Basware :BASWARE INTERIM REPORT JANUARY 1 - JUNE 30, 2013 (IFRS)
Stock Exchange Release, July 10, 2013 at 08:45
BASWARE INTERIM REPORT JANUARY 1 - JUNE 30, 2013 (IFRS)
SUMMARY
January-June H1/2013: Strong growth in service business continues
* Net sales EUR 61 617 thousand (EUR 56 153 thousand) - growth 9.7 percent
* Operating profit/loss EUR -661 thousand (EUR 3 120 thousand)
* Operating profit/loss -1.1 percent of net sales (5.6%)
* Operating profit/loss before non-recurring items EUR -542 thousand (EUR
3 120 thousand)
* Growth in Automation Services (SaaS and e-Invoicing) 41.2 percent
* Recurring revenue (Customer Support and Automation Services) 61.0 percent
(56.6%) of net sales
* Cash flow from operating activities EUR 9 268 thousand (EUR 9 946 thousand)
* Earnings per share (diluted) EUR -0.05 (0.19)
April-June Q2/2013:
* Net sales EUR 31 789 thousand (EUR 28 718 thousand) - growth 10.7 percent
* Operating profit EUR 908 thousand (EUR 1 298 thousand) - decrease 30.0
percent
* Operating profit 2.9 percent of net sales (4.5%)
* Operating profit/loss before non-recurring items EUR -158 thousand (EUR
1 298 thousand)
* Growth of Automation Services (SaaS and e-Invoicing) 41.4 percent
* The estimated revenue to be recognized for current Automation Services
agreements that are in production as well as for new, signed agreements in
the next twelve months is EUR 33.2 million (growth from estimate at the end
of the previous quarter 5.9 percent)
* Recurring revenue (Customer Support and Automation Services) 60.2 percent
(56.2%) of net sales
* Earnings per share (diluted) EUR 0.03 (0.07) - decrease of 63.0 percent
Basware expects its net sales for 2013 to grow and operating profit (EBIT) for
2013 to be positive.
The interim report is unaudited
GROUP KEY FIGURES
4-6/ 4-6/ Change, 1-6/ 1-6/ Change, 1-12/
EUR thousand 2013 2012 % 2013 2012 % 2012
-------------------------------------------------------------------------------
Net sales 31 789 28 718 10.7 % 61 617 56 153 9.7 % 113 699
EBITDA 2 663 2 793 -4.7 % 2 895 5 981 -51.6 % 14 801
Operating profit
before IFRS3
amortization 1 139 1 847 -38.3 % -197 4 302 10 555
Operating profit 908 1 298 -30.0 % -661 3 120 8 308
% of net sales 2.9 % 4.5 % -1.1 % 5.6 % 7.3 %
Profit before tax 836 1 296 -35.5 % -689 3 214 8 357
Profit for the period 352 949 -62.9 % -611 2 425 5 863
Return on equity, % 1.5 % 3.9 % -1.2 % 4.9 % 5.8 %
Return on investment,
% 4.4 % 5.7 % -0.3 % 6.7 % 8.2 %
Liquid assets *) 22 917 31 630 -27.5 % 22 917 31 630 -27.5 % 34 519
Gearing, % -13.0 % -32.0 % -13.0 % -32.0 % -23.8 %
Equity ratio, % 66.9 % 74.4 % 66.9 % 74.4 % 77.6 %
Earnings per share,
EUR 0.03 0.07 -63.0 % -0.05 0.19 0.46
Earnings per share
(diluted), EUR 0.03 0.07 -63.0 % -0.05 0.19 0.46
Parent company's
shareholders'
equity per share, EUR 7.46 7.56 -1.3 % 7.46 7.56 -1.3 % 7.84
*) Includes cash and cash equivalents
Reporting
Basware Corporation reports one operating segment: Purchase to Pay, P2P.
Basware reports income for products and services as follows: License sales,
Professional Services, Customer Support Maintenance, and Automation Services
(previously License sales, Professional Services, Maintenance, and Automation
Services).
Customer Support includes the previous Maintenance and expanded customer
support, which was previously reported under Professional Services. Expanded
customer support agreements are continuous service agreements with a term of
several years. Customer Support and Automation Services comprise the recurring
revenue reported by the company.
License sales consist of Purchase to Pay product family together with financial
planning and reporting solutions sold only in Finland. Automation Services
include e-Invoicing, scanning services, printing services, catalogue management,
purchase message exchange, activation services and Software as a Service (SaaS)
services.
Basware also reports the estimated revenue to be recognized for current
Automation Services agreements that are in production in the next twelve months.
Automation Services agreements typically expand several years or are valid until
further notice.
As geographic information Basware reports geographical areas Finland,
Scandinavia, rest of Europe and Other. In the geographical information net sales
is split by customer's location. Net sales and operating profit are also
reported by the location of the assets. In the annual financial statements, the
geographical information of non-current assets is reported by the location of
the assets.
CEO Esa Tihilä comments in conjunction with the Interim Report:
Net sales for Q2 amounted to EUR 31 789 thousand, growth of 10.7 percent
compared to the corresponding period the previous year, and operating profit was
EUR 908 thousand (EUR 1 298 thousand in 2012). The operating profit includes a
non-recurring capital gain of EUR 1 540 thousand recorded as a result of the
divestment of the Cashier Desk business in the second quarter and
expenses totaling EUR 474 thousand due to the efficiency drive and termination
of employment relationships.
