02.04.2008 |

2007 results show another record year for S&T

Solutions and services business takes off, profitable growth continues into 2008

Sales 2007: 522.2m euros (+13%)

EBITDA 2007: 20.4m euros (+13%)

EBIT 2007: 13m euros (+7%)

2nd April 2008. S&T’s success in 2007 has surpassed its own record results for 2006. The second half of 2007 saw particularly good results, enabling the company to boost annual sales by 13% to 522.2m euros. EBIT rose 7% to 13m euros. In accordance with expectations, EBITDA rose 13% to 20.4m euros. Growth in 2007 was primarily driven by the business units of solutions and services, and IT consulting, which accounted for 45% of overall sales. The S&T Group intends to expand these business units in 2008 in order to continue their profitable growth. The company projects 2008 sales of between 560-580m euros and EBIT of 15-17m euros.

S&T made strong progress in the key units of service and consulting in the 2007 financial year. This included an expansion of operations. The second half of the year was particularly successful, with outstanding 3rd quarter results and the best quarterly results ever were recorded in Q4. S&T’s Business Solutions operations rose to 149.1m euros – equating to growth of 59%.

The Managed Services business unit also experienced considerable organic growth – up 16% to 86.5m euros. At 286.6m euros (-2%), the Enterprise Systems business sector remained on the same level as during the previous year, although noticeable improvement in the business mix and gross margin was made. “In 2007 we successfully integrated our largest acquisition in the company’s history, the Swiss IMG Group. We were also busy completing the integration of the companies we acquired in 2006. Despite the financial and human resources that this entailed, we saw an increase in EBIT, in addition to a rise in sales and proper strategy execution,” said Christian Rosner, CEO at S&T.

Central Region* records highest sales

Boosted by the acquisition of IMG, and with 23% growth to 140.3m euros, the DACH Region recorded the fastest sales growth of all S&T regions. However, at 170.8m euros (+14%), the Central Region recorded the highest sales volume and strong organic growth. Adriatic remained stable at 117.1m euros (-1%) - Croatia delivered exceptional growth -, as did the East Region with 82m euros (+2%), where Romania and Bulgaria delivered standout performances. The Asia Region contributed 12m euros to the Group’s sales after its incorporation into the group in 2007 via the acquisition of IMG.

Sales Driver – Industry Knowledge

Within the S&T target industries, the manufacturing industry once again had the largest share of sales in 2007, with 26%. In this sector, S&T, with its comprehensive industry skills, is primarily active with companies involved with process manufacturing, plant and mechanical engineering and the automotive industry. Orders from the fast growing financial services sector equated to 21% of sales, with IT systems providing flexible and efficient support for the stringent requirements of this business. The telecommunications industry contributed 17% to S&T’s 2007 sales, with public administration providing 15% and the energy supply business 7%.

The area of retail finished the year with a sales share of 14%, a sector in which S&T primarily addresses wholesalers, retailers and commodities. “The companies in our target industries are becoming increasingly international and are active in Eastern Europe. They want to implement their technology and high IT standards at all sites. For this they need a partner such as S&T, which can design international strategies and then implement them locally in all relevant countries”, said Rosner.

S&T shares on the rise

The upward trend of S&T stock was barely impacted by instability in the capital markets during the second half of the 2007 financial year. The share price performed well with a gain of 18%. The market capitalization at year end was 166.7m euros. At the beginning of April the stock achieved an all-time high of 59.20 euros. The share price at year end was 46.50 euros.

Workforce increases 37%

By the end of 2007, S&T employed 3,138 employees – 37% more than at the end of 2006. Of these, 653 were added to the S&T payroll through the company’s acquisition of IMG. Hiring into positions created by the Group’s organic growth accounted for almost 200 new employees. The majority of employees (2,339) are based in Central and Eastern Europe. There are 639 employees in the DACH region and 160 in Asia.

Further growth forecast for 2008

S&T intends to continue its recent success in 2008. A promising volume of contracts in the order books, a successful business strategy and its realization, and the development of the local S&T (country) markets, will all contribute to continued profit growth. With sales forecast at 560-580m euros and projected EBIT of 15-17m euros, S&T expects its strong growth to exceed market growth once again this year. According to market analysts IDC, moderate growth of 5.5-6% is projected for the global IT market in 2008. In 2007 market growth was 6.9%. However, according to IDC, the IT services market will record better progress than the overall IT market.

Within the S&T markets, Ukraine leads with a forecast growth rate of 21.6% in IT services, compared with 19.7% for the overall IT market. Russia follows with 21.0% (18.9% for the overall IT market), then Romania with 19.6% (10.8% for overall IT market), and Bulgaria with 19.2% for IT services and 17.7% for the overall IT market. Rosner: “The projections for our markets continue to be good. We will utilize our potential and strategy to achieve double-digit EBIT growth.”

*S&T regions:
Central: Moldova, Poland, Slovakia, Czech Republic, Ukraine, Hungary
Adriatic: Albania, Bosnia and Herzegovina, Croatia, Macedonia, Montenegro, Serbia, Slovenia
East: Bulgaria, Romania, Russia, Turkey
DACH: Germany, Austria, Switzerland
Asia: China, Japan
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