BASWARE INTERIM REPORT JANUARY 1 - JUNE 30, 2010 (IFRS)
SUMMARY
January-June H1
- Net sales EUR 49 743 thousand (EUR 44 446 thousand) - growth 11.9
percent
- Operating profit EUR 5 143 thousand (3 738 thousand) - growth 37.6
percent
- Operating profit 10.3 percent of net sales (8.4%)
- International operations accounted for 53.5 percent of net sales (52.5%)
- growth 14.1 percent
- Automation Services increased by 50.7 percent
- Cash flows from operating activities were EUR 12 423 thousand (EUR
7 995 thousand)
- Earnings per share (diluted) EUR 0.32 (0.18) - growth 83.4 percent
April-June Q2
- Net sales EUR 26 612 thousand (EUR 22 729 thousand) - growth 17.1
percent
- Operating profit EUR 3 006 thousand (EUR 2 146 thousand) - growth 40.1
percent
- Operating profit 11.3 percent of net sales (9.4%)
- International operations accounted for 53.3 percent of net sales (52.6%)
- growth 18.8 percent
- Automation Services increased by 33.2 percent
- Earnings per share (diluted) EUR 0.19 (0.12) - growth 54.8 percent
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 interim report is unaudited.
GROUP KEY FIGURES
4-6/ 4-6/ Change, 1-6/ 1-6/ Change, 1-12/
EUR thousand 2010 2009 % 2010 2009 % 2009
--------------------------------------------------------------------------------
Net sales 26 612 22 729 17.1% 49 743 44 446 11.9% 92 654
EBITDA 4 315 3 213 34.3% 7 688 5 809 32.3% 16 280
Operating profit before IFRS3
amortization 3 566 2 559 39.4% 6 258 4 592 36.3% 13 788
Operating profit 3 006 2 146 40.1% 5 143 3 738 37.6% 11 824
% of net sales 11.3% 9.4% 10.3% 8.4% 12.8%
Profit before tax 2 953 2 122 39.1% 5 095 3 607 41.3% 11 590
Profit for the period 2 142 1 396 53.5% 3 724 2 062 80.6% 9 074
Return on equity, % 14.7% 11.5% 12.8% 8.4% 17.2%
Return on investment, % 18.9% 11.9% 16.0% 11.9% 18.8%
Liquid assets *) 18 554 9 516 95.0% 18 554 9 516 95.0% 12 210
Gearing, % -21.8% 3.3% -21.8% 3.3% -5.3%
Equity ratio, % 62.3% 58.2% 62.3% 58.2% 64.8%
Earnings per share, EUR 0.19 0.12 55.8% 0.33 0.18 84.9% 0.80
Earnings per share (diluted),
EUR 0.19 0.12 54.8% 0.32 0.18 83.4% 0.80
Equity per share, EUR 5.16 4.25 21.4% 5.16 4.25 21.4% 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: "The second quarter of the year was an excellent
success. Our net sales increased by 17.1% and our operating profit by as much as
40.1%. During the first two quarters, we exceeded our net sales and operating
profit objectives. H1 net sales rose to EUR 49.7 million, up 11.9%. Operating
profit increased by 37.6% to EUR 5.1 million.
During the second quarter, we succeeded in entering into several new Automation
Services agreements with international major customers, which proves that our
product offering is capable of meeting demanding customer expectations and
requirements. These agreements will have an effect on our net sales over several
years. The growth of Automation Services is also supported by the mid-market
SaaS solution launched during the second quarter in North America. The launch
will continue in the Central European market during the second half of the year.
Basware's license sales and services grew at a rapid rate during the second
quarter. License sales increased by 24.9%. Regionally, the European and North
American operations grew the best. Net sales increased by 28.2 percent in Europe
with a considerable improvement in operating profit. The North American net
sales also continued solid growth compared to the previous year.
An excellent first half of the year provides a solid basis for the rest of the
year. The market seems slightly more positive than the year before, which is
supported by favorable development in license sales and updated market analyst
forecasts. With regard to profitability, we are already within the full-year
profit targets, which offers us a great opportunity for reaching a good profit
level."
