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Digia Oyj — Annual Report 2020
Feb 22, 2021
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Download source file Digitalisation that makes a difference Annual Report 2020 Digia’s direction Responsible Digia Corporate Governance Financial statements Digia’s direction Digia in brief CEO’s review Markets and outlook Digia 2020 Report by the Board of Directors Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 Digitalisation that makes a data-driven world Digia is a growing software and service company that helps its customers to renew and develop data-driven business operations. The world is becoming networked and the pace of de- velopment is accelerating. Companies and public-sector organisations must have the capacity for continuous renewal. We live in a digitalised world in which organisa - tions’ processes and services are already largely reliant on a variety of information systems. The ability to utilise data will determine success. Digia is your partner for comprehensive digitalisation. We help our customers to build strong systems and translate - vide all the layers of digitalisation from business systems service management. Our Service Center ensures that our customers’ business-critical systems and services In order to renew your business, you have to win people over to the changes. Systems and services must be easy - tine operations so that peo- ple can focus on meaningful work. We connect humans with technology in a smart way. We are also developing our own operations. Our daily lives are guid - ed by our cultural principles: learn- ing, sharing, courage and professional pride. Helsinki, Tampere, Jyväskylä, Turku, Oulu, - holm, Sweden. Digia’s net sales totalled EUR The company is listed on Nasdaq Helsinki (DIGIA). We are building a world in which digitalisation and partners. Digia in brief Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 Digia in brief It will not sting that bad I will stand is a Senior Trainee Together we know more We complete our work but we ourselves are a work-in-progress! Shared information is double the information. Helping others saves time. What goes around doesn’t surprisingly come around to bite us. I will choose whatever works the best. If I made a wrong call, I’ll choose again. Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 - rus changed our business environment in the early year, and Digia personnel spent almost the entire year working remotely. Our organisation demonstrated its strength in our ability to operate but also developed our operations during the past year. In spite of the uncertain market This gives us a good foundation for future growth. The importance of responsible operations was highlight - - ic, we ensured that our customers’ services continued to operate without interruption and that our personnel could work safely. We also developed our corporate responsi - bility and updated its focal points. strategy, which revolves around the smart utilisation of data in services and business processes. All companies and public-sector actors are facing a learning journey in terms of the development of both operating culture and technological solutions. Digia is a visionary and reliable partner to our customers on this journey. - ing both our operations and our personnel’s competence. We have, for instance, developed remote management by coaching our supervisors and project managers on questions concerning leadership during the pandemic. In accordance with our cultural principles, we constantly provide a wide variety of training for our personnel. The continual development of our operating models is part of our strategy. As part of this, we launched a project to modernise our own business platform. This modernisation seeks to support Digia’s growth, data smooth running of daily life. We started planning environment, we managed to safeguard the continuity of our customers’ services and our personnel’s employment, as well as to renew our strategy. Our net sales grew by Over the course of the year, we strengthened our posi- - panded the Digia Hub (our network of freelance develop- ers) via the acquisition of NSD Consulting. In December, we signed an agreement to acquire Climber International At Digia, we believe in a world where business value is created by using data intelligently in digital ecosystems. We are a responsible and visionary partner to our cus - tomers in this world. I would like to thank our customers, personnel, partners and other stakeholders for their responsible business CEO, Digia Plc CEO’s Review Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 The digitalisation trend shows no signs of stopping and is creating a strong growth market for Digia. Customer organisations are placing a clearer focus on data utilisation needs. Companies and public-sector organisations are continuing to digitise their services. The further along organisations are on their digitalisation journey, the more clearly the focus of demand shifts to data utilisation. We believe that the coronavirus pandemic will primarily accelerate developments in digitalisation, even though more about the impacts of the coronavirus on Digia’s business on . We see the following strengthening trends in the market, both in the business and public sector: • digitalisation is becoming an increasingly important part of organisations’ core operations; • smart and responsible data utilisation in business processes creates a competitive advantage; • the world is becoming networked, and digital platforms enable new business models; • for services; • further growth in information security and protection requirements; • the role of cloud technologies as a platform for devel - oping and operating services is becoming the norm. In many organisations, the digitalisation of operations has progressed so far in recent years that operations are almost entirely reliant on a variety of information systems. This means that digitalisation will no longer be a sepa - how an organisation implements its core tasks. That’s why the uninterrupted operation of services and systems is becoming even more important. Digia meets these of service management and monitoring options, and its Finland-based Service Center. We are able to generate - When processes are highly digitalised, organisations have access to data on practically all of their activities. That’s why it is possible to make business even more da - ta-driven. Data also enables the development of brand- new kinds of services and even new business models. In driven operating models combined with the capability to gather, manage, share and analyse data. Digia employs data. In addition to analytics, we pay attention to data utilisation needs in all of our deliveries, from ERPs to digital services. In our networked world, digital platforms are becoming increasingly important in two ways. Firstly, every company and public-sector organisation must ensure that their own digital platform is in good working order. This means Secondly, digital platforms enable new types of coop - eration models (platform economies are a well-known operating models must also identify what kind of digital ecosystems they should join, and also ensure they have the capability to join these platforms and share data between platforms. - er users actually make good use of digital services. Services must be attractive and easy to use, and must - faces for functions implemented by many other systems. Digia’s strength in the competitive digital services market Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 is our understanding of the entire package: we are able to implement services from business systems all the way up to the customer interface. This package is tied together with a customer-centric approach and service design. The services of the future will, above all, be data-driven. The further we progress with digitalisation, more and more critical data of various types is being stored in protecting this data is vital. Data leaks and other cyber threats are posing an increasingly critical risk to the activities of both companies and organisations. For this reason, customers are increasingly valuing partners, who are able to guarantee secure systems all the way from implementation to maintenance. Digia can safeguard system security from implementation to maintenance. Digia has a separate security organisation headed up by the CSO, which is responsible for continually devel - in particular. These days, the cloud is increasingly being used as a production platform at all levels of digitalisation, from business systems to data analytics and digital services - ever, it is not always appropriate to migrate all operating and application environments to the cloud. This means that there is a need for a variety of cloud and data centre hybrid solutions. Digia is your comprehensive partner in the cloud. We can help design cloud architecture, implement cloud infrastructure, and provide continuous cloud-based services. Organisations are transitioning from service and process digitalisation to the next phase, which emphasises data utilisation. Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 to renew our operations and strengthen the selected focus areas. In the strategy, we place particular emphasis on data utilisation in our customers’ services and business processes. For its customers, Digia is a turnkey provider of smart solutions and a service company that manages the service lifecycle from implementation to maintenance and development. We provide our customers with a service package covering mobile and online services, data platforms and knowledge-based management, integrations and APIs, as well as business core systems including high-security solutions. For all of these, we provide various levels of maintenance services to help our customers operate their business- critical systems and services around the clock. further strengthening this package and helping our cus- utilisation of data. . Digia is seeking annual net sales growth of more than Digia delivers value to its customers by acting as a visionary and reliable partner in our networked and data-driven world. Strong customer relations, professionalism, corpo - rate culture, product and service packages, a partnership network and responsibility form the basis for our operations. Digia employees and the company’s cultural principles are at the core of this: courage, sharing, learning and professional pride. These cultural principles are everyday direction that supports learning and renewal. The world around is becoming more networked, and Digia is also gaining strength from partners and networks. We work with leading technology partners in the best interests of our customers. We are able to guarantee technological continuity and enable the provision of a We will bring data utilisation as a cross-cutting theme for all Digia’s service areas, from business systems to integrations and digital services. Skilled employees are the most important success factor for Digia. We are constantly developing Digia into a more desirable workplace by reinforcing our culture, at the heart of which is the continuous learning of every employee. We will deepen our customer relationships and further strengthen the share accounted for by the service business. We will develop our operational models and solutions to improve our cost- competitiveness. An essential development project in the strategy period will be the reform of our own business platform. Cloud is the development and operating platform for future services. We will continue services, taking into account security and key public cloud platforms (Microsoft Azure, Amazon Web Services and Google Cloud Platform). Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 Digia 2020 How the coronavirus has impacted Digia’s business Service areas Personnel Digia’s direction Responsible Digia Corporate Governance Report by the Board of Directors Financial statements Digia 2020 Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 Net sales EUR million 150 120 90 60 30 0 139 132 112 96 86 2016 2017 2018 2019 2020 Operating result EUR million 20 15 10 5 0 2019 Digia proceeded to EBITA guidance in the beginning of 2020. 2020 16 11 EBITA Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 In order to prevent the spread of have been working remotely since March. Digia’s and we have been able to guarantee uninterrupted services for our customers even during these step in Digia’s growth journey. This strategy - data. We will continue to renew our opera - tions and strengthen selected focus areas. Read more about our strategy on page. Diversity is an aspect of Digia’s responsibility, and we want to make our workplace even more and organised diversity training for personnel. We are also actively involved in the Women in Tech network. and the Swedish company Climber Interna- acquired Climber’s entire share capital. The After the acquisition, Digia now employs more integration and business analytics. the Digia Hub network, which versatile projects in a wide range of in October when Digia acquired NSD Consulting Oy,and Digia Hub Companies can acquire top-notch professionals for their own software development projects straight from this network. During the year, we made our own contribution to data-driven development project of the Finnish Red Emergency Response Centre was renewed during bulletins, which can be particularly useful during Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 In the midst of the coronavirus pandemic, we ensured that our customers’ services continued to operate without interruption and that our personnel could work safely. The market environment became more challenging - tions. In the short term, our customers’ need to ensure the performance of their core business and enhance an uncertain market, customers were also typically more careful in evaluating the volume of development projects and project implementation schedules. This cautiousness The coronavirus has forced many organisations to review their operating methods and assess opportunities to utilise digital solutions. The crisis has also revealed opportunities that have been opened up by digitalisation - erate the digitalisation trend in the years ahead. Clear the development of e-services. Many of the new op- and society even after the crisis is over. We are moving towards a world in which people and software collabo - rate in daily life. During the coronavirus epidemic last year, our priorities were to ensure the safety of our employees and the uninterrupted operation of services for our custom - ers, without neglecting continuous development. The majority of our employees have been working remotely throughout the pandemic. We introduced continuity plans for our continuous services in the very early stages of the pandemic, and these plans have helped to safe - guard service levels and the continuity of our customers’ business operations. Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 This business area combines customer-centric, tailor-made platform solutions with Digia’s Digia is recognised as one of Finland’s leading operators in integration and API solutions, and the network trend will further strengthen the importance of smooth and reliable integrations. This service area’s key themes are interoperability, reliability, and data security. In these service areas, we provide business systems that help our customers to core processes. These systems also act as - ment. Digia Business Platforms - our own Digia Enterprise ERP product, which has been awarded the Key Flag symbol. Digia Finan - cial Platforms is based around our Digia Financial Solutions product family, which is a market-leading solution for fund management companies, asset management companies, and brokers. This service area includes Digia’s continuous services, support and maintenance, and cloud environment op - eration. Digia’s own Service Center ensures that our customers’ business- We help our customers to utilise data and productive services that have been designed with a cus - tomer-centric approach. We provide business and service design, analytics, e-commerce solutions, and mobile and online services. Digia Digital Digia’s service areas Digia reports on one business segment that comprises of Digia Financial Platforms and Digia Customer Operations. Service areas Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 Digital services, such as a mobile application, are a critical part of HSL’s business, and uninterrupted service must be guaranteed around the clock. This is why HSL relies on Digia’s service management and the Digia Iiris monitoring solution. As part of this service management, Digia also coordinates troubleshooting with HSL’s other partners. HSL Woikoski operates in the gas industry and was in need of a new start. Several years ago, the company realised that it was time for some bold new development – the digitisation of its business. Woikoski worked with Digia to renew the company’s entire business by building a digital platform for it. This large-scale project included a new ERP, an IoT solution, data analytics and several other systems. The Finnish Elite League, Liiga is a pioneer in digital services for ice hockey – even on a global scale. Liiga’s mobile apps are the very model of innovation. An app developed by Digia is taking the fan experience to the next level by creating a brand- new kind of platform for clubs and their partners to reach audiences and sell services. Various versions of the app are being used exceptionally widely and innovatively. Liiga Service areas Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 The system that FIM was using in its fund value calculation had fallen badly behind the times and there was an obvious need to invest in a new system. Strictly regulated, routine back- oce functions tie up resources, but it is dicult to make them generate added value. FIM sought increased eciency and cost benets by outsourcing fund-related back-oce functions to Digia. FIM How to eectively organize volunteers when thousands of them can unexpectedly sign up at once? The Finnish Red Cross regularly encounters this positive but challenging dilemma. Signicant help came from a project with Digia, which combined service design and data utilisation. Now the Red Cross can guide and develop volunteer work with data, and more and more people are getting the help they need faster. Monitoring the situation on a construction site involves many challenges relating to transparency and information ow. Fira is aiming to resolve these issues through a variety of means, including digitalisation. The company worked with Digia to create a real-time overview that collates information from dierent systems into a single display, thereby increasing transparency on construction sites. Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 Personnel Skilled personnel who are committed to the objectives of our customers are the cornerstone of all our operations. We want to be a team of top professionals who are always Technological advancements are changing the world. Operating methods are changing and industry boundaries are breaking down. Our professionally skilled employees help our customers to navigate these changes and har - ness digitalisation opportunities. Digia’s key strength lies in its broad-ranging and profound and evolving workplace culture. This is why we are able solutions and our employees with varied and motivat - ing tasks. We are making continual investments in the a motivating workplace culture and a culture of lifelong learning. Culture is the ERP system of everyday life that guides our choices. Digia’s cultural principles are learning, we continued to integrate our cultural principles into our everyday work. We will continue to develop our corporate culture and build the best and most functional workplace possible in the spirit of continual improvement. Due to the coronavirus epidemic, the majority of Digia personnel began working from home. We are therefore seeking to maintain a sense of community with the aid of a variety of internal virtual events and content. Diversity is part of Digia’s corporate responsibility: our - eryone can be themselves. Psychological safety is one key aspect of an inclusive workplace, and studies have shown it to be a common factor among successful work - place communities. Continuous learning is one of our key cultural principles. In the spirit of Senior Trainee attitude, we believe that we can continuously develop as a work - place community with respect to how we take people’s community, which is also the umbrella organisation for Women in Tech. Inklusiiv seeks to promote greater diversity and inclusivity in the workplace. In cooperation with Inklusiiv, we organised diversity training for both management and personnel. Our tribal activities, which focus on the mutual sharing of information between personnel, also received a boost with the addition of a new tribe (the Diversity tribe) at the turn of the year a number of ways, such as by and sharing Digia em - ployees’ everyday observations and stories about their Personnel by location 31 December Number of personnel Helsinki 722 Tampere 256 Jyväskylä 170 Turku 51 Rauma 24 Vaasa 14 Lahti 10 Oulu 6 Stockholm 5 Employees 31 December Number of employees 1,500 1,200 900 600 300 0 2016 2017 2018 2019 2020 1,266 1,091 1,005 872 1,258 Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 We operate in an environment where everything is in constant motion. To keep up with the pace, we need to to provide our employees with a range of opportunities for personal development, thereby ensuring that both the company and its employees maintain their competi - tiveness. We want to be a team of top professionals who are always learning. To ensure this, we develop Digia employees’ competence in technology and other spe - cialist areas through training and learning on the job and in networks. during the year. Training mainly focused on organising coaching to support the technical and professional skills In addition to competence development for Digia per - - laborated with Vaasa Entrepreneurship Society (VES) to organise an e-commerce programming course that was attended by students from the Vaasa University of Applied Sciences and the University of Vaasa. We were also involved in the Academic Work Academy’s intensive Successful recruitment that supports Digia’s workplace culture is essential for competence development and business success. Induction for new employees is part of a successful recruiting process, and we therefore invest in this. Successful induction is the basis for a positive Personnel Personnel distribution by age 31 December Number of persons Women Men Other 150 120 90 60 30 0 24–27 28–31 32–35 36–39 40–43 44–47 48–51 52–55 56–59 60–63 64–67 67 << 24 Employees by gender 31 December Number of employees 1,500 1,200 900 600 300 0 2016 2017 2018 2019 2020 Female Male Other 935 828 749 646 911 347 331 263 256 226 career changers not only permanent positions, but also trainee placements and thesis-writing opportuni - ties. In the early year, we organised our popular Career Compass recruitment breakfasts in Helsinki, Jyväskylä, applications for the programme. Due to the coronavirus restrictions, our recruiting events moved online and we were actively involved in virtual events such as the Mim - mit koodaa (Women Code) programme. The ways in which work is done in the IT industry are changing quickly: small entrepreneurs are becoming increasingly prevalent alongside traditional employment Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 top-notch professionals for their own software develop - ment projects straight from this network. Continually monitoring and supporting the employee distribution and support for competence development. Digia uses an early intervention model that supports success at work. Wellbeing is also supported with - we introduced the Siqni personnel survey to gain a bet - ter understanding of our employees, as understanding key aspect of Digia’s culture of continuous improvement. The survey revealed certain themes that are both valued by Digia personnel and have been successfully realised: meaningful tasks, professional colleagues, the freedom to work independently of time and place, and job secu - rity and continuity. Praise was also given for maintaining a good work-life balance and giving employees the op - portunity to put their skills into practice on a daily basis. Digia wants to be a pioneer in good leadership and workplace culture. We seek to provide a professional, - is founded on providing the best possible support to employees to guarantee their success. For instance, in - ing our supervisors and project managers on questions concerning leadership during the pandemic. We will continue to coach supervisors with the basic premise of developing a digital method of providing positive, goal-oriented leadership with a coaching approach. We also arranged customised virtual coaching for our build trust and manage and orchestrate cooperation. Personnel Personnel by years of service 31 December Percent <1 1–5 6–10 11–15 16–20 20< 50 40 30 20 10 0 24.4 39.3 10.5 10.0 10.0 5.7 Digia Digia’s responsibility Sustainable digital value Sustainable digital life Digia’s direction Responsible Digia Corporate Governance Report by the Board of Directors Financial statements Digia 2020 Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 that makes a difference Digia’s responsibility is based on our own Code of Conduct, the UN’s Universal Declaration of Human Rights and Sustainable Development Goals, and the International Labour Organisation’s (ILO) standards. However, in our changing business environment, responsibility is based above all else on the continual monitoring and improvement of our operations. responsibility. We interviewed various stakeholders, such as our customers and personnel, in order to create a responsibility framework that genuinely promotes our - the focus areas of corporate responsibility as well as ob - jectives and indicators for them. Read more about Digia’s corporate responsibility, objectives and indicators in the our solutions are functional, secure and easy to use, we also promote the responsible digitalisation of society. Digia aims to act as a technological pioneer whose products and services promote the development and wellbeing of society and the environment. We seek to implement our solutions so that they promote our cus - tomers’ responsibility. We help our customers to improve their responsible utilisation of data, and the availability and usability of their services. We also seek to promote the ethical use of data. to contribute to building solutions that enhance environ - mental and social responsibility for both society and our customers. Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 roots are in Finland and we work with our customers both in Finland and abroad. Our headquarters are in Helsinki and we have seven other locations in Finland: Tampere, Jyväskylä, Turku, Oulu, Rauma, Vaasa and Lahti. We also Skilled personnel who are committed to the objectives of our customers are the cornerstone of all our opera- tions. Digia aims to be a desired employer in the tech- wellbeing and competence development. Our goal is to their term of employment. Digia wants to provide a safe and healthy working environment in which everyone is valued as themselves. Continually monitoring and supporting personnel wellbeing play a key role at Digia. When it comes to wellbeing, we want Digia to be among the best in the sector. We also aim to ensure diversity and inclusivity at all levels of our organisation. Digia is a member of the Inklusiiv community, whose mission is to promote increased diversity and inclusivity in the workplace. Digia shoulders its responsibility for the environment in all its choices. We strive to take the environmental impacts of our business into account, in both our own operations and procurement processes. The largest environmental impacts of Digia’s operations are related to energy consumption and devices. We aim to be a carbon-neutral company. Compliance with Digia’s Code of Conduct is an essential aspect of our company’s success. All of our personnel, are responsible for complying with these principles in their work. This Code of Conduct also applies to Digia’s subcontractors. Our goal is for our entire organisation to internalise and comply with these ethical practices. operator in the IT sector. That’s why we also have a to meet both our own needs and those of the sector as a whole. Governance Corporate Governance Statement Management Team Remuneration Report Digia’s direction Responsible Digia Corporate Governance Report by the Board of Directors Financial statements Digia 2020 Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 This Statement has been issued separately from Digia Plc’s (hereinafter “Digia”) corporate governance system is based on the Companies Act, the Securities Markets Act, general corporate governance recommen - dations, the company’s Articles of Association and its in-house rules and regulations on corporate governance. The company (and this Statement) adheres to the Governance Code for Listed Finnish Companies issued by the Finnish Securities Market Association, which Governance Code can be read on the website. Digia’s corporate governance principles are integrity, accountability, fairness, and transparency. This means that: • The company complies with applicable legislation and regulations. • When organising, planning, managing and running its business operations, the company abides by the applicable professional requirements that have been demonstrate due care and responsibility in performing their duties. • The company is prudent in the management of its capital and assets. • The company’s policy is to keep all parties in the market actively, openly and equitably informed of its businesses and operations. • The company’s management, administration and personnel are subject to the appropriate internal and Digia’s highest decision-making body is the Shareholders’ on company matters. The Annual General Meeting (AGM) is held once a year before the end of June on a date set the holder to one vote at a Shareholders’ Meeting. The Annual General Meeting should convene annually in writing by a company auditor or shareholders holding a The Finnish Companies Act and Digia’s Articles of As - - cally convened. In order to participate in a Shareholders’ Meeting, a shareholder must be entered