Interim / Quarterly Report • Jul 10, 2015
Interim / Quarterly Report
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Basware expects its net sales and operating profit (EBIT) for 2015 to grow compared to 2014.
The Interim Report is unaudited.
| 4-6/ | 4-6/ | Change, | 1-6/ | 1-6/ | Change, | 1-12/ | |
|---|---|---|---|---|---|---|---|
| EUR thousand | 2015 | 2014 | % | 2015 | 2014 | % | 2014 |
| Net sales | 36 590 | 31 833 | 14.9% | 70 631 | 62 846 | 12.4% | 127 674 |
| EBITDA | 64 | 2 896 | -97.8% | 2 855 | 4 995 | -42.9% | 11 354 |
| Operating result | -1 757 | 1 152 | -625 | 1 462 | 4 325 | ||
| % of net sales | -4.8% | 3.6% | -0.9 | 2.3% | 3.4% | ||
| Result before tax | -2 602 | 1 149 | -1 206 | 1 160 | 4 328 | ||
| Result for the period | -1 715 | 804 | -1 120 | 728 | 2 959 | ||
| Equity ratio, % | -4.9% | 3.4% | -1.9% | 1.5% | 2.5% | ||
| -3.5% | 5.8% | 0.5% | 3.8% | 4.4% | |||
| Earnings per share | 62 570 | 19 954 | 213.6% | 62 570 | 19 954 | 213.6% | 28 954 |
| Undiluted, EUR | -33.7% | -13.7% | -33.7% | -13.7% | -38.6% | ||
| Diluted, EUR | 67.9% | 70.5% | 67.9% | 70.5% | 82.7% | ||
| -0.12 | 0.06 | -0.08 | 0.06 | 0.22 | |||
| -0.12 | 0.06 | -0.08 | 0.06 | 0.22 | |||
| Equity per share, EUR | 9.80 | 7.46 | 31.4% | 9.80 | 7.46 | 31.4% | 9.88 |
Basware is the global leader in providing purchase-to-pay and e-invoicing solutions in the world of commerce. Basware empowers companies to unlock value across their financial operations by simplifying and streamlining key financial processes. Basware helps its customers to succeed and create added value to their business through better financial management. Basware Commerce Network, the largest open business network in the world, connects 1 million companies across 100 countries and enables easy collaboration between buyers and suppliers of all sizes. Through this network, leading companies around the world achieve improved spend control, efficiency, and closer relations with their suppliers. With Basware, businesses can introduce completely new ways of buying and selling to achieve significant cost savings and boost their cash flow.
Revenue continued to develop favorably during the second quarter, growth of 14.9 percent year-on-year. Net sales for the second quarter amounted to EUR 36 590 thousand (EUR 31 833 thousand). The yearon-year growth in key markets was at a good level: net sales grew strongly in Germany, the UK, and the US. The number of transactions within the Basware Commerce Network grew according to the plan and the SaaS business grew well. Operating result was EUR -1 757 thousand (EUR 1 152 thousand). The result was impacted by selected one-off costs related to acquisitions activities and business improvement projects amounting to approximately EUR 2 100 thousand as well as continued investments in the selected key operations, such as Financing Services.
The Network Services sales grew strongly during the second quarter, which was driven both by organic growth as well as the acquisition of Procserve. The net sales of Network Services amounted to EUR 12 296 thousand (EUR 8 096 thousand) during the second quarter, growth of 51.9 percent year-on-year. The growth in the transaction volume continued also during the second quarter, up 25.8 percent year-onyear. A total of 23.5 million transactions were processed via Basware Commerce Network during the quarter. An increasing amount of the transactions come from the e-invoicing target markets in which the e-invoicing penetration is relatively low while the growth is levelling off in some markets where the penetration is relatively high.
The Solution Services sales continued steadily also during the second quarter. The net sales of the Solution Services business amounted to EUR 24 294 thousand for the second quarter (EUR 23 737 thousand). The demand for SaaS services continued at a good level, represented by the SaaS revenue growth of 23.0 percent year-on-year. The productivity has improved due to improvements in billable utilization rate, faster go-lives and an increasing number of Alusta sales agreements.
The first customers have been signed for Basware Pay as well as Basware Discount which was introduced to the market during the first quarter within the Financing Services product suite. Negotiations with several new international financial institutions on collaboration with Basware Pay are underway. The development of the joint venture in the UK and a new e-invoicing based, supplier driven invoice financing service with Arrowgrass Capital Partners LLP are in progress. Building the Financing Services business and services has continued.
Basware acquired Procserve, the leading e-procurement solution provider for the public sector in the UK, in April and the integration has proceeded well. As of June 30, 2015, following the new Procurement Policy Note, Crown Commercial Service actioned the public sector organizations in the UK to be ready to accept e-invoices. Across Basware's markets, there is a continued push from governments and public sector to adopt e-invoicing. In May, Basware launched a white paper "Why are governments not paperless?" examining the impact and the benefits of e-invoicing adoption on governments worldwide.
In accordance with its strategy, Basware's geographic expansion and achieving strong growth in Basware Commerce Network continue to be the main objectives, pursued both organically and through mergers and acquisitions. Development of the Financing Services business and services and establishing and finding new significant partnerships in the business will continue actively during the second half of 2015. As part of the ongoing Customers for Life initiative, tasked with significantly improving the customer's experience in how they engage with Basware, the company has established a new centralized unit for customer support. The new Customer Care unit is responsible for the development and improvement of customer support at Basware globally.
Basware Group's net sales for the first half of the year amounted to EUR 70 631 thousand (EUR 62 846 thousand), growth of 12.4 percent. The net sales included higher alliance fees related to the financingrelated value added services compared to the corresponding period.
