2010-10-14 08:12:32 CEST
2010-10-14 08:13:00 CEST
REGULATED INFORMATION
BasWare - Quarterly report
BASWARE INTERIM REPORT JANUARY 1 - SEPTEMBER 30, 2010 (IFRS)
Basware stock exchange release, October 14, 2010 at 09:10
BASWARE INTERIM REPORT JANUARY 1 - SEPTEMBER 30, 2010 (IFRS)
SUMMARY
January-September
- Net sales EUR 72 946 thousand (EUR 66 054 thousand) - growth10.4
percent
- Operating profit EUR 8 550 thousand (EUR 7 767 thousand) - growth
10.1 percent
- Operating profit 11.7 percent of net sales (11.8%)
- International operations accounted for 54.0 percent of net sales
(54.3%) - growth 9.9 percent
- Automation Services grew by 52.8 percent
- Cash flows from operating activities were EUR 11 368 thousand (EUR
8 540 thousand).
- Earnings per share EUR 0.56 (EUR 0.45)
July-September Q3
- Net sales EUR 23 202 thousand (EUR 21 609 thousand) - growth 7.4
percent
- Operating profit EUR 3 408 thousand (EUR 4 028 thousand) - decrease
15.4 percent
- Operating profit 14.7 percent of net sales (18.6%)
- International operations accounted for 55.1 percent of net sales
(58.0%) - growth 2.0 percent
- Automation Services grew by 56.7 percent
- Earnings per share EUR 0.23 (EUR 0.27)
Basware expects its net sales for 2010 to develop positively on the level of
2009. Operating profit (EBIT) for 2010 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 2010 2009 % 2010 2009 % 2009
--------------------------------------------------------------------------
Net sales 23 202 21 609 7.4% 72 946 66 054 10.4% 92 654
EBITDA 4 702 5 134 -8.4% 12 389 10 943 13.2% 16 280
Operating profit before
IFRS-3 amortization 3 956 4 596 -13.9% 10 214 9 188 11.2% 13 788
Operating profit 3 408 4 028 -15.4% 8 550 7 767 10.1% 11 824
% of net sales 14.7% 18.6% 11.7 % 11.8% 12.8%
Profit before tax 3 391 3 946 -14.1% 8 486 7 553 12.4% 11 590
Profit for the period 2 694 3 005 -10.3% 6 418 5 066 26.7% 9 074
Return on equity. % 17.6% 23.7% 14.4% 13.3% 17.2%
Return on investment.
% 20.4% 24.5% 17,4% 16.4% 18.8%
Liquid assets* 13 719 7 567 81.3% 13 719 7 567 81.3% 12 210
Gearing. % -16.2% 3.2% -16.2% 3.2% -5.3%
Equity ratio. % 71.6% 61.9% 71.6% 61.9% 64.8%
Earnings per share.
EUR 0.23 0.27 -12.5% 0.56 0.45 26.2% 0.80
Earnings per share
(diluted). EUR 0.23 0.27 -13.2% 0.56 0.45 25.2% 0.80
Equity per share. EUR 5.34 4.58 16.5% 5.34 4.58 16.5% 4.93
*) Includes cash. cash equivalents and financial assets at fair value through
profit or loss
Basware's business operations consist of License Sales. Maintenance.
Professional Services and Automation Services. The core of Basware's license
sales consists of the Basware Enterprise Purchase to Pay product suite and
local, only in Finland marketed financial management products. 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:"Basware's most significant growth area, Automation Services, grew by as much as
56.7% in the third quarter. During Q3, we succeeded in closing several
significant deals in the Automation Services business, which proves our global
competitiveness in the e-invoice business. Automation Services agreements
typically span several years, and they provide a good foundation for growth in
2011. Geographically, the best growth was seen in North America and Europe.
Our operating profit for the third quarter was excellent, representing 14.7% of
net sales. Our net sales increased by 7.4% to EUR 23 202 thousand.
At this stage, our situation seems favorable with regard to reaching the full-
year target. We believe that the solid growth of our business will also continue
during the last quarter," says Ilkka Sihvo, Basware's CEO.
REPORTING
Basware's reporting segment is based upon geography as follows: Finland,
Scandinavia, Europe and Other. Following the acquisition of former reseller TAG
Services 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 were merged into the Other segment as of Q3/2009. The Finland
segment includes the Finnish, Russian, and Asia-Pacific (excluding Australia)
business operations and corporate services.
In addition, the company reports revenue from products and services as follows:
License Sales, Professional Services, Maintenance and Automation Services.
Automation Services include Software as a Service (SaaS), e-invoicing and Scan
and Capture services.
The company also reports an estimate of revenue to be recognized for current
Automation Services agreements in production in the next twelve months.
Automation Services agreements are typically in force for a fixed period of
several years or until further notice.
NET SALES
The geographical division of net sales by the location of assets:
+-------------------------------------------------------------------------+
|Net sales 7-9/ 7-9/ Change, 1-9/ 1-9/ Change, 1-12/|
|(EUR thousand) 2010 2009 % 2010 2009 % 2009|
+-------------------------------------------------------------------------+
|Finland 11 641 11 478 1.4 37 595 35 215 6.8 50 486|
| |
|Scandinavia 4 994 4 505 10.9 16 480 16 100 2.4 22 236|
| |
|Europe 4 782 4 104 16.5 15 388 13 087 17.6 18 717|
| |
|Other 3 111 3 980 -21.9 8 203 6 303 30.1 9 201|
| |
|Sales between segments -1 326 -2 459 46.1 -4 720 -4 652 -1.5 -7 985|
+-------------------------------------------------------------------------+
|Group total 23 202 21 609 7.4 72 946 66 054 10.4 92 654|
+-------------------------------------------------------------------------+
The geographical division of net sales by the location of customers:
+-----------------------------------------------------------------+
|Net sales 7-9/ 7-9/ Change, 1-9/ 1-9/ Change, 1-12/|
|(EUR thousand) 2010 2009 % 2010 2009 % 2009|
+-----------------------------------------------------------------+
|Finland 10 420 9 084 14.7 33 535 30 181 11.1 42 449|
| |
|Scandinavia 4 857 4 893 -0.7 15 859 15 716 0.9 21 719|
| |
|Europe 4 629 3 921 18.1 14 864 12 994 14.4 18 065|
| |
|Other 3 295 3 711 -11.2 8 688 7 163 21.3 10 421|
+-----------------------------------------------------------------+
|Group total 23 202 21 609 7.4 72 946 66 054 10.4 92 654|
+-----------------------------------------------------------------+
Basware Group's net sales grew by 10.4 percent in July-September and were EUR
72 946 thousand (EUR 66 054 thousand).
