9-Month Report of FJA AG

Transcription

1 9-Month Report of FJA AG Contact FJA AG Elsenheimerstrasse Munich GERMANY Investor Relations Phone: or Fax: investor.relations@fja.com

2 FJA Key Figures (IFRS) as of September 30, 2008 (9-Month Period) ,000 Euro,000 Euro Turnover 46,068 45,334 EBITDA (Operating result before depreciation) 4,691 4,676 EBITDA-Margin 10.2 % 10.3 % EBIT (Operating result) 4,043 3,898 EBIT-Margin 8.8 % 8.6 % EBT (Result before income taxes) 3,968 3,736 9-month result 2,972 3,010 Earnings per share Equity 25,650 20,649 Equity ratio 58.0 % 50.5 % Total assets 44,260 40,880 Net cash 16,280 13,778 Free cash flow 2,341 1,990 Employees as at FJA Key Figures (IFRS) as of September 30, 2008 (3 rd Quarter) ,000 Euro,000 Euro Turnover 14,862 15,289 EBITDA (Operating result before depreciation) 1,530 1,684 EBITDA-Margin 10.3 % 11.0 % EBIT (Operating result) 1,345 1,432 EBIT-Margin 9.1 % 9.4 % EBT (Result before income taxes) 1,380 1,383 Quarterly result 880 1,158 Earnings per share Dear Shareholders, The third quarter of the current fiscal year did not completely fulfil expectations as regards our ambitious annual targets. Although the turnover of 14.9 million Euro and EBT of 1.4 million Euro remained on a par with the comparatively good figures of last year, we will no longer be able to fully meet our demanding targets for the current year of a clear increase over Although we are assuming very good results for the current fourth quarter, we have adjusted our overall forecast for 2008 and now expect turnover of between 62.5 and 64 million Euro and a return on EBIT of around 9 %. Given the general macroeconomic trends following the crisis on the financial markets, we consider this a sound success. Our new-found efficiency helped achieve a cash flow from operating activities of 2.2 million Euro in the third quarter, resulting in a further increase in cash and cash equivalents. Here, it is important to note that in addition to the resulting increase in cash and cash equivalents, during Q3 we also financed implementation of the share buy-back that was started on 25 August 2008 in an amount of around 270 thousand Euro. The shares purchased are not recorded under cash and cash equivalents. With cash and cash equivalents of over 20 million Euro as at 30 September 2008 and comparatively low financial debts of less than 4 million Euro, FJA AG boasts sound financing. This provides a healthy basis for our Company's future, positive development which will focus on further development and market establishment of the FJA Insurance Platform. 1

3 Developments on the international financial markets are compelling all market players and thus also insurers to focus on their core business and increase efficiency. While this may lead to our customers, like others, delaying purchase decisions in the shortterm, it does confirm that FJA was correct in its chosen strategy. Our standardised IT solutions pool longstanding experience, extensive industry knowledge and advanced technology, allowing insurers to benefit from fast, sustainable increases in cost efficiency. FJA AG thus believes that with sector demand for its products set to increase over the next few years, it is ideally positioned to face future market challenges. We should like to express our gratitude for the trust you have shown in us thus far and look forward to you, our shareholders, accompanying us as we progress to becoming an internationally successful industry expert for insurers and related financial services providers. The Executive Board Overview of business development Third quarter incoming orders were affected by the overall economic climate. They rose from 58.5 to 61.7 million Euro. Third quarter incoming orders thus weakened slightly, but we nevertheless anticipate a very good fourth quarter with comparatively high licence revenues Sales pipeline 23.2 (probability >80%) Orders on hand 31.1 Sales revenues March 08 June 08 September 08 Secured turnover base (million Euro) While the year as a whole shows marked rises in incoming orders for the USA and Switzerland, Q4 orders on hand reveal a marked increase for the D, A, CH region due to upgrade licences for new releases of our standard products that will materialise in the fourth quarter. It is not yet possible to precisely estimate future development in terms of new life insurance products in the D, A, CH region. There is currently lively discussion within the industry, especially on the subject of "variable annuities". However, some uncertainty currently prevails as the guarantees issued with these products are linked to the financial markets. 2 3