Net sales for the second quarter increased by 14.9 percent to EUR 36 590 thousand (EUR 31 833 thousand).
| Net sales | 4-6/ | 4-6/ | Change, | 1-6/ | 1-6/ | Change, | 1-12/ |
|---|---|---|---|---|---|---|---|
| EUR thousand | 2015 | 2014 | % | 2015 | 2014 | % | 2014 |
| Network Services | 12 296 | 8 096 | 51.9 | 23 409 | 16 128 | 45.1 | 33 237 |
| Solution Services | 24 294 | 23 737 | 2.3 | 47 222 | 46 718 | 1.1 | 94 437 |
| Group total | 36 590 | 31 833 | 14.9 | 70 631 | 62 846 | 12.4 | 127 674 |
*The breakdown of the net sales of the businesses has been adjusted with regard to previously reported comparison periods due to changes in the organization structure
The Network Services net sales for the period amounted to EUR 23 409 thousand (EUR 16 128 thousand), growth of 45.1 percent, including an alliance fee of 3 million Euros related to the financingrelated value added services. The growth in the transaction volume of the business continued, up 27.0 percent, and 45.6 million transactions were processed via Basware Commerce Network.
Solution Services net sales amounted to EUR 47 222 thousand (EUR 46 718 thousand), up 1.1 percent.
The share of recurring revenue of net sales decreased during the period to 66.3 percent (66.7%) of net sales, influenced by a non-recurring alliance fee of 3 million Euros related to the financing-related value added services.
The international share of Basware's net sales was 65.1 percent (62.2%) in the period.
Basware's operating result for the period amounted to EUR -625 thousand (EUR 1 462 thousand). Operating result represented -0.9 percent (2.3%) of net sales.
Basware's operating result for the second quarter was EUR -1 757 thousand (EUR 1 152 thousand) Operating result represented -4.8 percent (3.6%) of net sales.
The company's operating expenses including employee benefits, depreciations and amortizations as well as other operating expenses were EUR 62 830 thousand (EUR 55 551 thousand) in the period, and have increased by 13.1 percent from the corresponding period the previous year. Personnel expenses made up 70.1 percent (71.4 %) or EUR 44 032 thousand (EUR 39 639 thousand) of the operating expenses. Bad debt provision at the end of the period amounted to EUR 765 thousand (EUR 1 681 thousand). Other operating expenses include acquisition-related non-recurring costs of EUR 1 682 thousand.
The company's finance income and finance expenses were EUR -137 thousand (EUR -302 thousand) for the period. During the quarter, Basware and Arrowgrass Capital Partners LLP established a joint venture to develop a new e-invoicing based, supplier driven invoice financing service. Basware's share of the start-up costs of the new business totaled EUR -444 thousand. Basware's result before tax was EUR -1 206 thousand (EUR 1 160 thousand) and result for the period was EUR -1 120 thousand (EUR 728 thousand) or -1.6 percent (1.2%) of net sales. Taxes for the period totaled EUR 86 thousand (EUR - 432 thousand). Undiluted earnings per share were EUR -0.08 (EUR 0.06).
Basware Group's total assets on the balance sheet at the end of the period were EUR 204 289 thousand (EUR 136 027 thousand). The company's cash and cash equivalents totaled EUR 62 570 thousand (EUR 19 954 thousand). The net cash flow from operations, EUR 19 747 thousand (EUR 13 558 thousand), was driven mainly by a decrease in working capital. Net cash flows from investments were EUR 3 821 thousand (EUR -2 093 thousand). Net casflow for acquisitions totaled EUR 20 425 thousand. Net cash flows from financing activities were 9 418 EUR thousand (EUR -4 765 thousand).
Equity ratio was 67.9 percent (70.5%) and gearing -33.7 percent (-13.7%). The company's interestbearing liabilities totaled EUR 15 833 thousand (EUR 6 810 thousand), of which current liabilities accounted for EUR 15 833 thousand (EUR 3 477 thousand). Return on investment was 0.5 percent (3.8%) and return on equity -1.6 percent (1.5%).
Capital expenditure, resulting from regular additional and replacement investments required by the growth, was EUR 437 thousand (EUR 444 thousand) during the period. Gross investments including Procserve acquisition as well as the capitalized research and development costs totaled EUR 31 232 thousand (EUR 2 707 thousand).
Basware's research and development expenses totaled EUR 9 947 thousand (EUR 9 027 thousand), or 14.1 percent (14.4%) of net sales during the review period. The expenses increased by 10.1 percent compared to the corresponding period the previous year. Research and development expenses capitalized during the period amounted to EUR 3 914 thousand (EUR 1 784 thousand). The research and development costs included in the result for the review period totaled EUR 6 033 thousand (EUR 7 243 thousand), or 8.5 percent (11.5%) of net sales. A total of 358 (320) people worked in R&D at the end of the period.
Basware employed 1 601 (1 452) people on average during the period and 1 649 (1 459) at the end of the period.
