2007-10-11 08:28:23 CEST
2007-10-11 08:28:23 CEST
REGULATED INFORMATION
BasWare - Quarterly report
BasWare Interim Report January 1 - September 30, 2007 (IFRS)
SUMMARY
January-September
- Net sales EUR 50 082 thousand (EUR 43 446 thousand) - growth
15 percent
- Operating profit EUR 5 588 thousand (EUR 6 271 thousand) -
decrease 11 percent
- Operating profit 11 percent of net sales (14%)
- Share of international operations 46 percent of net sales
(44%) - growth 21 percent
- Backlog of SaaS orders not recognized as income EUR 7 048
thousand at the end of the period
- Earnings per share EUR 0.26 (EUR 0.40)
July-September (Q3)
- Net sales EUR 15 268 thousand (EUR 13 363 thousand in
Q3/2006) - growth 14 percent
- Operating profit EUR 1 406 thousand (EUR 2 495 thousand) -
decrease 44 percent
- Operating profit 9 percent of net sales (19%)
- Share of international operations 48 percent of net sales
(48%) - growth 15 percent
- Earnings per share EUR 0.05 (EUR 0.15)
Outlook for 2007: BasWare expects the growth of net sales for the
financial year to be from 15 to 20 percent compared with the Group's
net sales in the previous year. Operating profit (EBIT) is expected
to be from 10 to 15 percent of net sales.
The 2006 figures have been restated to comply with the adjusted
accounting principles regarding license sales recognition. The
Financial Statements have been prepared according to International
Financial Reporting Standards (IFRS).
GROUP KEY FIGURES
7-9/ 7-9/ Change, 1-9/ 1-9/ Change, 1-12/
EUR thousand 2007 2006 % 2007 2006 % 2006
Net sales 15 268 13 363 14,3% 50 082 43 446 15.3% 59 954
Operating profit 1 406 2 495 -43.6% 5 588 6 271 -10.9% 8 078
% of net sales 9.2% 18.7% 11.2% 14.4% 13.5%
Profit before tax 1 516 2 563 -40.8% 5 816 6 457 -9.9% 8 287
Profit for the
period 531 1 665 -68.1% 2 999 4 460 -32.7% 4 986
Return on equity,
% 4.6% 15.6% 8.8% 18.2% 15.1%
Return on
investment, % 12.7% 23.3% 16.2% 25.8% 24.7%
Cash and cash
equivalents *) 9 644 9 909 -2.7% 9 644 9 909 -2.7% 8 975
Gearing, % -10.9% -20.6% -10.9% -20.6% -18.4%
Equity ratio, % 68.7% 76.6% 68.7% 76.6% 77.5%
Earnings per
share, EUR 0.05 0.15 -67.5% 0.26 0.40 -34.4% 0.45
Earnings per share
(diluted),
EUR 0.05 0.15 -67.5% 0.26 0.40 -34.4% 0.44
Equity per share,
EUR 4.04 3.83 5.5% 4.04 3.83 5.5% 3.88
*) Includes cash, cash equivalents and financial assets at fair value
through profit or loss
BasWare's CEO Ilkka Sihvo comments in conjunction with the Interim
Report:"We succeeded according to plan in the third quarter of the year. The
Finnish Enterprise Purchase to Pay and Financial Management units as
well as the European business area exceeded the objectives for the
quarter. Also the Scandinavian unit met their objective. Development
was positive also for BasWare Purchase Management solution and demand
for the solution increased both in Finland as well as
internationally. Additionally, services revenue increased during the
quarter while in the first half of the year the development was mild.
The third quarter of the year fell behind the same quarter in 2006
but was however as expected due to the growth investments realized
during the quarter.""During the quarter, BasWare signed several significant agreements
for BasWare Invoice Processing as well as BasWare Purchase Management
in Finland and in the rest of Europe. During the quarter, BasWare was
chosen to implement BasWare Purchase Management as a Software as a
Service delivery to both the Finnish State Treasury and the Oulu
region. These deliveries strengthen our position in the public
sector.""As a result of the acquisition of Digital Vision, realized during
the quarter, BasWare gained a market leading position in the UK
purchase to pay market. We also gained valuable expertise in data
capture solutions that can also be utilized within the global partner
agreement we recently signed with DICOM Group."
REPORTING
BasWare Group adjusted the revenue recognition principles regarding
license sales as well as the valuation principles regarding accounts
receivables. The company published the restated figures for 2005 and
2006 on February 1, 2007. The audited Financial Statements prepared
according to the adjusted accounting principles were published on
February 8, 2007. BasWare assesses that the adjusted accounting
principles have no effect on the Group's financial performance in the
future.
BasWare acquired Digital Vision Technologies Ltd on September 10,
2007. Digital Vision's financial statements are consolidated in the
Group financial statements as of September 1, 2007. This interim
report also presents unaudited pro forma comparative figures for net
sales and operating profit in 2007. The data has been prepared to
demonstrate what would have been the Group net sales and operating
profit had the financial statements been incorporated for the whole
financial period.
In the first quarter, a formal bad debt reservation of EUR 1.3
million was realized in sales receivables. The formal debt
reservation amounts to EUR 1.3 million at the end of the third
quarter.
BasWare reports it Software as a Service (SaaS) revenue separately in
the second segment. Software as a Service revenue includes license,
maintenance and services revenue that are invoiced monthly based on
an agreement. Software as a Service agreements typically span several
years. The Group also reports the backlog of orders not recognized as
income. The Company's SaaS sales are growing and this dilutes net
sales growth in short term.
NET SALES
BasWare Group's net sales grew during the financial period by 15
percent and were EUR 50 082 thousand (EUR 43 446 thousand). During
the third quarter, net sales grew by 14 percent and were EUR 15 268
thousand (EUR 13 363 thousand). The pro forma net sales for the
financial period would have been EUR 54 627 thousand had the Digital
Vision net sales been incorporated for the whole financial period.
