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Software AG Investor Roadshow USA July 2003. 2Investor Roadshow USA July 2003 Software AG Profile Germanys second largest software vendor In the high-end,

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Presentation on theme: "Software AG Investor Roadshow USA July 2003. 2Investor Roadshow USA July 2003 Software AG Profile Germanys second largest software vendor In the high-end,"— Presentation transcript:

1 Software AG Investor Roadshow USA July 2003

2 2Investor Roadshow USA July 2003 Software AG Profile Germanys second largest software vendor In the high-end, mission-critical IT business since 1969 Worldwide customer base of several thousand blue chip companies and public sector organizations Leader in XML system technology (DBMS and integration) System integrator for own products and solutions Listed at Frankfurt stock exchange (TecDAX) Market Cap 325 mio. / 375 mio. $ - Free Float: 68.4%

3 3Investor Roadshow USA July 2003 3 1985 Established First Platform Independent Language 1983 TAPS (Trade Analysis & Process System) Worlds Largest Clearing House System 1998 Introduced First XML Server 1997 First company to port DCOM to Mainframe 2000 First Mobile Fleet Mgmt System 2001 SCP Award Received 5 years in a row 2002 Over 5000 Customers Worldwide 2001/2002 Named Global Market Leader for XML Servers, IDC Profitable 2001 First Database to Utilize IBMs New 64 bit Virtual Storage Architecture for Mainframe 1979 First Mainframe 4GL 1969 Software AG Founded in Darmstadt 1991 Introduced First Service Broker for Distributed Applications 1971 First Mainframe Database 1973 Software AG Americas Formed Our History

4 4Investor Roadshow USA July 2003 Global Business Four Business Regions (share of revenue 2002): Americas (35%) Southern/ Western Europe (26%) Central/ Eastern Europe (24%) Asia/Northern Europe (15%)

5 5Investor Roadshow USA July 2003 Source of Revenue / Business Lines Project Services (Consulting and Implementation) Licensing of Software Products Maintenance (24x7 world wide) Product Business 1999 2000 2001* 2002 2003 (in mio. euros) * first consolidation of US acquisition

6 6Investor Roadshow USA July 2003 1999 2000 2001* 2002 Results (in mio. euros) * first consolidation of US acquisition -40 -20 0 20 40 60 80 100 66 69 91 38 67 39 70 -19 83 62 110 54 32 34 41 366 417 589 475 Operating result Net profit Op. cash flowOp. EBITARevenue

7 Strategy

8 8Investor Roadshow USA July 2003 Positioning of Software AG Focus on product business Licensing of software products Excellent maintenance services Global presence Technology leader in XML Expansion of the product portfolio to include standardized solutions System integrator for own products and solutions

9 9Investor Roadshow USA July 2003 XML Server - native XML server - Storage, management, publishing and exchange of XML documents - Extremely fast and reliable database - Available on all major platforms - For large and mission-critical applications - Integration server - Leveraging legacy systems for use in new (e-)business solutions - Development platform - For large-scale (e-)business applications Core Products

10 10Investor Roadshow USA July 2003 Number 2 worldwide market share for mainframe DBMS Customers are predominantly blue chip companies and large public authorities Adabas and Natural currently account for about ¾ of product revenue Adabas and Natural being continuously enhanced: Support for new platforms and technologies (Linux, 64 bit, XML, SQL) protects customers software investment 1/3 of R&D resources are allocated for Adabas and Natural (20 mio. euros in 2002) Adabas and Natural remain the main sources of revenue

11 11Investor Roadshow USA July 2003 Tamino XML Server sold more than 500 times Great success with XML technology in projects Daimler Chrysler – content management system (xDWS) Local government in UK – e-government portal (IESD) Vodafone – document management North American Logistics (Van Lines) – Mobile field service application California State Board of Equalization – e-filing EntireX serves as (XML) integration server Technologically and economically very attractive customer solutions will be converted into standardized solutions Strategy Realignment

12 12Investor Roadshow USA July 2003 Software AG Portfolio Evolving from Technology to Solutions ProductsCapabilitiesSolutions Tamino Communicator Mediator Adabas/Natural Partners Content Management Digital Library Mobile Data Exchange Web Enablement Data Integration Self-Service Portals Content Suite Mobile Suite Partner Solutions Regional Solutions Individual Customer Solutions Committed to delivering value for our customers