Geographical division of personnel:
| Personnel | 4-6/ | 4-6/ | Change, | 1-6/ | 1-6/ | Change, | 1-12/ |
|---|---|---|---|---|---|---|---|
| Employed, on average | 2015 | 2014 | % | 2015 | 2014 | % | 2014 |
| Finland | 476 | 479 | -0.6 | 475 | 486 | -2.3 | 482 |
| EMEIA & Russia | 540 | 412 | 32.4 | 537 | 410 | 31.0 | 425 |
| India | 526 | 486 | 8.2 | 515 | 489 | 5.3 | 492 |
| Americas & APAC | 76 | 66 | 15.2 | 74 | 67 | 10.4 | 67 |
| Group total | 1 618 | 1 443 | 10.8 | 1 601 | 1 452 | 10.3 | 1 466 |
The share of personnel working in foreign units has increased compared with the previous year mainly due to the growth of personnel in India and through the acquisition of Procserve. At the end of the period, 71.0 percent (67.0%) of Basware personnel worked outside of Finland and 29.0 percent (33.0%) in Finland. 11.8 percent (11.9%) of the personnel work in sales and marketing, 58.6 percent (60.2%) in
professional services, 22.9 percent (21.9%) in research and development, and 6.7 percent (6.0%) in administration.
The average age of employees is 35.5 (34.7) years. Women account for 25.0 percent (24.1%) of employees, men for 75.0 percent (75.9%).
Basware Corporation signed on April 8, 2015 an agreement to acquire Procserve, the leading eprocurement solution provider for the public sector in the UK. The acquisition price was approximately EUR 25.8 million. In 2014, the net sales of the acquired business amounted to approximately EUR 9.6 million. Procserve employed 60 people.
In 2015 the company expects the transaction and integration related costs to exceed the savings. In 2016 the company expects the cost synergies to be marginally net positive. The savings relate for example to the creation of joined IT infrastructure and facilities.
Jane Broberg was appointed as Senior Vice President, Human Resources and member of the Executive Team at Basware as of June 2, 2015. Senior Vice President Mari Heusala left the company and her position in the Executive Team as of April 16, 2015.
Basware established a new centralized unit for customer support in June. The Customer Care unit will be responsible for the development and improvement of customer support globally and the 1st and 2nd line support for all Basware solutions and services. Executive Team member Riku Roos has been appointed as head of the new unit with the title of Senior Vice President, Customer Care, as of July 1, 2015. Vice President Perttu Nihti assumed responsibility for the Network Services business for the time being. The company has begun the process of recruiting a new leader for the Network Services business.
The world economy and markets are unstable, which has resulted in a decrease in the demand for solutions and services. The negotiation times of large international deals in particular are long because of the nature of service level agreements in the deals.
Business management regularly monitors the payment of sales receivables as part of the management of customer accounts. There are no significant credit risk concentrations associated with the sales receivables; they are primarily comprised of a large number of relatively small receivables.
The development of Solution Services net sales is influenced by the utilization rate of consulting and delays in the entry of new SaaS services into production compared to the plans. The Alusta software and services are continuously developed in the Solution Services business area. The development work is associated with technical implementation risks that may influence the usability and quality of existing or new products.
Information security is an important and central part of Basware's operations. The market is developing all the time, and the requirement level related to information security changes rapidly, resulting in potential risks.
Basware invests in launching financing services business. This is a new business area for the company, and the associated possible risks include risks related to the functionality of new products, collaboration with business partners, and demand for the products.
The company aims to avoid wrong recruitments and excessive personnel turnover, which can lead to a decrease in customer satisfaction, growth and profitability, and continuously assesses the competence and well-being of the personnel as part of the HR processes.
Additional information on risks and risk management is available on the company's investor site www.basware.com/investors.
Companies of all sizes globally are under pressure to improve their cash flows, find new innovative payment strategies, and automate their financial processes and functions. The company expects the same to continue also in 2015 and the continuous demand for services to remain at a favorable level among its customers.
Consolidation is expected to continue in the business environment, with the role of services growing in companies' portfolios. According to industry research, e-invoicing has become more common and the number of e-invoices has grown substantially in Europe and the rest of the world. The global market penetration of e-invoices is estimated to be some 10 percent. The growing e-invoicing market and companies' interest in other payment and financing added value solutions as well will offer excellent growth opportunities in future years.
The global market growth in e-invoicing has been estimated to be approximately 20 percent. Basware is pursuing strong growth in Network Services by developing and automating the connection of buyers and suppliers to the e-invoicing service, by utilizing digital marketing and sales channels more extensively, and through acquisitions. In the Solution Services business, sales of Alusta are expected to have a positive effect on software net sales and professional services.
Basware's operating expenses are expected to develop moderately. Basware will invest more extensively in sales and marketing as well as research and development of new solutions and services, including Financing Services. The company will continue to improve its profit-making ability in its software business also this year by ensuring the efficient use of resources in professional services and improving the billing rate in relation to demand. The company will continue investments in the Network Services business to achieve accelerated growth by primarily developing automated solutions for sending and receiving e-invoices and new ways to achieve accelerated growth in sales.
In 2015, the company expects the acquisition of Procserve and related integration costs to exceed the savings starting from the second quarter of the year and the cost synergies to be marginally net positive next year. The company also expects the joint venture which has been established with Arrowgrass Capital Partners LLP to add net costs in 2015.
Basware continues active analysis of acquisition targets especially in the e-invoicing market in Europe and in the U.S. according to its strategy. Decisions on additional investments required for growth will be made during the year as required by the market situation and development of business operations.
Basware expects its net sales and operating profit (EBIT) for 2015 to grow compared to 2014.
