Board of Directors’ Report and
Consolidated Financial Statements
(IFRS)
January 1 – December 31, 2021
Financial period
Business ID: 2767842-8
Board of Directors’ Report and Consolidated Financial
Statements (IFRS)
Financial period January 1 – December 31, 2021
Sitowise is a Nordic specialist and digital expert in the built
smarter and more sustainable urban development as well
as smooth transportation. We operate in three business
areas in Finland and Sweden: real estate and buildings,
infrastructure, and digital solutions.
We want to raise the bar of being smart and sustainable,
which is why our vision is to be the most responsible
partner in developing a prosperous living environment.
Sitowise has grown rapidly and profitably in the past years.
The group’s net sales were EUR 179 million in 2021 and the
company employs over 2,000 experts. Sitowise Group Plc
is listed on Nasdaq Helsinki as SITOWS..
www.sitowise.com
SITOWISE GROUP PLC
2 Consolidated Financial Statements 2021
Board of Directors’ Report and
Contents
BOARD OF DIRECTORS’ REPORT ................................................................................................
CONSOLIDATED FINANCIAL STATEMENTS IFRS ...............................................................................
Consolidated statement of comprehensive income ...................................................................................
Consolidated statement of financial position .........................................................................................
Consolidated cash flow statement ...................................................................................................
Statement of changes in consolidated equity ........................................................................................
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS .........................................................................
General information ......................................................................................................
. Accounting policies ............................................................................................................
. Translation of items denominated in foreign currencies .........................................................................
. Key decisions made by the management requiring discretion and main uncertainty factors relating to estimates .................
Operating profit ..........................................................................................................
. Segment reporting ............................................................................................................
. Net sales ......................................................................................................................
. Other operating income .......................................................................................................
. Materials and services .........................................................................................................
. Personnel expenses ...........................................................................................................
. Other operating expenses .....................................................................................................
. Depreciation, amortization, and impairment ....................................................................................
Operational assets and liabilities ..........................................................................................
. Business combinations ........................................................................................................
. Goodwill and other intangible assets ...........................................................................................
. Tangible assets ................................................................................................................
. Trade and other receivables ...................................................................................................
. Provisions .....................................................................................................................
. Accounts payable and other liabilities ..........................................................................................
Financial items and capital structure ......................................................................................
. Financial income and expenses ................................................................................................
. Financial assets and liabilities ..................................................................................................
. Shareholders’ equity ..........................................................................................................
Financial and capital risks .................................................................................................
. Management of financial risks .................................................................................................
. Management of capital risks ...................................................................................................
Discontinued operations ..................................................................................................
Other notes ...............................................................................................................
. Group structure ...............................................................................................................
. Income taxes ..................................................................................................................
. Related party transactions .....................................................................................................
. Guarantees and contingent liabilities ...........................................................................................
. Disputes and litigation .........................................................................................................
. Major events after the closing date .............................................................................................
PARENT COMPANY'S FINANCIAL STATEMENTS ..............................................................................
Sitowise Group Plc income statement (FAS) .........................................................................................
Sitowise Group Plc balance sheet (FAS) ..............................................................................................
Sitowise Group Plc: Cash flow statement (FAS) ......................................................................................
Sitowise Group Plc: Notes to the financial statements (FAS) ..........................................................................
SIGNATURES OF THE BOARD OF DIRECTORS AND AUDITOR’S NOTE .........................................................
Board of Directors’ proposal for the distribution of profit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Signatures to the financial statements and Board of Directors’ report .................................................................
AUDITING ......................................................................................................................
Auditor’s Report ....................................................................................................................
Independent Auditor’s Reasonable Assurance Report on Sitowise Group PLC ESEF Financial Statements .............................
SITOWISE GROUP PLC
Board of Directors’ Report and Consolidated Financial Statements 2021 3
BOARD OF DIRECTORS’ REPORT
In July, Sitowise sought growth in Sweden and in the digital
market by acquiring Infracontrol AB, which builds real-time digital
solutions for transportation and infrastructure, oering solutions
to more than 120 Swedish municipalities as well as Sweden’s
national transportation and infrastructure authorities. The
acquisition further widened Sitowise’s digital solutions market.
In July the Group further extended its range of expert services in
Finland by acquiring Enco Oy, a digital real estate management
specialist.
Towards the end of the year, Sitowise strengthened its special
expertise and regional position by acquiring HVAC engineering
specialist Livair Oy in November and Insinööritoimisto Jorma
Jääskeläinen Oy, an engineering company specializing in
structural engineering and consultancy, in December. At the turn
of the year the Group acquired VRT Finland Oy’s business that
specializes in condition studies of structures below and above the
waterline.
Sitowise’s Board of Directors adopted a new sustainability
program for the Group in December 2021, which covers the
period up to 2025. The program is founded on Sitowise’s vision
of being the industry’s most responsible partner and built around
four measurable goals: Sitowise is carbon neutral in 2025,
Sitowise is the most equal workplace with best employee well-
being in the industry, Sitowise aims for sustainable economic
growth, and Sitowise actively contributes to make the industry
more sustainable. The sustainability program applies to all
Sitowise employees and calls for improvement on every level of
the organization.
Sitowise developed and launched its own sustainability tool in
the spring of 2021, which was used in 34% of all new projects
in Finland at the end of the year. The goal is to deploy the tool
across all of the Group’s projects.
Strategic growth – toward being the industry’s
most responsible
The Group’s net sales and profitability continued to grow in 2021,
in addition to which Sitowise’s order book reached a record-high
level. The number of experts increased beyond 2,000 during the
year thanks to both acquisitions and organic growth. Sitowise’s
personnel satisfaction remained at a healthy level, and leadership
in particular was once again rated especially high by personnel.
Sitowise’s Management Team was strengthened in November,
when Jonas Larsson took up his position as Head of Swedish
Operations.
Sitowise took a significant step towards growth with the IPO on
the main list of the Nasdaq Helsinki in March. The IPO promoted
growth, strengthened the balance sheet, and expanded the
shareholder base. Thanks to the listing, more than half of the
Group’s personnel are also now shareholders. Sitowise has a long
tradition of employee ownership, and this strong trust provides a
good base for the next step. Sitowise continues to implement its
growth strategy both in Finland and in other Nordic countries not
just through acquisitions but also organically.
Sitowise made eight acquisitions in 2021 that strengthened the
Group in Sweden both geographically and in terms of the service
concept. The acquisitions expanded and complemented also the
Group’s expertise in climate and sustainability services, digital
solutions, and technical design and consultancy in Finland.
The Group’s digital business was boosted in February by the
acquisition of Sweetlakes Oy, a specialist in cloud and mobile
development as well as information system solutions for the
security sector. In Sweden, Sitowise strengthened its building
services engineering competence by acquiring Stockholms VVS-
Kompetens AB, which has oces in Stockholm and Södertälje.
The Group’s sustainability expertise was increased through the
acquisition of two providers of sustainable development services.
Benviroc Oy is the market leader in Finland in the provision of
municipality-level emissions inventories and CO
2
reporting, and
MSDI Oy has developed a digital tool for municipal sustainability
management and decision-making.
partner
SITOWISE GROUP PLC
Board of Directors’ Report and Consolidated Financial Statements 2021 5
Key figures (IFRS)
Net sales by business area (IFRS)
Active investment in customer and sales work and close
cooperation with customers increased the order book of the
Buildings business throughout the year. This, in turn, was
reflected as e.g. an increase in the need for resources and
recruitment.
The net sales of the Buildings business area increased by 2% to
72.1 million euros in 2021. The business area accounted for 40%
of Sitowise’s total net sales.
The strong order book, significant projects and committed
personnel kept the Infrastructure business area competitive and
invigorated also in 2021. The needs of the future are better met
by developing the expertise and services. The year 2021 started
with a strong order book and without signs of major changes in
the infrastructure engineering market.
In the face of intensified competition, Sitowise managed to
hold on to its wide range of services and experts at its core.
The turnover of personnel in the Infrastructure business has
decreased since 2020. One of Sitowise’s competitive advantages
as an employer is investing in supervisory work.
The service oering was further developed, and an array of
sustainable development services was established during the
EUR million 2021 2020 2019 Change 2020–2021
Net sales . . . .%
EBITA, adjusted . . . .%
% of net sales .% .% .%
EBITA . . . -.%
Operating profit . . . -.%
Cash flow from operating activities before financing
items and taxes
. . . -.%
Net debt . . . -.%
Net debt / EBITDA, adjusted .x .x .x
Equity ratio, % .% .% .%
Earnings per share (EPS), EUR *) . . .
Average number of personnel , , , .%
*) Not comparable due to the changes in the number of shares resulting from the IPO at the end of the review period.
EUR million 2021 2020 2019 Change 2020–2021
Buildings . . . .%
Infrastructure . . . .
Digital Solutions . . . .%
Sweden . . . .%
Others . . .
Total 179.3 160.1 143.0 12.0%
The Sitowise Group revised its organization in September after divesting its telecommunications business. The reference figures for have been adjusted
to correspond with the new organization. The group ‘Others’ includes discontinued operations and eliminations between business areas.
DEVELOPMENT IN BUSINESS OPERATIONS
In the Buildings business, the slowdown in the long-running
housing market boom caused by the COVID-19 pandemic
could be seen as general cautiousness in construction market
investments, which had a significant impact on the business in
2021. Additional challenges were brought by availability problems
and rising costs of building materials, which slowed down the
progress of projects and were reflected as slow starts of projects.
During the year, the Buildings business launched numerous new
services to meet the new needs of the market. The new services
cover i.e. the prevention of the spread of infectious diseases and
the simulation of carbon neutrality and carbon footprint. The
business also focused on developing low-carbon construction
services to meet growing market demand brought about by
clients’ new carbon neutrality goals.
Due to the challenging market situation, scalability was utilized
throughout the business. During the year, the emphasis was
shifted between renovation and new construction, experts
were cross-utilized between businesses, and the share of the
government and industrial sectors was strengthened. The
demand and significance of areas of special expertise continued
to increase in 2021.
Board of Directors’ Report and Consolidated Financial Statements 2021
SITOWISE GROUP PLC
6
year, which is a response to meeting and exceeding more
environmentally conscious goals and requirements. Under the
array, Sitowise develops low-carbon solutions and strengthened
its position as a service provider for climate risks and adaptation.
The sustainable development service array supports Sitowise’s
vision of being the most responsible partner in our field.
The Infrastructure business area ended its year in a stable
position in terms of both its order book and personnel. The year
was a success, and the net result proved the direction for the
business to be right.
The net sales of the Infrastructure business area increased by 3%
to 55.9 million euros in 2021. The business area accounted for
31% of Sitowise’s total net sales.
One of the targets for Digital Solutions during the year was to
grow the business of operative and real-time IT solutions. The
growth of Sitowise’s Digital Solutions has been about double
when compared to the rest of the market. The growth strengthens
Sitowise’s position as the digital solutions vanguard and enables
the implementation of more interesting and comprehensive
information system solutions.
There is fierce competition for digital solution talent. Throughout
the year, Sitowise invested in the recruitment and onboarding
of specialists and in the amenities, development, and support of
employees and teams, i.e. in the form of its own internal guild
activities. Talent is needed to enable Sitowise to meet the growing
demand for digital solutions in the built environment.
Demand for digital solutions in the built environment and mobility
is growing as predicted, and even slightly faster than the rest of
the IT industry. There is a lot going on in the smart city market
right now: megatrends, EU legislation, national strategies, digital
projects, and expert networks are pushing the digitalisation of the
industry in an unprecedented way. Sitowise sees that the market
is not yet mature and there are significant additional opportunities
for the industry to take advantage of digitalisation at dierent
stages of the life cycle of the built environment.
The net sales of the Digital Solutions business area increased by
44% to 20.3 million euros in 2021. The business area accounted
for 12% of Sitowise’s total net sales.
During 2021, the operations in Sweden were preparing for the
integration of Swedish subsidiaries into the Group. Sitowise
appointed Jonas Larsson as the head of Sitowise’s operations
in Sweden and a member of the Group Management Team.
Sitowise’s goal is to increase project co-operation and the
utilization of expertise between specialists across borders.
During the first half of the year, market uncertainty due to
the COVID-19 pandemic was more pronounced in Sweden
than in Finland. For example, public infrastructure projects
were postponed, which was reflected in the utilization rate
of the Swedish subsidiaries at the beginning of the year. The
consequences of the COVID-19 pandemic, such as high material
costs and general market uncertainty, aected projects well into
the early fall.
However, the declining utilization rate at the beginning of the
year returned to normal, and with the order book growth, the
specialists’ work base was at a good level towards the end of the
year. Sitowise also managed to successfully recruit both new and
experienced employees.
Towards the end of the year, the Swedish infrastructure and
construction markets showed signs of return to normal. There
were challenges during the year, especially in the starts of
larger public sector construction projects, and at the same time,
competition for smaller projects was fiercer. The market outlook
in Sweden is bright, as stimulus funding is expected to have a
favourable impact on the market in the coming years.
The net sales of the Swedish business area increased by 47% to
EUR 31 million in 2021. The business area accounted for 17% of
Sitowise’s total net sales.
GROUP ORDER BOOK
The revitalization of the market that began at the start of the
year continued throughout the year. The record-high order book
was also helped along by Sitowise’s active sales eorts and
successfully completed acquisitions. The order book grew by
6% compared to the third quarter of the year. The order book
was up by 41% on the end of the previous year and finished at
EUR 162 million. The biggest threat to the order book relates to
projects starting significantly late, which would damage Sitowise’s
profitability if resources could not be reallocated.
LONGTERM FINANCIAL TARGETS
The Board of Directors of the Sitowise Group set the following
long-term financial targets in connection with the IPO in 2021:
• Growth: Annual net sales growth of over 10%, including
acquisitions;
• Profitability: Adjusted EBITA margin of at least 12%;
• Leverage: Net debt / adjusted EBITDA should not exceed
2.5x, except temporarily in conjunction with acquisitions; and
• Dividend policy: Sitowise targets paying a dividend
corresponding to 30–50% of net profit.
GROUP STRUCTURE
The Group’s parent company Sitowise Group Plc operated under
the name Sitowise Holding I Oy until March 2, 2021, at which time
the company changed its name to Sitowise Group Plc. The parent
was established on August 15, 2016.
SITOWISE GROUP PLC
Board of Directors’ Report and Consolidated Financial Statements 2021 7
At the end of the financial period, the Sitowise Group consisted
of the parent company Sitowise Group Plc and the following
companies:
• Wholly owned by Sitowise Group Plc: Sitowise Oy, which
is the company’s operational subsidiary in Finland, and
foreign subsidiaries Sitowise Holding AB (whose merger with
Sitowise Group Plc was pending at the year-end and due to
be registered in January 2022) and Infracontrol AB (acquired
in July 2021) as well as its wholly owned subsidiaries
Infracontrol Espana SL, Infracontrol Portugal Lda and Sitowise
Consulting OÜ.
• Sitowise Oy’s Finnish subsidiaries Sitowise Rakennuttajat
Oy (100%), Insinööritoimisto Jorma Jääskeläinen Oy (100%,
acquired in December 2021), Insinööritoimisto Livair Oy
(100%, acquired in November 2021) and Routa Systems Oy
(51%), and foreign subsidiaries AS DWG (55%) and Sitowise
Consulting OÜ (100%).
• Wholly owned by Sitowise Holding AB: Byggnadstekniska
Byrån AB, Technology for Infrastructure projects Sweden
AB (whose wholly owned subsidiaries Technology for
Infrastructure projects Gothenburg AB, Technology for
Infrastructure projects Stockholm AB and Technology
for Infrastructure projects International AB were wound
up through liquidation on December 31, 2021) and VVS-
Kompetens AB (acquired in February 2021, whose merger
with Technology for Infrastructure projects Sweden AB was
pending at the year-end).
Sitowise Holding II Oy, which was wholly owned by Sitowise
Group Plc, merged with Sitowise Group Plc on December 31,
2021. Of the Group’s subsidiaries, Ficonic Solutions Oy was
merged into Sitowise Oy on March 31, 2021, Benviroc Oy
(acquired in February 2021), Maapörssi Oy, MSDI Oy (acquired in
February 2021) and Sweetlakes Oy (acquired in February 2021)
on October 31, 2021, and Enco Oy (acquired in June 2021) and
Paloässät Oy on December 31, 2021.
PARENT COMPANY’S BOARD OF DIRECTORS,
MANAGEMENT, AND AUDITOR
The appointment and dismissal of the Board of Directors and
any amendment of the Articles of Association are decided at the
Annual General Meeting. Composition of the Board of Directors in
2021:
Eero Heliövaara Chairman of the Board
Tomi Terho Board member
Taina Kyllönen Board member
Janne Näränen Board member until March 25, 2021
Elina Piispanen Board member
Petri Rignell Board member
Leif Gustafsson Board member since March 25, 2021
Mirel Leino-Haltia Board member since March 25, 2021
Sitowise’s Board of Directors decides on the appointment and
dismissal of the CEO. Pekka Eloholma has been the company’s
CEO since August 15, 2019. The notice period for the termination
of the CEO’s contract is six (6) months on both sides. The CEO is
not entitled to a severance package in addition to the remaining
regular pay if he resigns. If the company terminates the CEO’s
contract for any reason other than the CEO’s gross misconduct,
criminal activity or other similar reason, the CEO is entitled to
not just his regular pay for the aforementioned notice period of
six (6) months but also a severance package equivalent to up
to six (6) months’ pay, provided that he does not enter into the
employment or service of a third party during that period.
