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2009-04-16 09:00:47 CEST 2009-04-16 09:01:32 CEST REGULATED INFORMATION BasWare - Quarterly reportBASWARE INTERIM REPORT JANUARY 1 - MARCH 31, 2009 (IFRS)BASWARE INTERIM REPORT JANUARY 1 - MARCH 31, 2009 (IFRS) Stock Exchange release, April 16, 2009 SUMMARY January-March - Net sales EUR 21 717 thousand (EUR 18 233 thousand) - growth 19.1 percent - Operating profit EUR 1 592 thousand (EUR -254 thousand) - growth 725.8 percent - Operating profit 7.3 percent of net sales (-1.4%) - International operations accounted for 52.5 percent of net sales (51.8%) - growth 20.7 percent - Cash flows from operating activities were EUR 8 423 thousand (EUR 6 885 thousand) - Earnings per share EUR 0.06 (-0.05) 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. Interim report is unaudited. GROUP KEY FIGURES EUR thousand 1-3/2009 1-3/2008 Change, % 1-12/2008 Net sales 21 717 18 233 19.1% 86 098 EBITDA 2 596 417 523.2% 11 722 Operating profit before IFRS3 amortization 2 033 -58 3602.0% 9 730 Operating profit 1 592 -254 725.8% 8.679 % of net sales 7.3% -1.4% 10.1% Profit before tax 1 484 -250 694.0% 8 410 Profit for the period 666 -550 221.1% 6 585 Return on equity, % 5.5% -4.8% 13.7% Return on investment, % 11.3% -1.8% 16.6% Liquid assets *) 11 460 7 254 58.0% 8 777 Gearing, % -0.7% -15.7% 9.3% Equity ratio, % 55.6% 66.4% 59.5% Earnings per share, EUR 0.06 -0.05 214.6% 0.56 Earnings per share (diluted), EUR 0.06 -0.05 214.6% 0.56 Equity per share, EUR 4.18 3.89 7.3% 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, consulting and Automation Services. 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 North America. Basware's CEO Ilkka Sihvo's comments in connection with the publishing of the Interim Report:"Our net sales increased strongly during the first quarter in spite of the extremely challenging economic situation in the market. Profitability improved over 700 percent from previous year. During the reporting period, the fastest growing areas were automation services, up 47.4 percent, consulting, up 21.8 percent, and maintenance functions, up 24.4 percent. Geographic success was also good, with all areas continuing their growth. Profitability improved over 100 percent in all geographical areas. Particularly strong growth was seen in North America, were net sales increased by more than 75 percent. The business operations in Scandinavia and Finland also developed positively, with more moderate growth elsewhere in Europe. During the period, Basware Connectivity was launched successfully as a part of Automation Services, allowing suppliers and buyers to communicate electronically in Basware's partner network. The new services complement Basware's current Enterprise Purchase to Pay offering." REPORTING 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 North America. In addition, the company reports revenue from products and services as follows: Product sales, Consulting, Maintenance and Automation Services. Automation Services include SaaS revenue and transaction-based 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 (EUR | | | | | | thousand) | 1-3/2009 | 1-3/2008 | Change, % | 1-12/2008 | |---------------------+----------+----------+-----------+-----------| | Finland | 11 331 | 10 493 | 8.0 | 49 517 | |---------------------+----------+----------+-----------+-----------| | Scandinavia | 5 317 | 4 198 | 26.6 | 18 805 | |---------------------+----------+----------+-----------+-----------| | Europe | 4 666 | 4 293 | 8.7 | 19 454 | |---------------------+----------+----------+-----------+-----------| | North America | 1 195 | 680 | 75.8 | 5 004 | |---------------------+----------+----------+-----------+-----------| | Sales between | | | | | | segments | -791 | -1 430 | -44.7 | -6 682 | |---------------------+----------+----------+-----------+-----------| | Group total | 21 717 | 18 233 | 19.1 | 86 098 | +-------------------------------------------------------------------+ The geographical division of net sales by the location of customers: +-------------------------------------------------------------------+ | Net sales (EUR | | | | | | thousand) | 1-3/2009 | 1-3/2008 | Change, % | 1-12/2008 | |---------------------+----------+----------+-----------+-----------| | Finland | 10 323 | 8 779 | 17.6 | 41 514 | |---------------------+----------+----------+-----------+-----------| | Scandinavia | 5 209 | 4 127 | 26.2 | 18 309 | |---------------------+----------+----------+-----------+-----------| | Europe | 4 681 | 4 347 | 7.7 | 19 191 | |---------------------+----------+----------+-----------+-----------| | Others | 1 503 | 979 | 53.5 | 7 083 | |---------------------+----------+----------+-----------+-----------| | Group total | 21 717 | 18 233 | 19.1 | 86 098 | +-------------------------------------------------------------------+ Basware Group's net sales for the period increased by 19.1 percent to EUR 21 717 thousand (EUR 18 233 thousand). The Company's product sales increased by 2.5 percent during the period to 21.5 percent (25.0%) of net sales. Maintenance revenue increased by 24.4 percent and accounted for 32.9 percent (31.5%) of net sales. Consulting revenue increased by 21.8 percent and accounted for 39.1 percent (38.3%) of net sales. During the period, Automation Services increased by 47.4 percent and accounted for 6.5 percent (5.2%) of net sales. The backlog of the Automation Services business not recognized as income was EUR 12 450 thousand (EUR 11 076 thousand) at the end of the period. A total of 866 customers had been connected to the service at the end of the period. Value added resellers provided a net share of 12.2 percent (22.9%) or EUR 568 thousand (1 044 thousand) of product sales in January-March. The international share of Basware's net sales was 52.5 percent (51.8%) in the period. International operations grew by 20.7 percent. FINANCIAL PERFORMANCE Basware's operating profit for the period increased by 725.8 percent to EUR 1 592 thousand (EUR -254 thousand). Operating profit represented 7.3 percent (-1.4%) of net sales. The geographical division of operating profit by the location of assets: +-------------------------------------------------------------------+ | Operating profit | | | | | | (EUR thousand) | 1-3/2009 | 1-3/2008 | Change, % | 1-12/2008 | |---------------------+----------+----------+-----------+-----------| | Finland | 849 | -93 | 1 017.1 | 7 898 | |---------------------+----------+----------+-----------+-----------| | Scandinavia | 666 | 321 | 107.9 | 1 017 | |---------------------+----------+----------+-----------+-----------| | Europe | 231 | -277 | 183.3 | -74 | |---------------------+----------+----------+-----------+-----------| | North America | 137 | -158 | 186.9 | 289 | |---------------------+----------+----------+-----------+-----------| | Operating profit | | | | | | between segments | -292 | -47 | 523.3 | -452 | |---------------------+----------+----------+-----------+-----------| | Group total | 1 592 | -254 | 725.8 | 8 679 | +-------------------------------------------------------------------+ The Company's fixed costs were EUR 17 599 thousand (EUR 16 674 thousand) in the period, up 5.5 percent on the corresponding period the previous year. Personnel costs made up 73.3 percent (70.6%) or EUR 12 896 thousand (EUR 11 765 thousand) of the fixed costs. Research and development costs totaled EUR 3 694 thousand (EUR 3 793 thousand), of which EUR 493 thousand (EUR 627 thousand) or 14.4 percent (16.5%) were capitalized during the period. The costs decreased by 2.6 percent compared with the same reporting period in 2008. Amortization of capitalized research and development costs totaled EUR 368 thousand (EUR 271 thousand). The Company's finance income and finance expenses were EUR -108 thousand (EUR 4 thousand). Profit before tax was EUR 1 484 thousand (EUR -250 thousand) and profit for the period was EUR 666 thousand (EUR -550 thousand). Undiluted earnings per share were EUR 0.06 (EUR -0.05). FINANCE AND INVESTMENTS Basware Group's total assets on the balance sheet at the end of the period were EUR 86 512 thousand (EUR 67 496 thousand). The Company's cash and liquid assets were EUR 11 460 thousand (EUR 7 254 thousand), of which cash and cash equivalents were EUR 11 429 thousand (EUR 7 223 thousand) and financial assets at fair value through profit or loss were EUR 31 thousand (EUR 31 thousand). Equity ratio was 55.6 percent (66.4%) and gearing was -0.7 percent (-15.7%). The Company's interest-bearing liabilities totaled EUR 11 114 thousand (EUR 232 thousand), of which current liabilities accounted for EUR 5 563 thousand (EUR 214 thousand). Return on investment was 11.3 percent (-1.8%) and return on equity 5.5 percent (-4.8%). Cash flows from operating activities were EUR 8 423 thousand (EUR 6 885 thousand). Cash flows from investments were EUR -1 339 thousand (EUR -737 thousand). The Company's capital expenditure, resulting from regular additional and replacement investments required for growth, was EUR 126 thousand (EUR 193 thousand) in the period. Gross investments which include, in addition to those mentioned