Interim report January-June 2000

Unreduced growth for ReadSoft Interim report January-June 2000 * The turnover increased with 61 percent to 117.5 (73.2) MSEK * Results after interest income - 5.1 (- 9.1) MSEK * Results after interest income during the second quarter 1.4 (- 3.4) MSEK * A general agreement worth 6 MSEK was signed with the British bank Abbey National * A bonus issue of 2:1 was carried through on May 25. Important events ReadSoft received a general agreement from the British bank Abbey National, with an estimated value of over half a million English pounds. The deal means that ReadSoft will install its software for automatic data capture on Abbey's bank offices around the country, to be used on loan applications, finance agreements, checks et c. At the Annual General Meeting in April, it was decided that a bonus issue 2:1 would be made during the period, and it was carried through on May 25. This meant that the share capital and number of shares were tripled in the company. ReadSoft was also chosen to participate in the Attract40 list on the Stockholm Stock Exchange. This new category includes successful companies, which have a stock turnover rate that is twice as high as the total stock exchange turnover rate. ReadSoft received the award "Best of AIIM" from the American magazine "Imaging & Document Solutions". The award is given every year after the world-leading document management exhibition AIIM has finished. The motivation for the prize, was that ReadSoft's products incorporate unique technology for using color through the entire process. In connection to the Board Meeting on August 24, the Board has assigned Göran E. Larsson as the Chairman of the Board, as the pervious chairman Gäran Kroon on his own request has left the Board. Turnover and profits During the first half-year of 2000 the development of business has been good with a growth of 61 percent compared to the same period last year. The turnover was 117.5 (73.2) MSEK and income after financial items amounted to -5.1 (-9.1) MSEK. Income after financial items during the second quarter amounted to 1.4 (-3.4) and was a clear improvement compared to the same period last year. The operating margin for the period was -5.5 (-12.0) percent. Measured on the last rolling twelve months the operating margin has been improved and amounted to -4.0 (-6.6) percent. Repayment from SPP is not included in the result of the period. The repayment amounts to 0.5 MSEK. Goal of activities Our goal for the year 2000 and forward is an organic growth of 40-50 percent per year. As for profitability, we want to reach a positive result for the year 2000 and in the long-term a 20 percent profit margin. During the second half-year, our growth goal has been surpassed with margins and the growth is 54 percent counted with rolling twelve months. ReadSoft does not expect to reach a positive result during the year's first three quarters, considering the seasonal turnover distribution during the year. Still, it can be observed that the result during quarter one is somewhat better than expected. The goal of activities may be influenced by complementary company acquisitions during the year. Expansion The company sales have increased strongly on the large export markets outside Scandinavia. During the first half-year, sales in these markets increased with 86 percent, to 94.6 (50.8) MSEK. In Sweden and the rest of Scandinavia our sales have been stable, 22.9 (22.4) percent. License revenues for the period amounted to 56.1 (36.1) MSEK and accounted for 48 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 18.7 (12.0) MSEK for the period. In addition, revenues for training and customer-specific development were 15.8 (4.8) MSEK. Hardware sales (mainly scanners) amounted to 18.4 (15.7) MSEK during the period. Other revenues totaled 8.5 (4.7) MSEK. Staff The number of employees June 30, 2000, were 231 (163) persons, which means an increase of 42 percent compared to the same time last year. Investments Investments during the period amounted to 4.4 (2.2) MSEK and consisted of the acquisition of computer, office and exhibition equipment. All costs for product development have continually burdened the results. Financial position The liquid capital as of June 30 was 116.1 (25.0) MSEK excluding unused committed credit line. The solidity was 60.6 (21.6) percent as of June 30. At the beginning of the year the solidity was 61.9 percent. Bonus issue At the Annual General Meeting in April, it was decided that a bonus issue would be made during the period. This meant that the share capital increased from TSEK 934.4 to TSEK 2.806.3 through a transfer from premium fund, and that the number of shares in the company increased from 9,354,420 shares to 28,063,260 shares. Shareholder