BASWARE'S YEAR 2014/media/Files/B/... · with financing services on the Basware Commerce Network. The first solution within the portfolio is Basware Pay, a new type of a global e-payment

BASWARE'SYEAR2014LETTINGTHECOMMERCEFLOWAttheendof2014,morethan78millionannualtransactions-e-invoices,purchaseordersandotherelectronicdocuments-wereprocessedviaBaswareCommerceNetwork,resultingto30percentgrowthcomparedto2013.BaswareCommerceNetwork,thelargestopenbusinessnetworkintheworld,connectsoveronemillioncompaniesacross100countriesandenableseasycollaborationbetweenbuyersandsuppliersofallsizes.Theshareofrecurringrevenuegrewthroughouttheyearandespeciallyinternationalbusinessoperationsdevelopedpositively.

Q1Duringthefirstquarter,theBaswareCommerceNetworkreachedamilestoneofconnectingonemillioncustomersinover100countries.Baswarefocusesonempoweringcompaniestounlockvalueacrosstheirfinancialoperationsbysimplifyingandstreamliningkeyfinancialprocesses.

Q2InMay2014,Baswarewasrecognisedasaleaderamongprocure-to-pay(P2P)automationplatformsinthe“TheForresterWave™:eProcurementQ22014”reportbyForresterResearchInc.Industryreseachreportshighlightedthegrowthpotentialine-invoicingadoptionasthebenefitsofe-invoicingarerealisedmorewidelywiththesupportofregulatorystandardsandasupportiveinfrastructure.

Q3InSeptember2014Baswarelaunchedanewbusinessinfinancingservicestodelivernewandinnovativeservicesforcompaniesofallsizes,combininginvoiceautomationwithfinancingservicesontheBaswareCommerceNetwork.ThefirstsolutionwithintheportfolioisBaswarePay,anewtypeofaglobale-paymentsolutionofferedincollaborationwithMasterCard.

Q4Duringthefourthquarter,21.8milliontransactionswereprocessedviatheBaswareCommerceNetwork,resultingto25.6percentgrowthyear-on-year.Theleveloforganicgrowthintransactionshasbeengoodthroughouttheyear.

BaswareAnnualReport2014-2

EURThousand 2014 2013Netsales 127,674 123,349EBITDA 11,354 10,383Operatingprofit 4,325 3,331%ofnetsales 3.4 2.7Profitbeforetaxes 4,328 3,284Profitfortheperiod 2,959 2,605

Returnonequity,% 2.5 2.6Returnoninvestment,% 4.4 3.9Cashandcashequivalents 28,954 13,218Gearing,% -38.6 -4.7Equityratio,% 82.7 77.1

Earningspershare Undiluted,EUR 0.22 0.20Diluted,EUR 0.22 0.20Equitypershare,EUR 9.88 7.62

Netsalesandoperatingprofit2010-2014

2010

103.1

2011

107.8

2012

113.7

2013

123.3

2014

127.6

13.5 12.3 8.3 3.3 4.3

Netsales,mEUR

Operatingprofit,mEUR


Netsalesbybusinessoperations2014

SolutionServices94.4

NetworkServices33.2

TransactionsinBaswareCommerceNetwork2011-2014,millions

2011

20.8

2012

34

2013

60

2014

78

Q4

Q3

Q2

Q1

SoftwareasaService(SaaS)–Licensesalesrelation2010-2014


BASWARECOMMERCENETWORKUNLOCKINGVALUEINACONNECTEDBUSINESSWORLD

Whenbusinessesandpeoplearefreetoconnect,newopportunitiesemergeandvalueiscreatedforall.Baswarebringstogetherforward-thinkingcommunitiesfocusedonsharingbestpracticesandsupportstheminseizingnewopportunitiesontheworld’smostopencommercenetwork.

TheBaswareCommerceNetwork,thelargestopenbusinessnetworkintheworld,connectsoveronemillioncompaniesacross100countriesandenableseasycollaborationbetweenbuyersandsuppliersofallsizes.Throughthenetwork,leadingcompaniesaroundtheworldachievenewlevelsofspendcontrol,efficiencyandcloserrelationswiththeirsuppliers.In2014,morethan78millionannualtransactions–e-invoices,purchaseordersandotherelectronicdocuments-wereprocessedviatheBaswareCommerceNetwork.

TheBaswareCommerceNetworkconnectsoveronemillioncompaniesacross100countries

BycreatingcloserpartnershipsontheBaswareCommerceNetwork,companiescanbreakdownboundariesanddiscoverhowcommercecanflow.Theopennetworkenablesorganizationsandtheircustomers,suppliersandpartnerstofullybenefitfromtheopportunitiesofconnectedcommerce.

Throughinstantcollaboration,smarttoolsandleadingproductinnovations,theBaswareCommerceNetworkenablesglobalreachthroughasingleconnection:organizationscanshareinformationinstantlywiththeirtradingpartnersandensuretheeasyonboardingoftheirsupplierstothenetwork.

Baswareunlockingnewopportunitiesforall

In2014,morethan78millionannualtransactionswereprocessedviatheBaswareCommerceNetwork

NewFinancingServicesforoptimizingcashandworkingcapitalInSeptember2014,Baswarelaunchedanewbusiness-FinancingServices.Basware’sFinancingServicesaredesignedfordigitallyconnectedorganizationsandtheirsupplierstooptimizecashandworkingcapital,andimproveB2BrelationshipsthroughparticipationintheBaswareCommerceNetwork.Basware’sFinancingServicesdelivernewandinnovativeservicesforcompaniesofallsizes,combininginvoiceautomationwithfinancingservicesontheBaswareCommerceNetwork.ThefirstsolutionwithintheportfolioisBaswarePay,anewtypeofaglobale-paymentsolutionofferedincollaborationwithMasterCard.


CEO'SREVIEWHOWWELETTHECOMMERCEFLOW

E-invoicinghasbecomemorecommonandthevolumeofe-invoiceshasincreasedsignificantlyinEuropeaswellasgloballyduringtheyear.Theadoptionofe-invoicingandothernewsolutionsforautomatingfinancialoperationsareacceleratedbycompanies'effortstoimprovetheircashflow.Thisissupportedalsobytheregulatorystandardsaimingtoestablishauniforminfrastructurefore-commerce.

Baswareisalreadytheleaderinthee-invoicingandpurchase-to-paysolutions,andFinancingServicesprovidenewgrowthopportunities.Thereisahighlevelofinterestinonline,real-timepaymentsolutionsamongourexistingandnewcustomers.OurnewandinnovativefinancingsolutionsmakeB-to-Bcommercemoreagileandenablefasterpayments.

Basware’srenewedcustomerpromise”Unlockingvalueinaconnectedbusinessworld”reflectsthecompany’sinternationalizationandtransformationtobethegloballeaderine-invoicingandpurchase-to-paysolutions.Weempowercompaniestounlockvalueacrosstheirfinancialoperationsintheworldofconnectedcommerce.OurBaswareCommerceNetworkenableseasycollaborationandtradingalreadyforoveronemillioncompaniesacrossover100countries.WithBaswaresolutions,ourcustomerssimplifyandstreamlinekeyfinancialandpurchasingprocesses.Thesolutionsenablethemtobenefitfromsignificantcostsavingswhiletheystrengthencontrol,optimizecashflowsandgainproactiveinsightsintotheirfinancialperformance.

OurnewandinnovativefinancingsolutionsmakeB-to-Bcommercemoreagileandenablefasterpayments

NetworkServicesbusinessgrewwellandsoftwaresalesdevelopedfavorablyin2014.NetsalesforthereviewperiodamountedtoEUR127674thousand,growthof3.5percent,andoperatingprofittoEUR4325thousand.Theshareofrecurringrevenueofnetsalescontinuedtogrow,accountingfor67.0percent.Theshareofinternationaloperationsgrewandaccountedfor61.6%ofnetsales.

ThegrowthinNetworkServicescontinuedthroughout2014andamountedto19.4percent.Over78milliontransactionswereprocessedviaBaswareCommerceNetworkduring2014,up30percentcomparedtothepreviousyear,betweenoveramillionbuyersandsuppliersinoverahundredcountries.Organicgrowthintransactionswasatagoodlevelduringeveryquarteroftheyear.

Decreaseinsoftwaresalescametoahaltduringthelatterhalfoftheyear.ThenetsalesoftheSolutionServicesbusiness,whichaccountsforover70percentofthecompany'stotalnetsales,amountedtoEUR25489thousandforthefourthquarter,adecreaseof0.6percentyear-on-year.

Theshareofinternationaloperationsgrewandaccountedfor61.6%ofnetsales

AchievingstronggrowthintheBaswareCommerceNetworkcontinuestobeourmainobjective.Inaccordancewithourstrategy,wearepursuinggrowthinthenetworkbothorganicallyandthroughmergersandacquisitions.WewillalsoinvestingrowthinthesalesofAlustasoftwareandservices,aswellasothersales.DevelopmentoftheFinancingServicesbusinessandfinancingservicesandsolutionscommencedin2014andwillcontinueactivelythisyear.

Basware-LetCommerceFlow


SOLUTIONS&SERVICESALEADINGPORTFOLIOOFNETWORKEDPURCHASE-TO-PAYSOLUTIONSSPANNINGE-INVOICINGTOINNOVATIVENEWFINANCINGSERVICES

Asthegloballeaderinprovidingpurchase-to-payande-invoicingsolutionsintheworldofcommerce,Baswareempowerscompaniestounlockvalueacrosstheirfinancialoperations.

WithBasware,smallbusinessestocorporategiantsacrossallindustriescansimplifyandstreamlinekeyfinancialprocessestostrengthencontrol,reducecosts,gainproactiveinsightsintocashflowsandimprovebuyer-supplierrelationships.

Baswarehasaleadingportfolioofnetworkedpurchase-to-paysolutionsspanninge-invoicingtoinnovativenewfinancingservices.TheusersofBaswaresolutionsandservicesandtheBaswareCommerceNetworkareabletooptimizetheirworkingcapitalthroughefficientpaymentandfinancingmethodsaswellasstrengthentheirbusinessrelationships.Today,theBaswareCommerceNetworkconnectsoveronemillioncompaniesacross100countriesandenableseasycollaborationbetweenbuyersandsuppliersofallsizes.

BaswarePay

Basware’ssolutionsfor:

Purchase-to-payImplementpurchase-to-paysothatfinanceandprocurementcanworkhandinhand.

Analyticsforpurchase-to-payGainimmediate,vividandactionableinsightintoyourfinancialdata.

AccountsPayableAutomationRemovepaperandautomateyourinvoicehandlingandpaymentprocesses.

Receivinge-invoicesStartreceiving100%e-invoicesfromyoursuppliers.

Sendinge-invoicesStartsending100%e-invoicestoyourcustomers.

e-ProcurementManageyourspendwithpeople-friendlyprocurementsolutions.

TravelandExpenseControlyourtravel&employeeexpenseprocesses.


FinancingServicesOptimizeworkingcapitalandimproveB2Brelationships.

Unlockingnewopportunitiesforall


BASWAREANSGLOBALNETWORKOFPROFESSIONALS

In2014,Baswareestablishedateamtofocusonthecompany’snewbusiness,FinancingServices.Baswarealsoimproveditse-learningcapabilities,continuedtodeveloptrainingprogramsandexpandeditsglobalnetworkofprofessionals.AnewpersonnelsurveywaslaunchedtoevaluateBasware’scapabilitiesandstrengthsbothasacompanyandaworkcommunity.

FinancingServicesteamBaswareannouncedthelaunchofFinancingServicesinSeptember2014.InNovember,AdvanderPoelwasappointedSeniorVicePresident,FinancingServices,andamemberoftheExecutiveTeam.VanderPoelandhisteamarebuildingandleadingthenewFinancingServicesbusinessandthefinancingservicesportfolio.

ContinuouslearninganddevelopmentIn2014,Baswarecontinuedtheleadershipprogram‘OptimizeyourMatrix’thatwaslaunchedin2013.Theprogramaimstodevelopanewmindsetandskillstodealwiththerealitiesandchallengesrelatedtoworkinginamatrixorganization.In2014,thetrainingwasextendedtoawidergroupofmanagers(workinginMatrix)duetotheexcellentfeedbackitreceived.Theprogramwasorganizedthreetimesin2014andtodateover140Baswareleadersandmanagershaveattendedthetraining.

Inearly2014,BaswarestartedplanningtheimplementationoftheLearningManagementSystem(LMS)tosupportthecompanyinmanagingtrainingandeducationalrecords.Theaimistoimproveonlineandblendedlearningcapabilitiesaswellastoenablebetterdocumentation,tracking,reportingaswellasdeliveringtrainingprogramswithfeaturesforonlinecollaboration.

TheimplementationbeganwithapilotprojectfortheSalesunit,whichwascompletedsuccessfullyduringthesecondhalfoftheyear.Thesalespersonnelnowhaveagreatervarietyofonlinetrainingcoursesenablinglearningonthemove.TheyalsonowhavesettrainingtargetsthatarefollowedontheBaswareKnowledgeNetwork,Basware’sLMS.

TheNetworkServicesunitalsostartedusingtheBaswareKnowledgeNetworkduringthesecondhalfoftheyear.Thesystemwillbelaunchedfortheentireorganizationinearly2015.ThenetworkwillprovideacentralizedlocationforallofBasware’strainingandmaterials.

Atrainingprogramthataimsatdevelopingcommunicationandpresentationskillsbeganin2014withthePresalesteam;moreteamswillbetrainedin2015.ThetargetgroupisBaswareglobally,inparticularcustomer-facingteams.

BaswareAcademyprogramscontinuedtoprovidenewsalesandconsultingpersonnelwiththerequiredknowledgeofBaswaresolutionsandservices.Thecontentisdevelopedinlinewithproductupdatesandtomeetcustomerexpectations.In2014,BaswarecarriedoutthreeSalesAcademyandfourConsultingAcademyprograms.

‘GearupfortheFuture’–thenewpersonnelsurveyInOctober,thecompanylaunchedanewpersonnelsurveyfocusingonBasware’scapabilitiesandstrengthsasacompanyandaworkcommunity.ThesurveyaimstohelpBaswaretoidentifyareasfordevelopmentintheorganization'swayofworkingthathaveadirectlinktobusinessperformanceandstrategicgoals.ThesurveyreplacedtheEmployeeSatisfactionSurveyin2014.

Thesurveyresultswillbeanalyzedandpresentedtothepersonnelinearly2015.ActionplansforimprovingselectedareaswillbecreatedtogetherwithBasware’spersonnel.

CallfortechnicaltalentDuringthesecondhalfoftheyear,Baswarelaunchedaglobalsocialmedia-drivenrecruitmentcampaigntargetedattechnicalexperts.Theaimistofindnewwaysofreachingtalentandfillvariousopentechnicalpositionsatthecompany.Aspartofthecampaign,BaswareattendedSlush,amajorstartupandtechnicalevent,asapartnerfocusingonemployerbrandingandrecruiting.

BaswarepersonnelinnumbersAttheendof2014,therewere1,493employeesinBasware(+1.4%),ofwhom68percentworkedoutsideofFinlandand32percentinFinland.Approximately11.7percentofthepersonnelworkinsalesandmarketing;59.7percentinconsultingandservices;22.2percentinproductdevelopment;and6.4percentinadministration.

Theaverageagewas34.9years(34.6years)andtheaverageyearsinBaswareservicewasfour.Femaleemployees


accountedfor24.8percent(23.3)andmale75.2percent(76.7).

ThelargestgrowthinpersonnelwasinRomaniawhereBaswarestrengtheneditsNetworkServicesorganization.Thenumberofpersonnelgrewfrom42to91duringtheyear.

SalariesaccountedforEUR59.6millionin2014(EUR61.6million).

Keyfocusareasin2015In2015,Baswarewilldeveloprecruitmentprocessesgloballywithaspecialfocusonrecruitingtalentinitskeymarkets.Socialmediawillbeutilizedmoreeffectivelytostrengthentheemployerimageandextendthetalentnetwork.

The‘GearupfortheFuture’surveyresultswillbeavailableinearly2015,andwillprovideaframeworkfordevelopingtheorganization’swayofworking.Baswarepersonnelwillbeinvolvedinanalyzingtheresultsandplanningactions.Basware’svaluesandethicswillalsobediscussedinconnectionwiththeresults.

WiththeBaswareKnowledgeNetwork,thecompanywillfurtherimproveitse-learningcapabilitiestobettersupportcontinuouslearninganddevelopmentinallitsunitsglobally.


Geographicaldivisionofpersonnel

Finland477

Scandinavia128

Europe321

India496

Other71

Divisionbyjobfunctions

SalesandMarketing174

Consultingandservices891

Productdevelopment332

Admin96


BASWARECORPORATERESPONSIBILITYSUSTAINABLEB2BCOMMERCE

Baswareisthegloballeaderinprovidingpurchase-to-pay,e-invoicingandfinancingsolutionsintheworldofcommerce.Weempowercompaniestounlockvalueacrosstheirfinancialoperationsbysimplifyingandstreamliningkeyfinancialprocesses.OurBaswareCommerceNetwork,thelargestopenbusinessnetworkintheworld,connectsonemillioncompaniesacross100countriesandenableseasycollaborationbetweenbuyersandsuppliersofallsizes.Throughthisnetwork,leadingcompaniesaroundtheworldachievenewlevelsofspendcontrolandefficiencyaswellascloserrelationswiththeirsuppliers.

Baswarecorporateresponsibilityisintegratedintoitsbusinessoperationswhileitscorporatevaluesarethetoolsforeverydaysustainableworkwithinthecompany.Baswareiscommittedtoresponsibleoperationsinallofitseconomic,socialandenvironmentalactivities.

AsalistedcompanyontheNasdaqHelsinki,Basware,withoverEUR0.5billionmarketcapital,iscommittedtofollowingtherulesandregulationssetbytheauthoritiesaswellasthelawsandregulationsineachcountrywhereitoperates.Greatemphasisisplacedonthecompany’sbrandandimage,openandtransparentcommunicationstodifferentstakeholders,andinternalcompanyvalues.

EnablingsustainableB2BcommerceB2Bcommercegeneratesahugeamountofpaper-manymid-tolarge-sizedcompanies,forexample,receivehundredsofthousandsofinvoiceswithrelateddocumentationannually.Agrowingnumberofcompaniesareconcernedaboutcorporatecompliancewithgreeninitiatives,andatthesametimearelookingtostreamlineprocessesandgainbusinessbenefits.Baswareiscommittedtohelpingthesecompanieseliminatepaperbyofferingautomatedpurchase-to-pay,e-invoicingandfinancingsolutionsthatwillhelpthemsignificantlyreducetheircarbonfootprint.

Baswaresolutionssignificantlyreducetheamountofpaper-basedinvoicesexchangedwithtradingpartners;theyalsoallowbuyerstoeasilytransactcollaborativelybysendinge-invoices,ordersandsharingcatalogswithmillionsofsuppliersacrosstheglobethroughtheBaswareCommerceNetwork.Byimplementinge-invoicing,companiesnolongerneedtoprint,post,process,manuallykey-in,storeanddisposeofpaperinvoices,thushelpingthemachievegreentargets.WithBaswareservices,companiescanalsoencourageenvironmentallyfriendlypracticesamongtheirtradingpartners.

In2014,BaswareintroduceditsnewbusinessFinancingServices.Baswareisdevelopingnewsolutionstotackletheexistingcultureoflatepaymentsandtheirimpactontheeconomy:bothlargeandsmallcompaniessufferfromlatepaymentswhichcancausehugeproblemsforeconomieseverywhere.BaswareandMasterCard’s2014researchinto‘CreatingPaymentEnergy’identifiedalatepaymentculture,poorcashflow,weakprocessesandpaymentbottlenecksasmajorfactorsinpreventingbusinessesfrombothpayingandgettingpaidinthemostefficientway.Basware’se-paymentsolutionspeedsupslowinvoiceprocessingandinvoicepaymenttasks,ensuresthatsuppliersgetpaidquicklyandextendstermsforbuyers.Thishelpskeepmoneymovingintheeconomyandmitigatesarepeatofpreviousfinancialcrises.

Baswarestrivesforcontinualimprovement.Usinganalyticstomeasurekeymetricsincompanies’greeninitiativesprovidesinsightsintowaystheycanelevateprocessestoworksmarter,achievegreatergreenbenefitsandtakeperformancetonewlevels.

Attheendoftheyear,therewereover78millionannualtransactionsintheBaswareCommerceNetwork,whichrepresentsa30%growthin2014.


EnergyefficiencywithintheBaswarecommunityTheBaswareglobalworkcommunityiscommittedtoenergysavingsinalltheirdailyoperations.Measurestoreducethecarbonfootprintincludeavoidingunnecessarybusinesstravelandtakingfulladvantageofonlineofficetoolssuchastelephoneandvideoconferencing.OnlinecommunicationtoolsenableBasware’sglobalteamstoworkvirtuallyacrosstimeandgeographicalboundaries.

ThedatacentersusedbyBaswarearemonitoredtoverifytheircommitmenttoenergyefficiencyintermsofcooling,heatinganduseofsmarttechnologysolutions.Baswareiscommittedtodoingbusinesswithpartnerswhorepresenttheverybestknowhow,expertiseandcommitmenttoenvironmentalissues.

ThecompanyhastheEnvironmentalManagementSystemISO14001inplaceinFinlandandthesamestandardisappliedgloballyinallBaswareoffices.ThisEMShasbeenauditedbyBureauVeritas.

Adigital,connectedeconomyandpaperlessofficeshelpBaswareanditscustomers,partnersandpersonneltoachievemoreenergyefficientbusinessoutcomes.

BuildingrelationshipswithcustomersTheBaswareExperienceuserforumeventsbringtogethercustomers,Baswarespecialistsandindustryluminariesfromacrosstheglobeforhighlyfocused,knowledge-sharingsessionsthatexaminethestrategiesthathavebeenproventoacceleratebusinessresults.

TheBaswareExperienceevent,oneofthekeyelementsinthecompany’scustomercommunicationsprogram,supportsthecompany´sstrategicgoaltocreatecustomersforlife.Thiseventisanexcellentforumforsharingthelatestinnovationsandfutureplansaswellaspresentingitscustomerswithauniqueopportunitytonetworkandexchangeinsightswitheachother.

In2014,Baswareeventsbroughttogethersome1,000customersfrom11countries.

Thecustomerevents,whichBaswarehasbeenorganizingforover15years,havebeenhighlysuccessfulandtheexcellentfeedbackfromourcustomersandcooperationpartnershasfurtherstrengthenedthedevelopmentworkintheBaswareCommercenetworkanditsserviceofferings.


TheArtofBasware–buildingaglobalnetworkofyoungartistsTheArtofBaswareisanannualinternationalartcompetitionforartistsunder30yearsofage.In2014,thecompetitioncelebratedits15thanniversaryandbecameglobal.TheArtofBaswarewasbornfromourwilltosupportthecareeranddevelopmentofyoungartists.Webelievethereisadeepconnectionbetweeninnovation,determination,creativityandcommerce.

TheArtofBasware-15yearsofcelebratinginnovation&creativity

AsBaswarehasgrownintoatrulyglobalorganizationthecompanywantedtogrowthiscompetitiontogiveabiggerpooloftalentthechancetoshowtheworldtheirpotential.Thisiswhythetheme'Growth'wasselectedfor2014.

Lastyear,nearly200artistswithover450piecesofartattendedthisleadinginitiativethatsupportssocialdevelopmentandengagement.The2014winnerwasToniR.Toivonen,withhispiece“Jonkinonhajottava–somethingmustbreak”.BaswarebuysthewinningartpieceandaselectionofotherentriesaftereverycompetitionandtheBasware’sartcollectionnowconsistsofover90piecesofart.

InterviewwithToniR.Toivonen,thewinnerof2014Tocelebratethecompetition’s15thanniversary,BaswarealsocooperatedwithArtHelsinkiattheHabitareexhibitioninSeptember,whereTheArtofBaswarejubileeexhibitionwasdisplayed.

During2015,Baswarecontinuestogrowthecompetitionglobally.ThethemeforTheArtofBasware2015is‘Achievement’.

In2014,Baswarepaidsalariesof59.6millioneuros,taxes0.9millioneurosanddividends3.0millioneuros.

AwardsandrecognitionforBaswareInFebruary2014,GlobalFinancenamedBaswarethebestproviderofTreasuryManagementSystems&ServicesforAccountsPayableServices.ThismarksthefifthyearthatBaswarereceivedanexclusivetreasurymanagementawardfromthemagazine.Baswarereceivedthisrecognitionforitsinnovativeleadershipincloud-basedaccountspayablesolutionsandservices,whichenablecompaniestoachievegreatervisibilityandcontrolofcash,spendandworkingcapitalaswellassignificantefficienciesandcostsavings.

InMay2014,Baswarewasrecognizedasaleaderinthe“TheForresterWave™:eProcurementQ22014”reportbyForresterResearchInc.,asresultofacomprehensiveevaluationofprocure-to-pay(P2P)automationplatforms.Baswarewasrecognizedforexcellingininvoiceautomationanditscapabilitiesforcapturing,validatingandprocessingalltypesofinvoices.Asotherstrengths,theanalystscitedBasware’sinnovativeanalyticsandalargeactivesuppliercommunity–bothdirectlyonitsBaswareCommerceNetworkandviainteroperabilitywithover170othernetworks,makingitoneofthelargestbusinessnetworksintermsoftransactionvolumeandvaluepassingthroughit.

InNovember2014,BaswarereceivedaGreenSupplyChainawardfromtheSupply&DemandChainExecutivemagazineforthefifthconsecutiveyear.Baswarereceivedtheawardforhelpingcompaniessignificantlyreducevolumesofpaperinvoicesthroughe-invoicing,automatingfinancialprocessesandconductingbusinessovertheBaswareCommerceNetwork,thelargestopenB2Bcommercenetwork.Inadditiontoenablingsustainability,Basware’ssolutionsandserviceshelpcompaniesgaincriticalvisibilityandcontroloverfinances,reducecostsandimprovetheirworkingcapital.

