mVISEAG

WanheimerStr66|40472Düsseldorf,Germany

Tel.:+49211781780-0|Fax:+49211781780-78

GroupAnnualReport

2016

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GroupannualreportofthemVISEfortheperiod1

Januaryto31December2016

Thegroupmanagementreportshouldbereadtogetherwiththeconsolidatedfinancialdata

andthedatapresentedintheAnnextotheconsolidatedfinancialstatement.Thefollowing

illustrationsarebasedonaseriesofdatawhichhavebeenpresentedindetailintheAnnex.

Inaddition, thegroupmanagement reportcontains statements focusedon the future, i.e.

statements, which are based on certain assumptions and corresponding current plans,

estimatesandforecasts.Forward-lookingstatementsarevalid,onlyforthetimeperiodwhen

they aremade. Themanagement ofmVISE AG undertakes no obligation to revise and/or

publish forward-looking statements underlying this document whenever there is new

information.Forward-lookingstatementsarealwayssubjecttorisksanduncertainties.The

ExecutiveBoardofmVISEAGpointsout thatavarietyof factorsmay lead toa significant

variation in achieving the target.Major factors aredescribed indetail in the section "Risk

report".

AconsolidatedfinancialstatementaccordingtoHGBwascreatedfirstvoluntarilyforthefiscal

year2016,thusnocomparativefiguresareavailableforthepreviousyear,becausenogroup

planninghadbeenundertakenfortheyear2016.

1.1 BasicsoftheGroup

1.1.1 Groupstructure

InadditiontotheparentcompanyinDüsseldorf,mVISEAG,JustIntelligenceGmbH,Hamburg

isincludedintheconsolidatedfinancialstatementasof01.10.2016:

Since2014,mVISEAGhassharesinJustIntelligenceGmbH,Hamburg.Thesharewasincreased

from33.4%to50.1%inSeptember2016.Thiswasfurtherincreasedto78%inJanuary2017.

Acontractualarrangementwasalsomadefortheremaining22%.Theeconomicconsolidation

ofthecompanieswasfromQ4/2016.

Just Intelligence GmbH was established in 2011 within the framework of an MBO

(ManagementBuyout)fromoneoftheleadingGermancustomerserviceproviders.Today,

thecompanystandsforintelligentdataanalysisandworkforcemanagementsolutions.With

the multi-award-winning software ICC, Just Intelligence offers one of the most powerful

systemsforplanningandmanagementofcontactcentres.

1.1.2 BusinesstransactionsofmVISEAG

mVISEAG,establishedinDüsseldorf,isaproviderofITservicesandproductsrelatedtomobile

businesssolutionsprimarilyinGermany.Thecompanywasfoundedintheyear2000andhas

decades of experience in the project and consulting environment. Since 2015, mVISE AG

positionsitselfasaclearlyfocusedsubject-matterexpertforITconsultingandITsolutionsand

ispartnerforitscustomersintheareaofmobiledigitisation.Buildingonitsownexpertisein

thefieldofmobiledatatransmission,mVISEAGconcentratesonthecoretopicsofmobility,

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virtualisationandsecurity,andprovidesappropriateadvice,complexindividualsolutions(B2B

apps) aswell asCloud-based standardproducts for theareasofmobile sales support and

workforcemanagement.

Byspecialisinginthethreefieldsofmobility,virtualisation(cloudcomputing)andsecurity,all

questionsrelatingtothemobilisationofbusinessprocessescanbeansweredforthecustomer

fromasinglesource,startingwithanalysisofthecondition,theneedandthepotential,about

thechoiceandimplementationofaproperinfrastructure(forexample,clouddesign)andthe

developmentofaspecificsolution,includingaspectssuchasaccesscontrol,onlineidentity

managementanddataprotection.

1.1.2.1 Consulting

Centralcomponentofcompanystrategyistheconsultingarea,whichwaslaunchedin2015

with the formation of a specialised consultant team.As on 31.12.2016,mVISEAGhad 51

employees in the area of consulting, and now it has offices in Düsseldorf, Frankfurt and

Hamburg.Theaimistobeabletolocallyserveexistingcustomersintheregion.Well-known

companies, such as Vodafone Group, Telekom Commerzbank, Deutsche Bank, Sparkasse

organisationsoreventheMunicipalServicesinDüsseldorfandDuisburgarecustomers.

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In addition to classical, personal orders,mVISE AG also increasingly concludes fixed-price

orders,knownas"managedservices".Thisapproachisestablishedinparticularinthefieldof

cloud-computingsolutions,andwillalsobeextended in thecontextofother innovative IT

infrastructurescenarios.BothmVISEaswellasthecustomerbenefit fromamoreefficient

implementation of the consulting contracts by using personnel synergies. In addition,

managed service contracts significantly enhance the achievement and maintenance of

customerloyaltyandincreasethefeasibilityofplanningsales.Inthereportingperiod,mVISE

AGhasalreadyachievedaboutaquarterofthetotaloperatingoutputbycarefulmanagement

ofsuchcontracts.

Furthermore, new workshop formats could be developed in the cloud and security

environment.Thesestandardisedconsultingproductsenableasimple,focusedresponsefrom

newandexistingcustomersandthusopenupadditionalsalespotentialandlong-termproject

scenarios.Inparticular,theresponseofnewcustomersshowedthattheworkshopformatcan

beusedasadooropenerforsubsequentcontracts,sothatprospectivecustomerswithlow

budgetorunclearimplementationstrategycaninitiallyconvincethemselvesofthequalityof

mVISEservices.Severalnewcustomerprojectscouldalreadybewoninthisway.

1.1.2.2 Products&Solutions

Based on the consulting, which often works as a door opener to the customers, mVISE

developedcustomisedsolutionsthatmobilisebusinessprocessesandproductsofcustomers.

Thereby,itfocusesonissuesinsalesandfieldservice.Untilnowtheintegrationofcustomers,

suppliers and partners was in focus, but this is shifting increasingly towards linking and

communicationofdevicesandproducts.Aparticularlysuccessfulexampleofsuchasolution

isthe"BoschToolboxapp",whichlinkswiththeBoschproductcatalogueandadealersearch

for numerous functions (measurement camera, construction documentation, shop report)

thatareusefulforworkmen.Theapp,whichfulfilsanimportantcustomerloyaltyfunctionfor

Bosch,hasreceivedseveralawards,includingtheGermanDesignAward2015,andhasalready

beendownloadedover3milliontimesfromAppStores.

Intermsofsolutions,mVISEbenefits fromawealthofexperiencefromavarietyofearlier

projects.Sonumerousappshavebeendevelopedinthepastforcustomers,suchasAustrian

Airlines, McDonalds, DEVK Insurance and Kaldewei. In recent years, the current strategy

focuses on complex solutions that map complete business processes and require deep

integration with the customers' core systems. Different from simple marketing apps, a

comprehensiveexpertiseisnecessaryforthis.TheresultisthatmVISEisincreasinglyseenby

industrialcustomersasapartnerandisintegratedatanearlystageinproductdevelopment,

inordertoprovidesolutionsforasafe,reliableandapp-basedSmartphoneconnectionwith

devicesandtools.

Based on the experiencewith the development of numerous customer-specific solutions,

mVISEhasdevelopedacatalogueapp,whichhasbeenplacedinthemarketunderthename

SalesWizardasaspecificsoftwareproduct.Thesoftwareensuresthatallsalesdocuments

andproductinformationareavailableinthelatestversion,andallowsmuchmoreeffective

presentations than would be possible with paper-based catalogues or brochures. In the

reportingperiod,theproducthasbeenfurtherdevelopedandthenewversionisintroduced

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in the market under the name SaleSphere. In contrast to Sales Wizard, SaleSphere is

completely designed as a significantly standardised and scalable cloud product, and also

allowssimpleintegrationwiththecustomers'ITcoresystems(ERP,CRM,PIM).Thisisalsoa

crucialdifferencecomparedtomanycompetingproducts.Inaddition,ahighvaluehasbeen

placedondataprotection.WithSaleSphere,mVISEAGpursuesapuresoftware-as-a-service

model(SaaS).Apartfromasmallinstallationandintegrationfee,onlymonthlyfeesapplyto

thecustomers,dependingonthenumberofconnectedusers.

MVISEispursuingasimilarstrategywiththesecondproductICC,acloud-basedsoftwarefor

planningandcontroloftheuseofemployeesincallcentres.ICChasbeendevelopedbyJust

IntelligenceGmbH inHamburg, inwhichmVISE isamajority shareholder sinceSeptember

2016.

