vwd Vereinigte Wirtschaftsdienste Aktiengesellschaft / Release of an
announcement according to Article 37x of the WpHG [the German Securities
Trading Act]
08.11.2012 08:41
Interim report according to Article 37x of the WpHG, transmitted by
DGAP - a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
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Growth momentum eases in third quarter
Special effects hurt earning power - short-term forecast dims
- Nine-month sales reach EUR 64,960 thousand (+ 12.1 %)
- EBITDA falls to EUR 5,500 thousand (- 8.7 %)
- EBIT drops to EUR 1,692 thousand (- 39.3 %)
- Guidance for 2012 adjusted slightly downward
Frankfurt am Main, November 8, 2012 - In a challenging business
environment, the growth momentum generated by the vwd group slowed during
the third quarter of 2012 compared with the two previous quarters in the
year. The low rate of sales growth and the positive im-pact produced by the
successful leveraging of economies of scale in connection with the
integration of the business in Italy that the group acquired in 2011 were
unable to offset the continuing cost increases in other areas of the
company. As a result, earnings fell. Because the current investment backlog
in the financial industry is unlikely to ease over the short term, the
company's guidance for 2012 has been adjusted downward.
Changes in the Management Board
On June 11, 2012, the Supervisory Board of vwd AG appointed Mr. Albrecht
Kiel to the company's Management Board effective September 1, 2012. In this
position, Mr. Kiel over-sees sales, marketing and strategic development at
the vwd group.
On September 19, 2012, the Supervisory Board of vwd AG dismissed Dr.
Andreas Dahmen from the Management Board effective immediately. The
responsibilities of Dr. Dahmen have been assumed on a temporary basis by
the two Management Board members Spencer Bosse and Albrecht Kiel.
Economic situation and industry trends
In the fall of 2012, the world's economy continued to slow. In a joint
assessment issued in October, Germany's leading economic research
institutes noted that the economy was losing momentum nearly everywhere. At
the same time, confidence among companies and consumers continued to erode.
The sovereign-debt and confidence crisis in the euro zone was cited as the
primary reason for this decline. The institutes also noted that the
adjustment process occurring in other developed economies following the
bursting of the U.S. real-estate bubble in 2007 had not yet come to an end.
The consequences of flawed structural trends that existed before the crisis
continue to act as a drag on the economy. Beginning in September,
disappointing economic figures, weak earnings reports from major companies
and ongoing concerns about Greece and Spain triggered a consolidation on
stock markets.
Business performance: diminished
As a result of the challenging business environment, the performance of the
vwd group weakened in the third quarter of 2012. At EUR 20,862 thousand,
sales reached approximately the same level produced during the previous
year's period, EUR 20,989 thousand. During the first nine months of fiscal
year 2012, sales totaled EUR 64,960 thousand. Compared with the previous
year's total of EUR 57,941 thousand, this represents an increase of 12.1 %.
The key reason for this growth was the activities acquired in Italy last
year.
Earnings position: special effects squeeze results
In the third quarter of 2012, the earnings position of the vwd group was
characterized by ongoing high expenditures for transmission, fees for
downloading stock-market data and other sales-related items resulting from
the entry into the Italian market. This is reflected in the rise of the
share of material expenses, which climbed from 33.5 % last year to 36.3 %.
In the three-month period that ended in September 2012, other operating
expenses totaled 16.0 % relative to sales. As a result, they exceeded the
level of the first six months (14.3 %) and of the previous year (14.4 %).
Factors to be considered here include non-recurring expenses following the
acquisition of the business in Italy and special effects related to the
dispute involving the put option of EDG minority shareholders. On the other
hand, further economies of scale could be achieved in personnel costs. As a
result, these expenditures fell relative to sales from 44.3 % in the third
quarter last year to 43.3 % in the period under review. But this positive
trend could only offset the negative factors to a limited degree. As a
result, earnings before interest, taxes, depreciation and amortization
(EBITDA) fell by 25.3 % in the third quarter of 2012 to EUR 1,491 thousand
(third quarter 2011: EUR 1,996 thousand). In the first nine months of the
year, EBITDA decreased by 8.7 % to EUR 5,500 thousand (previous year: EUR
6,022 thousand).
Primarily as a result of the purchase-price allocation of vwd group Italia
undertaken for the first time last year, depreciation, amortization and
impairment of tangible and intangible as-sets in the period under review
rose by 7.1 % to EUR 1,247 thousand (third quarter 2011: EUR 1,164
thousand). As a result, earnings before interest and taxes (EBIT) fell to
EUR 244 thousand (third quarter: EUR 832 thousand). The EBIT margin was 1.2
% (third quarter 2011: 4.0 %). During the nine-month period of 2012, the
vwd group generated EBIT of EUR 1,692 thousand (previous year: EUR 2,786
thousand), which corresponds to an EBIT margin of 2.6 % (previous year: 4.8
%).