InNovember2014,BaswarewasincludedintheTruffle100,beingranked57thamongEurope’stop100softwarecompanies.Basware’srankingimprovedtwospotsfrom2013.


BOARDOFDIRECTORS

HannuVaajoensuuMemberoftheBoardsince1990,ChairmanoftheBoardsince2005Born1961MSc(Econ)

PenttiHeikkinenMemberoftheBoardsince2009Born1960MSc(Econ),StanfordGraduateSchoolofBusiness(StanfordExecutiveProgram2001)

IlkkaSihvoViceChairmanoftheBoardsince2012Born1962MSc(Econ),MSc(Tech)

TuijaSoanjärviMemberoftheBoardsince2013Born1955MSc(Econ)

AnssiVanjokiMemberoftheBoardsince2012Born1956MSc(Econ)


EXECUTIVETEAM

EsaTihiläCEOBorn1964eMBA

AtBaswaresince2004,memberoftheExecutiveTeamsince2005

NiclasRosenlewCFO,started8Dec,2014Born1972MSc(Finance)


KariAarvalaSVP,GlobalSalesBorn1965MSc(Econ)


MariHeusalaSVP,HR&DevelopmentBorn1966MSc(Econ)


SteveMuddimanChiefMarketingOfficerBorn1961SouthamptonSolentUniversity(Communications)


IlariNurmiSVP,Products&ServicesBorn1975MSc(Tech)



RikuRoosSVP,NetworkServicesBorn1960MSc(Tech)


MattiRusiSVP,SolutionServicesBorn1963MBA

AtBaswaresince2010andyears1997-2008,memberoftheExecutiveTeamsince2010

AdvanderPoelSVP,FinancialServicesBorn1971MBA


MikaHarjuahoCFO,until10Nov,2014Born1966MSc(Econ)

MemberoftheExecutiveTeam2007-2014


BASWARECORPORATIONCORPORATEGOVERNANCESTATEMENT

ThisCorporateGovernanceStatementhasbeencomposedinaccordancewithRecommendation54oftheCorporateGovernanceCodeandChapter7,Section7oftheFinnishSecuritiesMarketAct.TheCorporateGovernanceStatementisissuedseparatelyfromthecompany'sannualreport.

GeneralprinciplesBaswareCorporationisapubliclimitedcompanyregisteredinFinlandanditsheadofficeislocatedinEspoo,Finland.BaswareGroup(Basware)iscomprisedoftheparentcompanyBaswareCorporation,itsoneFinnishsubsidiaryand12foreignsubsidiaries.

Decision-makingandgovernanceatBaswarecomplywiththecompany’sArticlesofAssociation,theFinnishCompaniesAct,andotherapplicablelegislation.Inaddition,thecompanycomplieswiththerecommendationsofNASDAQOMXHelsinkiLtdoncorporategovernancewiththeexceptionsmentionedintheseprinciples,aswellasNASDAQOMXHelsinkiLtd’sGuidelinesforInsiders.Thesubsidiariescomplywithlocallegislation.

BaswarecomplieswiththeFinnishCorporateGovernanceCodepublishedbytheSecuritiesMarketAssociationwiththefollowingexception:

Basware'sBoardofDirectorsdoesnothaveseparatecommitteesastheextentofthecompany'soperationsandthesizeoftheBoardofDirectorsdonotrequirematterstobepreparedbyabodysmallerthantheentireBoardofDirectors.

SecuritiesMarketAssociationisacooperationorganestablishedbytheConfederationofFinnishIndustriesEK,NASDAQOMXHelsinkiLtdandFinlandChamberofCommerce.TheCodeispubliclyavailableatwww.cgfinland.fi/en/

TasksandresponsibilitiesofbodiesTheGeneralMeetingofShareholders,BoardofDirectorsandCEOareinchargeofthemanagementofBaswareGroup,andtheirtasksaredeterminedasspecifiedbytheFinnishCompaniesAct.TheCEOisinchargeofGroup-leveloperationalactivity,assistedbythegroup'sExecutiveTeam.

AnnualGeneralMeetingTheAnnualGeneralMeetingisthehighestdecision-makingbodyofthecompany.TheAnnualGeneralMeetingisarrangedonceayearonthedatedeterminedbytheBoardofDirectorswithinsixmonthsoftheendofthefinancialperiod.ExtraordinaryGeneralMeetingscanbearrangedduringtheyear,ifnecessary.InaccordancewiththeArticlesofAssociation,theAnnualGeneralMeetingisheldinthecompany'sregisteredofficeEspoo,HelsinkiorVantaa.AnoticetoconvenetheMeetingofshareholdersneedstobepublished3monthsattheearliestand3weeksatthelatestonthecompany'swebsite,andatleast9daysbeforetherecorddateofAnnualGeneralMeeting.Accordingly,iftheBoardofDirectorssodecides,thecompanymaypublishtheinformationonthetimeandlocationoftheMeeting,includingthecompany'swebsiteinone,selectednewspaper.

TheAnnualGeneralMeetingeachyearresolvesthefollowingmatters:

approvaloftheincomestatementandbalancesheet

measuresoccasionedbytheprofitorlossshownintheapprovedbalancesheet

dischargingmembersoftheBoardofDirectorsandtheCEOfromliability

numberofBoardmembersandtheirappointment

electionoftheauditor

remunerationoftheBoardofDirectorsandauditors

othermattersmentionedinthesummonstothemeeting

BoardofDirectorsTheBoardofDirectorsofBaswareCorporationisresponsibleforthecompany’smanagementandtheappropriate


arrangementofitsoperations.TheBoardsupervisesthecompany’soperationsandmanagementanddecidesonsignificantmattersconcerningthecompanystrategy,organization,financingandinvestments.TheessentialdutiesandresponsibilitiesoftheBoardaredefinedprimarilybytheArticlesofAssociationandtheFinnishCompaniesAct.TheBoardannuallyratifiesaworkingorderthatspecifiesthemeetingprocedureoftheBoardofDirectorsanditstasks.

In2014,Basware'sBoardofDirectorshadfivemembers:HannuVaajoensuu(Chair),PenttiHeikkinen,IlkkaSihvo(ViceChair),TuijaSoanjärvi,andAnssiVanjoki.TheBoardofDirectorsconvened15times(sincetheAnnualGeneralMeetingheldonFebruary14,2014)andtheattendanceratewas97.4%.

Inaccordancewiththeworkingorder,thetasksoftheBoardofDirectorsareto:

1.TheappointingandremovaloftheChairmanoftheBoardofDirectorsandtheCEO.2.Confirmingthecompany’sstrategyandgoalsandmonitoringtheimplementationthereofand,whereappropriate,initiatingnecessarymeasurestocorrectanydeviations.3.Confirmingthecompany´smanagementsystemasperproposalbytheCEO,includingthecorporatestructure,organizationandappointmentoftheexecutiveteam.

4.Confirmingannuallythecompany’soperationplanandthebudget,andmonitoringtheirimplementations.

5.Addressinganddecidingupontheinterimreports,theannualaccountsandannualreportsandtheirpublishing.

6.Decisionsregardingprofitguidanceandpossiblechangestherein,andpublishingofsuchinformation.

7.Definingthefinancinganddividendpolicy,andsubmittingaproposaltotheAnnualGeneralmeetingaboutthedistributionofdividend.

8.Confirmingthecompany´sinternalcontrolandriskmanagementpractices,andmonitoringtheirimplementation.

9.Confirmingthecompany´svaluesandethicalprinciplesandmonitoringtheirimplementation.

10.Decidingaboutsellingortransferringcompanyassets,acquisitionsandothersignificantchangesintheCompany´sbusiness.

11.Decidingonmajorsingleinvestmentsandcommitments,anddecidingonallleasingagreementsofcommercialproperty.

12.Decidingonallagreementsandbusiness(includingselling,leasing,transferringorpledgingoffixedandfinancialassetsorintellectualpropertyrights)withthecompany´smanagementteamortheircloseassociates,includingcompaniesthattheyownorwheretheyhavecontrol.

13.Appointingandreleasingthecompany´stopmanagementfromtheirduties.ThetopmanagementincludestheCEO,DeputyfortheCEOanddirectsubordinatesoftheCEO.

14.Decidingonthecompany´stopmanagement´stermsofemployment,goalsandremuneration15.CEO´ssuccessionplanning

16.Confirmingthecompany´sincentivesystemandpolicy,includingthegeneralprinciplesoftheannualbonusprogramandtheremunerationframe.

17.Decidingonshareoptionsorotherlong-termincentivesystemswithintheauthorizationgivenbytheAnnualGeneralMeeting.

18.Redemptionofcompanyshares,grantingofwarrants,convertiblebondsorwarrantbondsaspertheauthorizationgivenbytheAnnualGeneralMeeting.


19.Decidingonestablishingandclosingaffiliates,branchofficesandrepresentativeoffices.

20.Developingthecompany´sCorporateGovernanceprocedures.

21.Developingandself-evaluatingtheactivitiesoftheBoardofDirectors.

22.EvaluatingtheCEO´sworkandprovidingfeedback.

23.ConveningtheAnnualGeneralMeeting.

InaccordancewiththeArticlesofAssociation,theBaswareBoardofDirectorshasaminimumoffourandamaximumofeightregularmembers.TheBoardmembersareelectedbytheAnnualGeneralMeetingforonetermofofficeatatime.ThetermofofficebeginsattheendoftheGeneralMeetingthatelectedtheBoardandexpiresattheendofthefirstAnnualGeneralMeetingofShareholdersfollowingtheelection.TheArticlesofAssociationplacenorestrictionsonthepoweroftheGeneralMeetingtoelectmembersfortheBoardofDirectors.TheBoardofDirectorselectsaChairandaViceChairfromamongitsmembers,andtheBoardofDirectorsisdeemedtohaveaquorumpresentwhenhalfofitsmembersarepresent.

Inadditiontomatterstoberesolved,theBoardofDirectorsisgivenreal-timeinformationontheoperation,financialstandingandrisksofthegroupinthemeetings.TheBoardofDirectorsconvenesoncemonthlyaccordingtoanagreedschedule,inadditiontowhichtheBoardofDirectorsconveneswhennecessary.Minutesarekeptforallmeetings,andthesecretaryofthemeetingsistheGroup’sDirector,LegalandAdministration.

BoardmembersThemembersoftheBoardofDirectorsHannuVaajoensuu(Chairman),PenttiHeikkinen,IlkkaSihvo(ViceChairman),TuijaSoanjärviandAnssiVanjokiareintroducedinthesection:BoardofDirectorsandExecutiveTeam.

TheBoardofDirectorsassessestheindependenceoftheboardmembersandreportswhoareindependentofthecompanyandwhoareindependentofitssignificantshareholders.IlkkaSihvoandHannuVaajoensuuaredependentofthecompany’ssignificantshareholders.OthermembersoftheBoardofDirectorsareindependentofthecompany.

CEOTheBoardofDirectorsappointstheCEO.TheCEOisinchargeofthemanagementofthecompany'sbusinessoperationsandgovernanceinaccordancewiththeArticlesofAssociation,theFinnishCompaniesActandtheinstructionsgivenbytheBoard.EsaTihilähasactedastheCEOofthecompanyfromOctober17,2011;Tihiläisintroducedinthesection:BoardofDirectorsandExecutiveTeam.

BaswareExecutiveTeam,BETTheGroup'sExecutiveTeamisappointedbyBasware'sBoardofDirectors.TheGroup'sExecutiveTeamassiststheCEOintheoperativemanagementoftheCompany,preparesmattershandledbytheBoardandtheCEOaswellasplansandmonitorstheoperationsofthebusinessunits.TheExecutiveTeamconvenesonceamonth.TheCEOactsaschairmanoftheExecutiveTeam.

AsofDecember8,2014,membersoftheBaswareExecutiveTeamareEsaTihilä,CEO;NiclasRosenlew,CFO;KariAarvala,SeniorVicePresident,GlobalSales;MariHeusala,SeniorVicePresident,HR&Development;SteveMuddiman,CMO;IlariNurmi,SeniorVicePresident,ProductManagement;RikuRoos,SeniorVicePresident,NetworkServices;MattiRusi,SeniorVicePresident,SolutionServices;andAdvanderPoel,SeniorVicePresident,FinancingServices.

MemberoftheBaswareExecutiveTeam,ChiefFinancialOfficerMikaHarjuahoresignedfromBaswareandworkedforBaswareuntilNovember10,2014.

NiclasRosenlewjoinedBaswareasthenewCFOandmemberoftheExecutiveTeamonDecember8,2014.

AdvanderPoeljoinedBaswareasSeniorVicePresident,FinancingServicesandmemberoftheExecutiveTeamonNovember24,2014.

ThemembersoftheBaswareExecutiveTeamareintroducedinthesection:BoardofDirectorsandExecutiveTeam.

Internalaudit


TheGroup'sinternalauditassessesandensuresthesufficiencyandeffectivenessoftheGroup'sinternalcontrol.Italsoassessestheefficiencyofdifferentbusinessprocesses,sufficiencyofriskmanagementandcompliancewithinternalguidelines.InternalauditservicesaremainlyacquiredfromanexternalandindependentservicesupplierselectedbytheBoardofDirectorsofBaswareCorporation,supplementedbythecompany'sin-houseresourcesasapplicable.

TheGroup'sinternalauditisindependentofBasware'sbusinessunitsandotherunits.ItreportstotheGroup'sBoardofDirectorsand,inanadministrativesense,totheCEO.TheCFOcoordinatesinternalauditactivities.Theworkdescription,authorityandresponsibilitiesoftheGroupinternalauditarespecifiedintheInternalAuditCharter.TheBoardofDirectorsapprovestheInternalAuditCharterandtheannualrisk-basedauditplan.

ExternalauditAccordingtotheArticlesofAssociation,BaswareCorporationhasaminimumofoneandamaximumoftwoauditorsappointedbytheAnnualGeneralMeeting,atleastoneofwhichisafirmaccreditedbytheCentralChamberofCommerce(AuthorizedPublicAccountants).Additionally,thecompanyhasaminimumofoneandamaximumoftwodeputyauditors.Theauditorsareelecteduntilfurthernotice.TheBoard'sproposalfortheauditorisdisclosedinthenoticeoftheGeneralMeeting.TheprimaryfunctionofauditistoverifythattheFinancialStatementsgiveaccurateandadequateinformationaboutBaswareCorporation'sresultandfinancialpositionforthefinancialperiod.Inaddition,theAuditorsreporttotheBoardofDirectorsontheongoingauditingofadministrationandoperations.In2014,Basware'sauditorwasErnst&YoungOy,AuthorizedPublicAccountants,withHeikkiIlkka,A.P.A.,astheauditorincharge.

InternalcontrolandriskmanagementsystemsassociatedwithfinancialreportingTheultimateresponsibilityforaccountingandfinancialadministrationlieswithBaswareCorporation’sBoardofDirectors.TheBoardisresponsibleforinternalcontrol,andtheCEOisresponsibleforthepracticalarrangementsandmonitoringofthecontrolsystem.ThesteeringandmonitoringofbusinessoperationsisbasedonthereportingandbusinessplanningsystemcoveringtheentireGroup.TheCEOandCFOgivebothBoardandExecutiveTeammeetingspresentationsoftheGroup'ssituationanddevelopmentbasedonmonthlyreports.

RiskmanagementandinternalauditsystemTheGroup'sriskmanagementisguidedbylegalrequirements,businessrequirementssetbytheshareholdersaswellastheexpectationsofthecustomers,personnelandotherimportantstakeholders.Thegoalofriskmanagementistosystematicallyandextensivelyidentifyandacknowledgetherisksinvolvedinthecompany'soperationsaswellastomakesurethattherisksareappropriatelymanagedwhenmakingbusinessdecisions.

Thecompany’sriskmanagementsupportstheattainmentofstrategicgoalsandensuresthecontinuityofbusinessoperations.Baswaretakesrisksthatareanaturalpartofitsstrategyandobjectives.Thecompanyisnotreadytotakerisksthatmightendangerthecontinuityofoperationsorthatareuncontrollableorthatcansignificantlyharmthecompany’soperations.

Inaccordancewiththecompany'sriskmanagementpolicy,risksaredividedintosixcategories:risksrelatedtobusinessoperations,products,personnelaswellaslegal,financialanddatasecurityrisks.Responsibilitiesofriskmanagementfollowthedistributionofliabilitythroughouttheorganizationandoperations.Eachgrouphasadesignatedpersonincharge.Intheprocessofriskmanagement,thegoalistoidentifyandevaluatetherisks,afterwhicharisk-specificplanisdrawnupandconcreteactionistaken.Suchactionsmayincludeavoidingtherisk,diminishingtheriskbydifferentmeansortransferringtheriskbyinsuranceoragreements.Thecompanyhascreatedacrisiscommunicationplanasapartofitsriskmanagementprocess.

InaccordancewithBasware'sriskmanagementprocess,theBoardofDirectorsreceivesanannualreportofthemostsignificantrisksdiscoveredduringtheassessmentofrisks.TheBoardanalysestherisksfromthepointofviewofshareholdervalue.Accordingtothereportingconformingtotheriskmanagementprocess,themostsignificantrisksin2014thathavecometotheBoard'sknowledgeareassociatedwiththecompany'sabilitytoinvestinthegrowthofitse-invoicingbusinessaswellaslaunchingofthenewfinancingservices,maintainingthecompany'scompetitivenessandensuringtheproductleadershipofAlusta-basedsolutions,ensuringtheproductionquality,continuity,andcomplianceofthegrowingservicebusiness,improvingnewcustomeracquisitionandincreasingthetransactionvolumeofthee-invoicingbusiness,developingproductsandservicesthatsupportscalablebusinessanddistributionmethodsandrelatedsupportprocesses,informationsystemsandorganization,successfulpreparationandimplementationofmergerandacquisitionprojects,strengtheningtheintellectualpropertyrightpositionaswellasthemeasurementandimpairmenttestingofsignificantbalancesheetitems.

Internalcontrolisaprocessperformedbytheorganization'sBoardofDirectors,actingmanagementandotheremployeesto


obtainareasonablecertaintyoftheattainmentofgoals.TheframeworkofinternalcontrolatBaswareisbasedontheinternationalCOSOmodelpublishedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission.

ControlenvironmentThegoalofBasware'sinternalcontrolistosupporttheimplementationoftheGroupstrategyandensurecompliancewithregulations.ThesystemisbasedonGroup-levelpolicies,guidelinesandprocessesandcontrolsofbusinessoperationsandsupportprocesses.Basware'sstrongethics,valuesandoperatingcultureformthebasisoftheinternalcontrolsystem.Theoperatingcultureisbeingbuiltbythesteeringandcontrolofthecompany'soperationsbytheBoardofDirectors,themanagementmethodsofthecompany'smanagement,thecompany'sorganizationalstructureandmanagementsystem,effectiveutilizationofglobalinformationsystemaswellastheemployees'competenceanddevelopment.ThecompanyusesaglobalHRsystem.

TheGroup'scentralizedfinancialadministrationcenterandgroupaccountingaswellascontrollingfunction,operatingundertheCFO,areresponsiblefortheoverallcontrolsystemoffinancialreporting.HarmonizedmethodsoffinancialreportingareappliedinallGroupcompanies,utilizingauniformERPsystemandharmonizedaccountscheme,andalsosoftwareforelectronicprocurementmanagement,purchaseinvoicesandtravelexpensereportsandfinancialmanagement.TheentireGroupappliestheInternationalFinancialReportingStandards(IFRS).

RiskassessmentTheriskmanagementprocessincludesanannualidentificationandanalysisofrisksrelatedtofinancialreporting.Inaddition,theaimistoanalyzeandreportallnewrisksimmediatelyaftertheyhavebeenidentified.TakingintoaccountthequalityandextentoftheGroup'sbusinessoperations,themostsignificantrisksassociatedwiththereliabilityoffinancialreportingareassociatedwithrevenuerecognition,processingofbaddebtreservation,capitalizationofproductdevelopmentexpenses,appreciationofgoodwillandintangibleassets,anddeferredtaxassets.

ControlfunctionsThecorrectnessandreliabilityoffinancialreportingareensuredthroughcompliancewiththeGrouppoliciesandguidelines.Controlsthatensurethecorrectnessoffinancialreportingincludecontrolsrelatedtoaccountingtransactions,controlsrelatedtotheselectionofandcompliancewiththeaccountingprinciples,informationsystemcontrolsandfraudcontrols.ThehighautomationrateoftheGroup'ssharedinformationsystemsandthesystems'integratedcontrolpointsfacilitateanefficientinternalcontrolprocesswithanaudittrailforfinancialreporting.TheGroup'scentralizedfinancialadministrationservicecenterandcontrollingfunctioncontinuouslydevelopglobalreliable,harmonized,scalableandefficientoperatingmethods.

TheresultofbusinessoperationsandattainmentofannualgoalsisassessedmonthlybyExecutiveTeamandBoardmeetings.MonthlymanagementandBoardreportingincludesbothactualandforecastdatacomparedtothegoalsandactualresultsofpreviousperiods.Financialreportsgeneratedforusebythebusinessmanagementmonitorcertainkeyindicatorsassociatedwiththedevelopmentofsalesandtradereceivablesonaweeklyandmonthlybasis.

Baswareaimstocomplementitsorganicgrowthwithacquisitionsinaccordancewithitsstrategy.Inmakingacquisitions,thecompanyaimstofollowduediligenceandutilizeitsinternalandexternalcompetenceintheplanningphase,takeoverphaseaswellaswhenintegratingacquiredfunctionswiththecompany'soperations.

CommunicationandinformationThepurposeofthemanagement'sreportingistoproduceaptlytimedandessentialinformationformakingdecisions.Thecontrollingfunctionprovidestheguidelinesonmonthlyreportingfortheentireorganizationandisinchargeofspecialreportinginstructionsassociatedwithbudgetingandforecasting.TheGroup'sfinancialadministrationinternallydistributesinformationonfinancialreporting-relatedprocessesandproceduresonaregularbasisandthepersonnelperformtheirinternalcontroltasksaccordingtosuchinformation.Whennecessary,financialadministrationalsoarrangestargetedtrainingfortherestoftheorganizationontheproceduresassociatedwithfinancialreportingandchangesinthem.

TheGroup'sInvestorRelationsfunctionmaintainstheguidelinesonthedisclosureoffinancialinformationincooperationwithfinancialadministrationandthelegaldepartment.

MonitoringMonitoringreferstotheprocesstoassessBasware'sinternalcontrolsystemanditsperformanceinthelongterm.Baswarealsocontinuouslymonitorsitsoperationsthroughvariousassessments,suchasinternalauditsandexternalauditsaswellassupplierauditscarriedoutbycustomers.Basware'smanagementmonitorsinternalcontrolaspartofroutinemanagementwork.Thebusinessmanagementisresponsibleforensuringthatalloperationscomplywithapplicablelawsandregulations.


TheGroup'sfinancialandcontrollerfunctionsmonitorcompliancewiththefinancialreportingprocessesandcontrol.Thefinancialandcontrollerfunctionsalsomonitorthecorrectnessofexternalandinternalfinancialreporting.TheBoardofDirectorsassessesandensurestheappropriatenessandeffectivenessofBasware'sinternalcontrolandriskmanagement.

InternalauditassiststheBoardofDirectorsinassessingandensuringtheappropriatenessandeffectivenessofBasware'sinternalcontrolandriskmanagementbyperformingregularinternalauditsintheGroup'ssupportfunctionsandlegallyindependentunitsinaccordancewithitsannualplan.Basware'sinternalcontrolisalsoassessedbythecompany'sAuditor.Theexternalauditorverifiesthecorrectnessofexternalannualfinancialreporting.Performedaspartofcontinuousauditing,processauditingtargetstypicalcontrolsthatensurethecorrectnessoffinancialreporting.ThemostsignificantobservationsandrecommendationsoftheprocessauditaccordingtotheauditingplanarereportedtotheBoardofDirectors.

Compensation

ManagementofcompensationInitsfirstorganizationalmeeting,theBoardofDirectorsdecidednottoestablishseparatecommitteesfor2014astheextentofthecompany'soperationsandthesizeoftheBoardofDirectorsdonotrequirematterstobepreparedbyabodysmallerthantheentireBoardofDirectors.Therefore,preparationofthecompensationpaidtotheBoardofDirectorshasnotbeenallocatedtoaNominationCommittee,andthepreparationofthecompensationpaidtotheCEOandothermembersofthemanagementhasnotbeenallocatedtoaCompensationCommittee.

RemunerationofBoardofDirectorsTheAnnualGeneralMeetingdecidesontheremunerationpaidtotheBoardofDirectorsandauditors.TheBoarddecidesontheservicetermsandconditionsoftheCEO,specifiedinwriting.ThecompensationprinciplesofthetopmanagementaredecidedbytheBoard.TheBoardannuallyapprovesthepersonnelincentivescheme.

TheAnnualGeneralMeetingresolvedonFebruary14,2014,tocompensatethemembersoftheBoardaccordingtothefollowing:

membersEUR27,500peryear;

ViceChairEUR32,000peryearand

ChairEUR55,000peryear.

However,theremunerationisnotpaidtothosemembersoftheBoardwhoholdafulltimepositionatBasware.Inaddition,allmembersoftheBoardarepaidameetingfeeofEUR340foreachmeeting.Theannualremunerationwillbepaidinthefollowingmanner:40percentofthegrossannualremunerationofthosemembersoftheBoardwhoseshareholdinginBaswareCorp.islessthan5,000shares,willbepaidinBaswareshares,acquiredinpublictradingonNASDAQOMXHelsinkiLtd.TheshareswillbeacquiredassoonaspossibleaftertheclosingoftheAnnualGeneralMeeting.Theownershipofthesharesreceivedisassociatedwithatwo-yearlock-upduringBoardmembership.Thelock-upendswiththeterminationofmembership.

