Quarterly Report • Apr 11, 2013
Quarterly Report
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Basware expects its net sales for 2013 to grow by more than 15% and operating profit (EBIT) to grow compared to the previous year.
The figures are unaudited.
| 1–3/ | 1–3/ | Change, | 1–12/ | |
|---|---|---|---|---|
| EUR thousand | 2013 | 2012 | % | 2012 |
| Net sales | 29 828 | 27 435 | 8.7% | 113 699 |
| EBITDA | 233 | 3 188 | -92.7% | 14 801 |
| Operating profit before IFRS3 | ||||
| amortization | -1 337 | 2 455 | 10 555 | |
| Operating profit | -1 569 | 1 822 | 8 308 | |
| % of net sales | -5.3% | 6.6% | 7.3% | |
| Profit before tax | -1 526 | 1 918 | 8 357 | |
| Profit for the period | -962 | 1 476 | 5 863 | |
| Return on equity, % | -3.9% | 6.0% | 5.8% | |
| Return on investment, % | -4.9% | 8.0% | 8.2% | |
| Liquid assets *) | 23 276 | 34 450 | -32.4% | 34 519 |
| Gearing, % | -13.2% | -35.2% | -23.8% | |
| Equity ratio, % | 63.7% | 70.5% | 77.6% | |
| Earnings per share, EUR | -0.07 | 0.11 | 0.46 | |
| Earnings per share (diluted), | ||||
| EUR | -0.07 | 0.11 | 0.46 | |
| Parent company's | ||||
| shareholders' | ||||
| equity per share, EUR | 7.51 | 7.47 | 0.6 % | 7.84 |
*) Includes cash and cash equivalents
Basware Corporation reports one operating segment: Purchase to Pay, P2P.
Basware reports income for products and services as follows: License sales, Professional Services, Customer Support, and Automation Services (previously License Sales, Professional Services, Maintenance, and Automation Services).
Customer Support comprises of previous Maintenance and Extended Customer Support previously reported under Professional Services. Extended customer support agreements are continuous service agreements spanning several years. Customer Support and Automation Services together form the recurring revenue reported by the company.
License Sales consist of the Purchase to Pay product family together with payment, financial planning and reporting solutions sold only in Finland. Automation Services include e-Invoicing, scanning services, printing services, catalog management, purchase message exchange, activation services and Software as a Service (SaaS) services.
Basware also reports the estimated revenue to be recognized for current Automation Services
As geographic information Basware reports geographical areas Finland, Scandinavia, rest of Europe, and Other. Net sales are split by the customer's location. Net sales and operating profit are also reported by the location of the assets. In annual financial statements, the geographical information of non-current assets is reported by the location of the assets.
Net sales for Q1 amounted to EUR 29 828 thousand, growth of 8.7 percent compared to the corresponding period the previous year, and operating profit was at a loss, EUR -1 569 thousand after non-recurring expenses. The first quarter was more difficult for the company than expected due to market conditions, ongoing transition of the business model as well as renewal of the product and service portfolio. At the same time, the process to integrate the business acquisition confirmed at the beginning of the year was carried out in the company.
Our net sales grew from services in line with our strategy. In spite of net sales growth falling short of the targets for the first quarter, quantitatively speaking, we closed 43 percent more significant Purchase to Pay deals than during the corresponding period the previous year. This proves that the fundamental demand for Basware products and services has remained at a good level.
The amount of significant e-invoice and SaaS deals was lower than expected, which was mainly due to the market conditions and sales processes taking longer than usual. Growth in net sales is supported by the focusing of our global sales efforts on buyer, supplier, and partner organizations. Product and process improvements accelerate the entry of SaaS and e-invoice deals into production.
The decrease in license sales continued, and it is expected to level off during the latter half of the year. The maturity of the Alusta product is continuously improving with new features and updates. Basware Match Plan was launched during the first quarter, and it will be complemented with Basware Match Order during the latter half of the year. The first versions of new Basware Purchase and Analytics products will be launched during the second quarter, and they are expected to improve the company's competitiveness further.
Automation Services grew almost at the planned rate, 41.0 percent, also during the first quarter of 2013. We have also connected an increasing number of small and medium-sized suppliers and buyers to our open Basware Commerce Network with new products and delivery methods. The transaction volume developed strongly during this quarter as well, up 62.7 percent.
The business acquisition of the leading e-Invoice operator in the Benelux, Certipost, a bpost company, was closed on January 2, 2013. Following the acquisition, Basware is the market leader in e-invoicing in Germany and the Benelux in addition to the Nordic countries. The company intends to continue to support organic growth in our key markets through acquisitions. With regard to the acquired business, efficiency benefits are pursued through personnel cuts, combination of business functions and technologies, and joint infrastructure and support functions. Restructuring expenses of approximately EUR 1.2 million related to employment relationships have been booked in the first quarter of 2013.
The competitiveness of Basware software and services is at a good level. In order to achieve our objective of accelerated global growth and maintain our product leadership in Purchase to Pay processes, the development of Alusta software and services will continue strongly this year as well.
We believe that the company will grow more strongly during the rest of the year than in the first quarter,
We target different customer segments in our marketing with our Better Buying - Better Selling - Connected Commerce customer promises. We have also strengthened our global sales organization by establishing units focusing on sales and customer-supplier relationships specializing in direct sales and partner channels. Teams founded for customer deliveries, packaged solutions, and financial process consulting take care of deployments of diverse types and sizes. With regard to customer support services, were have consistently expanded the service portfolio of extended customer support for major customers around the world, which improves customer satisfaction.
The above measures are related to the company's transition process, and these and other investments made are expected to begin to pay themselves back during the latter half of 2013.
According to independent research institutions most recent market estimates the software market is expected to grow by 6.4 percent globally in 2013 (2012: 6.2%). The entire IT market is expected to grow by 4.1 percent globally (2012: 2.1%).
The market conditions were more difficult than before in the first quarter. Customers' decision-making was slower than before. The negotiation times of large international deals in particular have been prolonged because the customers' requirements are higher in the service business than in the software business.
With the acquisition of a German e-invoice operator in 2012 and the acquisition of the network and einvoicing business of Certipost in Belgium we secured new customers, competence, and new technology, which improve the company's competitiveness. Automation Services will have a positive impact on the competitiveness, improving the predictability and transparency of the company's net sales and profitability in the long term.
Consolidation is expected to continue in the business environment, with the role of services growing in companies' portfolios. Basware continues active analysis of acquisition targets especially in the e-Invoicing market in Europe and in the U.S. according to its strategy.
The competitiveness of Basware software and services is good. In order to achieve our objective of accelerated global growth and maintain our product leadership in Purchase to Pay processes, the development of Alusta software and services will continue strongly this year as well.
By the end of 2015, Basware aims to become the largest business commerce network for buyers and suppliers. E-Invoicing and the supporting services are targeted to connect suppliers and buyers also outside of Basware's existing software customer base, leading to a higher potential. The penetration rate of e-Invoicing is low, between 5-30 percent depending on the country, and it has been estimated to grow strongly. E-invoicing is becoming more common and the related processes are becoming standard. This creates a good foundation for the growth of Basware Automation Services.
Offshoring operations hold a significant role in the company's strategy. R&D and Automation Services operations and other support functions at the Indian office have already succeeded in gaining a significant role in the company's operations. The company is also currently expanding the operations of its Romanian office to cover the product development and support functions of Automation Services.
