Interim report January-September 2001

ReadSoft consolidates Interim report January-September 2001 ·Turnover for the first nine months increased by 14 % to 204,7 (179,7) MSEK ·Results after interest income for January - September was -72,1 (-10,4) MSEK ·Turnover for the third quarter amounted to 59,8 (62,2) MSEK ·Results after interest income for the third quarter was -33,1 (-5,3) MSEK ·Liquidity was 47,5 (125,9) MSEK including committed credit line ·ReadSoft started a cost savings program to reduce annual costs by 60-80 MSEK ·Substantial orders were signed with Tesco, MJ Gleeson Group, the Tax Authority of Lithuania and a census project in Argentina ·After the period a global agreement was signed with Intentia ·In October, an agreement was signed with Hagströmer & Qviberg Fondkommission AB which gives ReadSoft the right to issue new shares and/or convertible bonds to a maximum total amount of 50 MSEK, in portions of 10-20 MSEK · IMPORTANT EVENTS DURING THE THIRD QUARTER During the period ReadSoft launched a substantial cost savings program which will reduce the staff by totally 80 people, 35 of those in Sweden. These measures were taken in order to adapt to a market slowdown and a growth which has been lower than planned. Lowered personnel costs and other measures will save 60-80 MSEK each year. The costs for the savings program will amount to approximately 8-10 MSEK, which will burden the fourth quarter of this year. A substantial part of the personnel cut down has been carried out already and the remaining part will be carried out during November. ReadSoft's INVOICES sales continued to grow during the period. One of the new customers during the third quarter is the UK based construction company MJ Gleeson Group who closed a deal with ReadSoft to automate their invoice processing. The initial order value is 1,2 MSEK. Regarding FORMS, Britain's largest food retailer, Tesco, made a substantial investment in the software during the period. FORMS will process 250 000 delivery notes from 692 stores each month. During the summer ReadSoft also sold FORMS to be used in yet another large census. In the upcoming Argentinean census, information about the 37 million Argentineans will be read, interpreted and verified by FORMS. The initial order value is approximately 2 MSEK. The first ever deal in Lithuania was closed during the third quarter. The Lithuanian Tax Authority will install FORMS to read and interpret approximately 40,000 tax -and VAT forms every month. After the period, ReadSoft signed a global agreement with Intentia regarding INVOICES. Intentia, a leading ERP provider, will resell ReadSoft's software INVOICES within the Movex ADC (automatic data capture) concept throughout their international reseller network. Intentia's goal is to install the system at 30 percent of their worldwide customers. ReadSoft's INVOICES is an integrated part of Movex ADC and if Intentias targets are met, ReadSoft estimates that the agreement could be worth several hundred million SEK. TURNOVER AND RESULTS DURING THE THIRD QUARTER During the third quarter, the revenue amounted to 59,8 (62,2) MSEK, a decrease by 4 percent. Results after interest income for the period was -33,1 (-5,3) MSEK The operating margin for the quarter was -55,4 (-8,5) percent. The company's sales on the major export markets outside of Scandinavia, during the third quarter amounted to 43,0 (50,7) MSEK. In Scandinavia our sales increased by 46 percent and totaled 16,8 (11,5) MSEK. The licenses revenue, consisting of one-time payments for the right to use our software, amounted to 20,3 (26,4) MSEK during the third quarter, which is 34 (42) percent of the total revenue. Out of the total license revenue for the third quarter, FORMS represented 63 (86) percent and INVOICES 37 (14) percent. Service fees (annual proceeds from service agreements) amounted to 14,6 (10,6) MSEK. In addition, revenues for training and customer-specific development were 10,8 (12,5) MSEK. Hardware sales (mainly scanners) amounted to 8,4 (8,3) MSEK. Other revenues totaled 5,7 (4,4) MSEK. TURNOVER AND RESULTS JANUARY-SEPTEMBER The first nine months brought along a 14 percent revenue growth compared to the same period last year. The turnover was 204,7 (179,7) MSEK and the result after financial items was -72,1 (-10,4). The operating margin for the period was -35,2 (-5,8) percent. During the last running 12 months, the revenue has increased by 33 percent to 316,6 (238,9) MSEK and the operating margin was -16,2 (-3,8) percent. During the first nine months of the year, the company's sales on the major export markets outside of Scandinavia increased by 5 percent to 152,9 (145,3) MSEK. In Scandinavia our sales increased by 51 percent and totaled 51,8 (34,4) MSEK. License revenue, for the first nine months, amounted to 87,0 (82,6) MSEK which is 43 (46) percent of the total revenue. Out