Basware : Basware Interim Report January 1-June 30, 2012 (IFRS)
Basware Corporation stock exchange release, July 11, 2012 at 09:00BASWARE INTERIM REPORT JANUARY 1 - JUNE 30, 2012 (IFRS)
January-June H1/2012: Strong growth in service business continues
Net sales EUR 56 153 thousand (EUR 53 338 thousand) - growth 5.3 percent
Operating profit EUR 3 120 thousand (EUR 5 788 thousand) - decrease of 46.1 percent
Operating profit 5.6 percent of net sales (10.9%)
Growth of Automation Services (SaaS and e-Invoicing) 46.0 percent
Recurring revenue (including Maintenance and Automation Services) 55.1 percent (47.9%) of net sales
Cash flow from operating activities EUR 9 946 thousand (EUR 15 800 thousand)
Earnings per share (diluted) EUR 0.19 (0.35) - decrease of 46.6 percent
Net sales EUR 28 718 thousand (EUR 27 280 thousand) - growth 5.3 percent
Operating profit EUR 1 298 thousand (EUR 2 832 thousand) - decrease 54.2 percent
Operating profit 4.5 percent of net sales (10.4%)
Growth of Automation Services (SaaS and e-invoicing) 45.6 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 27.0 million, growth from previous quarter 9.7 percent
Recurring revenue (including Maintenance and Automation Services) 54.7 percent (47.6%) of net sales
Earnings per share (diluted) EUR 0.07 (0.17) - decrease of 56.1 percent
Basware expects its net sales for 2012 to grow from the previous year, and operating profit (EBIT) is expected to be EUR 8-13 million. The company estimates that its net sales for the latter half of the year will see a stronger growth than for the ended review period.
Previously, the company expected its net sales for 2012 to grow from the previous year, and operating profit (EBIT) to be EUR 8-18 million.
The interim report is unaudited.
GROUP KEY FIGURES
| EUR thousand ||4-6/ |
| Net sales || 28 718 || 27 280 || 5.3% || 56 153 || 53 338 || 5.3% || 107 750 |
| EBITDA || 2 793 || 4 111 || -32.1% || 5 981 || 8 305 || -28.0% || 17 284 |
| Operating profit before IFRS3 amortization || 1 847 || 3 333 || -44.6% || 4 302 || 6 791 || -36.7% || 14 290 |
| Operating profit || 1 298 || 2 832 || -54.2% || 3 120 || 5 788 || -46.1% || 12 280 |
| % of net sales || 4.5% || 10.4% || 5.6% || 10.9% || 11.4% |
| Profit before tax || 1 296 || 2 904 || -55.4% || 3 214 || 5 834 || -44.9% || 12 332 |
| Profit for the period || 949 || 2 162 || -56.1% || 2 425 || 4 430 || -45.3% || 9 671 |
| Return on equity, % || 3.9% || 9.3% || 4.9% || 11.0% || 11.6% |
| Return on investment, % || 5.7% || 12.5% || 6.7% || 14.3% || 14.9% |
| Liquid assets *) || 31 630 || 47 661 || -33.6% || 31 630 || 47 661 || -33.6% || 42 977 |
| Gearing, % || -32.0% || -48.1% || -32.0% || -48.1% || -42.3% |
| Equity ratio, % || 74.4% || 75.1% || 74.4% || 75.1% || 81.9% |
| Earnings per share, EUR || 0.07 || 0.17 || -56.1% || 0.19 || 0.35 || -46.7% || 0.76 |
| Earnings per share (diluted), EUR || 0.07 || 0.17 || -56.1% || 0.19 || 0.35 || -46.6% || 0.76 |
| Parent company's shareholders' |
| equity per share, EUR || 7.56 || 7.32 || 3.2% || 7.56 || 7.32 || 3.2% || 7.76 |
*) Includes cash, cash equivalents and financial assets at fair value through profit or loss
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 consists 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 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 the 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 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:
"The company's ongoing transition process from a software company to a service company is proceeding according to plan. For example, during the first half of the year we connected more than
1 000 net sales-generating customers that send invoices and 125 new invoice-receiving customers to e-invoicing service production.
Our corporate performance is currently influenced by the decrease in license sales and the planned investments required by the growth and transformation process.
During the second quarter, our net sales increased by 5.3% to EUR 28.7 million, with our operating profit amounting to EUR 1.3 million. Even though our product sales decreased by EUR 1.0 million during the second quarter compared with the corresponding period the previous year, Basware Purchase-to-Pay (P2P) license sales were on a par with last year. In addition, the increase of EUR 1.8 million in Automation Services during the second quarter compensated for the decrease in license sales.
The strong growth in Automation Services continued during the second quarter. Growth in services was largely generated in the international market. The transaction volume processed by Automation Services amounted to 8.2 million during the quarter, up 63.4%. Automation Services account for 20.4% of net sales. Recurring revenue (Maintenance and Automation Services) accounted for an increasing share of net sales compared to the previous year, totaling 54.7% of net sales.
Sales of Software as a Service solutions are increasing at a steady rate, with an increasing number of agreements made as SaaS services and the demand for license sales shifting towards service solutions. We have secured new multi-year SaaS and e-invoicing service agreements with a value of EUR 17.9 million during the first two quarters. Basware Alusta, cloud-based platform for Purchase-to-Pay technology launched during the first quarter, has been received well by our customers.
Our performance during the first two quarters gives a strong foundation for reaching the growth objectives of Automation Services during the rest of the year. The company's growth is expected to speed up during the remainder of the year, supported by the growth in Automation Services, and the results of the transformation will begin to be visible in increasing net sales and profit."
Market outlook and operating environment
According to the most recent market estimates the software market is expected to grow 6.0 percent globally (previous estimate 6.2%) and 7.4 percent in the U.S. (previous estimate 8.0%). The entire IT services market is expected to grow by 4.7 percent globally (forecast unchanged) and by 7.3 percent in the U.S. (forecast unchanged) in 2012. According to research companies, the software market is expected to grow globally in 2013 at a rate of 7.0 percent, IT services by 5.6% and the IT market as a whole by 6.7 percent.
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 Basware's strategy.
The launch of Basware's next generation solutions during the first quarter in 2012 will further improve the competitiveness of Basware's solutions and services. Through the acquisition of German e-Invoicing operator in January 2012 we gained innovative technology, which will improve the competitiveness of the company. Also 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.
Basware aims to become a leading company in e-invoicing worldwide. E-Invoicing and the supporting services are targeted to connect suppliers and buyers also outside of Basware's existing software customer base, leading into 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.
The role of offshoring operations will continue to grow 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.
Espoo, Finland, July 11, 2012
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 11, 2012 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: Sirje Ahvenlampi, Manager, Investor Relations, tel. +358 (0)50 557 3822, sirje.ahvenlampi (at) basware.com.
A conference call for analysts who are not able to attend the briefing will take place on July 11, 2012 at 3 p.m. EET:
Preregistration is required to listen to the conference call: http://emea.directeventreg.com/registration/event/98332524
Preregistration is required to see the presentation during the conference call: http://webeventservices.reg.meeting-stream.com/66082_basware
Capital Markets Day in September
Basware arranges a Capital Markets Day for investors and analysts in London on September 4, 2012. The aim of the event is to tell about Basware's strategy and operations. The program will consist of management presentations, given by the CEO Esa Tihilä and other representatives of the company's top management. More information about the event will be available on the company's website.
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