ATOSS Software AG — Interim / Quarterly Report 2014

Aug 12, 2014

QUarterly report Q2/2014

LETTER TO SHAREHOLDERS

Andreas F. J. Obereder and Christof Leiber Board of Management ATOSS Software AG

Dear Shareholders, Ladies and Gentlemen,

ATOSS Software AG remains on course for continued growth and is now recording sustained success for the ninth year in succession. The basis for this robust development lies in the continuously increasing relevance of workforce management, in our innovative and sophisticated solutions, and in our highly stable business model.

The preconditions for the continuation of our success are excellent. We have once again achieved record figures, not only with regard to sales and earnings but also for orders received and orders on hand for software licenses. In the process we have acquired numerous new enterprise customers in the medical and retail sectors in particular. This strong demand for software licenses provides an outstanding foundation on which to develop our business in the coming quarters, for these orders yield not only license fees, but in time also generate revenues for services and maintenance.

Our verticalization strategy represents a key success factor

The sustained increase in orders received provides proof of the success of our verticalization strategy. We offer our enterprise customers software solutions that facilitate maximum flexibility and the continuous optimization of staff deployments. Our customers are concerned with creating modern working environments, while also adding value and safeguarding their competitiveness. Success for these business enterprises – and therefore ATOSS too – is dependent on the capacity of our innovative IT solutions to replicate widely varying and highly specific tasks and place these firmly within our customers' grasp.

This is precisely the approach we take through our verticalization strategy. The experience gained from countless projects has enabled us to develop software solutions oriented towards the characteristics peculiar to specific processes and especially to specific sectors. As a result our customers benefit from significant, and not least competitive, advantages!

By focusing on individual sectors such as healthcare and the retail sector, we have acquired a substantial share of these markets. In manufacturing and logistics, too, we are successfully acquiring new customers. Against this background, we are investing in the continuous development of existing and the creation of new sector-specific solutions.

The outlook is positive – for workforce management and for ATOSS

In order to safeguard our strong position and create the potential for further growth, we shall continue to consistently implement and refine our successful strategy. This strategy is underpinned by research & development, by a continuing focus on specific sectors, as well as the exploration of new markets and the continuing development of our international partnerships. In pursuing this course we will secure the success of our company, also over the long term.

As of 30 June 2014, ATOSS had orders on hand for software licenses worth 32 percent more than just a year previously. In view of the successful development in business in the first half of 2014, the strength of our development in orders and the continuing buoyant demand, we look to the future with optimism. We anticipate that 2014 will be our ninth record year in succession, and that the positive trend will be continued in the coming financial year.

Yours sincerely,

Andreas F.J. Obereder Christof Leiber

Chief Executive Officer Member of the Board of Management

Facts Overview

Economic background

German Institute for Economic Research (DIW Berlin) economic barometer indicates moderate growth of 0.3 percent in the German economy in Q2; positive mood sustained among both consumers and companies.

According to the ICT and new media trade association Bitkom, German ICT companies take a confident view of 2014 with a majority expecting sales to increase.

ATOSS Software AG

High volume of orders received for software licenses under-scores sustained customer interest in workforce management and the competitive strength of ATOSS

Development in sales and operating profits remains positive. Ninth record year appears likely.

Order Intak e Software Lice nses (EUR mill.)

C ONS OLIDATED OVER	V IEW AS PER	IFRS: Half-year ly C OMP	ARISON IN KEUR
	01.01.2014 – 30.06.2014	Proportion of Total sales revenues	01.01.2013 – 30.06.2013*	Proportion of Total sales revenues	Change 2014 to 2013
Sales	18.760	100%	17.531	100%	7%
Software	11,681	62%	10,860	62%
Software licenses	4,144	22%	3,794	22%
Software maintenance	7,537	40%	7,066	40%
Consulting	4,945	26%	4,422	25%	12%
Hardware	1,681	9%	1,462	8%
Others	453	3%	787	5%	-42%
EBITDA	4,958	26%	4,540	26%
EBIT	4,697	25%	4,256	24%	10%
EBT	5,114	27%	442	3%	>100%
Net earnings	3,482	19%	460	3%	>100%
Cash flow	2,699	14%	2,790	16%
Liquidity (1/2)	15,325		10,418
EPS (in EUR )	0.88		0.12		>100%
Employees (3)	295		280

