Basware Oyj — Annual Report 2021

Feb 23, 2022

FINANCIAL STATEMENTS

Report of the Board of Directors

Basware offers the largest open business network in the world and is the global leader in providing networked purchase-to-pay solutions and e-invoicing services. Our technology empowers organizations with 100% spend visibility by enabling the capture of all financial data across procurement, finance, accounts payable and accounts receivable functions. Basware's solutions play an important role in transitioning to a lower-carbon economy by enabling the digitalization and automation of Purchase-to-Pay enterprise processes that rely on paper. Basware is a global company doing business in more than 100 countries and is traded on Nasdaq Helsinki.

Basware’s results in 2021

Key figures EUR THOUSAND	2021	2020	Change, %
Net sales	153,155	151,579	1.0
Cloud revenue	119,996	110,312	8.8
Cloud ARR order intake	17,064	19,250	-11.4
EBIT	7,144	4,667	53.1
EBITDA	22,828	20,207	13.0
Gearing, %	72.5	53.0	36.8
Cash and cash equivalents	31,060	40,461	-23.2
Cash flow from operating activities	20,435	25,252	-19.1
Earnings per share, diluted, EUR	-0.99	-0.51	-93.7
Personnel	1,347	1,336	0.8

*At the end of the period.

Net sales

NET SALES BY REVENUE TYPE, EUR THOUSAND

	2021	2020	Change, %
Cloud	119,996	110,312	8.8
Consulting	26,942	26,875	0.2
Maintenance, license and other	6,216	14,392	-56.8
Total	153,155	151,579	1.0

NET SALES BY CUSTOMER LOCATION, EUR THOUSAND

	2021	2020	Change, %
Americas	33,641	35,013	-3.9
Europe	54,767	52,176	5.0
Nordics	56,904	56,428	0.8
APAC	7,843	7,962	-1.5
Total	153,155	151,579	1.0

Basware’s net sales for the year 2021 amounted to EUR 153,155 thousand (EUR 151,579 thousand), an increase of 1.0 percent. This equated to 0.9 percent organic growth at constant currencies. In 2021 cloud revenues amounted to EUR 119,996 thousand (EUR 110,312 thousand), up by 8.8 percent, equating to 8.6 percent organic growth at constant currencies and accounted for 78 percent (73%) of net sales. Consulting revenues amounted to EUR 26,942 thousand (EUR 26,875 thousand), an increase of 0.2 percent, equating to 0.1 percent organic at constant currencies. Maintenance and license revenues declined in line with expectations as Basware transitions customers to the cloud and discontinues some of Basware’s legacy services. Maintenance, license and other revenues amounted to EUR 6,216 thousand (EUR 14,392 thousand), a decrease of 56.8 percent. This equated 57.1 percent organic decrease at constant currencies. The accelerated decline in maintenance is due to end of life of some of Basware’s legacy on-premise products triggered on January 1st 2021.

ORDER INTAKE BY TYPE, EUR THOUSAND

	2021	2020	Change, %
New logo	6,045	6,065	-0.3
Expansion	8,378	9,357	-10.5
Transformation	2,641	3,828	-31.0
Total	17,064	19,250	-11.4

Cloud order intake Americas accounted for 22.0 percent (23.1%), Europe 35.8 percent (34.4%), Nordics 37.2 percent (37.2%) and Asia-Pacific area for 5.1 percent (5.3%) of total revenues. Basware’s net sales for the full year 2021 from Americas was negatively impacted by the development of US dollar against Euro. At constant currencies net sales from Americas in 2021 declined by 0.9 percent year on year. A list of Basware Corporation's subsidiaries is in Note 25 of the Financial Statements.

Financial performance

EUR THOUSAND	2021	2020	Change, %
Net sales	153,155	151,579	1.0
Cost of sales	-66,837	-65,941	1.4
Gross profit	86,317	85,638	0.8
Sales and marketing	-38,286	-40,001	-4.3
Research and development	-27,928	-25,930	7.7
General and administration	-13,038	-14,096	-7.5
Total operating expenses	-79,252	-80,027	-1.0
Other operating income and expenses	79	-944	N/A
EBIT	7,144	4,667	53.1
EBITDA	22,828	20,207	13.0

Basware’s profitability development was positive throughout the year. In 2021 Basware’s operating profit was EUR 7,144 thousand (EUR 4,667 thousand), an increase of 53.1 percent. In 2021, cost of sales amounted to EUR -66,837 thousand (EUR -65,941 thousand), an increase of 1.4 percent. Out of the total operating expenses, sales and marketing expenses decreased 4.3 percent, research and development expenses increased 7.7 percent and general and administration expenses decreased 7.5 percent in 2021. Sales and marketing costs reduced in comparison with 2020 due to lower labor costs and incentives. Research and Development expenses increased in comparison to 2020 mainly due to a lower level of capitalization of R&D expenses, and a higher amortization of previously capitalized expenses. Basware’s loss before taxes was EUR -13,421 thousand (EUR -6,985 thousand) and loss for the period EUR -14,233 thousand (EUR -7,329 thousand) in 2021. Finance income and expenses amounted to EUR -20,565 thousand (EUR -11,652 thousand). Finance expenses for 2021 were negatively impacted by the refinancing related one-off expenses of EUR 11,210 thousand in the third quarter 2021. Taxes impacted the result by EUR -812 thousand (EUR 345 thousand). Diluted earnings per share were EUR -0.99 (EUR -0.51). Basware’s cloud order# Stories Reports Financial statements Key figures Information for shareholders 45

Adjusted operating result and adjusted EBITDA

EUR THOUSAND	2021	2020	Change, %
EBIT	7,144	4,667	53.1
Adjustments:
Acquisition, disposal and restructuring income (-) and expenses (+)	-75	-301	75.1
Efficiency related expenses	432	453	-4.6
Total adjustments	357	152	134.9
Adjusted EBIT	7,501	4,819	55.7
Depreciation and amortization	15,685	15,540	0.9
Adjusted EBITDA	23,186	20,359	13.9
% of net sales	15.1%	13.4%

Cash flows, financing and investments

Cash flows from operating activities were EUR 20,435 thousand (EUR 25,252 thousand). Basware’s cash and cash equivalents including short-term deposits were EUR 31,060 thousand (EUR 40,461 thousand) at the end of the year. Cash balance decreased in comparison mainly because of the refinancing related payments in the third quarter 2021. Basware’s total assets on the balance sheet at the end of the year were EUR 220,720 thousand (EUR 224,862 thousand). Net cash flows from investments were EUR -13,408 thousand (EUR -9,464 thousand) in 2021. The equity ratio was 33.1 percent (36.7%) and gearing 72.5 percent (53.0%). Gearing increased because of lower cash balance and decreased equity driven by the loss for the period, both attributable to the refinancing transaction as expected. The company’s interest-bearing liabilities excluding leasing liabilities EUR 71,402 thousand (EUR 68,837 thousand), of which current liabilities accounted for EUR 1,175 thousand (EUR 2,173 thousand). The return on investment was 4.3 percent (3.1%) and return on equity -18.3 percent (-8.3%).

Research and development

In 2021 Basware’s research and development focused on meeting the global regulatory compliance requirements for e-invoicing with Basware’s network offering, developing Artificial Intelligence in SmartPDF AI solution, development of user experience in Basware Purchase solution and improving the user environment in AP Pro solution. The focus of Basware’s R&D activities is to strengthen the networked Purchase-to-Pay offering by extending the business coverage and the underlying system intelligence with Artificial Intelligence in addition to continuous development of an integrated user experience across the individual business solutions. In 2021 Basware’s research and development investments including capitalizations but excluding amortizations were EUR 25,235 thousand (EUR 24,819 thousand). Research and development investments were 16.5 percent (16.4%) of net sales in 2021. A total of 237 (273) people worked in research and development at the end of 2021.

Personnel

PERSONNEL BY AREA, ON AVERAGE

	2021	2020	Change, %
Americas	98	106	-7.6
Europe	380	373	1.9
Nordics	416	425	-2.3
APAC	446	430	3.7
Total	1,339	1,334	0.4

Basware employed 1,339 (1,334) people on average during 2021 and 1,347 (1,336) at the end of 2021. On 31 December 2021, 12.0 percent (13.6%) of the personnel worked in sales and marketing, 31.8 percent (33.2%) in R&D, production and products, 44.8 percent (42.4%) in consulting and customer services and 11.4 percent (10.7%) in administration. Information about salaries and employee benefits in Note 5 of the Financial Statements and other employee related metrics in the section Non-financial statement.

Stories Reports Financial statements Key figures Information for shareholders 46

ANNOUNCEMENT DATE

Shareholder	Threshold	Total holding, %
9 February	Arrowgrass Master Fund Ltd	Below 15%
23 February	Long Path Partners LP	Over 10%
15 April	Arrowgrass Master Fund Ltd	Below 10%
20 July	Arrowgrass Master Fund Ltd	Below 5%

Basware had 11,533 (11,864) shareholders at the end of 2021, including nominee-registers. Nominee-registered holdings accounted for 54.1 percent (56.4%) of the total number of shares. More information on Basware’s share and shareholders in sections Key figures and Information for shareholders.

SHARE AND SHAREHOLDERS

SHARE INDICATORS

	2021	2020
Share price performance, EUR
- lowest price	28.25	15.66
- highest price	43.85	42.85
- average price	37.43	29.58
- closing price	30.25	42.00
Market capitalization at end of period, EUR¹	437,293,788	605,449,320
Number of shares
- at end of the period	14,455,993	14,415,460
- average during the period	14,445,824	14,407,595
- average during the period, diluted	14,580,596	14,638,935
Number of traded shares (share issue adjusted) in Nasdaq Helsinki	4,162,965	4,817,685
% of average number of shares	28.6%	33.4%
Treasury shares held by the Company at end of the period	7,943	5,476
% of total shares	0.1%	0.0%
Share capital, EUR	3,528,368	3,528,368
Earnings per share, undiluted, EUR	-0.99	-0.51
Earnings per share, diluted, EUR	-0.99	-0.51
Adjusted earnings per share, undiluted, EUR	-0.96	-0.50
Adjusted earnings per share, diluted, EUR	-0.96	-0.50
Equity per share, EUR	5.06	5.73
Price per earnings (P/E)	-30.70	-82.56

¹ Excluding treasury shares

Flagging notifications in 2021

During 2021 Basware Corporation received the following notifications from major shareholders: More information in the section Share indicators in the Financial statements and Information for Shareholders. See also Remuneration report for information on Basware's share-based incentive plans.

Annual General Meeting and authorizations of the Board of Directors

Basware Corporation’s Annual General Meeting 2021 was held on March 18, 2021. The Annual General Meeting adopted the annual accounts for the financial period ending on 31 December 2020. The remuneration report was approved, and the members of the Board of Directors as well as the CEO were discharged from liability for the financial period ending on 31 December 2020. The Annual General Meeting resolved in accordance with the proposal of the Board of Directors that no dividend will be paid for the year 2020. The Annual General Meeting decided the number of members of the Board of Directors to be six. Mr. Ilkka Sihvo, Mr. Michael Ingelög, Mr. Daryl Rolley and Ms. Minna Smedsten were re-elected as members of the Board of Directors, and Mr. Carl Farrell and Mr. Jonathan Meister were elected as new members. The Board of Directors elected in its organizing meeting Michael Ingelög as the Chairperson and Ilkka Sihvo as the Vice Chairperson of the Board of Directors. Minna Smedsten was elected as the Chairperson of the Audit Committee and Carl Farrell, Jonathan Meister and Michael Ingelög as its members. Ilkka Sihvo was elected as the Chairperson of the Remuneration Committee and Daryl Rolley and Michael Ingelög as its members. Ernst & Young Oy, Authorized Public Accounting Firm, was elected as the company's auditor.

Stories Reports Financial statements Key figures Information for shareholders 47

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 1,446,000 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 repurchase authorization shall be valid for 18 months and it 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. A total maximum of 1,446,000 new shares may be issued and/or company's own shares held by the company may be conveyed. 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 1,446,000 shares. 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 authorizations shall be valid for 18 months. On 18 March 2021 Basware announced a stock exchange release of the resolutions of the Annual General Meeting. The resolutions from Annual General Meetings are available on Basware’s investor website at https://investors.basware.com/en/governance/annual-general-meeting.

Changes in the Executive Team

On 23 March 2021 Basware announced that Chief Revenue Officer Paul Taylor has decided to step down from Basware's Executive Team to take the role of Country Manager for United Kingdom and Ireland. In March 2021, Basware also started the recruiting process of a new Chief Revenue Officer. Basware's Chief Executive Officer Klaus Andersen acted as an interim Chief Revenue Officer during the recruitment period. The changes were effective as of 1 April 2021. On 24 June 2021 Basware announced that Chief Customer Officer Jussi Vasama# Management and Organization

Executive Team Changes

Jukka-Pekka Oinonen has decided to step down from Basware’s Executive Team. The changes were effective as of 24 June 2021. Selected members of the senior management team within the Basware Services organization assumed the responsibilities for Professional Services and Customer Support, reporting to Chief Executive Officer, Klaus Andersen.

On 24 August 2021 Basware announced that Alwin Schauer has been appointed as the Chief Revenue Officer of Basware and member of the Executive Team, reporting to Klaus Andersen, Chief Executive Officer of Basware. Klaus Andersen continued as the company’s interim CRO until Mr. Schauer started in his position on 1 September 2021.

Other events of the period

Loan arrangement with Macquarie Capital Principal Finance

On 12 July 2021 Basware announced that it has completed an amendment agreement of its debt facility with Macquarie Principal Financing PTY Limited, effective 12 July 2021. As a result of the improved terms, the Company will realize a cash benefit of minimum EUR 12 million over the remaining duration of the Loan, compared with the original debt facility. The renegotiated Loan reflects Basware’s improved financial performance and significantly decreases Basware’s cost of debt. Under the amendment, the debt facility is upsized to a EUR 66 million senior secured Loan which will be due September 2024 in line with the facility’s original maturity and has a non-call of 24 months. The Loan amount of EUR 66 million consists of EUR 50 million related to the original debt facility, EUR 11 million related to previously capitalized interest (PIK interest) and EUR 5 million upsizing to enhance the Company’s overall liquidity position.

Share issue to the company itself without consideration

On 14 January 2021 Basware announced that The Board of Directors of Basware Corporation has, pursuant to the share issue authorization granted to it by the Annual General Meeting held on 4 June 2020, resolved on an issue of 43,000 new shares in the company to the company itself without consideration. The new shares to be issued to the company will be used for reward payments under the company's incentive programs. The new shares to be issued are of the same class as the existing shares in the company. The total number of the company's shares after the share issue was 14,463,936 shares, of which 48,476 shares in total was held by the company.

Conveyances of Basware Corporation’s own shares

On 19 March 2021 Basware announced that The Board of Directors of Basware Corporation has decided on 18 March 2021 on a directed for the reward payment of Basware Corporation's Performance Share Plan 2019-2020 and Matching Share Plan 2018-2020. In the share issue, 39,908 Basware Corporation shares were issued and conveyed without consideration to the key persons participating in the plans according to the terms and conditions of the incentive schemes. After the transfer of the shares, the company held a total of 8,568 own shares.

As a result of the share issue, the Board of Directors also decided upon the adjustment of the number of shares that can be subscribed on the basis of the 1,000 freely transferable warrants issued by the company originally to Bregal Milestone in March 2019 and subsequently Stories Reports Financial statements Key figures Information for shareholders 48 transferred to Briarwood Chase Management LLC in October 2020. Following the adjustment resolved on 18 March 2021, the warrants entitle their holder to subscribe for a total of 1,003,000 shares in the company (before this adjustment, 1,001,000 shares) at an adjusted subscription price of EUR 29.7939 per share (before the adjustment, the subscription price per share was EUR 29.8764).

To increase the number of shares that may be subscribed for with the warrants, the Board of Directors exercised on 18 March 2021 the authorization granted by the Annual General Meeting of shareholders held on 18 March 2021 by deciding upon issuance of special rights that entitle their holder to subscribe for 2,000 new shares in the company. These adjustments to the terms and conditions of the warrants became effective upon registration with the Finnish Trade Register.

On 23 September 2021 Basware announced that The Board of Directors of Basware Corporation has decided on 22 September 2021 a directed share issue for the reward payment of Basware Corporation’s Restricted Share Plan 2020. In the share issue, 625 Basware Corporation shares were issued and conveyed without consideration to the key persons participating in the plan according to the terms and conditions of the plan. After the directed share issue, the company held 7,943 own shares.

As a result of the share issue, the Board of Directors also decided upon the adjustment of the subscription price to be utilized when subscribing the 1,000 freely transferable warrants belonging to Briarwood Chase Management LLC. Following the adjustment, the warrants entitle their holder to subscribe for a total of 1,003,000 shares in the company at an adjusted subscription price of EUR 29.7926 per share (before the adjustment, the subscription price per share was EUR 29.7939).

Events after the period

There were no significant events after the period.