Espoo, Finland, Friday, July 10, 2015
BASWARE CORPORATION Board of Directors
Esa Tihilä, CEO, Basware Corporation Tel. +358 40 480 7098
Distribution: NASDAQ OMX Helsinki Ltd Key media www.basware.com
| NET SALES 36 590 31 833 14.9 70 631 62 846 12.4 127 674 Other operating income 3 26 -89.0 22 203 -89.3 260 Materials and services -4 437 -3 057 45.1 -8 446 -6 035 39.9 -12 796 Employee benefit expenses -23 221 -19 561 18.7 -44 032 -39 639 11.1 -77 779 Depreciation and amortization -1 822 -1 744 4.4 -3 479 -3 533 -1.5 -7 029 Other operating expenses -8 870 -6 345 39.8 -15 319 -12 379 23.8 -26 004 Operating result -1 757 1 152 -625 1 462 4 325 Finance income 458 325 40.9 1 023 464 120.5 1 154 Finance expenses -319 -328 -2.7 -1 160 -766 51.5 -1 151 Share of results of a joint venture -444 0 100.0 -444 0 100.0 0 Result before tax -2 062 1 149 -1 206 1 160 0 Income taxes 347 -345 86 -432 -1 368 RESULT FOR THE PERIOD -1 715 804 -1 120 728 2 959 Other comprehensive income Other comprehensive income to be reclassified to profit or loss in subsequent periods: Exchange differences on translating 204 -149 1 595 109 1357.9 -684 foreign operations Income tax relating to components of 73 -45 -347 -69 401.0 -279 other comprehensive income Other comprehensive income, net of 277 -194 1 248 40 3015.0 -963 tax TOTAL COMPREHENSIVE INCOME -1 438 610 128 768 -83.4 1 996 1.4.– 1.4.– Change, 1.1.– 1.1.– Change, 1.1.- EUR thousand 30.6.2015 30.6.2014 % 30.6.2015 30.6.2014 % 31.12.2014 Profit attributable to: Equity holders of the parent company -1 715 804 -1 120 728 2 959 -1 715 804 -1 120 728 2 959 Total comprehensive income attributable to: Equity holders of the parent company -1 438 610 128 768 -83.4 1 996 -1 438 610 128 768 -83.4 1 996 Earnings per share undiluted, EUR -0.12 0.06 -0.08 0.06 0.22 diluted, EUR -0.12 0.06 -0.08 0.06 0.22 |
EUR thousand | 1.4.- 30.6.2015 |
1.4.- 30.6.2014 |
Change, % |
1.1.- 30.6.2015 |
1.1.- 30.6.2014 |
Change, % |
1.1.- 31.12.2014 |
|---|---|---|---|---|---|---|---|---|
| EUR thousand | 30.6.2015 | 30.6.2014 | Change, % | 31.12.2014 |
|---|---|---|---|---|
| ASSETS | ||||
| Non-current assets | ||||
| Intangible assets | 33 718 | 25 201 | 33.8 | 25 231 |
| Goodwill | 70 555 | 50 930 | 38.5 | 50 317 |
| Tangible assets | 1 468 | 1 438 | 2.0 | 1 387 |
| Available-for-sale investments | 38 | 36 | 4.4 | 38 |
| Trade and other receivables | 965 | 844 | 14.3 | 724 |
| Deferred tax assets | 4 700 | 3 864 | 21.6 | 4 377 |
| Non-current assets | 111 444 | 82 314 | 35.4 | 82 074 |
| Current assets | ||||
| Inventories | 27 | 149 | -81.9 | 42 |
| Trade receivables | 22 586 | 26 938 | -16.2 | 22 902 |
| Other receivables | 5 455 | 3 112 | 75.3 | 33 204 |
| Income tax receivables | 2 206 | 3 560 | -38.0 | 1 605 |
| Cash and cash equivalents | 62 570 | 19 954 | 213.6 | 28 954 |
| Current assets | 92 845 | 53 713 | 72.9 | 86 707 |
| ASSETS | 204 289 | 136 027 | 50.2 | 168 781 |
| EUR thousand | 30.6.2015 | 30.6.2014 | Change, % | 31.12.2014 |
|---|---|---|---|---|
| EQUITY AND LIABILITIES | ||||
| Shareholders' equity | ||||
| Share capital | 3 528 | 3 528 | 0.0 | 3 528 |
| Share premium account | 1 187 | 1 187 | 0.0 | 1 187 |
| Treasury shares | -1 123 | -1 156 | -2.8 | -1 156 |
| Invested unrestricted equity fund | 104 349 | 61 740 | 69.0 | 104 381 |
| Other reserves | 540 | 540 | 0.0 | 540 |
| Translation differences | -1 673 | -1 918 | -12.8 | -2 921 |
| Retained earnings | 31 906 | 31 925 | -0.1 | 34 184 |
| Shareholders' equity | 138 714 | 95 847 | 44.7 | 139 745 |
| Non-current liabilities | ||||
| Deferred tax liability | 3 898 | 2 130 | 83.0 | 2 433 |
| Interest-bearing liabilities | 0 | 3 333 | -100.0 | 1 667 |
| Other non-current financial liabilities | 449 | 289 | 55.4 | 315 |
| Non-current liabilities | 4 347 | 5 753 | -24.4 | 4 415 |
| Current liabilities | ||||
| Interest-bearing liabilities | 15 833 | 3 477 | 355.4 | 3 333 |
| Trade payables and other liabilities | 44 969 | 30 584 | 47.0 | 20 886 |
| Income tax liabilities | 425 | 366 | 16.1 | 403 |
| Current liabilities | 61 227 | 34 427 | 77.8 | 24 622 |
| EQUITY AND LIABILITIES | 204 289 | 136 027 | 50.2 | 168 781 |
| EUR thousand | Share capital |
Share premium account |
Treasury shares |
Inv. un restricted equity |
Other reserves |
Translation differences |
Retained earnings |
Total |
|---|---|---|---|---|---|---|---|---|
| SHAREHOLDERS' EQUITY 1.1.2015 |
3 528 | 1 187 | -1 156 | 104 381 | 540 | -2 921 | 34 184 | 139 745 |
| Comprehensive income | 1 248 | -1 120 | 128 | |||||
| Dividend distribution | -1 415 | -1 415 | ||||||
| Share based payments | 257 | 257 | ||||||
| Treasury shares issued* | 33 | -33 | 0 | |||||
| SHAREHOLDERS' EQUITY 30.6.2015 |
3 528 | 1 187 | -1 123 | 104 349 | 540 | -1 673 | 31 906 | 138 714 |
| EUR thousand | Share capital |
Share premium account |
Treasury shares |
Inv. un restricted equity |
Other reserves |
Translation differences |
Retained earnings |
Total |
|---|---|---|---|---|---|---|---|---|
| SHAREHOLDERS' EQUITY | ||||||||
| 1.1.2014 | 3 528 | 1 187 | -1 164 | 61 748 | 540 | -1 958 | 34 074 | 97 956 |
| Comprehensive income | 40 | 728 | 768 | |||||