in the Digia shareholder register maintained by Euroclear Finland Oy on the record date for the Shareholders’ Meeting, and must also have registered for the meeting at the latest by the date given in the invitation. CEO should be present at Shareholders’ Meetings. The minutes of Shareholders’ Meetings will be available for shareholders to read on the within two weeks of the meeting. The decisions made at Shareholders’ Meetings will also be published in a stock after the meeting. Shareholders have the right to add a relevant item (as Shareholders’ Meeting, as long as the request is made in added to the notice of meeting. Digia will announce the date by which shareholders must present a requested This deadline will be published on Digia’s website. The date will be announced at the latest by the end of meeting are available on the . No Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 Meeting, and is in charge of Digia’s administration and the appropriate organisation of the company’s operations. eight members. The Nomination Committee will present the Shareholders’ Meeting with its proposal for the com - the company and a minimum of two of those members must also be independent of the company’s major share - holders. Neither the CEO nor other company employees working under the CEO’s direction may be elected mem - the Annual General Meeting following their election. A elects its Chair and Vice Chair from amongst its members. policy. It states that the requirements of the company’s - in the following areas in particular: • • managing a company of similar size; • the nature of a listed company’s business operations; • management accounting; • risk management; • mergers and acquisitions; and • board work. successfully in line with Digia’s diversity policy. prescribed by the Companies Act and other rules and for the items in its rules of procedure, observing the following general guidelines: • good governance requires that, instead of needlessly should concentrate on furthering the company’s short- and long-term strategies; • - tations of various stakeholder groups; and • a manner that serves the company’s interests. the following tasks: • a preliminary meeting schedule and framework agenda for each meeting; • assessment; • provide guidelines for distributing notices of meetings for keeping and approving minutes; • and Secretary (the latter position is held by the General Counsel or, if absent, the CEO); and • up special committees or working groups. when necessary. its members on an annual basis. Of the current members Hokkanen, Seppo Ruotsalainen and Outi Taivainen are independent of the company and its major shareholders. Responsibility of Digia’s opeartions is held by the Share- holder’s meeting, Board of Directors, and the President & CEO assisted by the Group Mnanagement Team. Audit ISO 9001 quality management system and other written guidelines Risk Management Financial and internal control GROUP MANAGEMENT TEAM SHAREHOLDERS’ MEETING PRESIDENT AND CEO BOARD OF DIRECTORS Audit Committee Compensation Committee Nomination Committee Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 Robert Ingman is independent of the company. Robert Ingman is not independent of the company’s major shareholders due to his holdings in related parties. the Audit Committee, and the Nomination Committee. These committees do not hold powers of decision or - has decision-making and collegial responsibility over their actions. The purpose of the Audit Committee is to assist the - the company comply with legislation and are balanced, transparent and clear. The Audit Committee also su - pervises and assesses internal control and auditing, the agreements and other legal actions between the company and its related parties meet market conditions and the requirements for ordinary operations. The Audit Commit - tee supervises and assesses the independence of the company’s auditor and, in particular, the auditor’s pro - vision of non-audit services. The Audit Committee also supervises the company’s audit and prepares a proposal the Audit Committee consisted of Seppo Ruotsalainen with full attendance. Digia’s Compensation Committee is tasked with prepar- ing and monitoring remuneration policies for the compa- ny’s governing bodies and management remuneration schemes in order to ensure that the company’s targets are met, that decision-making is objective, and that remuneration schemes are transparent and systematic. Hokkanen (Chair), Robert Ingman and Outi Taivainen. year, with full attendance. The Nomination Committee prepares proposals for the Annual General Meeting on (a) the number of members of Directors, (c) the remuneration for the Chair, Vice remuneration for the Chair and members of the com - year, the Nomination Committee consisted of Seppo - gman. The Nomination Committee convened three times CEO business operations and administration in accordance far-reaching measures, in view of the nature and scope of the company’s activities, only if so authorised by the - ment Team’s meetings. The CEO is not a member of terms and conditions of the CEO’s employment. Timo The Group Management Team supports the President - pensation Committee approves the appointments of the members of the Group Management Team and decides on the terms and conditions of their service contracts on the basis of the CEO’s proposal. Digia follows the one- over-one principle in Group Management Team and other appointments. The CEO chairs meetings of Digia’s Management Team. The Management Team consisted of nine members on weeks to assist the CEO in the preparation and imple - mentation of strategy, operative management, and pre- sets their associated targets, and monitors their progress. acquisitions. The CEO is responsible for the Management Team’s decisions. Members of the Management Team are tasked with implementing these decisions within their own areas of responsibility. Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 KTT KTM CEO - - C FO BBA Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 The company has a controller function that reports to the CFO and is tasked with ensuring the accuracy of performance of the company and its divisions to Manage - - tee. The company uses a reporting system that compiles reports of subsidiaries. The company’s CFO monitors com - pliance with these instructions. The company also has the separate reporting facilities required for monitoring business operations and asset management. consolidated interim reports and consolidated Financial control over the Group’s funding and asset management, Internal control helps to ensure the reliability of the Digia Group’s business is divided into areas of responsibility led by Senior Vice Presidents (SVPs) reporting to the CEO. Report - ing and supervision are based on annual budgets that are reviewed monthly, on monthly income reporting, and on updates of the latest forecasts. The SVPs report to the Group Management Team on de - velopment matters, strategic and annual planning, business and income monitoring, investments, potential acquisition targets and internal organisation matters related to their areas of responsibility. Each area of responsibility also has its own management team. Digia’s operational management and supervision adhere to the corporate governance system described above. Digia has not yet established a separate function respon - sible for internal auditing. The need for an internal audit function is regularly assessed. With the company’s current - tions are able to handle internal auditing tasks. The purpose of the company’s risk management process is to identify and manage risks in a way that enables the com - - agement is a continuous process by which the major risks of risk management are appointed, and risks are prioritised identifying, planning and implementing risk management measures, and then monitoring their impact. The main operational risks monitored under Digia’s risk management are related to customers, personnel, deliveries, IT, data security and protection, immaterial rights, and goodwill. The company manages customer risks by actively developing its customer portfolio structure and avoiding any potential risk positions. Personnel risks are evaluated and managed using a quarterly performance review and development discussion process in which key personnel participate. To enhance personnel commitment, the company strives to - cations via regular personnel events and by increasing the management’s visibility. Two major personnel- by developing our personnel’s competence and through continual recruitment management and subcontractor management. projects and continuous services are conducted with a view to enhancing project and service risk manage- ment and securing the success of customer deliveries. - - ment system (Core Process Model), and the processes described in this system are utilised in all operations with Audits are carried out to manage data security and pro - tection risks, and the company also continually develops working models, practices and processes that promote data security and protection. Security training is organ - data security and data protection training package. This training must be retaken every year, not only by Digia personnel but also by any subcontractors working on Digia’s premises. The Management Team is tasked with systematically managing risks associated with business integration, shared operating models and best practices, as well as their integrated development. Typical risks in the software business include the appropriate protection of the company’s own immaterial property rights (IPRs) and violation of third parties’ IPRs. These are managed and appropriate supervision and analysis. With respect to IFRS-compliant accounting policies, the Group actively monitors goodwill and its associated impairment tests as a part of prudent and proactive risk Digia has assessed the corporate liability risks associated with its own operations and business relations, and has adequate and appropriate processes in place to predict and take precautions against these risks. In addition to operational risks, the company is subject Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 - pany. This function is responsible for the Group’s liquid- The Group’s risk management seeks to minimise the interest rate risk, credit risk, and funding risk. The general principles of Digia’s risk management are approved by and business divisions are jointly responsible for their practical implementation. Digia complies with the current Guidelines for Insiders issued by Nasdaq Helsinki. Digia also adheres to its own insider guidelines, which supplement Nasdaq Helsinki’s guidelines. Digia’s General Counsel is responsible for insider issues. Digia’s insiders are divided into: permanent insiders, which include the CEO and mem - Team; due to their position or tasks; insider registers. Members of Digia’s Management and those in their close circle must report all business transactions that involve Authority. The managerial positions covered by this obli - gation are: the CEO, members of the Management Team, business transactions made by members of Digia’s Man - agement and those in their close circle. These releases Digia also keeps a record of this information on the com - pany’s website. Anyone working in a managerial position at Digia, or who before the publication of one of the company’s business securities whilst the project is ongoing. Digia Plc has a ‘whistle blowing’ channel for reporting suspected cases of bribery and corruption, market abuse, and violations of Digia’s insider guidelines. This channel seeks to promote compliance with good gover - nance in the company’s routine activities, and to prevent and detect misconduct. It can be used to report market abuse and the violation of operating principles, regula - Anyone can make an anonymous report using the form on either Digia’s intranet or its public website. All reports are directed to Digia’s legal unit and the Chair of the - dance with the Personal Data Act, with regard to both the informant and suspect. According to the Corporate Governance Code, a compa- ny must evaluate and monitor business transactions with interest are duly taken into consideration in the com - pany’s decision-making. Here, “the company’s related parties” refer to the related parties of listed companies - bers with instructions concerning related parties. In order to enable the monitoring of related-party transactions, the company maintains an up-to-date register of com - parties and related-party transactions before engaging in any business. The business function and the legal counsel should together determine whether related- party transactions form part of the company’s ordinary business and whether they are subject to standard commercial terms and conditions. If an intended related-party transaction would be signif - icant for Digia and would either deviate from the com- pany’s ordinary business or not be subject to normal Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 market conditions, then this business transaction must be detail in the consolidated Financial Statements. The related-party transactions are carried out under normal market conditions and do not deviate from the compa - ny’s ordinary business. Central Chamber of Commerce. The auditor is elected until further notice. The Annual General Meeting elects of Authorised Public Accountants, is the Group’s auditor. Virpi Halonen, Authorised Public Accountant, has been Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 Committee and Compensation Committee. A Member of the Directors’ Institute of Finland. Independent of the company. and Nomination Committee. A member of the Directors’ Institute and a founder member of the Startup Foundation. Independent of the company and its major shareholders. Committee and Nomination Committee. A Member of the Directors’ Institute of Finland. Independent of the company and its major shareholders. Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 in economics Committee. A Member of the Directors’ Institute of Finland. Independent of the company and its major shareholders. Committee. A Member of the Directors’ Institute of Finland. Independent of the company and its major shareholders. Committee. Area HR Director, Central and North Europe, Helsinki Chamber of Commerce, Independent of the company and its major shareholders. Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 Various positions, Consumer Mobile Communication Senior Manager, Finance Transformation, Deloitte Fin - General Counsel - - Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 Senior Vice President, HR and Culture - Director: HR, legal and communications, Sanoma News Director: HR, legal and communications, Sanoma Enter - Common Services Senior Vice President, Sales and Marketing Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 Senior Vice President, Digia Digital Vice President, Consulting Services, CGI Suomi Ltd, Senior Vice President, Digia Financial Platforms Managerial positions in IT management, ICL Personal Technology Senior Vice President, various responsibilities, Digia Plc, Management Team member, various responsibilities, CGI Sales Director, Central Government, Logica Suomi Ltd, Account Manager, Public Sector, Novo Group Plc, Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 This Remuneration Report describes how Digia Plc has applied its been implemented in Finland mainly in the Limited Liability Companies Act it for presentation to the General Meeting. Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 The remuneration of Digia’s governing bodies is based on Digia Plc’s Remuneration Policy, on which shareholders made an advisory decision at the Annual General Meet - Remuneration Policy to a General Meeting before that date for an advisory decision. The Remuneration Policy is available online . strategy period Digia continues to renew operations and strengthen the selected focus areas. Digia places particular emphasis on the potential of data utilisation in customers’ services and business processes. For more information on the strategy, see , and on the im - plementation of the strategy, see . In spite of the coronavirus pandemic and the uncertain market situation it ushered in, Digia’s net sales grew and need to ensure the performance of their core busi - in service demand. In the uncertain market, customers were also typically more careful in evaluating the volume of development projects and project implementation The crisis has also revealed opportunities that have been crisis will accelerate the digitalisation trend in the years ahead. Read more about the impacts of the coronavirus on Digia’s business on . In general, the purpose of remunerations paid by the company is to support its business strategy and promote favourable development of shareholder value. In addi - tion, the aim is to ensure that the company has access to the best possible individuals for its governing bodies and is able to retain their commitment and motivation. The of Directors and CEO and the decision-making order in policy for governing bodies. There was no need for devi - ations from the policy or the clawback of remuneration. and meeting fees. The amounts of the fees paid depend - Remunerations. - bonuses paid on the basis of the short-term target bonus main emphasis of the short-term target bonus scheme is on the company’s performance on the annual level. However, the goal is to set the indicators to also support the company’s long-term success. The target bonus - tomer satisfaction. The long-term share-based incentive of the bonus scheme are the three-year development remuneration paid to the CEO are described in detail below in sections CEO’s Remuneration and Share-based incentive scheme The following section describes the development of the - development of the average remuneration of employees and thus no consistently comparable data is available for that or previous years. Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 - With respect to the development of the average salary costs of all personnel, it must be kept in mind that new the development of average salary. Average growth in the salaries of the company’s employees outpaces salary increases under collective agreements. Part of Digia’s employees are also covered by a short- term target bonus scheme or other variable salary com - salaries, variable salary components and any bonuses paid at three-year intervals on the basis of the long-term paid to the CEO. The participants of the long-term incen - tive scheme are primarily the CEO and the company’s se- nior management. Long-term incentives have been paid Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 - - A heavy weight is assigned to the variable salary compo - nent of the total remuneration of the CEO through both the short- and long-term incentives in line with perfor - mance-based thinking. The development of the CEO’s Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 With respect to net sales and operating result, the tar - gets had been set for the full year, but in such a way that the interim assessment and payment were made after will be deducted from the bonus assessed for the full - gets for customer and personnel satisfaction are annual level targets; the realisation of the customer satisfaction - satisfaction target at the end of the second half-year pe - independently of each other, but if the full-year operating been paid. appropriately taken into consideration regardless of the implementation date of any acquisition. At the same time, the model accounts for a functional half-yearly bonus payment cycle. - - - Directors thus did not change from the fees decided on The table above discloses the fees that were paid or are - short-term target bonus scheme, and share-based bonuses paid on the basis of the long-term incentive short-term target bonus scheme, which is assessed on the basis of successful performance in the full year realised bonus for the full year. In addition, the CEO received the company’s ordinary personnel and fringe - nus scheme of the CEO were based on the company’s Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 June is deducted from the full-year target bonus. The re - a bonus from Digia’s long-term share-based incen - shares and cash. - ed on a new three-year, long-term share-based incentive scheme. In principle, the target group consists of the CEO designed to align the goals of the company’s sharehold - ers and management in order to increase the company’s company and its long-term objectives. The new scheme was introduced after the earlier share-based incentive This long-term incentive scheme covers the calendar Directors for the three-year bonus period are met. The targets are based on the company’s net sales and total shareholder return (TSR). The earnings period for the net date of the earnings period. If the terms are met, the bonuses for both indicators based on the new scheme will be paid at the end of the reward period in spring resigns or if a member’s employment or post is terminat - - the option to decide on possible bonuses in accordance with the pro-rata principle. - Plc shares. The reward will be paid as a combination of shares and cash. The CEO was paid the following as salary and other ben- CEO's remuneration structure, paid 2020 Fixed salary 35.8% Target bonus 14.6% Share award 49.6% Directors’ Digia’s direction Responsible Digia Corporate Governance Report by the Board of Directors Financial statements Digia 2020 Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 Digia is a growing software and service company that helps its customers to renew and develop data-driven business operations in our increasingly networked world. Digia is your partner for comprehensive digitalisation. We provide all the layers of digitalisation from business sys - and service management. We help our customers to utilise data and harness it to renew their operations. The pandemic and on implementing the overhauled strategy. strategy period, we emphasise the potential of data utili - sation in our customers’ services and business processes. level to be an even stronger partner for our customers in the development of their business. Digia seeks growth both organically and through acqui - sitions. Particularly strong growth was seen in the busi- ness systems and customised solutions service areas. strength with their large share of net sales. - - acquire top-notch professionals for their own software development projects straight from this network. - ment to acquire the entire share capital of Climber company that provides its customers with consulting and solutions for data-driven business development. The acquisition concerns Climber’s operations in Sweden, Finland, Denmark and the Netherlands. The acquisition - ods. During the pandemic, Digia employees work almost entirely remotely, which has saved on the costs of travel, Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 - - - vided in parentheses always refer to the corresponding period of the previous year. - ed weighted average number of shares during the period As alternative performance measures, the Group reports - return on investment, net gearing and equity ratio, which - situation and development of business operations, as it considers this information necessary for investors. For - and reconciliations in . Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 In the latter half of the year, the impact of the coronavirus - lays and reductions in scope at the customer’s request. However, net sales of business systems and customised The service and maintenance business accounted for the service business’s share of net sales through service support and maintenance agreements that track project per cent of the company’s net sales. - - tion and operating methods as well as coronavirus-relat- million in interest-bearing liabilities. Interest-bearing lia - - Total investments in tangible assets amounted to Digia constantly invests in enhancing its long-term our own ERP systems (Digia Enterprise and ERPs for the monitoring solution for the continuous service needs of customers was developed. More information about Digia’s services and solutions can be found on the At the end of the review period, the total comparable - Skilled and enthusiastic personnel who are committed to the objectives of our customers are behind the compa- we continued to invest in developing our culture and strong Digia personnel began working from home. We are therefore seeking to maintain a sense of community with the aid of a variety of internal virtual events and content. We seek to provide a professional, evolving, diverse, the best possible support to employees to guaran - we developed remote management by coaching our supervisors and project managers on questions concern - ing leadership during the pandemic. We continued our premise of developing Digia’s positive, goal-oriented leadership with a coaching approach. We also arranged of developing their ability to both build trust and manage introduced a personnel survey to gain a better under - standing of our employees, as measuring the employee Digia’s culture of continuous improvement. Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 Fourteen people joined Digia as a result of the NSD Con- transaction gives our customers access to a network of Päivi Hokkanen, Robert Ingman, Seppo Ruotsalainen and - elected Robert Ingman as Chair and Seppo Ruotsalainen » Timo Levoranta, President and CEO » Pia Huhdanmäki, Senior Vice President, HR and Culture » Juhana Juppo, CTO and Senior Vice President, Horizontal Services » Mika Kervinen, General Counsel » Platforms » Tuomo Niemi, Senior Vice President, Financial Operations » Ari Rikkilä, Senior Vice President, Sales and Marketing » » Harri Vepsäläinen, Senior Vice President, Digital Services You can read more about Digia’s Management Team on the is the Group’s auditor. Virpi Halonen, Authorised Public General Meeting. In February, we announced Digia’s new strategy for the around smart digitalisation and continuous change in digital business. Digia enables its customers to take their Smart and responsible data utilisation in both services and business processes comprises an important cornerstone of strategy implementation. Data utilisation already provides of data will be increasingly emphasised. The core of Digia’s services, business systems, integrations and analytics. Digia takes care of the life cycle of solutions from develop - ment to maintenance and also invests in the opportunities provided by data and analytics in its own operations. end of the strategy period. We will bring data utilisation as a cross-cutting theme for all Digia’s service areas from business systems to integrations and digital services. We will deepen our customer rela - tionships and further strengthen the share accounted for by the service business. We will develop our op - erational models and solutions to improve our cost-com- petitiveness. An essential development project in the strategy period will be the reform of our own business platform. Cloud is the development and operating platform for future services. We will continue account security and key public cloud platforms (Mic - rosoft Azure, Amazon Web Services and Google Cloud Platform). Skilled employees are the most im - portant success factor for Digia. We are constantly devel- oping Digia into a more desirable workplace by reinforcing our culture, at the heart of which is the continuous learning of every employee. as promoting internal development projects. both recruitment and additional training. Digia’s cloud implementing transitions to cloud services for customers and highly automated maintenance of cloud services. We utilise major public cloud platforms in our services: Microsoft Azure, Google Cloud and Amazon Web Ser - Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 vices. In line with our strategy, analytics solutions and data warehouses on these platforms comprise a key cloud solutions. We launched the Digia Hub operating model towards for small entrepreneurs in the IT sector, uniting small entrepreneurs, Digia and customers into an ecosystem that creates value. Through this network, we can pro - vide small entrepreneurs with appealing tasks and our acquired NSD Consulting Oy. Following the transaction, - professionals for their own software development proj - ects straight from this network. Following the acquisition, - ing on projects at the time of the transaction. - gia acquired Climber’s entire share capital. The transaction data analytics and knowledge-based management are key focus areas of the strategy, and the acquisition supports the implementation of Digia’s growth strategy. As part of our strategy, we develop our operational mod - els and solutions to improve our cost-ompetitiveness. An essential development project in the strategy period will be the reform of our own business platform. Project design and the selection of the end-to-end solution were Lahti, Jyväskylä, Oulu, Rauma, Tampere, Turku and Vaasa Group consisted of the parent company, Digia Plc, and its subsidiaries Digia Finland Oy, Digia Hub Oy and Digia a subsidiary merger process in which Mirosys Oy was merged into Mavisystems Oy, which in turn was merged cent of all shares and votes. Nominee-registered share - Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 cent of its capital stock. shares, previously funded by Digia for use in the incen - tive system for key personnel and owned by EAM Digia Holding Oy, remained undistributed. Up-to-date information about the company’s major shareholders and the distribution of their shareholdings can be found on - ed to establish a new long-term share-based incentive long-term incentive scheme at a later date. In principle, the target group consists of the CEO and the company’s goals of the company’s shareholders and management in order to increase the company’s value, and to commit term objectives. - the three-year bonus period are met. The targets are based on the company’s net sales and total shareholder return (TSR). The earnings period for bonus period, the company’s CEO and other scheme - met, the bonuses for both indicators based on the new scheme will be paid at the end of the reward period in The cash portion of the bonus will primarily be used to the scheme. As a rule, the bonus will not be paid if a member resigns or if a member’s employment or post is terminated prior conditions, to decide on possible bonuses for the reward period in accordance with the