DGAP-News: Mensch und Maschine Software SE

Strong Q2 accelerating profit growth
- Over 82% proprietary gross margin & profit record
- Growth targets for 2017 comfortably achievable

Wessling, July 24, 2017 - Mensch und Maschine Software SE (MUM - ISIN DE0006580806), a CAD/CAM specialist company, managed to significantly increase its profit growth due to a strong Q2: After the better than expected +2,7% in Q1, EBITDA growth accelerated to sound +21% in the second quarter, leading to a new profit record. This was possible because the double digit growth of M+M's proprietary software and services, as opposed to Q1, was no longer significantly diluted by the transition to a rental model by supplier Autodesk.

While in Q1 group sales decreased by -9.7% to EUR 45.47 mln (PY: 50.37), there was a tender increase to EUR 38.12 mln (PY: 37.45 / +1.8%) in the second quarter. Half year sales came in at EUR 83.59 mln (PY: 87.83 / -4.8%), with M+M Software contributing EUR 25.22 mln (PY: 23.11 / +9.1%) and the VAR Business contributing EUR 58.37 mln (PY: 64.72 / -9.8%).

Opposite to half year sales, gross margin increased to EUR 48.20 mln (PY: 46.61 / +3.4%), because the Software growth to EUR 24.54 mln (PY: 22.45 / +9.3%) was higher than the VAR Business drop to EUR 23.67 mln (PY: 24.16 / -2.0%). While Q1 had contributed +1.5% to gross margin growth, Q2 already did +5.5%. All in all, gross margin from M+M's proprietary software and services grew by +11.8% to EUR 39.64 mln (PY: 35.45), while gross margin from the resale of Autodesk software dropped by -23% to EUR 8.56 mln, thus contributing less than 18% (PY: 24%) to group gross margin. Thus over 82% is now contributed by proprietary sources, leading to a higher gross yield at 57.7% (PY: 55.8%) - in the second quarter it even amounted to 60.9% (PY: 58.8%).

Operating profit EBITDA before depreciation, amortization, interest and taxes grew to a record EUR 9.13 mln (PY: 8.33 / +9.5%), with EUR 6.35 mln (PY: 5.70 / +11.5%) contribution from Software and EUR 2.77 mln (PY: 2.64 / +5.2%) from the VAR Business. Due to lower depreciation, amortization and finance cost, net profit after minority shares soared by +26% to EUR 4.37 mln (PY: 3.48), or 27 Cents (PY: 21) EPS. Operating cash flows remained on a strong level at EUR 7.65 mln (PY: 7.41).

M+M CEO Adi Drotleff is relaxed concerning the second half of the year: 'Our EBITDA target range of EUR 17.5 to 18.5 mln (PY: 15.76 / +11% to +17%), given in the annual report 2016, should be comfortably achievable, particularly as from Q4 the Autodesk rental model should deliver its full positive impact, helping the VAR segment back to higher growth. Net profit is expected to come in between EUR 8.5 to 9.3 mln (PY: EUR 6.59 mln / +29% to +41%), EPS 52-57 Cents (PY: 40). Assuming we achieve these targets we plan to increase the dividend to 45-50 Cents (PY: 35).'