EQS Group AG significantly expanded its investment activities in the third quarter of 2017 through the development of new products related to impending new regulations.
This resulted in a temporary burden on earnings compared to the strong prior-year period. Newly-developed cloud solutions currently introduced in the market are receiving high acceptance.
From July to September, the Group generated sales revenues of EUR7.015 million, 9 per cent less than in the same period in 2016. EBIT before scheduled amortisation of acquired customer bases and acquisition costs (non-IFRS) decreased to EUR71 thousand. Adjusted consolidated net income is -EUR399 thousand. Adjusted earnings per share amount to -EUR0.40.
The figures for the first nine months are as follows: revenues of EUR22.029 million (+22 per cent), EBIT (non-IFRS) decreased by 50 per cent to EUR983 thousand, and consolidated net income (non-IFRS) of -EUR436 thousand. Earnings per share (non-IFRS) are -EUR0.33 (previous year: EUR0.06).
Part of investments were allocated to the product development of ARIVA.DE's ARS-COCKPIT cloud software, which is scheduled to go to market in conjunction with the upcoming PRIIP Regulation, which takes effect at the beginning of 2018. The PRIIP Regulation requires issuers to provide pre-contractual key information documents. The ARS-COCKPIT offers companies a comprehensive service for the handling of these documents.
Additional investments were made to complete the Legal Entity Identifier (LEI) issuing platform and the new SAFE CHANNEL compliance product, a whistleblowing solution that enables anonymous and secure reporting of legal violations within companies.
These investments are already proving successful, with EQS's newly developed products garnering a positive resonance with the market. A significant number of clients have signed on long-term to the ARS-COCKPIT, six weeks before its market launch. In addition, several customer contracts for the SAFE CHANNEL tool have been secured before the product's official roll-out. These successful pre-sales underpin our anticipated positive market responses to our cloud solutions. Furthermore, our LEI issuing platform has issued numerous entity identifiers to companies in Germany and abroad, exceeding our expectations.
Achim Weick (pictured), Founder and CEO of EQS Group AG, says "These upcoming regulations give us the opportunity to reach new customer target groups and subsequently grow EQS in a whole new dimension. Although the associated investments in product development have a short-term impact on results, they will lead to consistent, highly-profitable cloud sales in the near future, guaranteeing the future positive business development of EQS Group AG."
Consolidated sales of EQS Group AG increased by 22 per cent in the first nine months of 2017. Adjusted for revenues from the majority holding of ARIVA.DE AG (67.5 per cent), growth was 9 per cent. Domestic business, including the large share of ARIVA.DE AG in Germany, achieved 28 per cent growth, compared to the 3 per cent growth in foreign businesses.
Domestic sales momentum at EQS Group AG continued to be driven by the European Market Abuse Regulation and corresponding increased ad-hoc obligations for a growing number of issuers, as well as extensive insider regulations. The newly-developed INSIDER MANAGER was established as a standard workflow solution for investor relations departments in Germany, and is enjoying increasing demand in other European countries.
The largest percentage growth abroad was achieved by our subsidiary in the UK, which increased its revenue by 33 per cent to EUR341 thousand in the first nine months. The French subsidiary, which is in the process of being established, also developed positively. Despite being founded very recently, the company has already acquired nine CAC 40 companies as an initial customer base.
The Management Board expects revenues of EUR31.2 to EUR32.5 million for the 2017 financial year. EBIT before one-off acquisition costs, purchase price allocation, and scheduled depreciation (non-IFRS) will decrease to EUR2 to EUR2.3 million (previously EUR3.6 million to EUR3.9 million) as a result of the investment program undertaken in 2017.
The outlook of EQS Group AG was adjusted with the September 26, 2017 publication of the company decision to expand its strategic direction and to develop the business area of Governance, Risk & Compliance (GRC). Sales growth of 10 per cent-15 per cent is expected for FY2018 and is expected to increase to 15 per cent-20 per cent beginning in 2019.
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