Interim Report as of 30 June 2006
Q2/2006
GFT Group Summary
Financial figures according to IFRS in e(k)
Revenues
Earnings before interest, taxes, depreciation and amortisation (EBITDA)
01/01–30/06/2006
01/01–30/06/2005
80,123
58,290
2,650
555
547
661
Earnings before interest and taxes (EBIT)
2,103
-106
Earnings before taxes (EBT)
2,286
213
Net income/net loss
917
-414
IAS 33 earnings per share, in c
0.03
-0.02
Fixed assets
23,416
18,288
Liquid assets and securities
10,169
16,213
Remaining current assets
Total depreciation
44,798
29,812
Equity ratio
54 %
61 %
Number of permanent employees absolute as of 30 June
1,006
999
Content 04 Report from the Executive Board 10 Consolidated Balance Sheet as of 30 June 2006 12 Consolidated Income Statement from 1 January to 30 June 2006 13 Consolidated Cash Flow Statement from 1 January to 30 June 2006 14 Consolidated Statement of Changes in Equity as of 30 June 2006 16 Notes to the Quarterly Financial Statement of the GFT Group (Interim Report as of 30 June 2006) 24 Dates and Contact
04
GFT Interim Report Q2/2006 | Report from the Executive Board
Course of Business
The consolidation of the acquired German Parity compa-
In the second quarter of 2006, the GFT Group generated
nies into GFT Resource Management GmbH as of 29 June
a profit before taxes of approximately c 1.4m. and was
2006, and the renaming of the French Parity Eurosoft
thus able to exceed the positive result of c 0.9m. in the
S.A.R.L. as GFT Technologies S.A.R.L. at the end of July
first quarter. This corresponds to an increase in profits of
2006, successfully completed the integration into the
approximately 55 % compared to the first quarter of
Resourcing segment.
2006. The mid-year results show that the profit before taxes increased from c(k) 213 as of 30 June 2005, to
Based upon a background of positive business develop-
c 2.3m. at the end of the first half of 2006. As in the
ment in the first half of the year, we continue to adhere
previous quarter, the largest contributions to results were
to our forecast for all of 2006, expecting revenues in the
made by the Spanish subsidiaries as well as by the
amount of c 170m. with a margin before taxes of at
Resourcing division. In the Services segment, GFT
least 3 %.
Technologies AG in Germany and our Austrian subsidiary affected results negatively. The negative contribution to results of the Austrian subsidiary will be counteracted by
Distribution of revenues by segments
concentrating the business operations of the Austrian and
The segment report for the first six months of the current
Hungarian subsidiaries at the more economical Budapest
financial year shows clear shifts in the distribution of rev-
site, as well as by strengthening the Hungarian manage-
enues by segments, branches and countries in comparison
ment team. The successful acquisition of two new major
to the same period last year, as it contains the Parity com-
projects that are presently in the final negotiation phase
panies’ operative business that is included in the consoli-
will positively influence the utilisation and the earnings
dated financial statements since 31 January 2006.
situation in Germany in the second half of the year. As of 30 June 2006, the distribution of revenue by individThe GFT Group was also able to register growth in rev-
ual segments is as follows:
Industry 21%
enues in the second quarter. With revenues of c 42.2m. in the second quarter of 2006, the GFT Group achieved the highest quarterly revenues since 2001. This corre-
Financial Services 64% 4% Software Postal, ServicesLogistics 49% Services 12%
sponds to an increase in revenues of 11 %, compared to c 37.9m. for the first quarter. This growth can be attri-
Others 3%
buted, in essence, to the three-month consolidation of revenues of the acquired Parity companies, to the growth in the Services segments in Spain and UK, and to in-
Resourcing 47%
creasing licence revenues in the Software division. Compared to the same time period last year, the GFT
The Services division posted revenue totalling c 38.8m.
Group was able to increase revenues overall by 37 %,
(previous year: c 37.4m.), corresponding to a share of
from c 58.3m. to c 80.1m. Comparably calculated, i.e.
revenue of approximately 49 %. Compared to the same
adjusted for revenues from the Parity companies which
time period last year, the share of revenue for this division
were acquired as of 31 January 2006, revenues for the
declined relatively by 15 %. However, the absolute increase
first half of 2006 outperformed the same time period last
of c 1.4m. is a reflection of the increasing importance of
year by 5 %, increasing from c 58.3m. to c 61.2m.
the Services division.
GFT Interim Report Q2/2006 | Report from the Executive Board
05
The share of revenue of the Resourcing segment amounted
which also includes the Public Sector and Consumer Prod-
to c 38.0m. (previous year: c 17.8m.) or approximately
uct industries, declined in comparison to the first half of
47 % (previous year: 31 %). This corresponds to an
2005 from 8 % to 3 %.
increase of c 20.2m. in comparison to 30 June 2005. Revenues for the Parity companies will be fully reported within the Resourcing segment. These companies made
Industry 21%
a fundamental contribution to revenue growth with revenues of c 18.9m. for the months of February through June.
Financial Services 64% Postal, Logistics Services 12%
The share of revenue in the Software segment amounted to c 3.3m. (previous year: c 2.9m.) or 4 %, thus remain-
Others 3%
ing relatively stable in comparison to the first six months of 2005. The absolute increase of c 0.4m. shows that the ongoing investments in product development in this division are already starting to pay off revenue-wise.