Basware Group's net sales for the period increased by 8.7 percent to EUR 29 828 thousand (EUR 27 435 thousand). In local currency terms, net sales increased by 8.4 percent.
| 1–3/ | 1–3/ | Change, | 1–12/ | |
|---|---|---|---|---|
| Net sales (EUR thousand) | 2013 | 2012 | % | 2012 |
| License Sales | 3 195 | 4 077 | -21.6 | 17 437 |
| Customer Support | 10 785 | 10 219 | 5.5 | 42 011 |
| Professional Services | 8 172 | 7 697 | 6.2 | 30 552 |
| Automation Services | 7 676 | 5 442 | 41.0 | 23 699 |
| Group total | 29 828 | 27 435 | 8.7 | 113 699 |
The company's license sales decreased by 21.6 percent during the reporting period to 10.7 percent (14.9%) of net sales. SaaS sales, reported in Automation Services, grew by 18.7 percent. Customer support revenue increased by 5.5 percent and accounted for 36.2 percent (37.2%) of net sales. Professional Services revenue increased by 6.2 percent and accounted for 27.4 percent (28.1 %) of net sales.
During the period, Automation Services grew by 41.0 percent and accounted for 25.7 percent (19.8%) of net sales. The transaction volume processed by the Automation Services business continued to develop favorably and was 12.7 million (growth of 62.7 percent). The estimated revenue to be recognized for current Automation Services agreements that are in production as for new, signed agreements in the next twelve months is EUR 31.5 million, growth of 13.2 percent compared to the estimate made at the end of the previous quarter.
The international share of Basware's net sales was 61.1 percent (56.1%) in the reporting period. International operations grew by 18.3 percent.
Basware's operating profit/loss for the period decreased and was EUR -1 569 thousand (EUR 1 822 thousand). Operating profit/loss represented -5.3 percent (6.6%) of net sales. Operating profit/loss before non-recurring items was EUR -384 thousand (EUR 1 822 thousand).
The company's fixed costs were EUR 27 111 thousand (EUR 22 244 thousand) in the period, up 21.9 percent on the corresponding period the previous year. Personnel costs made up 75.7 percent (72.3%) or EUR 20 518 thousand (EUR 16 072 thousand) of the fixed costs. Non-recurring restructuring expenses of approximately 1 185 thousand related to employment relationships have been booked in the first quarter of 2013. Bad debt and change in bad debt provision are included in fixed costs. Bad debt provision at the end of the first quarter amounted to EUR 1 186 thousand (EUR 1 213 thousand).
Basware's research and development expenses totaled EUR 4 622 thousand (EUR 4 251 thousand), or 15.5 percent (15.5%) of net sales during the review period. The expenses increased by 8.7 percent compared to the corresponding period the previous year. Research and development expenses capitalized during the review period amounted to EUR 1 258 thousand (EUR 1 162 thousand). The research and development costs included in the profit for the review period totaled EUR 3 364 thousand (EUR 3 089 thousand), or 11.3 percent (11.3%) of net sales.
The company's finance income and finance expenses were EUR 43 thousand (EUR 96 thousand). Profit before tax was EUR -1 526 thousand (EUR 1 918 thousand) and profit for the review period was EUR -962 thousand (EUR 1 476 thousand) or -3.2 percent (5.4%) of net sales. Taxes for the review period totaled EUR 563 thousand (EUR -442 thousand). Undiluted earnings per share were EUR -0.07 (EUR 0.11).
Basware Group's total assets on the balance sheet at the end of the period were EUR 151 489 thousand (EUR 136 033 thousand). The company's liquid assets were EUR 23 276 thousand (EUR 34 450 thousand), of which cash and cash equivalents were EUR 23 276 thousand (EUR 34 450 thousand).
Equity ratio was 63.7 percent (70.5%) and gearing was -13.2 percent (-35.2%). Return on investment was -4.9 percent (8.0%) and return on equity -3.9 percent (6.0%).
Net cash flows from operating activities were EUR 9 718 thousand (EUR 10 634 thousand). Cash flows from investments were EUR -17 874 thousand (EUR -13 453 thousand).
The company's capital expenditure, resulting from regular additional and replacement investments required for growth, was EUR 596 thousand (EUR 312 thousand) in the period. Gross investments which include – in addition to those mentioned above – the acquisition as well as capitalized research and development costs totaled EUR 19 219 thousand (EUR 13 682 thousand).
Amortization of intangible assets totaled EUR 1 505 thousand (EUR 1 188 thousand). There are no indications of impairments of assets.
In a transaction completed on January 3, 2013, Basware acquired the e-invoice business of Certipost, the leading e-invoice operator in the Benelux. The acquired business operations' figures were consolidated into Basware's net sales and profit as of January 1, 2013. The initial acquisition price of approximately EUR 18.2 million was paid in cash on the closing date. The final acquisition price, based on the audited 2012 annual accounts, will be confirmed during the second quarter of 2013. The acquired net assets amount to approximately EUR 1.4 million, including the cash reserves of EUR 2.2 million. Approximately EUR 4.5 million associated with customer relationships and acquired technology has been allocated to intangible assets, taking deferred tax liabilities into consideration. The value associated with customer relationships will be amortized over seven years, and with technology in five years, starting from the first quarter of 2013. The purchase price includes approximately EUR 12.3 million of goodwill. The calculation concerning the allocation of the purchase price is preliminary.
The Annual General Meeting decided on February 14, 2013, to authorize the Board of Directors to decide on the repurchase of the 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 1 290 000 company's own shares. The repurchase authorization is valid until June 30, 2014. The company had not repurchased additional shares by March 31, 2013, and the company held 82 708 treasury shares on March 31, 2013.
Basware's research and development expenses totaled EUR 4 622 thousand (EUR 4 251 thousand), or 15.5 percent (15.5%) of net sales during the review period. The expenses increased by 8.7 percent compared to the corresponding period the previous year. Research and development expenses
The development of new P2P functionalities to the Alusta technology and the development of new cloudbased services influence the amount of capitalized R&D expenditure.
Basware launched the Alusta technology in 2012. It brings together Basware's B2B process knowledge with its cloud services optimized to ensure easy connectivity with the Open Network to companies of all sizes. The company's next-generation product suite is also strongly offered as a service.
A total of 356 (325) people worked in R&D at the end of March 2013, of whom 153 people in India.
Basware employed 1 485 (1 241) people on average during the first quarter and 1 486 (1 245) at the end of the period. The number of personnel increased by 241 persons and by 19.4 percent compared with the same period the previous year. The increase in the number of personnel was mainly due to the increase in the number of employees in the Indian unit and the personnel joining Basware through the acquisition of a Belgian e-Invoicing operator.
Geographical division of personnel:
| Personnel | 1–3/ | 1–3/ | Change, | 1–12/ |
|---|---|---|---|---|
| (employed, on average) | 2013 | 2012 | % | 2012 |
| Finland | 507 | 463 | 9.6 | 486 |
| Scandinavia | 131 | 126 | 3.4 | 129 |
| Rest of Europe | 268 | 169 | 58.5 | 179 |
| India | 504 | 415 | 21.5 | 467 |
| Other | 75 | 68 | 9.3 | 69 |
| Group total | 1 485 | 1 241 | 19.7 | 1 330 |
The share of personnel working in foreign units has increased compared with the previous year. At the end of the period, 65.9 percent (63.3%) of Basware personnel worked outside of Finland and 34.1 percent (36.7%) in Finland. 12.4 percent of the personnel work in sales and marketing, 57.3 percent in consulting and services, 24.2 percent in Products, and 6.1 percent in administration.
