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.

In February 2018 Basware Corporation sold its Financial Performance Solutions and Banking businesses and harmonised revenue recognition principles with the Group in accordance with the Finnish Accounting Rules. Due to changes the figures for the financial year 2018 and 2017 are not comparable.

Transactions in foreign currencies

Transactions in foreign currencies are recorded at the exchange rates prevailing at the transaction dates. At the end of the accounting period, the unsettled balances on foreign currency receivables and liabilities are valued at the rates of exchange prevailing at the end of the accounting period. Foreign exchange gains and losses related to normal business operations are entered in the appropriate income statement account before operating profit and foreign exchange gains and losses associated with financing are entered as a net amount under financial income and expenses.

Revenue recognition

Parent company applies the same revenue recognition principles as Basware group. Revenue recogniton principles of Basware 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 and recognized and amortized over the useful life of 3-5 years. In determining the useful life, the obsolescence of technology and the typical life cycle of products in the industry are taken into consideration. Amortization starts once the product is ready for commercial utilization. Maintenance of existing products and minor enhancements are recognized as they are incurred. Public subsidies related to research and development are recognized through profit or loss in the periods during which the corresponding costs are recognized as expenses.

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 depreciation according to plan and possible impairment. Public subsidies related to the acquisition of an intangible asset are deducted from the acquisition cost of the asset and recognized as income by reducing the depreciation charge of the asset they are related to. The expected useful lives of intangible assets are 3–10 years. 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 have been recognized in accordance with the 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.

 

 

2. Net sales

Net sales by revenue type

Below is 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.-31.12.20181.1.-31.12.2017
Cloud revenue  
SaaS24,69020,510
Transaction services24,76722,715
Other cloud revenue125430
Cloud revenue total49,58343,656
Non-cloud revenue  
Maintenance17,17026,374
License sales1,4812,605
Consulting services6,59510,341
Other non-cloud revenue45-67
Non-cloud revenue total25,29139,253
Revenue total74,87482,909

 

Net sales by location of customer

EUR thousand

1.1-31.12.20181.1-31.12.2017
Finland37,90347,604
Export36,97135,305
Total74,87482,909

 

 

 

3. Other operating income

EUR thousand

1.1.-31.12.20181.1.-31.12.2017
Gain on sale of assets30,3010
Other operating income1,5500
Other operating income, total31,8510

Parent company recognized a gain on sale of assets amounting to EUR 30.3 million in the first quarter 2018 as a result of the sale of Banking and Financial Performance Solutions businesses.

Other operating income EUR 1.5 million consists of other proceeds related to divestment.

 

 

4. Materials and services

EUR thousand

1.1.-31.12.20181.1.-31.12.2017
Purchases during the financial period-12,007-10,661
Services purchased-1,104-2,101
Total-13,111-12,762

 

 

 

5. Personnel and employee benefits

Personnel expenses

EUR thousand

1.1.-31.12.20181.1.-31.12.2017
Salaries paid to CEO and the Board of Directors-720-634
Salaries paid to other personnel-23,943-26,923
Pension expenses-4,023-4,498
Other personnel expenses-954-1,453
Total-29,640-33,508

Salaries and fees paid to each member of the management are detailed in Note 5 to the Consolidated Financial Statements.

Number of personnel

1.1.-31.12.20181.1.-31.12.2017
Personnel average for the period392449
Personnel at the end of the period374439

 

 

 

6. Depreciation and amortization

EUR thousand

1.1.-31.12.20181.1.-31.12.2017
Intangible assets-7,715-6,858
Tangible assets-184-280
Total-7,898-7,139

 

 

 

7. Other operating expenses

EUR thousand

1.1.-31.12.20181.1.-31.12.2017
Rents-1,286-1,563
Non-statutory employee benefits-448-570
Travelling-1,177-1,010
Marketing-3,765-3,597
IT and telephone-1,109-1,102
Auditor fees-165-367
Other expenses-40,576-35,118
Other operating expenses total-48,526-43,328
  
Audit fees-165-160
Tax consultancy00
Other fees and services0-207
Audit fees total-165-367

 

 

 

8. Financial income and expenses

EUR thousand

1.1.-31.12.20181.1.-31.12.2017
Other interest and financial income  
From group companies1,3661,648
From others129170
Other interest and financial income1,4941,818
  
Interest and financial expenses  
To group companies-587-2,202
From others-2,002-1,071
Impairment on investments-4,9940
Other interest and financial expenses total-7,583-3,273
  
Total-6,089-1,455

 

 

 

9. Direct taxes

EUR thousand

1.1.-31.12.20181.1.-31.12.2017
Income taxes from previous financial periods0-187
Total0-187

The deferred tax asset arising from accumulated losses, total of EUR 2.7 million, has not been recognized on the balance sheet.