Distribution of revenues by countries In the first half of the year, the Spanish and French sales markets are the most important to the GFT Group, sec-
Distribution of revenues by industries
ond only to the German sales market. Next in importance
The purchase of the Parity companies had an impact on
during this reporting period is the Brazilian sales market.
the distribution of revenues by industries in the first six months of the current financial year, as it did in the first
The revenue share that the GFT Group generated in the
quarter. In this manner, the dependence of customers
first six months of the current financial year with clients
from the financial services sector has declined, while the
from the German market totalled c 49.7m. (previous
share of revenue from industrial customers has increased.
year: c 38.5m.) or 63 %. This share dropped by three percentage points in comparison to the same time period last
In the first six months of 2006, GFT achieved its highest
year, but increased by one percentage point compared to
revenues once again with clients from the financial ser-
31 March 2006. Accordingly, the GFT Group was able to
vices industry. The share totalled 64 %, a drop of 15 per-
generate c 30.4m. (previous year: c 19.8m.), or 38 %,
centage points in comparison to the first six months of
with clients outside of Germany.
2005. The revenue share of c 6.7m. (previous year: c 6.5m.) The share of revenue from industrial clients increased in
or 8 % that was attained with Spanish clients declined in
comparison to the same time period last year from 7 %
comparison to the same time period last year by three
to 21 %. This increase in revenue is basically to be attri-
percentage points due to the Parity consolidation. The
buted to the acquired Parity companies in Germany and
revenue share attained with clients from France, which
France.
we reported on separately for the first time as of 31 March 2006, due to the Parity consolidation, totalled
The share of the Postal and Logistics services also increased
c 5.7m. or 7 %. Similarly, the revenue share attained with
by 3 percentage points, from 9 % to 12 %, compared to
Brazilian clients was also reported on separately for the
the first six months of 2005. The share of other revenue,
first time as of 31 March 2006. This share amounted to
06
GFT Interim Report Q2/2006 | Report from the Executive Board
c 5.8m. or 7 %, for the first half of 2006. Compared to
ment increased slightly, a satisfactory level has not yet
the same time period last year, revenue shares with clients
been achieved in the second quarter. We believe that the
from UK of c 5.4m. (previous year: c 5.6 m.) or 7 %, sank
capacity utilisation will continue to increase in the second
by three percentage points due to reduced demand from
half of the year. While the start of the third quarter is tra-
our largest client. The revenue share with clients from
ditionally influenced by employee holidays, the workload
Switzerland amounted to c 1.8m. (previous year: c 2.1m.)
for the available capacities will also increase in Germany
or 2 %, declining by two percentage points. The revenue
up until the end of the year due to new foreseeable
shares with clients from other countries, among them
orders.
Italy, Austria, Hungary and the USA, amounted to c 4.9m. (previous year: c 5.4m.) or 6 % by the reporting date, thus declining by three percentage points. During the
Results
comparable period of the previous year, France and Brazil
In the first half of 2006, which progressed quite positively
were included under other countries.
overall, the GFT Group achieved clear improvements in results compared to the same period last year. Earnings before taxes (EBT) of c 2.3m. as of 30 June 2006 clearly
Spain 8% Germany 63%
France 7%
outperformed the previous year’s value of c(k) 213. In this connection, it should be noted that the development in results for the same period last year was positively influ-
United Kingdom 7% Brazil 7% Other countries 6% Switzerland 2%
enced by the sale of the “Hauptversammlungsservice” division for c(k) 380. Overall, the improvement in results was decisively influenced by the Spanish subsidiaries and the Resourcing division. The operating contribution to results by the Software segment also developed positively in the second quarter, due to the outsourcing of new
Demand and capacity utilisation
product development to India and its capitalisation as
After a traditionally weak capacity utilisation in the first
manufacturing costs. In contrast, GFT Technologies AG
quarter, we registered an anticipated increase in work vol-
and our subsidiaries in Austria, Hungary and Switzerland
ume in all important production locations in the second
continued to negatively affect Group results.
quarter. It was thus possible to increase, once again, the capacity utilisation in both our British and Spanish compa-
As of the end of June, earnings before interest and taxes
nies to a satisfactorily high level. Although the capacity
(EBIT) by the GFT Group increased from c(k) -106 in the
utilisation in the German companies in the Services seg-
previous year to c 2.1m. in 2006.
GFT Interim Report Q2/2006 | Report from the Executive Board
07
Accordingly, the earnings before interest, taxes, deprecia-
c 38.8m. for the first six months of the current financial
tion and amortisation (EBITDA) as of 30 June 2006
year, compared to c 22.1m. for the same time period
increased to c 2.6m., compared to c 0.6m. for the same
last year, thus increasing by c 16.7m. Of this amount,
time period last year.
c 15.7m. can be attributed to costs of materials for the former Parity companies. The increase of the relative rev-
The mid-year surplus of the GFT Group totalled c(k) 917
enue share of material expenditures in total costs, from
after deduction of all expenses, while last year net loss
38 % in the first half of 2005 to 48 % in the first half of
had amounted to c(k) -414.
