Annual Report • Feb 22, 2018
Annual Report
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Basware's net sales in 2017 were EUR 149 million (2016: EUR 149 million). Cloud revenues grew 20% from 2016 and accounted for 53% of total net sales (2016: 45%). Within cloud revenues, SaaS revenue grew by 45% and transaction services revenue by 12% from 2016. Non-cloud revenues declined in line with expectations as we transition customers to the cloud.
Basware's subscription order intake increased by 63% in 2017, a strong growth from 2016. Subscription annual recurring revenue gross order intake includes SaaS and other subscription types and covers new cloud customers, addons and renewal uplifts. Transaction revenue and churn are excluded.
People are Basware's most important resource. At the end of 2017, Basware employed 1,829 people in 14 countries around the world.
We have set the foundations for the future, and the effects are only just starting to become visible.
As both CEO and a shareholder of Basware, I am very proud of what we have achieved in 2017. We have continued to grow our cloud business rapidly, increased order intake, released exciting new innovations, and at the same time implemented significant productivity improvements. We have set the foundations for the future, and the effects of these changes are only just starting to become visible.
Basware's mission to help our customers simplify operations and spend smarter is something that I feel very passionate about. Every single organisation in the world can benefit from using Basware's solutions and this means that there is a huge market opportunity for us, worth EUR 15 billion annually in Europe and North America alone. Basware's Network, the largest e-invoicing network in the world, is a major differentiator and helps our customers to make all of their purchasing processes 100 percent paperless. A commissioned study conducted by Forrester Consulting on behalf of Basware published in November 2017 found that Basware's solutions have a return on investment of 307 percent and a payback time of 12 months for customers (read the full report: The Total Economic Impact™ Of Basware's Purchase-To-Pay Cloud Solution).
Basware's strategic priority is cloud revenue growth and with 20 percent growth in 2017, we met our guidance for 2017. Basware's cloud revenues now account for 53 percent of net sales, up from 45 percent in full year 2016. The ever increasing share of cloud revenues is a key driver for total growth. Subscription order intake, our main lead indicator for future cloud revenue growth, also continued to rise, up 63 percent compared to 2016.
Basware's vision is to offer the best global solution for purchasing, invoicing and paying. Basware leads innovation in our industry and we continued to announce more enhancements to our solutions that benefit our customers by utilising the huge data asset in our systems. These included further enhancements to the company's award-winning Analytics function, including peer benchmarking, predictive analytics and supplier quality analytics; new strategic sourcing offering; and Basware Vault, a compliant, efficient and secure cloud-based archiving service for e-invoices. In Q2 2017, the company also announced a partnership with Nordea to offer Basware's Discount product to Nordea's corporate banking customers.
At the same time as focusing on serving customers and growing cloud revenues, we have continued to work on streamlining our business and increasing productivity. Sales productivity has increased significantly compared to 2016. We successfully executed all aspects of the productivity programme announced in November 2016.
Basware's people are what makes our company, and employee satisfaction is very important to us. Together with the great team that we have globally at Basware I am excited and confident about Basware's future and our ability to capture the significant market opportunity ahead of us.
Targeting scalable cloud revenue growth through four strategic focus areas.
Basware is the global leader in providing networked source-to-pay, e-invoicing and value-added services.
Our vision is to deliver the best global solution for purchasing, invoicing and paying.
Basware's key strategic priority for the strategy period 2017-2020 is cloud revenue growth. The company continues to strengthen its leading market position in order to grow cloud revenue.
Basware's vision is to deliver the best global solution for purchasing, invoicing and paying.
Our mission is to help customers simplify operations and spend smarter.
Cloud revenue growth is Basware's primary objective and where long-term value in our business will be created. Organic growth is our key focus, supported by a disciplined acquisition strategy.
Basware has defined four strategic focus areas that guide our strategy implementation:
Our mission is to help customers simplify operations and spend smarter.
Basware focuses on scalable cloud growth during the strategy period 2017-2020. We have two strategic targets:
Helping our customers realize tomorrow's financial goals today.
We created the purchase-to-pay market over 30 years ago, so we understand what it takes for businesses to overcome their spending challenges. But our solutions are not just about improving the everyday, they are designed to help our customers unlock the full potential of their financial supply chain through smarter cash flow management.
With Basware's solutions our customers can
Basware has been consistently recognized as a global market leader by independent industry analysts, highlighting, in particular, our expertise in analytics and our best-in-class solution capabilities.
Our mission is to help our customers simplify operations and spend smarter.
In 2017, we introduced a range of new capabilities to our Analytics solution, including Predictive Analytics, Peer Benchmarking and Supplier Quality Analytics. We also added Smart Coding functionality to our Accounts Payable solution in order to help our customers further automate their invoice processing. On the Network side, we launched Vault - a compliant, efficient and secure cloud-based archiving service for e-invoices - that is available to our all Network customers. We also announced a strategic partnership with Nordea to deliver a dynamic
discounting solution based on Basware Discount in the Nordic countries.
Basware continues to lead industry innovation.
Read more about our solutions and services.
Focusing on competence development and employee engagement in 2017.
In 2017, Basware continued investing in employees with a focus on evolving employee engagement. Building competence and developing a high-performance culture was at the heart of the people strategy. Further developments were made to the Leadership program including developing employee's careers embedding personal development plans and encouraging continuous conversations between the Managers and their employees.
A greater focus was also invested in both competence development and general employee engagement for all Baswareans. Activities took place in all Basware locations ranging from, specific development opportunities, enhanced offerings in the Learning Management system and social events including giving back to the community activities.
Coherent approach to rolling out our refreshed strategy was a success
A very coherent approach to rolling out our refreshed strategy was executed with global, local and team events ensuring that all employees understood clearly our strategy and what it means for their teams and themselves as individuals. Read more about our strategy.
This activity saw some good success with Basware being awarded "Great Place to Work" award in all US locations and the "Best and
Brightest" award in India. The annual employee satisfaction survey also saw some good results with an amazing response rate of 90% and an overall result of 69% of our employees stating "they would recommend a friend" to work for Basware.
2017 was a year of focus on our sales organisation developing the foundation for high performance. The employee engagement result demonstrated the investment was being returned with an employee satisfaction score of 74%.
Overall our objective to develop engagement was achieved with further steps taken to provide a solid foundation for the future.
Read more: Basware careers
This Corporate Governance Statement has been composed in accordance with Chapter 7, Section 7 of the Finnish Securities Markets Act and the reporting requirements of the Finnish Corporate Governance Code 2015 issued by the Finnish Securities Market Association. Basware complies with the Code with no deviations.
Basware Corporation ("the Company") is a public listed company registered in Finland, with its headquarters located in Espoo, Finland. Basware Group ("Basware" or "the Group") is comprised of the parent company Basware Corporation and its Finnish and foreign subsidiaries. Decisionmaking and governance of the Group comply with the Company's Articles of Association, the Finnish Companies Act, and other applicable legislation. In addition, the Company complies with the Nasdaq Helsinki Ltd's Guidelines for Insiders. The Company's subsidiaries comply with local legislation.
This Corporate Governance Statement has been composed in accordance with Chapter 7, Section 7 of the Finnish Securities Markets Act and the reporting requirements of the Finnish Corporate Governance Code 2015 issued by the Finnish Securities Market Association (available at www. cgfinland.fi/en/). Basware complies with the Code with no deviations.
This Corporate Governance Statement is issued separately from the Report of Board of Directors.
The General Meeting of Shareholders, Board of Directors and CEO are responsible for the management of Basware Corporation, and their tasks are determined as specified in the Finnish Companies Act. The CEO is responsible for Group-level operational activity, assisted by the Group's Executive Team.
The Annual General Meeting is the highest decision-making body of the Company. The Annual General Meeting is arranged once a year on the date determined by the Board of Directors and held within six (6) months of the end of the financial period. Extraordinary General Meetings can be arranged during the year, if necessary.
In accordance with the Articles of Association, the Annual General Meeting is held in a place determined by the Board of Directors, either in Espoo, Helsinki or Vantaa. Notice of the General Meeting of Shareholders shall be published as a stock exchange release and announced on Company's website no earlier than three (3) months and no later than three (3) weeks prior to the General Meeting of Shareholders. The Annual General Meeting deals and takes decisions on proposals to the Annual General Meeting and other matters in accordance with the Finnish Companies Act and the Company's Articles of Association , which are available at Company's investors pages.
All shareholders registered by the record date in the Company's list of shareholders maintained by Euroclear Finland Ltd have the right to attend the General Meeting.
In 2017, the Annual General Meeting was held in Helsinki on March 16, 2017.
In accordance with the Articles of Association, the Company's Board of Directors has a minimum of four (4) and a maximum of eight (8) regular members. The Board members are elected by the
Annual General Meeting for one term of office at a time. The term of office begins at the end of the General Meeting that elected the Board and expires at the end of the first Annual General Meeting following the election. The Articles of Association place no restrictions on the power of the General Meeting to elect members for the Board of Directors. The Board of Directors elects a Chairman and
The rules of procedure are published in its entirety on the Company's Investors pages.
a Vice chairman from among its members, and the Board of Directors is deemed to have a quorum present when more than half of its members are present.
The Board of Directors of Basware Corporation is responsible for the Company's management and the appropriate arrangement of its operations. The Board supervises the Company's operations and management and decides on significant matters concerning the company strategy, organization, financing and investments. The duties
and responsibilities of the Board are defined primarily by the Articles of Association and the Finnish Companies Act. The Board annually ratifies rules of procedure that specify the meeting procedures of the Board and its tasks.
The Board of Directors assesses the independence of the board members and reports who are independent of the Company and who are independent of its significant shareholders. All current members of Board of Directors are independent of the Company and of major shareholders.
The Board of Directors of Basware has in its meeting on December 13, 2016, defined and approved the diversity principles for the Board of Directors. The diversity principles can be found on the Company's investors pages.
According to the diversity principles, both genders shall be represented on the Board of Directors and the aim of the Company is to strive towards an appropriately balanced gender distribution. Both genders are currently represented on the Board of Directors and its composition aligns with the goals set in the diversity principles in 2016. The mix of diverse financial and technical backgrounds of Board Members and extensive international experience in various leadership and board positions gives good foundation to the diversity of the Board of Directors. The duration of office of the Board Members is also divided so that the mix of new and long term Board members is balanced.
In 2017, Basware's Board of Directors had six members: Hannu Vaajoensuu (Chairman of the Board), Ilkka Sihvo (Vice Chairman of the Board), David Bateman, Michael Ingelög, Tuija Soanjärvi and Anssi Vanjoki.
More information on the members of the Board of Directors is available on the Company's investor pages.
The Board primarily meets on a monthly basis, however no meetings are scheduled during a few months. Additional meetings are held when necessary. In 2017, the Board of Directors held 10 meetings.
| Attendance (%) | Meetings attended | |
|---|---|---|
| Hannu Vaajoensuu (Chairman) | 90 | 9/10 |
| Ilkka Sihvo (Vice Chairman) | 100 | 10/10 |
| David Bateman | 100 | 10/10 |
| Michael Ingelög | 10/10 | |
| Tuija Soanjärvi | 8/10 | |
| Anssi Vanjoki | 100 | 10/10 |
The Board of Directors has established among its members the Audit Committee to assist the full Board in its work. Considering the scope and nature of the Company's operations, as well as the Board's working methods, it has not been deemed necessary to establish other committees. However, during 2017 a separate working group, consisting of selected Board members, discussed and worked on compensation matters.
The Audit Committee assists the Board in fulfilling its oversight responsibilities for the financial reporting process, the system of internal control, the audit process, and the Company's process for monitoring compliance with laws and regulations. The Audit Committee works in accordance with its charter confirmed by the Board of Directors, and the Committee reports to the Board on each meeting. The charter is published in its entirety on the Company's investor pages.
The Audit Committee consists of a minimum of two (2) members of the Board. The Board elects the members and the Chairman of the Audit Committee from among its members at the organizational meeting for a term of one (1) year. The majority of the members of the Audit Committee shall be independent of the Company and at least one (1) member shall be independent of significant shareholders. Each member shall have the qualifications necessary to perform the responsibilities of the Committee and at least one (1) member must have accounting, book-keeping or auditing or related financial expertise.
In 2017, the Audit committee consisted of three (3) members of the Board of Directors: Tuija Soanjärvi was elected as the Chairman and Michael Ingelög and Ilkka Sihvo as the members of the Committee.
The Audit Committee meets at minimum four (4) times during its term and additionally as necessary. In 2017, the Audit Committee held three (3) meetings and will hold one (1) more meeting during its term in January 2018.
| Attendance (%) | Meetings attended | |
|---|---|---|
| Tuija Soanjärvi (Chairperson) | 100 | 3/3 |
| Michael Ingelög | 100 | 3/3 |
| Ilkka Sihvo | 100 | 3/3 |
The Annual General meeting, held on March 15, 2016, decided to establish a permanent Shareholders' Nomination Board in accordance with the proposal of the Board of Directors. The Nomination Board shall be responsible for preparing and presenting proposals covering the remuneration and number of members of the Company's Board of Directors as well as the proposal on the members of the Board of Directors to Annual General Meeting and, where needed, to an Extraordinary General Meeting. The Nomination Board shall also be responsible for identifying successors for existing Board members.
The Nomination Board consists of four (4) members, three (3) of which are appointed by the Company's three (3) largest shareholders. The chairman of the Company's Board of Directors serves as the fourth member.
The Company's largest shareholders entitled to appoint members to the Nomination Board shall be determined annually on the basis of the registered holdings in the Company's shareholders' register held by Euroclear Finland Ltd as of the first weekday in September in the year concerned, or on the basis of separate shareholding information presented by nominee registered shareholders.
As regards individual persons as shareholders, their direct ownership and ownership of corporations over which he/she exercises control as well as ownership of his/her spouse and children, will be Basware Annual Report 2017 • 9
taken into account in the determination. If a shareholder who has distributed his/her holdings e.g. into several funds and has an obligation under the Finnish Securities Markets Act to take these holdings into account when disclosing changes in share of ownership makes a written request to such effect to the Chairman of the Board of Directors no later than on the weekday prior to the first weekday in September such shareholder's holdings in several funds or registers will be combined when calculating the shares which determine the nomination right. A nominee registered shareholder shall, within the same time limit, present to the Chairman of the Company's Board of Directors a sufficient evidence on the amount of shareholding of such nominee registered shareholder as well as a request that such shareholding would be taken into account in connection with the appointment of Nomination Board members.
The Chairman of the Company's Board of Directors shall request each of the three (3) largest shareholders established on this basis to appoint one (1) member to the Nomination Board. In the event that a shareholder does not wish to exercise their right to appoint a member, it shall pass to the next-largest shareholder that would not otherwise be entitled to appoint a member. In case two (2) shareholders have an equal number of shares and votes and the representatives of both such shareholders cannot be appointed to the Nomination Board, the decision between them shall be made by drawing lots.
The Nomination Board serves until further notice, unless the General Meeting decides otherwise. Its members shall be elected annually and their term of office shall end when new members are elected to replace them.
The following members were nominated to the Nomination Board of the Company as of September 4, 2017:
The Shareholders' Nomination Board held two (2) meetings in 2017 and will hold one (1) more meeting during its term in 2018.
Attendance of Shareholders Nomination Board members at the meetings in 2017
| Attendance (%) | Meetings attended | |
|---|---|---|
| Andrew Billett (Chairman) | 100 | 2/2 |
| Annika Ekman | 100 | 2/2 |
| Ilkka Sihvo | 100 | 2/2 |
| Hannu Vaajoensuu | 100 | 2/2 |
The Board of Directors appoints the CEO. The CEO is in charge of the management of the Company's business operations and governance in accordance with the Articles of Association, the Finnish Companies Act and the instructions given by the Board. Pursuant to Finnish Companies Act, as his general duties, the CEO is responsible for arranging the executive management of the company in accordance with the instructions and orders given by the Board of Directors. Further, according to the Finnish Companies Act, the CEO is responsible for arranging that the accounts of the company are in compliance with the law and that its financial affairs have been arranged in a reliable manner.
The Executive Team supports the CEO in managing the Company's business, but it does not have any authority based on legislation or the Articles of Association. The Executive Team includes the CEO (Chairman) and persons appointed at the proposal of the CEO.
All Executive Team members report to the Group's CEO, Vesa Tykkyläinen.
Risk management is an integral part of internal control. The Group's risk management is guided by legal requirements, business requirements set by the shareholders as well as the expectations of customers, personnel and other important stakeholders. Risk management refers to identification, assessment, measurement, monitoring and mitigating of risks that are fundamentally related to or part of the Company's business.
The aim of the risk management is to identify the risks relevant to the Company's business operations and to define the measures, responsibilities and time schedules required for effective risk management. The risk management process is aligned with other governance and management processes and the results achieved are used systematically as part of operative planning.
Risk management is carried out and risks are reported in accordance with the Company's risk management policy and risk management process. The evaluations of risks reviews are performed annually and risks and activities are being followed up on periodically in Board and Audit Committee meetings.
The steering and monitoring of business operations is based on the reporting and business planning system covering the entire Group. The CEO and the CFO give both the Board and the Executive Team meetings presentations of the Group's situation and development in monthly reports.
The Board is responsible for internal control and the Board's Audit Committee is responsible for monitoring the efficiency of the Company's internal control, internal audit, and risk management systems. The Board shall ensure that the Company has determined operating principles for internal control and that the Company monitors the effectiveness of the control procedures. Moreover, the Board shall ensure that planning, information and control systems used for risk management are sufficient and support the Company's business objectives. The CEO and the CFO are responsible for the practical arrangement of control procedures.
The aim of internal control and risk management is to ensure that the Company's operations are efficient and productive, that information is reliable and that regulations and operating principles are followed throughout the Group.
The Group's centralized finance function and group accounting as well as controlling function, operating under the CFO, are responsible for the overall control system for financial reporting. Harmonized methods of financial reporting are applied in all Group companies, utilizing a uniform ERP system and harmonized account scheme, and also software for electronic procurement management, purchase invoices and travel expense reports and financial management. The entire Group applies International Financial Reporting Standards (IFRS) in its financial reporting.
Monitoring refers to the process to assess Basware's internal control system and its performance in the long term. Basware also continuously monitors its operations through various assessments,
such as internal and external audits. Basware's management monitors internal control as part of routine management work. The business management is responsible for ensuring that all operations comply with applicable laws and regulations. The Group's financial and controller functions monitor compliance with the financial reporting processes and control. The financial and controller functions also monitor the correctness of external and internal financial reporting. The Board of Directors assesses and ensures the appropriateness and effectiveness of Basware's internal control and risk management.
The correctness and reliability of financial reporting are ensured through compliance with the Group policies and guidelines. Controls that ensure the correctness of financial reporting include controls related to accounting transactions, controls related to the selection of and compliance with the accounting principles, information system controls and fraud controls. The high automation rate of the Group's shared information systems and the systems' integrated control points facilitate an efficient internal control process with an audit trail for financial reporting. The Group's centralized finance functions continuously develop global reliable, harmonized, scalable and efficient operating methods.
The result of business operations and attainment of annual goals is assessed monthly by the Executive Team and approximately monthly in Board meetings. Monthly management and Board reporting includes both actual and forecast data compared to the goals and actual results of previous periods. Financial reports generated for use by the business management monitor certain key indicators associated with the business progress on a regular basis.
The internal control processes include internal guidelines, reporting, various technical systems and procedures relating to operations. They help ensure that management directives are followed and that activities are taken to achieve the Group's objectives. The daily tasks include management reviews and audits and operational reviews and audits, carrying out checks that are suitable for each function, country or business area.
The purpose of management reporting is to produce aptly timed and essential information for making decisions. The controlling function provides the guidelines on monthly reporting for the entire organization and is in charge of special reporting instructions associated with forecasting. The Group's financial administration internally distributes information on financial reporting-related processes and procedures on a regular basis and the personnel perform their internal control tasks according to such information. When necessary, financial administration also arranges targeted training for the rest of the organization on the procedures associated with financial reporting and changes in them.
The Group's Investor Relations function maintains the guidelines on the disclosure of financial information in cooperation with financial administration and the legal department.
Internal audit assists the Board of Directors and Audit Committee in assessing and ensuring the appropriateness and effectiveness of Basware's internal control and risk management. Internal audits are performed for the Group's functions and units. Internal audits are performed annually based on a long term internal audit plan. The long term internal audit plan is approved by the Board of Directors. The management and Board of Directors review the observations and recommendations of the internal audits.
The Company has a process for identifying parties that are related to the Company and continuously assesses and monitors related party transactions. The Company evaluates and monitors transactions to be concluded between the Company and its related parties to ensure that any
conflicts of interest are duly taken into account in the Company's decision-making. Any related party transactions are only entered into, when they are useful to the Company on the whole and serve the interests of the Company. Decisions on entering into related party transactions shall always be based on careful preparatory work. Any preparatory work, decision-making, and the evaluation and approval of individual transactions is subject to disqualifying potentially conflicted persons from such work. Related party transactions are appropriately identified and followed up by the Company's Audit Committee and reported in accordance with the Company's reporting practices.
In insider matters, Basware complies with the applicable legislation, the standards of the Finnish Financial Supervisory Authority as well as Nasdaq Helsinki's Guidelines for Insiders. Inside information refers to all information of a precise nature, which has not been made public and relates, directly or indirectly, to one or more issuers or to one or more financial instruments and which, if made public, would be likely to have a significant effect on the prices of those financial instruments or on the price of related derivative financial instruments. Basware discloses any possible inside information concerning the Company as soon as possible as a stock exchange release. However, the Company may, on its own responsibility and on a case-by-case basis, delay disclosure of inside information to the public in accordance with the conditions outlined in the Market Abuse Regulation ((EU) No 596/2014). Should the Company decide to delay disclosure, the Company documents and continuously monitors the preconditions of delayed disclosure. The Company notifies the Finnish Financial Supervisory Authority of the delayed disclosure immediately after the information has been publicly disclosed.
Basware does not maintain a list of permanent insiders, but establishes project-specific insider lists following the identification of a specific issue as inside information by the Company's Board of Directors and the Board's decision to establish an insider list relating to the identified issue. The Company maintains its project-specific insider lists in the insider list service provided by Euroclear Finland Ltd.
Persons discharging managerial responsibilities in the company may not trade in any financial instruments in the company during a closed period of 30 calendar days before the announcement of the company's half-year report, annual financial statements, or Q1 and Q3 interim reports. In addition to persons discharging managerial responsibilities in the company, the trading restriction applies to the company's employees participating in the preparation, drawing-up, and disclosure of the company's financial reports.
The Company's audit shall be performed by an authorized auditor or audit firm. The Audit Committee maked a recommendation to the Board, who is responsible for making a formal proposal to the Annual General Meeting for audit firm to be selected. The audit firm selected has, together with the Group's CFO, overall responsibility for co-ordinating audits for the whole group (audit plans for each Group company) and their cost. Moreover, if required, a local authorized audit firm can be selected to carry out the audit required by local legislation with a prior approval by the CFO.
The Annual General Meeting elects an authorized auditor as the Company's auditor. In 2017, Authorized Public Accountant Firm Ernst & Young Oy was elected as the Company's auditor, with Terhi Mäkinen, Authorized Public Accountant, as the principal auditor. The auditor's term expires after the conclusion of the next Annual General Meeting following the election.
In 2017, the auditor was paid remuneration for audit services EUR 216,000 and for non-audit services EUR 207,000.
