basware's year 2013 the year of e-engagementsoftware as a service (saas) – license sales...

BASWARE'SYEAR2013THEYEAROFE-ENGAGEMENT

Attheendof2013,morethan60millionannualtransactions-e-invoices,purchaseordersandotherelectronicdocuments-wereprocessedviaBaswareCommerceNetwork.DeterminedeffortstomakeBaswareCommerceNetworkintotheworld’slargestopenbusinesscommercenetworkforcompanieshavecontinued.

Q1TheacquisitionofCertipost,theleadinge-invoicingoperatorinBelgium,wasclosedinJanuaryandBaswareachievedasignificantmarketpositionintheBenelux.Anincreasingnumberofsmallandmedium-sizedsuppliersandbuyershavealsobeenconnectedtothenetworkthroughnewproductsanddeliverymethodsduringtheyear.

Q2Baswarereportedrecordgrowth:inAprilover50millione-invoicesandotherelectronicdocumentsweresentandreceivedacrosstheBaswareCommerceNetwork.ThestronggrowthofBaswareservicesbusinesscontinued.

Q3InSeptember2013BaswareannouncedapartnershipwithMasterCard.ThepartnershipconnectsMasterCard’snetwork,oneoftheworld’slargestpaymentnetworks,withtheBaswareCommerceNetwork.Thecooperationwillenablearevolutionaryelectronicpaymentsolutionthatensuressuppliersarepaidfastuponinvoiceapproval,whileextendingpaymenttermsforbuyers.

BaswareAnnualReport2013-2

Q4ThefirstAutomotiveSupplierDay,Basware’slargenetworkingeventforautomotiveindustry,wasorganizedinGermanyinNovember.Attheendoftheyear,morethan60millionannualtransactions-e-invoices,purchaseordersandotherelectronicdocuments-wereprocessedviaBaswareCommerceNetwork.Thenetsalesgrewto123millioneuros.


EURThousand 2013 2012Netsales 123349 113699EBITDA 10383 14801OperatingprofitbeforeIFRS3amortization 4256 10555Operatingprofit 3331 8308%ofnetsales 2,7 7,3Profitbeforetaxes 3284 8357Profitfortheperiod 2605 5863

Returnonequity,% 2,6 5,8Returnoninvestment,% 3,9 8,2Liquidassets* 13218 34519Gearing,% -4,7 -23,8Equityratio,% 77,1 77,6

Earningspershare Undiluted,EUR 0,20 0,46Diluted,EUR 0,20 0,46Equitypershare,EUR 7,62 7,84

*)includescashandcashequivalents

Netsalesandoperatingprofit2009-2013

Netsales,mEUR

2009

92.7

2010

103.1

2011

107.8

2012

113.7

2013

123.3

11.8 13.5 12.3 8.3 3.3 Operatingprofit,mEUR

Netsalesbybusinessoperations2013

CustomerSupport35.3%,43.5MEUR

ProfessionalServices24.4%,30MEUR

Licencesales11.9%,14.6MEUR

AutomationServices28.5%,35.2MEUR


TransactionsinAutomationServicesbyquarters2010-2013

=millionsoftransactions.Thetransactionvolumegrewby76.5percentin2013.

2010

13.6

2011

20.8

2012

34

2013

60

Q4

Q3

Q2

Q1

SoftwareasaService(SaaS)–Licensesalesrelation2009-2013


BASWARECOMMERCENETWORKONEOFTHEWORLD'SLARGESTBUSINESSCOMMERCENETWORKS

TheBaswareCommerceNetworkisfoundedontheprinciplesofopenness,wherealltypesoforganizationscancollaborateandtrade,makingitoneofthelargestintheworld.Thenetworkconnectsmillionsofbuyersandsellersglobally.

Allbusinessesbenefitfrombeingmoreconnectedtotheirsuppliersandcustomers.BaswareCommerceNetworkbringsbuyersandsellerstogethertoestablisheasier,moreprofitableconnectedcommerce.Baswaresimplifiespurchasing,accountspayableandinvoicingprocessestostrengthencontrol,efficiencyandcashflows.

In2013,morethan60millionannualtransactions–e-invoices,purchaseordersandotherelectronicdocuments-wereprocessedviaBaswareCommerceNetwork.Theaimistoreachanannualtransactionvolumeof150millionbytheendof2015.

Over10yearsofexperienceandsuccesswithautomatingprocessesintheautomotiveindustry

BaswareAutomotiveGateway

Baswarehasbeenworkingwiththousandsofautomotivesuppliersandmanufacturers,includingAudi,BMW,Daimler,MANandVolkswagenformanyyears,andthecompanyhasadeepknowledgeandunderstandingofthisuniqueindustry.Baswarerecognizesthecomplexitiesofe-invoicingintheautomotiveindustryandhasadapteditssolutionstoaccommodatethesechallenges.

TheBaswareCommerceNetworkenablestheexchangeofelectronicbusinessdocumentsacrosstheentirevaluechain.AnintegralcomponentofthenetworkistheBaswareAutomotiveGateway,anindustry-specifictechnologyplatformwhichprovidesthesolutionsandservicesthatmaketheseexchangespossible.

Baswarehasenjoyedovertenyearsofsuccessintheautomotiveindustry.Morethan12,000storedformatconversionand


workflowrulesautomateandacceleratetheexchangeofelectronicdocumentsbetweenmorethan5,000suppliersandautomotivemanufacturers.

BaswareAutomotiveSupplierDay2013InNovember2013weorganizedtogetherwithAudi,BMW,Daimler,VWandVWLogisticsafirstAutomotiveSupplierDay,Basware’slargenetworkingeventforautomotiveindustryinGermany.

250automotivesuppliersattendedthistwo-dayevent.Thesuppliersandtheautomotivemanufacturershadanopportunitytonetworkandexchangeideasregardinge-invoicing.

Watchthevideo


CEO'SREVIEWTHEYEAROFE-ENGAGEMENT

In2013,companieshavebeenfocusedonimprovingtheircashflow.Effectivepaymentstrategieswillstayfrontofmindasorganizationslooktomaximizeworkingcapitalandensurethefinancialstabilityoftheirsuppliers.

IampleasedthatthestronggrowthinAutomationServicescontinuedalsoin2013.Duringthefourthquarterthetransactionvolumegrewstrongly,up84.2percent.In2013,morethan60milliontransactionswereprocessedviaBaswareCommerceNetwork,agrowthof76.5percent.Theshareofrecurringrevenueofnetsalesincreasedduringeachquarter,accountingfor63.8percentofnetsalesduringthefinancialperiodasawhole.Theincreasingshareofrecurringrevenueofnetsalesimprovespredictabilityoverthelongterm.

DeterminedeffortstomakeBaswareCommerceNetworkintotheworld’slargestopenbusinesscommercenetworkforcompanieshavecontinued.Anincreasingnumberofsmallandmedium-sizedsuppliersandbuyershavealsobeenconnectedtothenetworkthroughnewproductsanddeliverymethodsduringtheyear.Thestrategicaimistoreachanannualtransactionvolumeof150millionbytheendof2015.Thegoodperformancein2013makesitpossibletoreachtheobjective.

ThestronggrowthinAutomationServicescontinuedalsoin2013andtheshareofrecurringrevenueofnetsalesincreasedduringeachquarter

Accordingtocustomerfeedbackreceivedduringtheyear,thecompetitivenessofBaswaresoftwareandservicesisgood.Duringtheyear,wehavemigratedanumberofexistingcustomerstoAlustaandwonasignificantnumberofnewAlustacustomers.Theproductandserviceportfoliowasstrengthenedalsothroughstrategicpartnershipsin2013,suchasthepartnershipwithMasterCardannouncedinSeptember,combiningMasterCard’snetwork,oneoftheworld’slargestpaymentnetworks,withtheBaswareCommerceNetworkandintroducinganewbusiness-to-businesspaymentsolution.

During2013,wehaverestructuredourorganizationtoensureevenfastergrowthintransactionvolumesandexpandourservice-basedbusiness.TheNetworkServicesbusinessareaisresponsibleforthee-invoicingbusinessandtheSolutionServicesbusinessareaforsoftwarebusiness.TheNetworkServicesbusinessaimsatstronggrowth,supportedbygrowthinvestments.TheSolutionServicesbusinessaimsatmoderategrowthandstrongprofitability.Thecompanywillcontinuetostreamlineitsoperationsin2014.

Thekeygoalsalsofor2014istogrowtheBaswareCommerceNetworkandtheAlustasoftwareandservices


sales

Financeandprocurementdepartmentsseektofurtheruseaseriesofnetworkstoimprovefinancialmanagementandincreaseresponsivenesstointernalusers,customersandsuppliers.Thesetrendswillleadtobetterinsight,improvedprocessesandincreasedcollaboration.Iexpectthistrendtocontinueinto2014.

Ourkeygoalisandwillbealsoduring2014thegrowthofBaswareCommerceNetworkandAlustasoftwareandservicessales.Iexpectthattheneedforrecurringserviceswillalsoremainatagoodlevelamongourclientele.Ialsobelievethattherapidlygrowingandevolvinge-invoicingmarketwillofferBaswareexcellentgrowthopportunitiesalsoin2014.

Iwouldliketothankouremployeesfortheircommittedwork.Also,IwouldliketoextendmythankstoallBasware’scustomersandshareholdersfortheirtrustnowandinthecomingyears.


SOLUTIONS&SERVICESTHEGLOBALLEADERINPROVIDINGSOLUTIONSFORBETTERBUYING,BETTERSELLINGANDCONNECTEDCOMMERCE

Baswareprovidesopen,secure,cloud-basedsolutionstoorganizationsofallsizes.Solutionshelporganizationstogaingreaterefficienciesinprocurement,accountspayableandaccountsreceivableprocesses.Baswareisthegloballeaderinprovidingsolutionsforbetterbuying,bettersellingandconnectedcommerce.

TheBaswareCommerceNetworkisoneoftheworld’slargestbusinesscommercenetworks,wherealltypesoforganizationscancollaborateandtrade.Todaythenetworkconnectsmillionsofbusinessusersin900,000companiesacrossover100countries.In2013,morethan60millionannualtransactions–e-invoices,purchaseordersandotherelectronicdocuments-wereprocessedviaBaswareCommerceNetwork.

Streamlinedfinancialprocessesforcompaniesofallsizes

Alustatechnologyplatformcombinesthelatestcloud,social,mobileandsmartanalyticstechnologies.AlustahasbeendesignedtobringtogetherBasware'sBusiness-to-Businessprocessknowledgewithitscloudservices.

E-paymentsupportsthedevelopmentofe-invoicingande-engagement

InSeptember2013BaswareannouncedapartnershipwithMasterCard.ThepartnershipconnectsMasterCard’snetwork,oneoftheworld’slargestpaymentnetworks,withtheBaswareCommerceNetwork.Thecooperationwillenablearevolutionaryelectronicpaymentsolutionthatensuressuppliersarepaidfastuponinvoiceapproval,whileextendingpaymenttermsforbuyers.ThecooperationwillbenefitalsoMasterCard’suniquesuiteofpaymentsproductsandwilldeliverimmediatecostandefficiencysavingstocompaniesofallsizes.MasterCard'spaymentnetworkcoversover150currenciesacrossmorethan210countriesandapproximately20,000financialinstitutions.


THEGLOBALNETWORKOFBASWAREPEOPLE

Baswarecontinuedtoimproveitsglobalhumanresourceservicesandhelpedtoestablishaneffectivematrixworkingculturein2013.OneofthekeyelementswastheimplementationofTheBaswareCareerFrameworkforsupportingpersonalandcareerdevelopmentintheentireBaswarecommunity.Thecompanywasstrengthenedthroughouttheyeartosupportgrowth.

LivinginaMatrixBasware´sbusinesstargetsrequireefficientandstreamlinedcooperationbetweendifferentunits.Leadersatalllevelshavetoworkbothverticallyandhorizontally,whichrequireschangesinthemodeofoperation.

In2013,Baswarelaunchedaleadershipprogram“OptimizeyourMatrix”todevelopanewmindsetandskillstodealwiththesenewrealitiesandchallenges–andtohelpotherstosucceedtoo.Thetrainingprogramwasorganizedthreetimesin2013andover60Baswareleadersandmanagershavenowattendedthetraining.

InJanuary2013,theBaswareCareerFrameworkwasimplementedtocovertheentireorganization.ThepurposeoftheFrameworkistosupportpersonalandcareerdevelopment.ItdefinestheBaswareorganizationbythefunction,gradeandrole,providingaglobalstandardizationforallroles,roletitlesandgradesforeachfunction.ItisatooltoenablekeyHRprocessese.g.recruitment,performanceandrewardmanagementandsetguidelinesonBasware’sapproachtocareermanagement.

TheCareerFrameworkprovidesaclearindicationofwhatisexpectedineachrole,intermsofaccountabilities,competencies,knowledgeandexperience.AccordingtotheannualEmployeeSatisfactionSurvey,Baswareemployeesarewellawareofwhatisexpectedfromthematworkandtheawarenesshasincreasedfromthepreviousyear.ThisindicatesthattheimplementationoftheCareerFrameworkhashadapositiveimpactintheorganization.

AlistairGilbert,OperationsManager,UK:

"IcoordinatethedevelopmentoftheB2BserviceswithinourSaaSenvironment.

Thisinvolvesworkingwiththeglobalteaminordertoensurethesmoothdelivery

oftheservices.Itisaboutstability,performanceandscalabilityandkeepingthe

serviceupandrunning24/7.Ithasalwaysbeenapleasuretoworkwithour

workingculturewithcollaborationandco-operation."

Watchtheinterview

StrengtheningtheorganizationtosupportgrowthDuring2013,theCompanycompletedtheCertipostacquisition.Accordingly,theorganizationwasalignedtobettersupportgrowth.AftertheCertipostacquisition,53employeesjoinedtheBaswareorganizationandBaswareBelgiumwasestablished.


Atthebeginningof2013,BaswareappointedMr.IlariNurmiastheSeniorVicePresidentforProductManagementtoleadtheproductandserviceportfoliomanagementanditsgo-to-marketmodel.TheSalesorganizationwasstrengthenedandalignedtofocusmoreondifferentcustomersegments.Theorganizationwasdividedintothreefocusareas:buyers,suppliersandpartnersandMr.KariAarvalawasappointedastheSeniorVicePresidentforGlobalSales.

Duringthesecondhalfoftheyear,Baswarerestructureditsorganizationtoensurefastergrowthintransactionvolumesandtoexpandtheservice-basedbusiness,accordingtoitsstrategy.ThecompanycreatedanewProducts&ServicesorganizationtoleadBasware’sproductoffering,coveringbothproductdefinitionsanddevelopment.ASolutionServicesunitwascreatedtofocusondeliveringandsupportingBaswaresoftwaresolutionsandNetworkServicestodeliverandsupportBasware´stransactionservices.


JuliaSonnhalter,MarketingManager,Germany:

“Onehighlightof2013wastheBaswareAutomotiveSupplierDaywithbig

Germancarmanufacturers.Thisdaywasahugesuccess,aswellasfun.Iam

proudtobeamemberofateamwhichmakesthingshappen.“

Watchtheinterview

BaswarepersonnelinnumbersAttheendof2013,therewere1472employeesinBasware(+3.4%).65percentofBaswarepersonnelworkedoutsideofFinlandand35percentinFinland.12.0percentofthepersonnelworkinsalesandmarketing,58.4percentinconsultingandservices,23.7percentinproducts,and5.8percentinadministration.

Theaverageagewas34.6years(34.0years)andyearsinBaswareservicewas3.9.Femaleemployeesaccountedfor23.3percent(22.8)andmen76.7(77.2)percent.

Salaries,feesandsocialcostspaidwere61.6millioneurosin2013(57.1millioneuros).

NinaKoivikko,VicePresident,Presales,HeadquartersinEspoo:

“Baswareisagreatcompanytoworkfor:foritsinnovativeanduniquesolution

offeringandgreatpeople.Personally,thecompanyhasbeenabletoprovide

mewithopportunitiesforgrowththroughtheyears.ThisiswhyIhavebeeninthe

companysince2001.”

Watchtheinterview

Keyfocusareasin2014In2014,Baswarewillfocusoncapabilitydevelopmentwithrobustdevelopmentprograms.TheCompanywillcontinuetotrainitsmanagersandleaderstoworkinamatrixorganizationandfurtherdevelopTheBaswareAcademyprogramstoprovidenewsalesandconsultingpersonnelwithrequiredknowledgeofBaswareproductsandservices.

BaswarewillalsoprovidesalespersonnelwithsalestechniquetrainingforsolutionsellingandimprovetheCompany´se-learningcapabilitiestobettersupportcontinuouslearninganddevelopmentglobally.

RyanCutright,SalesManager,USA:

"Iworkwithcustomersacrossthreecontinentsandyouhavetounderstandthe

cultureofdoingbusinessineachlocation.BaswareCommerceNetworkhelps

customerstotransactwithinsecureonlineservicetosendandreceiveinvoices

anddocuments.Ithasbeenrewardingexperiencetoworkwithdifferent

individualsinordertosucceedattheendoftheday."

Watchtheinterview


Geographicaldivisionofpersonnel

India,492persons

Finland,510persons

Europe,272persons

Scandinavia,131persons

Other,67persons

Employmentduration,%

Lessthan1year,16%

1-2years,39%

3-4years,14%

5-6years,11%

7-8years,6%

Over9years,14%

Educationalbackground,%

Master,23%

Bachelor,28%

Collegeandother,49%


BASWARECORPORATERESPONSIBILITYGLOBALENGAGEMENT

Baswareisaforerunnerine-engagementandconnectedeconomy,throughitscloud-basedpurchase-to-payande-invoicingsolutions.ThecompanyhasmillionsofbusinessusersinitsglobalBaswareCommerceNetwork,foundedontheprincipleofopenness.BaswarecorporateresponsibilityisintegratedinitsbusinessoperationsandthecorporatevaluesarethetoolsforeverydaysustainableworkwithintheGroup.Thecompanyiscommittedtoresponsibleoperationsinallofitseconomic,socialandenvironmentalactivities.

Basware´skeystrategyaimistobethelargestbusinesscommercenetworkintheworldby2015.TheBaswareCommerceNetworkisaglobal,secureandopennetworkfororganizationsofallsizes.Currentlyitconnects900,000companiesglobally,providingthemostefficientwaytoconnectandcollaboratewithbuyersandsuppliers,aswellasprocesse-invoices,purchaseordersandotherelectronicdocuments.

AsalistedcompanyontheOMXHelsinkiStockExchange,Basware,with321.8millioneurosmarketcapital,iscommittedtofollowtherulesandregulationssetbytheauthoritiesandfollowthelawandregulationsineachcountrythecompanyoperates.Agreatemphasisisplacedonthecompanybrandandreputation,openandtransparentcommunicationstodifferentstakeholders,aswellasinternalcompanyvalues.

TheBaswareCommerceNetworkisatoolforsustainablefinanceandcommerceWhenjoiningandcollaboratingwithothercompaniesthroughtheBaswareCommerceNetwork,organizationsallaroundtheworldcanimprovetheirfinancialperformance,transparencyandmitigatetheircarbonfootprint.Itisatoolforsustainablefinanceandcommerce.

BaswareCommerceNetworkenablesglobal,opencollaborationandfacilitatesbusinessoperations.TheNetworkisatoolforcompaniestodeliverinvoicesbetweencompaniesandcountrieswiththeinclusionofintegratedVATandotherlegislation.Allcompanieswithinthenetworkareabletoachievegreatereffectivenessincashmanagementandgovernance.

Accordingtoresearchers,itisestimatedthatane-invoiceminimizesthecarbonfootprintbyapproximately60percent,comparedtoapaperinvoice.ThelargestCO2reductionswilloccurwhencompaniescanminimizethemanualworkinvolvedincreatinginvoices.Reducingpaperusage,transportationneedsandwastealsohaveasignificantimpactonloweringthecarbonfootprint.

Whenthedataisstructuredonatruee-invoice,thecostsavingsandCO2reductionsaregreaterduetoahigherlevelofautomationinthebusinessprocesses.InvoicesinPDForWordformatarenottruee-invoices,asthedataisunstructured.Withe-invoicing,companiesnolongerneedtoprint,post,orprocesspaperinvoicesmanually.

Attheendoftheyear,therewereover60millionannualtransactionsintheBaswareCommerceNetwork,which


representsa76.5%growthin2013


ThedatacentersusedbyBaswarearebeingverifiedbytheircommitmenttoenergyefficiencyintheiroperations,suchascooling,heatingandusingsmarttechnologysolutions.Baswareiscommittedtohavingpartnersthatrepresenttheverybestknowhow,expertiseandcommitmenttoenvironmentalissues.

ThecompanyhastheEnvironmentalManagementSystemISO14001inplaceinFinlandandthesameoperationsareusedgloballyinallBaswareoffices.ThisEMShasbeenauditedbyBureauVeritas.

Digital,connectedeconomyandpaperlessofficeshelpBaswareanditscustomers,partnersandpersonneltoachievemoreenergyefficientbusinessoutcome.

EnergyefficiencyintheBaswareglobalworkcommunityTheBaswareglobalworkcommunityiscommittedtoenergysavingsinalltheirdailyoperations.Thecarbonfootprintreductionincludestheavoidanceofunnecessarybusinesstravellingandtakingfulladvantageofsuchonlineofficetoolsasvideoconferencing.

EngagementwithcustomersTheBaswareExperienceuserforumeventsbringtogethercustomers,Baswarespecialistsandindustryluminariesfromacrosstheglobeforhighlyfocused,highlyengagingknowledge-sharingsessionsthatexaminestrategiesthathavebeenproventoacceleratebusinessresults.

BaswareExperienceeventisoneofthekeyelementsinourCustomerCommunicationsprogramandsupportsacompany´sstrategicgoaltomaximizetheircustomerloyalty.Thiseventisagreatchannelforsharingthelatestinnovationsandfutureplans.Customershaveauniqueopportunitytonetworkandshareinsightswitheachother.

In2013,Baswareeventsbroughttogetherover2000customersfrom11countries

Baswarehasbeenorganizingthecustomereventsforover15years.Theeventshavebeenhighlysuccessful,receivinggreatfeedbackfromourcustomersandcooperationpartnersandthishasfurtherstrengthenedtheworkinthenetworkanditsserviceofferings.

