Basware Interim Report January 1 - September 30, 2009 (IFRS)
(Thomson Reuters ONE) - BASWARE INTERIM REPORT JANUARY 1 - SEPTEMBER 30, 2009 (IFRS)Basware Corp. Stock Exchange Release October 13, 2009 at 09.00AMSUMMARYJanuary-September- Net sales EUR 66 054 thousand (EUR 59 804 thousand) - growth10.5 percent- Operating profit EUR 7 767 thousand (EUR 4 557 thousand) -growth 70.4 percent- Operating profit 11.8 percent of net sales (7.6%)- International operations accounted for 54.3 percent of netsales (51.9%) - growth 15.5 percent- Cash flows from operating activities were EUR 8 540 thousand(EUR 6 205 thousand).- Earnings per share EUR 0.45 (EUR 0.28)July-September Q3- Net sales EUR 21 609 thousand (EUR 19 259 thousand) - growth12.2 percent- Operating profit EUR 4 028 thousand (EUR 2 381 thousand) -growth 69.2 percent- Operating profit 18.6 percent of net sales (12.4%)- International operations accounted for 58.0 percent of netsales (55.1%) - growth 18.0 percent- Earnings per share EUR 0.27 (EUR 0.17)Basware expects its net sales for 2009 to develop positively on thelevel of 2008. Operating profit (EBIT) for 2009 is expected to befrom 10 to 15 percent of net sales.The figures are unaudited.GROUP KEY FIGURES 7-9/ 7-9/ Change, 1-9/ 1-9/ Change, 1-12/EUR thousand 2009 2008 % 2009 2008 % 2008Net sales 21 609 19 259 12.2% 66 054 59 804 10.5% 86 098EBITDA 5 134 3 070 67.2% 10 943 6 611 65.5% 11 722Operating profitbeforeIFRS-3amortization 4 596 2 577 78.4% 9 188 5 146 78.5% 9 730Operating profit 4 028 2 381 69.2% 7 767 4 557 70.4% 8 679% of net sales 18.6% 12.4% 11.8% 7.6% 10.1%Profit before tax 3 946 2 370 66.5% 7 553 4 548 66.1% 8 410Profit for theperiod 3 005 1 941 54.8% 5 066 3 290 54.0% 6 585Return on equity,% 23.7% 16.3% 13.3% 9.2 % 13.7%Return oninvestment, % 24.5% 17.6% 16.4% 11.0% 16.6%Liquid assets* 7 567 8 680 -12.8% 7 567 8 680 -12.8% 8 777Gearing, % 3.2% 8.3% 3.2% 8.3% 9.3%Equity ratio, % 61.9% 60.0% 61.9% 60.0% 59.5%Earnings pershare, EUR 0.27 0.17 60.9% 0.45 0.28 58.8% 0.56Earnings per share(diluted), EUR 0.27 0.17 60.9% 0.45 0.28 58.8% 0.56Equity per share,EUR 4.58 4.19 9.3% 4.58 4.19 9.3% 4.23*) Includes cash, cash equivalents and financial assets at fair valuethrough profit or lossBasware's business operations consist of product sales, maintenanceand support, consulting and services, Software as a Service (SaaS)sales and other operations. The core of Basware's product salesconsists of the Basware Enterprise Purchase to Pay product suite andthe Basware Financial Management (FIMA) suite. The Group's reportedmarket areas are Finland, Scandinavia, Europe and other areas.Basware's CEO Ilkka Sihvo comments in conjunction with the InterimReport:"Our operating result for the third quarter is the best ever Q3result in the company's history. The cumulative operating result isalso at a record high. The 10.5 percent increase in net sales weattained is an excellent achievement amid a recession. In particular,we succeeded in growing the Automation Services business, and we havesecured customer accounts with major international corporations. Wealso made one of our biggest license sales ever during the thirdquarter. The deal boosts our business in Australia significantly,supporting the business acquisition we made earlier this year.At this point, our situation seems good with regard to reaching ourtarget for the entire year, but the last quarter of the year isnevertheless rather challenging in the current economic situation,"says Ilkka Sihvo, Basware's CEO.REPORTINGBasware acquired the entire share capital of its reseller TAGServices Pty Ltd on July 1, 2009 in Australia.As of January 1, 2009, the Group has applied the following new andrevised standards: IFRS 8 Operating Segments and IAS 1 Presentationof Financial Statements. IFRS 8 has an effect on the segmentinformation in the notes and IAS 1 has an effect on the presentationof the income statement.Basware's reporting segment is based upon geography as follows:Finland, Scandinavia, Europe and Other. Following the TAG Servicesacquisition on July 1, 2009, Basware has assets in Australia. Takinginto account the nature and extent of the business operations inNorth America and Australia, these areas will be merged into theOther segment as of Q3/2009. The Finland segment includes theFinnish, Russian, Asia-Pacific (excluding Australia) and FinancialManagement business operations.In addition, the company reports revenue from products and servicesas follows: License Sales, Professional Services, Maintenance, andAutomation Services. Automation Services include SaaS revenue andConnectivity Services, which include digitalization of paper invoicesand exchange of e-invoices and purchase transactions.The company also reports the backlog of Automation Servicesagreements not recognized as income. Automation Services agreementstypically span several years.NET SALESThe geographical division of net sales by the location of assets:Net sales 7-9/ 7-9/ 1-9/ 1-9/ Change, 1-12/(EUR thousand) 2009 2008 Change, % 2009 2008 % 2008Finland 11 478 10 604 8.2 35 215 34 188 3.0 49 517Scandinavia 4 505 3 352 34.4 16 100 12 179 32.2 18 805Europe 4 104 5 428 -24.4 13 087 14 189 -7.8 19 454Other 3 980 1 567 154.0 6 303 3 692 70.7 5 004Sales betweensegments -2 459 -1 692 45.3 -4 652 -4 444 4.7 -6 682Group total 21 609 19 259 12.2 66 054 59 804 10.5 86 098The geographical division of net sales by the location of customers:Net sales 7-9/ 7-9/ 1-9/ 1-9/ 1-12/(EUR thousand) 2009 2008 