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Basware Oyj Interim / Quarterly Report 2022
3257_rns_2022-07-21_2faac500-eba0-4184-8b6a-74c66a04cfc3.pdf
Interim / Quarterly Report
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basware
Simulity Operations, Special Smarter
HALF YEAR
FINANCIAL
REPORT
January-June 2022
Q2/2022
basware
Half Year Financial Report January-June 2022
Basware Half Year Financial Report January-June 2022: Net sales and adjusted EBIT in line with expectations, one-off items related to the tender offer impacted reported EBIT
April-June 2022
- Cloud ARR order intake decreased 7.4 percent to EUR 5.2 million (EUR 5.6 million), which amounted to 9.7 percent organic decrease at constant currencies
- Net sales increased 5.2 percent to EUR 40,563 thousand (EUR 38,571 thousand), which amounted to 2.3 percent organic growth at constant currencies
- Cloud revenue increased 11.4 percent to EUR 33,024 thousand (EUR 29,633 thousand), which amounted to 8.1 percent organic growth at constant currencies
- EBIT decreased to EUR -8,755 thousand (EUR 1,800 thousand)
- Adjusted EBIT increased 2.1 percent to EUR 1,965 thousand (EUR 1,926 thousand)
- Loss for the period was EUR -9,737 thousand (EUR -1,407 thousand)
- Adjusted profit for the period was EUR 983 thousand (EUR -1,282 thousand)
- Earnings per share (diluted) were EUR -0.67 (EUR -0.10)
- Adjusted earnings per share (diluted) were EUR 0.07 (EUR -0.09)
January-June 2022
- Cloud ARR order intake increased 8.8 percent to EUR 9.2 million (EUR 8.5 million), which amounted to 6.5 percent organic growth at constant currencies
- Net sales increased 4.1 percent to EUR 79,441 thousand (EUR 76,313 thousand), which amounted to 1.8 percent organic growth at constant currencies
- Cloud revenue increased 10.8 percent to EUR 65,021 thousand (EUR 58,676 thousand), which amounted to 8.1 percent organic growth at constant currencies
- EBIT decreased to EUR -6,415 thousand (EUR 3,180 thousand)
- Adjusted EBIT increased 30.5 percent to EUR 4,383 thousand (EUR 3,385 thousand)
- Loss for the period was EUR -8,799 thousand (EUR -2,885 thousand)
- Adjusted profit for the period was EUR 1,999 thousand (EUR -2,707 thousand)
- Earnings per share (diluted) were EUR -0.61 (EUR -0.20)
- Adjusted earnings per share (diluted) were EUR 0.14 (EUR -0.19)
Key figures
| EUR thousand | 4-6/2022 | 4-6/2021 | Change, % | 1-6/2022 | 1-6/2021 | Change, % | 2021 |
|---|---|---|---|---|---|---|---|
| Net sales | 40,563 | 38,571 | 5.2 | 79,441 | 76,313 | 4.1 | 153,155 |
| Cloud revenue | 33,024 | 29,633 | 11.4 | 65,021 | 58,676 | 10.8 | 119,996 |
| Cloud ARR order intake | 5,197 | 5,611 | -7.4 | 9,226 | 8,479 | 8.8 | 17,064 |
| EBIT | -8,755 | 1,800 | N/A | -6,415 | 3,180 | N/A | 7,144 |
| Adjusted EBIT | 1,965 | 1,926 | 2.1 | 4,383 | 3,385 | 30.5 | 7,501 |
| EBITDA | -4,518 | 5,852 | N/A | 2,015 | 11,077 | -81.8 | 22,828 |
| Adjusted EBITDA | 6,202 | 5,977 | 3.8 | 12,813 | 11,255 | 13.8 | 23,186 |
| Gearing, %^{1} | 79.5 | 55.4 | 43.5 | 79.5 | 55.4 | 43.5 | 72.5 |
| Cash and cash equivalents^{1} | 28,759 | 40,560 | -29.1 | 28,759 | 40,560 | -29.1 | 31,060 |
| Cash flow from operating activities | 3,851 | 1,278 | 201.3 | 6,241 | 7,636 | -18.3 | 20,435 |
| Earnings per share, diluted, EUR | -0.67 | -0.10 | 570.0 | -0.61 | -0.20 | 205.0 | -0.99 |
| Adjusted earnings per share, diluted, EUR | 0.07 | -0.09 | N/A | 0.14 | -0.19 | N/A | -0.96 |
| Personnel^{1} | 1,382 | 1,340 | 3.1 | 1,382 | 1,340 | 3.1 | 1,347 |
1 At the end of the period.
The half year financial report is unaudited.
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report
January-June 2022
Guidance for 2022
Basware updated its full year 2022 guidance on 27 June 2022 as follows:
- Order Intake to grow between 15 and 35 percent at organic constant currencies
- Net sales to grow between 3 and 6 percent at organic constant currencies
- EBIT between EUR 7 and 10 million, excluding any impact from one-off expenses related to the tender offer from Sapphire BidCo Ltd
Previous guidance given on 3 February 2022:
- Order Intake to grow between 15 and 35 percent at organic constant currencies
- Net sales to grow between 3 and 6 percent at organic constant currencies
- EBIT between EUR 7 and 10 million
CEO Klaus Andersen:
"Second quarter of 2022 developed according to our expectations both in terms of net sales and profitability. Total net sales grew 5.2% as reported and 2.3% at constant currencies y-o-y to EUR 40.6 million. Cloud revenue continued to deliver solid growth of 11.4% as reported and 8.1% at constant currencies y-o-y, amounting to EUR 33.0 million. Consulting revenue was EUR 6.8 million, a decrease of 5.7% as reported and 7.3% at constant currencies y-o-y. Cloud revenue growth was mainly driven by our SaaS business which grew 15.3% as reported and 11.2% at constant currencies, while our implementation partner strategy continued to impact our Consulting revenues, especially in North America. Profitability developed well in line with expectations during the second quarter and adjusted EBIT increased with 2.1% y-o-y to EUR 2.0 million, excluding the impact from the one-off cost items related to the tender offer. Reported EBIT was EUR -8.8 million including one-off cost items. Our cash position was strong, EUR 28.8 million at the end of the quarter.
This quarter we experienced indications of a shift in the external business environment compared to the first quarter of the year. The impact of the war in Ukraine as well as continued high inflation and cost pressures leading to economic uncertainty slowed customer decision making and investments, in particular in markets in Central Europe. Not all regions were equally impacted, and the total order intake amounted to EUR 5.2 million, down 7% y-o-y, which is a solid result in a changing business environment. As a testament to the value we deliver to our customers, expansion sales with existing customers remained strong and made up 57% of the total order intake. New logo business accounted for 43% of total order intake and again multiple new customers selected our advanced Networked Accounts Payable solution during the quarter. Well-known brand names such as Mauser, Black and McDonald and VYV3, among others. In total we welcomed more than 30 new customers in Q2. Partner influenced sales continued to contribute to our order intake in line with previous quarters. During Q2, we also added a new system integrator partner in France, Viseo, to our global partner network. Viseo is focused on providing digital transformation services that help customers adapt to the regulatory compliance requirements of e-invoicing, which come into effect from 2024 in France.
During Q2 we saw a continued improvement in our customer feedback as seen in the Gartner Peer Insights Business-to-Business customer review platform. Basware is now in the top three vendors for customer satisfaction with an average rating of 4.6 out of 5 for the last 12 months as at the end of June 2022.
Outlook for the rest of the year remains unchanged. Order intake, net sales and profitability is expected to develop in accordance with our guidance for the remainder of the year. Due to the tender offer activities, an update to our EBIT guidance was given on the 27th of June 2022. We clarified our full year EBIT guidance to be net of one-off expenses related to the tender offer."
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report January-June 2022
Net sales
| Net sales by revenue type, EUR thousand | 4-6/2022 | 4-6/2021 | Change, % | 1-6/2022 | 1-6/2021 | Change, % | 2021 |
|---|---|---|---|---|---|---|---|
| Cloud | 33,024 | 29,633 | 11.4 | 65,021 | 58,676 | 10.8 | 119,996 |
| Consulting | 6,818 | 7,233 | -5.7 | 13,056 | 14,418 | -9.4 | 26,942 |
| Maintenance, license and other | 720 | 1,706 | -57.8 | 1,363 | 3,219 | -57.7 | 6,216 |
| Total | 40,563 | 38,571 | 5.2 | 79,441 | 76,313 | 4.1 | 153,155 |
| Net sales by customer location, EUR thousand | 4-6/2022 | 4-6/2021 | Change, % | 1-6/2022 | 1-6/2021 | Change, % | 2021 |
| Americas | 9,102 | 8,463 | 7.6 | 17,402 | 16,801 | 3.6 | 33,641 |
| Europe | 14,596 | 13,399 | 8.9 | 28,960 | 26,675 | 8.6 | 54,767 |
| Nordics | 14,623 | 14,648 | -0.2 | 28,725 | 28,801 | -0.3 | 56,904 |
| APAC | 2,243 | 2,061 | 8.8 | 4,353 | 4,037 | 7.8 | 7,843 |
| Total | 40,563 | 38,571 | 5.2 | 79,441 | 76,313 | 4.1 | 153,155 |
Net sales by revenue type
- Cloud 81%
- Consulting 17%
- Maintenance, license and other 2%
Net sales by customer location
- Americas 22%
- Europe 36%
- Nordics 36%
- APAC 6%
Basware's net sales for the second quarter amounted to EUR 40,563 thousand (EUR 38,571 thousand), an increase of 5.2 percent. This equated to 2.3 percent organic growth at constant currencies.