ThelatestadditiontoBasware’sevents,AutomotiveSupplierDay,wasarrangedinNovember2013,inGermany.Theeventwastargetedatsupplierswhoarestillsendingpaperinvoicestotheircustomersintheautomotiveindustry.

Bybringingallthelargeautomotivemanufacturerstogether,Baswarewasabletoconnectthemwiththeirsuppliersandfacilitatediscussionsconcerninge-invoicing.Theeventcelebratedthecooperationandsharedwaysofworkingbetweenthesuppliersandtheautomotivemanufacturers.Thistwo-dayeventinOffenbachreceivedverypositivefeedbackfromthe250participants.

Knowledgesharing,engagementandefficiencyhavebeenthekeyfocusareasinthedevelopmentoftheBaswareCommerceNetwork.


EngagementwithSociety-“TheArtofBasware”Alreadyarrangedforthe15thtime,TheArtofBaswareisanannualinternationalartcompetitionforartistsunder30yearsofage.TheArtofBaswareisoneexampleofBasware’ssocialresponsibilitytowardssociety.

Lastyear,nearly200artistswithover400piecesofartattendedthisleadinginitiativethatsupportssocialdevelopmentandengagementwiththetheme“Network”.The2013winnerwasViljamiHeinonen,withhis“Scarecrows”work.BaswarebuysaselectionofartworkaftereverycompetionandtheBasware’sartcollectionnowconsistsof85piecesofart.

Baswarealsosupportsyoungartists,becausethecompanysharesthespirit,innovation,creativity,skills,passion,determinationandfeeling–theseareallskillsneededinpioneeringnewwaysofdoingbusinessaroundtheworld.

During2014,Baswareisalsoexpandingitsartcompetitiontoallofitscountriesofoperations.ThethemeofTheArtofBasware2014isGrowth.

In2013,Baswarepaidsalariesof61.6millioneuros,taxes3.7millioneurosanddividends2.9millioneuros.

AwardsandrecognitionforBaswareInFebruary2013,GlobalFinancenamedBaswaretheBestElectronicInvoicePresentmentandPaymentServicesProviderforthefourthyear.Baswarewasawardedthisrecognitionbecauseofitsinnovativeleadershipininvoiceautomation,procurementandglobalcommerceconnectivitysolutionsthatimprovesupplierandbuyerrelationshipsandpromotetheexchangeofelectronicdocumentsaroundtheworld,throughtheworld’slargestopennetworkfore-invoiceandpurchasemessagetransactions.

InMarch2013,BaswareappearedontheFinTech50list,whichhighlightsEurope’smostdisruptivefinancialtechnologycompanies.ThelistrecognizesbothnewandexistingEuropeanfirmsthatare“re-definingthefutureoffinance”throughinnovativetechnologies.

InNovember2013,BaswarereceivedaGreenSupplyChainawardfromtheSupply&DemandChainExecutivemagazineforthefourthconsecutiveyear.TheawardrecognizesBasware’sindustryleadershipinhelpingcompaniesreducepaperthroughe-invoicingandelectronicprocesses.Inadditiontoenablingsustainability,Basware’ssolutionsandserviceshelpcompaniesgaincriticalvisibilityandcontroloverfinances,reducecostsandimproveproductivity.


BOARDOFDIRECTORS

HannuVaajoensuuMemberoftheBoardsince1990,ChairmanoftheBoardsince2005Born1961MSc(Econ)

PenttiHeikkinenMemberoftheBoardsince2009Born1960MSc(Econ),StanfordGraduateSchoolofBusiness(StanfordExecutiveProgram2001)

IlkkaSihvoViceChairmanoftheBoardsince2012Born1962MSc(Econ),MSc(Tech)

TuijaSoanjärviMemberoftheBoardsince2013Born1955MSc(Econ)

AnssiVanjokiMemberoftheBoardsince2012Born1956MSc(Econ)

EXECUTIVETEAM


EsaTihiläCEOBorn1964eMBA

AtBaswaresince2004,memberoftheExecutiveTeamsince2005

KariAarvalaSVP,GlobalSalesBorn1965MSc(Econ)


MikaHarjuahoCFOBorn1966MSc(Econ)


MariHeusalaSVP,HR&DevelopmentBorn1966MSc(Econ)


SteveMuddimanChiefMarketingOfficerBorn1961SouthamptonSolentUniversity(Communications)


IlariNurmiSVP,Products&ServicesBorn1975MSc(Tech)


RikuRoosSVP,NetworkServicesBorn1960MSc(Tech)


MattiRusiSVP,SolutionServicesBorn1963MBA

AtBaswaresince2010andyears1997-2008,memberoftheExecutiveTeamsince2010


BASWARECORPORATIONCORPORATEGOVERNANCESTATEMENT

ThisCorporateGovernanceStatementhasbeencomposedinaccordancewithRecommendation54ofthenewCorporateGovernanceCodeandChapter7,Section7oftheFinnishSecuritiesMarketAct.TheCorporateGovernanceStatementisissuedseparatelyfromthecompany'sannualreport.

GeneralprinciplesBaswareCorporationisapubliclimitedcompanyregisteredinFinlandanditsheadofficeislocatedinEspoo,Finland.BaswareGroup(Basware)iscomprisedoftheparentcompanyBaswareCorporation,itsoneFinnishsubsidiaryand13foreignsubsidiaries.

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.Accordingly,iftheBoardofDirectorssodecides,thecompanymaypublishtheinformationonthetimeandlocationoftheMeeting,includingthecompany'swebsiteinone,selectednewspaper.

TheAnnualGeneralMeetingeachyearresolvesthefollowingmatters:

approvaloftheincomestatementandbalancesheet


measuresoccasionedbytheprofitorlossshownintheapprovedbalancesheet

dischargingmembersoftheBoardofDirectorsandtheCEOfromliability

numberofBoardmembersandtheirappointment

electionoftheauditor

remunerationoftheBoardofDirectorsandauditors

othermattersmentionedinthesummonstothemeeting

BoardofDirectorsTheBoardofDirectorsofBaswareCorporationisresponsibleforthecompany’smanagementandtheappropriatearrangementofitsoperations.TheBoardsupervisesthecompany’soperationsandmanagementanddecidesonsignificantmattersconcerningthecompanystrategy,organization,financingandinvestments.TheessentialdutiesandresponsibilitiesoftheBoardaredefinedprimarilybytheArticlesofAssociationandtheFinnishCompaniesAct.TheBoardannuallyratifiesaworkingorderthatspecifiesthemeetingprocedureoftheBoardofDirectorsanditstasks.

In2013,Basware'sBoardofDirectorshadfivemembers:HannuVaajoensuu(Chair),PenttiHeikkinen,IlkkaSihvo(ViceChair),TuijaSoanjärvi,andAnssiVanjoki.TheBoardofDirectorsconvened12times(sincetheAnnualGeneralMeetingheldonFebruary14,2013)andtheattendanceratewas98.3%.

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´stopmanagement́ stermsofemployment,goalsandremuneration


15.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.

CEOTheBoardofDirectorsappointstheCEO.TheCEOisinchargeofthemanagementofthecompany'sbusinessoperationsandgovernanceinaccordancewiththeArticlesofAssociation,theFinnishCompaniesActandtheinstructionsgivenbytheBoard.EsaTihilähasactedastheCEOofthecompanyfromOctober17,2011;TihiläisintroducedintheAnnualReport2013,sectionBoardofDirectorsandExecutiveTeam.

BaswareExecutiveTeam,BETTheGroup'sExecutiveTeamisappointedbyBasware'sBoardofDirectors.

TheGroup'sExecutiveTeamassiststheCEOintheoperativemanagementoftheCompany,preparesmattershandledbytheBoardandtheCEOaswellasplansandmonitorstheoperationsofthebusinessunits.TheExecutiveTeamconvenesonceamonth.TheCEOactsaschairmanoftheExecutiveTeam.

AsofOctober10,2013,membersoftheBaswareExecutiveTeamareEsaTihilä,CEO;MikaHarjuaho,CFO;KariAarvala,SeniorVicePresident,GlobalSales;MariHeusala,SeniorVicePresident,HR&Development;SteveMuddiman,SeniorVicePresident,ChiefMarketingOfficer;IlariNurmi,SeniorVicePresident,Products&Services;RikuRoos;SeniorVicePresident,NetworkServices;andMattiRusi,SeniorVicePresident,SolutionServices.

JormaKemppainen,SeniorVicePresident,andHenrikHasselbalch,SeniorVicePresident,resignedfromthecompanyinOctober2013.

KariAarvala,SeniorVicePresident,GlobalSales,wasappointedasanewmemberoftheExecutiveTeamasofApril8,2013.HerepresentssalesintheExecutiveTeamwiththeformerExecutiveTeammembersPekkaLindfors,SeniorVice


President,andJukkaVirkkunen,SeniorVicePresident,reportingtohim.

MattiCopeland,SeniorVicePresident,tookupapositionasthecompany’sadvisorinmattersrelatedtomergersandacquisitionsasofthebeginningofApril,andinAugust2013thecompanyagreedwithhimaboutconcludingtheseongoingprojects.

ThemembersoftheBaswareExecutiveTeamareintroducedintheAnnualReport2013,sectionBoardofDirectorsandExecutiveTeam.

InternalauditTheGroup'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.In2013,Basware'sauditorwasErnst&YoungOy,AuthorizedPublicAccountants,withHeikkiIlkka,A.P.A.,astheauditorincharge.TerhiMäkinen,A.P.A.,wasthedeputyauditor.

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,themostsignificantrisksin2013thathave


cometotheBoard'sknowledgeareassociatedwithensuringcompany'spossibilitiestoinvestonthegrowthofnetworkande-invoicingbusiness,maintainingthecompany'scompetitivenessandtheproductleadershipofAlusta,ensuringthequalityofproduction,improvingnewcustomeracquisitionandincreasingthetransactionvolumeofthee-invoicingbusiness,supportprocessestoimproveprofitability,successfulpreparationandimplementationofmergerandacquisitionprojects,strengtheningthepositionofintellectualpropertyrightsaswellasthemeasurementofsignificantbalancesheetitemsandimpairmenttesting.

Internalcontrolisaprocessperformedbytheorganization'sBoardofDirectors,actingmanagementandotheremployeestoobtainareasonablecertaintyoftheattainmentofgoals.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).

RiskassessmentTheaimoffinancialreportingistoensurethatassetsandliabilitiesbelongtothecompany;allrightsandliabilitiesofthecompanyarepresentedinthefinancialstatements;itemsinthefinancialstatementshavebeenclassified,disclosedanddescribedcorrectly;assets,liabilities,incomeandexpenditureareenteredinthefinancialstatementsatthecorrectamounts;allthetransactionsduringthereportingperiodareincludedintheaccounts;transactionsenteredintheaccountsarefactualtransactions;andthattheassetshavebeensecured.

Theriskmanagementprocessincludesanannualidentificationandanalysisofrisksrelatedtofinancialreporting.Inaddition,theaimistoanalyzeandreportallnewrisksimmediatelyaftertheyhavebeenidentified.TakingintoaccountthequalityandextentoftheGroup'sbusinessoperations,themostsignificantrisksassociatedwiththereliabilityoffinancialreportingareassociatedwithrevenuerecognition,processingofbaddebtreservation,capitalizationofproductdevelopmentexpenses,impairmenttestingofassets(includinggoodwill,capitalizedproductdevelopmentexpensesandunfinishedprojects)anddeferredtaxassets.

ControlfunctionsThecorrectnessandreliabilityoffinancialreportingareensuredthroughcompliancewiththeGrouppoliciesandguidelines.Controlsthatensurethecorrectnessoffinancialreportingincludecontrolsrelatedtoaccountingtransactions,controlsrelatedtotheselectionofandcompliancewiththeaccountingprinciples,informationsystemcontrolsandfraudcontrols.

TheGroup'snetsalesarerecognizedunderthesupervisionofthecentralizedcontrollingfunction.TheGrouphaswritteninternalrevenuerecognitionguidelines.Revenuerecognitionisbasedontheexistenceofobligatorysaleanddeliverydocuments.TheamountoftheGroup'sbaddebtreservationiscalculatedmonthlybythecentralizedfinancialadministrationservicecenter.Thecalculationisbasedonthematuritydistributionoftradereceivablesbysalescompany.

ThecapitalizedamountoftheGroup'sproductdevelopmentexpenditureiscalculatedmonthlybythecentralizedfinancialadministrationservicecenter.Thecalculationisbasedonproject-specificmonitoringdocumentationofR&Dactivities.TheGrouphaswrittenguidelinesonR&Dexpenditure.Goodwillistestedforimpairmentduringthelastquarteroftheyear.Keyvariablesusedinthecalculationsaretheestimatedchangeratesofnetsalesandcosts.Inaddition,indicationsofimpairmentarecontinuouslymonitored.Inspecifyingthecompany-specificdeferredassets,theeffectivetaxrateofeachcountryisapplied.Thesubsidiarieshaveaccumulatedunutilizedtaxlossesforwhichdeferredtaxassetshavenotbeenrecognizedinlinewiththeprudenceconcept.Accordingtothetransferpricingprincipleappliedsince2008,subsidiariesaccumulatetaxableincomeagainstwhichconfirmedlossescanbeutilizedinthefuture.Weconsideritprobablethattaxableincomewillbegeneratedinthesubsidiariesinthefutureagainstwhichtheunutilizedtaxlossescanbeutilized.Deferredtaxassetswere


recognizedinthefinancialstatementsfor2013forunutilizedtaxlossesaccumulatedinpreviousyears.

TheGroup'scentralizedfinancialadministrationservicecenterandcontrollingfunctioncontinuouslydevelopglobalreliable,harmonized,scalableandefficientoperatingmethods.Thegloballyharmonizedaccountscheme,highautomationrateoftheGroup'ssharedinformationsystemsandthesystems'integratedcontrolpointsfacilitateacost-efficientinternalcontrolprocesswithanaudittrailforfinancialreporting.InformationsystemssupportcompliancewiththeGroup'sacceptanceauthorizationsforprocurementproposalsandpurchaseinvoicesamongothers.Basware'sfinancialadministration,includingcashmanagementandpayment,arecentralizedattheGroup'slevel,whichstrengthensthefunctionalityofthecontrolsfurther.

PersonnelexpensesaccountforamajorityofBasware'sexpenditure.Actualandforecastedpersonnelexpensesaremonitoredandtheforecastsareupdatedataverydetailedlevelregularly.Thecontrollingfunctionisresponsibleforthecalculationofcommissionsandbonusesgloballyinaccordancewiththebonusschemeineffectatanytime,approvedbytheBoardannually.

TheresultofbusinessoperationsandattainmentofannualgoalsisassessedmonthlybyExecutiveTeamandBoardmeetings.MonthlymanagementandBoardreportingincludesbothactualandforecastdatacomparedtothegoalsandactualresultsofpreviousperiods.Financialreportsgeneratedforusebythebusinessmanagementmonitorcertainkeyindicatorsassociatedwiththedevelopmentofsalesandtradereceivablesonaweeklyandmonthlybasis.

Baswareaimstocomplementitsorganicgrowthwithacquisitionsinaccordancewithitsstrategy.Inmakingacquisitions,thecompanyaimstofollowduediligenceandutilizeitsinternalandexternalcompetenceintheplanningphase(e.g.duediligence),takeoverphase(e.g.immediateadoptionofBasware'sinformationsystems)aswellaswhenintegratingacquiredfunctionswiththecompany'soperations(e.g.adoptionofBasware'sHRpolicies).

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,theBoardofDirectorsdecidednottoestablishseparatecommitteesfor2013astheextentofthecompany'soperationsandthesizeoftheBoardofDirectorsdonotrequirematterstobepreparedbyabodysmallerthantheentireBoardofDirectors.Therefore,preparationofthecompensationpaidtotheBoardofDirectorshasnotbeenallocatedtoaNominationCommittee,andthepreparationofthecompensationpaidtotheCEOandothermembersofthemanagement


hasnotbeenallocatedtoaCompensationCommittee.

RemunerationofBoardofDirectorsTheGeneralMeetingdecidesontheremunerationpaidtotheBoardofDirectorsandauditors.TheBoarddecidesontheservicetermsandconditionsoftheCEO,specifiedinwriting.ThecompensationprinciplesofthetopmanagementaredecidedbytheBoard.TheBoardannuallyapprovesthepersonnelincentivescheme.

TheAnnualGeneralMeetingresolvedonFebruary14,2013,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,andpersonalobjectives.TheBoardofDirectorsmonitorsthefulfillmentoftheperformanceandresultcriteriaoftheincentiveschemetwiceayearandapprovesthebonustobepaidateachtime.

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

ThesalaryofCEOEsaTihilä’sfortheperiodJanuary1-December31,2013,includingbenefits,wasEUR343.797,76.SalaryinmoneywasEUR287.891,46andfringebenefitstotaledEUR12.108,54.Noincentiveswerepaid.

InDecember2013,EsaTihiläwasgranted1,725sharesonthebasisoftheincentiveschemeforthevestingperiod2011;ofwhich862shareswereconveyedtoEsaTihilä(thevalueofwhichisapproximatelyEUR21898,88basedontheaveragesharepriceEUR25.39ofthepaymentdayonDecember27,2013)andEUR21898,88waspaidincashtocoverthewithholdingtax.


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

InDecember2013,themembersofExecutiveTeam,excludingCEO,werepaidEUR1.814.004,66insalariesandfringebenefitstotaledtoEUR134.909,35.Noincentiveswerepaid.

InDecember2013,themembersofExecutiveTeamweregrantedatotalof6,863sharesonthebasisoftheincentiveplanforthevestingperiod2011,ofwhich3.430shares(intotalvalueofEUR87.125,79basedontheaveragepriceoftheshareEUR25,39onthepaymentdayonDecember27,2013)weretransferredtothekeypersonnelincludedintheplanandEUR87.125,79waspaidincashtocoverthewithholdingtax.

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.Thesharestobeallocatedatthetargetlevelwillcontinuetocorrespondatthecurrentsharepricetotheapproximateamountof95,000BaswareCorporationshares(includingalsotheproportiontobepaidincash)andtotalling142,000atthemaximum.ThepossiblesharestobeallocatedwillconsistofownsharesheldbythecompanyoracquiredinpublictradingthroughNASDAQOMXHelsinkiLtd.

Thetermsoftheincentiveschemeincludesworkandemploymentrelatedconditions.

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

Bylaw,theCompanypublicinsidersincludemembersoftheBoard,CEO,auditorsandtheauditorinchargeofthecompanyofpublicaccountantsaswellasExecutiveTeammembersresponsibleforthekeybusinessareas.Inaddition,theCompany


hasacompany-specificinsiderregisterthatincludesthosewhoregularlyreceiveinsiderinformationintheirwork.Personswhoareinvolvedinacquisitionsorotherprojectsthathaveaneffectonthevaluationofthecompany'sshares,areconsideredproject-specificinsidersandaresubjecttoatemporarytradingsuspension.

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

AccordingtotheshareregistermaintainedbyEuroclearFinlandLtd,CEOEsaTihiläheld12,212BaswareCorporationshares,MikaHarjuaho7,902,MariHeusala1,000,SteveMuddiman8,893,IlariNurmi899,MattiRusi2,783,andRikuRoos150sharesonDecember31,2013.OthermembersoftheExecutiveTeamdidnotholdsharesinBaswareCorporation.

AccordingtotheshareregistermaintainedbyEuroclearFinlandLtd,HannuVaajoensuuheld674,276,PenttiHeikkinen3,135,IlkkaSihvo885,300,TuijaSoanjärvi526,andAnssiVanjoki5,000sharesinBaswareCorporationonDecember31,2013.

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:

SirjeAhvenlampiSeniorCommunicationsManagerTel.+358505573822sirje.ahvenlampi(at)basware.fi


BOARDOFDIRECTORS'REPORTJANUARY1-DECEMBER31,2013

SUMMARYOFTHEFINANCIALYEAR

Financialyear2013

NetsalesEUR123349thousand(EUR113699thousand)–growth8.5percent

OperatingprofitEUR3331thousand(EUR8308thousand)–decrease59.9percent

Operatingprofit2.7percentofnetsales(7.3%)

GrowthofAutomationServices(SaaSande-invoicing)48.3percent

Recurringrevenue(CustomerSupportandAutomationServices)63.8percent(57.8%)ofnetsales

CashflowfromoperatingactivitiesEUR3578thousand(EUR6441thousand)

Earningspershare(diluted)EUR0.20(0.46)–decreaseof55.6percent

Dividendproposalfor2013:EUR0.23pershare(2012:EUR0.23)

ThisfinancialstatementreleasehasbeenpreparedinaccordancewithIAS34,InterimFinancialReporting.

BusinessoperationsBaswareisthegloballeaderinprovidingsolutionsforbetterbuying,bettersellingandconnectedcommerce.Baswareprovidesopen,secure,cloud-basedpurchase-to-payande-invoicingsolutionstoorganizationsofallsizes,resultingingreaterefficienciesinprocurement,accountspayableandaccountsreceivable,paymentandfinancialprocesses.Companiesacrossallindustries,fromsmallbusinessestocorporategiantsuseBaswaresolutionstodrivesustainablecostsavings,proactiveinsighttocashflowsandimprovedbuyer–supplierrelationships.BaswareCommerceNetworkisfoundedontheprinciplesofopenness,wherealltypesoforganizationscancollaborateandtrade,makingitthelargestintheworld.Todaythenetworkconnectmillionsofbusinessusersin900000companiesacrossover100countries.

ReportingBaswareCorporationreportsoneoperatingsegment:PurchasetoPay,P2P.

Baswarereportsincomeforproductsandservicesasfollows:Licensesales,ProfessionalServices,CustomerSupport,andAutomationServices.

CustomerSupportincludesthepreviousMaintenanceandExtendedcustomersupport,whichwaspreviouslyreportedunderProfessionalServices.Extendedcustomersupportagreementsarecontinuousserviceagreementswithatermofseveralyears.CustomerSupportandAutomationServicestogetherformtherecurringrevenuereportedbythecompany.

