6-Month Report of COR&FJA AG

Transcription

1 6-Month Report of COR&FJA AG Contact COR&FJA AG Humboldtstraße 35 D Leinfelden-Echterdingen Investor Relations Phone: Fax:

2 Key Figures for the First Half-Year 2013 Dear shareholders, customers, business associates and colleagues, euros 000 euros Turnover 63,076 68,010 EBITDA (Operating result before depreciation and amortisation) -5,090-1,883 EBITDA margin -8.1% -2.8% EBIT (Operating result) -8,084-3,857 EBIT margin -12.8% -5.7% EBT (Result before income taxes) -8,511-4,550 Half-year result -8,822-3,481 Earnings per share in euros Equity 41,007 72,959 Equity ratio 41.4% 56.3% Total assets 98, ,679 Cash flow from operating activity 944-2,269 Employees as at ,160 1,195 Key Figures for the Second Quarter euros 000 euros Turnover 32,603 32,720 EBITDA (Operating result before depreciation and amortisation) ,854 EBITDA margin -0.8% -5.7% EBIT (Operating result) -2,309-2,859 EBIT margin -7.1% -8.7% EBT (Result before income taxes) -2,541-3,398 Quarterly result -3,354-2,594 Earnings per share in euros With total turnover of 63.1 million euros (as per 30 June 2012: 68.0 million euros) and earnings before interest, taxes, depreciation of tangible assets and amortisation of intangible assets (EBITDA) amounting to -5.1 million euros (as per 30 June 2012: -1.9 million euros), COR&FJA AG s commercial development failed to live up to its own expectations for the first six months of One reason for this is that measures in connection with restructuring the company once again necessitate expenses that are posted directly through profit and loss. Furthermore, the slightly lower volume of business generated by existing customers caused by the general market situation has led to a decrease in turnover. As a consequence of this, we revised our earnings figures for the ongoing year 2013 downwards by way of an ad hoc announcement a few days ago. Instead of the approximately 5.0 million euros that had previously been budgeted, our earnings before interest, taxes, depreciation of tangible assets and amortisation of intangible assets (EBITDA) are now expected to total 3.0 million euros. In addition, the forecast for total turnover in 2013 was revised downwards slightly, from its previous figure of some million euros to million euros. Despite this still unsatisfactory commercial trend in the current financial year, we continue to view the company s current situation with cautious optimism in overall terms. This is because there are now signs that the cost-cutting programme that the company launched in 2012 is having a discernible effect, with the volume of previously outsourced services in particular showing a significant downward trend. In addition, the restructuring of our subsidiary COR&FJA Metris is progressing successfully and will be completed on schedule by the end of the year. In connection with this, it was agreed with msg systems AG that the complementary solutions offered by COR&FJA Metris and msg systems AG in the claims management area should be dovetailed more closely as regards both content and marketing in the future we believe that this will lead to greater demand on the market. 1

3 As early as July 2013, we had announced that we would be streamlining our product and service spectrum significantly in order to get the company back to profitability in the year ahead. Basically speaking, we are not ruling out further steps towards this goal, particularly with regard to the company s strategic realignment, and shall announce such steps in good time if any should be adopted. All in all, the sales situation at COR&FJA is satisfactory, and we have received noteworthy new orders in both the insurance and banking sectors during the current financial year. SOKA-BAU, the Social Security Benefits Offices of the German Building Industry, for example, was won as a new customer for our COR.FJA Life policy management system. In this instance, the intention is that the COR&FJA product should cover SOKA-BAU s pension-fund requirements for company pension schemes. In February 2013, moreover, we had announced that Honda Bank opted for the installation of the COR&FJA core banking system CORBAS after completing an extensive software selection process. Yours sincerely Dr Christian Hofer (Chairman of the Management Board) Volker Weimer (Members of the Management Board) Interim Management Report COR&FJA has won the Social Security Benefits Offices of the German Building Industry (SOKA-BAU) as a new customer for the COR.FJA Life policy management system. SOKA-BAU intend to use the COR&FJA product to map the pension fund requirements for the SOKA-BAU pension scheme. The solution will be based on the DB2 database management system when COR&FJA has successfully adapted the database concept for this standard software solution within the framework of its collaboration with IBM. COR&FJA had already announced Honda Bank s decision in favour of installing CORBAS, COR&FJA s core banking system, at the end of an extensive software selection process during the first quarter of The predecessor system will gradually be replaced by CORBAS within the framework of the collaboration as the year progresses, migrating Honda Bank s entire contract portfolio to the new solution in the process. In COR&FJA s Insurance segment, the new release 4.11 of the COR.FJA Life Factory (LF) policy management system was made available for customer projects on schedule at the end of April; some customers have already begun to change over to the new system. The main contents of the new release have all been discussed and agreed with the customers within the Tarifreform Klassik, Riester/taxes and SEPA working groups. Furthermore, a number of technical requirements (LF as a 64-bit application, further development of HTML as a result of the GUI strategy), along with other optimisation measures and functional enhancements of the standard (e.g. increasing life annuities in relation to pensions and exemption of specific supplementary insurance policies from premium payments), were also implemented in this release as a response to changed market requirements. Rolf Zielke (Members of the Management Board) Plans for the pending 4.12 release have been discussed and agreed with the company s existing customers within the framework of the user group and the pertinent working groups. The release will be made available in the spring of

