Annual Report P&I Personal & Informatik AG 2016/2017

Transcription

1 Annual Report P&I Personal & Informatik AG 2016/2017

2

3 OVERVIEW CONTENT COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS 3 Annual Report P&I Personal & Informatik AG 2016/ / Page / Page / PROLOG OF THE CHAIRMAN OF THE BOARD 07/ SUPERVISORY BOARD REPORT COMBINED MANAGEMENT REPORT 11/ Overview of the financial year 12/ P&I AG and the Group 20/ General economic conditions 21/ Group business performance 31/ P&I AG 34/ Summary of the course of business 35/ Events after the end of the reporting period 35/ Corporate risk report 40/ Forecast 03 / Page GROUP FINANCIAL STATEMENTS 43/ Information regarding the Company 44/ Consolidated income statement 45/ Consolidated statement of comprehensive income 46/ Consolidated statement of financial position 48/ Consolidated statement of changes in equity 49/ Consolidated cash flow statement 50/ Accounting policies 51/ Appendix to the consolidated financial statements 102/ Auditors' report 04 / Page AG FINANCIAL STATEMENTS 105/ Statement of income 106/ Statement of financial position

4 4» WITH THIS NEW WAY OF DEFINING "SERVICE PRODUCTS" AND EMBEDDING THEM IN OUR SOFTWARE MODULES, WE ARE IMPLEMENTING OUR VALUE-BASED DESIGN APPROACH LOWERING COSTS, REDUCING COMPLEXITY AND MINIMISING RISK FOR OUR CUSTOMERS. «Vasilios Triadis CEO/Chairman of the Board

5 OVERVIEW PROLOG COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS 5 DEAR LADIES AND GENTLEMEN, Today more than ever, we are seeing increasingly rapid changes in both technology and demographics. In particular, the digital transformation, the Internet of Things and finally the overall development in the field of Industry 4.0 are influencing our business model in an unprecedented manner. Consequently, our current top priority is the strategic alignment and its implementation in order to respond quickly to this change and to redesign our product and service portfolio together with our customers. The past financial year was again the most successful in our company s history, which was made more than plain by revenue of EUR 125 million and EBITDA of EUR 56.8 million, which equates to an EBITDA margin of 45.4 %. We boasted impressive growth rates in all business segments, whereby the increase in recurring services was by far the strongest at 17.9 % to EUR 75.8 million. We have taken the opportunities available and are growing sustainably and constantly on the basis of the success that we have obtained thanks to our technological and HR expertise. This success is based on our integrated solutions, which we make available to our customers for use in various forms. Our new product, P&I LogaALL-in, is the perfect synthesis of history, tradition, innovation, technology, functionality and performance. This product is a superlative HR platform. It has an enormous breadth and depth of functions on the basis of abundant special technological features. It was developed using state-of-the-art technology and is another step on the revolutionary path that P&I has been taking since September 2015 with the market launch of P&I BIGDATA and since January 2017 with the delivery of the P&I LOGAweb interface. This trailblazing and successfully deployed concept is encompassed under P&I LogaALL-in, is being consistently updated and will lead P&I into a great, successful future. After LOGA2001, P&I LOGA, P&I BIGDATA and P&I LOGAweb, a brand new fifth model generation is now available in the form of P&I LogaALL-in. Technologically, it is based on a brand new, cutting-edge system platform, which integrates numerous tools that make it extremely robust, secure and innovative. This platform is augmented by a large package of innovative security technologies and user assistance. Our new solution P&I LogaALL-in is based on the idea of defining service products. This means that, as soon as a pattern is identified for an HR function, it must immediately be determined which tasks within this function are suitable for automation. Two aspects should be considered here: firstly the frequency at which a task arises and secondly the complexity of the task with regard to the necessary know-how. Accordingly, tasks of high frequency and low complexity are ideal service products. This idea behind this is that algorithms that enable automation provide the greatest benefit in the performance of repetitive tasks with high data volumes. With this new way of defining service products and embedding them in our software modules, we are implementing our value-based design approach lowering costs, reducing complexity and minimising risk for our customers. We want to keep strengthening our competitiveness and innovativeness with the consistent implementation of our P&I LogaALL-in strategy. At heart, it is based on P&I s ambition to be the best provider of HR services. To this end, we continue to make targeted investments in our know-how, in the expansion of our product portfolio and in the definition of additional service products. P&I really has no shortage of innovation and experience with HR software. As far back as 1997, P&I raised its payroll accounting system to a new level with P&I LOGA. At that time, our company already introduced its first innovative features in the HR software segment with its first major HR platform. Size alone was never a crucial success criterion for us. Instead, we always aimed to offer high quality with the technological features of significantly larger systems in smaller formats. We also have ambitious targets this year, for which we primarily require dedicated and motivated employees. At this juncture, I would like to take the opportunity to thank all our employees for their dedication and commitment. I would also like to thank you for the trust you have placed in us and to assure you that we will do everything to ensure that your involvement in our company will continue to give you great pleasure in the future. Yours Vasilios Triadis

6 01/ SUPERVISORY BOARD REPORT

7 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS REPORT FROM THE SUPERVISORY BOARD 7 SUPERVISORY BOARD REPORT P&I Personal & Informatik AG successfully continued its recent success story in the 2016/2017 financial year. Both the targeted revenue growth and income and profitability targets were surpassed. Once again, some major new customers were acquired. In addition, new solutions were also sold to the existing customer base. This includes, for example, the successful implementation of the Big Data concept. The key elements of future growth were agreed at the strategy meeting after the finalised takeover by the new shareholder. In particular, these include a sharper focus on SaaS contracts, with which P&I will significantly increase the benefit for customers. This shall further increase the proportion of recurring revenue, which should have a positive effect on the Company s key financial indicators. In the past financial year, P&I already acquired some new customers with an SaaS contract and also migrated some existing customers from the previous licence and maintenance model to an SaaS model. In addition, it was agreed to more closely examine possibilities for non-organic growth again. The implementation of this strategy will open up new opportunities for P&I and secure future profitable growth. Work on the Supervisory Board in the last financial year was particularly influenced by the change of shareholder from Hg Capital to Permira Funds. The sales activities and the transition from Hg Capital to Permira Funds were closely monitored by the Supervisory Board sitting until November. After the takeover was concluded in November 2016, all Supervisory Board members in office at the time stepped down and were replaced by three new Supervisory Board members. The subsequent Supervisory Board meetings dealt above all with P&I s strategic direction, long-term plans and cooperation between the Supervisory Board and the Management Board. A Supervisory Board meeting took place at the branch office in Vienna, giving the Supervisory Board the opportunity to get to know international branch offices and the employees there. Besides the monthly financial and operating reports, the Supervisory Board specifically keeps an eye on the long-term strategy and the measures required to implement it. There was also a regular liquidity review in order to check that loan payments are secured. According to the final result of its own reviews, the Supervisory Board raises no objections to the Management Board declaration provided at the end of the report and included in the management report. During the 2016/2017 financial year, the Supervisory Board fulfilled the responsibilities incumbent upon it according to the law, articles of association and internal regulations and monitored and advised the Management Board in accordance with the Corporate Governance Code. The subject matter of the regular discussions and resolutions of the Supervisory Board included revenue and earnings performance, the financial situation with respect to the company s capitalisation,

8 8 the sale of the company, the long-term strategy and its implementation, potential acquisitions, the adoption of the Group budget, the composition of and changes in the Management Board, resolutions on specific transactions requiring approval and questions concerning the remuneration of the Management Board. In the 2016/2017 financial year, the Supervisory had five regular meetings, with at least one meeting taking place in each quarter. The meetings took place on June 1, 2016, August 2, 2016, November 17, 2016, February 15, 2017, and finally on March 15, The meetings on August 2, 2016, and November 17, 2016, were held by way of telephone conference. The meetings were held with all members present. In addition, four resolutions were passed by circulation. No conflicts of interest as defined by item 5.5 of the Corporate Governance Code occurred in the 2016/2017 financial year. Additional regular meetings for coordination between the Management Board and Supervisory Board were also introduced. This meant that the Supervisory Board was always comprehensively informed by the Management Board and capable of performing its duties of supervising and advising the Management Board and making the necessary decisions at all times. The consolidated financial statements and the annual financial statements of P&I Personal & Informatik AG and the combined management report for P&I Personal & Informatik AG and the Group were audited by Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft, appointed as auditors by the AGM on June 13, 2016, and granted an unqualified audit certificate. The consolidated financial statements were compiled according to the International Financial Reporting Standards (IFRS) and the additional requirements of German commercial law pursuant to section 315a (1) of the German Commercial Code (HGB). These consolidated financial statements according to IFRS exempt the company from the obligation to prepare consolidated financial statements in accordance with HGB. All financial statements, the combined management report and the audit reports were presented to all members of the Supervisory Board in due time. The auditor participated in the final explanations and negotiations concerning the annual financial statements and the consolidated financial statements and reported the significant findings of his audit at the Supervisory Board's accounts meeting on May 31, The Supervisory Board approved the results of the audit. The Supervisory Board also independently examined the consolidated financial statements and the annual financial statements of P&I Personal & Informatik AG, and the combined management report for P&I Personal & Informatik AG and the Group. No objections were raised. In accordance with section 171 AktG, the Supervisory Board approved the annual financial statements and the consolidated financial statements of P&I Personal & Informatik AG compiled by the Management Board. The annual financial statements are thereby adopted. The Supervisory Board agrees with the management report and in particular the assessment of the Group's future development.

9 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS REPORT FROM THE SUPERVISORY BOARD 9 The Supervisory Board would like to thank the Management Board and all employees for their commitment and successful work in the 2016/2017 financial year. Wiesbaden, May 31, 2017 The Supervisory Board Kamyar Niroumand Chairman of the Supervisory Board

10 02/ 11/ COMBINED MANAGEMENT REPORT Overview of the financial year 12/ P&I AG and the Group 20/ General economic conditions 21/ Group business performance 31/ P&I AG 34/ Summary of the course of business 35/ Events after the end of the reporting period 35/ Corporate risk report 40/ Forecast

11 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS OVERVIEW OF THE FINANCIAL YEAR 11 The following combined management report contains information on the P&I Personal & Informatik Group (P&I) and P&I Personal & Informatik Aktiengesellschaft (P&I AG). P&I AG is the parent of the P&I Group. It is operationally active and performs Group management functions. As P&I Personal & Informatik AG is a major component of the P&I Personal & Informatik Group, the management report of P&I AG is combined with the management report of the P&I Group in accordance with section 315 (3) in conjunction with section 298 (2) of the German Commercial Code (HGB). The information provided relates to the Group unless express reference is made to P&I AG. The consolidated financial statements are prepared in accordance with the International Financial Reporting Standards (IFRS) as required to be applied in the EU and the supplementary provisions of section 315a (1) HGB. The annual financial statements of P&I AG are prepared in accordance with the provisions of the HGB and the German Stock Corporation Act (AktG). 1. OVERVIEW OF THE FINANCIAL YEAR In the 2016/2017 financial year, the P&I Group generated revenue of EUR million and an operating result before depreciation and amortisation (EBITDA) of EUR 56.8 million. This corresponds to an EBITDA margin of 45.4 %. P&I s successful model is based on technological innovation and the product and service strategy to match. This leads to sustainable growth and permanent improvement in its key operating performance indicators. Revenue growth accompanied by increased profitability The P&I Group increased its revenue by 6.5 %, from EUR million to EUR million. EBITDA improved by 15.0 % to EUR 56.8 million. This corresponds to an EBITDA margin of 45.4 % (previous year: 42.0 %). EBIT amounted to EUR 53.5 million, resulting in an EBIT margin of 42.7 % (previous year: 39.4 %). At EUR 75.8 million, recurring services accounted for 60.6 % of the P&I Group s consolidated revenue, an increase of 17.9 %. This was therefore the fastest-growing segment once again. With its networked P&I LOGA3, P&I BIG DATA, HRBC, Talent3 and Bewerber3 products, P&I permanently invests in new software technologies that make system implementation and utilisation even simpler and more user-friendly. P&I AG has entered into a control and profit transfer agreement with P&I Zwischenholding GmbH, Wiesbaden (formerly Argon GmbH, Munich), that has been in force since the 2011/2012 financial year. Under the terms of the control and profit transfer agreement, the net profit of P&I AG for the 2016/2017 financial year as reported in the single-entity financial statements in the amount of EUR 56.6 million is to be transferred to P&I Zwischenholding GmbH (previous year: EUR 39.0 million).

12 12 The most important control parameters for the P&I Group developed as follows: EUR thousand 2016/ /2016 Change 2014/2015 Change Revenue 125, , % 106, % Recurring revenue 75,815 64, % 53, % International revenue 29,662 30, % 26, % EBITDA 56,752 49, % 43, % EBITDA margin 45.4 % 42.0 %./ %./. Operating cash flow 56,226 52, % 37, % 2. P&I AG AND THE GROUP 2.1 THE P&I GROUP P&I offers a unique and progressive HR system that permanently improves all the tasks of modern human resources work. Our customers use an HR platform that uniformly, simply and quickly provides the experience and knowledge of over 15,000 end customers by combining products, technologies, P&I BIG DATA and specially developed hardware. We can detect, analyse and automate similar patterns in our customers work. In the future, the focus will not be on the individual product but on the combination of product, service and result. It is a question of integrated HR systems, but not highly complex ones that expect too much of the user, rather HR systems that identify and automate routine tasks, reduce risks and costs and thus allow the user to focus on more involved tasks. P&I is in a very good position to remain the technological trailblazer and exert a substantial influence on the HR software industry to the benefit of our customers. P&I is the leading HR company in the German-speaking region with an innovative HR system for all the requirements of HR work: payroll, HR management and planning, analysis and benchmarking. P&I offers everything from a single source. Our HR system is used in thirteen European countries. It is easy to install and can thus be quickly put into use. With their expertise and high degree of commitment, around 430 employees make P&I a cutting-edge software company and premium provider of integrated HR systems. P&I is represented at four locations in Germany and a further eight in the rest of Europe. In the 2014/2015 financial year, P&I also established a development company in Silicon Valley under the name of P&I Silicon Valley, Inc. In addition, P&I will invest in building up further development capacity by founding a development company in Greece in This reflects our aspiration to be a technologically leading software company. P&I provides its customers with security and a safe investment thanks to its substantial expenditure on product research and development. Internationally leading HR service providers and large data centres count on P&I, and more than 15,000 end customers use P&I solutions to successfully shape their HR business. All of them rely on the high degree of expertise possessed by P&I, a company that has continuously delivered innovative products for long-term business success throughout its nearly 50-year history.

13 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS P&I AG AND THE GROUP GROUP STRATEGY P&I s aim is to remain the most technologically advanced, forward-looking and financially successful HR software company in the German-speaking region. The sustained success of P&I is based on customer proximity, technological innovation, an urge for renewal and a strong will to succeed. Customer proximity and customer focus are highly important to P&I. Many companies say this, but P&I puts in a lot of effort in day-to-day business to keep its customers in mind and not be distracted by internal or external factors. This may sound easy, but it requires high discipline and a sharp focus. Technological innovation is a fundamental element of P&I s past and future success. Our development work focuses on two key tasks. One task is to develop technological innovations that radically simplify the work and the processes of the customer. These are mostly long-term developments that have to prove themselves and may also change over the years. The second task is to optimise our existing technology with additional functions, processes, etc., to bring about fast and tangible progress for our customers. Due to the close cooperation between sales and development, P&I is consistently able to provide its customers with clear value added, for which they are willing to pay a fair price. Maintaining the strong will to succeed is a challenge, especially for companies that have existed and been successful for many years. At P&I, however, it is not about short-term success. As shown by P&I s history and its finances, it has grown organically year by year for over a decade. Only companies with a long-term approach can achieve this. However, we see this success story first and foremost as an obligation to keep developing P&I just as successfully and enduringly over the next decade. In order to continuously fuel our innovation, internal renewal and ambition, we also need new stimulus from outside. For many years, we have had a very successful trainee programme for young graduates and lateral entrants. This programme allows P&I to identify the necessary talents who, in cooperation with experienced employees, make P&I probably the most successful HR company in the Germanspeaking region.

14 14 HR-MANAGEMENT MIT DEM P&I PRODUKTPORTFOLIO P&I offers a progressive HR system that permanently improves the complex processes of modern HR management and provides support for the realisation of corporate strategies as a business partner. P&I is transforming HR work. The innovative P&I systems allow the HR department to make a crucial contribution to value creation and generate real value added with the right talents for the Company. Over 15,000 customers have already discovered the benefits and are handling all HR tasks with P&I products: Master data management Resource management Organisation management and position plan Contract management Document preparation Digital personnel file Certifications Workforce management (Time management/access/ personnel deployment planning) Payroll accounting Retroactive accounting Individual and bulk accounting Automatic system for collective agreement pay scales Statutory reporting Posting in Finance and Controlling Remuneration certifications Accounting statement analysis Travel expense accounting Recruitment Education and training Personnel development Performance management Compensation management Succession planning Business intelligence (Bl) Personnel cost planning and simulation Forecasts (costs, head count) Variance analysis Reporting Standard reports HR MANAGEMENT AT THE HIGHEST LEVEL With LOGA3, P&I has developed HR software that can be customised individually to users, gives them targeted support and always provides the information and data that the situation requires. This HR software solution condenses a company s entire HR management system on one modern and user-friendly web interface. Each user be it employee, HR officer or manager can easily design their own workstation, as the system operates like a modern social network. P&I LOGA3 is characterised by its modular structure and the exceptionally quick installation time, in which the system can be customised to individual requirements and implemented. In addition, country-specific laws throughout Europe are taken into account so that the software can be used internationally and in all sectors. The HR system can be expanded with additional modules at any time and thus adjusted to requirements. FOCUS ON EMPLOYEES The system offers the highest level of employee self-service. The focus is on individual employees, who have control over their personnel data at all times. Additional features support internal communication and project work. The HR solution keeps to the basics and thus ensures fast, streamlined and user-friendly processes: users only see the information and tasks that they need and for which they are authorised. Employees can influence HR processes by entering their qualifications

15 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS P&I AG AND THE GROUP 15 in order to advertise their capabilities in the company. This promotes employee motivation and follows the trend of quick and open communication. P&I LOGA3 reduces the HR department s workload, allowing it to focus on strategic tasks. P&I BIG DATA NETWORKING HR WORK P&I BIG DATA provides all applications, data and processes in a sector-specific manner and allows them to be linked seamlessly and in real time. The centralised platform accelerates existing and brand new applications in all P&I applications and simplifies HR management. The system helps to build up and access customer- and sector-specific content and optimise individual processes or entire company relationships. P&I BIG DATA is an infinite pool of knowledge, data store and foundation for subsequent treatment of processes and information from the entire P&I HR system. The benefit for P&I customers is obvious: The software offers a selection of strategic solutions and recipes for success compiled jointly by thousands of specialists.

16 16 YOUR PART IN THE P&I HR SYSTEM Together, the intuitive and highly efficient programmes of the P&I HR systems constitute the HR tool of the future. Using the HR system, every customer can handle any new challenges in HR management. P&I BIG DATA is required for the efficient use of P&I system components, which begins when it is first implemented, continuously ensures quality and standards and permanently enables enhancement for use according to respective operational requirements. Generating an individual configuration is also child s play: an integrated, system-driven analysis quickly provides the ideal customer set-up, which is immediately available as an executable system. CLICK & RUN: QUICK INSTALLATION OF P&I SOFTWARE The change from a predecessor system to new software entails a complex migration of enormous data volumes. In contrast, mapping via P&I BIG DATA in combination with P&I HRBC conveniently migrates existing data into the P&I applications. Via expert dialogue, P&I BIG DATA searches the entire pool of available knowledge for suitable configurations. P&I experts analyse the customer s basic profile in a dialogue by ruling out unsuitable features. The configurations are then listed, such as: nation, state, number of employees, sector, headquarters, organisational structure, collective bargaining commitment. Refining the selection criteria then allows a more precise selection. The use of configurations follows the principle of automation and reuse. The configurations found by way of expert dialogue provide the basis for generating an individual customer configuration. This allows the adoption of wage type and collective bargaining functions from the desired sector and the import function from the templates for tables and employee data. INFORMATION AS FUEL Due to the rising flood of data in companies, it is increasingly difficult to find relevant information. Even the relevant data are worthless if the suitable tools for analysis and processing are not available. Many companies now use business intelligence solutions in order to analyse information about individual organisational units. People analytics is an important set of tools in HR work. P&I has developed HR Business Connector, a piece of HR technology to answer the question, for example, of what skills and characteristics make successful employees. Within the P&I HR system, P&I HRBC is the intelligent data management option for analysing and processing information; in addition, it is capable of linking various applications and third-party systems in parallel as well as monitoring, controlling and optimising them. The purpose of the tool is to consolidate and convert data. It is based on three data sources: external, evident and hidden information. P&I HRBC offers the user complex analyses and the derivation of recommendations for action with the aim of optimising processes and results. Ease of use and transparent presentation options ensure that P&I HRBC can be used by anybody.