Cloud revenues continued to grow during the second quarter. Cloud revenues in the second quarter were EUR 33,024 thousand (EUR 29,633 thousand), up by 11.4 percent, equating to 8.1 percent organic growth at constant currencies and accounted for 81.4 percent (76.8%) of net sales. The growth in Cloud revenues was mainly driven by the positive development in the SaaS business.
In the second quarter consulting revenues decreased 5.7 percent, equating to 7.3 percent organic decrease at constant currencies. Basware's implementation partner strategy continued to impact Consulting revenues, especially in North America.
Maintenance and license revenues declined in line with expectations as Basware transitions customers to the cloud and discontinues some of Basware's legacy services. In the second quarter maintenance, license and other revenues decreased 57.8 percent, equating to 58.2 percent organic decrease at constant currencies.
Basware's net sales for the second quarter from the Americas was positively impacted by the development of US dollar against Euro. At constant currencies net sales for the second quarter from Americas declined by 4.0 percent y-o-y. Basware's net sales for the second quarter from the Asia Pacific was also positively impacted by the development of Australian dollar against Euro. At constant currencies net sales for the second quarter from Asia Pacific increased by 4.4 percent y-o-y.
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report January-June 2022
Cloud order intake
| Order intake by type, EUR thousand | 4-6/2022 | 4-6/2021 | Change, % | 1-6/2022 | 1-6/2021 | Change, % | 2021 |
|---|---|---|---|---|---|---|---|
| New logo | 2,240 | 2,795 | -19.9 | 4,060 | 3,506 | 15.8 | 6,045 |
| Expansion | 2,676 | 2,214 | 20.9 | 4,486 | 3,905 | 14.9 | 8,378 |
| Transformation | 281 | 602 | -53.3 | 680 | 1,069 | -36.4 | 2,641 |
| Total | 5,197 | 5,611 | -7.4 | 9,226 | 8,479 | 8.8 | 17,064 |
Cloud order intake by customer location in Q2/2022 and Q2/2021
Americas 27%
Europe 45%
Nordics 27%
APAC 1%
Americas 29%
Europe 40%
Nordics 26%
APAC 5%
Basware's total cloud annual recurring revenue (ARR) gross order intake in the second quarter amounted to EUR 5,197 thousand (EUR 5,611 thousand), a decrease of 7.4 percent from corresponding period last year. This equated to 9.7 percent decrease on an organic constant currency basis. The impact of the war in Ukraine as well as continued high inflation and cost pressures leading to economic uncertainty slowed customer decision making and investments, in particular in markets in Central Europe. Not all regions were equally impacted, which led to a solid result in terms of annual recurring revenue in a changing business environment.
Basware has reported from Q4 2021 onwards the distribution of cloud order intake into new logo, expansion and transformation order intake types. New logo means a new customer to Basware with whom it does not have prior significant business.
Out of total cloud order intake, new logo decreased by 19.9 percent for the second quarter compared to corresponding quarter last year and amounted to EUR 2,240 thousand (EUR 2,795 thousand). Expansion increased by 20.9 percent for the second quarter and amounted to EUR 2,676 thousand (EUR 2,214 thousand). In the second quarter new logos represented 43.1%, expansions 51.5% and transformations 5.4% of the total cloud order intake. In the first half of the year, order intake consisted of 44.0% new logos, 48.6% expansions, and 7.4% transformations.
There will be a time lag before order intake is visible in net sales. Historically, around one quarter of the full year's new ARR order intake converts into revenues in the same year, with roughly fifty to sixty percent converting to revenues in the following year and the remainder thereafter. Further information on the definition of annual recurring revenue gross order intake is included in the section on Definitions of Key Indicators and Alternative Performance Measures.
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report January-June 2022
Financial performance
| EUR thousand | 4-6/2022 | 4-6/2021 | Change, % | 1-6/2022 | 1-6/2021 | Change, % | 2021 |
|---|---|---|---|---|---|---|---|
| Net sales | 40,563 | 38,571 | 5.2 | 79,441 | 76,313 | 4.1 | 153,155 |
| Cost of sales | -17,505 | -17,137 | 2.1 | -34,403 | -33,553 | 2.5 | -66,837 |
| Gross profit | 23,058 | 21,434 | 7.6 | 45,038 | 42,760 | 5.3 | 86,317 |
| Sales and marketing | -10,277 | -9,113 | 12.8 | -19,408 | -18,355 | 5.7 | -38,286 |
| Research and development | -7,319 | -6,879 | 6.4 | -14,362 | -13,709 | 4.8 | -27,928 |
| General and administration | -3,894 | -3,427 | 13.6 | -7,171 | -7,187 | -0.2 | -13,038 |
| Total operating expenses | -21,490 | -19,418 | 10.7 | -40,942 | -39,251 | 4.3 | -79,252 |
| Other operating income and expenses | -10,322 | -215 | -10,511 | -328 | 79 | ||
| EBIT | -8,755 | 1,800 | N/A | -6,415 | 3,180 | N/A | 7,144 |
| EBITDA | -4,518 | 5,852 | N/A | 2,015 | 11,077 | -81.8 | 22,828 |
| Adjusted EBIT | 1,965 | 1,926 | 2.1 | 4,383 | 3,385 | 30.5 | 7,501 |
| Adjusted EBITDA | 6,202 | 5,977 | 3.8 | 12,813 | 11,255 | 13.8 | 23,186 |
In the second quarter, cost of sales amounted to EUR 17,505 thousand (EUR 17,137 thousand), an increase of 2.1 percent. The cloud gross margin was 69.4 percent in the second quarter, up 1.5 percentage point in comparison to the second quarter of 2021.
Out of the total operating expenses, sales and marketing expenses increased 12.8 percent, research and development expenses increased 6.4 percent and general and administration expenses increased 13.6 percent during the second quarter. Sales and marketing expenses increased mainly because of sales related headcount growth and increase in incentive and travel expenses. Research and development costs increased in comparison to corresponding period last year mainly due to higher amortization from completed development projects. General and administration expenses increased mainly driven by a refinancing transaction related one-off expense adjustment booked in Q2 2021.
Basware's research and development investments including capitalizations but excluding amortizations totalled EUR 6,657 thousand (EUR 6,424 thousand), or 16.4 percent (16.7%) of net sales during the quarter.
Other operating income and expenses in the second quarter of the year amounted to EUR -10,322 thousand (EUR -215 thousand) consisting EUR 10,666 thousand one-off cost items related to the tender offer including transaction-related advisory expenses of EUR 7,270 thousand and transaction-related incentive expenses of EUR 3,395 thousand.
Basware's EBIT for the quarter amounted to EUR -8,755 thousand (EUR 1,800 thousand) and adjusted EBIT to EUR 1,965 thousand (EUR 1,926 thousand). Basware's EBITDA for the quarter amounted to EUR -4,518 thousand (EUR 5,852 thousand) and adjusted EBITDA EUR 6,202 thousand (EUR 5,977 thousand). The adjustments to EBIT and EBITDA totalled EUR 10,720 thousand (EUR 125 thousand) and included EUR 10,666 thousand of one-off cost items related to the tender offer.
In the first half of the year, Basware's EBIT amounted to EUR -6,415 thousand (EUR 3,180 thousand) and EBITDA to EUR 2,015 thousand (EUR 11,077 thousand). Adjusted EBITDA was EUR 12,813 thousand (EUR 11,255 thousand) and adjusted EBIT EUR 4,383 thousand (EUR 3,358 thousand). The adjustments to EBIT and EBITDA totalled EUR 10,798 thousand (EUR 178 thousand) in the first half of the year and included EUR 10,666 thousand of one-off cost items related to the tender offer.
Basware's loss before taxes was EUR -10,435 thousand (EUR -1,212 thousand) and loss for the quarter EUR -9,737 thousand (EUR -1,407 thousand). Taxes for the quarter impacted the result by EUR 699 thousand (EUR -195 thousand). Finance income and expenses for the quarter amounted to EUR -1,681 thousand (EUR -3,012 thousand). Adjusted profit for the quarter was EUR 983 thousand (EUR -1,282 thousand) excluding EUR 10,666 thousand of one-off cost items related to the tender offer.
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report January-June 2022
Diluted earnings per share were EUR -0.67 (EUR -0.10) for the quarter. Adjusted diluted earnings per share were EUR 0.14 (EUR -0.19) for the quarter.