2006, can be attributed to the fact that the business model of the acquired Parity companies bases exclusively
Pursuant to IAS 33, earnings per share amounted to
on the provision of freelance IT specialists.
c 0.03, compared to c -0.02 for the same quarter of the previous year. This data refers to an average of
Personnel expenses totalled c 31.1m. as of 30 June
26,325,946 presently-circulating shares. Fractional
2006, increasing over the same time period last year by
dividends are not paid.
c 2.2m. Of this amount, personnel expenses for the acquired Parity companies totalled c 1.8m. during this reporting period. The increase of overall personnel
Development of costs and prices
expenses by 7 % in comparison to the previous year
Just as in the first quarter, the increase of costs in the
is also markedly underproportional to the increase in
second quarter of 2006 was under proportional, despite
revenue.
organic revenue growth that was dependent on the purchase of the former Parity companies. As of 30 June
The depreciation of tangible and intangible assets
2006, operative costs for the GFT Group amounted to
amounted to c 0.5m. for the first half of the year, slightly
c 79.5m., compared to c 60.2m. for the same time
underperforming last year’s value of c 0.7m. Increasing
period in the previous year. Thus, the cost base increased
depreciations are to be anticipated once again in the
by 32 %, while revenue for the same time period posted
future, due to the investments in the IT systems as well as
gains of 37 %. Without the former Parity companies,
in business equipment for the acquired Parity companies,
operating costs increased in the first six months of the
among other things.
year by only 1 %, while it was possible to increase the comparable revenue by 5 %.
Other operating expenses totalled c 9.0m. in the first half of the year, outperforming the previous year’s value by
The costs of materials, which primarily include expenses
c 0.5m. Of this amount, c 1.1m. can be attributed to the
for services rendered by outside personnel, totalled
former Parity companies. This clearly underproportional
08
GFT Interim Report Q2/2006 | Report from the Executive Board
cost increase reflects the successful usage of synergy
GmbH. Manufacturing expenditures were capitalised pur-
effects from the Parity integration, in particular through
suant to IAS 38 in connection with IAS 65ff, and will be
the merging of rented floor spaces and the joint utilisa-
amortised over three years.
tion of central resources.
Employees Liquidity
As of 30 June 2006, GFT employed a total of 1,006 staff,
The balance of loose funds, defined as liquid assets and
including part-time employees – one person more than in
marketable securities minus net liabilities against banks,
the previous quarter, and 7 persons more than the same
amounted to c 10.2m. as of 30 June 2006, compared to
time period last year. The number of freelance employees
c 14.5m. as of 31 March 2006 and to c 28.6m. as of 31
totalled 802, of which 711 are assigned to the Resourcing
December 2005. In the second quarter, the quarterly sur-
segment.
plus had a positive effect on the liquidity situation. This is offset, however, by a clear increment in trade receivables,
In the first half of the current financial year, an average of
which increased by c 3.7m. to c 40.2m. On one hand,
1,007 staff were employed, compared to 999 employees
the process and system conversion for the acquired Parity
for the first quarter of 2006, and 999 during the first half
companies resulted in extensions of the payment terms
of 2005.
for customers. On the other hand, our existing clients in UK and France continued to pay very slowly. Compared to
Just as in the first quarter of 2006, the share of workers
31 December 2005, the payment of the purchase price of
employed abroad during the first half of 2006 was 71 %,
c 6.0m. net for the Parity companies is one factor making
equalling 710 employees. In contrast, 296 employees or
an impact.
29 % of our workforce was employed in Germany. As of 30 June 2005, 302 employees or 30 % of our workforce was employed in Germany.
Investments Investments in the GFT Group amounted to approximately c(k) 711 during the first six months of the current
Research and development
financial year, compared to c(k) 486 for the comparable
Research and development expenses for the GFT Group,
time period last year. Of this amount, long-term intangi-
composed predominantly of personnel costs, totalled
ble assets are estimated at c(k) 348, while investments in
approximately c 2.7m. in the first six months of the
tangible fixed assets are estimated at c(k) 363. The surge
period under review. Of this amount, c 1.3m. can be
in investments reflects higher capital expenditures on
ascribed to the first quarter, and c 1.4m. to the second
replacements for the old Group, as well as new invest-
quarter. In the first half of 2005, expenses totalled c 2.9m.
ments in the acquired divisions. Development costs in the amount of c(k) 170 were capitalised for self-produced
During the first half of 2006, the focal point of our invest-
software. These development costs were incurred by our
ments in research and development was CMMI (Capabil-
Indian subsidiary, for the product family of GFT Solutions
ity Maturity Model Integration), an internationally-known
GFT Interim Report Q2/2006 | Report from the Executive Board
09
process model for the development of software and
contribution to this development and to the stabilisation
systems. The CMMI team is working intensively to achieve
of revenues in the course of this year.
Level 3 in Germany, Spain and UK by the end of next year. For the second half of the year, we anticipate that revFurthermore, in the first six months of the reporting period,
enues from the Services segment will increase slightly
investments were made in the further development of
over the first half of the year, boosted by two major
internal applications, such as the relaunch of the GFT
orders that are presently in the final negotiation phase.
intranet.
The Software segment is filling up its sales pipeline and is expected to grow in the second half of the year. The Resourcing segment will grow markedly in the upcoming
Important events after the end of the reporting period
months, among other reasons due to the acquisition of a major client in the area of third-party management.