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 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 |
|(EUR Change, 1-6/ Change, |
|thousand) 4-6/ 2010 4-6/ 2009 % 1-6/ 2010 2009 % 1-12/ 2009|
+------------------------------------------------------------------------------+
|Finland 13 763 12 406 10.9 25 953 23 737 9.3 50 486|
| |
|Scandinavia 6 232 6 278 -0.7 11 486 11 595 -0.9 22 236|
| |
|Europe 5 538 4 318 28.2 10 606 8 984 18.1 18 717|
| |
|Other 2 719 1 128 141.0 5 092 2 323 119.2 9 201|
| |
|Sales |
|between |
|segments -1 640 -1 402 -17.1 -3 394 -2 193 -54.8 -7 985|
+------------------------------------------------------------------------------+
|Group total 26 612 22 729 17.1 49 743 44 446 11.9 92 654|
+------------------------------------------------------------------------------+
The geographical division of net sales by the location of customers:
+------------------------------------------------------------------------------+
|Net sales |
|(EUR Change, 1-6/ Change, |
|thousand) 4-6/ 2010 4-6/ 2009 % 1-6/ 2010 2009 % 1-12/ 2009|
+------------------------------------------------------------------------------+
|Finland 12 419 10 774 15.3 23 114 21 098 9.6 42 449|
| |
|Scandinavia 6 007 5 613 7.0 11 001 10 823 1.7 21 719|
| |
|Europe 5 320 4 391 21.1 10 235 9 073 12.8 18 065|
| |
|Other 2 866 1 950 47.0 5 393 3 453 56.2 10 421|
+------------------------------------------------------------------------------+
|Group total 26 612 22 729 17.1 49 743 44 446 11.9 92 654|
+------------------------------------------------------------------------------+
Basware Group's net sales for the first two quarters increased by 11.9 percent
to EUR 49 743 thousand (EUR 44 446 thousand). During the second quarter, net
sales increased by 17.1 percent to EUR 26 612 thousand (EUR 22 729 thousand).
The Company's license sales increased by 14.7 percent during the period,
amounting to 23.4 percent (22.8%) of net sales. Maintenance revenue increased by
12.5 percent and accounted for 32.7 percent (32.5%) of net sales. Professional
Services revenue increased by 1.1 percent and accounted for 33.1 percent (36.6%)
of net sales.
During the period, Automation Services increased by 50.7 percent and accounted
for 10.9 percent (8.1%) of net sales. The estimated revenue to be recognized for
current Automation Services agreements in the next twelve months is EUR 11.3
million (growth of 7.0 percent compared to the estimate made at the end of the
previous quarter). The transaction volume processed by the Automation Services
business was 6.1 million during the reporting period.
In April-June, 26.3 percent (24.1%) of net sales consisted of license sales,
increasing by 27.8 percent. Automation Services sales accounted for 10.9 percent
(9.6%) of net sales in the second quarter, up 33.2 percent. Maintenance revenue
accounted for 30.6 percent (32.1%) of net sales during the second quarter and
grew by 11.4 percent. Professional Services revenue represented 32.2 percent
(34.2%) of net sales and grew by 10.4 percent.
The international share of Basware's net sales was 53.5 percent (52.5%) in the
period. International operations grew by 14.1 percent.
FINANCIAL PERFORMANCE
Basware's operating profit for the period increased by 37.6 percent to EUR
5 143 thousand (EUR 3 738 thousand). Operating profit represented 10.3 percent
(8.4%) of net sales.
Operating profit increased by 40.1 percent during the second quarter to EUR
3 006 thousand (EUR 2 146 thousand). Operating profit represented 11.3 percent
(9.4%) of net sales.
The geographical division of operating profit by the location of assets:
+------------------------------------------------------------------------------+
|Operating |
|profit |
|(EUR Change, 1-12/|
|thousand) 4-6/ 2010 4-6/ 2009 % 1-6/ 2010 1-6/ 2009 Change, % 2009|
+------------------------------------------------------------------------------+
|Finland 1 616 1 295 24.8 2 709 2 144 26.3 7 714|
| |
|Scandinavia 926 1 249 -25.9 1 688 1 915 -11.8 3 169|
| |
|Europe 683 -32 2 206.9 1 191 199 499.4 1 566|
| |
|North America 191 -102 286.8 370 35 956.5 741|
| |
|Operating |
|profit |
|between |
|segments -410 -263 -55.9 -816 -555 -47.1 -1 365|
+------------------------------------------------------------------------------+
|Group total 3 006 2 146 40.1 5 143 3 738 37.6 11 824|
+------------------------------------------------------------------------------+
The Company's fixed costs were EUR 39 118 thousand (EUR 35 556 thousand) in the
period, up 10.0 percent on the corresponding period the previous year. Personnel
costs made up 73.8 percent (74.1%) or EUR 28 887 thousand (EUR 26 340 thousand)
of the fixed costs.