In the third quarter of 2012, earnings before tax (EBT) totaled - EUR 16
thousand (third quarter 2011: EUR 419 thousand) amid significantly lower
fictional interest expenses related to the put option to acquire the
remaining shares of the EDG business group and slightly improved remaining
interest income. In the nine-month period that concluded at the end of
September, EBT totaled EUR 727 thousand (previous year: EUR 1,673
thousand).
Tax expenses, which include costs for audits in addition to current tax
liabilities, totaled EUR 941 thousand (third quarter 2011: EUR 357
thousand), including a deferred tax receivable. As a result, group earnings
after minority interests fell to - EUR 958 thousand (third quarter 2011:
EUR 62 thousand). During the nine-month period that concluded at the end of
September 2012, the result totaled - EUR 794 thousand (previous year: EUR
975 thousand).
In the third quarter of 2012, the net income or loss attributable to the
vwd group for the period totaled - EUR 966 thousand compared with - EUR 58
thousand in the previous year's period. After nine months, it totaled -
EUR1,032 thousand (previous year: EUR 699 thousand) or per share - EUR
0.040 compared with EUR 0.027 EUR in the previous year.
Market Data Solutions Segment (MDS)
In the MDS Segment, an area of the company that comprises the business with
standardized market-data systems, browser-based applications and
comprehensive portfolio-management solutions for banks, savings banks,
asset managers and companies, growth slowed considerably in the third
quarter of 2012. For the entire nine-month period of 2012, sales jumped by
23.4 % to EUR 34,604 thousand (previous year: EUR 28,024 thousand). The
biggest boost to sales was delivered by the company's new business
operation in Italy, which, however, also lost momentum in the quarter under
review as a result of challenging market conditions. Overall, the sales
situation for the product vwd market manager financials and terminal
solutions in Switzerland was satisfactory. But business with private
customers re-mained sluggish. In terms of costs, the trend seen in the
first half of the year continued. In connection with the integration of the
Italian business, material and other operating expenses jumped in the third
quarter. The negative impact resulting from these increases could not be
offset by the slight growth in sales and positive economies of scale. This
led to a sharp decline in EBITDA for the quarter. Nonetheless, the MDS
Segment was able to boost its EBITDA during the nine-month period of this
year by 4.3% to EUR 3,111 thousand (previous year: EUR 2.982 thousand).
Technology Solutions Segment (TS)
Sales of the TS Segment, which markets a wide range of customer-specific
financial-market information, rose by 8.4 % in the first nine months of the
year to EUR 15,515 thousand (previous year: EUR 14,278 thousand). One point
that must be considered in particular here is the new activities in Italy
attributable to this segment. In addition, strong growth momentum was
gen-erated by newly acquired projects and brisk demand for sales-processing
solutions. The segment also made further gains in the area of portfolio
management and administration for asset managers and family offices. Its
business with current customers remained stable. In contrast, business
conditions for the transaction solutions product group posed further
chal-lenges. In terms of earnings, the TS Segment made further strides in
the third quarter. Alt-hough quarterly sales remained virtually unchanged,
EBITDA rose sharply as a result of ongoing favorable trends, particularly
in terms of material and personnel expenses. For the nine-month period that
concluded at the end of September 2012, EBITDA climbed by 17.3 %, a rate
that was faster than the one produced in the first half of the year, to EUR
1,983 thou-sand (previous year: EUR 1,691 thousand).
Specialised Market Solutions Segment (SMS)
The SMS Segment, which creates publication and marketing concepts for
issuers of securi-ties, has been hurt considerably throughout the year by
the continuing uncertainty experi-enced in the financial markets. Declining
advertising income produced by the financial portal finanztreff.de could
not be offset by gains produced with certificate ratings and value-at-risk
calculations. The contract extension reached with a major German newspaper
customer in the first half of the year and the addition of two new
customers in Austria had a stabilizing effect on the area of vwd listing
services. Overall, sales fell by 4.8 % through the end of Sep-tember 30,
2012, to EUR 14,840 thousand (previous year: EUR 15,639 thousand). Largely
as a result of the measurable increase of material costs, the segment's
EBITDA plummeted by 69.8 % to EUR 407 thousand (previous year: EUR 1,348
thousand).
Financial and asset position: still very solid
The financial foundation of the vwd group remains very solid. Total assets
amounted to EUR 87,251 thousand (December 31, 2011: EUR 86.548 thousand),
and the equity ratio was 29.8 % (December 31, 2011: 31.5 %). The
liabilities side of the balance sheet included an increase in payments and
a seasonal reduction in supplier liabilities. The sharp rise in other
liabilities resulted largely from the new business acquired in Italy.
