BASWARE INTERIM REPORT JANUARY 1 - JUNE 30, 2008 (IFRS)
SUMMARY
January-June
- Net sales EUR 40 545 thousand (EUR 34 814 thousand) - growth
16.5 percent
- Operating profit EUR 2 177 thousand (EUR 4 182 thousand) -
decrease 48.0 percent
- Operating profit 5.4 percent of net sales (12.0%)
- Share of international operations 50.5 percent of net sales
(45.0%) - growth 30.5 percent
- Backlog of SaaS orders not recognized as income EUR 11 241
thousand at the end of the period
- Earnings per share EUR 0.11 (EUR 0.22)
April-June
- Net sales EUR 22 312 thousand (EUR 17 776 thousand) - growth
25.5 percent
- Operating profit EUR 2 431 thousand (EUR 2 334 thousand,
without one-time items) - increase 4.2 percent
- Operating profit 10.9 percent of net sales (13.1% without
one-time items)
- Share of international operations 49.3 percent of net sales
(44.7%) - growth 38.3 percent
- Earnings per share EUR 0.16 (EUR 0.14)
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. Operating profit (EBIT) is expected
to be from 10 to 15 percent of net sales.
The figures are unaudited.
GROUP KEY FIGURES
4-6/ 4-6/ Change, 1-6/ 1-6/ Change, 1-12/
EUR thousand 2008 2007 % 2008 2007 % 2007
Net sales 22 312 17 776 25.5% 40 545 34 814 16.5% 73 270
Operating profit 2 431 2 773 -12.3% 2 177 4 182 -48.0% 7 512
% of net sales 10.9% 15.6% 5.4% 12.0% 10.3%
Profit before tax 2 428 2 840 -14.5% 2 178 4 299 -49.3% 7 704
Profit for the
period 1 899 1 584 19.9% 1 350 2 468 -45.3% 4 112
Return on equity,
% 16.6% 14.2% 5.7% 11.0% 8.9%
Return on
investment, % 20.9% 25.2% 8.9% 18.9% 16.2%
Cash and cash
equivalents*) 5 771 14 683 -60.7% 5 771 14 683 -60.7% 7 041
Gearing, % -7.8% -31.0% -7.8% -31.0% -5.7%
Equity ratio, % 67.2% 71.6% 67.2% 71.6% 70.0%
Earnings per
share, EUR 0.16 0.14 16.8% 0.11 0.22 -47.7% 0.36
Earnings per share
(diluted), EUR 0.16 0.14 16.8% 0.11 0.22 -47.7% 0.36
Equity per share,
EUR 4.06 3.97 2.5% 4.06 3.97 2.5% 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 second quarter of the year can be described with growth and
profitability. Our net sales grew by over 25 percent compared with
the same period last year. Basware grew in all its market areas and
international growth was the strongest in North America, Europe and
Scandinavia. In operational level, the development continued also
well. Consulting operations grew by 41 percent, Software as a Servce
operations grew by 107 percent and also product sales by 14 percent.
New customer agreements were signed in all market areas and larger
and larger companies are interested in the Basware solutions.
Basware was evaluated as a global market leader in the Electronic
Invoice Presentment and Payment market in the Forrester Wave(TM):
Accounts Payable EIPP, Q2 2008 report, published on June 18, 2008. Of
all the companies evaluated, Basware had the largest market share,
best functionality and strong vision.
Thanks to the strong international growth, already over 50 percent of
our net sales come from areas outside of Finland. According to the
goals of 2008, the profitability of international units improved
significantly in Scandinavia, Europe and North America. Despite the
challenging market situation, the demand for the company's software
and consulting services remains steady. On the other hand, the cost
development for next two quarters will be modest. Based on these, the
development for the remainder of the year looks still promising."
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 first half of the year by
16.5 percent and were EUR 40 545 thousand (EUR 34 814 thousand).
During the second quarter, net sales grew by 25.5 percent and were
EUR 22 312 thousand (EUR 17 776 thousand).
The Company's product sales decreased by 14.1 percent in the period
and were 26.7 percent (36.3%) 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 17.5 percent.
Maintenance revenue and support services related to maintenance grew
by 17.4 percent and represented 29.3 percent (28.9%) of net sales.