13 13Investor Roadshow USA July 2003 Current solution- business situation Expansion of Portfolio with Solutions Future solution business Business Lines Develop a custom application Core products (Tamino, EntireX, Adabas/Natural) Delivery to customer Project services/ system integration Product business (Licensing and Maintenance) Standardized solution platform Modify a solution to meet customer requirements Core products (Tamino, EntireX, Adabas/Natural)

14 Marketing and Sales

15 15Investor Roadshow USA July 2003 The New Software AG Sales Approach Customer First is: Understanding our customers business and finding out how we can provide solutions that meet their needs A fundamental change, not only in our culture, but in the entire software industry Equally applicable to our installed base of customers or new prospects The way we will do business Customer First Strategy Move from Product and Event go to market strategy to a proactive consultative sales process focused on understanding client business issues and positioning Software AG solutions/capabilities to meet those needs.

16 16Investor Roadshow USA July 2003 Focus on Industries Financial Services Manufacturing Pharma Trade and Logistics Media Public Administration Regions will focus on their most important segments

17 17Investor Roadshow USA July 2003 American Samoa Alaska Arizona California Colorado Delaware Florida Guam Idaho Illinois Louisiana Los Angeles, CA Massachusetts Minnesota Mississippi New Jersey New York City, NY North Dakota Pennsylvania Philadelphia, PA Puerto Rico Rhode Island South Carolina South Dakota Texas Washington Utah Vermont Virginia Washington, D.C. West Virginia Wyoming BOE: 2 nd Largest Tax System SPARRS: Statewide HR System Digital Drivers License PennDOT: CRASH Accident System CRIS: Rehabilitation System DMV : Department of Motor Vehicles Software AG Experience with States and Cities

18 18Investor Roadshow USA July 2003 Creating a Technology Vision to Leverage Existing IT Investments Increase Productivity & Profitability Deliver Solutions to New Business Challenges Open & Extend Existing Applications Migrate or Outsource Improve Performance

19 19Investor Roadshow USA July 2003 Quick Wins Technology Vision Strategy How We Build the Vision Value to Customer Software AG Technology Vision Open Systems XML Access Web Services Desktop Access Data Exchange Web Enablement Data Integration Self-Service Portals Digital Library Application Development Add New Solutions Client Communication Management Insurance Coverage Reporting Pension Statement Management XML Enablement Content & Document Management Case Management Optimize 24x7 Availability Administration Performance Security Application Maintenance Application Re-Engineering Partner Offerings

20 20Investor Roadshow USA July 2003 North American Van Lines North American Logistics is focused on high touch, high service levels and high value segment Major clients include Hewlett Packard, Compaq and Dell Services include transportation, distribution, manufacturing support and business controls Business growing at 10-20% per year, mostly through new, additional services Business problems/challenges Order receiving and logistics tracking Order to invoice time cycle Logistics centers turnaround Systems support for new services (ie. installation)

21 21Investor Roadshow USA July 2003 nAL Mobile project (Phase 2) Project size: $710K (License $280K, PS $430K) Description: Mobile field service application integrated with SAG and non-SAG backend systems Repeatable, Yes Partnering with Extended Systems, Inc. for mobile solution called One Bridge Our Extended System partner brought valuable expertise in mobile and was key to securing this phase of nALs business Integrated the One Bridge Toolset with EntireX and Tamino Cellular EntireX ViaPhone Tamino Bill of Lading Asset Mgmt Warehouse Mgmt Product Tracking LEGACY SYSTEMS

22 22Investor Roadshow USA July 2003 Diogenes / xDWS Project size Licenses: 285 K PS: 1.3 mio. Problem Reduce the effort and expense to maintain and adapt automation and test systems in the areas of development, production and service. Solution Seamless development of automotive electronic control units with function prototyping, production code generation and hardware-in-the-loop test based on common XML based DTDs (xDWS / Tamino). Benefits Tight integration of all supply-chain-members. Cost-reduction. Better Quality. FASTER development! Tamino in Projects: DaimlerChrysler

23 23Investor Roadshow USA July 2003 Tamino in Projects: Vodafone Spain Project size : 2.2 mio. Licenses: 1.4 mio. PS: 740 K Description: Electronic Bills Presentation Solution Phase: A system that enables its clients and its internal users to see their invoices and the billing information through Internet, using XML technology (Tamino XML Server). Archiving System Solution Phase: Prepare a corporate platform to archive different types of documents coming from other applications (SAP, Lotus Notes, MS Exchange,…) using Ixos products.

