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2009-10-13 08:05:09 CEST 2009-10-13 08:06:43 CEST REGULATED INFORMATION BasWare - Interim report (Q1 and Q3)Basware Interim Report January 1 - September 30, 2009 (IFRS)BASWARE INTERIM REPORT JANUARY 1 - SEPTEMBER 30, 2009 (IFRS) Basware Corp. Stock Exchange Release October 13, 2009 at 09.00AM SUMMARY January-September - Net sales EUR 66 054 thousand (EUR 59 804 thousand) - growth 10.5 percent - Operating profit EUR 7 767 thousand (EUR 4 557 thousand) - growth 70.4 percent - Operating profit 11.8 percent of net sales (7.6%) - International operations accounted for 54.3 percent of net sales (51.9%) - growth 15.5 percent - Cash flows from operating activities were EUR 8 540 thousand (EUR 6 205 thousand). - Earnings per share EUR 0.45 (EUR 0.28) July-September Q3 - Net sales EUR 21 609 thousand (EUR 19 259 thousand) - growth 12.2 percent - Operating profit EUR 4 028 thousand (EUR 2 381 thousand) - growth 69.2 percent - Operating profit 18.6 percent of net sales (12.4%) - International operations accounted for 58.0 percent of net sales (55.1%) - growth 18.0 percent - Earnings per share EUR 0.27 (EUR 0.17) Basware expects its net sales for 2009 to develop positively on the level of 2008. Operating profit (EBIT) for 2009 is expected to be from 10 to 15 percent of net sales. The figures are unaudited. GROUP KEY FIGURES 7-9/ 7-9/ Change, 1-9/ 1-9/ Change, 1-12/ EUR thousand 2009 2008 % 2009 2008 % 2008 Net sales 21 609 19 259 12.2% 66 054 59 804 10.5% 86 098 EBITDA 5 134 3 070 67.2% 10 943 6 611 65.5% 11 722 Operating profit before IFRS-3 amortization 4 596 2 577 78.4% 9 188 5 146 78.5% 9 730 Operating profit 4 028 2 381 69.2% 7 767 4 557 70.4% 8 679 % of net sales 18.6% 12.4% 11.8% 7.6% 10.1% Profit before tax 3 946 2 370 66.5% 7 553 4 548 66.1% 8 410 Profit for the period 3 005 1 941 54.8% 5 066 3 290 54.0% 6 585 Return on equity, % 23.7% 16.3% 13.3% 9.2 % 13.7% Return on investment, % 24.5% 17.6% 16.4% 11.0% 16.6% Liquid assets* 7 567 8 680 -12.8% 7 567 8 680 -12.8% 8 777 Gearing, % 3.2% 8.3% 3.2% 8.3% 9.3% Equity ratio, % 61.9% 60.0% 61.9% 60.0% 59.5% Earnings per share, EUR 0.27 0.17 60.9% 0.45 0.28 58.8% 0.56 Earnings per share (diluted), EUR 0.27 0.17 60.9% 0.45 0.28 58.8% 0.56 Equity per share, EUR 4.58 4.19 9.3% 4.58 4.19 9.3% 4.23 *) Includes cash, cash equivalents and financial assets at fair value through profit or loss Basware's business operations consist of product sales, maintenance and support, consulting and services, Software as a Service (SaaS) sales and other operations. The core of Basware's product sales consists of the Basware Enterprise Purchase to Pay product suite and the Basware Financial Management (FIMA) suite. The Group's reported market areas are Finland, Scandinavia, Europe and other areas. Basware's CEO Ilkka Sihvo comments in conjunction with the Interim Report:"Our operating result for the third quarter is the best ever Q3 result in the company's history. The cumulative operating result is also at a record high. The 10.5 percent increase in net sales we attained is an excellent achievement amid a recession. In particular, we succeeded in growing the Automation Services business, and we have secured customer accounts with major international corporations. We also made one of our biggest license sales ever during the third quarter. The deal boosts our business in Australia significantly, supporting the business acquisition we made earlier this year. At this point, our situation seems good with regard to reaching our target for the entire year, but the last quarter of the year is nevertheless rather challenging in the current economic situation," says Ilkka Sihvo, Basware's CEO. REPORTING Basware acquired the entire share capital of its reseller TAG Services Pty Ltd on July 1, 2009 in Australia. As of January 1, 2009, the Group has applied the following new and revised standards: IFRS 8 Operating Segments and IAS 1 Presentation of Financial Statements. IFRS 8 has an effect on the segment information in the notes and IAS 1 has an effect on the presentation of the income statement. Basware's reporting segment is based upon geography as follows: Finland, Scandinavia, Europe and Other. Following the TAG Services acquisition on July 1, 2009, Basware has assets in Australia. Taking into account the nature and extent of the business operations in North America and Australia, these areas will be merged into the Other segment as of Q3/2009. The Finland segment includes the Finnish, Russian, Asia-Pacific (excluding Australia) and Financial Management business operations. In addition, the company reports revenue from products and services as follows: License Sales, Professional Services, Maintenance, and Automation Services. Automation Services include SaaS revenue and Connectivity Services, which include digitalization of paper invoices and exchange of e-invoices and purchase transactions. The company also reports the backlog of Automation Services agreements not recognized as income. Automation Services agreements typically span several years. NET SALES The geographical division of net sales by the location of assets: Net sales 7-9/ 7-9/ 1-9/ 1-9/ Change, 1-12/ (EUR thousand) 2009 2008 Change, % 2009 2008 % 2008 Finland 11 478 10 604 8.2 35 215 34 188 3.0 49 517 Scandinavia 4 505 3 352 34.4 16 100 12 179 32.2 18 805 Europe 4 104 5 428 -24.4 13 087 14 189 -7.8 19 454 Other 3 980 1 567 154.0 6 303 3 692 70.7 5 004 Sales between segments -2 459 -1 692 45.3 -4 652 -4 444 4.7 -6 682 Group total 21 609 19 259 12.2 66 054 59 804 10.5 86 098 The geographical division of net sales by the location of customers: Net sales 7-9/ 7-9/ 1-9/ 1-9/ 1-12/ (EUR thousand) 2009 2008 Change, % 2009 2008 Change, % 2008 Finland 9 084 8 645 5.1 30 181 28 745 5.0 41 514 Scandinavia 4 893 3 262 50.0 15 716 11 898 32.1 18 309 Europe 3 921 5 299 -26.0 12 994 14 048 -7.5 19 191 Other 3 711 2 052 80.8 7 163 5 113 40.1 7 083 Group total 21 609 19 259 12.2 66 054 59 804 10.5 86 098 Basware Group's net sales grew by 10.5 percent in July-September and were EUR 66 054 thousand (EUR 59 804 thousand). The company's license sales decreased by 10.0 percent during the reporting period to 24.2 percent (29.6%) of net sales. Maintenance revenue increased by 20.8 percent in the reporting period and accounted for 33.1 percent (30.2%) of net sales. Professional Services revenue increased by 12.2 percent and accounted for 34.4 percent (34.0%) of net sales. During the period, Automation Services (SaaS, e-invoicing, Scan and Capture) grew 48.6 percent and accounted for 8.3 percent (6.2%) of net sales. The backlog of the Automation Services business not recognized as income was EUR 10 836 thousand (EUR 11 130 thousand) at the end of the period. A total of 1 277 customers had been connected to the service at the end of the reporting period. In July-September, 26.9 percent (29.9%) of net sales consisted of own product sales with license sales increasing by 0.7 percent. Automation Services sales accounted for 8.7 percent (7.6%) of net sales in the third quarter, up 28.3 percent. Maintenance revenue accounted for 34.3 percent (32.6%) of net sales during the third quarter and grew by 18.0 percent. Consulting revenue represented 30.1 percent (29.9%) of net sales and grew by 13.2 percent. Value added resellers provided a net share of 9.2 percent (16.8%) or EUR 1 474 thousand of License Sales net sales during the reporting period, accounting for 4.1 percent (9.1%) of the net sales from international operations. In July September, resellers accounted for a net share of 5.7 percent (15.9%) of License Sales. Decrease is partly caused by the acquisition of TAG Services Pty Ltd and the change of its reseller position to a subsidiary. The international share of Basware's net sales was 54.3 percent (51.9%) in the reporting period. International operations grew by 15.5 percent. International operations accounted for 58.0 percent (55.1%) of Basware's net sales for the third quarter, increasing by 18.0 percent. FINANCIAL PERFORMANCE Basware's operating profit increased by 70.4 percent in the period and totaled EUR 7 767 thousand (EUR 4 557 thousand). Operating profit represented 11.8 percent (7.6%) of net sales. Operating profit grew by 69.2% in the third quarter and totaled EUR 4 028 thousand (EUR 2 381 thousand). In the third quarter, operating profit represented 18.6 percent of net sales. The division of operating profit geographically by the location of assets: Operating profit 7-9/ 7-9/ 1-9/ 1-9/ Change, 1-12/ (EUR thousand) 2009 2008 Change, % 2009 2008 % 2008 Finland 2 546 1 679 51.6 4 690 3 513 33.5 7 898 Scandinavia 212 229 -7.2 2 128 1 038 104.9 1 017 Europe 465 375 24.0 664 -26 2 653.8 -74 Other 1 223 144 748.4 1 258 171 634.0 289 Operating profit between segments -417 -47 787.2 -972 -140 594.3 -452 Group total 4 028 2 381 69.2 7 767 4 557 70.4 8 679 The Company's fixed costs were EUR 50 683 thousand (EUR 49 988 thousand) in the period and have grown by 1.4 percent compared with the same period last year. Personnel costs made up 73.9 percent (70.6%) or EUR 37 453 thousand (EUR 35 306 thousand) of the fixed costs. In the third quarter, fixed costs totaled EUR 15 127 thousand (EUR 15 449 thousand). Research and development costs totaled EUR 10 934 thousand (EUR 11 134 thousand), of which EUR 1 094 thousand (EUR 1 892 thousand) or 10.0 percent (17.0%) were capitalized during the period. Amortization of capitalized research and development costs totaled EUR 1 195 thousand (EUR 871 thousand). The Company's finance income and finance expenses were EUR -214 thousand (EUR -9 thousand). The Company's profit before tax was EUR 7 553 thousand (EUR 4 548 thousand) and profit for the period was EUR 5 066 thousand (EUR 3 290 thousand). Undiluted earnings per share were EUR 0.45 (EUR 0.28). FINANCE AND INVESTMENTS Basware Group's total assets on the balance sheet at the end of the financial period were EUR 84 942 thousand (EUR 80 537 thousand). The Company's cash and liquid assets were EUR 7 567 thousand (EUR 8 680 thousand), of which cash and cash equivalents were EUR 7 535 thousand (EUR 8 648 thousand) and financial assets at fair value through profit or loss were EUR 32 thousand (EUR 32 thousand). Equity ratio was 61.9 percent (60.0%) and gearing was 3.2 percent (8.3%). The Company had a total of EUR 9 235 thousand (EUR 12 697 thousand) interest-bearing liabilities, of which current liabilities accounted for EUR 5 563 thousand (EUR 5 561 thousand). Return on investment was 16.4 percent (11.0%) and return on equity 13.3 percent (9.2%). Cash flows from operating activities were EUR 8 540 thousand (EUR 6 205 thousand). Cash flows from investments were EUR -3 550 thousand (EUR -11 039 thousand). Basware Corporation acquired the entire share capital of TAG Services Pty Ltd in Australia. The acquisition price was 2.1 million Australian dollars (approximately EUR 1.2 million) and was paid in cash in two parts in July and August 2009. In addition the deal includes an additional acquisition price element that is based on the Company's net sales of the period from July 1, 2009 to June 30, 2010 and will be paid in August 2010 at the latest. 