09.05.2018
Softing AG DE0005178008
DGAP-News: Softing AG: Interim Statement on the 1st Quarter of 2018
DGAP-News: Softing AG / Key word(s): Quarterly / Interim Statement
Softing AG: Interim Statement on the 1st Quarter of 2018
09.05.2018 / 07:30
The issuer is solely responsible for the content of this announcement.
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Dear Shareholders, Employees, Partners and Friends of Softing AG,
We are aiming to increase incoming orders, revenue and earnings in 2018. The
initial months of this year have already seen significant new orders, which
ensures that we can meet our forecast in this respect. Included are incoming
orders of over EUR 2 million in the Industrial segment, specifically from
the oil and gas industry, which we are happy to report is recovering.
However, due to third-party supplies and complex manufacturing processes,
this revenue will not be realized until the fourth quarter.
At the beginning of February, we established Softing Technology Shanghai in
collaboration with our longstanding Chinese automotive sales partner. This
will help us meet the rapidly growing demand in China for the development of
complex technologies for semi-autonomous driving as well as for hybrid and
electric vehicles and solutions in the development and servicing of control
units. Our new company can now directly provide the necessary project
services locally, which creates growth opportunities we would not be able to
leverage in the same way from Europe.
Connectivity of decentralized units such as vehicles or machines to
centralized data systems is a key issue for our automotive customers. Over
the air services, as these are called, need a low-cost, reliable, secure
interface. Softing could not provide this in the past; neither were partners
able to cover this field satisfactorily. We closed this gap in mid-March
with our acquisition of all interests in Globalmatix AG. Globalmatix AG is a
provider of integrated MVNO (Mobile Virtual Network Operator) services. This
company has a cellular telephony network license to operate its own
telecommunications and telematics platform. The rights to a sophisticated
electronics system that records the data in the vehicle or on the machine
and can forward it to central servers in encrypted form over the cellular
network were also transferred. Softing is therefore the only company in the
market at present to offer inexpensive and secure access to data from mobile
units in freely scalable quantities up to one hundreds of thousand of units.
We can offer these services worldwide for vehicles and machinery in
Machine-to-Machine (M2M) and Internet of Things (IoT) applications. In early
2019, we expect to see substantial new revenue from subscription models
based on data services driven by this acquisition.
The IT Networks segment achieved double-digit growth rates in revenue in
2017. Given its sustained positive outlook, this business satisfied the
criteria necessary to become a separate segment that we reported in a
modified form for the first time in the 2017 annual report. Quarterly
reporting will now also be based on this new structure. Here, we anticipate
double-digit growth rates in 2018 once again, supported by the launch of two
new products in the second half of the year.
For detailed information on the performance of the individual segments,
please the following pages with the report on net assets, financial position
and results of operations Generally, both revenue and EBIT will benefit
disproportionately towards the end of the year from product innovations in
the Industrial segment and the launch of new, high-margin products in the IT
Networks and Automotive segments.
Softing will report on the achievement of key milestones during the current
2018 financial year. These will be basis and driver of profitable revenue
growth as early as this year. Significantly stronger growth is anticipated
for 2019 and subsequent years.
Sincerely yours,
Dr. Wolfgang Trier
(Chief Executive Officer)
Interim Statement on the 1st Quarter of 2018
Report on net assets, financial position and results of operations
Global economic conditions in the markets most important to Softing are
again giving positive signals despite an uneasy trade policy environment.
In the first three months of the year, the Industrial segment performed less
robustly in the North American market than in the previous year because
one-off development revenue will not be repeated until later on in the year.
The European market is stable, though orders that have already been placed
will be pushed to the second half of the year on account of the production
time.
In the Automotive segment, the market is starting to demand the new
products, but because of protracted sales negotiations we do not expect
initial orders to be placed until the third quarter of this year.
The IT Networks segment showed stable performance in the first quarter. With
new proprietary products in the second quarter we expect this segment's
revenue to increase as the year progresses.
