Bechtle AG — Interim / Quarterly Report 2014

Aug 8, 2014

Interim Report as of 30 June 2014

2nd Quarter 2014

Your strong IT partner. Today and tomorrow.

key figures of the bechtle group at a glance

		01.01– 30.06.2014	01.01– 30.06.2013	Change in %
Revenue		€k 1,190,372	1,032,467	15.3
IT system house & managed services	€k	775,266	684,698	13.2
IT e-commerce	€k	415,106	347,769	19.4
EBITDA	€k	55,786	40,764	36.9
IT system house & managed services	€k	35,896	24,134	48.7
IT e-commerce	€k	19,890	16,630	19.6
EBIT	€k	44,503	29,466	51.0
IT system house & managed services	€k	26,640	15,058	76.9
IT e-commerce	€k	17,863	14,408	24.0
EBIT margin	%	3.7	2.9
IT system house & managed services	%	3.4	2.2
IT e-commerce	%	4.3	4.1
EBT	€k	43,935	28,678	53.2
EBT margin	%	3.7	2.8
Earnings after taxes	€k	31,224	20,476	52.5
Earnings per share	€	1.49	0.98	52.5
Return on equity1	%	13.1	9.3
Cash flow from operating activities	€k	–876	11,606	–107.5
Cash flow per share	€	–0.04	0.55	–107.5
Number of employees (as of 30.06)		6,393	6,053	5.6
IT system house & managed services		5,020	4,787	4.9
IT e-commerce		1,373	1,266	8.5
		30.06.2014	31.12.2013	Change in %
Cash and cash equivalents 2	€k	113,525	156,105	–27.3
Working capital	€k	269,601	234,624	14.9
Equity ratio	%	57.6	55.1

1 Annualised 2 Incl. time deposits and securities

review by quarter 2014

	1st Quarter 01.01–31.03	2nd Quarter 01.04–30.06	3rd Quarter 01.07–30.09	4th Quarter 01.10–31.12	2014 FY 01.01–30.06
Revenue €k	586,696	603,676			1,190,372
EBITDA €k	26,637	29,149			55,786
EBIT €k	21,161	23,342			44,503
EBT €k	20,832	23,103			43,935
EBT margin %	3.6	3.8			3.7
Earnings after taxes €k	14,802	16,422			31,224

CONSOLIDATED INTERIM MANAGEMENT REPORT

Business Activity

As a one-stop IT provider, Bechtle is active with about 65 system houses in Germany, Austria and Switzerland, and is one of Europe's leading online resellers, with subsidiaries in 14 countries. This combination forms the basis of Bechtle's unique business model, which combines IT services with the conventional IT trading business. Established in 1983 and headquartered in Neckarsulm, Germany, the company offers a one-stop, vendor-independent, comprehensive IT portfolio to its more than 75,000 customers from the fields of industry and trade, the public sector and the financial industry.

In the IT system house & managed services segment, the service spectrum ranges from the sale of hardware, software and application solutions to project planning and roll-out, system integration, maintenance and training to the provision of cloud services and the complete operation of the customer IT. In IT e-commerce, the second business segment, we have bundled our trading activities. Here, we offer our customers hardware and standard software via the Internet and telesales under the Bechtle direct and ARP brands. Moreover, the Comsoft direct brand is active in this segment as our software management and software licensing specialist.

Business Environment

• � GDP in the EU continually moving upwards
• � Mood in the IT industry marked by optimism

Macroeconomy

The economy in the EU, which regained some dynamism in the second quarter, continues to perform well. The European Commission estimates that the gross domestic product (GDP) increased 0.4 per cent in the period from April to June, compared to a growth rate of 0.3 per cent in the prior quarter. The development was also positive in all countries in which Bechtle is present, though the growth dynamics varied from 0.1 per cent in Portugal to 1.1 per cent in Poland.

EU Germany

According to the European Commission, the GDP in Germany increased 0.3 per cent in the second quarter. Compared to the growth of 0.8 per cent in the prior quarter, the dynamics were somewhat lower.

Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14

The mood in the German economy declined slightly in the second quarter, although it remained at a high level. Starting at 110.7 points in March, the ifo index initially continued to climb in April, but then receded nominally, reaching a level of 109.7 in June. The index also lost some ground in July, dropping to 108.0 points. The development was different in the two sub-areas "current situation" and "expectations". While the assessment of the current situation was largely stable from March to June, expectations for the coming months declined.

Industry

In the second quarter of 2014, the situation in the IT industry was mixed. In the reporting period, the GULP IT project market index, which registers projects for freelance IT specialists in Germany, almost stagnated, with growth of only 0.8 per cent compared to the corresponding prior-year quarter. However, as had already been the case in the first quarter, the PC market in Europe recorded excellent growth figures. According to figures provided by the IDC market research institute, PC sales in Western Europe went up 25 per cent, and the quantities sold to enterprise customers even underwent an increase of 27 per cent in this region. According to IDC, the main drivers for the growth in Western Europe were the significantly better macroeconomic situation, the widespread optimism among enterprise customers and the end of support for Windows XP. As reported by IDC, the growth was especially noteworthy in Spain, Germany and the Netherlands. However, the sales figures on the Eastern European markets dropped 13 per cent in the same time period.

On average, product prices increased in the second quarter. However, there were significant differences between individual categories. While especially workstation and server prices went up, the prices of PCs, laptops and tablets were under pressure.

In the second quarter, the mood on the German IT market was slightly more subdued compared to the mood at the beginning of the year, but picked up considerably in July. Following a good start, the ifo index for IT service providers declined in the course of the second quarter of 2014. In April, the index initially reached a level of 38.4, surpassing the value of March (36.5). Thereafter, the index went down and closed the

quarter at 33.9 points. In July, however, it picked up again, returning to a level of 37.0. While the assessment of the current business situation retained its value of 40 in the period from March to June as well as in July, the figure for the expectations dropped from 33 to 28 points, but was able to return to 34 in July.

ifo index for IT service providers

The half-yearly BITKOM industry index was assessed in June 2014. It presented a consistently positive picture and increased from 67 to a record high of 72 points. Optimism also dominated the revenue expectations for the next six months within the three sub-segments IT services, software and hardware. Hardware experienced the greatest increase. Here, the expectations improved from 45 to 55 points. The outlook for software revenues increased from 80 to 84. The expectations for service revenues were able to maintain the high level of 79.

Overall Assessment

The economic performance remained very encouraging in the second quarter of 2014, although the growth dynamics declined slightly in Germany. Nevertheless, in light of the development in the first half of the year, the positive forecasts for the economic growth in the EU and in Germany appear to be realistic. The mood indicators dropped slightly in the second quarter. Still, the optimism is unbroken at least in the IT industry. Both the BITKOM index and the ifo index paint a confident picture. In the ifo index of July, especially the outlook for the coming months is again rated much more positively than in May and June.

Bechtle AG made excellent use of this positive market environment and grew much faster than the market as a whole. The customers' willingness to invest was high in most regions and throughout both segments. Especially the IT e-commerce segment benefited from this trend to an above-average extent.

As Bechtle AG does not publish any forecasts during the year, it is currently not possible to compare the actual figures with target figures. However, as far as the year as a whole is concerned, we are sticking to our forecast that both the revenues and the earnings will increase considerably compared to the prior year. As we expect the growth dynamics to be somewhat lower in the second half of 2014, our actual figures as of 30 June 2014 are in accordance with the targets we communicated for 2014 as a whole.

Earnings Position

• � Growth dynamics even better in Q2
• � E-commerce with excellent earnings margin

Order Position

Most of the contractual relationships for the sale of IT products and services that Bechtle enters into are of a short-term nature. The IT e-commerce segment is characterised almost entirely by the conclusion of pure trading deals with very short order and delivery times, while some project transactions in the IT system house & managed services segment may have time spans of up to one year. However, framework and operating agreements in the fields of managed services and cloud computing usually have much longer terms.

Due to the current business structure, the incoming orders largely match the revenue during a reporting period. In the first half of 2014, incoming orders amounted to €1,201 million, almost 16 per cent more than in the prior year (€1,037 million). The IT system house & managed services segment underwent an increase of about 14 per cent to €782 million (prior year: €689 million). At approximately €419 million, the incoming orders in the IT e-commerce segment were about 22 per cent higher than in the prior year (€343 million).

The order backlog as of 30 June 2014 rose to €355 million (prior year: €304 million), an increase of almost 17 per cent compared to the prior-year reporting date. Of this amount, the IT system house & managed services segment accounted for €338 million (prior year: €297 million), and the IT e-commerce segment for €17 million (prior year: €7 million).