4.2 million Australian dollars (approximately EUR 2.4 million) associated with customer relationships has been allocated to intangible assets, taking deferred tax liabilities into consideration. The allocation of the acquisition purchase price is preliminary. The company's gross capital expenditure, comprising of ordinary additional and replacement investments required by growh, totaled EUR 334 thousand (EUR 684 thousand) during the period. Gross investments, including capitalized R&D expenses and business acquisitions in addition to the above, totaled EUR 7 084 thousand (EUR 11 262 thousand). Amortizations of intangible assets were EUR 2 772 thousand (EUR 1 621 thousand). There are no indications of impairments of assets. RESEARCH, DEVELOPMENT AND NEW PRODUCTS Basware's research and development costs were EUR 10 934 thousand (EUR 11 134 thousand) in the period and made up 16.6 percent (18.6%) of net sales. Research and development costs decreased by 1.8 percent (growth of 28.9%) compared with the same period last year. Of the research and development costs, EUR 1 094 thousand (EUR 1892 thousand) or 10.0 percent (17.0%) has been capitalized. Amortization of capitalized research and development costs totaled EUR 1 195 thousand (EUR 871 thousand). Altogether 184 (162) people worked in Products at the end of September 2009. The Products unit is expanding in India where there are currently 49 employees. At the beginning of 2009, Basware launched the Basware Connectivity solution, which aims at speeding up the migration to electronic exchange of documents. There has been obvious demand for the solution in the market, and it has been sold successfully in Europe as well as North America. Basware is now able to exchange all the documentation related to the Purchase to Pay process in a single solution, including the exchange of e-invoices and procurement messages, e-invoice and scanning services and supplier activation. PERSONNEL Basware employed 743 (675) people on average in the third quarter and 755 (686) people at the end of the period. The number of personnel grew by 69 persons and by 10.1 percent compared with the same period last year. Basware Corporation acquired the entire share capital of TAG Services in Australia. TAG Services employed 13 people who joined Basware. The share of personnel working in foreign units has increased compared with the same period last year. At the end of the period, 47.0 percent (42.6%) of Basware personnel worked outside of Finland and 53.0 percent (57.4%) in Finland. 17.6 percent of the personnel work in sales and marketing, 48.9 in consulting and services, 24.4 percent in Products, and 9.1 percent in administration. The average age of the employees is 36.5 (35.9) years. 35.0 percent of them hold a Master's degree and 43.0 percent a Bachelor's degree. 28.7 percent of the personnel are women and 71.3 percent men. Geographical distribution of personnel (primary segment): Personnel (employed, on 7-9/ 7-9/ 1-9/ 1-9/ Change, 1-12/ average) 2009 2008 Change, % 2009 2008 % 2008 Finland 458 422 8.6 452 420 7.7 421 Scandinavia 135 103 31.1 137 101 35.2 112 Europe 116 130 -10.5 119 129 -7.7 129 Other 46 28 65.1 36 26 39.0 26 Group total 755 682 10.6 743 675 10.1 689 BUSINESS OPERATIONS Finland The Finland segment includes the business operations in Finland, Russia, Asia-Pacific (excluding Australia) and the head office functions. Net sales for the third quarter increased by 8.2 percent to EUR 11 478 thousand (EUR 10 604 thousand). Net sales of the Finnish and Russian business operations increased by 10.1 percent during the third quarter to EUR 9 144 thousand (EUR 8 306 thousand). All the Basware Enterprise Purchase to Pay and Financial Management products are sold in the region. New deal were made with Aktia, Metso, Helsingin seurakuntayhtymä,Schenker and Ilmarinen. There are currently 14 resellers in all in the area and the number of personnel averaged 458 (422) during the third quarter. Scandinavia Basware's Nordic organization consists of a centrally directed Scandinavian (Sweden, Denmark and Norway) unit. All the Basware Enterprise Purchase to Pay solutions are sold in the Nordic countries. Net sales of the Scandinavian business operations increased by 34.4 percent to EUR 4 505 thousand (EUR 3 352 thousand). The profitability of the operations declined by 7.2 percent and operating profit was EUR 212 thousand (EUR 229 thousand). Business operations are mainly handled by the own organization and there were 135 (103) employees on average in the area. Europe Basware's European business operations consist of the units in Germany, France, the Netherlands and the United Kingdom. Additionally, the reseller network covers the eastern part of Central Europe. All Enterprise Purchase to Pay solutions are sold in Europe. Net sales in the Europe segment decreased by 24.4 percent in the third quarter and totaled EUR 4 101 thousand (EUR 5 428 thousand). The profitability of the operations improved by 24.0 percent and operating profit was EUR 465 thousand (EUR 375 thousand). At the end of 2008, Basware UK initiated a rationalization program and reorganization of operations, facilitating profitable growth. The program has resulted in significant cost-savings and the utilization rate of consulting has increased, which