BASWARE INTERIM REPORT JANUARY 1 – SEPTEMBER 30, 2010 (IFRS)

SUMMARY

January–September

Net sales EUR 72 946 thousand (EUR 66 054 thousand) growth10.4 percent
Operating profit EUR 8 550 thousand (EUR 7 767 thousand) growth 10.1 percent
Operating profit 11.7 percent of net sales (11.8%)
International operations accounted for 54.0 percent of net sales (54.3%) growth 9.9 percent
Automation Services grew by 52.8 percent
Cash flows from operating activities were EUR 11 368 thousand (EUR 8 540 thousand).
Earnings per share EUR 0.56 (EUR 0.45)

July–September Q3

Net sales EUR 23 202 thousand (EUR 21 609 thousand) growth 7.4 percent
Operating profit EUR 3 408 thousand (EUR 4 028 thousand) decrease 15.4 percent
Operating profit 14.7 percent of net sales (18.6%)
International operations accounted for 55.1 percent of net sales (58.0%) growth 2.0 percent
Automation Services grew by 56.7 percent
Earnings per share EUR 0.23 (EUR 0.27)

Basware expects its net sales for 2010 to develop positively on the level of 2009. Operating profit (EBIT) for 2010 is expected to be from 10 to 15 percent of net sales.

The figures are unaudited.

GROUP KEY FIGURES

EUR thousand	7-9/ 2010	7-9/ 2009	Change, %	1-9/ 2010	1-9/ 2009	Change, %	1-12/ 2009

Net sales	23 202	21 609	7.4%	72 946	66 054	10.4%	92 654
EBITDA	4 702	5 134	-8.4%	12 389	10 943	13.2%	16 280
Operating profit before
IFRS-3 amortization	3 956	4 596	-13.9%	10 214	9 188	11.2%	13 788
Operating profit	3 408	4 028	-15.4%	8 550	7 767	10.1%	11 824
% of net sales	14.7%	18.6%		11.7 %	11.8%		12.8%
Profit before tax	3 391	3 946	-14.1%	8 486	7 553	12.4%	11 590
Profit for the period	2 694	3 005	-10.3%	6 418	5 066	26.7%	9 074

Return on equity. % Return on investment.	17.6%	23.7%		14.4%	13.3%		17.2%
%	20.4%	24.5%		17,4%	16.4%		18.8%
Liquid assets*	13 719	7 567	81.3%	13 719	7 567	81.3%	12 210
Gearing. %	-16.2%	3.2%		-16.2%	3.2%		-5.3%
Equity ratio. %	71.6%	61.9%		71.6%	61.9%		64.8%

Earnings per share. EUR	0.23	0.27	-12.5%	0.56	0.45	26.2%	0.80
Earnings per share
(diluted). EUR	0.23	0.27	-13.2%	0.56	0.45	25.2%	0.80
Equity per share. EUR	5.34	4.58	16.5%	5.34	4.58	16.5%	4.93

*) Includes cash. cash equivalents and financial assets at fair value through profit or loss

Basware's business operations consist of License Sales. Maintenance. Professional Services and Automation Services. The core of Basware's license sales consists of the Basware Enterprise Purchase to Pay product suite and local, only in Finland marketed financial management products. The Group's reported market areas are Finland, Scandinavia, Europe and Other areas.

Basware's CEO Ilkka Sihvo comments in conjunction with the Interim Report:

"Basware's most significant growth area, Automation Services, grew by as much as 56.7% in the third quarter. During Q3, we succeeded in closing several significant deals in the Automation Services business, which proves our global competitiveness in the e-invoice business. Automation Services agreements typically span several years, and they provide a good foundation for growth in 2011. Geographically, the best growth was seen in North America and Europe.

Our operating profit for the third quarter was excellent, representing 14.7% of net sales. Our net sales increased by 7.4% to EUR 23 202 thousand.

At this stage, our situation seems favorable with regard to reaching the full-year target. We believe that the solid growth of our business will also continue during the last quarter," says Ilkka Sihvo, Basware's CEO.

REPORTING

Basware's reporting segment is based upon geography as follows: Finland, Scandinavia, Europe and Other. Following the acquisition of former reseller TAG Services on July 1, 2009. Basware has assets in Australia. Taking into account the nature and extent of the business operations in North America and Australia, these areas were merged into the Other segment as of Q3/2009. The Finland segment includes the Finnish, Russian, and Asia-Pacific (excluding Australia) business operations and corporate services.

In addition, the company reports revenue from products and services as follows: License Sales, Professional Services, Maintenance and Automation Services. Automation Services include Software as a Service (SaaS), einvoicing and Scan and Capture services.

The company also reports an estimate of revenue to be recognized for current Automation Services agreements in production in the next twelve months. Automation Services agreements are typically in force for a fixed period of several years or until further notice.

