Basware : Basware Interim Report January 1-September 30,

Basware Corporation, stock exchange release, October 10, 2013 at 08:45 BASWARE INTERIM REPORT JANUARY 1 - SEPTEMBER 30, 2013 (IFRS) SUMMARY January-September 2013: Strong growth in Automation Services continues * Net sales EUR 90 300 thousand (EUR 83 272 thousand) - growth 8.4 percent * Operating profit EUR 1 201 thousand (EUR 5 381 thousand) - decrease 77.7 percent * Operating profit 1.3 percent of net sales (6.5%) * Growth of Automation Services (SaaS and e-Invoicing) 47.8 percent * Recurring revenue (Maintenance and Automation Services) 63.9 percent (57.9%) of net sales * Cash flow from operating activities EUR 4 129 thousand (EUR 7 334 thousand) * Earnings per share (diluted) EUR 0.03 (0.31) - decrease of 91.1 percent July-September 2013: * Net sales EUR 28 682 thousand (EUR 27 119 thousand) - growth 5.8 percent * Operating profit EUR 1 861 thousand (EUR 2 261 thousand) - decrease 17.7 percent * Operating profit 6.5 percent of net sales (8.3%) * Growth of Automation Services (SaaS and e-Invoicing) 43.8 percent * The estimated revenue to be recognized for current Automation Services agreements that are in production as well as for new, signed agreements in the next twelve months increased to EUR 33.6 million (growth from estimate at the end of the previous quarter 1.1 percent) * Recurring revenue (Maintenance and Automation Services) 66.8 percent (60.5%) of net sales * Earnings per share (diluted) EUR 0.07 (0.12) - decrease of 35.8 percent Basware expects its net sales for 2013 to grow and operating profit (EBIT) for 2013 to be positive. The figures are unaudited. GROUP KEY FIGURES 7-9/ 7-9/ Change, 1-9/ 1-9/ Change, 1-12/ EUR thousand 2013 2012 % 2013 2012 % 2012 ------------------------------------------------------------------------------- Net sales 28 682 27 119 5.8 % 90 300 83 272 8.4 % 113 699 EBITDA 3 609 4 070 -11.3 % 6 504 10 051 -35.3 % 14 801 Operating profit before IFRS3 amortization 2 092 2 793 -25.1 % 1 895 7 095 -73.3 % 10 555 Operating profit 1 861 2 261 -17.7 % 1 201 5 381 -77.7 % 8 308    % of net sales 6.5 % 8.3 %   1.3 % 6.5 %   7.3 % Profit before tax 1 819 2 300 -20.9 % 1 130 5 514 -79.5 % 8 357 Profit for the period 960 1 493 -35.7 % 350 3 918 -91.1 % 5 863 Return on equity, % 4.0 % 6.1 %   0.5 % 5.3 %   5.8 % Return on investment, % 7.7 % 9.6 %   2.3 % 7.6 %   8.2 % Liquid assets *) 15 124 27 739 -45.5 % 15 124 27 739 -45.5 % 34 519 Gearing, % -6.7 % -27.5 %   -6.7 % -27.5 %   -23.8 % Equity ratio, % 73.1 % 80.2 %   73.1 % 80.2 %   77.6 % Earnings per share, EUR 0.07 0.12 -35.8 % 0.03 0.31 -91.1 % 0.46 Earnings per share (diluted), EUR 0.07 0.12 -35.8 % 0.03 0.31 -91.1 % 0.46 Parent company's shareholders' equity per share, EUR 7.51 7.71 -2.5 % 7.51 7.71 -2.5 % 7.84 *) Includes cash and cash equivalents Business operations Basware is the global leader in providing solutions for better buying, better selling and connected commerce. Basware provides open, secure, cloud-based purchase-to-pay and e-invoicing solutions to organizations of all sizes, resulting in greater efficiencies in procurement, accounts payable and accounts receivable. Companies across all industries, from small businesses to corporate giants use Basware solutions to drive sustainable cost savings, proactive insight to cash flows and improved buyer-supplier relationships. The Basware Commerce Network is founded on the principles of openness, where all types of organizations can collaborate and trade, making it the largest in the world. Today the network connects millions of business users in 900 000 companies across over 100 countries. Reporting 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. Customer Support includes the previous Maintenance and expanded customer support, which was previously reported under Professional Services. Expanded customer support agreements are continuous service agreements with a term of several years. Customer Support and Automation Services comprise the recurring revenue reported by the company. License sales consist of the Purchase to Pay product family together with financial planning and reporting solutions sold only in Finland. Automation Services include e-Invoicing, scanning services, printing services, catalogue 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 agreements that are in production in the next twelve months. Automation Services agreements typically expand several years or are valid until further notice. As geographic information Basware reports geographical areas Finland, Scandinavia, rest of Europe, and Other. In the geographical information net sales are split by the customer's location. Net sales and operating profit are also reported by the location of the assets. In the annual financial statements, the geographical information of non-current assets is reported by the location of the assets. CEO Esa Tihilä comments in conjunction with the Interim Report: The strong growth in Automation Services continued during the third quarter. The company's net sales grew and the company returned to profitability. The company's efficiency drive launched during the second quarter to