1.1.3 BusinesstransactionsJustIntelligenceGmbH

Just Intelligence GmbH was established in 2011 within the framework of an MBO

(ManagementBuyout)fromoneoftheleadingGermancustomerserviceproviders.Today,

thecompanystandsforintelligentdataanalysisandworkforcemanagementsolutions.With

the multi-award-winning software ICC, Just Intelligence offers one of the most powerful

systemsforplanningandmanagementofcontactcentres.

1.1.4 Controlsystem

ThemanagementoftheparentcompanymanagestheinterestsoftheGroupduringregular

managementmeetingsofthecompanyaswellasthroughinformalcoordinationbetweenthe

SupervisoryBoardandtheExecutiveBoardandwithinthecommittees.Inaddition,topicsare

regularly discussed in frequent management meetings with the participation of

representativesfromallareasoftheGroup.TheExecutiveBoardcontrolstheGroupwiththe

helpofamanagementinformationsystemwithanintegratedperformanceanalysis,including

a detailed current projection of the funds required and their use. The Executive Board

essentiallycontrolstheGroupanditsdevelopmentthroughthefollowingfinancialandnon-

financialperformanceindicators.Inthiscontext,asustainabledevelopmentoftheGroupis

ofgreatvalue.TheaccuratepresentationoftheGroup'searnings,assetsandfinancialposition

islistedunderpoint3.2.4.

1.1.4.1 Financialperformanceindicators

Sales/totaloperatingperformance

ByfocusingofmVISEonscalableproductsandtechnologies,thesalestrendplaysanimportant

roleincorporatemanagement.Thereorganisationthattookplaceandtheexpansionofsales

team takes this into account. The personnel and strategic development and expansion of

differentdistributionchannelsformedthebasisforfuturesalesgrowth.Therefore,theoverall

goalofmVISEAGisinthedifferentiationandbalancingofanoptimalsalesmixofconsulting,

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solutions and products. In the latter two areas, the (further) development of innovative

products and solutions is an important part of the business ofmVISE. The corresponding

developmental activities are regularly initiated in-house, so that the total operating

performancealsoplaysanimportantroleforthecorporatemanagementinadditiontothe

sales.

EBITDAmargin

mVISEattachesgreat importancetothesuccessfulmonetisationof itsproductandservice

portfolios. The aim is to achieve a profitable growth. Against this background, EBITDA

representsan importantrole incorporatemanagement.TheEBITDAmargin isdetermined

fromoperatingprofitbeforedepreciations,interestsandtaxesdividedbysalesrevenues/total

operatingperformance.

Operativecashflow

Theoperativebusinesstransactionsoftheareasandtheresultinginflowoffundsrepresent

themain source of liquidity. Accordingly, the operative cash flow is an important control

parameterformVISE.Basisoftheoperativeplanningisthelonger-termliquidityforecast,for

which short and medium-term forecasts are updated every month. mVISE includes all

consolidatedsubsidiariesinthisplanning.

1.1.4.2 Non-financialperformanceindicators

Orderreceipt

AkeycontrolparameterformVISEistheorderreceipt.Insales,fixedtargetsarespecified,

which are subject to regular controlling, on the basis of which the appropriate sales and

marketingmeasuresarederived.ThevolumeofordersonhandisusedbytheExecutiveBoard

asanindicatoroffuturebusinessdevelopment.

Innovationmanagement

Digitisation is forcing companies to reviewanddevelop theirbusinessmodels in anopen,

flexibleandinnovativemanner.AsproviderofITservicesandmobilebusinesssolutionsinthis

environment,theadvancedtechnologicalandprofessionaldevelopmentofthecompanyand

itsproducts isessential forthebusinesssuccessofmVISEAG.SomVISEcurrentlypursues,

amongotherthings,aseriesofextremelyinnovativeprojectsintheenvironmentofInternet

of things (IoT).Another important stepwas the recentdevelopmentof the SaaS software

"SaleSphere",whichprovidesamobilesalessupportbasedonthelatestcloudandsecurity

technologies,andgettingtheEnterpriseMobilityAwardisaconfirmationoftheinnovative

abilityofmVISEAG.Alreadyin2015,themVISEsolution"BoschToolbox"hasexcelledwith

the German Design Award. In 2016, mVISE could get the second place in the Enterprise

MobilityAward.ThisshowsthatmVISEverywellconnectstechnicalcomplexitywithappealing

design.

Qualifiedemployees

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Core of the business success ofmVISE AG is the high level of expertise of its employees.

QualifiedandmotivatedemployeesarecriticalsuccessfactorsformVISE,inparticularbecause

oftheincreasingcompetitionforITprofessionals.TheExecutiveBoardconsidersensuringa

qualified personnel placement as its essential task. So mVISE AG has invested heavily in

recruitingactivitiesinthepastyear.Amongotherthings,afreelancereventwasconducted

forthefirsttimeinendJunewithaverypositivefeedbackfromparticipantsandcustomers.

Inthecurrentfiscalyear,mVISEhasalreadysucceededagaininattractingnewemployeesin

theareasofsalesanddistributionanddevelopment,andmVISEwillcontinuetoexpandthe

recruitingactivitiesinthefuture.Atargetedtrainingisconducted,inordertobeabletomeet

thepresent-dayrequirementsaswellas the futureones.Thehighqualityofproductsand

solutionsaswellasproficientadvice fromcustomers isanessentialpartof thecompany's

success.Specificmotivationandimprovementprogrammes,togetherwiththepossibilityof

activeparticipationofthecompany,complementtheoverallsystem.

1.1.5 Researchanddevelopment

Theadvancedtechnologicalandprofessionaldevelopmentofthecompanyanditsemployees

isessentialforthebusinesssuccessofmVISEAG.

Thereforein2016,substantialeffortsweretakentofurtherdeveloptheproductSaleSphere,

inordertomakeitmarket-readyin2016.Companiesthatovercomechallengesofdigitisation

throughdigitalprogrammesandmaintain,orevenexpand,theirsalesorganisationsprofitably

in this situation, double their revenueand their productivity on an average. SaleSphere is

orientedtowardsdigitisationofthesalescycle,inordertooptimiseitinasustainablemanner

andtostrengthenthevalue-addedchaininsales.ThesolutionofmVISEprovidesthesupport

neededindiversifiedmarketsfortheintegrationofcomplexandextensiveproductcatalogues

onmanagedsalessituations,ordermanagementandstructuredpreparationandfollowupof

deadlinesuntiltheintegrationinenterpriseplanningsystems.

Further,theshareinJustIntelligenceGmbHwasincreasedto50.1%.WithitsapplicationICC,

JustIntelligencehasafrontrunnerapplicationtocontrolthemanpowerplanningandcontrol

ofcallcentres.

Inthereportingyear, thedevelopmentalefforts focused inparticularonvirtualisationand

provision of cloud-capability to the products, as well as the development of additional

functions.

1.2 Economicreport

1.2.1 Overalleconomicdevelopments

Despitepoliticaluncertaintyandhigherinflation,theworldwideeconomicdevelopmenthas

improved during the reporting period. While the Euro area and Japan are already in a

moderateupswingforsometimenow,theeconomicrecoveryhasgatheredmomentumsince

thesummerof2016evenintheU.S.andthedevelopingcountries.Withsignificantincrease

in rawmaterial prices, the determining factors for the rawmaterial-exporting developing

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countrieshasimproved,andthegovernmenthasadoptedstimulatingmeasuresinChina.The

imageofasignificantupswingintheworldeconomyisalsoconsistentwiththefactthatthe

worldtradestronglyralliedattheendoftheyear,afterithadmoreorlessstagnatedthrough

muchoftheyear.

Even the German economy,which, according to the spring report of the leading German

economicresearchinstitutesimprovedby1.9percentin2016comparedtothepreviousyear,

benefitedfromtheincreasingdynamismoftheworldeconomy.Especiallyinthesecondhalf

of the year the economy developed positively, driven by declining unemployment, low

interestratesandalowexternalvalueoftheEuro.ThustheGermaneconomyisnowinthe

fifthyearofamoderateupswing,although thedynamismof theeconomyremains lowas

comparedtopreviousupswingphases.Thisissupportedbythefactthatthebuoyancyforces

come far more from consumer spending than from investments and foreign trade. In

particular,thecompanyinvestmentscontinuedtoimproveinarestrainedmanner.However,

surveys of companies regarding capacity utilisation suggest that the overall economic

productioncapacitieshavenowslightlyexceededthenormalload.

