NEW OPPORTUNITIES ABRIDGED ANNUAL REPORT

Transcription

1 NEW OPPORTUNITIES ABRIDGED ANNUAL REPORT P&I PERSONAL & INFORMATIK AG 1 APRIL MARCH 2007

2 Abridged Annual Report P&I AG Foreword from the Board of Directors Dear Shareholders, Dear Sir or Madam, After a successful fiscal year, we are continuing to pursue our goals. Having completed one year, we are facing the challenge of a new one with the motto: The future has begun. In order to continue to achieve our steady, highly profitable growth, we must confront these challenges which lie before us. 1. European orientation. For many years a problem child for us, our European business outside Germany has developed splendidly. Contributing 21 % to sales and 31 % to EBIT, our international division is today a vital component of our business. What are the reasons behind this development? On the one hand, our concentration on Austria, Switzerland, the Nether - lands, France and Spain was an important step in achieving this success. On the other, through the changes we have made to our organisational structure and product competences, we have been able to adapt ourselves more rapidly, more surely and with greater efficiency to the needs of foreign markets. Our strategy of think global, act local, has enabled us to improve the liaison between onsite local operations with centrally based resources in Germany. We have also achieved this in some areas by placing employees from the German organisation in key positions in local organisational units. 2. Expansion of our product portfolio A major factor in our success is of course our constant endeavour to extend our product portfolio so that every aspect of the human resources process can be covered by our standard software. We have added the functions of HR management and the web-based employee portal onto the payroll accounting base. The most recent additions we have made are the time management and personnel deployment functions, which have aided us in winning more market share from specialist providers. What we want to do now is amplify our range of USPs by rounding out our product portfolio. 3. Profitability In the past few years, we have boosted our levels of profitability and operating efficiency. This applies to Consulting just as much as to sales organisation and software development, but also of importance has been the trimming down and restructuring of the processes in our own administration. The result is reflected in the development of the EBIT margin, which climbed from 11.6 % in fiscal 2004/2005 to 19.6 % in fiscal 2005/2006. In the past year, we overtook the 20 % mark, attaining a margin of 22.5 %. 4. New business sectors The deals struck with the large, internationally active BPO specialists, Logica and ADP show that our software fulfils the requirements of such HR service providers. Even more, they are the key to our entry into the global player arena in the HR services market. Not only our modern, future-oriented software, but also our entire corporate organisation and its processes have been the deciding factors in attracting this long-term investment in a strong partnership for jointly-provided, high-quality, international HR services.

3 Abridged Annual Report P&I AG Foreword from the Board of Directors This relationship does not just represent a new market segment for us. It also makes new business models possible. The forceful growth strategies of such partners, combined with their very effective sales organisations will help us to open up completely new markets. They are also opening the door for us to their existing customers, to whom we would have had no access on our own. So, aside from the prospect of new business, a huge potential of customers exists who want to change at last from their outdated solutions to our modern platform. These new markets will lead to changes in licensing models as well. Licences will be leased rather than sold to our partners. For us this means long-term, steady, revenue from licences and therefore greater reliability in setting targets for Licensing sales. In this connection, as well as the actual supply of software and assistance with its installation, ongoing support for the solution will be placed in the foreground. A very wide range of Service Level Agreements will be offered to complement our spectrum of services sustainably and successfully. Last but not least, involvement in partnerships with HR service providers who are international players means a substantial increase in the share of sales generated by foreign business. The trend we can already perceive towards growing international business will be significantly accelerated. As you can see, we will have some big challenges to deal with in the future. A prerequisite for handling these new domains capably and without neglecting existing business is having employees with huge expertise who are yet eager for the chance to take on new challenges. I would like to thank our employees for their great dedication, and look forward with pleasure to scaling new heights of success with these highly motivated and committed colleagues in the future. P&I has changed and will carry on changing. So far, our employees have not only accepted the changes, but have also comprehended them as opportunities, which they have done their utmost to benefit from. Backed by this knowledge, I can only look ahead with the fullest confidence in a successful future and say: The future has begun. Yours faithfully Vasilios Triadis P&I AG CEO, Chairman of the Board

