SAF Interim Report Q1/2006
57 % growth in net sales in first quarter of 2006 Positive EBIT and net profit in the first quarter already Successful IPO achieved in under four months Increased awareness for SAF products
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In publishing its figures for the first quarter of 2006, SAF AG, which has been listed on the Prime Standard of the Frankfurt Stock Exchange (ISIN CH0024848738), reports a successful start to the new financial year. Not only did the quarterly comparison show a remarkable 57 percent increase in sales, but in the first quarter the company also achieved a positive operating result (EBIT of EUR 272,682) and consolidated net profit (EUR 189.479).
Sales of licences and maintenance income up by 88 percent and 118 percent respectively
"The first quarter of 2006 for SAF AG was devoted to the IPO and the consistent pursuit of organic growth in our core business of generating sales of software licenses and maintenance income", the CEO and President, Dr. Andreas von Beringe, explained.
SAF AG achieved an increase in total net sales of 57 percent compared with the prior-year period. The growth in sales of licences and in maintenance income was especially impressive at 88 percent and 118 percent respectively.
Sales of licences amounting to TEUR 1,184 were mostly generated from the conclusion of three new contracts for licence customers. Following a substantial increase in sales of licences in the previous year, maintenance income, which reflects sales of licences in earlier periods, rose significantly compared with the first quarter of the previous year to TEUR 540 or by almost 120 percent. There was also a corresponding increase in the volume of the order backlog resulting from the maintenance activities.
Income from services remained slightly below the level in the first quarter of 2005. The main reason for this was the increased use of SAF consultants in pre-sales projects.
The geographical analysis of the development of net sales by end customer reveals a slight increase over the prior-year period of 7 percentage points to TEUR 930 in the proportion of net sales to end customers located in Germany. End customers from the rest of Europe and the Middle East accounted for 39 percent of net sales for the first quarter of 2006. This represents an increase of 29 percentage points compared with the same quarter last year.
The proportion of net sales made to end customers in America fell by 35 percentage points, from 49 percent in the first quarter of 2005 to 14 percent for the same quarter of 2006. But SAF does not regard this shift in any way as setting the pattern for the following quarters. Moreover, the establishment last year of the US subsidiary has created a platform for acquiring additional customers in the US.
Rise in net sales outpaces increase in costs
Costs for the first three months rose by 36 percent overall compared with the prior-year period, considerably less than the rise in net sales of 57 percent. The analysis of the increase in costs by function is as follows: 17 percent rise in cost of sales, 24 percent in research and development costs and 40 percent in distribution costs. The increase was in line with expectations. Costs incurred in the context of strategic expansion relate, in particular, to the costs of developing SAF's business activities in the USA, and the expansion of SAF's own sales and distribution operations. General administrative costs rose by TEUR 216 compared with the first quarter of the previous year, an increase of 66 percent. The increase was mainly the result of costs incurred in connection with preparations for the IPO. These included the costs of improving the accounting systems, for example for the conversion to IFRS, tax and legal advice and the development of investor relations activities.
The analysis of costs by the type of expense shows personnel expenses 24.2 percent higher than in the prior-year period at EUR 1,118. The rise in the number of employees is in line with SAF AG's business plan and will continue until the end of the year. Depreciation and amortisation was 237 percent higher in the first quarter of 2006, mainly as a result of the investment in equipment of new business premises, rising from TEUR 27 to TEUR 92. This amount is not significant, however.
Major financial indicators (EBIT, EBT, net profit) substantially higher than prior year
The positive sales development was also strongly reflected in the operating result (EBIT). The EBIT amounted to TEUR 273 with an EBIT margin of 13 percent. This is a remarkable improvement over the first quarter in the previous year, for which SAF AG had reported an EBIT of TEUR - 18.
SAF AG also achieved a substantial improvement over the previous year in income before tax (EBT) which, at TEUR 242, significantly exceeded the loss before tax of TEUR -40 reported by SAF AG for the first three months of 2005.
SAF AG also achieved a significant increase in net profit for the period from a net loss of TEUR -62 in the first quarter of the previous year to TEUR 189. The net profit margin amounted to 9 percent. This perform-ance at net profit level too, is an additional major achievement, because the first quarter for SAF is typically somewhat weak for seasonal reasons, as is generally the case in the software industry.
Increase in staff numbers in line with growth in sales
SAF has recruited additional members of staff to help in continuing to drive the growth in sales forward. At the end of the first quarter of 2006, SAF AG had 55 employees, 10 more than in the same period of 2005.
Significant events after the end of the first quarter
In order to add even greater impetus to SAF AG's future growth, the Company successfully completed its admission to listing on the Prime Standard of the Frankfurt Stock Exchange on 6 April 2006 and also established a 100% subsidiary of SAF AG, SAF Simulation, Analysis and Forecasting s.r.o., in Bratislava (Slovakia). The subsidiary will commence operations even before the end of the second quarter, with the aim of carrying out nearshore development activities in particular, but also facilitating access to the Eastern Euro-pean market in the medium term.
SAF AG's prime objective is to achieve significant and also profitable growth in sales in the current financial year, together with a further improvement in the profit margin
In stating the reasons for the positive outlook, Dr. Andreas von Beringe said, "We have noticed that there has been a significant increase in interest from potential customers in the SAF SuperStore, SAF Super-Warehouse and SAF SuperForecast software products. This is undoubtedly also due to increased awareness of SAF AG thanks to the higher level of publicity generated in the context of the IPO. But we have also noticed a higher level of long-term interest in our standard software solutions for the retail sector at trade fairs over the course of the last few months. This is also reflected in the fact that we have already won several new direct customers for pre-sales studies and pilot installations".
This will trigger a further improvement in the profit margin. In the first quarter of 2006, SAF AG has already shown that net sales are continuing to rise at a rapid rate. It is notable that the increase in sales of just under 60 percent and the 80 percent rise in gross profit were achieved despite the preparations for the IPO, which took up large amounts of time and management resources. Since almost all of the administrative costs incurred in connection with the preparations for the IPO were included in the income statement for the first quarter, this has had an effect - as expected - on the EBIT and net profit margins.
end of announcement euro adhoc 31.05.2006 07:17:35
Further inquiry note:
Astrid Strömer
+41 (0)71 666 79 48
astrid.stroemer@saf-ag.com
Branche: Software
ISIN: CH0024848738
WKN: A0JD78
Index: Technologie All Share, Prime All Share
Börsen: Frankfurter Wertpapierbörse / official dealing/prime standard
Börse Berlin-Bremen / free trade
Baden-Württembergische Wertpapierbörse / free trade
Börse Düsseldorf / free trade
Bayerische Börse / free trade