Adesso : Quarterly Statement Q1/2024

QUARTERLY STATEMENT Q1 2024

Key Figures

in EUR kQ1 2024Q1 2023Changein %

Profit situation
Sales revenues	317,111			276,242		40,869		15
domestic	262,056			224,522		37,534		17
foreign	55,055			51,720		3,335		6
EBITDA	17,756			17,914		-158		-1
EBITDA margin (in %)	5.6			6.5		-0.9		-14
Consolidated earnings	-3,293			2,018	-5,311	-263
Balance sheet
Balance sheet total	774,259			668,654		105,605		16
Equity	203,729			216,902		-13,173		-6
Equity ratio (in %)	26.3			32.4		-6.1		-19
Liquid assets	47,287			46,171		1,116		2
Net cash position	-90,495			-73,567	-16,928	-23
Employees
Employees (FTE)	9,926			8,513		1,413		17
domestic	8,097			6,967		1,130		16
foreign	1,829			1,546		283		18
Gross profit/Employees	111			112	-1	-1
Share
Number	6,520,272			6,512,272		8,000		0
Price at the end of the period (in EUR)	109.20			147.00		-37.80		-26
Market capitalisation at the end of the period (in EUR m)	712.0			957.3		-245.3		-26
Earnings per share (in EUR)		-0.49			0.28		-0.77		-275
Growth in Sales		EBITDA Development
in EUR m		in EUR m

adesso Group Quarterly Statement Q1 2024

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MISSION STATEMENT

adesso optimises companies' core business processes with the targeted use of information technology. We offer customers expert consulting based on our in- depth industry knowledge and use our technical know-how to develop customised software solutions. For a defined set of operational tasks adesso provides innovative solutions and products. As an independent partner, we aim to help our customers make the most of their business potential while retaining flexibility in the future.

• Summary of key developments in the reporting period

• Economic report
  9 Forecast report
  9 Subsequent events
  10 Consolidated Balance Sheet
  12 Consolidated Income Statement
  12 Consolidated Statement of Comprehensive Income
  13 Consolidated Cash Flow Statement
  14 Segment informationen
  16 Financial calendar
  17 Imprint

adesso Group Quarterly Statement Q1 2024

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adesso Group Quarterly Statement Q1 2024

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adesso Group Quarterly Statement Q1 2024

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ECONOMIC REPORT

Business performance

Position

In the first quarter of 2024, adesso SE increased its sales revenues by 15 % to a new record level for a quarter of EUR 317.1 million. With the exception of 0.3 percentage points, growth was achieved almost entirely organically. This growth was achieved despite below-average capacity utilisation at the beginning of the year given the expansion of the workforce and price increases in the average daily rates. With a good order backlog and fundamentally good demand for adesso services, the number of employees, converted to full-time equivalents (FTE), was increased by 1,413 or 17 % year-on-year to 9,926 as at the reporting date. The average number of employees in the first three months increased by 17 %, in line with the number of employees as at the reporting date. Due to further internationalisation drive, the number of employees outside Germany grew by 18 % to 1,829 full-time equivalents.

The growth rates for both sales revenues and employees are below the same period of the previous year as planned. In order to increase capacity utilisation and earnings profitability, a more moderate pace of growth was pursued in the recruitment of new employees.

Sales growth in the German market amounted to 17 %. Outside Germany, sales revenue growth was less strong by 6 %. While adesso's foreign companies with the highest sales revenues Switzerland, Austria and Italy increased their local sales revenues, adesso SE, the Group company with the highest sales revenues, achieved lower sales revenues in the foreign market compared to the previous year. At 82 %, the share of total sales revenues generated in Germany was up slightly year on year (81 %). Dynamic sales growth in the double-digit percentage range was achieved in almost all core industries served by adesso. Only the "manufacturing" and "insurance" sectors remained slightly below the previous year's figure. The federal government's supplementary budget, which was temporarily halted by the Federal Constitutional Court in November 2023, led to the delay of already budgeted projects in the "Public Administration" sector in Germany in the first quarter of 2024. This slowed adesso's strongest sector in terms of sales to growth of 7 %. At 65 %, growth was particularly strong in the relatively new "energy supply" sector.

