CompuGROUP Holding AG

euro adhoc: CompuGROUP Holding AG
Earnings Forecast
CompuGROUP adjusts 2008 guidance and confirms medium-term growth and earnings targets. EBITDA forecast of EUR 50 million

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Ad hoc announcement of CompuGROUP Holding according to § 15 WpHG

CompuGROUP adjusts 2008 guidance and confirms medium-term growth and earnings targets. EBITDA forecast of EUR 50 million.

The management board of CompuGROUP Holding AG has adjusted its outlook for the remainder of the year. In the HCS business sector regulated health insurers are continuing to withhold contracts as a result of discussions regarding the consequences of the introduction of the health fund, so that a considerable number of these expected orders will probably be delayed until next year. Due to mandatory and time-consuming product changes in order to conform to regulatory changes in Germany, it is prudent to downgrade expectations for the pharmaceutical communications business in the second half of the year. The guidance set in March of this year has therefore been adjusted accordingly. For fiscal 2008 the board forecasts EBITDA of approximately EUR 50 million (roughly equivalent to 2007 levels), and consolidated revenues of about EUR215 million (which represents a 25% growth versus 2007).  The March guidance anticipated EBITDA and revenues of EUR 65 million and EUR 215 million respectively.  The margin reduction is due to the expected reductions in high-margin work in the HCS business sector, albeit whilst maintaining similar total sales volumes. Proforma 2008 revenues of the CompuGROUP group of companies after full consolidation of the businesses acquired during 2008 amount to EUR 265 million (2007: approx. EUR 180 million).  The management board expects growth of revenues and above average growth of group EBITDA in 2009.

End of adhoc announcement

Additional information:

The negative effects, which on balance lead to a reduction of the guidance from March of this year of approximately EUR 15million in EBITDA, are primarily attributable to the HCS (EUR -14million) and EPS (EUR -4million) sectors. In contrast, growth of the HPS business has slightly exceeded targets.

While the lack of growth in HCS is somewhat based on time-limited factors, the start-up phase in EPS appears to be lasting longer than expected due to a controversial public discussion concerning Web-supported patient records.

In the Health Professional Services (HPS) sector - solutions for doctors and dentists - sales and earnings in the domestic business increased at a disproportionately high rate in the first half of 2008 and exceeded targets as a result of organic growth. Margins of 30% in 2nd-year EBITDA have already been achieved by the foreign AIS providers in France and the Czech Republic following the respective integration phases. Lower growth and margins are still apparent in the companies acquired in 2007 in Austria and Turkey where anticipated integration costs were still being incurred in the first half of 2008.

The hospital software division (KIS), which also forms part the HPS sector, shows a comparable trend. The greatest contributor to sales, Systema Österreich, which was fully consolidated in 2007 for the first time, continued to develop according to plan and posted an above-average EBITDA margin of just under 20%. The Turkish company Tepe and the hospital business in Germany acquired in early 2008 are still undergoing restructuring and therefore continue to show negligible growth and contributions to earnings. Due to its strong customer base, CompuGROUP expects that these companies will show positive earnings and significantly increased sales as early as 2009. The same applies to the most recent acquisition, the All for One group of companies in Germany.

The high growth and income Health Connectivity Services (HCS) sector has performed in line with budget for both sales and earnings up to the mid-year point. The Pharma Communications division showed significant positive growth compared to 2007 due to reorganisation.

However, more recent amendments to the Arzneimittelwirtschaftlichkeitsgesetz (AVWG) in Germany make it prudent to currently assume a decrease in earnings during the second half of the year.

Contrary to expectations, the new regulations scheduled to take effect on January 1, 2009 (e.g. the planned introduction of the health fund in Germany) have had a negative impact on the investment climate for health insurance funds investing in innovative products and services. Despite extremely positive responses to HCS product tenders and a large number of sales appointments, customers continue to be beset by uncertainty.

In the Electronic Patient Services (EPS) sector, the board sees the sluggish introduction of the elektronischen Gesundheitskarte (eGk) and the associated lack of infrastructure as a major obstacle to conducting business with any degree of success. Allied to this is the confusion in many people´s minds between the debate of the pros and cons of eGk, and vita-X. The break-even point expected in this segment for 2008 will not be achieved.

The companies acquired in 2008, organic growth and a revitalisation of the HCS business in 2009 lead the board to expect that the consolidated CompuGROUP EBITDA margin will again move towards 30% with sales volumes of EUR 250 million- EUR 300 million.

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ots Originaltext: CompuGROUP Holding AG
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Further inquiry note:
Markus Georgi
Head of Investor Relations
Tel.: +49 (0) 261 8000-1238

Branche: Software
ISIN:      DE0005437305
WKN:        543730
Börsen:  Börse Frankfurt / regulated dealing/prime standard
              Börse Berlin / free trade
              Börse Hamburg / free trade
              Börse Stuttgart / free trade
              Börse Düsseldorf / free trade
              Börse München / free trade

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