BASWARE INTERIM REPORT JANUARY 1 - MARCH 31, 2008 (IFRS)
SUMMARY
January-March
- Net sales EUR 18 233 thousand (EUR 17 038 thousand) - growth
7.0 percent
- Operating profit EUR -254 thousand (EUR 1 409 thousand) -
decrease 118.1 percent
- Operating profit -1.4 percent of net sales (8.3%)
- Share of international operations 51.8 percent of net sales
(45.3%) - growth 22.6 percent
- Backlog of SaaS orders not recognized as income EUR 11 076
thousand at the end of the period
- Earnings per share EUR -0.05 (EUR 0.08)
Outlook for 2008: Basware expects the growth of net sales for the
financial year to be from 15 to 25 percent compared with the Group's
net sales in the previous year. The first quarter of the year is
milder in growth resulting from the high level of the restated
comparative figures for the first quarter of 2007. Operating profit
(EBIT) is expected to be from 10 to 15 percent of net sales.
GROUP KEY FIGURES
EUR thousand 1-3/2008 1-3/2007 Change, % 1-12/2007
Net sales 18 233 17 038 7.0% 73 270
Operating profit -254 1 409 -118.1% 7 512
% of net sales -1.4% 8.3% 10.3%
Profit before tax -250 1 459 -117.1% 7 704
Profit for the period -550 884 -162.2% 4 112
Return on equity, % -4.8% 8.0% 8.9%
Return on investment, % -1.8% 13.1% 16.2%
Cash and cash equivalents*) 7 254 12 713 -42.9% 7 041
Gearing, % -15.7% -27.5% -5.7%
Equity ratio, % 66.4% 68.8% 70.0%
Earnings per share, EUR -0.05 0.08 -162.2% 0.36
Earnings per share (diluted),
EUR -0.05 0.08 -162.2% 0.36
Equity per share, EUR 3.89 3.82 1.6% 4.12
*) Includes cash, cash equivalents and financial assets at fair value
through profit or loss
Basware's business operations consist of product sales, maintenance
and support, consulting and services, Software as a Service (SaaS)
sales and other operations. The core of Basware's product sales
consists of Basware Enterprise Purchase to Pay product suite and
Basware Basware Financial Management suite. The Group's reported
market areas are Finland, Scandinavia, Europe and North America.
Basware's CEO Ilkka Sihvo comments in conjunction with the Interim
Report:"The first quarter succeeded nearly according to plan. The first
quarter of the year was milder in growth compared to the full year
estimate due to the comparative figures of the first quarter of 2007.
Consulting and maintenance operations grew especially well during the
period. Due to the adjusted revenue recognition principles for
product sales, some of the agreements signed at the end of 2006 were
recognized in the first quarter of 2007. The value of these
agreements amounts to over EUR 3 million. The growth of product sales
without these components would have been 27.0 percent.
Geographical development was also steady and especially positive in
Scandinavia, Europe and in the Finnish Enterprise Purchase to Pay
unit.
The Group's profitability was according to planned in the first
quarter. Fixed costs will grow moderately during the rest of the
year. Profitability will develop positively during the rest of the
year as growth continues."
REPORTING
Basware's primary reporting segment is based upon geography as
follows: Finland, Scandinavia, Europe and North America.
Basware reports it Software as a Service (SaaS) revenue separately in
the second segment. Software as a Service revenue includes license,
maintenance and services revenue that are invoiced monthly based on
an agreement. Software as a Service agreements typically span several
years. The Group also reports the backlog of orders not recognized as
income. The Company's SaaS sales are growing and this dilutes net
sales growth in short term.
As of January 1, 2008, the capital structure of Basware Oyj's
foreign subsidiaries has been changed to the extent that majority of
the long-outstanding intercompany trade receivables in the parent
company have been converted to a long-term net investment in a
foreign operation. Purpose of the loan arrangement is to fund a
long-term strategic investment. Foreign currency gains and losses
from a net investment in a foreign operation are recorded in a
separate component of equity in the consolidated financial
statements.
NET SALES
Basware Group's net sales grew during the financial period by 7.0
percent and were EUR 18 233 thousand (EUR 17 038 thousand).
The Company's product sales decreased by 38.8 percent in the period
and were 22.6 percent (39.4%) of net sales. Due to the adjusted
revenue recognition principles for product sales, some of the
agreements signed at the end of 2006 were recognized in the first
quarter of 2007. The value of these agreements amounts to over EUR 3
million. The growth of product sales without these components would
have been 27.0 percent.
Maintenance revenue and support services related to maintenance grew
by 16.5 percent and represented 31.5 percent (29.1%) of net sales.
Consulting and services revenue grew by 55.2 percent and represented
43.6 percent (30.0%) of net sales. In the financial period SaaS sales
represented 2.3 percent (1.5%) of net sales. The backlog of SaaS
orders not recognized as income was EUR 11 076 thousand at the end of
the period.
Value added resellers provided a net share of 22.9 percent (16.6%) or
EUR 941 thousand of product sales in January-March.
The international share of Basware's net sales was 51.8 percent
(45.3%) in the period. International operations grew by 22.6 percent.