17 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS P&I AG AND THE GROUP 17 PROMOTING UNDISCOVERED TALENTS P&I Talent3 promotes strategic HR processes in performance and quality: starting with personnel procurement and selection and through employee retention and development right up to seminar management and leadership development. All processes are supported by intelligent and smart tools that are fully networked with P&I s overall HR system. Telent3 enables users to identify the existing skills and thus undiscovered potential at employee level in the company. Experiences such as certifications are immediately available for all decision-making processes. The module not only offers the opportunity to efficiently highlight skills in the blink of an eye, but also highlights flexible measures and training courses for expanding and developing employees abilities. P&I Talent3 allows employee skills, e.g. qualification levels, time period, review data and job skills profiles, to be managed quickly and conveniently. Talent management can be used to evaluate individual employees or an entire organisation. SKILL MATCHING After defining the desired requirements profile, the user identifies which employee best matches the desired profile or finds the best candidate for vacant positions. Any missing skills can be highlighted and acquired by way of flexible measures and training. EFFECTIVE RECRUITMENT Fighting for the best employees has become a daily challenge for every HR department. Finding good employees, recruiting them and retaining them within the company is becoming ever more difficult. There are also new trends such as mobile recruiting, big data, employer branding and candidate experience. These influences on the employment market are significantly increasing the complexity of already difficult recruitment processes. HR departments that have their recruitment well in hand and work innovatively are a crucial step ahead of the competition. A high-quality HR solution that meets all the requirements for modern recruitment can make the subtle difference. P&I Bewerber3 optimises staffing processes quickly and lastingly. The link to P&I HRBC indicates possible vacancies long before they arise. Via P&I Bewerber3, users can publish advertisements easily and in a targeted fashion, be it on the company s website, external job sites, social media platforms such as Xing or with external agencies and print media. The recruiting tool also provides support for the processing of paper, online and applications. If hired, all the applicant s data, including correspondence and attachments, can immediately be included in the digital personnel file.

18 18 Sales/market More than 15,000 end customers around Europe successfully organise their HR business using P&I products. All of them rely on P&I s high degree of expertise and more than 50 years of market presence. The market for HR software has been saturated for a number of years. Every company already has a payroll system, i.e. growth is only possible by increasing market share. The market is characterised by predatory competition. As such, gaining new customers for P&I s products and persuading existing customers to use our technology and products more extensively is the key growth factor. P&I occupies a special position within the market for providers of HR systems: between the small niche players, whose software solutions address individual areas of HR, and the global players offering end-to-end ERP solutions. P&I is the leader in the market segment of SMEs with between 250 and 5,000 employees, and its customer base is concentrated in this area. SAP dominates when it comes to larger companies, while smaller companies are served by a number of competitors, including DATEV, Sage, Exact, HANSALOG, etc. In the smaller customer segment, P&I is well positioned with a more modern and functionally extensive solution, as many competitors are unable to offer integrated solutions. In the area of public authorities and large organisations, P&I has firmly established itself as an alternative to the major ERP providers in recent years. Due to the specialisation of the IT market, all of the known providers now offer products that are mature and established, meaning that customers are largely unable to differentiate between software products and functions. This means that the basis for decision-making is also changing. However, P&I not only provides products and technologies, but also, by expanding its range with SaaS offerings, for example, will take even more direct responsibility for the results of its products and their utilisation in the future. We are thus significantly differentiated from our competition and hope for even greater momentum in customer acquisition. Research and development Strong products are a prerequisite for sustainable growth. P&I believes that software should not only reflect the state of the art in terms of functionality and technology, but that it should also reflect general societal trends. Networking of technologies, software and hardware are some of the trends that shaped the continued development of P&I s products in the past financial year. A total of EUR 16.5 million (previous year: EUR 17.1 million) was invested in product expansion, the change service in accordance with statutory provisions and the law on collective agreements, and new technical developments; this corresponds to 13.2 % of P&I s revenue for the year. This expenditure relates to all P&I products and the maintenance of the acquired products. Development activity is concentrated on the Company s location in Wiesbaden, complemented significantly by the development location in Slovakia. Having been established in the 2014/2015 financial year, P&I Silicon Valley, USA, commenced operations in the 2015/2016 financial year. 139 Group employees (previous year: 140) are responsible for the development of P&I s products.

19 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS P&I AG AND THE GROUP 19 P&I products are subject to permanent improvement in the form of P&I s development projects. P&I s projects are characterised by cyclical or iterative phases. The gathering (research) and implementation (development) of ideas are not sequential, meaning that the research and development phases cannot be separated. Research costs are expensed in the period in which they are incurred. The development costs for an individual project are only recognised as an intangible asset if the technical feasibility of the completion of the asset, the ability to use and sell the asset, the future economic benefit and the expenses relating to its development can be reliably determined. As in the previous years, the conditions for the recognition of development costs as assets at P&I AG were not met in the 2016/2017 financial year, meaning that all development costs were expensed. 2.3 Organisation/staff Including the Management Board, the P&I Group had an average of 399 FTEs in the year under review (previous year: 399). The Group had 252 employees in Germany (previous year: 261) and 147 abroad (previous year: 138). The companies in Switzerland had a total of 58 employees (previous year: 53), the development centre in Slovakia had 50 (previous year: 53) and P&I was represented in Austria with 33 employees (previous year: 30). The other employees are employed in the Other International segment. Within its sales organisation, P&I is actively represented by two strong pillars: the private and public sectors. The regional focus of its sales and consulting employees means that P&I s organisational structure is characterised by its special proximity to the customer. The area of Consulting offers strategic consulting, supports customers in implementing the P&I software solutions and in their day-to-day operations. An average of 174 employees were active in this area in the year under review (previous year: 175). Research and Development, whose activities are described in detail in section 2.2, accounted for a total of 139 employees (previous year: 140). There was an average of 42 employees in the area of Sales and Marketing (previous year: 44). European activities in countries without dedicated subsidiaries are coordinated by the head office in Wiesbaden, while we have local sales officers in Austria and Switzerland. 44 employees supported the P&I Group in administrative functions (previous year: 40). Staff costs for the 2016/2017 financial year totalled EUR 46.0 million (previous year: EUR 46.5 million). Controlling for the Group and P&I AG primarily builds on a broad-based system of targets. Company targets are broken

20 20 down into Group targets at the top management level and individual targets for all other employees and are rewarded in the form of variable salary components depending on the level of responsibility of the employees concerned. Company targets are derived from forecasts concerning revenue, particularly recurring revenue and licence revenue, as well as the operating result before depreciation and amortisation. 3. GENERAL ECONOMIC CONDITIONS The global economy grew steadily in 2016 and at a similar speed to the previous year. The economic growth of the major economies was relatively stable, while the economic situation in the emerging markets brightened slightly. Further economic recovery was observed in the euro zone in 2016, but there is no sustained acceleration of the upturn on the horizon. For 2016, the Kiel Institute for the World Economy (IfW) calculated growth in gross domestic product (GDP) in the euro zone of 1.7 %. In Germany, growth amounted to 1.9 % in According to the market figures published by the industry association BITKOM, the IT industry recorded growth of 1.0 % in 2016 (previous year: 3.0 %). 4. GROUP BUSINESS PERFORMANCE The P&I Group enjoyed extremely strong business development in the 2016/2017 financial year. With revenue rising by 6.5 % to EUR million, P&I reported EBITDA of EUR 56.8 million and an EBITDA margin of 45.4 %. This corresponds to a year-on-year increase of 15.0 %. EBIT increased to EUR 53.5 million, resulting in an EBIT margin of 42.7 %. This meant that P&I s growth exceeded the overall growth within the IT industry in Germany. 4.1 Results of operations Revenue development In the 2016/2017 financial year, the P&I Group s consolidated revenue increased by 6.5 % to EUR million. Adjusted for the effects of the disposal of business segments at the end of the previous year, organic revenue growth amounted to 8.2 %.

21 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS GROUP BUSINESS PERFORMANCE 21 EUR thousand 2016/ /2016 Maintenance 48,741 45,753 Software as a Service (SaaS) 12,293 6,429 Service agreements/application services providing (ASP) 14,781 12,143 Recurring services 75,815 64,325 Licences 26,968 29,393 Consulting (non-recurring business) 19,529 21,226 Other 2,796 2,517 Total 125, ,461 Consulting total 34,310 33,369 Licences Recurring services again enjoyed above-average growth of 17.9 % to EUR 75.8 million (previous year: EUR 64.3 million). Maintenance income, software as a service (SaaS) income and recurring income under service agreements are combined in this separate revenue category. P&I generated 60.6 % of its revenue from recurring revenue business. Maintenance business P&I s maintenance income developed as planned. Maintenance is the category of recurring services with the highest revenue at EUR 48.7 million. This represents an increase of 6.5 % as against the previous year, meaning that maintenance revenue accounted for 39 % of the Group s total revenue. Adjusted for the disposal of the Loga Vplus business segment as of December 31, 2015, and the P&I Time business segment as of March 31, 2016, the revenue growth amounted to 10.7 %. This high growth is primarily due to the successful licence sales in previous years and the high level of satisfaction among our existing customers. SaaS business (software as a service) The SaaS business nearly doubled in the past financial year and increased by EUR 6.4 million to EUR 12.3 million. The main growth driver was the successful introduction of P&I BIG DATA. Service agreements/asp (recurring consulting business) Revenue in recurring consulting business increased disproportionately by 21.7 % to EUR 14.8 million. P&I s business with existing customers focuses on helping users get the best use out of P&I software.

22 22 Licence business Licence revenue exceeded expectations slightly, amounting to EUR 27.0 million (previous year: EUR 29.4 million). P&I is deliberately refraining from selling new technologies (P&I BIG DATA) on a licence basis, instead primarily offering them in the form of SaaS solutions. This is intended to increase the share of recurring services and hence secure a continuous improvement in P&I s key financial indicators. Licence revenue of EUR 27.0 million represents a significant success for P&I, particularly in light of the deliberate reduction in this area alongside the expansion of SaaS business. The Group s success in its licence business is attributable to the acquisition of new customers as well as the ongoing expansion of business with existing customers, which involves the extension of P&I s product range in the licence business. The P&I Group generated 22 % of its revenue from licence business. Consulting business (one-off consulting business) Consulting business with one-off services for licence extensions and project launches decreased as expected to EUR 19.5 million (previous year: EUR 21.2 million). Many P&I users have accepted the offer of ongoing support to get the best use out of the software, which is reported in the service agreements/asp category of recurring services. Service revenue as a whole (consulting and service agreements) increased year-on-year from EUR 33.4 million to EUR 34.3 million, thereby accounting for 27 % of the P&I Group s revenue. Other Other revenue amounted to EUR 2.8 million (previous year: EUR 2.5 million). This item consists of revenue from the sale of time management hardware and third-party products. Revenue development by country EUR thousand 2016/ /2016 Change Germany 95,446 86, % Switzerland 19,739 18, % Austria 9,801 11, % Other international % Total 125, , %

23 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS GROUP BUSINESS PERFORMANCE 23 Growth in the competitive domestic business In the past financial year, domestic business grew further despite high competitive pressure. At EUR 95.4 million, it accounts for 76.3 % of the P&I Group s revenue. Domestic revenue increased by EUR 9.0 million in absolute terms and is attributable to the expansion of business with new and existing customers. Very good growth in Switzerland The Swiss business segment recorded revenue growth of 9.1 %. The P&I Group generated EUR 19.7 million (previous year: EUR 18.1 million) or 16 % of its revenue in Switzerland. Business in Switzerland is characterised by a high proportion of recurring revenue in the form of maintenance, SaaS and consulting services, which are collectively responsible for 63.7 % of revenue and are above the Group average. Decline in Austria due to disposal of LOGA Vplus business segment The P&I Group generated 7.8 % of its revenue, or EUR 9.8 million, in Austria (previous year: EUR 12.0 million). The revenue decline in Austria is due to the downturn in revenue resulting from the disposal of the Loga Vplus business segment with effect from December 31, 2015, particularly in the area of maintenance, which, as expected, was not offset by additional business. Development of orders In the 2016/2017 financial year, incoming orders (licences, consulting, SaaS and other) increased by EUR 6.3 million year-on-year to EUR 82.6 million (previous year: EUR 76.3 million). This rise was primarily attributable to the conclusion of contracts with P&I BIG DATA and service agreements. Licences accounted for EUR 23.7 million of total incoming orders (previous year: EUR 26.7 million). Total orders on hand increased from EUR 91.8 million in the previous year to EUR 92.6 million as of the reporting date. This overall figure for the next twelve months includes future maintenance and P&I BIG DATA income of EUR 57.5 million (previous year: EUR 55.1 million) and service revenue of EUR 15.7 million (previous year: EUR 13.6 million). Results of operations EBITDA rose by 15.0 % to EUR 56.8 million in the 2016/2017 financial year, corresponding to an EBITDA margin of 45.4 % (previous year: 42.0 %). Operating earnings (EBIT) amounted to EUR 53.5 million.

24 24 EUR thousand 2016/ /2016 Change IFRS consolidated earnings Revenue 125, , % EBITDA 56,752 49, % EBITDA margin 45.4 % 42.0 %./. EBIT 53,451 46, % EBIT margin 42.7 % 39.4 %./. EBITDA is the key earnings indicator for P&I. P&I increased its EBITDA and EBITDA margin once again. The Group s business model, with its focus on long-term customer relationships and a growing share of recurring services, is enabling a continuous improvement in EBITDA and the EBITDA margin. In addition to the increased revenue and the organic revenue growth of 8.2 %, EBITDA benefited from cost savings that resulted primarily from the elimination of expenses in the business segments disposed of in the previous year, such as the purchase of development services or partner sales commissions. The slight year-on-year decline in personnel expenses while the number of employees remained the same was due to changed salary structure. EUR thousand 2016/ /2016 Operating result before depreciation and amortisation (EBITDA) 56,752 49,329 EBIT margin 45.4 % 42.0 % Earnings before taxes 60,407 50,494 Consolidated net income (before profit transfer 1) 58,867 49,311 Return on revenue 47.0 % 42.0 % Return on operating assets 2) 48.0 % 49.0 % Earnings per share (EUR) 7,82 6,55 1) A control and profit transfer agreement has been in place between P&I Personal & Informatik AG, Wiesbaden, and Argon GmbH, Munich, since April 1, The profit reported by P&I Personal & Informatik AG, Wiesbaden, is to be transferred to Argon GmbH. 2) Consolidated EBIT for the financial year/operating assets at the reporting date. Operating assets consist of goodwill, intangible assets, property, plant and equipment and current assets. The net finance income of EUR 7.0 million in the 2016/2017 financial year (previous year: EUR 4.3 million) is primarily attributable to income in connection with the guarantee agreement and interest income from the loan extended to P&I Zwischenholding GmbH. Due to the effectiveness of various financing agreements (see separate information in section 4.2 of the management report), P&I Zwischenholding GmbH, Edge Holding GmbH (merged into P&I Holding GmbH with retroactive effect from April 1, 2016) and from November 10, 2016, P&ISWBidCo GmbH and P&I AG have contractually agreed that P&I AG shall be compensated for assuming the joint and several guarantee in the form of a guarantee fee. In the 2016/17 financial year, this fee amounted to EUR 3.5 million (previous year: EUR 0.5 million). A tax expense of EUR 1.5 million was recorded in the 2016/2017 financial year (previous year: EUR 1.2 million) due to the tax liability of

25 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS GROUP BUSINESS PERFORMANCE 25 the foreign P&I Group companies. P&I AG has not reported any current or deferred taxes since the corporation and commercial tax unity with Edge Holding GmbH, which was merged into P&I Holding GmbH with retroactive effect from April 1, 2016, came into force as of April 1, The P&I Group reported consolidated net income of EUR 58.9 million (previous year: EUR 49.3 million). Under the terms of the control and profit transfer agreement, the net profit of P&I AG for the 2016/2017 financial year as reported in the single-entity financial statements in the amount of EUR 56.6 million (previous year: EUR 39.0 million) is to be transferred to P&I Zwischenholding GmbH. Earnings per share Earnings per share amounted to EUR 7.82 (previous year: EUR 6.55). 4.2 FINANCIAL POSITION Cash flow development and liquidity position Financial and liquidity planning are updated on a regular basis in order to ensure the liquidity that is required for the Group s day-to-day operations. On instruction, a number of loan payments at standard market interest rates have been made to the controlling company, P&I Zwischenholding GmbH, with which a control and profit transfer agreement has been in place since April 1, The net profit reported in the HGB financial statements for 2015/2016 was transferred to P&I Zwischenholding GmbH in accordance with the terms of the profit transfer agreement and, in the 2016/2017 financial year, was set off against the loan granted on the basis of a netting agreement. At the reporting date March 31, 2017, the outstanding loan plus accrued interest amounted to EUR 77.3 million (previous year: EUR 72.9 million). The recoverability of the loan to P&I Zwischenholding GmbH is monitored by way of a regular review of P&I Zwischenholding GmbH s financial indicators. The current level of cash and cash equivalents is in line with Group planning even following this loan payment and is sufficient to cover the costs arising in connection with the Group s future business activity. The Group does not have any short-term refinancing requirements, but nonetheless has financing scope in the form of unutilised credit facilities totalling around EUR 63.9 million. Cash flow enjoyed positive development in the 2016/2017 financial year.

26 26 EUR thousand 2016/ /2016 Change Cashflow from - Operating activities 56,226 52,121 4,105 - Investing activities -48,994-41,321-7,673 - Change in cash and cash equivalents due to exchange rate changes Change in cash and cash equivalents 7,526 10,240-2,714 In the 2016/2017 financial year, net cash from operating activities increased from EUR 52.1 million to EUR 56.2 million. This was largely attributable to the earnings growth accompanied by an increase in current assets. The higher proportion of prepaid recurring services also made a similarly important contribution to the increase in the operating cash flow. Net cash from investing activities is dominated by the cash outflow from a loan that the Group was instructed to pay to P&I Zwischenholding GmbH and that totalled EUR 36.5 million in the year under review (previous year: EUR 43.9 million). Cash payments of EUR 10.0 million were made to acquire current financial assets. Investments in non-current assets amounted to EUR 2.5 million. As in the previous year, there was no cash flow from financing activities in the 2016/2017 financial year. The offsetting of the profit transfer obligation of EUR 39.0 million for 2015/2016 against the loan granted to P&I Zwischenholding GmbH in the 2016/2017 financial year means that this transaction is not reported in the cash flow statement. Changes in cash and cash equivalents due to exchange rate changes were attributable to the development of the Swiss franc and the US dollar compared with the euro. As of March 31, 2017, the closing rate for Switzerland was EUR/CHF (previous year: EUR/CHF ), while the closing rate for the USA was EUR/USD (previous year: EUR/USD ). The annual maintenance, SaaS and service invoices issued at the start of the calendar year mean that comparatively high payments are recorded at the start of the calendar year. This means that there is traditionally a high level of cash and cash equivalents at the turn of the Group s financial year. Accordingly, cash and cash equivalents amounted to EUR 59.2 million (previous year: EUR 51.6 million). Stable cash and cash equivalents and current financial assets The P&I Group enjoys an extremely solid position, with cash and cash equivalents and current financial assets totalling EUR 69.2 million (previous year: EUR 51.6 million).

27 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS GROUP BUSINESS PERFORMANCE 27 EUR thousand Mar. 31, 2017 Mar. 31, 2016 Change Cash and cash equivalents 59,159 51,633 7,526 Fixed-term deposits 10, ,000 Cash and cash equivalents and current financial assets 69,159 51,633 17,526 Interest-bearing liabilities Net financial position 69,159 51,633 17,526 Net financial position as a percentage of total assets 36.4 % 30.5 %./. Financial management For a number of years, the P&I Group has regularly had a substantial liquidity surplus resulting from advance payments for maintenance and services. The financial management and administration of surplus liquidity is determined by the terms of the control and profit transfer agreement and the loan extension to P&I Zwischenholding GmbH. Financing until November 9, 2016 Edge Holding GmbH (merged into P&I Holding GmbH as of April 1, 2016) entered into financing agreements in December 2013 in connection with the acquisition of the shares in P&I Zwischenholding GmbH. P&I Zwischenholding GmbH joined these financing agreements as a borrower in February/March 2014, as did, on instruction, P&I AG and its subsidiaries in Austria and Switzerland. In December 2015 and January 2016, the existing financing agreements were replaced by a new financing structure. As planned, P&I AG and its subsidiaries in Austria and Switzerland were instructed by P&I Zwischenholding GmbH to enter into the credit agreements of Edge Holding GmbH and P&I Zwischenholding GmbH in the amount of EUR million in December All movable assets and extensive receivables and rights were assigned to the financing banks as the typical security, and a subordinated obligation to Edge Holding GmbH and P&I Zwischenholding GmbH for interest and principal payments was entered into in accordance with an existing liquidity plan. The maximum amount for which the P&I Group could have been held liable equated to the loan amounts less the assets of Edge Holding GmbH and P&I Zwischenholding GmbH. P&I Zwischenholding GmbH, Edge Holding GmbH and P&I AG have contractually agreed that P&I shall be compensated for assuming the joint and several guarantee in the form of a guarantee fee. P&I AG received a guarantee fee of EUR 1.9 million in the 2016/2017 financial year (previous year: EUR 0.5 million). Financing from November 10, 2016 In connection with the change of majority shareholder, the existing financing structure was again replaced by a new

28 28 financing structure in November Following the conclusion of the new loan agreements, the previous loans with a remaining amount outstanding of EUR million were repaid in full on November 10, 2016, the financing agreement was terminated and P&I AG and its subsidiaries were released from their liability. The borrowers under the new financing structure are P&ISWBidCo GmbH, Wiesbaden, and P&ISWBidCo Holding GmbH, Wiesbaden. The new financing agreements with a volume of EUR million were signed in September 2016 and disbursed in November 2016 in the amount of EUR million. P&I AG and its subsidiaries in Austria and Switzerland were instructed by P&I Zwischenholding GmbH to enter into the credit agreements of P&ISWBidCo Holding GmbH and P&ISWBidCo GmbH in the amount of EUR million in November All movable assets and extensive receivables and rights were assigned to the financing banks as the typical security, and a subordinated obligation to P&ISWBidCo GmbH and P&ISWBidCo Holding GmbH for interest and principal payments was entered into in accordance with an existing liquidity plan. The maximum amount for which the P&I Group could be held liable equates to the loan amounts less the assets of P&I Zwischenholding GmbH, P&I Holding GmbH, P&ISWBidCo GmbH and P&ISWBidCo Holding GmbH. A compensation agreement in the form of a guarantee fee was concluded with P&ISWBidCo for the assumption of the joint and several guarantee. A guarantee fee of EUR 1.6 million was received in the 2016/2017 financial year. P&ISWBidCo GmbH was granted a capex facility of EUR 50.0 million and a revolving facility of EUR 15.0 million for a portion of the above loan amount of EUR million. These additional credit facilities can be used by P&I AG to finance potential future acquisitions or serve as additional liquidity protection as necessary. From the revolving facility, P&I AG has drawn down EUR 3.5 million under an ancillary facility agreement as a line of credit serving as collateral for the guarantees provided. The loans arising from the financing agreements of P&ISWBidCo GmbH had a total carrying amount of EUR million at the reporting date. In the previous year, the loan amount from the old financing agreements was EUR million. P&I AG was also instructed to extend loans to P&I Zwischenholding GmbH. At the reporting date March 31, 2017, the outstanding loan plus accrued interest amounted to EUR 77.3 million (previous year: EUR 72.9 million). Surplus liquidity that is not used for investments is held in the form of bank balances and fixed-term deposits. This reflects the management s aim of ensuring that it can access the available liquidity in full at short notice. Investments in securities are made solely in euro and with counterparties with excellent credit ratings in order to minimise the risk of significant fluctuations in value. The composition and development of cash and cash equivalents are presented in the notes to the consolidated financial statements and the consolidated cash flow statement.