Composition of the Group Management Team on December 31,
2021: Jannis Mikkola (Executive Vice President and Business
Director, Infrastructure), Timo Palonkoski (Executive Vice
President and Business Director, Buildings), Teemu Virtanen
(Business Director, Digital Solutions), Jonas Larsson (Head of
Swedish Operations), Anne-May Asplund (CHRO), Heidi Karlsson
(CFO), Turo Tinkanen (Chief Information Ocer) and Minttu
Vilander (Chief Communications and Corporate Responsibility
Ocer).
The auditor of the parent company and the Group is KPMG Oy Ab,
with Authorized Public Accountant Turo Koila as the auditor-in-
charge.
PERSONNEL
The average number of personnel in the Group during the
financial period was 1,969 (1,823). At the end of the financial
period, the Group had 2,034 employees (1,902). The average
age of Sitowise’s employees was 39 (39) years. At the end of
2021, students accounted for 10% of the Group’s personnel.
Women accounted for 35% (35%) of the Group’s employees. Of
all employees, 81% (79% in 2019) responded to the personnel
survey. The index measured in the survey, eNPS (Employee
Net Promoter Score), was 28 (25 in 2019). Personnel expenses
amounted to EUR 115.7 (101.9) million in 2021. Reference figures
for the previous year in brackets.
ASSESSMENT OF RISKS AND UNCERTAINTIES
The significant risks and uncertainties related to the Sitowise
Group’s business include operational and damage risks, and
strategic and financial risks, to which the Group’s financial
performance is exposed. The Group’s risk assessment is based on
an annual survey that was conducted during the financial year
2021, and its results have been discussed in the Group’s Board
of Directors, management team as well as business areas. The
Sitowise Group’s risk management process and responsibilities
are described on the Group’s website (www.sitowise.com).
In terms of operational risks, the most pronounced personnel
risks of the Sitowise Group relate to the retention and coping of
personnel and the availability of new experts. Sitowise’s business
and strategy are based on skilled personnel, and talented
professionals are a key factor in securing profitable growth and
Board of Directors’ Report and Consolidated Financial Statements 2021
SITOWISE GROUP PLC
8
business. The long period of remote working due to the COVID-19
pandemic is a risk to the employee retention and engagement
to the Sitowise Group. Due to the business model’s high
dependency on personnel, maintaining a steady and profitable
order book is of great importance to the business. A sucient
order book is aimed to be maintained through an extensive
customer base, diverse workload, and continuous monitoring
of the order book. A rise in the wage level can have a negative
impact on Sitowise’s profitability and financial performance if it
cannot revise the prices of its services accordingly.
The Sitowise Group’s other operational risks relate to the project
work and include, among others, miscalculated tenders, claims
for compensation due to engineering mistakes or delays, and
exceptionally strict warranty and liability terms, which could,
if invoked, damage Sitowise’s profitability. Risks related to
tenders and projects are managed by means of regular quality
management and risk management reviews and by complying
with procedures pursuant to the ISO-certified ERP system.
The Group has developed a proprietary service platform called
Voima to facilitate the adoption of more ecient and consistent
operating methods than earlier. The Voima project management
tool contains project guidelines and templates, best practices,
bidding and project workspaces, and a risk assessment tool.
Project risks are managed already in the oering phase by
means of project guidance according to which an authorization
from the management of the relevant business area is required
before tendering for any contracts that are subject to non-
standard terms and conditions. The guidance also covers the
implementation phase of projects. The risk assessment addresses
themes such as contract terms and liability, schedule, resources,
scope of the assignment, safety, and sustainability. The Voima
platform contains real-time data that can be used to mitigate risks.
Project risks are managed through carefully thought-out pricing
and a thorough review of the tendered project and itsproblematic
elements. Sitowise also continuously invests in the development
and expertise of its personnel.
Damage risks include IT system and cyber security risks.
Sitowise’s business is dependent on a well-working IT
infrastructure and uninterrupted access to IT-based tools and
systems. However, IT systems are susceptible to faults and
failures. Malfunctions, interruptions, faults, or cybersecurity
breaches that aect IT systems can delay the delivery of services,
cause unexpected costs, and damage Sitowise’s reputation.
The Sitowise Group’s strategic risk is that the planned growth
based on corporate acquisitions will not materialize. That
could happen if suitable acquisition targets are not available,
acquisitions cannot be made at financially reasonable valuation
level or acquisitions involve liabilities that cannot be considered
in the purchase price. Successful integration of acquisitions is
also a key element of the Sitowise Group’s growth strategy, and
Sitowise is therefore exposed to risks related to the integration
process, which can lead to additional costs, failure to implement
synergies, and loss of growth opportunities. Uncertainty in
the financial markets or rising interest rates leading to higher
financing costs and reduced availability (adequacy, timeliness,
and favorable terms) is both a strategic and a financial risk for
the Sitowise Group. That is a risk because Sitowise finances its
business and investments with cash flow and debt financing,
and needs external financing to implement its growth strategy.
Uncertainties created by the general economy development and
changes in market conditions are risks to the Sitowise Group’s
business.
Sitowise Group has been particularly careful in assessing its
potential financial risks due to the COVID-19 pandemic since
March 2020. The listing and the refinancing in connection
with it strengthened the Group’s liquidity which has also been
strengthened by monitoring trade receivables and cash flow more
intensively. External financing can expose Sitowise to risks related
to indebtedness and weaken its financial position. Financial risks
are discussed in more detail in Note 5 to the financial statements.
The coronavirus pandemic and new variants of the virus may
continue to contribute to the uncertainty in the global economy
and global financial markets. Moreover, the current exceptional
circumstances in Europe due to Russian war activities against
Ukraine may contribute to the uncertainty in the European
financial markets. Both may lead to a decline in economic
activity resulting, for example, in a reduction or postponement of
investments and projects. The company does not have oces in
Russia, Belarus or Ukraine, nor does it export to these countries.
The set new sanctions and the changed operating environment
outside the scope of sanctions because of the Russian military
actions – as well as counter-sanctions – may create uncertainties
that cannot be thoroughly assessed at the time of publication of
this board report.
Many of the risks associated with the Sitowise Group and its
business are characteristic of the business and typical in the
industry. The risks are described very comprehensively in the
listing prospectus of 12 March 2021 (available on our website at
www.sitowise.com), and they still form a set of current risks.
Climate risks
The built environment causes approximately one-third of all
greenhouse gas emissions, which is why reducing its emissions
plays an important role in mitigating climate change. The direct
and indirect eects of climate change are directly linked to
Sitowise’s service oering and business as well as their demand.
On the one hand, this is also an opportunity for Sitowise
to develop its business in accordance with the needs of its
customers.
The risk is that Sitowise fails to identity and anticipate customers’
needs well enough or that its expertise is not enough to
eectively meet those needs. Another risk is that the Group
fails to train its experts to identify the eects of climate risks on
customers’ needs or is not able to recruit enough experts who
have experience of climate change adaptation.
It is also possible that climate change aects the projects in which
Sitowise is involved, in addition to which Sitowise is susceptible
SITOWISE GROUP PLC
Board of Directors’ Report and Consolidated Financial Statements 2021 9
to the economic impacts of climate change. Climate change has
potential implications for Sitowise’s oces as well as the entire
Nordic building stock, which is aected by changes in weather
conditions such as heavier rainfall, which can lead to structural
dampness and aect the air quality. However, Sitowise does not
own its oces, which reduces the economic impact.
Sitowise has publicly announced its sustainability targets, one of
which is to be carbon neutral by 2025. Not being able to reach
this publicly announced target is a risk to Sitowise’s reputation.
REPORT ON THE SCOPE OF RESEARCH AND
DEVELOPMENT ACTIVITIES
Sustainability and responsibility requirements increasingly aect
the operations and development needs of Sitowise’s customers.
Mitigating and adapting to climate change, energy eciency,
the circular economy, and inclusivity also require customers to
develop new, scalable solutions.
One of the objectives of Sitowise’s sustainability program, which
was adopted in 2021 and covers the period up to 2025, is to aim
for sustainable economic growth. Sitowise intends to reach this
goal by anticipating and following shifts in the markets while
keeping an eye on the direction of sustainability trends and
its customers’ sustainability goals, by actively developing its
current and future services to meet the challenges of sustainable
development, and by increasing business activities aimed at
sustainable development. Sitowise aims to channel at least 80%
of its R&D&I budget to innovation in sustainable development
services.
Sitowise has named its research and development concept
The Smart City Lab. The activities are supported by an online
platform launched in 2021, which allows all Sitowise employees
to contribute to innovation activities by presenting ideas, out of
which the best ones move forward to be developed at Group level.
REPORT OF NONFINANCIAL INFORMATION
Business model
Sitowise is a Nordic expert in the built environment with a
strong focus on digitality. Sitowise oers sustainable design
and consultancy services for projects of all sizes to enable more
responsible and smarter urban development as well as smooth
transportation. Sitowise oers its services in the following areas
in Finland and Sweden: Buildings, Infrastructure, and Digital
Solutions.
Buildings provides building design, consultancy and real estate
development services for residential and commercial real estate
markets, as well as for the needs of the health-care sector and
industry. The business area has significant engineering expertise
in, for example, high-rise construction, acoustics design, and
fire safety engineering. Sitowise acts as a partner in both new
developments and renovation projects.
Infrastructure covers a wide range of urban development needs
in diverse areas: infrastructure, transportation and mobility, urban
development, environment and water, and the construction of
infrastructure. Urbanization supports the investment needs of
municipalities and cities in particular, and the business area’s most
significant customer segment is the public sector, which accounts
for almost 70% of revenue.
Digital Solutions focuses on digital solutions for mobility and the
built environment as well as consultancy services that support
these fields. Its services cover customer-driven information
system development, o-the-shelf products and solutions,
analytics, information management and visualization, and expert
and consultancy services. The business area also includes digital
solutions for trac and infrastructure in Sweden.
Sitowise’s Swedish Operations is a business area of its own,
excluding digital solutions. In Sweden, Sitowise provides design
and consultancy services in the following areas: structural
engineering, building services engineering and consultancy for
buildings and real estate, infrastructure and associated building
services engineering, and geotechnical design.
Principles and key aspects of sustainability
Sitowise’s vision is to be the most responsible partner in
developing a prosperous living environment. The company
is committed to increasing the sustainability of both its own
operations and its projects and customer relationships on a
long-term basis and to reporting on and measuring its progress
in respect of sustainability. The Group also continuously develops
its sustainability business to meet the changing needs of its
customers.
The UN’s Sustainable Development Goals (SDGs) are an integral
part of Sitowise’s sustainability policy. Many of Sitowise’s
customers and other operators in the industry are committed to
promoting the UN’s goals, and the sustainability tool developed
by Sitowise is also based on this framework. Adopted in early
2021, the sustainability tool helps Sitowise to measure and track
the sustainability of customer projects.
The tool was used to record sustainability targets for
approximately one-third of all projects started in Finland during
the year. Sitowise’s projects promoted all 17 of the UN’s SDGs. A
total of 30% of the projects in which the sustainability tool was
used promoted sustainable cities and communities. Good health
and well-being was recorded as a goal for 18% of the projects
in which the tool was used. More than 10% of the projects had
also made a commitment to promoting climate action as well as
sustainable industry, innovation, and infrastructure.
Sitowise’s Board of Directors adopted a new sustainability
program in December, which focuses, in particular, on setting
clear sustainability goals and indicators for Sitowise’s progress
in terms of sustainability. The program covers all three aspects
of the ESG agenda: environmental, social, and governance. The
program is based on a materiality assessment, for which Sitowise
Board of Directors’ Report and Consolidated Financial Statements 2021
SITOWISE GROUP PLC
10
conducted a comprehensive preparatory study encompassing
the current status of the company’s sustainability eorts, the
suitability of widely used sustainability frameworks to Sitowise’s
operations, and the views of stakeholders – especially Sitowise’s
personnel and customers. The sustainability program also aims to
anticipate the impact of national and EU-level legislative reforms,
such as the introduction of the EU taxonomy.
The sustainability program is built around four goals:
• We are carbon neutral in 2025
• We are the most equal workplace with best employee well-
being in the industry
• We aim for sustainable economic growth
• We actively contribute to make our industry more sustainable
Sustainability management
Sitowise’s sustainability eorts are guided by its sustainability
program, ethical principles and industry guidelines, as well as the
general principles of corporate social responsibility and the law.
Metrics for sustainability have been set, and progress in respect
of sustainability is actively monitored and reviewed at regular
intervals in the meetings of the company’s Board of Directors
and Group Management Team. The company’s integrated
management system and all aspects of its business also comply
with the requirements of the ISO 9001 and ISO 14001 standards.
The key points of the Group’s sustainability policy are approved
by Sitowise’s Board of Directors. The CEO has overall
responsibility for sustainability. The Corporate Responsibility
Ocer directs and promotes sustainability initiatives, and
monitors and reports on the indicators, goals, and achievements.
She provides updates on sustainability eorts to the CEO and, if
necessary, prepares accounts of dierent areas of sustainability
and progress in those areas.
Business Directors and line managers are responsible for
the implementation of practical measures. Group services
(finance, IT, HR, communications, quality, safety and security,
and procurement) support the business areas in reaching the
sustainability goals.
Disclosures within the meaning of Article 8 of Regulation (EU)
2020/852 of the European Parliament and of the Council on
the establishment of a framework to facilitate sustainable
investment, and amending Regulation (EU) 2019/2088
Sitowise’s taxonomy-eligible activities accounted for 58% of net
sales in 2021. Taxonomy is discussed in more detail in the Annual
and Sustainability Report.
Personnel perspectives
Sitowise’s personnel are guided by five commonly agreed values:
we trust each other, we know our customers, we are brave, we
work as one team, and we are open.
The well-being of Sitowise’s experts is the foundation of
meaningful and sustainable work. It is also a precondition for
them to do their work well. It is important for the company that
its employees are healthy, motivated, and proud of the positive
impact that Sitowise’s services have on the environment,
communities, and people. This is facilitated, for example, by
supporting coping at work, oering flexibility in dierent life
situations, and providing a variety of training options for both
professional development and better management of work-
related stress.
Sitowise’s employee satisfaction rating is high, and its experts
feel that their work reflects what matters to them on a personal
level. Employees’ readiness to recommend Sitowise as a good
place to work was at a good level in 2021, with an eNPS score of
28 (scale -100 – +100). Sitowise ranked second in the category
of organizations with 1,000+ employees in the 2021 Responsible
Employer survey.
The Group employed 1,969 people on average during the year
and 2,034 people at the year-end. The number of personnel
grew by 130 in 2021. The annual increase in the number of
personnel (+8%) was driven by both organic growth and the
eight acquisitions completed during the year. The biggest of these
was Infracontrol in Sweden, which employed 29 people at the
time of the acquisition. Sitowise hired 254 new employees on
a permanent basis and 86 on fixed-term contracts. Turnover of
permanent employees increased in 2021 and amounted to 14.0%
(9.7%). A total of 266 permanent employment contracts ended
during the year.
At the end of 2021, students accounted for approximately one-
tenth of the Group’s personnel. Sitowise’s goal is for at least 10%
of its personnel to be students. Women accounted for 35% of all
employees at the end of 2021. A total of 23% of executive and
managerial positions were held by women. The average age of
Sitowise’s employees was 39 years, and the 30–39-year-old
age group was the biggest (37%) among all personnel. Sickness
absences amounted to 2.3% at the end of the year (cumulative
percentage from January to December), a figure similar to the
previous year.
The coronavirus pandemic has taken a toll on the personnel’s
well-being. Work has been more stressful due to the changed
circumstances: remote working, lack of social contacts, virtual
meetings instead of face-to-face interaction with colleagues, and
worry over one’s own health and the health of family and friends.
Sitowise promoted its personnel’s well-being by a range of
awareness campaigns and tangible actions in 2021.
Sitowise’s occupational health-care provider launched an
approachable mental health service for employees in 2021.
Cooperation with the occupational health-care provider has been
intensified through occupational health meetings, which are
convened at the slightest sign of trouble relating to, for example,
an individual employee’s ability to cope. Personnel were invited
to webinars relating to well-being in the spring. Line managers
were given training on ways to manage well-being, and an
SITOWISE GROUP PLC
Board of Directors’ Report and Consolidated Financial Statements 2021 11
early intervention model was incorporated into the well-being
management training program. An employee can be invited to an
early intervention discussion if, for example, their flextime balance
increases above certain limits.
Ethical principles
Sitowise’s Code of Conduct concerns all employees and applies to
all units and functions of Sitowise Group Plc and its subsidiaries.
The Group also expects its partners to have sustainable practices
in place.
Sitowise is an important player in its industry and therefore
has an important role to play as a social influencer and industry
developer. Acting in a responsible manner is one of the
cornerstones of Sitowise’s strategy and an essential part of its
decision-making.