The geographical division of net sales by the location of assets
(primary segment):
+-------------------------------------------------------------------+
| Net sales (EUR | | | | |
| thousand) | 1-3/2008 | 1-3/2007 | Change, % | 1-12/2007 |
|---------------------+----------+----------+-----------+-----------|
| Finland | 10 493 | 12 057 | -13.0 | 48 849 |
|---------------------+----------+----------+-----------+-----------|
| Scandinavia | 4 198 | 4 030 | 4.2 | 16 797 |
|---------------------+----------+----------+-----------+-----------|
| Europe | 4 293 | 2 799 | 53.3 | 15 081 |
|---------------------+----------+----------+-----------+-----------|
| North America | 680 | 752 | -9.6 | 3 460 |
|---------------------+----------+----------+-----------+-----------|
| Net sales between | | | | |
| segments | -1 430 | -2 600 | 45.0 | -10 917 |
|---------------------+----------+----------+-----------+-----------|
| Group total | 18 233 | 17 038 | 7.0 | 73 270 |
+-------------------------------------------------------------------+
The geographical division of net sales by the location of customers:
+-------------------------------------------------------------------+
| Net sales (tuhatta | | | | |
| euroa) | 1-3/2008 | 1-3/2007 | Change, % | 1-12/2007 |
|---------------------+----------+----------+-----------+-----------|
| Finland | 8 779 | 9 360 | -6.2 | 37 969 |
|---------------------+----------+----------+-----------+-----------|
| Scandinavia | 4 127 | 3 929 | 5.0 | 15 911 |
|---------------------+----------+----------+-----------+-----------|
| Europe | 4 347 | 2 831 | 53.6 | 14 785 |
|---------------------+----------+----------+-----------+-----------|
| North America | 979 | 918 | 6.6 | 4 604 |
|---------------------+----------+----------+-----------+-----------|
| Group total | 18 233 | 17 038 | 7.0 | 73 270 |
+-------------------------------------------------------------------+
FINANCIAL PERFORMANCE
Basware's operating profit decreased by 118.1 percent in the quarter
and totaled EUR -254 thousand (EUR 1 409 thousand). Operating profit
represented -1,4 percent (8.3%) of net sales.
Due to the adjusted revenue recognition principles for product sales,
some of the agreements signed at the end of 2006 were recognized in
the first quarter of 2007. The value of these agreements amounts to
over EUR 3 million. The growth of product sales without these
components would have been 27.0 percent.
The division of operating profit geographically by the location of
assets (primary segment):
+-------------------------------------------------------------------+
| Operating profit | | | | |
| (EUR thousand) | 1-3/2008 | 1-3/2007 | Change, % | 1-12/2007 |
|---------------------+----------+----------+-----------+-----------|
| Finland | -93 | 3 315 | -102.8 | 12 706 |
|---------------------+----------+----------+-----------+-----------|
| Scandinavia | 321 | -229 | 239.9 | 333 |
|---------------------+----------+----------+-----------+-----------|
| Europe | -277 | -1 179 | 76.5 | -3 662 |
|---------------------+----------+----------+-----------+-----------|
| North America | -158 | -482 | 67.2 | -1 751 |
|---------------------+----------+----------+-----------+-----------|
| Operating profit | | | | |
| between segments | -47 | -15 | -204.9 | -114 |
|---------------------+----------+----------+-----------+-----------|
| Group total | -254 | 1 409 | -118.1 | 7 512 |
+-------------------------------------------------------------------+
The Company's fixed costs were EUR 16 674 thousand (EUR 14 253
thousand) in the quarter and have grown by 17.0 percent compared with
the same period last year. Personnel costs made up 70.6 percent
(64.8%) or EUR
11 765 thousand (EUR 9 243 thousand) of the fixed costs.
Research and development costs totaled EUR 3 793 thousand (EUR 3 091
million) in the first quarter of which EUR 627 thousand (EUR 440
thousand) or 16.5 percent (14.2%) were capitalized during the period.
Amortization of capitalized research and development costs totaled
EUR 271 thousand (EUR 208 thousand).
The Company's finance income and finance expenses were EUR 4 thousand
(EUR 50 thousand). The Company's profit before tax was EUR -250
thousand (EUR 1 459 thousand) and profit for the period was EUR -550
thousand (EUR 884 thousand). Undiluted earnings per share were EUR
-0.05 (EUR 0.08).
FINANCE AND INVESTMENTS
Basware Group's total assets on the balance sheet at the end of the
financial period were EUR 67 496 thousand (EUR 63 679 thousand). The
Company's cash and liquid assets were EUR 7 254 thousand (EUR 12 713
thousand), of which cash and cash equivalents were EUR 7 223 thousand
(EUR 5 898 thousand) and financial assets at fair value through
profit or loss were EUR 31 thousand (EUR 6 815 thousand).
Equity ratio was 66.4 percent (68.8%) and gearing was -15.7%
(-27.5%). The Company had a total of EUR 231 thousand (EUR 658
thousand) interest-bearing liabilities, of which current liabilities
accounted for EUR 214 thousand (EUR 426 thousand). Return on
investment was -1.8 percent and return on equity -4.8 percent.
Cash flows from operating activities were EUR 6 885 thousand (EUR 6
054 thousand). Cash flows from investments were EUR -737 thousand
(EUR -753 thousand).
