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Comarch – Financial results for Q2 2017

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The Comarch Group has published its consolidated financial results for Q2 2017. Sales revenue amounted to PLN 249 M and was by 8.9% lower than in the same period a year ago. In Q2, the Group generated PLN 6 M net profit, and operating profit amounted to PLN 7 M. Revenues from the sale of software and services amounted to more than PLN 232 M and represent approximately 93 per cent of the whole business.
In the six months of 2017, the Comarch Group's sales revenues amounted to PLN 491 M and was by PLN 25.4 M, i.e. by 4.9%, lower than in the same period last year. Net profit attributable to the shareholders of the parent entity in the first half of 2017 was similar to that achieved in the first half of the previous year and amounted to PLN 10.8 M. Operating result amounted to minus PLN 4.3. M. Financial result was strongly influenced by the Group's operations on foreign markets. Their share in total revenue was 57.8%.

In the first half of 2017, sales to the telecommunication sector accounted for the largest part of revenues, i.e. PLN 109 M, which is a decrease (by PLN 36 M, i.e. by 24.8%). On the other hand, customers from the finance and banking sectors bought products and services worth PLN 92.7 M, which represents an increase of PLN 24 M, i.e. by 35%, compared to the same period last year.

There was also an increase in sales to customers in the sector of trade and services (an increase of PLN 2 M, i.e. by 2.6%) and industry and utilities (an increase of PLN 3.6 M, i.e. by 5.8%). Comarch also improved its sales of solutions for small and medium-sized enterprises from Poland by PLN 5 M, i.e. by 10.1%.

In the first six months, there was a further decrease in revenue from sales to public sector clients (by PLN 13.7 M, i.e. by 37.7%), which is the result of the continued stagnation in the public procurement market. On the other hand, the appreciation of the zloty in 2017 translated into a lower value of sales to customers in the SME sector from DACH region by PLN 7.4 M, i.e. by 12.8%.

“The business situation in the first half of 2017 confirmed that maintaining diversification of revenue sources and diversity of the offer is beneficial for the stable development of the Group's operations. Despite a temporary drop in sales revenues, we are still going to invest in the development of the company, among others, by developing new products and gaining new markets in the Americas, Asia and Europe. In all of these areas, we would like to increase our presence and provide our customers with high quality IT. We are expanding sales force in foreign markets, only this year we have opened offices in Japan, Mexico and Saudi Arabia. We also take first steps in Africa and Australia. This does not mean that we are gradually giving up sales in Poland. On the contrary, we are strongly developing products related to smart city and e-health, which Polish local self-governments are strongly interested in”, says Konrad Tarański, Vice President and Chief Financial Officer of Comarch SA.
In 2017, the company continues its policy of investment in developing new IT products and expanding its infrastructure.

“We are aware that since we want to: strengthen Comarch's position, cooperate with the biggest companies, and compete with competitors, we have to develop our product offer. Therefore, from year to year, our R&D spending is growing. In 2016 it already exceeded 15% of sales revenue and we will keep it at this level in 2017”, says Konrad Tarański.
Investments in the development of own infrastructure, started in previous years, are underway. In Kraków, building SSE7 which is to be commissioned in Q4 2017 is being constructed and in the French city of Lille an investment project is underway in another Comarch Data Center. Total investment outlays in 2017 will amount to around PLN 100 M.