Group Half-Yearly Financial Report April 1 September 30, 2015 P&I Personal & Informatik AG

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1 Group Half-Yearly Financial Report April 1 September 30, 2015 P&I Personal & Informatik AG

2 KEY FIGURES AND HIGHLIGHTS 2 KEY FIGURES IFRS KEY FIGURES FOR THE GROUP Apr. 1 - Sept. 30, 2015 Apr. 1 - Sept. 30, 2014 Change Change EUR thousand Revenue 56,717 51,011 5, % Earnings before interest, taxes, depreciation and amortisation (EBITDA) 22,995 20,976 2, % Earnings before interest and taxes (EBIT) 21,551 19,910 1, % Earnings before taxes (EBT) 22,136 20,891 1, % Consolidated net income 21,794 15,550 6, % Return on sales 38.4 % 30.5 %./../. Average FTEs for the period % HIGHLIGHTS REVENUE GROWTH ACCOMPANIED BY HIGH PROFITABILITY In the first half of the 2015/2016 financial year, consolidated revenue increased by 11.2 % to EUR 56.7 million. Organic growth excluding the revenue resulting from the acquisition of Soreco HR AG amounted to 7.4 %. The P&I Group improved its operating earnings (EBIT) from EUR 19.9 million to EUR 21.6 million and generated an EBIT margin of 38.0 % (previous year: 39.0 %). ACQUISITION OF SORECO HR AG WITH EFFECT FROM JUNE 1, 2015 P&I Personal & Informatik AG acquired the HR division of Soreco AG with effect from June 1, The division will continue to operate as Soreco HR AG, Schwerzenbach, Switzerland. The acquisition of Soreco HR AG will reinforce the P&I Group s market position in Switzerland and allow it to benefit internationally from the transfer of expertise from the Swiss specialist, which can boast 30 % of the top 500 Swiss companies among its clients. MAJOR CHANGES IN THE P&I LOGA PRODUCT PORTFOLIO WITH RELEASE 15.9 AND 16.0 With Release 15.9 / 16.0, P&I is presenting a P&I LOGA client based on state-of-the-art web technology, including a communication module to and from P&I HR BIG DATA. NEW CFO The Supervisory Board of P&I Personal & Informatik AG appointed Mr Stefan Gaiser to the Management Board with effect from October 1, Mr Gaiser is responsible for Finance, Administration, Human Resources, Investor Relations and Legal. His predecessor, Mr Martin C. de Groot, stepped down from the Management Board at his own request ahead of schedule with effect from September 30, 2015.

3 OVERVIEW FOREWORD FROM THE BOARD OF DIRECTORS» THE MARKET DEMANDS AN ENTIRELY NEW GENERATION OF SOFTWARE WHOSE ARCHITECTURE ALLOWS USERS TO CUSTOMISE IT TO THEIR OWN REQUIREMENTS. «Vasilios Triadis CEO/Chairman of the Board 3