Accordingtothespringreport,theGermaneconomyshouldhaveagaingainedmomentumin

thefirstquarterof2017.OnanaverageinJanuaryandFebruary,theindustrialproduction

wassignificantlyabovethelevelofthelastquarterof2016,thesituationisassessedtobeno

longerasgoodasforthelastsixyearsaccordingtotheifoeconomictestinMarch,andthe

business expectationshave againbrightenedup.All in all, in their community reports the

leadingGermaneconomicresearchinstitutesassumeafurtherincreaseinthegrossdomestic

productby1.5percent in theyear2017. Thus the institutes raise their assessmentof the

previous autumn slightly. That the forecast is lower than the last year's increase is solely

becausetheavailableworkingdaysarelessbythreeinthecurrentyear.Inparticular,exports

willgainmomentumdueto the improvedglobaleconomicenvironmentandtheexpected

depreciation of Euro. Even the investment activity should contribute more to increased

production.

Intheforecastperiod,theeconomicdevelopmentisexpectedtobeaccompaniedbyastrong

employment dynamics. At the same time, the domestic price rise should intensify. Risks

emanatemainlyfromtheuncertainUSeconomicpolicy.Ifthisshouldleadtoanisolationist

policy,thenthiswouldseverelydisrupttheglobaleconomicdevelopmentintheshortterm.

ThiswouldparticularlyaffectGermany.Disadvantageously,ariseininterestratesassociated

withtheexpectednormalisationofthemonetarypolicycouldalsohaveanaffect.Thiswould

pose significant problems, particularly to indebted nations of the Euro area, with

correspondingreactionontheGermaneconomy.Also,thecontinuingstructuralchangesin

Chinacouldalsofurtherleadtodownturnoftheworldeconomy.

1.2.2 Marketandmarketenvironment

The industrial development in the IT sector is analysed and evaluated by the Federal

AssociationforInformationTechnology,Telecommunicationsandnewmediae.v.(Bitcom).In

its autumn press conference in October 2016, the Digital Association expected a market

growthofinformationtechnologyby3.6percentto84billioneuros.AccordingtoBitkom,the

main growth drivers are the businesses of software providers, for whom the Association

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forecastsanincreaseof6.2percentto21.6billioneuros.IThardwareisexpectedtogrowby

2.8percent to24.3billioneurosand thesalesof IT serviceshavesupposedly recordedan

increaseof2.7percentto38.2billioneurosin2016.

Themedium-sizedITfirmsremaincrucialforgrowth.AccordingtotherecentreportofBitcom

onmedium-sized IT firms, themedium-sized IT firmswere able to increase their sales in

Germanyby8percentto62billioneuroswithinayear.Thustheassessmentissignificantly

morepositivethanforthelargefirmswith500ormoreemployees,whichrecordedminus

twopercent.Accordingtothereport,themedium-sizedfirmsaccountfor33percentofsales

and54percentofemployeeswhoaresubjecttosocialinsurancecontributionregulationin

thedigitaleconomy.Alsoforthewholeyear2017,theconfidenceintheITindustryishigh,as

shownbythecurrentBitcomeconomicsurvey.Soeightoutoftenfirmsinthefieldofsoftware

(85percent)andITservices(83percent)countongrowingsales,whileonly5and9percent,

respectively,assumeadecline.ManufacturersofIThardwareexpectasalesincreaseoftwo-

thirds(65percent),whileeverysixthfirm(17percent)anticipatesadecrease.

Inparticular,thedigitisationoftheeconomyoffersgreatopportunitiesandprovidesmany

excitingtransformationprojectsinthemedium-sizedITfirms,whichcanexhibitherenotonly

its suitable expertise, but also its closeness to customer and marketability. The biggest

challenges lie in the integration of mobility in the company processes, as well as the

productionofITsecuritywhileapplyingmobility.Accordingly,thebudgetsprovidedforthe

integration of mobility in the company processes also increase. This emerges from the

EnterpriseMobilityStudy2015,whichalsomentions Industrie4.0,virtualisationandcloud

computingas themost important technology trends in thenext fiveyears.According toa

studybyCrispResearch,thecloudmarketalonewillincreasetoavolumeof13.4billioneuros

by2018.Theappsformobiledevicesareutilisedespeciallyintheareasofcollaborationand

customercommunication,andarethereforeusedinparticularbythedepartmentsofsales,

customerserviceandserviceprovision.SoaccordingtoastudybyBurdaCreativeonsales

communication of the future, two-thirds of the respondents foresee a large to very large

demandforthedigitisationofsalescommunication.Here,abetterorientationtotheneeds

ofthetargetgroupandagreaterconsolidationofthefloodof informationaredemanded.

Becauseeveninareas,wherethepenetrationofmobiledevicesishigh,onlyafewusersfully

exploittheexistingopportunities.

Overall, a slight growth in the digital investment could be observed in 2016 in Germany.

Therefore,thedigitaltransformationisstillalongwayinarrivinginanycompany.According

toBitcom'sCEOBernhardRohleder,approximatelyonlyhalfofthecompanieshaveadopted

acleardigitalstrategy.Also, inparticular,mostofthemedium-sizedcompaniestrytodeal

withdigitisationontheirown.Only18percentofcompanieswith20to499employeeshave

alreadytakenconsultingservicesforthedigitaltransformationoftheirownbusiness,while

just6percentareplanningthatforthefuture.Thisistheresultofarepresentativecompany

surveyonbehalfoftheDigitalAssociationBitcom.Inthecaseoflargercompanieswith500or

moreemployees,onlyabouthalfofthecompanies(49%)involveexternalconsultantsand22

percentofthosesurveyedhaveconcreteplanstodoso.Altogether,consequentlythereisstill

agreatneedformVISEAGtocatchupwithcorrespondingmarketopportunitiesintermsof

digitisation.

Thispleasantdevelopmentneverthelesshasadarkside,i.e.,thecontinuingshortageofwell-

qualified employees. Two-thirds of the companies belonging to the Bitcom industry (65

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percent) expect their development to be hindered by the situation involving qualified

manpower.AccordingtoaBitcomstudy,currentlymorethan50,000ITjobscannotbefilled.

Otheradverseinfluencingfactorstobeconsideredarecrucialpoliticalsituations(33percent)

andthefundingconditions(11percent).

1.2.3 Significanteventsduringthereportingperiod

Successfullaunchoftheproduct"SaleSphere"

SaleSpherewas first introduced to awider public in June 2016 in the SalesManagement

CongressinBerlinandpresentedtoshareholdersintheannualgeneralmeetinginJune.The

multimediaproductcatalogueisafurtherdevelopmentoftheexistingsolutionSalesWizard.

Itservesasdigitaltoolboxforsales,inordertospeeduptowardstheendandtosupporta

sustainablepositivecustomerloyalty.ThusSaleSphereisanexpressionofthestrategicfurther

developmentofmVISEAGtothesolutionpartnerformobiledigitisation.Thiswasconfirmed

in October 2016 by SaleSphere getting the Enterprise Mobility Award. The mobile sales

applicationwonthesecondplaceinthecategory"BusinessProcessMobilisation".

MajorityshareholdinginJustIntelligenceGmbH

InSeptember2016,mVISEAGincreaseditsshareholdinginJustIntelligenceGmbH,Hamburg

fromtheearlier33.4%to50.1%.Theincreasewasmadethroughcashamountingto180,000

EUR from the authorised capital ofmVISE AG. The shareholdingwas further increased in

January2017to78%byissuing210,000sharesinthecontextofanincreaseinfixedassets

from approved capital of mVISE AG. A contractual arrangement was also made for the

remaining22%.Thecashcomponentwasprovidedfromitsownliquidassets,whichshows

theincreasedfinancialstrengthofmVISE.Theconsolidationofthecompanieswasdonefrom

Q4/2016.

Just Intelligence GmbH was established in 2011 within the framework of an MBO

(ManagementBuyout)fromoneoftheleadingGermancustomerserviceproviders.Today,

thecompanystandsforintelligentdataanalysisandworkforcemanagementsolutions.Just

Intelligence'sclienteleincludesleadingmediahouses,tourismcompanies,customerservice

andeCommerceserviceproviders.Thesecustomerscanbeaddressedinthefutureevenwith

mVISE products and services.More synergy effects result from the joint development of

cloud-based SaaS models. Thus, for example, in the reporting period, a corresponding

extensionofthemultipleaward-winningsoftwareICCwasmadeforplanningandcontrolling

ofcontactcentres.Here,inthefuturesynergiescanbefurtherenhancedthroughtheexisting

marketing and sales capacities of mVISE. Also about eight software developers of Just

Intelligencewillbeutilisedinthefuturetooptimisetheresourcesevenincasesofprojects

andproductdevelopmentofmVISE.

