GFT: Underlying Organic Growth Expands To 19% In Q2
Edison | Aug 16, 2016 01:31AM ET
GFT Technologies AG (DE:GFTG): Revenue growth picked up in Q2, despite the challenging banking sector backdrop, as strong demand for digitisation projects in the commercial banking sector in Europe outweighed project deferrals in the Anglo Saxon investment banking markets. Consequently, management edged up revenue guidance but eased profit guidance. Management expects investment banking IT activity to recover in H2 or FY17, as the sector needs to invest in IT to remain competitive. We have lowered our EPS in FY16 and FY17, while FY18 is broadly maintained. Given that management’s long-term outlook is sustained, we believe the shares are attractive on c 14x our FY18 earnings.
Q2 results: Total group revenue up 23% in Q2
Q2 organic revenue grew by 19.2% at constant currencies, or 17.1% after the currency headwind due to the decline in sterling. Revenue from Adesis Netlife, acquired in June 2015, along with an initial contribution from Habber Tec, took total Q2 group revenue to €110.6m. Q2 adjusted EBITDA rose by 11% to €11.4m, reflecting a 106bp decline in the margin. For the full H1 period, organic revenue grew by 13.5%, before a 1.7% currency headwind, to €199.8m. The acquisitions took the total H1 revenue to €208.0m, up 16.4%. While net debt rose from €36.4m to €70.3m over H1, we note that the group generates its strongest cash flows in H2. Outstanding acquisition liabilities of €15.9m take the adjusted net debt to €86.2m.
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