| Dividend distribution | -2 957 | -2 957 | ||||||
| Share based payments | 80 | 80 | ||||||
| Treasury shares issued* | 8 | -8 | 0 | |||||
| SHAREHOLDERS' EQUITY | ||||||||
| 30.6.2014 | 3 528 | 1 187 | -1 156 | 61 740 | 540 | -1 918 | 31 925 | 95 847 |
*Reward of the share-based incentive plan for Basware's key personnel
| EUR thousand | 1.1.-30.6.2015 | 1.1.-30.6.2014 | 1.1.-31.12.2014 |
|---|---|---|---|
| Cash flows from operating activities | |||
| Result for the period | -1 120 | 728 | 2 959 |
| Adjustments | 4 000 | 4 308 | 8 460 |
| Working capital changes | 17 646 | 10 303 | 5 191 |
| Financial items in operating activities | 43 | -235 | -938 |
| Income taxes paid | -823 | -1 546 | -762 |
| Cash flows from operating activities | 19 747 | 13 558 | 14 912 |
| Cash flows used in investing activities | |||
| Purchase of tangible and intangible assets | -5 635 | -2 693 | -6 517 |
| Acquisition of subsidiaries and businesses | -20 425 | 0 | 0 |
| Short-term deposits | 29 881 | 0 | -30 000 |
| Repayment of loan receivables | 0 | 600 | 600 |
| Cash flows used in investing activities | 3 821 | -2 093 | -35 917 |
| Cash flows from financing activities | |||
| Share issue | 0 | 0 | 43 215 |
| Proceeds from borrowings | 12 500 | 0 | 0 |
| Repayments of borrowings | -1 667 | -1 667 | -3 333 |
| Payments of finance lease liabilities | 0 | -141 | -284 |
| Dividends paid | -1 415 | -2 957 | -2 957 |
| Cash flows from financing activities | 9 418 | -4 765 | 36 640 |
| Net change in cash and cash equivalents | 32 987 | 6 700 | 15 635 |
| Cash and cash equivalents at the beginning of period | 28 954 | 13 218 | 13 218 |
| Net foreign exchange difference | 629 | 36 | 101 |
| Cash and cash equivalents at the end of period | 62 570 | 19 954 | 28 954 |
Interim Report 14 (21)
July 10, 2015
The Interim Report has been prepared in accordance with IAS 34, Interim Financial Reporting. The same accounting principles have been followed as in the previous annual financial statements.
Basware has a 50 percent interest in a joint venture which was established with Arrowgrass Capital Partners LLP in the UK to develop a new e-invoicing based, supplier driven invoice financing service. Basware has determined its interest in the joint venture to be accounted for using the equity method. Basware's share of results of the joint venture is presented as a separate line item in the consolidated statement of comprehensive income and consolidated statement of financial position.
Basware reports one operating segment: Purchase to Pay, P2P. The segment is divided into the Network Services and Solution Services businesses that support each other. Revenue from products and services is reported as follows: Network Services (e-invoicing solutions and services) and Solution Services (software solutions and services).
Network services revenue is comprised of e-invoicing, paper invoice scanning services, printing service, catalog exchange and purchase message exchange. It contains activation services, professional services and start up fees related to these and alliance fees of financing-related value added services. Solution Services revenue is comprised of software revenue (SaaS revenue and license sales), software maintenance and extended customer support services, professional services, and start-up fees of SaaS services.
Recurring revenue reported by the company consists of the net sales excluding license sales and professional services revenue. Alliance fees from financing-related value added services of non-recurring nature are not included in the recurring revenue. The definition of the recurring revenue has been revisited in 2015 to reflect the current business structure.
As of January 1, 2015, Basware has reported geographical areas Finland, EMEIA & Russia, and Americas & APAC. The reported areas have been adjusted to reflect the growth in the share of the Group's international business. The Finland area includes the Finnish operations and corporate services. EMEIA & Russia combines Scandinavia and the rest of Europe, previously reported separately, and it also includes operations in Russia and Africa. Americas & APAC includes business operations in North and South America and the Pacific region. The comparison figures have been adjusted correspondingly.
Net sales are reported by the customer's location, and net sales and operating profit are also reported by the location of the assets. In addition, the geographical information of non-current assets is reported by the location of the assets in the annual financial statements.
Preparation of financial statements in accordance with the IFRS standards requires Basware's management to make estimates and assumptions that have an effect on the amount of assets and liabilities on the balance sheet at the closing date as well as the amounts of income and expenses for the financial period. In addition, the management must exercise its judgment regarding the application of accounting policies. Since the estimates and assumptions are based on the views at the date of the Financial Statements, they include risks and uncertainties. The actual results may differ from the estimates and assumptions.
