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Software AG Investor Presentation

Software AG Investor Presentation. July 2003. Software AG Profile. Germany’s second largest software vendor In the high-end, mission-critical IT business since 1969 Worldwide customer base of several thousand blue chip companies and public sector organizations

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Software AG Investor Presentation

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  1. Software AGInvestor Presentation July 2003

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

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

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

  5. Op. EBITA Operating result 120 Net profit Op. cash flow 100 80 60 40 20 0 -20 -40 Results (in mio. euros) 110 91 83 69 70 67 66 62 62 54 39 41 38 34 32 -19 1999 2000 2001* 2002 * first consolidation of US acquisition Investor Presentation July 2003

  6. Strategy

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

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

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

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

  11. Tamino in Projects:IESD, UK • Project size • Licenses 60 K€ • Implementation 30 K€ • Application Support 40 K€ • Integrated Electronic Service Delivery (IESD) is a powerful framework for building Public Sector applications (Call Centres, CRM, etc.) • Already repeated at • Aylesbury Vale District Council • Welland • Tewkesbury Hinckley & Bosworth Borough CouncilUnited Kingdom Investor Presentation July 2003

  12. Portal Vertical Applications XML Gateway Contact Centre Internet Call Centre IESD Components SAG Products IESD Overview Business Applications Management Reporting Security & Audit Content Management C.R.M Workflow Investor Presentation July 2003

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

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

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

  16. Software AG PortfolioEvolving from Technology to Solutions Products Capabilities Solutions • Tamino • Communicator • Mediator • Adabas/Natural • Partners • Content Management • Digital Library • Mobile • Data Exchange • Web Enablement • Data Integration • Self-Service Portals • Content Suite • Mobile Suite • Partner Solutions • Regional Solutions • Individual Customer Solutions Committed to delivering value for our customers Investor Presentation July 2003

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

  18. 1st Quarter 2003Financial Report

  19. Other Revenue Q1 2002/2003 (in mio. euros) -14% (-6%) 116.4 100.2 Project Services(Consulting and Implementation) 0.3 0.3 -24% (-21%) 40.0 Product Business Licensing of Software Products 30.6 Maintenance(24x7 world wide) 24.6 -11% (-2%) 21.9 51.5 -8% (+3%) 47.4 (...) in constant currencies Q1 2003 Q1 2002 Investor Presentation July 2003

  20. Licensing Revenue by Product Group Q1 2002/2003 (in mio. euros) Solutions Tamino EntireX Enterprise TransactionOther 24.6 21.9 4% 8% 11% 10% 15% 18% 60% 56% 10% 8% Q1 2002 Q1 2003 Investor Presentation July 2003

  21. Revenue by Region Q1 2002/2003 (in mio. euros) Americas Southern / Western Europe Northern EuropeAsia-SA Central / Eastern Europe 39.5 33.1 29.3 28.0 17.5 16.9 30.4 23.0 0.1 0.3 7.8 0.1 0.1 4.1 0.0 7.2 7.4 0.1 10.4 16.8 8.3 18.6 0.0 0.1 3.5 1.8 9.3 24.4 21.3 4.4 5.6 4.3 3.8 4.5 10.6 10.2 9.4 9.7 6.8 6.7 Actual Q1 2002 Actual Q1 2003 Actual Q1 2002 Actual Q1 2003 Actual Q1 2002 Actual Q1 2003 Actual Q1 2002 Actual Q1 2003 Maintenance Licensing Project Services Other Investor Presentation July 2003

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

  23. R&D by Product Group (in mio. euros) Solutions Tamino EntireX Enterprise TransactionOther 18.0 15.2 0% 4% 30% 24% 20% 25% 36% 35% 16% 10% Q1 2002 Q1 2003 Investor Presentation July 2003

  24. Result Q1 2002/2003 (in mio. euros) Investor Presentation July 2003

  25. Balance Sheet (in mio. euros) Investor Presentation July 2003

  26. Cash flow Q1 2002/2003 (in mio. euros) Investor Presentation July 2003

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

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

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

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

  31. Software AG MDAX Nemax/TecDAX Share Price Developmentas of June 30, 2002 – June 30, 2003 24.03.03 Entry in TecDAX SAG share price:30.06.02: 14.30 €30.06.03: 11.90 € Investor Presentation July 2003

  32. Top Ten TecDAXas of June 30, 2003 (in euros) Investor Presentation July 2003

  33. Key Figures per Share (in euros) Investor Presentation July 2003

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