The company's license sales increased by 3.8 percent during the reporting period
to 22.7 percent (24.2%) of net sales. License sales of Basware's own products
increased by 10.6 percent, and sales of third-party scanning software decreased
considerably while sales of outsourced scan and capture services grew.
Maintenance revenue increased by 12.3 percent in the reporting period and
accounted for 33.6 percent (33.1%) of net sales. Professional Services revenue
increased by 3.2 percent and accounted for percent (34.5%) of net sales.
During the period. Automation Services (SaaS, e-invoicing, Scan and Capture)
grew 52.8 percent and accounted for 11.5 percent (8.3%) of net sales. The
estimated revenue to be recognized for current Automation Services agreements in
production in the next twelve months is EUR 12.1 million (growth of 7.1
percent compared to the estimate made at the end of the previous quarter). The
transaction volume processed by the Automation Services business was 9.3 million
during the reporting period.
In July-September, 21.2 percent (26.9%) of net sales consisted of own product
sales with license sales decreasing by 15.3 percent. License sales in Q3
decreased because the Q3 comparison figure included revenue of EUR 1.9 million,
which is a part of one of Basware's largest license deals closed in Q3/2009.
License sales of Basware's own products decreased by 5.9%, and sales of third-
party scanning software decreased considerably while sales of outsourced scan
and capture services grew.
Automation Services sales accounted for 12.7 percent (8.7%) of net sales in the
third quarter, up 56.7 percent. Maintenance revenue accounted for 35.7 percent
(34.3%) of net sales during the third quarter and grew by 11.8 percent.
Consulting revenue represented 30.4 percent (30.2%) of net sales and grew by
8.3 percent.
The international share of Basware's net sales was 54.0 percent (54.3%) in the
period. International operations grew by 9.9 percent. The international share of
Basware's net sales in third quarter was 55.1 percent (58.0%), up 2.0 percent.
FINANCIAL PERFORMANCE
Basware's operating profit increased by 10.1 percent in the period and totaled
EUR 8 550 thousand (EUR 7 767 thousand). Operating profit represented 11.7
percent (11.8%) of net sales. Operating profit decreased by 15.4% in the third
quarter and totaled EUR 3 408 thousand (EUR 4 028 thousand). Operating profit in
Q3 decreased because the Q3 comparison figure included revenue of EUR 1.9
million, which is a part of one of Basware's largest license deals closed in
Q3/2009. In the third quarter, operating profit represented 14.7 percent of net
sales.
The division of operating profit geographically by the location of assets:
+------------------------------------------------------------------------------+
|Operating profit 7-9/ 7-9/ Change, 1-9/ 1-9/ Change, 1-12/|
|(EUR thousand) 2010 2009 % 2010 2009 % 2009|
+------------------------------------------------------------------------------+
|Finland 2 238 2 546 -12.1 4 946 4 690 5.5 7 714|
| |
|Scandinavia 890 212 319.3 2 578 2 128 21.2 3 169|
| |
|Europe 419 465 -9.9 1 611 664 142.5 1 566|
| |
|Other 269 1 223 -78.0 640 1 258 -49.1 741|
| |
|Operating profit between |
|segments -408 -417 2.2 -1 224 -972 -26.0 -1 365|
+------------------------------------------------------------------------------+
|Group total 3 408 4 028 -15.4 8 550 7 767 10.1 11 824|
+------------------------------------------------------------------------------+
The Company's fixed costs were EUR 56 068 thousand (EUR 50 683 thousand) in the
period and have grown by 10.6 percent compared with the same period last year.
Personnel costs made up 72.9 percent (73.9%) or EUR 40 846 thousand (EUR 37 453
thousand) of the fixed costs.
Research and development costs totaled EUR 10 797 thousand (EUR 10 934
thousand), of which EUR 1 038 thousand (EUR 1 094 thousand) or 9.6 percent
(10.0%) were capitalized during the period. Amortization of capitalized research
and development costs totaled EUR 1 399 thousand (EUR 1 195 thousand).
The Company's finance income and finance expenses were EUR -65 thousand (EUR
-214 thousand). The Company's profit before tax was EUR 8 486 thousand (EUR
7 553 thousand) and profit for the period was EUR
6 418 thousand (EUR 5 066 thousand). Undiluted earnings per share were EUR 0.56
(EUR 0.45).
FINANCE AND INVESTMENTS
Basware Group's total assets on the balance sheet at the end of the financial
period were EUR 87 132 thousand (EUR 84 942 thousand). The Company's cash and
liquid assets were EUR 13 719 thousand (EUR 7 567 thousand), of which cash and
cash equivalents were EUR 13 685 thousand (EUR 7 535 thousand) and financial
assets at fair value through profit or loss were EUR 34 thousand (EUR 32
thousand).
