GFT Quarterly Financial Report Q3/2013 by GFT Technologies SE

Quarterly financial Report as of 30 September 2013

digi tal pio neer ing

Q1–3–2013

Key figures according to IFRS (not certified)

9 months

01/01/– 30/09/2013

01/01/– 30/09/2012

Change

Income Statement Revenue

€m

185.44

174.61

6.2%

Earnings before interest, taxes, depreciation and amortisation (EBITDA)

€m

13.05

8.81

48.1%

Earnings before interest and taxes (EBIT)

€m

11.27

7.65

47.3%

Earnings before taxes (EBT)

€m

11.21

7.80

43.7%

Net income

€m

8.38

5.10

64.3%

Other non-current assets

€m

82.32

45.62

80.4%

Cash, cash equivalents and securities

€m

20.45

29.08

-29.7%

Other current assets

€m

74.62

56.78

31.4%

Assets

€m

177.39

131.48

34.9%

Balance Sheet

Non-current liabilities

€m

11.77

7.16

64.4%

Current liabilities

€m

82.93

48.88

69.7%

Shareholders’ equity

€m

82.69

75.44

9.6%

Shareholders’ equity and liabilities

€m

177.39

131.48

34.9%

Equity ratio

47%

57%

-17.5%

Cash flow from operating activities

€m

-1.44

-6.31

-77.2%

Cash flow from investing activities

€m

-15.77

-0.10

15,670.0%

Cash flow from financing activities

€m

0.47

-3.60

-113.1%

no.

2,029

1,371

48.0%

0.32

0.19

64.3%

26,325,946

0.0%

Cash flow

Employees Number of permanent employees (as of 30 September)

Share Earnings per share

€

Average number of outstanding shares (undiluted) (Rounding differences in the Interim Group Management Report due to presentation in € million possible)

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Highlights

Following a planned development of revenue in the first half of 2013, the GFT Group stepped up the pace of growth significantly in the third quarter. Thanks to dynamic organic growth in the GFT Solutions division and the initial consolidation of the newly acquired Sempla Group, consolidated revenue in the third quarter grew by 22% to €71.25 million. After the first nine months, the GFT Group posted revenue growth of 6% to €185.44 million. Pre-tax earnings (EBT) improved over the same period by 44% to €11.21 million. The Company has upgraded its full-year guidance for pre-tax earnings issued in August to around €16 million (formerly at least €15 million) and expects revenue for the full year to increase to at least €260 million (prev. year: €230.69 million) with an EBITDA result of around €19 million (prev. year: €13.35 million).

Revenue

€ million

Earnings before taxes

2012

56.08

58.23

2013

2012

€ million

71.25

4.31

4.02

2013

5.71

58.73

58.68

2.51

3.95

57.65

55.51

1.27

1.55

230.69

185.44

12.11

11.21

Contents Interim Group Management Report

…

Interim Group Financial Statements

Notes to the Interim Group Financial Statements

…

Q1–3–2013

Interim Group Management Report of GFT Technologies Aktiengesellschaft as at 30 September 2013 (not certified)

Business environment Economic environment Macroeconomic development Global growth remained slow in the third quarter of 2013.

The ifo’s Business Climate Index was up slightly again in September – for the fifth consecutive time. It rose marginally from 107.6 points in the previous month to 107.7 points.

In its latest World Economic Outlook of October 2013, the International Monetary Fund (IMF) downgraded its forecast for the global economy for the fourth time this year and for the sixth consecutive time. According to the report, global gross domestic product (GDP) will rise by just 2.9% this year, or by 0.3 %-points less than previously expected. High unemployment in Europe, uncertainty about the effects of tougher US monetary policy and weaker growth in the emerging economies are regarded as the main obstacles. In its Economic Outlook of September 2013, the Or-

Sector development The global IT market once again displayed stronger growth than the economy as a whole. However, the international market research institute IDC reduced its forecast for global IT expenditure in the current year from 4.9% to 4.6% growth. According to Gartner’s market researchers, global IT managers are expected to spend a total of $926 billion for IT services in 2013 – corresponding to growth of 2.2%.

ganisation for Economic Cooperation and Development

The German Federal Association for Information Technol

(OECD) came to a similar conclusion: the major economic

ogy, Telecommunications and New Media (BITKOM) is opti-

nations are recovering, while the risks in the world’s

mistic about the situation in Germany. According to its sur-

emerging economies are growing. The OECD’s experts

vey of market sentiment in July 2013, 70% of all suppliers

therefore predict that global economic growth will slow

of IT services reported increased revenues in the first half

to a »snail’s pace«.

of 2013. Of the suppliers of information technology, tele-

In contrast to this, however, the OECD believes that the eurozone is on track for recovery. The growth forecast for France was therefore increased from a slight decline to a plus of 0.3% in the current year, while growth in the UK has been upgraded from 0.8% to 1.5%. The monetary union as a whole is expected to pull out of its long and deep recession by the end of the year. The IMF has also

communication and entertainment electronics 57% raised sales over the same period. This upbeat mood is also reflected by the BITKOM’s sector barometer of July 2013, which remains high and continues to exceed expectations for the economy as a whole (ifo Index). However, 55% of companies still believe that the current lack of skilled staff is the greatest obstacle to market growth.

upgraded its growth forecast for the eurozone, but still

As the most important sector for GFT, the financial services

expects a slight decline of 0.4%. The IMF sees this as an

industry is the sector investing most heavily in IT. This was

improvement but no indication of a broader upturn.

the conclusion of a survey conducted by Forrester Research

In their autumn reports, the leading German research institutes state that Germany is on the verge of an economic upswing. Nevertheless, they downgraded their forecast for the current year from 0.8% in their spring reports to 0.4%. The IMF and OECD are more upbeat: the IMF expects economic growth of 0.5% for Germany this year, while the OECD’s economists predict as much as 0.7%.

Inc., which examined companies in the Americas, Europe and Asia. One key reason was the implementation of compliance regulations requiring IT support.

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Overview of business development

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Interim Group Management Report

The emagine division, which is being realigned as a separate brand in 2013, posted revenue of €67.61 million –

Following a stable and planned development of revenue

20% down on the previous year (€84.13 million). This

with strong earnings growth in the first half of 2013, the

decline in revenue resulted mainly from the planned dis-

GFT Group stepped up the pace of growth in the third

continuation of business with a major Third Party Manage-

quarter. Thanks to the strong organic growth of the GFT

ment (TPM) customer. In 2013, the planned reduction in

Solutions division and initial consolidation of Sempla S.r.l.,

revenue from low-margin TPM business will amount to

Milan, Italy (Sempla Group), acquired in early July 2013,

around €15 million. Realignment costs represented a par-

revenue in the third quarter grew year on year by 22% to

ticular burden on segment earnings in the first six months.

€71.25 million (prev. year: €58.23 million). After the first

Following an upturn in the third quarter, segment earnings

nine months, revenue of €185.44 million was 6% above

for the first nine months amounted to €0.41 million

the prior-year level (€174.61 million). Earnings before in-

(prev. year: €1.59 million).

terest, taxes, depreciation and amortisation (EBITDA) rose by 48% to €13.05 million in the first nine months (prev.

Due to the positive development of business and high

year: €8.81 million). This figure includes income of €1.73

utilisation of capacity in the GFT Solutions division, head-

million from an adjustment to the expected purchase price

count at the Spanish development centres was increased

for Asymo AG, acquired in 2011, as well as costs for the

by 19% to over 1,000 during the reporting period. All in all,

CODE_n innovation drive and CeBIT fair presence amount-

the number of full-time staff employed by GFT increased to

ing to €0.97 million (prev. year: €1.35 million). The newly

2,029 as at 30 September 2013 (prev. year: 1,371).

consolidated Sempla S.r.l. contributed €0.93 million to EBITDA. The Group’s pre-tax earnings (EBT) were up 44% to €11.21 million (prev. year: €7.80 million), corresponding to a margin of 6.0% (prev. year: 4.5%). The GFT Solutions division made very encouraging progress with revenue growth of 30% to €117.82 million in the first nine months (prev. year: €90.48 million). The newly integrated Sempla Group business accounted for €10.20 million of this figure. Adjusted for this revenue contribution, GFT Solutions posted growth of 19%. This strong organic growth was helped by rising demand for outsourcing services and investment banking solutions, especially in the regions UK and Germany. The disproportionately strong increase in earnings, compared to revenue, of 62% to €12.85 million (prev. year: €7.93 million) resulted mainly from a higher utilisation rate and the adjustment of the remaining purchase price for Asymo AG.

Q1–3–2013

GFT share The mood on the international stock markets was already

The share closed the month slightly above €5.00 after

predominantly bullish in the first half of the year. Although

reaching its month-high of €5.06 (closing Xetra price) on

the EURO STOXX 50 (heavy finance bias) was down 4%

29 July. The GFT share continued to climb in the reporting

after six months, the German blue-chip DAX index posted

month of August and following publication of the half-

growth of 2%. The mid-cap MDAX and tech stock TecDAX

yearly figures with positive analyst reviews, it reached a

indices were both up 12%. The US stock markets proved

month-high of €5.39 (closing Xetra price) on 13 August.

to be much more stable than their European counterparts.