Consulting and services revenue grew by 47.3 percent and represented
42.0 percent (33.2%) of net sales. In the financial period SaaS sales
grew by 52.4 percent and represented 2.0 percent (1.6%) of net sales.
The backlog of SaaS orders not recognized as income was EUR 11 241
thousand at the end of the period.
In April-June, 30.1 percent (33.2%) of net sales came from own
product sales, with product sales increasing by 13.9 percent. SaaS
sales represented 2.7 percent (1.6%) of net sales and grew by 106.7
percent. In the second quarter, maintenance revenue represented 27.3
percent (28.9%) of net sales and grew by 18.3 percent. Consulting and
service revenue represented 39.9 percent (36.3%) of net sales and
grew by 38.2 percent.
Value added resellers provided a net share of 16.7 percent (15.2%) or
EUR 1 814 thousand of product sales in January-June. In April-June
value added resellers provided a net share of 13.0 percent (13.5%) or
EUR 873 thousand of product sales which is 7.9 percent (10.0%) of
international operations' total net sales.
The international share of Basware's net sales was 50.5 percent
(45.0%) in the period. International operations grew by 30.5 percent.
The geographical division of net sales by the location of assets
(primary segment):
Net sales
(EUR 4-6/ 4-6/ 1-6/ 1-6/ 1-12/
thousand) 2008 2007 Change, % 2008 2007 Change, % 2007
24
Finland 13 091 12 276 6,6 23 584 333 -3,1 48 849
Scandinavia 4 628 3 859 19.9 8 827 7 889 11.9 16 797
Europe 4 469 3 153 41.7 8 762 5 952 47.2 15 081
North America 1 446 921 57.0 2 125 1 673 27.1 3 460
Sales between -5 -10
segments -1 322 -2 432 45.6 -2 752 033 45.3 917
34
Group total 22 312 17 776 25.5 40 545 814 16.5 73 270
The geographical division of net sales by the location of customers:
Net sales
(EUR 4-6/ 4-6/ 1-6/ 1-6/ 1-12/
thousand) 2008 2007 Change, % 2008 2007 Change, % 2007
19
Finland 11 320 9 819 15.3 20 100 179 4.8 37 969
Scandinavia 4 508 3 614 24.7 8 635 7 543 14.5 15 911
Europe 4 401 3 161 39.2 8 749 5 992 46.0 14 785
Other 2 082 1 182 76.2 3 061 2 100 45.8 4 604
34
Group total 22 312 17 776 25.5 40 545 814 16.5 73 270
FINANCIAL PERFORMANCE
Basware's operating profit decreased by 48.0 percent in the period
and totaled EUR 2 177 thousand (EUR 4 182 thousand). Operating profit
represented 5.4 percent (12.0%) of net sales.
In the second quarter, Basware's operating profit totaled EUR 2 431
thousand (EUR 2 773 thousand and without one-time items EUR 2 334
thousand). In the second quarter, operating profit represented 10.9
percent of net sales. Without one-time items, the growth of operating
profit was 4.2 percent. Including the one-time items, the decrease of
operating profit was 12.3 percent in the second quarter.
The division of operating profit geographically by the location of
assets (primary segment):
Operating profit
(EUR 4-6/ 4-6/ Change, 1-6/ 1-6/ Change, 1-12/
thousand) 2008 2007 % 2008 2007 % 2007
Finland 1 926 3 837 -49.8 1 834 7 152 -74.4 12 706
Scandinavia 489 -207 336.8 810 -436 285.9 333
-1
Europe -123 -347 64.5 -401 526 73.7 -3 662
North America 185 -495 137.4 27 -978 102.8 -1 751
Operating profit
between segments -47 -15 -203.2 -94 -31 -204.1 -114
Group total 2 431 2 773 -12.3 2 177 4 182 -48.0 7 512
The Company's fixed costs were EUR 34 539 thousand (EUR 28 750
thousand) in the quarter and have grown by 20.1 percent compared with
the same period last year. Personnel costs made up 70.6 percent
(66.8%) or EUR
24 373 thousand (EUR 19 203 thousand) of the fixed costs. In the
second quarter, fixed costs totaled EUR 17 865 thousand (EUR 14 496
thousand).
Research and development costs totaled EUR 8 133 thousand (EUR 6 344
thousand) of which EUR 1 342 thousand (EUR 1 281 thousand) or 16.5
percent (20.2%) were capitalized during the period. Amortization of
capitalized research and development costs totaled EUR 569 thousand
(EUR 453 thousand).