RemunerationofCEOTheBoarddecidesontheservicetermsandconditionsoftheCEO,specifiedinwriting.

CurrentlytheCEOhas:

6months’periodofnoticeandsalaryfortheperiodofnoticeshouldtheCompanygivenotice,inadditiontowhichheisentitledtoseverancepayequivalentof12months’fixedsalary,

6months’periodofnoticeandsalaryfortheperiodofnoticeshouldthepersonresignhimself,noadditionalcompensationispaid,

12-monthprohibitionofcompetitionasoftheterminationofemploymentonthepartofthecompany

24-monthprohibitionofcompetitionasoftheterminationofemploymentonthepartoftheCEO

retirementageandpensionbenefitspursuanttotheEmployees’PensionsAct(TyEL)

Theshort-termremunerationoftheCEOiscomprisedofsalary,fringebenefitsandapossibleannualbonusbasedonperformance.TheCEO’slong-termremunerationconsistsofashare-basedincentivescheme.Thebonusisdeterminedonthebasisoftheattainmentofgoalsrelatedtothecompany'sgrowthandprofitabilityaccordingtoitsstrategy,andpersonal


objectives.TheBoardofDirectorsmonitorsthefulfillmentoftheperformanceandresultcriteriaoftheincentiveschemetwiceayearandapprovesthebonustobepaidateachtime.

ThesalaryofCEOEsaTihilä’sfortheperiodJanuary1-December31,2014,includingbenefits,wasEUR300.020,00.SalaryinmoneywasEUR286.280,00andfringebenefitstotalEUR13.740,00.Nobonuseswerepaidat2014.Theincentives,basedontheshare-basedincentiveschemeanditsearningperiod2012,willbepaidinearly2015.

RemunerationofExecutiveTeamThecompensationprinciplesofthetopmanagementaredecidedbytheBoard.Theshort-termremunerationofthetopmanagementconsistsofsalary,fringebenefitsandapossibleannualbonusbasedonperformance.Thetopmanagement’slong-termremunerationconsistsofashare-basedincentivescheme.Thebonusbasedonperformanceisnomorethan50percentofannualbasicsalary.Thebonusisdeterminedonthebasisoftheattainmentofgoalssupportingtothecompany'sgrowthandprofitabilityaccordingtoitsstrategy,andpersonalobjectives.TheBoardofDirectorsmonitorsthefulfillmentoftheperformanceandresultcriteriaoftheincentiveschemetwiceayearandapprovesthebonustobepaid.

InDecember2014,themembersofExecutiveTeam,excludingCEO,werepaidinsalariesandfringebenefitstotaledtoEUR1.340.023,74.SalaryinmoneywasEUR1.214.657,45andfringebenefitstotaledEUR62.995,86.AsbonuswaspaidEUR62.370,43.Theincentives,basedontheshare-basedincentiveschemeanditsearningperiod2012,willbepaidinearly2015.

IncentiveschemesBaswareinformedaboutanewshare-basedincentiveplanforBaswareGroupkeypersonnelfor2012-2014onFebruary17,2012.OnFebruary15,2013,theBoardofDirectorsupdatedthisplantocontinueuntiltheendof2015.Thetermsoftheincentiveplanremainedthesame,withtheexceptionofaddingoneearningperiodtotheplan.

Theaimoftheplanistocombinetheobjectivesoftheshareholdersandthekeypersonnelinordertoincreasethevalueofthecompany,commitkeypersonneltothecompanyandofferthemacompetitiverewardplan.Accordingly,theBoardofDirectorsencouragesBaswareExecutiveTeammemberstoholdsharesinthecompanyequallingthevalueoftheirannualgrossbasicsalary.

Thesystemincludesfourearningperiods–calendaryears2012,2013,2014and2015.Itcomprisesannualearningperiods2012,2013,2014,and2015andafixedearningperiod2013-2015.MembersofBasware'sExecutiveTeammaybeallocatedadditionalshareswithoutconsiderationagainstshareholdingduringtheearningperiod2012-2015.

TheBoardofDirectorsdecidesontheearningscriteriaandrelatedtargetsseparatelyforeachannualearningperiodatthebeginningoftheearningperiod.Thereareemployment-relatedconditionsforeligibilityforrewardpayment.Therewardforthefixedearningperiod2013-2015isbasedonBaswareCorporation'searningspershare(EPS).Thetargetgroupofthefixedearningperiod2013-2015includesthemembersoftheBaswareExecutiveTeam.

Thesharestobeallocatedatthetargetlevelwillcontinuetocorrespondatthecurrentsharepricetotheapproximateamountof275,000BaswareCorporationshares(includingalsotheproportiontobepaidincash)andtotalling412,500atthemaximum.ThepossiblesharestobeallocatedwillconsistofsharesheldbythecompanyoracquiredinpublictradingthroughNASDAQOMXHelsinkiLtd.

Thetermsoftheincentiveschemeincludesworkandemploymentrelatedconditions.

Theincentives,basedontheshare-basedincentiveschemeanditsearningperiod2012,willbepaidinearly2015.

InsiderAdministrationBasware'sinsiderguidelinescomplywiththeNASDAQOMXHelsinkiGuidelinesforInsiders.Theinsiderguidelinesforbidinsiders,includingpersonsundertheirguardianshipandcompanieswheretheyexercisecontrol,totradeinsharesoroptionrightsissuedofthecompanyforaperiodoffourweekspriortothepublicationofaninterimreportorafinancialstatementsbulletin(theso-calledclosedwindow).

Bylaw,theCompanypublicinsidersincludemembersoftheBoard,CEO,auditorsandtheauditorinchargeofthecompanyofpublicaccountantsaswellasExecutiveTeammembersresponsibleforthekeybusinessareas.Inaddition,theCompanyhasacompany-specificinsiderregisterthatincludesthosewhoregularlyreceiveinsiderinformationintheirwork.Personswhoareinvolvedinacquisitionsorotherprojectsthathaveaneffectonthevaluationofthecompany'sshares,areconsidered


project-specificinsidersandaresubjecttoatemporarytradingsuspension.

Thecompanylawyerisinchargeoftheguidanceandsupervisionofinsiderissuesandalsomaintainstheproject-specificinsiderregistersifnecessary.TheCommunicationsManagertakescareofthepermanentinsiderregister.TheinsiderregisterofBaswareCorporationismaintainedbyEuroclearFinlandLtd.Theup-to-dateshareholdingsoftheinsiderscanbeseeninEuroclearFinlandLtd'scustomerservicepointinHelsinki,Finland,addressUrhoKekkosenkatu5C.Thecompanyalsomaintainsalistofinsidersonitswebsite.

AccordingtotheshareregistermaintainedbyEuroclearFinlandLtd,CEOEsaTihiläheld5,212BaswareCorporationshares,MariHeusala2,000,SteveMuddiman8,998,IlariNurmi899,MattiRusi253onDecember31,2014.OthermembersoftheExecutiveTeamdidnotholdsharesinBaswareCorporation.

AccordingtotheshareregistermaintainedbyEuroclearFinlandLtd,HannuVaajoensuuheld580,000,PenttiHeikkinen3,482,IlkkaSihvo885,300,TuijaSoanjärvi873,andAnssiVanjoki2,000sharesinBaswareCorporationonDecember31,2014.

DisclosurepolicyInitscommunications,BaswarecomplieswithFinnishandEUlegislations,therulesofNASDAQOMXHelsinkiLtd,theguidelinesissuedbytheFinancialSupervisionAuthority,andthecompany'sCorporateGovernanceStatement.Baswarehasaseparatedisclosurepolicy,ratifiedbyBasware’sBoardofDirectorsonJanuary20,2011.


CONTACTS

HEADQUARTERSBaswareCorporationPL97,02601Espoo,FinlandForvisitors:Linnoitustie2B,CellobuildingTel.+358(0)9879171Fax+359(0)2093410123info.fi(at)basware.com

www.basware.comwww.basware.com/investors

InvestorrelationsFormoreinformationontheAnnualReportandinvestorcommunications:

SirjeAhvenlampi-HyvönenCommunicationsDirectorTel.+358505573822sirje.ahvenlampi(at)basware.com


BOARDOFDIRECTOR'SREPORT1.1.2014-31.12.2014

SUMMARYOFTHEFINANCIALYEAR

Financialyear2014

NetsalesEUR127674thousand(EUR123349thousand)–growth3.5percent

OperatingprofitEUR4325thousand(EUR3331thousand)–growth29.8percent

Operatingprofit3.4percentofnetsales(2.7%)

GrowthofNetworkServicesnetsales19.4percent

Recurringrevenue67.0percent(63.8%)ofnetsales

NetcashflowsfromoperatingactivitiesEUR14912thousand(EUR3578thousand)

Earningspershare(diluted)EUR0.22(0.20)

Dividendproposalfor2014:EUR0.10pershare(2013:EUR0.23)

ThisfinancialstatementreleasehasbeenpreparedinaccordancewithIAS34,InterimFinancialReporting.

BusinessoperationsBaswareisthegloballeaderinprovidingpurchase-to-payande-invoicingsolutionsintheworldofcommerce.Baswareempowerscompaniestounlockvalueacrosstheirfinancialoperationsbysimplifyingandstreamliningkeyfinancialprocesses.Baswarehelpsitscustomerstosucceedandcreateaddedvaluetotheirbusinessthroughbetterfinancialmanagement.BaswareCommerceNetwork,thelargestopenbusinessnetworkintheworld,connects1millioncompaniesacross100countriesandenableseasycollaborationbetweenbuyersandsuppliersofallsizes.Throughthisnetwork,leadingcompaniesaroundtheworldachieveimprovedspendcontrol,efficiency,andcloserrelationswiththeirsuppliers.WithBasware,businessescanintroducecompletelynewwaysofbuyingandsellingtoachievesignificantcostsavingsandboosttheircashflow.

ReportingBaswarereportsoneoperatingsegment:PurchasetoPay,P2P.ThesegmentisdividedintotheNetworkServicesandSolutionServicesbusinessesthatsupporteachother.

Asofthebeginningof2014,thecompanyreportsrevenuefromproductsandservicesasfollows:NetworkServices(e-invoicingsolutionsandservices)andSolutionServices(softwaresolutionsandservices).Inadditiontothis,thecompanyreportsrevenuefromproductsandservicesintabulatedformataccordingtothebreakdownofthepreviousreportingpractice:Licensesales,ProfessionalServices,CustomerSupport,andAutomationServices.CustomerSupportandAutomationServicestogetherformtherecurringrevenuereportedbythecompany.

Networkservicesrevenueiscomprisedofe-invoicing,paperinvoicescanningservices,printingservice,catalogexchange,purchasemessageexchange,activationservices,andalliancefeesofe-invoicingservicesandfinancing-relatedaddedvalueservices.SolutionServicesrevenueiscomprisedofsoftwarerevenue(SaaSrevenueandlicensesales),softwaremaintenanceandextendedcustomersupportservices(customersupport),ProfessionalServices,andstart-upfeesofSaaSservices.

AsgeographicinformationBaswarereportsgeographicalareasFinland,Scandinavia,restofEurope,andOther.Netsalesarereportedbythecustomer’slocation,andnetsalesandoperatingresultarealsoreportedbythelocationoftheassets.Inaddition,thegeographicalinformationofnon-currentassetsisreportedbythelocationoftheassetsintheannualfinancialstatements.

FINANCIALPERIOD

NetsalesBaswareGroup’snetsalesforthereviewperiodamountedtoEUR127674thousand(EUR123349thousand),growthof3.5percent.Thegrowthofnetsalesincomparablecurrencieswas4.5percent.


NetworkServicesbusinessgrewwellandsoftwaresalesdevelopedfavorablyin2014.Theshareofrecurringrevenueofnetsalescontinuedtogrow,accountingfor67.0percent(63.8%)duringthefinancialperiod.Theshareofinternationaloperationsgrewandaccountedfor61.6%(60.0%)ofnetsales.


Informationofproductsandservices*EURthousand

1-12/2014 1-12/2013 ChangeNetworkServices 33,237 27,829 19.4SolutionServices 94,437 95,520 -1.1Grouptotal 127,674 123,349 3.5ofwhichLicencesales 14,173 14,617 -3.0CustomerSupport 44,493 43,512 2.3ProfessionalServices 27,930 30,069 -7.1AutomationServices 41,078 35,151 16.9

*Thebreakdownofthenetsalesofthebusinesseshasbeenadjustedwithregardtopreviouslyreportedcomparisonperiodsduetochangesintheorganizationstructure.

ThenetsalesofNetworkServicesamountedtoEUR33237thousand(EUR27829thousand)duringthereviewperiod,growthof19.4percentincludingthealliancefeesoffinancing-relatedaddedvalueservices.ThegrowthoftheNetworkServicestransactionsremainedstrong,up30percentandover78milliontransactionswereprocessedviaBaswareCommerceNetwork.

ThegrowthinNetworkServicescontinuedthroughout2014andamountedto19.4percent.betweenoveramillionbuyersandsuppliersinoverahundredcountries.Organicgrowthintransactionswasatagoodlevelduringeveryquarteroftheyear.ThenetsalesoftheSolutionServicesbusinessamountedtoEUR94437thousand(EUR95520thousand),adecreaseof1.1percent.Theutilizationrateforbillableconsultingworkwaslowerthanexpectedwhichimpactedthedevelopmentofnetsales.During2014,wehavemigratedanumberofexistingcustomerstoAlustaandsecuredasignificantnumberofnewAlustacustomers.ThedemandforSaaSserviceshasbeengood.

FinancialperformanceBasware’soperatingprofitfortheperiodamountedtoEUR4325thousand(EUR3331thousand).Operatingprofitrepresented3.4percent(2.7%)ofnetsales.Theoperatingprofitforthereviewperiodofthepreviousyearincludedanon-recurringcapitalgainofEUR1540thousandrecordedasaresultofthedivestmentoftheCashierDeskbusinessandexpensestotalingEUR1659thousandduetotheefficiencydriveandterminationofemploymentrelationships.

Thecompany’sfixedcostswereEUR103784thousand(EUR103119thousand)intheperiod,andhaveincreasedby0.6percentfromthecorrespondingperiodthepreviousyear.Personnelcostsmadeup74.9percent(74.6%)orEUR77779thousand(EUR76919thousand)ofthefixedcosts.Baddebtsandchangeinbaddebtprovisionareincludedinfixedcosts.BaddebtprovisionattheendoftheperiodamountedtoEUR1171thousand(EUR1714thousand).

Thecompany’sfinanceincomeandfinanceexpenseswereEUR3thousand(EUR-47thousand)fortheperiod.ResultbeforetaxwasEUR4328thousand(EUR3284thousand)andresultfortheperiodwasEUR2959thousand(EUR2605thousand)or2.3percent(2.1%)ofnetsales.TaxesfortheperiodtotaledEUR-1368thousand(EUR-678thousand).

UndilutedearningspersharewereEUR0.22(EUR0.20).

FinanceandinvestmentsBaswareGroup’stotalassetsonthebalancesheetattheendoftheperiodwereEUR168898thousand(EUR127043thousand).Thecompany'scashandcashequivalentswereEUR28954thousand(EUR13218thousand).Theimprovementofthenetcashflowfromoperations,EUR14912thousand(EUR3578thousand),resultedtoasignificantextentfromadecreaseinworkingcapital.NetcashflowsfrominvestmentswereEUR-35917thousand(EUR-19538thousand)includingaEUR30000thousandshort-termdeposit.NetcashflowsfromfinancingactivitieswereEUR36640thousand(EUR-4861thousand)whichwasinfluencedinparticularbythedirectedshareissuethatwascarriedoutduringtheperiod.

Equityratiowas82.7percent(77.1%)andgearingwas-38.6percent(-4.7%).Thecompany'sinterest-bearingliabilitiestotaledEUR5000thousand(EUR8632thousand),ofwhichcurrentliabilitiesaccountedforEUR3333thousand(EUR3618thousand).Returnoninvestmentwas4.4percent(3.9%)andreturnonequity2.5percent(2.6%).

Capitalexpenditure,resultingfromregularadditionalandreplacementinvestmentsrequiredbythegrowth,wasEUR816thousand(EUR1470thousand)duringtheperiod.Grossinvestmentsincludingthecapitalizedresearchanddevelopment


coststotaledEUR5821thousand(EUR20733thousand).Theinvestmentsduringthecorrespondingperiodthepreviousyearincludedoneacquisition.

ResearchanddevelopmentBasware’sresearchanddevelopmentexpensestotaledEUR17680thousand(EUR18148thousand),or13.8percent(14.7%)ofnetsalesduringthereviewperiod.Theexpensesdecreasedby2.6percentcomparedtothecorrespondingperiodthepreviousyear.ResearchanddevelopmentexpensescapitalizedduringtheperiodamountedtoEUR4274thousand(EUR3607thousand).TheresearchanddevelopmentcostsincludedintheprofitforthereviewperiodtotaledEUR13406thousand(EUR14541thousand),or10.5percent(11.8%)ofnetsales.Atotalof332(370)peopleworkedinR&Dattheendoftheperiod.

Basware’sFinancingServiceswillcombineinvoiceautomationwithfinancingservicesforcompaniesofallsizesviatheBaswareCommerceNetwork.InSeptemberBaswarelaunchedBaswarePay,anewtypeofaglobale-paymentsolutionofferedincollaborationwithMasterCard,asthefirstsolutionwithinBasware’sFinancingServicesportfolio.

AdditionalinformationonthedevelopmentoftheCorporation’sresearchanddevelopmentexpensescanbefoundfromthefinancialstatement'ssectionKeyFigures.

PersonnelBaswareemployed1466(1485)peopleonaverageduringtheperiod.Theshareofpersonnelworkinginforeignunitshasincreasedcomparedwiththepreviousyear.


Geographicaldivisionofpersonnel1-12/2014 1-12/2013 Change,%

Finland 482 510 -5.5%Scandinavia 134 131 2.3%RestofEurope 291 265 9.8%India 492 506 -2.8%Otherareas 67 73 -8.2%PersonnelTotal 1,466 1,485 -1.3%

Attheendoftheperiod,68.1percent(65.5%)ofBaswarepersonnelworkedoutsideofFinlandand31.9percent(34.5%)inFinland.11.7percent(12.0%)ofthepersonnelworkinsalesandmarketing,59.7percent(58.4%)inconsultingandservices,22.2percent(23.7%)inproducts,and6.4percent(5.8%)inadministration.

Statutoryco-operationnegotiationstookplaceduringthefirstquarter.Theaimoftheco-operationnegotiationswastoadjustthecompany'scoststructureindecliningbusinesssectors,andtoaimtobettersupportcompany'sbusinessmodelaswellastoimprovecompany'scompetitivenessandprofitability.Asanoutcomeofthenegotiations,permanentreductionswereissuedto28employeesintotalwithinBaswareCorporationoritssubsidiariesbytheendofMarch2014.Ofthis,22employeeswereaffectedwithinFinland.

Theaverageageofemployeesis34.9(34.6)years.Oftheemployees,21.6percent(22.8%)haveaMaster'sdegreeand26.5percent(28.1%)haveaBachelor'sdegree.Womenaccountfor24.8percent(23.3%)ofemployees,menfor75.2percent(76.7%).

Additionalinformationonthefiguresconcerningpersonnelcanbefoundfromthefinancialstatement'ssectionKeyFigures.

SHAREANDSHAREHOLDERSBaswareCorporation’ssharecapitaltotaledEUR3528368.70attheendoftheperiodandthenumberofshareswas142212290(12931229).

Thecompany’sAnnualGeneralMeetingofFebruary14,2014,authorizedtheBoardofDirectorsofBaswaretodecideontheissueofnewsharesdeviatingfromtheshareholders'pre-emptivesubscriptionrights.Thecompanycarriedoutashareissueofupto1290000newBaswaresharestoalimitednumberofinternationalinstitutionalinvestorsinanacceleratedbook-builtofferingdeviatingfromshareholders’pre-emptivesubscriptionrightsonSeptember4,2014.Theofferedsharescorrespondedwithapproximately9.98%ofallBaswaresharesandvotesbeforetheshareissue.ThesubscriptionpricewassetatEUR33.50pershare,amountingtototalproceedsofapproximatelyEUR43.2millionbeforecommissionsandexpenses.The1290000sharesissuedwereregisteredwiththeFinnishTradeRegisteronSeptember11,2014.

ShareholdersBaswarehad13675(14349)shareholdersattheendoftheperiod,including12nominee-registeredholdings(11).Nominee-registeredholdingsaccountedfor25.4percent(11.7%)ofthetotalnumberofshares.BaswareCorporationholds74803(75815)ofitsownshares,correspondingtoapproximately0.5percent(0.6%)ofthetotalnumberofshares.

AdditionalinformationonshareholdingsoftheExecutiveTeamandBoardofDirectorsandmajorshareholdersisavailableonthecompany’sinvestorsiteatwww.basware.com/investors.

SharepriceandtradingDuring2014,thehighestpriceofthesharewasEUR42.21(EUR25.60),thelowestwasEUR23.50(EUR16.75)andtheclosingpricewasEUR41.05(EUR25.03).TheaveragepriceofthesharewasEUR35.65(EUR20.35)duringtheperiod.

Atotalof4792273(1723866)sharesweretradedduringtheperiod,equivalentto36.1percent(13.4%)oftheaveragenumberofshares.Marketcapitalizationwiththeperiod’sclosingpriceonDecember31,2014,wasEUR577640(EUR321771).

GOVERNANCEEsaTihilähasactedastheCEOofthecompanyfromOctober17,2011.TheAnnualGeneralMeetingonFebruary14,2014decidedthenumberofmembersoftheBoardofDirectorstobefive.HannuVaajoensuu,PenttiHeikkinen,Ilkka


Sihvo,TuijaSoanjärviandAnssiVanjokiwereelectedasmembersoftheBoardofDirectors.InitsmeetingheldaftertheAnnualGeneralMeeting,theBoardofDirectorselectedHannuVaajoensuuastheChairmanandIlkkaSihvoastheViceChairmanoftheBoard.Inthesamemeeting,Ernst&YoungOy,AuthorizedPublicAccountantsorganization,waselectedasthecompany'sauditorandHeikkiIlkka,AuthorizedPublicAccountant,astheprincipallyresponsibleauditorofthecompany.

AuthorizationsTheAnnualGeneralMeetingheldonFebruary14,2014,authorizedtheBoardofDirectorstodecideonrepurchasingamaximumof1290000company'sownshares.Thecompany'sownsharesshallberepurchasedotherwisethaninproportiontotheholdingsoftheshareholdersbyusingthenon-restrictedequitythroughpublictradingonaregulatedmarketorganizedNASDAQOMXHelsinkiLtdatthemarketpriceprevailingatthetimeofacquisition.ThesharesshallberepurchasedandpaidforinaccordancewiththerulesofNASDAQOMXHelsinkiLtdandEuroclearFinlandLtd.Thesharesshallberepurchasedforuseasconsiderationinpossibleacquisitionsorotherarrangementsrelatedtothecompany'sbusiness,asfinancingforinvestmentsoraspartofthecompany'sincentiveprogramortobeheldbythecompany,tobeconveyedbyothermeansortobecancelled.TheBoardofDirectorsshalldecideonothertermsandconditionsrelatedtotherepurchaseofthecompany'sownshares.TheRepurchaseAuthorizationshallbevaliduntilJune30,2015,andshallrevokethepreviousauthorizationsforrepurchasingthecompany’sownshares.

TheAnnualGeneralMeetingdecidedtoauthorizetheBoardofDirectorstodecideonissuingnewsharesand/orconveyingthecompany'sownsharesheldbythecompanyand/orgrantingspecialrightsentitlingtosharespursuanttoChapter10,Section1oftheFinnishCompaniesActinaccordancewiththeproposaloftheBoardofDirectors.

Newsharesmaybeissuedandthecompany'sownsharesmaybeconveyedtothecompany'sshareholdersinproportiontotheircurrentshareholdingsinthecompanyorbywaivingtheshareholder'spre-emptionrightthroughadirectedshareissueifthecompanyhasaweightyfinancialreasontodoso,suchasusingthesharesasconsiderationinpossibleacquisitionsorotherarrangementsrelatedtothecompany'sbusiness,asfinancingforinvestmentsoraspartofthecompany'sincentiveprogram.Thenewsharesmayalsobeissuedinafreeshareissuetothecompanyitself.

Newsharesmaybeissuedandthecompany'sownsharesheldbythecompanymaybeconveyedeitheragainstpaymentorforfree.Adirectedshareissuemaybefreeonlyifthereisanespeciallyweightyfinancialreasonbothforthecompanyandwithregardtotheinterestsofallshareholdersinthecompany.

Basedontheauthorization,theBoardofDirectorsmaydecidetoissueamaximumof2580000newsharesandconveyamaximumof1365815ofthecompany'sownsharesheldbythecompany.Thenumberofsharestobeissuedtothecompanyitselftogetherwiththesharesrepurchasedbythecompanyonbasisoftherepurchaseauthorizationshallbeatthemaximumof1290000shares.

TheBoardofDirectorsmaygrantspecialrightsreferredtoinChapter10,Section1oftheFinnishCompaniesAct,whichcarrytherighttoreceive,againstpayment,newsharesofthecompanyorthecompany'sownsharesheldbythecompany.Therightmayalsobegrantedtothecompany'screditorinsuchamannerthattherightisgrantedonaconditionthatthecreditor'sreceivableisusedtosetoffthesubscriptionprice(convertiblebond).Themaximumnumberofnewsharesthatmaybesubscribedbyvirtueofthespecialrightsgrantedbythecompanyisintotal1000000shareswhichnumbershallbeincludedinthemaximumnumberofnewsharesstatedabove.

