Continued expansion for ReadSoft Interim report January-March 2000

Continued expansion for ReadSoft Interim report January-March 2000 * The turnover increased by 58 percent to 51,4 (32,5) MSEK * Results after interest income -6.5 (-5.7) MSEK * Census deal worth 6 MSEK signed in Ghana * Version 5 products for e-capture, containing Internet and color functions, launched at the customer and partner conference "Read the Future," sponsored by Microsoft, Kodak and Fujitsu. IMPORTANT EVENTS During the period, ReadSoft closed a census project deal in Ghana worth 6 MSEK. The order from Ghana fortifies ReadSoft's position as a leading supplier of software for census projects. Censuses are carried out on a regular basis in most parts of the world, and tend to be very large projects, especially in heavily populated countries. ReadSoft's version 5 products for e-capture were launched in connection with the company's customer and partner conference, "Read the Future," in Malta. The conference was well attended attracting more than 200 participants who discussed the future of e-capture and document handling. Microsoft, Kodak and Fujitsu sponsored the event, which also attracted about 50 other ReadSoft-partners such as IBM and Siemens. The feedback from the conference has been very positive. TURNOVER AND PROFITS The development of the business during the first quarter was strong, with growth of 58 percent compared to the same period last year. The turnover was 51.4 (32.5) MSEK and income after financial items was -6.5 (-5.7). A lot of recourses have been allocated on events and marketing activities, which have burdened the result for the period. The operating margin for the period was -14.0 (-17.3) percent. During the last rolling 12 months the operating margin has increased substantially and is now -6.6 (- 11.8) percent. GOAL OF ACTIVITIES Our organic growth target for the year 2000 and beyond is set for 40-50 percent per year. As for profitability, our goal for the whole year is to reach a positive result and eventually reach a profit margin of at least 20 percent. Our growth goals for the first quarter were well surpassed and during the last rolling 12 months our growth has been 57 percent. We do not estimate to be profitable during the first three quarters due to the seasonal spread of income. Bearing this in mind, the operating profit during the first quarter was somewhat better than expected. ReadSoft's goals for the year may come to be revised depending on whether company acquisitions are made during the year. EXPANSION The company's sales increased substantially on the major export markets outside of Scandinavia. During the first quarter, sales in these markets increased by 97 percent to 41.4 (21.0) MSEK. In Sweden and the rest of Scandinavia our sales were steady during the first quarter: 10.0 (11.4) MSEK. License revenues for the period amounted to 22.0 (15.0) MSEK and accounted for 49 percent of the total revenues. The licenses, consisting of one-time payments for the right to use our software, are our largest and most important source of revenue. Service proceeds (annual proceeds from service agreements) amounted to 8.9 (5.2) MSEK for the period. In addition, revenues for training and customer-specific development were 6.8 (2.7) MSEK. Hardware sales (scanners) amounted to 9.5 (7.6) MSEK during the period. Other revenues totaled 4.2 (1.9) MSEK. STAFF As of March 31, 2000, our staff amounted to 199 (152) people, an increase by 31 percent. This increase follows our recruiting plan of 20-30 percent annually. INVESTMENTS Investments during the period consisted mainly of the acquisition of computer and office equipment for 2.5 (1.0) MSEK. All costs for product development have continually burdened the results for the period. FINANCIAL POSITION The liquidity as of March 31 was 121.3 (132.9) MSEK excluding unused committed credit line. The solidity was 59.5 (3.2) percent as of March 31. At the beginning of the year, the solidity was 61.9 percent. SHAREHOLDER INFORMATION At the end of the period, the number of shareholders amounted to 3.798. 77 percent of these shareholders were Swedish and 23 percent were foreign. Out of the company's total capital, 46 percent were owned by Swedish and foreign institutions, 34 percent by the company's founders, and 20 percent by private persons, including staff. THE PARENT COMPANY The parent company's net sales, including inter-company posts, amounted to 18.7 (18.8) MSEK for the period. The income after financial items was -4.2 (-1.1) MSEK. It should be remembered that the parent company's statistics for 1999 included the sales on the Swedish market. These sales have been outsourced to a fully owned subsidiary, which makes the statistics from 1999 difficult to use as a comparison. Investments in the parent company amounted to 1.8 (0.4) MSEK. At the end of the period, liquidity was 105.5 (2.3) MSEK excluding unused committed credit line. Equity was 133.4 (0.4) MSEK, resulting in a solidity of 75.6 (0.8) percent. PRODUCTS Our product concept - e-capture - offers a complete solution