Basware Group acquired Digital Vision Technologies Ltd. in September
2007. The short-term loan of EUR 4 million that was withdrawn to in
part fund the acquisition was paid off on February 11, 2008.
The Company's capital expenditure, resulting from regular, additional
and replacement, investments resulting from growth, was EUR 193
thousand (EUR 169 thousand) in the period. Gross investments which
include, in addition to the previously mentioned, the capitalized
research and development costs totaled EUR 822 thousand (EUR 767
thousand).
Amortizations of intangible assets were EUR 525 thousand (EUR 442
thousand). There are no indications of impairments of assets.
RESEARCH, DEVELOPMENT AND NEW PRODUCTS
Basware's research and development costs were EUR 3 793 thousand (EUR
3 091 thousand) in the period and made up 20.8 percent (18.1%) of net
sales. Research and development costs grew by 22.7 percent (17.1%)
compared with the same period last year.
Research and development is centralized in the Software Production
business unit. Altogether 160 people (136) worked in the unit at the
end of March 2008. The Software Production unit expands to India
where there are currently 12 employees and 9 persons are attending a
training program for new employees.
Basware's product portfolio was developed according to plan in the
first quarter. In addition to developing the Invoice Automation
solution, special focus was put on the Procurement solution suite
which was complemented with new versions of Basware Purchase
Management, Basware Contract Lifecycle Management and Basware RFx
Management applications. With Basware Contract Lifecycle Management,
users can maintain and leverage all business agreements. With the
Basware RFx Management sourcing solution, tenders can be managed and
prepared electronically. A new version of Basware Travel & Expense
Management was launched during the quarter.
The Basware Enterprise Purchase to Pay suite received a Works with
Windows Vista approval during the first quarter.
The Finnish Information Processing Association (FIPA) recognized the
Basware Invoice Processing application and its successful
internationalization as the 2007 ICT deed in Finland. FIPA is an
independent association of Finnish ICT professionals and companies
that provide ICT products and services or use them. The Board of FIPA
does the selection, taking into account e.g. the work done to promote
and develop the ICT industry in Finland.
PERSONNEL
Basware employed 666 (532) people in average in the first quarter and
665 (533) people at the end of the period. The number of personnel
grew by 132 persons and by 24.8 percent compared with the same period
last year.
The share of personnel working in foreign units has increased
compared with the same period last year. At the end of the period,
41.1 percent (34.0%) of the Basware personnel worked outside of
Finland and 58.9 percent (66.0%) in Finland. 20.1 percent of the
personnel work in sales and marketing, 46.9 in consulting and
services, 24.1 percent in Software Production, and 8.9 percent in
administration.
The average age of the employees is 35.8 (35.4) years. 31.9 percent
of them hold a Master's degree and 44.7 percent a Bachelor's degree.
28.3 percent of the personnel are women and 71.7 percent men.
Geographical distribution of personnel (primary segment):
Personnel
(employed, in average) 1-3/2008 1-3/ 2007 Change, % 1-12/ 2007
Finland 416 353 17.9 367
Scandinavia 99 93 7.2 96
Europe 127 65 95.9 93
North America 24 22 7.6 25
Group total 666 532 25.1 580
BUSINESS OPERATIONS
Finland
The Finland segment includes the business operations of Finland,
Russia, Asia and Australia as well as the Financial Management and
Einvoices business units. Net sales decreased by 13.0 percent and
totaled EUR 10 493 thousand (EUR 12 057 thousand) in the period. Due
to the adjusted revenue recognition principles for product sales,
some of the agreements signed at the end of 2006 were recognized in
the first quarter of 2007. The value of these agreements amounts to
over EUR 2 million for the Finland segment. Net sales growth of the
Finland segment would have been 10.3 percent without these
components.
Net sales of the Finnish Enterprise Purchase to Pay unit grew by
2.1%. Due to the adjusted revenue recognition principles for product
sales, some of the agreements signed at the end of 2006 were
recognized in the first quarter of 2007. The value of these
agreements amounts to over EUR 1 million for the Finnish Enterprise
Purchase to Pay Unit. Net sales growth of the Finnish Enterprise
Purchase to Pay unit would have been 21.3 percent without these
components.
Net sales of the Financial Management operations (Basware FIMA Oy)
decreased by 27.5% and represented 8.9% (13.1%) of the Basware
Group's business operations. Due to the adjusted revenue recognition
principles for product sales, some of the agreements signed at the
end of 2006 were recognized in the first quarter of 2007. The value
of these agreements amounts to over EUR 0.7 million for the Financial
Management (FIMA) operations. Net sales growth of the Financial
Management operations would have been 6.7 percent without these
components.
During the period, a total of 2 million invoices were transmitted
through the eInvoicing service of Basware Einvoices Oy operating in
the Nordic countries. The invoice volume grew by 23.4 percent (45.1%)
compared with the same quarter last year. Basware Einvoices Oy signed
one new e-Invoice operator agreement with a Nordic operator. The
company internationalizes through Basware' other subsidiaries.
The Enterprise Purchase to Pay and Financial Management solutions are
sold in Russia. Currently there are 5 resellers in the area. New
customers include Tschelkovskiy Vitami and Stockmann ZAO.