4 During the third quarter we worked on a number of projects for existing customers of our core product FJA Life Factory. This work was related to the introduction of release 4.6 that was launched in the first half of the year and that focuses on capitalmarket-related products and supporting additional business processes. At the same time we carried out extensive preparatory work for release 4.7. For this comparatively extensive release version we are planning partial delivery in December this year, with final delivery in the first half of We have felt concrete effects of the financial crisis with one FJA Life Factory customer that is a member of a banking group. The budget for this project was cut significantly in the second half of 2008 and this had a noticeable impact on third quarter turnover. Business development in Switzerland was pleasing and also benefited because restructuring of a customer project has now been completed. The new release 3.0 for the FJA Zulagenverwaltung subsidy administration standard software was completed and successfully delivered in the third quarter. The settlement component of our FJA RAN pension settlement and documentation system is enjoying similar success and is now being developed with three customers as part of an early customer programme. In addition, release 2.1 was delivered to the customer projects. We have now gained 13 customers for the documentation component. During the period under review, business development in the Migration and Policy Administration Add-on Systems division was characterised by successful management of the recent sharp rise in migration projects. Overall, the third quarter was characterised by high levels of expenditure on product developments that will only produce turnover in subsequent quarters. Combined with the seasonal effects, this has produced a slight fall in annualised turnover per employee to Euro 126 thousand. Given our positive forecast for Q4, we expect this to be a temporary effect ,000 Euro Q3 Q4 Q1 Q2 Q Annualised turnover per employee We are carefully managing the continuing high number of promising potential projects for our core business within the D, A, CH region and spending considerable time on qualified support for these leads. Consequently, we expect this region to return to stronger growth from Q Thanks to the dynamic levels of incoming orders in the last two years, our US subsidiary is enjoying good capacity utilisation. We are using the current reduced momentum in incoming orders to focus on further developing the organisation. 4 5

5 Earnings position, financial situation and assets Earnings position The figures for Q turnover and earnings were just below those for the same quarter in Turnover was 14.9 million Euro compared with 15.3 million in the preceding year. At 1.3 million Euro, EBIT was almost on a par with the figure of 1.4 million Euro for the same quarter in At 46.1 million Euro, turnover for the first nine months rose 1.6 % on the preceding year's figure of 45.3 million Euro. Nine-month EBIT was 4.0 million Euro, representing a 3.7 % like-for-like increase on the preceding year. Total expenses for the nine-month period remained almost unchanged at 42.3 million Euro (same period in the preceding year: 42.1 million Euro). The rise in personnel expenses (31.1 million Euro compared with 29.7 million in 2007, +5 %) was offset by the 12 % reduction in other operating expenses from 11.7 million Euro in 2007 to 10.4 million Euro. Reduced depreciation/amortisation of 0.6 million Euro (2007: 0.8 million Euro; -17 %) was also set against considerably lower other operating income of 1.1 million Euro (2007: 1.5 million Euro; -26 %). An annual comparison of the number of employees as at the end of September showed a slight 1.5 % increase from 466 to 473. Delayed delivery cycles for upgrades for our core products led to lower revenues from licences and maintenance compared with the same quarter in the preceding year. At 2.2 million Euro, the fall was around 10 %. Third quarter total expenses (including depreciation/amortisation and other operating income and expenses) before interest and taxes amounted to 13.6 million Euro and were thus 4 % down on the same quarter in the preceding year. Personnel expenses rose 6 % from 9.7 million Euro in 2007 to 10.2 million Euro. Alongside the increase in the workforce, this rise is also due to salary adjustments and accruals for bonuses. By contrast, personnel expenses fell by around 0.6 million Euro compared with the second quarter of the current year; this was primarily due to the writeback of accruals as a result of holiday being taken. In Q3, other operating expenses were 3.0 million Euro, 1.3 million Euro down on 2007's like-for-like figure of 4.3 million Euro. This was due to the expiry of the sale & lease-back agreement in Q and to reduced exchange losses and project accruals. In Q3, earnings before interest and taxes (EBIT) totalled 1.3 million Euro and were thus on a par with the preceding year (1.4 million Euro). Cumulative EBIT for the first nine months of the current fiscal year was therefore 4.0 million Euro (3.7 % up on the same figure for the preceding year of 3.9 million Euro). The EBIT margin relative to turnover was 9.1 % for the third quarter of 2008 (Q3 2007: 9.4 %), while the nine-month figure was 8.8 % (2007: 8.6 %). 2,000 1,500 1, ,000 Euro 1,432 1,367 1,013 1,684 1,345 Q3 Q4 Q1 Q2 Q EBIT per quarter Interest income rose 25 % in the first nine months of the fiscal year. The cumulative net interest result for 2008 was -0.1 million Euro (same period in preceding year: -0.2 million Euro). 6 7