for automatic data capture from paper, via fax or over the Internet. Data capture in companies and public authorities all over the world is still to a large extent done manually, and information is still conveyed on paper in most cases. As the information society continues to develop, information will increasingly be transported over the Internet, and volumes will grow. Our products are well positioned with respect to this development. Through the Internet, new possibilities are opened up by the simplified transportation of information and the integration of information systems. To take advantage of this, the systems must be able to compile information from different sources and handle the different communication standards available on the market. FUTURE PROSPECTS ReadSoft is off to a flying start on the year 2000 and can report to our shareholders with yet another successful quarter during which the growth objectives of 40-50 percent have been surpassed. It is important to start the year well as the first quarter traditionally is our weakest, constituting less than 20 percent of the year's income. The seasonal variations and our rapid growth rate make precise estimates on our earnings trend for single quarters less relevant. To attain a better overview of our earnings trend, one should look at the operating margin for the last rolling 12 months. This shows that we have improved the margin by 44 percent during the last 12 months compared to the same 12 month-period last year. ReadSoft has established itself as the largest and fastest growing company in the world among software manufacturers for e-capture. This is a milestone for us, and reaching this position has been an important part of our strategy. Our increasing size is an advantage as it makes it continually harder for our competition to make themselves known on the market and allocate resources for product development. We hope to supplement our organic growth with an active acquisition strategy and thus further benefit from the size advantage. We will continue our efforts to find reasonable acquisitions but it is impossible to predict an exact timeframe for when this will take place. We have now entered the second quarter with our minds set on meeting our goals for the year, and the conditions for this look more than favorable. NEXT INFORMATION OCCASION * January-June, August 24, 2000 * Interim Report January-September, October 26, 2000 This report has not been audited by the company's auditors. For more information contact MD Jan Andersson at phone number +46-42-490 21 00, mobile 0708-37 66 00, e-mail jan.andersson@readsoft.com. Group's income statements in summary Amount in MSEK Jan - Mar Jan - Mar Rolling 12 mon Whole Year unless stated 2000 1999 . 9904 - 0003 1999 otherwise Net Sales 51,4 32,5 188,1 169,2 Commodities -10,7 -6,6 -34,2 -30,1 Other external costs -21,6 -12,3 -65,0 -55,7 Personnel costs -25,4 -18,5 -97,3 -90,4 Depreciations on -0,9 -0,7 -4,1 -3,9 fixed assets Operating income -7,2 -5,6 -12,5 -10,9 Financial income and expense Interest income 0,7 -0,1 1,5 0,7 Income after -6,5 -5,7 -11,0 -10,2 financial items Minority interest -0,4 0,1 -0,7 -0,2 Profit/loss before -6,9 -5,6 -11,7 -10,4 taxes Tax -0,2 0 -1,5 -1,3 Net profit/loss -7,1 -5,6 -13,2 -11,7 after taxes Group's balance sheet in summary Amount in MSEK unless stated otherwise 00-03-31 99-03-31 99-12-31 Assets Fixed assets 11,0 8,4 9,2 Current assets 214,1 65,0 217,3 Total assets 225,1 73,4 226,5 Shareholders' equity and liabilities Shareholders' equity 133,8 -2.3 140,2 Tax provision 0,4 0,4 0,4 Minority interests in shareholders' equity 0,9 0,2 0,4 Long-term liabilities 27,0 38,5 27,9 Short-term liabilities 63,0 36,6 57,6 Total shareholders' equity and liabilities 225,1 73,4 226,5 Cashflow statements in summary Amount in MSEK unless stated otherwise Jan - Mar Jan - Mar Whole Year 2000 1999 1999 Cashflow before changes in in working -6,0 -6,6 -8,2 capital Changes in working capital -2,8 -1,1 -12,6 Cashflow from the current business -8,8 -7,7 -20,8 Cashflow from investment activities -2,7 -1,0 -5,0 Cashflow from financial activities -0,1 5,7 143,5 Change in liquid assets -11,6 -3,0 117,7 Key data, Group Amount in MSEK unless stated Jan - Mar Jan - Mar Whole Year otherwise 2000 1999 1999 Revenue 51,4 32,5 169,2 Revenue growth % 58,2 164,2 70,4 Operating income -7,2 -5,6 -10,9 Income after financial items -6,5 -5,7 -10,2 Operating margin % -14,0 -17,3 -6,5 Profit margin % -13,5 -17,4 -6,0 Equity/assets ratio % 59,5 -3,2 61,9 Capital employed 161,7 31,4 168,0 Net/debt/equity ratio (multiple) -0,70 -9,2 -0,75 Net interest-bearing liabilities -94,3 21,4 -105,2 No. of employees at close of period 199 152 181 No. of shares at close of period 9.354 6.418 9.354 (thousands) Eget Kapital per aktie (kr) 14,30 -0,49 14,99 Shareholders' equity per share (SEK) -0,71 -0,89 -1,47 Earnings per share after tax (SEK) 186 Not listed 154 ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/04/27/20000427BIT00490/bit0001.doc http://www.bit.se/bitonline/2000/04/27/20000427BIT00490/bit0002.pdf