The average age of employees is 34.2 (34.2) years. Of the employees, 24.4 percent have a Master's degree and 28.5 percent have a Bachelor's degree. Women account for 22.6 percent of employees, men for 77.4 percent. For incentive purposes, the Company has a bonus program that covers all employees.
The company announced on February 17, 2012, a new share-based incentive plan for Basware Group's key personnel in 2012–2014. The company has been in a transition process from a software company to a service company, and achieving the goals of the transition has been slower than forecasted. Therefore, the Board of Directors updated the key personnel incentive plan on February 15, 2013, to run until the end of 2015.
The aim of the plan is to combine the objectives of the shareholders and the key personnel in order to increase the value of the company, commit the key personnel to the company, and offer them a competitive reward plan based on holding the company shares. The Board of Directors also encourages
the Basware Executive Team members to hold shares in the company equaling the value of annual gross base salary.
The system includes four earning periods, calendar years 2012, 2013, 2014, and 2015. The system comprises annual earning periods 2012, 2013, 2014, and 2015 and fixed earning period 2013–2015. Members of Basware Executive Team may be allocated additional shares without consideration against shareholding during the earning period 2012–2015.
The Board of Directors decides on the earnings criteria and targets to be established for them separately for each annual earning period at the beginning of the earning period. The reward for the earning period 2013–2015 is based on Basware Corporation's earnings per share (EPS). The target group for the earning period 2013–2015 consists of the members of the Basware Executive Team.
The other terms and conditions of the incentive plan remained unchanged apart from the addition of one earning period.
Geographical division of net sales and operating profit is presented in the tables to the interim report. As geographic information Basware reports geographical areas Finland, Scandinavia, rest of Europe, and Other.
The company announced on January 2, 2013, that the acquisition of Certipost's network and e-invoice business had been closed. In it, Basware acquired the network and e-Invoicing business of Certipost, the leading e-Invoice operator in the Benelux. The acquisition made Basware the market leader in e-Invoicing in the Benelux market. Certipost's extensive expertise in electronic data interchange (EDI) also played a key role in the conclusion of the agreement. The acquired business operations' figures were consolidated into Basware's net sales and profit as of January 1, 2013.
The initial acquisition price of approximately EUR 18.2 million was paid in cash on the closing date. The final acquisition price will be based on the audited 2012 annual accounts.
In 2012, the net sales of the acquired business amounted to approximately EUR 7.9 million and operating profit approximately EUR 1.2 million negative.
Synergy benefits are pursued through the combination of business operations and technologies as well as joint infrastructure and support functions. Non-recurring restructuring expenses of approximately EUR 1.2 million related to employment relationships have been booked in the first quarter of 2013. Previously, the company estimated these non-recurring expenses to amount to approximately EUR 2.3 million. The updated estimate of employment-related restructuring costs is based on the need for personnel cuts being lower than estimated previously, and it has been possible to allocate employees to other open positions within the group. The negotiations concerning the personnel are still underway in Belgium and are expected to complete on April 15, 2013.
The company estimates the annual potential for cost-savings related to the Certipost business to be approximately EUR 2.3 million once all of the predicted streamlining measures are complete (previous
.
The allocated purchase price is approximately EUR 18.2 million. The acquired net assets amount to approximately EUR 1.4 million, including the cash reserves of EUR 2.2 million. Approximately EUR 4.5 million associated with customer relationships and acquired technology has been allocated to intangible assets, taking deferred tax liabilities into consideration. The value associated with customer relationships will be amortized in seven years and value associated with technology in five years, starting from the first quarter of 2013. The purchase price includes approximately EUR 12.3 million of goodwill. The calculation concerning the allocation of the purchase price is preliminary.
The Annual General Meeting of Basware Corporation held on February 14, 2013, resolved in accordance with the proposal of the Board of Directors to distribute a dividend of EUR 0.23 per share for the year 2012.
The Annual General Meeting decided the number of members of the Board of Directors to be five. Mr. Hannu Vaajoensuu, Mr. Pentti Heikkinen, Mr. Ilkka Sihvo, Ms. Tuija Soanjärvi and Mr. Anssi Vanjoki were elected as members of the Board of Directors. In its first meeting held after the Annual General Meeting, the Board of Directors elected Hannu Vaajoensuu as chairman and Ilkka Sihvo as vice chairman of the Board.
The Annual General Meeting decided that the remuneration for the members of the Board of Directors will be paid as follows: members EUR 27 500 per annum, vice chairman EUR 32 000 per annum and chairman EUR 55 000 per annum. In addition each member shall receive EUR 340 per attended meeting.
Ernst & Young Oy, Authorized Public Accountants, was elected as the company's auditor. Ernst & Young Oy has advised that it will appoint Mr. Heikki Ilkka, 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 the repurchase of the 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 1 290 000 company's own shares. The company's own shares will be repurchased otherwise than in proportion to the holdings of the shareholders by using the non-restricted equity through public trading on a regulated market organized NASDAQ OMX Helsinki Ltd at the market price prevailing at the time of acquisition. The shares will be repurchased and paid for in accordance with the rules of NASDAQ OMX Helsinki Ltd and Euroclear Finland Ltd. The shares will 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 will decide on other terms and conditions related to the repurchase of the company's own shares. The repurchase authorization is valid until June 30, 2014.
The Annual General Meeting also resolved 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 pursuant to Chapter 10, Section 1 of the Finnish Companies Act in accordance with the proposal of the Board of Directors.
New shares may be issued and the company's own shares may be conveyed to the company's shareholders in proportion to their current shareholdings in the company or by waiving the shareholder's pre-emption right through a directed share issue if the company has a weighty financial reason to do so, such as using the shares 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. The new shares may also be issued in a free share issue to the company itself.
New shares may be issued and the company's own shares held by the company may be conveyed either against payment or for free. A directed share issue may be free only if there is an especially weighty financial reason both for the company and with regard to the interests of all shareholders in the company.
Based on the authorization, the Board of Directors may decide to issue a maximum of 2 580 000 new shares and convey a maximum of 1 372 708 of the company's own shares held by the company. 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 1 290 000 shares.
The Board of Directors may grant special rights referred to in Chapter 10, Section 1 of the Finnish Companies Act, which carry the right to receive, against payment, new shares of the company or the company's own shares held by the company. The right may also be granted to the company's creditor in such a manner that the right is granted on a condition that the creditor's receivable is used to set off the subscription price (convertible bond). The maximum number of new shares that may be subscribed by virtue of the special rights granted by the company is in total 1 000 000 shares which number shall be included in the maximum number of new shares stated above.
Ilari Nurmi, M.Sc.(Eng.), was appointed as the product manager of Basware Group with the title Senior Vice President, Product Management, and member of the Executive Team as of January 7, 2013. Mr. Nurmi reports to Esa Tihilä, the President and CEO.
Kari Aarvala, M.Sc.(Econ.), was appointed as Senior Vice President, Global Sales, and member of the Executive Team as of April 8, 2013. Mr. Aarvala reports to Esa Tihilä, the President and CEO.
As of April 8, 2013, the composition of the Basware Executive Team is as follows: Esa Tihilä, CEO; Mika Harjuaho, CFO; Kari Aarvala, Senior Vice President, Global Sales; Henrik Hasselbalch, Senior Vice President, Professional Services; Mari Heusala, Senior Vice President, HR & Development; Jorma Kemppainen, Senior Vice President, Product Development; Steve Muddiman, Senior Vice President, Global Marketing; Ilari Nurmi, Senior Vice President, Product Management; Riku Roos; Senior Vice President, Automation Services; and Matti Rusi, Senior Vice President, Customer Support.