Thesubscriptionpricesofthenewsharesandtheconsiderationpayableforthecompany’sownsharesshallberecordedinfullundertheinvestednon-restrictedequityfund.TheBoardofDirectorsshalldecideonallothertermsandconditionsrelatedtotheauthorizations.TheauthorizationsshallbevaliduntilJune30,2015andshallrevokethepreviousauthorizationsforshareissuesandgrantingofstockoptionsandotherspecialrightsentitlingtoshares.

CorporateGovernanceStatementThecompanypublisheditsCorporateGovernanceStatementfor2014thatwascomposedinaccordancewithRecommendation54oftheCorporateGovernanceCodeandChapter7,Section7oftheFinnishSecuritiesMarketAct.

TheCorporateGovernanceStatementisissuedseparatelyfromthecompany'sannualreport.BaswareCorporation'sCorporateGovernanceStatementisavailableatcompany'sinvestorswebsiteatwww.basware.com/investorsandintheAnnualReport2014.

RISKSANDUNCERTAINTYFACTORSTheworldeconomyandmarketsareunstable,whichhasresultedinadecreaseinthedemandforsolutionsandservices.Thenegotiationtimesoflargeinternationaldealsinparticulararelongbecauseofthenatureofservicelevelagreementsin


thedeals.

Businessmanagementregularlymonitorsthepaymentofsalesreceivablesaspartofthemanagementofcustomeraccounts.Therearenosignificantcreditlossconcentrationsassociatedwiththesalesreceivables;theyareprimarilycomprisedofalargenumberofrelativelysmallreceivables.

ThedevelopmentofSolutionServicesnetsalesisinfluencedbytheutilizationrateofconsultinganddelaysintheentryofnewSaaSservicesintoproductioncomparedtotheplans.TheAlustasoftwareandservicesarecontinuouslydevelopedintheSolutionServicesbusinessarea.Thedevelopmentworkisassociatedwithtechnicalimplementationrisksthatmayinfluencetheusabilityandqualityofexistingornewproducts.

InformationsecurityisanimportantandcentralpartofBasware'soperations.Themarketisdevelopingallthetime,andtherequirementlevelrelatedtoinformationsecuritychangesrapidly,resultinginpotentialrisks.

Baswareinvestsinlaunchingfinancingservicesbusiness.Thisisanewbusinessareaforthecompany,andtheassociatedpossiblerisksincluderisksrelatedtothefunctionalityofnewproducts,collaborationwithbusinesspartners,anddemandfortheproducts.

Thecompanyaimstoavoidwrongrecruitmentsandexcessivepersonnelturnover,whichcanleadtoadecreaseincustomersatisfaction,growthandprofitability,andcontinuouslyassessesthecompetenceandwell-beingofthepersonnelaspartoftheHRprocesses.

Goodwillwastestedforimpairmentduringthelastquarter.Accordingtothetestingforassetimpairment,goodwillhadnotbeenimpaired.

Additionalinformationonrisksandriskmanagementisavailableonthecompany'sinvestorsitewww.basware.com/investors.

ACQUISITIONSANDCHANGESINGROUP'SSTRUCTUREThegrouphasnotcarriedoutanyacquisitionsandtheBaswaregroup’sstructurehasnotchangedin2014.

Moreinformationonallofthecompany'sbranchescanbefoundfromthefinancialstatement'sNotes.

RESPONSIBILITYBaswareisaforerunnerine-engagementandconnectedeconomy,throughitspurchase-to-payande-invoicingsolutions.Thecompany’sopenandglobalBaswareCommerceNetworkhasmillionsofbusinessusersinover100countiesaroundtheworld.

BaswarecorporateresponsibilityisintegratedinitsbusinessoperationsandthecorporatevaluesarethetoolsforeverydaysustainableworkwithintheGroup.Thecompanyiscommittedtoresponsibleoperationsinallofitseconomic,socialandenvironmentalactivities.AsalistedcompanyontheOMXHelsinkiStockExchange,Basware,withEUR577640thousand(321771)marketcapital,iscommittedtofollowtherulesandregulationssetbytheauthoritiesandfollowthelawandregulationsineachcountrythecompanyoperates.Agreatemphasisisplacedonthecompanybrandandreputation,openandtransparentcommunicationstodifferentstakeholders,aswellasinternalcompanyvalues.

Moreinformationaboutthecompany'scorporateresponsibilityisavailableintheAnnualReport2014atwww.basware.com/annualreport.

STRATEGY2015–2018Baswareupdateditsstrategyaccordingtoitsstrategyprocessatthebeginningof2015.Thekeystrategicobjectivesare:250millionprocessedtransactionsandincreasingtheshareofrecurringrevenuetoover80%ofnetsalesduringthefiscalyear2018.Duringthestrategyperiod,thecompanywillalsopursueorganicannualnetsalesgrowthofover10percentandanoperatingprofitofover10percentfrom2016onwards.

Baswarehasaleadingportfolioofglobalnetworkedpurchase-to-paysolutionsspanninge-invoicingtoinnovativenewfinancingservicesfororganizationsofallsizes.

TheNetworkServicesbusinessisexpectedtogrowstronglyduringthestrategyperiod.SolutionServicesisexpectedtogrowmoderatelyandbestronglyprofitable,thuscreatingastrongfoundationforthecompany’sgrowth.FinancingServices,launchedin2014,willfurtherexpandBasware’sserviceoffering.Thebusinessisexpectedtocommenceduringthelatterhalfof2015.


StrengtheningBasware’spositioninthekeymarketsandcustomerloyaltyareobjectivessharedthroughoutthecompany.Thestrategyfocusesonacceleratedglobalgrowthbothorganicallyandthroughacquisitions.ThestrategyfocusesonacceleratingthegrowthofBaswareCommerceNetworkandmaximizingthenumberoftransactions,creatingnewfinancing-relatedaddedvalueservicesandmakingthemavailablethroughdigitalchannels,aswellasmaintainingglobalmarketleadershipinpurchase-to-pay(P2P)solutions.

NetworkServiceswillfocusonmeasurestomaximizethenumberoftransactions,whichincludenewvirtualoperatorpartnershipsandincreasingtheefficiencyofsupplieractivation,aswellasimprovingtheavailabilityofe-invoicingservicesthroughautomationandmoreextensiveutilizationofdigitalmarketingandsaleschannels.Baswarewillalsocontinuetoexpanditsnetworkthroughacquisitionsinlinewithitsstrategy.

TheP2Pofferinganditsdeliveryandsalesorganizations,whicharethefocusoftheSolutionServicesbusiness,havedevelopedgoodreadinesswithAlustatechnology.BaswarewillcontinuetodeliveritsP2PofferingbothashostedSaaSandasanon-sitelicense,themajorityofthenewbusinessisexpectedtocomefromtheSaaSmodel.

Basware’sFinancingServicesdelivernewandinnovativeservicesforcompaniesofallsizes,combininginvoiceautomationwithfinancingservicesontheBaswareCommerceNetworkforbuyersandsuppliers.Financingserviceswillbeprovidedincollaborationwithselectedpartners.HighvolumeandfastgrowthoftransactionsinBaswareCommerceNetworkprovideastrongfoundationforofferingreal-timeservicesthataremoreaccessible,easytouse,andcosteffectivethanthecurrentlyavailablealternatives.

Baswarewillcontinuetoreviseitssalesandmarketingmodel.Directsalesandmarketingmeasureswillbeincreasinglysegmentedaccordingtocarefullyselectedsegmentsandcompanies.Baswarewillcontinuetoexpandtheusageofmulti-channeleddigitalservicesformarketing,sellingandservicingitscustomers.Investmentsinobtainingchannelpartnersandbusinesssupportwillcontinue.

Thedevelopmentofthesolutionandservicesportfolioisaimingtoacceleratethego-liveofcloudbasedsolutionsande-invoicingande-procurementservicesthroughproductandprocessimprovements,andtomakethemavailableonlinetoimproveefficiencyandprofitability.

FUTUREOUTLOOK

OperatingenvironmentandmarketoutlookCompaniesofallsizesgloballyareunderpressuretoimprovetheircashflows,findnewinnovativepaymentstrategies,andautomatetheirfinancialprocessesandfunctions.Thecompanyexpectsthesametocontinuealsoin2015andthecontinuousdemandforservicestoremainatafavorablelevelamongitscustomers.

Consolidationisexpectedtocontinueinthebusinessenvironment,withtheroleofservicesgrowingincompanies’portfolios.Accordingtoindustryresearch,e-invoicinghasbecomemorecommonandthenumberofe-invoiceshasgrownsubstantiallyinEuropeandtherestoftheworld.Theglobalmarketpenetrationofe-invoicesisestimatedtobesome10percent.Thegrowinge-invoicingmarketandcompanies’interestinotherpaymentandfinancingaddedvaluesolutionsaswellwillofferexcellentgrowthopportunitiesinfutureyears.

Outlook2015Theglobalmarketgrowthine-invoicinghasbeenestimatedtobeapproximately20percent.AchievingstronggrowthintheBaswareCommerceNetworkcontinuestobethecompany’smainobjective.Inaccordancewithourstrategy,thecompanyispursuinggrowthinthenetworkbothorganicallyandthroughmergersandacquisitions.ThecompanywillalsoinvestingrowthinthesalesofAlustasoftwareandservices,aswellasothersales.DevelopmentoftheFinancingServicesbusinessandfinancingservicesandsolutionscommencedin2014andwillcontinueactivelythisyear.

BaswareispursuingstronggrowthinNetworkServicesbydevelopingandautomatingtheconnectionofbuyersandsupplierstothee-invoicingservice,byutilizingdigitalmarketingandsaleschannelsmoreextensively,andthroughacquisitions.IntheSolutionServicesbusiness,salesofAlustaareexpectedtohaveapositiveeffectonsoftwarenetsalesandprofessionalservices.

Basware’sfixedcostsareexpectedtodevelopmoderately.Baswarewillinvestmoreextensivelyinsalesandmarketingaswellasresearchanddevelopmentofnewsolutionsandservicesinparticular.Thecompanywillcontinuetoimproveitsprofit-makingabilityinitssoftwarebusinessalsothisyearbyensuringtheefficientuseofresourcesinProfessionalServicesandimprovingthebillingrateinrelationtodemand.ThecompanywillcontinueinvestmentsintheNetworkServicesbusinesstoachieveacceleratedgrowthbyprimarilydevelopingautomatedsolutionsforsendingandreceivinge-invoicesandnewwaystoachieveacceleratedgrowthinsales.


Baswarecontinuesactiveanalysisofacquisitiontargetsespeciallyinthee-invoicingmarketinEuropeandintheU.S.accordingtoitsstrategy.Decisionsonadditionalinvestmentsrequiredforgrowthwillbemadeduringtheyearasrequiredbythemarketsituationanddevelopmentofbusinessoperations.

Baswareexpectsitsnetsalesandoperatingprofit(EBIT)for2015togrowcomparedto2014.

BOARD'SDIVIDENDPROPOSALBaswareaimsatincreasedmarketcapitalizationandmoderatedividendyield.Whenpreparingthedividendproposal,theBoardconsiderstheCompany’sfinancialposition,profitabilityandprospectsinthenearfuture.

Attheendof2014,theGroupparentcompany’sdistributablefundsare127600402.61euros.Basware’sBoardofDirectorsproposestotheAnnualGeneralMeetingthatadividendofEUR0.10pershare(2013:EUR0.23)bepaidfor2014.Therearenosignificantchangestothecompany’sfinancialpositionafterthereviewperiod.Thecompany’sliquidityisgoodandaccordingtotheBoard’sview,theproposeddistributiondoesnotriskthecompany’ssolvency.

TheBoardofDirectorsdecidedthattherecorddateisFebruary17,2015.TheBoardofDirectorsproposestotheAnnualGeneralMeetingthatthedividendwillbepaidaftertherecorddateFebruary24,2015.


CONSOLIDATEDSTATEMENTOFCOMPREHENSIVEINCOME(IFRS)1.1.-31.12.2014

EURthousandNotes 1.1.-31.12.2014 1.1.-31.12.2013 Change,%

NETSALES 2 127,674 123,349 3.5

Otheroperatingincome 3 260 1,915 -86.4Materialsandservices 4 -12,796 -11,761 8.8Employeebenefitsexpenses 5 -77,779 -76,919 1.1Depreciationandamortization 10.11 -7,029 -7,052 -0.3Otheroperatingexpenses 6 -26,004 -26,200 -0.7Operatingprofit 4,325 3,331 29.8

Financialincome 7 1,154 928 24.3Financialexpenses 7 -1,151 -975 18.0Profitbeforetax 4,328 3,284 31.8

Incometaxexpense 8 -1,368 -678 101.8PROFITFORTHEPERIOD 2,959 2,605 13.6

Othercomprehensiveincome Othercomprehensiveincometobereclassifiedtoprofitorlossinsubsequentperiods:

Exchangedifferencesontranslatingforeignoperations

-684 -2,638 -74.1

Incometaxrelatingtocomponentsofothercomprehensiveincome

8 -279 281

Othercomprehensiveincome,netoftax

-963 -2,358 -59.2

TOTALCOMPREHENSIVEINCOME 1,996 247 708.2

Profitattributableto: Ownersoftheparent 2,959 2,605 13.6

2,959 2,605 13.6Totalcomprehensiveincomeattributableto:

Ownersoftheparent 1,996 247 708.2 1,996 247 708.2

Earningspershare Undiluted,EUR 9 0.22 0.20 11.4Diluted,EUR 9 0.22 0.20 11.4


CONSOLIDATEDSTATEMENTOFFINANCIALPOSITION(IFRS)31.12.2014

ASSETSEURthousand

Notes 31.12.2014 31.12.2013 Change,%Non-currentassets Intangibleassets 10 25,231 26,428 -4.5 Goodwill 10 50,317 50,996 -1.3 Tangibleassets 11 1,387 1,431 -3.1 Available-for-saleinvestments 12 38 38 0.0 Tradeandotherreceivables 14 724 947 -23.6 Deferredtaxassets 16 4,377 3,680 18.9 Non-currentassets 82,074 83,520 -1.7

Currentassets Inventories 13 42 240 -82.4 Tradereceivables 14 22,902 24,415 -6.2 Ohterreceivables 14 33,204 3,121 964.0 Incometaxreceivables 1,605 2,529 -36.5 Cashandcashequivalents 15 28,954 13,218 119.1 Currentassets 86,707 43,522 99.2

TOTALASSETS 168,781 127,043 32.9


EQUITYANDLIABILITIESEURthousand

Notes 31.12.2014 31.12.2013 Change,%Shareholders'equity Sharecapital 18 3,528 3,528 0.0Sharepremiumaccount 18 1,187 1,187 0.0Ownshares 18 -1,156 -1,164 -0.7Unrestrictedequityreserve 18 104,381 61,748 69.0Otherreserves 18 540 540 0.0Translationdifferences 18 -2,921 -1,958 49.2Retainedearnings 18 34,184 34,074 0.3Shareholders'equity 139,745 97,956 42.7

Non-currentliabilities Deferredtaxliabilities 16 2,433 1,863 30.6Interest-bearingliabilities 20.21 1,667 5,014 -66.8Othernon-currentfinancialliabilities 19 315 127 148.1Non-currentliabilities 4,415 7,004 -37.0

Currentliabilities Interest-bearingliabilities 20.21 3,333 3,618 -7.9Tradepayablesandotherliabilities 19 20,886 17,966 16.3Incometaxliabilities 403 499 -19.2Currentliabilities 24,622 22,082 11.5

TOTALEQUITYANDLIABILITIES 168,781 127,043 32.9


CONSOLIDATEDSTATEMENTOFCASHFLOWS(IFRS)1.1.-31.12.2014

EURthousand1.1.-31.12.2014 1.1.-31.12.2013

CASHFLOWFROMOPERATINGACTIVITIES Profitfortheperiod 2,959 2,605

Adjustmentsforprofit Depreciationandamortization 7,029 7,052Proceedsfromsaleofnon-currentassets 0 -1,540Unrealisedforeignexchangegainsandlosses -269 0Financeincomeandexpenses 223 48Incometaxes 1,368 678Othernon-cashitems 108 -61

Workingcapitalchanges Changeininventories 198 -221Changeintradeandotherreceivables 1,978 -589Changeintradeandotherpayables 3,016 -830

Interestpaid -147 -200Interestreceived 51 109Otherfinancialitemsinoperatingactivities -842 -425Incometaxespaid -762 -3,047Netcashfromoperatingactivities 14,912 3,578

CASHFLOWFROMINVESTINGACTIVITIES Purchasesoftangibleandintangibleassets -6,517 -5,418Acquisitionofsubsidiariesandbusinesses,netofcashacquired 0 -15,061Proceedsfromdivestmentofbusiness 0 1,540Short-termdeposits -30,000 0Loansgranted 0 -600Repaymentofloanreceivables 600 0Netcashusedininvestingactivities -35,917 -19,538

CASHFLOWFROMFINANCINGACTIVITIES Shareissue 43,215 0

Repaymentsofborrowings -3,333 -1,667Paymentoffinanceleaseliabilities -284 -239Dividendspaid -2,957 -2,955Netcashusedinfinancingactivities 36,640 -4,861

Netchangeincashandcashequivalents 15,635 -20,821

Cashandcashequivalentsatthebeginningofperiod 13,218 34,519Netforeignexchangedifference 101 -479Cashandcashequivalentsattheendofperiod 28,954 13,218


CONSOLIDATEDSTATEMENTOFCHANGESINEQUITY(IFRS)1.1.-31.12.2014

EURthousandShareholders'

capitalShare

premiumaccount

Ownshares

Investednon-restrictedequity

Otherreserves

Translationdifferences

Retainedearnings

Total

SHAREHOLDERS'EQUITY1.1.2014

3,528 1,187 -1,164 61,748 540 -1,958 34,074 97,956

Comprehensiveincome

-963 2,959 1,996

Dividenddistribution

-2,957 -2,957

Managementincentiveplan

108 108

Shareissue 42,641 42,641Changesinreportingperiod

8 -8 0


3,528 1,187 -1,156 104,381 540 -2,921 34,184 139,745

EURthousandShareholders'

capitalShare

premiumaccount

Ownshares


Otherreserves

Translationdifferences

Retainedearnings

Total


3,528 1,187 -1,215 61,799 540 -708 35,594 100,725

Comprehensiveincome

-2,358 2,605 247

Dividenddistribution

-2,955 -2,955

Managementincentiveplan

-61 -61

Changesinreportingperiod

51 -51 1,108 -1,108 0


3,528 1,187 -1,164 61,748 540 -1,958 34,074 97,956


NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTS(IFRS)Baswareisaleadingsupplierofe-InvoicingandPurchase-to-paysolutions.BaswareCorporationisapublicFinnishcompanyfoundedunderFinnishlaw.Thecompany’sdomicileisEspoo,Finland.ThesharesoftheparentcompanyBaswareCorporationhavebeenlistedonNASDAQOMXHelsinkiLtd.since2000.

AcopyoftheGroupfinancialstatementsisavailableontheInternetatwww.basware.com/about-us/investorsortheparentcompany'sheadquarters,addressLinnoitustie2,Espoo,Finland.

TheBoardofDirectorshasapprovedthefinancialstatementstobepublishedonJanuary23,2015.ShareholdersmayadoptorrejectthefinancialstatementsattheAnnualGeneralMeeting.

1.ACCOUNTINGPRINCIPLES

AccountingprinciplesBaswareCorporation’sfinancialstatementshavebeenpreparedaccordingtotheInternationalFinancialReportingStandards(IFRS),approvedforuseinEUcountries,inaccordancewiththeIASandIFRSstandards,aswellasIASandIFRICinterpretationsvalidonDecember31,2014.TheGroup’sFinancialStatementsarepresentedineuro,whichistheprimaryandreportingcurrencyoftheGroup'sparentcompany,andtheyarebasedonacquisitioncostsunlessotherwisestatedintheaccountingprinciples.Theamountspresentedinthefinancialstatementsarerounded,sothesumofindividualfiguresmaydifferfromthesumreported.

NewandrevisedstandardsandinterpretationsAsofJanuary1,2014,theGrouphasappliedthefollowingnewandrevisedstandardsandinterpretations:

Amendments:IFRS10,IFRS12andIAS27Consolidation–Investmententities.

Amendment:IAS39FinancialInstruments:RecognitionandMeasurement.Novationofderivativesandcontinuationofhedgeaccounting.

IFRIC21Levies.

AmendmentsthatwillenterintoforcethefollowingyearTheGroupwilladoptin2015thefollowingstandardsandinterpretationswhoseapplicationisnotyetcompulsoryinthefinancialstatements.

Amendment:DefinedBenefitPlans–EmployeeContributions.Theamendmentconcernsemployeeorthird-partycontributionstodefinedbenefitplans.TheamendmentisnotestimatedtohaveaneffectontheGroup’sfinancialstatements.

AnnualImprovementstoIFRSs2010–2012andAnnualImprovementstoIFRSs2011–2013.Minorandlessurgentamendmentstothestandardsarecollectedandimplementedonceayearthroughtheannualimprovementsprocedure.Theprojectresultedin11amendmentsto9standards.Theeffectsoftheamendmentsvarybystandard.Theamendmentsarenotestimatedtohaveasignificanteffectontheconsolidatedfinancialstatements.Theamendmentsarepresentedbelow:

IFRS1First-timeAdoptionofIFRSs

IFRS2Share-basedPayments

IFRS3BusinessCombinations

IFRS8OperatingSegments

IFRS13FairValueMeasurement

IAS16Property,PlantandEquipment

IAS24RelatedPartyDisclosures

IAS38IntangibleAssets

IAS40InvestmentProperties

AmendmentsthatwillenterintoforceatalatertimeThegroupwilladoptthefollowingstandardsduringsubsequentfinancialperiods,providedthattheyareapprovedbytheEU.


Amendment:IFRS11JointArrangements.Theamendmentrequirestheapplicationoftheprinciplesofbusinesscombinationsaccountingwhenacquiringaninterestinajointoperationthatconstitutesabusiness..

IFRS14RegulatoryDeferralAccounts.Thestandardallowsrate-regulatedentitiestocontinuereportingregulatorydeferralaccountbalancesinconnectionwiththefirst-timeadoptionofIFRS.ThestandardisnotestimatedtohaveaneffectontheGroup’sfinancialstatements.

AmendmentstoIAS16andIAS38Clarificationofacceptablemethodsofdepreciationandamortization.Theamendmentrebutstherevenue-basedmethodofdepreciatingtangibleassetsandallows,toalimitedextent,theapplicationofrevenue-basedmethodofdepreciationforintangibleassets.TheamendmentsarenotestimatedtohaveaneffectontheGroup’sfinancialstatements.

AmendmentstoIAS16andIAS41Agriculture:IAS16Property,PlantandEquipmenttobeappliedtoplantsmeetingthecriteriainsteadofIAS41Agriculture.TheamendmentsarenotestimatedtohaveaneffectontheGroup’sfinancialstatements

AmendmenttoIAS27EquityMethodinSeparateFinancialStatements.Theamendmentallowstheequitymethodasanaccountingoptionforinvestmentsinsubsidiariesandassociatesinanentity'sseparatefinancialstatements.TheamendmentisnotestimatedtohaveaneffectontheGroup’sfinancialstatements

AmendmenttoIFRS10,IFRS12andIAS28Investmententities:ApplyigtheConsolidationException.TheamendmentisnotestimatedtohaveaneffectontheGroup’sfinancialstatements.

AmendmenttoIAS1:DisclosureInitiative.Theamendmentencouragesentitiestoassessthenotesdisclosedandtheirclassification.Theamendmentisnotestimatedtohaveasignificanteffectontheconsolidatedfinancialstatements.

AmendmenttoIFRS10andIAS28SaleandContributionofassetsbetweenanInvestoranditsassociateorjointventure.TheamendmentisnotestimatedtohaveaneffectontheGroup’sfinancialstatements.

IFRS15RevenuefromContractswithCustomers.Thestandardincludesafive-stepmodelforrevenuerecognition.Revenueisrecognisedascontrolofthesoldgoodsorserviceispassedtothecustomer.TherecognitionmodelincludesclearlymoredetailedinstructionsthanthecurrentlyvalidIAS11ConstructionContractsandIAS18Revenue.Therequirementsfornotesarealsoconsiderablyexpanded.TheGroupisevaluatingtheimpactofthestandard.

IFRS9FinancialInstruments.IFRS9willcompletelyreplacetheexistingIAS39FinancialInstruments:RecognitionandMeasurement:Theinitialmeasurementoffinancialinstrumentsismadeatfairvalueforallfinancialassets.Financialassetsthataredebtinstrumentsandtowhichthefairvalueoptionisnotappliedaremeasuredfollowinginitialrecognitioneitheratamortizedcostorfairvalue,dependingonthecompany’sbusinessmodelforthemanagementoffinancialassetsandcontractualcashflowsofthefinancialassets.Asarule,allequityinstrumentsaremeasuredatfairvaluefollowingtheinitialmeasurement,eitherthroughprofitorlossorthroughothercomprehensiveincome.Withregardtofinancialliabilities,themainamendmentisthatwhenapplyingthefairvalueoption,theeffectofchangesintheentity'sowncreditriskonthefairvalueofthefinancialliabilitywillberecognizedthroughothercomprehensiveincome.Thegroupestimatesthattheamendmentswillnothaveasignificanteffectonthegroup'sfuturefinancialstatements.

AnnualImprovementstoIFRSs2012-2014Theamendmentsarenotestimatedtohaveasignificanteffectontheconsolidatedfinancialstatements.Theamendmentsarepresentedbelow:

IFRS5:Non-currentAssetsHeldforSale:changesinmethodsofdisposaldonotchangetheclassification

IFRS7:FinancialInstruments:Disclosures:ServicingContracts.Acompanycancontinueitsinvolvementinatransferredfinancialassetifthecompanyprovidesservicesrelatedtothetransferredfinancialassets.

IFRS7:FinancialInstruments:Disclosures.Theamendmentrebutstherequirementforthedisclosureofnotesonoffsettingincondensedinterimfinancialstatements.However,thenotesshallbepresentediftherehavebeenessentialchangescomparedtothepreviousfinancialstatements.