Capitalincrease

To finance furtherorganicgrowthand to strengthen theequitybase, theExecutiveBoard

decidedon11March2016,withtheconsentoftheSupervisoryBoard,toincreasetheshare

capitalofthecompanybyissuingnewshares.Withintheframeworkofprivateplacement,

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250,000 shares from the authorised capital, excluding subscription rights of shareholders,

wereissuedtoaninstitutionalinvestor.Theshareswereallocatedatanissuepriceof1.52

EURpershare.Aftertheregistrationofthecapital increaseinthetraderegister,theshare

capitalofthecompanyincreasedfromEUR7,914,052.00toEUR8,164,052.00.

1.2.4 Earnings,assetsandfinancialposition

3.2.4.1 Overallpresentation

Sincetheconsolidatedfinancialstatementwaspreparedforthefirsttimevoluntarilyupto

31.12.2016,therearenocomparativefiguresforthepreviousyear.Theindicatedprevious

yearfiguresrelatetotheindividualfinancialstatementsofmVISEAGforfiscalyear2015.

Inthepastyear2016,themVISEgroupcouldincreaseitssalesrevenuetoEUR7.9millionand

achieveatotaloperatingperformanceofaroundEUR9.0million.Inthiscase,salesgrowthis

primarilyduetothe furtherexpansionof theconsultingarea.Thepositivedevelopment is

reflectedintheamountofearning.Allearninglevelsareclearlyinthepositiverange.EBITDA

wasEUR1.2million,andtheEBITDAmarginwas14.8%.ThebottomlineisaGroup'snetprofit

ofEUR0.6million

EventheimprovedoperativecashflowtotheextentofEUR1.1millionshouldbecertainly

highlighted.Inall,despiteinvestmentstotheextentofEUR1.77million,apositivetotalcash

flowwas achieved.With an equity ratio of EUR 48% and free of long-term liabilities, the

balance sheet structure ofmVISE AG is still robust and offers sufficient scope for further

organicandinorganicgrowth.

1.2.4.2 Resultsofoperations

Orderhistory

Thereorganisationandexpansionofsalesteamisalreadyshowing initialsuccess.Thefirst

salescampaignforSaleSpherewassetupin2016,whichshowsthatthereisagreatneedfor

mobilesalesapplicationswithsimpleintegrationintocoresystemsofcompanies.Anagency

wasalsocommissionedtosupportsales.Theambitioustargetforthefiscalyear2016toreach

anorderreceiptofEUR6.0million in theareaofconsultinghadclearlyexceededEUR7.4

million as on 31.12.2016,with the result thatmVISE AG has started the new yearwith a

comfortableordersituation.

Salestrend

In theyear2016, theGroupsalesamounted toEUR7.89million (2015:EUR4.94million),

wheresalesamountingtoEUR6millionintheareaofconsulting(2015:EUR4million)and

salesamountingtoEUR3.1million(2015:EUR1.6million)intheareaofproducts&solutions

could be achieved. Consideration of the change involving stocks amounting to EUR -0.16

million, and consideration of the areas of sales/management/consolidation aswell as the

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own-work capitalisedamounting to EUR1.26million, showa total operatingperformance

amountingtoEUR9.00million(2015:EUR5.86million)fortheyear2016couldbeachieved.

Trendofexpenses

Inthepastfiscalyear,thepurchasedexternalservicesamountingtoEUR1.89million(2015:

EUR1.02million)couldbeachieved.ThepersonnelcostsamountedtoEUR4.69million(2015:

EUR4.17million),withashareofpersonnelcostsamountingto57.9%(2015:84.3%).Other

operating expenses totalled EUR 1.45million (2015: EUR 1.56million), primarily including

expenditureintermsofoccupancycosts,vehiclecosts,advertisingandcapitalmarketcosts,

aswellasthefeesforauditingandlegaladvice.Inthefiscalyear2016,thedepreciationsof

tangibleandintangibleassetsamountingtoEUR0.70million(2015:EUR0.43million)could

beachieved.

Researchanddevelopment

Duringthereportingperiod,theresearchanddevelopmentexpensesamountingtoEUR0.1

million(2015:EUR0.0million)couldbeachieved.Thedevelopmentalactivitiesmainlyfocused

on innovative activities within the framework of a sponsored prototyping for automated

driving.

Trendofearnings

Ultimately,theshareofservicesprovidedwithownemployees,togetherwiththeiraverage

utilisation, could be significantly increased.Material usage sharewith respect to the total

operatingperformancewasthussignificantlyreducedwithcorrespondinglypositiveeffecton

theEBITDAmargin.

Inthereportingperiod,EBITDA(earningsbeforeinterest,taxesanddepreciations)amounting

toEUR1.2million(2015:EUR-0.76million)couldbeachieved.Asaresult,theEBITDAmargin

amounted to 14.8%. In the fiscal year 2016, the EBIT (earnings before interest and taxes)

amountedtoEUR0.47million(2015:EUR-1.19million),withanEBITmarginamountingto

5.9%.

Duringthereportingperiod,thefinancialresultwasEUR-0.05million(2015:EUR-0.19million)

andtheGroupresultbeforetaxwasEUR0.64million(2015:EUR-1.37million).Consideringa

taxexpenditureofEUR0.01million,thereisasignificantlypositivenetprofitfortheGroup

amountingtoEUR0.63million(2015:EUR-0.40million).

1.2.4.3 Netassetsituation

Short-termassets

On31December2016,theshort-termassetsamountedtoEUR1.72million,wherethestocks

(unfinishedservices)amountedtoEUR0.11million(31December2015:EUR0.27million),the

receivablesfromgoodsandservicesamountedtoEUR1.15million(31December2015:EUR

0.73million),othershort-termassetsamountedtoEUR0.18million(31December2015:EUR

0.15million)andthestockofcurrencyandcurrencyequivalentsamountedtoEUR0.27million

(31December2015:EUR0.07million).

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Long-termassets

Long-termassets on thebalance sheet date amounted to EUR3.06million (31December

2015:EUR1.52million),ofwhichEUR0.08millionaccountedfortangiblefixedassets(2015:

EUR0.05million),EUR2.97millionaccountedforintangibleassets(2015:EUR1.00million)

andEUR0.01accountedforfinancialinvestments(2015:EUR0.46million).

Short-termborrowedcapital

On31December2016,theshort-termborrowedcapitalamountingtoEUR3.51million(31

December 2015: EUR 1.30 million) could be achieved.While the payables for goods and

services amounted to EUR 0.66 million (31 December 2015: EUR 0.60 million), the total

payablestocreditinstitutionsamountedtoEUR0.43million(31December2015:EUR0.00

million),thedownpaymentsreceivedamountedtoEUR0.02million(31December2015:EUR

0.16million)andotherpayablesamountedtoEUR1.01million(31December2015:EUR0.54

million).TheprovisionsonthebalancesheetdateamountedtoEUR1.4million(31December

2015:EUR0.62million).

Equitycapital

On31December2016,theequitycapitalofthemVISEGroupamountedtoEUR3.26million

(31December2015:EUR2.27million).WhilethesharecapitalamountedtoEUR8.16million

(31December2015:EUR7.91million),thecapitalreserveamountedtoEUR13.78million,the

carriedforwardlossamountedtoEUR-19.3million(31December2015:EUR-18.90million)

andtheannualnetprofit(afterminorityinterests)amountedtoEUR426million(31December

2015:EUR-0.40million).

1.2.4.4 Financialposition,fundsflowstatementandliquidity

Fundsflowstatementandliquidity

Inthepastfiscalyear,thenetcashflowfromoperatingactivitiesamountedtoEUR1.14million

(2015:EUR0.33million).Theoperativecashflowincludes,amongothers,theoperatingprofit,

aswellasthechangesinoperatingshort-termworkingcapitalandthusprovidesinformation

on theprofitabilityof thebusinessoperations. Improvementcanbeseenespecially in the

positiveannualnetprofitanditshowsamarkedpositivedevelopmentandtheprofitabilityof

mVISEfrombusinessoperations.

ThenetcashoutflowfrominvestmentactivitiesamountedtoEUR1.77millioninthereporting

period(2015:EUR1.06million).Thecashflowfrominvestingactivitiesincludesallcashflows

frominvestmentsanddisinvestments.Suchinvestmentsintangiblefixedassetsamountedto

EUR0.05million(2015:EUR0.03Mio.),theinvestmentsinintangibleassetsamountedtoEUR

1.27million(2015:EUR0.73million).Further,investmentwasdonebywaysofincreasingthe

shareholdinginJustIntelligence.

ThenetcashflowfromfinancingactivitiesamountedtoEUR0.82million inthefiscalyear

2016(2015:EUR2.12million).Thepositivebalanceresultedinreceiptsfromraisingloans,as

wellasfromthecapitalincreaseundertaken.