NET SALES

The geographical division of net sales by the location of assets:

Net sales (EUR thousand)	7-9/ 2010	7-9/ 2009	Change, %	1-9/ 2010	1–9/ 2009	Change, %	1–12/ 2009
Finland	11 641	11 478	1.4	37 595	35 215	6.8	50 486
Scandinavia	4 994	4 505	10.9	16 480	16 100	2.4	22 236
Europe	4 782	4 104	16.5	15 388	13 087	17.6	18 717
Other	3 111	3 980	-21.9	8 203	6 303	30.1	9 201
Sales between segments	-1 326	-2 459	46.1	-4 720	-4 652	-1.5	-7 985
Group total	23 202	21 609	7.4	72 946	66 054	10.4	92 654

Net sales (EUR thousand)	7-9/ 2010	7-9/ 2009	Change, %	1-9/ 2010	1-9/ 2009	Change, %	1-12/ 2009
Finland	10 420	9 084	14.7	33 535	30 181	11.1	42 449
Scandinavia	4 857	4 893	-0.7	15 859	15 716	0.9	21 719
Europe	4 629	3 921	18.1	14 864	12 994	14.4	18 065
Other	3 295	3 711	-11.2	8 688	7 163	21.3	10 421
Group total	23 202	21 609	7.4	72 946	66 054	10.4	92 654

The geographical division of net sales by the location of customers:

Basware Group's net sales grew by 10.4 percent in July–September and were EUR 72 946 thousand (EUR 66 054 thousand).

The company's license sales increased by 3.8 percent during the reporting period to 22.7 percent (24.2%) of net sales. License sales of Basware's own products increased by 10.6 percent, and sales of third-party scanning software decreased considerably while sales of outsourced scan and capture services grew.

Maintenance revenue increased by 12.3 percent in the reporting period and accounted for 33.6 percent (33.1%) of net sales. Professional Services revenue increased by 3.2 percent and accounted for percent (34.5%) of net sales.

During the period. Automation Services (SaaS, e-invoicing, Scan and Capture) grew 52.8 percent and accounted for 11.5 percent (8.3%) of net sales. The estimated revenue to be recognized for current Automation Services agreements in production in the next twelve months is EUR 12.1 million (growth of 7.1 percent compared to the estimate made at the end of the previous quarter). The transaction volume processed by the Automation Services business was 9.3 million during the reporting period.

In July-September, 21.2 percent (26.9%) of net sales consisted of own product sales with license sales decreasing by 15.3 percent. License sales in Q3 decreased because the Q3 comparison figure included revenue of EUR 1.9 million, which is a part of one of Basware's largest license deals closed in Q3/2009. License sales of Basware's own products decreased by 5.9%, and sales of third-party scanning software decreased considerably while sales of outsourced scan and capture services grew.

Automation Services sales accounted for 12.7 percent (8.7%) of net sales in the third quarter, up 56.7 percent. Maintenance revenue accounted for 35.7 percent (34.3%) of net sales during the third quarter and grew by 11.8 percent. Consulting revenue represented 30.4 percent (30.2%) of net sales and grew by 8.3 percent.

The international share of Basware's net sales was 54.0 percent (54.3%) in the period. International operations grew by 9.9 percent. The international share of Basware's net sales in third quarter was 55.1 percent (58.0%), up 2.0 percent.

FINANCIAL PERFORMANCE

Basware's operating profit increased by 10.1 percent in the period and totaled EUR 8 550 thousand (EUR 7 767 thousand). Operating profit represented 11.7 percent (11.8%) of net sales. Operating profit decreased by 15.4% in the third quarter and totaled EUR 3 408 thousand (EUR 4 028 thousand). Operating profit in Q3 decreased because the Q3 comparison figure included revenue of EUR 1.9 million, which is a part of one of Basware's largest license deals closed in Q3/2009. In the third quarter, operating profit represented 14.7 percent of net sales.

Operating profit (EUR thousand)	7-9/ 2010	7-9/ 2009	Change, %	1-9/ 2010	1-9/ 2009	Change, %	1–12/ 2009
Finland	2 238	2 546	-12.1	4 946	4 690	5.5	7 714
Scandinavia	890	212	319.3	2 578	2 128	21.2	3 169
Europe	419	465	-9.9	1 611	664	142.5	1 566
Other Operating profit between	269	1 223	-78.0	640	1 258	-49.1	741
segments	-408	-417	2.2	-1 224	-972	-26.0	-1 365
Group total	3 408	4 028	-15.4	8 550	7 767	10.1	11 824

The division of operating profit geographically by the location of assets:

The Company's fixed costs were EUR 56 068 thousand (EUR 50 683 thousand) in the period and have grown by 10.6 percent compared with the same period last year. Personnel costs made up 72.9 percent (73.9%) or EUR 40 846 thousand (EUR 37 453 thousand) of the fixed costs.

Research and development costs totaled EUR 10 797 thousand (EUR 10 934 thousand), of which EUR 1 038 thousand (EUR 1 094 thousand) or 9.6 percent (10.0%) were capitalized during the period. Amortization of capitalized research and development costs totaled EUR 1 399 thousand (EUR 1 195 thousand).

The Company's finance income and finance expenses were EUR -65 thousand (EUR -214 thousand). The Company's profit before tax was EUR 8 486 thousand (EUR 7 553 thousand) and profit for the period was EUR 6 418 thousand (EUR 5 066 thousand). Undiluted earnings per share were EUR 0.56 (EUR 0.45).

FINANCE AND INVESTMENTS

Basware Group's total assets on the balance sheet at the end of the financial period were EUR 87 132 thousand (EUR 84 942 thousand). The Company's cash and liquid assets were EUR 13 719 thousand (EUR 7 567 thousand), of which cash and cash equivalents were EUR 13 685 thousand (EUR 7 535 thousand) and financial assets at fair value through profit or loss were EUR 34 thousand (EUR 32 thousand).