29 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS GROUP BUSINESS PERFORMANCE 29 Derivative financial instruments Derivative financial instruments are employed in order to prevent to the greatest possible extent the risk to P&I s financial position and results of operations that could result from the negative impact of developments on the financial markets. P&I does not currently employ any derivative financial instruments. Off-balance-sheet financing instruments, such as the sale of receivables or sale-and-leaseback transactions, were not utilised. 4.3 Net assets The total assets of the P&I Group increased by 12.3 % due to the expansion of the business volume and amounted to EUR million at the reporting date (previous year: EUR million). EUR thousand Mar. 31, 2017 Mar. 31, 2016 Change Non-current assets 98,330 94,283 4,047 Current assets 91,485 74,796 16,689 Total assets 189, ,079 20,736 Equity 62,370 59,582 2,788 Non-current liabilities 1,474 1, Current liabilities 125, ,778 18,193 Total equity and liabilities 189, ,079 20,736 Total equity and liabilities Mar. 31, 2017 Mar. 31, 2016 Capital ratio 32.9 % 35.2 % Net current assets in EUR thousand *) -34,486-32,982 *) Current assets less current liabilities at the reporting date The P&I Group had non-current assets in the amount of EUR 98.3 million (previous year: EUR 94.3 million). The increase in the year under review was due to the higher level of financial assets. Financial assets primarily relate to a loan to P&I Zwischenholding GmbH, including accrued interest, in the amount of EUR 77.3 million (previous year: EUR 72.9 million). The loan is allocated to non-current assets on account of its term. Scheduled depreciation and amortisation led to a decrease in intangible assets. Property, plant and equipment increased as a result of investment. Current assets, primarily consisting of cash and cash equivalents and receivables, increased by EUR 16.7 million year-onyear to EUR 91.5 million. Receivables (including gross amount due from customers for contract work) decreased slightly from EUR 20.6 million to EUR 20.1 million despite the increase in revenue.

30 30 Cash and cash equivalents and current financial assets rose sharply year-on-year to EUR 69.2 million (previous year: EUR 51.6 million). Equity increased by EUR 2.8 million year-on-year to EUR 62.4 million. This was due to the profits of subsidiaries abroad (EUR 5.6 million) and the increase in accumulated other comprehensive income (EUR 0.6 million). Income was reduced due to the foreign subsidiaries dividend distribution to P&I AG last year (EUR 3.4 million) and differences between P&I AG s accounting according to the German Commercial Code and IFRS. P&I AG s accounting profit (EUR 56.6 million) is reported in the consolidated financial statements as appropriation of net profit. The increase in accumulated other comprehensive income is primarily based on currency translation effects relating to the Swiss subsidiaries. The equity ratio fell from 35.2 % to 32.9 %. Non-current liabilities decreased to EUR 1.5 million (previous year: EUR 1.7 million) and relate to the deferred tax liabilities of subsidiaries. Total current liabilities increased by EUR 18.2 million to EUR million. This figure includes trade payables, the liability for the profit transfer from P&I AG to P&I Zwischenholding GmbH (change: + EUR 17.6 million), tax liabilities (change: - EUR 5.0 million), deferred income (change: + EUR 3.7 million), the gross amount due to customers for contract work (change: + EUR 0.4 million) and other current liabilities (change: + EUR 1.7 million). Tax liabilities of EUR 2.0 million (previous year: EUR 1.9 million) include the tax liabilities of subsidiaries that were offset against tax prepayments for the respective financial years. Tax liabilities from the tax allocation agreement in place between P&I AG and P&I Zwischenholding GmbH from April 1, 2011, to March 31, 2014, were set off against the existing loan on the basis of a netting agreement in the 2016/2017 financial year. There was an increase in deferred income, which reflects the income that is received at the start of the calendar year due to the annual invoices that are issued and paid in advance and that is reversed each month for the purposes of revenue recognition. This amounted to EUR 47.4 million. The gross amount due to customers for contract work amounted to EUR 0.5 million (previous year: EUR 0.1 million) and primarily included advance payments and future expenses from a fixed-price project. Other current liabilities amounted to EUR 16.5 million at the end of the financial year (previous year: EUR 14.8 million) and included payment obligations to employees in relation to variable remuneration components and VAT liabilities, among other things.

31 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS P&I AG P&I AG 5.1 RESULTS OF OPERATIONS Revenue growth of 15.5 % to EUR million meant that P&I AG generated an operating result before taxes and net finance costs (EUR 10.3 million) of EUR 46.3 million (previous year: EUR 34.9 million), thereby generating an EBIT margin of 46.0 %. Revenue development Revenue for the 2016/2017 financial year totalled EUR million (previous year: EUR 87.5 million). This includes revenue from third parties of EUR 94.3 million (previous year: EUR 80.4 million), up 17.3 % on the previous year. EUR thousand 2016/ /2016 Change Revenue with - Third parties 94,265 80,352 13,913 - Affiliated companies 6,783 7, Total revenue 101,048 87,450 13,598 Change in inventories 1,091 1, Total operating revenue 102,139 88,711 13,428 Recurring services enjoyed above-average growth of 20.4 % to EUR 62.3 million (previous year: EUR 51.7 million). Maintenance income, software as a service (SaaS) income and recurring income under service agreements are combined in this separate revenue category. P&I AG generated 61.7 % of its revenue from recurring revenue business. But the Company also posted growth of EUR 3.0 million to EUR 38.8 million in non-recurring business, which arises from licence revenue (EUR 21.9 million) and consulting revenue in the context of the implementation of P&I software (EUR 14.5 million) and from other revenue (EUR 2.3 million). The change in inventories resulted from long-term construction contracts and amounted to EUR 1.1 million in the past financial year (previous year: EUR 1.3 million). Results of operations: profit after taxes remains at high level Profit after taxes increased by EUR 17.6 million to EUR 56.6 million (previous year: EUR 39.0 million). This was mainly attributable to the revenue growth (EUR 13.6 million) and an improved financial result due to the income from the loan extended to P&I Zwischenholding GmbH and the income from the guarantee fee received in connection with the financing agreements of P&I Zwischenholding GmbH, P&I Holding GmbH and P&ISWBidCo GmbH. Profit was reduced by the decline in other operating income, which resulted in the previous year from the disposal of business segments. The decline in expenses for materials and staff is due to the lower use of third-party products and purchased consulting services as well as the reduced workforce following the disposal of the P&I Time business segment.

32 32 A corporation and commercial tax unity has been in place with Edge Holding GmbH since April 1, 2014, which was transferred to P&I Holding GmbH as of April 1, 2016, due to the merger of Edge Holding GmbH into P&I Holding GmbH. The tax income reported in the previous year resulted from the reversal of taxes for prior periods through profit or loss. Net profit/profit transfer Under the terms of the control and profit transfer agreement, the net profit before profit transfer of P&I AG for the 2016/2017 financial year as reported in the single-entity financial statements in the amount of EUR 56.6 million (previous year: EUR 39.0 million) is to be transferred to P&I Zwischenholding GmbH. The return on revenue generated by P&I AG increased from 44.6 % in the previous year to 56.1 %. The return on equity amounted to % (previous year: %). 5.2 FINANCIAL POSITION Cash flow development and liquidity position Cash and cash equivalents increased by EUR 2.6 million to EUR 32.1 million in the 2016/2017 financial year. The increase resulted from the growth in the Company s operating result and the simultaneous rise in operating cash flow. The high cash outflow from investing activities in the previous year was mainly due to the acquisition of Soreco HR AG. In the past financial year, the cash outflow was determined by the loan to P&I Zwischenholding GmbH (EUR 36.5 million; previous year: EUR 43.9 million), a payout to fixed-term deposits of EUR 10.0 million and investments in intangible assets and property, plant and equipment of EUR 2.2 million (previous year: EUR 1.1 million). EUR thousand 2016/ /2016 Change Cashflow from - Operating activities 51,370 44,757 6,613 - Investing activities -48,730-46,706-2,024 - Financing activities Change in cash and cash equivalents 2,640-1,949 4,589 Cash-in-hand and bank balances amounted to EUR 42.1 million at the reporting date (previous year: EUR 29.5 million). EUR thousand March March Change Cash and cash equivalents 32,110 29,470 2,640 Fixed-term deposits 10, ,000 Cash-in-hand and bank balances 42,110 29,470 12,640 As in the previous year, the Group has no liabilities to banks.

33 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS P&I AG 33 Financial management and financial instruments See the separate disclosures in section 4.2 of the management report. 5.3 NET ASSETS EUR thousand March March Change Fixed assets 94,000 88,910 5,090 Current assets 60,632 46,799 13,833 Prepaid expenses 1,162 1,161 1 Assets 155, ,870 18,924 Equity 27,775 27,775 0 Provisions 12,570 10,428 2,142 Liabilities 79,418 65,747 13,671 Deferred income 36,031 32,920 3,111 Equity and liabilities 155, ,870 18,924 Fixed assets increased by EUR 5.1 million to EUR 94.0 million in the 2016/2017 financial year. This was primarily due to the higher level of financial assets as a result of additional loan payments to P&I Zwischenholding GmbH. Investments in office equipment also contributed to the increase in property, plant and equipment despite scheduled depreciation. Current assets increased by EUR 13.8 million year-on-year to EUR 60.6 million. Inventories, primarily consisting of work in progress, increased by EUR 1.1 million to EUR 6.5 million in the past financial year. Receivables including receivables from affiliated companies increased slightly to EUR 11.5 million (previous year: EUR 11.3 million). Other assets declined slightly (EUR -0.1 million). Cash-in-hand and bank balances increased by EUR 12.7 million to EUR 42.1 million due to the improved operating result. Prepaid expenses, which related to services for the subsequent year that were purchased at the beginning of the calendar year and are recognised on an accrual basis, remained stable year-on-year at EUR 1.2 million. Equity remained unchanged as against the previous year. Under the terms of the control and profit transfer agreement, the net profit of P&I AG for the 2016/2017 financial year as reported in the single-entity financial statements is to be transferred to P&I Zwischenholding GmbH, which is why this did not result in an increase in equity. The increase in total assets meant that the equity ratio declined to 17.8 % (previous year: 20.3 %). As of March 31, 2017, P&I AG s issued capital was EUR 7.5 million (previous year: EUR 7.5 million). The Annual General Meeting on January 26, 2017, resolved to reduce the share capital by withdrawing 168,873 no-par-value shares in a simplified withdrawal procedure

34 34 according to section 237 (3) no. 2, (4) and (5) of the German Stock Corporation Act (AktG). Since then, the Company has no longer held any treasury shares. Provisions increased by EUR 2.1 million to EUR 12.6 million. Tax provisions in the amount of EUR 0.1 million include the taxes attributable to the guaranteed dividend payment to former minority shareholders. Other provisions rose by EUR 2.2 million to EUR 12.5 million (previous year: EUR 10.3 million) as a result of higher staff provisions due to bonus obligations as well as provision obligations from day-to-day operations. Liabilities increased by EUR 13.7 million year-on-year to EUR 79.4 million (previous year: EUR 65.8 million). This is primarily attributable to the increase in liabilities to affiliated companies, which increased by EUR 12.3 million. This includes the liability to P&I Zwischenholding GmbH in the total amount of EUR 56.6 million, which is the result of the profit transfer for the 2016/2017 financial year. The increase in deferred income is due to the larger number of software maintenance agreements and P&I HR BIG DATA contracts, as well as the deferral of income from recurring services (including seminars). Deferred income, which amounted to EUR 36.0 million (previous year: EUR 32.9 million), contains income received prior to the reporting date that relates to a certain period after the reporting date. P&I AG and its subsidiaries in Austria and Switzerland were instructed by P&I Zwischenholding GmbH to enter into the credit agreements of P&ISWBidCo Holding GmbH and P&ISWBidCo GmbH in the amount of EUR million in November 2016 and to assign as security all movable assets as well as receivables and rights. The previous loans were repaid in full. Please refer to the information on financial management in section SUMMARY OF THE COURSE OF BUSINESS In the previous year, the Management Board forecast organic revenue growth in the P&I Group of 5 % for the 2016/2017 financial year, with licence revenue slightly below the previous year s level. Recurring services were expected to record low double-digit growth, accounting for more than 60 % of total revenue. Based on these factors and assuming unchanged cost efficiency, EBITDA was forecast at EUR 53 million, corresponding to an improved EBITDA margin. Operating cash flow was expected to be maintained at the existing high level. The forecast was exceeded in the year under review with revenue growth of 6.5 % to EUR million, accompanied by an EBITDA margin of 45.4 % (forecast: higher than the previous year s EBITDA margin of 42 %). This was due to the significant upturn in recurring services and their high level of profitability. Licence business was maintained at a high

35 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS RISK REPORT 35 level. This is all the more impressive considering the fact that P&I is actively increasing the extent to which it offers new technologies as SaaS services, meaning that recurring services are becoming stronger at the expense of licence business. The P&I Group s operating cash flow grew by EUR 4.1 million year-on-year to EUR 56.2 million, significantly exceeding the previous year s level. Thanks to the extremely good course of business, P&I AG s revenue of EUR million was well above the Management Board s forecast range of EUR million. This revenue growth and increased income from the financial resulted are also reflected in a corresponding rise in profit after taxes, which was increased to EUR 56.6 million, thereby significantly exceeding the forecast of up to EUR 36 million. P&I AG s operating cash flow was improved by EUR 6.6 million year-on-year to EUR 51.4 million. 7. EVENTS AFTER THE END OF THE REPORTING PERIOD With effect from May 31, 2017, Mr Stefan Gaiser is departing from the Company s Executive Board prematurely of his own volition. No further events occurred. 8. RISK REPORT In the course of its business activities, P&I is exposed to various risks that result or could result not only from its day-today business operations, but also from changes in its environment. We define risk in the broadest sense as the possibility that we will fail to achieve our planned financial, operational or strategic objectives. In order to ensure long-term business success, it is essential that risks are effectively identified, analysed and remediated or limited by way of appropriate control measures. We seek to achieve a balanced risk/reward ratio and only enter into risks if the corresponding business activities are highly likely to increase the value of P&I. 8.1 ORGANISATION OF RISK MANAGEMENT P&I has an adequate risk management system that it uses to identify and analyse risks and initiate corresponding countermeasures at an early stage. Group-wide risk management is controlled centrally by P&I AG, Wiesbaden. Central risk management is also responsible for preparing risk reports, initiating the further development of the risk management system and developing regulations aimed at reducing risk for the entire Group.

36 RISK FACTORS Business risk A key element of P&I s strategy is the further expansion of our position in the SME sector and among public authorities and large organisations by attracting new customers. Despite our efforts such as the expansion of our sales and partnership network or the reorganisation of our consulting activities demand for our products and services in the SME segment could fail to develop as planned, which could have an adverse effect on our business activities and our financial position and results of operations. P&I generates a significant proportion of its revenue from its large base of existing customers. If customer satisfaction were to decrease, our existing customers could decide against extending their maintenance agreements or entering into new licence or other agreements for additional products or services, or could downgrade the level of their maintenance agreements. This could have a significant adverse effect on P&I s revenue and earnings. However, this appears unlikely in light of P&I s solid business development with its existing customers in recent financial years and its forward-looking technological strategy, which is recognised by our partners and customers alike. The change in the business model with a focus on recurring SaaS services may lead to revenue losses in the non-recurring business, especially the licence business, in a transitional phase. This is not associated with a decline in consulting business. Accordingly, a significant reduction in the proportion of total income attributable to income from software could have a material adverse effect on business, and hence on P&I s net assets, financial position and results of operations. Risks from existing or new major projects and fixed-price projects are permanently monitored and evaluated. The implementation of P&I software often involves the extensive use of customer resources and is subject to a large number of risks over which P&I often has no influence. The possibility of lengthy installation processes or project costs that exceed the agreed fixed prices and that result in claims for recourse or damage to the Company s image cannot always be excluded. P&I is currently working on several major projects, which are regularly monitored. P&I believes that it has recognised these risks in its financial planning to an appropriate extent, particularly through the recognition of provisions. Accordingly, a significant adverse impact on the forecast business development and earnings performance as a result of risks from major projects and fixed-price projects is currently considered to be unlikely. Financial risk Financing until November 9, 2016 Edge Holding GmbH (merged into P&I Holding GmbH as of April 1, 2016) entered into financing agreements in December 2013 in connection with the acquisition of the shares in P&I Zwischenholding GmbH. P&I Zwischenholding GmbH joined these financing agreements as a borrower in February/March 2014, as did, on instruction, P&I AG and its subsidiaries in Austria and Switzerland.

37 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS RISK REPORT 37 In December 2015 and January 2016, the existing financing agreements were replaced by a new financing structure. As planned, P&I AG and its subsidiaries in Austria and Switzerland were instructed by P&I Zwischenholding GmbH to enter into the credit agreements of Edge Holding GmbH and P&I Zwischenholding GmbH in the amount of EUR million in December All movable assets and extensive receivables and rights were assigned to the financing banks as the typical security, and a subordinated obligation to Edge Holding GmbH and P&I Zwischenholding GmbH for interest and principal payments was entered into in accordance with an existing liquidity plan. The maximum amount for which the P&I Group could have been held liable equated to the loan amounts less the assets of Edge Holding GmbH and P&I Zwischenholding GmbH. P&I Zwischenholding GmbH, Edge Holding GmbH and P&I AG have contractually agreed that P&I shall be compensated for assuming the joint and several guarantee in the form of a guarantee fee. P&I AG received a guarantee fee of EUR 1.8 million in the 2016/2017 financial year (previous year: EUR 0.5 million). Financing from November 10, 2016 In connection with the change of majority shareholder, the existing financing structure was replaced by a new financing structure in November Following the conclusion of the new loan agreements, the previous loans with a remaining amount outstanding of EUR million were repaid in full on November 10, 2016, the financing agreement was terminated and P&I AG and its subsidiaries were released from their liability. The borrowers under the new financing structure are P&ISWBidCo GmbH, Wiesbaden, and P&ISWBidCo Holding GmbH, Wiesbaden. The new financing agreements with a volume of EUR million were signed in September 2016 and disbursed in November 2016 in the amount of EUR million. P&I AG and its subsidiaries in Austria and Switzerland were instructed by P&I Zwischenholding GmbH to enter into the credit agreements of P&ISWBidCo Holding GmbH and P&ISWBidCo GmbH in the amount of EUR million in November 2016 as jointly and severally liable guarantor. All movable assets and extensive receivables and rights were assigned to the financing banks as the typical security, and a subordinated obligation to P&ISWBidCo GmbH and P&ISWBidCo Holding GmbH for interest and principal payments was entered into in accordance with an existing liquidity plan. The maximum amount for which the P&I Group could be held liable equates to the loan amounts less the assets of P&I Zwischenholding GmbH, P&I Holding GmbH, P&ISWBidCo GmbH and P&ISWBidCo Holding GmbH. A compensation agreement in the form of a guarantee fee was concluded with P&ISWBidCo for the assumption of the joint and several guarantee. A guarantee fee of EUR 1.6 million was received in the 2016/2017 financial year. P&ISWBidCo GmbH was granted a capex facility of EUR 50.0 million and a revolving facility of EUR 15.0 million for a portion of the above loan amount of EUR million. These additional credit facilities can be used by P&I AG to

38 38 finance potential future acquisitions or serve as additional liquidity protection as necessary. From the revolving facility, P&I AG has drawn down EUR 3.5 million under an ancillary facility agreement as a line of credit serving as collateral for the guarantees provided. The loans arising from the financing agreements of P&ISWBidCo GmbH had a total carrying amount of EUR million at the reporting date. In the previous year, the loan amount from the old financing agreements was EUR million. The charges from the credit agreements are borne by P&ISWBidCo GmbH. P&ISWBidCo GmbH relies on P&I AG to secure the required liquidity. The profits and associated capital inflows of P&I AG are passed on to P&ISWBidCo GmbH under existing profit transfer agreements and ones yet to be concluded. Given the current corporate planning of P&I AG and the associated liquidity inflow, the Management Board sees no significant risk to the Company in entering into these credit agreements and hence no significant risk of utilisation for the Company. The Management Board and the Supervisory Board regularly discuss the issues relating to the loan agreement and its consequences for P&I. P&I AG and the Group are not exposed to any significant default risk. Surplus liquidity that is not used for investments is held in the form of bank balances and fixed-term deposits. This reflects the management s aim of ensuring that it can access the available liquidity in full at short notice. Investments in securities are made solely in euro and with counterparties with excellent credit ratings in order to minimise the risk of significant fluctuations in value. The composition and development of cash and cash equivalents are presented in the notes to the consolidated financial statements and the consolidated cash flow statement. In connection with the loan extended to P&I Zwischenholding GmbH, the creditworthiness of the counterparty is monitored on the basis of monthly financial information. Based on the information currently available, the risk of default is unlikely. Defaults at Group companies were maintained at the prior-year level. The recoverability of trade receivables is evaluated on an ongoing basis and valuation allowances are recognised when trigger events are identified. As P&I does not have any customer relations accounting for more than 10 % of its revenue, there is no credit risk that could endanger the continued existence of the Company. The Company controls default risk by demanding advance payments and by obtaining confirmations of transfer from insolvency administrators or credit information in cases where there is a suspicion of default. The Group does not have additional collateral in the form of rights to securities or similar. The Group does not have a significant concentration of default risk either with an individual counterparty or with a group of counterparties with similar characteristics.