above, the capitalized research and development costs totaled EUR 619 thousand (EUR 822 thousand). Amortization of intangible assets totaled EUR 873 thousand (EUR 525 thousand). There are no indications of impairments of assets. RESEARCH, DEVELOPMENT AND NEW PRODUCTS Basware's research and development costs were EUR 3 694 thousand (EUR 3 793 thousand) in the period, corresponding to 17.0 percent (20.8%) of net sales. Research and development costs decreased by 2.6 percent compared with the same period last year. A total of 176 (160) people worked in Producs at the end of March 2009. The Products unit is expanding in India, where there are currently 35 employees, in addition to which there are 6 persons taking part in a training program for new employees. During the period, the company launched Basware Connectivity services, which allow suppliers and buyers of all sizes and maturity to transact electronically across the Basware partner network. The new services complement Basware's current Enterprise Purchase to Pay offering. With the services, customers are able to automate their processes further by integrating their partners to their invoice processing and procurement activities. With the Basware Connectivity services, companies gain visibility to an audit trail that can be traced from order to goods delivery and invoice. This helps in driving down processing costs and increasing internal visibility between procurement and finance. PERSONNEL Basware employed 731 (666) people on average during the first quarter and 730 (665) at the end of the period. The number of personnel increased by 65 persons and by 9.8 percent compared with the same period the previous year. The share of personnel working in foreign units has increased compared with the previous year. At the end of the period, 45.5 percent (41.1%) of Basware personnel worked outside of Finland and 54.5 percent (58.9%) in Finland. 18.0 percent of the personnel work in sales and marketing, 48.9 percent in consulting and services, 24.1 percent in Products, and 9.0 percent in administration. The average age of employees is 35.8 (35.8) years. Of the employees, 34.9 percent have a Master's degree and 43.0 percent have a Bachelor's degree. Women account for 28.1 percent of employees, men for 71.9 percent. Geographical distribution of personnel: Personnel (employed, on average) 1-3/2009 1-3/ 2008 Change, % 1-12/ 2008 Finland 439 416 5.7 421 Scandinavia 138 99 39.3 112 Europe 122 127 -3.9 129 North America 31 24 29.6 26 Group total 731 666 9.7 689 BUSINESS OPERATIONS Finland The Finland segment includes the business operations in Finland, Russia, Asia and Australia and the head office functions. Net sales for the period increased by 8.0 percent to EUR 11 331 thousand (EUR 10 493 thousand). Net sales of the Finnish and Russian business operations increased by 23.3 percent to EUR 10 413 thousand (EUR 8 442 thousand). All the Basware Enterprise Purchase to Pay and Financial Management products are sold in the region. During the quarter Basware signed a partnership agreement with the Russian IT company Lanit (Laboratory of New Information Technologies), which is a leading supplier of IT services in Russia and CIS. Lanit primarily acts as a reseller of Basware's invoice automation solutions. In Finland, new customers included Cargotec, Maskun Kalustetalo Oy, Are Oy and Meira. In addition, Basware will supply the Basware Enterprise Purchase to Pay solution to the DNA telecommunications group. DNA will also expand the existing solution compatible with SEPA, the Single Euro Payments Area. There are 5 resellers in the Asia and Australia region. There are currently 8 resellers in all in the area and the number of personnel averaged 439 (416) during the period. Scandinavia Basware's Nordic organization consists of a centrally directed 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. The Scandinavian business operations developed positively as a whole, and net sales of the area increased by 26.6 percent to EUR 5 317 thousand (EUR 4 198 thousand). The profitability of the operations has improved by 107.9 percent and operating profit was EUR 666 thousand (EUR 321 thousand). New customers included Validus AS, Norges Vassdrags - og Energivesen, Laerdal Medical AS, Noa Noa Aps and Preem Petroleum AB. The integration of Contempus, which was purchased during the third quarter of 2008, is complete. Business operations are mainly handled by the own organization and there were 138 (99) employees on average in the area. Europe Basware's European business operations