PSI Software SE

Quarterly Report • Nov 21, 2023

PSI APP STORE SCALING BY CLICK

Report on the 3rd Quarter of 2023

	01/01-30/09/23 in KEUR	01/01-30/09/22 in KEUR	Change in KEUR	Change in %
Revenues	184,459	179,680	+4,779	+2.7
Operating Result	–2,714	14,311	–17,025	>100
Result before income taxes	–4,247	14,246	–18,493	>100
Net result	–7,128	7,973	–15,101	>100
Cash and cash equivalents	46,981	41,365	+5,616	+13.6
Employees on Sept. 30	2,279	2,256	+23	+1.0
Revenue/Employee	80.9	79.6	+1.3	+1.6

PSI Group Data as per September 30, 2023 at a Glance (IFRS)

Interim Management Report

Business Development

Earnings

The PSI Group increased sales by 2.7% to 184.5 million euros in the first nine months of 2023 (Sept. 30, 2022: 179.7 million euros). The operating result (EBIT) was positive in the third quarter at 2.65 million euros, but for the first nine months of 2023 it was still negative at −2.7 million euros after the one-time expenses of the second quarter (Sept. 30, 2022: 14.3 million euros). Accordingly, the group net result was −7.1 million euros (Sept. 30, 2022: 8.0 million euros). New orders improved by 16.1% year-on-year to 238 million euros (Sept. 30, 2022: 205 million euros). At 199 million euros, the order backlog at Sept. 30, 2023 exceeded the prior-year figure by 9.3% (Sept. 30, 2022: 182 million euros).

The Energy Management segment (energy grids, energy trading, public transport) achieved 0.7% lower sales of 91.8 million euros (Sept. 30, 2022: 92.4 million euros) and a significantly deteriorated operating result of −7.5 million euros (Sept. 30, 2022: 1 million euros). In the Electrical Grids business unit, earnings were still impacted by legacy projects. The new management established effective July 1, 2023, started to clear up the risks from legacy projects in the third quarter and is working towards the turnaround of the business unit in the fourth quarter. Further lucrative new orders were won in the third quarter, which are subject to the new process for order acceptance that minimizes risks. Among them is the major contract from a leading European transmission system operator, which PSI won at the beginning of the third quarter. In Southeast Asia, the strong order trend of the first half the year continues. Here PSI is benefiting from the increased gas price and was able to significantly increase new orders, sales and earnings.

Sales in the Production Management segment (metals, industry, logistics) increased by 6.2% to 92.7 million euros (Sept. 30, 2022: 87.3 million euros). The segment's operating profit decreased by 22.3% to 11.1 million euros (Sept. 30, 2022: 14.3 million euros). In contrast to the previous year, major licenses, particularly in the metals-producing industry business, are not recognized until the fourth quarter. The Logistics division in particular continued to develop positively, winning an important major order and significantly increasing incoming orders, sales and earnings. Sales generated via the cloud-based PSI App Store more than doubled in the first nine months of 2023 compared to the same period of the previous year, thus exceeding the annual target for the PSI App Store ahead of schedule.

Financial Position

Cash flow from operating activities changed only marginally compared with the prior-year period to −7.1 million euros (Sept. 30, 2022: −7.3 million euros). At 47.0 million euros, cash and cash equivalents were 5.6 million euros higher than in the previous year (Sept. 30, 2022: 41.4 million euros), offset by higher current financial liabilities of 27.2 million euros (Dec. 31, 2022: 4.7 million euros).

Assets

Compared to December 31, 2022, there have not been any material changes in the Group's assets.

Personnel Development

The number of employees in the Group increased slightly to 2,279 (Sept. 30, 2022: 2,256).

PSI-Shares

The PSI stock ended the third quarter of 2023 with a final price of 24.55 euros, 9.4% above the final 2022 price of 22.45 euros. In the same period, the technology index TecDAX recorded an increase of 3.4%.

Risk Report

The estimate of the corporate risk has not changed since the Annual Report for December 31, 2022.

Outlook

In the Production Management segment, PSI continues to benefit from strong demand in North America, South America and increasingly also in India and Australia. At the same time, the trend towards sustainable industrial production is creating increasing demand for optimization solutions based on industrial artificial intelligence. In the Energy Management segment, PSI continues to see high demand for solutions for the digitalization of energy grids. Since the law to restart the digitalization of the energy transition came into force in May 2023, this increasingly concerns inquiries in the area of smart micro-grid solutions for the active and intelligent management of low-voltage grids.