The Company's finance income and finance expenses were EUR 1 thousand
(EUR 117 thousand). The Company's profit before tax was EUR 2 178
thousand (EUR 4 299 thousand) and profit for the period was EUR
1 350 thousand (EUR 2 468 thousand). Undiluted earnings per share
were EUR 0.11 (EUR 0.22).
FINANCE AND INVESTMENTS
Basware Group's total assets on the balance sheet at the end of the
financial period were EUR 69 627 thousand (EUR 63 593 thousand). The
Company's cash and liquid assets were EUR 5 771 thousand (EUR 14 683
thousand), of which cash and cash equivalents were EUR 5 739 thousand
(EUR 7 805 thousand) and financial assets at fair value through
profit or loss were EUR 32 thousand (EUR 6 878 thousand). The change
in liquid assets results from their use to fund the Digital Vision
acquisition in September 2007. A total of EUR 5.2 million in cash
assets was used and the short-term loan of EUR 4 million taken to
fund the acquisition was paid in February 2008.
Equity ratio was 67.2 percent (71.6%) and gearing was -7.8% (-31.0%).
The Company had a total of EUR 2 130 thousand (EUR 552 thousand)
interest-bearing liabilities, of which current liabilities accounted
for EUR 2 111 thousand (EUR 422 thousand). Return on investment was
8.9 percent and return on equity 5.7 percent.
Cash flows from operating activities were EUR 4 579 thousand (EUR 6
090 thousand). Cash flows from investments were EUR -1 838 thousand
(EUR 1 409 thousand).
The Company's capital expenditure, resulting from regular, additional
and replacement, investments resulting from growth, was EUR 481
thousand (EUR 368 thousand) in the period. Gross investments which
include, in addition to the previously mentioned, the capitalized
research and development costs totaled EUR 1 823 thousand (EUR 1 649
thousand).
Amortizations of intangible assets were EUR 1 070 thousand (EUR 921
thousand). There are no indications of impairments of assets.
RESEARCH, DEVELOPMENT AND NEW PRODUCTS
Basware's research and development costs were EUR 8 133 thousand (EUR
6 344 thousand) in the period and made up 20.1 percent (18.2%) of net
sales. Research and development costs grew by 28.2 percent (16.5%)
compared with the same period last year. Of the research and
development costs, EUR 1 342 thousand (EUR 1 281 thousand) or 16.5
percent (20.2%) were capitalized during the period. Amortization of
capitalized research and development costs totaled EUR 569 thousand
(EUR 453 thousand).
Altogether 161 people (140) worked in Software Production at the end
of June 2008. The Software Production unit expands to India where
there are currently 18 employees.
Basware's product portfolio was developed according to plan in the
second quarter. New versions of Basware Contract Lifecycle Management
and Basware RFx Management applications were launched during the
second quarter. 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 also launched during the quarter.
PERSONNEL
Basware employed 672 (541) people in average in the second quarter
and 686 (559) people at the end of the period. The number of
personnel grew by 127 persons and by 22.7 percent compared with the
same period last year.
The share of personnel working in foreign units has increased
compared with the same period last year. At the end of the period,
41.8 percent (34.5%) of the Basware personnel worked outside of
Finland and 58.2 percent (65.5%) in Finland. 19.7 percent of the
personnel work in sales and marketing, 47.6 in consulting and
services, 23.5 percent in Software Production, and 9.2 percent in
administration.
The average age of the employees is 35,7 (35,5) years. 32.8 percent
of them hold a Master's degree and 44.3 percent a Bachelor's degree.
28.4 percent of the personnel are women and 71.6 percent men.
Geographical distribution of personnel (primary segment):
Personnel
(employed, in 4-6/ 4-6/ 1-6/ 1-6/ Change, 1-12/
average) 2008 2007 Change, % 2008 2007 % 2007
Finland 421 361 16.5 418 357 17.2 367
Scandinavia 101 97 4.5 100 95 5.8 96
Europe 130 69 87.5 129 67 91.6 93
North America 26 23 13.2 25 22 10.4 25
Group total 678 550 23.2 672 541 24.1 580
BUSINESS OPERATIONS
Finland
The Finland segment includes the business operations of Finland,
Russia, Asia and Australia as well as the Financial Management
business unit. Net sales increased by 6.6 percent in the second
quarter and totaled EUR
13 091 thousand (EUR 12 276 thousand).