Revenue Performance

In the second quarter of 2014, Bechtle stepped up its revenue growth dynamics even more compared to the already excellent prior quarters. The revenue throughout the Bechtle Group climbed 16.4 per cent from €518.5 million to €603.7 million. As in the first quarter, the growth driver was the IT e-commerce segment, which gained 22.6 per cent. With growth of 13.3 per cent, the IT system house & managed services segment was able to keep up the high dynamics of the prior quarter. Cumulatively for the entire first half of the year, revenue increased 15.3 per cent to €1,190.4 million (prior year: €1,032.5 million).

The revenue increase was particularly remarkable abroad, driven by a strong demand for hardware and software. There, Bechtle saw growth of 20.2 per cent to €200.2 million (prior year: €166.5 million). In Germany, revenue increased 14.6 per cent from €352.0 million to €403.5 million. Here, both segments contributed equally to the revenue increase.

Regional re	venue distribution					€m
0	125	250	375	500	625	Total
			352.0	166.5		518.5
Q2/2013
			403.5		200.2	603.7
Q2/2014						(+16.4%)

Domestic Abroad

The IT system house & managed services segment increased its revenue 13.3 per cent to €388.8 million (prior year: €343.3 million). The domestic system houses provided the primary contribution to this extremely positive development. As in the prior quarter, their contribution to the group revenue increased 14.6 per cent to €347.8 million (prior year: €303.3 million). The revenue of the foreign system houses went up 2.8 per cent from €39.9 million to €41.1 million.

Revenue by	segments					€m
0	125	250	375	500	625	Total
			343.3	175.2		518.5
Q2/2013
Q2/2014			388.8		214.9	603.7 (+16.4%)

IT system house & managed services IT e-commerce

In the reporting period, the revenue in the IT e-commerce segment improved 22.6 per cent from €175.2 million to €214.9 million. The increase of the foreign e-commerce companies was especially high. They boosted their revenue by 25.7 per cent to €159.2 million. The increase was distributed over almost all international markets of the Bechtle Group. Domestic revenue climbed 14.5 per cent from €48.6 million to €55.7 million.

Revenue – group and segments €k
	Q2/2014	Q2/2013	Change	H1/2014	H1/2013	Change
Group	603,676	518,517		+16.4% 1,190,372	1,032,467	+15.3%
Domestic	403,466	351,969	+14.6%	798,764	698,487	+14.4%
Abroad	200,210	166,548	+20.2%	391,608	333,980	+17.3%
IT system house & managed services	388,826	343,290	+13.3%	775,266	684,698	+13.2%
Domestic	347,768	303,342	+14.6%	686,541	599,036	+14.6%
Abroad	41,058	39,948	+2.8%	88,725	85,662	+3.6%
IT e-commerce	214,850	175,227	+22.6%	415,106	347,769	+19.4%
Domestic	55,698	48,627	+14.5%	112,223	99,451	+12.8%
Abroad	159,152	126,600	+25.7%	302,883	248,318	+22.0%

Based on an average of 5,845 full-time and part-time employees, the revenue per employee in the group amounted to €103 thousand in the second quarter of 2014, compared to €94 thousand for 5,534 full-time and part-time employees in the prior-year quarter. This positive development is also reflected in the segments. The revenue per employee in the IT system house & managed services segment amounted to €84 thousand, based on an average of 4,626 full-time and part-time employees (prior year: €78 thousand for 4,402 full-time and part-time employees). Productivity also improved in the IT e-commerce segment. The revenue per employee generated in this segment in the reporting quarter averaged €176 thousand, based on an average of 1,219 full-time and part-time employees (prior year: €155 thousand, based on an average of 1,132 full-time employees).

Earnings Performance

In the reporting quarter, the cost of sales went up 16.3 per cent, a rate slightly lower than that of the revenue. Though the proportion of material costs in the cost of sales went up especially due to the above average performance of the e-commerce segment, personnel expenses developed at a slower rate. The gross margin thus improved from 14.8 per cent to 14.9 per cent. The gross profit amounted to €89.7 million, 17.2 per cent more than in the prior year (€76.5 million). In the six-month period, the gross margin also increased 14.7 per cent to 14.9 per cent. Gross earnings improved 16.3 per cent from €152.3 million to €177.1 million.

In the second quarter, our functional costs again increased at a disproportionately slow rate. As distribution costs and marketing expenses increased 10.6 per cent to €41.5 million, the ratio receded from 7.2 per cent to 6.9 per cent. In the reporting quarter, administrative expenses increased 6.0 per cent to €28.7 million. Thus, their share in the revenue declined from 5.2 per cent to 4.8 per cent. The development in the six-month period was similar: The distribution cost ratio receded from 7.2 per cent to 6.8 per cent, and the administrative expense ratio dropped from 5.2 per cent to 4.9 per cent.

Year on year, earnings before interest, taxes, depreciation and amortisation (EBITDA) increased 40.3 per cent from €20.8 million to €29.1 million. Thus, our EBITDA margin reached a value of 4.8 per cent, compared to 4.0 per cent in the prior year. In the six-month period, the margin amounted to 4.7 per cent, compared to 3.9 per cent in the prior year.

Depreciation and amortisation totalled €5.8 million, a level similar to that of the prior year. As previously, depreciation of property, plant and equipment – which increased slightly from €4.5 million to €4.7 million – accounted for the largest share.

Earnings before interest and taxes (EBIT) improved 55.9 per cent to €23.3 million (prior year: €15.0 million). The margin increased one full percentage point from 2.9 per cent to 3.9 per cent. In the six-month period, the margin amounted to 3.7 per cent (prior year: 2.9 per cent).

Year on year, financial income improved slightly. Thus, the group generated earnings before taxes (EBT) amounting to €23.1 million in the period from April to June, 58.3 per cent more than in the prior year (€14.6 million). The EBT margin went up from 2.8 per cent to 3.8 per cent. In the six-month period, the margin increased from 2.8 per cent to 3.7 per cent.

In the reporting quarter, tax expense increased from €4.2 million to €6.7 million, especially due to the higher domestic earnings share. The tax rate progressed from 28.7 per cent in the prior year to 28.9 per cent in the period under review.

Earnings after taxes went up 57.9 per cent from €10.4 million to €16.4 million. Accordingly, the net margin climbed from 2.0 per cent to 2.7 per cent. On the basis of 21.0 million shares, earnings per share (EPS) amounted to €0.79, a figure considerably above the prior-year level (€0.50). In the six-month period, EPS amounted to €1.49, 52.5 per cent more than in the prior year (€0.98).

At segment level, the earnings situation was as follows:

In the second quarter of 2014, EBIT in the IT system house & managed services segment increased 69.3 per cent to €13.0 million (prior year: €7.7 million). The EBIT margin was 3.3 per cent, compared to 2.2 per cent in the prior year. Among other things, this excellent development is the result of the consistently careful recruitment policy and the associated disproportionately low increase in personnel expenses.

In the second quarter, the IT e-commerce segment generated EBIT of €10.4 million, an increase of 41.9 per cent compared to the prior year (€7.3 million). The margin climbed from 4.2 per cent to 4.8 per cent. Thus, the e-commerce segment has again reached the scope of our target margin of 5.0 per cent, a development caused by the only below-average increase in personnel expenses.

EBIT – group and segments €k
	Q2/2014	Q2/2013	Change	H1/2014	H1/2013	Change
Group	23,342	14,973	+55.9%	44,503	29,466	+51.0%
IT system house & managed services	12,972	7,663	+69.3%	26,640	15,058	+76.9%
IT e-commerce	10,370	7,310	+41.9%	17,863	14,408	+24.0%

Assets and Financial Position

• � Liquidity of more than €110 million secures further growth
• � Equity ratio 57.6 per cent
• � Cash flow from operating activities marked by higher business volume

As of 30 June 2014, the balance sheet total of the Bechtle Group amounted to €886.5 million, €23.9 million less than as of 31 December 2013 (€910.3 million), an effect caused by seasonal reasons.

Development of the Assets

Non-current assets went up from €299.2 million to €307.8 million. Significant changes were recorded in goodwill, which increased €4.5 million to €144.4 million, and other intangible assets, which went up €2.5 million to €21.8 million. Both items were mainly affected by the acquisitions performed. Property, plant and equipment climbed €2.8 million to €102.6 million, also due to the acquisitions and due to replacement and expansion investments. Accordingly, our capitalisation ratio has also gone up and now amounts to 34.7 per cent (31 December 2013: 32.9 per cent).

In contrast, current assets have fallen €32.5 million to €578.7 million since the beginning of the fiscal year. This item was mainly affected by the decline in cash and cash equivalents as well as trade receivables, on one hand, and the increase in inventories, on the other hand. The reduction of trade receivables for seasonal reasons amounted to €19.1 million from €345.2 million to €326.1 million. Year on year, our average DSO (days sales outstanding) in the first six months of 2014 improved from 38.6 days to 38.4 days. Owing to the revenue increase and the stock levels kept for larger projects, the inventories climbed from €107.6 million to €134.6 million. Especially due to the dividend payment, cash and cash equivalents dropped €43.1 million to €62.8 million. As of the balance sheet date, the total liquidity – the value of the cash and cash equivalents including short-term and long-term time deposits and securities – was nevertheless at a very comfortable level of €113.5 million (31 December 2013: €156.1 million). In addition to the total liquidity, Bechtle has a liquidity reserve of €37.2 million in the form of unused cash and guarantee credit lines.

