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Basware : Financial Statement Release January 1-December 31, 2012 (IFRS)


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2013-01-24 07:47:54 -

Basware Corporation, stock exchange release, January 24, 2013, at 08:45

BASWARE FINANCIAL STATEMENT RELEASE JANUARY 1 - DECEMBER 31, 2012 (IFRS)

Basware Corporation's fourth quarter and full year 2012

SUMMARY (last year's corresponding period in parentheses, unless otherwise
stated)

Financial year 2012: From software company to service company - Automation
Services business exceeded license sales

  * Net sales EUR 113 699 thousand (EUR 107 750 thousand) - growth 5.5 percent
  * Operating profit EUR 8 308 thousand (EUR 12 280 thousand) - decrease of
    32.3 percent
  * Operating profit 7.3 percent of net sales (11.4%)
  * Growth of Automation Services (SaaS and e-Invoicing) 44.1%.
  * Recurring revenue (Maintenance and Automation Services) 55.8 percent (48.9%)
    of 
net sales * Net cash flows from operating activities EUR 6 441 thousand (EUR 15 207 thousand). * Earnings per share (diluted) EUR 0.46 (EUR 0.76) - decrease of 40.1 percent October-December 2012: Transition to services strengthened further during the fourth quarter * Net sales EUR 30 427 thousand (EUR 30 227 thousand) - growth 0.7 percent * Operating profit EUR 2 927 thousand (EUR 3 454 thousand) - decrease of 15.3 percent * Operating profit 9.6 percent of net sales (11.4%) * Growth of Automation Services (SaaS and e-Invoicing) 38.1% * 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 increased to an estimated EUR 27.8 million, growth of 10.3 percent compared to the previous quarter * Recurring revenue (Maintenance and Automation Services) 54.9 percent (46.9%) of net sales * Earnings per share (diluted) EUR 0.15 (EUR 0.23) - decrease of 33.7 percent Basware expects its net sales for 2013 to grow by more than 15% and operating profit (EBIT) to grow compared to the previous year. The operating profit includes estimated one-off restructuring costs of approximately EUR 2.3 million related to an acquisition that was completed in January. The operating profit (EBIT) for the first quarter of 2013 is expected to be negative due to one-off restructuring costs. This financial statement release has been prepared in accordance with IAS 34, Interim Financial Reporting. The amounts presented in the summary of financial statements and notes to the financial statements are based on the company's audited financial statements. The Auditor's Report was issued on January 23, 2013. GROUP KEY FIGURES 10-12/ 10-12/ Change, 1-12/ 1-12/ Change, EUR thousand 2012 2011 % 2012 2011 % ------------------------------------------------------------------------------- Net sales 30 427 30 227 0.7% 113 699 107 750 5.5% EBITDA 4 750 4 671 1.7% 14 801 17 284 -14.4% Operating profit before IFRS3 amortization 3 460 3 958 -12.6% 10 555 14 290 -26.1% Operating profit 2 927 3 454 -15.3% 8 308 12 280 -32.3%    % of net sales 9.6% 11.4%   7.3% 11.4% Profit before tax 2 843 3 473 -18.1% 8 357 12 332 -32.2% Profit for the period 1 945 2 940 -33.8% 5 863 9 671 -39.4% Return on equity, % 7.8% 12.0%   5.8% 11.6% Return on investment, % 11.3% 14.9%   8.2% 14.9% Liquid assets *) 34 519 42 977 -19.7% 34 519 42 977 -19.7% Gearing, % -23.8% -42.3%   -23.8% -42.3% Equity ratio, % 77.6% 81.9%   77.6% 81.9% Earnings per share, EUR 0.15 0.23 -33.7% 0.46 0.76 -40.1% Earnings per share (diluted), EUR 0.15 0.23 -33.7% 0.46 0.76 -40.1% Parent company's shareholders' equity per share, EUR 7.84 7.76 1.0% 7.84 7.76 1.0% *) 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, Maintenance, and Automation Services. License sales consist of Purchase to Pay product family together with payment, 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 as well as for new, signed agreements 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. Net sales are split by the customer's location. Net sales and operating profit are also reported by the location of the assets.  In annual financial statements, the geographical information of non-current assets is reported by the location of the assets. CEO Esa Tihilä: "Net sales for Q4 amounted to EUR 30 427 thousand and operating profit to EUR 2 927 thousand. An increasing share of secured deals were made as Software as a Service (SaaS) solutions, which had an effect on the development of net sales for the quarter. 16 new SaaS-based Purchase-to Pay (P2P) agreements were concluded during the last quarter, compared to 2 agreements during the comparative period. At the same time, 21 new license-based P2P agreements were concluded during the quarter, compared to 31 agreements during the comparative period. The share of recurring revenue (Maintenance and Automation Services) of net sales developed favorably, totaling 54.9% of net sales. Increasing transaction volumes are essential to the continuous development of Automation Services. The transaction volume increased by 53.2% compared to the corresponding quarter the previous year, with the volume totaling 9.5 million transactions. Full-year net sales for 2012 increased by 5.5% during the reporting period and amounted to EUR 113 699 thousand. The decrease in license sales is partly attributable to the significant migration to SaaS services. 