of the total license revenue, FORMS accumulated 73 (88) percent and INVOICES 27 (12) percent. Revenue from service agreements amounted to 44,6 (29,2) MSEK. Revenues for training and customer-specific development were 28,8 (28,0) MSEK. Hardware sales amounted to 31,2 (26,7) MSEK. Other revenues totaled 13,1 (13,2) MSEK. STAFF As of September 30, 2001, the ReadSoft staff amounted to 348 (241), an increase by 18 employees compared to June 30 when the staff amounted to 330*. This recruitment was all made before the employment stop in August. After the completion of the staff reduction, the staff will amount to approximately 270. INVESTMENTS Investments during the period amounted to 11,4 (6,0) MSEK and consisted of the acquisition of computer-, office- and event related equipment. Investments during the third quarter amounted to 2,8 (1,6) MSEK. All costs for product development have continually burdened the results for the period. FINANCIAL POSITION The liquidity as of September 30 was 47,5 (125,9) MSEK including 36,0 (21,0) in committed credit line. The solidity was 49,3 (57,5) percent as of September 30. At the beginning of the year, the solidity was 60,1 percent. ReadSoft AB and Hagströmer & Qviberg Fondkommission AB have closed an agreement which gives ReadSoft the possibility to issue new shares and/or convertible bonds to a maximum total amount of 50 MSEK during a three-year period, if needed. The board of directors can call upon a number of new issues of shares/convertible bonds, in the interval 10-20 MSEK each during the period. When called upon Hagströmer & Qviberg Fondkommission AB will issue the shares and/or convertible bonds. The agreement has to be approved by an extra shareholders meeting planned for November 12, 2001. SHAREHOLDER INFORMATION At the end of the period, the number of shareholders amounted to 7 168 (5 118) Out of the company's total capital, 47 (49) percent were owned by Swedish and foreign institutions, 30 (31) percent by the company's founders, and 23 (20) percent by private persons, including staff. At the end of the period, Swedish shareholders held 81 (75) percent and foreign shareholders held 19 (25) percent of the total share value. THE PARENT COMPANY The parent company's net sales for the first nine months, including inter-company posts, amounted to 66,7 (64,9) MSEK. The result after financial items was -34,4 (-8,6) MSEK. Investments in the parent company amounted to 6,4 (3,1) MSEK. At the end of the period, liquidity was 24,3 (100,0) MSEK including 30,0 (15,0) MSEK in committed credit line. Equity was 130,6 (132,6) MSEK, resulting in a solidity of 82,1 (74,2) percent. * Revised number of employees at the end of the second quarter due to incomplete staff report PRODUCTS Our product concept e-capture offers a complete solution for automatic data capture. e-capture means 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. ReadSoft's software is called FORMS and INVOICES and they facilitate and improve the data capture at companies and authorities all over the world. The products 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 As earlier communicated, the third quarter turned out weaker than expected, under the influence of a worsening market climate. Due to this year's losses and an uncertain market development ReadSoft in September has decided to carry out a substantial cost savings program, which will create a foundation for reaching a positive cash flow and result for 2002. The signed agreement with Hagströmer & Qviberg Fondkommission AB provides a possibility to strengthen ReadSoft's financial situation if needed. In short, the agreement gives ReadSoft the possibility to issue new shares and/or convertible bonds to a value of a maximum amount of 50 MSEK during a three-year period. ReadSoft's products enables our customers to make substantial cost savings and this should provide ReadSoft with fine business opportunities even in a slow market climate. Despite the slow market, our INVOICES sales are growing fast. In Sweden, where we since 1999 have built a well working reseller network with partners, the sales of INVOICES has grown by 73% so far this year. We now work very hard to implement the same sales success internationally. With an adapted market plan we anticipate that ReadSoft will develop favorably and that we will reach our profit and growth targets. NEXT INFORMATION OCCASION Year-end communiqué 2001, February 18, 2002 Annual report for year 2001, April 2002 For more information contact MD Jan Andersson at phone number +46-42-490 21 00, mobile +46-708-37 66 00 or Head of Information Olof Engvall at phone number +46-708-37 66 70. Please visit www.readsoft.com ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/10/25/20011025BIT01310/bit0002.doc The full report http://www.waymaker.net/bitonline/2001/10/25/20011025BIT01310/bit0002.pdf The full report