Basware Financial Results Q2/2008 and H1/2008 CEO Ilkka Ilkk Sihvo Sih July 10, 2008

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Contents

•

Q2/2008 in Brief

•

Business Review of Q2/2008

•

Financial Review of H1/2008

•

Future Outlook

2

Basware in Brief •

Headquarters in Espoo, Finland and nine subsidiaries b idi i iin E Europe and d iin th the US

•

650,000 users globally in 1200+ large organizations i ti

•

Net sales EUR 40 545 thousand (EUR 34 814 th thousand) d) att th the end d off JJune 2008

•

686 (559) employees at the end of June 2008

Breakthrough to Global Leader 3

3

Q2/2008 in Brief EUR Million Net sales

Q2/2008

Q2/2007

22.3

17.8

25.5%

21.3%

2.4

2.3*

Ch Change off operating ti profit fit %

4.2%*

122 3% 122.3%

% of net sales

10.9%

15.6%

Net profit/loss

1.9

1.6

Earnings per share, euro

0.16

0.14

Fixed costs

17.9

14.5

49 3% 49.3%

44 7% 44.7%

13.0%

13.5%

686

559

Growth of net sales, % Operating profit

International operations’ share of net sales Resellers’ share of product sales Personnel 30.6.

• • •

Strong growth and profitability

•

Growth of consulting services 38 percent

•

Software as a Service grew 107 percent

•

49 percent of turnover from outside Finland

Growth of turnover 26 percent Strong international growth and profitability in the USA, Europe and Scandinavia

* without ith t one-time ti effect ff t off property t sale l

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Highlights of Q2/2008 Net sales The Forrester Wave: payable y accounts p electronic invoice presentment and payment (AP-EIPP) report: pack! Basware leads the p

New customers in the USA: American Cancer Society, Allied Building Products, one large printing and publishing company

Basware acts as an advisor in the EU level Pan-European Pan European Public Procurement On-Line (PEPPOL) project

New products: Basware RFx Management and Basware Contract y Lifecycle

New customers in AsiaPacific: UnitingCare Health, Health Challenger Group Services, Bureau VERITAS and Datacom

New customers in Scandinavia: Tamro AB, NORDUnet A/S, A/S Scandic Hotels AB

New customers N t in i E Europe: Europe Arab Bank, Transavia.com, AkzoNobel Functional Chemicals

Global Gl b l customer t roll-outs ll t with various large customers

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The Forrester Wave™: Wave : AP AP-EIPP, EIPP, Q2 2008 Basware is number 1 in all report dimensions: Strategy, gy, Current Offering g and Market Presence

The Forrester Wave Wave™:: AP APEIPP, Q2 2008 A survey made in the US of Electronic Invoice Presentment and Payment vendors

The Forrester Wave is copyrighted by Forrester Research, Inc. Forrester and Forrester Wave are trademarks of Forrester Research, Inc. The Forrester Wave is a graphical representation of Forrester's call on a market and is plotted using a detailed spreadsheet with exposed scores, weightings and comments. Forrester does not endorse any vendor, product, or service depicted in the Forrester Wave. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change.

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Comments by the leading EIPP analyst • “In Forrester’s 78-criteria evaluation of accounts payable electronic l t i iinvoice i presentment t t and d paymentt (AP (AP-EIPP) EIPP) vendors, we found that Basware leads the pack.”

• “Basware has the largest market presence, excellent functionality, and a strong vision.”

• “Basware has the best-rated strategy, continuing to enhance its EIPP p product innovation while expanding p g into new areas.“ Source Forrester Research Research, June 18 2008 2008, “The The Forrester Wave™: Wave : AP-EIPP, AP-EIPP Q2 2008” 2008

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B i Business R Review i off Q2/2008