40 new SaaS-based P2P agreements were concluded in 2012, compared to only 4 agreements during the previous year. At the same time, 78 new license-based P2P agreements were concluded in 2012, compared to 92 agreements during the comparative period. The Automation Services business grew by 44.1% during the year as a whole. We have also connected an increasing number of suppliers and buyers to our open network with new products and delivery methods during the year. The financial period's transaction volume was 34 million, up 63.5%. Full-year operating profit was EUR 8 308 thousand, or 7.3% of net sales. Recurring revenue (Maintenance and Automation Services) accounted for an increasing share of net sales during each quarter, accounting for 55.8% of net sales during the financial period as a whole. The increasing share of recurring revenue of net sales improves predictability over the long term. The planned investments required for the company's growth and transition process can be seen in the company's full-year financial performance. During 2012, we proceeded in implementing our growth strategy and transition from a software company to a service company in several concrete ways, in spite of the challenging market conditions. During the year, we have increasingly shifted from license sales-based operations to the service business. We announced two partnership agreements and 28 significant customer agreements, of which 24 included services, during the year. The growth in services was increasingly generated in our international markets in 2012. Alusta, the unified cloud-based platform for Purchase-to-Pay that was launched at the beginning of the year, was an important milestone in Basware's strategic change and transition to service-oriented business. Alusta has been received well by our customers. The more extensive commercial utilization of of Alusta commenced during the second half of the year, when Alusta's full sales and implementation capability was reached. We have also developed our service centers in Europe and the United States to be able to serve an increasing number of customers with the same infrastructure. In addition, the customer service models of our current customers have been developed and the service offering has been expanded. Our number of personnel has increased through both acquisitions and recruitment as we have been investing in the development of competence in service production and delivery, sales, and marketing. Approximately one-half of the increase in fixed costs in 2012 is attributable to supporting and building our transition process. In September, we published our updated strategy until 2015, emphasizing our objective of accelerated global growth. According to the updated strategy, our key objectives include accelerated growth in the transaction volume, strengthening our market position in selected key markets, more accurate segmenting of our services and products to companies of all sizes, with particular attention on small and medium-sized enterprises, developing customer loyalty, and improving the company's profitability. Basware acquired the leading German e-invoice operator First Businesspost GmbH in the beginning of 2012 and announced the acquisition of the network and e- invoice business of Certipost, part of the Belgian bpost group, in the end of 2012. The acquisition of Certipost's network and e-Invoicing business was closed on January 2, 2013. Following the acquisitions, Basware is the market leader in Germany and Benelux market in addition to the Nordic countries. The company intends to continue to support organic growth in our key markets through acquisitions. We expect that the company's transition process will reach a point where the investments begin to pay themselves back during 2013. We also expect that the need for continuous services will remain good in our customer base regardless of economic cycles and the challenging economic situation. The development of profitability is particularly based on the adoption of a scalable sales and delivery model and launching a global efficient service production network at full steam. The growing and developing e-invoice market offers excellent growth opportunities for Basware, which is already the industry-leading independent player worldwide. I would like to extend my thanks to Basware's shareholders and customers for their trust and our top-class experts for their committed work during the year." Market outlook and operating environment According to independent research institutions' most recent market estimates the software market is expected to grow by 6.4 percent globally in 2013 (2012: 6.2%). The entire IT services market is expected to grow by 5.2 percent globally (2012: 4.7%). The number of acquisitions and partnerships has increased in the market. Companies active in the market are trying to strengthen their supplier networks and expand geographically. Consolidation is expected to continue in the business environment, with the role of services growing in companies' portfolios. Basware continues active analyzing of acquisition targets especially in European e- Invoicing market according to its strategy. The launch of Basware's next generation Alusta software suite during the first quarter of 2012 has improved the competitiveness of Basware software and services further. Through the acquisition of German e-Invoicing operator in January 2012 we gained innovative technology, which will improve the competitiveness of the company. 