4 Generally speaking, LF customers are currently discovering that they The first stage of LF JEE was installed at the insurance company are enjoying competitive advantages as a consequence of the longterm investments made in previous years in an effort to increase the the end of the period under review. This led to the achievement of two Provinzial Rheinland on schedule at the beginning of July, shortly after flexibility of LF. The enhancements aimed at achieving standardised important milestones in one go for LF with its new, state-of-the-art handling of differentiated accounting principles, or the automated technology. LF JEE has the first live customer solution, and the facility calculation of additional interest reserves and (optional) reciprocal that offers existing LF customers a means of changing over to the new financing, for example, are proving to be extremely important instruments technology step by step passed the practical test with flying colours. for insurance companies in economic terms particularly in the light of Provinzial Rheinland is planning to introduce another stage before the the persistently difficult situation prevailing in the financial markets end of the year. Furthermore, COR&FJA is registering a high level of ( low interest rate challenge ) and increasingly stringent regulatory interest in this new technology platform among insurance companies. requirements. A proof-of-concept phase was carried out at the premises of a major Based on the standard, LF customers are able to use current accounting international insurer in Germany during the second quarter of the year; principles on commencement of the respective pension (in accordance it involved an in-depth functional and technical analysis in the customer s with the term conventional pension 2.0, which is currently being target environment. COR&FJA is expecting the company to reach a discussed on the market because of an innovative product offered by fundamental decision for or against using LF as its central life platform Allianz Lebensversicherung). This important product attribute is during the second half of A preliminary study was also completed supported by only a few of the systems that are available on the market successfully and the subsequent course of action agreed at the at the moment. LF users can go even further in this respect, mapping premises of another major insurance company during the second dynamic increases, supplementary payments or allowances with quarter of the year. At a third insurance company, COR&FJA is differentiated accounting principles in the system, for example, and currently in the middle of the planning phase aimed at achieving an offering them to their policyholders. Various alternative guarantee optimum project structure and integration into the project portfolio. LF s mechanisms can be used as well: these include, in particular, investment fundamental suitability as a central policy management system for the guarantees (based on hedging, (i)cppi or index participation) that life segment has already been established for this project as well. supplement or supersede the conventional guarantees. COR&FJA is also expecting decisions regarding the future use of LF from both of these insurance companies during the second half of the The technical enhancement of LF on the basis of modern JEE year. technology, beginning with the LF JEE Contract component, is still going according to plan. This means that LF JEE, developed in In the installation project at the premises of the ERGO Insurance Group, cooperation with IBM, is the world s first executable application to be LF was implemented successfully as scheduled on 15 June certified on IBM s PureSystems technology. As a result, LF JEE can be Fund-based product concepts completely new to the German market offered as a cloud solution on the basis of a strategic IBM platform. were implemented in LF and are available with or without guarantees. The solution was presented to the public for the first time at the CeBIT All important business transactions in LF are being used gradually in One of the current focal points of the collaboration with IBM is addition to these new product concepts, which require the integration the provision of a technical infrastructure for extensive automation of of a financial mathematics component and the mapping of guarantees the processes in the life insurance business in order to offer LF through a reinsurer. Further upgrading of the functionalities is planned customers more alternative ways of responding to growing cost and will constitute an element of the next stage. ERGO is the first of pressure. the top three life insurance companies in the German market to make extensive use of a standard software solution to handle its high-volume business processes and place its future-oriented insurance products. 4 5