8

Finland Segment EUR thousand

Q2/07

Q3/07

Q4/07

Q1/08

Q2/08

Net sales

12 276

10 238

14 278

10 493

13 091

Growth of net sales,%

26.1%

9.2%

30.8%

-13.0%

6.6%

3 837

3 219

2 335

-93 93

1 926

361

369

383

416

421

Operating profit Number of personnel

Net sales

Operating profit

Personnel 500

15 000

4 500

12 000

3 500

9 000

2 500

6 000

1 500

200

3 000

500

100

0

400 300

0

-500 Q2/07Q3/07Q4/07Q1/08Q2/08

Q2/07Q3/07Q4/07Q1/08Q2/08

Q2/07Q3/07Q4/07Q1/08Q2/08

9

Finland Segment Q2/2008

Profile

Highlights

New customers

Segment consists of Finnish, Russian, Asian, Australian, Financial Management’s and Ei Einvoicing’s i i ’ businesses b i

The growth of Finland segment 6.6% to 13 091 thousand euros (12 276)

A-lehdet, Gasum, Konecranes Plc, Tampereen Messut, Finpro, NCC Group, American Express Service Europe, Sesca Group, Thermo Fisher, UnitingCare Health, Challenger Group Services and Bureau VERITAS

Altogether 14 resellers in the segment g Number of personnel 421

Growth of EPP 13.5% Growth of FIMA 19.2% Growth of Einvoicing g volume 24.7%

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10

Scandinavia Segment EUR thousand

Q2/07

Q3/07

Q4/07

Q1/08

Q2/08

Net sales

3 859

3 126

5 782

4 198

4 628

-12.8%

17.0%

32.8%

4.2%

19.9%

-207

-107

873

321

489

97

98

98

99

101

Growth of net sales,% Operating profit Number of personnel

6 500

Net sales

4 500 2 500

Operating profit

Personnel

900

150

600

100

300

500

50

0

-1 500 Q2/07Q3/07Q4/07Q1/08Q2/08

-300 300

0 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08

Q2/07 Q3/07 Q4/07 Q1/08 Q2/08

11

Scandinavia Segment Q2/2008

Profile

Highlights

New customers

Centrally managed units in Sweden, S ede , Norway o ay a and d Denmark

The growth of Scandinavian segment was 19.9% to 4 628 thousand euros (3 859 thousand euros)

G4S Security Systems AS Tollpost, AS, Tollpost ODIM AS AS, Sandefjord Kommune, Tamro AB, Scandic Hotels AB, Storebrand Livsforsikring AS and Norstedts Juridik AB

The segment sells p Purchase to Enterprise Pay and Financial Management solutions excluding payment management g solutions Mainly direct sales

6 new SaaS customers Growth of profitability 336.8%

personnel 101 Number of p . 12

12

Europe Segment EUR thousand

Q2/07

Q3/07

Q4/07

Q1/08

Q2/08

N t sales Net l

3 153

3 477

5 652

4 293

4 469

90.3%

49.1%

108.3%

53.3

41.7%

-347

-1 058

-1 078

-277

-123

69

94

142

127

130

Growth of net sales,% Operating profit Number of personnel

Net sales

Operating profit

6 000

1 000

5 000

500

4 000

Personnel 200 150

0

3 000

100

-500

2 000

50

-1 000

1 000 0

-1 500 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08

0 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08

Q2/07 Q3/07 Q4/07 Q1/08 Q2/08

13

European Segment Q2/2008 Profile

Highlights

New customers

Segment consists of units in Germany, France, The Netherlands UK and Netherlands, Southern Europe

The growth of European segment was 41.7%

Europe Arab Bank, Transavia.com, AkzoNobel Functional Chemicals, Ballast Nedam 4th environment i t Axapta A t

Segment sells Enterprise Purchase to Pay products excluding payment and travel management solutions

Data Capture growth in UK as expected; operation profitable Increase of profitability 64.5%

Altogether 27 resellers in the segment Number of personnel 130

14

14

North America Segment EUR thousand Net sales Growth of net sales,% Operating profit N b off personnell Number

Net sales 1 500

500

1 200

300

900

100

600

-100

300

-300

0

Q2/07

Q3/07

Q4/07

Q1/08

Q2/08

921

757

1 030

680

1 446

79.0%

-42.0%

-7.9%

-9.6%

57.0%

-495

-614

-160

-158

185

23

28

28

24

26

Operating profit

-500 Q2/07Q3/07Q4/07Q1/08Q2/08

Personnel 30 25 20 15 10 5 0

Q2/07 Q3/07 Q4/07 Q1/08 Q2/08

Q2/07Q3/07Q4/07Q1/08Q2/08

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North America Segment Q2/2008 Profile

