Annual Report (ESEF) • Feb 24, 2022
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Download Source FileUntitled DIGITALISATION THAT MAKES A DIFFERENCE Annual Report 2021 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements This is a voluntary published pdf closure obligation pursuant to Section 7:5§ of the Securities Markets Act. 2 Digia’s direction 3 Digia in brief 5 CEO’s review 6 Markets and Digia's market position 7 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements DIGIA IN BRIEF 3 We help people and organisations renew The utilisation of technology is a key tool in business renewal and the development of competitiveness in both companies and the public sector. Our customers’ needs are connected to three main areas, which are digital Digia’s offering is well suited to these customer needs. Digia is a software and service provider with more than 1,300 employees. We are seeking sustainable growth from digitalisation that reshapes everyday life and promotes our customers’ business. systems, and data utilisation solutions. We manage all of these layers of digitalisation and ensure that services function around the clock. There are more than 1,300 of us working at Digia. Our roots are in Finland, and we operate in eight Finnish locations subsidiary Climber operates in Sweden, Finland, Denmark, and the Netherlands. Our headquarters is located in Hel sinki. Digia’s net sales totalled EUR 156 million in 2021. The company is listed on the Nasdaq Helsinki (DIGIA). Our daily lives are guided by four cultural principles that are based on our strengths and help us to renew our selves: learning, sharing, courage, and professional pride. Our Senior Trainee philosophy means that we believe that projects can end but no one is ever done with learning. These principles are also evident in our customer work: new digital solutions, and boldly learn new things, so that digital daily life would mean a better life for everyone. Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements DIGIA IN BRIEF 4 Every Digia employee is a Senior Trainee “We complete our work but we ourselves are a LEARNING It will not sting that bad “I will choose whatever works the best. If I made a wrong call, I’ll COURAGE Together we know more “Shared information is double the information. Helping SHARING I stand by my work “What goes around doesn’t surprisingly come around PROFESSIONAL PRIDE Digia’s cultural principles Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements CEO’S REVIEW 5 2021 was another year marked by the corona virus pandemic. During the year, the oppor tunities afforded by technology received increasing attention among our customers investments. A clear need for business renew al was seen in our customer base: demand data utilisation, and customer relationship management solutions. In late 2021, a new stage of the pandemic once again brought uncertainty to our operating environment. As the need for digitalisation grows, required from industry leaders. In addition to recruitment and providing continuous learn ing for our own personnel, we strengthened our capabilities through two acquisitions and tise and offering by acquiring the entire share capital of the Swedish analytics company Climber International AB. Climber implements tions. In September, we acquired the entire share capital of Solasys Oy. Solasys has long been our subcontractor in the delivery and reporting and analytics. freelancer network in Finland. Towards the end of the year, we signed a cooperation agree We paid particular attention to enhancing standard of workplace ergonomics. This is all part of building the workplace community of the future in which work and development will increasingly occur in a physically decentral ised community. The continual development of our operating models is part of our strategy. In 2021, we forged ahead with our project to modernise our own business platform (Digia Business Renewal is taking our business to the next level In line with our strategy, 2021 was a year of business renewal and building growth. We continued to develop our operations in order to better serve our customers. Our own business platform – completed two strategic acquisitions. Our net sales grew by 12.1 percent. Engine). In this project, we are creating a smart technology growth platform and overhauling our management system to support future growth and enhanced productivity. The Digia Business Engine will be introduced in phases from the year 2022 onwards. Responsible business and sustainable growth are the basic ideas behind Digia’s operations. 2021 marked the halfway point of our strategy period. Although we were work ment, we continued along our chosen path of renewal. We want to renew Digia in order to continue helping our customers also in the future to successfully take advantage of the opportunities afforded by technology. I would like to thank our customers, person nel, partners and other stakeholders for this Timo Levoranta Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements MARKETS AND DIGIA'S MARKET POSITION 6 Digia operates in Finland and Sweden, and our subsidiary Climber operates in Sweden, Finland, Denmark and the continue to grow in the long term. Although the corona virus pandemic still poses uncertainty in our operating environment, we believe that demand will develop favour ably in 2022. The pandemic has helped to accelerate digital advance ments: it has woken up many organisations to review their operating methods and assess opportunities for harness chain management. Market trends We see the following strengthening trends in the market both in the business and public sector: • Digitalisation is an increasingly important part of the core operations of organisations and business processes • The world is becoming networked, and digital platforms enable new business models • Smart and responsible data utilisation in business pro cesses creates a competitive advantage • services • The role of cloud technologies as a platform for devel oping and operating services is becoming the norm • Data utilisation leads to further increases in data secu rity and protection requirements. Developing digital business and data utilisation continue based business management increases a company’s ciency of your operations, identify customer needs, and build better customer encounters. must run effectively. This means that there is also a integrations and interface solutions as well as core busi ness systems. Digia is strong in this area. Digia’s market position ent markets. We have systematically built up our cus tomer and industry independent offering so as to be an the pandemic, our special strengths have been various the service and maintenance business. Our comprehensive service offering enables us to serve customers regardless of their stage of development and out risks involving demand in individual sectors. As part of our strategy, we have also strengthened our data and analytics capabilities by acquiring the Swedish business analytics specialist Climber International AB. Read more about our strategy on page 7. In addition to our project business, Digia provides compre hensive services for maintenance, monitoring, and contin uous development. Service and maintenance agreements bring stability to Digia’s business and serve as a founda tionships. In 2021, service and maintenance accounted for 67.1 percent of our net sales. Markets and Digia's market position Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements STRATEGY 7 Strategy 2020-2022 For its customers, Digia is a turnkey provider of smart solutions and a service company that manages the service lifecycle from implementation to maintenance and development. We provide our customers with a ser vice package covering mobile and online services, data For all of these, we provide various levels of maintenance services to help our customers operate their During the 2020–2022 strategy period, we will be further strengthening data utilisation in particular and helping smart utilisation of data. Read more about strategic implementation during 2021 on page 45 of the Report by the Board of Directors. Financial objectives Digia is seeking annual net sales growth of more than 10 percent including organic growth and acquisitions. The gin of 10 percent by the end of the strategy period. One of the key themes of this strategy period is to renew our operations and strengthen our chosen priorities. In the strategy, we have placed particular emphasis on data utilisation in our customers’ services and business processes. Strategy is a growth journey for both customers and personnel Digia generates value for its customers both as a vision ary and a reliable partner. Solid customer relations, professionalism, corporate culture, and a strong product and service package form the basis for our operations. We are steered with the aid of Digia’s cultural principles: courage, sharing, learning and professional pride. These cultural principles are everyday rules that help us renew learning and renewal. Responsibility is also central to our operations. Read more about our corporate responsibility on page 19. As our operating environment becomes increasingly net capabilities with the aid of partner networks. We work with leading technology partners in the best interests of our customers. We are able to guarantee technological Strategic focal points • Smart and responsible data utilisation. We will Digia’s service areas from business systems to inte grations and digital services. We believe that data is a key element in all of our customers’ operations. • Valued employer. Skilled employees are the most important success factor for Digia. We are constantly developing Digia into a more desirable workplace by reinforcing our culture, at the heart of which is the continuous learning by every employee. • Service business. We will deepen our customer rela tionships and further strengthen the share account ed for by the service business. • Productivity and scalability. We will develop our operational models and solutions to improve our project in the strategy period will be the reform of our own business platform. • Cloud technologies. Cloud technologies are the development and operating platform for future ser cloud services, taking into account both data securi ty and key public cloud platforms. Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements STRATEGY 8 Cornerstones of Digia’s strategy Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 9 Digia 2021 10 11 Selected milestones of 2021 12 Service areas 15 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 2021 2020 Change, % Net sales Result for the period Number of personnel by the end of the period Average personnel Balance sheet total Earnings per share 200 150 100 50 0 2017 2018 2019 2020 2021 156 139 132 112 96 Net sales EUR million 20 15 10 5 0 20202019 2021 18 16 11 Operating result EUR million Digia proceeded to EBITA guidance in the beginning of 2020. DIGIA IN FIGURES 10 + 10.9% operations 16,676,000€ Earnings per share 0.44€ Number of employees 1,339 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Selected milestones of 2021 11 Climber joins Digia: extra resources for the provision of data-driven services The Swedish company Climber joined Digia on 7 January 2021. Climber’s strengths include business analytics solutions and integration and business analytics. Read more Responsible use of data, carbon neutrality and digital expertise We published our revised corporate responsibility priorities, objectives, and indicators in early 2021. Although the greatest impact will be generated through our customers, we are also investing in diversity, personnel competence, and climate action. Read more about our corporate responsibility on page 19. Digia community present at home Although the majority of Digia personnel worked at home due to the pandemic, we also started to develop new work ing practices for the future. At Digia, this means things such More power through networks home and abroad Our Digia Hub freelancer network grew over the course of the and Europe. In December, we also signed a partnership agreement with Fulcrum Digital that will make more interna Both of these networks will play a role in achieving Digia’s strategic growth and scalability objectives. Read more Towards a symbiosis of humans and software: Digia Business Engine Our key individual development project during the strategy period is the development of Digia’s own business platform, Digia Business Engine. This project is an investment in Digia’s future competitiveness: we are building a smart growth plat form to support future growth and productivity. Digia Business Engine will be deployed in phases from 2022 onwards. A leader in Microsoft solutions tions in Finland. In addition, Microsoft invited Digia to join the Microsoft Business Applications 2021/2022 Inner Circle partner network as the only Finnish company. We were recognised for our achievements in 2021, including dedication to customers and innovations around Microsoft’s cloud services. Read more Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Digia’s service areas Intelligent Solutions Intelligent Solutions provides the compre hensive digital services that are required for a successful digital business. Sub areas include data utilisation solutions, and business and service design. Our business intelligence services. The Digia contracting network. Digia reports on one business segment that comprises of four service areas. In 2021, Digia’s service areas were Business Platforms both the public and private sectors. Our offering comprises Microsoft Dynamics 365 solutions, Oracle NetSuite solutions, which has been awarded the Key Flag symbol. Financial Platforms Digia Financial Systems product family, cial systems for fund management com panies, asset managers, and brokers in the Nordic countries. We can also provide Managed Digital Core The Managed Digital Core business area brings together all Digia services that form the foundations of our customers’ digital business: a package that consists of cloud opment, and 24/7 managed services. DIGIA’S SERVICE AREAS 12 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Customer stories DIGIA’S SERVICE AREAS 13 Finnish Tax Administration all citizens on a centralised basis for the authorities – is an important system for the whole of Finland. More than 100 Digia employees worked to imple ment project. Finnish society as a whole are considerable. Voimatel Energy systems will be undergoing enormous changes over the coming years, and the Finnish company Voimatel is operating right at the centre based data platform that improves management of solutions. The introduction of the data platform enabled all business units to better develop their The development of smart forecasting models and new business activities was also launched using Digia’s Fast Track operational model. Nordkalk was seeking a better solution for collecting produc tion data and reporting on its mines and produc tion facilities. Nordkalk’s facilities and individual production lines most important for each person’s work. Read more Read more Read more Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Customer stories DIGIA’S SERVICE AREAS 14 SOL When SOL began to outgrow its old CRM system, it was time to update the company’s invoicing and CRM with a modern platform. SOL updated its invoicing and CRM system using a solution tailored to the company’s needs. Digia worked with SOL to create a solution that has Dynamics 365 platform proved surprisingly ver satile, and allows for further development of the company’s processes in the future. Robit Robit manufactures drilling equipment. A few years ago the company noticed that its business and worked with Digia to introduce a new Oracle NetSuite system that would support growth and internationalisation. develop procedures that automatically update per day. Digia has also developed solutions for Unisport Unisport is the leading producer of sports facility concepts in the Nordic countries and has been active for over a hundred years. To achieve sus and scalable business platform that would import all of the required information into the data ware house in a transparent way, so as to support data management. With the help of Digia, Unisport achieved this by adopting a Microsoft Dynamics 365 Business Central solution tailored to its needs. Read more Read more Read more Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements PERSONNEL 15 2021 was another year marked by the pandemic, and Digia personnel continued to work mainly from home. As we did in 2020, we continued to invest in strengthening our culture and team spirit in remote working conditions and continuously developing our competence capital, while also preparing for the Personnel bined with an encouraging and evolving workplace culture. This is why we are able to provide our customers giving our employees varied and motivating tasks. We are making continual investments in the creation of a ing workplace culture and a culture of lifelong learning. We believe that in an esteemed and productive work place community, it is possible to create a good balance of meaningful work, continuous learning, wellbeing, Culture, community, and the employee experience Digia wants to be a pioneer in good leadership and workplace culture. We strive to provide Digia employees workplace community. Meaningful tasks and having the required skills for success at work provide the best sup Digia uses an early intervention model that supports that employees have more freedom to decide when they work, although naturally taking customers and teamwork into consideration. The idea is to ensure that there are no unnecessary cultural or other obstacles to balancing work with other aspects of life. requisites for cooperation at regular intervals. In our 2021 survey, meaningful work, professional colleagues, and both valued and thought had been successfully real of remote and hybrid working in terms of both working hours and location. As part of our corporate responsibility reporting, we monitor certain things in more detail, such as personnel’s satisfaction with team spirit and their page 50. As remote working continued throughout 2021, we con tinued to invest in supporting our sense of community through a variety of internal content and virtual events. 