5 Now that the first stage has gone live, project work at the premises of Cologne-based DEVK Versicherungen is now being focused on planning the subsequent stages in order to complete the business transactions in an effort to go live with the next stage towards the end of The current standard release 3.15 of the COR.FJA Life policy management system was supplied to the customer projects on schedule during the second quarter of the year. The issues covered by release 3.16 are being discussed and agreed at the moment and will be implemented during the last quarter of Delivery of the new release to customer The upgrade from the currently used LF 4.7 to the latest release, LF projects is expected to take place at the end of the first quarter of SP2, is still proceeding successfully at Heidelberger Leben as part of a strategy programme by the parent company, Lloyds Banking Group. In addition to this, possible ways of implementing commission functionalities based on the SAMOS system component from Global Side (msg systems group) are being investigated in connection with COR&FJA was delighted to welcome a total of 15 participants from nine insurance companies to this year s COR.FJA Life user group meeting, which was held in Berlin at a customer s premises for the first time in the middle of June. this programme within the framework of a preliminary study. COR&FJA is acting as general coordinator for this as the link between SAMOS and LF has a strategic character for COR&FJA. As far as the conversion of the COR.FJA Life user interface to web-based technology is concerned, the COR.FJA RegTestSuite has now been set up and can be used for automatic testing of the new The Migration division was able to generate several new and follow-up orders during the period under review. In the context of the LF installation project at DEVK Versicherungen, another migration tranche will be implemented in the pending second stage, culminating in a six-figure business-logic web services and the new browser-based interfaces alike. In this context, COR&FJA successfully completed the design and automation of a test portfolio for defined basic standard products during the second quarter of portfolio volume. Database support for the COR.FJA Life product has now been extended to Migration work in the project at Heidelberger Leben is proceeding on schedule in the context of the strategy programme mentioned above. Essential to the standardisation of the system landscape on the basis include DB2, as well as Oracle, as a result of its successful collaboration with IBM. The COR&FJA solution will be set up on the IBM database management system for the first time in the SOKA-BAU project. of an LF 4 version, this building block constitutes a central element within the project as a whole. AXA Versicherung went live with COR.FJA Life version 3.14 in the middle of June. The migration and installation went according to plan At Signal Iduna, the preliminary migration phase has been completed and the system has been running smoothly since then. successfully and more than two million contracts are now being carried over within the framework of an ambitious time schedule. Now that several components relating to COR.FJA Life went live successfully for individual business (phase 1) within the framework of Württembergische Lebensversicherung commissioned COR&FJA to provide support for an internal migration project. This again shows that COR&FJA s expertise, tools and migration techniques are also being appreciated on the market for portfolio migration projects outside of COR&FJA s proprietary product landscape. the project being implemented at the Norwegian insurer Frende Livsforsikring AS during the first quarter of this year, policies for all of Frende s new insurance contracts have been be issued and administered through the main COR.FJA Life component (life policy management) and peripheral components (partner management, collections and disbursements, business process management, correspondence and Furthermore, COR&FJA offers comprehensive advice on actuarial and migration-specific issues to the companies involved in a portfolio sale, plus simultaneous portfolio transfer. scheduling data) since the second quarter. In addition, the migration of existing contracts from the predecessor system to the new target environment was completed successfully at the beginning of June. 6 COR&FJA has sole responsibility for operating the system, which is hosted in the msg systems AG computing centre in Ismaning. 7

6 Active marketing of the COR.FJA P&C non-life insurance solution that had been offered to date has now ceased and COR&FJA has discontinued all product development in this segment. In future, the policy management solution for the non-life insurance sector will be covered within the framework of our collaboration with msg systems AG. Apart from this, COR&FJA registered growth in demand for automation functions (add-ons) for the solution during the last quarter. These supplementary functions require licences and offer customers a means of automating specific processes to an even greater extent or running them completely in the dark according to the actual volume involved. 8 The COR&FJA OdaTeam s COR.FJA Symass administration system was launched successfully at the premises of the company Modra Versicherung in Slovenia. In connection with this, COR&FJA OdaTeam has developed specific enhancements for the product, which include a web interface. New additional orders were received from Inter in Poland and from AXA in the Czech Republic and Slovakia during the second quarter of the year. Furthermore, a preliminary study was initiated at the premises of an existing COR&FJA customer to investigate further expansion of the Symass platform for the customer s international business. Release 4.31, the last in the 4 series, was delivered to existing COR.FJA Symass customers during the second quarter. Work has already started on the next version 5.0 in parallel with this. All of these activities underline the high level of flexibility and short development cycles of this universal administration system. COR&FJA OdaTeam created the first demo release of a reinsurance component in connection with another specific marketing project. The current release 3.10 of COR.FJA Zulagenverwaltung (a system for administering plans subsidised by the Riester system) was delivered to all customers on schedule in May Development work for the next version 4.0 is also proceeding according to plan. From this release onwards, COR.FJA Zulagenverwaltung is being supplemented by tax calculation functions for Riester-specific business transactions (e.g. in the context of home subsidy accounts or misuse). Numerous requests for these functions have already been received. This upgrade of COR.FJA Zulagenverwaltung is a logical continuation of the comprehensive automation and concentration of all regulatory and statutory requirements relating to Riester business in this component. A preliminary study was launched shortly after the period under review to evaluate the possible use of COR.FJA Zulagenverwaltung at the premises of a major supplier of insurance products subsidised by the Riester system. Release 3.7 of the COR.FJA RAN pension accounting and documentation system is being developed at present and will be made available for customer projects on schedule at the end of the third quarter of The release incorporates the new requirements laid down by the Central Allowance Authority for Pension Assets (ZfA) and a number of functional upgrades and optimisation measures that have been agreed with customers. COR&FJA is currently carrying out three preliminary studies with companies that are interested in this component and is also conducting negotiations with existing customers regarding the carryover of more customers into the COR.FJA RAN system already being used at their premises. The next release 1.4 of the standard COR.FJA TaxConnect software is also in the development stage at the moment. With this product to cover tax reporting requirements, COR&FJA has acknowledged the trend towards mapping regulatory requirements of this kind with a standard software product in the insurance market as well. This is being underlined emphatically by two preliminary studies that are already in progress. COR&FJA s new Pflege-PreMium solution, which implements the so-called Pflege-Bahr system introduced by the German Federal Government as at 1 January 2013, is still proceeding according to plan. The pre-release 3.8 was already ready for delivery at the end of July 2013, shortly after the end of the period under review and therefore ahead of schedule, which means that punctual applications for the government allowance are assured for the policyholders in question. Three renowned health insurance providers HUK-COBURG, LVM Versicherung and Nürnberger Versicherung have now opted for the new solution, which was devised in close cooperation with the customers. COR&FJA is also conducting negotiations with three other potential customers. 9