Highlights

New customers

The North American unit sells Basware E t i Purchase P h t Enterprise to Pay solutions

The growth of North American segment was 57.0%

American Cancer Society

Channel deals

One of the largest media d printing i ti houses h i th in the and USA

Altogether 10 resellers in the segment

Improvement of profitablity was 137.4%

Allied Building Products

Number of personnel 26

16

16

Net Sales by Operation Q2/2008 Thousand euros

600 6 723

f Growth of Product sales 13 13.9% 9% f Share of EPP and PM growing

8 913

f Growth of Maintenance 18.3% G th off Consulting C lti and dS i f Growth Services revenue 38.2% 6 076 Products Maintenance and support

f High utilization, strong funnel f Growth G th off SaaS S S 106.7% 106 7% f Also international deals

Consulting and Services

f SaaS organisation and roll-out

SaaS

f Backlog of SaaS orders EUR 11 241 thousand

Products = License sales of software products Consulting and Services = Installation and other consulting services related to products; also Business Transaction service fees Maintenance = Continuous, annually charged fees (18-20% of license sales) SaaS = Software as a Service, monthly charged fees

17

Net Sales by Primary Segment 4-6/2008 Net sales

4-6/2008

4-6/2007

Change, %

13 091

12 276

6.6

4 628 4 469

3 859 3 153

19.9 41.7

North America Net sales between segments

1 446 -1 322

921 -2 432

57.0 45.6

Group total (IFRS)

22 312

17 776

25.5

Finland Scandinavia Europe

14 000

North America

12 000 10 000 8 000 6 000

Europe

4 000

Finland Scandinavia

2 000 0 Finland

Scandinavia 4-6/2008

Europe

North America

4-6/2007

18

Operating Profit by Primary Segment 4-6/2008 Operating profit

4-6/2008

4-6/2007

Change, %

1926

3837

-49,8

489

-207

336.8

-123

-347

64.5

North America

185

-495

137.4

O Operating ti profit fit between b t segments t

-47 47

-15 15

-203.2 203 2

2 431

2 773

-12.3

Finland Scandinavia Europe

Group total (IFRS)

4 500

3 000 4-6/2008

1 500

4-6/2007

0 Finland

Scandinavia

Europe

North America

-1 500

19

Fi Financial i lR Review i off H1/2008

20

Development of Net Sales in Q2 2008 and H1 EUR Thousand

Q2/2008

Q2/2007

1-6/08 1 6/08

1-6/07 1 6/07

Net sales

22 312

17 776

40 545

34 814

Growth of net sales, %

25.5%

21.3%

16.5%

15.7%

International operations’ share of net sales, %

49.3%

44.7%

50.5%

45.0%

Growth of International operations, %

38.3%

22.9%

30.5%

23.0%

Resellers’ share of product sales, %

13.0%

13.5%

16.7%

15.2%

873

799

1 814

1 913

FIMA: share of net sales, %

12.2%

12.8%

10.7%

13.0%

Growth of FIMA, %

19.2%

23.0%

-3.9%

21.5%

Resellers’ share of product sales

21

Development of Quarterly Net Sales EUR thousand Net sales Growth % Other operating income Materials and services Personnel expences Depreciation and write-offs Other operating expenses Operating profit

Q1/08 18 233 7.0%

Q1/07 17 038 10.4%

Q2/08 22 312 25.5%

Q2/07 17 776 21.3%

69

15

62

752

23

44

1 211 11 765 671 4 910

819 9 243 571 5 010

1 385 12 608 693 5 257

662 9 961 597 4 536

981 7 827 657 4 419

1 996 13 569 765 4 977

-254

1 409

2 431

2 773

1 406

1 924

25000 20000 15000 10000 5000 0

Q3/08

Q3/07 15 268 14.3%

Q4/08

Q4/07 23 187 40.5%

Q4 Q1 32 % 23 %

Q1

Q2 Q3 2008

Q4

Q3 21 %

Q2 24 % 2007

22

Net Sales by Primary Segment 1-6/2008 Net sales

1-6/2008

Finland

1-6/2007

Change, %

23 584

24 333

-3,1

8 827 8 762

7 889 5 952

11,9 11 9 47,2

North America Net sales between segments

2 125 -2 752

1 673 -5 033

27,1 45.3

Group total (IFRS)