improves the unit's profitability. New customers included Her Majesty's Prison Service, Provimi Petfood, Frencken Group, Eurofoam Deutschland and Ringier AG. There are 35 resellers in Europe, and Basware personnel averaged 116 (130) during the third quarter. Other Business operations in North America and Australia are reported in this segment. Net sales of the area increased by 154.0 percent in the third quarter to EUR 3 980 thousand (EUR 1 567 thousand). The profitability of the operations grew by 748.4 percent and operating profit was EUR 1 223 thousand (EUR 144 thousand). The business operations in Australia are reported in the Other segment as of July 1, 2009. Basware will deliver the Basware Enterprise Purchase to Pay solution and Scan and Capture services to HCR ManorCare, Inc. in North America. The value of the agreement is over EUR one million including product sales, consulting and Scan and Capture services. The sales and consulting revenue will be recognized mainly during the last quarter of 2009 and Connectivity services over the next three years. Basware made one of its largest license deals ever with the State of South Australia. At the end of the period, there were 9 resellers in the segment. On average, there were 46 (28) employees in the area. OTHER EVENTS OF THE FINANCIAL PERIOD Basware Corporation acquired the entire share capital of TAG Services Pty Ltd in Australia. The acquisition price was based on the Company's net sales for its fiscal year from July 1, 2008 to June 30, 2009 and the Company's net asset value on June 30, 2009. The acquisition price was 2.1 million Australian dollars (approximately EUR 1.2 million, using exchange rate of EUR/AUD 1.7359 on June 30, 2009). The Company's net asset value at June 30 was 0.42 million Australian dollars (approximately EUR 0.24 million). The acquisition price was paid in cash in two parts in July and August 2009. In addition the deal includes an additional acquisition price element that is based on the Company's net sales of the period from July 1, 2009 to June 30, 2010 and will be paid in August 2010 at the latest. On August 21, 2009 Basware increased its shareholding in Basware FIMA Oy to 100 percent by acquiring 4.04% of the company's shares and control from the company's management. Basware announced a notice of change in ownership when the total number of shares held by Antti Pöllänen personally was below 5% of Basware Corporation's share capital and voting rights on September 10, 2009. Shares held by Antti Pöllänen together with persons under guardianship still exceed 5% of Basware Corporation's share capital and voting rights. 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. Share price and trade In the third quarter, the highest price of the share was EUR 11.49 (EUR 10.45), lowest price was EUR 6.60 (EUR 6.14) and closing price was EUR 10.72 (EUR 7.00). The average price of the share was EUR 9.29 (EUR 7.70). A total of 1 297 031 (1 808 869) shares were traded during the financial period which is the equivalent of 11.4 percent (15.8%) of the average number of shares. Market capitalization with the period's closing price on September 30, 2009 was EUR 121 970 273 (EUR 80 276 868). Shareholders Basware had 16 668 (17 301) shareholders on September 30, 2009 including nominee-registered holdings (7). Nominee-registered holdings accounted for 9,0 percent of the total number of shares. Basware Corporation's share repurchases program that was resolved by the Board of Directors on October 14, 2008 ended on March 31, 2009. The program was based on the authorization granted by the Annual General Meeting on February 14, 2008. The purchases started on October 23, 2008 and ended according to the terms of the share repurchase program on March 31, 2009. On March 31, 2009, 90 300 of shares had been acquired and the company now holds a total of 90 300 shares representing approximately 0.79% of all Basware shares. The average price of the shares acquired during the repurchases program was 6.9475 euro. GOVERNANCE The Annual General Meeting of Shareholders on February 12, 2009, confirmed the number of Board members as five. The Annual General Meeting resolved to agree on the proposal and elected Matti Copeland, Sakari Perttunen, Pentti Heikkinen, Ilkka Toivola and Hannu Vaajoensuu members of the Board of Directors. In its first meeting held after the Annual General Meeting, the Board of Directors elected Hannu Vaajoensuu as chairman and Sakari Perttunen as vice chairman of the Board. The Annual General Meeting further resolved to elect Ernst & Young Oy, Authorized Public Accountants as the auditor, with APA Heikki Ilkka in charge and APA Terhi Mäkinen as the deputy auditor. The Board was authorized to resolve on share issue and share repurchase. A separate stock exchange release has been issued on the Board authorizations and other resolutions of the Annual General Meeting of Shareholders on February 12, 2009. THE COMPANY'S NEAR FUTURE RISKS AND BUSINESS UNCERTAINTIES In accordance with Basware's risk management policy, risks are divided 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 its strategy and objectives. These risks are managed and decreased in various ways. Short-term risks are considered to be risks in the current reporting year. The global crisis of the finance market, general economic uncertainty and depression decrease companies' willingness to invest, which might have an unfavorable impact on the development of the company's net sales and