Sirma Group 2019 prelim consolidated profit is down to BGN 3.9m (NEGATIVE)

Sirma Group Q4’19 cons prelim revenue came at BGN 32.6m, adding 131% YoY. It is not possible to meaningfully compare with previous periods due to intra-year accounting changes related to revenue recognition, but according to the management report the most significant growth was in Intelligent evolution of enterprises segment (BGN 17.2m sales), where EBITDA margin was halved to 11%. Systems integration accounted for BGN 13m in sales, at 2% EBITDA margin. Overall EBITDA fell 50% to BGN 2m. BGN 1m higher depreciation expense of BGN 2.6m further negatively affected the bottom line, which came to BGN 1m loss. For the full year prelim sales were up 4.5% YoY to BGN 61.5m. EBITDA margin fell 5 p.p. YoY to 17% (BGN 10.3m), as capitalized costs were 80% YoY lower, and materials and energy expense increased 13% YoY. Compensation expense increased only 7% YoY to BGN 22.6m. Consolidation of the stakes in subsidiaries seems to be taking effect and minority interest fell 70%, which positively affected NI margin, down 3p.p. YoY to 6%. Net income came to BGN 3.9m, an EPS of BGN 0.07.