The amounts presented in the income statement and balance sheet are Group figures. The amounts presented in the release are rounded, so the sum of individual figures may differ from the sum reported.
The Interim Report is unaudited.
On April 8, 2015 Basware acquired the shares of Procserve, the UK's leading e-procurement solution provider. As part of its strategy, Basware continuously supports organic growth with acquisitions in its key markets and this acquisition made Basware the market leader for the public sector in the UK. The acquired business has been consolidated into Basware's result from the acquisition date. The consideration of EUR 25 753 thousand was paid in cash. The acquired net assets amount to approximately EUR 6 238 thousand, including the cash reserves of EUR 5 526 thousand. Approximately EUR 6 333 thousand associated with customer relationships have been allocated to intangible assets. The value associated with customer relationships will be amortized in 10 years, starting from the second quarter of 2015. The goodwill of EUR 19 645 thousand is recognized primarily to be attributing to the expected synergies with Procserve's and Basware's cloud-based e-procurement solutions as well as Procserve Commerce Network and the open Basware Commerce Network. The goodwill is non-deductible for income tax purposes. The calculation concerning the allocation of the purchase price is preliminary. Transaction costs of EUR 1 324 thousand are included in other operating expenses in the consolidated statement of comprehensive income and are part of the operating cash flows in the consolidated statement of cash flows.
| EUR thousand | Fair value |
|---|---|
| Intangible assets | 6 455 |
| Tangible assets | 55 |
| Trade and other receivables | 1 263 |
| Cash and cash equivalents | 5 526 |
| Total assets | 13 299 |
| Trade and other payables | 7 061 |
| Total liabilities | 7 061 |
| Net assets | 6 238 |
| Goodwill | 19 645 |
| Consideration | 25 753 |
| EUR thousand | Fair value |
|---|---|
| Consideration | -25 753 |
| Cash and cash equivalents in Procserve | 5 526 |
| Transaction costs | -1 324 |
| Net cash flow on acquisition | -21 551 |
The net sales of the acquired business included in the Group income statement since acquisition date were EUR 2 833 thousand and result for the period was EUR -663 thousand. The Group net sales would have totaled EUR 72 698 thousand and result for the period EUR – 1 072 thousand, if the business combination had taken place at the beginning of the year.
Basware reports one operating segment: Purchase to Pay, P2P. The reported segment is comprised of the entire Group, and the segment figures are consistent with the Group figures. The company reports revenue from products and services by businesses: Network Services (e-invoicing solutions and services) and Solution Services (software solutions and services).
| Net sales | 4-6/ | 4-6/ | Change, | 1-6/ | 1-6/ | Change, | 1-12/ |
|---|---|---|---|---|---|---|---|
| EUR thousand | 2015 | 2014 | % | 2015 | 2014 | % | 2014 |
| Network Services | 12 296 | 8 096 | 51.9 | 23 409 | 16 128 | 45.1 | 33 237 |
| Solution Services | 24 294 | 23 737 | 2.3 | 47 222 | 46 718 | 1.1 | 94 437 |
| Group total | 36 590 | 31 833 | 14.9 | 70 631 | 62 846 | 12.4 | 127 674 |
*The breakdown of the net sales of the businesses has been adjusted with regard to previously reported comparison periods due to changes in the organization structure
| Net sales | 4-6/ | 4-6/ | Change, | 1-6/ | 1-6/ | Change, | 1-12/ |
|---|---|---|---|---|---|---|---|
| EUR thousand | 2015 | 2014 | % | 2015 | 2014 | % | 2014 |
| Finland | 12 321 | 12 605 | -2.3 | 24 655 | 23 729 | 3.9 | 48 978 |
| EMEIA & Russia | 19 399 | 15 716 | 23.4 | 37 504 | 31 657 | 18.5 | 63 628 |
| Americas & APAC | 4 871 | 3 511 | 38.7 | 8 472 | 7 459 | 13.6 | 15 068 |
| Group total | 36 590 | 31 833 | 14.9 | 70 631 | 62 846 | 12.4 | 127 674 |
| Net sales | 4-6/ | 4-6/ | Change, | 1-6/ | 1-6/ | Change, | 1-12/ |
|---|---|---|---|---|---|---|---|
| EUR thousand | 2015 | 2014 | % | 2015 | 2014 | % | 2014 |
| Finland | 18 728 | 18 121 | 3.3 | 39 648 | 36 114 | 9.8 | 73 353 |
| EMEIA & Russia | 17 305 | 15 812 | 9.4 | 33 478 | 30 780 | 8.8 | 62 674 |
| Americas & APAC | 4 651 | 3 492 | 33.2 | 7 946 | 6 848 | 16.0 | 14 425 |
| Between areas | -4 093 | -5 591 | -26.8 | -10 441 | -10 896 | -4.2 | -22 778 |
