Readsoft Year-End Report 2009: Continued strong cash flow

Year-End Report JANUARY – DECEMBER 2009 “The market during 2009 was Continued strong cash flow difficult, and many customers had a cautious “wait-and-see” attitude. • Sales for 2009 increased by 6% to SEK 617.7 (584.2) million We normally close the year strongly, but the fourth quarter was • Operating profit EBITDA for the year was SEK 29.1 (45.6) million weaker than expected and some • Earnings per share after tax for the year were SEK 0.22 (0.21) deals in progress passed the year- end mark. • Sales for the fourth quarter was SEK 167.4 (182.4) million Our total growth for the year • Operating profit EBITDA for the fourth quarter was SEK 21.6 (38.0) million was approximately 6 percent and in local currencies this is approxi- • Earnings per share after tax for the fourth quarter were SEK 0.68 (0.85) mately the same as the previous • Cash-flow from operating activities for 2009 was SEK 102.5 (86.6) million year. The profit after tax increased somewhat, at the same time as the • The Board of Directors has established a dividend policy and will propose to cash flow from operating activities the Annual General Meeting of shareholders a dividend of SEK 0.15 per share was very strong at SEK 102.5 for 2009 million. We can say that 2009 was an “in-between year”, where we and Key data 2009 2008 Full year Full year Full year many others fought in a tough Oct-Dec Oct-Dec 2009 2008 2007 market. Net sales, SEK million 167,4 182,4 617,7 584,2 525,0 Our assessment is that the Profit/loss EBITDA*, SEK million 21,6 38,0 29,1 45,6 30,3 market is improving and our plans Profit/loss before tax, SEK million 21,4 30,6 11,3 7,0 23,7 are to focus on increasing sales in Net profit/loss, SEK million 22,0 27,7 7,1 6,9 17,8 all markets. We have several new Operating margin EBITDA*, % 12,9 20,8 4,7 7,8 5,8 products that increase our busi- Profit margin before tax, % 12,8 16,8 1,8 1,2 4,5 ness value, both for new customers and for our existing customer base. Profit margin after tax, % 13,1 15,2 1,1 1,2 3,4 We are also, step by step, moving Net earnings per share,SEK 0,68 0,85 0,22 0,21 0,55 towards our objective to reach 50 Cash flow, operating activities 30,3 34,6 102,5 86,6 32,4 percent of sales via partners. * Operating profit/loss before capitalization of costs for proprietary software development, depreciation, amortization, interest and tax. During 2009, sales via partners increased by 17 percent and now constitute 38 percent of our total Development rolling 12 months sales. Sales, SEK million EBITDA, % ReadSoft is equipped for MSEK 700 12% 600 10 considerably better results and 500 8 faster growth lies ahead when the 400 market normalizes. We are now 6 300 focusing all our energy on realizing 200 4 our long-term objectives and plans 100 2 for growth.” 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Jan Andersson 2007 2008 2009 President and CEO JANUARY – DECEMBER 2009 The Group Net sales and profit during the fourth quarter of 2009 During the fourth quarter, sales amounted to SEK 167.4 (182.4) million. Operating profit/loss EBITDA for the quarter was SEK 21.6 (38.0) million. The operating margin EBITDA was 12.9 (20.8) percent. Profit/loss after tax was SEK 22.0 (27.7) million. Operating profit (EBITDA) and profit after tax for the period were affected by exchange rate differences of SEK 1.8 (5.6) million, which are included in the Income Statement under “Other operating expenses/income”. Licensing revenue amounted to SEK 56.8 (70.9) million during the fourth quarter, which is 34 (39) percent of the total revenue. Out of the total licensing revenue for the quarter, Trade Process Automation represented SEK 46.6 (60.1) million, while Document Capture Automation represented SEK 10.2 (10.8) million. Revenue from maintenance agreements amounted to SEK 57.7 (52.5) million for the quarter. In addition, revenues for training and customer-specific development were SEK 42.6 (46.5) million. Hardware sales (primarily scanners) amounted to SEK 7.6 (8.0) million during the quarter. Other revenues amounted to SEK 2.6 (4.5) million. In the Nordic market, sales totaled SEK 44.9 (46.2) million. The company’s sales in other European markets amounted to SEK 72.0 (76.4) million. In the U.S. and the rest of the world, sales amounted to SEK 50.5 (59.8) million. Key developments during the fourth quarter During the fourth quarter, ReadSoft announced several large deals. Among them the biggest deal of the year worth US$1.4 million, and one of the largest orders ever for ReadSoft, which was signed in December with a North American Fortune 500 company. In October, ReadSoft signed a US$300,000 deal with a leading American microbiology company. Further ReadSoft also signed two other large agreements with energy and energy services companies for a total order value of approximately US$980,000. One of these deals was initiated via ReadSoft’s SAP partner programs. In November, ReadSoft closed an important deal with a government agency in the United Kingdom. This government agency will now be able to handle incoming invoices electronically and automatically transfer them into their business system, Oracle E-Business Suite. Further, an Australian government agency signed an agreement with ReadSoft worth US$800,000. This was the second biggest order during the quarter. At an extra ordinary shareholders’ meeting on October 14 ReadSoft’s Board of Directors was given an extended authorization, up to the next annual meeting 2010, to decide on purchase and transfer of own shares. Purchase may be made of maximum a number of shares so that the company's possession of shares at each point in time does not exceed ten (10) percent of the total number of shares in the company. The Board of Directors is hereby given the possibility to adjust the company's capital structure and to enable acquisition financing through use of own shares. ReadSoft has up until December 31, 2009, repurchased 2,679,034 own shares of series-B at a value of SEK 32.5 million. Up until thirty (30) days before this year- end report is published on February 15, 2010, ReadSoft has repurchased 2,750,760 own shares of series-B at a value of SEK 33.5 million. In November, ReadSoft appointed its Nominating Committee for the Annual General Meeting of shareholders in 2010. This consists of Jan Andersson, Lars Appelstål, Hans Forssman at Livförsäkringsaktiebolaget Skandia, and Göran E. Larsson, Chairman of the Board at ReadSoft AB. ReadSoft closed a number of major deals in December. An American industrial company signed a deal worth US$360,000.