Basware Financial Statement Release January 1-December 31, 2014 (IFRS)

Friday, 23 January, 2015
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Basware Corporation, stock exchange release, January 23, 2015 at 13:00

BASWARE FINANCIAL STATEMENT RELEASE JANUARY 1 - DECEMBER 31, 2014 (IFRS)

Basware Corporation's fourth quarter and full year 2014

Network Services business grew well and software sales developed favorably

Summary

Financial year 2014:

  • Net sales EUR 127 674 thousand (EUR 123 349 thousand) - growth 3.5 percent
  • Operating profit EUR 4 325 thousand (EUR 3 331 thousand) - growth 29.8 percent
  • Operating profit 3.4 percent of net sales (2.7%)
  • Growth of Network Services net sales 19.4 percent
  • Recurring revenue 67.0 percent (63.8%) of net sales
  • Net cash flows from operating activities EUR 14 912 thousand (EUR 3 578 thousand)
  • Earnings per share (diluted) EUR 0.22 (0.20) 

October-December 2014:

  • Net sales EUR 34 664 thousand (EUR 33 049 thousand) - growth 4.9 percent
  • Operating profit EUR 1 701 thousand (EUR 2 131 thousand) - decrease of 20.2 percent
  • Operating profit 4.9 percent of net sales (6.4%)
  • Growth of Network Services net sales 23.9 percent
  • Recurring revenue 64.9 percent (63.4%) of net sales
  • Earnings per share (diluted) EUR 0.11 (0.18)

Basware expects its net sales and operating profit (EBIT) for 2015 to grow compared to 2014.

This financial statement release has been prepared in accordance with IAS 34, Interim Financial Reporting. The amounts presented in the summary of financial statements and notes to the financial statements are based on the company's audited financial statements. The Auditor's Report was issued on January 23, 2015.

GROUP KEY FIGURES

               
  10-12/ 10-12/ Change, 1-12/ 1-12/ Change,  
EUR thousand 2014 2013 % 2014 2013 %  
               
Net sales 34 664 33 049 4.9% 127 674 123 349 3.5%  
EBITDA 3 436 3 879 -11.4% 11 354 10 383 9.4%  
Operating profit 1 701 2 131 -20.2% 4 325 3 331 29.8%  
  % of net sales 4.9% 6.4%   3.4% 2.7%    
Profit before tax 2 204 2 153 2.4% 4 328 3 284 31.8%  
Profit for the period 1 454 2 255 -35.5% 2 959 2 605 13.6%  
               
Return on equity, % 4.2% 9.3%   2.5% 2.6%    
Return on investment, % 7.2% 9.1%   4.4% 3.9%    
Cash and cash equivalents 28 954 13 218 119.0% 28 954 13 218 119.0%  
Gearing, % -38,6% -4.7%   -38,6% -4.7%    
Equity ratio, % 82.7% 77.1%   82.7% 77.1%    
               
Earnings per share              
EUR 0.11 0.18 -39.2% 0.22 0.20 11.4%  
(diluted), EUR 0.11 0.18 -39.2% 0.22 0.20 11.4%  
Equity per share, EUR 9.88 7.62 29.6% 9.88 7.62 29.6%  

BUSINESS OPERATIONS

Basware is the global leader in providing purchase-to-pay and e-invoicing solutions in the world of commerce. Basware empowers companies to unlock value across their financial operations by simplifying and streamlining key financial processes. Basware helps its customers to succeed and create added value to their business through better financial management. Basware Network, the largest open business network in the world, connects 1 million companies across 100 countries and enables easy collaboration between buyers and suppliers of all sizes. Through this network, leading companies around the world achieve improved spend control, efficiency, and closer relations with their suppliers. With Basware, businesses can introduce completely new ways of buying and selling to achieve significant cost savings and boost their cash flow.

Reporting

Basware reports one operating segment: Purchase to Pay, P2P. The segment is divided into the Network Services and Solution Services businesses that support each other.

As of the beginning of 2014, the company reports revenue from products and services as follows: Network Services (e-invoicing solutions and services) and Solution Services (software solutions and services). In addition to this, the company reports revenue from products and services in tabulated format according to the breakdown of the previous reporting practice: License sales, Professional Services, Customer Support, and Automation Services.

Customer Support and Automation Services together form the recurring revenue reported by the company.

Network services revenue is comprised of e-invoicing, paper invoice scanning services, printing service, catalog exchange, purchase message exchange, activation services, and alliance fees of e-invoicing services and financing-related added value services. Solution Services revenue is comprised of software revenue (SaaS revenue and license sales), software maintenance and extended customer support services (customer support), Professional Services, and start-up fees of SaaS services.

As geographic information Basware reports geographical areas Finland, Scandinavia, rest of Europe, and Other. Net sales are reported by the customer's location, and net sales and operating result are also reported by the location of the assets. In addition, the geographical information of non-current assets is reported by the location of the assets in the annual financial statements.

CEO Esa Tihilä:

Network Services business grew well and software sales developed favorably in 2014. Net sales for the review period amounted to EUR 127 674 thousand, growth of 3.5 percent, and operating profit to EUR 4 325 thousand (EUR 3 331 thousand). The share of recurring revenue of net sales continued to grow, accounting for 67.0 percent. International operations accounted for 61.6% (60.0%).of net sales. Growth in sales outside Europe was particularly good, up 13.3 percent for the year as a whole and 27.1 percent for the fourth quarter.