| Group total | 36 590 | 31 833 | 14.9 | 70 631 | 62 846 | 12.4 | 127 674 |
| Operating result | 4-6/ | 4-6/ | Change, | 1-6/ | 1-6/ | Change, | 1-12/ |
|---|---|---|---|---|---|---|---|
| EUR thousand | 2015 | 2014 | % | 2015 | 2014 | % | 2014 |
| Finland | -1 805 | -76 | 2275.0 | -1 377 | -596 | 131.0 | 514 |
| EMEIA & Russia | 324 | 1 288 | -74.8 | 1 073 | 2 095 | -48.8 | 4 473 |
| Americas & APAC | 230 | 207 | 11.1 | 395 | 371 | 6.5 | 723 |
| Between areas | -507 | -267 | 89.9 | -716 | -409 | 75.1 | -1 385 |
| Group total | -1 757 | 1 152 | -625 | 1462 | 4 325 |
| Personnel | 4-6/ | 4-6/ | Change, | 1-6/ | 1-6/ | Change, | 1-12/ |
|---|---|---|---|---|---|---|---|
| Employed, on average | 2015 | 2014 | % | 2015 | 2014 | % | 2014 |
| Finland | 476 | 479 | -0.6 | 475 | 486 | -2.3 | 482 |
| EMEIA & Russia | 540 | 412 | 32.4 | 537 | 410 | 31.0 | 425 |
| India | 526 | 486 | 8.2 | 515 | 489 | 5.3 | 492 |
| Americas & APAC | 76 | 66 | 15.2 | 74 | 67 | 10.4 | 67 |
| Group total | 1 618 | 1 443 | 10.8 | 1 601 | 1 452 | 10.3 | 1 466 |
** As of 2015, the company reports geographical areas as follows: Finland, EMEIA & Russia, and Americas & APAC. Comparative figures have been adjusted accordingly
| EUR thousand | 30.06.2015 Book value |
30.06.2015 Fair value |
30.06.2014 Book value |
30.06.2014 Fair value |
31.12.2014 Book Value |
31.12.2014 Fair value |
|---|---|---|---|---|---|---|
| Financial assets | ||||||
| Non-current: | ||||||
| Available-for-sale financial assets | 38 | 38 | 36 | 36 | 38 | 38 |
| Non-current trade and other receivables |
965 | 965 | 844 | 844 | 724 | 724 |
| Current: | ||||||
| Financial assets at fair value through profit or loss |
||||||
| Currency swaps * | 0 | 0 | 0 | 0 | 20 | 20 |
| Current trade receivables | 22 586 | 22 586 | 26 938 | 26 938 | 22 902 | 22 902 |
| Current other receivables | 5 455 | 5 455 | 3 115 | 3 115 | 33 204 | 33 204 |
| Cash and cash equivalents | 62 570 | 62 570 | 19 954 | 19 954 | 28 954 | 28 954 |
| Financial liabilities | ||||||
| Non-current: | ||||||
| Financial liabilities valued at amortized acquisition cost: |
||||||
| Loans from financial institutions, interest-bearing |
0 | 0 | 3 333 | 3 333 | 1 667 | 1 667 |
| Current: Financial liabilities at fair value through profit or loss |
||||||
| Interest rate derivatives* | 5 | 5 | 16 | 16 | 12 | 12 |
| Loans from financial institutions, interest-bearing |
15 833 | 15 833 | 3 333 | 3 333 | 3 333 | 3 333 |
| Finance lease liabilities, interest bearing |
0 | 0 | 143 | 143 | 0 | 0 |
| Trade payables and other liabilities | 44 525 | 44 525 | 30 584 | 30 584 | 20 886 | 20 886 |
*not in hedge accounting, level 2
| EUR thousand | 30.06.2015 | 30.06.2014 | 31.12.2014 |
|---|---|---|---|
| Own guarantees | |||
| Business mortgages of own debts | 1 200 | 1 200 | 1 200 |
| Guarantees | 205 | 0 | 205 |
| Commitments on behalf of subsidiaries and group companies |
|||
| Guarantees | 37 | 31 | 37 |
| Other own guarantees | |||
| Lease liabilities | |||
| Current lease liabilities | 973 | 935 | 992 |
| Lease liabilities maturing in 1–5 years | 1 091 | 825 | 1 014 |
| Total | 2 064 | 1 759 | 2 006 |
| Other rental liabilities | |||
| Current rental liabilities | 5 203 | 3 765 | 5 365 |
| Rental liabilities maturing in 1–5 years | 8 202 | 7 204 | 7 584 |
| Rental liabilities maturing later | 2 737 | 2 053 | 2 037 |
| Total | 16 142 | 13 022 | 14 985 |
| 18 206 | 14 782 | 16 991 | |
| Other own contingent liabilities, total | |||
| Total commitments and contingent liabilities | 19 648 | 16 012 | 18 433 |
| EUR thousand | 30.06.2015 | 30.06.2014 | 31.12.2014 |
|---|---|---|---|
| Joint venture: | |||
| Sales | 118 | 0 | 0 |
| Softaforce: | |||
| Purchases of services | 117 | 84 | 132 |
| EUR thousand | 4-6/2015 | 1-3/2015 | 10-12/2014 | 7-9/2014 | 4-6/2014 | 1-3/2014 |
|---|---|---|---|---|---|---|
| NET SALES | 36 590 | 34 041 | 34 664 | 30 164 | 31 833 | 31 013 |
| Other operating income | 3 | 19 | 0 | 57 | 26 | 177 |
| Materials and services | -4 437 | -4 009 | -3 559 | -3 200 | -3 057 | -2 978 |
| Employee benefit expenses | -23 221 | -20 811 | -20 803 | -17 337 | -19 561 | -20 078 |
| Depreciation and amortization | -1 822 | -1 658 | -1 735 | -1 760 | -1 744 | -1 789 |
| Other operating expenses | -8 870 | -6 449 | -6 865 | -6 761 | -6 345 | -6 034 |
| Operating result | -1 757 | 1 132 | 1 701 | 1 162 | 1 152 | 310 |
| % | -4.8% | 3.3% | 4.9% | 3.9% | 3.6% | 1.0% |