Equity ratio was 71.6 percent (61.9%) and gearing was -16.2 percent (3.2%). The
Company had a total of EUR
3 584 thousand (EUR 9 235 thousand) interest-bearing liabilities. of which
current liabilities accounted for EUR
3 551 thousand (EUR 5 563 thousand). Return on investment was 17.4 percent
(16.4%) and return on equity 14.4 percent (13.3%).
Cash flows from operating activities were EUR 11 368 thousand (EUR 8 540
thousand). Cash flows from investments were EUR -3 098 thousand (EUR -3 550
thousand).
The company's gross capital expenditure. comprising of ordinary additional and
replacement investments required by growh, totaled EUR 686 thousand (EUR 334
thousand) during the period. Gross investments. including capitalized R&D
expenses and business acquisitions in addition to the above, totaled EUR 3 426
thousand (EUR 7 084 thousand).
Basware Corporation acquired the entire share capital of TAG Services Pty Ltd in
Australia on July 1, 2009. 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. The additional acquisition price 2.0 million
Australian dollars (approximately EUR 1.4 million) was paid in August 2010.
Amortizations of intangible assets were EUR 3 413 thousand (EUR 2 772 thousand).
There are no indications of impairments of assets.
RESEARCH, DEVELOPMENT AND NEW PRODUCTS
Basware's research and development costs were 10 797 thousand (EUR 10 934
thousand) in the period and made up 14.8 percent (16.6%) of net sales. Research
and development costs decreased by 1.3 percent (1.8%) compared with the same
period last year. Of the research and development costs, EUR 1 038 thousand (EUR
1 094 thousand) or 9.6 percent (10.0%) has been capitalized. Amortization of
capitalized research and development costs totaled EUR 1 399 thousand (EUR
1 195 thousand).
Altogether 213 (184) people worked in Products at the end of September 2010. The
Products unit employes 72 persons in India at the moment.
PERSONNEL
Basware employed 826 (743) people on average in the third quarter and 866 (755)
people at the end of the period. The number of personnel grew by 111 persons and
by 14.7 percent compared with the same period last year.
The share of personnel working in foreign units has increased compared with the
same period last year. At the end of the period, 52.9 percent (47.0%) of Basware
personnel worked outside of Finland and 47.1 percent (53.0%) in Finland.
14.8 percent of the personnel work in sales and marketing, 52.4 in consulting
and services, 24.6 percent in Products, and 8.2 percent in administration.
The average age of the employees is 36.0 (36.5) years. Of the employees, 32.8
percent have a Master's degree and 35.1 percent have a Bachelor's degree. Women
account for 28.2 percent of employees, men for 71.8 percent.
Geographical distribution of personnel:
+-----------------------------------------------------+
| |
|Personnel |
|(employed. |
|on 7-9/ 7-9/ Change, 1-9/ 1-9/ Change, 1-12/|
|average) 2010 2009 % 2010 2009 % 2009|
+-----------------------------------------------------+
|Finland 547 458 19.3 525 452 16.1 454|
| |
|Scandinavia 124 135 -8.4 124 137 -8.9 135|
| |
|Europe 126 116 8.6 124 119 4.2 119|
| |
|Other 57 46 25.5 53 36 48.3 39|
+-----------------------------------------------------+
|Group total 854 755 13.1 826 743 11.1 747|
+-----------------------------------------------------+
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 1.4 percent to EUR 11 641 thousand
(EUR 11 478 thousand).
Net sales of the Finnish and Russian business operations increased by 14.7
percent during the third quarter to EUR 10 493 thousand (EUR 9 146 thousand).
There are currently 8 resellers in all in the area and the number of personnel
averaged 547 (458) during the third quarter.
Scandinavia
Basware's Nordic organization consists of a centrally directed Scandinavian
(Sweden, Denmark and Norway) unit.
Net sales of the Scandinavian business operations increased by 10.9 percent to
EUR 4 994 thousand (EUR 4 505 thousand). The profitability of the operations
increased by 319.3 percent and operating profit was EUR 890 thousand (EUR 212
thousand).
Business operations are mainly handled by the own organization and there were
124 (135) 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.
Net sales in the Europe segment increased by 16.5 percent in the third quarter
and totaled EUR 4 782 thousand (EUR 4 101 thousand). The profitability of the
operations improved by 9.9 percent and operating profit was EUR 419 thousand
(EUR 465 thousand).
There are 35 resellers in Europe, and Basware personnel averaged 126 (116)
during the third quarter.
Other
Business operations in North America and Australia are reported in this segment.
Net sales of the area decreased by -21.9 percent in the third quarter to EUR
3 111 thousand (EUR 3 980 thousand). The profitability of the operations grew by
78.0 percent and operating profit was EUR 269 thousand (EUR 1 223 thousand). Net
sales and operating profit in Q3 decreased because the Q3 comparison figure
included revenue of EUR 1.9 million, which is a part of one of Basware's largest
license deals closed in Q3/2009.
At the end of the period, there were 9 resellers in the segment. On average,
there were 57 (46) employees in the area.
OTHER EVENTS OF THE FINANCIAL PERIOD
Basware Board of Directors approved in its meeting on July 8, 2010 the
subscription of total of 79 200 shares subscribed for with Basware Warrant
Programs. The share subscriptions were based on the Warrant Program 2006 series
C warrants (39 000 shares) and Warrant Program 2007 series E warrants (40 200
shares).
Basware announced two notices of changes in ownership when the total number of
shares held by Nordea Rahastoyhtiö Suomi was below 5% of Basware Corporation's
share capital on July 26, 2010 and above 5% on July 30, 2010.