In the first half of 2014, the working capital increased from €234.6 million to €269.6 million, especially due to the higher inventories and lower trade payables. In relation to the balance sheet total, the working capital amounted to 30.4 per cent as of 30 June 2014, compared to 25.8 per cent as of 31 December 2013.

Development of the Equity and Liabilities

As of 30 June 2014, non-current liabilities amounted to €90.0 million, a level similar to that as of 31 December 2013 (€90.8 million). Though financial liabilities declined to €2.7 million and deferred income and accrued expenses to €1.4 million, the other provisions, deferred taxes and other liabilities increased equally.

Current liabilities fell €31.7 million to €286.3 million (31 December 2013: €318.0 million). For seasonal reasons, trade payables dropped €25.9 million from €170.5 million to €144.7 million. For reasons related to the reporting date, other liabilities dropped from €79.9 million to €70.4 million. This was mainly caused by the decrease of €8.1 million in personnel liabilities due to commission and bonuses paid in the first half of the year and a decrease of €5.2 million in VAT liabilities. Deferred income increased €3.9 million, and financial liabilities amounted to €10.4 million, just below the prior-year figure (€10.5 million).

Thanks to the greatly improved earnings position, the equity went up from €501.6 million to €510.2 million as of 30 June 2014, despite the dividend payment. Therefore, our equity ratio increased considerably compared

to 31 December 2013, reaching a value of 57.6 per cent (31 December 2013: 55.1 per cent). Based on the current earnings and the equity development, the extrapolated return on equity improved noticeably to 13.1 per cent (prior year: 9.3 per cent).

RETURN ON EQUITY						%
0	2.5	5.0	7.5	10.0	12.5	15.0
H1/2013				9.3
					13.1
H1/2014

Due to the slightly higher increase in non-current assets over the equity, the equity to non-current assets ratio declined from 167.6 per cent as of 31 December 2013 to 165.7 per cent as of 30 June 2014. At minus €52.1 million, the group's net debt remains negative, i.e. Bechtle is free of debt. We were able to further reduce the dependence on external creditors. As of 30 June 2014, Bechtle's debt ratio was 73.8 per cent, considerably lower than as of the end of the fiscal year 2013 (81.5 per cent).

KEY BALANCE SHEET FIGURES OF THE BECHTLE GROUP

	30.06.2014	31.12.2013
Balance sheet total €m	886.5	910.3
Cash and cash equivalents including time deposits and securities €m	113.5	156.1
Equity €m	510.2	501.6
Equity ratio %	57.6	55.1
Equity to non-current assets ratio %	165.7	167.6
Net debt €m	–52.1	–91.9
Debt ratio %	73.8	81.5
Working capital €m	269.6	234.6

Development of the Cash Flow

Year on year, the net cash generated from operating activities in the period from January to June 2014 dropped €12.5 million to minus €0.9 million. Despite an increase of €15.3 million in earnings before taxes, changes in net assets resulted in a cumulatively higher cash outflow than in the corresponding prior-year period. One of the primary reasons for this development was the increase of €21.5 million in the cash outflow for inventories due to the higher business volume.

Year on year, the net cash used for investments in the first half of 2014 increased from €8.7 million to €15.0 million. This was due to changes in time deposits and securities. In the first half of 2013, this item was still marked by the shift of cash and cash equivalents to time deposits.

With an outflow of €27.3 million, the cash flow from financing activities hardly changed compared to the prior year (€27.0 million). The item mainly consisted of the dividend payment.

From January to June, the free cash flow dropped to minus €16.2 million (prior year: minus €5.0 million). The payments for acquisitions and investments in intangible assets and property, plant and equipment could not be compensated by the cash flow from operating activities.

EMPLOYEES

� Further moderate headcount increase

� E-commerce segment invests in future growth

As of the reporting date 30 June 2014, the Bechtle Group had a total of 6,393 employees, including 412 trainees. Compared to 31 December 2013, this represents an increase of 174 persons. The increase was the result of acquisitions as well as new recruitment. Year on year, the headcount went up by 340, an increase of 5.6 per cent.

EMPLOYEES IN THE GROUP

The headcount increase was especially high in the IT e-commerce segment, whose recruitment level had been low in prior quarters. Here, the number of employees went up from 1,266 as of 31 December 2013 to 1,373, an increase of 8.5 per cent, compared to a low increase of 1.4 per cent in the system house segment.

EMPLOYEES by segments

0	1,000	2,000	3,000	4,000	5,000	6,000	Total
Q2/13					4,787	1,266	6,053
Q4/13					4,953	1,266	6,219
					5,020	1,373	6,393
Q1/14							(+5.6%) vs. Q2/2013

IT system house & managed services IT e-commerce

With a total of 4,833 persons as of 30 June 2014, Germany still accounts for over three quarters of the workforce, although the headcount abroad increased at a higher rate.

EMPLOYEES BY REGIONS

0	1,000	2,000	3,000	4,000	5,000	6,000	Total
Q2/13				4,632		1,421	6,053
Q4/13					4,743	1,476	6,219
					4,833	1,560	6,393
Q2/14							(+5.6%) vs. Q2/2013
Domestic	Abroad

The average headcount in the group in the period from April to June 2014 amounted to 6,387, a total of 344 employees more than in the prior-year period.

In the period from April to June 2014, personnel and social expenses totalled €95.7 million, 10.2 per cent more than in the prior year (€86.8 million). Due to the slower headcount increase in recent quarters, the expense ratio dropped from 16.7 per cent to 15.9 per cent. Based on an average number of 5,845 full-time and part-time employees (prior year: 5,534), personnel and social expenses per employee increased slightly to €16.4 thousand in the second quarter of 2014 (prior year: €15.7 thousand).

As of the end of the reporting period, the company had 412 young trainees (prior year: 391), including 49 junior staff members abroad. As of 30 June 2014, the training ratio in Germany amounted to 7.7 per cent (prior year: 7.6 per cent).

Our human resources work focuses on training. Throughout the year, numerous training fairs give the enterprise the opportunity to present itself as a training company. For example, Bechtle attended the training fair Heilbronn in May. Owing to our participation in fairs, we receive many applications for available training posts every year. For the 51 training and study posts of the 2014 training year in Neckarsulm (prior year: 43), we have already received 988 applications (as of 30 June 2014).

On 4 July, after the end of the reporting period, the "Training Day" was again held at our group headquarters in Neckarsulm. A total of 85 visitors made use of the opportunity to ask our current trainees and students directly about the various training options in the company and establish some first contacts.

Bechtle is also attractive as an employer for prospective university graduates. In the reporting period, groups of students from the Flensburg and Aschaffenburg universities of applied sciences visited the group headquarters in Neckarsulm in order to get information on subjects such as IT security and augmented reality. Additionally, they took a tour of the company during which they learned about possibilities to join the company. Bechtle was also present at the VHK career forum "IT + MB/Automotive" in Stuttgart.

Bechtle continues to invest in the promotion of junior staff. In April, 13 participants completed the general management programme for the promotion of junior executives. In June, another 13 participants embarked on the second round of the junior management programme, in which they are equipped with action and decision competencies for the role of an executive at the middle management level.

Research and Development

As a pure service and trading company, Bechtle is not involved in any research activities. Software and application development activities are conducted primarily for internal purposes and only to a very limited extent. However, the software and application solutions division also offers customers the design, development and implementation of software, e.g. in SharePoint projects. There were no notable development activities in the reporting period.

OPPORTUNITIES aND RISKS

• � Economic environment stable in the first half of the year
• � Outlook clouded by political risks
• � Opportunities through alliances in e-commerce

In line with the long-term focus of the strategy and business management of the Bechtle Group, the opportunities and risks for the coming months are basically the same as those presented in the Annual Report 2013. In the course of the second quarter of 2014, no additional material opportunities or risks arose compared to the situation presented in the last Annual Report. Currently, no risks have been identified that could – individually or collectively – endanger the going concern. Rather than negative economic influences, the present risk situation is affected by an increasing number of political risks, which could have a negative impact on the economic development. Apart from this, the changes in the risk situation and in the assessment of opportunities were as follows, though these were partly only of marginal significance.

According to initial evaluations, the macroeconomic performance as well as the economic development in the IT industry continued to pick up speed in 2014. Nevertheless, crisis scenarios still exist, such as the debt crisis in some European countries, the situation in the Middle East and the problems in Ukraine, which could cause a deterioration of the macroeconomic situation in the EU and in Germany. But even a weaker economy would offer opportunities for the Bechtle Group, e.g. the opportunity to grow faster due to the displacement of competitors and the accelerated consolidation in the industry. All in all, the company assumes that the risks and opportunities described in the Annual Report 2013 with respect to economic trends and cyclicity within the industry will persist.