Strategy

Basware is a global market leader in networked Purchase-to-Pay with the largest open e-invoicing network in the world. The market growth is estimated to be slightly over 8 percent from 2022 onwards. In 2021, the Purchase-to-Pay market that Basware addresses was estimated to be worth EUR 4.3 billion and the market is expected to grow to EUR 6.2 million by 2025. Purchase-to-Pay markets are driven by global megatrends such as digitalization and automation, increased regulation, rapid technological development and sustainability.

Basware is focused on sustainable growth and profitability, increasing operational efficiency in the strategic business and simplifying operations. Basware’s key growth markets are US, UK, Germany and France, where the company sees the greatest opportunity to win new customers. Each of Basware’s top 200 key customers brought on average approximately EUR 330 thousand annual recurring cloud revenue in 2021. Through add-on sales and geographical expansions, there is potential to increase the average revenue from existing customers. Once Basware wins a new customer they typically stay with the company for many years. In 2021 Basware’s gross renewal rate was 96 percent and net renewal rate was 104 percent. The gross margin for cloud revenues in 2021 was 68 percent. Together these make the lifetime value of customer contracts high. In 2021 Basware had a customer lifetime value to customer acquisition cost ratio of approximately seven times.

Basware’s long-term ambition is to become the networked Purchase-to-Pay vendor of choice for large global enterprises. Basware moves forward to its vision through six Must-Wins, which define strategic priorities for the period 2020—2022. The Must-Wins relate to customer satisfaction, project delivery capabilities, procurement solution, growing with partners, cloud transformations and Network business.

The first Must-Win relates to customer satisfaction, which is a priority across all functions, from first contact to project delivery, products and support. The second Must-Win is enhancing delivery capabilities internally and together with partners to meet customer needs for continuous improvement and change agility. With the number three Must-Win, Basware’s aim is to further strengthen its procurement solution and entire Source-to-Pay offering through partnerships and open API architecture. For number four, Basware aims to accelerate cloud growth through partnering. The fifth Must-Win battle is to complete the last phase in customer cloud transformations and reallocate resources to long-term strategic areas. Basware has identified accelerating its Network business as the sixth Must-Win battle from 2021 onwards.

The second Must-Win Battle Delivery Capabilities was completed in 2021 and will be left out from the Must-Win Battles, leaving five Must-Win Battles from 2022 onwards. Transformations now and after, which was defined as the fifth Must-Win Battle for year 2021, is renamed to Ignite Growth. With the Must-Win battle Ignite Growth Basware is focusing on accelerating growth in its business as the cloud transformations for Basware’s clients have essentially been completed. Ignite Growth will be effective from 2022 onwards.

Risks and uncertainty factors

Basware operates in a market where technological innovation plays a key role. While Basware is recognized as a leader within its segments by independent analysts, it is critical that Basware Stories Reports Financial statements Key figures Information for shareholders 49 continues to innovate and develop its offering. Basware invests in product development to ensure the competitiveness of its product portfolio and good end-to-end quality, which impacts customer satisfaction, customer retention and expansion.

Basware has a growth strategy with high net sales growth expectations for the cloud business. Executing the strategy requires significant investments in sales and marketing and related resources in addition to an optimized pricing model with efficient customer delivery. 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 fully complete, this will act as a drag on Group net sales growth. The churn rate may increase as Basware consolidates its product portfolio to focus on strategic high gross margin business. Market disruptions such as consolidation of significant competitors, aggressive entries of new competitors or emergence of disruptive technologies may be a risk to Basware’s position as a market leader and to# Basware’s market share

The fact that more than 45 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 movement of USD, GBP, NOK, SEK or AUD against the euro, reported net sales may be affected. In addition, a proportion of Basware’s costs are denominated in INR and RON. Political risks may have a negative effect on Basware. This includes the uncertainty around the status of the UK in relation to the European Union which may have a negative impact on Basware’s business in the UK, and additionally the uncertainty related to taxation and legislation in India which may have a negative impact on Basware’s business in India. 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. Basware’s biggest operational risks relate to service disruption which could be as a result of, 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’ behavior. Operational risks are actively managed by continuous improvement in risk monitoring and protection practices, external assessments as well as internal training of Basware’s personnel. The Covid-19 pandemic may have an impact on the timing of organisations’ IT project decisions and implementations and on the global volume of invoices sent and received. This may impact Basware’s order intake, revenues, operating profit and cash flow. Basware has a business continuity plan in place including extensive remote working capabilities across all functions, however, should the Covid-19 situation materially affect employees’ ability to work, this may disturb Basware’s ability to serve its customers. Basware announced on May 2021 that the Basware quality management system has been certified according to the International Organisation for Standardisation (ISO) 9001:2015 standard, the most widely recognised international quality management standard. In 2021, Basware also started a project to certify its information security management system (ISMS) according to ISO27001 standard.

Corporate governance statement

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: https://investors.basware.com/en/governance/statements-and-policies.

Non-financial statement

Basware is a supplier of networked purchase-to-pay solutions and e-invoicing services; and has the largest open business network in the world. Basware’s technology empowers organisations with 100% spend visibility by enabling the capture of all financial data across procurement, finance, accounts payable and accounts receivable functions. Basware operates globally and has 1,347 employees in 14 countries. 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.

Social responsibility and respect for human rights

Employees are Basware’s most important resource. Basware unconditionally supports and promotes human rights and is committed to act in accordance with the United Nations’ Universal Declaration of Human Rights and the United Nations’ Global Compact principles. Basware complies with the standards of the International Labour Organization as well as with all relevant local employment legislation. Basware does not tolerate in any context the use of servitude, child labor, forced labor, human trafficking, or slavery in our operations in any region we operate.

	2021	2020
Reported bribery or corruption incidents	0	0

Prevention of corruption and bribery

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. The policy was reviewed and updated in 2020.

EMPLOYEE BY AGE GROUP	2021	2020
Under 25	5%	4%
25-34	35%	36%
35-44	35%	37%
45-54	18%	18%
Over 55	7%	6%

In addition, Basware has a global Code of Conduct that applies to all employees. The Code of Conduct describes the ethical principles according to which Basware operates and expects its suppliers and partners to operate. Code of Conduct training is mandatory for all employees.

EMPLOYEE METRICS	2021	2020
Women, of total employees	34%	32%
Women, of managers	30%	29%
Full-time employees	98%	98%
Permanent employees	99%	99%
Employees average years of service	5.5	5.5
Attrition rate	7.7%	7.1 %
CEO-to-employee pay ratio	5.97-to-1	6.19-to-1

Whistle-blowing practice

Basware encourages its employees to report any suspected misconduct related to Basware operations immediately. Employees may contact their line manager or Human Resources team for any concerns. Where the Employee prefers not to raise the issue with his/her line manager or the Human Resources Team for any reason, they can contact Basware Whistleblowing Committee, which will ensure that the identity of the person making the report will be confidential and known only to the people necessary to ensure case is handled properly. Any Basware employee who makes a whistleblowing report is protected from any repercussions, such as dismissal or other forms of reprisal.

Cyber and information security

As a cloud-based service provider, Basware recognizes cyber and information security risks related to its industry. Basware acknowledges responsibility to ensure confidentiality, integrity, and availability of customers data and Basware’s information assets. Basware takes any threat to its customers’ and its own information assets and data seriously and is continuously developing processes and technologies to meet the requirements and mitigate any identified risks. Information security risks are integrated into the company’s multi-disciplinary risk assessment. Basware has an Information Security Management System (ISMS) to oversee the development in the security domain. International standards and best practices are employed to structure Basware information security policy. The ISMS and cybersecurity programs are regularly enhanced to ensure that security policies and standards continuously follow evolving business requirements, emerging cyber threats, and regulatory requirements.

	2021	2020
Code of Conduct training completion rate	99%	100%

Basware’s ability to attract, retain and develop the right type of talent at all levels is critical for the company’s success. People are employed based on the principle of equal opportunity and without distinction to race, color, gender, religion, affiliation or origin. In 2021 Basware’s employees were of 34 different nationalities, of which three largest were Indian, Finnish and Romanian. Basware organizes YourVoice employee engagement survey annually and follows up the outcome with interactive employee sessions resulting in action points each year. In 2021 the survey had a response rate of 93 percent. Survey results in questions measuring employee engagement remained on par with the previous year’s level, while the other areas improved with three highlights: feedback received from others, reward and recognition as well as career opportunities.

Basware’s service control environments are externally audited annually by the ISAE 3402 standard, and the reports are available to customers upon request. Basware co-operates with a leading security company to carry out penetration testing annually and manages potentially identified threats accordingly. Basware has in place a Responsible Disclosure channel for security researchers to report any found issues in Basware services. Awareness training play a key role in assuring security. Employees are regularly educated through mandatory Global Security e-learning for all employees. In 2021 an extensive update to the internal Security e-learning was completed and a continuous gamified phishing training service was introduced for all employees protecting the information of Basware and its’ customers.

Data privacy

Basware is committed to data privacy compliance across its operations. This means that Basware processes personal data of its employees, customers and partners with due care and in accordance with the Global Data Protection Regulation (GDPR) and other applicable data protection laws. Basware conducts an extensive data privacy program, which is led by the Global Data Protection Officer (DPO) and reviewed within the Privacy Steering Committee. The program identifies personal data processing activities, maintains the mandatory privacy process register, performs impact assessments, builds compliance documentation, and follows up on compliance improvement actions. As part of the data privacy program, Basware performs specific impact assessments to ensure that its transfer of personal data from the EU to its affiliates and subcontractors outside the EU is compliant with the GDPR. These assessments are performed based by the Schrems II judgment of the EU Court of Justice (2020) and related recommendations from the EU Data Protection Board (2021). Basware also ensures that employees who process personal data are trained to comply with the privacy policy.and guidelines.

Environmental responsibility. Basware’s corporate environmental responsibility is incorporated into the company’s operations, including the company’s Code of Conduct. In its day-to-day activities, Basware complies with all applicable environmental laws and regulations and expects all employees, suppliers and partners to comply with all relevant legal and industry-specific environmental requirements. Basware’s main material environmental challenges relate to energy consumption at their office locations, business travel and responsible commuting. Basware tracks its greenhouse gas emissions annually and reports them to CDP. Basware has committed to reduce its emissions footprint and to improve the energy efficiency of its office locations. Basware set an emission target for 2016—2020 on its office-based CO2 emissions per employee to decrease with 20%. The target was clearly reached, and CO2 emissions dropped with 70% during the period. Covid-19 had a significant impact on reduced CO2 emissions for Basware. In addition, the company executed emission reduction initiatives in its’ offices globally. Basware is committed to setting new energy targets for mid-term and to communicate on the progress made in energy saving through its external reporting and annual CDP survey. Basware has made good progress in reducing its emissions from business travel since 2018. Basware strives to continue the work in reducing the energy and fuel consumption levels also in the long-term, by implementing responsible business travel guidelines and monitoring the business travel of the employees. Basware aims to reduce the need for business travel by using collaborative technologies and online meeting tools. The direct, positive environmental impact of Basware’s services is estimated to be moderate due to the nature of Basware’s business. Basware’s digital solutions and services provide Basware’s customers with environmental benefits by automating their financial processes by provision of cloud-based software and reducing the use of paper. By moving from paper invoices into electronic invoices, the savings from logistics of sending the paper to a preferred location can also be achieved. Basware is working towards a clearer understanding of the environmental impacts of its solutions and services and is committed to transparency in communicating about the environmental benefits and burdens of its business.

	2021	2020	Change, %
Air travel emissions, CO2 e ton	89	669	-87%

Sustainable activities of Basware based on EU Taxonomy

Basware Corporation has analyzed its economic activity according to Taxonomy Regulation of European Union (EU 2020/852) and related Technical Screening Criteria for climate change mitigation and climate change adaptation. Basware's economic activities can be identified from the regulation. Basware Corporation’s activities are eligible according to the Technical Screening Criteria for climate change mitigation in section 8.2. “Data-driven solutions for GHG emissions reductions”. Basware’s eligible activities cover the Purchase-to-Pay process by which Basware’s customers can reduce their CO2 emissions and get insight into their GHG emissions from their finance processes when needed. The eligible activities represent 82% of total net sales of Basware.

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	Taxonomy-eligible
Capital Expenditure at Basware includes mainly research and development of eligible activities and facility improvements to some extent, which amounts to 95% of total CapEx.
Taxonomy-eligible Operating Expenditure includes mainly research and development costs and purchases of taxonomy-aligned activities to some extent. Share of eligible activities is 75% of the OpEx as defined in Taxonomy Regulation.
Due to the nature of Basware’s Cloud business, the capital expenditure and operational expenditure for research and development is relatively high, and this has impacted the reported figures based on EU Taxonomy Regulation.
Basware’s eligible activities will be screened for taxonomy-alignment during the year 2022.

Guidance for 2022

Basware guides the following for the full year 2022:
* Order Intake to grow between 15 and 35 percent at organic constant currencies
* Net sales to grow between 3 and 6 percent at organic constant currencies
* EBIT between EUR 7 and 10 million

Constant currencies mean that the effects of any changes in currencies are eliminated by calculating the figures for the period using comparable period’s exchange rates. Organic means that the figures are adjusted to remove the effects of any acquisitions or disposals within the past 12 months.

Board of Directors’ proposal for dividend

On 31 December 2021, the Group’s parent company’s distributable funds were EUR 12,533 thousand. The Board of Directors proposes to the Annual General Meeting that no dividend be paid for 2021. Basware Corporation’s Annual General Meeting is planned to be held on 22 March 2022.

Espoo, Finland, on Wednesday, 2 February 2022

BASWARE CORPORATION
Board of Directors

EU TAXONOMY KPI	2021
Net sales	82%
Capital Expenditure	95%
Operating Expenditure	75%

Future outlook

Themes affecting revenues and EBIT

Basware considers the following key drivers affecting net sales and EBIT in 2022:
* Gradual improvements in the business environment throughout the year
* Gradual improvements in demand generation and sales execution throughout the year, and the timing in the ramp-up of Sales and Marketing capacity and spending
* Cloud revenues impacted by cloud order intake volume and timing, churn and network transaction volume driven revenues. Approximately fifty percent of Basware’s network transaction services revenues are subscription based.
* Consulting services revenue is driven primarily by new logo wins, expansion sales, services adoption and efficiency projects for existing customers, as well as the level of partner delivered implementations
* Revenues from maintenance and license will continue to decline approximately at the same rate as in 2021
* Improvements in scalability and operational efficiency are expected to continue
* Inflation and labor costs

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (IFRS)

EUR THOUSAND	Notes	1.1.-31.12.2021	1.1.-31.12.2020
NET SALES	2	153,155	151,579
Cost of sales		-66,837	-65,941
GROSS PROFIT		86,317	85,638
Sales and marketing		-38,286	-40,001
Research and development		-27,928	-25,930
General and administration		-13,038	-14,096
Total operating expenses		-79,252	-80,027
Other operating income	4	75	309
Other operating expenses	6	3	-1,253
OPERATING PROFIT/LOSS		7,144	4,667
Finance income	7	832	619
Finance expenses	7	-21,398	-12,271
PROFIT/LOSS BEFORE TAX		-13,421	-6,985
Income tax	8	-812	-345
PROFIT/LOSS FOR THE PERIOD		-14,233	-7,329

EUR THOUSAND	Notes	1.1.-31.12.2021	1.1.-31.12.2020
Other comprehensive income
Other comprehensive income that will not be reclassified to profit or loss
Remeasurement of employee benefits	17	-33	-5
Other comprehensive income that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations		4,977	-4,964
Cash flow hedges	18	808	-435
Income tax relating to components of other comprehensive income	8	-131	112
Other comprehensive income for the year net of tax		5,621	-5,292
TOTAL COMPREHENSIVE INCOME		-8,612	-12,621
Profit/loss attributable to:
Equity holders of the parent company		-14,233	-7,329
Total comprehensive income attributable to:
Equity holders of the parent company		-8,612	-12,621
Earnings per share
undiluted, EUR	9	-0.99	-0.51
diluted, EUR	9	-0.99	-0.51

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION (IFRS)

EUR THOUSAND	Notes	31.12.2021	31.12.2020
ASSETS
Non-current assets
Intangible assets	10	38,786	41,927
Goodwill	3	80,257	76,676
Tangible assets	11	1,366	1,023
Right-of-use assets	11	11,470	14,322
Non-current financial assets	14	13	13
Other receivables	15	8,133	3,541
Contract assets	2	0	6
Deferred tax assets	8	11,673	10,592
Non-current assets		151,697	148,101
Current assets
Trade receivables	15	27,407	26,602
Other receivables	15	9,471	8,714
Contract assets	2	639	818
Income tax receivables	8	445	166
Cash and cash equivalents	16	31,060	40,461
Current assets		69,023	76,761
TOTAL ASSETS		220,720	224,862

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION (IFRS)