Basware opened a branch office in Singapore in the end of 2007 to
strengthen its Asian operations. There are five resellers in the
area. New customers in the quarter include ABB in Japan and Malaysian
Airlines.
In the Finland segment, new customers include Skanska Oy,
Backman-Trummer Oy Ab, AS Paulig Baltic, Viking Line Abp, Sisu Diesel
Oy, Oy HYY-Yhtiöt AB, Toyota Motor Finland Oy, Malaysian Airlines,
ABB Japan, Tschelkovskiy Vitami and Stockmann ZAO.
There are currently 14 resellers in the area and the number of
personnel was 416 (353) on average in the period.
Scandinavia
Basware's Nordic organization includes the Enterprise Purchase to Pay
and Financial Management units in Finland, as part of the parent
company, as well as the 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 which are currently sold only in Finland.
Scandinavia operations developed favorably as a whole and the net
sales of the area grew by 4.2 percent and totaled EUR 4 198 thousand
(EUR 4 030 thousand). The profitability of the operations has
improved by 239.9 percent and operating profit was EUR 321 thousand
(EUR -229 thousand). Due to the adjusted revenue recognition
principles for product sales, some of the agreements signed at the
end of 2006 were recognized in the first quarter of 2007. The value
of these agreements amounts to approximately EUR 0.4 million for the
Scandinavia segment. Net sales growth of the Financial Management
operations would have been 16.7 percent without these components.
New customers include Ovako Steel, Rentokil Initial, Norsk Aller AS,
Nor-Lines, Sector Alarm and AKVA Group. Det Norske Veritas has
started implement Basware Invoice Automation solution globally to
nearly a hundred countries as planned.
Business operations are mainly handled by the own organization and
there were 99 (93) 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 solutions are sold in Europe,
apart from the payment and travel & expense management solutions.
Net sales of the Europe segment grew by 53.3 percent and totaled EUR
4 293 thousand (EUR 2 799 thousand). The profitability of the
operations has improved by 76.5 percent and operating profit was EUR
-277 thousand (EUR -1 179 thousand). Due to the adjusted revenue
recognition principles for product sales, some of the agreements
signed at the end of 2006 were recognized in the first quarter of
2007. The value of these agreements amounts to approximately EUR 0.7
million for the Europe segment. Net sales growth of the European
operations would have been 108.1 percent without these components.
The UK data capture operations developed according to plan and were
profitable.
New customers include Nutrixo, Romande Energie and Societe de Figaro
in France, PowerPacker in The Netherlands as well as Pension
Regulator and Signet in the United Kingdom. Cooperation with Novartis
was extended and the company will implement the Basware Enterprise
Purchase to Pay portfolio globally in 60 countries.
At the end of the third quarter, there were 27 resellers and 127 (65)
employees on average in Europe.
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 decreased by 9.6 percent and totaled EUR 960
thousand. The profitability of the operations has improved by 67.2
percent and operating profit was EUR -158 thousand (EUR -482
thousand). Due to the adjusted revenue recognition principles for
product sales, some of the agreements signed at the end of 2006 were
recognized in the first quarter of 2007. The value of these
agreements amounts to approximately EUR 0.2 million for the North
America segment. Net sales growth of the North American operations
would have been 39.3 percent without these components.
New customers in North America include ING Direct in Canada and
Natixis and General Growth Properties in the United States. General
Growth Properties will implement the Basware Invoice Automation
solution in all its US locations.
At the end of the third quarter, there were 10 resellers and 24 (22)
employees on average in North America.
OTHER EVENTS OF THE FINANCIAL PERIOD
New branches
Basware opened a branch office in Moscow at the beginning of 2008.
Strategy
In its meeting on October 4, 2007, the Board of Directors of Basware
Corp. discussed the Company's growth strategy and approved five
strategic projects that facilitate reaching the set targets. The
projects, to be realized in the strategy period from 2007 to 2010,
are: Dominating the US, Conquer the base, Must-have brand and thought
leadership, Five global giants per year and Joint forces.
There has been no change to the Company's vision, mission and
financial targets, published on September 12, 2006.
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. The book
counter value of the shares is EUR 0.30 per share.
A separate stock exchange release has been issued February 14, 2008
on the Board authorizations and other resolutions of the Annual
General Meeting of Shareholders.
Share price and trade
In the third quarter, the highest price of the share was EUR 10.45
(EUR 14.0), lowest price was EUR 7.50 (EUR 10.48) and closing price
was EUR 7.90 (EUR 11.30). The average price of the share was EUR 8.27
(EUR 12.19).
A total of 482 102 (1 114 729) shares were traded during the
financial period which is the equivalent of 4.2 percent (9.7%) of the
average number of shares. Market capitalization with the period's
closing price on March 31, 2008 was EUR 90 598 180 thousand (EUR
129 589 801 thousand).
Shareholders
Basware had 17 923 (18 951) shareholders on March 31, 2008 including
nominee-registered holdings (9). Nominee-registered holdings
accounted for 13.5 percent of the total number of shares.
The Company received one notice of change in ownership during the
financial period when the holdings of Nordea Investment Fund Company
Finland Ltd, exceeded the five percent threshold defined in the
Securities Markets Act.