In the IT e-commerce segment, the alliances with PC Connection and Atea have yielded further opportunities for promoting the internationalisation of our trading business. With these agreements, Bechtle is responding to the increase in enquiries from businesses with a global positioning, which require comprehensive customer care in Europe and beyond. In addition, the alliances are expected to expand Bechtle's IT e-commerce strategy. We intend to further expand our cooperation with partners inside and outside Europe. These and other partnerships that may be established in the future complement the previous internationalisation measures and thus represent a key element of the strategic positioning on the path to the "Bechtle Vision 2020".

Apart from this, the second quarter of 2014 did not see any new circumstances that would have resulted in a change of the risk position or the evaluation of opportunities.

Share

� Bechtle share maintains high level

� Annual General Meeting approves dividend of €1.10

At the beginning of the quarter, the performance of the stock markets was still affected by the crises in Ukraine and the Middle East. Investors were also slowed down by negative economic data from the USA. It was not until the second half that the stock markets underwent a slight upturn, especially due to the eased monetary policy of the European Central Bank. On 9 June, the DAX closed at over 10,000 points for the first time. All in all, the DAX gained 2.4 per cent in the second quarter of 2014. The TecDAX also reached new record values, gaining 3.4 per cent by the end of the quarter.

Following its above-average performance in the prior quarter, the price of the Bechtle share remained at a high level in the second quarter of 2014. On 1 April, the share had started at a closing price of €63.00. As a result of the unfavourable market environment, the price dropped to its lowest quarterly value on 15 April, closing at €58.14. Thereafter, however, the share recovered and climbed to its new all-time high of €65.80 on 10 June. The price then receded until the end of the reporting period, reaching €62.57 on 30 June. The price of the Bechtle share thus dropped slightly by 0.7 per cent in the course of the second quarter of 2014.

On average, 39,554 shares were traded every trading day in the second quarter of 2014, compared to 27,221 shares in the prior year. The daily turnover averaged €2,479,351, a significant year-on-year increase. In the TecDAX ranking of Deutsche Börse, Bechtle ranked 20th in June in terms of the stock exchange turnover (prior year: 21st place). In terms of the market cap, the company ranked 13th, a year-on-year improvement of four places.

TRADING DATA OF THE BECHTLE SHARE

		Q2/2014	Q2/2013	Q2/2012	Q2/2011	Q2/2010
Closing price at beginning of quarter	€	63.00	37.28	33.85	30.40	22.89
Closing price at end of quarter	€	62.57	35.19	29.08	30.85	21.01
High (closing price)	€	65.80	38.94	35.10	34.35	25.23
Low (closing price)	€	58.14	33.60	28.68	27.22	21.01
Performance – absolute	€	–0.43	–2.09	–4.77	0.45	–1.88
Performance – relative	%	–0.7	–5.6	–14.1	1.5	–8.1
Market cap – total1	€m	1,314.0	739.0	610.7	647.9	441.2
Avg. turnover/trading day2	shares	39,554	27,221	46,431	54,229	36,037
Avg. turnover/trading day2	€	2,479,351	991,605	1,501,151	1,608,442	824,743

Xetra price data

1 As of 30 June

2 All German stock exchanges

EARNINGS PER SHARE

		Q2/2014	Q2/2013	Change	H1/2014	H1/2013	Change
Earnings after taxes	€k	16,422	10,401	57.9%	31,244	20,476	52.5%
Avg. number of shares	th. shares	21,000	21,000	–	21,000	21,000	–
Earnings per share	€	0.79	0.50	57.9%	1.49	0.98	52.5%

On 5 June 2014, the Annual General Meeting of Bechtle AG took place at the "Harmonie" centre in Heilbronn. Among other things, the agenda included the election of a new member of the Supervisory Board. The Annual General Meeting elected Dr. Matthias Metz as new member of the Supervisory Board and subsequently appointed him as its Chairman.

In accordance with the proposal of the Executive Board and Supervisory Board of Bechtle AG, the Annual General Meeting adopted a resolution to pay a dividend of €1.10 per share. In the prior year, Bechtle AG had paid out a dividend of €1.00. Compared to the prior year, the payment per share certificate thus increased by a total of €0.10. Based on the dividend payment of €23.1 million, 36.4 per cent of the consolidated earnings after taxes were paid out to the shareholders. In relation to the quarterly closing price, the dividend yield is 1.8 per cent. This was the eighth increase of the normal dividend. This year, too, Bechtle has thus held fast to its shareholder-friendly dividend policy, which it has pursued since its IPO in 2000.

DIVIDEND

		2013	2012
Dividend	€	1.10	1.00
Dividend payout ratio	%	36.4	37.3
Dividend yield1	%	1.8	2.8
1 As of 30 June

� Economic development considered to be positive, as previously � Bechtle confirms forecast: significant profitable growth

Macroeconomy

According to the forecast of the European Commission, the economy in the EU will be able to maintain its growth dynamics in the second half of 2014. Growth rates of 0.4 per cent and 0.5 per cent over the prior quarter are forecast for the next two quarters. In 2014 as a whole, GDP is to grow 1.6 per cent, a high rate similar to that recorded in the years prior to the euro crisis. The prospects in the Bechtle markets in the EU are mixed, though growth is expected for all countries. In the third quarter of 2014, the expected increase ranges from 0.1 per cent over the prior quarter in Portugal to 1.1 per cent in Poland. In the fourth quarter, the gap between the growth rates is set to become smaller, ranging from 0.2 per cent in Portugal to 1.0 per cent in Poland. According to current estimates of the State Secretariat for Economic Affairs (SECO), Switzerland is to outperform the EU, reaching a GDP growth rate of 2.0 per cent in 2014.

In the coming months, the economic performance in Germany is expected to more or less reflect the dynamics in the EU. For the third and fourth quarters, the European Commission predicts growth of 0.4 per cent, respectively, over the prior quarter. Overall, most analysts expect Germany's GDP growth in 2014 to reach 1.8 to 2.0 per cent. Investments in equipment are to grow 4.2 per cent, while government expenditure is to increase 1.6 per cent.

Industry

The EITO market research institute believes that the IT market in the EU will grow 2.0 per cent in 2014. Hardware revenues, which had already dropped 0.8 per cent in 2013, are to recede by another 1.8 per cent in 2014. In most countries in which Bechtle is present, hardware revenues are to decline as in the EU as a whole, particularly in Belgium (minus 3.8 per cent) and Poland (minus 4.7 per cent). In some countries, however, hardware revenues are set to increase: a slight increase is expected for the Netherlands, Spain and Hungary, an increase of 3.0 per cent for Ireland and a significant increase of 7.6 per cent in the Czech Republic. With growth of 4.2 per cent in 2014, software revenues are to be the growth driver in the EU. Growth is expected in all countries in which Bechtle is present. In this field, too, substantial differences exist between the individual countries, though these differences are not as drastic as in the field of hardware. Here, the bandwidth ranges from plus 0.4 per cent in Portugal to plus 5.6 per cent in the United Kingdom. In Switzerland, too, the IT market is set to perform well in 2014, achieving growth of 2.7 per cent. Though hardware revenues are expected to undergo a severe decline of 3.0 per cent in Switzerland as well, this is to be more than compensated for by growth of 3.0 per cent in the service segment and 5.6 per cent in the software segment.

The development on the German IT market will be similar to the development in Switzerland. Its overall growth is to amount to 2.5 per cent. The hardware business is to drop 2.8 per cent, especially due to the significant decline of PC sales in consumer business, as forecast by EITO. Service revenues are to increase 3.2 per cent and software – the growth driver – 5.3 per cent.

Performance of the Bechtle Group

Our investments in the expansion of our workforce and in the training of our specialists paid off in the first half of 2014. Bechtle was able to make good use of the economic tailwind. Our revenue and especially our earnings greatly outstripped the prior-year values.

From the current perspective, we are confident that our revenue and earnings position will outperform the prior year in the second half of the year as well despite the increasing significance of existing political risks. However, we expect the growth dynamics to slacken slightly. This is not due to fears of an economic slowdown but rather due to the much higher reference figures as a result of the excellent second half of 2013. We confirm our forecast for the year as a whole, which predicts a significant revenue and earnings increase.

In view of the current market development and the rearrangement of the competitive landscape, we are constantly investigating suitable acquisition options. For this, we consider both smaller enterprises as well as larger acquisitions. All in all, acquisitions will continue to play a key role in our growth strategy, either to complement our regional positioning or to supplement our competence profile.

Irrespective of the acquisitions, we plan a further headcount increase for 2014. The continuous increase in the number of employees mainly serves the realisation of growth and thus the medium-term to long-term further development of Bechtle. However, we expect the dynamics of the headcount increase to remain lower than those of the revenue growth.

