Interim report January - March 2001

ReadSoft continues to grow Interim report January-March 2001 · The turnover increased by 15 percent to 59,4 (51,4) MSEK · Results after interest income -21,7 (-6,5) MSEK · A deal was closed with the UK based gaming company Littlewoods Leisure, worth 9 MSEK · ReadSoft closed an agreement with American software supplier Bluebird Systems · Eyes & Hands FORMS was chosen for Uganda Election, order value 4 MSEK · One of ReadSoft's so far largest orders in Australia was signed to automate transactions at the Stock Exchange in Sydney · Version 5-2 of Eyes & Hands FORMS and INVOICES was launched at the Read the Future convention in Spain · IMPORTANT EVENTS During the period, ReadSoft closed a number of important deals. One was the 9 MSEK agreement with the UK based gaming company Littlewoods Leisure. Eyes & Hands FORMS will speed up the handling and verification of 30 million game coupons annually. Furthermore ReadSoft closed an agreement with Bluebird Systems, an American developer of management software. Bluebird Systems is a US based global alliance partner to PeopleSoft that provides total solutions for electronic document management. ReadSoft's products for automatic data capture, Eyes & Hands FORMS and INVOICES will be integrated in Bluebird System's products line. An order to facilitate the Ugandan electoral count manifests ReadSofts position as a leading provider of systems for census and statistical projects. In a short time span FORMS will scan and interpret 22 million electoral forms in the upcoming election. During the period ReadSoft also closed a prestigious order with the Australian Stock Exchange and its partner The Perpetual Trustees. The deal is one of ReadSoft's largest to date in Australia and Eyes & Hands FORMS will automate the handling of, for instance, share transactions. The order is worth more than 2 MSEK. Version 5-2 of ReadSoft's products for e-capture were launched at the future conference Read the Future in Malaga. The new versions bring along great improvements for both Eyes & Hands FORMS and INVOICES. The ability to read and interpret information from e-mails has been improved. The Read the Future conference was well attended and attracted 280 participants who discussed the future of e-capture and document handling. Kodak, Fujitsu and BancTec were main sponsors of the event. The feedback from the participants has been very positive and Read the Future gives ReadSoft valuable goodwill and PR. TURNOVER AND PROFITS The first quarter of the year 2001 brought along a 15 percent revenue growth compared to the same period last year. The turnover was 59,4 (51,4) MSEK and income after financial items was -21,7 (-6,5). The operating margin for the period was -36,5 (-14,0) percent. During the last rolling 12 months the operating margin has increased and is now -1,5 (-6,6) percent. GOAL OF ACTIVITIES ReadSoft's organic growth target for the year 2001 and beyond is set for 40-50 percent per year. As for profitability, the long-term goal is to reach a profit margin of at least 20 percent. In the first quarter the growth was lower than the growth target. However, during the last rolling 12 months our growth has been 59 percent. In conformity with earlier years we do not estimate to be profitable during the first three quarters due to the seasonal spread of income. EXPANSION The company's sales on the major export markets outside of Scandinavia, during the first quarter, increased by 5 percent to 43,5 (41,4) MSEK. In Scandinavia our sales increased by 59 percent and totaled 15,9 (10,0) MSEK. License revenues for the period amounted to 26,4 (22,0) MSEK and accounted for 44 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. Out of the total license revenue for the period, FORMS accumulated 81 (91) percent and INVOICES 19 (9) percent. Service (annual proceeds from service agreements) amounted to 14,0 (8,9) MSEK. In addition, revenues for training and customer- specific development were 8,9 (6,8) MSEK. Hardware sales (mainly scanners) amounted to 5,9 (9,5) MSEK. Other revenues totaled 4,1 (4,2) MSEK. STAFF As of March 31, 2001, our staff amounted to 307 (199), an increase by 54 percent compared to the same period last year. INVESTMENTS Investments during the period amounted to 2,6 (2,5) MSEK and consisted of the acquisition of computer, office and event equipment. All costs for product development have continually burdened the results for the period. FINANCIAL POSITION The liquidity as of March 31 was 75,1 (121,3) MSEK excluding unused committed credit line. The solidity was 60,5 (59,5) percent as of March 31. At the beginning of the year, the solidity was 60,1 percent. SHAREHOLDER INFORMATION At the end of the period, the number of shareholders amounted to 6 339 (3 798) Out of the company's total capital, 48 (46) percent were owned by Swedish and foreign institutions, 30 (34) percent by the company's founders, and 22 (20) percent by private persons, including staff. At the end of the period Swedish share holders held 78 (77) and foreign share-holders held 22 (23) percent of the total share value. THE PARENT COMPANY The parent company's net sales, including inter-company posts, amounted to 19,7 (18,7) MSEK for the period. The income after financial items was -11,0 (-4,2) MSEK. Investments in the parent company amounted to 1,4 (1,8) MSEK. At the end of the period, liquidity was 41,1 (105,5) MSEK excluding unused committed credit line. Equity was 153,7 (133,4) MSEK, resulting in a solidity of 86,2 (75,6) percent. PRODUCTS Our product concept e-capture offers a complete solution for automatic data capture. e-capture is the technology that has the ability to capture, interpret and process information from paper, fax, the web, e- mail and other media and transport it to a customer's target system. The name of ReadSoft's software is Eyes & Hands FORMS and Eyes & Hands INVOICES and they facilitate and improve the data capture at companies and authorities all over the world. They give our customers the possibility to lower their costs and automate their data capture, irrespective of if the information comes from paper or electronic documents. With ReadSoft's solutions, customers do not need to build and maintain parallel systems to handle the different information flows, instead they can build a uniform system with common rules for how the information should be captured and handled. FUTURE PROSPECTS Revenue and results were weaker than planned during the first quarter but this does not change our goal for the full year. The probability of ReadSoft exceeding the goals for year 2001 has decreased substantially. The important revenue from software licenses and services increased by 31 percent during the quarter, which in definite numbers deviate from our goals with 2,8 - 5,9 MSEK. Revenue from scanner sales decreased to 9 percent our revenue for the period. This is to be compared with last year when the revenue from scanner sales was high and constituted 18 percent of the revenue. We interpret the weak start of the year partly as a reaction to our very strong closing of last year. In general we see no signs of a falling market climate, the exception is possibly the US where sales have been slower during the first quarter than in other countries. We closely monitor the development on different markets to be ready for swift actions. There are no indications that business should be sensitive to economic fluctuations and our products offers quick return on investment for our clients. However, if the market climate becomes even darker we could be affected. A positive side is that recruitment has become easier. We receive more, and better qualified applicants today compared to last year. The seasonal variations means that we anticipate a loss for the first three quarters. Just as the previous year, our profit for the full year will be generated in the fourth quarter, which traditionally holds more than a third of the annual revenue. We anticipate to improve our result towards our long-term target of a 20 percent profit margin and also to grow by 40-50 percent during the year 2001. However, the probability of a growth in the upper regions of this interval has decreased due to the outcome of the first quarter. NEXT INFORMATION OCCASION · Interim Report January-June, August 27, 2001 · Interim Report January-September, October 25, 2001 For more information contact MD Jan Andersson at phone number +46-42-490 21 00, mobile +46-708-37 66 00 or Information Services Manager Olof Engvall at phone number +46-708-37 66 70. ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/04/25/20010425BIT01140/bit0001.doc The full report http://www.bit.se/bitonline/2001/04/25/20010425BIT01140/bit0001.pdf The full report