Revenue +22.6 %; EBITDA; +15.8 %; EPS +44.6 %
Continuing uncertainties over impacts of the Corona pandemic
Pliezhausen, May 14, 2020. DATAGROUP SE (WKN A0JC8S) today publishes figures for the first half of FY 2019/2020. The company once again achieved significant growth in revenue and earnings. In addition to organic growth, the first-time consolidation of Portavis is the most important driver.
In the period under review (01.10.2019 – 31.03.2020) revenue increased by 22.6% to EUR 170.0m (PY EUR 138.7m). The proportion of service revenue has again improved slightly to 84.1% (PY 82.7 %). Earnings before taxes, interest, depreciation and amortization (EBITDA) came in at EUR 23.6m compared to EUR 20.4m in the previous year. The EBITDA margin was 13.9 %. Earnings before interest and taxes (EBIT) totaled EUR 9.6m (PY EUR 10.2m). The EBIT margin was 5.6 %. EBT came in at EUR 8.4m (PY EUR 9.1m). Earnings per share (EPS) increased to EUR 1.07 (PY EUR 0.74) Other income has been impacted by a one-time negative difference from the purchase price allocation (badwill) of Portavis GmbH (Portavis) in the amount of some EUR 10m. Portavis was acquired in early 2020 and has been consolidated for the first time. The company will use this effect to set aside larger provisions for risks.
The again strong growth in sales confirms the path taken by DATAGROUP to grow both organically and through M&A transactions. Especially in uncertain times, this business model shows an extraordinary crisis-proofness. Naturally, this is also associated with the necessity to properly position and profit from the acquired companies or parts of companies. In individual cases, this can lead to restructuring expenses, which are countered with generously calculated provisions.
“In these turbulent economic times, which are dominated by the pandemic, the stability of our business model as engine room of digitization for our customers becomes particularly visible”, says Max Schaber, CEO of DATAGROUP. “Our long-term contracts for basic IT operating services concluded with successful companies of the German Mittelstand and with public authorities have already proven effective during the financial and economic crisis in 2008. The recurring monthly services will enable us to achieve solid results in the times of the corona pandemic as well, although DATAGROUP has also felt its impact selectively”, Schaber continues to say.
With the acquisition of Portavis at the beginning of 2020 DATAGROUP has further improved its strengths in the financial services sector. The company, which has been consolidated since March 1, 2020, has around 200 employees providing IT services for Hamburger Sparkasse and Sparkasse Bremen, wo continue to hold a stake of 32% in Portavis, as well as Hamburg Commercial Bank. With the acquisition, a service contract was agreed on with the largest customer, Hamburger Sparkasse, which runs until 2028. This eliminated the risk of the contract ending soon. Negotiations are also underway with Sparkasse Bremen to extend the contract.
“The financial services sector is under severe digitization pressure and, at the same time, is highly regulated. With DATAGROUP Financial IT Services and Portavis, DATAGROUP can provide both a comprehensive IT portfolio and the necessary expertise on safety regulations to leverage the potential of this sector”, explains Peter Schneck, Management Board member responsible for M&A, legal and IR.
The DATAGROUP business model has so far been virtually unaffected by the pandemic. “Especially in the beginning, we have seen increased demand from customers”, says Dirk Peters, Management Board member responsible for sales. “However, in the further course of the crisis, we have also experienced impairments”, explains Andreas Baresel, Management Board member responsible for production. For instance, some of the larger transitions, for example at DATAGROUP Financial IT Services, currently cannot be fully implemented within the given time frame. There is also a noticeably retention among customers to invest in projects during the pandemic, especially in the business with software robots and mobile business applications. Furthermore, IT-Informatik (today DATAGROUP Ulm), which was acquired from insolvency last year, has experienced unexpected delays in the start-up of new business. Although DATAGROUP Ulm was slightly profitable before the pandemic, it will not yet make a significant contribution to consolidated earnings from today’s point of view.
To sum up, it can be said that:
Existing business with contract-based service contracts is crisis-proof, but new start-ups and project-based business however are experiencing an impact that dampens the organic growth. This dampening effect is compensated by the company’s M&A activities.
As the duration and extent of the effects of the pandemic currently cannot be foreseen, the Management Board has suspended the outlook given at the annual general meeting for the time being. “We are proceeding cautiously, and currently still cannot reliably estimate the duration and extent of the direct and indirect economic effects of the pandemic on DATAGROUP”, says Max H.-H. Schaber, CEO of DATAGROUP.
“In the long run, the corona pandemic is expected to boost the digitization of business processes and the mobilization and cloudification of our working worlds”, says Andreas Baresel. “When the corona-related exceptional situation is over, momentum could be generated particularly for our cloud and collaboration solutions, which should lead to an upturn in business.
DATAGROUP is very well positioned to meet this demand. Since the beginning of this year alone, the company has trained some 50 Microsoft Azure Cloud administrators. They, together with the existing expertise in on premise services and private cloud solutions allows DATAGROUP to cover a wide variety versions of cloud services – private cloud, public cloud and hybrid models.
The interim consolidated financial statements are available for download under datagroup.de/publications
The Chief Executive Officer Max H.-H. Schaber will explain the figures of H1 2019/2020 in a conference call on May 18, 2020 at 4.00 pm CET. All interested investors, analysts, and journalists are cordially invited to participate.
You can register for the event under the following link:
Or else, please dial in at the time specified using one of the following phone numbers:
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