In the IT e-commerce segment, our ARP brand launched its activities in Belgium in April. Apart from this, we do not plan to establish any new companies in the current fiscal year. Instead, the focus is on the consolidation of the Bechtle direct companies newly established at annual intervals over the past years and on the expansion of brand awareness.

Our sustainable earnings power and stable liquidity base provide us with the funds needed for realising our planned growth. There are no plans for material changes to our company structure and organisation or to our business targets and strategies.

Neckarsulm, 7 August 2014

Bechtle AG The Executive Board

Consolidated Income Statement

				€k
	01.04– 30.06.2014	01.04– 30.06.2013	01.01– 30.06.2014	01.01– 30.06.2013
Revenue	603,676		518,517 1,190,372	1,032,467
Cost of sales	514,018		441,991 1,013,299	880,192
Gross profit	89,658	76,526	177,073	152,275
Distribution costs	41,490	37,499	81,376	74,473
Administrative expenses	28,747	27,128	58,085	54,022
Other operating income	3,921	3,074	6,891	5,686
Earnings before interest and taxes	23,342	14,973	44,503	29,466
Financial income	462	421	886	839
Financial expenses	701	802	1,454	1,627
Earnings before taxes	23,103	14,592	43,935	28,678
Income taxes	6,681	4,191	12,711	8,202
Earnings after taxes (attributable to shareholders of Bechtle AG)	16,422	10,401	31,224	20,476
Net earnings per share (basic and diluted) in €	0.79	0.50	1.49	0.98
Weighted average shares outstanding (basic and diluted) in thousands	21,000	21,000	21,000	21,000

Consolidated Statement of Comprehensive Income

				€k
	01.04– 30.06.2014	01.04– 30.06.2013	01.01– 30.06.2014	01.01– 30.06.2013
Earnings after taxes	16,422	10,401	31,224	20,476
Other comprehensive income
Items that will not be reclassified to profit or loss in subsequent periods
Actuarial gains and losses on pension provisions	–27	138	–82	256
Income tax effects	4	–24	13	–45
Items that will be reclassified to profit or loss in subsequent periods
Unrealised gains and losses on securities	–73	–129	–168	–216
Income tax effects	6	11	14	26
Unrealised gains and losses on financial derivatives	471	69	683	117
Income tax effects	–150	–21	–206	–34
Currency translation differences of net investments in foreign operations	24	–63	42	–63
Income tax effects	0	3	0	5
Hedging of net investments in foreign operations	–263	611	–869	1,231
Income tax effects	77	–179	254	–360
Currency translation differences	349	–932	810	–1,865
Other comprehensive income	418	–516	491	–948
of which income tax effects	–63	–210	75	–408
Total comprehensive income (attributable to shareholders of Bechtle AG)	16,840	9,885	31,715	19,528

Consolidated Balance Sheet

ASSETS			€k
	30.06.2014	31.12.2013	30.06.2013
Non-current assets
Goodwill	144,434	139,885	137,723
Other intangible assets	21,761	19,293	19,361
Property, plant and equipment	102,558	99,747	98,541
Trade receivables	1,278	1,547	1,384
Income tax receivables	84	84	113
Deferred taxes	3,108	4,131	5,5021
Other assets	2,829	2,513	2,682
Time deposits and securities	31,760	32,012	40,677
Total non-current assets	307,812	299,212	305,9831
Current assets
Inventories	134,579	107,638	95,040
Trade receivables	326,074	345,195	287,007
Income tax receivables	1,878	1,029	3,608
Other assets	34,355	33,181	34,442
Time deposits and securities	19,010	18,255	20,004
Cash and cash equivalents	62,755	105,838	53,643
Total current assets	578,651	611,136	493,744
Total assets	886,463	910,348	799,7271

1Adjusted figure, see annual report page 151f

See

further comments in the Notes, in particular V., page 34f

Equity and liabilities			€k
	30.06.2014	31.12.2013	30.06.2013
Equity
Issued capital	21,000	21,000	21,000
Capital reserves	145,228	145,228	145,228
Retained earnings	343,952	335,337	291,884
Total equity	510,180	501,565	458,112
Non-current liabilities
Pension provisions	6,188	6,382	10,499
Other provisions	3,180	2,307	2,849
Financial liabilities	50,946	53,625	57,912
Trade payables	328	438	31
Deferred taxes	16,165	15,128	15,3141
Other liabilities	2,246	538	669
Deferred income	10,924	12,369	9,505
Total non-current liabilities	89,977	90,787	96,7791
Current liabilities
Other provisions	5,383	5,774	5,342
Financial liabilities	10,441	10,546	11,443
Trade payables	144,661	170,518	127,932
Income tax payables	6,751	6,519	2,204
Other liabilities	70,440	79,941	55,188
Deferred income	48,630	44,698	42,727
Total current liabilities	286,306	317,996	244,836
Total equity and liabilities	886,463	910,348	799,7271

1Adjusted figure, see annual report page 151f

Consolidated Statement Of Changes In Equity

						€k
				Retained earnings		Total equity
	Issued capital	Capital reserves	Accrued profits	Changes in equity outside profit or loss	Total	(attributable to shareholders of Bechtle AG)
Equity as of 1 January 2013	21,000	145,228	292,0411	1,3151	293,356	459,584
Distribution of profits for 2012			–21,000		–21,000	–21,000
Earnings after taxes			20,476		20,476	20,476
Other comprehensive income				–948	–948	–948
Total comprehensive income	0	0	20,476	–948	19,528	19,528
Equity as of 30 June 2013	21,000	145,228	291,5171	3671	291,884	458,112
Equity as of 1 January 2014	21,000	145,228	334,438	899	335,337	501,565
Distribution of profits for 2013			–23,100		–23,100	–23,100
Earnings after taxes			31,224		31,224	31,224
Other comprehensive income				491	491	491
Total comprehensive income	0	0	31,224	491	31,715	31,715
Equity as of 30 June 2014	21,000	145,228	342,562	1,390	343,952	510,180

1Adjusted figure, see annual report 2013 page 151f

Bechtle AG Interim Report as of 30 June 2014

Consolidated Cash flow Statement

				€k
	01.04– 30.06.2014	01.04– 30.06.2013	01.01– 30.06.2014	01.01– 30.06.2013
Operating activities
Earnings before taxes	23,103	14,592	43,935	28,678
Adjustment for non-cash expenses and income
Financial earnings	239	381	568	788
Depreciation and amortisation of intangible assets and property, plant and equipment	5,807	5,796	11,283	11,298
Gains and losses on disposal of intangible assets and property, plant and equipment	–10	–5	–14	–15
Other non-cash expenses and income	157	585	228	781
Changes in net assets
Changes in inventories	–11,822	–3,701	–26,790	–5,317
Changes in trade receivables	–18,380	–26,537	21,541	21,687
Changes in trade payables	–4,133	8,368	–28,127	–18,217
Changes in deferred income	–2,834	–3,911	1,308	441
Changes in other net assets	9,726	2,958	–12,464	–13,505
Income taxes paid	–5,805	–5,381	–12,344	–15,013
Cash flow from operating activities	–3,952	–6,855	–876	11,606
Investing activity
Cash paid for acquisitions less cash acquired	0	–2,653	–3,241	–3,748
Cash paid for investments in intangible assets and property, plant and equipment	–7,364	–6,595	–12,243	–13,066
Cash received from the sale of intangible assets and property, plant and equipment	70	36	136	196
Cash paid for the acquisition of time deposits and securities	0	0	–10,000	–20,000
Cash received from the sale of time deposits and securities, and from redemptions of non-current assets	9,231	11,817	9,254	26,827
Interest payments received	541	567	1,049	1,044
Cash flow from investing activities	2,478	3,172	–15,045	–8,747
Financing activities	–2,912	–2,285	–6,158	–8,270
Cash paid for the repayment of financial liabilities	–1,039	2,989	3,314	3,815
Cash received from the assumption of financial liabilities	–23,100	–21,000	–23,100	–21,000
Interest paid	–674	–793	–1,389	–1,585
Cash flow from financing activities	–27,725	–21,089	–27,333	–27,040
Exchange-rate-related changes in cash and cash equivalents	55	–192	171	–384
Changes in cash and cash equivalents	–29,144	–24,964	–43,083	–24,565
Cash and cash equivalents at beginning of the period	91,899	78,607	105,838	78,208
Cash and cash equivalents at the end of the period	62,755	53,643	62,755	53,643

Notes

I. General Disclosures

Bechtle AG, Bechtle Platz 1, 74172 Neckarsulm, Germany, is a listed company and as such required under Section 315a of the German Commercial Code (HGB) to prepare its consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and as endorsed by the EU. Accordingly, this interim financial report as of 30 June 2014 has also been prepared in accordance with the IFRS.