Cash flow, financing and investments
Cash flow from operating activities was EUR 3,851 thousand (EUR 1,278 thousand) during the second quarter. Increase in the cash flow from operating activities was mainly driven by improvements in the working capital compared to the second quarter of 2021. EUR 181 thousand of Covid-19 payment deferrals are remaining to be repaid by the end of 2022.
Basware's cash and cash equivalents including short-term deposits totalled EUR 28,759 thousand (EUR 40,560 thousand) at the end of the quarter. Cash balance decreased in comparison mainly because of the refinancing related payments amounting to EUR 9,886 thousand in the third quarter of last year and payments of one-off cost items amounting to EUR 1,556 thousand in the second quarter this year.
Basware's total assets on the balance sheet at the end of the quarter were EUR 221,159 thousand (EUR 227,556 thousand). Net cash flow from investments was EUR -2,946 thousand (EUR -2,431 thousand) in the quarter.
The equity ratio was 30.8 percent (35.9%) and gearing 79.5 percent (55.4%). Gearing increased because of lower cash balance and decreased equity attributable to the refinancing transaction in the third quarter of last year as expected. The Company's interest-bearing liabilities excluding leasing liabilities totalled EUR 71,173 thousand (EUR 70,216 thousand), of which current liabilities accounted for EUR 0 thousand (EUR 2,173 thousand). The return on investment was -21.8 percent (4.3%) and return on equity -54.4 percent (-6.7%) in the quarter. Decrease in these indicators were driven by one-off cost items related to the tender offer.
Personnel
| Personnel on average by area | 4-6/2022 | 4-6/2021 | Change, % | 1-6/2022 | 1-6/2021 | Change, % | 2021 |
|---|---|---|---|---|---|---|---|
| Americas | 94 | 102 | -7.2 | 93 | 103 | -9.4 | 98 |
| Europe | 406 | 377 | 7.7 | 399 | 377 | 6.0 | 380 |
| Nordics | 420 | 419 | 0.2 | 413 | 419 | -1.4 | 416 |
| APAC | 461 | 441 | 4.6 | 462 | 435 | 6.4 | 446 |
| Total | 1,381 | 1,338 | 3.2 | 1,368 | 1,333 | 2.6 | 1,339 |
Basware employed 1,381 (1,338) people on average during the quarter and 1,382 (1,340) at the end of the quarter.
On 30 June 2022, 12.4 percent (13.0%) of the personnel worked in sales and marketing, 32.2 percent (32.6%) in R&D, production and products, 44.4 percent (43.8%) in consulting and customer services and 11.1 percent (10.6%) in administration.
Basware's personnel expenses were EUR 26,412 thousand (EUR 21,996 thousand) in the quarter.
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report January-June 2022
Share and shareholders
| Share Indicators | 1-6/2022 | 1-6/2021 | 2021 |
|---|---|---|---|
| Share price performance, EUR | |||
| - lowest price | 19.96 | 33.10 | 28.25 |
| - highest price | 40.20 | 43.85 | 43.85 |
| - average price | 30.47 | 38.74 | 37.43 |
| - closing price | 39.70 | 39.75 | 30.25 |
| Market capitalization at end of period¹, EUR | 573,902,922 | 574,600,878 | 437,293,788 |
| Number of shares¹ | |||
| - at end of the period | 14,455,993 | 14,455,368 | 14,455,993 |
| - average during the period | 14,455,993 | 14,435,745 | 14,445,824 |
| - average during the period, diluted | 14,559,404 | 14,575,469 | 14,580,596 |
| Number of traded shares (share issue adjusted) in Nasdaq Helsinki | 3,289,975 | 2,736,040 | 4,162,965 |
| % of average number of shares | 22.6% | 19.0% | 28.6% |
| Treasury shares held by the Company at end of the period | 7,943 | 8,568 | 7,943 |
| % of total shares | 0.1% | 0.1% | 0.1% |
| Share capital, EUR | 3,528,368 | 3,528,368 | 3,528,368 |
| Earnings per share, undiluted, EUR | -0.61 | -0.20 | -0.99 |
| Earnings per share, diluted, EUR | -0.61 | -0.20 | -0.99 |
| Adjusted earnings per share, undiluted, EUR | 0.14 | -0.19 | -0.96 |
| Adjusted earnings per share, diluted, EUR | 0.14 | -0.19 | -0.96 |
| Equity per share, EUR | 4.71 | 5.65 | 5.06 |
| Price per earnings (P/E) | -65.23 | -194.40 | -30.70 |
¹ Excluding treasury shares
Basware had 10,520 (11,584) shareholders at the end of the quarter, including nominee-registers. Nominee-registered holdings accounted for 60.5 percent (52.7%) of the total number of shares.
Flagging notifications
During the second quarter 2022, Basware Corporation has received the following notifications from major shareholders:
| Announcement date | Shareholder | Threshold | Total holding, % |
|---|---|---|---|
| 22 April | The Goldman Sachs Group | Above 5% | 5.58% |
| 25 April | The Goldman Sachs Group | Below 5% | 3.76% |
| 09 May | The Goldman Sachs Group | Above 5% | 5.37% |
| 11 May | The Goldman Sachs Group | Below 5% | 1.6% |
Annual General Meeting and authorizations of the Board of Directors
Basware Corporation's Annual General Meeting 2022 was held on 22 March 2022. The Annual General Meeting adopted the annual accounts for the financial period ended on 31 December 2021. The remuneration report was approved, and the members of the Board of Directors as well as the CEO were discharged from liability for the financial period ended on 31 December 2021. The Annual General Meeting resolved that no dividend will be paid for the year 2021.
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report January-June 2022
The Annual General Meeting decided the number of members of the Board of Directors to be five. Mr. Carl Farrell, Mr. Michael Ingelög, Mr. Jonathan Meister, Mr. Daryl Rolley and Ms. Minna Smedsten were re-elected as members of the Board of Directors. Basware Corporation's Board of Directors elected in its organizing meeting Michael Ingelög as the Chairperson and Minna Smedsten as the Vice Chairperson of the Board of Directors. Minna Smedsten was elected as the Chairperson of the Audit Committee and Jonathan Meister and Michael Ingelög as its members. Daryl Rolley was elected as the Chairperson of the Remuneration Committee and Carl Farrell and Michael Ingelög as its members.
Ernst & Young Oy, Authorized Public Accounting Firm, was elected as the company's auditor. Ernst & Young Oy appointed Mr. Anders Svennas, Authorized Public Accountant, as the principally responsible auditor of the company.
The Annual General Meeting decided to authorize the Board of Directors to decide on repurchase of company's own shares in accordance with the proposal of the Board of Directors. By virtue of the authorization, the Board of Directors is entitled to decide on repurchasing a maximum of 1,446,000 company's own shares. The company's own shares shall be repurchased otherwise than in proportion to the holdings of the shareholders by using the non-restricted equity through trading on regulated market organized by Nasdaq Helsinki Ltd at the market price prevailing at the time of acquisition. The shares shall be repurchased for use as consideration in possible acquisitions or other arrangements related to the company's business, as financing for investments or as part of the company's incentive program or to be held by the company, to be conveyed by other means or to be cancelled. The Board of Directors shall decide on other terms and conditions related to the repurchase of the company's own shares. The repurchase authorization shall be valid for 18 months and it shall revoke the previous authorizations for repurchasing the company's own shares.
The Annual General Meeting decided to authorize the Board of Directors to decide on issuing new shares and/or conveying the company's own shares held by the company and/or granting special rights entitling to shares. A total maximum of 1,446,000 new shares may be issued and/or company's own shares held by the company may be conveyed. The number of shares to be issued to the company itself together with the shares repurchased by the company on basis of the repurchase authorization shall be at the maximum of 1,446,000 shares. The subscription price of the new shares and the consideration payable for the company's own shares shall be recorded under the invested non-restricted equity fund. The Board of Directors shall decide on all other terms and conditions related to the authorizations. The authorizations shall be valid for 18 months.
On 22 March 2022 Basware announced a stock exchange release of the resolutions of the Annual General Meeting. The resolutions from Annual General Meetings are available on Basware's investor website at https://investors.basware.com/en/governance/annual-general-meeting.
Strategy
Basware is a global market leader in networked Procure-to-Pay with the largest open e-invoicing network in the world. The market growth is estimated to be slightly over 8 percent from 2022 onwards. In 2021, the Procure-to-Pay core markets that Basware addresses were estimated to be worth EUR 4.3 billion and these markets are expected to grow to EUR 6.2 billion by 2025. Procure-to-Pay markets are driven by global megatrends such as digitalization and automation, increased regulation, rapid technological development and sustainability. Basware is focused on sustainable growth and profitability, increasing operational efficiency in the strategic business and simplifying operations.
Basware's key growth markets are US, UK, Germany and France, where the company sees the greatest opportunity to win new customers. Each of Basware's top 200 key customers brought on average approximately EUR 330 thousand annual recurring cloud revenue in 2021. Through add-on sales and geographical expansions, there is potential to increase the average revenue from existing customers.