Change, % 2009 2008 Change, % 2008Finland 9 084 8 645 5.1 30 181 28 745 5.0 41 514Scandinavia 4 893 3 262 50.0 15 716 11 898 32.1 18 309Europe 3 921 5 299 -26.0 12 994 14 048 -7.5 19 191Other 3 711 2 052 80.8 7 163 5 113 40.1 7 083Group total 21 609 19 259 12.2 66 054 59 804 10.5 86 098Basware Group's net sales grew by 10.5 percent in July-September andwere EUR 66 054 thousand (EUR 59 804 thousand).The company's license sales decreased by 10.0 percent during thereporting period to 24.2 percent (29.6%) of net sales. Maintenancerevenue increased by 20.8 percent in the reporting period andaccounted for 33.1 percent (30.2%) of net sales. ProfessionalServices revenue increased by 12.2 percent and accounted for 34.4percent (34.0%) of net sales.During the period, Automation Services (SaaS, e-invoicing, Scan andCapture) grew 48.6 percent and accounted for 8.3 percent (6.2%) ofnet sales. The backlog of the Automation Services business notrecognized as income was EUR 10 836 thousand (EUR 11 130 thousand) atthe end of the period. A total of 1 277 customers had been connectedto the service at the end of the reporting period.In July-September, 26.9 percent (29.9%) of net sales consisted of ownproduct sales with license sales increasing by 0.7 percent.Automation Services sales accounted for 8.7 percent (7.6%) of netsales in the third quarter, up 28.3 percent. Maintenance revenueaccounted for 34.3 percent (32.6%) of net sales during the thirdquarter and grew by 18.0 percent. Consulting revenue represented 30.1percent (29.9%) of net sales and grew by 13.2 percent.Value added resellers provided a net share of 9.2 percent (16.8%) orEUR 1 474 thousand of License Sales net sales during the reportingperiod, accounting for 4.1 percent (9.1%) of the net sales frominternational operations. In July September, resellers accounted fora net share of 5.7 percent (15.9%) of License Sales. Decrease ispartly caused by the acquisition of TAG Services Pty Ltd and thechange of its reseller position to a subsidiary.The international share of Basware's net sales was 54.3 percent(51.9%) in the reporting period. International operations grew by15.5 percent. International operations accounted for 58.0 percent(55.1%) of Basware's net sales for the third quarter, increasing by18.0 percent.FINANCIAL PERFORMANCEBasware's operating profit increased by 70.4 percent in the periodand totaled EUR 7 767 thousand (EUR 4 557 thousand). Operating profitrepresented 11.8 percent (7.6%) of net sales. Operating profit grewby 69.2% in the third quarter and totaled EUR 4 028 thousand (EUR 2381 thousand). In the third quarter, operating profit represented18.6 percent of net sales.The division of operating profit geographically by the location ofassets:Operating profit 7-9/ 7-9/ 1-9/ 1-9/ Change, 1-12/(EUR thousand) 2009 2008 Change, % 2009 2008 % 2008Finland 2 546 1 679 51.6 4 690 3 513 33.5 7 898Scandinavia 212 229 -7.2 2 128 1 038 104.9 1 017Europe 465 375 24.0 664 -26 2 653.8 -74Other 1 223 144 748.4 1 258 171 634.0 289Operating profitbetween segments -417 -47 787.2 -972 -140 594.3 -452Group total 4 028 2 381 69.2 7 767 4 557 70.4 8 679The Company's fixed costs were EUR 50 683 thousand (EUR 49 988thousand) in the period and have grown by 1.4 percent compared withthe same period last year. Personnel costs made up 73.9 percent(70.6%) or EUR 37 453 thousand (EUR 35 306 thousand) of the fixedcosts. In the third quarter, fixed costs totaled EUR 15 127 thousand(EUR 15 449 thousand).Research and development costs totaled EUR 10 934 thousand (EUR 11134 thousand), of which EUR 1 094 thousand (EUR 1 892 thousand) or10.0 percent (17.0%) were capitalized during the period. Amortizationof capitalized research and development costs totaled EUR 1 195thousand (EUR 871 thousand).The Company's finance income and finance expenses were EUR -214thousand (EUR -9 thousand). The Company's profit before tax was EUR 7553 thousand (EUR 4 548 thousand) and profit for the period was EUR5 066 thousand (EUR 3 290 thousand). Undiluted earnings per sharewere EUR 0.45 (EUR 0.28).FINANCE AND INVESTMENTSBasware Group's total assets on the balance sheet at the end of thefinancial period were EUR 84 942 thousand (EUR 80 537 thousand). TheCompany's cash and liquid assets were EUR 7 567 thousand (EUR 8 680thousand), of which cash and cash equivalents were EUR 7 535 thousand(EUR 8 648 thousand) and financial assets at fair value throughprofit or loss were EUR 32 thousand (EUR 32 thousand).Equity ratio was 61.9 percent (60.0%) and gearing was 3.2 percent(8.3%). The Company had a total of EUR9 235 thousand (EUR 12 697 thousand) interest-bearing liabilities, ofwhich current liabilities accounted for EUR5 563 thousand (EUR 5 561 thousand). Return on investment was 16.4percent (11.0%) and return on equity 13.3 percent (9.2%).Cash flows from operating activities were EUR 8 540 thousand (EUR 6205 thousand). Cash flows from investments were EUR -3 550 thousand(EUR -11 039 thousand).Basware Corporation acquired the entire share capital of TAG ServicesPty Ltd in Australia. The acquisition price was 2.1 millionAustralian dollars (approximately EUR 1.2 million) and was paid incash in two parts in July and August 2009. In addition the dealincludes an additional acquisition price element that is based on theCompany's net sales of the period from July 1, 2009 to June 30, 2010and will be paid in August 2010 at the latest.4.2 million Australian dollars (approximately EUR 2.4 million)associated with customer