In accordance with IAS 34, the scope of the presentation used in this interim financial report as of 30 June 2014 is significantly reduced compared to the consolidated financial statements as of the end of the fiscal year. Additionally, the requirements of the German Accounting Standard No. 16 (DRS 16) and the Stock Exchange Rules and Regulations of the Frankfurt stock exchange that exceed IAS 34 have been taken into consideration and fully met.

Our business activity is subject to certain seasonal fluctuations during the year. In the past, the revenue and earnings contributions tended to be at their lowest in the first quarter and at their highest in the fourth quarter due to the traditionally strong year-end business. Therefore, the interim results only qualify as indicators for the results of the fiscal year as a whole to a limited extent.

II. Key Principles of Accounting and Consolidation

In the period under review, Bechtle adopted the new and revised standards and interpretations of the following new accounting pronouncements, which had been published by the IASB/IFRIC and endorsed by the EU, for the first time. The effective dates specified for the mandatory adoption also originate from the respective EU directive:

Pronouncement	Publication by IASB/IFRIC	Endorsement (EU)	Effective date (EU)1
Voluntary adoption of pronouncements ahead of time
IFRIC 21 Levies	20 May 2013	13 June 2014	17 June 2014

1Must be adopted at the latest at the beginning of the first fiscal year commencing on or after the said date.

IFRIC 21 Levies. IFRIC 21 provides guidance on when and how to recognise a liability for a levy imposed by laws and regulations of a government. The obligating event for the recognition of a liability is identified as the activity that triggers the payment obligation in accordance with the relevant legislation. The liability is recognised progressively if the obligating event occurs over a period of time. If an obligation is triggered upon reaching a threshold value, the liability is recognised when that threshold value is reached. At Bechtle, the first-time adoption of the interpretation does not have any noteworthy effect on the assets, financial and earnings position.

Bechtle had already adopted the new and amended standards and interpretations whose adoption is mandatory for the fiscal year 2014 ahead of time for the consolidated financial statements for the fiscal year 2013.

In this interim financial report, the same key principles of accounting and consolidation were applied as in the consolidated financial statements for the fiscal year 2013. For further information, please refer to the consolidated financial statements as of 31 December 2013, which form the basis for these interim financial statements.

In accordance with IAS 34, the determination of the tax expense in the interim financial reporting period takes place on the basis of the effective tax rate expected for the entire fiscal year. Taxes related to extraordinary events are taken into consideration in the quarter in which the underlying event occurs.

III. Scope of Consolidation

The scope of consolidation comprises Bechtle AG, Neckarsulm, and all subsidiaries in which it holds a controlling interest. As in the prior year, Bechtle AG directly or indirectly holds all interests and voting rights in all consolidated companies.

The following companies were included in the scope of consolidation for the first time in this reporting period:

Company	Headquarters	Date of initial consolidation	Acquisition/ foundation
AMARAS AG	Monheim am Rhein, Germany	1 February 2014	Acquisition
PLANET! Software-Vertrieb & Consulting GmbH	Wien, Austria	5 March 2014	Acquisition
Bechtle Management GmbH	Wien, Austria	26 June 2014	Foundation

Further disclosures concerning the acquired companies are presented in section X. "Acquisitions and Purchase Price Allocation".

www.bechtle.com/ investors/ financial-reports

IV. Notes to the Income Statement and to the Consolidated Statement of Comprehensive Income

Expense Structure

						€k
	Cost of sales			Distribution costs		Administrative expenses
	01.01– 30.06.2014	01.01– 30.06.2013	01.01– 30.06.2014	01.01– 30.06.2013	01.01– 30.06.2014	01.01– 30.06.2013
Material costs	902,500	777,668	0	0	0	0
Personnel expenses	86,563	78,796	64,931	58,789	37,859	34,725
Depreciation and amortisation	5,420	5,543	2,620	2,551	3,243	3,204
Other operating expenses	18,816	18,185	13,825	13,133	16,983	16,093
Total expenses	1,013,299	880,192	81,376	74,473	58,085	54,022

The year-on-year increase in material costs, personnel expenses and other operating expenses was mainly caused by the much higher business volume in the reporting period. The decline in depreciation and amortisation resulted from the decline in amortisation of intangible assets that were capitalised in connection with acquisitions. Year on year, the other depreciation of property, plant and equipment and amortisation of intangible assets underwent an increase.

The material costs include net income of €69 thousand from exchange rate fluctuations (prior year: €319 thousand).

Other Operating Income

Other operating income mainly consisted of marketing grants and other payments from suppliers amounting to €6,223 thousand (prior year: €4,979 thousand).

Financial Income and Financial Expenses

The financial income mainly comprises income from time deposits and securities as well as cash and cash equivalents. As previously, the monetary investment strategy focuses on ensuring the company's unlimited solvency at all times and only permits particularly low-risk or hedged investments.

The financial expenses mainly include interest paid for the financial liabilities. The year-on-year decline in financial expenses occurred due to the lower loan liabilities.

Earnings per Share

The table below shows the calculation of the earnings after taxes per share that are due to the shareholders of Bechtle AG:

	01.01– 30.06.2014	01.01– 30.06.2013
Earnings after taxes €k	31,224	20,476
Average number of outstanding shares	21,000,000	21,000,000
Earnings per share €	1.49	0.98

According to IAS 33, the earnings per share are determined on the basis of the earnings after taxes (due to the shareholders of Bechtle AG) and the average number of shares in circulation in the year. Treasury shares would reduce the number of outstanding shares accordingly. The basic earnings per share are identical to the diluted earnings per share.

Other Comprehensive Income

The other comprehensive income was mainly affected by the development of the euro/Swiss franc exchange rate. Unlike the corresponding prior-year period, in which the Swiss franc had lost value against the euro, the Swiss currency gained value in the first half of 2014.

Apart from this, the other comprehensive income was influenced by the hedging of the currency risk for future goods purchases in USD and the hedging of the interest rate risk of loans with variable interest rates, which were accounted for as cash flow hedges. The market value (–€1,820 thousand) that is attributable to the effective part of the hedges was recognised outside profit or loss under other comprehensive income under consideration of the deferred taxes (€516 thousand). These comprise forward exchange contracts, currency options and interest rate swaps. In terms of the volume and time, the planned cash flows correspond to the financial transactions. In the period under review, a hedge of \$500 thousand had to be reversed, as the expected payments are no longer expected as originally planned. This resulted in a loss amounting to €25 thousand, which was recognised under operating expenses. Moreover, these hedges can be considered as effective even in the case or realistic deviations from the plan. In the current period, ineffectiveness in the amount of –€12 thousand, which had resulted from the time differences between the maturities of the transactions and the associated liabilities, was recognised under financial income.

Details on the composition of the other comprehensive income, which is recognised outside profit or loss, with respect to the change that this item underwent and its accumulated balance are presented in section V. "Notes to the Balance Sheet and to the Statement of Changes in Equity".

V. Notes to the Balance Sheet and to the Statement of Changes in Equity

Assets

The reduction of the trade receivables in the reporting period resulted from seasonal fluctuations during the year, with a high-revenue final quarter. The significant increase in inventories was due to the higher business volume and the stock levels required for ongoing large projects.

Compared to the consolidated financial statements as of 31 December 2013, the assets of the Bechtle Group as of 30 June 2014 now also contain the assets of the companies newly acquired in the period under review.

Equity

Retained Earnings

At the Annual General Meeting of 5 June 2014, a resolution was adopted to pay out a dividend of €1.10 per no-par share with dividend entitlement. The dividend was paid out on 6 June 2014.

In terms of its accumulated balance as of the balance sheet date and its change during the period under review, the other comprehensive income that is to be recognised outside profit or loss was composed as follows:

						€k
		30.06.2014		31.12.2013
	Before taxes	Income tax effects	After taxes	Before taxes	Income tax effects	After taxes
Actuarial gains and losses on pension provisions	–8,936	1,535	–7,401	–8,854	1,522	–7,332
Unrealised gains and losses on securities	146	–11	135	314	–25	289
Unrealised gains and losses on financial derivatives	–1,820	516	–1,304	–2,503	722	–1,781
Currency translation differences of net investments in foreign operations	0	0	0	–42	0	–42
Hedging of net investments in foreign operations	–9,530	2,776	–6,754	–8,661	2,522	–6,139
Currency translation differences	16,714	0	16,714	15,904	0	15,904
Other comprehensive income	–3,426	4,816	1,390	–3,842	4,741	899

						€k
	01.01–30.06.2014			01.01–30.06.2013
	Before taxes	Income tax effects	After taxes	Before taxes	Income tax effects	After taxes
Items that will not be reclassified to profit or loss in subsequent periods
Actuarial gains and losses on pension provisions	–82	13	–69	256	–45	211
Items that will be reclassified to profit or loss in subsequent periods
Unrealised gains and losses on securities	–168	14	–154	–216	26	–190
Gains and losses that arose in the current period	–136	11	–125	–141	14	–127
Reclassifications to profit and loss	–32	3	–29	–75	12	–63
Unrealised gains and losses on financial derivatives	683	–206	477	117	–34	83
Gains and losses that arose in the current period	436	–134	302	16	–5	11
Reclassifications to profit and loss	247	–72	175	101	–29	72
Currency translation differences of net investments in foreign operations	42	0	42	–63	5	–58
Gains and losses that arose in the current period	42	0	42	–61	5	–56
Reclassifications to profit and loss	0	0	0	–2	0	–2
Hedging of net investments in foreign operations	–869	254	–615	1,231	–360	871
Gains and losses that arose in the current period	–869	254	–615	1,231	–360	871
Reclassifications to profit and loss	0	0	0	0	0	0
Currency translation differences	810	0	810	–1,865	0	–1,865
Other comprehensive income	416	75	491	–540	–408	–948

Liabilities

The changes, especially those concerning the trade payables and the current other liabilities, were mainly caused by the usual seasonal fluctuations during the year, with a high-revenue final quarter.