EUR THOUSAND	Notes	31.12.2021	31.12.2020
EQUITY AND LIABILITIES
Shareholder's equity
Share capital	19	3,528	3,528
Share premium account	19	1,187	1,187
Treasury shares	19	0	0
Invested unrestricted equity fund	19	110,290	110,290
Other reserves	19	1,006	289
Translation differences	19	-8,205	-13,137
Retained earnings	19	-34,843	-19,600
Shareholders' equity		72,963	82,557
Non-current liabilities
Deferred tax liabilities	8	5,960	5,071
Interest-bearing liabilities	22	70,227	66,665
Leasing liabilities, interest-bearing	22	8,986	11,647
Contract liabilities	2	2,133	2,791
Liabilities from employee benefits	17	509	388
Non-current liabilities		87,814	86,562
Current liabilities
Interest-bearing liabilities	22	1,175	2,173
Leasing liabilities, interest-bearing	22	3,560	3,727
Trade payables and other payables	20	34,930	30,470
Contract liabilities	2	19,965	19,177
Income tax liabilities	8	313	196
Current provisions	21	0	0
Current liabilities		59,943	55,743
TOTAL EQUITY AND LIABILITIES		220,720	224,862

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CONSOLIDATED STATEMENT OF CASH FLOWS (IFRS)

EUR THOUSAND	1.1.-31.12.2021	1.1.-31.12.2020
Cash flows from operating activities
Profit/loss for the period	-14,233	-7,329
Adjustments for profit:
Depreciation and amortisation	15,685	15,540
Unrealised foreign exchange gains and losses	310	690
Financial income and expenses	20,217	11,068
Tax on income
Other adjustments -512 1,566
Total adjustments 36,513 29,208
Changes in working capital:
Increase (-) / Decrease (+) in trade and other receivables 749 810
Increase (+) / Decrease (-) in trade and other payables 2,807 5,069
Increase (+) / Decrease (-) in provisions 0 -211
Total changes in working capital 3,556 5,668
Financial items in operating activities -3,899 -1,301
Income taxes paid (-) / received (+) -1,502 -994
Cash flows from operating activities 20,435 25,252

EUR THOUSAND	1.1.-31.12.2021	1.1.-31.12.2020
Cash flows used in investing activities
Purchase of tangible and intangible assets	-8,441	-9,470
Net proceeds from sale of tangible and intangible assets	33	7
Movements in short-term deposits and fixes deposits	-5,000	0
Cash flows from investing activities	-13,408	-9,464
Cash flows from financing activities
Proceeds from current borrowings	0	176
Repayment of current borrowings	-1,996	-1,996
Payment related to financing	-9,886	0
Payment of lease liabilities	-4,267	-4,257
Cash flows from financing activities	-16,149	-6,076
Net change in cash and cash equivalents	-9,122	9,712
Cash and cash equivalents at the beginning of period	40,461	31,672
Net foreign exchange difference	-279	-922
Cash and cash equivalents at the end of period	31,060	40,461

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (IFRS)

EUR THOUSAND	Share capital	Share premium account	Treasury shares	Invested unrestricted equity	Other reserves	Translation differences	Retained earnings	Total SHAREHOLDERS’ EQUITY
Jan. 1, 2021	3,528	1,187	0	110,290	289	-13,137	-19,600	82,557
Comprehensive income						4,932	-14,229	-9,297
Share based payments						-982	-982
Defined benefit plans						-33	-33
Cash flow hedges						717	717
SHAREHOLDERS' EQUITY Dec. 31, 2021	3,528	1,187	0	110,290	1,006	-8,205	-34,843	72,963

EUR THOUSAND	Share capital	Share premium account	Treasury shares	Invested unrestricted equity	Other reserves	Translation differences	Retained earnings	Total SHAREHOLDERS’ EQUITY
Jan. 1, 2020	3,528	1,187	-98	110,388	653	-8,226	-13,347	94,086
Comprehensive income						-4,912	-7,340	-12,253
Share based payments						98	1,092	1,092
Defined benefit plans						-5	-5
Cash flow hedges						-363	-363
SHAREHOLDERS' EQUITY Dec. 31, 2020	3,528	1,187	0	110,290	289	-13,137	-19,600	82,557

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)

Basic information of the group

Basware Corporation is a leading supplier of e-Invoicing and Purchase-to-pay solutions. Parent company Basware Oyj is a public Finnish company founded under Finnish law. Business ID of Basware Oyj is 0592542-4 and company's domicile is Espoo, Finland. Basware Corporation and its subsidiaries form the Basware Group ("Basware" or "the Group"). 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 December 31, 2021 were authorized for issue in accordance with a resolution of the Board of directors on February 2, 2022. Shareholders may adopt or reject the financial statements at the Annual General Meeting. Basware’s financial statements, Board of Directors’ report as well as the Auditor’s report are available on the Internet at https://investors.basware.com/en or parent company's head office at Linnoitustie 2, 02601 Espoo.

1. Accounting principles

Basis of preparation

Basware’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 SIC and IFRIC interpretations valid on December 31, 2021. 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.

New and revised standards and interpretations

As of January 1, 2021, the Group has applied the following new and revised standards and interpretations which did not materially impact Group reporting:

• Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform – Phase 2 (Effective for annual periods beginning on or after January 1, 2021). On 27 August 2020, the IASB published Interest Rate Benchmark Reform – Phase 2, Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16. The amendments provide temporary reliefs which address the financial reporting effects when an interbank offered rate (IBOR) is replaced with an alternative nearly risk-free interest rate (RFR). The amendments had no impact on the Group's financial statements.

• Configuration or Customisation Costs in a Cloud Computing Arrangement (IAS 38 Intangible Assets). In April 2021, IFRS Interpretations Committee published their final agenda decision on the accounting of configuration and customization costs in a cloud computing arrangement (IAS 38 Intangible Assets). In this agenda decision, the Committee considered when an intangible asset can be recognized in relation to configuration and customization of an application software. As the IFRIC agenda decisions do not have a date when they enter into force, they are expected to be applied as soon as possible. Basware has cloud computing arrangements and has analysed whether this agenda decision has an impact on the accounting principles related to costs in implementing cloud computing arrangements. As a result of the analysis, it was concluded that the IFRIC agenda decision has an impact on the earlier accounting treatment related to costs in cloud computing arrangements. As an outcome of the analysis, Basware has expensed cloud computing related costs which had a minor impact during the fourth quarter.

Amendments that will enter into force during the financial year 2022 or later

In addition to the standards and interpretations presented in the financial statements for 2021, 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, 2022. 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.

• Amendments to IFRS3 Business Combinations - Reference to the Conceptual Framework (Effective for annual periods beginning on or after 1 January 2022). The amendments are intended to replace a reference to a previous version of the IASB’s Conceptual Framework (the 1989 Framework) with a reference to the current version issued in March 2018 (the Conceptual Framework) without significantly changing its requirements. 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.

• Amendments to IAS 37 Onerous Contracts – Costs of Fulfilling a Contract (Effective for annual periods beginning on or after 1 January 2022). In May 2020, the IASB issued amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets to specify which costs an entity needs to include when assessing whether a contract is onerous or loss-making. 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.

• Amendments to IAS 16 Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16 (Effective for annual periods beginning on or after 1 January 2022). The amendment prohibits entities from deducting from the cost of an item of property, plant and equipment (PP&E), any proceeds of the sale of items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognises the proceeds from selling such items, and the costs of producing those items, in profit or loss. 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.

• IFRS 9 Financial Instruments – Fees in the ’10 per cent’ test for derecognition of financial liabilities: As part of its 2018-2020 annual improvements to IFRS standards process the IASB issued amendment to IFRS 9. The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other’s behalf. An entity applies the amendment to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in which the entity first applies the amendment. The amendment is effective for annual reporting periods beginning on or after 1 January 2022 with earlier adoption permitted. The Group will apply the amendments to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in which the entity first applies the amendment. The amendments are not expected to have a material impact on the Group.

• Definition of Accounting Estimates - Amendments to IAS 8: In February 2021, the IASB issued amendments to IAS 8, in which it introduces a definition of ‘accounting estimates’.# Notes to the Consolidated Financial Statements

Significant Accounting Policies

Amendments to accounting standards

Amendments to IAS 8 and IAS 1 – Accounting Policies, Changes in Accounting Estimates and Errors

Amendments to IAS 8 and IAS 1 clarify the distinction between changes in accounting estimates and changes in accounting policies and the correction of errors. Also, they clarify how entities use measurement techniques and inputs to develop accounting estimates. The amendments are effective for annual reporting periods beginning on or after 1 January 2023 and apply to changes in accounting policies and changes in accounting estimates that occur on or after the start of that period. Earlier application is permitted as long as this fact is disclosed. The amendments are not expected to have a material impact on the Group.

Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2

In February 2021, the IASB issued amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality Judgements, in which it provides guidance and examples to help entities apply materiality judgements to accounting policy disclosures. The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their ‘significant’ accounting policies with a requirement to disclose their ‘material’ accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures. The amendments to IAS 1 are applicable for annual periods beginning on or after 1 January 2023 with earlier application permitted. Since the amendments to the Practice Statement 2 provide non-mandatory guidance on the application of the definition of material to accounting policy information, an effective date for these amendments is not necessary. The Group is currently assessing the impact of the amendments to determine the impact they will have on the Group’s accounting policy disclosures.

Basis of Consolidation

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.

Transactions in Foreign Currencies

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.

Segment Information

Basware reports one operating segment. The reported segment is comprised of the entire Group, and the segment figures are consistent with the Group figures. Entity-wide disclosures are presented in Note 2 and 13.

Government Grants

Government grants are recognized when there is reasonable assurance that the grant will be received. The grants received are recognized as offsetting items of the expenses incurred. 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 and Development Costs

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:
* The technical feasibility of completing the intangible asset so that the asset will be available for use or sale.
* Its intention to complete and its ability and intention to use or sell the asset.
* How the asset will generate future economic benefits.
* The availability of resources to complete the asset.
* The ability to measure reliably the expenditure during development.

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.

Accounting Principles Requiring Management’s Judgement and Key Uncertainties Relating to the Use of Estimates

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:
* Goodwill (Note 3)
* Development expenses (Note 10)
* Leases (Note 12)
* Trade receivables (Note 15)
* Deferred tax assets (Note 8)
* Share-based payments (Note 5)
* Financial risk management (Note 18)
* Warrants (Note 19)

Alternative Performance Measures

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.

• Cloud revenue includes net sales from SaaS and other subscription revenues, transactions services 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 and disposals that have taken place in the past 12 months.
• Net sales in constant currencies is calculated by eliminating the impact of exchange rate fluctuations by calculating the net sales for the comparable period by using the current period’s exchange rates.
• Gross investments are total investments made to non-current assets including acquisitions and capitalized research and development costs.
• Other capitalized expenditure consists of investments in property, plant and equipment and intangible assets excluding acquisitions and capitalized research and development costs.
• EBITDA is calculated as operating result plus depreciation and amortization.
• Adjusted EBITDA is calculated from EBITDA excluding any adjustments related to alliance fees, acquisitions and disposals, restructuring and efficiency measures, impairment losses and litigation fees and settlements.
• Adjusted operating result (Adjusted EBIT) is 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.
• Adjusted earnings per share (Adjusted EPS) is calculated by excluding from the profit/loss any adjustments related to alliance fees, acquisitions and disposals, restructuring and efficiency measures, impairment losses and litigation fees and settlements.
• Annual recurring revenue gross order intake is calculated by summing the total order intake in the period expressed as an annual contract value. For cloud order intake this includes all SaaS and# 2. Revenue and contract balances

Accounting principles

Net sales

Net sales are presented net of discounts and exchange rate differences of foreign currency sales.

Revenue recognition

Basware reports net sales by type. Net sales by type is divided into two groups: cloud and non-cloud revenue. Cloud revenue consists of net sales from SaaS and other subscription types and transaction revenue and non-cloud revenue includes net sales from licences, maintenance and consulting. SaaS and transaction services are sold together with consulting services and e-invoicing services include also work related to set-up activities which are charged separately as Start up fee.

IFRS 15 Revenue from Contracts with Customers is based on the principle that sales are recognized when the control of the goods or service is transferred to the customer. According to IFRS 15 the contract qualifies as a customer contract when each party's general and specific rights and obligations are described, contract is approved by the parties, each party's enforecable rights and obligations exists, the contract has commercial substance and it is probable that the consideration to which the entity is entitled to in exchange for the goods or services will be collected. Group does not have a significant financing components in its contracts with customers or sale with a right of return.

Basware revenue for different revenue types is recognized over time except for licenses which is recognized at a point in time. SaaS and transaction service fees are fixed and are invoiced on a monthly or annual basis, or monthly based on user and transaction volumes. Both fees are recognized on a monthly basis over the term of the contract. Revenue from set up activities are deferred and recognized over time throughout the contract term. Revenue from the license sales is recognized when contractual criteria of IFRS 15 has been fulfilled and when license has been delivered to the customer. Maintenance services which includes new version releases and customer support are recognized over the contract period. Revenue of professional services are recognized during the reporting period in which service is provided. Revenue 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. If the resulting costs and recognized profits exceed the amount invoiced for the transaction, the difference is presented in “contract assets” on the balance sheet. If the resulting costs and recognized profits are lower the invoicing for the transaction, the difference is presented in “contract 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.

Basware reports geographical areas Americas, Europe, Nordics and APAC. Americas includes business operations in North and South America. Europe includes operations in Europe and Russia, excluding the Nordic countries (Denmark, Finland, Norway and Sweden), which are reported separately. APAC includes operations in Asia and the Pacific region.

Timing of revenue recognition	EUR THOUSAND	1.1.-31.12.2021	1.1.-31.12.2020
Cloud Revenue
SaaS	Over time	65,227	58,344
Transaction services	Over time	49,844	47,272
Other cloud revenue	Over time	4,926	4,696
Cloud Revenue total		119,996	110,312
Non-Cloud Revenue
Maintenance	Over time	6,051	14,687
License sales	At a point in time	136	348
Consulting services	Over time	26,942	26,875
Other non-cloud revenue	Over time	30	-644
Non-Cloud Revenue Total		33,158	41,267
Group total		153,155	151,579

Net sales by type	EUR THOUSAND	1.1.-31.12.2021	1.1.-31.12.2020
Americas		33,641	35,013
Europe		54,767	52,176
Nordics		56,904	56,428
APAC		7,843	7,962
Group total		153,155	151,579

Summary of contract balances:	EUR THOUSAND	31.12.2021	31.12.2020
Trade receivables		27, 407	26,602
Contract assets:
Non-current		0	6
Current		639	818
Contract liabilities:
Non-current		2,133	2,791
Current		19,965	19,177

During 2020-2021 the Group has not recognized significant impairment losses on contract assets.

Revenue recognized from amounts included in contract liabilities at the beginning of the period:	EUR THOUSAND	1.1.-31.12.2021	1.1.-31.12.2020
		17,349	15,203

Net sales by currency	%	1.1.-31.12.2021	1.1.-31.12.2020
EUR	54.1	52.8
USD	20.5	21.3
GBP	7.3	7.2
Other	18.0	18.6
Group total	100	100

Contract assets and liabilities

The timing of invoicing may differ from the timing of revenue recognition. The Group recognizes an contract asset when revenue is recognized prior to invoicing, and a contract liability when revenue is recognized subsequent to invoicing.

Revenue of professional services are recognized during the reporting period in which service is provided. Revenue 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. If the resulting costs and recognized profits exceed the amount invoiced for the transaction, the difference is presented in “contract assets” on the balance sheet. If the resulting costs and recognized profits are lower the invoicing for the transaction, the difference is presented in “contract liabilities” on the balance sheet.

The majority of contract liabilities arise from:
* SaaS and Transactions services invoiced in advance and recognized as revenue on monthly basis over the contract term
* Setup activities invoiced in advance and recognized as revenue during the contract period
* maintenance revenue invoiced in advance and recognized as revenue over the maintenance period

Transaction price allocated to the remaining performance obligations

The Group has elected to use the practical expedient in IFRS 15.121 in disclosing the transaction price allocated to remaining performance obligations as its related performance obligations are a part of a contract that have a original expected duration of less than one year, or the revenue recognition from performance obligations is done according to IFRS 15.B16.

3. Goodwill

Accounting principles

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.

Goodwill impairment testing

Goodwill is not amortised, but is 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.

	EUR THOUSAND	31.12.2021	31.12.2020
Acquisition cost Jan. 1		76,676	80,345
Translation difference		3,580	-3,669
Business disposals		0	0
Acquisition cost Dec. 31		80,257	76,676
Book value Dec. 31		80,257	76,676

Goodwill is tested according to IAS 36. The Group does not possess any other intangible assets than Goodwill that has indefinite economical life. Unfinished intangible assets are also subjected to impairment testing during reporting period. Impairment testing is carried out at group level as the Group has centralised steering model and reporting structure. Goodwill is monitored at group level internally. Goodwill has been tested for impairment in the last quarter of 2021. 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 board approved estimates for the following year and subsequent development derived from the strategic plans, covering five years. Terminal year value has been defined based on the long term strategic financials. Cash flows beyond the 10-year period are calculated using the terminal value method. The terminal growth rate of 2.5% percent (2.5%) 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 the 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 11.1% percent (11.2%) has been used in the calculations. As a result of the# 4. Other operating income

Accounting principles

Other operating income includes proceeds from the sale of business operations and property, plant and equipment. In financial year 2020, other operating income mainly consists of other proceeds related to divestment.