pro-rata principle. Digia has an agreement with Evli Awards Management Ltd for the coordination of the company’s share-based incentive schemes, their associated share management, and the payment of incentives to individuals in accor - dance with the terms and conditions of the schemes. in the company as follows (includes the holdings of related-parties and related-party organisations): Digia Plc’s shares are listed on Nasdaq Helsinki under name is DIGIA. The lowest reported share quotation in year. The share’s trade weighted average price was EUR Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 - holder register maintained by Euroclear Finland Ltd on - - total number of shares. Only unrestricted equity may be on how these shares are to be acquired. Treasury shares may be bought back in disproportion to shareholders’ holdings (directed acquisition). The authorisation also includes acquisition of shares through public trading organised by Nasdaq Helsinki Oy in accordance with the rules and instructions of Nasdaq Helsinki and Euroclear Shares may be acquired in order to improve the compa - ny’s capital structure, to fund or complete acquisitions or - tive schemes, to sell on, or to be annulled. The shares must be acquired at the market price in public trading. The minimum price of the shares to be acquired shall be the lowest quotation in public trading while the authori - price shall be the highest quotation in public trading is otherwise authorised to decide on all terms relating to share buyback. This authorisation supersedes that or bonus issue of shares and the granting of special rights Companies Act) in one or more instalments, as follows: The authorisation applies both to new shares and to treasury shares held by the company. The authorisation may be used to fund or complete acquisitions or other proposed that this authorisation should include the right issue or special rights, including the subscription price and its payment in cash or (partly or wholly) in capital - scriber’s receivables, and its recognition in the company’s balance sheet. This authorisation supersedes that granted More information about the AGM’s decisions is available on the . Consulting Oy signed an agreement whereby Digia Plc acquired NSD Consulting Oy’s entire share capital. The NSD - - - for their own software development projects straight from this network. Following the acquisition, NSD Consulting Oy’s - - quired the share capital of the Swedish company Climber The acquisition of the entire share capital of Climber the terms and conditions for its completion were met and - that provides its customers with consulting and solutions for data-driven business development. The acquisi - tion concerns Climber’s operations in Sweden, Finland, Denmark and the Netherlands. Climber will continue as a subsidiary with its own brand. - not include the company’s operations in the UK, which - - using the net cash on the transaction date. The transac - calculation of the allocation of the purchase price will be drafted after the completion of the transaction. Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 Smart data utilisation is one of the main focal points of Digia’s strategy. The acquisition of Climber will accel - erate growth in Digia’s data and analytics business, pri- marily by providing access to markets outside Finland. The main change in Digia’s key risks and operating en- vironment concerns the risks posed by the coronavirus epidemic to service demand, the health of the compa - ny’s employees, and the valuation of trade receivables. The company estimates that no other great changes The company’s risks and uncertainty factors relate changes in the company’s operating environment and service areas. General economic trends and changes - sition may have an unfavourable impact on the com- slower decision-making and the postponement or cancellation of IT investments. Risks relating to short- business environment as a result of the coronavirus epidemic. If demand sees a sharp fall, price levels might also decline. Although the pricing models used in the service business balance out cyclical business, the recurring fees paid for the products are spread made for product licenses. Implementing the growth strategy will place demands on both the organisation and its management. The company’s ability to recruit, retain and develop the In line with its strategy, Digia is also seeking growth through acquisitions. However, Digia cannot be certain of locating suitable companies for acquisition or of successfully integrating them. Digia has not performed human rights-related as - sessments, but in the company’s opinion there are no own operations. Digia’s supply chain does not, in the main, - ronmental assessment, but in the company’s opinion its operations have a minor impact on the environment and do - customer projects increase in size, the risks associated - ery packages. Large customer projects typically involve delivery-related sanctions whose materialisation always poses a risk. Risks related to customer receivables are also growing. In addition, data security and protection business operations. Digia primarily operates in the Finnish IT service and keep growing in the long term. Although we believe the Digitalisation using data will continue to be a strong trend forced many organisations to review their operating meth - ods and assess opportunities to utilise digital solutions. The crisis has also highlighted the opportunities opened accelerate the digitalisation trend in the years ahead. Digia sees the following strengthening trends in the market both in the business and public sector: » digitalisation is becoming an increasingly important part of our customers’ core operations; » the world is becoming networked, and digital platforms enable new business models; » smart and responsible data utilisation in business processes creates a competitive advantage; » factor for services; » the role of cloud technologies as a platform for developing and operating services is becoming the norm; » a further rise in information security and protection requirements. Digia has consistently built its market position as a turn- - ing has successfully met market demand and has also - of business or customer account, and by the fact that a continuous services. Continual developments in customers’ needs coupled with the increasing pace of technological advancement will require continual investments in the service business, enhanced productivity, and technologies, such as in data utilisation and cloud technologies. Service provision re - quires combining technologies and people’s professional skills. This is why Digia wants to be a desirable employer, and why the company will continue to invest in its cor - porate culture, lifelong learning, and operating methods to provide smart technological solutions that support everyday working life. Software, their growing intelligence and data are chang- ing the world. Organisations’ value creation models and people’s work patterns are evolving. In the future digital world, we believe that corporate business value will be generated through the smart utilisation of data in net - works and ecosystems. At the level of companies’ inter- Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 nal operations and individuals, we are moving towards a symbiosis between humans and software, where people focus on meaningful work while automation and software handle routine tasks. As digital business becomes an ever-more critical aspect of our customers’ business, this strengthens the need for - position supports continued growth. - ers listed on the shareholder register maintained by Eu- Digia is a software and service company whose service business systems, integration and API solutions and data utilisation and analytics solutions. We ensure the busi - ness and customer orientation of our implementations through consulting and service design. We also ensure continuously developed. - Service areas are described on . Society is going digital at a rapid pace. Most of the core functions of companies and public sector organisations are performed using a variety of information systems and digital services. Due to this development, IT solutions are increasingly business critical. When processes and ser - vices are digitalised, an ever-growing volume of data also becomes available on key functions, making it possible to steer, optimise and modernise processes. Actors in the IT sector play a major role in safeguarding the operations and development of both society and companies. At the same time, data security requirements are on the rise. Due to the growing digitalisation trend, the IT industry is also a major employer both now and in the future. Digia’s aim is to build sustainable digitalisation that its corporate responsibility and listened to its stakehold - focus areas of corporate responsibility and set both ob - jectives and indicators for them. The selected objectives Our responsibility is based on our own Code of Conduct, the UN’s Universal Declaration of Human Rights and Sustainable Development Goals, and the International Labour Organisation’s (ILO) standards. However, in our changing business environment, responsibility is based above all else on the continual monitoring and improve - ment of our operations. Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 CO Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 » » » Anti-corruption and anti-bribery policy » » Digia’s Corporate Governance Statement is presented on . The CEO is responsible for corporate responsibility and the CFO for responsibility reporting. The corporate responsibility working group heads up operational The Management Team monitors the development of key indicators of corporate responsibility. The company’s general risks and uncertainties are described on . connection with its annual reporting. The company com - - nancial information set in accounting legislation. - our solutions are functional, secure and easy to use, we also promote the responsible digitalisation of society. Digia aims to act as a technological pioneer whose products and services promote the development and wellbeing of society and the environment. The most important sustainability topics in the “sustainable digital value” focus area are solutions that promote the respon - sibility of our customers and the sustainable digitalisation of society. - panies and society is increasing rapidly. This fast-paced development also raises fears and uncertainties con - - . We seek to implement our customer solutions so that they promote our customers’ responsibility. We aim to improve the responsible utilisation of data. To this end, we monitor and report on the annual growth in data pro - tection impacts and security analyses in customer orders - isation of data through various measures. We will report In addition, we aim to improve the accessibility and user-friendliness of services. At the annual level, we monitor and report on the growth in accessibility design - ent ways. In addition to customer work, we seek to con- tribute to building solutions that enhance environmental and social responsibility for society and our customers. - petition. This project harnessed data analytics in devel- the winning project. In this project, four types of volun - These personality types were validated using data from the volunteer database of the Finnish Red Cross. The volunteer personality types created in this project will to the volunteers that would be most interested in and suitable for them. This will enable the Finnish Red Cross to get volunteers involved in its activities faster and more High-quality data protection and security plays a key role - ing risks in its own operations with regard to privacy and data protection: reputational risk, contractual risk, and the risk of sanctions. Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 We respect the privacy of our personnel, customers and partners in all our operations. We are committed to pro - tecting the data, materials and devices in our possession or our partners. We maintain a high level of data protec - tion and security by training our personnel, administrative and technical controls, audits, and continually developing processes related to data protection and security. Each Digia employee familiarises themselves with data secu - rity and protection procedures as part of their induction. protection training package. This training must be retaken every year, not only by Digia personnel but also any sub - contractors working on Digia’s premises. The data security process overhaul and its continuous - curity management for closer alignment with the ISO protection at the Digia level, the data protection organi - security and protection obligations. We assess our data security and protection practices from time to time, and update our operating models as required. The data protection organisation engages in continuous monitoring of the risk level and keeps the organisation informed as necessary. Data protection is Digia also provides customers with services that meet - ly-audited (Facility Security Clearance) premises. We have such premises at four locations. These premises and operations in them are described separately as part of the processes guiding Digia’s operations. - ternally by EcoVadis. EcoVadis assessment of corporate social responsibility (CSR) indicates how well a company has integrated CSR principles into its business and man - agement system. The assessment delves into questions on CSR that are grouped into four themes: the environ - ment, labour and human rights, ethics and fair business practices, and sustainable procurement. roots are in Finland and we work with our customers both in Finland and abroad. Our headquarters are in Helsinki and we have seven other locations in Finland: Tampere, Jyväskylä, Turku, Oulu, Rauma, Vaasa and Lahti. We also Skilled personnel who are committed to the objectives of our customers are the cornerstone of all our operations. Digia aims to be a desired employer in the technology - ing and competence development. The most important focus area are providing a learning community for top Finland. the future. We want to be a team of top professionals who are always learning and are both highly skilled and opportunities to pursue career paths and personal devel - opment and to maintain their competence at a competi- tive level. For instance, Digia has active workplace tribes, whose major task is to develop the competence of the tribe members through peer activities and provide rec - ommendations about company-level technology policies in the specialist area of the tribe. Our goal is to increase the value of our personnel’s - nual level, we monitor and report on the percentage of employees for whom a personal competence target has been set. We are starting this measurement and monitor - them with opportunities to keep their skills up to date. The cloud is also one of Digia’s strategic focus areas. Our - operator in the IT sector. That’s why we also have a to meet both our own needs and those of the sector as a whole. To achieve this objective, we monitor and report on the total annual number of participants in training programmes organised by Digia alone or in cooperation with partners as