Strategy
Basware continued to develop its strategy within the Basware Responsive Strategy
framework. The company's Board of Directors reviewed the current strategic
guidelines during the third quarter. The company's long-term targets remained
unchanged. The target is to grow annually more than 10% in License Sales,
Maintenance, and Professional Services, and more than 50% in Automation
Services. The company's long-term target for operating profit margin is 10%-20%.
Basware has successfully implemented its strategy in all areas despite the
challenging market conditions. The strategic changes made in 2009 to develop
Automation Services have turned out to be the right ones, and we have achieved
global delivery capability in Automation Services.
The company will continue and increase its investments in Automation Services,
particularly with regard to sales and marketing, targeting the European and
North American markets. In addition, new service packages will be developed in
Automation Services, and particular attention will be paid to securing and
managing global customer accounts. Basware aims to become the world's leading
company in e-invoicing.
The geographical strategy remained unchanged. North America is the company's
most significant growth market. Basware has succeeded in increasing its net
sales in the North American market, and additional investments will be made to
continue rapid growth. The most significant strategic European target countries
are the United Kingdom, France, and Germany.
The development of the office in India has been one of the most significant
internal strategic investments in expanding the operations of the R&D unit and
in the e-invoicing validation service. The Indian office will be expanded
further by moving also new functions there, which will enable cost-efficient
expansion of operations.
The company will continue the regular review and development of its strategy,
based on which the company's strategy will be adapted to changing market
conditions as required.
SHARE AND SHAREHOLDERS
Basware Corporation's share capital totaled EUR 3 506 677.20 at the end of the
period and the number of shares was 11 688 924.
Share price and trade
In the third quarter, the highest price of the share was EUR 20.10 (EUR 11.49),
lowest price was EUR 15.00 (EUR 6.60) and closing price was EUR 19.40 (EUR
10.72). The average price of the share was EUR 17.81 (EUR 9.29).
A total of 1 565 754 (1 297 031) shares were traded during the financial period
which is the equivalent of 13.7 percent (11.4%) of the average number of shares.
Market capitalization with the period's closing price on September 30, 2010 was
EUR 225 013 306 (EUR 121 970 273).
Shareholders
Basware had 16 041 (16 668) shareholders on September 30, 2010 including
nominee-registered holdings (8). Nominee-registered holdings accounted for 10.4
percent of the total number of shares.
The company holds 90 300 Basware Corporation shares, corresponding to
approximately 0.78% of all shares in the company.
Basware Board of Directors approved in its meeting on July 8, 2010 the
subscription of total of 79 200 shares subscribed for with Basware Warrant
Programs. The share subscriptions were based on the Warrant Program 2006 series
C warrants (39 000 shares) and Warrant Program 2007 series E warrants (40 200
shares).
GOVERNANCE
The Annual General Meeting of Shareholders on February 18, 2010, confirmed the
number of Board members as six. The Annual General Meeting resolved to agree on
the proposal and elected Matti Copeland, Sakari Perttunen, Pentti Heikkinen,
Eeva Sipilä, 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
18, 2010.
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.
Market forecasts released in March-September 2010 expect the software purchases
to increase by 7.5 percent globally and 8.3 percent in the US in 2010.
The IT services market growth is expected to be slightly lower than Q2 estimate,
approximately 5 percent globally and 3.5 percent in the US in 2010, turning to
7 percent growth in 2011. However, services market growth in Purchase to Pay
business is estimated to grow substantially, 7 percent in 2010 and over 10
percent in 2011.
The global economic uncertainty continues, which might decrease companies'
willingness to invest also in the future. This might have an unfavorable impact
on the development of the company's net sales and profitability.
Previously in times of economic uncertainty, the demand for the company's
products and services has remained more positive than the general market, as the
company's software solutions generate cost savings.
Typically, in uncertain economic times 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.
The Group's main currency is the euro, accounting for approximately 61 percent
of net sales in 2009 (approximately 67% in 2008). The significance of exchange
rate fluctuations between the euro and other currencies will increase hand in
hand with the share of international operations. The company did not realize
hedging for exchange rate fluctuations during the financial period as the
foreign-currency-denominated cash flow in the subsidiaries did not exceed the
set annual foreign-currency-specific limit for hedging measures.
Basware's objective is to become the world's leading company in e-invoicing. E-
invoicing and the supporting Scan and Capture services, included in Automation
Services, also target suppliers and buyers outside Basware's existing customer
base, which increases the customer potential. The company's long-term objective
is an annual growth of more than 50 percent in Automation Services. SaaS and e-
invoicing are scalable business models with a high business potential. The
realization of this growth potential requires a new operating model as well as
active and continuous development of competencies because of the strong growth
of the number of customers and transaction volumes. These include sales and
commissioning as well as customer support and product development.
No significant changes have taken place in Basware's short-term risks and
uncertainties during the financial period.
EVENTS AFTER THE FINANCIAL PERIOD
Basware acquired TNT Post's Connectivity operations, which is a part of TNT
Post's electronic invoicing operations in the Netherlands. TNT Post's
Connectivity operations has over 100 e-invoice customers and the estimated
amount of annual transactions is close to 1 million.
The Connectivity e-invoice services of TNT Post's customers will be gradually
transferred to Basware's e-invoice service. The transfer is estimated to be
completed by the end of 2010. Additionally 2 employees will join Basware in
connection with the acquisition.
FUTURE OUTLOOK
Market forecasts released in March-September 2010 expect the software purchases
to increase by 7.5 percent globally and 8.3 percent in the US in 2010.
The IT services market growth is expected to be slightly lower than Q2 estimate,
approximately 5 percent globally and 3.5 percent in the US in 2010, turning to
7 percent growth in 2011. However, services market growth in Purchase to Pay
business is estimated to grow substantially, 7 percent in 2010 and over 10
percent in 2011.