Research and development costs totaled EUR 7 836 thousand (EUR 7 530 thousand),
of which EUR 641 thousand (EUR 892 thousand) or 8.2 percent (11.8%) was
capitalized during the period. The costs increased by 4.1 percent compared with
the same reporting period in 2009. Amortization of capitalized research and
development costs totaled EUR 914 thousand (EUR 778 thousand).
The Company's finance income and finance expenses were EUR -48 thousand (EUR
-132 thousand). Profit before tax was EUR 5 095 thousand (EUR 3 607 thousand)
and profit for the period was EUR 3 724 thousand (EUR 2 062 thousand). Undiluted
earnings per share were EUR 0.33 (EUR 0.18).
FINANCE AND INVESTMENTS
Basware Group's total assets on the balance sheet at the end of the period were
EUR 96 171 thousand (EUR 84 060 thousand). The Company's cash and liquid assets
were EUR 18 554 thousand (EUR 9 516 thousand), of which cash and cash
equivalents were EUR 18 520 thousand (EUR 9 484 thousand) and financial assets
at fair value through profit or loss were EUR 34 thousand (EUR 32 thousand).
Equity ratio was 62.3 percent (58.2%) and gearing was -21.8 percent (3.3%). The
Company's interest-bearing liabilities totaled EUR 5 507 thousand (EUR 11 115
thousand), of which current liabilities accounted for EUR 3 551 thousand (EUR
5 563 thousand). Return on investment was 16.0 percent (12.8%) and return on
equity 12.8 percent (8.4%).
Cash flows from operating activities were EUR 12 423 thousand (EUR 7 995
thousand). Cash flows from investments were EUR -970 thousand (EUR -2 734
thousand).
The Company's capital expenditure, resulting from regular additional and
replacement investments required for growth, was EUR 341 thousand (EUR 230
thousand) in the period. Gross investments which include - in addition to those
mentioned above - capitalized research and development costs totaled EUR 1 264
thousand (EUR 2 598 thousand).
Amortization of intangible assets totaled EUR 2 267 thousand (EUR 1 073
thousand). There are no indications of impairments of assets.
RESEARCH, DEVELOPMENT AND NEW PRODUCTS
Basware's research and development costs were EUR 7 836 thousand (EUR 7 530
thousand) in the period, corresponding to 15.8 percent (16.9%) of net sales.
Research and development costs increased by 4.1 percent compared with the same
period last year.
A total of 200 (187) people worked in Producs at the end of June 2010. The
Products unit is expanding at the fastest rate in India.
PERSONNEL
Basware employed 812 (738) people on average during the first two quarters and
833 (742) at the end of the period. The number of personnel increased by 91
persons and by 12.3 percent compared with the same period the previous year. The
increase in the number of personnel is due to acquisitions and an increase in
the number of employees in the Indian unit.
The share of personnel working in foreign units has increased compared with the
previous year. At the end of the period, 51.1 percent (46.1%) of Basware
personnel worked outside of Finland and 48.9 percent (53.9%) in Finland. 15.5
percent of the personnel work in sales and marketing, 51.9 percent in consulting
and services, 24.0 percent in Products, and 8.6 percent in administration.
The average age of employees is 35.8 (36.1) years. Of the employees, 32.3
percent have a Master's degree and 36.1 percent have a Bachelor's degree. Women
account for 29.7 percent of employees, men for 70.3 percent.
Geographical distribution of personnel:
+------------------------------------------------------------------------------+
|Personnel |
|(employed, Change, Change, |
|on average) 4-6/ 2010 4-6/ 2009 % 1-6/ 2010 1-6/ 2009 % 1-12/ 2009|
+------------------------------------------------------------------------------+
|Finland 526 458 14.9 514 449 14.5 454|
| |
|Scandinavia 123 137 -10.0 125 138 -9.2 135|
| |
|Europe 124 119 4.2 123 121 2.1 119|
| |
|Other 54 31 75.0 51 31 65.2 39|
+------------------------------------------------------------------------------+
|Group total 827 744 11.1 812 738 10.1 747|
+------------------------------------------------------------------------------+
BUSINESS OPERATIONS
Finland
The Finland segment includes operations in Finland, Russia, the Asia-Pacific
region (excluding Australia) and corporate services. Net sales for the period
increased by 10.9 percent to EUR 13 763 thousand (EUR 12 406 thousand).
Net sales of the Finnish and Russian business operations increased by 10.2
percent to EUR 12 489 thousand (EUR 11 333 thousand).
There are currently 8 resellers in all in the area and the number of personnel
averaged 526 (458) during the period.
Scandinavia
Basware's Nordic organization consists of a centrally directed Scandinavian
(Sweden, Denmark and Norway) unit.
