PSI Software SE

Quarterly Report • May 18, 2018

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REPORT ON THE 1ST QUARTER OF 2018

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---------------------------------------------------------	--	--	--	--	--	--	--	--

	01/01-31/03/18 in KEUR	01/01-31/03/17 in KEUR	Change in KEUR	Change in %
Revenues	45,745	43,784	+1,961	+4.5
Operating Result	2,786	2,607	+179	+6.9
Result before income taxes	2,640	2,511	+129	+5.1
Net result	1,921	1,775	+146	+8.2
Cash and cash equivalents	42,563	42,197	+366	+0.9
Employees on 31 March	1,701	1,613	+88	+5.5
Revenue/Employee	26.9	27.1	–0.3	–0.9

Interim Management Report

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PSI Group increased new orders in the first quarter of 2018 by 19 % to the record value of 93 million euros (31 March 2017: 78 million euros). The order book volume on 31 March 2018 was, with 174 million euros, about 7 % above the value for the previous year (31 March 2017: 163 million euros). Group sales improved primarily thanks to the growth in the field of electrical grids by just about 5 % to 45.7 million euros (31 March 2017: 43.8 million euros). The EBIT increased by 7 % to 2.8 million euros (31 March 2017: 2.6 million euros), the Group Net Result improved by 8 % to 1.9 million euros (31 March 2017: 1.8 million euros).

Energy Management, which, as of the first quarter of 2018 consists of the areas energy grids, energy trading, public transportation and the South-Asian business, achieved 11 % higher sales of 22.4 million euros (31 March 2017: 20.2 million euros) in the first quarter. The EBIT for the business improved compared to the previous year to 1.1 million euros (31 March 2017: 0.9 million euros). Electrical grids showed a strong increase in new orders, in particular due to the rollout of the GLDPM module (Generation and Load Data Provision Methodology), which, with the data exchange between the distribution grid operators and the transmission grid operators, also provides the basis for distribution grid autopilots. The gas and oil business saw a drop in the backlog of demand in the oilproducing countries following the increase in the price of oil. In Russia, however, the awarding of some contracts for gas networks and metals production has been delayed as a result of sanctions. In Southeast Asia, PSI had a significant recovery of both sales and profits. In the public transportation business, PSI won an important contract from the operator of the Berlin underground, BVG.

Sales in Production Management (raw materials, industry, logistics), which as of the first quarter also includes the Polish business, were, with 23.3 million euros, just slightly below the figure for the previous year (31 March 2017: 23.5 million euros). The market launch of PSIpenta ERP and POM (Production Order Management), that have also been migrated to the PSI Java Platform, and MES (Manufacturing Execution System) that has been recently reimplemented based on group standard modules still requires resources. This business should be heading for growth with regular customers as well as new customers starting in the summer. The EBIT for the segment was improved by 4 % to 2.1 million euros (31 March 2017: 2.0 million euros).

The metals industry business significantly increased its volume of new orders in the USA, in the automobile industry PSI obtained an important contract for completing a production suite in electrical vehicle production. Above all, artificial intelligence, metals and logistics contributed to the increase in profits. The integrated production and logistic process in the production of electrical vehicles as well as comprehensive practical examples from the industrial application of artificial intelligence are currently being presented at the 2018 Hannover Trade Fair.

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The cash flow from operating activities was characterized by changes in working capital and improved significantly to 6.3 million euros (31 March 2017: –0.2 million euros). Liquidity, which increased slightly to 42.6 million euros (31 March 2017: 42.2 million euros), will be used for the proposed dividend payment, sales financing in the seasonal business and for the financing of targeted acquisitions.

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Compared to 31 December 2017, there have not been any material changes in the Group's assets.

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The number of employees in the Group increased to 1,701 as of 31 March 2018 (31 March 2017: 1,613). The focus of new recruiting was once again in Germany and other industrial countries in Europe and North America.

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The PSI stock ended the 1st quarter of 2017 with a final price of 17.25 euros 6.8 % below the final 2017 price of 18.51 euros. In the same period the technology index TecDAX declined by 1.4 %.

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The estimate of the corporate risk has not changed since the Annual Report for 31 December 2017.