At the end of the month, the share suffered slightly from a

The Dow Jones, S&P 500 and Nasdaq all reported double-

market environment hit by the Syrian crisis and ended Au-

digit growth in the first half-year. In July 2013, the Europe-

gust at €5.08. Trading remained firm with a daily average

an Central Bank’s commitment to continue its low-interest

turnover of 77,262 shares.

policy and Federal Reserve President Bernanke’s confirmation of America’s expansionary monetary policy led to new all-time-highs for the Dow Jones, S&P 500 and Nasdaq. The DAX failed to join them and only the MDAX climbed to new record heights. Bolstered by positive economic data from the eurozone, the upward trend continued on the stock markets with new records for the US indices in early August. However, investor sentiment was knocked back by the Assad regime’s gas attack in Syria on 21 August and by

After the strong upward trend of the previous months, the Company’s share remained slightly above the €5 mark in the first half of September and thus proved very stable on the moving average of the 38-day-line (€5.088). With trading volumes slightly down on the previous month, the GFT share closed September at €4.91 – representing growth of 52% since the beginning of the year.

the growing danger of a military escalation in the Middle

Shareholder structure

East, resulting in profit-taking at the end of the month.

There were no changes in the shareholder structure of

The political situation calmed down somewhat after Russia

GFT Technologies Aktiengesellschaft in the period under

and Syria agreed on the destruction of chemical weapons

review. 28.08% of shares are still held by company foun

in September. The Federal Reserve also surprised the capi-

der Ulrich Dietz. Maria Dietz owns 9.68% of shares, while

tal markets with its decision not to reduce its bond buying.

former Supervisory Board member Dr. Markus Kerber holds

These circumstances all helped push the German stock

5.00%. The free float portion comprises 57.24% of all

markets to new record highs, with an all-time-high for the

GFT shares.

DAX. Market sentiment was tempered at the end of the month, however, by the government crisis in Italy and fear of an impending budget lockdown in the USA.

Shareholder structure

Following growth of 27% in the first half of the year, the GFT share was able to follow up this strong performance of the previous months in the third quarter. Starting at just over €4.00 in July, the share held this level in low trading until the middle of the month. After passing the €4.50 mark in mid July, daily trading volumes picked up strongly. %

Ulrich Dietz

28.08

Maria Dietz

9.68

Dr Markus Kerber Free float

5.00 57.24

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Interim Group Management Report

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Share performance indexed

170 GFT share

Technology All Share Performance Index 100

2 January 2013 (closing price Xetra) €3.22 = 100%

28 September 2013 (closing price Xetra) €4.91

Information on the GFT share Q1– 3 2013

Q1– 3 2012

€3.22

€2.75

Closing quotation on 30 September (daily closing prices Xetra)

€4.91

€2.90

Percentage change

Year-opening quotation (daily closing prices Xetra)

+52%

+5%

Highest price (daily closing prices Xetra)

€5.39 (13/08/2013)

€3.20 (02/03/2012 13/–16/03/2012 20/–21/03/2012)

Lowest price (daily closing prices Xetra)

€3.20 (03/01/2013) (07/01/2013)

€2.75 (02/01/2012)

26,325,946

Market capitalisation on 30 September

€129.16 million

€76.35 million

Average daily trading volume in shares (Xetra and Frankfurt)

38,320

12,954

€0.32

€0.09

Number of shares on 30 September

Earnings per share

ISIN

DE 0005800601

Initial stock market quotation

28/06/1999

Market segment

Prime Standard

Q1–3–2013

Development of revenue In the first nine months of 2013, the GFT Group generated

In the emagine division, revenue was 20% down on the

consolidated revenue of €185.44 million, corresponding to

previous year at €67.61 million for the first nine months

growth of 6% over the previous year (€174.61 million).

of 2013 (prev. year: €84.13 million). This figure includes

The planned reduction in low-margin Third Party Manage-

the planned reduction of revenues in the TPM business of

ment (TPM) business amounted to €13.72 million in the

€13.72 million. With its consultancy services for the staff-

first nine months. Adjusted for this discontinued revenue

ing of technology projects with highly skilled IT and engi-

contribution, the Group’s core business grew by 15% year

neering experts, the emagine division reported a decline

on year. In the third quarter, revenue rose by 22% to

in revenues of 3% to €65.28 million (prev. year: €67.58

€71.25 million (prev. year: €58.23 million). This figure

million). The TPM business contributed just €2.33 million

includes revenue of €10.20 million from the initial inclu-

(prev. year: €16.55 million) to segment revenue. All in all,

sion of the Sempla Group (consolidated in July).

this division’s share of consolidated revenue fell to 36% (prev. year: 48%).

Revenue by segment The GFT Solutions division achieved revenue growth

Revenue by country

of 30% to €117.82 million (prev. year: €90.48 million)

Germany, which is affected most by the withdrawal from

in the first nine months of 2013. The newly consolidated

TPM business, reported a fall in revenue of 10% to €61.21

Sempla Group, integrated into this division, contributed

million in the first three quarters (prev. year: €68.10 mil-

€10.20 million to revenue in the third quarter. Adjusted

lion). The GFT Solutions division enjoyed strong growth in

for this revenue contribution, GFT Solutions achieved

this region of 36% to €31.85 million (prev. year: €23.36

growth of 19% in the first nine months. This strong or-

million). Germany remained the GFT Group’s largest sales

ganic growth resulted mainly from projects relating to the

market with a share of total revenue of 33% (prev. year:

introduction of the Single Euro Payments Area (SEPA) as

39%).

well as from solutions for investment banking and mobile banking. The division’s share of consolidated revenue Revenue by country

rose to 64% (prev. year: 52%).

Revenue by segment

Q1– 3 2013

€ million

Germany

33%

61.21

23%

42.27

France

16%

29.83

Spain

10%

19.46

Q1– 3 2013

€ million

GFT Solutions

64%

117.82

emagine

36%

67.61

Italy

14.20

0.01

USA

7.14

Switzerland

6.67

Other countries

4.66

Others

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Interim Group Management Report

The GFT Group recorded its strongest revenue growth in

Revenue by industry

the UK. Driven by strong demand from the investment

At the beginning of financial year 2013, revenue by indus-

banking industry, revenues here rose by 54% to €42.27 million (prev. year: €27.45 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%). With a decline in revenue of 5% to €29.83 million, business in France was slightly down on the previous year (€31.32 million). Revenue in this region is generated almost completely with the staffing of technology projects (emagine). The region accounted for 16% (prev. year: 18%) of total Group revenue. Revenue in Spain was also down by 3% to €19.46 million (prev. year: €20.06 million). Its share of Group revenue remained stable at 10% (prev. year: 11%). With the acquisition of the Sempla Group, the GFT Group has been represented by ten offices in Italy since the beginning of the third quarter of 2013. Revenue with clients in this region, which was previously classified under »Other countries«, is now shown in the separately disclosed region »Italy«. In the reporting period, revenue in Italy amounted to €14.20 million (prev. year: €3.82 million), of which the Sempla Group accounted for €10.20 million in the third

try was reclassified in order to reflect business in the relevant target markets more transparently. Prior-year figures were adjusted accordingly. With a 65% share of the GFT Group’s total revenue (prev. year: 61%), the financial service providers sec tor remained the most important industry for GFT in the first nine months of 2013. Revenue losses from the discon tinued TPM business were completely offset in this sector by revenue growth in the GFT Solutions segment of 32% to €108.83 million (prev. year: €82.74 million). All in all, revenue in this sector increased by 13% to €120.96 million (prev. year: €106.94 million). The proportion of revenue contributed by the sector »other service providers« fell to 14% (prev. year: 16%). Revenues were down by 10% to €24.99 million (prev. year: €27.84 million). This was due to lower sales in both the emagine segment and GFT Solutions segment. Revenue in the »other industries« sector remained virtually unchanged at €39.49 million (prev. year: €39.82 million) and accounted for 21% of Group revenue (prev. year: 23%).

quarter. This region contributed 8% (prev. year: 2%) to total Group revenue.

Revenue by industry

In the USA, revenue fell by 14% to €7.14 million (prev. year: €8.35 million), accounting for 4% (prev. year: 5%) of Group revenue. Revenue generated in Switzerland amounted to €6.67 million, corresponding to a decline of 27% on the previous year (€9.14 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

Q1– 3 2013

€ million

discontinuation of local emagine business in the third

Financial service providers

65%

120.96

quarter of the previous year.

Other industries

21%

39.49

Other service providers

14%

24.99

Revenue from »other countries« reached €4.66 million (prev. year: €6.37 million), corresponding to a decline of 27% and a share of Group revenue of 2%.

