Digitalist : Financial Statements 2023

Financial statements and annual report

1 January-31 December 2023

digitalist.global

AnnuAl report 2023 table of contents | 3

Digitalist Group plc Siltasaarenkatu 18-20 00530 Helsinki, Finland

Trade reg. no. 611.522

Business ID 0997039-6

Contents

Annual report

Annual report 4

Key indicators 11

Principles for calculating the key indicators 13

Information on shares, shareholders and options 14

Consolidated financial statements (IFrS)

Consolidated income statement 16

Consolidated statement of comprehensive income 17

Consolidated balance sheet 18

Consolidated cash flow statement 19

Calculation of changes in consolidated shareholders' equity 20

Notes to the consolidated financial statements 21

parent company's financial statements (FAS)

Parent company's income statement 52

Parent company's balance sheet 53

Parent company's cash flow statement 55

Notes on the parent company 57

Calculation of changes in the parent company's shareholders' equity 62

Signatures to the financial statements and report of the Board of Directors 64

Auditor's report 66

Annual report

1 January-31 December 2023

Summary of the financial period

Financial period January-December 2023 (comparable figures for 2022 in parentheses):

• ■ Turnover: EUR 16.7 million (EUR 18.6 million), change: −10.1%.

• ■ EBITDA: EUR − 0.9 million* (EUR −2.8 million), −5.2% of turnover (−15.1%).

• ■ EBIT: EUR −1.7 million* (EUR −4.4 million**), −10.2% of turnover (−23.7%).

• ■ Net income in the financial period: EUR −4.1 million* (EUR −6.4 million**), −24.5% of turnover (−34.7%).

• ■ Earnings per share: EUR −0.01 (EUR −0.01).

• ■ Earnings per share (diluted): EUR −0.01 (EUR −0.01).

• ■ Cash flow from operations: EUR −2.3 million (EUR −2.2 million).

• ■ Number of employees at the end of the financial period: 126 (150), decrease of 17.3%.

* EBIT, EBITDA and net income of the period were impacted by a booked gain of EUR 0.6 million from the FutureLab share transaction and EUR 0.3 million is attributed to the write-down of Turret accounts payable and an additional purchase price related to the Ticknovate divestment.

** EBIT and net income of the comparison period were impacted by an impairment charge of EUR 0.2 million against the right-of-use assets concerning the subletting of Digitalist UK Ltd's rental premises.

Business

Digitalist Group combines brand strategy, the client expe-rience, design and technology to help its clients succeed and remain meaningful in a constantly-evolving digital environment. Our innovative services offer Digitalist Group a competitive advantage in markets where companies have increasingly identified a positive client experience as a key source of competitive advantage.

Our Branding service develops clients' brands, marketing and client experiences. Our Design services include digital design and service design, from design strategy and user research to visual to visual and interaction design, prototype design and usability research.

In technology services, we have robust expertise in devel-oping creative soſtware solutions with respect to hardware, embedded systems and soſtware. We offer digital services for open-source environments, and we are the leading web designand integration expert in Sweden. Our main clients in Sweden are municipalities, government agencies and NGOs that have chosen an open source strategy.

In addition to its service- and consulting-oriented businesses, Digitalist Group has two highly interesting SaaS businesses with strong growth potential: LeanLab and Open Cloud. LeanLab is a key tool in our usability and user experience offering, providing the opportunity to build client understanding and co-develop with clients and personnel. Open Cloud offers open source products as a service.

The Group's head office is in Helsinki. In addition to Finland, the Group has offices and significant business oper-ations in Sweden (Stockholm). Digitalist's branding, design and technology specialists work together to provide their diverse expertise to its clients. Digitalist Group focuses on its core businesses in the European markets, especially in Sweden and Finland. Consequently, its operations in Canada have been stripped back.

2023

In 2023, we rationalised our operations, made acquisitions and divestments, and continued our efforts to build profitable business operations in challenging market conditions.

Uncertainty has continued over the past year, and the more difficult circumstances impacted our turnover, reducing it to EUR −16.7 million in the 2023 financial period from EUR 18.6 million in 2022. Nonetheless, our cost-saving projects are yielding results, reducing operating costs by EUR 3.9 million during the 2023 financial period and improv-ing EBITDA in both absolute and percentage terms.