relationships has been allocated tointangible assets, taking deferred tax liabilities intoconsideration. The allocation of the acquisition purchase price ispreliminary.The company's gross capital expenditure, comprising of ordinaryadditional and replacement investments required by growh, totaled EUR334 thousand (EUR 684 thousand) during the period. Gross investments,including capitalized R&D expenses and business acquisitions inaddition to the above, totaled EUR 7 084 thousand (EUR 11 262thousand).Amortizations of intangible assets were EUR 2 772 thousand (EUR 1 621thousand). There are no indications of impairments of assets.RESEARCH, DEVELOPMENT AND NEW PRODUCTSBasware's research and development costs were EUR 10 934 thousand(EUR 11 134 thousand) in the period and made up 16.6 percent (18.6%)of net sales. Research and development costs decreased by 1.8 percent(growth of 28.9%) compared with the same period last year. Of theresearch and development costs, EUR 1 094 thousand (EUR 1892thousand) or 10.0 percent (17.0%) has been capitalized. Amortizationof capitalized research and development costs totaled EUR 1 195thousand (EUR 871 thousand).Altogether 184 (162) people worked in Products at the end ofSeptember 2009. The Products unit is expanding in India where thereare currently 49 employees.At the beginning of 2009, Basware launched the Basware Connectivitysolution, which aims at speeding up the migration to electronicexchange of documents. There has been obvious demand for the solutionin the market, and it has been sold successfully in Europe as well asNorth America. Basware is now able to exchange all the documentationrelated to the Purchase to Pay process in a single solution,including the exchange of e-invoices and procurement messages,e-invoice and scanning services and supplier activation.PERSONNELBasware employed 743 (675) people on average in the third quarter and755 (686) people at the end of the period. The number of personnelgrew by 69 persons and by 10.1 percent compared with the same periodlast year.Basware Corporation acquired the entire share capital of TAG Servicesin Australia. TAG Services employed 13 people who joined Basware.The share of personnel working in foreign units has increasedcompared with the same period last year. At the end of the period,47.0 percent (42.6%) of Basware personnel worked outside of Finlandand 53.0 percent (57.4%) in Finland.17.6 percent of the personnel work in sales and marketing, 48.9 inconsulting and services, 24.4 percent in Products, and 9.1 percent inadministration.The average age of the employees is 36.5 (35.9) years. 35.0 percentof them hold a Master's degree and 43.0 percent a Bachelor's degree.28.7 percent of the personnel are women and 71.3 percent men.Geographical distribution of personnel (primary segment):Personnel(employed, on 7-9/ 7-9/ 1-9/ 1-9/ Change, 1-12/average) 2009 2008 Change, % 2009 2008 % 2008Finland 458 422 8.6 452 420 7.7 421Scandinavia 135 103 31.1 137 101 35.2 112Europe 116 130 -10.5 119 129 -7.7 129Other 46 28 65.1 36 26 39.0 26Group total 755 682 10.6 743 675 10.1 689BUSINESS OPERATIONSFinlandThe Finland segment includes the business operations in Finland,Russia, Asia-Pacific (excluding Australia) and the head officefunctions. Net sales for the third quarter increased by 8.2 percentto EUR 11 478 thousand(EUR 10 604 thousand).Net sales of the Finnish and Russian business operations increased by10.1 percent during the third quarter to EUR 9 144 thousand (EUR 8306 thousand). All the Basware Enterprise Purchase to Pay andFinancial Management products are sold in the region.New deal were made with Aktia, Metso, Helsinginseurakuntayhtymä,Schenker and Ilmarinen.There are currently 14 resellers in all in the area and the number ofpersonnel averaged 458 (422) during the third quarter.ScandinaviaBasware's Nordic organization consists of a centrally directedScandinavian (Sweden, Denmark and Norway) unit. All the BaswareEnterprise Purchase to Pay solutions are sold in the Nordiccountries.Net sales of the Scandinavian business operations increased by 34.4percent to EUR 4 505 thousand (EUR 3 352 thousand). The profitabilityof the operations declined by 7.2 percent and operating profit wasEUR 212 thousand (EUR 229 thousand).Business operations are mainly handled by the own organization andthere were 135 (103) employees on average in the area.EuropeBasware's European business operations consist of the units inGermany, France, the Netherlands and the United Kingdom.Additionally, the reseller network covers the eastern part of CentralEurope. All Enterprise Purchase to Pay solutions are sold in Europe.Net sales in the Europe segment decreased by 24.4 percent in thethird quarter and totaled EUR 4 101 thousand (EUR 5 428 thousand).The profitability of the operations improved by 24.0 percent andoperating profit was EUR 465 thousand (EUR 375 thousand).At the end of 2008, Basware UK initiated a rationalization programand reorganization of operations, facilitating profitable growth. Theprogram has resulted in significant cost-savings and the utilizationrate of consulting has increased, which improves the unit'sprofitability.New customers included Her Majesty's Prison Service, Provimi Petfood,Frencken Group, Eurofoam Deutschland and Ringier AG.There are 35 resellers in Europe, and Basware personnel averaged 116(130) during the third quarter.OtherBusiness operations in North America and Australia are reported inthis segment. Net sales