GOVERNANCE
At the Annual General Meeting of Shareholders on February 14, 2008,
the number of Board members was confirmed to be five. The Annual
General Meeting resolved to agree on the proposal and elected Matti
Copeland, Sakari Perttunen, Ossi Pohjola, Ilkka Toivola and Hannu
Vaajoensuu to the Board of Directors.
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 on a free
issue to the Company itself.
A separate stock exchange release has been issued February 14, 2008
on the Board authorizations and other resolutions of the Annual
General Meeting of Shareholders.
THE COMPANY'S NEAR FUTURE RISKS AND BUSINESS UNCERTAINTIES
Risk Management
According to the Company's risk management model, the 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 the strategy
and objectives. These risks are managed and diminished in various
ways. Short risks are considered to be risks in current reporting
year.
As part of Basware's risks and business uncertainties in the near
future, Software as a Service (SaaS) based services instead of
license agreements may affect the Company's short term net sales
growth.
General economic uncertainty has increased. According to research
institutions, the global enterprise software market continues to
grow. The market growth in Asia Pacific and Europe is estimated to
compensate the decline of the US market. The economic decline in the
United States has not yet had a substantial impact on Basware's North
American operations.
The company operates in several areas outside the Euro zone, the most
significant of which being Sweden, Norway, United Kingdom and United
States. The company is exposed to exchange rate risks in these
countries through intra-company trade, exports and imports as well as
through funding of foreign units and currency denominated equities.
As of January 1, 2008, the capital structure of Basware Oyj's
foreign subsidiaries has been changed to the extent that majority of
the long-outstanding intercompany trade receivables in the parent
company have been converted to a long-term net investment in a
foreign operation. Purpose of the loan arrangement is to fund a
long-term strategic investment. Foreign currency gains and losses
from a net investment in a foreign operation are recorded in a
separate component of equity in the consolidated financial
statements.
There have not been any other substantial changes to the Company's
near future risks and business uncertainties.
EVENTS AFTER THE FINANCIAL PERIOD
The Company received notice of change in ownership from Baillie
Gifford on April 3, 2008 when shares held by the mutual funds and
separate accounts managed by Baillie Gifford fell under the 5%
percent threshold defined in the Securities Markets Act.
FUTURE OUTLOOK
General economic uncertainty has increased. However, according to
research institutions, the global enterprise software market
continues to grow. The market growth in Asia Pacific and Europe is
estimated to compensate the decline of the US market. Basware
operates in the electronic procurement and purchase invoice area,
which is expected to grow more rapidly than the average for
enterprise software. Basware solutions generate cost savings and
therefore the demand is not heavily dependent on the economic
situation.
Western Europe and the United States represent approximately three
quarters of overall demand for enterprise software. Invoice
processing and procurement software remain at the beginning of their
lifecycles in these regions. The purchase management and invoice
processing software markets are relatively heterogeneous with regards
to the competitive situation. However, strong growth may attract more
competitors to the market. The industry is consolidating rapidly and
this development is expected to continue in the future. Basware is a
medium sized software company on a global scale, in terms of sales
and number of personnel.
Basware's direct competitors are mainly smaller companies that
operate locally. Document management, scanning and workflow solution
developers compete with Basware especially in invoice processing.
Competing solutions also include tailored software solutions that
complement Enterprise Resource Planning (ERP) systems and require
extensive client-specific project work.
The competitiveness of the software is still good due to new value
added products and the integrated concept that the products form.
The Company's international growth is based on the Company's own
sales and marketing efforts as well as on reseller operations. The
development of the indirect channel continues especially in Europe
and North America and in Russia and Asia. In Scandinavia, the focus
is on profitability, supported by the extending product portfolio. In
Finland, the focus is on profitability and the moderate growth comes
mainly from the purchase management area.
The profitability of the regions outside the Nordic countries
continues to be improved in all of the Group's country units which
decreases the Group's tax rate in the long term.
As a result of the acquisition of Digital Vision, the Company gained
a foothold in the Indian market. The Company extends it research and
development unit to India which in the future results in a decrease
of the research and development costs' share of the Company's net
sales.
Of the Company's EUR 11 076 thousand backlog of SaaS orders,
approximately EUR 500 thousand will be recognized as income in 2008.
Basware has complemented its organic growth with acquisitions. The
Company continues to review possible acquisition targets especially
in the United States and Europe during 2008. With the acquisitions,
the Company can extend the sales channel in international markets.
Fixed costs will grow moderately during the rest of the year.
In 2008, Basware expects the growth of net sales for the financial
year to be from 15 to 25 percent compared with the Group's net sales
in the previous year. Operating profit (EBIT) is expected to be from
10 to 15 percent of net sales.
In Espoo, Finland, April 15, 2008.
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 15, 2008 a briefing on the Interim
Report for the press and analysts at 11:00 in Restaurant Palace
Gourmet, Eteläranta 10, 10th floor, cabinet 4-5 in Helsinki, Finland.
During this briefing CEO Ilkka Sihvo will comment the operations and
financial performance of the quarter. Welcome.