Net sales of the Finnish Enterprise Purchase to Pay unit grew by 13.5
percent in the second quarter. Net sales of the Financial Management
operations (Basware FIMA Oy) increased by 19.2 percent and
represented 12.2 percent (12.8%) of the Basware Group's business
operations.
In January-June, a total of 4.1 million invoices and in April-June
2.1 million invoices were transmitted through the eInvoicing service
of Basware Einvoices Oy. The invoice volume grew by 24.7 percent
(38.9%) during the second quarter compared with the same quarter last
year. The company internationalizes through Basware' other
subsidiaries.
The Enterprise Purchase to Pay and Financial Management solutions are
sold in Russia. Currently there are five resellers in the area.
There are five resellers in the Asia Pacific region. New customers in
the quarter include UnitingCare Health, Challenger Group Services,
Bureau VERITAS and Datacom.
In the Finland segment, new customers include A-Lehdet Oy, Gasum Oy,
Konecranes Plc, Suomen Liikunta ja Urheilu (SLU), Tampereen Messut,
Rautaruukki Oyj, Finpro ry, CPS Color Oy, American Express Service
Europe, NCC Group, Sesca Group and Thermo Fisher.
There are currently 14 resellers in the area and the number of
personnel was 421 (361) on average in the period.
Scandinavia
Basware's Nordic organization consists of centrally directed
Scandinavian (Sweden, Denmark and Norway) unit. All the Basware
Enterprise Purchase to Pay and Financial Management products are sold
in the Nordic countries, apart from the payment solutions which are
currently sold only in Finland.
Net sales of the area grew by 19.9 percent in the second quarter and
totaled EUR 4 628 thousand (EUR 3 859 thousand). The profitability of
the operations has improved by 336.8 percent and operating profit was
EUR 489 thousand (EUR -207 thousand).
New customers include G4S Security Systems AS, Tollpost, ODIM AS,
Sandefjord Kommune, Storebrand Livsforsikring AS, Tamro AB, NORDUnet
A/S, Scandic Hotels AB and Norstedts Juridik AB.
Business operations are mainly handled by the own organization and
there were 101 (97) 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 41.7 percent and totaled EUR
4 469 thousand (EUR 3 153 thousand). The profitability of the
operations has improved by 64.5 percent and operating profit was EUR
-123 thousand (EUR -347 thousand).
The UK data capture operations developed according to plan and were
profitable.
New customers include Europe Arab Bank, Transavia.com, AkzoNobel
Functional Chemicals and Ballast Nedam 4th environmen Axapta.
At the end of the second quarter, there were 27 resellers and 130
(69) 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 increased 57.0 percent in second quarter and
totaled EUR 1 446 thousand. The profitability of the operations has
improved by 137.4 percent and operating profit was EUR 185 thousand
(EUR -495 thousand).
New customers in North America include American Cancer Society and
Allied Building Products. Additionally, an agreement was signed with
one of the largest publishing houses in America. The customer extends
its existing Basware Invoice Automation solution to an end-to-end
Enterprise Purchase to Pay solution.
At the end of the third quarter, there were 10 resellers and 26 (23)
employees on average in North America.
OTHER EVENTS OF THE FINANCIAL PERIOD
Basware Corporation was among the select companies that Forrester
invited to participate in its June 18, 2008 Forrester Wave(TM):
Accounts Payable EIPP, Q2 2008 report. Basware is evaluated number 1
in all three of the report's dimensions: Strategy, Current Offering
and Market Presence. Basware was stated to have "the largest market
presence, excellent functionality, and a strong vision" The findings
of the Forrester Wave report reflect our success in combining a
strong strategic vision with top-of-the-line product development -
this is made possible by our clear focus on the Purchase to Pay
business area.
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.
Share price and trade
In the third quarter, the highest price of the share was EUR 10.45
(EUR 14.00), lowest price was EUR 6.14 (EUR 10.48) and closing price
was EUR 7.00 (EUR 12.25). The average price of the share was EUR 8.03
(EUR 12.19).