Net sales in Scandinavia decreased by 0.7 percent to EUR 6 232 thousand (EUR
6 278 thousand). The profitability of the operations decreased by 25.9 percent
and operating profit was EUR 926 thousand (EUR 1 249 thousand).
Business operations are mainly handled by the own organization and there were
123 (137) 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 28.2 percent to EUR 5 538 thousand
(EUR 4 318 thousand). The profitability of the operations improved by 2 206.9
percent and operating profit was EUR 683 thousand
(EUR -32 thousand).
There are 35 resellers in Europe, and Basware personnel averaged 124 (119)
during the period.
Other
Business operations in North America and Australia are reported in this segment.
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.
Net sales of the area increased by 141.0 percent to EUR 2 719 thousand (EUR
1 128 thousand). The profitability of the operations has improved by 286.8
percent and operating profit was EUR 191 thousand (EUR -102 thousand).
At the end of the period, there were 9 resellers in the Other segment. On
average, there were 54 (31) employees in the area.
OTHER EVENTS OF THE PERIOD
Basware FIMA Oy was merged to the parent company during the second quarter of
2010.
Strategy
Basware has updated its strategy for 2010-2012. The Basware Responsive Strategy
framework allows the company to act with agility and sensitivity based on the
company's situation, market trends and other changes. The Responsive Strategy
framework includes follow-up and analysis of internal and external trends as
well as the company's vision, mission and operating principles. Basware's
operating principles comprise of the company's values, corporate governance and
responsibility.
The company aims at maintaining its position as a leading global supplier of
invoice automation and procurement solutions. In order to support the sales of
invoice automation solutions, Basware is launching a mid-market SaaS (Software
as a Service) solution. The solution was launched in North America during the
second quarter and thereafter in select markets.
Basware also 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, Connectivity Services and e-invoicing are scalable models and
offer an increasing profit potential in the long run. The company's long-term
target is to grow annually more than 10% in License Sales, Maintenance and
Professional Services. The target for operating profit margin is 10%-20%.
SHARE AND SHAREHOLDERS
Basware Corporation's share capital totaled EUR 3 482 917.20 at the end of the
period and the number of shares was 11 609 724.
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.
Share price and trade
During the reporting period, the highest price of the share was EUR 19.60 (EUR
11.48), the lowest was EUR 15.00 (EUR 6.60) and the closing price was EUR 17.50
(EUR 11.40). The average price of the share was EUR 17.66 (EUR 8.57) during the
period.
A total of 1 385 665 (986 643) shares were traded during the period which is the
equivalent of 12.2 percent (8.7%) of the average number of shares. Market
capitalization with the period's closing price on June 30, 2010 was
EUR 201 589 920 (EUR 129 707 194).
Shareholders
Basware had 16 170 (16 770) shareholders on June 30, 2010 including
nominee-registered holdings (8). Nominee-registered holdings accounted for 10.3
(8.4) 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's Board of Directors approved in its meeting on July 8, 2010, the
subscription of a 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).
During the period, Basware announced notifications of change in ownership when
the total number of shares held by Ilmarinen Mutual Pension Insurance
Company represented over 5% of Basware Corporation's share capital and voting
rights on April 16, 2010.
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.
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.
Market forecasts released in March-June 2010 expect the software purchases to
increase by 7.5 percent globally and 8.3 percent in the US in 2010. The entire
IT services market is expected to grow by 7.2 percent globally and by 6.6
percent in the US in 2010. 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.
During times of economic uncertainty, companies' delinquency entries and the
number of bankruptcies have been increasing. Typically, companies may also
prolong the times of payments in order to free up working capital. Basware has
intensified its management of sales receivables, and business management
regularly monitors the payment of sales receivables as part of the management of
customer accounts.
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 REPORTING 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).
FUTURE OUTLOOK
Market forecasts released in March-June 2010 expect the software purchases to
increase by 7.5 percent globally and 8.3 percent in the US in 2010. The entire
IT services market is expected to grow by 7.2 percent globally and by 6.6
percent in the US in 2010.
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 and expanding
the Company's distribution channel in international markets.
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.
Espoo, Finland, July 12, 2010
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, July 12, 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 Monday,
July 12 at 13:30 EET. Please register throughIR@basware.com for appropriate
information.
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 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
1.4.- 1.4.- 1.1.- 1.1.- 1.1.-
30.6. 30.6. Change, 30.6. 30.6. Change, 31.12.