Despite the decline in turnover, our strategic decisions - such as the sale of FutureLab & Partners AB and the acquisition of Open Communications International AB - combined with our concentration on our core businesses in the European market have laid the foundation for a healthier, more efficient Digitalist Group. Our EBITDA has improved from EUR −2.8 million in 2022 to EUR −0.9 million in 2023.

The acquisition of Walker & Handson Oy in February strengthened our design and digital transformation capabil-ities and laid the foundation for future growth opportunities in Finland. e acquisition of Open Communications Inter-national AB in July strengthened the Group's expert services in branding, strategy and communications and added several international clients to our portfolio. In addition, the sale of FutureLab & Partners AB and the downsizing of operations in Canada have supported our focus on our core businesses and markets and boosted our financial flexibility.

Our commitment to improving operational efficiency and profitability has been consistent. e additional savings programmes in our subsidiaries and adjustments to bring the cost structure into line with the current market outlook have enabled us to make significant advances towards restoring our financial position.

Innovations, such as Open Cloud, our new SaaS offering that offers open-source products as a service, are an example of our efforts to meet the growing demand for products and services based on open technologies. is, allied with stable growth in our LeanLab SaaS business, underscores our com-mitment to identifying new growth areas and strengthening our market position.

Our focus on the private and public sectors continues to bear fruit. New framework agreements and long-term cooperation with clients such as the City of Helsinki, EQT and Business Sweden have diversified our client base and strengthened our position in critical sectors that are less affected by the weaker market situation.

Our journey toward sustainable profitability and growth requires constant effort and acceleration. As we move into 2024, Digitalist Group will leverage the strengths of its talented and diverse team, optimise its offering and take advantage of new opportunities. We would like to thank our employees, clients and stakeholders for their support and dedication in 2023.

General meeting of 26 April 2023 and Board of Directors' authorisations

Digitalist Group Plc's Annual General Meeting, which was held on 26 April 2023, adopted the financial statements for the financial year that ended on 31 December 2022 and discharged the members of the Board of Directors and the CEO from liability for the financial period that ended on 31 December 2022. As proposed by the Board of Directors, the Annual General Meeting decided not to pay a dividend for 2022.

e Annual General Meeting decided that the Board of Directors would have six members. Paul Ehrnrooth, Andreas Rosenlew, Esa Matikainen, Peter Eriksson, Maria Olofsson and Johan Almquist were re-elected as members of the Board of Directors.

e Annual General Meeting decided to pay the following emoluments to members of the Board of Directors: chair of the Board: EUR 40,000/year and EUR 500/meeting, deputy chair: EUR 30,000/year and EUR 250/meeting, other Board members: EUR 20,000/year and EUR 250/meeting. e fee for meetings of the Board's committees is EUR 500/meeting for the chair and EUR 250/meeting for the members.

KPMG Oy Ab, a firm of auditors, was elected as the company's auditor. e auditor with principal responsibility nominated by the audit firm is Miika Karkulahti, Authorised

Public Accountant. e decision was taken to pay the auditor's fee in accordance with a reasonable invoice.

At the end of the financial period, the Board of Directors had two valid authorisations. e Annual General Meeting held on 26 April 2023 granted the following authorisations:

AutHorISInG tHe BoArD oF DIreCtorS to DeCIDe on SHAre ISSueS AnD tHe GrAntInG oF SpeCIAl rIGHtS entItlInG HolDerS to SHAreS.

e Annual General Meeting authorised the Board of Direc-tors to decide on a paid share issue, as well as the issue of options and other special rights entitling their holders to shares as referred to in chapter 10, section 1 of the Limited Liability Companies Act, or a combination of all or some of the foregoing on one or more occasions, subject to the following conditions: e total number of new shares to be issued under this authorisation may not exceed 341,211,370.

e Board of Directors was authorised to decide on all the terms and conditions of share issues and special rights enti-tling their holders to shares within the limits of the foregoing authorisation, such as the condition that the subscription price may be paid in cash or by offsetting the value against the subscriber's outstanding receivables from the company.

e Board of Directors was authorised to decide to recog-nise the subscription price either as an increase in the share capital or in the invested unrestricted equity fund, either in whole or in part.