Basware's direct competitors are primarily locally operating and often smaller
companies. In North America in particular, the company also has larger
competitors. especially in the field of procurement management. Developers of
document management, scanning and workflow 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
will have a positive impact on the competitiveness.
Automation Services increase the long-term predictability and transparency of a
company's net sales and profitability. In 2009, revenue from continuous services
(including maintenance) accounted for more than 40 percent of the company's
total revenue. In order to support the sales of invoice automation solutions,
Basware launched a mid-market SaaS (Software as a Service) solution. The
solution was launched during the second quarter in North America and will be
launched in the Central European market during the last two quarters.
Basware aims to become a leading company in e-invoicing worldwide. E-invoicing
and supporting Connectivity Services are targeted to connect suppliers and
buyers also outside of Basware's existing software customer base, leading into a
higher potential.
The company's long-term target is to grow annually more than 50% in Automation
Services. SaaS and e-invoicing are scalable models with a high business
potential. A growth investment program of Basware Automation Services (SaaS.
Scan and Capture and e-invoicing) has been launched at the beginning of 2010,
and it is expected to promote the positive development of operations and order
backlog.
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. 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 2010. In particular,
possible acquisitions will aim at supporting Automation Services.
The Group's number of personnel will increase the most in Automation Services
and product development during the year. The number of personnel will increase
the most in India, which facilitates growth with a more moderate increase in
costs.
Due to the strong first half of the year, additional growth-related investments
will be made during the latter half of 2010. The growth investments will
particularly focus on the Automation Services business and research and
development activities.
Basware expects its net sales for 2010 to develop positively on the level of
2009. Operating profit (EBIT) for 2010 is expected to be from 10 to 15 percent
of net sales.
In Espoo, Finland, October 14, 2010
BASWARE CORPORATION
Board of Directors
For more information, please contact
CEO Ilkka Sihvo. Basware Corporation
Tel. +358 40 501 8251
Analyst and Press Briefing
Basware arranges today, October 14, 2010 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.
A conference call for analysts who are not able to attend the briefing will take
place on October 14 at 15:00 EET. Please register throughIR@basware.com for
appropriate information.
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 from the beginning of the financial
period, the company has adopted certain new or amended IFRS standards and IFRIC
interpretations as described in the Financial Statements for 2009. However, the
adoption of these new and amended norms have not yet had an effect on the
reported figures in practice. In other respects, the same accounting policies
have been followed as in the Financial Statements for 2009.
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 2010 2009 % 2010 2009 % 2009
--------------------------------------------------------------------------------
NET SALES 23 202 21 609 7.4 72 946 66 054 10.4 92 654
Other operating income 43 47 -9.9 147 129 14.2 162
Materials and services -1 593 -1 395 14.2 -4 635 -4 557 1.7 -6 193
Employee benefit
expenses -11 959 -11 113 7.6 -40 846 -37 453 9.1 -52 294
Depreciation and
amortization -1 294 -1 106 17.0 -3 839 -3 176 20.9 -4 456
Other operating expenses -4991 -4 014 24.3 -15 222 -13 230 15.1 -18 048
--------------------------------------------------------------------------------
Operating profit 3 408 4 028 -15.4 8 550 7 767 10.1 11 824
Finance income -59 32 -282.2 61 187 -67.2 172
Finance expenses 42 -115 -136.9 -126 -401 -68.6 -406
--------------------------------------------------------------------------------
Profit before tax 3 391 3 946 -14.1 8 486 7 553 12.4 11 590
Income tax expense -697 -941 -25.9 -2 068 -2 486 -16.8 -2 517
--------------------------------------------------------------------------------
PROFIT FOR THE PERIOD 2 694 3 005 -10.3 6 418 5 066 26.7 9 074
Other comprehensive
income
Exchange differences
on translating foreign
operations -43 620 -106.9 651 2 017 -67.7 1 326
Income tax relating
to components of
other comprehensive
income -143 89 -259.4 324 45 620.9 -549
--------------------------------------------------------------------------------
Other comprehensive
income. net of tax -185 709 -126.2 976 2 062 -52.7 777
--------------------------------------------------------------------------------
TOTAL COMPREHENSIVE
INCOME 2 509 3 714 -32.4 7 394 7 128 3.7 9 850
Profit attributable
to:
Owners of the
parent 2 694 3 055 -11.8 6 418 5 066 26.7 9 074
Minority interest 0 -50 -100.0 0 0 0 0
--------------------------------------------------------------------------------
2 694 3 005 -10.3 6 418 5 066 26.7 9 074
Total comprehensive
income attributable to:
Owners of the
parent 2 509 3 763 -33.3 7 394 7 128 3.7 9 850
Minority interest 0 -50 -100.0 0 0 0 0
--------------------------------------------------------------------------------
2 509 3 714 -32.4 7 394 7 128 3.7 9 850
Earnings per share
(undiluted). EUR 0.23 0.27 -12.5 0.56 0.45 26.2 0.80
Earnings per share
(diluted). EUR 0.23 0.27 -13.2 0.56 0.45 25.2 0.80
GROUP BALANCE SHEET
EUR thousand 30.9.2010 30.9.2009 Change, % 31.12.2009
--------------------------------------------------------------------------------
ASSETS
NON-CURRENT ASSETS
Intangible assets 18 180 19 636 -7.4 20 291
Goodwill 31 977 31 283 2.2 31 119
Tangible assets 1 048 879 19.3 823
Available-for-sale investments 38 38 38
Long-term trade and other receivables 23 132 -82.4 124
Deferred tax assets 1 819 1 962 -7.2 2 199
--------------------------------------------------------------------------------
Non-current assets 53 085 53 928 -1.6 54 593
CURRENT ASSETS
Inventories 15 40 -62.1 33
Trade and other receivables 19 679 20 275 -2.9 19 684
Income tax receivables 634 3 132 -79.8 767
Financial assets at fair value through
profit or loss 34 32 4.4 34
Cash and cash equivalents 13 685 7 535 81.6 12 176
