Financial2018statements

DIGITALIST GROUP PLCArkadiankatu 2, 00100 Helsinki

Krnro 611.522Business ID 0997039-6

Table of Contents

Report of the Board of Directors 1

Key figures 9

Calculation of key figures 10

Information about shares, shareholders and options 11

Consolidated Financial Satatements, IFRS

Consolidated comprehensive income statement 13

Consolidated balance sheet 14

Consolidated cash flow statement 15

Consolidated statement of changes in shareholders’ equity 16

Accompanying notes to the consolidated financial statements 17

Parent company financial statements, FAS

Parent company income statement 49

Parent company balance sheet 50

Parent company cash flow statement 51

Parent company statement of changes in shareholders’ equity 52

Accompanying notes to the parent company financial statements 53

Signatures to the financial statements and to the report of the Board of Directors 60

Auditor’s Report 61

REPORT OF THE BOARD OF DIRECTORS 1 January 2018 – 31 December 2018

SUMMARY OF THE ACCOUNTING PERIOD

Accounting period 2018 (figures for 2017 in brackets): • Turnover EUR 24.7 million (EUR 20.0 million), growth of 23.7%.• Earnings before interest, taxes, depreciation and amortisation (EBITDA) EUR -4.8 million (EUR -4.0 million),-19.6% of turnover (-19.9%).• Operating result EUR -6.4 million (EUR -4.9 million), -26.0% of turnover (-24.5%).• Net result EUR -6.8 million (EUR -6.9 million), -27.6% of turnover (-34.7%).• Earnings per share (diluted and undiluted) EUR -0.01 (EUR -0.02).• Cash flow from operating activities EUR -6.4 million (EUR -5.6 million).

BUSINESS OPERATIONS

Digitalist Group is a creative technology company. It seeks, plans, designs and implements functional user experience and durable software solutions which are based on Internet, cloud or mobile technologies. Our customers include leading companies from all over the world. We design comprehensive digital solutions for our customers which increase their competitiveness and productivity and bring them added value and customer loyalty. We are researchers, designers, engineers and strategists from Finland, Sweden, Great Britain, Canada and the United States.

Our vision ”From Ideas to Life” comprises user and usage research, branding services, planning comprehensive strategic and innovative solutions and definition of suitability of technology through to final implementation. Our service focuses on an in-depth understanding of the changes caused by digitalisation together with our customers; designing solutions based on research and implementing them in the private and public sectors. The acquisition by the company of Grow Holding AB on 31 May 2018 makes the Company more strategic, creative and relevant for our clients and supplements our supply and value proposition.

We create new digital services for our customers based on functional technologies and changes which have an impact on our customers’ business. User experience of a high class requires a seamless cooperation of user research, branding, design and technology, and Digitalist seeks to continually be a transparent and active operator in the business.

Our user and usage research consist of development programmes built strongly around our LeanLab product, which include both individual and group interviews with our target groups and online surveys, while target groups comprise both end customers and the customer’s own staff. This definition research helps our customers find the key features and how these should be implemented in the final product or service. To support the development work, we also conduct versatile usability research which ensures that the end result in all its details is such that it brings a substantial competitive benefit to our customers both qualitatively and temporally.

Our branding service develops the customers’ marketing and customer experience. The activities are based on recognising trends and changing customer needs and implementing the ideas derived therefrom to increase the customer’s business and value.

Our design services include digital, mobile and web design and service as well as industrial design. The services extend from a planning strategy and user research to visual and interactive design and continue to workshops, prototype design and usage research. We carry out all our planning innovations for different devices and platform always seeking the best possible solutions at a point in time hoped for by our customers.

In technology services, we have in-depth know-how in the design of creative software solutions in devices, embedded systems and software. As a rule, we use the open standardised technologies (for example Java, Linux, Android, iOS, .Net ) and partner up with chosen technology partners (for example IBM, Salesforce, Maxicaster). Thus, we combine our technological know-how with world famous design, in-depth user interface and usability design and top level project management. This combination forms a major competitive benefit for the company. Our technological expertise covers both software and hardware (mobile, wireless integration and network services and equipment).

The company headquarters are located in Helsinki. In addition to Finland, the Company has major business operations in Sweden, Canada, the United States and Great Britain.

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YEAR 2018

Year 2018 began with the company opening new studios in North America, Vancouver and San Francisco. Digitalist Group focused its operations and reduced the number of personnel in Finland e.g. in the Kemi and Jyväskylä offices. At the same time, the company sought to obtain new customer relationships and to improve its profitability. During the first quarter, the company concluded major cooperation agreements with City Cruises from London and the Helsinki Regional Transport Authority. These agreements supported the major know-how of the company in the digitalisation of travel and tourism. During the first quarter, the result of the company suffered from the delay of major client projects.

During the second quarter, the company grew and globalised by acquiring branding, design and consulting know-how when Grow AB and Grow Nine AB joined Digitalist Group. The cooperation and integration of the companies commenced quickly and joint business relationships were created during the first year together. At the end of the year, the companies moved into common premises in Stockholm’s Östermalm.

The expertise of Digitalist consists of combining research, design, marketing and technology. The intention is to help companies lead digitalisation, design new services and products and to create better customer experience. In the third quarter, the Board of Directors of the company approved a new strategy, according to which the company wishes to grow and improve its know-how within CRM as well. In the third quarter, the company organised its leadership and management according to this new strategy and hired a new commercial director.

The share of company turnover from outside of Finland grew steadily during the whole of 2018 and in the last quarter, roughly two thirds of turnover came from outside of Finland. The company has major customer relationships and projects in Vancouver, San Francisco, London, Stockholm and Helsinki. The culture of the company is very international and it serves the best companies in the world. The biggest customers include the Canadian Finning, Honda, the Swedish Unionen, Volvo and Tikkurila. The company combines versatile know-how in client projects and delivers internationally from different studios. In 2018, the turnover of the company grew by 24 % while the result was negative e.g. because of costs resulting from acquisitions, delay of major client projects and additional costs resulting from the integration of the company.

During the operating year, Digitalist Group employed on average of 258 experts.

Acquired business operations

In May 2018, Digitalist Group concluded an agreement, whereby all shares in the Swedish Grow Holding AB and 51.9% of the Swedish Grow Nine AB transferred by exchange of shares to the ownership of the Company. Through the arrangement, Digitalist Group expanded its Swedish operations to strengthen its ability to shape and deliver comprehensive innovation, design and technology solutions. Grow is a Swedish company, which has, from 2004, supported the growth of its customers by offering strategic, design and communications services both in Sweden and globally. Through the acquisition, Digitalist Group received almost 50 experts. Together Digitalist Group and Grow form a creative international design and technology company.

Additional information on the Group companies are available in the notes to the consolidated financial statements.

Annual General Meeting of 17 April 2018 and the authorizations of the Board of Directors

The Annual General Meeting of Digitalist Group Plc held on 17 April 2018 verified the financial statements for the accounting period closed on 31 December 2017 and gave discharge to the members of the Board of Directors and the Chief Executive Officers for the accounting period closed on 31 December 2017. The Annual General Meeting decided in accordance with the suggestion of the Board of Directors that no dividends are paid for 2017.

The Annual General Meeting decided that the Board of Directors includes seven individuals. Paul Ehrnrooth, Bo-Erik Ekström, Peter Eriksson, Esa Matikainen, Pekka Pylkäs, Jaana Rosendahl and Ville Tolvanen were elected as members of the Board.

The Annual General Meeting decided that the members of the Board of Directors will be paid as follows: the Chair of the Board of Directors EUR 40,000/year and EUR 500/meeting, Deputy Chair EUR 30,000/year and EUR 250/meeting, other members of the Board of Directors EUR 20,000/year and EUR 250/meeting. The payment for the committee meetings of the Board of Directors will be EUR 500/meeting for the Chair and EUR 250/meeting for members.

The audit firm KPMG Oy Ab was chosen to act as the company’s auditor. The appointed principal auditor is Esa Kailiala, an authorized public accountant. It was decided that the auditor will be paid a fee in accordance with a reasonable invoice presented for the audit work.

The Annual General Meeting authorized the Board of Directors to decide on the issue of shares for cash as well as option rights and granting other special rights entitling to shares referred to in Chapter 10, Section 1 of the Limited

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Liability Companies Act, or combinations of all or some of the aforementioned in one or several instalments under the following conditions:

The maximum number of new shares to be issued under the authorization can be up to 276,912,173 shares, equivalent to approximately 50 per cent of the company’s total shares at the time of the notice of the Annual General Meeting. The Board of Directors was authorized to decide on all of the terms and conditions of the share issue and the special rights entitling to shares under the aforementioned authorization, for example that the payment of the subscription price may take place by cash or by offsetting the receivables of the subscriber from the company.

The Board of Directors is entitled to decide on the marking of the subscription price either as an increase in share capital or fully or partially in the invested unrestricted equity fund.

The issue of shares and the issue of special rights entitling to shares may also be made in a direct manner, in deviation from the shareholders’ pre-emptive right, if there is a weighty financial reason concerning the company in accordance with the Limited Liability Companies Act. The authorization may then be used to finance acquisitions or other investments included in the company’s business operations, and to maintain and grow the Group’s financial solidity and to implement the incentive plan.

The authorization will be in force until the Annual General Meeting in 2019, but no longer than 30 June 2019.

Authorization of the Board of Directors to decide on the purchase of own shares:

The Annual General Meeting authorized the Board of Directors to decide on the surety or acquisition of a maximum of 55,382,434 of its own shares with the company’s distributable funds, which corresponds to about 10 per cent of the company’s total shares at the time of the notice of the Annual General Meeting. The acquisition can take place in one or more instalments. The acquisition price of the shares is at the most the maximum price paid for the share in public trading at the time of acquisition. The implementation of purchasing own shares may include ordinary derivative, share lending or other agreements in the capital market within the scope of the law and regulations. The authorization entitles the Board of Directors to decide on acquisition other than in proportion to the shares held by the shareholders (directed acquisition).

Shares may be acquired for the purpose of undertaking acquisitions or other arrangements included in the company’s business operations, to improve the company’s financial structure or otherwise to be supplied onward or cancelled.

The authorization includes the right of the Board of Directors to decide on all other matters related to the acquisition of shares. The authorization is valid until the Annual General Meeting in 2019, but no longer than 30 June 2019.

The minutes and decisions of the Annual General Meeting can be found on the website of the company at https://investor.digitalistgroup.com/fi/investor/governance/annual-general-meeting.

Extraordinary General Meeting of 28 June 2018 and the authorizations of the Board of Directors

The Extraordinary General Meeting of Digitalist Group Plc held on 28 June 2018 elected Andreas Rosenlew and Anders Liljeblad as new ordinary members of the Board of Directors.

The Extraordinary General Meeting authorized the Board of Directors to deal with the issue of shares for cash as well as option rights and granting other special rights entitling to shares referred to in Chapter 10, Section 1 of the Limited Liability Companies Acts or combinations of all or some of the aforementioned in one or several instalments under the following conditions:

The maximum number of new shares to be issued under the authorization can be up to 315,000,000 shares, equivalent to approximately 49.5 per cent of the company’s total shares at the time of the notice of the Annual General Meeting.

The Board of Directors was authorized to decide on all of the terms and conditions of the share issue and the special rights entitling to shares under the aforementioned authorization, for example that the payment of the subscription price may take place by cash or by offsetting the receivables of the subscriber from the company.

The Board of Directors is entitled to decide on the marking of the subscription price either as an increase in share capital or fully or partially in the invested unrestricted equity fund.

The issue of shares and the issue of special rights entitling to shares may also be made in a direct manner, in deviation from the shareholders’ pre-emptive right, if there is a weighty financial reason concerning the company in accordance with the Limited Liability Companies Act. The authorization may then be used to finance acquisitions or other investments included in the company’s business operations, and to maintain and grow the Group’s financial solidity and to implement the incentive plan.

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The authorization will be in force until the Annual General Meeting in 2019, but no longer than 30 June 2019. The new authorization for the share issue does not annul the previous authorization.

The minutes and decisions of the Extraordinary General Meeting can be found on the website of the company at https://investor.digitalistgroup.com/fi/investor/governance/annual-general-meeting.

OFFICES

Our offices are located on our principal markets in Finland, Sweden, the United States, Canada and Great Britain. All offices have both technology and design experts as well as a local sales organisation.

SEGMENTS

Digitalist Group reports its business operations in a single segment.

TURNOVER

The turnover of the Group during the accounting period was EUR 24.7 million (EUR 20.0 million), which was 23.7% more than in the previous year. The growth of turnover resulted from the expansion of the international business. This was positively affected by the acquisitions made in Sweden in 2017 and 2018. Turnover from outside of Finland composed more than half the turnover during the review period and was 62% (26%).

RESULT

In the accounting period, the earnings before interest, taxes, depreciation and amortisation (EBITDA) was EUR -4.8 million (EUR -4.0 million), operating result was EUR -6.4 million (EUR -4.9 million) and result before taxes EUR -7.1 million (EUR -7.2 million). In the accounting period, the earnings before interest, taxes, depreciation and amortisation (EBITDA) were affected e.g. by costs relating to acquisitions, delays in major client projects and additional costs related to the integration of the company. The net result in the accounting period was EUR -6.8 million (EUR -6.9 million), result per share was EUR -0.01 (EUR -0.02) and cash flow from business operations/share was EUR -0.01 (EUR -0.01). The result in the accounting period contains a total of EUR 0.5 million (EUR 0.6 million) of costs relating to acquisitions.

RETURN ON CAPITAL

The Group’s equity was EUR 7.0 million (EUR 5.5 million). Return on equity (ROE) was negative. Return on investment (ROI) was -28.3 (-36.5) per cent.

INVESTMENTS

Investments in the accounting period totalled EUR 7.3 million (EUR 7.0 million). The investments were mainly related to acquisitions. The R&D costs capitalised in the balance sheet in the accounting period amounted to a total of EUR 0.5 million (EUR 0.0). The R&D costs are related to the new Ticknovate product announced in the autumn.

BALANCE SHEET AND FINANCING

The balance sheet total grew due to acquisitions made in 2017 and 2018 and was EUR 32.2 million (EUR 25.0 million). Equity was EUR 7.0 million (EUR 5.5 million). The equity ratio was 21.8% (21.9%). The liquid assets of the Group at the end of the accounting period amounted to EUR 0.3 million (EUR 1.4 million).

The positive change in the company’s equity in the accounting period was affected by the rights issues offered in the context of the acquisitions and the financial arrangements conducted with the principal owner amounting to a total of EUR 8.7 million.

At the end of the accounting period, the Group’s balance sheet included EUR 7.5 million (EUR 3.2 million) in loans from financial institutions, including the credit limits in use.

In addition to this, the company has loans from its principal owner. Interest-bearing debt as of 31 December 2018 was EUR 16.3 million (EUR 11.5 million), of which loans from related party companies constitute EUR 8.6 million (EUR 8.1 million). Loan agreements signed with related party companies during the accounting period are listed under the section: Related party transactions.

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CASH FLOW The consolidated cash flow from operating activities during the accounting period was EUR -6.4 million (EUR -5.6 million), a change of 13.2%. The negative consolidated cash flow from operating activities is due to the operating loss in the accounting period. To shorten the rotation of sales receivables, the Group is selling some of its sales receivables from Finland. Sold sales receivables in the accounting period amounted to EUR 7.6 million (EUR 6.8 million). GOODWILL The Group’s balance sheet as of 31 December 2018 included EUR 18.1 million (EUR 12.8 million) in goodwill. No need for goodwill impairment was recognised during the goodwill impairment testing on 31 December 2018. The present value of future cash flows exceeded the carrying value of assets by EUR 19.3 million. The present value of the cash flow calculation, EUR 43.1 million, is lower than the sum of the financial liabilities of the company (EUR 16.3 million) and market price of the shares (EUR 30.6 million) as of 31 December 2018. PERSONNEL The average number of personnel during the accounting period was 258 (203) and at the end of the period, there were 270 (240) employees. At the end of the accounting period, 119 (158) persons were employed by the Finnish companies and 151 (82) persons by the foreign companies of the Group. During the accounting period, the number of personnel increased by 30 people due to acquisitions.