LicensesalesconsistofthePurchasetoPayproductfamilytogetherwithfinancialplanningandreportingsolutionssoldonlyinFinland.AutomationServicesincludee-invoicing,scanningservices,printingservices,catalogmanagement,purchasemessageexchange,activationservices,andSoftwareasaService(SaaS)services.

BaswarealsoreportstheestimatedrevenuetoberecognizedforcurrentAutomationServicesagreementsthatareinproductioninthenexttwelvemonths.AutomationServicesagreementstypicallyexpandseveralyearsorarevaliduntilfurthernotice.

AsgeographicinformationBaswarereportsgeographicalareasFinland,Scandinavia,restofEurope,andOther.Netsalesarereportedbythecustomer’slocation,andgeographicalinformationofnon-currentassetsisreportedbythelocationoftheassets.

Theaccountingprinciplesandcalculationofkeyindicatorshaveremainedunchanged,andarepresentedintheFinancialStatements2013.

FINANCIALPERIOD


NetsalesBaswareGroup’snetsalesincreasedby8.5percentduringthereviewperiod(January–December)andwereEUR123349thousand(EUR113699thousand).Inlocalcurrencyterms,netsalesincreasedby10.0percent.


Netsalesbybusiness 10-12/2013 10-12/2012 Change,% 1-12/2013 1-12/2012 Change,%LicenceSales 4237 5179 -18.2 14617 17437 -16.2CustomerSupport 11009 10865 1.3 43512 42011 3.6Consulting 7869 7746 1.6 30069 30552 -1.6Automationservices 9934 6637 49.7 35151 23699 48.3

GroupTotal 33049 30427 8.6 123349 113699 8.5

Thecompany'slicensesalesdecreasedby16.2percentduringthereportingperiodto11.9percent(15.3%)ofnetsales.SaaSsales,reportedinAutomationServices,grewby17.8percent.CustomerSupportrevenueincreasedby3.6percentandaccountedfor35.3percent(36.9%)ofnetsales.ProfessionalServicesrevenuedecreasedby1.6percentandaccountedfor24.4percent(26.9%)ofnetsales.

Duringtheperiod,AutomationServicesgrewby48.3percentandaccountedfor28.5percent(20.8%)ofnetsales.ThetransactionvolumeprocessedbytheAutomationServicesbusinesscontinueditsfavorabledevelopmentandwas60.0million(growthof76.5percent).TheestimatedrevenuetoberecognizedforcurrentAutomationServicesagreementsthatareinproductionaswellasfornew,signedagreementsinthenexttwelvemonthsincreasedtoEUR36.1million,growthof7.6percentcomparedtothepreviousquarter.

TheinternationalshareofBasware’snetsaleswas60.0percent(57.3%)inthefinancialperiod.Internationaloperationsgrewby13.7percent.

FinancialperformanceBasware'soperatingprofitfortheperioddecreasedby59.9percenttoEUR3331thousand(EUR8308thousand).Operatingprofitrepresented2.7percent(7.3%)ofnetsales.

Thecompany’sfixedcostswereEUR103119thousand(EUR90081thousand)intheperiod,up14.5percentonthecorrespondingperiodthepreviousyear.Personnelcostsmadeup74.6percent(72.8%)orEUR76919thousand(EUR65590thousand)ofthefixedcosts.Baddebtandchangeinbaddebtprovisionareincludedinfixedcosts.BaddebtprovisionattheendofthefourthquarteramountedtoEUR1714thousand(EUR1055thousand).

AmortizationofintangibleassetstotaledEUR6085thousand(EUR5724thousand).

Thecompany’sfinanceincomeandfinanceexpenseswereEUR-47thousand(EUR50thousand).ProfitbeforetaxwasEUR3284thousand(EUR8357thousand).TaxesfortheperiodtotaledEUR-678thousand(EUR-2494thousand).Profitfortheperiodwas2.1percent(5.2%)ofnetsales,orEUR2605thousand(EUR5863thousand).UndilutedearningspersharewereEUR0.20(EUR0.46).

Additionalinformationonthecompany'skeyfigurescanbefoundfromthefinancialstatement'ssectionKeyFigures.

FinanceandinvestmentsBaswareGroup’stotalassetsonthebalancesheetattheendoftheperiodwereEUR127043thousand(EUR129758thousand).Thecompany’sliquidassetswereEUR13218thousand(EUR34519thousand),whichcomprisesofcashandcashequivalentsinfull.NetcashflowsfromoperatingactivitieswereEUR3578thousand(EUR6441thousand).NetcashflowsfrominvestmentswereEUR-19538thousand(EUR-18799thousand)andthenetcashflowfromfinancingactivitieswereEUR-4861thousand(EUR3584thousand).

Equityratiowas77.1percent(77.6%)andgearingwas-4.7percent(-23.8%).Thecompany'sinterest-bearingliabilitiestotaledEUR8632thousand(EUR10524thousand),ofwhichcurrentliabilitiesaccountedforEUR3618thousand(EUR1906thousand).Returnoninvestmentwas3.9percent(8.2%)andreturnonequity2.6percent(5.8%).

Thecompany’scapitalexpenditure,resultingfromregularadditionalandreplacementinvestmentsrequiredforgrowth,wasEUR1470thousand(EUR1431thousand)intheperiod.Grossinvestmentswhichinclude–inadditiontothosementioned


above–theacquisitionaswellascapitalizedresearchanddevelopmentcoststotaledEUR20733thousand(EUR19606thousand).

AdditionalinformationontheCorporation'skeyfigurescanbefoundfromthefinancialstatement'ssectionKeyFigures.

ResearchanddevelopmentBasware’sresearchanddevelopmentexpensestotaledEUR18148thousand(EUR17884thousand),or14.7percent(15.7%)ofnetsalesduringthereviewperiod.Theexpensesincreasedby1.5percentcomparedtothecorrespondingperiodthepreviousyear.ResearchanddevelopmentexpensescapitalizedduringtheperiodamountedtoEUR3607thousand(EUR5330thousand).TheresearchanddevelopmentcostsincludedintheprofitforthereviewperiodtotaledEUR14541thousand(EUR12555thousand),or11.8percent(11.0%)ofnetsales.

Atotalof370(351)peopleworkedinR&Dofwhom160peopleinIndiaattheendof2013.

PersonnelBaswareemployed1485(1330)peopleonaverageduringtheperiodand1472(1423)attheendoftheperiod.Thenumberofpersonnelincreasedby49personsandby3.4percentcomparedwiththesameperiodthepreviousyear.TheincreaseinthenumberofpersonnelwasmainlyduetothepersonneljoiningBaswarethroughtheacquisitionofaBelgiane-invoicingoperator.


Personnel(employed,onaverage)

10-12/2013 10-12/2012 Change,% 1-12/2013 1-12/2012 Change,%

Finland 510 507 0.5 510 486 4.9Scandinavia 131 133 -1.3 131 129 1.7RestofEurope 272 196 38.8 265 179 47.9India 498 507 -1.8 506 467 8.4Other 67 71 -5.6 73 69 5.3

PersonnelTotal 1478 1414 4.5 1485 1330 11.6

Theshareofpersonnelworkinginforeignunitshasincreasedcomparedwiththepreviousyear.Attheendoftheperiod,65.5percent(64.4%)ofBaswarepersonnelworkedoutsideofFinlandand34.5percent(35.6%)inFinland.12.0percentofthepersonnelworkinsalesandmarketing,58.4percentinconsultingandservices,23.7percentinproducts,and5.8percentinadministration.

Theaverageageofemployeesis34.6(34.0)years.Oftheemployees,22.8percenthaveaMaster'sdegreeand28.1percenthaveaBachelor'sdegree.Womenaccountfor23.3percentofemployees,menfor76.7percent.Forincentivepurposes,theCompanyhasabonusprogramthatcoversallemployees.

Thecompany'spersonnelcostswereEUR76919(EUR65590),anincreaseof17.3percentcomparedtothepreviousyear.

OTHEREVENTSOFTHEPERIODThestronggrowthinAutomationServicescontinuedthroughout2013andamountedto48percent.Anincreasingnumberofsmallandmedium-sizedsuppliersandbuyershavealsobeenconnectedtothenetworkthroughnewproductsanddeliverymethodsduringtheyear.Attheendof2013,morethan60milliontransactionswereprocessedviaBaswareCommerceNetwork,agrowthof76.5percent.

ThekeystrategicobjectiveistogrowtheBaswareCommerceNetworktobecometheworld’slargest,openbusinesscommercenetworkandreachanannualvolumeof150milliontransactionsprocessedbytheendof2015.

Theshareofrecurringrevenue(CustomerSupportandAutomationServices)ofnetsalesincreasedduringeachquarter,accountingfor63.8percentofnetsalesduringthefinancialperiodasawhole.Theincreasingshareofrecurringrevenueofnetsalesimprovespredictabilityoverthelongterm.

Theproductandserviceportfoliowasstrengthenedthroughstrategicpartnershipsin2013.InSeptemberthecompanyannouncedapartnershipwithMasterCardthatconnectsMasterCard’snetwork,oneoftheworld’slargestpaymentnetworks,withBaswareCommerceNetworkandintroducesanewbusiness-to-businesspaymentsolution.InSeptemberthecompanyalsoannouncedapartnershipwiththeleadingindependentsupplymanagementandspendanalysisproviderBravoSolutionstocreateacomprehensivesource-to-pay(S2P)solution.

Duringthelatterhalfof2013,thecompanyrestructureditsorganizationtoensureevenfastergrowthintransactionvolumesandexpandtheservice-basedbusiness.Theoperationswillbemanagedastwounitsin2014:theNetworkServicesbusinessareaisresponsibleforthee-invoicingbusinessandtheSolutionServicesbusinessareaforsoftwarebusiness.TheNetworkServicesbusinessaimsatstronggrowth.TheSolutionServicesbusinessaimsatmoderategrowthandstrongprofitability.

SHAREANDSHAREHOLDERSBaswareCorporation’ssharecapitaltotaledEUR3528368.70attheendoftheperiodandthenumberofshareswas12931229.

TheAnnualGeneralMeetingheldonFebruary14,2013,authorizedtheBoardofDirectorstodecideonrepurchaseofthe


company’sownsharesinaccordancewiththeproposaloftheBoardofDirectors.Byvirtueoftheauthorization,theBoardofDirectorsisentitledtodecideonrepurchasingamaximumof1290000company'sownshares.TherepurchaseauthorizationisvaliduntilJune30,2014.

ShareholdersBaswarehad14349(14443)shareholdersonDecember31includingnominee-registeredholdings(11).Nominee-registeredholdingsaccountedfor11.7percent(11.2%)ofthetotalnumberofshares.

Thecompanyholds75815BaswareCorporationshares,correspondingtoapproximately0.6%ofallsharesinthecompany.

AdditionalinformationonshareholdingsoftheExecutiveTeamandBoardofDirectorsandmajorshareholdersisavailableonthecompany’sinvestorsiteatwww.basware.com/investors.

SharepriceandtradingDuring2013,thehighestpriceofthesharewasEUR25.60(EUR24.00),thelowestwasEUR16.75(EUR16.70)andtheclosingpricewasEUR25.03(EUR20.25).TheaveragepriceofthesharewasEUR20.35(EUR20.84)duringtheperiod.

Atotalof1723866(1514703)sharesweretradedduringtheperiod,equivalentto13.4percent(11.8%)oftheaveragenumberofshares.Marketcapitalizationwiththeperiod’sclosingpriceonDecember31,2013,wasEUR321771012(EUR260182550).

GOVERNANCEEsaTihilähasactedastheCEOofthecompanyfromOctober17,2011.TheCEOisinchargeofthemanagementofthecompany'sbusinessoperationsandgovernanceinaccordancewiththeArticlesofAssociation,theFinnishCompaniesActandtheinstructionsgivenbytheBoard.

TheAnnualGeneralMeetingonFebruary14,2013decidedthenumberofmembersoftheBoardofDirectorstobefive.HannuVaajoensuu,PenttiHeikkinen,IlkkaSihvo,TuijaSoanjärviandAnssiVanjokiwereelectedasmembersoftheBoardofDirectors.InitsmeetingheldaftertheAnnualGeneralMeeting,theBoardofDirectorselectedHannuVaajoensuuastheChairmanandIlkkaSihvoastheViceChairmanoftheBoard.

Inthesamemeeting,Ernst&YoungOy,AuthorizedPublicAccountantsorganisation,waselectedasthecompany'sauditorandHeikkiIlkka,AuthorizedPublicAccountant,astheprincipallyresponsibleauditorofthecompany.

AuthorizationsTheAnnualGeneralMeetingdecidedtoauthorizetheBoardofDirectorstodecideonrepurchaseofcompany'sownsharesinaccordancewiththeproposaloftheBoardofDirectors.Byvirtueoftheauthorization,theBoardofDirectorsisentitledtodecideonrepurchasingamaximumof1,290,000company'sownshares.Thecompany'sownsharesshallberepurchasedotherwisethaninproportiontotheholdingsoftheshareholdersbyusingthenon-restrictedequitythroughtradingonregulatedmarketorganizedbyNASDAQOMXHelsinkiLtdatthemarketpriceprevailingatthetimeofacquisition.ThesharesshallberepurchasedandpaidforinaccordancewiththerulesofNASDAQOMXHelsinkiLtdandEuroclearFinlandLtd.Thesharesshallberepurchasedforuseasconsiderationinpossibleacquisitionsorotherarrangementsrelatedtothecompany'sbusiness,asfinancingforinvestmentsoraspartofthecompany'sincentiveprogramortobeheldbythecompany,tobeconveyedbyothermeansortobecancelled.TheBoardofDirectorsshalldecideonothertermsandconditionsrelatedtotherepurchaseofthecompany'sownshares.TheRepurchaseAuthorizationshallbevaliduntil30June2014.

TheAnnualGeneralMeetingdecidedalsotoauthorizetheBoardofDirectorstodecideonissuingnewsharesand/orconveyingthecompany'sownsharesheldbythecompanyand/orgrantingspecialrightsentitlingtosharespursuanttoChapter10,Section1oftheFinnishCompaniesActinaccordancewiththeproposaloftheBoardofDirectors.

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


Newsharesmaybeissuedandthecompany'sownsharesheldbythecompanymaybeconveyedeitheragainstpaymentorforfree.Adirectedshareissuemaybefreeonlyifthereisanespeciallyweightyfinancialreasonbothforthecompanyandwithregardtotheinterestsofallshareholdersinthecompany.

Basedontheauthorization,theBoardofDirectorsmaydecidetoissueamaximumof2,580,000newsharesandconveyamaximumof1,372,708ofthecompany'sownsharesheldbythecompany.Thenumberofsharestobeissuedtothecompanyitselftogetherwiththesharesrepurchasedbythecompanyonbasisoftherepurchaseauthorizationshallbeatthemaximumof1,290,000shares.

TheBoardofDirectorsmaygrantspecialrightsreferredtoinChapter10,Section1oftheFinnishCompaniesAct,whichcarrytherighttoreceive,againstpayment,newsharesofthecompanyorthecompany'sownsharesheldbythecompany.Therightmayalsobegrantedtothecompany'screditorinsuchamannerthattherightisgrantedonaconditionthatthecreditor'sreceivableisusedtosetoffthesubscriptionprice(convertiblebond).Themaximumnumberofnewsharesthatmaybesubscribedbyvirtueofthespecialrightsgrantedbythecompanyisintotal1,000,000shareswhichnumbershallbeincludedinthemaximumnumberofnewsharesstatedabove.

Thesubscriptionpriceofthenewsharesandtheconsiderationpayableforthecompany'sownsharesshallberecordedundertheinvestednon-restrictedequityfund.TheBoardofDirectorsshalldecideonallothertermsandconditionsrelatedtotheauthorizations.Theauthorizationsshallbevaliduntil30June2014.

CorporateGovernanceStatementThecompanypublisheditsCorporateGovernanceStatementfor2013thatwascomposedinaccordancewithRecommendation54ofthenewCorporateGovernanceCodeandChapter7,Section7oftheFinnishSecuritiesMarketAct.TheCorporateGovernanceStatementisissuedseparatelyfromthecompany'sannualreport.

BaswareCorporation'sCorporateGovernanceStatementisavailableatcompany'sinvestorswebsiteatwww.basware.com/investors.

SHORT-TERMRISKSANDUNCERTAINTYFACTORSShort-termrisksareconsideredtoberisksinthecurrentreportingyear.Additionalinformationonrisksandriskmanagementisavailableonthecompany’sinvestorwebsite:www.basware.com/investors.

Theworldeconomyandmarketsareunstable,whichhasresultedinadecreaseinthedemandforlicensesalesandservices.Thenegotiationtimesoflargeinternationaldealsinparticulararelongbecausethecustomers’requirementsarehigherintheservicebusinessthaninthesoftwarebusiness.

Thebaddebtprovisionrelatedtosalesreceivablesonthecompany’sbalancesheethasincreasedduetoanincreaseintheamountofoverduecustomerpayments.However,therearenosignificantcreditlossconcentrationsassociatedwiththesalesreceivables;theyareprimarilycomprisedofalargenumberofrelativelysmallreceivables.

WorkthatcannotbeinvoicedrelatedtotheproductionentrytimesforAlustasoftwareandSaaSdeliverymodelbeinglongerthanplannedhaveeffectsontheprofitabilityofProfessionalServices.TheproductionentrytimesofSaaSdeliveriesalsoaffectthegrowthofAutomationServices.

AspartofHRprocesses,thecompanycontinuouslyassessesthecompetenceandwell-beingofthepersonnel.Thecompanyaimstoavoidrecruitmenterrorsandexcessiveturnoverofpersonnel,whichmayleadtoadecreaseincustomersatisfaction,growth,andprofitability.

Goodwillwastestedforimpairmentduringthelastquarterof2013.Accordingtothetestingforassetimpairment,goodwillhadnotbeenimpaired.

ACQUISITIONSANDCHANGESINGROUP'SSTRUCTURETheacquisitionofCertipost’se-invoicingbusinessbyBaswarewasclosedonJanuary2,2013.Init,Baswareacquiredthee-invoicingbusinessofCertipost,theleadinge-invoicingoperatorintheBenelux.TheinitialacquisitionpriceofapproximatelyEUR18.2millionwaspaidincashontheclosingdate.Thefinalpurchasepricewasconfirmedduringthesecondquarterof2013andwasEUR17.3millionbasedontheannualaccountsfor2012.

In2012,thenetsalesoftheacquiredbusinessamountedtoapproximatelyEUR7.9millionandoperatingprofit


approximatelyEUR1.2millionnegative.Theacquiredbusinessoperations’figureswereconsolidatedintoBasware’snetsalesandprofitasofJanuary1,2013.Thenetsalesfor2013wereapproximatelyEUR8.5millionandoperatingresultapproximatelyEUR-0.1million.TheallocatedpurchasepriceisapproximatelyEUR17.3million.TheacquirednetassetsamounttoapproximatelyEUR2.4million,includingthecashreservesofEUR2.2million.ApproximatelyEUR4.5millionassociatedwithcustomerrelationshipsandacquiredtechnologyhasbeenallocatedtointangibleassets.Thevalueassociatedwithcustomerrelationshipswillbeamortizedinsevenyearsandvalueassociatedwithtechnologyinfiveyears,startingfromthefirstquarterof2013.ThepurchasepriceincludesapproximatelyEUR10.3millionofgoodwill.BaswareestablishedtheBaswareBelgiumN.V.subsidiaryinBelgiumonNovember12,2012

Thecompany'sbranchofficesSingaporewasclosedonApril30,2013

Moreinformationonallofthecompany'sbranchescanbefoundfromthefinancialstatement'sNote28.

RESPONSIBILITYBaswareisaforerunnerine-engagementandconnectedeconomy,throughitscloud-basedpurchase-to-payande-invoicingsolutions.ThecompanyhasmillionsofbusinessusersinitsglobalBaswareCommerceNetwork,foundedontheprincipleofopenness.BaswarecorporateresponsibilityisintegratedinitsbusinessoperationsandthecorporatevaluesarethetoolsforeverydaysustainableworkwithintheGroup.Thecompanyiscommittedtoresponsibleoperationsinallofitseconomic,socialandenvironmentalactivities.

AsalistedcompanyontheOMXHelsinkiStockExchange,Basware,with321.8millioneurosmarketcapital,iscommittedtofollowtherulesandregulationssetbytheauthoritiesandfollowthelawandregulationsineachcountrythecompanyoperates.Agreatemphasisisplacedonthecompanybrandandreputation,openandtransparentcommunicationstodifferentstakeholders,aswellasinternalcompanyvalues.

Moreinformationaboutthecompany'scorporateresponsibilityisavailableintheAnnualReport2013atwww.basware.com/annualreport.

STRATEGYBaswareupdateditsstrategyinaccordancewithitsstrategyprocessattheendof2013.Thekeystrategicobjectivesremainunchanged:anannualvolumeof150milliontransactionsprocessedbytheendof2015,annualgrowthof15–30percentinnetsales,shareofrecurringrevenue70percentofnetsalesandoperatingprofitmarginof15–20percentattheendofthestrategyperiod.

Basware’sneworganizationalstructuresupportstheimplementationofthestrategy.ThekeyaimoftheNetworkServicesbusinessisstronggrowthinnetsales,whiletheSolutionServicesbusinessaimsatstrongprofitabilityandmoderategrowth.StrengtheningBasware’spositioninthekeymarketsandcustomerloyaltyareobjectivessharedthroughoutthecompany.

Thestrategyfocusesonacceleratedglobalgrowthbothorganicallyandthroughacquisitions.Thestrategicfocusareasfor2014includestrengtheningBasware’spositionintheinternationalkeymarkets,maximizingthetransactionvolume,globalmarketleadershipinPurchase-to-Pay(P2P)solutions,andcustomerloyalty.

Baswarewillcontinuetoreviseitssalesandmarketingmodelwiththeaimofstrengtheningitspositioninthekeymarkets.Directsalesandmarketingmeasureswillbeincreasinglysegmentedaccordingtocarefullyselectedsegmentsandcompanies.Investmentsinobtainingchannelpartnersandbusinesssupportwillcontinue.