Q1–3–2013

Earnings position Earnings before interest, taxes, depreciation and

Earnings per share rose by €0.13 to €0.32 (prev. year:

amortisation (EBITDA) of the GFT Group rose by 48%

€0.19 per share) based on 26,325,946 outstanding shares.

to €13.05 million in the first nine months (prev. year: €8.81 million). The newly consolidated Sempla Group con-

Consolidated earnings position by segment

tributed €0.93 million to EBITDA, of which €+1.78 million

In the first nine months of 2013, the earnings contribution

resulted from operating income and €-0.85 million from costs of purchased services as part of the initial Purchase Price Allocation (PPA). EBITDA includes income of €1.73 million from the adjustment of the expected purchase price for Asymo AG acquired in 2011, as well as costs for the CODE_n innovation drive and CeBIT fair presence amounting to €0.97 million (prev. year: €1.35 million). Earnings before interest and taxes (EBIT) improved by 47% to €11.27 million (prev. year: €7.65 million).

of the GFT Solutions segment rose by 62% to €12.85 million (prev. year: €7.93 million), corresponding to an increase in the operating margin to 10.9% (prev. year: 8.8%). The disproportionately strong increase in earnings, compared to revenue, resulted mainly from a higher utilisation rate and the adjustment of the remaining purchase price for Asymo AG. Earnings of the emagine segment amounted to €0.41 million after the first nine months of 2013 (prev. year:

In the first nine months of 2013, earnings before taxes (EBT) amounted to €11.21 million and were thus 44% up on the previous year (€7.80 million). The operating margin before taxes improved strongly by 1.5 %-points, from 4.5% in the previous year to 6.0%. In the reporting period, the GFT Group generated earnings after taxes of €8.38 million, corresponding to growth of 64% over the prior-year figure (€5.10 million). The calculated tax ratio fell to 25% (prev. year: 35%). This was mainly due to the tax-free earn-out reduction of Asymo.

€1.59 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 fell to 0.6% (prev. year: 1.9%). 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 €-2.05 million, pre-tax earnings of this division in the first nine months were 20% below the prior-year figure (€-1.72 million). This was mainly due to expenses for the CODE_n project and CeBIT fair presence in March 2013.

Earnings by segment

GFT Solutions € million

emagine

Total

others

Q1– 3 2012 Q1– 3 2013 Q1– 3 2012 Q1– 3 2013 Q1– 3 2012 Q1– 3 2013 Q1– 3 2012 Q1– 3 2013 7.93

12.85

1.59

0.41

-1.72

-2.05

7.80

11.21

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Interim Group Management Report

Consolidated earnings position by income and expense items

The financial result fell to €-0.18 million (prev. year:

In the first three quarters of 2013, other operating in-

ments. The financial result includes expenditure for the cal-

come rose to €3.19 million (prev. year: €1.64 million). This increase of €1.55 million was mainly due to the partial reversal of an earn-out provision for the remaining Asymo purchase payment 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 €5.62 million to €77.41 million (prev. year: €83.03 million) due to lower revenues in the Third Party Management business and the related purchase of external employees. The cost of pur-

€0.13 million), mainly as a result of increased interest payculated compounding of the remaining purchase price obligation in connection with the acquisition of the Sempla Group amounting to €-0.10 million (prev. year: zero). In the first nine months, income taxes amounted to €2.83 million and were thus €0.13 million above the prioryear figure (€2.70 million). The calculated tax ratio fell strongly by 10 %-points to 25% (prev. year: 35%). 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.

chased services includes a non-recurring write-down of €0.85 million on the order backlog of the acquired company Sempla Group resulting from the Purchase Price Alloca-

Financial position

tion (PPA). The ratio of cost of purchased services to revenue consequently fell year on year by 6 %-points to 42% (prev. year: 48%).

As at 30 September 2013, cash, cash equivalents and

Personnel expenses increased by €11.18 million to

€19.97 million below the corresponding figure at the end

€78.03 million in the reporting period (prev. year: €66.85

of 2012 (€40.42 million). This decline resulted from a sig-

million). As a proportion of revenue (the so-called »per

nificant fall in liquid funds, mainly due to the disposal of

sonnel cost ratio«), personnel expenses were 4 %-points

securities and the purchase price payment for the Sempla

above the prior-year figure at 42% (prev. year: 38%). This

Group.

increase resulted from the strongly increased revenue share of the more labour-intensive GFT Solutions segment to 64% (prev. year: 52%) and the related increase in headcount in this division as at 30 September 2013. Depreciation of intangible and tangible assets rose slightly to €1.78 million in the first nine months (€1.16 million). The acquisition of the Sempla Group resulted in pro rata depreciation from operating activities of €0.38 million and write-downs on client base and software products from the Purchase Price Allocation (PPA) of €0.27 million. Other operating expenses rose by 14% to €20.03 million in the reporting period (prev. year: €17.53 million). The main cost elements are operating, administrative and selling expenses, which rose by €2.60 million to €19.14 million (prev. year: €16.54 million). This item also includes exchange rate losses and other taxes.

securities amounted to €20.45 million and were thus

Due to the delayed receipt of payments and the acquisition of the Sempla Group, trade receivables rose by €24.31 million to €68.52 million as at 30 September 2013. At year-end 2012, the figure stood at €44.21 million. Trade payables – consisting mainly of amounts owing to external employees – amounted to €18.32 million on 30 September 2013. This corresponds to a reduction of €1.51 million compared to 31 December 2012 (€19.83 million). Since the planned winding down of Third Party Management business last year, liabilities have remained correspondingly stable since the beginning of the year.

Q1–3–2013

Asset position Cash flows from operating activities amounted to

As of the beginning of 2013, the requirements of IAS 19

€-1.44 million after the first nine months (prev. year:

(revised) have been applied. As a consequence, actuarial

€-6.31 million). This difference is mainly due to the in-

gains and losses must now be recognised in the balance

creased profit for the period, the increase in receivables of

sheet without an effect on profit or loss. This necessitated

€6.52 million, the change in provisions of €3.03 million,

a retroactive adjustment of various balance sheet items as

the change in other assets of €1.98 million, and the

at 31 December 2012. Further details on this topic are pro-

change in trade payables and other liabilities of €2.76

vided in the Notes to the Interim Group Financial State-

million.

ments.

Working capital (the difference between current assets

The balance sheet total of the GFT Group increased by

and current liabilities) amounted to €6.80 million as at

€44.91 million and stood at €177.39 million as at 30 Sep-

30 September 2013 and was thus €30.12 million below

tember 2013. At the end of the financial year 2012, the

the year-end 2012 figure of €36.92 million.

total had amounted to €132.48 million. The acquisition of

At €-15.77 million, cash flows from investing activities were below the prior-year figure of €-0.10 million. In add ition to smaller IT procurements, a significant proportion

the Sempla Group played a major role in this development. Further details are provided in the Notes to the Interim Group Financial Statements.

of capital expenditure resulted from the acquisition of the

There was an increase in non-current assets of €34.27

Sempla Group. The purchase of a new administration

million to €82.44 million as at 30 September (31 Decem-

building in Stuttgart as the Company’s future head office

ber 2012: €48.17 million). The rise was largely due to the

was largely covered by proceeds from the disposal of

addition of intangible assets and increased goodwill result-

financial investments.

ing from the acquisition of the Sempla Group. The increase

Cash flows from financing activities amounted to €0.47 million (prev. year: €-3.60 million). This figure con-

in property, plant and equipment is mainly attributable to the purchase of the administration building.

cerns the use of short-term credit lines by foreign sub

As at 30 September 2013, current assets amounted to

sidiaries, mainly in Italy.

€94.95 million and were thus €10.64 million above their year-end 2012 level (€84.31 million). There was a sharp increase of €24.31 million in trade receivables to €68.52 million (31 December 2012: €44.21 million), which was opposed by a fall in liquid funds of €16.85 million to €19.06 million (31 December 2012: €35.91 million). The acquisition of the Sempla Group once again played a major role. Equity of €82.69 million on 30 September 2013 was €4.48 million above the corresponding figure on the balance sheet date of 31 December 2012 (€78.21 million). This change was mainly due to a reduction in the balance sheet loss from €-3.83 million to a balance sheet profit of €0.56 million. As a result of the strong increase in the balance sheet total, the equity ratio amounts to 47% and is thus 12 %-points below the year-end 2012 figure (59%).

➜

❘

Interim Group Management Report

Group balance sheet structure

Assets in € million

31/12/ 2012

30/09/ 2013

31/12/ 2012

Equity & Liabilities in € million

Cash and securities

40.42

20.45

82.93

47.05

Current liabilities

Other current assets

47.08

74.62

11.77

7.22

Non-current liabilities

Other non-current assets

44.98

82.32

82.69

78.21

Equity capital

132.48

177.39

132.48

On the liabilities side, there was a rise in current liabili-

As at 30 September 2013, non-current liabilities

ties of €35.88 million compared to 31 December 2012.

amounted to €11.77 million and were thus €4.55 million

This increase results from the changes in other provisions

higher than on 31 December 2012. This change resulted

of €8.33 million, in current income tax liabilities of €3.40

mainly from the increase in deferred tax liabilities, due

million, and in financial liabilities of €7.35 million. There

above all to the acquisition of the Sempla Group. The in-

was also an increase in other financial liabilities of €11.58

crease in pension provisions and the reduction of other

million and in other liabilities of €6.74 million. These items

provisions almost offset each other.

were mainly affected by the acquisition of the Sempla Group.