7 10 Work on the new product COR.FJA ilis was also advanced further during the second quarter of the year. COR.FJA ilis offers COR&FJA customers an automated, non-redundant and audit-proof means of performing all of the calculations needed for financial reporting directly from within the policy management function. The standard software is being developed further in cooperation with the customer in a separate working group. In addition to COR&FJA s own COR.FJA Alamos projection software, other risk management tools from renowned manufacturers will be linked in a fully automated process via a standardised interface. The project at WellPoint, the North American health insurance provider, is still progressing according to plan. The company, COR&FJA s US subsidiary, had won WellPoint as a new customer for the FJA Product Machine in mid Several introductory projects relating to the new SEPA (Single Euro Payments Area) functions of the CORBAS MBS core banking system have been launched on the premises of existing COR&FJA customers in the Banking segment since the second quarter of this year. With the current release (13) having been delivered to existing COR&FJA customers on time during the first quarter, plans are now underway for the next release. Completion is scheduled for the last quarter of The new release of CORBAS ReCon (reporting and controlling) was delivered successfully during the second quarter of the year and COR&FJA s first existing customer has already gone live on the basis of this. Another two existing customers are scheduled to follow during the third quarter. COR&FJA s RiskEngine, which has been integrated successfully into CORBAS ReCon, is used to calculate and standardise cash flows in connection with the new statutory reporting ratio LCR (liquidity coverage ratio) and is still operating successfully in pilot mode. COR&FJA is cooperating with the ABACUS/DaVinci manufacturer Bearing-Point to offer the market a complete platform for regulatory reporting requirements in the form of CORBAS ReCon. The positive, constructive collaboration with Bearing-Point is to be further expanded by way of a partnership agreement during the current financial year. The aim of this is to establish the CORBAS ReCon product on the market as a comprehensive platform for modern banking management in the medium term. In the context of the persistent financial crisis and the associated extension of regulatory requirements and reporting obligations, COR&FJA basically regards itself as being well positioned with the CORBAS ReCon product and is anticipating a positive response from the market. As far as the TopDesk integration framework is concerned, COR&FJA is continuing with its gradual rollout at the banks now that delivery of a pilot version has been underway since the beginning of the year and one customer MCE Bank has already gone live with TopDesk. This means that a central component of the COR.FJA Banking Suite (CORBAS) has gone live in the form of TopDesk. This solution enables an even better integration of external systems and supports process handling with its additional functions (such as a mailbox). TopDesk ensures that all core banking processes for lending and deposit business can be controlled centrally and handled in an integrated process featuring the new front end. For this product as well, important functional enhancements have been devised and coordinated with the customers in the relevant expert panels. COR&FJA is collaborating with its long-standing partner TONBELLER with respect to the planned introduction of the US tax reporting system FATCA (Foreign Account Tax Compliance Act) for European financial services companies. TONBELLER joined forces with COR&FJA to present the FATCA customer classification and reporting modules, which are to be integrated into the COR&FJA Banking Suite (CORBAS) as the next stage, to existing COR&FJA customers during the second quarter of The purpose of this is to develop a FATCA financial settlement component for branches in countries which have not yet concluded intergovernmental agreements with the USA. COR&FJA s currently emerging range of products and services relating to FATCA is available to banks and insurance companies alike. A more comprehensive collaboration with TONBELLER is currently being discussed. 11