of the area increased by 154.0 percent in thethird quarter to EUR 3 980 thousand (EUR 1 567 thousand). Theprofitability of the operations grew by 748.4 percent and operatingprofit was EUR 1 223 thousand (EUR 144 thousand). The businessoperations in Australia are reported in the Other segment as of July1, 2009.Basware will deliver the Basware Enterprise Purchase to Pay solutionand Scan and Capture services to HCR ManorCare, Inc. in NorthAmerica. The value of the agreement is over EUR one million includingproduct sales, consulting and Scan and Capture services. The salesand consulting revenue will be recognized mainly during the lastquarter of 2009 and Connectivity services over the next three years.Basware made one of its largest license deals ever with the State ofSouth Australia.At the end of the period, there were 9 resellers in the segment. Onaverage, there were 46 (28) employees in the area.OTHER EVENTS OF THE FINANCIAL PERIODBasware Corporation acquired the entire share capital of TAG ServicesPty Ltd in Australia. The acquisition price was based on theCompany's net sales for its fiscal year from July 1, 2008 to June 30,2009 and the Company's net asset value on June 30, 2009. Theacquisition price was 2.1 million Australian dollars (approximatelyEUR 1.2 million, using exchange rate of EUR/AUD 1.7359 on June 30,2009). The Company's net asset value at June 30 was 0.42 millionAustralian dollars (approximately EUR 0.24 million). The acquisitionprice was paid in cash in two parts in July and August 2009. Inaddition the deal includes an additional acquisition price elementthat is based on the Company's net sales of the period from July 1,2009 to June 30, 2010 and will be paid in August 2010 at the latest.On August 21, 2009 Basware increased its shareholding in Basware FIMAOy to 100 percent by acquiring 4.04% of the company's shares andcontrol from the company's management.Basware announced a notice of change in ownership when the totalnumber of shares held by Antti Pöllänen personally was below 5% ofBasware Corporation's share capital and voting rights on September10, 2009. Shares held by Antti Pöllänen together with persons underguardianship still exceed 5% of Basware Corporation's share capitaland voting rights.SHARE AND SHAREHOLDERSBasware Corporation's share capital totaled EUR 3 440 437.20 at theend of the period and the number of shares was 11 468 124.Share price and tradeIn the third quarter, the highest price of the share was EUR 11.49(EUR 10.45), lowest price was EUR 6.60 (EUR 6.14) and closing pricewas EUR 10.72 (EUR 7.00). The average price of the share was EUR 9.29(EUR 7.70).A total of 1 297 031 (1 808 869) shares were traded during thefinancial period which is the equivalent of 11.4 percent (15.8%) ofthe average number of shares. Market capitalization with the period'sclosing price on September 30, 2009 was EUR 121 970 273 (EUR 80 276868).ShareholdersBasware had 16 668 (17 301) shareholders on September 30, 2009including nominee-registered holdings (7). Nominee-registeredholdings accounted for 9,0 percent of the total number of shares.Basware Corporation's share repurchases program that was resolved bythe Board of Directors on October 14, 2008 ended on March 31, 2009.The program was based on the authorization granted by the AnnualGeneral Meeting on February 14, 2008. The purchases started onOctober 23, 2008 and ended according to the terms of the sharerepurchase program on March 31, 2009.On March 31, 2009, 90 300 of shares had been acquired and the companynow holds a total of 90 300 shares representing approximately 0.79%of all Basware shares. The average price of the shares acquiredduring the repurchases program was 6.9475 euro.GOVERNANCEThe Annual General Meeting of Shareholders on February 12, 2009,confirmed the number of Board members as five. The Annual GeneralMeeting resolved to agree on the proposal and elected Matti Copeland,Sakari Perttunen, Pentti Heikkinen, Ilkka Toivola and HannuVaajoensuu members of the Board of Directors. In its first meetingheld after the Annual General Meeting, the Board of Directors electedHannu Vaajoensuu as chairman and Sakari Perttunen as vice chairman ofthe Board.The Annual General Meeting further resolved to elect Ernst & YoungOy, Authorized Public Accountants as the auditor, with APA HeikkiIlkka in charge and APA Terhi Mäkinen as the deputy auditor.The Board was authorized to resolve on share issue and sharerepurchase.A separate stock exchange release has been issued on the Boardauthorizations and other resolutions of the Annual General Meeting ofShareholders on February 12, 2009.THE COMPANY'S NEAR FUTURE RISKS AND BUSINESS UNCERTAINTIESIn accordance with Basware's risk management policy, risks aredivided into six categories: risks related to business operations,products, personnel as well as legal, financial and data securityrisks. Basware takes risks that are a natural part of its strategyand objectives. These risks are managed and decreased in variousways. Short-term risks are considered to be risks in the currentreporting year.The global crisis of the finance market, general economic uncertaintyand depression decrease companies' willingness to invest, which mighthave an unfavorable impact on the development of the company's netsales and profitability. In previous economic downturns, the demandfor the company's products and services has remained more positivethan the general economic market as a whole as the company's softwaresolutions