The Company's product sales grew by 17 percent in the period and were
33 percent (33%) of net sales. Maintenance revenue and support
services related to maintenance grew by 14 percent and represented 31
percent (31%) of net sales. Consulting and services revenue grew by
9 percent and represented 34 percent (36%) of net sales. In the
financial period SaaS sales represented 2 percent of net sales. The
backlog of SaaS orders not recognized as income was EUR 7 048
thousand at the end of the period.
In July-September, 26 percent (34%) of net sales came from own
product sales and product sales decreased by 12 percent. The decrease
of product sales in the quarter is affected by part of the Company's
product sales becoming SaaS-based. SaaS sales represented 2 percent
of net sales in the third quarter. Maintenance revenue represented 35
percent (32%) of net sales and grew by 23 percent. Consulting and
services revenue represented 37 percent (34%) of net sales and grew
by 25 percent.
Value added resellers provided a net share of 15 percent (16%) or EUR
2 533 thousand of product sales in January-September. In
July-September value added resellers provided a net share of 16
percent (15%) or EUR 620 thousand of product sales which represents 9
percent (11%) of international operations' total net sales.
The international share of BasWare's net sales was 46 percent (44%)
in the period. International operations grew by 21 percent.
The geographical division of net sales by the location of assets
(primary segment):
Net sales
(EUR Change, Change,
thousand) 7-9/2007 7-9/2006 % 1-9/2007 1-9/2006 % 1-12/2006
Finland 10 238 9 375 9.2 34 571 30 110 14.8 41 028
Scandinavia 3 126 2 672 17.0 11 015 10 344 6.5 14 698
Europe 3 477 2 332 49.1 9 429 6 272 50.3 8 985
Other 757 1 306 -42.0 2 429 2 393 1.5 3 512
Sales
between
segments -2 329 -2 321 0.3 -7 362 -5 671 -29.8 -8 269
Group total 15 268 13 363 14.3 50 082 43 446 15.3 59 954
The geographical division of net sales by the location of customers:
Net sales
(EUR Change, Change,
thousand) 7-9/2007 7-9/2006 % 1-9/2007 1-9/2006 % 1-12/2006
Finland 7 939 7 024 13.0 27 118 24 410 11.1 32 557
Scandinavia 2 819 2 602 8.3 10 362 9 713 6.7 14 129
Europe 3 371 2 051 64.4 9 364 6 717 39.4 9 421
Other 1 139 1 686 -32.5 3 239 2 607 24.2 3 848
Group total 15 268 13 363 14.3 50 082 43 446 15.3 59 954
FINANCIAL PERFORMANCE
BasWare's operating profit decreased by 11 percent in the financial
period and totaled EUR 5 588 thousand (EUR 6 271 thousand). Operating
profit represented 11 percent (14%) of net sales. In the third
quarter, BasWare's operating profit decreased by 44 percent and was
EUR 1 406 thousand (EUR 2 495 thousand). Operating profit represented
9 percent (19%) of net sales. The pro forma operating profit for the
period would have been EUR 5 874 thousand had the Digital Vision
operating profit been incorporated for the whole financial period.
The division of operating profit geographically by the location of
assets (primary segment):
Operating profit
(EUR Change, Change,
thousand) 7-9/2007 7-9/2006 % 1-9/2007 1-9/2006 % 1-12/2006
Finland 3 219 3 514 -8.4 10 371 9 072 14.3 12 314
Scandinavia -104 -211 50.7 -540 -65 -729.5 -45
Europe -1 058 -580 -82.4 -2 584 -1 922 -34.5 -2 831
Other areas -614 -213 -188.4 -1 591 -767 -107.6 -1 297
Operating profit
between segments -37 -15 -146.7 -67 -47 -42.6 -62
Group total 1 406 2 495 -43.6 5 588 6 271 -10.9 8 078
The Company's fixed costs were EUR 40 996 thousand (EUR 33 906
thousand) in the period and have grown by 21 percent compared with
the same period last year. Fixed costs include the bad debt
reservation of EUR 1.3 thousand realized in sales receivables.
Personnel costs made up 66 percent or EUR 27 031 thousand (EUR 23 910
thousand) of the fixed costs. In the third quarter, fixed costs
totaled EUR 12 247 thousand (EUR 9 905 thousand).
Research and development costs totaled EUR 8 640 thousand (EUR 7 640
thousand) of which EUR
1 843 thousand (EUR 1 542 thousand) or 21 percent (20%) were
capitalized during the period. Amortization of capitalized research
and development costs totaled EUR 719 thousand (EUR 291 thousand). In
the third quarter, research and development costs totaled EUR 2 296
thousand (EUR 2 195 thousand).
The Company's finance income and finance expenses were EUR 227
thousand (EUR 185 thousand). The Company's profit before tax was EUR
5 816 thousand (EUR 6 457 thousand) and profit for the period was EUR
2 999 thousand (EUR 4 460 thousand). Undiluted earnings per share
were EUR 0.26 (EUR 0.40).
In the third quarter, profit before tax was EUR 1 516 thousand (EUR
2 563 thousand) and profit for the period was EUR 531 thousand (EUR
1 665 thousand). Earnings per share were EUR 0.05 (EUR 0.15).
FINANCE AND INVESTMENTS
BasWare Group's total assets on the balance sheet at the end of the
financial period were EUR 67 555 thousand (EUR 57 293 thousand). The
Company's cash and liquid assets were EUR 9 644 thousand (EUR 9 909
thousand), of which cash and cash equivalents were EUR 9 217 thousand
(EUR 3 993 thousand) and financial assets at fair value through
profit or loss were EUR 427 thousand (EUR 5 915 thousand).
Equity ratio was 68.7 percent (76.6%) and gearing was -10.9%
(-20.6%). The Company had a total of EUR 4 597 thousand (EUR 870
thousand) interest-bearing liabilities, of which current liabilities
accounted for EUR 4 418 thousand (EUR 433 thousand). Return on
investment was 16.2 percent and return on equity 8.8 percent.
