2006 was an extremely successful year for Software AG. We achieved double-digit growth rates in both revenue and earnings. The licensing business contributed primarily to this success with growth exceeding that of the other business segments. Software AG’s own high-margin products now represent nearly 100 percent of licensing revenue and one-third of total revenue. We increased sales by 11 percent over the previous year, surpassing our target for 2006 of a rise in total revenue of 10 percent on a currency-adjusted basis. Software AG raised its operating margin (EBIT) to a record high of 23 percent; this represents a gain of 1 percentage point over the previous year. Profit was 18 percent above last years figure at €73.2 million.

Growth through geographic expansion

Sales in Sweden, Finland, Australia, Asia, Latin America, Eastern Europe, and the Middle East rose by more than onefifth and contributed 12 percent to Group revenues. The Software AG Group now earns 86 percent of its revenues outside of Germany.

Product sales (licenses and maintenance) accelerates growth

Product sales (licenses and maintenance) developed into a growth driver in 2006. Revenues rose by 13 percent and contributed 73 percent of total revenues. This reinforces our high-earnings sales structure.

Licensing revenue continues to expand sharply in both business lines

The lucrative software licensing business showed the greatest increase of all sales segments with a jump of 26 percent. The proportion of licensing sales to Group sales rose to over 34 percent.

Targets achieved in 2006*
	Actual 2006	Forecast 2006**
Revenue	+ 11 %	Growth: 10 %
Licenses	+ 28 %	Growth: 25 to 27 %
Maintenance	+ 4 %	Growth: 4 to 5 %
Professional Services	+ 3 %	Growth: 2 to 4 %
EBIT ratio	+ 1 Pp %	Growth: 0 to 1 Pp (22 bis 23 %)
Revenues
ETS	+ 8 %	Growth: 5 to 7 %
Crossvision (not including licensing revenues from non-proprietary products)	+ 23 %	Growth: 20 to 30 %
* at constant currency ** (2006 Forecast Oct. 2006 and Annual Report 2005)

 

Maintenance revenues up again

The licensing business, which has been growing for three years, forms the basis for our maintenance revenues. Maintenance revenues amounted to €187.3 million, up 3 percent from the previous years figure.

Professional Service revenues grow despite the focus on proprietary products

Revenues from Professional Services slowed due to the strategic decision to concentrate on the implementation of our own products. As the result of the restructuring of Professional Services and the elimination of non-strategic projects, sales show subdued growth of 3 percent to €126.2 million.