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Nemetschek SE

Quarterly Report Oct 30, 2018

301_10-q_2018-10-30_ab665ea8-1fe2-44a7-9050-9bc6d1ecfff4.pdf

Quarterly Report

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QUARTERLY STATEMENT AS OF SEPTEMBER 30, 2018

To our shareholders

Patrik Heider, Spokesman of the Executive Board and CFOO

The Nemetschek Group has maintained its strong growth in the third quarter and further enhanced its earnings. At the same time, the world's second largest provider of software solutions for the AEC sector invested in strategic projects to be sure of continued double-digit growth in the future.

Major indicators of the Group's success in Q3 / the first nine months of 2018

  • » Group revenue in Q3 2018 rose to EUR 114.9 million, yet again demonstrating a strong growth rate of 19.8% (currency-adjusted: 19.7%) compared to the previous year. Purely organic growth in Q3 amounted to 17.0%. Cumulative revenues for the first nine months rose by 14.2% (currency-adjusted: 18.0%) to EUR 330.9 million. Organic growth amounted to 12.4%.
  • » Recurring revenues from software service contracts and subscriptions remained growth drivers in Q3, rising by 26.4% to EUR 58.3 million. An increase of 20.5% was recorded for the period January to September. This disproportionate increase reflects the strategic change to the business model of offering subscriptions in addition to licenses. Revenue from subscriptions increased considerably in Q3 by 64.7% to EUR 5.6 million. Growth in the first nine months was an impressive 46.9%.
  • » Consolidated operating earnings (EBITDA) increased in Q3 by 17.8% year on year to EUR 29.2 million. In the first nine months, the EBITDA rose by 15.3% to EUR 88.2 million; at 26.7%, the EBITDA margin was slightly up on the previous year (26.4%) and as such at the top end of the target range for 2018 of between 25% and 27%. At the same time, Nemetschek invested as planned in strategic projects, including further internationalization and innovative solutions, so as to ensure it would be able to consistently achieve double-digit growth in the future.
  • » In Q3, the net income (Group shares) rose by a significant 19.9% to EUR 18.2 million, prompting the earnings per share to increase to EUR 0.47. Cumulative net income for the first nine months rose by 22.9% to EUR 52.6 million, which corresponds to earnings per share of EUR 1.37.

Our sustained fast pace of growth shows that our strategic priorities are the right ones. The acquisition of MCS Solutions represents a strategically important investment in the Manage segment. We have also maintained the growth dynamic in licenses and recurring revenues from subscriptions and service contracts. And even with our investments in growth, our profitability is still at a very high level. All of this provides an extremely solid basis for the final quarter of the year and beyond.

Segment development

  • » The strongest revenue growth, both in Q3 (35.4%) and in the first nine months (25.6%) (currency-adjusted: +32.9%), was in the Build segment. At 58.1%, the cumulative EBITDA for the first nine months grew disproportionately compared to revenue growth, resulting in the EBITDA margin reaching an impressive 27.3% in the first nine months. Alongside the US brand Bluebeam, Solibri also achieved strong growth, especially in the Nordic countries and the UK.
  • » Q3 also saw double-digit revenue growth (11.1%) in the Design segment. The cumulative increase after nine months was 8.9% (currency-adjusted: 11.3%). Due to investments in growth in this segment in the first nine months of the year, the EBITDA margin decreased year on year from 27.8% to 25.0%.
  • » In the third quarter, the Manage segment was significantly reinforced through the acquisition of MCS Solutions, headquartered in Antwerp. MCS Solutions offers modular and integrated software solutions for property, facility and workplace management as well as smart building platforms designed to optimize productivity and efficiency for building administrators. The first consolidation began in September, meaning MCS contributed revenues of EUR 1.4 million in Q3. Growth in the Manage segment rose in Q3 by 75%, while organic growth was at 8.3%. Cumulative growth amounted to 32.4% (organic: 8.9%). The EBITDA margin increased from 20.1% to 22.0% in the first nine months.
  • » The Media & Entertainment segment recorded a significantly accelerated revenue growth rate of 18.5% in Q3. Cumulative growth after nine months was 7.9% (currency-adjusted: 11.5%). The EBITDA margin increased significantly from 36.9% to 41.9% in the period from January to September. Nemetschek SE increased its share of Maxon from 70% to 100% at the beginning of July. Under the leadership of a new CEO, the brand is now expected to leverage its growth potential even further in the key AEC markets.