Cash flows from operating activities were EUR 5 918 thousand (EUR
5 532 thousand). Cash flows from investments were EUR -7 373 thousand
(EUR -5 023 thousand).
The acquisition cost of Digital Vision, acquired in September 2007,
totals EUR 9 271 thousand according to the estimate conducted at the
end of the quarter. Of the amount, a total of EUR 916 thousand,
including deferred tax liabilities, has been allocated to intangible
assets in respect of customer relationships and products. EUR 7 147
thousand has been recorded as goodwill.
The Company's capital expenditure, resulting from regular, additional
and replacement, investments resulting from growth, was EUR 581
thousand (EUR 510 thousand) in the period. Gross investments which
include, in addition to the previously mentioned, the capitalized
research and development costs and the acquisition of Digital Vision,
totaled EUR 11 109 thousand (EUR 24 492 thousand, includes the
acquisition of Analyste).
Amortizations of intangible assets were EUR 1 448 thousand (EUR 1 051
thousand). There are no indications of impairments of assets.
RESEARCH, DEVELOPMENT AND NEW PRODUCTS
BasWare's research and development costs were EUR 8 640 thousand (EUR
7 640 thousand) in the period and made up 17 percent (18 %) of net
sales. Research and development costs grew by 13 percent (75%)
compared with the same period last year.
Research and development is centralized in the Software Production
business unit. Altogether 144 people (138) worked in the unit at the
end of September 2007.
During the second quarter, the BasWare portfolio was further
developed according to plan. A new version of BasWare Purchase
Management was launched during the quarter. The new version includes
support for the Unicode standard, enabling the use of different Latin
or Asian character sets in one database installation. A new version
was also launched of the BasWare Travel & Expense Management
solution. The new version enables e.g. fully automated document
processing by matching pre-approved travel plans with incoming travel
claims. A new version or BasWare Mobile was launched during the
quarter with enhancements to the user interface and also support for
mobile phones running the Windows Mobile operating system.
A new version of BasWare Group Consolidation was launched during the
quarter, including full support for Cyrillic characters. During the
quarter, a Russian version of the related BasWare IFRS Consolidation
solution was also launched. A new version of the public sector
reporting package, related to the BasWare Group Consolidation
solution, was launched during the quarter. The new version enables
e.g. automated calculation of key figures.
PERSONNEL
BasWare employed 588 (510) people in average in the third quarter and
630 (519) people at the end of the period. The number of personnel
grew by 21 percent compared with the same period last year and grew
by 13 percent compared with the first quarter of the year. The
acquisition of Digital Vision increased the number of personnel by 52
people.
The share of personnel working in foreign units has increased
compared with the same period last year. At the end of the period, 41
percent (34%) of the BasWare personnel worked outside of Finland and
59 percent (66%) in Finland.
The average age of the employees is 35.8 (35.4) years. 32 percent of
them hold a Master's degree and 44 percent a Bachelor's degree. 28
percent of the personnel are women and 72 percent men.
For incentive purposes, the Company has a bonus program that covers
the whole personnel. During the financial period, the Company also
had two on-going warrant programs for the Group's key personnel as
well as a share-based incentive program directed to the top
management.
Geographical distribution of personnel:
Personnel
(employed, in 7-9/ 7-9/ 1-9/ 1-9/ Change, 1-12/
average) 2007 2006 Change, % 2007 2006 % 2006
Finland 369 343 7.6 361 348 3.7 346
Scandinavia 98 88 11.4 96 87 10.3 89
Europe 94 63 49.2 76 60 26.7 62
Other areas 28 17 64.7 24 15 60.0 17
Group total 588 510 15.3 557 510 9.2 513
BUSINESS OPERATIONS
General economic situation in the main market areas of BasWare
remains relatively good. Research institutions predict that the
annual growth of the IT market will be approximately 5-7 percent in
the Nordic countries, Western Europe and United States. The
competitiveness of the BasWare software is estimated to have slightly
improved. BasWare is named strong newcomer in the international
eProcurement solutions market in a report by the independent research
firm Forrester Research, Inc. and ranked among five leading vendors
globally. According to Forrester, BasWare is a leading electronic
invoice presentment and payment (EIPP) vendor with the most revenues
and largest installed base.
BasWare Enterprise Purchase to Pay operations grew by 16 percent in
the financial period and represent 88 percent (87%) of total net
sales. In the third quarter the growth was 18 percent. The Company
estimates that the demand for procurement solutions continues to
increase. The demand for automated invoice processing solutions and
travel and expense management solutions has remained steady.
In Enterprise Purchase to Pay units, new customers include Toyota
Material Handling Finland and Maxit Oy Ab in Finland, Scottish &
Newcastle in the UK, Ernst & Young in France, ING Direct Spain in
Spain, Nykredit A/S in Denmark and Fairwinds Credit Union in the
United States. Additionally, several Software as a Service deliveries
were agreed during the quarter, the most significant of which being
the Finnish State Treasury and the Oulu region. BasWare was chosen to
deliver its BasWare Purchase Management solution as a service to the
State Treasury where it will be taken in to use in the entire state
administration. In addition to BasWare Purchase Management, the Oulu
region will implement also the new sourcing solution, BasWare RFx
Management.
A total of 1.6 million invoices were transmitted through the
eInvoicing service of BasWare EInvoices Oy, operating in the Nordic
countries. The invoice volume grew by 34.1 percent during the quarter
compared with the same period last year. A total of 20 new customer
agreements were signed during the quarter, of which international
operations represented 25 percent. BasWare EInvoices Oy signed two
new e-Invoice operator agreements with Nordic operators. In addition
to these agreements, BasWare EInvoices Oy became a member of the HUB
Alliance e-Invoicing community, operating in the United Kingdom. This
strengthens the company's role in international e-Invoicing markets,
especially in Central Europe and in the United States. Net sales of
BasWare EInvoices Oy are included in the Enterprise Purchase to Pay
net sales.