Equity ratio was 71.6 percent (61.9%) and gearing was -16.2 percent (3.2%). The Company had a total of EUR 3 584 thousand (EUR 9 235 thousand) interest-bearing liabilities. of which current liabilities accounted for EUR 3 551 thousand (EUR 5 563 thousand). Return on investment was 17.4 percent (16.4%) and return on equity 14.4 percent (13.3%).

Cash flows from operating activities were EUR 11 368 thousand (EUR 8 540 thousand). Cash flows from investments were EUR -3 098 thousand (EUR -3 550 thousand).

The company's gross capital expenditure. comprising of ordinary additional and replacement investments required by growh, totaled EUR 686 thousand (EUR 334 thousand) during the period. Gross investments. including capitalized R&D expenses and business acquisitions in addition to the above, totaled EUR 3 426 thousand (EUR 7 084 thousand).

Basware Corporation acquired the entire share capital of TAG Services Pty Ltd in Australia on July 1, 2009. The acquisition price was 2.1 million Australian dollars (approximately EUR 1.2 million) and was paid in cash in two parts in July and August 2009. In addition the deal includes an additional acquisition price element that is based on the company's net sales of the period from July 1, 2009 to June 30, 2010. The additional acquisition price 2.0 million Australian dollars (approximately EUR 1.4 million) was paid in August 2010.

Amortizations of intangible assets were EUR 3 413 thousand (EUR 2 772 thousand). There are no indications of impairments of assets.

RESEARCH, DEVELOPMENT AND NEW PRODUCTS

Basware's research and development costs were 10 797 thousand (EUR 10 934 thousand) in the period and made up 14.8 percent (16.6%) of net sales. Research and development costs decreased by 1.3 percent (1.8%) compared with the same period last year. Of the research and development costs, EUR 1 038 thousand (EUR 1 094 thousand) or 9.6 percent (10.0%) has been capitalized. Amortization of capitalized research and development costs totaled EUR 1 399 thousand (EUR 1 195 thousand).

Altogether 213 (184) people worked in Products at the end of September 2010. The Products unit employes 72 persons in India at the moment.

PERSONNEL

Basware employed 826 (743) people on average in the third quarter and 866 (755) people at the end of the period. The number of personnel grew by 111 persons and by 14.7 percent compared with the same period last year.

The share of personnel working in foreign units has increased compared with the same period last year. At the end of the period, 52.9 percent (47.0%) of Basware personnel worked outside of Finland and 47.1 percent (53.0%) in Finland.

14.8 percent of the personnel work in sales and marketing, 52.4 in consulting and services, 24.6 percent in Products, and 8.2 percent in administration.

The average age of the employees is 36.0 (36.5) years. Of the employees, 32.8 percent have a Master's degree and 35.1 percent have a Bachelor's degree. Women account for 28.2 percent of employees, men for 71.8 percent.

Personnel (employed. on average)	7–9/ 2010	7–9/ 2009	Change, %	1–9/ 2010	1–9/ 2009	Change, %	1–12/ 2009
Finland	547	458	19.3	525	452	16.1	454
Scandinavia	124	135	-8.4	124	137	-8.9	135
Europe	126	116	8.6	124	119	4.2	119
Other	57	46	25.5	53	36	48.3	39
Group total	854	755	13.1	826	743	11.1	747

Geographical distribution of personnel:

BUSINESS OPERATIONS

Finland

The Finland segment includes the business operations in Finland, Russia, Asia-Pacific (excluding Australia) and the head office functions. Net sales for the third quarter increased by 1.4 percent to EUR 11 641 thousand (EUR 11 478 thousand).

Net sales of the Finnish and Russian business operations increased by 14.7 percent during the third quarter to EUR 10 493 thousand (EUR 9 146 thousand).

There are currently 8 resellers in all in the area and the number of personnel averaged 547 (458) during the third quarter.

Scandinavia

Basware's Nordic organization consists of a centrally directed Scandinavian (Sweden, Denmark and Norway) unit.

Net sales of the Scandinavian business operations increased by 10.9 percent to EUR 4 994 thousand (EUR 4 505 thousand). The profitability of the operations increased by 319.3 percent and operating profit was EUR 890 thousand (EUR 212 thousand).

Business operations are mainly handled by the own organization and there were 124 (135) employees on average in the area.

Europe

Basware's European business operations consist of the units in Germany, France, the Netherlands and the United Kingdom. Additionally, the reseller network covers the eastern part of Central Europe.

Net sales in the Europe segment increased by 16.5 percent in the third quarter and totaled EUR 4 782 thousand (EUR 4 101 thousand). The profitability of the operations improved by 9.9 percent and operating profit was EUR 419 thousand (EUR 465 thousand).

There are 35 resellers in Europe, and Basware personnel averaged 126 (116) during the third quarter.

Other

Business operations in North America and Australia are reported in this segment.

Net sales of the area decreased by -21.9 percent in the third quarter to EUR 3 111 thousand (EUR 3 980 thousand). The profitability of the operations grew by 78.0 percent and operating profit was EUR 269 thousand (EUR 1 223 thousand). Net sales and operating profit in Q3 decreased because the Q3 comparison figure included revenue of EUR 1.9 million, which is a part of one of Basware's largest license deals closed in Q3/2009.

At the end of the period, there were 9 resellers in the segment. On average, there were 57 (46) employees in the area.