8 The partnership with the Swiss software company Business-DNA Solutions for all aspects of the TopEase modelling platform, which is used for the integrated documentation, visualisation and monitoring of an entire corporate architecture (processes, organisation and applications), continues to proceed according to plan. COR&FJA is aiming to advance continuously the model of the COR&FJA Banking Suite (CORBAS) created with this platform so that it will be able to provide multidimensional, thoroughgoing and full support for these specialised processes in the banks with the CORBAS modules and components, extending right through to interface documentation and mask descriptions, etc., on the basis of a generally applicable bank process map and standardised workflows. Communication with COR&FJA s customers will be greatly simplified by this model because functional and technical aspects are always considered in the context of one another and promote a high level of mutual understanding. At the same time, this model constitutes the basis for process optimisations at banks which, for their part, provide the basis for the further advancement of product development and standardisation at COR&FJA. Numerous adaptations and further developments were concluded and successfully carried over into pilot operation within the framework of the project at Honda Bank during the second quarter of the year. In connection with this, there are also plans to tie in the processing of bank lending by afb Application Services AG (afb) in order to supplement the range of services provided by COR&FJA in the lending sector. afb optimises entire business processes in the lending activities of banks and leasing companies. State-of-the-art IT solutions based on application service providing offer a means of automating the entire lending process COR&FJA has entered into a cooperation agreement with afb which opens up new possibilities for new and existing customers by virtue of the interaction with the COR&FJA product spectrum. The production environment was successfully installed on the premises of a potential new customer during the second quarter of the year in preparation for the main project; COR&FJA is expecting the project to actually go live during the third quarter of In connection with this, a letter of intent (LOI) was received at the end of the last financial year. Two new COR&FJA modules dealing with impairment (revaluation of fixed assets) and hedge accounting (offsetting changes in the value of financial instruments) were supplied to an existing customer for the first time at the end of the period under review and the system is expected to go live during the third quarter of the year. Apart from considerable interest in the system as a whole, COR&FJA is registering an appreciable level of demand for the software solutions that it offers in the loan processing and reporting-and-controlling product segments. Furthermore, promising discussions concerning long-term prolongations of maintenance agreements are being conducted with a number of existing customers. The regular expert panel meetings with COR&FJA s existing customers in the Banking segment were convened again during the second quarter of the year to coordinate pending implementation issues and discuss the most important customer requirements. Discussions again centred on the expansion of the lending systems for the retail and wholesale segments, the development of data marts on the basis of CORBAS ReCon business data in order to optimise data analysis, and optimisation of the TopDesk interface. Apart from this, discussions with the company s existing customers continue to focus on regulatory issues (reporting requirements) and the subject of bank management (equity calculation, internal controlling, etc.). 12 Apart from this, projects involving the technical porting of CORBAS Hyp, the core banking system for mortgage lending institutions, to a new system platform and database have also been launched on the premises of two existing customers. The solution is running as a pilot system in both of these projects and is scheduled to go live during the last quarter of

9 Earnings, financial and assets position Income position As at 30 June 2013, turnover amounts to 63.1 million euros, which is 4.9 million euros below the turnover generated in the same period last year. COR&FJA AG s commercial development in the first half of the year therefore fell short of the company s own expectations, a fact which can be attributed primarily to the downturn in business with existing customers that resulted from the general market situation. As at 30 June 2013, products and services invoiced within the framework of fixed-price orders as well as services performed on a time and material basis account for 71.3 per cent of aggregate income, which is 1.0 percentage points lower than in the previous year. Licensing income declined by 2.6 percentage points to 4.0 per cent of total turnover. Maintenance income, on the other hand, increased by 3.2 percentage points to 21.9 per cent. Income from merchandise and computing centre services remain almost constant at 2.8 per cent of total turnover. Changes in the portfolio resulting from the capitalisation of consulting services not invoiced made an unchanged contribution of 44,000 euros to earnings. Other operating income, which consists primarily of rental income and contributions still to be paid for the assignment of company cars, amounting to 2.4 million euros, was 1.6 million euros higher than in the previous year. This demonstrates the first successes of the restructuring activities and the cost-cutting programme. In connection with this, rental spaces were rented out returned or sub-let. Another outcome of the cost-cutting activities has been that other operating expenses are now at 11.3 million euros, slightly below their level in the first half of last year (as per 30 June 2012: 12.2 million euros). Their proportional bearing on turnover, however, increased slightly by 0.1 percentage points from 17.9 per cent to 18.0 per cent. As a result of the lower turnover and especially the higher personnel expenses, earnings before interest, taxes, depreciation of property, plant and equipment and amortisation of intangible assets (EBITDA) amounted to -5.1 million euros in the first six months of the year, which at 3.2 million euros was considerably lower than the comparable prior-year figure of -1.9 million euros. As at 30 June 2013, depreciation and amortisation amounts to 3.0 million euros, an increase compared with the previous year (as per 30 June 2012: 2.0 million euros). As part of the impairment test for goodwill, the carrying amounts of the goodwill of the individual cash-generating units were examined for signs of impairment. The comparison of the carrying amount with the value in use in accordance with the discounted cash flow method resulted in impairment totalling 1.1 million euros. In particular, the goodwill at both the Wagner & Kunz Aktuare AG (0.034 million euros) and plenum AG (1.088 million euros) was fully impaired. Scheduled depreciation of property, plant and equipment and amortisation of intangible assets accounted for 1.0 million euros; a further 0.9 million euros was accounted for by the scheduled amortisation of the intangible assets from shareholdings which were identified during corporate acquisitions. Total capacity-driven personnel and external services costs amount to 59.2 million euros as at 30 June 2013, 0.5 million euros higher than the previous year s figure. In this area too, though, the cost of purchased services was down by 3.0 million euros. But this success was more than offset by the severance pay agreements necessitated by the company s restructuring. Consequently, the proportional bearing of these costs on turnover increased by 7.3 percentage points to 93.9 per cent compared with the same period last year. The financial result is almost stable at -0.5 million euros. In the comparable period last year, amortisation through profit and loss still had to be carried out for the shares in B+S Banksysteme Aktiengesellschaft reported in accordance with IAS 39, a step which was not necessary this year. All in all, COR&FJA generated a consolidated loss of -8.8 million euros as at 30 June 2013 (comparable period last year: -3.5 million euros). Earnings per share amount to euros, a deterioration of 0.12 euros compared with the same period last year