40 545

34 814

16,5

Scandinavia Europe

30 000

North America

25 000 20 000 15 000

Europe

10 000

Finland Scandinavia

5 000 0 Finland

Scandinavia 1-6/2008

Europe

North America

1-6/2007

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Development of Profit EUR Thousand

Q2/2008

Q2/2007

1-6/08

1-6/07

Operating profit

2 431

2 334*

2 177

4 182

Change of operating profit %

4.2%*

122.3%

-48.0%

10.7%

% of net sales

10.9%

15.6%

5.4%

12.0%

Profit before tax

2 428

2 840

2 178

4 299

Net profit/loss

1 899

1 584

1 350

2 468

0.16

0.14

0.11

0.22

Fixed costs

17 865

14 496

34 539

28 750

Personnel costs

12 608

9 961

24 373

19 203

4 340

3 252

8 133

6 344

714

841

1 342

1 281

Earnings per share, euro

R&D costs Capitalized R&D

* without one-time effect of property sale

24

Development of Quarterly Profit EUR thousand Net sales Growth %

Q1/08 18 233 7.0%

Q1/07 17 038 10.4%

Q2/08 22 312 25.5%

Q2/07 17 776 21.3%

69

15

62

752

23

44

1 211 11 765 671 4 910

819 9 243 571 5 010

1 385 12 608 693 5 257

662 9 961 597 4 536

981 7 827 657 4 419

1 996 13 569 765 4 977

-254

1 409

2 431

2 773

1 406

1 924

Other operating income Materials and services Personnel expences Depreciation and write write-offs offs Other operating expenses Operating profit

3000 2500 2000 1500 1000 500 0 -500

Q3/08

Q4 26 % Q3 19 %

Q1

Q2

Q3

2008

2007

Q3/07 15 268 14.3%

Q4/08

Q4/07 23 187 40.5%

Q1 19 %

Q2 37 %

Q4 2007

25

Operating Profit by Primary Segment 1-6/2008 Operating profit

1-6/2008

Finland Scandinavia Europe North America O Operating ti profit fit between b t segments t Group total (IFRS)

1-6/2007

Change, %

1 834

7 152

-74,4

810

-436

285,9

-401

-1 526

73,7

27

-978

102,8

-94

-31

-204.1

2 177

4 182

-48,0

9 000 7 500 6 000 4 500 1-6/2008

3 000

1-6/2007

1 500 0 -1 500

Finland

Scandinavia

Europe

North America

-3 000

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Finance and Investments •

Total assets on the balance sheet EUR 69 627 thousand (EUR 63 593 thousand)

•

Cash and cash equivalents EUR 5 771 thousand (EUR 14 683 thousand)

•

Cash flow from operations EUR 4 579 thousand (EUR 6 090 thousand)

• • •

Equity ratio 67.2% (71.6%) Gearing -7,8% (-31.0%) Total gross investments EUR 1 823 thousand ( EUR 1 649 t ousa d) thousand)

-

Includes capitalized R&D costs

27

Research and Development •

Product development costs EUR 8 133 thousand (EUR 6 344 thousand)

-

20.1% 20 1% of net sales

• 23.5% of personnel

Growth 28.2 percent (16.5%) 20 1% of net sales (18 20.1% (18.2%) 2%) EUR 1 342 thousand i.e.16.5% of costs capitalized

Software production personnel 161 (140)

-

Units in Finland, India and Norway

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Personnel • •

In total 686 (559) employees at the end of June 2008

•

Growth 22.7 percent

•

College and other 23%

Master 33%

58.2 percent in Finland; 41.8 percent abroad Average age 35.7 years Sales & Sales Support 20%

