basware financial results q3/2009financial results q3/2009...
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Basware Financial Results Q3/2009Basware Financial Results Q3/2009 and 1-9/2009
CEO Ilkka Sihvo and CFO Mika Harjuaho
October 13, 2009
1
Contents
• Q3/2009 in Brief• Q3/2009 in Brief• 1-9/2009 in Brief
• Business Review of Q3/2009
• Financial Review of Q3/2009• Financial Review of 1-9/2009
• Future Outlook
2
Basware in Brief
• Headquarters in Espoo, Finland and altogether 10 subsidiaries in Europe, in the US and Asia-Pacific
• 850,000 users globally in 1500+ large organizations
• Net sales 66 054 thousand at theNet sales 66 054 thousand at the end of September 2009 (59 804 thousand)
• 755 employees at the end of755 employees at the end of September 2009 (686)
Breakthrough to Global Leader
3
Q3/2009 in BriefEUR Million Q3/2009 Q3/2008
Net sales 21 6 19 3
• Excellent performance in recession
• Third quarter all-time record-high Net sales 21.6 19.3
Growth of net sales, % 12.2% 26.1%
Operating profit (EBIT) 4 .0 2.4
q gprofitability - analysts’ consensus estimate was exceeded 100%
• Double-digit net sales growth -Change of operating profit % 69.2% 69.3%
% of net sales 18.6% 12.4%
Net profit/loss 3 0 1 9
g gexceeded analysts’ estimate by EUR 1.8 Million
• Fixed costs tightly managedNet profit/loss 3.0 1.9
Earnings per share, euro 0.27 0.17
Fixed costs 15.1 15.4
g y g• Strong cash flow from operations
EUR 8 540 thousand• Automation Services grew by
International operations’share of net sales
58.0% 55.1%
Resellers’ share of product l
5.7% 15.9%
• Automation Services grew by 28.3%
• Maintenance grew by 18.0%sales
Personnel 30.9. 755 686• License sales grew by 0.7%• International operations’ share of
net sales continued to grow,
4
growth 18.0%
1-9/2009 in BriefEUR Million 1-9/2009 1-9/2008
Net sales 66 0 59 8
• Excellent performance in recession
Net sales 66.0 59.8
Growth of net sales, % 10.5% 19.4%
Operating profit (EBIT) 7.8 4.6
• Record-high profitability for 1-9/2009 at 11.8%
Change of operating profit % 70.4% -18.4%
% of net sales 11.8% 7.6%
Net profit/loss 5 1 3 3
• Automation Services grew by 48.6%
• M i t b 20 8%Net profit/loss 5.1 3.3
Cash flow from operating activities
8.5 6.2
Earnings per share euro 0 45 0 28
• Maintenance grew by 20.8%• License sales declined 10.0%• International operations’ share of Earnings per share, euro 0.45 0.28
Fixed costs 50.7 50.0
International operations’h f l
54.3% 51.9%
pnet sales continued to grow, growth 15.5%
• Order backlog EUR 10.8 Million, share of net sales
Resellers’ share of product sales
9.2% 16.8%
Personnel 30 9 755 686
g ,several new large AutomationServices deals
5
Personnel 30.9. 755 686
Highlights of Q3/2009g g
Enterprise Purchase to Pay solution and BaswareC ti it S i
Acquisition of Basware’s G S
Enterprise Purchase to Pay solution to the State of S O f Connectivity Services
(including scan and capture) to HCR ManorCare, Inc
reseller TAG Services in Australia
South Australia. One of the largest license sales deals in Basware’s history
Invoice Processing solution Connectivity Services togto Her Majesty’s Prison Services
Connectivity Services to Metso Corporation
6
Business Review of Q3/2009
CEO Ilkka Sihvo
7
2009 market estimate up-dates2009 market estimate up dates
Forrester August 2009 Forrester Sept. 2009 Gartner March 2009 W t /C t l E USA
2009 2010 2009 2010 2009 2010S f 4% % 9 4% 9 3% NA NA
Western/Central Europe USA
Software purchases
-5.4% 5.5% -9.4% 9.3% NA NA
IT services NA NA NA NA NA NA
Total IT purchases
-6.3% 4% -9.3% 7.7% -3.7% 2.4