improve profit- making ability has continued as targeted. At the same time the originally targeted annual cost-savings of EUR 3 million compared to the June level has been revised to EUR 4 million by the end of 2013. Automation Services net sales have increased according to our strategy, up 43.8 percent during the third quarter. The strong growth in the transaction volume continued during the quarter, up 69.5 percent. Basware Commerce Network has grown strongly and we have connected an increasing number of small and medium- sized suppliers and buyers in more than a hundred countries to the network with new products and delivery methods. The demand for software licenses continued to be soft during the quarter, and license sales decreased by 18.3 percent. At the same time, SaaS net sales increased by 17.4 percent. The decrease in license sales affects the development of Professional Services. According to customer feedback, the competitiveness of Basware software and services is good. We increasingly emphasize the growth in the sales of Basware Commerce Network and Alusta software and services in all of our operations. We have continued the development of Alusta software and services, focusing on finalizing the accounts payable functions. We expect the accounts payable functions to reach the level in the upcoming months which will enable us to start the projects to update the functionality to our existing customers. In the future, development activities will focus on developing purchasing and travel management. In the development of e-invoice services, the focus is on developing automated processes. We have restructured our organization to ensure faster growth in transaction volumes and expand the service-based business according to our strategy. We aim to speed up the adoption of our services and products, accelerate the entry of SaaS and e-invoice deals into production through product and project enhancements as well as enhance our operational efficiency. Our aim is to strengthen the growth globally and maintain our product leadership in Purchase- to-Pay processes as well as improve our profit-making ability. The renewal of the company's product and service portfolio and transition of the business model will continue. The product and service offering has been strengthened through strategic partnerships. A partnership with MasterCard was announced in September, connecting MasterCard, one of the world's largest payment networks, to Basware Commerce Network to launch a revolutionary electronic payment solution. In September, we also announced collaboration with the supply management and spend analysis provider BravoSolution in source-to-pay (S2P) solutions. FUTURE OUTLOOK Operating environment and market outlook Consolidation is expected to continue in the business environment, with the role of services growing in companies' portfolios. Basware continues the survey of acquisition targets especially in the e-Invoicing market in Europe and in the U.S. according to its strategy. By the end of 2015, Basware aims to become the largest business commerce network for buyers and suppliers. The penetration rate of e-Invoicing is low, between 5-30 percent depending on the country, and it has been estimated to grow strongly in the upcoming years. Outlook 2013 The acquisition of the e-invoicing business of the Belgian company Certipost was confirmed on January 2, 2013. The company estimated the operating profit of the acquired business after non-recurring expenses of approximately EUR 1.5 million recognized in the first quarter to be approximately EUR 0.5 million negative for 2013, while the earlier estimate was approximately EUR 1.6 million negative. According to the previous estimate for 2013, the operating profit was expected to be slightly positive. The operating profit includes group services charged to the parent company, such as expenses related to R&D, customer support, and administration. The development of Alusta software and services will continue strongly also this year in order to maintain product leadership in Purchase-to-Pay processes. The emphasis of R&D expenses will shift gradually from Alusta product development towards the product development of Automation Services as of 2014. The development of the net sales of Professional Services is supported by fixed- price delivery packages as well as consultation fees based on individual transactions in addition to hourly charged project work. In order to support license and SaaS business sales, we have made significant changes in the sales management and sales organization as well as further specified the sales models for new customer acquisition as well as customer account management methods. The efficiency drive launched by the company in June to improve profit-making ability has proceeded as targeted. The originally targeted annual cost-savings of EUR 3 million compared to the June level has been revised to EUR 4 million by the end of 2013. Basware expects its net sales for 2013 to grow and operating profit (EBIT) for 2013 to be positive. Espoo, Finland, October 10, 2013 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 [HUG#1734590]