SHARES AND SHARE CAPITAL

Share turnover and price During the accounting period, the highest price for the company share was EUR 0.10 (EUR 0.16), the lowest price was EUR 0.04 (EUR 0.07) and the closing price on 31 December 2018 was EUR 0.05 (EUR 0.07). The average price for the accounting period was EUR 0.07 (EUR 0.11). A total of 15,294,061 shares were traded during the accounting period (44,747,638), which corresponds to 2.35 (8.08) per cent of the number of the shares listed at the end of the accounting period. The market value for shares using the closing price on 31 December 2018 was EUR 30,598,069 (EUR 38,767,704.22). Share capital The registered share capital of the company at the beginning of the accounting period was EUR 585,394.16 and the number of shares was 553,824,346 pieces. At the end of the accounting period, the share capital was EUR 585,394.16 and the number of shares was 651,022,746. The company has one series of shares and the company does not own its own shares at the end of the accounting period. Option plan 2016 The Digitalist Group Plc has a valid stock option programme for 2016, which in total gives the right to subscribe to 24,749,592 new company shares. Descriptions of the option plans are available on the company website at https://digitalist.global. Shareholders The number of shareholders on 31 December 2018 was 3,969 (3,906). Private persons owned 8.51 (9.75) per cent and institutions 91.49 (89.90) per cent. The share of foreign ownership was 0.03 (0.35) per cent. Nominee registered ownership was 4.73 (5.63) of all shares. The ownership of Tremoko Oy Ab, a related party company, was 72.13 per cent. Options allow an increase in ownership up to 72.20 per cent.

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RELATED-PARTY TRANSACTIONS

On 30 January 2018, Digitalist Group Plc has agreed with Nordea Bank AB (publ), Finnish Branch, on the increase of the current credit limit from EU 0.2 million to EUR 1.0 million. The credit limit is secured by a directly enforceable guarantee granted by Turret Oy Ab and Holdix Oy Ab to Nordea Bank AB (publ), Finnish Branch, amongst other things, as collateral for the liabilities of Digitalist Group and its subsidiaries (published 22 December 2017). Turret Oy Ab and Holdix Oy Ab are the owners of Tremoko Oy Ab, the principal owner of the Digitalist Group.

On 21 February 2018, Digitalist Group Plc has agreed with its principal owner Tremoko Oy Ab on the increase of the current credit limit published on 18 August 2016 from EUR 2.5 million to EUR 3.0 million. This additional financing will be due no later than 31 December 2019.

On 25 April 2018, Digitalist Group Plc has accepted a binding offer from its principal owner Tremoko Oy Ab for a maximum of EUR 1.0 million debt financing arrangement. This arrangement enables further funding of EUR 1.0 million for the Digitalist Group compared to the previous situation. The additional financing complying with the financing arrangement will be due no later than 31 December 2019.

As part of the financing arrangement, Digitalist Group has also agreed with its principal owner Tremoko Oy Ab on the postponement of the due date 31 January 2019 for the previously provided EUR 4.6 million credit line facility. The new due date will be no later than 31 December 2019.

In conjunction with the financial arrangement, Digitalist Group Plc has agreed on a drawdown of debt securities for an amount of EUR 2.0 million from Nordea Bank AB (publ), Finnish Branch, converting the previous revolving credit facility of the same amount. These will be due in equal instalments every three months starting on 30 April 2020, the last payment date being on 30 April 2023.

On 25 May 2018, Digitalist Group Plc has agreed with Nordea Bank AB (publ), Finnish Branch, on the increase of the current credit limit by EUR 2.0 million to a total of EUR 3.0 million. The credit limit is secured by a directly enforceable guarantee granted by Turret Oy Ab and Holdix Oy Ab to Nordea Bank AB (publ), Finnish Branch, amongst other things, as collateral for the liabilities of Digitalist Group and its subsidiaries. Turret Oy Ab and Holdix Oy Ab are the owners of Tremoko Oy Ab, the principal owner of the Digitalist Group

On 31 May 2018, the company launched a directed share issue to Tremoko Oy Ab as part of the acquisition of the Grow Group.

To fulfil the conditions for the implementation of the arrangement, the Board of Directors of the Company decided, on the authorization of the Annual General Meeting of 17 April 2018, to issue a total amount of 22,222,222 new shares of the Company to be subscribed for by Tremoko Oy Ab in a directed share issue (“Rights Issue”) in deviation from the shareholders’ pre-emptive right. The issue price of new shares in the Rights Issue was EUR 0.09.

In the Rights Issue, the shares were issued to develop the business of the Company and to carry out the acquisition, so there is a weighty financial reason for the Rights Issue and the deviation from the shareholders’ pre-emptive right as is required under the Limited Liability Companies Act.

Tremoko Oy Ab has paid for the shares subscribed for by setting off receivables it has from the Company, amounting to EUR 1.6 million, and will pay the rest of the subscription price EUR 399,999.98 by cash.

Convertible bond to Tremoko Oy Ab On the authorization of the Annual General Meeting of 17 April 2018, the Board of Directors of the Digitalist Group decided, in deviation from the shareholders’ pre-emptive right, to direct the convertible bond and associated special rights referred to in Chapter 10 Section 1(2) of the Limited Liability Companies Act to be subscribed for by Tremoko Oy Ab in accordance with the terms of the Loan agreement. The principal of the loan is EUR 8,671,932.36. Tremoko Oy Ab or the current holder of the Special Rights is entitled to subscribe for a maximum of 150,000,000 new Company shares under the terms set out in more detail in Terms. Tremoko Oy Ab has subscribed for the Loan and the associated Special Rights in full in accordance with the Terms, and the Company’s Board of Directors has approved the subscription of Tremoko Oy Ab.

The number of shares issued on the basis of the right of conversion is determined by dividing the amount of principal of the Bond by the rate of conversion. The Rate of Conversion of the share (which means the subscription price per share as referred to in the Limited Liability Companies Act) corresponds to the trade volume weighted average price of the Company’s share in the Nasdaq Helsinki Stock Exchange during the period of six (6) months preceding the making of the Request to Convert as defined in section 13 of the Terms of the Loan minus 10 per cent, yet so that each Bond can be converted into a maximum of ten million (10,000,000) new company shares. The Rate of Conversion of a Share will be revised in accordance with the Terms of the Loan.

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The other main terms of the Loan and Special Rights are the following: • interest 6.0% p.a.• interest starts to accrue as of 1 January 2019• Interest paid biannually on 30 June and 31 December• the maturity date (if conversion right has not been exercised) 31 December 2021. In addition to this, the

debtor has the right to once repay the Loan including interests to the creditor at any time between 1 July2018 and 30 June 2021

• the conversion period is any time between 1 July 2019 and 31 December 2021 (unless otherwiseagreed between the creditor and the debtor for a pressing financial or other weighty reason), yet so thatthe debtor has the right to notify that it intends to repay the loan, in which case no conversion rightexists for 3 months starting from such a notification, regardless of whether or not the creditor hassubmitted a notice of the conversion. The debtor may submit the request to convert referred to hereinonly once.

Tremoko Oy Ab has paid the subscribed Loan and the attached Special Rights by setting off its receivables from the Company in the total amount of EUR 8,671,932.36.

On 26 September 2018, Digitalist Group Plc has agreed with Nordea Bank AB (publ), Finnish Branch, on the increase of the current credit limit by EUR 1.0 million to a total of EUR 4.0 million. The credit limit is secured by a directly enforceable guarantee granted by Turret Oy Ab and Holdix Oy Ab to Nordea Bank AB (publ), Finnish Branch, as collateral for the liabilities of Digitalist Group and its subsidiaries. Digitalist Group and Digitalist Finland Oy have provided a joint collateralised counter-indemnity to Turret Oy Ab and Holdix Oy Ab, in which the company has, among other things, committed to paying market-priced guarantee provision. Turret Oy Ab and Holdix Oy Ab are the owners of Tremoko Oy Ab, the principal owner of Digitalist Group.

On 19 December 2018, Digitalist Group Plc has agreed with Nordea Bank Plc on the increase of the current credit limit by EUR 1.0 million to a total of EUR 5.0 million. The credit limit is secured by a directly enforceable guarantee granted by Turret Oy Ab and Holdix Oy Ab to Nordea Bank Plc, as collateral for the liabilities of Company and its subsidiaries. Digitalist Group and Digitalist Finland Oy have provided a joint collateralised counter-indemnity to Turret Oy Ab and Holdix Oy Ab, in which the Company has, among other things, committed to paying market-priced guarantee provision. Turret Oy Ab and Holdix Oy Ab are the owners of Tremoko Oy Ab, the principal owner of Digitalist Group.

EVENTS FOLLOWING THE REVIEW PERIOD

On 29 January 2019, the company has concluded a major deal with a Swedish public operator on the supply of design and development services. The deal is part of long-term cooperation and its value is roughly EUR 1.5 million. The services have been planned to be delivered during 2019. The deal supports the growth of the Digitalist Group in Sweden and its objective to act as a strategic partner.

The deal does not cause any changes to the instructions provided by the Company for 2019.

RISK MANAGEMENT AND NEAR FUTURE UNCERTAINTY FACTORS

The risk management objective of Digitalist Group Plc is to ensure the undisturbed continuation and development of the company’s operations, and to support the achievement of the business goals set by the company and promote the increase of the company’s value. More detailed information on the organisation and processes of risk management and the identified risks can be found on the company’s website at https//digitalist.global.

Despite the measures implemented to improve efficiency, the company has recorded operating losses, which have an immediate effect on the company’s working capital. Risks are therefore managed by maintaining readiness for different financing solutions.

Changes in key accounts may have a negative effect on the operations, performance and financial position of the Digitalist Group. If one of the largest clients should move their purchases from Digitalist Group to its competitors or dramatically change their business model, the prospects for finding new client volume in the short term would be limited.

The turnover of the Group mainly consists of individual client contracts that are often fairly short in duration. Forecasting the dates and scope of new projects is sometimes challenging, while the cost structure is largely fixed by nature. The above factors may cause unexpected variation in turnover and, thereby, profitability.

Fixed-price project deliveries form part of the business of the Group and they involve risks related to time and content. Contract and project leadership tools are used in order to mitigate this risk.

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A proportion of the Group’s turnover is invoiced in currencies other than euros. The risks related to currency exchange rates are managed by different means, including net positions and hedging agreements. The review periods in 2018 and 2017 did not include hedging agreements.

The Group has a subsidiary in England. The impact of Brexit on the subsidiary’s business has been assessed and it has been estimated to be minor.

The Group has a substantial amount of goodwill in its balance sheet, which is subject to an impairment risk in case the expected cashflow of the Group declines due to internal or external factors. Goodwill is tested each quarter and also at other times if need arises.

CORPORATE GOVERNANCE

Digitalist Group is governed in compliance with the Finnish Limited Liability Companies Act (624/2006 including amendments), the Securities Markets Act (746/2012 including amendments), the Market Abuse Regulation (EC) No 596/2014, the rules and regulations issued by Nasdaq Helsinki Ltd for listed companies, and the corporate by-laws of Digitalist Group Plc. In addition, the company observes in its governance the Finnish Corporate Governance Code 2015 with regard to those recommendations that entered into force on 1 January 2016. The Corporate Governance Statement required by the Corporate Governance Code of listed companies has been issued separately from the report of the Board of Directors and published on 28 February 2018. The report is available on the company website. The Insider Guidelines in accordance with the Market Abuse Regulation (EC) No 596/2014 has been issued separately from the report of the Board of Directors in September 2018. The report is available on the company website.

PARENT COMPANY

The parent company, Digitalist Group Plc, had no turnover in 2018 or 2017. The operating result was EUR -3.6 million. (EUR -1.3 million). The result of the year was negative by EUR -3.4 million (EUR -5.1 million). The result was affected by a write-down of the subsidiary’s shares totalling EUR 2 million.

The balance sheet total was EUR 49.4 million (EUR 40.7 million). Shareholders’ equity was EUR 34.9 million (EUR 29.5 million). The equity ratio was 70.6% (72.6%). The parent company’s liquid assets at the end of the accounting period were EUR 0.1 million (EUR 0.9 million).

The average number of personnel during the accounting period was 3 (3) and at the end of the period 2 (4). Wages, salaries and fees amounted to EUR 0.9 million (EUR 0.8 million), pension expenses EUR 0.1 million (EUR 0.1 million) and other indirect personnel costs EUR 0.0 million (EUR 0.0 million). Personnel expenses totalled EUR 1.0 million (EUR 0.9 million), accounting for approximately 40.5% of the operating expenses (42.6%).

Cash flow from operating activities was EUR -4.7 million during the accounting period (EUR -3.7 million).

FUTURE PROSPECTS

In 2019, turnover and operating result are expected to develop positively compared to 2018.

PROPOSAL OF THE BOARD OF DIRECTORS TO THE ANNUAL GENERAL MEETING

The Board of Directors of Digitalist Group Plc proposes to the Annual General Meeting that the distributable funds be left in the shareholders’ equity and no dividend be distributed to the shareholders for the accounting period 2018. On 31 December 2018, the distributable funds of the parent company were EUR 34,077,492.

The Annual General Meeting of Digitalist Group Plc will be held in Helsinki on Tuesday, 2 April 2019.

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CONSOLIDATED KEY FIGURES IFRS IFRS IFRS IFRS IFRS1.1.-31.12.2018 1.1.-31.12.2017 1.1.-31.12.2016 1.1.-31.12.2015 1.1.-31.12.2014

Tunover, EUR 1000 24 737 20 000 15 256 17 001 23 939Turnover, percantage increase 23,7 % 31,1 % -10,3 % -29,0 % -28,3 %

EBITDA (*, EUR 1000 -4 845 -3 985 -7 231 -7 392 -4 646Percentage of turnover -19,6 % -19,9 % -47,4 % -43,5 % -19,4 %

Operating profit/loss, EUR 1000 -6 432 -4 899 -7 736 -8 702 -7 424Percentage of turnover -26,0 % -24,5 % -50,7 % -51,2 % -31,0 %

Profit/loss before taxes, EUR 1000 -7 063 -7 173 -9 547 -5 656 -8 477Percentage of turnover -28,6 % -35,9 % -62,6 % -33,3 % -35,4 %

Balance sheet total, EUR 1000 32 222 25 027 16 095 18 347 21 897

Return on equity, per cent (* neg neg neg neg neg

Return on investment, per cent (* -28,3 % -36,5 % -70,1 % -29,9 % -46,4 %

Interest-bearing liabilities, EUR 1000 16 299 11 483 12 525 10 685 17 266

Financial assets, cash and cash Equivalents, EUR 1000 314 1 366 422 1 901 255

Net gearing (* 227,2 % 184,8 % -288,0 % 324,4 % -1397,7 %

Equity ratio 21,8 % 21,9 % -26,1 % 14,8 % -5,6 %

Investments, EUR 1000 7 363 7 035 657 1 477 1 138Percentage of turnover 29,8 % 35,2 % 4,3 % 8,7 % 4,8 %

Average number of personnel 258 203 188 217 320

Average number of personnel at the end of the period 270 240 174 200 264

Key figures on shares 1.1.-31.12.2018 1.1.-31.12.2017 1.1.-31.12.2016 1.1.-31.12.2015 1.1.-31.12.2014

Earnings per share, diluted, EUR (* ja (** -0,01 -0,02 -0,03 -0,05 -0,09Earnings per share, undiluted, EUR (* -0,01 -0,02 -0,03 -0,05 -0,09P/E Ratio (** -19,88 -3,50 -26,90 9,03 -2,08Share price at the end of the period, EUR 0,05 0,07 0,10 0,07 0,06Number of shares, adjusted for issue, average (** 609 376 504 384 459 880 353 564 898 194 418 208 96 651 722Number of shares, at the end of the period 651 022 746 553 824 346 353 564 898 353 564 898 106 313 536Number of shares, adjusted for option dilution and issue, average (** 609 376 504 384 459 880 454 281 622 194 418 208 96 651 722Dividend per earnings, per cent 0,00% 0,00% 0,00% 0,00% 0,00%Dividend per share, EUR 0,00 0,00 0,00 0,00 0,00Effective dividend yield, per cent 0,00% 0,00% 0,00% 0,00% 0,00%Equity per share, EUR 0,01 0,01 -0,01 0,01 -0,01

*) Digitalist Group presents alternative key figures in order to supplement its consolidated financial statements compiled in accordance with IFRS standards. The purpose of these key figures is to measure growth and to describe the economic performance of the company.