2017 2018 2019 2020 2021 Employees 31 December Number of employees 1,500 1,200 900 600 300 0 1,258 1,266 1,091 1,005 1,339 Personnel by location 31 December Number of personnel Helsinki 726 Tampere 248 Jyväskylä 172 Turku 67 Stockholm 50 Rauma 24 Lahti 15 Malmö 14 Vaasa 10 Oulu 7 Hengelo 6 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements PERSONNEL 16 a virtual summer party and a Christmassy morning iment with and deploy virtual collaboration tools and further developed our feedback culture with the aid of an internal virtual channel called Spread the success. Digia personnel can use this channel to thank their colleagues ples that embody our culture of sharing, learning, cour age, and professional pride. Some of Digia’s Tribes and to continue remotely. Level Awards to teams and individuals that had been nominated by their Digia colleagues. These awards were based on Digia’s cultural principles. The winners were chosen by a jury of Digia employees. daily life, in which an increasing amount of work will be done in different environments. We surveyed our per sonnel’s willingness to continue remote work after the pandemic, and have used this as a basis for developing a hybrid work model. Based on our personnel's wishes and better meet future needs. Employees who primarily chose remote work also received support in the form of a home contained equipment, an electric table and a work chair. Diversity at Digia Diversity is part of Digia’s corporate responsibility: our continuous development efforts seek to make Digia an even more inclusive workplace – a place where every aspect of inclusivity, and studies have shown it to be a common factor among successful workplace commu nities. Continuous learning is also one of our key cultural principles. In the spirit of Senior Trainee attitude, we believe that we can continuously develop as a workplace community with respect to how we take people’s diversity into account. themselves at work and whether Digia has groups whose voice should be better heard. We used the results to create a summary of Digia’s main priorities in the form of an action plan, and then systematically began putting selected measures into practice. <1 1–5 6–10 11–15 16–20 20< 50 40 30 20 10 0 Personnel by years of service 31 December Percent 43.6 14.6 14.1 10.6 5.1 12.0 2017 2018 2019 2020 2021 Employees by gender 31 December Number of employees 1,500 1,200 900 600 300 0 Other Female Male Male Female Other 27.6% 26.1% 24.1% 74.5% 29.1% 70.9% 72.4% 73.9% 75.9% 25.5% 400 300 200 100 0 30-39 40-49 50-59 60 ≤ < 30 Personnel distribution by age 31 December Number of persons Men Women Other Women Men Other Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements PERSONNEL 17 With our partner Inklusiiv, we continued to provide our personnel and supervisors with training in unconscious prejudices and inclusive leadership. This year, we once again received insights and new perspectives from blog posts written by Digia employees which shed light on things Learning We operate in an environment where everything is in constant motion. To keep up with the pace, we need to learn continuously and help others learn, too. We seek to provide our employees with a range of opportunities for personal development, thereby ensuring that both the company and its employees maintain their competitive ness. This radiates out as an ability to deliver even better value to our customers in digital networks. We want to be a team of top professionals who are always learning. To ensure this, we develop our employees’ competence in technology and other specialist areas through training, An average of 57.7 hours of training per person were spent on competence development in 2021. The Digia during the year. This training primarily focused on organ ising coaching to support the technical and professional Tribal activities focus on sharing information between personnel, and these continued remotely. In addition to technical topics, tribes also organised lectures on subjects such as preparing for retirement and impostor syndrome. As it is one of our priority areas, we created the Digia Master of Cloud program, with the aim of gradually skills, whilst also taking their starting level and tasks into account. We will also continue to invest in developing leadership with the aid of our two customised coaching trate cooperation. In addition to competence development for Digia per both its own and the sector’s needs. For the second year in a row, we collaborated with Vaasa Entrepreneurship course that was attended by students from the Vaasa University of Applied Sciences and the University of Vaa sa. We also organised recruitment training programmes have joined Digia. Recruitment and networks Successful recruitment that supports Digia’s workplace culture is essential for competence development and business success. Induction for new employees is part of a successful recruiting process, and we therefore invest in this in multiple ways. In addition to online induction which new employees have been able to meet each oth er (remotely during the pandemic). Each business area has induction templates to suit the role in question. In 2021, Digia continued to recruit new employees in spite of the coronavirus pandemic. Virtual interviews became an everyday occurrence in recruitment, which soned IT professionals, we offered students and career changers not only permanent positions, but also trainee Career Compass recruitment breakfasts. The popularity of this programme has grown steadily, and it once again attracted a commendable number of applications. We continued our active cooperation with educational establishments in 2021. We also continued to develop our employer image on the basis of preparations made in 2020, and our new strategy was completed in spring 2021. We participated in the virtual Mimmit koodaa (Women a coding club in cooperation with student organisations and educational establishments. During the autumn, we also held four interactive remote professionals anonymous questions. The aim of these mation about daily life in the IT sector, support them in their studies, and make them aware of Digia and what we do. We also strengthened our partnership network by launching a key partnership with Laurea University of Applied Sciences. This cooperation will also strengthen both parties’ understanding of working life and the com petences required to prepare for it. Towards the end of the year, Digia took part in the and organisational psychologist Jaakko Sahimaa. He worked at Digia for a month, familiarising himself with the company’s businesses and activities. Not only did various channels such as social media, he also provided own internal use. Small entrepreneurship is also gaining in popularity in the IT sector alongside traditional employment. The Digia Hub network offers freelancers access to a broad variety of Digia projects. It currently consists of more than 2,000 freelance professionals in Finland and more than 10,000 within the EU. At the end of the year, we also established the Digia alumni group in LinkedIn, so that former employees can keep up with what’s going on in the Digia community after they have moved on to tackle new challenges. Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 18 Responsible Digia Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Digia – sustainable digitalisation that makes a difference Our responsibility is based on our own Code of Conduct and the UN’s Sustainable Development Goals. We are committed to respecting human rights in accordance with the UN’s Universal Declaration of Human Rights and the International Labour Organisation’s (ILO) fundamental principles and rights at work. However, in our changing business environment, responsibility is based above all else on the continual monitoring and improvement of our operations. Sustainable digital value for our customers while building a functional society in which our society is developing. By ensuring that our solutions are functional, secure and easy to use, we also promote the responsible digitalisation of society. Digia aims to act as a technological pioneer whose products and services promote the development and wellbeing of society and the environment. We seek to implement our solutions so that they promote our cus tomers’ responsibility. We help our customers to utilise data in a responsible manner, and to improve the avail ability and usability of their services. We also seek to promote the ethical use of data. ent ways. In addition to customer work, we seek to con tribute to building solutions that enhance environmental and social responsibility for society and our customers. RESPONSIBLE DIGIA 19 Read more about our objectives and indicators in the Report by the Board of Directors on page 50. and indicators. The selected objectives and indicators will remain in effect until the end of 2022. Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Sustainable digital expertise for both our personnel and Finland as a whole Skilled personnel who are committed to the objectives of our customers are the cornerstone of all our operations. Digia aims to be a desired employer in the technology sector – an employer that supports personnel wellbeing and compe tence development. Our goal is to increase the value of our operator in the IT sector. That’s why we also have a meet both our own needs and those of the sector as a whole. Sustainable digital life in our own work with respect for the environment Digia wants to provide a safe and healthy working environ ment in which everyone is valued as themselves. Continually monitoring and supporting personnel wellbeing plays a key role at Digia. When it comes to wellbeing, we want Digia to be among the best in the sector. We also aim to ensure diversity and inclusivity at all levels of our organisation. Digia is a member of the Inklusiiv community, whose mission is to promote increased diversity and inclusivity in the workplace. Digia shoulders its responsibility for the environment in all its choices. We strive to take the environmental impacts of our business into account, in both our own operations and procurement processes. The largest environmental impacts of Digia’s operations are related to energy consumption and Compliance with Digia’s Code of Conduct is an essential factor in the success of our business. All of the company’s employees, including management and the Board of Direc tors, are responsible for adhering to these principles in their work. This Code of Conduct also applies to Digia’s subcon tractors. Our goal is for our entire organisation to internalise and comply with these ethical practices. RESPONSIBLE DIGIA 20 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 21 Corporate Governance 22 Corporate Governance Statement 29 Digia’s Board of Directors 31 Digia’s Management Team 34 Remuneration Report Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Digia Plc’s Corporate Governance Statement 2021 General This Statement has been issued separately from the Report of the Board of Directors. system is based on the Companies Act, the Securities Markets Act, general corporate governance recommen dations, the company’s Articles of Association and its The company (and this Statement) adheres to the Gov ernance Code for Listed Finnish Companies issued by the Finnish Securities Market Association, which entered into force on 1 January 2020. The Corporate Governance Code can be read on the Finnish Securities Market Association’s website . Digia’s corporate governance principles are integrity, accountability, fairness, and transparency. This means that: • The company complies with applicable legislation and regulations. • When organising, planning, managing, and running its business operations, the company abides by the appli cable professional requirements that have been gener ally approved by its Board members, who demonstrate due care and responsibility in performing their duties. • The company is prudent in the management of its capital and assets. • The company’s policy is to keep all parties in the market actively, openly, and equitably informed of its business es and operations. • The company’s management, administration and personnel are subject to the appropriate internal, and Shareholders’ Meeting on company matters. The Annual General Meeting (AGM) must be held once a year before the end of June on a date set by the Board of Directors. Each company share entitles the holder to one vote at a Shareholders’ Meeting. Board of Directors deems it necessary or if requested in writing by a company auditor or shareholders holding a minimum of 10 percent of the company’s shares, for the The Finnish Companies Act and Digia’s Articles of Associ vened. In order to participate in a Shareholders’ Meeting, a shareholder must be entered in the Digia shareholder register maintained by Euroclear Finland Oy on the record date for the Shareholders’ Meeting, and must also have registered for the meeting at the latest by the date given in the invitation. The Chair of the Board, Members of the Board, auditor, should be present at Shareholders’ Meetings. The minutes of Shareholders’ Meetings will be available for shareholders to read on the company’s Internet site at meeting/ within two weeks of the meeting. The decisions made at Shareholders’ Meetings will be published in a Shareholders have the right to add a relevant item (as Shareholders’ Meeting, as long as the request is made in writing to the Board of Directors in time for the item to be added to the notice of meeting. Digia will announce the date by which shareholders must present a requested AGM agenda item to the company’s Board of Directors. This deadline will be published on Digia’s website. The date will be announced at the latest by the end of the The 2021 Annual General Meeting was held on 17 March 2021. More information about the decisions made at this meeting are available at digia.com/en/investors/ . 22 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Board of Directors Activities and tasks The Board of Directors is elected by the Shareholders’ Meeting, and is in charge of Digia’s administration and the appropriate organisation of the company’s oper ations. Under the Articles of Association, the Board of Directors must consist of a minimum of four and a will present the Shareholders’ Meeting with its proposal for the composition of the new Board of Directors to be appointed. The majority of Board members must be independent of the company and a minimum of two of those members must also be independent of the com pany’s major shareholders. Neither the CEO nor other company employees working under the CEO’s direction may be elected members of the Board. Annual General Meeting following their election. A Board number of successive terms. The Board of Directors elects its Chair and Vice Chair from amongst its members. Board Diversity Policy policy. It states that the requirements of the company’s ed in the Board’s composition. Both genders should be represented on the Board. It should be ensured that the the following areas in particular: • • • • • • • board work. The composition of the 2021 Board of Directors was successfully in line with Digia’s diversity policy. The Board of Directors’ rules of procedure The Board has prepared and approved written rules of procedure for its work. In addition to the Board duties prescribed by the Companies Act and other rules and regulations, Digia’s Board of Directors is responsible for the items in its rules of procedure, observing the following general guidelines: • good governance requires that, instead of needlessly interfering in routine operations, the Board of Directors should concentrate on furthering the company’s short and long term strategies • the Board’s general task is to steer the company’s busi of various stakeholder groups • Board members are required to act on the basis of manner that serves the company’s interests. The Board of Directors’ rules of procedure cover the following tasks: • preliminary meeting schedule and framework agenda for each meeting • provide guidelines for the Board’s annual • provide guidelines for distributing notices of meetings and advance information to the Board, and procedures for keeping and approving minutes • and Secretary (the latter position is held by the General Counsel or, if absent, the CEO) • special committees or working groups. The Board evaluates its activities and working methods when necessary. The Board convened a total of 10 times during the 2021 CORPORATE GOVERNANCE STATEMENT 23 Audit ISO 9001 quality management system and other written guidelines Risk Management Financial and internal control General overview of governance Responsibility of Digia’s operations is held by the Shareholder’s the Group Management Team. SHAREHOLDER’S MEETING BOARD OF DIRECTORS Audit Committee Compensation Committee Nomination Committee Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Independence of the members of the Board of Directors The Board of Directors assesses the independence of its members on an