The equity/non-current assets ratio – the yardstick for solid balance sheet structures – amounted to 100% as at

This was opposed by a decline in trade payables of €1.51

30 September 2013 (year-end 2012: 162%). This ratio ex-

million to €18.32 million. As at 31 December 2012, the

presses the relationship between the balance sheet items

figure had stood at €19.83 million.

»equity« and »non-current assets« and provides information about the Company’s financial stability.

Q1–3–2013

Employees Employees by division as of 30 September

As at 30 September 2013, the GFT Group employed a total of 2,029 people. This corresponds to an increase of 658 persons or 48% compared to the same date last year. Headcount is calculated on the basis of full-time staff,

GFT Solutions

whereby part-time staff are included on a pro rata basis.

emagine

The major share of this increase in headcount (441 per-

Others

sons) results from the acquisition of the Sempla S.r.l.

Total

2013

2012

1,887

1,225

100

2,029

1,371

It is fully disclosed in the GFT Solutions division, whose headcount rose correspondingly by 54%: from 1,225 at the end of the third quarter of 2012 to 1,887 on 30 September 2013. There was a strong increase in headcount in

The number of freelance staff fell year on year by 36 to 1,070 persons.

Spain with the addition of 158 staff, taking the total to 1,008 employees (an increase of 19%). The emagine

Research and development

division employed 96 people as of 30 September 2013. The year on year decrease of four persons corresponds to a 4% decline. The »others« category comprises staff with corporate functions and remained unchanged from the

The GFT Group invested a total of €1.65 million in research and development during the reporting period; and thus

same date last year at 46 employees.

45% more than in the corresponding prior-year period

As at 30 September 2013, 286 people were employed in

(€1.14 million).

Germany (prev. year: 274). The proportion of GFT staff employed outside Germany amounted to 86% (prev. year:

The largest share of this total (€1.46 million or 88%) was accounted for by personnel expenses (prev. year: 78%). In

80%).

the first nine months of 2013, the GFT Group concentrat-

Employees by country as of 30 September

ed its R&D efforts on the following strategic initiatives: At the SAP Competence Centre, experts develop tailored

2013

2012

1,008

850

SAP software into their existing IT platform. One of the key

Italy

441

topics in the first nine months of 2013 was the further de-

Germany

286

274

velopment of possible uses for in-memory databases based

Brazil

164

129

on SAP HANA technology. This technology is integrated

into client solutions in order to significantly reduce the

Switzerland

computing time for complex simulations, thus enhancing

USA

its use in consultation sessions.

France

Mobile Finance activities comprise the development of

2,029

1,371

solutions for financial institutes, which help them integrate Spain

Total

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.

➜

❘

Interim Group Management Report

Forecast report In its internal Applied Technologies Group, GFT pools all

Macroeconomic development

R&D activities in the field of applied innovation manage-

According to leading economists, the global economy

ment. 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.

will continue to gain stability in 2013 and 2014 but grow more slowly than previously expected. The main risks are seen as slower growth in the major emerging nations of China, India, Brazil and Russia, the continued expansionary monetary policy of central banks and unresolved budget issues in the USA. In its economic outlook of October 2013, the International Monetary Fund (IMF) therefore downgraded its forecast for global economic growth in the current year from 3.2% to 2.9%. The IMF also predicts slower global growth of 3.6% for 2014, compared to its

Subsequent events

forecast of 3.8% in July. In its forecast of September 2013, the OECD continued to predict an upturn in the economies of the major industrial nations for the rest of the year,

There were no significant events for the GFT Group which occurred after the reporting date of 30 September 2013.

but also sees considerable risks for the global economy if the US Federal Reserve raises interest rates. The OECD’s forecasts for Europe’s economic heavyweights

Opportunity and risk report

in 2013 are much more upbeat than in May. The economists upgraded expected growth in France from a slight decline to growth of 0.3% and raised their growth fore-

In the first nine 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 Group Financial Statements for 2012. The risk position of the GFT Group is thus unchanged.

cast for the UK from 0.8% to 1.5%. For Germany, they expect an increase in economic output of 0.7%. For the monetary union as a whole, the OECD believes that the long and deep recession will be overcome by the end of the year. The IMF is also more upbeat than before about the eurozone’s development in 2013 and now predicts an overall decline of 0.4%, compared to 0.6% in its previous forecast. The outlook for Germany is also much more optimistic. The IMF forecasts GDP growth of 0.5% in 2013 (previously 0.3%). This growth is now expected to reach 1.4% in 2014, instead of 1.3% as previously predicted.

Q1–3–2013

Sector development

Spending on IT services (projects, consulting and outsourc-

The slowdown in growth in China and its negative conse-

ing) is likely to grow by 2.5% to around €36 billion in the

quences for the global economy led the IDC’s market analysts to once again downgrade their forecast for the global IT market in August 2013. The analysts now predict an increase in global IT spending of 4.6% in the current year, after previously forecasting growth of 4.9%. IDC also reduced its forecast for global spending on IT services from

current year. Following a positive first six months, the association’s sector barometer of July 2013 indicated that the German high-tech sector remained optimistic for the second half of the year. Around three quarters of all suppliers of information technology, telecommunication and entertainment electronics expect rising revenues in the second

3.8% to 3.4%.

half of 2013.

In its forecast in July 2013, the market research institute

Revenue and earnings forecast

Gartner already downgraded its growth outlook for global IT spending in the current year from 4.1% to 2%. Gartner stated that the strong downgrade was mainly due to fluctuations in dollar exchange rates. If exchange rates had remained stable, the revised growth forecast would have been 3.5%. The analysts see a slight increase in Western Europe, as further strategic IT initiatives are expected in this region. Growth in spending is expected to fall in most other regions. For the coming year, Gartner expects growth in global IT spending to pick up again and reach 4.1%. The experts forecast growth of 2.2% in spending on IT services for the current year and an increase of 4.6%

Following a first six months of 2013 in line with expectations and a good third quarter well above the prior-year figures – thanks to strong organic growth of GFT Solutions and the Sempla Group acquisition – the GFT Group expects business to make further progress in the year as a whole. The Executive Board has therefore upgraded its fullyear guidance for pre-tax earnings issued in August to around €16 million (formerly at least €15 million) and expects revenue for the full year to increase to at least €260 million (prev. year: €230.69 million) with an EBITDA result of around €19 million (prev. year: €13.35 million).

in the following year. Growth in IT spending in the banking

In the GFT Solutions division, the Executive Board expects

industry is also expected to exceed the general market

further solid organic growth in the fourth quarter of 2013,

level at 2.5% in 2013.

as well as a further strong growth impetus from the acqui-

In its economic outlook of March 2013, the industry association BITKOM forecasts market growth for products and services in the IT and telecommunication sector of 5.1% to €2.7 trillion in the current year. The high-tech sector will therefore remain one of the global economy’s most important growth drivers. According to the association, ICT spending in the EU – the second-largest IT market with a global share of 21.8% – will grow by 0.9% this year. The market experts forecast growth of 6.5% for the USA (with

sition of the Italian company Sempla Group. GFT Solutions is now present in Europe’s fourth-largest IT market with almost 500 employees and an extended portfolio of solutions for the finance sector. In addition to expanding its position on the Italian market, further growth opportunities are expected from the positioning of selected competencies of the Sempla Group – especially its expertise in the general banking sector – with clients in Europe and the USA.

a global share of 26.8%). In Germany, expected ICT mar-

In the fourth quarter of 2013, demand for IT solutions

ket growth of 1.8% to €141.3 billion in the current year

to implement new compliance regulations in the banking

will once again easily outpace general economic growth.

sector will continue to rise. The further optimisation of core banking systems will also remain a key topic. One main growth 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.

➜

❘

Interim Group Management Report

Further growth for the GFT Solutions division is expected

In 2013, the division will also be burdened by costs for re-

to arise from increased competition in the finance sector,

positioning business under its own brand and for the rea-

which will force established banks to develop innovative

lignment of its internal structures. In terms of earnings, the

business models. The Executive Board therefore expects

division displayed a positive turnaround in the third quar-

banks to invest increasingly in new technologies for mobile

ter, which is expected to continue in the fourth quarter.

payments and to use social media to strengthen customer retention. In the field of mobile banking, financial institutes will be investing increasingly in security solutions. Further growth opportunities are expected from the acquired consulting expertise and expanded solution portfolio in general banking from the acquisition of the Sempla Group.

