Annual Report 2010

Our inventive solutions bring success for people and businesses in everyday life.

Digia Plc

Digia in brief3
Key events in 2010 4
Key figures6
CEO's review 7
Strategy 8
Inventive expertise 11
Personnel 12
Key capabilities for successful performance 14

Business operation

Enterprise Solutions	17
Mobile Solutions	26
Product development and technology trends	29
Markets and Digia's business	30

Governance

Board of Directors	33
Group Management Team	35
Corporate Governance Statement	37
Statement on
Digia Management Emoluments	41

Financial Statement

Board of Directors' Report 44
Consolidated Income Statement 50
Consolidated Balance Sheet 51
Consolidated Cash Flow Statement 52
Changes in Shareholders' Equity 53
Basic Information of the Group and Accounting Policies 55
Notes to the Consolidated
Financial Statement 59
Calculation of Financial Ratios 78
Parent Company's Income Statement 79
Parent Company's Balance Sheet 80
Parents Company's Cash Flow Statement 81
Basic Information of the Parent Company and Accounting Policies 82
Notes to the Parent Company's Financial Statement 83
Signatures to the Board's Report and Financial Statement 88
Auditor's Report 89
List of Accounting Books 90

Shareholders

Information for Shareholders	92
Stock Exchange Releases	92
Share Information	93
Offices	94

Digia in brief

Digia's driver is the desire to succeed. It offers its customers success, through inventive solutions that enhance operational efficiency, improve user experiences and increase sales. Digia helps its customers become forerunners. With almost 1,600 top experts, Digia enables its customers to benefit from changes in the market, making the future a mutual success. Digia is known for swiftly embracing new technologies, to its customers' benefit.

Digia's offering includes ERP systems, and mobile and user experience services and solutions. The company's customers are businesses and organisations from various industries, with an emphasis on public administration, industry, mobile industry, retail, services, banking and insurance. Digia operates in Finland, Russia, China and Sweden. The company is listed on the NASDAQ OMX Helsinki exchange (DIG1V).

Digia's mission

Our inventive solutions bring success for people and businesses in everyday life.

Digia's vision

Digia 2014: Successful and most recommended We are the Finnish software solutions and services company of choice, growing strongly at home and abroad. Our continuous success is based on inspired experts, skilled leadership and solutions which improve customer experience. Our innovative products are within reach of people around the world.

Key events in 2010

January

University of Helsinki made a partnership agreement with Digia. The Universitarian's virtual desktop is a user-friendly tool, databank and interaction channel intended for all students and staff at the University of Helsinki. The virtual desktop will be realized as an agile project in partnership with Digia. Digia has solid experience in creating extensive intranet and internet portals.

February

Digia Enterprise production management system boosts the institutional kitchen operations of Kymijoen Ravintopalvelut. As an industry leader, Kymijoen Ravintopalvelut is reshaping its operation models, and is about to deploy a new production management system. With the help of Digia's system, kitchen operations will become more cost effective and easily manageable. The industrialising of institutional kitchens is something new in Finland. Digia was selected as the system provider through a public procurement process.

Digia shows the way for beautiful user experiences across multiple platforms with Qt Quick. Digia is using a pre-release version of Qt Quick, the new user interface and application creation tool, to demonstrate how to deliver visually impressive consumer experiences across

devices with different software and hardware platforms at this year's Mobile World Congress.

March

The AGM decided to elect seven members to the Board. Re-elected as Board members were: Kari Karvinen, Pertti Kyttälä, Martti Mehtälä and Pekka Sivonen. In addition, as new Board members were elected Robert Ingman, Tommi Uhari and Marjatta Virtanen. At the Organising Meeting held after the General Meeting, Pertti Kyttälä was elected as Chairman of the Board and Martti Mehtälä was elected as Vice Chairman of the Board.

Lappeenranta University of Technology and Digia joined forces to train future Android experts. Students learned to develop software for Android mobile phones during one-week course. Lappeenranta University of Technology (LUT) organised a one-week intensive training course, titled Code Camp, during which students designed and built applications suitable for Android mobile phones by Motorola and HTC. Digia to help Holiday Club Resorts boost efficiency, through system integration. Finland's leading provider of tourism services, Holiday Club Resorts Oy, ordered a financial management system from Digia. In addition, Digia is responsible for integrating the data systems of Holiday Club's entire partner network, to ensure

a smooth data flow between systems and higher operational efficiency.

April

Digia fortifies its position as a supplier of insurance data systems. Digia continues to maintain Arek Ltd's Pension Earnings System after the termination of the original three-year service contract in August. The new agreement, to remain valid until further notice, entrusts Digia with sole responsibility for the future development and maintenance of the Arek platform.

Digia ranked among top 10 IT-employers by Universum Student Survey. Digia came ninth in a survey charting how university students rate potential employers in IT sector. Climbing 13 places over last year, Digia was named the Highest Climber at the University Awards ceremony on Wednesday 28 April. Digia believes that students particularly appreciate its stable financial position and the personal development opportunities it provides.

June

MeeGo innovation in Finnish Universities gets accelerated by Digia's MeeGo training material and Intel's development environments. Digia and University of Jyväskylä, supported by Intel, launch a program to offer MeeGo training materials and state-of-the-art Intel Atom Z600 based development environments to Finnish universities to accelerate adoption of MeeGo in education and innovation.

Digia's ERP system to modernise and boost operations of Ykkösleipurit. Ykkösleipurit (Katri Antell Oy, Leipomo Rosten Oy, Linkosuo Oy, Porin Leipä Oy and Primula Oy) reached agreement on purchase of Digia Enterprise ERP system.

Digia delivered the Digia Enterprise ERP and financial management system to five regional companies in the Ykkösleipurit chain. This stateof-the-art system will lead to faster processes and greater efficiency at the five bakeries. In addition, the joint acquisition will generate cost savings.

September

Digia provides an eLearning environment to the S Group. Digia provides S Group's specialised vocational institute, Jollas Institute, with an eLearning environment based on Microsoft SharePoint 2010. This solution provides Finnish co-operative retail company group S Group employees with diverse on-line training opportunities. All of S Group's 38,000 employees are potential users of the learning environment. Datafisher contributed to the specification and implementation of the new eJollas solution.

October

Lappeenranta University of Technology and Digia provided intensive training in Qt expertise. As a first for Lappeenranta, students spent a week coding Qt applications for mobile phones. Lappeenranta University of Technology (LUT) held a one-week intensive course, Code Camp, making students familiar with Qt technology. Digia attended the Qt Developer Days 2010

both in Munich and San Francisco and demonstrated the latest in mobile user experience and Qt. Demos showed exciting and inspiring ways of adding new dimensions with 3D and Augmented Reality to the mobile user experience. Digia also showcased how sleek, state-of-the-art mobile experience can be delivered on Nokia touch devices with Qt Quick - and encouraged visitors to download the cool Flowd -application to their own devices from www.flowd.com.

November

Digia Tablo Boosts Information Workers' Efficiency – The Digia Tablo digital workdesk builds a flow of data and events from various sources. Digia has launched a new product with which organisations can increase the efficiency of information retrieval and work flows. The profile-based Digia Tablo digital workdesk brings the right information to the right people, at the

right time. Faster and more accurate information retrieval improves efficiency and increases the productivity of tasks and work processes for individuals and organisations alike.

Digia introduced a product creation solution for MeeGo product makers. Digia builds on its extensive 16+ year's track record in mobile industry and introduced a product creation solution for MeeGo ecosystem. Digia's offering addresses key elements of MeeGo device creation where product differentiation is the key to success. Digia's MeeGo product creation solution starts from MeeGo training and concepting services and scales to full product software solution delivery and lifecycle management. Digia also launches a software solution, Digia Device Cloud, enabling efficient and environmentally friendly MeeGo RD operations in distributed environments. Digia Device Cloud solution enables remote development teams to access real devices without need to physically distribute prototypes.

Digia took part in Invest 2010 Fair at Wanha Satama, Helsinki.

Key figures

Net sales MEUR

MEUR

provision of EUR 0.9 million. Operating profit including one-off items was EUR -7.8 million for the year.

	MEUR
• 2010	130.8
• 2009	120.3
• 2008	123.2
• 2007	105.8

Operating profit MEUR

Cash flow from operations MEUR

Earnings per share before extraordinary items EUR

MEUR
11.1
20.2
15.5
6.2
5.8

	EUR
• 2010	0.56
• 2009*	0.53
• 2008	0.36
• 2007	0.29
• 2006	0.25

* Earnings per share before extraordinary items was calculated for the 2009 fiscal year before the effect of one-off items. The EPS after extraordinary items was EUR -0.67 per share.

• 2006 85.0

• 2007 11.1 • 2006 8.4 * Operating profit before extraordinary items does not include one-off items, which in the 2009 fiscal year comprised a writedown of goodwill totalling EUR 23.8 million and an oper-

• 2010 17.2 • 2009* 16.9 • 2008 13.4

ational restructuring provision of EUR 0.9 million. Operating profit including one-off items was EUR -7.8 million for the year.

CEO's review

Digia had a very successful 2010. A year ago, Digia found itself in great shape to pursue active growth. We worked hard and fulfilled our promise: we succeeded in growing our net sales by 8.7% in 2010.

A year ago, we promised high profitability as well as growth. In this too, we were successful our profitability figures remain unrivalled in our sector.

Digia is able to deliver organic growth, something that makes me particularly happy. At Digia, the right things are done, with high quality. We handle and develop sales and daily business operations efficiently. Our competencies are top-class, and we develop them with a close eye on market needs and technological requirements.

Digia has the desire and skill to grow. As one Digia, we have worked stronger than ever to develop our core business operations, achieve efficiency and pull in the same direction. We want to offer customers a strong partner in excellent financial shape, run from Finland and easy to do business with.

At Digia, we have done more than ensure that our core operations are outstanding and profitable. We have also developed our businesses and gone for growth through strategic projects. Our conceptualised, customer experience development services, and our profile-based Digital

Workdesk, are just two examples of our investment in productised packages. In 2010, we were also innovators, launching products on the international markets.

We'll keep investing in product-based growth. As our vision statement says, by the end of the strategy period we want to put several innovative products within easy reach of people around the world.

We also want to grow in international markets, with Russia as our main target region. To accelerate and maintain our organic growth, we've become active in Russia's fast-growing businessto-business markets. We've already won our first customers, with ERP solutions spearheading our local expansion. Through our Chinese sites, we are growing our broad-based offshore competence centres, in line with demand. Our first local customers have been won in both mobile and enterprise solutions.

During the year, Digia recruited many experts. As staff numbers have grown, we've also tightened up our network of locations. Last winter, we combined our Jyväskylä offices. At the turn of the year, our around 600 of our Helsinki-based experts moved to a single location in Pitäjänmäki, this replaced our former three offices. It will be fascinating to see how our corporate culture unifies, as well as our practices and

teamwork becoming more fluent. Of course, through larger competence centres, Digia will also become even more effective at meeting customer needs.

My sincere thanks go to our customers and owners for their trust in Digia. A big thank you too, to each and every one of Digia's inventive experts. Your everyday efforts are important to our mutual success.

Juha Varelius President and CEO

Strategy

The objective is to improve shareholder value

Digia's strategic objective is to be an international growth company, whose ability to turn a profit and sound financial health provide rising shareholder value
The company seeks growth based on developing current operations, expanding the market area and creating new, scalable business
Key factors are expert personnel, high quality project management and satisfied customers
Competitive advantage is built on operational efficiency, ability to renew, and industry and technology expertise

Digia's target is to pursue mainly organic growth. The company expands by developing its business operations and product and service portfolio. Digia's product and service strategy is based on multi-channel solutions, which increase customers' operational efficiency. Other key parts of Digia's strategy are product creation services and services covering the entire product life cycle.

Digia is an innovative development partner. As such, it launches products, services and business models using new technologies. Digia is also expanding into new market areas. To accelerate

growth, Digia is supplementing its successful current business with new solutions suitable for internet distribution.

In 2010 Digia's profitability was higher than the industry average due to efficient management systems and processes. Digia learns faster, improves its quality and becomes more efficient by focusing on leading technologies and methods. Digia's price-competitiveness stems from strong industry expertise, technology leadership and a cost-efficient site structure.

Portfolios

• To strengthen profitability and optimise growth, Digia's business is split into portfolios

Digia's products, services and business areas are arranged into portfolios. This is based on growth expectations, life cycles, operational synergies and business models.

Digia's portfolios are:

Productivity and operations management: Makes customers' internal processes more efficient; strengthens customers' cost and price competitiveness.
Product creation services: Helps customers lead the way in technology; enables the production of successful mobile software and devices, providing good user experiences.
Customer experience management: Increases the efficiency of interaction and encounters between Digia's customers and their end-customers. Sales are boosted by improved customer service and greater customer loyalty.
Ventures: Provides solutions for the international consumer and corporate market. These are based on a scalable business model, and can be distributed via the internet.

Portfolios to enable risk management, operational development and new business creation

The aim is to profitably grow Digia's current core business. At the same time, new, scalable operations based on internet distribution will complement Digia's current, successful businesses.

The portfolios will guarantee the continuous development of existing operations. Product and competence life cycles will be optimised, and financial and business risk management easier. In addition, a portfolio breakdown enables new forms of business, creating potential for future growth and value generation.

Growth

• The company seeks growth based on developing current operations, expanding the market area and creating new, scalable business

Within current businesses, the target is to pursue mainly organic growth

Digia seeks growth by developing its current businesses and product and service selection. In addition, Digia intends to grow by expanding sales into neighboring markets.

Digia can provide comprehensive deliveries, from conceptualisation to maintenance.

In ERP systems, Digia pursues to grow in selected solution segments. These include Internet-based, Customer Experience Management solutions, and systems that improve customers' operational efficiency.

Within mobile accounts, Digia looks to expand by developing applications and user experience services. To the same end, Digia intends to create extensive project and solution packages, covering solution life cycles.

In search of a better market position, Digia monitors market developments and, when necessary, grasps the corporate acquisition opportunities.

International business and market expansion

Digia wants to enter growth markets, by providing its existing products and services in neighboring regions and China. The company serves local customers directly from sites in Russia, Sweden and China. Competence centres in China and Russia give Digia a sharper competitive edge: they bring off-shore resources to global customer relationships.

New business with new kinds of services

To accelerate growth, new business based on internet distributed consumer and business solutions will be built alongside Digia's successful existing business. The growth will focus on new, innovative business models, such as SaaS* or transaction based services. New solutions will open the road for new, growing markets, where Digia seeks faster growth compared to other business. Innovative business models are scalable and allow better profitability in the future. The goal is to create an international area of business,

which is not based solely on man-hour billing. The new business has been organised as its own Ventures unit, which will expedite in-house innovation activity and aims to bring new solutions to market quickly.

Examples of inventive solutions

A good example of an innovative solution is the new mobile workforce management service Oiko. fi, based on the SaaS business model. With this network, service companies can send mobile assignments to their workforce, thus increase the effectiveness of mobile work, save workers time, optimise routes, save fuel, expedite billing and improve customer satisfaction. The Oiko.fi service can be quickly taken to use, without the need for system investments and it can be integrated easily to be part of other information systems. Digia is marketing the service globally with different language versions, for instance in Germany the service is called Mobiledispo.de.

Increasingly, Digia's clients want to offer their consumer clients experimental, modern entertainment services with latest innovations. Flowd. com is a mobile and location info based social media communication service, executed from a technology and skills point of view. The service gives a good view about the direction where modern consumer services are developing into. At the same time, it showcases what is possible to achieve with Digia's excellent skills in usability, mobile technology, network services and cloud computing. The service is free to use for consumer clients.

Modern information technology - and Digia's solutions - lean on user-oriented design, mobility and internet technologies, such as cloud computing. These viewpoints are exploited from two dimensions; on one hand to bring value to Digia's clients and their customers, on the other to bring value through service implementation and production. When these perspectives are realised properly, new service and product development is fast, affordable, client oriented and rationalises the operations of all parties.

* SaaS = Software as a Service. Business model where IT-solution is offered as an internet based cloud service invoiced by usage.

• Key factors are expert personnel, high quality project management and satisfied customers

Digia's profitability has traditionally been based on expert personnel, high quality project management and satisfied customers. Digia has carefully selected technologies, shared methods and sufficiently large competence centres. Combined with affordable resources, these factors help maintain a high utilisation rate. They also equip Digia to respond to changes in market demand and technology trends.

Digia's partners are world-class software and service providers. This means that Digia can deliver extensive system packages.

Global management models and systems, sufficiently large unit sizes and a focus on technology – this is where operational synergies are created. A technology focus ensures quality, fast learning and efficient use of resources.

Profitability Competitive advantage

• Competitive advantage is built on operational efficiency, ability to renew, and industry and technology expertise

Digia has experience of enterprise systems and mobile system development. Combined with its expertise in new business areas, operating models and technologies, this helps Digia to renew its entire offering and sharpen its competitive edge. Digia's reputation as a professional, successful growth company makes it a desirable workplace, with satisfied employees. Through business portfolios, Digia aims to develop its current businesses profitably, while at the same time growing new, scalable and international businesses. Digia is efficient because it combines large competence centres, and carefully selected technologies, with a global management model. Digia's proven earning power; good customer relations and portfolio management have made it an efficient and profitable growth company.

Inventive expertise

Unique blend of expertise in ERP systems, mobile devices, usability planning and web application design
World-class expert in chosen technology sectors
Flexible competence development in line with demand

Digia has a unique blend of expertise in ERP systems, mobile devices, interaction design and web application design. This enables Digia to identify and exploit the opportunities provided by new technological trends (cloud computing, SaaS, etc.). Examples include building new internetbased ERP systems, accessible also by smartphones.

Effective competence development

Digia is skilled at developing its expertise, in line with demand and technology trends. In the past year, Digia has successfully trained a large number of its experts, in the Qt application development tool and the MeeGo environment. Digia is now one of the world's leading experts in Qt. Digia's professional experts are fast in learning new technologies.

Competence development in core enterprise system technologies

In 2010, Digia has invested heavily in developing its enterprise system expertise.

Through effective, in-house training organisation and external courses Digia strongly enhanced its expertise in Microsoft Sharepoint, Dynamix AX and Java technologies.

Continually improving employer image

A continually improving employer image is also boosting Digia's expertise. In 2010, Digia came ninth in a Universum survey, charting how university students rate potential employers. Owing to a rise by 13 places since 2009, Digia was dubbed the "IT Sector Rocket". This means that, as it grows, Digia should have no trouble recruiting new experts. Digia recruited a large number of first-rate professionals last year.

Competence strategies increase efficiency

Competence development is systematic at Digia. The company has drawn up site-specific competence strategies. These define the areas of expertise on which each site must focus. In creating these strategies, Digia examined the existing expertise on each site, and what might be obtained locally. Local competence development plans were formed on this basis, including close cooperation with local universities. Operational efficiency will also benefit from each competence strategy. On their basis, sufficiently large teams of experts will be secured, matching each site's area of expertise.

Operational efficiency based on global management model

Digia's inventive experts are managed globally, in a horizontal organisation. This has enabled Digia to achieve a high utilisation rate and good operational efficiency.

The company's global site network includes offices in low-cost locations (Chengdu and Beijing in China and St. Petersburg in Russia). This allows Digia to work with its customers in deciding on the most suitable and cost-efficient unit for each customer project.

Personnel

• Digia's market recognition continues to grow

Personnel in figures

During 2010, the number of employees in Digia increased by 87 persons (+ 5,9%). This growth was purely organic. At year-end there were 1,558 employees, of whom 12.6% worked outside Finland. Staff turnover was 8.5%, which increased a bit.

The average age was approximately 36.1 years, a bit higher than in 2009. Women made up 22.1% of personnel, which was a slight increase.

Recruitment

Digia significantly increased its recognition and attractiveness as an employer. The number of job applications received almost doubled since 2009. Around 6,000 applications were received during the year.

In addition to traditional recruitment channels, Digia increasingly focuses on its visibility and online presence, including in the social media.

Work environment

The annual work environment survey provided plenty of feedback and good improvement suggestions. This year's response rate was particularly high, at over 83%. The overall ratings were similar to those of the previous year.

The company's security as an employer, the company's financial success and future prospects were given noticeably positive ratings. Personnel also highly rated communications and leadership at Digia. Processes were further refined in response to feedback. This included areas such as performance reviews, feedback and incentive systems.

Employer-employee cooperation

Digia continued to work closely with staff representatives, most crucially via the Cooperation Team, to which employees elect representatives. In accordance with the collective labour agreement system, the shop steward and his or her deputy are permanent members of the Cooperation Team. In late 2010, Digia made its first completely local agreement on salary reviews. Previously,

only some salary reviews could be made locally. This agreement entailed higher salary levels than the minimum agreed with the unions. However, it also took account of differences between sites and of individual cases for raises. Pay rises will take place between November 2010 and April 2011.

Occupational safety activities are performed regionally. The company has an occupational safety delegate, an occupational safety committee and occupational safety representatives in various locations. The occupational safety committee convened twice during the year.

Training

Digia is skilled in developing its competence in line with demand and technology trends. Competence in Microsoft SharePoint, Java EE, Oracle, IBM and other technologies was reinforced. Digia trained successfully also a significant number of Qt and MeeGo experts. This was achieved through external and internal training sessions, and certification tests. On average,

almost weekly training events and best-practice

Amount of employees

Personnel distribution by age group

briefings were arranged on the following: various technologies, tools, operating models and certain employee roles. A special emphasis was given to specification expertise, through regular training sessions.

The number of Scrum experts grew to over 100, due to the new Certified Scrum Master (CSM). Digia also extended the skills of its own instructors and trainers.

Managers were trained in the 'proactive care model,' and the model was made available to all personnel. This model aims at the earliest possible intervention in difficult workplace situations. Solutions are sought together with occupational health care and other experts.

Employee well-being

Digia organises an annual well-being event. This reminds employees of how easy and important it is to take everyday, functional exercise. Based on a different theme every year, these events are held in every Digia site. In 2010, the well-being event involved occupational health care partners and service providers, as well as clubs and associations.

Employee benefits were provided to foster well-being. These included luncheon vouchers and meal tickets for daily meals. Occupational health care services were also provided, either through health insurance or by contract with private clinics. Digia also offers dentistry services

to employees. Culture vouchers were introduced in 2010, supporting a balance of both fitness and cultural activities. Through both exercise and cultural pastimes, these versatile vouchers have motivated many employees to take care of their well-being.

Digia enhanced its employees' work-life balance. This was achieved through flexible working hours and, for example, childcare services when children fall sick. An average of 3.5% of personnel were fully absent from work due to longerterm leave. A similar number were employed part-time or on an hourly basis.

A similar budget to last year was allocated to the OpenClub, which coordinates leisure activities for employees. Clubs related to various activities were established in several locations. Examples of OpenClub leisure activities include theatre visits, sports clubs and bands around Finland. One of Digia's bands, Open Stones, once again reached the final of the national Firmarock music competition. Digia's OpenClub bands have been represented among the top bands for several years.

Personnel distribution by Digia offices

Key capabilities for successful performance

Sustainable performance capabilities are built of a deep understanding of customer needs, market trends and the latest technological possibilities
At the core of these capabilities are highly skilled people and efficient processes

Skilled people need to be both recruited and trained continuously to answer to Digia's customer demands. A good employer reputation and fast adapting competence development programs make it possible to grow both in numbers and in technological prowess.

In addition to skilled people, successful performance needs motivated people. Digia provides its people with a whole range of possibilities to increase well-being and job motivation, e.g. various club activities that stimulate both mind and body.

The continuation of successful performance is also dependent on efficient working practices and processes. These are developed continuously and monitored rigorously. The development is done through the Digia Core Process Model (CPM) framework which is the de facto quality management system of the company. The performance monitoring gives insights to development activities and thus contributes crucially to the future performance and success.

Recruitment, Digia as an employer Employer image improved

Last year Digia recruited both seasoned professionals and recent graduates for various positions in .Net, SharePoint, Java Enterprise, Qt and MeeGo technologies as well as project manager positions.

In addition to traditional recruitment channels, Digia is increasing its online visibility. This means e.g. presence in social media and relevant discussion forums.

Digia's improved employer image was reflected by its higher ranking in the Universum survey. This charts shows how university students rate potential employers. Students ranked Digia within the top 10 potential IT sector employers. Due to its hugely improved ranking, Digia was dubbed the "IT Sector Rocket."

Students are an important target group

Digia possesses close relationships with the higher education institutions. In recruitment, students are an important target group. In spring 2010, Digia and the University of Lappeenranta joined forces to train Android experts. This was intended to meet growing needs in mobile device product development. In the early summer, Digia entered a partnership with the University of Jyväskylä and Intel on MeeGo training. Partner universities are provided with the same teaching materials as Digia uses in its own training. MeeGo training commenced in autumn 2010.

Digia actively participated in recruitment events organised by universities. The company's own traineeship programme began in spring 2010. Through this, Digia recruited many promising young talents.

Focus on processes

Understanding changing customer needs is imperative for building high-performing processes
Well-designed processes lead to consistent quality
Continuous improvement is the key to future success

Continuous development

Digia is continuously developing its quality management system – Digia Core Process Model (CPM) – based on recent development in the industry and from our learning experiences and customer feedback. The certified Core Process Model includes descriptions of our processes, as well as instructions, templates and reference material, steers operations in projects, and guarantees a consistent working method of high quality.

Examples of recent achievements include improvements in Digia customer account management process and Digia offering portfolio management process.

The renewed account management process gathers more competences from the entire organisation to the customer front for better customer service. It also brings even more senior management attention to our customer accounts.

The offering portfolio management process has been improved for better transparency throughout the company and hence giving the possibility to more people to be involved in the process. This is important especially in the early stages of product and service innovation and cultivation.