**) The number of shares and earnings per share in 2017 have been affected by the acquisition of Interquest Oy and NodeOne AB,and in 2018 the acquisition of the Grow Group and the conversion of the convertible bond and Rights Issues.

Return on investment, per cent 2018 2017 2016

Profit before tax -7 063 -7 173 -9 547Financial expenses -1 364 -2 555 -1 045

Balance sheet total Q4 2016 16 095Balance sheet total Q4 2017 25 027Balance sheet total Q4 2018 32 222

Non-interest-bearing liabilities Q4 2016 7 769Non-interest-bearing liabilities Q4 2017 8 071Non-interest-bearing liabilities Q4 2018 8 911

Return on investment, per cent -28,3 % -36,5 % -70,1 %

The Group has applied the Guidelines on Alternative Performance Measures by the European Securities and Markets Authority (ESMA), in force since 3 July 2016.

9

CALCULATION OF KEY FIGURES:

Operating profit/EBITDA = Earnings before interest, taxes depreciation and amortizations

Profit for the periodEquity (average)

(Profit before tax + financial expenses)Balance sheet total - Non-interest-bearing liabilities (average)

Total of shareholder’s equityBalance sheet total - Advances received

Interest-bearing liabilities - Liquid assets Total of shareholder’s equity

Profit for the period, attributable to equity holders of the parentNumber of shares, adjusted for issues and for option dilution, average

Equity attributable to equity holders of the parent Amount of shares on the closing date

Dividends for the period Profit for the period

Share price at the end of the periodDiluted earnings per share

Dividend/Share Share price at the end of the period

Dilution = Number of shares plus allocated options -Number of shares obtainable with the exercise price for options according to the turnover-weighted average price

Dividend/Earnings

P/E Ratio =

Effective Dividend Share =

x 100

x 100

x100

x 100

Return on Equity =

Return on Investment =

Equity Ratio, per cent =

Net Gearing =

Diluted Earnings per Share =

Equity per Share =

10

INFORMATION ABOUT SHARES, SHAREHOLDERS AND OPTIONS

SHARES

Share capital and sharesThe share capital of Digitalist Group Plc at 31 December 2018 was EUR 585,394.16. The total number of shares of the company at 31 December 2018 651,022,746 shares.

STOCK EXCHANGE INFORMATION

Digitalist Group Plc is listed at Nasdaq OMX Helsinki.The company has one listed series of shares: DIGIGR.

2018 20175,75 EUR 0,10 EUR 0,04 EUR 0,05 EUR

5,75 EUR 0,16 EUR 0,07 EUR 0,07 EUR

30 598 069 EUR 15 294 061 pieces

38 767 704 EUR 44 747 638 pieces

1 054 808 EUR 0,07 EUR

5 202 958 EUR 0,11 EUR

2,4 % 8,1 %

Share subscription price at listing on 1 October 1999 Highest share price during the periodLowest share price during the period Closing price on 31 DecemberMarket value on 31 DecemberExchange of shares 1.1. - 31.12.

Average price, 1 January - 31 December (*Exchange of shares, percentage of number of shares on 31 December 31.12 (* Number of shares, adjusted for issues on 31 December (*Number of shares, adjusted for dilution and issues on 31 December (* Number of shares on 31 December

609 376 504 shares 651 022 746 shares 651 022 746 shares

384 459 880 shares 553 824 346 shares 553 824 346 shares

*) The number of shares and earnings per share in 2017 have been affected by the acquisition of Interquest Oy and NodeOne AB,and in 2018 the acquisition of the Grow Group and the conversion of the convertible bond and Rights Issues.

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INFORMATION ABOUT SHARES, SHAREHOLDERS AND OPTIONS

OWNERSHIP OF SHARESShares, pcs Percentage of shares Owners, pcs

Private persons 55 397 793 8,51% 3 826Corporations 595 624 953 91,49% 143Total (* 651 022 746 100,00% 3 969

CorporationsCompanies 555 904 827 85,39%Financial and insurance institutions 37 997 203 5,84%Public entities 1 514 478 0,23%

Non-profit organisations 502 0,00%

Foreign holdings 207 943 0,03%

Total 595 624 953 91,49%

of which nominee shareholding 30 821 508 4,73%

MAJOR SHAREHOLDERSShares, pcs Percentage of Shares

Tremoko Oy Ab 469 595 445 72,13Rosebloom Ventures Ab 44 427 665 6,82Elmtwig Holding ab 12 901 481 1,98Niclas Engsäll Ab 5 402 363 0,83Rome Advisors Oy 4 971 709 0,76Nordea Bank Abp 4 585 763 0,70Österlund Jori Ville Ferdinard 4 549 962 0,70Elsa Victorin Ab 4 508 421 0,69Sjöblom Katri 3 363 712 0,52Idl Studio Ab 3 034 444 0,47Liselott Tingvall Holding Ab 3 034 444 0,47Karisma-Invest Oy 2 588 557 0,40Gribenberg Jarl Dödsbo 2 000 000 0,31Lombard International Assurance S.A 1 832 931 0,28Mäki Tuomas 1 664 511 0,26Ritanen Eero Juhani 1 612 500 0,25Elo Keskinäinen Työeläkevakuutusyhtiö 1 514 478 0,234capes Oy 1 500 000 0,23Hämäläinen Kari Heikki Kristian 1 380 000 0,21Rapeli Marko 1 367 895 0,21Others 75 186 465 11,55Total (* 651 022 746 100%

DISTRIBUTION OF THE SHARESShareholders Percentage of Shareholders Shares Percentage of Shares

1-100 shares 710 17,89% 31 492 0,01%101-1.000 shares 1 143 28,80% 590 473 0,09%1.001-10.000 shares 1 517 38,22% 6 404 830 0,98%10.001-100.000 shares 506 12,75% 15 949 084 2,45%100.001-1.000.000 shares 68 1,71% 18 873 186 2,90%More than 1.000.000 shares 25 0,63% 609 173 681 93,57%Total (* 3 969 100,00% 651 022 746 100,00%

SHARE HOLDINGS AND OPTION RIGHTS OF THE MANAGEMENTOwnerhip 2018 Percentage of Shares Ownership 2017

Shareholdings of the CEO and Board of Directors 519 494 819 79,80% 451 177 932Option rights of the CEO and Board of Directors 1 500 000 0,23% 331 470

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (IFRS)

1000 EUR Notes 1.1.-31.12.2018 1.1.-31.12.2017

Turnover 2,4 24 737 20 000

Other operating income 5 155 85

Materials and services 6 -2 274 -2 369Employee benefit costs 7 -19 641 -15 424Depreciation and amortisation 9 -1 588 -914Other operating expenses 10 -7 821 -6 277

Total expenses -31 324 -24 984

Operating profit -6 432 -4 898

Financial income 734 281Financial expenses -1 364 -2 555Total financial income and expenses 11 -631 -2 274

Profit before tax -7 063 -7 173

Income tax 12 235 231

Profit for the Period -6 828 -6 942Attributable to

Equity holders of the parent -6 828 -6 942

25 -0,01 -0,0225 651 022 746 553 824 346

25 -0,01 -0,02Number of shares, adjusted for dilution and issues, on 31 December 25 651 022 746 553 824 346

STATEMENT OF COMPREHENSIVE INCOME (IFRS)

1000 EUR 1.1.-31.12.2018 1.1.-31.12.2017

Profit for the period -6 828 -6 942

Other comprehensive income Change in translation difference -345 477

Comprehensive income for the period -7 173 -6 465

Comprehensive income attributable toEquity holders of the parent -7 173 -6 465

Earnings per share, undiluted, EUR

Earnings per share, diluted, EUR

Number of shares, undiluted, on 31 December

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION (IFRS)

EUR 1000 Notes 31/12/18 31/12/17

ASSETS

Non-current assetsGoodwill 13 18 059 12 755Other intangible assets 13 5 209 5 024Tangible assets 14 553 401Other investments 14 2 7Advance payments and construction in progress 14 73 0Accounts receivable 4,16 0 41

Total non-current assets 23 896 18 227

Current assetsTrade receivables 4,16 7 209 4 628Other receivables 16 802 806Cash and cash equivalents 17 314 1 365

Total current assets 8 326 6 799

TOTAL ASSETS 32 222 25 027

EUR 1000 Note 31/12/18 31/12/17

EQUITY AND LIABILITIES

Shareholders’ equityEquity attributable to equity holders of the parent

Share capital 18 585 585Share premium reserve 18 219 219Invested non-restricted equity fund 18 73 186 64 457Retained earnings -60 134 -52 846Result for the period -6 828 -6 942

Total equity attributable to equity holders of the parent 7 027 5 473

Total equity 7 027 5 473

Non-current liabilitiesFinancial liabilities 20,21 11 664 6 423Deferred tax liabilities 15,20 982 1 051

Total of non-current liabilities 12 646 7 474

Current liabilitiesTrade payables 22 1 861 1 630Current financial liabilities 20,21,22 4 620 5 060Tax liabilities based on taxable income for the financial year 22 -14 110Other liabilities 22 6 083 5 279

Total current liabilities 12 549 12 080

TOTAL EQUITY AND LIABILITIES 32 222 25 027

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CONSOLIDATED STATEMENT OF CASH FLOWS

EUR 1000 Note 1.1.-31.12.2018 1.1.-31.12.2017

Cash flow from operating activitiesProfit for the period -6 828 -6 942Adjustment to cash flow from operating activitiesIncome taxes 12 -235 -231Other income and expenses, no cash transactions 0Depreciation and amortisation 9 1 587 914Other adjustments 165 2 274Financial income and expenses 11 631 2 100Net cash generated before working capital changes, interests and tax -4 680 -1 884

Change in working capital 23 -1 343 -2 936Interest received 11 16 5Interest paid 11 -341 -748Income taxes paid 12 -27 -69Net cash flow from operating activities -6 375 -5 632

Cash flow from investing activitiesTransactions for business 0

Acquisition of subsidiaries, net of cash acquired 3 198 662

13,14 -848 -213Käypään arvoon tulosvaikutteisesti kirjattavien rahoitusvarojen myynti 0 0Net cash flow from investing activities -650 449

Cash flow before financing -7 026 -5 184

Cash flow from financing activitiesIncrease in long-term borrowings 20,21 3 827 6 265Increase in short-term borrowings 21 4 400 2 001Repayment of short-term borrowings 21 -2 550 -2 300Expenses for equity procurement -19 -44Proceeds from rights issues 400 300Financial lease payments -84 -94Net cash flow from financing activities 5 974 6 127

Change in cash and cash equivalents -1 052 944

Cash and cash equivalents at the beginning of the period 17 1 366 422Cash and cash equivalents at the end of the period 17 314 1 366

Investment in property, plant and equipment and intangible assets

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

EUR 1000 Share

capitalShare premium

reserve

Invested non-restricted

equity fundTranslation

differenceRetained earnings Total

Non-controlling

interest Total equity

Shareholders’ equity at 1 January 2017 585 219 47 191 280 -52 475 -4 199 0 -4 199Other changes 0 0 0Comprehensive income for the period -6 942 -6 942 -6 942Translation difference 477 477 477Total comprehensive income for the period -6 465 -6 465

Transactions with shareholdersEquity part of the convertible bond -1 300 -1 300 -1 300Conversion of the convertible bond 9 200 9 200 9 200Rights issue 8 110 8 110 8 110Expenses for equity procurement -44 -44 -44 Share-based remuneration 172 172 172

7Shareholders’ equity at 31 December 2017 219 64 457 757 -60 545 5 473 0 5 473

EUR 1000 Share

capitalShare premium

reserve

Invested non-restricted

equity fundTranslation

differenceRetained earnings Total

Non-controlling

interest Total equity

Shareholders’ equity at 1 January 2018 585 219 64 457 757 -60 545 5 473 0 5 473Other changes 0 -2 -2 0 -2Comprehensive income for the period -6 828 -6 828 -6 828Translation difference -345 -345 -345Total comprehensive income for the period -7 173 -7 173

Transactions with shareholdersRights issue 2 000 2 000 2 000Share issue 6 748 6 748 6 748Expenses for equity procurement -19 -19 -19 Share-based remuneration 0 0 0

Shareholders’ equity at 31 December 2018 219 73 186 412 -67 375 7 027 0 7 027

585

585

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1. ACCOUNTING POLICIES FOR THE CONSOLIDATED FINANCIAL STATEMENTS

Basic information on the Group

Digitalist Group Plc is a Finnish public limited company, founded in accordance with the laws of Finland, with domicile in Helsinki. Shares of the parent company Digitalist Group Plc have been listed at NASDAQ OMX Helsinki since 1999.

The consolidated financial statements are available at the Internet address www.digitalist.global and in the head office of the Group’s parent company at the address Arkadiankatu 2, Helsinki.

Digitalist Group is a creative technology company. It seeks, plans, designs and implements functional user experience and durable software solutions which are based on Internet, cloud or mobile technologies. Our customers include leading companies from all over the world. We design comprehensive digital solutions for our customers which increase their competitiveness and productivity and bring them added value and customer loyalty.

We are researchers, designers, engineers and strategists from Finland, Sweden, Great Britain Canada and the United States

Approval of the Board of Directors

The Board of Directors has approved the financial statements to be published on 28 February 2019. According to the Finnish Limited Liability Companies Act, shareholders have the opportunity to approve or reject the financial statements at the Annual General Meeting held after their publication. The Annual General Meeting also has the right to make a decision to change the financial statements.

Basis of preparation

The consolidated financial statements of Digitalist Group have been prepared in accordance with International Financial Reporting Standards (IFRS), observing the IAS and IFRS standards in force at 31 December 2018, and the SIC and IFRIC interpretations. International standards refer to standards and interpretations of standards, approved by the Finnish Accounting Act and the statutes based on it, for application in the EU in accordance with the procedure laid down by the EU regulation (EC) No. 1606/2002. Notes to the consolidated financial statements also comply with the Finnish provisions of the accounting and corporate legislation supplementing the IFRS regulations.

Going concern

These financial statements have been prepared in line with the principle of going concern, taking into account the financing arrangements executed by the company in the 2018 financial period and the business forecast for 2019. The forecasts take into consideration probable or foreseeable changes in future expectations for revenues and costs.

At the time of the publication of the financial statements, the company estimates that its net working capital will be sufficient for the needs of the following 12 months.

The accounting data of the Group are presented with an accuracy of a thousand euro and the accounting data of the parent company with an accuracy of one euro, unless stated otherwise. The figures are based on the original acquisition costs, with the exception of financial assets recorded at fair value in profit or loss.

New and amended standards applied during the completed financial period

From the start of 2018, Digitalist Group has observed the following new and amended standards currently in force:

IFRS 9, Financial Instruments

IFRS 9 has replaced the previous IAS 39 standard. The new standard contains revised guidelines on the recognition and valuation of financial assets, and also covers a new model of accounting for expected credit losses applied for determining the impairment of financial assets. The rules on general hedge accounting have also been revised. IAS 39 rules on the recognition and derecognition of financial instruments in the balance sheet have been preserved. This standard has not had an effect on the values of the receivables or notes in 2018 and 2017.

IFRS 15, Revenue from Contracts with Customers

The new standard has replaced the previous IAS 18 and IAS 11 standards and the interpretations relating to them. IFRS 15 includes five-step principles on recognition of sales revenues: to which amount and at what time the sales revenues shall be recognised. The sales shall be recognised on the basis of the transfer of control either over a period of time or at a point in time. The standard has increased the number of notes to be presented. The Group has used the cumulative effect method of it’s IFRS 15 transition.

17

Amendments to IFRS 2 – Classification and Measurement of Share-based Payment Transactions

The amendments clarify the accounting for certain types of arrangements. Three accounting areas are covered: recognition of transactions settled in cash; share-based payments settled net of tax withholdings; and modifications of share-based payment transactions from cash-settled to equity-settled. This standard has not had an effect on the values of the share-based payment transactions in 2018 and 2017

New and amended standards and interpretations to be applied in future accounting periods

Digitalist Group has not yet applied the following new or revised standards and interpretations which IASB has already published. The Group will introduce them from the effective date of each standard or interpretation, or, if the effective date is some other than the first day of the accounting period, from the start of the next accounting period following the effective date.