Compliance with the statutes that are binding on Sitowise is the
starting point of all operations. Sitowise’s employees are required
to familiarize themselves with the laws, commitments and internal
guidelines that apply to their duties and to Sitowise, and to act
accordingly.
Sitowise respects and supports human rights and equality,
and does not tolerate any form of violence, abuse, bullying, or
harassment. Sitowise does not tolerate discrimination based on
gender, nationality or ethnicity, age, religion, sexual orientation,
mental or physical impairment, political or other views, social
status, family relationships, or other personal attributes.
Sitowise contributes to a sustainable and smart living
environment together with its customers and partners. The most
significant vehicle for promoting environmental friendliness is the
introduction of climate and resource-wise solutions in connection
with projects. Sitowise is always looking to develop new services
that promote sustainability and environmental friendliness,
and strives to minimize the adverse environmental impact of its
services.
Sitowise takes care of both its own assets and assets that have
been entrusted to it, and only uses these resources for the
purposes of its business. The company makes all its purchases
responsibly and in accordance with established procurement
practices, and operates fairly and transparently with its
contractual partners.
Sitowise does not tolerate corruption or bribery, and never pays,
oers, solicits, requests, or accepts bribes or any other undue
advantage. When oering or accepting hospitality or gifts, the
company applies the precautionary principle. Only reasonable
and customary gifts are acceptable. The company never oers or
accepts money or anything of monetary value as a gift.
Every employee and partner of Sitowise has an obligation to
immediately report any concerns and known or suspected
inappropriate conduct. Employees are instructed to voice their
concerns and to tell their suspicions primarily to their supervisor
or contact person at Sitowise. If this is not possible, the Corporate
Responsibility Ocer can also be contacted. Sitowise also has
a confidential contact and whistleblowing channel that can be
used to report concerns anonymously. A total of 11 (14) concerns
were submitted via the whistleblowing channel by Sitowise’s
own personnel and 1 (0) by an outside party in 2021. All the
concerns were reviewed, and the CHRO and/or the Corporate
Responsibility Ocer responded to them.
Key risks related to non-financial information and risk
management
Sitowise’s business and strategy are based on competent
personnel, and skilled professionals are a key factor in securing
profitable growth and the continuity of the business. As stated on
page 9 of the report under ‘Assessment of risks and uncertainties’,
the most pronounced personnel risks of the Sitowise Group relate
to the retention and coping of personnel and the availability of
new experts. Managing these risks is based on the premise that
it is important for the company that its employees are healthy,
motivated, and proud of the positive impact that Sitowise’s
services have on the environment, communities, and people.
Each employee contributes to the setting of their personal targets
and the assessment of their performance and development
needs, and discusses expectations with his/her line manager at
regular intervals and at least once a year. The aforementioned
risks are also managed by, for example, supporting coping at
work, oering flexibility in dierent life situations, and providing
a variety of training options for both professional development
and better management of work-related stress. However, the best
ways to increase competence are learning on the job, teamwork,
and sharing experiences in the course of projects.
Well-being at work stems, above all, from good work
management and having access to training that builds
competence, as well as a good team spirit, interaction, and a
culture of solving problems together. Good leadership creates a
framework for ecient teamwork and success. Sitowise promotes
its personnel’s well-being systematically in cooperation with,
for example, its occupational health care provider and pension
provider.
Due to the nature of Sitowise’s business, there are no significant
environmental risks associated with the Group’s own operations.
One risk related to the upholding of human rights and the fight
against corruption and bribery could be a failure to observe
Sitowise’s Code of Conduct, if this resulted in significant damage
to the Group’s finances or reputation or if the violations were
systemic, in which case the operations of the entire Group could
be aected. This risk is managed by clearly stating the company’s
position on human rights and discrimination in the Code of
Conduct, which applies to all employees of Sitowise, and by
instructing both the company’s personnel and partners to report
concerns or potential inappropriate conduct. The risk of corruption
and bribery, and the resulting damage, is also controlled by
always having more than one person check every payment and
purchase.
Board of Directors’ Report and Consolidated Financial Statements 2021
SITOWISE GROUP PLC
12
SUBORDINATED LOANS
Sitowise Group Plc had no subordinated loans on December 31,
2021. The subordinated loan of EUR 14.1 million, which was
included in the balance sheet of December 31, 2020, was paid o
during the first quarter of the financial period.
SHARES, SHAREHOLDERS, AND STOCK
OPTIONS
Initial public oering (IPO)
Sitowise Group Plc’s IPO was oversubscribed, and the listing was
completed as planned. The listing consisted of a share issue and a
share sale. The company raised gross proceeds of approximately
EUR 75 million by issuing a total of 9,213,547 new shares. In
addition, Intera Fund III Ky and certain other shareholders sold a
total of 7,881,994 new shares. The final subscription price was
EUR 8.20 per share in the institutional and public oering and
10% lower in the personnel issue, i.e. EUR 7.38 per share, based
on which the company’s market capitalization was approximately
EUR 288 million immediately after the IPO. The shares were in
strong demand from both Finnish and international investors,
and the oering was oversubscribed several times. Trading in the
company’s shares began on the prelist of Nasdaq Helsinki Ltd on
March 25, 2021 and on the stock exchange on March 29, 2021.
The company has one class of shares. Each share entitles its
holder to one vote and an equal dividend. The trading code
for Sitowise’s shares is SITOWS. Sitowise belongs to Mid Cap
companies and the Construction and Materials category.
In the institutional oering, 17,982,238 shares were allocated
to institutional investors in Finland and internationally, and in
the public oering, 1,000,000 shares were allocated to private
individuals and entities in Finland. The personnel issue saw the
allocation of 672,053 shares to employees in Finland, Sweden,
Estonia, and Latvia, as well as to the company’s management.
The total number of shareholders increased to more than 9,000,
including foreign institutional shareholders and all personnel
shareholders.
Shares outstanding and share capital
New shares were issued following acquisitions and in order to
commit key personnel to the company, and the number of shares
entered for the company in the Trade Register increased by a
total of 32,669 A2 shares and 980,291 P1 shares during the first
quarter in 2021. The company also canceled some of the shares
in its possession during the first quarter in 2021 (37,183 Series A2
shares, 690,215 Series P1 shares, and 275,332 Series P2 shares).
In addition, Intera Fund III acquired the stock options granted to
CEO Eloholma (a total of 7,692 stock options) and subscribed for
Series A2 shares with all the options.
In the IPO, Sitowise issued a total of 9,213,547 new shares. The
company also canceled a total of 12,879,032 Series P1 shares and
8,517,444 Series P2 shares in connection with the IPO.
The Sitowise Group’s IPO and the listing of the company’s shares
on the main list of Nasdaq Helsinki Ltd involved merging the
company’s share classes, redeeming and cancelling the Series P1
and Series P2 shares, and increasing the number of outstanding
shares to 34,493,874. The new shares subscribed for in the
personnel issue (672,053 shares) were entered into the Trade
Register on April 14, 2021, and the number of the company’s
shares consequently increased to 35,165,927 shares.
At the end of the financial period, Sitowise Group Plc’s share
capital amounted to EUR 80,000, and the total number of shares
outstanding was 35,415,927, of which 31,677, i.e. approximately
0.1% of all Sitowise shares, were treasury shares. On June
29, 2021 and again on December 15, 2021, the Group’s Board
of Directors decided, based on an authorization granted by a
unanimous resolution of the shareholders on March 3, 2021, to
issue 250,000 new Sitowise shares per each directed issue to
Sitowise itself without consideration. The shares were entered
into the Trade Register on July 9, 2021 and January 3, 2022
and admitted for trading on the ocial list of Nasdaq Helsinki
Ltd on July 12, 2021 and January 4, 2022 respectively. After
the registration of the latest new shares, the number of shares in
Sitowise increased to 35,665,927, of which 281,677 shares were
treasury shares on January 3, 2022. Since the listing, a total of
218,323 shares have been issued to subscribers in connection
with acquisitions and to engage key personnel in directed issues.
For the key terms and conditions of share oerings, see
https://www.sitowise.com/investors/stock-exchange-releases.
Key figures per share
2021
Earnings per share (EPS) EUR .
Equity per share (BPS) EUR .
Dividend per share* EUR .
Dividend/earnings ratio % .
Eective dividend yield % .
Price/earnings ratio (P/E) % .
Share price development
Average share price EUR .
Lowest share price EUR .
Highest share price EUR .
Share price on December EUR .
Market value of shares on December EUR million .
Trading volume EUR million .
Trading value EUR million .
*) Board of Directors’ proposal to the Annual General Meeting.
Key figures per share are presented as of 2021. The classes and
numbers of shares changed significantly in connection with the
IPO, which is why figures from previous financial periods are not
comparable.
SITOWISE GROUP PLC
Board of Directors’ Report and Consolidated Financial Statements 2021 13
For the weighted average adjusted number of shares during the
financial period and the adjusted number of shares at the end of
the financial period, see Note 4.3 to the financial statements.
Shareholders
At the end of the financial period on December 31, 2021,
the number of registered shareholders was 6,169 (6,581 on
September 30, 2021). Nominee-registered shareholders
accounted for 33.2% (31.4% on September 30, 2021) of the
company’s shares. The 10 largest shareholders entered in the
book-entry register maintained by Euroclear Finland Oy held a
total of 32.1% (32.6% on September 30, 2021). A list of these
major shareholders is available on the company’s website at
www.sitowise.com.
The table below lists the 10 largest shareholders on December 31,
2021 based on information from the Monitor service provided by
the Swedish company Modular Finance AB: *)
Shareholders by sector on December 31, 2021
Shareholder Number of shares % of shares
Intera Fund III Ky ,, .%
Capital Group Companies, Inc. ,, .%
Avanza Pension ,, .%
Lannebo Fonder AB ,, .%
Didner & Gerge Småbolag ,, .%
Evli Finnish Small Cap Fund ,, .%
Paradigm Capital Value Fund ,, .%
Ilmarinen Mutual Pension Insurance Company ,, .%
Skedevi Holding AB , .%
Mandatum Life Insurance Company Limited , .%
10 largest combined 17,782,977 50.2%
Total number of shares on December , ,,
*) Data may be incomplete for both the number of shares and shareholders. It is not possible for the company to verify the accuracy or timeliness of the information.
The company is not responsible for the information provided by the service provider, which is provided only as additional information. The company’s shareholder
register is available from Euroclear, and the company also publishes the flagging notifications it receives as stock exchange releases.
Sector Number of shares % of shares
Public sector, total ,, .
Financial and insurance institutions, total ,, .
Households ,, .
Businesses, total ,, .
Nonprofit organizations, total , .
Foreign, total , .
Total 23,643,445 100.0
Nominee-registered 11,772,482 33.2
All shares, total 35,415,927 0.0
Board of Directors’ Report and Consolidated Financial Statements 2021
SITOWISE GROUP PLC
14
Shareholding of the management of Sitowise Group Plc on
December 31, 2021
Board of Directors
Name Position Shares, qty % of shares
Eero Heliövaara
Chairman of the Board , .%
Leif Gustafsson Board member , .%
Taina Kyllönen Board member , .%
Mirel Leino-Haltia Board member , .%
Elina Piispanen
Board member , .%
Petri Rignell
Board member , .%
Tomi Terho Board member .%
Total 277,680 0.8%
Including both shares held by Heliövaara personally and shares held by Heliocabala Oy, which he controls
Including both shares held by Piispanen personally and shares held by Fit Advice Oy, which she controls
Including both shares held by Rignell personally and shares held by PriRock Oy, which he controls
Group Management Team
Name Position Shares, qty % of shares
Pekka Eloholma CEO , .%
Heidi Karlsson CFO , .%
Jonas Larsson Head of Swedish Operations , .%
Jannis Mikkola Business Director , .%
Timo Palonkoski Business Director , .%
Teemu Virtanen Business Director , .%
Turo Tinkanen Chief Information Ocer , .%
Minttu Vilander Chief Communications and Corporate Responsibility Ocer , .%
Anne-May Asplund CHRO , .%
Total 1,064,161 3.0%
The company’s management was granted stock options in the
spring of 2021. The table in section 7.3.4 of the notes to the
financial statements lists the options held by the CEO and the
members of the Group’s Management Team. The Board members
hold no options.
Decisions of General Meetings in 2021
By a unanimous resolution of the shareholders on January 13,
2021, the company resolved to make EUR 579,733.05 capital
repayment for certain P1 and P2 shares on January 15, 2021 at
the latest.
The matters to be resolved by the Annual General Meeting were
decided by a unanimous decision of the shareholders on March
1, 2021. The Annual General Meeting adopted the company’s
financial statements for the period January 1 – December 31,
2020, decided not to distribute a dividend other than what
had been separately decided regarding preferential shares,
and discharged the members of the Board of Directors and the
CEO from liability. The Annual General Meeting also decided
on the Board’s remuneration as of April 1, 2021 as follows:
the remuneration of the Chairman of the Board is EUR 4,750
per month and the remuneration of the other members of the
Board is EUR 2,250 per month, the attendance allowance
of the Chairman of the Board and the Chairmen of the Audit
and Personnel Committees is EUR 1,000 per meeting and the
attendance allowance of the other members of the Board and the
other members of the Audit and Personnel Committees is EUR
400 per meeting. The Chairman and members of the Nomination
Committee will each be paid an attendance allowance of EUR
1,000 in total. Had the listing not been completed, remuneration
would have remained as before. KPMG Oy Ab was appointed
the auditor, with Authorized Public Accountant Turo Koila
continuing as the auditor-in-charge. It was decided to increase the
company’s share capital by a reserve increase to EUR 80,000,
to change the company’s legal form to a public limited company
and the business name to Sitowise Group Plc, and to revise the
Articles of Association accordingly. Furthermore, a share issue
without consideration (stock split) was approved, involving
the issue of 19 new class A1 shares to the company’s class A1
shareholders for each class A1 share held by the shareholder
and 19 new class A2 shares to each shareholder of the company
for each class A2 share held by the shareholder. A total of
8,958,614 class A1 shares and 15,696,147 class A2 shares were
issued in the share issue. The same decision also authorized the
SITOWISE GROUP PLC
Board of Directors’ Report and Consolidated Financial Statements 2021 15
Board to decide on a dividend payment for the financial period
from January 1 to December 31, 2020, consisting of all of the
accrued preferred payments on the class P1 and P2 shares to be
redeemed in connection with the listing, up to the redemption
date, and amounting to a maximum of EUR 330,000.
The company’s shareholders resolved unanimously on March
3, 2021 to remove the redemption clause and certain other
provisions related to share classes from the Articles of Association
subject to the completion of the listing, on a share issue without
consideration, to combine class A shares, to redeem and cancel
all class P shares, as well as to authorize the Board of Directors to
decide on share issues in connection with, among other things,
the listing of the company and other measures relating to the
listing.
At its meetings on January 27, February 25, and March 11, the
Board confirmed certain corporate governance documents
conditional to the listing, such as the Charter of the Board of
Directors and its committees, the principles of internal audit as
well as the company’s disclosure policy and insider guidelines.
The Board also decided on a long-term incentive scheme, under
which a maximum of 1,463,400 options will be issued.
Option programs
The company’s Board of Directors decided on the establishment
of a new long-term incentive scheme in March 2021. The target
group of the option program includes the CEO and the members
of Sitowise’s Group Management Team as well as approximately
300 other key employees of Sitowise subject to invitation. The
goal of the scheme is to encourage Sitowise’s key employees
toward long-term shareholding in the company by requiring an
investment in shares in order to receive options. In addition, the
options are used to encourage the key employees in the target
group toward long-term eorts in order to increase shareholder
value and to retain the key employees.
Under the option program, a maximum of 1,463,400 options
will be issued, each of which will give the right to subscribe for
one new or treasury share. The options will be issued under the
authorization granted to the Board of Directors by the unanimous
resolution of the shareholders on March 3, 2021.
The option program includes 636,750 class A options and
826,650 class B options. Class A options have a three-year
vesting period, and class B options have a four-year vesting
period. The subscription of shares with class A options will take
place between April 1, 2024 and March 31, 2025, and with class
B options between April 1, 2024 and March 31, 2026, if the pre-
defined threshold yield for the share set for the commencement
of the subscription period is met. The subscription price with the
options equals the subscription price of the share in the oering
minus any annually paid dividends and capital repayments.
The class A and B options may be divided into matching and
performance options. In order to receive matching options,
the recipient of the options must hold or subscribe for in the
personnel oering as many shares as they have been allocated
matching options. The shares must be held until the subscription
period for the shares to be subscribed with the options begins.
As at the date of the oering circular, the number of allocated
matching options is 923,400 in total. The performance options
have a higher threshold yield for the share regarding the
commencement of the subscription period of the share than
matching options.
In addition, members of the Group Management Team who are
covered by the option program must acquire shares with 50%
of their net profit from the options, until the total value of their
shareholding in the company corresponds to the value of their
annual salary. This number of shares must be held for as long as
the person is a member of the Group Management Team.
The options will be forfeited and transferred back to the
company for no consideration if the option holder resigns or their
employment relationship or service contract is terminated before
the commencement of the subscription period of the shares to be
subscribed with the options. The Board of Directors can, under
certain conditions, permit the option holder to keep some of their
options, however.