4 Abridged Annual Report P&I AG P&I Group in Figures Key figures acc. to IAS 2006/ /06 Changes Changes '000 euro % Group sales 54,541 49,983 4, % Result before depreciation (EBITDA) 15,590 13,056 2, % Result before interest and taxes (EBIT) 12,252 9,782 2, % Consolidated result (DVFA/SG) 8,786 7,395 1, % Number of employees (average) % Earning per share (DVFA/SG) % Hightlights 2006/2007 The P&I success story continues: EBIT margin rises to 22.5 % in fiscal 2006/2007 Total sales for the P&I Group rose by 9.1 % to 54.5 million euros. With an EBIT of 12.3 million euros, the previous year's result was raised by 2.5 million euros, achieving a margin of 22.5 % (previous year: 19.6 %). Repeat proposal for payout of dividends At the next Annual General Meeting, the Supervisory Board and Board of Directors intend to propose a payout of a dividend of 1.00 euro per share. This represents approximately 96 % of the 2006/2007 annual profit for P&I AG. Successful entry into the BPO (Business Process Outsourcing) market Internationally active BPO specialists, ADP, Germany and LogicaCMG, Holland have opted for P&I's integrated HR Software solution, P&I LOGA. Audits carried out by such providers have shown that P&I software and development meets their requirements fully. Deciding factors in the long-term investment decision made by these BPO providers were P&I's transparent, well-focused corporate strategy and its corporate organisation and processes.

5 Abridged Annual Report P&I AG Consolidated Balance Sheet Consolidated Balance Sheet acc. to IAS expressed in '000 euros, commercially rounded Assets Long term assets Customer base 10,127 10,298 Goodwill Other intangible assetse 1,137 1,311 Tangible assets 1, Financial assets Deferred taxes Total long term liabilities 13,913 12,716 Short term assets Inventories Receivables and other assets 14,803 10,543 Cash 6,472 25,240 Available-for-sale financial assets 18,288 14,874 Other short term assets 1, Total short term assets 40,757 51,741 Total assets 54,670 64,457

6 Abridged Annual Report P&I AG Consolidated Balance Sheet Consolidated Balance Sheet acc. to IAS expressed in '000 euros, commercially rounded Equity and Liabilities Shareholders' Equity Subscribed capital 7,700 7,700 Capital reserve Revenue reserve Other equity Balance sheet profit 17,501 31,815 Total shareholders' equity 24,429 38,799 Long term liabilities Deferred tax liabilities 2, Other reserves 1, Other long term liabilities Total long term liabilities 3,873 1,435 Short term liabilities Other short term liabilities 6,386 5,904 Trade payables 1,894 1,662 Tax liabilities 3,997 3,070 Payments received Deferred revenues 13,888 13,175 Total short term liabilities 26,368 24,223 Total equity and liabilities 54,670 64,457

7 Abridged Annual Report P&I AG Consolidated Statement of Income Abridged Annual Report P&I AG Consolidated Statement of Income Consolidated earnings acc. to IAS Quarterly financial Quarterly financial 2006/ /2006 statement statement 1.1.to to to to expressed in '000 euros Sales 16,470 13,728 54,541 49,983 Cost of sales 4,926 4,600 16,847 15,562 Gross profit from sales 11,544 9,128 37,694 34,421 Research and development expenses 2,655 2,635 10,129 9,782 Sales and distribution expenses 2,112 2,469 8,292 8,678 Administrative expenses 1,042 1,056 3,848 3,816 Write down of goodwill ,322 2,269 Other operating income Other operating expenses , Result of ordinary activities (EBIT) 4,260 2,663 12,252 9,782 Income from investments Financing expenses Currency translation gains Currency translation losses Result of ordinary activities before tax 4,390 2,876 13,113 10,605 Tax expenses* ,327 3,210 Net profit for the year acc. to DVFA/SG 3,488 2,419 8,786 7,395 Average number of shares issued (undiluted) 7,700,000 7,700,000 7,700,000 7,700,000 Average number of shares issued (diluted) 7,700,000 7,700,000 7,700,000 7,700,000 Earnings per share in euro (diluted/undiluted) * Taxes paid or due on corporate income and earnings are shown as taxes on income, as well as tax accruals and deferrals.