6 Overall, the FJA Group recorded earnings after taxes (EAT) of 0.9 million Euro in Q (Q3 2007: 1.2 million Euro). The decline in EAT is due to higher deferred tax expenses. Cumulative EAT for the first nine months of 2008 was 3.0 million Euro, exactly on a par with the same period in the preceding year. Earnings per share were 0.04 Euro for the third quarter and 0.14 Euro for the first nine months of the 2008 fiscal year (2007: 0.06 Euro and 0.14 Euro). Here, it is important to note that FJA purchased 114,505 treasury shares during the third quarter. This produced a corresponding reduction in shares outstanding. On a cumulative basis, the cash flow from operating activities for the first nine months of 2008 was 2.8 million Euro. This is an increase of 0.4 million Euro on the 2007 like-for-like cumulative figure of 2.4 million Euro. The free cash flow for the third quarter was 2.0 million Euro (preceding year: 3.1 million Euro) while the nine-month figure was 2.3 million Euro (preceding year: 2.0 million Euro). As at 30 September 2008, therefore, the net cash position (for reasons of transparency, calculation also includes the liabilities under the sale & license-back agreements) amounted to 16.3 million Euro (preceding year: 13.8 million Euro). Financial situation As expected, the cash flow from operating activities developed very favourably during the third quarter of 2008 and amounted to 2.2 million Euro (Q3 2007: 3.2 million Euro). There were no major special effects resulting in large outflows of cash and cash equivalents. The further reduction in billed and unbilled receivables from 11.3 million Euro on 30 June 2008 to 9.3 million Euro as at 30 September 2008 had a favourable effect. There was a corresponding reduction in days sales outstanding (DSO) to 60 days as at 30 September The shares repurchased in the third quarter of 2008 (114,505 shares) led to a total cash outflow of 0.3 million Euro. At the end of the third quarter, cash and cash equivalents amounted to 20.2 million Euro (preceding year: 18.8 million Euro), of which an amount of 17.4 million Euro was freely available. Assets Most of FJA's added value is from licences and services. Besides the key current assets of cash and cash equivalents and trade receivables, the Group also has important long-term assets such as off-balance sheet know-how and intangible assets. 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2, ,000,000 Euro 13,778 Q3 Q4 Q1 Q2 Q Net Cash 3,187 OPCF 14, ,345 14, ,280 2,188 Net cash / Cash flow from operating activities The third quarter saw capitalisation of additional development costs arising under the FJA Insurance Platform (150 thousand Euro). With the expenses for those parts of SymAss2 that will in future be used as part of the FJA Insurance Platform that were already capitalised in the first half of the year, the cumulative total for capitalisation of software developed in-house was 0.3 million Euro (preceding year: 0.3 million Euro). Beyond this, we only capitalised that portion of the loss carryforwards available within the Group that we currently expect to use within the next three years. There was a further rise in the equity ratio in the third quarter of 2008 to a very sound level of 58 % as at 30 September In summary, the earnings position, financial situation and also the assets have again developed extremely favourably in the first nine months of