NetworkServicesbusinessfocusesonmaximizingtransactionvolumes,includingacquiringnewvirtualoperatorpartners,intensifyingandautomatingsupplieractivation,developingproductandtransactionservices,andofferingaddedvalueservicesrelatedtofinancing,amongothers.

SolutionServicesbusinesswillcontinuethedevelopmentofAlustasoftwareproductsandstreamliningtheassociateddelivery,production,andsupportprocesses.TheeaseofuseandoperatinglogicofAlustaproductshavemetafavorablemarketreception.

FUTUREOUTLOOK

OperatingenvironmentandmarketoutlookCompaniesofallsizesgloballyareunderpressuretoimprovetheircashflows,findnewinnovativepaymentstrategiesandautomatetheirfinancialprocessesandfunctions.Thecompanyexpectsthesametocontinuealsoin2014andthecontinuousneedforservicestoremainatafavorablelevelamongitscustomers.


Consolidationisexpectedtocontinueinthebusinessenvironment,withtheroleofservicesgrowingincompanies’portfolios.Baswarecontinuesactiveanalysisofacquisitiontargetsespeciallyinthee-invoicingmarketinEuropeandintheU.S.accordingtoitsstrategy.

Bytheendof2015,Baswareaimstobecomethelargestbusinesscommercenetworkforbuyersandsuppliers.Thepenetrationrateofe-Invoicingisstilllow.Itvariesbetween5-30percentdependingonthecountry,andithasbeenestimatedtogrowstrongly.Thegrowingandevolvinge-invoicingmarketwillofferBaswareexcellentgrowthopportunities.

Outlook2014InBasware’sneworganizationalmodeltheoperationswillbemanagedastwounits:theNetworkServicesbusinessareawillberesponsibleforthee-invoicingbusinessandtheSolutionServicesbusinessareaforBasware’ssoftwarebusiness.TheNetworkServicesbusinessaimsatstronggrowth.TheSolutionServicesbusinessaimsatmoderategrowthandstrongprofitability.

Theorganizationalrestructuringhasparticularlyaimedatacceleratingthedeploymentofcompany’sservicesandproducts,acceleratingtheproductionofSaaSande-invoicingdealsthroughproductandprocessimprovementsandtomakeoperationsmoreefficientandimproveprofit-makingability.Thecompanywillcontinuetostreamlineitsoperationsin2014.

Baswareexpectsitsnetsalesandoperatingprofit(EBIT)for2014togrowcomparedto2013.

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

Attheendof2013,theGroupparentcompany’sdistributablefundsareEUR88866295.46.

Basware’sBoardofDirectorsproposestotheAnnualGeneralMeetingthatadividendofEUR0.23pershare(2012:EUR0.23)bepaidfor2013.

Espoo,Finland,January23,2014

BASWARECORPORATIONBoardofDirectors

HannuVaajoensuu,ChairmanIlkkaSihvo,ViceChairmanPenttiHeikkinenTuijaSoanjärviAnssiVanjoki

EsaTihilä,CEO


CONSOLIDATEDSTATEMENTOFCOMPREHENSIVEINCOME(IFRS)1.1.-31.12.2013

EURthousand Notes 1.1.-31.12.2013 1.1.-31.12.2012 Change,%NETSALES 2 123349 113699 8,5

Otheroperatingincome 4 1915 228 738,4Materialsandservices 5 -11761 -9045 30,0Employeebenefitsexpenses 6 -76919 -65590 17,3Depreciationandamortization -7052 -6493 8,6Otheroperatingexpenses 7 -26200 -24491 7,0

Operatingprofit 3331 8308 -59,9

Financialincome 8 928 372 149,3Financialexpenses 8 -975 -323 202,4

Profitbeforetax 3284 8357 -60,7

Incometaxexpense 9 -678 -2494 -72,8

PROFITFORTHEPERIOD 2605 5863 -55,6

Othercomprehensiveincome Othercomprehensiveincometobereclassifiedtoprofitorlossinsubsequentperiods:

Exchangedifferencesontranslatingforeignoperations

-2638 886

Incometaxrelatingtocomponentsofothercomprehensiveincome

9 281 111 153,8

Othercomprehensiveincome,netoftax -2358 996 TOTALCOMPREHENSIVEINCOME 247 6860 -96,4

Profitattributableto: Ownersoftheparent 2605 5863 -55,6

2605 5863 -55,6Totalcomprehensiveincomeattributableto:

Ownersoftheparent 247 6860 -96,4

247 6860 -96,4

Earningspershare Undiluted,EUR 10 0,20 0,46 -55,6Diluted,EUR 10 0,20 0,46 -55,6


CONSOLIDATEDSTATEMENTOFFINANCIALPOSITION(IFRS)31.12.2013

EURthousand Notes 31.12.2013 31.12.2012 Change,%ASSETS

Non-currentassets Intangibleassets 11 26428 23169 14,1Goodwill 11 50996 41896 21,7Tangibleassets 12 1431 1440 -0,6Available-for-saleinvestments 13 38 38 0,0Tradeandotherreceivables 14 947 1068 -11,3Deferredtaxassets 18 3680 2543 44,7

Non-currentassets 83520 70154 19,1

Currentassets Inventories 15 240 18 1209,2Tradeandotherreceivables 16 27536 24202 13,8Incometaxreceivables 2529 865 192,2Cashandshort-termdeposits 17 13218 34519 -61,7

Currentassets 43522 59604 -27,0

TOTALASSETS 127043 129758 -2,1

CONSOLIDATEDSTATEMENTOFFINANCIALPOSITION(IFRS)31.12.2013


EURthousand Notes 31.12.2013 31.12.2012 Change,%EQUITYANDLIABILITIES

Shareholder'sequity Sharecapital 21 3528 3528 0,0Sharepremiumaccount 21 1187 1187 0,0Ownshares 21 -1164 -1215 4,2Fairvaluereserveandotherreserves 21 62288 62339 -0,1Translationdifferences -1958 -708 -176,4Retainedearnings 34074 35594 -4,3

Shareholders'equity 97956 100725 -2,7

Non-currentliabilities Deferredtaxliabilities 18 1863 1493 24,8Interest-bearingliabilities 22,23 5014 8618 -41,8Othernon-currentfinancialliabilities 127 245 -48,4

Non-currentliabilities 7004 10356 -32,4

Currentliabilities Interest-bearingliabilities 22,23 3618 1906 89,8Tradepayablesandotherpayables 22 17966 15992 12,3Incometaxliabilities 499 779 -36

Currentliabilities 22082 18677 18,2

TOTALEQUITYANDLIABILITIES 127043 129758 -2,1


CONSOLIDATEDSTATEMENTOFCASHFLOWS(IFRS)1.1.-31.12.2013

EURthousand 1.1.-31.12.2013 1.1.-31.12.2012CASHFLOWFROMOPERATINGACTIVITIES

Profitfortheperiod 2605 5863

Adjustmentsforprofit Depreciationandamortization 7052 6493Proceedsfromsaleofnon-currentassets -1540 0Financeincomeandexpenses 48 -50Incometaxes 678 2494Othernon-cashitems -61 -991

Workingcapitalchanges Changeininventories -221 128Changeintradeandotherreceivables -589 -1437Changeintradeandotherpayables -830 -2176

Interestpaid -200 -6Interestreceived 109 170Otherfinancialitemsinoperatingactivities -425 -173Incometaxespaid -3047 -3874

Netcashfromoperatingactivities 3578 6441

CASHFLOWFROMINVESTINGACTIVITIES

Purchasesoftangibleandintangibleassets -5418 -6820Acquisitionofsubsidiariesandbusinesses,netofcashacquired -15061 -11979Proceedsfromdivestmentofbusiness 1540 0Loansgranted -600 0

Netcashusedininvestingactivities -19538 -18799

CASHFLOWFROMFINANCINGACTIVITIES

Proceedsfromborrowings 0 10000Repaymentsofborrowings -1667 0Purchaseofownshares 0 -963Paymentoffinanceleaseliabilities -239 -175Dividendspaid -2955 -5278

Netcashusedinfinancingactivities -4861 3584

Netchangeincashandcashequivalents -20821 -8774

Cashandcashequivalentsatthebeginningofperiod 34519 42977Netforeignexchangedifference -479 112Cashandcashequivalentsfromacquisitions 0 204

Cashandcashequivalentsattheendofperiod 13218 34519


CONSOLIDATEDSTATEMENTOFCHANGESINEQUITY(IFRS)1.1.-31.12.2013

Shareholders'

capitalShare

premiumaccount

Ownshares

Investednon-restrictedequity

Otherreserves

Translationdifferences

Retainedearnings

Total

SHAREHOLDERS'EQUITY1.1.2013

3528 1187 -1215 61799 540 -708 35594 100725

Comprehensiveincome

-2358 2605 247

Dividenddistribution

-2955 -2955

Managementincentiveplan

-61 -61

Changesinreportingperiod

51 -51 1108 -1108 0


3528 1187 -1164 61748 540 -1958 34074 97956

EURthousandShareholders'

capitalShare

premiumaccount

Ownshares


Otherreserves

Translationdifferences

Retainedearnings

Total


3528 1187 -429 61976 540 -1266 34340 99877

Comprehensiveincome

996 5863 6860

Dividenddistribution

-5278 -5278

Acquisitionoftreasuryshares

-963 -963

Managementincentiveplan

220 220

Changesinreportingperiod

177 -177 -438 448 10


3528 1187 -1215 61799 540 -708 35594 100725


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

AcopyoftheGroupfinancialstatementsisavailableontheInternetathttp://www.basware.com/about-us/investorsortheparentcompany'sheadquarters,addressLinnoitustie2,Espoo,Finland.

TheBoardofDirectorshasapprovedthefinancialstatementstobepublishedonJanuary23,2014.ShareholdersmayadoptorrejectthefinancialstatementsattheAnnualGeneralMeeting.

1.ACCOUNTINGPRINCIPLES

BasisofpreparationBaswareCorporation’sfinancialstatementshavebeenpreparedaccordingtotheInternationalFinancialReportingStandards(IFRS),approvedforuseinEUcountries,inaccordancewiththeIASandIFRSstandardsandIFRICinterpretationsvalidonDecember31,2013.TheGroupFinancialStatementsarepresentedineuro,whichistheprimaryandreportingcurrencyoftheGroup'sparentcompany,andtheyarebasedonacquisitioncostsunlessotherwisestatedintheaccountingprinciples.Theamountspresentedinthefinancialstatementsarerounded,sothesumofindividualfiguresmaydifferfromthesumreported.

AsofJanuary1,2013,theGrouphasappliedthefollowingnewandrevisedstandardsandinterpretations:

Amendment:IAS1PresentationofItemsofOtherComprehensiveIncome.Theamendmentintroducedtherequirementforclassifyingitemsofothercomprehensiveincomeaccordingtowhethertheythatmaybesubsequentlyreclassifiedthroughprofitorlosswhencertainconditionsaremet.TheamendmenthadanimpactonthepresentationoftheGroup’scomprehensiveincome.

Amendment:IAS12IncomeTaxes:RecoveryofUnderlyingAssets.Deferredtaxliabilitiesandassetsassociatedwithinvestmentpropertiesmeasuredatfairvalueandproperty,plantandequipmentmeasuredwiththerevaluationmodelaremeasuredonthebasisoftheassumptionthatthecarryingamountoftheunderlyingassetwillberecoveredentirelybysale.TheamendmenthasnothadaneffectontheGroup’sfinancialstatements.

Amendment:IFRS7FinancialInstruments:DisclosuresandIAS32FinancialInstruments:Presentation–OffsettingFinancialAssetsandFinancialLiabilities.Theamendmentspecifiedfurthertheguidelinesonwhenfinancialassetsandliabilitiescanbedisclosedonthebalancesheetinnetterms.TheamendmenthasnothadaneffectontheGroup’sfinancialstatements.

IFRS10ConsolidatedFinancialStatementsandIAS27SeparateFinancialStatements(revised).Thestandardamendedtheconceptofcontrolandwhetheracompanyisconsolidatedaccordingtothenewdefinitionofcontrol.Thestandardalsoincludesrequirementsforconsolidatedfinancialstatements.ThestandarddidnothaveaneffectontheGroup’sfinancialstatements.

IFRS11JointArrangementsandIAS28InvestmentsinAssociatesandJointVentures(revised).Thenewstandarddealswiththetreatmentofjointventures.ThestandarddidnothaveaneffectontheGroup’sfinancialstatements.

IFRS12DisclosuresofInterestsinOtherEntities.Thenewstandardincludesrequirementsfornotesconcerningsubsidiaries,jointventures,associates,andstructuredentities.ThestandarddidnothaveaneffectontheGroup’sfinancialstatements.

Amendment:IFRS10,11,and12TransitionGuidance.TheamendmentsclarifythetransitionalrequirementspresentedinIFRS10,especiallywithregardtowhenandhowtheIFRS10standardshouldbeappliedretroactively.Accordingtotheamendment,theexistenceofcontrolshouldbeassessedatthetimeofthetransition,notatthebeginningofthecomparisonperiod.Furthermore,theamendmentspecifiesthetransitionrequirementsappliedintheadoptionofIFRS11andIFRS12.ThestandarddidnothaveaneffectontheGroup’sfinancialstatements.

IFRS13FairValueMeasurement.ThestandardsetsoutasingledefinitionoffairvalueapplicabletoallIFRSstandardsandasingleapproachtomeasuringfairvalue.Furthermore,thestandardsignificantlyincreasesthedisclosuresontheuseoffairvalues.Thestandardhadaneffectonthenotesconcerningfinancialinstruments.


Revised:IAS19Employeebenefits.Therevisedstandardincludesseveralamendmentstoharmonizetherecognitionofdefinedbenefitpensionplansandtoimprovecomparability.Inaddition,theamendmentstopresentationwillimprovethecomparabilityoffinancialstatementsandprovideaclearerviewofthefinancialcommitmentsrelatedtodefinedbenefitplans.ThestandarddidnothaveaneffectontheGroup’sfinancialstatements.

Amendment:IAS36RecoverableAmountDisclosuresforNon-FinancialAssetsTheamendmentclarifiesthedisclosurerequirementsconcerningassetswhoserecoverableamountisbasedonfairvaluelesscostsofdisposal.Thestandardalsoremovedtherequirementfordisclosingtherecoverableamountifthecarryingamountofgoodwillofacash-generatingunitissignificantincomparisonwiththegroup’stotalcarryingamountofgoodwill.Thestandarddidnothaveasignificanteffectonthenotestotheconsolidatedfinancialstatements.

AnnualImprovementstoIFRSs2009–2011.Minorandlessurgentamendmentstothestandardsarecollectedandimplementedonceayearthroughtheannualimprovementsprocedure.Theamendmentsincludedintheprojectconcernatotaloffivestandards.Theeffectsoftheamendmentsvarybystandard,buttheamendmentsdidnothaveasignificanteffectontheconsolidatedfinancialstatements.

AnnualimprovementstoIFRSsTheGroupwilladoptin2014thefollowingstandardsandinterpretationswhoseapplicationisnotyetcompulsoryinthefinancialstatements.

Amendments:IFRS10,IFRS12,IAS27,andIAS28regardingtheconsolidationofInvestmententities.Aspecialprovisiononconsolidationregardingentitiesengagedininvestmentactivitieswasaddedtothestandard.Unitsthatmeetthecriteriawillnotconsolidatetheirsubsidiariesinthefinancialstatements;theywillbetreatedaccordingtoIFRSFinancialInstrumentsorIASFinancialInstruments:RecognitionandMeasurementatfairvaluethroughprofitorloss.ThestandardisnotestimatedtohaveaneffectontheGroup’sfinancialstatements.

Amendment:IAS39NovationofDerivativesandContinuationofHedgeAccounting:Accordingtotheamendment,hedgeaccountingneednotbediscontinuedifanovationtothecounterpartytothehedginginstrumenthappensasaconsequenceoflawsorregulationsandtheothertermsandconditionsoftheinstrumentremainunchangedinotherrespects.ThestandardisnotestimatedtohaveaneffectontheGroup’sfinancialstatements.

ThegroupwilladoptthefollowinginterpretationprovidedthatitisapprovedbytheEU.Thegroupestimatesthattheinterpretationwillnothaveasignificanteffectonthegroup'sfuturefinancialstatements.

IFRIC21Levies.Accordingtotheinterpretation,outflowsimposedinaccordancewithlawsarerecognizedwhentheeventthatobligatestheentitytopaythelevyoccursasprescribedbylaw.Accordingtotheinterpretation,forexample,insituationswheretheentityisliabletopayalevyafterreachingaspecifiedminimumlevelofnetsales,theobligatingeventisconsideredtobethereachingoftheminimumlevelofnetsales,andtheentityshouldnotrecognizetheliabilitybeforetheminimumlevelhasbeenachieved.

AmendmentsthatwillenterintoforceatalatertimeThegroupwilladoptthefollowingstandardsduringsubsequentfinancialperiods,providedthattheyareapprovedbytheEU.Thegroupestimatesthattheamendmentswillnothaveasignificanteffectonthegroup'sfuturefinancialstatements.

AnnualImprovementstoIFRSs2010–2012andAnnualImprovementstoIFRSs2011–2013Minorandlessurgentamendmentstothestandardsarecollectedandimplementedonceayearthroughtheannualimprovementsprocedure.Theprojectresultedin11amendmentsto9standards.Theeffectsoftheamendmentsvarybystandard,buttheamendmentshavenothadasignificanteffectontheconsolidatedfinancialstatements.Theamendmentsarepresentedbelow:

IFRS1First-timeAdoptionofIFRSs

IFRS2Share-basedPayments

IFRS3BusinessCombinations

IFRS8OperatingSegments

IFRS13FairValueMeasurement

IAS16Property,PlantandEquipment

IAS24RelatedPartyDisclosures

IAS38IntangibleAssets

IAS40InvestmentProperties


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

IFRS9FinancialInstruments.IFRS9willcompletelyreplacetheexistingIAS39FinancialInstruments:RecognitionandMeasurement.Allfinancialinstrumentsaremeasuredatfairvalueatinitialrecognition.Financialassetsthataredebtinstrumentsandtowhichthefairvalueoptionisnotappliedaresubsequentlymeasuredeitheratamortizedcostorfairvalue,dependingonthecompany’sbusinessmodeltoholdtheassetstocollectcontractualcashflows.Asarule,allequityinstrumentsaremeasuredatfairvaluefollowingtheinitialmeasurement,eitherthroughprofitorlossorthroughothercomprehensiveincome.Withregardtofinancialliabilities,themainamendmentisthatwhenapplyingthefairvalueoption,theeffectofchangesintheentity'sowncreditriskonthefairvalueofthefinancialliabilitywillberecognizedthroughothercomprehensiveincome.Thegroupestimatesthattheamendmentswillnothaveasignificanteffectonthegroup'sfuturefinancialstatements.

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

ThesubsidiarieshavebeenincludedintheGroupfinancialstatementsasoftheacquisitiondate.Intra-groupholdingiseliminatedusingtheacquisitioncostmethod.Acquiredcompaniesareaccountedforusingthepurchasemethodaccordingtowhichtheassetsandliabilitiesoftheacquiredcompanyaremeasuredattheirfairvaluewhenithasbeenpossibletodeterminethevaluereliably.Deferredtaxesoftheacquisitioncostadjustmentsarerecognizedaccordingtothevalidtaxrate,andtheremainderisrecognizedasgoodwillonthebalancesheet.

Intra-groupbusinesstransactions,internalliabilitiesandreceivables,andinternalprofitdistributionareeliminatedintheGroupfinancialstatements.

TransactionsinforeigncurrenciesTransactionsinforeigncurrenciesarerecordedintheoperatingcurrencyattheapproximateexchangeratesprevailingatthetransactiondates.Monetaryitemsinforeigncurrencieshavebeentranslatedintotheoperatingcurrencyusingtheexchangeratesattheendofthereportingperiod.Non-monetaryitemsdenominatedinforeigncurrenciesarecarriedattheexchangerateatthedateofthetransaction.

IntheGroupfinancialstatements,theincomestatementsofforeignsubsidiariesaretranslatedintoeurosattheaveragerateforthefinancialperiodandbalancesheetsattheexchangerateofthebalancesheetdate.Averageratedifferenceduetodifferentexchangeratesonthestatementofcomprehensiveincomeandbalancesheetareenteredinothercomprehensiveincome.Translationdifferencesarisingfromtheeliminationofforeignsubsidiariesandtranslationofequityitemsaccumulatedaftertheacquisitionareenteredinothercomprehensiveincome.Foreigncurrencygainsandlossesfrommonetaryitemspartofthenetinvestmentinaforeignunitarerecognizedinothercomprehensiveincomeandenteredonthestatementofcomprehensiveincomewhenthenetinvestmentisabandoned.

RevenuerecognitionTheGroup’snetsalesaregeneratedbyAutomationServices,CustomerSupport,ProfessionalServices,andLicenseSales.Whennetsalesarecalculated,salesrevenueisadjustedforexchangeratedifferencesofforeigncurrencysales.

Servicerevenueisrecognizedatthetimeofdelivery.Revenueandcostsoffixed-pricebusinesstransactionsarerecognizedasrevenueandexpenditureonthebasisofthepercentageofcompletionwhentheoutcomeoftheprojectcanbereliablyestimated.Thedegreeofcompletionofbusinesstransactionsisspecifiedastheproportionofhoursworkedoftheestimatedtotalnumberofhours.Iftheresultingcostsandrecognizedprofitsexceedtheamountinvoicedforthetransaction,thedifferentispresentedin“Tradeandotherreceivables”onthebalancesheet.Iftheresultingcostsandrecognizedprofitsarelowertheinvoicingforthetransaction,thedifferenceispresentedin“Tradepayablesandotherliabilities”onthebalancesheet.Whenitislikelythatthetotalcostsrequiredforcompletingthebusinesstransactionexceedthetotalrevenuefromthetransaction,theexpectedlossisrecognizedasanexpenseimmediately.AutomationServicesrevenueismainlycomprisedofstart-up,transaction,andusefees.Start-upfeesarerecognizedasrevenuewhentheworkrelatedtothestart-upprocedurehasbeencompletedandthecustomerhasbeenconnectedtotheserviceenvironment.Transactionrevenueisrecognizedonthebasisofactualtransactionvolumesandusechargesonamonthlybasisonthebasisoftheexistenceofanagreement.Maintenancerevenueisallocatedoverthecontractperiod.