profitability. In previous economic downturns, the demand for the company's products and services has remained more positive than the general economic market as a whole as the company's software solutions generate cost savings. The rapidly weakened global market situation does however cause uncertainty. The depression has generally increased companies' delinquency entries and the number of bankruptcies. Typically, companies may also prolong the times of payments in order to free up working capital. Basware has intensified its management of sales receivables, and business management regularly monitors the payment of sales receivables as part of the management of customer accounts. Goodwill has been tested during the last quarter of 2008. In accordance with the testing for impairment of assets, no impairment of assets has occurred. At the end of 2008, Basware UK implemented a rationalization program and reorganization of operations. The program has resulted in significant cost-savings and the utilization rate of consulting has increased, which improves the unit's profitability. If the unit's profitability does not improve as planned in the medium term despite the streamlining program, it is likely that the goodwill allocated to the unit will need to be impaired. In other respects, no significant changes have taken place in Basware's short-term risks and uncertainties during the financial period. EVENTS AFTER THE FINANCIAL PERIOD Basware will deliver Connectivity Services and Invoice Processing to a leading manufacturer of building materials. The value of the deal exceeds EUR 400 000. FUTURE OUTLOOK According to market estimates updated in the early fall of 2009, the software market is expected to decrease by 9.4 percent in the United States and by 5.4 percent in Western and Central Europe in 2009. In 2010, the software market is expected to increase by 9.3 percent in the United States and by 5.5 percent in Western and Central Europe. The entire IT market is expected to shrink 9.3 percent in the United States and 6.3 percent in Western and Central Europe. In 2010, the entire IT market is expected to grow 7.7 percent in the United States and by 4.0 percent in Western and Central Europe. Western Europe and the United States combined account for approximately three quarters of the enterprise software market. In these markets, electronic invoice processing and procurement solutions are still in early maturity. The procurement management and electronic invoice processing markets are heterogeneous in terms of the competitive situation. Growth could attract more competitors to the market. The industry is consolidating, and this development could go on in the future as well. Globally speaking, Basware is a medium-sized software company in terms of net sales as well as number of personnel. Basware's direct competitors are primarily locally operating and often smaller companies. In North America in particular, the company has also larger competitors, especially in the field of procurement management. Developers of document management, scanning and recycling systems compete with Basware, particularly with regard to purchase invoice management solutions. Competing solutions also include customized solutions integrated into ERP (Enterprise Resource Planning) systems. The software still offers a competitive edge, thanks to the integrated offering consisting of new added value products and the products. Automation Services, a new concept in the portfolio, will have a positive impact on the competitiveness. Automation Services increase the predictability and transparency of a company's net sales and profitability. In 2008, revenue from continuous services (including maintenance) accounted for a third of the company's total revenue. Basware predicts that Automation Services revenue will increase significantly in the strategy period. The company's international growth is based on efforts of its own sales and marketing activity as well as the reseller channel. Development of the indirect distribution channel continues in Europe, Russia and Asia. In North America, the focus will be on developing the company's own sales channel for the time being. In Scandinavia, the focus is on profitability, and moderate growth is supported by the company's expanded product portfolio and the development of the service business. In Finland, the focus is on profitability, and moderate growth will primarily be achieved from the fields of procurement management and services. Basware has complemented its organic growth with acquisitions. The company will continue to review possible acquisition targets during 2009. The aim of the acquisitions is to expand the company's distribution channel and product portfolio in international markets. The Group increased its number of personnel mainly in India during the first two quarters. Research and development costs are not expected to substantially increase from the level of 2008. Additional investments required by growth will be made moderately during the second half of the year if net sales and profitability are at the expected level. The cost savings resulting from the synergy benefits of the Contempus integration will materialize starting from the beginning of 2009 and they will be approximately EUR 3 million by the end of 2009. Approximately EUR 1 million will be amortized of the Contempus acquisition cost allocated to customer relationships and products in accordance with a straight-line depreciation plan of 4.25 