Shares and special rights entitling their holders to shares may also be issued in a directed issue in deviation from the shareholders' pre-emptive rights if there is a weighty finan-cial reason to do so in accordance with the Limited Liability Companies Act. In such a case, the authorisation may be exercised in order to finance corporate acquisitions or other investments in the company's business, to maintain and increase the Group's solvency or to implement its incentive scheme.

e authorisation is valid until the 2024 Annual General Meeting or 30 June 2024, whichever is first. The Board of Directors exercised its authority and decided on a directed issue of 11,007,709 shares on 4 July 2023.

AutHorISAtIon oF tHe BoArD oF DIreCtorS to DeCIDe on tHe ACQuISItIon oF treASurY SHAreS

e general meeting authorised the Board of Directors to decide on the acquisition or distraint of up to 68,242,000 of the company's own shares using the company's distributable assets. e purchase may take place on one or more occasions. e purchase price of the shares may be no more than the highest price paid for the shares in public trading at the time of purchase. When treasury shares are purchased, ordinary derivative contracts, share lending or other contracts may be made in capital markets as provided by the laws and regu-lations. e authorisation entitles the Board of Directors to

decide on the purchase of shares in proportions other than the holdings of the existing shareholders (directed acquisition).

Shares may be purchased for use in executing corporate acquisitions or other arrangements as part of the company's business, to improve the company's financial structure, or otherwise for onward conveyance or cancellation.

e authorisation includes the right of the Board of Direc-tors to decide on all other matters related to the purchase of shares. e authorisation is valid until the 2024 Annual General Meeting or 30 June 2024, whichever is first. The authorisation had not been used by the publication date of the financial statement release.

AMenDMent oF tHe ArtICleS oF ASSoCIAtIon

The Annual General Meeting decided to amend clause 8 (Notice of meetings) of the company's Articles of Association to the effect that the heading mentions the meeting venue, and provisions concerning the meeting venue and remote meetings were added to the second paragraph.

The minutes of the Annual General Meeting and the decisions made are on the company's website at https:// investor.digitalistgroup.com/fi/investor/governance/annual -general-meeting.

offices

Our offices are located in our primary markets of Finland and Sweden. ese offices have technology and design experts and a local sales organisation.

Segments

Digitalist Group reports its business in a single segment.

turnover

e Group's turnover for the period totalled EUR 16.7 million (EUR 18.6 million), which is 10.1% less than in the previous year. Full-year turnover did not meet the target. Inflation, higher interest rates and other factors contributing to economic uncertainty made clients more cautious about initiating new projects. Turnover outside Finland accounted for the majority of the Group's turnover in the financial period, standing at 61% (74%).

result

EBITDA for the financial period was EUR −0.9 million (EUR −2.8 million), EBIT was EUR −1.7 million (EUR −4.4 million) and earnings before taxes were EUR −4.0 million (EUR −6.4 million). Operating expenses decreased by EUR 3.9 million year-on-year. Of this figure, sub-contracting expenses decreased by EUR −1.1 million and per-sonnel costs by EUR −1.4 million as a consequence of efficiencyenhancement measures and divestments. EBIT, EBITDA and net income of the period were impacted by a booked gain of EUR 0.6 million from the FutureLab Share transaction and EUR 0.3 million is attributed to the write-down of Turret accounts payable and an additional purchase price related to the Ticknovate divestment. EBIT and net income of the comparison period were impacted by an impairment charge of EUR 0.2 million against the right-of-use assets concerning the subletting of Digitalist UK Ltd's rental premises.

Net financial items amounted to EUR −2.3 million (EUR −2.0 million), consisting mainly of external interest expenses related to financing loans and related party loans. Earnings for the financial period came to EUR −4.1 million (EUR −6.4 million), earnings per share were EUR −0.01 (EUR −0.01), and cash flow from operations per share was EUR −0.01 (EUR −0.00).

