DGAP-News: Daldrup & Söhne (Daldrup) AG

PRESS RELEASE

Daldrup & Söhne AG posts positive group half-year results in line with forecast

- EBIT at 0.5 million Euros, total output at 22.8 million Euros

- Excellent order situation for second half 2017 and 2018

- Geothermal power plant Landau: Trial operations to run until end of November 2017

- Geothermal power plant Taufkirchen

- Heat exchangers to be installed

- Trial operations of power production planned until end of 2017

- 2017 forecast confirmed: ca. 40 million Euros total output, EBIT margin 2%-5%

Grünwald / Ascheberg, Germany, October 4, 2017 - The drilling technology and geothermics specialist Daldrup & Söhne AG (ISIN: DE0007830572) posted consolidated total output of 22.8 million Euros (H1 2016: 21 million Euros). Next to the group revenues total output includes drillings which are still in progress and have therefore not yet been finally invoiced of 17.3 million Euros (2016 H1: 13,7 million Euros). The business environment from January to June 2017 was characterized by a good order situation with work to capacity in the business divisions Water Extraction, Raw Materials & Exploration, Water Extraction and Environment, Development & Services (EDS) as well as major ongoing drilling orders for geothermal projects in Belgium and Germany. Investor and municipal demand for drilling services and ready-to-operate geothermal power plants was strong. As of August 31, 2017, the volume of orders was more than 75 million Euros.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were 2.3 million Euros as of the reporting date (2016: 2.2 million Euros). Consolidated earnings before interest and taxes (EBIT) were 0.5 million Euros (2016; 0.4 million Euros). Consolidated earnings after taxes for the first half of 2017 were 168,000 Euros compared to 3,000 Euros during the same period last year with earning per share of 0.03 Euros (2016: 0.00 Euros).

Trial operations for the Landau geothermal power plant to run until November 2017
First trial operations for the Landau geothermal power plant have started last week. The operating company geox GmbH, a subsidiary of Daldrup & Söhne AG, has nearly completed the plant's renovation. All of the plant's individual components have been tested successfully and trial operations are projected to run until the end of November 2017. "Within the framework of the trial operations, we are now completely focused on putting the entire plant into operation and synchronizing everything," says CEO Josef Daldrup. "We are optimistic that we will be able to start regular operations by the end of 2017."

Geothermal power plant Taufkirchen projected to start power production by end of 2017
The company expects the first heat exchanger for the Taufkirchen geothermal power plant to be delivered by manufacturers Kelvion shortly. Following installation of the heat exchanger, trial operations are expected to be concluded by the end of 2017, to be followed by the start of regular operations and power production. With heat provision to the communities of Taufkirchen and Oberhaching the economic priority for the winter months, the second heat exchanger is projected to be operational in spring 2018. The plant can then move towards operating at planned capacity step by step.

Solid equity ratio of 51.3%
The consolidated balance sheet total as of the reporting date of June 30, 2017, remained virtually unchanged at 90.0 million Euros (December 31, 2016: 91.4 million Euros). Work in progress, which was valued according to commercial caution, amounted to 77.2 million Euros as of the reporting date (December 31, 2016: 62.9 million Euros), most of which was the result of unfinished work at construction sites in Belgium and Germany that has not yet been fully invoiced. Advance payments received in the amount of 65.7 million Euros (December 31, 2016: 56.0 million Euros) were deducted as usual in the industry from orders in progress. With an equity ratio of 51.3% (December 31, 2016: 50.4%), the balance sheet remains solid. As of June 30, 2017, the company reported cash and cash equivalents worth 0.3 million Euros (December 31, 2016: 0.8 million Euros).

Cost of materials ratio lowered to 52.3%
The slightly higher cost trend in the reporting period compared to the same period a year ago is in line with the increase in operating expenses due to the growth in drilling activity. Based on total output, a materials expense ratio of 52.3% (first half of 2016: 55.9%) has been calculated. Expenses for services purchased declined to 5.5 million Euros, from 7.6 million Euros during the same period a year earlier. Personnel costs rose by 4% year-to-year to 4 million Euros as a result of the increase in staff members due to rising order volume.