Distribution
Helsinki Stock Exchange
Key media
www.Basware.com
The Interim Report has been prepared according to the International
Financial Reporting Standards (IFRS). Same Accounting Principles have
been applied as in the 2007 Financial Statements. Key indicator
calculations remain unchanged and have been presented in the 2007
Financial Statements.
GROUP INCOME STATEMENT
Change,
EUR thousand 1.1.-31.3.2008 1.1.-31.3.2007 % 1.1.-31.12.2007
NET SALES 18 233 17 038 7.0 73 270
Other operating
income 69 15 348.2 834
Materials and
services -1 211 -819 47.9 -4 459
Employee
benefits
expenses -11 765 -9 243 27.3 -40 600
Depreciation
and
amortization -671 -571 17.5 -2 590
Other operating
expenses -4 910 -5 010 -2.0 -18 943
Operating
profit -254 1 409 -118.1 7 512
Finance Income 39 61 -35.1 344
Finance
Expenses -35 -11 215.8 -152
Profit before
tax -250 1 459 -117.1 7 704
Income tax
expense -300 -575 -47.9 -3 591
PROFIT FOR THE
PERIOD -550 884 -162.2 4 112
EPS
(undiluted),
EUR -0.05 0.08 -163.2 0.36
EPS (diluted),
EUR -0.05 0.08 -163.2 0.36
Average share
number:
- undiluted 11 468 124 11 468 124 11 468 124
- diluted 11 468 124 11 468 124 11 468 124
GROUP BALANCE SHEET
EUR thousand 31.3.2008 31.3.2007 Change, % 31.12.2007
ASSETS
NON-CURRENT ASSETS
Intangible assets 12 321 10 150 21,4 12 210
Goodwill 25 693 18 489 39.0 25 702
Tangible assets 1 033 821 25.8 1 009
Available-for-sale
investments 38 2 612 -98.6 38
Long-term trade and other
receivables 12 12 12
Deferred tax assets 2 303 3 102 -25.8 2 489
Non-current assets 41 401 35 188 17.7 41 460
CURRENT ASSETS
Inventories 35 18 88.5 42
Trade and other receivables 17 817 15 547 14.6 18 704
Income tax receivables 990 213 365.7 476
Financial assets at fair
value through profit or loss 31 6 815 -99.5 31
Cash and cash equivalents 7 223 5 898 22.5 7 010
Current assets 26 095 28 491 -8.4 26 263
TOTAL ASSETS 67 496 63 679 6.0 67 722
EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Share capital 3 440 3 440 3 440
Share premium account 33 127 33 127 33 127
Fair value reserve and other
reserves 540 540 540
Translation differences 208 283 -26.5 392
Retained earnings 7 352 6 370 15.4 9 765
Minority interest 161 81 99.2 148
Shareholders' equity 44 828 43 841 2.3 47 413
NON-CURRENT LIABILITIES
Deferred tax liability 1 644 1 437 14.4 1 643
Interest-bearing liabilities 18 232 -92.2 20
Non-current liabilities 1 662 1 669 -0.4 1 663
CURRENT LIABILITIES
Interest-bearing liabilities 214 426 -49.9 4 314
Trade payables and other
liabilities 20 498 17 324 18.3 14 000
Tax liability from income
tax 295 419 -29.7 333
Current liabilities 21 006 18 169 15.6 18 647
TOTAL EQUITY AND LIABILITIES 67 496 63 679 6.0 67 722
GROUP STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Share- Share Share-
holders' premium Other Translation Retained Minority holders'
EUR thousand equity account reserves differences earnings interest equity
SHAREHOLDERS' 3 440 33 127 540 235 7 176 88 44 606
EQUITY
1.1.2007
Change in
translation
difference 48 23 71
Net
profit/loss
recognized
directly in
shareholders'
equity 48 23 71
Profit for the
period 891 -7 884
Total profits
and losses 48 914 -7 955
Share premium -1 720 -1 720
SHAREHOLDERS'
EQUITY
31.3.2007 3 440 33 127 540 283 6 370 81 43 841
Share- Share Share-
holders' premium Other Translation Retained Minority holders'
EUR thousand equity account reserves differences earnings interest equity
SHAREHOLDERS'
EQUITY
1.1.2008 3 440 33 127 540 392 9 765 148 47 413
Change in
translation
difference -184 -161 -345
Granted
warrants 31 31
Net
profit/loss
recognized
directly in
shareholders'
equity -184 -130 -314
Profit for the
period -563 13 -550
Total profits
and losses -184 -693 13 -864
Dividend
distribution -1 720 -1 720
SHAREHOLDERS'
EQUITY
31.3.2008 3 440 33 127 540 208 7 352 161 44 828
GROUP CASH FLOW STATEMENT
EUR thousand 1.1.-31.3.2008 1.1.-31.3.2007 1.1.-31.12.2007
Cash flows from
operating activities
Profit for the period -550 884 4 112
Adjustments for profit 966 1 118 5 732
Working capital changes 7 192 4 658 -1 812
Interest paid -31 -7 -124
Dividends received 41 8 287
Interest received -5 -1 -7
Other financial items
in operating activities -728 -607 -3 801
Net cash from operating
activities 6 885 6 054 4 387
Cash flows from
investing activities
Purchase of tangible
and intangible assets -742 -757 -2 869
Proceeds from sale of