consist of the units in Germany, France, the Netherlands, United Kingdom and Southern Europe. Additionally, the reseller network covers the eastern part of Central Europe. All Enterprise Purchase to Pay products and services are sold in Europe, apart from the payment and travel & expense management solutions. Net sales in the Europe segment increased by 8.7 percent to EUR 4 666 thousand (EUR 4 293 thousand). The profitability of the operations has improved by 183.3 percent and operating profit was EUR 231 thousand (EUR -277 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 Adenclassifieds, Zodiac Marine&Pool and Coen Hagedoom Bouwgroep. Collaboration with Novartis expanded, with the company adopting the Basware Enterprise Purchase to Pay product family globally in 60 countries. In addition, the SITA Group expanded the automatic purchase invoice processing system to its offices in Germany, Belgium and Luxembourg. There are 35 resellers in Europe, and Basware personnel averaged 122 (127) during the period. North America Basware's North American unit sells the Enterprise Purchase to Pay solutions in the United States and Canada. Net sales of the area increased by 75.8 percent to EUR 1 195 thousand (EUR 680 thousand). The profitability of the operations has improved by 186.9 percent and operating profit was EUR 137 thousand (EUR -158 thousand). New customers in North America included Take-Two Interactive Software Inc. At the end of the period, there were 9 resellers in North America. On average, there were 31 (24) employees in the area. OTHER EVENTS OF THE PERIOD Basware issued a notice of changes in ownership when the shareholding of Nordea Investment Fund Company Finland Ltd fell below the 5 percent threshold on February 23, 2009. Basware increased on January 30, 2009 its shareholding in Basware Einvoices Oy to 100 percent 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 is approximately EUR 720 thousand and the additional purchase price to be paid in February 2010 at the latest on the basis of the business volume for 2009 is expected to be approximately EUR 250 thousand. Basware Einvoices Oy will be merged into the parent company during the present fiscal period. Cases such as the one presented above are not currently regulated by IFRS, so the company's management has compiled an accounting principle to be applied 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. Strategy Basware has updated its strategy for the years 2009-2012. The long term net sales growth objective remains in the range of 20-40 percent with operating profit margin of 10-20 percent of net sales. Basware will expand the EPP (Enterprise Purchase to Pay) Automation Services concept during 2009. The concept targets Basware software license customers to achieve an even higher degree of automation. The Software as a Service (SaaS) model is predicted to see a remarkably higher growth than the software license market. Due to the changed market situation, Basware updated its strategy projects for 2009 by replacing two projects with new strategy projects better suited to the current situation. The Dominating the US and Joint Forces projects will advance as a part of daily business operations. Instead of them, Basware will outlay on world-class product development and even tighter networking with customers in 2009. The company's vision, mission and financial objectives for the years 2007-2010 announced on September 12, 2006, remain unchanged. 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. 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. Share price and trade During the reporting period, the highest price of the share was EUR 7.75 (EUR 10.45), the lowest was EUR 6.60 (EUR 7.50) and the closing price was EUR 7.50 (EUR 7.90). The average price of the share was EUR 7.37 (EUR 8.27) during the period. A total of 431 908 (482 102) shares were traded during the period which is the equivalent of 3.8 percent (4.2%) of the average number of shares. Market capitalization with the period's closing price on March 31, 2009 was EUR 85 340 355 (EUR 90 598 180). Shareholders Basware had 17 016 (17 923) shareholders on March 31, 2009 including nominee-registered holdings (7). Nominee-registered holdings accounted for 7.9 (9.1) percent of the total number of shares. 