generate cost savings.The rapidly weakened global market situation does however causeuncertainty. The depression has generally increased companies'delinquency entries and the number of bankruptcies. Typically,companies may also prolong the times of payments in order to free upworking capital. Basware has intensified its management of salesreceivables, and business management regularly monitors the paymentof sales receivables as part of the management of customer accounts.Goodwill has been tested during the last quarter of 2008. Inaccordance with the testing for impairment of assets, no impairmentof assets has occurred. At the end of 2008, Basware UK implemented arationalization program and reorganization of operations. The programhas resulted in significant cost-savings and the utilization rate ofconsulting has increased, which improves the unit's profitability. Ifthe unit's profitability does not improve as planned in the mediumterm despite the streamlining program, it is likely that the goodwillallocated to the unit will need to be impaired.In other respects, no significant changes have taken place inBasware's short-term risks and uncertainties during the financialperiod.EVENTS AFTER THE FINANCIAL PERIODBasware will deliver Connectivity Services and Invoice Processing toa leading manufacturer of building materials. The value of the dealexceeds EUR 400 000.FUTURE OUTLOOKAccording to market estimates updated in the early fall of 2009, thesoftware market is expected to decrease by 9.4 percent in the UnitedStates and by 5.4 percent in Western and Central Europe in 2009. In2010, the software market is expected to increase by 9.3 percent inthe United States and by 5.5 percent in Western and Central Europe.The entire IT market is expected to shrink 9.3 percent in the UnitedStates and 6.3 percent in Western and Central Europe. In 2010, theentire IT market is expected to grow 7.7 percent in the United Statesand by 4.0 percent in Western and Central Europe.Western Europe and the United States combined account forapproximately three quarters of the enterprise software market. Inthese markets, electronic invoice processing and procurementsolutions are still in early maturity. The procurement management andelectronic invoice processing markets are heterogeneous in terms ofthe competitive situation. Growth could attract more competitors tothe market. The industry is consolidating, and this development couldgo on in the future as well. Globally speaking, Basware is amedium-sized software company in terms of net sales as well as numberof personnel.Basware's direct competitors are primarily locally operating andoften smaller companies. In North America in particular, the companyhas also larger competitors, especially in the field of procurementmanagement. Developers of document management, scanning and recyclingsystems compete with Basware, particularly with regard to purchaseinvoice management solutions. Competing solutions also includecustomized solutions integrated into ERP (Enterprise ResourcePlanning) systems.The software still offers a competitive edge, thanks to theintegrated offering consisting of new added value products and theproducts. Automation Services, a new concept in the portfolio, willhave a positive impact on the competitiveness.Automation Services increase the predictability and transparency of acompany's net sales and profitability. In 2008, revenue fromcontinuous services (including maintenance) accounted for a third ofthe company's total revenue. Basware predicts that AutomationServices revenue will increase significantly in the strategy period.The company's international growth is based on efforts of its ownsales 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 developingthe company's own sales channel for the time being. In Scandinavia,the focus is on profitability, and moderate growth is supported bythe company's expanded product portfolio and the development of theservice business. In Finland, the focus is on profitability, andmoderate growth will primarily be achieved from the fields ofprocurement management and services.Basware has complemented its organic growth with acquisitions. Thecompany will continue to review possible acquisition targets during2009. The aim of the acquisitions is to expand the company'sdistribution channel and product portfolio in international markets.The Group increased its number of personnel mainly in India duringthe first two quarters. Research and development costs are notexpected to substantially increase from the level of 2008. Additionalinvestments required by growth will be made moderately during thesecond half of the year if net sales and profitability are at theexpected level.The cost savings resulting from the synergy benefits of the Contempusintegration will materialize starting from the beginning of 2009 andthey will be approximately EUR 3 million by the end of 2009.Approximately EUR 1 million will be amortized of the Contempusacquisition cost allocated to customer relationships and products inaccordance with a straight-line depreciation plan of 4.25 years.Basware expects its net sales for 2009 to develop positively on thelevel of 2008. Operating profit (EBIT) for 2009 is expected to befrom 10 to 15 percent of net sales.In Espoo, Finland, October 13, 2009BASWARE CORPORATIONBoard of DirectorsFor more information, please contactCEO Ilkka Sihvo, Basware Corp.,Tel. +358 9 8791 7251 or +358 40 501 8251Analyst and Press BriefingBasware arranges today, October 13, 2009 a briefing on the InterimReport for the press and analysts at 11:00 in Hotel Kämp,Pohjoisesplanadi 29, Helsinki, Finland. During this briefing CEOIlkka Sihvo will comment the operations and financial performance ofthe quarter. Welcome.DistributionHelsinki Stock Exchange,Key media, www.basware.comThe Interim Report has been prepared in accordance with theInternational Financial Reporting Standards (IFRS). As of January 1,2009, the Group has applied the following new and revised standards:IFRS 8 Operating Segments and IAS 1 Presentation of FinancialStatements. Otherwise the same Accounting Principles have beenapplied as in the 2008 Financial Statements. Key indicatorcalculations remain unchanged and have been presented in the 2008Financial Statements.GROUP INCOME STATEMENT 1.7.