annual basis. Of the current members Hokkanen, Seppo Ruotsalainen and Outi Taivainen are independent of the company and its major shareholders. Robert Ingman is independent of the company. Robert Ingman is not independent of the company’s major shareholders due to his holdings in related parties. Committees of the Board of Directors three (3) committees: the Audit Committee, the Compen sation Committee, and the Nomination Committee. and collegial responsibility over their actions. Audit Committee The purpose of the Audit Committee is to assist the Board any other information provided by the company com ply with legislation and are balanced, transparent and clear. The Audit Committee also supervises and assesses internal control and auditing, the effectiveness of risk management systems, and how well agreements and other legal actions between the company and its related parties meet market conditions and the requirements for ordinary operations. The Audit Committee supervises and assesses the independence of the company’s auditor services. The Audit Committee also supervises the com pany’s audit and prepares a proposal for the choice of consisted of Seppo Ruotsalainen (Chair), Santtu Elsinen Compensation Committee Digia’s Compensation Committee is tasked with prepar ing and monitoring remuneration policies for the compa ny’s governing bodies and management remuneration schemes in order to ensure that the company’s targets tion is objective, and that remuneration schemes are transparent and systematic. In 2021, the Compensation Ingman and Outi Taivainen. The committee convened Nomination Committee The Nomination Committee prepares proposals for the Annual General Meeting on the number of members of the Board of Directors, the members of the Board of Directors, the remuneration for the Chair, Vice Chair and members of the Board of Directors, and the remuner ation for the Chair and members of the committees of Nomination Committee consisted of Seppo Ruotsalainen Nomination Committee convened seven times during the CEO the Board of Directors. The CEO is in charge of Digia’s business operations and administration in accordance with the instructions and regulations issued by the Board of the company’s activities, only if so authorised by the Board of Directors. The CEO chairs the Group Manage ment Team’s meetings. The CEO is not a member of the Board of Directors, but attends Board meetings. The Board of Directors approves the CEO’s service con and conditions of the CEO’s employment. Timo Levoranta Group Management Team CEO in the routine management of the company. Under the authorisation of the Board of Directors, the Compen sation Committee approves the appointments of the members of the Group Management Team and decides on the terms and conditions of their service contracts on other appointments. The CEO chairs meetings of Digia’s Management Team. The Management Team consisted of nine members on 31 December 2021. The Team meets once every two weeks to assist the CEO in the preparation and implementation of strategy, operative management, and preparing items for consideration by the Board of Directors. The Team associated targets, and monitors their progress. It also tions. The CEO is responsible for the Management Team’s decisions. Members of the Management Team are tasked with implementing these decisions within their own areas of responsibility. CORPORATE GOVERNANCE STATEMENT 24 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Born Holdings on 31 Dec 2021 Member since 1965 2016 Santtu Elsinen 1972 0 1959 2012 1961 2010 1954 Board professional 2012 Outi Taivainen Includes related parties and related party holdings The attendance of Board and Committee members at meetings in 2021 Audit Committee 10/10 4/4 7/7 Santtu Elsinen 10/10 4/4 10/10 7/7 Robert Ingman 10/10 7/7 7/7 Seppo Ruotsalainen 10/10 4/4 7/7 Outi Taivainen 10/10 7/7 Management Team members on 31 Dec 2021 Born Holdings on 31 Dec 2020 Member since Timo Levoranta 1965 2016 1969 LLM Juhana Juppo 1971 Business Services 2016 Mika Kervinen General Counsel 2016 Jukka Kotro 1961 Business Information Technology 2017 Tuomo Niemi 1962 2017 1974 197 2021 Kristiina Simola 1965 2017 Janne Tuominen 2021 Includes related parties and related party holdings CORPORATE GOVERNANCE STATEMENT 25 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Internal control and risk reporting Control functions and control environment The company has a controller function that reports to the CFO and is tasked with ensuring the accuracy of month performance of the company and its divisions to Man agement, the Board of Directors, and the Board’s Audit Committee. The company uses a reporting system that compiles ments. There are also written directives for completing monitors compliance with these instructions. The compa ny also has the separate reporting facilities required for monitoring business operations and asset management. consolidated interim reports and consolidated Financial tralised control over the Group’s funding and asset man Internal control Internal control helps to ensure the reliability of the Digia matters. The Group’s business is divided into areas of ing to the CEO. Reporting and supervision are based on annual budgets that are reviewed monthly, on monthly income reporting, and on updates of the latest forecasts. bility of projects. development matters, strategic and annual planning, business and income monitoring, investments, potential acquisition targets and internal organisation matters related to their areas of responsibility. Each area of responsibility also has its own management team. Digia’s operational management and supervision adhere to the corporate governance system described above. Digia has not yet established a separate function respon sible for internal auditing. The need for an internal audit function is regularly assessed. With the company’s ment functions are able to handle internal auditing tasks. Risk management and major risks The purpose of the company’s risk management process is to identify and manage risks in a way that enables the management is a continuous process by which the major in charge of risk management are appointed, and risks are prioritised according to an assessment scale that implementing risk management measures, and then monitoring their impact. The main operational risks monitored under Digia’s risk management are related to customers, personnel, deliv eries, IT, data security and protection, immaterial rights, and goodwill. The company manages customer risks by actively devel oping its customer portfolio structure and avoiding any potential risk positions. quarterly performance review and development dis cussion process in which key personnel participate. To enhance personnel commitment, the company strives to nications via regular personnel events and by increasing tematically developing our personnel’s competence and recruitment processes as well as through subcontractor management. projects and continuous services are conducted with a view to enhancing project and service risk management and securing the success of customer deliveries. Digia es described in this system are utilised in all operations Audits are carried out to manage data security and pro tection risks, and the company also continually develops working models, practices, and processes that promote data security and protection. Security training is organ ised for all personnel. In 2020, we renewed our internal data security and data protection training package. This training must be retaken every year, not only by Digia personnel but also any subcontractors working on Digia’s premises. The Management Team is tasked with systematically managing risks associated with business integration, shared operating models and best practices, as well as their integrated development. Typical risks in the software business include the appropriate protection and appropriate supervision and analysis. CORPORATE GOVERNANCE STATEMENT 26 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Group actively monitors goodwill and its associated impairment tests as a part of prudent and proactive risk Digia has assessed the corporate liability risks associated with its own operations and business relations, and has adequate and appropriate processes in place to predict and take precautions against these risks. In addition to operational risks, the company is subject company. This function is responsible for the Group’s ment of interest rate and currency risks. The Group is business. The Group’s risk management seeks to mini risks are interest rate risk, credit risk, and funding risk. The general principles of risk management are approved by together with the business segments is responsible for their practical implementation. Insider issues Digia complies with the current Guidelines for Insiders issued by Nasdaq Helsinki. Digia also adheres to its own insider guidelines, which supplement Nasdaq Helsinki’s guidelines. Digia’s General Counsel is responsible for insider issues. Insiders Digia’s insiders are divided into: 1. permanent insiders, which include the CEO and members of Digia’s Board of Directors and Management Team due to their position or tasks insider registers. Management’s business transactions Members of Digia’s Management and those in their close circle must report all business transactions that involve EUR 5,000 to both Digia and the Financial Supervisory Authority. The managerial positions covered by this obli gation are: the CEO, members of the Management Team, and members of Digia’s Board of Directors. business transactions made by members of Digia’s Man agement and those in their close circle. These releases will be issued within three (3) days of the transaction. Digia also keeps a record of this information on the com pany’s website. Closed window Anyone working in a managerial position at Digia, or who in the company’s securities during a period of 30 days before the publication of one of the company’s business securities whilst the project is ongoing. Reporting misconduct suspected cases of bribery and corruption, market abuse, and violation of Digia’s insider guidelines. This channel seeks to promote compliance with good governance in the company’s routine activities, and to prevent and detect misconduct. It can be used to report market abuse and the violation of operating principles, regulations and Anyone can make an anonymous report using the form on either Digia’s intranet or its public website. All reports are directed to Digia’s legal unit and the chair of the Audit Committee of the Board of Directors. All reports will be informant and suspect. Related-party transactions According to the Corporate Governance Code, a compa ny must evaluate and monitor business transactions with of interest are duly taken into consideration in the com Board members, the CEO, and Management Team mem bers with instructions concerning related parties. In order any business. The business function and the legal counsel actions form part of the company’s ordinary business and whether they are subject to standard commercial terms and conditions. The Audit Committee of the Board of Directors monitors and supervises the assessment of company’s ordinary business or not be subject to normal CORPORATE GOVERNANCE STATEMENT 27 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements market conditions, then this business transaction must be decided upon by the company’s Board of Directors. detail in the consolidated Financial Statements. The com market conditions and do not deviate from the compa ny’s ordinary business. Auditor and auditor’s fees Central Chamber of Commerce. The auditor is elected until further notice. The Annual General Meeting elects chief auditor since 2015. 2021 96 39 Other statutory duties 2 2 Other services 17 Total 157 CORPORATE GOVERNANCE STATEMENT 28 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Digia’s Board of Directors Robert Ingman Chair of the Board of Directors b. 1961, MSc. (Tech.), MSc. (Econ.) Digia Board Member since 2010, Vice Nomination Committee and Compensation Committee. A Member of the Directors’ Institute of Finland. Key work experience CEO, Ingman Group, 2000– CEO, Ingman Foods Ltd, 1997–2000 Chair of the Board of Directors Ingman Group Ltd, 2009– Ingman Development Ltd, 2013– Ingman Finance Ltd, 2009– Halti Ltd, 2012– Member of the Board Ingman Baltic Sea Finance Ltd, 2015– Independent of the company. Seppo Ruotsalainen Vice Chair of the Board b. 1954, Lic.Sc. (Tech.), MSc. (Tech.) Digia Board member since 2012. Vice Chair of the Board, and Chair of the Board’s Audit Committee and Nomination Committee. A member of the Directors’ Institute of Finland and the Finnish Business Angels Network, and a founder member of the Startup Foundation. Key work experience Several management positions, Hewlett Chair of the Board of Directors Softera Ltd, 2015–2020 Viabile Ltd, 2003– AniLinker Ltd, 2003–2007 Member of the Board Biisafe Ltd, 2014–2016 Napakka Ltd, 1999–2013 AtBusiness Communications, 2003–2006 3StepIT Group, 2003–2006 Independent of the company and its major shareholders. Päivi Hokkanen Member of the Board b. 1959, DSc (Econ.) Digia Board member since 2012. Chair of the Board’s Compensation Committee. A Member of the Directors’ Institute of Finland. Key work experience CEO, ITprofs Ltd, 2017– Development Director, SoteDigi Ltd, Several positions, Cap Gemini Ltd, Several positions, Kansallisrahoitus Ltd, Chair of the Board of Directors Wointi Ltd, 2021 Member of the Board Wointi Ltd, 2021– ICT Leaders Finland, 2016– Independent of the company and its major shareholders. DIGIA’S BOARD OF DIRECTORS 29 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Santtu Elsinen Member of the Board the Board’s Audit Committee. A Member of the Directors’ Institute of Finland. Key work experience CEO, Winterfell Capital Ltd, 2014– CEO, Quartal Ltd, 2011– Director, Business Development, Talentum Director, Business Development, Trainers’ Director, Quartal Ltd, 1997–2005 Chair of the Board of Directors Finnish Authentication Cooperative, 2021– Quartal Ltd, 1997– Member of the Board Alma Mediapartners Ltd, 2017– Arena Interactive Ltd, 2017–2020 Media Industry Research Foundation of Finland, 2016– Fondia Tools Ltd, 2011–2012 Other positions of trust Finnish Media Federation, Chair of the technology working group, 2019– Independent of the company and its major shareholders. Outi Taivainen Member of the Board the Board’s Compensation Committee. Key work experience HR Director, Aava Terveyspalvelut Ltd, 2019– Area HR Director, Central and North Europe, Chair of the Board of Directors Member of the Board Helsinki Chamber of Commerce, 2009–2011 Other positions of trust Helsinki Chamber of Commerce, HR Committee member, 2012– Independent of the company and its major shareholders. Martti Ala-Härkönen Member of the Board b. 1965, DSc (Econ.), Lic.Sc. (Tech.) Digia Board member since 2016. Member of the Board’s Audit Committee and Nomination Committee. A Member of the Directors’ Institute of Finland. Key work experience Corporation, 2016– Member of the Board Member of the Supervisory Board 2020–2021 Independent of the company and its major shareholders. DIGIA’S BOARD OF DIRECTORS 30 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Digia’s Management Team 31.12.2021 Timo Levoranta President & CEO b. 1965, MSc. (Tech.), MSc. (Econ.) since 1 May 2016. Key work experience CEO, TDC Ltd Finland, 2011–2015 Various positions, Consumer Mobile Communication Division, Telecom Finland Ltd, 1991–1995 Member of the Board The Finnish Olympic Committee Marketing Ltd, 2021– Technology Industries of Finland, Deputy Member, 2020– Kristiina Simola CFO b. 1965, MSc. (Econ.) Digia Management Team member since 14 August 2017. Key work experience Senior Manager, Finance Transformation, Deloitte Finland, 2010–2012 Mika Kervinen General Counsel Digia Management Team member since 1 May 2016. Key work experience Senior Legal Counsel, Fondia Ltd, 2015–2016 Director, Business Support, TDC Finland Ltd, 2012–2014 Nokia Networks Ltd, 2004–2012 DIGIA’S MANAGEMENT TEAM, 31.12.2021 31 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Pia Huhdanmäki Senior Vice President, HR, Culture & Sustainability b. 1969, LLM Key work experience HR Director/CHRO, Sanoma Media Finland Ltd, 2012–2016 Director – HR, legal and communications, Sanoma News and Sanoma Entertainment Ltd, 2010–2011 Director – HR, legal and communications, Sanoma Entertainment Ltd, 2007–2010 1996–2006 Juhana Juppo CTO and Senior Vice President, Business Services b. 1971, MSc. (Computer Science) Digia Management Team member since 19 September 2016. Key work experience 2013–2016 Service Director, CGI Suomi Ltd, 2011–2013 CTO, Capgemini Finland Ltd, 2005–2011 Jukka Kotro Senior Vice President, Business Platforms Technology Key work experience Management Team member, various responsibilities, CGI Sales Director, Central Government, Logica Suomi Ltd, 2006–2010 DIGIA’S MANAGEMENT TEAM, 31.12.2021 32 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Tuomo Niemi Senior Vice President, Financial Platforms b. 1962, MSc. (Tech.), MSc. (Econ.) Digia Management Team member since 1 June 2017. Key work experience Managing Director, Accenture Ltd, 2003–2017 Leading Consultant, Accenture Ltd, 1996–2003 Systems, 1992–1996 Sami Paihonen Senior Vice President, Intelligent Solutions b. 1974, MSc. (Tech.) Key work experience 2015–2017 Janne Tuominen Senior Vice President, Managed Digital Core Digia Management Team member since 29 March 2021. Key work experience 2013–2014 Client Director, Logica Suomi Ltd, 2010–2013 Member of the Board DIGIA’S MANAGEMENT TEAM, 31.12.2021 33 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Digia