The renewal of the company's product and service portfolio and transition of the
business model are still underway. The company issued a full-year profit warning
during the second quarter, based primarily on growth in net sales falling short
of the objectives. This was partly due to market conditions and partly due to
delay in the sales and delivery capability of Alusta software compared to our
targets. The company launched an efficiency program to improve profit-making
ability. The aim of the efficiency drive is to achieve annual cost-savings of
EUR 3 million compared to the current level by the end of 2013.
Growth in the service business has increased our net sales in accordance with
our strategy. Automation Services net sales increased by 41.4 percent during the
second quarter. We have also connected an increasing number of small and medium-
sized suppliers and buyers to our open Basware Commerce Network with new
products and delivery methods. The transaction volume developed strongly during
this quarter as well, up 66.0 percent. The average price of transactions
remained similar to the previous quarters. The decrease in license sales leveled
off during the second quarter. At the same time, SaaS net sales increased by
20.6 percent.
The competitiveness of Basware software and services is good. In order to
enhance the growth in net sales, we have accelerated the entry of SaaS and e-
invoice deals into production through product and project enhancements. Our aim
is to strengthen the growth globally and maintain our product leadership in
Purchase-to-Pay processes. Therefore, we will continue to develop Alusta
software and services strongly also this year.
In the current state of the company's transition process, operating profit
depends on the development of license sales and investments in the transition
process. The investments required by the company's transition process can be
seen in all of the company's functions from marketing to sales, professional
services, customer support, production, and administration. The decrease in
license sales has been significant for several years, and growth in the SaaS
business has not yet fully compensated for the decrease, which is due to the
different earning models. The company estimates that the profit-making ability
of license sales and the SaaS business will result in an entity where the
investments will begin to pay off as increasing net sales and improving
profitability in 2014.
Market outlook and operating environment
According to independent research institutions' most recent market estimates,
the software market will clearly outgrow the IT market as a whole. The software
market's growth estimate is 6.4 percent for 2013 (2012: 4.7%) and 6.6 percent
for 2014. The growth forecast for the entire IT market has decreased; growth of
2.0 percent for 2013 (2012: 2.5). The first forecasts concerning the growth of
the entire IT market in 2014 amount to 4.1 percent.
The market conditions were more difficult than before in the first quarter.
Customers' decision-making was slower than before. The negotiation times of
large international deals in particular have been prolonged because the
customers' requirements are higher in the service business than in the software
business.
Automation Services will have a positive impact on the competitiveness,
improving the predictability and transparency of the company's net sales and
profitability in the long term. With the acquisition of a German e-invoice
operator in 2012 and the acquisition of the network and e-invoicing business of
Certipost in Belgium we secured new customers, competence, and new technology,
which improve the company's competitiveness.
Consolidation is expected to continue in the business environment, with the role
of services growing in companies' portfolios. Basware continues active analysis
of acquisition targets especially in the e-Invoicing market in Europe and in the
U.S. according to its strategy.
The competitiveness of Basware software and services is good. The development of
Alusta software and services will continue strongly this year as well in order
to achieve our objective of accelerated global growth and maintain our product
leadership in Purchase to Pay processes.
By the end of 2015, Basware aims to become the largest business commerce network
for buyers and suppliers. E-Invoicing and the supporting services are targeted
to connect suppliers and buyers also outside of Basware's existing software
customer base, leading to a higher potential. The penetration rate of e-
Invoicing is low, between 5-30 percent depending on the country, and it has been
estimated to grow strongly. E-invoicing is becoming more common and the related
processes are becoming standard. This creates a good foundation for the growth
of Basware Automation Services.
Offshoring operations hold a significant role in the company's strategy. R&D and
Automation Services operations and other support functions at the Indian office
have already succeeded in gaining a significant role in the company's
operations. The company is also currently expanding the operations of its
Romanian office to cover the product development and support functions of
Automation Services.
Outlook 2013
Basware expects its net sales for 2013 to grow and operating profit (EBIT) for
2013 to be positive.
Espoo, Finland, July 10, 2013
BASWARE CORPORATION
Board of Directors
For more information, please contact
CEO Esa Tihilä, Basware Corporation
Tel. +358 40 480 7098
Interim Report briefing & conference call
Basware arranges a briefing on the Interim Report for the press and analysts on
July 10, 2013 at 11:00 a.m. in Hotel Kämp (Kluuvikatu 2, 2nd floor), Helsinki,
Finland. During this briefing CEO Esa Tihilä and CFO Mika Harjuaho will comment
on the events and financial performance of the quarter. More information and
registration: Jaana Sirkiä, tel. +358 (0)400 303 069, jaana.sirkia (@)
basware.com
A conference call for analysts who are not able to attend the briefing will take
place on July 10, 2013 at 3 p.m. EET. More details on
http://www.basware.com/about-us/investors/ir-calendar
Distribution:
NASDAQ OMX Helsinki Ltd
Key media
www.basware.com