For the full year 2023, the PSI Executive Board continues to expect, despite the still burdened result in the third quarter, to achieve the planned year-on-year increases in new orders and sales of 10% and an EBIT in the corridor between 5 and 7 million euros with a seasonally very strong fourth quarter. In the long term, the management is maintaining its growth strategy for the PSI Group.

Group Balance Sheet

from January 1, 2023 until September 30, 2023 according to IFRS

Assets	9 Month Report 01/01-30/09/23 KEUR	Annual Report 01/01-31/12/22 KEUR
Non current assets
Intangible assets	69,892	73,190
Property, plant and equipment	33,061	37,892
Investments in associates	694	694
Deferred tax assets	6,091	6,589
	109,738	118,365
Current assets
Inventories	11,154	8,138
Net trade receivables	34,475	42,031
Receivables from long-term development contracts	60,678	49,915
Other assets	11,021	5,876
Income tax receivables	2,971	2,829
Cash and cash equivalents	46,981	45,444
	167,280	154,233
Total assets	277,018	272,598
Total Equity and Liabilities
Equity
Subscribed capital	40,185	40,185
Capital reserves	35,137	35,137
Reserve for treasury shares	–4,698	–4,698
Other reserves	–18,007	–17,102
Retained earnings	52,194	65,517
	104,811	119,039
Non-current liabilities
Pension provisions and similar obligations	42,008	42,633
Deferred tax liabilities	4,136	4,892
Other liabilities	562	562
Provisions	1,018	1,639
Lease liabilities	14,063	17,798
Financial liabilities	60	75
	61,847	67,599
Current liabilities
Trade payables	19,194	23,399
Other liabilities	21,934	23,589
Provisions	2,282	2,308
Liabilities from long-term development contracts and deferred revenue	31,396	22,983
Lease liabilities	6,998	6,636
Financial liabilities	27,163	4,667
Liabilities in connection with discontinued assets	1,393	2,378
	110,360	85,960
Total equity and liabilities	277,018	272,598

Group Income Statement

from January 1, 2023 until September 30, 2023 according to IFRS

	Quarterly Report III		9 Month Report
	01/07/23- 30/09/23 KEUR	01/07/22- 30/09/22 KEUR	01/01/23- 30/09/23 KEUR	01/01/22- 30/09/22 KEUR
Sales Revenues	65,192	63,230	184,459	179,680
Other operating income	5,058	5,799	12,927	11,767
Cost of materials	–12,267	–7,922	–28,230	–21,839
Personnel expenses	–44,319	–41,793	–137,152	–122,639
Depreciation and amortisation	–3,617	–3,390	–10,996	–9,938
Other operating expenses	–7,398	–9,792	–23,722	–22,720
Operating result	2,649	6,132	–2,714	14,311
Investment income	0	0	268	221
Interest and similar income	135	325	395	398
Interest expenses	–737	–413	–2,196	–684
Result before income taxes	2,047	6,044	–4,247	14,246
Income tax	–688	–1,175	–3,866	–3,211
Result after income taxes from continuing operations	1,359	4,869	–8,113	11,035
Result after income taxes from discontinued operations	257	–1,342	985	–3,062
Net result	1,616	3,527	–7,128	7,973
Earnings per share (in Euro per share, basic and diluted)	0.10	0.23	–0.46	0.51
Profit attributable to shareholders from continuing
operations Profit attributable to shareholders from discontinued	0.09	0.31	–0.52	0.71
operations	0.02	–0.09	0.06	–0.20
Weighted average shares outstanding	15,487,995	15,587,266	15,487,995	15,641,018

Group comprehensive Income Statement

from January 1, 2023 until September 30, 2023 according to IFRS

	01/07/23- 30/09/23 KEUR	01/07/22- 30/09/22 KEUR	01/01/23- 30/09/23 KEUR	01/01/22- 30/09/22 KEUR
Net result	1,616	3,527	–7,128	7,973
Currency translation foreign operations	901	744	–905	–756
Net losses from cash flows hedges	0	0	0	0
Income tax effects	0	0	0	0
Group comprehensive result	2,517	4,271	–8,033	7,217