24 1 st Quarter 2003 Financial Report

25 25Investor Roadshow USA July 2003 Revenue Q1 2002/2003 30.6 40.0 -24% (-21%) 47.4 21.9 0.3 51.5 24.6 -8% (+3%) -11% (-2%) 116.4100.2 Q1 2002 Q1 2003 -14% (-6%) (...) in constant currencies (in mio. euros) Other Project Services (Consulting and Implementation) Maintenance (24x7 world wide) Licensing of Software Products Product Business

26 26Investor Roadshow USA July 2003 Licensing Revenue by Product Group Q1 2002/2003 Q1 2002Q1 2003 Solutions Tamino EntireX Enterprise Transaction Other 11% 4% 60% 15% 10% 56% 18% 8% 24.621.9 10% (in mio. euros)

27 27Investor Roadshow USA July 2003 Revenue by Region Q1 2002/2003 33.139.5 Americas Southern / Western Europe Northern Europe Asia-SA Central / Eastern Europe Actual Q1 2002 Actual Q1 2003 7.8 24.4 7.2 0.1 Project ServicesMaintenanceLicensingOther 4.1 21.3 7.4 0.3 Actual Q1 2002 Actual Q1 2003 Actual Q1 2002 Actual Q1 2003 Actual Q1 2002 Actual Q1 2003 28.029.316.917.523.030.4 18.6 6.8 3.8 0.1 16.8 6.7 4.5 3.5 9.7 4.3 1.8 9.4 5.6 0.1 10.4 10.6 9.3 0.1 8.3 10.2 4.4 0.1 0.0 (in mio. euros)

28 28Investor Roadshow USA July 2003 Operating EBITA by Region Q1 2002/2003 Q1 2002Q1 2003 7.5 6.9 +9% 2.9 3.4 1.2 2.2 4.0 +0% +82% -65% Americas Southern / Western Europe Northern Europe Asia-SA Central / Eastern Europe (in mio. euros)

29 29Investor Roadshow USA July 2003 R&D by Product Group Q1 2002Q1 2003 30% 35% 25% 10% 36% 20% 16% 4% 18.015.2 24% 0% Solutions Tamino EntireX Enterprise Transaction Other (in mio. euros)

30 30Investor Roadshow USA July 2003 Result Q1 2002/2003 (in mio. euros)

31 31Investor Roadshow USA July 2003 Balance Sheet (in mio. euros)

32 32Investor Roadshow USA July 2003 Cash flow Q1 2002/2003 (in mio. euros)

33 33Investor Roadshow USA July 2003 Our medium-term goal is a Profit Margin of 15% (operating result = PbT excluding one-time effects) Savings potential of 55 to 60 million euros annually Increase in profitability Alignment of the organization in the regions Focusing R&D on the future portfolio Reduction of overhead Headcount reduction ca. FTE 300 Approx. 1/3 of the savings will be reinvested in the development of new solutions Cost cuts in 2003 cover the restructuring expenses Rightsizing of the Company

34 34Investor Roadshow USA July 2003 Full year product revenue same level as 2002 (at constant currency) Maintenance ensuring about 45% of total revenue Project services continue to show weakness Positive operating result (about the amount of 2002) Positive operating cash flow Positive net income Outlook 2003

35 Software AG Stock information (as of June 30, 2003)

36 36Investor Roadshow USA July 2003 Shareholder Structure as of June 30, 2003 (Number of Shares: 27,3 mio.) Software-AG- Foundation 31.6% Private Investors 11.5% Institutional Investors 56.9% Germany 36.2% UK 14.9% Rest of Europe 35.7% USA 13.1% Shareholder StructureFree Float by Region Market Cap: 325 mio. euros Free Float: 68.4% Major Funds: Classic Fund Aktiengesellschaft, Liechtenstein Capital Group Companies, Inc., USA Fidelity International Ltd., USA Rest of World: 0.1%

37 37Investor Roadshow USA July 2003 24.03.03 Entry in TecDAX Software AG MDAX Nemax/ TecDAX Share Price Development as of June 30, 2002 – June 30, 2003 SAG share price: 30.06.02: 14.30 30.06.03: 11.90

38 38Investor Roadshow USA July 2003 Top Ten TecDAX as of June 30, 2003 (in euros)

39 39Investor Roadshow USA July 2003 Key Figures per Share (in euros)


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