Framework for further development of deep geothermics remains favourable
With Germany's amended renewable energies law (EEG) taking effect January 1, 2017, the legal framework and conditions for subsidies for geothermics have largely been confirmed. The law provides investors with planning and legal certainty for current and future projects until 2021 with subsidies to remain steady at 25.2 Eurocents/kWh. Furthermore, the degression of the payment by 5 percent per year will not start until 2021. Another benefit of the EEG for geothermal energy providers in Germany is that - in contrast to wind and photovoltaic power plants - the compensation rate for geothermal power will not be determined as part of tenders. Politics has clearly recognized the benefits of geothermal energy for the energy market 2.0.
2017 forecast confirmed
The order books for the Geothermics business division as well as for the three other business divisions are filled until 2019. Daldrup expects to gain further business for all divisions from current and future tenders as well as from ongoing contract negotiations. Investors are particularly getting more and more interested in bigger geothermal power plant projects, with a large number of new plans and tenders from both municipal and private investors being announced. Daldrup is already working on further geothermal power plant projects in the Bavarian Molasse Basin in Puchheim near Munich and the upper Rhine rift valley in Neuried.

Overall, demand in Central Europe is increasing significantly. As an established competitor with more than 35 fully realized major geothermal drillings, Daldrup is benefitting from the increase in demand. Thanks to the positive economic situation, the management board of Daldrup & Söhne AG is optimistic that the company will be able to meet its forecast of 40 million Euros total output and an EBIT margin between 2% and 5% for the 2017 fiscal year.

About Daldrup & Söhne AG
Daldrup & Söhne AG (ISIN: DE0007830572, WKN: 783057) with a corporate history spanning more than 60 years is a specialist provider of drilling and environmental services and ranks as one of the leading companies in Germany. Its activities are divided into the business divisions Geothermics, Raw Materials & Exploration, Water Extraction as well as Environment, Development & Services (EDS). The Geothermics business division provides drilling services for near-surface geothermics (especially geothermal probes of heat pumps), along with drilling services for deep geothermics up to 6000 m, in order to utilise the geothermal energy accessible in this way for electricity and/or heat generation. In the Raw Materials and Exploration business division, the bores made by Daldrup & Söhne AG serve for exploring and developing fossil fuel deposits (especially coal and gas) as well as mineral resources and ores (e.g. copper and gold). The Water Extraction business division comprises well construction for the extraction of drinking, service, curative, mineral, boiler-feed or cooling water as well thermal brine. The Environment, Development & Services (EDS) business division comprises special environmental engineering services such as the hydraulic clean-up of contaminated sites, the drilling of gas extraction wells for recovering waste dump gas, the provision of groundwater quality measuring points or the installation of water purification plants.

The majority stake in Geysir Europe GmbH also gives the Daldrup Group its own fields of experience in the exploration of geothermal energy in the Bavarian Molasse Basin and in the Upper Rhine Plain. The existing project management and power station expertise means that all stages of value creation can be covered for a deep geothermics project.

The shares of Daldrup & Söhne AG are listed in the Scale (sub-segment in the open market of the Frankfurt Stock Exchange).

Disclaimer
This publication represents neither an offer for sale nor a call to submit a tender for the purchase or underwriting of securities. This publication and the information it contains is not intended for direct or indirect dissemination in or within the United States of America ("USA"), Canada, Australia or Japan.

Press & Investor Relations Contact:

Daldrup & Söhne AG
Falk v. Kriegsheim
Phone +49 (0)2593-9593-29
Fax +49 (0)2593-9593-60
Bavariafilmplatz 7 ir@daldrup.eu
82031 Grünwald/Geiselgasteig www.daldrup.eu