 

 

10. Intangible assets

Intangible assets 2018

EUR thousand

Development costsIntangible rights Goodwill/merger lossOther long-term investmentsAssets, unfinished projectsTotal
Acquisition cost Jan 147,75516,63517,6256412,35894,436
Additions392813--8,6269,831
Disposals-4,507-11---1,675-6,193
Reclassifications between items6,413----6,4130
Acquisition cost Dec 3150,05317,43717,6256412,89598,074
      
Cumulative amortization
 Jan 1
-26,232-11,067-17,625-43.020-54,967
Cumulative amortisation on disposals and reclassifications1,335----1,335
Amortisation-5,611-2,095--5--7,711
Cumulative amortisation Dec 31-30,508-13,162-17,625-480-61,343
      
Book value Dec 3119,5454,27501612,89536,731

 

Intangible assets 2017

EUR thousand

Development costsIntangible rights Goodwill/merger lossOther long-term investmentsAssets, unfinished projectsTotal
Acquisition cost Jan 128,54114,57417,6256422,29783,100
Additions2,0052,103--7,33811,446
Decreases-110-----110
Reclassifications between items17,319-42---17,2770
Acquisition cost Dec 3147,75516,63517,6256412,35894,436
      
      
Cumulative amortization 
Jan 1
-21,551-8,905-17,625-38--48,119
Amortization-4,681-2,162--5--6,848
Cumulative amortization Dec 31-26,232-11,067-17,625-430-54,967
      
Book value 
Dec 31
21,5235,56802112,35839,469

 

 

 

11. Tangible assets 2018

EUR thousand

Machinery and equipmentOther tangible assetsTotal
Acquisition cost Jan 16,2341336,367
Additions321345
Disposals-71--71
Acquisition cost Dec 316,1961456,341
   
Cumulative amortization Jan 1-5,9360-5,936
Cumulative amortisation on disposals and reclassifications46-46
Amortization-184--184
Cumulative amortization Dec 31-6,0730-6,073
   
Book value Dec 31123145268

 

Tangible assets 2017

EUR thousand

Machinery and equipmentOther tangible assetsTotal
Acquisition cost Jan 16,1651336,298
Additions69 69
Acquisition cost Dec 316,2341336,367
   
Cumulative amortization Jan 1-5,6560-5,656
Amortization-280--280
Cumulative amortization Dec 31-5,9360-5,936
   
Book value Dec 31298133431

 

 

 

12. Investments

EUR thousand

20182017
Shares in group companies  
Book value Jan 198,07597,621
Increase-453
Disposals--
Book value Dec 3198,07598,075
  
Balance sheet value Dec 3198,07598,075
  
Other shares  
Book value Jan 13838
Book value Dec 313838
  
Share of investment in a joint venture*  
Book value Jan 14,9944,994
Impairment-4,9940
Book value Dec 3104,994
  
Receivables from group companies  
Loan receivables from group companies20,16020,026
  
Investments total118,272123,133

* During the financial year Basware decided to write down its share of the joint venture Clear Funding Limited.  The loss impact totalled EUR 4.9 million.

Shares in subsidiaries

DomicileCountryParent company holding, %
Basware International OyEspooFinland100
Basware GmbHDüsseldorfGermany100
Basware UK Ltd.StaffordshireUnited Kingdom100
Basware ABStockholmSweden100
Basware B.V.AmsterdamThe Netherlands100
Basware A/SHerlevDenmark100
Basware, Inc.DelawareUnited States100
Basware SASParisFrance100
Basware ASOsloNorway100
Basware Pty LtdChatswoodAustralia100
Basware India Private LimitedIasiIndia99
Basware Belgium NVChandigarhBelgium99
Basware SRLAalstRomania100
Basware Holdings Ltd.LondonGreat Britain100
Basware Shared Services Ltd.LondonGreat Britain100
Basware Supplier Solutions Ltd.LondonGreat Britain100
Procserve Solutions Ltd.LondonGreat Britain100
Procserve Services Ltd.LondonGreat Britain100

Foreign branches

 

The parent company has branches in India, Chandigarh (reg.no. F03347 ) and Russia, Moscow (reg.no. 16926.1).