The Financial Management operations (BasWare FIMA Oy) grew by 12
percent in the period and represented 12 percent (13%) of net sales.
In the third quarter the operations decreased by 7 percent. The
demand for Financial Management software has been moderate especially
for the planning and analyzing solutions. The unit's new customers
include Espoon kaupunki, Lännen Tehtaat Oyj and Fastems Oy Ab in
Finland. Additionally, the Financial Management unit signed an
agreement with Russian IES Holding for the delivery of BasWare IFRS
Consolidation.
Reseller Channel and Partners
Reseller operations through business partners are an important part
of international operations. The focus of partner activities in the
third quarter was on the execution of actions defined in the partner
plans. The aim is to identify the most potential companies among the
partners and increase their expertise and commitment to the BasWare
solutions.
Three new reseller agreements were signed during the third quarter of
which Pba Consult in Russia, IT Sistemi in Croatia and Pebbletree
Consulting in South Africa. BasWare had a total of 66 international
resellers at the end of the period, operating in 33 countries.
Outside the Nordic countries, BasWare has 42 partners in Europe.
BasWare also has an extensive reseller network in Finland.
Value added resellers provided a net share of 15 percent (16%) or EUR
2 533 thousand of product sales in January-September. In
July-September value added resellers provided a net share of 16
percent (15%) or EUR 620 thousand.
Nordic
BasWare's Nordic organization includes the Enterprise Purchase to Pay
and Financial Management units in Finland, as part of the parent
company, as well as the Scandinavian (Sweden, Denmark and Norway)
unit. All the BasWare Enterprise Purchase to Pay and Financial
Management products are sold in the Nordic countries, apart from the
payment solutions which are currently sold only in Finland.
Sales and other business operations are mainly handled by the own
organization. There are altogether 28 resellers and 17 application
service providers selling payment solutions in Finland. There are two
Enterprise Purchase to Pay business partners in Sweden and one in
Iceland. In Russia, there are two Enterprise Purchase to Pay partners
of which the other started operations during the quarter. In addition
there are two Financial Management business partners in the area.
As a whole, BasWare's Nordic operations exceeded its objectives for
the third quarter. The Finnish unit exceeded its objective while the
Scandinavian unit met its objective. Also the Financial Management
unit exceeded its objective. The growth of net sales in the Finland
segment was 9 percent. In the Scandinavia segment, the quarter's net
sales grew by 17 percent. Net sales of the financial period grew by
14 percent.
Europe
Outside of Scandinavia, BasWare has European subsidiaries in the
Netherlands, Germany, the United Kingdom and France. In addition,
there are partner operations in 10 other countries. Two new reseller
agreements were signed during the quarter. There are altogether 42
resellers in the area.
As a whole, the European business area exceeded the objective for the
quarter. The net sales of the area grew by 49 percent in
July-September compared with the same quarter last year. The sales
consisted mainly of the BasWare Invoice Processing solution. The
units in United Kingdom and France exceeded their objectives for the
quarter. The Dutch and German units met their objectives.
Other Areas
Other areas segment decreased in July-September by 42 percent
compared with the same quarter last year.
Outside of Europe, BasWare has a U.S. subsidiary which focuses on the
sales of the Enterprise Purchase to Pay solutions in the United
States and Canada. In addition, there are six resellers in the area.
The operations of BasWare, Inc. fell behind the objective for the
quarter.
The sales in other areas outside Europe, mainly in Australia, are
handled through value added resellers. Their net sales, that are
entered as a part of the Finnish parent company's sales in segment
reporting, fell slightly behind the objective for the period.
OTHER EVENTS OF THE FINANCIAL PERIOD
Acquisition of Digital Vision
BasWare acquired the entire share capital of UK-based Digital Vision
on September 10, 2007. The acquisition price was approximately EUR
9.2 million and was paid in cash. First part, a total of EUR 9
million, was paid in conjunction with the completition of the
acquisition. The remainder, totaling approximately EUR 0.2 million,
will be determined by Digital Vision's net assets on the Interim
Financial Statements on August 31, 2007 and will be paid in October
2007.
Digital Vision's organization was combined with BasWare's UK
subsidiary. The acquisition strengthens BasWare's market position in
the United Kingdom and also extends BasWare's expertise in scan &
capture and mailroom automation solutions. Digital Vision's mailroom
automation application automates document processing in companies
that receive large volumes of documents. Digital Vision uses state of
the art document recognition and data capture technologies to
eliminate the paper documents and automate processes. The company has
been the leading mailroom automation solution provider in the UK.
Changes in Group structure
BasWare incorporated its Financial Management unit on August 1, 2007.
The new company is called BasWare FIMA Oy. The company develops and
provides off the shelf software solutions as well as consulting
services for business planning, reporting and group consolidation.
The aim is to strengthen the market leadership in Finland and gain
significant market share in the countries where the transition to
IFRS reporting is about to take place.
Strategy
In its meeting on October 4, 2007, the Board of Directors of BasWare
Corp. discussed the Company's growth strategy and approved five
strategic projects that facilitate reaching the set targets. The
projects, to be realized in the strategy period from 2007 to 2010,
are: Dominating the US, Conquer the base, Must-have brand and thought
leadership, Five global giants per year and Joint forces.
There has been no change to the Company's vision, mission and
financial targets, published on September 12, 2006.
SHARE AND SHAREHOLDERS
BasWare Corporation's share capital totaled EUR 3 440 437.20 at the
end of the period and the number of shares was 11 468 124. The book
counter value of the shares is EUR 0.30 per share.
Board's Authorizations given by the Annual General Meeting of
Shareholders on February 26, 2007
Authorization to resolve on share issue
The Annual General Meeting authorized the Board to resolve on the
issuance of a maximum of
2 293 624 shares and on the conveying of a maximum of 1 146 812
shares in possession of the Company in one or more installments,
either against pay or free of charge.