CONSOLIDATED OVERVIEW AS PER IFRS: QUARTERLY COMPARISON IN KEUR

	Q2/14	Q1/14	Q4/13*	Q3/13*	Q2/13*
Sales	9,107	9,653	9,025	8,949	8,840
Software	5,771	5,910	5,617	5,369	5,585
Software licenses	2,002	2,142	1,965	1,779	2,025
Software maintenance	3,769	3,768	3,652	3,590	3,560
Consulting	2,450	2,495	2,375	2,165	2,264
Hardware	631	1,050	768	1,126	569
Others	255	198	264	289	422
EBITDA	2,296	2,662	2,094	2,373	2,322
EBIT	2,170	2,527	1,946	2,230	2,186
EBIT margin in %	24%	26%	22%	25%	25%
EBT	2,270	2,844	1,385	2,493	-1,962
Net earnings	1,514	1,968	835	1,724	-1,290
Cash flow	-1,279	3,979	-186	5,658	297
Liquidity (1/2)	15,325	19,493	15,249	16,177	10,418
EPS (in EUR )	0.38	0.50	0.21	0.43	-0.32
Employees (3)	295	293	289	280	280

(1) Cash and cash equivalents, other current and non-current financial assets (sight deposits, gold)

as of the qualifying date, adjusted to exclude borrowings (loans)

(2) Dividend of EUR 3.62 per share on 29.04.2013 (TEUR 14,395) and dividend of EUR 0.72 per share on 02.05.2014 (TEUR 2,863)

(3) at the end of the quarter/half year

* adjusted for the effects of IAS 19 R

INVESTOR RELATIONS

Share price movement: Q1/2007 – Q2/2014

CONSOLIDATED OVERVIEW AS PER IFRS: QUARTERLY COMPARISON IN EUR

	Q2/14	Q1/14	Q4/13	Q3/13	Q2/13
Highest price	30.73	30.29	29.19	29.15	34.10
Lowest price	28.51	27.81	24.85	24.09	24.05
Share price at end of quarter	29.90	29.30	28.56	25.30	24.84
Dividend paid per share (2)	0.72	0.00	0.00	0.00	3.62
Cash flow per share	-0.32	1.00	-0.05	1.42	0.07
Liquidity per share (1/2)	3.85	4.90	3.83	4.07	2.62
EPS	0.38	0.50	0.22	0.43	-0.33
EPS (diluted)	0.38	0.50	0.22	0.43	-0.33

(1): Cash and cash equivalents, other current and non-current financial assets (sight deposits, gold) as of the qualifying date, adjusted to exclude borrowings (loans);

(2): Dividend of EUR 3.62 per share on 29.04.2013 (KEUR 14,395) and EUR 0.72 per share on 02.05.2014 (TEUR 2,863).

Positive share price development continues, new record figures highlight the sustained potential of an investment in ATOSS

Amid fluctuations the ATOSS share price nevertheless adhered to a slight upward trend in the first half of 2014, putting on 3.1 percent (5.6 percent including dividend distributions). As a result ATOSS clearly outperformed the benchmark Daxsubsector Software Performance Index, which recorded a negative performance of -6.7 percent in the same period.

Once again, ATOSS stock has substantially outperformed the market as a whole. In a long-term comparison between the year 2007 when the current sustained period of operational success began and the end of the first half of 2014, shareholders have seen the price of ATOSS shares rise by 192 percent, while the in the same period the Daxsubsector Performance Index has put on just 63 percent.

The dividend paid in May 2014 at EUR 0.72 per share matched the same high level as in the year before. In view of the current earnings developments, our policy of paying a dividend oriented towards earnings per share and at least equal to the preceding year, is another source of confidence. It is custom and practice at ATOSS to distribute around 50 percent of earnings per share as a dividend, and at EUR 0.88 by the middle of 2014, this figure already exceeds last year's total dividend of EUR 0.72. Accordingly, there are excellent prospects for a respectable dividend increase.

Shareholders in ATOSS Software AG have seen their prosperity increase both through the rising share price and in the form of attractive dividends, supplemented from time to time by substantial special distributions. Overall since 2006, long-term shareholders have received dividend payments totaling EUR 12.40 per share.

Considering the dividend policy in conjunction with the highly positive development in earnings, ATOSS will continue to retain its position as a technology company with an attractive and reliable dividend yield, and consistently positive operating performance with the potential for growth.

ATOSS Dividend in EUR*

Analysts at Warburg Research have raised the upside target and recommend ATOSS as a buy.

Analyst response to the publication of the half-yearly figures was unanimous. Praising the "strong orders for new licenses", they particularly stressed the substantial order intake, which they regard as a good indicator for the development of business in the coming quarters. Not only do orders for software licenses initially yield licensing revenues, they also lead on to an income stream from projects (services) and ultimately maintenance. In view of the strong figures, the analysts raised the upside target for ATOSS stock, increasing their forecast from EUR 31.00 to EUR 33.60.