Investments

The Group's subsidiary, Digitalist Finland Ltd, purchased the share capital of Walker & Handson Oy during the financial period. The acquisition price was approximately EUR 0.9 million, of which EUR 0.6 million was recognised as an increase in goodwill.

Digitalist Group acquired the share capital of Open Com-munications International AB, which is based in Sweden. e acquisition price was approximately EUR 0.9 million, of which EUR 0.5 million was recognised as an increase in goodwill.

Other investments during the financial period totalled EUR 0.0 million (EUR 0.0 million). ere were no research and development expenses during the financial period. At the end of the review period, research and development expenses capitalised on the balance sheet totalled EUR 0.0 million (EUR 0.0 million).

Balance sheet, financing and return on capital

e balance sheet total was EUR 11.4 million (EUR 12.2 million).

Shareholders' equity amounted to EUR −32.7 million (EUR −30.8 million). The proportion of shareholders' equity attributable to minority interests is EUR 0.1 million (EUR 0.5 million). e solvency ratio was −285.9% (−252.0%). Return on equity (ROE) was negative. Return on investment (ROI) was −27.8% (−75.6%). e Group's shareholders' equity was negatively affected by the loss for the financial period.

At the end of the period, the Group's liquid assets totalled EUR 0.9 million (EUR 0.9 million). At the start of 2023, the company made an agreement with its financing bank to raise its financing limit by EUR 0.7 million. e minority sharehold-ers of Digitalist Open Tech AB (formerly Digitalist Sweden AB) paid EUR 1.4 million in long-term debt to Digitalist Group Plc

during the financial period. e sale of FutureLab improved liquid assets by EUR 1.2 million.

At the end of the financial period, the Group's balance sheet recognised EUR 11.2 million(EUR 11.0 million) in loans from financial institutions, including the overdraſts in use. Lease liabilities under IFRS 16 amounted to EUR 1.0 million (EUR 1.3 million). In addition, the company has loans from its main owners. On 31 December 2023, the Group's interest-bearing liabilities amounted to EUR 35.7 million (EUR 35.3 million), of which related-party loans amounted to EUR 23.4 million (EUR 23.1 million). Of the related-party loans, EUR 16.9 million (EUR 16.8 million) are capital loans. The loan agreements made with related-party companies during the financial period are in the section of the financial statements entitled related-party transactions. Further infor-mation about capital loans is provided in the notes concerning the parent company.

Cash flow

e Group's cash flow from operating activities during the review period was EUR −2.3 million (EUR −2.2 million), a change of EUR −0.1 million. Improved profitability, repay-ments of loan receivables, a larger overdraſt facility, and the sale of FutureLab & Partners AB have contributed to the improvement of the company's liquid assets. e change in working capital has had a negative effect on cash flow.

In order to reduce the rate of turnover of trade receiv-ables, the Group sells some of its trade receivables from Finnish clients. Trade receivables worth EUR 3.2 million (EUR 3.1 million) were sold during the financial period.

Goodwill

On 31 December 2023, the consolidated balance sheet rec-ognised EUR 5.4 million (EUR 4.7 million) in goodwill. e acquisitions of Walker & Handson Oy and Open Communica-tions International AB and the sale of FutureLab & Partners AB affected goodwill. e company tested sits goodwill in accordance with IAS 36 on 30 June 2023 and 31 December 2023. ere was no need for impairment.

personnel

e average number of employees during the financial period was 139 (159), and the Group had 126 (150) employees at the end of the period. At the end of the financial period, 52 (60) of the Group's personnel were employed in the companies in Finland and 72 (90) were employed in the companies abroad.

Shares and share capital

trADInG VoluMe AnD prICe

During the financial period, the company's share price hit a high of EUR 0.03 (EUR 0.04) and a low of EUR 0.01 (EUR 0.02), and the closing price on 31 December 2023 was EUR 0.02 (EUR 0.02). e average share price in the financial period was EUR 0.02 (EUR 0.03). During the financial period, 40,711,793 (72,922,285) shares were traded, corresponding to 6.0% (10.7%) of the number of shares in circulation at the end of the period. Market capitalisation at the closing share price on 31 December 2023 was EUR 10,236,341 (EUR 12,966,032). Further information is in the section of the notes entitled "Information on shares, shareholders and options".