Source: Gartner, March 2009Source: Forrester: European IT Market Outlook: 2009 To 2010, Aug 2009
8
Reportingp g
FinlandFinnish, Russian, Asia-Pacific(excl. Australia) and h d t ti
License salesEnterprise Purchase to Pay andFinancial Management Software
headquarter operations
Scandinavia
g
Professional ServicesDenmark, Norway and Sweden
EuropeMaintenance
A t ti S iEuropeFrance, Germany, The Netherlands, UK
Automation ServicesSaaSConnectivity (e-invoicing, S &C t )
OtherNorth-America, Australia
Scan&Capture)
9
Segment: Finland Q3/2009g
EUR thousand Q3/08 Q4/08 Q1/09 Q2/09 Q3/09EUR thousand Q3/08 Q4/08 Q1/09 Q2/09 Q3/09Net sales 10 604 15 329 11 331 12 406 11 478Growth of net sales,% 3.6% 7.4% 8.0% -5.2% 8.2%Operating profit 1 679 4 385 849 1 295 2 546Number of personnel 422 426 439 458 458
20 000Net Sales Operating Profit
500
Personnel
10 000
15 000
20 000
2 000
3 000
4 000
5 000
200
300
400
500
0
5 000
Q3/08Q4/08Q1/09Q2/09Q3/090
1 000
2 000
Q3/08 Q4/08 Q1/09 Q2/09 Q3/090
100
200
Q3/08Q4/08Q1/09Q2/09Q3/09
10
Segment: Finland Q3/2009g
New deals withHighlightsProfile
• Aktia• Metso• Helsingin seurakunta-
Basware Connectivitydeal with Metso
Segment consists of Finnish, Russian, Asia-Pacific (excluding Helsingin seurakunta
yhtymä • Schenker• Ilmarinen
Financial Management Team integration to Finnish Business Unit
Pacific (excludingAustralia) operations and head quarter functions
Finnish Business UnitAltogether 14 resellers in the segment
Number of personnel 458 (422)
11
Segment: Scandinavia Q3/2009g
EUR thousand Q3/08 Q4/08 Q1/09 Q2/09 Q3/09EUR thousand Q3/08 Q4/08 Q1/09 Q2/09 Q3/09Net sales 3 352 6 627 5 317 6 278 4 505Growth of net sales,% 7.2% 14.6% 26.6% 35.6% 34.4%Operating profit 229 21 666 1 249 212Operating profit 229 -21 666 1 249 212Number of personnel 103 146 138 137 135
7 000
Net Sales1 300
Operating profit160
Personnel
2 0003 0004 0005 0006 0007 000
500700900
1 100
6080
100120140
01 0002 000
Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 -100100300
Q3/08Q4/08Q1/09Q2/09Q3/09
02040
Q3/08 Q4/08 Q1/09 Q2/09 Q3/09
12
Segment: Scandinavia Q3/2009g
Profile
C t ll d it
New deals withHighlights
Centrally managed unitsin Sweden, Norway and Denmark
• Danske Regioner• Arctic Securities
Several new deals(customer names notpublic)
The segment sellsEnterprise Purchase to Pay solutions
Customer Care Modelsuccesfully introduced in Scandinavia
Mainly direct salesNumber of personnel 135 (103)
Scandinavia
( )
13
Segment: Europe Q3/2009g p
EUR thousand Q3/08 Q4/08 Q1/09 Q2/09 Q3/09EUR thousand Q3/08 Q4/08 Q1/09 Q2/09 Q3/09Net sales 5 428 5 264 4 666 4 318 4 104Growth of net sales,% 56.1% -6.9% 8.7% -3.4% -24.4%Operating profit 375 48 231 32 465Operating profit 375 -48 231 -32 465Number of personnel 130 127 122 119 116
Net Sales Operating Profit Personnel
3 0004 0005 0006 000
0100200300400
Operating Profit
120125130135
Personnel
01 0002 000
Q3/08 Q4/08 Q1/09 Q2/09 Q3/09
-200-100
0
Q3/08 Q4/08 Q1/09 Q2/09 Q3/09105110115
Q3/08 Q4/08 Q1/09 Q2/09 Q3/09
14
Segment: Europe Q3/2009g p
New deals with
• Her Majesty’s Prison
Profile
Segment consists of units
Highlights
• Profitability improved • Her Majesty s PrisonService
• Eurofoam• Deutschland Ringier
Segment consists of unitsin Germany, France, The Netherlands and UK
S t ll E t i
• Profitability improved by 24.0% •Basware Connectivity Services: Major success • Deutschland Ringier
AG• Provimi Petfood• Frencken Group
Segment sells Enterprise Purchase to Pay solutions
Altogether 35 resellers in
Services: Major success in 1-9/2009 extending Basware’s portfoliocompetitiveness Frencken GroupAltogether 35 resellers in
the segmentNumber of personnel 116 (130)