4 FOREWORD FROM THE BOARD OF DIRECTORS 4 DEAR CUSTOMERS AND BUSINESS PARTNERS, DEAR FRIENDS OF P&I, We can be more than satisfied with our results for the first half of the year. They confirm the accuracy of our assumptions and give us reason to believe that we will also enjoy a successful end to the second half of the year, and hence the financial year as a whole. I would like to take this opportunity to draw your attention to our software. Unlike pure consulting firms, our standard software plays a central role in our business model. Accordingly, it is the future development of this software that will determine our company s success. The process of digital transformation means it is no longer enough to permanently modernise our human resource management software in order to meet this challenge. Three years ago, we therefore began to develop a digital product family around P&I LOGA3, with P&I BIG DATA as the centrepiece. With our latest software releases, 15.9 (September 2015) and 16.0 (January 2016), we are making this new solution available to our customers. We are living in an era of steadily growing dynamism in which the future is hard to predict. An era in which companies are having to face the serious and sudden challenge of strong competition in the form of companies from other countries or market segments. An era in which almost everything that can be digitised is being digitised, turning company workflows on their head in the process. We see this digital transformation as a major opportunity for our HR software. Our expanded product portfolio allows companies to obtain information on their human resources any time, anywhere. This means that HR departments can fully reposition themselves within their company, establishing themselves as an expert partner for the development of new strategies and their implementation. Digitisation is not a process that can be mandated from above. Without willingness on the part of employees and the support of the HR department, any change is doomed to failure. The most important task of digital human resource management is to support the company and its employees in this process of permanent change. With Release 15.9, P&I has used BIG DATA to enable an entirely new kind of release change for its customers, while Release 16.0 introduces a new generation of user interfaces. This includes new digitalised products for business analytics in the form of P&I LOGA3. P&I s aim is to give HR departments the scope they require to successfully master the challenges of digital transformation. The digitisation of HR is also becoming increasingly important because companies are having to focus on their cost behaviour and process efficiency to a greater extent in today s uncertain marketplace. This is why they are turning to products such as P&I LOGA3 that help to support certain administrative activities with respect to employees and suppliers.

5 FOREWORD FROM THE BOARD OF DIRECTORS 5 We can see that the software industry, and the HR software industry in particular, is facing dramatic changes. Merely overhauling existing software solutions to a greater or lesser extent is not a good recipe for supporting the digital transformation. The market demands an entirely new generation of software whose architecture allows users to customise it to their own requirements. It requires software with integrated business analytics, and intelligently networked software that is able to position the HR department so that it can lead the transformation of the company and pave the way for other departments to follow. We hope that our investments in our digital software portfolio will also persuade you that we have laid the foundations for the continued, successful and sustainable growth of P&I AG. Thank you for the trust you have placed in us. Yours Vasilios Triadis CEO

6 6 1. ORDERS AND REVENUE Total orders on hand amounted to EUR 79.7 million (previous year: EUR 79.6 million); long-term services in the next twelve months accounted for EUR 12.4 million of this figure. This overall figure includes future maintenance/saas income for the coming twelve months in the amount of EUR 50.5 million (previous year: EUR 43.1 million). In the first six months, consolidated revenue increased by 11.2 % year-on-year to EUR 56.7 million (previous year: EUR 51.0 million). Recurring revenue again enjoyed above-average growth of 18.4 % to EUR 30.4 million (previous year: EUR 25.7 million). Maintenance income, software as a service (SaaS) income and recurring income under service agreements are combined in this separate revenue category. P&I generated 54 % of its revenue from recurring revenue business. Consulting services grew compared with the previous year in both traditional non-recurring business and recurring service business (each EUR +1.4 million). Licence revenue fell by EUR 0.4 million year-on-year to EUR 15.3 million. With stable licence revenue of EUR 11.6 million (previous year: EUR 11.7 million), the Germany segment accounted for the largest proportion of revenue. Licence revenue in Austria increased from EUR 1.0 million to EUR 1.9 million thanks to a major order. By contrast, licence revenue in Switzerland declined from EUR 2.4 million to EUR 1.7 million. In recurring revenue, maintenance business saw year-on-year growth as expected due to the licence revenue recorded in the previous years. Ongoing support for our existing customers was also expanded. 2. RESULTS OF OPERATIONS AND COST DEVELOPMENT Operating earnings increased by EUR 1.6 million year-on-year to EUR 21.6 million in the first half of the 2015/2016 financial year. This corresponds to an EBIT margin of 38.0 % after 39.0 % in the same period of the previous year. The results of operations are primarily determined by the increase in recurring services and consulting services combined with permanent cost control. The sale of the rights of use to the Loga Vplus software and the Loga Vplus customer base in Austria resulted in other income of EUR 1.8 million. The future viability of software companies depends to a large extent on their ability to identify changes at an early stage and make investments to secure their earnings strength in a timely manner. The P&I Group invests in its employees as value creators, in its infrastructure and in products such as P&I BIG DATA, P&I LOGA3 and the HR Business Connector with a view to establishing itself as a genuine cloud company. The P&I Group s results of operations were positively affected in particular by the successful business performance in Germany. Austria also recorded significant revenue and earnings growth thanks to a major order. All in all, the results of operations in Switzerland and the rest of the world developed in line with expectations.