years. Basware expects its net sales for 2009 to develop positively on the level of 2008. Operating profit (EBIT) for 2009 is expected to be from 10 to 15 percent of net sales. In Espoo, Finland, October 13, 2009 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 13, 2009 a briefing on the Interim Report for the press and analysts at 11:00 in Hotel Kämp, Pohjoisesplanadi 29, 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 The Interim Report has been prepared in accordance with the International Financial Reporting Standards (IFRS). As of January 1, 2009, the Group has applied the following new and revised standards: IFRS 8 Operating Segments and IAS 1 Presentation of Financial Statements. Otherwise the same Accounting Principles have been applied as in the 2008 Financial Statements. Key indicator calculations remain unchanged and have been presented in the 2008 Financial Statements. 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 2009 2008 % 2009 2008 % 2008 NET SALES 21 609 19 259 12.2 66 054 59 804 10.5 86 098 Other operating income 47 58 -18.3 129 189 -31.8 250 Materials and services -1 395 -797 75.0 -4 557 -3 394 34.3 -4 726 Employee benefit -11 -10 -37 expenses 113 933 1.6 453 -35 306 6.1 -50 399 Depreciation and amortization -1 106 -690 60.3 -3 176 -2 053 54.7 -3 043 Other operating -13 expenses -4 014 -4 516 -11.1 230 -14 682 -9.9 -19 500 Operating profit 4 028 2 381 69.2 7 767 4 557 70.4 8 679 Finance income 32 39 -17.7 187 96 93.9 734 Finance expenses -115 -50 130.6 -401 -106 280.0 -1 003 Profit before tax 3 946 2 370 66.5 7 553 4 548 66.1 8 410 Income tax expense -941 -430 119.0 -2 486 -1 258 97.6 -1 825 PROFIT FOR THE PERIOD 3 005 1 941 54.8 5 066 3 290 54.0 6 585 Other comprehensive income Exchange differences on translating foreign operations 620 -409 251.6 2 017 619 425.8 -4 383 Income tax relating to components of other comprehensive income 89 0 45 0 0 Other comprehensive income, net of tax 709 0 273.3 2 062 619 433.1 -4 383 TOTAL COMPREHENSIVE INCOME 3 714 1 532 142.5 7 128 2 671 166.9 2 201 Profit attributable to: Owners of the parent 3 055 1 913 59.7 5 066 3 215 57.6 6 467 Minority interest -50 27 -286.5 0 75 -100.0 118 3 005 1 941 54.8 5 066 3 290 54.0 6 585 Total comprehensive income attributable to: Owners of the parent 3 763 1 504 150.1 7 128 2 596 174.6 2 084 Minority interest -50 27 -286.5 0 75 -100.0 118 3 714 1 532 142.5 7 128 2 671 166.9 2 201 Earnings per share (undiluted), EUR 0.27 0,17 60.9 0.45 0.28 58.8 0.36 Earnings per share (diluted), EUR 0.27 0,17 60.9 0.45 0.28 58.8 0.36 GROUP BALANCE SHEET EUR thousand 30.9.2009 30.9.2008 Change, % 31.12.2008 ASSETS NON-CURRENT ASSETS Intangible assets 19 636 20 953 -6.3 17 022 Goodwill 31 283 25 821 21.2 29 212 Tangible assets 879 1 148 -23.5 991 Available-for-sale investments 38 38 0.0 38 Long-term trade and other receivables 132 12 983.2 536 Deferred tax assets 1 962 2 199 -10.8 2 208 Non-current assets 53 928 50 171 7.5 50 006 CURRENT ASSETS Inventories 40 57 -30.2 48 Trade and other receivables 20 275 19 579 3.6 20 737 Income tax receivables 3 132 2 051 52.7 2 341 Financial assets at fair value through profit or loss 32 32 1.6 31 Cash and cash equivalents 7 535 8 648 -12.9 8 745 Current assets 31 014 30 367 2.1 31 902 TOTAL ASSETS 84 942 80 537 5.5 81 909 EQUITY AND LIABILITIES SHAREHOLDERS' EQUITY Share capital 3 440 3 440 0.0 3 440 Share premium account 69 69 0.0 69 Own shares -629 -271 Fair value reserve and other reserves 33 598 33 598 0.0 33 598 Translation differences -3 542 -237 539.3 -3 991 Retained earnings 19 622 11 235 33.9 15 648 Minority interest 223 -100.0 224 Shareholders' equity 52 559 48 328 8.8 48 717 NON-CURRENT LIABILITIES Deferred tax liability 3 852 1 648 133.8 2 307 Interest-bearing liabilities 3 672 7 118 -48.4 7 729 Non-interest-bearing liabilities 242 Non-current liabilities 7 766 8 766 -11.4 10 036 CURRENT LIABILITIES Interest-bearing liabilities 5 563 5 561 0.0 5 555 Trade payables and other liabilities 18 384 17 138 7.3 16 683 Tax liability from income tax 670 744 -10.0 918 Current liabilities 24 617 23 444 5.0 23 156 TOTAL EQUITY AND LIABILITIES 84 942 80 537 5.5 81 909 GROUP STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY Inv. non- Share- Share restr. holders premium Own equity Other Transl Retained Minority EUR thousand capital account shares res. res. diff. earnings interest Total SHAREHOLDERS' 47 EQUITY 1.1.08 3 440 33 127 0 0 540 392 9 765 148 413 Comprehensive income -629 3 225 75 2 671 Dividend -1 distribution -1 720 720 Granted warrants 106 106 Changes in reporting period -33 058 33 058 -141 -141 SHAREHOLDERS' EQUITY 48 30.9.08 3 440 69 0 33 058 540 -237 11 235 223 328 EUR thousand SHAREHOLDERS' 48 EQUITY 1.1.09 3 440 69 -271 33 058 540 -3 991 15 648 224 717 Comprehensive income 450 6 678 7 128 Dividend -2 distribution -2 623 623 Granted warrants 447 447 Repurchase of own shares -358 -358 Changes in reporting period -528 -224 -752 SHAREHOLDERS' EQUITY 52 30.9.09 3 440 69 -629 33 058 540 -3 542 19 622 0 559 GROUP CASH FLOW STATEMENT 1.1.- 1.1.- EUR thousand 1.1.