Outlook for the Group for 2018 is affirmed

We have confirmed the goals we had set itself so far for the whole of 2018 and expects to achieve EUR 447-457 million* in Group-wide sales this year. The EBITDA margin is expected to be in the corridor of 25% and 27%.

Yours

Patrik Heider

Nemetschek on the Capital Market

Stock market development

Stock markets have experienced further volatility in the third quarter. Once again, the trade war between the United States and China proved a stress factor. In addition, political developments such as the Brexit negotiations and budget talks in Italy played their part in dampening the mood.

In the first nine months of 2018, the DAX dropped by 5%, whereas the technology company stocks consolidated in the TecDAX were able to rise by some 11%. The MDAX was at much the same level as at the beginning of the year (–1%).

Price development of the Nemetschek share since the start of 2018

Since the reorganization of the German stock index on September 24, 2018, the Nemetschek share has been noted in the MDAX as well as in the TecDAX.

On January 2, 2018 the Nemetschek share started at a price of EUR 74.50. At the beginning of February, the share dropped to its lowest price for the year of EUR 72.40 (February 9, 2018), primarily as a result of the overall market environment. Then the share price experienced a considerable rise, but this came to a halt in mid-March in the wake of discussions concerning punitive US tariffs and the consequent slide in share prices on stock markets. The publication of Nemetschek's annual figures for 2017, the positive outlook for the 2018 financial year and the first-time publication of mid-term targets for the year 2020 were conducive to the share price rising again strongly at the end of March. Thereafter the share continued on its upward course until mid-May, at which point it plateaued in keeping with general market development. Following the release of second-quarter results at the end of July 2018, the Nemetschek share began to rise again, a trend continued through the acquisition of MCS Solutions at the end of August. The Nemetschek share achieved its high for the year to date, EUR 153.40, on September 18, 2018. There followed a period of correction, resulting in the Nemetschek share closing significantly under its high at EUR 126.00 at the end of September. All in all, the share has risen by some 69% since the beginning of the year. Nemetschek SE's market capitalization increased accordingly to around EUR 4.85 billion as of the end of September, 2018.

DEVELOPMENT OF THE NEMETSCHEK SHARE AS WELL AS OF THE DAX, MDAX AND TECDAX, INDEXED

Shareholder structure

Nemetschek SE's share capital as of September 30, 2018 was unchanged at EUR 38,500,000 and was divided into 38,500,000 no-par value bearer shares.

The free float as of September 30, 2018 was 46.9 percent.

SHAREHOLDER STRUCTURE*

* Direct shareholdings as of September 30, 2018.

Managers' Transactions

Members of the Executive Board and the Supervisory Board or related parties must report reportable transactions in Nemetschek SE shares if the value of the transactions within a calendar year reaches or exceeds EUR 5,000.

On September 21, 2018, the following transactions were reported to Nemetschek SE in the context of managers' transactions:

MANAGERS' TRANACTIONS

Buyer/Seller Patrik Heider
Name of finance instrument Nemetschek SE Aktie, ISIN DE0006452907
Type of transaction Aquisition
Date of transaction September 21, 2018
Place of transaction Xetra
Average share price in EUR 125.620
Total value in EUR 62,991.53

Key figures

NEMETSCHEK GROUP

in EUR million 3rd Quarter 2018 3rd Quarter 2017 Change 9 month 2018 9 month 2017 Change
Revenues 114.9 95.8 19.8% 330.9 289.8 14.2%
EBITDA 29.2 24.8 17.8% 88.2 76.5 15.3%
as % of revenue 25.5% 25.9% 26.7% 26.4%
EBITA 27.0 22.8 18.4% 82.0 70.5 16.2%
as % of revenue 23.5% 23.8% 24.8% 24.3%
EBIT 23.2 19.5 18.8% 71.4 60.3 18.3%
as % of revenue 20.2% 20.4% 21.6% 20.8%
Net income (group shares) 18.2 15.1 19.9% 52.6 42.8 22.9%
per share in € 0.47 0.39 1.37 1.11
Net income (group shares) before
purchase price allocation
21.1 17.4 20.7% 61.1 50.0 22.2%
per share in € 0.55 0.45 1.59 1.30
Cash flow from operating activities 72.1 68.2 5.8%
Free cash flow 1.1 36.3
Free cash flow (w/o acquisition effects) 64.4 61.1 5.2%
Net liquidity/net debt* –32.5 24.0
Equity ratio* 40.7% 49.5%
Headcount as of balance sheet date 2,529 2,094 20.8%

* Presentation of previous year as of December 31, 2017.