The net sales of Network Services amounted to EUR 9 175 thousand (EUR 7 407 thousand) for the fourth quarter, growth of 23.9 percent year-on-year. A total of 21.8 million transactions, e-invoices and other electronic messages, were processed via Basware Network, up 25.6 percent year-on-year.

The growth in Network Services continued throughout 2014 and amounted to 19.4 percent. Over 78 million transactions were processed via Basware Network during 2014, up 30 percent compared to the previous year, between over a million buyers and suppliers in over a hundred countries. Organic growth in transactions was at a good level during every quarter of the year.

Decrease in software sales came to a halt during the latter half of the year. The net sales of the Solution Services business, which accounts for over 70 percent of the company's total net sales, amounted to EUR 25 489 thousand for the fourth quarter (EUR 25 642 thousand), a decrease of 0.6 percent year-on-year.

According to customer feedback, Basware's e-invoicing and purchase-to-pay software and services are highly competitive. During 2014, we have migrated a number of existing customers to Alusta and secured a significant number of new Alusta customers. The demand for SaaS services has been good.

The extensive reach and size of Basware Network offers excellent opportunities for providing Basware's new and innovative financing services to meet the needs of companies of all sizes under competitive terms. Basware's Financing Services deliver financing solutions and alternatives for both buyers and suppliers, combining invoice automation and e-invoicing with financing services on the Basware Network. Basware Pay, a new type of a global e-payment solution offered in collaboration with MasterCard, was launched in September 2014 as the first solution in the Financing Services portfolio. The first agreement on Basware Pay collaboration was signed with an international financial institution towards the end of 2014, and negotiations with other potential partners are underway.

E-invoicing became more common and the volume of e-invoices increased significantly in Europe as well as globally during the year. The adoption of e-invoicing and other new solutions for automating financial operations are accelerated by companies' efforts to improve their cash flow. This is supported also by the regulatory standards aiming to establish a uniform infrastructure for e-commerce.

Basware is already the leader in the e-invoicing and purchase-to-pay solutions, and Financing Services provide new growth opportunities. In the light of market analyses, industry research and feedback, there is a high level of interest in online, real-time payment solutions that make B-to-B commerce more agile among existing and new customers.

Achieving strong growth in Basware Network continues to be our main objective. In accordance with our strategy, we are pursuing growth in the network both organically and through mergers and acquisitions. We will also invest in growth in the sales of Alusta software and services, as well as other sales. Development of the Financing Services business and financing services and solutions commenced in 2014 and will continue actively this year.

I would like to extend my gratitude to our employees for their committed work and development of high-quality and new solutions and processes for automated financial administration, helping Basware's customers to prosper, generate added value, and improve their cash flow. I would also like to thank all of Basware's customers and shareholders for their trust in the company.

FUTURE OUTLOOK

Operating environment and market outlook

Companies of all sizes globally are under pressure to improve their cash flows, find new innovative payment strategies, and automate their financial processes and functions. The company expects the same to continue also in 2015 and the continuous demand for services to remain at a favorable level among its customers.

Consolidation is expected to continue in the business environment, with the role of services growing in companies' portfolios. According to industry research, e-invoicing has become more common and the number of e-invoices has grown substantially in Europe and the rest of the world. The global market penetration of e-invoices is estimated to be some 10 percent. The growing e-invoicing market and companies' interest in other payment and financing added value solutions as well will offer excellent growth opportunities in future years.

Outlook 2015

The global market growth in e-invoicing has been estimated to be approximately 20 percent. Basware is pursuing strong growth in Network Services by developing and automating the connection of buyers and suppliers to the e-invoicing service, by utilizing digital marketing and sales channels more extensively, and through acquisitions. In the Solution Services business, sales of Alusta are expected to have a positive effect on software net sales and professional services.

Basware's fixed costs are expected to develop moderately. Basware will invest more extensively in sales and marketing as well as research and development of new solutions and services in particular. The company will continue to improve its profit-making ability in its software business also this year by ensuring the efficient use of resources in Professional Services and improving the billing rate in relation to demand. The company will continue investments in the Network Services business to achieve accelerated growth by primarily developing automated solutions for sending and receiving e-invoices and new ways to achieve accelerated growth in sales.

Basware continues active analysis of acquisition targets especially in the e-invoicing market in Europe and in the U.S. according to its strategy. Decisions on additional investments required for growth will be made during the year as required by the market situation and development of business operations.

Basware expects its net sales and operating profit (EBIT) for 2015 to grow compared to 2014.

BOARD'S DIVIDEND PROPOSAL

Basware aims at increased market capitalization and moderate dividend yield. When preparing the dividend proposal, the Board considers the Company's financial position, profitability and prospects in the near future.

At the end of 2014, the Group parent company's distributable funds are EUR 127 600 thousand.

Basware's Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.10 per share (2013: EUR 0.23) be paid for 2014.

Basware Corporation's Annual General Meeting will take place on Friday, February 13, 2015, at 10 a.m. at Korjaamo in Helsinki, Finland.

Espoo, Finland, Friday, January 23, 2015

BASWARE CORPORATION
Board of Directors

For more information, please contact:

Esa Tihilä, CEO, Basware Corporation
Tel. +358 40 480 7098

Distribution:
NASDAQ OMX Helsinki Ltd
Key media
www.basware.com

Basware Q4/2014 Interim Report