Further information: www.atoss.com

GROUP MANAGEMENT REPORT

1. Business and conditions: German economic upturn continues

The global economy has picked up pace once again since the summer of 2013. As the Eurozone began to emerge from almost two years of recession, the recovery in the USA, Great Britain and Japan gained momentum. Looking ahead to the end of 2015, the pace of global expansion appears set to increase moderately, with the advanced economies providing the primary source of momentum.

In the Eurozone, real gross domestic product is likely to have grown by 0.3 percent in the second quarter of 2014. In the third and fourth quarters, the rate of expansion can now be expected to stabilize at this level.

As a result of the welcome development at a global level, the German economy is also gathering pace. In the first quarter of 2014, macroeconomic output in Germany rose by a seasonally adjusted 0.8 percent relative to the preceding three months. This increase in real GDP is primarily attributable to domestic demand. According to estimates by the ifo Institute, real GDP is likely to increase by 2 percent this year and 2.2 percent next year. However, while this positive underlying trend in the economy raises expectations of a continuing upturn, it is somewhat tainted by sustained uncertainties surrounding current geopolitical risks, among them the conflicts between Russia and the Ukraine and in the Middle East. Another central assumption is that there will be no major imponderables or adaptive difficulties arising from Europe's sovereign debt crisis and its financial market and structural problems.

With the ifo Business Climate Index standing at 109.7 in June 2014, German companies continue to take a benign view of the current business situation. Opinion in the services sector is even more optimistic, climbing to its highest level since spring 2007, as further efforts are made to streamline staffing levels.

The high tech sector looks forward to the future with confidence following a successful first half-year in 2014 in which three out of four ICT companies recorded rising sales. Eight out of ten companies expect sales to rise in the coming second half. This positive mood is also reflected in the BITKOM Index which put on a further 5 points to reach a new high of 72. More than two third of ICT companies intend to hire new employees this year.

Against this background, in the first half of 2014 ATOSS recorded strong business with sales up 7 percent and a 10 percent increase in operating profits (EBIT) – despite a sustained high level of investments in marketing and development. In its core software business the company achieved sales growth of 8 percent. In addition, especially the developments in orders received in the first half-year have been very gratifying. Coming in at a new record of EUR 5.4 million, the figure was substantially higher than last year's EUR 3.6 million. Orders on hand as of June 30, 2014 amounted to EUR 4.7 million, compared with EUR 3.6 million last year.

2. Earnings position: New record sales and results

In the first six months of financial year 2014 ATOSS recorded sales revenues up 7 percent at EUR 18.8 million (previous year: EUR 17.5 million). In our core software business, turnover climbed 8 percent from EUR 10.9 million to EUR 11.7 million, with sales of software licenses growing by 9 percent from EUR 3.8 million to EUR 4.1 million. Software maintenance, too, continued to develop positively with turnover increasing by 7 percent to EUR 7.5 million.

As of June 30, 2014 consulting sales stood at EUR 4.9 million (previous year: EUR 4.4 million).

Operating profits (EBIT), too, improved substantially relative to the year before, rising 10 percent from EUR 4.3 million to EUR 4.7 million.

Driven by positive financial earnings of EUR 0.4 million in connection with the increase in the gold price, earnings before taxes (EBT) in the reporting period climbed to EUR 5.1 million.

Earnings after tax at the end of June 2014 amounted to EUR 3.5 million (previous year: EUR 0.5 million). Earnings per share accordingly came in at EUR 0.88 (previous year: EUR 0.12).

Orders received as of June 30, 2014 amounted to EUR 5.4 million (previous year: EUR 3.6 million). Orders on hand for software licenses at the end of June stood at EUR 4.7 million, well above last year's high level of EUR 3.6 million and providing an excellent starting point for the second half of 2014.

3. Net assets and financial position

In the first six months, cash flow from operations amounted to EUR 2.7 million (previous year: EUR 2.8 million). At the same time, liquidity (cash and cash equivalents less borrowings) increased relative to the same period last year from EUR 3.4 million to EUR 10.0 million. Despite the dividend distribution of EUR 2.9 million in May 2014, the position as a whole comprising liquidity and other current and noncurrent financial assets, after adjusting for borrowed funds such as loans, increased by EUR 4.9 million to stand at EUR 15.3 million. Liquidity per share on June 30, 2014 including these other current and non-current financial assets and after adjusting for borrowings accordingly stood at EUR 3.85 (previous year: EUR 2.62).