OTHER EVENTS OF THE FINANCIAL PERIOD

Basware Board of Directors approved in its meeting on July 8, 2010 the subscription of total of 79 200 shares subscribed for with Basware Warrant Programs. The share subscriptions were based on the Warrant Program 2006 series C warrants (39 000 shares) and Warrant Program 2007 series E warrants (40 200 shares).

Basware announced two notices of changes in ownership when the total number of shares held by Nordea Rahastoyhtiö Suomi was below 5% of Basware Corporation's share capital on July 26, 2010 and above 5% on July 30, 2010.

Strategy

Basware continued to develop its strategy within the Basware Responsive Strategy framework. The company's Board of Directors reviewed the current strategic guidelines during the third quarter. The company's long-term targets remained unchanged. The target is to grow annually more than 10% in License Sales, Maintenance, and Professional Services, and more than 50% in Automation Services. The company's long-term target for operating profit margin is 10%-20%.

Basware has successfully implemented its strategy in all areas despite the challenging market conditions. The strategic changes made in 2009 to develop Automation Services have turned out to be the right ones, and we have

achieved global delivery capability in Automation Services.

The company will continue and increase its investments in Automation Services, particularly with regard to sales and marketing, targeting the European and North American markets. In addition, new service packages will be developed in Automation Services, and particular attention will be paid to securing and managing global customer accounts. Basware aims to become the world's leading company in e-invoicing.

The geographical strategy remained unchanged. North America is the company's most significant growth market. Basware has succeeded in increasing its net sales in the North American market, and additional investments will be made to continue rapid growth. The most significant strategic European target countries are the United Kingdom, France, and Germany.

The development of the office in India has been one of the most significant internal strategic investments in expanding the operations of the R&D unit and in the e-invoicing validation service. The Indian office will be expanded further by moving also new functions there, which will enable cost-efficient expansion of operations.

The company will continue the regular review and development of its strategy, based on which the company's strategy will be adapted to changing market conditions as required.

SHARE AND SHAREHOLDERS

Basware Corporation's share capital totaled EUR 3 506 677.20 at the end of the period and the number of shares was 11 688 924.

Share price and trade

In the third quarter, the highest price of the share was EUR 20.10 (EUR 11.49), lowest price was EUR 15.00 (EUR 6.60) and closing price was EUR 19.40 (EUR 10.72). The average price of the share was EUR 17.81 (EUR 9.29).

A total of 1 565 754 (1 297 031) shares were traded during the financial period which is the equivalent of 13.7 percent (11.4%) of the average number of shares. Market capitalization with the period's closing price on September 30, 2010 was EUR 225 013 306 (EUR 121 970 273).

Shareholders

Basware had 16 041 (16 668) shareholders on September 30, 2010 including nominee-registered holdings (8). Nominee-registered holdings accounted for 10.4 percent of the total number of shares.

The company holds 90 300 Basware Corporation shares, corresponding to approximately 0.78% of all shares in the company.

GOVERNANCE

The Annual General Meeting of Shareholders on February 18, 2010, confirmed the number of Board members as six. The Annual General Meeting resolved to agree on the proposal and elected Matti Copeland, Sakari Perttunen, Pentti Heikkinen, Eeva Sipilä, Ilkka Toivola and Hannu Vaajoensuu members of the Board of Directors. In its first meeting held after the Annual General Meeting. the Board of Directors elected Hannu Vaajoensuu as chairman and Sakari Perttunen as vice chairman of the Board.

The Annual General Meeting further resolved to elect Ernst & Young Oy, Authorized Public Accountants as the auditor, with APA Heikki Ilkka in charge and APA Terhi Mäkinen as the deputy auditor.

The Board was authorized to resolve on share issue and share repurchase.

A separate stock exchange release has been issued on the Board authorizations and other resolutions of the Annual General Meeting of Shareholders on February 18, 2010.

THE COMPANY'S NEAR FUTURE RISKS AND BUSINESS UNCERTAINTIES

In accordance with Basware's risk management policy, risks are divided into six categories: risks related to business operations, products, personnel as well as legal, financial and data security risks. Basware takes risks that are a natural part of its strategy and objectives. These risks are managed and decreased in various ways. Short-term risks are considered to be risks in the current reporting year.

Market forecasts released in March-September 2010 expect the software purchases to increase by 7.5 percent globally and 8.3 percent in the US in 2010.

The IT services market growth is expected to be slightly lower than Q2 estimate, approximately 5 percent globally and 3.5 percent in the US in 2010, turning to 7 percent growth in 2011. However, services market growth in Purchase to Pay business is estimated to grow substantially, 7 percent in 2010 and over 10 percent in 2011.

The global economic uncertainty continues, which might decrease companies' willingness to invest also in the future. This might have an unfavorable impact on the development of the company's net sales and profitability.

Previously in times of economic uncertainty, the demand for the company's products and services has remained more positive than the general market, as the company's software solutions generate cost savings.

Typically, in uncertain economic times companies may also prolong the times of payments in order to free up working capital. Basware has intensified its management of sales receivables, and business management regularly monitors the payment of sales receivables as part of the management of customer accounts.

The Group's main currency is the euro, accounting for approximately 61 percent of net sales in 2009 (approximately 67% in 2008). The significance of exchange rate fluctuations between the euro and other currencies will increase hand in hand with the share of international operations. The company did not realize hedging for exchange rate fluctuations during the financial period as the foreign-currency-denominated cash flow in the subsidiaries did not exceed the set annual foreign-currency-specific limit for hedging measures.