Non-current assets decreased due to other intangible assets, which declined
because of depreciation-related reasons. This decrease was more than offset
by a rise in the current area, which was primarily attributable to an
increase in trade receivables. As a result of its high level of cash and
cash equivalents, the vwd group reported net financial assets of EUR 643
thousand as of September 30, 2012, (December 31, 2011: net financial
liabilities of EUR 651 thousand).
Risks and opportunities
During the first nine months of fiscal year 2012, only insignificant
changes have occurred in the information regarding the fundamental risks
and opportunities for the vwd group's future direction that the company
provided in the financial statements for fiscal year 2011.
Supplementary report
Effective October 20, 2012, Dr. Thorsten Dippel was appointed to the
Supervisory Board of vwd AG by order of the local court in Frankfurt. The
appointment was made after Superviso-ry Board member Pieter van Halem gave
up his seat on October 19, 2012. Dr. Dippel is an employee of the Carlyle
business group. His appointment to the Supervisory Board was made in the
wake of the takeover offer by Vienna GmbH, a member of the Carlyle business
group, that was announced on September 18, 2012, and released on October
25, 2012.
Guidance: weak market conditions require adjustment in forecast
In its World Economic Outlook issued in October, the International Monetary
Fund (IMF) lowered its growth forecast for most countries from the level it
predicted in July. Expectations for Italy, in particular, were lowered
sharply. For 2012 and 2013, the IMF now expects growth will slow to 2.3 %
and 0.7 %, respectively. For Germany, a small gain of 0.9 % percent in each
year is forecast. In its new forecasts, the IMF confirmed its previous
outlook for 2012, but reduced its forecast for 2013 by 0.5 percentage
point. The festering euro crisis was the primary reason for the growing
doubts about future economic performance.
Faced with these macroeconomic conditions, the state of the financial
markets is weak, a situation that is significantly restraining industry
investments. Nonetheless, the need to review current business models and to
optimize business processes remains in place as a result of ongoing
regulatory changes. For this reason, it can be assumed that the current
reluctance to invest is a fleeting phenomenon. Once this investment logjam
begins to break, the vwd group will profit thanks to its tailored products
and solutions.
For 2012, however, no change in the market situation is expected. As a
result, the company has had to adjust its guidance for the year. It
continues to expect group sales for fiscal year 2012 to measurably exceed
the previous year's level. But the range has now been specified to be
between EUR 87.0 million and EUR 90.0 million. Special effects regarding
the dispute over the put option of EDG minority shareholders and consulting
services in connection with the takeover offer made by Vienna GmbH to the
stockholders of vwd AG as well as provisions made for personnel changes
have prompted the company to reduce the announced range for EBITDA at the
vwd group to between EUR 8.9 million and EUR 9.6 million (previous
guidance: EUR 9.6 million to EUR 10.5 million).
Frankfurt am Main, in November 2012
vwd Vereinigte Wirtschaftsdienste AG
The Management Board
Forward-looking statements:
This interim statement contains forward-looking statements that reflect the
current views, expectations and assumptions of the vwd group and are based
on the information available to the company at the time of its preparation.
Forward-looking statements cannot guarantee that results and developments
will actually occur in the future, but are subject to risks and
uncertainties. Different factors may cause the future results and
development of the vwd group to deviate substantially from the expectations
and assumptions formulated in this statement. Changes in general economic
conditions, new legal parameters, the competitive situation and financial
market developments, in particular, can impact future results and
de-velopments.
Additional information:
Carsten Scharf
Investor Relations
Tel: +49 (0) 69-50701-270
Fax: +49 (0) 69-50701-114
E-mail: investorrelations@vwd.com
www.vwd.com
vwd Vereinigte Wirtschaftsdienste AG
Tilsiter StraÃe 1
60487 Frankfurt am Main
Regulated Market Frankfurt, General Standard
ISIN: DE 000 520470 5
About vwd group:
vwd group offers customised information, communications and technology
solutions for the financial markets. As a leading European provider, it
specialises in meeting individual cus-tomer requirements in the areas of
asset management, retail banking, private banking and wealth management. It
offers innovative solutions for financial service providers, investors and
the media. vwd's business is driven by innovation, flexibility, customer
centricity and strong commitment to local needs. With around 470 employees
at 18 locations in 5 countries vwd is a public company, listed at the
Frankfurt Stock Exchange (ISIN DE0005204705). The group's best-known brands
are: finanztreff.de, vwd fonds service, vwd market manager, vwd portfolio
manager, vwd PortfolioNet, TradeLink and Tai-Pan.
08.11.2012 DGAP's Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de
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Language: English
Company: vwd Vereinigte Wirtschaftsdienste Aktiengesellschaft
Tilsiter StraÃe 1
60487 Frankfurt am Main
Germany
Internet: http://www.vwd.com
End of Announcement DGAP News-Service
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