Revenuerecognitionofproductsalesrequiresthatthereisabindingagreementofthesale,theproducthasbeendelivered,proceedsfromthetransactioncanbereliablyspecified,thefinancialgainwillbenefitthecompanywithsufficientprobability,


andsignificantbenefitsandrisksrelatedtoownershiporrightsofuseoftheproducthavebeentransferredtothebuyer.Licenseagreementswitharightofreturnorconditionsrelatedtotheproduct'sfunctionalityorimplementationprojectarerecognizedasrevenueoncetherightofreturnhasexpiredortheabove-mentionedconditionshavebeenfulfilled.

OtheroperatingincomeOtheroperatingincomeincludesproceedsfromthesaleofproperty,plantandequipmentandpossiblerentalincome,recognizedonastraight-linebasisovertherentalperiod.

OperatingprofitTheIAS1PresentationofFinancialStatementsstandarddoesnotdefinetheconceptofoperatingprofit.TheGroupusesthefollowingdefinitionofoperatingprofit:operatingprofitisthenetsumofoperatingincomeaddedtonetsales,lessthecostofpurchaseforfinishedgoodswhichisadjustedwithinventorychanges,lessthecostsresultingfromemployeebenefits,depreciationandpossibleimpairmentlossaswellasotheroperatingexpenses.Allotheritemsoftheincomestatementarepresentedafteroperatingprofit.Exchangedifferencesandfairvaluechangesofderivativesareincludedinoperatingprofit,providedthattheyresultfromitemsrelatedtobusinessoperations;otherwisetheyarerecognizedunderfinancingitems.

ImpairmentoftangibleandintangibleassetsTheGroupperformsanannualimpairmenttestofgoodwill,thoseintangibleassetsthathaveunlimitedusefullives,andunfinisheddevelopmentprojects.Additionallyindicationsofimpairmentareevaluatedregularly.Incaseofsuchindications,therecoverableamountofthecash-generatingunitorassetisevaluated.Theneedforimpairmentisevaluatedatthelevelofthecash-generatingunits,orthelowestnitlevelmainlyindependentofotherunitsandwhosecashflowscanbedifferentiatedandarehighlyindependentofthecashflowsofothercorrespondingunits.

Thebookvalueofthecashgeneratingunitandassetsallocatedtotheunitarecomparedtotheunit’srecoverableamount(valueinuse).Valueinusereferstotheestimatedfuturenetcashflowsfromtheassetorcash-generatingunitinquestiondiscountedtothecurrentvalue.

Thecurrentvalueoffuturecashflowsisbasedontheso-calledperpetuityassumption(timeperiodisinfinite).Theforecastcashflowsareestimatedforaperiodoffiveyearsandthevalueoftheso-calledresidualpartofusevalueaftertheforecastperiodisdeterminedusingtheGordonmodel.Valueinuseisbasedoncashflowsaccordingtobusinessplansforthefirstyear(annualbudget)andaccordingtolong-termpredictions(PlanningFrame)forthetwosubsequentyears.Thecashflowsforthefollowingtwoyearsareestimatedbyextrapolatingthecashflowofthethirdyearwiththezero-growthassumption.Theterminalperiodgrowthrateis1%.ThediscountratesemployedaretheweightedaverageofcapitalcostsanditsstartingpointisdeterminingtheriskinaccordancewithCAPM.Thediscountrateincludesarisk-freeinterestratethattakesthetimevalueofmoneyintoconsiderationandariskpremium.

Ifthevalueinuseislowerthanthecarryingamountoftheasset,theimpairmentisenteredasanexpenseontheincomestatementandallocatedprimarilytogoodwillandthereafteragainstotherassetsonaproratabasis.

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

GoodwillGoodwillismeasuredastheexcessofthecostoftheacquisitionovertheGroup'sshareofthefairvaluesoftheacquiree'snetassetsatthetimeoftheacquisition.Goodwillisrecognizedattheoriginalacquisitioncostlessaccumulateddepreciation.

OtherintangibleassetsOtherintangibleassetsincludesoftware,capitalizedproductdevelopmentcosts,otherlong-termexpenses,andcustomerrelationships.Intangibleassetsarerecognizedattheoriginalacquisitioncostlessaccumulateddepreciationaccordingtoplanandpossibleimpairment.Publicsubsidiesrelatedtotheacquisitionofanintangibleassetaredeductedfromtheacquisitioncostoftheassetandrecognizedasincomebyreducingthedepreciationchargeoftheassettheyarerelatedto.Theexpectedusefullivesofintangibleassetsare3–10years.

ResearchanddevelopmentcostsResearchexpensesarebookedasanexpenseastheyareincurred.Developmentcostsofnewproductsandnewproductversionswithsignificantenhancementsarecapitalizedandrecognizedandamortizedovertheusefullifeof3–5years.Indeterminingtheusefullife,theobsolescenceoftechnologyandthetypicallifecycleofproductsintheindustryaretakeninto


consideration.Amortizationstartsoncetheproductisreadyforuse.Maintenanceofexistingproductsandminorenhancementsarerecognizedastheyareincurred.Unfinisheddevelopmentprojectsaretestedforimpairmentatthebalancesheetdate.Publicsubsidiesrelatedtoresearchanddevelopmentarerecognizedthroughprofitorlossintheperiodsduringwhichthecorrespondingcostsarerecognizedasexpenses.

TangibleassetsTangibleassetsincludemachineryandequipment.Tangibleassetsarerecognizedonthebalancesheetattheoriginalacquisitioncostlessaccumulateddepreciationaccordingtoplanandpossibleimpairment.Theusefullivesoftangibleassetsare3–10years.

Theusefullifeofanassetisreviewedatleastattheendofeachfinancialyearand,ifnecessary,anychangeinexpectationsforfinancialbenefitisaccountedfor.

Salesgainsandlossesondisposalortransferoftangibleassetsarerecognizedthroughprofitorloss.

Maintenancecostsarerecognizedthroughprofitorlossastheyareincurred.

Thecompanyrecognizesborrowingcostsasanexpenseintheperiodduringwhichtheyareincurred.Iftheborrowingcostsareduetoanassetwhosecompletionfortheintendedpurposeorsalenecessarilyrequiresaconsiderablylongtime,theborrowingcostsarecapitalizedaspartoftheacquisitioncostoftheasset.

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

Iftherisksandbenefitstypicalofownershipremainwiththelessor,thecontractishandledasanotherrentalagreementandthepaymentsexecutedbasedontheagreementarerecognizedasanexpenseinfixedinstallmentsovertheleaseperiod.

FinancialassetsTheGroup'sfinancialassetsarecategorizedasfollows:

Financialassetsatfairvaluethroughprofitorloss

Held-to-maturityinvestment

Loansandotherreceivables

Available-for-salefinancialassets

Thecategorizationisbasedonthepurposeoftheacquisitionofthefinancialassets,anditisperformedinconnectionwiththeoriginalacquisition.

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

FinancialassetsatfairvaluethroughprofitorlossAfinancialassetisgroupedintotheFinancialassetsatfairvaluethroughprofitorlosscategoryifitisacquiredasheldfortrading,oritisdesignatedasatfairvaluethroughprofitorlossuponinitialrecognition.Held-for-tradingfinancialassetsaremainlyacquiredinordertoobtaingainsfromchangesinshort-termmarketprices.Theassetsarevaluedatthefairmarketpriceatthebalancesheetdate,andthechangeinvalueisrecognizedunderfinanceincomeontheincomestatement.Therewerenosuchfinancingitemsonthebalancesheetattheclosingdate.

Derivativesthatarenoteligibleforhedgeaccountingareclassifiedasheldfortrading.Derivativesheldfortradingareincludedinlong-termassetsiftheymatureinmorethan12months;otherwisetheyarecategorizedinshort-termassets,asarefinancialassetsthatmaturein12months.

Held-to-maturityinvestments


Held-to-maturityinvestmentsarenon-derivativefinancialassetswithfixedordeterminablepaymentsandfixedmaturitythattheGrouphasthepositiveintentandabilitytoholdtomaturity.Theyarevaluedatamortizedcostandareincludedinnon-currentassets.

LoansandotherreceivablesLoansandotherreceivablesarenon-derivativefinancialassetswithfixedordeterminablepaymentsthatarenotquotedinanactivemarketandarenotheldbytheGroupwiththeintenttosell.Loansandotherreceivablesarevaluedatamortizedcostusingtheeffectiveratemethod.Theyareincludedincurrentornon-currenttradereceivablesandotherreceivablescategoryonthebalancesheetinaccordancewiththeirnature.Ifthereceivablematuresinmorethan12months,itiscategorizedinlong-termreceivables.

Available-for-salefinancialassetsAvailable-for-salefinancialassetsarenon-derivativefinancialassetsspecificallydesignatedtothisgroupornotcategorizedotherwise.Theyareincludedinlong-termassetsunlesstheyareintendedtobeheldforlessthan12monthsasoftheclosingdate,inwhichcasetheyareincludedinshort-termassets.Available-for-salefinancialassetsaremeasuredatfairvalue.Whenthefairvaluecannotbereliablydetermined,theyaremeasuredatacquisitioncost.

Changesinthefairvalueofavailable-for-salefinancialassetsareenteredinothercomprehensiveincomeandpresentedinthefairvaluereserve,takingintoaccountthetaxeffect.Changesinfairvaluearetransferredfromequitytotheincomestatementasadjustmentswhentheinstrumentissoldoritsvaluehasdecreasedsothatanimpairmentlosshastoberecognizedfortheinstrument.

CashandcashequivalentsCashandcashequivalentsconsistofcash,bankdepositsthatcanbewithdrawnondemandandothercurrenthighlyliquidinvestmentsthatcanbeexchangedtoanamountofcashassetsthatisknowninadvance,andwithalowriskofchangesinvalue.Itemsclassifiedascashandcashequivalentshaveamaximummaturityofthreemonthsfromacquisition.

ImpairmentoffinancialassetsBasedonariskassessment,animpairmentismadeforuncertainsalesreceivables.Significantfinancialproblemsofadebtor,likelihoodofbankruptcy,defaultofpaymentsoradelayofmorethan180daysofapaymentareindicationsoftheimpairmentofsalesreceivables.Iftheamountoftheimpairmentlossisdecreasedduringasubsequentperiodandthedecreasecanbeobjectivelyconsideredtobeassociatedwithaneventaftertheimpairmentwasrecognized,therecognizedlossisreversedthroughprofitorloss.

Additionally,anassessmentisconductedateachclosingdatetodetermineifthereisobjectiveevidenceofimpairmentofanitemoracategoryincludedinthefinancialassets.

FinancialliabilitiesFinancialliabilitiesareinitiallyrecognizedatfairvalue.Transactioncostshavebeenincludedintheoriginalcarryingamountoffinancialliabilitiesmeasuredatamortizedcost.Subsequently,allfinancialliabilities,excludingderivativeliabilities,arevaluedatamortizedcostusingtheeffectiveinterestratemethod.Financialliabilitiesaredividedintocurrentandnon-currentliabilitiesandtheycaneitherbeinterest-bearingornon-interest-bearing.

DerivativecontractsDerivativecontractsarerecognizedinitiallyatfairvalueatthedateonwhichtheGroupentersintotheagreement,andsubsequentlytheyarestillmeasuredatfairvalue.Gainsandlossesresultingfromfairvaluemeasurementaretreatedinaccountingasspecifiedbythepurposeofthederivativecontract.Derivativecontractsarenotincludedinhedgeaccounting.

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

PensionsThestatutorypensioncoverageofBaswareCorporationemployeesisprovidedthroughinsurancepoliciestakenoutwithapensioninstitution.PensioncoverageforpersonnelemployedbyunitsoutsideFinlandisarrangedinlinewiththerequirementsoflocallegislationandsocialsecurityprovisions.Paymentsrelatedtodefinedcontributionpensionplansarerecognizedontheincomestatementintheyeartheyareincurred.Groupcompanieshavenodefinedbenefitplans.


Share-basedpaymentsTheGrouphasincentiveschemesinwhichthepaymentsaremadeaseitherequityinstrumentsorincash.Thebenefitsgrantedintheschemesaremeasuredatfairvalueatthegrantdateandrecognizedasanexpenseevenlyduringtheearningsperiod.Inschemeswherethepaymentsaremadeincash,theliabilityrecognizedandchangeinitsfairvalueiscorrespondinglyallocatedasexpenses.Theresultimpactoftheschemesispresentedunderemployeebenefitsexpenses.

IncometaxesThetaxexpensesontheincomestatementcompriseoftaxbasedonthetaxableincomeforthefinancialyearanddeferredtaxes.Taxexpensesarerecognizedintheincomestatementexceptfortheexpensesentereddirectlytoshareholders’equitywhentheyareenteredonthebalancesheetaspartofshareholders’equity.TaxesbasedontheresultsoftheGroupcompaniesarerecordedaccordingtothelocaltaxrulesofeachcountry.

Deferredtaxesarecalculatedfromalltemporarydifferencesbetweenthecarryingamountandtaxablevalueatthetaxratesconfirmedattheclosingdate.Deferredtaxisnotrecognizedfornon-taxdeductiblegoodwill.Deferredtaxisnotrecognizedfornon-distributedprofitsofsubsidiariesinsofarasthedifferenceisnotlikelytobedischargedintheforeseeablefuture.

Attheclosingdate,acompany-specificassessmentoftheamountofdeferredtaxassetsincludedonthebalancesheetisconductedanditisreducedtotheextentthatlikelycannotbeutilizedinthetaxationofthecompanyinquestion.Deferredtaxliabilitiesarewhollyincludedonthebalancesheet.

Themostsignificanttemporarydifferencesarisefromdepreciationofproperty,plantandequipment,unusedtaxlosses,andadjustmentsforfairvaluesinconnectionwithacquisitions.

TreasurysharesSharerepurchaseandconveyanceofsharesandrelatedcostsarepresentedundershareholders'equity.

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

Themanagementbelievesthattheestimatesandsuppositionsareaccurateenoughtobeusedasbasisforfairvalueassessment.Additionally,theGroupreviewsthepossibleindicationsofdepreciationregardingbothtangibleandintangibleassetsateachclosingdate,atthelatest.

Themostsignificantestimatesincludedinthefinancialstatementsarerelatedtomeasurementofassets,currentsalesreceivables(Note16),utilizationofdeferredtaxassets(Note18)andcapitalizationofproductdevelopmentexpenses(Note11).

TheGroupperformsanannualimpairmenttestofgoodwill,thoseintangibleassetsthathaveunlimitedusefullives,andunfinisheddevelopmentprojectsandevaluatesindicationsofimpairmentaspresentedabove.Recoverableamountsofcash-generatingunitshavebeendeterminedbycalculationsbasedonvalueinuse.Moreinformationonthemeasurementofintangibleassetsincompanymergerscanbefoundinnote3.Productdevelopmentcostsarecapitalizedinintangibleassetsregardingnewproductsaswellasproductversionswithsignificantupgradesandamortizedduringtheusefullifeaftertheproducthasbeencompleted.


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

TheGroupreportsrevenuefromproductsandservicesasfollows:LicenseSales,CustomerSupport,ProfessionalServices,andAutomationServices.LicensesalesconsistofthePurchasetoPayproductfamilytogetherwithfinancialplanningandreportingsolutionssoldonlyinFinland.CustomerSupportiscomprisedofthepreviousMaintenanceandExtendedcustomersupportpreviouslyreportedunderProfessionalServices.Extendedcustomersupportagreementsarecontinuousserviceagreementswithatermofseveralyears.CustomerSupportandAutomationServicestogetherformtherecurringrevenuereportedbythecompany.Workrelatedtocustomerprojects,suchassoftwareinstallation,businessconsultingandprojectmanagementareincludedinProfessionalServices.Maintenanceiscomprisedofannualmaintenancefeespaidfortheproductsandworkbysupportunitpersonneltocustomers.AutomationServicesincludee-invoicing,scan&captureservices,printingservices,purchasecataloguemanagement,purchasemessageexchange,activationservicesandSaaSservices.

AsgeographicinformationBaswarereportsgeographicalareasFinland,Scandinavia,restofEurope,andOther.Netsalesarereportedbythecustomer’slocation,andgeographicalinformationofnon-currentassetsisreportedbythelocationoftheassets.

NetsalesbybusinessEURthousand

1.1.-31.12.2013 1.1.-31.12.2012Licencesales 14617 17437CustomerSupport 43512 42011ProfessionalServices 30069 30552AutomationServices 35151 23699

Total 123349 113699

NetSalesbyCustomerLocationEURthousand

1.1.-31.12.2013 1.1.-31.12.2012Finland 49324 48567Scandinavia 25928 25809RestofEurope 34453 25194Other 13643 14129

Total 123349 113699

Non-currentassetsbasedonthelocationsoftheassetsEURthousand

31.12.2013 31.12.2012Finland 39680 39402Scandinavia 8607 10069RestofEurope 29463 15644Other 2091 2497

Total 79840 67611


3.ACQUIREDBUSINESSOPERATIONSTheacquisitionofCertipost’se-invoicingbusinessbyBaswarewasclosedonJanuary2,2013.Init,Baswareacquiredthee-InvoicingbusinessofCertipost,theleadinge-InvoiceoperatorintheBenelux.TheinitialacquisitionpriceofapproximatelyEUR18.2millionwaspaidincashontheclosingdate.Thefinalpurchasepricewasconfirmedduringthesecondquarterof2013andwasEUR17.3millionbasedontheannualaccountsfor2012.

In2012,thenetsalesoftheacquiredbusinessamountedtoapproximatelyEUR7.9millionandoperatingprofitapproximatelyEUR1.2millionnegative.Theacquiredbusinessoperations’figureswereconsolidatedintoBasware’snetsalesandprofitasofJanuary1,2013.Thenetsalesfor2013wereapproximatelyEUR8.5millionandoperatingresultapproximatelyEUR-0.1million.TheallocatedpurchasepriceisapproximatelyEUR17.3million.TheacquirednetassetsamounttoapproximatelyEUR2.4million,includingthecashreservesofEUR2.2million.ApproximatelyEUR4.5millionassociatedwithcustomerrelationshipsandacquiredtechnologyhasbeenallocatedtointangibleassets.Thevalueassociatedwithcustomerrelationshipswillbeamortizedinsevenyearsandvalueassociatedwithtechnologyinfiveyears,startingfromthefirstquarterof2013.ThepurchasepriceincludesapproximatelyEUR10.3millionofgoodwill.Thedepreciationsofgoodwillaretaxdeductible.

Thevaluesofacquiredassetsanddebtsasatthedateofacquisitionwereasfollows:EURthousand

Notes FairvalueIntangibleassets 11 4651Tangibleassets 12 324Tradeandotherreceivables 2721Cashandshort-termdeposits 2200

Totalassets 9895

Tradeandotherpayables 2955

Totalliabilities 2955

Netassets 6940

Goodwill 10316

Purchaseprice 17256

4.OTHEROPERATINGINCOMEEURthousand

1.1.-31.12.2013 1.1.-31.12.2012Incomefromsaleofbusinesses 1,540 0Otheroperatingincome 375 228

Otheroperatingincome 1,915 228

CashierDeskbusinesswasdivestedforFinnishmunicipalandpublicsectortoComputerProgramUnitOyincludingtheCashierDeskbusinessoperations,customeraccountsandallrelatedtechnology.Noemployeesweretransferredinconnectionwiththedivestment.


5.MATERIALSANDSERVICESEURthousand

1.1.-31.12.2013 1.1.-31.12.2012Purchasesduringtheperiod -9,855 -7,430Increase/decreaseininventories 221 -23Externalservices -2,127 -1,593

Materialsandservices -11,761 -9,045

6.PERSONNELANDEMPLOYEEBENEFITSEXPENSE

1.1.-31.12.2013 1.1.-31.12.2012Finland 510 486Scandinavia 131 129RestofEurope 265 179India 506 467Other 73 69

Personneltotal 1,485 1,330

EmployeebenefitsexpensesEURthousand

1.1.-31.12.2013 1.1.-31.12.2012Salariesandfees -62204 -53994Pensionexpenses,definedbenefitplans -7134 -5881Share-basedincentiveplans 0 -576Otheremployeebenefits -7581 -5138

Employeebenefitsexpenses -76919 -65590

ManagementandBoardsalaries,feesandbenefitsEURthousand

1.1.-31.12.2013 1.1.-31.12.2012CEOofparentcompany EsaTihilä -344 -508CompensationofthemembersoftheBoardofDirectors HannuVaajoensuu -60 -62PenttiHeikkinen -32 -34SakariPerttunen(until16February2012) 0 -6IlkkaSihvo(since16February2012) -36 -32EevaSipilä(until14February2013) -4 -33TuijaSoanjärvi -27 0IlkkaToivola(until16February2012) 0 -6AnssiVanjoki(since16February2012) -32 -28

Total -535 -709


ThesalaryofCEOEsaTihilä,includingbenefits,totaledEUR288thousandfortheperiodJanuary1–December31,2013.SalaryinmoneywasEUR310thousandandfringebenefitstotaledEUR12thousand.EsaTihiläwasgranted1725sharesonthebasisoftheincentiveschemeinDecember2013,ofwhich862shareswereconveyedtoEsaTihilä(withavalueofEUR22thousandattheaveragepriceofEUR25.39onthepaymentdate,December27,2013)andEUR22thousandwaspaidincashtocoverthewithholdingtax.TheaccruedpensioncostsofEsaTihiläamountedtoEUR56thousand.TheCEO'spensionplanispursuanttotheemploymentpensionlegislation.TheCEOhas6months’periodofnoticeandsalaryfortheperiodofnoticeshouldtheCompanygivenotice,inadditiontowhichheisentitledtoseverancepayequivalentof12months’fixedsalary.

KeymanagementcompensationEURthousand

1.1.-31.12.2013 1.1.-31.12.2012Salariesandothershort-termemployeebenefits -2244 -3019Post-employmentbenefits -450 -450Share-basedpayments -201 -576

Managementcompensation -2895 -4045

CompensationofthemembersoftheExecutiveTeamhasbeentakenintonoticeinmanagementcompensation.