EUR THOUSAND	1.1.-31.12.2021	1.1.-31.12.2020
Gain on sale of assets	44	26
Other operating income	31	283
Other operating income	75	309

5. Personnel And Employee Benefits

Accounting principles

The Group has exclusively defined contribution pension arrangements, and the related payments are expensed in the year they are incurred. The Group also has a defined benefit based incentive scheme to commit personnel in accordance with local regulations and practices in India. The calculations for defined benefit plan 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. The plan is unfunded and more information on the defined benefit plan is presented in Note 17.

The Group's related parties include parent company (Basware Corporation) and its subsidiaries, the members of the Board of Directors, the members of the Corporate Executive Team, CEO and their family members and their controlled companies. Basware Corporation's subsidiaries are disclosed in Note 25. No loans have been given to the related parties of the Group, except subsidiaries, and no guarantees or other collateral have been issued on their behalf.

AVERAGE NUMBER OF PERSONNEL

	1.1.-31.12.2021	1.1.-31.12.2020
Americas	98	106
Europe	380	373
Nordics	416	425
APAC	446	430
Tota l	1,339	1,334

Employee benefits expense

EUR THOUSAND	1.1.-31.12.2021	1.1.-31.12.2020
Salaries and fees	-72,925	-74,171
Share-based incentive plans	-534	-1,409
Expenses from defined benefit plans	-114	-74
Pension expenses, defined contribution plans	-6,407	-5,690
Other employee benefits	-6,441	-6,268
Employee benefits expense, total	-86,420	-87,613

Management and Board salaries, fees and benefits

EUR THOUSAND	1.1.-31.12.2021	1.1.-31.12.2020
CEO of the parent company Klaus Andersen	-1,145	-519
Compensation of the members of the Board of Directors
Michael Ingelög	-116	-80
Ilkka Sihvo	-63	-59
Daryl Rolley	-51	-74
Minna Smedsten (from June 4, 2020)	-60	-37
Carl Farrell (from Mar 18, 2021)	-40	0
Jonathan Meister (from Mar 18, 2021)	-40	0
Asko Schrey (until Mar 18, 2021)	-9	-44
Tuija Soanjärvi (until August 21, 2019)	0	-4
Tota l	-1,524	-817

Group's key employees are defined as CEO, members of the Board of Directors and Executive team, including appointed interim positions. No loans, guarantees or other collaterals have been given on behalf of group's key employees.

Key management employee benefits

EUR THOUSAND	1.1.-31.12.2021	1.1.-31.12.2020
Salaries and other short-term employee benefits	-1,746	-1,862
Share-based payments	-395	-523
Tota l	-2,141	-2,385

Total fixed salary of the CEO Klaus Andersen for the period January 1 - December 31, 2021 was EUR 411 thousand (EUR 410 thousand January 1 - December 31, 2020). Salary in money was EUR 391 thousand (EUR 410 thousand), and fringe benefits were EUR 20 thousand (EUR 19 thousand). Additionally, Andersen was paid a bonus of EUR 123 thousand from the financial year 2020 (EUR 99 thousand in 2020 from the financial year 2019). Andersen was also given a total of 16,657 shares (354 shares in 2020) on the basis of the share-based incentive schemes. Of these, 8,329 shares (177 shares in 2020) were conveyed to Andersen, the value of which was approximately EUR 305 thousand (EUR 5 thousand) based on the average share price of the payment days, and EUR 305 thousand (EUR 5 thousand) was paid in cash to cover the withholding tax. The accrued pension cost of Klaus Andersen amounted to EUR 64 thousand (61 thousand in 2020). The CEO's pension plan is pursuant to the employment pension legislation. CEO Klaus Andersen has 3 months’ period of notice, in addition to which he is entitled to severance pay equivalent of 12 months’ fixed salary should the company give notice.

Matching Share Plan 2018-2020

The Board of Directors resolved on July 17, 2018 to establish a new matching share plan for 2018-2020 for the Group's key employees. The prerequisite for receiving reward on the basis of the matching share plan was that the plan member acquired Basware shares. The plan member will, as a reward, receive two (2) matching shares for each share subject to the share ownership prerequisite after a matching period of three (3) years. Receipt of matching shares was contingent on the continuation of employment or service and on the plan member holding the acquired shares upon reward payment. The rewards to be paid in aggregate to plan members on the basis of the matching share plan corresponded to the value of a maximum total of 77,714 Basware Corporation shares, including also the proportion to be paid in cash. The 32 Group’s key employees eligible for receiving a reward based on the plan had acquired or allocated a total of 29,336 Basware Corporation shares based on the plan. The rewards to be paid to the key employees on the basis of the plan thus corresponded to 58,672 Basware Corporation shares, including also the proportion to be paid in cash. The reward was conveyed, and the plan ended in March 2021.

Performance Share Plan 2017-2019

The Board of Directors resolved on March 1, 2017 to establish a 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 reward for the performance period 2019-2020 was based on the Group’s key performance measures in 2019. The potential rewards to be paid on the basis of the performance period 2019-2020 corresponded to the value of a maximum total of 60,225 Basware Corporation shares, including also the proportion to be paid in cash. The plan was directed to approximately 45 key employees, including the members of the Basware Executive Team. In March 2021, 10,572 shares were conveyed on a directed share issue related to the reward payment for the performance period 2019-2020 of the performance share plan 2017-2019, closing the final performance period 2019-2020 of the plan. The rewards paid on the basis of the plan in 2020 corresponded to a total of 21,140 Basware Corporation shares, including also the proportion to be paid in cash. The plan ended in March 2021.

Share-based payments

Accounting principles

Share-based incentive schemes are valued at fair value on the grant date based on the gross number of shares awarded, 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. The withholding paid by the company to the tax authority is recognized directly in equity.

Performance Share Plan 2020-2021

The Board of Directors resolved on December 18, 2019 to establish a performance share plan for 2020-2021 for key employees. The Performance Share Plan includes one performance period, calendar years 2020-2021. The Board of Directors have resolved on the performance criteria at the required performance levels for each criterion. The plan is directed to approximately 45 key employees, including the members of the Basware Executive Team. The potential reward from the performance period 2020—2021 will be based on the company´s Total Shareholder Return (TSR), the Group´s total revenue and ARR order intake during 2020—2021. The rewards to be paid on the basis of the performance period 2020—2021 corres - pond to the value of a maximum total of 320,000 Basware Corporation shares (including also the proportion to be paid in cash). At the end of 2021, the performance share plan included 45 key employees.

Restricted Share Plan 2020

The Board of Directors resolved on December 18, 2019 to establish a restricted share plan 2020. The restricted share plan is directed to selected key contributors. 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# 8. Income taxes
Accounting principles
Income taxes comprise of tax recognized on the taxable income for the financial year and deferred taxes. Taxes for the items recognised in the income statement are included in taxes in the income statement. For items recognised directly in equity or other comprehensive income, the income tax effect is similarly recognised. Taxes based on taxable income are recorded according to the local tax rules of each country using the applicable tax rate. When uncertainty is included in interpretation of income tax rules, the 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.

Stories Reports Financial statements Key figures Information for shareholders 72

6. Other operating expenses

EUR THOUSAND	1.1.-31.12.2021	1.1.-31.12.2020
Impairment losses on trade receivables	463	-745
Acquisition, disposal and restructuring expenses	-8	-8
Efficiency related expenses	-432	-453
Other operating expenses	-20	-47
Other operating expenses total	3	-1,253

7. Finance income and expenses

Accounting principles
The Group recognizes borrowing costs as an expense in the period during which they are incurred.

EUR THOUSAND	1.1.-31.12.2021	1.1.-31.12.2020
Finance income
Interest income on instruments valued at amortized cost	7	25
Foreign exchange gain on instruments valued at amortized cost	510	548
Other financing income	316	46
Total	832	619
Finance expenses
Interest expenses on debt instruments valued at amortized cost	-19,515	-10,196
Foreign exchange loss on instruments valued at amortized cost	-1,117	-1,167
Interest expenses on lease liabilities	-762	-881
Other financing expenses	-4	-27
Total	-21,398	-12,271
Finance income and expenses total	-20,566	-11,652

Exchange differences recognized on income statement	EUR THOUSAND
	1.1.-31.12.2021	1.1.-31.12.2020
Exchange differences included in net sales	30	-644
Exchange differences included in purchases and expenses	-27	-5
Foreign exchange gains	510	548
Foreign exchange losses	-1,117	-1,167
Exchange differences recognized on income statement	-604	-1,267

Direct taxes	EUR THOUSAND
	1.1.-31.12.2021	1.1.-31.12.2020
Income tax on operations	-942	-1,027
Tax for previous accounting periods	-352	76
Change in deferred tax liabilities and tax assets	482	607
Income tax total	-812	-345

Tax rate reconciliation	EUR THOUSAND
	1.1.-31.12.2021	1.1.-31.12.2020
Profit/loss before taxes	-13,421	-6,985
Tax calculated at domestic tax rate	2,684	1,397
Tax for previous years	-352	76
Effect of different tax rates of foreign subsidiaries	-298	-384
Effect of change in tax rate	0	0
Non-deductible expenses	-3,390	-2,099
Losses for which no deferred tax asset is recognised	0	0
Other	-130	528
Income not subject to tax	3	65
Taxable profit not included in the accounting profit	0	0
Utilization of previous year losses	1,159	839
Previous year losses for which deferred tax asset is booked	-488	-766
Income taxes	-812	-345

Taxes relating to other comprehensive income	EUR THOUSAND
	1.1.-31.12.2021	1.1.-31.12.2020
Taxes on foreign exchange gains from net investments	-41	41
Taxes on derivatives	-90	72

Income tax receivables and payables	EUR THOUSAND
	31.12.2021	31.12.2020
Income tax receivables	445	166
Income tax liabilities	313	196

Deferred taxes
Accounting principles
Deferred taxes are calculated from all temporary differences between the carrying amount and taxable value at the corporate income tax rates prevailing at the reporting date. The most significant temporary differences arise from depreciation of property, plant and equipment, unused tax losses, research and development adjustments, and adjustments for fair values in connection with acquisitions. Deferred tax is not recognized for goodwill that is permanently non-taxable. 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

Deferred tax assets 2021

EUR THOUSAND	1.1.2021	Recognized in profit or loss	Business acquisitions / disposals	Period change booked in equity	31.12.2021
Tax losses	4,848	-502	0	0	4,345
Deferred expenses	5,168	1,851	0	0	7,019
Other items	576	603	0	0	1,180
Tota l	10,592	1,952	0	0	12,544

Deferred tax assets 2020

EUR THOUSAND	1.1.2020	Recognized in profit or loss	Business acquisitions / disposals	Period change booked in equity	31.12.2020
Tax losses	5,613	-766	0	0	4,848
Deferred expenses	3,516	1,652	0	0	5,168
Other items	525	51	0	0	576
Tota l	9,654	938	0	0	10,592

Deferred tax liabilities 2021

EUR THOUSAND	1.1.2021	Recognized in profit or loss	Exchange rate differences	Period change booked in equity	31.12.2021
Allocation of fair value on purchases	5,127	596	203	0	5,926
Fair valuation of deriva- tives	-56	0	0	90	34
Other items	0	871	0	0	871
Tota l	5,071	1,467	203	90	6,831

Deferred tax liabilities 2020

EUR THOUSAND	1.1.2020	Recognized in profit or loss	Exchange rate differences	Period change booked in equity	31.12.2020
Allocation of fair value on purchases	4,987	335	-195	0	5,127
Fair valuation of deriva- tives	15	0	0	-72	-56
Tota l	5,003	335	-195	-72	5,071

The Group has recognised total of EUR 4,345 thousand (EUR 4,848 thousand) of deferred tax assets for unused tax losses, of which EUR 632 thousand will expire during 2026–2028, while the rest have no expiry period. According to the transfer pricing principle, subsidiaries accu- mulate taxable income against which confirmed losses can be utilized in the future. The Group has offset deferred taxes EUR 871 thousand from the same source. The Group has total of EUR 21,207 thousand of tax losses and EUR 21,802 thousand of non-deductible interests for which deferred tax asset has not been recognized. The Group will reassess the amount of deferred tax assets if there are changes in the expectations for accumulation of future taxable profit.

Accounting principles

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 amortization 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. Assets relating to customer relationships and technology that are acquired through business combinations are measured at fair value at the time of acquisition and amortized over the useful life.

10. Intangible assets

9. Earnings per share

Accounting principles

Undiluted earnings per share is calculated by dividing the profit for the period attributable to the owners of the parent company by the weighted average number of shares outstanding during the year. The average number of shares has been adjusted with the treasury shares. Diluted earnings per share reflect the impact of the share-based incentive plans.

EUR THOUSAND	1.1.-31.12.2021	1.1.-31.12.2020
Profit/loss for the period	-14,233	-7,329
Average number of shares (1,000)
Undiluted	14,446	14,408
Diluted	14,581	14,639
Earnings per share (EUR)
Undiluted	-0.99	-0.51
Diluted	-0.99	-0.51

Intangible assets 2021

EUR THOUSAND	Develop- ment costs	Intangible rights	Other long-term investments	Assets, unfinished projects	To ta l
Acquisition cost Jan. 1	66,802	47,716	2,617	14,246	131,380
Translation difference (+/-)	20	971	147	1	1,138
Additions	313	391	111	7,1 9	8,007
Disposals	-6,337	-7,134	-303	0	-1 3 ,7 74
Reclassifications between items	5,701	0	0	-5,885	-184
Acquisition cost Dec. 31	66,498	41,944	2,572	15,552	126,566
Cumulative amortization Jan. 1	-47,175	-41,023	-1,256	0	-89,453
Translation difference (+/-)	-38	-677	-77	0	-792
Cumulative amortiza- tion on disposals and reclassifications	6,246	7,134	286	0	13,666
Amortization	-9,265	-1,643	-293	0	-11,201
Cumulative amortization Dec. 31	-50,231	-36,210	-1,339	0	-87,781
Book value Dec. 31, 2021	16,267	5,734	1,233	15,552	38,785

Intangible assets 2020

EUR THOUSAND	Develop- ment costs	Intangible rights	Other long-term investments	Assets, unfinished projects	To ta l
Acquisition cost Jan. 1	64,741	48,068	2,858	8,118	123,785
Translation difference (+/-)	-36	-1,003	-241	0	-1,280
Additions	692	650	0	7, 578	8,920
Disposals	0	0	0	-46	-46
Reclassifications between items	1,405	0	0	-1,405	0
Acquisition cost Dec. 31	66,802	47,716	2,617	14,246	131,380
Cumulative amortization Jan. 1	-39,003	-39,401	-980	0	-79,384
Translation difference (+/-)	48	658	92	0	799
Cumulative amortiza- tion on disposals and reclassifications	0	0	0	0	0
Amortization	-8,220	-2,280	-368	0	-10,868
Cumulative amortization Dec. 31	-47,175	-41,023	-1,256	0	-89,453
Book value Dec. 31, 2020	19,627	6,693	1,361	14,246	41,927

Goodwill is presented in Note 3. 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. Sales gains or losses are calculated as the difference between the sales price and the remaining acquisition cost.

11. Tangible assets

Accounting principles

Tangible assets 2021

EUR THOUSAND	Right-of- use-assets, buildings	Right-of- use-assets, machinery and equip- ment	Machi- nery and equipment	Other tangible assets	Tota l
Acquisition cost Jan. 1	21,088	2,148	10,651	152	34,040
Translation difference (+/-)	444	-2	95		536
Additions	3,778	504	470		4,752
Disposals	-3,091	-50			-3,177
Reclassifications between items	184				184
Acquisition cost Dec. 31	22,218	2,600	8,222	152	33,193
Cumulative depreciation Jan. 1	-7,567	-1,347	-9,780	0	-18,694
Translation difference (+/-)	-209	2	-81		-288
Cumulative depreciation on disposals and reclassifications	0	0	3,177		3,177
Depreciation	-3,706	-521	-326		-4,552
Cumulative depreciation Dec. 31	-11,483	-1,866	-7,009	0	-20,357
Book value Dec. 31, 2021	10,736	735	1,213	152	12,836

Tangible assets 2020

EUR THOUSAND	Right-of- use-assets, buildings	Right-of- use-assets, machinery and equip- ment	Machi- nery and equipment	Other tangible assets	Tota l
Acquisition cost Jan. 1	18,778	1,865	11,069	152	31,865
Translation difference (+/-)	-501	4	-121	0	-617
Additions	2,990	298	435	0	3,723
Disposals	-180	-19	-732	0	-931
Acquisition cost Dec. 31	21,088	2,148	10,651	152	34,040
Cumulative depreciation Jan. 1	-4,024	-689	-10,147	0	-14,860
Translation difference (+/-)	146	-4	122	0	264
Cumulative depreciation on disposals and reclassifications	0	0	714	0	714
Depreciation	-3,689	-654	-469	0	-4,812
Cumulative depreciation Dec. 31	-7,567	-1,347	-9,780	0	-18,694
Book value Dec. 31, 2020	13,521	802	871	152	15,346

12. Leases

Accounting principles

The group has lease contracts for office spaces, vehicles and various items of office equipment (e.g., coffee machines, copy machines, water machines, servers etc). All Group's real estate contracts and car leasing contracts were analyzed to belong in the scope IFRS 16. The Group has elected to use the exemptions applicable to the stan- dard on short-term lease contracts (lease period less than 12 months), and for lease contracts for which the underlying asset is of low value. The Group is not subleasing any of its leased assets. There are several lease contracts that include extension and termination options. The Group applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to extend or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the extension or termination. The Group applied the following practical expedients in determining lease period:
* if both parties have the right to terminate the contract on a certain date and after this certain date the contract is valid until further notice the contract is interpreted to be terminated on the date when both parties have right to terminate the contract;
* if the Group has right to terminate the contract before the lessor, each contract is separately analyzed: what is the most likely outcome taking into consideration the future prospects and investments made to the premises.