- 1.7.- 1.1.- 1.1.- 1.1.- 30.9. 30.9. Change, 30.9. 30.9. Change, 31.12.EUR thousand 2009 2008 % 2009 2008 % 2008NET SALES 21 609 19 259 12.2 66 054 59 804 10.5 86 098Other operatingincome 47 58 -18.3 129 189 -31.8 250Materials andservices -1 395 -797 75.0 -4 557 -3 394 34.3 -4 726Employee benefit -11 -10 -37expenses 113 933 1.6 453 -35 306 6.1 -50 399Depreciation andamortization -1 106 -690 60.3 -3 176 -2 053 54.7 -3 043Other operating -13expenses -4 014 -4 516 -11.1 230 -14 682 -9.9 -19 500Operating profit 4 028 2 381 69.2 7 767 4 557 70.4 8 679Finance income 32 39 -17.7 187 96 93.9 734Finance expenses -115 -50 130.6 -401 -106 280.0 -1 003Profit beforetax 3 946 2 370 66.5 7 553 4 548 66.1 8 410Income taxexpense -941 -430 119.0 -2 486 -1 258 97.6 -1 825PROFIT FOR THEPERIOD 3 005 1 941 54.8 5 066 3 290 54.0 6 585OthercomprehensiveincomeExchangedifferenceson translatingforeignoperations 620 -409 251.6 2 017 619 425.8 -4 383Income taxrelatingto components ofothercomprehensiveincome 89 0 45 0 0Othercomprehensiveincome, net oftax 709 0 273.3 2 062 619 433.1 -4 383TOTALCOMPREHENSIVEINCOME 3 714 1 532 142.5 7 128 2 671 166.9 2 201Profitattributableto:Owners of theparent 3 055 1 913 59.7 5 066 3 215 57.6 6 467Minorityinterest -50 27 -286.5 0 75 -100.0 118 3 005 1 941 54.8 5 066 3 290 54.0 6 585Totalcomprehensiveincomeattributable to:Owners of theparent 3 763 1 504 150.1 7 128 2 596 174.6 2 084Minorityinterest -50 27 -286.5 0 75 -100.0 118 3 714 1 532 142.5 7 128 2 671 166.9 2 201Earnings pershare(undiluted), EUR 0.27 0,17 60.9 0.45 0.28 58.8 0.36Earnings pershare(diluted), EUR 0.27 0,17 60.9 0.45 0.28 58.8 0.36GROUP BALANCE SHEETEUR thousand 30.9.2009 30.9.2008 Change, % 31.12.2008ASSETSNON-CURRENT ASSETSIntangible assets 19 636 20 953 -6.3 17 022Goodwill 31 283 25 821 21.2 29 212Tangible assets 879 1 148 -23.5 991Available-for-saleinvestments 38 38 0.0 38Long-term trade and otherreceivables 132 12 983.2 536Deferred tax assets 1 962 2 199 -10.8 2 208Non-current assets 53 928 50 171 7.5 50 006CURRENT ASSETSInventories 40 57 -30.2 48Trade and other receivables 20 275 19 579 3.6 20 737Income tax receivables 3 132 2 051 52.7 2 341Financial assets at fairvalue through profit or loss 32 32 1.6 31Cash and cash equivalents 7 535 8 648 -12.9 8 745Current assets 31 014 30 367 2.1 31 902TOTAL ASSETS 84 942 80 537 5.5 81 909EQUITY AND LIABILITIESSHAREHOLDERS' EQUITYShare capital 3 440 3 440 0.0 3 440Share premium account 69 69 0.0 69Own shares -629 -271Fair value reserve and otherreserves 33 598 33 598 0.0 33 598Translation differences -3 542 -237 539.3 -3 991Retained earnings 19 622 11 235 33.9 15 648Minority interest 223 -100.0 224Shareholders' equity 52 559 48 328 8.8 48 717NON-CURRENT LIABILITIESDeferred tax liability 3 852 1 648 133.8 2 307Interest-bearing liabilities 3 672 7 118 -48.4 7 729Non-interest-bearingliabilities 242Non-current liabilities 7 766 8 766 -11.4 10 036CURRENT LIABILITIESInterest-bearing liabilities 5 563 5 561 0.0 5 555Trade payables and otherliabilities 18 384 17 138 7.3 16 683Tax liability from incometax 670 744 -10.0 918Current liabilities 24 617 23 444 5.0 23 156TOTAL EQUITY AND LIABILITIES 84 942 80 537 5.5 81 909GROUP STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY Inv. non- Share- Share restr. holders premium Own equity Other Transl Retained MinorityEUR thousand capital account shares res. res. diff. earnings interest TotalSHAREHOLDERS' 47EQUITY 1.1.08 3 440 33 127 0 0 540 392 9 765 148 413Comprehensiveincome -629 3 225 75 2 671Dividend -1distribution -1 720 720Grantedwarrants 106 106Changes inreportingperiod -33 058 33 058 -141 -141SHAREHOLDERS'EQUITY 4830.9.08 3 440 69 0 33 058 540 -237 11 235 223 328EUR thousandSHAREHOLDERS' 48EQUITY 1.1.09 3 440 69 -271 33 058 540 -3 991 15 648 224 717Comprehensiveincome 450 6 678 7 128Dividend -2distribution -2 623 623Grantedwarrants 447 447Repurchase ofownshares -358 -358Changes inreportingperiod -528 -224 -752SHAREHOLDERS'EQUITY 5230.9.09 3 440 69 -629 33 058 540 -3 542 19 622 0 559GROUP CASH FLOW STATEMENT 1.1.- 1.1.-EUR thousand 1.1.