Plc Remuneration Report 2021 Letter to shareholders from the chair of the compensation committee Dear Digia Plc shareholders, The purpose of remunerations paid by the company is development of shareholder value. I am pleased to pres the company's Compensation Committee and the Board of Directors. The Remuneration Report describes how the company’s performance as well as the remuneration paid to the Board of Directors and the CEO in 2021. General observations about Digia’s performance Compensation Committee Due to the prolonged coronavirus pandemic, 2021 was that, we forged ahead with implementing our strategy and overhauling our selected priorities for 2020–2022. Digia places particular emphasis on the potential of data utilisation in its customers' services and business processes. We believe that value is created in digital ecosystems, making intelligent and responsible use of data. As digitalisation progresses, the technology sector faces now, and also in the future, challenges caused by strong demand and competition for talent, which are 34 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements the industry. However, I am pleased with the company’s overall performance during the review year. In addition to its primary task, the Compensation Committee monitors the development of matters related to the company’s working culture and employees in particular. lion. The EBITA margin remained almost unchanged at 11.4 per cent. It has been especially positive and encouraging fulness of work) have remained at quite a good level. All From a personnel perspective, Digia aims to be a respon professionals that combines solid professionalism, a Strengthening our sense of community and work culture as well as the continuous development of competence capital were also major HR priorities in 2021. During the review period, the company has developed its everyday working practices to suit the current circumstances, whole in which hybrid everyday working practices, adapt ing the work of the future during the period now ended was our investment in our smart technological growth platform, Digia Business Engine. We have invested in competence development in many different ways. These It should be noted that in early 2021, Digia also published its updated corporate responsibility priorities and objec to create a more sustainable society, everyday life and responsibility is at the heart of successful business – and in the future it will also be more tightly linked to remuner ation as well. On the remuneration of Digia’s management and The remuneration of Digia’s Board of Directors and senior Governing Bodies, which has been published on the com pany’s website. Together with the Remuneration Report, this policy aims to provide investors with a clear picture of the overall remuneration of Digia’s governing bodies. The main idea behind the remuneration policy is that overall remuneration is based on the company’s perfor mance, as evident in the weighting and indicators of the Digia’s previous Remuneration Report – for 2020 – was presented at the spring 2021 Annual General Meeting. The advisory vote on the Remuneration Report at the meeting and 640,411 votes against. On the basis of the votes, the Annual General Meeting decided to adopt the present ed 2020 Remuneration Report for Governing Bodies. In response to feedback from shareholders, we have sought to take this feedback into consideration in revising the 2021 Remuneration Report. No major changes occurred in the remuneration of the company’s Board of Directors and senior manage ment in 2021. Salary and incentive structures remained to the remuneration of senior management. A clear difference compared with the previous year is that no in 2021 as well. I am proud of how Digia has grown and developed as term development of the share price and shareholder value. We are well poised to keep building the company and remuneration that incentivises and elicits commit accordance with our strategy. Päivi Hokkanen Chair of the Compensation Committee REMUNERATION REPORT 35 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Introduction Summary: Digia's remuneration in the This Remuneration Report has been drafted in com amending the Shareholder Rights Directive. The require in Finland mainly in the Limited Liability Companies Act (624/2006, as amended), Securities Markets Act (746/2012, as amended), Decree of the Ministry of Finance Digia's Board of Directors has approved the Remunera tion Report on the proposal of the Compensation Com mittee and the report will be presented to the Annual General Meeting in spring 2022. The remuneration of Digia’s governing bodies is based ies, on which shareholders made an advisory decision at the Annual General Meeting on 16 March 2020. The Annual General Meeting unless the Board of Directors decides to present amendments to the Remuneration ble on our site: digia.com/en/investors/governance/ . In general, the purpose of remunerations paid by the company is to support its business strategy and promote favourable development of shareholder value. Another aim is to support the recruitment and commitment of the best possible people to the company’s governing bodies. The structure of the remuneration of the compa need for deviations from the policy or the clawback of remuneration. and meeting fees. The amounts of the fees paid depend ed on the role in question – Chair, Vice Chair and mem ber of the Board and Chair and member of a committee. The fees paid are disclosed below in the section “Board The total remuneration paid to the CEO in 2021 consisted scheme is on the company’s performance on the annual level. Despite this, the goal is to set the indicators to also bonus scheme for 2021 had the following indicators: net any subsequent share rewards will be paid in spring 2023. The incentive schemes and the total remuneration paid to the CEO are described in detail below in the sections REMUNERATION REPORT 36 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 2017 2018 2019 2020 2021 Dividends paid per share (according to the year in which the dividend was set) Market capitalisation - 2017 2018 2019 2020 2021 Salaries and remunerations (EUR million) Average personnel during report year (FTE) 954 Average salary costs (total salary costs divided by personnel average) 2017 2018 2019 2020 2021 Annual remuneration of the Chair of the Board Development of the remuneration of the Chair of the Board of Directors Annual remuneration of the other members of the Board of Directors Development of the remuneration of the other members of the Board of Number of members of the Board of Directors in the calendar year (including Chair and Vice Chair) 5 6 6 6 6 2017 2018 2019 2020 2021 payment and partly on previous year) 0 0 0 performance and remuneration 2017–2021 The following section describes the development of the remuneration paid to members of the Board of Directors and the CEO as from 2017, compared to the develop ment of the average remuneration of employees and the period. • Regarding the trend in the average salary costs of all personnel, it must be kept in mind that new recruit ments, acquired businesses and turnover affect the development of the average salary. The trend in aver age personnel salaries at the company outperforms salary increases set in accordance with collective • incentive scheme are primarily the company’s senior 2017 and spring 2020. The shares paid to the CEO are and CEO" in the table. REMUNERATION REPORT 37 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements * - ings Member of the Board Member of the Nomination Committee Member of the Audit Committee Santtu Elsinen Member of the Board Member of the Audit Committee Member of the Board Chair of the Compensation Committee Robert Ingman Chair of the Board of Directors Member of the Nomination Committee Member of the Compensation Committee Seppo Ruotsalainen Vice Chair of the Board Chair of the Nomination Committee Chair of the Audit Committee Outi Taivainen Member of the Board Member of the Compensation Committee Total 16 14 12 10 8 6 4 2 0 2017 2018 2019 2020 2021 Trend in operating prot (EBIT) EUR million 1.8 6.5 9.6 14.1 14.7 Operating profit (EBIT) +4.3% +46.2% +48.6% +252% 8 7 6 5 4 3 2 1 0 2017 2018 2019 2020 2021 Trend in share price and dividends EUR -6.4% +88.5% 2.35 2.85 3.99 7.52 7.04 +40% +21.3% Share price Dividens paid per share 0.16 0.14 0.12 0.10 0.08 0.06 0.04 0.02 0.00 Board remunerations 2021 Remuneration of Digia’s Board of Directors 1 Jan–31 Dec 2021 The 2021 Annual General Meeting decided on the pay ment of monthly fees of EUR 3,000 to Board members, EUR 4,000 to the Vice Chair and EUR 5,500 to the Chair for their at the end of the 2022 Annual General Meeting. In addi tion, fees of EUR 1,000 to the Chair and EUR 500 to other members are paid per each Board and Board Committee meeting. The amounts of Board fees did not change from the amounts decided at the 2020 Annual General Meet ing. In addition, Board members will be reimbursed for The following emoluments were paid to members of Digia’s Board of Directors for Board and Committee work 180 160 140 120 100 80 60 40 20 0 2017 2018 2019 2020 2021 Trend in net sales EUR million 112.1 94.5 131.8 139 155.9 Net sales +12.1% +5.5% +17.6% +18.6% REMUNERATION REPORT 38 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements CEO’s remuneration 2021 Application of performance criteria and year based. Thus, in the total remuneration of the CEO, the growth. The total remuneration paid to the CEO in 2021 consisted second instalment of the 2020 target bonuses was paid in 2021 (payment in February of the following year, that is, 2021) as well as the target bonus for January–June 2021 (payment in August of the year in question, that is, 2021). scheme, which is assessed on the basis of successful performance in the full year 2021, is paid in February 2022. The bonus component paid for January–June 2021 is deducted from the realised bonus for the full year. compensation of the CEO was adjusted in 2021, such that the Board of Directors decided to allocate 10,000 addi tional shares to the CEO. During the reward period, the CEO can, after the allocation of additional shares, earn a shares and cash in spring 2023. No share rewards were payable in 2021. scheme of the CEO were based on the company’s net personnel satisfaction targets. The same indicators are used for Digia's other management and the employees have been set for the full year 2021, but in such a way that the interim estimate and payment took place after objectives set for January–June 2021. The bonus paid deducted from the bonus assessed for the full calendar year 2021 that will be paid in February 2022. The targets for customer and personnel satisfaction are annual level (January–June) and the realisation of the personnel sat (July–December). All bonus indicators are assessed bonus assessed at the end of the year would not have acquisitions is appropriately taken into consideration regardless of the implementation date of any acquisition. At the same time, the model accounts for a functional In 2021, the CEO was paid a total salary (including fringe es of EUR 126,212.00. The target bonus consisted of the following realised targets shown below. In addition, the CEO had the company’s ordinary personnel and fringe January June December August January June December February August H1/2020 intermediate target payment The share paid for H1/2020 is deducted H1/2021 intermediate target payment Bonus paid: EUR 54,557.60 Bonus paid: EUR 71,654.40 01–06/2020 intermediate targets 01–06/2021 intermediate targets REMUNERATION REPORT 39 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Salaries and remunerations paid to the CEO in the The CEO was paid the following as salary and other ben (2020–2022 incentive scheme) No payment in 2021 (payable in spring 2023) Total Share-based incentive scheme 2020–2022 scheme. The scheme is designed to align the goals of the company's shareholders and management in order to tives. This scheme covers the calendar years 2020–2022 and offers participants the chance to earn company shares if the targets set by the Board of Directors for the group of the scheme consists of the CEO and the compa company's net sales and total shareholder return (TSR). The earnings period for the net sales and TSR indicators is three years (2020–2022), and the targets for both indi period. If the terms are met, the bonuses for both indica tors based on the new scheme will be paid at the end of the reward period in spring 2023. CEO's remuneration structure Paid 2021 Fixed salary 70.5% Target bonus 29.5% Share award 0.0% 900 800 700 600 500 400 300 200 100 0 2017 2018 2019 2020 2021 237 366 431 826 428 CEO's salaries and remunerations 2017-2021 EUR 1,000 9.6 Fixed total salary Short-term incentives Bonus from the long-term incentive scheme REMUNERATION REPORT 40 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 41 Report by the Board of Directors Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 42 Company, markets and business environment service areas. In uncertain environment, the large share of the company’s net sales accounted for by continuous services was a strength, bringing stability to our business. The company acquired the entire share capital of the Swedish company Climber International AB on 7 January 2021. The acquisition included Climber’s operations in Sweden, Finland, Denmark and the Netherlands. Climb er’s business is largely based on the use of advanced Qlik technologies and an operating model that strongly focuses on consulting. After the acquisition, Digia now integration and business analytics. In addition, we acquired the entire share capital of per cent holding in Solasys Oy. Solasys has long served as a partner in the delivery and development of the Digia ports our strategy of combining analytics solutions with development of our new business platform, cloud busi ness and the working environment of the future. Company Digia is a growing software and service company that business operations in our increasingly networked world. Digia is your partner for comprehensive digitalisation: we provide all the layers of digitalisation from business sys tems to integrations, digital services and 24/7 monitoring and service management. 2021 was a year of business renewal for Digia. Our major development projects were our own business platform (Digia Business Engine), in which we are building a smart growth platform to support future growth and productiv ity, and our future way of working (Digia Future of Work). Both of these projects build a modern organisation and way of working, a symbiosis of humans and software – a community where people do meaningful work, while AI and automation handle routine tasks. During the review year, we continued implementing our improvement while bolstering Digia’s future competitive ness by renewing our operations. In the strategy period, we emphasise the potential of data utilisation in services and business processes. As a company, we will advance for our customers in the development of their business. Digia seeks growth both organically and through acquisi seen in the business systems and customised solutions Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 43 2021 2020 2019 Extent of business Net sales 1 213 Average number of personnel price allocation amortisation (EBITA) 2 2021 2020 2019 Dividends (paid) undiluted 3 diluted 3 4 EUR Dividend payout ratio Effective dividend yield 3 Lowest share price Highest share price Average share price Market capitalisation ed weighted average number of shares during the period was 26,926,305. The number of outstanding shares at the the company held 97,369 of its own shares. As alternative performance measures, the Group reports return on investment, net gearing and equity ratio, which situation and development of business operations, as it considers this information necessary for investors. and reconciliations in . 1 2 includes the amortisation on the transaction prices allocated to customer 3 4 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 44 Net sales 155.9 (139.0) million, up 12.1 per cent on the previous year. solutions and customised solutions in particular. Growth was accelerated by acquisitions. Demand for Digia's own key products, Digia Enterprise and Digia Financial Sys The service and maintenance business accounted for 67.1 per cent of net sales. The product business accounted for 13.4 (12.9) per cent of the company’s net sales. per cent. through the development of operating methods and has been weakened by strategic development projects have invested heavily in our smart technological busi ness platform (Digia Business Engine). The Digia Busi million during the review period. Our recruitment drive and efforts to build up the capabilities of cloud platform solutions have remained strong. expenditure On the balance sheet date at the end of 2021, Digia’s balance sheet total stood at EUR 143.0 (121.1) million and balance sheet is primarily due to the acquisition of the Climber Group. Net gearing was 15.7 (17.3) per cent. in 2020 included a large receivable paid from an individ Total investments in tangible assets amounted to EUR investment (ROI) was 16.3 (16.5) per cent, and return on Report on the extent of research and development 2019: 6.3), representing 3.9 per cent of net sales (2020: have been recognised in the result. The main focus of tion, the Digia Iiris monitoring solution for the continuous service needs of customers was developed. More information about Digia’s services and solutions can be found on the company’s website: digia.com/en/ services. Personnel, management and administration was 1,334 (1,261), an increase of 72 employees, or 5.7 per cent, on the 2020 average. Digia's Management Team started their duties. Skilled personnel who are committed to the objectives of our customers are the cornerstone of all our operations. community of top professionals that combines strong We believe that the seamless interplay between people and smart software will deepen in the future. Remote and These trends are also evident in the development of Digia’s work culture. demic with the Future of Work project – one of its guiding in working hours gave Digia employees greater freedom in scheduling their working hours, taking their work and life situation into consideration. We also assessed our package that included an electric table, and also refur bished our premises to better suit future needs. Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 45 development. We offered a wide range of training to ing tailored for Digia. Cloud competence development remained a key focus area with the provision of training We implemented training programmes to prepare students to work in the sector, such as in association with Academic Work, and stepped up our cooperation with educational institutions by signing a partnership agreement with Laurea University of Applied Sciences, for instance. Digia’s prestigious Career Compass pro gramme, which is aimed at students, recent graduates and career changers, started up again at the end of In late 2021, we once again conducted a Siqni survey to been at a good level had both risen in spite of the pro employees. We continued to develop our corporate responsibility in cooperation with our personnel. As part of this effort, Digia employees came up with actions to further reduce our carbon footprint in the future, for instance. We used Digia employees’ ideas in our climate roadmap work, that is, our action plan to minimise climate impacts. Carbon neutrality is part of Digia’s broader corporate responsi bility. With respect to social responsibility, we continued to organise diversity training. In cooperation with Digia tion plan and its actions. Diversity and getting everyone involved are key aspects of Digia’s corporate responsibil ity: our development efforts seek to make Digia an even more inclusive workplace – a place where everyone can be themselves. For more information on Digia's corporate responsibility priorities, objectives and actions, see the section. Hokkanen, Robert Ingman, Seppo Ruotsalainen and Outi Taivainen as members of the Board. At its organisational meeting after the AGM, the Board of Directors elected Robert Ingman as Chair and Seppo Ruotsalainen as Vice Chair of the Board. On 31 December 2021, Digia’s Management Team consisted of: • • Sustainability • Services • Mika Kervinen, General Counsel • • • Solutions • • Core on the company’s website: digia.com/en/investors/ . Accountant, has been chief auditor since the 2015 Annual General Meeting. Digia employees by location: 31 Dec 2021 31 Dec 2020 employees Helsinki 726 722 4 Tampere 256 172 170 2 Turku 67 51 16 Rauma 24 24 0 Lahti 15 14 1 Vaasa 10 10 0 Oulu 7 6 1 Stockholm 50 5 45 14 0 14 Hengelo 6 0 6 Total 1,339 1,258 81 Strategy implementation and business development digitalisation and continuous change in digital business. Digia enables its customers to take their digital busi responsible data utilisation in both services and business processes comprises an important cornerstone of strat increasingly important. The core of Digia’s service offering is a smart and functional package of digital services, business systems, integrations and analytics. Digia handles the lifecycle of solutions from development to maintenance – and also invests in harnessing the oppor tunities of data and analytics in its own operations. In the strategy period 2020–2022, Digia seeks annual improvement is an EBITA margin of 10 per cent by the end of the strategy period. Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 46 The focus areas of Digia's strategy to increase customer 1) Smart data utilisation all Digia’s service areas from business systems to inte grations and digital services. We believe that data is a key element in all of our customers’ operations. We will deepen our customer relationships and further strengthen the share accounted for by the service business. We will develop our operational models and solutions to ernisation project in the strategy period will be the renewal of our own business platform and management system. Cloud is the development and operating platform for future services. We will continue to strengthen our security and key public cloud platforms. Skilled employees are the most important success factor for Digia. We are constantly developing Digia into a more desirable workplace by reinforcing our culture, at the heart of which is the continuous learning of every employee. Strategy implementation in 2021 in 2021 was the renewal of our own business platform and management system, the Digia Business Engine. The pro ject will continue in 2022, the last year of the strategy period. The aim is to build a constantly evolving smart technology platform and management system that supports Digia’s On average, 16 people worked on the project during the Our Future of Work project focused on the development of new working and operating methods that combine remote with their work and management in a hybrid environment. Among other things, this includes the development of man agement, tools and work ergonomics at home. In addition, We bolstered the availability and scalability of competence network and signing partnership agreements with interna 212 persons in 2021. At the beginning of 2021, we strengthened our data utili sation capabilities by acquiring the entire share capital of Climber International AB. After the acquisition, Digia now integration and business analytics. Our strategy prioritises agement. The acquisition of Solasys Oy in autumn 2021 also supported this aim. Group structure Digia operates in eight locations in Finland – Helsinki, Lahti, the Netherlands. Our headquarters are located in Helsinki. Finland Oy, Digia Hub Oy, Solasys Oy, Digia Sweden AB and Climber International AB, with its subsidiaries Climber Fin Climber Holding AB and its subsidiary Climber AB. holding. Group structure Climber International AB Digia Plc Digia Finland Oy Digia Sweden AB Solasys Oy Digia Hub Oy Climber Finland Oy Climber Danmark ApS Climber Holding AB Climber AB Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 47 Share capital and shares shareholders. Foreign shareholders accounted for 0.4 per and they held 3.3 per cent of all shares and votes. Ten largest shareholders on 31 December 2021 Shareholder Percentage of shares and votes Ingman Development Oy Ab Etola Oy Etola Group Oy Matti Savolainen Rausanne Oy Kohonen Jorma Shareholding by number of shares held on 31 December 2021 Number of shares Percentage of shareholders Percentage of shares and votes 1–100 101–500 Shareholding by sector on 31 December 2021 Percentage of holdings Percentage of shares and votes Companies Households Financial and insurance institutions Foreign holding of 31 December 2021. The company held about 0.4 per cent of its capital stock. shares, previously funded by Digia for use in the incentive system for key personnel and owned by EAM Digia Hold ing Oy, remained undistributed. shareholders and the distribution of their shareholdings can be found on Digia’s website: digia.com/en/investors/ shareholders. Share-based payments Share-based bonuses incentive scheme separately. In principle, the target group consists of the CEO and the company’s senior the company's shareholders and management in order objectives. years 2020–2022. It offers its participants the chance to earn company shares if the targets set by the Board of The targets are based on the company's net sales and total shareholder return (TSR). The earnings period for the net sales and TSR indicators is three years (2020–2022), and the targets for both indicators have been set for the the company’s CEO and other scheme participants are for both indicators based on the new scheme will be paid at the end of the reward period in spring 2023. Rewards under the scheme will be paid as a 50/50 combination of shares and cash. The cash component of the bonus will costs arising from the scheme. As a rule, the bonus will not be paid if a member resigns or if a member’s employment or post is terminated prior scheme. Under certain conditions, the Board has the option to decide on possible bonuses in accordance with Digia has an agreement with Evli Awards Management incentive schemes, their associated share management, and the payment of incentives to individuals in accord ance with the terms and conditions of the schemes. Management ownership According to the list of shareholders on 31 December 2021, Digia’s Board of Directors and CEO owned shares in the company as follows (includes the holdings of relat Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 48 Board of Directors Santtu Elsinen 0 Outi Taivainen representing 30.10 per cent of all shares and votes. year Technology. The company's short name is DIGIA. The low est reported share quotation in 2021 was EUR 6.30 and the the last trading day of the year. The share’s trade weight ed average price was EUR 7.51. The company's market 2021. Other major events during the 2021 for 2020, released the Board members and the CEO from liability, determined Board emoluments and auditor fees, company’s Board of Directors for a new term. approved the Board's proposal to pay a dividend of EUR 0.15 per share to all shareholders listed in the shareholder register maintained by Euroclear Finland Ltd on the rec onciliation date of 19 March 2021. The dividend payment date was 26 March 2021. The AGM granted the following authorisations to the Board Authorising the Board of Directors to decide on buying back own shares and/or accepting them as collateral The Annual General Meeting authorised the Board to decide on the acquisition and/or pledging of treasury mum total of 2,000,000 shares may be bought back and/ or pledged in one or more instalments. The proposed number is under 10 per cent of the company’s total number of shares. Only unrestricted equity may be used to buy back treasury shares. The Board will decide on how these shares are to be acquired. Treasury shares may be bought back in disproportion to shareholders’ holdings (directed acquisition). This authorisation also includes the acquisition of shares through public trading on Nasdaq Helsinki in accordance with the rules and instructions of Nasdaq Helsinki and Euroclear Finland Ltd, or through offers made to shareholders. Shares may be acquired in order to improve the company's capital structure, to fund or complete acquisitions or other business transactions, be annulled. The shares must be acquired at the market price in public trading. The minimum price of the shares to be acquired shall be the lowest quotation in public trading while the authorisation is in force and, corre tation in public trading while the authorisation is in force. The Board of Directors is otherwise authorised to decide on all terms relating to share buyback. This authorisation will supersede the authorisation granted by the AGM of September 2022. Authorising the Board of Directors to decide on a share issue and granting of special rights The AGM authorised the Board to decide on an ordinary or bonus issue of shares and the granting of special rights Companies Act) in one or more instalments, as follows: authorisation applies both to new shares and to treasury shares held by the company. The authorisation may be used to fund or complete acquisitions or other business or for other purposes decided by the Board. It is proposed that this authorisation should include the right for the Board to decide on all terms related to the share issue or special rights, including the subscription price and its payment in cash or (partly or wholly) in capital contribut ed in kind or its being written off against the subscriber's receivables, and its recognition in the company's balance sheet. This authorisation will supersede the authorisation months, that is, until 17 September 2022. More information about the AGM’s decisions is available at digia.com/en/investors/governance/ . Business combinations signed an agreement to acquire the entire share capital of Climber International AB. The terms and conditions for the completion of the transaction were met on 7 January 2021, and Climber International AB was transferred to Digia’s ownership. Climber International AB is a Swedish company that provides its customers with consulting and Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 49 The acquisition included Climber’s operations in Sweden, Finland, Denmark and the Netherlands. Climber continued as a subsidiary with its own brand. After the acquisition, Digia now employs a total of more than 300 professionals Smart and responsible data utilisation is one of the main focal points of Digia’s strategy. The acquisition of Climber has accelerated growth in Digia’s data and analytics business, primarily by providing access to markets out side Finland. Digia acquired the entire share capital of Solasys Oy on 1 ing in Solasys Oy. Solasys has long served as a partner in the delivery and development of the Digia Enterprise reporting and analytics. The acquisition supports the company’s strategy of combining analytics solutions with Events after the balance sheet date Risks and uncertainties According to the company’s estimate, there have been no great changes in Digia’s major risks in 2021. The com pany’s risks and uncertainty factors relate to increasing company’s operating environment and service areas. General economic trends and changes in customers’ have an unfavourable impact on the company’s busi term demand in Digia’s business environment as a result of the coronavirus epidemic. If demand sees a sharp fall, price levels might also decline. Although the pricing models used in the service business balance out cyclical business, products provid product licenses. Implementing the growth strategy will place demands on both the organisation and its management. The compa ny’s ability to recruit, maintain and develop the correct competence – and also to adapt the offering to meet demand at the right time – will play a vital role. In line with its strategy, Digia is also seeking growth through acquisitions. However, Digia cannot be certain of locating suitable companies for acquisition or of suc cessfully integrating them. Human rights and environ mental risks are described in the section. particular – involve both business opportunities and risks. As customer projects increase in size, the risks associated ery packages. Large customer projects typically involve poses a risk. Risks related to customer receivables are also growing. In addition, data security and protection business operations. Outlook for 2022 Markets and business environment favourable development in demand during 2022, even though the coronavirus pandemic will continue to gen erate uncertainty in our operating environment in the short term. Digitalisation will accelerate after the crisis. are changing the world permanently – and competition is tightening in every industry. Renewal is continuous. Organisations' value creation models and people's work ing methods are evolving. Harnessing technology is a key tool in renewing our cus tomers’ business and enhancing competitiveness in both the public and private sectors. This is a strong trend. Our customers’ needs dovetail into three main areas: digital business, leading with data, and operational continuity business. Digia believes that modern business digitalisation is built on four robust cornerstones – and data utilisation is strongly linked to all of them: • • • • Seamless interplay between people and smart software. The development of modern digital business is supported successfully met market demand and has also demon During the pandemic in particular, our strength has lain in having a broad variety of solutions for operative systems of the pandemic, many organisations have woken up to assessing their own operations and renewal, especially with respect to how data utilisation and digital solutions Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 50 In the future digital world, Digia believes that corporate business value will be generated through the smart utilisation of data in networks and ecosystems. Data uti lisation is becoming an increasing part of daily business life. At the level of companies' internal operations and individuals, we are moving towards a symbiosis between humans and software, where people focus on meaningful tasks while automation and smart software handle part of the work. Digia sees the following strengthening trends in the mar ket both in the business and public sector: • Digitalisation is an increasingly important part of the core operations of organisations and business • The world is becoming networked, and digital platforms • Smart and responsible data utilisation in business pro • • The role of cloud technologies as a platform for devel • Data utilisation leads to further increases in data secu rity and protection requirements. net sales. Board’s dividend proposal According to the balance sheet dated 31 December Directors will propose that a dividend of EUR 0.17 per share in the shareholders’ register maintained by Euroclear Finland Oy on the dividend reconciliation date, 23 March 2022, will be eligible for the payment of dividend. Dividends will be paid on 30 March 2022. connection with its annual reporting. The report complies information in accounting legislation. In this report, the following topics are dealt with in com pliance with the requirements of the Accounting Act: Accounting Act requirement Location in this report Description of business model Business model Environmental issues Sustainable digital life HR matters and social responsibility Sustainable digital life Human rights Sustainable digital life Sustainable digital life Business model Digia is a software and service company whose service offering covers all layers of digitalisation: digital servic utilisation and analytics solutions, and cloud environments. We ensure the business and customer orientation of our implementations through consulting and service design. 