The new shares can be issued and the Company's own shares conveyed
either against payment or for free to the Company's shareholders in
proportion to their holding or by means of a directed issue,
deviating from the pre-emptive rights of the shareholders provided
that from the Company's perspective there are important financial
grounds for it, such as enabling business arrangements and company
acquisitions, company's capital management, personnel incentive
program or other reasons for developing the Company's business
activities.
The authorization also includes the right to grant warrants and other
special rights to receive new shares in the company or BasWare shares
held by the company against payment such that either the share
subscription price will be paid in cash or the subscriber's
receivables will be offset against the subscription price.
The authorization also includes the right to resolve on a free issue
to the Company itself. The amount of the shares issued to the Company
can be a maximum of 1 146 812 shares, including shares acquired based
on the authorization or the previously acquired own shares of the
Company.
The subscription prices of new shares and the sum paid for the own
shares will be recorded in the fund for invested non-restricted
equity.
The authorization is valid until March 31, 2008.
Authorization to resolve on acquiring the Company's own shares
The Board is authorized to resolve on the acquisition of a maximum of
1 146 812 own shares. The new shares are acquired at the Helsinki
Stock Exchange and can either be held by the Company, nullified or
conveyed further. The authorization for acquisition is valid until
March 31, 2008.
Authorization to resolve on an extraordinary dividend distribution
The Board is authorized to resolve on an extraordinary dividend
distribution totaling a maximum of EUR 1 000 000, distributed from
the Company's distributable funds.
The authorization is in effect until the start of the following
Annual General Meeting.
Warrant Programs
Warrant Program 2006
Based on the Warrant Program 2006, a maximum of 300 000 warrants can
be granted
to the key personnel of BasWare Group, each warrant entitling to
subscribe one BasWare share. The warrants of the Warrant Program 2006
are divided into three series, each having an own subscription period
as follows: April 1, 2008-March 31, 2009, April 1, 2009-March 31,
2010 and April 1, 2010-March 31, 2011. The subscription prices of the
shares correspond to the volume-weighted average share price of the
Company in January-March of 2006, 2007 and 2008.
Warrant Program 2007
The warrants shall, by deviation from the shareholders' pre-emptive
right to subscription, be issued to key personnel identified by the
Board of Directors, employed by the group for the present and not
part-time, to increase their commitment and work motivation. Part of
the warrants shall be issued to the wholly owned subsidiary of
BasWare Corporation to be issued later to persons employed by the
Group or to persons who are recruited to the Group.
The shareholders' pre-emptive right to subscription is being deviated
from, since the warrants are intended to form a part of the Group's
incentive program and, thus, from the Company's perspective, there
are considerable financial grounds for it.
The warrants are granted free of charge. The Board of Directors shall
decide upon the procedure and schedule of the approval of warrants.
The warrants will be granted to the Group's personnel and management
according to the resolution of the Board.
BasWare Corporation shall issue a maximum of 200 000 warrants,
whereof 100 000 shall be marked with the letter D and 100 000 with
the letter E. The warrants will be issued in the book-entry system.
Each warrant entitles its holder to subscribe one (1) share in
BasWare Corporation.
The subscription price of the share will be recorded to EUR 0.30 in
the share capital of Company and for the remainder in the fund for
invested non-restricted equity. BasWare's share capital can increase
by a maximum of 200.000 new shares or EUR 60 000 based on the
subscriptions.
The subscription period is
- warrant D April 1, 2009 - March 31, 2010,
- warrant E April 1, 2010 - March 31, 2011
The subscription prices correspond to
- for warrant D, the volume-weighted average share price of the
Company in January-March of 2007
- for warrant E, the volume-weighted average share price of the
Company in January-March of 2008
The portion of shares subscribed based on the now issued warrants
totals a maximum of 1.71% of the Company's shares and votes after the
possible increase in share capital.
Share price and trade
In the third quarter, the highest price of the share was EUR 14.00
(EUR 15.25), lowest price was EUR 10.11 (EUR 11.21) and closing price
was EUR 12.95 (EUR 11.90). The average price of the share was EUR
12.13 (EUR 13.22).
A total of 2 216 534 (4 708 382) shares were traded during the
financial period which is the equivalent of 19 percent (43%) of the
average number of shares. Market capitalization with the period's
closing price on September 28, 2007 was EUR 148 512 thousand (EUR
136 471 thousand).
Shareholders
BasWare had 17 990 (20 453) shareholders at the end of the financial
period, including nominee-registered holdings (10).
Nominee-registered holdings accounted for 14.2 percent of the total
number of shares.
The Company received one notice of change in ownership during the
financial period when the holdings of Baillie Gifford Overseas
Limited and Baillie Giffords & Co. exceeded the five percent
threshold defined in the Securities Markets Act.
THE COMPANY'S NEAR FUTURE RISKS AND BUSINESS UNCERTAINTIES
A more in-depth account of the Company's operating risks has been
published in conjunction with the 2006 Financial Statements. BasWare
has divided the risks into six categories: risks related to business
operations, products, personnel as well as legal, financial and data
security risks. BasWare takes risks that are a natural part of the
strategy and objectives. These risks are managed and reduced in
various ways.
As part of BasWare's risks and business uncertainties in the near
future, Software as a Service (SaaS) based services instead of
license agreements may affect the Company's short term net sales
growth. The availability of consulting resources has improved but
resourcing may still somewhat slow down the growth of services
operations.
There have been no other significant changes in BasWare's risks and
uncertainties during the financial period.
FUTURE OUTLOOK
According to research institutions, the global enterprise software
market will grow by approximately 5-7 percent annually. However,
regional growth may outstrip this; for example in Asia Pacific annual
growth is estimated at over 12 percent. BasWare operates in the
electronic procurement and purchase invoice area, which is expected
to grow more rapidly than the average for enterprise software.
Western Europe and the United States represent approximately three
quarters of overall demand for enterprise software. Since invoice
processing and purchase management software remain at the beginning
of their lifecycles in these regions, demand is estimated to be high.
