2012 results of the leading Polish stock-exchange listed IT services providers

The combined 2012 sales revenues of the five leading Polish IT services providers and integrators – Asseco, Comarch, Sygnity, Comp and Talex – came to approximately PLN 7.2bn, a 5.6% year-on-year increase and just slightly more than the 5% estimated for IT business solutions market growth in Poland for the same year. The undisputed leader among the top five is the Asseco Group, whose consolidated revenues reached PLN 5.3bn, six times those of Comarch, the second most prominent. The cumulative consolidated EBITDAs of the five IT companies came to PLN 1.1bn in 2012 and remained relatively unchanged in comparison with 2011. The cumulative EBITDA margin remains high, but there has been a slight reduction in the last few years – from 21% in 2009 to 18% in 2012.

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The Asseco Group is the largest IT company of Polish origin. It has operated on the market since 1991 (and was formerly known as Prokom Software). Its parent company, Asseco Poland, has been on the WIG20 index on the Warsaw Stock Exchange (WSE) since 2008.

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A comparison of the sales revenues of Asseco between 2007 and 2010 shows that the company performed well even in 2009 – the year of crisis. Despite an 8.5% market downturn for overall Polish IT business solutions, Asseco succeeded in achieving a 9% increase in sales revenues that year. In all, Asseco’s revenues have grown by 48.3% in terms of the CAGR over the last six years. The EBITDA margin remained stable until 2011, when it fell by about 4 p.p. to 17%. Asseco kept this EBITDA figure in 2012 also.

Asseco began the last six-year period with a substantial net profit, and a rate of growth which significantly exceeded 100% until 2009, when the crisis struck. However, once more, even during the downturn, the rate of growth of net profit remained positive at 10% year on year. Despite the recovery, the company has not succeeded in returning to pre-crisis growth rates until now, although in 2011 Assecos’s net profit reached its maximum of PLN 0.61bn. However, the company reported an 8% reduction in net profit in 2012.

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An analysis of Asseco’s sales revenues over the last six years shows that there has been a constant increase in the share of the sales of the company’s own services and software as a proportion of total revenues. It is also apparent that the proportions accounted for by the group’s “third-party software and services” and “Infrastructure and equipment” categories have been falling continuously since 2007. In terms of clients, the most prominent group in Asseco’s sales in 2012 was business clients, which accounted for 42%.

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The most prominent Asseco customer category in 2012 was businesses, which accounted for 42% of the company’s sales. This is followed by finance & banking and public bodies, with 34% and 24% respectively. The breakdown of the sales of these three remained similar for 2011 and 2012.

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The company with the second most substantial revenues is Comarch, whose sales revenues came to almost PLN 884m in 2012, a 13% increase from PLN 785.7m in 2011. The financial figures of the company for 2007-2012 show that its revenues were not strongly affected by the downturn in 2009, as they grew from PLN 701m in 2008 to PLN 729m in 2009. Conversely, Comarch’s EBITDA fell by 15% in 2009 in year-on-year terms. The latest data show Comarch with an EBITDA figure of PLN 84m. The EBITDA margin fluctuated between 7.7% and 10.5% during the period in question to 9.5% last year.

Comarch’s net profit was relatively healthy in 2012: PLN 37.5m, with a 10% rate of growth. The company’s performance in 2008 was substantially affected by the sale of Interia.pl to Bauer Media Poland. This was worth PLN 188.9m and accounted for 94% of the 2008 net profit of the company. After 2008, there was an 87% natural slump in 2009, followed by a subsequent, 9%, reduction in 2010. Since then, there has been a two-figure rate of growth, and no recovery of the PLN 42.5m net profit level of 2007.

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The breakdown of Comarch’s sales by categories between 2007 and 2012 confirms that the company bases its activities on IT services. About 66% of Comarch’s sales revenues came from such operations in 2012. However, there is no clear trend as was the case with Asseco. The only apparent similarity is a reduction in the share of hardware sales as a proportion of total sales revenues. Other sales subgroups fluctuated in similar ranges during the whole period.

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The breakdown of the company’s sales in terms of clients shows that the two dominant business areas among its clients are finance and banking, along with telecommunications, media and IT. These two categories accounted for approximately 50% of Comarch’s sales revenues in 2012. The other half is divided between five other minor groups.