tangible
and intangible assets 4 1 48
Acquired subsidiaries -1 -8 180
Proceeds from other
investments 3 013
Repayments of loan
receivables 3 20
Net cash used in
investing activities -737 -753 -7 969
Cash flows from
financing activities
Minority's capital
investment 40
Proceeds from
short-term loans 4 000
Repayments of
short-term borrowings -4 000
Repayments of long-term
borrowings -100 -100 -562
Repayments of financial
lease liabilities -2 -7 -10
Dividends paid -1 720 -1 510 -1 720
Net cash used in
financing activities -5 822 -1 617 1 749
Net change in cash and
cash equivalents
according to cash flow
statement 325 3 683 -1 833
Cash and cash
equivalents at
beginning of period 7 041 8 975 8 975
Effects of exchange
rate changes on cash
and cash equivalents -112 3 -101
Effects of fair value
implementation 52
Cash and cash
equivalents at end of
period 7 254 12 713 7 041
GROUP QUARTERLY INCOME STATEMENT
EUR thousand 1-3/2008 1-3/2007 4-6/2007 7-9/2007 10-12/2007
NET SALES 18 233 17 038 17 776 15 268 23 187
Other operating income 69 15 752 23 44
Materials and services -1 211 -819 -662 -981 -1 996
Employee benefits
expenses -11 765 -9 243 -9 961 -7 827 -13 569
Depreciation and
amortization -671 -571 -597 -657 -765
Other operating
expenses -4 910 -5 010 -4 536 -4 419 -4 977
Operating profit -254 1 409 2 773 1 406 1 924
% -1.4% 8.3% 15.6% 9.2% 8.3%
Finance income 39 61 79 130 73
Finance expenses -35 -11 -12 -20 -109
Profit before tax -250 1 459 2 840 1 516 1 888
% -1.4% 8.6% 16.0% 9.9% 8.1%
Tax on income from
operations -300 -575 -1 256 -985 -775
PROFIT FOR THE PERIOD -550 884 1 584 531 1 113
% -3.0% 5.2% 8.9% 3.5% 4.8%
COMMITMENTS AND CONTINGENT LIABILITIES
Tuhatta euroa 31.3.2008 31.3.2007 31.12.2007
GUARANTEES ON BEHALF OF SUBSIDIARIES
1 075 986 1 103
Guarantees total 1 075 986 1 103
OTHER OWN CONTINGENT LIABILITIES
Lease liabilities:
Current lease liabilities 771 554 601
Lease liabilities maturing in 1-5
years 861 485 685
Total 1 631 1 039 1 286
Other rental liabilities:
Current rental liabilities 2 014 1 414 1 827
Rental liabilities maturing in 1-5
years 3 892 2 763 3 957
Rental liabilities maturing later 99 172
Total 6 005 4 176 5 956
Other own contingent liabilities,
total 7 636 5 215 7 242
SEGMENT REPORTING
Geographical segments (primary segment)
+-------------------------------------------------------------------+
| Net sales | | | | |
| (EUR thousand) | 1-3/2008 | 1-3/2007 | Change, % | 1-12/2007 |
|---------------------+----------+----------+-----------+-----------|
| Finland | 10 493 | 12 057 | -13.0 | 48 849 |
|---------------------+----------+----------+-----------+-----------|
| Scandinavia | 4 198 | 4 030 | 4.2 | 16 797 |
|---------------------+----------+----------+-----------+-----------|
| Europe | 4 293 | 2 799 | 53.3 | 15 081 |
|---------------------+----------+----------+-----------+-----------|
| North America | 680 | 752 | -9.6 | 3 460 |
|---------------------+----------+----------+-----------+-----------|
| Sales between | | | | |
| segments | -1 430 | -2 600 | 45.0 | -10 917 |
|---------------------+----------+----------+-----------+-----------|
| Group total | 18 233 | 17 038 | 7.0 | 73 270 |
+-------------------------------------------------------------------+
+-------------------------------------------------------------------+
| Operating profit | | | | |
| (EUR | | | Change, | |
| thousand) | 1-3/2008 | 1-3/2007 | % | 1-12/2007 |
|-----------------------+----------+----------+---------+-----------|
| Finland | -93 | 3 315 | -102.8 | 12 706 |
|-----------------------+----------+----------+---------+-----------|
| Scandinavia | 321 | -229 | 239.9 | 333 |
|-----------------------+----------+----------+---------+-----------|
| Europe | -277 | -1 179 | 76.5 | -3 662 |
|-----------------------+----------+----------+---------+-----------|
| North America | -158 | -482 | 67.2 | -1 751 |
|-----------------------+----------+----------+---------+-----------|
| Operating profit | | | | |
| between segments | -47 | -15 | -204.9 | -114 |
|-----------------------+----------+----------+---------+-----------|
| Group total | -254 | 1 409 | -118.1 | 7 512 |
+-------------------------------------------------------------------+
Personnel
(employed, in average) 1-3/2008 1-3/ 2007 Change, % 1-12/ 2007
Finland 416 353 17.9 367
Scandinavia 99 93 7.2 96