SHAre CApItAl

e company's registered share capital at the beginning of the financial period was EUR 585,394.16, and there were 682,422,746 shares. At the end of the period, the share capital was EUR 585,394.16, and there were 693,430,455 shares. e company has one class of shares. At the end of the financial period, the company held 7,664,943 of its own shares, or 1.1% of the total float.

optIon SCHeMeS 2019 AnD 2021

e company's Board of Directors stated that the undistrib-uted options from the 2019 option scheme have lapsed. Of the options included in the 2019 stock option scheme, a total of 3,580,500 options belonging to the 2019A1 and 2019A2 series were granted. ese options enable the subscription of a maximum of 1,302,000 new shares in the company in accordance with the conditions of the option scheme. e options programme has lapsed in other regards.

The options belonging to the company's 2021 option scheme are labelled 2021A1, 2021A2, 2021B1, 2021B2 and 2021C1. A maximum total of 60,000,000 options can be issued, and they entitle their holders to subscribe for a maximum of 60,000,000 new shares in the company.

e theoretical market value of the options allocated by the end of the financial period is approximately EUR 0.8 million, which will be recognised as expenditure in accordance with IFRS 2 from 2021 to 2025. A total of EUR 0.2 million of the expenditure item will be allocated to 2023. ere will be no cash-flow effect from the expense.

Descriptions of the option programmes are on the com-pany's website athttps://digitalist.global.

SHAreHolDerS

e number of shareholders on 31 December 2023 was 5,578 (5,457). Private individuals owned 10.4 (10.1) per cent and entities held 79.5 (79.5) per cent. Foreign nationals or entities held 10.0 (10.4) per cent of the shares. Nominee-registered shares accounted for 6.3 (3.4) per cent of the total.

related-party transactions

FInAnCInG ArrAnGeMentS

WItH relAteD pArtIeS

On 31 October 2023, Digitalist Group made an agreement with Turret Oy Ab on a loan of EUR 2.0 million. e company is entitled to withdraw the loan in instalments by 31 December 2024. e loan was agreed on market terms, and it matures on 31 December 2025. Turret is Digitalist Group's largest shareholder.

CoMpAnY ArrAnGeMentS WItH relAteD pArtIeS

Digitalist Group sold its wholly-owned subsidiary FutureLab & Partners AB on 4 July 2023. e equity transaction was executed by selling FutureLab's entire share capital to Turret Oy Ab. Turret is Digitalist Group's largest shareholder. e transaction price was EUR 1.2 million, and it was paid in cash.

Changes in the Group structure

On 23 February 2023, Digitalist Group Plc's subsidiary, Digi-talist Finland Ltd, acquired the entire share capital of Walker & Handson Oy in a share exchange by directing new shares in Digitalist Finland Ltd to Walker & Handson Oy in an amount equivalent to approximately 10% of all Digitalist Finland Ltd's shares aſter the share issue. Under the arrangement, W&H's owner, Jussi Hermunen, was appointed CEO of Digitalist Finland Ltd. Walker & Handson Oy merged with Digitalist Finland Ltd on 31 December 2023.

Digitalist Group Plc agreed on a directed share issue at a subscription price of EUR 250,000 to a holding companyowned by the CEO of LeanLab Oy on 19 June 2023. Following the share issue, the management gained a 15% minority shareholding in LeanLab Oy.

On 4 July 2023, Digitalist Group acquired the share capital of Open Communications International AB ("OC"), which is based in Sweden. Digitalist Group acquired 70% of OC's share capital by paying SEK 2.5 million in cash and the remaining 30% of OC's share capital with a share issue of up to 11,007,709 new shares in Digitalist Group directed to David Gray's holding company. In addition, Digitalist Group acquired the remaining 30% of OC's share capital by transferring shares in its wholly-owned subsidiary Grow AB to the sellers. e total transaction price was SEK 10.6 million. Following the arrangement, the sellers gained a 10% minority shareholding in Grow AB, and Digitalist Group retained its 90% holding.

