Gloster plans significant growth and dividend payments by 2026

SPECIAL ANNOUNCEMENT

Gloster Infocommunications Public Limited Company (company registration number: 13-10-042012; registered office: 2142 Nagytarcsa, Csonka János Street 1/A, Building A/2; hereinafter: the Company, Gloster) hereby informs its esteemed investors of the following in accordance with applicable laws and the General Rules of the Budapest Stock Exchange.

Gloster plans significant growth and dividend payments by 2026

According to an investor presentation published by the company, Gloster’s Board of Directors plans to generate more than 3 billion forints in EBITDA on revenue of 15.6 billion forints over the next two years, starting in 2026, as a result of dividend payments, significant international expansion, and internal synergies.

An international IT services company listed in the BSE Standard category, which has completed 11 transactions over the past 60 months, has now grown into a company with 355 employees serving 811 clients. According to research by Helap Partners, Gloster is the market leader among Hungarian-owned companies exporting software development and the largest Hungarian-owned cloud service provider partnered with Microsoft. Its business model focuses on recurring revenue (69% of total revenue) and export revenue (44% of total revenue), which grew by an average of 60% and 98%, respectively, between 2021 and 2023.  

Among the challenges facing Gloster, the company’s board of directors identified the need to further develop international sales, improve corporate profitability, and address the high wages typical of the IT sector.

According to the investor presentation, Gloster is launching international B2B business development with experienced partners in major global software markets: the United Kingdom and Ireland, the DACH region, and Scandinavia. Gloster is organizing its international sales by region rather than by country; as a result, it will target a market approximately 43% larger than its current one, amounting to roughly 21,700 M EUR per year. It is establishing its own sales and customer support teams at each location. Sales in the UK and Ireland will be led by Andrew Wilmot; the DACH region will be led by Attila Tóth, a native German speaker; and the Scandinavian region will be led by Herwig Stöckl.

From the presentation, investors will learn that, in order to enhance its international competitiveness (through more favorable developer salaries), Gloster plans to open an SSC in the Philippines by the end of the year, which is expected to yield annual savings of approximately 50 million forints starting in early 2025. Gloster had previously announced that the Company’s management expects an annual improvement in earnings of at least 200 million forints from the “Gloster Level Up” internal efficiency-enhancement program announced on November 27, 2023. The Company anticipates approximately 1,518 million forints in additional EBITDA by 2026 from business opportunities arising from artificial intelligence, as well as the digital and green transitions (compared to 2023). Additionally, the Company expects to collect approximately 400 million forints more in annual dividends from its subsidiaries by 2026, by which time all contracted acquisitions are scheduled to be fully completed.

Gloster’s debt level will remain low in 2024 (117% of EBITDA), and while it is expected to rise in 2025, it is projected to reach only 89% of EBITDA by 2026. Analysts’ price targets exceed Gloster’s current share price: ERSTE’s target price is 1,183 HUF (recommendation: buy), while Equilor’s target price is 1,369 HUF with a hold recommendation.

A significant difference compared to previous announcements is that the Company plans to pay dividends starting in 2026, a move that is likely to be welcomed by Gloster’s current and future shareholders. Gloster will provide investors with details on this in a separate announcement regarding its revised dividend policy by June 30, 2024.

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Nagytarcsa, March 26, 2024

Gloster Infocommunications Plc.