Basware Corporation Financial Statement Stock Exchange Release, January 25, 2012 at 09:00

BASWARE FINANCIAL STATEMENTS
Basware fourth quarter and full year 2011

SUMMARY (last year's corresponding period in parentheses, unless otherwise stated)

Financial year 2011

  • Net sales EUR 107 750 thousand (EUR 103 094 thousand) - growth 4.5 percent
  • Operating profit EUR 12 280 thousand (EUR 13 487 thousand) - decrease of 8.9 percent
  • Operating profit 11.4 percent of net sales (13.1%)
  • Operating profit includes a restructuring provision of EUR 1 203 thousand due to streamlining measures
  • Growth of Automation services (SaaS and e-Invoicing) 32.3 percent
  • Recurring revenue (including Maintenance and Automation Services) 48.9% (44.3%) of net sales
  • Cash flows from operating activities were EUR 15 207 thousand (EUR 12 523 thousand)
  • Earnings per share EUR 0.76 (0.90) - decrease of 15.0 percent

-       Dividend proposal for 2011: EUR 0.41 per share (2010: EUR 0.40)

October-December Q4

  • Net sales EUR 30 227 thousand (EUR 30 149 thousand) - growth 0.3 percent
  • Operating profit EUR 3 454 thousand (EUR 4 937 thousand) - decrease of 30.0 percent
  • Operating profit 11.4 percent of net sales (16.4%)
  • Operating profit includes a restructuring provision of EUR 1 203 thousand due to streamlining measures
  • Growth of Automation Services (SaaS and e-invoicing) 17.9 percent
  • The estimated revenue to be recognized for current Automation Services agreements in production in the next twelve months is EUR 18.3 million, growth from previous quarter 6.2 percent
  • Recurring revenue (including Maintenance and Automation Services) 46.9% (42.5%) of net sales Earnings per share EUR 0.23 (0.34) - decrease 32.2 percent

Basware outlook

  • Basware expects its net sales in 2012 to grow from the previous year, and operating profit (EBIT) for 2012 is expected to be EUR 8-18 million

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 24, 2012.

REPORTING

Basware's reporting segment is based upon geography as follows: Finland, Scandinavia, Europe, and Other. The Finland segment includes the Finnish, Russian, and Asia-Pacific (excluding Australia) business operations and corporate services. The Other segment includes North America and Australia.

In addition, the company reports revenue from products and services as follows: License Sales, Professional Services, Maintenance and Automation Services. License Sales consist of the Purchase to Pay (P2P) product suite and financial management and payment automation solutions that are only marketed in Finland. Basware Automation Services include paper invoice scanning services, exchange of purchase catalogues and purchase messages, e-invoicing, activation service, and Software as a Service (SaaS) services.

The company also reports an estimate of revenue to be recognized for current Automation Services agreements in the next twelve months. Automation Services agreements are typically in force for a fixed period of several years or until further notice.

GROUP KEY FIGURES  

 

 EUR thousand 10-12/

 2011		 10-12/

2010		 Change,

 %		 1-12/

 2011		 1-12/

2010		 Change,

 %		  
               
Net sales 30 227 30 149 0,3 107 750 103 094 4.5  
EBITDA 4 671 6 215 -24.8 17 284 18 604 -7.1  
Operating profit before              
IFRS-3 amortization 3 958 5 477 -27.7 14 290 15 691 -8.9  
Operating profit 3 454 4 937 -30.0 12 280 13 487 -8.9  
% of net sales 11.4 16.4   11.4 13.1    
Profit before tax 3 473 4 839 -28.2 12 332 13 325 -7.5  
Profit for the period 2 940 3 913 -24.9 9 671 10 331 -6.4  
               
Return on equity, % 12.0 24.2   11.6 16.7    
Return on investment, % 14.9 29.7   14.9 20.1    
Liquid assets* 42 977 13 822 210.9 42 977 13 822 210.9  
Gearing, % -42.3 -15.3   -42.3 -15.3    
Equity ratio, % 81.9 73.3   81.9 73.3    
               
Earnings per share, EUR 0.23 0.34 -32,2 0.76 0.90 -15.0  
Earnings per share (diluted), EUR 0.23 0.34 -31,9 0.76 0.89 -14.5  
Parent company's shareholder's

Equity per share, EUR		 7.76 5.78 34,6 7.76 5.78 34.6  

*) Includes cash, cash equivalents and financial assets at fair value through profit or loss

Basware focuses strongly on service business  

Basware's CEO Esa Tihilä about the quarter: "Basware continued the implementation of strategy published in January 2011 and focuses more strongly than previously on services. During the last quarter Automation Services grew 23.3% compared with previous quarter, which reflects continuous growth. Compared with corresponding quarter in 2010 the growth of Automation Services was 17.9 percent. Exceptionally many opening fees of large deals were reported during the corresponding quarter in 2010.

The growth of transaction volume is essential to the growth of Automation Services. Transaction volume grew 51.6 percent compared with corresponding quarter in 2010 and transaction volume was 6.2 million.

Basware's CEO Esa Tihilä about full year 2011: "The company's net sales increased by 4.5 percent to EUR 107 750 thousand. The growth of Automation Services of 32.3 percent had a positive impact on the growth of net sales. Transaction volume in 2011 was 20.8 million and the volume grew by 53.0 percent. Recurring revenue (Automation Services and Maintenance) accounted for 48.9 percent of net sales.  The growth of recurring revenue improves the estimates in the long run.