Once Basware wins a new customer they typically stay with the company for many years. In 2021 Basware's gross renewal rate was 96 percent and net renewal rate was 104 percent. The gross margin for cloud revenues in 2021 was 68 percent. Together these make the lifetime value of customer contracts high. In
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report January-June 2022
2021 Basware had a customer lifetime value to customer acquisition cost ratio of approximately seven times.
Basware's long-term ambition is to become the networked Procure-to-Pay vendor of choice for large global enterprises. Basware moves forward to its vision through five Must-Wins, which define strategic priorities for the period 2020-2022. The Must-Wins relate to customer satisfaction, procurement solution, growing with partners, igniting growth and Network business. The first Must-Win relates to customer satisfaction, which is a priority across all functions, from first contact to project delivery, products and support. With the second Must-Win battle Basware's aim is to further strengthen its procurement solution and entire Source-to-Pay offering through partnerships and open API architecture. With the number three Must-Win, Basware aims to accelerate cloud growth through partnering. For number four Must Win Battle, Ignite Growth, Basware is focusing on accelerating growth in its business as the cloud transformations for Basware's clients have essentially been completed. With the fifth Must Win Battle, Basware aims at accelerating and creating momentum for its' unique Network business.
Risks and uncertainty factors
Basware operates in a market where technological innovation plays a key role and thus, it is critical that Basware continues to innovate and develop its offering. Basware invests in product development to ensure the competitiveness of its product portfolio and good end-to-end quality, which impacts customer satisfaction, customer retention and expansion.
Basware has a growth strategy with high net sales growth expectations for the cloud business. Executing the strategy requires significant investments in sales and marketing and related resources in addition to an optimized pricing model with efficient customer delivery. At the same time, the industry transformation from an on-premise license-based business model to a SaaS model will accelerate the decline of certain Basware revenue streams, including license sales and maintenance. The transformation will also make consulting revenues more volatile. Until the transformation is fully complete, this will act as a drag on Group net sales growth. The churn rate may increase as Basware consolidates its product portfolio to focus on strategic high gross margin business.
Market disruptions such as consolidation of significant competitors, aggressive entries of new competitors or emergence of disruptive technologies may be a risk to Basware's position as a market leader and to Basware's market share.
The fact that more than 45 percent of the company's sales are expected to come from non-euro countries exposes the Group's net sales growth to foreign exchange rate movements. In case there is a significant movement of USD, GBP, NOK, SEK or AUD against the euro, reported net sales may be affected. In addition, a proportion of Basware's costs are denominated in INR and RON. Political risks may have a negative effect on Basware. This includes the uncertainty around the status of the UK in relation to the European Union which may have a negative impact on Basware's business in the UK, and additionally the uncertainty related to taxation and legislation in India which may have a negative impact on Basware's business in India.
Basware considers acquisitions as part of its strategy. Acquisitions entail risks, such as failure in integrating acquisitions or in ensuring that the planned financial benefits and synergies of the acquisitions materialize.
Basware's biggest operational risks relate to service disruption which could be as a result of data centre failures, various data security threats and non-compliance risks related to Basware's solutions and services, the company's activities or its employees' behaviour. Operational risks are actively managed by continuous improvement in risk monitoring and protection practices, external assessments as well as internal training of Basware's personnel.
The Covid-19 pandemic may have an impact on the timing of organisations' IT project decisions and implementations and on the global volume of invoices sent and received. This may impact Basware's order intake, revenues, operating profit and cash flow. Basware has a business continuity plan in place including extensive remote working capabilities across all functions, however, should the Covid-19 situation materially affect employees' ability to work, this may disturb Basware's ability to serve its customers.
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report January-June 2022
Basware announced on May 2021 that the Basware quality management system has been certified according to the International Organisation for Standardisation (ISO) 9001:2015 standard, the most widely recognised international quality management standard. In 2021, Basware also started a project to certify its global information security management system (ISMS) according to ISO27001 standard.
Based on the current analysis, the conflict in Ukraine does not create a material direct impact on Basware's business. Basware has taken into account that it has a few very small customers in Russia and will continue to provide services for these customers for the time being due to the fact that they are subsidiaries of multinational companies and are not Russian origin. Basware has also considered the safety of its employees in Russia and performed the needed actions for this. Basware has no employees in Ukraine and had two employees in Russia. The company is aware of the increased risk of cyber-attacks and these risks are being monitored with an increased level of attention. Basware has analysed its supply chain to the extent possible and the derived impacts of the sanctions introduced and concluded that the sanctions do not have an impact on its strategic suppliers. Basware will continue to monitor the situation in Ukraine closely and the impacts of the conflict in the medium and long-term for the company.
Increased inflation and labour cost pressure will negatively impact Basware's profitability in the short to medium term.
Other events of the quarter
On 21 April Basware announced that the Board of Directors has on 20 April 2022 decided to issue the statement regarding the Tender Offer as required by the Finnish Securities Markets Act (746/2012, as amended). The statement of the Board of Directors is available as an attachment in the stock exchange release published on 21 April 2022.
On 25 April Basware announced that Sapphire BidCo Ltd commences the voluntary recommended public cash tender offer for all the shares in Basware Corporation on 26 April 2022. The Finnish Financial Supervisory Authority approved on 25 April the Finnish language version of the tender offer document relating to the Tender Offer. The Finnish language version of the Tender Offer Document has been available on the internet at https://investors.basware.com/fi/ostotarjous and at www.danskebank.fi/basware as of 26 April 2022. The English language translation of the Tender Offer Document has been available on the internet at https://investors.basware.com/en/tender-offer and at www.danskebank.fi/basware-en as of 26 April 2022. The offer period for the Tender Offer commenced on 26 April 2022, at 9:30 a.m. (Finnish time) and expired on 7 June 2022, at 4:00 p.m. (Finnish time).
On 6 June Basware announced that Sapphire BidCo Ltd extends the offer period for the tender offer to end on 21 June 2022 as the regulatory approval process in the United Kingdom remained on-going. Pending approval or expiry of the review period, the Offeror decided to extend the offer period for the Tender Offer to expire on 21 June 2022, at 4:00 p.m. (Finnish time).
On 10 June Basware announced that Sapphire BidCo Ltd has received all relevant authority approvals for its voluntary recommended public cash tender offer for the shares in Basware Corporation, including the approval under the National Security and Investment Act in the United Kingdom. Therefore, the Offeror confirmed that the condition to completion of the Tender Offer concerning the receipt of authority approvals has been fulfilled.
On 22 June Basware announced the preliminary result of Sapphire BidCo Ltd's cash tender offer for all the shares in Basware Corporation. Based on the preliminary result of the Tender Offer, the 11,189,978 Shares tendered in the Tender Offer represented approximately 77.4 per cent of all the Shares and voting rights carried by the Shares in Basware. Together these shares with the total of 1,882,818 Shares held by Long Path and 680,948 Shares held by Briarwood that they have irrevocably undertaken to exchange for securities in the Offeror's affiliated entity, Topaz MidCo Ltd ("Topaz"), upon the completion of the Tender Offer having been confirmed and 1,000 warrants held by Briarwood (the "Warrants") which entitle it to subscribe for a total maximum number of 1,003,000 new shares in Basware and which it has undertaken to exercise upon the completion of the Tender Offer having been confirmed and to then exchange Shares so
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report January-June 2022
subscribed for securities in Topaz, or to exchange the Warrants for securities in Topaz, represented, on a fully diluted basis, approximately 95.5 per cent of all the Shares and voting rights carried by the Shares in Basware.
On 27 June Basware announced the final result of Sapphire BidCo Ltd's voluntary public cash tender offer for all the shares in Basware Corporation and confirmed that Sapphire BidCo Ltd completes the tender offer. According to the final result of the Tender Offer, the 11,345,283 Shares tendered in the Tender Offer represented approximately 78.5 per cent of all the Shares and voting rights carried by the Shares in Basware and, together with the total of 1,882,818 Shares held by Long Path and 680,948 Shares held by Briarwood that they have irrevocably undertaken to exchange for securities in the Offeror's affiliated entity, Topaz MidCo Ltd, upon the completion of the Tender Offer having been confirmed, represented approximately 96.2 per cent of all the Shares and voting rights carried by the Shares in Basware.
Events after the quarter
On 6 July Basware announced that in preparation for the completion of Sapphire BidCo Ltd's tender offer, the Board of Directors of Basware has conditionally decided upon a prepayment of its debt with Macquarie Capital Principal Finance and on related refinancing with a committed intra-group loan facility between Basware and Sapphire BidCo. The prepayment of the Macquarie debt was conditional on the change of control in Basware resulting from the completion of Sapphire BidCo's tender offer for all the outstanding shares of Basware. The change of control occurred on 15 July 2022.