The financial liabilities declined by the scheduled repayments of the existing loans.

The increase in non-current other liabilities was caused by the long-term purchase price payments that were agreed for the companies newly acquired in 2014. Compared to the consolidated financial statements as of 31 December 2013, the liabilities of the Bechtle Group as of 30 June 2014 also contain the liabilities of the companies newly acquired in the period under review.

	See page 40ff

VI. Notes to the Cash Flow Statement

The year-on-year decline of the cash flow from operating activities was caused by the significantly higher business volume, which resulted in a higher outflow for inventories as well as a higher net outflow in other items of the net assets. The higher earnings before taxes and lower income tax payment compared to the prior-year period could not compensate this effect.

The cash flow from investing activities reflects the outflows for acquisitions and investments and payments in connection with time deposits and securities.

The cash flow from financing activities was mainly marked by the dividend that was paid out in the reporting period. The dividend for the fiscal year 2013 amounted to €23,100 thousand. The dividend for the fiscal year 2012, which had been paid out in the prior year, had amounted to €21,000 thousand.

VII. Operating Leases

The future minimum lease payments from rental and leasing contracts classified as "operating leases" according to IAS 17 amounted to €59,655 thousand as of 30 June 2014 (31 December 2013: €63,382 thousand).

		€k
	30.06.2014	31.12.2013
Due within one year	23,184	24,427
Due between one and five years	30,251	31,866
Due after five years	6,220	7,089
Total minimum lease payments	59,655	63,382

VIII. Fair Value of Financial Instruments

Financial assets and liabilities (financial instruments) are classified according to IFRS 7. The allocation of the financial instruments contained in the individual balance sheet items in this interim financial report corresponds to the allocation in the Annual Report 2013.

According to IFRS 13, the measurement methods are divided into the following three levels, depending on the key parameters on which the measurement is based:

Level 1: Measurement at prices (not adjusted) quoted on active markets for identical assets and liabilities Level 2: Measurement of the asset or liability takes place either directly or indirectly on the basis of observable input data, which do not represent quoted prices as stated in Level 1

Level 3: Measurement is based on models using input parameters not observable on the market.

The following table compares the carrying amounts and fair value of the financial instruments for the classes of financial instruments according to IFRS 7 and their measurement level according to IFRS 13:

						€k
Class pursuant to IFRS 7	Measurement category	Carrying amount 30.06.2014	Fair value 30.06.2014	Carrying amount 31.12.2013	Fair value 31.12.2013	Level
Assets
Non-current trade receivables	LAR	1,278	1,303	1,547	1,522	3
Current trade receivables	LAR	326,074	326,074	345,195	345,195	3
Securities	AFS	13,985	13,985	17,600	17,600	1
Time deposits
Bond loans	LAR	30,101	30,469	30,192	30,506	2
Insurances	LAR	6,684	6,737	2,475	2,258	3
Other financial assets	LAR	15,115	15,115	17,335	17,335	3
Long-term lending	LAR	573	612	595	648	3
Financial derivatives
Derivatives without hedge relationship	FAFVPL	0	0	7	7	2
Cash and cash equivalents	LAR	62,755	62,755	105,838	105,838	1
Liabilities
Loans	FLAC	61,387	68,460	64,171	69,340	2
Non-current trade payables	FLAC	328	321	438	427	3
Current trade payables	FLAC	144,661	144,661	170,518	170,518	3
Other financial liabilities	FLAC	43,555	43,555	50,050	50,050	3
Liabilities resulting from acquisitions	FLFVPL	3,026	3,026	465	465	3
Financial derivatives
Derivatives with hedge relationship	n/a	2,610	2,610	2,523	2,523	2
Derivatives without hedge relationship	FLFVPL	215	215	23	23	2
Thereof aggregated according to valuation category pursuant to IAS 39	LAR	442,580	443,065	503,177	503,302
	AFS	13,985	13,985	17,600	17,600
	FLAC	249,931	256,997	285,177	290,335
	FAFVPL FLFVPL	0 3,241	0 3,241	7 488	7 488

Abbreviations used for the measurement categories of IAS 39:

• LAR = Loans and receivables
• AFS = Available-for-sale financial assets
• FLAC = Financial liabilities at amortised cost

FAFVPL = Financial assets measured at fair value through profit and loss

FLFVPL = Financial liabilities measured at fair value through profit and loss

Except for the following two classes, the definitions and measurement methods correspond to those described in the Annual Report 2013:

Liabilities resulting from acquisitions are conditional, additional purchase price payments (earn-outs) for acquisitions (IFRS 3.58). The fair value was determined with the help of the DCF method. Apart from the planned business development of the unit taken over, a discount rate that is appropriate for the period was used. The creditworthiness of the debtor Bechtle (IFRS 13.42 ff) was taken into account via an overhead percentage method under consideration of the amount, the probability of default and the recovery rate in the event of inability to pay. The factor that has the greatest impact on the fair value is the planned business development. In the event of a reduction of the target achievement to 90 per cent of the target achievement assumed at the acquisition, the liabilities from acquisitions would drop almost 19 per cent; in the event of an increase to 110 per cent of the target achievement assumed at the acquisition, the liabilities would increase almost 9 per cent. These liabilities will reach maturity in 2014 to 2019.

Since the first quarter of 2014, the insurances class has contained both TEP market investments and pension funds as capital investments. The fair value of the TEP market investments in the time deposits corresponds to the redemption value plus creditworthiness impairment; the fair value of the pension funds corresponds to the discounted amount of the payment guaranteed plus creditworthiness impairment.

During the reporting period up to 30 June 2014, there were no reclassifications between measurements at fair value of Level 1 and Level 2 and no reclassifications to or from measurements at fair value of Level 3.

							€k
		Total gains and losses
Financial assets and liabilities in Level 3	01.01.2014	Included in financial earnings	Included in other compre hensive income	Additions	Compen sation/ settlement	Reclassi fication	30.06.2014
Liabilities resulting from acquisitions	465	24	0	2,537	0	0	3,026

The financial instruments in Level 3 developed as follows:

The €24 thousand posted as expense under financial earnings were fully attributable to future payments accounted for as of 30 June 2014.

IX. Segment Information

The segment information is presented on the basis of the same principles as in the consolidated financial statements for the fiscal year 2013.

						€k
		01.01–30.06.2014			01.01–30.06.2013
By segments	IT system house & managed services	IT e-commerce	Group	IT system house & managed services	IT e-commerce	Group
Total segment revenue	776,518	415,407		685,968	347,897
less intersegment revenue	–1,252	–301		–1,270	–128
External revenue	775,266		415,106 1,190,372	684,698	347,769	1,032,467
Depreciation and amortisation	–7,118	–2,027	–9,145	–6,710	–1,885	–8,595
Amortisation from acquisitions	–2,138	0	–2,138	–2,366	–337	–2,703
Earnings before interest and taxes	26,640	17,863	44,503	15,058	14,408	29,466
Financial earnings			–568			–788
Earnings before taxes			43,935			28,678
Income taxes			–12,711			–8,202
Earnings after taxes			31,224			20,476
Investments	9,550	2,444	11,994	8,960	3,763	12,723
Investments through acquisitions	8,799	0	8,799	2,390	0	2,390

						€k
	01.01–30.06.2014			01.01–30.06.2013
By regions	Domestic	Abroad	Group	Domestic	Abroad	Group
External revenue	798,764	391,608	1,190,372	698,487	333,980	1,032,467
Investments	9,843	2,151	11,994	10,509	2,214	12,723
Investments through acquisitions	3,627	5,172	8,799	777	1,613	2,390

As the total segment assets have not been and are not part of the internal reporting, this information is not disclosed in the notes in the quarterly reports in accordance with IAS 34.16Agiv.

X. Acquisitions and Purchase Price Allocation

AMARAS AG

As of the acquisition date 1 February 2014, the company acquired all interests in AMARAS AG, Monheim am Rhein, Germany.