R&D 24%

Admin 9%

Bachelor 44% Education

Customer Services 47% Personnel Groups

29

Share and Shareholders •

Number of shareholders 17 301 (18 459) at the end of June 2008

•

Share price development during January–June 2008:

-

•

Highest EUR 10.45 (14.00), lowest EUR 6.14 (10.48) Closing price EUR 7.00 (EUR 12.25)

Traded shares 1 039 454 (1 597 569)

-

•

Average g p price of the share EUR 8.03 ((EUR 12.19)

9.1 % (13.9 %) of all shares

Market capitalization EUR 80 276 868 million (EUR 140 484 519 million)

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Industry and Basware Outlook • •

Growth of net sales 15–25 percent Operating profit 10–15 percent of net sales

• •

Uncertainty in the world economy Business software area expected to grow

•

Europe, US, Russia, Asia, Southern Europe, growth areas, profitability increasing influencing also tax rate in the long run

• • •

Scandinavia & Finland focus on profitability, mild growth

• •

SaaS order back log: Approximately EUR 0.4 M in revenue in Q3-Q4 2008

•

Review of acquisition possibilities continues: Europe, US distribution channel

Software production expanding to India, relative cost of R&D decreases Fixed costs in the second half of the year are estimated to be at the same level as the fixed costs in the first half of the year New products: Basware Mobile Client, Basware RFx Management, Basware Contract Lifecycle Management

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Addi i Additional l Slid Slides

32

Key Financials 2003–2007 EUR thousand

2003

FAS 2004

2005

IFRS 2006

2007

59 954

73 270

43.9%

22.2%

Restated Net sales

25 597

32 640

Grow th of net sales, %

26.3%

27.5%

Operating profit

1 133

4 663

3 611

8 078

7 512

% of net sales

4.4%

14.3%

8.7%

13.5%

10.5%

254

302

395

528

658

Personnel, 31.12. tEUR 80 000 70 000 60 000 50 000 40 000 30 000 20 000 10 000 0

Net sales

2003 2004 2005 2006 2007

tEUR 9000 8000 7000 6000 5000 4000 3000 2000 1000 0

41 666

Personnel

Operating profit 600 500 400 300 200 100 0 2003 2004 2005 2006 2007

2003 2004 2005 2006 2007

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Basware Enterprise Purchase to Pay Solutions Basware Business Transactions Basware Supplier Portal

Basware Procurement Basware RFx Management

Basware Invoice Automation

Basware Contract Lifecycle Management

Basware Purchase Management

Basware Contract Matching

Basware Invoice Processing

Basware Order Matching

Basware KPI Tool Basware Travel & Expense Management Basware Document Archiving 34

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Basware Financial Management Solutions Basware Business Planning

Basware Business Planning

Basware Analyzer

Basware Transparent Reporting

Basware Group Consolidation

Basware Group Consolidation

Basware IFRS/Public Sector Package

Basware Cash Flow

Basware Invoice Processing

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Basware Einvoices offering Business Transactions Service

Sending customer

Receiving customer

Supplier pp activation

•

Communicate with any organization on the network, including those connected to Basware BT and those on the global interoperability network

•

Basware Business Transactions Connector with value added dd d services i and d customization i i

•

Partner operator offering for small size companies

•

Receiving customers use tailored interface if they are Basware Invoice Processing users or

•

FTP to fetch invoices if they use some other invoice workflow software

•

A service to maximize the cost saving opportunity for einvoice receivers

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Analyst Review “Basware stakes out a strong position as a new player in eProcurement.”

The Forrester Wave™: eProcurement Solutions, Q2 2007 A survey made in the US of eProcurement Solution vendors The Forrester Wave is copyrighted by Forrester Research, Inc. Forrester and Forrester Wave are trademarks of Forrester Research, Inc. The Forrester Wave is a graphical representation of Forrester's call on a market and is plotted using a detailed spreadsheet with exposed scores, weightings and comments. Forrester does not endorse any vendor, product, or service depicted in the Forrester Wave. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change.

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Th k you!! Thank

www.Basware.com

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