Software AG Stock
2008: one of the worst years in stock-market history
2008 will go down in history as one of the worst stock market years worldwide. The intensifying financial crisis and associated weakening of the global economy as a whole were key contributing factors in this development. The second half of the year was particularly hard on global indices.
The DAX lost just over 40 percent last year. This makes 2008 the second worst year in the 20-year history of the German benchmark index. It lost more only in 2002 when it decreased by 44 percent. Since then, the DAX had seen gains over five successive years. The situation was scarcely better for other indices. The MDAX lost 43 percent over the year; the SDAX almost 54 percent; while the Euro-Stoxx 50 suffered a 52 percent decline.
The Dow Jones, which tracks 30 US standard stocks, fell by 44 percent, the broader-based American S&P 500 by 50 percent. Even technology stocks were not able to withstand the strong downward pull in fiscal 2008. The Nasdaq computer composite index plunged 40 percent in 2008. And the Nasdaq 100, which tracks the largest companies listed on the exchange, lost as much as 51 percent. The German TecDAX technology barometer suffered a 48 percent drop.
Software AG stock beats indices
In 2008, Software AG’s stock was unable to escape the market’s overall uncertainty or counter the negative trend. It started the year at €60.37 and closed 33 percent lower at €40.00. However, Software AG’s stock still outperformed the major indices.
Software AG’s initial share price of €60.37 was also its peak for fiscal 2008. In the first six months of the year, our stock increasingly felt the impact of the market’s continued uncertainty. Profit warnings from competitors further complicated the scenario. We observed a typical trend in times of weak stock markets. Despite numerous recommendations to buy Software AG shares, assets were invested primarily in blue chips or liquidized, while smaller IT stocks appeared on investors’ “to sell” lists. Our stock reached its low point - €29.50 - on October 8, 2008. Nevertheless, in the second half of the year, Software AG garnered attention with positive company announcements, such as signing on a number of major deals, and consistently strong quarterly financials. Our share price saw an improvement over the indices after publication of third-quarter results, in particular, and was able to develop a certain degree of resistance to the increasingly downward trend. As a result, our share price enjoyed a slight recovery at year’s end.
Software AG is now one of the 100 most widely traded stocks on the German market and therefore meets the highest liquidity criteria for electronic trading on the Xetra. In the 2008 fiscal year, around 55.1 million shares were traded (2007: 45.7 million).
As a result of the drop in share price, market capitalization fell in 2008. At the end of the year, it was approximately €1.1 billion, compared with €1.7 billion on the same day of the previous year. After the stock’s recovery at the start of 2009, market capitalization rose again in February 2009 to approximately €1.4 billion and Software AG advanced to be the third-highest valued stock on the TecDAX.
Market capitalization at year end
Share price development (indexed)
Dividend for 2008
For many years Software AG’s shareholders have been profiting from a stable corporate dividend policy geared toward continuity. At the Annual Shareholders’ Meeting on April 29, 2008 in Darmstadt, we decided to increase the dividend from €0.90 per share to €1.00 per share. In other words, approximately €28.5 million were paid out to shareholders as dividends.
Software AG’s shareholders will participate in the Company’s success once again this year. At the same time, we need to protect our cash reserves in the face of uncertain economic forecasts and with a view to further acquisition opportunities. For the 2008 fiscal year, the Executive Board and Supervisory Board will therefore propose a dividend of €1.10 for each share entitled to dividends at the Annual Shareholders' Meeting. The total dividend payout would therefore be €31.5 million, and the payout ratio would be 27 percent of consolidated earnings after tax.
Total dividend payout
Software AG has a robust business model with continued sales and earnings growth and a sustained cash flow increase that enables us to grow through internal funding. Investment in Software AG is therefore a defensive investment with high dividend continuity.
Prompt, comprehensive and transparent investor relations
We maintain intensive, transparent and ongoing communication with all capital market stakeholders. Our publicly accessible financial calendar on the Internet provides a detailed overview of current activities. We publish our financial results extremely promptly, presenting them to journalists, analysts and investors in conference calls or face-to-face events. Our website also features comprehensive documents providing speeches, presentations, press releases, ad-hoc reports, etc. Last year, our financial report was accessed from our homepage around 4,000 times.
We also received numerous awards for our work last year. We were ranked second in the TecDAX for “Best IR” by both the Wirtschaftswoche economic journal (carried out by Thomson Financial) and by the Capital economic journal. NetFederation also awarded Software AG’s website first place in the TecDAX in the category “Best IR Website.” We relaunched our new user-friendly website last year. The awards are a testament to our transparent reporting and communication with the market.