Systematic monitoring

Digia systematically monitors the implementation of its quality operations. The suitability and development of the quality management system, Core Process Model, is monitored regularly through both internal and external audits. Recent developments include specific themes for internal audits. This way Digia is able to gather larger amounts of information from a specific field of interest for closer examination and future improvement.

Business operation

A successful customer experience helps firms to stand out and improves customer loyalty.

Enterprise Solutions New Etra Logistics Centre equipped

Off-the-shelf software for operational and business management as well as consulting and development services
Solutions for electronic services and customer experience management

Digia offers software and services in support of its customers' daily operations. Its customers are enterprises and organisations of all sizes, from both the private and public sectors.

Digia's selection includes off-the-shelf software for operational and business management as well as consulting and development services.

Solutions for electronic services and customer experience management, based on leading technology companies' architecture platforms, build an essential part of Digia's offering.

Digia's offering covers solution implementation, implementation services and comprehensive, continuous life cycle services.

CASE

with Digia Enterprise ERP system

From Etra central warehouse, products move directly to all customers and Megacenter outlets
Quantities can be optimised more effectively, giving Etra Megacenters an even broader product selection via logistics centres

Etra Oy, a subsidiary of Etola Group, is a Finnish technical retail specialist, offering a broad selection of industrial products and services. Etola Group consists of some 30 specialist companies working in close cooperation. With 1,500 employees, these firms have total revenues of around EUR 400 million.

The Etola Group has been using the Digia Enterprise ERP system for several years. This enables it to manage wholesale operations, production and maintenance at Etra and approximately 40 of its outlets. The system has around 1,000 users within the group. The Etola Group emphasises continuous collaboration and process development, alongside customers and suppliers. Logistics is one of its main focus areas. A range of shelf management, service warehouse and consignment stock models, using collection terminals and RFID solutions – these are already in daily use by the Group.

To further improve its logistical efficiency, Etra is building a central logistics unit in Hämeenlinna.

Digia will provide this unit with its Digia Enterprise system. The customer was convinced by the system's logistics features and tools – they are comprehensive and adaptable enough to suit the operations of a huge centre. The logistics centre will enable smoother delivery of an even broader selection of products. These will move directly from the warehouse to all Etra customers and Megacenter outlets.

For the Etola Group and its customers, realtime data streams and seamless integration are major benefits. Product quantities can be optimised more effectively, giving Etra Megacenters an even broader product selection via logistics centres. Rapid and more-reliable deliveries result directly to even better customer service.

Customer Experience Management

Digia makes experiences a competitive asset

Digia helps its clients to provide better customer experiences
Professionally managed development process for improving customer loyalty, competitiveness and process efficiency

It is becoming even more challenging to stand out on the basis of product or service features. Innovations can be quickly copied, reducing the window of opportunity for exploiting them. In addition, customers no longer compare products and services in the way they used to. The competition is shifting towards customer interaction and service experiences when using end products. A successful customer experience helps organisations to differentiate and improve customer loyalty.

Networking is intense and organisations are outsourcing some of their operations. As a result, systematising customer experiences is vitally important. Subcontractor networks, service models and quality need to be wellmanaged; outsourced service centers and maintenance services are also sources of customer experiences. Even if some services are outsourced, in the minds of customers they still form an image of the service provider's brand.

Digia's services and solutions improve the customer experience

Digia's services and solutions help its clients to improve their customer experiences. Through business consulting, end customers' objectives and expectations are identified. Based on that, Digia creates a development plan for systematic improvement of the customer experience. This plan usually includes measures for improving communications, processes, human resourcing and information systems. Aimed at a better customer experience, these measures are defined and prioritised based on how well they benefit the customer.

Digia's IT solutions are tools which help organisations to generate positive customer experiences.

• Portal solutions and electronic customer service solutions support successful customer encounters.

Information work, ERP and process management solutions help organisations to fulfil promises made in customer encounters.
Network management and cooperation solutions help networks to fulfil customer promises through cooperation.
Integration, service architecture and business information solutions enable the gathering, analysis and use of information from customer encounters. They also support the fulfilment of customer promises.

Effective management of the customer experience, from planning to concrete actions: this is what separates Digia from the rest. Digia offers tools for understanding the end customer's values and expectations. They help in planning customer experiences and structuring development measures. Advanced solutions guarantee a trouble-free start-up. These are much more than IT solutions - they are comprehensive development projects in which technology plays its part.

CASE

Customer encounters at Aalto University

• Through CEM-based workshops, Digia and Aalto's IT unit concretised the specification for customer experience

At the beginning of 2010, three Finnish universities merged to create Aalto University. Each of the three previously had its own IT organisation, services and operating models. During the second half of 2010, Aalto's IT unit was seeking a roadmap and destination for its IT services. This was done with the help of Digia, which applied its CEM-method (Customer Experience Management), a tool for understanding and managing the quality of B-to-C encounters.

The customer experience forms part of every customer encounter. Even a good customer relationship can be damaged by a poor experience. Improving customer loyalty and encouraging viral marketing - these are among the most effective ways of increasing sales and profitability.

Through CEM-based workshops, Digia and Aalto's IT unit completed the specifications. The aim was to concretise the customer experience and its possible use in creating an IT services roadmap and destination. The workshops focused on setting objectives for customer groups and customer encounters. This led to an understand-

ing of how to identify and prioritise areas of improvement. It also showed how a future roadmap might be created for the IT organisation. Aalto University was delighted with the workshop approach. The university intends to continue using CEM, in creating roadmaps for other unit.

Digia Tablo

Digital workdesk raises efficiency and speeds up info searches

Digia's digital workdesk launched in 2010
Flexible access to relevant data depending on the personalised profile and the context
Greater organisational efficiency benefits end-customers

In their many roles, knowledge workers spend their days gathering and refining information to be used by either the worker or the organisation. Today's work requires ever more data and IT tools. Managing the related information flows, tools and tasks is taking up more and more time. Information needed at work is scattered between various data warehouses. Some of these are internal, some shared within a network and some are public information sources. In the worst case scenario, employees may even have to manually piece together information. Additionally, interacting with colleagues and partners should be easy, regardless of location. Seeing the big picture and keeping up to date is therefore more crucial than ever, but also more difficult.

Traditional intranets are built solely for internal communication. In Digia's view, this means that they cannot provide the availability, scope and speed of information required by today's organisations.

Digia's digital workdesk provides the solution

As a solution to these problems, Digia launched a digital workdesk in the autumn of 2010. The project was established for developing the concept. This dynamic workdesk collects data and event flows from diverse sources, to create a single, clear entity. It brings together various communication tools and communities, as well as documents and reports. The workdesk also provides access to back-office systems, presents

CASE

Digital Workdesk boosts VVO's information flow

VVO work productivity is being increased with Digia Tablo, a digital workdesk concept
The workdesk and its content are based on employee profiles and their task based information needs

VVO is a listed company specialising in housing rental. VVO commissions, markets and manages its own residences. The company has nearly 39,000 rented dwellings in 50 locations around Finland.

In late 2010, VVO decided to modernise its out-of-date intranet. Using the SharePoint 2010 platform, Digia is building a digital workdesk for people at VVO, in line with the Tablo concept. To make VVO's work more efficient, and improve user experiences of IT systems, the best possible solutions are being chosen. This is based on a digital workdesk, covering areas such as internal communications, group work, document handling and work flows.

The digital workdesk project will be completed in three phases. Beginning in autumn 2010, the first phase will end on May Day 2011. As a result, VVO will have an intranet with a renewed structure. This will provide user-friendly, effective tools for creating and searching for content. In the second and third phases, further intranet tools will be provided, aimed at boosting the

Photo: VVO/Jukka Ahola

ease and efficiency of communication and daily tasks.

The Digital Workdesk is a productivity tool for employees. It offers a user-friendly interface to information, colleagues, tasks, events and other tools. The workdesk and its content are based on employee profiles and their task based information needs. This makes for dynamic, up-to-date content and tools, supporting user needs.

the related tasks and displays organisation and team calendars. This is all done contextually, in real time.

Digia has developed its digital workdesk into both a concept and a productised solution. Digia Tablo links an organisation's information and tools to the context in question. These are provided to users by task: information and tools are made available based on individual user profiles and situations. Dynamically retrieved from various sources, information is provided in line with users' actual needs.

People want to know what's happening in their social networks. Digia Tablo takes this key insight of the social media, and adapts it to the business world. Workers are kept up to date by a flow of feeds - Digia's digital workdesk gathers information from the organisation's various systems, wiki pages, blogs and feeds.

All sides undeniably benefit

The employee, organisation and customer all clearly benefit from the digital workdesk. Organisations obtain productivity gains in knowledge work and work processes. In addition, swift access to information boosts efficiency. Each user's work is lightened by easy access to the right content, tasks, people and tools. Time management is also made easier. In this way, the workdesk increases job satisfaction, and finally, will benefit the customers, in the form of positive experiences.

Integration

Integration is the spinal column of good customer experiences

Outstanding expertise in integration
Experience from hundreds of integration projects
Smooth integration improves business processes and customer encounters

To provide a good customer experience, a company needs to deliver information where it is needed. This often means integrating the company's various systems. As business applications become smarter, integration requirements are becoming more complex. In integration solutions, the focus needs to shift from traditional, twoway message transfers to comprehensive business process management. Business processes are typically long-lasting: they comprise many, interconnected systems and may include manual work phases.

Digia has carried out hundreds of integration projects and understands challenges related to integration. This means that Digia is unmatched for integrating information systems to support the company's core business management.

Once a company has opted for process-oriented integration, Digia's consulting packages help it take its first steps in the right direction. This is how it's effortless to engage the business and IT management to walk together towards the next maturity level of integration.

Integration is the key to service management

Whether through systematic development, or piecemeal improvements, integration services have risen into a critical role in many companies. This means that even small-scale interruptions in integration services can create incidents for a business - not to mention longer disruptions, which can cause significant financial losses. In most cases, integration services are not managed from a single point. Instead, the chain includes several technical solutions, such as a service channel, portal solutions and direct connections to legacy systems. Managing the whole service system is critical, in ensuring a reliable service chain. This not only means paying attention to the roles and critical nature of systems, but also their special characteristics and support/maintenance arrangements.

Digia offers high quality services for mapping, and systematically developing, integration architecture. These can provide major advantages, for example by unifying integration services related to customer encounters. Digia has created numerous management models, for both integration- and other types of architecture. Its experience also includes setting up integration centres, as well as the implementation and runtime monitoring of integrations.

Productivity and Operations Management

Digia improves customers' operational efficiency

Digia's ERP business is growing, with Digia Enterprise and Microsoft Dynamics as the drivers
Digia is the market leader in Finland among providers of systems to trade unions and unemployment funds
Digia has expanded its product selection with a core banking solution intended for small and medium-sized banks

Productivity and Operations Management

Digia's ERP business grew faster than the market rate in 2010. Profitability remained also high. The outstanding success is based on high customer satisfaction and the ability to continuously launch new, inventive solutions meeting evolving customer needs.

Digia's industry-specific, off-the-shelf software is used for daily operations. These include managing the order/delivery chain, stock and asset management, customer and supplier management, financial administration and official reporting.

A strategic partner

As a system supplier, Digia often plays a strategic role for the customers whose entire operations are often based on systems delivered by Digia. In many cases, Digia participates in customers' business development and change management. This is achieved by guaranteeing seamless system support during key development projects. An ERP system is often like a company's heartbeat; without it, the company would grind to a halt.

Digia's offering areas include world-class, off-the-shelf software. Such products serve the needs of retailers, manufacturing, service organisations, banks, asset management and trade unions. Renowned for their flexibility, these systems can be expanded with custom-made extensions or third-party software.

In addition to ready-made software, customers can obtain consulting and development services. These are for the creation of custom-made functions, in line with the industry-best practices and specific customer requirements.

Digia's offering encompasses software implementation services, as well as comprehensive continuous services during the product's life cycle. Throughout an application's lifetime, many customers seek as many application-related services as possible from a single supplier. Digia has strong expertise in the SaaS

(Software-as-a-Service) model in all key application segments. Digia foresees a time when businesses will mainly acquire applications as a service; the company is well prepared to meet these needs.

CASE

ERP and financial administration Making an organisation's knowledge capital visible

SLO Oy is Finland's leading wholesaler of electrical and telecommunication equipment. It serves electricians, power and telecom companies, network builders, industrial firms and public bodies, through 35 sales offices around Finland. SLO has 410 employees.

SLO wanted to update its popular intranet, to operate on the Microsoft® Office SharePoint 2010 platform. It also wanted a more logical structure for content offered through the service. In addition, the intranet was to be made more interactive, by offering SLO units their own sites. On these, they would be able to post their own news, instructions and practices.

Predictive product search functionality was added to SLO's intranet. When a user types a product name in the search field, information on electrical and telecom goods flows from the product database. This database is a separate online system for managing products, quantities and sales.

A content management consultant guided the specification and design phase, by offering opinions and pre-prepared suggestions based on the customer's wishes.

Pictured: SLO's Tuupakka outlet in Vantaa. Sales Manager Jari Tuoriniemi checks the order of products on the shelves of SLO's Tuupakka outlet. Attached to the company's central warehouse in Vantaa, the outlet offers a selection of around 110,000 electrical and telecom goods.

Digia's ERP system business includes the company's own and third-party, off-the-shelf software. These are provided to various industries, on a broad basis. As a leading ERP expert, Digia has extensive experience spanning two decades. This has led to a large, satisfied clientele in Finland and its neighbouring areas.

Developed in Finland, and designed specifically for the Finnish business environment, the Digia Enterprise package has enjoyed long success. This is despite intensifying competition. In 2010, as a provider of ERP systems to Finnish companies, Digia won considerably more market share. Digia's Microsoft Dynamics business also grew, at a rate clearly exceeding market growth. Among international corporations, Dynamics

AX has become a competitive alternative to tra-

ditional, global ERP systems. Digia's Microsoft operations are international, delivering solutions to many countries outside Finland.

A well-productised implementation process, professional personnel and ready-made verticals in focus industries: these are the keys to Digia's success as an ERP and financial system supplier. Customers often cite security and stability as Digia's ace cards. In-depth experience and solid technological expertise mean that the company can guarantee a safe and carefree project model. This keeps customers' projects on schedule, within budget and in sight of the desired outcomes and benefits.

CASE

More transparent and efficient jewellery order-supply chain

Digia supplied the most flexible, yet highly standardised, ERP system possible with all the necessary integrations
Production planning is now easier, thanks to up-to-date sales data and forecasts

Kalevala Koru Oy designs and produces gold, silver and bronze jewellery. Together with Lapponia Jewelry Oy, it forms the Koru Group. This is the largest company of its kind in Finland, and one of the largest in northern Europe.

Kalevala Koru wanted the most flexible, but highly standardised, ERP system possible. System implementation would have to be smooth, without extensive customisation. With simple system run-in, the system would bring fast realiasable benefits. International introduction would have to be an option.

Digia met all of these objectives, by supplying the Microsoft Dynamics AX ERP system, plus the necessary integrations. Hardly any customisation was needed; the built-in processes supported well Kalevala Koru's operating models. They also enabled the desired changes to its practices.

The result was a more efficient and transparent order-supply chain. Stocktaking is now easy via a mobile device, with data being automatically recorded to the system. Production planning is easier, thanks to up-to-date sales data and forecasts.

In addition, customers can be briefed in more detail at various stages of the process. This increases customer satisfaction and trust between players.

"Our new ERP system is the most imperative operative system in Koru Group. Practically everything, from financial administration to production and purchasing, is now based on AX. The system is already used by around 30% of our staff," states Kalevala Koru IT Manager Tuula Aitta-aho.

Bank and asset management application

Digia serves bank and asset management customers, based on its own product line. This includes an asset management application package and a basic bank solution for small and medium-sized banks. Within its target segment, this product line is a well-known market leader in Finland.

corporate reorganisations and other changes, some players have disappeared altogether. Their places have been taken by new entrants. Digia has retained its market position. Among other things, this is due to long-term customer relationships and a skilfully created product line.

In this segment, tumult in the financial markets has created a more challenging scenario. Through

Services for associations and unions

Trade unions and unemployment funds throughout Finland are significant customers of Digia. Due to changes among suppliers in the sector, Digia has been able to increase its market share and is now the undisputed market leader. In this carefully focused segment, Digia's strengths are in-depth knowledge of its customers and the industry. It also keeps a close eye on constantly changing legislation. Innovative and unflagging development of the Digia OpenPoint product line is another, major strength.

In this sector, Digia will continue to focus on excellent customer service. Product development, which takes account of customer needs, will also be a priority. Through these, Digia will ensure that customers can increase their efficiency. Customers will also be able to offer their own clients first-class services and wellmanaged encounters, in union and unemployment insurance matters.

CASE

PAM has over one million member contacts per year

By reducing back-office functions, electronic customer services have cut down manual work at PAM offices
PAM can now focus its time and resources on customer encounters

Service Union United (PAM) is a Finnish trade union for the private service sector. It has more than 228,000 members. PAM's members are insured by PAM's unemployment fund. For over a decade, PAM and Digia have been jointly developing member-service solutions. Digia has provided the union with OpenPoint solutions, which include ERP systems for both the union and fund. Digital self-service channels for members are also included. These have mobile application extensions and are system-integrated.

Digital channels have improved customer service in many areas of PAM. Joining PAM, signing up for courses and making membership fee payments can all be done online. Members can also view and edit their personal data.

Fund members can carry out all fund-related business online. This includes applying, and submitting the necessary attachments, for fund payouts. Further applications can be sent by mobile phone and based on speech recognition technology.

By cutting back-office functions, electronic customer services have reduced manual work at

PAM offices. The union can now focus its time and resources on customer encounters. PAM's vision is to be the most modern trade union by 2015. To this end, PAM and Digia are seeking new ways of improving member services. In early 2011, PAM will adopt VoIP and Contact Center solutions provided by Digia. These will be seamlessly integrated into the OpenPoint system.

Through systems provided by Digia, PAM has more than one million customer encounters per year.

Mobile Solutions

Digia as a mobile solution partner: an innovator and strong change driver

Time and again, Digia has been chosen as a key partner of firms facing dramatic change
Digia has a long, successful history and high customer satisfaction in mobile solutions

Provider of complete solutions

Digia creates innovative mobile solutions with the world's leading mobile companies. Digia serves its customers throughout the innovation chain, from designing exciting user experiences, to market launches and life cycle management. Digia's business is increasingly based around the independent management and delivery of large software systems.

A strong partner during rapid change

The mobile sector is changing faster than any other. Consumer habits, technologies and the business environment are developing at speeds unheard of elsewhere. Time and again, Digia has been chosen as a key partner of firms facing dramatic change. Building new-generation software platforms, delivering software solutions for strategic products and forecasting future use scenarios - Digia has been a powerful partner during technological upheaval.

Key to success: the broadest experience and most inventive expertise on the market

Digia has a long, successful history and high customer satisfaction in mobile solutions. These are based on renowned expertise, continuous renewal, reliable delivery and high quality - all the fruit of broad experience.

To create winning solutions, Digia works close to and alongside the customer. This closeness is combined with agile methods, and the efficiency gains available to an international company.

Product Creation Services

Speed, efficiency and quality user experience in Product Creation Services

World-leading product creation services in the mobile sector

Digia offers innovative mobile solutions and advanced development services to several world-class companies in the mobile sector. Digia's long and successful history and high customer satisfaction are based on reliable delivery and high quality.

Software platforms and applications for mobile devices, tablets and netbooks
Turnkey deliveries of device-specific software and maintenance on multiple platforms
Cloud services and desktop applications for consumers and business segments
Embedded software for devices, machines and industrial systems
User experience services: innovation, concept design and usability
Training services, in the sector's leading technologies

Core competence, on which customer satisfaction and continuous renewal are built

Inventive design in user experience and architecture, reliability in delivering large entities, efficient operations and uncompromising quality control - these are the keys to developing modern products and services. Experience and refined operating methods are critical elements of such skills. Mastery of these core competencies makes it easy to adopt new technologies, trends and operating models. It also enables their rapid renewal. This is how Digia provides excellent customer satisfaction. On the same basis, customers can be astonished by Digia's inventive solutions and ideas to help them succeed.

Ease of purchase based on unique service portfolio

For multiple software platforms, from Android to MeeGo, Symbian, Windows and the iPhone iOS environment, Digia provides inventive, efficient solutions. Digia is unique in offering strong expertise in user experience, visionary

architecture design, world-class project management and the efficiencies available from an international operating environment. In addition, agile methods are used alongside the customer, to turn its visions into gems. For customers new to the opportunities of mobile and software solutions, Digia offers training and consulting services to help them get started.

Product creation services bring digital dimension to new areas

To some companies and industries, mobile services and software are still new sources of competitiveness. Digia offers the benefits of product creation services to these too. In such companies, software may be recognised as an important part of a product or service portfolio. However, software development for multiple platforms, or for a specific device environment, may not make sense. This is often for reasons related to competencies or efficiency. As a software partner, Digia can bring a new dimension to a customer's offering, based on a quick, scalable and efficient method.

User Experience

Digia User Experience: visionary design for ease of use and added value

User Experience: inspiration and easy-to-use products for the end-users – and at the same time, achieving business targets
Digia's strength is to understand both users and technology
Good results come by asking feedback from the users and by taking account the business needs

Experiences and ease of use for users: achieving business targets

End-users' demands are growing, and products and services need to respond. A product needs to be attractive, inspiring and provide experiences, as well as being useful and user-friendly. Users must be captivated not only by the product's design, but also by its interface. This is a core precept of Digia's broad-based, User Experience teams. Every year, User Experience works on hundreds of customer projects related to mobile and business solutions.

Digia's User Experience design services stand out: in addition to experiences and ease of use, they take feasibility and scheduling into account. Such elements are crucial to commercial success. This is possible thanks to close cooperation with Digia's software teams. For many customers, strategic decision-making and choice of direction are much easier, when their vision can rapidly be transformed into functioning software.

Basis in user-driven design and understanding what technology can offer

The mobile sector is seeing rapid technological development and tough competition. This leads to a short user experience renewal cycle, and the need to stand out. Due to its pedigree in user experience design, Digia has a pole position in this area. Digia's leadership is also based on long-term cooperation with leading companies in the sector, renowned technological expertise and a broad

CASE

usability testing in various markets. With usability testing as part of its solution package, Digia can ensure quick and seamless utilisation of user feedback. This achieves the best possible end result. User satisfaction and, from a business perspective, a focus on developing the right

things, are thereby guaranteed.

Objective: the best user experience in the market

Using the applications and solutions can be made more inspiring with clear and visually attractive user interfaces
User experience both in mobile phones and tablet computers matches reality better and supports users' everyday life
By investing into research and technology, Digia paves the road for new and innovative user experiences

The key requirement for any enterprise and mobile solution is a top-class user experience, achieved by smooth interaction and attractive visual look. Digia continuously explores new user experience innovations and emerging technologies.

Touch based user experiences have been the high interest topic for the past couple of years, but there are several new inspiring opportunities around the corner for further enriching the user experience. Using the applications and solutions can be made more fun and inspiring with clear and visually attractive user interfaces. User experiences both in mobile phones and tablet computers can be made to better match reality and users' experiences in everyday life. Digia has used its technical and user experience expertise to enable these future mobile UI technologies in the mobile phones available today. By investing into research and technology needed

to enable these new experiences Digia paves the road for new and innovative user experiences.

During 2010 Digia showcased e.g. the following: • 3D desktop – Your new menu for the smartphone of the future. Stunning visual appearance and totally new way for navigating in all three dimensions.
Augmented Reality Add a new dimension to any app. Finding content, services and people from your environment with mobile device acting as an smart display to your world.
Flowd A circle of artists, places and friends you love. Create and visit places, post comments, send shouts with images and share in Facebook and Twitter. Flowd is available as a web service and mobile application for Android, iPhone and Nokia touch devices.

range of usability services. Digia is uniquely able to carry out user-driven design for small, everyday purposes, while also creating radical innovations. Such innovations harness the potential of new technologies, to create added value.

Fine solutions are not created by accident; user experience requires insight and skill

Digia has been refining its processes for years. Digia can now create tailored products quickly, turning great ideas into gems. Visual and user interface designers are involved in new product development from a very early stage. Digia is able to fuse creative design seamlessly with the development process. In this way, ideas are honed to perfection and viable commercialisation plans are created. Digia's User Experience services progress naturally, from user-driven innovation to concept design, visual design, prototyping, usability evaluations and user interface design.

Getting the end result right: collection and iterative use of user feedback

Digia's solutions take usability seriously. Its usability testing methods apply the sector's best practices. Testing is based on usability labs with testing equipment, and partner networks for

Product development and technology trends

Latest technologies serving users and businesses

By developing its own products and expertise in line with changing market needs, Digia stays at the cutting edge of trends
Novel information systems or customer channels enable new business operations and new business models

During the last few years, advancements in computer science have brought within our reach many new, even trend like things. Cloud computing, location based services, social media, mobile applications, Software as a Service (SaaS), just to mention a few. As always, some of the new marvels get a little more publicity than they deserve. Despite all the hype and media fuss, there's usually at least a nugget of verity behind all of them.

Naturally, trends play a part in how consumers use information technology and various terminal devices. It's clear, that in all organisations the end customer connects also electronically to the services or products of the organisation. Thus, the new technology trends have their effect on how end customers are being served and how services are being created. New technologies and operational models have bred whole new

methods to do business. In many areas, the competitive arenas for companies have changed radically.

From market promise to real customer benefit

As described above, the change of processes and business models also requires taking into account of new kind of information systems or customer channels. This can also be addressed reversely: new kinds of information systems or customer channels enable new business or a radical change in the business model. Often also significant cost savings or cost scalability in change situations can be achieved with new operational model or new information system.

Digia will strongly stay in the forefront of the trends by developing its own products and knowledge to meet the changing market needs. As part of this research and development, the company is also searching for new partners or will be adopting new products from existing partners. This ensures that our clients always have access to best solutions and skill that the market can offer.