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 Group acquisition on 30 May 2013. The adjusted earnings forecast was made on publication of the Half-Yearly Financial Report. Following a good third quarter, the Executive

The emagine division will continue to drive its realignment

Board has upgraded its full-year guidance for pre-tax earn-

as an expert for staffing technology projects with IT and

ings issued in August to around €16 million (formerly at

engineering specialists. The division is focusing on those

least €15 million) and expects an EBITDA result for the full

growth industries in Germany, France and the UK which

year of around €19 million (prev. year: €13.35 million). For

are expected to profit most from an economic upturn in

the financial year 2015, the Executive Board continues to

the coming years. In the field of IT, emagine focuses on fu-

expect consolidated revenue of around €400 million and

ture topics and technology trends such as Big Data, Busi-

an operating pre-tax profit margin of over 6%. The under-

ness Intelligence, Social Media and IT Security, in order to

lying business plan assumes steady organic growth in com-

tap new growth fields. In the field of engineering, growth

bination with targeted acquisitions in both business divi-

is expected from the rising demand for highly skilled engi-

sions.

neers 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.

Stuttgart, 6 November 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

Q1–3–2013

Consolidated Income Statement for the period from 1 January to 30 September 2013, IFRS GFT Technologies Aktiengesellschaft, Stuttgart (not certified)

9 months

€

Revenue Other operating income

Third quarter

01/01/– 30/09/2013

01/01/– 30/09/2012

01/07/– 30/09/2013

01/07/– 30/09/2012

185,443,589,25

174,604,538,26

71,256,021,76

58,222,314.78

3,186,079,44

1,641,389,03

767,047,20

181,922.80

188,629,668,69

176,245,927,29

72,023,068,96

58,404,237.58

77,409,224,26

83,032,113,12

28,857,410,10

28,041,966.58

– Salaries and wages

64,379,185.32

55,811,069.99

23,615,212.64

16,715,209.77

– Social security and expenditures for retirement pensions

13,650,728.66

11,041,547.93

5,550,144.81

3,719,667.94

78,029,913.98

66,852,617.92

29,165,357.45

20,434,877.71

Costs of purchased services

Personnel expenses:

Depreciation on non-current intangible assets and of tangible assets

1,779,107.20

1,164,692.42

1,052,008.61

401,602.33

Other operating expenses

20,027,397.29

17,528,672.45

7,029,386.69

5,529,525.10

Result from operating activities

11,384,025.96

7,667,831.38

5,918,906.11

3,996,265.86

264,908.53

340,385.18

50,911.22

101,783.05

-4,211.63

-19,284.00

-2,280.21

-6,973.46

Other interest and similar income Profit share from associates Depreciation on securities

105,430.88

0.00

60.00

0.00

Interest and similar expenses

331,181.03

186,821.22

259,005.19

71,574.68

Financial result

-175,915.01

134,279.96

-210,434.18

23,234.91

11,208,110.95

7,802,111.34

5,708,471,93

4,019,500.77

Taxes on income and earnings

2,829,020.24

2,697,920.03

1,688,644.30

1,275,578.49

Net income

8,379,090.71

5,104,191.31

4,019,827.63

2,743,922.28

8,340,391.85

5,104,191.31

4,019,827.63

2,743,922.28

38,698.86

0.00

Net earnings per share – undiluted

0.32

0.19

0.15

0.10

Net earnings per share – diluted

0.32

0.19

0.15

0.10

Earnings before taxes

Net income for the period is allocated to: – Shareholders of the parent company – Non-controlling interests

➜

❘

Interim Group Financial Statements

Consolidated Statement of comprehensive INCOME for the period from 1 January to 30 September 2013, IFRS GFT Technologies Aktiengesellschaft, Stuttgart (not certified)

9 months

Third quarter

01/01/– 30/09/2013

01/01/– 30/09/2012

01/07/– 30/09/2013

01/07/– 30/09/2012

8,379,090,71

5,104,191,31

4,019,827,63

2,743,922,28

Actuarial gains/losses

0.00

-1,212,920,77

0.00

-398,703,92

Income taxes on components of other result

0.00

334,110,71

0.00

108,765,77

Other (partial) result A.)

0.00

-878,810,06

0.00

-289,938,15

456,316.16

148,140.00

154,000.00

75,369.25

456,316.16

148,140.00

154,000.00

75,369.25

-402,826.83

130,954.86

-172,945.59

-235,905,63

-402,826.83

130,954.86

-172,945.59

-235,905.63

€

Net income

A.) Components never reclassified to the income statement

B.) Components that can be reclassified to the income statement Financial assets available for sale (securities): – C hange of fair value recognised in equity during the financial year

Exchange differences on translating foreign operations: – Profits/losses during the financial year

Income taxes on components of other result

-112,509.21

-8,235.50

0.00

-8,235.50

Other (partial) result B.)

-59,019.88

270,859.36

-18,945.59

-168,771.88

Other result

-59,019.88

-607,950.70

-18,945.59

-458,710.03

8,320,070.83

4,496,240.61

4,000,882.04

2,285,212.25

8,281,371.97

4,496,240.61

4,000,882.04

2,285,212.25

38.698.86

0.00

Total result Total result is allocated to: – Shareholders of the parent company – Non-controlling interests

Q1–3–2013

Consolidated Balance Sheet as at 30 September 2013, IFRS GFT Technologies Aktiengesellschaft, Stuttgart (not certified) Assets 30/09/2013

31/12/2012 adjusted*

9.206.528.45

737,212.65

59.132.419.18

35,949,217.28

7.243.204.66

3,208,376.73

118.130.45

3,189,680.45

25.979.69

30,191.32

Other financial assets

960.206.77

410,502.75

Current tax assets

325.552.93

415,212.93

€

Non-current assets Intangible assets Goodwill Tangible assets Securities Financial assets, accounted for using the equity method

Deferred tax assets

5.427.024.68

4,231,941.18

82.439.046.81

48,172,335.29

68.523.328.76

44,206,480.67

1.274.000.00

1,316,100.00

715.568.41

918,103.24

19.058.803.27

35,911,786.55

747.994.90

416,363.25

Current assets Trade receivables Securities Current tax assets Cash and cash equivalents Others Other assets

* We refer to Note 1 of the Interim Group Financial Statements.

4.630.100.50

1,542,577.73

94.949.795.84

84,311,411.44

177,388,842,65

132,483,746.73

➜

❘

Interim Group Financial Statements

Shareholders‘ Equity and Liabilities €

30/09/2013

31/12/2012 adjusted*

26,325,946.00

Shareholders‘ equity Share capital Capital reserve

42,147,782.15

Retained earnings

15,243,349.97

-1,869,539.05

-1,891,432.39

Changes in equity not affecting net income Actuarial gains/losses Foreign currency translations

176,116.27

578,943.10

Reserve of market assessment for securities

-20,016.00

-363,822.95

564,152.71

-3,827,347.23

Other equity

Consolidated balance sheet gain, loss

-6,263,000.00

0.00

Equity of the shareholders of the parent company

76,304,792.05

78.213.418,65

6,383,775.05

0.00

82,688,567.10

78,213,418.65

Non-controlling interests

Liabilities Non-current liabilities Provisions for pensions Other provisions Deferred tax liabilities

6,430,662.27

3,687,637.36

916,003.10

2,934,677.79

4,420,891.66

593,418.42

11,767,557.03

7,215,733.57

26,418,383.98

18,089,885.88

Current income tax liabilities

4,151,338.87

752,481.50

Financial liabilities

7,348,049.98

0.00

Trade payables

18,322,830.38

19,834,818.88

Other financial liabilities

12,264,144.13

685,418.71

Other liabilities

14,427,971.18

7,691,989.54

82,932,718.52

47,054,594.51

177,388,842.65

132,483,746.73

Current liabilities Other provisions

* We refer to Note 1 of the Interim Group Financial Statements.