Digitalist Group sold its wholly-owned subsidiary Future-Lab & Partners AB on 4 July 2023. e equity transaction was executed by selling FutureLab's entire share capital to Turret Oy Ab. Turret is Digitalist Group's largest shareholder. e transaction price was EUR 1.2 million, and it was paid in cash.

events since the financial period

In the course of preparing the financial statements for the fiscal year 2023, Digitalist Group identified the need for write-downs amounting to EUR 3.1 million related to the value of subsidiaries in the balance sheet. Due to the write-downs, the Company's equity will is less than half of the Company's share capital in the 2023 financial statements.

In order to strengthen the Company's equity, Digital Group decided on 22 March 2024 to utilize the right provided by Turret Oy Ab ("Turret") and Holdix Oy Ab ("Holdix") to convert a total of 1,907,175.40 euros and interest 334,513.29 euros of the principal and interest of the convertible bonds 2021/3 and 2021/4 subscribed by Turret and Holdix into a capital loan in accordance with Chapter 12 of the Limited Liability Companies Act.

e company announced the details of the arrangement on 22 March 2024 and published a stock exchange release.

risk management and short-term uncertainties

e objectives of Digitalist Group Plc's risk management are to ensure the undisrupted continuity and development of the company's operations, support the achievement of the com-pany's business objectives and increase the company's value. For more details about the organisation of risk management, processes and identified risks, see the company's website athttps://digitalist.global.

e company has been making a loss despite the efficiency measures it has taken. e company's loss-making perfor-mance directly affects its working capital and the sufficiency of its financing. is risk is managed by maintaining the capacity to use different financing solutions. e company aims to continuously assess and monitor the amount of necessary business financing to ensure that it has sufficient liquid assets to finance its operations and repay maturing loans. Any disruptions in the financial arrangements would weaken Digitalist Group's financial position.

e company is currently dependent on external financ-ing, most of which has been obtained from related-party companies and financial institutions. Digitalist Group's ability to finance its operations and reduce the amount of its debt depends on several factors, such as the cash flow from operations and the availability of debt and equity financing, and there is no certainty that such financing will be available in the future. Similarly, there can be no certainty in the long term that Digitalist Group will be able to obtain additional debt or refinance its current debt on acceptable terms, if at all. In 2022, the company rearranged its short-term loans with both the main owner and a financial institution. Negotiations began in autumn 2023 on the arrangements for related party convertible bonds maturing during 2024. Aſter the end of the financial year, Digitalist Group has received a confirmation from its main owners regarding rescheduling of the due dates of the loans, and ensuring the Company's capability to meet its payment obligations for a minimum period of 12 months ahead.

Any changes to key client accounts could have a sub-stantial impact on Digitalist Group's operations, earning potential and financial position. If one of Digitalist Group's largest clients decided to switch to a competing company or drastically altered its operating model, the chances of finding client volumes to replace the shortfall in the near term would be limited.

The Group's business consists mainly of individual client agreements, which are often relatively short-term. Forecasting the start dates and scopes of new products is occasionally challenging, while the cost structure is largely fixed. e aforementioned aspects can lead to unpredictable fluctuations in turnover and, thereby, in profitability. Some of the Group's business consists of fixed-price deliveries. Fixed-price client deliveries carry risks related to timing and content. The company endeavours to manage these risks through contractual and project management measures.

Irrespective of the market situation, there is a shortage of certain experts in the Group's business sector. Furthermore, the aggressive recruitment policies that occasionally arise in the Group's business sector may increase the risk of per-sonnel moving to competitors. ere are no guarantees that the company will be able to retain its current personnel and recruit new employees to sustain growth. If Digitalist Group loses a significant number of its current personnel, it would be more difficult to complete existing projects and acquire new ones. is could have an adverse impact on Digitalist Group's business, earnings and financial position.

Cost inflation is exerting pressure to raise salaries, so the importance of cost monitoring is emphasised further. Rising interest rates do not have a significant direct impact on financ-ing costs because most of the company's debts have fixed interest rates. If the interest rates on the company's loans from financial institutions rose by 1 per cent, the company's annual interest costs would rise by approximately EUR 0.1 million.