13

Thus,therewasapositivetotalcashflowofEUR0.18millionforthefiscalyear2016(2015:

EUR0.0million).Currencyandcurrencyequivalentson31December2016amountedtoEUR

0.27million(31December2015:EUR0.07million).

Investments

Inthepastfiscalyear,investmentsmadeweretothetuneofEUR1.77million(2015:EUR1.06

million).OfthatEUR0.05million(2015:EUR0.03million)wasintheformoftangiblefixed

assetsandEUR1,2.7million(2015:EUR0.73Mio.)wasintheformofintangibleassets.For

themostpart,investedfundswereusedforfurtherdevelopmentoftheproductsSaleSphere

andICC,aswellasfortheacquisitionofsharesinJustIntelligence.

Forthefiscalyear2017,furtherinvestmentstothetuneofaroundEUR1.5millionin

tangiblefixedassetsandintangibleassetshavebeenplanned.Intheseinvestments,the

majoritemsrelatetofurtherdevelopmentoftheproductsofSaleSphereandICC,aswellas

investmentinacquisitions.

Employee(s)

Qualifiedandmotivatedemployeesareanessential asset formVISE.During the reporting

period, the number of employees increased from 64 on 31 December 2015 to 81 on 31

December2016.Thissignificantincreasehasseveralreasons:Oneofthereasonsisthatmany

newpersonswere recruited in thegrowing consultingbusiness andanother reason is the

majority shareholding of Just Intelligence GmbH. On an average, 70 employees had been

employedintheGroupinthefiscalyear2016(2015:60).

Ordersituation

ThetotalvalueofordersofmVISEAGattheendofthefiscalyear2016wasEUR3.4million,

whichwaswellabovethepreviousyear'slevel(31December2015:EUR1.4million).Ofwhich

85%(2015:92%)wasintheareaofconsulting,whiletheremaining15%wasintheareaof

products&solutions(2015:8%).Inall,theExecutiveBoardforeseesagrowingordervolume

inboththeareasinthecurrentfiscalyear.

Financialmanagement

mVISEAG'sfinancialmanagementiscommittedtothecoreobjectiveofhavingatalltimes

sufficient liquidity reserves,minimizing financial risks and safeguarding financial flexibility.

Basis for safeguarding liquidity is an integrated financial and liquidity planning. Basically,

mVISE AG involves all consolidated subsidiaries in this planning. Basis of the operative

planningisthelonger-termliquidityforecast,inwhichshort-termandmedium-termforecasts

are updatedmonthly. The operative business transactions of the areas and the resulting

inflowoffundsrepresentthemainsourceofliquidity.Tosafeguardliquidity,themVISEGroup

additionally uses various internal and external financial instruments. So, in the fiscal year

2016,amongotherthings,operatingfundcreditagreementamountingtoEUR500,000was

concludedwiththeDeutscheBank.Alsothecashcapitalwassuccessfullyincreased,inorder

tofinancefurtherorganicgrowthandtostrengthentheequitybase.Withtheavailablecapital

structureandthefinancingmeasurestaken,mVISEAGhascreatedtheessentialatmosphere

forthefuturefinancingaccordingtotheExecutiveBoard.

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1.2.5 RemunerationSystemsoftheManagement

3.2.5.1 RemunerationoftheExecutiveBoard

On31.12.2016,theExecutiveBoardofmVISEhadthefollowingmembers:

ManfredGötz,Dipl.inComputerScience,Ratingen,BoardMember

RainerBastian,Dipl.inPedagogy,Düsseldorf,BoardMember

Please refer to the specific details given in Annex for the individual remuneration of the

ExecutiveBoardmembers.

1.2.5.2 RemunerationoftheSupervisoryBoard

On31.12.2016,theSupervisoryBoardhadthefollowingpersons:

AchimPlate,Dipl.ing.,Glückstadt,ChairmanoftheSupervisoryBoard,ManagingDirectorof

SPSWCapitalGmbH,Hamburg

FranziskaOelte,Lawyer,Hamburg,DeputyChairmanoftheSupervisoryBoard,Chairmanof

theSupervisoryBoardofhello.deAG,Berlin

Malte-MatthiasvonderRopp,Dipl.inBusiness,Cologne,MemberoftheSupervisoryBoard,

MemberoftheAdvisoryCommitteeofclickworkerGmbH,Essen

HenningSoltau,Hamburg,ManagingDirectorofSPSWCapitalGmbH,alternatememberof

theSupervisoryBoard(since27.08.2015)

Mr. Plate and Mr. Soltau are not members of other statutory supervisory boards or

comparabledomesticandforeigncontrollingbodiesofbusinessenterprises.

The total remuneration of the Supervisory Board in the reporting year, excluding the

reimbursementofexpenses,amountedtoEURO25,000(previousyearEUR20,400).Please

refertothespecificdetailsgiveninAnnexfortheindividualremunerationoftheSupervisory

Boardmembersduringthereportingperiod.

1.2.6 Otherinformation

Compositionofsubscribedcapital

ThesharecapitalofmVISEAGamountstoEUR8,374,052.00andisdividedinto8,374,052,000

no-parvalueshares,whicharebearersharesandhaveaproportionalamountofEUR1.00per

shareofthesharecapital.Allshareshavethesamevotingrightsanddividendrights.Shares

heldbythecompany,fromwhichthecompanyderivesnorights,areexcluded.Therightsand

obligationsof theshareholdersarise inparticular fromtheprovisionsof theLawonShare

Companies,andinparticularfrom§§12,53aff.,118ff.and186AktG.

Restrictionsconcerningvotingrightsortransferofshares

15

Restrictionsonvotingrightsofsharesmayarisefromlegalprovisions(§§71b,136AktG).

However,fortheExecutiveBoardtherearenorestrictionsonexercisingofthevotingrights

ortransferofshares.

Shareswithspecialrights,whichconfercontrollingpowers

mVISEAGdoesnothaveshareswithspecialrights,whichconfercontrollingpowers.

Typeofvotingrightcontrol,ifemployeeshaveequitiesanddonotdirectlyexercisetheircontrol

mVISE AG has not issued any share, from which the control rights cannot be exercised

immediately.

StatutoryregulationsandprovisionsoftheStatutesontheappointmentanddismissalofExecutive

Boardmembersandtheamendmentofstatutes

TheappointmentanddismissaloftheExecutiveBoardmembersaregovernedby§§84and

85AktGaswellas§5oftheStatutes.Accordingtothelegalprovisions(§179paragraph1

AktG),anyamendmenttotheStatutesrequiresaresolutionofthegeneralmeeting.Forthe

resolutionsofthegeneralmeeting,asimplemajorityissufficient,aslongastheLawonShare

Companies does not impose as a requirement larger majority for amending individual

statutes.Inaccordancewith§10paragraph2oftheStatuteofthecompany,theSupervisory

BoardisauthorisedtoamendonlythoseStatutes,whichpertaintoitsjurisdiction.

PowersoftheExecutiveBoardtoissueorbuybackshares

According to§4,paragraph8of theStatutes, theExecutiveBoard isauthorised,with the

consentoftheSupervisoryBoard,toincreasethesharecapitalofthecompanybyuptoEUR

3,872,026,00.00till8June2021throughone-timeormultipleissueofnewsharesagainstcash

orcontributioninkind(ApprovedCapital2016).

Pursuantto§4paragraph9oftheStatutes,thesharecapitalhasbeenconditionallyincreased

byuptoEUR2,000,000.00byissuingupto2,000,000newbearershares(conditionalcapital

2016). The conditional capital is increased, only inasmuch as the holders of optional or

conversionrightsorthoseentitledforconversionoroptionalexercisebasedonwarrantsor

convertiblebonds,whichareissuedorguaranteedbythecompanyorasubsidiarygroupof

thecompanyduetotheempowermenttill8June2021adoptedbythegeneralmeetingon9

June2016undertheagendaitem8,makeuseoftheiroptionalorconversionrightsor,asfar

astheyarecommittedtotheconversionorexercisingoftheoption,fulfiltheircommitment

totheconversionorexercisingoftheoptionorifthecompanyexercisesarighttovote,grant

ordinarysharestothecompanywhollyorinpartinsteadofthepaymentofasumofmoney.

According to § 4 paragraph 11 of the Statutes, the share capital has been conditionally

increasedbyuptoEUR283,387.00(ConditionalCapitalV).TheConditionalCapitalVisused

forthefulfilmentofsubscriptionrights,whichareissuedtomembersoftheManagementand

employeesof thecompany inaccordancewith theresolutionof thegeneralmeetingon9

August2010,aswellastheamendmentdecisionsofgeneralmeetingson29August2011and

29January2015.Theconditionalcapitalisincreasedonlyinsofarastheholdersoftheissued

subscriptionrightsexercisetheirsubscriptionright.