competitiveness
• ADT & Tyco saved over 400,000 Euros with 400,000 Euros with Basware Invoice Automation in the first year
15
y
Segment: Other Q3/2009g
EUR thousand Q3/08 Q4/08 Q1/09 Q2/09 Q3/09Net sales 1 567 1 311 1 195 1 128 3 980Growth of net sales,% 107.1% 27.3% 75.8% -21.9% 154.0%Operating profit 144 118 137 -102 1 223Number of personnel 28 29 31 31 46
Net Sales Operating Profit Personnel
2 000
3 000
4 000
500
1 000
1 500
20
30
40
50
0
1 000
Q3/08 Q4/08 Q1/09 Q2/09 Q3/09
-500
0
Q3/08Q4/08Q1/09Q2/09Q3/090
10
20
Q3/08 Q4/08 Q1/09 Q2/09 Q3/09
16
Segment: Other Q3/2009g
Highlights New deals withProfile
• One of the largestslicense deals inBasware’s history with
• HCR ManorCare,Inc
Fl
Segment consistsunits in North-America and A t li
ythe State of South Australia
• Flowserve
• The State of South Australia
Australia
Altogether 9 resellers in the • Acquisition of Australian
reseller TAG Services Pty Ltd
Australiaresellers in the segment
Number ofNumber of personnel 46 (28)
17
Basware Connectivity Servicesy
Business Transactions: enablesdelivery of e-invoices and purchase messages between
Scan and Capture: convertspaper invoices into electronicf tpurchase messages between
buyers and suppliers format
BaswareBaswareConnectivity
ServicesBasware Supplier Portal: enables suppliers to createeinvoices and to handle
Basware Supplier Activationservice: enables buyers to
t li ’einvoices and to handlepurchase messages and catalogues
convert suppliers’ paperinvoices into electronic invoices
18
Basware Connectivity Servicesy
• Basware Connectivity is a new set of services which enable suppliers and buyers of all sizes and maturity to transact electronicallyelectronically
• Launched on the markets early 2009, clear demand for the solution • New customers in all important markets including North America
- For example Metso Corporation, SITA NEWS, large Finnish corporation and HCR ManorCare Inc. in the US
• Basware strong player in connectivity markets• Basware strong player in connectivity markets• Competitors local or small by transaction volumes• Major success in 1-9/2009 extending Basware’s competitivenessMajor success in 1 9/2009 extending Basware s competitiveness
and ensuring recurring revenue stream
19
Financial Review of Q3/2009 and 1-9/2009
CFO Mika Harjuaho
20
Key Financials 2004-2008y
EUR thousand 2004 2005 2006 2007 2008
R t t dRestated
Net sales 33 891 41 666 59 954 73 270 86 098
Growth of net sales, % 29.4% 43.9% 22.2% 17.5%
Operating profit 6 256 3 611 8 078 7 512 8 679
% of net sales 18.5% 8.7% 13.5% 10.3% 10.1%
Personnel, 31.12. 302 395 528 658 731,
100000
Net sales10000
Operating profit800
PersonneltEUR tEUR
5000060000700008000090000
50006000700080009000
400
500
600
700
010000200003000040000
01000200030004000
0
100
200
300
21
2004 2005 2006 2007 20080
2004 2005 2006 2007 20080
2004 2005 2006 2007 2008
Q3/2009 and 1-9/2009 in Brief
EUR Thousand Q3/09 Q3/08 1-9/09 1-9/08EUR Thousand Q3/09 Q3/08 1-9/09 1-9/08Net sales 21 609 19 258 66 054 59 804Growth of net sales, % 12.2% 26.1% 10.5% 19.4%Operating profit 4 028 2 381 7 767 4 557Change of operating profit, % 69.2% 69.3% 70.4% -18.4%% f % % % %% of net sales 18.6% 12.4% 11.8% 7.6%Net profit/loss 3 005 1 941 5 066 3 290Earning per share EUR 0 27 0 17 0 45 0 28Earning per share, EUR 0.27 0.17 0.45 0.28Fixed costs 15 127 15 449 50 683 49 988International operations' share of net sales,% 58.0% 55.1% 54.3% 51.9%Resellers' share of product sales,% 5.7% 15.9% 9.2% 16.8%
22
Development of Quarterly Net Salesp y