EUR thousand 2010 2009 % 2010 2009 % 2009
--------------------------------------------------------------------------------
NET SALES 26 612 22 729 17.1 49 743 44 446 11.9 92 654
Other operating income 55 52 5.8 104 81 28.2 162
Materials and services -1 754 -1 611 8.9 -3 042 -3 162 -3.8 -6 193
Employee benefit
expenses -15 184 -13 444 12.9 -28 887 -26 340 9.7 -52 294
Depreciation and
amortization -1 309 -1 067 22.7 -2 545 -2 071 22.9 -4 456
Other operating expenses -5 414 -4 513 20.0 -10 231 -9 216 11.0 -18 048
--------------------------------------------------------------------------------
Operating profit 3 006 2 146 40.1 5 143 3 738 37.6 11 824
Finance income 4 30 -86.4 120 155 -22.3 172
Finance expenses -58 -54 6.7 -168 -286 -41.3 -406
--------------------------------------------------------------------------------
Profit before tax 2 953 2 122 39.1 5 095 3 607 41.3 11 590
Income tax expense -727 11.6 -1 371 -1 545 -11.3 -2 517
--------------------------------------------------------------------------------
PROFIT FOR THE PERIOD 2 142 1 396 53.5 3 724 2 062 80.6 9 074
Other comprehensive
income
Exchange differences
on translating
foreign
operations 330 594 -44.4 694 1 397 -50.3 1 326
Income tax relating
to components of
other comprehensive
income 266 8 3 425.8 467 -44 1 150.5 -549
--------------------------------------------------------------------------------
Other comprehensive
income. net of tax 596 602 -1.0 1 161 1 353 -14.2 777
--------------------------------------------------------------------------------
TOTAL COMPREHENSIVE
INCOME 2 738 1 998 37.1 4 885 3 415 43.0 9 850
Profit attributable
to:
Owners of the
parent 2 142 1 370 56.4 3 734 2 012 85.2 9 074
Minority interest 0 26 -100.0 0 50 -100.0 0
--------------------------------------------------------------------------------
2 142 1 396 53.5 3 724 2 062 80.6 9 074
Total comprehensive
income attributable
to:
Owners of the
parent 2 738 1 973 38.8 4 885 3 365 45.2 9 850
Minority interest 0 26 -100.0 0 50 -100.0 0
--------------------------------------------------------------------------------
2 738 1 998 37.1 4 885 3 415 43.0 9 850
Earnings per share
(undiluted), EUR 0.19 0.12 55.8 0.33 0.18 84.9 0.80
Earnings per share
(diluted), EUR 0.19 0.12 54.8 0.32 0.18 83.4 0.80
GROUP BALANCE SHEET
EUR thousand 30.6.2010 30.6.2009 Change, % 31.12.2009
ASSETS
NON-CURRENT ASSETS
Intangible assets 18 949 17 678 7.2 20 291
Goodwill 31 898 30 389 5.0 31 119
Tangible assets 945 933 1.3 823
Available-for-sale investments 38 38 38
Long-term trade and other receivables 115 208 -44.9 124
Deferred tax assets 1 904 1 973 -3.5 2 199
--------------------------------------------------------------------------------
Non-current assets 53 849 51 220 5.1 54 593
CURRENT ASSETS
Inventories 48 45 5.1 33
Trade and other receivables 23 086 20 285 13.8 19 684
Income tax receivables 635 2 993 -78.8 767
Financial assets at fair value through
profit or loss 34 32 4.4 34
Cash and cash equivalents 18 520 9 484 95.3 12 176
--------------------------------------------------------------------------------
Current assets 42 323 32 840 28.9 32 694
--------------------------------------------------------------------------------
TOTAL ASSETS 96 171 84 060 14.4 87 287
--------------------------------------------------------------------------------
EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Share capital 3 483 3 440 1.2 3 440
Issue of shares 655 100.0 140
Share premium account 876 69 1 171.9 69
Own shares -629 -629 -629
Fair value reserve and
other reserves 34 474 33 598 2.6 33 598
Translation differences -2 053 -3 818 46.2 -3 214
Retained earnings 23 098 16 088 43.6 23 176
Minority interest 189 -100.0 0
-----------------------------------------------------------------
Shareholders' equity 59 905 48 937 22.4 56 580
NON-CURRENT LIABILITIES
Deferred tax liability 3 746 2 823 32.7 3 997
Interest-bearing liabilities 1 956 5 552 -64.8 3 674
Non-interest-bearing liabilities 345 21 1 572.7 110
-----------------------------------------------------------------
Non-current liabilities 6 048 8 396 -28.0 7 782
CURRENT LIABILITIES
Interest-bearing liabilities 3 551 5 563 -36.2 5 555
Trade payables and other liabilities 26 123 20 664 26.4 17 039
Tax liability from income tax 545 500 8.9 331
-----------------------------------------------------------------
Current liabilities 30 219 26 727 13.1 22 926
-----------------------------------------------------------------
TOTAL EQUITY AND LIABILITIES 96 171 84 060 14.4 87 287
-----------------------------------------------------------------
GROUP STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Inv.