Basware's objective is to become the world's leading company in e-invoicing. E-invoicing and the supporting Scan and Capture services, included in Automation Services, also target suppliers and buyers outside Basware's existing customer base, which increases the customer potential. The company's long-term objective is an annual growth of more than 50 percent in Automation Services. SaaS and e-invoicing are scalable business models with a high business potential. The realization of this growth potential requires a new operating model as well as active and continuous development of competencies because of the strong growth of the number of customers and transaction volumes. These include sales and commissioning as well as customer support and product development.

No significant changes have taken place in Basware's short-term risks and uncertainties during the financial period.

EVENTS AFTER THE FINANCIAL PERIOD

Basware acquired TNT Post's Connectivity operations, which is a part of TNT Post's electronic invoicing operations in the Netherlands. TNT Post's Connectivity operations has over 100 e-invoice customers and the estimated amount of annual transactions is close to 1 million.

The Connectivity e-invoice services of TNT Post's customers will be gradually transferred to Basware's e-invoice service. The transfer is estimated to be completed by the end of 2010. Additionally 2 employees will join Basware in connection with the acquisition.

FUTURE OUTLOOK

Market forecasts released in March-September 2010 expect the software purchases to increase by 7.5 percent globally and 8.3 percent in the US in 2010.

Basware's direct competitors are primarily locally operating and often smaller companies. In North America in particular, the company also has larger competitors. especially in the field of procurement management. Developers of document management, scanning and workflow systems compete with Basware, particularly with regard to purchase invoice management solutions. Competing solutions also include customized solutions integrated into ERP (Enterprise Resource Planning) systems.

The software still offers a competitive edge, thanks to the integrated offering consisting of new added value products and the products. Automation Services will have a positive impact on the competitiveness.

Automation Services increase the long-term predictability and transparency of a company's net sales and profitability. In 2009, revenue from continuous services (including maintenance) accounted for more than 40 percent of the company's total revenue. In order to support the sales of invoice automation solutions, Basware launched a mid-market SaaS (Software as a Service) solution. The solution was launched during the second quarter in North America and will be launched in the Central European market during the last two quarters.

Basware aims to become a leading company in e-invoicing worldwide. E-invoicing and supporting Connectivity Services are targeted to connect suppliers and buyers also outside of Basware's existing software customer base, leading into a higher potential.

The company's long-term target is to grow annually more than 50% in Automation Services. SaaS and e-invoicing are scalable models with a high business potential. A growth investment program of Basware Automation Services (SaaS. Scan and Capture and e-invoicing) has been launched at the beginning of 2010, and it is expected to promote the positive development of operations and order backlog.

The Company's international growth is based on efforts of its own sales and marketing activity as well as the reseller channel. Development of the indirect distribution channel continues in Europe, Russia and Asia. In North America, the focus will be on developing the Company's own sales channel. In Scandinavia, the focus is on profitability, and moderate growth is supported by the Company's expanded product portfolio and the development of the service business. In Finland, the focus is on profitability, and moderate growth will primarily be achieved from the fields of procurement management and services.

Basware has complemented its organic growth with acquisitions. The Company will continue to review possible acquisition targets during 2010. In particular, possible acquisitions will aim at supporting Automation Services.

The Group's number of personnel will increase the most in Automation Services and product development during the year. The number of personnel will increase the most in India, which facilitates growth with a more moderate increase in costs.

Due to the strong first half of the year, additional growth-related investments will be made during the latter half of 2010. The growth investments will particularly focus on the Automation Services business and research and development activities.

Basware expects its net sales for 2010 to develop positively on the level of 2009. Operating profit (EBIT) for 2010 is expected to be from 10 to 15 percent of net sales.

In Espoo, Finland, October 14, 2010

BASWARE CORPORATION Board of Directors

For more information, please contact

CEO Ilkka Sihvo. Basware Corporation Tel. +358 40 501 8251

Analyst and Press Briefing

Basware arranges today, October 14, 2010 a briefing on the Interim Report for the press and analysts at 11:00 a.m. in Hotel Kämp, Pohjoisesplanadi 29, Helsinki, Finland. During this briefing CEO Ilkka Sihvo and CFO Mika Harjuaho will comment the events and financial performance of the quarter. Welcome. A conference call for analysts who are not able to attend the briefing will take place on October 14 at 15:00 EET. Please register through [email protected] for appropriate information.

Distribution

Helsinki Stock Exchange,Key media www.basware.com

The Interim Report has been prepared in accordance with the International Financial Reporting Standards (IFRS). As from the beginning of the financial period, the company has adopted certain new or amended IFRS standards and IFRIC interpretations as described in the Financial Statements for 2009. However, the adoption of these new and amended norms have not yet had an effect on the reported figures in practice. In other respects, the same accounting policies have been followed as in the Financial Statements for 2009.