Interim Management Report

Report on the earnings, financial and asset situation

Revenue growth of 14.2%, with continued high EBITDA margin of 26.7%

The Nemetschek Group increased its revenues in the first nine months by 14.2% to EUR 330.9 million (previous year: EUR 289.8 million). Purely organic growth amounted to 12.4%. Currency-adjusted on the basis of constant currency translation rates, this would result in 18.0% revenue growth, or 16.1% purely organic growth.

EBITDA rose disproportionally compared to revenue growth. With a plus of 15.3%, EBITDA rose to EUR 88.2 million (previous year: EUR 76.5 million), which corresponds to an operating margin of 26.7% (previous year: 26.4%).

Significant rise in recurring revenue

During the first nine months, the Nemetschek Group's revenue from software licenses increased by 9.1%, rising to EUR 155.8 million (previous year: EUR 142.8 million). Adjusted for currency fluctuations, the increase amounted to 13.2%. During the same period, recurring revenues rose by 20.5% to EUR 162.4 million (previous year: EUR 134.8 million) – a considerably stronger rise than was achieved in revenue from software licenses. The share of revenue from software licenses amounts to 47.1% (previous year: 49.3%); the share of recurring revenues rose from 46.5% to 49.1%.

Growth impulses by region came particularly from international markets. Revenues within Germany increased by 7.4% to EUR 94.3 million (previous year: EUR 87.8 million). In international markets, the Nemetschek Group achieved revenues of EUR 236.6 million (previous year: EUR 202.0 million), an increase of 17.1% year on year. The share of revenues from international markets amounted to 71.5% (previous year: 69.7%).

Summary of segments

In the Design segment, the Nemetschek Group generated revenue growth of 8.9%, which is equivalent to EUR 198.1 million (previous year: EUR 181.9 million). As a result of planned investments, EBITDA decreased slightly by 1.9% to EUR 49.6 million (previous year: EUR 50.5 million). This is equivalent to an operating margin of 25.0%, following 27.8% in the previous year. In the Build segment, continuously strong growth of Bluebeam Software, Inc. brought a 25.6% rise in revenues to EUR 106.2 million, a considerable increase compared to the previous year ( EUR 84.6 million). The EBITDA margin also rose considerably, growing to 27.3% (previous year: 21.7%). The Manage segment maintained the previous year's positive development and increased revenues by 32.4%, achieving EUR 7.7 million. Organic growth was 8.9% and the EBITDA margin rose to 22.0% (previous year: 20.1%). At the end of the first nine months, revenues from the Media & Entertainment segment had increased by 7.9% to EUR 18.9 million (previous year: EUR 17.5 million). The EBITDA margin remained at the very high level of 41.9% (previous year: 36.9%).

Earnings per share at EUR 1.37

Operating expenses rose by 13.3% from EUR 233.0 million to EUR 263.9 million. As a result, material expenses grew to EUR 10.2 million (previous year: EUR 9.7 million). Mainly as a result of a larger workforce, personnel expenses rose by 13.9%, increasing from EUR 127.6 million to EUR 145.3 million. The amortization of assets amounting to EUR 16.8 million was slightly above the previous year's value of EUR 16.2 million. Other operating expenses rose by 15.0% from EUR 79.6 million to EUR 91.5 million.

As of September 30, 2018, the Group's tax rate amounted to 26.0% (previous year: 25.7%).

The year's net income (Group shares) of EUR 52.6 million thus exceeded the previous year's value of EUR 42.8 million by 22.9%. Consequently, the earnings per share amounted to EUR 1.37 (value of the previous year for comparison: EUR 1.11 per share.) Adjusted for the amortization from the purchase price allocation, net income for the year climbed by 22.2% to EUR 61.1 million (previous year: EUR 50.0 million), and thus the earnings per share reached EUR 1.59 (value of the previous year for comparison: EUR 1.30 per share).

Operating cash flow at EUR 72.1 million

The Nemetschek Group generated an operating cash flow of EUR 72.1 million in the first nine months of 2018 (previous year: EUR 68.2 million). The cash flow from investing activities amounted to EUR –71.1 million (previous year: EUR –31.9 million). The main causes of this rise were the acquisitions of the MCS Solutions Group and 123erfasst.de GmbH in the third quarter of 2018. The cash flow from financing activities of –0.2 million (previous year: EUR –46.7 million) primarily includes the payout of dividends to the value of EUR 28.9 million, the repayment of bank loans amounting to EUR 29.5 million, the procurement of loans of EUR 86.0 million to finance acquisitions, and the payout of EUR 25.5 million in connection with the acquisition of non-controlling interests in Maxon GmbH.

