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