Basware UK subsidiaries, Basware Holdings Ltd and Basware Shared Services Ltd. sub-group entities have applied exemption from the local statutory audit requirements under section 479A of the Companies Act 2006.

Basware GmbH is exempt from the duty of corporations to audit and disclose financial statements pursuant to German legislation (§ 264 III HGB).

 

 

13. Non-current receivables

EUR thousand

Dec 31, 2018Dec 31, 2017
Rent deposits401423
Accrued employee expenses and other prepaid expenses9641,287
Total1,3651,710

 

 

 

14. Current receivables

EUR thousand

Dec 31, 2018Dec 31, 2017
Accounts receivables61,5897,546
  
Receivables from group companies  
Accounts receivables6,3785,802
Interest receivables150153
Loan receivables6,8178,833
Other receivables5,5263,206
Total18,87117,994
  
Prepaid expenses and accrued income4,4813,707
Other receivables632174
Total5,1133,881
  
Current receivables total30,14329,421
  
Prepaid expenses and accrued income  
Accrued employee expenses552344
Other prepaid expenses and accrued income3,9293,363
Total4,4813,707

 

 

 

15. Shareholders' equity

EUR thousand

20182017
Share capital Jan 13,5283,528
Share capital Dec 313,5283,528
  
Share premium account Jan 11,1181,118
Share premium account Dec 311,1181,118
  
Fair value reserve Jan 100
Increase2400
Fair value reserve Dec 312400
  
Restricted Equity Dec 314,8874,647
  
Invested non-restricted equity Jan 1112,089112,291
Decrease of treasury shares-204-202
Invested non-restricted equity Dec 31111,885112,089
  
Retained earnings Jan 1-11,0435,762
Decrease of treasury shares204202
Profit for the period1,460-15,469
Retained earnings Dec 31-9,379-9,505
Changes in accounting principles0-1,538
Retained earnings Dec 31 changed-9,379-11,043
Non-restricted equity Dec 31102,506101,046
  
Shareholders' equity Dec 31107,392105,693
  
Specification of distributable funds  
Profit for the period1,460-15,469
Retained earnings-10,8405,964
Other distributable funds111,885112,089
Change in accounting principles0-1,538
Development expenses, capitalized**-32,440-33,881
Distributable funds70,06567,165

* During the financial year 2018 Basware Corporation aligned its revenue recognition principles with the Group in accordance with Finnish Accounting Rules and changed accounting principle of bad debt provisions. The effect of the change in sales recognition principle on equity is EUR -1,540 thousand and the effect of the change in bad debt calculation is EUR +2 thousand.

** According to Accounting Act 5:8 capitalized development expenses are deducted from distributable funds.

 

 

16. Provisions

EUR thousand

20182017
Opening balance Jan 12011,199
Additions4690
Disposals-564-998
Closing balance Dec 31106201

Reorganisation provision are detailed in Note 21 to the Consolidated Financial Statements.

 

 

17. Non-current liabilities

EUR thousand

Dec 31, 2018Dec 31, 2017
Loans from financial institutions40,11747,286
Deferred income191694
Debts to group companies177177
Non-current liabilities total40,48548,157

 

 

 

18. Current liabilities

EUR thousand

Dec 31, 2018Dec 31, 2017
Accounts payable5,4555,643
  
Liabilities to group companies  
Accounts payable1,072450
Other debts31,84232,947
Total32,91433,397
  
Loans from financial institutions17,1011,996
Other debts1,2361,980
Accrued expenses and deferred income9,82011,364
Total28,15715,340
  
Current liabilities total66,52654,380
  
Accrued expenses and deferred income  
Accrued exployee expenses6,3968,452
Deferred income1,6981,529
Other accrued expenes1,7261,383
Total9,82011,364

 

 

 

19. Commitments and contingent liabilities

EUR thousand

Dec 31, 2018Dec 31, 2017
Own guarantees  
Business mortgages of own debt01,200
Guarantees367202
  
Commitments on behalf of subsidiaries  
Guarantees327100
  
Other own contingent liabilities  
Leasing liabilities  
Current lease liabilities240182
Lease liabilities maturing in 1-5 years340229
Total581411
  
Rental liabilities  
Current rental liabilities4,3153,567
Rental liabilities maturing in 1-5 years6,4586,705
Rental liabilities maturing over 5 years2,8000
Total13,57310,272
  
Other own contingent liabilities total14,15410,683
  
Commitments and Contingent Liabilities total14,84812,185

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.

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