The purchase management and invoice processing software markets are
relatively heterogeneous with regards to the competitive situation.
However, strong growth may attract more competitors to the market.
The industry is consolidating rapidly and this development is
expected to continue in the future. BasWare is a medium sized
software company on a global scale, in terms of sales and number of
personnel.
BasWare's direct competitors are mainly smaller companies that
operate locally. Document management, scanning and workflow solution
developers compete with BasWare especially in invoice processing.
Competing solutions also include tailored software solutions that
complement Enterprise Resource Planning (ERP) systems and require
extensive client-specific project work.
The competitiveness of the software is still good due to new value
added products and the integrated concept that the products form. A
leading research company, Forrester Research, Inc. names BasWare the
leading provider of invoice automation solutions and in procurement
one of the top five vendors in the world.
The Company's international growth is based on the Company's own
sales and marketing efforts as well as on reseller operations. The
development of the indirect channel continues especially in Europe
and North America and in Russia and Asia. In Scandinavia, the focus
is on profitability, supported by the extending product portfolio. In
Finland, the focus is on profitability and the moderate growth comes
mainly from the purchase management area.
BasWare has complemented its organic growth with acquisitions. The
Company continues to review possible acquisition targets during 2007.
With the acquisitions, the Company can extend the sales channel and
the product portfolio. They may also strengthen the Company's
position in the electronic invoicing market.
In 2007, BasWare expects the growth of net sales for the financial
year to be from 15 to 20 percent compared with the Group's net sales
in the previous year. Operating profit (EBIT) is expected to be from
10 to 15 percent of net sales.
In Espoo, Finland, October 11, 2007
BASWARE CORPORATION
Board of Directors
For more information, please contact
CEO Ilkka Sihvo, BasWare Corp.,
Tel. +358 9 8791 7251 or +358 40 501 8251
Analyst and Press Briefing
BasWare arranges today, October 11, 2007 a briefing on the Interim
Report for the press and analysts at 10:30 in Hotel Kämp, Paavo Nurmi
conference room in Helsinki, Finland. During this briefing CEO Ilkka
Sihvo will comment the operations and financial performance of the
quarter. Welcome.
Distribution
Helsinki Stock Exchange
Key media
www.basware.com
GROUP INCOME STATEMENT
1.7.- 1.7.- 1.1.- 1.1.- 1.1.-
30.9. 30.9. Change, 30.9. 30.9. Change, 31.12.
EUR thousand 2007 2006 % 2007 2006 % 2006
NET SALES 15 268 13 363 14.3 50 082 43 446 15.3 59 954
Other operating
income 23 25 -8.1 790 127 521.0 177
Materials and
services -981 -468 109.5 -2 463 -1 935 27.3 -2 593
Employee
benefits
-23
expenses -7 827 -6 942 12.8 -27 031 910 13.0 -32 953
Depreciation and
amortization -657 -520 26.4 -1 825 -1 462 24.9 -2 033
Other operating
expenses -4 419 -2 963 49.2 -13 966 -9 995 39.7 -14 474
Operating profit 1 406 2 495 -43.6 5 588 6 271 -10.9 8 078
Finance Income 130 56 133.2 270 242 11.7 308
Finance
Expenses -20 12 -266.6 -43 -57 -24.5 -99
Profit before
tax 1 516 2 563 -40.8 5 816 6 457 -9.9 8 287
Income tax
expense -985 -898 9.7 -2 816 -1 997 41.0 -3 301
PROFIT FOR
THE PERIOD 531 1 665 -68.1 2 999 4 460 -32.7 4 986
EPS (undiluted),
EUR 0.05 0.15 -67.5 0.26 0.40 -34.4 0.45
EPS (diluted),
EUR 0.05 0.15 -67.5 0.26 0.40 -34.0 0.44
Average share
number:
11 468 11 443 11 468 11 074 11
- undiluted 124 639 124 109 172 612
11 468 11 443 11 468 11 138 11 221
- diluted 124 639 124 694 052
GROUP BALANCE SHEET
EUR thousand 30.9.2007 30.9.2006 Change, % 31.12.2006
ASSETS
NON-CURRENT ASSETS
Intangible assets 11 873 9 384 26.5 9 980
Goodwill 25 816 18 228 41.6 18 477
Tangible assets 1 003 841 19.3 784
Investments in associates 3 -100.0
Available-for-sale
investments 38 2 612 -98.6 2 612
Trade and other receivables 12 12 -0.5
Deferred tax assets 2 752 3 446 -20.1 3 501
Non-current assets 41 495 34 527 20.2 35 354
CURRENT ASSETS
Inventories 28 8 265.7 20
Trade and other receivables 16 158 12 724 27.0 13 018
Income tax receivables 230 125 84.1 192
Financial assets at
fair value through profit or
loss 427 5 915 -92.8 5 963
Cash and cash equivalents 9 217 3 993 130.8 3 012
Current assets 26 060 22 766 14.5 22 204
TOTAL ASSETS 67 555 57 293 17.9 57 558
EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Share capital 3 440 3 440 3 440
Share premium account 33 127 33 127 33 127
Fair value reserve and other
reserves 540 514 5.0 540
Translation differences 550 211 160.5 235