According to § 4 paragraph 12 of the Statutes, the share capital has been conditionally

increasedbyuptoEUR500,000.00(ConditionalCapitalVII).TheConditionalcapitalVIIisused

forthefulfilmentofsubscriptionrights,whichareissuedtomembersoftheExecutiveBoard

16

and employees of the company, as well as members of management and employees of

affiliatedcompanieswithinthemeaningof§§15,17AktGinaccordancewiththeresolutions

ofthegeneralmeetingson28June2012,27August2015and9June2016.Theconditional

capitalisincreasedonlyinsofarastheholdersoftheissuedsubscriptionrightsexercisetheir

subscriptionright.

Essentialagreementsofthecompany,whicharesubjecttotheconditionofachangeofcontrol

followingatakeoverbid

Therearenosuchagreements.

Compensationagreementsofthecompany,whichhavebeenconcludedwithmembersofthe

ExecutiveBoardoremployeesinconnectionwithatakeoverbid.

TherearenocompensationagreementswiththemembersoftheExecutiveBoardorwiththe

workersinconnectionwithatakeoverbid.

1.3 RiskandOpportunityReport

1.3.1 Riskmanagement

Risks refer to the general possibility that internal or external events occur that have an

unfavourableeffectonthenetassets,financialpositionandresultsofoperationsofmVISEAG

anditssubsidiaries,respectively,ortheoccurrenceofwhichjeopardisestheachievementof

settargetfigures.ThebusinessoperationsofmVISEAGareexposedtoamultitudeofrisks

whichareinextricablyassociatedwithcorporatepolicy.Thechancesandrisksresultingfrom

business activity are constantly defined and evaluated by the board of directors. The

monitoring,analysisandevaluationaswellascontrolofrisksareessentialelementsofthe

managementandleadershipinstruments,asabsolutelyrequiredbyart.91,section2ofthe

CompaniesAct.Therisksarenotquantified.Categoricallyrulingoutorfundamentallyavoiding

specialrisksisnotintended.Risksareminimisedortransferredtothirdpartiesifpossibleand

ifitmakessensefromabusinesspointofview.

mVISE AG has introduced risk management and control systems in order to recognise

developmentsinadvancethatcouldjeopardisethecontinuedexistenceofthecompany.The

reviewofrelevantbusinessriskswiththeireconomiceffectsisperiodicallyevaluatedbythe

management.Thedetectedrisksaredividedintoriskcategoriesandtakenintoconsideration

in the strategic corporateplanning.Essentialbusinessdecisionsaremadeby theboardof

directorsincoordinationwiththesupervisoryboard.Theefficiencyoftheriskmanagement

systemismonitoredandevaluatedregularly.Ifopportunitiesforimprovementaredetected,

thesewillbepresentedtotheboardofdirectorsandimplementedwithoutdelay.

Inrelationtothefinancialreportingprocess,theinternalcontrolandriskmanagementsystem

hasbeenfullyintegratedinthequalityassuranceprocessofthegroup.

1.3.2 Risks

ThemajorrisksthatarerelevantformVISEaredescribedhereinafter:

17

Economyandworldpolicies

ThebusinessactivityofmVISEissubjecttoeconomicinfluences.Majoreconomicrisksliein

the follow-up to a further intensification of the refugee crisis in Europe and a political

destabilisation of the EU thatmay be associatedwith that, the expansion of warlike and

terrorist actions in and near Europe as well as stagnating economic growth in China. In

additiontotheanticipatedeconomicfluctuations,eventsintheseareasofriskhaveagainand

again negatively influenced the investment confidence of companies and investors in the

DACHregioninthepast10years.

Marketandcompetition

TheincreasingglobalcompetitionontheIT-servicesmarketaswellasinthesectorsofour

customersgeneratesconstantpressureatthepricelevel.Fallingpricescanaffectouryield.

Delayedreceiptsofpaymentaswellasinsolvenciesofcustomercanresultinpaymentdefaults

anddirectlyinfluenceouryieldandourcashflow.

Innovationmanagement

ThefurtherdevelopmentandestablishmentonthemarketfortheCloudproductsSaleSphere

andICCrequireconsiderablefinancialinvestment.Theprofitcontributionthatisanticipated

tocomefromtheseinvestmentsfortheyear2017andfollowingyearsdependslargelyonthe

marketmaturityof the cloud-specific billingmodels (Pay-per-use) for thenotifiedproduct

targetgroups.

Personnelrisk

Qualified and motivated employees are critical for the success of mVISE. The company

competes for highly qualified specialists directly with other companies. It becomesmore

difficult to recruit employeesdue to the increasing competition for qualified experts. This

couldlimitthegrowthopportunities.

Projectrisk

mVISEAGassumesoverall project responsibility for its customers. Erroneousprice and/or

time estimates of fixed price projects can affect the profit. Poor quality can give rise to

warrantyobligations.Theprojectcontrollingismonitoredanddevelopedconstantlyinorder

tominimisetherisks.

Dependenceofcollaborationsandimportantpartners

Forthepurposeofwinninghigh-margindevelopmentprojects,itiscriticalforsuccesstobe

able tooffer and implement short-termprocessing ina competentmanner. TheSolutions

departmentrevealedtheneedforcoveringtheshort-termpeaksindemandbycompetent

andreliablepartners.Iftheprovisionofsuchresourcesresultsinseveredelaysorifthequality

ofthedeliveredproductisinsufficient,thismayhavedetrimentaleffectsonthenetassets,

financial position and results of operations. Inorder tominimise this risk, the company is

workingtogetherwithseveral trustedpartnersandmanages theseriskscloselyduringthe

projects.

18

Financialrisks

Takingintoaccounttheliquidassetsthatareavailableattheendoftheyear,therearerisks

thattheanticipatedoperativecashflowinthefiscalyear2017willnotreachtheextentor

doesnotdevelopattheanticipatedpointintime.Thefurtherimprovementofthefinancial

resourceswillmakeadditionalexternalfinancingcomponentsessentialinordertoimplement

thenecessarymeasurestotheplannedextentandwithintheplannedtimeframe.Forthis

purpose,aconceptwascreatedbasedonequitycapitalandborrowedcapitalmeasuresthat

istobeimplementedinfiscalyear2017.

1.3.3 Opportunitiesmanagement

The markets that are relevant for mVISE are subject to constant change which could

continuallyresultinnewopportunities.AsignificantfactorforthesuccessofmVISEAGisthe

promptidentificationaswellascorrectassessmentandexploitationoftheseopportunities.

Thismayrefertobothinternalandexternalpotentials.Anopportunitiesmanagementsystem

isnotinplaceatmVISE,i.e.thepotentialforopportunitiesisnotquantified.Theanalysisof

theopportunitiesfallswithinthescopeofresponsibilityoftheboardofdirectors.Theanalysis

of opportunities produces the strategic orientation of the business and the operative

measures to be derived from it. The opportunities that present themselves are always

associatedwithrisks.Itisthetaskofriskmanagementtoevaluateandreducetheserisks,if

possible.Inprinciple,mVISEstrivesforanadequatebalancebetweenopportunitiesandrisks.

1.3.4 Opportunities

The main opportunities of mVISE AG are described hereinafter. However, this list only

represents an extract of the available opportunities. Moreover, the assessment of the

opportunitiesiscontinuallysubjecttochanges,astherelevantmarketsandthetechnological

environmentareconstantlydevelopingfurther.Atthesametime,newopportunitiescanalso

arisefromthesedevelopments.

Increasingdigitalisation

Opportunitiesarisefromthedevelopmentoffurtherimplementationofmobiledigitalisation

inenterprisesunderIndustrie4.0andthenetworkingofmachinesanddevices(M2M&IoT).

Thecontinuousincreaseindigitalcommunication,forexampleviadigitalmedia,platformsor

networked devices, is leading to an increasing pressure to digitalise. Due to the dynamic

technologicaldevelopmentintheITsector,newapplicationsandneedsareconstantlyarising.

Digitalisation presents great social opportunities and opens up enormous potentials for

furthervalueaddition.Thisrequiresenterprises,primarily,toquestiontheirbusinessmodels

openly, flexibly and innovatively and to develop newones. The technology leaders in the

industrial sectorsareengaged in large-scale researchanddevelopmentprojects to further

develop intelligent control systems usingmobile technologies andmore secure andmore

flexibleinfrastructures.