10 Financial position The company s cash in banks decreased by 0.3 million euros in the first six months of 2013 and amounted to 11.0 million euros as at 30 June Current financial liabilities showed a slight increase of 0.1 million euros, taking them to 15.0 million euros as at 30 June As at the reporting date, net cash showed a modest decline of -0.5 million euros compared with its previous year s figure. The change from the earnings before interest, taxes, depreciation of property, plant and equipment and amortisation of intangible assets (EBITDA) plus the change in provisions and in share price and exchange rate effects not accounted for through profit and loss amounted to -6.1 million euros (free cash flow) in the first six months of Investments were made on a modest scale, amounting to 0.3 million euros. The change in receivables and liabilities amounted to 7.0 million euros. This led to a positive cash flow from operating activity amounting to 0.9 million euros a clear sign that the restructuring process is showing initial successes. Tax payments of 0.1 million euros had to be made in the first six months of the year. Assets position Current assets were 4.2 million euros lower than at the end of 2012 and amounted to 47.8 million euros. This was essentially the result of lower trade receivables, which decreased by 4.0 million euros to 33.1 million euros. The main reason for this downturn was that only 19.2 million euros worth of receivables could be invoiced in the first quarter; the PoC receivables not covered by partial payments, moreover, also decreased slightly and totalled 14.0 million euros. Other current assets, however, increased by 0.7 million euros to 1.6 million euros. Conversely, current income tax claims decreased by 0.5 million euros to 0.7 million euros. A similar trend was shown by cash and cash equivalents, which declined by 0.3 million euros in the first half of the year. Non-current assets decreased slightly by 2.8 million euros, remaining largely steady overall at 52.3 million euros in the reporting period. The goodwill impairment test revealed impairment of 1.1 million euros, with the recoverable value now amounting to 24.6 million euros. In addition, other intangible assets decreased in value by 1.0 million euros to 10.5 million euros. Deferred tax assets were down slightly by 0.1 million euros, amounting to 6.9 million euros as per 30 June As a result of the aforementioned scheduled amortisations, which were accompanied by only minor investments, other intangible assets and property, plant and equipment decreased by 1.6 million euros to 13.9 million euros. All in all, current liabilities increased by 2.9 million euros to 40.5 million euros. This resulted from the personnel measures that were implemented, which caused other financial liabilities to increase by 2.0 million to 13.8 million euros, primarily in the personnel and social welfare areas. In addition, other current liabilities increased by 2.2 million euros to 6.4 million euros. In a contrary development, trade payables as at 30 June 2013 were 0.6 million euros lower than in the same period in the previous year and amounted to 2.8 million euros as per the reporting date

11 Non-current liabilities declined slightly, being 1.0 million euros lower at 17.4 million euros. This resulted particularly from the decline of 0.6 million euros in non-current financial liabilities to 0.0 million euros. Deferred tax liabilities showed a similar trend, decreasing by 0.3 million euros. The Life Insurance segment generated 36.7 million euros, which constitutes 58.2 per cent of aggregate turnover, and EBITDA of -2.8 million euros. Before the allocation of 3.9 million euros for selling and administration costs, operating EBITDA for this segment amounts to 1.1 million euros. Equity totalled 41.1 million euros at the end of second quarter, leaving it 9.0 million euros lower than in the previous year s annual financial statements. This development can be attributed in particular to the Group s ongoing restructuring process and the slight downturn in business with existing customers resulting from the general market situation. Another contributory factor is the impairment of goodwill. The equity ratio as at 30 June 2013 is 41.5 per cent. Segmental reporting The segment results are based on the company s internal national and pan-company profit centre statement of profit and loss in accordance with which the Group is managed. In the process, services exchanged between the segments are accounted for as internal sales within total operating performance or as intracompany expenses in the segment result. Expenses incurred for central functions (management, selling, central services) are charged to the operating segments under costs and allocated according to their actual origin and cause. The segment result constitutes the earnings before income taxes, as the income taxes are not subject to segment allocation due to their being centrally controlled. The amortisation of intangible assets identified in the course of the merger is classified as amortisation costs and charged to the respective segments according to actual origin and cause. The valuation methods used in segment reporting correspond to those used for the consolidated financial statements as at 31 December The Non-Life Insurance segment generated 13.2 million euros, which constitutes 20.9 per cent of aggregate turnover, and EBITDA of -0.3 million euros. EBITDA before allocation of 1.1 million euros for selling and administration costs totalled 0.8 million euros. At 13.2 million euros, the Banking segment contributed 20.9 per cent of aggregate turnover and generated EBITDA of -2.0 million euros. Before allocation of 0.8 million euros for selling and administration costs, operating EBITDA is reported at -1.2 million euros. Selling and administration costs, including in-house IT, accounted for 8.7 per cent of the Group s total costs in the first half of Consolidated segment information as at 30 June 2013 in 000 euros Turnover Intersegment turnover EBITDA Life Insurance ,704 5,129-2, ,017 9,435 3,130 Non-Life Insurance ,177 2, ,556 2,000-4,237 Banking ,195 3,025-2, ,437 1, Total ,076 10,430-5, ,010-1,