EUR thousand Q1/09 Q1/08 Q2/09 Q2/08 Q3/09 Q3/08 Q4/09 Q4/08Net sales 21 717 18 233 22 729 22 312 21 609 19 259 26 294Net sales 21 717 18 233 22 729 22 312 21 609 19 259 26 294Growth % 19.1% 7.0% 1.9% 25.5% 12.2% 26.1% 13.4%Other operating income 30 69 52 62 47 58 62Materials and services 1 552 1 211 1 611 1 385 1 395 797 1 333Materials and services 1 552 1 211 1 611 1 385 1 395 797 1 333Personnel expences 12 896 11 765 13 444 12 608 11 113 10 933 15 093Depreciation and write-offs 1 004 671 1 067 693 1 106 690 990Oth ti 4 703 4 910 4 513 5 257 4 014 4 516 4 818Other operating expenses 4 703 4 910 4 513 5 257 4 014 4 516 4 818Operating profit 1 592 -254 2 146 2 431 4 028 2 381 4 122
2009 2008 2008
200002500030000
2009 2008
21 %31 %
2008
05000
1000015000
26 %
22 %
23
0Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Development of Quarterly profitp y p
EUR thousand Q1/09 Q1/08 Q2/09 Q2/08 Q3/09 Q3/08 Q4/09 Q4/08Net sales 21 717 18 233 22 729 22 312 21 609 19 259 26 294Growth % 19.1% 7.0% 1.9% 25.5% 12.2% 26.1% 13.4%Other operating income 30 69 52 62 47 58 62Materials and services 1 552 1 211 1 611 1 385 1 395 797 1 333Materials and services 1 552 1 211 1 611 1 385 1 395 797 1 333Personnel expences 12 896 11 765 13 444 12 608 11 113 10 933 15 093Depreciation and write-offs 1 004 671 1 067 693 1 106 690 990Other operating expenses 4 703 4 910 4 513 5 257 4 014 4 516 4 818Operating profit 1 592 -254 2 146 2 431 4 028 2 381 4 122
2009 2008 2008
300040005000
2009 2008-3 %
26 %45 %
008
10000
10002000
26 %
24
-1000Q1 Q2 Q3 Q4
Q1 Q2 Q3 Q4
Net Sales by Operation Q3/2009y p
7405
1884EUR Thousand
Maintenance, growth
Licensesales, growth7405
5803
gof 18.0%
sales, growthof 0.7%
AutomationServices,
growth
Professional Services, growth of
6517Maintenance Professional ServicesLi A t ti S i
growthof 28.3%
growth of 13.2%
Licenses Automation Services
Licenses = License sales of software products Professional Services = Former consulting includes also Maintenance and Automation Services related consulting
25
Professional Services = Former consulting, includes also Maintenance and Automation Services related consultingMaintenance = Continuous, annually charged fees (18-20% of license sales)Automation Services = Software as a Service, transaction based services
Net Sales by Primary Segment Q3/2009y y gNet sales 7-9/09 7-9/08 Change, %Finland 11 478 10 604 8.2Scandinavia 4 505 3 352 34.4Europe 4 104 5 428 -24.4Other 5 980 1 567 154.0Net sales between segments -2 459 -1 692 45.3
Group total (IFRS) 21 609 19 259 12.2
14000
7-9/2009 7-9/2008
8000100001200014000
0200040006000
26
0Finland Scandinavia Europe Other Finland Scandinavia Europe Other
Operating Profit by Primary Segment Q3/2009Operating profit Q3/09 Q3/08 Change,%Finland 2 546 1 679 51.6Scandinavia 212 229 -7.2Europe 465 375 24.0Other 1 223 144 748.4Operating profit between segments -417 -47 787.2Group total (IFRS) 4 028 2 381 69.2
Other
Scandinavia
Europe
Q3/2008Q3/2009
Finland
Scandinavia Q3/2009
27
0 500 1000 1500 2000 2500 3000
Net Sales by Primary Segment 1-9/2009y y g
Net sales 1-9/2009 1-9/2008 Change,%et sa es 9/ 009 9/ 008 C a ge,%Finland 35 215 34 188 3.0Scandinavia 16 100 12 179 32.2Europe 13 087 14 189 -7.8pOther 6 303 3 692 70.7Net sales between segments -4 652 -4 444 4.7Group total (IFRS) 66 054 59 804 10.5p ( )
Other
Europe
Other
1-9/2008
Finland
Scandinavia 1-9/2009
28
0 10000 20000 30000 40000
Operating profit by Primary Segment 1-9/2009
Operating profit 1-9/2009 1-9/2008 Change,%Finland 4 690 3 513 33.5Scandinavia 2 128 1 038 104.9Europe 664 -26 2 653.8pOther 1 258 171 634.0Operating profit between segments -972 -140 594.3Group total (IFRS) 7 767 4 557 70.4Group total (IFRS) 7 767 4 557 70.4