The prepayment value of the Macquarie debt was approximately EUR 75 million and it was financed with the committed intra-group loan facility between Sapphire BidCo and Basware. The intra-group loan facility is unsecured with a total nominal value of EUR 86 million, an annual fixed interest rate of 6%, with no restrictive financial or other covenants and a maximum maturity of seven years. Basware has the right to utilize the remaining part of the intra-group loan for the prepayment of its EUR 10 million fixed rate notes due on 14 September 2023.
As a result of the prepayment of the debt to Macquarie, Basware's Q3 2022 finance expenses will be impacted by a one-off increase of approximately EUR 14 million in total. The one-off increase in finance expenses consist of a prepayment cost of approximately EUR 9 million and an extinguishment accounting treatment of the current debt facility under IFRS9 of approximately EUR 5 million.
Basware received on 14 July a flagging notification from Briarwood Chase Management LLC according to which their holding of shares and financial instruments has decreased below five (5) percent of the total number of shares and votes in Basware. Briarwood Chase Management LLC's total holding of both shares and financial instruments decreased to zero (0) percent of the total number of shares and votes in Basware.
Basware received on 14 July a flagging notification from Long Path Partners LP according to which their holding of shares of Basware has decreased below five (5) percent of the total number of shares and votes in Basware. Long Path Partners LP's total holding of both shares and financial instruments of Basware decreased to zero (0) percent of the total number of shares and votes in Basware.
Basware received on 14 July a flagging notification from Accel-KKR Capital Partners VI LP according to which their holding of shares of Basware has exceeded fifteen (15) percent and holding of financial instruments has exceeded five (5) percent of the total number of shares and votes in Basware. Accel-KKR Capital Partners VI LP's total holding of both shares and financial instruments through Topaz MidCo Ltd increased to 24.66 percent of the total number of shares and votes in Basware.
Basware received on 15 July a flagging notification from Accel-KKR Capital Partners VI, LP according to which Topaz MidCo Ltd's holding of shares has decreased below five (5) percent of the total number of shares and votes in Basware and total holding of both shares and financial instruments has decreased below ten (10) percent of the total number of shares and votes in Basware. Topaz MidCo Ltd's total holding of both shares and financial instruments decreased to 6.93 percent of the total number of shares and votes in Basware.
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report
January-June 2022
Basware received on 15 July a flagging notification from Accel-KKR Capital Partners VI, LP according to which Sapphire BidCo Ltd's holding of shares has exceeded fifteen (15) percent of the total number of shares and votes in Basware. Sapphire BidCo Ltd's total holding of both shares and financial instruments increased to 17.73 percent of the total number of shares and votes in Basware.
Basware received on 15 July a flagging notification from Accel-KKR Capital Partners VI, LP according to which Sapphire BidCo Ltd's holding of shares has exceeded ninety (90) percent of the total number of shares and votes in Basware. Sapphire BidCo Ltd's total holding of both shares and financial instruments increased to 96.41 percent of the total number of shares and votes in Basware, and as a result, the change of control of Basware Corporation was transferred to Sapphire BidCo Ltd.
On 19 July Basware announced a notice to the shareholders of Basware Corporation to the Extraordinary General Meeting to be held on Tuesday, 9 August 2022 at 9:00 a.m. EEST in the company's headquarters, at the address of Linnoitustie 2 B, Espoo, Finland in Cello-building. The reception of persons who have registered for the meeting will commence at 8:30 a.m. EEST.
On 20 July Basware announced that Sapphire BidCo Ltd will commence redemption proceedings in respect of the remaining minority shares in Basware Corporation. To implement the redemption of the remaining Shares, the Offeror will initiate arbitration proceedings as soon as possible as provided in the Finnish Companies Act. In such redemption proceedings, the Offeror will demand that the redemption price for the remaining Shares is set to no more than EUR 40.10 per Share, which corresponds to the consideration paid by the Offeror in the Tender Offer in accordance with the terms and conditions of the Tender Offer.
Future outlook
Themes affecting net sales and EBIT
Basware considers the following key drivers affecting net sales and EBIT in 2022:
- Gradual improvements in the business environment throughout the year
- Gradual improvements in demand generation and sales execution throughout the year, and the timing in the ramp-up of Sales and Marketing capacity and spending
- Cloud revenues impacted by cloud order intake volume and timing, churn and network transaction volume driven revenues. Over fifty percent of Basware's network transaction services revenues are subscription based
- Consulting services revenue is driven primarily by new logo wins, expansion sales, services adoption and efficiency projects for existing customers, as well as the level of partner delivered implementations
- Revenues from maintenance and license will continue to decline approximately at the same relative rate as in 2021
- Improvements in scalability and operational efficiency are expected to continue
- Inflation and labour costs
Guidance for 2022
Basware updated its full year 2022 guidance on 27 June 2022 as follows:
- Order Intake to grow between 15 and 35 percent at organic constant currencies
- Net sales to grow between 3 and 6 percent at organic constant currencies
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report
January-June 2022
- EBIT between EUR 7 and 10 million, excluding any impact from one-off expenses related to the tender offer from Sapphire BidCo Ltd
Previous guidance given on 3 February 2022:
- Order Intake to grow between 15 and 35 percent at organic constant currencies
- Net sales to grow between 3 and 6 percent at organic constant currencies
- EBIT between EUR 7 and 10 million
Constant currencies mean that the effects of any changes in currencies are eliminated by calculating the figures for the period using comparable period’s exchange rates. Organic means that the figures are adjusted to remove the effects of any acquisitions or disposals within the past 12 months.
Basware Corporation’s financial calendar for 2022
- 25 October 2022 at 8.45 a.m. EEST
Interim Report for 1 January–30 September 2022
Espoo, Finland, on Wednesday, 20 July 2022
BASWARE CORPORATION
Board of Directors
Klaus Andersen, CEO
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report
January-June 2022
SUMMARY OF FINANCIAL STATEMENTS AND NOTES TO THE FINANCIAL STATEMENTS JANUARY 1 – JUNE 30, 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| EUR thousand | 4-6/2022 | 4-6/2021 | Change, % | 1-6/2022 | 1-6/2021 | Change, % | 2021 |
|---|---|---|---|---|---|---|---|
| NET SALES | 40,563 | 38,571 | 5.2 | 79,441 | 76,313 | 4.1 | 153,155 |
| Cost of sales | -17,505 | -17,137 | 2.1 | -34,403 | -33,553 | 2.5 | -66,837 |
| GROSS PROFIT | 23,058 | 21,434 | 7.6 | 45,038 | 42,760 | 5.3 | 86,317 |
| Sales and marketing | -10,277 | -9,113 | 12.8 | -19,408 | -18,355 | 5.7 | -38,286 |
| Research and development | -7,319 | -6,879 | 6.4 | -14,362 | -13,709 | 4.8 | -27,928 |
| General and administration | -3,894 | -3,427 | 13.6 | -7,171 | -7,187 | -0.2 | -13,038 |
| Total operating expenses | -21,490 | -19,418 | 10.7 | -40,942 | -39,251 | 4.3 | -79,252 |
| Other operating income and expenses | -10,322 | -215 | -10,511 | -328 | 79 | ||
| OPERATING PROFIT | -8,755 | 1,800 | N/A | -6,415 | 3,180 | N/A | 7,144 |
| Finance income and expenses | -1,681 | -3,012 | -44.2 | -3,197 | -5,797 | -44.9 | -20,565 |
| PROFIT/LOSS BEFORE TAXES | -10,435 | -1,212 | -761.2 | -9,612 | -2,617 | -267.3 | -13,421 |
| Income taxes | 699 | -195 | N/A | 813 | -268 | N/A | -812 |
| PROFIT/LOSS FOR THE PERIOD | -9,737 | -1,407 | -591.9 | -8,799 | -2,885 | -205.0 | -14,233 |