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In the upcoming quarters, PSI expects to continue the positive trend in orders in industrialized countries and will therefore double its capacity in the USA to 50 employees. In the raw materials exporting countries the backlog in demand will continue to be reduced; in Germany, PSI expects new orders to continue to increase in the energy sector in advance of the coming regulatory base years.

PSI will increase maintenance earnings, upgrade and cloud sales to over 60 million euros in 2018. Overall, the PSI management continues to forecast growth in the upper singledigit range for 2018. In view of the current general conditions, the management now expects an EBIT with double-digit growth to over 15 million euros.

Group Balance Sheet

from 1 January 2018 until 31 March 2018 according to IFRS

^ëëÉíë=	P=jçåíÜ=oÉéçêí= MNLMNJPNLMPLNU hbro	^ååì~ä=oÉéçêí= MNLMNJPNLNOLNT= hbro=
kçå=ÅìêêÉåí=~ëëÉíë=
Property, plant and equipment	12,734	12,531
Intangible assets	56,851	56,489
Investments in associates	150	150
Deferred tax assets	8,639	8,377
	TUIPTQ	TTIRQT=
`ìêêÉåí=~ëëÉíë=
Inventories	8,756	7,823
Trade accounts receivable, net	27,902	31,611
Receivables from long-term development contracts	34,739	33,118
Other current assets	9,593	5,779
Cash and cash equivalents	42,563	38,132
	NOPIRRP	NNSIQSP=
qçí~ä=~ëëÉíë=	OMNIVOT	NVQIMNM=

qçí~ä=bèìáíó=~åÇ=iá~ÄáäáíáÉë=

40,185	40,185
35,137	35,137
–542	–328
–18,642	–18,823
26,047	24,126
UOINUR	UMIOVT=
50,271	50,540
4,194	3,494
RQIQSR	RQIMPQ=
12,579	14,564
37,162	29,206
13,399	13,287
2,137	2,622
SRIOTT	RVISTV=
OMNIVOT	NVQIMNM=

Group Income Statement

from 1 January 2018 until 31 March 2018 according to IFRS

	P=jçåíÜ=oÉéçêí MNLMNJPNLMPLNU	P=jçåíÜ=oÉéçêí= MNLMNJPNLMPLNT=
	hbro	hbro=
Sales revenues	45,745	43,784
Other operating income	1,622	1,687
Cost of materials	–5,669	–5,123
Personnel expenses	–29,944	–28,640
Depreciation and amortization	–1,066	–1,035
Other operating expenses	–7,902	–8,066
léÉê~íáåÖ=êÉëìäí	OITUS	OISMT=
Net finance result	–146	–96
oÉëìäí=ÄÉÑçêÉ=áåÅçãÉ=í~ñÉë=	OISQM	OIRNN=
Income tax	–719	–736
kÉí=êÉëìäí=	NIVON	NITTR=
Earnings per share (in Euro per share, basic)	0.12	0.11
Earnings per share (in Euro per share, diluted)	0.12	0.11
Weighted average shares outstanding (basic)	15,657,864	15,642,922
Weighted average shares outstanding (diluted)	15,657,864	15,642,922

Group comprehensive Income Statement

from 1 January 2018 until 31 March 2018 according to IFRS

	P=jçåíÜ=oÉéçêí MNLMNJPNLMPLNU hbro	P=jçåíÜ=oÉéçêí= MNLMNJPNLMPLNT= hbro=
kÉí=êÉëìäí=	NIVON	NITTR=
Currency translation foreign operations	181	–186
Net losses from cash flows hedges	0	0
Income tax effects	0	0
dêçìé=ÅçãéêÉÜÉåëáîÉ=êÉëìäí=	OINMO	NIRUV=