Taking advantage of new business models in offerings as a whole

Digia has divided its offering and business areas into portfolios. This dividing has been based on the growth expectations, life cycle, operative synergy and business models.

The portfolios are:

Productivity and operations management
Product creation services
Customer experience management
Ventures

Customer experience management is a service and product concept intended for Digia's customers. It provides tools for understanding the end customers' values and expectations, planning customer experiences and structuring development measures. Through advanced solutions, it also guarantees a fluent and fast start-up. One part of our customer experience management concept is the Digital Workdesk, launched last year.

In the Product creation services, it is natural to take advantage of the latest technologies: the clients' products usually are from the sharpest end of progress, thus making the demand for competence ambitious. Digia has, over the years, produced operational models that can be used to match the know-how to changing market needs. Technologies change, but with deep industry knowledge and efficient transformation training, even hundreds of employees have been moved towards new technologies.

Ventures approaches the market with easily scalable cloud solutions, directly from web. Browser and mobile based products are available without place or time restrictions. The business models are also innovative: the client pays the affordable basic fee plus usage. Introduction is free or low cost as well.

Digia's competitiveness has become even stronger, due to continuous renewal and development. The balanced development of offering portfolio and expertise are Digia's key factors to renew and further improve its own abilities to race the market. Investments made to research and development take Digia forward to meet the future challenges. This way, the company will further maintain its unique combination of skills in enterprise solutions, mobile devices, usability design and web application design.

Markets and Digia's business Digia helps customers face accelerating change in the markets

Customer experience growing as a competitive factor
Need for services, anywhere, anytime, is boosting development of multichannel interaction
Technological development and changes in consumer behaviour create increasing demand for mobile services

Major change is affecting many Digia's customer industries. Good customer experiences have joined the traditional change drivers of greater efficiency and productivity. This is increasing demand for digital services. It is also encouraging companies to improve the usability of services on various devices. Services must be available anytime, anywhere. Companies are planning the type of customer experience they provide more carefully, via various channels.

Finance industry customer experience is created online

Service availability and ease of use have become major competitive factors in the finance industry. Finance companies are developing digital services, and services independent of time and place. This enables them to provide a better customer experience. It has also led to rising

demand for solutions which directly link online and mobile services to back-office systems.

Digia has a strong position in back-office systems for asset managers and in core banking solutions for small and medium-sized banks. Last year, Digia broadened the functionality of its banking system, for example with an online banking feature. As smartphones proliferate, Digia is also expanding its mobile solutions range for the finance industry. Digia's solutions range from back-office systems to excellent end-customer usability. No major investments are needed from customers, since these innovative solutions can also be provided as a service.

Public administration services for a growing clientele, at lower cost

The need for greater efficiency and productivity spells major change, both now and in the past, for Finland's public administration. Public bodies are responding by centralising and digitising services, leading to larger, centralised purchases. Many traditional public services are now open to competition from the private sector: citizens will benefit from these changes, due to falling costs and improved services. Healthcare is a familiar example of this.

Digia has solid expertise and existing long-term customer relationships in the public sector. It also has a strong, private-sector pedigree, in improving customer experiences and operations. This is an ideal platform for increasing the efficiency and customer-orientation of public administration systems.

Consumer behaviour taking a front seat in the trade and services industry

In retail, there is a growing need to manage value chains using real-time data. This is because the logistics emphasis is shifting, from a retailer's own central warehouses to managing subcontractors and partners. Traditional competitive factors are now rivalled by the ability to offer

consumer services, even mobile services, which strengthen customer loyalty. Factors such as timely staff availability and in-store efficiency will grow in significance. By improving these, retailers can gain a more competitive edge, through a better customer experience. Digia has developed the Digia Smart Store concept. This brings together retail chain management and store solutions, into a package covering the key needs of general and specialist retailers. Digia has a comprehensive range of solutions, from ERP systems, integration services and e-commerce solutions, to mobile applications for in-store workflow management.

Mobile industry's focus shifting from devices to services

Of Digia's customer segments, the mobile industry underwent most changes in recent quarters. Serious new competitors have appeared among device manufacturers. In addition, competitive technology platforms have increased in number. Competitive factors are bi-fold. Device manufacturers need a critical mass of their own devices on the market, but the services available for each technical platform and device are also critical. In addition to telephones, the range of mobile devices has grown hugely. A key competitive edge lies in swift production of new, more

intuitive devices. Strongly fragmented value chains are also typical of the sector. The decisive role is played by consumers, who choose the kinds of services they prefer.

Digia's strengths are excellent technical expertise and the ability to follow demand by exploring new technologies. Digia can also manage the entire customer needs cycle, from the early planning phases to solution maintenance. It can assume responsibility for large entities whether single applications, or more extensive products or services.

Change drivers in other industries

In Digia's other customer segments, the increasing need to manage both a fragmented workforce and mobile work is the clearest change driver. In addition, the race is on to produce a good, distinctive customer experience: this is a force for change shaking up the entire market. For example, traditional, large capital goods are often produced outside Finland. Fierce competition makes after-market services a distinctive competitive edge. These include servicing, maintenance and other services. The same competitive edge is gathering strength in several sectors, for example in elderly care services. Many companies are wondering how to produce efficient services, while staying focused on good customer experiences.

In its other customer segments, Digia offers solutions in addition to customer experience development and traditional ERP. These include mobile work optimisation and management, for example.

International markets

Digia has growing competence centres in China and Russia. In 2010, the company began active sales to local business customers in these markets. China's and Russia's markets are changing even faster than Finland's. In Russia, key areas of corporate development include the review and renewal of IT strategies, system optimisation, efficient infra management and, naturally, cost reduction. Across the board, Russian companies are keener to outsource large parts of their IT systems than before. Growth is also expected in public healthcare IT projects. This will provide Western companies with good prospects. Digia has long operated in Sweden. There, it provides system solutions for the asset management market, which is undergoing similar changes to Finland: demand for electronic and mobile services is growing fast.

Digia's strengths

Ability to understand the industry change
Inventive expertise
Ability to add value to the customer's business operation

In addition to its solid financial position, Digia has systematically maintained its product and service portfolio, while developing new business opportunities. Extensive industry-specific and technology expertise, plus built-in efficiency, mean Digia can change direction quickly to meet demand. Digia is technology-independent, making it an even more trusted partner.

Digia's strength lies in understanding change in customer industries. This enables it to provide value-generating, inventive solutions.

Governance

Digia's employer image is skyrocketing: the number of applications received has doubled in 2010.

Board of Directors

From left to right: Robert Ingman, Martti Mehtälä, Pertti Kyttälä, Pekka Sivonen, Marjatta Virtanen, Kari Karvinen and Tommi Uhari.

Pertti Kyttälä, b. 1950, M.Sc. (Econ.) Board member since 2005 and Chairman of the Board since 2010. Chairman of the Board's Audit Committee. Previously Vice Chairman of the Board. Currently Managing Director of Peranit Ltd. His previous posts include CEO of Radiolinja Ltd (1999 –2003), IT Director of Helsinki Telephone Company (1997 –1999), Managing Director of Samlink Ltd (1994 –1997), and Managing Director and Deputy Managing Director of Sp-palvelu Ltd (1991 –1994). Previously, he has held various

positions at SKOP Bank (1985 –1990) and OKO Bank (1973 –1985). Moreover, he is Chairman of the Board of Directors at ASAN Security Technologies Ltd.

Independent of the company and its significant shareholders.

Martti Mehtälä, b. 1957, M.Sc. (Tech.) Board member since 2007 and Vice Chairman of the Board since 2010. Chairman of the Board's Compensation Committee. Until June 2007,

served as Managing Director of Microsoft Oy for 12 years. Previously held managerial sales and marketing positions at Nokia Data and ICL Data Oy, as well as serving as Dava Oy's Managing Director and Country Director of Computervision Inc. Over 25 years' experience of IT implementation and of sales and marketing in various industries, and broad experience of working in cooperation with Finland's most extensive IT partner network and various international partners. Positions of trust have included membership of the

National Information Security Advisory Board established by the Ministry of Transport and Communications and of the National Board of Economic Defense.

Independent of the company and its significant shareholders.

Robert Ingman, b. 1961, M.Sc. (Eng.), M.Sc. (Econ.) Member of the Board since 2010. Member of the Board's Nomination Committee. Currently Managing Director of Arla Ingman Oy Ab. Previously

he has served as the Managing Director of Ingman Group Oy Ab and Ingman Foods Ab (1997- 2006). In addition, Robert Ingman is the Chairman of the Board of Ingman Group Oy Ab and a member of Etteplan Oyj's and Evli Pankki Oyj's Boards.

Dependent on significant shareholders.

Kari Karvinen, b. 1959, MA

Member of the Board since 1990. Member of the Board's Audit Committee and the Nomination Committee. Co-founder of SysOpen Plc. Chairman of the Board (2002–2005) and Vice Chairman (1999 –2002) of Sysopen. Vice Chairman of the Board at Digia Plc (2005 –2007). Board professional and independent investor. At SysOpen Plc, held the posts of deputy Managing Director (1990-1999), Director of Planning (1999 –2000) and full-time Chairman of the Board (2002 –2004). His previous posts include Managing Director and Product Manager at Helsingin PC-Konsultit Ltd (1988 –1990), and various IT industry posts at Sycon Ltd (1982 –1988). Member of the Finnish Association of Professional Board Members since 2003.

Independent of the company and its significant shareholders.

Pekka Sivonen, b. 1961, Secondary school graduate in Political Science

Member of the Board since 1997. Chairman of the Board's Nomination Committee and member of the Compensation Committee. Previously full-time Chairman of the Board of Directors of Digia Oyj (2005 –2010). Founding shareholder of Digia Inc., Board member (1997 –2005) and Chairman (2000 –2005). CEO of Digia Inc (1997 –2000). Chair of the National Emergency Supply Agency's Technology Pool since 2007. Currently also Chairman of the Board at BlueWhite Resorts Ltd and Comma Group Ltd. Member of the Finnish Association of Professional Board Members since 2005.

Dependent on the company and significant shareholders.

Tommi Uhari, b. 1971, M.Sc. (Eng.)

Member of the Board since 2010. Member of the Board's Compensation Committee. Previously Uhari has served as a management team member of ST Microelectronics (2006 –2010). In addition, he has held various managerial positions at ST's joint ventures in the wireless business ST-NXP Wireless and ST-Ericsson (2008 –2010), and he has also acted as head of ST's Wireless Business Unit (2006 –2008). Prior to that, Uhari was in charge of Wireless and SW platforms units at Nokia (1999 –2006).

Independent of the company and its significant shareholders.

Marjatta Virtanen, b. 1950, M.Sc. (Econ.) Member of the Board since 2010. Member of the Board's Audit Committee. Currently Managing Director and IR consultant at IRMA Advisors Ltd. Previously Virtanen worked as Market Supervisor at the Financial Supervisory Authority (FIN-FSA) (2006 –2009). During her long career in communications and investor relations Marjatta Virtanen has served as Head of Communications at Hartwall (1988 –1993) and at Tamro (2001 –2004). She has also worked as an IR consultant and Managing Director at Viherjuuri Communications (1994 –2001) and at IRMA Advisors Ltd (2004 –2006). Member of the Finnish Association of Professional Board Members since 2010. Independent of the company and its significant shareholders.

Group Management Team

Juha Varelius, b. 1963, M.B.A.

Digia's President and CEO as from the beginning of 2008. Reporting to the Board of Directors, Varelius is responsible for the company's operative business. Previously, he has served as the President and CEO of the technology company Everypoint Inc of Boston (2006 –2007). He has also held managerial positions at Yahoo! and Everypoint in London (2002 –2006). Moreover, he has served in various managerial positions at Sonera (1993 –2002), acting in his last years there as Managing Director of Sonera Zed and a member of the Sonera Management Team.

Asko Hakonen, b. 1961, vocational qualification in business and administration

Senior Vice President, software and service products, Management Team member since 2008. Responsible for software and service products as well as their development. Previously held managerial positions at the Digia Industry and Trade division (2007 –2008). Prior to joining Digia, Hakonen worked as a project and unit manager at Sentera Plc (1998 –2006), where he was in charge of internet, mobile and ERP systems. Previously also held the post of project manager at Solagem Oy (1990 –1997). Hakonen has worked in the IT sector since 1985.

Tommi Laitinen, b. 1968, vocational qualification in business and administration

Senior Vice President, new products and international product business, Management Team member since 2005. Previously, he has served at Digia as SVP of Competence organisation (2009 –2010), SVP of Telecommunication division (2007–2008) and SVP in charge of the company's strategy and development (2005 –2007). His previous positions at Digia Inc. included Vice President, Engineering (2002 –2004); Director, Quality and Processes (2001–2002); and Business Unit Manager (1999 –2000). Prior to that (1991–1999), he was in charge of various project and product management duties and software development duties.

Antti Lastunen, b. 1964, vocational qualification in business and administration

Senior Vice President, sales and marketing, Management Team member since 2008. Responsible for sales and marketing operations. Previously, he has been in charge of Business Operations at SAP Nordic (2005 –2008), and Large Enterprise Sales (2003 –2004) and Manufacturing Industry Sales (2000 –2002) at SAP Finland. Prior to that, he held positions in international customer management at SAP and Computer Associates Finland (1995 –1997) and sales at Inter Marketing (1988 –1994), respectively.

Harri Paani, b. 1963, M.Sc.

Senior Vice President, competences and projects. Management Team member since 2010. Paani is responsible for the development and management of competences as well as project resourcing. Previously he has served as Business Development Director at Logica (2007 –2009) and was responsible for specific large-scale sales projects and application outsourcing. Prior to that Paani worked at Computer Sciences Corporation in Finland and abroad (1997 –2000). During that time he spearheaded software development unit located across several countries and acted as the CEO of CSC Finland. He was responsible for customer relations for a major international client and in charge of service provision in Finland, Sweden and Norway. Prior to that, he was the Chief Information Officer for the Sampo Group and Director of the Systems Development unit, also at the Sampo Group.

Mika Pälsi, born 1970, LL.M. General Counsel, Management Team member since 2009. In charge of legal matters and stock exchange communications at the company. Trained on the bench, post-graduate LL.M studies at the Universities of Helsinki and Leicester (U.K.). Pälsi has over ten years' experience in international business law, both as an attorney and in-house counsel. Before joining Digia in 2009, Pälsi worked for Tieto Corporation, where he was in charge of providing legal counsel to one of their business units. Before moving into corporate practice, Pälsi worked as an attorney at Castrén & Snellman and as a solicitor at Allen & Gledhill Advocates & Solicitors (Singapore).

Harri Savolainen, b. 1965, M.Sc. Business Economics

Chief Financial Officer, Management Team member since 2010. Savolainen is in charge of Group Finance and Administration. Prior to joining Digia he worked for Logica Finland Ltd. where he, as a Member of Management Team was in charge of Logica Finland's finance, internal IT, HR and administration. Previously in his career, between 1997 and 2006 Savolainen worked at Siemens Ltd. as Director for Accounting, Controlling and Financing in Finland and the Baltic States, and between 1992 and 1997 at Mars Incorporated.

Corporate Governance Statement

General issues

This Statement has been issued separately from the company's operating and financial review.

Digia's corporate governance system is based on the Companies Act, the Securities Markets Act, general corporate governance recommendations, and the company's Articles of Association and in-company rules and regulations on corporate governance.

Digia's corporate governance principles are integrity, accountability, fairness and transparency. This means, inter alia, that:

The company complies with the applicable laws, rules and regulations.
The company organises, plans and manages its operations, and does business abiding by the applicable professional requirements approved by Board members, who demonstrate due care and responsibility in performing their duties.
The company demonstrates special prudence with respect to the management of its capital and assets.
The company's policy is to keep all market participants actively, openly and equitably informed of its business operations.
The company's management, administration and personnel are subject to the appropriate internal and external audits and supervision.

Adherence to the Governance Code

Digia adheres to the Governance Code for Listed Finnish Companies, issued on 15 June 2010 by the Finnish Securities Market Association.

The Governance Code can be read on the website of Finnish Securities Market Association at www.cgfinland.fi.

Shareholders' Meeting

Digia's highest decision-making body is the Shareholders' Meeting at which shareholders exercise their voting rights regarding company matters. Each company share entitles the holder to one vote at the Shareholders' Meeting.

AGM will be held annually within three months of the end of the financial year. An Extraordinary General Meeting will be held if the Board of Directors deems it necessary or if requested in writing by a company auditor or shareholders holding a minimum of 10 per cent of the company's shares, for the purpose of discussing a specific issue.

The Finnish Limited Liability Companies Act and Digia's Articles of Association define the responsibilities and duties of the Shareholders' Meeting. Extraordinary General Meetings decide on the matters for which they have been specifically convened.

Board of Directors

Operations and duties

Elected by the Shareholders' Meeting, the Board of Directors is in charge of company administration and the appropriate organisation of company operations. Under the Articles of Association, the Board of Directors must consist of a minimum of five and a maximum of eight members. The Nomination Committee prepares a proposal for the Shareholders' Meeting regarding 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 company's major shareholders. The Managing Director or other company employees under the Managing Director's direction may not be elected members of the Board.

The term of all Board members expires at the end of the Annual General Meeting following their election. A Board member can be re-elected without limitations on the number of successive terms. The Board of Directors elects its Chairman and Vice Chairman from amongst its members. If the Board so decides, the position of Chairman of the Board may be a full-time job. Upon the full-time Chairman of the Board of Directors since 2005, Pekka Sivonen announcing in the AGM 2010 that he is no longer available for the chairman's position in the new Board to be elected by the AGM, the company announced that it will give up the practice to have a full-time chairman of the Board.

The Board has prepared and approved a written agenda for its work. In addition to Board duties prescribed by the Companies Act and other rules and regulations, Digia's Board of Directors is responsible for issues on its agenda, observing the following guidelines:

Good board practices require that the Board of Directors, instead of needlessly interfering in the details involved in day-to-day operations, concentrate on elaborating the company's short- and long-term strategies.
The Board's general duty is to steer the company's business with a view to maximising shareholder value in the long term, while taking account of expectations set by various stakeholder groups; and
Board members are required to perform on the basis of sufficient, relevant and updated information, in order to serve the company's interests.

In addition, the Board's agenda:

defines the Board's annual action plan and provides a preliminary meeting schedule and framework agenda for each meeting;
provides guidelines for the Board's annual selfassessment;
provides guidelines for distributing notices of meetings and advance information to the Board and procedures for keeping and adopting minutes;
defines job descriptions for the Chairman, members and secretary of the Board of Directors (the secretary is the Company's General Counsel or, if absent, the CEO); and
defines the framework within which the Board may set up special committees or working groups.

During the 2010 financial year, the Board convened 18 times. The meeting attendance rate averaged 98 per cent.

The Board evaluates its activities and working methods annually, employing an external consultant for this evaluation, if necessary.

Board Members

In 2010, the Digia Plc Board of Directors comprised:

Pertti Kyttälä, b. 1950, M.Sc. (Econ.)

Board member since 2005 and Chairman of the Board since 2010. Chairman of the Board's Audit Committee. Previously Vice Chairman of the Board. Currently Managing Director of Peranit Ltd. His previous posts include CEO of Radiolinja Ltd (1999–2003), IT Director of Helsinki Telephone Company (1997–1999), Managing Director of Samlink Ltd (1994–1997), and Managing Director and Deputy Managing Director of Sp-palvelu

Ltd (1991–1994). Previously, he has held various positions at SKOP Bank (1985–1990) and OKO Bank (1973–1985). Moreover, he is Chairman of the Board of Directors at ASAN Security Technologies Ltd.

Martti Mehtälä, b. 1957, M.Sc. (Tech.)

Board member since 2007 and Vice Chairman of the Board since 2010. Chairman of the Board's Compensation Committee. Until June 2007, served as Managing Director of Microsoft Oy for 12 years. Previously held managerial sales and marketing positions at Nokia Data and ICL Data Oy, as well as serving as Dava Oy's Managing Director and Country Director of Computervision Inc. Over 25 years' experience of IT implementation and of sales and marketing in various industries, and broad experience of working in cooperation with Finland's most extensive IT partner network and various international partners. Positions of trust have included membership of the National Information Security Advisory Board established by the Ministry of Transport and Communications and of the National Board of Economic Defense. Robert Ingman, b. 1961, M.Sc. (Eng.), M.Sc. (Econ.)

Member of the Board since 2010. Member of the Board's Nomination Committee. Currently Managing Director of Arla Ingman Oy Ab. Previously he has served as the Managing Director of Ingman Group Oy Ab and Ingman Foods Ab

(1997–2006). In addition, Robert Ingman is the Chairman of the Board of Ingman Group Oy Ab and a member of Etteplan Oyj's and Evli Pankki Oyj's Boards.

Kari Karvinen, b. 1959, MA

Member of the Board since 1990. Member of the Board's Audit Committee and the Nomination Committee. Co-founder of SysOpen Plc. Chairman of the Board (2002–2005) and Vice Chairman (1999–2002) of Sysopen. Vice Chairman of the Board at Digia Plc (2005–2007). Board professional and independent investor. At SysOpen Plc, held the posts of deputy Managing Director (1990–1999), Director of Planning (1999–2000) and full-time Chairman of the Board (2002–2004). His previous posts include Managing Director and Product Manager at Helsingin PC-Konsultit Ltd (1988–1990), and various IT industry posts at Sycon Ltd (1982–1988). Member of the Finnish Association of Professional Board Members since 2003.

Pekka Sivonen, b. 1961, Secondary school graduate in Political Science

Member of the Board since 1997. Chairman of the Board's Nomination Committee and member of the Compensation Committee. Previously full-time Chairman of the Board of Directors of Digia Oyj (2005–2010). Founding shareholder of Digia Inc., Board member (1997–2005) and Chairman (2000–2005). CEO of Digia Inc (1997–2000). Chair of the National Emergency Supply Agency's Technology Pool since 2007. Currently also Chairman of the Board at BlueWhite Resorts Ltd and Comma Group Ltd. Member of the Finnish Association of Professional Board Members since 2005.

Tommi Uhari, b. 1971, M.Sc. (Eng.)

Member of the Board since 2010. Member of the Board's Compensation Committee. Previously Uhari has served as a management team member of ST Microelectronics (2006–2010). In addition, he has held various managerial positions at ST's joint ventures in the wireless business ST-NXP Wireless and ST-Ericsson (2008–2010), and he has also acted as head of ST's Wireless Business Unit (2006–2008). Prior to that, Uhari was in charge of Wireless and SW platforms units at Nokia (1999–2006).

Marjatta Virtanen, b. 1950, M.Sc. (Econ.)

Member of the Board since 2010. Member of the Board's Audit Committee. Currently CEO and IR consultant at IRMA Advisors Oy. Previously Virtanen held the post of Market Supervisor at Financial Supervisory Authority, formerly Financial Supervision, (2006–2009). During her long career in communications and investor relations Marjatta Virtanen has served as Head of Communications at Hartwall (1988–1993) and at Tamro (2001–2004). She has also worked as an IR consultant and CEO at Viherjuuri Communications (1994–2001) and at IRMA Advisors Oy (2004–2006). Member of the Finnish Association of Professional Board Members since 2010.

Heikki Mäkijärvi, b. 1959, M.Sc. (Eng.) Board member since 2009 until 2010. Jari Pasanen, b. 1960, Licentiate of Technology Board member since 2009 until 2010.

Of the aforementioned members of the Board, Pertti Kyttälä, Martti Mehtälä, Kari Karvinen, Tommi Uhari and Marjatta Virtanen are independent of the company and its major shareholders. Robert Ingman is independent of the company.

Committees of the Board of Directors

The Digia Board of Directors had three committees in 2010: the Compensation Committee, the Audit Committee, and the Nomination Committee.

These committees do not hold powers of decision or execution. They assist the Board in decision-making concerning their own areas of expertise. The committees report regularly on their work to the Board, which governs and assumes collegiate responsibility for the committees' work.

Purpose of Digia's Compensation Committee is to prepare and follow up compensation and remuneration schemes in order to ensure that the company's targets are met, to guarantee the objectivity of decision-making, and to see to it that the schemes are transparent and systematic. In 2010, the members of the Compensation Committee were Martti Mehtälä (Chairman), Pekka Sivonen and Tommi Uhari. In 2010, the

committee convened three times, with full attendance by all members.

Purpose of the Audit Committee is to assist the Board of Directors in ensuring that the company's financial reporting, accounting methods, financial statements and other reported financial information are legitimate, balanced, transparent and clear, as further specified in the agenda. In 2010 the Audit Committee was composed of Pertti Kyttälä (Chairman), Kari Karvinen and Marjatta Virtanen. The committee convened four times in 2010, with full attendance by all members.

Nomination Committee's duty is to prepare a proposal for the Annual General Meeting concerning the number of members of the Board of Directors, the members of the Board of Directors, the remuneration of the Chairman, Vice Chairman and members of the Board and the remuneration of the chairmen and members of the committees of the Board of Directors. In 2010, the members of the Nomination Committee were Pekka Sivonen (Chairman), Kari Karvinen and Robert Ingman. The committee convened once, with full attendance by all members.

CEO

The company's Chief Executive Officer is appointed by 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 Directors, and as defined by the Finnish Limited Liability Companies Act. The CEO may take exceptional and far-reaching measures, in view of the nature and scope of the company's activities, only if so authorised by the Board of Directors. The CEO chairs the Group Management Team's meetings. Moreover, the CEO is not a member of the Board of Directors, but attends Board meetings.

The CEO's service contract, approved by the Board of Directors, defines the key terms and conditions which govern his/her position, in writing.

M.B.A. Juha Varelius (b. 1963) has been the company's CEO since the beginning of 2008.