The Softing Group recorded revenue of EUR 18.5 million in the first three
months of 2018 (previous year: EUR 19.8 million). Revenue in the Industrial
segment was down from EUR 13.4 million to EUR 11.6 million. The Automotive
segment showed initial signs of revenue improvement, with revenue rising
from EUR 3.8 million to EUR 4.2 million. Since the previous year, we have
been reporting on the IT Networks business as a separate segment; it was
part of the Industrial segment until Q3/2017. IT Networks achieved slight
revenue growth to EUR 2.7 million.
On account of various new product developments in the segments, own work
capitalized rose from EUR 0.9 million to EUR 1.3 million.
The Group's EBITDA totaled EUR 1.4 million in the three nine months
(previous year: EUR 1.5 million), resulting in a stable EBITDA margin of
around 8 %. EBIT in the Industrial segment decreased from EUR 1.6 million to
EUR 0.7 million, while operating EBIT fell from EUR 1.8 million to EUR 0.7
million. EBIT in the Automotive segment increased from EUR -0.9 million to
EUR -0.2 million, while operating EBIT improved from EUR -1.4 million to EUR
-0.8 million. Both EBIT and operating EBIT in the IT Networks segment came
in at EUR -0.1 million.
The Group's operating EBIT (EBIT adjusted for capitalized development
services and amortization on these as well as effects from purchase price
allocation) in the reporting period totaled EUR -0.2 million (previous year:
EUR -0.3 million). The Group's EBIT amounted to EUR 0.4 million (previous
year: EUR 0.5 million).
Consolidated profit for the period after the first three months was slightly
below the prior-year figure of EUR 0.3 million.
Capital expenditure on property, plant, and equipment was insignificant and
comprised replacements. This resulted in cash of EUR 9.9 million as of March
31, 2018, compared with EUR 10.3 million as of December 31, 2017.
The equity ratio as of March 31, 2018 rose to 69 % (December 31, 2017: 65
%). The Executive Board of Softing AG adopted a resolution on March 16,
2018, with the approval of the Supervisory Board, to increase the Company's
share capital in return for cash contributions by EUR 1,450,000 from EUR
7,655,381 to EUR 9,105,381 by issuing 1,450,000 new no-par bearer shares at
an issue price of EUR 9.43.
Key figures of the Softing Group at a glance:
All figures in EUR million 3M/2018 3M/2017
Incoming orders 21.1 21.8
Orders on hand 13.8 14.6
Revenue 18.5 19.8
EBITDA 1.4 1.5
EBIT 0.4 0.5
EBIT (operating) -0.2 0.3
Net profit for the year 0.0 0.3
Earnings per share in EUR (operating) -0.03 0.05
Research and Product Development
In the first three months of 2018, Softing capitalized a total of EUR 1.3
million (previous year: EUR 0.9 million) for the development of new products
and the enhancement of existing ones. This increase is mainly due to the
development of a new generation of communication interfaces (VCI) and
related software components in the Automotive segment. Other significant
amounts were expensed.
Employees
As of March 31, 2018, the Softing Group had 403 employees (previous year:
425). No stock options were issued to employees in the reporting period.
Opportunities for the Company's Future Development
As of the reporting date of March 31, 2018, the Company's risk structure had
not deviated significantly from the description in the consolidated
financial statements for the year ended December 31, 2018. Material changes
are also not expected for the remaining nine months of 2018. For more
detailed information, we refer to our Group Management Report in the 2017
Annual Report, page 9 et seq.
Outlook
Overall, the Group expects a moderate increase in revenue and incoming
orders to EUR 80 million. Given the current uncertainty, we cautiously
anticipate EBIT of EUR 4.0 million and operating EBIT of EUR 3.7 million. At
segment level, we expect a slight increase in revenue, EBIT and operating
EBIT in both the Industrial and IT Networks segments. We expect EBIT and
operating EBIT in the Automotive segment to improve considerably as a result
of the cost reduction measures introduced. We believe that new automotive
products will have a discernible impact on revenue from the middle of the
year. For more detailed information, we refer to the Group's guidance in the
management report of the 2017 consolidated financial statements, which is
contained on pages 27/28 of the 2017 annual report.
Events after the Reporting Period
There were no events of special importance after the reporting date of March
31, 2018.
