10/28/2022 Corporate News PSI with strong industrial business in the third quarter

Berlin, October 28, 2022 – The PSI Group improved sales by 2.5% to 179.7 million euros in the first nine months of 2022 (30 Sept. 2021 adjusted: 175.4 million euros). Due to weak order intake and significant project overruns in the municipal utilities business, operating earnings (EBIT) were 13% down year-on-year at 14.3 million euros (30 Sept. 2021 adjusted: 16.4 million euros), while consolidated net profit decreased accordingly to 8.0 million euros (30 Sept. 2021: 11.1 million euros). Despite the withdrawal in Russia and weak orders in the municipal utilities business, new orders at 205 million euros were 4.6% higher than in the prior-year quarter (30 Sept. 2021: 196 million euros). At 182 million euros, the order book volume on September 30, 2022 exceeded the prior-year figure by 10.3% (Sept. 30, 2021: 165 million euros).

• New orders 4.6 % above previous year at 205 million euros
• Sales increase by 2.5 % to 180 million euros
• EBIT still impacted by municipal utility projects in 3rd quarter

The Energy Management segment (energy grids, energy trading, public transport) generated 4.6% lower sales of 92.4 million euros in the first nine months (Sept. 30, 2021 adjusted: 96.8 million euros) and a significantly lower operating result of 1 million euros (Sept. 30, 2021 adjusted: 7.3 million euros). New orders, sales and in particular the segment's earnings were impacted by weak demand and cost overruns in municipal utility projects. Business with municipal utilities contributes around 5% to Group sales. In particular, municipal utilities with low levels of in-house generation are currently burdened by high energy procurement costs. Losses from a newly developed Redispatch 2.0 software, which helps distribution system operators and municipal utilities to intelligently distribute the renewable energy fed into their own networks and to relieve the transmission networks, were already recorded in the second quarter. PSI management had already previously almost tripled investments in the underlying, market-leading product PSIcontrol to 10 million euros per year in order to improve the efficiency of configuration, upgradeability and quality. Furthermore, management structures were bundled in experienced hands and personnel capacities were reallocated. The new control system developed on the PSI platform has passed an important function and load test. With the introduction of this technology, the electricity grid business is also to become partner-capable - pilot orders have been received. The other business units of the Energy Management segment (transmission grids, traction power grids, gas grids, energy trading, public transport) are developing as planned. In Public Transport, PSI is benefiting from the increasing demand for software for electric bus depots and received a major international order in the third quarter. In the gas export country Malaysia, new orders doubled.

Sales in the Production Management segment (metals, industry, logistics) in the first nine months were 11.2% higher than in the previous year at 87.3 million euros (Sept. 30, 2021 adjusted: 78.5 million euros). The segment's operating profit improved by 44% to 14.3 million euros (Sept. 30, 2021 adjusted: 9.9 million euros). In particular, the North American business with customers in the metals producing industry continues to develop very strongly. The strong demand can be increasingly better served worldwide thanks to the PSI platform, as customers and partners increasingly take over order processing, so that PSI can concentrate on the role as a software product vendor (ISV). With workflow, PSI Click Design and e-learning via PSI Virtual Factory, customers and partners can carry out rollouts independently and adapt the software to plant-specific features.

In the first quarter of 2022, the risk situation of the business activities in Russia was reassessed. A separate segment was formed, as a significantly higher risk situation was assumed due to the Ukraine war and the EU sanctions as well as legal changes in Russia. PSI decided in the second quarter of 2022 to discontinue the business activities combined in the segment and to report them separately accordingly. At the end of the third quarter of 2022, this resulted in an effect on earnings of -3.1 million euros (previous year: -0.7 million euros). In the prior-year comparison, all carrying amounts have been adjusted to allow an economic period comparison.

The number of employees in the Group was increased to 2,256 (Sept. 30, 2021: 2,186) due to new hires in Germany, Poland and the USA and despite the departures in Russia. At −7.3 million euros, cash flow from operating activities was significantly below the figure for the prior-year quarter (Sept. 30, 2021: 16.3 million euros) due to lower project-related advance payments and grants not yet disbursed. Cash and cash equivalents were down 12.6% year-on-year at 41.4 million euros (Sept. 30, 2021: 47.3 million euros), also due to the dividend payment and the share buyback. Although only four product lines became available in the cloud-based PSI App Store in the course of the year, licenses and accompanying services were already ordered for 5.4 million euros, in some cases with seven-digit order sums. Further partnerships with international resellers and integrators have been agreed, including in particular Accenture and Tata Consulting. PSI will also offer generic standard products via the app stores of major US cloud providers in 2023.

PSI adjusted the annual targets due to the problems and measures with Redispatch 2.0 and municipal utilities on October 4, 2022. New orders and sales of the PSI Group are now expected to be slightly above the previous year. For the operating result (EBIT) from continuing operations (without Russia) the management now expects 20 million euros. For 2023, the PSI Executive Board plans a return to the long-term growth and earnings increase trend. The strategic developments (PSI App Store/cloud platform) are not affected by the aforementioned problems, so that the PSI Executive Board continues to aim for the long-term target of 54 million euros EBIT for 2026, irrespective of short-term economic fluctuations.

The PSI Group develops its own software products for optimizing the flow of energy and materials for utilities (energy grids, energy trading, public transport) and industry (metals production, automotive, mechanical engineering, logistics). The industry-specific products, which are built from standard components, are sold both directly and via the cloud-based PSI App Store and can also be customized by customers and partners themselves. PSI was founded in 1969 and employs more than 2,200 people worldwide.