In March 2013, Basware closed a reseller agreement with Cintas Document Management. Cintas provides highly specialized services to businesses of all types primarily throughout North America. According to the agreement, Cintas will sell Basware Purchase to Pay (P2P) / Accounts Payable Automation services as an addition to its current service offering. The agreement with Cintas forms a strategic relationship, supporting Basware's access to the small and mid-market in North America.
Basware Corporation's share capital totaled EUR 3 528 368.70 at the end of the period and the number of shares was 12 931 229.
The Annual General Meeting held on February 14, 2013, authorized the Board of Directors to decide on repurchase of the 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 1 290 000 company's own shares. The repurchase authorization is valid until June 30, 2014.
During the reporting period, the highest price of the share was EUR 21.69 (EUR 19.95), the lowest was EUR 19.30 (EUR 16.70) and the closing price was EUR 20.20 (EUR 19.26). The average price of the share was EUR 20.43 (EUR 19.04) during the period.
A total of 312 873 (444 503) shares were traded during the period, equivalent to 2.4 percent (3.5%) of the average number of shares. Market capitalization with the period's closing price on March 31, 2013, was EUR 259 540 124 (EUR 247 418 756).
Basware had 14 200 (14 964) shareholders on March 31 including nominee-registered holdings (13). Nominee-registered holdings accounted for 11.7 percent (12.1%) of the total number of shares.
The company holds 82 708 Basware Corporation shares, corresponding to approximately 0.6% of all shares in the company.
According to the share register maintained by Euroclear Finland Ltd, CEO Esa Tihilä held 10 850 Basware Corporation shares, Matti Copeland 2 771, Mika Harjuaho 8 000, Mari Heusala 250, Jorma Kemppainen 3 021, Steve Muddiman 8 087, Ilari Nurmi 469 and Matti Rusi 3 021 shares on March 31,2013. Other members of the Executive Team did not hold shares in Basware Corporation.
According to the share register maintained by Euroclear Finland Ltd, Hannu Vaajoensuu held 758 076, Pentti Heikkinen 3 135, Ilkka Sihvo 885 300, Eeva Sipilä 1 593 (Board member until February 14, 2013), Tuija Soanjärvi 526 (Board member as of February 14, 2013), and Anssi Vanjoki 5 000 shares in Basware Corporation on March 31, 2013.
The Annual General Meeting of Shareholders on February 14, 2013, confirmed the number of Board members as five. Mr. Hannu Vaajoensuu, Mr. Pentti Heikkinen, Mr. Ilkka Sihvo, Ms. Tuija Soanjärvi and Mr. Anssi Vanjoki were elected as members of the Board of Directors.
Ernst & Young Oy, Authorized Public Accountants, was elected as the company's auditor. Ernst & Young Oy has advised that it will appoint Mr. Heikki Ilkka, 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 the repurchase of the 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 1 290 000 company's own shares. The company's own shares will be repurchased otherwise than in proportion to the holdings of the shareholders by using the non-restricted equity through public trading on a regulated market organized NASDAQ OMX Helsinki Ltd at the market price prevailing at the time of acquisition. The shares will be repurchased and paid for in accordance with the rules of NASDAQ OMX Helsinki Ltd and Euroclear Finland Ltd. The shares will 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 will decide on other terms and conditions related to the repurchase of the company's own shares. The repurchase authorization is valid until June 30, 2014.
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 pursuant to Chapter 10, Section 1 of the Finnish Companies Act in accordance with the proposal of the Board of Directors.
The Board of Directors shall decide on all other related to the authorization. The authorizations are valid until June 30, 2014.
The company issued a Corporate Governance Statement for 2012, composed in accordance with Recommendation 54 of the new Corporate Governance Code and Chapter 7, Section 7 of the Finnish Securities Market Act. The Corporate Governance Statement was issued separately from the company's annual report.
Basware's full governance principles can be read on the company's investor pages: http://www.basware.com/investors.
Basware Executive Team between January 7 and April 7, 2013: Esa Tihilä, CEO; Matti Copeland, Senior Vice President, Strategy; Mika Harjuaho, CFO; Henrik Hasselbalch, Senior Vice President, Professional Services; Mari Heusala, Senior Vice President, HR&Development; Jorma Kemppainen, Senior Vice President, Products; Pekka Lindfors, Senior Vice President, Volume Sales; Steve Muddiman, Senior Vice President, Global Marketing; Riku Roos, Senior Vice President, Automation Services; Matti Rusi, Senior Vice President, Support; and Jukka Virkkunen, Senior Vice President, Enterprise Sales.
Changes in the Executive Team of Basware Group and appointment of Kari Aarvala as Senior Vice President, Global Sales and new member of the Executive Team as of April 8, 2013, were announced on January 28, 2013.
In accordance with Basware's risk management policy, risks are divided into six categories: risks related to business operations, products, personnel as well as legal, financial and data security risks. Basware
The world economy and markets are unstable, which may result in a decrease in the demand for license sales and services. Furthermore, the conversion of license sales to SaaS solutions will reduce net sales growth over the short term. The shift of demand for license sales towards the SaaS solution will support the long-term growth target of the Automation Services business.
Competitiveness in bringing new customers is essential to the growth pursued by the company. Next generation Alusta software solutions aim to ensure Basware's product leadership in Purchase-to-Pay software and services as well as increase the number of new customers. Alusta has not yet impacted to the company's net sales as aimed, due to not reaching the full sales and implementation capability of Alusta as fast than planned.
Securing the maintenance and service revenue generated by existing software customer accounts is the foundation for the company's profitable growth. Therefore, the aim is to ensure the controlled migration of existing customers to next generation software and services during the next financial periods.
The long-term target in Automation Services is annual growth of more than 50 percent. SaaS and einvoicing are scalable business models with a high business potential. Achieving the targeted growth requires continuous strong growth in the number of customers and transaction volumes and ensuring the production quality and continuity of the growing service business. The material production environment risks related to the achievement of the financial objectives of the service business are associated with breaches of service level agreements and financial losses caused by production interruptions.
Basware has complemented its organic growth with acquisitions in accordance with its strategy. Ensuring the success of acquisitions is fundamental to the company's profitable growth. In implementing acquisition projects, the aim is to follow due diligence and utilize the company's internal and external expertise in the planning phase, take over phase and when integrating the acquired functions into the company's operations.
Managing the increasing costs through the cost benefits offered by offshoring sites is an essential part of the continuous improvement of the company's profitability.
The bad debt risk associated with sales receivables is part of the risk related to business operations. The company has intensified the management of sales receivables and collection process during the latter half of 2012. Business management regularly monitors the payment of sales receivables as part of the management of customer accounts.
Goodwill was tested for impairment during the last quarter of 2012. According to the testing for asset impairment, goodwill has not been impaired, and there are no indications of impairment.
In other respects, no significant changes have taken place in Basware's short-term risks and uncertainties.
Basware's Board of Directors and management updated the company's strategy and objectives for the next 3-year period. The updated strategy was announced in fall 2012. The updated strategy for 2013– 2015 emphasizes accelerated global growth both organically and through acquisitions, which will enable the positive development of the operating profit margin.
Basware's long-term growth objectives for net sales and operating profit remain unchanged. The longterm objective is to grow 15–30 percent in net sales annually boosted by over 50 percent growth in Automation Services. The company's long-term objective for operating profit margin is 15–20 percent of net sales, improving towards the end of the period. The share of recurring revenue is aimed to grow to 70 percent of net sales, with Software as a Service (SaaS) and e-invoicing contributing the most to the growth, thus improving the profitability.