Group Cash Flow Statement

from January 1, 2023 until September 30, 2023 according to IFRS

	9 Month Report 01/01-30/09/23 KEUR	9 Month Report 01/01-30/09/22 KEUR
CASHFLOW FROM OPERATING ACTIVITIES
Result before income taxes	–3,262	11,184
Adjustments for non-cash expenses
Amortisation of intangible assets	3,161	2,611
Depreciation of property, plant and equipment	2,591	2,597
Amortization of right-of-use	5,244	4,829
Earnings from investments in associated companies	–268	–221
Income and expenses from asset disposals	–19	0
Interest income	–387	–165
Interest expenses	1,978	1,004
Other non-cash income/expenses	0	3
	9,038	21,842
Changes of working capital
Inventories	–3,072	–3,028
Trade receivables and receivables from
long-term development contracts	–3,267	–15,663
Other current assets	–5,339	–5,216
Provisions	–1,721	–1,787
Trade payables	–4,284	–2,216
Other non-current and current liabilities	7,112	851
	–1,533	–5,217
Interest paid	–507	–422
Income taxes paid	–5,010	–1,690
Cash flow from operating activities	–7,050	–7,329
CASHFLOW FROM INVESTING ACTIVITIES
Additions to intangible assets	–436	–2,032
Additions to property, plant and equipment	–1,262	–2,310
Cash received from distribution of associated companies	221	156
Proceeds on disposal of assets held for sale	0	60
Interest received Cash flow from investing activities	387 –1,090	165 –3,961
CASHFLOW FROM FINANCING ACTIVITIES
Dividends paid	–6,195	–6,264
Proceeds/repayments from/of borrowings	21,496	4,085
Repayments of lease liabilities	–5,096	–5,136
Interest paid on leases	–387	–253
Outflows for share buybacks	0	–4,261
Cash flow from financing activities	9,818	–11,856
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
Changes in cash and cash equivalents	1,678	–23,146
Valuation-related changes in cash and cash equivalents	–141	689
Cash and cash equivalents at beginning of the period	45,444	67,478
Cash and cash equivalents at the end of the period	46,981	45,021

Statement of Changes in Equity

from January 1, 2023 until September 30, 2023 according to IFRS

	Number of shares issued	Share capital	Additional paid-in capital	Reserve for treasury stock	Other reserves	Accumulated results	Total
	Number	KEUR	KEUR	KEUR	KEUR	KEUR	KEUR
As of January 1, 2022	15,691,727	40,185	35,137	702	–23,394	62,087	114,717
Group comprehensive result after tax					6,292	9,694	15,986
Share buybacks	–232,999			–6,055			–6,055
Issue of treasury shares	29,267			655			655
Dividends paid						–6,264	–6,264
As of January 1, 2023	15,487,995	40,185	35,137	–4,698	–17,102	65,517	119,039
Group comprehensive result after tax					–905	–7,128	–8,033
Dividends paid						–6,195	–6,195
As of September 30, 2023	15,487,995	40,185	35,137	–4,698	–18,007	52,194	104,811

Shares held by Management Board and Supervisory Board as of September 30, 2023

	Shares on 30/09/2023	Shares on 30/09/2022
Management Board
Gunnar Glöckner	0	0
Supervisory Board
Andreas Böwing	0	0
Elena Günzler	2,022	1,994
Prof, Dr, Uwe Hack	600	600
Prof, Dr, Wilhelm Jaroni	0	0
Uwe Seidel	493	465
Karsten Trippel	117,322	115,322

Notes on the consolidated financial statements as of September 30, 2023

The Company

1. Business Activities and Legal Background

The business activities of PSI Software AG and its subsidiaries relate to the development and sale of software systems and products fulfilling the specific needs and requirements of its customers, particularly in the following industries and service lines: utilities, manufacturing, logistics and transportation. In addition, the Group provides services of all kinds in the field of data processing, sells electronic devices and operates data processing systems.

The PSI Group is structured into the core business segments energy management and production management. The company is listed in the Prime Standard segment of the Frankfurt stock exchange.

