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General principles

1_Basis of accounting

Software AG ’s condensed and unaudited consolidated financial statements (interim financial statements) as of June 30, 2009 have been prepared in accordance with the International Financial Reporting Standards (IFRS) applicable on the balance sheet date, as endorsed by the EU. The IAS s/ IFRSs applicable as of June 30, 2009 were observed, as were the corresponding interpretations of the International Financial Reporting Interpretations Committee (IFRIC – formerly SIC).

Software AG is a joint stock corporation under German law with registered offices in Darmstadt. The Company is the parent company of a group that is active in the fields of development, licensing, and maintenance of software as well as IT services.

The consolidated financial statements of Software AG are expressed in thousands of euros unless stated otherwise.

2_Changes in the consolidated group

Software AG gained control over itCampus Software- und Systemhaus GmbH, Leipzig (itCampus) on March 2, 2009 by acquiring 51 percent of its shares. itCampus controls four subsidiaries. Additional information on the acquisition of itCampus can be found under Note 4 (Business Acquisitions). The acquisition resulted in the following additions to the consolidated group:

  • itCampus GmbH, Leipzig, Germany
  • itCampus UK, Limited, Newcastle Upon Tyne, United Kingdom
  • itCampus Schweiz AG , Sursee, Switzerland
  • itCampus Sarix Italia s.r.l., Bozen, Italy
  • itCampus Informationstechnologie Austria GmbH, Wiener Neudorf, Austria

The subsidiaries itCampus Schweiz AG , Sursee, Switzerland, and itCampus Informationstechnologie Austria GmbH were not consolidated because they are immaterial for the Group’s financial position, financial performance, and cash flows. They are recognized at cost.

3_Accounting policies

The same accounting policies have been applied as were applied to the consolidated financial statements as of December 31, 2008, with the exception of the revisions to IAS 1.

The first-time application of the revised IAS 1 resulted in changes to the presentation of the statement of changes in equity as well as the presentation of the result for the period and the income and expenses recognized in equity during the period. Prior-year figures were adjusted where necessary. Net income and earnings per share have not changed as a result of the change in presentation. These quarterly financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting.

4_Business acquisitions

By acquiring 51 percent of its shares, Software AG gained control over itCampus Software- und Systemhaus GmbH, Leipzig (itCampus), a supplier of software and communication solutions for the call center, energy, medicine, and public administration industries.

The purchase price of the acquisition was settled in cash and totaled €4,512 thousand after deducting acquired cash funds. There were no significant directly attributable costs in connection with the acquisition. The following table shows the preliminary allocation of the purchase price to net assets acquired. This purchase price allocation was prepared based on preliminary valuations. In contrast to the presentation in our report for the first quarter, there were some minor changes to the carrying amounts before acquisition and hence to the initial carrying amounts on the balance sheet. As a result of information not yet available and reviews yet to be conducted, the assumptions and estimates used have not been finalized.


in € thousandsCarrying amount before acquisition

Adjustment to fair value

Initial carrying amount on the balance sheet

Cash and cash equivalents1,4881,488
Inventories431431
Trade receivables1,2081,208
Other receivables and other assets406406
Prepaid expenses48 48
Intangible assets975,9926,089
Goodwill76 76
Property, plant and equipment410410
Financial assets195195
Assets4,3595,99210,351
Financial liabilities2,2412,241
Trade payables715751
Other liabilities1,9751,975
Other provisions233233
Tax provisions26 26
Deferred tax liabilities01,8581,858
Liabilities5,1901,8587,048
Net assets-8314,1343,303
Minority interest-1,618
Goodwill4,315

Payments to shareholders

2,900

Payment to the company for capital increase

3,100
Acquisition costs6,000
Acquired cash and cash equivalents1,488
Acquisition costs net of acquired cash4,512

 

The intangible assets measured at fair value as part of purchase price allocation are comprised of mainly software. The company’s innovative employees represent an additional material asset that nevertheless may not be capitalized separately from goodwill in accordance with IFRS 3. The goodwill recognized as an asset within the framework of the acquisition was attributed in full to the webMethods segment.

The operating results of itCampus have been included in the consolidated financial statements since the acquisition date. If Software AG had acquired itCampus as of January 1, revenues generated in the first half of 2009 would have been an estimated €1,254 thousand higher and would thus have amounted to €342,921 thousand. Net income for the same period would have been €635 thousand lower and would thus have amounted to €53,944 thousand. This pro forma data is only provided for comparative purposes.

The share of Software AG ’s net income that is attributable to itCampus since the acquisition date amounts to €-815 thousand.

Business acquisitions and proposed business acquisitions after June 30, 2009:

Software AG gained control over Teconomic AG , Freienbach, Switzerland, on July 1, 2009 by acquiring 100 percent of its shares. Teconomic AG provides advisory services and solutions to the European financial market. It has long-standing experience and in-depth expertise in the financial industry, advising its clients on SWIFT services and IT architectures.

The purchase price for this acquisition will depend on various balance sheet ratios and profitability indicators of the acquired company and is expected to amount to approx. €1 to €2 million. There were no significant costs directly attributable to the acquisition. Due to the short period of time between the acquisition and the authorization to issue this interim financial report, it was not possible to conduct a purchase price allocation. According to Software AG ‘s forecast, the impact of the acquisition on the Group‘s overall financial position, financial performance and cash flows will be immaterial.

Software AG intends to acquire all of the shares in IDS Scheer AG , Saarbrücken, Germany. The Company announced this intention on July 13, 2009 in the form of a voluntary takeover offer. IDS Scheer AG is listed in the TecDax.

It is planned to acquire the shares at a price of €15.00 per outstanding share, to be paid in cash, via a voluntary public takeover offer to be made by SAG Beteiligungs GmbH, a wholly-owned subsidiary of Software AG , to all shareholders of IDS Scheer during the third quarter of 2009. The offer will be made subject to the terms and conditions yet to be communicated in the offer document and subject to approval by the competent antitrust authorities. Dr. August-Wilhelm Scheer and Dr. Alexander Pocsay have already signed a contract with Software AG agreeing to accept the takeover offer with respect to all of the shares held by them (approx. 47.68 percent of all outstanding shares). In addition, between the date of announcing the takeover offer and publication of the interim report for the second quarter, Software AG acquired 4,665,000 shares in IDS Scheer AG at an average price of €14.97. The acquisition costs for 100 percent of the shares will amount to approx. €490 million (including transaction costs).