HAMBURG, Germany, Aug. 31, 2001 (PRIMEZONE) -- Based on results for the first half of 2001, the Gauss Group is operating to a large extent in line with previously announced plans. Total Group revenues in the first half of the year amounted to Euro $23.3 million (same period the previous year: Euro $11.2 million). Revenues of Euro $16.6 million (Euro $3.5 million) were generated in international product business. The EBITDA reported by the Gauss Group in this period totalled Euro $- 17 million (Euro $-3.6 million), about Euro $- 1.8 million of which were non-recurring expenses.
As part of its announced business plan, Gauss Group will move aggressively towards focusing exclusively on its software product business in future. It therefore intends to sell its subsidiary Gauss Interprise Consulting AG. The revenues generated by Gauss Interprise Consulting AG in the first half of the year totalled Euro $ 6.7 million, while the EBITDA in the same period were Euro $- 0.4 million. In accordance with US--GAAP accounting standards, this transaction will be reported in the financial statements in compliance with "discontinued operations" regulations. Based on this adjustment in reporting, sales in product business will be reported as Euro $17.2 (Euro $3.9 million), with the corresponding EBITDA totalling Euro $-16.6 Million (Euro $-3.6 million).This leads to revenues of Euro $23.9 million and an EBITDA result of Euro $ -16.9 million for the Gauss Group.
This adjustment not withstanding, the Gauss Group remains confident that the announced goals and break-even can be reached at EBITDA level in the 4th quarter of 2001.
Gauss Interprise AG has concluded a further agreement with its main financial backer about the provision of liquid funds amounting to Euro $5 million in addition to existing loan arrangements. The total credit line to date, through June 30, 2002, amounts to Euro $10.0 million. Current cash position consists of loan capital of Marketing 2.2 million, with total liquid funds at the end of August of about Marketing 5 million.
The provision of the loan capital is based on achievement of specific business goals by the Gauss Group.
To this end, the Gauss Group has engaged corporate finance consulting companies chartered to to raise new equity, restructure the liabilities and facilitate the sale of Gauss Interprise Consulting AG.
Explanatory notes:
The complete report on the first half of the year will be published on Friday, Aug.31.2001 (www.deutsche-boerse.de).
In view of the high growth potential that still exists in the enterprise content management systems field, Gauss Interprise AG has decided to concentrate on international software product business. In order to meet our goals of becoming a world-class software products business, resources must be focused exclusively on this goal, and cannot continue to be allocated towards continued development of the Gauss Interprise Consulting AG, a services-based business unit operating only in Germany. The company therefore intends to sell this consulting business. This decision will help avoid potential conflicts with integration and consulting partners in the German market, and will open up new strategic prospects for the consulting unit. In accordance with US--GAAP, the results generated by the consulting business are being shown separately in the half-yearly report as required by the discontinued operations rule. The Gauss Group feels this decision will help attract additional investors, as the company will be operating in a high growth segment of the software market with a very clear business model.
In spite of deteriorating economic conditions, revenue for U.S. operations showed positive growth -- recording revenues of Euro $11.1 million for the first half of 2001.
In view of the challenging global economic situation, which has led to ongoing reluctance to invest in IT infrastructure, the Management Board of Gauss Interprise AG has approved an extensive program to increase profitability, and have taken appropriate action in connection with this goal. The basic objective of this break-even initiative is to reduce costs, and to realign the organization towards higher margin product revenues opportunities. The break-even initiative centers on restructuring of the sales organisation. Europe, Middle East, and Africa (EMEA) marketing & sales and research & development operations have therefore been combined in a single Management Board function. Gauss Interprise reduced staff by 30 employees in the EMEA product area in July, while a reduction of 20 employees had already been made in the USA in June. The Netherlands operation has been restructured and now has fewer staff. Business development assignments are now being carried out at Management Board level. These savings in personnel will have a positive effect on results in the following quarters. Gauss Interprise AG is also realigning its partner revenues strategy in Germany, concentrating on partners who generate large sales and reducing the total number of partners. Focussed support and more intensive joint marketing activities are expected as a result. More effective accounts receivable management will ensure that outstanding invoices are paid promptly, which will help to further improve the company's cash position. Further savings have been made by making targeted reductions in investment and marketing budgets in Europe.