In addition to net earnings of EUR 3.5 million, the figure of EUR 2.7 million in cash flow from operations was boosted primarily by the reduction in net current assets resulting from an increase in deferred revenues of EUR 0.5 million and a decline of EUR 0.6 million in tax provisions. Cash flow was by contrast reduced primarily by a reduction in miscellaneous current liabilities in the amount of EUR 0.9 million and an increase in trade receivables and other current assets of EUR 0.5 million.

As of June 30, 2014 ATOSS reported an equity ratio of 53 percent (previous year: 43 percent). The company thus remains extremely well capitalized, with solvency assured at all times.

4. Product development

A high level of expenditure on research & development remains an important component of the ATOSS growth strategy with the goal of further extending the company's strong position as a technological leader in workforce management. Research and development costs in the first six months rose by 4 percent relative to the year before to stand at EUR 3.9 million at the end of June 2014 (previous year: EUR 3.8 million). R&D costs as a proportion of overall sales amounted to 21 percent (previous year 21 percent).

The company continues to refrain from capitalizing the expense of developing new products. All expenditure for this purpose is recognized in the income statement in the period in which it is incurred.

5. Employees

The number of employees has risen from 280 last year to 295. On June 30, 2014 ATOSS employed 128 developers (previous year: 124), with a further 80 staff employed in consulting (previous year: 71), 44 in sales and marketing (previous year: 43) and 43 in administration (previous year: 42).

Personnel costs for the current financial year amounted as of June 30 to EUR 9.3 million (previous year: EUR 8.3 million).

6. Risks associated with future development

There has been no material change in the company's risk structure relative to the description contained in the consolidated financial statements to December 31, 2013.

The market risk associated with financial assets available for sale essentially concerns the fair value of the company's gold holdings, which stood at EUR 5.3 million as of June 30, 2014 and is dependent on the ongoing development in the gold price.

7. Events after the closing dateg

There have been no reportable events of particular significance since June 30, 2014.

8. Outlook

In the first six months of the current financial year 2014, ATOSS has experienced extremely positive developments in sales and operating profits. In view of these developments and in consideration of the high level of orders on hand, despite further scheduled investments, particularly in developing new markets, and a continuing high level of expenditure on research & development amounting to around one fifth of sales, the Management Board continues to expect stable sales growth in the current financial year with an EBIT margin in excess of 20 percent.

CONSOLI DATED BALANCE SHEET to 30.06.2014

Assets (EUR)	30.06.2014	31.12.2013
Non-current assets
Intangible assets	163,201	145,046
Property, plant and equipment	2,703,465	2,725,868
Other financial assets	441,565	408,491
Deferred taxes	652,901	630,402
Total non-current assets	3,961,132	3,909,807
Current assets
Inventories	5,537	8,642
Trade accounts receivable	3,270,405	3,029,835
Other financial assets	4,897,462	4,448,182
Other non-financial assets	1,473,681	1,189,822
Cash and cash equivalents	9,986,250	10,392,796
Total current assets	19,633,335	19,069,277
Total assets	23,594,467	22,979,084
Equity and Liabilities (EUR)	30.06.2014	31.12.2013
Equity
Subscribed capital	3,976,568	3,976,568
Capital reserve	-661,338	-661,338
Equity deriving from unrealized profits/losses	-709,589	-734,394
Unappropriated net income	9,775,974	9,156,749
Total equity	12,381,615	11,737,585
Non-current liabilities
Pension provisions	2,703,135	2,687,192
Deferred taxes	157,130	354,275
Total non-current liabilities	2,860,265	3,041,467
Current liabilities
Trade accounts payable	323,525	327,290
Other liabilities	3,844,047	4,734,091
Deferred revenues	3,420,286	2,944,110
Tax provisions	710,062	105,541
Other provisions	54,667	89,000
Total current liabilities	8,352,587	8,200,032
Total equity and liabilities	23,594,467	22,979,084