Retained earnings 8 629 6 584 31.1 7 176
Minority interest 98 88
Shareholders' equity 46 383 43 877 5.7 44 606
NON-CURRENT LIABILITIES
Deferred tax liability 1 649 1 415 16.5 1 462
Interest-bearing liabilities 179 437 -58.9 329
Non-current liabilities 1 828 1 851 -1.2 1 791
CURRENT LIABILITIES
Interest-bearing liabilities 4 418 433 919.5 428
Trade payables and other
liabilities 13 774 10 085 36.6 9 957
Tax liability from income
tax 1 152 1 046 10.1 775
Current liabilities 19 343 11 565 67.3 11 160
TOTAL EQUITY AND LIABILITIES 67 555 57 293 17.9 57 558
GROUP STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Share- Share Share-
holders' premium Other Translation Retained Minority holders'
EUR thousand equity account reserves differences earnings interest equity
SHAREHOLDERS'
EQUITY
1.1.2006 2 963 15 010 -203 3 527 21 296
Change in
translation
difference 414 -252 162
Granted
warrants -81 -81
Net
profit/loss
recognized
directly in
shareholders'
equity 514 414 -333 596
Profit for
the period 4 460 4 460
Total profits
and losses 514 414 4 127 5 055
Dividend
distribution -1 070 -1 070
Rights issue 477 477
Warrants used 190 190
Share premium 17 933 17 933
Transaction
costs for
equity -6
SHAREHOLDERS'
EQUITY
30.9.2006 3 440 33 127 514 211 6 584 43 877
Share- Share Share-
holders' premium Other Translation Retained Minority holders'
EUR thousand equity account reserves differences earnings interest equity
SHAREHOLDERS'
EQUITY
1.1.2007 3 440 33 127 540 235 7 176 88 44 606
Change in
translation
difference 315 -2 312
Granted
warrants 142 142
Net
profit/loss
recognized
directly in
shareholders'
equity 315 143 458
Profit for
the period 3 030 -31 2 999
Total profits
and losses 315 3 173 -31 3 457
Rights issue 40 40
Dividend
distribution -1 720 -1 720
SHAREHOLDERS'
EQUITY
30.9.2007 3 440 33 127 540 550 8 629 98 46 383
GROUP CASH FLOW STATEMENT
EUR thousand 1.1.-30.9.2007 1.1.-30.9.2006 1.1.-31.12.2006
Cash flows from
operating activities
Profit for the period 2 999 4 460 4 986
Adjustments for profit 4 110 3 176 5 235
Working capital changes 739 -305 -902
Interest paid -47 -34 -41
Dividends received -8
Interest received 55 52 70
Other financial items
in operating activities 35 69 65
Income taxes paid -1 975 -1 885 -3 750
Net cash from operating
activities 5 918 5 532 5 657
Cash flows from
investing activities
Purchase of tangible
and intangible assets -2 402 -1 974 -3 021
Proceeds from sale of
tangible and intangible
assets 25 133 64
Acquired subsidiaries -8 018 -3 660 -3 660
Disposal of associated
companies 23
Proceeds from other
investments 3 013 457 457
Granted loans -1
Repayments of loan
receivables 8 21 24
Net cash used in
investing activities -7 373 -5 023 -6 114
Cash flows from
financing activities
Proceeds from issuance
of share capital 760 760
Minority's capital
investment 40 95
Proceeds from
short-term loans 4 000
Repayments of long-term
borrowings -307 -300 -400
Repayments of financial
lease liabilities -12 -63 -75
Dividends paid -1 720 -1 070 -1 070
Net cash used in
financing activities 2 000 -673 -689
Net change in cash and
cash equivalents 545 -1 146
according to cash flow
statement -163
Cash and cash
equivalents at
beginning of period 8 975 9 987 9 987
Effects of exchange
rate changes on cash
and cash equivalents -39 -20 -19
Effects of fair value
implementation 164 105 152
Cash and cash
equivalents at end of
period 9 644 9 909 8 975
GROUP QUARTERLY INCOME STATEMENT
1-3/ 1-3/ 4-6/ 4-6/ 7-9/ 7-9/ 10-12/
EUR thousand 2007 2006 2007 2006 2007 2006 2006
NET SALES 17 038 15 432 17 776 14 651 15 268 13 363 16 508
Other operating
income 15 41 752 61 23 25 50
Materials and
services -819 -778 -662 -689 -981 -468 -658
Employee benefits
expenses -9 243 -8 259 -9 961 -8 710 -7 827 -6 942 -9 042
Depreciation and
amortization -571 -453 -597 -488 -657 -520 -572
Other operating
expenses -5 010 -3 454 -4 536 -3 578 -4 419 -2 963 -4 479
Operating profit 1 409 2 529 2 773 1 247 1 406 2 495 1 807
% 8.3% 16.4% 15.6% 8.5% 9.2% 18.7% 10.9%
Finance income 61 138 79 48 130 56 66
Finance expenses -11 -60 -12 -8 -20 12 -43
Profit before tax 1 459 2 606 2 840 1 287 1 516 2 563 1 831
% 8.6% 16.9% 16.0% 8.8% 9.9% 19.2% 11.1%
Tax on income from
operations -575 -613 -1 256 -486 -985 -898 -1 304
PROFIT FOR THE
PERIOD 884 1 994 1 584 801 531 1 665 526
% 5.2% 12.9% 8.9% 5.5% 3.5% 12.5% 3.2%
COMMITMENTS AND CONTINGENT LIABILITIES
EUR thousand 30.9.2007 30.9.2006 31.12.2006
GUARANTEES ON BEHALF OF SUBSIDIARIES
Guarantees total 1 097 980 986
OWN CONTINGENT LIABILITIES
Lease liabilities
Current lease liabilities 553 611 544
Lease liabilities maturing in 1-5
years 598 613 567
Total 1 151 1 224 1 111
Rental liabilities
Current rental liabilities 1 675 1 064 1 334
Rental liabilities maturing in 1-5