-30.9.2009 30.9.2008 31.12.2008Net cash from operatingactivitiesProfit for the period 5 066 3 290 6 585Adjustments for profit 5 877 3 294 5 243Working capital changes 859 2 200 125Interest paid -183 -83 -291Interest received 57 83 154Other financial items inoperating activities -58 -8 -38Income taxes paid -3 079 -2 572 -3 447Net cash from operatingactivities 8 540 6 205 8 331Cash flows from investingactivitiesPurchase of tangible andintangible assets -1 447 -2 515 -3 631Proceeds from sale of tangibleand intangible assets 0 36 47Acquired subsidiaries -2 104 -8 567 -8 728Repayment of loan receivables 0 7 9Net cash used in investingactivities -3 550 -11 039 -12 303Cash flows from financingactivitiesProceeds from short-term loans 0 5 550 2 000Repayments of short-term loans 0 -4 000 -4 000Proceeds from long-termborrowings 0 7 100 10 650Repayments of long-termborrowings -3 558 -300 -300Share repurchase -358 -271Repayments of financial leaseliabilities 0 -5 -1Dividends paid -2 623 -1 711 -1 720Net cash used in financingactivities -6 539 6 634 6 358Net change in cash and cashequivalents according to cashflow statement -1 549 1 800 2 386Cash and cash equivalents atbeginning of period 8 777 7 041 7 041Effects of exchange rate changeson cash and cash equivalents 339 -161 -650Cash and cash equivalents at endof period 7 567 8 680 8 777GROUP QUARTERLY INCOME STATEMENT 1-3/ 1-3/ 4-6/ 4-6/ 7-9/ 7-9/ 10-12/EUR thousand 2009 2008 2009 2008 2009 2008 2008NET SALES 21 717 18 233 22 729 22 312 21 609 19 259 26 294Other operatingincome 30 69 52 62 47 58 62Materials andservices -1 552 -1 211 -1 611 -1 385 -1 395 -797 -1 333Employee benefit -12 -13 -10expenses 896 -11 765 444 -12 608 -11 113 933 -15 093Depreciation andamortization -1 004 -671 -1 067 -693 -1 106 -690 -990Other operatingexpenses -4 703 -4 910 -4 513 -5 257 -4 014 -4 516 -4 818Operating profit 1 592 -254 2 146 2 431 4 028 2 381 4 122% 7.3% -1.4% 9.4% 10.9% 18.6% 12.4% -15.7%Finance income 124 39 30 18 32 39 637Finance expenses 232 -35 -54 -21 -115 -50 -897Profit beforetax 1 484 -250 2 122 2 428 3 946 2 370 3 862% 6.8% -1.4% 9.3% 10.9% 18.3% 12.3% 14.7%Income taxexpense -818 -300 -727 -528 -941 -430 -567PROFIT FOR THEPERIOD 666 -550 1 396 1 899 3 005 1 941 3 294% 3.1% -3.0% 6.1% 8.5% 13.9% 10.1% 12.5%Changes of ownershipBasware increased its shareholding in Basware Einvoices Oy to 100percent on January 30, 2009, by acquiring 12.55% of the company'sshares and control from the company's management. The purchase pricepaid on the date of the transaction was approximately EUR 720thousand and the additional purchase price to be paid based on thebusiness volume for 2009 in February 2010 at the latest is expectedto be approximately EUR 250 thousand. Basware increased itsshareholding in Basware FIMA Oy to 100 percent on August 21, 2009, byacquiring 4.04% of the company's shares and control from thecompany's management. A situation such as the one presented above iscurrently not regulated by IFRS, so the company's management hascompiled an accounting principle for the case in compliance with IAS8. The change of ownership is recognized under shareholders' equity,and it will not have any effect on profit or goodwill.Basware Einvoices Oy merged with Basware Corporation in accordancewith the previously registered merger plan on June 30, 2009. BaswareEinvoices Oy's business operations will continue in BaswareCorporation as a part of Basware's Automation Services business. Themerger did not result in any changes to Basware Corporation'sorganization structureBasware AS acquired the Norwegian invoice automation solutionbusiness of Itella Information AS. The purchase price was NOK 6.38million (approximately EUR 0.72 million) and it was paid in cash onthe day the acquisition was completed, April 1, 2009. In addition,Basware may pay an additional purchase price of a maximum of NOK 7.0million (EUR 0.77 million) in February 2010, determined on the basisof the volume of the purchased operations' service volume in 2009.EUR 1 039 thousand associated with customer relationships has beenallocated to intangible assets, taking deferred tax liabilities intoconsideration. The purchase price includes EUR 436 thousand ofgoodwill. The allocation of the acquisition cost is preliminary. Theacquired business operations do not have a significant impact on thecompany's net sales and profit for the reporting period, which is thereason for not presenting separate pro forma figures.Basware Corporation acquired the entire share capital of TAG ServicesPty Ltd in Australia. The acquisition price was 2.1 millionAustralian dollars (approximately EUR 1.2 million) and was paid incash in two parts in July and August 2009. In addition the dealincludes an additional acquisition price element that is based on theCompany's net sales of the period from July 1, 2009 to June 30, 2010and will be paid in August 2010 at the latest.4.2 million Australian dollars (approximately EUR 2.4 million)associated with customer relationships has been allocated tointangible assets, taking deferred tax liabilities intoconsideration. The purchase price does not include goodwill. Theallocation of the acquisition purchase price is preliminary.Pro forma net sales for the financial period would have been EUR 66636 thousand had TAG Services Pty Ltd net sales been consolidated forthe entire period.Pro forma operating profit for the financial period would have beenEUR 7 747 thousand had TAG Services Pty Ltd operating profit beenconsolidated for the entire period.COMMITMENTS AND CONTINGENT LIABILITIESEUR thousand 30.9.2009 30.9.2008 31.12.2008GUARANTEES ON BEHALF OF SUBSIDIARIES 1 122 1 101 1 096Guarantees total 1 122 1 101 1 096OWN GUARANTEESLease liabilitiesCurrent lease liabilities 880 781 868Lease liabilities maturing in 1-5years 800 969 838Total 1 680 1 750 1 706Other rental liabilitiesCurrent rental liabilities 2 419 2 033 2 385Rental liabilities maturing in 1-5years 3 309 4 056 4 620Rental liabilities maturing later 1 140 1 196Total 6869 6 183 8 201Other own contingent liabilities,total 8 549 7 934 9 907SEGMENT