8 Jahreskurzbericht P&I AG Consolidated Cash Flow Statement Cash Flow Statement acc. to IAS 2006/ /2006 expressed in '000 euros EBIT 12,252 9,782 Depreciation on fixed assets 3,338 3,274 Changes in accruals for pensions 0-2,416 Changes in inventories, trade receivables and other assets -5,461-1,994 Changes in liabilities and other equity and liabilities 2,184 1,088 Result from the sale of fixed assets 3 8 Result from the sale of of current assets Changes in other items not affecting payments Funds received from operating activities -1, Minimum Regulatory Capital Operating activities 10,636 8,757 Investment activities -6,304-2,904 Financing activities -23,100-6 Changes in liquid resources -18,768 5,847 Liquid resources at the beginning of the fiscal year 25,240 19,393 Liquid resources at the end of the reporting period 6,472 25,240 Breakdown of funds at the end of the fiscal year Cash and cash equivalents 6,472 25,240 Financial assets held for sale with a duration > 3 months 18,288 14,874 Liquidity 24,760 40,114

9 Abridged Annual Report P&I AG Notes including Segment Reporting Change in shareholders equity Annual financial statement 2006/ /2006 in 000 euro Shareholders' equity at the beginning of the fiscal year 38,799 31,534 Subscribed capital 7,700 7,700 Capital reserve Revenue reserve Other shareholder's equity Balance sheet result 17,501 31,815 Shareholders' equity at of the period 24,429 38,799 Orders and Sales Orders on hand for the next twelve months amount to Euro 34.4 million as at March 31, Of these, Euro 20.4 million attributable to maintenance business. After Euro 11.6 million in the first quarter and Euro 12.5 million in the second quarter sales in the second quarter amounted to Euro 14.0 million in the third quarter (previous year: Euro 11.0 million in the first, Euro 11.3 million in the second and Euro 14.0 million in the third quarter) and Euro 16.5 million in the fourth quarter (previous year: Euro 13.7 million). Annual sales of Euro 54.5 million represented a year-on-year increase of Euro 4.5 million or 9.1 %. Profit situation and cost development The operating result rose by Euro 2.5 million to Euro 12.3 million. The EBIT margin rose from 19.6 % to 22.5 %. Operating costs in the fiscal year 2006/2007 months amounted to Euro 42.3 million compared with Euro 40.2 million in the comparable period in the previous year. The increase in costs for the P&I Group amounted to 5.2 %, as against a 9.1 % increase in sales. The increase in EBIT resulted from growth in revenue from product sales and also Consulting. Research & Development Investment of Euro 10.1 million was made in Research and Development for product improvement, updates for changes in legislation and collective bargaining arrangements-agreements, and development of new technologies. A new development is the P&I LOGA Analyse module, which allows individual analysis of salary statements. As a first step, P&I has made the module capable of analysing the gross wage type. With this P&I product, HR clerks and systems administrators can provide swift and uncomplicated responses to queries from employees regarding their payslips. Other priorities for product improvement are the development of web based personnel scheduling and time management in the C/S (Client/Server) area and web portals as well as a project time recording function. Currently, the web based personnel scheduling functionality is being developed in two directions at the moment: shift-oriented (for example hospitals) and need-oriented (for example peak time transactions or call centres).

10 Abridged Annual Report P&I AG Notes including Segment Reporting Investments Fixed investments amounting to Euro 4,172,000 have been made. Acquisitions On December 8, 2006 and with effect from January 1, 2007, P&I Personal & Informatik AG took over KSL Gesellschaft für kommunale Informationssysteme mbh, based in Zweibruecken, Germany, by means of a notarised purchase agreement. The purchase price was paid in cash. The purchase price for the acquisition can be apportioned as follows: In '000 euros book value fair value Liquid assets Trade receivables Other assets Fixed assets Other financial assets Liabilities from accounts payable for supplies -4-4 Other liabilities Deferred tax liability Additional value of net capital Established customer value 0 2,151 Software Goodwill achieved by the purchase ,506 Outflow of funds for purchase of company: Outflow of funds 2,506 Earned funds of the subsidiary 418 Outflow of funds for purchase of company 2,088 The differential amount between the fair value of the net assets and the purchase price of the participation was assigned in full to the identifiable assets, the customer base (Euro 2,151,000) and software (Euro 229,000) and goodwill (Euro 945,000). The recoverability of the balance positions was checked. There are no sleeping reserves or debts. There are no contingency debts. The established customer value acquired will be depreciated over ten years, the software purchased over five years. Since the purchase date, KSL Gesellschaft für kommunale Informationssysteme mbh, Zweibruecken, has contributed 36,000 euros to the Group result. Between January 1, 2006 and 31 December, 2006, the company realised an annual profit of 237,000 euros. For reasons of economy, no interim financial statements for comparative purposes were prepared for March 31, 2006.