High balance of cash and cash equivalents of EUR 106.8 million

Compared to December 31, 2017, acquisitions meant that the balance sheet total increased from EUR 460.8 million to EUR 558.2 million.

As of September 30, 2018, the Nemetschek Group held cash and cash equivalents amounting to EUR 106.8 million (December 31, 2017: EUR 104.0 million). Similarly, trade receivables rose considerably from EUR 41.0 million to EUR 51.6 million, owing to acquisitions as well as to revenue growth in the third quarter of 2018. Due to the acquisitions of the MSC Solutions Group and 123erfasst.de GmbH, non-current assets increased considerably to EUR 377.0 million (December 31, 2017: EUR 301.7 million).

Equity ratio at 40.7%

Deferred revenues increased by EUR 27.5 million to EUR 95.6 million in line with software service contracts invoiced. Current and non-current loans increased by EUR 59.4 million as a result of new borrowings for acquisitions. Equity amounted to EUR 226.9 million (December 31, 2017: EUR 227.9 million). As a result of the acquisition of the non-controlling interests in Maxon GmbH in July 2018, the difference was EUR 27.7 million taking profit carried forward into account. Thus the equity ratio was 40.7%, after 49.5% as of December 31, 2017.

Employees

As of the reporting date, September 30, 2018, the Nemetschek Group employed a staff of 2,529 (September 30, 2017: 2,094). The increase is mainly attributable to recruitment in several Group companies and as a result of acquisitions in the past 12 months.

Report on significant transactions with related parties

There are no significant changes compared to the information provided in the consolidated financial statements as of December 31, 2017.

Opportunity and risk report

For details on significant opportunities and risks for the prospective development of the Nemetschek Group, please see the opportunities and risks described in the Group management report for the year ended December 31, 2017. In the interim period there were no material changes.

Report on forecasts and other statements on prospective development

The development in the first nine months confirms the expectations for the 2018 financial year. As a result, the Nemetschek Group reaffirms its objective of achieving revenues in the EUR 447 million to EUR 457 million* range. As was the case in the past, the Group EBITDA margin is forecast to remain in the corridor of 25% to 27%. At the same time, the Nemetschek Group is also investing EUR 10 million in strategic projects in order to secure future growth.

Notes to the interim financial statements based on IFRS

The interim financial statements of the Nemetschek Group have been prepared in accordance with the International Financial Reporting Standards (IFRSs), as required to be applied in the European Union, and the interpretations of the International Financial Reporting Interpretations Committee (IFRIC) and of the Standing Interpretations Committee (SIC). These interim financial statements have been prepared in accordance with the requirements of IAS 34.

The interim financial statements as of September 30, 2018 have not been audited and have not undergone an audit review. With the exception of the changes resulting from the initial application of IFRS 15/IFRS 9 specified below, the same accounting policies and calculation methods are applied to the interim financial statements as for the consolidated financial statements as of December 31, 2017. Significant changes to the consolidated statement of financial position, the consolidated statement of comprehensive income and the consolidated cash flow statement are detailed in the report on the earnings, financial and asset situation.

On June 13, 2018, within the scope of an asset deal, Bluebeam, Inc. acquired all material assets of the private company Project Atlas, LLC.

Project Atlas developed a digital mapping module that organizes and visualizes 2D plans and construction data using site data instead of traditional folder structures. This location-based approach makes it possible for experts from the architecture and building sectors to create and search through a flawless digital overview of their project – with plans, people, materials, site photos and drone pictures in highly detailed, zoomable levels.

The purchase price was EUR 3.1 million; a preliminary purchase price allocation identified non-material assets worth EUR 0.6 million. This is in addition to a goodwill or transaction value of EUR 2.5 million.

Effective July 2, 2018, NEVARIS Bausoftware GmbH, Bremen, acquired 100% of the shares in 123erfasst.de GmbH. The latter sells software products for time recording as well as construction diary administration and project management. In addition to the purchase price consisting of a fixed component of EUR 14.5 million, there is a subsequent purchase price obligation (earn-out component) based on the achievement of revenue targets in the 2020 financial year. Within the scope of a preliminary estimate, this obligation was estimated at EUR 2.7 million. As part of a preliminary purchase price allocation, EUR 9.2 million was allocated to non-material assets (technology, customer base, brand name), resulting in a goodwill or transaction value of EUR 11.5 million.