With the integration of the German Parity company, purchased by GFT at the end of January 2006, into
Based on this development, we are holding firm to our
GFT Resource Management GmbH as of 29 June 2006,
forecast for the entire year, anticipating c 170 m. in rev-
and the renaming of the French Parity Eurosoft S.A.R.L.
enues and a margin of at least 3 % before taxes."
as GFT Technologies S.A.R.L. at the end of July 2006, the integration of the new companies is successfully
The Executive Board would like to thank all of its employ-
completed.
ees for their firm commitment, and all clients, investors, and business partners, for their trust and their loyalty.
The Baden-Württembergische Investmentgesellschaft mbH, with headquarters in Stuttgart, has informed GFT
St. Georgen, 4 August 2006
via a communication dated 5 July 2006, pursuant to § 21 Par. 1 of the German Securities Trading Act (WpHG),
The Executive Board
that its voting right percentage in GFT Technologies AG exceeded the voting rights threshold of 5 % on 3 July 2006, and presently amounts to 6.047 %. This note was withdrawn from Baden-Württembergische Investmentgesellschaft mbH in a correspondance from 2 August 2006. Ulrich Dietz
Outlook for the current financial year In the second quarter of the current year we were able to report on the achievement, according to plan, of the highest-ever quarterly revenue since 2001, totalling c 42.2m. The Resourcing segment, which has been strengthened by the Parity acquisition, made a significant
Marika Lulay
Dr. Jochen Ruetz
10
GFT Interim Report Q2/2006 | Consolidated Financial Statement
GFT Technologies Aktiengesellschaft, St. Georgen
Consolidated Balance Sheet (IFRS) as of 30 June 2006
Interim Report 30/06/2006 e
Annual Accounts 31/12/2005 e
Liquid funds
6,471,744.99
20,652,062.51
Marketable securities
3,696,804.68
7,996,004.68
40,228,564.46
22,647,276.19
0.00
0.00
163,856.75
135,587.26
0.00
0.00
4,022,293.57
2,817,388.44
0.00
0.00
54,583,264.45
54,248,319.08
2,444,104.39
2,478,672.05
616,556.76
382,077.51
Assets Current assets
Trade receivables Receivables from related parties Inventories Deferred tax assets Accrued items and other current assets Others Total current assets
Non-current assets Property, plant and equipment Intangible assets Goodwill
20,355,727.38
15,347,712.05
Financial assets
0.00
0.00
Investments accounted for using the equity method
0.00
0.00
Loans receivable
0.00
0.00
5,757,181.16
5,655,394.92
383,575.08
246,274.66
Deferred tax assets Other assets Others
0.00
0.00
Total non-current assets
29,557,144.77
24,110,131.19
Total assets
84,140,409.22
78,358,450.27
GFT Interim Report Q2/2006 | Consolidated Financial Statement
Liabilities
11
Interim Report 30/06/2006 e
Annual Accounts 31/12/2005 e
0.00
0.00
Current liabilities Current portion of capital lease obligation Short-term loans and current portion of long-term loans Trade payables Payables form related parties Deposits received Provisions
16,361.36
10,332.00
9,498,791.56
10,261,121.35
0.00
0.00
3,005,983.64
2,251,188.84
15,367,302.72
9,476,765.40
Deferred revenues
2,038,894.16
2,569,166.77
Current income tax liabilities
1,304,043.62
640,323.49
0.00
0.00
3,720,793.73
4,607,658.03
0.00
0.00
34,952,170.79
29,816,555.88
156,888.64
132,918.00
Deferred tax liabilities Other current liabilities Others Total current liabilities
Non-current liabilities Long-term loans Long-term capital lease obligations
0.00
0.00
Deferred revenues
0.00
0.00
Deferred tax liabilities
621,973.96
499,675.24
Provisions for pensions
820,394.00
820,394.00
Others
2,404,906.81
2,631,810.99
Total non-current liabilities
4,004,163.41
4,084,798.23
0.00
0.00
Share capital
26,325,946.00
26,325,946.00
Capital reserve
67,346,563.99
67,346,563.99
Minority interest
Shareholders’ equity
Treasury stock Legal reserve Other retained earnings Foreign currency translation
0.00
0.00
1,387.65
1,387.65
2,343,349.97
2,343,349.97
36,745.52
87,641.94
Market assessment for securities
42,187.50
181,250.00
Consolidated balance sheet loss
-50,912,105.61
-51,829,043.39
Total shareholders’ equity
45,184,075.02
44,457,096.16
Total equity and liabilities
84,140,409.22
78,358,450.27
12
GFT Interim Report Q2/2006 | Consolidated Financial Statement
GFT Technologies Aktiengesellschaft, St. Georgen
Consolidated Income Statement (IFRS) from 1 January until 30 June 2006
Interim Report
Revenue Other operating income Changes in inventories of work in progress Other capitalised services
Cumulated period
01/04/2006– 30/06/2006 e
01/04/2005– 30/06/2005 e
01/01/2006– 30/06/2006 e
01/01/2005– 30/06/2005 e
42,182,769.27
30,035,029.33
80,123,212.71
58,290,169.72
551,151.42
575,327.92
1,503,751.09
1,958,685.37
0.00
0.00
0.00
0.00
85,105.10
0.00
170,443.35
0.00
Cost of material/Purchased services
-20,887,998.48
-11,459,696.53
-38,796,152.38
-22,188,826.37
Employee benefits costs
-15,669,721.43
-14,684,334.11
-31,118,976.27
-28,930,572.62
-280,429.78
-334,095.98
-547,031.79
-661,008.30
Depreciation of tangible and intangible assets Goodwill amortisation Other operating expenses Others