Internal control and risk management related to financial reporting

Control functions and control environment

The company has a controller function tasked with verifying monthly reports. This controller function reports to the management, the Board of Directors and the Board's Audit Committee regarding the financial performance of the company and its divisions.

The company uses a reporting system which compiles separate subsidiaries' reports into the consolidated financial statements. There are written directives for completing the financial reports of subsidiaries. Compliance with these directives is monitored by the controller function. The company also has the necessary, separate reporting facilities for monitoring business operations and asset management.

The Group finance unit provides instructions for drawing up financial statements and interim financial statements, and compiles the consolidated financial statements. The finance unit has centralised control over the group's funding and asset management, and is in charge of managing interest rate risk.

Internal risk control

As a general principle, authorisation is distributed in Digia in such a way that no individual may independently perform measures unbeknown to at least one other individual. For example, the company's bookkeeping and asset management are managed by separate persons, and two authorised persons are needed to sign on behalf of the company.

The Group's business is divided into divisions whose Senior Vice Presidents (SVPs) report 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.

The SVPs in charge of the divisions report to the Group Management Team on 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 division has its own management team. Digia's operational management and supervision take place according to the corporate gov-

ernance system described above. The Group's administration unit is in charge of HR

management and policy, as well as properties and the viability of working conditions in each facility. The legal affairs unit provides instructions for and monitors contracts made by the company and ensures the legality of the Group's operations.

Communications

The Group's General Counsel is in charge of the company's external communications and their correctness. External communications include financial reports and other stock exchange communications. The General Counsel is responsible for the publication of interim reports and financial statements, as well as for actions related to convening and holding Shareholders' Meetings. Most communications take place through the company's website and using stock exchange releases.

Risk management

The purpose of the company's risk management process is to identify and manage risks in such a way that the company is able to meet its strategic and financial targets. Risk management is a continuous process, by which the major risks are identified, listed and assessed, the key persons in charge of risk management are appointed and risks are prioritised according to an assessment scale in order to compare the effects and mutual significance of risks.

The main operational risks handled by Digia's risk management function are customer risk, personnel risk, project risk, data security risk and goodwill risk.

The company manages customer risk by actively developing its customer portfolio structure and avoiding any potential risk positions. Personnel risks are assessed and managed using a quarterly goal and development discussion process for key personnel. To improve personnel commitment, the company strives to improve the efficiency of internal communications systematically, using personnel events and increasing the visibility of management. Key project audits are carried out with a view to enhancing project risk management and securing the success of project deliveries to customers. In addition, the Group's certified quality systems are regularly evaluated and the Group has increased the efficiency of its project delivery reporting practices in relation to corporate governance and finance. Data security risk is managed through data security audits and continuous development of working models, security practices and processes. Risks associated with the integration of businesses, shared

operating models and best practices, as well as their integrated development, are managed according to plan under the supervision of the Group Management Team. With respect to IFRScompliant accounting policies, the Group actively monitors goodwill and the related impairment tests, as part of prudent and proactive risk management practices within financial management. In addition to operational risks, the company is subject to financial risks. Digia Plc's internal and external financing and the management of financial risks are coordinated by the finance function of the Group's parent company. This function is responsible for the Group's liquidity, sufficiency of financing, and the management of interest rate and currency risk. The Group is exposed to several financial risks during the normal course of its business. The objective of the Group's risk management is to minimise the adverse effects of changes in the financial markets on the Group's earnings. The primary types of financial risks are interest rate risk, credit risk and funding risk. The general principles of risk management are approved by the Board of Directors, and the Group's finance function is responsible for their practical implementation together with the business divisions.

Statement on Digia Management Emoluments

This management emolument statement sets forth a summary of the financial benefits, remuneration system and thereto related decisionmaking pertaining to Board members and operative management of Digia Plc.

Board Emoluments

The Shareholders' Meeting decides on emoluments payable to the Board of Directors and grounds for the compensation of expenses. The 2010 AGM decided to pay monthly emoluments of EUR 2,000 to Board members, EUR 3,000 to the Vice Chairman and EUR 5,000 to the Chairman for their work on the Board. In addition, the AGM approved EUR 400 in fees per Board or committee meeting for all Board members. Moreover, the Shareholders' Meeting decided that standard and reasonable costs resulting from work on the Board would be reimbursed against invoice.

In the 2010 financial year, a total of EUR 248,800 was paid in emoluments to the members of the Board of Directors for their work on the Board, as follows:

Pertti Kyttälä	EUR64,400
Martti Mehtälä	EUR41,600
Robert Ingman	EUR24,400
Kari Karvinen	EUR31,200
Pekka Sivonen	EUR25,200
Tommi Uhari	EUR24,800
Marjatta Virtanen	EUR26,000

Heikki Mäkijärvi	EUR 5,600
Jari Pasanen	EUR 5,600

All emoluments were monetary. The company does not grant stock options or share-based remuneration for work on the Board.

Emoluments of the CEO and other management

Summary of the CEO remuneration system

The Board of Directors decides on the CEO's salary, and other remuneration and benefits.

CEO Juha Varelius' remuneration package comprises a monthly salary in accordance with his director agreement and the bonus possibly payable pursuant to two share incentive schemes.

CEO's regular monthly salary is based on a target salary model comprising a fixed and variable parts. According to said model the remuneration finally payable to the CEO is linked to the company's profitability and revenue targets set by the Board for each quarter respectively. In the event the set targets are not met, the agreed target salary will be reduced accordingly by a maximum of 15 percent variable part. On the other hand, exceeding the set targets will lead to remuneration above the target level. CEO's share-based remuneration plans were decided by the Board pursuant to authority given by the AGM in Autumn 2009 and in Spring 2010.

The scheme decided in Autumn 2009 covers the earning periods of 2009 and 2010, entitling the CEO to a maximum bonus equal to the value of 80,000 company shares for each earning period respectively.The bonus will begin to accrue progressively when the EPS amounts to EUR 0.41, entitling the CEO to a value of 20,000 shares. The maximum bonus will become payable if the EPS amounts to EUR 0.69 for the earning period.

The scheme decided in Spring 2010 has four earning periods, which are years 2010–2013. Earning criteria will be the earning per share (EPS) value reached and growth in net sales compared to the budgeted net sales during the respective earning period as to be annually specified by the Board in more detail. The maximum total bonus payable for the CEO under the scheme amounts to the value of 20,000 shares in the earning period 2010 and to the value of 100,000 shares in 2011–2013 respectively. Regarding year 2010 the minimum bonus (5,000 shares) requires an EPS of EUR 0.41 and the maximum bonus will become payable if the EPS amounts to EUR 0.69 or a minimum of EUR 0.615 if the company's budgeted revenues are being exceeded by 15 per cent.

Under said schemes the CEO will, based on the results of financial year 2010, be paid with a total bonus equal to the value of 67,750 company shares during the financial year 2011. All bonuses payable under both of said

schemes will be paid in a 50/50 combination

of shares and cash after the adoption of the financial statements following the close of the respective earning period. The cash payment is used primarily to cover taxes and other applicable fees and levies incurred from the bonus payment. The schemes include no lock-up periods designed to restrict the disposal of shares already granted to the CEO.

CEO Financial benefits and main terms of service

In 2010 the CEO was paid EUR 515,413 in salary and benefits, of which salary and fringe benefits account for EUR 305,713 and bonuses for EUR 209,700.

The company may terminate the CEO's service contract with six months' notice. Upon such termination, he will receive remuneration for the notice period plus severance pay equalling 12 months' salary. The CEO's retirement age is as stipulated by law, and he has no supplementary pension agreement with the company.

Summary of the remuneration system of other management

Based on a proposal submitted by the CEO, the Board of Directors decides on the salary, other remuneration and other benefits to be paid to members of the Group Management Team (GMT).

GMT members' total remuneration package comprises a monthly salary and the bonus possibly payable pursuant to two share incentive schemes.

As with the CEO's pay, the Management Team members' pay is based on a target salary model, where 85 per cent of the salary is fixed and a 15 per cent portion is linked to the company's profitability and revenue targets set by the Board for each quarter respectively.

In addition to the monthly salary the GMT members will receive, in each January of years 2010–2013 respectively, a bonus decided by the Board in 2009 based on the results of said accounting period. The bonus amounting to an aggregate total value of 85,000 shares will be paid in four equal slots assuming that the recipient is still employed by the company on each payment date.

Moreover, the GMT members accompany the CEO in the share incentive scheme decided by the Board in Spring 2010 and covering the earning periods of 2010–2013 where the earning criteria will be the earning per share (EPS) value reached and growth in net sales compared to the budgeted net sales during the respective earning period as to be annually specified by the Board in more detail. The maximum total bonus payable for the GMT members in aggregate under the scheme amounts to the value of 20,000 shares in the earning period 2010 and to the value of 100,000 shares in 2011–2013 respectively. Regarding year 2010 the minimum bonus (5,000 shares in aggregate) requires an EPS of EUR 0.41 and the maximum bonus will become payable if the EPS amounts to EUR 0.69 or a minimum of EUR 0.615 if the company's budgeted revenues are being exceeded by 15 per cent. Under said schemes the GMT members will, based on the results of financial year 2010, be paid with a aggregate total bonus equal to the value of 13,750 company shares during the financial year 2011.

All bonuses payable under both of said schemes will be paid in a 50/50 combination of shares and cash. The cash payment is used primarily to cover taxes and other applicable fees and levies incurred from the bonus payment. The schemes include no lock-up periods designed to restrict the disposal of shares already granted to the GMT members.

Each Management Team members' retirement age is stipulated by law, and no member has a supplementary pension agreement with the company.

Financial statement

Based on years of experience, Digia can meet Finnish and international ERP needs safely and securely.

The Board of Directors' Report

Markets and Digia's business operations

2010 began in uncertain terms, but economic insecurity abated during the year and the IT market has recovered somewhat from the crash following the financial crisis. Thanks to an upturn in overall market demand and a boost to the company's sales, net sales grew significantly faster than the overall market. Digia was also able to maintain a strong positive cash flow and good operational profitability. The operating profit and earnings per share increased slightly from the comparable figures from 2009. There was some cost impact towards the end of the year from recruitment of new experts and investments into developing the scalable product business, which lowered operational profitability slightly from the like-for-like figures for 2009.

Cash flow from operations remained positive, allowing the company to pay off a total of EUR 7.1 million of its liabilities during the financial year. This meant that at the end of the year the company only had EUR 22 million left in loans from financial institutions. The company's cash reserves will allow it to continue paying off its debts ahead of schedule or invest in expanding its operations.

With regard to international operations in 2010, Digia improved the offering and expertise of its units in China and Russia, especially in relation to serving local customers. Digia's Chinese unit generates product development and maintenance services, thanks to which the company is able to serve customers at various points in their product development cycle. The unit's capacity is utilised both in projects within China and for global customer relationships. The Russian unit operates as a near-shore resource for Digia's Finnish customers and also sells services directly to local customers. The company obtained its first local customers in both countries during 2010.

Enterprise Solutions

The customers of Digia's Enterprise Solutions segment are companies, organisations and public bodies. The segment's product and service strategy is based on multi-channel solutions that increase the efficiency of customers' business operations, and on services that cover the entire product lifecycle. An innovative development partner for its customers, Digia introduces to the market products, services and business models that employ new technologies. The segment's core market consists of the Nordic region and Russia, where it seeks to increase its operations mainly through organic growth.

Demand for ERP systems was good throughout the year. Meanwhile, demand for e-business and customer experience management solutions grew during the year, reaching a pleasing level in the fourth quarter.

Demand for software and IT services also grew in 2010 within the retail and service sector. The mood in the financial and insurance sector was more cautious, although positive. Demand for system work was weak in the public sector. During the year, the company focused on creating suitable conditions for growth, for example

by recruiting new experts and developing sectorspecific solutions for increasing customers' operational efficiency and for customer experience management. Digia began offering its Digia Enterprise ERP system as a cloud service in response to demand for new service models. Overall, the Enterprise Solutions segment increased its net sales moderately during the fiscal year, but its operating profit and operational profitability fell.

Mobile Solutions

The customers of Digia's Mobile Solutions segment are globally operational smartphone, machine and equipment manufacturers and telecom operators that utilise Digia's contract engineering services. Some of the cornerstones of the segment's operations are competence management and continuous competence development. The segment's core competence areas are developed in order to match the company's

expertise in the latest technologies with customer needs. On this basis, Digia draws up concrete objectives and measures.

Demand for software and user experience development for smartphones was higher in 2010 than was forecast in conjunction with the goodwill writedown in 2009. Growth was particularly good in Linux-based software development and user experience-enhancing software development and consulting.

During the year, the company focused on improving delivery capacity for Linux-based software and reinforcing its service selection to cover the entire customer needs lifecycle. Digia also launched the Device Cloud solution, which allows development teams that are scattered around the world to access the devices under development via the internet.

The Mobile Solutions segment as a whole considerably increased its net sales and operating profit during the year.

Financial indicators

The group's operations were profitable, and its financial position and solvency were good. The group's financial indicators are presented in the following table:

	2010	2009	2008	2007	2006
Net sales	130,825	120,335	123,203	105,839	84,968
Operating profit	17,164	-7,796	13,437	11,080	8,354
Operating margin, %	13%	-6%	11%	10%	10%
Return on equity, %	18%	-21%	11%	9%	8%
Equity ratio, %	59%	52%	47%	47%	44%

More detailed key figures for the last five years are provided in the notes to the financial statements (Note 30).

Net sales

Digia's consolidated net sales for the fiscal year were EUR 130.8 (120.3) million, up 8.7 per cent on 2009.

The Enterprise Solutions segment posted net sales of EUR 75.7 (70.8) million, up 6.8 per cent. The Mobile Solutions segment had net sales of EUR 55.2 (49.5) million, up 11.4 per cent.

During the reporting period, the product business accounted for EUR 19.7 (18.5) million or 15.1 (15.4) per cent of consolidated net sales.

International operations accounted for EUR 10.6 (9.7) million or 8.1 (8.1) per cent of consolidated net sales.

Profitability and financial result

Digia's consolidated operating profit (EBIT) for the fiscal year was EUR 17.2 (-7.8) million and profitability (EBIT%) was 13.1 (-6.5) per cent. In 2009, the like-for-like operating profit before extraordinary items was EUR 16.9 million and the profitability before extraordinary items was (EBIT-%) 14.1 per cent. The extraordinary nonrecurrent items for 2009 comprised a EUR 23.8 million goodwill writedown and a EUR 0.9 million restructuring provision related to the closure of sites. Profitability was favourably affected by the organic growth in consolidated net sales and by the relatively high billing rate. However, investments aimed at recruiting new experts and expanding the replicable product business caused a decrease in operational profitability as compared to the figures before extraordinary items for 2009.

The Enterprise Solutions segment's operating profit was EUR 11.0 (12.2) million, down 9.9 per cent. Operating profit before extraordinary items for 2009 totalled EUR 12.3 million.

The Mobile Solutions segment's operating profit was EUR 6.2 (-20.0) million, while its operating profit before extraordinary items for 2009 was EUR 4.6 million.

The Group's net financial expenses for 2010 totalled EUR 1.4 (2.3) million. Consolidated earnings before tax for the year totalled EUR 15.7 (-10.1) million, and net profit was EUR 11.5 (-13.7) million.

Earnings per share for the fiscal year were EUR 0.56 (-0.67). Earnings per share before extraordinary items for 2009 totalled EUR 0.53.

Financial position and capital expenditure

At the end of the reporting period, the Digia Group's consolidated balance sheet total stood at EUR 115.4 (112.8) million and the equity ratio was 58.8 (52.3) per cent. Net gearing was 20.2 (34.3) per cent. At the end of the year the Group's liquid assets totalled EUR 9.7 (10.5) million. At the end of the year, the Group had interestbearing liabilities of EUR 23.3 (30.4) million. Interest-bearing liabilities comprised of EUR 22.0 million in loans from financial institutions, EUR 1.2 million in financial leasing liabilities and EUR 0.1 million in product development loans. During the reporting period, the company repaid EUR 7 million in loans from financial institutions.

The Group carries out quarterly impairment testing on goodwill and intangible assets with an indefinite useful life. Impairment testing is described in more detail in the notes to the financial statements, under Note 15 'Intangible assets'.

The company has financing, framework and delivery agreements with special terms and conditions for any situation in which control of the company changes hands.

The Group's cash flow from business operations for 2010 was positive by EUR 11.1 million (positive by EUR 20.2 million), cash flow from investments was negative by EUR 2.0 million (negative by EUR 1.3 million) and cash flow from financing was negative by EUR 9.9 million (negative by EUR 27.3 million). Cash flow from operations was lower than in the previous year due to the fact that some receivables were received in advance, before the end of the previous financial year. Cash flow from investments was negatively impacted in the last quarter by furniture purchases for the sum of EUR 0.5 million, made in conjunction with the consolidation of the three Helsinki offices. Cash flow from financing was negatively affected by a repayment of loans totalling EUR 7.0 million, as well as by the payment of dividends with a total effect of EUR 2.9 million.

The Group's total investments into fixed assets were EUR 2.0 (1.3) million. Acquisitions of tangible fixed assets totalled EUR 1.7 (1.1) million. Return on investment (ROI) for 2010 was 19.3 (-7.1) per cent and return on equity (ROE) was 18.3 (-21.0) per cent.

Report on the extent of research and development

The Group made research and development efforts and engaged in product development in all of its divisions. In the 2010 fiscal year, the Group's R&D costs totalled EUR 3.0 million (2009: EUR 2.6 million and 2008: EUR 2.0 million), corresponding to 2.3 per cent of net sales (2009: 2.2 per cent and 2008: 1.6 per cent).

Personnel, management and administration

At the end of 2010, the number of Group employees totalled 1,558, showing an increase of 87 employees or 5.9 per cent from the end of the previous year (1,471). The number of employees for the period averaged 1,508, an increase of 121 employees or 8.7 per cent over the 2009 average (1,387). Cumulative employee turnover was 8.5 per cent in 2010 (4.4 per cent).

Employee indicators:

	2010	2009	2008
Average number of personnel	1,508	1,387	1,314
Wages and salaries	65,172	59,907	58,606

Employees by segment, year-end 2010:

Enterprise Solutions	47%
Mobile Solutions	50%
Administration and management	3%

As of the end of the year, 196 (219) employees were working outside of Finland. The reduction in personnel since the end of 2009 was due to the closure of the Yaroslaw unit in Russia and to the natural attrition of personnel in Chengdu, China.

Digia Plc's Annual General Meeting of 3 March 2010 re-elected Kari Karvinen, Pertti Kyttälä, Martti Mehtälä and Pekka Sivonen as members of the Board, and elected Robert Ingman, Tommi Uhari and Marjatta Virtanen as new members. At the organisation meeting of the Board, Pertti Kyttälä was elected as Chairman of the Board and Martti Mehtälä as Vice Chairman. The separate employment contract applying to Pekka Sivonen's term as full-time Chairman of the Board ended upon the conclusion of the Annual General Meeting.

Juha Varelius has been Digia Plc's President and CEO since 1 January 2008. Harri Savolainen started as the new CFO in September 2010.

In 2010, Digia's Board of Directors had three committees: the Compensation Committee, the Audit Committee, and the Nomination Committee.

Digia's Compensation Committee's task is to prepare and follow management remuneration schemes in order to ensure that the company's targets are met, that the objectivity of decision-making is maintained, and that the schemes are transparent and systematic. The members of the Compensation Committee in 2010 were Martti Mehtälä (Chairman), Pekka Sivonen and Tommi Uhari. In 2010, the committee convened three times, with full attendance by all members.

The purpose of the Audit Committee is to assist the Board of Directors in ensuring that the company's financial reporting, accounting methods, financial statements and other financial information provided by the company are balanced, transparent and clear. In 2010 the Audit Committee was made up of Pertti

Kyttälä (Chairman), Kari Karvinen and Marjatta Virtanen. The committee convened four times in 2010, with full attendance.

The Nomination Committee will prepare proposals for the Annual General Meeting of the shareholders concerning the number of members of the Board of Directors, the members of the Board of Directors, the remuneration for the Chairman, Vice Chairman and members of the Board of Directors and the remuneration for the Chairman and members of the committees of the Board of Directors. In 2010, the members of the Nomination Committee were Pekka Sivonen (Chairman), Kari Karvinen and Robert Ingman. The Nomination Committee convened once with full attendance.

Ernst & Young Oy, authorised public accountants, are the Group's auditors, with Heikki Ilkka, Authorised Public Accountant, as the chief auditor.

Digia adheres to the Governance Code for Listed Finnish Companies, issued on 15 June 2010 by the Finnish Securities Market Association. Digia's corporate governance system is based on the Companies Act, the Securities Markets Act, general corporate governance recommendations, and the company's Articles of Association and in-company rules and regulations on corporate governance. The Governance Code and a separate review of the group's corporate governance and management system made for this annual report can be seen at www.digia.com.

Business acquisitions

During the 2010 fiscal year, the Digia Group made no corporate acquisitions.

Group structure and organisation

At the end of the year, the Digia Group consisted of parent company Digia Plc and its active subsidiaries Digia Finland Ltd (parent company

holding 100%); Digia Sweden AB (100%); Digia Estonia Oü (100%), Digia Hong Kong Ltd (100%) and Sunrise Resources Ltd (100%).

Digia Finland Ltd has the wholly owned active subsidiaries Digia Financial Software Ltd (100%) and Digia Service Ltd (100%). Digia Hong Kong Ltd has the wholly owned subsidiary Digia Software (Chengdu) Co. Ltd (100%), with a registered branch in Beijing. Sunrise Resources Oy has a subsidiary, OOO Digia RUS (100%), operating in Russia.

Digia's business operations are now divided into two main business segments: Enterprise Solutions and Mobile Solutions. Enterprise Solutions is divided into ERP and Financial Administration, Digital Services and Integration Solutions. The Mobile Solutions segment is divided into Contract Engineering Services and User Experience Services.

Shareholders' meetings

Digia Plc's Annual General Meeting (AGM) was held on 3 March 2010.

The AGM adopted the financial statements for 2009, released the Board members and the CEO from liability, specified the dividend payment, determined Board emoluments, resolved to raise the number of Board members to seven (7), elected the company's Board of Directors for a new term, and amended Section 9 of the Articles of Association, concerning the convocation of the AGM. The AGM granted the following authorisations to the Board:

Authorisation of the Board of Directors to decide on the buyback of own shares

The AGM authorised the Board to decide on the buyback of a maximum of 2,000,000 shares in the company using the company's unrestricted

equity. The Board shall decide on how the shares are acquired. Own shares can be bought back in disproportion to the holdings of the shareholders. The authorisation also includes the acquisition of shares through public trading organised by NASDAQ OMX Helsinki Oy in accordance with the rules and instructions of NASDAQ OMX 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 acquisitions or other business transactions, to offer share-based incentive schemes, to sell on or to be annulled. The shares must be acquired at the going price in public trading. The authorisation replaces the authorisation granted by the Shareholders' Meeting on 10 March 2009 and is valid for 18 months from the authorisation, i.e. until 3 September 2011.

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 in one or more instalments, as follows: the issue can total a maximum of 4,000,000 shares. The authorisation applies both to new shares and own shares held by the company. By virtue of the authorisation, the Board has the right to decide on share issues and the granting of special rights, waiving the preemptive subscription rights of the shareholders (directed issue). The authorisation can be used to fund or complete acquisitions or other business transactions, to offer share-based incentive schemes, to develop the company's capital structure, or for other purposes. The Board was authorised to decide on all terms relating to the

share issue or special rights, including the subscription price, its payment and its recognition in the company's balance sheet. The authorisation replaces the authorisation granted by the Shareholders' Meeting on 10 March 2009 and is valid for 18 months from the authorisation, i.e. until 3 September 2011.

Based on authorisation received from the AGM, the Board of Directors decided to establish a new stock-based incentive scheme for the Chief Executive Officer and the other members of the Group Management Team. The scheme comprises four earning periods, which are the calendar years 2010- 2013. The earnings principles are the consolidated earnings per share and the growth in consolidated net sales compared to the budget, according to formulae settled separately by the Board. According to the scheme, rewards totalling a maximum value equivalent to 40,000 shares will be paid for

the 2010 earning period, and a maximum value of 200,000 shares will be paid for each of the earning periods from 2011 to 2013. Of the rewards paid, one half will be awarded to the CEO and one half to the other management team members in total. The reward will be paid as a 50/50 combination of shares and cash. The cash portion of the bonus will primarily be used to cover taxes and other comparable costs of the scheme.

The Annual General Meeting will take place on Wednesday 16 March 2011 from 10 am at the company's headquarters at Valimotie 21, 00380 Helsinki. Distribution of holdings by number of shares held on 31 December 2010

Number of shares	Holding (%)	Shares and votes
1–100	21.6%	0.4%
101–1,000	59.1%	7.2%
1,001–10,000	17.5%	12,7%
10,001–100,000	1.4%	10.8%
100,001–1,000,000	0.3%	19.1%
1,000,001–3,000,000	0.1%	49.8%

Shareholding by sector on 31 December 2010

	Holding (%)	Shares (%)
Companies	5.0%	19.6%
Financial institutions and insurance companies	0.3%	7.1%
Non-corporate public sector	0.1%	3.6%
Non-profit organisations	0.3%	0.6%
Households	94.0%	68.0%
Foreign holding	0.3%	1.1%

Share capital and shares

The nominal share price is EUR 0.10. The number of shares at the end of 2010 totalled 20,864,645. 31 December 2010, according to Finnish Central Securities Depository Ltd, Digia had 5,540 shareholders. The ten major shareholders were:

Shareholder	Shares and votes
Ingman Group Oy Ab	14.4 %
Pekka Sivonen	12.6 %
Jyrki Hallikainen	10.2 %
Kari Karvinen	6.5 %
Matti Savolainen	6.1 %
Varma Mutual Pension Insurance Company	3.6 %
Nordea Bank Finland Plc (nominee-registered)	3.1 %
OMXBS/Skandinaviska Enskilda Banken (nominee-registered)	1.7 %
Etola Oy	1.0 %
Olli Ahonen	0.9 %

Stock options granted

Stock options

The Group has had stock option schemes since 15 September 1999. Stock options granted after 2003 are recognised in the financial statements in accordance with the standard IFRS 2, Share-Based Payment.