well as trainees and students working on training programmes, Digia engages in cooperation with educational institutions to support and round out their and e-commerce. competitive today. We estimate that the availability of risks, along with retention of employees. The ways in which work is done in the IT industry are also changing quickly: small entrepreneurs are becoming increasingly prevalent alongside traditional employment relationships. In response to this, we launched the Digia Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 small entrepreneurs in the IT sector. Through it, we can provide small entrepreneurs with appealing tasks and - professionals. In an industry with high employee turnover and a short - age of talent, taking care of employee well-being is particularly important. Digia wants to provide a safe and healthy working environment in which everyone is valued as themselves. Employee well-being, equality and equal treatment of personnel are Digia’s direct impacts on personnel, social responsibility and human rights. They are also issues that The most important responsibility topics in the “sustain - able digital life” focus area are employee well-being and diversity, carbon-neutral Digia and an ethical operating culture. Continually monitoring and supporting personnel well - being play a key role at Digia. Well-being is supported by, among other things, ensuring a workload suitable for the life situation of the employee, a coaching leadership style and support for developing one’s own competence. Digia uses an early intervention model that supports suc - Our goal is that Digia is one of the best companies in its industry in terms of well-being at work. We monitor and report on the annual average days of sick leave per em - days. In addition, we monitor and report on our employ - ees’ satisfaction with team spirit and work-life balance using a personnel survey. We aim to maintain this at a We treat all employees equally regardless of their gen - such factors. The diversity of the company and its inclu - sive, appreciative atmosphere support the well-being and productivity of Digia employees and their ability to renew themselves. Diversity has been featured in our in - diversity through HR data and launched the Diverse Digia Digia employees. We aim to ensure diversity and inclusivity at all levels of our organisation. We monitor and report on the gender and age distribution of all employees, the Management Team, Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 Gender and age breakdown of Women 22.2% Men 77.8% Other 0% Group Management team distribution by gender 31 Dec Percent Group Management team distribution by age 31 Dec Percent < 30, 0% 30–39, 0% 40–49, 22.2% 50–59, 77.8% 60<, 0% _ Women 32% Men 68% Other 0% Supervisor distribution by gender 31 Dec Percent Supervisor distribution by age 31 Dec Percent < 30, 0% 30–39, 10.4% 40–49, 56.6% 50–59, 32% 60<, 1% _ Personnel distribution by age 31 Dec Percent < 30, 8.3% 30–39, 27.5% 40–49, 37.3% 50–59, 21.4% 60<, 5.5% _ Women 27.6% Men 72.4% Other 0% Personnel distribution by gender 31 Dec Percent Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 mission is to promote increased diversity and inclusivity in the workplace. As part of this, we organise training on diversity and inclusion for management, supervisors and employees. We monitor and report on what percentage of our supervisors have completed this training each the training. policy. It states that the requirements of the company’s size, market position and industry should be duly . Digia shoulders its responsibility for the environment in all its choices. We strive to take the environmental impacts of our business into account, in both our own operations and procurement processes. The CEO is always ultimately responsible for environmental issues at Digia. Practical environmental issues are promoted by the working group on corporate responsibility. Prog - ress is monitored by the Management Team. Digia’s environmental policy is available on the . preparing the climate and environmental strategy for ICT sector are generated indirectly by emissions from raw materials for hardware, for instance. Digital services require ICT infrastructure, whose construction and use burden the climate and environment. Data transfer, requires powerful servers and electrical energy. That said, the report also states that ICT solutions have great potential to reduce the carbon footprint and environ - mental impacts of other sectors. We aim to be a carbon-neutral company. We monitor from heating and cooling at all our locations in Fin - land and the emissions of the data centres used by GHG Protocol. not only energy consumption, but also waste manage - Digia's carbon footprint 2020 Percent Travel, 10.3% Premises and data centers, 15.2% Equipment and recycling, 51.3% Other procurements, 23.2% ment, commuting, equipment procurements and recy- cling, and emissions from other procurements, that is, - The largest environmental impacts of Digia’s operations work typically poses a very low risk of environmental damage. About half of the carbon footprint is generated by production machinery, that is, equipment and recy - cling. In addition to energy consumption, the emissions of business premises include waste management emis - sions. - sions. The changeover to district cooling at premises (in were assessed with a personnel survey. The remote work arrangements introduced due to the pandemic led to a - nent change in working methods, a part of this reduction will most likely be permanent. Board of Directors distribution by age 31 Dec Percent < 30, 0% 30–39, 0% 40–49, 17% 50–59, 50% 60<, 33% _ Women 33% Men 67% Other 0% Board of Directors distribution by gender 31 Dec Percent Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 e Digia has compensated for the emissions of its own draft a roadmap for reducing emissions throughout the entire value. Alongside this, Digia will assess the scale of the reductions in emissions it produces for its customers Compliance with Digia’s is an essential aspect of our company’s success. All of our personnel, responsible for complying with these principles in their work. This Code of Conduct also applies to Digia’s sub - contractors. In addition, Digia’s anti-bribery and anti-cor- ethical and legal activities. Unethical behaviour is not accepted or permitted under any circumstances. Each subcontractors had signed Digia’s Code of Conduct. Our goal is for our entire organisation to internalise and comply with these ethical practices. We monitor and report on how many of our employees have completed training on the Code of Conduct each year. We are start - Digia primarily operates in Finland. Our operations mainly - ever, Digia has foreign partners in countries where the risk of bribery and corruption is high. We pay attention to bribery and corruption in our dealings with partners, and We also require our partners to commit to compliance with anti-bribery and corruption legislation. Digia has a channel through which any Digia employee or - ed to bribery and corruption. These reports can also be made anonymously. All of the reports are forwarded to Digia’s legal department and the Audit Committee of the The whistle-blowing channel can be found on the com . areas of responsibility and start monitoring and reporting on the aforementioned key indicators. We will also hone our objectives and key indicators if we see a need for improvement. The topics, objectives and key indicators of responsibility reported on here comprise Digia’s responsibility reporting Financial Statements Main statements in the consolidated General Information Financial development Human resources Working capital Capital structure Other items Formulas for the indicators and reconciliations statements (FAS) Signatures to Annual Report and Financial Statements Auditor’s Note Auditor’s Report Digia’s direction Responsible Digia Corporate Governance Report by the Board of Directors Financial statements Digia 2020 Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 139,049 131,824 252 141 -15,257 -15,065 -6,066 -5,496 -90,597 -86,648 13,279 -15,108 -124,947 -122,176 14,102 9,648 84 142 728 -682 -644 -540 13,458 9,108 -2,830 -2,017 10,627 7,090 0.40 0.27 0.39 0.26 10,627 7,090 10,627 7,090 -80 38 10,547 7,128 10,547 7,128 Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 ASSETS 61,478 57,771 6,332 6,378 987 894 9,272 9,150 484 484 2 94 513 558 79,067 75,328 25,600 32,950 16,410 5,838 42,010 38,787 121,078 114,116 2,088 2,088 5,204 5,204 42,081 42,081 -343 -422 1,080 -2,850 10,627 7,090 60,737 53,190 60,737 53,190 1,115 1,250 0 23 8,626 15,553 6,657 5,719 2,000 126 18,399 22,671 13,070 13,989 790 1,315 1,383 1,384 15,041 14,384 3,431 3,556 8,226 3,626 41,942 38,254 60,341 60,925 121,078 114,116 Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 10,627 7,090 16,057 6,386 2,815 -4,258 -1,684 5,050 -457 -311 32 - -3,801 -1,662 23,589 12,294 -1,268 -213 -3,591 -10,035 10 13 60 - -4,789 -10,236 - 3,019 -3,577 -2,326 -19,826 - 14,200 - -4,800 - 18,100 -301 -213 -2,672 -1,864 -8,317 2,020 10,482 4,078 5,838 1,733 10,482 4,078 90 27 16,410 5,838 Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 2,088 42,081 5,204 -384 -1,206 47,782 7,090 7,090 - - - -38 - -38 income - - - -38 7,090 7,052 - - - - 434 434 - - - - -1,864 -1,864 - - - - -213 -213 -1,644 -1,644 2,088 42,081 5,204 -422 4,241 53,190 2,088 42,081 5,204 -422 4,241 53,190 10,627 10,627 - - - 80 - 80 income - - - 80 10,627 10,707 - - - - -188 -188 - - - - -2,672 -2,672 - - - - -301 -301 -3,161 -3,161 2,088 42,081 5,204 -343 11,707 60,737 Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 Digia is a software and service company that helps its customers renew themselves in the networked world. roots are in Finland and we operate with our customers in Finland and abroad. We are building a world in which customers and partners. The company’s strengths are its good customer base, - nance and support, and the credible size of its business. partner to its customers in their digitalisation transfor - mation. We forge long-term customer relationships and develop them to grow with our customers. Lahti, Jyväskylä, Oulu, Rauma, Tampere, Turku and Vaasa Nasdaq Helsinki (DIGIA). Digia Plc is domiciled in Helsinki Finnish Companies Act, shareholders have the right to Meeting held after publication. The General Meeting may - pared in compliance with the International Financial Reporting Standards (IFRS), observing the IAS and IFRS standards, as well as SIC and IFRIC interpretations valid International Financial Reporting Standards refer to the standards and their interpretations approved for applica - tion in the EU in accordance with the procedure stipulat- in Finnish accounting legislation and the statutes enacted under it. funds, which are measured at fair value. In the fair value hierarchy, the highest level is assigned to quoted (un - adjusted) prices for identical assets or liabilities in active per cent owned by the Group. Acquired subsidiaries are consolidated using the acquisition method, according to which the assets and liabilities of the acquired entity are measured at fair value at the time of acquisition, and the the acquired shareholders’ equity constitutes goodwill. - when control was gained, while divested subsidiaries are included until the date of divestment. No subsidiaries - rounded to the nearest thousand euro, which means that from the totals given. the Group’s units are recognised in the currency that is the main currency of the unit’s primary operating envi - - cial statements are given in euros, which is the operating and presentation currency of the parent company. The Group has one subsidiary abroad, in Sweden. Receivables and liabilities denominated in foreign cur - arising from foreign currency transactions are recognised from operations are included in the corresponding items company has been converted into euro at the weighted from the application of the acquisition method are treat - ed as items adjusting consolidated shareholders’ equity. non-controlling interests, so its earnings are attributable solely to the shareholders of the parent company. Digia presents the other accounting principles applied in - ment items in question. The table below lists the Group’s accounting policies, information about which note they are presented in and a reference to the relevant IFRS standard. Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 The assumptions underlying management’s estimates are presented in the following notes: Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 Digia reports on its business operations as one segment. characteristics and are also similar in terms of the nature of product and service production processes, type of customer, and methods used in product or service distribution or service provision. For this reason, these service areas have been combined into a single reporting segment. Digia’s net sales in the review period amounted to EUR million. The net sales of the service and maintenance per cent of total net sales. The net sales of the project the company’s net sales. The product business includes licence maintenance, and it is included in both project and service and maintenance operations. The net sales the company’s net sales. At the end of the reporting period, Digia reports the total transaction price of uncompleted performance obliga - tions insofar as the agreement is for several years and - for service and maintenance agreements cannot be un - ambiguously determined and it is not reported because the agreements often include transaction-based items in income is recognised over time. per cent of consolidated net sales. Digia’s performance obligations are work performed by people, licences of own products, maintenance of own products, third-party products, maintenance of third-par - ty products as well as services. The typical payment term from the approval of the delivery. The cancellation term in agreements is typically the right of either party to can - cel the agreement if a party commits a material breach of the agreement and has not remedied said breach within are to return any deliverables received. Net sales EUR million 150 120 90 60 30 0 139 132 112 96 86 2016 2017 2018 2019 2020 Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 projects is recognised as revenue over time in accordance recognised over time on the basis of their percentage of completion once the outcome of the project can be reliably estimated. The percentage of completion is de - termined as the proportion of costs arising from work per- formed for the project up to the date of review in the total estimated project costs. If estimates of the project change, the period during which the change becomes known and performed by people in accordance with progress. The from service delivery. after which the customer has the option of withdrawing from the project is recognised as revenue over time, but income from a delivery project will not be recognised as The licences of own products comprise a performance obligation that is to be recognised as revenue at a point in time. Revenue is recognised in one instalment when the product has been delivered, that is, when the licences have been installed in the customer’s testing