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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