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Investor Relations
Allgeier reports sales growth in financial year 2014

03/06/2015

Munich, 06.03.2015 – Preliminary figures indicate that Allgeier SE (ISIN DE0005086300, WKN 508630) recorded further growth in sales in continued operations in financial year 2014 (1 January 2014 to 31 December 2014), inspite of the difficult year for the Experts segment (as detailed in the ad hoc announcement of 29 July 2014 and the half-year financial report to 30 June 2014), and turned in a positive result. In 2014 the Group continued to pursue the change in strategy initiated two years ago. During the year the management team once again devoted a great deal of time to ensuring that the Group’s three segments were more strongly focused on high-growth and high-margin future-oriented business. In this context, in the past year the Group disposed of DIDAS Business Services GmbH, Langenfeld, as well as the Allgeier Benelux business unit (Allgeier N.V., Belgium, Allgeier Computer BV, Netherlands, Allgeier S.A., Luxembourg, Allgeier Ltd., Cyprus and Allgeier Ltd., Turkey). In accordance with IFRS, both units are included in the financial statements under the heading of discontinued operations. The process of focusing will continue in 2015.

Given the wide variations in the development in business in individual segments in financial year 2014, in the interests of greater clarity the preliminary figures for the three segments are detailed hereinafter as additional information, followed afterwards by the figures for the Group:

Experts segment (IT personnel services)

The Experts segment achieved preliminary sales of EUR 228.6 million in 2014 (previous year: EUR 245.3 million), representing a decline of 7 percent. This was primarily attributable to the conclusion of a major project at the end of the year 2013, as well as to the effects of labour market policy uncertainties in the first half of 2014. Preliminary value added (aggregate performance less sales costs and personnel costs directly attributable to sales) accordingly declined to EUR 38.5 million, down 7 percent relative to the year before (previous year: EUR 41.5 million), equating to a gross margin of 16.9 percent (previous year: 16.9 percent). Preliminary EBITDA from operations (before extraordinary effects and effects relating to other periods) was down by a disproportionate 32 percent to EUR 10.3 million (previous year: EUR 15.1 million). One of the main reasons for this is that the company refrained from personnel downsizing and, in particular, invested in sales and marketing instead, as well as in improved internal structures, which was reflected by an above-average acquisition of new customers compared with previous years.

Solutions segment (IP and IT Solutions)

The Solutions segment (continued operations) increased its sales by 6 percent to EUR 88.6 million (previous year: EUR 83.9 million) according to preliminary figures. Preliminary value added (gross margin) accordingly rose by 5 percent to EUR 29.2 million (previous year: EUR 27.8 million), equating to a gross margin of 33.1 percent (previous year: 32.9 percent). However, preliminary EBITDA from operations (before extraordinary effects and effects relating to other periods) slipped by 15 percent to EUR 5.3 million (previous year: EUR 6.3 million). Material factors contributing to the decline included investments in developing a business unit acquired by the Group in August 2014. This resulted in a nominal charge against earnings (EBITDA) of EUR 1.2 million.

Projects segment (software development)

The Projects segment (software development) recorded strong growth of 26 percent, which lifted preliminary sales to EUR 114.8 million (previous year: EUR 91.3 million). Preliminary value added increased by 29 percent to EUR 41.8 million (previous year: EUR 32.4 million), equating to a gross margin of 36.2 percent (previous year: 35.6 percent). Preliminary EBITDA from operations (before extraordinary effects and effects relating to other periods) climbed 22 percent to EUR 15.3 million (previous year: EUR 12.5 million).

Group

At the Group as a whole, preliminary consolidated revenues from continued operations as per IFRS in financial year 2014 came in at EUR 428.3 million (previous year: EUR 414.8 million), representing growth of 3 percent. Preliminary value added at operational level rose by a disproportionate 8 percent to EUR 109.6 million (previous year: EUR 101.7 million), equating to a gross margin of 25.4 percent (previous year: 24.1 percent). Allgeier has now taken another step along the path towards increasing the fundamental profitability of its business operations. The development of the Experts segment, which was accompanied by extraordinary, non-recurrent items, in the past year should not disguise the fact that around two thirds of the value added by the Group was achieved with a gross margin averaging over 33 percent.