12 Employees At the end of June 2013, the COR&FJA Group had 1,160 permanent employees (30 June 2012: 1,195 permanent employees; 31 December 2012: 1,178 permanent employees). This decline is due to the fact that posts which became vacant as a result of the economic situation have not all been filled since the beginning of Distribution by region: Germany: 872 Austria: 36 Switzerland: 24 Benelux: 9 Slovakia: 94 Slovenia: 29 USA: 80 Portugal: 10 Poland: 3 Czech Republic: 2 Denmark: 1 Forecast Report Just a few days ago, COR&FJA reduced its earnings forecasts for the ongoing financial year. The company is now forecasting that its earnings before interest, taxes, depreciation of tangible assets and amortisation of intangible assets (EBITDA) will amount to 3.0 million euros. Previously the company had based its assumptions on EBITDA of around 5.0 million euros in the current year. In addition, the forecast for total turnover in 2013 was revised downwards slightly, from around million euros to million euros. One reason for this revised forecast is that measures in connection with restructuring the company once again necessitate the posting of expenses directly through profit and loss. Furthermore, the slightly lower business volume generated by existing customers due to the general market situation has led to a decrease in turnover. COR&FJA is nevertheless taking a cautiously optimistic overall view of the ongoing financial year and the company s further development. The company s cost-cutting programme launched in 2012, for example, is now having an appreciable impact, with the comparatively high costs incurred for the freelancers hired during the investment peak period, in particular, being reduced significantly and selectively. At the end of July 2013, COR&FJA had announced that it was going to tighten up its product and service spectrum to a significant degree. This would involve the discontinuation of active sales and marketing for the non-life insurance solution COR.FJA P&C and the complete cessation of product development in this area. This is the company s reaction to the fact that despite substantial efforts in the past, it had failed to establish this product offering successfully on the market. In future, the policy management solution for the non-life insurance sector will be covered within the framework of our collaboration with msg systems AG. Furthermore, the services offered by COR&FJA s internal Consulting segment will be focused clearly on product-related advice, actuarial and process consulting, and migration. This means that there are no longer any plans to build up in-house human resources for the product-independent management consulting sector

13 In addition, a decision has been taken to consolidate efforts on existing foreign markets rather than entering new ones and to continue optimising the profitability of business areas in the markets where the company already operates in Europe and the USA. Also on the right track is the restructuring of the subsidiary COR&FJA Metris GmbH, which will be completed successfully by the end of the year. The subsidiary s human resources were adjusted to the economic position at the end of April Opportunity and risk report In respect of the future opportunities and risks, COR&FJA refers to the relevant parts of the condensed management report and consolidated financial statements for the 2012 financial year, as we currently estimate that there have been no significant changes in this area. In addition, COR&FJA came to an agreement with msg systems AG that the complementary solutions offered by COR&FJA Metris and msg systems AG in the claims management area should be dovetailed more closely terms of both content and marketing activities in the future. COR&FJA expects this to generate higher demand on the market. The overriding objective of all these measures is to get COR&FJA AG back to profitability by 2014 at the latest. Related party disclosures The sales situation, too, is progressing satisfactorily at COR&FJA, and the company has received new orders in both the Insurance and Banking segments during the current financial year. In the reporting period, there were no significant transactions with related parties that would require separate reporting. Parallel to this, the management continues to press ahead systematically with the COR&FJA Group s strategic realignment in an effort to achieve a clear focus on the Group s core business, i.e. the development and marketing of standard software for the financial services industry. Furthermore, COR&FJA is going to reduce the strong anorganic growth that has characterised the past few years. The measures to be implemented for this will be communicated to all COR&FJA stakeholders in good time. In respect of all other statements on likely future developments, COR&FJA refers to the relevant parts of the condensed management report and consolidated financial statements for the 2012 financial year, as we currently estimate that there have been no significant changes in this area