A total of 1 039 454 (1 597 569) shares were traded during the
financial period which is the equivalent of 9.1 percent (13.9%) of
the average number of shares. Market capitalization with the period's
closing price on June 30, 2008 was EUR 80 276 868 thousand (EUR
140 484 519 thousand).
Shareholders
Basware had 17 301 (18 459) shareholders on June 30, 2008 including
nominee-registered holdings (9). Nominee-registered holdings
accounted for 11.41 percent of the total number of shares.
The Company did not receive any notice of change in ownership during
the financial period.
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.
Decision on the Decrease of Share Premium
The AGM authorized the company share premium to be decreased by EUR
33 057 787.45 for the purpose of transferring the decreased amount to
the company's distributable equity. According to the resolution of
the National Board of Patents and Registration of Finland on June 24,
2008, the decrease has been done.
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.
EVENTS AFTER THE FINANCIAL PERIOD
There were no significant events after the financial period.
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 11 241 thousand backlog of SaaS orders,
approximately EUR 400 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 in the second half of the year are estimated to be at the
same level as the fixed costs in the first half 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, July 10, 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, July 10, 2008 a briefing on the Interim
Report for the press and analysts at 11:00 in Hotel Kämp,
Pohjoisesplanadi 29, 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
SUMMARY OF FINANCIAL STATEMENTS AND NOTES TO THE FINANCIAL STATEMENTS
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
1.4.- 1.4.- 1.1.- 1.1.- 1.1.-
30.6. 30.6. Change, 30.6. 30.6. Change, 31.12.
EUR thousand 2008 2007 % 2008 2007 % 2007
NET SALES 22 312 17 776 25,5 40 545 34 814 16,5 73 270
Other operating
income 62 752 -91.8 131 767 -83.0 834
Materials and
services -1 385 -662 109.1 -2 596 -1 482 75.2 -4 459
Employee
benefits -12 -24 -19
expenses 608 -9 961 26.6 373 203 26.9 -40 600
Depreciation and
amortization -693 -597 16.0 -1 364 -1 168 16.7 -2 590
Other operating -10
expenses -5 257 -4 536 15.9 166 -9 546 6.5 -18 943
Operating profit 2 431 2 773 -12.3 2 177 4 182 -48.0 7 512
Finance Income 18 79 -77.7 57 140 -59.2 344
Finance
Expenses -21 -12 78.8 -56 -23 145.5 -152
Profit before
tax 2 428 2 840 -14.5 2 178 4 299 -49.3 7 704
Income tax
expense -528 -1 256 -57.9 -828 -1 831 -54.8 -3 591
PROFIT FOR THE
PERIOD 1 899 1 584 19.9 1 350 2 468 -45.3 4 112
EPS (undiluted),
EUR 0.16 0.14 16.8 0.11 0.22 -47.7 0.36
EPS (diluted),
EUR 0.16 0.14 16.8 0.11 0.22 -47.7 0.36
Average share
number
11 468 11 468 11 468 11 468 11 468
- undiluted 124 124 124 124 124
11 468 11 11 468 11 468 11 468
- diluted 124 468 124 124 124 124
GROUP BALANCE SHEET
EUR thousand 30.6.2008 30.6.2007 Change, % 31.12.2007
ASSETS
NON-CURRENT ASSETS
Intangible assets 12 589 10 390 21.2 12 210
Goodwill 25 726 18 529 38.8 25 702
Tangible assets 1 081 875 23.6 1 009
Available-for-sale
investments 38 38 0.0 38
Long-term trade and other
receivables 12 12 0.0 12
Deferred tax assets 2 300 2 854 -19.4 2 489
Non-current assets 41 746 32 698 27.7 41 460
CURRENT ASSETS
Inventories 37 21 76.2 42