-30.9.2009 30.9.2008 31.12.2008 Net cash from operating activities Profit for the period 5 066 3 290 6 585 Adjustments for profit 5 877 3 294 5 243 Working capital changes 859 2 200 125 Interest paid -183 -83 -291 Interest received 57 83 154 Other financial items in operating activities -58 -8 -38 Income taxes paid -3 079 -2 572 -3 447 Net cash from operating activities 8 540 6 205 8 331 Cash flows from investing activities Purchase of tangible and intangible assets -1 447 -2 515 -3 631 Proceeds from sale of tangible and intangible assets 0 36 47 Acquired subsidiaries -2 104 -8 567 -8 728 Repayment of loan receivables 0 7 9 Net cash used in investing activities -3 550 -11 039 -12 303 Cash flows from financing activities Proceeds from short-term loans 0 5 550 2 000 Repayments of short-term loans 0 -4 000 -4 000 Proceeds from long-term borrowings 0 7 100 10 650 Repayments of long-term borrowings -3 558 -300 -300 Share repurchase -358 -271 Repayments of financial lease liabilities 0 -5 -1 Dividends paid -2 623 -1 711 -1 720 Net cash used in financing activities -6 539 6 634 6 358 Net change in cash and cash equivalents according to cash flow statement -1 549 1 800 2 386 Cash and cash equivalents at beginning of period 8 777 7 041 7 041 Effects of exchange rate changes on cash and cash equivalents 339 -161 -650 Cash and cash equivalents at end of period 7 567 8 680 8 777 GROUP QUARTERLY INCOME STATEMENT 1-3/ 1-3/ 4-6/ 4-6/ 7-9/ 7-9/ 10-12/ EUR thousand 2009 2008 2009 2008 2009 2008 2008 NET SALES 21 717 18 233 22 729 22 312 21 609 19 259 26 294 Other operating income 30 69 52 62 47 58 62 Materials and services -1 552 -1 211 -1 611 -1 385 -1 395 -797 -1 333 Employee benefit -12 -13 -10 expenses 896 -11 765 444 -12 608 -11 113 933 -15 093 Depreciation and amortization -1 004 -671 -1 067 -693 -1 106 -690 -990 Other operating expenses -4 703 -4 910 -4 513 -5 257 -4 014 -4 516 -4 818 Operating profit 1 592 -254 2 146 2 431 4 028 2 381 4 122 % 7.3% -1.4% 9.4% 10.9% 18.6% 12.4% -15.7% Finance income 124 39 30 18 32 39 637 Finance expenses 232 -35 -54 -21 -115 -50 -897 Profit before tax 1 484 -250 2 122 2 428 3 946 2 370 3 862 % 6.8% -1.4% 9.3% 10.9% 18.3% 12.3% 14.7% Income tax expense -818 -300 -727 -528 -941 -430 -567 PROFIT FOR THE PERIOD 666 -550 1 396 1 899 3 005 1 941 3 294 % 3.1% -3.0% 6.1% 8.5% 13.9% 10.1% 12.5% Changes of ownership Basware increased its shareholding in Basware Einvoices Oy to 100 percent on January 30, 2009, by acquiring 12.55% of the company's shares and control from the company's management. The purchase price paid on the date of the transaction was approximately EUR 720 thousand and the additional purchase price to be paid based on the business volume for 2009 in February 2010 at the latest is expected to be approximately EUR 250 thousand. Basware increased its shareholding in Basware FIMA Oy to 100 percent on August 21, 2009, by acquiring 4.04% of the company's shares and control from the company's management. A situation such as the one presented above is currently not regulated by IFRS, so the company's management has compiled an accounting principle for the case in compliance with IAS 8. The change of ownership is recognized under shareholders' equity, and it will not have any effect on profit or goodwill. Basware Einvoices Oy merged with Basware Corporation in accordance with the previously registered merger plan on June 30, 2009. Basware Einvoices Oy's business operations will continue in Basware Corporation as a part of Basware's Automation Services business. The merger did not result in any changes to Basware Corporation's organization structure Basware AS acquired the Norwegian invoice automation solution business of Itella Information AS. The purchase price was NOK 6.38 million (approximately EUR 0.72 million) and it was paid in cash on the day the acquisition was completed, April 1, 2009. In addition, Basware may pay an additional purchase price of a maximum of NOK 7.0 million (EUR 0.77 million) in February 2010, determined on the basis of the volume of the purchased operations' service volume in 2009. EUR 1 039 thousand associated with customer relationships has been allocated to intangible assets, taking deferred tax liabilities into consideration. The purchase price includes EUR 436 thousand of goodwill. The allocation of the acquisition cost is preliminary. The acquired business operations do not have a significant impact on the company's net sales and profit for the reporting period, which is the reason for not presenting separate pro forma figures. Basware Corporation acquired the entire share capital of TAG Services Pty Ltd in Australia. The acquisition price was 2.1 million Australian dollars (approximately EUR 1.2 million) and was paid in cash in two parts in July and August 2009. In addition the deal includes an additional acquisition price element that is based on the Company's net sales of the period from July 1, 2009 to June 30, 2010 and will be paid in August 2010 at the latest. 4.2 million Australian dollars (approximately EUR 2.4 million) associated with customer relationships has been allocated to intangible assets, taking deferred tax liabilities into consideration. The purchase price does not include goodwill. The allocation of the acquisition purchase price is preliminary. Pro forma net sales for the financial period would have been EUR 66 636 thousand had TAG Services Pty Ltd net sales been consolidated for the entire period. Pro forma operating profit for the financial period would have been EUR 7 747 thousand had TAG Services Pty Ltd operating profit been consolidated for the entire period. COMMITMENTS AND CONTINGENT LIABILITIES EUR thousand 30.9.2009 30.9.2008 31.12.2008 GUARANTEES ON BEHALF OF SUBSIDIARIES 1 122 1 101 1 096 Guarantees total 1 122 1 101 1 096 OWN GUARANTEES Lease liabilities Current lease liabilities 880 781 868 Lease liabilities maturing in 1-5 years 800 969 838 Total 1 680 1 