Operating profit was EUR 12 280 million and accounted for 11.4 percent of net sales. Operating profit decreased by 8.9 percent. Operating profit includes a restructuring provision of EUR 1 203 thousand due to streamlining measures, during the fourth quarter. By making its operations more efficient, the company increases its focus on the service business. Through streamlining measures Basware seeks possibilities for further investments in growth markets outlined in strategy.

Basware's CEO Esa Tihilä about future outlook: "During 2012, the company will be undergoing a strong transformation from a software company into a service company, which will change our operating methods, solutions, and services. We are targeting completely new customer groups through segmented customer care model as well as through product and services offering.

Our strategic objective is to become the world's leading e-invoice operator. With the acquisition of a German e-Invoice operator in January 2012, we will be able to complement our portfolio with innovative technology to transfer also sales invoices into electronic format, which will also benefit our existing customers worldwide and support our strategy."

Market outlook and operating environment

Market estimates released in January 2012 expect the software market to grow 6.2 percent globally (previous forecast 7.0%) and 8.0 percent in the U.S. in 2011 (forecast unchanged). The entire IT services market is expected to grow by 4.7 percent globally (previous estimate 6.0%) and by 6.8 percent in the U.S. (previous estimate 6.0%) in 2012. According to research companies, the software market is expected to grow at a rate of 7.0 percent globally, IT services by 5.6% and the IT market as a whole by 7.3 percent.

The number of acquisitions and partnerships has increased in the market. Companies active in the market are trying to strengthen their supplier networks and expand geographically. Consolidation is expected to continue in the business environment, with the role of services growing in companies' portfolios.

Basware software still offer a competitive edge, thanks to new added value products and the integrated offering consisting of services and products. The next generation of solutions will improve the company's competitiveness in the long term. 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.

Basware aims to become a leading company in e-invoicing worldwide. E-invoicing and the supporting Connectivity Services are targeted to connect suppliers and buyers also outside of Basware's existing software customer base, leading into a higher potential. The penetration rate of e-invoicing is low, which creates a solid foundation for the future growth of Basware Automation Services.

In order to consolidate international growth further, Basware is increasing the focus on acquisitions in its strategy and organization. The company has been active in mergers and acquisitions and has strengthened the activity further by establishing a new executive team-level M&A function.

The role of offshoring operations will continue to grow in the company's strategy. R&D and Automation Services operations at Basware's Indian office have already succeeded in gaining a significant role. The company is surveying the development of offshoring in order to improve profitability also with regard to new service business operations and internal support functions. The company is also investigating the possibility of new geographical regions in expanding offshoring.

FUTURE OUTLOOK  

Market estimates released in January 2012 expect the software market to grow 6.2 percent globally (previous forecast 7.0%) and 8.0 percent in the U.S. in 2011 (forecast unchanged). The entire IT services market is expected to grow by 4.7 percent globally (previous estimate 6.0%) and by 6.8 percent in the U.S. (previous estimate 6.0%) in 2012. According to research companies, the software market is expected to grow at a rate of 7.0 percent globally, IT services by 5.6% and the IT market as a whole by 7.3 percent.

The world economy and markets are unstable, which may result in a decrease in license sales and demand for services. In addition, the conversion of license sales to SaaS solutions may have an increasingly negative effect on the growth in net sales, especially with the company's next-generation software family. The shift in demand from license sales towards SaaS solutions will support the long-term growth targets of the Automation Services business in the future.

During 2012, the company will be undergoing a strong transformation from a software company into a service company, which will change our operating methods, solutions, and services. In addition, the uncertainty in the market will continue. Therefore, Basware estimates that its net sales for 2012 will increase on the previous year, while its operating profit (EBIT) is estimated to reach EUR 8-18 million.

BOARD'S DIVIDEND PROPOSAL

Basware is a growth company that 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 2011, the Group parent company's distributable funds are EUR 95 917 650.04.

Basware's Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.41 per share (2010: EUR 0.40) be paid for 2011.

Espoo, Finland, January 25, 2012

BASWARE CORPORATION

Board of Directors

For more information, please contact

CEO Esa Tihilä, Basware Corp.,

Tel. +358 40 480 7098

Analyst and Press Briefing

Basware arranges today, January 25, 2012 a briefing on the Interim Report for the press and analysts at 11:00 a.m. in Hotel Kämp, Pohjoisesplanadi 29, Helsinki, Finland. During this briefing CEO Esa Tihilä will comment the operations and financial performance of the quarter. Welcome. A conference call for analysts will take place on January 25 at 15:30 (GMT+2). Registration: IR@basware.com:
mailto:IR@basware.com

FINANCIAL REPORTING IN 2012

Basware's Annual Report 2011, including the audited Financial Statements, will be published on the company's website during the week starting on February 8, 2012. The company will not publish the Annual Report in print.

Release dates for interim reports:

- Interim Report January-March 2012 (Q1) on Thursday, April 16, 2012

- Interim Report January-June 2012 (Q2) on Wednesday, July 11, 2012

- Interim Report January-September 2012 (Q3) on Wednesday, October 10, 2012

Basware Corporation's Annual General Meeting of Shareholders will be held on Thursday, February 16, 2012 starting at 2:00 PM at Helsinki Music House, Mannerheimintie 13a in Helsinki, Finland.

Distribution:

NASDAQ OMX Helsinki Ltd

Key media

www.basware.com:
http://www.basware.com/

ENC: Basware_Financial_statement2011

Basware_Financial_Statement2011:
http://hugin.info/131662/R/1579924/493214.pdf


This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients.

The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.

Source: Basware via Thomson Reuters ONE
HUG#1579924