During the reporting period, the company had a stock option scheme from 2005 as part of its key personnel incentive scheme. The number of warrants under that scheme totalled 900,000, of which 300,000 were marked as 2005A, 300,000 as 2005B and 300,000 as 2005C. The warrants entitle their holders to subscribe a maximum total of 900,000 Digia Plc shares.

At the end of the 2010 financial year, all A options in the 2005 scheme had expired. 11,000 B options were held by previous employees of the company, while all the rest had been returned to the company. All C options had been returned. The returned options will not be exercised for subscribing shares.

The maximum dilution effect of the outstanding options was only 0.1 per cent on 31 December 2010. After the end of the reporting period, the remaining 11,000 B options were returned to the company, and therefore as of the annual report

issue date, the company had no outstanding options.

Share incentive scheme and management ownership

The company has a share bonus system as a part of its key personnel commitment and incentive scheme. The share-based incentive scheme of the President and CEO was specified by the Board in autumn 2009 and spring 2010 according to authorisation received at the AGM.

The system set in autumn 2009 covers the earning periods 2009 and 2010 and entitles the CEO to a maximum bonus for each period equivalent to the value of 80,000 shares. The minimum required result is an EPS of EUR 0.41 (entitling the CEO to a value of 20,000 shares) for an earning period, whereafter the bonus will increase in steps so that the maximum bonus will become payable when the EPS reaches EUR 0.69 for the earning period.

The scheme specified in spring 2010 comprises four earning periods, which are the calendar years 2010–2013. The earnings principles are the consolidated earnings per share and the growth in consolidated net sales compared to the budget, according to formulae settled annually by the Board. According to the scheme, rewards totalling a maximum value equivalent to 20,000 shares will be paid for the 2010 earning period, and a maximum value of 100,000 shares will be paid for each of the earning periods from 2011 to 2013. For 2010 the requirement for the minimum bonus (5,000 shares) was an EPS of EUR 0.41 and the maximum bonus required an EPS of EUR 0.69, or at least an EPS of EUR 0.615 plus consolidated net sales that exceeded the budget by 15 per cent. In addition to the CEO, the scheme that finished in spring 2010 applied to the company's other management team members, who were entitled to share the same share bonus that the CEO received.

In addition, the company has a share incentive scheme for specific key persons, who, based on the financial results for 2009, could receive a total maximum bonus equivalent to 200,000 shares, paid out 50/50 in shares and cash in four equal annual instalments beginning in January 2010. The payment of bonuses according to the share-based incentive schemes is subject to the employee in question being employed by the company on the payment date.

According to the list of shareholders dated 31 December 2010, Digia's Board of Directors and CEO owned shares in the company as follows:

Pertti Kyttälä	0
Martti Mehtälä	0
Robert Ingman	20,000
Kari Karvinen	1,353,901
Pekka Sivonen	2,631,613
Tommi Uhari	0
Marjatta Virtanen	0
Juha Varelius	113,750

At the end of the year, the shares held by the Board members and the CEO represented 19.7% of the company's shares and votes.

Reported share performance on NASDAQ OMX Helsinki in 2010

Digia Plc shares were during the fiscal year listed on NASDAQ OMX Helsinki exchange under IT Services. The company's short name is DIG1V. The lowest reported share quotation was EUR 3.36 and the highest was EUR 5.89. The share closed at EUR 5.03 on the last trading day. The tradeweighted average was EUR 5.01. The Group's market capitalisation was EUR 104,949,164 at the end of the fiscal year.

The company received no flagging notifications during the year.

Risks and uncertainties

The main risks and uncertainties of the company's business have remained unchanged, although there is more uncertainty in the development of the mobile market.

The key risks under Digia's risk management in 2010 were customer, personnel, project, data security, integration and goodwill risks.

Measures for managing customer risks included the active development of the customer structure and the active prevention of potential risk positions. Personnel risks were assessed and managed using a quarterly goal and appraisal discussion process in which key personnel participate. To develop personnel commitment, measures were taken to produce more systematic and effective internal communication through regular personnel events and increased management visibility. The Group carried out key project audits with a view to enhancing project risk management and securing the success of project deliveries to customers. In addition, the Group's certified quality management systems were re-evaluated and approved, and the Group streamlined its project delivery reporting procedures. In order to manage data security risks, the Group carries out data security audits and continuously develops operating models, practices and processes that promote data security. The management team is tasked with managing risks associated with the integration of business operations, unified operating models

and best practices, as well as their integrated development. With respect to IFRS-compliant accounting policies, the Group actively monitors goodwill and the related impairment tests as a part of prudent and proactive risk management practices within financial management.

Short-term uncertainties are related to any major changes occurring in the company's core markets. Certain customer segments are still recovering from the long global recession, and this may still affect the company's customers' investment decisions and liquidity, and therefore also Digia's net sales and profit. Furthermore, the growth in customer project sizes increases the risks related to projects and their profitability.

Prospects for the future

The company's main objective for 2011 is to increase its net sales. To do this, it will continue to increase its human resources, develop its sales operations and implement efficiencyenhancing measures. In addition to carrying out its core business operations, the company will continue to invest into expanding its scalable product business. Digia will also continue to develop its international operations, particularly in China and Russia.

Despite these growth efforts, the cornerstones of the company's operations will continue to be maintaining a positive cash flow and a good level of profitability.

The company predicts continued moderate growth in the sale of ERP systems in 2011.

The increase in popularity of smartphones and their related services will create opportunities for favourable development of the company's sales. The technology revolution, leading to the arrival of new technologies on the market, and

the fact that customers are buying increasingly large packages of products and services will help to uphold demand for Digia's services. On the other hand, the development of the mobile market is somewhat more uncertain than before.

The outsourcing of testing and maintenance services to low-cost countries continues. Digia is making long-term efforts in improving its delivery capacity for new technologies. It will continue to increase its competence in producing conceptualisation and user experience services, and its ability to provide services that cover entire life cycles on various technological platforms for global clients.

As a whole, the company predicts the IT market to continue growing moderately from 2010 levels.The company expects its net sales to grow organically, at least at the predicted market level,and estimates that it will maintain its good level of operational profitability.

Major events after the balance sheet date

There have been no significant events after the end of the financial year.

Board's dividend proposal

At the end of 2010, the distributable shareholders' equity of Digia Plc was EUR 41,919,216.74, of which EUR 2,946,031.47 was the net profit for the year. The Board of Directors will propose at the Annual General Meeting of 16 March 2011 that the dividend according to the confirmed statement of financial position for the fiscal year ending 31 December 2010 be EUR 0.27 per share. Dividends are paid to shareholders listed in the shareholder register maintained by Euroclear Finland Oy on the dividend reconciliation date, 21 March 2011. Dividends will be paid on 28 March 2011.

Consolidated Income Statement (IFRS)

€	Note	1 Jan–31 Dec 2010	1 Jan–31 Dec 2009
Net sales	1.3	130,825,208.92	120,335,203.72
Other operating income	6	317,471.09	219,677.35
Materials and services		-10,156,889.49	-7,996,473.53
Depreciation and amortisation	9	-3,719,067.09	-28,051,336.80
Other operating expenses	4,5,7,8,10	-100,102,287.26	-92,303,126.32
		-113,660,772.75	-128,131,259.30
Operating profit		17,164,436.16	-7,796,055.58
Financial income	11	126,541.87	118,641.56
Financial expenses	11	-1,565,317.44	-2,441,881.65
		-1,438,775.57	-2,323,240.09
Earnings before tax		15,725,660.59	-10,119,295.67
Income taxes	12	-4,251,316.59	-3,544,609.99
Net profit		11,474,344.00	-13,663,905.66

€ Note	1 Jan–31 Dec 2010	1 Jan–31 Dec 2009

Components of statement of comprehensive income:
Exchange differences on translating foreign operations	292,272.49	128,278.79
Total comprehensive income	11,766,616.49	-13,535,626.87
Distribution of net profit:
Parent company shareholders	11,474,344.00	-13,663,905.66
Minority interest	-	-
	11,474,344.00	-13,663,905.66

Distribution of comprehensive income:
Parent company shareholders	11,766,616.49	-13,535,626.87
Minority interest	-	-
	11,766,616.49	-13,535,626.87
Basic earnings per share, undiluted	0.56	-0.67
Diluted earnings per share	0.56	-0.67

Consolidated Balance Sheet (IFRS)

€	Note	31 Dec 2010	31 Dec 2009
ASSETS
Non-current assets
Goodwill	15	65,544,601.75	65,544,601.41
Other intangible assets	15	8,969,615.85	11,032,708.45
Tangible assets	14	2,925,938.19	2,616,735.36
Available-for-sale investments	27	627,964.34	627,964.34
Long-term receivables		13,996.95	202,913.87
Deferred tax assets	16	875,669.02	1,211,629.53
		78,957,786.10	81,236,552.96


Current assets
Accounts receivable and other receivables	17	26,798,906.70	21,048,287.42
Cash and cash equivalents	18	9,681,630.64	10,468,665.55
		36,480,537.34	31,516,952.97

Total assets		115,438,323.44	112,753,505.93

€	Note	31 Dec 2010	31 Dec 2009
SHAREHOLDERS' EQUITY AND LIABILITIES
Equity attributable to parent company shareholders
Share capital	19	2,086,464.50	2,085,364.50
Rights issue		39,710.00	-
Premium fund		7,899,485.80	7,899,485.80
Other reserves		5,203,821.24	5,203,821.24
Unrestricted invested shareholders' equity reserve		35,486,427.82	35,447,817.82
Translation difference		166,300.95	-125,971.54
Retained earnings		5,054,438.38	21,337,119.32
Net profit		11,474,344.00	-13,663,905.66
		67,410,992.69	58,183,731.48
Total shareholders' equity		67,410,992.69	58,183,731.48
Non-current liabilities
Deferred tax liabilities	16	2,177,566.16	2,672,317.82
Interest-bearing liabilities	22	16,609,379.77	23,601,334.38
		18,786,945.93	26,273,652.20
Current liabilities
Accounts payable and other liabilities	24	9,462,612.75	8,767,349.99
Income tax liabilities		1,368,676.49	551,269.24
Provisions	21	133,452.00	1,051,808.00
Accured expences	24	11,569,401.32	11,098,259.86
Interest-bearing liabilities	22	6,706,242.26	6,827,435.16
		29,240,384.82	28,296,122.25
Total liabilities		48,027,330.75	54,569,774.45
Total shareholders' equity and liabilities		115,438,323.44	112,753,505.93

Consolidated Cash Flow Statement (IFRS)

	1 Jan–31	1 Jan–31
€ 000	Dec 2010	Dec 2009

Cash flow from operations:
Net profit	11,474	-13,664
Adjustments to net profit for the period	9,409	33,919
Change in working capital	-5,828	6,817
Interest paid	-703	-1,929
Interest income	21	91
Taxes paid	-3,306	-5,002
Cash flow from operating activities	11,066	20,232

Cash flow from investments:
Purchase of property, plant and equipment and tangible assets	-1,965	-1,342
Cash flow from investments	-1,965	-1,342

Cash flow from financing:
Paid share issue	79	-
Purchase of own shares	-	-33
Repayment of short-term loans	-6,082	-58,242
Repayments of long-term loans	-1,000	-18,000
Withdrawals of short-term loans	-	5,000
Withdrawals of long-term loans	-	45,000
Dividends paid and other profit distribution	-2,885	-1,024
Cash flow from financing	-9,887	-27,300

Change in cash and cash equivalents	-786	-8,410

Cash and cash equivalents at beginning of period	10,469	18,879
Change in cash and cash equivalents	-786	-8,410
Cash and cash equivalents at end of period	9,682	10,469

Changes in Shareholders' Equity

	Proportion belonging to parent company shareholders
	Unrestricted
				invested
€ 000	Share capital	Rights	Premium fund	shareholders' equity reserve	Other reserves	Translation difference	Retained earnings	Total

Shareholders' equity 1 Jan 2009	2,085	0	7,899	34,938	5,204	-254	22,210	72,083
Available-for-sale investments
Gains/losses on fair valuation	-	-	-	-	-	-	-	-
Amount recognised through profit or loss	-	-	-	-	-	-	-	-
Taxes associated with items recognised	-	-	-	-	-	-	-	-
or derecognised in shareholders' equity	-	-	-	-	-	-	-	-
Net profit (+) / loss (-)	-	-	-	-	-	-	-13,664	-13,664
Total income and expenses rec
ognised during the period	-	-	-	-	-	-	-13,664	-13,664
Increase of share capital	-	-	-	-	-	-
Distribution of dividends	-	-	-	-	-	-	-1,024	-1,024
Own share redemption fund	-	-	-	510	-	-	-169	340
Share-based transactions
settled in shareholders' equity	-	-	-	-	-	-	321	321
Stock options exercised	-	-	-	-	-	-	-	-
Items of comprehensive income	-	-	-	-	-	128	-	128
				510	-	128	-873	-235

Shareholders' equity 31 Dec 2009	2,085	0	7,899	35,448	5,204	-126	7,673	58,184

Proportion belonging to parent company shareholders
				Unrestricted
				invested
€ 000	Share capital	Rights	Premium fund	shareholders' equity reserve	Other reserves	Translation difference	Retained earnings	Total
Shareholders' equity 1 Jan 2010	2,085	0	7,899	35,448	5,204	-126	7,673	58,184
Available-for-sale investments
Gains/losses on fair valuation	-	-	-	-	-	-	-	-
Amount recognised through profit or loss	-	-	-	-	-	-	-	-
Taxes associated with items recognised
or derecognised in shareholders' equity	-	-	-	-	-	-	-	-
Net profit (+) / loss (-)	-	-	-	-	-	-	11,474	11,474
Total income and expenses recognised
during the period	-	-	-	-	-	-	11,474	11,474
Increase of share capital	-	-	-	-	-	-
Distribution of dividends	-	-	-	-	-	-	-2,885	-2,885
Share-based transactions
settled in shareholders' equity	1	40	-	39	-	-	267	346
Stock options exercised	-	-	-	-	-	-	-	-
Items of comprehensive income	-	-	-	-	-	292	-	292
	1	40	-	39	-	292	-2,619	-2,247

Shareholders' equity 31 Dec 2010	2,086	40	7,899	35,486	5,204	166	16,529	67,411

Distributable funds on 31 Dec

	2010	2009
€ 000	Parent	Parent
Unrestricted invested shareholders' equity reserve	35,486	35,448
Retained earnings	3,487	2,178
Net profit	2,946	3,928
Total	41,919	41,553

Basic Information of the Group and Accounting policies

Basic information of the company

Digia Plc is a modern, agile software company providing and implementing ICT products, services and technologies for its customers to improve their competitive advantage – solutions for the needs of a transforming world.

Solutions that are independent of the terminals and technologies used provide true freedom and enable the right information to reach the right people in the right place at the right time.

As a comprehensive solution provider and system integrator, Digia provides its customers with an extensive range of IT products and services, strong software expertise in mobile environments and extensive industry knowledge.

The company is registered in Finland and it operates internationally, employing more than 1,500 professionals. Digia is listed on NASDAQ OMX Helsinki.

The Group's parent company is Digia Plc. The parent company is domiciled in Helsinki and its registered office is at Hiomotie 19, 00380 Helsinki.

Accounting policies

Basis of preparation

The consolidated financial statements have been prepared in compliance with the International Financial Reporting Standards (IFRS), observing the IAS and IFRS standards, as well as SIC and IFRIC interpretations valid on 31 December 2010.

Consolidation principles

The consolidated financial statements include the parent company Digia Plc and subsidiaries in which the parent company directly or indirectly controls more than 50 per cent of the votes associated with shares or over which the parent company otherwise exercises control. Acquired subsidiaries are consolidated using the cost method, according to which the assets and liabilities of the acquired entity are measured at fair value at the time of acquisition, and the remaining difference between the acquisition price and the acquired shareholders' equity constitutes goodwill. In accordance with the exemption permitted by IFRS 1, acquisitions prior to the IFRS transition date have not been adjusted to correspond to the IFRS principles. Their values remain unchanged from Finnish Accounting Standards. Subsidiaries acquired during the fiscal period are included in the consolidated financial statements as of the date of acquisition, while divested subsidiaries are included until the date of divestment. Intra-Group transactions, receivables, liabilities, unrealised margins and internal profit distribution are eliminated in the consolidated financial statements. The profit for the period is divided between the parent company shareholders and the minority. The minority interest is also presented as a separate item within shareholders' equity.

From 1 January 2010, the Group has applied the following new or amended standards and interpretations:

• Changes to IFRS 2, Share-based Payment – Group cash-settled share-based payment transactions. The change had no significant effect on the consolidated financial statements.

• Updated IFRS 3, Business Combinations.The updated standard has a broader scope than before. The update affects the quantity of goodwill posted on acquisitions, and the segments' income from sales. The standard also has an effect on items recognised through profit and loss, both in the acquisition year and in any years where additional sums are paid on the purchase price or additional acquisitions are made. The change is expected to have a significant impact on any future business acquisitions.
• Amended IAS 27, Consolidated and Separate Financial Statements. The amended standard requires that the effects of any changes in ownership of subsidiaries be posted directly under the consolidated shareholders' equity if the parent company retains its controlling interest. The change had no significant effect on the consolidated financial statements.
• Changes to IAS 39, Financial Instruments: Recognition and Measurement, Eligible Hedged Items. The changes apply to hedge accounting. They specify the instructions given in IAS 39 concerning the hedging of unilateral risk and risk of inflation in items belonging to financial assets or financial liabilities. The change had no significant effect on the consolidated financial statements.
• Improvements to IFRS April 2009. In the Annual Improvements procedure, all the minor and less urgent changes to the standards are gathered together and carried out once a year. The changes made in this procedure apply to 12 standards. The

changes were not significant for the consolidated financial statements.

• The following interpretations have not been significant for the group:
IFRIC 12: Service Concession Arrangements

IFRIC 15: Agreements for the Construction of Real Estate

IFRIC 16: Hedges of a Net Investment in a Foreign Operation

IFRIC 17: Distributions of Non-cash Assets to Owners

IFRIC 18: Transfers of Assets from Customers The preparation of financial statements under IFRS means that Group management must necessarily make certain estimates and judgments concerning the application of the accounting principles. Information about such considerations made by the management when applying the corporate accounting principles with the greatest influence on the figures presented in the financial statements are explained under the item 'Accounting policies requiring consideration by management and crucial factors of uncertainty associated with estimates'.

Segment reporting

Digia's business operations are now divided into two main business segments: Enterprise Solutions and Mobile Solutions. Enterprise Solutions comprises ERP and Financial Administration, Digital Services and Integration Solutions. The Mobile Solutions segment comprises Contract Engineering Services and User Experience Services. The divisions have been specified as primary reporting segments in accordance with

IFRS 8 Segment Reporting. Geographical areas have been specified as secondary segments.

Foreign currency translation

Items referring to the earnings and financial position of the Group's units are recognised in the currency that is the main currency of the unit's primary operating environment ('functional currency'). The consolidated financial statements are given in euros, which is the operating and presentation currency of the parent company.

Receivables and liabilities denominated in foreign currency have been converted into euro at the exchange rate in effect on the balance sheet date. Gains and losses arising from foreign currency transactions are recognised through profit or loss. Foreign exchange gains and losses from operations are included in the corresponding items above operating profit.

The income statements of non-Finnish consolidated companies have been converted into euro at the weighted average exchange rate for the period, and their balance sheets have been converted at the exchange rate quoted on the balance sheet date. Translation differences arising from the application of the cost method are treated as items adjusting consolidated shareholders' equity.

Tangible assets

Property, plant and equipment (PPE) is carried at cost less accumulated planned depreciation and impairment. Assets are depreciated over their estimated useful lives. Depreciation is not booked for land areas. Estimated useful lives are as follows: Buildings and structures 25 years Machinery and equipment 3–8 years The residual value and useful life of assets

is reviewed on each balance sheet date and, if

necessary, adjusted to reflect any changes in expected economic value.

Capital gains and losses on elimination and the transfer of tangible assets are included either in other operating income or expenses.

Government grants

Grants received as compensation for costs are recognised in the income statements at the same time as the expenses related to the target of the grant are recognised as expenses. Grants of this kind are presented under other operating income. Government grants attributable to fixed assets are recognised as deductions in the value of intangible fixed assets. The grants are recognised as income over the life of the asset through reduced amortisation.

Intangible assets

Goodwill

Goodwill corresponds to the proportion of the acquisition cost of an entity acquired after the period between 1 January 2004 and 31 December 2009 that exceeds the Group's share of the fair value of the entity's net assets on the date of acquisition. The acquisition cost also includes other direct expenses related to the acquisition, such as professionals' fees.

As of the beginning of the 2010 fiscal year, goodwill has been defined according to IFRS 3, i.e. as the difference between points 1 and 2 below:

1. Sum of the following items:
1.1 the fair value of the consideration paid at the time of acquisition
1.2 the amount of any non-controlling interest in the object of acquisition

1.3 the fair value of any previously held non-controlling interest in the object of acquisition, in the case of a phased business combination

The net sum of the acquisition date assets acquired and liabilities assumed.

The goodwill for business combinations prior to 2004 corresponds to goodwill in accordance with previous accounting standards that has been used as the deemed cost. A portion of the goodwill of acquired entities is allocated to customer relationships or products originating in acquisitions and recognised in intangible assets. The portions of acquisition cost recognised in intangible assets are amortised over their useful life.

No regular amortisation is booked on goodwill but it is tested quarterly for impairment. For this purpose, goodwill is allocated to cash generating units. Goodwill is recognised at the original cost from which the impairment is deducted. Any adjustments of acquisition cost are booked no later than 12 months after the date of acquisition.

Research and development costs

Research costs are recognised as expenses in the income statement. Development costs arising from the design of new products are capitalised as intangible assets in the statement of financial position until the product is ready for commercial utilisation and future economic benefit is expected from the product. Depreciation begins once the product is ready for commercial utilisation. The useful life of capitalised development expenses is 2 to 5 years, during which time the capitalised assets will be recognised as expenses by straight-line depreciation.

Other intangible assets and long-term expenses

Patents, trademarks and licences with a limited useful life are booked in the statement of financial position and recognised as expenses in the

income statement by straight-line depreciation over their useful life. Amortisation is not booked on intangible assets with an unlimited useful life but they are tested annually for impairment. Long-term expenses are capitalised and depreciated over their financial lifetime, which is defined as somewhere between 3 and 7 years.

Leases

Leases on property, plant and equipment in which the Group bears a significant part of the risks and benefits characteristic of ownership are categorised as finance leases. A finance lease is recognised in the balance sheet at the fair value of the leased asset at the start of the lease period or at a lower current value of minimum lease payments. Assets acquired on finance leases are depreciated over the asset's useful life or the lease period, whichever is shorter. Lease obligations are included in interest-bearing debt. Leases in which the risks and benefits characteristic of ownership remain with the lessor are treated as operating leases. Leases payable on the basis of other leases are recognised as expenses in the income statement in equal instalments over the lease period.

Financing assets and liabilities

Financing assets are divided into receivables and liabilities, either as held-to-maturity, held-for-trading, or available-for-sale. Financial instruments are at first measured at fair value, with any fees deducted. Usually, the fair value corresponds with the sum paid or received for the instrument. Loans are included under non-current and current liabilities. Interest expenses and fees are stated in the income statement during the loan period, on an accrual basis using the effective yield method, and they are recognised as a cost on the period during which they are incurred.

Accounts receivable and other receivables

Accounts receivable and other receivables are measured at nominal value. A provision for impairment of accounts receivable is established when there is evidence based on a case-by-case risk assessment that the Group will not be able to collect all amounts due according to the original terms of receivables.

Cash and cash equivalents

Cash and cash equivalents consist of cash and withdrawable bank deposits and other shortterm investments. Accounts with a credit facility are treated as short-term loans under current liabilities.

Amortisation

On each balance sheet date, the Group estimates whether there is evidence that the value of an asset may have been impaired. If there is evidence of impairment, the amount recoverable from the asset is estimated. In addition, the recoverable amount is estimated annually on the following assets regardless of whether there is an indication of impairment or not: goodwill, and intangible assets with an unlimited useful life. The need for impairment is reviewed at the level of cash generating units, which refers to the lowest level of unit that is mainly independent of other units and whose cash flows can be separated from other cash flows. If the carrying amount exceeds the recoverable amount, an impairment loss is recognised in the income statement. An impairment loss recognised for goodwill will not be revoked under any circumstances.

Employee benefits

Pension liabilities

The Group's pension schemes are arranged through a pension insurance company. The pension schemes are mainly defined contribution plans, and payments are recognised in the income statement during the period to which the payment applies. The Finnish Employees' Pensions Act (TyEL) pension scheme was treated as a defined contribution plan in 2009 and 2010.

Share-based payments

The Group has various incentive schemes where payments are made either in equity instruments or in cash. The benefits granted through these arrangements are measured at fair value on the date of their being granted and recognised as expenses in the income statement evenly during the vesting period. Correspondingly, in arrangements where the payment is made in cash, the liability and the change in its fair value is recognised as a liability on an accrual basis. The impact of these arrangements on the financial results is shown in the income statements under the cost of employee benefits.

The cost determined at the time of granting the options is based on the Group's estimate of the amount of options that are expected to become vested at the end of the vesting period. The Group updates the assumption of the final amount of options on each balance sheet date. Changes in the estimates are entered in the income statement. The fair value of option arrangements is determined on the basis of the Black-Scholes option pricing model. Non-market-based conditions, such as profitability and certain growth targets, are not taken into account when determining the fair value of

an option, but they affect the estimate of the final amount of options.