In July 2018, Nemetschek SE acquired the remaining 30% non-controlling interests in Maxon GmbH. The purchase price consists of a fixed component of EUR 25.5 million as well as a variable purchase price of EUR 3.0 million, which is dependent on the revenue targets agreed upon for the years 2018 and 2019. The difference between the purchase price (including earn-out component) and the carrying value of the non-controlling interests at the time of purchase took profit carried forward into account.

On August 28, 2018, the MCS Solutions Group, headquartered in Antwerp, became a wholly owned subsidiary. MCS Solutions offers modular and integrated software solutions for property, facility and workplace management for large private and public organizations. In addition, MCS Solutions developed the COBUNDU™ smart building platform, which uses Internet of Things (IoT) sensors and big data analysis to optimize productivity and efficiency for building administrators.

The preliminary purchase price is EUR 46.1 million. As part of a preliminary purchase price allocation, EUR 17.3 million was allocated to non-material assets (technology, customer base, brand name, non-competes). In addition, the goodwill or transaction value was set at EUR 37.0 million.

Disclosures on the quarterly report

The accounting and valuation principles described in the notes to the consolidated financial statements as of December 31, 2017 apply. Changes resulted from IFRS 15 "Revenue from contracts with customers" going into effect as of January 1, 2018 in the area of revenue recognition as well as IFRS 9 in the area of financial instruments.

Revenue recognition

IFRS 15 introduces a 5-step model for recognizing revenue resulting from customer contracts. The standard went into effect as of January 1, 2018 and replaces IAS 18 "Revenue," IAS 11 "Construction Contracts" and their interpretations. IFRS 15 is to be applied to all revenue resulting from customer contracts unless these are subject to the application of a different standard.

Details on IFRS 15 revenue from contracts with customers:

Revenue is recognized in an amount that reflects the consideration that the company receives in return for the transfer of goods to the customer.

The Nemetschek Group generally distinguishes between the recognition of revenue from the sale of goods and merchandise, revenue from the provision of services and revenue from licenses. Revenue may be recognized only after complete fulfillment of all 5 steps of IFRS 15. These 5 steps are:

  • » 1. Identification of the contract with the customer
  • » 2. Identification of the performance obligations in the contract
  • » 3. Determination of the transaction price for the contract
  • » 4. Allocation of the transaction price to the individual performance obligations
  • » 5. Recognition of revenue upon fulfillment of the performance obligation

The Nemetschek Group's revenue recognition for the various product categories breaks down as follows:

1. Software and licenses

1.1 Standard software

Standard software includes only the "Software" performance obligation. After completion of the 5 steps, revenue from standard software is recognized when control of the software passes on to the customer. Control of the software passes on to the customer after the hardware is shipped to the customer or a link for downloading the software is sent to the customer.

1.2 Software rental models (subscriptions)

The Nemetschek Group's software rental models usually include the "Software" and "User support" performance obligations. The "User support" performance obligation is a stand-ready obligation that is recognized straight-line over the period during which the service is rendered. For recognition of the "Software" performance obligation, the Nemetschek Group distinguishes between two different models:

  • » Most of the software rental models include access to the most recent version of the corresponding application via servers provided by Nemetschek Group companies. The revenue for this form of provision is recognized straight-line over the term of the contract.
  • » In a few instances, the customer runs the application directly on the customer's own system. With this model, the part of the revenue allocated to the "Software" performance obligation using the residual value method is recognized at the point at which to customer first downloads the software.

1.3 Sales transactions via sales representatives /agents

In the case of sales transactions with end customers via sales representatives, the income from the sale is recorded as of the point in time that ownership is transferred to the end customer. The sales representative serves only as broker in such transactions, for which he/she receives a commission. The Nemetschek Group acts as the principal; Nemetschek has primary responsibility for fulfilment of the contract and influence on the pricing of such.

2. Maintenance / software service contracts

In the case of software service contracts, the performance obligations can be subdivided into two material obligations. First, there is user support, which is available to the customer for the entire term of the contract. Second, customers with software service contracts get the most recent version of the Nemetschek software in question. However, it is at the discretion of the Group to decide the intervals at which new versions of the software will be provided and what functionalities and/or modules of the corresponding software will be changed, modified, reduced or extended. In the case of demand for software versions and user support that are not further defined, IFRS 15 defines these as "stand-ready obligations" for which revenue recognition is straight-line over the term of the contract. Advance payments received from customers for software maintenance contracts are carried as deferred revenue (contract liability) and generally lead to revenue within the next six months.

3. Consulting

In the case of consulting services, inasmuch as these constitute a separate performance obligation, revenue is recognized in the period in which they were rendered. Should they not constitute separate performance obligations, consulting services are combined with other contract components to form a separate performance obligation and recognized in accordance with the provisions of IFRS 15.