Share- non- Retain Mino-
hol- Share Own restr Tran ed rity
ders' Share premium shar- equity Other sl. earnin inter-
capital issue account es res. res. diff gs est Total
EUR
thousand . .
SHARE-
HOL-
DERS'
EQUITY -3
1.1.09 3 440 0 69 -271 33 058 540 991 15 648 224 48 717
Compre-
hensive
income 173 3 192 50 3 415
Dividend
distribution -2 663 -2 663
Granted
warrants 378 378
Changes
In
reporting
period -358 -467 -86 -911
SHARE-
HOL-
DERS'
EQUITY -3
30.6.09 3 440 0 69 -629 33 058 540 818 16 088 189 48 937
Share- Mino-
hol- Share Own Inv. Tran rity
ders' Share premium shar non- Other sl. Retain Inter-
capital issue account es restr. res diff. ed est
EUR Equity
thousand res. Total
SHARE-
HOL-
DERS'
EQUITY
1.1.10 3 440 140 69 -629 33 058 540 -3 214 23 176 0 56 580
Compre-
hensive
income 1 161 3 724 4 885
Dividend
distri-
bution -4 100 -4 100
Granted
warrants 132 132
Changes
in
reporting
period 42 515 807 876 167 2 408
SHARE-
HOL-
DERS'
EQUITY
30.6.10 3 483 655 876 -629 33 934 540 -2 053 23 098 0 59 905
GROUP CASH FLOW STATEMENT
EUR thousand 1.1.-30.6.2010 1.1.-30.6.2009 1.1.-31.12.2009
--------------------------------------------------------------------------------
Net cash from operating activities
Profit for the period 3 724 2 062 9 074
Adjustments for profit 3 964 3 748 7 832
Working capital changes 5 925 4 392 -136
Interest paid -28 -99 -192
Interest received 32 29 104
Other financial items in operating
activities -62 -16 -30
Income taxes paid -1 131 -2 122 -1 920
--------------------------------------------------------------------------------
Net cash from operating activities 12 423 7 995 14 732
--------------------------------------------------------------------------------
Cash flows from investing
activities
Purchase of tangible and
intangible assets -970 -2 010 -3 135
Proceeds from sale of tangible and
intangible assets 1
Acquired subsidiaries -724 -1 875
--------------------------------------------------------------------------------
Net cash used in investing
activities -970 -2 734 -5 009
--------------------------------------------------------------------------------
Cash flows from financing
activities
Minority's capital investment 2 241 140
Repayments of short-term loans -2 000 -3 558
Repayments of long-term borrowings -1 775 -1 783 0
Share repurchase -358 -358
Repayments of financial lease
liabilities 0
Dividends paid -4 100 -2 623 -2 623
--------------------------------------------------------------------------------
Net cash used in financing
activities -5 634 -4 763 -6 398
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net change in cash and cash
equivalents according to cash flow
statement 5 819 498 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 525 242 109
Cash and cash equivalents at end
of period 18 554 9 516 12 210
GROUP QUARTERLY INCOME STATEMENT
1-3/ 1-3/ 4-6/ 4-6/ 7-9/ 10-12/
EUR thousand 2010 2009 2010 2009 2009 2009
------------------------------------------------------------------------------
NET SALES 23 132 21 717 26 612 22 729 21 609 26 600
Other operating income 50 30 55 52 47 34
Materials and services -1 288 -1 552 -1 754 -1 611 -1 395 -1 636
Employee benefit expenses -13 703 -12 896 -15 184 -13 444 -11 113 -14 841
Depreciation and amortization -1 236 -1 004 -1 309 -1 067 -1 106 -1 280
Other operating expenses -4 818 -4 703 -5 414 -4 513 -4 014 -4 819
------------------------------------------------------------------------------
Operating profit 2 136 1 592 3 006 2 146 4 028 4 058
% 9.2% 7.3% 11.3% 9.4% 18.6% 15.3%
Finance income 116 124 4 30 32 -15
Finance expenses -111 232 -58 -54 -115 -5
------------------------------------------------------------------------------
Profit before tax 2 142 1 484 2 953 2 122 3 946 4 038
% 9.3% 6.8% 11.1% 9.3% 18.3% 15.2%
Income tax expense -560 -818 -811 -727 -941 -30
------------------------------------------------------------------------------
PROFIT FOR THE PERIOD 1 582 666 2 142 1 396 3 005 4 007
% 6.8% 3.1% 8.0% 6.1% 13.9% 15.1%
Changes in company structure
Basware FIMA Oy was merged to the parent company during second quarter of 2010.