39 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS RISK REPORT 39 Exchange rate risk P&I s exchange rate risk is concentrated on the Swiss franc, the currency in which its subsidiaries and second-tier subsidiaries in Switzerland conduct their business. In the USA, no revenue is generated from transactions with third parties, and the costs incurred are negligible, so the Company is not exposed to any significant risk. The Management Board considers the risk from exchange rate fluctuations from operations to be immaterial. The currency risk is not hedged, but is continuously monitored. The Management Board assumes that future exchange rate fluctuations will also have no material impact on consolidated net income. IT risk P&I is subject to the risk that the availability, integrity, reliability, authenticity and clarity of data may not be adequately secured due to insufficient data protection. The Company counteracts this risk by examining its data protection concepts and regularly adjusting them to reflect new requirements, as well as conducting regular data backups. Data centre services are also subject to availability risk. P&I counteracts this risk by implementing corresponding back-up scenarios and redundant solutions. Mobile data storage devices are subject to the risk of data loss and misuse. Organisational instructions are in place to ensure that IT equipment and data storage devices are handled carefully. Legal risk The rescission proceedings regarding the resolutions of the 2010 Annual General Meeting were the subject of a general settlement and have been terminated. P&I is confronted with various claims and legal proceedings arising from its regular business operations. The negative consequences of the claims made or the proceedings initiated against us could result in the payment of compensation or reversal costs or defaults. We are of the opinion that the outcome of these pending proceedings, both individually and as a whole, will not have an adverse effect on our business activities as corresponding provisions and specific valuation allowances have been recognised as a precaution. Staff risk P&I is a specialist for standardised HR software solutions. Experts in this area are also in demand among other software companies. In order to prevent employees from being poached by competitors, we ensure that they are closely tied to the Company through measures such as profit-sharing, further education and training, and non-competition clauses. When it comes to key areas, we also ensure that several people have the expertise required to continue in their own right.

40 40 The Group recruits young staff by way of new trainee programmes launched every year. We use P&I s own Talent3 and Bewerber3 software to acquire talents. Acquisition risk P&I has made acquisitions in the past and will continue to examine potential acquisitions for the future. This means that the P&I Group is exposed to acquisition risk. The challenges involved relate to the integration of product ranges, organisational processes, staff and different corporate cultures. We use established control mechanisms for integration to identify potential problem areas as quickly as possible, with a focus on the key areas of the acquired company. Overall assessment of the risk situation In the period under review, none of the risks identified and quantified in P&I s risk management system reached a level that could endanger the continued existence of the Company. The Company has not classified any risks as material to the course of business and the successful management of the Company above and beyond the identified risks described above. The overall risk assessment shows that P&I s risks are limited and manageable. There are no identified risks that alone or in conjunction could endanger the continued existence of P&I AG or the P&I Group, either at present or in the future. 9. FORECAST 9.1 THE ECONOMY AND THE INDUSTRY IN THE NEW FINANCIAL YEAR European economic research institutions currently see Europe s economy as being on a stable growth trajectory. Gross domestic product in the euro zone is expected to continue growing moderately and unemployment to fall in the next two years. The economic recovery in the euro zone is therefore continuing, but there is no sustained acceleration of the upturn on the horizon. For 2017 and 2018, the Kiel Institute for the World Economy (IfW) is forecasting lower growth in gross domestic product of 1.6 % and 1.5 % respectively, attributing this to increased uncertainty and declining impetus from fallen oil prices. For Germany, the IfW is predicting growth rates of 1.7 % in 2017 and 2.0 % in 2018 and has thus lowered its original forecast. This is due above all to a decline in consumer spending driven by increased energy bills while exports rise. The industry association BITKOM expects the IT sector to expand by 1.3 % in 2017, with the software segment remaining the growth driver with a forecast rise in revenue of 6.3 %. BITKOM expects revenue from IT services to increase by 2.3 %. 9.2 EXPECTATIONS AND OPPORTUNITIES OF THE P&I GROUP AND P&I AG The strength of the P&I Group lies in the continuity with which it has steadily and sustainably expanded its business year after year. In this spirit, P&I will concentrate harder on obtaining more SaaS contracts in the next few years.

41 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS FORECAST 41 This service offering will again materially increase the benefit for customers, and we expect even better momentum in both new customer business and existing customer business in the medium term. This will be accompanied by further investments in our sales department and the opening of another development centre in Greece. The Management Board assumes that the planned increase in SaaS contracts will lead to a greater decline in licence business and expects that the drop in licence revenue will be offset by the new business in the SaaS environment in the medium term. In conjunction with the investments in sales and development, next year will therefore be a year of transition, characterised by a sharp rise in incoming SaaS orders, declining licence revenue and a slight increase in personnel costs. The Management Board is convinced that these measures will keep P&I in a very successful position in the long term. Accounting according to the German Commercial Code and financial reporting according to IFRS differ at P&I AG, especially in revenue recognition for major projects. With this in mind, the Management Board is issuing the following outlook for the 2017/2018 financial year: We expect the P&I Group to record revenue on a par with the previous year. Significant increase in recurring services, especially SaaS revenue. Due to the concentration on SaaS contracts, we anticipate a substantial decline in licence revenue. Due to the revenue development and investments described above, the Management Board expects a slight decline in the Group s EBITDA. For P&I AG, we expect revenue to be on a par with or slightly below the previous year s level. The operating cash flow of the P&I Group and P&I AG is expected to remain at the previous year s level. The lack of assurance in terms of the progress and completion of major projects means that the forecast for the P&I Group and P&I AG is subject to uncertainty and revenue recognition may be affected by fluctuations. We are confident that P&I has a promising future with the decisions we have described and the long-term focus. We will continue to ambitiously pursue and achieve our goals in the future. P&I Personal & Informatik AG Wiesbaden, May 31, 2017 Vasilios Triadis Stefan Gaiser

42 03/ 43/ GROUP FINANCIAL STATEMENTS Information regarding the Company 44/ Consolidated income statement 45/ Consolidated statement of comprehensive income 46/ Consolidated statement of financial position 48/ Consolidated statement of changes in equity 49/ Consolidated cash flow statement 50/ Accounting policies 51/ Appendix to the consolidated financial statements 102/ Auditors' report

43 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS INFORMATION REGARDING THE COMPANY INFORMATION REGARDING THE COMPANY P&I Personal & Informatik Aktiengesellschaft (hereinafter also the Company or P&I AG ) is domiciled in Wiesbaden, Germany, and has been registered in the commercial register of the Wiesbaden District Court, section B, under no since May 28, The articles of association were adopted on April 2, 1998, and last amended by resolution of the Annual General Meeting on January 26, The Company is the parent company of the P&I Personal & Informatik Group ( P&I ), which operates throughout Europe in the fields of software development, licensing and maintenance and IT services. The address of the parent company s registered office is Kreuzberger Ring 56, Wiesbaden, Germany. The corporate objective of the Company and its subsidiaries is the production, sale and maintenance of software, the accompanying consultation and training of operators and the trading of IT equipment and software. In accordance with the articles of association, emphasis is placed on human resources and the information technology operations falling within this sector, such as programming, personnel databases, project management, personnel data graphics, image processing, process data processing, PPS, network control and special query languages. P&I AG s admission to the Frankfurt Stock Exchange was suspended by request with effect from November 12, The Company s shares had been admitted to trading in the Prime Standard of the Frankfurt Stock Exchange since January 1, Previously, the Company s shares had been admitted to trading on the Neuer Markt of the Frankfurt Stock Exchange since July 7, The financial investor Permira Funds V (Pumvila S.à.r.l., Luxembourg, Luxembourg) became the new majority shareholder effective November 10, However, the former owner HgCapital retains a minority interest of around 15 % in P&I AG via its investment in a holding company, which indirectly holds 100 % of the shares in P&I AG s parent company, P&I Zwischenholding GmbH, Wiesbaden. The consolidated financial statements of P&I Personal & Informatik AG are not included in the consolidated financial statements of its parent company, P&I Zwischenholding GmbH, Wiesbaden, as, according to the information provided, this company is included in the exempting consolidated financial statements of P&ISWBidCo Holding GmbH, Wiesbaden, in accordance with section 291 (2) no. 3 of the German Commercial Code (HGB). According to the information provided, the consolidated financial statements of P&ISWBidCo Holding GmbH will be disclosed in the electronic Federal Gazette (Bundesanzeiger). The ultimate parent company of the group that owns P&I Holding GmbH, Wiesbaden, is Pumvila S.à r.l., Luxembourg, Luxembourg. On February 7, 2011, P&I AG concluded a control and profit transfer agreement with P&I Zwischenholding GmbH. Under this agreement, P&I AG is obliged to transfer its profits according to the single-entity financial statements prepared under German commercial law to P&I Zwischenholding GmbH. The agreement was concluded for a minimum of five years. The agreement came into effect following the approval of the shareholders meeting of P&I Zwischenholding GmbH on February 7, 2011, and the extraordinary general meeting of P&I AG on March 24, 2011, and its entry in the commercial register on September 9, 2011.

44 44 CONSOLIDATED INCOME STATEMENT April 1, March 31, 2017 April 1, March 31, 2016 EUR thousand Revenue (3) 125, ,461 Cost of sales (4) 35,017 35,843 Gross profit 90,091 81,618 Research and development costs (4) 16,502 17,124 Selling costs (4) 11,072 12,344 Administrative costs (4) 6,683 6,031 Amortisation of customer bases (4) 1,454 1,479 Other operating income (4) 331 2,584 Other operating expenses (4) 1, Operating earnings (EBIT) 53,451 46,235 Financial income (6) 7,000 4,663 Finance expenses (6) Earnings before taxes (EBT) 60,407 50,494 Tax expenses/tax income (-) 1,540 1,183 Consolidated net income 58,867 49,311 Consolidated net income attributable to Shareholders of the parent company 58,867 49,311 Non-controlling shareholders 0 0

45 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 45 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME April 1, March 31, 2017 April 1, March 31, 2016 EUR thousand Consolidated net income 58,867 49,311 Items that may be reclassified to profit or loss in subsequent periods Currency translation of foreign operations 562-1,187 Change in the fair value of financial assets available for sale 0-38 of which change in unrealised gains and losses 0 0 of which reclassification of realised gains and losses 0-38 of which income tax effects 0 0 Other comprehensive income (20) 562-1,225 Consolidated comprehensive income 59,429 48,086 Consolidated comprehensive income attributable to Shareholders of the parent company 59,429 48,086 Non-controlling shareholders 0 0

46 46 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF MARCH 31, 2017 EUR thousand March 31, 2017 March 31, 2016 Assets Non-current assets Customer base (8) 7,770 9,054 Goodwill (8) 10,107 9,910 Other intangible assets (8) Property, plant and equipment (9) 2,586 1,716 Non-current financial assets (10) 77,401 72,947 Deferred tax assets (11) Total non-current assets 98,330 94,283 Current assets Inventories (12) Trade receivables (13) 15,271 16,248 Gross amount due from customers for contract work (15) 4,829 4,337 Current financial assets (15) 10,000 0 Other current assets (16) 2,073 2,429 Cash and cash equivalents (17) 59,159 51,633 Total current assets 91,485 74,796 Total assets 189, ,079

47 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF FINANCIAL POSITION 47 March 31, 2017 March 31, 2016 EUR thousand Liabilities Equity Issued capital (18) 7,531 7,700 Capital reserves (18) 2,334 2,334 Treasury shares (18) 51,791 51,320 Treasury shares (18) 0-1,924 Cumulative other comprehensive income (20) Total equity 62,370 59,582 Non-current liabilities Deferred tax liabilities (11) 1,474 1,719 Total non-current liabilities 1,474 1,719 Current liabilities Trade payables (22) 2,967 3,190 Liability from profit transfer agreement (23) 56,641 38,999 Tax liabilities (24) 1,966 1,926 Liabilities from tax sharing agreement (25) 0 5,005 Deferred income (26) 47,431 43,712 Gross amount due to customers for contract work (27) Other current liabilities (28) 16,500 14,831 Total current liabilities 125, ,778 Total liabilities 127, ,497 Total equity and liabilities 189, ,079

48 48 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY EUR thousand Accumulated other comprehensive income Change in the fair value of Difference financial resulting assets Issued Capital Retained Treasury from currency available capital reserves earnings shares translation for sale Total (18) (18) (18) (18) (20) (20) As of March 31, ,700 2,334 41,009-1,924 1, ,496 Consolidated net income 49,311 49,311 Other comprehensive income -1, ,225 Consolidated comprehensive income 49,311-1, ,086 Profit transfer to Argon GmbH -38,999-38,999 As of March 31, ,700 2,334 51,320-1, ,582 Consolidated net income 58,867 58,867 Other comprehensive income Consolidated comprehensive income 58, ,429 Recovery own shares ,755 1,924 0 Profit transfer to P&I Zwischenholding GmbH (formerly Argon GmbH) -56,641-56,641 As of March 31, ,531 2,334 51, ,370

49 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS CONSOLIDATED CASH FLOW STATEMENT 49 CONSOLIDATED CASH FLOW STATEMENT EUR thousand April 1,2016- March 31, 2017 April 1,2015- March 31, 2016 Consolidated net income 58,867 49,311 Tax income/tax expenses 1,540 1,183 Financial result (financial income less finance costs) -6,956-4,259 Operating earnings (EBIT) 53,451 46,235 Depreciation of property, plant and equipment and amortisation of intangible assets 3,301 3,094 Change in inventories, trade receivables and other assets not attributable to investing or financing activities Change in trade payables and other liabilities not attributable to investing or financing activities 512 5,143 Losses/gains from the disposal of non-current assets 7-1,747 Changes in other non-cash items Interest paid Interest received Tax payments -1,772-1,567 Cash flow from operating activities 56,226 52,121 Payments for investments in property, plant and equipment -2, Payments for investments in intangible assets Proceeds from the disposal of property, plant and equipment and intangible assets 29 2,098 Proceeds from the disposal of non-current financial assets 0 3,513 Proceeds from the disposal of current financial assets 0 10,000 Payments for investments in non-current financial assets -36,492-43,890 Payments for investments in current financial assets -10,000 0 Payments for company acquisitions 0-11,732 Cash flow from investing activities -48,994-41,321 Cash flow from financing activities 0 0 Changes in cash and cash equivalents due to exchange rate changes Change in cash and cash equivalents 7,526 10,240 Cash and cash equivalents at beginning of period 51,633 41,393 Cash and cash equivalents at end of period 59,159 51,633

50 50 2. ACCOUNTING POLICIES 2.1 CHANGES IN ACCOUNTING POLICIES The accounting rules applied correspond to the methods applied in the previous year. The International Accounting Standards Board (IASB) has made various amendments to existing IFRSs and published new IFRSs and interpretations of the International Financial Reporting Standards Interpretations Committee (IFRS IC). Effects of new or amended standards All accounting principles required to be applied from the 2016/2017 financial year onwards were implemented by the P&I Group. Since January 1, 2016, various amendments to International Financial Reporting Standards including IFRS 3, IFRS 7, IFRS 8, IFRS 13 and IAS 24 have come into force as a result of the Annual Improvements Projects for 2012 and In addition, a number of conceptual clarifications were incorporated into IAS 1, but these have no effect on the presentation of the consolidated financial statements. It was also specified in IAS 1 that disclosures are only required when the information is material. None of the above or any other amendments to IFRS have material effects on the net assets, financial position, results of operations and the cash flows of the P&I Group. Unadopted new or amended standards In the consolidated financial statements for the 2016/2017 financial year, the P&I Group did not observe the following accounting standards adopted by the IASB because they were not yet required to be applied in the financial year.

51 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS APPENDIX TO THE CONSOLIDATED FINANCIAL STATEMENTS 51 IAS 7 IAS 12 IAS 40 IFRS 2 IFRS 4 Standard/ Interpretation Improvements to IFRSs : Amendments and clarifications to various IFRSs Cash Flow Statements: Notes Aktivi Income taxes: Deferred taxes on unrealized losses "Investment Property: Transfer of investment property" Share-based remuneration: Clarification for the classification and measurement of share-based remuneration "Insurance contracts: Application of IFRS 9 "Financial Instruments" together with IFRS 4 "Insurance Contracts" Published by IASB Mandatory application for financial years from Adopted by the EU Effects on the P&I Group / No No major changes No Expanding notes No No major changes No None No None No None IFRS 9 Financial Instruments Yes New provisions for the reduction of impairment, extension of the notes IFRS 10 und IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture postponed indefinitely No None IFRS 15 Revenue from Contracts with Customers Yes See explanatory notes following this table IFRS 15 Clarification on IFRS No See explanatory notes following this table IFRS 16 Leasing No See explanatory notes following this table IFRIC 22 Foreign currency transactions and payments paid in advance No Conversion of foreign currency prepayments into the functional currency with the cash payment on the day of payment IFRS 9 Financial Instruments IFRS 9 comprehensively governs the recognition of financial instruments and amends the accounting principles for the classification and measurement of financial assets, for the impairment of financial assets and for hedge accounting. The revised classification requirements for financial assets are now based on the characteristics of the business model and the structure of cash flows. There are fundamentally new requirements for recognising impairment and risk provisions, which result from the expected loss model. Similarly, the requirements for hedge accounting have been revised so that operating risk management can be better reflected. IFRS 15 - Revenue from Contracts with Customers IFRS 15 revises the accounting principles for the recognition of revenue. Material amendments, especially with regard to multi-component agreements, are not expected. Application of the (modified) retrospective method is planned. IFRS 16 - Leases IFRS 16 fundamentally changes the requirements for the recognition of leases with the aim that all leases are accounted for. Consequently, leases will no longer be classified as finance or operating leases. Instead, the lessee has to recognise a right to use the leased asset and a lease liability in the statement of financial position (there are exceptions for short-term and low-value leases). During the lease term, the right-of-use asset is amortised on a straight-line basis and the lease liability is carried forward according to the effective interest method and accounting for lease payments. The new accounting by lessees therefore tends to result in an increase in non-current assets and non-current liabilities. In the income statement, a positive effect is expected on the operating result and a negative effect on the financial result. There will also be much more extensive disclosures in the notes. Our preliminary estimates of the expected effects of IFRS standards to be applied in the future could be subject to change, as we have not yet completed our analysis and therefore not yet finally determined the effects on the P&I consolidated financial statements.

52 52 Basis for the preparation of the financial statements Pursuant to Article 4 of Regulation (EC) No. 1606/2002 of the European Parliament and of the Council of July 19, 2002, on the application of international accounting standards (OJ EC No. L 243 p. 1), the Company prepares its consolidated financial statements in accordance with International Financial Reporting Standards (IFRS). In preparing the consolidated financial statements, the Company also complies with the supplementary requirements of section 315a (1) of the German Commercial Code (HGB). All IFRSs (IFRSs, IASs, IFRICs, SICs) valid at the reporting date were applied as adopted in the European Union. The consolidated financial statements were prepared using the historical cost principle. The historical costs were generally based on the fair value of the consideration paid in exchange for the asset. Financial assets classified as available for sale, which were subsequently measured at fair value, are an exception. The internationally recognised function of expense method was applied in preparing the consolidated income statement. The consolidated financial statements were prepared in German and in euro. Unless otherwise indicated, all amounts are rounded to the nearest thousand euro (EUR thousand). All amounts are rounded in accordance with standard commercial practice, which may give rise to minor discrepancies when these amounts are aggregated. Consolidated group In addition to P&I Personal & Informatik AG, the consolidated financial statements prepared for the 2016/2017 financial year include seven foreign subsidiaries in which P&I AG either directly or indirectly holds a majority of the voting rights (hereafter referred to as the P&I Group or Group ). There were no changes in the consolidated group in the 2016/2017 financial year: A list of the subsidiaries included in the consolidated financial statements can be found in note 34. Principles of consolidation Subsidiaries are fully consolidated from the date of acquisition, i.e. the date on which the parent company obtains control. The parent company obtains control when it: can exercise power over the investee, is exposed to variable returns from its investment and can use its power to affect the amount of the returns.

