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Financial Results of the Comarch Group in the First Quarter of 2010

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In the first quarter of 2010, the Comarch Group achieved more favourable financial results in comparison to the first quarter of the previous year. Revenue from sales decreased by 14 million PLN, i.e. 8.8%, yet operating profit increased by 2.8 million PLN, i.e. 47%, and net profit was higher by 2.7 million PLN, i.e. 96%. In the first quarter of 2010, operating profit amounted to -3.1 million PLN, and net profit amounted to -0.1 million PLN. The EBIT margin was -2.2% and net margin reached 0.1%.

Several reasons for the decrease in revenue from sales in the first quarter of 2010 mainly include a decrease of 1.1 million Euros in revenue from sales by the SoftM Group, as well as the Polish zloty strengthening by 13.8% against the EURO compared to the first quarter of 2009. As a result of the consolidation with SoftM Group, Comarch Group’s revenue increased by 35 million PLN (46 million PLN in Q1 2009). Following elimination of the effects of currency fluctuation, the Group’s revenue has remained at a stable level.

The Group denoted satisfactory financial results relating to its core activity, although the influence of one-off events has continued. The negative financial result achieved in the first quarter of 2010 is mostly the result of a loss incurred in SoftM Group as well as functioning costs of companies that were established by CCF FIZ and the conducting of new IT projects. As a result of the consolidation with the SoftM Group, operating profit achieved by the Comarch Group in the first quarter of 2010 was decreased by 6.8 million PLN, and net profit attributable to the company’s shareholders was decreased by 6.1 million PLN. An encouraging point to be noted is that operating result achieved by SoftM in Q1 2010 was better by 2 million PLN than in the first quarter of 2009. The impact on operating and net profit of the companies established by Comarch Corporate Finance FIZ was respectively minus 2.9 million PLN and minus 2.4 million PLN. Other one-off events had a less significant effect on the financial results in Q1 2010. After eliminating the influence of SoftM and the companies established by CCF FIZ, as well as the costs incurred from the managerial option programme adjusted operating profit was 7.2 million PLN and was higher than in the previous year’s first quarter (5.6 million PLN). After the further elimination of one-off event costs incurred (from the settlement of assets and provisions due to deferred tax), the adjusted net profit attributable to the company’s shareholders in Q1 2010 amounted to 7.1 million PLN, compared to 3.3 million PLN in Q1 2009. The adjusted EBIT margin amounted to 6.5 %, and adjusted net margin amounted to 6.4 %.

The nominal EBITDA amounted to 8.1 million PLN, an increase of 4.9 million PLN in comparison to the first quarter of 2009. Adjusted EBITDA achieved a higher level than in Q1 2009 (13 million PLN in 2010 compared to 10.8 million PLN in 2009). Adjusted EBITDA margin amounted to 11.7 % in Q1 2010 and was higher than in the previous year (9.5 %).

For the purpose of an increase in the operating margin, the Group continues a policy of employment stabilisation at the current level, balanced costs reduction as well as an increase in operating effectiveness. As of 31st of March, 2010, the Comarch Group had 2,946 employees (excluding employees in SoftM Group and MKS Cracovia SSA), i.e. 25 more than at the end of the previous year (an increase of 0.9 %). As of 31st of March, 2010, the SoftM Group had 341 employees, i.e. 2 more than at the end of the previous year.

The good financial results, achieved during the first quarter of 2010, confirm the effectiveness of the Group's strategy – a strategy that is based on:

  • the sale of IT solutions, most of which are developed in-house,
  • the sale of an increasing number of products on international markets, especially in Western Europe,
  • the stable improvement of operational performance through the ongoing improvement of procedures and cost rationalisation.

The strong position of the Comarch Group enables further development and improvement of the suite of offered products and services. It also ensures acquiring attractive sources for the financing of investment projects, as well as securing its activities during the unstable national and international macroeconomic situation. The Group is aware of incurring high costs for new products development and activities on foreign markets in order to further enhance the Group's future competitiveness.