Earnings situation

At EUR 17.8 million, the operating result (EBITDA) in the first quarter was almost on a par with the previous year (previous year: EUR 17.9 million). It is only slightly below expectations for the first quarter of 2024. This is driven by various factors. With two fewer working days than in the previous year, the first quarter of 2024 has a factored- in calendar effect, which is primarily reflected in the operating result. While sales revenues increased by 15 %, personnel expenses, adesso's largest cost item rose by 18 %, and therefore in line with the increase in the number of employees. Investments in the IT Solutions segment, which unlike in the previous year were not accompanied by corresponding licence revenues, also had an adverse effect on earnings growth. The capacity utilisation rate in the IT Services business improved over the course of the first quarter, but was still below average. Other operating income increased by 118 % to EUR 6.4 million, mainly due to a tax related adjustment of provisions.

Key figures profit situation

in EUR k		Q1 2024	Q1 2023		Change		Change
								in %
	317,111
Sales		276,242	40,869	15
	17,756
EBITDA		17,914	-158	-1
EBITDA margin	5.6
(in %)		6.5	-0.9	-14
Consolidated	-3,293
earnings		2,018	-5,311	-263
Earnings per share		-0.49
(in EUR)		0.28		-0.77		-275

adesso Group Quarterly Statement Q1 2024

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Notes on individual items in the income statement

Other operating income increased by 118 % compared to the same period in the previous year, from EUR 2.9 million to EUR 6.4 million. This is primarily due to the reversal of warranty provisions, which proved to be too high during a tax audit.

The cost of materials primarily includes expenses for services purchased externally within the scope of customer projects. The cost of materials rose by 8 % to EUR 42.6 million, which was significantly lower than sales revenues. This development follows the measure to increase the capacity utilisation rate. Nevertheless, adesso continues to contract external services in certain areas.

Personnel expenses rose by 18 % from EUR 192.4 million to EUR 227.0 million, which was disproportionate compared to sales revenues, but only slightly higher than the increase in headcount. At EUR 111 thousand, the annualised gross profit per employee in the first three months was almost at the previous year's level of EUR 112 thousand.

Other operating expenses increased by 24 % from EUR

30.2 million to EUR 37.4 million. The composition and development varies. While expenses in connection with the IT landscape increased by EUR 1.3 million, legal and consulting costs were reduced by a similar amount.

Savings totalling EUR 1.1 million were achieved in personnel recruitment compared to the same period of the previous year due to the more moderate growth. At the same time, various cost items directly related to further growth increased. Due to the general price trend, this is usually disproportionate to headcount growth.

Depreciation and amortisation amounted to EUR 15.5 million (previous year: EUR 12.7 million), of which EUR

3.9 million (previous year: EUR 3.0 million) was attributable to depreciation of property, plant and equipment. Of the remaining amortisation of intangible assets, EUR 8.8 million (previous year: EUR 6.3 million) and therefore now more than half of the total amortisation is attributable to right-of-use assets from leases. The increase in depreciation of property, plant and equipment as well as depreciation of right-of-use assets from leases is also directly related to the expansion of the Group headquarters in Dortmund, which was completed in mid-2023. No goodwill impairments were recognised.

Income tax expenses increased to EUR 2.7 million (previous year: EUR 1.7 million). Based on pretax profit, the tax rate was calculated at -473 % (previous year: -46 %). The increase in the tax rate is primarily due to regular,

non-deductible expenses and non-capitalised deferred taxes on losses incurred in the financial year. These are even more pronounced than in the same period of the previous year due to the lower earnings before taxes compared to the previous year.

Employee key figures

The total number of employees in the Group increased by 1,413 or 17 % compared to the previous year's figure, which was significantly lower than in the previous year (2,244 or 36 %). While 8,513 employees worked for adesso as at the reporting date in the previous year, this figure has risen to 9,926 full-time equivalents after the first quarter of 2024. In the first three months of 2024, the number of employees rose by 414 compared to the figure reported at the end of the previous year. At 18 %, the number of employees outside Germany also increased significantly less than in the previous year (previous year: 42 %) to 1,829 full-time equivalents.

