Quarterly statement first quarter 2020

Frankfurt/Main, 27 April 2020. In the first three months of fiscal year 2020 the Amadeus FiRe Group achieved consolidated sales revenues of EUR 76.4m (prior year: EUR 53.3m) The main reason for the 38.3 percent increase was the acquisition of the Comcave Holding GmbH on 19 December 2019. Organic revenue growth reached 8.2 percent. Revenues from the individual services developed as follows:

All business services initially made a good start to the new fiscal year. The coronavirus crisis did not have a significant impact on operations until March. From this point on, the demand of client companies for all services of the Personnel Services segment has decreased significantly. After a good start above previous year’s level, the number of current temporary staffing assignments was around 15 percent down on the previous year after March turned to April. The current low level of demand is not sufficient to replace expiring orders with new assignments equivalently.

Since 1 April, Amadeus FiRe has been using the instrument of short-time work for the temporary employees. Consequently, for all external employees not actively working for a customer, working hours are reduced by 100%. Sick leave, which is usually high in the first quarter, unsurprisingly increased in this reporting period, as a result of the Corona crisis. This resulted in a lower utilisation rate in temporary staffing in the reporting period and a negative effect of around EUR 0.4m. A positive note is that a lot of temporary employees can continue working for their respective customer from home and that these assignments can continue to run unaltered. In the first quarter of 2020, one more billable day was available than in the same quarter of the previous year. This corresponds to a positive effect on revenue, gross profit and earnings before taxes of around EUR 0.6m.

In the first quarter as a whole, the situation was stable for permanent staff and very positive for interim and project management. Due to the decline in new enquiries and additional difficulties in the arrangement of face-to-face interviews, the business volume in these two services is expected to decline considerably compared to the first quarter. In the training segment, the corona crisis also led to cuts in mid-March due to the ban on events and uncertainty among potential participants. A large portion of the event offered by the companies of Steuer-Fachschule Dr. Endriss take place in classrooms. This element of the educational operations had to be temporarily shut down completely. Digital alternatives were quickly found for many products, but short seminars in particular were cancelled without substitution. The impact of the crisis on pre-tax earnings in the first quarter was around EUR 0.5 million, with the majority attributable only to a postponement of the start dates of long-running courses such as those for tax advisors or certified accountants.

The companies of the Comcave Holding GmbH, acquired at the end of 2019, generated revenue of EUR 16.6m in the first quarter. The Comcave College is particularly active in the field of public funded training for the unemployed. For years, Comcave has also specialized in telelearning, therefore live instructor-guided virtual learning with flexible attendance. Comcave was therefore able to very quickly enable 100 percent of its customers to participate in training from their home desk. The escalating situation on the labour market with unemployment and short-time work represents a potentially improving demand situation for the business model of Comcave, in which the people affected by the crisis can take the opportunity offered by Comcave for public funded training. The gross profit of the Amadeus FiRe Group improved by 46.7 percent to EUR 38.4m, mainly due to the acquisition of the Comcave Holding GmbH.

The adjusted increase was 4.1 percent. The gross profit margin rose from 47.3 percent to 50.2 percent. Due to the high gross profit margin structure at Comcave, there was a change in the services mix, which was the main reason for the rise in the gross profit margin. Sales and administrative expenses amounted to EUR 27.8m in the first quarter of 2020 compared to EUR 17.3m in the previous year. Adjusted for Comcave, the increase amounted to EUR 2.5m or 14.4 percent. This increase is mainly due to follow-up expenses for the Comcave transaction (EUR 0.7m), the structural improvement of IT infrastructure (EUR 0.4m) and the full-year effect of the successful expansion of the sales organisation in the past fiscal year. As a result of the new situation, all expansion plans of the Personnel Services segment for the current fiscal year were postponed and strict cost discipline has been put in place. Profit from operations before goodwill amortization and amortization of intangible assets from purchase price allocation (EBITA-pre) reached EUR 10.6m in the first quarter 2020 (previous year: EUR 8.9m), an upturn of 18.4 percent or EUR 1.7m in comparison to the previous year. The EBITA-pre margin fell by 2.3 percentage points to 13.9 percent (previous year: 16.2 percent). EBITA-pre in the first quarter initially was influenced by an EBITA-pre contribution of EUR 3.1m by Comcave.

Subsequent transaction costs reduced earnings by EUR 0.7m. This is offset by an extra billable day in the first quarter with a positive effect of around EUR 0.6m. In addition, EBITA-pre was burdened by direct effects of around EUR 1.6m resulting from the Corona crisis. In particular, these were the cancellation of temporary staffing assignments, the increased sick leave among temporary employees, the decline in demand for all services from March, the termination/postponement of ongoing processes and customer interviews, and the cancellation/postponement of classroom training. The amortisation of intangible assets associated with the purchase price allocation of the Comcave Holding GmbH amounted to EUR 2.5m (previous year: EUR 0). The net profit for the first quarter was EUR 5.0m (previous your: 6.0m). Earnings per share based on the net profit for the period attributable to the ordinary shareholders of the parent fell by 18 Cents to EUR 0.96 in the first quarter (previous year: EUR 1.14). Revenue and operating earnings (EBITA-pre) for the first quarter of 2020 were increased.

However, the coronavirus effect had already impacted the revenue and order situation of nearly all economic sectors in Germany in March. This effect is resulting in an economic slowdown, a significant decline in demand and considerable uncertainty among German companies. At this time, the Management Board is therefore abandoning its earnings forecast for 2020 as a whole. The Management Board expects the Amadeus FiRe Group to have a very weak second quarter. If a general trend of recovery sets in and the demand situation improves in the near future, the Amadeus FiRe Group should benefit from this in the second half of the year. Currently the Management does not assume to be able to match the previous year’s level in the course of the second half. The Management Board expects a positive outlook and increasing revenue and earnings for the 2020 fiscal year only for Comcave’s countercyclical public funded training business.

Overall, the financial impact on the 2020 fiscal year of the continuing spread and unforeseeable duration of the pandemic simply cannot be reliably quantified at this time. The Management Board will reassess the situation as soon as reliable information is available. To further improve the company’s financial flexibility in this extraordinary situation, the Management Board and Supervisory Board have decided to propose that the Annual General Meeting suspend the dividend payment. For further information, please see the “Anticipated revenue and earnings development” section of the 2019 annual report. Amadeus FiRe AG