| 10 Feb 2010 |
|
Software AG Middle East posts 67 per cent revenue growth
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Group revenue up 18 per cent to €847.4 million
EBIT up 21 per cent to €218.2 million
EBIT margin of 25.8 per cent
Net income up 22 per cent to €140.8 million
Free Cash Flow rose by 41 per cent to €188.4 million
2010 outlook: revenue growth of 25-30 per cent
2010 net income up 8-12 per cent
(Frankfurt TecDAX: SOW) has reported a significant increase in revenue and net income for fiscal year 2009, as Germany's second largest software company beat market expectations. Group revenues amounted to €847.4 million, up 18 per cent in 2009 (2008: €720.6 million). EBIT increased by 21 per cent to €218.2 million for the same period, delivering an EBIT margin of 25.8 per cent. The company's strong global performance was likewise evident in the Middle East, where Software AGSoftware AG achieved a 67 per cent overall revenue growth in 2009 compared with 2008. Marco Gerazounis, Senior Vice President, Software AGSoftware AG, Middle East, said: "Local operations in the Middle East remained strong in 2009 as year-on-year revenue growth reached 67 per cent compared with 2008. The Middle East has recently been a significant driver in overall growth as the region's performance was higher than that of the Software AGSoftware AG Group."
forecasts revenue growth of 25 to 30 per cent at constant currency rates and net income up 8 to 12 per cent. Record results in 2009
Most importantly for a software company, total product revenue (license and maintenance) rose by 8 per cent to €580.5 million (€539.1 million in 2008). Services & Consulting revenue rose by 48 per cent to €262.5 million (€177.8 million in 2008).
Against a backdrop of continuing economic recession, the webMethods business line (integration software) product revenue was up 5 per cent to €219.9 million compared with 2008 (€208.0 million) and total revenue by 3 per cent to €324.9 million (€315.7 million in 2008). Through an improved sales mix and increased sales efficiency the webMethods business line increased its contribution to earnings by 15 per cent to €70.1 million (2008 €60.8 million). webMethods contributed more in 2009 than ever before to Group results.
Product revenue from the data management business ETS amounted to €327.7 million, marginally under the 2008 figure of €330.6 million. An 8 per cent increase in maintenance to €187.9 million (2008: €173.8 million) compensated for a decrease in license revenue to €139.8 million (2008: €156.8 million) attributable to difficult ETS trading conditions in Japan.
The consolidation of IDS Scheer, as of August 20, 2009, as a third Software AGSoftware AG business line had added revenue of €126.5 million.
"We reported record numbers again in 2009. The acquisition of IDS Scheer will help us build a leadership position for Business Process Excellence software," said Software AGSoftware AG CEO, Karl-Heinz Streibich. "In the fourth quarter we closed an increased number of large deals. We are seeing the first signs of an economic recovery. Software AGSoftware AG is an excellent position to benefit from this development."
Fourth Quarter
The fourth quarter 2009 returned total revenue of €292.1 million, 38 percent up on €212.4 million in 2008. Product revenue was up 11 percent to €181.1 million (2008: 163.2 million) and Services & Consulting up 130 percent to €109.0 million (2008: €47.3 million). The significant rise in Services & Consulting revenue is due to the contribution of IDS Scheer whose results are being consolidated for a full quarter for the first time.
The fourth quarter also saw webMethods license revenue up by 21 per cent to €43.5 million (2008: €35.8 million); in comparison to the third quarter this represents doubling of new business. Total business line revenue was €98.9 million, 8 per cent up on €91.4 million in 2008. This growth in webMethods sales in combination with an increased number of large deals in the quarter indicated the first signs of an economic recovery.
ETS product revenue at €87.7 was up 6 per cent in the fourth quarter compared with the third quarter showing normal seasonal development. It was, however, under the comparable quarter in 2008 (€101.2 million). This was due to delayed business in Japan. In consequence, total business line revenue of €105.4 million was 13 per cent down on €121 million revenue in 2008.