CONSOLIDATED INCOME STATEMENT FROM 01.01. TO 30.06.2014

	Quarterly report		6-months report
EUR	01.04.2014 –30.06.2014	01.04.2013 –30.06.2013 adjusted*	01.01.2014 –30.06.2014	01.01.2013 –30.06.2013 adjusted*
Sales revenues	9,107,280	8,839,865	18,760,079	17,530,792
Cost of sales	-2,677,228	-2,359,385	-5,523,816	-4,821,667
Gross profit	6,430,052	6,480,480	13,236,263	12,709,125
Selling costs	-1,494,418	-1,552,982	-3,112,239	-3,004,800
Administration costs	-815,839	-837,567	-1,600,925	-1,681,855
Research and development costs	-1,966,804	-1,928,108	-3,910,604	-3,755,408
Other operating income	26,883	4,610	103,502	12,226
Other operating expenses	-9,846	19,330	-18,684	-23,208
Operating profit (EBIT)	2,170,028	2,185,763	4,697,313	4,256,080
Interest and similar income	122,835	12,694	463,006	424,548
Interest and similar expenses	-23,224	-4,160,080	-46,341	-4,238,547
Earnings before taxes (EBT)	2,269,639	-1,961,623	5,113,978	442,081
Taxes on income and earnings	-755,694	671,434	-1,631,625	18,235
Net income for the year	1,513,945	-1,290,189	3,482,353	460,317
Earnings per share (undiluted)	0.38	-0.32	0.88	0.12
Earnings per share (diluted)	0.38	-0.32	0.88	0.12
Average number of shares in circulation (undiluted)	3,976,568	3,976,568	3,976,568	3,976,568
Average number of shares in circulation (diluted)	3,976,568	3,976,568	3,976,568	3,976,568

* adjusted for the effects of IAS 19 R

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FROM 01.01 TO 30.06.14

EUR	01.01.2014 –30.06.2014	01.01.2013 –30.06.2013 adjusted*	01.01.2013 –30.06.2013
Net income for the year	3,482,353	460,317	425,851
Components not reallocated in profit and loss
Profits/losses on the revaluation of defined benefit pension plans recognized in equity	0	-174,405	0
Tax effects on profits/losses on the revaluation of defined benefit pension plans recognized in equity	0	32,224	0
Profits/losses recognized in equity on the disposal of financial assets available for sale	0	503,533	503,533
Tax effects on profits/losses recognized in equity on the disposal of financial assets available for sale	0	-225,808	-225,808
Components reallocated in profit or loss in later periods
Profits/losses recognized in equity on the disposal of financial assets available for sale	33,074	-151,370	-151,370
Tax effects on profits/losses recognized in equtiy on the disposal of financial assets available for sale	-8,269	37,842	37,842
Other comprehensive income for the period after taxes	24,805	22,016	164,197
Comprehensive income after taxes	3,507,158	482,333	590,048

* adjusted for the effects of IAS 19 R

CONSOLIDATED CASH FLOW STATEMENT FROM 01.01 TO 30.06.2014

EUR	01.01.2014 -30.06.2014	01.01.2013 -30.06.2013 adjusted*
Business operations
Net income	3,482,353	460,317
Depreciation of fixed assets	260,687	283,816
Gains from the disposal of fixed assets	0	0
Gains from the disposal / valuation of financial assets available for sale	-449,280	3,634,283
Other financial investment income	-13,726	-17,186
Changes in deferred taxes	-219,645	-161,548
Change in provisions for pension commitments	15,943	4,325
Adjustment for items not recognized in profit or loss	-8,269	-187,966
Change in net current assets
Trade accounts receivable	-240,570	-1,150,097
Inventories and other assets	-278,518	-519,890
Trade accounts payable	-3,766	-105,691
Other provisions	-34,333	0
Other liabilities	-890,042	-702,224
Deferred revenues	476,176	1,291,016
Tax provisions	602,285	-38,931
Cash flow generated from business operations (1)	2,699,295	2,790,224
Investment activities
Disbursements for the purchase of tangible and intangible assets	-256,438	-156,084
Receipts from the disposal of other financial assets	0	3,296,036
Interest/dividend receipts	13,726	43,056
Interes paid	0	-8,519
Cash flow generated from investment activities (2)	-242,712	3,174,489
Financing activities
Dividends paid	-2,863,129	-14,395,176
Proceeds from the draw down of bank loans	0	3,000,000
Loans disbursed	0	-3,500,000
Repayment of loans received	0	3,500,000
Cash flow generated from financing activities (3)	-2,863,129	-11,395,176
Changes in liquidity – total of (1) to (3)	-406,547	-5,430,463
Liquidity at the start of the period	10,392,796	8,859,080
Liquidity at the end of the period	9,986,250	3,428,617

* adjusted for the effects of IAS 19 R

EUR	Subscribed capital	Capital reserve	Treasury stock	Equity deriving from unrealized profits/losses	Profit shown on balance sheet	Total
Status 01.01.2013	3,976,568	-611,338	0	-601,667	20,532,402	23,245,965
Net income, adjusted*	0	0	0	0	460,317	460,317
Withdrawal of treasury stock	0	0	0	0	0	0
Dividends	0	0	0	0	-14,395,176	-14,395,176
Other comprehensive income, adjusted*	0	0	0	22,016	0	22,016
Status 30.06.2013 adjusted*	3,976,568	-661,338	0	-579,651	6,597,543	9,333,122
Status 01.01.2014	3,976,568	-661,338	0	-734,394	9,156,749	11,737,585
Net income	0	0	0	0	3,482,353	3,482,353
Dividends	0	0	0	0	-2,863,128	-2,863,128
Other comprehensive icome	0	0	0	24,805	0	24,805
Status 30.06.2014	3,976,568	-661,338	0	-709,589	9,775,974	12,381,615