4. Hardware

Revenue from hardware sales is usually recognized at the point in time of the transfer of risk to the customer. Hardware revenue is of minor significance to the Nemetschek Group.

5. Training

Revenue from training is recognized after the service has been rendered.

Effect as a result of the application of IFRS as of January 1, 2018 As of the transition date, January 1, 2018, the Nemetschek Group applies the modified retrospective method to contracts whose terms have not expired.

As a result of the earlier revenue recognition within the scope of the IFRS 15 transition, in the case of the "download" variation for software rental models, the revenue reserves of the Nemetschek Group rose by EUR 538k as of January 1, 2018.

The change resulted from the release of deferred expenses that were restructured to revenue reserves due to the earlier (partial) recognition of revenue.

Moreover, as of January 1, 2018, additional revenue that had not yet been invoiced was recognized. Consequently, a contract asset in the same amount was recorded. This is recorded in other current assets and successively released in the subsequent periods.

The transition effect as a result of IFRS 15 as of September 30, 2018 is disclosed as follows:

IFRS 15 TRANSITION EFFECT

Thousands of € Balance
Sheet as of
January 1,
2018
Balance sheet
as of December
31, 2017
Transition effect
ASSETS
Contract assets 399 0 399
LIABILITIES
Deferred revenue 67,745 68,097 –352
Deferred tax liabilities 13,740 13,527 213
EQUITY
Retained earnings 193,717 193,179 538

The additional revenue from IFRS 15 compared to IAS 18 is disclosed as follows for the third quarter of 2018:

TRANSITION EFFECT ON REVENUES FOR THE FIRST 9 MONTHS

Thousands of € P&L as of
September
30, 2018
P&L as of
September 30,
2018 without
adoption of
IFRS 15
Transition effect
P&L
Subscription revenues 15,008 14,554 454

Disaggregation of revenue

The Nemetschek Group's revenue as of September 30, 2018 is disclosed as follows:

REVENUES BY TYPE

Thousands of € September 30,
2018
September 30,
2017
Software and licenses 155,764 142,790
Recurring revenues (software service
contracts and rental models)
162,417 134,787
Services (consulting and training) 12,659 12,059
Hardware 64 199
330,904 289,835

Revenue from previous periods is disclosed as per IAS 18 or IAS 11.

In the third quarter of 2018, recurring revenue includes revenue from software rental models in the amount of EUR 15,008k (previous year: EUR 9,993k).

The products of the Nemetschek Group are sold via direct and indirect distribution channels, whereby the majority are sold by means of direct distribution.

The Nemetschek Group's revenue by region for the third quarter of 2018 is disclosed as follows:

REVENUES BY REGION

Thousands of € September 30,
2018
September 30,
2017
Germany 94,308 87,834
Abroad 236,596 202,001
Total 330,904 289,835

IFRS 9 Financial instruments

The Nemetschek Group has been applying IFRS 9 since January 1, 2018; previous periods continue to be disclosed as per IAS 39. As of January 1, 2018, the transition had no effect on equity.