19

EnterpriseMobilityconceptsandprogramsareakeycomponentofthefuturestrategyandIT

budgetinmanyenterprisesofallsizes.Combinedwithflexiblecloudtechnologiesandrobust

securityconcepts,EnterpriseMobilityisalsoactuallybecomingseriouslyimplementablefor

manycompanies.Therapidlygrowingtechnologicalcapabilitiesofdevicesandtheprojected

increaseinthevolumeofdatatransferredalsodemandfromenterprisescontinuedexpansion

andflexibilityofcapacities inenterprise IT.Virtualisationandespeciallycloudtechnologies

arecurrentlyregardedasakeystrategyforsolutions,butarestillataninitialstageinmany

companies.With its prioritymix,mVISE currently has auniqueofferingon theGerman IT

servicemarketforovercomingthischallenge;andwithitsvastandlong-yearsofexperience

incloudprojects,mVISEoffersthenecessarysupportforconfidentdecision-makingforthe

right cloud strategyand its consistent implementation. Thus,mVISEwasable toacquirea

seriesofinnovativeprojectsintheInternetofThings(IoT)environment.Thiscouldpositively

influencethenetassets,financialpositionandresultsofoperationsofthemVISEGroupinthe

future.

IncreasingsensitisationaboutITsecurity

Inaddition toprotectionofperson-relateddata,progressivedigitalisation requires further

measures in the area of IT security. With the arrival of mobile technologies in business

processes and product lines, the activity around security attacks and the production and

applicationofmalicioussoftwareisalsogrowingworldwide.Thedemandofenterprisesfor

reliable, up-to-date IT protection will have to continue to adapt to this threat potential

constantly,ifcompaniesdonotwanttofaceexistentialrisks.Evenonthepoliticalfront,data

securityandsovereigntyhavebeenanongoing issue,not just since theemergenceof the

hackerpracticesofintelligenceservices.Withthecurrent,explosiveglobalpoliticalsituation,

sabotage defence for IT systems is becoming an increasingly urgent area of intervention,

especiallyincompaniesoperatinginglobalisedanddiversifiedmarkets.

Last but not least, for the end customers of the enterprises, the comprehensible security

strategyoftheenterprisesisanimportantbasisfortheendcustomers'trustinusingmobile

technologies.Asamobilitypioneerandsecurityspecialist,mVISEistheidealpartnertobuild

this trust through well-thought-out concepts. Thus, mVISE has implemented intelligent

encryption mechanisms already in the first version of SaleSphere, which impressively

demonstrates thepossibilitiesofdefenceagainst interceptionmethodsofAsiancharacter.

TheincreasinginterestinITsecurity,alsodrivenbymediaattention,andthegrowingdemand,

as a consequence, also brings along increasing competition. This is to be taken into

considerationintheassessmentofopportunities.

Increasingregulation

Thenetassets,financialpositionandresultsofoperationsaswellasbusinesstransactionsof

thecompanyareinfluencedbythechangesintheeconomicandotherpoliciesinGermany,

andintheEuropeanUnion.Similarly,theotherpoliticalor legalchanges,especiallydueto

changesinlaws,canaffectthenetassets,financialpositionandresultsofoperationsofthe

mVISEGroup. The regulatory authorities, for instance in the banking sector, havedefined

features, which amodern IT infrastructuremust have from a regulatory perspective. For

instances,banksshouldbeinapositiontocarryoutadhocstresstestsaswellasgenerateup-

to-date,completeanddetailedbalancesheetdataanddatarelatedtothebusinesspartners

20

fortheentirebank.Tobeabletodothis,theITinfrastructuremustbeinapositiontomeet

therequirementsforriskreporting.Thisisnotthecaseeverywhere,whichiswhybankshave

tosignificantlyincreasetheirITbudget, inordertobeabletomeetthecurrentandfuture

requirements. mVISE was able to acquire a series of renowned new customers from the

bankingandsavingsbanksector.Eveninotherareas,morestringentrequirementsarebeing

imposedonITinfrastructure.Thecontinuationofthisdevelopmentcouldpositivelyinfluence

thenetassets,financialpositionandresultsofoperationsofthemVISEGroup.

Increasingestablishmentofownproductsandsolutions

TheoverarchingobjectiveofmVISE is further differentiation and striking a balance for an

optimal revenue-mix of Consulting, Solutions and Products. After the very successful

developmentofthebusinessareaConsulting,Strategie2015+envisagesmarketingofown

softwareproductsinthemediumtolong-term.Buildingonthelongyearsofexperiencein

creating and operating the catalogue app "SalesWizard", mVISE has developed the new

standardproduct "SaleSphere",which, as a freely configurable cloud-based solution, from

nowonsupportstheentiresalesprocess,andisavailableonthemarketsinceMarch2016as

Release1.Inadditiontothis,mVISEissteppingupitseffortsintheareaofSolutionstoacquire

additional,interestedcustomersandprojects.WiththecontinuingfocusofSolutionsonthe

corethemesofMobileProductivityandConnectivityaspartofstrategicenterpriseprojects,

referenceable,innovativesolutionswithsignificantmarginsarealsoexpectedtobecreated.

The increasing establishment of own products and solutions in the market could have a

positiveinfluenceonthenetassets,financialpositionandresultsofoperationsofthemVISE

Group.

Focusingonlargeorders

Attheendofreorientation,mVISEAGis increasinglyfocusingonhigh-marginfuturetopics

andlarge-volumeprojectsintheconsultingarea.Majorexistingcustomersarenowfollowing

thisstrategyandhaveinvolvedandcommissionedmVISEinstrategicprojects.Productivity

tools,suchasthemarket-leadingandmultipleaward-winningmVISEworkmen-app"Bosch

Toolbox",areleadingthewayfortheenterprisemobilitystrategyofthecompaniesandtheir

conceptsforthefieldservicesupport.

With the conclusion of valuable outline agreements with major customers and the

corresponding commissioning of large-scale projects, the business area Consulting has

providedanexcellentbase fora continuous rise in salesandearnings. Theexcellent sales

positioningforthesecustomersensuresthecommissioningofinternalspecialistsandallows

significant scaling of business with the support of external partners. Accordingly, further

expansion of the consulting business on the basis of stronger key accounts could have a

positiveinfluenceonthenetassets,financialpositionandresultsofoperationsofthemVISE

Group.

Opening-upofnewtargetmarkets

InthesolutionsareaofmVISEAG,smallerappprojectsareincreasinglyreplacedwithcomplex

B2Bsolutionprojects,with theeffect thatamorestableand long-term involvement takes

placeinstrategicprojectsofthecustomer.Basedonitsexperienceasapioneerfordevice

controlthroughmobiledevices,suchassmartphonesandtablets,mVISEhasnowgaineda

prominentplaceamongthesuppliersofdeviceconnectivityandconfirmedthiswiththeinitial

21

project orders. This opens up formVISE a completely new targetmarketwithB2Bdevice

manufacturers,whomustmeettherequirementsoftheirprofessionalend-usersintermsof

easeofcontrol,freedomfromfaultsandincreasingobligationsconcerningdocumentation.

Amongotherthings,mVISEwillbeworkinginthecomingyearswithleadingmanufacturersof

the automotive industry on a research and pilot project funded by the German Federal

Governmentonthesubjectof"automateddriving"andwillbecollaboratinginthedefinition

andgenerationof industrial standards,where itwillbesolely responsible for thesub-area

smartphonecontrol.Accordingly,asuccessfulreorientationoftheareaSolutionsinhigher-

valueB2Bapplicationswillhaveapositiveinfluenceonthenetassets,financialpositionand

resultsofoperationsofthemVISEGroup.

Opening-upofnewsaleschannels

InAugust2016,themVISE'ssubsidiaryJustIntelligenceGmbHhasenteredintoapartnership

with4com,themarket leader incloud-basedinboundandoutboundsolutions incustomer

service,andthusopenedupanimportantnewsaleschannel.Withinashortperiodoftime,

thepartnershipwith4comhasresultedintheinvolvementofinitialcustomersandnumerous

otherrelevantleads.Inparticular,thehighlevelofsatisfactionof4comwiththesupportand

service of Just Intelligence marks the current and future cooperation. Accordingly, the

expansionofcooperationwith4comandtheestablishmentofadditionalnewsaleschannels

couldshowapositiveinfluenceonthenetassets,financialpositionandresultsofoperations

ofthemVISEGroup.

