Frankfurt am Main/Walldorf, May 29, 2000
realTech AG, the Walldorf-based company that specializes in technical consulting services, Enterprise Resource Management software and outsourcing services, and is listed on the Neuer Markt, achieved a consolidated revenue of EURO 9.435 million for the 1st quarter of FY 2000 compared with EURO 5.624 million for the same period last year. This corresponds to a 68% increase in revenue. The largest share of revenue was achieved by the SAP R/3 consulting division. The software division achieved the highest revenue growth, namely 115 percent, boosting this quarter’s revenue to EURO 813 thousand. More than 1,000 customers are currently using realTech software. Approximately half of the consolidated revenue was achieved by the international subsidiaries. The numbers were announced today in Walldorf by Daniele Di Croce, member of real Tech AG’s Board of Directors and responsible for Finance.
Operating income decreased by 67% to EURO 290 thousand, compared with the EURO 884 thousand that were achieved in the first three months of 1999. This decrease was caused by charges that were incurred by realTech Inc. in the U.S. and realTech Australasia Pty Ltd. in Australia, which, despite the positive development of the results in Europe and New Zealand, could not be offset between the group companies. Operating income was additionally burdened by substantial investments in the Marketing, Sales and R&D departments. These investments will enable realTech to continue producing profitable software products and marketplace solutions.
As a result of the above, the company posted a net loss in the first quarter of FY 2000 of EURO 150 thousand or 0,06 EURO per share compared with a net income of EURO 514 thousand or 0,10 EURO per share for the same period last year.
All of the business divisions showed a positive development. Revenue for FY 2000 is planned to increase by 47% to EURO 42,4 million as the result of organic growth. realTech is positive that the strategy that was implemented during the first quarter of 2000 will enable the company to record positive results during the second half of the year. The R/3 Technical Consulting and the eServices divisions will be merged into a new division: "Technology Consulting". The Internet’s wide-spread availability, its constantly improving quality and the growing complexity of systems such as mySap.com will see an increase in computer center service outsourcing. realTech’s "Outsourcing" division will take on and support this new line of business. Both divisions will be supplemented by the "Software Products" division that will market in-house developed solutions that enable customers to manage complex IT landscapes.
Investments and Substantial Customer
Orders Strategic investments enabled realTech AG to further increase its growth potential and its service offerings. In the area of technical consulting, realTech AG entered the arena of virtual marketplace development and hosting by investing in the English start-up InterClub. The InterClub platform was developed to enable the transfer of football players from anywhere to anywhere in the world via the Internet. The software that realTech developed for the InterClub project can be easily applied to other marketplaces.
realTech AG signed a number of contracts with large companies such as Siemens, Braun GmbH, Deutsche Post AG and Fiat for technical R/3® consulting services, and the implementation of mySAP.com® components – SAP AG's Internet application.
Highlights Q1 2000
realTech Inc. and Microsoft signed a contract that gives realTech’s U.S. subsidiary the status of "preferred Microsoft partner for SAP installations". Based on the agreement between the Redmond-based company realTech’s U.S. subsidiary, Microsoft will refer customers to realTech for SAP R/3 installations on Windows 2000 with the SQL Server. This goes for new installations as well as for system and database migrations.
realTech AG and Hanover-based IMPRESS SOFTWARE AG signed a strategic partnership by which both companies will jointly integrate SAP R/3 systems with the Internet. The partnership will enable realTech to expand its Internet and eCommerce activities.
Employees
As in the previous years, realTech hired more qualified employees during the first quarter of FY 2000 than were planned for. On March 31, 2000, the last day of the first quarter, the number of employees rose by 42 to a total of 411 - despite the tense situation in the market for SAP® R/3 consultants. 191 people are employed by realTech’s international subsidiaries.
Forecast
The move towards Internet-based total solutions calls for innovative concepts and strategies. New and increasingly complex technologies will continue to increase the demand for realTech services and products. In addition to our SAP R/3 and mySAP.com solutions, we will increase our product portfolio to include solutions that enable companies to integrate their applications via the Internet and monitor their security.
realTech will continue to focus on increasing its international presence and further developing its international subsidiaries. To this extent, a new subsidiary in France will be opened during the summer of 2000.
On May 22, realTech announced that it had signed a letter of intent to acquire a company that focuses on eBusiness solutions. The company to be acquired is headquartered in the U.S. and is expected to achieve a yearly revenue of approx. 22 to 24 million U.S. Dollars. The company currently employs 200 people. The preliminary agreement is based on the positive results of the due diligence audit. The final contract is due to be signed within the next few months.
The acquisition confirms realTech's strategy to becoming a market leading technology consulting firm. It also increases the company's presence in the U.S. After the contract has been signed, realTech will release a new, upward corrected forecast.
realTech AG foresees further growth potential in the market for solutions that enable companies to manage complex IT landscapes. To this extent, the company will work on extending the functionality of each of its individual solutions to create a number of total solutions. These solutions will consist of Enterprise Resource Management and SAP-specific solutions as well as web-based applications. The development is due to be completed by mid-2002.