7 7 The financial result declined in the first half of the 2015/2016 financial year on account of the change in the Swiss franc exchange rate and the resulting exchange rate losses on an intra-group loan. P&I AG no longer recognises any income taxes following the termination of the tax sharing agreement between Argon GmbH and P&I AG as of March 31, Tax expenses incurred by foreign subsidiaries amounted to EUR 0.3 million in the first half of the 2015/2016 financial year. 3. RESEARCH AND DEVELOPMENT An innovative product is a prerequisite for sustainable development. With its P&I LOGA3, P&I PLUS and Mirus brands, P&I has a valuable brand portfolio in the European software industry. The acquisition of Soreco HR AG and its products has further reinforced the Swiss market in particular. In the area of research and development, a total of EUR 8.6 million (previous year: EUR 7.2 million) was invested in the expansion of P&I LOGA, P&I PLUS, the P&I BIG DATA concept, change services in accordance with statutory provisions and collective agreement legislation and new technical developments. This corresponds to 15.1 % of revenue (previous year: 14.0 %). The rising share of revenue attributable to research and development expenses is consistent with Group planning and is intended to secure the future earnings strength of the company. The expenses relate to all P&I products and the maintenance of the products acquired. As in previous years, P&I s development costs did not meet the requirements for recognition as an intangible asset. More detailed information on our research and development activities can be found in the consolidated financial statements for the 2014/2015 financial year (management report, page 6). 4. FINANCIAL POSITION AND NET ASSETS 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. The P&I Group continues to enjoy a solid position with cash and cash equivalents and current financial assets totalling EUR 24.4 million (March 31, 2015: EUR 51.4 million). Cash and cash equivalents are currently in line with planning and the liquidity requirements of our business. The Group does not have any short-term refinancing requirements and has sufficient financing scope for its future corporate development. The cash flow statement as at September 30, 2015 shows an operating cash flow of EUR -6.3 million on the back of an increase in consolidated net income (September 30, 2014: EUR -7.1 million). The main reason for this negative cash flow,

8 8 which is seasonal in nature, is the system used for the annual invoicing of maintenance and recurring service business. The annual invoices issued at the start of the calendar year mean that comparatively high payments are received in the fourth quarter of the respective financial year, whereas the corresponding income is realised over the term of the respective agreement. Expenses and payments relating to maintenance/recurring service business are distributed across the year. This means that there is traditionally an extremely high level of cash and cash equivalents at the turn of the Group s financial year. The associated reversal of deferred income over the year is the main reason for the higher negative operating cash flow coupled with an increase in consolidated income. The non-current financial assets in the amount of EUR 62.2 million (March 31, 2015: EUR 75.2 million) include a loan plus accrued interest to an affiliated company, Argon GmbH, in the amount of EUR 39.3 million (March 31, 2015: EUR 59.9 million). The reduction in the loan granted was due to its offsetting against the liability from the profit transfer agreement in accordance with a netting agreement concluded in May Further loan tranches in the amount of EUR 13.5 million were issued in the second quarter of the 2015/2016 financial year. The equity ratio increased from 34.0 % (March 31, 2015) to 63.5 %. This was due to the lower level of total assets and the reporting of P&I AG s net income for the period in equity, as the profit transfer only comes into effect at the end of the financial year. 5. EMPLOYEES In the period under review, the P&I Group had a total of 402 FTEs expressed as an average for the financial year as a whole (previous year: 390). The Group had 266 employees in Germany (September 30, 2014: 273) and 136 in the rest of Europe (September 30, 2014: 117), with the development centre in Slovakia (52 employees; September 30, 2014: 50) constituting the largest individual component of this figure. In Switzerland, the three companies have a total of 51 employees following the acquisition of Soreco HR AG (September 30, 2014: 37). The company in Austria has 30 employees (September 30, 2014: 29). 6. OUTLOOK The Management Board is reiterating its forecast of organic consolidated revenue growth in excess of the five % mark in the 2015/2016 financial year. Taking into account the acquisition of Soreco HR AG, the actual revenue growth will be higher. On the basis of the expected revenue increase, the profitability of the P&I Group will remain at its high level providing that significant cost efficiency is achieved, with an EBITDA target in the region of EUR 47 million.