The Group is exposed to potential cash outflows that are not reflected in the measu- rement of lease liabilities. The Group has committed to enter into a lease agreement with expected cash outflows during the coming year. The carrying amounts of right-of-use assets recognised and the movements during the period are presented in Note 11. Tangible Assets. The maturity analysis of lease liabilities is disclosed in Note 18. Management of financial risk.

EUR THOUSAND	1.1.-31.12.2021	1.1.-31.12.2020
Depreciation expense of right-of-use assets	-4,227	-4,203
Interest expense on lease liabilities	-762	-881
Expense relating to leases of low-value assets	-643	-530
Total amount recognised in profit or loss	-5,631	-5,613

13.# Entity-wide disclosures

Of the entity-wide information assets are shown by their location. Assets presented below consists mainly of goodwill, intangible assets, right-of-use assets and other non-current receivables. Non-current assets based on the location of the assets.

EUR THOUSAND	1.1.-31.12.2021	1.1.-31.12.2020
Finland	53,909	51,834
Americas	30,707	28,895
Europe	42,884	43,828
Nordics	9,369	9,292
APAC	3,156	3,661
Group total	140,025	137,509

The sales shown by the location of customers is presented in note 2. The group doesn't have customers whose share of the revenue exceeds 10% of total revenue.

14. Non-current financial assets

EUR THOUSAND	31.12.2021	31.12.2020
Acquisition cost Jan. 1	13	13
Acquisition cost Dec. 31	13	13

Non-current financial assets include unquoted equity shares.

15. Current trade and other receivables

Accounting principles - Expected credit losses on trade receivables

The Group recognizes loss allowances for expected credit losses (ECL) on trade receivables in accordance with IFRS 9. For analyzing and recognition of ECL regarding trade receivables, the simplified approach for determining the expected credit losses of IFRS 9 is applied. In this approach the credit losses are based on predetermined credit loss rates by category. The rates are determined by past events and external sources. Loss allowances for trade receivables are always measured at an amount equal to lifetime ECL. For measurement of ECL for trade receivables the Group uses a provision matrix. The provision matrix is based on historical observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates specific to the geographic region and the economic environment. At every reporting date the historical observed default rates are updated and changes in the forward-looking estimates are analyzed. Expected credit losses have not been recorded from the value added tax that is included in trade receivables. Loss allowances for ECL are presented in the statement of financial position as a deduction from the gross carrying amount of the assets. In profit or loss, the amount of ECL (or reversal) is recognised as an impairment gain or loss in other operating expenses category.

EUR THOUSAND	31.12.2021	31.12.2020
Non-current receivables
Contract assets	0	6
Capitalized contract costs	1,996	2,854
Other non-current receivables	1,138	688
Pledged bank account	5,000	0
Non-current trade and other receivables total	8,133	3,547
Current receivables
Trade receivables	27,407	26,602
Contract assets	639	818
Capitalized contract costs	2,600	3,271
Other receivables	6,871	5,443
Current receivables total	37,518	36,134

The fair values of financial assets and liabilities are presented in Note 22 and definitions for contract assets presented in Note 2.

Contract costs

The incremental costs of obtaining a contract with a customer includes sales commissions related to long-term service contracts. Contracts costs 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. Below table describes the changes in capitalized contract costs.

EUR THOUSAND	31.12.2021	31.12.2020
Capitalized contract costs, opening balance	6,125	6,636
Capitalized during the period	2,063	3,204
Recognized as an expense during the period	-3,590	-3,715
Capitalized contract costs, ending balance	4,598	6,125

The aging analysis of trade receivables and impairment loss

EUR THOUSAND	2021	2020
	Impairment provision Net 2021	Impairment provision Net 2020
Not due	20,684	20,017
Overdue 1-180 days	6,770	6,939
181-360 days	376	242
Over 360 days	-123	-574
Additional provision	-300	-600
Total	27,407	26,602

In addition to the standard company practice of provisioning for credit losses the Group estimates an additional provision of EUR 300 thousand related to increased uncertainty of economic conditions in countries where the Group operates due to Covid-19 pandemic. 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.

16. Cash and short-term deposits

Accounting principles

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.

EUR THOUSAND	31.12.2021	31.12.2020
Cash and cash equivalents	31,060	40,461
Cash and short-term deposits	31,060	40,461

17. Defined benefit plans

The 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.

EUR THOUSAND	1.1.-31.12.2021	1.1.-31.12.2020
Opening value Jan. 1 - liability	388	377
Amounts recognised in profit and loss
Service cost, benefits earned during the year	64	70
Interest expense (+) / income (-)	26	25
Changes due to currency fluctuation	34	-43
Amounts recognised in other comprehensive income
Acturial losses (+) / gains (-)	33	4
Other changes
Benefits paid	-36	-46
Ending value Dec. 31 - liability	509	388

The most significant actuarial assumptions

• Discount rate (%) 6.9% 6.6%
• Increase of wages (%) 7.0 % 7.0 %

18. Management of financial risk

The Group's international business involves customary financial risks such as foreign exchance risk, interest rate risks, liquidity risks and credit risks. The risk management principles are defined in the Treasury Policy approved by the Board of Directors. Basware Treasury is responsible for the centralized management of the financial risk.

Foreign currency risk

The Group's main currency is euro, accounting for approximately 54 percent of net sales in 2021 (approximately 53% in 2020). Total Net sales were 153 (152) million EUR. In addition to the euro area, Basware has sales in various areas, the most significant being the United States, the United Kingdom, Sweden and Norway. In addition, Basware has internal operations in India and Romania.

Net sales by currency %	1.1.-31.12.2021	1.1.-31.12.2020
EUR	54.1	52.8
USD	20.5	21.3
GBP	7.3	7.2
Other	18.0	18.6
Group total	100	100

Sales in subsidiaries are carried out mainly in local currencies and do not expose the Group to significant foreign currency transaction risk. Operational expenses, such as IT services, and other purchases that takes place in non-functional currency expose the Group to foreign exchange risk and is considered as significant risk to profit and loss statement. In addition, the Group is exposed to foreign currency risk through intra-company trade and funding. Internal loans are primarily in the functional currency of the subsidiary letting the parent company to carry the foreign exchange risk. All outstanding interest-bearing liabilities on the reporting date were in Euros. The most relevant transaction risk exposures arising from US dollar, Indian Rupee and Romanian Leu. The Group hedged substantial foreign currency items in the financial period according to the Treasury Policy. The Group strategy is to hedge foreign exchange exposures of contractual and other highly probable recurring expenses and sales according to guidelines set within the treasury policy. The hedged exposures consist of future forecasted contracted cash flows in next 12 months. The Group hedges also balance sheet risk arising from foreign currency denominated items on the balance sheet. Foreign currency cash flow hedges are conducted at parent company level. Foreign currency forward and non-deliverable forward contracts are used for Hedging. Accounting principles are presented in Note 22. The effective portion of changes in the fair values of hedge accounted derivatives are recognized in other comprehensive income. The changes of non-hedge accounted derivatives are recognized in profit and loss statement. The table below presents the fair values of foreign currency derivatives at year-end.

EUR THOUSAND	2021	2020
	Nominal value	Positive fair value
Foreign-currency derivatives	28,958	794

The sensitivity of foreign currency exposure on revenue and operating profit has been estimated using 10 percent change to all currencies the company is exposed to. Revenue impact is calculated using the total group net revenue for the reporting period. Operating profit sensitivity includes all line items as per profit and loss statement excluding hedge accounted derivatives. Foreign exchange sensitivity is estimated by recalculating the reporting period result using changed average rates. Sensitivity analysis of the operative items as well as the financial instruments have been changed since the annual report 2020 and are not comparable. Comparison year has been recalculated here using the new method.

10% change in the average foreign exchange rates
Revenue Impact
Operating profit impact
Change in EUR revenue# Financial Risk Management

Foreign Currency Risk

The Group is exposed to currency risk through its foreign currency-denominated monetary items, such as cash and cash equivalents, receivables, liabilities and internal loans. The Group also uses foreign currency derivatives to manage its exposure to currency risk.

A sensitivity analysis of financial instruments as required by IFRS 7, include the following items: foreign currency cash and cash equivalents, currency derivatives, foreign currency leasing debt, foreign currency internal loans and net investment loans. The next table presents the effects, net of taxes, of a +/- 10 percent change in EUR foreign exchange rates:

TUHATTA EUROA USD AUD GBP SEK DKK NOK RON INR
Pitkäaikaiset varat
Lyhytaikaiset varat
Rahavarat
Myyntisaamiset ja muut saamiset
Lyhytaikaiset velat
Korottomat velat

Stories Reports Financial statements Key figures Information for shareholders 83

TUHATTA EUROA Tuloslaskelma Laajan tuloslaskelman erät 2021
+10% -10% +10% -10%
EUR/USD 1,790 -136 1,926 -1,926
EUR/GBP 237 -95 332 -332
EUR/SEK 267 -62 328 -328
EUR/NOK 359 -153 511 -511
EUR/INR 762 -161 923 -923
EUR/RON 612 -170 782 -782
Muut valuutat 593 -140 728 -728
4,620 -917 5,531 -5,531

TUHATTA EUROA Tuloslaskelma Laajan tuloslaskelman erät 2021
+10% -10% +10% -10%
EUR/USD 2,174 541 1,633 -1,633
EUR/GBP 774 45 729 -729
EUR/SEK 204 -118 322 -322
EUR/NOK 44 -463 507 -507
EUR/INR 229 -194 423 -423
EUR/RON 484 -30 514 -514
Muut valuutat 339 -167 465 -465
4,248 -386 4,593 -4,593

Changes in the other comprehensive income are caused by net investment loans and foreign currency contracts relating to and designated in cash flow hedge accounting.

Interest rate risk

The objective of the risk management with regard to interest rate risk is to diminish the negative impacts of changes in interest rates on the Group's financial performance. Changes in market rates are impacting interest rates of loan portfolio as well as interest-bearing payables and receivables. The Group is exposed to cash flow interest rate risk through its loan portfolio which arises from floating rate loans. In order to manage and diversify the risk the Group has both fixed and floating rate loans and possibility to apply interest rate derivatives for hedging. In the last financial period the Group has not used derivatives against the interest rate risk.

On December 31, 2021 the Group had a total of EUR 71.4 million (EUR 68.8 million) interest- bearing liabilities, excluding leasing-liabilities, of which a total of EUR 60.2 million variable-rate loans. At the closing date all external loans have been in Euro with the average cost of debt of 10.8 percent (14.2%) and average maturity of 2.6 years. Cost of debt calculation for 2021 excluded one time costs relating to the amendment of the Macquarie debt facility in July 2021.

According to IFRS 7 standard calculated sensitivity analysis represents the effect of variable rate interest-bearing liabilities on profit before taxes if interest rate would have increased or decreased by 1 percentage with all other variables constant. For interest rate analysis the impact would have been -0.3/+0.0 million euros (-0.2/+0.0 million). At the closing date the Group didn’t have significant interest-bearing assets or other financial items that would be exposed to market rate changes.

The following table illustrates the effect of a sensitivity analysis on interest rates:

EUR THOUSAND	2021		2020
	+1%	-1%	+1%	-1%
Interest-bearing liabilities	-300	0	-237	0

Liquidity risk and refinancing risk

Liquidity risk is the risk that current funds and existing loan facilities are insufficient which may affect the Group's ability to deliver on the long-term strategy. Liquidity risk is managed by securing the availability of long-term funding and maintaining sufficient cash reserves. The refinancing risk is managed by using various funding sources and distributing maturities of loans. The Group maintains sufficient liquidity and its cash and cash equivalents was EUR 31.1 million on 31 December 2021.

On July 12, Basware completed an amendment agreement of its debt facility with Macquarie Principal Financing PTY Limited, effective 12th of July 2021. As a result of the improved terms, the Company will realize a cash benefit of minimum EUR 12 million over the remaining duration of the Loan, compared with the original debt facility. The renegotiated Loan reflects Basware’s improved financial performance and significantly decreases Basware’s cost of debt. Under the amendment, the debt facility is upsized to a EUR 66 million senior secured Loan which will be due September 2024 in line with the facility’s original maturity and has a non-call of 24 months. The Loan amount of EUR 66 million consists of EUR 50 million related to the original debt facility, EUR 11 million related to previously capitalized interest (PIK interest) and EUR 5 million upsizing to enhance the Company’s overall liquidity position.

Stories Reports Financial statements Key figures Information for shareholders 84

Below is presented changes in the Group's debt portfolio in the financial year:

EUR THOUSAND	2020	Cash flow (+/-)	Non-cash flow (+/-)	2021
Non-current Loans from financial institutions	56,706	-9,886	13,432	60,253
Bond	9,958	16	-	9,974
Current Loans from financial institutions	2,173	-1,996	998	1,175
Leasing liabilities	15,374	-4,267	2,191	13,298
Total	84,212	84,700

The Group’s liquidity remained stable during the financial year. The Group's ability to secure financing may affect its ability to deliver on the strategy. The tables below describe the maturity structure of the interest-bearing liabilities. The figures are revealed with inclusion of interest and principal repayment, figures have not been discounted.

Maturity distribution of financial liabilities 2021

EUR THOUSAND	Balance sheet value	Cash flow	less than 1 year	1-3 years	3-5 years	over 5 years
Loans, interest-bearing	71,402	90,292	5,266	85,026	0	0
Leasing liabilities, interest-bearing	13,298	14,513	4,203	6,537	3,773	0
Foreign currency derivatives	54	54	54	0	0	0
Trade and other payables	12,207	12,207	12,207	0	0	0
Total	96,961	117,066	21,730	91,563	3,773	0

Maturity distribution of financial liabilities 2020

EUR THOUSAND	Balance sheet value	Cash flow	less than 1 year	1-3 years	3-5 years	over 5 years
Loans, interest-bearing	68,837	115,881	5,148	22,728	88,005	0
Leasing liabilities, interest-bearing	15,374	17,875	4,608	6,925	4,351	1,990
Foreign currency derivatives	357	357	357	0	0	0
Trade and other payables	10,196	10,196	10,196	0	0	0
Total	94,765	144,309	20,309	29,654	92,356	1,990

Stories Reports Financial statements Key figures Information for shareholders 85

Credit risk

The sales receivables of the Group are widely spread among a customer base and do not include significant concentration of 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 accounts receivables are presented in Note 15.

Capital management

Shareholders’ equity reported in the Group balance sheet is managed as capital. The Group's capital management aims to ensure the continuity of its 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 Annual Report. Additional information on the share and share issue is presented under Share and Shareholders.

The Group monitors the financial covenants as part of its business and strategy planning. In order to ensure sufficient headroom in relation to covenant thresholds and maximum levels the group forecasts the future values and provide the management with the information on financial and risk positions. No covenant was breached in the financial period ending 31 December 2021.

The Group aims to maintain a strong equity ratio and a moderate gearing ratio. At the end of 2021 the equity ratio was 33.0 percent (36.7%) and gearing ratio 73.4 percent (53.0%). Gearing ratio excluding leasing liabilities was 55.2 percent (34.4%).

19. Shareholders' equity

Accounting principles: 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.

Shareholders' equity 2021

EUR THOUSAND	Share- holders' equity	Share premium account	Invested un- restricted equity	Other reserves	Own shares	Total
Jan 1, 2021	3,528	1,187	110,290	290	0	115,296
Decrease of treasury shares
Transactions that do not affect the number of shares / Cash flow hedges	717					717
Dec 31, 2021	3,528	1,187	110,290	1,006	0	116,013

Shareholders' equity 2020

EUR THOUSAND	Share- holders' equity	Share premium account	Invested un- restricted equity	Other reserves	Own shares	Total
Jan 1, 2020	3,528	1,187	110,388	653	-98	115,659
Decrease of treasury shares	-98			98	0
Transactions that do not affect the number of shares / Cash flow hedges	-363					-363
Dec 31, 2020	3,528	1,187	110,290	290	0	115,296

The nominal value of one share is not determined.

Stories Reports Financial statements Key figures Information for shareholders 86

Number of shares

	2021	2020
Number of outstanding shares Jan. 1	14,415,460	14,397,639
Incentive plan (+)	0	17,821
Number of outstanding shares Dec. 31	14,415,460	14,415,460
Treasury shares Jan. 1	5,476	4,297
Share issue without consideration (+)	19,000	19,000
Incentive plan (-)	-17,821	-17,821
Treasury shares Dec.
Other reserves include the fair value reserve, which includes the cash flow hedges and the increase in the value of the Analyste deal shares between the publication and realization of the deal in 2006.