REPORTINGNet sales by market areaNet sales 7-9/ 7-9/ Change, 1-9/ 1-9/ Change, 1-12/(EUR thousand) 2009 2008 % 2009 2008 % 2008Finland 11 478 10 604 8.2 35 215 34 188 3.0 49 517Scandinavia 4 505 3 352 34.4 16 100 12 179 32.2 18 805Europe 4 104 5 428 -24.4 13 087 14 189 -7.8 19 454Other 3 980 1 567 154.0 6 303 3 692 70.7 5 004Sales betweensegments -2 459 -1 692 45.3 -4 652 -4 444 4.7 -6 682Group total 21 609 19 259 12.2 66 054 59 804 10.5 86 098Operating profit 7-9/ 7-9/ Change, 1-9/ 1-9/ Change, 1-12/(EUR thousand) 2009 2008 % 2009 2008 % 2008Finland 2 546 1 679 51.6 4 690 3 513 33.5 7 898Scandinavia 212 229 -7.2 2 128 1 038 104.9 1 017Europe 465 375 24.0 664 -26 2 653.8 -74Other 1 223 144 748.4 1 258 171 634.0 289Operating profitbetween segments -417 -47 787.2 -972 -140 594.3 -452Group total 4 028 2 381 69.2 7 767 4 557 70.4 8 679Personnel (employed, on 7-9/ 7-9/ 1-9/ 1-9/ Change, 1-12/average) 2009 2008 Change, % 2009 2008 % 2008Finland 458 422 8.6 452 420 7.7 421Scandinavia 135 103 31.1 137 101 35.2 112Europe 116 130 -10.5 119 129 -7.7 129Other 46 28 65.1 36 26 39.0 26Group total 755 682 10.6 743 675 10.1 689Net sales by businessNet sales 7-9/ 7-9/ 1-9/ 1-9/ Change, 1-12/(EUR thousand) 2009 2008 Change, % 2009 2008 % 2008 17License Sales 5 803 5 763 0.7 15 955 725 -10.0 25 859 18Maintenance 7 405 6 278 18.0 21 843 086 20.8 25 068Professional 20Services 6 517 5 757 13.2 22 786 313 12.2 30 538AutomationServices 1 884 1 469 28.3 5 469 3 680 48.6 4 633 59Group total 21 609 19 267 12.2 66 054 804 10.5 86 098Net sales by the location of customer:Net sales 7-9/ 7-9/ Change, 1-9/ 1-9/ Change, 1-12/(EUR thousand) 2009 2008 % 2008 2008 % 2008Finland 9 084 8 645 5.1 30 181 28 745 5.0 41 514Scandinavia 4 893 3 262 50.0 15 716 11 898 32.1 18 309Europe 3 921 5 299 -26.0 12 994 14 048 -7.5 19 191Other 3 711 2 052 80.8 7 163 5 113 40.1 7 083Group total 21 609 19 259 12.2 66 054 59 804 10.5 86 098GROUP KEY INDICATORS 1-9/ 1-9/ 1-9/ 1-12/EUR thousand 2009 2008 2007 2008Net sales 66 054 59 804 50 082 86 098Growth of net sales, % 10.5% 19.4% 15.3% 17.5%EBITDA 10 943 6 611 7 414 11 722% of net sales 16.6% 11.1% 14.8% 13.6%Operating profit beforeIFRS3 amortization 9 188 5 146 6 104 9 730% of net sales 13.9% 8.6% 12.2% 11.3%Operating profit 7 767 4 557 5 588 8 679Growth of operatingprofit, % 70.4% -18.4% -10.9% 15.5%% of net sales 11.8% 7.6% 11.2% 10.1%Profit before tax 7 553 4 548 5 816 8 410% of net sales 11.4% 7.6% 11.6% 9.8%Profit for the period 5 066 3 290 2 999 6 585% of net sales 7.7% 5.5% 6.0% 7.6%Return on equity, % 13.3% 9.2% 8.8% 13.7%Return on investment, % 17.1% 11.0% 16.2% 16.6%Interest-bearingliabilities 9 235 12 679 4 597 13 283Cash and liquid assets*) 7 567 8 680 9 644 8 777Gearing, % 3.2% 8.3% -10.9% 9.3%Equity ratio, % 61.9% 60.0% 68.7% 59.5%Total assets 84 942 80 537 67 555 81 909Gross investments **) 7 084 11 262 11 109 12 476% of net sales 10.7% 18.8% 22.2% 14.5%Capital expenditure 334 684 581 1 007% of net sales 0.5% 1.1% 1.2% 1.2%Research and developmentcosts 10 934 11 134 8 640 15 518% of net sales 16.6% 18.6% 17.3% 18.0%R&D personnel at end ofperiod 184 162 144 171Personnel on averageduring the period 743 675 557 689Personnel at end ofperiod 755 686 630 731Increase in personnel, % 10.1% 8.9% 21.8% 11.1%Earnings per share, EUR 0.45 0.28 0.26 0.56Earnings per share(diluted), EUR 0.45 0.28 0.26 0.56Equity per share, EUR 4.58 4.19 4.04 4.23P/E ratio 24.09 24.97 49.02 11.68Share price performance lowest share price 6.60 6.14 10.11 6.00 highest share price 11.49 10.45 14.00 10.45 average share price 9.29 7.70 12.13 7.53 closing share price 10.72 7.00 12.95 6.59Market capitalization at 121 970 80 276 148 512 75 301end of period 273 868 206 011 2 298Number of traded shares 1 297 031 1 808 869 2 216 534 467% of average number ofshares 11.4% 15.8% 19.3% 20.1%Average number of shares 11 383 11 468 11 468 11 463- undiluted 265 124 124 307 11 383 11 468 11 468 11 463- diluted 265 124 124 307*) Includes cash, cash equivalents and financial assets at fair valuethrough profit or loss**) Includes capitalized R&D costs and acquisitionsMajor shareholdersSeptember 30, 20091. Sihvo, Ilkka 1 065800 9.32. Eräkangas, Kirsi (incl. children under guardianship) 1031 800 9.03. Vaajoensuu, Hannu (incl. a controlled company and children under guardianship)962 100 8.44. Perttunen, Sakari830 400 7.25. Pöllänen, Antti (incl. children under guardianship)667 423 5.86. Nordea Nordic Small Cap Fund 552 217 4.87. Sampo Life Insurance Company Limited550 000 4.88. llmarinen Mutual Pension Insurance Company429 064 3.79. Ahonen, Asko318 822 2.810. Royal Skandia Life Assurance Eib 17527-6 270 0002.411. Kaleva Mutual Insurance Company242 690 2.112. Pension Insurance Company Veritas 226 0002.013. Perttunen, Meimi 215 4001.914. Fondita Nordic Micro Cap Placeringsfond 200 0001.715. Investment Fund Aktia Capital170 863 1.516. Fondita Nordic Small Cap Placfond118 500 1.017. Basware Corporation90 300 0.818. Vaajoensuu, Sara 83 7000.719. Tietoklusteri Oy 77 000 0.720. Pavor Oy75 052 0.7Total of 20 largest shareholders8 177 131 71.3Total ofnominee-registered 1031 110 9.0Others 2 259883 19.7Total 11 468 124 100.0http://hugin.info/131662/R/1347099/323792.pdfThis announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 13.10.2009 - 08:05 Uhr
Sprache: Deutsch
News-ID 6835
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"Basware Interim Report January 1 - September 30, 2009 (IFRS)"
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