Basware is the global market leader in Purchase to Pay (P2P) solutions with close to 2 000 software and SaaS customers in Invoice Automation and Procurement. In addition, Basware has approximately 800 000 active customer companies using the Basware supplier and buyer network for invoices and purchase messages. Basware's focus markets - the P2P software and e-invoicing markets - are expected to grow substantially over the next few years, especially in the geographical areas where Basware is already well-positioned.
Basware's business is based on automating procurement and accounts payable and receivable processes within and between organizations. Basware offers all products and services through a global cloud. The services are hosted in a few key locations, which meet the highest service level requirements of private and public organizations.
Basware is the global product category leader in P2P. The company's product and services strategy is geared around category leadership. Alusta, launched in early 2012, is a cloud-based flexible platform for P2P technology that is built on open standards. Alusta is designed to bring together Basware's Business-to-Business process knowledge with its cloud services, ensuring easy connectivity with the Open Network to companies of all sizes. Alusta is primarily offered as a service and it thereby supports Basware's strategic transformation to a services company. The company will also invest in migrating the current customers to Alusta. Contributing to the growth of cloud service business in the future, value added services such as Supply Chain Financing and Dynamic Discounting will offer new revenue streams.
Basware will intensify its go-to-market activities in order to reach higher growth by segmenting customers by size and by buyers' and suppliers' organizations. Special attention will be placed on small and medium-sized organizations. The company's go-to-market activities are expanded with channel and online sales on top of direct sales. Basware is looking for partners that are providing outsourcing services for financial processes for global organizations. The company is looking for service providers and accounting firms as partners for small and medium-sized organizations. Such partners act as Virtual Operators or Sales Agents. Additionally, the company will support organic growth through acquisitions.
Basware's offering and solutions and services are available globally. The company aims to increase its global presence by increasing its service provisioning and delivery activities for supplier customers while putting additional emphasis on sales on selected key markets for getting a higher share in P2P software and services business. These markets offer significant upside potential for the company in terms of market share and transaction volume, organically and in the form of potential acquisitions.
In the strategy period, Basware aims to significantly increase the number of new customers for its products and services. Basware will support new customer acquisition by centralizing and automating the marketing lead generation process.
Realizing the strategy will improve the profitability of the company in several ways over the strategy period. The benefits of the new strategic profitability drivers are partially offset by investments required for the growth.
The market conditions were more difficult than before in the first quarter. Customers' decision-making was slower than before. The negotiation times of large international deals in particular have been prolonged because the customers' requirements are higher in the service business than in the software business.
In spite of net sales growth falling short of the targets for the first quarter, quantitatively speaking, the company closed 43 percent more significant Purchase to Pay deals than during the corresponding period the previous year. This proves that the fundamental demand for the company's products and services has remained at a good level.
The next-generation Alusta software has not yet contributed to the growth of the company's net sales as targeted, which is due sales and delivery ability being reached slower than planned. The maturity of the product is continuously improving with new features and updates. Basware Match Plan was launched during the first quarter, and it will be complemented with Basware Match Order, which will be launched during the latter half of the year. The first versions of new Basware Purchase and Analytics products will be launched during the second quarter, and they are expected to improve the company's competitiveness further. The improved maturity of Alusta and new products are expected to enable the leveling off of the decrease in licence sales during the rest of the year.
The delivery ability of Alusta will improve while the number of customers put into production will increase. The improvement of delivery ability and shorter production lead times contribute to accelerating growth in net sales.
We expect the company to grow more strongly during the rest of the year than in the first quarter, with the decrease in licence sales leveling off and the growth of Automation Services continuing. The company's fixed expenses will grow at a more moderate rate during the last three quarters than in the first quarter. We have increased the number of personnel during 2012, and we expect improvement of productivity to decrease the need for recruitments in our different functions in late 2013.
In order to achieve our objective of accelerated global growth and maintain our product leadership in Purchase to Payment processes, the development of Alusta software and services will continue strongly
this year as well. The share of R&D expenses of net sales is expected to decrease during 2013 compared to the level of 2012. The emphasis of R&D expenses will shift gradually from Alusta product development towards the service development of Automation Services.
The company's transition process is expected to reach a point where the investments will begin to pay themselves back in the form of increasing net sales and improved profitability during the latter half of the year.
Basware expects its net sales for 2013 to grow by more than 15% and operating profit (EBIT) to grow compared to the previous year.
Espoo, Finland, April 11, 2013
BASWARE CORPORATION Board of Directors
CEO Esa Tihilä, Basware Corporation Tel. +358 40 480 7098
Basware arranges today, April 11, 2013, a briefing on the Interim Report for the press and analysts at 11:00 a.m. in Hotel Kämp (Kluuvikatu 2, 2nd floor), Helsinki, Finland. During this briefing CEO Esa Tihilä and CFO Mika Harjuaho will comment the events and financial performance of the first quarter. Additional information and registration: Sirje Ahvenlampi, Manager, Investor Relations, tel. +358 50 557 3822, sirje.ahvenlampi (at) basware.com.
A conference call for analysts will take place on April 11, 2013 at 3:00 p.m. (GMT+2). More information on registration for the conference on the company's investor pages:http://www.basware.com/investors.
Distribution: NASDAQ OMX Helsinki Ltd Key media www.basware.com
This interim report has been prepared in accordance with IAS 34, Interim Financial Reporting. As from the beginning of the financial period, the company has adopted certain new or amended IFRS standards and IFRIC interpretations as described in the Financial Statements for 2012. However, the adoption of these new and amended norms have not yet had an effect on the reported figures in practice. In other respects, the same accounting policies have been followed as in the previous Financial Statements. Key indicator calculations remain unchanged and have been presented in the 2012 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 Interim Report, 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.