When options are exercised, the payments received net of any transaction costs are recognised in shareholders' equity. Before the entry into force of the new Limited Liability Companies Act on 1 September 2006, payments received from share subscriptions based on granted options were recognised in accordance with the terms and conditions of these arrangements in the share capital and share premium account. In the option arrangements decided after the entry into force of the new Limited Liability Companies Act, proceeds received net of any eventual transaction costs are recognised in accordance with the terms and conditions of these arrangements in the unrestricted shareholders' equity reserve.

Provisions

A provision is recognised when the Group has a legal or factual obligation based on previous events, the realisation of a payment obligation is probable and the amount of the obligation can be reliably estimated.

A restructuring provision is recognised when the Group has prepared a detailed restructuring plan and started its implementation and disclosed the matter. The provision is based on expected actual costs, such as agreed compensation for termination of employment.

The Group recognizes a provision for onerous contracts when the expected benefits to be derived from a contract are less than the unavoidable costs of meeting the obligations under the contract.

A guarantee provision is recognised once a product or service subject to guarantee terms has been sold and the amount of potential guarantee costs can be estimated with sufficient accuracy.

Shares, dividends and shareholders' equity

Dividends proposed by the Board of Directors will not be deducted from distributable shareholders' equity before the Board's approval has been received. Immediate costs relating to the acquisition of Digia Plc's own shares are recognised as deductions in shareholders' equity.

Earnings per share

Earnings per share are calculated by dividing the period's earnings after tax belonging to the parent company's shareholders by the weighted average of shares outstanding during the fiscal period, excluding own shares acquired by Digia Plc. Diluted earnings per share are calculated assuming that all subscription rights and options have been exercised by the beginning of the next fiscal year. In addition to the weighted average of shares outstanding, the denominator also includes shares received from subscription rights and options assumed to have been exercised. The subscription rights and options assumed to have been exercised will not be taken into account in earnings per share if their actual price exceeds their average price during the fiscal year.

Income taxes

Taxes recognised in the income statement include taxes based on taxable income for the financial period, adjustments to taxes for previous periods, as well as changes in deferred taxes. Tax based on taxable income for the period is calculated using the corporate income tax rate applicable in each country. Deferred tax assets and liabilities are recognised for temporary differences between the taxable values and book values of asset and liability items. The biggest temporary differences arise from depreciation of fixed assets, unused tax losses, and the revaluation of financial and derivative instruments at the fair price resulting from the purchase. Deferred taxes are determined on the basis of the tax rate enacted by the balance sheet date. Deferred tax receivables are recognised up to the probable amount of taxable income in the future, against which the temporary difference can be utilised.

Revenue recognition

Work carried out by people is recognised monthly in accordance with progress. Long-term projects with a fixed price are recognised on the basis of their percentage of completion once the outcome of the project can be reliably estimated. The percentage of completion is determined as the proportion of costs arising from work performed for the project up to the date of review in the total estimated project costs. If estimates of the project change, the recognised sales and profit/margin are amended in the period during which the change becomes known and can be estimated for the first time. Any loss expected from a project is recognised as an expense immediately after the matter has been noticed. Licensing income is recognised in accordance with the factual substance of the agreement. Depending on the nature of the licence, the recognition is based on either the installation date or the degree of completion. Maintenance fees are allocated over the agreement period.

One-off items

Items recorded as one-off items are ones which occur only once or very rarely. These may include business divestments, reorganisations and goodwill write-downs.

Accounting policies requiring consideration by management and crucial factors of uncertainty associated with estimates

Estimates and assumptions regarding the future have to be made during the preparation of the financial statements, and the outcome may differ from the estimates and assumptions. Furthermore, the application of accounting policies requires consideration. These estimates and assumptions are based on historical experience and other justifiable assumptions that are believed to be reasonable in the circumstances that serve as a foundation for evaluating the items included in the financial statements. The estimates mainly concern the following items:

Impairment testing

The Group carries out annual impairment testing of goodwill and intangible assets with an unlimited useful life and evaluates any indications of impairment as described above in the accounting policies. Recoverable amounts from cash generating units are determined as calculations based on value in use. The preparation of these calculations requires the use of estimates.

Recognition as income and expenses

As described in the revenue recognition policies, the revenue and costs of a long-term project are recognised as income and expenses on the basis of percentage of completion once the outcome of the project can be reliably estimated. Recognition associated with the degree of completion is based on estimates of expected income and expenses of the project and reliable measurement and estimation of project progress. If estimates of the project's outcome change, the recognised sales and profit/

margin are amended in the period during which the change becomes known and can be estimated for the first time. Any loss expected from a project is immediately recognised as an expense.

Financial risks

Financial risk management consists, for instance, of the planning and monitoring of solvency of liquid assets, the management of investments, receivables and liabilities denominated in a foreign currency, and the management of interest rate risks on non-current interest-bearing liabilities.

In accordance with the company's investment policy, cash and cash equivalents are invested only in low-risk short rate funds and bank deposits. The Group's policy defines creditworthiness requirements for customers in order to minimise the amount of credit losses. A sufficient provision was made for uncertain accounts receivable at the end of the fiscal period. The Group's operative cash flow has developed favourably during the year, and thus the Group's solvency has also remained good. The most significant currency risks relating to accounts receivable or accounts payable are managed by means of forward foreign exchange contracts. At the end of the fiscal year, the company did not have any such forward contract in force. Interest rate trends are monitored systematically in different bodies within the company, and possible interest rate risks hedges are made with the appropriate instruments. At the end of the fiscal year, the company had no such hedging instruments in force.

Application of new and amended IFRS standards

The IASB has published the following new or amended standards and interpretations that are not yet effective and thus have not yet been applied by the Group. The Group will introduce each standard and interpretation as of its effective date or, if the effective date is some other date than the first day of the fiscal period, as of the beginning of the fiscal period following the effective date.

• Changes to IAS 24, Related Party Disclosures. The purpose of the changes is to clarify and simplify the definition of related parties, especially as regards significant influence or shared control of parties. The Group does not expect the change to have a significant effect on upcoming consolidated financial statements.
• Changes to IAS 32, Financial Instruments: Classification of Rights Issues. The change applies especially to the handling of share issues in foreign currencies. In the future, subscription rights related to share issues in foreign currencies can, under certain conditions, be classified as shareholders' equity rather than derivative instruments. The Group does not expect the change to have a significant effect on upcoming consolidated financial statements.
• IFRS Annual Improvements 2010, changes to several standards. The improvements for 2010 apply to six standards and one interpretation. The Group does not expect the change to have a significant effect on upcoming consolidated financial statements.
• The following standards and interpretations are not considered to affect the Group:
Changes to IFRIC 14 IAS 19, The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction. IFRIC 19, Extinguishing Financial Liabilities with Equity Instruments.

Notes to the Consolidated Financial Statement

1. Segment information

Digia's business segments are Enterprise Solutions and Mobile Solutions.

Net sales

€ 000	2010	2009
Enterprise Solutions	75,674	70,841
Mobile Solutions	55,152	49,494
Group total	130,825	120,335

In the Enterprise Solutions segment, no single customer accounted for more than 10 per cent of the consolidated net sales. The Mobile Solutions segment's major customer is Nokia, which accounted for more than 10 per cent of the consolidated net sales in the fiscal year.

Operating profit before extraordinary items

€ 000	2010	2009
Enterprise Solutions	11,001	12,301
Mobile Solutions	6,164	4,634
Group total	17,164	16,936

Digia's consolidated profitability for 2009 was significantly affected by extraordinary non-recurrent items comprising a EUR 23.8 goodwill writedown and a EUR 0.9 million restructuring provision related to the closure of sites. The goodwill writedown was entirely attributable to the Mobile Solutions segment. EUR 0.8 million of the restructuring provision was attributable to Mobile Solutions and EUR 0.1 million to Enterprise Solutions. The operating profit before extraordinary items is an indicator of the company's operational profitability.

Operating profit (EBIT)

€ 000	2010	2009
Enterprise Solutions	11,001	12,211
Mobile Solutions	6,164	-20,007
Group total	17,164	-7,796

Assets

€ 000	2010	2009
Enterprise Solutions	63,762	61,240
Mobile Solutions	40,491	39,205
Unallocated	11,185	12,308
Group total	115,438	112,753

The assets of the Enterprise Solutions segment include goodwill arising from the acquisition of Digia Sweden AB (formerly Capital C AB), Samstock Ltd and Sentera Plc, as well as the part of the goodwill arising from the acquisition of Yomi Software Ltd that is attributable to the operations of the segment. The assets of the Mobile Solutions segment include goodwill arising from the acquisition of Digia Inc. and Sunrise Resources Ltd, as well as the part of the goodwill arising from the acquisition of Yomi Software Ltd that is attributable to the operations of the segment. The goodwill items are described in more detail in Note 15.

The most significant unallocated asset item comprises investments and cash and cash equivalents treated from the viewpoint of the Group level.

Liabilities

€ 000	2010	2009
Enterprise Solutions	12,270	11,139
Mobile Solutions	10,264	10,329
Unallocated	25,493	33,101
Group total	48,027	54,570

The most significant item within unallocated liabilities consists of a long-term bank loan.

Depreciation and amortisation

€ 000	2010	2009
Enterprise Solutions	1,671	1,945
Mobile Solutions	2,048	26,106
Group total	3,719	28,051

One-off expenses

There were no one-off expenses during the fiscal year 2010. The one-off expenses for the fiscal year 2009 totalled EUR 24.7 million, comprising EUR 23.8 million in a goodwill writedown and EUR 0.9 million in a restructuring provision.

5. Auditors' fees

Capital expenditure			€ 000	2010	2009
			Audit	80	97
€ 000	2010	2009	Other statutory duties	1	1
Enterprise Solutions	1,023	670	Tax counselling	10	7
Mobile Solutions	942	672	Other services	12	19
Group total	1,965	1,342

Geographical distribution of net sales

€ 000	2010	2009
Finland	120,196	110,624
Other countries	10,629	9,711
Total	130,825	120,335

2. Acquired business operations

Acquired business operations in 2010 and 2009

No business operations were acquired in the 2009 or 2010 fiscal years.

3. Long-term projects

Consolidated net sales include income recognised on long-term projects totalling EUR 17.7 million in 2010 (EUR 15.9 million in 2009). The consolidated income statement includes income recognised on incomplete long-term projects to the amount of EUR 14.3 million on 31 December 2010 (EUR 10.6 million on 31 December 2009). The statement of financial position includes advance payments recognised on incomplete long-term projects to the amount of EUR 0.8 million on 31 December 2010 (EUR 0.7 million on 31 December 2009).

Tax counselling	10	7
Other services	12	19
Total	103	123

6. Other operating income

€ 000	2010	2009
Grants	249	191
Other income	68	28
Total	317	220

7. Other operating expenses

The following table presents the five most significant items included in other operating expenses:

€ 000	2010	2009
Costs of premises	6,144	5,996
IT costs	4,119	4,359
Voluntary personnel expenses	3,384	2,675
Travel	2,367	2,440
External services	1,041	808
Total	17,056	16,278

8. Product development expenses

€ 000	2010	2009
Product development expenses	3,003	2,623
Total	3,003	2,623

9. Depreciation, amortisation and impairment

€ 000	2010	2009
Depreciation and amortisation by asset category

Intangible assets
Capitalised development costs	-	84
Intangible assets	2,162	2,477
Total	2,162	2,561

Property, plant and equipment
Buildings	7	7
Machinery and equipment	1,550	1,647
Total	1,557	1,654

Amortisation
Goodwill impairment	-	23,837
Total	-	23,837
Depreciation, amortisation and impairment, total	3,719	28,051

10. Personnel expenses

€ 000	2010	2009
Wages and salaries	65,172	59,907
Pension costs, defined-contribution plans	11,339	10,242
Stock options granted	720	659
Other personnel expenses	3,343	2,827
Total	80,573	73,636

Group personnel on average during the period	2010	2009
Enterprise Solutions	689	627
Mobile Solutions	768	711
Group management and administration	51	49
Total	1,508	1,387

Information on employee benefits and loans to the management are presented in Note 28, 'Related party transactions'.

11. Financial income and expenses

Financial income

€ 000	2010	2009
Capital gains on assets recognised at fair value through profit and loss	-	-
Interest income from cash and cash equivalents	23	98
Interest income from accounts receivable	6	4
Dividend income	10	10
Exchange rate gains	87	5
Other financial income	1	2
Total	127	119

Financial expenses

€ 000	2010	2009
Interest expenses for financing loans
valued at accrued acquisition cost	727	1,755
Interest expenses for accounts payable	1	2
Interest expenses for finance lease liabilities	-	4
Loan administration fees	322	394
Exchange rate losses	290	73
Other financial expenses	225	214
Total	1,565	2,442

12. Income taxes

€ 000	2010	2009
Current tax	4,362	3,507
Taxes from previous periods	48	-40
Deferred tax	-159	77
Total	4,251	2,997

Reconciliation between the tax expenses in the income statement and taxes calculated at the tax rate valid in the Group's home country (26 per cent):

€ 000	2010	2009
Pre-tax profit	15,726	-10,119

Taxes calculated at the domestic corporation tax rate	4,089	-2,630
Deviating tax rates of foreign subsidiaries	-1	-2
Income not subject to tax	-21	-35
Non-deductible expenses	49	6,253
Tax effect of dissolution losses	219	103
Other items	-131	-104
Taxes from previous years	48	-40
Total	4,251	3,545

Taxes for the period in the income statement	4,251	3,545

13. Earnings per share

Basic earnings per share are calculated by dividing the earnings before tax for the accounting period attributable to the parent company's shareholders by the weighted average of shares outstanding during the accounting period. Own shares possessed by the company are not included in the calculation of the weighted average of shares outstanding. The calculation of diluted earnings per share includes consideration of the diluting effect of stock options on the weighted average number of shares. Stock options have a diluting effect if their exercise price is lower than the fair value of the share.

	2010	2009
Profit for the period attributable to parent company shareholders (€ 000)	11,474	-13,664
Weighted average number of shares during the period	20,626,817	20,439,833
Diluting effect of stock options	5,187	-
Diluted weighted average number of shares during the period	20,632,004	20,439,833

Basic earnings per share (EUR/share)	0.56	-0.67
Diluted earnings per share (EUR/share)	0.56	-0.67

14. Property, plant and equipment

	Land and	Buildings and	Machinery and	Other
€ 000	water areas	structures	equipment	tangible assets	Total 2010	Total 2009
Acquisition cost 1 January	17	162	12,602	84	12,865	11,719
Additions	-	-	2 018	-	2,018	1,148
Acquisition of subsidiary	-	-	-	-	-	-
Disposals	-	-	-144	-	-144	-3
Acquisition cost 31 December	17	162	14,476	84	14,739	12,865

Accumulated depreciation and amortisation 1 January	-	-58	-10,107	-83	-10,248	-8,594
Depreciation	-	-7	-1,558	-	-1,565	-1,654
Amortisation	-	-	-	-	-	-
Disposals	-	-	-	-	-	-
Accumulated depreciation and amortisation 31 December	-	-65	-11,665	-83	-11,813	-10,248

Book value 1 January	17	104	2,495	1	2,617	3,125
Book value 31 December	17	97	2,811	1	2,926	2,617

Property, plant and equipment include assets leased under finance lease as follows:

2010, € 000	Land and water areas	Buildings and structures	Machinery and equipment	Other tangible assets	Total
Acquisition cost	-	-	6,519	-	6,519
Accumulated depreciation	-	-	-5,318	-	-5,318
Book value	-	-	1 202	-	1 202

2009, € 000	Land and water areas	Buildings and structures	Machinery and equipment	Other tangible assets	Total
Acquisition cost	-	-	5,676	-	5,676
Accumulated depreciation	-	-	-4,455	-	-4,455
Book value	-	-	1,221	-	1,221

15. Intangible assets

			Other
€ 000	Goodwill	Development costs	intangible assets	Total 2010	Total 2009
Acquisition cost 1 January	89,382	2,487	23,550	115,419	115,488
Capitalised development costs	-	-	-	-	-
Additions	-	-	244	244	197
Disposals	-	-	-145	-145	-
Acquisition of subsidiary	-	-	-	-	-267
Acquisition cost 31 December	89,382	2,487	23,649	115,518	115,419

Accumulated depreciation and amortisation 1 January	-23,837	-2,487	-12,517	-38,841	-12,444
Depreciation	-	-	-2,162	-2,162	-2,560
Amortisation	-	-	-	-	-23,837
Accumulated depreciation and amortisation 31 December	-23,837	-2,487	-14,679	-41,003	-38,841

Book value 1 January	65,545	0	11,033	76,578	103,044
Book value 31 December	65,545	0	8,970	74,514	76,578

The Group carries out annual impairment tests for goodwill and intangible assets with an indefinite useful life, in accordance with the IAS 36 standard.

The distribution of goodwill and values subject to testing between divisions on the balance sheet date was as follows:

	Specified	Unallocated		Total value
€ 000	intangible assets	goodwill	Other items	subject to testing
Enterprise Solutions	3,515	43,244	4,552	51,311
Mobile Solutions	4,941	22,301	4,411	31,654
Total	8,456	65,545	8,963	82,964

The goodwill in the Enterprise Solutions segment was mainly associated to the acquisition of Sentera Plc and Digia Sweden Ab and Samstock Ltd. The goodwill in the Mobile Solutions division was mainly associated with the combination of Digia Inc. and SysOpen Plc, as well as the acquisition of Yomi Software Ltd and Sunrise Resources Ltd. Allocated goodwill is presented in the intangible asset group 'Other intangible assets' and amortised over a period of 5–10 years.

The other items include the estimated working capital and fixed assets of the divisions.

Impairment testing

The Group has defined its business segments as cash-generating units (CGU). Goodwill impairment is tested by comparing the CGU fair value to the book value. The use values are based on the continuous use of an asset as well as on the financial plans and estimates of the CGU's future development, approved by the relevant CGU management.

Present values for the Enterprise Solutions segment were calculated for the forecast period based on the following assumptions: net sales for 2011 according to the latest forecast, after which annual

growth of 3 per cent; operating profit for 2011 in accordance with the latest forecast and after that 10 per cent, with discount rates of 11.2 per cent. Cash flows following the forecast period are estimated by extrapolating the cash flows, using the assumptions given above.

Present values for the Mobile Solutions segment were calculated for the forecast period based on the following assumptions: net sales for 2011 according to the latest forecast, after which annual growth of 0 per cent; operating profit for 2011 in accordance with the latest forecast and after that 8 per cent, with discount rates of 14.7 per cent. Cash flows following the forecast period are estimated by extrapolating the cash flows, using the assumptions given above.

Net sales growth is reckoned to constitute the most critical factor in calculating the present values of cash flows. The amount of goodwill for Enterprise Solutions requires average annual growth of two per cent for business operations and five per cent profitability. For Mobile Solutions, the goodwill requires business to be maintained at the current level, with seven per cent profitability.

On the balance sheet date, the Enterprise Solutions segment's use value was EUR 70.6 million higher than the segment's book value. The Mobile Solutions segment's use value was EUR 7.4 million higher than the book value.

16. Deferred tax assets and liabilities

Changes in deferred taxes during 2010:

€ 000	1 Jan 2010	Recognised in income statement	Recognised in equity	Exchange rate differences	Subsidiaries acquired/ divested	31 Dec 2010
Deferred tax assets:
Provisions	76	-41	-	-	-	35
Confirmed losses	827	-138	-	-	-	690
Other items	309	-157	-	-	-	151
Total	1,212	-336	-	-	-	876

€ 000	1 Jan 2010	Recognised in income statement	Recognised in equity	Exchange rate differences	Subsidiaries acquired/ divested	31 Dec 2010
Deferred tax liabilities:
From business combinations	2,438	-449	-	-	-	1,989
Other items	234	-45	-	-	-	189
Total	2,672	-495	-	-	-	2,178

Changes in deferred taxes during 2009:

€ 000	1 Jan 2009	Recognised in income statement	Recognised in equity	Exchange rate differences	Subsidiaries acquired/ divested	31 Dec 2009
Deferred tax assets:
Provisions	112	-36	-	-	-	76
Confirmed losses	1,183	-356	-	-	-	827
Internal margin on business transfers	308	-308	-	-	-	0
Other items	150	159	-	-	-	309
Total	1,753	-542	-	-	-	1,212

€ 000	1 Jan 2009	Recognised in income statement	Recognised in equity	Exchange rate differences	Subsidiaries acquired/ divested	31 Dec 2009
Deferred tax liabilities:
Capitalisation of intangible assets	21	-21	-	-	-	0
From business combinations	3,027	-589	-	-	-	2,438
Other items	90	145	-	-	-	234
Total	3,138	-465	-	-	-	2,672

17. Accounts receivable and other receivables

€ 000	2010	2009
Accounts receivable and other receivables
Accounts receivable	21,919	16,782
Security deposit for rental dues	374	543
Receivables from customers on long-term projects	1,023	1,143
Prepayments and accrued income	2,902	1,360
Other receivables	581	1,220
Accounts receivable and other receivables	26,799	21,048

€ 000	2010	2009
Non-due accounts receivable	20,470	15,943
Accounts receivable due 1–30 days ago	1,132	660
Accounts receivable due 31–60 days ago	162	125
Accounts receivable due more than 60 days ago	154	54
Total	21,919	16,782

At the end of the fiscal year 2010, credit loss provisions totalled EUR 0.1 million. At the end of the fiscal year 2009, credit loss provisions totalled EUR 0.1 million. The book value of accounts receivable and security deposits for rental dues is a reasonable estimate of their fair value. Their balance sheet values best correspond with the sum of money that represents the maximum amount of credit risks. Essential items included in prepayments and accrued income are associated with the accrual of statutory insurance premiums and other accrued expenses.

18. Cash and cash equivalents

€ 000	2010	2009
Financing assets recognised at fair value through profit and loss
Mutual funds	300	293
Bank accounts	9,382	10,176
Total	9,682	10,469

19. Notes on share capital

	Number of shares	Share capital (€ 000)
1 Jan 2009	20,853,645	2,085
Increase in share capital	-	-
Exercise of stock options	-	-
31 Dec 2009	20,853,645	2,085

	Number of shares	Share capital (€ 000)
1 Jan 2010	20,853 645	2,085
Increase of share capital	11,000	1
Exercise of stock options	-	-
31 Dec 2010	20,864,645	2,086

The maximum number of shares is 48 million (48 million in 2009). The nominal value of each share is EUR 0.1 and the Group's maximum share capital is EUR 4.8 million (EUR 4.8 million in 2009). All outstanding shares are paid in full. At the end of the fiscal year, the company held 220,703 own shares, or 1.1 per cent of all shares.

The premium fund comprises the amount paid for shares in excess of the nominal value. The 'Other reserves' amount arises from fair valuation of acquired business operations in the consolidated financial statements. The translation differences reserve comprises translation differences arising from the translation of financial statements of non-Finnish units. The unrestricted invested shareholders' equity reserve comprises investments similar to shareholders' equity and the subscription price of shares when a specific decision is made not to enter it in shareholders' equity.

20. Share-based payments

The Group has had stock option schemes in place since 15 September 1999 and has also offered sharebased bonuses as part of key personnel commitment and incentive scheme as of 31 May 2007. Options granted after 2003 have been recognised in the financial statements for 2005 in accordance with the standard IFRS 2 Share-based Payment. Stock options expire if they are not exercised during a period separately defined in the option scheme. Stock options are also lost if the employee resigns from the company before the right is vested.

On 30 September 2009, the Digia Board of Directors decided to offer key personnel an option conversion, such that one Digia share and a cash amount equalling the value of the share would be provided in exchange for twenty (20) A options, for four (4) B options and for two and two-thirds (2 2/3) C options. The conversion offer was made to the holders of warrants under the 2005 scheme. The conversion offer was approved fully, and a total of 276,000 warrants held by key personnel were converted into 51,900 Digia shares and the equivalent cash amount in order to cover the tax cost of the incentive. The conversion was carried out with existing Digia shares.

At the end of the financial year, all A options in the 2005 scheme had expired. 11,000 B options were held by previous employees of the company, while all the rest had been returned to the company. All C options had been returned. The returned options will not be exercised for subscribing shares. The maximum dilution effect of the remaining warrants was 0.001 per cent on 31 December 2010.

The Group had the stock option schemes described below in the financial year.

Option scheme 2005

The number of warrants under the 2005 stock option scheme totals 900,000, 300,000 of which are marked as 2005A, 300,000 as 2005B and 300,000 as 2005C. The warrants entitle their holders to subscribe a maximum total of 900,000 Digia Plc shares.

The share subscription price for 2005B warrants is EUR 3.75 (dividend-adjusted) and for 2005C warrants it is EUR 3.78. The 2005A warrants expired on 30 November 2009. On the record date for each distribution of dividends, the share subscription price based on the stock options will be deducted by the amount of dividends for which the decision to distribute has been made between the beginning of the price-setting period and the date of subscription. However, the minimum subscription price will always be the nominal value of the share. The share subscription period for the 2005A warrants will be between 1 November 2007 and 30 November

2009, for the 2005B warrants between 1 November 2008 and 30 November 2010 and for the 2005C warrants between 1 November 2009 and 30 November 2011. As a result of share subscriptions using warrants 2005A, 2005B and 2005C, the share capital of Digia Plc may increase by a maximum of EUR 90,000, and the number of shares may increase by a maximum of 900,000 new shares. On 31 December 2010, Digia Plc's wholly owned subsidiary Digia Partners Oy held a total of 578,000 warrants under the 2005 option scheme.