At the Annual General Meeting of the parent company of the PSI Group, PSI Software AG, on May 23, 2023, it was decided to change the legal form from a German stock corporation to a European Stock Corporation (Societas Europaea). The legally binding resolution was entered in the Commercial Register B, Charlottenburg Local Court, on August 3, 2023.

The company is exposed to a wide range of risks that are similar to other companies active in the dynamic technology sector. Major risks for the development of the PSI Group lie in the success with which it markets its software systems and products, competition from larger companies, the ability to generate sufficient cash flows for future business development as well as in individual risks regarding the integration of subsidiaries, organisational changes and the cooperation with strategic partners.

The condensed interim consolidated financial statements for the period from January 1, 2023 to September 30, 2023 were released for publication by a decision of the management on October 25, 2023.

The condensed interim consolidated financial statements for the period from 1 January 2023 to September 30, 2023 were produced in compliance with IAS 34 "Interim Financial Reporting". The condensed interim consolidated financial statements do not contain all the data and notes prescribed for the annual financial statements and should be read in conjunction with the consolidated financial statements for December 31, 2022.

2. Accounting and Valuation Principles

With regard to the principles of accounting and valuation and especially the application of International Financial Reporting Standards (IFRS), see the group consolidated financial statements for the financial year 2022.

3. Seasonal Influences on the Business Activities

Seasonal effects resulted in the PSI Group operations with regards to the receipt of maintenance revenues in the first quarter of the financial year (deferment of the influences on the result of corresponding incoming payments throughout the year) and significantly greater demand and project accounting in the fourth quarter of the financial year.

4. Changes in the Consolidation Group

Compared to December 31, 2022 there were no fundamental changes in the consolidation group. The PSI Group has not or no longer fully consolidated subsidiaries that have no material effect on the Group's assets, financial position and earnings.

5. Selected Individual Items

Cash and cash equivalents

	September 30, 2023	December 31, 2022
	KEUR	KEUR
Bank balances	42,108	42,308
Fixed term deposits	4,849	3,111
Cash	24	25
	46,981	45,444

Receivables from long-term development contracts, liabilities from long-term development contracts and deferred revenue

Costs and estimated earnings in excess of billings on uncompleted contracts arise when revenues have been recorded but the amounts cannot be billed under the terms of the contracts. Such amounts are recognized according to various performance criteria. Costs and estimated earnings contain directly allocable costs (labour cost and cost of services provided by third parties) as well as the appropriate portion of overheads including pro rata administrative expenses.

Liabilities and receivables according to the percentage-of-completion method break down as follows:

	September 30, 2023	December 31, 2022
	KEUR	KEUR
Receivables from long-term
development contracts (gross)	142,261	128,502
Payments on account	–81,583	–78,587
Receivables from long-term
development contracts	60,678	49,915
Payments on account (gross)	94,288	90,542
Set off against contract revenue	–81,583	–78,587
Liabilities from long-term development contracts	12,705	11,955
Deferred revenue	18,691	11,028
Liabilities from long-term development contracts	31,396	22,983

Sales revenues

The sales revenues reported in the group income statement break down as follows:

September 30, 2023 KEUR	Energy Management	Production Management	Total
Software development at fixed price	27,236	17,425	44,661
Software development, time and material	4,221	31,258	35,479
Maintenance	38,680	35,440	74,120
License fees	2,975	7,371	10,346
Merchandise	18,638	1,215	19,853
Total	91,750	92,709	184,459

September 30, 2022	Energy	Production
KEUR	Management	Management	Total
Software development at fixed price	36,503	18,777	55,280
Software development, time and material	7,281	26,383	33,664
Maintenance	36,939	33,107	70,046
License fees	1,867	8,188	10,055
Merchandise	9,816	819	10,635
Total	92,406	87,274	179,680

Taxes on income

The main components of the income tax expenditure shown in the group income statement are added as follows:

	September 30, 2023 KEUR	September 30, 2022 KEUR
Effective taxes expenses
Effective tax expenses	–4,124	–3,195
Deferred taxes
Emergence and reversal of
temporary differences	258	–16
Tax expenses	–3,866	–3,211

Related Parties

With the exception of the matters described below, there have been no changes in the group of related parties or in the compensation granted to these persons.