53 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS APPENDIX TO THE CONSOLIDATED FINANCIAL STATEMENTS 53 The parent company reassesses whether it controls an investee or not if facts and circumstances indicate that there are changes to one or more of the above control criteria. Consolidation ends as soon as the parent company no longer exercises control. The total comprehensive income of a subsidiary is allocated to the owners and any non-controlling interests even if losses result in negative total comprehensive income. The subsidiaries financial statements, which serve as the basis for consolidation, are prepared for the same reporting period as the parent company s financial statements and using uniform accounting methods. All intra-group assets, liabilities, equity, income, expenses and cash flows in connection with transactions between Group companies are eliminated in full on consolidation. The acquisition of subsidiaries is accounted for using the purchase method. The costs of a company acquisition are calculated on the basis of the transferred consideration measured at fair value on the acquisition date, which is determined by the total of the fair values of the transferred assets, assumed liabilities and issued equity instruments at the date of exchange. Transaction costs incurred during the acquisition are expensed. The identifiable assets acquired and the liabilities assumed are measured at their fair values at the acquisition date. On initial recognition, goodwill is measured at cost, which is calculated as the amount by which the total consideration transferred and the non-controlling interest exceeds the identifiable assets acquired and liabilities assumed (full goodwill method). If this consideration is lower than the fair value of the net assets of the acquired subsidiary, the difference is recognised in the income statement. After initial recognition, the goodwill resulting from an acquisition is measured at cost less impairment and reported separately in the consolidated statement of financial position. For the purposes of impairment testing, goodwill is divided between all of the cash-generating units (or groups thereof) of the Group that are expected to benefit from the synergies of the combination. This applies irrespective of whether other assets or liabilities of the acquired company were allocated to these cash-generating units. These cash-generating units are tested for impairment annually. Impairment testing is also performed if events or circumstances indicate impairment. If the recoverable amount based on the value in use of the cash-generating unit (or group of cash-generating units) is less than the carrying amount of the cash-generating unit (or group of cash-generating units) to which the goodwill was

54 54 allocated, an impairment loss is recognised. Goodwill impairment losses may not be reversed in a subsequent period. The Group tests the capitalised goodwill for impairment annually as at March 31. If a cash-generating unit is sold, the attributable amount of goodwill is taken into account in calculating the gain on disposal. Significant accounting policies Currency translation The consolidated financial statements are prepared in euro, the Group s functional and presentation currency. Each company within the Group determines its own functional currency. The items included in the financial statements of each company are measured using this functional currency. Transactions in a foreign currency are initially translated at the spot exchange rate between the functional currency and the foreign currency on the day of the transaction. Foreign-currency monetary assets and liabilities are translated into the functional currency at the closing rate on the reporting date. All exchange differences are recognised in net profit or loss for the period. One exception is exchange differences arising from foreign currency borrowings used to hedge a net investment in a foreign operation. They are recognised directly in equity until the net investment is sold, and are only recognised in net profit or loss for the period on disposal. Taxes resulting from these exchange differences are also recognised in equity. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rate at the date when the fair value was determined. The functional currency of the subsidiaries in Switzerland is the Swiss franc, while the functional currency of the subsidiary in the USA is the US dollar. The assets and liabilities of these subsidiaries are translated into the Group s presentation currency at the closing rate at the reporting date. Income and expenses are translated at the average rate for the period. The exchange differences arising from currency translation are recognised directly in equity in other comprehensive income. As of March 31, 2017, the closing rate for Switzerland was CHF/EUR (previous year: CHF/EUR ), while the closing rate for the USA was USD/EUR (previous year: USD/EUR ). The average exchange rate for the 2016/2017 financial year was CHF/EUR (previous year: CHF/EUR ) for Switzerland and USD/EUR (previous year: USD/EUR ) for the USA. Revenue recognition The Company generates revenue from granting licences for software products, revenue from the use of the software (incl. maintenance) including the IT infrastructure by customers in the P&I data centre (software as a service revenue, SaaS), software maintenance services, other services, selling time management hardware and third-party products (merchandise) and hardware maintenance services. In multi-component agreements, the Company offers software maintenance, consultation, development, training and other services together with the software licence. In general, the Company agrees the compensation for individual revenue components separately, while the agreed fees regularly match the applicable market prices.

55 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS APPENDIX TO THE CONSOLIDATED FINANCIAL STATEMENTS 55 Revenue from the sale of licences and goods is recognised when the significant risks and opportunities associated with ownership of the goods and products sold have been transferred to the buyer and the income can be reliably determined. Sale of licences Revenue from the granting of licences is realised only when a contract with the customer has been signed, the software has been provided in accordance with the contract, a price is determinable and payment is sufficiently likely. Software as a Service (SaaS) Revenue from SaaS business is recognised on a pro rata basis as the service is rendered. Maintenance business Revenue from maintenance business is recognised on a pro rata basis as the service is rendered. Provision of services Revenue from service agreements invoiced on the basis of hours worked is recognised in line with the services performed by P&I companies. Revenue and expenses from service agreements for which a fixed price has been agreed are recognised in accordance with IAS 18 (in conjunction with IAS 11 where applicable) using the percentage of completion method (PoCM) if the amount of revenue can be measured reliably, it is sufficiently probable that the economic benefits associated with the transaction will flow to the Company, and the costs incurred for the transaction and the expected costs to completion can be measured reliably. The degree of completion is calculated on the basis of the hours worked up until the reporting date as a percentage of the estimated working hours required for the project. If the result of a fixed-price project cannot be estimated reliably, revenue is only recognised in the amount of reimbursable expenses (zero profit method, ZPM ). Revenue from customer service agreements is recognised on a pro rata basis as the service is rendered. Intangible assets Intangible assets acquired in a business combination software and customer base Intangible assets acquired in a business combination are recognised separately from goodwill and measured at fair value (cost) on the acquisition date. In subsequent periods, they are measured in the same way as individually acquired intangible assets, i.e. at cost less accumulated amortisation and impairment. Software acquired in a business combination is normally amortised on a straight-line basis over a period of five years.

56 56 At P&I, a useful life of ten years is applied to the capitalised customer bases. They are amortised on a straight-line basis. The carrying amounts of the software and the customer bases are tested for impairment whenever there are indications that the carrying amount of an asset may exceed the amount recoverable through its use or sale. Amortisation and impairment losses on customer bases are recognised in the income statement in the separate item Amortisation and impairment of customer base. Separately acquired intangible assets Intangible assets with determinable useful lives not acquired as part of a business combination are amortised over their economic lives and tested for impairment if there are indications that the intangible asset may be impaired. In the case of intangible assets with determinable useful lives, the useful life and the amortisation method are reviewed at least at the end of each financial year. Possible changes to the useful life and amortisation method are treated as changes in estimates. Purchased software licences are normally amortised on a straight-line basis over three to five years. All of the P&I Group s separately acquired intangible assets have determinable useful lives. Internally generated intangible assets research and development costs Research costs are expensed in the period in which they are incurred. Development costs for a single project are only capitalised as intangible assets if P&I can demonstrate the following: The technical feasibility of completing the intangible asset so that it can be used internally or sold; The intention to complete the intangible asset and the ability to use or sell it; How the asset will generate future economic benefits; The availability of resources for the purpose of completing the asset; The ability to measure reliably the expenditure attributable to the intangible asset during its development. An intangible asset exists from the day on which all these conditions are met for the first time. Expenses incurred prior to this date are recognised in profit or loss. In subsequent periods, the assets are measured at cost less accumulated amortisation and impairment. The development costs at P&I do not meet the requirements for capitalisation as an intangible asset in accordance with IAS The P&I LOGA products are subject to permanent improvement in the form of P&I s development projects. Capitalisation would only be permitted if the improvements or changes were so extensive that they would give rise to a new product. Furthermore, the projects are distinguished by cyclical or iterative phases. The gathering (research) and implementation (development) of ideas are not sequential, meaning that the research and development phases cannot be separated. Accordingly, the conditions for the capitalisation of internally generated intangible assets are not met in full until just before the products are ready for market. Development expenses incurred after fulfilment of the capitalisation criteria are not significant and are expensed on the date they are incurred.

57 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS APPENDIX TO THE CONSOLIDATED FINANCIAL STATEMENTS 57 Derecognition of intangible assets An intangible asset is derecognised when it is disposed of or when no further economic benefit is expected from its use or sale. Gains or losses on derecognition are determined as the difference between the net proceeds of the sale and the carrying amount of the asset. They are recognised in income in the period in which the item is derecognised. Property, plant and equipment Operating and office equipment is carried at cost less accumulated depreciation and impairment. It is depreciated over the estimated expected economic life using the straight-line method in line with the expected pattern of use: IT systems Vehicles Other operating and office equipment Leasehold improvements 2 7 years 5 6 years 4 16 years 4 years, or not exceeding the remaining term of the lease at the date installed When property, plant and equipment is sold or scrapped, the cost of the respective item and the accumulated depreciation are derecognised. Any gain or loss on disposal is reported in the consolidated income statement. The residual values, useful lives and depreciation methods are reviewed at the end of each financial year and prospectively adjusted as necessary. Inventories Costs include direct costs and reasonable overheads. Inventories are measured at the lower of cost or net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Impairment of non-financial assets other than goodwill On each reporting date, the Group assesses whether there are indications that an asset may be impaired. If such indications exist or an annual impairment test is required for an asset, the Group estimates the recoverable amount of the respective asset. An asset s recoverable amount is the higher of an asset or cash-generating unit s fair value less costs to sell and its value in use. When calculating the value in use, the estimated future cash flows are discounted to their present value at a pre-tax rate that reflects current market expectations of the time value of money and the specific risks of the asset.

58 58 For assets that generate no cash flows that are largely independent of those of other assets or groups of other assets, the recoverable amount for the cash-generating unit to which the asset is allocated is determined. If the carrying amount of an asset exceeds the recoverable amount, it is reduced to the recoverable amount through profit or loss. For assessments of impairment, P&I uses detailed budget and forecast calculations, which are created separately for each of the cash-generating units. Financial assets Financial assets are classified as follows: held-to-maturity investments, financial assets at fair value through profit or loss, available-for-sale financial assets, and loans and receivables. When a financial asset is recognised for the first time, it is carried at the fair value of the consideration given, which is the same as the acquisition cost. The Group s financial assets include cash and short-term cash investments, trade receivables and other financial receivables. A financial asset is derecognised when the Group no longer exercises control over its contractual rights. This normally occurs on sale or when all cash flows from a financial instrument are transferred to a third party outside the Group. All arm s-length purchases and disposals of non-derivative financial assets are recognised on the settlement date, i.e. the date on which the Company acquires or transfers ownership of the asset. Assets at fair value through profit or loss Financial assets are measured at fair value through profit or loss if the financial asset concerned is either held for trading or classified as measured at fair value through profit or loss on initial recognition. Financial assets primarily acquired to generate profit from short-term price or rate fluctuations are classified as financial assets held for trading. Assets measured at fair value through profit or loss are reported under current assets. They are subsequently measured at fair value without deduction of any transaction costs incurred and applying their quoted market price at the reporting date. Changes in fair value are recognised in the financial result. The Group did not own any financial assets at fair value through profit or loss on the reporting date or in the previous year. Held-to-maturity investments Financial assets with fixed or determinable payments and fixed terms that the Company intends and is able to hold to maturity, excluding loans and receivables originated by the Company, are classified as financial investments held to maturity. They are recognised at cost under non-current assets unless they mature less than twelve months after the reporting date. They are subsequently measured at amortised cost using the effective interest method less impairment. No financial instruments fell under this category at P&I in the 2016/2017 financial year or in the previous year.

59 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS APPENDIX TO THE CONSOLIDATED FINANCIAL STATEMENTS 59 Available-for-sale financial assets Available-for-sale financial assets include debt and equity securities of other companies. Debt securities are allocated to this category if they are intended to be held for an indefinite period and can be sold to meet short-term liquidity requirements. All other financial assets not assigned to another category are reported in this category. Subsequent measurement is performed in the same way as initial measurement, i.e. at fair value. Gains and losses resulting from the measurement of an available-for-sale financial asset at fair value are recognised directly in other comprehensive income until the financial asset is sold, withdrawn or otherwise disposed of or until sustained impairment is detected for the financial asset, with the result that the cumulative gain or loss previously recognised in equity is included in the net profit or loss for the period at this time. No financial instruments fell under this category at P&I in the 2016/2017 financial year or in the previous year. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or definable payments that are not listed on an active market. After initial recognition at fair value, loans and receivables are measured at amortised cost using the effective interest method less impairment. If the loans and receivables are derecognised or impaired, gains and losses are recognised in net profit or loss for the period. Fixed-term deposits with a term of longer than three months at P&I also fall under this category. Trade receivables and other receivables are carried at cost taking into account appropriate valuation allowances. Receivables are derecognised as soon as they become uncollectible. Longer remaining maturities (more than one year) are accounted for using discounts at matching maturities. Impairment of financial assets The impairment of financial assets is determined on every reporting date by testing whether a financial asset or a group of financial assets other than financial assets measured at fair value through profit or loss is impaired. Assets carried at amortised cost If there are objective indications that an impairment loss on assets carried at amortised cost has occurred, the amount of the impairment loss is measured as the difference between the asset s carrying amount and the present value of the estimated future cash flows (excluding expected future credit losses that have not yet been incurred) discounted at the financial asset s original effective interest rate, i.e. the effective interest rate computed on initial recognition. The carrying amount of the asset is reduced using an allowance account. The impairment loss is recognised in profit or loss. If the impairment loss decreases in subsequent reporting periods and this decrease can be attributed objectively to a circumstance arising after the impairment was recognised, the impairment loss is reversed. However, the new carrying amount of the asset may not exceed the amortised cost on the date of the reversal. The reversal of the impairment loss is recognised in profit or loss. In the case of trade receivables, if there are objective indications that not all amounts due according to the originally

60 60 agreed invoice terms will be received (e.g. probable insolvency or a debtor in significant financial difficulties), the trade receivables are impaired using an allowance account. Both individual receivables and portfolios of receivables can be tested for impairment. Receivables are derecognised if they are classified as uncollectible. Available-for-sale financial assets If an available-for-sale financial asset is impaired, an amount equal to the difference between the cost (less any repayments, amortisation and valuation allowances previously recognised in profit or loss) and the current fair value is reclassified from equity to the income statement. Impairment reversals for equity instruments classified as available for sale are not reported in the income statement. An increase in fair value is reported in other comprehensive income. Impairment reversals for debt instruments classified as available for sale are recognised through profit or loss if an objective analysis shows that the increase in the fair value of the instrument is the result of an event that occurred after the recognition of the impairment through profit or loss. Financial liabilities Financial liabilities are categorised either as financial liabilities measured at fair value through profit or loss or as other financial liabilities. On initial recognition, they are measured at fair value. Trade payables are recognised at fair value. For liabilities due within a year, the fair value is the settlement amount. Other financial liabilities, including borrowings, are initially recognised at fair value less transaction costs. They are subsequently measured at amortised cost according to the effective interest method, with interest expense recognised on the basis of the effective interest rate. If liabilities are derecognised or written down, gains and losses are recognised through profit or loss. Financial liabilities in the P&I Group include trade payables and liabilities from profit transfer. Financial liabilities are derecognised if the Group s obligations are settled or cancelled or if they expire. Cash and cash equivalents Cash and short-term cash investments in the statement of financial position include cash in hand, cheques, bank balances and fixed-term deposits with a term of less than three months from the date of acquisition. Gross amount due from customers for contract work The item Gross amount due from customers for contract work includes as yet uninvoiced work on projects with significant software modification and fixed-price projects, which are recognised using the percentage of completion method if the result and the degree of completion can be reliably estimated or the zero profit method if not. The percentage of completion is calculated as the proportion of accumulated costs incurred up until the reporting date to the estimated total costs. If advance payments have been received for these projects, they are offset against the amount of as yet uninvoiced work. If the amount of advance payments received exceeds the as yet uninvoiced work, the balance is reported on the liabilities side as the gross amount due to customers for contract work.

61 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS APPENDIX TO THE CONSOLIDATED FINANCIAL STATEMENTS 61 Treasury shares If the Group acquires its own shares, they are carried at cost and deducted from equity. The purchase, sale or withdrawal of treasury shares is recognised in equity. Provisions A provision is recognised when the Group has a current (legal or constructive) obligation due to a past event, the outflow of resources with economic benefit to meet the obligation is likely, and a reliable estimate of the amount of the obligation is possible. If the Group expects at least partial reimbursement for a provision carried as a liability (e.g. in the case of an insurance contract), the reimbursement is recognised as a separate asset only if the reimbursement is as good as guaranteed. The expense for recognising the provision is reported in the income statement. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability, where applicable. In the event of discounting, the increase in provisions due to the passage of time is recognised as interest expense. Partial retirement agreements Partial retirement agreements are recognised as other long-term benefits to employees at the present value of the obligation as of the reporting date. Securities are pledged to the beneficiaries to protect partial retirement credits earned from insolvency. The fair value of these securities is netted against the corresponding obligation. Leases The Group only acts as a lessee in the context of operating leases. Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease payments for operating leases are expensed in the income statement on a straight-line basis over the term of the lease. Whether an agreement contains a lease is determined on the basis of the economic substance of the agreement on the date it was concluded. This requires an assessment as to whether the fulfilment of the contractual agreement depends on the use of a certain asset or assets and whether the agreement grants a right to the use of the asset. Income taxes Income taxes include the taxes owed by P&I AG and the consolidated subsidiaries, as well as deferred taxes. In the 2011/2012 financial year, a tax sharing agreement was concluded with effect from the 2011/2012 financial year on the basis of the existing corporation and commercial tax unity with P&I Zwischenholding GmbH. The tax unity and tax sharing agreement remained unchanged until March 31, Current and deferred taxes were calculated in accordance with the provisions of IAS 12. With effect from April 1, 2014, the corporation and commercial tax unity was expanded by Edge Holding GmbH, which was merged into P&I Holding GmbH with retroactive effect from April 1, 2016, creating a new multi-level tax

62 62 unity. The tax sharing agreement from that time was not continued. As a result, neither income taxes nor deferred taxes are attributable to P&I AG from its joint operations starting from the 2014/2015 financial year, meaning that it does not report any such items. The deferred taxes recognised in previous years were released in the 2014/2015 financial year. At Group companies outside the tax unity, current tax expenses are calculated on the basis of taxable income. This is based on the tax rates and tax laws valid as of the end of the reporting period in the countries in which the Group operates. Current tax and deferred tax are charged or credited directly to equity if the tax relates to items that are credited or charged directly to equity in the same period or a different period. Deferred taxes are calculated using the temporary difference approach. Deferred income taxes reflect the net tax expense/income from temporary differences between the carrying amount of an asset or liability in the IFRS statement of financial position and its tax base. Deferred tax liabilities are recognised for all taxable temporary differences. A deferred tax asset is recognised for all deductible temporary differences to the extent that it is probable that taxable income will be available against which the temporary difference can be utilised. No deferred taxes are recognised for temporary differences if they relate to the initial recognition of goodwill or the initial recognition of an asset or liability from a transaction other than a business combination that affects neither accounting profit nor taxable profit at the time of the transaction. No deferred tax liabilities arise if undistributed profits of foreign holdings are to remain invested in this company for an indefinite period. The Company reassesses unrecognised deferred tax assets and the carrying amount of deferred tax assets at each reporting date. The Company recognises a previously unrecognised deferred tax asset to the extent that it has become probable that future taxable income will allow the deferred tax asset to be recovered. Conversely, it reduces the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable income will be available to allow the benefit of part or all of that deferred tax asset to be utilised. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the differences reverse because the asset is realised or the liability is settled. Profit transfer There is a control and profit transfer agreement between P&I AG and P&I Zwischenholding GmbH as the controlling company. This agreement allows P&I Zwischenholding GmbH to issue instructions. P&I AG s accounting profit after taxes must be transferred to P&I Zwischenholding GmbH. In turn, P&I Zwischenholding GmbH is obliged to compensate any possible loss.

63 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS APPENDIX TO THE CONSOLIDATED FINANCIAL STATEMENTS 63 In the consolidated financial statements, the profit transfer is not recognised as an expense in the income statement as in P&I AG s single-entity financial statements prepared under German commercial law, but instead is reported as an allocation of profit or loss (see consolidated statement of changes in equity). The Company s share-based payment transactions As at March 31, 2017, and in the previous year, P&I no longer recognised any equity-settled share-based payments to employees. Statement of cash flows The statement of cash flows shows how the P&I Group s cash position has changed during the course of the financial year in terms of cash inflows and outflows. When subsidiaries are consolidated for the first time, only the actual cash flows are reported in the statement of cash flows. The cash inflow/outflow from the purchase or sale of companies, i.e. the purchase price less/plus the funds acquired/disposed of with the company, is recognised as net cash from investing activities. In accordance with IAS 7, a distinction is made between cash flows from operating activities, from investments and from financing MANAGEMENT S USE OF JUDGEMENT AND KEY SOURCES OF ESTIMATION UNCERTAINTY The preparation of the consolidated financial statements in accordance with IFRS sometimes requires the Management Board to make estimates or assumptions that can affect the recognition of assets and financial liabilities as of the reporting date and income and expenses for the reporting period. The actual amounts or developments may deviate from these estimates and assumptions. Among other things, significant estimates are required for judgements for estimates of the useful lives of fixed assets (notes 8 and 9) and the assessment of the recoverability of trade receivables (note 13), the gross amount due from customers for contract work (note 14) and deferred tax assets (note 11). Assumptions, risks and uncertainties associated with the percentage of completion method for revenue recognition affect the level of revenue reported and their distribution over time (note 3). Numerous internal and external factors can influence the estimates of services yet to be rendered. Accordingly, the estimates and underlying assumptions are reviewed regularly. Changes are accounted for in the affected periods. At each reporting date, the Group determines whether there are indications of impairment of non-financial assets. Goodwill is tested for impairment at least once a year as well as when indications of impairment arise. Other non-financial assets are tested for impairment if there are indications that the carrying amount may be greater than the recoverable amount. For further details, please refer to the relevant information in note 8.

64 64 3. REVENUE Revenue broken down by activity developed as follows: EUR thousand 2016/ /2016 Maintenance 48,741 45,753 Software as a Service (SaaS) 12,293 6,429 Service agreements/application services providing (ASP ) 14,781 12,143 Recurring services 75,815 64,325 Licences 26,968 29,393 Consulting (non-recurring business) 19,529 21,226 Other 2,796 2,517 Total 125, ,461 Consulting total 34,310 33,369 The P&I Group reports recurring services in a separate revenue category, which pools maintenance income, software as a service (SaaS) income and recurring services under service agreements. The services result from open-ended contracts with customers or customer contracts with terms of up to five years. Revenue from the percentage of completion method amounted to EUR 1,519 thousand in the Consulting category (previous year: EUR 2,207 thousand) and EUR 646 thousand in the Licences category (previous year: EUR 5,262 thousand). The accumulated costs of the current financial year from construction contracts not yet completed as of the reporting date amounted to EUR 1,950 thousand (previous year: EUR 1,731 thousand), while the accumulated recognised profits amounted to EUR 215 thousand (previous year: EUR 5,457 thousand). There was a changed estimate in one major project in the financial year, which resulted in a negative revenue and earnings effect of EUR 91 thousand. In addition, EUR 352 thousand was expensed for expected losses of future periods. No customer accounted for more than 10 % of the Group s revenue during the 2015/2016 and 2016/2017 financial years.