Basware Corporation's remuneration report describes the decision-making procedure and main principles of remuneration of members of the Board of Directors, CEO and the Executive Team and explains remuneration paid to Board members, CEO and the Executive Team in 2017.
The Annual General Meeting, held on March 15, 2016, decided to establish a permanent Shareholders' Nomination Board. The Nomination Board shall be responsible for preparing and presenting proposals covering the remuneration of members of the company's Board of Directors to Annual General Meeting and, where needed, to an Extraordinary General Meeting. The Board of Directors has not established a separate Compensation Committee.
The compensation principles of the top management are decided by the Board. The Board decides on the service terms and conditions of the CEO, specified in writing. The Board annually approves the personnel incentive scheme.
The General Meeting of Shareholders decides on the remuneration paid to the Board of Directors.
The Annual General Meeting held on March 16, 2017 resolved to compensate the members of the Board according to the following:
In addition, chairmen of the Board of Directors and its committees shall receive EUR 500 per attended meeting and members of the Board of Directors and its committees EUR 400 per attended meeting. Out of the annual remuneration to be paid to the Board members, 40 percent of total gross compensation will be used to purchase Basware Corporation's shares at trading on regulated market organized by Nasdaq Helsinki Ltd. However, this only applies Board members whose ownership of Basware Corporation is less than 5,000 shares. The purchase of shares will take place as soon as possible after the decision by the General Meeting. Shares received as remuneration may not be sold or otherwise transferred during a period of two (2) years. This restriction does not concern persons who are no longer Board members. Travel expenses of the members of the Board of Directors are reimbursed in accordance with the company's travel policy.
The Board decides on the service terms and conditions of the CEO, specified in writing. Currently the CEO has:
3 months' period of notice and salary for the period of notice should the person resign himself, no additional compensation is paid;
12-month prohibition of competition as of the termination of employment on the part of the company;
The short-term remuneration of the CEO is comprised of salary, fringe benefits and a possible annual bonus based on performance. The CEO's long-term remuneration consists of a share-based incentive scheme. The annual bonus is determined on the basis of the attainment of goals related to the company's growth and profitability according to its strategy as well as personal objectives. The Board of Directors monitors the fulfillment of the performance and result criteria of the incentive scheme twice a year and approves the bonus to be paid.
The salary of the CEO Vesa Tykkyläinen for the period January 1-December 31, 2017, including benefits, was EUR 374,777 (EUR 90,060 in September 26-December 31, 2016). Salary in money was EUR 359,217 (EUR 86,880 in September 26-December 31, 2016) and fringe benefits EUR 15,560 (EUR 3,180 in September 26-December 31, 2016). Tykkyläinen was paid no bonus in 2017 (EUR 0 in in September 26-December 31, 2016). During 2017, Tykkyläinen was granted a total of 1,500 shares on the basis of the incentive schemes. Of these, 750 shares were conveyed to Tykkyläinen, the value of which was approximately EUR 25,524 based on the average share price of the payment days, and EUR 25,524 was paid in cash to cover the withholding tax.
The accrued pension costs of Vesa Tykkyläinen amounted to EUR 81,670 (EUR 18,000 in September 26-December 31, 2016). The CEO's pension plan is pursuant to the employment pension legislation.
The compensation principles of the top management are decided by the Board. The short-term remuneration of the top management consists of salary, fringe benefits and a possible annual bonus based on performance. The top management's long-term remuneration consists of a share-based incentive scheme. The bonus based on performance is no more than 50 percent of annual basic salary. The bonus is determined on the basis of the attainment of goals supporting to the company's growth and profitability according to its strategy and personal objectives. The Board of Directors monitors the fulfillment of the performance and result criteria of the incentive scheme twice a year and approves the bonus to be paid.
For the period January 1 - December 31, 2017, the members of Executive Team, excluding CEO, were paid in salaries and fringe benefits total of EUR 1,573,993 (EUR 2,313,092 in 2016). Salary in money was EUR 1,535,001 (EUR 1,854,340 in 2016) and fringe benefits totaled EUR 38,992 (EUR 85,438 in 2016). In addition, EUR 44,275 (EUR 156,486 in 2016) were paid as bonus payments and EUR 403,520 (EUR 216,828 in 2016) on the basis of the long-term incentive scheme.
Remuneration of Executive Team in 2017:
| Salary | Fringe benefits | Bonus payments |
Share-based Total payments |
||
|---|---|---|---|---|---|
| CEO Vesa Tykkyläinen | 359 217 | 15 560 | 0 | 51 048 | 425 825 |
| Other Executive team | 1 535 001 | 38 992 | 44 275 | 403 472 | 2 021 740 |
| In total | 1 894 218 | 54 552 | 44 275 | 454 520 | 2 447 565 |
The compensation principles of the top management are decided annually by the Board. The Executive Team members' performance bonus is no more than 50 percent of annual basic salary. The performance bonus percentage is not limited in the CEO's contract of employment. The bonus is determined on the basis of the attainment of personal objectives and goals supporting the company's growth and profitability according to its strategy. The Board of Directors monitors the fulfillment of the performance and result criteria of the incentive scheme and approves the bonus. In addition to the annual bonus based on performance, the long-term remuneration of the top management consists of
share-based incentive schemes, decided by the Board.
The Board of Directors resolved on March 1, 2017 to establish a new matching share plan for 2017- 2019 for Basware Executive Team members.
The prerequisite for receiving reward on the basis of the matching share plan is that the member of the Basware Executive Team in question acquires Basware shares. The Basware Executive Team member will, as a reward, receive matching shares for each share subject to the share ownership prerequisite after a matching period of three years. Receipt of matching shares is contingent on the continuation of employment or service upon reward payment and that the shares in question are still held by the member.
The Board of Directors resolved that the rewards to be paid in aggregate to the Basware Executive Team on the basis of the matching share plan correspond to the value of a maximum total of 75,000 Basware Corporation shares, including also the proportion to be paid in cash.
Members of Basware Executive Team acquired or allocated a total of 35,017 Basware Corporation shares in the beginning of the plan. The rewards to be paid to Basware Executive Team members on the basis of the plan thus corresponds to a maximum of 70,034 Basware Corporation shares, including also the proportion to be paid in cash.
The Board of Directors resolved on March 1, 2017 to establish a new performance share plan for 2017-2019 for key employees.
The performance share plan includes three performance periods, calendar years 2017-2018, 2018-2019 and 2019-2020. The Board of Directors decides on the performance criteria and on the required performance levels for each criterion at the beginning of each performance period. The plan is directed at approximately 60 key employees, including the members of the Basware Executive Team.
The potential reward from the performance period 2017-2018 is based on the company's total shareholder return and the Group's cumulative Cloud revenue during 2017-2018. The rewards to be paid on the basis of the performance period 2017-2018 correspond to the value of a maximum total of 156,000 Basware Corporation shares, including also the proportion to be paid in cash.
At the end of 2017, the performance share plan included 62 key employees for the performance period 2017-2019. The rewards to be paid on the basis of the plan corresponds to a maximum total of 156,000 Basware Corporation shares, including also the proportion to be paid in cash.
The Board of Directors resolved on March 1, 2017 to establish a new restricted share plan for 2017. The restricted share plan is directed to selected key employees at Basware. Receipt of the reward is contingent on the continuation of employment or service upon reward payment.
The reward from the restricted share plan will be paid after a vesting period of one to three years. The total rewards to be allocated on the basis of the plan amount to a maximum of 20,000 Basware Corporation shares, including also the proportion to be paid in cash.
At the end of 2017, the restricted share plan 2017 included 6 key employees. The rewards to be paid on the basis of the plan corresponds to a maximum total of 5,750 Basware Corporation shares, including also the proportion to be paid in cash.
The Board of Directors resolved on February 1, 2016 to establish a new restricted share plan for 2016. The restricted share plan was directed to selected key employees at Basware and the total rewards to be allocated on the basis of the plan amounted to a maximum of 4,000 Basware Corporation shares, including also the proportion to be paid in cash. Receipt of the reward was
contingent on the continuation of employment or service upon reward payment.
The restricted share plan 2016 included two Basware key employees, who were both paid the reward at the end of the vesting period in March 2017. The rewards paid on the basis of the plan corresponded to a total of 3,000 Basware Corporation shares, including also the proportion to be paid in cash. The plan has ended.
The Board of Directors resolved on March 23, 2015 to establish a new matching share plan for 2015-2018. The restricted share plan was directed to selected key employees at Basware and the total rewards to be allocated on the basis of the plan amounted to a maximum total value of 11,000 Basware Corporation shares. In addition to the share reward, employees included in the plan will also be paid a cash portion to cover the taxes resulting from the reward.
The prerequisite for receiving reward on the basis of the matching share plan is that the employee in question acquires Basware Corporation shares at the beginning of the plan. The participating employee can, as a reward, receive matching shares for each share subject to the share ownership prerequisite after a matching period of three years. Receipt of matching shares is contingent on the continuation of employment or service upon reward payment and that the shares in question are still held by the participating employee.
In 2017, the matching share plan 2015-2018 included four Basware key employees. The rewards to be paid on the basis of the plan corresponded to a maximum total value of 5,148 Basware Corporation shares. The plan ended in January 2018.
The Board of Directors resolved on March 23, 2015 to establish a new performance share plan for 2015-2017 for key employees.
The performance share plan includes three performance periods, calendar years 2015, 2016 and 2017. The first one third of the earned shares were allocated 6 months, the second one third 12 months and the last one third 18 months after the end of the earning period. In addition, the members of Basware Executive Team had the possibility in early 2015 to be allocated shares against purchased shares without consideration against their shareholding over three years during the earning periods in 2015-2017.
For the earning period 2015, the rewards to be paid on the basis of the plan corresponded to a maximum total of 67,500 Basware Corporation shares, including also the proportion to be paid in cash. The reward for the earning period 2015 was based on the revenue and operating profit growth and the total shareholder return of Basware Corporation. For the earning period 2015, the plan included 35 key employees and the rewards earned corresponded to a total of 28,059 Basware Corporation shares, including also the proportion to be paid in cash. The rewards for the earning period 2015 were paid in June 2016 and January and July 2017.
For the earning period 2016, the rewards to be paid on the basis of the plan corresponded to a maximum total of 79,525 Basware Corporation shares, including also the proportion to be paid in cash. The targets for earning period 2016 were not reached and therefore no reward was paid for the earning period.
The earning period 2017 was not started, and the plan was replaced with a new share-based incentive plan based on the resolution of the Board of Directors on March 1, 2017.
Basware is committed to operating responsibly and sustainably, helping customers move to paperless processes, fostering employee welfare and taking care of cybersecurity and data privacy.
This statement describes how Basware manages social and environmental challenges in its business operations. Basware is committed to operating responsibly and sustainably, helping customers move to paperless processes, fostering employee welfare and taking care of cybersecurity and data privacy. This statement has been compiled in order to fulfil the reporting requirements on non-financial information as outlined in Chapter 3a, Sections 1-6 of the Finnish Accounting Act.
Basware is the global leader in networked source-to-pay solutions, including e-invoicing and valueadded services. Basware's commerce network connects businesses in over 100 countries and territories around the globe. As the largest open business network in the world, Basware provides scale and reach for organizations of all sizes, enabling them to grow their business and unlock value across their operations by simplifying and streamlining their financial processes. Small and large companies around the world achieve significant cost savings, more flexible payment terms, greater efficiencies and closer relationships with their suppliers.
Basware is comprised of the group's parent company, Basware Corporation, and its subsidiaries. Basware Corporation is a public listed company domiciled in Espoo, Finland. Basware Corporation's shares are listed on Nasdaq Helsinki Ltd. All Basware companies comply with local legislation and other applicable guidelines and requirements.
Basware operates globally and has offices in 14 countries around the world. In 2017, the company's average number of employees was 1,838. At the end of 2017, 35 percent of the company's employees worked in India, 24 percent in Finland, 32 percent in rest of Europe and 9 percent in Americas and APAC.
Employees are Basware's most important resource. Operating globally, Basware complies with the standards of the International Labour Organization as well as with all relevant local employment legislation. In addition, Basware is committed to acting in accordance with the United Nations' Universal Declaration of Human Rights and the principles of the United Nations' Global Compact. Basware has a global Code of Conduct that applies to all Basware employees globally. The Code of Conduct describes the principles according to which Basware operates and expects its suppliers and partners to operate. 94 percent of Basware's employees had completed Code of Conduct training by the end of 2017, with the target of reaching 99 percent by the end of Q1/2018.
Basware's ability to attract, retain and develop the right type of talent at all levels is critical for the company's success. Basware promotes learning and development at an organizational, team and individual level and is committed to a safe and healthy workplace. The company's employees' average years of service is 4.9 years and the attrition rate 15.3 percent. 98 percent of the company's employees are permanent employees and 98 percent work full-time. The average age of employees
is 35.3 years. The company's CEO-to-employee pay ratio based on base salary is 5-to-1.
Basware conducts an employee engagement survey annually. The results of the survey are used for developing ways of working within the company together with the employees
Basware supports diversity in the workforce and is committed to equal opportunity in the workplace. Basware does not tolerate any discrimination based on race, color, sex, religion, age, political affiliation, sexual orientation, or origin. Women account for 28 percent and men for 72 percent of employees. In the 2017 annual employee engagement survey, employees were asked whether they believe that people at Basware are comfortable working with colleagues with diverse backgrounds. 98 percent of employees answered either favourably or neutral.
As part of Basware's commitment to conducting its business in an honest and ethical manner, Basware takes a zero-tolerance approach to bribery and corruption, and upholds all relevant laws to countering bribery and corruption in all jurisdictions it operates in. Basware has an Anti-Bribery and Corruption Policy, which sets out the responsibilities of Basware employees in observing and upholding the company's position on bribery and corruption and provides guidance for Basware employees on how to recognize and deal with bribery and corruption issues. No bribery or corruption incidents were reported to the company in 2017.
Providing digital, cloud-based services and solutions, Basware operates in an industry characterized by a high information security and data privacy risk. Basware takes any threats to its own or its customers' information systems and data very seriously. Information security risks are integrated into the company's multi-disciplinary risk assessment. To manage risks arising from information security breaches, Basware has a continuous information security model, which includes tracking and followup of any security incidents for mitigation and corrective actions. As part of this model, Basware continuously assesses its systems, support processes and personnel and analyzes implications of any security incidents. Personnel training and certification play a key role in assuring the integrity of the company's systems and the quality of the company's customer promise. In addition, Basware's service integrity control environments are externally audited at regular intervals.
Whilst using Basware's services, customers transmit orders, invoices and other business data to the company's applications for further processing. In processing customers' business contact data identifying individuals Basware complies with all relevant legal requirements governing the protection of personal data.
Basware's corporate environmental responsibility is incorporated into the company's business strategy and operations. In its day-to-day activities, Basware complies with all applicable environmental laws and regulations and expects all its suppliers and partners to obey all relevant legal and industry-specific environmental requirements.
Basware's most material environmental exposures are energy consumption at our office locations and third-party data centres and the impact of business travel and commuting. Basware tracks its greenhouse gas emissions annually and reports them to CDP. Basware has implemented an improvement programme to track and reduce its emissions footprint and to improve the energy efficiency of its office locations. Basware seeks to reduce the need for business travel by using collaborative technologies and online meeting tools. Basware is committed to open and transparent communication on its environmental performance.
The direct environmental impact of Basware's services is estimated to be immaterial to moderate due to the nature of Basware's business. Basware's digital solutions and services have the potential to provide Basware's customers with environmental benefits by automating their financial processes by provision of cloud-based software, thus reducing the use of paper and the reliance on separate, company-specific data centres. Basware is working towards a clearer understanding of the environmental impacts of its solutions and services and is committed to full transparency in communicating about the environmental benefits and burdens of its business.
| Board of Director's Report | 22 |
|---|---|
| Consolidated Statement of Comprehensive Income | 31 |
| Consolidated Statement of Financial Position | 32 |
| Consolidated Statement of Cash Flows | 33 |
| Consolidated Statement of Changes in Equity | 34 |
| Notes to the Consolidated Statements | 35 |
| Parent Company Income Statement | 70 |
| Parent Company Balance Sheet | 71 |
| Parent Company Cash Flow Statement | 72 |
| Notes to the Parent Company Financial Statements | 73 |
| Auditor's Report | 85 |
| Key Figures | 89 |
| Calculation of Key Inditcators | 91 |
| Share and Shareholders | 92 |
| For Shareholders | 95 |
| 1.1.-31.12.2017 | 1.1.-31.12.2016 | Change, % | |
|---|---|---|---|
| Net sales | 149,241 | 148,580 | 0.4 |
| Cloud revenue | 79,169 | 66,242 | 19.5 |
| ARR order intake | 12,838 | 7,896 | 62.6 |
| EBITDA | 672 | -5,394 | |
| Adjusted EBITDA | 3,367 | 2,063 | 63.2 |
| Operating result | -9,436 | -13,946 | 32.3 |
| Adjusted operating result | -6,741 | -6,490 | -3.9 |
| Result before tax | -12,203 | -16,256 | 24.9 |
| Result for the period | -11,451 | -14,318 | 20.0 |
| Cash and cash equivalents | 20,683 | 35,755 | -42.2 |
| Earnings per share, EUR | |||
| Diluted | -0.79 | -1.00 | 20.5 |
| Adjusted earnings per share diluted | -0.61 | -0.48 | -26.8 |
Basware is the global leader in networked source-to-pay solutions, including e-invoicing and financing services. Basware's commerce network connects businesses in over 100 countries and territories around the globe. As the largest open business network in the world, Basware provides scale and reach for organizations of all sizes, enabling them to grow their business and unlock value across their operations by simplifying and streamlining financial processes. Small and large companies around the world achieve significant cost savings, more flexible payment terms, greater efficiencies and closer relationships with their suppliers.
In 2017, Basware continued to grow its cloud business rapidly, increased order intake, released exciting new innovations, and at the same time implemented significant productivity improvements. This sets the foundations for the future, and the effects of these changes are only just starting to become apparent.
Basware's strategic priority is cloud revenue growth and with 20 percent growth in 2017, the company met its guidance for 2017. In 2017, Basware's cloud revenues accounted for 53 percent of net sales, up from 45 percent in 2016. The increasing share of cloud revenues is a key driver for total growth. Subscription order intake, the company's main lead indicator for future cloud revenue growth, also continued to rise, up 63 percent in 2017.
Winning and retaining customers are key to Basware's success. In 2017, the company acquired a number of significant new customers as well as transforming existing customers to the cloud. New customers won in 2017 include, for example, Vinci Energies, Handelsbanken, IPG, Aspen Square and Tennis Australia. Customers that Basware transformed from on-premise to cloud solutions included Unicredit Bank, Engie, Adecco, Metso and Bradken.
Basware's vision is to offer the best global solution for purchasing, invoicing and paying. Basware is recognised as a trail blazer by industry analysts and was cited as a Leader in "The Forrester Wave™: eProcurement, Q2 2017" report, which came out in May 2017. According to the Forrester report, Basware excels in invoice automation for global organizations and is a particularly strong fit for enterprises that want to automate processing of high invoice volumes. Basware leads innovation in the industry and continued to announce more enhancements to the company's solutions in 2017. These included further enhancements to the company's award-winning Analytics function, including peer benchmarking, predictive analytics and supplier quality analytics; new strategic sourcing offering; and Basware Vault, a compliant, efficient and secure cloud-based archiving service for e-invoices. In Q2 2017, the company also announced a partnership with Nordea to offer Basware's Discount product to Nordea's corporate banking customers.
At the same time as focusing on serving customers and growing cloud revenues, Basware also continued to work on streamlining the company's business and increasing productivity. The company's sales productivity increased compared to 2016. In addition, the company successfully executed the productivity programme announced in November 2016.
Basware is a global market leader as recognised by key industry analysts and continues to win the trust of new customers. With a cloud-focused strategy, combined with actions to further improve the company's operations, Basware is well positioned to capture the significant market opportunity ahead of the company.
In 2017, Basware's net sales amounted to EUR 149 241 thousand (EUR 148 580 thousand), a growth of 0.4 percent. This equated to 1.5 percent organic growth at constant currencies.
| 1.1.-31.12.2017 | 1.1.-31.12.2016 | Change, % | |
|---|---|---|---|
| Cloud Revenue | |||
| SaaS | 33,190 | 22,975 | 44.5 |
| Transaction services | 40,164 | 35,996 | 11.6 |
| Other cloud revenue | 5,815 | 7,270 | -20.0 |
| Cloud Revenue Total | 79,169 | 66,242 | 19.5 |
| Non-Cloud Revenue | |||
| Maintenance | 37,026 | 40,761 | -9.2 |
| License sales | 4,192 | 7,188 | -41.7 |
| Consulting services | 28,982 | 34,389 | -15.7 |
| Other non-cloud revenue | -129 | 0 | |
| Non-Cloud Revenue Total | 70,072 | 82,338 | -14.9 |
| Total | 149,241 | 148,580 | 0.4 |
Cloud revenues grew strongly during the financial year. Cloud revenues were EUR 79 169 thousand (EUR 66 242 thousand), up by 19.5 percent, and accounted for 53.0 percent (44.6 %) of net sales.
SaaS revenues grew significantly compared to 2016 with total growth of 44.5 percent. Transaction services revenues grew 11.6 percent.
In non-cloud revenues, maintenance and consulting revenues declined in line with expectations as we transition customers to the cloud.
In 2017, the share of Basware's net sales outside Finland was 67.9 percent (66.3 %).
In 2017, Basware's subscription annual recurring revenue gross order intake, including SaaS and other subscription types, amounted to EUR 12.8 million (EUR 7.9 million). Subscription annual recurring revenue gross order intake increased by 62.6 percent compared to 2016. There will be a time lag before order intake is visible in net sales.
| EUR thousand | ||
|---|---|---|
| 31.12.2017 | 31.12.2016 | Change, % | |
|---|---|---|---|
| ARR order intake | 12,838 | 7,896 | 62.6 |
In 2017, Basware's adjusted EBITDA was EUR 3 367 thousand (EUR 2 063 thousand). The operating result for the year amounted to EUR -9 436 thousand (EUR -13 946 thousand). Basware's unadjusted performance measures for 2016 included approximately EUR 5 million costs related to personnel reductions as part of the productivity programme.
The company's operating expenses including employee benefits, depreciation and amortization as well as other operating expenses were EUR 143 946 thousand (EUR 146 783 thousand), decreasing by 1.9 percent from 2016. Personnel expenses made up 68.8 percent (71.3 %) or EUR 99 083 thousand (EUR 104 600 thousand) of the operating expenses.
Materials and services were EUR 14 865 thousand (EUR 15 746 thousand), down 5.6 percent from 2016.
Basware announced a productivity programme to simplify its operations and increase scalability in the fourth quarter of 2016. The savings achieved as result of personnel reductions were EUR 5.1 million in 2017. In addition to achieving expenses savings, Basware has achieved improvements in sales and marketing productivity over the same period. Taken together, these increase the scalability of Basware's business, meaning the ability to grow revenues faster than costs.
The company's net finance expenses were EUR 2 391 thousand (EUR 887 thousand) in 2017. Basware's share of the result of the joint venture with Arrowgrass Capital Partners LLP totalled EUR -1 048 thousand (EUR -2 170 thousand).
Basware's result before tax was EUR -12 203 thousand (EUR -16 256 thousand) and result EUR -11 451 thousand (EUR -14 318 thousand). Taxes for the financial year impacted the result positively by EUR 752 thousand (EUR 1 939 thousand).