environment. - tion has been completed. SaaS (software as a service) agreements for the compa - ny’s own products are recognised as revenue over time during the contract period. Maintenance fees for Digia product licences are rec - ognised as revenue over time during the contract period. - pleted software has been approved. With respect to third-party licences, the actual respon- sibility for the features, further development and main- Digia is responsible, revenue from third-party products is recognised on a gross basis in one instalment once the product licence has been installed in the customer’s test environment. If a third party holds actual responsibility for the aforementioned matters, revenue is recognised on a net basis, that is, the margin or commission is recognised in net sales upon installation. Revenue accrued from maintenance of third-party prod - ucts and from SaaS agreements is recognised over time either on a gross basis (Digia has actual responsibility for maintenance) or on a net basis (a third party is responsible for maintenance). The warranty for third-party software is determined ac - cording to the terms of the third-party software. Revenue from service agreements is recognised over time during the agreement period. If a service agreement in - cludes a ticket- or hour-based performance obligation, rev- enue is recognised over time in accordance with progress. Revenue recognition: degree of completion of a project recognised as revenue over time A project recognised as revenue over time is recognised - pletion once the outcome of the project can be reliably - ment and estimation of project progress. If estimates of the project’s outcome change, the recognised sales and time. An onerous contract is immediately recognised as Provisions. Recognition: principal or agent Digia can act as either a principal or agent for third-party products. Whether the company is deemed to be acting as a principal or agent for third-party products is based on Digia management’s analysis of the legal form and factual content of the agreements made between the company and its suppliers. With respect to factual con - tent, the decisive factor is Digia’s role and responsibility towards the end customer. If Digia is responsible, reve - nue is recognised from these products in one instalment on a gross basis once the installation environment has been completed. Maintenance revenue will also be recognised on a gross basis, but over time. If a third party holds actual responsibility, Digia only recognises the margin or commission in net sales. loss provisions had been recorded on the basis of re - maining work. Loss provisions have been made on the basis of the estimated total workload. If the total work - load changes as a project progresses, this impacts on the size of the loss provision. Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 A provision is recognised when the Group has a legal or factual obligation based on previous events, the realisa - tion of a payment obligation is probable and the amount of the obligation can be reliably estimated. to be gained from the agreement. The loss is recognised in the period when it becomes known and can be es - product development and these product development Government grants received as compensation for costs are recognised in the income statement at the same time - under other operating income. capital of NSD Consulting Oy. With this acquisition, Digia - development and, in particular, Java and .NET environ - ments. A key element in NSD’s operations is a profession- - transferred into Digia’s employ. Forty consultants were working on projects at the time of the transaction. Total fair values of the acquired businesses on the acquisition date: The purchase price was paid at the time of acquisition in - gent amounts subsequently payable in cash. The total calculations. The acquired business had an impact of EUR Accounts receivable consist of the ordinary receivables of the acquired company, whose fair values are estimat - ed to correspond to their book values. Digia’s goodwill Goodwill consisted of the value of acquired market - tional information on goodwill is presented in . - evance to the Group as a whole. If the business acquired - Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 share capital of Starcut Oy. With this acquisition, Digia bolstered its Digia Digital service area, which comprises service design, analytics, e-commerce and agile applica - employees transferred into Digia’s employment. - ital stock of Accountor Enterprise Solutions Oy. With this acquisition, Digia strengthened its Microsoft and Oracle million. Following the acquisition, Accountor Enterprise employ. Total fair values of the acquired businesses on the acquisition date: The purchase prices were paid at the time of acquisi- contingent amounts subsequently payable in cash. The acquisition cost calculations. Acquisitions had an impact the period. Accounts receivable consist of the ordinary receivables of the acquired companies, whose fair values are esti - mated to correspond to their book values. Digia’s good- Goodwill consisted of the value of acquired market - tional information on goodwill is presented in . substantial relevance to the Group either individually or year had been included in Digia’s consolidated accounts for the entire year, they would have accounted for about - All business combinations are accounted for using the acquisition method. The purchase price consists of a share paid at the time of acquisition and any additional purchase price payable later. Such additional purchase prices are paid in cash. business combinations are measured at their fair value at the time of acquisition. The amount of the purchase is recognised as goodwill. Changes in the value of the additional purchase price (liability item) are recognised in which additional information has been received about change in the acquisition price is recognised by adjust - ing the acquisition cost calculation. Acquisition-related - idated income statement. Fair values of net assets acquired in business combinations and additional purchase prices The purchase price, additional purchase price, if any, and net assets acquired in business combinations are measured at fair value. The fair value of acquired net assets is determined based on the fair values of similar asset items, estimated of the additional purchase price is determined based on a forecast of the parameters in accordance with the terms of the additional purchase price over the period In the view of management, the used estimates and fair value. Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 recognise impairment losses. In addition to information technology, IT costs include the cost of communication solutions. Voluntary personnel - - services. Audit fees are included in other operating - pany’s own products carried out largely by in-house during the development phase. - - for the period is calculated using the corporate income Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 - - - - - - - - - ences arise from obligatory provisions, the share-based incentive scheme, and revaluation at fair value in con - to the parent company’s shareholders by the weighted average of shares outstanding during the accounting period. Own shares held by the company are not included in the calculation of the weighted average of shares out - standing. When calculating diluted earnings per share, the impact of the share-based incentive scheme is taken into consideration. Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 - - costs of the management incentive scheme. Information based payments. Additional information on the remu - neration of key employees is also provided in Related party transactions. Digia’s pension schemes are arranged through and Sweden. plans, and payments are recognised in the income state - ment during the period to which the payment applies. hourly pay. Part of the employees are covered by target bonus schemes. The key indicators of the target bonus scheme for salespeople are the value of agreements or the value of agreements and net sales. The key indicators of the short-term target bonus scheme are consolidated Digia has incentive schemes where payments are made - ed through these arrangements are measured at fair value on the date of their being granted and recognised vesting period. The impact of these arrangements on the balance sheet as a change in shareholders’ equity. - ed to establish a new long-term share-based incentive three-year bonus period are reached. In principle, the scheme is designed to align the goals of the company’s shareholders and management in order to increase the - ment to the company and its long-term objectives. The scheme replaced the previous share-based incentive The targets of the scheme are based on the company’s net sales and total shareholder return (TSR). The earn - ings period for the turnover and TSR indicators is three During the bonus period, the company’s CEO and other scheme participants are entitled to a bonus equivalent to are met, the bonuses for both indicators based on the new scheme will be paid at the end of the reward period The cash portion of the bonus will primarily be used to scheme. As a rule, the bonus will not be paid if a member resigns or if a member’s employment or post is terminated prior option to decide on possible bonuses in accordance with the pro-rata principle. Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 presented below. * No transactions were carried out under the share-based over and cash portions paid on the basis of the earlier cash portion of the bonus payment is also recorded as a bonuses include the shares and the equivalent cash sum. - - - - - - The targets of the share-based scheme are based on the Group’s net sales and total shareholder return (TSR). recognised annually, assessing the total cost impact of the scheme at the level estimated by management. If estimates of the total cost impact of the scheme change, the cost is amended in the period during which the Immediate costs relating to the acquisition of Digia Plc’s own shares are recognised as deductions in sharehold - ers’ equity. Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 Digia ensures optimal working capital through the turnover of accounts receivable and payable. Additional information on accounts receivable is provided in Other liabilities include project-related advance payments from customers. The carrying amounts of accounts payable and other liabilities are considered to correspond to their fair values due to the short-term nature of these items.. Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 The Group’s capital management aims at supporting company business by means of optimal management of the capital structure, ensuring normal operating con - ditions and increasing shareholder value with a view to net gearing, the interest-bearing net liabilities are divided by shareholders’ equity as indicated in the consolidated balance sheet. Gearing includes interest-bearing net liabilities less cash and cash equivalents. Interest-bearing The share of liabilities of total shareholders’ equity was as Additional information on shareholders’ equity is and on interest-bearing liabilities Accounts receivable and other receivables Accounts receivable are mainly attributable to invoicing of Finnish companies and organisations. At the end of a payment plan has been agreed with an individual cus - tomer. In the company’s view, this receivable does not pose an elevated risk of credit losses. The book value of accounts receivable, receivables from customer agreements and security deposits for rental dues is a reasonable estimate of their fair value. Their balance sheet values best correspond with the of credit risks. Receivables from customer agreements comprise completed work that has not been invoiced. which it has been agreed that invoices will be sent after sub-deliveries are accepted. After invoicing, receivables from customer agreements are transferred to accounts receivable. Essential items included in prepayments and accrued income are associated with the accrual of statu - Other shares include holiday cabins usable by personnel and golf shares. by applying the fair value option at the time of initial are recognised on the transaction date. Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 Amortised cost: Financial assets measured at amortised cost comprise accounts receivable and receivables from customer agreements. Due to their nature, the carrying amount of short-term accounts receivable and other prepayments and accrued income is their fair value minus the amount of credit losses. value changes are recognised in the period in which they arise. Unlisted shares and participations owned by Digia Accounts receivable and other receivables are measured at nominal value. The credit loss provision is based on each accounts receivable category and contractual receivables. In addition to anticipated credit loss provisions, million has been recognised. The Group’s credit loss provision is estimated based receivables from customers in long-term projects over their entire period of validity (). Digia applies a accounts receivable. Thus the estimate of the credit loss losses for the entire period are calculated by multiplying the gross carrying amount of unpaid accounts receivable and receivables from customers on long-term projects by - Cash and cash equivalents are recognised at fair value. liabilities and accounts payable. Digia did not use deriv - that are described in more detail below. Euribor plus a margin. The loan covenant related to the Group’s solvency and - facilities at its disposal. More information on these facilities is provided in on liquidity risk. Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 Accounts payable have not been included in the table above because the carrying amount of accounts payable is close to their fair value. - Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 payments and the repayment of loan capital: Accounts payable are recognised in the balance sheet at their original cost, which considering the maturities of the liabilities. the accounts at fair value on the basis of the consideration received. Financial liabilities are included in non-current and current liabilities and may be interest-bearing or non- A more detailed description of leases is provided in - Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 - - 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. - company. The unit is responsible for the Group’s liquidity, Group’s risk management seeks to minimise the adverse rate risk, credit risk, and liquidity risk. The general prin - ciples of risk management are approved by the parent - ness segments is responsible for their practical imple- mentation. The Group’s interest rate risk is primarily associated with long-term bank loans whose interest rates are linked to Euribor rates. Changes in market interest rates have annum. Interest rate developments are monitored and reported on regularly in the Group. Possible interest rate hedges will be made with the appropriate instruments. At not have any hedging instruments in force. The Group’s customers are mostly well-known Finnish and foreign companies with well-established credit, and loss risks. The Group continuously assesses the increase in credit risk after initial recognition on the basis of chang - es in the default risk. for customers and investment transactions with the aim of minimising credit losses. 