Board of Directors’ authorizations
After the initial public oering and the issuance of options,
the company has the following authorizations granted by a
unanimous resolution of the shareholders on March 3, 2021:
The Board of Directors has been authorized to decide on the
issuance of shares as well as the issuance of option rights or other
special rights entitling to shares within the meaning of chapter
10, section 1 of the Finnish Limited Liability Companies Act in
one or several instalments. The authorization includes both the
issuance of new shares and the transfer of treasury shares. The
total number of shares to be issued cannot exceed 3,500,000,
and the issuance of shares and of special rights entitling to shares
can also be carried out in deviation from shareholders’ preemptive
rights (directed issue). The Board of Directors has been authorized
to decide on the acquisition of the company’s own shares. The
total number of shares to be acquired based on the authorization
cannot exceed 3,500,000 shares. However, the company
together with its subsidiaries cannot at any moment own more
than 10% of all the shares in the company. The Board of Directors
decides on the manner of acquiring own shares, and derivative
instruments, for example, can be used in the acquisition. Based on
the authorization, own shares can be acquired at a price formed
in public trading on the date of the repurchase or otherwise at a
price formed on the market. Furthermore, shares do not have to
be acquired proportionally to the number of shares held by the
shareholders (directed acquisition). Only the unrestricted equity
of the company can be used to acquire own shares on the basis
of the authorization. The authorizations are eective until the end
of the next Annual General Meeting, however no longer than until
June 30, 2022.
Board of Directors’ Report and Consolidated Financial Statements 2021
SITOWISE GROUP PLC
16
RELATED PARTY LOANS
Sitowise Group Plc has given subordinated loans to its related
party company Fimpec Group Oy. The loans amounted to EUR
917,000 at the end of the financial period. The interest rate on
the subordinated loans is 8% p.a. The loans are subject to the
provisions of chapter 12 of the Finnish Limited Liability Companies
Act.
BOARD OF DIRECTORS’ PROPOSAL
CONCERNING THE USE OF THE PARENT
COMPANY’S PROFIT
On December 31, 2021, the distributable funds of the parent
company Sitowise Group Plc amounted to EUR 109.9 million, of
which profit for the 2021 financial period was EUR 9.7 million.
The Board of Directors proposes that a dividend of EUR 0.10 per
share be paid based on the balance sheet to be adopted for the
2021 financial period and that the dividend will be paid in a single
instalment.
CORPORATE GOVERNANCE STATEMENT AND
REMUNERATION REPORT
Sitowise’s Corporate Governance Statement and remuneration
report are included in the Annual and Sustainability Report.
FUTURE OUTLOOK
The steady growth in the demand of design and consultancy
services to create sustainable societies is supported by
megatrends such as urbanization, renovation backlog,
sustainability, and digitalization.
The market began and has continued to pick up since 2021, and
Sitowise expects the market to grow in all of the Group’s business
areas. However, the exceptional situation in Europe due to
Russia’s military action against Ukraine has the potential to
create uncertainty in the European financial markets and lead to
decreased economic activity.
MAIN EVENTS AFTER THE FINANCIAL PERIOD
Sitowise announced on January 4, 2022 the appointment of
a new Group CEO, Heikki Haasmaa, who takes oce latest on
May 4, 2022.
Sitowise announced on February 10, 2022 that Anne-May
Asplund, Chief Human Resources Ocer and member of the
Group Management Team, will resign in February 2022 and that
the recruitment process for a new CHRO has started.
SITOWISE GROUP PLC
Board of Directors’ Report and Consolidated Financial Statements 2021 17
CONSOLIDATED FINANCIAL STATEMENTS IFRS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
The discontinued operations in 2020 include the Tele business, which Sitowise sold to Rejlers during the financial period.
EUR thousand Note Jan 1 – Dec 31, 2021 Jan 1 – Dec 31, 2020
Net sales 2.2 179,334 160,082
Other operating income . 976 1,365
Materials and services . -14,589 -13,220
Personnel expenses . -115,696 -101,935
Other operating expenses . -24,064 -20,012
Depreciation and amortization, and impairment . -9,586 -8,008
Operating profit 16,376 18,272
Financial income . 184 1,163
Financial expenses . -6,270 -3,539
Profit before taxes 10,290 15,896
Income taxes . -2,388 -3,215
Result from continuing operations 7,903 12,681
Discontinued operations
Result from discontinued operations 0 118
Profit for the period 7,903 12,798
Attributable to:
Owners of the parent 7,827 12,728
Non-controlling interest 76 70
Other comprehensive income
Items that will not be reclassified to profit or loss
Recognition of change in the fair value of other
investments through comprehensive income
Items that may be reclassified to profit or loss
Change in translation dierence -204 243
Total comprehensive income 7,754 13,271
Comprehensive income attributable to:
Owners of the parent 7,678 13,201
Non-controlling interest 76 70
Earnings per share:
Earnings per share (EUR) 0.22 9.69
Diluted earnings per share (EUR) 0.22 9.63
Earnings per share (continuing operations):
Earnings per share (EUR) 0.22 9.60
Diluted earnings per share (EUR) 0.22 9.54
Board of Directors’ Report and Consolidated Financial Statements 2021
SITOWISE GROUP PLC
18
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
EUR thousand Note Dec 31, 2021 Dec 31, 2020
Assets
Goodwill . 135,193 118,081
Other intangible assets . 7,543 5,681
Tangible assets . 31,421 34,174
Other shares, similar rights of ownership, and receivables 1,865 1,682
Deferred tax assets . 1,077 304
Total non-current assets 177,098 159,922
Trade and other receivables . 52,099 45,404
Deferred tax assets 1,204 740
Cash and cash equivalents . 19,353 15,463
Total current assets 72,656 61,607
Total assets 249,754 221,528
EUR thousand Note Dec 31, 2021 Dec 31, 2020
Shareholders’ equity and liabilities
Share capital 80 3
Fund for invested unrestricted equity 95,310 40,663
Fair value reserve 285 230
Subordinated loans 0 14,145
Translation dierence 157 360
Retained earnings 18,840 11,370
Equity attributable to owners of the parent 114,672 66,770
Non-controlling interest 186 110
Total shareholders’ equity 114,858 66,880
Deferred tax liabilities . 1,565 1,985
Financial liabilities . 70,983 92,554
Other liabilities 12 12
Total non-current liabilities 72,560 94,551
Income tax liabilities 2,273 1,608
Financial liabilities . 7,624 9,379
Provisions . 1,428 1,793
Trade payable and other liabilities . 51,010 47,317
Total current liabilities 62,336 60,098
Total shareholders’ equity and liabilities 249,754 221,528
SITOWISE GROUP PLC
Board of Directors’ Report and Consolidated Financial Statements 2021 19
CONSOLIDATED CASH FLOW STATEMENT
EUR thousand Jan 1 – Dec 31, 2021 Jan 1 – Dec 31, 2020
Cash flow from operating activities:
Profit for the period 7,903 12,798
Adjustments
Income taxes 2,388 3,215
Depreciation, amortization, and impairment 9,586 8,008
Financial income and expenses 6,086 2,376
Other adjustments 154 694
Change in working capital
Increase (-) / decrease (+) in trade receivables and other receivables -4,177 -700
Increase (+) / decrease (-) in trade and other payables 878 5,117
Interest paid and other financial expenses -2,430 -6,495
Interest received and other financial income 186 73
Income taxes paid -3,425 -959
Net cash flows from operating activities 17,149 24,128
Cash flow from investing activities:
Investment in tangible and intangible assets
-2,209 -3,133
Businesses acquired and divested 0 739
Acquisitions of subsidiaries, net of cash acquired
-19,900 -21,717
Purchase and sale of other shares 0 -24
Cash flow from investing activities -22,109 -24,135
Cash flow from financing activities:
Payments from share issue 78,762 3,761
Listing expenses paid -5,078 0
Share repurchase -22 -1,613
Dividends paid and capital repayments -22,286 -2,618
Withdrawal of loans 50,119 14,559
Repayment of loans -72,753 -4,091
Repayment of subordinated loan -14,145 0
Payments of lease liabilities -5,766 -5,011
Cash flow from financing 8,831 4,987
Cash and cash equivalents at the start of the period 15,463 10,346
Change in cash and cash equivalents, increase (+) / decrease (-) 3,871 4,980
Impact of changes in foreign exchange rates 19 137
Cash and cash equivalents at the end of the period 19,353 15,463
Board of Directors’ Report and Consolidated Financial Statements 2021
SITOWISE GROUP PLC
20
STATEMENT OF CHANGES IN CONSOLIDATED EQUITY
Equity attributable to owners of the parent
EUR thousand
Share
capital
Fund for
invested
unrestricted
equity
Fair
value
reserve
Subordinated
loans
Translation
dierences
Retained
earnings Total
Non-
controlling
interest
Total
shareholders’
equity
Shareholders’ equity
January ,
Adjustments for the previous
financial period
-87 -87 -87
Adjusted shareholders’ equity
January ,
Profit for the period 12,869 12,869 -70 12,798
Other comprehensive income 230 243 472 472
Total comprehensive income 0 0 230 0 243 12,869 13,341 -70 13,271
Share issues 3,761 3,761 3,761
Share repurchases -1,613 -1,613 -1,613
Distribution of dividends -1,956 -784 -2,740 -2,740
Interest on subordinated loan -3,233 -3,233 -3,233
Transactions with non-
controlling interests
Transactions with owners 0 192 0 0 0 -3,755 -3,563 -111 -3,673
Shareholders’ equity
December 31, 2020
Shareholders’ equity
January ,
Profit for the period 7,827 7,827 76 7,903
Other comprehensive income 55 -204 -149 -149
Total comprehensive income 0 0 55 0 -204 7,827 7,678 76 7,754
Fund increase 78 -78 0 0
Share issues 78,762 78,762 78,762
IPO expenses -2,049 -2,049 -2,049
Share repurchases -22 -22 -22
Dividend distribution and
capital repayments
-21,988 -298 -22,286 -22,286
Subordinated loan -14,145 -14,145 -14,145
Interest on subordinated loan -198 -198 -198
Share-based incentive
program
Transactions with owners 78 54,648 0 -14,145 0 -356 40,224 0 40,224
Shareholders’ equity
December 31, 2021
SITOWISE GROUP PLC
Board of Directors’ Report and Consolidated Financial Statements 2021 21
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
Basic information
Sitowise is a Nordic expert in the built environment with a
strong focus on digitality. Sitowise oers sustainable design
and consultancy services for projects of all sizes to enable more
responsible and smarter urban development as well as smooth
transportation. Sitowise oers its services in the following
business areas in Finland and Sweden: Buildings, Infrastructure,
and Digital Solutions.
Sitowise wants to raise the bar when it comes to smart solutions
and sustainability, which is why our vision is to be a responsible
partner in the development of a prosperous living environment.
Sitowise has grown rapidly and profitably in recent years. The
Group employs over 2,000 experts.
The Group’s parent company is the Finnish limited liability
company Sitowise Group Plc (hereinafter referred to as the
“Company”), domiciled in Espoo, with the mailing address
Linnoitustie 6, FI-02600 Espoo, Finland . The Company was listed
on the main list of the Helsinki Stock Exchange in March 2021.
The consolidated financial statements are available at the
company's head oce at Linnoitustie 6 D, FI-02600 Espoo ,
The Board of Directors of Sitowise Group Plc approved these
financial statements at its meeting on March 1, 2022.
In accordance with the Finnish Limited Liability Companies Act,
shareholders can adopt or reject the financial statements in a
general meeting of shareholders organized after their publication.
The general meeting can also resolve to amend the financial
statements.
1 GENERAL INFORMATION
1.1 ACCOUNTING POLICIES
The consolidated financial statements of the Sitowise Group have
been prepared in accordance with the International Financial
Reporting Standards (IFRS) approved for use in the European
Union, and the IAS and IFRS standards as well as SIC and IFRIC
interpretations in force on December 31, 2021 have been applied
in preparing them. IFRS refers to standards and interpretations
that companies referred to in the Finnish Accounting Act and
regulations issued under it must comply with and that have
been approved for application in accordance with the procedure
enacted by Regulation (EC) No. 1606/2002 of the European
Parliament and of the Council. The notes to the consolidated
financial statements also fulfill the requirements of Finnish
accounting and company legislation supplementing the IFRS
standards.
New standards applied during the financial period
The Sitowise Group has applied the reforms and annual
improvements to IFRS standards that entered into force on
January 1, 2021. The reforms and annual improvements to the
standards have not had a significant impact on the reported
figures. The IFRS Interpretations Committee's April 2021 agenda
decision on accounting for cloud configuration and customization
costs (IAS 38 Intangible Assets) does not have a material impact
on the Group’s accounting principles applied to cloud deployment
costs.
New and amended standards applicable in future financial
periods
The Group has not adopted any new and revised IFRS standards
or interpretations that have been published but have not yet
entered into force in the financial period beginning on January
1, 2022 (early application), and the unadopted IFRS or IFRIC
interpretations are not considered to have a significant impact on
the Group.
The consolidated financial statements have been prepared on the
basis of original cost, unless otherwise specified in the accounting
policies. The consolidated financial statements include the parent
company’s financial statements and the financial statements of
all companies over which the Group has control. A subsidiary is
consolidated into the financial statements as of the moment when
the Group receives control. Consolidation is discontinued once
control ceases to exist. All intra-Group transactions are eliminated
in the consolidated financial statements.
Item-specific accounting policies and descriptions of decisions
requiring management discretion and the use of estimates and
assumptions are presented in conjunction with each item.
The operating currency of the Sitowise Group is the euro. The
figures disclosed in the financial statements are rounded up, so
the sum of individual figures can deviate from the reported sum.
The notes are an integral part of the financial statements.
1.2 TRANSLATION OF ITEMS DENOMINATED IN FOREIGN
CURRENCIES
The consolidated financial statements are reported in euros,
which is also the parent company’s operating currency. Items
included in the financial statements of Group companies are
measured at the currency of the primary economic operating
environment of the respective company (operating currency).
Board of Directors’ Report and Consolidated Financial Statements 2021
SITOWISE GROUP PLC
22
Transactions denominated in foreign currencies are translated
into the operating currency at the exchange rate of the
transactions. Foreign exchange gains and losses arising from
payments associated with such transactions and translation of
monetary assets and liabilities denominated in foreign currencies
at the exchange rate of the closing date are recognized through
profit and loss.
The profit and loss accounts and balance sheets of international
units using an operating currency dierent from the reporting
currency are translated into the reporting currency as follows:
• the assets and liabilities on each reported balance sheet are
translated using the exchange rate of the closing date; and
• the income and expenses on each profit and loss account are
translated at average exchange rates for the financial period.
Exchange rate dierences arising from the consolidation of
foreign units are recognized as translation dierences in other
comprehensive income.
1.3 KEY DECISIONS MADE BY THE MANAGEMENT
REQUIRING DISCRETION AND MAIN UNCERTAINTY
FACTORS RELATING TO ESTIMATES
Preparing the financial statements in accordance with the IFRS
requires the management to make discretionary decisions
and use estimates and assumptions that have impacts on the
amounts of assets and liabilities on the closing date, reporting
of contingent assets and liabilities and the amounts of income
and expenses for the reporting period. These estimates and
assumptions are based on prior experience and other justifiable
factors, such as expectations concerning future events that the
management of the Sitowise Group considers reasonable, taking
into account the conditions on the closing date and when the said
estimates and assumptions were made.
Even though these estimates are based on the best view of the
Sitowise Group’s management of events and measures on the
closing date, it is possible that the outcomes dier from these
estimates. The estimates and underlying assumptions are
continuously updated when preparing the financial statements.
The Group may need to adjust its estimates if the conditions on
which the estimates are based change, or if the Group receives
new information or accumulates more experience. Any changes
are recognized in the accounts for the financial period during
which the estimate or assumption is updated.
Decisions based on management discretion which the
management has made when applying the accounting policies
and which have impacts on the figures disclosed in the financial
statements are associated with the following areas, among
others: recognition of revenue based on the percentage of
completion, goodwill impairment testing, provisions, allocation
of the cost of acquisitions, measurement of tangible assets,
and economic lives of other intangible assets. Covid-19 has not
had a material impact on the decisions based on management
discretion.
The revenue recognition practices are described in Note 2.2.
Impairment testing is described in Note 3.2.
2 OPERATING PROFIT
This section focuses on the Group's result and its formation. Next,
the dierent components of the Group’s operating profit are
discussed.
2.1 SEGMENT REPORTING
The Sitowise Group consists of a single operating segment
covering all the Group's business operations. This corresponds
to the way in which internal reporting is made to the highest
operational decision-maker and the way in which the highest
operational decision-maker makes decisions on resource
allocation and evaluates performance.
Significant decisions based on management discretion
Sitowise Group's management has used discretion in determining
the Group's segment reporting. Areas requiring discretion have
been the determination of the highest operational decision-
maker, decisions made in Group management and the reports
used. The Board of Directors and the CEO have been defined as
the highest operational decision-maker. The CEO is responsible
for allocating resources and evaluating performance.