0.00
0.00
0.00
0.00
-4,485,223.80
-4,159,236.88
-8,997,345.59
-8,394,178.50
0.00
0.00
0.00
0.00
1,495,652.30
-27,006.25
2,337,901.12
74,269.30
88,584.62
104,555.35
182,659.39
318,196.68
Dividend income
0.00
0.00
0.00
0.00
Income/expenses from financial assets using the equity method
0.00
0.00
0.00
0.00
Result from operating activities
Interest income/expenses
Foreign currency gains/losses
17,047.29
6,272.66
14,457.58
-28,256.64
-230,400.00
-31,832.08
-249,500.00
-151,550.00
1,370,884.21
51,989.68
2,285,518.09
212,659.34
-796,638.23
-579,061.60
-1,368,580.31
-626,442.11
0.00
0.00
0.00
0.00
574,245.98
-527,071.92
916,937.78
-413,782.77
0.00
0.00
0.00
0.00
574,245.98
-527,071.92
916,937.78
-413,782.77
Net earnings per share (basics)
0.02
-0.02
0.03
-0.02
Net earnings per share (diluted)
0.02
-0.02
0.03
-0.02
Weighted average number of shares outstanding (basic)
26,325,946
26,325,946
26,325,946
26,325,946
Weighted average number of shares outstanding (diluted)
26,325,946
26,325,946
26,325,946
26,325,946
Other income/expenses Earnings before tax (and minority interest) Income tax expenses Extraordinary income/expenses Earnings before minority interest Minority interest Net income/net loss
GFT Interim Report Q2/2006 | Consolidated Financial Statement
13
GFT Technologies Aktiengesellschaft, St. Georgen
Consolidated Cash Flow Statement from 1 January until 30 June 2006
Cumulated period 01/01/2006– 30/06/2006 e
01/01/2005– 30/06/2005 e
916,937.78
-413,782.77
Cash flows from operating activities Net income/loss Adjustments for: Minority interest Depreciation Increase/decrease of provisions and value adjustments Losses/gains from the disposal of assets Foreign currency gains/losses
0.00
0.00
547,031.79
661,008.30
1,347,809.32
-1,076,542.82
1,234.61
-14,910.32
14,457.58
-28,256.64
249,500.00
151,550.00
Changes in working capital
-13,890,136.95
-13,265,032.57
Cash flows from operating activities
-10,813,165.87
-13,985,966.82
-6,015,882.84
0.00
0.00
0.00
-711,432.36
-485,997.83
416.00
89,930.00
3,827,200.00
-1,383,104.25
-2,899,699.20
-1,779,172.08
Others
Cash flows from investing activities Acquisition of consolidated companies, net of purchased cash Income of sales of consolidated companies, net of cash disposed of Acquisition of fixed assets Income of sales of fixed assets Others Cash flows used in investing activities
Cash flows from financing activities Cash receipts from equity contribution Cash receipts form issuing short- or long-term loans Cash payments for repayments of loans Cash payments for lease obligations Others Cash flows used in financing activities Foreign exchange difference Decrease of liquid funds Liquid funds at the beginning of the period Liquid funds at the end of the period
0.00
0.00
30.000.00
45,358.89
-529,993.53
0.00
0.00
0.00
32,541.08
63,028.18
-467,452.45
108,387.07
0.00
0.00
-14,180,317.52
-15,656,751.83
20,652,062.51
20,472,430.62
6,471,744.99
4,815,678.79
14
GFT Interim Report Q2/2006 | Consolidated Financial Statement
GFT Technologies Aktiengesellschaft, St. Georgen
Consolidated Statement of Changes in Equity as of 30 June 2006
Retained Earnings
As of 31 December 2004
Legal reserve e
Other revenue reserves e
Subscribed capital e
Capital reserve e
26,325,946.00
67,346,563.99
1,387.65
2,343,349.97
26,325,946.00
67,346,563.99
1,387.65
2,343,349.97
26,325,946.00
67,346,563.99
1,387.65
2,343,349.97
26,325,946.00
67,346,563.99
1,387.65
2,343,349.97
26,325,946.00
67,346,563.99
1,387.65
2,343,349.97
Write-off of negative goodwill 1 January 2005 (IFRS 3.81) Adapted to 1 January 2005 version Financial assets available for sale (securities) - Change of fair value recognised in equity - Transferred to income statement 01/01–30/06/2005 Exchange differences on translating foreign operations 01/01–30/06/2005 Deferred taxes taken directly to or transferred from equity 01/01–30/06/2005 Income and expense recognised directly in equity 01/01–30/06/2005 Net loss 01/01–30/06/2005 Total recognised income and expense for 01/01–30/06/2005 As of 30 June 2005 Financial assets available for sale (securities) - Change of fair value recognised in equity - Transferred to income statement 01/01–31/12/2005 Exchange differences on translating foreign operations 01/01–31/12/2005 Deferred taxes taken directly to transferred from equity 01/01–31/12/2005 Income and expense recognised directly in equity 01/01–31/12/2005 Net income 01/01–31/12/2005 Total recognised income and expense for financial year 2005 As of 31 December 2005 Financial assets available for sale (securities) - Change of fair value recognised in equity - Transferred to income statement 01/01–30/06/2006 Exchange differences on translating foreign operations 01/01–30/06/2006 Deferred taxes taken directly to or for transferred from 01/01–30/06/2006 Income and expense recognised directly in equity 01/01–30/06/2006 Net income 01/01–30/06/2006 Total recognised income and expense for 01/01–30/06/2006 As of 30 June 2006
GFT Interim Report Q2/2006 | Consolidated Financial Statement
Changes in equity not affecting results Foreign currency translations