Munich, October 2018

Patrik Heider Sean Flaherty Viktor Várkonyi

Consolidated Statement of Comprehensive Income

for the period from January 1 to September 30, 2018 and 2017

STATEMENT OF COMPREHENSIVE INCOME

Revenues
114,862
95,839
330,904
289,835
Other operating income
1,203
1,342
4,346
3,478
Operating Income
116,065
97,181
335,250
293,313
Cost of materials/cost of purchased services
–3,571
–3,373
–10,201
–9,653
Personnel expenses
–51,247
–42,082
–145,306
–127,554
Depreciation of property, plant and equipment and
amortization of intangible assets
–6,022
–5,267
–16,838
–16,159
thereof amortization of intangible assets due to purchase price allocation
–3,783
–3,266
–10,586
–10,192
Other operating expenses
–32,012
–26,915
–91,530
–79,605
Operating expenses
–92,852
–77,637
–263,875
–232,971
Operating results (EBIT)
23,213
19,544
71,375
60,342
Interest income
122
67
280
188
Interest expenses
–269
–255
–621
–733
Share of results of associated companies
0
–23
0
–90
Other financial expenses/income
4
1
336
–12
Earnings before taxes (EBT)
23,070
19,334
71,370
59,695
Income taxes
–6,065
–3,851
–18,553
–15,327
Net income for the year
17,005
15,483
52,817
44,368
Other comprehensive income:
Difference from currency translation
2,218
–5,277
4,633
–19,199
Subtotal of items of other comprehensive income that will be
reclassified to income in future periods:
2,218
–5,277
4,633
–19,199
Gains/losses on revaluation of defined benefit pension plans
47
–44
118
22
Tax effect
–14
13
–34
–6
Subtotal of items of other comprehensive income that will not be
reclassified to income in future periods:
33
–31
84
16
Subtotal other comprehensive income
2,251
–5,308
4,717
–19,183
Total comprehensive income for the year
19,256
10,175
57,534
25,185
Net profit or loss for the period attributable to:
Equity holders of the parent
18,163
15,145
52,623
42,834
Non-controlling interests
–1,158
338
194
1,534
Net income for the year
17,005
15,483
52,817
44,368
Total comprehensive income for the year attributable to:
Equity holders of the parent
20,366
9,872
57,253
23,733
Non-controlling interests
–1,110
303
281
1,452
Total comprehensive income for the year
19,256
10,175
57,534
25,185
Earnings per share (undiluted) in euros
0.47
0.39
1.37
1.11
Earnings per share (diluted) in euros
0.47
0.39
1.37
1.11
Average number of shares outstanding (undiluted)
38,500,000
38,500,000
38,500,000
38,500,000
Average number of shares outstanding (diluted)
38,500,000
38,500,000
38,500,000
38,500,000
Thousands of € 3rd Quarter 2018 3rd Quarter 2017 9 month 2018 9 month 2017

Consolidated Statement of Financial Position

as of September 30, 2018 and December 31, 2017

STATEMENT OF FINANCIAL POSITION

ASSETS
Thousands of €
September 30, 2018 December 31, 2017
Current assets
Cash and cash equivalents 106,761 103,957
Trade receivables, net 51,590 41,011
Inventories 1,414 561
Tax refunded claims for income taxes 3,027 908
Other current financial assets 207 116
Other current assets 18,216 12,514
Current assets, total 181,215 159,067
Non-current assets
Property, plant and equipment 16,638 14,852
Intangible assets 104,610 86,857
Goodwill 248,069 192,736
Investments in associates and non-current available-for-sale assets 3,525 3,553
Deferred tax assets 3,172 2,569
Non-current financial assets 34 34
Other non-current assets 963 1,114
Non-current assets, total 377,011 301,715

Total assets 558,226 460,782

EQUITY AND LIABILITIES Thousands of € September 30, 2018 December 31, 2017
Current liabilities
Short-term borrowings and current portion of long-term loans 52,103 36,003
Trade payables 6,671 8,189
Provisions and accrued liabilities 37,889 35,465
Deferred revenue 95,583 68,097
Income tax liabilities 5,790 7,715
Other current financial obligations 4,150 601
Other current liabilities 9,675 9,677
Current liabilities, total 211,861 165,747
Non-current liabilities
Long-term borrowings without current portion 87,204 43,944
Deferred tax liabilities 20,055 13,527
Pensions and related obligations 1,641 1,703
Non-current deferred revenue 217 738
Non-current financial obligations 4,195 1,738
Other non-current liabilities 6,120 5,440
Non-current liabilities, total 119,432 67,090
Equity
Subscribed capital 38,500 38,500
Capital reserve 12,485 12,485
Retained earnings 189,683 193,179
Other comprehensive income –13,964 –18,691
Equity (Group shares) 226,704 225,473
Non-controlling interests 229 2,472
Equity, total 226,933 227,945
Total equity and liabilities 558,226 460,782