GROUP INCOME STATEMENT

EUR thousand	1.7.- 30.9. 2010	1.7.- 30.9. 2009	Change, %	1.1.- 30.9. 2010	1.1.- 30.9. 2009	Change, %	1.1.- 31.12. 2009

NET SALES	23 202	21 609	7.4	72 946	66 054	10.4	92 654
Other operating income Materials and	43	47	-9.9	147	129	14.2	162
services	-1 593	-1 395	14.2	-4 635	-4 557	1.7	-6 193
Employee benefit
expenses Depreciation and	-11 959	-11 113	7.6	-40 846	-37 453	9.1	-52 294
amortization Other operating	-1 294	-1 106	17.0	-3 839	-3 176	20.9	-4 456
expenses	-4991	-4 014	24.3	-15 222	-13 230	15.1	-18 048
Operating profit	3 408	4 028	-15.4	8 550	7 767	10.1	11 824
Finance income	-59	32	-282.2	61	187	-67.2	172
Finance expenses	42	-115	-136.9	-126	-401	-68.6	-406
Profit before tax	3 391	3 946	-14.1	8 486	7 553	12.4	11 590
Income tax expense	-697	-941	-25.9	-2 068	-2 486	-16.8	-2 517
PROFIT FOR THE PERIOD	2 694	3 005	-10.3	6 418	5 066	26.7	9 074

Other

comprehensive

income Exchange differences
on translating foreign
operations	-43	620	-106.9	651	2 017	-67.7	1 326
Income tax relating
to components of other comprehensive income	-143	89	-259.4	324	45	620.9	-549
Other
comprehensive
income. net of tax	-185	709	-126.2	976	2 062	-52.7	777
TOTAL COMPREHENSIVE INCOME	2 509	3 714	-32.4	7 394	7 128	3.7	9 850
Profit attributable
to:
Owners of the
parent	2 694	3 055	-11.8	6 418	5 066	26.7	9 074
Minority interest	0	-50	-100.0	0	0	0	0
	2 694	3 005	-10.3	6 418	5 066	26.7	9 074
Total comprehensive income attributable to:
Owners of the

parent	2 509	3 763	-33.3	7 394	7 128	3.7	9 850
Minority interest	0	-50	-100.0	0	0	0	0
	2 509	3 714	-32.4	7 394	7 128	3.7	9 850
Earnings per share
(undiluted). EUR	0.23	0.27	-12.5	0.56	0.45	26.2	0.80
Earnings per share
(diluted). EUR	0.23	0.27	-13.2	0.56	0.45	25.2	0.80
GROUP BALANCE SHEET
EUR thousand		30.9.2010		30.9.2009	Change, %	31.12.2009
ASSETS

Inventories	15	40	-62.1	33
CURRENT ASSETS
Non-current assets	53 085	53 928	-1.6	54 593
Deferred tax assets	1 819	1 962	-7.2	2 199
Long-term trade and other receivables	23	132	-82.4	124
Available-for-sale investments	38	38		38
Tangible assets	1 048	879	19.3	823
Goodwill	31 977	31 283	2.2	31 119
Intangible assets	18 180	19 636	-7.4	20 291

TOTAL ASSETS	87 132	84 942	2.6	87 287
Current assets	34 047	31 014	9.8	32 694
Cash and cash equivalents	13 685	7 535	81.6	12 176
Financial assets at fair value through profit or loss	34	32	4.4	34
Income tax receivables	634	3 132	-79.8	767
Trade and other receivables	19 679	20 275	-2.9	19 684

EQUITY AND LIABILITIES

SHAREHOLDERS' EQUITY
Share capital	3 507	3 440	1.9	3 440
Issue of shares	9		100.0	140
Share premium account	1 187	69	1 623.1	69
Own shares	-629	-629		-629
Fair value reserve and other reserves	34 795	33 598	3.6	33 598
Translation differences	-2 239	-3 542	36.8	-3 214
Retained earnings	25 760	19 622	31.3	23 176
Minority interest				0
Shareholders' equity	62 390	52 559	18.7	56 580

NON-CURRENT LIABILITIES
Deferred tax liability	3 806	3 852	-1.2	3 997
Interest-bearing liabilities	33	3 672	-99.1	3 674
Non-interest-bearing liabilities	457	242	89.0	110
Non-current liabilities	4 296	7 766	-44.7	7 782
CURRENT LIABILITIES
Interest-bearing liabilities	3 551	5 563	-36.2	5 555
Trade payables and other liabilities	16 736	18 384	-9.0	17 039
Tax liability from income tax	160	670	-76.1	331
Current liabilities	20 447	24 617	-16.9	22 926
TOTAL EQUITY AND LIABILITIES	87 132	84 942	2.6	87 287

GROUP STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

EUR thousand SHARE HOLDERS'	Share holders capital	Share issue	Share premium account	Own shares	Inv. non restr. equity res.	Other res.	Transl diff.	Retai ned Earn ings	Mino rity Inter est	Total
EQUITY 1.1.09 Compre hensive	3 440	0	69	-271	33 058	540	-3 991	15 648	224	48 717
income Dividend distri-							450	6 678 -2 623		7 128 -2 623

bution
Granted warrants Repur chase of own								447		447
shares				-358						-358
Changes in reporting
period								-528	-224	-752
SHARE HOLDERS'
EQUITY
30.9.09	3 440	0	69	-629	33 058	540	-3 542	19 622	0	52 559
EUR thousand
SHARE HOLDERS'
EQUITY
1.1.10 Compre hensive	3 440	140	69	-629	33 058	540	-3 214	23 176	0	56 580
income Dividend							976	6 418		7 394
distri bution								-4 100		-4 100
Granted warrants								159		159
Changes in
reporting period	66	-131	1 118		1 197			-107		2 357
SHARE
HOLDERS' EQUITY
30.9.10	3 507	9	1 187	-629	34 254	540	-2 239	25 760	0	62 390