Group Cash Flow Statement

from 1 January 2018 until 31 March 2018 according to IFRS

	P=jçåíÜ=oÉéçêí MNLMNJPNLMPLNU hbro	P=jçåíÜ=oÉéçêí= MNLMNJPNLMPLNT= hbro=
^pecilt=colj=lmbo^qfkd=^qfsfqfbp=
oÉëìäí=ÄÉÑçêÉ=áåÅçãÉ=í~ñÉë=	OISQM	OIRNN=
^ÇàìëíãÉåíë=Ñçê=åçåJÅ~ëÜ=ÉñéÉåëÉë=
Amortisation on intangible assets	426	429
Depreciation of property, plant and equipment	640	607
Interest income	–25	–51
Interest expenses	253	213
	PIVPQ	PITMV=
`Ü~åÖÉë=çÑ=ïçêâáåÖ=Å~éáí~ä=
Inventories	–852	–1,457
Trade receivables and receivables from
long-term development contracts	1,909	–3,819
Other current assets	–3,478	–4,694
Provisions	–591	–548
Trade payables	–1,811	271
Other current liabilities	7,410	6,392
	SIRON	ÓNQS=
Interest paid	–41	–11
Income taxes paid	–205	–36
`~ëÜ=Ñäçï=Ñêçã=çéÉê~íáåÖ=~ÅíáîáíáÉë=	SIOTR	ÓNVP=
^pecilt=colj=fksbpqfkd=^qfsfqfbp=
Additions to intangible assets	–410	–81
Additions to property, plant and equipment	–843	–655
Interest received	25	51
`~ëÜ=Ñäçï=Ñêçã=áåîÉëíáåÖ=~ÅíáîáíáÉë=	ÓNIOOU	ÓSUR=
^pecilt=colj=cfk^kfkd=^`qfsfqfbp=
Proceeds/repayments from/of borrowings	–485	452
Outflows for share buybacks	–214	–297
`~ëÜ=Ñäçï=Ñêçã=Ñáå~åÅáåÖ=~ÅíáîáíáÉë=	ÓSVV	NRR=
^pe=^ka=^pe=bnrfs^ibkqp= ^q=qeb=bka=lc=qeb=mbofla=
`Ü~åÖÉë=áå=Å~ëÜ=~åÇ=Å~ëÜ=Éèìáî~äÉåíë=	QIPQU	ÓTOP=
s~äì~íáçåJêÉä~íÉÇ=ÅÜ~åÖÉë=áå=Å~ëÜ=~åÇ=Å~ëÜ=Éèìáî~äÉåíë=	UP	ÓUU=
`~ëÜ=~åÇ=Å~ëÜ=Éèìáî~äÉåíë=~í=ÄÉÖáååáåÖ=çÑ=íÜÉ=éÉêáçÇ=	PUINPO	QPIMMU=
`~ëÜ=~åÇ=Å~ëÜ=Éèìáî~äÉåíë=~í=íÜÉ=ÉåÇ=çÑ=íÜÉ=éÉêáçÇ=	QOIRSP	QOINVT=

Statement of Changes in Equity

from 1 January 2018 until 31 March 2018 according to IFRS

	kìãÄÉê=çÑ= ëÜ~êÉë=áëëìÉÇ=	pÜ~êÉ=Å~éáí~ä	^ÇÇáíáçå~ä é~áÇJáå= Å~éáí~ä	oÉëÉêîÉ=Ñçê íêÉ~ëìêó= ëíçÅâ	líÜÉê= êÉëÉêîÉë	^ÅÅìãìä~íÉÇ= êÉëìäíë=	qçí~ä=
	kìãÄÉê=	hbro	hbro	hbro	hbro	hbro=	hbro=
^ë=çÑ=N=g~åì~êó=OMNT=	NRISRSIMNS=	QMINUR	PRINPT	ÓROU	ÓNTIRUU	NUIMSU=	TRIOTQ=
Group comprehensive result after tax					ÓNIOPR	9,497	8,262
Share buybacks	–24,885			–297			–297
Issue of own shares	28,889			497			497
Dividends paid						–3,439	–3,439
^ë=çÑ=N=g~åì~êó=OMNU=	NRISSMIMOM=	QMINUR	PRINPT	ÓPOU	ÓNUIUOP	OQINOS=	UMIOVT=
Group comprehensive result after tax					181	1,921	2,102
Share buybacks	–14,611			–214			–214
^ë=çÑ=PM=pÉéíÉãÄÉê=OMNT=	NRISQRIQMV=	QMINUR	PRINPT	ÓRQO	ÓNUISQO	OSIMQT=	UOINUR=

