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2013-04-11 07:45:00 CEST 2013-04-11 07:45:41 CEST REGULATED INFORMATION BasWare - Interim report (Q1 and Q3)Basware : Interim Report January 1-March 31, 2013 (IFRS)Basware Corporation, stock exchange release, April 11, 2013 at 08:45 BASWARE INTERIM REPORT JANUARY 1-MARCH 31, 2013 (IFRS) SUMMARY January-March 2013: Net sales increased amidst difficult market conditions and transition from software to service business * Net sales EUR 29 828 thousand (EUR 27 435 thousand) - growth 8.7 percent * Operating profit/loss EUR -1 569 thousand (EUR 1 822 thousand) * Operating profit/loss -5.3 percent of net sales (6.6%) * Operating profit/loss before non-recurring items EUR -384 thousand (EUR 1 822 thousand) * Growth of Automation Services (SaaS and e-Invoicing) 41.0 % * 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 31.5 million, growth of 13.2 percent compared to the previous quarter * Recurring revenue (Customer Support and Automation Services) 61.9 percent (57.1%) of net sales * Net cash flows from operating activities EUR 9 718 thousand (EUR 10 634 thousand) * Earnings per share (diluted) EUR -0.07 (EUR 0.11) 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 figures are unaudited. GROUP KEY FIGURES 1-3/ 1-3/ Change, 1-12/ EUR thousand 2013 2012 % 2012 ------------------------------------------------------------------------- Net sales 29 828 27 435 8.7% 113 699 EBITDA 233 3 188 -92.7% 14 801 Operating profit before IFRS3 amortization -1 337 2 455 10 555 Operating profit -1 569 1 822 8 308 % of net sales -5.3% 6.6% 7.3% Profit before tax -1 526 1 918 8 357 Profit for the period -962 1 476 5 863 Return on equity, % -3.9% 6.0% 5.8% Return on investment, % -4.9% 8.0% 8.2% Liquid assets *) 23 276 34 450 -32.4% 34 519 Gearing, % -13.2% -35.2% -23.8% Equity ratio, % 63.7% 70.5% 77.6% Earnings per share, EUR -0.07 0.11 0.46 Earnings per share (diluted), EUR -0.07 0.11 0.46 Parent company's shareholders' equity per share, EUR 7.51 7.47 0.6 % 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, and Automation Services (previously License Sales, Professional Services, Maintenance, and Automation Services). Customer Support comprises of previous Maintenance and Extended Customer Support previously reported under Professional Services. Extended customer support agreements are continuous service agreements spanning several years. Customer Support and Automation Services together form the recurring revenue reported by the company. License Sales consist of the 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, catalog 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 Q1 amounted to EUR 29 828 thousand, growth of 8.7 percent compared to the corresponding period the previous year, and operating profit was at a loss, EUR -1 569 thousand after non-recurring expenses. The first quarter was more difficult for the company than expected due to market conditions, ongoing transition of the business model as well as renewal of the product and service portfolio. At the same time, the process to integrate the business acquisition confirmed at the beginning of the year was carried out in the company. Our net sales grew from services in line with our strategy. In spite of net sales growth falling short of the targets for the first quarter, quantitatively speaking, we closed 43 percent more significant Purchase to Pay deals than during the corresponding period the previous year. This proves that the fundamental demand for Basware products and services has remained at a good level. The amount of significant e-invoice and SaaS deals was lower than expected, which was mainly due to the market conditions and sales processes taking longer than usual. Growth in net sales is supported by the focusing of our global sales efforts on buyer, supplier, and partner organizations. Product and process improvements accelerate the entry of SaaS and e-invoice deals into production. The decrease in license sales continued, and it is expected to level off during the latter half of the year. The maturity of the Alusta product is continuously improving with new features and updates. Basware Match Plan was launched during the first quarter, and it will be complemented with Basware Match Order during the latter half of the year. The first versions of new Basware Purchase and Analytics products will be launched during the second quarter, and they are expected to improve the company's competitiveness further. Automation Services grew almost at the planned rate, 41.0 percent, also during the first quarter of 2013. 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 62.7 percent. The business acquisition of the leading e-Invoice operator in the Benelux, Certipost, a bpost company, was closed on January 2, 2013. Following the acquisition, Basware is the market leader in e-invoicing in Germany and the Benelux in addition to the Nordic countries. The company intends to continue to support organic growth in our key markets through acquisitions. With regard to the acquired business, efficiency benefits are pursued through personnel cuts, combination of business functions and technologies, and joint infrastructure and support functions. Restructuring expenses of approximately EUR 1.2 million related to employment relationships have been booked in the first quarter of 2013. The competitiveness of Basware software and services is at a good level. In order to achieve our objective of accelerated global growth and maintain our product leadership in Purchase to Pay processes, the development of Alusta software and services will continue strongly this year as well. We believe that the company will grow more strongly during the rest of the year than in the first quarter, with the decrease in licence sales leveling off and the growth of Automation Services continuing. The company's fixed expenses will grow at a more moderate rate during the last three quarters than in the first quarter. We have increased the number of personnel during 2012, and we expect improvement of productivity to decrease the need for recruitments in our different functions in late 2013. We target different customer segments in our marketing with our Better Buying - Better Selling - Connected Commerce customer promises. We have also strengthened our global sales organization by establishing units focusing on sales and customer-supplier relationships specializing in direct sales and partner channels. Teams founded for customer deliveries, packaged solutions, and financial process consulting take care of deployments of diverse types and sizes. With regard to customer support services, were have consistently expanded the service portfolio of extended customer support for major customers around the world, which improves customer satisfaction. The above measures are related to the company's transition process, and these and other investments made are expected to begin to pay themselves back during the latter half of 2013. 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 market is expected to grow by 4.1 percent globally (2012: 2.1%). 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. 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. 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. 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. In order to achieve our objective of accelerated global growth and maintain our product leadership in Purchase to Pay processes, the development of Alusta software and services will continue strongly this year as well. 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. Espoo, Finland, April 11, 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, April 11, 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 first 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 April 11, 2013 at 3:00 p.m. (GMT+2). More information on registration for the conference on the company's investor pages: http://www.basware.com/investors. Distribution: NASDAQ OMX Helsinki Ltd Key media www.basware.com [HUG#1692188] |
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