--------------------------------------------------------------------------------
Current assets 34 047 31 014 9.8 32 694
--------------------------------------------------------------------------------
TOTAL ASSETS 87 132 84 942 2.6 87 287
--------------------------------------------------------------------------------
EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Share capital 3 507 3 440 1.9 3 440
Issue of shares 9 100.0 140
Share premium account 1 187 69 1 623.1 69
Own shares -629 -629 -629
Fair value reserve and other reserves 34 795 33 598 3.6 33 598
Translation differences -2 239 -3 542 36.8 -3 214
Retained earnings 25 760 19 622 31.3 23 176
Minority interest 0
--------------------------------------------------------------------------------
Shareholders' equity 62 390 52 559 18.7 56 580
NON-CURRENT LIABILITIES
Deferred tax liability 3 806 3 852 -1.2 3 997
Interest-bearing liabilities 33 3 672 -99.1 3 674
Non-interest-bearing liabilities 457 242 89.0 110
--------------------------------------------------------------------------------
Non-current liabilities 4 296 7 766 -44.7 7 782
CURRENT LIABILITIES
Interest-bearing liabilities 3 551 5 563 -36.2 5 555
Trade payables and other liabilities 16 736 18 384 -9.0 17 039
Tax liability from income tax 160 670 -76.1 331
--------------------------------------------------------------------------------
Current liabilities 20 447 24 617 -16.9 22 926
--------------------------------------------------------------------------------
TOTAL EQUITY AND LIABILITIES 87 132 84 942 2.6 87 287
--------------------------------------------------------------------------------
GROUP STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Inv.
non- Retai- Mino-
Share- Share restr. ned rity
EUR holders Share premium Own equity Other Transl Earn- Inter-
thousand capital issue account shares res. res. diff. ings est Total
SHARE-
HOLDERS'
EQUITY
1.1.09 3 440 0 69 -271 33 058 540 -3 991 15 648 224 48 717
Compre-
hensive
income 450 6 678 7 128
Dividend
distri-
bution -2 623 -2 623
Granted
warrants 447 447
Repur-
chase
of own
shares -358 -358
Changes in
reporting
period -528 -224 -752
SHARE-
HOLDERS'
EQUITY
30.9.09 3 440 0 69 -629 33 058 540 -3 542 19 622 0 52 559
--------------------------------------------------------------------------------
EUR
thousand
--------------------------------------------------------------------------------
SHARE-
HOLDERS'
EQUITY
1.1.10 3 440 140 69 -629 33 058 540 -3 214 23 176 0 56 580
Compre-
hensive
income 976 6 418 7 394
Dividend
distri-
bution -4 100 -4 100
Granted
warrants 159 159
Changes in
reporting
period 66 -131 1 118 1 197 -107 2 357
--------------------------------------------------------------------------------
SHARE-
HOLDERS'
EQUITY
30.9.10 3 507 9 1 187 -629 34 254 540 -2 239 25 760 0 62 390
--------------------------------------------------------------------------------
GROUP CASH FLOW STATEMENT
1.1.- 1.1.- 1.1.-
EUR thousand 30.9. 2010 30.9.2009 31.12.2009
-------------------------------------------------------------------------------
Net cash from operating activities
Profit for the period 6 418 5 066 9 074
Adjustments for profit 5 971 5 877 7 832
Working capital changes 1 150 859 -136
Interest paid -47 -183 -192
Interest received 40 57 104
Other financial items in operating activities -50 -58 -30
Income taxes paid -2 115 -3 079 -1 920
-------------------------------------------------------------------------------
Net cash from operating activities 11 368 8 540 14 732
-------------------------------------------------------------------------------
Cash flows from investing activities
Purchase of tangible and intangible assets -1 668 -1 447 -3 135
Proceeds from sale of tangible and intangible
assets 0 1
Acquired subsidiaries -1 430 -2 104 -1 875
-------------------------------------------------------------------------------
Net cash used in investing activities -3 098 -3 550 -5 009
-------------------------------------------------------------------------------
Cash flows from financing activities
Minority's capital investment 2 381 140
Repayments of short-term loans -2 000 -3 558
Repayments of long-term borrowings -3 550 -3 558
Share repurchase -358 -358
Repayments of financial lease liabilities 0
Dividends paid -4 100 -2 623 -2 623
-------------------------------------------------------------------------------
Net cash used in financing activities -7 269 -6 539 -6 358
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Net change in cash and cash equivalents
according to cash flow statement 1 000 -1 549 3 324
-------------------------------------------------------------------------------
Cash and cash equivalents at beginning of
period 12 210 8 777 8 777
Effects of exchange rate changes on cash and
cash equivalents 508 339 109
Cash and cash equivalents at end of period 13 719 7 567 12 210
GROUP QUARTERLY INCOME STATEMENT
1-3/ 1-3/ 4-6/ 4-6/ 7-9/ 7-9/ 10-12/
EUR thousand 2010 2009 2010 2009 2010 2009 2009
--------------------------------------------------------------------------------
NET SALES 23 132 21 717 26 612 22 729 23 202 21 609 26 600
Other operating income 50 30 55 52 43 47 34
Materials and services -1 288 -1 552 -1 754 -1 611 -1 593 -1 395 -1 636
Employee benefit
expenses -13 703 -12 896 -15 184 -13 444 -11 959 -11 113 -14 841
Depreciation and
amortization -1 236 -1 004 -1 309 -1 067 -1 294 -1 106 -1 280
Other operating expenses -4 818 -4 703 -5 414 -4 513 -4 991 -4 014 -4 819
--------------------------------------------------------------------------------
Operating profit 2 136 1 592 3 006 2 146 3 408 4 028 4 058
% 9.2% 7.3% 11.3% 9.4% 14.7 % 18.6% 15,3 %
Finance income 116 124 4 30 -59 32 -15
Finance expenses -111 232 -58 -54 42 -115 -5
--------------------------------------------------------------------------------
Profit before tax 2 142 1 484 2 953 2 122 3 391 3 946 4 038
% 9.3% 6.8% 11.1% 9.3% 14.6 % 18.3% 15,2 %
Income tax expense -560 -818 -811 -727 -697 -941 -30
--------------------------------------------------------------------------------
PROFIT FOR THE PERIOD 1 582 666 2 142 1 396 2 694 3 005 4 007
% 6.8% 3.1% 8.0% 6.1% 11.6 % 13.9% 15,1%
Changes of ownership
Basware increased its shareholding in Basware Einvoices Oy to 100 percent on
January 30, 2009, by acquiring 12.55 percent 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 EUR 293 was paid in February
2010 as an additional purchase price based on the business volume for 2009.