Treasury shares
The treasury shares reserve includes the acquisition cost of own shares held by the Group.

Warrants
Basware entered into a loan agreement with Bregal Milestone LLP with detachable warrants entered into at the same time (On November 23, 2020 the loan was transferred to Macquarie Principal Finance PTY Limited, UK Branch). On October 9, 2020, Basware received flagging notifications from Bregal Milestone and Briarwood Chase Management LLC according to which Briarwood Chase Management LLC had acquired all warrants from Bregal Milestone. The management used judgement in valuing the warrants at fair value. The loan is calculated at amortized cost applying EIR. As a result of the share issue decided by the Board of Directors on 22 September 2021, the Board of Directors also decided upon the adjustment of the subscription price to be utilized when subscribing the 1,000 freely transferable warrants belonging to Briarwood Chase Management LLC. Following the adjustment, the warrants entitle their holder to subscribe for a total of 1,003,000 shares in the company at an adjusted subscription price of EUR 29.7926 per share. The warrants are exercisable at any time until 20 business days prior to the 19 September 2024.

Dividends
The Board of Directors proposes to the Annual General Meeting that no dividend will be paid for the year 2021 (2020: 0 euros per share).

1. Trade and other liabilities
   | EUR THOUSAND | 31.12.2021 | 31.12.2020 |
   | :----------------------------------------- | :--------- | :--------- |
   | Long-term trade and other liabilities | | |
   | Contract liabilities | 2,133 | 2,791 |
   | Long-term trade and other liabilities total | 2,133 | 2,791 |
   | Short-term trade and other liabilities | | |
   | Trade liabilities | 7,796 | 6,178 |
   | Contract liabilities | 19,965 | 19,177 |
   | Other Liabilities | 27,134 | 24,292 |
   | Short-term trade and other liabilities total | 54,895 | 49,648 |

Accrued expenses include personnel related expenses EUR 17,137 thousand (EUR 17,054 thousand). The fair values of financial assets and liabilities are presented in Note 22 and definitions for contract liabilities presented in Note 2.

1. Provisions
   Accounting principles
   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.

EUR THOUSAND	Opening balance Jan. 1	Additions	Disposals	Closing balance Dec. 31
31.12.2021	0	0	0	0
31.12.2020	266	0	-266	0

1. Financial assets and liabilities
   Accounting principles
   A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Financial assets
The financial assets are categorized as follows:
* financial asset measured at amortized cost
* financial asset measured at fair value through other comprehensive income
* financial asset measured at fair value through profit or loss

A financial asset is measured at amortized cost when both of the following conditions are met:
* the objective is to hold financial assets to collect contractual cash flows and
* the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A financial asset is measured at fair value through other comprehensive income when both of the following conditions are met:
* the objective is to collect contractual cash flows and to sell financial assets and
* the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A financial asset is measured at fair value through profit or loss unless it is measured at amortized cost or at fair value through other comprehensive income.

On initial recognition of an equity instrument that is not held for trading, the Group may irrevocably elect to present subsequent changes in fair value in other comprehensive income. This election is made on an investment by investment basis. 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 financial assets are disclosed as current assets. 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 derecognized 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.

Impairment of financial assets
Trade receivables are measured at amortized cost less impairment losses. The principles for impairment of trade receivables are presented in Note 15. For the other financial assets the impairments are recognized based on Expected Credit Losses. In addition, the Group assesses at each reporting date whether there is objective evidence that a financial asset is impaired.

Financial liabilities
The Group's financial liabilities include trade and other payables and financial liabilities that are measured at amortized cost. 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.

Derivatives
Derivative financial instruments are recognized at fair value on the trade date and subsequently revalued at the fair value on each reporting date. For all derivatives the fair value calculation is based on using the observable market data for foreign currency and interest rate price quotation on the reporting date. Derivatives are included in current assets or liabilities and on the reporting date, except derivatives maturities greater than 12 months after the balance sheet date, which are classified as non-current assets or liabilities. designated in the cash flow hedge accounting is no longer valid or a hedge relationship

The Group applies hedge accounting for foreign currency cash flow hedging. For foreign exchange forwards and swaps not qualifying for hedge accounting changes in fair values are recognized in income statement in financial income and expenses. Hedge relationship qualifies for hedge accounting only if the specific requirements are met. At inception the hedge relationships have to be formally documented and consist of eligible hedge instrument and hedged item(s). The documentation defines the relationship between the designated hedging instrument(s) and the designated hedged item(s), the nature of the risk being hedged with the company’s risk management objective and strategy. The designated items have to be identifiable and reliably measurable. In addition, analysis of the sources for the ineffectiveness are documented. The hedge effectiveness is assessed at inception and after that ongoing basis considering the economic relationship, credit risk and the hedge ratio. Effectiveness is assessed using qualitative methodology. In cash flow hedge accounting is used foreign currency forward and non-deliverable forward contracts to hedge exposures in foreign currency cash flows which ensures economic relationship. Economic relationship exist between the designated hedged item and the designated hedging instrument which means that the values of these items move in the opposite directions because of the common underlying risk. Selecting appropriate stakeholders enables assessment of credit risk and ensuring that the effect of credit risk is not dominating the value changes in the fair values. The hedge ratio in hedge accounting is the same used for actual hedging. Forward contracts are designated with the full fair value to hedge relationships, meaning spot and forward elements are not separated. For cash flow hedges the effective portion of changes in the fair value of hedging instruments are recognized through other comprehensive income (OCI) to hedge reserve within equity. When the hedged transaction affects the income statement the hedging instruments recognized in OCI are transferred to income statement. Accumulated changes in fair values within equity are recognized in income statement in adjustment of purchases or sales in the same period when the hedged item affects income statement. Any ineffective portion of hedges under hedge accounting treatment are reclassified immediately to income statement in financial gain or expense. If hedging instrument doesn't meet the criteria for hedge accounting, the cumulative change in the fair value the hedging instrument will remain in the equity until a recognition of the hedged item in the income statement. The cumulative change in the fair value of the hedging instrument is reclassified to income statement to adjustment item immediately if the hedged cash flow is not firm or highly probable and not expected to realize in the future. Changes in the fair values of foreign exchange derivatives are recognized in financing income and expenses if hedged items are recognized as assets or liabilities. Cash flow hedging resulted in the net profit of EUR 76 thousand in the income statement and the balance sheet# Stories Reports Financial statements Key figures Information for shareholders 89

EUR THOUSAND

Note	Derivatives, hedge accounting	Fair value through profit or loss	Amortized cost	2021 Carrying amount	2021 Fair value
	Financial assets non-current
14	Unlisted share investments			13	13
15	Other receivables			6,138	6,138
	Financial assets current
15	Trade and other receivables			28,600	28,600
18	Derivatives	471	323	794	794
16	Cash and cash equivalents			31,060	31,060
	Financial assets			66,605	66,605
	Financial liabilities non-current
	Loans, interest-bearing			70,227	78,151
	Leasing liabilities, interest-bearing			8,986	8,986
	Financial liabilities current
	Loans, interest-bearing			1,175	1,175
	Leasing liabilities, interest-bearing			3,560	3,560
20	Trade and other payables			12,207	12,207
18	Derivatives	21	33	54	54
	Financial liabilities			96,209	104,133

Stories Reports Financial statements Key figures Information for shareholders 90

EUR THOUSAND

Note	Derivatives, hedge accounting	Fair value through profit or loss	Amortized cost	2020 Carrying amount	2020 Fair value
	Financial assets non-current
14	Unlisted share investments			13	13
15	Other receivables			688	688
	Financial assets current
15	Trade and other receivables			27,807	27,807
18	Derivatives	55	55	55	55
16	Cash and cash equivalents			40,461	40,461
	Financial assets			69,024	69,024
	Financial liabilities non-current
	Loans, interest-bearing			66,665	77,299
	Leasing liabilities, interest-bearing			11,647	11,647
	Financial liabilities current
	Loans, interest-bearing			2,173	2,173
	Leasing liabilities, interest-bearing			3,727	3,727
20	Trade and other payables			10,196	10,196
18	Derivatives	413	413	413	413
	Financial liabilities			94,821	105,455

Stories Reports Financial statements Key figures Information for shareholders 91

Financial instruments that are measured at fair value in the balance sheet are presented according to fair value measurement hierarchy: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: inputs other than quoted price included within Level 1 that are observable for the assets or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). Level 3: inputs for the assets or liability that is not based on observable market data (unobservable inputs).

In determining the values of the financial assets and liabilities, the following price quotations, assumptions and valuation models have been used.

Long-term financial assets

Long-term financial assets consist of unlisted share investments and other receivables. Unquoted equity shares of EUR 13 thousand are classified as level 3 in the fair value measurement hierarchy.

Short-term financial assets

Trade and other receivables are measured at amortized cost less impairment losses. Financial assets arising from derivative financial instruments of EUR 794 thousand are classified as level 2.

Long-term financial liabilities

Long-term loans from financial institutions consist of a loan from Macquarie Principal Finance PTY Limited, UK Branch and other institutions. The terms of the debt facility with Macquarie Principal Financing PTY Limited was ammended effective 12th of July 2021. Fair value of the loan from Macquarie Principal Finance PTY is measured to reflect the amount the Group would need to pay if it would repay the loan in full at the end of reporting period. The loan is classified as level 2 in the fair value measurement hierarchy. The value of the loan as of 31 December, 2021 would approximately be 68.2 million euros if calculated based on discounted cash flows. Other loans are at fixed or variable rate and their fair values are considered to correspond to the book values as divergences between the values are assessed as immaterial.

Short-term financial liabilities

The fair values of short-term loans from financial institutions are considered to correspond to the book values. Trade payables and other liabilities are measured at amortized cost. Financial liabilities arising from derivative financial instruments of EUR 54 thousand are classified as level 2. The maturity distribution of financial liabilities is presented in Note 18.

23. Auditor fees

EUR THOUSAND	1.1.-31.12.2021	1.1.-31.12.2020
Audit fees	-277	-258
Tax consultancy	-1	0
Other fees and services	-5	-4
Auditor fees total	-283	-262

24. Commitments and contingent liabilities

EUR THOUSAND	31.12.2021	31.12.2020
Own guarantees
Guarantees	1,052	1,262
Business mortgage	86,200	0
Commitments on behalf of subsidiaries
Guarantees	862	822
Other commitments
Maturing in less than 1 year	2,831	3,455
Maturing in 1-5 years	572	2,876
Maturing later than 5 years	2	0
Total	3,405	6,331
Commitments and contingent liabilities total	91,518	8,415

Other commitments include leases and other rental not in scope of IFRS 16, as well as commitments arising from license agreements. Obligations from long term service agreements are not included. The group does not have pledges, mortgages or guarantees on behalf of external parties.

Stories Reports Financial statements Key figures Information for shareholders 92

On July 12, Basware completed an amendment agreement of its debt facility with Macquarie Principal Financing PTY Limited, effective 12th of July 2021. Under the amendment, the debt facility type was changed to a senior secured debt facility which will be due September 2024 in line with the facility’s original maturity and has a non-call of 24 months. As a security for the debt facility mortgage notes with a total nominal of EUR 86.2 million were pledged to the lender.

The Group has committed to enter into a lease agreement with expected cash outflows during the coming year. When this occurs, the Group is exposed to potential cash outflows that are not now disclosed in the measurement of rental liabilities or other commitments. In addition, Basware has an asset of EUR 5,000 thousand in a pledged bank account that is related to the guarantee the Company has from Garantia for its multi-issuer bond.

The Group’s Indian subsidiary is in receipt of Show Cause Notice pertaining to Indian financial year 2017-2018 and 2018-2019 for goods and service tax liability and if services are considered to be Intermediary services or export of services. This issue is related to a substantial number of global IT companies operating in India. As a result of the analysis made based on the recent circular No. 159/15/2021 dated 20 September 2021 issued by Central Board of Indirect Taxes (CBIC), it has been concluded by the Group that software development services provided by Basware India to Basware Oyj would qualify as export of services. The Group has not recorded any provision related to the Notice as the Group considers it to be more likely than not that it will not realize.

25. Shares in subsidiaries

Domicile	Country	Group holding, %
Basware International Oy	Espoo	Finland
Basware GmbH	Düsseldorf	Germany
Basware AB	Stockholm	Sweden
Basware B.V.	Amsterdam	Netherlands
Basware A/S	Herlev	Denmark
Basware, Inc.	Delaware	United States
Basware SAS	Paris	France
Basware AS	Oslo	Norway
Basware Pty Ltd	Chatswood	Australia
Basware SRL	Iasi	Romania
Basware India Private Limited	Chandigarh	India
Basware Belgium NV	Aalst	Belgium
Basware Holdings Ltd.	London	Great Britain
Basware Shared Services Ltd.	London	Great Britain

Foreign branches

The parent company has a branch office in Russia, Moscow (reg. no. 16926.1). Basware GmbH is exempt from the duty of corporations to audit and disclose financial statements pursuant to German legislation (§ 264 III HGB).

26. Events after the reporting period

After the balance sheet date, no significant events have taken place within the Group.

Parent company income statement (FAS)

EUR	Note	1.1.-31.12.2021	1.1.-31.12.2020
NET SALES	2	75,308,359.44	76,404,254.64
Other operating income	3	15,536.52	104,306.00
Materials and services	4	-16,325,836.33	-16,603,144.76
Employee benefits expenses	5	-28,612,352.29	-27,577,060.55
Depreciation and amortization	6	-10,199,482.36	-9,754,876.74
Other operating expenses	7	-20,929,989.17	-24,205,080.20
Operating profit/loss		-743,764.19	-1,631,601.61
Financial income	8	834,932.24	886,438.27
Financial expenses	8	-20,290,644.39	-11,530,950.03
Dividend from group companies		794,821.86	200,000.00
Impairment on investments	8	0.00	-17,884.00
Profit/loss before appropriation and taxes		-19,404,654.48	-12,093,997.37
Income tax expense	9	0.00	0.00
PROFIT/LOSS FOR THE PERIOD		-19,404,654.48	-12,093,997.37

Parent company balance sheet (FAS)

EUR	Note	31.12.2021	31.12.2020
ASSETS
Non-current assets
Intangible assets	10	34,389,564.65	36,566,585.97
Tangible assets	11	653,149.67	677,978.80
Investments	12	103,515,446.52	107,583,005.73
Long-term trade and other receivables	13	5,987,351.20	645,316.57
Non-current assets		144,545,512.04	145,472,887.07
Current assets
Short-term trade and other receivables	14	21,808,245.72	23,008,460.06
Cash and cash equivalents		22,111,900.02	32,370,471.67
Current assets		43,920,145.74	55,378,931.73
TOTAL ASSETS		188,465,657.78	200,851,818.80
EQUITY AND LIABILITIES
Shareholders' equity
Share capital		3,528,368.70	3,528,368.70
Share premium account		1,118,161.00	1,118,161.00
Fair value reserve		450,412.66	-357,511.42
Other reserves		115,939,220.13	115,939,220.13
Retained earnings		-47,243,286.26	-35,149,288.89
Result for the period		-19,404,654.48	-12,093,997.37
Shareholders' equity	15	54,388,221.75	72,984,952.15
Liabilities
Long-term liabilities	16	70,958,990.48	68,901,805.96
Short-term liabilities	17	63,118,445.55	58,965,060.69
Total liabilities		134,077,436.03	127,866,866.65
TOTAL EQUITY AND LIABILITIES		188,465,657.78	200,851,818.80

Stories Reports Financial statements Key figures Information for shareholders 93

Parent company cash flow statement (FAS)

EUR	1.1.-31.12.2021	1.1.-31.12.2020
Cash
# Cash Flow Statement

Cash flow from operating activities

Result for the period	-19,404,654.48
Adjustments for result
Planned depreciations	10,199,482.36
Proceeds from sale of non-current assets	0.00
Unrealized exchange gains and losses	100,286.43
Finance income and expenses	18,540,986.58
Other non-cash items	-465,602.69
Working capital changes	759,165.79
Interest paid	-2,839,758.57
Dividends received	795,398.82
Interest received	156,022.23
Other financial items in operating activities	-338,048.50
Net cash from operating activities	7,503,277.97

Cash flow from investing activities

Purchase of tangible and intangible assets	-8,092,503.40
Proceeds from sale of tangible and intangible assets	0.00
Investments in group companies	-1,100,000.00
Proceeds from repayments of loans	5,168,220.28
Movements in short-term deposits and fixes deposits	-5,000,000.00
Addition / deduction of cash equivalents	169,522.16
Net cash used in investing activities	-8,854,760.96

Cash flow before financing activities	-1,351,482.99

The company includes intra-group accounts in the financing activities.

### EUR 1.1.-31.12.2021	1.1.-31.12.2020
Cash flow from financing activities
Repayment of current borrowings	-1,995,972.00
Addition / deduction of current borrowings	4,263,928.51
Proceeds from borrowings	0.00
Repayment of non-current borrowings	-11,175,045.17
Net cash used in financing activities	-8,907,088.66

Net change in cash and cash equivalents	-10,258,571.65
Cash and cash equivalents at the beginning of period	32,370,471.67
Cash and cash equivalents at the end of period	22,111,900.02

---

Stories Reports Financial statements Key figures Information for shareholders 94

NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS (FAS)

1. Accounting principles

Basware Corporation’s financial statements have been prepared in accordance with the Finnish Accounting Act.