24/7 and are continuously developed. In 2021, Digia comprised four service areas: Intelligent page 12. Digia primarily operates in Finland, and also has business in Sweden, Denmark and the Netherlands. Digia has a broad customer base that includes organisations of var ious sizes in different sectors. In 2021, we employed 1,339 which consists of more than 2,000 freelance professionals in Finland and more than 10,000 within the EU. Principles and management of responsibility at Digia Digia’s operations are governed by the Finnish Limited Liability Companies Act, regulations concerning publicly listed companies, the rules and regulations of Nasdaq Helsinki Oy, and Digia’s Articles of Association. Operations are also guided by the policies and operating principles approved by the Board of Directors or Management Team. Our responsibility is based on our Code of Conduct, which is approved by the Board of Directors, and the UN Sustainable Development Goals. We are committed to respecting human rights in accordance with the UN’s Universal Declaration of Human Rights and the Interna tional Labour Organisation’s (ILO) fundamental principles and rights at work. However, in our changing business environment, responsibility is based above all else on the continual monitoring and improvement of our operations. In addition, we closely monitor Finnish and international corporate responsibility regulation and develop our cor porate responsibility proactively. Respect for human rights is also part of Digia’s ethical operating culture. In 2021, we initiated systematic work on human rights, which will continue in 2022. This effort aims to identify and assess Digia’s major human rights risks and ensure that its commitments and practices support the realisation of human rights responsibility. Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 51 Digia’s corporate responsibility efforts are guided by the following key policies and principles: • Code of Conduct • • • ISO 9001 quality management system • Environmental policy • Disclosure policy The CEO is responsible for corporate responsibility and for responsibility reporting. The corporate responsibility working group heads operational responsibility efforts, HR, Culture and Sustainability is the chair of the working group and is responsible to the Management Team. The Management Team monitors the development of key indicators of corporate responsibility. Digia's corporate responsibility objectives and indicators as well as this report are approved by the Board of Directors. Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Sustainable digital value for our customers while building a functional society Topic Objective 2021 Solutions that promote the responsibility of our customers Improving the responsible use of data Growth in data protection impacts and securi amples See description on of services society Solutions that enhance environmental and social responsibility for society and our customers Description of the solutions and their sustaina ble development impacts See description on page 54 Sustainable digital expertise for both our personnel and Finland as a whole Topic Objective 2021 Employees for whom a learning target has meet both our own needs and those of the sector as a whole nal and internal training programmes as well as trainees and students working on theses 65 52 Focus areas, objectives and key indicators of Digia’s corporate responsibility the end of 2022. Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Sustainable digital life in our own work with respect for the environment Topic Objective 2021 Among the best in the sector in occupation al wellbeing Satisfaction with team spirit 73 Digia fosters diversity and inclusion at different levels of the organisation Age and gender distribution of the Manage and personnel to promote diversity and inclusion * Reducing CO 2 emissions CO 2 emissions See 2021 calculation on page 59 Ethical operating culture Entire organisation has adopted ethical ways of working Conduct training 53 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Sustainable digital value for our customers while building a functional society in which our society is developing. By ensuring that our solutions for customers are functional, accessible, secure and easy to use, we also promote the responsible digital isation of society. Digia aims to act as a technological pioneer whose products and services promote the positive development and wellbeing of society and the environment. The most important sustainability topics in the “sustainable digital sibility of our customers and the sustainable digitalisation of society. responsibility programme. In this programme, Microsoft partners commit to promoting the positive impacts of Microsoft technologies to society and to make even greater outlays on the development of digital skills, responsible AI, equality and environmentally friendly solutions. We were also recognised as a Nasdaq ESG and efforts in ESG themes. Solutions that promote the responsibility of our customers We seek to implement our customer solutions so that they promote our customers’ responsibility. We aim to improve the responsible utilisation of data. To this end, we monitor and report on the annual growth in data protec tion impacts and security analyses in customer orders increase is due to both growth in the number of commis sions and the trend in reporting accuracy. Data security and protection are also included in Digia’s level of data protection and security by training our personnel, administrative and technical controls, audits, and continually developing processes related to data protection and security. Each Digia employee familiarises themselves with data security and protection procedures as part of their induction. In 2020, we renewed our internal data security and data protection training package. This training must be retaken every year, not only by Digia personnel but also any subcontractors working on Digia’s completed all sections of the training package. We also provide our customers with services that meet particularly high data security/protection levels both on audited (Facility Security Clearance) premises. We also seek to proactively promote the ethical utilisa tion of data through various measures. In 2021, we held two webinars for our customers and others interested in signed up for these webinars. In addition, in association with Sitra, we published an article in Kauppalehti on the responsible utilisation of data and spoke about the topic at the Shift Business Festival 2021 in August. In addition, we aim to improve the accessibility and monitor and report on the growth in accessibility design sons behind this decrease is normal variation in customer demand. Promoting the sustainable digitalisation of society ent ways. In addition to customer work, we seek to con tribute to building solutions that enhance environmental and social responsibility for society and our customers. in 2021 in which the solution served to enhance environ mental or social responsibility: Visit Finland, part of Business Finland, has developed the Sustainable Travel Finland (STF) programme, which promotes sustainable travel and provides companies in the sector with a development path for sustainable travel. BI report for Business Finland’s site, enabling visitors to see which companies have been granted the STF label category, for instance. This evolving report will provide valuable information about the state and development of to it. Digia integrated a carbon footprint calculation app been able to see their production results in the online service. Now, this information has been rounded out with the inclusion of carbon footprint data into the dairy’s sys tem, where it is available to producers along with animal welfare information. Mobile is the crucial user interface for mobility services in Greater Helsinki, and HSL’s mobile app has established its position as one of Finland’s most popular apps in just a couple of years. As HSL’s partner, Digia is responsi ble for developing and maintaining the app. As part of the development of the application, a feature that was already included in the browser version was added to transport route, it also displays a suggested walking or improving air quality in cities. 54 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Digia's tax footprint ees, shareholders and society are part of Digia’s social We comply with local legislation on the payment, collec Digia has a statutory obligation to either pay or collect. payments paid on employee salaries. Taxes and tax-like payments 2021 2020 Social security contributions Total 58,172 55,959 Around 31.4 per cent of Digia’s shareholder base consists of Finnish households. In addition, our largest share Annual General Meeting of 17 March 2021 decided to pay a dividend of EUR 0.15 (0.10) per share. The dividends were paid on 26 March 2021 and totalled EUR 4,001,719. Sustainable digital expertise for both our personnel and Finland as a whole Skilled personnel who are committed to the objectives of our customers are the cornerstone of all our operations. Digia aims to be a desired employer in the technology sector – an employer that supports personnel wellbe ing and competence development. The most important focus area are providing a learning community for top Finland. A learning community for top digital experts Changes in the operating environment and society affect future. We want to be a team of top professionals who are We create opportunities for employees to pursue career paths and personal development and to maintain their competence at a competitive level. For instance, Digia has active workplace tribes, whose major task is to develop the competence of the tribe members through peer activ technology policies in the specialist area of the tribe. tise during their term of employment. At the annual level, we monitor and report on the percentage of employees for whom a personal competence target has been set. In 2021, a personal competence target had been set for 74 per cent of Digia employees. selected areas. In 2020 and 2021, we chose to focus on cloud, which is one of Digia’s strategic priorities. In 2021, cially in Microsoft Azure. Bolstering technological expertise in Finland operator in the IT sector. That’s why we also have a to meet both our own needs and those of the sector as a whole. To achieve this objective, we monitor and report on the total annual number of participants in training programmes organised by Digia alone or in cooperation with partners as well as trainees and students working on theses. In 2021, the total number was 65 (65). In addition to training programmes, Digia engages in cooperation with educational institutions to support and round out their offering of IT courses. In 2021, we organ coding club, in cooperation with educational institutions and student organisations. Sustainable digital life in our own work with respect for the environment Digia wants to provide a safe and healthy working envi ronment in which everyone is valued as themselves. personnel are Digia's direct impacts on personnel, social responsibility and human rights. They are also issues that affect Digia’s reputation as an employer and improve its top professionals. Digia’s employee turnover in 2021 was The most important responsibility topics in the “sustain culture. 55 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Employee well-being and diversity Continually monitoring and supporting personnel well among other things, ensuring a workload suitable for the life situation of the employee, a coaching leadership style and support for developing one's own competence. Digia uses an early intervention model that supports success at Due to the coronavirus pandemic, Digia employees con tinued to work mainly remotely. For this reason, strength ening our sense of community emerged as a particularly important theme. During the year, we held a variety of vir tual personnel meetings to bolster sense of community. daily life and a model for hybrid work based on employ ees’ wishes. On the basis of our personnel’s wishes and better meet future needs. Employees who primarily chose remote work also received support in the form of a home table and a work chair. Together with these partners, we also offered webinars to employees and supervisors on a variety of themes concerning coping at work. Our goal is that Digia is one of the best companies in and report on the annual average days of sick leave per employee. In 2021, sick leave per employee averaged 5.6 days (5.1). In addition, we monitor and report on our employees’ a personnel survey. We aim to maintain this at a good spirit was 73 on a scale of 0–100 (75) and satisfaction our Code of Conduct, and we treat all employees equally tation and other such factors. tion survey to gain a better understanding of how Digia employees feel that these themes are realised at the company. Digia employees praised aspects such as the arrangements. They also highlighted the wide age range retire every year, too. and also requested feedback on it from our employees. opment measures that are important to us and which we will tackle in 2022. These priorities include fostering a are not native Finnish speakers and encouraging women to enter the IT industry. The diversity of the company and its inclusive, apprecia of Digia employees and their ability to renew themselves. We aim to ensure diversity and inclusivity at all levels of our organisation. We monitor and report on the gender and age distribution of all employees, the Management Team, supervisors and the Board of Directors at an annu al level. 56 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Gender and age breakdown of management and personnel in 2021 Men 70.9% Women 29.1% Other 0% Personnel distribution by gender 31 Dec Percent Personnel distribution by age 31 Dec Percent < 30, 7.4% 30–39, 26.3% 40–49, 37.8% 50–59, 22.5% 60≤, 6.0% Men 77.8% Women 22.2% Other 0% Group Management team distribution by gender 31 Dec Percent Group Management team distribution by age 31 Dec Percent < 30, 0% 30–39, 0% 40–49, 22.2% 50–59, 66.7% 60≤, 11.1% Men 69.3% Women 30.7% Other 0% Supervisor distribution by gender 31 Dec Percent Supervisor distribution by age 31 Dec Percent < 30, 0.8% 30–39, 13.4% 40–49, 52.0% 50–59, 31.5% 60≤, 2.4% 57 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Men 67% Women 33% Other 0% Board of Directors distribution by gender 31 Dec Percent Board of Directors distribution by age 31 Dec Percent < 30, 0% 30–39, 0% 40–49, 16.7% 50–59, 33.3% 60≤, 50% Every year, we organise training and online meetings to promote diversity, equality and inclusion (DEI) for management, supervisors and personnel. Digia is also a member of the Inklusiiv community, which shares information, provides training and promotes equality in working life. We monitor and report on what percentage of our supervisors have completed DEI training each year. policy. It states that the requirements of the company’s ed in the Board’s composition. Both genders should be represented on the Board. More information about the page 23. Carbon-neutral Digia Information and communications technology (ICT) is part of society’s critical infrastructure today and in the future. We all who operate in this sector also play a key role in reconciling society’s activities with the climate and nature's carrying capacity. launched climate roadmap work, which we completed in January 2022. The climate roadmap includes a compre our climate objectives until 2030. We have been carbon neutral in our own operations since 2020 and our objec tive is to be carbon neutral throughout the entire value chain by 2030. We also seek to cut emissions by 75 per cent from the 2019 baseline by 2030. We compensate for the remaining emissions in a reliable manner. The climate roadmap action plan also includes Digia’s carbon handprint – that is, how we can promote the positive climate impacts we produce for customers and stakeholders. Digia has the opportunity to accelerate the ecological renewal of society by producing digital solutions and data for solving sustainability challenges. the section “Sustainable digital value for our customers In addition to our work on the climate roadmap, we updated our environmental policy in 2021 – it is based on compliance with legislation and the UN’s Sustainable Development Goals, as well as on active monitoring and development of recommendations and practices appli cable to the industry Digia operates in. Our environmental responsibility is guided by three principles that indicate how Digia takes responsibility for the climate and nature: 1. Our own operations are in balance with the climate and the carrying capacity of nature 2. Environmental responsibility is part of the daily life and 3. We accelerate the ecological renewal of society Read our updated environmental policy on our site: digia. . tion to promote measures taken in accordance with our environmental policy and action plan to improve Digia's environmental responsibility and reduce our emissions. The largest environmental impacts of Digia’s operations work typically poses a very low risk of environmental damage. We monitor and report our CO 2 emissions for our own operations and the entire value chain at an annual level emissions. The calculations cover all of Digia Finland Oy’s locations and employees. 