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, in February 2010 Basware paid an
additional purchase price of NOK 4 434 thousand (approximately EUR 559 thousand)
determined on the basis of the volume of the purchased operations' service sales
in 2009.
Basware FIMA Oy was merged to the parent company during the second quarter of
2010.
Basware Corporation acquired the entire share capital of TAG Services Pty Ltd in
Australia on July 1, 2009. 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. The additional acquisition price 2.0 million
Australian dollars (approximately EUR 1.4 million) was paid in August 2010.
COMMITMENTS AND CONTINGENT LIABILITIES
EUR thousand 30.9.2010 30.9.2009 31.12.2009
---------------------------------------------------------------------
Own guarantees
Business mortgages of own debts 1 200 1 200 1 200
Commitments on behalf of
subsidiaries and group companies
Guarantees 1 123 1 122 1 075
Other own guarantees
Lease liabilities
Current lease liabilities 859 880 970
Lease liabilities maturing in 1-5 years 823 800 895
---------------------------------------------------------------------
Total 1 682 1 680 1 865
Other rental liabilities
Current rental liabilities 2 415 2 419 2 333
Rental liabilities maturing in 1-5 years 7 862 3 309 2 924
Rental liabilities maturing later 0 1 140 1 071
---------------------------------------------------------------------
Total 10 277 6 869 6 328
---------------------------------------------------------------------
Other own contingent liabilities. total 11 959 8 549 8 193
---------------------------------------------------------------------
SEGMENT REPORTING
Net sales by market area
+-----------------------------------------------------------------+
|Net sales 7-9/ 7-9/ Change, 1-9/ 1-9/ Change, 1-12/|
|(EUR thousand) 2010 2009 % 2010 2009 % 2009|
+-----------------------------------------------------------------+
|Finland 11 641 11 478 1.4 37 595 35 215 6.8 50 486|
| |
|Scandinavia 4 994 4 505 10.9 16 480 16 100 2.4 22 236|
| |
|Europe 4 782 4 104 16.5 15 388 13 087 17.6 18 717|
| |
|Other 3 111 3 980 -21.9 8 203 6 303 30.1 9 201|
| |
|Sales between |
|segments -1 326 -2 459 46.1 -4 720 -4 652 -1.5 -7 985|
+-----------------------------------------------------------------+
|Group total 23 202 21 609 7.4 72 946 66 054 10.4 92 654|
+-----------------------------------------------------------------+
+------------------------------------------------------------------------------+
|Operating profit 7-9/ 7-9/ Change, 1-9/ 1-9/ Change, 1-12/|
|(EUR thousand) 2010 2009 % 2010 2009 % 2009|
+------------------------------------------------------------------------------+
|Finland 2 238 2 546 -12.1 4 946 4 690 5.5 7 714|
| |
|Scandinavia 890 212 319.3 2 578 2 128 21.2 3 169|
| |
|Europe 419 465 -9.9 1 611 664 142.5 1 566|
| |
|Other 269 1 223 -78.0 640 1 258 -49.1 741|
| |
|Operating profit between |
|segments -408 -417 2.2 -1 224 -972 -26.0 -1 365|
+------------------------------------------------------------------------------+
|Group total 3 408 4 028 -15.4 8 550 7 767 10.1 11 824|
+------------------------------------------------------------------------------+
+-------------------------------------------------------+
|Personnel |
|(employed. On 7-9/ 7-9/ Change, 1-9/ 1-9/ Change, 1-12/|
|average) 2010 2009 % 2010 2009 % 2009|
+-------------------------------------------------------+
|Finland 547 458 19.3 525 452 16.1 454|
| |
|Scandinavia 124 135 -8.4 124 137 -8.9 135|
| |
|Europe 126 116 8.6 124 119 4.2 119|
| |
|Other 57 46 25.5 53 36 48.3 39|
+-------------------------------------------------------+
|Group total 854 755 13.1 826 743 11.1 747|
+-------------------------------------------------------+
Net sales by business
+------------------------------------------------------------------------+
|Net sales 7-9/ 7-9/ Change, 1-9/ 1-9/ Change, 1-12/|
|(EUR thousand) 2010 2009 % 2010 2009 % 2009|
+------------------------------------------------------------------------+
|License Sales 4 915 5 803 -15.3 16 558 15 955 3.8 23 755|
| |
|Maintenance 8 277 7 405 11.8 24 522 21 843 12.3 29 757|
| |
|Professional Services 7 059 6 517 8.3 23 511 22 786 3.2 31 174|
| |
|Automation Services 2 952 1 884 56.7 8 355 5 469 52.8 7 967|
+------------------------------------------------------------------------+