Consolidated Cash Flow Statement

for the period from January 1 to September 30, 2018 and 2017

CONSOLIDATED CASH FLOW STATEMENT

Thousands of € 9 month 2018 9 month 2017
Profit (before tax) 71,370 59,695
Depreciation and amortization of fixed assets 16,838 16,159
Change in pension provision 56 88
Other non-cash transactions 4 899
Portion of the result of non-controlling interests 0 90
Result from disposal of fixed assets 46 75
Cash flow for the period 88,314 77,006
Interest income –280 –188
Interest expenses 621 733
Change in other provisions 962 3,513
Change in trade receivables –6,102 –8,575
Change in other assets –6,663 1,113
Change in trade payables –1,658 –1,206
Change in other liabilities 16,900 10,345
Dividend received from associated companies 28 0
Interest received 278 185
Income taxes received 844 1,975
Income taxes paid –21,102 –16,699
Cash flow from operating activities 72,142 68,202
Capital expenditure –7,755 –6,917
Changes in liabilities from acquistions –40 –275
Cash received from disposal of fixed assets 5 139
Cash paid for acquisition of subsidiaries, net of cash acquired –63,264 –24,862
Cash flow from investing activities –71,054 –31,915
Dividend payments –28,875 –25,025
Dividend payments to non-controlling interests –1,711 –1,424
Interest paid –572 –607
Repayment of borrowings –29,500 –19,500
Changes in bank liabilities due to company acquisitions 86,000 0
Payments for acquisition of non-controlling interests –25,500 –151
Cash flow from financing activities –158 –46,707
Changes in cash and cash equivalents 930 –10,420
Effect of exchange rate differences on cash and cash equivalents 1,874 –5,903
Cash and cash equivalents at the beginning of the period 103,957 112,482
Cash and cash equivalents at the end of the period 106,761 96,159

Consolidated Segment Reporting

for the period from January 1 to September 30, 2018 and 2017

SEGMENT REPORTING

2018 Thousands of € Total Elimination Design Build Manage Media &
Entertainment
Revenue, external 330,904 198,052 106,202 7,737 18,913
Intersegment revenue –2,894 33 1,700 0 1,160
Total revenue 330,904 –2,894 198,085 107,902 7,737 20,074
EBITDA 88,213 49,572 29,011 1,699 7,930
Depreciation/amortization –16,838 –7,016 –9,312 –173 –338
Segment operating result (EBIT) 71,375 42,556 19,700 1,526 7,593

SEGMENT REPORTING

2017 Thousands of € Total Elimination Design Build Manage Media &
Entertainment
Revenue, external 289,835 181,886 84,573 5,845 17,531
Intersegment revenue –1,786 12 654 0 1,120
Total revenue 289,835 –1,786 181,898 85,227 5,845 18,651
EBITDA 76,501 50,513 18,351 1,174 6,463
Depreciation/amortization –16,159 –5,873 –9,864 –48 –374
Segment operating result (EBIT) 60,342 44,640 8,487 1,126 6,089

Consolidated Statement of Changes in Equity

for the period from January 1 to September 30, 2018 and 2017

STATEMENT OF CHANGES IN EQUITY

Equity attributable to the parent company's shareholders
Thousands of € Subscribed capital Capital reserve Retained earnings Currency
conversion
Total Non-controlling
interests
Total equity
As of January 1, 2017 38,500 12,485 143,954 4,363 199,302 2,816 202,118
Difference from
currency translation
–19,113 –19,113 –87 –19,200
Remeasurement gains/loss
es from pensions and related
obligations
11 11 5 16
Net income for the year 42,834 42,834 1,534 44,368
Total comprehensive
income for the year
0 0 42,845 –19,113 23,732 1,452 25,184
Transactions with non-controlling
interests
–358 –358 319 –39
Dividend payments to
non-controlling interests
0 –1,424 –1,424
Dividend payment –25,025 –25,025 –25,025
As of September 30, 2017 38,500 12,485 161,416 –14,750 197,651 3,163 200,814
As of January 1, 2018 38,500 12,485 193,179 –18,691 225,473 2,472 227,945
Difference from
currency translation
4,727 4,727 –94 4,633
Remeasurement gains/loss
es from pensions and related
obligations
–96 –96 181 85
Net income for the year 52,623 52,623 194 52,817
Total comprehensive
income for the year
0 0 52,527 4,727 57,254 281 57,535
Transition effects of new In
ternational Financial Reporting
Standards (IFRS)
538 538 538
Transactions with non-controlling
interests
–27,686 –27,686 –813 –28,499
Dividend payments to
non-controlling interests
0 –1,711 –1,711
Dividend payment –28,875 –28,875 –28,875
As of September 30, 2018 38,500 12,485 189,683 –13,964 226,704 229 226,933

Financial Calendar 2018

November 13, 2018 November 26. – 28, 2018 December 06, 2018

Capital Markets Day, Frankfurt / Main

German Equity Forum, Frankfurt / Main

Berenberg European Conference 2018 Pennyhill Park

Contact

Nemetschek SE Investor Relations, Konrad-Zuse-Platz 1, 81829 Munich

Contact: Stefanie Zimmermann, VP Investor Relations and Corporate Communication Tel.: +49 89 540459-250, Fax: +49 89 540459-444,

E-Mail: [email protected]

NEMETSCHEK SE Konrad-Zuse-Platz 1 81829 Munich Tel.: +49 89 540459-0 Fax: +49 89 540459-414 [email protected] www.nemetschek.com

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