IAS19:EmployeeBenefits.Accordingtotheamendment,theassessmentofthemarketdepthofcorporatebondsshouldbebasedonthecurrencyinwhichtheobligationisdenominated,ratherthanthecountrywheretheobligationislocated.

IAS34:InterimReports:TheIASBhasclarifiedthecontentoftheconceptof‘elsewhereintheinterimfinancialreport'

PrinciplesofconsolidationBasware'sGroupfinancialstatementsincludetheparentcompanyBaswareCorporationandthesubsidiariescontrolledbyit.Withregardtosubsidiaries,theparentcompany’scontrolisbasedonfullownershipofthesharecapitaloramajorityholding.TheCompanydoesnotownsharesinjointenterprisesoraffiliates.


ThesubsidiarieshavebeenincludedintheGroupfinancialstatementsasoftheacquisitiondate.Intra-groupholdingiseliminatedusingtheacquisitioncostmethod.Acquiredcompaniesareaccountedforusingthepurchasemethodaccordingtowhichtheassetsandliabilitiesoftheacquiredcompanyaremeasuredattheirfairvaluewhenithasbeenpossibletodeterminethevaluereliably.Deferredtaxesoftheacquisitioncostadjustmentsarerecognizedaccordingtothevalidtaxrateandtheremainderisrecognizedasgoodwillonthebalancesheet.

Intra-groupbusinesstransactions,internalliabilitiesandreceivables,andinternalprofitdistributionareeliminatedintheGroupfinancialstatements.

TransactionsinforeigncurrenciesTransactionsinforeigncurrenciesarerecordedintheoperatingcurrencyattheapproximateexchangeratesprevailingatthetransactiondates.Monetaryitemsinforeigncurrencieshavebeentranslatedintotheoperatingcurrencyusingtheexchangeratesattheendofthereportingperiod.Non-monetaryitemsdenominatedinforeigncurrenciesarecarriedattheexchangerateatthedateofthetransaction.

IntheGroupfinancialstatements,theincomestatementsofforeignsubsidiariesaretranslatedintoeurosattheaveragerateforthefinancialperiodandbalancesheetsattheexchangerateofthebalancesheetdate.Averageratedifferenceduetodifferentexchangeratesonthestatementofcomprehensiveincomeandbalancesheetareenteredinothercomprehensiveincome.Translationdifferencesarisingfromtheeliminationofforeignsubsidiariesandtranslationofequityitemsaccumulatedaftertheacquisitionareenteredinothercomprehensiveincome.Foreigncurrencygainsandlossesfrommonetaryitemspartofthenetinvestmentinaforeignunitarerecognizedinothercomprehensiveincomeandenteredonthestatementofcomprehensiveincomewhenthenetinvestmentisabandoned

RevenuerecognitionTheGroupreportsrevenuefromproductsandservicesasfollows:NetworkServices(e-Invoicingsolutionsandservices)andSolutionServices(softwaresolutionsandservices).Whennetsalesarecalculated,salesrevenueisadjustedforexchangeratedifferencesofforeigncurrencysales.

Servicerevenueisrecognizedatthetimeofdelivery.Start-upfeesarerecognizedasrevenuewhentheworkrelatedtothestart-upprocedurehasbeencompletedandthecustomerhasbeenconnectedtotheserviceenvironment.Transactionrevenueisrecognizedonthebasisofactualtransactionvolumesandusechargesonamonthlybasisonthebasisoftheexistenceofanagreement.Thealliancefeesoffinancing-relatedaddedvalueservicesarerecognisedasrevenuewhentherelatedobligationshavebeenperformed.

Revenuerecognitionofproductsalesrequiresthatthereisabindingagreementofthesale,theproducthasbeendelivered,proceedsfromthetransactioncanbereliablyspecified,thefinancialgainwillbenefitthecompanywithsufficientprobability,andsignificantbenefitsandrisksrelatedtoownershiporrightsofuseoftheproducthavebeentransferredtothebuyer.Licenseagreementswitharightofreturnorconditionsrelatedtotheproduct'sfunctionalityorimplementationprojectarerecognizedasrevenueoncetherightofreturnhasexpiredortheabove-mentionedconditionshavebeenfulfilled.Maintenancerevenueisallocatedoverthecontractperiod.

Revenueandcostsoffixed-priceconsultingprojectsarerecognizedasrevenueandexpenditureonthebasisofthepercentageofcompletionwhentheoutcomeoftheprojectcanbereliablyestimated.Thedegreeofcompletionoftheprojectisspecifiedastheproportionofhoursworkedoftheestimatedtotalnumberofhours.Iftheresultingcostsandrecognizedprofitsexceedtheamountinvoicedforthetransaction,thedifferentispresentedin“Tradeandotherreceivables”onthebalancesheet.Iftheresultingcostsandrecognizedprofitsarelowertheinvoicingforthetransaction,thedifferenceispresentedin“Tradepayablesandotherliabilities”onthebalancesheet.Whenitislikelythatthetotalcostsrequiredforcompletingtheprojectexceedthetotalrevenuefromthetransaction,theexpectedlossisrecognizedasanexpenseimmediately.

OtheroperatingincomeOtheroperatingincomeincludesproceedsfromthesaleofbusinessoperationsandproperty,plantandequipment,rentalincome,andpublicsubsidiestotheextentthattheyarenotrelatedtocapitalizedR&Dprojects.

PublicsubsidiesPublicsubsidiesarepresentedunderotheroperatingincomeforthefinancialperiodduringwhichthecorrespondingcostsareregognizedthroughprofitorloss.SubsidiesrelatedtocapitalizedR&Dprojectsaredisclosedonthebalancesheetasadjustmentstoacquisitioncost,andtheyarerecognizedintheformoflowerdepreciationovertheusefullifeoftheintangibleright.


ResearchanddevelopmentcostsResearchexpensesarebookedasanexpenseastheyareincurred.Costsrelatedtotheadoptionofnewtechnologyordevelopmentofanewgenerationofprojectsarecapitalizedandrecognizedandamortizedovertheusefullifeof3–5years.Indeterminingtheusefullife,theobsolescenceoftechnologyandthetypicallifecycleofproductsintheindustryaretakenintoconsideration.Amortizationstartsoncetheproductisreadyforcommercialutilization.Maintenanceofexistingproductsandminorenhancementsarerecognizedastheyareincurred.Publicsubsidiesrelatedtoresearchanddevelopmentarerecognizedthroughprofitorlossintheperiodsduringwhichthecorrespondingcostsarerecognizedasexpenses.

OperatingprofitOperatingprofitisthenetsumofoperatingincomeaddedtonetsales,lessthecostofpurchaseforfinishedgoodswhichisadjustedwithinventorychanges,lessthecostsresultingfromemployeebenefits,depreciationandpossibleimpairmentlossaswellasotheroperatingexpenses.Allotheritemsoftheincomestatementarepresentedafteroperatingprofit.Exchangedifferencesandfairvaluechangesofderivativesareincludedinoperatingprofit,providedthattheyresultfromitemsrelatedtobusinessoperations;otherwisetheyarerecognizedunderfinancingitems.

ImpairmentoftangibleandintangibleassetsTheGroupperformsanannualimpairmenttestofgoodwillandthoseintangibleassetsthathaveunlimitedusefullives.Additionallyindicationsofimpairmentareevaluatedregularly.Incaseofsuchindications,therecoverableamountofthecash-generatingunitorassetisevaluated.Theneedforimpairmentisevaluatedatthelevelofthecash-generatingunits,orthelowestnitlevelmainlyindependentofotherunitsandwhosecashflowscanbedifferentiatedandarehighlyindependentofthecashflowsofothercorrespondingunits.

Thebookvalueofthecashgeneratingunitandassetsallocatedtotheunitarecomparedtotheunit’srecoverableamount(valueinuse).Valueinusereferstotheestimatedfuturenetcashflowsfromtheassetorcash-generatingunitinquestiondiscountedtothecurrentvalue.

Ifthevalueinuseislowerthanthecarryingamountoftheasset,theimpairmentisenteredasanexpenseontheincomestatementandallocatedprimarilytogoodwillandthereafteragainstotherassetsonaproratabasis.

Ifthereisapositivechangeintheestimatedrecoverableamountofmoney,depreciationlossrelatedtotangiblefixedassetsandotherintangibleassets,excludinggoodwill,isnullified.However,animpairmentlossisonlyreversedtotheextentthattheasset’scarryingamountdoesnotexceedthecarryingamountthatwouldhavebeendeterminedhadnoimpairmentlossbeenrecognized.Goodwillimpairmentlossisnotreversedinanysituation.Additionally,theimpairmentlossofequityinstrumentsthatarerecognizedasavailable-for-salefinancialassetsisnotreversedthroughprofitandloss.

GoodwillGoodwillismeasuredastheexcessofthecostoftheacquisitionovertheGroup'sshareofthefairvaluesoftheacquiree'snetassetsatthetimeoftheacquisition.Goodwillisrecognizedattheoriginalacquisitioncostlessaccumulateddepreciation.

OtherintangibleassetsOtherintangibleassetsarerecognizedattheoriginalacquisitioncostlessaccumulateddepreciationaccordingtoplanandpossibleimpairment.Publicsubsidiesrelatedtotheacquisitionofanintangibleassetaredeductedfromtheacquisitioncostoftheassetandrecognizedasincomebyreducingthedepreciationchargeoftheassettheyarerelatedto.Theexpectedusefullivesofintangibleassetsare3–10years.

Customeraccountsandtechnologyacquiredinbusinesscombinationsaremeasuredatfairvalueatthetimeofacquisitionanddepreciatedovertheusefullife..

TangibleassetsTangibleassetsarerecognizedonthebalancesheetattheoriginalacquisitioncostlessaccumulateddepreciationaccordingtoplanandpossibleimpairment.Theusefullivesoftangibleassetsare3–10years.

Theusefullifeofanassetisreviewedatleastattheendofeachfinancialyearand,ifnecessary,anychangeinexpectationsforfinancialbenefitisaccountedfor.

Salesgainsandlossesondisposalortransferoftangibleassetsarerecognizedthroughprofitorloss.Maintenancecostsarerecognizedthroughprofitorlossastheyareincurred.

ForeigncapitalcostsThecompanyrecognizesborrowingcostsasanexpenseintheperiodduringwhichtheyareincurred.Iftheborrowingcostsareduetoanassetwhosecompletionfortheintendedpurposeorsalenecessarilyrequiresaconsiderablylongtime,the


borrowingcostsarecapitalizedaspartoftheacquisitioncostoftheasset

LeasesLeasesonproperty,plantandequipmentareclassifiedasfinanceleasesiftheytransferasubstantialportionoftherisksandrewardsincidenttoownership.Financeleasesarerecognizedonthebalancesheetatthebeginningoftheleaseasassetsandliabilitiesatthelowerofthefairvalueoftheleasedassetandthepresentvalueoftheminimumleasepayments.Commoditiesacquiredusingfinanceleasesareamortizedaccordingtoplanandpossibleimpairmentlossesarerecognized.Financeleaseliabilitiesarerecognizedasfinancialliabilities,dividedintoshortandlongtermliabilities.

Iftherisksandbenefitstypicalofownershipremainwiththelessor,thecontractishandledasanotherrentalagreementandthepaymentsexecutedbasedontheagreementarerecognizedasanexpenseinfixedinstallmentsovertheleaseperiod..

FinancialassetsThefinancialassetsarecategorizedasfollows:

Financialassetsatfairvaluethroughprofitorloss

Held-to-maturityinvestments

Loansandotherreceivables

Available-for-salefinancialassets

Thecategorizationisbasedonthepurposeoftheacquisitionofthefinancialassets,anditisperformedinconnectionwiththeoriginalacquisition.Financialassetsareclassifiedasnon-currentassetsiftheymatureinmorethan12months.Iftheyaretobeheldforlessthan12months,theyaredisclosedascurrentassets.Financialassetsmeasuredatfairvaluethroughprofitorlossareclassifiedascurrentassets.

Transactioncostsareincludedintheoriginalbookvalueofthefinancialassets,whentheiteminquestionisnotrecognizedatfairvaluethroughprofitorloss.Allpurchasesandsalesoffinancialassetsarerecognizedatthetransactiondate,whichisthedateonwhichtheGroupcommitstopurchaseorsellthefinancialinstruments.DerecognitionofafinancialassetsisdonewhentheGrouphaslostitscontractualrighttomoneyfloworwhenithas,forasignificantextent,transferredrisksandprofitstooutsidethegroup.

FinancialassetsatfairvaluethroughprofitorlossAfinancialassetisgroupedintotheFinancialassetsatfairvaluethroughprofitorlosscategoryifitisacquiredasheldfortrading,oritisdesignatedasatfairvaluethroughprofitorlossuponinitialrecognition.Derivativesthatarenoteligibleforhedgeaccountingareclassifiedasheldfortrading.Theassetsarevaluedatfairvalueatthebalancesheetdate,andthechangeinvalueisrecognizedunderfinanceincomeontheincomestatement.TheGroupdidnothaveassetsmeasuredspecificallyatfairvalueattheclosingdate.

Held-to-maturityinvestmentsHeld-to-maturityinvestmentsarenon-derivativefinancialassetswithfixedordeterminablepaymentsandfixedmaturitythattheGrouphasthepositiveintentandabilitytoholdtomaturity.Theyaremeasuredatamortizedcostusingtheeffectiveratemethod.

LoansandotherreceivablesLoanreceivablesandotherreceivablesarenon-derivativefinancialassetswithfixedordeterminablepaymentsthatarenotquotedinanactivemarketandarenotheldbytheGroupwiththeintenttosell.Loanreceivablesandotherreceivablesarevaluedatamortizedcostusingtheeffectiveratemethod.Theyareincludedincurrentornon-currentloanreceivables,tradereceivablesandotherreceivablescategoryonthebalancesheetinaccordancewiththeirnature.

Available-for-salefinancialassetsAvailable-for-salefinancialassetsarenon-derivativefinancialassetsspecificallydesignatedtothisgroupornotcategorizedotherwise.Available-for-salefinancialassetsaremeasuredatfairvalue.Whenthefairvaluecannotbereliablydetermined,theyaremeasuredatacquisitioncost.

Changesinthefairvalueofavailable-for-salefinancialassetsareenteredinothercomprehensiveincomeandpresentedinthefairvaluereserve,takingintoaccountthetaxeffect.Changesinfairvaluearetransferredfromequitytotheincomestatementasadjustmentswhentheinstrumentissoldoritsvaluehasdecreasedsothatanimpairmentlosshastoberecognizedfortheinstrument

Cashandcashequivalents


Cashandcashequivalentsconsistofcash,bankdepositsthatcanbewithdrawnondemandandothercurrenthighlyliquidinvestmentsthatcanbeexchangedtoanamountofcashassetsthatisknowninadvance,andwithalowriskofchangesinvalue.Itemsclassifiedascashandcashequivalentshaveamaximummaturityofthreemonthsfromacquisition..

ImpairmentoffinancialassetsCashandcashequivalentsconsistofcash,bankdepositsthatcanbewithdrawnondemandandothercurrenthighlyliquidinvestmentsthatcanbeexchangedtoanamountofcashassetsthatisknowninadvance,andwithalowriskofchangesinvalue.Itemsclassifiedascashandcashequivalentshaveamaximummaturityofthreemonthsfromacquisition.Basedonariskassessment,animpairmentismadeforuncertainsalesreceivables.Significantfinancialproblemsofadebtor,likelihoodofbankruptcy,defaultofpaymentsoradelayofmorethan180daysofapaymentareindicationsoftheimpairmentofsalesreceivables.Iftheamountoftheimpairmentlossisdecreasedduringasubsequentperiodandthedecreasecanbeobjectivelyconsideredtobeassociatedwithaneventaftertheimpairmentwasrecognized,therecognizedlossisreversedthroughprofitorloss.

Additionally,anassessmentisconductedateachclosingdatetodetermineifthereisobjectiveevidenceofimpairmentofanitemoracategoryincludedinthefinancialassets.

FinancialliabilitiesFinancialliabilitiesareinitiallyrecognizedatfairvalue.Transactioncostshavebeenincludedintheoriginalcarryingamountoffinancialliabilitiesmeasuredatamortizedcost.Subsequently,financialliabilities,excludingderivativeliabilities,arevaluedatamortizedcostusingtheeffectiveinterestmethod.Financiallaibilitiesareclassifiedasnon-currentliabilitiesiftheymatureinmorethan12months.Liabilitiesmaturinginlessthan12monthsareclassifiedascurrent.

DerivativecontractsDerivativecontractsarerecognizedinitiallyatfairvalueatthedateonwhichtheGroupentersintotheagreement,andsubsequentlytheyarestillmeasuredatfairvalue.Gainsandlossesresultingfromfairvaluemeasurementaretreatedinaccountingasspecifiedbythepurposeofthederivativecontract.Derivativecontractsarenotincludedinhedgeaccounting.

ProvisionsAprovisionisrecognizedwhentheGrouphasapresentlegalorconstructiveobligationasaresultofapastevent,itisprobablethattheobligationwillhavetobesettled,andtheamountoftheobligationcanbereliablyestimated.Provisionsaremeasuredatthepresentvaluerequiredinordertocovertheobligation.Thepresentvaluefactorusedinthecalculationofthepresentvalueisselectedsothatitrepresentsthemarketinsightintothetimevalueofmoneyandliability-relatedrisksatthetimeoftheassessment.

PensionbenefitliabilitiesTheGrouphasexclusivelydefinedcontributionpensionarrangements,andtherelatedpaymentsareexpensedintheyeartheyareincurred.

Share-basedpaymentsTheGrouphasincentiveschemesinwhichthepaymentsaremadeaseitherequityinstrumentsorincash.Thebenefitsgrantedintheschemesaremeasuredatfairvalueatthegrantdateandrecognizedasanexpenseevenlyduringtheearningsperiod.Inschemeswherethepaymentsaremadeincash,theliabilityrecognizedandchangeinitsfairvalueiscorrespondinglyallocatedasexpenses.Theresultimpactoftheschemesispresentedunderemployeebenefitsexpenses

IncometaxesIncometaxescompriseoftaxbasedonthetaxableincomeforthefinancialyearanddeferredtaxes.Taxesarerecognizedintheincomestatementexceptfortheexpensesentereddirectlytoshareholders’equitywhentheyareenteredonthebalancesheetaspartofshareholders’equity.

Taxesbasedontaxableincomearerecordedaccordingtothelocaltaxrulesofeachcountryusingthetaxrateinforce.

Deferredtaxesarecalculatedfromalltemporarydifferencesbetweenthecarryingamountandtaxablevalueatthetaxratesconfirmedattheclosingdate.Themostsignificanttemporarydifferencesarisefromdepreciationofproperty,plantandequipment,unusedtaxlosses,andadjustmentsforfairvaluesinconnectionwithacquisitions.Deferredtaxisnotrecognizedfornon-taxdeductiblegoodwill.Deferredtaxisnotrecognizedfornon-distributedprofitsofsubsidiariesinsofarasthedifferenceisnotlikelytobedischargedintheforeseeablefuture.Deferredtaxliabilitiesarewhollyincludedonthebalancesheetinothercases.Adeferredtaxassetisrecognizedtotheextentthatitislikelythattherewillbefuturetaxableincomeagainstwhichitisdeductible.Therequirementsfortherecognitionofdeferredtaxassetsarereassessedateachclosingdate.


Shareholders'equityCostsrelatedtotheissueorpurchaseofequityinstrumentsarerecordedasareductionofshareholders'equity.

Treasurysharerepurchaseandconveyancearepresentedundershareholders'equity.

Accountingprinciplesrequiringmanagement’sconsiderationandkeyuncertaintiesrelatingtotheestimatestWhenpreparingthefinancialstatements,estimatesandsuppositionregardingthefuturehavetobemade.Realizationmay,however,differfromtheseestimates.Additionally,discretionmustbeusedwhenapplyingtheaccountingprinciples.Theestimatesarebasedonthebestviewsofthemanagementatthetimeoftheclosingofthebooks.Possiblechangesintheestimatesandsuppositionsarerecordedinaccountingintheperiodwhentheestimateorsuppositionisadjustedandinallthefollowingfinancialperiods.Themanagementbelievesthattheestimatesandsuppositionsareaccurateenoughtobeusedasbasisforfairvalueassessment.

Themostsignificantestimatesincludedinthefinancialstatementsarerelatedtomeasurementofgoodwillandotherintangibleassets(Note10),currentsalesreceivables(Note14),utilizationofdeferredtaxassets(Note16)andcapitalizationofproductdevelopmentexpenses(Note6).


2.OPERATINGSEGMENTSBasware’sbusinessoperationsarecomprisedofasinglebusinessarea,thePurchase-to-Pay(P2P)business.BaswareprovidesPurchase-to-Payproductsandservicestoallpotentialcustomers.Basware'sP2Pproductsandservicesaresuitableforallindustriesandcompaniesofallsizes.

TheGroupreportsrevenuefromproductsandservicesasfollows:NetworkServices(e-Invoicingsolutionsandservices)andSolutionServices(softwaresolutionsandservices).Inadditiontothis,thecompanyreportsrevenuefromproductsandservicesintabulatedformataccordingtothebreakdownofthepreviousreportingpractice:LicenseSales,CustomerSupport,ProfessionalServices,andAutomationServices.Inaccordancewiththepreviouspractice,CustomerSupportandAutomationServicestogetherformtherecurringrevenuereportedbythecompany.

NetworkServicesrevenueiscomprisedofe-Invoicing,paperinvoicescanningservices,printingservice,catalogexchange,purchasemessageexchange,activationservices,andalliancefeesofe-invoicingservicesandfinancing-relatedaddedvalueservices.

SolutionServicesrevenueiscomprisedofsoftwarerevenue(SaaSrevenueandlicensesales),softwaremaintenanceandextendedcustomersupportservices(customersupport),ProfessionalServices,andstart-upfeesofSaaSservices.

LicensesalesconsistofthePurchasetoPayproductfamilytogetherwithfinancialplanningandreportingsolutionssoldonlyinFinland.CustomerSupportiscomprisedofthepreviousMaintenanceandExtendedcustomersupportpreviouslyreportedunderProfessionalServices.Extendedcustomersupportagreementsarecontinuousserviceagreementswithatermofseveralyears.Workrelatedtocustomerprojects,suchassoftwareinstallation,businessconsultingandprojectmanagementareincludedinProfessionalServices.Maintenanceiscomprisedofannualmaintenancefeespaidfortheproductsandworkbysupportunitpersonneltocustomers.AutomationServicesincludee-invoicing,scan&captureservices,printingservices,purchasecataloguemanagement,purchasemessageexchange,activationservicesandSaaSservices.

AsgeographicinformationBaswarereportsgeographicalareasFinland,Scandinavia,restofEurope,andOther.Netsalesarereportedbythecustomer’slocation,andnetsalesandoperatingresultarealsoreportedbythelocationoftheassets.Inaddition,thegeographicalinformationofnon-currentassetsisreportedbythelocationoftheassets

NetsalesbyproductsandservicesEURthousand

1.1.-31.12.20134 1.1.-31.12.2013NetworkServices 33,237 27,829SolutionServices 94,437 95,520Grouptotal 127,674 123,349ofwhichLicencesales 14,173 14,617CustomerSupport 44,493 43,512ProfessionalServices 27,930 30,069AutomationServices 41,078 35,151


NetsalesbycustomerlocationEURthousand

1.1.-31.12.2014 1.1.-31.12.2013Finland 48,978 49,324Scandinavia 26,216 25,928Europe 37,020 34,453Others 15,459 13,643Total 127,674 123,349

NetsalesbygeographicalareaEURthousand

31.12.2014 31.12.2013Finland 73,353 64,570Scandinavia 26,175 25,351Europe 36,499 36,768Others 14,425 11,899Salesbetweenareas -22,778 -15,239Total 127,674 123,349

OperatingresultbygeographicalareaEURthousand

31.12.2014 31.12.2013Finland 514 887Scandinavia 1,583 2,348Europe 2,890 326Others 723 362Operatingresultbetweenareas -1,385 -592Total 4,325 3,331

Non-currentassetsbasedonthelocationsoftheassetsEURthousand

31.12.2014 31.12.2013Finland 39,534 39,680Scandinavia 7,761 8,607Europe 28,574 29,463Others 1,829 2,091Total 77,697 79,840


3.OTHEROPERATINGINCOMEEURthousand

1.1.-31.12.2014 1.1.-31.12.2013Incomefromsaleofbusinesses 0 1,540Otheroperatingincome 260 375Otheroperatingincome 260 1,915

CashierDeskbusinessdinvestmentisincludedintocomparativeinformation.

4.MATERIALSANDSERVICESEURthousand

1.1.-31.12.2014 1.1.-31.12.2013Purchasesduringtheperiod -9,900 -9,855Increase/decreaseininventories -197 221Externalservices -2,699 -2,127Materialsandservices -12,796 -11,761

5.PERSONNELANDEMPLOYEEBENEFITSEXPENSE1.1.-31.12.2014 1.1.-31.12.2013

Finland 482 510Scandinavia 134 131RestofEurope 291 265India 492 506Otherareas 67 73PersonnelTotal 1,466 1,485

Employeebenefitsexpenses

EURthousand1.1.-31.12.2014 1.1.-31.12.2013

Salariesandfees -63,487 -62,003Pensionexpenses,definedbenefitplans -6,629 -7,134Share-basedincentiveplans -296 -201Otheremployeebenefits -7,367 -7,581Employeebenefitsexpenses -77,779 -76,919


KeymanagementcompensationEURthousand

1.1.-31.12.2014 1.1.-31.12.2013Salariesandothershort-termemployeebenefits -1,640 -2,244Post-employmentbenefits 0 -450Share-basedpayments -296 -201Managementcompensation -1,936 -2,895

CompensationofthemembersoftheExecutiveTeamhasbeentakenintonoticeinmanagementcompensation.