information At the end of the period, the number of shareholders amounted to 4,268. Of the total capital, Swedish and foreign institutions owned 50 percent, the company founders 31 percent and others, including personnel, 19 percent. At the end of the period, Swedish shareholders owned 75 percent and foreign shareholders 25 percent of the total capital. The parent company The parent company's net sales, including inter-company posts, amounted to 43.3 (38.3) MSEK. The income after financial items was -3.9 (-1.6) 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 2.4 (0.6) MSEK. At the end of the period, liquidity was 93.9 (20.3) MSEK, excluding unused committed credit line. Equity was 135.7 (26.5 MSEK), resulting in a solidity of 76.2 (35.6) 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 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. 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. Our 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. ReadSoft's products are efficient tools in reducing costs for the increasingly more important information management around the world. Future prospects The development so far during this year is encouraging and signals that we can reach our goals for the entire year. ReadSoft is since the beginning of the year the world-leader when it comes to software for data capture. Our rapid growth is distancing our competitors day by day, both when it comes to technology and market shares. As we grow, we also have more space for a positive result development, without risking our position toward our competitors. We are dominating many of the markets where we are active, and that means that we can become market leaders on these local markets. This will give important advantages in the marketing and sales process and increase our possibility to grow fast and increase our profitability. This promises well for the future and our continued development may be very exciting. Next information occasion Interim report January-September, October 26, 2000 The company's auditors have not audited this report. For more information contact MD Jan Andersson at 042-490 21 00, mobile 0708-37 66 00, e-mail jan.andersson@readsoft.com. Group's income statement in summary Amount in Jan - June Jan - June Rolling 12 Whole year SEK if no 2000 1999 months 9907 1999 other - 0006 mention) Net sales 117.5 73.2 213.5 169.2 Commodities -20.1 -15.4 -34.8 -30.1 Other -44.0 -25.0 -74.7 -55.7 external costs Personnel -57.9 -40.2 -108.1 -90.4 costs Depreciatio -2.0 -1.4 -4.5 -3.9 n on fixed assets Operating -6.5 -8.8 -8.6 -10.9 income Financial income and expense Interest 1.4 -0.3 2.4 0.7 income Income -5.1 -9.1 -6.2 -10.2 after financial items Minority -0.4 0 -0.6 -0.2 interests Profit/loss -5.5 -9.1 -6.8 -10.4 before taxes Taxes -1.2 -0.6 -1.9 -1.3 Net -6.7 -9.7 -8.7 -11.7 profit/loss after taxes Group's balance sheet in summary (Amount in SEK 00-06-30 99-06-30 99-12-31 if no other mention) Assets Fixed assets 11.0 9.0 9.2 Current assets 211.5 84.4 217.3 Total assets 222.5 93.4 226.5 Shareholders' equity and liabilities Shareholders 134.9 20.2 140.2 equity Tax provision 0.4 0.4 0.4 Minority 0.0 0.3 0.4 interests in shareholders' equity Long-term 26.8 31.8 27.9 liabilities Short-term 60.4 40.7 57.6 liabilities Total 222.5 93.4 226.5 shareholders' equity and liabilities Cash-flow statements in summary (Amount in SEK Jan - June Jan - June Whole year if no other 2000 1999 1999 mention) Cash-flow -5.7 -9.2 -8.2 before changes in working capital Changes in -7.0 -3.1 -12.6 working capital Cash-flow from -12.7 -12.3 -20.8 the current business Cash-flow from -3.8 -2.2 -5.0 investment activities Cash-flow from -0.3 24.3 143.5 financial activities Change in -16.8 9.8 117.7 liquid assets Key data group (Amount in SEK Jan - June Jan - June Whole year if no other 2000 1999 1999 mention) Revenue 117.5 73.2 169.2 Revenue growth 60.5 116.5 70.4 % Operating -6.5 -8.8 -10.9 income Income after -5.1 -9.1 -10.2 financial items Operating -5.5 -12.0 -6.5 margin % Profit margin -4.4 -12.4 -6.0 % Equity/assets 60.6 21.6 61.9 ratio % Capital 161.8 51.0 168.0 employed Net/debt/equit -0.66 0.28 -0.75 y ratio (multiple) Net interest- -89.2 5.8 -105,.2 bearing liabilities No. of 163 181 employees at close of period No. of shares 28,063 23,113 *) 28,063 *) at close of period (thousands) Shareholders' 4.81 0.87 *) 5.00 *) equity per share (SEK) Earnings per -0.18 -0.39 *) -0.36 *) share after tax (SEK) Market value 54 10 *) 51 *) at close of period (SEK) *) Comparative values have been recalculated with regard to the bonus issue during the second quarter 2000. ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2000/08/24/20000824BIT00810/bit0001.doc http://www.bit.se/bitonline/2000/08/24/20000824BIT00810/bit0002.pdf