| NET SALES 29 828 27 435 8.7 113 699 Other operating income 58 58 0.8 228 Materials and services -2 542 -2 061 23.4 -9 045 Employee benefit expenses -20 518 -16 072 27.7 -65 590 Depreciation and amortization -1 801 -1 366 31.9 -6 493 Other operating expenses -6 594 -6 171 6.8 -24 491 Operating profit -1 569 1 822 8 308 227 146 55,5 372 Finance income -184 -50 268,8 -323 Finance expenses -1 526 1 918 8 357 Profit before tax Income tax expense 563 -442 -2 494 PROFIT FOR THE PERIOD -962 1 476 5 863 Other comprehensive income Other comprehensive income to be reclassified to profit or loss in subsequent periods: Exchange differences on translating foreign operations -285 -2 18 993,8 886 Income tax relating to components of other comprehensive income - 26 - 8 210,5 111 Other comprehensive income, net of tax -312 -10 3 049,1 996 TOTAL COMPREHENSIVE INCOME 6 860 -1 274 1 466 Profit attributable to: Owners of the parent -962 1 476 5 863 -962 1 476 5 863 Total comprehensive income attributable to: Owners of the parent -1 274 1 466 6 860 -1 274 1 466 6 860 Earnings per share (undiluted), EUR -0.07 0.11 0.46 Earnings per share (diluted), EUR -0.07 0.11 0.46 |
EUR thousand | 1.1.– 31.3.2013 |
1.1.– 31.3.2012 |
Change, % | 1.1.– 31.12.2012 |
|---|---|---|---|---|---|
| Change, | ||||
|---|---|---|---|---|
| EUR thousand | 31.3.2013 | 31.3.2012 | % | 31.12.2012 |
| ASSETS | ||||
| Non-current assets | ||||
| Intangible assets | 27 694 | 23 018 | 20.3 | 23 169 |
| Goodwill | 54 012 | 41 530 | 30.1 | 41 896 |
| Tangible assets | 1 998 | 1 372 | 45.6 | 1 440 |
| Available-for-sale financial assets | 38 | 38 | 38 | |
| Trade and other receivables | 1 068 | 1 | 95 613.8 | 1 068 |
| Deferred tax assets | 3 369 | 3 392 | -0.7 | 2 543 |
| Non-current assets | 88 179 | 69 350 | 27.2 | 70 154 |
| Current assets | ||||
| Inventories | 202 | 138 | 46.5 | 18 |
| Trade and other receivables | 38 175 | 31 062 | 22.9 | 24 202 |
| Income tax receivables | 1 656 | 1 032 | 60.4 | 865 |
| Cash and short-term deposits | 23 276 | 34 450 | -32.4 | 34 519 |
| Current assets | 63 309 | 66 683 | -5.1 | 59 604 |
| ASSETS | 151 489 | 136 033 | 11.4 | 129 758 |
| 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 |
| Own shares | ||||
| -1 215 | -932 | -30.3 | -1 215 | |
| Fair value reserve and other reserves | 62 339 | 62 503 | -0.3 | 62 339 |
| Translation differences | -973 | -1 276 | 23.8 | -708 |
| Retained earnings | 31 645 | 30 946 | 2.3 | 35 594 |
| Shareholders' equity | 96 512 | 95 956 | 0.6 | 100 725 |
| Non-current liabilities | ||||
| Deferred tax liabilities | 1 410 | 2 929 | -51.9 | 1 493 |
| Other non-current financial liabilities | 6 908 | 465 | 1 386.6 | 8 618 |
| Other liabilities | 245 | 462 | -47.0 | 245 |
| Non-current liabilities | 8 563 | 3 856 | 122.1 | 10 356 |
| Current liabilities | ||||
| Other current financial liabilities | 3 584 | 178 | 1 908.1 | 1 906 |
| Trade payables and other liabilities | 41 287 | 34 954 | 18.1 | 15 992 |
| Income tax liabilities | 597 | 861 | -30.7 | 779 |
| Provisions | 947 | 229 | 314.0 | 0 |
| Current liabilities | 46 414 | 36 222 | 28.1 | 18 677 |
| TOTAL EQUITY AND LIABILITIES | 151 489 | 136 033 | 11.4 | 129 758 |
| Share | Share | Inv. non | ||||||
|---|---|---|---|---|---|---|---|---|
| holder | premium | Own | restricted | Other | Translation | Retained | ||
| EUR thousand | capital | account | shares | equity | reserves | differences | earnings | Total |
| SHAREHOLDERS' | ||||||||
| EQUITY 1.1.2012 | 3 528 | 1 187 | -429 | 61 976 | 540 | -1 266 | 34 340 | 99 877 |
| Comprehensive | ||||||||
| income | -10 | 1 476 | 1 466 | |||||
| Dividend distribution | -5 278 | -5 278 | ||||||
| Changes in rep. period | -503 | -13 | 408 | -108 | ||||
| SHAREHOLDERS' | ||||||||
| EQUITY 31.3.2012 | 3 528 | 1 187 | -932 | 61 963 | 540 | -1 276 | 30 946 | 95 956 |
| Share holder |
Share premium |
Own | Inv. non restricted |
Other | Translation | Retained | ||
|---|---|---|---|---|---|---|---|---|
| EUR thousand | capital | account | shares | equity | reserves | differences | earnings | Total |
| SHAREHOLDERS' | ||||||||
| EQUITY 1.1.2013 | 3 528 | 1 187 | -1 215 | 61 799 | 540 | -708 | 35 594 | 100 725 |
| Comprehensive | ||||||||
| income | -312 | -962 | -1 274 | |||||
| Dividend distribution | -2 955 | -2 955 | ||||||
| Share-based | ||||||||
| payments | 16 | 16 | ||||||
| Changes in rep. period | 47 | -47 | 0 | |||||
| SHAREHOLDERS' | ||||||||
| EQUITY 31.3.2013 | 3 528 | 1 187 | -1 215 | 61 799 | 540 | -973 | 31 645 | 96 512 |
| EUR thousand | 1.1.– 31.3.2013 |
1.1.– 31.3.2012 |
1.1.– 31.12.2012 |
|---|---|---|---|
| Cash flows from operating activities | |||
| Profit for the period | -962 | 1 476 | 5 863 |
| Adjustments for profit | 1 211 | 1 695 | 9 158 |
| Working capital changes | 10 833 | 8 640 | -4 697 |
| Interest paid | -32 | -1 | -6 |
| Interest received | 24 | 69 | 170 |
| Other financial items in operating activities | -62 | 20 | -173 |
| Income taxes paid | -1 294 | -1 266 | -3 874 |
| Net cash flows from operating activities | 9 718 | 10 634 | 6 441 |
| Cash flows used in investing activities | |||
| Purchase of tangible and intangible assets | -1 841 | -1 475 | -6 820 |
| Acquisition of subsidiaries and businesses, net | |||
| of cash acquired | -16 033 | -11 978 | -11 979 |
| Net cash flows used in investing activities | -17 874 | -13 453 | -18 799 |
| Cash flows from financing activities | |||
| Proceeds from borrowings | 0 | 0 | 10 000 |
| Purchase of own shares | 0 | -516 | -963 |
| Payment of finance lease liabilities | -63 | -44 | -175 |
| Dividends paid | -2 955 | -5 278 | -5 278 |
| Net cash flows from financing activities | -3 018 | -5 838 | 3 584 |
| Net change in cash and cash equivalents | -11 174 | -8 657 | -8 774 |
| Cash and cash equivalents at the beginning of | |||
| period | 34 519 | 42 977 | 42 977 |
| Net foreign exchange difference | -68 | 130 | 112 |
| Cash and cash equivalents acquired in intra Group re-organizations |
0 | 0 | 204 |
| Cash and cash equivalents at the end of period | 23 276 | 34 450 | 34 519 |
| EUR thousand | 1-3/2013 | 1-3/2012 | 4-6/2012 | 7-9/2012 | 10-12/2012 |
|---|---|---|---|---|---|
| NET SALES | 29 828 | 27 435 | 28 718 | 27 119 | 30 427 |
| Other operating income | 58 | 58 | 58 | 55 | 57 |
| Materials and services | -2 542 | -2 061 | -1 957 | -2 313 | -2 715 |
| Employee benefit expenses | -20 518 | -16 072 | -17 282 | -15 415 | -16 820 |
| Depreciation and amortization | -1 801 | -1 366 | -1 495 | -1 809 | -1 823 |
| Other operating expenses | -6 594 | -6 171 | -6 745 | -5 376 | -6 199 |
| Operating profit | -1 569 | 1 822 | 1 298 | 2 261 | 2 927 |
| % | -5.3% | 6.6% | 4.5% | 8.3% | 9.6% |
| Finance income | 227 | 146 | 75 | 91 | 61 |
| Finance expenses | -184 | -50 | -76 | -52 | -145 |
| Profit before tax | -1 526 | 1 918 | 1 296 | 2 300 | 2 843 |
| % | -5.1% | 7.0% | 4.5% | 8.5% | 9.3% |
| Income tax expense | 563 | -442 | -347 | -807 | -898 |
| PROFIT FOR THE PERIOD | -962 | 1 476 | 949 | 1 493 | 1 945 |
| % | -3.2% | 5.4% | 3.3% | 5.5% | 6.4% |
| EUR thousand | 31.3.2013 | 31.3.2012 | 31.12.2012 |
|---|---|---|---|
| Own guarantees | |||
| Business mortgages of own debts | 1 200 | 1 200 | 1 200 |