* = The said regulation has not been approved for application in the EU on 31 December 2018.

IFRS 16 Leases (effective for periods beginning on or after 1 January 2019)

The new standard replaces the IAS 17 standard and the interpretations relating to it. The IFRS 16 standard requires that the lessees record the lease agreement in the balance sheet as a lease payment obligation and a property item relating to it. Recognition in the balance sheet is very similar to accounting of financial leasing according to IAS 17. There are two allowances to the recognition in the balance sheet which concern short-term lease agreements concluded for a maximum of 12 months, and goods whose value is approximately USD 5,000 at the most. Accounting by lessors will largely remain in accordance with the current IAS 17.

On 1 January 2019, Digitalist Group Plc introduced the IFRS 16 standard on leases. The most notable effect is that Digitalist records new assets and debts in the balance sheet that are mainly premises contained in existing other lease agreements. In addition, the nature of the costs associated with the lease agreements in question is changing as IFRS 16 replaces rental cost with depreciation of the access right asset and with the interest expense arising from the lease agreement debt, reported as part of financial costs. Digitalist Group will adopt the standard with a cumulative catch-up transition method, without restating prior periods. The impact of the change on the balance sheet on 1 January 2019 is roughly EUR 3.6 million.

The following new amended standards and interpretations are not estimated to have an effect to the Digitalist Group.

IFRIC 23 Uncertainty over Income Tax Treatments (effective for periods beginning on or after 1 January 2019)

The interpretation clarifies the accounting in a situation where the tax treatment of an entity awaits the approval of the tax authorities. It is essential to assess whether the tax authority will approve the decision made by the entity. In judging this, it is assumed that the tax authority has access to all relevant information when estimating the decision.

Amendments to IFRS 9 Prepayment Features with Negative Compensation Treatments (effective for periods beginning on or after 1 January 2019)

The amendments enable the measurement of some prepayable financial instruments with so-called negative compensation at amortised cost.

Annual Improvements to IFRS standards (2015‒2017 cycle)* (effective for periods beginning on or after 1 January 2019)

The annual improvements process provides a mechanism for dealing efficiently with a collection of minor non-urgent amendments to IFRSs. The amendments relate to the IFRS 3, IFRS 11, IAS 12 and IAS 23 standards.

Amendments to References to the Conceptual Framework in IFRS Standards* (effective for periods beginning on or after 1 January 2020)

The amended framework sets out the fundamental concepts of financial reporting used by IASB in the standards introduced in recent years. The conceptual framework mainly serves the Board as a tool in developing standards and supports the IFRS Interpretations Committee in its interpretations. The framework does not annul the requirements of individual IFRS standards.

Amendments to IFRS 3 Definition of a Business* (effective for periods beginning on or after 1 January 2020)

The amendments narrowed and clarified the definition of a business. They also allow making a simplified evaluation of whether a company has acquired a group of assets, rather than a business.

Amendments to IAS 1 and IAS 8 Definition of Material* (effective for periods beginning on or after 1 January 2020)

The amendments clarify the definition of ‘material’ and contain guidance on the coherent application of the concept in all IFRS standards. The explanations relating to the definition have also been improved.

18

Consolidation principles

The consolidated financial statements include the parent company Digitalist Group Plc and all subsidiaries in which the parent company directly or indirectly holds more than 50 per cent of the votes or which it otherwise controls.

Mutual share ownership between Group companies has been eliminated through the acquisition method. Acquired subsidiaries are integrated in the consolidated financial statements from the moment the Group obtains control and all released subsidiaries until the control ends. All transactions, receivables, liabilities and unrealised profits within the Group as well as internal profit distribution are eliminated when preparing the consolidated financial statements. The assets and liabilities of the acquired company are appreciated to their fair values at the time of purchase, and the remaining part of the difference of the purchase price and the net assets is goodwill.

Changes in group structure

In the accounting period 2018, the company acquired the entire share capital of Grow Holding Ab and Grow Nine Ab in May. Interquest Oy and Cresense Oy merged with Digitalist Finland Oy in December 2018.

In the accounting period 2017, the company acquired the entire share capital of Interquest Oy in March; in April the company purchased Rome Advisor Oy’s #Digitalist business operations, and in August the company purchased the entire share capital of NodeOne AB, the parent company of Wunderkraut Sweden AB.

Segment reporting

Digitalist Group reports its business operations in a single segment.

Foreign currency items

The figures concerning the result and financial position of the units of the Group are determined in the currency of the main operating environment of each unit (“functional currency”). The consolidated financial statements are presented in euros, which is the functional and presentation currency of the parent company of the Group.

Foreign currency transactions are recorded in the functional currency using the exchange rate prevailing on the transaction dates. Monetary items in foreign currencies are translated into the functional currency using the exchange rates prevailing on the closing date. Non-monetary items that are denominated in a foreign currency and measured at fair value are translated into the functional currency using the exchange rates prevailing on the measurement date. Other non-monetary items are measured at the exchange rate prevailing on the transaction date.

Gains and losses resulting from transactions in a foreign currency and from the translation of monetary items are recognized as financial items in the income statement. Foreign exchange gains and losses related to business operations are included in the corresponding items above the operating profit.

The profit and loss items in the income statements of the foreign Group companies have been translated to euros using the average rate for the current month, and the balance sheets using the rates of the closing date. Changing the profit of the financial period and the extensive result with various exchange rates in the statement of income, in the statement of comprehensive income, and the balance sheet causes a translation difference to the equity, which is recognized in the other comprehensive income items.

Goodwill

Goodwill equals any excess of the cost of the acquisition which exceeds the Group’s share of the net fair value, at the time of acquisition, of identifiable assets, liabilities and conditional liabilities of companies acquired.

Goodwill is allocated to cash generating units and is not subject to depreciation. Goodwill is tested for impairment quarterly and whenever an event or a change in circumstances indicates that a carrying amount may not be recoverable.

Other intangible assets

Intangible assets acquired through a business combination are capitalized at their fair value at the time of acquisition. Intangible assets deriving from an integration of Group operations pertain to customer relationships and contracts with known useful lives.

Other intangible assets are recognized initially in the acquisition cost of the balance sheet in case the acquisition cost can be defined reliably and it is likely that benefit from the asset item will benefit the Group.

An intangible asset with a limited useful life is recorded as a depreciation expense using the straight-line method through profit and loss during its known or estimated useful life.

19

The group does not have other intangible assets with unlimited useful life.

R&D costs

Research costs are recorded as expenses in the income statement. Development costs arising from the design of new or more advanced products are capitalized as intangible assets when the product is technically feasible, can be exploited commercially and is expected to bring future financial benefits that cover those development costs. Intangible assets are measured at cost less depreciation and impairment losses. The useful lives of capitalized development expenses are 3-4 years, during which time the capitalized expenses are entered as depreciation costs using the straight-line method.

Development expenditure which has been recognised as an expense in previous financial statements will not be capitalized later.

Property, plant and equipment

Machinery and equipment form major part of the company’s tangible assets. They have been measured in the balance sheet at the initial recognition less accrued depreciation and any impairment. Gains or losses from the sales or transfer of tangible assets are entered into the income statement.

The Group’s depreciation methods:

Intangible assets acquired through business combinations 3 - 10 years straight-line Intangible rights 3 - 4 years straight-line Internally generated intangible assets 3 - 4 years straight-line Other tangible assets 3 - 5 years straight-line

Machinery and equipment 3 - 5 years straight-line

Machinery acquired through financial leasing 3 - 5 years straight-line Intangible assets acquired through financial leasing 3 - 5 years straight-line

Government grants

Government grants are entered as a reduction of the carrying amount of other intangible assets when it is fairly certain that the grants will be received and that the Group meets the conditions attached to them. The grants are recognized in the income statement as lower depreciation on the respective asset during its useful life. Grants received as compensation for costs already realized are recorded through profit and loss for the period during which the right to the grant arises. Such grants are recorded in other operating income or netting expenses. The amount of the government grants is presented in note 5.

Impairment of tangible and intangible assets

On each closing date, the Group assesses whether there are indications that any asset has been impaired. If such indications exist, the recoverable amount of the asset is assessed. In addition, the recoverable amount is assessed annually and quarterly of goodwill, regardless of whether there are indications of impairment. The impairment tests are performed for a cash generating unit.

The recoverable amount is either the fair value of the asset less costs to sell or its value in use, whichever is higher. The value in use is defined as the projected future net cash flow for the asset or the cash generating unit, discounted to its present value. The discount rate used is a pre-tax rate that reflects current market assessments of the time value of money as well as of the risks specific to the asset.

An impairment loss is recognized if the balance sheet value of an asset exceeds the recoverable amount for the asset. Losses from impairment are entered into the income statement. When an impairment loss is entered, the useful life of the depreciated asset is re-estimated. Any other depreciation loss recognized from any other property item than goodwill is cancelled in the case that there has been a change in those estimates that were used when defining the cash amount from the asset item. However, such a reversal will not exceed the carrying amount that would prevail if no impairment loss had been recognized. An impairment loss entered for goodwill is never reversed.

Leases

A lease of property, plant and equipment where a substantial part of the risks and rewards of ownership lies with the Group is classified as a finance lease. Assets acquired through finance leases are recorded in the balance sheet when the lease period begins, either at the fair value of the asset or at the lower present value of the minimum lease payments. Assets acquired

20

through finance leases are depreciated over their useful lives or a shorter lease term. Leases to be paid are divided into financial cost and a decrease in debt during the lease term so that the interest rate on the remaining debt is the same each financial period.

Leases in which the risks and rewards of ownership remain with the lessor are treated as other leases. Rent paid under other leases is recognized as an expense in the income statement in equal amounts over the term of the lease.

Financial assets and liabilities

The Group has classified its financial assets into the following categories: financial assets recorded at fair value through profit and loss, loans and other receivables, and financial assets that can be sold. The classification, which is performed at the time of the original acquisition, is based on the purpose of acquiring the financial asset.

Financial assets are initially recorded at fair value. Transaction costs are included in the original carrying amount of the financial assets when the item is not measured at fair value through profit and loss. All purchases and sales of financing assets are recognized on the date of trade.

Financial assets are derecognized when the Group has lost its contractual right to the cash flow or transferred a substantial part of the risks and rewards outside the Group. More on the definition of the fair value of financing assets and liabilities in note 24.

Financial assets and liabilities recorded at fair value through profit and loss

After initial recognition, loans and receivables are measured at amortized cost using the effective interest rate method. Financial assets whose business model’s objective is to hold financial assets to maturity in order to collect contractual cash flows are classified as financial assets measured at amortized cost. The cash flows of these assets consist solely of payments of principal and interest on the principal amounts outstanding. They are presented on the balance sheet as current asset and non-current assets.

Trade and other receivables and other investments are included in this group. Trade receivables are initially recognized at original value. The Group recognizes an allowance for expected credit losses for financial assets recognized at amortized cost. Expected credit losses are recognized under other operating expenses in the statement of profit or loss.

An impairment loss is recognised if there is objective evidence of impairment of a financial asset. An objective evidence of impairment of a receivable are the customer's remarkable financial difficulties, probability of bankruptcy, default or a delay in payment. Impairment losses are expensed under other operating expenses in the statement of profit or loss.

Loans and other receivables

After their initial recording, loans and other receivables are measured at amortized cost using the effective interest rate method. Loans and other receivables are items with which fixed and definable payments are associated. They are included in current and noncurrent assets.

This category includes sales and other receivables. Trade receivables are recorded at their original value. The Group estimates the number of receivables in each financial statement and records an impairment if there is objective evidence that individual items have been impaired.

Such evidence includes the debtor’s considerable financial problems, high probability of bankruptcy and defaulted or significantly overdue payments.

Impairment is recognized as an expense in the income statement.

Cash and cash equivalents

Cash and cash equivalents comprise cash as well as bank deposits payable on demand.

Financial liabilities

Financial liabilities are initially recognised at the original value corresponding to the consideration received. Transaction costs are included in the original carrying amount of the financial liability. Non-derivative financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Financial liabilities are included in the non-current and current liabilities. Borrowing costs are recorded as interest expense for the period during which they are incurred.

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Pension plans

The Group currently uses defined contribution pension plans only. The payments for these plans are expensed in the income statement for the period during which they occur.

The Group has no legal or constructive obligation to make additional contributions should the recipient of the contributions be unable to pay the relevant retirement benefits.

Share-based payments

The Group operates incentive schemes in which payments are made as equity instruments. Any benefits admitted in the arrangements will be appreciated to a current value at the moment of their admission and recognised as cost in the financial statement evenly during the generation period. The impact of these arrangements on the financial results is shown in the income statement under employee benefit costs.

The cost determined at the time of granting options is based on the estimate of the Group of the amount of options that are expected to be vested at the end of the investing period. The Group updates its assumption of the final amount of options on each closing date. Changes in the estimates are recorded in the income statement. The fair value of the option arrangements is determined according to the Black–Scholes option pricing model.

When options are exercised, the proceeds are recognised in shareholders’ equity, net of any transaction costs. The proceeds from exercise of options granted have been recognised in the share capital and in the share premium reserve, in accordance with the terms of the option plan.

Income taxes

The tax expense in the consolidated income statement consists of performance-based tax corresponding to the result of Group companies for the period and based on the taxable income recognised by each Group company according to local tax regulations as well as of tax adjustments for previous periods and of changes in deferred tax.

Deferred tax is recognised for all temporary differences between carrying amounts and taxable values. However, a deferred tax liability is not recorded if it arises from initial recognition of an asset or liability in a transaction other than a business combination, and this recognition does not affect the accounting result or the taxable income at the time of carrying out the transaction. Deferred tax is not recognised for goodwill that is not tax-deductible. Deferred tax on retained earnings of subsidiaries is not recognised for the portion of the difference that is not estimated to dissolve during the foreseeable future.

Deferred tax is determined using the tax rates enacted by the closing date.

Deferred tax assets are recognised to the extent that future taxable profit against which the temporary differences can be utilised is likely to become available.

Equity, dividends and treasury shares

The proposal of the Board of Directors on dividend distribution is not recorded in the financial statements since dividends are recognised based on the decision of the Annual General Meeting.

In purchasing Digitalist Group Plc’s own shares, the amount paid for them will be recognised as deduction from equity.

Turnover and revenue recognition

Turnover includes income from services provided. It is measured at the fair value of the consideration received, and it is corrected for indirect taxes as well as for discounts. Turnover consists fully of service production. The revenues from services are entered as income for the financial period when the service is provided.

If the final result of a long-term project can be evaluated reliably, any income and costs from the project are recognised as income and costs during the project. The Group uses an income entry method according to the production degree for defining the income and costs of each period. The stage of completion for a specific contract is defined as the percentage of completed working hours at the time of review in proportion to the estimated total working hours. If the total expenses for a contract are likely to exceed the total income from the contract, the expected loss is expensed immediately.

Interest and dividend income

Interest income is recorded using the effective interest rate method. Dividend income is recorded when the right to receive dividend is established.

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Other operating income

Other operating income includes gains from the sale of assets and other income unrelated to the sales of services, such as government grants.

Accounting policies requiring consideration by management and main factors of uncertainty related to estimates

Preparing the financial statements requires estimates and assumptions from the management of the company that affect the amounts of assets, liabilities, income and expenses recorded in the financial statements as well as the amount of contingent assets and liabilities presented in the accompanying notes. Although these estimates are based on the best judgment of the management of current events and actions, actual results may differ from estimates.

The management of the Group exercises judgment in selecting and applying accounting policies. This particularly concerns cases in which the IFRS norms in force provide mutually alternative recording, measurement or presentation methods. The major estimates and assumptions in the context of the financial statements are related to impairment testing, use of deferred taxes, definition of allocation and depreciation times of acquisitions, and capitalisation of development costs.

Uncertainties related to estimates

The estimates made when preparing the financial statements are based on the best estimates of the management at that time. Previous experience and such assumptions regarding the future as are considered the most probable at the time of preparing the financial statements are applied. These assumptions relate to, among others, the expected development of the economic operating environment of the Group in terms of sales and cost-level. The Group and its business units regularly use various internal and external information sources to monitor the realisation of the estimates and assumptions as well as any changes in background factors. Changes in estimates and assumptions are entered into the accounts for the period during which they are adjusted and for all subsequent periods.