Other
Europe
Other
1-9/2008
Finland
Scandinavia 1-9/2009
29
-1000 0 1000 2000 3000 4000 5000
Development of Profit Q3/2009 and 1-9/2009p
EUR Thousand Q3/09 Q3/08 1-9/09 1-9/08Operating profit 4 028 2 381 7 767 4 557Change of operating profit,% 69.2% 69.3% 70.4% -18.4%% of net sales 18.6% 12.4% 11.8% 7.6%Profit before tax 3 946 2 370 7 553 4 548N fi /l 3 00 1 941 066 3 290Net profit/loss 3 005 1 941 5 066 3 290Earnings per share, EUR 0.27 0.17 0.45 0.28Fixed costs 15 127 15 449 50 683 49 988P l t 11 113 10 933 37 453 35 306Personnel costs 11 113 10 933 37 453 35 306R&D costs 3 405 3 000 10 934 11 134
30
Products
• R&D costs EUR 10 934 thousand(EUR 11 134 thousand)- Decrease of 1.8 percentDecrease of 1.8 percent- 16.6 percent of net sales (18.6%)- EUR 1 094 thousand of costs
capitali ed i e 10 0%R&D costs 16.6% of net sales
capitalized i.e. 10.0%
• Products unit personnel 184 (162)Products unit personnel 184 (162)- Units in Finland, India and Norway- Future recruitments in India
24.4% of personnel
31
Personnel
• In total 755 (686) employees at the end of September 2009
• 47.0 percent abroad• Average age 36.5 years
College and other
Sales & Sales Admin
Masterand other Support
R&D
BachelorBachelorCustomer Service
Education Personnel groups
32
g p
Finance and Investments
• Total assets on the balance sheet EUR 84 942 thousand (EUR 80 537 thousand)
• Cash and cash equivalents EUR 7 567 thousand(EUR 8 680 th d)(EUR 8 680 thousand)
• Cash flow from operations EUR 8 540 thousand (EUR 6 205 thousand)(EUR 6 205 thousand)
• Equity ratio 61.9% (60.0%)• Gearing 3.2% (8.3%) g ( )• Total gross investments EUR 7 084 thousand
(EUR 11 262 thousand)- Includes capitalized R&D costs and acquisitions
Share and Shareholders
• Number of shareholders 16 668 (17 301) at the end of September ( ) p2009
Sh i d l t d i J S t b 2009• Share price development during January–September 2009:- Average price of the share EUR 9.29 (EUR 7.70)
Hi h t EUR 11 49 (EUR 10 45) l t EUR 6 60 (EUR 6 14)- Highest EUR 11.49 (EUR 10.45), lowest EUR 6.60 (EUR 6.14)- Closing price EUR 10.72 (EUR 7.00)
• Traded shares 1 297 031 (1 808 869)- 11.4% (15.8%) of all shares ( )
• Market capitalization EUR 121 970 273 (EUR 80 276 868)
Future Outlook
CEO Ilkka Sihvo
35
Industry and Basware Outlook• Uncertainty in world economy
- Total software purchases forecast 2009: -5.4% in Western/Central Europe and -9.4% in USAT t l ft h f t 2010 5 5% i W t /C t l E d 9 3% i USA- Total software purchases forecast 2010: 5.5% in Western/Central Europe and 9.3% in USA
- Total IT purchases forecast 2009: -6.3% in Western/Central Europe and -9.3% in USA - Total IT purchases forecast 2010: 4.0% in Western/Central Europe and 7.7% in USA
• Growth areas: Europe, US, Russia, Asia-Pacific, profitability improving• Scandinavia & Finland focus on profitability, mild growth• Software production expanding to India year 2009 R&D costs are expected not to substantiallySoftware production expanding to India, year 2009 R&D costs are expected not to substantially
increase from the level of 2008• Growth related investments in Q4/2009 if operating profit and net sales are at the expected level• Automation Services order backlog: EUR 10.8 Mg
• Review of acquisition possibilities continues: distribution channel and product portfolio• The cost savings resulting from the synergy benefits of the Contempus integration will materialize
t ti f th b i i f 2009 d th ill b i t l EUR 2 illi b th d f 2009starting from the beginning of 2009 and they will be approximately EUR 2 million by the end of 2009.