Undiluted earnings per share were EUR -0.80 (EUR -1.00) for the financial year.
Cashflows from operating activities were EUR -4 001 thousand (EUR -1 774 thousand) in 2017. Basware's operating cash flows are seasonal as a relatively large part of payments for annual maintenance are made in the first quarter. Working capital changes included the cash impact of restructuring provisions related to the productivity programme announced in November 2016.
Basware's cash and cash equivalents including short-term deposits totalled EUR 20 683 thousand (EUR 35 755 thousand) at the end of the financial year. In addition to cash and cash equivalents, Basware has an undrawn revolving credit facility of EUR 10 million, bringing total available liquidity at the end of the financial year to EUR 30 683 thousand (EUR 38 755 thousand).
In the third quarter of 2017, the company signed a new term loan financing totalling EUR 30 million, with EUR 10 million maturing in September 2019 and EUR 20 million in September 2020.
The equity ratio was 54.8 percent (58.5 %) and gearing 24.7 percent (8.7 %). The company's interest-bearing liabilities totalled EUR 49 282 thousand (EUR 47 280 thousand), of which current liabilities accounted for EUR 1 996 thousand (EUR 10 548 thousand). The return on investment was -5.7 percent (-9.5 %) and return on equity -9.2 percent (-10.5 %).
Gross investments including acquisitions and capitalized research and development costs totalled EUR 12 498 thousand (EUR 51 882 thousand) in 2017.
Basware's research and development investments totalled EUR 22 319 thousand (EUR 23 092 thousand), or 14.9 percent (15.5 %) of net sales during the financial year. The expenses decreased by 3.3 percent compared to 2016. The decrease was due primarily to savings achieved as a result of the productivity programme announced in November 2016. The research and development costs excluding depreciation included in the result for the financial year totalled EUR 12 439 thousand (EUR 12 214 thousand), or 8.3 percent (8.2 %) of net sales. Research and development expenses capitalized during the financial year amounted to EUR 9 879 thousand (EUR 10 878 thousand). A total of 410 (419) people worked in research and development at the end of the financial year.
Basware employed 1 838 (1 811) people on average during the financial year and 1 829 (1 889) at the end of the financial year.
| 1.1.-31.12.2017 | 1.1.-31.12.2016 | Change, % | |
|---|---|---|---|
| Finland | 447 | 500 | -10.6 |
| EMEIA | 587 | 599 | -2.0 |
| India | 645 | 577 | 11.8 |
| Americas & APAC | 159 | 135 | 17.8 |
| Total | 1,838 | 1,811 | 1.5 |
At the end of the financial year, the share of Basware's personnel outside Finland was 76.1 percent (74.0 %). 11.2 percent (12.2 %) of the personnel work in sales and marketing, 59.3 percent (58.6 %) in professional services, production and customer care, 22.4 percent (22.2 %) in research and development, and 7.1 percent (7.0 %) in administration.
The average age of employees is 35.3 (35.5) years. Women account for 27.7 percent (27.1 %) of employees, men for 72.2 percent (72.9 %).
Basware Corporation's share capital totalled EUR 3 528 369 (3 528 369) at the end of the financial year and the number of shares was 14 401 936 (14 401 936). Basware Corporation holds 42 233 (58 622) of its own shares, corresponding to approximately 0.3 percent (0.4 %) of the total number of shares.
Basware had 11 682 (12 620) shareholders at the end of the financial year, including 10 nominee-registers (10). Nomineeregistered holdings accounted for 46.7 percent (37.0 %) of the total number of shares.
The company's Annual General Meeting of March 16, 2017 authorized the Board of Directors to decide on the repurchase of the company's own shares and on share issue as well as on the issuance of options and other special rights entitling to shares.
The Annual General Meeting of Basware Corporation held on March 16, 2017 adopted the annual accounts for the financial period ended on December 31, 2016. The members of the Board of Directors as well as the CEOs were discharged from liability for the financial period ended on December 31, 2016. In accordance with the proposal of the Board of Directors, the Annual General Meeting resolved that no dividend will be paid for the year 2016.
The Annual General Meeting decided the number of members of the Board of Directors to be six. Mr. Hannu Vaajoensuu, Mr. Ilkka Sihvo, Mr. David Bateman, Mr. Michael Ingelög, Mrs. Tuija Soanjärvi and Mr. Anssi Vanjoki were elected as members of the Board of Directors.
The Annual General Meeting decided that the remuneration for the members of the Board of Directors will be paid as follows: to the members of the Board of Directors and committee members EUR 27 500, to the vice chairman of the Board of Directors and the Chairman of the Audit Committee EUR 32 000 and to the chairman of the Board of Directors EUR 55 000. In addition, the chairmen of the Board of Directors and its committees shall receive EUR 700 per attended meeting and members of the Board of Directors and its committees shall receive EUR 500 per attended meeting. Out of the annual remuneration to be paid to the Board members, 40 percent of total gross compensation amount will be used to purchase Basware Corporation's shares at trading on regulated market organized by Nasdaq Helsinki Ltd. However, this only concerns Board members whose ownership of Basware Corporation is less than 5 000 shares. The purchase of shares will take place as soon as possible after the decision by the General Meeting. Shares received as remuneration may not be sold or otherwise transferred during a period of two years. This restriction does not concern persons who are no longer Board members. Travel expenses of the members of the Board of Directors are reimbursed in accordance with the company's travel policy.
Ernst & Young Oy, Authorized Public Accounting Firm, was elected as the company's auditor. Ernst & Young Oy has advised that it will appoint Ms. Terhi Mäkinen, Authorized Public Accountant, as the principally responsible auditor of the company.
The Annual General Meeting decided to authorize the Board of Directors to decide on repurchase of company's own shares in accordance with the proposal of the Board of Directors. By virtue of the authorization, the Board of Directors is entitled to decide on repurchasing a maximum of 1 420 000 company's own shares. The company's own shares shall be repurchased otherwise than in proportion to the holdings of the shareholders by using the non-restricted equity through trading on regulated market organized by Nasdaq Helsinki Ltd at the market price prevailing at the time of acquisition. The shares shall be repurchased and paid for in accordance with the rules of Nasdaq Helsinki Ltd and Euroclear Finland Ltd. The shares shall be repurchased for use as consideration in possible acquisitions or other arrangements related to the company's business, as financing for investments or as part of the company's incentive program or to be held by the company, to be conveyed by other means or to be cancelled. The Board of Directors shall decide on other terms and conditions related to the repurchase of the company's own shares. The Repurchase Authorization shall be valid until June 30, 2018 and shall revoke the previous authorizations for repurchasing the company's own shares.
The Annual General Meeting decided to authorize the Board of Directors to decide on issuing new shares and/or conveying the company's own shares held by the company and/or granting special rights entitling to shares pursuant to Chapter 10, Section 1 of the Finnish Companies Act in accordance with the proposal of the Board of Directors.
New shares may be issued and the company's own shares may be conveyed to the company's shareholders in proportion to their current shareholdings in the company or by waiving the shareholder's pre-emption right, through a directed share issue if the company has a weighty financial reason to do so, such as using the shares as consideration in possible acquisitions or other arrangements related to the company's business, as financing for investments or as part of the company's incentive program. The new shares may also be issued in a free share issue to the company itself.
New shares may be issued and the company's own shares held by the company may be conveyed either against payment or for free. A directed share issue may be free only if there is an especially weighty financial reason both for the company and with regard to the interests of all shareholders in the company.
Based on the authorization, the Board of Directors may decide to issue a maximum of 2 840 000 new shares and convey a maximum of 1 466 792 of the company's own shares held by the company. The number of shares to be issued to the company itself together with the shares repurchased by the company on basis of the repurchase authorization shall be at the maximum of 1 420 000 shares.
The Board of Directors may grant special rights referred to in Chapter 10, Section 1 of the Finnish Companies Act, which carry the right to receive, against payment, new shares of the company or the company's own shares held by the company. The right may also be granted to the company's creditor in such a manner that the right is granted on a condition that the creditor's receivable is used to set off the subscription price (convertible bond). The maximum number of new shares that may be subscribed by virtue of the special rights granted by the company is in total 1 000 000 shares which number shall be included in the maximum number of new shares stated above.
The subscription price of the new shares and the consideration payable for the company s own shares shall be recorded under the invested non-restricted equity fund. The Board of Directors shall decide on all other terms and conditions related to the authorizations. The authorizations shall be valid until June 30, 2018 and shall revoke the previous authorizations for share issues and granting of stock options and other special rights entitling to shares.
The Annual General meeting decided to approve the proposal regarding the clarification of the Charter of the Nomination Board in accordance with the proposal of the Nomination Board, i.e. so that also the shareholdings of nominee registered shareholders may be taken into account when determining the composition of the Nomination Board.
In its first meeting held after the Annual General Meeting, the Board of Directors elected Hannu Vaajoensuu as the Chairman and Ilkka Sihvo as the Vice Chairman of the Board. Tuija Soanjärvi was elected as the Chairman of the Audit Committee, and Michael Ingelög and Ilkka Sihvo as its members.
On March 2, 2017, the company announced that the Board of Directors of Basware Corporation had established a new long-term incentive plan structure for the Group key employees. The new structure consists of three share-based plans:
The aim of the new plans is to further align the objectives of shareholders and key employees, to retain key employees at the company and to offer key employees competitive reward plans based on acquiring, receiving and holding the company's shares.
Mr. Jussi Vasama was appointed as Senior Vice President, Customer Services and as a member of the Executive Team at Basware. He commenced in this position on May 2, 2017.
Mr. Mikko Pilkama joined Basware on May 1, 2017 as Senior Vice President, Network and Financing Services and as a member of the Executive Team at Basware. Both Vasama and Pilkama report to Vesa Tykkyläinen, CEO, Basware Corporation.
The Corporate Governance Statement is issued separately from the report of Board of Directors. Basware Corporation's Corporate Governance Statement is available on the company's investor website.
Basware has a growth strategy with high net sales growth expectations for the cloud business. Executing the strategy for 2017-2020 requires significant investments in sales and marketing and related resources as well as continued investments in product development. At the same time, the industry transformation from an on-premise license-based business model to a SaaS model will accelerate the decline of certain Basware revenue streams, including license sales and maintenance. The transformation will also make Consulting revenues more volatile. Until the transformation is complete, this will act as a drag on Group net sales growth.
Additionally, even higher than expected pace in the license to SaaS transformation would have a negative impact on expected net sales in the short term. In addition to SaaS, Basware expects high growth rates in its network-based transaction services which will, besides successful sales effort, also require an efficient supplier onboarding process. Sales from Value Added Services, including Financing Services, are dependent on Basware's ability to bring innovative and attractive products to the market according to its planned timetable and move customers quickly to a phase where they are using the services extensively enough to provide meaningful revenue to Basware.
The fact that close to 50 percent of the company's sales are expected to come from non-euro countries exposes the Group's net sales growth to foreign exchange rate movements. In case there is a significant depreciation of GBP, USD, NOK, SEK or AUD against the euro, reported net sales may be affected, despite good performance in local currencies. In addition, a proportion of Basware's costs are denominated in INR and RON. Should there be a significant appreciation in these currencies against the euro, this may affect the company's result.
Execution of the growth strategy and going through constant change puts new demands on the organization as well as its management and leadership capabilities. The company's ability to attract, retain and develop the right type of talent to deliver on its strategy is critical as well as management focus and ability to drive change.
Basware considers acquisitions as part of its strategy. Acquisitions entail risks, such as failure in integrating acquisitions or in ensuring that the planned financial benefits and synergies of the acquisitions materialize.
The cloud transformation process requires cash investment. The company's ability to secure financing for this transformation may affect its ability to deliver on the strategy.
Basware's biggest operational risks relate to service disruption as a result of for example data centre failures, various data security threats and non-compliance risks related to Basware's solutions and services, the company's activities or its employees' behaviour. Operational risks are actively managed by continuous improvement in risk monitoring and protection practices as well as internal training of Basware's personnel.
Basware operates in a market where technological and business model innovation play a key role. While Basware is recognized as a leader within its segments by independent analysts, it is critical that Basware continues to innovate and develop its offering.
This statement describes how Basware manages social and environmental challenges in its business operations. Basware is committed to operating responsibly and sustainably, helping customers move to paperless processes,
fostering employee welfare and taking care of cybersecurity and data privacy. This statement has been compiled in order to fulfil the reporting requirements on non-financial information as outlined in Chapter 3a, Sections 1-6 of the Finnish Accounting Act.
Basware is the global leader in networked source-to-pay solutions, including e-invoicing and value-added services. Basware's commerce network connects businesses in over 100 countries and territories around the globe. As the largest open business network in the world, Basware provides scale and reach for organizations of all sizes, enabling them to grow their business and unlock value across their operations by simplifying and streamlining their financial processes. Small and large companies around the world achieve significant cost savings, more flexible payment terms, greater efficiencies and closer relationships with their suppliers.
Basware is comprised of the group's parent company, Basware Corporation, and its subsidiaries. Basware Corporation is a public listed company domiciled in Espoo, Finland. Basware Corporation's shares are listed on Nasdaq Helsinki Ltd. All Basware companies comply with local legislation and other applicable guidelines and requirements.
Basware operates globally and has offices in 14 countries around the world. In 2017, the company's average number of employees was 1 838. At the end of 2017, 35 percent of the company's employees worked in India, 24 percent in Finland, 32 percent in rest of Europe and 9 percent in Americas and APAC.
Employees are Basware's most important resource. Operating globally, Basware complies with the standards of the International Labour Organization as well as with all relevant local employment legislation. In addition, Basware is committed to acting in accordance with the United Nations' Universal Declaration of Human Rights and the principles of the United Nations' Global Compact. Basware has a global Code of Conduct that applies to all Basware employees globally. The Code of Conduct describes the principles according to which Basware operates and expects its suppliers and partners to operate. 94 percent of Basware's employees had completed Code of Conduct training by the end of 2017, with the target of reaching 99 percent by the end of Q1/2018.
Basware's ability to attract, retain and develop the right type of talent at all levels is critical for the company's success. Basware promotes learning and development at an organizational, team and individual level and is committed to a safe and healthy workplace. The company's employees' average years of service is 4.9 years and the attrition rate 15.3 percent. 98 percent of the company's employees are permanent employees and 98 percent work full-time. The average age of employees is 35.3 years. The company's CEO-to-employee pay ratio based on base salary is 5-to-1.
Basware conducts an employee engagement survey annually. The results of the survey are used for developing ways of working within the company together with the employees.
Basware supports diversity in the workforce and is committed to equal opportunity in the workplace. Basware does not tolerate any discrimination based on race, color, sex, religion, age, political affiliation, sexual orientation, or origin. Women account for 28 percent and men for 72 percent of employees. In the 2017 annual employee engagement survey, employees were asked whether they believe that people at Basware are comfortable working with colleagues with diverse backgrounds. 98 percent of employees answered either favourably or neutral.
As part of Basware's commitment to conducting its business in an honest and ethical manner, Basware takes a zerotolerance approach to bribery and corruption, and upholds all relevant laws to countering bribery and corruption in all jurisdictions it operates in. Basware has an Anti-Bribery and Corruption Policy, which sets out the responsibilities of Basware employees in observing and upholding the company's position on bribery and corruption and provides guidance for Basware employees on how to recognize and deal with bribery and corruption issues. No bribery or corruption incidents were reported to the company in 2017.
Providing digital, cloud-based services and solutions, Basware operates in an industry characterized by a high information security and data privacy risk. Basware takes any threats to its own or its customers' information systems and data very seriously. Information security risks are integrated into the company's multi-disciplinary risk assessment. To manage risks arising from information security breaches, Basware has a continuous information security model, which includes tracking and follow-up of any security incidents for mitigation and corrective actions. As part of this model, Basware continuously assesses its systems, support processes and personnel and analyzes implications of any security incidents. Personnel training and certification play a key role in assuring the integrity of the company's systems and the quality of the company's customer promise. In addition Basware's service integrity control environments are externally audited at regular intervals.
fostering employee welfare and taking care of cybersecurity and data privacy. This statement has been compiled in order to fulfil the reporting requirements on non-financial information as outlined in Chapter 3a, Sections 1-6 of the Finnish Accounting Act.
Basware is the global leader in networked source-to-pay solutions, including e-invoicing and value-added services. Basware's commerce network connects businesses in over 100 countries and territories around the globe. As the largest open business network in the world, Basware provides scale and reach for organizations of all sizes, enabling them to grow their business and unlock value across their operations by simplifying and streamlining their financial processes. Small and large companies around the world achieve significant cost savings, more flexible payment terms, greater efficiencies and closer relationships with their suppliers.
Basware is comprised of the group's parent company, Basware Corporation, and its subsidiaries. Basware Corporation is a public listed company domiciled in Espoo, Finland. Basware Corporation's shares are listed on Nasdaq Helsinki Ltd. All Basware companies comply with local legislation and other applicable guidelines and requirements.
Basware operates globally and has offices in 14 countries around the world. In 2017, the company's average number of employees was 1 838. At the end of 2017, 35 percent of the company's employees worked in India, 24 percent in Finland, 32 percent in rest of Europe and 9 percent in Americas and APAC.
The direct environmental impact of Basware's services is estimated to be immaterial to moderate due to the nature of Basware's business. Basware's digital solution and services have the potential to provide Basware's customers with environmental benefits by automating their financial processes by provision of cloud-based software, thus reducing the use of paper and the reliance on separate, company-specific data centres. Basware is working towards a clearer understanding of the environmental impacts of its solutions and services and is committed to full transparency in communicating about the environmental benefits and burdens of its business.
All organisations need to manage their purchasing processes from procurement through to handling invoices and paying them. Currently many organisations only have unsophisticated or partial tools to manage these processes and as a result many are faced with unmanaged spending, inefficient manual and paper-based processes and poor visibility of cashflows. Basware offers a uniquely complete solution for these challenges that is differentiated by the Basware Network, the largest e-invoicing network in the world, and enables customers to manage 100 percent of their spending and make their purchasing processes completely paperless.
Basware expects the demand for networked purchase to pay services to continue to grow. The total potential market for networked purchase to pay services is estimated to be worth EUR 15 billion in annual revenues in Europe and North America.
Basware is the global leader in providing networked source-to-pay, e-invoicing and value-added services. Basware's key strategic priority for the strategy period 2017-2020 is cloud revenue growth. The company continues to strengthen its leading market position in order to grow cloud revenue.
For 2018 Basware expects the following on an organic basis at constant currencies:
Constant currencies means that the effects of any changes in currencies are eliminated by calculating the figures for the period using 2017 exchange rates. Organic means that the figures are adjusted to remove the effects of any acquisitions or disposals within the past 12 months.
Mr. Eric Wilson was appointed as Senior Vice President, North America and as a member of the company's Executive Team as of January 4, 2018. Wilson reports to Vesa Tykkyläinen, CEO, Basware Corporation.
On December 31, 2017, the Group's parent company's distributable funds were EUR 68 704 thousand. The Board of Directors proposes to the Annual General Meeting that no dividend be paid for 2017.
| Notes | 1.1.-31.12.2017 | 1.1.-31.12.2016 | Change, % | |
|---|---|---|---|---|
| NET SALES | 2 | 149,241 | 148,580 | 0.4 |
| Other operating income | 4 | 134 | 4 | 3,250.0 |
| Materials and services | 5 | -14,865 | -15,746 | -5.6 |
| Employee benefits expenses | 6 | -99,083 | -104,600 | -5.3 |
| Depreciation and amortization | 11, 12 | -10,108 | -8,552 | 18.2 |
| Other operating expenses | 7 | -34,755 | -33,631 | 3.3 |
| Operating result | -9,436 | -13,946 | -32.3 | |
| Financial income | 8 | 672 | 746* | -9.9 |
| Financial expenses | 8 | -2,391 | -887* | 169.5 |
| Share of results of a joint venture | 14 | -1,048 | -2,170 | -51.7 |
| Result before tax | -12,203 | -16,256 | -24.9 | |
| Income taxes | 9 | 752 | 1,939 | -61,2 |
| RESULT FOR THE PERIOD | -11,451 | -14,318 | ||
| Other comprehensive income | ||||
| Other comprehensive income to be reclassified to profit or loss in subsequent periods: |
||||
| Remeasurement of defined benefit plan | 17 | 155 | -94 | |
| Exchange differences on translating foreign operations |
-6,588 | -1,463 | ||
| Income tax relating to components of other comprehensive income |
9 | 290 | 311 | |
| Other comprehensive income, net of tax | -6,144 | -1,245 | ||
| TOTAL COMPREHENSIVE INCOME | -17,594 | -15,563 | ||
| Result attributable to: | ||||
| Equity holders of the parent company | -11,451 | -14,318 | ||
| -11,451 | -14,318 | |||
| Total comprehensive income attributable to: |
||||
| Equity holders of the parent company | -17,594 | -15,563 | ||
| -17,594 | -15,563 | |||
| Earnings per share | ||||
| Undiluted, EUR | 10 | -0.80 | -1.00 | |
| Diluted, EUR | 10 | -0.79 | -1.00 |
*The automatic currency valuation booking policy of cashpool accounts has been clarified. Comparatives for 2016 have been changed accordingly. The change had no impact on net financial items or result for the period.