| Finance income | 458 | 565 | 923 | -233 | 325 | 139 |
| Finance expenses | -319 | -841 | -420 | 34 | -328 | -438 |
| Share of results of a joint venture |
-444 | 0 | 0 | 0 | 0 | 0 |
| Result before tax | -2 062 | 856 | 2 204 | 964 | 1 149 | 11 |
| % | -5.6% | 2.5% | 6.4% | 3.2% | 3.6% | 0.0% |
| Income taxes | 347 | -261 | -749 | -187 | -345 | -87 |
| RESULT FOR THE PERIOD | -1 715 | 595 | 1 454 | 777 | 804 | -76 |
| % | -4.7% | 1.7% | 4.2% | 2.6% | 2.5% | -0.2% |
| EUR thousand | 1-6/2015 | 1-6/2014 | 1-6/2013 | 1-12/2014 | |
|---|---|---|---|---|---|
| Net sales | 70 631 | 62 846 | 61 617 | 127 674 | |
| Growth of net sales, % | 12.4% | 2.0% | 9.7% | 3.5% | |
| EBITDA | 2 855 | 4 995 | 2 895 | 11 354 | |
| % of net sales | 4.0% | 7.9% | 4.7% | 8.9% | |
| Operating result | -625 | 1 462 | - 661 | 4 325 | |
| % of net sales | -0.9% | 2.3% | -1.1% | 3.4% | |
| Growth of operating result, % | 29.8% | ||||
| Result before tax | -1 206 | 1 160 | -689 | 4 328 | |
| % of net sales | -1.7% | 1.8% | -1.1% | 3.4% | |
| Result for the period | -1 120 | 782 | -611 | 2 959 | |
| % of net sales | -1.6% | 1.2% | -1.0% | 2.3% | |
| Return on equity, % | -1.6% | 1.5% | -1.2% | 2.5% | |
| Return on investment, % | 0.5% | 3.8% | -0.3% | 4.4% | |
| Interest-bearing liabilities | 15 833 | 6 810 | 10 415 | 5 000 | |
| Cash and cash equivalents | 62 570 | 19 954 | 22 917 | 28 954 | |
| Gearing, % | -33.7% | -13.7% | -13.0% | -38.6% | |
| Equity ratio, % | 67.9% | 70.5% | 66.9% | 82.7% | |
| Total assets | 204 289 | 136 027 | 143 158 | 168 781 | |
| Gross investments* | 31 232 | 2 707 | 18 507 | 5 821 | |
| % of net sales | 44.2% | 4.3% | 30.0% | 4.6% | |
| Capital expenditure | 437 | 444 | 709 | 816 | |
| % of net sales | 0.6% | 0.7% | 1.2% | 0.6% | |
| Research and development expenses | 9 947 | 9 027 | 9 468 | 17 680 | |
| % of net sales | 14.1% | 14.4% | 15.4% | 13.8% | |
| R&D personnel at end of period | 358 | 320 | 350 | 332 | |
| Personnel expenses | 23 221 | 19 561 | 20 611 | 77 779 | |
| Personnel on average during the period | 1 601 | 1 452 | 1 490 | 1 466 | |
| Personnel at end of period | 1 649 | 1 459 | 1 498 | 1 493 | |
| Change in personnel, % | 13.0% | -2.6% | 13.2% | 1.4% |
*Including acquisitions and capitalized R&D costs
| Group Share Indicators | 1-6/2015 | 1-6/2014 | 1-6/2013 | 1-12/2014 |
|---|---|---|---|---|
| Earnings per share, undiluted | -0.08 | 0.06 | -0.05 | 0.22 |
| Earnings per share, diluted | -0.08 | 0.06 | -0.05 | 0.22 |
| Equity per share | 9.80 | 7.46 | 7.46 | 9.88 |
| Price per earnings (P/E) | -505.44 | 695.14 | -370.36 | 184.31 |
| Share price performance | ||||
| lowest price | 35.98 | 23.50 | 16.75 | 23.50 |
| highest price | 44.89 | 41.00 | 21.69 | 41.21 |
| average price | 39.93 | 34.31 | 19.88 | 35.65 |
| closing price | 40.00 | 38.55 | 17.60 | 41.05 |
| Market capitalization at end of period* | 566 030 800 | 495 615 222 | 226 133 970 | 577 640 124 |
| Share issue adjusted number of | ||||
| traded shares | 1 809 791 | 3 111 870 | 490 244 | 4 792 273 |
| % of average number of shares | 12.8% | 24.2% | 3.8% | 36.1% |
| Number of shares* | ||||
| - at end of the period | 14 150 770 | 12 856 227 | 12 848 521 | 14 146 426 |
| - average during the period | 14 149 810 | 12 931 229 | 12 931 229 | 13 286 327 |
| - average during the period, diluted | 14 164 540 | 12 856 227 | 12 848 521 | 13 297 962 |
*Excluding treasury shares
Basware Corporation's share capital totaled EUR 3 528 367 (3 528 368) at the end of the period and the number of shares was 14 221 229 (12 931 229). Basware Corporation holds 70 459 (74 803) of its own shares, corresponding to approximately 0.5 percent (0.6%) of the total number of shares.
Basware had 13 282 (13 840) shareholders at the end of the period, including 12 nominee-registered holdings (9). Nominee-registered holdings accounted for 28.6 percent (19.1%) of the total number of shares.
The company's Annual General Meeting of February 13, 2015, authorized the Board of Directors to decide on the repurchase of the company's own shares and on share issue as well as on the issuance of options and other special rights entitling to shares.
Additional information on shareholdings of the Executive Team and Board of Directors and major shareholders is available on the company's investor site at www.basware.com/investors.
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