Q1–3–2013

Consolidated Statement of Changes in Equity as at 30 September 2013, IFRS GFT Technologies Aktiengesellschaft, Stuttgart (not certified)

€

Attributable to the shareholders of the parent company Notes

Subscribed

Capital

Retained

capital

reserve

earnings

Other equity

Other retained earnings

As at 01/01/2012

Retroactive adjustment acc. to IAS 19R

Adjusted amount 01/01/2012

26,325,946.00

42,147,782.15

12,743,349.95

0.00

26,325,946.00

42,147,782.15

12,743,349.95

0.00

26,325,946.00

42,147,782.15

12,743,349.95

0.00

26,325,946.00

42,147,782.15

15,243,349.97

0.00

26,325,946.00

42,147,782.15

15,243,349.97

0.00

Retroactive adjustment acc. to IAS 19R

Dividend payment May 2012

Total income and expenses for the period 01/01/–30/09/2012

As at 30/09/2012

As at 01/01/2013

Retroactive adjustment acc. to IAS 19R

Adjusted amount 01/01/2013

Effects from IAS 19R

Dividend payment May 2013

Changes in the consolidated Group

-6,263,000.00

Total income and expenses for the period 01/01/–30/09/2013

As at 30/06/2013 * Net income

26,325,946.00

42,147,782.15

15,243,349.97

-6,263,000.00

â&#x17E;&#x153;

â?&#x2DC;

Interim Group Financial Statements

Attributable to the shareholders of the parent company Other result

Consolidated

Total

balance sheet

Non-controlling

Total

interests

share capital

0.00

75,615,784.46

Profits/losses Foreign

Market

Actuarial gains/losses

currency

assessment

translations

for securities

728,294.52

-615,885.24

Profits (+) Losses (-)

0.00

-5,713,702.92

-720,874.64

728,294.52

-615,885.24

-720,874.64

-5,713,702.92

-878,810.06

130,954.86

139,904.50

859,249.38

-475,980.74

578,943.10

-363,822.95

578,943.10

-1,599,684.70

75,615,784.46

74,894,909.82

-720,874.64

0.00

74,894,909.82

-878,810.06

-3,948,891.90

5,104,191.31*

5,375,050.67

-4,558,403.51

75,442,258.53

0.00

75,442,258.53

-3,827,347.23

80,104,851.04

0.00

80,104,851.04

0.00

-1,891,432.39

0.00

-1,891,432.39

-363,822.95

-1,891,432.39

-3,827,347.23

78,213,418.65

21,893.33

-3,948,891.90

21,893.33

-3,948,891.90

-6,263,000.00

6,345,076.19

82,076.19

-402,826.83

343,806.95

0.00

8,340,391.85*

8,281,371.97

38,698.86

8,320,070.83

176,116.27

-20,016.00

-1,869,539.06

564,152.72

76,304,792.05

6,383,775.05

82,688,567.10

Q1–3–2013

Consolidated cash flow statement for the period from 1 January to 30 September 2013, IFRS GFT Technologies Aktiengesellschaft, Stuttgart (not certified)

9 months

01/01/– 30/09/2013

01/01/– 30/09/2012

Net income

8,379,090.71

5,104,191.31

Taxes on income and earnings

€

Notes

2,829,020.24

2,697,920.03

Interest income

175,915.01

-134,279.96

Interest paid

-77,010.67

-4,872.98

Income taxes paid

-1,656,381.22

-1,468,337.82

Depreciation on intangible and tangible assets

1,779,107.20

1,164,692.42

Changes in provisions

3,285,763.35

254,434.36

-156,328.42

241,732.40

Other non-cash expenses/income Profit from the disposal of tangible and intangible assets as well as financial assets Changes in trade receivables Changes in other assets

-41,688.72

4,691.00

-9,547,783.75

-3,023,883.29

962,097.11

-1,014,513.67

Changes in trade liabilities and other liabilities

-7,372,887.17

-10,129,565.90

Cash flow from operating activities

-1,441,086.33

-6,307,792.10

Cash receipts from sales of tangible assets Cash payments to acquire tangible assets Cash payments to acquire non-current intangible assets Cash receipts from sales of financial assets Cash payments / receipts from the acquisition of consolidated companies net of cash and cash equivalents acquired Interest received

7,000.00

0.00

-4,139,314.94

-1,228,284.74

-124,865.21

-175,091.75

3,517,950.00

1,000,000.00

-15,254,260.79

0.00

225,699.44

303,882.13

-15,767,791.50

-99,494.36

4,417,305.26

352,944.89

-3,948,891.90

468,413.36

-3,595,947.01

-112,518.81

79,332.45

-16,852,983.28

-9,923,901.02

Cash funds at the beginning of the period

35,911,786.55

32,472,593.37

Cash funds at the end of the period

19,058,803.27

22,548,692.35

Cash flow from investing activities

Cash receipts from taking out short-term or long-term loans Payments to shareholders Cash flow from financing activities

Effect of exchange rate changes on cash and cash equivalents

Change in cash funds from cash-relevant transactions

➜

❘

Notes

Notes to the Interim Group Financial Statements as at 30 September 2013, IFRS GFT Technologies Aktiengesellschaft, Stuttgart (not certified)

1. Fundamentals for the GFT Group’s Interim Financial Statements

···································································································································

These unaudited Interim Group Financial Statements of GFT Technologies

Mandatory retrospective application in accordance with IAS 19R

Aktiengesellschaft (GFT AG) and its subsidiaries have been prepared in

has resulted in the following changes to balance sheet items as at

accordance with section 37w (3) of the German Securities Trading Act

31 December 2012:

(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 Consolidated Financial Statements and comply with the International Financial 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 Group Financial State-

Effects on the Consolidated Balance Sheet from the amendment of IAS 19 31/12/2012

01/01/2012

Equity

1,891.43

-720.87

Pension provisions

2,612.14

996.29

-720.71

-275.42

€ thsd.

Balance of deferred taxes

ments as in the last Group Financial Statements as at 31 December 2012. New or amended standards and interpretations to be applied as

The effects on the Consolidated Income Statement for the first nine

of the beginning of the financial year 2013 had the following impact on

months of financial year 2012 are only minor. There was no change in

the Interim Group Financial Statements:

earnings per share.

In June 2011, the IASB published amendments to IAS 19 »Employee

Maintaining the old version of IAS 19 would have resulted in the fol

Benefits« which were adopted by the EU in June 2012. Application of

lowing changes to the Consolidated Balance Sheet and Consolidated

the amended standard is mandatory for all financial statements prepared

Income Statement.

for financial years beginning on or after 1 January 2013, and thus for the first time in the current financial year.

Effects on the Consolidated Balance Sheet from the maintenance of IAS 19

The Group previously recognised pensions and similar obligations according to the so-called corridor approach. With the mandatory adop-

€ thsd.

30/09/2013

be used and actuarial gains and losses are now recognised in other

Equity

65.40

comprehensive income.

Pension provisions

-90.21

Balance of deferred taxes

-24.81

tion of IAS 19 revised as of 2013, the corridor approach is no longer to

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

Effects on the Consolidated Income Statement from the maintenance of IAS 19

gains and losses in future as these are now recognised in other compre30/09/2013

hensive income.

€ thsd.

A further change is the introduction of the net interest rate. Net pension

EBT

83.83

obligations are discounted with the underlying interest rate used for the

Interest result

53.63

valuation of gross pension obligations.

Income taxes

14.75

Group result

69.08

There would also have been no change in earnings per share as of the end of the third quarter of financial year 2013.

Q1–3–2013

Other comprehensive income was disclosed for the first time according

equity«, which includes currency translation differences of subsidiaries,

to IAS 1.82A. The effects mainly concerned the disclosure of actuarial

was distributed among the changes in assets and liabilities in the report-

gains and losses in other comprehensive income, which are never reclas-

ing period while currency translation differences in cash and cash equiva

sified into the Income Statement.

lents were disclosed separately.

Other new and revised standards to be adopted as of 1 January 2013

In drawing up these Interim Group Financial Statements, the Executive

(IAS 12/IFRS 7/IFRS 13) have no material impact on the Interim Group

Board made estimations concerning the application and interpretation

Financial Statements.

of accounting regulations. Actual events may differ from these estimations. Future developments and results depend on a number of external

In financial year 2012, the structure of the cash flow statement was amended in accordance with IAS 1.41 in order to improve presentation. The amounts for taxes paid and interest paid and received disclosed in

factors involving risks and uncertainties, and are based on current assumptions which may prove inaccurate.

the footnotes of the previous year were integrated into the calculation of the cash flow statement. Moreover, the item »other changes in

2. Changes to the consolidated Group and its associated companies

·· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ·

The following changes to the scope of consolidation have occurred

As a consequence, the payment obligation owed to the former share-

since the Group Financial Statements were closed on 31 December

holders has fallen to €1,275 thousand. The obligation is to be settled in

2012:

the third quarter of 2014.

On 26 February 2013, GFT Technologies AG, Stuttgart, purchased

In the course of the Two Brand Strategy, the following changes to com-

Neckarsee 283. VV GmbH. On 21 March 2013, the company’s name

pany names were made in January 2013.

was changed to GFT Beteiligungs-GmbH. Its initial consolidation did not have any major effect on the Group’s assets, financial and earnings

a) emagine GmbH was renamed as emagine TPM GmbH as of 23 January 2013.

position. GFT Holding Italy S.r.l., Milan, Italy, was founded by GFT Technologies AG, Stuttgart, on 16 May 2013. The company’s share capital amounts

b) GFT Resource Management GmbH was renamed as emagine GmbH as of 13 February 2013. c) GFT Flexwork GmbH was renamed as emagine Flexwork GmbH as of

to €10 thousand and was fully paid on 6 May 2013. The company’s initial consolidation had no material impact on the Group’s assets, financial and earnings position.