GROUP CASH FLOW STATEMENT

EUR thousand	1.1.– 30.9. 2010	1.1.– 30.9.2009	1.1.– 31.12.2009

Net cash from operating activities

Profit for the period	6 418	5 066	9 074
Adjustments for profit	5 971	5 877	7 832
Working capital changes	1 150	859	-136
Interest paid	-47	-183	-192
Interest received	40	57	104
Other financial items in operating activities	-50	-58	-30
Income taxes paid	-2 115	-3 079	-1 920
Net cash from operating activities	11 368	8 540	14 732

Cash flows from investing activities

Purchase of tangible and intangible assets Proceeds from sale of tangible and	-1 668	-1 447	-3 135
intangible assets		0	1
Acquired subsidiaries	-1 430	-2 104	-1 875

Net cash used in investing activities	-3 098	-3 550	-5 009


Cash flows from financing activities
Minority's capital investment	2 381		140
Repayments of short-term loans	-2 000		-3 558
Repayments of long-term borrowings	-3 550	-3 558
Share repurchase		-358	-358
Repayments of financial lease liabilities			0
Dividends paid	-4 100	-2 623	-2 623
Net cash used in financing activities	-7 269	-6 539	-6 358

Net change in cash and cash equivalents
according to cash flow statement	1 000	-1 549	3 324

Cash and cash equivalents at beginning of
period	12 210	8 777	8 777
Effects of exchange rate changes on cash
and cash equivalents	508	339	109
Cash and cash equivalents at end of period	13 719	7 567	12 210

GROUP QUARTERLY INCOME STATEMENT

EUR thousand	1–3/ 2010	1–3/ 2009	4–6/ 2010	4–6/ 2009	7-9/ 2010	7–9/ 2009	10–12/ 2009

NET SALES	23 132	21 717	26 612	22 729	23 202	21 609	26 600
Other operating income	50	30	55	52	43	47	34
Materials and services	-1 288	-1 552	-1 754	-1 611	-1 593	-1 395	-1 636
Employee benefit expenses	-13 703	-12 896	-15 184	-13 444	-11 959	-11 113	-14 841
Depreciation and amortization	-1 236	-1 004	-1 309	-1 067	-1 294	-1 106	-1 280
Other operating expenses	-4 818	-4 703	-5 414	-4 513	-4 991	-4 014	-4 819
Operating profit	2 136	1 592	3 006	2 146	3 408	4 028	4 058
%	9.2%	7.3%	11.3%	9.4%	14.7 %	18.6%	15,3 %
Finance income	116	124	4	30	-59	32	-15
Finance expenses	-111	232	-58	-54	42	-115	-5
Profit before tax	2 142	1 484	2 953	2 122	3 391	3 946	4 038
%	9.3%	6.8%	11.1%	9.3%	14.6 %	18.3%	15,2 %

Income tax expense	-560	-818	-811	-727	-697	-941	-30
PROFIT FOR THE PERIOD	1 582	666	2 142	1 396	2 694	3 005	4 007
%	6.8%	3.1%	8.0%	6.1%	11.6 %	13.9%	15,1%

Changes of ownership

Basware increased its shareholding in Basware Einvoices Oy to 100 percent on January 30, 2009, by acquiring 12.55 percent of the company's shares and control from the company's management. The purchase price paid on the date of the transaction was approximately EUR 720 thousand, and EUR 293 was paid in February 2010 as an additional purchase price based on the business volume for 2009.

Basware AS purchased the Norwegian invoice automation solution business of Itella Information AS. The purchase price was NOK 6.38 million (approximately EUR 0.72 million) and it was paid in cash on the day the acquisition was completed, April 1, 2009. In addition, in February 2010 Basware paid an additional purchase price of NOK 4 434 thousand (approximately EUR 559 thousand) determined on the basis of the volume of the purchased operations' service sales in 2009.

Basware FIMA Oy was merged to the parent company during the second quarter of 2010.

COMMITMENTS AND CONTINGENT LIABILITIES

EUR thousand	30.9.2010	30.9.2009	31.12.2009

Own guarantees
Business mortgages of own debts	1 200	1 200	1 200
Commitments on behalf of subsidiaries and group companies
Guarantees	1 123	1 122	1 075
Other own guarantees
Lease liabilities
Current lease liabilities	859	880	970
Lease liabilities maturing in 1–5 years	823	800	895
Total	1 682	1 680	1 865
Other rental liabilities
Current rental liabilities	2 415	2 419	2 333
Rental liabilities maturing in 1–5 years	7 862	3 309	2 924
Rental liabilities maturing later	0	1 140	1 071
Total	10 277	6 869	6 328
Other own contingent liabilities. total	11 959	8 549	8 193

SEGMENT REPORTING

Net sales by market area

Net sales (EUR thousand)	7–9/ 2010	7–9/ 2009	Change, %	1–9/ 2010	1–9/ 2009	Change, %	1–12/ 2009
Finland	11 641	11 478	1.4	37 595	35 215	6.8	50 486
Scandinavia	4 994	4 505	10.9	16 480	16 100	2.4	22 236
Europe	4 782	4 104	16.5	15 388	13 087	17.6	18 717
Other Sales between	3 111	3 980	-21.9	8 203	6 303	30.1	9 201
segments	-1 326	-2 459	46.1	-4 720	-4 652	-1.5	-7 985
Group total	23 202	21 609	7.4	72 946	66 054	10.4	92 654