Share-basedpayments


Incentiveschemes

Ashare-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.Thesharestobeallocatedatthetargetlevelwillcontinuetocorrespondatthecurrentsharepricetotheapproximateamountof95,000BaswareCorporationshares(includingalsotheproportiontobepaidincash)andtotalling142,000atthemaximum.ThepossiblesharestobeallocatedwillconsistofownsharesheldbythecompanyoracquiredinpublictradingthroughNASDAQOMXHelsinkiLtd.

Thetermsoftheincentiveschemeincludesworkandemploymentrelatedconditions.


Share-basedincentiveplanEURthousand

2010 2011Basicvalues Maximumnumberofshares 36000 47175Maximumamountofcash 36000 47175Dateofissue 18.2.2010 14.3.2011Beginningofearningperiod 18.2.2010 14.3.2011Endofearningperiod 31.12.2012 31.12.2013Vestingconditions Workingcommitment WorkingcommitmentCriterions EPS EPSFormofthereward Sharesandcash SharesandcashNumberofpersons,dateofissue 8 12Shareprice,dateofissue 17,70 24,25Theannualexpecteddividends,fairvalue 0,74 0,82Closingshareprice31.12.2009 Closingshareprice31.12.2010 24,75 Closingshareprice31.12.2011 16,45 16,45Closingshareprice31.12.2012 20,25Closingshareprice31.12.2013 25,03Fairvalue31.12.2009 Fairvalue31.12.2010 875910 Fairvalue31.12.2011 908380 1082773Fairvalue31.12.2012 420569Fairvalue31.12.2013 0Recognizedliability,cashportion 29516


2012Annualvesting* 2013Annualvesting*Basicvalues Maximumnumberofsharesyear2012 35533 Maximumamountofcashyear2012 35533 Maximumnumberofsharesyear2013 37553 33417Maximumamountofcashyear2013 37553 33417Dateofissue 16.2.2012 14.2.2013Beginningofearningperiod 16.2.2012 14.2.2013Endofearningperiod 31.12.2014 31.12.2015Vestingconditions Workingcommitment WorkingcommitmentCriterions NetSales EPSFormofthereward Sharesandcash SharesandcashNumberofpersons,dateofissue 11 25Shareprice,dateofissue 18,53 20,30Theannualexpecteddividends,fairvalue 1,37 1,37Closingshareprice31.12.2012 20,25 Closingshareprice31.12.2013 25,03 25,03Fairvalue31.12.2012 230578 Fairvalue31.12.2013 223866 61013Recognizedliability,cashportion 86600 10587



2012Fixedvesting* 2013Fixedvesting* 2012Matchingofshares*/**Basicvalues Maximumnumberofsharesyear2012

97145 0 2697

Maximumamountofcashyear2012

97145 0 0

Maximumnumberofsharesyear2013

83127 4869

Maximumamountofcashyear2013

83127 0

Dateofissue 16.2.2012 14.2.2013 16.2.2012Beginningofearningperiod 16.2.2012 14.2.2013 16.2.2012Endofearningperiod 31.12.2014 31.12.2015 31.12.2015Vestingconditions Workingcommitment Workingcommitment WorkingcommitmentCriterions EPS EPS NumberofdepositedsharesFormofthereward Sharesandcash Sharesandcash SharesNumberofpersons,dateofissue 11 10 11Shareprice,dateofissue 18,53 20,30 18,53Theannualexpecteddividends,fairvalue

1,37 1,37 1,37

Closingshareprice31.12.2012 20,25 20,25Closingshareprice31.12.2013 25,03 25,03 25,03Fairvalue31.12.2012 545126 41652Fairvalue31.12.2013 0 0 75197Recognizedliability,cashportion 0 0

*TheBoardofDirectorsdecidedonFebruary14,2013,toextendtheincentiveschemesbyoneyearuntil2015**

Thesystemincludesfourvestingperiods,calendaryears2012,2013,2014,and2015.Thesystemcomprisesannualvestingperiods2012,2013,2014,and2015,andfixedvestingperiod2013–2015.

MembersofBaswareExecutiveTeammaybeallocatedadditionalshareswithoutconsiderationagainstshareholdingduringthevestingperiod2012–2015.

Theincreasesinthefairvaluesoftheschemesdidnotchangesubstantiallyastheresultoftheamendments.


7.OTHEROPERATINGEXPENSESEURthousand

1.1.-31.12.2013 1.1.-31.12.2012Otheroperatingexpenses Rents -4,110 -3,856Non-statutoryemployeebenefits -1,270 -1,195Travel -4,373 -5,023Marketing -4,310 -4,237ITandtelephone -2,184 -2,092Auditorfees -428 -328Otherexpenses -9,525 -7,760

Otheroperatingexpensestotal -26,200 -24,491

Auditorfees Auditfees -245 -199Taxadvices -120 -103Otherfeesandservices -64 -26

Auditfeestotal -428 -328

Researchanddevelopmentexpenses Researchanddevelopmentinincomestatement -14,541 -12,555Increasesincapitalizedresearchanddevelopmentexpenses -3,607 -5,330

Researchanddevelopmentexpensestotal -18,148 -17,884

8.FINANCIALINCOMEANDEXPENSESEURthousand

1.1.-31.12.2013 1.1.-31.12.2012Financeincome Changesinvalueoffinancialassetsatfairvaluethroughprofitorloss Interestincome 90 170Otherfinancialincome 837 202

Total 928 372

Financeexpenses Interestratederivatives,nohedgeaccounting -14 0Interestexpenses -200 -7Otherfinanceexpenses -761 -316

Total -975 -323

Financeincomeandexpensestotal -47 50

Otherfinanceincomeiscomprisedofexchangegains.

Otherfinanceexpensesaremainlycomprisedofexchangelosses.


ExchangedifferencesrecognizedonincomestatementEURthousand

1.1.-31.12.2013 1.1.-31.12.2012Exchangedifferencesincludedinnetsales 30 -74Exchangedifferencesincludedinpurchasesandexpenses 219 -51Foreignexchangegains 837 202Foreignexchangelosses -761 -285

Exchangedifferencesrecognizedonincomestatement 325 -208

9.INCOMETAXES

EURthousand1.1.-31.12.2013 1.1.-31.12.2012

Incometaxonoperations -911 -2714Taxforpreviousaccountingperiods -455 -533Changeindeferredtasliabilitiesandtaxassets 688 753

Incometax -678 -2494

TaxratereconciliationEURthousand

1.1.-31.12.2013 1.1.-31.12.2012Profitbeforetaxes 3284 8357

Taxcalculatedatdomestictaxrate -804 -2048Taxforpreviousyears -455 -533Effectofdifferenttaxratesofforeignsubsidiaries 135 -339Effectofchangeintaxrate -161 0Non-deductibleexpenses 86 200Other 346 251Incomenotsubjecttotax 0 -130Unrecognizeddeferredtaxassetsfromtaxlosses -196 0Reassessmentofdeferredtaxassets 371 105

Incometaxes -678 -2494

Formoreinformationondeferredtaxassetsandliabilities,refertoNote18.

TaxesrelatingtoothercomprehensiveincomeEURthousand

1.1.-31.12.2013 1.1.-31.12.2012Taxesonforeignexchangegainsfromnetinvestments 281 111


10.EARNINGSPERSHAREEURthousand

1.1.-31.12.2013 1.1.-31.12.2012Profitfortheperiod 2,605 5,863

Averagesharenumber,1,000pieces undiluted 12,849 12,837diluted 12,849 12,837

Earningspershare Undiluted,EUR 0.2 0.46Diluted,EUR 0.2 0.46

11.GOODWILLANDOTHERINTANGIBLEASSETS

GoodwillEURthousand

2013 2012Acquisitioncost1.1. 41,896 32,210Translationdifference -1,216 610Additions 10,316 9,076

Acquisitioncost31.12. 50,996 41,896

Bookvalue31.12. 50,996 41,896

Goodwillcomprisesofthefollowingarrangements:EURthousand

GoodwillMomentumDoc,AB(2002) 1,105IocoreAS/BaswareAS(2005) 2,896TrivetOy(2005) 669AnalysteOyj(2006) 13,869DigitalVisionTechnologiesLtd.(2007)/BaswareUK 7,462ContempusAS(2008) 5,119ItellaInformationAS/BaswareAS(2009) 484FirstBusinesspostGmbH(2012) 9,076Certipost(2013) 10,316

Total 50,996

Goodwillhasbeenallocatedtocash-generatingunitsaccordingtothesynergybenefitsexpectedtoresultfromunifyingtheoperations:


CashgeneratingunitEURthousand

GoodwillBaswareOyj 21,077BaswareAB 552BaswareAS 7,051BaswareUK 7,462BaswareGmbH 4,538BaswareNV 10,316

Total 50,996

Goodwillhasbeentestedforimpairmentinthelastquarterof2013,andthediscountrateusedintheimpairmenttestingis7.30percent(BaswareCorporation),7.10percent(BaswareAB),7.61percent(BaswareAS),7.18percent(BaswareUK),8.11percent(BaswareGmbH),and8.21percent(BaswareNV).Therecoverableamountevaluatedintheimpairmenttestisbasedonthe2014budgetandonsubsequentdevelopmentassessedonthebasisofthebudget.Keyvariablesusedinthecalculationsarethechangeratesofnetsalesandcosts.Thegrowthofnetsaleshasbeendeterminedbytakingintoaccountthecompany’sactualperformance,marketpositionandgrowthpotentialinthemarketinquestion.

Ongroundsofsensitivityanalysesbasedonthezero-growthscenariothemanagementoftheCompanyestimatesthatitisunlikeIythatachangeinthekeyvariablesusedinthetestwouldcreateasituationwheretheaccountingvalueofgoodwillincludedinthebalancesheetexceededtherecoverableamountoftheunit.Inthezero-growthscenario,growthinnetsalesiszerothroughouttheevaluatedperiod.Thecostsofthezero-growthscenarioacknowledgeafive-percentdecreaseafterthetwoyearsfollowingthebudgetyear2014,afterwhichthecostsareatthepreviousyear’slevel.

Intangibleassets2013EURthousand

Developmentcosts

Intangiblerights

Intangibleassets,financelease

Otherlong-terminvestments

Assets,unfinishedprojects

Total

Acquisitioncost1.1 22,100 23,242 745 538 2,969 49,595Translationdifference(+/-)

-127 -836 0 -5 -968

Additions 361 801 32 3,607 4,800Acquisitionsthroughbusinesscombinations

0 4,651 0 4,651

Reclassificationsbetweenitems

732 0 0 -732 0

Acquisitioncost31.12

23,066 27,858 745 565 5,844 58,078

Cumulativeamortization1.1

-10,845 -14,942 -389 -250 -26,426

Translationdifference(+/-)

124 736 0 1 861

Amortization -3,331 -2,535 -178 -41 -6,085


-14,052 -16,740 -567 -291 -31,650

Bookvalue31.12.2013

9,014 11,117 178 274 5,844 26,428


Intangibleassets2012EURthousand

Developmentcosts

Intangiblerights

Intangibleassets,financelease

Otherlong-terminvestments

Assets,unfinishedprojects

Total

Acquisitioncost1.1 11,423 19,193 745 481 7,737 39,579Translationdifference(+/-)

60 416 476

Additions 2,360 3,644 57 2,969 9,030Acquisitionsthroughbusinesscombinations

541 541

Decreases -21 -11 -32Reclassificationsbetweenitems

7,737 -7,737 0

Acquisitioncost31.12

22,100 23,242 745 538 2,969 49,595


-8,302 -11,675 -211 -184 -20,372

Translationdifference(+/-)

-55 -284 -339

Decreasesandtransfers

21 11 32

Amortization -2,510 -2,994 -178 -66 -5,748


-10,845 -14,942 -389 -250 -26,426

Bookvalue31.12.2012

11,255 8,301 356 287 2,969 23,169

12.TANGIBLEASSETS


Tangibleassets2013EURthousand

Machineryandequipment Machineryandequipment,financelease Othertangibleassets TotalAcquisitioncost1.1 8130 140 99 8369Translationdifference(+/-) 50 -6 43Additions 631 7 637Acquisitionsthroughbusinesscombinations

329 329

Decreases -2 -2

Acquisitioncost31.12 9137 134 106 9377


-6789 -140 -6929

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


-7812 -134 0 -7946

Bookvalue31.12.2013 1325 0 106 1431

Tangibleassets2012EURthousand

Machineryandequipment Machineryandequipment,financelease Othertangibleassets TotalAcquisitioncost1.1 7133 137 92 7363Translationdifference(+/-) 54 3 57Additions 855 7 862Acquisitionsthroughbusinesscombinations

97 97

Decreases -9 -9

Acquisitioncost31.12 8130 140 99 8369


-5982 -137 -6119

Translationdifference(+/-) -47 -3 -50Decreases 9 9Amortization -769 -769


-6789 -140 -6929

Bookvalue31.12.2012 1341 0 99 1440


13.AVAILABLE-FOR-SALEINVESTMENTSEURthousand

31.12.2013 31.12.2012Acquisitioncost1.1. 38 38

Acquisitioncost31.12 38 38

Available-for-saleInvestmentsincludingsharesofunlistedcompanies.

14.NON-CURRENTTRADEANDOTHERRECEIVABLESEURthousand

31.12.2013 31.12.2012Othernon-currentreceivables 947 1,068

Non-currenttradeandotherreceivablestotal 947 1,068

Othernon-currentreceivablesconsistmainlyofleasedeposits.Thebalancesheetvaluescorrespondthebesttothemaximumamountofthecreditrisk.Nosignificantconcentrationsofcreditriskareassociatedwiththereceivables.

15.INVENTORIESEURthousand

31.12.2013 31.12.2012Rawmaterialsandconsumables 240 18

Inventoriestotal 240 18

FiFoprinciplehasbeenappliedinthemeasurementofinventories.

16.CURRENTTRADEANDOTHERRECEIVABLESEURthousand

31.12.2013 31.12.2012Tradereceivables 24,415 21,292Otherreceivables 188 1,416Prepaidexpensesandaccruedincome 2,333 1,494Loanreceivables 600 0

Tradeandotherreceivables 27,536 24,202

Nosignificantconcentrationsofcreditriskareassociatedwiththereceivables.Thebalancesheetvaluescorrespondthebesttothemaximumamountofthecreditrisk.CreditriskmanagementprinciplesarepresentedinNote19.

ThefairvaluesoffinancialassetsandliabilitiesarepresentedinNote25.


TheageinganalysisoftradereceivablesandimpairmentEURthousand

2013 Impaired Net2013 2012 Impaired Net2012Non-overduesalesreceivables 13,966 13,966 12,503 12,503Overduesalesreceivables 1-180days 9,667 9,667 8,000 8,000181-360days 1,564 -782 782 1,061 -612 448Over360days 932 -932 0 784 -443 341

Total 26,129 -1,714 24,415 22,347 -1,055 21,292

17.CASHANDSHORT-TERMDEPOSITSEURthousand

31.12.2013 31.12.2012Cashandcashequivalents 13,218 34,519

Cashandshort-termdeposits 13,218 34,519

18.DEFERREDTAXASSETSANDLIABILITIES

Deferredtaxassets2013EURthousand

1.1.2013 Inincomestatement Incomprehensiveincome Companiesacquired/sold 31.12.2013Confirmedlosses 2,265 1,257 3,522Otheritems 278 -120 158

Total 2,543 1,137 3,680

Deferredtaxliabilities2013EURthousand

1.1.2013 Inincomestatement Exchangeratedifferences Companiesacquired/sold 31.12.2013Allocationoffairvalueonpurchases

1493 378 -8 1863

Total 1493 378 -8 1863

Deferredtaxassets2012EURthousand

1.1.2012 Inincomestatement Incomprehensiveincome Companiesacquired/sold 31.12.2012Confirmedlosses 2,156 -651 3 757 2,265Otheritems 524 -246 278

Total 2,680 -897 3 757 2,543


Deferredtaxliabilities2012EURthousand

1.1.2012 Inincomestatement Exchangeratedifferences Companiesacquired/sold 31.12.2012Allocationoffairvalueonpurchases

2,079 -1,651 31 1,034 1,493

Total 2,079 -1,651 31 1,034 1,493

TheGrouphasatotalofEUR3522thousand(EUR2265thousand)ofdeferredtaxassetsforunutilizedtaxlossesofsubsidiaries,ofwhichEUR681thousandwillexpireduring2025–2029,whiletheresthavenoexpiryperiod.Accordingtothetransferpricingprinciple,subsidiariesaccumulatetaxableincomeagainstwhichconfirmedlossescanbeutilizedinthefuture.DeferredtaxassetstotalingEUR371thousand(EUR105thousand)netwereadditionallyrecognizedduringthefinancialperiodforunutilizedtaxlossesaccumulatedinpreviousyears.Deferredtaxassetshavenotbeenrecognizedinfulltotheextentthattheutilizationofthelossesisconsidereduncertain.

19.MANAGEMENTOFFINANCIALRISKSBaswareGroup'sinternationaloperationsinvolvecustomaryfinancingrisks.Thepurposeoffinancialriskmanagementistoensuretheavailabilityofsufficientfinancingcost-efficientlyandmonitorand,ifnecessary,limittheemergingrisksbytakingappropriatemeasures.RiskmanagementiscentralizedintheGroup’sfinancedepartment.Inaccordancewiththeriskmanagementpolicy,thedepartmentreportstotheCompany’sBoardofDirectorsatleastonceayear.

CurrencyriskBasware'snetsalesincreasedby10.0%(3.3%)inlocalcurrencytermsduring2013.

TheGroup'smaincurrencyisEuro,accountingforapproximately64percentofnetsalesin2013(approximately61%in2012).Inadditiontotheeuroarea,Baswareoperatesinvariousareas,themostsignificantofthembeingNorway,Sweden,theUnitedKingdom,theUnitedStatesandAustraliain2013.Thecompanyisexposedtoexchangeraterisksinthesecountriesthroughintra-companytrade,exportsandimportsaswellasthroughtheequityandfundingofforeignsubsidiaries.TheCompanydidnotrealizehedgingforexchangeratefluctuationsduringthefinancialyearastheforeignexchange-denominatedcashflowinthesubsidiariesaccordingtothecompany’shedgingpolicydidnotexceedtheannualcurrency-specificlimitforhedgingmeasures.

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

AsensitivityanalysisofcurrencyriskcalculatedasrequiredbyIFRS7wouldhavehadanimpactofEUR+/-+0.7million(EUR0.8million)ontheprofitbeforetaxattheclosingdateonDecember31,2013,assumingaratechangeof+/-5%ofthelocalcurrencies(AUD,SEK,NOK,DKK,GBP,USD,RON,INR)againsttheeuro.Othervariablesareassumedtoremainunchanged.Thecalculationincludestheforeigncurrencytradepayablesandaccountsreceivableinthebalancesheetandnetinvestmentsandsubordinatedloansinthesubsidiaries.Asensitivityanalysisofcurrencyriskinforeignexchange-denominatednetinvestmentswouldhavehadanimpactof+/-EUR1.1million(EUR1.2million)onshareholders'equityonDecember31,2013.

Theparentcompany’soperatingcurrencyiseuro.Foreigncurrency-denominatedassetsandliabilitiestranslatedintotheeuroattheexchangeratesoftheclosingdateareasfollows.


Nominalvalues2013EURthousand

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

Nominalvalues2012EURthousand

USD AUD GBP SEK DKK NOK RONNon-currentassets 68 197 378 1,186 75 2,063 6Currentassets Otherfinancialassets 658 680 1,149 950 504 2,859 22Tradeandotherreceivables 2,953 1,087 1,588 2,158 984 1,757 14Currentliabilities Non-interestbearingliabilities 112 421 823 1,224 519 1,649 12

InterestrateriskThecompanyhadatotalofEUR8.3millionofvariable-ratebankloansattheclosingdate.Athree-yearloanamountingtoEUR10.0millionwasraisedonDecember27,2012,topartlyfundtheacquisitionofCertipost’snetworkande-InvoicingbusinessonJanuary2,2013.Theloanwillbepaidoffinequalhalf-yearlyinstallments.

Thecompanyisexposedtocashflowinterestrateriskthroughitsloanportfolio.Thegoalofthecompany’sriskmanagementwithregardtointerestrateriskistominimizethenegativeimpactsofchangesininterestratesonthecompany’sfinancialperformance.Thecompanyappliesdiverseinterestratehedginginstrumentstomanageinterestraterisks.Thecompany'saverageinterestratewhentheloanswereraisedin2013was1.43percent.

TheaveragebalancesofthevariablerateloansrealizedduringtheperiodhavebeenusedincalculatingthesensitivityanalysisrequiredbyIFRS7.Attheclosingdate,31.12.13,theeffectonvariablerateinterest-bearingliabilitiesonprofitbeforetaxeswouldhavebeen+/-EUR76thousandhadtheinterestrateincreasedordecreasedby1percentagepoint.

LiquidityriskThecompanymaintainssufficientliquidityreservesthroughcentralizedGroup-levelcashmanagementandpayments,andoverdraftfacilities.TheGroup’sliquidityremainedgoodduringthefinancialyear.TheGroup’smanagementhasnotidentifiedsignificantconcentrationsofliquidityrisksinthefinancialassetsorsourcesoffinance.Thetablebelowdescribesamaturityanalysisbasedonagreements.Thefinanceleaseliabilitiesarediscounted;theotherfigureshavenotbeendiscountedandtheyincludeloanratesandrepaymentsofcapital.


Maturitydistributionoffinancialliabilities2013EURthousand

Balancesheetvalue Cashflow 0-6months 6months-1year 1-5yearBankLoans 8333 8470 1719 1707 5044Financelease 284 284 125 159 0Tradeandotherpayables 18093 18093 17966 0 127

Total 26710 26847 19810 1866 5171

Maturitydistributionoffinancialliabilities2012EURthousand

Balancesheetvalue Cashflow 0-6months 6months-1year 1-5yearBankLoans 10,000 10,423 71 1,737 8,616Financelease 524 538 125 125 288Tradeandotherpayables 16,237 14,279 14,034 0 245

Total 26,761 25,241 14,230 1,862 9,149

CreditrisksThecompany’ssalesreceivablesarespreadtoavastclienteleanddonotincludesignificantcreditrisks.CreditdecisionsarefollowedandmonitoredcentrallybytheGroupmanagement.TheGrouphasnotusedsuretybondstosecuresalesreceivables.