Trade and other receivables 20 654 15 993 29.1 18 704
Income tax receivables 1 420 199 614.3 476
Financial assets at fair
value through profit or loss 32 6 878 -99.5 31
Cash and cash equivalents 5 739 7 805 -26.5 7 010
Current assets 27 881 30 895 -9.8 26 263
TOTAL ASSETS 69 627 63 593 9.5 67 722
EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Share capital 3 440 3 440 0.0 3 440
Share premium account 69 33 127 -99.8 33 127
Fair value reserve and other
reserves 33 598 540 6 121.4 540
Translation differences 229 355 -35.5 392
Retained earnings 9 227 8 015 15.1 9 765
Minority interest 196 68 186.9 148
Shareholders' equity 46 759 45 545 2.7 47 413
NON-CURRENT LIABILITIES
Deferred tax liability 1 618 1 328 21.8 1 643
Interest-bearing liabilities 19 130 -85.5 20
Non-current liabilities 1 637 1 458 12.3 1 663
CURRENT LIABILITIES
Interest-bearing liabilities 2 111 422 400.0 4 314
Trade payables and other
liabilities 18 866 15 215 24.0 14 000
Tax liability from income
tax 255 952 -73.3 333
Current liabilities 21 231 16 590 28.0 18 647
TOTAL EQUITY AND LIABILITIES 69 627 63 593 9.5 67 722
GROUP STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Invested
Share non- Ot- Trans- Mino-
Share- pre- re- her lation rity Share-
holders' mium stricted re- dif- Retained inte- holders'
EUR thousand equity account equity serves ference earnings rest equity
SHARE-HOLDERS' 3 440 33 127 0 540 235 7 176 88 44 606
EQUITY 1.1.2007
Change in
translation
difference 120 120
Granted
warrants 69 69
Other changes 1 1
Net profit/loss
recognized
directly in
shareholders'
equity 120 71 190
Profit for the
period 2 488 -20 2 468
Total profits
and losses 120 2 559 -20 2 658
Share premium -1 720 -1 720
SHARE-HOLDERS'
EQUITY
30.6.2007 3 440 33 127 0 540 355 8 015 68 45 545
Invested
Share non- Ot- Trans- Mino-
Share- pre- re- her lation rity Share-
holders' mium stricted re- dif- Retained inte- holders'
EUR thousand equity account equity serves ference earnings rest equity
SHARE-HOLDERS'
EQUITY 1.1.2008 3 440 33 127 0 540 392 9 765 148 47 413
Change in
translation
difference -163 -190 -353
Granted
warrants 70 70
Siirrot erien -
välillä 33 058 33 058 0
Net profit/loss
recognized
directly in
shareholders' -33
equity 058 33 058 -163 -120 -283
Profit for the
period 1 302 48 1 350
Total profits
and losses -163 1 182 48 1 066
Dividend
distribution -1 720 -1 720
SHARE-HOLDERS'
EQUITY
30.6.2008 3 440 69 33 058 540 229 9 227 196 46 759
GROUP CASH FLOW STATEMENT
EUR thousand 1.1.-30.6.2008 1.1.-30.6.2007 1.1.-31.12.2007
Cash flows from
operating activities
Profit for the period 1 350 2 468 4 112
Adjustments for profit 2 191 2 506 5 732
Working capital changes 2 770 2 286 -1 812
Interest paid -51 -13 -124
Dividends received 56 25 287
Interest received -6 -6 -7
Other financial items
in operating activities -1 730 -1 177 -3 801
Net cash from operating
activities 4 579 6 090 4 387
Cash flows from
investing activities
Purchase of tangible
and intangible assets -1 842 -1 634 -2 869
Proceeds from sale of
tangible
and intangible assets 25 48
Acquired subsidiaries -1 -8 180
Proceeds from other
investments 3 013 3 013
Repayments of loan
receivables 5 6 20
Net cash used in
investing activities -1 838 1 409 -7 969
Cash flows from
financing activities
Minority's capital
investment 40
Proceeds from
short-term loans 2 000 4 000
Repayments of
short-term borrowings -4 200