Shares and Options held by Management Board and Supervisory Board as of 31 March 2018

	pÜ~êÉë	léíáçåë=
j~å~ÖÉãÉåí=_ç~êÇ=
Harald Fuchs	6,023	0
Dr. Harald Schrimpf	67,000	0
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Andreas Böwing	0	0
Elena Günzler	1,739	0
Prof. Dr. Uwe Hack	600	0
Prof. Dr. Wilhelm Jaroni	0	0
Uwe Seidel	100	0
Karsten Trippel	111,322	0

Remuneration for the Management Board and Supervisory Board

	cáñÉÇ=êÉãìåÉê~íáçå hbro=	s~êá~ÄäÉ=êÉãìåÉê~íáçå hbro=	qçí~ä=êÉãìåÉê~íáçå= hbro=
Harald Fuchs	79	25	104
Dr. Harald Schrimpf	95	50	145
j~å~ÖÉãÉåí=_ç~êÇ=Ó=íçí~ä=	NTQ=	TR=	OQV=

As the Supervisory Board payments for the current year are made in the 4th quarter, the Supervisory Board did not obtain any remuneration in the first three months of 2018.

Notes on the consolidated financial statements as of 31 March 2018

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NK _ìëáåÉëë=^ÅíáîáíáÉë=~åÇ=iÉÖ~ä=_~ÅâÖêçìåÇ=

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

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

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

The condensed interim consolidated financial statements for the period from 1 January 2018 to 31 March 2018 were released for publication by a decision of the management on 23 April 2018.

The condensed interim consolidated financial statements for the period from 1 January 2018 to 31 March 2018 were produced in compliance with IAS 34 "Interim Financial Reporting". The condensed interim consolidated financial statements do not contain all the data and notes prescribed for the annual financial statements and should be read in conjunction with the consolidated financial statements for 31 December 2017.

OK ^ÅÅçìåíáåÖ=~åÇ=s~äì~íáçå=mêáåÅáéäÉë=

With regard to the principles of accounting and valuation and especially the application of International Financial Reporting Standards (IFRS) see the group consolidated financial statements for the financial year 2016.

PK pÉ~ëçå~ä=fåÑäìÉåÅÉë=çå=íÜÉ=_ìëáåÉëë=^ÅíáîáíáÉë

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

QK Ü~åÖÉë=áå=íÜÉ=çåëçäáÇ~íáçå=dêçìé=

Compared to 31 December 2017 there were no changes in the consolidation group.

RK pÉäÉÅíÉÇ=fåÇáîáÇì~ä=fíÉãë=

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	PN=j~êÅÜ=OMNU	PN=aÉÅÉãÄÉê=OMNT=
	hbro=	hbro=
Bank balances	39,193	34,742
Fixed term deposits	3,345	3,366
Cash	25	24
	QOIRSP	PUINPO=

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Costs and estimated earnings in excess of billings on uncompleted contracts arise when revenues have been recorded but the amounts cannot be billed under the terms of the contracts. Such amounts are recoverable from customers upon various measures of performance, including achievement of certain milestones, completion of specified units or completion of the contract. Costs and estimated earnings contain directly allocable costs (labour cost and cost of services provided by third parties) as well as the appropriate portion of overheads including pro rata administrative expenses.

Costs and estimated earnings on uncompleted contracts and related amounts are billed as follows:

	PN=j~êÅÜ=OMNU	PN=aÉÅÉãÄÉê=OMNT=
	hbro=	hbro=
Costs incurred on uncompleted contracts	92,340	88,768
Profit shares	16,592	15,028
`çåíê~Åí=êÉîÉåìÉ=	NMUIVPO=	NMPITVS=
Payments on account	–87,592	–83,965
Set off against contract revenue	–74,193	–70,678
Receivables from long-term construction contracts	34,739	33,118
Liabilities from long-term construction contracts	13,399	13,287

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

	PN=j~êÅÜ=OMNU	PN=j~êÅÜ=OMNT=
	hbro=	hbro=
Software development	25,010	24,140
Maintenance	13,959	13,080
License fees	4,326	3,521
Merchandise	2,450	3,043
	QRITQR	QPITUQ=

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

	PN=j~êÅÜ=OMNU hbro=	PN=j~êÅÜ=OMNT= hbro=
Effective taxes expenses
Effective tax expenses	–282	–174
Deferred taxes
Emergence and reversal of
temporary differences	–437	–562
q~ñ=ÉñéÉåëÉë=	ÓTNV	ÓTPS=

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

Segments of the PSI Group:

• Energy Management: Intelligent solutions for energy suppliers from the electricity, gas, oil and district heating markets and for public transportation. Focal points are reliable and economically sound control system solutions for intelligent energy grid management and the safe operation of traffic infrastructures as well as trade and sales management in the liberalised energy market.
• Production Management: Software products and solutions for production planning, special tasks in production control and efficient logistics. Focuses are the optimisation of the use of resources and the increase of efficiency, quality and profitability.