9 CONSOLIDATED INCOME STATEMENT 9 CONDENSED S CONSOLIDATED INCOME STATEMENT IFRS CONSOLIDATED INCOME STATEMENT 2nd quarter Jul. 1 - Sept. 30, nd quarter Jul. 1 - Sept. 30, st half Apr. 1 - Sept. 30, st half Apr. 1 - Sept. 30, 2014 EUR thousand Revenue 28,888 25,994 56,717 51,011 Cost of sales 9,252 7,351 17,852 14,639 Gross profit 19,636 18,643 38,865 36,372 Research and development costs 4,261 3,469 8,541 7,170 Selling costs 2,968 2,667 6,265 5,404 Administrative costs 1,571 1,365 3,113 2,703 Amortisation of customer base Other operating income , Other operating expenses Operating earnings (EBIT) 10,239 10,429 21,551 19,910 Financial income Finance expenses Earnings before taxes (EBT) 10,249 10,876 22,136 20,891 Tax expenses 17 2, ,341 Consolidated net income 10,232 8,145 21,794 15,550 Consolidated net income attributable to shareholders of the parent company 10,232 8,145 21,794 15,550 non-controlling shareholders

10 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 10 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME IFRS CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 2nd quarter Jul. 1 - Sept. 30, nd quarter Jul , st half Apr. 1 - Sept. 30, st half Apr. 1 - Sept. 30, 2014 EUR thousand Consolidated net income 10,232 8,145 21,794 15,550 Items that may be reclassified to profit or loss in subsequent periods Currency translation of foreign operations Change in the fair value of financial assets available for sale of which change in unrealised gains and losses of which change in realised gains and losses of which income tax effects Other comprehensive income Consolidated comprehensive income 9,354 8,182 20,816 15,574 Consolidated comprehensive income attributable to shareholders of the parent company 9,354 8,182 20,816 15,574 non-controlling shareholders

11 CONSOLIDATED BALANCE SHEET 11 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF SEPTEMBER 30, 2015 IFRS CONSOLIDATED STATEMENT OF FINANCIAL POSITION September 30, 2015 March 31, 2015 EUR thousand Assets Non-current assets Customer base 10,145 4,642 Goodwill 10,116 4,391 Other intangible assets Property, plant and equipment 1,605 1,672 Financial assets 39,423 63,528 Deferred tax assets Total non-current assets 62,240 75,216 Current assets Inventories Trade receivables 16,923 16,723 Gross amount due from customers for contract work 5,786 2,688 Current financial assets 0 10,000 Other current assets 2,725 2,452 Cash and cash equivalents 24,397 41,393 Total current assets 49,992 73,418 Total assets 112, ,634