11 Abridged Annual Report P&I AG Notes including Segment Reporting KSL Gesellschaft für kommunale Informationssysteme mbh creates, sells and maintains HR software packages and provides related hotline and training services. The payroll accounting software BAGE2000 was developed especially for customers in the public administration sector. Its customer base chiefly comprises municipalities and district administrations. The takeover of KSL will reinforce P&I's capabilities in the public administration field. As a leading provider of personnel management software in the Public Administration market segment, P&I, can ensure the further development of KSL's BAGE2000 software. P&I Personal & Informatik AG intends, retrospective to April 1, 2007, to take over, as the absorbing company and by way of an amalgamation ( 2 Item 1, German Reorganisation of Companies Act, UmwG), its 100 % subsidiary, KSL Gesellschaft für kommunale Informationssysteme mbh, based in Zweibruecken, as transferring company, with no granting of new shares. The advice of an impending merger pursuant to 62, Para. 3, UmwG, was transmitted to the electronic pages of the Bundesanzeiger on April 25, Publication of this took place on April 27, The draft of the Merger Contract was filed at the Wiesbaden local court on April 25, The notarial act effecting the merger was executed on May 29, Shareholdings by the company and executive bodies As at March 31, 2007, neither P&I AG nor any other company have a shareholding in P&I s own shares pursuant to 160 Para. 1 No. 2 AktG (German Companies Act). No convertible bonds or similar securities pursuant to 160 Para. 1 No. 5 AktG had been issued as at March 31, As at March 31, 2007, Members of the Board of Directors or of the Supervisory Board are not holding any P&I shares or stock options. Segment reporting The rise in sales is the result of across-the-board growth in all sales categories. Above-average growth rates were generated in the P&I Group in Consulting, where sales grew by 11 % year on year, from 16.1 million euros to 18.0 million euros. 33 % of total sales were realised in the area of Consulting. Following sales of 13.3 million euros in the previous year and a growth rate of 9.2 %, the P&I Group has again raised Licensing sales, by 8.5 %, or 1.1 million euros, to 14.4 million euros in the fiscal year just ended. In this current fiscal year, a number of medium and smaller-sized projects have been realised as well. However, a double-digit growth rate can only be achieved if we conclude deals for major projects, as in the fiscal year just ended. The demand for HCM (Human Capital Management) products has risen considerably and the need for systems for time management and personnel deployment has also grown. P&I's web-based solutions are proving winners with many of our new customers. The highest contribution to sales came from the profitable Maintenance business with sales volume of almost 20.7 million euros (previous year: 19.1 million euros) and a contribution to total sales of nearly 38 %.

12 Abridged Annual Report P&I AG Notes including Segment Reporting P&I realised domestic sales of 43.2 million euros, representing 79 % of total sales, and international sales of 11.4 million euros. Sales figures for the P&I Group improved both in the German market, where it maintains a strong presence (up 1.5 million euros) and internationally (up 3.1 million euros). However, in percentage terms, the growth in foreign sales was considerably greater. The geographical segment result for the current fiscal year is set out as follows: '000 euros 2006/ /2006 Sales Domestic 43,173 41,690 International 11,368 8,293 Group 54,541 49,983 EBIT Domestic 8,450 8,569 International 3,802 1,213 Group 12,252 9,782 Employees As at March 31, 2007, P&I employed 308 staff, 263 in Germany and 45 abroad. If part-time jobs are taken proportionally into account, this represents an average FTE (employment quotient) of 275 in the reporting period, with 229 employed in Germany and 46 abroad. Dividends The net profit shown in the annual financial statements of P&I Personal & Informatik AG is, pursuant to the German Companies Act, material to a dividend distribution. Paid dividends 2005/2006 In the ordinary Annual General Meeting of August 29, 2006, payout of a dividend of Euro 3.00 per share was resolved on. There are two components to the dividend: one part from a one-off extra dividend from the repayment of a capital reserve of Euro 18,780,000, and the other from approximately 50 % of the profits carried forward as well as of the annual profit 2005/2006 for P&I AG of Euro 44,320,000. With 7,700,000 shares issued which are entitled to a dividend for fiscal 2005/2006, the sum to be distributed amounted to Euro 23.1 million, and was paid out to shareholders on August 30, Proposed dividend 2006/2007 At the next Annual General Meeting, the Supervisory Board and Board of Directors intend to propose a payout of a dividend of Euro 1.00 per share. With 7,700,000 shares issued currently entitled to a dividend for fiscal 2006/2007, the sum to be distributed amounts to 7.7 million euros. The remaining net profit will be carried forward to new account.