Employee key figures

		Q1 2024	Q1 2023		Change		Change
								in %
Employees
at the end of the	10,734
period		9,385	1,349	14
Full-time
equivalents (FTE)
at the end of the	9,926
period		8,513	1,413	17
Full-time
equivalents (FTE)	9,854
average for the year		8,456	1,398	17
Sales annualised
per average FTE (in	129
EUR k)		131	-2	-2
Gross profit
annualised
per average FTE (in	111
EUR k)		112	-1	-1
Personnel costs
annualised
per average FTE (in		92
EUR k)		91		1		1

adesso Group Quarterly Statement Q1 2024

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Financial position and results of operations

Goodwill and intangible assets are almost at the same level as at 31 December 2023 due to the more moderate Group growth.

Liquid assets fell by 53 % compared to 31 December 2023 to stand at EUR 47.3 million. The decline corresponds to the typical trend in the first quarter, in which the variable salary components for the previous year are paid out. Due to a significantly lower increase in net working capital in the same period of the previous year, cash flow from operating activities of EUR -20.8 million was above the previous year's level (previous year: EUR -27.4 million). Trade receivables and contract assets once again rose sharply by 10 % from EUR 259.5 million to EUR 284.5 million and account for a good third of the balance sheet total. Cash flow from investing activities in the first quarter of 2024 was positively impacted compared to the previous year, primarily due to a more conservative M&A approach without major company acquisitions. It totalled EUR -9.1 million in the first quarter of 2024 after EUR -16.5 million in the same period of the previous year. Cash flow from financing activities totalled EUR -23.1 million (previous year: EUR -0.8 million). Compared to the same period of the previous year, more financial liabilities were repaid than newly assumed.

Equity as at 31 March 2024 remained almost unchanged compared to 31 December 2023 due to the negative consolidated earnings with growth of -2 % (EUR 203.7 million after EUR 207.8 million as at 31 December 2023).

Financial liabilities decreased by 8 % from EUR 149.1 million as at 31 December 2023 to EUR 137.8 million, primarily due to ongoing repayments. Net liquidity amounted to EUR -90.5 million as at the reporting date

(31 December 2023: EUR -48.4 million; 31 March 2023: EUR -73.6 million), once again showing a typical increase in the first quarter.

Investments and company acquisitions

Investments in property, plant and equipment totalled EUR 5.5 million (previous year: EUR 8.2 million). The growth in property, plant and equipment is generally in line with the increase in headcount, albeit not in the exact same proportion and with a time lag. There is no investment backlog to report.

adesso did not complete any company acquisitions in the first quarter of 2024.

adesso Group Quarterly Statement Q1 2024

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FORECAST REPORT

Anticipated development of adesso SE

Despite the slightly lower than expected earnings development in the first quarter, the Executive Board continues to remain positive about the outlook for the rest of the financial year based on planning and other current indicators. The earnings trend, which is heavily influenced by the calendar effect in the first quarter of 2024, is likely to improve again significantly against the backdrop of the significantly higher number of available working days, especially in the second half of 2024, as capacity utilisation picks up. A package of measures initiated at the beginning of 2024 to increase profitability will increase the achievable margin in the following quarters and subsequently also the contribution to earnings, assuming appropriate capacity utilisation. On this basis, the Executive Board has reaffirmed its original full-year guidance for 2024 of over EUR 1.25 billion in sales revenues with EBITDA of EUR 110 to 130 million.

SUBSEQUENT EVENTS

There are no significant events to report.

adesso Group Quarterly Statement Q1 2024

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Consolidated Balance Sheet

of adesso Group as of 31.03.2024 according to IFRS

Assets

in EUR k	31.03.2024	31.12.2023

Non-current assets
Goodwill	97,348	98,098
	38,823
Intangible assets	39,589
	52,102
Property, plant and equipment	50,509
	182,367
Right-of-use from leasing	173,274
	1,760
Shareholdings recognized under the equity method	2,224
	21,433
Financial assets	20,748
	781
Other non-current assets	854
	10,341
Deferred tax assets	10,803
	404,955	396,099
Current assets
Cash and cash equivalents	47,287	100,772
	160,826
Trade accounts receivable	181,893
	123,711
Contract assets	77,602
	7,508
Receivables from income taxes	6,781
	3,213
Financial assets	2,284
	26,759
Other assets	20,554
	369,304	389,886

TOTAL ASSETS

774,259

785,985

adesso Group Quarterly Statement Q1 2024

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