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. Basware Corporation's share repurchase program, which the company's Board of Directors decided to start on October 14, 2008, ended on March 31, 2009. The Board's decision was based on the authorization granted by the Annual General Meeting of Basware Corporation on February 14, 2008. In accordance with the decision, share repurchase was started on October 23, 2008, and it ended in accordance with the terms of the repurchase program on March 31, 2009. On March 31, a total of 90 300 shares had been purchased, and the number of treasury shares held by the company is 90 300, corresponding to approximately 0.79% of all shares in the company. The average price of the purchased shares during the share repurchase program was EUR 6.9475. The subscription period of shares subscribed for on the basis of Basware Corporation's option program 2006 Series A ended on March 31, 2009. Each option right entitled the holder to subscribe for one Basware share. No subscriptions were done, so all the options in the 2006 Series A (totaling 100 000) were nullified. The Board of Directors of Basware Corporation has approved a new share-based incentive plan for the Basware Group key personnel. The aim of the Plan is to combine the objectives of the shareholders and the key personnel in order to increase the value of the Company, to commit the key personnel to the Company, and to offer them a competitive reward plan based on holding the Company shares. The incentive plan covers the members of the Basware Executive Team. The Plan includes three earning periods, calendar years 2009, 2010 and 2011. The Board of Directors decides on the earnings criteria and targets to be established for them separately for each earning period at the beginning of each earning period. The rewards to be paid on the basis of the earning period 2009 will correspond to the approximate value of a maximum total of 84 000 Basware Corporation shares (including also the proportion to be paid in cash). SHORT-TERM RISKS AND UNCERTAINTY FACTORS 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. Goodwill has been tested during the last quarter of 2008. In accordance with the testing for impairment of assets, and 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 been 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 period. EVENTS AFTER THE REPORTING PERIOD Basware AS purchased 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 at the latest, determined on the basis of the volume of the purchased operations' service sales in 2009. The acquisition is expected to increase Basware's Automation Services revenues for 2009 by approximately EUR 1.2 million. The company will deliver Basware Connectivity services to a Finnish industry group. The services will be implemented on the group level in around 20 countries. The value of the deal is approximately EUR 900.000. Implementation starts immediately. FUTURE OUTLOOK Market forecasts published in March 2009 expect the entire IT market to decrease by 3.7 percent in 2009, while the corporate software market is forecast to increase by 5.4 percent on average annually until 2013. According to a market forecast published in February 2009, the invoice automation solution market is expected to grow by 12 percent and the procurement solution market to decrease by 9 percent. 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 quarter. Research and development costs will not substantially increase from the level of 2008. Growth related investments will start earliest in the second half of the year if Q2 operating profit and net sales 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. Espoo, Finland, April 16, 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, April 16, 2009 a briefing on the Interim Report for the press and analysts at 11:00 a.m. in Hotel Kämp, Pohjoisesplanadi 29, Helsinki, Finland. During this briefing CEO Ilkka Sihvo and CFO Mika Harjuaho will comment the events and financial performance of the quarter. Welcome. Distribution: NASDAQ OMX Helsinki Ltd 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 company applies 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 Change, EUR thousand 1.1.-31.3.2009 1.1.-31.3.2008 % 1.1.