750 1 706 Other rental liabilities Current rental liabilities 2 419 2 033 2 385 Rental liabilities maturing in 1-5 years 3 309 4 056 4 620 Rental liabilities maturing later 1 140 1 196 Total 6869 6 183 8 201 Other own contingent liabilities, total 8 549 7 934 9 907 SEGMENT REPORTING Net sales by market area Net sales 7-9/ 7-9/ Change, 1-9/ 1-9/ Change, 1-12/ (EUR thousand) 2009 2008 % 2009 2008 % 2008 Finland 11 478 10 604 8.2 35 215 34 188 3.0 49 517 Scandinavia 4 505 3 352 34.4 16 100 12 179 32.2 18 805 Europe 4 104 5 428 -24.4 13 087 14 189 -7.8 19 454 Other 3 980 1 567 154.0 6 303 3 692 70.7 5 004 Sales between segments -2 459 -1 692 45.3 -4 652 -4 444 4.7 -6 682 Group total 21 609 19 259 12.2 66 054 59 804 10.5 86 098 Operating profit 7-9/ 7-9/ Change, 1-9/ 1-9/ Change, 1-12/ (EUR thousand) 2009 2008 % 2009 2008 % 2008 Finland 2 546 1 679 51.6 4 690 3 513 33.5 7 898 Scandinavia 212 229 -7.2 2 128 1 038 104.9 1 017 Europe 465 375 24.0 664 -26 2 653.8 -74 Other 1 223 144 748.4 1 258 171 634.0 289 Operating profit between segments -417 -47 787.2 -972 -140 594.3 -452 Group total 4 028 2 381 69.2 7 767 4 557 70.4 8 679 Personnel (employed, on 7-9/ 7-9/ 1-9/ 1-9/ Change, 1-12/ average) 2009 2008 Change, % 2009 2008 % 2008 Finland 458 422 8.6 452 420 7.7 421 Scandinavia 135 103 31.1 137 101 35.2 112 Europe 116 130 -10.5 119 129 -7.7 129 Other 46 28 65.1 36 26 39.0 26 Group total 755 682 10.6 743 675 10.1 689 Net sales by business Net sales 7-9/ 7-9/ 1-9/ 1-9/ Change, 1-12/ (EUR thousand) 2009 2008 Change, % 2009 2008 % 2008 17 License Sales 5 803 5 763 0.7 15 955 725 -10.0 25 859 18 Maintenance 7 405 6 278 18.0 21 843 086 20.8 25 068 Professional 20 Services 6 517 5 757 13.2 22 786 313 12.2 30 538 Automation Services 1 884 1 469 28.3 5 469 3 680 48.6 4 633 59 Group total 21 609 19 267 12.2 66 054 804 10.5 86 098 Net sales by the location of customer: Net sales 7-9/ 7-9/ Change, 1-9/ 1-9/ Change, 1-12/ (EUR thousand) 2009 2008 % 2008 2008 % 2008 Finland 9 084 8 645 5.1 30 181 28 745 5.0 41 514 Scandinavia 4 893 3 262 50.0 15 716 11 898 32.1 18 309 Europe 3 921 5 299 -26.0 12 994 14 048 -7.5 19 191 Other 3 711 2 052 80.8 7 163 5 113 40.1 7 083 Group total 21 609 19 259 12.2 66 054 59 804 10.5 86 098 GROUP KEY INDICATORS 1-9/ 1-9/ 1-9/ 1-12/ EUR thousand 2009 2008 2007 2008 Net sales 66 054 59 804 50 082 86 098 Growth of net sales, % 10.5% 19.4% 15.3% 17.5% EBITDA 10 943 6 611 7 414 11 722 % of net sales 16.6% 11.1% 14.8% 13.6% Operating profit before IFRS3 amortization 9 188 5 146 6 104 9 730 % of net sales 13.9% 8.6% 12.2% 11.3% Operating profit 7 767 4 557 5 588 8 679 Growth of operating profit, % 70.4% -18.4% -10.9% 15.5% % of net sales 11.8% 7.6% 11.2% 10.1% Profit before tax 7 553 4 548 5 816 8 410 % of net sales 11.4% 7.6% 11.6% 9.8% Profit for the period 5 066 3 290 2 999 6 585 % of net sales 7.7% 5.5% 6.0% 7.6% Return on equity, % 13.3% 9.2% 8.8% 13.7% Return on investment, % 17.1% 11.0% 16.2% 16.6% Interest-bearing liabilities 9 235 12 679 4 597 13 283 Cash and liquid assets *) 7 567 8 680 9 644 8 777 Gearing, % 3.2% 8.3% -10.9% 9.3% Equity ratio, % 61.9% 60.0% 68.7% 59.5% Total assets 84 942 80 537 67 555 81 909 Gross investments **) 7 084 11 262 11 109 12 476 % of net sales 10.7% 18.8% 22.2% 14.5% Capital expenditure 334 684 581 1 007 % of net sales 0.5% 1.1% 1.2% 1.2% Research and development costs 10 934 11 134 8 640 15 518 % of net sales 16.6% 18.6% 17.3% 18.0% R&D personnel at end of period 184 162 144 171 Personnel on average during the period 743 675 557 689 Personnel at end of period 755 686 630 731 Increase in personnel, % 10.1% 8.9% 21.8% 11.1% Earnings per share, EUR 0.45 0.28 0.26 0.56 Earnings per share (diluted), EUR 0.45 0.28 0.26 0.56 Equity per share, EUR 4.58 4.19 4.04 4.23 P/E ratio 24.09 24.97 49.02 11.68 Share price performance lowest share price 6.60 6.14 10.11 6.00 highest share price 11.49 10.45 14.00 10.45 average share price 9.29 7.70 12.13 7.53 closing share price 10.72 7.00 12.95 6.59 Market capitalization at 121 970 80 276 148 512 75 301 end of period 273 868 206 011 2 298 Number of traded shares 1 297 031 1 808 869 2 216 534 467 % of average number of shares 11.4% 15.8% 19.3% 20.1% Average number of shares 11 383 11 468 11 468 11 463 - undiluted 265 124 124 307 11 383 11 468 11 468 11 463 - diluted 265 124 124 307 *) 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, 2009 1. Sihvo, Ilkka 1 065 800 9.3 2. Eräkangas, Kirsi (incl. children under guardianship) 1 031 800 9.0 3. Vaajoensuu, Hannu (incl. a controlled company and children under guardianship) 962 100 8.4 4. Perttunen, Sakari 830 400 7.2 5. Pöllänen, Antti (incl. children under guardianship) 667 423 5.8 6. Nordea Nordic Small Cap Fund 552 217 4.8 7. Sampo Life Insurance Company Limited 550 000 4.8 8. llmarinen Mutual Pension Insurance Company 429 064 3.7 9. Ahonen, Asko 318 822 2.8 10. Royal Skandia Life Assurance Eib 17527-6 270 000 2.4 11. Kaleva Mutual Insurance Company 242 690 2.1 12. Pension Insurance Company Veritas 226 000 2.0 13. Perttunen, Meimi 215 400 1.9 14. Fondita Nordic Micro Cap Placeringsfond 200 000 1.7 15. Investment Fund Aktia Capital 170 863 1.5 16. Fondita Nordic Small Cap Placfond 118 500 1.0 17. Basware Corporation 90 300 0.8 18. Vaajoensuu, Sara 83 700 0.7 19. Tietoklusteri Oy 77 000 0.7 20. Pavor Oy 75 052 0.7 Total of 20 largest shareholders 8 177 131 71.3 Total of nominee-registered 1 031 110 9.0 Others 2 259 883 19.7 Total 11 468 124 100.0 |
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