OEX Group summarises its performance in the first half of 2018

In the first half of this year, the Group noted a 12 per cent growth in its revenues, although its results were lower. The growth was accompanied by a significant improvement in the flows from operating activities.

The net debt to EBITDA ratio remained at the level below 2.0 despite the disbursement of large investment loans.

In the first half of 2018, the OEX Group significantly increased its client base, continued the foreign expansion and development of new services as well as boosted the share of technologies in the services offered.

The fall in the Group’s profits, when compared to the first half of the previous year was caused mainly by the worse result in the Sale Support segment – in consequence of the transfer of a part of planned projects to the second half and increased labour costs.

‘Changes in contracts with clients aimed at the adjustment of prices to the increased labour costs will bring delayed effects with regard to the payroll rises effected. Therefore, we treat the fall in the profits in the Sale Support segment as transitional only. The segment continues to develop organically, there is a perspective that new solutions related to data analytics will be offered to the clients,’ said Jerzy Motz, President of OEX SA.

The Group significantly improved the flows from operating activities, which amounted to PLN 13.0 million at the end of the period, while in the first half of 2017 they amounted to PLN -4.4 million.

It is also worthwhile to note the changes in the area of cooperation with Orange Polska S.A., in the Retail Sale Network Management segment, which influences the Group’s revenues and operating result.

In May, a new assignment-based system was implemented, replacing the old system in which Tell Sp. z o.o. purchased equipment on its own account. The main effect of the change will be the elimination of no-margin revenues and of the corresponding costs of goods sold from the income statement of Tell Sp. z o.o. as well as the termination of the system of settling instalment sales.

The Group’s total revenue went up by 12 per cent, while the revenue net of the no-margin revenue, i.e. after the elimination of the revenue related to the sale of subscription phones, increased in the Group by almost 20 per cent when compared to the first half of 2017.

As part of the instalment sale system, Tell Sp, z o.o. received an additional commission, bearing at the same time, the financial cost equal to the value of that commission on account of the assignment of the instalment sale agreement onto the operator. In result of the termination of the settlement of the instalment sales, the revenues generated by the segment and the Group went down by almost one million PLN when compared to the first half of 2017, while EBITDA decreased on this account by PLN 639 thousand. At the same time, these changes are neutral when it comes to the gross and net profits of both, the segment and the Group.

Good results were also generated by the BPO segment, which not only generates considerable flows from operating activities but is also the most profitable segment in the Group. The segment’s EBITDA is 10% higher than in the corresponding period of the previous year.

‘ArchiDoc provides its services to 9 out of 10 largest banks and 8 out of 10 largest insurance companies. Currently, we focus mainly on organic growth and on the medical sector, where, in view of the regulations concerning electronic medical documentation, there are huge challenges ahead of us. In response to these trends, we have found a special vehicle dedicated to such tasks – ArchiDoc MED.

Considering the significant rise in the business related to the digitalisation and storage of documents, we plan to augment our storage capacities by the end of this year. The employment levels went up and we have also given pay rises to the employees in connection with the labour market situation and this impacted our present results,’ said Jerzy Motz.

There was a significant improvement in the performance of the E-business segment, where the revenue grew by over 38 per cent and EBITDA by almost 34 per cent.

‘This year, the segment pursues a strategy of building a comprehensive offer of technology-based services and logistic support for the eCommerce clients. The client base has expanded considerably and the clients are more and more often interested in cooperating with us as we can provide them with a full set of support services necessary for the Internet stores. We also want to develop the technology and own products created by Divante,’ added President Motz.

In the first half of 2018, the Group obtained PLN 18.7 million from a private subscription issue of shares, which will allow it to make investments in further organic growth of the E-business and BPO segments as well as potential acquisitions if any. The share capital increase was registered on 5 September 2018.

Summary of the performance of the OEX Group in the first half of 2018:

• In the first half of 2018, the revenue from the sale in the Group amounted to kPLN 277,993 and was higher by 12% than in the corresponding period of previous year.
• The operating profit amounted to kPLN 10,429 and was lower by 8 per cent.
• EBITDA amounted to kPLN 14,542 and was lower by 4 per cent.
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• The gross profit in the first half of 2018 amounted to kPLN 6,655 and was lower by 10 per cent.
• The net profit in the first half of 2018 amounted to kPLN 5,127 and was lower by 13 per cent.
• The net profit attributable to the Parent Company’s shareholders in the first half of 2018 amounted to kPLN 4,872 and was lower by 19 per cent.