12 CONSOLIDATED BALANCE SHEET 12 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF SEPTEMBER 30, 2015 IFRS CONSOLIDATED STATEMENT OF FINANCIAL POSITION September 30, 2015 March 31, 2015 EUR thousand Equity and liabilities Equity Issued capital 7,700 7,700 Capital reserves 2,334 2,334 Retained earnings 62,802 41,008 Treasury shares -1,924-1,924 Accumulated other comprehensive income 399 1,377 Total equity 71,311 50,495 Non-current liabilities Deferred tax liabilities 1, Other non-current liabilities 2,071 2,300 Total non-current liabilities 3,976 3,081 Current liabilities Trade payables 2,479 3,314 Liabilities from profit transfer 0 33,153 Tax liabilities 1,266 1,887 Tax liabilities from tax sharing agreement 4,969 5,022 Deferred income 13,539 35,596 Gross amount due to customers for contract work 3,347 2,136 Other current liabilities 11,345 13,950 Total current liabilities 36,945 95,058 Total liabilities 40,921 98,139 Total equity and liabilities 112, ,634

13 CONSOLIDATED CASH FLOW STATEMENT 13 CONSOLIDATED CASH FLOW STATEMENT IFRS CONSOLIDATED CASH FLOW STATEMENT EUR thousand 1st half Apr. 1 - Sept. 30, st half Apr. 1 - Sept. 30, 2014 Consolidated net income 21,794 15,550 Tax expenses 342 5,341 Financial result (financial income less finance costs) Earnings before interest and taxes (EBIT) 21,551 19,910 Depreciation of property, plant and equipment and amortisation of intangible assets and financial assets 1,444 1,066 Change in inventories, trade receivables and other assets not attributable to investment or financing activities ,684 Change in trade payables and other liabilities not attributable to investment or financing activities -26,657-24,787 Losses/gains on the disposal of non-current assets -1,750 1 Changes in other non-cash items Interest paid Interest received Tax payments ,928 Cash flow from operating activities -6,324-7,104 Payments for investments in property, plant and equipment Payments for investments in intangible assets Proceeds from the disposal of property, plant and equipment and intangible assets Proceeds from the disposal of non-current financial assets 5,215 0 Proceeds from the disposal of current financial assets 10,000 0 Payments for investments in non-current financial assets -13,730-9,258 Payments for company acquisitions -11,732 0 Cash flow from investing activities -10,251-9,787 Cash flow from financing activities 0 0 Exchange rate-related changes in value of cash and cash equivalents Change in cash and cash equivalents -16,996-16,808 Cash and cash equivalents at beginning of period 41,393 44,547 Cash and cash equivalents at end of period 24,397 27,739

HISTORY OF GROUP REVENUE DEVELOPMENT 14 HISTORY OF GROUP REVENUE DEVELOPMENT Revenue by activity April 1 - September 30, 2015 April 1 - September 30, 2014 April 1 - September 30, 2013 EUR thousand

14 HISTORY OF GROUP REVENUE DEVELOPMENT 14 HISTORY OF GROUP REVENUE DEVELOPMENT Revenue by activity April 1 - September 30, 2015 April 1 - September 30, 2014 April 1 - September 30, 2013 EUR thousand Share EUR thousand Share EUR thousand Share Licences 15, % 15, % 13, % Maintenance 22, % 19, % 17, % SaaS 2,519 4 % 2,054 4 % 1,772 4 % Service agreements/asp 5, % 4,204 8 % 3,091 6 % Recurring revenues 30, % 25, % 22, % Consulting 9, % 8, % 8, % Other 1,156 2 % 1,134 2 % 1,202 3 % Total 56, % 51, % 45, % Revenue by business segment April 1 - September 30, 2015 April 1 - September 30, 2014 April 1 - September 30, 0, 2013 EUR thousand Share EUR thousand Share EUR thousand Share Germany 42, % 38, % 35, % Switzerland 8, % 6, % 5, % Austria 5,316 9 % 4,282 8 % 4, % International % % % Total 56, % 51, % 45, % Wiesbaden, November 12, 2015 P&I Personal & Informatik AG Vasilios Triadis Stefan Gaiser

15 CONTACT P&I Personal & Informatik AG Kreuzberger Ring Wiesbaden Germany Phone +49 (0) Fax +49 (0) Internet

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