Part of the Group's turnover is invoiced in currencies other than the euro - mainly in the Swedish krona. e risk associated with changes in exchange rates can be managed in various ways, including net positioning and currency hedging contracts. In 2023 and 2022, the Group had no hedging contracts.

e Group's balance sheet contains goodwill that is subject to impairment risk in the event that the Group's future yield expectations decrease due to internal or external factors. e goodwill is tested for impairment every six months and whenever the need arises.

General economic uncertainty and low growth forecasts in the company's key markets affected the Group's business during the financial period, but the future impact is difficult to estimate. Geopolitical uncertainty may affect the business activities of some of the Group's clients, thereby indirectly affecting the Group's business. e Group has no business activities in Russia or Ukraine.

Corporate governance

Digitalist Group Plc is governed in accordance with the Finnish Limited Liability Companies Act (624/2006, including amendments), Securities Markets Act (746/2012, including amendments), the Market Abuse Regulation (EU) No 596/2014 (MAR), Nasdaq Helsinki Ltd's rules and regulations for listed companies, and Digitalist Group Plc's Articles of Association. In addition, the company complies with the Corporate Gov-ernance Code 2020 with respect to the recommendations that took effect on 1 January 2020. e Corporate Governance Statement, which listed companies are required to publish under the Corporate Governance Code, was appended to the review by the Board of Directors, published on 28 March 2024. e report is available on the company's website. Insider guidelines in accordance with the MAR ((EU) No. 596/2014) were published as a separate appendix to the review by the Board of Directors in September 2018. e report is available on the company's website.

parent company

e parent company, Digitalist Group Plc, had no net sales in 2023 and 2022. e operating profit was EUR −0.6 million (EUR −1.2 million). Earnings for the financial period were EUR −4.6 million (EUR −5.3 million). The earnings for the period were affected by an impairment charge of EUR 3.5 million (EUR 2.5 million) on subsidiary shares and Group receivables.

The balance sheet total was EUR 23.2 million (EUR 28.0 million). Shareholders' equity amounted to EUR −16.9 million (EUR −12.5 million). Shareholders' equity was EUR 0.0 million (EUR 4.4 million), taking into consider-ation the conversion of EUR 16.9 million of convertible bonds into capital loans.

Due to the impairment charges recognised in the finan-cial statements, the company's shareholders' equity on the balance sheet date is less than half of its share capital. However, the partial conversion of the 2021/3 and 2021/4 convertible bonds held by Turret Oy Ab and Holdix Oy Abinto capital loans - announced by the company on 22 March 2024 - has strengthened the Company's balance sheet and financial solidity.

e equity ratio was 0.1% (16.1%), taking into account the capital loans. At the end of the period, the parent company's liquid assets totalled EUR 0.00 million (EUR 0.00 million).

e average number of employees during the financial period was 0 (1), and the Group had 0 (0) employees at the end of the period. Salaries and bonuses amounted to EUR 0.3 million (EUR 0.4 million), pension expenses were EUR 0.0 million (EUR 0.0 million), and other personnel add-on costs were EUR 0.0 million (EUR 0.0 million). Personnel expenses totalled EUR 0.3 million (EUR 0.4 million), which is approximately 26.5% of operating expenses (27.2%).

Cash flow from operating activities in the financial period amounted to EUR −2.1 million (EUR −0.4 million).

EUR 1.0 million of interest on capital loans in the 2023 financial period was not recognised as an expense. Further information about capital loans is provided in the notes concerning the parent company.

outlook for the future

In 2024, it is expected that turnover will maintain its current level and EBITDA will improve in comparison with 2023.

proposal by the Board of Directors to the Annual General Meeting

e Board of Directors of Digitalist Group Plc proposes to the Annual General Meeting that the distributable funds be retained in shareholders' equity and that no dividend be distributed to shareholders for the 2023 financial period. On 31 December 2023, the parent company had distributable assets of EUR −17,675,655.

Digitalist Group Plc's Annual General Meeting will be held in Helsinki on ursday 25 April 2024.