As a result of the situation described above at the Experts segment and the investments in developing the Solutions segment, the result for the Group as a whole was somewhat lower than in the year before: Preliminary EBITDA from operations (before extraordinary effects and effects relating to other periods) slipped by 10 percent to EUR 25.6 million (previous year: EUR 28.5 million). Preliminary extraordinary earnings for financial year 2014 were negative at EUR -2.2 million (previous year: EUR 0.6 million). Significant contributing factors in this instance were the effect of currency fluctuations and currency hedging, as well as non-recurrent costs incurred through financing the Group totalling EUR -1.5 million (previous year: EUR -0.6 million). Preliminary consolidated EBITDA from continued operations accordingly amounted to EUR 23.4 million (previous year: EUR 29.8 million). Preliminary consolidated EBIT (earnings before interest and taxes) from continued operations came in at EUR 10.6 million (previous year: EUR 16.5 million). The Group generated preliminary pre-tax earnings from continued operations in the amount of EUR 6.3 million (previous year: EUR 12.5 million). The Group received proceeds of EUR 3.0 million from the disposal of the business entities according to preliminary figures.

Preliminary revenues from continued and discontinued operations in the past financial year amounted to EUR 456.5 million (previous year: EUR 477.6 million). Preliminary EBITDA from continued and discontinued operations during the period amounted to EUR 23.4 million (previous year: EUR 30.1 million).

The preliminary figure for equity rose to EUR 102 million as of 31 December 2014 (previous year: EUR 94.7 million). Excluding discontinued operations, the Allgeier Group had liquidity at its disposal as of 31 December 2014 in the amount of EUR 98 million (previous year: EUR 46.7 million). Current and non-current financial liabilities on the balance sheet closing date had increased to EUR 125.2 million (previous year: EUR 75.5 million). The balance sheet total at the end of the financial year stood at EUR 331 million (previous year: EUR 289.3 million).

Outlook for financial year 2015

In view of the widely varying developments at its individual segments, Allgeier SE has decided that an adequately transparent and comprehensive illustration of the company’s current development in this situation should include an outlook for the financial year 2015.

The outlook for the individual segments is as follows:

– The Experts segment has achieved the turnaround back to growth development in the second half of 2014 and expects the investments made in previous years to pay for themselves in 2015. The segment is endeavouring to achieve a single-digit percentage increase in sales accompanied by corresponding growth in earnings. Furthermore, the segment is soon to be further expanded through further acquisitions.

– The Solutions segment continues to focus on growth areas such as Medical IT, Productivity and Mobile Solutions, Banking and Insurance Solutions as well as BPM solutions and is aiming to achieve a double-digit percentage increase in sales along with substantially higher earnings. Additionally, this segment will also be further expanded by acquisitions in 2015.

– The Projects segment with over 2,700 highly qualified employees committed to excellence in high-end software development and engineering is in an outstanding position to achieve further strong growth accompanied by high margins. The segment plans to generate double-digit growth in sales with a corresponding increase in earnings. Also in this segment, the concrete intention is to boost further growth by acquisitions.

Plans for the Group as a whole anticipate overall sales growth in the single-digit range in financial year 2015, but with a disproportionately strong increase in earnings. The projected figures relate exclusively to the organic development of the existing Group and do not include any variations in the portfolio, whether as a result of further acquisitions or due to further divestments.

Allgeier SE is working intensively towards a clear and dynamic development of its portfolio in order to focus the Group’s strategic orientation in the marketplace and take the Allgeier Group to the next level by continuing to sharpen its focus. A particular goal is once again in 2015 to accelerate the future development of the business through further value-creating acquisitions over and beyond current projections. To this end, even before the past financial year came to an end, the Group had already begun to restructure its finances on attractive terms for the years ahead (cf. ad hoc announcement of 4 December 2014).

Note

All of the IFRS figures quoted in this announcement for financial year 2014 are preliminary and have not yet been conclusively verified by the Group auditor. The aforementioned annual results from continued operations are not comparable with the financial year 2013 owing to the retrospective adjustment in the previous year to account for the disposal of the two entities. Publication of the Allgeier annual report for 2014 is scheduled for 30 April 2015. The statements on the year 2015 represent expectations based on current plans and projections; there is no certainty that they will be realized.