7 Development of the segments during the third quarter of 2008 Currently accounting for around 68 % of overall business, the region of Germany still represents the largest segment. As the share for the third quarter of the preceding year was around 75 %, this does, however, increasingly reflect the success of our strategic objective of expanding our international business Turnover EBIT Turnover EBIT Turnover EBIT Turnover EBIT Turnover EBIT 4.00 Mio. Germany Austria Switzerland USA Slovenia Q3/2007 Q3/2008 Turnover and EBIT by segment (third quarter) Among the other regions, Switzerland and the USA are especially important for business with third parties, while Austria and Slovenia are primarily acting as suppliers of internal services within the Group. million Euro. Revenues in the region for the first nine months of the current fiscal year were down 8 %, from 35.1 million Euro in 2007 to 32.2 million Euro. Nine-month EBIT fell from 4.2 million Euro in 2007 to 1.3 million Euro. The favourable development of business in the USA continued during the third quarter of In the months July to September, turnover amounted to 3.0 million Euro (Q3 2007: 2.7 million Euro). Accumulated turnover for the first nine months of the current fiscal year was 8.8 million Euro, 44 % up on the figure of 6.1 million Euro for the same period in the preceding year. The continuing improvement in earnings is also pleasing. Whereas EBIT for the third quarter of 2008 was 0.7 million Euro, around 0.5 million Euro up on the preceding year's figure of 0.2 million Euro, earnings for the first nine months of 2008 were 1.5 million Euro, already 0.9 million Euro up on the comparative figure for As a segment, the USA thus remains a key growth and earnings driver for the FJA Group. In the segment of Switzerland, the turnover of 1.4 million Euro (Q3 2007: 0.8 million Euro; +68 %) was on a par with that of the preceding quarter. Revenues for the first nine months were 4.2 million Euro, 28 % up on the same figure for the preceding year (3.3 million Euro). EBIT for the third quarter of 2008 was +0.1 million Euro compared with -0.5 million Euro in the preceding year. At 0.6 million Euro, there was a significant increase in EBIT for the nine-month period compared with -1.7 million Euro for the same period in the preceding year. In the third quarter of 2008, the segment of Germany recorded revenues of 10.1 million Euro (Q3 2007: 11.4 million Euro; -11 %). This reduction in turnover is on the one hand due to lower licence revenues in this quarter, and on the other to increased product development expenses. As a result, we were unable to achieve the level of earnings (EBIT) of 1.6 million Euro recorded in the same quarter of On the contrary, the development expenses that were brought forward in Q meant EBIT was just 0.1 Once again, the segment of Austria did not record any noticeable turnover directly with own customers in the third quarter. Turnover in this segment is achieved through intra-group services, especially in actuarial consulting. At 0.1 million Euro, external turnover for the first nine months of 2008 was half that of the previous year. At 0.4 million Euro, EBIT for the first nine months of 2008 was below the preceding year's comparative figure of 0.6 million Euro

8 The situation in the third quarter in the segment of Slovenia was again characterised by the company's inclusion within the FJA Group's organisational structure as part of the FJA Insurance Platform strategy. Revenues for the third quarter of 2008 were 0.3 million Euro (preceding year: 0.2 million Euro). At 0.4 million Euro, there was a significant increase in EBIT for July to September compared with -0.1 million Euro for the same period in the preceding year. Here, external turnover for the period January to September 2008 was 0.8 million Euro (first nine months of 2007: 0.7 million Euro; +24 %). EBIT for the same period was 0.3 million Euro compared with 0.1 million Euro for the first nine months of Forecast for the current fiscal year Given development in the third quarter, although we are assuming very good results for the current fourth quarter, we have adjusted our overall forecast for 2008 and now expect turnover of between 62.5 and 64 million Euro and a return on EBIT of around 9 %. Given the general macroeconomic trends following the crisis on the financial markets, we consider this a sound success. In terms of opportunities and risks for business in the fourth quarter of 2008, the report on opportunities and risks as contained in the half-year report remains valid in principle, although the possible effects if the opportunities and risks outlined therein materialise are now significantly reduced as we approach the end of the 2008 fiscal year Report on major transactions with related parties During the period under review there were no major transactions with related parties for which special reporting was required Mio. Turnover EBIT Turnover EBIT Turnover EBIT Turnover EBIT Turnover EBIT Germany Austria Switzerland USA Slovenia 9M/2007 9M/2008 Turnover and EBIT by segment (9-month) Employees At the end of September 2008 the FJA Group employed 473 people (preceding year: 466). This represents a 1.5 % year-on-year increase. Distribution by region: Germany 343 Austria 18 Switzerland 29 Slovenia 24 USA