ManagementandBoardsalaries,feesandbenefitsEURthousand

1.1.-31.12.2014 1.1.-31.12.2013CEOofparentcompany EsaTihilä -300 -344CompensationofthemembersoftheBoardofDirectors HannuVaajoensuu -59 -60PenttiHeikkinen -31 -32IlkkaSihvo -36 -36EevaSipilä(until14February2013) 0 -4TuijaSoanjärvi -31 -27AnssiVanjoki -31 -32Total -488 -535


ThesalaryofCEOEsaTihilä,includingbenefits,totaledEUR300thousand(EUR344thousand)fortheperiodJanuary1-December31,2014.SalaryinmoneywasEUR286thousand(EUR288thousand)andfringebenefitstotaledEUR14thousand(EUR12thousand).TheaccruedpensioncostsofEsaTihiläamountedtoEUR58thousand(EUR56thousand).TheCEO'spensionplanispursuanttotheemploymentpensionlegislation.TheCEOhas6months'periodofnoticeandsalaryfortheperiodofnoticeshouldtheCompanygivenotice,inadditiontowhichheisentitledtoseverancepayequivalentof12months'fixedsalary.

Share-basedpayments

IncentiveschemesAshare-basedincentiveschemewasinusein2009-2011.Thepossiblerewardoftheshare-basedincentiveschemeforthevestingperiod2009-2011wasbasedonBaswareCorporation'searningspershare(EPS).Thebonusforthevestingperiod2009waspaidinDecember2011,thebonusforthevestingperiod2010inDecember2012,andthebonusforthevestingperiod2011wasbepaidinDecember2013.Thebonusesarepaidpartiallyassharesinthecompanyandpartiallyincash.Thebonusoftheshare-basedincentiveschemeispaidtwoyearsaftertheendofthevestingperiod,andthereforenootherrestrictionsareassociatedwiththeownershipofthesharesreceived.

Baswareinformedaboutanewshare-basedincentiveplanfortheBaswareGroupkeypersonnelfor2012-2014onFebruary17,2012.TheBoardofDirectorsinformedaboutupdatingtheshare-basedincentiveplanforthekeypersonneltocontinueuntiltheendof2015onFebruary15,2013.Thetermsoftheincentiveplanremainedthesamewiththeexceptionofaddingoneearningperiodtotheplan.

Theaimoftheplanistocombinetheobjectivesoftheshareholdersandthekeypersonnelinordertoincreasethevalueofthecompany,committhekeypersonneltothecompany,andofferthemacompetitiverewardplanbasedonshareholdinginthecompany.Accordingly,theBoardofDirectorsencouragestheBaswareExecutiveTeammemberstoholdsharesinthecompanyequalingthevalueofannualgrossbasesalary.

Thesystemincludesfourearningperiods,calendaryears2012,2013,2014,and2015.Thesystemcomprisesannualearningperiods2012,2013,2014,and2015andfixedearningperiod2013-2015.MembersoftheExecutiveTeammaybeallocatedadditionalshareswithoutconsiderationagainstshareholdingduringtheearningperiod2012-2015.

TheBoardofDirectorsdecidesontheearningscriteriaandrelatedtargetsseparatelyforeachannualearningperiodatthebeginningoftheearningperiod.Thereareemployment-relatedconditionsforeligibilityforrewardpayment.Therewardforthefixedearningperiod2013-2015isbasedonBaswareCorporation'searningspershare(EPS).Thetargetgroupofthefixedearningperiod2013-2015includesthemembersoftheBaswareExecutiveTeam.

Thesharestobeallocatedatthetargetlevelwillcontinuetocorrespondatthecurrentsharepricetotheapproximateamountof111742BaswareCorporationshares(includingalsotheproportiontobepaidincash)andtotalling167614atthemaximum.ThepossiblesharestobeallocatedwillconsistofownsharesheldbythecompanyoracquiredinpublictradingthroughNASDAQOMXHelsinkiLtd.

Thetermsoftheincentiveschemeincludesworkandemploymentrelatedconditions.

Share-basedincentiveswasgiventothekeypersonnel2014accordingtoTheBoadofDirectors'decisions.


Share-basedincentiveplan2011

Basicvalues Maximumnumberofshares 47,175 Maximumamountofcash 47,175 Dateofissue 14.3.2011 Beginningofearningperiod 14.3.2011 Endofearningperiod 31.12.2013 Vestingconditions Workingcommitment Criterions EPS Formofthereward Sharesandcash Numberofpersons,dateofissue 12 Shareprice,dateofissue 24.25 Theannualexpecteddividends,fairvalue 0.82 Closingshareprice31.12.2011 16.45 Closingshareprice31.12.2012 20.25 Closingshareprice31.12.2013 25.03 Fairvalue31.12.2011 1,082,773 Fairvalue31.12.2012 420,569 Fairvalue31.12.2013 0 Recognizedliability,cashportion 29,516

Share-basedincentiveplan2012Annualvesting* 2013Annualvesting 2014Annualvesting

Basicvalues Maximumnumberofshares 35,533 Maximumamountofcash 35,533 Maximumnumberofshares 37,553 33,417 32,562Maximumamountofcash 37,553 33,417 32,562Dateofissue 16.2.2012 14.2.2013 24.2.2014Beginningofearningperiod 16.2.2012 14.2.2013 1.3.2014Endofearningperiod 31.12.2014 31.12.2015 31.12.2016Vestingconditions Workingcommitment Workingcommitment WorkingcommitmentCriterions Netsales Netsales NetsalesFormofthereward Sharesandcash Sharesandcash SharesandcashNumberofpersons,dateofissue 11 25 25Shareprice,dateofissue 18.53 20.3 29.91Theannualexpecteddividends,fairvalue

1.37 1.37 1.37

Closingshareprice31.12.2012 20.25 Closingshareprice31.12.2013 25.03 25.03 Closingshareprice31.12.2014 41.05 41.05 41.05Fairvalue31.12.2012 230,578 Fairvalue31.12.2013 223,866 61,013 Fairvalue31.12.2014 232,233 96,489 543,837Recognizedliability,cashportion 163,772 43,081 98,779


Share-basedincentiveplan2014Annualvesting 2014Annualvesting

Basicvalues Maximumnumberofshares 2,500 750Maximumamountofcash 2,500 750Dateofissue 26.11.2014 24.11.2014Beginningofearningperiod 26.11.2014 24.11.2014Endofearningperiod 1.9.2015 1.1.2016Vestingconditions Workingcommitment WorkingcommitmentCriterions Formofthereward Sharesandcash SharesandcashNumberofpersons,dateofissue 5 1Shareprice,dateofissue 40.99 40.85Theannualexpecteddividends,fairvalue 1.37 1.37Closingshareprice31.12.2014 41.05 41.05Fairvalue31.12.2014 104,385 31,316Recognizedliability,cashportion 7,724 1,696

Share-basedincentiveplan2012Fixedvesting* 2013Fixedvesting*

Basicvalues Maximumnumberofshares 97,145 0Maximumamountofcash 97,145 0Maximumnumberofshares 83,127Maximumamountofcash 83,127Dateofissue 16.2.2012 14.2.2013Beginningofearningperiod 16.2.2012 14.2.2013Endofearningperiod 31.12.2014 31.12.2015Vestingconditions Workingcommitment WorkingcommintmentCriterions EPS EPSFormofthereward Sharesandcash SharesandcashNumberofpersons,dateofissue 11 10Shareprice,dateofissue 18.53 20.3Theannualexpecteddividends,fairvalue 1.37 1.37Closingshareprice31.12.2012 20.25 Closingshareprice31.12.2013 25.03Closingshareprice31.12.2014 41.05Fairvalue31.12.2012 545,126 Fairvalue31.12.2013 Fairvalue31.12.2014 Recognizedliability,cashportion 10,587


Share-basedincentiveplan2012Matchingofshares*

Basicvalues Maximumnumberofshares 2,697 Maximumamountofcash 0 Maximumnumberofshares 4,869 Maximumamountofcash 0 Maximumnumberofshares 2,562 Maximumamountofcash 0 Dateofissue 16.2.2012 Beginningofearningperiod 16.2.2012 Endofearningperiod 31.12.2015 Vestingconditions Workingcommitment Criterions Numberofdepositedshares Formofthereward Shares Numberofpersons,dateofissue 11 Shareprice,dateofissue 18.53 Theannualexpecteddividends,fairvalue 1.37 Closingshareprice31.12.2012 20.25 Closingshareprice31.12.2013 25.03 Closingshareprice31.12.2014 41.05 Fairvalue31.12.2012 41,652 Fairvalue31.12.2013 75,197 Fairvalue31.12.2014 39,568

*TheBoardofDirectorsdecidedonFebruary14,2013,toextendtheincentiveschemesbyoneyearuntil2015.Thesystemincludesfourvestingperiods,calendaryears2012,2013,2014,and2015.Thesystemcomprisesannualvestingperiods2012,2013,2014,and2015,andfixedvestingperiod2013–2015.MembersofBaswareExecutiveTeammaybeallocatedadditionalshareswithoutconsiderationagainstshareholdingduringthevestingperiod2012–2015.Theincreasesinthefairvaluesoftheschemesdidnotchangesubstantiallyastheresultoftheamendments.


6.OTHEROPERATINGEXPENSEEURthousand

1.1.-31.12.2014 1.1.-31.12.2013Otheroperatingexpenses Rents -3,972 -4,110 Non-statutoryemployeebenefits -842 -1,270 Travel -3,737 -4,373 Marketing -4,432 -4,310 ITandtelephone -2,037 -2,184 Recognitionofdoubtfultradereceivables 15 -563 Auditorfeesandotherservices -352 -428 Otherexpenses -10,647 -8,962 Otheroperatingexpensestotal -26,004 -26,200

Auditorfeesandotherservices Auditfees -231 -245 Taxadvices -96 -120 Otherfeesandservices -25 -64 Auditfeestotal -352 -428

ResearchandDevelopmentexpenses Researchanddevelopmentexpenses -13,406 -14,541 Capitalizeddevelopmentexpenses -4,274 -3,607 Researchanddevelopmentexpensestotal -17,680 -18,148

7.FINANCIALINCOMEANDEXPENSESEURthousand

1.1.-31.12.2014 1.1.-31.12.2013Financeincome Currencyderivatives,nohedgeaccounting 20 0Interestincome 51 90Otherfinancialincome 1,083 837Total 1,154 928

Financeexpenses Interestratederivatives,nohedgeaccounting -12 -14Interestexpenses -134 -200Otherfinanceexpenses -1,006 -761Total -1,151 -975

Financeincomeandexpensestotal 3 -47

Otherfinanceincomeiscomprisedofexchangegains

Otherfinanceexpensesaremainlycomprisedofexchangelosses.


ExchangedifferencesrecognizedonincomestatementEURthousand

1.1.-31.12.2014 1.1.-31.12.2013Exchangedifferencesincludedinnetsales 34 30Exchangedifferencesincludedinpurchasesandexpenses -93 219Foreignexchangegains 1,083 837Foreignexchangelosses -1,100 -761Exchangedifferencesrecognizedonincomestatement -76 325

8.INCOMETAXESEURthousand

1.1.-31.12.2014 1.1.-31.12.2013Incometaxonoperations -1,120 -911Taxforpreviousaccountingperiods -448 -455Changeindeferredtasliabilitiesandtaxassets 200 688Incometax -1,368 -678

TaxratereconciliationEURthousand

1.1.-31.12.2014 1.1.-31.12.2013Profitbeforetaxes 4,328 3,284

Taxcalculatedatdomestictaxrate -866 -804Taxforpreviousyears -448 -455Effectofdifferenttaxratesofforeignsubsidiaries -363 135Effectofchangeintaxrate 7 -161Non-deductibleexpenses -229 86Other 34 346Incomenotsubjecttotax 6 0Applicationoflossfrompreviousyear 305 -196Deductibleexpensesnotincludedintheaccountingprofit 176 0Unrecognizeddeferredtaxassetsfromtaxlosses 10 0Reassessmentofdeferredtaxassets 371Incometaxes -1,368 -678

Formoreinformationondeferredtaxassetsandliabilities,refertoNote16.

TaxesrelatingtoothercomprehensiveincomeEURthousand

1.1.-31.12.2014 1.1.-31.12.2013Taxesonforeignexchangegainsfromnetinvestments -279 281


9.EARNINGSPERSHAREEURthousand

1.1.-31.12.2014 1.1.-31.12.2013Profitfortheperiod 2,959 2,605

Averagesharenumber,1,000pieces undiluted 13,286 12,849diluted 13,298 12,849

Earningspershare Undiluted,EUR 0.22 0.20Diluted,EUR 0.22 0.20

10.GOODWILLANDOTHERINTANGIBLEASSETS

GoodwillEURthousand

2014 2013Acquisitioncost1.1. 50,996 41,896Translationdifference -679 -1,216Additions 0 10,316Acquisitioncost31.12. 50,317 50,996

Acquisitioncost31.12. 50,317 50,996

Goodwillcomprisesofthefollowingarrangements:EURthousand

GoodwillMomentumDoc,AB(2002) 1,042IocoreAS(2005) 2,896TrivetOy(2005) 669AnalysteOyj(2006) 13,869DigitalVisionTechnologiesLtd.(2007) 7,484ContempusAS(2008) 4,517ItellaInformationAS(2009) 448FirstBusinesspostGmbH(2012) 9,076Certipost(2013) 10,316Total 50,317

Goodwillhasbeenallocatedtocash-generatingunitstothesynergybenefitsexpectedtoresultfromunifyingtheoperations.


CashgeneratingunitEURthousand

GoodwillBaswareOyj 21,045 BaswareAB 521 BaswareAS 6,413 BaswareUK 7,484 BaswareGmbH 4,538 BaswareNV 10,316 Total 50,317

Goodwillhasbeentestedforimpairmentinthelastquarterof2014,andthediscountrateusedintheimpairmenttestingvariesbetweencountriesfrom9.48to12.00percentandis9.48percent(BaswareCorporation),9.62percent(BaswareAB),11.37percent(BaswareAS),11.24percent(BaswareUK),9.80percent(BaswareGmbH),and12.00percent(BaswareNV).Therecoverableamountevaluatedintheimpairmenttestisbasedonthe2015budgetandonsubsequentdevelopmentassessedonthebasisofthebudget.Keyvariablesusedinthecalculationsarethechangeratesofnetsalesandcosts.Thegrowthofnetsaleshasbeendeterminedbytakingintoaccountthecompany’sactualperformance,marketpositionandgrowthpotentialinthemarketinquestion.

Ongroundsofsensitivityanalysesbasedonthezero-growthscenariothemanagementoftheCompanyestimatesthatitisunlikeIythatachangeinthekeyvariablesusedinthetestwouldcreateasituationwheretheaccountingvalueofgoodwillincludedinthebalancesheetexceededtherecoverableamountoftheunit.Inthezero-growthscenario,growthinnetsalesiszerothroughouttheevaluatedperiod.Thecostsofthezero-growthscenarioacknowledgeafive-percentdecreaseafterthetwoyearsfollowingthebudgetyear2015,afterwhichthecostsareatthepreviousyear’slevel.

If,inadditiontothezero-growthscenario,thediscountratewasincreasedby1.5%foreachunittested,thiswouldleavetoBaswareUK'svalueinusebeinglowerthantheaccountingvalueoftheunit'sassetstested(GBP5.3mvs.GBP5.8m).Shouldtheassumptionsofthezero-growthscenariomaterializeinBaswareUKtogetherwiththehigherdiscountrate(+1.5%)usedinthesensitivityanalysis,thiswouldconstituteasituationwithindicationsofimpairment.Ifthevalueinuseaccordingtotestingforimpairmentofgoodwillperformedatthistimewaslowerthantheaccountingvalueoftheunit'sassetstested,theimpairmentwouldberecognizedasacostintheincomestatementandwouldbeprimarilyallocatedtogoodwillonthebalancesheet.


Intangibleassets2014EURthousand

Developmentcosts

Intangiblerights**

Otherintangibleassets

Assets,unfinishedprojects*

Total

Acquisitioncost1.1 23,066 28,393 565 6,054 58,078Translationdifference(+/-)

-69 -465 1 -533

Additions 411 46 4,548 5,005Acquisitionsthroughbusinesscombinations

Reclassificationsbetweenitems

1,146 781 -1,927 0

Acquisitioncost31.12 24,143 29,120 612 8,675 62,550

Cumulativeamortization1.1

-14,052 -17,307 -291 -31,650

Translationdifference(+/-)

69 428 496

Amortization -3,238 -2,878 -49 -6,165Cumulativeamortization31.12

-17,222 -19,758 -340 0 -37,320

Bookvalue31.12.2014 6,922 9,362 272 8,675 25,231

*AssetgroupUnfinishedinvestmentshasbeenremovedfromassetgroupIntangiblerightstoassetgroupAsset,unfinishedprojects.Comparativeinformationfromyear2013hasbeenchangedaccordingly.

**AssetgroupIntangiblerights,financeleasehasbeenjoinedtoassetgroupIntangiblerights.Comparativeinformationfromyear2013hasbeenchangedaccordingly.Therearenofinancialleaseitemsatthebalancesheetdate31.12.2014.



Developmentcosts

Intangiblerights**

Otherintangibleassets


Total

Acquisitioncost1.1 22,100 23,852 538 3,104 49,595Translationdifference(+/-)

-127 -836 -5 -968

Additions 361 726 32 3,677 4,800Acquisitionsthroughbusinesscombinations

4,651 4,651

Reclassificationsbetweenitems

732 -732 0

Acquisitioncost31.12 23,066 28,393 565 6,054 58,078


-10,845 -15,331 -250 -26,426

Translationdifference(+/-)

124 736 1 861

Amortization -3,331 -2,713 -41 -6,085Cumulativeamortization31.12

-14,052 -17,307 -291 -31,650

Bookvalue31.12.2013 9,014 11,295 274 5,844 26,428

11.TANGIBLEASSETS

Tangibleassets2014EURthousand

Machineryandequipment Machineryandequipment,financelease Othertangibleassets TotalAcquisitioncost1.1 9,137 134 106 9,377Translationdifference(+/-) 12 -3 9Additions 808 8 816Acquisitionsthroughbusinesscombinations

Decreases -7 -7Acquisitioncost31.12 9,950 131 114 10,195


-7,812 -134 -7,946

Translationdifference(+/-) -8 3 -5Decreases 7 7Amortization -864 -864Cumulativeamortization31.12

-8,677 -131 0 -8,808

Bookvalue31.12.2014 1,273 0 114 1,387



Machineryandequipment Machineryandequipment,financelease Othertangibleassets TotalAcquisitioncost1.1 8,130 140 99 8,369Translationdifference(+/-) 50 -6 43Additions 631 7 637Acquisitionsthroughbusinesscombinations

329 329

Decreases -2 -2Acquisitioncost31.12 9,137 134 106 9,377


-6,789 -140 -6,929

Translationdifference(+/-) -58 6 -52Decreases 2 2Amortization -966 -966Cumulativeamortization31.12

-7,812 -134 0 -7,946

Bookvalue31.12.2013 1,325 0 106 1,431

12.AVAILABLE-FOR-SALEASSETSEURthousand

31.12.2014 31.12.2013Acquisitioncost1.1. 38 38Acquisitioncost31.12 38 38

Available-for-saleInvestmentsincludessharesofunlistedcompanies.

13.INVENTORIESEURthousand

31.12.2014 31.12.2013Rawmaterialsandconsumables 42 240Inventoriestotal 42 240

FIFOprinciplehasbeenappliedinthemeasurementofinventories.


14.TRADEANDOTHERRECEIVABLESEURthousand

1.1.-31.12.2014 1.1.-31.12.2013Non-currentreceivables Othernon-currentreceivables 724 947Non-currentreceivablestotal 724 947

Currentreceivables Tradereceivables 22,902 24,415Shorttermdeposits 29,979 0Otherreceivables 141 188Prepaidexpensesandaccruedincome 3,065 2,333Loanreceivables 600Derivatives,non-hedgeaccounting,level2 20 0Currentreceivablestotal 56,106 27,536

ThefairvaluesoffinancialassetsandliabilitiesarepresentedinNote21.

Nosignificantconcentrationsofcreditriskareassociatedwiththereceivables.Thebalancesheetvaluescorrespondthebesttothemaximumamountofthecreditrisk.CreditriskmanagementprinciplesarepresentedinNote18.

TheageinganalysisoftradereceivablesandimpairmentEURthousand

2014 Impairmentloss Net2014 2013 Impairmentloss Net2013Non-overduesalesreceivables 15,252 13,966 13,966Overduesalesreceivables 1-180days 7,159 9,667 9,667181-360days 984 -492 492 1,564 -782 782Over360days 678 -678 0 932 -932 0Total 24,073 -1,171 22,903 26,129 -1,714 24,415

15.CASHANDCASHEQUIVALENTSEURthousand

31.12.2014 31.12.2013Cashandcashequivalents 28,954 13,218Cashandcashequivalents 28,954 13,218


16.DEFERREDTAXASSETSANDLIABILITIES

Deferredtaxassets2014EURthousand

1.1.2014 Inincomestatement Periodchange,recordedinequity 31.12.2014Losses 3,522 349 3,871Otheritems 158 205 143 506Total 3,680 554 143 4,377

Deferredtaxassets2013EURthousand

1.1.2013 Inincomestatement Periodchange,recordedinequity 31.12.2013Losses 2,265 1,257 3,522Otheritems 278 -120 158Total 2,543 1,137 3,680

Deferredtaxliabilities2014EURthousand

1.1.2014 Inincomestatement Exchangeratedifference 31.12.2014Allocationoffairvalueonpurchases

1,863 581 -11 2,433

Total 1,863 581 -11 2,433

Deferredtaxliabilities2013EURthousand

1.1.2013 Inincomestatement Exchangeratedifference 31.12.2013Allocationoffairvalueonpurchases

1,493 378 -8 1,863

Total 1,493 378 -8 1,863


TheGrouphasatotalofEUR3871thousand(EUR3522thousand)ofdeferredtaxassetsforunutilizedtaxlossesofsubsidiaries,ofwhichEUR681thousandwillexpireduring2025–2027,whiletheresthavenoexpiryperiod.Accordingtothetransferpricingprinciple,subsidiariesaccumulatetaxableincomeagainstwhichconfirmedlossescanbeutilizedinthefuture.DeferredtaxassetstotalingEUR349thousand(EUR371thousand)netwereadditionallyrecognizedduringthefinancialperiodforunutilizedtaxlossesaccumulatedinpreviousyears.TheGrouphastotalEUR1059thousandunutilizedtaxcreditandlossesfromwhichdeferredtaxassetshasnotbeenrecognised.TotalEUR296thousandwillexpire2019andrestduring2025-2027.

17.MANAGEMENTOFFINANCIALRISKSThecompany'sinternationalbusinessinvolvescustomaryfinancingrisks.Thepurposeoffinancialriskmanagementistoensuretheavailabilityofsufficientfinancingcost-efficientlyandmonitorand,ifnecessary,limittheemergingrisksbytakingappropriatemeasures.RiskmanagementiscentralizedintheGroup’sfinancedepartment.Inaccordancewiththeriskmanagementpolicy,thedepartmentreportstotheCompany’sBoardofDirectorsatleastonceayear.

CurrencyriskBasware'snetsalesincreasedby4.5%(10.0%)inlocalcurrencytermsduring2014.

TheGroup'smaincurrencyisEuro,accountingforapproximately63percentofnetsalesin2014(approximately64%in2013).Inadditiontotheeuroarea,Baswareoperatesinvariousareas,themostsignificantofthembeingNorway,Sweden,theUnitedStates,theUnitedKingdom,andAustraliain2014.Thecompanyisexposedtoexchangeraterisksinthesecountriesthroughintra-companytrade,exportsandimportsaswellasthroughtheequityandfundingofforeignsubsidiaries.Theforeignexchange-denominatedcashflowinthesubsidiariesaccordingtothecompany’shedgingpolicydidnotexceedtheannualcurrency-specificlimitforhedgingmeasures,andthecompanythereforedidnothedgethesecashflowsagainstexchangeratefluctuations.Thecompanymadeashort-termDKK-denominateddepositofEUR29979thousandduringthefinancialperiodandhedgeditagainstexchangeratefluctuationsthroughacurrencyswap.

AsofJanuary1,2008,thecapitalstructureofBaswareCorporation'sforeignsubsidiarieshasbeenchangedtotheextentthatthemajorityofthelong-outstandingintercompanytradereceivablesintheparentcompanyhavebeenconvertedtoalong-termnetinvestmentinaforeignoperation.Thepurposeoftheloanarrangementistofundalong-termstrategicinvestment.Foreigncurrencygainsandlossesfromanetinvestmentinaforeignoperationarerecordedinothercomprehensiveincome.

AsensitivityanalysisofcurrencyriskwouldhavehadanimpactofEUR+/-0.8million(EUR0.7million)ontheprofitbeforetaxattheclosingdate,assumingaratechangeof+/-5%ofthelocalcurrencies(AUD,SEK,NOK,DKK,GBP,USD,RON,INR)againsttheeuro.Othervariablesareassumedtoremainunchanged.Thecalculationincludestheforeigncurrencytradepayablesandaccountsreceivableinthebalancesheetandnetinvestmentsandsubordinatedloansinthesubsidiaries.Asensitivityanalysisofcurrencyriskinforeignexchange-denominatednetinvestmentswouldhavehadanimpactof+/-EUR1.1million(EUR1.2million)onshareholders'equityattheclosingdate.