11 January 2013. d) GFT Technologies S.A.R.L. was renamed as emagine S.A.R.L. as of

In the first nine months of financial year 2013, the following adjustment was made to the outstanding obligation from the acquisition of GFT Financial Solutions AG, Opfikon, Switzerland, due to a change in the expected value resulting from reduced earnings expectations:

8 January 2013. The registered office and purpose of the companies did not change as a result of the name changes. In accordance with the merger agreement of 22 April 2013, emagine TPM GmbH, Eschborn, was merged with emagine GmbH, Eschborn,

€ thsd.

Carrying value as of 1 January 2013 Adjustment of conditional consideration Carrying value as of 30 June 2013 Payment of the 2nd tranche Reversal of 2nd tranche recognised in profit and loss Carrying value as of 30 September 2013

with effect from 26 June 2013. The merger had no effect on the 3,133 -1,282 1,851 48 528 1,275

Group’s assets, financial and earnings position.

➜

3. Business combinations

❘

Notes

Business combinations in the third quarter of 2013

As the purchase price liability and the put and call option for the remain-

In an agreement dated 30 May 2013, GFT AG acquired an 80% stake in the Italian IT service provider Sempla S.r.l., Milan, Italy, via the subsidiary GFT Holding Italy S.r.l. (Segment Solutions). The purchase price for 80%

ing 20% depend on the future earnings of Sempla S.r.l., the payment range from these agreements lies between €0 thousand and €10,602 thousand.

of share capital was paid in the amount of €20,712 thousand and car-

The amounts for each major group of acquired assets and assumed

ried as a variable purchase price liability in the amount of €4,339 thou-

liabilities at the time of acquisition are shown below:

sand. A put and call option agreement was concluded for the remaining 20%

€ thsd.

of shares in Sempla S.r.l. The deal was closed on 3 July 2013 and the

Fair value at time of purchase

acquired company has since been controlled by GFT AG. The Sempla Group is one of Italy’s leading IT consultancies, specialising in commer-

Goodwill

cial and private banking, as well as insurance. With 460 employees, the

Intangible assets

company generated revenues of over €44 million in 2012 with earnings

Office and factory equipment

before taxes of €4.08 million.

Order backlog

Sempla’s range of services adds top-quality consulting know-how on the

Trade receivables

Italian market and acclaimed expertise in the field of banking to the ex-

Other assets

4,085

isting portfolio of GFT Solutions. This creates synergies for the further

Cash and cash equivalents

5,458

penetration of the Italian market and offers GFT clear growth opportuni-

Total assets

ties with existing and new clients in Europe and the USA.

Provisions for pensions

2,552

The goodwill resulting from the purchase amounts to €23,450 thou-

Other provisions

3,432

sand, which not only reflects the considerable synergy effects and ex-

Deferred tax liabilities

4,509

pected cross-selling effects, but also the expected growth in the port

Current income tax liabilities

folio of GFT Solutions. Goodwill is not tax deductible.

Trade payables

3,178

The transaction costs for the acquisition amount to €315 thousand and

Financial liabilities

2,931

were recognised in profit and loss.

Other liabilities

11,376

Total liabilities

28,607

The fair value of the non-controlled shares was calculated with a linear

23,450 9,149 921 1,708 15,233

60,003

629

extrapolation of the consideration granted. A linear connection was anticipated between the company value, the consideration granted and

The acquired receivables refer to trade receivables. The fair value of

the fair value of the non-controlled shares.

acquired receivables amounts to €15,233 thousand, while the gross

In this connection, a financial liability in the amount of the cash value of the repurchase price for these shares (€6,263 thousand) was recognised, which will be recognised in profit and loss in the following periods in accordance with IAS 39.

amount is €16,011 thousand. Adjusted receivables as of the purchase date amount to €778 thousand. In accordance with IFRS 3.23, no contingent liabilities were recognised. As of 30 September 2013, there were no significant changes to contin-

The purchase price for the 80% of shares in Sempla S.r.l. carried in the balance sheet thus consists of the following:

gent liabilities. Since the date of acquisition (i.e. July 2013), Sempla S.r.l. has generated third-party sales of €11,004 thousand and contributed €116 thousand

€ thsd.

Purchase price

Variable purchase price liability Total purchase price

tion had already taken place in January 2013, third-party sales of €33,713 thousand and an earnings contribution of €485 thousand

For 80% stake Paid in cash

to the consolidated operating result of financial year 2013. If the acquisi-

20,712 4,339 25,051

would have been generated. The initial consolidation of the Sempla Group was made on a provisional basis.

Q1–3–2013

4. Changes in equity

For the changes in equity capital between 1 January 2013 and 30 Sep-

of €0.15 per share was distributed to shareholders, totalling €3,949

tember 2013, we refer to the Consolidated Statement of Changes in

thousand, from the balance sheet profit of the parent company GFT

Equity which is disclosed separately.

Technologies AG.

As of 30 September 2013, the Company’s share capital of

There were no changes in Authorised Capital or Conditional Capital in

€26,325,946.00 consists of 26,325,946 non-par value individual

the period 1 January 2013 to 30 September 2013 compared to 31 De-

share certificates (no change relative to 31 December 2012). These

cember 2012. As of 30 September 2013, GFT Technologies AG did not

shares are bearer shares and all grant equal rights.

hold any of its own shares, nor did it purchase or sell any of its own

In June 2012, a dividend of €0.15 per share was distributed to shareholders, totalling €3,949 thousand, from the balance sheet profit of the parent company GFT Technologies AG. In accordance with the adopted resolution of the Annual General Meeting of 15 May 2013, a dividend

shares in the period 1 January 2013 to 30 September 2013.

➜

5. Segment reporting

❘

Notes

·· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ·

GFT has identified the two segments GFT Solutions and emagine as re-

Internal controlling and reporting within the GFT Group, and thus also

portable segments. The identification of these segments was mainly

segment reporting, is based on IFRS accounting principles as applied in

based on the fact that the products and services offered in these seg-

the Group Financial Statements. The GFT Group measures the success of

ments show differences, and that the GFT Group is organised, managed

its segments by means of segment EBT (earnings before tax). Segment

and controlled on the basis of these segments. Internal reporting to the

income and results also include transactions between the segments. In-

Executive Board is based on the classification of Group activities in these

tersegment transactions take place at market prices on an arm’s length

segments.

principle.

The products and services with which the reportable segments generate

As a general rule, the assets of the segments include all assets, except

their income can be characterised as follows: all activities in connection

for those from income tax and assets attributed to the holding activity.

with IT solutions (services and projects) are aggregated in the GFT Solu-

The segment liabilities include all liabilities, except for those from income

tions segment. The emagine segment focuses on the placement of free-

tax, financing, and liabilities in connection with the holding activity.

lance IT specialists and engineers.

For detailed information about the business segments, please refer to the table on page 28 and 29. It also includes disclosures concerning revenue from external clients for each group of comparable products and services.

Q1–3–2013

information on business segments – Segment report GFT Technologies Aktiengesellschaft, Stuttgart (not certified)

GFT Solutions

emagine

30/09/2013

30/09/2012

30/09/2013

30/09/2012

117,821

90,476

67,607

84,129

444

1,187

3,133

118,265

90,505

68,794

87,262

-1,542

-910

-144

-195

149

-38

-322

-96

-21

-18

-4

-19

12,853

7,929

410

1,587

133,563

77,851

32,177

39,861

Investments in non-current intangible and tangible assets

25,422

1,250

108

Segment liabilities

64,054

27,840

17,919

25,250

€ thsd.

External sales Inter-segment sales Total revenues

Scheduled depreciation Significant non-cash income/expenditure other than depreciation Interest income Interest expenses Share of net profits of associated companies reported according to the equity method

Segment result (EBT)

Segment assets Shares in associated companies reported according to the equity method

* Please refer to point 1 of the Notes to the Interim Group Financial Statements as of 30 September 2013 regarding adjustments to the previous year.

➜

Total

Eliminations

❘

Notes

Consolidated

30/09/2013

30/09/2012

30/06/2013

30/09/2012

30/09/2013

30/09/2012

185,428

174,605

185,444

174,605

1,631

3,162

-1,631

-3,162

187,059

177,767

-1,615

-3,162

185,444

174,605

-1,686

-1,105

-93

-60

-1,779

-1,165

149

-38

-204

156

-242

176

264

265

340

-343

-114

-73

-331

-187

-4

-19

-4

-19

13,263

9,516

-2,055

-1,714

11,208

7,802

165,740

117,712

11,649

14,375

177,389

132,087

25,480

1,358

2,235

27,715

1,403

81,973

53,090

12,727

3,554

94,700

56,644

Q1–3–2013

The reconciliation of the segment figures to the corresponding figures in the Group Financial Statements is as follows:

€ thsd.

Total segment revenue Occasionally occurring revenue Elimination of intersegment revenue

01/01/– 30/09/2013

01/01/– 30/09/2012 adjusted*

187,059

177,767

-1,631

-3,162

185,444

174,605

Total segment results (EBT)

13,263

9,516

Non-attributed expenses/income of Group HQ

-1,358

-814

Group revenue

Non-attributed income for elimination of interim results Other Group result before taxes

€ thsd.

