The revenue of Software AG primarily consists of
revenue from the granting of software licenses of
generally unlimited periods of usage, maintenance
revenue and revenue from services. Revenue
from the granting of perpetual licenses is only recognized
when a signed contract exists with the
customer, any rights of return which were granted
have expired, the software has been supplied
in accordance with the contract, a price has been
agreed or can be determined and there is a
sufficient probability of payment.
Revenue from pure maintenance is prorated over
the period in which the service is rendered.
Service agreements which are invoiced on the
basis of hours performed are recognized based on
the services performed by the Software AG companies.
Service agreements for which a fixed price has
been agreed are recognized under to the percentage-
of completion method pursuant to IAS 11 and
IAS 18 if the amount of the revenue can be reliably
determined, there is sufficient probability that
Software AG will receive the economic benefit from
the transaction and all related costs expected by
completion of the service can be reliably
Revenues are reported net of discounts, price
rebates, customer bonuses and allowances.
Cost of sales
Cost of sales includes all production-related full
costs based on normal utilization of capacity. In
particular, cost of sales includes the individual costs
directly allocable to orders as well as fixed and
variable overheads. Financing costs are not capitalized
as part of the costs of acquisition or manufacture.
No non-scheduled write-downs on inventories
were required during the reporting period.
Research and development costs
Research and development costs are recorded as
an expense in the income statement as they are
The production and further development of software
requires the use of closely linked iterative processes
between the research and development phases.
This means that an exact delineation of the expenses
incurred in both phases is not possible. The
delineation criteria required to capitalize development
expenses in accordance with IAS 38 § 41 in
conjunction with § 42 are, therefore, not fulfilled.
The selling expenses include costs for personnel,
materials, depreciation allocated to the sales sector
as well as advertising costs.
Administrative expenses include costs for personnel,
materials and depreciation allocated to the area of
Earnings per share
The earnings per share were calculated by dividing
the net income for the period allocable to the
shareholders by the weighted average number of
shares outstanding during the reporting period
and presented accordingly. Software AG has only
issued common stock.