65 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS APPENDIX TO THE CONSOLIDATED FINANCIAL STATEMENTS INCOME STATEMENT DISCLOSURES Cost of sales The costs of products or services provided in order to generate revenue include expenses for the Consulting category (primarily for personnel, services purchased from partners and materials) and the cost of goods purchased in the time management hardware category, merchandise and other costs of revenue. EUR thousand 2016/ /2016 Costs of consulting and SaaS services rendered 32,073 32,610 Cost of goods purchased for time-management hardware, merchandise and other costs of sales 2,944 3,233 Total 35,017 35,843 RESEARCH AND DEVELOPMENT COSTS Significant expenses are incurred regularly for research and development projects carried out in the expectation of future revenue. Research and development expenses are recognised through profit or loss as the work is performed. Expenses of EUR 2,706 thousand (previous year: EUR 2,386 thousand) were incurred for the maintenance and further development of the 13 international country versions of P&I LOGA/P&I LOGA3 in the financial year. In addition, expenses for write-downs of property rights amounted to EUR 326 thousand (previous year: EUR 556 thousand). SELLING COSTS Selling costs include expenses for staff and partner commissions, advertising expenses and expenses for trade fairs and conferences. For the 2016/2017 financial year, expenses for advertising, trade fairs and conferences in the Group amounted to EUR 770 thousand (previous year: EUR 784 thousand). ADMINISTRATIVE COSTS In addition to the costs for administrative staff, administrative costs include a portion of the personnel costs for the Management Board. Expenses for legal and tax consulting and auditing are also classified as administrative costs. AMORTISATION AND IMPAIRMENT OF CUSTOMER BASE AND GOODWILL The amortisation of the customer base amounted to EUR 1,454 thousand (previous year: EUR 1,479 thousand). At the P&I Group, the impairment tests conducted at the end of the financial year did not result in impairment of the customer base (previous year: EUR 0 thousand) or goodwill (previous year: EUR 0 thousand).

66 66 OTHER OPERATING INCOME/EXPENSES Other operating income amounted to EUR 331 thousand (previous year: EUR 2,584 thousand). In the previous year, this primarily comprised income from the sale of the rights of use to the Loga Vplus software and the Loga Vplus customer base in Austria as well as the P&I Zeitmanagement business segment. The other operating expenses of EUR 1,260 thousand (previous year: EUR 989 thousand) include specific valuation allowances on receivables, ongoing expenses for the Supervisory Board and non-operating non-recurring expenses. 5. ADDITIONAL NOTES ON THE INCOME STATEMENT ACCORDING TO THE FUNCTION OF EXPENSE METHOD COST OF MATERIALS The cost of materials amounted to EUR 5,493 thousand in the 2016/2017 financial year (previous year: EUR 7,314 thousand). This included the cost of purchased services of EUR 2,549 thousand (previous year: EUR 4,081 thousand) and material requirements for portal software solutions and time management hardware. PERSONNEL EXPENSES At EUR 46,025 thousand, staff costs were down slightly on the previous year (EUR 46,452 thousand). The number of employees including the Management Board measured as an average for the year as a whole was 399 (previous year: 399). In Germany, an average of 252 employees (including the Management Board) were employed over the year as a whole. A total of 143 people were employed in the rest of Europe, with the development centre in Slovakia most strongly represented with 50 employees. Four employees in total are based in Silicon Valley in the USA. The Consulting division had the most employees at 174 (44 %). 139 members of staff (35 %) were employed in the personnel-intensive Research and Development division. Sales and Marketing had 42 employees, while 44 employees supported the P&I Group in the administrative sector. The amount expensed for defined contribution plans in the 2016/2017 financial year was EUR 2,041 thousand (previous year: EUR 2,112 thousand), of which EUR 1,813 thousand (previous year: EUR 1,864 thousand) related to state pension insurance funds. DEPRECIATION, AMORTISATION AND IMPAIRMENT The amortisation of intangible assets and depreciation of property, plant and equipment amounted to EUR 3,301 thousand (previous year: EUR 3,094 thousand). On the basis of the function of expense classification, depreciation and amortisation of equipment and other intangible assets of EUR 1,847 thousand (previous year: EUR 1,615 thousand) are broken down on the face of the income statement into the cost of sales, research and development costs, selling costs and administrative costs.

67 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS APPENDIX TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL RESULT FINANCIAL INCOME This item is comprised as follows: EUR thousand 2016/ /2016 Interest income from loans granted 3,500 1,694 Commissions for guarantees 3, Gains from exchange rate effects Income from reversal of financial guarantee 0 2,300 Other Financial income 7,000 4,663 FINANCE EXPENSES This item is comprised as follows: EUR thousand 2016/ /2016 Losses from exchange rate effects Other Financial Expenses TAX EXPENSES Taxes both paid and owed on income and deferred taxes are reported as income taxes. EUR thousand 2016/ /2016 Deferred tax income/expense Outside Germany EUR thousand 2016/ /2016 Current tax expenses Germany other Outside Germany 1,815 1,525 1,812 1,496 1,540 1,183

68 68 German tax expenses from the tax unity were no longer charged to the tax group subsidiary P&I AG in the 2014/2015 financial year. This was due to changes in the income tax unity and the termination of the tax sharing agreement at the start of the 2014/2015 financial year. As a result, P&I AG has since no longer recognised any taxes or deferred taxes, and the deferred taxes previously recognised were released through profit and loss in the 2014/2015 financial year. P&I AG s combined tax rate of % (previous year: %) includes the average trade income tax assessment rate of 440 %, the corporation tax rate of 15 % and the solidarity surcharge of 5.5 %. The tax rate used for Austria was 25 % (previous year: 25 %), for the Netherlands 20 % (previous year: 20 %), for Switzerland 20 % (previous year: 20 %), for the USA 15 % (previous year: 15 %), and for Slovakia 19 % (previous year: 19 %). No other tax rates were applied. The following table contains a reconciliation between the tax expense calculated by applying the German tax rates and the tax expense reported in the annual financial statements: EUR thousand 2016/ /2016 Calculated Tax 21,188 15,816 Income Tax Effects of the PLTA -17,692-12,200 Effects of foreign tax rates -1,956-2,433 Income taxes 1,540 1, GOODWILL, CUSTOMER BASES AND OTHER INTANGIBLE ASSETS GOODWILL The goodwill recognised as of March 31, 2017, is the result of the acquisition of Soreco HR AG, Thalwil, Switzerland (EUR 5,928 thousand), the acquisition of MIRUS Software AG, Davos, Switzerland (EUR 3,234 thousand), and the acquisition of KSL Gesellschaft für kommunale Informationssysteme mbh, Zweibrücken (EUR 945 thousand). The goodwill includes the value of the acquisition that exceeds the customer base and software product acquired, which represents the market presence and market reputation of the company and the expertise of its employees. For the purposes of impairment testing based on the value in use, goodwill was allocated to the cash-generating units Germany and Switzerland, as the synergies are enjoyed by the P&I Group at country level. The cash flows include the operating pre-tax cash flows based on the segment planning compiled by the Management Board. This planning is based on the assumption that the economy as a whole, the software industry and P&I AG s

69 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS APPENDIX TO THE CONSOLIDATED FINANCIAL STATEMENTS 69 existing and new customer business will develop in a certain way. This is based on past experience as well as external sources of information. The planning covers a period of five years. Cash flows beyond this five-year period are extrapolated without a growth rate. For the purposes of testing the goodwill added by the acquisition of both MIRUS Software AG and Soreco HR AG, we defined the Swiss business segment as the relevant cash-generating unit. The P&I Schweiz business segment includes P&I Personal & Informatik AG, Thalwil, MIRUS Software AG and Soreco HR AG, as these companies operate in the same currency area and market segment. The cash flows are discounted at a pre-tax discount rate of 9.48 % (previous year: 9.05 %) for Germany and 8.15 % (previous year: 7.78 %) for Switzerland. The Swiss interest rate was also calculated using the interest rate for the euro zone for reasons of simplification. To calculate the interest rate, it is assumed that the Company is debt-free. The discount rates reflect the management s estimate of the specific risks allocable to the cash-generating units. The discount rate is derived on the basis of the following assumptions: EUR thousand March 31, 2017 March 31, 2016 Risk-free interest rate (EUR) 1.25 % 1.00 % Market risk premium 6.50 % 6.50 % Beta factor *) 0,8 0,8 Expected tax rate (Germany) % % Expected tax rate (Switzerland) 20 % 20 % *) The beta factor is an average beta factor from three companies in the software industry. At the same time as the impairment test as of the reporting date, a sensitivity analysis was carried out for the goodwill described above. This showed that neither an increase in the discount interest rate of 100 or 200 basis points nor a reduction in the expected cash flows of 10 % would result in the need to recognise impairment losses. As of March 31, 2017, the carrying amount of the goodwill in the P&I Group had increased to EUR 10,107 thousand. The increase was due exclusively to exchange rate effects. The impairment tests conducted as of March 31, 2017, served to confirm the recoverability of the existing goodwill from the acquisition of MIRUS Software AG, Soreco HR AG and KSL Gesellschaft für kommunale Informationssysteme mbh.

70 70 CUSTOMER BASES The customer bases are broken down as follows: EUR thousand March 31, 2017 March 31, 2016 Öffentlicher Dienst RevierS KSL Germany total JET PABIS NG E-PM Austria total Soreco HR AG 5,094 5,595 MIRUS Software AG 2,274 2,678 Switzerland total 7,368 8,273 Customer base 7,770 9,054 The customer bases are amortised over a period of ten years. In the year under review, amortisation amounted to EUR 1,454 thousand (previous year: EUR 1,479 thousand). As in the previous year, the impairment tests conducted on March 31, 2017, on the basis of the value-in-use concept revealed no need to recognise impairment losses. OTHER INTANGIBLE ASSETS Other intangible assets primarily include software licences. The decrease in other intangible assets is largely due to amortisation of EUR 614 thousand (previous year: EUR 728 thousand). Amortisation declined because the software acquired in the acquisition of Soreco HR AG was amortised over a useful life of one year, which then came to an end. 9. PROPERTY, PLANT AND EQUIPMENT The development of fixed assets is described at the end of these notes. In the 2016/2017 financial year, depreciation expense amounted to EUR 1,233 thousand (previous year: EUR 887 thousand) and related exclusively to scheduled depreciation. Property, plant and equipment includes advance payments of EUR 552 thousand (previous year: EUR 0 thousand).

71 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS APPENDIX TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL ASSETS A loan agreement was concluded between P&I AG and P&I Zwischenholding GmbH in the 2011/2012 financial year. The loan is allocated to non-current financial assets on account of its term and bears a fixed interest rate. As of March 31, 2016, the loan plus accrued interest amounted to EUR 72,865 thousand. In the 2016/2017 financial year, this loan was set off against the liability from the profit transfer agreement (EUR 38,999 thousand). Due to the new loan tranches of EUR 39,951 thousand granted in the 2016/2017 financial year, the loan amounted to EUR 77,317 thousand (previous year: EUR 72,865 thousand) as of March 31, The interest accrued up until March 31, 2017, amounted to EUR 9,176 thousand (previous year: EUR 5,676 thousand) and is reported together with the loan. The loan is to be repaid including accrued interest by no later than December 31, DEFERRED TAXES Deferred taxes are calculated according to the liability method, taking into account temporary differences. The tax rate used for Germany was % (previous year: %), for Austria 25 % (previous year: 25 %), for Switzerland 20 % (previous year: 20 %), for the Netherlands 20.0 % (previous year: 20 %), for the USA 15 % (previous year: 15 %), and for Slovakia 19 % (previous year: 19 %). No other tax rates were applied. Deferred tax assets and liabilities developed as follows: 2016/2017 EUR thousand Opening balance Apr. 1, 2016 Disposals/ acquisitions Recognised in the income statement Recognised in other comprehensive income Reclassification of amounts in income statement Closing balance Temporary differences Liabilities Other Deferred tax assets Customer base 1, ,474 Software Deferred tax liabilities 1, ,474 Deferred tax income/expense 2, ,765 Deferred tax (net) -1,701-1,429

72 /2016 EUR thousand Opening balance Apr. 1, 2015 Disposals/ acquisitions Recognised in the income statement Recognised in other comprehensive income Reclassification of amounts in income statement Closing balance Temporary differences Goodwill Liabilities Other Deferred tax assets Customer base 660 1, ,654 Software Deferred tax liabilities 781 1, ,719 Deferred tax income/expense 2, ,493 Deferred tax (net) ,701 There was a tax sharing agreement between P&I AG and P&I Zwischenholding GmbH for the period from April 1, 2011, to March 31, 2014, which was terminated as of April 1, The deferred taxes recognised in previous years were released in the 2014/2015 financial year. In addition, there are temporary differences from subsidiaries amounting to EUR 1,131 thousand (previous year: EUR 957 thousand) for which no deferred tax liabilities were recognised. 12. INVENTORIES Inventories primarily include hardware and spare parts from the time management segment. 13. TRADE RECEIVABLES Trade receivables are due exclusively from third parties and are comprised as follows: EUR thousand March 31, 2017 March 31, 2016 Trade receivables 15,919 16,868 Valuation allowances Trade receivables 15,271 16,248

73 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS APPENDIX TO THE CONSOLIDATED FINANCIAL STATEMENTS 73 Trade receivables do not bear interest. The receivables have an average credit period of days or are subject to individual contractual arrangements. As of March 31, 2017, trade receivables were impaired in the amount of EUR 648 thousand (previous year: EUR 620 thousand). The impairments, in the form of specific valuation allowances, were based on various issues, such as default, the threat of inability to pay, overindebtedness, the initiation of insolvency proceedings and the accompanying expected default risks. In the context of impairment on a portfolio basis, financial assets for which it may be necessary to recognise impairment losses are grouped on the basis of similar default risks and collectively tested for impairment, with impairment losses recognised as necessary. For this purpose, past experiences of default are utilised when calculating future cash inflows. The allowance account developed as follows: EUR thousand Subject to a specific allowance for impairment losses Impairment on a portfolio basis Total As at March 31, Addition Utilisation Reversal As at March 31, Addition Utilisation Reversal As at March 31, As of March 31, 2017, the age structure of the trade receivables was as follows: EUR thousand March 31, 2017 March 31, 2016 Overdue, but not impaired over 91 days 1,109 1, to 90 days 649 1, to 60 days 563 1,109 1 to 30 days 1,179 3,579 Neither overdue nor impaired 12,419 8,998 Total 15,919 16,868

74 GROSS AMOUNT DUE FROM CUSTOMERS FOR CONTRACT WORK EUR thousand March 31, 2017 March 31, 2016 Receivables from application of PoCM 24,611 23,455 Advance payments received -19,782-19,118 Gross amount due from customers for contract work 4,829 4,337 Receivables from the application of the percentage of completion method are receivables from contracts where the realisation of revenue depends on the work performed by the P&I companies. In the year under review, revenue from PoCM amounted to EUR 1,153 thousand (previous year: EUR 6,798 thousand). 15. CURRENT FINANCIAL ASSETS EUR thousand March 31, 2017 March 31, 2016 Fixed-term deposits with a term of over three months 10,000 0 Current financial assets 10,000 0 The current financial assets relate to a time deposit with a term of six months from the deposit date. 16. OTHER CURRENT ASSETS Other current assets comprise: EUR thousand March 31, 2017 March 31, 2016 Deferred income 1,901 2,056 Rental deposit Other Other current assets 2,073 2,429

75 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS APPENDIX TO THE CONSOLIDATED FINANCIAL STATEMENTS CASH AND CASH EQUIVALENTS EUR thousand March 31, 2017 March 31, 2016 Cash in hand and bank balances 59,159 51,633 Cash and cash equivalents 59,159 51,633 As of March 31, 2017, the fair value of cash and cash equivalents was EUR 59,159 thousand (previous year: EUR 51,633 thousand). The cash equivalents as of March 31, 2016, included a time deposit of EUR 10,000 thousand with a onemonth notice period. 18. ISSUED CAPITAL AND RESERVES As of March 31, 2017, P&I AG s issued capital was EUR 7,531 thousand (previous year: EUR 7,700 thousand) and was divided into 7,531,127 no-par-value bearer shares. Each share grants one vote and has a notional interest in the issued capital of EUR The Annual General Meeting on January 26, 2017, resolved to reduce the share capital by withdrawing 168,873 no-par-value shares in a simplified withdrawal procedure according to section 237 (3) no. 2, (4) and (5) of the German Stock Corporation Act (AktG). The separate treasury shares item was set off against issued capital (EUR 169 thousand) and retained earnings (EUR 1,755 thousand) outside profit or loss at cost (EUR 1,924 thousand). As in the previous year, no subscription rights were issued in the year under review and none are in circulation. The Annual General Meeting on September 3, 2013, extended the authorisation for the Management Board, with the approval of the Supervisory Board, to increase the share capital of the Company by up to EUR 3,850 thousand by issuing new shares in exchange for cash and/or non-cash contributions on one or more occasions until September 2, 2018 (Authorised Capital 2013). Shareholders must be granted pre-emptive subscription rights. However, the Management Board is authorised, with the approval of the Supervisory Board, to disapply shareholders pre-emptive subscription rights insofar as this is required in order to grant subscription rights for new shares to the holders of exchange or subscription rights issued by the Company or to be issued by the Company in future to the relevant extent. In the case of cash capital increases, the Management Board is also authorised, with the approval of the Supervisory Board, to disapply shareholders statutory subscription rights if the pro rata amount attributable to the new shares does not exceed 10 % of the share capital either at the effective date or - if this value is lower - at the date this authorisation is exercised and the issue price of the new shares is not significantly lower than the quoted price for existing listed shares with the same conditions at the date on which the issue price is finalised. The limit of 10 % of the share capital includes shares that were sold or are to be issued during the term of this authorisation until the date it is exercised due to different authorisations in direct or mutatis mutandis application of section 186 (3) sentence 4 AktG with subscription rights disapplied.

76 76 In the case of non-cash capital increases, the Management Board is authorised, with the approval of the Supervisory Board, to disapply shareholders statutory subscription rights if the non-cash capital increase is conducted for the purpose of acquiring companies, parts of companies, equity investments in companies or other assets and the total proportionate share capital attributable to the new shares for which subscription rights are disapplied does not exceed 20 % of the share capital on the issue date of the new shares. The Management Board is authorised, with the approval of the Supervisory Board, to disapply shareholders statutory subscription rights if the capital increase is performed for the purpose of creating shares that are to be transferred by the members of the Management Board of P&I Personal & Informatik AG in accordance with provisions agreed between the Supervisory Board and the Management Board members of P&I Personal & Informatik AG on variable Management Board remuneration as an alternative to a cash payment with a statutory holding period for the shares. The holding period for the shares to be granted for the Management Board member is generally three years. The specifics of remuneration for Management Board members are defined by the Supervisory Board. The Management Board is also authorised, with the approval of the Supervisory Board, to disapply shareholders statutory subscription rights on one or more occasions in order to eliminate fractions. The Management Board is also authorised, with the approval of the Supervisory Board, to determine the further content of the share rights, the conditions of the share issue and the further details of the implementation of capital increases from Authorised Capital. The Supervisory Board is authorised to adjust the wording of the articles of association to reflect any utilisation of Authorised Capital The Management Board was also authorised to utilise the acquired treasury shares for all legally permitted purposes, and in particular to sell them to third parties under certain circumstances, to use them in acquiring companies and to offer them to employees and governing bodies for purchase or to transfer them with a lock-up period. The shares may also be withdrawn. With the approval of the Supervisory Board, shares previously acquired by the Company may also be used as variable Management Board remuneration within the framework of the regulations agreed between the Supervisory Board and the members of the Management Board of P&I Personal & Informatik AG. The authorisation was not exercised in the 2016/2017 financial year. The capital reserve reported in the consolidated statement of financial position is broken down as follows: EUR thousand March 31, 2017 March 31, 2016 P&I AG capital reserves Offsetting of IPO costs -1,199-1,199 Share-based payment 2,763 2,763 Capital reserves 2,334 2,334 The share-based remuneration related to the Management Board and the Supervisory Board and resulted from sharebased remuneration plans of previous years. Retained earnings includes the legal reserve of P&I AG in accordance with section 150 AktG in the amount of EUR 2 thousand (previous year: EUR 2 thousand).

77 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS APPENDIX TO THE CONSOLIDATED FINANCIAL STATEMENTS APPROPRIATION OF NET PROFIT On the basis of the existing control and profit transfer agreement with P&I Zwischenholding GmbH, P&I AG s accounting profit must be transferred to P&I Zwischenholding GmbH. A corresponding profit transfer liability is recognised. 20. ACCUMULATED OTHER COMPREHENSIVE INCOME The increase in accumulated other comprehensive income is primarily based on currency translation effects relating to the Swiss subsidiaries. 21. TRADE PAYABLES Trade payables primarily relate to the purchase of materials to maintain operating activities. 22. LIABILITY FROM PROFIT TRANSFER AGREEMENT The liability is owed solely to P&I Zwischenholding GmbH and relates to the P&I AG profit transfer of EUR 56,641 thousand (previous year: EUR 38,999 thousand). 23. TAX LIABILITIES The tax liabilities of EUR 1,966 thousand (previous year: EUR 1,926 thousand) mainly include the tax liabilities of foreign subsidiaries and tax liabilities of P&I AG in the amount of EUR 47 thousand (previous year: EUR 93 thousand) from the equalisation payment to external shareholders. P&I AG had no pre-consolidation tax liabilities in the 2016/2017 financial year. 24. LIABILITIES FROM TAX SHARING AGREEMENT There was a tax sharing agreement between P&I AG and P&I Zwischenholding GmbH for the period from April 1, 2011, to March 31, 2014, which was terminated as of April 1, All the liabilities from the tax sharing agreement as of March 31, 2016, resulted from the 2012/2013 and 2013/2014 financial years and were set off against the loan receivables from P&I Zwischenholding GmbH in the 2016/2017 financial year.