Executive Board and Executive Board remuneration

On April 27, 2023, the Supervisory Board appointed Mr. Robert Klaffus as a member of the Executive Board effective November 1, 2023.

On June 26, 2023, Dr. Harald Schrimpf stepped down from his position as Chairman of the Executive Board and his membership on the Executive Board of PSI Software AG, effective June 30, 2023. The composition of Executive Board compensation for fiscal year 2023 will change in connection with the departure of Dr. Harald Schrimpf by severance payments granted of 3.5 million euros. In the quarterly financial statements as of September 30, 2023, the amounts already paid as severance payments as well as those still to be paid were reported as personnel expenses and presented in the segment reporting as non-recurring expenses in the "Reconciliation" column.

Segment Reporting

The development of the segment results can be found in the Group segment reporting.

Segments of the PSI Group:

• Energy management: Intelligent solutions for network operators in the fields of electricity, gas, district heating and pipelines as well as for public transport, Focal points are reliable and economically sound control system solutions for intelligent energy grid management and the safe operation of traffic infrastructures as well as trade and sales management in the liberalised energy market,
• Production Management: Software products and solutions for production planning, optimization and control as well as efficient logistics, Focuses are the optimization of the use of resources and the increase of efficiency, quality and profitability,
• In addition to the operating segments, PSI Group shows a "Reconciliation" column in which, in addition to consolidation effects (expense and earnings consolidation as well as elimination of intercompany profits), non-recurring effects are also shown whose allocation to the operating segments is not possible in a meaningful breakdown. In the first nine months of 2023, the costs of severance payments to related parties (Executive Board), related legal advisory costs and costs for the change of legal form (Societas Europaea) totaling 5 million euros were reported as non-recurring effects. No nonrecurring effects were reported in the prior-year period.

Group Segment Reporting

from 1 January 2023 until 30 September 2023 according to IFRS

	Energy		Production
	Management		Management		Reconciliation		PSI Group
	30/09/ 2023 KEUR	30/09/ 2022 KEUR	30/09/ 2023 KEUR	30/09/ 2022 KEUR	30/09/ 2023 KEUR	30/09/ 2022 KEUR	30/09/ 2023 KEUR	30/09/ 2022 KEUR
Sales revenues
Sales to external customers	91,750	92,406	92,709	87,274	0	0	184,459	179,680
Inter-segment sales	2,349	2,363	14,521	13,461	–16,870	–15,824	0	0
Segment revenues	94,099	94,769	107,230	100,735	–16,870	–15,824	184,459	179,680
Operating result before interest, tax, depreciation and amortisation	–2,273	5,743	16,540	19,500	–5,985	–994	8,282	24,249
Operating result before depreciation and amortisation resulting from purchase price allocation	–7,035	1,438	11,499	14,691	–6,376	–1,016	–1,912	15,113
Depreciation and amortisation resulting from purchase price allocation	–444	–443	–358	–359	0	0	–802	–802
Operating result	–7,479	995	11,141	14,332	–6,376	–1,016	–2,714	14,311
Net finance result	–827	132	–321	68	–385	–265	–1,533	–65
Result before income taxes	–8,306	1,127	10,820	14,400	–6,761	–1,281	–4,247	14,246

Responsibility Statement

To the best of my knowledge, the interim consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the group, and the interim management report of the group includes a fair review of the group's development and performance of its position, together with a description of the principal opportunities and risks associated with the expected development of the group in the remaining months of the financial year, in accordance with proper accounting principles of interim consolidated reporting.

Financial Calendar

March 29, 2023	Publication of Annual Result 2022
March 29, 2023	Analyst Conference
April 27, 2023	Report on the 1st Quarter of 2023
May 23, 2023	Annual General Meeting
July 27, 2023	Report on the 1st Six Months of 2023
October 27, 2023	Report on the 3rd Quarter of 2023
November 27 to 29, 2023	German Equity Forum, Analyst Presentation

Your Investor Relations contact:

Karsten Pierschke

Phone:	+49 30 2801-2727
E-Mail:	kpierschke@psi.de

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For the latest IR information, please visit our website at www.psi.de/ir.

PSI Software SE

Dircksenstraße 42-44 10178 Berlin Germany Phone: +49 30 2801-0 Fax: +49 30 2801-1000 ir@psi.de www.psi.de