Operating profit (EUR thousand)	7–9/ 2010	7–9/ 2009	Change, %	1–9/ 2010	1–9/ 2009	Change, %	1–12/ 2009
Finland	2 238	2 546	-12.1	4 946	4 690	5.5	7 714
Scandinavia	890	212	319.3	2 578	2 128	21.2	3 169
Europe	419	465	-9.9	1 611	664	142.5	1 566
Other Operating profit	269	1 223	-78.0	640	1 258	-49.1	741
between segments	-408	-417	2.2	-1 224	-972	-26.0	-1 365
Group total	3 408	4 028	-15.4	8 550	7 767	10.1	11 824

Personnel (employed. On average)	7–9/ 2010	7–9/ 2009	Change, %	1–9/ 2010	1–9/ 2009	Change, %	1–12/ 2009
Finland	547	458	19.3	525	452	16.1	454
Scandinavia	124	135	-8.4	124	137	-8.9	135
Europe	126	116	8.6	124	119	4.2	119
Other	57	46	25.5	53	36	48.3	39
Group total	854	755	13.1	826	743	11.1	747

Net sales by business

Net sales (EUR thousand)	7-9/ 2010	7-9/ 2009	Change, %	1-9/ 2010	1-9/ 2009	Change, %	1-12/ 2009
License Sales	4 915	5 803	-15.3	16 558	15 955	3.8	23 755
Maintenance	8 277	7 405	11.8	24 522	21 843	12.3	29 757
Professional Services	7 059	6 517	8.3	23 511	22 786	3.2	31 174
Automation Services	2 952	1 884	56.7	8 355	5 469	52.8	7 967
Group total	23 202	21 609	7.4	72 946	66 054	10.4	92 654

Net sales by the location of customer:

Net sales (EUR thousand)	7–9/ 2010	7–9/ 2009	Change, %	1–9/ 2010	1–9/ 2009	Change, %	1–12/ 2009
Finland	10 420	9 084	14.7	33 535	30 181	11.1	42 449
Scandinavia	4 857	4 893	-0.7	15 859	15 716	0.9	21 719
Europe	4 629	3 921	18.1	14 864	12 994	14.4	18 065
Other	3 295	3 711	-11.2	8 688	7 163	21.3	10 421
Group total	23 202	21 609	7.4	72 946	66 054	10.4	92 654

GROUP KEY INDICATORS

EUR thousand	1-9/ 2010	1-9/ 2009	1-9/ 2008	1-12/ 2009

Net sales	72 946	66 054	59 804	92 654
Growth of net sales,%	10.4 %	10.5%	19.4%	7.6%
EBITDA	12 389	10 943	6 611	16 280
% of net sales Operating profit before IFRS3	17.0 %	16.6%	11.1%	17.6%
amortization	10 214	9 188	5 146	13 788
% of net sales	14.0 %	13.9%	8.6%	14.9%
Operating profit	8 550	7 767	4 557	11 824
Growth of operating profit,%	10.1 %	70.4%	-18.4%	36.2%

% of net sales	11.7 %	11.8%	7.6%	12.8%
Profit before tax	8 486	7 553	4 548	11 590
% of net sales	11.6%	11.4%	7.6%	12.5%
Profit for the period	6 418	5 066	3 290	9 074
% of net sales	8.8 %	7.7%	5.5%	9.8%
Return on equity, %	14.4 %	13.3%	9.2%	17.2%
Return on investment, %	17.4 %	17.1%	11.0%	18.8%
Interest-bearing liabilities	3 584	9 235	12 679	9 230
Cash and liquid assets *)	13 719	7 567	8 680	12 210
Gearing, %	-16.2 %	3.2%	8.3%	-5.3%
Equity ratio, %	71.6 %	61.9%	60.0%	64.8%
Total assets	87 132	84 942	80 537	87 287
Gross investments **)	3 426	7 084	11 262	7 448
% of net sales	4,7 %	10.7%	18.8%	8.0%
Capital expenditure	686	334	684	2 047
% of net sales Research and development	0.9 %	0.5%	1.1%	2.2%
costs	10 797	10 934	11 134	14 781
% of net sales R&D personnel at end of	14.8 %	16.6%	18.6%	16.0%
period Personnel on average during	213	184	162	195
the period	826	743	675	747
Personnel at end of period	866	755	686	761
Increase in personnel, %	14.7 %	10.1%	8.9%	4.1%
Earnings per share, EUR Earnings per share (diluted), EUR	0,56 0.56	0.45 0.45	0.28 0.28	0.80 0.80
Equity per share. EUR	5.34	4.58	4.19	4.93
P/E ratio	34.53	24.09	24.97	18.21
Share price performance
lowest share price	15.00	6.60	6.14	6.60
highest share price	20.10	11.49	10.45	14.66
average share price	17.81	9.29	7.70	10.79
closing share price	19.40	10.72	7.00	14.52
Market capitalization at end of period	225 013 306	121 970 273	80 276 868	165 206 004
Number of traded shares % of average number of	1 565 754	1 297 031	1 808 869	2 038 565
shares	13.7%	11.4%	15.8%	17.9%
Average number of shares
- undiluted	11 422 987	11 383 265	11 468 124	11 381 905
- diluted	11 517 522	11 383 265	11 468 124	11 381 905