COMMITMENTS AND CONTINGENT LIABILITIES
EUR thousand 30.6.2010 30.6.2009 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 1 098 1 075
Other own guarantees
Lease liabilities
Current lease liabilities 861 795 970
Lease liabilities maturing in 1-5 years 728 820 895
--------------------------------------------------------------------------------
Total 1 589 1 615 1 865
Other rental liabilities
Current rental liabilities 2 471 2 477 2 333
Rental liabilities maturing in 1-5 years 8 461 4 299 2 924
Rental liabilities maturing later 1 227 1 071
--------------------------------------------------------------------------------
Total 10 933 8 003 6 328
--------------------------------------------------------------------------------
Other own contingent liabilities, total 12 522 9 618 8 193
--------------------------------------------------------------------------------
SEGMENT REPORTING
Net sales by market area
+-----------------------------------------------------------------+
|Net sales 4-6/ 4-6/ Change, 1-6/ 1-6/ Change, 1-12/|
|(EUR thousand) 2010 2009 % 2010 2009 % 2009|
+-----------------------------------------------------------------+
|Finland 13 763 12 406 10.9 25 953 23 737 9.3 50 486|
| |
|Scandinavia 6 232 6 278 -0.7 11 486 11 595 -0.9 22 236|
| |
|Europe 5 538 4 318 28.2 10 606 8 984 18.1 18 717|
| |
|Other 2 719 1 128 141.0 5 092 2 323 119.2 9 201|
| |
|Sales between |
|segments -1 640 -1 402 -17.1 -3 394 -2 193 -54.8 -7 985|
+-----------------------------------------------------------------+
|Group total 26 612 22 729 17.1 49 743 44 446 11.9 92 654|
+-----------------------------------------------------------------+
+---------------------------------------------------------------+
|Operating profit 4-6/ 4-6/ Change, 1-6/ 1-6/ Change, 1-12/|
|(EUR thousand) 2010 2009 % 2010 2009 % 2009|
+---------------------------------------------------------------+
|Finland 1 616 1 295 24.8 2 709 2 144 26.3 7 714|
| |
|Scandinavia 926 1 249 -25.9 1 688 1 915 -11.8 3 169|
| |
|Europe 683 -32 2 206.9 1 191 199 499.4 1 566|
| |
|Other 191 -102 286.8 370 35 956.5 741|
| |
|Operating profit |
|between segments -410 -263 -55.9 -816 -555 -47.1 -1 365|
+---------------------------------------------------------------+
|Group total 3 006 2 146 40.1 5 143 3 738 37.6 11 824|
+---------------------------------------------------------------+
+------------------------------------------------------------------------------+
|Personnel |
|(employed, on 1-6/ Change, |
|average) 4-6/ 2010 4-6/ 2009 Change, % 1-6/ 2010 2009 % 1-12/ 2009|
+------------------------------------------------------------------------------+
|Finland 526 458 14.9 514 449 14.5 454|
| |
|Scandinavia 123 137 -10.0 125 138 -9.2 135|
| |
|Europe 124 119 4.2 123 121 2.1 119|
| |
|Other 54 31 75.0 51 31 65.2 39|
+------------------------------------------------------------------------------+
|Group total 827 744 11.1 812 738 10.1 747|
+------------------------------------------------------------------------------+
Net sales by business
+----------------------------------------------------------------------------+
|Net sales 4-6/ 4-6/ 1-6/ 1-6/ 1-12/|
|(EUR thousand) 2010 2009 Change, % 2010 2009 Change, % 2009|
+----------------------------------------------------------------------------+
|License Sales 6 996 5 475 27.8 11 644 10 152 14.7 23 755|
| |
|Maintenance 8 132 7 301 11.4 16 245 14 439 12.5 29 757|
| |
|Professional Services 8 581 7 773 10.4 16 452 16 269 1.1 31 174|
| |
|Automation Services 2 903 2 179 33.2 5 403 3 585 50.7 7 967|
+----------------------------------------------------------------------------+
|Group total 26 612 22 729 17.1 49 743 44 446 11.9 92 654|
