REALTECH AG / Key word(s): Final Results 21.03.2014 10:01 Dissemination of an Ad hoc announcement according to § 15 WpHG, transmitted by DGAP - a company of EQS Group AG. The issuer is solely responsible for the content of this announcement. --------------------------------------------------------------------------- - Group revenue down 2% to EUR 39.1 million - IT consulting 7% lower, software business grows by 10% - Special and one-time effects negatively impact operating profit by EUR 6.3 million - Equity ratio at 45.8%, net liquidity EUR 9.4 million Walldorf, March 21, 2014. According to provisional figures, REALTECH AG recorded Group revenue in fiscal year 2013 of EUR 39.1 million (2012: EUR 39.8 million), a fall of 2%. IT consulting business fell 7% to EUR 25.7 million (EUR 27.6 million). Revenue from the sale of software increased 10% to EUR 13.5 million (EUR 12.3 million). In the 2013 fiscal year, the operating profit (EBIT) fell to minus EUR 6.5 million (EUR 0.4 million) and the EBITDA to minus EUR 5.0 million (EUR 1.7 million). Group net income dropped from minus EUR 0.2 million to minus EUR 7.1 million. Earnings per share accordingly decreased to minus EUR 1.32 (minus EUR 0.04). Despite the decline in business in 2013, REALTECH AG can boast a healthy financial base. Net liquidity is EUR 9.4 million (EUR 11.3 million) and equity ratio 45.8%. Furthermore, the Group has no significant or long-term liabilities. Developments in detail In 2013, business development was influenced by a number of special and one-time effects that negatively impacted the operating profit (EBIT) to the tune of EUR 6.3 million. These effects comprise unforeseen market and customer changes as well as terminated development activities and a fundamental reorientation of the company. In the spring of 2013, SAP reorganized its sales model, a development not anticipated by market observers. This directly affected REALTECH, because license revenue within the framework of the OEM partnership with SAP for the SAP ITSM product (IT Service Management) could not be achieved as planned. The investments made by REALTECH in relation to this since 2010 therefore generated only low revenues. This negatively impacted the operating profit in 2013 by EUR 1.2 million. Development projects and research activities launched in 2013, such as the new IT solution Timplify for simplified IT management, were terminated. According to original planning, investments from operational cash flow were to cover this in the 2013 and 2014 fiscal years. As market maturity was not reached as quickly as planned, the Executive Board halted the project, which led to a loss of EUR 1.7 million at operating profit level. Following an extensive analysis, the Executive Board decided to cease business operations in Singapore and Denmark as a result of the earnings prospects in the second half of 2013. Together, the two 100% subsidiaries achieved a negative EBIT of EUR 0.6 million. In view of the expected business development for the remainder of 2013, the company underwent a fundamental reorganization in the second half of the year. Among other things, the Supervisory Board appointed a new Chief Executive Officer and Chief Financial Officer and established a financial holding. Under the management of the financial holding, profit-oriented, organizational and HR measurements were carried out. These included a check on all the profitability of all Group areas and subsidiaries, detailed analyses of the markets and the company's own portfolio and a realignment of sales activities. The aim of these measures was to orient the REALTECH Group more closely to the requirements of the IT market and thus to secure profitability over the medium and long term. The realignment required for REALTECH impacted the 2013 operating profit by EUR 2.8 million. Without the special and one-time effects, the EBIT for the 2013 fiscal year was minus EUR 0.2 thousand. 4th quarter 2013 Compared to the same quarter of the previous year, Group revenue in the 4th quarter of 2013 rose to EUR 10.9 million (Q4/2012: EUR 10.8 million). Revenue from IT consulting fell by 21% to EUR 5.8 million (EUR 7.4 million), while revenue from software solutions rose 48% to EUR 5.0 million (EUR 3.4 million). The operating profit (EBIT) decreased from EUR 0.4 million to minus EUR 3.0 million and EBITDA fell from EUR 0.7 million to minus EUR 2.5 million. Group net income correspondingly dropped from EUR 0.5 million to minus EUR 3.0 million and the earnings per share fell from EUR 0.09 to minus EUR 0.56. Outlook The specific aim of the measures initiated in 2013 was to adapt the Group's cost structure to the development of sales. For 2014, the Executive Board is focusing in particular on stabilization and the customer- and future-oriented realignment of the company. The reorganization and strategic development will help to strengthen the earning power of REALTECH and its position on the IT market over the long term, and provide our customers with an attractive solution portfolio. REALTECH is focusing on the current and future requirements of the IT line of business and its business mission in SMEs and large companies. Above all, this involves the provision and management of reliable, SLA-capable IT services, infrastructures and processes in complex and increasingly hybrid IT environments for our customers. Our consulting and product portfolio is systematically directed toward the optimization, stabilization and business orientation of this customer IT. The strategic element in this is the integration and enhancement of SAP products and solutions. The Executive Board's primary aim is to guide the company back on track in respect of earnings and achieve profitability that is assured over the long term. The Executive Board assumes that in 2014, revenue from consulting and software will stabilize. In view of this, for 2014 the Executive Board expects revenues at the previous year's level. On course toward profitable growth, the 2014 fiscal year will be a transitional period. In view of this, the REALTECH Executive Board expects the operating profit (EBIT) for the 2014 fiscal year to improve in the range from minus EUR 1.0 million to EUR 0.0 million. The forecasts include all the currently known events that may have an influence of the development of the REALTECH Group's business. In the 2013 fiscal year, REALTECH AG achieved net income of EUR 0.0 million, following EUR 1.1 million in 2012. At the General Meeting, scheduled to be held in Wiesloch on May 27, 2014, the Executive and Supervisory Boards of REALTECH AG will propose carrying forward the net profit of EUR 0.0 million for the 2013 fiscal year to a new account. REALTECH will be publishing its final consolidated financial statements for 2013 on April 15, 2014. Contact Person: Manon Fischer Investor Relations REALTECH AG, 69190 Walldorf Tel.: +49.6227.837.500 Fax: +49.6227.837.546 E-Mail: [email protected] 21.03.2014 DGAP's Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------------- Language: English Company: REALTECH AG Industriestraße 39c 69190 Walldorf Germany Phone: +49 (0)6227 837-500 Fax: +49 (0)6227 837 9134 E-mail: [email protected] Internet: www.realtech.com ISIN: DE0007008906 WKN: 700890 Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin, Düsseldorf, Hamburg, München, Stuttgart End of Announcement DGAP News-Service ---------------------------------------------------------------------------