| Notes | Dec. 31, 2017 | Dec. 31, 2016 | Change, % | |
|---|---|---|---|---|
| ASSETS | ||||
| Non-current assets | ||||
| Intangible assets | 11 | 49,039 | 47,325 | 3.6 |
| Goodwill | 3 | 91,961 | 96,811 | -5.0 |
| Tangible assets | 12 | 1,291 | 1,585 | -18.5 |
| Share of investment in joint venture | 13 | 153 | 1,201 | -87.3 |
| Available-for-sale investments | 14 | 38 | 38 | |
| Trade and other receivables | 15 | 3,985 | 2,789 | 42.9 |
| Deferred tax assets | 9 | 10,362 | 8,403 | 23.3 |
| Non-current assets | 156,828 | 158,152 | -0.8 | |
| Current assets | ||||
| Trade receivables | 15 | 24,534 | 24,638 | -0.4 |
| Other receivables | 15 | 9,145 | 8,372 | 9.2 |
| Income tax receivables | 9 | 358 | 126 | 184.1 |
| Cash and cash equivalents | 16 | 20,683 | 35,755 | -42.3 |
| Current assets | 54,720 | 68,891 | -20.6 | |
| TOTAL ASSETS | 211,548 | 227,043 | -6.8 |
| Notes | Dec. 31, 2017 | Dec. 31, 2016 | Change, % | |
|---|---|---|---|---|
| EQUITY AND LIABILITIES | ||||
| Shareholder's equity | ||||
| Share capital | 19 | 3,528 | 3,528 | |
| Share premium account | 19 | 1,187 | 1,187 | |
| Treasury shares | 19 | -841 | -1,043 | -19.3 |
| Invested unrestricted equity fund | 19 | 111,132 | 111,333 | -0.2 |
| Other reserves | 19 | 592 | 540 | 9.7 |
| Translation differences | 19 | -11,160 | -4,863 | -129.5 |
| Retained earnings | 19 | 11,488 | 22,182 | -48.2 |
| Shareholders' equity | 115,925 | 132,864 | -12.8 | |
| Non-current liabilities | ||||
| Deferred tax liabilities | 9 | 4,569 | 4,904 | -6.8 |
| Interest-bearing liabilities | 20, 22 | 47,286 | 36,732 | 28.7 |
| Other non-current financial liabilities | 20 | 1,693 | 1,555 | 8.9 |
| Liabilities from defined benefit plan | 17 | 434 | 506 | -14.3 |
| Non-current liabilities | 53,982 | 43,697 | 23.5 | |
| Current liabilities | ||||
| Interest-bearing liabilities | 20, 22 | 1,996 | 10,548 | -81.1 |
| Trade payables and other liabilities | 20 | 38,539 | 34,225 | 12.6 |
| Income tax liabilities | 9 | 177 | 637 | -72.3 |
| Current provisions | 21 | 928 | 5,072 | -81.7 |
| Current liabilities | 41,640 | 50,482 | -17.2 | |
| TOTAL EQUITY AND LIABILITIES | 211,548 | 227,043 | -6.8 |
| 1.1.-31.12.2017 | 1.1.-31.12.2016 | |
|---|---|---|
| CASH FLOW FROM OPERATING ACTIVITIES | ||
| Result for the period | -11,451 | -14,318 |
| Adjustments for result | ||
| Depreciation and amortization | 10,108 | 8,552 |
| Share of results of a joint venture | 1,048 | 2,170 |
| Proceeds from sale of non-current assets | 111 | -23 |
| Unrealised foreign exchange gains and losses | 764 | -318 |
| Finance income and expenses | 1,002 | 476 |
| Income taxes | -752 | -1,939 |
| Other non-cash items | 602 | 535 |
| Other adjustments | -71 | 74 |
| Working capital changes | ||
| Change in inventories | 0 | 30 |
| Change in trade and other receivables | -2,683 | 35 |
| Change in trade and other payables | 4,252 | -1,867 |
| Change in provisions | -4,141 | 5,071 |
| Interest paid | -705 | -165 |
| Interest received | 28 | 125 |
| Other financial items in operating activities | -280 | -447 |
| Income taxes paid/received | -1,832 | 234 |
| Net cash from operating activities | -4,001 | -1,774 |
| CASH FLOW FROM INVESTING ACTIVITIES | ||
| Purchase of tangible and intangible assets | -12,485 | -12,660 |
| Proceeds from sale of tangible and intangible assets | 0 | 11 |
| Acquisition of subsidiaries and businesses | 0 | -25,013 |
| Investment made to a joint venture | 0 | -3,037 |
| Cash flows used in investing activities | -12,485 | -40,698 |
| CASH FLOW FROM FINANCING ACTIVITIES | ||
| Proceeds from current borrowings | 0 | 10,548 |
| Repayment of current borrowings | -27,998 | -1,667 |
| Proceeds from non-current borrowings | 30,000 | 36,732 |
| Cash flows from financing activities | 2,002 | 45,613 |
| Net change in cash and cash equivalents | -14,484 | 3,141 |
| Cash and cash equivalents at the beginning of period | 35,755 | 33,238 |
| Net foreign exchange difference | -588 | -624 |
| Cash and cash equivalents at the end of period | 20,683 | 35,755 |
| Share capital |
Share premium account |
Treasury shares |
Invested unrestricted equity |
Other reserves |
Translation differences |
Retained earnings |
Total | |
|---|---|---|---|---|---|---|---|---|
| Shareholders' equity Jan. 1, 2017 |
3,528 | 1,187 | -1,043 | 111,333 | 540 | -4,863 | 22,182 | 132,864 |
| Comprehensive income |
-6,297 | -11,451 | -17,748 | |||||
| Dividend distribution |
0 | |||||||
| Share based payments |
202 | -202 | 602 | 602 | ||||
| Share issue | 0 | |||||||
| Adjustment to previous years |
52 | 52 | ||||||
| Define benefit plans |
155 | 155 | ||||||
| Shareholders' equity Dec. 31, 2017 |
3,528 | 1,187 | -841 | 111,131 | 592 | -11,160 | 11,488 | 115,925 |
| Share capital |
Share premium account |
Treasury shares |
Invested unrestricted equity |
Other reserves |
Translation differences |
Retained earnings |
Total | |
|---|---|---|---|---|---|---|---|---|
| Sahreholders' equity Jan. 1, 2016 |
3,528 | 1,187 | -1,108 | 104,334 | 540 | -3,712 | 36,378 | 141,147 |
| Comprehensive income |
-1,151 | -14,317 | -15,468 | |||||
| Dividend distribution |
0 | |||||||
| Share based payments |
65 | -65 | 535 | 535 | ||||
| Share issue | 7,065 | 7,065 | ||||||
| Adjustment to previous years |
-320 | -320 | ||||||
| Define benefit plans |
-94 | -94 | ||||||
| Shareholders' equity Dec. 31, |
3,528 | 1,187 | -1,043 | 111,333 | 540 | -4,863 | 22,182 | 132,864 |
2016
Basware is a leading supplier of networked source-to-pay solutions. Basware Corporation is a public Finnish company founded under Finnish law. The company's domicile is Espoo, Finland. The shares of the parent company Basware Corporation have been listed on NASDAQ Helsinki Ltd. since 2000. The consolidated financial statements for the year ended on December 31 2017 were authorized for issue in accordance with a resolution of the Board of directors on February 1, 2018. Shareholders may adopt or reject the financial statements at the Annual General Meeting.
Basware Corporation's consolidated financial statements have been prepared according to the International Financial Reporting Standards (IFRS), approved for use in EU countries, in accordance with the IAS and IFRS standards, as well as IAS and IFRIC interpretations valid on December 31, 2017. The Group's Financial Statements are presented in euros, which is the primary and reporting currency of the Group's parent company, and they are based on acquisition costs unless otherwise stated in the accounting principles. The amounts presented in the financial statements are rounded, so the sum of individual figures may differ from the sum reported.
As of January 1, 2017, the Group has applied the following new and revised standards and interpretations. The amended standards and interpretations had no impact on the consolidated financial statements:
In addition to the standards and interpretations presented in the financial statements for 2017, the Group will adopt the following standards, interpretations and amendments to standards published by the IASB during financial periods beginning on or after January 1, 2018. The Group will adopt each standard on the effective date, or if the effective date is not the first day of a reporting period, as of the beginning of the following reporting period, provided that they are approved by the EU.
IFRS 15 Revenue from Contracts with Customers (effective date January 1, 2018). The EU has approved the standard. The standard provides a five-step revenue recognition model. Revenue is recognized when control of the good or service sold is transferred to the customer. The recognition model includes clearly more detailed instructions than the currently valid standards IAS 11 Construction Contracts and IAS 18 Revenue. In addition, notes requirements are significantly expanded.
Basware has adopted IFRS 15 Revenue from Contracts with Customers as of January 1, 2018 (mandatory application), with full retrospective application. The Group made a preliminary analysis of the impacts of IFRS 15 in 2016 and further analysis were conducted during 2017. The impacts were assessed by reviewing customer contracts in relation to the IFRS 15 revenue recognition model. Based on the assessment, the Group has identified those revenue types that will be affected by the new standard. The Group is currently in the process of finalizing the impact calculations on the Group's revenue and revising the Group's revenue recognition policy to conform to the new standard. As the new standard affects only a minority of the Group's customer contracts, the estimated impact of the standard on the Group's total revenue is not material, being within the range EUR +/-0.5 million. However, as a result of IFRS 15 standard implementation, part of Cloud revenue will be recognized later and part of Non-cloud revenue will be recognized earlier compared to the current revenue recognition standard. The estimate is that 2017 Cloud revenue will be approximately EUR 1.5 - 2.5 million lower, and Non-cloud revenue approximately EUR 1.5 - 2.5 million higher based on IFRS 15 compared to the current standard.
In connection with the IFRS 15 implementation, the Group will also make certain changes in the revenue allocation between Cloud and Non-cloud. Revenues related to dedicated customer services as part of SaaS subscriptions will now be allocated as cloud revenues. This will not impact Group revenue but it is estimated that EUR 2.0 - 3.0 million of revenues recorded as part of Non-cloud will be recorded as Cloud revenue.
The net impact of IFRS 15 and the changes in revenue allocation between Cloud and Non-cloud is estimated to be EUR +/- 0.5 million on Group level, Cloud revenue will increase EUR 0.5 - 1.5 million and non-Cloud revenue will decrease EUR 0.5 - 1.5 million, thus increasing slightly the Cloud revenue share of the Group's total revenue.
IFRS 9 Financial Instruments (effective date January 1, 2018). The EU has approved the standard. IFRS 9 will replace the existing IAS 39 Financial Instruments: Recognition and Measurement standard. In accordance with the section on classification and measurement included in IFRS 9, financial assets are classified and measured based on the entity's business model and contractual cash flows of financial assets. The classification and measurement of financial liabilities primarily complies with the principles of IAS 39, the current standard.
The hedge accounting model provides more opportunities for the application of hedge accounting, thereby allowing entities to reflect their risk management practices in more detail in financial statements. The hedge effectiveness testing rules have been revised, and the new principles are based on financial dependence.
The impairment model pursuant to IAS 39 was based on credit losses incurred, while the new impairment model takes into account expected credit losses. Entities recognize the expected credit losses and changes in them in each reporting period so that changes in the credit risk after initial recognition are taken into consideration. The standard will provide new disclosure requirements concerning the entity's risk management practices. The Group estimates that credit losses will be recognized earlier under the new standard and that notes information disclosed will be affected. The Group continues the assessment of the impact of the amendment in the beginning of 2018. Based on the preliminary calculations the Group is not expecting changes to have material impact on the Group's future financial statements.
In the future, a compensation cost pursuant to IFRS 2 will be recognized for such payments, based on the entire scheme being an equity-settled payment. The compensation cost is thus recognized based on the number of gross shares awarded in spite of the employee ultimately only receiving the net shares and the company paying the portion required for meeting the withholding obligations in cash to the tax authority. The withholding paid by the company to the tax authority is recognized directly in equity. According to the Group's current estimate, the amendments will have an impact on the Group's future financial statements, and it is continuing its assessment of the impact of the amendments.
11, IAS 12 and IAS 23. According to the Group's current estimate, the amendments will have no impact on the Group's future financial statements, and it is continuing its assessment of the impact of the amendments.
The interpretation addresses the following issues:
Whether the entity should consider each tax treatment independently or whether tax treatments should be considered collectively
The entity's assumptions for taxation authorities' actions and information concerning uncertain tax positions
How the entity considers uncertain tax positions when determining taxable profit (or loss), tax bases, unused tax losses and credits and tax rates
How the entity accounts for changes in facts and circumstances
According to the Group's current estimate, the interpretation will have no impact on the Group's future financial statements, and it is continuing its assessment of the impact of the interpretation.
The consolidated financial statements comprise the parent company Basware Corporation and the subsidiaries controlled by it at the end of reporting period. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Being in control means the power to govern the financial and operating policies of the company to obtain benefits from its activities. The subsidiaries have been included in the Group financial statements as of the acquisition date. Intra-group holding is eliminated using the acquisition cost method. Acquired companies are accounted for using the purchase method according to which the assets and liabilities of the acquired company are measured at their fair value when it has been possible to determine the value reliably. Deferred taxes of the acquisition cost adjustments are recognized according to the valid tax rate and the remainder is recognized as goodwill on the balance sheet. When circumstances indicate that there are changes in elements of control the consolidation is re-assessed.
Intra-group business transactions, internal liabilities and receivables, and internal profit distribution are eliminated in the Group financial statements.
Basware has a 50 percent interest in a joint venture which was established with Arrowgrass Capital Partners LLP in the UK. Basware has determined its interest in the joint venture to be accounted for using the equity method. Basware's share of results of the joint venture is presented as a separate line item in the financial items of the consolidated statement of comprehensive income and in investments in the consolidated statement of financial position. The Group does not have interests in other joint ventures or associates.
Transactions in foreign currencies are recorded in the operating currency at the approximate exchange rates prevailing at the transaction dates. Monetary items in foreign currencies have been translated into the operating currency using the exchange rates at the end of the reporting period. Non-monetary items denominated in foreign currencies are carried at the exchange rate at the date of the transaction.
In the Group financial statements, the income statements of foreign subsidiaries are translated into euros at the average rate for the financial period and balance sheets at the exchange rate of the balance sheet date. Average rate difference due to different exchange rates on the statement of comprehensive income and balance sheet are entered in other
comprehensive income. Translation differences arising from the elimination of foreign subsidiaries and translation of equity items accumulated after the acquisition are entered in other comprehensive income. Foreign currency gains and losses from monetary items part of the net investment in a foreign unit are recognized in other comprehensive income and entered on the statement of comprehensive income when the foreign unit is divested.
Net sales are presented net of discounts and exchange rate differences of foreign currency sales.
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group when there is a binding agreement of the sale, the revenue can be reliably measured, and significant benefits and risks related to ownership or rights of use of the product have been transferred to the buyer on delivery on the product or service is rendered.
Service revenue is recognized at the time of delivery. Start-up fees are recognized as revenue when the work related to the start-up procedure has been completed and the customer has been connected to the service environment. Transaction revenue is recognized on the basis of actual transaction volumes and service charges on a monthly basis over the term of the contract. The alliance fees of financing-related added value services are recognized as revenue when the related obligations have been performed.
Revenue from license sales is recognized when the above mentioned criteria has been fulfilled. License agreements with a right of return or conditions related to the product's functionality or implementation project are recognized as revenue once the right of return has expired or the above-mentioned conditions have been fulfilled. Maintenance revenue is allocated over the contract period.
Revenue and costs of fixed-price consulting projects are recognized as revenue and expenditure on the basis of the percentage of completion when the outcome of the project can be reliably estimated. The percentage of completion of the project is specified as the proportion of hours worked of the estimated total number of hours. If the resulting costs and recognized profits exceed the amount invoiced for the transaction, the different is presented in "Trade and other receivables" on the balance sheet. If the resulting costs and recognized profits are lower the invoicing for the transaction, the difference is presented in "Trade payables and other liabilities" on the balance sheet. When it is likely that the total costs required for completing the project exceed the total revenue from the transaction, the expected loss is recognized as an expense immediately.
Other operating income includes proceeds from the sale of business operations and property, plant and equipment, rental income, and government grants to the extent that they are not related to capitalized R&D projects.
Government grants are recognized when there is reasonable assurance that the grant will be received. When the grant relates to an expense item, it is recognized as other operating income for the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to capitalized R&D projects it will reduce the carrying amount of the asset, and they are recognized in profit and loss by way of lower depreciation charge over the useful life of the intangible asset.
Research expenses are booked as an expense as they are incurred. Development expenditures on an individual project are recognized as an intangible asset when the Group can demonstrate:
Costs related to the adoption of new technology or development of a new generation of products are capitalized and recognized and amortized over the useful life of 3–5 years. In determining the useful life, the obsolescence of technology and the typical life cycle of products in the industry are taken into consideration. Amortization begins when development is complete, the asset is available for use and the product is ready for commercial utilization. Maintenance of existing products and minor enhancements are expensed when they are incurred. Government grants related to research and development are recognized through profit or loss in the periods during which the corresponding costs are recognized as expenses.
Operating profit is the net sum of operating income added to net sales, less cost of sales consisting of materials and services, less the costs resulting from employee benefits, depreciation and amortization as well as other operating expenses and any impairment. Exchange rate differences and gains or losses arising from changes in the fair value of derivatives are included in operating profit, provided that they result from items related to business operations; otherwise they are recognized under financing items. All other items of the consolidated statement of comprehensive income are presented after operating profit.
Goodwill is measured as the excess of the cost of the acquisition over the Group's share of the fair values of the acquiree's net assets at the time of the acquisition. After initial recognition, goodwill is measured at cost less any accumulated impairment losses.
Other intangible assets are measured at cost less accumulated amortization and possible impairment. Government grants related to the acquisition of an intangible asset are deducted from the acquisition cost of the asset and recognized as income by reducing the depreciation charge of the asset they are related to. Amortization is calculated on a straight-line basis over the estimated useful lives of the assets. The estimated useful lives of intangible assets are 3–10 years. Each financial year end useful lives are reviewed and adjusted prospectively, if appropriate.
Customer relationships and technology acquired in business combinations are measured at fair value at the time of acquisition and depreciated over the useful life.
Tangible assets are measured at cost less accumulated depreciation and possible impairment. The useful lives of tangible assets are 3–10 years. The useful life of an asset is reviewed at least at the end of each financial year and adjusted, if appropriate.
Sales gains and losses on disposal or transfer of tangible assets are presented in other operating income and expenses.
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, and when circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each cash generating unit (CGU) to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised. An asset's recoverable amount is the higher of CGU's fair value less costs of disposal and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the entity specific risks. Impairment losses relating to goodwill cannot be reversed in future periods.
The company recognizes borrowing costs as an expense in the period during which they are incurred. If the borrowing costs are due to an asset whose completion for the intended purpose or sale necessarily requires a considerably long time, the borrowing costs are capitalized as part of the acquisition cost of the asset.
Leases on property, plant and equipment are classified as finance leases if they transfer substantially the risks and rewards incidental to ownership to the Group. Finance leases are capitalized at the beginning of the lease as assets and liabilities at the lower of the fair value of the leased asset and the present value of the minimum lease payments. A leased asset is depreciated over the useful life of the asset. Lease payments are apportioned between finance charges and reduction of the lease liability to achieve a constant rate of interest on the remaining balance of the liability. Finance lease liability is presented in current and non-current interest-bearing financial liabilities.
An operating lease is a lease other than a finance lease. Operating lease payments are recognised as an operating expense in the statement of profit or loss on a straight-line basis over the lease term.
The incremental costs of obtaining a contract with a customer including significant sales commissions related to longterm service contracts are capitalized if the recognition criteria are satisfied and the entity expects to recover those costs. The capitalized costs are amortized on a straight-line basis over the contract term in which the services are transferred and the revenue is recognized.
The financial assets are categorized as follows:
The categorization is based on the purpose of the acquisition of the financial assets, and it is performed in connection with the original acquisition. Financial assets are classified as non-current assets if they mature in more than 12 months. If they are to be held for less than 12 months, they are disclosed as current assets. Financial assets measured at fair value through profit or loss are classified as current assets.
Transaction costs are included in the acquisition cost of the financial assets, when the item in question is not recognized at fair value through profit or loss. All purchases and sales of financial assets are recognized at the transaction date, which is the date on which the Group commits to purchase or sell the financial instruments.
A financial asset is derecognised when the rights to receive cash flows from the asset have expired the Group has transferred substantially all the risks and rewards of the asset.
A financial asset is grouped into the Financial assets at fair value through profit or loss category if it is acquired as held for trading, or it is designated as at fair value through profit or loss upon initial recognition. Derivatives that are not eligible for hedge accounting are classified as held for trading. The assets are valued at fair value at the balance sheet date, and the change in value is recognized under finance income on the income statement.
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity that the Group has the positive intent and ability to hold to maturity. They are measured at amortized cost using the effective rate method.
Loan receivables and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are not held by the Group with the intent to sell. Loan receivables and other receivables are valued at amortized cost using the effective rate method. They are included in current or non-current loan receivables, trade receivables and other receivables category on the balance sheet in accordance with their nature.
Available-for-sale financial assets are non-derivative financial assets specifically designated to this group or not categorized otherwise. Available-for-sale financial assets are measured at fair value. When the fair value cannot be reliably determined, they are measured at acquisition cost.
Changes in the fair value of available-for-sale financial assets are entered in other comprehensive income and presented in the fair value reserve, taking into account the tax effect. Changes in fair value are transferred from other comprehensive income to the income statement as adjustments when the instrument is sold or its value has decreased so that an impairment loss has to be recognized for the instrument.
Cash and cash equivalents consist of cash, short-term bank deposits that can be withdrawn on demand and other current highly liquid investments that can be exchanged to an amount of cash assets that is known in advance, and with a low risk of changes in value. Items classified as cash and cash equivalents have a maximum maturity of three months from acquisition.
The Group assesses, at each reporting date, whether there is objective evidence that a financial asset or a group of financial assets is impaired. An impairment exists if one or more events that has occurred since the initial recognition of the asset has an impact on the estimated future cash flows of the financial asset that can be reliably estimated. Evidence of impairment may include indications that the debtor is experiencing significant financial difficulty, default of payments, the likelihood of bankruptcy, and delay of more than 180 days of a payment or other observable data indicating that there is a measurable decrease in the estimated future cash flows. If the amount of the impairment loss is decreased during a subsequent period and the decrease can be objectively considered to be associated with an event after the impairment was recognized, the recognized loss is reversed through profit or loss.
Financial liabilities are initially recognized at fair value, net of transaction cost. Subsequently, financial liabilities, excluding derivative liabilities, are valued at amortized cost using the effective interest method. Financial liabilities are classified as non-current liabilities if they mature in more than 12 months. Liabilities maturing in less than 12 months are classified as current.
Derivative contracts are recognized at fair value through profit and loss. Gains and losses resulting from fair value measurement are treated in accounting as specified by the purpose of the derivative contract.
At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which it wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. For cash flow hedges the effective portion of the gain or loss on the hedging instrument is recognised in OCI in the cash flow hedge reserve, while any ineffective portion is recognised immediately in the statement of profit or loss. Amounts recognised as OCI are transferred to profit or loss when the hedged transaction affects profit or loss.
A provision is recognized when the Group has a present legal or constructive obligation as a result of a past event, it is probable that the obligation will have to be settled, and the amount of the obligation can be reliably estimated. Provisions are measured at the present value required in order to cover the obligation. The present value factor used in the calculation of the present value is selected so that it represents the market insight into the time value of money and liability-related risks at the time of the assessment.
The Group has exclusively defined contribution pension arrangements, and the related payments are expensed in the
year they are incurred.The Group has exclusively defined contribution pension arrangements, and the related payments are expensed in the year they are incurred.
Group also has defined benefit based incentive schemes to commit personnel in accordance with local regulations and practices in countries where it operates. The calculations for defined benefit plans are done according to same principles as defined benefit plans for pensions and they predispose the Group to actuary risks like payroll risk, interest risk and risk related to expected lifetime. Amounts of the defined benefit plans are based on the yearly calculations submitted by independent actuaries. The present value of the defined benefit obligations is determined by discounting the estimated future cash flows using interest rates of Government issued bonds, if interest rate of high quality-corporate bonds is not available. These plans are unfunded.
Group has share-based incentive schemes in which the payment are made either as in equity instruments or in cash. Share-based incentive schemes are valued at fair value on the grant date, recognized as an expense in the consolidated statement of comprehensive income during the period in which the conditions are met (the vesting period) and with a corresponding adjustment to the equity or liability. The liability of the part settled in cash is revalued at each balance sheet date with changes in fair value recognized in the consolidated statement of comprehensive income. The expense from share-based incentive schemes is recognized in employee benefits expenses in the consolidated statement of comprehensive income.
Income taxes comprise of tax based on the taxable income for the financial year and deferred taxes. Taxes are recognized in the statement of comprehensive income except for the expenses entered directly to shareholders' equity when they are entered on the balance sheet as part of shareholders' equity.
Taxes based on taxable income are recorded according to the local tax rules of each country using the tax rate in force.
When uncertainty is included to interpretation of income tax rules, Group estimates, if a company is able to fully utilize the tax position that is stated in income tax computation. If necessary, tax bookings are adjusted to reflect the changes in tax position. At reporting date booked income tax amounts reflect the estimates of future tax payments.
