in the first half of the year, this also being the reason for the high proportion in the cost of materials of a total of EUR 80.4 million (previous year EUR 72.3 million). However, at EUR 26.8 million (previous year EUR 25.1 million), personnel costs did not grow as quickly as revenues. The trend in other operating expenses emerging in earlier quarters continued with a decline to EUR 9.4 million (previous year EUR 9.8 million). As a result, EBITDA widened to EUR 4.3 million (previous year EUR 3.8 million). At 40 percent, the increase in EBIT to EUR 3.0 million (previous year EUR 2.1 million) was even more pronounced. In previous years, amortisation charges recognised in connection with the order backlog of an acquired company had asserted additional pressure. At EUR 2.8 million, post-tax earnings, however, were unchanged over the previous year due to the fact that greater deferred taxes had been recognised in the previous year and the Group's now improved profitability resulted in increased income tax expense.
The order backlog reached a new record value of EUR20.8 million (previous year EUR 15.6 million), with Integralis also achieving the highest total contract volumes in its history.
"IT security business is relatively resistant to cyclical effects despite the global financial crisis. Indeed, the IT services market is proving to be a growth driver in the financial crisis as it gives enterprises a means of cutting costs quickly," explains Georg Magg, Integralis' CEO.
On the other hand, the current economic conditions are for the most part tending to take their toll on technology sales with their traditionally narrow margins and proportionately smaller contribution to gross profit. Historically, the fourth quarter has always been the strongest in terms of both revenues and earnings. Indeed, it contributed 60% of the Company's full-year EBIT last year. Even in normal market conditions, it is difficult to make any precise forecast for the final quarter. With an increase of almost 40% in EBIT up until the end of September, the Company's previous forecast of a full-year 50% rise for 2008 is still possible. However, given the external factors, we consider it more prudent to take a more cautious approach and are therefore now looking for EBIT growth in a range of between 30 and 50%. That said, we still consider our original target of 10% revenue growth to be realistic notwithstanding the current market environment.
As we expect a further improvement in the revenue mix in 2009 and beyond accompanied by a gradual increase in recurring income with its wider margins, we reaffirm our medium-term EBIT margin of 6-8%.
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