| Commitments on behalf of subsidiaries and group companies |
|||
| Guarantees | 244 | 1 123 | 244 |
| Other own guarantees | |||
| Lease liabilities | |||
| Current lease liabilities | 1 261 | 916 | 944 |
| Lease liabilities maturing in 1–5 years | 1 054 | 1 061 | 737 |
| Total | 2 315 | 1 977 | 1 681 |
| Other rental liabilities | |||
| Current rental liabilities | 4 180 | 4 425 | 4 369 |
| Rental liabilities maturing in 1–5 years | 2 923 | 6 301 | 3 820 |
| Total | 7 103 | 10 726 | 8 189 |
| Other own contingent liabilities, total | 9 417 | 12 704 | 9 870 |
| Total commitments and contingent liabilities | 10 861 | 15 027 | 11 314 |
| 31.03.2013 | 31.03.2012 | |||
|---|---|---|---|---|
| EUR thousand | Book value | Fair value | Book value | Fair value |
| Financial assets | ||||
| Available-for-sale financial assets | ||||
| Available-for-sale financial assets | 38 | 38 | 38 | 38 |
| Financial assets at fair value | ||||
| through profit or loss | ||||
| Current | ||||
| Cash and cash equivalents | 23 276 | 23 276 | 34 450 | 34 450 |
| Trade and other receivables | 38 175 | 38 175 | 31 062 | 31 062 |
| Financial liabilities | ||||
| Financial liabilities at fair value | ||||
| through profit or loss | ||||
| Interest rate derivatives - | ||||
| not in hedge accounting Financial liabilities – financial liabilities valued at amortized acquisition cost |
27 | 27 | 0 | 0 |
| Non-current | ||||
| Loans from financial institutions, | ||||
| interest-bearing | 6 667 | 6 667 | 0 | 0 |
| Finance lease liabilities, | ||||
| interest-bearing | 214 | 214 | 465 | 465 |
| Current | ||||
| Loans from financial institutions, | ||||
| interest-bearing | 3 333 | 3 333 | 0 | 0 |
| Finance lease liabilities, | ||||
| interest-bearing | 251 | 251 | 178 | 178 |
| Trade payables and | ||||
| other liabilities | 41 287 | 41 287 | 34 954 | 34 954 |
The company announced on January 2, 2013, that the acquisition of Certipost's network and e-invoice business had been closed. The initial acquisition price of approximately EUR 18.2 million was paid in cash on the closing date. The final acquisition price will be based on the audited 2012 annual accounts. In 2012, the net sales of the acquired business amounted to approximately EUR 7.9 million and operating profit approximately EUR 1.2 million negative.
The acquired business operations' figures were consolidated into Basware's net sales and profit as of January 1, 2013. Synergy benefits are pursued through the combination of business operations and technologies as well as joint infrastructure and support functions. Non-recurring restructuring expenses of approximately EUR 1.2 million related to employment relationships have been booked in the first quarter of 2013. Previously, the company estimated these nonrecurring expenses to amount to approximately EUR 2.3 million. The updated estimate of employment-related restructuring costs is based on the need for personnel cuts being lower than estimated previously, and it has been possible to allocate employees to other open positions within the group. The negotiations concerning the personnel are still underway in Belgium and are expected to complete on April 15, 2013.
The company estimates the annual potential for cost-savings related to the Certipost business to be approximately EUR 2.3 million once all of the predicted streamlining measures are complete (previous estimate approximately EUR 3.0 million). The operating profit of the acquired business is expected to be approximately EUR 1.3 million negative in 2013
(previous estimate slightly positive). The consolidation of business functions and technologies will take longer than expected, estimated to be complete at the end of the first half of 2014, and therefore the operating profit of the acquired business is estimated to develop in 2013 more softly than previously estimate.
The allocated purchase price is approximately EUR 18.2 million. The acquired net assets amount to approximately EUR 1.4 million, including the cash reserves of EUR 2.2 million. Approximately EUR 4.5 million associated with customer relationships and acquired technology has been allocated to intangible assets, taking deferred tax liabilities into consideration. The value associated with customer relationships will be amortized in seven years and value associated with technology in five years, starting from the first quarter of 2013. The purchase price includes approximately EUR 12.3 million of goodwill. The calculation concerning the allocation of the purchase price is preliminary.
| EUR thousand | Fair value |
|---|---|
| Intangible assets | 4 664 |
| Tangible assets | 386 |
| Trade and other receivables | 2 721 |
| Cash and cash equivalents | 2 200 |
| Total assets | 9 970 |
| Trade and other payables | 4 052 |
| Total liabilities | 4 052 |
| Net assets | 5 918 |
Basware Corporation reports one operating segment: Purchase to Pay, P2P. The reported operating segment is comprised of the entire Group, and the segment figures are consistent with the Group figures.
As geographic information Basware reports geographical areas Finland, Scandinavia, rest of Europe, and Other. Net sales are split by the customer's location. Net sales and operating profit are also reported by the location of the assets. The Finland geographical area includes the business operations in Finland, Russia, and Asia-Pacific (excluding Australia) and the head office functions. The business operations in North America and Australia are reported in the Other geographical area.
| Net sales (EUR thousand) | 1–3/ 2013 |
1–3/ 2012 |
Change, % |
1–12/ 2012 |
|---|---|---|---|---|
| Finland | 11 614 | 12 040 | -3.5 | 48 567 |
| Scandinavia | 6 320 | 6 216 | 1.7 | 25 809 |
| Rest of Europe | 8 634 | 6 053 | 42.6 | 25 194 |
| Other | 3 260 | 3 125 | 4.3 | 14 129 |
| Group total | 29 828 | 27 435 | 8.7 | 113 699 |
| 1–3/ | 1–3/ | Change, | 1–12/ | |
|---|---|---|---|---|
| Net sales (EUR thousand) | 2013 | 2012 | % | 2012 |
| Finland | 14 333 | 14 592 | -1.8 | 61 870 |
| Scandinavia | 6 250 | 6 381 | -2.1 | 26 310 |
| Rest of Europe | 9 011 | 6 110 | 47.5 | 26 035 |
| Other | 2 850 | 2 925 | -2.6 | 12 925 |
| Sales between areas | -2 615 | -2 574 | -1.6 | -13 441 |
| Group total | 29 828 | 27 435 | 8.7 | 113 699 |
| Operating profit (EUR thousand) | 1–3/ 2013 |
1–3/ 2012 |
Change, % |
1–12/ 2012 |
| Finland | -576 | 1 218 | 5 506 | |
| Scandinavia | 447 | 883 | -49.4 | 849 |
| Rest of Europe | -1 196 | 261 | 1 775 | |
| Other | -79 | -288 | 72.6 | 884 |
| Operating profit between areas | -164 | -252 | 35.0 | -707 |
| Group total | -1 569 | 1 822 | 8 308 | |
| Personnel (employed, on average) |
1–3/ 2013 |
1–3/ 2012 |
Change, % |
1–12/ 2012 |
| Finland | 507 | 463 | 9.6 | 486 |
| Scandinavia | 131 | 126 | 3.4 | 129 |
| Rest of Europe | 268 | 169 | 58.5 | 179 |
| India | 504 | 415 | 21.5 | 467 |
| Other | 75 | 68 | 9.3 | 69 |
| Group total | 1 485 | 1 241 | 19.7 | 1 330 |
Basware reports income for products and services as follows: License sales, Professional Services, Customer Support, and Automation Services (previously License Sales, Professional Services, Maintenance, and Automation Services).