Deferred taxes are calculated from all temporary differences between the carrying amount and taxable value at the tax rates confirmed at the reporting date. The most significant temporary differences arise from depreciation of property, plant and equipment, unused tax losses, and adjustments for fair values in connection with acquisitions. Deferred tax is not recognized for non-tax deductible goodwill. In respect of deductible temporary differences associated with investments in subsidiaries, and interests in joint arrangements, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. Deferred tax is not recognized for non-distributed profits of subsidiaries in so far as the difference is not likely to be discharged in the foreseeable future. Deferred tax assets are recognised for all other deductible temporary differences. A deferred tax asset is recognized to the extent that it is likely that there will be future taxable income against which it is deductible. The requirements for the recognition of deferred tax assets are reassessed at each reporting date.
Costs related to the issue or purchase of equity instruments are recorded as a reduction of shareholders' equity. Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from equity.
Preparation of financial statements in accordance with the IFRS standards requires Basware's management to make estimates and assumptions that have an effect on the amount of assets and liabilities on the balance sheet at the closing date as well as the amounts of income and expenses for the financial period. In addition, the management must exercise its judgment regarding the application of accounting policies. Since the estimates and assumptions are based on the views at the date of the Financial Statements, they include risks and uncertainties. The actual results may differ from the estimates and assumptions.
More information on the most significant items requiring management's judgement:
| Number for the note | |
|---|---|
| Goodwill | 3 |
| Development expenses | 7 |
| Trade receivables | 15 |
| Deferred tax assets | 9 |
| Share-based payments | 6 |
| Financial risk management | 18 |
Basware presents the following financial measures to supplement its Consolidated Financial Statements which are prepared in accordance with IFRS. These measures are designed to measure growth and provide insight into the company's underlying operational performance. The Group has applied the recent guidance from ESMA (the European Securities and Markets Authority) on Alternative Performance Measures which is applicable as of July 3, 2016 and defined alternative performance measures as follows.
Recurring revenue reported by the company consists of net sales excluding license sales and consulting revenue for deliveries. Alliance fees from financing-related value added services are not included in the recurring revenue.
Cloud revenue includes net sales from transactions services, SaaS and other subscription revenues, and financing services excluding alliance fees.
Organic revenue growth is calculated by comparing net sales between comparison periods in constant currencies excluding alliance fees as well as net sales from acquisitions that have taken place in the past 12 months. Net sales in constant currencies is calculated by eliminating the impact of changes in currencies by calculating the net sales for the period by using the comparable period's exchange rates.
Gross investments are total investments made to non-current assets including acquisitions and capitalized R&D costs.Other capital expenditure consists of investments in property, plant & equipment and intangible assets excluding acquisitions and capitalized R&D costs.
EBITDA is defined as operating profit + depreciation and amortization.
Adjusted EBITDA is reported excluding any adjustments related to alliance fees, acquisitions and disposals, restructuring and efficiency measures, impairment losses and litigation fees and settlement
Basware has one reporting segment: purchase-to-pay.
As a result of reorganisation in the beginning of 2017, Basware reports net sales by type. Net sales by type is divided into two groups: Cloud and Non-cloud. Cloud revenue includes net sales from SaaS and other subscription types, transaction revenue and financing services excluding alliance fees. Non-cloud revenue includes net sales from licences, maintenance and consulting, as well as alliance fees.
Basware reports geographical areas Finland, EMEIA, and Americas & APAC. Finland includes the Finnish operations and corporate functions. EMEIA includes Scandinavia and the rest of Europe as well as operations in Russia, India and Africa. Americas & APAC includes business operations in North and South America and the Pacific region.
The geographical information of non-current assets is reported by the location of the assets in the annual financial statements.
| EUR thousand | 1.1.-31.12.2017 | 1.1.-31.12.2016 |
|---|---|---|
| Cloud revenue | ||
| SaaS | 33,190 | 22,975 |
| Transaction services | 40,164 | 35,996 |
| Other cloud revenue | 5,815 | 7,270 |
| Cloud revenue total | 79,169 | 66,242 |
| Non-cloud revenue | ||
| Maintenance | 37,026 | 40,761 |
| License sales | 4,192 | 7,188 |
| Consulting services | 28,982 | 34,389 |
| Other non-cloud revenue | -129 | 0 |
| Non-cloud revenue total | 70,072 | 82,338 |
| Total | 149,241 | 148,580 |
EUR thousand
| 1.1.-31.12.2017 | 1.1.-31.12.2016 | |
|---|---|---|
| Finland | 47,891 | 50,093 |
| EMEIA | 69,467 | 71,163 |
| Americas & APAC | 31,883 | 27,324 |
| Group total | 149,241 | 148,580 |
| 1.1.-31.12.2017 | 1.1.-31.12.2016 | |
|---|---|---|
| Finland | 82,909 | 80,623 |
| EMEIA | 84,231 | 78,698 |
| Americas & APAC | 31,758 | 26,870 |
| Sales between areas | -49,657 | -37,612 |
| Total | 149,241 | 148,580 |
| 1.1.-31.12.2017 | 1.1.-31.12.2016 | |
|---|---|---|
| Finland | -14,991 | -15,425 |
| EMEIA | -4,828 | 436 |
| Americas & APAC | 3,010 | 2,006 |
| Operating result between areas | 7,373 | -962 |
| Total | -9,436 | -13,946 |
| 31.12.2017 | 31.12.2016 | |
|---|---|---|
| Finland | 62,528 | 57,464 |
| EMEIA | 51,952 | 55,589 |
| Americas & APAC | 31,986 | 36,500 |
| Total | 146,466 | 149,554 |
| Total | 100.0 | 100.0 |
|---|---|---|
| Other | 20.1 | 20.3 |
| GBP | 8.2 | 10.5 |
| USD | 16.8 | 13.8 |
| EUR | 54.9 | 55.4 |
| 1.1.-31.12.2017 | 1.1.-31.12.2016 | |
| % |
| EUR thousand | 31.12.2017 | 31.12.2016 |
|---|---|---|
| Acquisition cost Jan. 1 | 96,811 | 69,262 |
| Translation difference | -4,850 | -164 |
| Additions | 0 | 27,713 |
| Acquisition cost Dec. 31 | 91,961 | 96,811 |
| Book value Dec. 31 | 91,961 | 96,811 |
| Goodwill | |
|---|---|
| Momentum Doc, AB (2002) | 994 |
| Iocore AS / Basware AS (2005) | 2,329 |
| Trivet Oy (2005) | 669 |
| Analyste Oyj (2006) | 13,869 |
| Digital Vision Technologies Ltd. (2007)/ Basware UK | 7,443 |
| Contempus AS (2008) | 4,483 |
| Itella Information AS/Basware AS (2009) | 411 |
| First Businesspost GmbH (2012) | 9,076 |
| Certipost (2013) | 10,316 |
| Basware Holdings Ltd (2015) | 16,017 |
| Verian (2016) | 26,353 |
| Total | 91,961 |
Goodwill is tested according to IAS 36. Basware does not possess any other intangible assets than Goodwill that has indefinite economical life. Unfinised intangible assets are also subjected to impairment testing during reporting period. Impairment testing is carried out at Group level as the Basware has centralised steering model and reporting structure that this. Goodwill is monited at group level internally.
Goodwill has been tested for impairment in the last quarter of 2017. The recoverable amounts from the cash generating unit (CGU) are determined based on value-in-use calculations. The calculations are prepared on a discounted cash flow method basis, derived from the management approved estimates for the following year and subsequent development derived from the strategic plans.
Cash flows beyond the 5-year period are calculated using the terminal value method. The terminal growth rate of 2.5 percent (2.0%) used in projections is based on management's assessment on conservative long term growth. Key driver for the valuation is the revenue growth based on group's performance and future strategic growth plans, market position as well as the potential in key markets.
The applied discount rate is the weighted average pre-tax cost of capital (WACC). The components of the WACC are risk-free rate, market risk premium, company specific factor, and industry specific beta, cost of debt and debt/ equity ratio. The WACC of 12.8 percent (10.5 %) has been used in the calculations.
As a result of the impairment test, no impairment loss for the CGU were recognized for the financial periods ended 31 December 2017 and 2016 respectively. The recoverable amount exceeds the total carrying amount of fixed assets.
A sensitivity analysis was conducted and there is no indication that the changes in the assumptions could be so substantial that the carrying amount would exceed the recoverable amount. In the future impairment testing is influenced by how the Group will meet the targets set for year 2020 and beyond. In a sensitivity analysis the impacts of substantial changes to the most significant assumptions like revenue growth, EBIT-margin percentage and the discount rate was assessed. Revenue growth would have to be at 0 percent or below, or the terminal year EBIT-margin percentage below at 50 % projected levels for an impairment to take place.
EUR thousand
| Total | 134 | 4 |
|---|---|---|
| Other operating income | 134 | 4 |
| 1.1.-31.12.2017 | 1.1.-31.12.2016 |
| 1.1.-31.12.2017 | 1.1.-31.12.2016 | |
|---|---|---|
| Purchases during the period | -13,385 | -12,943 |
| Increase / decrease in inventories | 0 | 30 |
| External services | -1,480 | -2,774 |
| Total | -14,865 | -15,746 |
| EUR thousand | 1.1.-31.12.2017 | 1.1.-31.12.2016 |
|---|---|---|
| Finland | 447 | 500 |
| EMEIA (excluding India) | 587 | 599 |
| India | 645 | 577 |
| Americas & APAC | 159 | 135 |
| Total | 1,838 | 1,811 |
| EUR thousand | 1.1.-31.12.2017 | 1.1.-31.12.2016 |
|---|---|---|
| Salaries and fees | -81,505 | -86,654 |
| Share-based incentive plans | -1,161 | -973 |
| Expenses from defined benefit plans | -114 | -74 |
| Pension expenses, defined benefit plans | -6,809 | -7,348 |
| Other employee benefits | -9,494 | -9,551 |
| Total | -99,083 | -104,600 |
Group's key employees are defined as CEO, members of the Board of Directors and Executive team. No loans, guarantees or other collaterals have been given on behalf of group's key employees.
| 1.1.-31.12.2017 | 1.1.-31.12.2016 | |
|---|---|---|
| CEO of parent company | ||
| Vesa Tykkyläinen (from 26 September 2016) | -426 | -90 |
| Esa Tihilä (until 25 September 2016) | 0 | -403 |
| Compensation of the members of the Board of | ||
| Directors | ||
| Hannu Vaajoensuu | -62 | -60 |
| Ilkka Sihvo | -39 | -37 |
| Tuija Soanjärvi | -40 | -33 |
| Anssi Vanjoki | -33 | -33 |
| Michael Ingelög | -35 | -33 |
| David Bateman | 0 | 0 |
| Total | -635 | -689 |
| 1.1.-31.12.2017 | 1.1.-31.12.2016 | |
|---|---|---|
| Salaries and other short-term employee benefits | -1,618 | -2,288 |
| Post-employment benefits | -629 | -661 |
| Share-based payments | -403 | -634 |
| Total | -2,650 | -3,583 |
The salary of the CEO Vesa Tykkyläinen for the period January 1-December 31, 2017, including benefits, was EUR 384 thousand (EUR 90 thousand in September 26-December 31, 2016). Salary in money was EUR 359 thousnad (EUR 87 thousand), including fringe benefits of EUR 16 thousand (EUR 3 thousand). Tykkyläinen was paid no bonus from the financial year 2016.
During 2017, Tykkyläinen was granted a total of 1,500 shares on the basis of the incentive schemes. Of these, 750 shares were conveyed to Tykkyläinen, the value of which was approximately EUR 26 thousand based on the average share price of the payment days, and EUR 26 thousand was paid in cash to cover the withholding tax.
The accrued pension costs of Vesa Tykkyläinen amounted to EUR 82 thousand (EUR 18 thousand in September 26- December 31, 2016). The CEO's pension plan is pursuant to the employment pension legislation. The CEO has 6 months' period of notice, in addition to which he is entitled to severance pay equivalent of 12 months' fixed salary.
Esa Tihilä stepped down as the CEO of Basware Corporation on September 26, 2016. The salary of the notice period was EUR 164 thousand and the one-time severance pay EUR 328 thousand. Esa Tihilä received from the incentive schemes total 3 900 shares, of which half was conveyed as shares and half paid in cash.
The Board of Directors resolved on March 23, 2015 to establish a new performance share plan for 2015-2017 for key employees.
The performance share plan includes three performance periods, calendar years 2015, 2016 and 2017. The first one third of the earned shares were allocated 6 months, the second one third 12 months and the last one third 18 months after the end of the earning period. In addition, the members of Basware Executive Team had the possibility in early 2015 to be allocated shares against purchased shares without consideration against their shareholding over three years during the earning periods in 2015-2017.
For the earning period 2015, the rewards to be paid on the basis of the plan corresponded to a maximum total of 67,500 Basware Corporation shares, including also the proportion to be paid in cash. The reward for the earning period 2015 was based on the revenue and operating profit growth and the total shareholder return of Basware Corporation. For the earning period 2015, the plan included 35 key employees and the rewards earned corresponded to a total of 28,059 Basware Corporation shares, including also the proportion to be paid in cash. The rewards for the earning period 2015 were paid in June 2016 and January and July 2017.
For the earning period 2016, the rewards to be paid on the basis of the plan corresponded to a maximum total of 79,525 Basware Corporation shares, including also the proportion to be paid in cash. The targets for earning period 2016 were not reached and therefore noreward was paid for the earning period.
The earning period 2017 was not started, and the plan was replaced with a new share-based incentive plan based on the resolution of the Board of Directors on March 1, 2017.
The Board of Directors resolved on March 23, 2015 to establish a new matching share plan for 2015-2018. The restricted share plan was directed to selected key employees at Basware and the total rewards to be allocated on the basis of the plan amounted to a maximum total value of 11,000 Basware Corporation shares. In addition to the share reward, employees included in the plan will also be paid a cash portion to cover the taxes resulting from the reward.
The prerequisite for receiving reward on the basis of the matching share plan is that the employee in question acquires Basware Corporation shares at the beginning of the plan. The participating employee can, as a reward, receive matching shares for each share subject to the share ownership prerequisite after a matching period of three years. Receipt of matching shares is contingent on the continuation of employment or service upon reward payment and that the shares in question are still held by the participating employee.
In 2017, the matching share plan 2015-2018 included four Basware key employees. The rewards to be paid on the basis
of the plan corresponded to a maximum total value of 5,148 Basware Corporation shares. The plan ended in January 2018.
The Board of Directors resolved on February 1, 2016 to establish a new restricted share plan for 2016. The restricted share plan was directed to selected key employees at Basware and the total rewards to be allocated on the basis of the plan amounted to a maximum of 4,000 Basware Corporation shares, including also the proportion to be paid in cash. Receipt of the reward was contingent on the continuation of employment or service upon reward payment.
The restricted share plan 2016 included two Basware key employees, who were both paid the reward at the end of the vesting period in March 2017. The rewards paid on the basis of the plan corresponded to a total of 3,000 Basware Corporation shares, including also the proportion to be paid in cash. The plan has ended.
The Board of Directors resolved on March 1, 2017 to establish a new matching share plan for 2017-2019 for Basware Executive Team members.
The prerequisite for receiving reward on the basis of the matching share plan is that the member of the Basware Executive Team in question acquires Basware shares. The Basware Executive Team member will, as a reward, receive matching shares for each share subject to the share ownership prerequisite after a matching period of three years. Receipt of matching shares is contingent on the continuation of employment or service upon reward payment and that the shares in question are still held by the member.
The Board of Directors resolved that the rewards to be paid in aggregate to the Basware Executive Team on the basis of the matching share plan correspond to the value of a maximum total of 75,000 Basware Corporation shares, including also the proportion to be paid in cash.
Members of Basware Executive Team acquired or allocated a total of 35,017 Basware Corporation shares in the beginning of the plan. The rewards to be paid to Basware Executive Team members on the basis of the plan thus corresponds to a maximum of 70,034 Basware Corporation shares, including also the proportion to be paid in cash.
The Board of Directors resolved on March 1, 2017 to establish a new performance share plan for 2017-2019 for key employees.
The performance share plan includes three performance periods, calendar years 2017-2018, 2018-2019 and 2019-2020. The Board of Directors decides on the performance criteria and on the required performance levels for each criterion at the beginning of each performance period. The plan is directed at approximately 60 key employees, including the members of the Basware Executive Team.
The potential reward from the performance period 2017-2018 is based on the company's total shareholder return and the Group's cumulative Cloud revenue during 2017-2018. The rewards to be paid on the basis of the performance period 2017-2018 correspond to the value of a maximum total of 156,000 Basware Corporation shares, including also the proportion to be paid in cash.
At the end of 2017, the performance share plan included 62 key employees for the performance period 2017-2019. The rewards to be paid on the basis of the plan corresponds to a maximum total of 156,000 Basware Corporation shares, including also the proportion to be paid in cash.
The Board of Directors resolved on March 1, 2017 to establish a new restricted share plan for 2017. The restricted share plan is directed to selected key employees at Basware. Receipt of the reward is contingent on the continuation of employment or service upon reward payment.
The reward from the restricted share plan will be paid after a vesting period of one to three years. The total rewards to be allocated on the basis of the plan amount to a maximum of 20,000 Basware Corporation shares, including also the proportion to be paid in cash.
At the end of 2017, the restricted share plan 2017 included 6 key employees. The rewards to be paid on the basis of the plan corresponds to a maximum total of 5,750 Basware Corporation shares, including also the proportion to be paid in cash.
| Performance Share Plan 2015 - 2017 | Matching Share Plan 2015 - 2018 | Restricted Share Plan 2016 | |
|---|---|---|---|
| Expense for the reporting period |
-42,863 | 333,543 | 28,718 |
| Recognized in equity 2017 | -26,540 | 65,713 | 23,060 |
| Recognized as liability | -16,323 | 267,830 | 5,658 |
| Matching Share Plan 2017 - 2019 | Performance Share Plan 2017 - 2019 | Restricted Share Plan 2017 | |
|---|---|---|---|
| Expense for the reporting period |
586,222 | 660,633 | 178,677 |
| Recognized in equity 2017 | 224,820 | 228,319 | 87,118 |
| Recognized as liability | 361,402 | 432,314 | 91,559 |
| EUR thousand | |||
|---|---|---|---|
| Performance Share Plan 2015 - 2017 | Matching Share Plan 2015 - 2018 | Restricted Share Plan 2016 | |
| Maximum number of shares, including the portion to be settled in cash |
147,075 | 11,000 | 4,000 |
| Initial grant date | March 23, 2015 | March 23, 2015 | July 21, 2017 |
| Vesting date | July 1, 2016 / Jan. 1, 2017 / July 1, 2017 / Jan. 1, 2018 / July 1, 2018 |
Jan 31, 2018 | March 31, 2017 |
| Vesting conditions |
Growth of net sales and EBIT and Total Shareholder Return (TSR) |
Share ownership and employment precondition until reward payment |
Employment precondition until reward payment |
| Maximum contractual life, years |
2.3/3.3 | 2.9 | 0.7 |
| Remaining contractual life, years |
0 | 0.1 | 0 |
| Number of persons at the end of reporting period |
0 | 4 | 0 |
| Payment method | Shares and cash | Shares and cash | Shares and cash |
| Matching Share Plan 2017 - 2019 | Performance Share Plan 2017 - 2019 | Restricted Share Plan 2017 | |
|---|---|---|---|
| Maximum number of shares, including the portion to be settled in cash |
75,000 | 156,000 | 20,000 |
| Initial grant date | March 1, 2017 | March 1, 2017 | March 1, 2017 |
| Vesting date | March 31, 2020 | March 31, 2019 | March 16, 2018 |
| Vesting conditions |
Share ownership and employment precondition until reward payment |
Total Shareholder Return and Net sales growth of Cloud -business |
Employment precondition until reward payment |
| Maximum contractual life, years |
3.1 | 2.1 | 1 |
| Remaining contractual life, years |
2.2 | 1.2 | 0.2 |
| Number of persons at the end of reporting period |
8 | 62 | 6 |
| Payment method | Shares and cash | Shares and cash | Shares and cash |
| Performance Share Plan 2015 - 2017 | Matching Share Plan 2015 - 2018 | Restricted Share Plan 2016 | |
|---|---|---|---|
| Outstanding at the beginning of the period |
98,468 | 10,548 | 4,000 |
| Granted | - | - | - |
| Forfeited | 81,787 | 5,400 | 1,000 |
| Exercised | 16,681 | - | 3,000 |
| Outstanding at the end of the period |
- | 5,148 | - |
| Matching Share Plan 2017 - 2019 | Performance Share Plan 2017 - 2019 | Restricted Share Plan 2017 | |
|---|---|---|---|
| Outstanding at the beginning of the period |
- | - | - |
| Granted | 70,034 | 116,609 | 5,750 |
| Forfeited | - | 7,000 | - |
| Exercised | - | - | - |
| Outstanding at the end of the period |
70,034 | 109,609 | 5,750 |
| 1.1.-31.12.2017 | 1.1.-31.12.2016 | |
|---|---|---|
| Other operating expenses | ||
| Rents | -4,843 | -4,860 |
| Non-statutory employee benefits | -1,120 | -1,352 |
| Travel | -4,140 | -4,348 |
| Marketing | -6,046 | -6,652 |
| IT and telephone | -1,855 | -1,902 |
| Bad Debt from account receivables | 113 | -1,040 |
| Auditor fees | -423 | -267 |
| Other expenses | -16,441 | -13,211 |
| Total | -34,755 | -33,631 |
| Auditor fees | ||
| Audit fees | -216 | -247 |
| Tax advices | 0 | -110 |
| Other fees and services | -207 | -219 |
| Auditor fees total | -423 | -576 |
| Research and development expenses | ||
| Research and development in income statement | -12,439 | -12,214 |
| Increases in capitalized development expenses | -9,879 | -10,878 |
| Total | -22,319 | -23,092 |
According to new presentation financial year depreciations of capitalized development expenses are excluded and FY2016 figures are revised.
| 1.1.-31.12.2017 | 1.1.-31.12.2016 | |
|---|---|---|
| Finance income | ||
| Interest income | 28 | 125 |
| Other financial income | 644 | 621 |
| Total | 672 | 746* |
| Finance expenses | ||
| Interest expenses | -967 | -287 |
| Other finance expenses | -1,423 | -599 |
| Total | -2,391 | -887* |
| Finance income and expenses total | -1,719 | -141 |
Other finance income is comprised of the proceeds of fund investments and realized exchange gains and other finance expenses are mainly comprised of realized exchange losses.