Europe 127 65 95.9 93
North America 24 22 7.6 25
Group total 666 532 25.1 580
Business segments (secondary segment)
+-------------------------------------------------------------------+
| Net sales | | | | |
| (EUR thousand) | 1-3/2008 | 1-3/2007 | Change, % | 1-12/2007 |
|---------------------+----------+----------+-----------+-----------|
| Product sales | 4 074 | 6 466 | -37.0 | 24 117 |
|---------------------+----------+----------+-----------+-----------|
| Maintenance and | | | | |
| support | 5 750 | 4 958 | 16.0 | 22 100 |
|---------------------+----------+----------+-----------+-----------|
| Consulting and | | | | |
| services | 7 256 | 5 021 | 44.5 | 23 342 |
|---------------------+----------+----------+-----------+-----------|
| SaaS | 223 | 250 | -10.7 | 1 250 |
|---------------------+----------+----------+-----------+-----------|
| Other operations | 930 | 343 | 171.3 | 2 461 |
|---------------------+----------+----------+-----------+-----------|
| Group total | 18 233 | 17 038 | 7.0 | 73 270 |
+-------------------------------------------------------------------+
Geographical division of net sales by the location of customer
+-------------------------------------------------------------------+
| Net sales (EUR | | | | |
| thousand) | 1-3/2008 | 1-3/2007 | Change, % | 1-12/2007 |
|---------------------+----------+----------+-----------+-----------|
| Finland | 8 779 | 9 360 | -6.2 | 37 969 |
|---------------------+----------+----------+-----------+-----------|
| Scandinavia | 4 127 | 3 929 | 5.0 | 15 911 |
|---------------------+----------+----------+-----------+-----------|
| Europe | 4 347 | 2 831 | 53.6 | 14 785 |
|---------------------+----------+----------+-----------+-----------|
| North America | 979 | 918 | 6.6 | 4 604 |
|---------------------+----------+----------+-----------+-----------|
| Group total | 18 233 | 17 038 | 7.0 | 73 270 |
+-------------------------------------------------------------------+
GROUP KEY INDICATORS
EUR thousand 1-3/2008 1-3/2007 1-12/2007
Net sales 18 233 17 038 73 270
Growth of net sales, % 7.0% 10.4% 22.2%
Operating profit -254 1 409 7 512
Growth of operating profit, % -118.1% -44.3% -7.0%
% of net sales -1.4% 8.3% 10.3%
Profit before tax -250 1 459 7 704
% of net sales -1.4% 8.6% 10.5%
Profit for the period -550 884 4 112
% of net sales -3.0% 5.2% 5.6%
Return on equity, % -4.8% 8.0% 8.9%
Return on investment, % -1.8% 13.1% 16.2%
Interest bearing liabilities 232 658 4 334
Cash and liquid assets *) 7 254 12 713 7 041
Gearing, % -15.7% -27.5% -5.7%
Equity ratio, % 66.4% 68.8% 70.0%
Total assets 67 496 63 679 67 722
Gross investments **) 822 767 12 220
% of net sales 4.5% 4.5% 16.7%
Capital expenditure 193 169 817
% of net sales 1.1% 1.0% 1.1%
Research and development costs 3 793 3 091 13 172
% of net sales 20.8% 18.1% 18.0%
R&D personnel at end of period 160 136 152
Personnel average for period 666 532 580
Personnel at end of period 665 533 658
Growth of personnel, % 24.8% 3.9% 24.6%
Earnings per share, EUR -0.05 0.08 0.36
Earnings per share, EUR (diluted) -0.05 0.08 0.36
Equity per share, EUR 3.89 3.83 4.12
Average share number:
- undiluted 11 468 124 11 468 124 11 468 124
- diluted 11 468 124 11 468 124 11 468 124
*) 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, 2008
Shares Votes
pcs %
1. Sihvo, Ilkka 1 065 800 9.3
2. Vaajoensuu, Hannu (incl. a controlled company
and children under guardianship) 1 045 800 9,1
3. Eräkangas, Kirsi (incl. children under
guardianship) 1 031 800 9,0
4. Perttunen, Sakari 830 400 7,2
Pöllänen, Antti (incl. children under
5. guardianship) 760 900 6,6
6. Nordea Nordic Small Cap Fund 558 084 4,9
7. Ahonen, Asko 318 822 2,8
8. Henki Sampo Pension Insurance Company 300 000 2,6
9. Fondita Nordic Small Cap Placfond 261 000 2,3
10. Royal Skandia Life Assurance 250 000 2,2
11. Veritas Pension Insurance Company 216 000 1,9
12. Perttunen Meimi 215 400 1,9
13. Kaleva Mutual Insurance Company 130 000 1,1
14. Evli Pankki Oyj 118 297 1,0
15. Sr Eq Suomi Pienyhtiöt 103 703 0,9
16. Fondita Nordic Micro Cap Rahasto 95 000 0,8
17. Sr Eq Technology 86 823 0,8
18. Fondita Nordic Micro Cap Placeringsfond 71 500 0,6
19. Evli Nordic Tmt 68 424 0,6
20. Sarvala, Vesa 65 241 0,6
20 largest shareholders total 7 592 994 66,2
Nominee registered shares 1 543 762 13,5
Others 2 331 368 20,3
Total 11 468 124 100