Customer Support is comprised of the previous Maintenance and Extended customer support previously reported under Professional Services. Extended customer support agreements are continuous service agreements spanning several years. Customer Support and Automation Services together form the recurring revenue reported by the company.
License Sales consist of the Purchase to Pay product family together with payment, financial planning and reporting solutions sold only in Finland. Automation Services include e-Invoicing, scanning services, printing services, catalog management, purchase message exchange, activation services and Software as a Service (SaaS) services.
| 1–3/ | 1–3/ | Change, | 1–12/ | |
|---|---|---|---|---|
| Net sales (EUR thousand) | 2013 | 2012 | % | 2012 |
| License Sales | 3 195 | 4 077 | -21.6 | 17 437 |
| Customer Support | 10 785 | 10 219 | 5.5 | 42 011 |
| Professional Services | 8 172 | 7 697 | 6.2 | 30 552 |
| Automation Services | 7 676 | 5 442 | 41.0 | 23 699 |
| Group total | 29 828 | 27 435 | 8.7 | 113 699 |
| EUR thousand | 1-3/2013 | 1-3/2012 | 1-3/2011 | 1-12/2012 |
|---|---|---|---|---|
| Net sales | 29 828 | 27 435 | 26 058 | 113 699 |
| Growth of net sales, % | 8.7% | 5.3% | 12.7% | 5.5% |
| EBITDA | 233 | 3 188 | 4 169 | 14 801 |
| % of net sales | 0.8 % | 11.6 % | 16.0 % | 13.0 % |
| Operating profit before IFRS3 | ||||
| amortization | -1 337 | 2 455 | 3 458 | 10 555 |
| % of net sales | -4.5% | 8.9% | 13.3% | 9.3% |
| Operating profit | -1 569 | 1 822 | 2 957 | 8 308 |
| Growth of operating profit, % | -38.4% | 38.4% | -32.3 % | |
| % of net sales | -5.3% | 6.6% | 11.3% | 7.3% |
| Profit before tax | -1 526 | 1 918 | 2 930 | 8 357 |
| % of net sales | -5.1% | 7.0% | 11.2% | 7.4% |
| Profit for the period | -962 | 1 476 | 2 268 | 5 863 |
| % of net sales | -3.2% | 5.4% | 8.7% | 5.2% |
| Return on equity, % | -3.9% | 6.0% | 11.4% | 5.8% |
| Return on investment, % | -4.9% | 8.0% | 14.7% | 8.2% |
| Interest bearing liabilities | 10 492 | 643 | 1 789 | 10 524 |
| Liquid assets* | 23 276 | 34 450 | 48 295 | 34 519 |
| Gearing, % | -13.2% | -35.2% | -50.7% | -23.8% |
| Equity ratio, % | 63.7% | 70.5% | 71.0% | 77.6% |
| Total assets | 151 489 | 136 033 | 129 048 | 129 758 |
| Gross investments * | 19 219 | 13 682 | 1 219 | 19 606 |
| % of net sales | 64.4% | 49.9% | 4.7% | 17.2% |
| Capital expenditure | 596 | 312 | 411 | 1 431 |
| % of net sales | 2.0% | 1.1% | 1.6% | 1.3% |
| Research and development costs | 4 622 | 4 251 | 3 834 | 17 884 |
| % of net sales | 15.5% | 15.5% | 14.7% | 15.7% |
| R&D personnel at end of the period | 356 | 325 | 270 | 351 |
| Personnel on average during the period | 1 485 | 1 241 | 959 | 1 330 |
| Personnel at end of period | 1 486 | 1 245 | 981 | 1 423 |
| Increase in personnel, % | 19.4% | 26.9% | 21.4% | 20.4% |
*) Includes acquisitions and capitalized R&D costs
| 1-3/2013 | 1-3/2012 | 1-3/2011 | 1-12/2012 | |
|---|---|---|---|---|
| Earnings per share (basic), EUR | -0.07 | 0.11 | 0.19 | 0.46 |
| Earnings per share (diluted), EUR | -0.07 | 0.11 | 0.19 | 0.46 |
| Equity/share, EUR | 7.46 | 7.42 | 7.11 | 7.79 |
| Parent company's shareholders' | ||||
| equity per share, EUR | 7.51 | 7.47 | 7.16 | 7.84 |
| Price per earnings (P/E) | -269.72 | 167.94 | 141.94 | 44.34 |
| Share price performance, share issue adjusted | ||||
| lowest price | 19.30 | 16.70 | 23.02 | 16.70 |
| highest price | 21.69 | 19.95 | 27.00 | 24.00 |
| average price | 20.43 | 19.04 | 25.26 | 20.84 |
| closing price | 20.20 | 19.26 | 26.40 | 20.25 |
| Market capitalization at end of period | 259 540 124 | 247 418 756 | 337 933 966 | 260 182 550 |
| Share issue adjusted number of | ||||
| traded shares | 312 873 | 444 503 | 2 625 376 | 1 514 703 |
| % of average number of shares | 2.4% | 3.5% | 21.5% | 11.8% |
| Average number of shares | ||||
| - during the period | 12 848 521 | 12 868 721 | 12 192 657 | 12 836 966 |
| - at end of the period | 12 931 229 | 12 931 229 | 12 890 829 | 12 931 229 |
| - during the period, diluted | 12 848 521 | 12 868 721 | 12 222 700 | 12 836 966 |
| Shares | Votes | ||
|---|---|---|---|
| Shares | % | ||
| 1. | Ilmarinen Mutual Pension Insurance Company | 1 478 665 | 11.4 |
| 2. | Sihvo, Ilkka | 885 300 | 6.8 |
| 3. | Eräkangas, Kirsi | 827 300 | 6.4 |
| Eräkangas, Kirsi | 576 900 | 4.5 | |
| Eräkangas, Lotta | 250 400 | 1.9 | |
| 4. | Vaajoensuu, Hannu | 673 800 | 5.2 |
| Havacment Oy | 266 500 | 2.1 | |
| Vaajoensuu, Hannu | 323 500 | 2.5 | |
| Vaajoensuu, Matias | 83 800 | 0.6 | |
| 5. | Perttunen, Sakari | 665 900 | 5.1 |
| 6. | Varma Mutual Pension Insurance Company | 530 000 | 4.1 |
| 7. | Fondita Nordic Micro Cap Placeringsf | 460 000 | 3.6 |
| 8. | Op-Suomi Pienyhtiöt | 408 823 | 3.2 |
| 9. | Nordea Nordic Small Cap Fund | 387 585 | 3.0 |
| 10. | Veritas Pension Insurance Company | 374 161 | 2.9 |
| 11. | OP-Focus Fund | 300 000 | 2.3 |
| 12. | Pöllänen, Antti | 299 023 | 2.3 |
| 13. | Investment Fund Aktia Capital | 273 313 | 2.1 |
| 14. | The State Pension Fund | 256 000 | 2.0 |
| 15. | OP-Delta Fund | 244 692 | 1.9 |
| 16. | Sr Danske Invest Suomi Kasvuosake | 175 776 | 1.4 |
| 17. | Perttunen, Meimi | 175 400 | 1.4 |
| 18. | Ahonen, Asko | 168 736 | 1.3 |
| 19. | Fim Fenno Fund | 162 554 | 1.3 |
| 20. | Fim Forte Fund | 150 000 | 1.2 |
| 20 largest shareholders total | 8 897 028 | 68.8 | |
| Nominee registered shares | 1 507 946 | 11.7 | |
| Others | 2 526 255 | 19.5 | |
| Total | 12 931 229 | 100.0 |
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