9 Consolidated Income Statement (IFRS) 9-Month Period 2008 and 2007 Turnover Change in stocks of finished goods and work in process Own work capitalised Cost of purchased services and materials Personnel expenses Other operating income Other operating expense Depreciation/amortisation of property, plant and equipment and of intangible assets Operating result Interest income Interest expense Result before income taxes Income tax 9-month result Allocation of result: Profits/losses attributable to equity holders of the parent company Profits/losses attributable to minority interests 9-month result Earnings per share (basic) in Euro Earnings per share (diluted) in Euro Average shares outstanding (basic / diluted) ,000 Euro,000 Euro 46,068 45, ,353 1,425 31,066 29,706 1,140 1,542 10,352 11, ,043 3, ,968 3, ,972 3,010 2,972 2, ,972 3, ,281,658 21,289,

10 Consolidated Income Statement (IFRS) 3 rd Quarter 2008 and 2007 Turnover Change in stocks of finished goods and work in process Own work capitalised Cost of purchased services and materials Personnel expenses Other operating income Other operating expense Depreciation/amortisation of property, plant and equipment and of intangible assets Operating result Interest income Interest expense Result before income taxes Income tax Quarterly result Allocation of result: Profits/losses attributable to equity holders of the parent company Profits/losses attributable to minority interests Quarterly result Earnings per share (basic) in Euro Earnings per share (diluted) in Euro Average shares outstanding (basic / diluted) ,000 Euro,000 Euro 14,862 15, ,234 9, ,014 4, ,345 1, ,380 1, , , , ,266,519 21,289,353 16

11 Consolidated Balance Sheet (IFRS) Assets Current assets: Cash and cash equivalents Marketable securities Trade accounts receivable billed receivables unbilled receivables Inventories Current income tax assets Other financial assets Other current assets Total current assets Fixed assets: Goodwill Intangible assets Property, plant and equipment Financial investments Deferred tax assets Current income tax assets Other financial assets Total fixed assets Total assets ,000 Euro,000 Euro 20,181 18, ,830 7,950 9,258 7, ,257 28,041 3,583 3,583 1,832 1,776 1,672 2, ,785 4, , ,003 12,768 44,260 40,809 Liabilities and Equity Current liabilities: Financial debt Trade accounts payable Current income tax liabilities Other accruals Other current liabilities Other financial liabilities Total current liabilities Long-term liabilities: Other accruals Other financial liabilities Deferred tax liabilities Pension provision Total long-term liabilities Total liabilities ,567 1,987 3,107 1,196 7,171 7,329 13,191 11, ,616 3, ,656 1,611 5,420 6,220 18,611 17,897 Equity: Share capital Capital reserves Retained earnings Shares of parent company's shareholders Minority interest Total Equity 21,175 21,289 10,141 10,294 5,666 8,832 25,650 22, ,650 22, Total liabilities and Equity 44,260 40,809

12 Consolidated Cash Flow Statement (IFRS) Net income/loss Income tax Result before income tax Adjustments: Depreciation/amortisation of property, plant and equipment and of intangible assets Gain/loss from the disposal of property, plant and equipment Gain/loss from the disposal of intangible assets Increase in pension provision Interest income Interest expenditure Changes in: Trade accounts receivable Inventories Other assets/other financial assets/current income tax assets Other accruals Trade accounts payable Other debts/financial liabilities Income tax refunded Income tax paid Cash flow from operating activities ,000 Euro,000 Euro 2,972 3, ,968 3, , , ,104 1,701 1, ,807 2,444 Table continued on following page 20 21