In the first quarter of 2018, segment reporting was changed by the split of the Infrastructure Management segment. The PSI Incontrol Group allocated to the former Infrastructure Management segment until 31 December 2017 and PSI Transcom GmbH were re-allocated to the Energy Management segment. PSI Polska Sp. z o.o., which was allocated to the former Infrastructure Management segment until 31 December 2017, was re-allocated to the Production Management segment.

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

Group Segment Reporting

from 1 January 2018 until 31 March 2018 according to IFRS

	båÉêÖó=		mêçÇìÅíáçå=
	j~å~ÖÉãÉåí=		j~å~ÖÉãÉåí=		oÉÅçåÅáäá~íáçå=		mpf=dêçìé=
	PNLMPL= OMNU= qbro=	PNLMPL OMNTG qbro=	PNLMPL OMNU= qbro=	PNLMPL OMNTG qbro=	PNLMPL OMNU= qbro=	PNLMPL OMNTG qbro=	PNLMPL= OMNU= qbro=	PNLMPL= OMNT= qbro=
p~äÉë=êÉîÉåìÉë=							=	=
Sales to external customers	22,412	20,242	23,333	23,542	0	0	45,745	43,784
Inter-segment sales	558	52	2,106	1,624	–2,664	–1,676	0	0
pÉÖãÉåí=êÉîÉåìÉë=	OOIVTM	OMIOVQ	ORIQPV	ORINSS	ÓOISSQ	ÓNISTS	QRITQR=	QPITUQ=
léÉê~íáåÖ=êÉëìäí== ÄÉÑçêÉ=áåíÉêÉëíI=í~ñI= ÇÉéêÉÅá~íáçå=~åÇ= ~ãçêíáë~íáçå	NISTV=	NIQRM	OIRVS	OIQVT	ÓQOQ	ÓPMR	PIURN=	PISQO=
léÉê~íáåÖ=êÉëìäí=ÄÉÑçêÉ= ÇÉéêÉÅá~íáçå=~åÇ= ~ãçêíáë~íáçå=êÉëìäíáåÖ= Ñêçã=éìêÅÜ~ëÉ=éêáÅÉ= ~ääçÅ~íáçå=	NINPV=	VPV	OIOPM	OINQR	ÓQQO	ÓPOR	OIVOT=	OITRV=
Depreciation and amortisation resulting from purchase price allocation	–10	–21	–131	–131	0	0	–141	–152
léÉê~íáåÖ=êÉëìäí=	NINOV=	VNU	OIMVV	OIMNQ	ÓQQO	ÓPOR	OITUS=	OISMT=
Net finance result	–91	–9	–55	–87	0	0	–146	–96
oÉëìäí=ÄÉÑçêÉ== áåÅçãÉ=í~ñÉë=	NIMPU=	VMV	OIMQQ	NIVOT	ÓQQO	ÓPOR	OISQM=	OIRNN=

* The figures shown for 2017 differ from those in the report on the first quarter of 2017 due to changes made to the segment reporting (see Notes, page 11, Segment Reporting).

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22 March 2018	Publication of Annual Result 2017
22 March 2018	Analyst Conference
26 April 2018	Report on the 1st Quarter of 2018
16 May 2018	Annual General Meeting
26 July 2018	Report on the 1st Six Months of 2018
31 October 2018	Report on the 3rd Quarter of 2018
26 to 28 November 2018	German Equity Forum, Analyst Presentation

vçìê=fåîÉëíçê=oÉä~íáçåë=Åçåí~ÅíW=

Karsten Pierschke

Phone:	+49 30 2801-2727
Fax:	+49 30 2801-1000
E-Mail:	kpierschke@psi.de

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

PSI Software AG

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