years 4 152 1 156 3 193
Rental liabilities maturing later 246
Total 6 074 2 220 4 527
Own contingent liabilities, total 7 225 3 444 5 638
SEGMENT REPORTING
Geographical segments (primary segment)
Net sales Change, Change,
(EUR thousand) 7-9/2007 7-9/2006 % 1-9/2007 1-9/2006 % 1-12/2006
Finland 10 238 9 375 9.2 34 571 30 110 14.8 41 028
Scandinavia 3 126 2 672 17.0 11 015 10 344 6.5 14 698
Europe 3 477 2 332 49.1 9 429 6 272 50.3 8 985
Other areas 757 1 306 -42.0 2 429 2 393 1.5 3 512
Sales between
segments -2 329 -2 321 0.3 -7 362 -5 671 -29.8 -8 269
Group total 15 268 13 363 14.3 50 082 43 446 15.3 59 954
Operating profit
(EUR Change, Change,
thousand) 7-9/2007 7-9/2006 % 1-9/2007 1-9/2006 % 1-12/2006
Finland 3 219 3 514 -8.4 10 371 9 072 14.3 12 314
Scandinavia -104 -211 50.7 -540 -65 -729.5 -45
Europe -1 058 -580 -82.4 -2 584 -1 922 -34.5 -2 831
Other areas -614 -213 -188.4 -1 591 -767 -107.6 -1 297
Operating profit
between segments -37 -15 -146.7 -67 -47 -42.6 -62
Group total 1 406 2 495 -43.6 5 588 6 271 -10.9 8 078
Personnel
(employed, in Change, Change,
average) 7-9/2007 7-9/2006 % 1-9/2007 1-9/2006 % 1-12/2006
Finland 369 343 7.6 361 348 3.7 346
Scandinavia 98 88 11.4 96 87 10.3 89
Europe 94 63 49.2 76 60 26.7 62
Other areas 28 17 64.7 24 15 60.0 17
Group total 588 510 15.3 557 510 9.2 513
Business segments (secondary segment)
Net sales
(EUR Change, Change,
thousand) 7-9/2007 7-9/2006 % 1-9/2007 1-9/2006 % 1-12/2006
Product
sales 4 019 5 632 -28.6 16 637 15 265 9.0 19 374
Maintenance
and support 5 369 3 561 50.8 15 468 12 771 21.1 18 776
Consulting
and
services 4 987 4 072 22.5 15 523 14 352 8.2 20 106
SaaS 340 881
Other
operations 553 98 462.8 1 573 1 059 48.5 1 698
Group total 15 268 13 363 14.3 50 082 43 446 15.3 59 954
Geographical division of net sales by the location of customer
Net sales
(EUR Change, Change,
thousand) 7-9/2007 7-9/2006 % 1-9/2007 1-9/2006 % 1-12/2006
Finland 7 939 7 024 13.0 27 118 24 410 11.1 32 557
Scandinavia 2 819 2 602 8.3 10 362 9 713 6.7 14 129
Europe 3 371 2 051 64.4 9 364 6 717 39.4 9 421
Other areas 1 139 1 686 -32.5 3 239 2 607 24.2 3 848
Group total 15 268 13 363 14.3 50 082 43 446 15.3 59 954
GROUP KEY INDICATORS
EUR thousand 1-9/2007 1-9/2006 1-12/2006
Net sales 50 082 43 446 59 954
Growth of net sales, % 15.3% 40.9% 43.9%
Operating profit 5 588 6 271 8 078
Growth of operating profit, % -10.9% 78.5% 123.7%
% of net sales 11.2% 14.4% 13.5%
Profit before tax 5 816 6 457 8 287
% of net sales 11.6% 14.9% 13.8%
Profit for the period 2 999 4 460 4 986
% of net sales 6.0% 10.3% 8.3%
Return on equity, % 8.8% 18.2% 15.1%
Return on investment, % 16.2% 25.8% 24.7%
Interest bearing liabilities 4 597 870 758
Cash and liquid assets *) 9 644 9 909 8 975
Gearing, % -10.9% -20.6% -18.4%
Equity ratio, % 68.7% 76.6% 77.5%
Total assets 67 555 57 293 57 558
Gross investments **) 11 109 24 492 25 315
% of net sales 22.2% 56.4% 42.2%
Capital expenditure 581 510 597
% of net sales 1.2% 1.2% 1.0%
Research and development costs 8 640 7 640 10 925
% of net sales 17.3% 17.6% 18.2%
R&D personnel at end of period 144 138 138
Personnel average for period 557 510 513
Personnel at end of period 630 519 528
Growth of personnel, % 21.4% 34.8 % 33.7%
Earnings per share, EUR 0.26 0.40 0.45
Earnings per share, EUR (diluted) 0.26 0.40 0.44
Equity per share, EUR 4.04 3.83 3.88
Average share number:
- undiluted 11 468 124 11 074 109 11 172 612
- diluted 11 468 124 11 138 694 11 221 052
*) Includes cash, cash equivalents and financial assets at fair value
through profit or loss
**) Includes capitalized R&D costs and acquisitions
MAJOR SHAREHOLDERS
September 30, 2007 Shares and votes
Number %
1. Sihvo, Ilkka 1 065 800 9.3
2. Vaajoensuu, Hannu (incl. a controlled company
and children under guardianship) 1 045 800 9.1
3. Eräkangas, Kirsi (incl. children under
guardianship) 1 031 800 9.0
4. Perttunen, Sakari 830 400 7.2
Pöllänen, Antti (incl. children under
5. guardianship) 800 900 7.0
6. Nordea Nordic Small Cap Fund 465 997 4.1
7. Ahonen, Asko 318 822 2.8
8. Fondita Nordic Small Cap Fund 247 000 2.2
9. Veritas Pension Insurance Company 216 000 1.9
10. Perttunen, Meimi 215 400 1.9
11. Royal Skandia Life Assurance 210 000 1.8
12. Henki-Sampo Insurance Company 155 000 1.4
13. OP Finland Small Firm Fund 106 000 0.9
14. Veritas Life Insurance Company Ltd 100 000 0.9
15. Sarvala, Vesa 95 241 0.8
16. Kaleva Mutual Insurance Company 93 800 0.8
17. Fides Finland Focus Fund 93 048 0.8
18. Nordea Fennia Plus Fund 86 000 0.7
19. Luoto, Matti 81 950 0.7
20. Fondita Nordic Micro Cap Fund 75 000 0.7
20 largest shareholders total 7 333 958 64.0
Nominee-registered shares total 1 631 640 14.2
Others 2 502 526 21.8
Total 11 468 124 100
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