Comparing fourth-quarter business development to the third quarter, the IDS Sheer business line showed revenue gains in all areas. Total operating revenue was up 14 per cent and contributed €87.9 million to Software AGSoftware AG Group revenues. Services & Consulting revenue was up 9 per cent and ARIS license revenue up 83 per cent to €11.5 million. This strong growth in license revenue mirrored the development in the webMethods business line and is another indicator of customer investment in new technologies.
Operating results and cash flow
Software AGSoftware AG achieved a revenue increase of 18 percent with only a moderate increase in costs. This demonstrates a further increase in efficiency. This led to an increase of 21 per cent in EBIT to €218.2 million (2008 €180.5 million) and an EBIT margin of 25.8 per cent (2008: 25.1 per cent).
A reduced tax rate of 32.7 per cent of the consolidated company contributed to a growth in net income of 22 per cent to €140.8 million (2008: €115.9 million). Earnings per share rose to €4.92 (2008: €4.05).
Free cash flow performed extremely well rising 41 per cent to €188.4 million from €133.4 million in 2008. In the fourth quarter 2009 free cash flow was up 63 per cent to €68.6 million.
"We have benefited over the full year from cost-cutting measures which we began in 2008. We were able to return an EBIT above our target, increase our EPS by 21 per cent and our free cash flow by 41 per cent. In the course of integrating IDS Scheer, we will use the efficient processes of Software AGSoftware AG in order to sustainably increase the profit of the Group," said Arnd Zinnhardt, Chief Financial Officer of Software AGSoftware AG.
Forecast for 2010
Software AGSoftware AG is forecasting for fiscal year 2010, at constant currency rates, total revenue growth of 25 to 30 per cent with product revenue growth of 12 to 15 per cent. The company also forecasts growth in net income of 8 to 12 per cent.
IDS Scheer Acquisition
Software AGSoftware AG now holds 91 per cent of IDS Scheer shares. A domination agreement was approved at an extraordinary general meeting of IDS Scheer on January 8, 2010. Software AGSoftware AG therefore expects to realise cost synergies of €25 to €30 million. To accelerate the organisational integration a merger of the two companies is planned. The minority shareholders of IDS Scheer AG would then become shareholders of Software AGSoftware AG. The company plans to buy the required shares on the open market within the next few months.
Key Figures
in € million | 2009 | 2008 | Change
| Forecast 2009 | Forecast 2010 |
|
| ∆ |
|
| |
Group revenue | 847.4 | 720.6 | +18% | €835-€845 | +25-30%* |
- Product revenue | 580.5 | 539.1 | +8% | +12-15%* | |
- Licensing revenues | 269.9 | 272.0 | -1% | ||
- Maintenance revenues | 310.6 | 267.1 | +16% | ||
EBIT | 218.2 | 180.5 | +21% | ||
EBIT margin | 25.8% | 25.1% | +70 BP | 25-25.5% | |
Net income | 140.8 | 115.9 | +22% | +8-12% | |
Earnings per share (in €) | 4.92 | 4.05 | +21% | +8-12% | |
Free cash flow | 188.4 | 133.4 | +41% | ||
Total employees | 6,013 | 3,526 | |||
- Employees in Germany | 2,149 | 772 | |||
* At constant currency rates |
-Ends-
About Software AGSoftware AG:
Software AGSoftware AG is the world's largest independent provider of Business Infrastructure Software. Our 4,000 global enterprise customers achieve business results faster by modernizing, integrating and automating their IT systems and processes. As a result, they rapidly build measurable business value and meet changing business demands. Based on our solutions, organizations are able to liberate and govern their data, systems, applications, processes and services - achieving new levels of business flexibility.
Our leading product portfolio includes solutions for high performance data management, developing and modernizing applications, enabling service-oriented architecture, and improving business processes. By combining our technology with industry expertise and best practices experience, our customers improve and differentiate their businesses - faster.
Software AGSoftware AG has 40 years of global IT experience and about 3,600 employees serving customers in 70 countries. The company is headquartered in Germany and listed on the Frankfurt Stock Exchange (TecDAX, ISIN DE 0003304002 / SOW). Software AGSoftware AG posted total revenues of €721 million in 2008.
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© Press Release 2010
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