Such critical estimates of the future, as well as essential uncertainty factors related to estimates on the closing date, as pose a significant risk of substantial changes in the carrying amounts of the assets and liabilities of the Group within the next financial period are disclosed below. The management of the Group has considered these portions of the financial statements the most central ones, as their related accounting policies are the most complex from the viewpoint of the Group and as applying them requires the most use of estimates and assumptions, such as when measuring asset items. These areas of the financial statements are also the ones in which any changes in the assumptions and estimates used are assumed to have the greatest impact.

Impairment testing

The Group tests goodwill and intangible assets quarterly for potential impairment. Any indicators of impairment are evaluated according to the above accounting policies. The recoverable amounts for the cash generating units have been defined using calculations based on value in use. These calculations require the use of estimates. Further information on impairment testing is presented in note 13.

Purchase price allocations and definition of depreciation time

Tangible assets will be depreciated over their useful life according to the estimate of the management, taking into account the depreciation principles observed within the Group. Intangible assets arising from business combinations are recognised separately from goodwill at fair value at the time of acquisition if they are identifiable. In connection with acquired business operations, the Group has mostly acquired technology, backlog and customer relationships.

Capitalisation of development costs

The Group recognises the product development costs that meet the activation requirements. The management estimates the fulfilment of the activation criteria and the progress of product development projects regularly.

Deferred tax assets recognised for losses

Due to tax losses there are no deferred tax assets included in the balance sheet.

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2. SEGMENT INFORMATION

one operational and reporting segment.During the period, the share of one customer was 12.1 per cent of the turnover.

Geographical information

The Group operates in two geographical areas, which are Europe and North America.

the geographical areas are presented according to the location of the assets. Proceeds from sales to external customers are determined according to IFRS.

2018 Turnover Non-current assetsEUR 1 000Europe 18 911 23 752 of which Finland 7 777 13 762USA 5 339 144Other countries 488 0Group total 24 737 23 896

2017 Turnover Non-current assetsEUR 1 000 Europe 16 475 18 198 of which Finland 12 153 13 768USA 3 126 70Other countries 399 0Group total 20 000 18 268

The highest operative decision-maker is the Board of Directors, to which business operations are reported in

During the period, the share of related parties was 12.8 per cent of the turnover.

3. ACQUIRED BUSINESS OPERATIONS

Accounting period 2018In May 2018, Digitalist Group concluded an agreement, whereby all shares in the Swedish Grow Holding AB and 51.9% of the Swedish Grow Nine AB transferred by exchange of shares to the ownership of Digitalist Group. Grow Holding AB owns 48.1% of Grow Nine AB’s shares. As compensation in the Transaction, Digitalist Group provided a total of 74,976,178 new shares in the Company in a special issue to be subscribed to by the owners of Grow Holding AB and the minority owners of Grow Nine AB. The subscription price for the shares in the shares issue was EUR 0.09 apiece. Thus, the total price of the acquisition was MEUR 6,747,856.02. The transaction was carried out on 31 May 2018.

The Compensation Shares represent roughly 11.52% of the shares and votes in Digitalist Group following the Share Issue. The Compensation Shares entitle their owners to any full dividends possibly distributed by Digitalist Group and to any other distribution of assets, and provide full shareholder rights in the Company from the point the Compensation Shares are recorded in the trade register and in the company’s list of shareholders. According to a separate agreement, the Compensation Shares are subject to a lock-up period between twelve (12) months and three (3) years from their issue.

Through the arrangement, Digitalist Group expands its Swedish operations and strengthens its ability to shape and deliver comprehensive innovation, design and technology solutions. Grow is a Swedish company, which has, from 2004, supported the growth of its client companies by offering strategic, design and communications services both in Sweden and globally. Through the acquisition, Digitalist Group received approximately 50 experts. Together Digitalist Group and Grow form a creative international design and technology company.

Turnover for the geographical regions is presented according to the location of the customers, and the assets for

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PURCHASE PRICE ALLOCATION

Current value of total consideration 6 748

Current values of acquired assets and debts taken on at the time of purchase

Intangible assets 6 424Tangible assets 136Backlog 272Receivables 1 505Cash and bank deposits 198Total assets 8 535

Accounts payable and other debts 1 547Calculated tax debt 240Total debt 1 787

Total acquired net assets 6 749

Goodwill 5 333

Impact of acquisition on cash flow

Total consideration paid 6 748Share of consideration consisting of cash assets 0Acquired cash assets 198Impact of acquisition on cash flow 198

Allocated sum 6 749Order book 1 091Goodwill 5 333

If the acquisition had been carried out in 2017, the impact of the Grow companies on turnover would have been roughly EUR 5.5 million and the impact on the result for the period EUR -0.3 million.

Accounting period 2017

In March 2017, the Company signed an agreement to purchase the total share capital of Interquest Oy. The transaction was finalised during the second quarter. Through the acquisition, the Group reinforces its global position as the leading comprehensive producer of digital transformation services and launches an even wider, deeper and faster global service. Following the transaction, the Group became the major Nordic “User Insight” company to govern the modern service experience research.

In the arrangement, the total share capital of Interquest Oy, excluding the shares owned by the company itself, transferred to the ownership of the Digitalist Group. As compensation, Digitalist Group issued a total of 12,012,990 new Digitalist Group shares in a directed share issue to be subscribed by the present owners of Interquest (”Sellers”). The share issue was carried out by decision of the Board of Directors of the Digitalist Group, in deviation from the shareholders’ pre-emptive right, on the authorization of the Annual General Meeting of 7 April 2016. The share issue will entitle to full dividends and other distribution of assets possibly distributed by the Digitalist Group and provide other shareholder rights in the Company starting from when the the shares have been entered in the Trade Register and the shareholders’ register of the company. Some of the shares of Ville Österlund, who continues to work for the Company, are subject to a lock-up period of six (6) months – two (2) years starting from the date of issue.

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Current value of total consideration 1 381

Current values of acquired assets and debts taken on at the time of purchase

Intangible assets 1 323Tangible assets 3Receivables 128Income tax assets 23Cash and bank deposits 294Total assets 1 770

Long-term loans from financial institutions 80Accounts payable and other debts 309Calculated tax debt 263Total liabilities 651

Total of net assets acquired 1 119

Goodwill 263

Effect of acquisition on cash flow

Total consideration paid 1 381Share of consideration consisting of cash assets 0Acquired cash assets 294Impact of acquisition on cash flow 294

Allocated sum 1 313Intangible rights 525Order book 788Goodwill 263

In April 2017, the Company acquired the business of the Finnish Rome Advisors Oy:n #Digitalist and the associated assets and rights. The corporate transaction fortifies the Company strategy and the new company will spearhead the implementation of digitalisation in the different sectors.

The Digitalist Group has paid the acquisition price through a directed share issues (”Share Issue 1”), in which it issued a total of 2,677,074 new shares of the Digitalist Group to be subscribed by Rome Advisors Oy. Furthermore, when the acquisition was carried out, Digitalist issued a total of 2,294,635 new Digitalist group shares to be subscribed by Rome Advisors Oy (”Share”) in a separate directed issues independent of the acquisition, to be paid in cash (”Share Issue 2”). Share issue 1 and share issue 2 (together ”Share Issues”) were carried out by decision of the Board of Directors of the Digitalist Group, in in deviation from the shareholders' pre-emptive right, on the authorization of the Annual General Meeting of the Digitalist Group on 29 March 2017. Both shares entitle to full dividends and other assets possibly distributed by the Digitalist Group and produce other shareholder rights in the Company starting from when the shares have been entered in the Trade Register and the shareholders’ register of the Company. The shares are subject to a lock-up period of one (1) year – two (2) years starting from the date of issue.

In August 2017, the Company expanded its operations into Sweden and significantly fortified the R&D of its webpages by purchasing the entire share capital of the parent company of Wunderkraut Sweden AB, NodeOne Group AB. The Digitalist Group launches into the Swedish market its full ”Discover – Design – Deliver” supply, through which customers can purchase all their digitalisation services from one platform. Wunderkraut Sweden has a firm reputation as the leading company in digital and webpage design in Sweden and its customer satisfaction index is on a very high level, with its world-class team having constant bookings and projects.

As compensation, the Digitalist Group issued a total of 37,500,500 new Digitalist Groupin shares ("Compensation Shares") in a directed share issue (^"Share issue") to subscribed by the owners of Node Group AB ("Sellers"). The Share Issue was carried out by decision of the Board of Directors of the Digitalist Group, in deviation from the shareholders' pre-emptive right, on the authorization of the Annual General Meeting of the Digitalist Group on 29 March 2017. The Compensation Shares entitle to full dividends and other distribution of assets possibly distributed by the Digitalist Group and provide other shareholder rights in the Company from when the Compensation Shares have been entered into the Trade Register and the shareholders’ register of the company. Of the shares, 60 per cent are subject to a lock-up period of (12) months – three (3) years starting from the date of issue, according to what is separately agreed.

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Current value of total consideration 4 371

Current values of acquired assets and debts taken onat the time of purchase

Intangible assets 3 910Receivables 544Cash and bank deposits 368Total assets 4 822

Trade payables and other debts 500Deferred tax debt 860Total liabilities 1 360

Total of net assets acquired 3 462

Goodwill 910

Impact of acquisition on cash flow

Total consideration paid 4 371Share of consideration consisting of cash assets 0Acquired cash assets 368Effect of acquisition on cash flow 368

Allocated sum 3 910Non-competition agreement 72Order book 3 838Goodwill 910

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4. TURNOVER

The following table decribes the amount of sales receivables and contract receivables and liabilities at the end of the accounting period.

2018 2017Turnover from service fees 24 737 20 000 Customer contracts recognised over time 24 124 19 821 Customer contracts recognised based on percentage of completion 613 179

2018 2017Sales receivables 7 209 4 628 Customer contract assets 284 122 Customer contract liabilities 379 60

Group's Customer contract assets consist of non-billed receivables from customers on the reporting date. Contract assets are transfered to sales receivables when there is a definitive right to the asset.Customer contract liabilities consist mainly of received advanced payments.Additional information in Note 16.

Customer contract liabilities at the end of reporting period that will be fullfilled during the next year totalled 379 (2017: 60)

5. OTHER OPERATING INCOME

2018 2017Gains on sales of fixed assets 8 0Government grants 2 28Other items 144 57Total 155 85

The Group has received government grants in total of EUR 2 thousand during the period 2017 (2016: EUR 28 thousand). Government grants are mainly channelled to product development. Part of the grants have been recorded to profit and loss as expense reduction, mainly to personnel expenses.

6. MATERIALS AND SERVICES

0 2017Materials -757 -464Services -1 517 -1 905Total -2 274 -2 369

7. EMPLOYEE BENEFIT EXPENSES

0 2017Salaries and remuneration of the CEO and the Board of Directors -560 -462Option rights (CEO and the Board of Directors ) 0 -13Salaries and remuneration -15 453 -12 202Option rights 0 -159Total -16 013 -12 836

Defined contribution pension costs -1 895 -1 655Other personnel expenses -1 734 -933Personnel expenses in the income statement -19 641 -15 424

Related party transactions: Note 29.

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8. PERSONNEL

Employed on average 0 2017Experts 220 169Administrative and sales personnel 38 34Total 258 203- from which working outside of Finland 112 52

Employed at the end of the period 0 2017Experts 229 203Administrative and sales personnel 41 37Total 270 240- from which working outside of Finland 151 82

9. DEPRECIATION AND IMPAIRMENT

0 2017Depreciation and amortisation of intangible assests acquired in business combinations -1 303 -599Depreciation and amortisation of intangible assests -70 -190Depreciation and amortisation of property, plant and equipment -215 -125Total depreciation and impairment -1 588 -914

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10. OTHER OPERATING EXPENSES2018 2017

Employee-related expenses -834 -638Premises expenses -2 030 -1 366Machinery and equipment expenses -768 -623Travel expenses -740 -595Marketing and sales expenses -406 -408Credit losses -192 -235Other operating expenses -2 852 -2 411Total -7 821 -6 277

The income statement includes EUR 0 (2017: EUR 58 thousand) in expensed R&D costs.

Auditor's fees 2018 2017KPMG Oy Ab, PricewaterhouseCoopers Oy Audit fees -104 -73 Tax advice -30 -8 Other services -72 -83Total -206 -164Audit fees EUR 69 thousand and other services EUR 72 thousand are charged by KPMG Oy Ab

11. FINANCIAL INCOME AND EXPENSES

2018 2017Foreign exchange gains 329 12Other financial income 404 269 Total financial income 734 281

Interest expense for borrowings measured at amortised costs -732 -1 595Value changes in financial assests recoded at fair value through profit and loss- Derivative interest rate contracts -13 5Foreign exchange losses -563 -763Interest on financial leasing debt 0 -3Other financial expenses -56 -199Total financial expense -1 365 -2 555

Total financial income and expenses -631 -2 274

12. INCOME STATEMENT

Income tax in the income statament 2018 2017Tax for the period -47 -110Tax for the previous periods 4 0Deferred tax 278 341Total 235 231

Synchronization of the tax rate of the Group with Finland's tax rate2018 2017

Profit before tax -7 063 -7 173

Income tax according to Finland's tax rate 1 413 1 435Other non-deductible items -60 -958Tax for previous periods 4 0Different tax rate of foreign subsidiaries 42 233Unrecorded deferred tax assets from the losses -1 353 -477Other 189 -2Consolidated income tax 235 231

More information on deferred tax assets and liabilities as well as tax losses is presented in Note 15.

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13. INTANGIBLE ASSETS

Intangible assets in 2018 Goodwill

Internally generated intangible

assets

Other intangible

assets TotalAcquisition cost at 1 January 2018 35 547 4 519 21 255 61 321Additions 5 295 531 1 171 6 996Disposals and transfers 0 0 -12 -12Exchange rate changes 10 0 -145 -136Acquisition cost at 31 December 2018 40 851 5 050 22 269 68 169

Accumulated depreciation and impairment at 1 January 2018 -22 792 -4 516 -16 235 -43 543Depreciation for the period 0 -3 -1 367 -1 370Exchange rate changes 0 0 0 0Exchange rate changes 0 12 12Accumulated depreciation and impairment at 31 December 2018 -22 792 -4 519 -17 590 -44 901

Carrying amount at 1 January 2018 12 755 3 5 020 17 778

Carrying amount at 31 December 2018 18 059 531 4 678 23 268

Intangible assets in 2017 Goodwill

Internally generated intangible

assets

Other intangible

assets TotalAcquisition cost at 1 January 2017 34 335 4 539 15 707 54 581Additions 1 234 0 5 608 6 842Disposals and transfers 0 -20 20 0

Exchange rate changes -23 0 -80 -103Acquisition cost at 31 December 2017 35 547 4 519 21 255 61 321

Accumulated depreciation and impairment at 1 January 2017 -22 792 -4 398 -15 525 -42 716Depreciation for the period 0 -117 -672 -789Exchange rate changes 0 0 -38 -24Accumulated depreciation and impairment at 31 December 2017 -22 792 -4 516 -16 235 -43 543

Carrying amount at 1 January 2017 11 543 141 182 11 866

Carrying amount at 31 December 2017 12 755 3 5 020 17 778

Other intangible assets comprise intangible rights formed through corporate acquisitions and licence fees.

Goodwill impairment testing

Goodwill has been allocated to one cash generating unit (CGU).

The recoverable amount of a cash-generating unit is based on the value in use for the asset. Goodwill impairment is tested by comparing value in use to th ecarrying value. The cash-flow forecasts of the first year are based on economic forecasts approved by the Management Team. The current values of the forecasting periods for the three preceding years have been defined using the following assumptions based on the deliberations of the Management Team: in the impairment testing conducted on 31 December 2018, the forecasting period for the cash-flow forecast comprised of the forecast for years 2019 – 2022. In the forecast for 2019–2022, the expected growth is 17 per cent on the average, while digitalisation affects an increasing part of the business. In calculating the forecasted EBIT level, an average of six per cent was used.

Cash-flow forecasts are discounted by using the WACC before taxes. The discounting rate has been derived from the external assesment of the required return on equity as well as the cost of debt increased by risk speed. The discount rate used is 9 per cent.