ImpairmentlossesrecognizedduringthefinancialperiodandtheagedistributionofsalesreceivablesarepresentedinNote16.

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

Thecapitalstructurecanbeadjustedbydecisionson,e.g.,distributionofdividend,sharerepurchaseandshareissues.

TheAnnualGeneralMeetingdecidedonFebruary14,2013,toauthorizetheBoardofDirectorstodecideontherepurchaseofthecompany’sownsharesinaccordancewiththeproposaloftheBoardofDirectors.Byvirtueoftheauthorization,theBoardofDirectorsisentitledtodecideonrepurchasingamaximumof1290000company'sownshares.Thecompany'sownshareswillberepurchasedotherwisethaninproportiontotheholdingsoftheshareholdersbyusingthenon-restrictedequitythroughpublictradingonaregulatedmarketorganizedNASDAQOMXHelsinkiLtdatthemarketpriceprevailingatthetimeofacquisition.TheshareswillberepurchasedandpaidforinaccordancewiththerulesofNASDAQOMXHelsinkiLtdandEuroclearFinlandLtd.Theshareswillberepurchasedforuseasconsiderationinpossibleacquisitionsorotherarrangementsrelatedtothecompany'sbusiness,asfinancingforinvestmentsoraspartofthecompany'sincentiveprogramortobeheldbythecompany,tobeconveyedbyothermeansortobecancelled.TheBoardofDirectorswilldecideonothertermsandconditionsrelatedtotherepurchaseofthecompany'sownshares.TherepurchaseauthorizationisvaliduntilJune30,2014.

TheAnnualGeneralMeetingalsoresolvedtoauthorizetheBoardofDirectorstodecideonissuingnewsharesand/orconveyingthecompany'sownsharesheldbythecompanyand/orgrantingspecialrightsentitlingtosharespursuanttoChapter10,Section1oftheFinnishCompaniesActinaccordancewiththeproposaloftheBoardofDirectors.

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

Newsharesmaybeissuedandthecompany'sownsharesheldbythecompanymaybeconveyedeitheragainstpayment


orforfree.Adirectedshareissuemaybefreeonlyifthereisanespeciallyweightyfinancialreasonbothforthecompanyandwithregardtotheinterestsofallshareholdersinthecompany.

Basedontheauthorization,theBoardofDirectorsmaydecidetoissueamaximumof2580000newsharesandconveyamaximumof1372708ofthecompany'sownsharesheldbythecompany.Thenumberofsharestobeissuedtothecompanyitselftogetherwiththesharesrepurchasedbythecompanyonbasisoftherepurchaseauthorizationshallbeatthemaximumof1290000shares.

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

During2013,thegroup’sobjectivewastomaintainastrongequityratio,amoderategearingratioandtheAAAcreditratingofBasware’sparentcompany.Theequityratioin2013was77.1%(2012:77.6%).Thegearingratioin2013was-4.7%(-23.8%).Basware’sparentcompany’sDun&BradsheetcreditratingwasAAAin2013(AAA).


21.SHAREHOLDERS'EQUITY

Changesinthenumberofsharesandcorrespondingchangesinshareholders’equityarepresentedbelow.

Shareholders'Equity2013EURthousand

Sharenumber

Shareholders'equity

Sharepremiumaccount


Otherreserves

Ownshare

Total

31.12.2012 12,931,229 3,528 1,187 61,799 540 -1,215 65,839Decreaseoftreasuryshares

-51 51 0

31.12.2013 12,931,229 3,528 1,187 61,748 540 -1,164 65,839

Shareholders'Equity2012EURthousand

Sharenumber

Shareholders'equity

Sharepremiumaccount


Otherreserves

Ownshare

Total

31.12.2011 12,931,229 3,528 1,187 61,976 540 -429 66,802Purchaseofownshares

-963 -963

Decreaseoftreasuryshares

-177 177 0

31.12.2012 12,931,229 3,528 1,187 61,799 540 -1,215 65,839

BaswareCorporationhasoneseriesofshares.Sharesdonothaveanominalvalue.

OtherreservesOtherfundsincludethefairvaluereserve,whichincludestheincreaseinthevalueoftheAnalystedealsharesbetweenthepublicationandrealizationofthedealin2006.

TreasurysharesThetreasurysharesreserveincludestheacquisitioncostofownsharesheldbytheGroup.

DividendsAfterthebalancesheetdate,theBoardofDirectorshasproposedthatadividedofEUR0.23persharebepaid.AdividendofEUR0.23persharewaspaidfor2012.


22.LIABILITIESEURthousand

31.12.2013 31.12.2012Long-termfinancialliabilitiesatfairvaluethroughprofitandloss Interestratederivatives-non-hedgeaccounting 14 0Total 14 0

Long-termfinancialliabilitiesvaluedatamortizedacquisitioncost: Interestbearingliabilitiesfromfinancialinstitutions 5,000 8,333Financeleaseobligations,interestbearing 0 284

Total 5,000 8,617

Short-termfinancialliabilitiesvaluedatamortizedacquisitioncost: Interestbearingliabilitiesfromfinancialinstitutions 3,333 1,667Interestbearingfinanceleaseobligations 284 239Tradeliabilities 1,770 1,769Accruedexpensesanddeferredincome 12,143 9,432Otherliabilities 4,053 4,791

Total 21,583 17,898

ThefairvaluesoffinancialassetsandliabilitiesarepresentedinNote25.

23.FINANCELEASELIABILITIESEURthousand

31.12.2013 31.12.2012Long-termfinanceleases,interest-bearing 0 284Short-termfinanceleases,interest-bearing 284 239

Financeleaseliabilities 284 524

Financeleaseliabilities-minimumrentals Withinayear 281 229Morethanoneyearbutnomorethan5years 0 281Minimumrentals 281 510Futurefinancingcostsrelatedtoleasingagreements 3 14

Currentvalueoffinanceleaseliabilities 284 524

Presentvalueofminimumrentals Withinayear 284 239Morethanoneyearbutnomorethan5years 0 284

Futureminimumleasepaymentsatpresentvalue 284 524


24.PROVISIONSEURthousand

2013 2012Provisions1.1. 0 1,203Utilized 0 -1,203

Provisions31.12. 0 0

25.FAIRVALUESOFFINANCIALASSETSANDLIABILITIESEURthousand

Note 2013Bookvalue 2013Fairvalue 2012Bookvalue 2012FairvalueFinancialassets Available-for-salefinancialassets 13 38 38 38 38Non-currenttradeandotherreceivables

13 947 947 1,068 1,068

Currenttradeandotherreceivables

16 27,536 27,536 24,202 24,202

Cashandcashequivalents 17 13,218 13,218 34,519 34,519Financialliabilities Financialliabilitiesatfairvaluethroughprofitorloss

Interestratederivatives-non-hedgeaccounting(level2)

22 14 14 0 0

Financialliabilities-financialliabilitiesvaluedatamortizedacquisitioncost

Non-current Loansfromfinancialinstitutions,interest-bearing

22 5,000 5,000 8,333 8,333

Financialleaseliabilities,interest-bearing

22 0 0 284 284

Current Loansfromfinancialinstitutions,interest-bearing

22 3,333 3,333 1,667 1,667

Financialleaseliabilities,interest-bearing

22 284 284 239 239

Tradeandotherpayables 22 17,966 17,966 15,992 15,992

Inmeasuringthefairvaluesofthefinancialassetsandliabilities,thefollowingpricequotations,assumptionsandvaluationmodelshavebeenused.


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

TradeandotherreceivablesThebookvalueoftradeandotherreceivablescorrespondstotheirfairvalueastheeffectofdiscountingisnotsubstantialtakingintoaccountthematurityofreceivables.

FinancialliabilitiesFinancialliabilitiesatfairvaluethroughprofitorlosshavebeenderivedindirectlyfrommarketprices.

Thefloatinginterestratesofloansarebasedon1-montheuribor,dependingonthematurityoftheloan.Therefore,thefairvalueoffloatingrateloansisconsideredtocorrespondtotheirbookvalue.

Thefairvalueoffinanceleasesisbasedondiscountingfuturecashflowsusinganinterestratecorrespondingtotheinterestrateofcorrespondingleaseagreements.

ThematuritydistributionoffinancialliabilitiesispresentedinNote19.

26.COMMITMENTSANDCONTINGENTLIABILITIESEURthousand

31.12.2013 31.12.2012Ownguarantees

Businessmortgageofowndebt 1,200 1,200

Commitmentsonbehalfofsubsidiaries

Guarantees 31 244

Otherowncontingentliabilities

Leaseliabilities Currentleaseliabilities 1,012 944Leaseliabilitiesmaturingin1-5years 820 737

Total 1,831 1,681

Rentalliabilities Currentrentalliabilities 4,001 4,369Rentalliabilitiesmaturingin1-5years 3,738 3,820

Total 7,739 8,189

Otherowncontingentliabilitiestotal 9,570 9,870

CommitmentsandContingentLiabilitiestotal 10,801 11,314

Valueaddedtaxisonlyincludedinvehicleleasingliabilities.Theotherliabilitiesareexclusiveofvalueaddedtax.

LeasesTheGrouphasleasedtheofficepremisesituses.Theaveragedurationsoftheleasesare3–5years,andnormallytheyincludeanopportunityforextendingtheagreementaftertheoriginalenddate.Theagreementsusuallyincludeanindexclause.


27.RELATEDPARTYTRANSACTIONS

TheGroup'srelatedpartiesincludetheBoardofDirectorsandmanagementteammembers,includingtheCEO.

EURthousand31.12.2013 31.12.2012

Servicespurchased 82 0

BaswareCorporationandSoftaforceOyhaveanagreementrelatedtooutsourcingofprocurement.Theagreementismarket-based.

CompensationofthekeyemployeesincludedinthemanagementispresentedinNote6.

BaswareCorporation’ssubsidiariesarepresentedinNote28.

28.SHARESINSUBSIDIARIES

Domicile Country Groupholding,%BaswareInternationalOy Espoo Finland 100BaswareGmbH Düsseldorf Germany 100BaswareUKLtd. Staffordshire GreatBritain 100BaswareAB Stockholm Sweden 100BaswareB.V. Amsterdam Netherlands 100BaswareA/S Herlev Denmark 100Basware,Inc. Delaware UnitedStates 100BaswareSAS Paris France 100BaswareAS Oslo Norway 100BaswarePtyLtd Chatswood Australia 100BaswareSRL Iasi Romania 100BaswareIndiaPrivateLimited Chandigarh India 100BaswareBelgiumNV Aalst Belgium 100

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

29.EVENTSAFTERTHEREPORTINGPERIOD

Afterthebalancesheetdate,nosignificanteventshavetakenplacewithintheGroup.


PARENTCOMPANYINCOMESTATEMENT(FAS)1.1.-31.12.2013

EURthousand Note 1.1-31.12.2013 1.1-31.12.2012 Change,%NETSALES 2 64570 61870 4,4

Otheroperatingincome 3 1654 0

Materialsandservices 4 -8622 -7010 23,0Employeebenefitsexpenses 5 -38774 -33752 14,9Depreciationandamortization 6 -6419 -5408 18,7Otheroperatingexpenses 7 -14237 -11633 22,4

Operatingprofit/loss -1829 4067 -145,0

Financialincome 8 2200 2399 -8,3Financialexpenses 8 -1935 -546 254,4

Resultbeforeappropriationandtaxes -1564 5919 -126,4

Incometaxexpense 9 -421 -1739 -75,8

RESULTFORTHEPERIOD -1985 4181 -147,5


PARENTCOMPANYBALANCESHEET(FAS)31.12.2013

EURthousand Note 31.12.2013 31.12.2012 Change,%ASSETS

Non-currentassets Intangibleassets 10 22979 24078 -4,6Tangibleassets 11 892 1066 -16,4Investments 12 77301 78375 -1,4Long-termtradeandotherreceivables 14 457 435 5,2

Non-currentassets 101629 103954 -2,2

Currentassets Inventories 13 240 18 1209,2Short-termtradeandotherreceivables 15 19641 14473 35,7Cashandcashequivalents 4622 6164 -25,0

Currentassets 24503 20655 18,6

TOTALASSETS 126133 124609 1,2

EURthousand Note 31.12.2013 31.12.2012 Change,%EQUITYANDLIABILITIES

Shareholders'equity Sharecapital 3528 3528 0,0Sharepremiumaccount 1118 1118 0,0Otherreserves 62132 62183 -0,1Retainedearnings 28770 27494 4,6Resultfortheperiod -1985 4181 -147,5

Shareholders'equity 16 93564 98504 -5,0

Liabilities Long-termliabilities 17 5191 8510 -39,0Short-termliabilities 18 27377 17595 55,6

Totalliabilities 32569 26106 24,8

TOTALEQUITYANDLIABILITIES 126133 124609 1,2


PARENTCOMPANYCASHFLOWSTATEMENT(FAS)1.1.-31.12.2013

1.1-31.12.2013 1.1-31.12.2012

Cashflowfromoperatingactivities

Profitfortheperiod -1985 4181

Adjustmentsforprofit Depreciations 6419 5408Proceedsfromsaleofnon-currentassets -1540 0Unrealizedexchangegainsandlosses 1100 -548Financeincomeandexpenses -1365 -1304Incometaxes 421 1739

Workingcapitalchanges 3012 -6497

Interestpaid -275 -1Interestreceived 1458 1322Otherfinancialitemsinoperatingactivities -270 -142Incometaxespaid -1882 -2285

Netcashfromoperatingactivities 5095 1873

Cashflowfrominvestingactivities Purchaseoftangibleandintangibleassets -5120 -10090Acquiredsubsidiaries -31 -9275Grantedloans -3976 -18233Proceedsfromsaleofbusiness 1540 0

Netcashusedininvestingactivities -7587 -37598

Cashflowbeforefinancingactivities -2492 -35724

Cashflowfrominvestingactivities Purchaseofownshares 0 -963Proceedsfromborrowings 5572 15980Repaymentsofborrowings -1667 0Dividendspaid -2955 -5278

Netcashusedinfinancingactivities 950 9739

Netchangeincashandcashequivalents -1542 -25986

Cashandcashequivalentsatthebeginningofperiod 6164 32150Cashandcashequivalentsattheendofperiod 4622 6164


NOTESTOTHEPARENTCOMPANYFINANCIALSTATEMENTS(FAS)

1.ACCOUNTINGPRINCIPLESBaswareCorporation’sfinancialstatementshavebeenpreparedinaccordancewiththeFinnishAccountingAct.

TransactionsinforeigncurrenciesTransactionsinforeigncurrenciesarerecordedattheexchangeratesprevailingatthetransactiondates.Attheendoftheaccountingperiod,theunsettledbalancesonforeigncurrencyreceivablesandliabilitiesarevaluedattheratesofexchangeprevailingattheendoftheaccountingperiod.Foreignexchangegainsandlossesrelatedtonormalbusinessoperationsareenteredintheappropriateincomestatementaccountbeforeoperatingprofitandforeignexchangegainsandlossesassociatedwithfinancingareenteredasanetamountunderfinancialincomeandexpenses.

RevenuerecognitionBaswareCorporation’snetsalesaregeneratedbyAutomationServices,CustomerSupport,ProfessionalServices,andLicenseSales.Whennetsalesarecalculated,salesrevenueisadjustedforexchangeratedifferencesofforeigncurrencysales.

Servicerevenueisrecognizedatthetimeofdelivery.Revenueandcostsoffixed-pricebusinesstransactionsarerecognizedasrevenueandexpenditureonthebasisofthepercentageofcompletionwhentheoutcomeoftheprojectcanbereliablyestimated.Thedegreeofcompletionofbusinesstransactionsisspecifiedastheproportionofhoursworkedoftheestimatedtotalnumberofhours.Iftheresultingcostsandrecognizedprofitsexceedtheamountinvoicedforthetransaction,thedifferentispresentedin“Tradeandotherreceivables”onthebalancesheet.Iftheresultingcostsandrecognizedprofitsarelowertheinvoicingforthetransaction,thedifferenceispresentedin“Tradepayablesandotherliabilities”onthebalancesheet.Whenitislikelythatthetotalcostsrequiredforcompletingthebusinesstransactionexceedthetotalrevenuefromthetransaction,theexpectedlossisrecognizedasanexpenseimmediately.AutomationServicesrevenueismainlycomprisedofstart-up,transaction,andusefees.Start-upfeesarerecognizedasrevenuewhentheworkrelatedtothestart-upprocedurehasbeencompletedandthecustomerhasbeenconnectedtotheserviceenvironment.Transactionrevenueisrecognizedonthebasisofactualtransactionvolumesandusechargesonamonthlybasisonthebasisoftheexistenceofanagreement.

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

OtheroperatingincomeOtheroperatingincomeincludesproceedsfromthesaleofproperty,plantandequipmentandpossiblerentalincome,recognizedonastraight-linebasisovertherentalperiod.

ResearchanddevelopmentcostsResearchexpensesarerecognizedasanexpenseastheyareincurred.Productdevelopmentexpensesarerecognizedsothatdevelopmentcostsofnewproductsandproductversionswithsignificantenhancementsarecapitalizedandamortized.Maintenanceofexistingproductsandminorenhancementsarerecognizedastheyareincurred.Governmentgrantsrelatedtocapitalizeddevelopmentexpensesaredeductedfromtheacquisitioncosts.

PensionsThestatutorypensioncoverageofBaswareCorporationemployeesisprovidedthroughinsurancepoliciestakenoutwithapensioninstitution.Thestatutorypensionexpensesarerecognizedasexpensesintheyeartheyareincurred.

IntangibleassetsIntangibleassetsincludesoftware,goodwill,capitalizedproductdevelopmentcosts,andotherlong-termexpenses.Theyarerecognizedintheoriginalacquisitioncostslessaccumulateddepreciation.Publicsubsidiesrelatedtotheacquisitionofintangibleassetsaredeductedfromtheacquisitioncostoftheassetandrecognizedasincomebyreducingthedepreciationchargeoftheassettheyarerelatedto.Theusefullivesofintangibleassetsare3–10years.

TangibleassetsTangibleassetsarerecognizedinthebalancesheetattheoriginalacquisitioncostlessaccumulateddepreciation.Theuseful


livesoftangibleassetsare3–5years.

LeasesIntheparentcompanyfinancialstatements,leasingpaymentsarerecognizedasannualexpensesinaccordancewiththeFinnishAccountingStandards.

LiquidassetsLiquidassetsincludecashandbankbalances

DerivativesDerivativesarevaluedatfairvalueandunrealizedlossesarerecognizedintheincomestatementinaccordancewithprudenceprinciple.Companyhasnotappliedhedgeaccounting.

IncometaxesIncometaxeshavebeenrecognizedinaccordancewithFinnishtaxlegislation.


NOTESTOTHEINCOMESTATEMENT

2.NETSALESEURthousand

2013 2012Netsalesbybusinessbranches Licencesales 8442 9482CustomerSupport 25291 24976ProfessionalServices 12596 12608AutomationServices 18241 14803

Total 64570 61870

Netsalesbybusinessareas Finland 48982 48350Export 15588 13520

Total 64570 61870

Baswarereportsincomeforproductsandservicesasfollows:Licensesales,ProfessionalServices,CustomerSupport,andAutomationServices(previouslyLicenseSales,ProfessionalServices,Maintenance,andAutomationServices).CustomerSupportiscomprisedofthepreviousMaintenanceandExtendedcustomersupportpreviouslyreportedunderProfessionalServices.

3.OTHEROPERATINGINCOMEEURthousand

2013 2012Incomefromsaleofbusinesses 1540 0Otheroperatingincome 114 228

Total 1654 228

4.MATERIALSANDSERVICESEURthousand

2013 2012Purchasesduringthefinancialperiod -7389 -6223Changeininventories 221 -23Servicespurchased -1454 -764

Total -8622 -7010


5.NOTESTOPERSONNELANDCORPORATEGOVERNANCEEURthousand

2013 2012Personnelexpenses SalariespaidtoCEOandtheBoardofDirectors -535 -856Salariespaidtootherpersonnel -30814 -27219Pensionexpenses -5259 -4318Otherpersonnelexpenses -2166 -1360

Total -38774 -33752

SalariesandfeespaidtoeachmemberofthemanagementaredetailedinNote6totheconsolidatedfinancialstatements.