Transactions in foreign currencies

Transactions in foreign currencies are recorded at the exchange rates prevailing at the transaction dates. 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.

Revenue recognition

Parent company applies the same revenue recognition principles as the Group. Revenue recognition principles of the Group are presented in Note 2.

Other operating income

Other operating income includes proceeds from the sale of business operations and property, plant and equipment and rental income.

Research and development costs

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, 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.

Pensions

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

Intangible assets are recognized at the original acquisition cost less accumulated amortization 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 amortization of the asset they are related to. The expected useful lives of intangible assets are 3–10 years. The useful lives are reviewed at the end of each financial year and are adjusted if needed.

Tangible assets

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.

Investments

The company’s subsidiary shares and other shares in the investments in non-current assets are valued at acquisition cost or, if lower, at fair value.

Financial instruments

Financial instruments are recognized at fair value in accordance with Accounting Act section 5: 2a. The accounting principles of hedge accounting are presented in Note 18 and Note 22 of group financial statements.

Provisions

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.

Leases

Leasing payments are recognized as annual expenses.

Income taxes

Income taxes are recognized in accordance with Finnish tax legislation. Income taxes include the income tax payments for the period based on the profit for the period, taxes for prior periods and tax refunds. Deferred taxes are not included in the parent’s income statement and balance sheet.

---

Stories Reports Financial statements Key figures Information for shareholders 95

2. Net sales

Net sales by revenue type

Below is a breakdown of revenue by type. Revenue by type is not directly comparable with group revenue because figures reported by parent company include intra-group revenue.

#### EUR THOUSAND	1.1-31.12.2021	1.1-31.12.2020
Cloud revenue
SaaS	39,485	35,349
Transaction services	23,614	23,871
Other cloud revenue	83	60
Cloud revenue total	63,182	59,281
Non-cloud revenue
Maintenance	4,459	9,682
License sales	74	193
Consulting services	7,457	7,518
Other non-cloud revenue	136	-269
Other than cloud revenue total	12,127	17,124
Revenue total	75,308	76,404

Net sales by location of customer

#### EUR THOUSAND	1.1-31.12.2021	1.1-31.12.2020
Finland	36,633	36,315
Export	38,675	40,089
Total	75,308	76,404

Salaries and fees paid to each member of the management are detailed in Note 5 to the consolidated financial statement.

3. Other operating income

#### EUR THOUSAND	1.1.-31.12.2021	1.1.-31.12.2020
Gain on sale of assets	7	23
Other operating income	8	81
Other operating income total	15	104

4. Materials and services

#### EUR THOUSAND	1.1.-31.12.2021	1.1.-31.12.2020
Purchases during the financial period	-15,754	-15,614
Services purchased	-571	-989
Total	-16,326	-16,603

5. Personnel and employee benefits

#### EUR THOUSAND	1.1-31.12.2021	1.1-31.12.2020
Salaries paid to CEO and the Board of Directors	-1,524	-817
Salaries paid to other personnel	-22,233	-22,715
Pension expenses	-3,996	-3,139
Other personnel expenses	-859	-906
Total	-28,612	-27,577

### Personnel average for the period	1.1-31.12.2021	1.1-31.12.2020
Personnel at the end of the period	340	347
Number of personnel	335	346

6. Depreciation and amortization

#### EUR THOUSAND	1.1.-31.12.2021	1.1.-31.12.2020
Intangible assets	-10,005	-9,565
Tangible assets	-195	-190
Total	-10,199	-9,755

7. Other operating expenses

#### EUR THOUSAND	1.1.-31.12.2021	1.1.-31.12.2020
Rents	-1,425	-1,376
Non-statutory employee benefits	-412	-387
Travelling	-137	-313
Marketing	-4,824	-3,531
IT and telephone	-920	-904
Auditor fees	-198	-171
Other expenses	-13,013	-17,523
Other operating expenses total	-20,930	-24,205

### Audit fees	1.1.-31.12.2021	1.1.-31.12.2020
Audit fees	-193	-167
Tax consultancy	0	0
Other fees and services	-5	-4
Audit fees total	-198	-171

8. Finance income and expenses

#### EUR THOUSAND	1.1.-31.12.2021	1.1.-31.12.2020
Other interest and financial income
From group companies	358	845
From others	477	41
Other interest and financial income	835	886
Interest and financial expenses
To group companies	-623	-1,283
To others	-19,668	-10,248
Impairment on investments	0	-18
Other interest and financial expenses total	-20,291	-11,549
Total	-19,456	-10,663

9. Direct taxes

#### EUR THOUSAND	1.1.-31.12.2021	1.1.-31.12.2020
Income taxes from previous financial periods	0	0
Total	0	0

The deferred tax asset arising from accumulated losses total of 5.6 (6.4) million euros has not been recognized on the balance sheet. In addition, the company has non-deductible interests in total of 26.1 (17.2) million euros for which deferred tax asset has not been recognized on the balance sheet. The postponed R&D amortizations 7.0 (5.2) million euros are booked as deferred tax asset on the Group balance sheet. Income taxes have been recognized in accordance with Finnish tax legislation.