Repayments of long-term
borrowings -200 -562
Repayments of financial
lease liabilities -4 -6 -10
Dividends paid -1 720 -1 720 -1 720
Net cash used in
financing activities -3 925 -1 927 1 749
Net change in cash and
cash equivalents
according to cash flow
statement - 1 184 5 573 -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 -86 21 -101
Effects of fair value
implementation 115
Cash and cash
equivalents at end of
period 5 771 14 683 7 041
GROUP QUARTERLY INCOME STATEMENT
1-3/ 1-3/ 4-6/ 4-6/ 7-9/ 10-12/
EUR thousand 2008 2007 2008 2007 2007 2007
NET SALES 18 233 17 038 22 312 17 776 15 268 23 187
Other operating income 69 15 62 752 23 44
Materials and services -1 211 -819 -1 385 -662 -981 -1 996
Employee benefits
expenses -11 765 -9 243 -12 608 -9 961 -7 827 -13 569
Depreciation and
amortization -671 -571 -693 -597 -657 -765
Other operating expenses -4 910 -5 010 -5 257 -4 536 -4 419 -4 977
Operating profit -254 1 409 2 431 2 773 1 406 1 924
% -1.4% 8.3% 10.9% 15.6% 9.2% 8.3%
Finance income 39 61 18 79 130 73
Finance expenses -35 -11 -21 -12 -20 -109
Profit before tax -250 1 459 2 428 2 840 1 516 1 888
% -1.4% 8.6% 10.9% 16.0% 9.9% 8.1%
Tax on income from
operations -300 -575 -528 -1 256 -985 -775
PROFIT FOR THE PERIOD -550 884 1 899 1 584 531 1 113
% -3.0% 5.2% 8.5% 8.9% 3.5% 4.8%
COMMITMENTS AND CONTINGENT LIABILITIES
EUR thousand 30.6.2008 30.6.2007 31.12.2007
GUARANTEES ON BEHALF OF SUBSIDIARIES
1 075 1 075 1 103
Guarantees total 1 075 1 075 1 103
OTHER OWN CONTINGENT LIABILITIES
Lease liabilities:
Current lease liabilities 713 586 601
Lease liabilities maturing in 1-5
years 754 460 685
Total 1 468 1 046 1 286
Other rental liabilities:
Current rental liabilities 2 000 1 766 1 827
Rental liabilities maturing in 1-5
years 4 471 4 435 3 957
Rental liabilities maturing later 25 321 172
Total 6 496 6 522 5 956
Other own contingent liabilities,
total 7 964 7 567 7 242
SEGMENT REPORTING
Geographical segments (primary segment)
Net sales
(EUR 4-6/ 4-6/ 1-6/ 1-6/ 1-12/
thousand) 2008 2007 Change, % 2008 2007 Change, % 2007
24
Finland 13 091 12 276 6.6 23 584 333 -3.1 48 849
Scandinavia 4 628 3 859 19.9 8 827 7 889 11.9 16 797
Europe 4 469 3 153 41.7 8 762 5 952 47.2 15 081
North America 1 446 921 57.0 2 125 1 673 27.1 3 460
Sales between -5 -10
segments -1 322 -2 432 45.6 -2 752 033 45.3 917
34
Group total 22 312 17 776 25.5 40 545 814 16.5 73 270
Operating profit
(EUR 4-6/ 4-6/ Change, 1-6/ 1-6/ Change, 1-12/
thousand) 2008 2007 % 2008 2007 % 2007
Finland 1 926 3 837 -49.8 1 834 7 152 -74.4 12 706
Scandinavia 489 -207 336.8 810 -436 285.9 333
-1
Europe -123 -347 64.5 -401 526 73.7 -3 662
North America 185 -495 137.4 27 -978 102.8 -1 751
Operating profit
between segments -47 -15 -203.2 -94 -31 -204.1 -114
Group total 2 431 2 773 -12.3 2 177 4 182 -48.0 7 512
Personnel
(employed, in 4-6/ 4-6/ 1-6/ 1-6/ Change, 1-12/
average) 2008 2007 Change, % 2008 2007 % 2007
Finland 421 361 16.5 418 357 17.2 367
Scandinavia 101 97 4.5 100 95 5.8 96
Europe 130 69 87.5 129 67 91.6 93
North America 26 23 13.2 25 22 10.4 25
Group total 678 550 23.2 672 541 24.1 580
Business segments (secondary segment)
Net sales 4-6/ 4-6/ 1-6/ 1-6/ Change, 1-12/
(EUR thousand) 2008 2007 Change, % 2008 2007 % 2007
Product sales 6 762 6 152 9.9 10 836 12 618 -14.1 24 117
Maintenance and
support 5 507 5 141 7.1 11 257 10 099 11.5 22 100
Consulting and