58 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Digia's carbon footprint 2021 Percent Travel, 9% Premises and data centers, 34% Equipment and recycling, 16% Other procurements, 40% 1,210 t CO 2 e 2019 2020 2021 Digia's carbon footprint Tonnes CO 2 e 2019 2020 2021 1,210 1,510 3,050 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Premises and data centers Travel Equipment and recycling Other procurements The carbon footprint of Digia’s own operations (Scope 2) in 2021 was 386 tonnes CO 2 - 2 2 - - - - Carbon footprint indicators 2019 2020 2021 Unit Carbon footprint of own opera- tions (Scope 2) 343 386 tonnes CO 2 e Carbon footprint of the entire tonnes CO 2 e tonnes CO 2 2 Carbon footprint (t CO 2 e) 2019 2020 2021 360 420 240 110 680 Total 3,050 1,510 1,210 - footprint. 59 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Ethical operating culture Compliance with Digia’s Code of Conduct is an essential aspect of our company’s success. All of our personnel, including management and the Board of Directors, are responsible for complying with these principles in their work. Our goal is for our entire organisation to internalise and comply with these ethical practices. We monitor and report on how many of our employees have completed training on the Code of Conduct each year. In 2021, 46.9 per cent of the personnel had completed this training. In 2022, we will develop the training further. This Code of Conduct also applies to Digia’s subcontractors. By the end of 2021, 67 per cent of our subcontractors had signed and legal activities. We updated the policy during 2021. Digia's operations and business areas do not pose a high more, the operations of Digia Group companies mainly corruption according to Transparency International. public procurements and the share of Digia’s customers accounted for by public administration. . In public pro ruption measures during its participation and instructs participating persons to be very careful to ensure that operations are appropriate. Digia has foreign partners in countries where the risk of bribery and corruption is high. We pay attention to bribery also require our partners to commit to compliance with All Digia Group companies have undertaken to comply have shown them to be at least at the same level. In addition, the employees of Group companies are pro vided with appropriate training on these themes. The per to counselling and whistleblowing channels through interest, whether their own or of other persons participat ing in a tender process, for instance. They have received guidance on the use of these channels. Digia has a channel through which any Digia employee related to bribery and corruption. These reports can also be made anonymously. All reports are directed to Digia’s legal unit and the Audit Committee of the Board channel can be found on Digia's website: digia.com/en/ . The mechanism used for Digia’s whistleblowing pro Directive (EU 2021/1937) and its national implementation provisions. The intention is to introduce a fully anonymous personnel can report on activities that are in contraven Code of Conduct. Development and assessment of responsibility The topics, objectives and key indicators of responsibility reported on here comprise Digia’s responsibility reporting for 2020–2022. In 2022, our development priorities will be to further promote an ethical operating culture and human rights impact assessment, and to develop envi ronmental responsibility in accordance with the climate roadmap. In the development of our responsibility efforts, environment, corporate responsibility regulations and human rights. In addition to our own internal assessment, Digia’s EcoVadis assessment of corporate social responsibility (CSR) indicates how well a company has integrated CSR principles into its business and management system. The assessment delves into questions on CSR that are grouped into four themes: the environment, labour and human rights, ethics and fair business practices, and sustainable procurement. In 2021, Digia received a rating of 56/100 from EcoVadis environmental matters in particular. We intend to main tain our assessment at a good level and improve our operations on the basis of the development proposals made during assessment. 60 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Business in accordance with the EU Taxonomy pany’s business operations belong to any of the sectors ness operations of the company in light of the criteria of the company operates in the Information and Communi cation sector, but did not provide any services of the kind Even though Digia does not yet report on operations in amount of projects and services for its customers in 2021 that have a direct impact on both climate change miti gation and contribution to climate change adaptation in the operations of its customers. In addition, some of these systems is to optimise production and service. Optimis ing processes reduces wastage, energy consumption, mitigating and adapting to climate change in the opera tions of our customers. On the other hand, we accelerate the ecological renew al of society by providing digital solutions and data to implementations that sustainably promote the digitalisa tion of society are presented in the section . In general, the company is widely involved in building and deploying new technologies, tools and systems to sustainability challenges, data is required for feedback on both decisions and the success of actions and to ensure effective management. The data indicates where resources are wasted and where unnecessary emissions are produced. Digital solutions can also be helpful in cultural changes in society – they facilitate adopting an ecological lifestyle, for instance. The technology and the operations of the the solutions that it provides, Digia helps its customers to understand their own operations and make conscious changes towards improving them. In addition, Digia has provided a wide range of services other than climate change for both the customer and society. Share of business covered by Share of business not covered by Net sales 0 0 100 0 0 100 0 0 100 61 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 62 Financial Statements 63 Main statements in the consolidated 67 General information 71 78 Human resources 80 81 87 Other items 92 reconciliations 94 101 102 104 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 1 Main statements in the consolidated Note 1 Jan–31 Dec 2021 1 Jan–31 Dec 2020 Net sales 155,939 139,049 445 252 -21,674 -15,257 -7,485 -6,066 -99,063 -90,597 -13,482 -13,279 -141,260 -124,947 14,680 14,102 540 84 -646 -728 -107 -644 14,573 13,458 -2,801 -2,830 11,772 10,627 0.44 0.40 0.44 0.39 11,758 10,627 14 0 1 Jan–31 Dec 2021 1 Jan–31 Dec 2020 11,772 10,627 -198 80 Total comprehensive income 11,574 10,707 11,560 10,707 14 0 63 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Note 31 Dec 2021 31 Dec 2020 ASSETS Non-current assets Goodwill 71,915 61,478 10,875 6,332 686 987 6,969 9,272 484 484 538 2 640 513 92,107 79,067 Current assets 32,785 25,600 18,148 16,410 50,933 42,010 Total assets 143,040 121,078 Note 31 Dec 2021 31 Dec 2020 Equity attributable to parent-company shareholders 2,088 2,088 5,204 5,204 42,081 42,081 Translation difference -541 -343 7,468 1,080 11,758 10,627 68,057 60,737 interests 14 0 68,072 60,737 Non-current liabilities 1,877 1,115 0 0 16,000 8,626 4,354 6,657 2,324 2,000 24,554 18,399 Current liabilities 21,156 13,070 985 790 1,234 1,383 18,580 15,041 3,431 3,431 5,026 8,226 50,413 41,942 Total liabilities 74,968 60,341 143,040 121,078 64 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Note 1 Jan–31 Dec 2021 1 Jan–31 Dec 2020 11,772 10,627 9,398 16,057 -3,204 2,815 2,517 -1,684 -299 -457 43 32 -3,580 -3,801 16,648 23,589 -1,768 -1,268 -9,933 -3,591 5 10 1,573 - - 60 -10,124 -4,789 Note 1 Jan–31 Dec 2021 1 Jan–31 Dec 2020 4,085 3,019 -9,726 -2,326 Withdrawals of current loans 3,000 - -271 - Withdrawals of non-current loans 10,900 - -630 -301 -4,002 -2,672 -4,814 -8,317 Change in cash and cash equivalents 1,710 10,482 Cash and cash equivalents at beginning of period 16,410 5,838 1,710 10,482 28 90 Cash and cash equivalents at end of period 18,148 16,410 65 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 1.5 Changes in shareholders’ equity EUR 1,000 Notes Share capital Unrestricted shareholders’ equity reserve Other reserves Translation difference Retained earnings Total shareholders’ equity Shareholders’ equity, 1 Jan 2020 2,088 42,081 5,204 -422 4,241 53,190 Comprehensive income Net prot (+) / loss (-) 1.1 10,627 10,627 Other comprehensive income items 1.2 - - - 80 - 80 Total comprehensive income - - - 80 10,627 10,707 Transactions with shareholders Share-based transactions settled in equity 4.4 - - - - -188 -188 Dividends - - - - -2,672 -2,672 Acquisition of treasury shares - - - - -301 -301 Transactions with shareholders, total -3,161 -3,161 Shareholders’ equity, 31 Dec 2020 2,088 42,081 5,204 -343 11,707 60,737 EUR 1,000 Notes Share capital Unrestricted shareholders’ equity reserve Other reserves Translation difference Retained earnings Total shareholders’ equity Shareholders’ equity, 1 Jan 2021 2,088 42,081 5,204 -343 11,707 60,737 Comprehensive income Net prot (+) / loss (-) 1.1 11,758 11,758 Other comprehensive income items 1.2 - - - -198 - -198 Non-controlling interests - - - - 14 14 Total comprehensive income - - - -198 11,772 11,574 Transactions with shareholders Share-based transactions settled in equity 4.4 - - - - 392 392 Dividends - - - - -4,002 -4,002 Acquisition of treasury shares - - - - -630 -630 Transactions with shareholders, total -4,239 -4,239 Shareholders’ equity, 31 Dec 2021 2,088 42,081 5,204 -541 19,240 68,072 66 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 2 General information 2.1 Basic information on the Group Digia is a software and service company that helps its customers renew themselves in the networked world. There are more than 1,300 of us working at Digia. Our roots are in Finland, and we work with our customers both in Finland and abroad. We are building a world in which digitalisation makes a difference – together with our customers and partners. The company’s strengths are its good customer base, extensive product and service offering, 24/7 maintenance and support, and the credible size of its business. Based on these strengths, Digia can serve as a trusted partner to its customers in their digitalisation transformation. We forge long-term customer relationships and develop them to grow with our customers. Digia operates in eight locations in Finland – Helsinki, Lahti, Jyväskylä, Oulu, Rauma, Tampere, Turku and Vaasa – as well as in Stockholm and Malmö in Sweden, and Hengelo in the Netherlands. The company is listed on Nasdaq Helsinki (DIGIA). Digia Plc is domiciled in Helsinki and its registered office is at Atomitie 2 A, 00370 Helsinki. 2.2 Approval by the Board of Directors The Board of Directors approved the financial statements for publication on 8 February 2022. According to the Finnish Companies Act, shareholders have the right to approve or reject the financial statements at the General Meeting held after publication. The General Meeting may also decide to revise the financial statements. Digia Plc’s Annual General Meeting will be held on 21 March 2022. 2.3 Accounting policies - - - sidiaries are consolidated using the acquisition method, - rounded to the nearest thousand euro, which means that - - - - 67 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Accounting policy Note Goodwill Goodwill - - - - Accounting estimates and judgements applied in the preparation of the - Note Leases and 68 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Dec 2021 Covid-19-Related Rent Concessions beyond 30 June Leases - - Financial InstrumentsFinancial Instruments: Recognition and Measurement Financial Instruments: DisclosuresInsurance ContractsLeases- - - Provisions, contingent liabilities and contingent assets - 2018–2020 and less urgent changes to the standards are gathered • First-time Adoption of International Financial Reporting Standards • Financial Instruments - - • Leases - - • Agriculture- - Fair Value Measurement - Property, Plant and Equipment — Proceeds before Property, Plant and Equipment - er with the manufacturing costs associated with the Business Combinations Insurance Contracts Financial InstrumentsRevenue from Contracts with Customers - Presentation of Financial State- ments 69 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 1 Presentation of Financial Statements Statement 2 Making Materiality Judgements Accounting Policies, Changes in Accounting Estimates and Errors - Income Taxes - - Insurance Contracts: Initial Application of IFRS 17 and IFRS 9 - - and its Associate or Joint Venture – Amendments to Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures- Business Combinations 70 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 3.1 Reportable segments - Finland Other countries Total net sales 3.2 Net sales - - Accounting principle – recognition in net sales - 3 Financial development 200 150 100 50 0 2017 2018 2019 2020 2021 156 139 132 112 96 Net sales EUR million 71 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements - - - - - - - - Third-party products - - - - Services - recognised as revenue over time - - - - 3.3 Provisions 2021 2020 1 Jan 31 Dec 72 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Accounting principle – provisions - 3.4 Other operating income 2021 2020 Other income Total 445 252 Accounting principle – government grants are recognised in the income statement at the same - 3.5 Acquired business operations Business operations acquired during the 2021 - - - - - - Total fair values of the acquired businesses on the Total assets 11,698 Total liabilities 8,522 Goodwill - - 73 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements - Business operations acquired during the 2020 - - - - Total fair values of the acquired businesses on the Total assets 2,275 Total liabilities 711 Goodwill - - - Accounting principle – business combinations - - 74 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Fair values of net assets acquired in business combina- tions and additional purchase prices - 3.6 Depreciation, amortisation and impairment 2021 2020 31 Total 7,485 6,066 Total depreciation and amortisation 7,485 6,066 - 2021 2020 Total 13,482 13,279 - Auditors’ fees 2021 2020 1 Total 157 109 Research and development costs 2021 2020 Total 6,103 5,956 - 75 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 2021 2020 -335 Total 2,801 2,830 2021 2020 11 - -51 -3 Other items - Total 2,801 2,830 Taxes in the income statement 2,801 2,830 1 Jan 2021 Recognised in income statement Acquired business operations 31 Dec 2021 - Other items 33 Total 513 82 45 640 1 Jan 2021 Recognised in income statement Acquired business operations 31 Dec 2021 acquisitions Other items - Total 1,115 -488 1,249 1,877 1 Jan 2020 Recognised in income statement Acquired business operations 31 Dec 2020 - - Other items - Total 558 -45 - 513 1 Jan 2020 Recognised in income statement Acquired business operations 31 Dec 2020 acquisitions Total 1,250 -380 245 1,115 - - 76 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 3.10 Earnings per share 2021 2020 Accounting principle – earnings per share - 77 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 4 Human resources Group personnel on average during the period 2021 2020 Total 1,334 1,261 2021 2020 Total 99,063 90,597 - 4.2 Pension liabilities Accounting principle – pension liabilities - 4.3 Personnel remuneration 4.4 Share-based payments - ed through these arrangements are measured at fair - shareholders and management in order to increase the - - 78 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements share-based incentive scheme 2020–2022 share-based incentive scheme 2020–2022 Granting date requirement requirement 1 11 - President and CEO's share-based incentive scheme 2020–2022 Key personnel's share-based incentive scheme 2020–2022 - - - Accounting principle – share-based incentive scheme - - own shares are recognised as deductions in sharehold- - on 2021 consolidated result Effect on earnings President and CEO's share-based incentive scheme 2020–2022 Key personnel's share-based incentive scheme 2020–2022 Total shareholders' Comparison data for 2020 Effect on earnings President and CEO's share-based incentive scheme 2020–2022 Key personnel's share-based incentive scheme 2020–2022 Total shareholders' 79 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements - 2021 2020 Total -3,204 2,815 5.2 Accounts payable and other liabilities 2021 2020 Total 21,156 13,070 Accounting principle – accounts payable and other liabilities 80 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 6 Capital structure 6.1 Capital management and net liabilities - - 2021 2020 - sented in 6.2 Financial assets 2021 2020 agreements Accounts receivable and other receivables 33,963 26,115 2021 2020 Total 26,618 22,115 - Other shares and holdings 31 Dec 2020 Change 31 Dec 2021 Other shares total Total 484 0 484 - 81 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Accounts receivable and receivables from customers on long-term projects - Balance sheet credit loss Credit loss provision 3 1 Total 26,618 31 customer contracts - Cash and other cash equivalents 2021 2020 Fair value hierarchy level - Total 22,648 19,410 Accounting principle – cash and cash equivalents 6.3 Financial liabilities 31 Dec 2021 31 Dec 2020 Credit facility 82 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 2021 Fair values 2020 Fair values 2021 Balance sheet values 2020 Balance sheet values Fair value hierarchy level 3 3 Total Current 3 3 Total Total 2021 2020 - Total 28,811 15,284 Less than Total 34,971 35,650 14,874 7,457 13,319 Less than Total 31,801 32,093 16,649 4,760 10,685 - 1 Jan Changes in leases 31 Dec Non-current interest-bearing nancial liabilities including a current component Total 26,889 302 1,594 28,785 83 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 1 Jan Changes in leases 31 Dec Total 28,375 -5,063 3,577 26,889 53 - 6.4 Lease liabilities 31 Dec 2021 31 Dec 2020 Long-term Lease liabilities, total 7,785 10,089 Maturity distribution Commitments to future agreements Contingent liabilities 2021 2020 84 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Financial income 2021 2020 31 5 Total 540 84 2021 2020 3 Loan administration fees Total 646 728 - - - - - - 85 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 6.7 Shareholders’ equity Number of shares Share capital Number of shares Share capital Reserves - - - Dividends Accounting principle – dividends Calculation of the parent company Digia Plc’s distributable funds, 31 Dec 2021 2020 Total 61,824 56,922 86 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 7 Other items - - 2021 2020 Goodwill is recognised from the acquisition as the differ- » » » - assets Other items Balance sheet value of assets subject to total - Sensitivity analysis - - - - 87 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Accounting principle – impairments - 7.2 Property, plant and equipment 2021 Right-of-use assets Buildings and structures Machinery and equipment Other tangible assets Total 2021 11 1 Decreases - - - 31 2020 Right-of-use assets Buildings and structures Machinery and equipment Other tangible assets Total 2020 - - Decreases -111 - - - -111 133 31 88 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Accounting principle – property, plant and equipment - 2021 Development Other intangible assets assets in progress Allocated assets related to acquisitions Total 2021 - - Translation difference - - - - - - Decreases - - - - 1 Jan - - - -31 - Translation difference - - - - 31 Dec - 2020 Development Other intangible assets assets in progress Allocated assets related to acquisitions Total 2020 - - - - - - Decreases - - - - - - 1 Jan - - - - 31 Dec - 89 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Accounting principle – intangible assets - tomer agreements and technologies with a limited useful - - - - or customisation costs incurred, are recognised under 7.4 Right-of-use assets 1 Jan 2021 Depreciation Decreases 31 Dec 2021 Cars 1 Jan 2020 Depreciation Decreases 31 Dec 2020 Cars -111 -111 Accounting principle – lease agreements - mencement date of the contract, the lessee recognises a - - - 2021 2020 355 related to customer agreements Total 9,398 16,057 90 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 7.6 Related party transactions • • Management Team, including the CEO • • 2021 2020 Total 2,064 3,096 - 2021 2020 Directors 51 CEO Total 834 1,100 Group companies Domicile Domestic segment Share of Share of votes Digia Plc Helsinki Parent Helsinki Helsinki Turku Helsinki Hengelo Denmark 7.7 Events after the balance sheet date 91 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 8 Formulas for the indicators and reconciliations 8.1 Formulas for the indicators 92 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 8.2 Reconciliation of alternative performance measures - 31 Dec 2021 31 Dec 2020 31 Dec 2021 31 Dec 2020 31 Dec 2021 31 Dec 2020 31 Dec 2021 31 Dec 2020 31 Dec 2021 31 Dec 2020 93 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 9.1 Parent company’s income statement EUR Note 1 Jan–31 Dec 2021 1 Jan–31 Dec 2020 1 3 5 9.2 Parent company balance sheet EUR Note 31 Dec 2021 31 Dec 2020 Land and water areas Other shares and holdings 94 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements EUR Note 31 Dec 2021 31 Dec 2020 11 Total current assets Total assets 174,509,204.52 151,751,299.00 EUR Note 1 Jan–31 Dec 2021 1 Jan–31 Dec 2020 shareholders Total shareholders’ equity 63,911,111.62 59,009,734.28 13 Total liabilities 110,598,092.90 92,741,564.72 Total shareholders’ equity and liabilities 174,509,204.52 151,751,299.00 95 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements statement EUR Note 1 Jan–31 Dec 2021 1 Jan–31 Dec 2020 - cash acquired Withdrawals of current loans Withdrawals of non-current loans - - Change in cash and cash Change in cash and cash 1 9.4 Basic information on the parent company and accounting policies Basic information on the company - Accounting policies Pension schemes Leasing payments Share-based payments - - - Tangible assets Board’s dividend proposal - 96 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 9.5 Notes to the parent company’s 1. Net sales EUR 2021 2020 - Total 13,387,000.00 10,980,087.50 2. Other operating income EUR 2021 2020 - Total 41,934.00 36,445.00 EUR 2021 2020 Other salaries and remunerations Total 4,100,382.01 3,149,665.32 2021 2020 Management and administration 35 Total 43 35 4. Depreciation, amortisation and impairment EUR 2021 2020 Total 430,994.10 455,022.52 5. Auditors’ fees EUR 2021 2020 - - Total 102,272.50 92,101.38 Financial income EUR 2021 2020 Total 67,198.57 42,168.09 EUR 2021 2020 Loan administration fees Total 696,710.55 735,959.53 EUR 2021 2020 - Total -2,405,101.58 -1,810,400.80 97 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements EUR rights Other long-term assets in progress Total 2021 Total 2020 Decreases - - - - - - - 9. Property, plant and equipment EUR Land and Buildings and structures Machinery and equipment Total 2021 Total 2020 - - - - - EUR in subsidiary shares Other shares and holdings Total 2021 Total 2020 - Decreases - - - - - - - - Group companies Domicile Domestic segment Share of Share of votes Helsinki Helsinki Turku 98 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 11. Current receivables EUR 2021 2020 Total 4,125,441.66 855,167.90 12. Shareholders’ equity EUR 2021 2020 - Total unrestricted shareholders’ equity 61,823,547.12 56,922,169.78 Total shareholders’ equity 63,911,111.62 59,009,734.28 Calculation of distributable shareholders’ equity, 31 Dec EUR 2021 2020 Total 61,823,547.12 56,922,169.78 13. Non-current liabilities EUR 2021 2020 Total 18,324,000.00 10,600,000.00 14. Current liabilities EUR 2021 2020 Total interest-bearing current liabilities 77,552,623.45 72,393,871.11 - To others Total interest-free current liabilities 14,721,469.45 9,747,693.61 Total current liabilities 92,274,092.90 82,141,564.72 99 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements 15. Contingent liabilities Lease liabilities EUR 2021 2020 Due later Total 88,237.58 335,829.33 Other lease liabilities EUR 2021 2020 Due later Total 6,217,895.68 9,404,067.83 Other liabilities EUR 2021 2020 Other Total 582,617.82 633,900.41 16. Share-based incentive scheme of the consolidated 100 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Signatures to the Board’s Report and Financial Statements 101 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Auditor’s Note 102 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Storage method Journals General ledger Voucher types and storage method until 1 January 2027 Memoranda 103 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Auditor’s Report Report on the Audit of the Financial Statements Opinion We have audited the nancial statements of Digia Plc (business identity code 0831312-4) for the year ended December 31, 2021. The nancial statements comprise the consolidated balance sheet, income statement, statement of comprehensive income, statement of changes in equity, statement of cash ows and notes, including a summary of signicant accounting policies, as well as the parent company’s balance sheet, income statement, statement of cash ows and notes. In our opinion • the consolidated nancial statements give a true and fair view of the group’s nancial position, nancial per- formance and cash ows in accordance with Interna- tional Financial Reporting Standards (IFRS) as adopted by the EU • the nancial statements give a true and fair view of the parent company’s nancial performance and nancial position in accordance with the laws and regulations governing the preparation of nancial statements in Finland and comply with statutory requirements. Our opinion is consistent with the additional report sub- mitted to the Audit Committee. Basis for Opinion We conducted our audit in accordance with good audit- ing 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 require- ments that are applicable in Finland and are relevant to our audit, and we have fullled our other ethical responsi- bilities in accordance with these requirements. In our best knowledge and understanding, the non-audit services that we have provided to the parent company and group companies are in compliance with laws and regulations applicable in Finland regarding these servic- es, and we have not provided any prohibited non-audit services referred to in Article 5(1) of regulation (EU) 537/2014. The non-audit services that we have provid- ed have been disclosed in note 3.7 to the consolidated nancial statements. We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our opinion. Materiality The scope of our audit was inuenced by our application of materiality. The materiality is determined based on our professional judgement and is used to determine the nature, timing and extent of our audit procedures and to evaluate the effect of identied misstatements on the nancial statements as a whole. The level of materiality we set is based on our assessment of the magnitude of misstatements that, individually or in aggregate, could reasonably be expected to have inuence on the eco- nomic decisions of the users of the nancial statements. We have also taken into account misstatements and/ or possible misstatements that in our opinion are mate- rial for qualitative reasons for the users of the nancial statements. Key Audit Matters Key audit matters are those matters that, in our profes- sional judgment, were of most signicance in our audit of the nancial statements of the current period. These matters were addressed in the context of our audit of the nancial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The signicant risks of material misstatement referred to in the EU Regulation No 537/2014 point (c) of Article 10(2) are included in the description of key audit matters below. We have also addressed the risk of management over- ride of internal controls. This includes consideration of whether there was evidence of management bias that represented a risk of material misstatement due to fraud. To the Annual General Meeting of Digia Plc 104 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements - How the matter was addressed in the audit • - • - • • Revenue recognition, project accounting and valuation of accounts receivable - Note 3.2 and 6.2 - - - • - • • • • Responsibilities of the Board of Directors and the President and CEO for the Financial Statements - - ments that are free from material misstatement, whether 105 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements matters relating to going concern and using the going - Auditor’s Responsibilities for the Audit of Financial Statements material misstatement, whether due to fraud or error, not a guarantee that an audit conducted in accordance - • risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as - • • • • • - - - Other Reporting Requirements - 106 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements - - misstatement of this other information, we are required to Authorised Public Accountant, KHT 107 Digia’s direction Responsible Digia Digia 2021 Corporate Governance Report by the Board of Directors Financial statements Independent Auditor’s Reasonable Assurance Report on Digia Oyj’s ESEF Financial Statements To the Board of Directors of Digia Oyj We have undertaken a reasonable assurance engage- ment on the iXBRL marking up of the consolidated nan- cial statements for the year ended 31 December, 2021, included in the Digia Oyj’s digital les [743700QVAG6OX- K5OP587-2021-12-31-en.zip] prepared in accordance with the requirements of Article 4 of EU Delegated Regulation 2018/815 (ESEF RTS). The Responsibility of the Board of Directors and Managing Director The Board of Directors and Managing Director are responsible for preparing the report of the Board of Directors and nancial statements (ESEF nancial state- ments) that comply with the requirements of ESEF RTS. This responsibility includes: • preparation of ESEF nancial statements in XHTML for- mat in accordance with Article 3 of the ESEF RTS • marking up the consolidated nancial statements included in the ESEF nancial statements with iXBRL tags in accordance with Article 4 of the ESEF RTS; and • ensuring consistency between ESEF nancial state- ments and audited nancial statements. The Board of Directors and the Managing Director are also responsible for such internal control as they deem necessary to prepare the ESEF nancial statements in accordance with the requirements of the ESEF RTS. Auditor’s Independence and Quality Control We are independent of the company in accordance with the ethical requirements applicable in Finland, which apply to the engagement we have performed, and we have fullled our other ethical obligations in accordance with these requirements. The auditor applies International Standard on Quality Control 1 and accordingly maintains a comprehensive system of quality control including documented poli- cies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. Auditor’s Responsibility In accordance with the Engagement Letter our responsi- bility is to express an opinion on whether the marking up of the consolidated nancial statements included in the ESEF nancial statements comply in all material respects with the Article 4 of the ESEF RTS. We conducted our reasonable assurance engagement in accordance with International Standard on Assurance Engagements 3000. The engagement involves procedures to obtain evidence whether; • the consolidated nancial statements included in the ESEF nancial statements are, in all material respects, marked up with iXBRL tags in accordance with Article 4 of the ESEF RTS, and; • the ESEF nancial statements and the audited nancial statements are consistent with each other. The nature, timing and the extent of procedures selected depend on practitioner’s judgement. This includes the assessment of the risks of material departures from the requirements set out in the ESEF RTS, whether due to fraud or error. We believe that the evidence we have obtained is suf- cient and appropriate to provide a basis for our opinion. Opinion In our opinion, the consolidated nancial statements included in the ESEF nancial statements of Digia Oyj identied as [743700QVAG6OXK5OP587-2021-12-31-en. zip] for the year ended 31 December, 2021 are marked up, in all material respects, in compliance with the ESEF Regulatory Technical Standard. Our audit opinion relating to the consolidated nancial statements of Digia Oyj for the year ended 31 December, 2021 is set out in our Auditor’s Report dated 8 February, 2022. In this report, we do not express an audit opinion, review conclusion or any other assurance conclusion on the consolidated nancial statements. Helsinki 24 February, 2022 KPMG OY AB Virpi Halonen Authorised Public Accountant, KHT 108 Digia Plc Atomitie 2 A FIN-00370 Helsinki digia.com Tel. +358 10 313 3000 743700QVAG6OXK5OP5872021-01-012021-12-31743700QVAG6OXK5OP5872020-01-012020-12-31743700QVAG6OXK5OP5872021-12-31743700QVAG6OXK5OP5872020-12-31743700QVAG6OXK5OP5872019-12-31743700QVAG6OXK5OP5872019-12-31ifrs-full:IssuedCapitalMember743700QVAG6OXK5OP5872020-01-012020-12-31ifrs-full:IssuedCapitalMember743700QVAG6OXK5OP5872020-12-31ifrs-full:IssuedCapitalMember743700QVAG6OXK5OP5872019-12-31DIG:ReserveOfInvestedUnrestrictedEquityMember743700QVAG6OXK5OP5872020-01-012020-12-31DIG:ReserveOfInvestedUnrestrictedEquityMember743700QVAG6OXK5OP5872020-12-31DIG:ReserveOfInvestedUnrestrictedEquityMember743700QVAG6OXK5OP5872019-12-31ifrs-full:OtherReservesMember743700QVAG6OXK5OP5872020-01-012020-12-31ifrs-full:OtherReservesMember743700QVAG6OXK5OP5872020-12-31ifrs-full:OtherReservesMember743700QVAG6OXK5OP5872019-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember743700QVAG6OXK5OP5872020-01-012020-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember743700QVAG6OXK5OP5872020-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember743700QVAG6OXK5OP5872019-12-31ifrs-full:RetainedEarningsMember743700QVAG6OXK5OP5872020-01-012020-12-31ifrs-full:RetainedEarningsMember743700QVAG6OXK5OP5872020-12-31ifrs-full:RetainedEarningsMember743700QVAG6OXK5OP5872021-01-012021-12-31ifrs-full:IssuedCapitalMember743700QVAG6OXK5OP5872021-12-31ifrs-full:IssuedCapitalMember743700QVAG6OXK5OP5872021-01-012021-12-31DIG:ReserveOfInvestedUnrestrictedEquityMember743700QVAG6OXK5OP5872021-12-31DIG:ReserveOfInvestedUnrestrictedEquityMember743700QVAG6OXK5OP5872021-01-012021-12-31ifrs-full:OtherReservesMember743700QVAG6OXK5OP5872021-12-31ifrs-full:OtherReservesMember743700QVAG6OXK5OP5872021-01-012021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember743700QVAG6OXK5OP5872021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember743700QVAG6OXK5OP5872021-01-012021-12-31ifrs-full:RetainedEarningsMember743700QVAG6OXK5OP5872021-12-31ifrs-full:RetainedEarningsMemberiso4217:EURiso4217:EURxbrli:shares
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