Consolidated Statement of Changes in EQUITY AS OF 30.06.2014

* adjusted for the effects of IAS 19 R

One share represents 1 euro of subscribed capital.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. General

The present quarterly report has been prepared in accordance with International Financial Reporting Standards (IFRS) in compliance with IAS 1.14. In particular the report complies with the provisions contained in IAS 34 "Interim Financial Reporting". The requirements contained in German Accounting Standard (DRS) No. 6 regarding interim reporting have likewise been fulfilled.

In accordance with IAS 34.20, the present statements include a consolidated balance sheet, consolidated income statement, consolidated statement of comprehensive income, consolidated cash flow statement, a statement of changes in consolidated equity and explanatory notes to the consolidated statements.

The same financial accounting, valuation and computation methods have been applied as in the case of the annual financial statements to December 31, 2013. The revised IAS 19, which requires unexpected fluctuations in pension benefit liabilities and assets – so-called actuarial profits and losses – to be recognized immediately in other comprehensive income, plan amendments to be recognized in profit and loss in full in the relevant period and expected interest on plan assets to be recognized at the discount interest rate only, was applied by the Group at the financial year end, backdated to January 1, 2013. Consequently the quarterly figures have been adjusted accordingly. In addition to the back-dated recognition in equity of actuarial profits and losses in the amount of TEUR 174 for the first half of 2013, the corresponding deferred taxes carried as assets in the amount of TEUR 32 have been recognized in other income. The recognition in the income statement firstly of an adjustment in returns on plan assets in line with the discount rate on the defined benefit liability and secondly of deferred taxes on the pension provision led to an increase in earnings of TEUR 34.

The Management Board is satisfied that the impression of the economic situation of the company, its net assets, financial position, earnings situation and cash flow conveyed by the present quarterly financial statements accords with the true facts. This interim report has not undergone an auditors' inspection or statutory audit.

2. Reporting period

The present interim report was prepared to June 30, 2014 for the reporting period from January 1, 2014 to that date.

3. Currency

All figures are stated in euro. Amounts are rounded up to whole euro units.

4. Consolidated group

In addition to the parent company ATOSS Software AG, Munich, the consolidated financial statements to June 30, 2014 also include all subsidiary companies:

ATOSS CSD Software GmbH, Cham, Germany ATOSS Software Ges.mbH, Vienna, Austria ATOSS Software AG, Zurich, Switzerland ATOSS Software S.R.L., Timisoara, Romania

These companies are fully consolidated.

5. Changes in equity

The development in equity is evident from the statement of changes in consolidated equity.

6. Sales revenues

The company's sales revenues in the financial year were composed as follows:

EUR	01.01.2014 –30.06.2014	01.01.2013 –30.06.2013
Software licenses	4,144,037	3,794,399
Software maintenance	7,536,845	7,065,982
Total software	11,680,882	10,860,381
Consulting	4,945,027	4,421,522
Hardware	1,681,174	1,461,670
Others	452,996	787,219
Total sales revenues	18,760,079	17,530,792

The geographic breakdown of sales revenues was as follows:

EUR	01.01.2014 –30.06.2014	01.01.2013 –30.06.2013
Germany	15,916,021	16,232,408
Austria	2,033,434	865,955
Switzerland	453,643	310,086
German-speaking territories in total	18,403,098	17,408,449
Other countries	356,981	122,343
Total sales revenues	18,760,079	17,530,792

7. Personnel expenses

The consolidated personnel costs to June 30, 2014 were composed as follows:

EUR	01.01.2014 –30.06.2014	01.01.2013 –30.06.2013
Wages and salaries	7,769,114	6,927,866
Social security contributions and expenditure on retirement pensions and welfare	1,532,736	1,401,273
Total personnel costs	9,301,850	8,329,139

8. Other operating income and expenses

In the first six months of the current financial year the company recorded other operating income in the amount of EUR 103,502 (previous year: EUR 12,226). This income essentially resulted from the liquidation of reserves and reimbursement of costs.

Other operating expenses amounting to EUR 18,684 (previous year: EUR 23,208) essentially related to exchange rate losses and allowances.

