EQS Group AG has finished the 2017 business year with a significant sales increase, achieving new record revenue figures for the eighth successive time. The Group achieved a sales increase of 16 per cent, up to EUR30.36 million.
EBIT before one-off acquisition costs, purchase price allocation, and scheduled depreciation of acquired customer bases (non-IFRS), decreased by 66 per cent, down to EUR1.11 million as a result of high investment activities. The adjusted consolidated annual net loss was EUR-218 thousand. The adjusted earnings per share is EUR-0.17.
The Group achieved sales of EUR8.33 million (+4 per cent) in the October to December period. The adjusted EBIT decreased by 9 per cent, down to EUR130 thousand. The adjusted consolidated net profit was EUR218 thousand (-77 per cent). This resulted in an adjusted earnings per share of EUR0.16 (-70 per cent) for the fourth quarter of 2017.
EQS Group AG is resolutely implementing the September 2017 decision to expand the Group’s core business into the Governance, Risk & Compliance (GRC) business area. This is accompanied by an investment programme to expand the corporation into a full-fledged technology company and a focus on developing cloud-based solutions specifically for this new business area. Sixty-eight additional employees have already been recruited as of the end of 2017. This strategic decision has led to a temporary strain on earnings. Compared to preliminary figures, there is also a lower EBIT, which is due to reduced costs capitalised for the ARIVA.DE AG portal development.
The EQS Group AG Executive Board and Supervisory Board propose to defer the May 18, 2018 dividends for the 2017 business year in order to expand investments. This proposal was already communicated in September 2017.
Achim Weick, Founder and CEO of the EQS Group AG, says: “The largest investment programme in the company’s history has had an excellent start. Our aim is to become the leading European cloud provider for global investor relations and corporate compliance solutions. We are prioritising this strategy over short-term earnings targets. We are sure that EQS Group AG will generate permanently-high returns for its shareholders after its transformation into a technology company.”
On the domestic market, the July 2016 European Market Abuse Regulation has continued to provide increases in sales. The extension of ad hoc obligations to a much larger group of issuers, as well as more extensive insider regulations, has led to increases in news distribution and increased INSIDER MANAGER sales. The Reports & Webcasts division has also recorded considerable growth.
The subsidiary ARIVA.DE AG has also made a large sales contribution. It continues to benefit from increased orders in regulatory services. This is a result of the 3 January, 2018 roll-out of the PRIIP Directive. Overall, ARIVA.DE AG earnings remained below expectations and were slightly lower than the previous year. This is largely due to lower project sales and the prioritization of ARS-COCKPIT software development.
EQS Group AG achieved a total sales increase of 21 per cent in Germany, up to EUR24.62 million. EUR7.36 million of this was from ARIVA.DE AG’s consolidated sales.
EQS Group AG’s 2017 revenue from foreign business (EUR5.74 million) remained almost at the same level as in the previous year (EUR5.68 million). Compared to the previous year, the share of foreign companies in consolidated sales dropped by 3 per cent, down to 19 per cent as a result of the base effect from the consolidation of ARIVA.DE AG. Abroad, the Group’s focus is on markets with comprehensive regulatory environments. The UK, France, Switzerland, and US belong to these key markets.
The UK subsidiary recorded a considerable 35 per cent sales increase, up to EUR473 thousand. France’s EQS Group SAS, founded in 2017, has already acquired a number of CAC 40-clients and has been licensed as a Primary Information Provider as of September 2017 by AMF, the French financial market supervisory body. The US subsidiary has also undergone expansion and has been able to acquire double-digit client numbers. It has developed the Group’s global media network by forming a partnership with the fourth-largest US news service, Accesswire. This collaboration was underpinned by the September 2017 investment of just under 10 per cent in its owner, Issuer Direct Corporation. The Swiss subsidiary has had to accept a 6 per cent decrease in sales, down to EUR2.02 million. This was impacted by a management change within Tensid AG, which was taken over in 2016.
Although the Asian subgroup, EQS Asia Ltd., recorded a 14 per cent sales decrease in 2017, down to EUR2.11 million, the primary goal of achieving a positive operating result was accomplished. Our Russian subsidiary increased its sales by 26 per cent, up to EUR916 thousand, despite prevailing difficult market conditions.
Domestic non-IFRS EBIT decreased to EUR1.70 million (previous year EUR3.57 million) as a result of large investments in infrastructure and product development. Non-IFRS EBIT was EUR-585 thousand abroad (previous year EUR-289 thousand).
Investments in 2017 were focused on product development. Specifically, on completing the issuing platform for the Legal Entity Identifier (LEI), providing a whistleblowing solution, and on developing the new COCKPIT cloud platform, which is to be completed in the fourth quarter of 2018. At ARIVA.DE AG, the focus was on developing workflow solutions for PRIIP and MiFID II.
Prospects: more growth in 2018 with continuously-high investment activities.
For the 2018 business year, and as a result of various European regulation initiatives (such as MiFID II and Sapin II), the Executive Board is anticipating a sales increase of 19 per cent to 24 per cent, resulting in an estimated EUR36 million to EUR37.6 million in revenue. Investments of roughly EUR2.8 million are being planned. An EBITDA between EUR1.5 million and EUR2.1 million is expected.