2.2 NET SALES
Sitowise provides its customers with all the services for the built
environment as well as expert and digital services under the
one-stop-shop principle. The main market areas are Finland
and Sweden. The net sales of the Sitowise Group primarily
comprise sales of services and service packages that may also
include software or system development. All services provided
to clients under client contracts are recognized as net sales in
accordance with the variable and fixed amounts specified in the
client contract, taking into account any incentives and sanctions.
Other income that is not related to ordinary activities, such as
public grants received and gains on the sale of tangible assets, are
recognized in other operating income.
A five-step model is applied to revenue recognition, identifying
the contract and performance obligations, determining the
transaction price, and allocating it to the performance obligation.
Sales revenue is recognized as the performance obligation is
fulfilled and only up to the consideration that the Group expects it
to be entitled against the services delivered to the client.
Accounting policy
Identification of a contract: IFRS 15 includes the criteria for
identifying and combining contracts. As a rule, Sitowise only
SITOWISE GROUP PLC
Board of Directors’ Report and Consolidated Financial Statements 2021 23
concludes a single contract with the same customer on a single
project. However, contracts can be combined when several
almost simultaneous contracts concerning the same site have
been concluded with the customer. If separate framework
agreements have been concluded with the same customer on
dierent areas of design, it means that the contracts should not
be combined for revenue recognition. The justification of this is
that the contract negotiations have often been carried out by
completely dierent persons and they have not been negotiated
as a single whole. The average duration of customer contracts
varies from weeks to a few months, depending on the industry
and whether the contract is a framework agreement or an
individual service contract with the client.
Amendments to contracts: In the contracts of the Sitowise Group,
additional work is most commonly addressed as part of the
project whole, i.e. as expansions of the existing project. In some
cases, additional and alteration work can also be established as
separate projects and performance obligations. If the scope of
application of a contract is expanded due to the work added to it
being separable and the total contractual price increases by the
separate selling prices for work, the alteration and additional work
will be accounted for as a separate performance obligation and
recognized as revenue as a separate project.
Identification of performance obligations: The services promised
in the customer contract are estimated and the performance
obligations delivered to the customer are identified at the time
of concluding the contract. In the practice pursuant to IFRS
15, the entire project is considered to be a single performance
obligation in the customer contracts of the Infrastructure and
Digital Solutions business areas. In the Buildings business area,
on the other hand, performance obligation levels depend on the
customer and the service oered. If the sub-areas of design are
defined and priced as a single aggregate of duties in the request
for quote, quote, and contract, the assignment is treated as a
single performance obligation.
Buildings
Sitowise's Buildings business oers customers structural design,
building system, specialist and construction contracting services
for new builds and renovation projects. The primary clients of
Buildings are construction companies, housing companies, and
the public sector.
In the area of structural and prefabricated element engineering
and building systems, fulfilling the more extensive project
package makes up the performance obligation. Correspondingly,
in building design, the performance obligation regarding dierent
types of engineering comprises implementing the individual
projects of the engineering sectors.
In renovations, the performance obligation comprises the overall
construction contracting and supervision assignment or tasks of
the service areas. The Buildings area also includes specialist and
design services that, when commissioned individually, make up a
separate performance obligation.
Infrastructure
The Infrastructure business area of Sitowise oers clients services
relating to urban, trac, structural, geotechnical, environmental
and landscape design, and infrastructure construction contracting.
The primary clients of Infrastructure are construction companies
and the public sector. Sitowise’s performance obligation consists
of preparing the overall engineering of the infrastructure project.
Digital Solutions
Sitowise’s Digital Solutions business is divided into two areas:
Mobility and Trac Infrastructure and Built Environment
Information Services. The customer contracts of Digital Solutions
primarily include consultation work.
Mobility and Trac Infrastructure oers clients development of
trac optimization, trac data collection and software services. In
Built Environment Information Services, Sitowise provides clients
with comprehensive solutions for more cost-ecient design. The
clients of both areas are primarily public-sector entities, such as
cities and municipalities. The services of Digital Solutions usually
make up a single project package that is treated as a performance
obligation. The system maintenance phase after system
development is treated as a separate performance obligation.
The Sitowise Group primarily acts as the principal in all of its
contracts, as it is itself always liable for fulfilling the contract.
The Sitowise Group is also responsible for final delivery to the
customer when using subcontractors.
Determination of transaction price and its allocation to
performance obligations: The transaction price is the amount of
consideration to which the Sitowise Group expects it to be entitled
for the services provided to the customer. The consideration
pledged in the customer contract may include fixed or variable
monetary amounts or both. The most common variable
considerations are associated with penalties for delay, incentives,
performance-linked bonuses, and target prices. Penalties for
delays are recognized once they are likely to materialize.
Incentives and bonuses and additional consideration received for
completion below target prices are recognized once they are very
likely to materialize.
Revenue recognition: The services provided by the Sitowise
Group are customized for the customer, and the Sitowise Group
primarily has a contractual right to payment for the customized
output received by the time of review. Performance obligations
are fulfilled over time, and control is considered to be transferred
to the client as the service is performed for the client.
The determination of sales revenue recognized over time is based
on the percentage of completion. The percentage of completion
is determined as the percentage of the working hours and costs
of work performed by the time of review of the estimated total
amount of work and costs of the project. If the service package
involves software or software maintenance services, their license
and maintenance revenue is recognized for the contract period.
Board of Directors’ Report and Consolidated Financial Statements 2021
SITOWISE GROUP PLC
24
The estimated sales revenue and total costs of the project are
updated at the end of each reporting period. If the outcome of a
long-term project cannot be reliably estimated, revenue from the
project is recognized only to the extent that the monetary amount
corresponding to actual costs is available. If it is probable that the
total cost of project completion exceeds the total revenue received
from the project, the expected loss is immediately expensed.
If the invoicing of the project is lower than the sales revenue
recognized on the basis of percentage of completion, the
dierence is reported as a contractual asset in the Project
receivables item on the balance sheet. If the invoicing of the
project is higher than the sales revenue recognized on the basis
of percentage of completion, the dierence is reported as a
contractual liability in the Trade and other liabilities item on the
balance sheet.
The Sitowise Group has set euro-denominated limits for revenue
recognition based on the percentage of completion, varying by
business area. If the price of the project is below the limit, revenue
is not recognized based on the percentage of completion, but the
contract is recognized as revenue monthly based on the work
performed up to the amount that it is entitled to charge to the
customer. In addition, there are hourly priced projects to which
the practical relief is applied; in them, revenue is recognized based
on expert work.
The warranty periods of customer contracts are based on the
common standard contractual clauses of the industry. The Group
applies payment terms pursuant to the industry’s standard
business practices.
Significant decisions based on management discretion
When revenue recognition is based on the percentage of
completion, the outcome of the contract is assessed regularly
and reliably. Revenue recognition based on the percentage of
completion is based on estimates of the probable sales revenue
and expenses of the project as well as reliable measurement of
the percentage of completion of the project. If the estimates of
the project outcome change, the revenue recognition based on
the percentage of completion is adjusted for the reporting period
during which the change is initially known. The expected loss
from the project is recognized as a loss provision immediately in
conjunction with the following monthly reporting.
2.2.1 Net sales by business area
EUR thousand 2021 2020 Change
Buildings , , .%
Infrastructure , , .%
Digital Solutions , , .%
Sweden , , .%
Others - - -.%
Total 179,334 160,082 12.0%
*) The group ”Others” includes discontinued operations and eliminations
between business areas.
EUR thousand 2021 2020
Finland , ,
Sweden , ,
Other countries ,
Total 179,334 160,082
EUR thousand 2021 2020
Gains on fixed assets
Grants received
Other income
Total 976 1,365
EUR thousand 2021 2020
Subcontracting expenses , ,
Project and other expenses , ,
Total 14,589 13,220
2.2.2 Net sales by market area
The net sales of the geographical areas are reported by the
customer’s location.
Assets based on customer contracts are reported in Notes 3.4 and
3.6.
Revenue from customer contracts expected to be recognized and
relating to remaining performance obligations by December 31,
2021 amount to approximately EUR 163 (115) million.
2.3 OTHER OPERATING INCOME
Accounting policy
The Sitowise Group recognizes net sales from non-ordinary
activities in other operating income. Other income includes, for
example, public grants received and gains on the sale of tangible
assets. Public grants are recognized as income at the moment
when there is reasonable assurance that the grant will be
received and the Group both meets and complies with the terms
of the grant.
The Sitowise Group has received public grants from Business
Finland, the European Union and the Latvian State, among others.
In 2020, gains on fixed assets included the gain on the disposal of
the telecommunications business, among others.
2.4 MATERIALS AND SERVICES
In 2021, subcontracting expenses amounted to 4.9% (8.3%) and
Project and other expenses to 3.2% (3.3%) of net sales.
Project and other expenses include costs relating to customer
projects as well as travel and meeting expenses.
SITOWISE GROUP PLC
Board of Directors’ Report and Consolidated Financial Statements 2021 25
2.5 PERSONNEL EXPENSES
Accounting policy
Pension schemes are classified as either defined contribution
or defined benefit schemes. The defined contribution pension
scheme is an arrangement in which the Sitowise Group pays fixed
premiums to pension insurance policies. The Sitowise Group has
no legal or factual obligations to make additional payments if the
insurance does not provide sucient funds for paying all benefits
based on the work performance for the current and previous
financial periods to all employees.
The total compensation paid by the Sitowise Group to its
personnel comprises salaries, wage supplements, short-term
incentives, and fringe benefits. The lower pension expenses in
the comparison year are due to reduced employer’s employment
pension contributions because of the Covid-19 pandemic by 2.6
percentage points in Finland between May 1 and December 31,
2020.
In 2021, personnel expenses amounted to 64.5% (63.7%) of net
sales.
Other personnel-related expenses mainly comprise fringe
benefits and diverse expenses relating to training, recruitment,
and personnel meetings.
ICT expenses are primarily associated with software and IT
service expenses.
The material items included in other expenses are legal and other
counselling fees and communications expenses. Practical reliefs
allowed by IFRS 16 have been applied, and part of lease costs are
included in other operating expenses. Information on IFRS 16 is
presented in Note 3.3.
2.6.1 Auditors' fees
EUR thousand 2021 2020
Statutory audit
Tax advice
Other advisory services
Total 680 361
EUR thousand 2021 2020
Other personnel-related expenses , ,
ICT expenses , ,
Sales and marketing expenses
Rent expenses , ,
Other expenses , ,
Total 24,064 20,012
EUR thousand 2021 2020
Wages and salaries , ,
Pension expenses , ,
Other social security expenses , ,
Total 115,696 101,935
Personnel 2021 2020
Average number of personnel , ,
Full-time equivalent (FTE) on average , ,
Full-time equivalent (FTE) on average is the average number of
full-time equivalents in the Group.
Information about the compensation of the management is
reported in Note 7.3 on related party transactions.
2.6 OTHER OPERATING EXPENSES
In 2021, other operating expenses amounted to 13.4% (12.5%) of
net sales.
Other advisory services for 2021 include listing-related expenses,
some of which are recognized through equity, as well as advisory
expenses related to mergers and acquisitions.
2.7 DEPRECIATION, AMORTIZATION, AND IMPAIRMENT
Accounting policy
Depreciation of machinery, equipment, and other tangible assets
is recognized over their economic useful lives. Depreciation
is recognized using the straight-line method based on the
acquisition cost and estimated economic useful life of the
asset. The Sitowise Group reviews the depreciation periods
and methods at least at the end of each financial period. If
the economic useful life of an asset diers from the previous
estimate, the depreciation period will be adjusted accordingly.
Impairment loss is the amount by which the book value of an
asset exceeds the recoverable value of the asset.
A public grant received for capital expenditure is recognized as
lowering the cost of the fixed asset.
Economic useful lives of assets for the 2021 and 2020 financial
periods are as follows:
• IT machinery and equipment 4 years
• Other machinery and equipment 5 years
Economic useful lives of intangible assets are as follows:
• Intangible rights 3–5 years
• Acquired asset, technology 5 years
• Acquired asset, customer relations 5 years
• Other intangible rights 5–10 years
Board of Directors’ Report and Consolidated Financial Statements 2021
SITOWISE GROUP PLC
26
EUR thousand 2021 2020
Machinery and equipment , ,
Leases
Building and structures , ,
Machinery and equipment
Tangible assets 7,286 6,745
Intangible rights and other
intangible assets
, ,
Impairment
Intangible assets 2,300 1,263
Impairment of goodwill
Total 9,586 8,008
The Sitowise Group did not recognize impairment on intangible
assets for the financial periods 2021–2020.
3 OPERATIONAL ASSETS AND LIABILITIES
3.1 BUSINESS COMBINATIONS
Accounting policy
Acquired subsidiaries are consolidated into the consolidated
financial statements using the acquisition method. The
consideration given in business combinations and the identifiable
assets and assumed liabilities of the acquired company are
measured at fair value upon acquisition. The consideration
given in conjunction with acquisitions includes any funds given,
liabilities to the previous owners of the acquiree and issued equity
shares.
Any additional purchase price is measured at fair value upon
acquisition. The additional purchase price is classified as either
equity or a liability. If the additional purchase price is classified as
a liability, it is measured at fair value on the closing date of each
reporting period. An additional purchase price classified as equity
is not remeasured.
Non-controlling interest in the acquiree is measured at fair value
or at an amount corresponding to the proportional share of
the non-controlling interest of the identifiable net assets of the
acquiree.
Acquisition-related expenses, such as expert fees, are expensed
for the periods during which they occur and services are received.
Information about additional purchase price liabilities is presented
in Note 4.2.2.
Mergers and acquisitions are a central part of the active growth
strategy of the Sitowise Group. The mergers and acquisitions
have primarily been minor supplementary acquisitions, and each
acquisition has had an impact of less than 10% individually on the
net sales of the Sitowise Group. The starting point in acquisitions
has been to strengthen local expertise and resources. Therefore,
the value of the acquisitions is primarily based on skilled personnel,
and no value is allocated; the majority of it is allocated to goodwill.
In 2021, the Sitowise Group carried out eight acquisitions, of
which six in Finland and two in Sweden:
• Stockholms VVS-Kompetens AB, a building systems expert
based in Stockholm and Södertälje
• Sweetlakes Oy from Jyväskylä, which specializes in cloud
and mobile development and security information system
solutions,
• Benviroc Oy and MSDI Oy, which specialize in climate and
sustainability services based on digitalization
• Enco Oy, a digital real estate management expert,
• Infracontrol AB, a Swedish company that implements real-time
digital solutions for transport and infrastructure
• Livair Oy, which specializes in HVAC design
• Jorma Jääskeläinen Oy, an engineering company specializing
in structural design
Company Time Transaction method Location Personnel
Stockholms VVS-Kompetens AB / Share purchase (%) Stockholm
Sweetlakes Oy / Share purchase (%) Jyväskylä
Benviroc Oy / Share purchase (%) Espoo
MSDI Oy / Share purchase (%) Espoo
Enco Oy / Share purchase (%) Helsinki
Infracontrol AB / Share purchase (%) Mölndal
Livair Oy / Share purchase (%) Helsinki
Insinööritoimisto Jorma Jääskeläinen Oy / Share purchase (%) Tampere
All eight acquisitions were paid in cash.The unpaid additional
purchase prices related to M&A total EUR 0.4 million. The assets
and liabilities of the acquired companies mainly include working
capital items and separately identified assets related to customer
relationships and technology. The estimated useful life of the
separately identified assets is 5 years. Recognized consolidated
goodwill is not deductible for tax purposes.
EUR thousand 2021 2020
Purchase price , ,
Assets , ,
Liabilities , ,
Net assets 5,620 5,017
Goodwill , ,
SITOWISE GROUP PLC
Board of Directors’ Report and Consolidated Financial Statements 2021 27
Other intangible assets
Other intangible assets include intangible rights and other
intangible assets. Intangible assets, such as system deliveries,
which have a limited economic useful life, are recognized on
the balance sheet at original acquisition cost less accumulated
amortization and any impairment.
Technology and customer relationships owned by the Sitowise
Group have been acquired in conjunction with previous mergers
and acquisitions, and they were initially recognized on the
balance sheet at fair value and are amortized using the straight-
line method over their estimated economic useful lives.
The Sitowise Group assesses on the closing date of each financial
period whether there are indications of the impairment of
intangible assets other than goodwill. If indications emerge, the
Group assesses the recoverable amount from the said asset. The
recoverable amount is the fair value of the asset less the higher of
costs of selling or value in use.An impairment loss is recognized
through profit and loss when the book value of the asset exceeds
the recoverable amount. When recognizing the impairment loss,
3.2 GOODWILL AND OTHER INTANGIBLE ASSETS
Accounting policy
Apart from goodwill, intangible assets are recognized at cost less
amortization using the straight-line method over their economic
useful lives. Intangible assets include goodwill, intangible rights,
and other intangible assets.
Goodwill
Goodwill from the acquisition of business operations is recognized
at the amount by which the consideration given, non-controlling
interest, and any previous holding in the acquiree combined
exceed the Group’s share of the fair value of the acquired net
assets. Goodwill is recognized on the balance sheet less any
accumulated impairment losses. Goodwill is not amortized, but
tested annually for any impairment.