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Sygnity is the third largest company on the Polish IT market, in terms of both revenues and EBITDA. The company’s sales revenues exceeded PLN 470m in 2012 but have fallen by a CAGR of 10.7% since 2007. EBITDA results fluctuated between a 2009 minimum of PLN -69m and PLN 57m for the preceding year. Last year’s EBITDA came to PLN 15.5m, 34% less than the 2011 figure. As a result of the EBITDA fluctuations, the EBITDA margin also swayed between -12 and 6%, standing at 3% in 2012.

Sygnity’s net profit figures do not show the company in a good light. The loss of over PLN 12m in 2012 seems to be relatively minor in comparison with its substantial net losses of PLN 81m and PLN 104m in 2007 and 2009 respectively. The 2009 result reflects its problems in 2009, when the slump in revenue occurred. The best situation in terms of net profit was undoubtedly that of 2011, when the figure exceeded PLN 8m. However, the company’s fortunes were reversed last year, when a loss in excess of PLN 12m was reported.

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The breakdown of the company’s sales revenues reveals the domination of services among overall sales. Implementation and maintenance services represent 70% of Sygnity’s revenues. The third most important subgroup is that of software and licence distribution, which account for 17%, a 10 p.p. increase over last the six years from 7% in 2007. There has been a reduction in the distribution of computer hardware from 36% in 2007 to 11% in 2012.

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The financial results of Comp show acceptable levels of sales, EBITDA and net profit. Even in 2009 the company achieved healthy figures for these variables. In addition, despite a reduction in revenues, Comp achieved an increase in EBITDA and in a net profit. However, it has taken two years for the company to regain and exceed pre-crisis sales levels. In 2012 it allocated PLN 10.2m for restructuring, and this led to negative EBITDA and net profit results. The EBITDA margin was positive over the whole period and fluctuated between 12% in 2009 and 2010 and 0% in 2012. If the provision for restructuring were excluded, the 2012 EBITDA margin would be 2%.

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The 2012 revenue breakdown reported by Comp suggests that the company is concentrating on providing solutions to the retail industry. Its business mainly includes the provision of POS devices and training services for clients. With shares of 17%, there are two subgroups of secondary importance among Comp’s revenues. These are backup & storage and networking equipment & services. The company also provides IT outsourcing and solutions associated with IT security, each accounting for 12% of sales.

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Last, but not least among the companies analysed is Talex. Its financial figures reveal far lower levels of revenue than those of Asseco or even Comp, but it is still one of the largest Polish IT companies. Reflecting the overall market, Talex encountered several problems in 2012, which caused a 53% reduction in sales, and this also had an adverse effect on EBITDA and net profit levels. The figures for both fell below zero, which means PLN 3.2m and PLN 2.8m losses in terms of EBITDA and net profit respectively. The level of revenue achieved in 2008 was recovered in 2011, after which there was another 34% reduction to PLN 94.6m in 2012. Overall, the compound annual growth rate of Talex’s sales revenues over the last six years came to 2.5%. In 2012 company also made a net loss of PLN 2m.

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The bulk of Talex’s revenues in 2012 came from computer hardware and software wholesale. About 40% of the sales revenues generated by Talex are accounted for by different kinds of IT services. Unlike the preceding companies analysed, Talex’s services revenues account for a small proportion of sales.

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The most prevalent industry represented in Talex’s sales revenues is finance & banking. This accounted for 59.3% of the company’s overall sales in 2012. Trade & services, representing almost 24% of revenues, is also important in Talex’s portfolio of clients. The last on the list is public utility business, which accounted for 0.1% of sales revenues in 2012.

A comparison of the stock exchange performances of the five companies analysed reveals a relatively pessimistic situation with regard to their prices on the WSE in 2012. Comarch was the only one to witness an increase in the value of its shares. The company’s share price rose by more than 32%, from PLN 55.65 to PLN 73.5, during the year. Reductions witnessed by other companies were in the 6-49% range. The most substantial loss was made by Talex, whose shares depreciated by 49%.

Lukasz Wilk

lukasz.wilk@pmrpublications.com