| Other comprehensive income | |||||||
| Other comprehensive income that will not be reclassified to profit or loss | |||||||
| Remeasurement of employee benefits | -84 | -40 | -109.5 | -73 | -18 | -315.9 | -33 |
| Other comprehensive income that may be reclassified subsequently to profit or loss | |||||||
| Exchange differences on translating foreign operations | 1,667 | -855 | N/A | 2,711 | 2,531 | 7.1 | 4,977 |
| Cash flow hedges | 163 | -55 | N/A | -53 | 465 | N/A | 808 |
| Income tax relating to components of other comprehensive income | -33 | 11 | N/A | -79 | -62 | -28.2 | -131 |
| Other comprehensive income for the year net of tax | 1,714 | -939 | N/A | 2,505 | 2,916 | -14.1 | 5,621 |
| TOTAL COMPREHENSIVE INCOME | -8,023 | -2,346 | -241.9 | -6,293 | 31 | N/A | -8,612 |
| Profit/loss attributable to: | |||||||
| Equity holders of the parent company | -9,737 | -1,407 | -591.9 | -8,799 | -2,885 | -205.0 | -14,233 |
| Total comprehensive income attributable to: | |||||||
| Equity holders of the parent company | -8,023 | -2,346 | -241.9 | -6,293 | 31 | N/A | -8,612 |
| Earnings per share | |||||||
| undiluted, EUR | -0.67 | -0.10 | 570.0 | -0.61 | -0.20 | 205.0 | -0.99 |
| diluted, EUR | -0.67 | -0.10 | 570.0 | -0.61 | -0.20 | 205.0 | -0.99 |
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report
January-June 2022
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| EUR thousand | Jun 30, 2022 | Jun 30, 2021 | Change, % | Dec 31, 2021 |
|---|---|---|---|---|
| ASSETS | ||||
| Non-current assets | ||||
| Intangible assets | 37,949 | 40,604 | -6.5 | 38,786 |
| Goodwill | 82,130 | 78,474 | 4.7 | 80,257 |
| Tangible assets | 1,253 | 1,158 | 8.2 | 1,366 |
| Right-of-use assets | 10,532 | 14,347 | -26.6 | 11,470 |
| Non-current financial assets | 13 | 13 | 0.0 | 13 |
| Other receivables | 8,257 | 3,003 | 175.0 | 8,133 |
| Contract assets | 0 | 0 | 11.5 | 0 |
| Deferred tax assets | 13,083 | 11,043 | 18.5 | 11,673 |
| Non-current assets | 153,217 | 148,642 | 3.1 | 151,697 |
| Current assets | ||||
| Trade receivables | 28,888 | 28,808 | 0.3 | 27,407 |
| Other receivables | 9,011 | 8,533 | 5.6 | 9,471 |
| Contract assets | 1,014 | 753 | 34.8 | 639 |
| Income tax receivables | 270 | 261 | 3.4 | 445 |
| Cash and cash equivalents | 28,759 | 40,560 | -29.1 | 31,060 |
| Current assets | 67,942 | 78,914 | -13.9 | 69,023 |
| ASSETS | 221,159 | 227,556 | -2.8 | 220,720 |
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report
January-June 2022
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| EUR thousand | Jun 30, 2022 | Jun 30, 2021 | Change, % | Dec 31, 2021 |
|---|---|---|---|---|
| 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 |
| Invested unrestricted equity fund | 110,290 | 110,290 | 0.0 | 110,290 |
| Other reserves | 873 | 731 | 19.4 | 1,006 |
| Translation differences | -5,495 | -10,648 | -48.4 | -8,205 |
| Retained earnings | -42,367 | -23,486 | 80.4 | -34,843 |
| Shareholders' equity | 68,017 | 81,603 | -16.6 | 72,963 |
| Non-current liabilities | ||||
| Deferred tax liability | 6,396 | 5,332 | 20.0 | 5,960 |
| Interest-bearing liabilities | 71,173 | 68,043 | 4.6 | 70,227 |
| Leasing liabilities, interest-bearing | 7,792 | 11,811 | -34.0 | 8,986 |
| Contract liabilities | 1,301 | 2,517 | -48.3 | 2,133 |
| Liabilities from employee benefits | 616 | 460 | 34.1 | 509 |
| Non-current liabilities | 87,278 | 88,162 | -1.0 | 87,814 |
| Current liabilities | ||||
| Interest-bearing liabilities | 0 | 2,173 | -100.0 | 1,175 |
| Leasing liabilities, interest-bearing | 3,845 | 3,734 | 3.0 | 3,560 |
| Trade payables and other liabilities | 38,233 | 29,320 | 30.4 | 34,930 |
| Contract liabilities | 23,377 | 22,400 | 4.4 | 19,965 |
| Income tax liabilities | 409 | 164 | 148.7 | 313 |
| Current liabilities | 65,864 | 57,790 | 14.0 | 59,943 |
| EQUITY AND LIABILITIES | 221,159 | 227,556 | -2.8 | 220,720 |
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report
January-June 2022
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| EUR thousand | Share capital | Share premium account | Treasury shares | Inv. un-restricted equity | Other reserves | Translation differences | Retained earnings | Total |
|---|---|---|---|---|---|---|---|---|
| SHAREHOLDERS’ EQUITY Jan 1, 2022 | 3,528 | 1,187 | 0 | 110,290 | 1,006 | -8,205 | -34,843 | 72,963 |
| Comprehensive income | 2,711 | -8,799 | -6,088 | |||||
| Share based payments | 1,347 | 1,347 | ||||||
| Defined benefit plan | -73 | -73 | ||||||
| Cash flow hedges | -132 | -132 | ||||||
| SHAREHOLDERS’ EQUITY Jun 30, 2022 | 3,528 | 1,187 | 0 | 110,290 | 873 | -5,495 | -42,367 | 68,017 |
| EUR thousand | Share capital | Share premium account | Treasury shares | Inv. un-restricted equity | Other reserves | Translation differences | Retained earnings | Total |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| SHAREHOLDERS’ EQUITY Jan 1, 2021 | 3,528 | 1,187 | 0 | 110,290 | 289 | -13,137 | -19,600 | 82,557 |
| Comprehensive income | 2,489 | -2,884 | -395 | |||||
| Share based payments | -985 | -985 | ||||||
| Defined benefit plan | -18 | -18 | ||||||
| Cash flow hedges | 443 | 443 | ||||||
| SHAREHOLDERS’ EQUITY Jun 30, 2021 | 3,528 | 1,187 | 0 | 110,290 | 731 | -10,648 | -23,486 | 81,603 |
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report
January-June 2022
CONSOLIDATED STATEMENT OF CASH FLOWS
| EUR thousand | 4-6/2022 | 4-6/2021 | 1-6/2022 | 1-6/2021 | 2021 |
|---|---|---|---|---|---|
| Cash flow from operating activities | |||||
| Profit/loss for the period | -9,737 | -1,407 | -8,799 | -2,885 | -14,233 |
| Adjustments for profit: | |||||
| Depreciation and amortisation | 4,237 | 4,052 | 8,430 | 7,897 | 15,685 |
| Unrealised foreign exchange gains and losses | 275 | 209 | 550 | 237 | 310 |
| Financial income and expenses | 1,399 | 2,795 | 2,643 | 5,520 | 20,217 |
| Tax on income from operations | -699 | 195 | -813 | 268 | 812 |
| Other adjustments | 2,683 | -1,267 | 3,071 | -696 | -512 |
| Total adjustments | 7,895 | 5,984 | 13,880 | 13,226 | 36,513 |
| Changes in working capital: | |||||
| Increase (-) / decrease (+) in trade and other receivables | 2,949 | 852 | -1,049 | -748 | 749 |
| Increase (+) / decrease (-) in trade and other payables | 2,743 | -3,657 | 4,064 | -835 | 2,807 |
| Increase / decrease in provisions | 0 | -4 | 0 | 0 | 0 |
| Total changes in working capital | 5,692 | -2,808 | 3,015 | -1,583 | 3,556 |
| Financial items in operating activities | -53 | -217 | -1,641 | -464 | -3,899 |
| Income taxes paid (-) / received (+) | 54 | -273 | -215 | -657 | -1,502 |
| Cash flow from operating activities | 3,851 | 1,278 | 6,241 | 7,636 | 20,435 |
| Cash flow used in investing activities | |||||
| Purchase of tangible and intangible assets | -2,946 | -2,431 | -5,614 | -4,296 | -8,441 |
| Net proceeds from sale of tangible and intangible assets | 0 | 0 | 0 | 0 | 33 |
| Movements in short-term deposits and fixed deposits | 0 | 0 | 0 | 0 | -5,000 |
| Cash flow from investing activities | -2,946 | -2,431 | -5,614 | -4,296 | -13,408 |
| Cash flow from financing activities | |||||
| Repayment of current borrowings | -177 | 0 | -1,175 | -998 | -1,996 |
| Payment related to financing | 0 | 0 | 0 | 0 | -9,886 |
| Payment of lease liabilities | -753 | -1,083 | -1,753 | -2,148 | -4,267 |
| Cash flow from financing activities | -929 | -1,083 | -2,927 | -3,146 | -16,149 |
| Net change in cash and cash equivalents | -25 | -2,236 | -2,300 | 194 | -9,122 |
| Cash and cash equivalents at the beginning of period | 28,637 | 43,080 | 31,060 | 40,461 | 40,461 |
| Net foreign exchange difference | 147 | -283 | 0 | -95 | -279 |
| Cash and cash equivalents at the end of period | 28,759 | 40,560 | 28,759 | 40,560 | 31,060 |
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report January-June 2022
ACCOUNTING PRINCIPLES
This interim report has been prepared in accordance with IAS 34. The same accounting principles have been followed as in the annual financial statements except for the adoption of new standards and amendments effective as of January 1, 2022. The new standards and amendments had no impact on Group figures.
Preparation of financial statements in accordance with IFRS 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 judgement 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. Percentage changes for net figures are shown on an absolute basis.