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 loss risks associated with commercial operations are primarily the responsibility services in a centralised manner and ensures that the Group’s guidelines are observed with regard to terms of payment and collateral required. maturity analysis of accounts receivable and receivables - sented in . Credit loss risks increased slightly in of some customers due to the pandemic. The Group has The Group’s currency risks related to the receivables, liabilities and investments of the Swedish subsidiary as well as the Finnish companies’ accounts receivable and - The Group aims to continuously estimate and monitor operations and repaying loans falling due. The Group maintains its immediate liquidity with the help of cash management solutions such as Group accounts and credit facilities at banks. The amount of unwithdrawn standby liabilities is presented in Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 - remained undistributed and were under the management - - stricted shareholders’ equity reserve comprises invest- ments similar to shareholders’ equity and the subscription enter it in shareholders’ equity. deducted from distributable shareholders’ equity before Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 Digia’s goodwill has been generated by several acquisi- Goodwill is recognised from the acquisition as » the fair value of the consideration paid at the time of acquisition » the amount of any non-controlling interest in the object of acquisition » the fair value of any previously held non- controlling interest in the object of acquisition, in the case of a phased business combination and liabilities assumed. No amortisation is booked on goodwill but it is tested annually for impairment. For this purpose, goodwill is al- located to cash generating units. Goodwill is recognised at the original cost from which the impairment is deducted. Goodwill impairment testing is performed at Group level, with the Group as the cash-generating unit. The tables below show the distribution of goodwill and balance sheet values of other asset items subject to testing at the end of the reporting period: the following assumptions: - olated using the same assumptions as for the forecast period. The discount rate used is the average cost of capital (WACC). - cant estimates used in forecasts with sensitivity analyses. The most important factors in goodwill sensitivity anal - assumptions, but also the growth percentage of the had been used as the growth percentage of the termi - per cent had been used as the discount rate, instead of the value subject to testing. If the operating margin were correspond to the value subject to testing. In addition, a sensitivity analysis of net sales growth and sensitivity analysis, goodwill requires either net sales to - ments in assessing the development of the Group’s net of changes in market conditions on the Group’s earnings estimates of growth in future years. Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 On the balance sheet date, it is estimated whether there is evidence that the value of a tangible or intangible asset may have been impaired. If there is evidence of impair- ment, the amount recoverable from the asset is estimated. In addition, the recoverable amount is estimated annually on goodwill regardless of whether there is an indication of impairment or not. The need for impairment is reviewed at the level of cash gener - ating units, which refers to the lowest level of unit that is mainly independent of other income statement. An impairment loss recognised for goodwill will not be reversed under any circumstances. - - - - - - - - - - Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 Property, plant and equipment (PPE) are carried at cost less accumulated depreciation and impairment. Assets are depreciated over their estimated useful lives. Depreciation is not booked for land areas. Estimated useful lives are as follows: The residual value and useful life of assets is reviewed on each balance sheet date and, Capital gains and losses on elimination and the transfer of property, plant and equipment - - - - - - - - - - - - - Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 Asset items related to customer agreements comprise customer agreements and technologies with a limited useful life. They are entered in the balance sheet under income statement by straight-line depreciation over their Other intangible assets comprise capitalised IT software licenses. The depreciation period of licences is three years. - criteria for development costs. measurement, and disclosure of leases that have been complied with. Under the standard, the lessee shall recognise lease contracts in the balance sheet as a lease liability and related right-of-use asset. At the commence - ment date of the contract, the lessee recognises a liabili- ty for its obligation to make lease payments and an asset must be recognised for the liability in the balance sheet and depreciation for the asset. Digia leases its business premises, company cars, equip - ment and multifunction devices, and thus the adoption of the standard has had an impact on the accounting treatment of these items. The bulk of the lease liability and right-of-use asset in the balance sheet comprises have not been recognised in the balance sheet. In addi - tion, Digia does not recognise an asset and liability in the balance sheet for leases of low value assets. been recorded as adjustments in the opening balance corresponding lease liability are based on the company’s estimate of the duration of current lease - Two parties are considered related if one party can operations. The related parties of the Group’s parent company, Digia Plc, include the following entities: » subsidiaries » Group’s Management Team, including the CEO (key management) » the family members of said persons, and » companies under the control of related parties. The amounts presented in the tables below correspond question. Wages and salaries include any share-based Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 The Group’s incentive schemes are described in Share-based payments and in the separate report on corporate governance. Transactions involving purchases of goods and services consisted mainly of marketing services. Transactions in - of services to related parties are based on the Group’s current prices. The Group has no related-party loans or voluntary pension arrangements. The streamlining of the Group’s structure was com- merged into Mavisystems Oy, which in turn was merged New or amended standards and interpretations have no - the share capital of the Swedish company Climber Inter - with a bank loan. scheme The CEO and the Group’s other management are provided with pension coverage under the Finnish Employees’ Pension Act (TyEL). have received the following salaries and fees: CEO Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 and reconciliations Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 As alternative performance measures, the Group reports - return on investment, net gearing and equity ratio, which - situation and development of business operations, as it considers this information necessary for investors. Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 EUR EUR ASSETS Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 EUR EUR Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 EUR - - - Digia Plc is the parent company of the Digia Group. It is - Digia Finland Oy, Digia Hub Oy and Digia Sweden Ab. prepared in accordance with Finnish Accounting Standards - reduced to correspond to fair value as necessary. as the Group’s administrative company and charged the Group companies for services rendered. The Group’s pension schemes are arranged through a pension insurance company. Pension premiums and - Digia has a share bonus scheme where payments are made either in equity instruments or in cash. In the to the statement, the terms and conditions of a share of the bonus period. Therefore, the service commitment required of an employee under a share bonus scheme is Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 scheme is to be considered to have been rendered on the one hand and received on the other by the com - pany at the end of the bonus period, at which point the employee shall have an irrevocable right to the shares immediate cost less planned depreciation and amortisation. The economic lives underlying planned depreciation and amortisation are as follows: - Shareholders listed on the shareholder register main - tained by Euroclear Finland Oy on the dividend reconcili- EUR EUR EUR EUR EUR - EUR EUR Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 EUR Financial Position, in accordance with the principle of - EUR - - - - - EUR - - - - - Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 EUR - - - - - - - - EUR EUR EUR Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 EUR EUR as well as accrued provisions for salaries and fees. EUR EUR EUR - Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 and Financial Statements Päivi Hokkanen Seppo Ruotsalainen Outi Taivainen Timo Levoranta Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 A report of the audit has been submitted today. KPMG Oy Ab Virpi Halonen Authorised Public Accountant Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 the consolidated balance sheet, income statement, statement of comprehensive income, statement of as well as the parent company’s balance sheet, income In our opinion • - - tional Financial Reporting Standards (IFRS) as adopted by the EU • position in accordance with the laws and regulations Finland and comply with statutory requirements. • Our opinion is consistent with the additional report sub - mitted to the Audit Committee. We conducted our audit in accordance with good auditing practice in Finland. Our responsibilities under good auditing practice are further described in the Auditor’s Responsibili - ties for the Audit of the Financial Statements section of our report. We are independent of the parent company and of the group companies in accordance with the ethical require - ments that are applicable in Finland and are relevant to our in accordance with these requirements. In our best knowledge and understanding, the non-audit services that we have provided to the parent company and group companies are in compliance with laws and regu - lations applicable in Finland regarding these services, and we have not provided any prohibited non-audit services non-audit services that we have provided have been dis - closed in We believe that the audit evidence we have obtained is of materiality. The materiality is determined based on our professional judgement and is used to determine the we set is based on our assessment of the magnitude of misstatements that, individually or in aggregate, could - or possible misstatements that in our opinion are mate - statements. Key audit matters are those matters that, in our profes- - ion thereon, and we do not provide a separate opinion on - audit matters below. We have also addressed the risk of management over - ride of internal controls. This includes consideration of whether there was evidence of management bias that represented a risk of material misstatement due to fraud. The key audit matter - - How the matter was addressed in the audit Our audit procedures related to goodwill impairment tests included, among others: This document is an English translation of the Finnish auditor’s report. Only the Finnish version of the report is legally binding. Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 • we have analyzed the reasonable of assumptions un- - ability, discount rate and forecasted growth rate. • we have involved KPMG valuation specialists in audit. They have tested accuracy of the technical model and analyzed the reasonableness of the assumptions underlying the goodwill impairment tests compared to the market information. • we have compared the assumptions used in previous year’s impairment tests, especially in respect of net assess the accuracy of Digia’s estimation process. • we have considered the accuracy and adequacy of the disclosures in respect of goodwill and impairment testing. - - Our objectives are to obtain reasonable assurance on material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Rea - sonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with good auditing practice will always detect a material mis - fraud or error and are considered material if, individually As part of an audit in accordance with good auditing professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement - ror, design and perform audit procedures responsive to and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omis - sions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the pur - the parent company’s or the group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • - rectors’ and the President and CEO’s use of the going concern basis of accounting and based on the audit ev - doubt on the parent company’s or the group’s ability to continue as a going concern. If we conclude that attention in our auditor’s report to the related disclo - are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the parent company or the group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content statements give a true and fair view. • - for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and - identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical re - quirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of Digia’s direction Responsible Digia Corporate Governance Board of Directors’ report Financial statements Digia 2020 of the current period and are therefore the key audit matters. We describe these matters in our auditor’s re - port unless law or regulation precludes public disclosure - es, we determine that a matter should not be communi- cated in our report because the adverse consequences Information on our audit engagement total period of uninterrupted engagement. Virpi Halonen, Authorised Public Accountant, KHT has acted as the re - sponsible auditor of the audit engagement. Other Information responsible for the other information. The other informa - information included in the Annual Report, but does not Directors prior to the date of this auditor’s report, and the - not cover the other information. our responsibility is to read the other information identi - statements or our knowledge obtained in the audit, or oth - erwise appears to be materially misstated. With respect of Directors has been prepared in accordance with the applicable laws and regulations. been prepared in accordance with the applicable laws and regulations. If, based on the work we have performed on the other information that we obtained prior to the date of this audi - tor’s report, we conclude that there is a material misstate- ment of this other information, we are required to report that fact. We have nothing to report in this regard. 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