	Warrants 2005
2010	2005A	2005B	2005C
Maximum number of options	300,000	300,000	300,000
Shares available for subscription per option	1	1	1
Original subscription price *	€ 4.33	€ 3.98	€ 3.93
Dividend adjustment	Yes	Yes	Yes
Subscription price on 31 December 2008	€ 4.10	€ 3.80	€ 3.83
Subscription price on 31 December 2009	expired	€ 3.75	€ 3.78
Subscription price on 31 December 2010	expired	€ 3.61	€ 3.64
Vesting date	1 November 2007	1 November 2008	1 November 2009
	30 November	30 November	30 November
Expiry date	2009	2010	2011
Exercise period, years	expired	expired	0.9
Persons at end of financial period	expired	expired	no longer binding

Events in 2010 fiscal year

Amounts 1 January 2010
Options granted	-	148,000	60,000
Options returned	-	126,000	60,000
Options outstanding	-	22,000	0
Options in reserve	-	278,000	300,000

Changes during the period
Shares subscribed using options	-	11,000	-

Amounts on 31 December 2010
Options granted	-	148,000	60,000
Options returned	-	126,000	60,000
Shares subscribed with optios (not yet registered)	-	11,000	-
Options in reserve	-	278,000	300,000

* At the end of the fiscal year, the subscription price for warrants in force was determined as follows: 2005A: Trading-weighted average share price on the Helsinki Stock Exchange calculated for the 20 days following the publication of Digia's Interim Report Q1/2005.

6 8

2005B: Trading-weighted average share price on the Helsinki Stock Exchange calculated for the 20 days following the publication of Digia's Interim Report Q1/2006.

2005C: Trading-weighted average share price on the Helsinki Stock Exchange calculated for the 20 days following the publication of Digia's Interim Report Q1/2007.

On the recorded date for each distribution of dividends, the share subscription price will be deducted by the amount of dividends for which the decision to distribute has been made between the beginning of the price-setting period and the date of subscription.

The following table presents a summary of the number of warrants and subscription prices on 31 December 2010:

2010	Options total	Subscription prices (weighted)
Amounts on 1 January 2010
Options granted	208,000	€ 3.94
Options returned	186,000	€ 3.92
Shares subscribed using options	-	-
Options outstanding	22,000	-
Options in reserve	578,000	€ 3.77

Changes during the period
Options granted	-	-
Options returned	-	-
Shares subscribed using options	11,000	€ 3.61
Options expired	278,000	€ 3.63

Amounts on 31 December 2010
Options granted	208,000	-
Options returned	186,000	-
Shares subscribed using options	11,000	-
Shares subscribed with options (not yet registered)	11,000	-
Options in reserve	578,000	-

Determination of fair value

The fair value of the options is determined using the Black-Scholes option pricing model. A fair value is determined for the date of granting the options and charged to personnel expenses over the vesting period. The granting date is the date of the decision by Board of Directors. The company incurred no expenses from share options or from the conversion offer made as a part of the scheme in 2010 (2009: EUR 348,378).

Comparison data for 2009

The following table presents the situation on 31 December 2009 for comparison:

	Option scheme
					Subscription
2009	2005A	2005B	2005C	Total	price €
Amounts on 1 January 2009
Options granted	326,000	148,000	60,000	534,000	€ 3.39
Options returned	106,000	33,000	-	139,000	€ 4.03
Shares subscribed using options	-	-	-	-	-
Options outstanding	220,000	115,000	60,000	395,000	€ 3.97
Options in reserve	80,000	185,000	240,000	505,000	€ 3.86

Changes during the period
Options granted	-	-	-	-	-
Options returned	123,000	93,000	60,000	276,000	€ 3.89
Shares subscribed using options	-	-	-	-	-
Trading-weighted average price
during subscription period, € *	2.50	2.57	3,32	-	-
Options expired	300,000	-	-	300,000	€ 4.05

Amounts on 31 December 2009
Options granted	326,000	148,000	60,000	534,000	€ 3.94
Options returned	229,000	126,000	60,000	415,000	€ 3.92
Shares subscribed using options	-	-	-	-	-
Options outstanding	-	22,000	-	22,000	-
Options in reserve	-	278,000	300,000	578,000	€ 3.77

* Trading-weighted average price of Digia Plc's share from January to November 2009 (2005A) and from January to December 2009 (2005B and 2005C).

Share-based bonuses

In addition to stock option schemes, the company offers share-based bonuses as part of its key personnel commitment and incentive scheme. The share-based bonus scheme offers the target group an opportunity to receive shared in Digia Plc shares as a reward for the achievement of specified goals set for an earning period. The Board of Directors decides the earning criteria for the scheme and specifies the targets, as well as the maximum remuneration for the earning period for each person belonging to the target group.

On 30 September 2009, the Board of Directors made the following decisions regarding share-based bonus systems for management and key personnel:

It was decided that the terms of the Chief Executive Officer's 2008 share-based incentive scheme would be changed so that in October 2009 the CEO received a bonus equivalent to the value of 100,000 shares, paid 50/50 in shares and cash. This bonus system entirely replaced the 2008 share-based incentive scheme.

The CEO's new share-based incentive scheme covers the period 2009 and 2010. It entitles the CEO to a maximum bonus equal to the value of 160,000 company shares according to the terms of the scheme, based on the company's EPS. The bonus is payable 50/50 in shares and cash and is made available to the CEO annually after the financial statements are approved.

In a system directed at key personnel, a maximum bonus totalling the value of 200,000 shares will be payable as a 50/50 combination of shares and cash. The instalments will be paid in 2009, 2010, 2011 and 2012. The bonus will be paid annually, without any disposition restrictions, beginning on 30 January 2010, depending on the fulfilment of certain goals set by the Board and on the condition that the recipient is still employed by the company on the payment date.

On 27 May 2010, the Board of Directors decided on a new share incentive scheme for the CEO and other members of the Group Management Team, as follows:

The scheme comprises four earning periods, which are the calendar years 2010–2013. The earnings principles are the consolidated earnings per share and the growth in consolidated net sales compared to the budget, according to formulae settled separately by the Board.

According to the scheme, rewards totalling a maximum value equivalent to 40,000 shares will be paid for the 2010 earning period, and a maximum value of 200,000 shares will be paid for each of the earning periods from 2011 to 2013. Of the rewards paid, one half will be awarded to the CEO and one half to the other management team members in total. The reward will be paid as a 50/50 combination of shares and cash. The cash portion of the bonus will primarily be used to cover taxes and other comparable costs of the scheme.

The scheme is a continuation of the management share incentive scheme initiated in 2009, which remains effective as planned.

The basic details of the schemes are listed in the table below.

31 Dec 2010	Management group share-based incentive scheme 2010–2013	CEO's share-based incentive scheme 2009–2010	Key personnel share-based incentive scheme 2009–2010
Granting date	27 May 2010	30 September 2009	30 September 2009
Instrument	Shares and cash	Shares and cash	Shares and cash
Target group	Management group	CEO	Key personnel
Maximum amount of shares *	640,000	160,000	200,000
Beginning of the earning period	28 May 2010	1 October 2009	1 October 2009
End of the earning period	31 March 2011/ 31 March 2012/ 31 March 2013/ 31 March 2014	30 March 2010/ 30 March 2011	30 January 2010/ 30 January 2011/ 30 January 2010/ 30 January 2013
Vesting condition	Earnings per share, net sales growth and employment requirement	Earnings per share, employment requirement	Earnings criterion, employment requirement
Maximum validity, years	3.2	1.5	3.3
Remaining validity, years	0.2	0.2	2.1
Number of persons (31 December 2010)	7	1	30

* In addition to the bonus payment in shares, a cash bonus is paid to cover the cost of taxes and similar expenses.

The items related to share-based incentive schemes in 2010 are given in the table below. Because the cash portion of the bonus payment is also recorded as a share-based expense, the sums below are gross, i.e. the bonuses include the shares and the equivalent cash sum.

Events in 2010 fiscal year	Management group share-based incentive scheme 2010–2013	CEO's share-based incentive scheme 2009–2010	Key personnel share-based incentive scheme 2009–2010	Total
Gross amounts 1 January 2010 **
Outstanding at beginning of period	0	160,000	200,000	360,000
Changes during the period Granted during the year Forfeited during the year Exercised during the year Expired during the year	640,000 0 0 0	0 35,000 45,000 0	0 4,498 45,502 0	640,000 39,498 90,502 0
Gross amounts 31 December 2010 **
Outstanding at end of period	640,000	80,000	150,000	870,000
Available for exercising at end of period	640,000	80,000	150,000	870,000

** The amounts include the cash portion (in shares) granted according to the terms of the incentive scheme.

Determination of fair value

The fair value of share-based payments is determined on the day on which the scheme is agreed between the company and the recipient group. As the share-based bonus is paid as a combination of shares and cash, the determination of its fair value is divided into two parts in accordance with the IFRS 2 standard: the part settled in shares and the part settled in cash. The part settled in shares is recognised as shareholders' equity and the part settled in cash as a liability. The fair value of the part settled in cash is revalued on each reporting date until the end of the earning period, and thus the fair value of the liability changes in accordance with the price of the Digia share.

Expense effect of share-based incentive schemes on 2010 income statement

€ 000 Effect on earnings and financial position	Management group share-based incentive scheme 2010–2013	CEO's share-based incentive scheme 2009–2010	Key personnel share-based incentive scheme 2009–2010	Total
Share-based payment
expense for the fiscal year	156	295	268	720
Share-based payment
expense for the fiscal year,
shareholders' equity	72	96	100	267
Liabilities from share-based payments 31 December 2010	84	101	114	299

Comparison data for 2009

€ 000 Effect on earnings and financial position	CEO's share-based bonus in 2008	CEO's share-based bonus in 2009	CEO's share-based incentive scheme 2009–2010	Key personnel share-based incentive scheme 2009–2010	Total
Share-based payment expense
for the fiscal year, €	58	306	99	113	576

21. Provisions

Changes in provisions during 2010:

€ 000	Restructuring provision	Unprofitable agreement	Total
1 Jan 2010	895	157	1 052
Increase in provisions	-	79	79
Provisions used	-895	-103	-998
Reversals of unused provisions	-	-	-
31 Dec 2010	0	133	133

Changes in provisions during 2009:

	Restructuring	Unprofitable
€ 000	provision	agreement	Total
1 Jan 2009	0	432	432
Increase in provisions	895	157	1,052
Provisions used	-	-432	-432
Reversals of unused provisions	-	-	-
31 Dec 2009	895	157	1,052

Restructuring provision

The restructuring provision is associated with restructuring of entities in connection with acquisitions and the reorganisation of unprofitable business operations.

To improve its operating conditions, the company launched measures in 2009 for rationalising its site network in line with market requirements, and concentrating its expertise into fewer but larger units.

22. Financial liabilities

In this way, customers' needs will be met more effectively. The measures encompassed the closure of the company's offices in Kuopio, Turku, Lahti and Vaasa, and the reduction of personnel in certain departments of the Pori unit. Due to these measures, the company made an operational restructuring provision of EUR 0.9 million in its financial statements for 2009. This provision was eliminated according to plan in 2010.

Unprofitable agreements

A loss provision is created for fixed-price projects if it becomes apparent that the completion of the project will require significantly more work input than has been estimated in connection with selling the project and can be invoiced from the customer on the basis of the agreement.

On the balance sheet date of 31 December 2010, there were six fixed-price projects for which loss provisions had been recorded on the basis of remaining work.

			2010	2009
	2010	2009	Balance sheet	Balance sheet
€ 000	Fair values	Fair values	values	values
Non-current
Bank loan	14,701	20,081	16,000	23,000
Subordinated loan	41	79	44	89
Finance lease liabilities	507	478	565	513
Total	15,249	20,639	16,609	23,601

Current
Bank loan	5,797	5,797	6,000	6,000
Subordinated loan	41	73	44	82
Finance lease liabilities	636	716	662	745
Total	6,474	6,586	6,706	6,827
Total	21,723	27,225	23,316	30,429

The fair value of loans has been calculated by discounting the loan capital on the balance sheet date using a discount rate of 7.86%, which has been determined with regard to the industry's general risk level.

On 3 February 2009, Digia signed a three-year syndicated loan agreement that replaced the company's prior loans in their entirety. The loan agreement is financed by Pohjola Bank, Nordea Bank and Varma. In addition to a three-year bank-financed package of EUR 42 million, the package included EUR 8 million in re-borrowing of pension contributions. There is also a maximum EUR 5 million credit limit. As a part of the financing package, the company committed to covenants concerning the maintenance of the company's financial standing and liquidity. The loan covenants comprise the following key figures: operating profit before depreciation and amortisation (EBITDA) in relation to net debt, equity ratio and net gearing.

The company's loan covenant terms were modified during the period to stipulate that the company is allowed to distribute a maximum of 50 per cent of the consolidated net profit for 2010 for dividends in 2011. During the financial year, the company repaid EUR 7.0 million in loans, reducing its interest-bearing liabilities to EUR 22.0 million. The loans have floating interest rates tied to Euribor, plus a margin. The average interest rate of the loans in 2010 was 2.8% (3.4% in 2009). The shares of Digia Finland Ltd and Digia Financial Software Ltd are pledged as collateral for the loans.

A subordinated loan has been granted by TEKES for product development. The loan has a fixed interest rate, which ranged between 1.0% and 3.0% until 31 December 2010. The effective interest rates on finance lease liabilities during the fiscal year was 4.48% (4.99% in 2009).

Interest-bearing liabilities fall due as follows:

Year, € 000	2010	2009
2010	-	6,827
2011	6,706	6,447
2012	14,886	15,640
2013	1,194	1,515
Later	530	0
Total	23,316	30,429

The tables below describe agreement-based maturity analysis results for 2010 and the 2009 comparison period. The figures are undiscounted and include interest payments and the repayment of loan capital:

€ 000
31 Dec 2010	Balance sheet values	Cash flow	Less than 1 year	1–2 years	2–5 years
Bank loans	22,000	22,658	6,514	14,616	1,528
Subordinated loans	89	89	45	44	0
Finance lease liabilities	1,227	1,227	662	342	223
Total	23,316	23,975	7,221	15,002	1,751

€ 000
31 Dec 2009	Balance sheet values	Cash flow	Less than 1 year	1–2 years	2–5 years
Bank loans	29,000	30,715	6,872	6,675	17,169
Subordinated loans	170	174	84	45	45
Finance lease liabilities	1,259	1,311	785	410	116
Total	30,429	32,200	7,741	7,130	17,330

23. Due dates of finance lease liabilities

€ 000	2010	2009
Finance lease liabilities, total of minimum lease payments
Within one year	695	785
Within more than one but less than five years	580	525
After more than five years	-	-
Finance lease liabilities, present value of minimum lease payments
Within one year	662	705
Within more than one but less than five years	565	437
After more than five years	-	-
Financial expenses to be accrued in the future	48	51
Total amount of finance lease liabilities	1,227	1,311

The book value of non-interest bearing current liabilities represents a reasonable estimate of their fair value. Material items included in accrued expenses arise from the accrual of holiday pay, as well as accrued provisions for salaries and fees.

25. Operating leases

Minimum lease payments on the basis of other non-cancellable leases:

€ 000	2010	2009
Within one year	3,988	5,053
Within more than one but less than five years	2,412	2,477
After more than five years	-	-
Total	6,400	7,530

The Group leases all of its production facilities and office premises. The average duration of the leases is three to five years, and they normally include the option of extension after the original date of expiry. The Group has also leased motor vehicles on maintenance lease agreements. The normal duration of maintenance lease agreements is three years.

The finance leases concern IT equipment and have durations of two to three years.

24. Non-interest bearing liabilities

€ 000	2010	2009
Non-current
Deferred tax liabilities	2,178	2,672
Total	2,178	2,672

Current
Accounts payable	2,353	1,575
Total	2,353	1,575

Other non-interest bearing current liabilities
Advance payments received	769	1,400
Accruals and deferred income	11,569	11,098
Provisions	133	1,052
Income tax liabilities	1,369	551
Other liabilities	6,340	5,793
Total	20,181	19,894
Total non-interest bearing liabilities	24,712	24,141

26. Contingent liabilities

€ 000	2010	2009
Collateral pledged for own commitments
Other	767	905
Total	767	905

Other contingent liabilities are associated with guarantee deposits or are units in fixed-income mutual funds pledged as collateral for the credit limit. The credit limit is used as security for office leases. Furthermore, the item includes a guarantee deposit pledged as collateral.

27. The group's shares and holdings

			Share of
Group companies	Domicile	Home country	ownership	Share of votes
Digia Plc	Helsinki	Finland	Parent company
Digia Estonia Oü *	Tallinn	Estonia	100%	100%
Digia Financial Software Oy	Jyväskylä	Finland	100%	100%
Digia Finland Oy	Helsinki	Finland	100%	100%
Digia Hong Kong Ltd *	Hong Kong	China	100%	100%
Digia Service Oy	Jyväskylä	Finland	100%	100%
Digia Software (Chengdu) Co. Ltd	Chengdu	China	100%	100%
Digia Sweden Ab	Stockholm	Sweden	100%	100%
OOO Digia RUS	St. Petersburg	Russia	100%	100%
Sunrise Resources Oy	Helsinki	Finland	100%	100%
Digia Partners Oy *	Helsinki	Finland	100%	100%
Microext Oy *	Helsinki	Finland	100%	100%

* The companies are not engaged in business operations.

Other shares and holdings	€ 000
Keimola Golf Club Oy	7
Kiinteistö Oy Rukan Kuukkeli	62
Kytäjä Golf Oy	39
Vierumäki Golf Oy	17
Vierumäki Golf Club Oy	35
Vierumäen Loma-aika Oy	138
Vierumäen Kuntoharju Oy	270
Rikunniemen Huolto Oy	6
Tahko Golf Club Oy	39
Tahkovuorenpeikko Oy	11
Other	3
Total	627

28. Related party transactions

Two parties are considered related if one party can exercise control or significant power in decisionmaking associated with the other party's finances and business operations. The Group's related parties include the parent company and subsidiaries, in addition to the members of the Board of Directors and the Management Team.

Remuneration paid to the CEO and Group management during the financial period, including fringe benefits, was as follows:

€ 000	2010	2009
Salaries and other short-term employee benefits	1,893	1,505
Share-based bonuses	285	574
Total	2,178	2,079

The salaries and fees paid in 2010 to the CEO and the members of the Board of Directors were as follows:

		€ 000
Kyttälä Pertti	Chairman of the Board of Directors	64
Mehtälä Martti	Vice Chairman of the Board	42
Ingman Robert	Member of the Board	24
Karvinen Kari	Member of the Board	31
Sivonen Pekka	Member of the Board	25
Uhari Tommi	Member of the Board	25
Virtanen Marjatta	Member of the Board	26
Mäkijärvi Heikki	Member of the Board until March 2010	6
Pasanen Jari	Member of the Board until March 2010	6
Varelius Juha	CEO	515
Total		764

The incentive schemes are described in Note 20 Share-based payments and in the separate report on corporate governance. Transactions related to the sale of services to related parties totalled EUR 14,700 (EUR 8,400 in 2009). Transactions associated with the purchase of goods or services totalled EUR 16,200 (EUR 14,700 in 2009). The Group has no related-party loans.

29. Management of financing risks

Digia Plc's internal and external financing and the management of financing risks is concentrated in the finance function of the Group's parent company. The function is responsible for the Group's liquidity, sufficiency of financing, and the management of interest rate and currency risk. The Group is exposed to several financing risks in its normal course of business. The objective of the Group's risk management is to minimise the adverse effects of changes in the financial markets on the Group's earnings. The primary types of financing risks are interest rate risk, credit risk and funding risk. The general principles of risk management are approved by the Board of Directors, and the Group's finance function together with the business segments is responsible for their practical implementation.

Foreign exchange risks

The Group is not significantly exposed to foreign exchange risk in its operations. The Group's key foreign exchange risks involve the Swedish krona, Russian rouble and Chinese yuan. The Group has currency holdings of EUR 1.9 million through its Swedish, Russian and Chinese subsidiaries, which entails an exchange risk when the investments are converted into euro. The Group has not hedged these investments. The financial statements include foreign currency sales receivables of approximately EUR 0.3 million in Swedish kronas and Chinese yuan. Foreign currency accounts payable totalled approximately EUR 0.4 million, mainly being in Swedish kronas and Chinese yuan. The most significant currency risks relating to accounts receivable and accounts payable can be managed by means of forward foreign exchange contracts when necessary. At the end of the fiscal year 2009, the company had no such forward contract in force.

Interest rate risks

The Group's interest rate risk is primarily associated with a long-term bank loan that has an interest rate linked to Euribor rates. Changes in market interest rates have a direct effect on the Group's future interest payments. During the financial period 2010, the interest rate on the long-term bank loan varied between 2.3% and 2.9% (between 2.3% and 4.6% in 2009). The impact of a +/-1% change in the loan's interest rate is EUR 0.2 million per annum. The Group's money market investments are a source of interest rate risk, but the overall impact of these investments is negligible. Interest rate developments are monitored systematically in different bodies within the company, and possible interest rate hedges will be made with the appropriate instruments.

Credit risks

The Group's customers are mostly well-known Finnish and foreign companies with well-established credit, and thus the Group has no significant credit risks. The Group's policy defines creditworthiness requirements for customers, investment transactions and counterparties. Services and products are only sold to companies with a good credit rating. The counterparties in investment transactions are companies with a good credit rating. Credit risks associated with commercial operations are primarily the responsibility of operational units. The parent company's finance function provides customer financing services in a centralised manner and ensures that the principles of the financing policy are observed with regard to terms of payment and collateral required. At the end of the fiscal year 2010, credit loss provisions totalled EUR 0.1 million (EUR 0.1 million in 2009). The maturity analysis of accounts receivable for 2010 and 2009 is presented in Note 17.

Liquidity risk

The Group aims to continuously estimate and monitor the amount of financing required for business operations in order to maintain sufficient liquid funds for financing operations and repaying loans falling due. The availability and flexibility of financing is ensured by maintaining an unused credit facility and using several banks for financing. The amount of unwithdrawn standby credit on 31 December 2010 was EUR 5.0 million. The Group maintains its immediate liquidity with the help of cash management solutions such as Group accounts and credit facilities at banks. Cash and cash equivalents on 31 December 2010 totalled EUR 9.7 million. An agreement-based maturity analysis on discounted equity and interest payments for the reporting periods 2010 and 2009 is presented in Note 22.

Management of the capital structure

The Group's capital management aims at supporting company business by means of optimal management of the capital structure, ensuring normal operating conditions and increasing shareholder value with a view to achieve the best possible profit. The Group's interest-bearing net liabilities at the end of 2010 were EUR 10,634,000 (31 December 2009: EUR 19,960,000). When calculating gearing, the interest-bearing net liabilities are divided by shareholders' equity. Gearing includes interest-bearing net liabilities less cash and cash equivalents. Interest-bearing net liabilities have primarily been used for financing the Group's company acquisitions, and at the end of the reporting period, gearing stood at 20% (34% in 2009).

The share of liabilities of total shareholders' equity on 31 December 2010 and 31 December 2009 was as follows:

€ 000	2010	2009
Interest-bearing liabilities	20,316	30,429
Cash and cash equivalents	9,682	10,469
Interest-bearing net liabilities	10,634	19,960
Total shareholders' equity	67,411	58,184
Net gearing, %	20%	34%

30. The group's key financial ratios

€ 000	2010	2009	2008	2007	2006
Extent of business
Net sales, € 000	130,825	120,335	123,203	105,839	84,968
- change on previous year, %	9 %	-2%	16%	25%	40%
Gross capital expenditure, € 000	1,965	1,342	2,512	1,979	1,876
- % of net sales	2 %	1%	2%	2%	2%
Capitalisation for research and development	-	-	-	-	256
- % of net sales	0%	0%	0%	0%	0%
Number of personnel, 31 December	1,558	1,471	1,337	1,155	1,087
Average number of personnel	1,508	1,387	1,314	1,116	981
Profitability
Operating profit, € 000	17,164	-7,796	13,437	11,080	8,354
- % of net sales	13%	-6%	11%	10%	10%
Net profit, € 000	17,164	-13,664	7,409	5,871	4,867
- % of net sales	13%	-11%	6%	6%	6%
Return on equity, %	18%	-21%	11%	9%	8%
Return on investment, %	19%	-7%	11%	9%	9%
Financing and financial standing
Loans from financial institutions, € 000	23,316	30,429	56,950	56,413	56,664
Cash and cash equivalents, € 000	9,682	10,469	18,879	11,739	11,506
Gearing, %	20%	34%	53%	65%	72%
Equity ratio, %	59%	52%	47%	47%	44%
Cash flow from operations, € 000	11,066	20,232	15,473	6,157	5,756
Dividends (paid), € 000	2,885	1,025	2,041	1,625	930
Earnings per share, EUR undiluted	0.56	-0.67	0.36	0.29	0.25
Earnings per share, EUR diluted	0.56	-0.67	0.36	0.29	0.25
Equity per share	3.23	2.79	3.46	3.32	3.10
Dividend per share (proposal for 2010)	0.27	0.14	0.05	0.1	0.08
Dividend payout ratio	48%	-	14%	35%	32%
Effective dividend yield	5%	4%	3%	3%	2%
Price/earnings ratio (P/E)	8.98	-	5.17	10.39	13.70
Lowest share price	3.38	1.39	1.73	2.93	3.00
Highest share price	5.89	3.88	3.35	4.26	4.97
Average share price	5.01	2.72	2.83	3.77	3.75
Market capitalisation	104,949	71,528	38,788	61,079	69,669
Trading volume, shares	7,260,278	9,123,589	7,321,002	9,583,795	13,899,149
Trading volume, %	35%	45%	36%	47%	71%

The weighted average number of shares during the accounting period, adjusted for share issues, was 20,855,020. The diluted weighted average number of shares during the period was 20,860,207. The number of shares outstanding at the end of the accounting period was 20,643,942. At the end of the fiscal year the company held 129,964 own shares. The company has financed the purchase of 300,000 own shares for use in the incentive schemes for key personnel. At the end of the review period Evli Bank held 90,739 of these shares. The buyback program was terminated by the Board at its meeting on 3 February 2009.