Adjusted EBIT and EBITDA
| EUR thousand | 4-6/2022 | 4-6/2021 | Change, % | 1-6/2022 | 1-6/2021 | Change, % | 2021 |
|---|---|---|---|---|---|---|---|
| EBIT | -8,755 | 1,800 | N/A | -6,415 | 3,180 | N/A | 7,144 |
| Adjustments: | |||||||
| Acquisition, disposal and restructuring income (-) and expenses (+) | 10,666 | -8 | N/A | 10,666 | -12 | N/A | -75 |
| Efficiency related expenses | 54 | 133 | -59.2 | 133 | 190 | -29.9 | 432 |
| Total adjustments | 10,720 | 125 | 10,798 | 178 | 357 | ||
| Adjusted EBIT | 1,965 | 1,926 | 2.1 | 4,383 | 3,358 | 30.5 | 7,501 |
| Depreciation and amortization | 4,237 | 4,052 | 4.6 | 8,430 | 7,897 | 6.8 | 15,685 |
| Adjusted EBITDA | 6,202 | 5,977 | 3.8 | 12,813 | 11,255 | 13.8 | 23,186 |
| % of net sales | 15.3% | 15.5% | 16.1% | 14.7% | 15.1% |
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report January-June 2022
Information on products and services
Basware reports one operating segment. The reported segment is comprised of the entire Group, and the segment figures are consistent with the Group figures.
Basware reports revenues by type. Cloud revenue includes SaaS, Transaction services (consisting of e-invoicing, scan and capture services, printing services and network start-up fees) and Other cloud revenue. Non-cloud revenue includes Maintenance, License sales, Consulting services (consisting of professional services and customer services management) and Other non-cloud revenue.
| EUR thousand | 4-6/2022 | 4-6/2021 | Change, % | Change, %1 | 1-6/2022 | 1-6/2021 | Change, % | Change, %1 | 2021 |
|---|---|---|---|---|---|---|---|---|---|
| Cloud Revenue | |||||||||
| SaaS | 18,682 | 16,204 | 15.3 | 11.2 | 36,448 | 31,816 | 14.6 | 11.3 | 65,227 |
| Transaction services | 13,028 | 12,217 | 6.6 | 4.3 | 25,971 | 24,454 | 6.2 | 4.3 | 49,844 |
| Other cloud revenue | 1,315 | 1,211 | 8.6 | 6.2 | 2,603 | 2,406 | 8.2 | 4.8 | 4,926 |
| Cloud Revenue total | 33,024 | 29,633 | 11.4 | 8.1 | 65,021 | 58,676 | 10.8 | 8.1 | 119,996 |
| Non-Cloud Revenue | |||||||||
| Maintenance | 750 | 1,702 | -55.9 | -56.4 | 1,472 | 3,085 | -52.3 | -52.7 | 6,051 |
| License sales | 8 | 14 | -41.7 | -41.7 | 15 | 78 | -81.2 | -81.2 | 136 |
| Consulting services | 6,818 | 7,233 | -5.7 | -7.3 | 13,056 | 14,418 | -9.4 | -10.8 | 26,942 |
| Other non-cloud revenue | -38 | -10 | 259.8 | 259.3 | -123 | 57 | N/A | -316.4 | 30 |
| Non-Cloud Revenue total | 7,538 | 8,939 | -15.7 | -17.0 | 14,419 | 17,637 | -18.2 | -19.4 | 33,158 |
| Total | 40,563 | 38,571 | 5.2 | 2.3 | 79,441 | 76,313 | 4.1 | 1.8 | 153,155 |
1Organic at constant currencies.
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report January-June 2022
Fair values of financial assets and liabilities
| EUR thousand | Jun 30, 2022 | Jun 30, 2021 | Dec 31, 2021 | |||
|---|---|---|---|---|---|---|
| Book value | Fair value | Book value | Fair value | Book value | Fair value | |
| Financial assets | ||||||
| Non-current: | ||||||
| Non-current financial assets | 13 | 13 | 13 | 13 | 13 | 13 |
| Non-current trade and other receivables | 6,078 | 6,078 | 1,232 | 1,232 | 6,138 | 6,138 |
| Current: | ||||||
| Current trade receivables | 28,888 | 28,888 | 28,808 | 28,808 | 27,407 | 27,407 |
| Current other receivables | 1,337 | 1,337 | 1,128 | 1,128 | 1,192 | 1,192 |
| Cash and cash equivalents | 28,759 | 28,759 | 40,560 | 40,560 | 31,060 | 31,060 |
| Financial liabilities | ||||||
| Non-current: | ||||||
| Financial liabilities valued at amortized acquisition cost: | ||||||
| Loans from financial institutions, interest-bearing | 71,173 | 78,101 | 68,043 | 79,080 | 70,227 | 78,151 |
| Leasing liabilities, interest-bearing | 7,792 | 7,792 | 11,811 | 11,811 | 8,986 | 8,986 |
| Current: | ||||||
| Loans from financial institutions, interest-bearing | 0 | 0 | 2,173 | 2,173 | 1,175 | 1,175 |
| Leasing liabilities, interest-bearing | 3,845 | 3,845 | 3,734 | 3,734 | 3,560 | 3,560 |
| Trade payables and other liabilities | 10,315 | 10,315 | 9,665 | 9,665 | 12,207 | 12,207 |
Financial assets arising from derivative financial instruments of EUR 398 thousand are classified as level 2 and unquoted equity shares of EUR 13 thousand as level 3 in the fair value measurement hierarchy.
On 12 July 2021, Basware made an agreement of its debt facility with Macquarie Principal Financing PTY Limited, effective 12th of July 2021. Under the agreement the debt facility was a EUR 66 million senior secured loan to be due in September 2024 with a non-call of 24 months. The loan amount of EUR 66 million consisted of EUR 50 million related to the debt facility drawn in 2019, EUR 11 million related to previously capitalized interest (PIK interest) and EUR 5 million upsizing to enhance the Company's overall liquidity position. The annual interest margin of the loan was 5.75 per cent in during the second quarter of 2022.
On 6 July 2022, Basware announced that in preparation for the completion of Sapphire BidCo Ltd's tender offer, the Board of Directors of Basware has conditionally decided upon a prepayment of the debt and on related refinancing with a committed intra-group loan facility between Basware and Sapphire BidCo. The prepayment of the Macquarie debt was conditional on the change of control in Basware resulting from the completion of Sapphire BidCo's tender offer for all the outstanding shares of Basware.
Basware received on 15 July 2022 a flagging notification from Accel-KKR Capital Partners VI, LP according to which Sapphire BidCo Ltd's holding of shares has exceeded ninety (90) percent of the total number of shares and votes in Basware. Sapphire BidCo Ltd's total holding of both shares and financial instruments increased to 96.41 percent of the total number of shares and votes in Basware, and as a result, the change of control of Basware Corporation was transferred to Sapphire BidCo Ltd and the prepayment of the Macquarie debt was completed on 15 July 2022.
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report January-June 2022
The prepayment value of the Macquarie debt was approximately EUR 75 million and was financed with the committed intra-group loan facility between Sapphire BidCo and Basware. The intra-group loan facility is unsecured with a total nominal value of EUR 86 million, an annual fixed interest rate of 6%, with no restrictive financial or other covenants and a maximum maturity of seven years. Basware has the right to utilize the remaining part of the intra-group loan for the prepayment of its EUR 10 million fixed rate notes due on 14 September 2023.
As a result of the prepayment of the debt to Macquarie, Basware's Q3 2022 finance expenses will be impacted by a one-off increase of approximately EUR 14 million in total. The one-off increase in finance expenses consist of a prepayment cost of approximately EUR 9 million and an extinguishment accounting treatment of the current debt facility under IFRS9 of approximately EUR 5 million.
Commitments and contingent liabilities
| EUR thousand | Jun 30, 2022 | Jun 30, 2021 | Dec 31, 2021 |
|---|---|---|---|
| Own guarantees | |||
| Guarantees | 788 | 1,233 | 1,052 |
| Business mortgage | 86,200 | 0 | 86,200 |
| Commitments on behalf of subsidiaries | |||
| Guarantees | 862 | 865 | 862 |
| Other commitments | |||
| Maturing in less than 1 year | 1,597 | 3,221 | 2,831 |
| Maturing in 1-5 years | 704 | 1,503 | 572 |
| Maturing later than 5 years | 0 | 0 | 2 |
| Total | 2,300 | 4,724 | 3,405 |
| Total commitments and contingent liabilities | 90,150 | 6,822 | 91,518 |
Other commitments include leases and other rental not in scope of IFRS 16, as well as commitments arising from license agreements. Obligations from long term service agreements are not included. The group does not have pledges, mortgages or guarantees on behalf of external parties.
On July 12 2021, Basware completed an amendment agreement of its debt facility with Macquarie Principal Financing PTY Limited, effective 12th of July 2021. Under the amendment, the debt facility type was changed to a senior secured debt facility to be due in September 2024 in line with the facility's original maturity and had a non-call of 24 months. As a security for the debt facility mortgage notes with a total nominal of EUR 86.2 million were pledged to the lender. The debt from Macquarie Principal Financing PTY Limited was prepaid after the change of control occurred on 15 July 2022 and replaced with an intra-group loan facility amounting to EUR 86 million. New intra-group loan facility is unsecured.