*The automatic currency valuation booking policy of cashpool accounts has been clarified. Comparatives for 2016 have been changed accordingly. The change had no impact on net financial items or result for the period.
| 1.1.-31.12.2017 | 1.1.-31.12.2016 | |
|---|---|---|
| Exchange differences included in net sales | -129 | 0 |
| Exchange differences included in purchases and expenses | -19 | -131 |
| Foreign exchange gains | 541 | 586 |
| Foreign exchange losses | -1,419 | -584 |
| Exchange differences recognized on income statement | -1,026 | -129 |
| 1.1.-31.12.2017 | 1.1.-31.12.2016 | |
|---|---|---|
| Income tax on operations | -1,169 | -1,058 |
| Tax for previous accounting periods | -276 | -80 |
| Change in deferred tas liabilities and tax assets | 2,196 | 3,077 |
| Income tax total | 752 | 1,939 |
| EUR thousand | 1.1.-31.12.2017 | 1.1.-31.12.2016 |
|---|---|---|
| Profit before taxes | -12,203 | -16,256 |
| Tax calculated at domestic tax rate | 2,441 | 3,250 |
| Tax for previous years | -276 | -80 |
| Effect of different tax rates of foreign subsidiaries | -414 | 10 |
| Effect of change in tax rate | -183 | 5 |
| Non-deductible expenses | -85 | 6 |
| Other | -125 | -8 |
| Income not subject to tax | 27 | 21 |
| Application of loss from previous year | 333 | -24 |
| Profit not included in the accounting profit | 15 | -299 |
| Unrecognized deferred tax assets from tax losses | -771 | -434 |
| Share of profit of a joint venture | -210 | |
| Reassessment of deferred tax assets | 0 | -508 |
| Income taxes | 752 | 1,939 |
| EUR thousand | 1.1.-31.12.2017 | 1.1.-31.12.2016 |
|---|---|---|
| Taxes on foreign exchange gains from net investments | 289 | 311 |
| EUR thousand | 31.12.2017 | 31.12.2016 |
|---|---|---|
| Income tax receivables | 358 | 126 |
| Income tax liabilities | 177 | 637 |
Local tax authorities are investigating tax position of Basware's Indian subsidiary from previous years. The related tax risk and uncertainty has been identified, but for the moment the risk assessment has not resulted in tax bookings in the Group. With further information the arguments for tax bookings are reassessed in the future.
| EUR thousand Jan. 1, 2017 | In income statement | Business acquisitions | Period change booked in equity | Dec. 31, 2017 | |
|---|---|---|---|---|---|
| Losses | 8,118 | 1,661 | 0 | 0 | 9,779 |
| Other items | 286 | 297 | 0 | 0 | 583 |
| Total | 8,404 | 1,958 | 0 | 0 | 10,362 |
| EUR thousand | Jan. 1, 2017 | In income statement | Exchange rate differences | Business acquisitions | Dec. 31, 2017 |
|---|---|---|---|---|---|
| Allocation of fair value on purchases |
4,885 | -207 | -109 | 0 | 4,569 |
| Other temporary differences |
19 | -19 | 0 | 0 | 0 |
| Total | 4,904 | -226 | -109 | 0 | 4,569 |
| EUR thousand Jan. 1, 2016 | In income statement | Business acquisitions | Period change booked in equity | Dec. 31, 2016 | |
|---|---|---|---|---|---|
| Losses | 4,138 | 3,980 | 8,118 | ||
| Other items | 695 | -409 | 286 | ||
| Total | 4,832 | 3,571 | 8,403 |
| EUR thousand | Jan 1, 2016 | In income statement | Exchange rate differences | Business acquisitions | Dec. 31, 2016 |
|---|---|---|---|---|---|
| Allocation of fair value on purchases |
4,060 | 963 | -138 | 4,885 | |
| Other temporary differences |
485 | -469 | 3 | 19 | |
| Total | 4,545 | 494 | -135 | 0 | 4,904 |
The Group has a total of EUR 9 779 thousand (EUR 8 118 thousand) of deferred tax assets for unutilized tax losses of subsidiaries, of which EUR 6 323 thousand will expire during 2026–2034, while the rest have no expiry period. According to the transfer pricing principle, subsidiaries accumulate taxable income against which confirmed losses can be utilized in the future. The Group has total of EUR 2 000 thousand unutilized tax credit and losses from which deferred tax assets has not been recognized. The Group will reassess the amount of deferred tax receivables if there are changes in the expectations for accumulation of future taxable profit.
During the fourth quarter of 2017 United States and Belgium enacted new corporate income tax rates for 2018 onwards. Basware has measured its deferred tax liabilities and deferred tax assets applying the enacted, reduced tax rates. The reduction of corporate income tax rates did not have a material impact on Group's income tax expenses for the period.
| EUR thousand | 1.1.-31.12.2017 | 1.1.-31.12.2016 |
|---|---|---|
| Result for the period | -11,451 | -14,318 |
| Average number of shares (1,000) | ||
| Undiluted | 14,357 | 14,294 |
| Diluted | 14,407 | 14,313 |
| Earnings per share | ||
| Undiluted, EUR | -0.80 | -1.00 |
| Diluted, EUR | -0.79 | -1.00 |
| EUR thousand | Development costs |
Intangible rights * |
Other long-term investments |
Assets, unfinished projects |
Total |
|---|---|---|---|---|---|
| Acquisition cost Jan. 1 | 30,005 | 45,754 | 1,005 | 22,297 | 99,061 |
| Translation difference (+/-) |
-68 | -1,238 | -69 | 0 | -1,375 |
| Additions | 2,005 | 2,132 | 331 | 7,338 | 11,806 |
| Disposals | -110 | 0 | -166 | 0 | -276 |
| Reclassifications between items |
17,379 | -250 | 0 | -17,276 | -147 |
| Acquisition cost Dec. 31 | 49,211 | 46,398 | 1,101 | 12,359 | 109,069 |
| Cumulative amortization Jan. 1 |
-23,006 | -28,187 | -543 | 0 | -51,736 |
| Translation difference (+/-) |
68 | 561 | 35 | 0 | 664 |
| Cumulative amortisation on disposals |
-51 | 208 | 74 | 0 | 231 |
| Amortization | -4,696 | -4,357 | -135 | 0 | -9,188 |
| Cumulative amortization Dec. 31 |
-27,685 | -31,775 | -568 | 0 | -60,029 |
| Book value Dec. 31, 2017 |
21,526 | 14,623 | 533 | 12,359 | 49,040 |
| EUR thousand | Development costs |
Intangible rights * |
Other long-term investments |
Assets, unfinished projects |
Total |
|---|---|---|---|---|---|
| Acquisition cost Jan. 1 | 24,435 | 38,037 | 810 | 16,857 | 80,138 |
| Translation difference (+/-) |
46 | -440 | 1 | 0 | -394 |
| Additions | 1,300 | 6,803 | 194 | 11,015 | 19,311 |
| Acquisitions through business combinations |
0 | 4 | 0 | 0 | 4 |
| Disposals | 0 | 0 | 1 | 0 | 1 |
| Reclassifications between items |
4,225 | 1,350 | 0 | -5,575 | 0 |
| Acquisition cost Dec. 31 | 30,005 | 45,754 | 1,005 | 22,297 | 99,061 |
| Cumulative amortization Jan. 1 |
-19,922 | -23,488 | -420 | 0 | -43,829 |
| Translation difference (+/-) |
-46 | -137 | -8 | 0 | -191 |
| Cumulative amortisation on disposals |
0 | 0 | -1 | 0 | -1 |
| Amortization | -3,039 | -4,561 | -114 | 0 | -7,715 |
| Cumulative amortization Dec. 31 |
-23,006 | -28,187 | -543 | 0 | -51,736 |
| Book value Dec. 31, 2016 |
6,998 | 17,566 | 463 | 22,297 | 47,325 |
Goodwill is presented in Note 3.
| Machinery and equipment | Machinery and equipment, finance lease | Other tangible assets | Total | |
|---|---|---|---|---|
| Acquisition cost Jan. 1 | 11,903 | 130 | 133 | 12,166 |
| Translation difference (+/-) |
-204 | -3 | -207 | |
| Additions | 691 | 691 | ||
| Decreases | -108 | -108 | ||
| Reclassifications | 46 | 46 | ||
| Acquisition cost Dec. 31 | 12,328 | 127 | 133 | 12,588 |
| Cumulative amortization Jan. 1 |
-10,451 | -130 | 0 | -10,581 |
| Translation difference (+/-) |
157 | 3 | 160 | |
| Other | -8 | -8 | ||
| Decreases | 52 | 52 | ||
| Amortization | -920 | -920 | ||
| Cumulative amortization Dec. 31 |
-11,170 | -127 | 0 | -11,297 |
| Book value Dec. 31, 2017 | 1,158 | 0 | 133 | 1,291 |
| Machinery and equipment | Machinery and equipment, finance lease | Other tangible assets | Total | |
|---|---|---|---|---|
| Acquisition cost Jan. 1 | 11,011 | 128 | 122 | 11,261 |
| Translation difference (+/-) |
-102 | 2 | -100 | |
| Additions | 961 | 11 | 972 | |
| Acquisitions through business combinations |
0 | 0 | ||
| Decreases | 33 | 33 | ||
| Acquisition cost Dec. 31 | 11,903 | 130 | 133 | 12,166 |
| Cumulative amortization Jan. 1 |
-9,688 | -128 | 0 | -9,816 |
| Translation difference (+/-) |
98 | -2 | 96 | |
| Decreases | -21 | -21 | ||
| Amortization | -840 | -840 | ||
| Cumulative amortization Dec. 31 |
-10,451 | -130 | 0 | -10,581 |
| Book value Dec. 31, 2016 | 1,452 | 0 | 133 | 1,585 |
The joint ventures' financial information presented below is based on the financial statements for 2017.
| EUR thousand | ||
|---|---|---|
| 31.12.2017 | 31.12.2016 | |
| Non-current assets | 5 | 240 |
| Current assets | 201 | 2,087 |
| Long-term liabilities | 854 | 0 |
| Short-term liabilities | 110 | 968 |
| Net Sales | 0 | 0 |
| Result for the period | -2,097 | -4,230 |
| Name | Main industry | Registered location | Share of ownership(%) | |
|---|---|---|---|---|
| Clear Funding Limited | Financing services | London, United Kingdom | 50 |
Basware has determined its interest in the joint venture to be accounted for using the equity method. Basware's share of results (50 %) of the joint venture is presented as a separate line item in the financial items of the consolidated statement of comprehensive income and in investments in the consolidated statement of financial position.
| 31.12.2017 | 31.12.2016 | |
|---|---|---|
| Available for sale Investments | 38 | 38 |
| Total | 38 | 38 |
Available-for-sale investments include shares of unlisted companies.
EUR thousand
| 31.12.2017 | 31.12.2016 | |
|---|---|---|
| Non-current assets | ||
| Other non-current receivables | 3,985 | 2,789 |
| Total | 3,985 | 2,789 |
| Current receivables | ||
| Trade receivables | 24,534 | 24,638 |
| Trade receivables from joint venture | 0 | 200 |
| Other receivables | 182 | 208 |
| Prepaid expenses and accrued income | 8,963 | 7,964 |
| Total | 33,679 | 33,010 |
The fair values of financial assets and liabilities are presented in Note 22.
No significant concentrations of credit risk are associated with the receivables. The balance sheet values equal the best to the maximum amount of the credit risk. Principles of the Group's credit risk management are presented in note 18.
EUR thousand
| 2017 | Impairment loss | Net 2017 | 2016 | Impairment loss | Net 2016 | |
|---|---|---|---|---|---|---|
| Non-overdue sales receivables | 16,565 | 0 | 16,565 | 14,566 | 0 | 14,566 |
| Overdue sales receivables | ||||||
| 1-180 days | 7,891 | 0 | 7,891 | 9,694 | 0 | 9,694 |
| 181-360 days | 404 | -300 | 104 | 763 | -382 | 382 |
| Over 360 days | 247 | -274 | -27 | 504 | -504 | 0 |
| Total | 25,108 | -574 | 24,534 | 25,527 | -886 | 24,641 |
| Total | 20,683 | 37,755 |
|---|---|---|
| Cash and cash equivalents | 20,683 | 37,755 |
| 31.12.2017 | 31.12.2016 | |
| EUR thousand |
Group has in Indian subsidiary an incentive scheme to commit employees, where benefit is paid to the employee after five years in service, in case of the employment is ending.
The calculations for defined benefit plans are done according to same principles as defined benefit plans for pensions and they predispose the Group to actuary risks like wage risk, interest risk and risk related to expected lifetime. These plans are unfunded.
| 1.1.-31.12.2017 | 1.1.-31.12.2016 | |
|---|---|---|
| Opening value Jan. 1 | 506 | 0 |
| Amounts recognised in profit and loss | ||
| Service cost, benefits earned during the year | 102 | 75 |
| Interest expense (+)/income (-) | 33 | 19 |
| -31 | 0 | |
| Amounts recognised in other comprehensive income | ||
| Acturial losses (+)/gains (-) | -155 | 97 |
| Other changes | ||
| Items from revaluations | 0 | 332 |
| Benefits paid | -22 | -18 |
| Ending value Dec. 31 | 433 | 506 |
| The most significant actuarial assumptions | ||
| Discount interest (%) | 7.45 % | 8.00 % |
| Increase of wages (%) | 9.00 % | 9.00 % |
The company's international business involves customary financing risks. The purpose of financial risk management is to ensure the availability of sufficient financing cost-efficiently and monitor and, if necessary, limit the emerging risks by taking appropriate measures. Risk management is centralized in the Group's finance department.
Basware's net sales increased by 1.5 percent (5.4%) in constant currencies during 2017.
The Group's main currency is euro, accounting for approximately 55 percent of net sales in 2017 (approximately 55% in 2016). In addition to the euro area, Basware operates in various areas, in 2017 the most significant being Norway, Sweden, the United States and the United Kingdom. The company is exposed to exchange rate risks in these countries through intra-company trade, exports and imports as well as through the equity and funding of foreign subsidiaries. The foreign exchange-denominated cash flow in the subsidiaries according to the company's hedging policy did not exceed the annual currency-specific limit for hedging measures, and the company therefore did not hedge these cash flows against exchange rate fluctuations.
As of January 1, 2008, the capital structure of Basware Corporation's foreign subsidiaries has been changed to the extent that the majority of the long-outstanding intercompany trade receivables in the parent company have been converted to a long-term net investment in a foreign operation. The purpose of the loan arrangement is to fund a longterm strategic investment.
According to IFRS 7 a sensitivity analysis of currency risk would have had an impact of EUR +/- 0.3 million (EUR 0.1 million) on the profit before tax at the closing date, assuming a rate change of +/- 5 % of the local currencies (AUD, SEK, NOK, DKK, GBP, USD, RON, INR) against the euro. Other variables are assumed to remain unchanged. The calculation includes the foreign currency trade payables and accounts receivables.
A sensitivity analysis of currency risk in foreign exchange-denominated net investments would have had an impact of +/- EUR 0.6 million (EUR 0.5 million) on other comprehensive items in income statement. Other variables are assumed to remain unchanged. The calculation includes the foreign currency net investments and subordinated loans in the subsidiaries.
The parent company's operating currency is euro. Foreign currency-denominated assets and liabilities translated into the euro at the exchange rates of the closing date are as follows:
| USD | AUD | GBP | SEK | DKK | NOK | RON | INR | |
|---|---|---|---|---|---|---|---|---|
| Non-current assets | 28,590 | 433 | 1,887 | 1,194 | 170 | 759 | 198 | 395 |
| Current assets | ||||||||
| Cash and cash equivalents | 1,997 | 169 | 667 | 430 | 208 | 950 | 677 | 479 |
| Trade and other receivables | 5,572 | 994 | 2,914 | 1,980 | 918 | 1,247 | 360 | 458 |
| Current liabilities | ||||||||
| Non-interest bearing liabilities | 5,802 | 857 | 3,390 | 1,162 | 748 | 1,168 | 727 | 1,407 |
| EUR thousand | ||||||||
|---|---|---|---|---|---|---|---|---|
| USD | AUD | GBP | SEK | DKK | NOK | RON | INR | |
| Non-current assets | 33,126 | 333 | 9,961 | 1,229 | 166 | 947 | 201 | 206 |
| Current assets | ||||||||
| Cash and cash equivalents | 909 | 140 | 555 | 436 | 240 | 966 | 429 | 331 |
| Trade and other receivables | 6,311 | 855 | 3,327 | 1,758 | 1,044 | 1,411 | 292 | 1 |
| Current liabilities | ||||||||
| Non-interest bearing liabilities | 5,100 | 785 | 2,872 | 1,441 | 1,058 | 1,305 | 352 | 823 |
The company had a total of EUR 40.3 million (EUR 37.3 million) of variable-rate bank loans at the closing date.
In the third quarter of 2017, the company signed a new term loan financing totalling EUR 30 million, with EUR 10 million maturing in September 2019 and EUR 20 million in September 2020. In addition, the EUR 10 million revolving credit facility was extended by one year to March 2019.
The company is exposed to cash flow interest rate risk through its loan portfolio. The goal of the company's risk management with regard to interest rate risk is to minimize the negative impacts of changes in interest rates on the company's financial performance. The company applies diverse interest rate hedging instruments to manage interest rate risks. The average interest rate of loans was 2.85 percent (1.25%).
According to IFRS 7, the average balances of the variable rate loans realized during the period have been used in the sensitivity analysis. At the closing date, the effect of variable rate interest-bearing liabilities on profit before taxes would have been +/- EUR 431.6 thousand (EUR 124.5 thousand) had the interest rate increased or decreased by 1 percentage point.
The company maintains sufficient liquidity reserves through centralized Group-level cash management, payment traffic, and overdraft facilities. The Group's liquidity remained good during the financial year. Group management has not identified any major concentration of liquidity risks in cash assets and equivalents or in sources of funding. The tables below describes a maturity analysis on agreements. The figures have not been discounted and they included loan rate and repayments of capital.
EUR thousand
| Balance sheet value | Cash flow | 0-6 months | 6 months - 1 year | 1-5 year | |
|---|---|---|---|---|---|
| Bank Loans | 49,282 | 53,505 | 1,709 | 1,708 | 50,088 |
| Trade and other payables | 12,532 | 12,532 | 11,862 | 670 | 0 |
| Total | 61,814 | 66,037 | 13,571 | 2,378 | 50,088 |
EUR thousand
| Bank Loans | Balance sheet value 47,280 |
Cash flow 48,275 |
0-6 months 7,257 |
6 months - 1 year 3,811 |
1-5 year 37,208 |
|---|---|---|---|---|---|
| Trade and other payables | 11,350 | 11,350 | 11,350 | 0 | 0 |
| Total | 58,630 | 59,625 | 18,607 | 3,811 | 37,208 |
The company's sales receivables are spread to a vast clientele and do not include significant credit risks. Business management regularly monitors the payment of sales receivables as part of the management of customer accounts. The Group has not used surety bonds to secure sales receivables.
Impairment losses recognized during the financial period and the age distribution of sales receivables are presented in Note 15.
Shareholders' equity reported in the Group balance sheet is managed as capital. The company's capital management aims to ensure the continuity of the company's operations (going concern) and increase the value of shareholder's investment.
The capital structure can be adjusted by decisions on, e.g. distribution of dividend, share repurchase and share issues. The resolutions of the Annual General Meeting and the authorizations of the Board of Directors are presented in the Board of Directors' Report. Additional information on the share and share issue is presented under Share and Shareholders.
The company's objective is to maintain a strong equity ratio and a moderate gearing ratio. The company's equity ratio is 54.8 percent (58.5%) and gearing ratio is 24.7 percent (8.7%).
In the following table is presented changes in shareholders equity and corresponding movements in shares.
| Shareholders' equity |
Share premium account |
Invested non-restricted equity |
Other reserves |
Own share |
Total | |
|---|---|---|---|---|---|---|
| Jan. 1, 2017 | 3,528 | 1,187 | 111,334 | 540 | -1,044 | 115,545 |
| Share issue | 0 | |||||
| Decrease of treasury shares |
-202 | 202 | 0 | |||
| Transactions that do not affect the number of shares |
52 | 52 | ||||
| Dec. 31, 2017 | 3,528 | 1,187 | 111,132 | 592 | -842 | 115,597 |
| Shareholders' equity |
Share premium account |
Invested non-restricted equity |
Other reserves |
Own share |
Total | |
|---|---|---|---|---|---|---|
| Jan. 1, 2016 | 3,528 | 1,187 | 104,334 | 540 | -1,109 | 108,480 |
| Share issue | 7,065 | 7,065 | ||||
| Decrease of treasury shares |
-65 | 65 | 0 | |||
| Dec. 31, 2016 | 3,528 | 1,187 | 111,333 | 540 | -1,043 | 115,545 |
| 31.12.2017 | 31.12.2016 | |
|---|---|---|
| Number of outstanding shares Jan. 1 | 14,343,314 | 14,152,770 |
| Share issue (+) | 0 | 180,707 |
| Incentive plan (+) | 16,389 | 9,837 |
| Number of outstanding shares Dec. 31 | 14,359,703 | 14,343,314 |
| Treasury shares Jan. 1 | 58,622 | 68,459 |
| Incentive plan (-) | 16,389 | 9,837 |
| Treasury shares Dec. 31 | 42,233 | 58,622 |
Other funds include the fair value reserve, which includes the increase in the value of the Analyste deal shares between the publication and realization of the deal in 2006.
The treasury shares reserve includes the acquisition cost of own shares held by the Group.
The Annual General Meeting resolved in accordance with the proposal of the Board of Directors that no dividend will be paid for the year 2016 (2015: 0 euros per dividend). No substantial changes has taken place in the company's financial position after the end of the financial period.
EUR thousand
| 31.12.2017 | 31.12.2016 | |
|---|---|---|
| Long-term trade and other liabilities | ||
| Other liabilities | 1,693 | 1,555 |
| Total | 1,693 | 1,555 |
| Short-term trade and other liabilities | ||
| Trade liabilities | 8,284 | 7,055 |
| Accrued expenses and deferred income | 26,007 | 22,874 |
| Other Liabilities | 4,248 | 4,296 |
| Total | 38,539 | 34,225 |
Accrued expenses includes personnel related expenses EUR 16 064 thousand (EUR 12 390 thousand).
The fair value of financial assets and liabilities are presented in Note 22.
| 31.12.2017 | 31.12.2016 | |
|---|---|---|
| Provision for restructuring | ||
| Booking value Jan. 1 | 5,072 | 0 |
| Additions | 0 | 5,072 |
| Disposals | -4,144 | 0 |
| Booking value Dec. 31 | 928 | 5,072 |
The group announced a productivity programme on November 2, 2016 in order to simplify operations and improve productivity. The measures announced included also personnel reductions and concerned a total of 130 employees globally. Negotiations with employees were carried out in accordance with local legislation in each location affected. For some countries, employees' severance pay is payable still during 2018.
| Note | 2017 Book value | 2017 Fair value | 2016 Book value | 2016 Fair value | |
|---|---|---|---|---|---|
| Financial assets | |||||
| Non-current | |||||
| Available-for-sale financial assets |
|||||
| Unlisted shares | 14 | 38 | 38 | 38 | 38 |
| Non-current loan receivables and other receivables |
14 | 1,400 | 1,400 | 1,212 | 1,212 |
| Current | |||||
| Current trade and other receivables |
15 | 24,716 | 24,716 | 25,046 | 25,046 |
| Cash and cash equivalents | 16 | 20,683 | 20,683 | 35,755 | 35,755 |
| Financial liabilities | |||||
| Non-current | |||||
| Financial loans measured at amortized cost |
|||||
| Loans from financial institutions, interest-bearing |
47,286 | 47,286 | 36,732 | 36,732 | |
| Current | |||||
| Financial liabilities - financial liabilities valued at amortized acquisition cost |
|||||
| Loans from financial institutions, interest-bearing |
1,996 | 1,996 | 10,548 | 10,548 | |
| Trade and other payables | 20 | 12,528 | 12,528 | 11,350 | 11,350 |
In determining the fair values of the financial assets and liabilities, the following price quotations, assumptions and valuation models have been used.
Available-for-sale financial assets consist of unlisted share investments valued at cost less any impairment. Therefore, the fair value of the investments cannot be specified reliably. Unlisted shares do not have an active market, and the Group does not intend to give up these investments for the time being.
The book value of trade and other receivables corresponds to their fair value as the effect of discounting is not substantial taking into account the maturity of receivables.
The fair value of derivatives is determined on the basis of available market information.
The floating interest rates of bank loans are based on 1-month euribor, depending on the maturity of the loan. Therefore, the fair value of floating rate loans is considered to correspond to their book value.