Market assessment for securities
e
e
Consolidated balance sheet loss e
52,910.25
0.00
-52,958,512.85
43,111,645.01
65,046.44
65,046.44
-52,893,466.41
43,176,691.45
52,910.25
0.00
Minority interest
Total share capital
e
e
0.00
43,111,645.01
0.00
43,176,691.45
65,046.44
0.00
0.00
0.00
0.00
0.00
0.00
63,028.18
63,028.18
63,028.18 0.00 63,028.18
0.00
63,028.18
0.00
115,938.43
0.00
0.00
0.00
0.00
63,028.18
0.00
63,028.18
-413,782.77
-413,782.77
0.00
-413,782.77
-413,782.77
-350,754.59
0.00
-350,754.59
-53,307,249.18
42,825,936.86
0.00
42,825,936.86
290,000.00
290,000.00
290,000.00
0.00
0.00
0.00
34,731.69
34,731.69
34,731.69
181,250.00
-108,750.00
-108,750.00
-108,750.00 34,731.69
Equity attributed to equity holders of the parent e
0.00
215,981.69
0.00
215,981.69
1,064,423.02
1,064,423.02
0.00
1,064,423.02
34,731.69
181,250.00
1,064,423.02
1,280,404.71
0.00
1,280,404.71
87,641.94
181,250.00
-51,829,043.39
44,457,096.16
0.00
44,457,096.16
24,000.00
24,000.00
24,000.00
-246,500.00
-246,500.00
-246,500.00
-50,896.42
-50,896.42
-50,896.42 83,437.50 -50,896.42
-139,062.50
-50,896.42
-139,062.50
36,745.52
42,187.50
83,437.50
83,437.50
0.00
-189,958.92
0.00
-189,958.92
916,937.78
916,937.78
0.00
916,937.78
916,937.78
726,978.86
0.00
726,978.86
-50,912,105.61
45,184,075.02
0.00
45,184,075.02
15
16
GFT Interim Report Q2/2006 | Consolidated Financial Statement
GFT Technologies Aktiengesellschaft, St. Georgen
Notes to the Quarterly Financial Statements as of 30 June 2006
1. Fundamentals for the GFT Group’s quarterly financial statements The quarterly financial statements of the GFT Technologies Aktiengesellschaft Group (“GFT AG“) should be read in conjunction with the GFT AG Group annual financial statements as of the end of the last financial year (31 December 2005). They were drawn up in Euro in accordance with standard principles of accounting and valuation and conform to the prescriptions set out in IAS 34 and the regulations for the Frankfurt Stock Exchange. The same accounting and valuation methods were used in these quarterly financial statements as in the previous group annual financial statements as of 31 December 2004. These are the International Financial Reporting Standards (“IFRS“) issued by the International Accounting Standards Board (IASB).
2. Changes to the consolidated group and its associated companies The following changes to the scope of consolidation have occurred since the consolidated financial statements were closed on 31 December 2005. With effect from 31 January 2006 GFT AG bought all of the business shares of the following companies: 1. PARITY EUROSOFT S.A.R.L., Paris, France 2. GFT Resource Management GmbH (until 15 March 2006 PARITY BETEILIGUNGSGESELLSCHAFT GMBH), Eschborn (until 19 July 2006 Frankfurt am Main) including the subsidiaries GFT Flexwork GmbH (until 5 July parity Selection GmbH, Eschborn (until 25 April 2006 in Munich, from 26 April to 17 July 2006 in Frankfurt) Parity Eurosoft GmbH, Frankfurt am Main and Parity Business Solutions GmbH, Frankfurt am Main - all five companies together are jointly referred to as “Parity companies”. The companies named above were included in the consolidated financial statements for the first time from 31 January 2006. Their contribution to revenue in the first quarter 2006 totalled c 18,9m. with a contribution to results totalling c 0.3m. The initial inclusion of the stated companies affects the Group’s assets, financial and earnings position and thus makes comparisons with the previous year’s figures difficult. Parity Eurosoft GmbH and Parity Business Solutions GmbH were consolidated on the effective date of 1 January 2006, into GFT Resource Management GmbH (the absorbing legal entity); the consolidations became effective on 29 June 2006. The consolidations had no effect on the interim report of the GFT Group of 30 June 2006.
17
GFT Interim Report Q2/2006 | Consolidated Financial Statement
On 10 February 2006 GFT AG purchased 100 % of the shares in GFT Business Development GmbH, Eschborn, which is included in the consolidated financial statements from this time onwards. As this company did not engage in operating activities from the time it was purchased until 31 March 2006, first-time inclusion did not have a significant influence on the asset, financial or earnings position of the Group; similarly there is no effect on comparability with previous year’s figures. In addition, the scope of consolidation was also subject to the following changes compared with the quarterly financial statements to 30 June 2005. The subsidiary, GFT Brasil Consultoria Informática Ltda., São Paulo, Brazil, acquired in November 2005, was included in the consolidated financial statements for the first time. As this company did not engage in operating activities from the time it was purchased until 30 June 2006, first-time inclusion did not have significant influence on the asset, financial or earnings position of the Group; similarly there is no effect on comparability with previous year’s figures.