The carrying amount of goodwill is EUR 18.1 million. The present value of the cash flows calculated, EUR 43.1 million, is lower than the sum of the company's financial liabilities (EUR 16.3 million) and the market price of the shares (EUR 30.6 million) at 31 December 2018. No need for goodwill impairment was recognised during the goodwill impairment testing on 31 December 2018 and 31.12.2017.

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Goodwill has been allocated to the following units:

One Digitalist

Group TotalGoodwill, 1 January 2018 12 755 12 755Impairment, Grow 5 304 5 304Goodwill, 31 December 2018 18 059 18 059

One Digitalist

Group TotalGoodwill, 1 January 2017 11 543 11 543Impairment, Interquest, #Digitalist, NodeOne 1 212 1 212Goodwill, 31 December 2017 12 755 12 755

Key assumptions used when testing goodwill 2018 2017Forecast period 4 4Annual growth in turnover 17% 12%Growth rate of cash flows after the forescast period 1% 1%Discount rate 9% 10%

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13. INTANGIBLE ASSETS (continues)

14. TANGIBLE ASSETS AND OTHER ASSETS

Tangible assets 2018

Machinery and

equipmentOther tangible

assetsOther

investments TotalAcquisition cost at 1 January 2018 11 334 109 7 11 450Additions 305 62 0 367Disposals and transfers 0 0 -5 -5Exchange rate changes 0 1 0 1Acquisition cost 31.12.2018 11 639 173 2 11 814

Accumulated depreciation at 1 January 2018 -11 011 -31 0 -11 042Depreciation for the period -185 -31 0 -216Exchange rate changes 0 0 0 0Accumulated depreciation at 31 December 2018 -11 197 -62 0 -11 259

Carrying amount at 1 January 2018 322 78 7 408

Carrying amount at 31 December 2018 442 111 2 555

Tangible assets 2017

Machinery and

equipmentOther tangible

assetsOther

investments TotalAcquisition cost at 1 January 2017 11 201 92 8 11 301Additions 168 24 0 192Disposals and transfers 0 0 -1 -1Exchange rate changes -36 -7 0 -42Acquisition cost at 31 December 2017 11 334 109 7 11 450

Accumulated depreciation at 1 January 2017 -10 936 -17 0 -10 953Depreciation for the period -109 -16 0 -125Exchange rate changes 33 2 0 35Accumulated depreciation at 31 December 2017 -11 011 -31 0 -11 042

Carrying amount at 1 January 2017 265 75 8 348

Carrying amount at 31 December 2017 322 78 7 408

Prepayments and acquisitions in progress 01/01/18 Software project 31/12/18Additions 0 73 73

The most sensitive factors in goodwill impairment testing in addition to the cash-flow forecast itself and the assumptions included in is the terminal growth rate and the discount rate. If the growth rate of -9.9 had been used instead of one per cent, the tested value would have been equal to the discounted cash flow. If the discount rate of 15.5 had been used instead of 9 per cent, the tested value would have been equal to the discounted cash flow. If the EBIT percentage was 1.1 per cent on average instead of 6 per cent, the tested value would be equal to the discounted cash flow.

The table below shows the limits within which the carrying value and value-in-use are equal.

Terminal growth rate Discount rate Average EBIT-9.9.0% 15.5% 1.1%

At 31 December 2018, value-in-use exceeds carrying value by EUR 19.3 million.

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15. DEFERRED TAX ASSETS AND LIABILITIES

Deferred tax assets 2018 01/01/18In the income

statementAcquired

businesses 31/12/18Intangible assets, measuring at fair value 1 049 -278 209 980Other items 2 0 0 2Total 1 051 -278 209 982

Deferred tax assets 2017 01/01/17In the income

statementAcquired

businesses 31/12/17Intangible assets, measuring at fair value 0 -115 1 164 1 049Other items 228 -226 0 2Total 228 -341 1 164 1 051

Confirmed loss Expires MEUR2009 2019 0,12010 2020 0,32011 2021 0,02012 2022 7,72013 2023 11,12014 2024 5,92015 2025 7,82016 2026 4,72017 2027 2,4

Total 40,0

The Group has no deferred tax receivables in the balance sheet, due to taxation losses and the uncertainty still prevailing on the market.

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16. TRADE AND OTHER RECEIVABLES

Current receivables 2018 2017Trade receivables 7 209 4 628Other receivables 802 806Total 8 012 5 434

Other receivables 2018 2017Other receivables 320 352Accruals 483 454Total 802 806

Breakdown of trade receivables by maturity 2018 Impairment loss Net 2018

Not due for payment 5 888 0 5 888Due since 1 - 30 days 810 0 810Due since 31 - 60 days 268 0 268Due since 61 - 90 days 128 0 128Due since 91 - 180 days 61 -30 31Due since more than 180 days 246 -162 84Total 7 401 -192 7 209Breakdown of trade receivables by maturity

2017 Impairment loss Net 2017Not due for payment 3 856 0 3 856Due since 1 - 30 days 208 0 208Due since 31 - 60 days 205 -1 204Due since 61 - 90 days 190 -12 178Due since 91 - 180 days 62 0 62Due since more than 180 days 272 -153 119Total 4 794 -166 4 628

The financial assets do not include due terms.

The Company has written off EUR 192 thousand (2017: EUR 235 thousand) in credit losses during the period.

The methods used to estimate the fair value of the receivables are presented in Note 24.

Credit risk management is a major part of the the risk management of the Group. Fifty-eight per cent of the turnover of the Group is derived from the 20 largest customers. The biggest customers are Finnish companies operating abroad in the fields of telecommunications, information technology and banking and within public administration. The majority of these customers are invoiced in euro. The receivables do not include any significant concentration of credit risk. The counterparties in external financing transactions are the major Nordic banks.

To reduce the turnaround time of the receivables, the Group had trade receivables in the amount of MEUR 0.6 (2017: MEUR 1.0) in its balance sheet on 31 December 2018 that were transferred to a financing company in the beginning of 2019. In 2018, MEUR 7.6 (2017: MEUR 6.8) trade receivables were sold.

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17. CASH AND CASH EQUIVALENTS

2018 2017Cash and cash equivalents 314 1 366

The cash and cash equivalents comprise cash in hand and cash deposits in current accounts.

18. EQUITY

Number of shares, pcs

Share capital

Share premium

reserve

Invested non-restricted equity

fund Total1 January 2018 553 824 346 585 219 64 457 65 261Directed share issue 22 222 222 0 0 2 000 2 000Share issue 74 976 178 0 0 6 748 6 748Expenses for equity procurement 0 0 0 -19 -1931/12/18 651 022 746 585 219 73 186 73 990

In April 2018, a directed rights issue was carried out, where a total of 22,222,222 new shares were issued.In May 2018, a total of 74,976,178 new shares were issued, in connection with the share acquisition of Grow Holding Ab and Grow Nine Ab.

Number of shares, pcs

Share capital

Share premium

reserve

Invested non-restricted equity

fund Total1 January 2017 353 564 898 585 219 47 191 47 995Rights issue 68 830 863 0 0 8 110 8 110Conversion of convertible bond 131 428 585 0 0 9 200 9 200Expenses for equity procurement 0 0 0 -44 -4431/12/17 553 824 346 585 219 64 457 65 261

In April 2017, a total of 12,012,990 new shares were issued in the acquisition of the share capital of Interquest Oy.In April 2017, a total of 4,971,709 new shares were issued in the business acquisition of Digitalist of RomeAdvisors Oy.In August 2017, a total of 37,500,000 new shares were issued in the acquisition of the share capital of NodeOne Group AB.In September 2017, a directed rights issue was carried out, where a total of 12,500,000 new shares were issued.In November 2017, a total of 1,846,164 new shares were issued, while confirming the additional purchase price of the share capital of Cresense Oy.In December 2017, a directed rights issue was carried out, where a total of 131,428,585 new shares were issued.

In the following, a description of reserves:

Share premium reserve

Invested non-restricted equity fund

19. PROVISIONS

Digitalist Group Plc did not record provisions in years 2018 and 2017.

The invested non-restricted equity fund contains other equity-type investments and the subscription price of the shares to the extent that a specific decision to recognise it in the share capital has not been made. After the entry into force (1 September 2006) of the new Finnish Limited Liability Companies Act (21.7.2006/624), the income from exercise of options is recorded entirely in the invested on-restricted equity fund.

In cases where where stock options have been decided under the repealed Finnish Limited Liability Companies Act (29.9.1978/734), payments received for share subscriptions based on stock options have been recorded in the share capital and share premium reserve in accordance with the terms of the respective option programmes, net of transaction costs.

Digitalist Group Plc has one class of shares. The share capital has been paid in full. According to the Articles of Association, there is no maximum to the number of shares or the share capital. Digitalist Group Plc does not hold any treasury shares.

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20. NON-CURRENT LIABILITIES

Other loans

Deferred tax liabilities

Finance leasing debt Total

Non-current liabilities at 1 January 2018 6 330 1 051 93 7 474Convertible bond 8 568 0 0 8 568Change in loans -3 305 0 0 -3 305Change in finance leasing debt 0 0 -22 -22Deferred tax liabilities 0 -69 0 -69Non-current liabilities at 31 December 2018 11 593 982 71 12 646

Other loans

Deferred tax liabilities

Finance leasing debt Total

Non-current liabilities at 1 January 2017 9 951 228 37 10 215Convertible bond conversion -7 085 0 0 -7 085Change in loans 3 464 0 0 3 464Change in finance leasing debt 0 0 56 56Deferred tax liabilities 0 823 0 823Non-current liabilities at 31 December 2017 6 330 1 051 93 7 474The methods used to estimate the fair values of the liabilities have been presented in Note 24.

21. FINANCIAL LIABILITIES

Non-current 2018 2017

Convertible bond 8 568 0Borrowings from financial institutions 3 025 730Other loans 0 5 600Finance leasing debt 71 93Non-current financial liabilities 11 664 6 423

Current 2018 2017Borrowings from financial institutions 4 434 2 498Other loans 104 2 500Finance leasing debt 82 62Financial liabilities recorded at fair value through profit and loss (* 15 2Current financial liabilities 4 635 5 062

*)The financial liabilities recoded at fair value through profit and loss are derivatives.The balance is included in other liabilities

The methods used to estimate the fair values of the liabilities have been presented in Note 24.

The instalment scheme for interest-bearing borrowings from financial institutions at 31 December 2018.

Total of loans at 31 December 2018 -11 827Instalments 2019 -130Instalments 2020 -547Instalments 2021 -9 535Instalments 2022 -863Instalments 2023 -556Instalments 2024 -195

The average interest rate of the borrowings from financial institutions was 4.6%.

Changes in interest-bearing liabilities during the financial period 2018Interest-bearing liabilities at 1 January 2018 11 485Monetary change in interest-bearing liabilities -3 768Changes with no payment relation:Financial liabilities at fair value through profit or loss 13Conversion of convertible bond 8 568Interest-bearing liabilities at 31 December 2018 16 299

Changes in interest-bearing liabilities during the financial period 2017Interest-bearing liabilities at 1 January 2017 12 531Monetary change in interest-bearing liabilities 6 044Changes with no payment relation:Financial liabilities at fair value through profit or loss -5Conversion of convertible bond -7 085Interest-bearing liabilities at 31 December 2017 11 485

37

22. TRADE AND OTHER PAYABLES 35

Current liabilities 2018 2017Trade liabilities 1 861 1 630Tax liabilities -14 110Borrowings from financial institutions 4 434 2 498Other loans 104 2 525Financial leasing liabilities 82 37Provisions 0 220Other liabilities 3 111 2 006Accrued expenses 2 972 3 053Total 12 549 12 080

Breakdown of other liabilities 2018 2017Withholding tax debt 338 521Social security contribution debt 369 263VAT debt 851 672Other liabilities 1 552 550Total other liabilities 3 111 2 006

Breakdown of accrued expenses 2018 2017Provision of holiday pay 1 388 1 418Pension insurance contribution liabilities 101 237Other accrued expenses 1 483 1 397Total accrued expenses 2 972 3 053

23. CASH FLOW STATEMENT

2018 2017Change in working capital -1 343 -2 936 Trade receivables and other receivables -2 628 -2 275 Trade payables and other payables 1 285 -661

24. BOOK AND FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES

Financial assets and liabilities recorded at fair value through profit and lossThe Group has classified its interest rate swap agreements and other investments to be recorded at fair value through profit and loss and they are included in short term assests and liabilities in the balance sheet.

Changes in fair value are recorded as financial income and expenses in the profit and loss stament. The fair value of the agreements is calculated by discounting future cash flows.

The agreements are presented in financial assets and liabilities in the balance sheet and they are acquired in hedging purposes. The company is not applying hedge accounting.

Financial assets measured at amortized costAfter initial recognition, loans and receivables are measured at amortized cost using the effective interest rate method.Financial assets whose business model’s objective is to hold financial assets to maturity in order to collect contractual cash flowsare classified as financial assets measured at amortized cost. The cash flows of these assets consist solely of payments of principal and interest on the principal amounts outstanding. They are presented on the balance sheet as current asset and non-current assets.

Trade and other receivables and other investments are included in this group. Trade receivables are initially recognized at original value. The Group recognizes an allowance for expected credit losses for financial assets recognized at amortized cost. Expected credit losses are recognized under other operating expenses in the statement of profit or loss.

An impairment loss is recognised if there is objective evidence of impairment of a financial asset. An objective evidence of impairment of a receivable are the customer's remarkable financial difficulties, probability of bankruptcy, default or a delay in payment.Impairment losses are expensed under other operating expenses in the statement of profit or loss.

Liabilities are discounted at the rate the Group would pay for an equivalent borrowing on the closing date. As most interest-bearing liabilities have floating rates, the effect of discounting is not significant.

38

Methods used to estimate fair values

Trade and other receivables

The original values correspond to the fair values of trade and other liabilities, since the terms of payment are short,and the effect of discounting is not significant. Note 16 shows a breakdown of trade receivables by maturity.

Other liabilities

Other liabilities (trade payables and other non-interest-bearing liabilities) are recorded in the balance sheet at their original values, which correspond to their fair values, since the effect of discounting is not significant considering the maturity of such liabilities.

Nominal value of derivative contracts, EUR 1000

Interest rate swaps 2018 2017Falling due within one year 0 253Falling due within 1 - 5 years 2 000 0Total 2 000 253Fair value -15 -2

All interest rate swaps are classified at level 2.

The fair value of a financial instrument that is not traded in an active market is determined using valuation techniques. These techniques maximise the use of observable market data where it is available and rely as little as possible on company-specific estimates. If all significant inputs required for the determination of the fair value of an instrument are observable, the instrument is at level 2.

39

25. EARNINGS PER SHARE (*2018 2017

Profit attributable to equity holders of the parent company, EUR 1 000 -6 828 -6 942

Number of shares during the period, adjusted for issues, average, pcs 609 376 504 384 459 880Earnings per share, EUR -0,01 -0,02

Diluted weighted average number of shares during the period, pcs 651 022 746 553 824 346Earnings per share, diluted, EUR -0,01 -0,02

Dilution effect, pcs 609 376 504 384 459 880

26. PROPOSAL OF THE BOARD OF DIRECTORS TO THE ANNUAL GENERAL MEETING

27. LEASING AND RENTAL LIABILITIES

Operating leasing liabilities, EUR 1000 2018 2017Operating leasing liabilities, 12 months 10 24Operating leasing liabilities, more than 12 months but less than 60 months 15 20Total 25 44

The company has no leasing liabilities with a maturity of more than 60 months.

Rental and other liabilities, EUR 1000 2018 2017Rental and other liabilities 12 months 1 482 1 290Rental and other liabilities, more than 12 months but less than 60 months 2 281 1 129Total 3 763 2 419

Major leases:

The lease contract of the head office of the company (Arkadiankatu 2, Helsinki)The lease contract of the office in Sweden (Östermalmsgatan 26A, Stockholm)The lease contract of the office in United State (128 Spear st., San Francisco)The lease contract of the office in Great Britain (5th floor, Camden High Street, London)

*) The number of the shares and per share figures have been affected by rights issues in 2018 and 2017.

The leases of the company give the company a temporary right to use the machinery and equipment included in the leases.

The rental liabilities are mainly due to the rental liability arising from the company's head office. Leases are presented in accordance with the situation on 31 December 2018.