Total segment assets Non-attributed assets of Group HQ

-879

-697

-21

11,208

7,802

30/09/2013

30/09/2012

165,740

117,712

315

116

Securities

1,392

6,523

Assets from income taxes

6,819

7,058

Other Group assets

Total segment liabilities Non-attributed liabilities of Group HQ Liabilities from income taxes Other Group liabilities

2,800

678

177,389

132,087

81,973

53,090

246

372

12,335

2,816

146

366

94,700

56,644

* Please refer to point 1 of the Notes to the Interim Group Financial Statements as of 30 September 2013 regarding adjustments to the previous year.

The reconciliation discloses items which per definition are not components of the segments. Non-attributed items of Group HQ, e.g. from centrally managed issues. Business transactions between the segments are also eliminated in the reconciliation Due to reduced earnings expectations for GFT Financial Solutions AG, as described in point 2, the segment liabilities of GFT Solutions were reduced by €1,282 thousand.

➜

❘

Notes

The table below shows information according to geographic regions for the GFT Group:

Revenue from sales to external clients*

Non-current intangible and tangible assets

in € million

01/01/– 30/09/2013

01/01/– 30/09/2012

30/09/2013

30/09/2012

Germany

61.21

68.10

35.42

32.93

42.27

27.45

0.06

0.05

Spain

19.46

20.06

1.72

1.31

France

29.83

31.32

0.08

0.10

7.14

8.35

4.95

5.24

6.67

9.14

0.08

0.13

14.20

3.82

32.93

n/a

USA Switzerland Italy Other countries Total *

4.66

6.37

0.34

0.30

185.44

174.61

75.58

40.06

Determined by client location

Revenue from clients who account for more than 10% each of Group revenue is shown below:

Revenue

Segments in which this revenue is generated

in € million

Client 1

6. Changes to contingent liabilities

01/01/– 30/09/2012

01/01/– 30/09/2013

01/01/– 30/09/2012

70.91

54.05

GFT Solutions, emagine

As of 30 September 2013, there were no significant changes to contingencies and other financial commitments compared to the Group Financial Statements as at 31 December 2012. As at 31 December 2012, there were no contingent receivables.

01/01/– 30/09/2013

Q1–3–2013

INFORMATION ON FINANCIAL INSTRUMENTS ACCORDING TO Categories (not certified)

30/09/2013

€ thsd.

Valued at

Valued at fair value

Carrying

amortised cost

amount in the balance sheet

Carrying

Fair

Carrying

amount

value

amount

Fair value

Level 1 1

Level 2 2

Level 3 3

Financial assets Receivables from goods and services rendered

Loans and receivables

60,297

Amounts due from customers for construction work

Loans and receivables

8,226

Securities held as non-current assets Fixed-interest securities

Available-for-sale financial assets

Variable-interest securities

Financial assets measured at fair value through profit or loss and classified as such upon initial recognition

Securities held as current assets Variable-interest securities

Available-for-sale financial assets

Variable-interest securities

Financial assets measured at fair value through profit or loss and classified as such upon initial recognition

118

1,274

Cash and cash equivalents

Loans and receivables

19,059

Other long-term assets

Loans and receivables

960

Other short-term assets

Loans and receivables

Total financial assets

748

89,290

748 1,392

1,392

Available-for-sale financial assets

1,274

Financial assets measured at fair value through profit or loss

118

Loans and receivables

89,290

Fair values were measured on the basis of quoted prices (unadjusted) in active markets for identical assets or liabilities.

Fair values were measured on the basis of inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Fair values were measured on the basis of inputs for the asset or liability that are not based on observable market data (unobservable inputs).

90,682

â&#x17E;&#x153;

31/12/2012 Valued at

Valued at fair value

Carrying

amortised cost

amount in the balance sheet

Carrying

Fair

Carrying

amount

value

amount

Fair value

Level 1 1

Level 2 2

Level 3 3

40,351

3,855

3,855 3,189

3,189

3,071

118

1,316

861

455

35,912

411

416

80,945

416 4,505

4,505

85,450

3,932

573

80,945

â?&#x2DC;

Notes

Q1–3–2013

30/09/2013

€ thsd.

Valued at

Valued at fair value

Carrying

amortised cost

amount in the balance sheet

Carrying

Fair

Carrying

amount

value

amount

Fair value

Level 1 1

Level 2 2

Level 3 3

Financial liabilities Financial liabilities

Financial liabilities valued at amortised cost

7,349

Trade liabilities

Valued at amortised cost

18,323

Other liabilities

Valued at amortised cost

1,662

Financial liabilities from subsequent purchase price payments

Valued at amortised cost

12,214

Total financial liabilities Financial liabilities valued at amortised cost

39,548

Fair values were measured on the basis of quoted prices (unadjusted) in active markets for identical assets or liabilities.

Fair values were measured on the basis of inputs for the asset or liability that are not based on observable market data (unobservable inputs).

â&#x17E;&#x153;

â?&#x2DC;

31/12/2012 Valued at

Valued at fair value

Carrying

amortised cost

amount in the balance sheet

Carrying

Fair

Carrying

amount

value

amount

Fair value

Level 1 1

Level 2 2

Level 3 3

19,835

685

3,671

24,191

Notes

Q1–3–2013

7. Reporting on financial instruments

Information on financial instruments according to categories Page 32–35 shows the carrying amounts and the fair value of the individual financial assets and liabilities for each individual class of financial

Financial instruments stated in the balance sheet at fair value can be classified according to the following hierarchy which reflects to which extent the fair value is observable:

instruments, and transfers them to the corresponding balance sheet

Level 1: measurement at fair value on the basis of quoted prices (unad-

items.

justed) in active markets for identical assets or liabilities.

The fair value of a financial instrument is the price at which a party

Level 2: measurement at fair value using inputs other than quoted prices

would take on the rights and/or obligations from this financial instru-

included within Level 1 that are observable for the asset or liability, either

ment from an independent, contractually-willing other party.

directly (i.e. as prices) or indirectly (i.e. derived from prices).

In the case of financial instruments to be accounted for at fair value, the

Level 3: measurement at fair value based on inputs for the asset or liabil-

fair value is determined on the basis of market prices. If no market prices

ity that are not based on observable market data (unobservable inputs).

are available, a valuation is carried out using typical valuation methods based on instrument-specific market parameters. The fair value of loans and receivables and of original liabilities is fundamentally determined as the present value of future cash inflows or outflows, discounted at a current interest rate on the balance sheet date

Quantitative disclosures for financial instruments stated in the balance sheet at fair value are included in the table on page 32–35. As in the previous period, no reclassifications between the three levels were made during the current financial year.

taking into account the respective due date of the asset items or the residual term of the liability. Owing to the mainly short maturity term of trade payables and receivables, other receivables and liabilities and cash and cash equivalents, the carrying amounts on the balance sheet date do not vary significantly from the fair value.

9. Investments/disinvestments

During the period 1 January to 30 September 2013, the GFT Group invested €125 thousand in intangible assets (1 January – 30 September 2012: €175 thousand) and €4,139 thousand in tangible assets (1 January – 30 September 2012: €1,228 thousand). There were no significant disinvestments in the reporting period. Additions to non-current tangible assets mainly refer to the purchase of an administration building totalling €2,177 thousand. Investments were also made in connection with company acquisitions, see Note 3.

➜

9. Related party disclosures

❘

Notes

Compared to the disclosures made in the Notes to the Group Financial Statements as at 31 December 2012, there were no significant changes in related party disclosures. There were also no changes in the composition of related parties nor in relations with such parties.

10. Events after 30 September 2013

There were no significant events after the interim reporting period which were not considered in the Interim Group Financial Statements.

Stuttgart, 6 November 2013 GFT Technologies Aktiengesellschaft The Executive Board

Ulrich Dietz

Jean-François Bodin

Marika Lulay

Dr. Jochen Ruetz

Executive Board

(Chairman)

Q1–3–2013

Financial Calendar

Further INFORMATION

Deutsches Eigenkapitalforum, Frankfurt/Main

Write to us or call us if you have any questions. Our Investor Relations

11 –13 November 2013

team will be happy to answer them for you. Or visit our website at www.gft.com/ir. There you can find further information on our company

LBBW German Company Day, London

and the GFT share.

14 November 2013

GFT Technologies Aktiengesellschaft Investor Relations Andrea Wlcek Filderhauptstrasse 142 70599 Stuttgart Germany T +49 711 62042-440 F +49 711 62042-301 ir@gft.com

This Quarterly Report is also available in German. The online versions of the German and English Interim Reports are available on www.gft.com/ir.

IMPRINT Concept: GFT Technologies Aktiengesellschaft, Stuttgart, www.gft.com Text: GFT Technologies Aktiengesellschaft, Stuttgart, www.gft.com Creative concept and design: Impacct Communication GmbH, Hamburg, www.impacct.de