The fair value of finance leases is based on discounting future cash flows using an interest rate corresponding to the interest rate of corresponding lease agreements.
The maturity distribution of financial liabilities is presented in Note 18.
The group does not have any held-to-maturity investments
| 31.12.2017 | 31.12.2016 | |
|---|---|---|
| Own guarantees | ||
| Business mortgage of own debt | 1,200 | 1,200 |
| Guarantees | 202 | 273 |
| Commitments on behalf of subsidiaries | ||
| Guarantees | 100 | 100 |
| Other own contingent liabilities | ||
| Lease liabilities | ||
| Current lease liabilities | 850 | 1,169 |
| Lease liabilities maturing in 1- 5 years | 847 | 1,362 |
| Total | 1,697 | 2,530 |
| Rental liabilities * | ||
| Current rental liabilities | 6,424 | 4,989 |
| Rental liabilities maturing in 1- 5 years | 11,368 | 9,421 |
| Rental liabilities maturing over 5 years | 180 | 41 |
| Total | 17,973 | 14,452 |
| Other own contingent liabilities total | 19,670 | 16,983 |
| Commitments and contingent liabilities total | 21,172 | 18,555 |
*Value added tax is only included in vehicle leasing liabilities. The lease agreements are ordinary lease agreements and the finance lease agreements are ordinary finance lease agreements and have no associated leaseback clauses. The group does not have pledges, mortgages or guarantees on behalf of external parties.
Basware Group's related parties include the subsidiaries, joint venture Clear Funding Ltd and the co-owner of joint venture, Arrowgrass Capital Partners LLP.
In addition, the related parties of Basware include the members of the Board of Directors, the members of the Corporate Executive Team, CEO and their family members and their controlled companies. Key management compensations are disclosed in note 6.
| 31.12.2017 | 31.12.2016 | |
|---|---|---|
| Joint venture Clear Funding LTD: | ||
| Net sales | 0 | 784 |
| Trade receivables | 0 | 200 |
| EUR thousand | ||
|---|---|---|
| 31.12.2017 | 31.12.2016 | |
| Arrowgrass Master Fund LTD | 10,000 | 10,000 |
Loans from related parties includes the share of Arrowgrass Master Fund LTD of the Group's new term loan financing signed in September 2017 and totaling EUR 30 million. The other lenders are Nordea Bank AB, OP Corporate Bank Plc and Ilmarinen Mutual Pension Insurance Company. Loans from related parties have been provided at commercial interest rates.
| Domicile | Country | Group holding, % omistusosuus, % |
|
|---|---|---|---|
| Basware International Oy | Espoo | Finland | 100 |
| Basware GmbH | Düsseldorf | Germany | 100 |
| Basware UK Ltd. | Staffordshire | Great Britain | 100 |
| Basware AB | Stockholm | Sweden | 100 |
| Basware B.V. | Amsterdam | Netherlands | 100 |
| Basware A/S | Herlev | Denmark | 100 |
| Basware, Inc. | Delaware | United States | 100 |
| Basware SAS | Paris | France | 100 |
| Basware AS | Oslo | Norway | 100 |
| Basware Pty Ltd | Chatswood | Australia | 100 |
| Basware SRL | Iasi | Romania | 100 |
| Basware India Private Limited | Chandigarh | India | 100 |
| Basware Belgium NV | Aalst | Belgium | 100 |
| Basware Holdings Ltd. | London | Great Britain | 100 |
| Basware Shared Services Ltd. | London | Great Britain | 100 |
| Basware Supplier Solutions Ltd. | London | Great Britain | 100 |
| Procserve Solutions Ltd. | London | Great Britain | 100 |
| Procserve Services Ltd. | London | Great Britain | 100 |
| Procserve Inc. | Arlington | United States | 100 |
| Basware Technologies LLC | Fort Mill | United States | 100 |
The parent company has branches in India, Chandigarh (reg. no F03347) and Russia, Moscow (eg. no 16926.1).
Basware UK subsidiaries, Basware UK Ltd and Basware Holdings Ltd sub-group entities have applied exemption from the local statutory audit requirements under section 479A of the Companies Act 2006.
Basware GmbH is exempt from the duty of corporations to audit and disclose financial statements pursuant to German legislation (§ 264 III HGB).
After the balance sheet date, no significant events have taken place within the Group.
| Note | 1.1.-31.12.2017 | 1.1.-31.12.2016 | Change, % | |
|---|---|---|---|---|
| NET SALES | 2 | 82,909 | 80,623 | 2.8 |
| Other operating income | 3 | 0 | 3 | -100 |
| Materials and services | 4 | -12,762 | -14,344 | -11.0 |
| Employee benefits expenses | 5 | -33,508 | -39,485 | -15.1 |
| Depreciation and amortization | 6 | -7,139 | -6,674 | 7.0 |
| Other operating expenses | 7 | -43,328 | -35,740 | 21.2 |
| Operating profit | -13,827 | -15,618 | -11.5 | |
| Financial income | 8 | 1,818 | 2,514 | -27.7 |
| Financial expenses | 8 | -3,273 | -2,668 | 22.7 |
| Profit before tax | -15,282 | -15,772 | -3.1 | |
| Income taxes | 9 | -187 | -115 | 62.1 |
| PROFIT FOR THE PERIOD | -15,469 | -15,887 | -2.6 |
*The automatic currency valuation booking policy of cashpool accounts has been clarified. Comparatives for 2016 have been changed accordingly. The change had no impact on net financial items or result for the period.
| Note | 31.12.2017 | 31.12.2016 | Change, % | |
|---|---|---|---|---|
| ASSETS | ||||
| Non-current assets | ||||
| Intangible assets | 10 | 39,470 | 34,981 | 12.8 |
| Tangible assets | 11 | 431 | 642 | -32.8 |
| Investments | 12 | 123,133 | 124,418 | -1.0 |
| Long-term other receivables | 13 | 1,192 | 797 | 49.5 |
| Non-current assets total | 164,226 | 160,838 | 2.1 | |
| Current assets | ||||
| Short-term trade and other receivables | 14 | 29,352 | 35,675 | -17.7 |
| Cash and cash equivalents | 14,266 | 25,483 | -44.0 | |
| Current assets total | 43,619 | 61,158 | -28.7 | |
| TOTAL ASSETS | 207,844 | 221,996 | -6.4 |
| Note | 31.12.2017 | 31.12.2016 | Change, % | |
|---|---|---|---|---|
| EQUITY AND LIABILITIES | ||||
| Shareholders' equity | ||||
| Share capital | 3,528 | 3,528 | 0 | |
| Share premium account | 1,118 | 1,118 | 0 | |
| Other reserves | 112,089 | 112,291 | -0.2 | |
| Retained earnings | 5,964 | 21,649 | -72.5 | |
| Profit for the period | -15,469 | -15,887 | -2.6 | |
| Shareholders' equity total | 15 | 107,230 | 122,700 | -12.6 |
| Current provisions | 16 | 201 | 1,199 | -83.3 |
| Liabilities | ||||
| Long-term liabilities | 17 | 47,463 | 36,909 | 28.6 |
| Short-term liabilities | 18 | 52,950 | 61,189 | -13.5 |
| Total liabilities | 100,413 | 98,098 | 2.4 | |
| TOTAL EQUITY AND LIABILITIES | 207,844 | 221,996 | -6.4 |
| 1.1.-31.12.2017 | 1.1.-31.12.2016 | |
|---|---|---|
| CASH FLOW FROM OPERATING ACTIVITIES | ||
| Result for the period | -15,469 | -15,887 |
| Adjustments for profit | ||
| Planned depreciations | 7,139 | 6,674 |
| Proceeds from sale of non-current assets | -6 | 350 |
| Unrealized exchange gains and losses | 1,233 | 1,221 |
| Finance income and expenses | 260 | -1,049 |
| Income taxes | 187 | 115 |
| Other non-cash items | 105 | 0 |
| Working capital changes | -2,424 | 7,703 |
| Interest paid | -714 | -121 |
| Interest received | 1,017 | 1,441 |
| Other financial items in operating activities | -312 | -325 |
| Income taxes paid | -187 | 1,031 |
| Net cash from operating activities | -9,170 | 1,154 |
| CASH FLOW FROM INVESTING ACTIVITIES | ||
| Purchase of tangible and intangible assets | -11,550 | -13,424 |
| Proceeds from sale of tangible and intangible assets | 0 | 125 |
| Acquisition of subsidiaries and businesses | 133 | -30,493 |
| Investment made to a joint venture | 0 | -3,037 |
| Repayment of loan receivables | 7,141 | 3,039 |
| Addition / deduction of cash equivalents | -1,208 | -3,447 |
| Cash flows used in investing activities | -5,484 | -47,237 |
| Cash flow before financing activities | -14,654 | -46,083 |
| CASH FLOW FROM FINANCING ACTIVITIES | ||
| Proceeds from current borrowings | 0 | 10,548 |
| Repayment of current borrowings | -27,998 | -1,667 |
| Addition / deduction of current borrowings | 1,435 | 7,497 |
| Proceeds from borrowings | 30,000 | 36,732 |
| Net cash used in financing activities | 3,437 | 53,110 |
| Net change in cash and cash equivalents | -11,217 | 7,028 |
| Cash and cash equivalents at the beginning of period | 25,483 | 18,455 |
| Cash and cash equivalents at the end of period | 14,266 | 25,483 |
Basware Corporation's financial statements have been prepared in accordance with the Finnish Accounting Act.
Transactions in foreign currencies are recorded at the exchange rates prevailing at the transaction dates. At the end of the accounting period, the unsettled balances on foreign currency receivables and liabilities are valued at the rates of exchange prevailing at the end of the accounting period. Foreign exchange gains and losses related to normal business operations are entered in the appropriate income statement account before operating profit and foreign exchange gains and losses associated with financing are entered as a net amount under financial income and expenses.
Net sales are generated by Automation Services, Customer Support, Professional Services, and License Sales. When net sales are calculated, sales revenue is adjusted for exchange rate differences of foreign currency sales.
Revenue recognition of product sales requires that there is a binding agreement of the sale, the product has been delivered, proceeds from the transaction can be reliably specified, the financial gain will benefit the company with sufficient probability, and significant benefits and risks related to ownership or rights of use of the product have been transferred to the buyer.
Service revenue is recognized at the time of delivery. Start-up fees are recognized as revenue when the work related to the start-up procedure has been completed and the customer has been connected to the service environment. Transaction revenue is recognized on the basis of actual transaction volumes and use charges on a monthly basis on the basis of the existence of an agreement. The alliance fees of financing-related added value services are recognised as revenue when the related obligations have been performed.
License agreements with a right of return or conditions related to the product's functionality or implementation project are recognized as revenue once the right of return has expired or the above-mentioned conditions have been fulfilled. Maintenance revenue is allocated over the contract period.
Revenue and costs of fixed-price consulting projects are recognized as revenue and expenditure on the basis of the percentage of completion when the outcome of the project can be reliably estimated. The degree of completion of the project is specified as the proportion of hours worked of the estimated total number of hours. If the resulting costs and recognized profits exceed the amount invoiced for the transaction, the different is presented in "Trade and other receivables" on the balance sheet. If the resulting costs and recognized profits are lower the invoicing for the transaction, the difference is presented in "Trade payables and other liabilities" on the balance sheet. When it is likely that the total costs required for completing the project exceed the total revenue from the transaction, the expected loss is recognized as an expense immediately.
Other operating income includes proceeds from the sale of business operations and property, plant and equipment, rental income, and public subsidies to the extent that they are not related to capitalized R&D projects.
Research expenses are booked as an expense as they are incurred. Costs related to the adoption of new technology or development of a new generation of projects are capitalized and recognized and amortized over the useful life of 3-5 years. In determining the useful life, the obsolescence of technology and the typical life cycle of products in the industry are taken into consideration. Amortization starts once the product is ready for commercial utilization. Maintenance of existing products and minor enhancements are recognized as they are incurred. Public subsidies related to research and development are recognized through profit or loss in the periods during which the corresponding costs are recognized as expenses.
The statutory pension coverage for employees is provided through insurance policies taken out with a pension institution. The statutory pension expenses are recognized as expenses in the year they are incurred.
Intangible assets are recognized at the original acquisition cost less accumulated depreciation according to plan and possible impairment. Public subsidies related to the acquisition of an intangible asset are deducted from the acquisition cost of the asset and recognized as income by reducing the depreciation charge of the asset they are related to. The expected useful lives of intangible assets are 3-10 years.
Tangible assets are recognized in the balance sheet at the original acquisition cost less accumulated depreciation. The useful lives of tangible assets are 3-5 years.
A provision is recognized when the Group has a present legal or constructive obligation as a result of a past event, it is probable that the obligation will have to be settled, and the amount of the obligation can be reliably estimated.
Leasing payments are recognized as annual expenses.
Income taxes have been recognized in accordance with Finnish tax legislation.
| 1.1.-31.12.2017 | 1.1-31.12.2016 | |
|---|---|---|
| Net sales | ||
| Cloud Revenue | ||
| SaaS | 20,510 | 14,614 |
| Transaction services | 22,715 | 19,666 |
| Other cloud revenue | 430 | 998 |
| Cloud Revenue Total | 43,656 | 35,279 |
| Non-Cloud Revenue | ||
| Maintenance | 26,374 | 28,349 |
| License sales | 2,605 | 4,683 |
| Consulting services | 10,341 | 12,280 |
| Other non-cloud revenue | -67 | 33 |
| Non-Cloud Revenue Total | 39,253 | 45,344 |
| Total | 82,909 | 80,623 |
EUR thousand
| 1.1.-31.12.2017 | 1.1-31.12.2016 | |
|---|---|---|
| Finland | 47,604 | 49,871 |
| Export | 35,305 | 30,752 |
| Total | 82,909 | 80,623 |
EUR thousand
| 1.1.-31.12.2017 | 1.1.-31.12.2016 | |
|---|---|---|
| Other operating income | 0 | 3 |
| Total | 0 | 3 |
| Total | -12,762 | -14,344 |
|---|---|---|
| Services purchased | -2,101 | -4,413 |
| Change in inventories | 0 | -30 |
| Purchases during the financial period | -10,661 | -9,901 |
| 1.1.-31.12.2017 | 1.1.-31.12.2016 |
| 1.1.-31.12.2017 | 1.1.-31.12.2016 | |
|---|---|---|
| Personnel expenses | ||
| Salaries paid to CEO and the Board of Directors | -634 | -1,057 |
| Salaries paid to other personnel | -26,923 | -31,410 |
| Pension expenses | -4,498 | -4,937 |
| Other personnel expenses | -1,453 | -2,081 |
| Total | -33,508 | -39,485 |
Salaries and fees paid to each member of the management are detailed in Note 6 to the consolidated financial statementS.
| 31.12.2017 | 31.12.2016 | |
|---|---|---|
| Personnel average for the period | 449 | 1,079 |
| Personnel at the end of the period | 439 | 830 |
Operations of the Indian branch were incorporated in August 2016 and as a result India's personnel was moved to Basware India Limited.
| 1.1.-31.12.2017 | 1.1.-31.12.2016 | |
|---|---|---|
| Intangible assets | -6,858 | -6,317 |
| Tangible assets | -280 | -357 |
| Total | -7,139 | -6,674 |
| 1.1.-31.12.2017 | 1.1.-31.12.2016 | |
|---|---|---|
| Other operating expenses | ||
| Rents | -1,563 | -1,787 |
| Non-statutory employee benefits | -570 | -638 |
| Travelling | -1,010 | -1,280 |
| Marketing | -3,597 | -3,530 |
| IT and telephone | -1,102 | -1,136 |
| Auditor fees | -367 | -576 |
| Other expenses | -35,118 | -26,793 |
| Total | -43,328 | -35,740 |
| Audit fees | -160 | -247 |
| Tax consultancy | 0 | -110 |
| Other fees and services | -207 | -219 |
| Audit fees total | -367 | -576 |
| 1.1.-31.12.2017 | 1.1.-31.12.2016 | |
|---|---|---|
| Other interest and financial income | ||
| From group companies | 1,648 | 2,343* |
| From others | 170 | 170 |
| Other interest and financial income total | 1,818 | 2,513* |
| Interest and financial expenses | ||
| To group companies | -2,202 | -2,335* |
| From others | -1,071 | -333 |
| Other interest and financial expenses total | -3,273 | -2,668* |
| Total | -1,455 | -154 |
*The automatic currency valuation booking policy of cashpool accounts has been clarified. Comparatives for 2016 have been changed accordingly. The change had no impact on net financial items or result for the period.
| Total | -187 | -115 |
|---|---|---|
| Income taxes from previous financial periods | -187 | -12 |
| Income taxes on actual business | 0 | -103 |
| 1.1.-31.12.2017 | 1.1.-31.12.2016 | |
| EUR thousand |
The deferred tax asset arising from accumulated losses, total of EUR 6,1 million, has not been booked to balance sheet.
| Development costs |
Intangible rights |
Goodwill/merger loss |
Other long-term investments |
Assets, unfinished projects |
Total | |
|---|---|---|---|---|---|---|
| Acquisition cost Jan. 1 |
28,541 | 14,574 | 17,625 | 64 | 22,297 | 83,100 |
| Additions | 2,005 | 2,103 | 0 | 0 | 7,338 | 11,446 |
| Decreases | -110 | 0 | 0 | 0 | 0 | -110 |
| Reclassifications between items |
17,319 | -42 | 0 | 0 | -17,277 | 0 |
| Acquisition cost Dec. 31 |
47,755 | 16,635 | 17,625 | 64 | 12,358 | 94,436 |
| Cumulative amortization Jan. 1 |
-21,551 | -8,905 | -17,625 | -38 | 0 | -48,119 |
| Amortization | -4,681 | -2,162 | 0 | -5 | 0 | -6,848 |
| Cumulative amortization Dec. 31 |
-26,232 | -11,067 | -17,625 | -43 | 0 | -54,967 |
| Book value Dec. 31, 2017 |
21,523 | 5,568 | 0 | 21 | 12,358 | 39,469 |
| Development costs |
Intangible rights |
Goodwill/merger loss |
Other long-term investments |
Assets, unfinished projects |
Total | |
|---|---|---|---|---|---|---|
| Acquisition cost Jan. 1 |
23,016 | 11,126 | 17,625 | 509 | 16,857 | 69,132 |
| Additions | 1,300 | 2,098 | 11,015 | 14,413 | ||
| Decreases | 0 | -445 | 0 | -445 | ||
| Reclassifications between items |
4,225 | 1,350 | -5,575 | 0 | ||
| Acquisition cost Dec. 31 |
28,541 | 14,574 | 17,625 | 64 | 22,297 | 83,100 |
| Cumulative amortization Jan. 1 |
-18,573 | -6,500 | -16,711 | -342 | 0 | -42,126 |
| Amortization | -2,978 | -2,405 | -914 | 304 | -5,993 | |
| Cumulative amortization Dec. 31 |
-21,551 | -8,905 | -17,625 | -38 | 0 | -48,119 |
| Book value Dec. 312016 |
6,990 | 5,669 | 0 | 26 | 22,297 | 34,981 |
| Machinery and equipment | Other tangible assets | Total | |
|---|---|---|---|
| Acquisition cost Jan. 1 | 6,165 | 133 | 6,298 |
| Additions | 69 | 69 | |
| Acquisition cost Dec. 31 | 6,234 | 133 | 6,367 |
| Cumulative amortization Jan. 1 | -5,656 | 0 | -5,656 |
| Amortization | -280 | -280 | |
| Cumulative amortization Dec. 31 | -5,936 | 0 | -5,936 |
| Book value Dec. 31, 2017 | 298 | 133 | 431 |
| Machinery and equipment | Other tangible assets | Total | |
|---|---|---|---|
| Acquisition cost Jan. 1 | 6,622 | 121 | 6,743 |
| Additions | 409 | 11 | 420 |
| Decreases | -865 | 0 | -865 |
| Acquisition cost Dec. 31 | 6,165 | 133 | 6,298 |
| Cumulative amortization Jan. 1 | -6,020 | 0 | -6,020 |
| Decreases | 722 | 722 | |
| Amortization | -357 | -357 | |
| Cumulative amortization Dec. 31 | -5,656 | 0 | -5,656 |
| Book value Dec. 31, 2016 | 509 | 133 | 642 |
| 31.12.2017 | 31.12.2016 | |
|---|---|---|
| Shares in group companies | ||
| Book value Jan. 1 | 97,621 | 57,698 |
| Increase | 453 | 49,156 |
| Disposals | 0 | -9,232 |
| Book value Dec. 31 | 98,075 | 97,621 |
| Balance sheet value Dec. 31 | 98,075 | 97,621 |
| Other shares | ||
| Book value Jan. 1 | 38 | 38 |
| Book value Dec. 31 | 38 | 38 |
| Share of investment in a joint venture | ||
| Book value Jan. 1 | 4,994 | 1,957 |
| Increase | 0 | 3,037 |
| Book value Dec. 31 | 4,994 | 4,994 |
| Receivables from group companies | ||
| Loan receivables from group companies | 20,026 | 21,764 |
| Total | 123,133 | 124,418 |
| Domicile | Country | Parent company holding, % | |
|---|---|---|---|
| Basware International Oy | Espoo | Finland | 100 |
| Basware GmbH | Düsseldorf | Germany | 100 |
| Basware AB | Stockholm | Sweden | 100 |
| Basware B.V. | Amsterdam | The Netherlands | 100 |
| Basware A/S | Herlev | Denmark | 100 |
| Basware, Inc. | Delaware | United States | 100 |
| Basware SAS | Paris | France | 100 |
| Basware AS | Oslo | Norway | 100 |
| Basware Pty Ltd | Chatswood | Australia | 100 |
| Basware India Private Limited | Chandigarh | India | 99 |
| Basware Belgium NV | Aalst | Belgium | 99 |
| Basware SRL | Iasi | Romania | 100 |
| Basware Holdings Ltd. | London | United Kingdom | 100 |
| Basware Shared Services Ltd. | London | United Kingdom | 100 |
| Basware Supplier Solutions Ltd. | London | United Kingdom | 100 |
| Procserve Solutions Ltd. | London | United Kingdom | 100 |
| Procserve Services Ltd. | London | United Kingdom | 100 |
| Procserve Inc. | Arlington | United States | 100 |
The parent company has branches in India, Chandigarh (reg.no. F03347 ) and Russia, Moscow (reg.no. 16926.1).
Basware UK subsidiaries, Basware UK Ltd and Basware Holdings Ltd sub-group entities have applied exemption from the local statutory audit requirements under section 479A of the Companies Act 2006.