3. Corporate mergers between 1 January and 30 June 2006 On 10 February 2006 GFT AG purchased 100 % of the shares in GFT Business Development GmbH, Eschborn. This is a stocking company that was purchased exclusively to extend business activities in Southern and Eastern Europe including the CIS states, but which has since that date not carried out any operating activities. The purchase costs totalled c(k) 28 and were paid in cash. The purchased company only held assets totalling a bank credit of c(k) 13 and outstanding deposits totalling c(k) 12. The merger created goodwill totalling c(k) 3. The loss of GFT Business Development GmbH from the date of purchase to 30 June 2006 contained in the results of the GFT Group for the period totals c(k) -6. With the purchase contract dated 26 January 2006 - hereafter called "purchase contract" - GFT AG purchased all the business shares in the Parity companies with effect from 31 January 2006 (see point 2 above). With this purchase GFT AG purchased the Resourcing Solutions division from Parity in Germany and France. The annual report covers the management of external IT service providers ranging from locating experts via service provider contract management to billing and reporting. The purchase aims to expand the existing GFT segment Resourcing and accelerate the expansion of business in France. The purchase price for all the business shares in the Parity companies is currently believed to be c(k) 6,826 and according to the purchase contract is shared as follows over the companies purchased: e(k)
PARITY EUROSOFT S.A.R.L.
1,000
GFT Resource Management GmbH
5,826
18
GFT Interim Report Q2/2006 | Consolidated Financial Statement
GFT Technologies Aktiengesellschaft, St. Georgen
Notes to the Quarterly Financial Statements as of 30 June 2006
The purchase contract includes adaptation mechanisms that could result in a change to the purchase price depending on data not yet known at present. From today’s perspective, before including any future changes to the purchase price the total purchasing cost is comprised as follows:
e(k)
Purchase price Due diligence, legal, consulting and notary costs Total purchase costs
6,826 204 7,030
The purchase costs were paid in cash. At present, the sums applied to each class of assets and debts of the purchased companies at the time of purchase are as follows: Book value = current value e(k)
Assets Long-term assets Tangible assets
37
Short-term assets Receivables and other assets Liquid funds
11,033 1,015 12,048 12,085
Debts Short-term debts Provisions for taxation Other provisions Liabilities
660 4,446 4,954 10,060
Net assets acquired
2,025
Goodwill
5,005
Purchase costs
7,030
GFT Interim Report Q2/2006 | Consolidated Financial Statement
19
The factors that contributed to the purchase costs that were used to set the goodwill are: a. Qualification and activity of the employees of the Parity companies b. Positioning of Parity companies with the customers including existing framework agreements c. Current, comprehensive, maintained database of available IT service providers d. Process expertise on the cost-effective processing of temporary freelancers e. Expected synergy potential with the GFT Group customer portfolio It is not possible to identify immaterial assets that are separate from goodwill. The profit of the purchased Parity companies from the date of purchase to 30 June 2006 contained in the results of the GFT Group for the period totals c(k) 279. The revenue of the GFT Group for the reporting period from 1 January to 30 June 2006 would have been c 84.0m. if all mergers that took place within this period had been purchased at the start of the reporting period. The profit of the GFT Group for the reporting period from 1 January to 30 June 2006 would have been c 0.9m. if all mergers that took place within this period had been purchased at the start of the reporting period.
4. Changes in equity With respect to the changes in equity capital between 1 January 2006 and 30 June 2006 we refer to the consolidated stamement of changes in equity on page 14 and 15. As of 30 June 2006 the company’s share capital of c 26,325,946.00 consists of 26,325,946 non par value individual share certificates (no change relative to 31 December 2005). These shares are bearer shares and they all grant equal rights. On 30 June 2006 the consolidated balancesheet loss included a carry forward from the previous year amounting to c(k) –51,829 (previous year: c(k) –52,893). No changes resulted to the company’s authorised and conditional capital between 1 January and 30 June 2006 relative to 31 December 2005. Dividends have not been proposed or paid out during the 2006 financial year.
5. Segmental reporting Segmental reporting for the first six months of 2006 financial year was undertaken for the same business segments as in the group’s annual financial statement as of 31 December 2005. Segment Resourcing also contains the Parity companies that were included in the consolidated accounts for the first time from 31 January 2006 (see point 2 above).