|Group total 23 202 21 609 7.4 72 946 66 054 10.4 92 654|
+------------------------------------------------------------------------+
Net sales by the location of customer:
+-----------------------------------------------------------------+
|Net sales 7-9/ 7-9/ Change, 1-9/ 1-9/ Change, 1-12/|
|(EUR thousand) 2010 2009 % 2010 2009 % 2009|
+-----------------------------------------------------------------+
|Finland 10 420 9 084 14.7 33 535 30 181 11.1 42 449|
| |
|Scandinavia 4 857 4 893 -0.7 15 859 15 716 0.9 21 719|
| |
|Europe 4 629 3 921 18.1 14 864 12 994 14.4 18 065|
| |
|Other 3 295 3 711 -11.2 8 688 7 163 21.3 10 421|
+-----------------------------------------------------------------+
|Group total 23 202 21 609 7.4 72 946 66 054 10.4 92 654|
+-----------------------------------------------------------------+
GROUP KEY INDICATORS
1-9/ 1-9/ 1-9/ 1-12/
EUR thousand 2010 2009 2008 2009
--------------------------------------------------------------------------------
Net sales 72 946 66 054 59 804 92 654
Growth of net sales,% 10.4 % 10.5% 19.4% 7.6%
EBITDA 12 389 10 943 6 611 16 280
% of net sales 17.0 % 16.6% 11.1% 17.6%
Operating profit before IFRS3
amortization 10 214 9 188 5 146 13 788
% of net sales 14.0 % 13.9% 8.6% 14.9%
Operating profit 8 550 7 767 4 557 11 824
Growth of operating profit,% 10.1 % 70.4% -18.4% 36.2%
% of net sales 11.7 % 11.8% 7.6% 12.8%
Profit before tax 8 486 7 553 4 548 11 590
% of net sales 11.6% 11.4% 7.6% 12.5%
Profit for the period 6 418 5 066 3 290 9 074
% of net sales 8.8 % 7.7% 5.5% 9.8%
Return on equity, % 14.4 % 13.3% 9.2% 17.2%
Return on investment, % 17.4 % 17.1% 11.0% 18.8%
Interest-bearing liabilities 3 584 9 235 12 679 9 230
Cash and liquid assets *) 13 719 7 567 8 680 12 210
Gearing, % -16.2 % 3.2% 8.3% -5.3%
Equity ratio, % 71.6 % 61.9% 60.0% 64.8%
Total assets 87 132 84 942 80 537 87 287
Gross investments **) 3 426 7 084 11 262 7 448
% of net sales 4,7 % 10.7% 18.8% 8.0%
Capital expenditure 686 334 684 2 047
% of net sales 0.9 % 0.5% 1.1% 2.2%
Research and development costs 10 797 10 934 11 134 14 781
% of net sales 14.8 % 16.6% 18.6% 16.0%
R&D personnel at end of period 213 184 162 195
Personnel on average during the
period 826 743 675 747
Personnel at end of period 866 755 686 761
Increase in personnel, % 14.7 % 10.1% 8.9% 4.1%
Earnings per share, EUR 0,56 0.45 0.28 0.80
Earnings per share (diluted), EUR 0.56 0.45 0.28 0.80
Equity per share. EUR 5.34 4.58 4.19 4.93
P/E ratio 34.53 24.09 24.97 18.21
Share price performance
lowest share price 15.00 6.60 6.14 6.60
highest share price 20.10 11.49 10.45 14.66
average share price 17.81 9.29 7.70 10.79
closing share price 19.40 10.72 7.00 14.52
Market capitalization at end of
period 225 013 306 121 970 273 80 276 868 165 206 004
Number of traded shares 1 565 754 1 297 031 1 808 869 2 038 565
% of average number of shares 13.7% 11.4% 15.8% 17.9%
Average number of shares
- undiluted 11 422 987 11 383 265 11 468 124 11 381 905
- diluted 11 517 522 11 383 265 11 468 124 11 381 905
*) 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, 2010
Shares. pcs %
1. Sihvo, Ilkka 1 081 800 9.3
2. Eräkangas, Kirsi 1 001 800 8.6
Eräkangas, Kirsi 691 400 5.9
Eräkangas, Lotta 310 400 2.7
3. Ilmarinen Mutual Pension Insurance Company 994 298 8.5
4. Vaajoensuu, Hannu 962 100 8.2
Havacment Oy 266 500 2.3
Vaajoensuu, Hannu 528 000 4.5
Vaajoensuu, Matias 83 800 0.7
Vaajoensuu, Petra 83 800 0.7
5. Perttunen, Sakari 830 400 7.1
6 Pöllänen, Antti 586 823 5.0
Launimo, Essi 100 208 0.9
Pöllänen, Antti 486 615 4.2
7. Nordea Nordic Small Cap 576 033 4.9
8. Mandatum Life Insurance Company Ltd, 550 000 4.7
9. Fondita Nordic Micro Cap Sijoitusrahasto 300 000 2.6
10. Kaleva Mutual Insurance Company 242 690 2.1
11. Veritas Pension Insurance Company 226 000 1.9
12. Perttunen, Meimi 215 400 1.8
13. Investment Fund Aktia Capital 210 863 1.8
14. Ahonen, Asko 188 736 1.6
15. Basware Oyj 90 300 0.8
16. Vaajoensuu, Sara 83 700 0.7
17. Pavor Oy 75 052 0.6
18. Tietoklusteri Oy 74 600 0.6
19. Placeringsfonden Gyllenberg Small Firm 71 968 0.6
20. Sinkonen, Raija 70 000 0.6
20 largest shareholders total 8 432 563 72.1
Nominee registered shares 1 216 000 10.4
Others 2 040 361 17.5
Total 11 688 924 100.0
[HUG#1451832]
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