Numberofpersonnel

2013 2012Personnelaveragefortheperiod 1016 953Personnelattheendoftheperiod 1002 1018

6.DEPRECIATIONANDWRITE-OFFSEURthousand

2013 2012Intangibleassets -5868 -4872Tangibleassets -552 -536

Total -6419 -5408

7.OTHEROPERATINGEXPENSESEURthousand

2013 2012Otheroperatingexpenses Rents -2126 -2024Non-statutoryemployeebenefits -591 -637Travelling -2909 -1768Marketing -2474 -2446ITandtelephone -1310 -1312Auditorfees -328 -254Otherexpenses -4499 -3192

Total -14237 -11633

Auditfees -209 -167Taxadvices -72 -78Otherfeesandservices -47 -9

Auditfeestotal -328 -254


8.FINANCIALINCOMEANDEXPENSESEURthousand

2013 2012Otherinterestandfinancialincome Fromgroupcompanies 2204 2337Fromothers -4 62

Financialincometotal 2200 2399

Interestandfinancialexpenses Togroupcompanies -1569 -385Fromothers -366 -161

Financialexpensestotal -1935 -546

Total 265 1853

9.DIRECTTAXESEURthousand

2013 2012Incometaxesonthefinancialperiod Incometaxesonactualbusiness -133 -1679Incometaxesfrompreviousfinancialperiods -288 -60

Total -421 -1739


NOTESTOTHEBALANCESHEET

10.INTANGIBLEASSETSEURthousand

2013 2012Developmentcosts Bookvalue1.1. 20435 10437Additions 361 2283Disposals 0 -21Reclassifications 732 7737

Bookvalue31.12. 21528 20435

Accumulatedamortization1.1. -9702 -7418Cumulativeamortizationondisposals 0 21Amortizationforthefinancialperiod -3138 -2306

Accumulatedamortization31.12. -12840 -9702

Balancesheetvalue31.12. 8688 10733

Intangiblerights Bookvalue1.1. 6831 2788Additions 726 3699Disposals 0 -10Reclassifications 0 355

Bookvalue31.12. 7557 6831

Accumulatedamortization1.1. -3044 -2393Accumulatedamortizationondecreases 0 10Amortizationforthefinancialperiod -854 -661




EURthousand2013 2012

Goodwill/mergerloss Bookvalue1.1. 17625 17625

Bookvalue31.12. 17625 17625

Accumulatedamortization1.1. -11433 -9590Amortizationforthefinancialperiod -1843 -1843



Otherlong-termexpenses Bookvalue1.1. 509 481Additions 0 28

Bookvalue31.12. 509 509

Accumulatedamortization1.1. -247 -184Amortizationforthefinancialperiod -33 -63



Otherassetsunderconstruction Bookvalue1.1 135 106Additions 75 384Reclassifications 0 -355

Bookvalue31.12 210 135


Assets,unfinishedprojects Bookvalue1.1. 2969 7737Additions 3607 2969Reclassifications -732 -7737

Bookvalue31.12. 5844 2969


Intangibleassetstotal 22979 24078


11.TANGIBLEASSETSEURthousand

2013 2012Machineryandequipment Bookvalue1.1. 5526 4863Additions 370 667Disposals 0 -4

Bookvalue31.12. 5896 5526

Accumulateddepreciation1.1. -4559 -4027Accumulateddepreciationondisposals 0 4Amortizationfortheperiod -552 -536



Othertangibleassets Bookvalue1.1. 99 92Increase 7 7

Bookvalue31.12. 106 99


Tangibleassetstotal 891 1066

Totalfixedassets 23870 25144

12.INVESTMENTSEURthousand

2013 2012Sharesingroupcompanies Bookvalue1.1. 26315 17040Increase 3677 9275

Bookvalue31.12. 29992 26315

Balancesheetvalue31.12 29992 26315

Othershares Bookvalue1.1. 38 38

Bookvalue31.12. 38 38

Receivablesfromgroupcompanies Loanreceivablesfromgroupcompanies 47271 52022

Investmentstotal 77301 78375


Sharesinsubsidiaries

Domicile Country Parentcompanyholding,%BaswareInternationalOy Espoo Finland 100BaswareGmbH Düsseldorf Germany 100BaswareUKLtd. Staffordshire UnitedKingdom 100BaswareAB Stockholm Sweden 100BaswareB.V. Amsterdam TheNetherlands 100BaswareA/S Herlev Denmark 100Basware,Inc. Delaware UnitedStates 100BaswareSAS Paris 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

2013 2012Rawmaterialsandconsumables 240 18

Total 240 18

14.NON-CURRENTRECEIVABLESEURthousand

2013 2012Rentdeposits 457 435

Total 457 435


15.CURRENTRECEIVABLESEURthousand

2013 2012Accountsreceivables 6797 6304

Receivablesfromgroupcompanies Accountsreceivables 1575 3936Interestreceivables 1860 1406Loanreceivables 3376 0Otherreceivables 1749 0

Total 8560 5342

Prepaidexpensesandaccruedincome 3586 1601Loanreceivables 600 0Otherreceivables 99 1226

Total 4285 2827

Currentreceivablestotal 19641 14473

Prepaidexpensesandaccruedincome Taxreceivables 2244 781Accruedemployeeexpenses 810 382Otherprepaidexpensesandaccruedincome 532 438

Total 3586 1601


16.SHAREHOLDERS'EQUITYEURthousand

2013 2012Sharecapital1.1. 3528 3528

Sharecapital31.12. 3528 3528

Sharepremiumaccount1.1. 1118 1118

Sharepremiumaccount31.12. 1118 1118

Equity31.12. 4647 4647

Investednon-restrictedequity1.1. 62183 62360Decreaseoftreasuryshares -51 -177

Investednon-restrictedequity31.12. 62132 62183

Retainedearnings1.1. 31674 33558Dividendpayment -2955 -5278Acquisitionoftreasuryshares 0 -963Decreaseoftreasuryshares 51 177Profitfortheperiod -1985 4181

Retainedearnings31.12. 26785 31674

Non-restrictedequity31.12. 88917 93857

Shareholders'equity31.12. 93564 98504

Distributablefunds Profitfortheperiod -1985 4181Retainedearnings 28719 27494Otherdistributablefunds 62132 62183

Distributablefunds 88866 93857

17.NON-CURRENTLIABILITIESEURthousand

2013 2012Loansfromfinancialinstitutions 5000 8333Debtstogroupcompanies 177 177Accruedexpensesanddeferredincome 14 0

Total 5191 8510


18.CURRENTLIABILITIESEURthousand

2013 2012Accountspayable 1014 1243

Liabilitiestogroupcompanies Accountspayable 337 391Otherdebts 14560 6549Accruedexpensesanddeferredincome 0 1

Total 14897 6941

Loansfromfinancialinstitutions 3333 1667Otherdebts 2300 2496Accruedexpensesanddeferredincome 5832 5249

Total 11465 9412

Currentliabilitiestotal 27377 17595

Accruedexpensesanddeferredincome Accruedexployeeexpenses 4933 4286Otheraccruedexpenes 900 963

Total 5832 5249


19.COMMITMENTSANDCONTINGENTLIABILITIESEURthousand

2013 2012Ownguarantees Businessmortgagesofowndebt 1200 1200

Commitmentsonbehalfofsubsidiaries Guarantees 31 244

Otherowncontingentliabilities Leasingliabilities Currentleaseliabilities 110 177Leaseliabilitiesmaturingin1-5years 79 98

Total 189 275

Rentalliabilities Currentrentalliabilities 2724 2958Rentalliabilitiesmaturingin1-5years 3107 3156

Total 5831 6114

Otherowncontingentliabilitiestotal 6020 6389

CommitmentsandContingentLiabilitiestotal 7251 7833

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


BOARD’SDIVIDENDPROPOSALAttheendof2013,theGroupparentcompany’sdistributablefundsareEUR88866295.46.

Basware’sBoardofDirectorsproposestotheAnnualGeneralMeetingthatadividendofEUR0.23pershare(2012:EUR0.23)bepaidfor2013.Nosubstantialchangeshavetakenplaceinthecompany’sfinancialpositionaftertheendofthefinancialperiod.Thecompany’sliquidityisgood,andtheBoard’sviewisthattheproposeddividendpayoutwillnotendangerthecompany’sliquidity.

AccordingtotheBoard’sdecision,thedividendmatchingdateisFebruary19,2014.TheBoardofDirectorsproposestotheAnnualGeneralMeetingthatthedividendbepaidaftertheendofthematchingperiodonFebruary26,2014.

InEspoo,Finland,January23,2014

HannuVaajoensuu,ChairmanoftheBoard

IlkkaSihvo,ViceChairmanoftheBoard

PenttiHeikkinen

AnssiVanjoki

TuijaSoanjärvi

EsaTihilä,CEO

Auditor'sNote

OurAuditor'sreporthasbeenissuedtoday.

InHelsinki,Finland,January23,2014

Ernst&Young

AuthorizedPublicAccountantFirm

HeikkiIlkka

AuthorizedPublicAccountant


AUDITOR’SREPORT

TotheAnnualGeneralMeetingofBaswareCorporationWehaveauditedtheaccountingrecords,thefinancialstatements,thereportoftheBoardofDirectors,andtheadministrationofBaswareCorporationforthefinancialperiod1.1-31.12.2013.Thefinancialstatementscomprisetheconsolidatedstatementoffinancialposition,statementofcomprehensiveincome,statementofchangesinequityandstatementofcashflows,andnotestotheconsolidatedfinancialstatements,aswellastheparentcompany’sbalancesheet,incomestatement,cashflowstatementandnotestothefinancialstatements.

TheresponsibilityoftheBoardofDirectorsandtheManagingDirectorTheBoardofDirectorsandtheManagingDirectorareresponsibleforthepreparationofconsolidatedfinancialstatementsthatgiveatrueandfairviewinaccordancewithInternationalFinancialReportingStandards(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.

InHelsinkionJanuary23,2014

Ernst&YoungOyAuthorizedPublicAccountantFirm

HeikkiIlkkaAuthorizedPublicAccountan


GROUPQUARTERLYINCOMESTATEMENT

EURthousand1-3/2013 1-3/2012 4-6/2013 4-6/2012 7-9/2013 7-9/2012 10-12/2013 10-12/2012

NETSALES 29828 27435 31789 28718 28682 27119 33049 30427

Otheroperatingincome 58 58 1623 58 61 55 173 57

Materialsandservices -2542 -2061 -2987 -1957 -2967 -2313 -3265 -2715 Employeebenefitsexpenses

-20518 -16072 -20611 -17282 -16464 -15415 -19327 -16820

Depreciationandamortization

-1801 -1366 -1755 -1495 -1748 -1809 -1748 -1823

Otheroperatingexpenses -6594 -6171 -7152 -6745 -5703 -5376 -6751 -6199

Operatingprofit/loss -1569 1822 908 1298 1861 2261 2131 2927 % -5,3% 6,6% 2,9% 4,5% 6,5% 8,3% 6,4% 9,6%

Financialincome 227 146 252 75 178 91 271 61 Financialexpenses -184 -50 -324 -76 -220 -52 -248 -145

Resultbeforetax -1526 1918 836 1296 1819 2300 2153 2843 % -5,1% 7,0% 2,6% 4,5% 6,3% 8,5% 6,5% 9,3%

Incometaxexpense 563 -442 -485 -347 -859 -807 102 -898

RESULTFORTHEPERIOD

-962 1476 352 949 960 1493 2255 1945

% -3,2% 5,4% 1,1% 3,3% 3,3% 5,5% 6,8% 6,4%


KEYFIGURES(IFRS)

GroupKeyFinancialPerformanceIndicatorsEURthousand

2013 2012 2011 2010 2009Netsales 123349 113699 107750 103094 92654Growthofnetsales,% 8,5% 5,5% 4,5% 11,3% 7,6%EBITDA 10383 14801 17284 18604 16280%ofnetsales 8,4% 13,0% 16,0% 18,0% 17,6%OperatingprofitbeforeIFRS3amortization 4256 10555 14290 15691 13788%ofnetsales 3,5% 9,3% 13,3% 15,2% 14,9%Operatingprofit 3331 8308 12280 13487 11824Growthofoperatingprofit,% -59,9% -32,3% -8,9% 14,1% 36,2%%ofnetsales 2,7% 7,3% 11,4% 13,1% 12,8%Profitbeforetax 3284 8357 12332 13325 11590%ofnetsales 2,7% 7,4% 11,4% 12,9% 12,5%Profitfortheperiod 2605 5863 9671 10331 9074%ofnetsales 2,1% 5,2% 9,0% 10,0% 9,8%

Returnonequity,% 2,6% 5,8% 11,6% 16,7% 17,2%Returnoninvestment,% 3,9% 8,2% 14,9% 20,1% 18,8%Interestbearingliabilities 8632 10524 682 3582 9230Cashandliquidassets* 13218 34519 42977 13822 12210Gearing,% -4,7% -23,8% -42,3% -15,3% -5,3%Equityratio,% 77,1% 77,6% 81,9% 73,3% 64,8%Totalassets 127043 129758 121966 91470 87287

Grossinvestments** 20733 19606 6331 4567 7448%ofnetsales 16,8% 17,2% 5,9% 4,4% 8,0%Capitalexpenditure 1470 1431 2014 970 2047%ofnetsales 1,2% 1.3% 1,9% 0,9% 2,2%Researchanddevelopmentcosts 18184 17884 16489 14883 14781%ofnetsales 14,7% 15,7% 15,3% 14,4% 16,0%R&Dpersonnelatendofperiod 370 351 311 239 195

Personnelaverageforperiod 1485 1330 1058 845 747Personnelatendofperiod 1472 1423 1182 913 761Growthofpersonnel,% 3,4% 20,4% 29,5% 20,0% 4,1%

*)Includescashandcashequivalents

**)IncludesacquisitionsandcapitalizedR&Dcosts


GroupShareIndicators2013 2012 2011 2010 2009

Earningspershare,undiluted 0,20 0,46 0,76 0,90 0,80Earningspershare,diluted 0,20 0,46 0,76 0,89 0,80Equitypershare 7,62 7,84 7,76 5,78 4,97Dividendpershare 0,23* 0,23 0,41 0,40 0,36Dividendperprofit,% 113,4% 50,4% 53,8% 44,6% 45,2%Effectivedividends,% 0,9% 1,1% 2,5% 1,6% 2,5%Price/Earningsratio(P/E) 123,45 44,34 21,57 27,58 18,21

Sharepriceperformance,shareissueadjusted

lowestshareprice 16,75 16,70 14,95 15,00 6,60highestshareprice 25,60 24,00 28,10 24,80 14,66averageshareprice 20,35 20,84 21,58 19,27 10,79closingshareprice 25,03 20,25 16,45 24,75 14,52

ShareissueadjustedaveragesharenumberDec31

12931229 12931229 12931229 11690024 11468124

Marketvalueofsharesatendofperiod

321771012 260182550 211737063 287093169 165206004

Shareissueadjustednumberoftradedshares

1723866 1514703 5079523 2131071 2038565

%ofaveragesharenumber 13,4% 11,8% 40,1% 18,5% 17,9%

Averagesharenumber** -undiluted 12848540 12836966 12679281 11513690 11381905-diluted 12848540 12836966 12686792 11585155 11381905

*)BoardsproposaltotheAnnualGeneralMeetingofShareholders

**)Excludingtreasuryshares


CALCULATIONOFKEYINDICATORSReturnonequity(ROE),%

(Profitorlossbeforetaxes-taxes)x100

Shareholders'equity+minorityinterest+voluntaryprovisionsandaccelerateddepreciationreducedbydeferredtaxliabilities(average)

Returnoninvestment(ROI),%

(Profitbeforetaxes+interestandotherfinancialexpenses)x100

Balancesheettotal-non-interestbearingliabilities(average)

Gearing,%

(Interest-bearingliabilities-cashandcashequivalents)x100

Shareholders'equity+minorityinterest+voluntaryprovisionsandaccelerateddepreciationreducedbydeferredtaxliabilities(average)

Equityratio,%

(Shareholders'equity+minorityinterest+voluntaryprovisionsandaccelerateddepreciationreducedbydeferredtaxliabilities)x100

Balancesheettotal-advancesreceived

Earningspershare

Profitfortheperiod

Adjustedaveragenumberofsharesduringtheperiod

Equitypershare

Shareholders'equityincludingreservesanddepreciationdifferencereducedbydeferredtaxliability

Adjustednumberofsharesattheendofthefinancialperiod

Dividendpershare

Totaldividend

Adjustednumberofsharesattheendofthefinancialperiod-ownshares

Dividend/profit,%

Dividendpersharex100

Earningspershare

Effectivedividendyield,%

Dividendpersharex100


Adjustedsharepriceattheendofthefinancialperiod

Price-earningsratio(P/E)

Adjustedsharepriceattheendofthefinancialperiod

Earningspershare


SHAREANDSHAREHOLDERS

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

BaswaresharesarecurrentlylistedonNASDAQOMXHelsinkiLtdintheInformationTechnologysector,Mid-Capsegment.Thecompanyhasoneseriesofshares,withthetradingcodeBAS1V.

Attheendof2013,thetotalnumberofsharesissuedbyBaswarewas12931229(12931229).ThebookcountervaluepershareisEUR0.30.Eachshareconfersonevoteinthegeneralmeetingofshareholders,andallsharescarryanequalrighttodividend.

SharecapitalAttheendof2013,BaswareCorporation'ssharecapitalwasEUR3528368.70.

SharepriceperformanceandtradingDuring2013,thehighestpriceofthesharewasEUR25.60(EUR24.00),thelowestwasEUR16.75(EUR16.70)andtheclosingpricewasEUR25.03(EUR20.25).TheaveragepriceofthesharewasEUR20.35(EUR20.84)duringtheperiod.

Atotalof1723866(1514703)sharesweretradedduringtheperiod,equivalentto13.4percent(11.8%)oftheaveragenumberofshares.Marketcapitalizationwiththeperiod’sclosingpriceonDecember31,2013,wasEUR321771012(EUR260182550).

TheAnnualGeneralMeetingheldonFebruary14,2013,authorizedtheBoardofDirectorstodecideonrepurchaseofthecompany’sownsharesinaccordancewiththeproposaloftheBoardofDirectors.Byvirtueoftheauthorization,theBoardofDirectorsisentitledtodecideonrepurchasingamaximumof1290000company'sownshares.TherepurchaseauthorizationisvaliduntilJune30,2014.

ThetotalamountofownsharesheldbythecompanyonDecember31,2013,is75815shares,representingapproximately0.6%ofallofoutstandingshares.Noshareswererepurchasedduring2013.

IncentiveschemesBaswaredidnothaveanywarrantprogramsinforcein2013.

Additionalinformationontheshare-basedincentiveschemesisavailableonthecompany’sinvestorsiteathttp://www.basware.com/investors.

SHAREHOLDERSBaswarehad14349(14443)shareholdersonDecember31,includingnominee-registeredholdings(11).Nominee-registeredholdingsaccountedfor11.7percent(11.2%)ofthetotalnumberofshares.

Distributionofholdingsbynumberofshares,December31,2013Numberofholders Shares,pcs Votes,%

1-100 11629 273205 2.1101-1,000 2450 709242 5.51,001-10,000 216 510624 3.910,001-100,000 27 1226476 9.5100,001+ 27 10211682 79.0

Total 14349 12931229 100.0


Distributionbysector,December31,2013Numberofholders Shares,pcs Votes,%

Privatecompanies 524 836764 6.5Financialandinsuranceinstitutions 33 3323317 25.7Publicsectororganizations 6 2108097 16.3Non-profitorganizations 47 259410 2.0Households 13686 4874602 37.7Foreign 42 19606 0.2

14338 11421796 88.3Nominee-registered 11 1509433 11.7

Total 14349 12931229 100.0

MajorshareholdersShares,pcs Votes,%

1.IlmarinenMutualPensionInsuranceCompany 1461658 11,32.Sihvo,Ilkka 885300 6,83.Eräkangas,Kirsi 807300 6,2Eräkangas,Kirsi 563900 4,4Eräkangas,Lotta 243400 1,94.Vaajoensuu,Hannu 590000 5,2HavacmentOy 266500 2,1Vaajoensuu,Hannu 323500 2,55.Perttunen,Sakari 665900 5,16.FonditaNordicMicroCapPlaceringsf 461000 3,67.OP-FinlandSmallFirmsFund 435371 3,48.NordeaNordicSmallCapFund 395935 3,19.VeritasPensionInsuranceCompany 379509 2,910.OP-FocusFund 306384 2,411.OP-DeltaMutualFund 300358 2,312.Pöllänen,Antti 293029 2,313.InvestmentFundAktiaCapital 273313 2,114.TheStatePensionFund 256000 2,015.MutualLifeInsuranceCompanySuomi 250000 1,916.SijoitusrahastoDanskeInvestSuomenPienyhtiöt 227423 1,817.CarnegieShareFund 191627 1,518.Perttunen,Meimi 175400 1,419.Ahonen,Asko 168736 1,320.MutualFundFIMFenno 162554 1,3

20largestshareholderstotal 8686797 67,2Nomineeregisteredshares 1509433 11,7Others 2734999 21,2

Total 12931229 100,0


FORSHAREHOLDERS

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

TradingcodeBAS1VISINcodeFI0009008403Book-countervalueEUR0.30ListingpriceonFebruary29,2000EUR5.70ClosingpriceonDecember31,2013EUR25.03

AnnualGeneralMeetingBaswareCorporation’sAnnualGeneralMeetingwilltakeplaceonFriday,February14,2014,at10a.m.atTapahtumataloBank(Unioninkatu22)inHelsinki,Finland.

ShareholderswhohavebeenregisteredatthelatestbyFebruary4,2014,intheshareholders'registerkeptbyEuroclearFinlandLtd.areentitledtoparticipateintheAnnualGeneralMeeting.Shareholderswhowishtoparticipateinthemeetingshouldinformthecompanyby4:00p.m.onFebruary11,2014,either:

atBasware’sinvestorwebsiteatwww.basware.com/annual-general-meeting;or

bytelephoneat+358879171onweekdaysbetween9:00AMand4:00PM;or

byregularmailtoBaswareCorporation,AnnualGeneralMeeting2014,P.O.Box97,02601Espoo,Finland.

ThematterstobehandledintheAnnualGeneralMeetingwillbedisclosedintheNoticeofthemeetingthatispublishedasastockexchangereleaseandonBasware’sinvestorwebsiteatwww.basware.com/annual-general-meeting.

DividendTheBoardofDirectorsofBaswareproposestotheAnnualGeneralMeetingthatadividendofEUR0.23persharebepaidfor2013.IftheBoard’sproposalisaccepted,thedividendwillbepaidtothoseshareholderswhoareenteredintheshareholders’registermaintainedbyEuroclearFinlandOyonthedividendrecorddateFebruary19,2014.TheactualpaymentofdividendswilltakeplaceattheearliestonFebruary26,2014.

FinancialReportingin2014ReleasedatesforBaswareCorporation’sinterimreports:

InterimReportJanuary-March2014(Q1)onThursday,April10,2014

InterimReportJanuary-June2014(Q2)onThursday,July10,2014

InterimReportJanuary-September2014(Q3)onFriday,October10,2014

Thefinancialstatementreleaseandinterimreportswillbepublishedatapproximately9:00a.m.onthesedaysinFinnishandEnglish.

InterimreportsarepreparedaccordingtotheIAS34,InterimFinancialReportingstandard.

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

ChangesofaddressIftheaddressofashareholderchanges,werequestsendingawrittennotificationofthistothebankwheretheshareholder’sbook-entryaccountisheld.

basware's year 2013 the year of e-engagementsoftware as a service (saas) – license sales...

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