9. Financial investment income and expenses

In the first six months of the current financial year the company recorded income in the amount of EUR 463,006 (previous year: EUR 424,548) from financial investments. This essentially comprised income from write-ups on the company's gold holdings in the amount of EUR 449,280 and interest income of EUR 13,726 (previous year: EUR 25,704).

As of the end of June, 2014, the company had recorded financial expenses in the amount of EUR 46,341 (previous year: EUR 4,238,547). This almost exclusively concerned interest expenses in connection with the pension provision.

10. Tax charge

Consolidated tax expenses to June 30, 2014 were comprised as follows:

EUR	01.01.2014 –30.06.2014	01.01.2013 –30.06.2013
Pre-tax earnings (EBT)	5,113,978	460,317
Expected tax charge (2014: 32.60%, 2013: 32.60%)	-1,667,157	-150,063
Non-deductible operating expenses	-79,118	-13,583
Tax payments/refunds for previous years	4,051	0
Interests as per § 8b KStG	0	105,437
Differences in tax rates at consolidated companies	110,598	39,974
Actual Group tax charge	-1,631,625	18,235

*adjusted for the effects of IAS 19 R

11. Earnings per share

The figure for earnings per share is arrived at by dividing the net result for the period in the amount of EUR 3,482,353 by the weighted average number of shares outstanding. From January 1 to June 30, 2014 there were an average of 3,976,568 shares in circulation. Thus earnings per share for this period amounted to EUR 0.88, in comparison with EUR 0.12 in the first six months of the preceding year.

12. Segment reporting

The identification of operating segments presupposes that a senior decision-maker monitors and assesses the profitability of significant components of the company as the basis for resource allocation and profitability measurement, that the components of the company generate income and incur expenses as part of their business activities, and that financial information is available for these components of the company. Several segments can be aggregated into one segment if the type of products and services, production processes and customers for which the products and services are intended are similar, as well as the sales methods applied, and where they exhibit a significant shortfall relative to the quantitative thresholds for segment formation.

The company has only one uniform business segment within the meaning of IFRS 8 which comprises the creation, sale and implementation of software solutions directed towards the efficient deployment of personnel.

The following tables depict sales revenues broken down by software solutions and their contributions to the operating result. As a result of a reallocation of costs between the two software solutions the prior numbers have been adjusted accordingly.

The individual software solutions comprise:

ATOSS Staff Efficiency Suite (ASES) and ATOSS Startup Edition (ASE):

ASES and ASE are time and attendance management and workforce scheduling solutions for customers of all sizes in all industries. These software solutions are generally accompanied by other services covering implementation and training. In addition, consulting services are rendered with the object of making meaningful use of the available scope and developing optimum solutions for the efficient deployment of personnel under specific operating conditions and in consideration of company agreements and industrywide pay deals. The company also sells hardware components for time recording and access control purposes. ASES/ASE software is used in conjunction with all major standard system platforms and databases. Moreover thanks to the extensive facility to define customer-specific parameters these solutions are capable of satisfying even the most sophisticated requirements of customers of all sizes in all industries.

ATOSS Time Control (ATC):

ATC is a solution for time and attendance management and workforce scheduling geared to small and mediumsized customers, as well as large but decentrally organized clients. Likewise in conjunction with ATC, ATOSS offers software implementation and training as well as consulting services. Merchandise including hardware and recording media is also available. ATC software is installed on the Microsoft Windows system platform in association with standard SQL databases and is particularly user-friendly and convenient for small to medium-sized customers as well as large decentralized organizations.

EUR	01.01.2014 –30.06.2014	01.01.2013 –30.06.2013
Sales revenues
ATO SS Staff Efficiency Suite (ASES) and ATO SS Startup Edition (ASE)	17,083,296	15,983,725
ATO SS Time Control (ATC)	1,676,783	1,547,067
Total sales revenues	18,760,079	17,530,792
Operating result (EBIT)
ATO SS Staff Efficiency Suite (ASES) and ATO SS Startup Edition (ASE)	4,408,645	3,940,620
ATO SS Time Control (ATC)	288,668	315,460
Operating result (EBIT) in total	4,697,313	4,256,080

13. Employees

On June 30, 2014 the company had 295 employees (previous year: 280).

