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  Business development in first half year  

Licensing contributes one quarter of consolidated revenues
The first half year at Software AG was characterized by rising license sales, up 15 percent over 2003 at € 52.6 million (€ 45.8 million). This represents an increase from 22 to 26 percent of total revenues. Including licenses and maintenance, and excluding currency effects, product sales gained 5 percent to € 143.5 million (€ 141.2 million). Total consolidated first-half revenues reached € 202.0 million (€ 206.3 million) – growth of 1 percent before currency effects.

Considerable cost reductions
Software AG continued to bring down expenses during the first half of the year. Compared to the first six months of 2003, costs for administration, sales, marketing and distribution, and R&D fell by a total € 19.3 million to € 90.9 million (€ 110.1 million). As a result, operating profit climbed by 55 percent to € 39.4 million.

Development of earnings

Significant improvement in cash flow
In spite of restructuring costs totaling € 19.3 million, net cash nearly doubled, rising to € 10.4 million (€ 5.3 million). Taking into account factoring, restructuring payments, and tax claims, organic cash flow rose to € 35.2 million, or 17.4 percent of total revenues.

Shareholders’ equity rises by € 45.3 million
At June 30, 2004, cash and cash equivalents amounted to € 110.5 million, exceeding the 2003 figure by € 35.4 million. This was largely due to the sale of Software AG's stockholding in SAP SI. Shareholders' equity advanced to € 301.5 million, taking the equity-to-total-assets ratio to 57 percent. Total assets rose to € 533.1 million (€ 520.3 million). The reduction in fixed assets was due to the disposal of SAP SI shares.

Employee structure increasingly international
Restructuring of the Software AG workforce was completed sooner than expected: On June 30, 2004, the Group had 2,467 employees (2,896). This figure may rise slightly during the second half of the year. Approximately two thirds of the entire workforce are based outside Germany, which reflects the highly international structure and orientation of Software AG, and demonstrates the success of our efforts to create a lean holding company.

  Interim Report Q2/04 (PDF)
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