13 Consolidated Cash Flow Statement (IFRS) Cash flow from investing activities: Investments in property, plant and equipment Investments in intangible assets Inpayments from the disposal of property, plant and equipment Payment from the purchase of minority shares in consolidated enterprises Total cash flow from investing activities Cash flow from financing activities: Payment acquisition own shares Repayment of financial debts Borrowing of long-term debts Interest received Interest paid Total cash flow from financing activities Exchange-rate related changes not relevant for cash flow Change in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period ,000 Euro,000 Euro , , , ,286 2,673 18,894 16,176 20,181 18,

14 Consolidated Statement of Changes in Equity (IFRS) Share capital Capital reserves Retained earnings Subtotal Equity capital Equity Valuation reserves Exchange equalization Net Investment Other Shares of parent company s shareholders Minority interests,000 Euro,000 Euro,000 Euro,000 Euro,000 Euro,000 Euro,000 Euro,000 Euro,000 Euro Position ,289 10, , ,092 17, ,891 Net Investment Differences due to currency conversion Changes in equity capital not affecting operating result Net income/loss ,990 2, ,010 Total income and expenditure for the period ,990 2, ,758 Position ,289 10, ,619 1,610 11,102 20, ,649 11,093 Position ,289 10, ,750 1,746 8,837 22, ,912 Acquisition own shares Transfer posting from minorities in profit reserves Separation minorities by payment Differences due to currency conversion Changes in equity capital not affecting operating result Net income/loss ,972 2, ,972 Total income and expenditure for the period ,004 2, ,737 Position ,175 10, ,912 1,746 5,832 25, ,646 5,

15 Annex Accounting policies These interim financial statements of FJA AG to 30 September 2008 have been prepared in the Group currency of the Euro, in compliance with IAS 34 "Interim Financial Reporting" and taking into consideration the International Financial Reporting Standards (IFRS) applicable on the reporting date. There have been no changes in the accounting and valuation methods or indeed in the calculation methods used in the consolidated financial statements to 31 December For further information, please refer to the consolidated financial statements of FJA AG as of 31 December Scope of consolidation On 10 April 2008, FJA AG acquired the remaining 20 % of shares in FJA Oda Team d.o.o., Maribor, and thus became the sole shareholder. The purchase price was 130 thousand Euro. There is also an earn-out provision, which depending on whether specified performers and team members remain, may lead to an additional payment of up to 170 thousand Euro. At the time of purchase, materialisation of the conditions for the earn-out provision could not be reliably estimated; consequently, it has not been included in the accounts as at the reporting date. Management and control Mr Stephan Schulak left the Executive Board of FJA AG on 15 April Share capital As at 30 September 2008, the share capital was divided into 21,289,353 shares with a nominal value of 1.00 Euro. No dividend was proposed or paid out during the period under review. The AGM held on 20 June 2008 issued an authorisation, valid until 20 December 2009, for the Company to purchase treasury stock pursuant to 71 para. 1 No. 8 of the German Stock Corporation Act [AktG] totalling up to 10 % of the share capital. From 25 August to 30 September 2008 a total of 114,505 shares were purchased, representing 0.5 % of the share capital. The number of shares outstanding as at 30 September 2008 was 21,174,848. Supplementary report Under a shareholding assignment agreement dated 28 October 2008, FJA AG's entire shareholding in FJA Akademie GmbH (i.e. its shareholding of 25, Euro) was assigned to FJA Feilmeier & Junker GmbH. FJA Akademie GmbH was merged into FJA Feilmeier & Junker GmbH with retrospective effect from 1 March Segments For details on segment reporting, please refer to the statements in the interim management report. Under a termination agreement dated 28 October 2008, the profit and loss transfer agreement between FJA AG and FJA Feilmeier & Junker GmbH dated 17 August 2005 was terminated with effect from 31 December

16 FJA Share Stock exchange segment Prime Standard, Frankfurt Number of shares 21,289,353 Stück ISIN DE German code (WKN) IPO