EUR	01.01.2014 –30.06.2014	01.01.2013 –30.06.2013
Development	128	124
Consulting	80	71
Sales and marketing	44	43
Administration	43	42
Total	295	280

14. Management Board

The members of the Management Board are:

Andreas F. J. Obereder	Chief Executive Officer
Christof Leiber	Member of the Board of Management

15. Supervisory Board

By a resolution adopted at the annual general meeting on April 30, 2014, the Supervisory Board was re-elected and is now comprised as follows:

Peter Kirn	Chairman
Rolf Baron Vielhauer von Hohenhau	Deputy Chairman
Klaus Bauer	Member of the Supervisory Board

16. Board member shareholdings

As of June 30, 2014 the following supervisory board members held the following numbers of ATOSS shares:

EUR	30.06.2014	31.03.2014	31.12.2013	30.09.2013	30.06.2013
Andreas F. J. Obereder	1,988,285	1,988,285	1,988,285	1,988,285	1,988,285
Peter Kirn	14,760	14,760	14,760	14,760	14,760

The majority shareholder, Andreas F.J. Obereder of Grünwald, Germany, holds 1,988,285 shares representing 50.0000025 percent of the shares in ATOSS Software. His shares are held via the company AOB Invest GmbH of Grünwald, Germany, which is wholly owned by him.

17. Notifiable participating interests

In the first six months of financial year 2014 the company received the following notification regarding changes in participating interests pursuant to Sections 21 ff. of the German Securities Trading Act:

On July 8, 2014 the interest held by MainFirst SICAV, Luxembourg, fell below the threshold of 5 percent of voting rights and amounted at this time to 4.78 percent.

There have been no further notifications pursuant to §§ 21ff of the German Securities Trading Act regarding changes in participating interests.

18. Business relations with closely related persons

As of June 30, 2014, there were no business relations with closely related persons.

19. Events after the closing date

There have been no reportable events of particular significance since June 30, 2014.

Declaration by the Legal Representatives

According to the best of our knowledge, we assure that, pursuant to the applicable accounting principles for interim reporting, the interim consolidated financial statements convey a true and fair view of the Group's net assets, financial position and results of operations, and that the business development, including the business results and the Group's position, are presented in the interim Group management reports in such a way that they convey a true and fair view, and that the key opportunities and risks pertaining to the Group's prospective development in the remainder of the fiscal year are described.

Munich, August 12, 2014

Andreas F.J. Obereder Christof Leiber

Chief Executive Officer Member of the Board of Management

Disclaimer

This report contains forward-looking statements that are based on the conviction of the Management Board of ATOSS Software AG and reflect current assumptions and estimations. These forward-looking statements are subject to risks and uncertainties. Many facts that cannot currently be predicted may cause the actual performance and earnings of ATOSS Software AG to develop in a different manner. This could for example include the non-acceptance of newly introduced products or services, changes in the general economic and business climate, a failure to achieve efficiency and cost-reduction targets or changes in business strategy.

The Management Board is firmly convinced that the expectations embodied in these forward-looking statements are sound and realistic. Should however the above-mentioned or other unforeseeable risks materialize, ATOSS Software AG cannot guarantee that the expressed expectations will prove to be correct.

Corporate calendar

October 21, 2014	Press Release Nine Months' Statement
November 14, 2014	Publication Nine Months' Statement
November 24 – 26, 2014	ATO SS at the German Equity Forum

Imprint

RESPONSIBle

ATOSS Software AG Am Moosfeld 3 D-81829 Munich

T +49 89 4 27 71 0 F +49 89 4 27 71 100 info@atoss.com www.atoss.com

INVESTOR RELATIONS

ATOSS Software AG Investor Relations Christof Leiber

T +49 89 4 27 71 0 F +49 89 4 27 71 100 Christof.Leiber@atoss.com

Representations

Düsseldorf Robert-Bosch-Straße 14 40668 Meerbusch T +49 21 50 9 65 0

Frankfurt Campus Carré Herriotstraße 8 60528 Frankfurt/Main T +49 69 13 82 43 0

Hamburg Osterbekstraße 90b 22083 Hamburg T +49 40 27 81 63 0

Stuttgart Zettachring 10a 70567 Stuttgart T +49 7 11 7 28 73 200

Utrecht (Netherlands) ATOSS Software AG Newtonlaan 115 3584 BH Utrecht T +31 30 210 6028

Affiliated Companies

Germany ATOSS CSD Software GmbH Rodinger Straße 19 93413 Cham T +49 99 71 85 18 0

Austria ATOSS Software Ges. mbH Europaplatz 2/1/2 1150 Vienna T +43 1 7 17 28 334

Switzerland ATOSS Software AG Leutschenbachstraße 95 8050 Zurich T +41 44 3 08 39 56

Romania SC ATOSS Software SRL Str. Diaconu Coresi, Nr. 31 300588 Timisoara T +40 356 71 01 82

atoss.com