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. 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, which creates a solid foundation for the future growth of Basware Automation Services. Offshoring operations hold a significant role in the company's strategy. R&D and Automation Services operations at Basware's Indian office have already succeeded in gaining a significant role. The company has developed its offshoring operations in order to improve profitability also with regard to new service business operations and internal support functions. FUTURE OUTLOOK Operating environment and market outlook According to independent research institutions' most recent market estimates the software market is expected to grow by 6.4 percent globally in 2013 (2012: 6.2%). The entire IT services market is expected to grow by 5.2 percent globally (2012: 4.7%). The company's transition process is expected to reach a point where the investments will begin to pay themselves back in the form of increasing net sales and improved profitability during the latter half of the year. The share of R&D expenses of net sales is expected to decrease during 2013 compared to the level in 2012. The emphasis of the overall R&D expenses will move towards the service development of Automation Services. The need for continuous services is expected to remain good in our customer base regardless of economic cycles and the challenging economic situation. The predicted development of profitability is particularly based on the adoption of a scalable sales and delivery model and launching a global efficient service production network at full steam. The growing and developing e-invoice market offers good growth opportunities for Basware, which is already the industry- leading independent player worldwide. The world economy and markets are unstable, which may result in a decrease in the demand for license sales and services. The conversion of license sales to SaaS solutions will reduce net sales growth over the short term. The shift of demand for license sales towards the SaaS solution will support the growth target of the Automation Services business. Outlook 2013 Basware expects its net sales for 2013 to grow by more than 15% and operating profit (EBIT) to grow compared to the previous year. The operating profit includes estimated one-off restructuring costs of approximately EUR 2.3 million related to an acquisition that was completed in January. The operating profit (EBIT) for the first quarter of 2013 is expected to be negative due to one-off restructuring costs. BOARD'S DIVIDEND PROPOSAL Basware is a growth company that aims at increased market capitalization and moderate dividend yield. When preparing the dividend proposal, the Board considers the company's financial position, profitability and prospects in the near future. At the end of 2012, the Group parent company's distributable funds are EUR 93 857 156.92. Basware's Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.23 per share (2011: EUR 0.41) be paid for 2012. Espoo, Finland, January 23, 2013 BASWARE CORPORATION Board of Directors For more information, please contact CEO Esa Tihilä, Basware Corporation Tel. +358 40 480 7098 Analyst and press briefing and conference call Basware arranges today, January 24, 2013, a briefing on the Interim Report for the press and analysts at 11:00 a.m. in Hotel Kämp (Kluuvikatu 2, 2(nd) floor), Helsinki, Finland. During this briefing CEO Esa Tihilä and CFO Mika Harjuaho will comment the events and financial performance of the quarter. Additional information and registration: Sirje Ahvenlampi, Manager, Investor Relations, tel. +358 50 557 3822, sirje.ahvenlampi (at) basware.com. A conference call for analysts will take place on January 24 at 4:00 p.m. (GMT+2). More information on registration for the conference on the company's investor site: www.basware.com/about-us/investors. Basware's financial reporting and Annual General Meeting in 2013 Basware's Annual Report 2012, including the audited Financial Statements, will be published on the  company's website during the week starting on January 21, 2013. Release dates for interim reports: * Interim Report January-March 2013 (Q1) on Thursday, April 11, 2013 * Interim Report January-June 2013 (Q2) on Wednesday, July 10, 2013 * Interim Report January-September 2013 (Q3) on Thursday, October 10, 2013 Basware Corporation's Annual General Meeting of Shareholders will be held on Thursday, February 14, 2013, starting at 2:00 p.m. in Finlandia Hall (Mannerheimintie 13 e) in Helsinki, Finland. Distribution: NASDAQ OMX Helsinki Ltd Main media www.basware.com Basware's financial statement release Q4/2012 01/24/2013: hugin.info/131662/R/1672626/544443.pdf This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Basware via Thomson Reuters ONE [HUG#1672626]


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