20
GFT Interim Report Q2/2006 | Consolidated Financial Statement
GFT Technologies Aktiengesellschaft, St. Georgen
Notes to the Quarterly Financial Statements – Segment reporting as of 30 June 2006
Services
Software
Resourcing
30/06/2006 ke
30/06/2005 ke
30/06/2006 ke
30/06/2005 ke
30/06/2006 ke
30/06/2005 ke
38,757
37,452
3,337
2,989
38,029
17,849
–
–
–
157
79
11
38,757
37,452
3,337
3,146
38,108
17,860
3,168
363
-674
169
683
361
35,461
36,439
1,257
2,026
37,907
14,387
21,108
16,624
1,993
1,921
13,396
6,184
Capital expenditure
434
405
193
53
70
17
Depreciation
446
560
61
66
29
21
–
–
–
–
–
–
Revenue External sales Inter-segment sales Total revenue Result Segment result Unallocated income/expenses Operating result Interest expenses Interest income Share of profit/loss of associates Earnings before tax Income tax expense Net income/loss Other information Segment assets Investments in associates accounted for under the equity method Unallocated corporate assets Consolidated total assets Segment liabilities Unallocated corporate liabilities Consolidated total liabilities
Non-cash expenditure other than depreciation
GFT Interim Report Q2/2006 | Consolidated Financial Statement
Total
Eliminations
30/06/2006 ke
30/06/2005 ke
80,123
58,290
Consolidated
30/06/2006 ke
30/06/2005 ke
79
168
-79
-168
80,202
58,458
-79
-168
3,177
893
74,625
52,852
9,515
36,497
17,554
24,729 2,459
21
2,851
30/06/2006 ke
30/06/2005 ke
80,123
58,290
3,177
893
-1,074
-998
2,103
-105
-78
-34
261
352
–
–
2,286
213
-1,369
-627
917
-414
74,625
52,852
–
–
9,515
17,554
84,140
70,406
36,497
24,729
2,459
2,851
38,956
27,580 486
697
475
14
11
711
536
647
11
14
547
661
–
–
250
152
250
152
22
GFT Interim Report Q2/2006 | Consolidated Financial Statement
GFT Technologies Aktiengesellschaft, St. Georgen
Notes to the Quarterly Financial Statements as of 30 June 2006
In addition to segment data by business segment, oriented in accordance with the company’s structure, the table shown below contains geographical data in accordance with IAS 14 (secondary segment information).
External revenues for group**
Investments in tangible fixed assets and intangible assets
Book value for segmental assets
01/01/– 30/06/2006 in e(k)
01/01/– 30/06/2005 in e(k)
30/06/2006 in e(k)
30/06/2005 in e(k)
01/01/– 30/06/2006 in e(k)
01/01/– 30/06/2005 in e(k)
49,730
38,512
59,754
54,885
385
282
Spain
6,695
6,536
11,141
7,745
260
120
United Kingdom
5,432
5,614
5,707
4,447
17
0
Switzerland
1,780
2,168
1,184
1,755
39
24
Brazil
5,758
0
94
0
3
0
France
5,778
238
5,264
333
3
0
Other foreign countries
4,950
5,222
996
1240
4
60
80,123
58,290
84,140
70,405
711
486
Germany
Total
** According to location of clients’ head office
6. Changes to contingent liabilities As of 30 June 2006, the group had not undergone any significant changes to its contingencies and other financial commitments since its group annual financial statements of 31 December 2005.
7. Investments During the period between 1 January and 30 June 2006, the GFT Group invested c(k) 348 in intangible fixed assets (1 January to 30 June 2005: c(k) 144) and c(k) 363 in tangible assets (1 January to 30 June 2005: c(k) 342).
GFT Interim Report Q2/2006 | Consolidated Financial Statement
23
8. Related party disclosures Relative to the notes to the group annual financial statements as of 31 December 2005 there were no changes to the composition of the affiliated companies and people, and to the relationships with these.
9. Explanations about shares for company use and subscription rights of employees and members of the company’s executive bodies As of 30 June 2006 GFT AG does not hold any own shares; nor were any own shares acquired or sold in the period from 1 January to 30 June 2006 (§ 160 para. 1 no. 2 AktG - German Company Law). The explanations about subscription rights of employees and members of the company’s executive bodies as per § 160 para. 1 no. 5 AktG refer to the stock options program (subscription rights as per § 192 para. 2 no. 3 AktG): The extraordinary shareholders’ meeting of 4/24 June 1999 approved a conditional equity capital increase through an issue of up to 260,000 individual share certificates (corresponding to 780,000 individual share certificates following the 3:1 stock split of May 16, 2000, Conditional Capital I/1999) permitting subscription rights exclusively through stock options programs as well as the basic features of stock options programs to be launched by the Executive Board. The conditional increase in capital is to be carried out only insofar as the holders of the issued subscription rights wish to use their subscription rights according to § 192 para. 2 no. 3 AktG. Beneficiaries are exclusively members of the Executive Board and employees of GFT Technologies AG as well as of 100 % subsidiaries, to whom purchasing rights have been granted. The subscription rights under the “1999/2004” and “2000/2005” stock option programmes issued by the Executive Board lapsed on 6 July 2004 and respectively 1 July 2005 without having been exercised. Therefore, no subscription rights pursuant to Sec. 192 para. 2 No. 3 of the German Corporation Law (AktG) which may be used have existed since 1 July 2005.
24
GFT Interim Report Q2/2006 | The GFT Group
Contact GFT Technologies AG Investor Relations Leopoldstraße 1 78112 St. Georgen, Germany P +49 7724 9411-440 F +49 7724 9411-883 ir@gft.com
Dates Interim Report as of 30 June 2006 Interim Report as of 30 September 2006
GFT Technologies AG Leopoldstraße 1 78112 St. Georgen, Germany P +49 7724 9411-0 F +49 7724 9411-94 info@gft.com www.gft.com
10 August 2006 9 November 2006
GFT Technologies AG LeopoldstraĂ&#x;e 1 78112 St. Georgen, Germany T +49 7724 9411-0 F +49 7724 9411-94 info@gft.com www.gft.com