• Net sales expected to develop positively on the level of 2008. • Operating profit (EBIT) for 2009 is expected to be from 10 to 15 percent of net sales.
Next interim report on January 26, 2010
Analyst and press briefing takes place on January 26, 2010 at 11 00 in Hotel Kämp Pohjoisesplanadi 292010 at 11.00 in Hotel Kämp, Pohjoisesplanadi 29, Helsinki, Finland.
Welcome!
Additional Slides
EPP Automation Services
Licenses and SaaS Only SaaS
Basware Connectivity
Business Supplier SupplierTransactions Portal Activation
Data Capture Catalog Management Printing
EPP SaaS Offering
g
EPP Application Management EPP Data management
EPP Solution Support
Invoice Automation Procurement
Operation Center Services
Basware Strategy presentation 10/13/2009 39
Basware Connectivityy
Basware Connectivity is a set of enabling services that allows buyers and suppliers of all sizes and maturity to accelerate automation of the purchase to pay process including:• The ability to deliver e-invoices and purchase messages with Basware Business Transactions• Basware’s Scan and Capture service to convert all paper invoice to• Basware s Scan and Capture service to convert all paper invoice to electronic format• Basware’s Supplier Activation service to communicate with the suppliers, assist and activate them to connect to the buyers’ purchase to pay process.• The ability for suppliers to key-in invoices, receiver orders y pp y ,electronically, send order confirmations as well as upload and create electronic catalogs via Basware Supplier Portal
40
Basware Connectivity
BaswareMonitor BuyersOffering for Suppliers
SupplierBaswareBusiness Buyers
y
ppTransactions
Buyers
Printingservices
BaswareMonitorSupplier
Off i f B
BaswareBusiness Buyer
pp
Supplier
Offering for Buyers
Transactionsypp
Scanning andData
Capture services
41
Basware’s process tools
Procurement
p
BankSupplier BankSupplierSourcing &
Supplier Management Agree-
ment
Tendering Contractmanagement
PaymentStakeholderReporting
InvoiceOrderCatalog
Budget
Planning &Budgeting
Purchasemanagement
InvoiceProcessing Reporting Group
consolidation
MatchingPurchasevolume Matching
SpendAnalysis
Budgeting
CategoryMgmt
ProductItems
volume
Basware Strategy presentation 10/13/2009 42
Invoice AutomationAnalysisMgmtItems
Basware Enterprise Purchase to Payp y
Procurement Invoice
sProcurement Automation
y S
ervi
ces
Serv
ices
Ser
vice
s
usto
mer
s
onne
ctiv
ity
nnec
tivity
Snn
ectiv
ity
Sup
plie
rs
Cu
sine
ss C
o
pplie
rC
onup
plie
r CoS
Bu
Sup
Su
KPI Measurement and Continuous Improvement
Customer Legacy Systems e.g. Financial Systems, ERP
Basware Strategy presentation 10/13/2009 43Basware Strategy presentation 10/13/2009 43
KPI Measurement and Continuous Improvement