14 Consolidated Income Statement First Half-Year 2013 and 2012 Turnover Changes in inventory of finished and unfinished services Capitalised own services for developments Other operating income Cost of purchased services Personnel expenses Other operating expenses Depreciation of property, plant and equipment and amortisation of intangible assets Operating result Interest income Interest expenses Income from participating interests Earnings before income taxes Taxes on income and revenues Consolidated earnings Of which: Shareholders of the parent company Non-controlling shares Consolidated earnings Earnings per share (undiluted) in euros Earnings per share (diluted) in euros Average shares outstanding (undiluted/diluted) euros 000 euros 63,076 68, , ,751-9,720-52,473-48,975-11,346-12,173-2,994-1,974-8,084-3, ,511-4, ,069-8,822-3,481-8,369-3, ,822-3, ,895,861 40,895,861 Consolidated Statement of Comprehensive Income First Half-Year 2013 and 2012 Consolidated earnings Unrealised profits and losses from currency differences Other comprehensive income Total comprehensive income Of which: Shareholders of the parent company Non-controlling shares euros 000 euros -8,822-3, ,944-3,267-8,492-3,

15 Consolidated Income Statement Second Quarter 2013 and 2012 Turnover Changes in inventory of finished and unfinished services Capitalised own services for developments Other operating income Cost of purchased services Personnel expenses Other operating expenses Depreciation of property, plant and equipment and amortisation of intangible assets Operating result Interest income Interest expenses Income from participating interests Earnings before income taxes Taxes on income and revenues Consolidated earnings Of which: Shareholders of the parent company Non-controlling shares Consolidated earnings Earnings per share (undiluted) in euros Earnings per share (diluted) in euros Average shares outstanding (undiluted/diluted) euros 000 euros 32,603 32, , ,353-4,762-26,151-24,438-5,235-5,852-2,048-1,005-2,309-2, ,541-3, ,354-2,594-3,127-2, ,353-2, ,895,861 40,895,861 Consolidated Statement of Comprehensive Income Second Quarter 2013 and 2012 Consolidated earnings Unrealised profits and losses from currency differences Other comprehensive income Total comprehensive income Of which: Shareholders of the parent company Non-controlling shares euros 000 euros -3,354-2, ,531-2,287-3,305-2,

16 Consolidated Statement of Financial Position Assets Current assets: Cash and cash equivalents Securities Trade receivables Invoiced receivables PoC receivables Receivables from affiliated companies Inventories Ongoing income tax claims Other financial receivables Other short-term assets Short-term assets, total Non-current assets: Goodwill Other intangible assets Property, plant and equipment Shareholdings accounted for using the equity method Financial investments Deferred tax claims Ongoing income tax claims Other financial receivables Long-term assets, total Assets, total euros 000 euros 10,950 11, ,122 37,090 19,169 23,178 13,953 13, , , ,770 51,956 24,609 25,731 10,494 11,517 3,390 3, ,686 4,686 6,942 7, ,213 53,996 98, ,952 Table continued on following page 28 29

17 Consolidated Statement of Financial Position Equity and liabilities Current liabilities: Financial liabilities Trade payables Amounts owed to affiliated companies Current income tax liabilities Other provisions Other current liabilities Other financial liabilities Short-term liabilities, total Non-current liabilities: Financial liabilities Other provisions Other financial liabilities Deferred tax liability Pension provisions Other long-term liabilities Long-term liabilities, total Liabilities, total Equity: Subscribed capital of COR&FJA AG Capital reserve of COR&FJA AG Group retained income Equity held by the shareholders in the parent company Non-controlling shares Equity total Equity and liabilities, total euros 000 euros 15,036 14,896 2,775 3, ,099 2,685 6,430 4,169 13,790 11,833 40,535 37, ,766 7,086 9,383 9, ,441 18,435 57,976 56,000 40,896 40,896 33,601 33,601-34,801-26,310 39,696 48,187 1,311 1,765 41,007 49,952 98, ,

18 Consolidated Cash Flow Statement Profits/ losses that are to be assigned to the shareholders of the parent company Profits/ losses that are attributable to non-controlling shares Income taxes Earnings before income taxes Adjustments for the transfer of earnings to the cash flow from operational activities: Depreciation of property, plant and equipment and amortisation of intangible assets Earnings from disposal of property, plant and equipment and of intangible assets Depreciation of financial assets Other expenses/ income with no impact on earnings Change in provisions for pensions recognised in profit or loss Interest income Interest expenses Income taxes paid less reimbursed payments Change in: Trade receivables Inventories Other assets/ other financial receivables/ ongoing income tax claims Other provisions Trade payables Other debts/ financial liabilities Cash flow from operating activity euros 000 euros -8,369-3, ,069-8,511-4,550 2,994 1, ,346 3,998-2, ,220 3, ,269 Table continued on following page 32 33