For impairment testing, goodwill is allocated to the Sitowise
Group, which is expected to benefit from the business
combinations from which the goodwill emerged. Impairment
testing is described in more detail below in this Note.
EUR thousand Goodwill
Other intangible
assets Total
Acquisition cost January , , , ,
Business combinations , , ,
Increase , ,
Decrease - -
Transfer between items -, -,
Exchange rate dierences - - -
Acquisition cost December , , , ,
Accumulated depreciation -, -,
Business combinations, accumulated depreciation -, -,
Depreciation for the period -, -,
Transfer between items , ,
Exchange rate dierences
Accumulated depreciation, amortization, and impairment December -, -,
Acquisition cost December 31, 2021 135,193 7,543 142,735
EUR thousand Goodwill
Other intangible
assets Total
Acquisition cost January , , , ,
Business combinations , , ,
Increase , ,
Exchange rate dierences ,
Acquisition cost December , , , ,
Accumulated and depreciation for the period -, -,
Depreciation for the period -, -,
Other change
Exchange rate dierences
Accumulated depreciation, amortization, and impairment December -, -,
Acquisition cost December 31, 2020 118,081 5,681 123,761
Board of Directors’ Report and Consolidated Financial Statements 2021
SITOWISE GROUP PLC
28
the Group reassesses the economic useful life of the intangible
asset. The impairment loss is reversed if a change has taken place
in the circumstances and the recoverable amount of the asset
has changed from the time of recognizing the impairment loss.
However, the impairment loss will not be reversed in excess of
the book value of the asset had the impairment loss not been
recognized.
The impairment of goodwill is described in Note 3.2.1, Impairment
testing.
Significant decisions based on management discretion
Technology and customer relationships owned by the Sitowise
Group have been acquired in conjunction with previous
mergers and acquisitions, and they were initially recognized
on the balance sheet at fair value and are amortized using the
straight- line method over their estimated economic useful lives.
The management has estimated the economic useful life of
technology to be 5 years and the economic useful life of customer
relationships to be 5 years.
Section 3.2.1.1, Business combinations, discusses the treatment
of goodwill. During the 2021 financial period, the Sitowise Group
carried out eight acquisitions.
3.2.1 Impairment testing
Accounting policy
Goodwill is allocated to cash-generating units in impairment
testing. The impairment testing is carried out annually, and
if there are indications of value possibly being impaired.
Furthermore, other assets are tested for impairment if there are
indications of any impairment.
If any evidence of impairment is found, the recoverable amount of
the said asset is estimated. The recoverable amount is determined
on the basis of value in use. An impairment loss is recognized
when the book value of the asset exceeds the recoverable
amount. The impairment loss is immediately recognized through
profit and loss, and the economic useful life of the amortized
asset is reassessed when recognizing the impairment loss. The
need for recognizing impairment losses is reviewed at the level of
cash-generating units, namely the Sitowise Group. An impairment
loss recognized for goodwill is never reversed.
Significant decisions based on management discretion
The preparation of calculations used in testing goodwill for
impairment requires making estimates concerning the future. The
management’s estimates and related critical uncertainty factors
are associated with the components of calculations concerning
the recoverable amount, which include discount rate, growth
rate after the projection period and development of net sales
and operating profit, including the level of the company’s costs.
The discount rate indicates current estimates of the time value of
money and a relevant risk premium, which, in turn, indicates risks
and uncertainty factors not taken into account by adjusting the
estimates concerning the corresponding cash flows. The discount
rates used and projections of business growth and profitability,
including sensitivity analyses, are presented in section 3.2.1.1
below.
3.2.1.1 Impairment testing of goodwill
The Sitowise Group has one cash-generating unit at the level of
which goodwill is monitored and to which goodwill is allocated.
Cash flow projections are based on the confirmed budget for
the next year and confirmed strategy for the subsequent years.
The length of the projection period used in impairment testing
calculations is five years.
The management’s conservative estimate of long-term cash flow
growth has been used in determining the growth in the terminal
value. The growth factor used for the terminal value is 2.0%
annual growth, corresponding to long-term GDP growth in the
market areas in which the Sitowise Group operates. The discount
rate of cash flows is determined using the weighted average cost
of capital (WACC). The key factors of WACC are risk-free interest
rate, market risk premium, industry-specific beta factor, cost of
debt, and ratio of equity to liabilities.The table below presents the
assumptions by testing dates.
Assumptions used in impairment
calculation
September
30, 2021
September
30, 2020
Growth in net sales during the
projection period (CAGR)
.% .%
Terminal growth assumption .% .%
Discount rate (pre-tax WACC) .% .%
Impairment testing on September 30, 2021 did not indicate a
need for impairment of goodwill, with the recoverable amount
exceeding the book value.
The Sitowise Group has estimated that no anticipated change in
the key assumptions would cause a situation in which the book
value of a cash-generating unit would exceeds its recoverable
amount. A break-even sensitivity analysis was carried out in
conjunction with the impairment testing, in which the discount
rate was increased by 5 percentage points and the terminal
growth assumption was reduced to 0%. Based on the sensitivity
analyses, the probability of goodwill impairment losses was low.
3.3 TANGIBLE ASSETS
Accounting policy
Tangible assets primarily comprise oce furniture, IT hardware,
and other tools. Property, plant, and equipment is measured at
original acquisition cost less accumulated amortization and any
impairment.
The Group assesses on the closing date of each reporting period
whether there are indications of the impairment of a tangible
asset. If indications emerge, the Group assesses the recoverable
amount from the said asset. An impairment loss is recognized
when the book value of the asset exceeds the recoverable amount.
SITOWISE GROUP PLC
Board of Directors’ Report and Consolidated Financial Statements 2021 29
EUR thousand
Machinery and
equipment
Other tangible
assets Total
Acquisition cost January , , ,
Business combinations
Increase
Decrease - -
Exchange rate dierences - -
Transfer between items -, -,
Acquisition cost December , , ,
Accumulated depreciation -, -,
Business combinations, accumulated depreciation - -
Depreciation for the period -, -,
Accumulated depreciation of decreases
Transfer between items , ,
Exchange rate dierences
Accumulated depreciation, amortization, and impairment December -, -,
Acquisition cost December 31, 2021 3,923 36 3,959
EUR thousand
Machinery and
equipment
Other tangible
assets Total
Acquisition cost January , , ,
Increase , ,
Decrease
Exchange rate dierences
Acquisition cost December , , ,
Accumulated and depreciation for the period -, -,
Exchange rate dierences - -
Accumulated depreciation, amortization, and impairment December -, -,
Acquisition cost December 31, 2020 4,822 36 4,858
3.3.1 Leases
Accounting policy
As a rule, the Sitowise Group recognizes all lease-related assets
(right-of-use assets) and lease liabilities on its balance sheet. At
the time of concluding a contract, the Sitowise Group assesses
whether the contract is a lease or includes a lease. The contract is
a lease or includes a lease if the contract gives the right to control
the use of a specific asset for a fixed period against consideration.
A right-of-use asset and a corresponding liability are recognized
for all of the lessees’ leases, with the exception of short-term
leases as well as leases of minor value. The right-of-use asset
is measured at acquisition cost at the start of the contract and
later at acquisition cost less accumulated depreciation and
amortization and any impairment losses, adjusted for the impact
of any reassessments of the lease liability. The lease liability is
measured at the start of the contract at the current value of rents
not paid on the said date.Later, the lease liability is measured
at amortized cost using the eective interest method. The
lease liability is remeasured when a change has taken place
in the future rent payments due to a change in the index or
price level. When the lease liability is remeasured in this way, a
corresponding adjustment is made to the book value of the right-
of-use asset, or it is recognized through profit or loss if the book
value of the right-of-use asset has been reduced to zero.
At the Sitowise Group, right-of-use assets include the premises
and vehicles leased under ordinary terms and conditions. The
Group treats premises which have a period of notice of less than
one year and are located in smaller locations as short-term leases.
Computers, tablets, printers, and similar assets are treated as
assets with minor value. The Group uses the IFRS relief clause
and does not apply IFRS 16 to intangible assets. The discount rate
used is the interest rate of the company’s additional credit, the
components of which include the reference interest rate and the
financial institution’s margin.
Board of Directors’ Report and Consolidated Financial Statements 2021
SITOWISE GROUP PLC
30
During the 2021 financial period, outgoing cash flow due to leases
totaled EUR 5.8 million, and during the 2020 financial period,
they totaled EUR 5.9 million.
Rent expenses from short-term contracts are included in other
operating expenses, amounting to EUR 2,938 thousand in 2021
and EUR 2,644 thousand in 2020.
The interest expense on the lease liability was EUR 894 thousand
in 2021 and EUR 874 thousand in 2020.
3.4 TRADE AND OTHER RECEIVABLES
Accounting policy
The Sitowise Group applies the simplified approach of IFRS9 to
provisions for credit losses for trade receivables. Trade receivables
are recognized on the balance sheet at original invoiced value
less any impairment. A provision for impairment is immediately
recognized through profit and loss. An allowance for loss is based
on the expected credit losses from trade receivables. The model
of expected credit losses is forward-looking and based on the
historic credit loss rate, applying the simplified procedure, the
provisioning matrix. The Sitowise Group records the final credit
loss when debt collection measures prove to be unsuccessful.
A final credit loss is recognized, for example, when a credit loss
recommendation has been received from the debt collection
agency or the debtor applies for restructuring or bankruptcy.
Project receivables increased during 2021, mainly on account of
growth in business. The project portfolio also had an impact on
the development of project receivables during the financial period.
There are no significant credit risk concentrations associated with
the receivables, and all receivables are unsecured.
EUR thousand
IFRS16,
Business
Premises
IFRS16,
Cars
IFRS 16
right-of-
use assets
Acquisition cost
January ,
, , ,
Increase , ,
Decrease - - -
Exchange rate dierences - - -
Acquisition cost
December ,
, , ,
Accumulated and depreciation
for the period
-, -, -,
Depreciation for the period -, - -,
Exchange rate dierences
Accumulated depreciation,
amortization, and impairment
December
-, -, -,
Acquisition cost
December 31, 2021
26,678 784 27,462
Sitowise Group has a sublease agreement that is part of a lease
arrangement. Due to the principal agreement, the Sitowise Group
does not recognize income from the sublease agreement. Due
to the lease arrangement, the Group does not incur any liabilities
from the lease, and the fixed asset has not been capitalized.
Significant decisions based on management discretion
The management of the Sitowise Group regularly reviews
the strategic value of locations. This influences the IFRS 16
interpretation regarding for how long the Group is likely to extend
a lease on premises until further notice, for example.
EUR thousand
IFRS 16
right-of-use assets
Acquisition cost January , ,
Increase ,
Decrease -,
Exchange rate dierences
Acquisition cost December , ,
Accumulated and depreciation for the period -,
Depreciation for the period -,
Exchange rate dierences -
Accumulated depreciation, amortization, and
impairment December
-,
Acquisition cost December 31, 2020 29,316
EUR thousand 2021 2020
Trade receivables , ,
Project receivables , ,
Accrued income , ,
Other accrued income ,
Total 52,099 45,404
The Group's right-of-use assets consist primarily of business
premises contracts. In the financial period 2021, the share of
business premises contracts was 97%, and in the financial period
2020, the share was 98%.
SITOWISE GROUP PLC
Board of Directors’ Report and Consolidated Financial Statements 2021 31
EUR thousand 2021
Expected
credit losses
Expected
credit losses 2020
Expected
credit losses
Expected credit
losses
Undue , .% , .%
– days , .% , .%
– days .% .%
– days .% .%
– days .% .%
Over days % %
Total 34,983 896 30,232 795
Provisions for impairment related to trade receivables are based
on historic data concerning materialized credit losses and on an
estimate of potential future credit losses. The expected credit
losses are fully covered by the provision for credit losses and
complaints.
3.5 PROVISIONS
Accounting policy
A provision is recognized when the Group has a legal or factual
obligation as the result of a prior event, the materialization of
the obligation is likely, and the amount of the obligation can be
reliably measured. The amount recognized as a provision is the
current value of the expenses which fulfilling the obligation is
expected to require at the end of the financial period based on
the management’s best estimate. If compensation for part of the
obligation can be recovered from a third party, the compensation
is deducted from the provision, but only when it is likely that the
compensation will be received. A provision is recognized only if
the amount of the obligation can be reliably measured.
At the time of recognition, the management must assess whether
there is an obligation that is likely to materialize as well as its
amount and time of materialization.
A provision is recognized for loss-making contracts when the
expenses required to fulfill obligations exceed the benefits from
the contract. The loss provision is decreased pro rata to the
recognition of revenue from the loss-making contract.
EUR thousand 2021 2020
Accounts payable , ,
Liabilities based on contracts with
customers
, ,
Accrued expenses , ,
Other liabilities , ,
Total 51,010 47,318
EUR thousand 2021
Provision January ,
Increases in provisions
Provisions used -
Cancellations of unused provisions -
Provision December 31 1,428
EUR thousand 2020
Provision January ,
Change in provisions
Provision December 31 1,793
Aging of trade receivables
Liabilities based on contracts with customers increased during
2021, mainly on account of growth in business. The project
portfolio also had an impact on the development of liabilities
based on contracts with customers during the financial period.
Liabilities based on customer contracts include both the
dierence between net sales based on the percentage of
completion and invoicing, and ordinary provisions for costs
relating to customer projects.
The most essential items in accrued expenses included accrual of
personnel expenses and ordinary business-related accruals. The
increase in accrued expenses in 2021 was mainly due to higher
personnel-related accruals brought about by the increase in the
number of employees.
Provisions include normal business-related complaint and loss
provisions.
3.6 ACCOUNTS PAYABLE AND OTHER LIABILITIES
Board of Directors’ Report and Consolidated Financial Statements 2021
SITOWISE GROUP PLC
32
At the Sitowise Group, non-current receivables include
receivables falling due after more than one year. Other shares and
participations, which are included in non-current financial assets,
are initially measured at amortized cost, and their fair value is
determined using inputs other than observable market inputs.
Financial assets that are not measured at amortized cost are
recognized at fair value through comprehensive income. The
change in the fair value of these items is recognized through
comprehensive income. The Group's shares in non-listed
companies are measured at fair value using the valuation of the
company's last financing round.
Current financial assets include trade receivables and cash and
cash equivalents.The book values of current trade receivables
and cash and cash equivalents correspond to the best estimate
of their fair values. Write-downs of trade receivables are made
based on expected credit losses from trade receivables. The
model of expected credit losses is forward-looking and based on
the historic credit loss rate.
Cash and any bank deposits that can be withdrawn on demand
are included in cash equivalents at the Sitowise Group. Short-term
deposits are considered to be easily convertible into cash because
their original maturity is at most three months. The cash and cash
equivalents reported on the balance sheet correspond to the cash
and cash equivalents reported on the cash flow statement. Cash
and cash equivalents on December 31, 2021 amounted to EUR
19,353 thousand (EUR 15,463 thousand).
Cash and cash equivalents are derecognized when the Group has
lost the contractual right to cash flows or has transferred risks and
income to outside the Group to a significant extent. During 2021,
there were no transfers between fair value levels 1, 2 and 3.
4.2.2 Financial liabilities
Financial liabilities measured at amortized cost are included in the
Group’s external loans from financial institutions and accounts
payable. Financial liabilities are measured initially at fair value
and recognized on the balance sheet less transaction costs. A
financial liability is classified as current if the Group does not have
an unconditional right to postpone the repayment of the liability
a minimum of 12 months from the closing date of the reporting
period. If loans are repaid or refinanced, any remaining costs not
expensed relating to them are recognized in financial expenses.
These financial liabilities are measured at amortized cost using
the eective interest method. Cost items are measured at fair
value through profit or loss in the period during which they
occur. Liabilities recognized at fair value through profit or loss are
additional purchase price liabilities for acquisitions.
The Sitowise Group had an estimated additional purchase price
liability of EUR 426 thousand (December 31, 2021) and EUR 1,171
thousand (December 31, 2020).
4 FINANCIAL ITEMS AND CAPITAL
STRUCTURE
4.1 FINANCIAL INCOME AND EXPENSES
EUR thousand 2021 2020
Other interest and financial income ,
Interest on lease liabilities - -
Interest expenses -, -,
Other financial expenses -, -
Total -6,086 -2,376
Other interest and financial income mainly include unrealized
foreign exchange income from internal loans in 2020 that did not
arise in the financial period 2021. Interest expenses are associated
with loans from financial institutions.
4.2 FINANCIAL ASSETS AND LIABILITIES
Measurement of fair values
The fair value of an asset or liability is the price that would
be received from selling the asset or paid for transferring the
liability between market parties in a regular transaction on the
measurement date. The Sitowise Group makes use of market data
in measuring fair value if there is an active market for the financial
asset or liability. Otherwise, other measurement methods will be
applied.
Fair values are classified as follows to dierent levels of the fair
value hierarchy, illustrating the significance of input data used in
the measurement methods:
• Level 1: Quoted fair values for identical assets and liabilities in
active markets
• Level 2: Fair values are measured using inputs other than
quoted prices included within Level 1, and they are observable
for the asset or liability, either directly or indirectly
• Level 3: Fair values are measured using asset or liability data
not based on observable market inputs
The Sitowise Group considers that the book values of current
trade receivables, accounts payable and cash and cash
equivalents correspond to the best estimate of their fair values.
