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EANS-News: Beta Systems achieves a significant increase in operating cash flow in the first quarter of 2011
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Berlin (euro adhoc) - Substantial reduction in short-term debt
Adjustments to the personnel structure completed in the first quarter Decline in revenues and profits anticipated in the wake of realigning the business model Rising cost savings as from 2011 and considerable increase in margins as from 2012 Realignment of the portfolio geared to GRC solutions Berlin, May 12, 2011 - In the first quarter of 2011, Beta Systems Software AG (BSS, ISIN DE0005224406) raised its operating cash flow significantly to EUR 15.0 million, thereby outperforming the high year-earlier figure (Q1/2010: EUR 11.7 million). This positive development was attributable to the notable improvement in contractual and receivables management and the associated substantial liquidity inflow from the reduction of trade receivables in comparison with December 31, 2010. Moreover, there were the customary effects at the start of the year from invoicing a major part of the maintenance services provided in 2011 and the non-recurrence of liquidity out-flow owing to the sale of the ECM business which took place in 2010. The increase in operating cash flow enabled the utilization of short-term credit facilities at banks to be significantly scaled back; the current restructuring of the Group can be financed by its own cash funds. In the current fiscal year, the Company also anticipates another cash inflow from the ECM disposal.
The Berlin-based software provider achieved revenues of EUR 8.9 million and earnings before interest and tax (EBIT) of EUR -2.3 million (Q1/2010: EUR -1.6 million) and a result for the period of EUR -1.5 million (Q1/2010: EUR 0.3 million). In comparison with the first three months of 2010, the effect on profit from the disposal of the ECM busi-ness came to EUR 1.6 million with the concurrent positive impact on the result for the period.
The determining factor in the first quarter of 2011 were the restructuring measures announced in 2010. As part of the process of realigning the business model, which also entails waiving non-recurrent license revenues in favor of recurring, sustainable software and maintenance income and the termination of less profitable activi-ties, revenues and the results from continued operations stood at a lower level in the first quarter of 2011 as against the year-earlier period, in line with expectations. Another reason for this development was the scheduled termination at year-end 2010 of the service agreement with the BancTec Group concluded as part of the ECM disposal. The personnel costs associated with this agreement were nonetheless incurred up until the end of the first quarter of 2011 and, in the wake of measures completed in downsizing jobs, will only have an easing effect on the result in the second quarter of the year.
As part of cost optimization measures following the sale of the ECM business, the decision was made to scale back up to 20% of jobs in general central administration and support functions as well as in downstream func-tions in sales and development both in Germany and abroad. The relevant discussions with employee representatives and employees have meanwhile been concluded. The respective provisioning of EUR 4.6 million had already been taken account of in the results of continued operations in 2010 and will lead to the relevant fund outflow from the second quarter onwards.
With the restructuring measures having been completed, the Company plans to make growing cost savings groupwide of up to EUR 2.5 million in operating expenses over the course of the year 2011 measured against 2010. Cost savings of up to EUR 5.0 million are envisaged from 2012 onwards. Moreover, Beta Systems antici-pates an increase in margins as from 2012 through stepping up its services business and from the lower risk in continued operations, as the focus here will be on the security and compliance and the GRC solutions increasingly required by customers.
Statements by the Management Board "A key determinant of future earnings is the now completed process of cost optimization which has resulted in lowering our breakeven point by almost EUR 5 million long term," explained Gernot Sagl, Chief Financial Officer of Beta Systems Software AG and added: "As far as financing is concerned, Beta Systems is very well posi-tioned through its pleasingly high operating cash flow, and we can use our own funds not only to reduce our short-term debt as planned but also to finance the restructuring measures. Securing the positive liquidity posi-tion from operations is our primary goal, and the payments still outstanding from the sale of the ECM business will be used to finance the upcoming investments to promote growth".
"I am delighted that we can now look to the future," stated Jürgen Herbott, Chief Executive Officer of Beta Systems Software AG and added: "The adjustments to our business model are beginning to take effect in the cash flow, and we are currently working on a three-year plan which encompasses our repositioning in the high-growth IT/GRC market. The greatest challenge and, at the same time, our most important unique selling propo-sition as against our competitors is the singular combination of our tried-and-tested solutions for secure and efficient information management in data centers, the processing of documents and IT user management with their new functionalities for the monitoring, control and management of constantly changing, necessary regula-tions placed on IT operations and resulting in particular from new regulatory requirements. This applies to both mid-sized enterprises and large conglomerates."
More information and disclaimer The complete Quarterly Financial Report as per March 31, 2011 has also been published today and can be downloaded from the company website at http://www.betasystems.com under the Investor Rela-tions/Financial Reports heading. This year's Annual General Meeting of Shareholders will take place on June 7, 2011, in Berlin.
All amounts (e.g. figures in EUR million) cited in this information by the Company and information derived therefrom (e.g. percentage figures) are figures fully rounded up to thousands of euros as presented in the provisional Con-densed Combined Interim Financial Report as at March 31, 2011.
End of the press release
Beta Systems Software AG Beta Systems Software AG (Prime Standard: BSS, ISIN DE0005224406) offers large corporations, mid-sized companies and organizations high-end infrastructure software products spanning sectors for the cost-effective and secure monitoring of IT processes in high-performance IT environments. The software and solutions portfolio comprises Data & Document Processing, secure and efficient information management in data centers which guarantees premium efficiency in the processing of documents, and Security & Compliance which is the secure and efficient user management for the comprehensive management of statutory provisions. The products in both areas are developed, marketed and sold as integrated product suites under the overarching aspect of governance, risk management and compliance (GRC). The high-quality infrastructure software products and solutions enhance the performance of a company´s IT in terms of its availability, scalability and flexibility. Data centers optimize their job and output management. Moreover, especially compa-nies with high numbers of users are supported in the automation of their IT user administration.
Beta Systems was founded in 1983, has been a listed company since 1997, and has a workforce of 325 employees. The company´s principal place of business is Berlin. Beta Systems operates in Germany and internationally through 14 subsidi-aries and cooperations with numerous partner companies. Throughout the world more than 1,300 customers use the prod-ucts and solutions of Beta Systems to improve their processes and security in more than 3,200 running installations. At present, Beta Systems generates 50 percent of its sales from international business.
More information on the company and its products can be found under www.betasystems.com.
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Beta Systems Software AG
Tel.: +49 (0)30 726 118-171
Fax: +49 (0)30 726 118-800
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Tel.: +49 (0)89 99 38 87-32
Fax: +49 (0)89 930 24 45
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