The Board of Directors of Digitalist Group Plc proposes to the Annual General Meeting that the distributable funds be left in the shareholders’ equity and no dividend be distributed to the shareholders for the accounting period 2018. On 31 December 2018, the distributable funds of the parent company were EUR 34,077,492.

40

Parent ownership Domicile, City and country

Parent Helsinki, FinlandDigitalist Finland Oy 100% Helsinki, FinlandDigitalist Canada Ltd. 100% Vancouver, CanadaIxonos Estonia OÜ 100% Tallinn, EstoniaIxonos Germany GmbH 100% Berlin, GermanyIxonos Slovakia s.r.o. 100% Košice, SlovakiaDigitalist USA Ltd. 100% San Francisco, USAIxonos Hong Kong Ltd *) 100% Hongkong, ChinaDigitalist UK Ltd 100% London, Great BritainIxonos Singapore Pte Ltd 100% Singapore, SingaporeCresense, Inc. 100% San Francisco, USACresense Hong Kong Limited * 100% Hongkong, ChinaDigitalist Singapore Pte Ltd 100% Singapore, SingaporeNodeOne Group AB 100% Stockholm, SwedenDigitalist Sweden AB 100% Stockholm, SwedenWunderlive AB 100% Stockholm, SwedenGrow Holding AB 100% Stockholm, SwedenGrow AB 100% Stockholm, SwedenGrow Nine AB 100% Stockholm, SwedenGrow Finland Oy 100% Helsinki, FinlandGrow Norway AS 100% Oslo, Norway

Changes in the Group structureCresense Oy and Interquest Oy have been merged with Digitalist Finland Oy in December 2018.Ixonos Danmark been closed during 2017

29. RELATED-PARTY DISCLOSURES

Salaries, remunerations and other short-term employee benefits, EUR 1 000 2018 2017 Sami Paihonen, CEO (until 30 September 2017) 0 195 Ville Tolvanen, CEO (from 1 October 2017) 300 57

Board of Directors Ehrnrooth Paul (Chairman until 28 June 2018) 39 49 Rosenlew Andreas (Chairman from 28 June 2018) 26 0 Marttila, Päivi (Vice-Chairman until 17 April 2018) 12 38 Matikainen, Esa (Vice-Chairman from 17 April 2018) 29 0 Ekström Bo-Erik 31 27 Eloholma, Pekka (until 17 April 2018) 8 26 Konttinen, Samu (until 17 April 2018) 7 26 Pylkäs Pekka 27 26 Eriksson Peter (from 29 March 2017) 28 19 Jaana Rosendahl (from 17 April 2018) 22 0 Ville Tolvanen (from 17 April until 28 June 2018) 7 0 Anders Liljeblad (from 28 June 2018) 13 0

Management Team (excluding CEO) 1 190 511Total of related party salaries and remunerations 1 739 974

The related party salaries and remunerations have been presented on an accrual basis.

*) It has been decided that the Group companies in Hong Kong will close down. The wind-down processes are still ongoing.

The related parties of Digitalist Group Plc include the members of the Board of Directors, the CEO and the members of the Group's Management Team.

28. GROUP COMPANIES

Name

41

The total fair value of the options is EUR 302 thousand (2017: EUR 232 thousand).

Ownership of shares by the members of the Board of Directors, the CEO and the Management Team, pcs2018 2017CEO 4 971 709 4 971 709Board of Directors (* 514 523 110 446 206 223Management Team 17 451 803 0Total 536 946 622 451 177 932

The company did not hold any shares of its own.

*) The related party Tremoko Oy Ab owns 469,595,445 pcs of company shares with ownership share of 72.13%. Tremoko Oy Ab is owned by Turret Oy Ab and Holdix Oy Ab. Turret Oy Ab, which is the controlling company of Paul Ehrnrooth, the Chairman of the Board of Directors, owns 65%of the company shares and Holdix Oy Ab owns 35% of the shares of Tremoko Oy Ab.

The term of notice of the CEO is 9 months. If the company dismisses the CEO, he is entitled to a severance payment equivalent to nine month's salary.

In 2018, members of the Board of Directors, the CEO and the Management Team had a total of 6,044,520 option rights (2017: 3,320,275 pcs).

The pension arrangements of the CEO comply with Finnish employee pension legislation, in addition to which the CEO has a voluntary pension arrangement to which EUR 8.5 thousand was contributed in 2017 (EUR 8.5 thousand in 2016).

42

Loans to related parties

On 1 June 2018, Digitalist Group agreed on a convertible loan agreement with Tremoko Oy Ab. The loan agreement amounts to EUR 8.7 million, and the loan was used to set off all the receivables from the company. The due date Lainan eräpäivä (if the conversion option has not been used) is 31 December 2021. Interest starts to accrue on 1 January 2019, and the interest becomes due biannually on 30 June and 31 December.

30. SHARE-BASED PAYMENTS

Option plan 2016

On 21 November 2016, the Board of Directors of Digitalist Group Plc has decided on the issue of option rights on the basis of the authorization granted by the Annual General Meeting on 7 April 2016.

The option rights will be distributed as determined by the Board of Directors to key personnel employed or recruited by a company in the Digitalist Group Plc for the purpose of increasing their commitment and motivation.

The option rights will be marked as series 2016A, 2016B and 2016C. The maximum number of option rights is 35,356,560 and they entitle to subscribe a maximum of 35.356.560 of new Company shares. The Board of Directors may decided on any additional conditions concerning the receipt of option rights and on the redistribution of option rights that later revert back to the Company.

Each option right entitles its holder to subscribe for one new Digitalist Group share. Shares subscribed on the basis of the option rights represent, on 3 November 2016, a maximum of ten per cent of all Company shares and votes, corresponding to a dilution effect of nine per cent.

The subscription period of shares subscribed for under option rights 2016A began on 1 October 2017 and ended on 30 September 2018. The subsciption price of a share subscribed for under option rights 2016A is EUR 0.08, which corresponds to the weighted average price of the Company’s shares quoted on NASDAQ Helsinki Ltd (”Helsinki Stock Exchanges”) between 18 May – 18 November 2016 rounded up to the nearest cent.

The subscription period of shares subscribed for under option rights 2016B starts on 1 October 2018 and ends on 30 September 2019. The subscription price of a share subscribed for under option right 2016B is EUR 0.10, which corresponds to the weighted average price of the Company’s shares quoted on the Helsinki Stock Exchanges on 1 July –31 December 2017 rounded up to the nearest cent.

The subscription period of shares subscribed for under option rights 2016C begins on 1 October 2019 and ends on 30 September 2020. The subsciption price of a share subscribed for under option rights 2016C is the weighted average price of the Company’s shares quoted on the Helsinki Exchange on 1 July–31 December 2018 rounded up to the nerest cent.

The subscription price will e.g. be decreased by the amount of dividends paid and it may also otherwise be revised according to the terms and conditions of the option plan. However, the subscription price of a share may never be lower than EUR 0.01.

The complete terms and conditions of the option plan are appended to this stock exchange release and available on the Company’s homepage at http://www.Digitalist Group.com/fi/ investor/shares/option-schemes.

The theoretical market value of the option rights has been calculated using the Black & Scholes method. Each option entitles its holder to subscribe to one new share of Digitalist Group Plc.

43

The main assumptions used in determining the fair value of options

Option plan 2016BDate of issue 19/06/18Number of shares on date of issue 12 359 000Subscription price 0,10Exercise period 30/09/19Share price on date of issue 0,07Number of persons, date of issue 48

Number of options, 31 December 2017 0Granted options 12 359 000Expired option rights 0Number of options, 31 December 2018 12 359 000

Volatility 55%Dividend yield 0%Closing share price, 31 December 2017 0,07Closing share price, 31 December 2018 0,05

31. COMMITMENTS AND CONTIGENT LIABLITIES,

On 31 December 2018, the Group had pledged 19 company mortgages of EUR 1,000,000 each, one company mortgage of EUR 800,000, one company mortgage of EUR 55,000, two company mortgages of EUR 50,000 and one company mortgage of EUR 45,000 as guarantee for its borrowings, credit limits in financial institutions and leasing and other commitment and two company mortgages of EUR 1,000,000 and three company mortgages of EUR 500 000 as security for its short term borrowings from Oy Tremoko Ab.

The total value of company mortgages is EUR 23,500,000.

The mortgages are pledged as security for EUR 10,353,030 for its own borrowings and credit limits with financial institutions.

32. EVENTS AFTER THE FINANCIAL PERIOD

On 29 January 2019, the company has concluded a major deal with a Swedish public operator on the supply of R&D services. The deal is part of long-term cooperation and its value is roughly EUR 1.5 million. The services have been planned to be delivered during 2019. The deal supports the growth of the Digitalist Group in Sweden and its objective to act as a strategic partner.

The deal does not cause any changes to the instructions provided by the Company for 2019.

33. FINANCIAL RISK MANAGEMENT

In the course of its normal business operations, the company is exposed to several financial risks. Financial risk management aims to minimise any adverse effects that changes on the finance market may have on the company profit. The main financial risks of the Digitalist Group are the capital adequacy and interest rate risk.

The long term funding of the Digitalist Group has been mainly arranged through two main financiers. The company may later decide on the issues of shares. Should the general economic situation tumble into an exceptionally long decline, it would be likely to increase the financial expenses of the Digitalist Group in proportion to the earnings from the business operations of the Digitalist Group, as during a general recession, the earning power and cash flow of the Group would decrease. These factors could also reduce the availability of external funding and financial position of the Digitalist Group.

The financing function of the parent company is responsible for the implementation of risk management. Its task is to identify, assess and hedge against financial risk in co-operation with the business units.

44

EUR 1000 AmountAverage rate, per cent

Interest rate sensitivity

Borrowings from financial institutions31/12/18 7 458 2,61 -5531/12/17 3 228 5,52 -30

Other loans31/12/18 8 672 6 -8731/12/17 8 100 10 -81

The interest rate hedgings of the loans have been taken into account in the calculation.

The company does not apply IAS 39 hedge accounting but the changes in the fair value of derivatives acquired for hedging are recorded through profit and loss as financial income and expenses. The amount of such changes in the fair value of derivatives as were recorded through profit and loss were EUR 13'000 for the period from 1 January to 31 December 2018 and EUR 5'000 for the financial period ending 31 December 2017. Profit and loss entries related to hedging can cause substantial variation in the financial income and expenses from one financial period to another. An interest rate rise by one percentage point would have had a positive effect of EUR 20'000 (2017: by EUR 4'000) on the fair value of the company’s derivative position from the situation at 31 December 2018. The effect of taxes has not been considered in the sensitivity analyses.

Of the borrowings of the company’s at 31 December 2018, 73 per cent (2017: 92 per cent) have floating rates. Considering the effect of derivative interest-rate contracts, 73 per cent of the borrowings (2017: 92 per cent) have floating interest rates at the balance sheet date. The figures include the overdrafts in use.

Other loans all have floating rates.

Interest rate risk of borrowings from financial institutions should the interest rate rise by one percentage during the next year

Interest rate risk

The income and operational cash flows of the company are largely independent from fluctuations in market rates. The company is exposed to cash flow interest rate risk through its loan portfolio, which consists of short term and long term variable rate borrowings. The aim of the interest rate risk management of the company is to minimise any adverse effects that changes in interest rates may inflict on the company profit. The company manages interest rate risk by using various interest rate hedging instruments. The company has interest rate swaps for a total loan capital of MEUR 0.3. The company has used interest rate swaps to convert a floating rate to a fixed rate of 0.92 plus margin. On 31 December 2018, the company had a total of MEUR 5.5 (2017: MEUR 3.0) in unhedged floating rate loan capital, including overdrafts in use. The average interest rate of the Company between 1 January–31 December 2018 has been 2.61 per cent (2017: 5.52 per cent). An interest rate rise of one percentage point would increase the interest costs of the floating-rate borrowings of the company by approximately EUR 55'000. The realisation of interest risks would have a negative impact on the availability of external funding and financial position of the Company.

The company has unhedged loans at 31 December 2018 in total of MEUR 8.7 (2017: MEUR 8.1) that consisted totally of floating-rate loans to related parties. The average interest rate between 1 January and 31 December 2018 was 5.75 per cent (2017: 6.22 per cent). An interest rate rise of one percentage point would increase the interest costs for these floating-rate borrowings by approximately EUR 87'000 per year. The related party borrowings have been described in more detail in Note 29.

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31/12/18 Balance sheet value Cash flowLess than one

year 1-5 yearsMore than fice

years

Bank loans 3 156 3 346 199 3 146 0Other debt 104 123 6 117 0Convertible bonds 8 568 10 110 514 9 596 0Financial leasing debt 153 156 84 72 0Accounts payable 1 861 1 861 1 861 0 0

31/12/17 Balance sheet value Cash flowLess than one

year 1-5 yearsMore than fice

years

Bank loans 3 228 3 256 2 585 671 0Other debt 8 100 9 526 3 880 5 647 0Financial leasing debt 155 158 64 94 0Accounts payable 1 630 1 630 1 630 0 0

At year end 4,4 million eur was used out of 5,4 million eur revolving credit facility.

The company has agreed with its main financier an instalment free period for the loans until 31 December 2021.

Liquidity risk

The aim of the company liquidity risk management is to ensure sufficient liquid assets for financing the company operations and repaying the loans due. To fulfil this aim, the company seeks to continuously assess and monitor the financing required by the operations. At 31 December 2018 , almost all the liquid assets of the company consisted of funds in bank accounts. The function responsible for the financing of the company continuously monitors the liquidity and adequacy of the funding. Possible disruptions in the cash flow of basic business operations would weaken the financial position of the company.

At the time of publication of the financial statements, the company estimates that its working capital will be sufficient for the needs of the 12 following months.

Maturity of financial liabilities

46

Foreign exchange risk

2018 2017

EUR 1000 CAD GBP NOK SEK SGD USD CAD GBP NOK SEK SGD USD

Current assets Other financial assets 1 89 4 135 60 0 22 54 0 242 46 98 Trade and other receivables 1 333 830 137 3 455 6 604 174 443 0 1 484 63 886

Current liabilities Non-interest-bearing liabilities 225 277 2 2 682 12 342 116 247 0 1 026 39 263Open position 1 559 1 196 143 6 272 78 946 312 744 0 2 752 148 1 247

2018 2017

EUR 1000 CAD GBP NOK SEK SGD USD CAD GBP NOK SEK SGD USDEffect on profit before tax 78 60 7 314 4 47 16 37 0 138 7 62

EUR 1000 2018 2017Interest-bearing liabilities -16 284 -11 483

Cash and cash equivalents 314 1 366

Interest-bearing net liabilities -15 969 -10 117

Total equity 7 027 5 473

Net gearing of total equity, per cent 227,2 % 184,8 %

Net gearing from the equity attributable to the owners of the parent was -227.2 per cent.

The functional currency of the parent is the euro. The assets and liabilities in foreign currencies, translated to euros at the exchange rates prevailing at the closing date, are as follows:

A sensitivity analysis of the translation risk associated with the Canadian dollar, British pound, Norwegian krone, Swedish krone, Singapore dollar and US dollar is presented in the following table. The effects of +5/-5 per cent exchange rate changes on assets and liabilities in foreign currencies at the closing date have been taken into account. The analysis does not include net investments in foreign units.

Capital management

With the help of an optimal capital structure, the capital management of the Group aims to support the business operations by safeguarding normal operating conditions and to increase shareholder value with the aim of achieving best possible profit. The optimal capital structure also ensures smaller capital costs.

The company considers as capital both shareholders’ equity and borrowings from financial institutions and related party company Tremoko Oy Ab.

The capital structure is influenced e.g. through distribution of dividends and share issues. The group may vary and adjust the amount of dividends or capital refunds paid to shareholders, as well as the number of shares to be issued. The Group may also resolve to sell assets to reduce debt.