Basware GmbH is exempt from the duty of corporations to audit and disclose financial statements pursuant to German legislation (§ 264 III HGB).
| EUR thousand | |
|---|---|
| -- | -------------- |
| 31.12.2017 | 31.12.2016 | |
|---|---|---|
| Rent deposits | 423 | 402 |
| Accrued employee expenses | 769 | 395 |
| Total | 1,192 | 797 |
| 31.12.2017 | 31.12.2016 | |
|---|---|---|
| Accounts receivables | 7,544 | 6,718 |
| Receivables from group companies | ||
| Accounts receivables | 5,802 | 3,002 |
| Interest receivables | 153 | 360 |
| Loan receivables | 8,833 | 13,614 |
| Other receivables | 3,206 | 8,572 |
| Total | 17,994 | 25,547 |
| Prepaid expenses and accrued income | 3,686 | 3,131 |
| Receivables from joint venture | 0 | 200 |
| Other receivables | 128 | 79 |
| Total | 3,814 | 3,410 |
| Current receivables total | 29,352 | 35,675 |
| Prepaid expenses and accrued income | ||
| Accrued employee expenses | 344 | 12 |
| Other prepaid expenses and accrued income | 3,342 | 3,119 |
| Total | 3,686 | 3,131 |
| 31.12.2017 | 31.12.2016 | |
|---|---|---|
| Share capital Jan. 1 | 3,528 | 3,528 |
| Share capital Dec. 31 | 3,528 | 3,528 |
| Share premium account Jan. 1 | 1,118 | 1,118 |
| Share premium account Dec. 31 | 1,118 | 1,118 |
| Equity Dec. 31 | 4,647 | 4,647 |
| Invested non-restricted equity Jan. 1 | 112,291 | 105,291 |
| Decrease of treasury shares | -201.79282 | -65 |
| Share issue | 0 | 7,065 |
| Invested non-restricted equity Dec. 31 | 112,089 | 112,291 |
| Retained earnings Jan. 1 | 5,762 | 21,584 |
| Decrease of treasury shares | 202 | 65 |
| Result for the period | -15,469 | -15,887 |
| Retained earnings Dec. 31 | -9,505 | 5,762 |
| Non-restricted equity Dec. 31 | 102,584 | 118,053 |
| Shareholders' equity Dec. 31 | 107,231 | 122,700 |
| Specification of distributable funds | ||
| Result for the period | -15,469 | -15,887 |
| Retained earnings | 5,964 | 21,649 |
| Other distributable funds | 112,089 | 112,291 |
| Development expenses, activated | -33,881 | -29,295 |
| Distributable funds | 68,704 | 88,758 |
| 31.12.2017 | 31.12.2016 | |
|---|---|---|
| Restructuring provisions | ||
| 1,199 | 0 | |
| Additions | 0 | 1,199 |
| Disposals | -998 | 0 |
| 201 | 1,199 |
Reorganisation provisions are detailed in Note 21 to the consolidated financial statements.
EUR thousand
| 31.12.2017 | 31.12.2016 | |
|---|---|---|
| Loans from financial institutions | 47,286 | 36,732 |
| Debts to group companies | 177 | 177 |
| Non-current liabilities total | 47,463 | 36,909 |
| 31.12.2017 | 31.12.2016 | |
|---|---|---|
| Accounts payable | 5,643 | 4,602 |
| Liabilities to group companies | ||
| Accounts payable | 450 | 1,047 |
| Other debts | 32,947 | 34,791 |
| Total | 33,397 | 35,838 |
| Loans from financial institutions | 1,996 | 10,548 |
| Other debts | 1,980 | 2,050 |
| Accrued expenses and deferred income | 9,933 | 8,151 |
| Total | 13,910 | 20,749 |
| Current liabilities total | 52,950 | 61,189 |
| Accrued expenses and deferred income | ||
| Accrued employee expenses | 8,452 | 6,363 |
| Other accrued expenes | 99 | 1,788 |
| Total | 8,551 | 8,151 |
EUR thousand
| 31.12.2017 | 31.12.2016 | |
|---|---|---|
| Own guarantees | ||
| Business mortgages of own debt | 1,200 | 1,200 |
| Guarantees | 202 | 273 |
| Commitments on behalf of subsidiaries | ||
| Guarantees | 100 | 100 |
| Other own contingent liabilities | ||
| Leasing liabilities | ||
| Current lease liabilities | 182 | 194 |
| Lease liabilities maturing in 1 - 5 years | 229 | 136 |
| Total | 411 | 329 |
| Rental liabilities | ||
| Current rental liabilities | 3,567 | 1,721 |
| Rental liabilities maturing in 1 - 5 years | 6,705 | 4,671 |
| Rental liabilities maturing over 5 years | 0 | 0 |
| Total | 10,272 | 6,392 |
| Other own contingent liabilities total | 10,683 | 6,721 |
| Commitments and contingent liabilities total | 12,185 | 8,293 |
Value added tax is only included in vehicle leasing liabilities. The other liabilities are exclusive of value added tax. The lease agreements are ordinary lease agreements. The finance lease agreements are ordinary finance lease agreements and have no associated leaseback clauses. The group does not have pledges, mortgages or guarantees on behalf of external parties.
(Translation of the Finnish original)
We have audited the financial statements of Basware Corporation (business identity code 0592542-4) for the year ended 31 December, 2017. The financial statements comprise the consolidated balance sheet, statement of comprehensive income, statement of changes in equity, statement of cash flows and notes, including a summary of significant accounting policies, as well as the parent company's balance sheet, income statement, statement of cash flows and notes.
In our opinion,
Our opinion is consistent with the additional report submitted to the Audit Committee.
We conducted our audit in accordance with good auditing practice in Finland. Our responsibilities under good auditing practice are further described in the Auditor's Responsibilities for the Audit of Financial Statements section of our report.
We are independent of the parent company and of the group companies in accordance with the ethical requirements that are applicable in Finland and are relevant to our audit, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
In our best knowledge and understanding, the non-audit services that we have provided to the parent company and group companies are in compliance with laws and regulations applicable in Finland regarding these services, and we have not provided any prohibited non-audit services referred to in Article 5(1) of regulation (EU) 537/2014. The non-audit services that we have provided have been disclosed in 7 to the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We have fulfilled the responsibilities described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements.
We have also addressed the risk of management override of internal controls. This includes consideration of whether there was evidence of management bias that represented a risk of material misstatement due to fraud.
We refer to the Group's accounting policies and the note 3
At the balance sheet date 31 December 2017, the value of goodwill amounted to EUR 92 million representing 43% of total assets and 79% of total equity (2016: EUR 97 million, 43% of total assets and 73% of total equity). The annual impairment test was a key audit matter as:
The cash flows of the cash generating unit is based on the value in use. Changes in the assumptions used can significantly impact the value in use. The value in use is dependent on several assumptions such as the revenue growth, operating profit, and discount rate used. Changes in these assumptions can lead to an impairment.
How our audit addressed the Key Audit Matter
Our audit procedures included, among others, involving valuation specialists to assist us in evaluating the assumptions and methodologies used by the group including those related to forecasted revenue, operating profit and the weighted average cost of capital used in discounting the cash flows.
We reviewed the sensitivity in the available headroom by cash generating unit and focused on whether any reasonably possible change in assumptions could cause the carrying amount to exceed its recoverable amount.
We compared the historical forecasting of the group with actual outcome and we compared projections to the latest budgets approved by the board. We checked the mathematical accuracy of the underlying calculations.
We compared the groups' disclosures related to impairment tests in note 3 in the financial statements with presentation requirements in applicable accounting standards and we reviewed the information provided on sensitivity analysis.
We refer to the Group's accounting policies and the note 2
Revenue is recognised when the risks and rewards of the underlying products and services have been transferred to the customer.
The group focuses on revenue as a key performance measure which could create an incentive for revenue to be recognized before the risks and rewards have been transferred.
Revenue recognition was determined to be a key audit matter and a significant risk of material misstatement referred to in EU Regulation No 537/241, point (c) of Article 10(2) due to the risk related to the recognition of revenue before risks and rewards have been transferred.
How our audit addressed the Key Audit Matter
Our audit procedures, considering the significant risk of material misstatement related to revenue recognition, included amongst other:
We refer to the Group's accounting policies and the note 9
At the balance sheet date 31 December 2017, the deferred tax assets on unused tax losses amounted to EUR 10 million.
The deferred tax assets was a key audit matter as the management's assumptions used to determine the recognition criteria as well as the probability on utilizing the tax losses in the future are judgmental and depending on the future market and economical situation. The deferred tax assets is a significant balance.
How our audit addressed the Key Audit Matter
During the audit of the deferred tax assets we assessed the evidence that there will be future taxable income available to utilize the deferred tax assets.
Our assessment focused on loss generating group companies and we focused on:
The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, and of financial statements that give a true and fair view in accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with statutory requirements. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors and the Managing Director are responsible for assessing the parent company's and the group's ability to continue as going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting. The financial statements are prepared using the going concern basis of accounting unless there is an intention to liquidate the parent company or the group or cease operations, or there is no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance on whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with good auditing practice will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
As part of an audit in accordance with good auditing practice, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
We were first appointed as auditors by the Annual General Meeting on 14 February 2008, and our appointment represents a total period of uninterrupted engagement of 10 years.
The Board of Directors and the Managing Director are responsible for the other information. The other information comprises the report of the Board of Directors and the information included in the Annual Report, but does not include the financial statements and our auditor's report thereon. We have obtained the report of the Board of Directors prior to the date of this auditor's report, and the Annual Report is expected to be made available to us after that date.
Our opinion on the financial statements does not cover the other information.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. With respect to report of the Board of Directors, our responsibility also includes considering whether the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations.
In our opinion, the information in the report of the Board of Directors is consistent with the information in the financial statements and the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations.
If, based on the work we have performed on the other information that we obtained prior to the date of this auditor's report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Helsinki, Finland, February 1, 2018
Ernst & Young Oy Authorized Public Accountant Firm
Terhi Mäkinen Authorized Public Accountant
| 2017 | 2016 | 2015 | 2014 | 2013 | |
|---|---|---|---|---|---|
| Net sales | 149,241 | 148,580 | 143,410 | 127,674 | 123,349 |
| Growth of net sales, % | 0.4 % | 3.6 % | 12.3 % | 3.5 % | 8.5 % |
| EBITDA | 672 | -5,394 | 11,902 | 11,354 | 10,383 |
| % of net sales | 0.5 % | - | 8.3 % | 8.9 % | 8.4 % |
| Adjusted EBITDA | 3,367 | 2,063 | 12,121 | 11,354 | 10,383 |
| % of net sales | 2.3 % | 1.4 % | 8.3 % | 8.9 % | 8.4 % |
| Operating profit | -9,436 | -13,946 | 4,676 | 4,325 | 3,331 |
| Growth of operating profit, % | - | - | 7.5 % | 29.8 % | -59.9 % |
| % of net sales | - | - | 8.1 % | 3.4 % | 2.7 % |
| Adjusted operating result | -6,741 | -6,490 | 4,894 | 4,325 | 3,331 |
| % of net sales | - | - | 3.4 % | 3.4 % | 2.7 % |
| Profit before tax | -12,203 | -16 256 | 3,563 | 4,328 | 3,284 |
| % of net sales | - | - | 2.5 % | 3.4 % | 2.7 % |
| Profit for the period | -11,451 | -14 318 | 3,083 | 2,959 | 2,605 |
| % of net sales | - | - | 2.1 % | 2.3 % | 2.1 % |
| Return on equity, % | -9.2 % | -10.5 % | 2.2 % | 2.5 % | 2.6 % |
| Return on investment, % * | -5.7 % | -6.8 % | 3.6 % | 4.4 % | 3.9 % |
| Interest bearing liabilities | 49,282 | 47,280 | 1,667 | 5,000 | 8,632 |
| Cash assets | 20,683 | 35,755 | 33,238 | 28,954 | 13,218 |
| Gearing, % | 24.7 % | 8.7 % | -22.4 % | -38.6 % | -4.7 % |
| Equity ratio, % | 54.8 % | 58.5 % | 79.1 % | 82.8 % | 77.1 % |
| Total assets | 211,548 | 227,043 | 178,545 | 168,781 | 127,043 |
| Gross investments ** | 12,498 | 51,882 | 39,971 | 5,821 | 20,733 |
| % of net sales | 8.4 % | 34.9 % | 27.9 % | 4.6 % | 16.8 % |
| R&D costs *** | 22,319 | 24,274 | 20,748 | 17,680 | 18,184 |
| % of net sales | 15.0 % | 16.3 % | 14.5 % | 13.8 % | 14.7 % |
| R&D personnel at end of period | 410 | 419 | 373 | 332 | 370 |
| Personnel expenses | 99,083 | 104,600 | 85,726 | 77,779 | 76,919 |
| Personnel average for period | 1,838 | 1,811 | 1,591 | 1,466 | 1,485 |
| Personnel at end of period | 1,829 | 1,889 | 1,648 | 1,493 | 1,472 |
| Growth of personnel, % | -3.2 % | 14.6 % | 10.4 % | 1.4 % | 3.4 % |
*) The automatic currency valuation booking policy of cashpool accounts has been clarified. Due to the change in presentation of 2016 comparatives, also the return on investment has been revised to reflect the clarified booking policy.
**) Includes aquisitions and capitalized R&D costs.
***) According to new presentation financial year depreciations of capitalized development expenses are excluded and FY2016 figures are revised.
| 2017 | 2016 | 2015 | 2014 | 2013 | |
|---|---|---|---|---|---|
| Earnings per share, undiluted | -0.80 | -1.00 | 0.22 | 0.22 | 0.20 |
| Earnings per share, diluted | -0.79 | -1.00 | 0.22 | 0.22 | 0.20 |
| Adjusted earnings per share, undiluted (EUR) |
-0.61 | -0.48 | 0.23 | 0.22 | 0.20 |
| Adjusted earnings per share, diluted (EUR) |
-0.61 | -0.48 | 0.23 | 0.22 | 0.20 |
| Equity per share | 8.07 | 9.26 | 9.97 | 9.88 | 7.62 |
| Dividend per share | 0.00 * | 0.00 | 0.00 | 0.10 | 0.23 |
| Dividend per profit, % | 0.0 % | 0.0 % | 0.0 % | 45.1 % | 113.4 % |
| Effective dividends, % | 0.0 % | 0.0 % | 0.0 % | 0.2 % | 0.9 % |
| Price/Earnings ratio (P/E) | -59.56 | -36.24 | 171.31 | 184.31 | 123.45 |
| Share price performance, share issue adjusted |
|||||
| lowest share price | 31.96 | 30.48 | 31.80 | 23.50 | 16.75 |
| highest share price | 47.50 | 40.90 | 47.80 | 42.21 | 25.60 |
| average share price | 38.84 | 36.22 | 39.20 | 35.65 | 20.35 |
| closing share price | 47.50 | 36.30 | 37.32 | 41.05 | 25.03 |
| Market value of shares at end of period |
682,085,892 | 520,662,298 | 530,736,266 | 577,640,124 | 321,771,012 |
| Share issue adjusted number of traded shares |
1,681,791 | 1,931,525 | 3,156,826 | 4,792,273 | 1,723,866 |
| % of average share number | 11.7 % | 13.5 % | 22.3 % | 36.1 % | 13.4 % |
| Number of shares ** | |||||
| - end of the period | 14,359,703 | 14,343,314 | 14,152,770 | 14,146,426 | 12,931,229 |
| - average during the period | 14,357,343 | 14,293,754 | 14,150,954 | 13,286,327 | 12,848,540 |
| - average during the period, diluted | 14,406,674 | 14,313,442 | 14,173,167 | 13,297,962 | 12,848,540 |
*) Board of Director's proposal to the Annual General Meeting of Shareholders
**) Excluding treasury shares
(Profit or loss before taxes - taxes) x 100
Shareholders' equity (average)
(Profit before taxes + interest and other financial expenses) x 100
Balance sheet total - non-interest bearing liabilities (average)
Gearing, % (Interest-bearing liabilities - interest-bearing assets) x 100 Shareholders' equity
Equity ratio, % Shareholders' equity x 100 Balance sheet total - advance payments received
Earnings per share Profit for the period
Adjusted average number of shares during the period
Adjusted earnings per share (Adjusted EPS) is calculated by excluding from the result any adjustments related to alliance fees, acquisitions and disposals, restructuring and efficiency measures, impairment losses and litigation fees and settlements.
Shareholders' equity
Adjusted number of shares at the end of the financial period - own shares
Total dividend
Adjusted number of shares at the end of the financial period - own shares
Dividend/profit, % Dividend per share x 100
Earnings per share
Dividend per share x 100
Adjusted share price at the end of the financial period
Price-earnings ratio (P/E) Adjusted share price at the end of the financial period
Earnings per share
Adjusted EBITDA is reported excluding any adjustments related to alliance fees, acquisitions and disposals, restructuring and efficiency measures, impairment losses and litigation fees and settlements.
Adjusted EBIT os calculated from operating result excluding any adjustments related to alliance fees, acquisitions and disposals, restructuring and efficiency measures, impairment losses and litigation fees and settlements.
Total investments made to non-current assets including acquisitions and capitalized research and development costs.
Basware shares are listed on Nasdaq Helsinki Ltd. The company has one series of shares, with the trading code BAS1V. Basware has been listed on the Helsinki Stock Exchange (Nasdaq Helsinki Ltd.) since February 29, 2000. The listing price of the share was EUR 5.70.
At the end of 2017, the total number of shares issued by Basware was 14,401,936 (14,401,936). The book counter value per share is EUR 0.30. Each share confers one vote in the general meeting of shareholders, and all shares carry an equal right to dividend.
At the end of 2017, Basware Corporation's share capital was EUR 3,528,368.70 (EUR 3,528,368.70).
During 2017, the highest price of the share was EUR 47.50 (EUR 40.90), the lowest was EUR 31.96 (EUR 30.48) and the closing price was EUR 47.50 (EUR 36.30). The average price of the share was EUR 38.84 (EUR 36.22) during the period.
A total of 1,681,791 (1,931,525) shares were traded during the period, corresponding to 11.7 percent (13.5%) of the average number of shares. Market capitalization with the period's closing price on December 31, 2017, was EUR 682,085,892 (EUR 520,662,298).
The total amount of own shares held by the company on December 31, 2017 was 42,233 shares (58,622 shares), representing approximately 0.3 percent (0.4 %) of all of outstanding shares. The Group repurchased 669 own shares from the markets for remuneration of the Board of Directors.
Additional information on the company's share-based incentive schemes is available on the company's investor webpages.
Basware had 11,682 (12,620) shareholders on December 31, 2017, including nominee registers (10). Nominee registered holdings accounted for 46.7 percent (37.0%) of the total number of shares.
| Number of shareholders | Number of shares | Votes, % | |
|---|---|---|---|
| 1-100 | 9,757 | 235,144 | 1.6 |
| 101-1,000 | 1,745 | 467,683 | 3.2 |
| 1,001-10,000 | 132 | 304,667 | 2.1 |
| 10,001-100,000 | 28 | 1,064,784 | 7.4 |
| 100,001+ | 20 | 12,329,658 | 85.6 |
| Total | 11,682 | 14,401,936 | 100.0 |
| Number of shareholders | Number of shares | Votes, % | |
|---|---|---|---|
| Private companies | 383 | 635,236 | 4.4 |
| Financial and insurance institutions | 25 | 8,283,164 | 11.0 |
| Public sector organizations | 8 | 1,448,557 | 10.1 |
| Non-profit organizations | 36 | 58,159 | 0.4 |
| Households | 11,178 | 3,742,351 | 26.0 |
| Foreign | 52 | 234,469 | 1.5 |
| Of which nominee-registered | 10 | 6,730,476 | 46.7 |
| Total | 11,682 | 14,401,936 | 100.0 |
| Number of shares | Votes, % | |
|---|---|---|
| 1. Sihvo Ilkka Juhani | 885,300 | 6.2 |
| 2. Ilmarinen Mutual Pension Insurance Company | 757,921 | 5.3 |
| 3. OP-Finland Value Fund | 606,454 | 4.2 |
| 4. Vaajoensuu Hannu | 575,857 | 4.0 |
| Vaajoensuu Hannu | 309,357 | 2.6 |
| Havacment Oy | 266,500 | 1.9 |
| 5. Eräkangas Kirsi | 486,376 | 3.4 |
| 6. Perttunen, Sakari | 384,375 | 2.7 |
| 7. Veritas Pension Insurance Company Ltd. | 343,479 | 2.4 |
| 8. The State Pension Fund | 256,000 | 1.8 |
| 9. Pöllänen Antti | 208,400 | 1.5 |
| 10. Eräkangas Lotta | 196,400 | 1.4 |
| 13. Swiss Life Luxembourg Sa | 185,950 | 1.3 |
| 12. Fondita Nordic Micro Cap Investment Fund | 180,000 | 1.3 |
| 13. OP-Suomi Pienyhtiöt -sijoitusrahasto | 170,091 | 1.2 |
| 14. Perttunen Meimi | 145,107 | 1.0 |
| 15. Fondita Nordic Small Cap -sijoitusrahasto | 140,000 | 1.0 |
| 16. Danske Invest Finnish Institutional Equity Fund | 104,700 | 0.7 |
| 17. Danske Invest Finnish Small Cap Fund | 90,000 | 0.6 |
| 18. Vaajoensuu Henri | 83,800 | 0.6 |
| 19. Vaajoensuu Petra | 83,800 | 0.6 |
| 20. Vaajoensuu Sara | 83,700 | 0.6 |
| Total 20 shareholders | 5,967,710 | 41.5 |
| Nominee registered total | 6,730,476 | 46.7 |
| Total remaining | 1,703,750 | 11.8 |
| Total | 14,401,936 | 100.0 |
The members of the Board of Directors and Executive Team held in total 1,565,471 company shares on December 31, 2017. This amount accounted for 10.9 percent of the total number of shares and votes. The members of the Board of Directors and members of the Executive Team held shares on December 31, 2017 as follows:
| Number of shares | % of all shares | |
|---|---|---|
| David Bateman | 0 | 0.0 |
| Michael Ingelög | 5,000 | 0.0 |
| Ilkka Sihvo | 885,300 | 6.2 |
| Tuija Soanjärvi | 1,804 | 0.0 |
| Hannu Vaajoensuu | 575,857 | 4.0 |
| Anssi Vanjoki | 880 | 0.0 |
| Board total | 1,468,841 | 10.2 |
| Jane Broberg | 1,706 | 0.0 |
| Tehseen Dahya | 53,116 | 0.4 |
| Lars Madsen | 2,863 | 0.0 |
| Ilari Nurmi | 9,882 | 0.1 |
| Mikko Pilkama | 1,409 | 0.0 |
| Paul Taylor | 7,512 | 0.1 |
| Vesa Tykkyläinen | 2,817 | 0.0 |
| Jussi Vasama | 15,835 | 0.1 |
| Executive Team total | 96,630 | 0.7 |
Basware shares are listed on Nasdaq Helsinki Ltd. The Basware share has been listed on the Helsinki Stock Exchange (Nasdaq Helsinki Ltd.) since February 29, 2000.
| Trading code | BASV1 |
|---|---|
| ISIN code | FI0009008403 |
| Book-counter value | EUR 0.30 |
| Listing price on February 29, 2000 | EUR 5.70 |
| Closing price on December 31, 2017 | EUR 47.50 |
Annual General Meeting of Basware Corporation will be held on Thursday, March 15, 2018 at 1:00 PM in Helsinki, at the address of Iso Roobertinkatu 14, Helsinki, Finland.
Each shareholder, who is registered on March 5, 2018 in the shareholders' register of the company held by Euroclear Finland Ltd, has the right to participate in the General Meeting.
A shareholder, who wishes to participate in the General Meeting, shall register for the meeting no later than 4:00 PM (Finnish time) on March 7, 2018 by giving a prior notice of participation to the company. Such notice can be given:
The proposals for the decisions on the matters on the agenda of the General Meeting are available on Basware's investor webpages.
Board of Directors proposes to the Annual General Meeting that no dividend be paid for 2017.
During 2018, Basware Corporation will publish financial information as follows:
Interim reports are prepared according to the IAS 34 Interim Financial Reporting standard.
All interim reports and stock exchange releases are available on Basware's investor webpages.
Contact us if you have any questions or feedback: [email protected] investors.basware.com
© 2018 Basware
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