services 8 696 5 515 57.7 15 952 10 536 51.4 23 342
SaaS 600 291 106.7 824 541 52.4 1 250
Other operations 745 678 9.9 1 675 1 021 64.1 2 461
Group total 22 312 17 776 25.5 40 545 34 814 16.5 73 270
Geographical division of net sales by the location of customer
Net sales (EUR 4-6/ 4-6/ 1-6/ 1-6/ Change, 1-12/
thousand) 2008 2007 Change, % 2008 2007 % 2007
Finland 11 320 9 819 15.3 20 100 19 179 4.8 37 969
Scandinavia 4 508 3 614 24.7 8 635 7 543 14.5 15 911
Europe 4 401 3 161 39.2 8 749 5 992 46.0 14 785
North America 2 082 1 182 76.2 3 061 2 100 45.8 4 604
Group total 22 312 17 776 25.5 40 545 34 814 16.5 73 270
GROUP KEY INDICATORS
EUR thousand 1-6/2008 1-6/2007 1-6/2006 1-12/2007
Net sales 40 545 34 814 30 083 73 270
Growth of net sales, % 16.5% 15.7% 22.2%
Operating profit 2 177 4 182 3 776 7 512
Growth of operating
profit, % -48.0% 10.7% -7.0%
% of net sales 5.4% 12.0% 12.6% 10.3%
Profit before tax 2 178 4 299 3 894 7 704
% of net sales 5.4% 12.3% 12.9% 10.5%
Profit for the period 1 350 2 468 2 795 4 112
% of net sales 3.3% 7.1% 9.3% 5.6%
Return on equity, % 5.7% 11.0% 26.8% 8.9%
Return on investment,
% 8.9% 18.9% 37.1% 16.2%
Interest bearing
liabilities 2 130 552 990 4 334
Cash and liquid assets
*) 5 771 14 683 11 312 7 041
Gearing, % -7.8% -31.0% -24.8% -5.7%
Equity ratio, % 67.2% 71.6% 71.1% 70.0%
Total assets 69 627 63 593 58 655 67 722
Gross investments **) 1 823 1 649 23 501 12 220
% of net sales 4.5% 4.7% 78.1% 16.7%
Capital expenditure 481 368 368 817
% of net sales 1.2% 1.1% 1.2% 1.1%
Research and
development costs 8 133 6 344 5 445 13 172
% of net sales 20.1% 18.2% 18.1% 18.0%
R&D personnel at end
of period
Personnel average for
period 672 541 508 580
Personnel at end of
period 686 559 507 658
Growth of personnel, % 22.7% 10.3% 24.6%
Earnings per share.
EUR 0.11 0.22 0.26 0.36
Earnings per share,
EUR (diluted) 0.11 0.22 0.25 0.36
Equity per share, EUR 4.06 3.97 3.67 4.12
Dividend per profit, % 42.0%
P/E ratio 61.67 56.46 53.57 28.02
Share price
performance
lowest share price 6.14 10.48 11.21 9.50
highest share price 10.45 14.00 15.25 14.00
average share price 8.03 12.19 13.35 12.03
closing share price 7.00 12.25 13.75 10.00
Market value at the
end of period 80 276 868 140 484 519 156 038 768 114 681 240
Share issue adjusted
number
of traded shares 1 039 454 1 597 569 3 628 803 2 761 995
% of average share
number 9.1% 13.9% 33.3 % 24.1%
Average share number:
- during the period 11 468 124 11 468 124 10 889 344 11 468 124
- during the period,
diluted 11 468 124 11 468 124 10 986 222 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, June 30, 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) 740 900 6.5
6. Nordea Nordic Small Cap Rahasto 558 084 4.9
7. Ahonen, Asko 318 822 2.8
8. Henki-Sampo Pension Insurance Company 300 000 2.6
9. Royal Skandia Life Assurance 270 000 2.4
10. Veritas Pension Insurance Company 266 000 2.3
11. Fondita Nordic Small Cap Fund 261 000 2.3
12. Perttunen Meimi 215 400 1.9
13. Kaleva Mutual Insurance Company 146 600 1.3
14. Evli Pankki Oy 120 297 1.0
15. Fondita Nordic Micro Cap Placeringsfond 95 000 0.8
16. Sr Eq Technology 94 823 0.8
17. Pavor 75 052 0.7
18. Sinkonen, Raija 70 000 0.6
19. Nordea Fennia Plus Fund 67 390 0.6
20. Sarvala, Vesa 65 241 0.6
20 largest shareholders total 7 639 409 66.6
Nominee registered shares 1 308 306 11.4
Others 2 520 409 22.0
Total 11 468 124 100