-31.12.2008 NET SALES 21 717 18 233 19.1 86 098 Other operating income 30 69 -57.0 250 Materials and services -1 552 -1 211 28.1 -4 726 Employee benefit expenses -12 896 -11 765 9.6 -50 399 Depreciation and amortization -1 004 -671 49.6 -3 043 Other operating expenses -4 703 -4 910 -4.2 -19 500 Operating profit 1 592 -254 725.8 8 679 Finance income 124 39 214.9 734 Finance expenses -232 -35 565.2 -1 003 Profit before tax 1 484 -250 694.0 8 410 Income tax expense -818 -300 172.8 -1 825 PROFIT FOR THE PERIOD 666 -550 221.1 6 585 Other comprehensive income: Exchange differences on translating foreign operations 803 -184 -4 383 Income tax relating to components of other comprehensive income -52 0 0 Other comprehensive income, net of tax 751 -184 -4 383 TOTAL COMPREHENSIVE INCOME 1 417 -734 293,0 2 201 Profit attributable to: Owners of the parent 641 -563 213.9 6 467 Minority interest 25 13 84.4 118 666 -550 221.1 6 585 Total comprehensive income attributable to: Owners of the parent 1 392 -747 286.3 2 084 Minority interest 25 13 84.4 118 1 417 -734 293.0 2 201 Earnings per share (undiluted), EUR 0.06 -0.05 214.6 0.56 Earnings per share (diluted), EUR 0.06 -0.05 214.6 0.56 Average number of shares: - undiluted 11 394 147 11 468 124 11 463 307 - diluted 11 394 147 11 468 124 11 463 307 GROUP BALANCE SHEET EUR thousand 31.3.2009 31.3.2008 Change, % 31.12.2008 ASSETS NON-CURRENT ASSETS Intangible assets 17 267 12 321 40.1 17 022 Goodwill 30 170 25 693 17.4 29 212 Tangible assets 975 1 033 -5.6 991 Available-for-sale investments 38 38 38 Long-term trade and other receivables 235 12 1 835.3 536 Deferred tax assets 2 165 2 303 -6.0 2 208 Non-current assets 50 850 41 401 22.8 50 006 CURRENT ASSETS Inventories 29 35 -17.6 48 Trade and other receivables 21 691 17 817 21.7 20 737 Income tax receivables 2 483 990 150.9 2 341 Financial assets at fair value through profit or loss 31 31 0.7 31 Cash and cash equivalents 11 429 7 223 58.2 8 745 Current assets 35 662 26 095 36.7 31 902 TOTAL ASSETS 86 512 67 496 28.2 81 909 EQUITY AND LIABILITIES SHAREHOLDERS' EQUITY Share capital 3 440 3 440 3 440 Share premium account 69 33 127 -99.8 69 Own shares -622 -271 Fair value reserve and other reserves 33 598 540 6 121.4 33 598 Translation differences -3 241 208 -1 659.8 -3 991 Retained earnings 14 664 7 352 99.5 15 648 Minority interest 163 161 1.2 224 Shareholders' equity 48 071 44 828 7.2 48 717 NON-CURRENT LIABILITIES Deferred tax liability 2 367 1 644 44.0 2 307 Interest-bearing liabilities 5 551 18 30 663.3 7 729 Non-interest-bearing liabilities 4 Non-current liabilities 7 922 1 662 376.7 10 036 CURRENT LIABILITIES Interest-bearing liabilities 5 563 214 2 504.2 5 555 Trade payables and other liabilities 23 812 20 498 16.2 16 683 Tax liability from income tax 1 144 295 288.3 918 Current liabilities 30 519 21 006 45.3 23 156 TOTAL EQUITY AND LIABILITIES 86 512 67 496 28.2 81 909 GROUP STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY Share- holders' Share Own shares SVOP equity Premium reserve EUR thousand account SHARE-HOLDERS' EQUITY 1.1.08 3 440 33 127 0 Comprehensive income Dividend distribution Granted warrants Changes in reporting period SHARE-HOLDERS' EQUITY 31.3.08 3 440 33 127 0 0 Share- Share holders' Premium Own shares SVOP EUR thousand equity account reserve SHARE-HOLDERS' EQUITY 1.1.09 Comprehensive income Dividend distribution Granted warrants Re-purchase of own shares -351 Changes in reporting period SHARE HOLDERS' EQUITY 31.3.09 3 440 69 -622 33 058 Other Transl Retained Minority Total EUR thousand reserves diff earnings interest SHARE-HOLDERS' 47 EQUITY 1.1.08 540 392 413 Comprehensive income -184 -563 13 -734 Dividend -1 distribution -1 720 720 Granted warrants 31 31 Changes in reporting period -161 -161 SHARE-HOLDERS' 44 EQUITY 31.3.08 540 208 7 352 161 828 Other Transl Retained Minority Total EUR thousand reserves diff earnings interest SHARE-HOLDERS' EQUITY 1.1.09 Comprehensive income 751 641 25 1 417 Dividend distribution -2 623 -2 623 Granted warrants 308 308 Re-purchase of own shares -351 Changes in reporting period 689 -86 603 SHARE HOLDERS' EQUITY 31.3.09 540 -3 241 14 664 163 48 071 GROUP CASH FLOW STATEMENT EUR thousand 1.1.-31.3.2009 1.1.-31.3.2008 1.1.-31.12.2008 Net cash from operating activities Profit for the period 666 -550 6 585 Adjustments for profit 2 238 966 5 243 Working capital changes 6 400 7 192 125 Interest paid -96 -31 -291 Interest received 16 41 154 Other financial items in operating activities -27 -5 -38 Income taxes paid -775 -728 -3 447 Net cash from operating activities 8 423 6 885 8 331 Cash flows from investing activities Purchase of tangible and intangible assets -614 -742 -3 631 Proceeds from sale of tangible and intangible assets 0 4 47 Acquired subsidiaries -724 -1 -8 728 Repayment of loan receivables 3 9 Net cash used in investing activities -1 339 -737 -12 303 Cash flows from financing activities Proceeds from short-term loans 2 000 Repayments of short-term loans -4 000 -4 000 Proceeds from long-term borrowings 10 650 Repayments of long-term borrowings -1 783 -100 -300 Share repurchase -351 -271 Repayments of financial lease liabilities -2 -1 Dividends paid -2 623 -1 720 -1 720 Net cash used in financing activities -4 757 -5 822 6 358 Net change in cash and cash equivalents according to cash flow statement 2 328 325 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 355 -112 -650 Cash and cash equivalents at end of period 11 460 7 254 8 777 GROUP QUARTERLY INCOME STATEMENT EUR thousand 1-3/2009 1-3/2008 4-6/2008 7-9/2008 10-12/2008 NET SALES 21 717 18 233 22 312 19 259 26 294 Other operating income 30 69 62 58 62 Materials and services -1 552 -1 211 -1 385 -797 -1 333 Employee benefit expenses -12 896 -11 765 -12 608 -10 933 -15 093 Depreciation and amortization -1 004 -671 -693 -690 -990 Other operating expenses -4 703 -4 910 -5 257 -4 516 -4 818 Operating profit 1 592 -254 2 431 2 381 4 122 % 7.3% -1.4% 10.9% 12.4% 15.7% Finance income 124 39 18 39 637 Finance expenses -232 -35 -21 -50 -897 Profit before tax 1 484 -250 2 428 2 370 3 862 % 6.8% -1.4% 10.9% 12.3% 14.7% Income tax expense -818 -300 -528 -430 -567 PROFIT FOR THE PERIOD 666 -550 1 899 1 941 3 294 % 3.1% -3.0% 8.5% 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 Einvoices Oy will be merged with the parent company during the financial period underway. Cases such as the one presented above are not currently regulated by IFRS, so the company's management has compiled an accounting principle to be applied 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. COMMITMENTS AND CONTINGENT LIABILITIES EUR thousand 31.3.2009 31.3.2008 31.12.2008 GUARANTEES ON BEHALF OF SUBSIDIARIES 1 098 1 075 1 096 Guarantees total 1 098 1 075 1 096 OWN GUARANTEES Lease liabilities Current lease liabilities 799 771 868 Lease liabilities maturing in 1-5 years 823 861 838 Total 1 623 1 631 1 706 Other rental liabilities Current rental liabilities 2 481 2 014 2 385 Rental liabilities maturing in 1-5 years 4 330 3 892 4 620 Rental liabilities maturing later 1 259 99 1 196 Total 8 070 6 005 8 201 Other own contingent liabilities, total 9 693 7636 9 907 SEGMENT REPORTING Net sales by market area +-------------------------------------------------------------------+ | Net sales (EUR | | | | | | thousand) | 1-3/2009 | 1-3/2008 | Change, % | 1-12/2008 | |---------------------+----------+----------+-----------+-----------| | Finland | 11 331 | 10 493 | 8.0 | 49 517 | |---------------------+----------+----------+-----------+-----------| | Scandinavia | 5 317 | 4 198 | 26.6 | 18 805 | |---------------------+----------+----------+-----------+-----------| | Europe | 4 666 | 4 293 | 8.7 | 19 454 | |---------------------+----------+----------+-----------+-----------| | North America | 1 195 | 680 | 75.8 | 5 004 | |---------------------+----------+----------+-----------+-----------| | Sales between | | | | | | segments | -791 | -1 430 | -44.7 | -6 682 | |---------------------+----------+----------+-----------+-----------| | Group total | 21 717 | 18 233 | 19.1 | 86 098 | +-------------------------------------------------------------------+ +-------------------------------------------------------------------+ | Operating profit | | | | | | (EUR thousand) | 1-3/2009 | 1-3/2008 | Change, % | 1-12/2008 | |---------------------+----------+----------+-----------+-----------| | Finland | 849 | -93 | 1 017.1 | 7 898 | |---------------------+----------+----------+-----------+-----------| | Scandinavia | 666 | 321 | 107.9 | 1 017 | |---------------------+----------+----------+-----------+-----------| | Europe | 231 | -277 | 183.3 | -74 | |---------------------+----------+----------+-----------+-----------| | North America | 137 | -158 | 186.9 | 289 | |---------------------+----------+----------+-----------+-----------| | Operating profit | | | | | | between segments | -292 | -47 | 523.3 | -452 | |---------------------+----------+----------+-----------+-----------| | Group total | 1 592 | -254 | 725.8 | 8 679 | +-------------------------------------------------------------------+ Personnel (employed, on average) 1-3/2009 1-3/ 2008 Change, % 1-12/ 2008 Finland 439 416 5.7 421 Scandinavia 138 99 39.3 112 Europe 122 127 -3.9 129 North America 31 24 29.6 26 Group total 731 666 9.7 689 Net sales by business +-------------------------------------------------------------------+ | Net sales (EUR | | | | | | thousand) | 1-3/2009 | 1-3/2008 | Change, % | 1-12/2008 | |---------------------+----------+----------+-----------+-----------| | Product sales | 4 676 | 4 564 | 2.5 | 25 859 | |---------------------+----------+----------+-----------+-----------| | Maintenance | 7 139 | 5 739 | 24.4 | 25 068 | |---------------------+----------+----------+-----------+-----------| | Consulting | 8 496 | 6 978 | 21.8 | 30 538 | |---------------------+----------+----------+-----------+-----------| | Automation services | 1 406 | 953 | 47.4 | 4 633 | |---------------------+----------+----------+-----------+-----------| | Group total | 21 717 | 18 233 | 19.1 | 86 098 | +-------------------------------------------------------------------+ Net sales by the location of customer +-------------------------------------------------------------------+ | Net sales (EUR | | | | | | thousand) | 1-3/2009 | 1-3/2008 | Change, % | 1-12/2008 | |---------------------+----------+----------+-----------+-----------| | Finland | 10 323 | 8 779 | 17.6 | 41 514 | |---------------------+----------+----------+-----------+-----------| | Scandinavia | 5 209 | 4 127 | 26.2 | 18 309 | |---------------------+----------+----------+-----------+-----------| | Europe | 4 681 | 4 347 | 7.7 | 19 191 | |---------------------+----------+----------+-----------+-----------| | Others | 1 503 | 979 | 53.5 | 7 083 | |---------------------+----------+----------+-----------+-----------| | Group total | 21 717 | 18 233 | 19.1 | 86 098 | +-------------------------------------------------------------------+ GROUP KEY INDICATORS EUR thousand 1-3/09 1-3/08 1-3/07 1-12/08 Net sales 21 717 18 233 17 038 86 098 Growth of net sales, % 19.1% 7.0% 10.4% 17.5% EBITDA 2 596 417 1 981 11 722 % of net sales 12.0% 2.3% 11.6% 13.6% Operating profit before IFRS3 amortization 2 033 -58 1 574 9 730 % of net sales 9.4% -0.3% 9.2% 11.3% Operating profit 1 592 -254 1 409 8 679 Growth of operating profit, % 725.8% -118.1% -44.3% 15.5% % of net sales 7.3% -1.4% 8.3% 10.1% Profit before tax 1 484 -250 1 459 8 410 % of net sales 6.8% -1.4% 8.6% 9.8% Profit for the period 666 -550 884 6 585 % of net sales 3.1% -3.0% 5.2% 7.6% Return on equity, % 5.5% -4.8% 16.1% 13.7% Return on investment, % 11.3% -1.8% 26.4% 16.6% Interest-bearing liabilities 11 114 232 658 13 283 Cash and liquid assets *) 11 460 7 254 12 713 8 777 Gearing, % -0.7% -15.7% -27.5% 9.3% Equity ratio, % 55.6% 66.4% 68.8% 59.5% Total assets 86 512 67 496 63 679 81 909 Gross investments **) 619 822 767 12 476 % of net sales 2.9% 4.5% 4.5% 14.5% Capital expenditure 126 193 169 1 007 % of net sales 0.6% 1.1% 1.0% 1.2% Research and development costs 3 694 3 793 3 091 15 518 % of net sales 17.0% 20.8% 18.1% 18.0% R&D personnel at end of period 176 160 136 171 Personnel on average during the period 731 666 532 689 Personnel at end of period 730 665 533 731 Increase in personnel, % 9.8% 24.8% 3.9% 11.1% Earnings per share, EUR 0.06 -0.05 0.08 0.56 Earnings per share (diluted), EUR 0.06 -0.05 0.08 0.56 Equity per share, EUR 4.18 3.89 3.82 4.23 P/E ratio 133.26 -160.90 145.42 11.68 Share price performance lowest share price 6.60 7.50 10.48 6.00 highest share price 7.75 10.45 14.00 10.45 average share price 7.37 8.27 12.19 7.53 closing share price 7.50 7.90 11.30 6.59 Market capitalization at 129 589 end of period 85 340 355 90 598 180 801 75 301 011 Number of traded shares 431 908 482 102 1 114 729 2 298 467 % of average number of shares 3.8% 4.2% 9.7% 20.1% Average number of shares - undiluted 11 394 147 11 468 124 11 468 124 11 463 307 - diluted 11 394 147 11 468 124 11 468 124 11 463 307 *) Includes cash, cash equivalents and financial assets at fair value through profit or loss **) Includes capitalized R&D costs and acquisitions MAJOR SHAREHOLDERS March 31, 2009 Shares Shareholders votes pcs % 1. Sihvo, Ilkka 1 065 800 9,3 Eräkangas, Kirsi (incl. children under 2. guardianship) 1 031 800 9,0 Vaajoensuu, Hannu (incl. a controlled 3. company and 962 100 8,4 children under guardianship) 4. Perttunen, Sakari 830 400 7,2 Pöllänen, Antti (incl. children under 5. guardianship) 740 900 6,5 6. Nordea Nordic Small Cap 557 354 4,9 7. Henki-Sampo insurance company 550 000 4,8 8. Ahonen, Asko 318 822 2,8 9. Royal Skandia Life Assurance Ltd 270 000 2,4 10. Pension insurance company Veritas 246 000 2,1 11. Kaleva Mutual Insurance company 242 690 2,1 12. Perttunen, Meimi 215 400 1,9 13. Fondita Nordic Micro Cap Placeringsfond 200 000 1,7 14. Carnegie Fond 182 073 1,6 15. Fondita Nordic Small Cap Placfond 136 000 1,2 16. Ilmarinen Mutual Insurance company 133 402 1,2 17. Aktia Capital 133 213 1,2 18. Basware Oyj 89 410 0,8 19. Vaajoensuu, Sara 83 700 0,7 20. Pavor Oy 75 052 0,7 Total of 20 largest shareholders 8 064 116 70,3 Total of nominee-registered 913 939 8,0 Others 2 490 069 21,7 Total 11 468 124 100,0 |
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