Theparentcompany’soperatingcurrencyiseuro.Foreigncurrency-denominatedassetsandliabilitiestranslatedintotheeuroattheexchangeratesoftheclosingdateareasfollows:

Nominalvalues2014EURthousand

USD AUD GBP SEK DKK NOK RONNon-currentassets 126 186 414 1,085 85 1,401 116Currentassets Cashandcashequivalents 2,226 1,629 342 897 342 1,302 259Tradeandotherreceivables 2,401 1,671 2,090 1,610 30,974 1,600 67Currentliabilities Non-interestbearingliabilities 422 448 1,076 1,236 710 1,411 141


Nominalvalues2013EURthousand

USD AUD GBP SEK DKK NOK RON INRNon-currentassets 52 151 393 1,157 63 1,583 42 0Currentassets Cashandcashequivalents 1,132 206 184 508 155 1,806 19 1Tradeandotherreceivables 2,173 1,264 2,705 1,633 1,041 1,553 150 0Currentliabilities Non-interestbearingliabilities 441 325 838 1,204 586 1,262 77 0

InterestrateriskThecompanyhadatotalofEUR5.0million(EUR8.3million)ofvariable-ratebankloansattheclosingdate.Athree-yearloanamountingtoEUR10.0millionwasraisedattheendof2012topartlyfundtheacquisitionofCertipost’snetworkande-Invoicingbusiness.Theloanispaidoffinequalhalf-yearlyinstallments.

Thecompanyisexposedtocashflowinterestrateriskthroughitsloanportfolio.Thegoalofthecompany’sriskmanagementwithregardtointerestrateriskistominimizethenegativeimpactsofchangesininterestratesonthecompany’sfinancialperformance.Thecompanyappliesdiverseinterestratehedginginstrumentstomanageinterestraterisks.Theaverageinterestrateofloanswas1.4percent(1.4%).

Theaveragebalancesofthevariablerateloansrealizedduringtheperiodhavebeenusedinthesensitivityanalysis.Attheclosingdate,theeffectofvariablerateinterest-bearingliabilitiesonprofitbeforetaxeswouldhavebeen+/-EUR61thousand(EUR76thousand)hadtheinterestrateincreasedordecreasedby1percentagepoint.

LiquidityriskThecompanymaintainssufficientliquidityreservesthroughcentralizedGroup-levelcashmanagement,paymenttraffic,andoverdraftfacilities.TheGroup’sliquidityremainedgoodduringthefinancialyear.Thecompany'sfinancialassetsincludedashort-termdepositofEUR29979thousand(EUR0thousand).

Thetablebelowdescribesamaturityanalysisbasedonagreements.Thefinanceleaseliabilitiesarediscounted;theotherfigureshavenotbeendiscountedandtheyincludeloanratesandrepaymentsofcapital.Thecompanydidnothavefinancialleaseliabilitiesattheclosingdate.

Maturitydistributionoffinancialliabilities2014EURthousand

Balancesheetvalue Cashflow 0-6months 6months-1year 1-5yearBankLoans 5,000 5,038 1,690 1,679 1,668Financelease 0 0 0 0 0Tradeandotherpayables 21,318 21,318 21,003 0 315Total 26,318 26,356 22,693 1,679 1,983


Maturitydistributionoffinancialliabilities2013EURthousand

Balancesheetvalue Cashflow 0-6months 6months-1year 1-5yearBankLoans 8,333 8,470 1,719 1,707 5,044Financelease 284 284 125 159 0Tradeandotherpayables 18,093 18,093 17,966 0 127Total 26,710 26,847 19,810 1,866 5,171

CreditrisksThecompany’ssalesreceivablesarespreadtoavastclienteleanddonotincludesignificantcreditrisks.Businessmanagementregularlymonitorsthepaymentofsalesreceivablesaspartofthemanagementofcustomeraccounts.TheGrouphasnotusedsuretybondstosecuresalesreceivables.

ImpairmentlossesrecognizedduringthefinancialperiodandtheagedistributionofsalesreceivablesarepresentedinNote14.

CapitalManagementShareholders’equityreportedintheGroupbalancesheetismanagedascapital.Thecompany'scapitalmanagementaimstoensurethecontinuityofthecompany'soperations(goingconcern)andincreasethevalueofshareholder’sinvestment.

Thecapitalstructurecanbeadjustedbydecisionson,e.g.,distributionofdividend,sharerepurchaseandshareissues.TheresolutionsoftheAnnualGeneralMeetingandtheauthorizationsoftheBoardofDirectorsarepresentedintheAnnualReport.AdditionalinformationontheshareandshareissueispresentedunderShareandShareholders.

Thecompany’sobjectiveistomaintainastrongequityratioandamoderategearingratio.Thecompany'sequityratiois82.7%(77.1%)andgearingratiois-38.6%(-4.7%).

18.SHAREHOLDERS'SEQUITY

Shareholders'Equity2014EURthousand

Shareholders'equity

Sharepremiumaccount


Otherreserves

Ownshares

Total

31.12.2013 3,528 1,187 61,748 540 -1,164 65,839Shareissue 42,641 42,641Decreaseoftreasuryshares

-8 8 0

31.12.2014 3,528 1,187 104,381 540 -1,156 108,480


Shareholders'Equity2014EURthousand

Shareholders'equity

Sharepremiumaccount


Otherreserves

Ownshares

Total

31.12.2012 3,528 1,187 61,799 540 -1,215 65,839Decreaseoftreasuryshares

-51 51 0

31.12.2013 3,528 1,187 61,748 540 -1,164 65,839

Numberofshares2014 2013

Numberofoutstandingshares1.1. 12,855,414 12,848,521Shareissue(+) 1,290,000 0Incentiveplan(-) 1,012 6,893Numberofoutstandingshares31.12 14,146,426 12,855,414

Treasuryshares1.1. 75,815 82,708Incentiveplan(-) 1,012 6,893Treasuryshares31.12. 74,803 75,815

OtherreservesOtherfundsincludethefairvaluereserve,whichincludestheincreaseinthevalueoftheAnalystedealsharesbetweenthepublicationandrealizationofthedealin2006.

TreasurysharesThetreasurysharesreserveincludestheacquisitioncostofownsharesheldbytheGroup.

DividendsAfterthebalancesheetdate,theBoardofDirectorshasproposedthatadividedofEUR0.10persharebepaid.AdividendofEUR0.23persharewaspaidfor2013.

19.TRADEANDOTHERLIABILITIESEURthousand

31.12.2014 31.12.2013Long-termtradeandotherliabilities Otherliabilities 314 127Long-ermtradeandotherliabilitiestotal 314 127

Short-termtradeandotherliabilities Tradeliabilities 2,604 1,770Accruedexpensesanddeferredincome 14,322 12,143Otherliabilities 3,961 4,053Short-termtradeandotherliabilitiestotal 20,886 17,966


ThefairvalueoffinancialassetsandliabilitiesarepresendtedinNote21.

AccruedexpensesincludespersonnelrelatedexpensesEUR9,798thousand(EUR7,163thousand).

20.FINANCELEASELIABILITIESEURthousand

31.12.2014 31.12.2013Short-termfinanceleases,interest-bearing 0 284Financeleaseliabilities 0 284

Financeleaseliabilities-minimumrentals Withinayear 0 281Minimumrentals 0 281Futurefinancingcostsrelatedtoleasingagreements 0 3Financeleaseliabilities 0 284

Presentvalueofminimumrentals Withinayear 0 284Futureminimumleasepaymentsatpresentvalue 0 284


21.FAIRVALUEOFFINANCIALASSETSANDLIABILITIESEURthousand

Note 2014Bookvalue 2014Fairvalue 2013Bookvalue 2013FairvalueFinancialassets

Non-current Available-for-salefinancialassets

Unlistedshares 12 38 38 38 38Loanandotherreceivables Non-currenttradeandotherreceivables

14 724 724 947 947

Current Financialassetsatfairvaluethroughprofitorloss

Currencyderivatives 14 20 20 0 0Loanandotherreceivables Short-termdeposits 14 29,979 29,979 0 0Tradeandotherreceivables 14 26,107 26,107 27,536 27,536Cashandcashequivalents 15 28,954 28,954 13,218 13,218

Financialliabilities

Non-current Financialloansmeasuredatamortizedcost

Loansfromfinancialinstitutions,interest-bearing

1,667 1,667 5,000 5,000

Financialleaseliabilities,interest-bearing

20 0 0 0 0

Current Financialliabilitiesatfairvaluethroughprofitorloss

Interestratederivatives 12 12 14 14Financialliabilities-financialliabilitiesvaluedatamortizedacquisitioncost

Loansfromfinancialinstitutions,interest-bearing

3,333 3,333 3,333 3,333

Financialleaseliabilities,interest-bearing

20 0 0 214 214

Tradeandotherpayables 19 20,886 20,886 17,966 17,966


*non-hedgeaccounting,level2

Notransfersbetweenthelevelstookplaceduringthefinancialperiod.Indeterminingthefairvaluesofthefinancialassetsandliabilities,thefollowingpricequotations,assumptionsandvaluationmodelshavebeenused.

Available-for-salefinancialassetsAvailable-for-salefinancialassetsconsistofunlistedshareinvestmentsvaluedatcostlessanyimpairment.Therefore,thefairvalueoftheinvestmentscannotbespecifiedreliably.Unlistedsharesdonothaveanactivemarket,andtheGroupdoesnotintendtogiveuptheseinvestmentsforthetimebeing.

TradeandotherreceivablesThebookvalueoftradeandotherreceivablescorrespondstotheirfairvalueastheeffectofdiscountingisnotsubstantialtakingintoaccountthematurityofreceivables.

DerivativesThefairvalueofderivativesisdeterminedonthebasisofavailablemarketinformation.

FinancialliabilitiesThefloatinginterestratesofbankloansarebasedon1-montheuribor,dependingonthematurityoftheloan.Therefore,thefairvalueoffloatingrateloansisconsideredtocorrespondtotheirbookvalue.

Thefairvalueoffinanceleasesisbasedondiscountingfuturecashflowsusinganinterestratecorrespondingtotheinterestrateofcorrespondingleaseagreements.

ThematuritydistributionoffinancialliabilitiesispresentedinNote17.

Thegroupdoesnothaveanyheld-to-maturityinvestments.


22.COMMITMENTSANDCONTINGENTLIABILITIESEURthousand

31.12.2014 31.12.2013Ownguarantees

Businessmortgageofowndebt 1,200 1,200Guarantees 205 0

Commitmentsonbehalfofsubsidiaries

Guarantees 37 31

Leaseliabilities Currentleaseliabilities 992 1,012Leaseliabilitiesmaturingin1-5years 1,014 820Total 2,006 1,831

Rentalliabilities Currentrentalliabilities 5,365 4,001Rentalliabilitiesmaturingin1-5years 7,584 3,738Rentalliabilitiesmaturingover5years 2,037 0Total 14,985 7,739

Otherowncontingentliabilitiestotal 16,991 9,570

CommitmentsandContingentLiabilitiestotal 18,433 10,801

Valueaddedtaxisonlyincludedinvehicleleasingliabilities.Theotherliabilitiesareexclusiveofvalueaddedtax.

23.RELATEDPARTYTRANSACTIONSGroup'srelatedpartiesincludetheBoardofDirectorsandmanagementteammembers,includingtheCEO.

EURthousand31.12.2014 31.12.2013

Servicespurchased 132 82

BaswareCorporationandSoftaforceOyhaveanagreementrelatedtooutsourcingofprocurement.Theagreementismarket-based.

CompensationofthekeyemployeesincludedinthemanagementispresentedinNote5.

BaswareCorporation’ssubsidiariesarepresentedinNote24.


24.SHARESINSUBSIDIARIESDomicile Country Groupholding,%

BaswareInternationalOy Espoo Finland 100BaswareGmbH Düsseldorf Germany 100BaswareUKLtd. Staffordshire GreatBritain 100BaswareAB Tukholma Sweden 100BaswareB.V. Amsterdam TheNetherlands 100BaswareA/S Herlev Denmark 100Basware,Inc. Delaware UnitedStates 100BaswareSAS Pariisi France 100BaswareAS Oslo Norway 100BaswarePtyLtd Chatswood Australia 100BaswareSRL lasi Romania 100BaswareIndiaPrivateLimited Chandigarh India 100BaswareBelgiumNV Aalst Belgium 100

ForeignbrancesTheparentcompanyhasbranchesinIndia,Chandigarh(reg.noF03347)andinRussia,Moscow(reg.no16926.1).

25.EVENTSAFTERTHEREPORTINGPERIODAfterthebalancesheetdate,nosignificanteventshavetakenplacewithintheGroup.


PARENTCOMPANYINCOMESTATEMENT(FAS)1.1.-31.12.2014

EURthousandNote 1.1.-31.12.2014 1.1-31.12.2013 Change,%

NETSALES 2 73,353 64,570 13.6

Otheroperatingincome 3 196 1,654 -88.2

Materialsandservices 4 -10,828 -8,622 25.6Employeebenefitsexpenses 5 -38,141 -38,774 -1.6Depreciationandamortization 6 -6,455 -6,419 0.6Otheroperatingexpenses 7 -20,129 -14,237 41.4Operatingprofit -2,003 -1,829 9.5

Financialincome 8 2,689 2,200 22.2Financialexpenses 8 -2,039 -1,935 5.4Profitbeforeappropriationandtaxes -1,354 -1,564 -13.4

Incometaxexpense 9 -221 -421 -47.5PROFITFORTHEPERIOD -1,575 -1,985 -20.6


PARENTCOMPANYBALANCESHEET(FAS)31.12.2014

EURthousandNote 31.12.2014 31.12.2013 Change,%

ASSETS Currentassets Intangibleassets 10 21,937 22,979 -4.5Tangibleassets 11 754 892 -15.5Investments 12 71,902 77,301 -7.0Long-termtradeandotherreceivables 14 197 457 -56.9Currentassets 94,790 101,629 -6.7

Currentassets Inventories 13 42 240 -82.4Short-termtradeandotherreceivables 15 56,911 19,641 189.8Cashandcashequivalents 15,136 4,622 227.5Currentassets 72,089 24,503 194.2

TOTALASSETS 166,878 126,133 32.3

EURthousandNote 31.12.2014 31.12.2013 Change,%

EQUITYANDLIABILITIES Shareholders'equity Sharecapital 16 3,528 3,528 0.0Sharepremiumaccount 16 1,118 1,118 0.0Otherreserves 16 105,398 62,132 69.6Retainedearnings 16 23,778 28,770 -17.4Profitfortheperiod 16 -1,575 -1,985 -20.6Shareholders'equity 16 132,247 93,564 41.3

Totalliabilities Long-termliabilities 17 1,844 5,191 -64.5Short-termliabilities 18 32,788 27,377 19.8Totalliabilities 34,632 32,569 6.3

TOTALEQUITYANDLIABILITIES 166,878 126,133 32.3


PARENTCOMPANYCASHFLOWSTATEMENT(FAS)1.1.-31.12.2014

EURthousand1.1-31.12.2014 1.1-31.12.2013

Netcashfromoperatingactivities Profitfortheperiod -1,575 -1,985Adjustmentsforprofit Planneddepreciations 6,455 6,419Proceedsfromsaleofnon-currentassets 0 -1,540Unrealizedexchangegainsandlosses 130 1,100Financeincomeandexpenses -503 -1,365Incometaxes 221 421

Workingcapitalchanges 5,983 3,012

Interestpaid -260 -275Interestreceived 1,944 1,458Otherfinancialitemsinoperatingactivities -887 -270Incometaxespaid 671 -1,882Netcashfromoperatingactivities 12,179 5,095

Netcashusedininvestingactivities Purchaseoftangibleandintangibleassets -5,984 -5,120Acquiredsubsidiaries 0 -31Short-termdeposits -30,000 0Grantedloans 3,119 -3,976Proceedsfromsaleofbusiness -4,522 1,540Netcashusedininvestingactivities -37,387 -7,587

Cashflowbeforefinancingactivities -25,207 -2,492

Netcashusedinfinancingactivities Shareissue 43,215 0Purchaseofownshares 0 0Proceedsfromborrowings -1,204 5,572Repaymentsofborrowings -3,333 -1,667Dividendspaid -2,957 -2,955Netcashusedinfinancingactivities 35,721 950

Netchangeincashandcashequivalents 10,514 -1,542

Cashandcashequivalentsatthebeginningofperiod 4,622 6,164Cashandcashequivalentsattheendofperiod 15,136 4,622


NOTESTOTHEPARENTCOMPANYFINANCIALSTATEMENTS(FAS)

1.ACCOUNTINGPRINCIPLESBaswareCorporation’sfinancialstatementshavebeenpreparedinaccordancewiththeFinnishAccountingAct

TransactionsinforeigncurrenciesTransactionsinforeigncurrenciesarerecordedattheexchangeratesprevailingatthetransactiondates.Attheendoftheaccountingperiod,theunsettledbalancesonforeigncurrencyreceivablesandliabilitiesarevaluedattheratesofexchangeprevailingattheendoftheaccountingperiod.Foreignexchangegainsandlossesrelatedtonormalbusinessoperationsareenteredintheappropriateincomestatementaccountbeforeoperatingprofitandforeignexchangegainsandlossesassociatedwithfinancingareenteredasanetamountunderfinancialincomeandexpenses

Revenuerecognition.NetsalesaregeneratedbyAutomationServices,CustomerSupport,ProfessionalServices,andLicenseSales.Whennetsalesarecalculated,salesrevenueisadjustedforexchangeratedifferencesofforeigncurrencysales.

Servicerevenueisrecognizedatthetimeofdelivery.Start-upfeesarerecognizedasrevenuewhentheworkrelatedtothestart-upprocedurehasbeencompletedandthecustomerhasbeenconnectedtotheserviceenvironment.Transactionrevenueisrecognizedonthebasisofactualtransactionvolumesandusechargesonamonthlybasisonthebasisoftheexistenceofanagreement.Thealliancefeesoffinancing-relatedaddedvalueservicesarerecognisedasrevenuewhentherelatedobligationshavebeenperformed.

Revenuerecognitionofproductsalesrequiresthatthereisabindingagreementofthesale,theproducthasbeendelivered,proceedsfromthetransactioncanbereliablyspecified,thefinancialgainwillbenefitthecompanywithsufficientprobability,andsignificantbenefitsandrisksrelatedtoownershiporrightsofuseoftheproducthavebeentransferredtothebuyer.Licenseagreementswitharightofreturnorconditionsrelatedtotheproduct'sfunctionalityorimplementationprojectarerecognizedasrevenueoncetherightofreturnhasexpiredortheabove-mentionedconditionshavebeenfulfilled.Maintenancerevenueisallocatedoverthecontractperiod.

Revenueandcostsoffixed-priceconsultingprojectsarerecognizedasrevenueandexpenditureonthebasisofthepercentageofcompletionwhentheoutcomeoftheprojectcanbereliablyestimated.Thedegreeofcompletionoftheprojectisspecifiedastheproportionofhoursworkedoftheestimatedtotalnumberofhours.Iftheresultingcostsandrecognizedprofitsexceedtheamountinvoicedforthetransaction,thedifferentispresentedin“Tradeandotherreceivables”onthebalancesheet.Iftheresultingcostsandrecognizedprofitsarelowertheinvoicingforthetransaction,thedifferenceispresentedin“Tradepayablesandotherliabilities”onthebalancesheet.Whenitislikelythatthetotalcostsrequiredforcompletingtheprojectexceedthetotalrevenuefromthetransaction,theexpectedlossisrecognizedasanexpenseimmediately.

OtheroperatingincomeOtheroperatingincomeincludesproceedsfromthesaleofbusinessoperationsandproperty,plantandequipment,rentalincome,andpublicsubsidiestotheextentthattheyarenotrelatedtocapitalizedR&Dprojects.

ResearchanddevelopmentcostsResearchexpensesarebookedasanexpenseastheyareincurred.Costsrelatedtotheadoptionofnewtechnologyordevelopmentofanewgenerationofprojectsarecapitalizedandrecognizedandamortizedovertheusefullifeof3–5years.Indeterminingtheusefullife,theobsolescenceoftechnologyandthetypicallifecycleofproductsintheindustryaretakenintoconsideration.Amortizationstartsoncetheproductisreadyforcommercialutilization.Maintenanceofexistingproductsandminorenhancementsarerecognizedastheyareincurred.Publicsubsidiesrelatedtoresearchanddevelopmentarerecognizedthroughprofitorlossintheperiodsduringwhichthecorrespondingcostsarerecognizedasexpenses

Pensions.Thestatutorypensioncoverageforemployeesisprovidedthroughinsurancepoliciestakenoutwithapensioninstitution.Thestatutorypensionexpensesarerecognizedasexpensesintheyeartheyareincurred

IntangibleassetsIntangibleassetsarerecognizedattheoriginalacquisitioncostlessaccumulateddepreciationaccordingtoplanandpossibleimpairment.Publicsubsidiesrelatedtotheacquisitionofanintangibleassetaredeductedfromtheacquisitioncostofthe


assetandrecognizedasincomebyreducingthedepreciationchargeoftheassettheyarerelatedto.Theexpectedusefullivesofintangibleassetsare3–10years.

TangibleassetsTangibleassetsarerecognizedinthebalancesheetattheoriginalacquisitioncostlessaccumulateddepreciation.Theusefullivesoftangibleassetsare3–5years.

LeasesLeasingpaymentsarerecognizedasannualexpenses.

DerivatesDerivativesarevaluedatfairvalueandunrealizedlossesarerecognizedintheincomestatementinaccordancewithprudenceprinciple.Companyhasnotappliedhedgeaccounting.

IncometaxesIncometaxeshavebeenrecognizedinaccordancewithFinnishtaxlegislation.


2.NETSALESEURthousand

2014 2013Netsalesbybusinessbranches Licencesales 9,249 8,442CustomerSupport 29,679 25,291ProfessionalServices 11,303 12,596AutomationServices 23,122 18,241Total 73,353 64,570

Netsalesbybusinessareas Finland 48,783 48,982Export 24,570 15,588Total 73,353 64,570

3.OTHEROPERATINGINCOMEEURthousand

2014 2013Incomefromsaleofbusinesses 0 1,540Otheroperatingincome 196 114Otheroperatingincome 196 1,654

4.MATERIALSANDSERVICESEURthousand

2014 2013Purchasesduringthefinancialperiod -8,498 -7,389Changeininventories -198 221Servicespurchased -2,132 -1,454Total -10,828 -8,622

5.NOTESTOPERSONNELANDCORPORATEGOVERNANCEEURthousand

2014 2013Personnelexpenses SalariespaidtoCEOandtheBoardofDirectors -488 -535Salariespaidtootherpersonnel -31,055 -30,814Pensionexpenses -4,821 -5,259Otherpersonnelexpenses -1,776 -2,166Total -38,140 -38,774

SalariesandfeespaidtoeachmemberofthemanagementaredetailedinNote5totheconsolidatedfinancialstatement.


Numberofpersonnel2014 2013

Personnelaveragefortheperiod 976 1,016Personnelattheendoftheperiod 975 1,002

6.DEPRECIATIONANDWRITE-OFFSEURthousand

2014 2013Intangibleassets -5,978 -5,868Tangibleassets -477 -552Total -6,455 -6,419

7.OTHEROPERATINGEXPENSESEURthousand

2014 2013Otheroperatingexpenses Rents -1,906 -2,126Non-statutoryemployeebenefits -395 -591Travelling -1,439 -2,909Marketing -2,474 -2,474ITandtelephone -1,321 -1,310Auditorfeesandotherservices -279 -328Otherexpenses -12,314 -4,499Total -20,129 -14,237

Auditfeesandotherservices -186 -209Taxadvices -68 -72Otherfeesandservices -25 -47Auditfeestotal -279 -328


8.FINANCIALINCOMEANDEXPENSESEURthousand

2014 2013Otherinterestandfinancialincome Fromgroupcompanies 2,652 2,204Fromothers 36 -4Otherinterestandfinancialincome 2,689 2,200

Interestandfinancialexpenses Togroupcompanies -938 -1,569Fromothers -1,101 -366Otherinterestandfinancialexpensestotal -2,039 -1,935

Total 649 265

9.DIRECTTAXESEURthousand

2014 2013Incometaxesonthefinancialperiod Incometaxesonactualbusiness -257 -133Incometaxesfrompreviousfinancialperiods 36 -288Total -221 -421


10.INTANGIBLEASSETS


Developmentcosts

Intangiblerights

Goodwill/mergerloss

Otherlong-terminvestments


Total

Acquisitioncost1.1 21,528 7,557 17,625 509 6,054 53,273Additions 400 4,537 4,937Reclassificationsbetweenitems

1,146 781 -1,927 0

Acquisitioncost31.12

22,674 8,738 17,625 509 8,664 58,210


-12,840 -3,898 -13,276 -280 0 -30,294

Amortization -3,091 -1,098 -1,759 -31 -5,979Cumulativeamortization31.12

-15,931 -4,996 -15,035 -311 0 -36,273

Bookvalue31.12.2014

6,743 3,742 2,590 198 8,664 21,937

*AssetgroupOtherassetsunderconstructionhasbeenjoinedtoassetgroupAsset,unfinishedprojects.Comparativeinformationfromyear2013hasbeenchangedaccordingly.