---

Stories Reports Financial statements Key figures Information for shareholders 97

10. Intangible assets

Intangible assets 2021 | Intangible assets 2020

--- | --- | ---
| EUR THOUSAND | |
| Development costs | |
| Intangible rights | |
| Goodwill/merger loss | |
| Other long-term investments | |
| Assets, unfinished projects | |
| Total | |
Acquisition cost Jan. 1 | 65,652 | 18,496 | 17,625 | 288 | 14,044 | 116,104 |
Additions | 321 | 391 | 0 | 28 | 7,178 | 7,919 |
Disposals | -6,337 | -7,134 | 0 | 0 | 0 | -13,471 |
Reclassifications between items | 5,701 | 0 | 0 | 0 | -5,701 | 0 |
Acquisition cost Dec. 31 | 65,337 | 11,753 | 17,625 | 317 | 15,520 | 110,552 |
Cumulative amortization Jan. 1 | -45,771 | -16,035 | -17,625 | -107 | 0 | -79,538 |
Cumulative amortization on disposals and reclassifications | 6,246 | 7,134 | 0 | 0 | 0 | 13,380 |
Amortization | -9,265 | -706 | 0 | -34 | 0 | -10,005 |
Cumulative amortization Dec. 31 | -48,790 | -9,607 | -17,625 | -140 | 0 | -76,163 |
Book value Dec. | | | | | | |
```# 11. Tangible assets

Tangible assets 2021

EUR THOUSAND	Machinery and equipment	Other tangible assets	Total
Acquisition cost Jan. 1	6,898	152	7,050
Additions	170	0	170
Disposals	-3,061	0	-3,061
Acquisition cost Dec. 31	4,007	152	4,159
Cumulative depreciation Jan. 1	-6,372	0	-6,372
Cumulative depreciation on disposals and reclassifications	3,061	0	3,061
Depreciation	-195	0	-195
Cumulative depreciation Dec. 31	-3,506	0	-3,506
Book value Dec. 31	501	152	653

Tangible assets 2020

EUR THOUSAND	Machinery and equipment	Other tangible assets	Total
Acquisition cost Jan. 1	6,954	152	7,107
Additions	49	0	49
Disposals	-106	0	-106
Acquisition cost Dec. 31	6,898	152	7,050
Cumulative depreciation Jan. 1	-6,287	0	-6,287
Cumulative depreciation on disposals and reclassifications	106	0	106
Depreciation	-190	0	-190
Cumulative depreciation Dec. 31	-6,372	0	-6,372
Book value Dec. 31	526	152	678

12. Investments

Shares in group companies

EUR THOUSAND	1.1.-31.12.2021	1.1.-31.12.2020
Book value Jan. 1	98,075	98,075
Increase	3,352	0
Book value Dec. 31	101,427	98,075

Other shares

EUR THOUSAND	1.1.-31.12.2021	1.1.-31.12.2020
Book value Jan. 1	13	13
Book value Dec. 31	13	13

Receivables from group companies

EUR THOUSAND
Loan receivables from group companies	2,075	9,495

Investments total

EUR THOUSAND
	103,515	107,583

Subsidiary shares

Domicile	Country	Parent company holding, %
Basware International Oy	Espoo	Finland
Basware GmbH	Düsseldorf	Germany
Basware AB	Stockholm	Sweden
Basware B.V.	Amsterdam	Netherlands
Basware A/S	Herlev	Denmark
Basware Inc.	Delaware	United States
Basware SAS	Paris	France
Basware AS	Oslo	Norway
Basware Pty Ltd	Chatswood	Australia
Basware SRL	Iasi	Romania
Basware India Private Limited	Chandigarh	India
Basware Belgium NV	Aalst	Belgium
Basware Holdings Ltd.	London	Great Britain
Basware Shared Services Ltd.	London	Great Britain

Foreign branches

The parent company has a branch office in Russia, Moscow (reg. no. 16926).

13. Non-current receivables

EUR THOUSAND	31.12.2021	31.12.2020
Rent deposits	7	7
Pledged bank account	5,000	0
Total	5,987	645

14. Current receivables

EUR THOUSAND

	31.12.2021	31.12.2020
Accounts receivables	6,463	5,662
Receivables from group companies
Accounts receivables	7,275	10,262
Interest receivables	0	0
Loan receivables	147	317
Other receivables	2,887	2,910
Total	10,309	13,488
Prepaid expenses and accrued income	4,204	3,698
Other receivables	833	159
Total	5,036	3,858
Current receivables total	21,808	23,008

Prepaid expenses and accrued income

EUR THOUSAND	31.12.2021	31.12.2020
Accrued employee expenses	2	7
Other prepaid expenses and accrued income	4,202	3,692
Total	4,204	3,698

15. Shareholders' equity

EUR THOUSAND	31.12.2021	31.12.2020
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
Fair value reserve Jan. 1	-358	77
Increase or decrease	808	-435
Fair value reserve Dec. 31	450	-358
Restricted Equity Dec. 31	5,097	4,289
Invested non-restricted equity Jan. 1	115,939	116,037
Decrease of treasury shares	0	-98
Invested non-restricted equity Dec. 31	115,939	115,939
Retained earnings Jan. 1	-47,243	-35,246
Decrease of treasury shares	0	98
Profit for the period	-19,405	-12,094
Retained earnings Dec. 31	-66,648	-47,243
Non-restricted equity Dec. 31	49,291	68,696
Shareholders' equity Dec. 31	54,388	72,985

Specification of distributable funds

EUR THOUSAND	31.12.2021	31.12.2020
Profit for the period	-19,405	-12,094
Retained earnings	-47,243	-35,148
Other distributable funds	115,939	115,939
Warrants	-4,691	-4,691
Development expenses, capitalized*	-32,067	-33,925
Distributable funds Dec. 31	12,533	30,080

• According to Accounting Act 5:8 capitalized development expenses are deducted from distributable funds. Warrants are detailed in Note 19.

Shareholders' equity in the consolidated financial statement.

16. Non-current liabilities

EUR THOUSAND	1.1.-31.12.2021	1.1.-31.12.2020
Loans from financial institutions	70,227	66,665
Deferred income	555	613
Debts to group companies	177	1,624
Non-current liabilities total	70,959	68,902

17. Current liabilities

EUR THOUSAND	31.12.2021	31.12.2020
Accounts payable	6,220	5,145
Liabilities to group companies
Accounts payable	1,291	2,345
Other debts	38,914	34,709
Total	40,205	37,054
Loans from financial institutions	998	1,996
Other debts	1,373	1,363
Total	16,693	16,767
Current liabilities total	63,118	58,965

Accrued expenses and deferred income

EUR THOUSAND	31.12.2021	31.12.2020
Accrued employee expenses	8,125	7,787
Deferred income	1,841	3,683
Other accrued expenes	4,357	1,938
Total	14,323	13,408

18. Commitments and contingent liabilities

EUR THOUSAND	31.12.2021	31.12.2020
Own guarantees
Guarantees	399	398
Business mortgage	86,200
Commitments on behalf of subsidiaries
Guarantees	862	822

EUR THOUSAND	31.12.2021	31.12.2020
Other own contingent liabilities
Leasing liabilities
Current lease liabilities	306	299
Lease liabilities maturing in 1–5 years	344	190
Total	651	489
Rental liabilities*
Current rental liabilities	3,719	4,380
Rental liabilities maturing in 1- 5 years	4,687	7,278
Rental liabilities maturing over 5 years	0	1,048
Total	8,407	12,706
Other own contingent liabilities total	9,057	13,196
Commitments and Contingent Liabilities total	96,518	14,416

*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. On July 12, Basware completed an amendment agreement of its debt facility with Macquarie Principal Financing PTY Limited, effective 12th of July 2021. Under the amendment, the debt facility type was changed to a senior secured debt facility which will be due September 2024 in line with the facility’s original maturity and has a non-call of 24 months. As a security for the debt facility mortgage notes with an total nominal of EUR 86.2 million where pledged to the lender. In addition, Basware has an asset of EUR 5,000 thousand in a pledged bank account that is related to the guarantee the Company has from Garantia for its multi-issuer bond.

SIGNATURES FOR THE BOARD OF DIRECTORS' REPORT AND FINANCIAL STATEMENTS

In Espoo, February 2, 2022

Michael Ingelög
Chair of the Board

Ilkka Sihvo
Vice Chair of the Board

Daryl Rolley
Member of the Board

Minna Smedsten
Member of the Board

Klaus Andersen
CEO

Jonathan Meister
Member of the Board

Carl Farrell
Member of the Board

The Auditor's Note

A report on the audit performed has been issued today.
Helsinki 2.2.2022

Ernst & Young Oy
Authorized Public Accountant Firm

Terhi Mäkinen
Authorized Public Accountant

AUDITOR’S REPORT (TRANSLATION OF THE FINNISH ORIGINAL)

To the Annual General Meeting of Basware Corporation

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Basware Corporation (business identity code 0592542-4) for the year ended 31 December, 2021. 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

• the consolidated financial statements give a true and fair view of the group’s financial position as well as its financial performance and its cash flows in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.
• the financial statements give a true and fair view of the parent company’s financial performance and financial position in accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with statutory requirements.

Our opinion is consistent with the additional report submitted to the Audit Committee.

Basis for Opinion

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 the 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# Auditor's Report

We have audited the consolidated financial statements of the Company and its subsidiaries and the separate financial statements of the Company (the "Parent Company") for the year ended 31 December 2021. These financial statements comprise the consolidated statement of financial position as at 31 December 2021, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies, and the Parent Company's statement of financial position as at 31 December 2021, the Parent Company's income statement, Parent Company's statement of comprehensive income, Parent Company's changes in equity and Parent Company's cash flow statement for the year then ended and notes to the Parent Company financial statements.

In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Company and its subsidiaries as at 31 December 2021, and of their financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.

In our opinion, the Parent Company's financial statements give a true and fair view of the financial position of the Parent Company as at 31 December 2021, and of its financial performance and cash flows for the year then ended in accordance with the laws and regulations of Finland governing the preparation of financial statements and comply with statutory requirements.

We have also confirmed that the information in the Directors' report is in accordance with the financial statements.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) and applicable legislation in Finland. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.

We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Finland, which consist of the independence requirements of the Finnish Auditing Act and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

We confirm that we have obtained all the information and explanations which we have required for the purposes of our audit. 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 note 23 to the consolidated financial statements and note 7 to the parent company financial statements.

Key Audit Matters

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.

Valuation of Goodwill

We refer to the Group’s accounting policies and the note 3. At the balance sheet date 31 December 2021, the value of goodwill amounted to EUR 80 million representing 36% of total assets and 110% of total equity (2020: EUR 77 million, 34% of total assets and 93% of total equity). The valuation of goodwill was a key audit matter as:

• the management’s annual impairment test is complex and involves judgments;
• the annual impairment test is based on market and economical assumptions;
• the goodwill balance is significant.

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.

Our audit procedures included, among others, involving internal valuation specialist 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 estimates approved by the board. We checked the mathematical accuracy of the underlying calculations. We compared the group’s 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.

Revenue Recognition

We refer to the Group’s accounting policies and the note 2. Sales are recognized when the control of the goods or service is transferred to the customer. Revenue is recognized at an amount that reflects the considerations to which the company expects to be entitled in exchange for transferring goods or services to a customer. Revenue is recognized over time or at a point in time. The group focuses on revenue as a key performance measure which could create an incentive for revenue to be recognized before the control 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 537/2014, point (c) of Article 10(2) due to the identified risk of material misstatement in timely revenue recognition.

Our audit procedures, considering the significant risk of material misstatement related to revenue recognition, included amongst other:

• assessing the application of group’s accounting policies over revenue recognition and comparing the group’s accounting policies over revenue recognition with applicable accounting standards;
• identifying the nature of the revenues and identification of any unusual contract terms;
• testing the revenue recognized including testing of group’s controls on revenue recognition, when applicable. Our testing included tracing the information to agreements and payments.
• assessing the revenue recognized with substantive analytical procedures and
• assessing the group’s disclosures on revenue recognition.

Responsibilities of the Board of Directors and the Managing Director for the Financial Statements

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.

Auditor’s Responsibilities for the Audit of the Financial Statements

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:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the parent company’s or the group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of the Board of Directors’ and the Managing Director’s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the parent company’s or the group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the parent company or the group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events so that the financial statements give a true and fair view.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. 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.# Information on our audit engagement
  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 14 years.

Other information

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.

Other opinions on assignment of the Audit Committee

We support that the financial statements should be adopted. The proposal by the Board of Directors regarding the use of the distributable funds shown in the financial statements is in compliance with the Limited Liability Companies Act. We support that the Members of the Board of Directors and the Managing Director of the parent company should be discharged from liability for the financial period audited by us.

Helsinki 2.2.2022
Ernst & Young Oy
Authorized Public Accountant Firm
Terhi Mäkinen
Authorized Public Accountant

GROUP KEY FINANCIAL PERFORMANCE INDICATORS

EUR THOUSAND	2021	2020	2019	2018	2017
Cloud ARR order intake	17,064	19,250	23,694	21,474	-
Net sales	153,155	151,579	148,302	141,417	149,167
Growth of net sales, %	1.00%	2.20%	4.90%	-5.20%	0.40%
Organic revenue growth, %	0.90%	3.20%	5.90%	5.40%	1.50%
Operating profit	7,144	4,667	-14,537	-1,471	-9,509
% of net sales	4.70%	3.10%
EBITDA	22,828	20,207	1,403	9,217	599
% of net sales	14.90%	13.30%	0.90%	6.50%	0.40%
Adjusted EBITDA	23,186	20,359	5,185	-4,364	3,294
Return on equity, %	-18.30%	-8.30%	-22.90%	-6.30%	-9.36%
Return on investment, %	4.30%	3.10%	-8.60%	-0.90%	-5.77%
Interest-bearing liabilities excl. leasing liabilities	71,402	68,837	60,885	57,206	49,282
Cash and cash equivalents	31,060	40,461	31,672	40,747	20,683
Cash flows from operating activities	20,435	25,252	4,159	-6,261	-4,001
Gearing, %	72.50%	53.00%	48.90%	14.90%	25.24%
Gross investments	8,554	9,877	10,617	10,933	12,498
% of net sales	5.60%	6.50%	7.20%	7.70 %	8.40%
R&D expenses excluding amortizations	17,666	16,447	19,138	21,231	24,372
R&D costs, capitalised	7,569	8,372	8,829	8,862	9,879
R&D investments, total	25,235	24,819	27,967	30,093	34,251
% of net sales	16.50%	16.40%	18.90%	21.30%	23.00%
Depreciation and amortization	15,685	15,539	15,941	10,688	10,108
Other capitalised expenditure	985	1,505	1,788	2,071	2,620
Personnel at end of period	1,347	1,336	1,325	1,412	1,829

GROUP SHARE INDICATORS

	2021	2020	2019	2018	2017
Earnings per share, undiluted	-0.99	-0.51	-1.63	-0.49	-0.80
Earnings per share, diluted	-0.99	-0.51	-1.63	-0.49	-0.80
Adjusted earnings per share, undiluted (EUR)	-0.96	-0.50	-1.37	-1.44	-0.61
Adjusted earnings per share, diluted (EUR)	-0.96	-0.50	-1.37	-1.44	-0.61
Equity per share	5.06	5.73	6.53	7.71	7.89
Dividend per share	0,00*	0,00	0,00	0,00	0,00
Dividend per profit, %	0.00%	0.00%	0.00%	0.00%	0.00%
Effective dividends, %	0.00%	0.00%	0.00%	0.00%	0.00%
Price/Earnings ratio (P/E)	-30.70	-82.56	-14.58	-80.20	-59.18
Share price performance, share issue adjusted
lowest share price	28.25	15.66	16.76	19.75	31.96
highest share price	43.85	42.85	41.10	47.60	47.50
average share price	37.43	29.58	23.61	34.00	38.84
closing share price	30.25	42.00	23.75	39.50	47.50
Market value of shares at end of period**	437,293,788	605,449,320	341,943,926	567,633,802	682,085,892
Share issue adjusted number of traded shares	4,162,965	4,817,685	4,204,444	3,005,479	1,681,791
% of average share number	28.60%	33.40%	29.20%	20.92%	11.70%
Number of shares**
- at end of the period	14,455,993	14,415,460	14,397,639	14,370,476	14,359,703
- average during the period	14,445,824	14,407,595	14,388,469	14,367,829	14,357,343
- average during the period, diluted	14,580,596	14,638,935	14,473,519	14,461,175	14,406,674

) Board’s proposal to the Annual General Meeting of Shareholders
*) Excluding treasury shares

CALCULATION OF KEY INDICATORS

EARNINGS PER SHARE

Profit for the period
Adjusted average number of shares during the period

DILUTED EARNINGS PER SHARE

Profit for the period
Adjusted average number of shares during the period + dilutive shares

DIVIDEND/PROFIT, %

Dividend per share x 100
Earnings per share

Alternative performance measures

RETURN ON EQUITY (ROE), %

(Profit or loss before taxes - taxes) x 100
Shareholders' equity (average)

RETURN ON INVESTMENT (ROI), %

(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

ADJUSTED EARNINGS PER SHARE (EPS) is calculated by excluding from the profit/loss any adjustments related to alliance fees, acqui- sitions and disposals, restructuring and efficiency measures, impairment losses and litigation fees and settlements.

EQUITY PER SHARE
Shareholders' equity x 100
Adjusted number of shares at the end of the financial period - own shares

DIVIDEND PER SHARE
Total dividend x 100
Adjusted number of shares at the end of the financial period - own shares

EFFECTIVE DIVIDEND YIELD, %
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 x 100
Earnings per share

ADJUSTED EBITDA
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.

OPERATING PROFIT
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, depre - ciation 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.

ADJUSTED OPERATING PROFIT (ADJUSTED EBIT)
Is calculated from operating result excluding any adjustments related to alliance fees, acqui- sitions and disposals, restructuring and efficiency measures, impairment losses and litigation fees and settlements.

GROSS INVESTMENTS
Total investments made to non-current assets including acquisitions and capitalized research and development costs.

FREE CASH FLOW METRIC
Free cash flow is calculated as follows: EBITDA minus capitalizations, total debt service costs, tax and payments of lease liabilities, and excluding the share part of share-based compensation.

SHARE AND SHAREHOLDERS

Share

Basware shares are listed on Nasdaq Helsinki Ltd. The company has one series of shares, with the trading code BAS1V.

• Trading code: BAS1V
• ISIN code: FI0009008403
• Book-counter value: EUR 0.30
• Listing price on February 29, 2000: EUR 5.70
• Closing price:on December 31, 2021, EUR 30.25. At the end of 2021, the total number of shares issued by Basware was 14,463,936 (14,420,936). Each share confers one vote in the general meeting of shareholders, and all shares carry an equal right to dividend.

Share Capital and Trading

At the end of 2021, Basware Corporation's share capital was EUR 3,528,368.70 (EUR 3,528,368.70). During 2021, the highest price of the share was EUR 43.85 (EUR 42.85), the lowest was EUR 28.25 (EUR 15.66) and the closing price was EUR 30.25 (EUR 42.00). The average price of the share was EUR 37.43 (EUR 29.58) during the period. A total of 4,162,965 (4,817,685) shares were traded on Nasdaq Helsinki stock exchange during the period, corresponding to 28.6 percent (33.4%) of the average number of shares. Market capitalization with the period’s closing price on December 31, 2021, was EUR 437,293,788 (EUR 605,449,320). The total amount of own shares held by the company on December 31, 2021, was 7,943 shares (5,476 shares), representing approximately 0.1 percent (0.0%) of all outstanding shares.

Incentive Schemes

Additional information on the share-based incentive schemes is available on the Group's investor webpages at https://investors.basware.com/en/governance/compensation.

Shareholders

Basware had 11,533 (11,864) shareholders on December 31, 2021, of which 10 are nominee registers. Nominee registered holdings accounted for 54.0 percent (56.4%) of the total number of shares.

Distribution of holdings by country as at December 31, 2021

COUNTRY	Number of shareholders	% of shareholders	Number of shares	% of shares
Finland	11,375	98.6	6,095,464	42.1%
United States	37	0.3	4,085,870	28.2%
Sweden	17	0.1	1,844,118	12.7%
United Kingdom	14	0.1	432,138	3.0%
Germany	9	0.1	279,412	1.9%
Other	81	0.7	1,726,934	11.9%
Total	11,533	100.0	14,463,936	100

Distribution of holdings by sector as at December 31, 2021

	Number of shareholders	% of shareholders	Number of shares	% of shares
International institutions	10	0.1	7,812,930	54.0%
Finnish institutions	520	4.5	2,723,811	18.8%
Households	10,978	95.2	984,408	6.8%
Non-profit organizations	2	0.0	26,000	0.2%
Treasury	1	0.0	7,943	0.1%
Other	22	0.2	2,908,844	20.1%
Total	11,533	100	14,463,936	100
Of which nominee-registered	10	0.1	7,812,930	54.0%

Holdings of the Board of Directors and the Executive Team as at December 31, 2021

	Number of shares	% of all shares
Michael Ingelög, Chair	8,347	0.1
Ilkka Sihvo, Vice-Chair	887,300	6.1
Daryl Rolley	3,786	0.0
Minna Smedsten	1,135	0.0
Carl Farrel	538	0.0
Jonathan Meister	538	0.0
Holdings of the Board of Directors in total	901,644	6.2
Klaus Andersen, CEO	18,984	0.1
Martti Nurminen, CFO	0	0.0
Jane Broberg	5,482	0.0
Lars Madsen	7,896	0.1
Perttu Nihti	2,197	0.0
Mogens Pedersen	1,500	0.0
Alwin Schauer	0	0.0
Executive Team holdings in total	36,059	0.3

On December 31, 2021, the members of the Board of Directors and Executive Team held in total 937,703 company shares, accounting for 6.5 percent of the total number of shares and votes.

Major shareholders as at December 31, 2021

	Number of shares	% of shares
1. Long Path Partners	1,462,776	10.1
2. Lannebo Fonder	1,316,479	9.1
3. Ilkka Sihvo	887,300	6.1
4. Briarwood Chase Management	635,352	4.4
5. Hannu Vaajoensuu	560,446	3.9
6. Artisan Partners	492,073	3.4
7. Fourth Swedish National Pension Fund	469,873	3.3
8. Ilmarinen Mutual Pension Insurance Company	420,830	2.9
9. Janus Henderson Investors	420,508	2.9
10. Teton Capital	391,974	2.7
11. Kirsi Eräkangas	390,313	2.7
12. Capital Group	380,200	2.6
13. The State Pension Fund of Finland	306,000	2.1
14. Sakari Perttunen	301,121	2.1
15. Sp-Fund Management Company	290,612	2.0
16. Allianz Global Investors	276,231	1.9
17. Veritas Pension Insurance Company	241,102	1.7
18. OP Fund Management Company	189,333	1.3
19. Franklin Templeton	182,574	1.3
20. Antti Pöllänen	161,454	1.1
Total 20 largest shareholders	9,776,551	67.6
Nominee registered total	7,812,930	54.0
Total	14,463,936	100.0

Source: Datablocks by Modular Finance AB. Compiled and processed data from various sources, including Euroclear Finland and Morningstar.

FOR SHAREHOLDERS

Annual General Meeting 2022

The Annual General Meeting of Basware Corporation will be held on March 22, 2022, at 3:00 p.m. EET. The meeting will be held under special arrangements without shareholders’ or their proxy representatives’ presence in the company’s headquarters, at the address Linnoitustie 2, Building Cello, 02600 Espoo. The Board of Directors of the company has resolved on an exceptional meeting procedure based on the Act temporarily amending the Companies Act and certain other community laws (375/2021, the “Temporary Act”). In order to limit the spread of the Covid-19 pandemic, the Annual General Meeting will be held without shareholders’ or their proxy representatives’ presence at the meeting venue. This is necessary in order to organize the General Meeting in a predictable way while taking into account the health and safety of the company’s shareholders, personnel and other stakeholders. Each shareholder, who is registered on March 10, 2022, in the shareholders' register of the company held by Euroclear Finland Ltd, has the right to participate in the General Meeting. A shareholder, whose shares are registered on his/her personal Finnish book-entry account, is registered in the shareholders' register of the company. Registration for the meeting and advance voting begin on February 17, 2022, at 9:00 a.m. EET, when the deadline for delivering counterproposals has expired and the company has published the possible counterproposals to be put to a vote on the company’s website. A shareholder entered in the company's shareholder register, who wishes to participate in the General Meeting by voting in advance, must register for the General Meeting and deliver his/her votes in advance on March 16, 2022, at 4:00 p.m. EET at the latest, by which time the notice of participation and the votes must be received. Shareholders with a Finnish book-entry account can register and vote in advance on certain items on the agenda of the General Meeting during the period February 17, 2022, at 9:00 a.m. EET–March 16, 2022, at 4:00 p.m. EET. Instructions regarding the voting are available to shareholders on the company’s website at http://investors.basware.com/en. A holder of nominee registered shares has the right to participate in the General Meeting by virtue of such shares, based on which he/she on the record date of the General Meeting, i.e., on March 10, 2022, would be entitled to be registered in the shareholders' register of the company held by Euroclear Finland Ltd. The right to participate in the Annual General Meeting requires, in addition, that the shareholder on the basis of such shares has been temporarily registered into the shareholders' register held by Euroclear Finland Ltd at the latest by March 17, 2022, by 10:00 a.m. EET. As regards nominee registered shares, this constitutes due registration for the General Meeting.

Dividend for 2021

Board of Directors proposes to the Annual General Meeting that no dividend be paid for 2021.

Financial Reporting in 2022

In 2022, Basware Corporation will publish financial information as follows:

• April 21, 2022 - Interim report for January 1 – March 31, 2022
• July 21, 2022 - Half-year financial report for January 1 – June 30, 2022
• October 25, 2022 - Interim report for January 1 – September 30, 2022

All interim reports and stock exchange releases are available on Basware's investor webpages at https://investors.basware.com/en.

Basware Investor Relations Contacts

For investor relations questions or inquiries please contact IR@basware.com.

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© 2021 Basware

A member firm of Ernst & Young Global Limited

Independent Auditor’s Report on Basware Oyj’s ESEF Consolidated Financial Statements (Translation of the Finnish original)

To the Board of Directors of Basware Oyj

We have performed a reasonable assurance engagement on the iXBRL tagging of the consolidated financial statements included in the digital files 743700ULKFAAEA2N3D13-2021-12-31-fi.zip of Basware Oyj for the financial year 1.1. – 31.12.2021 to ensure that the financial statements are tagged with iXBRL mark ups in accordance with the requirements of Article 4 of EU Commission Delegated Regulation (EU) 2018/815 (ESEF RTS).

Responsibilities of the Board of Directors and Managing Director

The Board of Directors and Managing Director are responsible for the preparation of the Report of Board of Directors and financial statements (ESEF financial statements) that comply with the ESEF RTS. This responsibility includes:

• preparation of ESEF financial statements in accordance with Article 3 of ESEF RTS
• Tagging the consolidated financial statements included within the ESEF financial statements by using the iXBRL mark ups in accordance with Article 4 of ESEF RTS
• Ensuring consistency between ESEF financial statements and audited financial statements

The Board of Directors and Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of ESEF financial statements in accordance the requirements of ESEF RTS.

Auditor’s Independence and Quality Control

We are independent of the company in accordance with the ethical requirements that are applicable in Finland and are relevant to the engagement we have performed, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The auditor applies International Standard on Quality Control (ISQC) 1 and therefore maintains a comprehensive quality control system including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.# Auditor’s Responsibilities

In accordance with the Engagement Letter we will express an opinion on whether the electronic tagging of the consolidated financial statements complies in all material respects with the Article 4 of ESEF RTS. We have conducted a reasonable assurance engagement in accordance with International Standard on Assurance Engagements ISAE 3000. The engagement includes procedures to obtain evidence on:

• whether the tagging of the primary financial statements in the consolidated financial statements complies in all material respects with Article 4 of the ESEF RTS
• whether the ESEF financial statements are consistent with the audited financial statements

The nature, timing and extent of the procedures selected depend on the auditor’s judgement including the assessment of risk of material departures from requirements sets out in the ESEF RTS, whether due to fraud or error. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our statement.

A member firm of Ernst & Young Global Limited

Opinion

In our opinion the tagging of the consolidated financial statement included in the ESEF financial statements of Basware Oyj for the year ended 31.12.2021 complies in all material respects with the requirements of ESEF RTS.

Our audit opinion on the consolidated financial statements of Basware Oyj for the year ended 31.12.2021 is included in our Independent Auditor’s Report dated 2.2.2022. In this report, we do not express an audit opinion or any other assurance on the consolidated financial statements.

Helsinki 23.2.2022

Ernst & Young Oy
Authorized Public Accountant Firm

Terhi Mäkinen
APA