78 DEFERRED INCOME Deferred income is broken down as follows: EUR thousand March 31, 2017 March 31, 2016 Prepaid maintenance 32,077 29,946 Prepaid Software as a Service (SaaS) 9,531 8,217 Prepaid recurring consulting 5,823 5,549 Deferred income 47,431 43,712 In each of the individual categories, deferred income relates to annual fees paid in advance by customers. 26. GROSS AMOUNT DUE TO CUSTOMERS FOR CONTRACT WORK This item includes receivables from production orders as a result of the application of the PoCM that have a debit balance after being set off against the advance payments received. They are set off as follows: EUR thousand March 31, 2017 March 31, 2016 Costs and pro rata profit Advance payments received Gross amount due to customers for contract work OTHER CURRENT LIABILITIES Other current liabilities comprise the following: EUR thousand March 31, 2017 March 31, 2016 Premiums, salaries and variable compensation 12,318 11,053 Value-added tax 1, Holiday obligations Wage/church tax and social security contributions Other 1,400 1,544 Other current liabilities 16,500 14,831

79 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS APPENDIX TO THE CONSOLIDATED FINANCIAL STATEMENTS 79 The fair value of insolvency-protected assets in the form of securities amounted to EUR 396 thousand as of March 31, 2017 (previous year: EUR 420 thousand). The present value of the partial retirement obligation as of March 31, 2017, was calculated on the basis of actuarial valuations and amounted to EUR 405 thousand (previous year: EUR 424 thousand). The measurement date for the partial retirement obligations is March 31, The 2005 G mortality tables by Klaus Heubeck are taken as a basis for the calculation. A discount factor of 0.1 % and a salary increase rate of 2 % were assumed as parameters by the actuary. 28. CORPORATE BODIES The Company s Management Board comprises at least two members. The Supervisory Board determines the number of members of the Management Board (see section 4 (1) of the articles of association, last amended by resolution of the Annual General Meeting on January 26, 2017). The members of the Management Board are: Mr Vasilios Triadis, CEO, member responsible for Strategy, Consulting, Research and Development and Marketing and Sales. Mr Stefan Markus Gaiser, member responsible for Finance, Human Resources, Legal, Administration and Investor Relations. On December 20, 2013, Mr Vasilios Triadis was appointed as a member and Chairman of the Management Board by the Supervisory Board of P&I Personal & Informatik AG until the end of March 31, Mr Stefan Markus Gaiser was appointed to the Management Board by the Supervisory Board of P&I Personal & Informatik AG with effect from October 1, 2015, until September 30, The members of the Management Board are authorised to represent the Company together with one other member of the Management Board or an authorised signatory. Remuneration for the members of the Management Board is determined by the Supervisory Board and consists of fixed and variable components. The fixed component consists of fixed monthly remuneration and benefits in kind, such as the amounts for company cars and other non-cash benefits that are required to be applied in accordance with the relevant provisions of tax law.

80 80 In accordance with section 95 AktG in conjunction with section 6 of the articles of association in the version dated January 26, 2017, the Company has a Supervisory Board consisting of three members. The Supervisory Board of P&I AG was composed as follows in the 2016/2017 financial year: Kamyar Niroumand, Chairman (from November 18, 2016) Industrial Advisor for Permira Beteiligungsgesellschaft GmbH Jörg Rockenhäuser, Deputy Chairman (from November 18, 2016; Chairman of the Supervisory Board from November 11 to 17, 2016) Managing Director, Permira Beteiligungsberatung GmbH Stefan Dziarski (from November 11, 2016) Investment Advisor for Permira Beteiligungsberatung GmbH Sebastian Mertes (November 11 to 17, 2016) Investment Professional, Permira Beteiligungsberatung GmbH Thomas Volk, Chairman (until November 10, 2016) Consultant Kai Romberg, Deputy Chairman (until November 10, 2016) Managing Director, HgCapital Verwaltungs GmbH Justin von Simson (until November 10, 2016) Managing Director, HgCapital Verwaltungs GmbH In accordance with the articles of association, the members of the Supervisory Board receive fixed remuneration of EUR 20 thousand for each full financial year they spend as members of the Supervisory Board, payable after the end of the financial year. The Chairman receives four times this amount, while the Deputy Chairman receives one and a half times this amount. The Company reimburses the members of the Supervisory Board for the expenses arising from the performance of their duties and for the value-added tax on their remuneration and expenses. Messrs Romberg, von Simson, Rockenhäuser, Dziarski and Mertes waived the remuneration for their membership of the Supervisory Board for the 2016/2017 financial year. The total remuneration of the Management Board for the 2016/2017 financial year was EUR 2,373 thousand (previous year: EUR 1,794 thousand) and the total remuneration of the Supervisory Board was EUR 78 thousand (previous year:

81 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS APPENDIX TO THE CONSOLIDATED FINANCIAL STATEMENTS 81 EUR 80 thousand). A consulting agreement was also concluded in the 2016/2017 financial year, the remuneration for which amounted to EUR 8 thousand. The total remuneration paid to the members of the Management Board for the 2016/2017 financial year is shown in the table below: EUR thousand 2016/ /2016 Non-performance-related remuneration Salary 1, Other *) Performance-related remuneration Bonuses/bonus programme 1, Total remuneration 2,373 1,794 *) Insurance contributions, cash benefits and in fiscal 2015/2016 benefits arising from the premature termination of employment (257 thousand). 29. RELATED PARTY DISCLOSURES Related parties in accordance with IAS 24 are: Pumvila S.à r.l., Luxembourg, Luxembourg, as the ultimate parent company of the group to which P&I Zwischenholding GmbH, Wiesbaden, the direct parent company of P&I AG, belongs (from November 10, 2016) HgCapital 7 Nominees Limited, London, United Kingdom, as the ultimate parent company of the group to which P&I Zwischenholding GmbH, Wiesbaden, the direct parent company of P&I AG, belongs (until November 9, 2016) P&I Zwischenholding GmbH, Wiesbaden, as the direct parent company P&I Personal & Informatik Holding GmbH, Wiesbaden Edge Holding GmbH, Wiesbaden, as the 100 % shareholder of P&I Zwischenholding GmbH, was merged into P&I Holding GmbH, Wiesbaden, as of April 1, 2016 P&I II Holding S.à r.l., Luxembourg P&ISWBidCo GmbH, Wiesbaden P&ISWBidCo Holding GmbH, Wiesbaden P&I I Holding S.à r.l., Luxembourg TeamViewer GmbH, Göppingen (from November 10, 2016) the subsidiaries of P&I AG listed in note 34

82 82 TeamViewer GmbH, Göppingen, has been an affiliated company of the highest known parent company of P&I Zwischenholding GmbH, Pumvila S.à r.l., Luxembourg, Luxembourg, since November 10, The following transactions and payments were made with related parties: EUR thousand March 31, 2017 March 31, 2016 Receivables P&I Zwischenholding GmbH, Wiesbaden 77,317 72,865 Total receivables 77,317 72,865 Liabilities P&I Zwischenholding GmbH, Wiesbaden 56,641 44,004 Total liabilities 56,641 44,004 EUR thousand 2016/ /2016 Income P&I Zwischenholding GmbH, Wiesbaden 4,199 1,891 P&ISWBidCo GmbH, Wiesbaden 1,578 0 P&I Holding GmbH, Wiesbaden 1, Total income 6,960 2,224 EUR thousand 2016/ /2016 Expense P&I Holding GmbH, Wiesbaden 61 0 Total expense 61 0 There were no transactions with TeamViewer GmbH, Göppingen, in the 2016/2017 financial year. TRANSACTIONS WITH P&I ZWISCHENHOLDING GMBH There is a control and profit transfer agreement between P&I AG, Wiesbaden, and P&I Zwischenholding GmbH, Wiesbaden, as the controlling company. This agreement allows P&I Zwischenholding GmbH to issue instructions. P&I AG s accounting profit after taxes of EUR 56,641 thousand (previous year: EUR 38,999 thousand) must be transferred to P&I Zwischenholding GmbH. At the instruction of P&I Zwischenholding GmbH, a non-collateralised loan was extended to the former in the 2011/2012 financial year. In the 2016/2017 financial year, as in the previous year, this loan was set off against the liability

83 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS APPENDIX TO THE CONSOLIDATED FINANCIAL STATEMENTS 83 from the profit transfer. Due to the new loan tranches of EUR 39,951 thousand granted in the 2016/2017 financial year (previous year: EUR 44,420 thousand), the loan plus accrued interest amounted to EUR 77,317 thousand as of March 31, 2017 (previous year: EUR 72,865 thousand). The accrued loan interest of EUR 9,176 thousand (previous year: EUR 5,676 thousand) will be paid on final maturity. The Management Board does not currently believe that extending the loan to P&I Zwischenholding GmbH has increased the risk to which the Company is exposed. The Management Board has duly satisfied itself that this loan receivable is recoverable. The tax sharing agreement between P&I AG and P&I Zwischenholding GmbH that had been in place since the 2011/2012 financial year was terminated with effect from April 1, TRANSACTIONS WITH EDGE HOLDING GMBH (MERGED INTO P&I HOLDING GMBH AS OF APRIL 1, 2016) AND P&ISWBIDCO GMBH Edge Holding GmbH entered into financing agreements in December 2013 in connection with the acquisition of the shares in P&I Zwischenholding GmbH. P&I Zwischenholding GmbH joined these financing agreements as a borrower in February/March 2014, as did, on instruction, P&I AG and its subsidiaries in Austria and Switzerland. In December 2015 and January 2016, the existing financing agreements were replaced by a new financing structure. As planned, P&I AG and its subsidiaries in Austria and Switzerland were instructed by P&I Zwischenholding GmbH to enter into the credit agreements of Edge Holding GmbH and P&I Zwischenholding GmbH in the amount of EUR 312,500 thousand in December All movable assets and extensive receivables and rights were assigned to the financing banks as the typical security, and a subordinated obligation to Edge Holding GmbH and P&I Zwischenholding GmbH for interest and principal payments was entered into in accordance with an existing liquidity plan. The maximum amount for which the P&I Group could have been held liable equated to the loan amounts less the assets of Edge Holding GmbH and P&I Zwischenholding GmbH. P&I Zwischenholding GmbH, Edge Holding GmbH and P&I AG have contractually agreed that P&I shall be compensated for assuming the joint and several guarantee in the form of a guarantee fee. P&I AG received a guarantee fee of EUR 1,882 thousand in the 2016/2017 financial year (previous year: EUR 529 thousand). In connection with the change of majority shareholder, the existing financing structure was again replaced by a new financing structure in November Following the conclusion of the new loan agreements, the previous loans with a remaining amount outstanding of EUR 302,500 thousand were repaid in full on November 10, 2016, the financing agreement was terminated and P&I AG and its subsidiaries were released from their liability. The borrowers under the new financing structure are P&ISWBidCo GmbH, Wiesbaden, and P&ISWBidCo Holding GmbH, Wiesbaden. The new financing agreements with a volume of EUR 465,000 thousand were signed in September 2016 and disbursed in November 2016 in the amount of EUR 400,000 thousand.

84 84 P&I AG and its subsidiaries in Austria and Switzerland were instructed by P&I Zwischenholding GmbH to enter into the credit agreements of P&ISWBidCo Holding GmbH and P&ISWBidCo GmbH in the amount of EUR 465,000 thousand in November 2016 as jointly and severally liable guarantor. All movable assets and extensive receivables and rights were assigned to the financing banks as the typical security, and a subordinated obligation to P&ISWBidCo GmbH and P&ISWBidCo Holding GmbH for interest and principal payments was entered into in accordance with an existing liquidity plan. The maximum amount for which the P&I Group could be held liable equates to the loan amounts less the assets of P&I Zwischenholding GmbH, P&I Holding GmbH, P&ISWBidCo GmbH and P&ISWBidCo Holding GmbH. A compensation agreement in the form of a guarantee fee was concluded with P&ISWBidCo GmbH for the assumption of the joint and several guarantee. A guarantee fee of EUR 1,578 thousand was received in the 2016/2017 financial year. P&ISWBidCo GmbH was granted a capex facility of EUR 50,000 thousand and a revolving facility of EUR 15,000 thousand for a portion of the above loan amount of EUR 465,000 thousand. These additional credit facilities can be used by P&I AG to finance potential future acquisitions or serve as additional liquidity protection as necessary. From the revolving facility, P&I AG has drawn down EUR 3,500 thousand under an ancillary facility agreement as a line of credit serving as collateral for the guarantees provided. The loans arising from the financing agreements of P&ISWBidCo GmbH had a total carrying amount of EUR 400,000 thousand at the reporting date. In the previous year, the loan amount from the old financing agreements was EUR 302,500 thousand. The charges from the credit agreements are borne by P&ISWBidCo GmbH. P&ISWBidCo GmbH relies on P&I AG to secure the required liquidity. The profits and associated capital inflows of P&I AG are passed on to P&ISWBidCo GmbH under existing profit transfer agreements and ones yet to be concluded. Given the current corporate planning of P&I AG and the associated liquidity inflow, the Management Board sees no significant risk to the Company in entering into these credit agreements and hence no significant risk of utilisation for the Company. The Management Board and the Supervisory Board regularly discuss the issues relating to the loan agreement and its consequences for P&I. The Supervisory Board approved all of the payments disclosed. There were no other related party transactions containing non-standard conditions. The disclosures concerning members of the Management Board and Supervisory Board can be found in note 28.

85 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS APPENDIX TO THE CONSOLIDATED FINANCIAL STATEMENTS AUDITOR S FEE The total fee calculated by the auditor for the 2016/2017 financial year and the previous year was: EUR thousand 2016/ /2016 Auditing financial statements Other assurance services 0 0 Tax consultation 0 0 Other services Total OTHER FINANCIAL OBLIGATIONS, CONTINGENT LIABILITIES AND CONTINGENCIES OTHER FINANCIAL OBLIGATIONS As of March 31, 2017, there were future minimum lease payment obligations on account of operating leases in the following amount: EUR thousand March 31, 2017 March 31, 2016 Maturity Within one year 2,753 2,387 Between one and five years 6,740 4,949 More than five years 13,290 15,481 Total 22,783 22,817 The standard obligations primarily result from the lease concluded for the Company s head office in Wiesbaden in the 2014/2015 financial year, other leased buildings, cars, computer equipment and office equipment. The leases have terms of between one and fifteen years and include extension and purchase options in some cases. With the exception of the lease for the administrative building, there are no price adjustment clauses and no further restrictions arising from the leases. Rental agreements and leases are concluded to spread the outflow of liquidity over several financial years. A lease for the Company s head office in Wiesbaden with a term of 192 months was concluded in the 2014/2015 financial year. Following the successful acquisition of the land by the lessor, the latter is redeveloping and extending the leased property, with the lessee being consulted on the redevelopment measures. Price adjustment clauses are contractually agreed in case the volume of investment in the building redevelopment exceeds the agreed investment volume. The lessee will receive the leased property in a fully functional condition suitable for use in accordance with the contract. In the

86 /2016 financial year, a contract was concluded granting P&I AG the right to acquire the leased property at fair value, or at least at the residual carrying amount for tax purposes, at the end of the contract term (purchase right). Payments of EUR 2,678 thousand were made for leases in the financial year (previous year: EUR 2,888 thousand). As of March 31, 2017, there were no future minimum lease payment receivables. There is a control and profit transfer agreement between P&I AG and P&I Zwischenholding GmbH as the controlling company. This agreement allows P&I Zwischenholding GmbH to issue instructions. P&I AG s accounting profit after taxes of EUR 56,641 thousand (previous year: EUR 38,999 thousand) must be transferred to P&I Zwischenholding GmbH. In turn, P&I Zwischenholding GmbH is obliged to compensate any possible loss. In the view of the Management Board, the conclusion of the control and profit transfer agreement has not increased the risk to which the Company is exposed. CONTINGENT LIABILITIES P&I observes and measures risks from existing major and fixed-price projects on a permanent basis. For projects involving a substantial commitment of resources on the part of the customer and P&I, the possibility that rights of recourse will arise or that project costs above the agreed fixed prices will be incurred cannot be ruled out. The costs incurred by P&I for a project are always included in the expenses for the current period. Equally, the financial statements take possible payment obligations into account providing the requirements are met. We are confronted with customer complaints in the ordinary course of business. In cases where an obligation to a third party is likely to have arisen and the amount of the corresponding expense can be estimated reliably, we recognise provisions to the extent that the requirements are met. We are currently of the opinion that the outcome of the customer complaints will have no significant detrimental effects on our operations, financial position, financial performance and cash flows. However, such matters entail uncertainty and our present assessment may change in the future. In the 2015/2016 financial year, a sponsorship agreement for a sporting event in Switzerland was signed for the period from 2016 to As the agreement provides for the joint and several liability of all four sponsors with respect to the contractual partner, the contingent liabilities from this agreement amount to EUR 680 thousand in the event that the other three sponsors are unable to meet their payment obligations. The Management Board does not expect these contingent liabilities to result in actual cash outflows for the P&I Group. There are no other risks that would lead to the disclosure of contingent liabilities.

87 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS APPENDIX TO THE CONSOLIDATED FINANCIAL STATEMENTS 87 LIABILITY ARISING FROM THE PROVISION OF COLLATERAL FOR LIABILITIES OF AFFILIATED COMPANIES PROFIT TRANSFER AGREEMENT A control and profit transfer agreement has been in place with P&I Zwischenholding GmbH since April 1, In the view of the Management Board, the conclusion of this control and profit transfer agreement has not increased the risk to which the Company is exposed. Furthermore, the Management Board does not currently feel that extending the loan to P&I Zwischenholding GmbH has increased the risk to which the Company is exposed. The Management Board has duly satisfied itself that this loan receivable is recoverable. FINANCING UNTIL NOVEMBER 9, 2016 Edge Holding GmbH (merged into P&I Holding GmbH as of April 1, 2016) entered into financing agreements in December 2013 in connection with the acquisition of the shares in P&I Zwischenholding GmbH. P&I Zwischenholding GmbH joined these financing agreements as a borrower in February/March 2014, as did, on instruction, P&I AG and its subsidiaries in Austria and Switzerland. In December 2015 and January 2016, the existing financing agreements were replaced by a new financing structure. As planned, P&I AG and its subsidiaries in Austria and Switzerland were instructed by P&I Zwischenholding GmbH to enter into the credit agreements of Edge Holding GmbH and P&I Zwischenholding GmbH in the amount of EUR 312,500 thousand in December All movable assets and extensive receivables and rights were assigned to the financing banks as the typical security, and a subordinated obligation to Edge Holding GmbH and P&I Zwischenholding GmbH for interest and principal payments was entered into in accordance with an existing liquidity plan. The maximum amount for which the P&I Group could have been held liable equated to the loan amounts less the assets of Edge Holding GmbH and P&I Zwischenholding GmbH. P&I Zwischenholding GmbH, Edge Holding GmbH and P&I AG have contractually agreed that P&I shall be compensated for assuming the joint and several guarantee in the form of a guarantee fee. P&I AG received a guarantee fee of EUR 1,882 thousand in the 2016/2017 financial year (previous year: EUR 529 thousand). FINANCING FROM NOVEMBER 10, 2016 In connection with the change of majority shareholder, the existing financing structure was again replaced by a new financing structure in November Following the conclusion of the new loan agreements, the previous loans with a remaining amount outstanding of EUR 302,500 thousand were repaid in full on November 10, 2016, the financing agreement was terminated and P&I AG and its subsidiaries were released from their liability. The borrowers under the new financing structure are P&ISWBidCo GmbH, Wiesbaden, and P&ISWBidCo Holding GmbH, Wiesbaden. The new financing agreements with a volume of EUR 465,000 thousand were signed in September 2016 and disbursed in November 2016 in the amount of EUR 400,000 thousand.

88 88 P&I AG and its subsidiaries in Austria and Switzerland were instructed by P&I Zwischenholding GmbH to enter into the credit agreements of P&ISWBidCo Holding GmbH and P&ISWBidCo GmbH in the amount of EUR 465,000 thousand in November 2016 as jointly and severally liable guarantor. All movable assets and extensive receivables and rights were assigned to the financing banks as the typical security, and a subordinated obligation to P&ISWBidCo GmbH and P&ISWBidCo Holding GmbH for interest and principal payments was entered into in accordance with an existing liquidity plan. The maximum amount for which the P&I Group could be held liable equates to the loan amounts less the assets of P&I Zwischenholding GmbH, P&I Holding GmbH, P&ISWBid- Co GmbH and P&ISWBidCo Holding GmbH. A compensation agreement in the form of a guarantee fee was concluded with P&ISWBidCo for the assumption of the joint and several guarantee. A guarantee fee of EUR 1,578 thousand was received in the 2016/2017 financial year. P&ISWBidCo GmbH was granted a capex facility of EUR 50,000 thousand and a revolving facility of EUR 15,000 thousand for a portion of the above loan amount of EUR 465,000 thousand. These additional credit facilities can be used by P&I AG to finance potential future acquisitions or serve as additional liquidity protection as necessary. From the revolving facility, P&I AG has drawn down EUR 3,500 thousand under an ancillary facility agreement as a line of credit serving as collateral for the guarantees provided. The loans arising from the financing agreements of P&ISWBidCo GmbH had a total carrying amount of EUR 400,000 thousand at the reporting date. In the previous year, the loan amount from the old financing agreements was EUR 302,500 thousand. The charges from the credit agreements are borne by P&ISWBidCo GmbH. P&ISWBidCo GmbH relies on P&I AG to secure the required liquidity. The profits and associated capital inflows of P&I AG are passed on to P&ISWBidCo GmbH under existing profit transfer agreements and ones yet to be concluded. Given the current corporate planning of P&I AG and the associated liquidity inflow, the Management Board sees no significant risk to the Company in entering into these credit agreements and hence no significant risk of utilisation for the Company. The Management Board and the Supervisory Board regularly discuss the issues relating to the loan agreement and its consequences for P&I. In addition, P&ISWBidCo GmbH was granted a revolving facility commitment of EUR 15,000 thousand; at the reporting date, P&I AG had utilised EUR 3,500 thousand of this amount as collateral for the guarantee line. BANK GUARANTEES The Company has a working capital credit facility with Wiesbadener Volksbank eg with a total volume of EUR 1,534 thousand (previous year: EUR 1,534 thousand) for current account utilisation at an interest rate of 8.50 % p.a.