General accounting policies
The consolidated financial statements of Softing AG as of December 31, 2017
were prepared in accordance with the International Financial Reporting
Standards (IFRSs) based on the guidance of the International Accounting
Standards Board (IASB) applicable at the reporting date. The quarterly
management statement as of March 31, 2018, which was prepared on the basis
of International Accounting Standard (IAS) 34 "Interim Financial Reporting",
does not contain all of the required information in accordance with the
requirements for the presentation of the annual report and should be read in
conjunction with the consolidated financial statements of Softing AG as of
December 31, 2017. In general, the same accounting policies were applied in
the quarterly management statement as of March 31, 2018 as in the
consolidated financial statements for the 2017 financial year. This
quarterly management statement was prepared without an auditor's review.
Changes in the Basis of Consolidation
As of March 31, 2018, the following changes occurred in the basis of
consolidation of Softing AG compared to December 31, 2017:
GlobalmatiX AG
On March 16, 2018, Softing AG acquired all of the interests in GlobalmatiX
AG in Vaduz, Liechtenstein.
Globalmatix AG is a mobile virtual network operator (MVNO) providing mobile
data communication services for vehicles and machinery in Europe and North
America that are needed for (semi-)autonomous driving and also for other
connected services for vehicles and machinery.
This acquisition allows Softing to broaden its expertise in the megatrends
of digitalization and Industry 4.0 on a large scale, thus paving the way for
new service-oriented revenues.
The purchase price in shares of Softing AG, with a value of EUR 13.7
million, was financed based on the authorization granted by the General
Shareholders' Meeting of Softing AG on May 6, 2015 (Authorized Capital
2015). The Executive Board of Softing AG adopted a resolution on March 16,
2018, with the approval of the Supervisory Board, to increase the Company's
share capital in return for cash contributions by EUR 1,450,000 from EUR
7,655,381 to EUR 9,105,381 by issuing 1,450,000 new no-par bearer shares at
an issue price of EUR 9.43. Alois Widmann, Vaduz, Principality of
Liechtenstein, has been authorized to subscribe and acquire the new shares.
Mr. Widmann will transfer all of his shares in GlobalmatiX
Aktiengesellschaft, whose registered office is in Vaduz, Liechtenstein, to
the Company. The Company and Mr. Widmann entered into a transfer agreement
to this effect on March 16, 2018.
We will report on this transaction in more detail and on the allocation of
the purchase price in the 2018 Half-Yearly Financial Report.
Shanghai Softing software Co., Ltd.
On February 10, 2018, Softing AG signed an agreement with Beijing Windhill
Technology Co., Ltd. on the sale of 50 % of the interests in Shanghai
Softing software Co., Ltd., Shanghai, China. At the same time, Softing AG
and Beijing Windhill Technology Co., Ltd. entered into an agreement on a
future joint venture; the purchase price paid for 50 % of the interests was
EUR 1 thousand.
Softing is thus taking account of the considerable importance of the Chinese
automotive market, which is characterized by a rapidly growing need for
product and project solutions in Softing's core expertise in the development
and diagnostics of control units. Up to 50 experienced sales and development
employees are available to Softing Technology Shanghai in the Shanghai and
Beijing offices.
Shanghai Softing software Co., Ltd. will continue to be included in the
group of consolidated affiliated companies because Softing is responsible
for this company's economic and financial management. Softing holds two of
the three seats on its Board of Directors and Shanghai Softing software Co.,
Ltd. is dependent on the marketing of software products developed by
subsidiaries of Softing.
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09.05.2018 Dissemination of a Corporate News, transmitted by DGAP - a
service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.
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Language: English
Company: Softing AG
Richard-Reitzner-Allee 6
85540 Haar
Germany
Phone: +49 (0)89 456 56-333
Fax: +49 (0)89 456 56-399
E-mail: [email protected]
Internet: www.softing.com
ISIN: DE0005178008
WKN: 517800
Listed: Regulated Market in Frankfurt (Prime Standard); Regulated
Unofficial Market in Berlin, Dusseldorf, Hamburg, Munich,
Stuttgart, Tradegate Exchange
End of News DGAP News Service
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