The acquisition was recognised in the balance sheet according to the purchase method (IFRS 3.4 ff) and must still be considered as provisional (IFRS 3.45).

Apart from the assets and liabilities already recognised by the acquired company, whose carrying amounts corresponded to their fair value, the customer service agreements (€1,000 thousand) and a non-compete agreement (€470 thousand) were newly recognised as identifiable assets (IFRS 3.10 ff) and measured at fair value as of the acquisition date (IFRS 3.18 ff).

Deferred tax liabilities (€388 thousand) were recognised in connection with the capitalisation of the customer service agreements, which are amortised over a period of five years, and of the non-compete agreement, which is amortised over a period of two years.

Under consideration of the acquired total net assets (€1,245 thousand), the capital consolidation resulted in a difference of €2,140 thousand that is presented as goodwill. This goodwill is not recognised for tax purposes.

By acquiring AMARAS (33 employees), Bechtle is further developing the managed services business, one of the core business areas.

The presentation of the acquisition in the balance sheet as of the time of initial consolidation is provided in the table at the end of this section.

The company purchase agreement for the acquisition of AMARAS contains a contingent purchase price payment of an unlimited amount, which depends on the acquired company's future business performance. Based on the validated business plan of AMARAS, the fair value of this contingent purchase price payment on the acquisition date was €1,385 thousand.

Other acquisiton costs (€2,000 thousand) resulted in an outflow of cash and cash equivalents.

The receivables taken over were not subject to any major impairment.

In the reporting period, AMARAS accounted for €1,097 thousand of the revenue and €105 thousand of the earnings before taxes of the Bechtle Group (IFRS 3.B64qi).

PLANET! Software-Vertrieb & Consulting GmbH

As of the acquisition date 5 March 2014, the company acquired all interests in Planet! Software Vertrieb & Consulting GmbH, headquartered in Wien, Austria.

The acquisition was recognised in the balance sheet according to the purchase method (IFRS 3.4 ff) and must still be considered as provisional (IFRS 3.45).

Apart from the assets and liabilities already recognised by the acquired company, whose carrying amounts corresponded to their fair value, the customer service agreements (€1,900 thousand), the customer base (€640 thousand) and a non-compete agreement (€400 thousand) were newly recognised as identifiable assets (IFRS 3.10 ff) and measured at fair value as of the acquisition date (IFRS 3.18 ff).

Deferred tax liabilities (€714 thousand) were recognised in connection with the capitalisation of the customer service agreements, which are amortised over a period of 10 years, of the customer base, which is amortised over a period of five years, and of the non-compete agreement, which is amortised over a period of two years.

Under consideration of the acquired total net assets (€2,411 thousand), the capital consolidation resulted in a difference of €2,079 thousand that is presented as goodwill. This goodwill is not recognised for tax purposes.

By acquiring planetsoftware (36 employees), Bechtle is stepping up its market presence in Austria and at the same time expanding the local product spectrum. Like the Bechtle companies SolidLine and SolidPro, planetsoftware is a SolidWorks partner.

The company purchase agreement for the acquisition of planetsoftware contains a contingent purchase price payment of an unlimited amount, which depends on the acquired company's future business performance. Based on the validated business plan of planetsoftware, the fair value of this contingent purchase price payment on the acquisition date was €1,152 thousand.

Other acquisiton costs (€3,338 thousand) resulted in an outflow of cash and cash equivalents.

The receivables taken over were not subject to any major impairment.

In the reporting period, planetsoftware accounted for €2,621 thousand of the revenue and €45 thousand of the earnings before taxes of the Bechtle Group (IFRS 3.B64qi).

The following table presents the fair value of the assets and liabilities of AMARAS and planetsoftware as of the date of initial consolidation as they appear in the balance sheet:

€k
	AMARAS	planetsoftware
Non-current assets
Goodwill	2,140	2,079
Other intangible assets	1,470	2,957
Property, plant and equipment	17	136
Total non-current assets	3,627	5,172
Current assets
Inventories	0	70
Trade receivables	563	1,069
Other assets	46	429
Cash and cash equivalents	1,281	816
Total current assets	1,890	2,384
Total assets	5,517	7,556
Non-current liabilities
Other provisions	0	42
Deferred taxes	388	714
Deferred income	0	48
Total non-current liabilities	388	804
Current liabilities
Trade payables	1,386	656
Income tax liabilities	55	0
Other provisions and liabilities	303	506
Deferred income	0	1,100
Total current liabilities	1,744	2,262
Total liabilities	2,132	3,066
Total assets – Total liabilities = Acquisition costs	3,385	4,490

Had AMARAS and planetsoftware been acquired at the beginning of the reporting period, the revenue of the Bechtle Group for the reporting period would have amounted to €1,192 million. Earnings before taxes would not have changed and would have amounted to €44 million (IFRS 3.B64qii).

XI. Employees

The employee numbers were as follows:

	30.06.2014	31.12.2013	01.01– 30.06.2014	01.01– 30.06.2013
Full-time and part-time employees	5,855	5,631	5,796	5,492
Trainees	412	473	433	403
Employees on parental leave	126	115	114	108
Temporary staff	219	184	210	155
Total	6,612	6,403	6,553	6,158

The employee numbers (without temporary staff) break down by segments and regions as follows:

	30.06.2014	31.12.2013	01.01– 30.06.2014	01.01– 30.06.2013
IT system house & managed services	5,020	4,953	5,028	4,770
Domestic	4,324	4,287	4,339	4,143
Abroad	696	666	689	627
IT e-commerce	1,373	1,266	1,315	1,233
Domestic	509	456	476	450
Abroad	864	810	839	783

The employee numbers (without employees on parental leave and without temporary staff) break down by functional areas as follows:

	30.06.2014	31.12.2013	01.01– 30.06.2014	01.01– 30.06.2013
Services	2,953	2,843	2,929	2,756
Sales	1,933	1,841	1,909	1,810
Administration	1,381	1,420	1,391	1,329

Bechtle AG Interim Report as of 30 June 2014

XII. Organs

The office term of Gerhard Schick, whom the court had appointed as member of the Supervisory Board in December 2013 and who also served as Chairman of the Supervisory Board, ended as of the Annual General Meeting of 5 June 2014. Dr. Matthias Metz was elected as new member of the Supervisory Board and subsequently appointed as Chairman of the Supervisory Board.

Since his departure from the Supervisory Board, Gerhard Schick, father of Karin Schick, the largest shareholder of Bechtle AG, has continued to make his experience available to the Bechtle Group within the scope of a consulting agreement without compensation.

XIII. Noteworthy Events after the Reporting Period

No noteworthy events occurred at Bechtle after the end of the reporting period.

Neckarsulm, 7 August 2014

Bechtle AG Executive Board

RESPONSIBILITY STATEMENT BY THE EXECUTIVE BOARD

To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, 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 development and performance of the business and the position of the group, together with a description of the principal opportunities and risks associated with the expected development of the group for the remaining months of the financial year.

Neckarsulm, 7 August 2014

Bechtle AG The Executive Board

Dr. Thomas Olemotz Michael Guschlbauer Jürgen Schäfer

AUDITING INFORMATION

The present interim financial report was neither audited, according to Article 317 of the HGB, nor revised by the auditor.

Forward-looking Statements

This interim financial report contains statements that relate to the future performance of Bechtle AG. Such statements are based on assumptions and estimates. Though the Executive Board believes that these forward-looking statements are realistic, this cannot be guaranteed. The assumptions are subject to risks and uncertainties that may result in consequences that differ substantially from those anticipated.

Bechtle's financial accounting and reporting policies comply with the International Financial Reporting Standards (IFRS) as endorsed by the EU. Due to rounding differences, percentages stated in the report may differ slightly from the corresponding amounts in € million. Similarly, totals may differ from the individual values.

Financial Calendar

Interim Report 2nd Quarter 2014 (30 June)

Friday, 8 August 2014 Conference call with analysts, investors and media

Interim Report 3rd Quarter 2014 (30 September)

Wednesday, 12 November 2014 Conference call with analysts, investors and media

Annual Report 2014 Friday, 13 March 2015

Accounts Press Conference

Friday, 13 March 2015, Stuttgart

DVFA Analysts' Conference

Friday, 13 March 2015, Frankfurt (Main)

See www.bechtle.com/events or www.bechtle.com/financial-calendar for further dates and changes.

Publisher/Contact

Bechtle AG Bechtle Platz 1 74172 Neckarsulm Germany

Investor Relations

Martin Link Julia Hofmann Phone +49 7132 981-4149 Phone +49 7132 981-4153

martin.link@bechtle.com julia.hofmann@bechtle.com

The Interim Report Q2/2014 was published on 8 August 2014.

Bechtle AG Bechtle Platz 1, 74172 Neckarsulm Germany

Phone +497132 981-0 ir@bechtle.com www.bechtle.com

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