89 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS APPENDIX TO THE CONSOLIDATED FINANCIAL STATEMENTS 89 The Company has a general agreement with Commerzbank AG on the provision of collateral ( guarantee line ) for its own obligations with a total volume of EUR 3,500 thousand (previous year: EUR 3,500 thousand). At the reporting date, EUR 2,610 thousand (previous year: EUR 2,627 thousand) of the guarantee line had been utilised. The ancillary facility agreement of the banking syndicate of P&I Holding GmbH (until November 9, 2016) and P&ISWBidCo GmbH (from November 10, 2016) serves as security. 32. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES P&I AG s most important financial objectives include the sustainable increase of the Company s value in the interests of investors, employees, customers and suppliers while also ensuring its solvency at all times. For P&I AG, the creation of sufficient liquidity reserves is absolutely central to this form of capital management. Moreover, maintaining a sound capital base is an important requirement for securing the continued existence of the Company and continuing the growth strategy. Liquidity reserves are controlled permanently on the basis of short- and medium-term forecasts of future liquidity. Capital is monitored regularly on the basis of various ratios. The most important are the relationship of liquidity to equity (gearing) and the capital ratio. As there is no financial debt, but rather a positive net position, the gearing ratio is negative. EUR thousand March 31, 2017 March 31, 2016 Cash and cash equivalents 59,159 51,633 Short-term securities and fixed-term deposits 10,000 0 Liquidity 69,159 51,633 Equity *) 61,656 59,430 Capital ratio 32.9 % 35.2 % Gearing **) % % *) Equity not including accumulated other comprehensive income **) Net financial position/equity not including accumulated other comprehensive income Even after paying further loan tranches totalling EUR 39,951 thousand to the controlling company in the past financial year, the Group has a high level of cash and cash equivalents amounting to EUR 69,159 thousand (previous year: EUR 51,633 thousand) as well as current financial assets that are not offset by any loans to third parties. The Company has a working capital credit facility with Wiesbadener Volksbank eg with a total volume of EUR 1,534 thousand (previous year: EUR 1,534 thousand) for current account utilisation at an interest rate of 8.50 % p.a.

90 90 P&ISWBidCo GmbH was granted a revolving facility commitment of EUR 15,000 thousand; at the reporting date, P&I AG had utilised EUR 3,500 thousand of this amount as collateral for the guarantee line. There are no other working capital credit facilities. The guarantee line discussed under contingencies may be used for rental, advance payment, warranty and performance guarantees. The ancillary facility agreement of the banking syndicate of P&ISWBidCo GmbH serves as security. The amount utilised (EUR 2,610 thousand; previous year: EUR 2,627 thousand) relates to rental and performance guarantees. For additional information, please refer to item 8.2 of the management report. 33. SUPPLEMENTARY DISCLOSURES ABOUT FINANCIAL INSTRUMENTS At the instruction of P&I Zwischenholding GmbH, a non-collateralised loan was extended to the former in the 2011/2012 financial year. In the 2016/2017 financial year, as in the previous year, this loan was set off against the liability from the profit transfer. Due to the new loan tranches of EUR 39,951 thousand granted in the 2016/2017 financial year (previous year: EUR 44,420 thousand), the loan plus accrued interest amounted to EUR 77,317 thousand as of March 31, 2017 (previous year: EUR 72,865 thousand). The accrued loan interest of EUR 9,176 thousand (previous year: EUR 5,676 thousand) will be paid on final maturity. The Management Board does not currently believe that extending the loan to P&I Zwischenholding GmbH has increased the risk to which the Company is exposed. The Management Board has duly satisfied itself that this loan receivable is recoverable. There are currently no indications of credit risk with regard to the loan plus interest. The majority of the financial liabilities used by the Group concern liabilities from the profit transfer agreement and trade payables. The main purpose of the financial liabilities is to finance the Group s operations. The Group has trade receivables, other receivables, cash and short-term deposits that result directly from its operations. The Group operates internationally, meaning it is exposed to market risks on the basis of changes in interest and exchange rates. CURRENCY RISK Currency risk is the risk to which the fair value or future cash flow of a financial instrument is exposed because of exchange rate fluctuations. As the individual Group companies conduct their operations mainly in their functional currency, the Management Board considers the risk of exchange rate fluctuations from operations to be immaterial.

91 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS APPENDIX TO THE CONSOLIDATED FINANCIAL STATEMENTS 91 As of March 31, 2017, the P&I Group no longer had any monetary financial instruments not concluded in the functional currency of P&I AG, Thalwil, MIRUS Software AG and Soreco HR AG. INTEREST RATE AND VALUE RISK Interest rate or value risk is the risk that the fair value or future cash flow of a financial instrument will change because of changes in market interest rates or prices. The P&I Group limits interest rate risks, particularly when granting loans, by agreeing fixed interest terms. Accordingly, changes in market interest rates for fixed-interest loans recognised at amortised cost have no effect on profit or loss or equity and hence are not included in the sensitivity analysis. These loans are subject to interest rate risk on reinvestment. The P&I Group is not subject to any other significant interest rate and value risks. LIQUIDITY RISK Liquidity risks arise when current payment obligations cannot be met. The P&I Group s supply of liquidity is secured at all times thanks to liquidity planning focused on a fixed time horizon and available, unutilised lines of credit. The Group s financial liabilities have the following maturities: March 31, 2017 Less than 1 year 1 to 5 years More than 5 years Total EUR thousand Trade payables 2, ,967 Liabilities from profit transfer 56, ,641 Total 59, ,608 March 31, 2017 Less than 1 year 1 to 5 years More than 5 years Total EUR thousand Other non-current liabilities 3, ,190 Trade payables 38, ,999 Liabilities from profit transfer 5, ,005 Total 47, ,194 CREDIT RISK The P&I Group does not believe that it is exposed to a notable credit risk with respect to any single contractual partner in terms of trade receivables. The Company controls default risk by demanding advance payments and by obtaining confirmations of transfer from insolvency administrators or credit information in cases where there is a suspicion of default.

92 92 The Group does not have additional collateral in the form of rights to securities or similar. The maximum credit risk is limited to the carrying amount reported under note 13. The Group does not have a significant concentration of default risk either with an individual counterparty or with a group of counterparties with similar characteristics. For the Group s other financial assets, cash and cash equivalents and non-current financial assets, the maximum credit risk if the counterparty defaults is equal to the carrying amounts of these instruments. At the instruction of P&I Zwischenholding GmbH, a non-collateralised loan was extended to the former in the 2011/2012 financial year. In the 2016/2017 financial year, as in the previous year, this loan was set off against the liability from the profit transfer. Due to the new loan tranches of EUR 39,951 thousand granted in the 2016/2017 financial year (previous year: EUR 44,420 thousand), the loan plus accrued interest amounted to EUR 77,317 thousand as of March 31, 2017 (previous year: EUR 72,865 thousand). The accrued loan interest of EUR 9,176 thousand (previous year: EUR 5,676 thousand) will be paid on final maturity. The Management Board does not currently believe that extending the loan to P&I Zwischenholding GmbH has increased the risk to which the Company is exposed. The Management Board has duly satisfied itself that this loan receivable is recoverable. There are currently no indications of credit risk with regard to the loan plus interest. GUARANTEE OBLIGATION FROM FINANCING UNTIL NOVEMBER 9, 2016 Edge Holding GmbH (merged into P&I Holding GmbH as of April 1, 2016) entered into financing agreements in December 2013 in connection with the acquisition of the shares in P&I Zwischenholding GmbH. P&I Zwischenholding GmbH joined these financing agreements as a borrower in February/March 2014, as did, on instruction, P&I AG and its subsidiaries in Austria and Switzerland. In December 2015 and January 2016, the existing financing agreements were replaced by a new financing structure. As planned, P&I AG and its subsidiaries in Austria and Switzerland were instructed by P&I Zwischenholding GmbH to enter into the credit agreements of Edge Holding GmbH and P&I Zwischenholding GmbH in the amount of EUR 312,500 thousand in December All movable assets and extensive receivables and rights were assigned to the financing banks as the typical security, and a subordinated obligation to Edge Holding GmbH and P&I Zwischenholding GmbH for interest and principal payments was entered into in accordance with an existing liquidity plan. The maximum amount for which the P&I Group could have been held liable equated to the loan amounts less the assets of Edge Holding GmbH and P&I Zwischenholding GmbH. P&I Zwischenholding GmbH, Edge Holding GmbH and P&I AG have contractually agreed that P&I shall be compensated for assuming the joint and several guarantee in the form of a guarantee fee. P&I AG received a guarantee fee of EUR 1,882 thousand in the 2016/2017 financial year (previous year: EUR 529 thousand). GUARANTEE OBLIGATION FROM FINANCING FROM NOVEMBER 10, 2016 In connection with the change of majority shareholder, the existing financing structure was again replaced by a new

93 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS APPENDIX TO THE CONSOLIDATED FINANCIAL STATEMENTS 93 financing structure in November Following the conclusion of the new loan agreements, the previous loans with a remaining amount outstanding of EUR 302,500 thousand were repaid in full on November 10, 2016, the financing agreement was terminated and P&I AG and its subsidiaries were released from their liability. The borrowers under the new financing structure are P&ISWBidCo GmbH, Wiesbaden, and P&ISWBidCo Holding GmbH, Wiesbaden. The new financing agreements with a volume of EUR 465,000 thousand were signed in September 2016 and disbursed in November 2016 in the amount of EUR 400,000 thousand. P&I AG and its subsidiaries in Austria and Switzerland were instructed by P&I Zwischenholding GmbH to enter into the credit agreements of P&ISWBidCo Holding GmbH and P&ISWBidCo GmbH in the amount of EUR 465,000 thousand in November 2016 as jointly and severally liable guarantor. All movable assets and extensive receivables and rights were assigned to the financing banks as the typical security, and a subordinated obligation to P&ISWBidCo GmbH and P&ISWBidCo Holding GmbH for interest and principal payments was entered into in accordance with an existing liquidity plan. The maximum amount for which the P&I Group could be held liable equates to the loan amounts less the assets of P&I Zwischenholding GmbH, P&I Holding GmbH, P&ISWBid- Co GmbH and P&ISWBidCo Holding GmbH. A compensation agreement in the form of a guarantee fee was concluded with P&ISWBidCo for the assumption of the joint and several guarantee. A guarantee fee of EUR 1,578 thousand was received in the 2016/2017 financial year. P&ISWBidCo GmbH was granted a capex facility of EUR 50,000 thousand and a revolving facility of EUR 15,000 thousand for a portion of the above loan amount of EUR 465,000 thousand. These additional credit facilities can be used by P&I AG to finance potential future acquisitions or serve as additional liquidity protection as necessary. From the revolving facility, P&I AG has drawn down EUR 3,500 thousand under an ancillary facility agreement as a line of credit serving as collateral for the guarantees provided. The loans arising from the financing agreements of P&ISWBidCo GmbH had a total carrying amount of EUR 400,000 thousand at the reporting date. In the previous year, the loan amount from the old financing agreements was EUR 302,500 thousand. The charges from the credit agreements are borne by P&ISWBidCo GmbH. P&ISWBidCo GmbH relies on P&I AG to secure the required liquidity. The profits and associated capital inflows of P&I AG are passed on to P&ISWBidCo GmbH under existing profit transfer agreements and ones yet to be concluded. Given the current corporate planning of P&I AG and the associated liquidity inflow, the Management Board sees no significant risk to the Company in entering into these credit agreements and hence no significant risk of utilisation for the Company. The Management Board and the Supervisory Board regularly discuss the issues relating to the loan agreement and its consequences for P&I.

94 94 FAIR VALUE The fair values of financial instruments were calculated on the basis of the available market information on the reporting date. The following table shows the carrying amounts and fair values of the financial instruments reported in the consolidated financial statements. Classification according to IAS 39 Carrying amount Fair value EUR thousand March 31, 2017 March 31, 2016 March 31, 2017 March 31, 2016 Kredite und Forderungen Loan extended *) 77,401 72,947 85,408 72,947 Current financial assets **) 10, ,000 0 Trade receivables 15,271 16,248 15,271 16,248 Cash and cash equivalents 59,159 51,633 59,159 51,633 Own class Construction contracts with asset balance ***) 4,829 4,337 4,829 4,337 Other financial liabilities Trade payables 2,967 3,190 2,967 3,190 Liabilities from profit transfer 56,641 38,999 56,641 38,999 Liabilities from tax-sharing agreement 0 5, ,005 *) Balance sheet item: long-term financial assets **) Balance sheet item: current financial assets ***) within the scope of IAS 11 Due to the predominantly short terms for trade receivables and trade payables, liabilities from profit transfer and cash and cash equivalents, the carrying amounts do not differ significantly from the fair values as of the reporting date. The fair value of non-current financial assets is calculated on the basis of an alternative investment with a similar risk structure and conditions observable on the market that yields identical returns (level 2). FAIR VALUE HIERARCHY The financial instruments measured at fair value are allocated to the levels of the measurement method as follows: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly (i.e. as a price) or indirectly (i.e. derived from prices). Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

95 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS APPENDIX TO THE CONSOLIDATED FINANCIAL STATEMENTS 95 March 31, 2017 Level 1 Level 2 Level 3 EUR thousand Non-current financial assets (loans) 0 77,401 0 March 31, 2016 Level 1 Level 2 Level 3 EUR thousand Non-current financial assets (loans) 0 72,947 0 The Group has no financial assets or liabilities that are allocated to level CONSOLIDATED COMPANIES The following companies were included in the consolidated financial statements for the year ended March 31, 2017: P&I Personal & Informatik Gesellschaft mbh, Vienna, Austria P&I Personal & Informatik AG, Thalwil, Switzerland MIRUS Software AG, Davos, Switzerland Soreco HR AG, Thalwil, Switzerland P&I Personal & Informatik s.r.o., Bratislava, Slovakia P&I Personeel & Informatica B.V., Gorinchem, Netherlands (new domicile from April 1, 2017, is Zevenaar, Netherlands) P&I Silicon Valley Inc., Redwood City, California, USA The list of shareholdings together with the share of capital held directly or indirectly by P&I Personal & Informatik AG, the net income for the year and the equity of the Company as of March 31, 2017, and according to the financial statements under national law is as follows: EUR thousand Share in capital *) The net income of P & I AG, Thalwil includes a dividend payment by MIRUS of EUR 2,208 thousand. **) Tier subsidiary, 100% subsidiary of P & I Personal & computer science AG, Thalwil ***) Seat of the company from 1 April 2017 is Zevenaar, the Netherlands Net income 2016/2017 Equity 2016/2017 P&I Personal & Informatik AG, Thalwil, Switzerland *) 100 % 2,972 23,407 MIRUS Software AG, Davos, Switzerland **) 100 % 2,470 4,658 Soreco HR AG, Thalwil, Switzerland **) 100 % 1,277 2,872 P&I Personal & Informatik GmbH, Vienna, Austria 100 % 2,051 2,161 P&I Personeel & Informatica B.V., Gorinchem, Netherlands ***) 100 % P&I Personal & Informatik s.r.o., Bratislava, Slovakia 100 % P&I Silicon Valley Inc., Redwood City, California, USA 100 % 38 46

96 SHARES HELD BY THE COMPANY AND MEMBERS OF EXECUTIVE BODIES As of March 31, 2016, P&I Personal & Informatik AG held 168,873 P&I treasury shares. The Annual General Meeting on January 26, 2017, resolved to reduce the share capital by withdrawing 168,873 no-par-value shares in a simplified withdrawal procedure according to section 237 (3) no. 2, (4) and (5) of the German Stock Corporation Act (AktG). No convertible bonds or similar securities in accordance with section 160 (1) no. 5 AktG had been issued by P&I Personal & Informatik AG or other companies as of March 31, As of March 31, 2017, the members of the Management Board and Supervisory Board did not hold any P&I shares or options. 36. DISCLOSURES IN ACCORDANCE WITH SECTION 160 (1) NO. 8 AKTG P&I AG has not received any notifications in accordance with section 20 of the German Stock Corporation Act (AktG). In line with section 20 (8) AktG, the acquisition of the fourth package of shares in P&I AG and the acquisition of a majority interest by Edge Holding GmbH and P&I Zwischenholding GmbH respectively did not require mandatory notification in accordance with section 20 (1) and (4) AktG. As there was no change in the equity interests held, the delisting of P&I AG following the entry in the commercial register of the resolution on the transfer of shares of the minority shareholders to the majority shareholder on October 27, 2014, did not require mandatory notification in accordance with section 20 (4) AktG. The notifications in accordance with section 21 of the German Securities Trading Act (WpHG) were received in full. P&I Zwischenholding GmbH currently holds 100 % of the shares in P&I AG. P&ISWBidCo Holding GmbH notified P&I AG that it indirectly holds 100 % of the shares in P&I Zwischenholding GmbH and thus also in P&I AG via several subsidiaries.

97 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS APPENDIX TO THE CONSOLIDATED FINANCIAL STATEMENTS EVENTS AFTER THE END OF THE REPORTING PERIOD With effect from May 31, 2017, Mr Stefan Gaiser is departing from the Company s Executive Board prematurely of his own volition. No further events occurred. Once the preparation of the consolidated financial statements is complete on May 31, 2017, and the audit of the consolidated financial statements is complete on the same date, the consolidated financial statements will be presented to the Supervisory Board, which will decide whether to approve them at its accounts meeting on May 31, Wiesbaden, May 31, 2017 Vasilios Triadis Stefan Gaiser

98 98 DEVELOPMENT OF INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT Cost EUR thousand April 1, 2016 Change in consolidated group Currency translation Additions Disposals Reclassification March 31, 2017 Intangible assets Customer base 25, ,569 Goodwill 9, ,107 Other intangible assets 6, ,276 Total intangible assets 42, ,952 Property, plant and equipment Leasehold improvements Operating and office equipment 1, ,421 IT systems 4, ,587 Total property, plant and equipment 6, , ,765 Total 48, , ,717

99 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS DEVELOPMENT OF INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT 99 APRIL 1, 2016 TO MARCH 31, 2017 Accumulated depreciation, amortisation and impairment Carrying amounts April 1, 2016 Currency translation Additions Disposals Reclassification March 31, 2017 March 31, 2017 March 31, , , ,799 7,770 9, ,107 9,910 6, , , , ,654 18,298 19, , , , , , , ,179 2,586 1,716 26, , ,833 20,884 21,318

100 100 DEVELOPMENT OF INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT Cost EUR thousand April 1, 2015 Change in consolidated group Currency translation Additions Disposals Reclassification March 31, 2016 Intangible assets Customer base 24,291 6, , ,350 Goodwill 5,076 6, ,910 Other intangible assets 6, ,888 Total intangible assets 36,276 12,806-1, , ,148 Property, plant and equipment Leasehold improvements Operating and office equipment 1, ,978 IT systems 3, ,015 Total property, plant and equipment 5, ,142 Total 41,849 12,845-1,090 1,310 6, ,290

101 OVERVIEW COMBINED MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS AG FINANCIAL STATEMENTS DEVELOPMENT OF INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT 101 APRIL 1, 2015 TO MARCH 31, 2016 Accumulated depreciation, amortisation and impairment Carrying amounts April 1, 2015 Currency translation Additions Disposals Reclassification March 31, 2016 March 31, 2016 March 31, , ,479 4, ,296 9,054 4, ,910 4,391 6, , , ,207 5, ,546 19,602 9, , , , , , ,426 1,716 1,672 30, ,094 6, ,972 21,318 11,578

102 102 INDEPENDENT AUDITORS REPORT We have audited the consolidated financial statements prepared by P&I Personal & Informatik Aktiengesellschaft, Wiesbaden, comprising the balance sheet, the income statement and statement of comprehensive income, the cash flow statement, the statement of changes in equity and the notes to the consolidated financial statements and the group management report for the business year from 1 April 2016 to 31 March The preparation of the consolidated financial statements and the group management report in accordance with IFRS, as adopted by the European Union (EU), and the additional requirements of German commercial law pursuant to Section 315a (1) German Commercial Code (HGB) are the responsibility of the parent Company s management. Our responsibility is to express an opinion on the consolidated financial statements and on the group management report based on our audit. We conducted our audit of the consolidated financial statements in accordance with Section 317 German Commercial Code (HGB) and German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer (Institute of Public Auditors in Germany). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the consolidated financial statements in accordance with the applicable financial reporting framework and in the group management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the group and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the consolidated financial statements and the group management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of those entities included in consolidation, the determination of entities to be included in consolidation, the accounting and consolidation principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements and the group management report. We believe that our audit provides a reasonable basis for our opinion. Our audit has not led to any reservations. In our opinion, based on the findings of our audit, the consolidated financial statements of P&I Personal & Informatik Aktiengesellschaft, Wiesbaden, comply with IFRS, as adopted by the EU, the additional requirements of German commercial law pursuant to Section 315a (1) German Commercial Code (HGB) and give a true and fair view of the net assets, financial position and results of operations of the group in accordance with these requirements. The group management report is consistent with the consolidated financial statements, complies with legal requirements, as a whole provides a suit able view of the group s position and suitably presents the opportunities and risks of future development. Frankfurt am Main, 31 May 2017 Deloitte GmbH Wirtschaftsprüfungsgesellschaft (Gräbner-Vogel) Wirtschaftsprüferin (German Public Auditor) (Botsch) Wirtschaftsprüfer (German Public Auditor)

103 KONZERNABSCHLUSS BESTÄTIGUNGSVERMERK