The group net gearing ratio were the following on 31 December 2018 and 31 December 2017:

47

34. FINANCIAL LEASE AGREEMENTS

EUR 1000 2018 2017Initial carrying value of tangible assets under financing lease agreements 37 67

Accumulated depreciation -15 -36Carrying amount at the end of the financial period 22 31

Initial carrying value of tangible assets under financing lease agreements 264 179

Accumulated depreciation -122 -43Carrying amount at the end of the financial period 142 136

The present value of the minimum lease payments at the end of the period for non-cancellable financial lease agreements

Future minimum lease payments, total 156 159Less interest expenses -2 -3Present value of the minimum lease payments 153 155

The gross liability of financial leases - minimum lease payments by maturityWithin one year 84 64After a year to five years 72 94After five years 0 0Total 156 159

Future financing expenses -2 -3Present value of the financing lease agreements 153 155

Maturity of the present value of the financing lease liabilities:

Within one year 84 64After a year to five years 69 91After five years 0 0Total 153 155

48

INCOME STATEMENT OF THE PARENT COMPANY (FAS)

EUR 1.1.-31.12.2018 1.1.-31.12.2017

Other operating income 842 695 901 851

Personnel expenses Salaries and remuneration -881 173 -806 863

Indirect employee costsPension costs -90 386 -106 038Other indirect employee costs -6 535 -10 426

Indirect employee costs total -96 920 -116 465

Personnel costs total -978 094 -923 328

Depreciation and impairmentImpairment of non-current assets -2 000 000 0Depreciation on tangible and intangibleassets -126 471 -104 711

Depreciation and impairment total -2 126 471 -104 711

Other operating expenses -1 310 594 -1 140 204

Expenses total -4 415 159 -2 168 242

Operating profit -3 572 464 -1 266 391

Financial income and expensesInterest and financial income

Interest income 522 044 265 048Other financial income 430 077 201 644

Interest and financial income total 952 121 466 692

Interest and financial expensesInterest expenses -468 115 -978 779Impairment of non-current assets 0 -500Other financial expenses -303 138 -3 271 039

Interest and financial expenses total -771 252 -4 250 318

Financial income and expenses total 180 869 -3 783 626

Profit for the period -3 391 595 -5 050 018

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BALANCE SHEET OF THE PARENT COMPANY (FAS)

EUR 31/12/18 31/12/17

ASSETS

FIXED ASSETSIntangible assets

Intangible rights 313 555 345 909Intangible assets, total 313 555 345 909Tangible assets

Machinery and equipment 64 934 89 550Other tangible assets 11 477 11 477

Tangible assets, total 76 411 101 027Investments

Shares in Group companies 42 028 273 32 871 817Other shares 1 953 1 953

Investments total 42 030 226 32 873 770

Advance payments and construction in progress 72 532 0

TOTAL FIXED ASSETS 42 492 724 33 320 707

CURRENT ASSETS

Long-term assetsLoans receivable 1 000 000 0

Long-term assets, total 1 000 000 0

Current assetsTrade receivables 3 253 528 1 300 661Accruals 30 634 99 176Other receivables 2 610 728 5 061 879

Current assets, total 5 894 890 6 461 716

Cash and cash equivalentsCash on hand and in banks 51 530 871 251

TOTAL CURRENT ASSETS 6 946 420 7 332 967

TOTAL ASSETS 49 439 143 40 653 674

31.12.2018 31.12.2017EQUITY AND LIABILITIES

SHAREHOLDERS' EQUITYShare capital 585 394 585 394Share premium reserve 218 725 218 725Invested non-restricted equity fund 74 431 644 65 683 788Retained earnings -36 962 557 -31 912 539Result for the period -3 391 595 -5 050 018

TOTAL SHAREHOLDERS' EQUITY 34 881 611 29 525 350

LIABILITIES

Non-current liabilitiesOther non-current liabilities 0 5 600 000Convertible bond 8 671 932 0

Non-current liabilities, total 8 671 932 5 600 000

Current liabilitiesBorrowings from financial institutions 4 192 327 253 030Trade payables 798 321 665 831Other current liabilities 456 552 3 791 382Accrued expenses 438 400 818 081

Current liabilities, total 5 885 600 5 528 324

TOTAL LIABILITIES 14 557 532 11 128 324

TOTAL EQUITY AND LIABILITIES 49 439 143 40 653 674

50

CASH FLOW OF THE PARENT COMPANY

EUR 1.1.-31.12.2018 1.1.-31.12.2017

Cash flow from operating activitiesProfit for the period -3 391 595 -5 050 018Adjustments to cash flow from operations Impairment of subsidiaries' shares 2 000 000 0Depreciation and amortisation 126 471 104 711Other adjustments -39 067 222 370Financial income and expenses -180 869 3 783 626Net cash generated before working capital changes, interest and tax -1 485 060 -939 310

Change in working capital -2 904 447 -2 235 179Interest received 7 396 106Interest paid -333 183 -508 810Net cash flow from operating activities -4 715 294 -3 683 193

Cash flow from investing activitiesAcquisition of subsidiaries, net of cash acquired 197 955 661 814

-69 500 9 852-2 120 053 -2 119 729

47 873 149 834Total cash from investing activities -1 943 725 -1 298 229

Cash flow before financing -6 659 019 -4 981 422

Cash flow from financing activitiesWithdrawal of long-term loans 1 500 000 5 600 000Withdrawal of short-term loans 4 192 327 0Repayment of short term loans -253 030 -253 030Proceeds from rights issues 400 000 300 000Net cash flow from financing activities 5 839 297 5 646 970

Change in cash and cash equivalents -819 721 665 548

Cash and cash equivalents at the beginning of the period 871 251 205 704Cash and cash equivalents at the end of the period 51 530 871 251

Repayment of Group loans provided

Investments in property, plant and equipment and in intangible assets Group loans provided

51

CHANGES IN EQUITY OF THE PARENT COMPANY

€Share

capital

Share premium

reserve

Invested non-restricted

equity fund Retained earnings Total

Shareholders' equity at 1 January 2017 585 394 218 725 48 374 169 -31 912 539 17 265 750Conversion of convertible bond 0 0 9 200 001 0 9 200 002Rights issue 0 0 8 109 617 0 8 109 617Profit for the period 0 0 0 -5 050 018 -5 050 018Shareholders' equity at 31 December 2017 585 394 218 725 65 683 787 -36 962 557 29 525 351

Shareholders' equity at 1 January 2018 585 394 218 725 65 683 787 -36 962 557 29 525 351Rights issue 0 0 8 747 857 0 8 747 857Profit for the period 0 0 0 -3 391 595 -3 391 595Shareholders' equity at 31 December 2018 585 394 218 725 74 431 643 -40 354 152 34 881 611

The distributable funds of the parent company at 31 December 2018 were MEUR 34,077,492 (2017: MEUR 28,721,230).

52

ACCOUNTING POLICIES FOR THE FINANCIAL STATEMENTS

Tangible and intangible assets

Depreciation begins on the commissioning date of each asset.

Depreciation periods:Machinery and equipment 25 per cent reducing balance or straight-line depreciation 3-5 years Intangible rights 3-5 years, straight-lineOther long-term expenses 3-5 years, straight-line

Investments

Long term investments are valued at acquisition cost or lower estimated discounted future value.

The goodwill evaluation of subsidiary shares at 31 December 2018 is based on long term calculations and forecasts.

Valuation of financial assets

Derivatives

The derivatives of the company include interest rate swaps, which are used to convert the floating rate of the borrowings

Pensions

The pension cover of parent employees is handled by external pension companies.Pension expenditure is expensed in the year of accrual.

Foreign currency items

The Notes of the parent company have been presented to the nearest euro unless otherwise stated.

Receivables and liabilities denominated in foreign currencies have been translated into euros using the exchange rate prevailing on the closing date.

Tangible and intangible assets are shown in the balance sheet at historical cost less depreciation and impairment according to plan.

from financial institutions to a fixed rate. The fair value of swaps are included by they nature either to current receivables or liabilities.

53

ACCOMPANYING NOTES TO THE INCOME STATEMENT OF THE PARENT COMPANY

EUR 2018 2017

OTHER OPERATING INCOME

Administrative cost fees 841 169 901 848Other items 1 526 3Total 842 695 901 851

ACCOMPANYING NOTES ON PERSONNEL AND MEMBERS OF ORGANS

Number of parent employees during the period, average 3 3Number of parent employees at the end of the period 2 4

Personnel expensesSalaries and remuneration of the management and the Board of Directors -881 173 -836 354Salaries and remuneration 0 29 491Pension costs -90 386 -106 038Other personnel expenses -6 535 -10 426Total -978 094 -923 328

Auditor’s fees 2018 2017KPMG Oy Ab, Pricewaterhousecoopers Ltd. Auditor’s fees -54 982 -54 008 Tax advice -29 549 -5 126 Other services -72 359 -73 211Auditor’s fees total -156 890 -132 345

DEPRECIATION AND IMPAIRMENT Depreciation and amortisation of intangible rights -101 854 -76 090Depreciation and amortisation of tangible assets -24 616 -28 621Impairment of non-current asset -2 000 000 0Total -2 126 471 -104 711

FINANCIAL INCOME AND EXPENSESInterest and financial income

From Group companies 522 044 265 048 Others 430 077 201 644

Total 952 121 466 692

Interest and financial expenses To Group companies -3 515 -3 227 469 Impairment of non-current asset 0 -500 Others -767 737 -1 022 349

Total -771 252 -4 250 318

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ACCOMPANYING NOTES ON MEMBERS OF ORGANS 2018 2017EUR

Salaries and remuneration Sami Paihonen, CEO (until 30 September 2017) 0 194 780 Ville Tolvanen, CEO (from 1 October 2017) 300 240 57 060

Board of Directors Rosenlew Andreas (Chairman from 28 June 2018) 26 000 0 Ehrnrooth Paul (Vice-Chairman until 28 June 2018) 38 500 48 500 Matikainen, Esa (Vice-Chairman from 17 April 2018) 28 500 0 Marttila, Päivi (Vice-Chairman from 7 April 2016) 11 750 38 000 Ekström Bo-Erik 30 500 27 000 Eloholma, Pekka (until 17 April 2018) 8 167 26 250 Eriksson, Peter (from 29 March 2017) 27 750 18 500 Konttinen, Samu (until 17 April 2018) 7 417 24 500 Pylkäs Pekka 27 000 25 750 Jaana Rosendahl (from 17 April 2018) 21 750 0 Ville Tolvanen (during 17 April -28 June 2018) 7 000 0 Anders Liljeblad (from 28 June 2018) 13 250 0

Total salaries and remuneration of members of organs (* 547 824 460 340

*) including fringe benefits

Salaries and remuneration are presented on an accrual basis. The CEO has a voluntary supplementary pension agreement (cf. Note 29 for more details).

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ACCOMPANYING NOTES TO THE PARENT COMPANY BALANCE SHEET

€ 2018 2017

ASSETS

Intangible assets

Other long-term expensesAcquisition cost at the beginning of the financial period 7 079 552 7 079 552Additions during the financial period 0 0Acquisition cost at the end of the financial period 7 079 552 7 079 552

Accumulated depreciations -7 033 865 -7 008 994Depreciation and amortisation for the financial period -24 871 -24 871Accumulated depreciations at the end of the financial period -7 058 736 -7 033 865Carrying amount at the end of the financial period 20 816 45 687

Intangible rightsAcquisition cost at the beginning of the financial period 1 920 766 1 570 766Additions during the financial period 69 500 350 000Acquisition cost at the end of the financial period 1 990 266 1 920 766

Accumulated depreciations -1 620 544 -1 569 326Depreciation and amortisation for the financial period -76 983 -51 219Accumulated depreciations at the end of the financial period -1 697 528 -1 620 544Carrying amount at the end of the financial period 292 739 300 222

Tangible assets

Machinery and equipmentAcquisition cost at the beginning of the financial period 870 175 869 027Additions during the financial period 0 1 148Acquisition cost at the end of the financial period 870 175 870 175

Accumulated depreciations -769 148 -740 527Depreciation and amortisation for the financial period -24 616 -28 621Accumulated depreciations at the end of the financial period -793 764 -769 148Carrying amount at the end of the financial period 76 411 101 027

InvestmentsAcquisition cost at the beginning of the financial period 32 873 770 26 152 009Additions during the financial period 11 156 456 6 722 261Depreciation and amortisation for the financial period -2 000 000 -500Acquisition cost at the end of the financial period 42 030 226 32 873 770

Advance payments and construction in progress 72 532 0Total 72 532 0

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NON-CURRENT RECEIVABLES

Receivables from Group companiesLoan receivables 1 000 000 0Total 1 000 000 0

SHORT-TERM RECEIVABLES

Receivables from Group companiesTrade receivables 3 224 710 1 300 661Other receivables 2 610 728 5 032 491Total 5 835 438 6 333 153

Receivables from othersTrade receivables 28 818 0Prepayments and accrued income 30 634 99 176Other receivables 0 29 388Total 59 452 128 564Short-term receivables, total 5 894 890 6 461 716

Prepayments and accrued incomePrepaid expenses 30 634 99 176Rent guarantees 0 21 856Others 0 7 532Total 30 634 128 564

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A ACCCOMPANYING NOTES TO THE PARENT COMPANY BALANCE SHEET

2018 2017

LIABILITIES

NON-CURRENT LIABILITIES

Convertible bond 8 671 932 0

Borrowings from financial institutions 0 5 600 000

CURRENT LIABILITIES

Borrowings from financial institutions 4 192 327 2 753 030

Liabilities to Group companiesTrade payables 333 638 130 471Loans and group account liabilities 300 000 1 182 953Other liabilities 25 810 22 111Total 659 448 1 335 536

Liabilities to othersTrade payables 464 683 535 360Other current liabilities 130 742 86 318Accrued expenses 438 400 818 081Total 1 033 825 1 439 758Current liabilities total 5 885 600 5 528 324

Accrued expenses 2018 2017Provision for holiday pay 58 845 99 080Interest rate hedge 0 1 984Others 379 555 717 017Total 438 400 818 081

CONTINGENT LIABILITIES AND GUARANTEES

Leasing and rental liabilities 2018 2017Leasing liabilities, 12 months 9 518 22 887Leasing liabilities, over 12 months 15 070 19 829Leasing liabilities, total 24 588 42 716

Rental liabilities 316 251 1 921 104

Financial guarantee contracts on behalf of Group companies 186 601 2 783 540

Mortgages

At 31 December 2018, the Company had pledged nine company mortgages of EUR 1,000,000 and one company mortgage of EUR 800,000 as collateral for its borrowings from financial institutions and two company mortgages of EUR 1,000,000 and three company mortgages of EUR 500,000 as collateral for its additional financing for non-current liabilities from Tremoko Oy Ab.The total number of company mortgages is EUR 13,300,000. The mortgages are collateral for EUR 6,192,315.63 in borrowings from financial institutions and EUR 8,671,932 loans from Tremoko Oy Ab.

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SUBSIDIARIES

Name Domicile Parent ownershipCity and country

Digitalist Finland Oy Helsinki, Finland 100%Digitalist Canada Ltd. Vancouver, Canada 100%Ixonos Estonia OÜ Tallinn, Estonia 100%Ixonos Germany GmbH Berlin, Germany 100%Ixonos Slovakia s.r.o. Košice, Slovakia 100%Digitalist USA Ltd. San Francisco, USA 100%Ixonos Hong Kong Ltd Hongkong, China 100%Digitalist UK Ltd London, Great Britain 100%Ixonos Singapore Pte Ltd Singapore, Singapore 100%Cresense, Inc. San Francisco, USA 0%Cresense Hong Kong Limited Hongkong, China 0%Digitalist Singapore Pte Ltd Singapore, Singapore 100%NodeOne Group AB Stockhom, Sweden 100%Digitalist Sweden AB Stockhom, Sweden 0%Wunderlive AB Stockhom, Sweden 0%Grow Holding AB Stockhom, Sweden 100%Grow AB Stockhom, Sweden 0%Grow Nine AB Stockhom, Sweden 52%Grow Finland Oy Stockhom, Sweden 0%Grow Norway AS Oslo, Norway 0%

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Ville Tolvanen Andreas RosenlewCEO Chairman of the Board of Directors

Esa Matikainen Paul EhrnroothVice-Chairman of the Board of Directors Member of the Board of Directors

Bo-Erik Ekström Peter ErikssonMember of the Board of Directors Member of the Board of Directors

Anders Liljeblad Pekka PylkäsMember of the Board of Directors Member of the Board of Directors

Jaana RosendahlMember of the Board of Directors

Signatures to the Financial Statements and the Report of the Board of Directors

Helsinki / 2019

Authorised Public Accountant

An auditor’s report has been issued today.

Auditor's Note

Helsinki / 2019

KPMG OyAuthorised Public Accountants

Esa Kailiala

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