In addition, Basware has an asset of EUR 5,000 thousand in a pledged bank account that is related to the guarantee the Company has from Garantia for its multi-issuer bond.
The Group's Indian subsidiary is in receipt of Show Cause Notice pertaining to Indian financial year 2017-2018 and 2018-2019 for goods and service tax liability and if services are considered to be Intermediary services or export of services. This issue is related to a substantial number of global IT companies operating in India. As a result of the analysis made based on the circular No. 159/15/2021 dated 20 September 2021 issued by Central Board of Indirect Taxes (CBIC), it has been concluded by the Group that software development services provided by Basware India to Basware Corporation would qualify as export of
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report January-June 2022
services. The Group has not recorded any provision related to the Notice as the Group considers it to be more likely than not that it will not realize.
Definitions of Key Indicators and Alternative Performance Measures
Earnings per share (EPS)
Profit for the period
Adjusted average number of shares during the period
Diluted earnings per share (EPS)
Profit for the period
Adjusted average number of shares during the period + dilutive shares
Alternative Performance Measures
Organic revenue growth is calculated by comparing net sales between comparison periods in constant currencies excluding alliance fees as well as net sales from acquisitions or disposals that have taken place in the past 12 months.
Net sales in constant currencies is calculated by eliminating the impact of exchange rate fluctuations by calculating the net sales for the current period by using the comparable period's exchange rates.
Gross investments are total investments made to non-current assets including acquisitions and capitalized research and development costs.
Other capitalized expenditure consists of investments in property, plant & equipment and intangible assets excluding acquisitions and capitalized research and development costs.
EBITDA is calculated as operating profit (EBIT) plus depreciation and amortization.
Adjusted EBITDA is calculated from EBITDA excluding any adjustments related to alliance fees, acquisitions and disposals, restructuring and efficiency measures, impairment losses and litigation fees and settlements.
Operating profit (EBIT) is the net sum of operating income added to net sales, less cost of sales consisting of materials and services, less the costs resulting from employee benefits, depreciation and amortization as well as other operating expenses and any impairment. Exchange rate differences and gains or losses arising from changes in the fair value of derivatives are included in operating profit, provided that they result from items related to business operations; otherwise they are recognized under financing items. All other items of the consolidated statement of comprehensive income are presented after operating profit.
Adjusted operating profit (Adjusted EBIT) is calculated from operating profit excluding any adjustments related to alliance fees, acquisitions and disposals, restructuring and efficiency measures, impairment losses and litigation fees and settlements.
Annual recurring revenue gross order intake is calculated by summing the total order intake in the period expressed as an annual contract value. For cloud order intake this includes all SaaS and Network recurring revenues including transaction revenues. Gross order intake covers new cloud customers, add-ons and renewal uplifts but excludes churn. There will be a time lag before this order intake is visible in net sales.
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report
January-June 2022
Cloud gross churn rate is defined as the total amount of cloud revenues lost during the period, divided by the total cloud revenues at the beginning of the period.
Cloud net churn rate is defined as the total amount of cloud revenues lost during the period minus the new cloud ARR won from add-on sales to existing customers during the period, divided by the total cloud revenues at the beginning of the period.
Cloud gross renewal rate is defined as 100 percent minus the cloud gross churn rate.
Cloud net renewal rate is defined as 100 percent minus the cloud net churn rate.
Customer lifetime is defined as 1 divided by the cloud gross churn rate.
Lifetime value of the order intake won during the period is calculated by multiplying Cloud ARR order intake during the period by the cloud gross margin and dividing by the cloud gross churn rate.
The customer acquisition cost is defined as the total expenditure on sales and marketing for the 12 months prior to the period (to account for the lead time between new sales and marketing expenditure converting to order intake).
Return on equity (ROE), %
(Profit or loss before taxes – taxes) x 100
Shareholders’ equity (average)
Return on investment (ROI), %
(Profit before taxes + interest and other financial expenses) x 100
Balance sheet total – non-interest-bearing liabilities (average)
Gearing, %
(Interest-bearing liabilities – interest-bearing assets) x 100
Shareholders’ equity
Equity ratio, %
Shareholders’ equity x 100
Balance sheet total – advance payments received
Adjusted earnings per share (EPS) is calculated by excluding from the profit/loss any adjustments related to alliance fees, acquisitions and disposals, restructuring and efficiency measures, impairment losses and litigation fees and settlements.
Equity per share
Shareholders’ equity
Adjusted number of shares at the end of the financial period - own shares
Price-earnings ratio (P/E)
Adjusted share price at the end of the financial period
Earnings per share
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report
January-June 2022
QUARTERLY INCOME STATEMENT
| EUR thousand | 4-6/2022 | 1-3/2022 | 10-12/2021 | 7-9/2021 | 4-6/2021 |
|---|---|---|---|---|---|
| NET SALES | 40,563 | 38,878 | 39,742 | 37,100 | 38,571 |
| Cost of sales | -17,505 | -16,898 | -17,275 | -16,010 | -17,137 |
| GROSS PROFIT | 23,058 | 21,980 | 22,467 | 21,090 | 21,434 |
| Sales and Marketing | -10,277 | -9,131 | -11,162 | -8,768 | -9,113 |
| Research and Development | -7,319 | -7,043 | -7,030 | -7,190 | -6,879 |
| General and Administration | -3,894 | -3,278 | -3,077 | -2,774 | -3,427 |
| Total operating expenses | -21,490 | -19,452 | -21,269 | -18,732 | -19,418 |
| Other operating income and expenses | -10,322 | -189 | 333 | 74 | -215 |
| OPERATING PROFIT | -8,755 | 2,339 | 1,532 | 2,432 | 1,800 |
| % of net sales | -21.6 | 6.0 | 3.9 | 6.6 | 4.7 |
| Finance income and expenses | -1,681 | -1,516 | -1,833 | -12,934 | -3,012 |
| Profit/loss before taxes | -10,435 | 823 | -302 | -10,503 | -1,212 |
| Income taxes | 699 | 114 | -349 | -195 | -195 |
| PROFIT/LOSS FOR THE PERIOD | -9,737 | 938 | -650 | -10,698 | -1,407 |
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report
January-June 2022
KEY INDICATORS
| EUR thousand | 4-6/2022 | 4-6/2021 | 1-6/2022 | 1-6/2021 | 2021 |
|---|---|---|---|---|---|
| Cloud ARR order intake | 5,197 | 5,611 | 9,226 | 8,479 | 17,064 |
| Net sales | 40,563 | 38,571 | 79,441 | 76,313 | 153,155 |
| Net sales growth, % | 5.2% | 2.1% | 4.1% | 0.4% | 1.0% |
| Organic net sales growth, % | 2.3% | 2.8% | 1.8% | 1.4% | 0.9% |
| EBIT | -8,755 | 1,800 | -6,415 | 3,180 | 7,144 |
| % of net sales | -21.6% | 4.7% | -8.1% | 4.2% | 4.7% |
| Adjusted EBIT | 1,965 | 1,926 | 4,383 | 3,385 | 7,144 |
| EBITDA | -4,518 | 5,852 | 2,015 | 11,077 | 22,828 |
| % of net sales | -11.1% | 15.2% | 2.5% | 14.5% | 14.9% |
| Adjusted EBITDA | 6,202 | 5,977 | 12,813 | 11,255 | 23,186 |
| Return on equity, % | -54.4% | -6.7% | -25.0% | -7.0% | -18.3% |
| Return on investment, % | -21.8% | 4.3% | -7.4% | 3.0% | 4.3% |
| Interest-bearing liabilities excl. leasing liabilities | 71,173 | 70,216 | 71,173 | 70,216 | 71,402 |
| Cash and cash equivalents | 28,759 | 40,560 | 28,759 | 40,560 | 31,060 |
| Cash flow from operating activities | 3,851 | 1,278 | 6,241 | 7,636 | 20,435 |
| Gearing, % | 79.5% | 55.4% | 79.5% | 55.4% | 72.5% |
| Gross investments | 2,753 | 2,592 | 5,424 | 4,537 | 8,554 |
| % of net sales | 6.8% | 6.7% | 6.8% | 5.9% | 5.6% |
| R&D expenses excluding amortizations | 4,469 | 4,224 | 8,713 | 8,623 | 17,666 |
| R&D costs, capitalised | 2,187 | 2,200 | 4,553 | 4,003 | 7,569 |
| R&D investments, total | 6,657 | 6,424 | 13,266 | 12,626 | 25,235 |
| % of net sales | 16.4% | 16.7% | 16.7% | 16.5% | 16.5% |
| Depreciation and amortization | 4,237 | 4,052 | 8,430 | 7,897 | 15,685 |
| Other capitalised expenditure | 566 | 392 | 872 | 534 | 985 |
| Personnel at end of period | 1,382 | 1,340 | 1,382 | 1,340 | 1,347 |
Basware Corporation | https://investors.basware.com/en