Moreover, the Group considers that the book values of loans from
financial institutions and other non-current liabilities correspond
to the best estimate of their fair values.
4.2.1 Financial assets
The Group classifies its financial assets at amortized cost and fair
value through other comprehensive income. The classification of
financial assets is based on the business model specified by the
Group and contractual cash flows of financial assets.
SITOWISE GROUP PLC
Board of Directors’ Report and Consolidated Financial Statements 2021 33
EUR thousand
Measured
at amortized
cost
Measured at fair
value through other
comprehensive income
Fair value
through profit
and loss
Book value
total Fair value Level
Non-current financial assets
Other shares and holdings Level
Loans receivable Level
Other financial assets Level
Current financial assets
Trade receivables , , , Level
Cash and cash equivalents , , , Level
Financial assets December 31, 2021 54,986 731 0 55,717 55,717
EUR thousand
Measured
at amortized
cost
Measured at fair
value through other
comprehensive income
Fair value
through profit
and loss
Book value
total Fair value Level
Non-current financial liabilities
Loans from financial institutions , , , Level
Lease liabilities , , Level
Current financial liabilities
Loans from financial institutions , , , Level
Accounts payable , , , Level
Additional purchase price liabilities Level
Lease liabilities , , Level
Financial liabilities December 31, 2021 84,913 0 426 85,339 56,943
EUR thousand
Measured
at amortized
cost
Measured at fair
value through other
comprehensive income
Fair value
through profit
and loss
Book value
total Fair value Level
Non-current financial assets
Other shares and participations Level
Loans receivable Level
Other financial assets Level
Current financial assets
Trade receivables , , , Level
Cash and cash equivalents , , , Level
Financial assets December 31, 2020 46,715 663 0 47,378 47,378
EUR thousand
Measured
at amortized
cost
Measured at fair
value through other
comprehensive income
Fair value
through profit
and loss
Book value
total Fair value Level
Non-current financial liabilities
Loans from financial institutions , , , Level
Lease liabilities , , Level
Current financial liabilities
Loans from financial institutions , , , Level
Accounts payable , , , Level
Additional purchase price liabilities , , , Level
Lease liabilities , , Level
Financial liabilities December 31, 2020 106,889 1,171 108,060 78,173
Board of Directors’ Report and Consolidated Financial Statements 2021
SITOWISE GROUP PLC
34
Loans from financial institutions comprised a variable rate bank
loan. In connection with the IPO, a new financing agreement
was negotiated, under which a total of EUR 50.5 million has
been raised. In the financial period 2021, the Group fulfilled the
covenant condition attached to the net liabilities/EBITDA key
figure in accordance with the financing agreement. There are also
liability conditions attached to the bank loan.
4.3 SHAREHOLDERS’ EQUITY
4.3.1 Shares and share capital
Sitowise Group Plc has one series of shares in which each
share entitles its holder to one vote and an equal dividend. The
company's share (SITOWS) is listed and publicly traded on the
main list of Nasdaq Helsinki Ltd. On December 31, 2021, the
number of shares was 35,415,927 and the share capital was EUR
80,000 (2,500). The shares have no nominal value and all issued
shares have been fully paid. On December 31, 2021, the company
held a total of 31,677 own shares.
On December 31, 2021, the company had shares as follows:
2021 2020*
Number of shares ,, ,,
Average number of shares ,, ,,
Diluted number of shares ,, ,,
Average number of diluted shares ,, ,,
*) Number of A shares, not comparable.
Share type Dec 31, 2020 Change 1–2/2021 3/2021 before split 3/2021 after split
3/2021 Redemption
of P shares
A , , ,, ,,
A , , , ,, ,,
P ,, , ,, ,,
P ,, -, ,, ,,
Total 22,676,173 17,922 22,694,095 47,348,856 25,952,380
At the end of the previous financial period, December 31, 2020,
Sitowise had four series of shares, each entitling to a dierent
number of votes and a dierent distribution of assets.
By a unanimous resolution of the shareholders, the company
resolved to make EUR 580,000 as a capital repayment for certain
P1 and P2 shares in January. In March, the General Meeting
authorized the Board to decide on a dividend payment for the
financial period from January 1 to December 31, 2020, consisting
of all of the accrued preferred payments on the series P1 and P2
shares to be redeemed in connection with the listing, up to the
redemption date, and amounting to EUR 298,000.
New shares were issued following acquisitions and in order
to commit key personnel to the company, and the number of
shares entered for the company in the Trade Register increased
by a total of 32,669 A2 shares and 980,291 P1 shares during the
review period. The company also canceled some of the shares in
its possession during the review period (37,183 Series A2 shares,
690,215 Series P1 shares, and 275,332 Series P2 shares). In
addition, Intera Fund III acquired the stock options granted to CEO
Eloholma (a total of 7,692 stock options) and subscribed for Series
A2 shares with all the options.
The table below contains a summary of the above changes in
January–March 2021 before the company's stock exchange
listing.
The company merged the Series A1 and A2 shares into one
series and canceled a total of 12,879,032 Series P1 shares and
8,517,444 Series P2 shares in connection with the IPO. In the IPO,
the company issued a total of 9,213,547 new shares, bringing the
number of shares in circulation to 34,493,874 shares. The new
shares subscribed for in the personnel issue (672,053 shares)
were entered into the Trade Register on April 14, 2021, and the
number of the company’s shares consequently increased to
35,165,927 shares.
SITOWISE GROUP PLC
Board of Directors’ Report and Consolidated Financial Statements 2021 35
On December 15, 2021 the Group’s Board of Directors also
decided, under an authorization granted by a unanimous
resolution of the shareholders on March 3, 2021, to issue
250,000 new Sitowise shares to Sitowise itself without
consideration. The shares were registered with the Trade Register
on January 3, 2022 and admitted to trading on the ocial list of
Nasdaq Helsinki Ltd on January 4, 2022, after which the number
of shares increases to 35,665,927 and the number of shares held
by the company to 281,677. Since the listing, a total of 218,323
shares have been issued to subscribers in directed share issues in
connection with acquisitions.
4.3.2 Ownership of the Board of Directors and the
management
The 2020 share numbers take into account the share split under
the IPO in order to make the share numbers and ownership
comparable.
4.3.3 Fund for invested unrestricted equity
Payments made for subscriptions for shares during the financial
period and capital repayments are recognized in full in the fund
for invested unrestricted equity. When listed on the ocial list of
Nasdaq Helsinki Ltd, the company paid approximately EUR 22.0
million in capital repayments and received approximately EUR
73.0 million in new capital, taking into account the costs related
to the listing. In addition, the fund for invested unrestricted equity
includes approximately EUR 3.8 million of investments in the
company resulting from acquisitions made during the year.
3/2021
number of shares
3/2021
IPO
4/2021
personnel issue
7/2021
directed issue
12/2021
number of shares
Number of shares ,, ,, , , ,,
Ownership of the Board of Directors
and the management Dec 31, 2021 Share % Dec 31, 2020 Share %
Board *) , .% , .%
CEO , .% , .%
Other management team , .% , .%
Total management ownership 1,341,841 3.8% 1,215,420 4.8%
Total (shares) ,, ,,
*) Includes direct ownership and/or through a company.
4.3.4 Subordinated loans
Sitowise Group Plc had no subordinated loans on December
31, 2021. The subordinated loan of EUR 14.1 million, which was
included in the balance sheet of December 31, 2020, was paid o
during the financial period.
4.3.5 Share-based payments (option program)
As part of the incentive and engagement scheme for management
and key personnel, the Sitowise Group has one valid option
program. Stock options are granted free of charge. Each stock
option gives you the right to subscribe for one Sitowise Group
Plc share (SITOWS) at a price determined in accordance with the
option clauses and at the time specified in the option clauses.
The options will be forfeited and transferred back to the
Company for no consideration if the option holder resigns or their
On June 29, 2021 the Group’s Board of Directors decided,
under an authorization granted by a unanimous resolution of
the shareholders on March 3, 2021, to issue a total of 250,000
new Sitowise shares to Sitowise itself without consideration. The
table below describes the changes in the number of shares in
connection with the listing and subsequently according to the
date of registration.
Board of Directors’ Report and Consolidated Financial Statements 2021
SITOWISE GROUP PLC
36
employment relationship or service contract is terminated before
the commencement of the subscription period of the Shares to
be subscribed with the options. The Board of Directors can, under
certain conditions, permit the option holder to keep some of their
options, however.
Option program 2021
Program Option rights 2021
Type OPTION OPTION OPTION OPTION
Instrument Match 2021A Performance 2021A Match 2021B Performance 2021B
Date of Annual General Meeting March , March ,
Maximumamount, pcs , ,
Subscription ratio of underlying
shares, pcs
Initial subscription price, EUR . . . .
Dividend adjustment Yes Yes Yes Yes
Current exercise price, EUR . . . .
Initial allocation date March , March , March , March ,
Vesting date April , April , April , April ,
Maturity date March , March , March , March ,
Vesting conditions Share price development
Service requirement
Share price development
Service requirement
Share price development
Service requirement
Share price development
Service requirement
Maximum contractual life, years . . . .
Remainingcontractual life, years . . . .
Number of persons at the end of
the reporting year
Payment method Share Share Share Share
Changes during the period Match 2021A Performance 2021A Match 2021B Performance 2021B
January 1, 2021
Changes during the period
Granted , , , ,
Forfeited , ,
December 31, 2021
Outstanding at the end of the period , , , ,
Exercisable at the end of the period
In stock at the end of the period , ,
Determination of fair value
The fair value of share based incentives have been determined at
grant date and the fair value is expensed until vesting. The pricing
of the share based incentives granted during the period was
determined by the following inputs and had the following eect:
Valuation parameters for instruments granted during the period
Share price at the grant date, EUR .
Share price at the end of the reporting period, EUR .
Exercise price, EUR .
Expected volatility .%
Maturity, years .
Risk-free interest rate
Expected dividends, EUR
Valuation model Binomial model
Fair value, EUR ,
The impact of the option program 2021 on the result and financial
position for the financial period was EUR 161 thousand.
SITOWISE GROUP PLC
Board of Directors’ Report and Consolidated Financial Statements 2021 37
5 FINANCIAL AND CAPITAL RISKS
5.1 MANAGEMENT OF FINANCIAL RISKS
The management of financial risks at the Sitowise Group aims
to ensure the financial stability of the Group and availability of
sucient financing options in dierent market situations. In
addition, the aim is to support the businesses in identifying and
managing business-related financial risks. The Board of Directors
has approved the Group's risk management principles and the
Board is responsible for supervising them.
The Group is exposed to diverse market risks. Changes in
these risks have eects on the company’s assets, liabilities,
and anticipated business transactions. The risks are caused
by changes in interest and exchange rates. Financial risk
management is carried out as part of the Group’s risk
management eorts. The foundation of the management
of financial risks is based on principles aiming for business
continuity.
The situation of financial risks is regularly reported on to the
company’s Board of Directors and management. The company’s
Board of Directors makes the most significant in-principle
decisions concerning risk management. The Board of Directors
reviews all material financing-related matters, such as external
loan arrangements, on a case-by-case basis. The CFO of the
Sitowise Group is responsible for ensuring financing, identifying
risks and, if necessary, implementation of hedging together with
external counterparties. The business units and subsidiaries
are responsible for the management of risks involved in their
respective business operations, and subsidiaries also for
projecting cash flows.
The Group’s cash and liquidity remained at a good level.
5.1.1 Exchange rate risk
The Sitowise Group is exposed to exchange rate risks, the most
significant of which is the Swedish krona through the business
operations of the Swedish subsidiaries. The Sitowise Group does
not actively hedge against exchange rate risks, as the income
and expenses of business operations are primarily in the same
currency (“natural hedge”).
Translation risk is primarily caused by foreign currency-
denominated internal loans of the parent company. The Group’s
finance unit regularly analyzes translation risk and reports on
essential factors in this area to the management. The most
significant internal loans are denominated in the Swedish krona.
The translation risk is not hedged as most of the internal loans
denominated in the Swedish krona are eliminated when Sitowise
Holding AB merges with the parent company on January 31,
2022.
On the closing date, the sensitivity of the Sitowise Group to
exchange rates was approximately EUR 1.6 million (2020:
approximately EUR 1.6 million), assuming that the SEK/EUR
exchange rate changes by 5 percentage points.
5.1.2 Interest rate risk
The Group is exposed to financial risks in its operations, such
as the eects of changes in interest rates and the availability
of competitive financing. Changes in the macroeconomic
environment or general situation in the financial markets may
have negative impacts on the availability, price, and other terms
and conditions of financing. An increase in interest rates could
have a material direct impact on the costs of available financing
and the company’s existing financial expenses. An increase in
interest rates could thereby aect the costs of the company’s
debt financing in the future. The company aims to continuously
project and monitor the need for financing in its business
operations so that the company has sucient liquid assets for
financing its operations and repaying maturing debt.
On the closing date, the Group had EUR 50.5 million in interest-
bearing bank loans (2020: EUR 72 million). Loans from financial
institutions comprised a variable rate loan in 2021, similarly to the
previous year. On the closing date, the interest rate exposure of
the Sitowise Group was approximately EUR 500 thousand (2020:
approximately EUR 700 thousand), assuming that interest rates
would increase by one percentage point. See also section 4.2.2,
Financial liabilities.
5.1.3 Credit risk
Credit risk is the risk of a financial loss that occurs if a customer
fails to fulfill their contractual obligations. The credit risk of the
Sitowise Group is related to counterparties from which it has
outstanding receivables or with which the Sitowise Group has
long-term contracts. The tools of credit risk management at
the Sitowise Group include frontloaded payment schedules of
projects, thorough investigation of the customers’ background
data, and agreeing on advance payments.
The Sitowise Group assesses at the end of each reporting period
whether there is objective evidence of impairment of a financial
asset or group of financial assets. If there is justified indication of
impairment, the said financial asset is recognized as a credit loss.
Credit losses are recognized as expenses through profit and loss.
The Sitowise Group considers that there are indications of a credit
loss if any of the following indications is present:
• Significant financial diculties of the debtor
• Probability of the debtor's bankruptcy or other financial
restructuring
• Default of payments
Information on trade receivables and expected credit losses is
presented in Note 3.4.
Board of Directors’ Report and Consolidated Financial Statements 2021
SITOWISE GROUP PLC
38
5.1.4 Solvency risk
In order to manage the solvency risk, the Sitowise Group
continuously maintains sucient liquidity reserves. The Sitowise
Group aims to have a sucient amount of liquid assets to deal
with fluctuations in the need for working capital. Cash and cash
equivalents totaled EUR 19.4 million at the end of 2021 (2020:
EUR 15.5 million). At the end of 2021, the Group additionally had
a EUR 20.0 million unused overdraft facility (2020: EUR 4.5
million).
Contractual cash flows of financial liabilities
6 DISCONTINUED OPERATIONS
For the financial period 2021, the consolidated income statement
does not include discontinued operations The Sitowise Group
divested its Tele unit to Rejlers in fall 2020. The Tele business has
been treated as a discontinued operation in 2020.
The result of the discontinued operations is presented in the table
below.
The cash flows in lease liabilities include the payments of lease
liabilities.
5.2 MANAGEMENT OF CAPITAL RISKS
In the management of working capital, the Sitowise Group aims
to ensure the ability to operate continuously in order to be able
to provide the shareholders with returns and increase the value
of their invested capital. The Sitowise Group monitors the ratio
of net debt to adjusted EBITDA to ensure the realization of the
growth strategy by keeping indebtedness under control. The
Group's capital structure is regularly assessed by the company's
management. The company has announced a long-term goal of
keeping the ratio of net debt to operating margin below 2.5.
Net debt is calculated as current and non-current loans from
financial institutions less cash and cash equivalents. The table
below presents the net debt of the Sitowise Group.
EUR thousand 2022 2023 2024 →
Loans from financial
institutions
, , ,
Lease liabilities , , ,
Accounts payable ,
Total 13,929 6,633 64,350
EUR thousand 2021 2022 2023 →
Loans from financial
institutions
, ,
Lease liabilities , , ,
Accounts payable ,
Total 14,826 74,667 21,424
EUR thousand 2021 2020
Loans from financial institutions , ,
Cash and cash equivalents -, -,
Net debt 30,859 56,583
Net debt / EBITDA, adjusted 1.4x 2.6x
Net debt excludes IFRS lease liabilities.
EUR thousand 2021 2020
Income ,
Expenses -,
Profit before taxes 0 118
Taxes
Result from discontinued
operations
0 118
7 OTHER NOTES
7.1 GROUP STRUCTURE
Accounting policy
The consolidated financial statements include the parent
company Sitowise Group Plc and all subsidiaries over which the
parent company had control on the closing date of the reporting
period. Sitowise Group Plc has control when it is exposed, or has
rights, to variable returns from its involvement with a company
and has the ability to aect those returns through its power
over the company. Acquired subsidiaries are consolidated as of
the date on which Sitowise Group Plc gains control. Divested
subsidiaries are consolidated until control ceases to exist.