Twenty-four analyst firms in Germany, the United Kingdom and France regularly monitor Software AG and its development. Most of them see high potential in our stock and have rated it as ”buy” or ”outperform.”
Investor communications enhanced
Our communication with existing and potential investors was further intensified last year. This is reflected in the higher number of direct contacts with analysts and investors interested in Software AG. We took part in a total of 17 capital market conferences and visited investors in Europe and North America in 50 roadshow events. Last fiscal year, we conducted 500 one-to-one meetings in which we explained our business model, strategy and products. We recently received positive feedback from France, in particular, where we accepted more invitations than in the past to roadshows and conferences. Overall, market interest has increased significantly, particularly following publication of Q3 results.
According to the “Close Cycle Ranking 2007,” a study by ifb group and BPM International, Software AG is one of Germany’s leaders in prompt publication of its results. This also pays tribute to the quality of our financial processes and systems. Through active involvement in the board of the German Investor Relations Association (DIRK), we contribute to the definition of fundamental investor relations conditions on a national and international level and state our view on capital market rulings.
Shareholder structure
The non-profit Software AG Foundation holds 29.4 percent of outstanding Software AG shares. The foundation supports Software AG’s growth strategy and thereby facilitates long-term corporate development to ensure the creation of sustained shareholder value.
Software AG’s free float is 70.6 percent and ensures good liquidity in stock exchange trading. It is spread over a diversified investor structure made up of private and institutional investors, both domestic and foreign. A number of internationally renowned investment companies have shares of more than 1 percent in Software AG’s capital. Private investors and unregistered investors hold 24 percent of our shares. Our reported free float is distributed by region as follows: Germany 51 percent, United Kingdom 26 percent, rest of Europe 16 percent, North America 7 percent. The percentage of shares held by North American investors has risen again, in line with our objective (2007: 5.2 percent).
Shareholder structure (percentage of free float)*
* As of January 2009, Source: Thomson Reuters
Top 10 investors in Software AG stock
| Investor Name | No. of shares held | in % |
| Software AG Stiftung | 8,416,926 | 29.40 |
| Deka Investment GmbH | 1,770,000 | 6.18 |
| DWS Investment GmbH | 1,419,859 | 4.96 |
| Virmont S.à.r.l. (Alken) | 1,430,581 | 5.00 |
| JPMorgan Asset Management U.K. Limited | 868,511 | 3.03 |
| Allianz Global Investors
Kapitalanlagegesellschaft mbH | 847,136 | 2.96 |
| Braun, von Wyss & Müller AG | 745,066 | 2.60 |
| Baring Asset Management Ltd. | 470,491 | 1.64 |
| Universal-Investment-Gesellschaft mbH | 373,933 | 1.31 |
| Deutsche Asset Management
Investmentgesellschaft mbH | 349,806 | 1.22 |
Source: Thomson Reuters/Software AG
Changes in share capital
Compared to last year, the number of shares outstanding has increased by 99,387 to 28,638,842. This is due to the exercising of a conditional capital increase (management option plan).
Key share data
| 2008
IFRS | 2007
IFRS | |
| Closing price (Xetra) in € | 40.00 | 60.57 |
| Year high in € | 60.37 | 77.20 |
| Year low in € | 29.50 | 50.12 |
| Total number of shares at year end | 28,638,842 | 28,539,455 |
| Market capitalization at year end in € | 1.145,2 | 1,789.21 |
| Free float in % | 70.6 | 70.8 |
| Average daily trading volume (XETRA) | 218,517 | 181,485 |
Ticker symbol and basic data
| ISIN | DE 0003304002 |
| WKN | 330400 |
| Symbol | SOW |
| Reuters | SOW Gn.F |
| Bloomberg | SOW GY |
| Stock exchange | Börse Frankfurt |
| Market segment | Prime Standard |
| Index | TecDAX |
| IPO | April 26, 1999 |
| Offering price | €30 |
| Total number of shares outstanding | 28,638,842 |
Indices:
- CDAX
- German Entrepreneurial Index Gex
- HAFixD
- HDAX
- L-TECDAX Performance-Index
- Midcap Market
- Prime All Share
- Prime IG Software
- Prime Software
- TECDAX
- Technology All Share
- MSCI Europe Small Cap Index
- MSCI Germany Small Cap
- MSCI Europe Information Technology Small Cap
- Dow Jones STOXX 600