Developmentcosts

Intangiblerights

Goodwill/mergerloss

Otherlong-terminvestments

Unfinishedprojects*

Total

Acquisitioncost1.1 20,435 6,831 17,625 509 3,104 48,504Additions 361 726 3,682 4,769Reclassificationsbetweenitems

732 0 -732 0

Acquisitioncost31.12

21,528 7,557 17,625 509 6,054 53,273


-9,702 -3,044 -11,433 -247 -24,426

Amortization -3,138 -854 -1,843 -33 -5,868Cumulativeamortization31.12

-12,840 -3,898 -13,276 -280 -30,294

Bookvalue31.12.2013

8,688 3,659 4,349 229 6,054 22,979


11.TANGIBLEASSETS


Machineryandequipment Othertangibleassets TotalAcquisitioncost1.1 5,896 106 6,002Additions 331 8 339Acquisitioncost31.12 6,227 114 6,341

Cumulativeamortization1.1 -5,111 0 -5,111Amortization -477 -477Cumulativeamortization31.12 -5,588 0 -5,588

Bookvalue31.12.2014 639 114 754


Machineryandequipment Othertangibleassets TotalAcquisitioncost1.1 5,526 99 5,625Additions 370 7 377Acquisitioncost31.12 5,896 106 6,002

Cumulativeamortization1.1 -4,559 -4,559Amortization -552 -552Cumulativeamortization31.12 -5,111 -5,111

Bookvalue31.12.2013 785 106 891

12.INVESTMENTSEURthousand

2014 2013Sharesingroupcompanies Bookvalue1.1. 29,992 26,315Increase 0 3,677Bookvalue31.12. 29,992 29,992

Balancesheetvalue31.12 29,992 29,992

Othershares Bookvalue1.1. 38 38Bookvalue31.12. 38 38

Receivablesfromgroupcompanies Loanreceivablesfromgroupcompanies 41,872 47,271Investmentstotal 71,902 77,301


SharesissubsidiariesDomicile Country Parentcompanyholding,%

BaswareInternationalOy Espoo Finland 100BaswareGmbH Düsseldorf Germany 100BaswareUKLtd. Staffordshire GreatBritain 100BaswareAB Tukholma Sweden 100BaswareB.V. Amsterdam TheNetherlands 100BaswareA/S Herlev Denmark 100Basware,Inc. Delaware UnitedStates 100BaswareSAS Pariisi France 100BaswareAS Oslo Norway 100BaswarePtyLtd Chatswood Australia 100BaswareIndiaPrivateLimited Chandigarh India 99BaswareBelgiumNV Aalst Belgium 99

ForeignbranchesTheparentcompanyhasbranchesinIndia,Chandigarh(reg.noF03347)andinRussia,Moscow(reg.no16926.1)

13.INVENTORIESEURthousand

2014 2013Rawmaterialsandconsumables 42 240Inventoriestotal 42 240

14.NON-CURRENTRECEIVABLESEURthousand

2014 2013Rentdeposits 197 457Non-currentreceivablestotal 197 457


15.CURRENTRECEIVABLESEURthousand

2014 2013Accountsreceivables 6,158 6,797

Receivablesfromgroupcompanies Accountsreceivables 1,766 1,575Interestreceivables 1,566 1,860Loanreceivables 10,938 3,376Otherreceivables 2,840 1,749Total 17,110 8,560

Prepaidexpensesandaccruedincome 3,566 3,586Loanreceivables 0 600Shorttermdeposits 29,979 0Otherreceivables 98 99Total 33,643 4,285

Currentreceivablestotal 56,911 19,641

Prepaidexpensesandaccruedincome Taxreceivables 1,352 2,244Accruedemployeeexpenses 452 810Otherprepaidexpensesandaccruedincome 1,762 532Total 3,566 3,586


16.SHAREHOLDERS'EQUITYEURthousand

2014 2013Sharecapital1.1. 3,528 3,528Sharecapital31.12. 3,528 3,528

Sharepremiumaccount1.1. 1,118 1,118Sharepremiumaccount31.12. 1,118 1,118

Equity31.12. 4,647 4,647

Investednon-restrictedequity1.1. 62,132 62,183Shareissue 43,215 0Decreaseoftreasuryshares -7 -51Investednon-restrictedequity31.12. 105,340 62,132

Retainedearnings1.1. 26,785 31,674Dividendpayment -2,957 -2,955Acquisitionoftreasuryshares 0 0Decreaseoftreasuryshares 7 51Profitfortheperiod -1,575 -1,985Retainedearnings31.12. 22,260 26,785

Non-restrictedequity31.12. 127,600 88,917

Shareholders'equity31.12. 132,246 93,564

Specificationofdistributablefunds Profitfortheperiod -1,575 -1,985Retainedearnings 23,835 28,719Otherdistributablefunds 105,340 62,132Distributablefunds 127,600 88,866

17.NON-CURRENTLIABILITIESEURthousand

2014 2013Loansfromfinancialinstitutions 1,667 5,000Debtstogroupcompanies 177 177Accruedexpensesanddeferredincome 0 14Non-currentliabilitiestotal 1,844 5,191


18.CURRENTLIABILITIESEURthousand

2014 2013Accountspayable 1,512 1,014

Liabilitiestogroupcompanies Accountspayable 84 337Otherdebts 18,584 14,560Accruedexpensesanddeferredincome 0 0Total 18,668 14,897

Loansfromfinancialinstitutions 3,333 3,333Otherdebts 2,056 2,300Accruedexpensesanddeferredincome 7,220 5,832Total 12,609 11,465

Currentliabilitiestotal 32,788 27,377

Accruedexpensesanddeferredincome Accruedexployeeexpenses 6,243 4,933Otheraccruedexpenes 977 900Total 7,220 5,832


19.COMMITMENTSANDCONTINGENTLIABILITIESEURthousand

2014 2013Ownguarantees Businessmortgagesofowndebt 1,200 1,200Guarantees 205 0

Commitmentsonbehalfofsubsidiaries Guarantees 37 31

Otherowncontingentliabilities Leasingliabilities Currentleaseliabilities 126 110Leaseliabilitiesmaturingin1 5years 115 79Total 241 189

Rentalliabilities Currentrentalliabilities 3,598 2,724Rentalliabilitiesmaturingin1-5years 5,739 3,107Rentalliabilitiesmaturingover5years 2,037 0Total 11,374 5,831

Otherowncontingentliabilitiestotal 11,615 6,020

CommitmentsandContingentLiabilitiestotal 13,057 7,251

Valueaddedtaxisonlyincludedinvehicleleasingliabilities.Theotherliabilitiesareexclusiveofvalueaddedtax.Theleaseagreementsareordinaryleaseagreements.Thefinanceleaseagreementsareordinaryfinanceleaseagreementsandhavenoassociatedleasebackclauses.Thegroupdoesnothavepledges,mortgagesorguaranteesonbehalfofexternalparties.


BOARD'SDIVIDENDPROPOSALAttheendof2014,theGroupparentcompany’sdistributablefundsareEUR127,600,402.61.

Basware’sBoardofDirectorsproposestotheAnnualGeneralMeetingthatadividendofEUR0.10pershare(2013:EUR0.23)bepaidfor2014.Nosubstantialchangeshavetakenplaceinthecompany’sfinancialpositionaftertheendofthefinancialperiod.Thecompany’sliquidityisgood,andtheBoard’sviewisthattheproposeddividendpayoutwillnotendangerthecompany’sliquidity.

AccordingtotheBoard’sdecision,thedividendmatchingdateisFebruary17,2015.TheBoardofDirectorsproposestotheAnnualGeneralMeetingthatthedividendbepaidaftertheendofthematchingperiodonFebruary24,2015.

InEspoo,Finland,January23,2015

HannuVaajoensuu,ChairmanoftheBoard

IlkkaSihvo,ViceChairmanoftheBoard

PenttiHeikkinen

TuijaSoanjärvi

AnssiVanjoki

EsaTihilä,CEO

Auditor'sNoteOurAuditor'sreporthasbeenissuedtoday.

InHelsinki,Finland,January23,2015

Ernst&Young

AuthorizedPublicAccountantFirm

HeikkiIlkka

AuthorizedPublicAccountant


AUDITOR'SREPORT

TotheAnnualGeneralMeetingofBaswareCorporationWehaveauditedtheaccountingrecords,thefinancialstatements,thereportoftheBoardofDirectors,andtheadministrationofBaswareCorporationforthefinancialperiod1.1-31.12.2014.Thefinancialstatementscomprisetheconsolidatedstatementoffinancialposition,statementofcomprehensiveincome,statementofchangesinequityandstatementofcashflows,andnotestotheconsolidatedfinancialstatements,aswellastheparentcompany’sbalancesheet,incomestatement,cashflowstatementandnotestothefinancialstatements.

TheresponsibilityoftheBoardofDirectorsandtheManagingDirector

TheBoardofDirectorsandtheManagingDirectorareresponsibleforthepreparationofconsolidatedfinancialstatementsthatgiveatrueandfairviewinaccordancewithInternationalFinancialReportingStandards(IFRS)asadoptedbytheEU,aswellasforthepreparationoffinancialstatementsandthereportoftheBoardofDirectorsthatgiveatrueandfairviewinaccordancewiththelawsandregulationsgoverningthepreparationofthefinancialstatementsandthereportoftheBoardofDirectorsinFinland.TheBoardofDirectorsisresponsiblefortheappropriatearrangementofthecontrolofthecompany’saccountsandfinances,andtheManagingDirectorshallseetoitthattheaccountsofthecompanyareincompliancewiththelawandthatitsfinancialaffairshavebeenarrangedinareliablemanner.

Auditor’sresponsibilityOurresponsibilityistoexpressanopiniononthefinancialstatements,ontheconsolidatedfinancialstatementsandonthereportoftheBoardofDirectorsbasedonouraudit.TheAuditingActrequiresthatwecomplywiththerequirementsofprofessionalethics.WeconductedourauditinaccordancewithgoodauditingpracticeinFinland.GoodauditingpracticerequiresthatweplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsandthereportoftheBoardofDirectorsarefreefrommaterialmisstatement,andwhetherthemembersoftheBoardofDirectorsoftheparentcompanyandtheManagingDirectorareguiltyofanactornegligencewhichmayresultinliabilityindamagestowardsthecompanyorhaveviolatedtheLimitedLiabilityCompaniesActorthearticlesofassociationofthecompany.

AnauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthefinancialstatementsandthereportoftheBoardofDirectors.Theproceduresselecteddependontheauditor’sjudgment,includingtheassessmentoftherisksofmaterialmisstatement,whetherduetofraudorerror.Inmakingthoseriskassessments,theauditorconsidersinternalcontrolrelevanttotheentity’spreparationoffinancialstatementsandreportoftheBoardofDirectorsthatgiveatrueandfairviewinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessofthecompany’sinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationofthefinancialstatementsandthereportoftheBoardofDirectors.

Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinion.

OpinionontheconsolidatedfinancialstatementsInouropinion,theconsolidatedfinancialstatementsgiveatrueandfairviewofthefinancialposition,financialperformance,andcashflowsofthegroupinaccordancewithInternationalFinancialReportingStandards(IFRS)asadoptedbytheEU.

Opiniononthecompany’sfinancialstatementsandthereportoftheBoardofDirectorsInouropinion,thefinancialstatementsandthereportoftheBoardofDirectorsgiveatrueandfairviewofboththeconsolidatedandtheparentcompany’sfinancialperformanceandfinancialpositioninaccordancewiththelawsandregulationsgoverningthepreparationofthefinancialstatementsandthereportoftheBoardofDirectorsinFinland.TheinformationinthereportoftheBoardofDirectorsisconsistentwiththeinformationinthefinancialstatements.

InHelsinkionJanuary23,2015

Ernst&YoungOy

AuthorizedPublicAccountantFirm

HeikkiIlkkaAuthorizedPublicAccountant


KEYFIGURES(IFRS)

GroupQuaterlyIncomeStatementEURthousand

1-3/2014 4-6/2014 7-9/2014 10-12/2014 1-3/2013 4-6/2013 7-9/2013 10-12/2013NETSALES 31,013 31,833 30,164 34,664 29,828 31,789 28,682 33,049

Otheroperatingincome 177 27 57 0 58 1,623 61 173

Materialsandservices -2,994 -3,042 -3,201 -3,559 -2,542 -2,987 -2,967 -3,265Employeebenefitsexpenses -20,084 -19,556 -17,337 -20,803 -20,518 -20,611 -16,464 -19,327Depreciationandamortization

-1,789 -1,744 -1,760 -1,735 -1,801 -1,755 -1,748 -1,748

Otheroperatingexpenses -6,012 -6,367 -6,760 -6,865 -6,594 -7,152 -5,703 -6,751Operatingresult 310 1,152 1,162 1,701 -1,569 908 1,861 2,131% 1,0% 3,6% 3,9% 4,9% -5,3% 2,9% 6,5% 6,4%

Financialincome 263 201 -233 923 227 252 178 271Financialexpenses -444 -321 34 -420 -184 -324 -220 -248Resultbeforetax 129 1,031 964 2,204 -1,526 836 1,819 2,153% 0,4% 3,2% 3,2% 6,4% -5,1% 2,6% 6,3% 6,5%

Incometaxexpense -77 -356 -187 -749 563 -485 -859 102RESULTFORTHEPERIOD

52 676 777 1,454 -962 352 960 2,255

% 0,2% 2,1% 2,6% 4,2% -3,2% 1,1% 3,3% 6,8%


GroupKeyFinancialPerformanceIndicatorsEURthousand

2014 2013 2012 2011 2010Netsales 127,674 123,349 113,699 107,750 103,094Growthofnetsales,% 3,5% 8,5% 5,5% 4,5% 11,3%EBITDA 11,354 10,383 14,801 17,284 18,604%ofnetsales 8,9% 8,4% 13,0% 16,0% 18,0%OperatingprofitbeforeIFRS3amortization 5,682 4,256 10,555 14,290 15,691%ofnetsales 4,5% 3,5% 9,3% 13,3% 15,2%Operatingprofit 4,325 3,331 8,308 12,280 13,487Growthofoperatingprofit,% 29,8% -59,9% -32,3% -8,9% 14,1%%ofnetsales 3,4% 2,7% 7,3% 11,4% 13,1%Profitbeforetax 4,328 3,284 8,357 12,332 13,325%ofnetsales 3,4% 2,7% 7,4% 11,4% 12,9%Profitfortheperiod 2,959 2,605 5,863 9,671 10,331%ofnetsales 2,3% 2,1% 5,2% 9,0% 10,0%

Returnonequity,% 2,5% 2,6% 5,8% 11,6% 16,7%Returnoninvestment,% 4,4% 3,9% 8,2% 14,9% 20,1%Interestbearingliabilities 5,000 8,632 10,524 682 3,582Cashassets 28,954 13,218 34,519 42,977 13,822Gearing,% -38,6% -4,7% -23,8% -42,3% -15,3%Equityratio,% 82,8% 77,1% 77,6% 81,9% 73,3%Totalassets 168,781 127,043 129,758 121,966 91,470

Grossinvestment* 5,821 20,733 19,606 6,331 4,567%ofnetsales 4,6% 16,8% 17,2% 5,9% 4,4%Capitalexpenditure 816 1,470 1,431 2,014 970%ofnetsales 0,6% 1,2% 1,3% 1,9% 0,9%Researchanddevelopmentcosts 17,680 18,184 17,884 16,489 14,883%ofnetsales 13,8% 14,7% 15,7% 15,3% 14,4%R&Dpersonnelattheendofperiod 332 370 351 311 239

Personnelexpenses 77,779 76,919 65,590 61,575 57,337Personnelaverageforperiod 1,466 1,485 1,330 1,058 845Personnelatendofperiod 1,493 1,472 1,423 1,182 913Growthofpersonnel,% 1,4% 3,4% 20,4% 29,5% 20,0%

*IncludesaquisitionsandcapitalizedR&Dcosts


GroupShareIndicatorsEURthousand

2014 2013 2012 2011 2010Earningspershare,undiluted 0.22 0.20 0.46 0.76 0.90Earningspershare,diluted 0.22 0.20 0.46 0.76 0.89Equitypershare 9.88 7.62 7.84 7.76 5.78Dividendpershare 0,10* 0.23 0.23 0.41 0.40Dividendperprofit,% 45,1% 113,4% 50,4% 53,8% 44,6%Effectivedividends,% 0,2% 0,9% 1,1% 2,5% 1,6%Price/Earningsratio(P/E) 184.31 123.45 44.34 21.57 27.58

Sharepriceperformance,shareissueadjusted

lowestshareprice 23.50 16.75 16.70 14.95 15.00highestshareprice 42.21 25.60 24.00 28.10 24.80averageshareprice 35.65 20.35 20.84 21.58 19.27closingshareprice 41.05 25.03 20.25 16.45 24.75

Marketvalueofsharesatendofperiod

577,640,124 321,771,012 260,182,550 211,737,063 287,093,169

Shareissueadjustednumberoftradedshares

4,792,273 1,723,866 1,514,703 5,079,523 2,131,071

%ofaveragesharenumber 36,1% 13,4% 11,8% 40,1% 18,5%

Numberofshares** -endoftheperiod 14,146,426 12,931,229 12,931,229 12,931,229 11,690,024-averageduringtheperiod 13,286,327 12,848,540 12,836,966 12,679,281 11,513,690-averageduringtheperiod,diluted 13,297,962 12,848,540 12,836,966 12,686,792 11,585,155

*BoardsproposaltotheAnnualGeneralMeetingofShareholders

**Excludingtreasuryshares


CALCULATIONOFKEYINDICATORSReturnonequity(ROE),%(Profitorlossbeforetaxes-taxes)x100

Shareholders'equity(average)

Returnoninvestment(ROI),%(Profitbeforetaxes+interestandotherfinancialexpenses)x100

Balancesheettotal-non-interestbearingliabilities(average)

Gearing,%(Interest-bearingliabilities-interest-bearingassets)x100

Shareholders'equity

Equityratio,%Shareholders'equityx100

Balancesheettotal-advancesreceived

Earningspershare

Profitfortheperiod

Adjustedaveragenumberofsharesduringtheperiod

EquitypershareShareholders'equity

Adjustednumberofsharesattheendofthefinancialperiod-ownshares

DividendpershareTotaldividend

Adjustednumberofsharesattheendofthefinancialperiod-ownshares

Dividend/profit,%Dividendpersharex100

Earningspershare

Effectivedividendyield,%Dividendpersharex100

Adjustedsharepriceattheendofthefinancialperiod

Price-earningsratio(P/E)Adjustedsharepriceattheendofthefinancialperiod

Earningspershare


SHAREANDSHAREHOLDERS

ShareBaswaresharesarecurrentlylistedonNASDAQOMXHelsinkiLtdintheInformationTechnologysector,Mid-Capsegment.Thecompanyhasoneseriesofshares,withthetradingcodeBAS1V.

TheBaswaresharehasbeenlistedontheHelsinkiStockExchange(NASDAQOMXHelsinkiLtd.)sinceFebruary29,2000.ThelistingpriceofthesharewasEUR5.70.BaswaretransferredtotheMainListofthestockexchangeonOctober19,2004,andtheshareislistedintheInformationTechnologybusinesssector.

Attheendof2014,thetotalnumberofsharesissuedbyBaswarewas14,221,229(12,931,229).ThebookcountervaluepershareisEUR0.30.Eachshareconfersonevoteinthegeneralmeetingofshareholders,andallsharescarryanequalrighttodividend.

SharecapitalAttheendof2014,BaswareCorporation'ssharecapitalwasEUR3,528,368.70.

SharepriceperformanceandtradingDuring2014,thehighestpriceofthesharewasEUR42.21(EUR25.60),thelowestwasEUR23.50(EUR16.75)andtheclosingpricewasEUR41.05(EUR25.03).TheaveragepriceofthesharewasEUR35.65(EUR20.35)duringtheperiod.

Atotalof4,792,273(1,723,866)sharesweretradedduringtheperiod,equivalentto36.1percent(13.4%)oftheaveragenumberofshares.Marketcapitalizationwiththeperiod’sclosingpriceonDecember31,2014,wasEUR577,640,124(EUR321,771,012).

Thecompany’sAnnualGeneralMeetingofFebruary14,2014,authorizedtheBoardofDirectorsofBaswaretodecideontheissueofnewsharesdeviatingfromtheshareholders'pre-emptivesubscriptionrights.Thecompanycarriedoutashareissueofupto1290000newBaswaresharestoalimitednumberofinternationalinstitutionalinvestorsinanacceleratedbook-builtofferingdeviatingfromshareholders’pre-emptivesubscriptionrightsonSeptember4,2014.Theofferedsharescorrespondedwithapproximately9.98%ofallBaswaresharesandvotesbeforetheshareissue.ThesubscriptionpricewassetatEUR33.50pershare,amountingtototalproceedsofapproximatelyEUR43.2millionbeforecommissionsandexpenses.The1290000sharesissuedwereregisteredwiththeFinnishTradeRegisteronSeptember11,2014.

ThetotalamountofownsharesheldbythecompanyonDecember31,2014,is74,803shares,representingapproximately0.5%ofallofoutstandingshares.Noshareswererepurchasedduring2014.

IncentiveschemesAdditionalinformationontheshare-basedincentiveschemesisavailableonthecompany'sinvestorsiteatwww.basware.com/investors.

SHAREHOLDERSBaswarehad13,675(14,349)shareholdersonDecember31,includingnominee-registeredholdings(12).Nominee-registeredholdingsaccountedfor25.4percent(11.7%)ofthetotalnumberofshares.

Distributionofholdingsbynumberofshares,December31,2014Numberofholders Shares,pcs Votes,%

1-100 11,212 272,050 1.9101-1,000 2,202 627,939 4.41,001-10,000 196 473,238 3.310,001-100,000 37 1,409,381 9.9100,001+ 28 11,438,621 80.4Total 13,675 14,221,229 100


Distributionbysector,December31,2014Numberofholders Shares,pcs Votes,%

Privatecompanies 531 753,178 5.3Financialandinsuranceinstitutions 43 3,032,540 21.3Publicsectororganizations 8 2,132,948 15Non-profitorganizations 47 266,029 1.8Households 12,985 4,390,129 30.8Foreign 49 28,876 0.5

13,663 10,603,700 74.7Nominee-registered 12 3,617,529 25.3Total 13,675 14,221,229 100

MajorshareholdersShares,pcs Votes,%

1.IlmarinenMutualPensionInsuranceCompany 1,521,658 10.72.SihvoIlkka 885,300 6.23.EräkangasKirsi 697,300 4.9EräkangasKirsi 498,900 3.5EräkangasLotta 198,400 1.44.VaajoensuuHannu 580,000 4VaajoensuuHannu 313,500 2.2HavacmentOy 266,500 1.95.PerttunenSakari 524,497 3.76.OP-FocusFund 361,380 2.57.OP-DeltaFund 341,404 2.48.PensionsförsäkringsaktiebolagetVeritas 294,341 2.19.FonditaNordicMicroCapPlaceringsf 286,000 210.NordeaNordicSmallCapFund 262,818 1.811.Pöllänen,Antti 258,389 1.812.OP-FinlandSmallFirmsFund 257,681 1.813.TheStatePensionFund 256,000 1.814.KaloniemiMarkku 191,103 1.315.FonditaNordicSmallCapPlacfond 190,000 1.316.MutualFundFIMFenno 172,554 1.217.DanskeInvestFinnishSmallCapFund 162,423 1.118.InvestmentFundAktiaCapital 150,000 1.119.PerttunenMeimi 145,107 1.120.EVLIFinnishSmallCap 117,295 0.820largestshareholderstotal 8,932,550 63Nomineeregisteredshares 3,617,529 25.4Others 1,671,150 12Total 14,221,229 100


FORSHAREHOLDERS

BaswareShareBaswaresharesarequotedontheHelsinkiStockExchange(NASDAQOMXHelsinkiLtd.)intheTechnologysector,MidCapsegment.ThetradingstartedonOctober19,2004.Basware'sshareshavebeentradedintheHelsinkiStockExchangesinceFebruary29,2000.

Tradingcode BAS1V

ISINcode FI0009008403

Book-countervalue EUR0.30

ListingpriceonFebruary29,2000 EUR5.70

ClosingpriceonDecember31,2014 EUR41.05

AnnualGeneralMeetingAnnualGeneralMeetingofBaswareCorporationwillbeheldonFriday,13February,2015at10:00AMinHelsinki,atKorjaamo(Kulmasalihall),attheaddressofTöölönkatu51,00250Helsinki,Finland.

Eachshareholder,whoisregisteredon3February,2015intheshareholders'registerofthecompanyheldbyEuroclearFinlandLtd,hastherighttoparticipateintheGeneralMeeting.

Ashareholder,whowishestoparticipateintheGeneralMeeting,shallregisterforthemeetingnolaterthan10:00AM(Finnishtime)on10February,2015bygivingapriornoticeofparticipationtothecompany.Suchnoticecanbegiven

atBasware'sinvestorwebpageswww.basware.com/annual-general-meeting;

bytelephoneat+358207706867onweekdaysbetween9:00AMand4:00PM;or

byregularmailtoBaswareCorporation,AnnualGeneralMeeting2015,P.O.Box97,02601Espoo,Finland.

TheproposalsforthedecisionsonthemattersontheagendaoftheGeneralMeetingaswellasthisnoticeareavailableonBaswareCorporation'sinvestorwebpagesatwww.basware.com/annual-general-meeting.

DividendBasware’sBoardofDirectorsproposestotheAnnualGeneralMeetingthatadividendofEUR0.10pershare(2013:EUR0.23)bepaidfor2014.ThedividenddecidedbytheAnnualGeneralMeetingwillbepaidtoshareholdersregisteredon17February,2015inthecompany'sshareholderregistermaintainedbyEuroclearFinlandLtd.TheBoardofDirectorsproposestotheGeneralMeetingthatthedividendbepaidon24February,2015.

Financialreportingin2015ReleasedatesforBaswareCorporation'sInterimreports:

InterimReportJanuary-March2015(Q1)onTuesday,April14,2015

InterimReportJanuary-June2015(Q2)onFriday,July10,2015

InterimReportJanuary-September2015(Q3)onMonday,October12,2015

InterimReportswillbepublishedatapproximately9:00a.m.onthesedaysinFinnishandEnglish.

InterimreportsarepreparedaccordingtotheIAS34,InterimFinancialReportingStandard.

AllinterimreportsandstockexchangereleasesareavailableonBasware'sinvestorwebsiteatwww.basware.com/investors.TheBaswaree-maillistforthestockexchangereleasescanbesubscribedtothroughthepages.

ChangesofaddressIftheaddressofashareholderchanges,werequestsendingawrittennotificationofthistothebankwheretheshareholder'sbook-entryaccountisheld.

Documents

BASWARE'S YEAR 2014/media/Files/B/... · with financing services on the Basware Commerce Network. The first solution within the portfolio is Basware Pay, a new type of a global e-payment