Calculation of Financial Ratios

Return on investment (ROI),%:
Profit or loss before taxes + interest and other financing costs
Balance sheet total – non-interest bearing liabilities (average)	x 100
Return on equity (ROE),%:
Profit or loss before taxes – taxes
Shareholders' equity + minority interest (average)	x 100
Equity ratio,%:
Shareholders' equity + minority interest
Balance sheet total – advance payments received	x 100
Earnings per share:
Earnings before extraordinary items and taxes – taxes +/- minority interest
Average number of shares during the period, adjusted for share-issues
Dividend per share:
Total dividend
Number of shares at the end of the period, adjusted for share issues
Dividend payout ratio,%:
Dividend per share
Earnings per share	x 100
Net gearing
Loans from financial institutions – cash, bank receivables and financial securities
Shareholders' equity	x 100
Effective dividend yield,%:
Dividend per share
Last trading price for the period, adjusted for share issues	x 100
Price/earnings (P/E):
Last trading price for the period, adjusted for share issues
Earnings per share

Parent Company's Income Statement (FAS)

€	Note	1 Jan–31 Dec 2010	1 Jan–31 Dec 2009
Net sales	1	7,971,700.00	8,277,619.00

Other operating income	2	36,975.00	21,905.00
Personnel expenses	3	-4,674,170.53	-4,537,220.03
Depreciation and amortisation	4	-236,026.63	-853,996.90
Other operating expenses	5	-2,836,101.90	-2,993,412.43
		-7,646,299.06	-8,384,629.36

Operating profit		262,375.94	-85,105.36

Financial income and expenses	6	-1,666,790.36	-3,016,448.01

Earnings before
extraordinary items and taxes		-1,404,414.42	-3,101,553.37

Extraordinary items		5,500,000.00	8,600,000.00

Earnings before tax		4,095,585.58	5,498,446.63

Income taxes	7	-1,149,554.11	-1,570,680.66

Net profit		2,946,031.47	3,927,765.97

Parent Company's Balance Sheet (FAS)

€	Note	31 Dec 2010	31 Dec 2009	€ Note	31 Dec 2010	31 Dec 2009
ASSETS				SHAREHOLDERS' EQUITY AND LIABILITIES

FIXED ASSETS				SHAREHOLDERS' EQUITY
Intangible assets	8			Equity attributable to parent company shareholders
Intangible rights		273,675.61	421,224.63	Share capital	2,086,464.50	2,085,364.50
Other long-term expenses		0.00	777.51	Rights issue	39,710.00	0
		273,675.61	422,002.14	Issue premium fund	7,899,485.80	7,899,485.80
Tangible assets	9			Unrestricted invested share
Land and water areas		16,818.79	16,818.79	holders' equity reserve	35,486,427.82	35,447,817.82
Buildings and structures		97,253.53	103,846.99	Retained earnings	3,486,757.45	2,177,767.16
Machinery and equipment		44,322.44	79,925.06	Net profit	2,946,031.47	3,927,765.97
		158,394.76	200,596.84	Total shareholders' equity	51,944,877.04	51,538,201.25
Investments
	10
Shares in Group companies		114,078,367.38	114,078,367.38	LIABILITIES
Other shares and holdings		606,292.32	606,292.32
		114,684,659.70	114,684,659.70	Non-current liabilities
				Loans from financial institutions	13,000,000.00	18,000,000.00
Total fixed assets		115,116,730.07	115,307,252.68

CURRENT ASSETS				Current liabilities

Current receivables	11			Accounts payable	88,141.00	161,510.01
Receivables from Group companies		6,335,115.00	9,430,272.94	Interest-bearing liabilities	4,000,000.00	4,000,000.00
Other receivables		212,120.54	276,800.10	Liabilities to Group companies	59,928,367.18	58,489,943.46
Prepayments and accrued income		272,595.74	261,815.24	Other liabilities	280,365.50	707,874.37
		6,819,831.28	9,968,888.28	Accrued expenses	829,763.38	724,171.71
					65,126,637.06	64,083 499.50
Cash and cash equivalents		8,134,952.75	8,345,559.84
				Total liabilities	78,126,637.06	82,083,499.55
Total current assets		14,954,784.03	18,314,448.12
				Total shareholders' equity and liabilities	130,071,514.10	133,621,700.80
Total assets		130,071,514.10	133,621,700.80

Parent Company's Cash Flow Statement (FAS)

€ 000	1 Jan–31 Dec 2010	1 Jan–31 Dec 2009
Cash flow from operations:
Net profit	2,946	3,927
Adjustments to net profit	-2,448	-3,159
Change in working capital	4,711	7,627
Interest paid	-621	-1,758
Interest received	11	83
Income tax paid	-1,495	-2,422
Net cash flow from operating activities	3,104	4,298

Cash flow from investments:
Purchase of tangible and intangible assets	-46	-16
Acquisition of subsidiary, net of cash acquired	-	-
Cash flow from investments	-46	-16

Cash flow from financing:
Proceeds from share issue	79	-
Acquisition of own shares	-	-33
Repayment of current term loans	-4,000	-57,000
Repayments of non-current loans	-1,000	-18,000
Withdrawals of current loans	-	4,000
Withdrawals of non-current loans	-	38,000
Group financing items *	4,537	37,580
Dividends paid and other profit distribution	-2,885	-1,025
Cash flow from financing	-3,269	3,522

Change in liquid assets	-211	7,805

Liquid assets at beginning of period	8,345	540
Change in liquid assets	-211	7,805
Liquid assets at end of period	8,135	8,345

* Group financing items comprise changes in loans and receivables between the parent company and its subsidiaries.

Basic Information of the Parent Company and Accounting Policies (FAS)

Basic information of the company

Digia Plc is the parent company of the Digia Group. It is domiciled in Helsinki and its registered office is at Hiomotie 19, 00380 Helsinki. Digia Plc subsidiaries with business operations are Digia Finland Ltd (with the wholly owned subsidiaries Digia Financial Software Oy and Digia Service Oy), Sunrise Resources Ltd and Digia Sweden Ab.

Accounting policies

The parent company's financial statements have been prepared in accordance with Finnish Accounting Standards (FAS). The financial statement is based on original acquisition costs. Book values based on original costs have been reduced to correspond to fair value as necessary.

Since 1 June 2005, the parent company has operated as the Group's administrative company and charged the Group companies for services rendered.

Pension schemes

The Group's pension schemes are arranged through a pension insurance company. Pension premiums and expenses allocated to the financial period are based on confirmations received from the insurance company. Pension expenses are recognised as expenses for the year in which they arise.

Leasing payments

Leasing payments are recognised as annual expenses.

Extraordinary items

Extraordinary income and expenses include substantial non-recurring income and expenses not associated with actual business operations. In the reporting periods 2010 and 2009, Group contributions received have been recognised as extraordinary items.

Fixed assets, depreciation and amortisation

Fixed assets are recognised in the balance sheet at immediate cost less planned depreciation and amortisation.

The economic lives underlying planned depreciation and amortisation are as follows:

Intangible assets
Intangible rights	5 years
Other long-term expenses	5 years

Tangible assets
Buildings and structures	25 years
Machinery and equipment	3–8 years

Purchases of fixed assets with an economic life of less than three years are recognised as annual expenses.

Notes to the Parent Company's Financial Statement

1. Net sales

Net sales by segment

€ 000	2010	2009
Group administration services	7,972	8,278
Group total	7,972	8,278

2. Other operating income

€ 000	2010	2009
Other	37	22
Total	37	22

3. Information on personnel and governing bodies

€ 000 2010		2009
Board emoluments and remuneration and CEO's compensation	764	1,220
Other salaries and remunerations	3,260	2,520
Pension insurance premiums	532	618
Other personnel expenses	118	179
Total	4,674	4,537

Number of personnel, 31 December	2010	2009
Management and administration	47	46
Total	47	46

4. Depreciation, amortisation and impairment

€ 000	2010	2009
Planned depreciation and amortisation
Property, plant, and equipment, and intangible assets	236	258
Amortisation	-	596
Total	236	854

5. Auditor's fees

€ 000	2010	2009
Audit	80	91
Other statutory duties	1	1
Tax counselling	10	7
Other services	12	19
Total	103	118

6. Financial income and expenses

Financial income

€ 000	2010	2009
Dividend income from Group companies	-	-
Interest and financial income from Group companies	-	-
Interest and financial income from others	11	66
Total	11	66

Financial expenses

€ 000	2010	2009
Impairment of financial securities	-	-
Interest expenses to Group companies	765	660
Interest expenses to other companies	513	1,494
Loan administration fees	80	826
Other financial expenses	320	102
Total	1,678	3,082

7. Income taxes

€ 000	2010	2009
Income taxes on operations	-280	-665
Income taxes on extraordinary operations	1,430	2,236
Total	1,150	1,571

Deferred tax assets arising accrual differences and from temporary differences between book values and taxation values are unrecorded in the Statement of Financial Position in accordance with the principle of materiality. Deferred tax assets totalled EUR 137,278.70 at the end of the fiscal year.

8. Intangible assets

	Intangible	Other long-term	Total	Total
€ 000	rights	expenses	2010	2009
Acquisition cost 1 January	1,809	655	2,464	2,460
Additions	35	-	35	4
Disposals	-	-	-	-
Acquisition cost 31 December	1,844	655	2,499	2,464

Accumulated depreciation and
amortisation 1 January	-1,388	-654	-2,042	-1,846
Depreciation	-183	-1	-184	-196
Amortisation	-	-	-	-
Accumulated depreciation and
amortisation 31 December	-1,571	-655	-2,226	-2,042

Book value 1 January	421	1	422	614
Book value 31 December	274	0	274	422

9. Property, plant and equipment

€ 000	Land and water areas	Buildings and structures	Machinery and equipment	Total 2010	Total 2009
Acquisition cost 1 January	17	162	1,843	2,022	2,009
Additions	-	-	10	10	13
Disposals	-	-	-	-	-
Acquisition cost 31 December	17	162	1,853	2,032	2,022
Accumulated depreciation and amortisation 1 January	-	-59	-1,762	-1,821	-1,759
Depreciation	-	-7	-46	-53	-62
Amortisation	-	-	-	-	-
Disposals	-	-	-	-	-
Accumulated depreciation and amortisation 31 December	-	-66	-1,808	-1,874	-1,821

Book value 1 January	17	104	81	201	249
Book value 31 December	17	97	44	158	201

10. Financial assets

€ 000	Investments in subsidiary shares	Other shares and holdings	Total 2010	Total 2009
Acquisition cost 1 January	114,078	606	114,685	115,281
Additions	-	-	-	-
Disposals	-	-	-	-596
Acquisition cost 31 December	114,078	606	114,685	114,685

Book value 1 January	114,078	606	114,685	115,281
Book value 31 December	114,078	606	114,685	114,685

Itemisation of other shares and holdings

			Share of
Group companies	Domicile	Home country	ownership	Share of votes
Digia Hong Kong Ltd	Hong Kong	China	100%	100%
Digia Estonia Oü	Tallinn	Estonia	100%	100%
Digia Sweden AB	Stockholm	Sweden	100%	100%
Digia Finland Oy	Helsinki	Finland	100%	100%
Sunrise Resources Oy	Helsinki	Finland	100%	100%
Digia Partners Oy	Helsinki	Finland	100%	100%

Other shares and holdings	€000
Kiinteistö Oy Rukan Kuukkeli	62
Kytäjä Golf Oy	39
Vierumäki Golf Oy	17
Vierumäki Golf Club Oy	35
Vierumäen Loma-aika Oy	138
Vierumäen Kuntoharju Oy	270
Rikunniemen Huolto Oy	6
Tahko Golf Club Oy	39
Total	606

11. Current receivables

€ 000	2010	2009
Receivables from Group companies
Accounts receivable	-	7
Prepayments and accrued income	5,534	8,622
Borrowings	801	801
Other receivables	212	277
Prepayments and accrued income	273	262
Total	6,820	9,969

12. Shareholders' equity

€ 000	2010	2009
Share capital 1 January	2,085	2,085
Rights issue	1	-
Reduction of nominal value	-	-
Share capital 31 December	2,086	2,085
Premium fund 1 January	7,899	7,899
Transfer to unrestricted shareholders' equity	-	-
Premium fund 31 December	7,899	7,899
Rights issue	40	-
Total restricted shareholders' equity	10,026	9,985
Unrestricted shareholders' equity reserve 1 January Increase in share capital	35,448 39	34,938 -
Own shares	-	510
Unrestricted shareholders' equity reserve 31 December Accrued earnings 1 January	35,486 6,106	35,448 2,989
Dividends Own shares	-2,885 -	-1,024 -169
Share-based transactions settled in equity	85	383
Accrued earnings 31 December	3,487	2,178
Net profit	2,946	3,928
Total unrestricted shareholders' equity	41,919	41,553
Total shareholders' equity	51,945	51,538

Distributable funds 31 December

€ 000	2010	2009
Unrestricted invested shareholders' equity	35,486	35,448
Accrued earnings	3,487	2,178
Net profit	2,946	3,928
Total	41,919	41,553

13. Non-current liabilities

€ 000	2010	2009
Loans from financial institutions	13,000	18,000
Total	13,000	18,000

14. Current liabilities

€ 000	2010	2009
Interest-bearing
Interest-bearing liabilities	4,000	4,000
Liabilities to Group companies
Borrowings	59,201	57,636
Total interest-bearing current liabilities	63,201	61,636

Interest-free
Liabilities to Group companies
Accounts payable	284	301
Accruals and deferred income	443	553
To others
Accounts payable	88	162
Other liabilities	280	708
Accruals and deferred income	830	724
Total interest-free current liabilities	1,925	2,447
Total current liabilities	65,127	64,083

Material items included in accrued expenses arise from the accrual of holiday pay, as well as accrued provisions for salaries and fees.

15. Contingent liabilities

Lease liabilities

€ 000	2010	2009
Due during the current financial period	150	158
Due later	148	157
Total	298	315

Other lease liabilities

€ 000	2010	2009
Due during the current financial period	2,036	1,879
Due later	835	648
Total	2,872	2 526

Other liabilities

€ 000	2010	2009
Other	140	147
Total	140	147

Signatures to the Board's Report and Financial Statement

Helsinki, 3 February 2011

Pertti Kyttälä Chairman of the Board of Directors	Robert Ingman	Kari Karvinen
Martti Mehtälä	Pekka Sivonen	Tommi Uhari
Marjatta Virtanen	Juha Varelius CEO

Auditor's note

A report of the audit has been submitted today.

Helsinki, 3 February 2011

Ernst & Young Oy Authorised Public Accountants

Heikki Ilkka Authorised Public Accountant

Auditor's report

To the Annual General Meeting of Digia Oyj

We have audited the accounting records, the financial statements, the report of the Board of Directors, and the administration of Digia Oyj for the year ended 31 December, 2010. The financial statements comprise the consolidated statement of financial position, income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows, and notes to the consolidated financial statements, as well as the parent company's balance sheet, income statement, cash flow statement and notes to the financial statements.

The responsibility of the Board of Directors and the Managing Director

The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, as well as for the preparation of financial statements and the report of the Board of Directors that give a true and fair view in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The Board of Directors is responsible for the appropriate arrangement of the control of the company's accounts and finances, and the Managing Director shall see to it that the accounts of the company are in compliance with the law and

that its financial affairs have been arranged in a reliable manner.

Auditor's responsibility

Our responsibility is to express an opinion on the financial statements, on the consolidated financial statements and on the report of the Board of Directors based on our audit. The Auditing Act requires that we comply with the requirements of professional ethics. We conducted our audit in accordance with good auditing practice in Finland. Good auditing practice requires that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the report of the Board of Directors are free from material misstatement, and whether the members of the Board of Directors of the parent company and the Managing Director are guilty of an act or negligence which may result in liability in damages towards the company or have violated the Limited Liability Companies Act or the articles of association of the company.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements and the report of the Board of Directors. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of financial statements and report

of the Board of Directors that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements and the report of the Board of Directors.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion on the consolidated financial statements

In our opinion, the consolidated financial statements give a true and fair view of the financial position, financial performance, and cash flows of the group in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.

Opinion on the company's financial statements and the report of the Board of Directors

In our opinion, the financial statements and the report of the Board of Directors give a true and fair view of both the consolidated and the parent company's financial performance and financial position in accordance with the laws and regulations governing the preparation of the financial

statements and the report of the Board of Directors in Finland. The information in the report of the Board of Directors is consistent with the information in the financial statements.

In Helsinki on February 2, 2011

Ernst & Young Oy Authorized Public Accountant Firm

Heikki Ilkka Authorized Public Accountant

List of Accounting Books

Accounting books

Journals	Electronic archive e-Office
General ledger	Electronic archive e-Office
Accounts receivable	Computerised partial accounting
Accounts payable	Computerised partial accounting
Payroll	Computerised partial accounting
Balance sheet book	Separately bound
Itemisations of balance sheet	Separately bound

Voucher types and method of storage	Until 31 December 2016

VAT documents	Paper documents
Automatic entries	Paper documents
Eurocard vouchers	Paper documents
Accruals	Paper printouts in the journal
Bank receipts	Paper documents
Travel and expense invoices	Paper documents
Sales invoices	Paper documents
Sales payments	Paper documents
Memoranda	Paper documents
Purchasing invoices	Electronic archive e-Office
Payments of purchases	Paper printouts in the journal
Payroll receipts	Paper documents

Information for Shareholders Stock Exchange Releases

The purpose of Digia's investor relations is to provide capital markets with open and reliable information on the company and its operating environment in order to give market participants a factual overview of Digia as an investment.

Digia Plc shares are quoted on the Main List of the NASDAQ OMX Helsinki Ltd, in the Information Technology sector, Small Cap segment.

Investor relations

Chief Financial Officer Harri Savolainen Valimotie 21, FI-00380 Helsinki Tel. +358 10 313 3000 harri.j.savolainen(at)digia.com

Communications Manager Camilla Lindfors Valimotie 21, FI-00380 Helsinki Tel. +358 10 313 3000 camilla.lindfors(at)digia.com

Financial releases 2011

During the financial year 2011, Digia Plc will publish the following financial releases in Finnish and in English:

Q1 Interim Report: Friday 29 April 2011 at 9:00 a.m.
Q2 Interim Report: Thursday 11 August 2011 at 9:00 a.m.
Q3 Interim Report: Friday 28 October 2011 at 9:00 a.m.

Digia Plc will hold its Annual General Meeting for 2011 on Wednesday, 16 March 2011, starting at 10.00 a.m. at the headquarters of the company. Address Valimotie 21, 00380 Helsinki, Finland.

To order Annual Reports and other publications, please contact

Digia Plc, Corporate Communications Valimotie 21, FI-00380 Helsinki Tel. +358 10 313 3000 invest(at)digia.com

The Annual Report, interim reports, and stock exchange releases are available on our website at www.digia.com.

The Annual Report 2010 has been published in electronic form at http://vuosikertomus2010.digia.com/en. The Annual Report can also be ordered as a printed PDF version via email from [email protected].

Change of address

We kindly ask shareholders to notify their respective book-entry securities registers of any change of address.

Financial reports

04.02.2010	Digia Plc Financial Statement bulletin 2009: Digia achieves its best-ever
	operative result
10.02.2010	Digia's Financial Statements 2009 published
29.04.2010	Digia Plc First Quarter 2010: Net sales up 6.4 per cent, operating profit
	14.2 per cent of net sales
12.08.2010	Digia Plc Q2 2010: Clear rise in net sales (12.9%), profitability remains
	good (13.6%)
29.10.2010	Digia Plc Third Quarter 2010: Net sales continued to increase (+6.6%) with
	good profitability (EBIT 10.9%)

Other stock exchange releases

05.02.2010	Summons to the Annual General Meeting of Digia Plc
05.02.2010	Changes in Digia's Board of Directors
10.02.2010	Digia's Annual Summary of releases from 2009 published
11.02.2010	Digia's Electronic Annual Report published
03.03.2010	The decisions of Digia Plc's Annual General Meeting and the organising
	meeting of the Company's Board of Directors
31.03.2010	Change in Digia's Financial Reports schedule regarding Q3/2010
27.05.2010	New incentive scheme based on share earnings and growth for Digia's
	Management
15.11.2010	Digia Plc: Shares subscribed with option rights
24.11.2010	Digia's Financial Reports and Annual General Meeting in 2011

Share information

Share capital and shares

The nominal share price is EUR 0.10. On 31st of December 2010, the total number of Digia shares was 20,864,645. According to the Finnish Central Securities Depository Ltd, on 31st of December 2010 Digia had 5,540 shareholders.

Shareholder	Number of shares	Shares and votes
Ingman Group Oy Ab	3,000,000	14.4%
Sivonen Pekka	2,631,613	12.6%
Hallikainen Jyrki	2,135,463	10.2%
Karvinen Kari	1,353,901	6.5%
Savolainen Matti	1,270,659	6.1%
Keskinäinen työeläkevakuutusyhtiö Varma	750,000	3.6%
Nordea Pankki Suomi Oyj (Nominee-registered)	641,068	3.1%
OMXBS/Skandinaviska Enskilda Banken AB (Nominee-registered)	363,005	1.7%
Etola Oy	200,000	1.0%
Ahonen Olli	183,050	0.9%

The ten major shareholders were Distribution of holdings by number of shares held on 31 December 2010

Number of shares	Percentage of holdings	Percentage of shares and votes
1–100	21.6%	0.4%
101–1,000	59.1%	7.2%
1,001–10,000	17.5%	12.7%
10,001–100,000	1.4%	10.8%
100,001–1,000,000	0.3%	19.1%
1,000,001– 3,000,000	0.1%	49.8%

Distribution of shareholding by sector on 31 December 2010

	Percentage of holdings	Percentage of shares
Business	5.0%	19.6%
Finance and insurance	0.3%	7.1%
Public corporations	0.1%	3.6%
Non-profit organisations	0.3%	0.6%
Households	94.0%	68.0%
Foreign holdings	0.3%	1.1%

Digia offices

Digia switchboard is +358 10 313 3000

HELSINKI

Headquarters Valimotie 21 FI-00380 Helsinki, Finland Tel. +358 10 313 3000 Fax +358 10 313 3700

PORI

Pohjoisranta 11 F FI-28100 Pori, Finland Tel. +358 10 313 3000 Fax +358 10 313 4411

SAINT-PETERSBURG

8 Beloostrovskaya str Saint-Petersburg, Russia,197342 Tel./Fax +7 812 655 0340/41

JYVÄSKYLÄ

Piippukatu 11 FI-40101 Jyväskylä, Finland Tel. +358 10 313 3000 Fax +358 10 313 4700

RAUMA

Isokatu 21 FI-26100 Rauma, Finland Tel. +358 10 313 3000 Fax +358 10 313 2110

CHENGDU

8F, Building D5 Tianfu Software Park, Tianfu Avenue Chengdu 610015, China Tel. +86 28 6685 6966 Fax +86 28 6685 6966-115

LAPPEENRANTA

Laserkatu 6 FI-53850 Lappeenranta, Finland Tel. +358 10 313 3000 Fax +358 10 313 4961

TAMPERE

Åkerlundinkatu 11 FI-33100 Tampere, Finland Tel. +358 10 313 3000 Fax +358 10 313 2120

BEIJING

2001, 20F, East Ocean Centre 24A, Jianguomenwai Avenue, Changyang Beijing, China Tel. +86 10 6515 5271 Fax +86 10 8518 5950

OULU

Sepänkatu 20 FI-90100 Oulu, Finland Tel. +358 10 313 3000 Fax +358 10 313 4022

STOCKHOLM

Kungsgatan 8, 4 tr, SE-11143, Stockholm, Sweden Tel. +46 8 5723 6400 Fax +46 5723 6401

AI assistant

Digia Oyj — Annual Report 2010

3261_10-k_2011-02-21_e0c29ece-e37d-45a4-b85b-6445951199ec.pdf

Annual Report 2010

Table of contents

Digia Plc

Business operation

Governance

Financial Statement

Shareholders

Digia in brief

Digia's mission

Digia's vision

Key events in 2010

January

February

March

April

June

September

October

November

Key figures

Net sales MEUR

Operating profit MEUR

Earnings per share before extraordinary items EUR

CEO's review

Strategy

The objective is to improve shareholder value

Portfolios

Portfolios to enable risk management, operational development and new business creation

Growth

Within current businesses, the target is to pursue mainly organic growth

International business and market expansion

New business with new kinds of services

Examples of inventive solutions

Profitability Competitive advantage

Inventive expertise

Effective competence development

Competence development in core enterprise system technologies

Continually improving employer image

Competence strategies increase efficiency

Operational efficiency based on global management model

Personnel

• Digia's market recognition continues to grow

Personnel in figures

Recruitment

Work environment

Employer-employee cooperation

Training

Amount of employees

Personnel distribution by age group

Employee well-being

Key capabilities for successful performance

Recruitment, Digia as an employer Employer image improved

Students are an important target group

Focus on processes

Continuous development

Systematic monitoring

Business operation

Enterprise Solutions New Etra Logistics Centre equipped

CASE

with Digia Enterprise ERP system

Customer Experience Management

Digia makes experiences a competitive asset

Digia's services and solutions improve the customer experience

CASE

Customer encounters at Aalto University

Digia Tablo

Digia's digital workdesk provides the solution

CASE

Digital Workdesk boosts VVO's information flow

ease and efficiency of communication and daily tasks.

All sides undeniably benefit

Integration

Integration is the spinal column of good customer experiences

Integration is the key to service management

Productivity and Operations Management

Productivity and Operations Management

A strategic partner

Digia Oyj Annual Report 2010