+----------------------------------------------------------------------------+
Net sales by the location of customer
+-----------------------------------------------------------------+
|Net sales 4-6/ 4-6/ Change, 1-6/ 1-6/ Change, 1-12/|
|(EUR thousand) 2010 2009 % 2010 2009 % 2009|
+-----------------------------------------------------------------+
|Finland 12 419 10 774 15.3 23 114 21 098 9.6 42 449|
| |
|Scandinavia 6 007 5 613 7.0 11 001 10 823 1.7 21 719|
| |
|Europe 5 320 4 391 21.1 10 235 9 073 12.8 18 065|
| |
|Other 2 866 1 950 47.0 5 393 3 453 56.2 10 421|
+-----------------------------------------------------------------+
|Group total 26 612 22 729 17.1 49 743 44 446 11.9 92 654|
+-----------------------------------------------------------------+
EUR thousand 1-6/10 1-6/09 1-6/08 1-12/09
--------------------------------------------------------------------------------
Net sales 49 743 44 446 40 545 92 654
Growth of net sales, % 11.9% 9.6% 16.5% 7.6%
EBITDA 7 688 5 809 3 540 16 280
% of net sales 15.5% 13.1% 8.7% 17.6%
Operating profit before IFRS3
amortization 6 258 4 592 2 569 13 788
% of net sales 12.6% 10.3% 6.3% 14.9%
Operating profit 5 143 3 738 2 177 11 824
Growth of operating profit, % 37.6% 71.8% -48.0% 36.2%
% of net sales 10.3% 8.4% 5.4% 12.8%
Profit before tax 5 095 3 607 2 178 11 590
% of net sales 10.2% 8.1% 5.4% 12.5%
Profit for the period 3 724 2 062 1 350 9 074
% of net sales 7.5% 4.6% 3.3% 9.8%
Return on equity, % 12.8% 8.4% 5.7% 17.2%
Return on investment, % 16.0% 12.8% 8.9% 18.8%
Interest-bearing liabilities 5 507 11 115 2 130 9 230
Cash and liquid assets *) 18 554 9 516 5 771 12 210
Gearing, % -21.8% 3.3% -7.8% -5.3%
Equity ratio, % 62.3% 58.2% 67.2% 64.8%
Total assets 96 171 84 060 69 627 87 287
Gross investments **) 1 264 2 598 1 823 7 448
% of net sales 2.5% 5.8% 4.5% 8.0%
Capital expenditure 341 230 481 2 047
% of net sales 0.7% 0.5% 1.2% 2.2%
Research and development costs 7 836 7 530 8 133 14 781
% of net sales 15.8% 16.9% 20.1% 16.0%
R&D personnel at end of period 200 187 161 195
Personnel on average during the
period 812 738 672 747
Personnel at end of period 833 742 686 761
Increase in personnel, % 12.3% 8.2% 22.7% 4.1%
Earnings per share, EUR 0.33 0.18 0.11 0.80
Earnings per share (diluted), EUR 0.32 0.18 0.11 0.80
Equity per share, EUR 5.16 4.25 4.06 4.93
P/E ratio 53.57 64.54 61.67 18.21
Share price performance
lowest share price 15.00 6.60 6.14 6.60
highest share price 19.60 11.48 10.45 14.66
average share price 17.66 8.57 8.03 10.79
closing share price 17.50 11.40 7.00 14.52
Market capitalization at end of
period 201 589 920 129 707194 80 276 868 165 206 004
Number of traded shares 1 385 665 986 643 1 039 454 2 038 565
% of average number of shares 12.2% 8.7% 9.1% 17.9%
Average number of shares
- undiluted 11 399 277 11 385 986 11 468 124 11 381 905
- diluted 11 498 619 11 385 986 11 468 124 11 381 905
Major Shareholders, June 30, 2010
1. Sihvo, Ilkka 1 081 800 9.3
2. Eräkangas, Kirsi 1 001 800 8.6
Eräkangas, Kirsi 691 400 6.0
Eräkangas, Lotta 310 400 2.7
3. Vaajoensuu, Hannu 962 100 8.3
Havacment Oy 266 500 2.3
Vaajoensuu, Hannu 528 000 4.5
Vaajoensuu, Matias 83 800 0.7
Vaajoensuu, Petra 83 800 0.7
4. Ilmarinen Mutual Pension Insurance Company 959 673 8.3
5. Perttunen, Sakari 830 400 7.2
6. Pöllänen, Antti 586 823 5.1
Launimo, Essi 100 208 0.9
Pöllänen, Antti 486 615 4.2
7. Nordea Nordic Small Cap Fund 547 713 5.0
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 1.9
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 8 396 618 72.3
Nominee registered shares 1 192 054 10.3
Others 2 021 052 17.4
Total 11 609 724 100.0
[HUG#1430982]