13 Abridged Annual Report P&I AG Notes including Segment Reporting Miscellaneous The annual general meeting for the current fiscal year took place on August 29, All decisions were taken in line with the recommendations of management. For the first time since P&I s listing on the stock exchange in 1999, payment of a dividend was resolved on. Once again, a share buyback scheme was approved, as well as the motion concerning the opting out of the individual disclosure of the Board of Directors' remuneration, and an amendment to the Memorandum and Articles of Association on editorial grounds. Further, the acts of the Supervisory Board and Board of Directors for fiscal 2005/2006 were ratified unanimously by the AGM and the appointment of Mr Klaus C. Plönzke of Wiesbaden to the Supervisory Board was confirmed. Mr Wilhelm Konrad Thomas Zours, Heidelberg, informed the Company on March 2, 2007 in compliance with 21 Para. 1 of the German Securities Trade Act (WpHG), that his share of voting rights in P&I AG as at February 28, 2007 had risen above the 5 % threshold and amounted to % (387,270 votes). The votes are assigned completely to Mr Wilhelm Konrad Thomas Zours in accordance with 22 Para. 1 Sentence 1, Item 1 WpHG. The voting rights of the companies of DELPHI Unternehmensberatung GmbH, VV Beteiligungen AG and Deutsche Balaton Aktiengesellschaft, all of Heidelberg and each with a share of voting rights of more than 3 % or more, are assigned to P&I. Assigned voting rights are held through the companies DELPHI Unternehmensberatung GmbH, VV Beteiligungen AG and Deutsche Balaton Aktiengesellschaft, all of Heidelberg, being controlled companies each with voting rights of 3 % or more. Selected facts and figures The Group annual financial statements for P&I AG were prepared in compliance with the financial accounting standards of the International Accounting Standards Board (IASB) the International Financial Reporting Standards (IFRS). The accounting and valuation methods applied conform in general with those applied in the previous year. As a consequence of its modified Product and Market strategy as a provider of integrated software solutions, and as well, the altered internal control mechanisms in operational areas, the Company is reporting for the first time on business area according to field of activity in its segment reporting in fiscal 2006/2007. These business areas are divided into the categories of Product (Licensing and Maintenance), Consulting/Systems Integration, and Other. Up to now, product specific areas of Loga Payroll and Loga HRMS have been combined, as it was not possible to separate the product improvement, sales activities and consulting services of the former sectors. The previous year's figures have been adjusted to the segmenting. Risks There has been no significant change in the risk profile as outlined in the Annual Report of March 31, P&I AG has a company-wide risk-management system in place to monitor and control manageable risk.

14 Abridged Annual Report P&I AG Notes including Segment Reporting Outlook 2007/2008 The P&I Group has set a target for organic sales growth of between 5 % and 8 % for the coming fiscal year, 2007/2008. As in the fiscal year just ended, we are aiming for growth in domestic business as well as in business with international customers. In the positioning of time management we see that the prospects here for steady increases in sales are good. Our goal is not only to win over existing customers to this product. We also aim to fully exploit the clear competitive advantage that our integrated P&I software solution gives us over others in the market in order to gain new customers. Extending our cooperation with the large international BPO providers not only means our entry into a new market segment, but at the same time, opens up possibilities for new business models, and brings with it an broadening of the company's spectrum of services. P&I offers a software solution for all HR processes, and a product with cross-border application for payroll accounting and employee self management. Our aim is to continue the successful acquisition of new customers we have achieved in previous years, and so gain a broader customer base and increased market share. In setting its targets, the P&I Group is anticipating a positively developing economic environment and expects that organisations will be increasing their investment levels. Our top-priority goal however, has been and remains the improvement of the EBIT margin, which we aim to establish long-term above the 20 % level. P&I is looking at the future with confidence. With our excellent and comprehensive product portfolio, transparent, well-focused corporate strategy, professionalism and affordable price structures, we have no doubt that we can continue to build on our sturdy market position in the coming years. We will continue to pursue our goals consistently and steadily. Wiesbaden, June 14, 2007 The Board of Directors

15 Abridged Annual Report P&I AG Notes including Segment Reporting Financial Calendar 9 August 2007 Publication of the Quarterly report FY 2007 / August 2007 Shareholders Meeting for 2007 in Wiesbaden 8 November 2007 Publication of the Half-yearly report 2007 / Februar 2008 Publication of the 9-Monthly report 2007 / 2008 P&I AG Investor Relations Kreuzberger Ring Wiesbaden Telefon (06 11) Telefax (06 11) aktie@pi-ag.com Internet WKN ISIN DE