Inorganicgrowth

Inaddition toorganicgrowthopportunities,mVISEAGalsoseeksopportunitieswithin the

frameworkofcollaborationsandtakeovers.So,mVISEAGincreaseditsshareholdinginJust

IntelligenceGmbH,Hamburgfromtheearlier33.4%to50.1%.Synergyeffectsexist,among

other things, in product development and capacitymanagement aswell as in the area of

marketing and sales. The Executive Board ofmVISE AG is constantly exploring interesting

collaboration opportunities even for the future and is having discussions with potential

partners for complementing the mVISE Group. The successful implementation of further

acquisitionswouldhelp inexpandingthepreviouslyachievedmarketpositionofmVISEAG

and could accordingly have a positive influence on the situation of assets, finance and

revenuesofthemVISEGroup.

1.3.5 Assessmentofthemanagementconcerningtheoverallriskandopportunity

situation

In a summary analysis of the opportunities and risks that could have influence on the

developmentoftheGroup,theExecutiveBoardarrivesatapositiveconclusion.Inboththe

businessareasConsultingandProducts&Solutions,sufficientopportunitypotentialexists,in

order tobeable tomake thecompanygroweven in the future,and thedefined risksare

discernibleandmanageable.At thetimeofpreparingthis report, thereareno identifiable

risks,individuallyandwholly,whichcouldendangerthecontinuedexistenceofthecompany.

22

TheoperativemanagementoftheGroupactswithawarenessofrisksandconsistentlytakes

measures toavoidpotential risk.At thesametime,exploitationof theexistingand future

opportunitiesispursuedwithawiderangeofactivities.

1.4 Forecastingreport

Followingthesuccessfulrestructuringandthepositivecourseofbusinessin2016,thegrowth

rate should continueeven in the current fiscal year.Basically, thedetermining factorsare

positive:Theeconomicenvironment isstableandtheproductsandsolutionsofmVISEare

compatible with the global trends such as the digitisation of business processes and IT

security.TheGrouphasbeenacknowledgedaspioneerintheareaofmobiledigitisationand,

therefore,ithasastableandreliable(current)customerstructure.In2017,thefocusisalso

onthefurthergrowthintheconsultingbusiness.Forthis,initialmeasurablesuccessesinthe

licensingbusinessarestrivedfor,bothwiththeproductsforsalessupport(saleSphere)aswell

asafurtherexpansionofthelicensesaleswiththesolutionsformanpowerplanning(ICC).In

order to enlarge market position achieved so far, mVISE AG would like to again achieve

inorganic growtheven in2017. In this case,potential targets shouldhavea strongprofile

complementarytothemVISEGroup,similartoJustIntelligenceGmbH.

1.4.1 Developmentsinthebusinessareas

Startingwiththefiscalyear2017,thebusinessareashavebeenre-structured.Becausethe

development of customer-specific solutions is closely linked with the accompanying

consultingactivity,boththebusinessareasConsultingandSolutionshavebeenmergedasthe

areaProfessionalServices, forwhichManfredGötz is incharge.Sincethebeginningofthe

year, theproductbusiness thus formsan independentarea, forwhichRainerBastian is in

charge.

ProfessionalServices

As part of the growth strategy, mVISE AG started in 2017 a new consulting location in

Hamburg.For theestablishmentof thebranchoffice,wehaveanexperiencedmanager in

AndreasBehrens.Withthenewlocations,theproximitytocustomersincreases,whichshould

have a positive influence in getting new customers. The demand for technical know-how

continuestobehigh,andtheordersituationisaccordinglygood.Inorganicgrowthcouldhelp

inenhancingtheabilitytodeliverandfurtherenlargethecriticalsizeatindividuallocations

andalsofortheentirecompany.

Products

Inthemediumandlongterm,thedevelopmentandmarketingofownsoftwareproductsplay

agreaterrole.Theproductsalesisrelevant,especiallyfortheachievementofahighmargin.

The interest in the existing products is high, already in the current fiscal year numerous

promising appointments have taken place with potential new customers and the first

23

SaleSpherepilot-customercouldbeobtained.Buthere,itwasalsoseenthatthesalescycles

toobtainandconnectnewcustomersarelongerthanwhatwasoriginallyexpected.Basedon

the current pilot projects and advanced licensing discussions, we, however, assume first

visiblesuccessforthefiscalyear2017.Forthis,thepartnershipofJustIntelligenceGmbHwith

4com,themarketleaderincloud-basedinboundandoutboundsolutionsincustomerservice,

should also contribute. Beyond the existing products and partnerships, the mVISE

managementalsoactivelyandcontinuouslyevaluatestheintegrationofmeaningfulproduct

additionsinthemarket.

1.4.2 Netassets,financialpositionandresultsofoperations

Basedontheabove-describeddevelopment in the individualbusinessareas, theExecutive

Board,therefore,reaffirmsthegrowthandprofittargetsatGrouplevel.Underthecondition

ofstablecompetitivestructuresandmarketprices,absenceoflossoflargecustomersaswell

as continued positive development in the relevant target markets, the Executive Board

expectsforthefiscalyear2017,fromtoday'spointofview,atotaloperatingperformanceof

over14millioneuros.Here,JustIntelligenceGmbHisexpectedtocontributearound10to15

percent of the planned total operating performance. In addition, this forecast does not

consideranyhigher sales fromtheproductarea.Overall, theExecutiveBoardassumesan

EBITDAmarginof15to20percentforthefiscalyear2017.

Düsseldorf,15May2017

TheBoardofDirectors

ManfredGötz,BoardofDirectors

RainerBastian,BoardofDirectors

24

Consolidatedannualfinancialstatementaccordingto

theCommercialCode

2.1 Consolidatedbalancesheet

25

26

2.2 Profitandlossstatementforthefiscalyearfrom01.01to

31.12.2016

27

2.3 Cashflowstatement

0

2.4 Developmentofthefixedassetsforthefiscalyearfrom01.01to31.12.2016

FixedassetstableI

Procurementandmanufacturingcosts

Statuson

01.01.2016

Accrualsbasisof

consolidationAccruals Transfers Disposals

Statuson

31.12.2016

Intangibleassets

I.self-createdindustrialpropertyrights €1,314,011.23 €1,403,195.00 €1,256,413.69 €0.00 €0.00 €3,973,619.92

II.paidconcessions,industrialproperty

rightsandsimilarrights €541,015.77 €27,268.08 €659.52 €0.00 €223,555.37 €345,388.00

III.Goodwill €150,000.00 €0.00 €584,709.18 €0.00 €734,709.18

Total €2,005,027.00 €1,430,463.08 €1,841,782.39 €0.00 €223,555.37 €5,053,717.10

Tangibleassets

I.Othertangibleassets,furnitureand

officeequipment€630,112.81 €30,894.75 €53,632.36 €0.00 €417,932.10 €296,707.82

Total €630,112.81 €30,894.75 €53,632.36 €0.00 €417,932.10 €296,707.82

Financialassets

I.Holdingsinaffiliatedcompanies €0.00 €0.00 €7,423.17 €0.00 €0.00 €7,423.17

Total €0.00 €0.00 €7,423.17 €0.00 €0.00 €7,423.17

Total €2,635,139.81 €1,461,357.83 €1,902,837.92 €0.00 €641,487.47 €5,357,848.09

1

FixedassetstableII

Depreciationforfixedassetsaccumulated Bookvalues

Statuson

01.01.2016

Accrualsbasisof

consolidationAccruals Transfers Disposals

Statuson

31.12.2016 01.01.2016 31.12.2016

Intangibleassets

I.self-createdindustrialproperty

rights€456,433.23 €619,024.00 €570,413.69 €0.00 €0.00 €1,645,870.92 €857,578.00 €2,327,749.00

II.paidconcessions,industrial

propertyrightsandsimilarrights€426,818.77 €18,841.50 €71,557.10 €0.00 €223,241.37 €293,976.00 €114,197.00 €51,412.00

III.Goodwill €115,000.00 €0.00 €24,745.15 €0.00 €0.00 €139,745.15 €35,000.00 €594,964.03

Total €998,252.00 €637,865.50 €666,715.94 €0.00 €223,241.37 €2,079,592.07 €1,006,775.00 €2,974,125.03

Tangibleassets

I.Othertangibleassets,furniture

andofficeequipment€579,427.81 €19,586.68 €32,017.43 €0.00 €416,700.10 €214,331.82 €50,685.00 €82,376.00

Total €579,427.81 €19,586.68 €32,017.43 €0.00 €416,700.10 €214,331.82 €50,685.00 €82,376.00

Financialassets

I.Holdingsinaffiliatedcompanies €0.00 €0.00 €0.00 €0.00 €0.00 €0.00 €0.00 €7,423.17

Total €0.00 €0.00 €0.00 €0.00 €0.00 €0.00 €0.00 €7,423.17

Total €1,577,679.81 €657,452.18 €698,733.37 €0.00 €639,941.47 €2,293,923.89 €1,057,460.00 €3,063,924.20

0