Intra-Group transactions, receivables, debts, and unrealized
margins and internal distribution of profits are eliminated in
preparing the consolidated financial statements using the
acquisition cost method. The allocation of profit (loss) for the
financial period to non-controlling interests is presented in the
statement of comprehensive income. Non-controlling interests’
share of shareholders’ equity is reported as a separate figure
under shareholders’ equity on the balance sheet.
Associated companies are companies in which the Group has
considerable influence. The Group considers considerable
influence to emerge primarily when the Group holds 20–50
percent of a company’s votes or has otherwise considerable
influence, but no control. Associated companies are consolidated
in the financial statements using the equity method. The Group
has no associated companies. Routa Systems Oy and AS DWG
are treated as subsidiaries.
SITOWISE GROUP PLC
Board of Directors’ Report and Consolidated Financial Statements 2021 39
At the end of the financial period, the Sitowise Group Plc group consisted of the
parent company Sitowise Group Plc and the following companies:
7.2 INCOME TAXES
Accounting policy
The Sitowise Group’s tax expense recognized through profit and
loss comprises tax based on the taxable profit for the period,
any taxes on previous financial periods, and deferred taxes. The
tax based on the taxable profit for the period is calculated in
accordance with the local tax legislation of each Group company.
If the taxes are associated with other comprehensive income or
transactions or other events recognized directly in shareholders’
equity, income taxes are recognized in the said items. The tax for
the financial period is calculated using the tax rates confirmed by
the closing date of the reporting period.
Deferred tax assets and liabilities are primarily recognized for
all temporary dierences between the tax bases of assets and
liabilities and unused tax losses and credits. The most significant
temporary dierences arise from tangible and intangible
assets, confirmed tax losses, and allocations of the fair values of
subsidiary acquisitions. Deferred tax assets are recognized at the
maximum up to the amount for which it is probable that there will
be future taxable income against which the temporary dierence
can be used. The prerequisites for recognizing deferred tax assets
are assessed on the closing date of the reporting period. Deferred
tax liabilities are recognized in full. Deferred taxes are recognized
using the tax rates enacted or factually confirmed by the closing
date of the reporting period.
Significant decisions based on management discretion
The decision on recognizing deferred tax assets on the balance
sheet requires discretion. Deferred tax assets are only recognized
when it is more likely that they will be realized than not realized,
which, in turn, is determined by whether sucient taxable income
will be generated in the future. The assumptions concerning the
accumulation of taxable income are based on future cash flows
projected by the management. These estimates concerning future
cash flows, on the other hand, depend on estimates concerning
the volume of future sales, business expenses, investments, and
other items aecting the profitability of business operations,
among other things. These estimates and assumptions involve
risks and uncertainty and, therefore, it is possible that changes
in conditions result in charges in expectations, which in turn can
aect the deferred tax assets recognized on the balance sheet
as well as any other tax losses or temporary dierences not yet
recognized.
The ability of the Sitowise Group to accumulate taxable income
also depends on general factors relating to the economy,
financing, competitiveness, legislation, and regulation which
are beyond its own control. If the future taxable income of the
Company Domicile Ownership 2021 Ownership 2020
Sitowise Holding II Oy Espoo .% (****
Sitowise Oy Espoo .% .%
Sitowise Rakennuttajat Oy Espoo .% .%
Benviroc Oy Espoo (**
Enco Oy Helsinki (***
Ficonic Solutions Oy Jyväskylä .% (*
Insinööritoimisto Jorma Jääskeläinen Oy Tampere .%
Livair Oy Espoo .%
Maapörssi Oy Järvenpää .% (**
MSDI Oy Espoo (**
Paloässät Oy Espoo .% (***
Routa Systems Oy Espoo .% .%
Sweetlakes Oy Jyväskylä (**
AS DWG Riga, Latvia .% .%
Sitowise Holding AB Stockholm, Sweden .% .%
Byggnadstekniska Byrån AB Stockholm, Sweden .% .%
Technology for Infrastructure projects Sweden, AB Gothenburg, Sweden .% .%
VVS Kompetens AB Stockholm, Sweden .%
Infracontrol AB Gothenburg, Sweden .%
Infracontrol Espana SL Madrid, Spain .%
Infracontrol Portugal Lda Vila Pouca de Aguiar, Portugal .%
Sitowise Consulting Oü Tallinn, Estonia .% .%
(* Company merged with Sitowise Oy on March ,
(** Company merged with Sitowise Oy on October ,
(*** Company merged with Sitowise Oy on December ,
(**** Company merged with Sitowise Group Plc on December ,
Board of Directors’ Report and Consolidated Financial Statements 2021
SITOWISE GROUP PLC
40
Sitowise Group is lower than projected by the management
when measuring the deferred tax assets to be recognized, the
value of the assets decreases or they lose all value. In this case,
the amounts recognized on the balance sheet may have to be
reversed through profit and loss. Changes in circumstances can
also lead to recognizing deferred tax assets for confirmed losses
for which no receivables have been currently recognized.
Deferred tax assets and liabilities
EUR thousand 2021 2020
Tax based on the taxable profit for
the financial period
-, -,
Adjustments concerning previous
financial periods
- -
Change in deferred taxes , -,
Total -2,388 -3,215
EUR thousand 2021 2020
Profit before taxes , ,
Tax calculated using the %
domestic tax rate
-, -,
Adjustments concerning previous
financial periods
- -
Diering tax rates of foreign
subsidiaries
Tax-free income and non-deductible
expenses
-
Confirmed loss
Other items -
Taxes on the profit and loss account -2,388 -3,215
Reconciliation between tax expenses and taxes calculated
using the 20% domestic tax rate
EUR thousand January 1, 2021
Recognized on the
income statement
Recognized in
shareholders’ equity December 31, 2021
Dierence between depreciation and
amortization in accounting and taxation
Other items
Deferred tax assets total 304 232 541 1,077
Financial items -
Other items , - ,
Deferred tax liabilities total 1,985 -821 401 1,565
EUR thousand January 1, 2020
Recognized on the
income statement
Recognized in
shareholders’ equity December 31, 2020
Dierence between depreciation and
amortization in accounting and taxation
Other items , -,
Deferred tax assets total 1,401 -1,097 0 304
Financial items
Other items , ,
Deferred tax liabilities total 1,257 190 538 1,985
SITOWISE GROUP PLC
Board of Directors’ Report and Consolidated Financial Statements 2021 41
7.3 RELATED PARTY TRANSACTIONS
Accounting policy
Parties are considered to be related when one party can exercise
control, shared control, or significant influence over the other in
decision-making involving its finances and operating activities.
The related parties of the parent company include subsidiaries,
the investment in Fimpec Group Oy, and key management
personnel, family members of the management and companies
over which they exercise control. Key management personnel
include members of the Board of Directors, the CEO, and
members of the Group Management Team.
Balances and transactions between the Group and its subsidiaries
and common functions are eliminated in the consolidated
financial statements, and they are not reported in this note. The
transactions between them have been carried out on market
terms.
7.3.1 Transactions with related parties
EUR thousand 2021 2020
Other related parties
Income
Expenses -
Receivables
Liabilities
Other related party transactions for the financial period consist of
transactions with Fimpec Group Oy. The company had no other
related party transactions during the financial period.
7.3.2 Employment benefits for management belonging to
related parties
The management of Sitowise Group Plc consists of the Board of
Directors, the CEO, and the members of the Group Management
Team.
At the end of March, a long-term incentive plan, i.e. an option
program, was established in connection with the listing (Note
4.2.4). The option program includes the company's management,
excluding the Board of Directors, and the company's key
personnel. The CEO's share of share-based payments was EUR
18 thousand.
EUR thousand 2021 2020
Remuneration of the Board of
Directors
Remuneration of the CEO, including
fringe benefits
Remuneration of the Management
Team, including fringe benefits
, ,
Total (basis of payment) 1,897 1,562
EUR thousand 2021
Wages, salaries and other short-term employment
benefits
,
Share-based payments
Total 1,947
7.3.3 Remuneration of the Board of Directors and the CEO's
salary with fringe benefits
In accordance with the Finnish Limited Liability Companies Act,
the remuneration paid to the members of the Board of Directors
is decided by the shareholders at the Annual General Meeting.
The shareholders of the company decided by unanimous
resolution on 1 March 2021, as part of the matters decided at the
Annual General Meeting, that upon completion of the IPO, the
remuneration of the Chair of the Board of Directors will be EUR
4,750 per month and the remuneration of the other members of
the Board of Directors will be EUR 2,250 per month. It was also
unanimously decided that the Chair of the Board and the Chairs
of the Audit and Personnel Committees will be paid an attendance
allowance of EUR 1,000 per meeting, and the other members
of the Board and the members of the Audit and Personnel
Committees will be paid an attendance allowance of EUR 400 per
meeting. The Chair and members of the Nomination Committee
will each be paid an attendance allowance of EUR 1,000 in total.
The allowances were paid from April because the listing took
place at the end of March.
Prior to the listing, the representatives of the main shareholder
Intera on the Board of Directors did not receive any allowance,
and the Board had no committees.
EUR thousand 2021 2020
Board of Directors
Heliövaara Eero, Chair of the Board
Gustafsson Leif
(since March , )
Kyllönen Taina
Leino-Haltia Mirel
(since March , )
Heartburn Janne
(until March , )
Piispanen Elina
Rignell Petri
Terho Tomi
Total remuneration of the Board
of Directors
228 76
CEO
Eloholma Pekka
Board of Directors’ Report and Consolidated Financial Statements 2021
SITOWISE GROUP PLC
42
The CEO is covered by the Finnish statutory earnings-related
pension scheme. The retirement age of the CEO is 64 years and
six months. The CEO's notice period is six months for both parties.
The CEO is not entitled to a severance package in addition to their
remaining regular pay if they resign.
7.3.4 Management stock options
The company’s management was granted stock options in the
spring of 2021. The table below lists the options held by the CEO
and the members of the Group’s Management Team. The Board
of Directors holds no options.
No pledges or real collateral have been provided as a guarantee
for the financing agreement negotiated in connection with the
listing. Bank guarantees totaling EUR 2.6 million have been
provided for the benefit of lessors against the leases of the
premises.
7.5 DISPUTES AND LITIGATION
The Group has no open disputes or litigation.
EUR thousand December 31, 2021 December 31, 2020
Commitments on behalf of own obligations
Business mortgage ,
Pledged shares at book value ,
Bank guarantees , ,
Total 2,587 331,123
Bank guarantees
Contractual guarantees
Other guarantees , ,
Total 2,587 2,729
December 31, 2021 Match 2021A Match 2021B
Performance
2021A
Performance
2021B Total
Options granted , , , , 295,200
Of which exercisable 0
Total number of shares entitled to , , , , 295,200
The option program is described in more detail in Note 4.3.6.
7.4 GUARANTEES AND CONTINGENT LIABILITIES
The guarantees and contingent liabilities of the Sitowise Group
are presented in the table below:
7.6 MAJOR EVENTS AFTER THE CLOSING DATE
Sitowise announced on January 4, 2022 the appointment of a
new Group CEO, Heikki Haasmaa, who takes oce on May 4,
2022.
Sitowise announced on February 10, 2022 that Anne-May
Asplund, Chief Human Resources Ocer and member of the
Group Management Team, would resign in February 2022.
SITOWISE GROUP PLC
Board of Directors’ Report and Consolidated Financial Statements 2021 43
PARENT COMPANY'S FINANCIAL STATEMENTS
SITOWISE GROUP PLC BALANCE SHEET FAS
SITOWISE GROUP PLC INCOME STATEMENT FAS
EUR thousand Note Jan 1 – Dec 31, 2021 Jan 1 – Dec 31, 2020
Net sales ,
Other operating income ,
Personnel expenses -, -
Depreciation, amortization, and impairment -
Other operating expenses - -
Operating profit/loss 8,032 -820
Financial income and expenses - -
Profit/loss before appropriations and taxes 7,719 -1,683
Group contributions , ,
Income taxes -
Profit for the period 9,658 3,092
EUR thousand
Assets Note Dec 31, 2021 Dec 31, 2020
Non-current assets
Intangible assets ,
Holdings in Group companies , ,
Non-current assets total 116,146 58,698
Current assets
Current receivables ,
Cash and cash equivalents , ,
Current assets total 45,687 1,578
Assets total 161,832 60,277
Shareholders’ equity and liabilities
Shareholders’ equity 12
Share capital
Fund for invested unrestricted equity , ,
Retained earnings ,
Profit (loss) for the period , ,
Subordinated loan ,
Total shareholders’ equity 109,934 57,967
Liabilities
Non-current liabilities ,
Current liabilities , ,
Liabilities total 51,898 2,310
Shareholders’ equity and liabilities total 161,832 60,277
Board of Directors’ Report and Consolidated Financial Statements 2021
SITOWISE GROUP PLC
44
SITOWISE GROUP PLC: CASH FLOW STATEMENT FAS
EUR thousand Jan 1 – Dec 31, 2021 Jan 1 – Dec 31, 2020
Cash flow from operating activities
Operating profit , -
Adjustments to operating profit -,
Change in working capital , ,
Dividends received and other financial income
Interest paid and other financial expenses -, -,
Taxes paid -, -
Cash flow from operating activities 4,975 -3,567
Cash flow from investing activities
Purchase and sale of shares in subsidiaries and associated companies -, -,
Cash flow from investing activities -9,513 -1,811
Cash flow from financing
Share issue for consideration , ,
Listing expenses paid -,
Share repurchase - -,
Dividends paid and capital repayments -, -,
Withdrawal of loans ,
Repayment of loans -,
Repayment of subordinated loans -,
Group contribution received ,
Cash flow from financing 15,007 6,145
Change in cash and cash equivalents ,
Cash and cash equivalents January ,
Cash and cash equivalents December 31 11,530 1,061
SITOWISE GROUP PLC
Board of Directors’ Report and Consolidated Financial Statements 2021 45
SITOWISE GROUP PLC: NOTES TO THE FINANCIAL STATEMENTS FAS
Copies of Sitowise Group's consolidated financial statements
are available at Linnoitustie 6, FI-02600 Espoo, Finland.
More detailed information on the terms and conditions of the
CEO's contract can be found in Note 7.3.3 to the consolidated
financial statements.
At the end of the financial period 2020, the Group's Board of
Directors and management, which were on the payroll of Sitowise
Holding II Oy, were transferred to the parent company.
The average number of personnel in the financial period 2021
was 3 (0). At the end of the financial period 2021, the number of
personnel was 3 (3).
4 DEPRECIATION, AMORTIZATION, AND
IMPAIRMENT ACCORDING TO PLAN
1 ACCOUNTING POLICIES
1.1 MEASUREMENT OF FIXED ASSETS
Fixed assets are capitalized at direct acquisition cost. With regard
to machinery and equipment, the depreciation plan used is the
straight-line method of depreciation based on the economic
useful life:
• IT machinery and equipment 4 years
• Other machinery and equipment 5 years
Straight-line depreciation based on economic useful life is used
for intangible rights and long-term expenses, with the following
planned depreciation periods:
• Intangible rights 3–5 years
• Goodwill 10 years
• Long-term expenses 5–10 years
• Development expenses 5 years
1.2 MEASUREMENT OF INVESTMENTS
Investments are measured at acquisition cost.
2 OTHER OPERATING INCOME
EUR thousand 2021 2020
Merger profit ,
Total 9,657 0
EUR thousand 2021 2020
Other long-term expenses
Total 699 0
EUR thousand 2021 2020
Audit firm KPMG Oy
Statutory audit
Tax advice and consulting
Total 715 12
EUR thousand 2021 2020
Interest income
From Group companies
From others
Interest expenses
To Group companies -
To others -, -
Total -313 -863
EUR thousand 2021 2020
Wages and salaries ,
Pension expenses
Other social security expenses
Total 1,302 191
EUR 2021
Board of Directors
CEO
Total (basis of payment) 711
3 PERSONNEL EXPENSES
Management remuneration
5 AUDIT FEES
The advisory costs related to the listing have been capitalized into
balance sheet intangible expenses.
6 FINANCIAL INCOME AND EXPENSES
Board of Directors’ Report and Consolidated Financial Statements 2021
SITOWISE GROUP PLC
46
EUR thousand 2021 2020
Group contributions received , ,
Total 1,938 5,565
7 APPROPRIATIONS
8 DIRECT TAXES
12 SHAREHOLDERS’ EQUITY
9 INTANGIBLE ASSETS
10 INVESTMENTS
Calculation of distributable funds
EUR thousand 2021 2020
Income taxes on ordinary activities for
the financial period
-
Total 0 -779
EUR thousand 2021 2020
Acquisition cost January
Increase ,
Acquisition cost December ,
Accumulated depreciation,
amortization, and impairment
January
Depreciation -
Accumulated depreciation,
amortization, and impairment
December
-
Acquisition cost December 31 3,971 0
EUR thousand 2021 2020
Holdings in Group companies
Acquisition cost January ,
Increase , ,
Decrease
Acquisition cost December 31 110,953 58,698
EUR thousand 2021 2020
Other shares and participations
Acquisition cost January
Increase
Decrease
Acquisition cost December 31 306 0
EUR thousand 2021 2020
Fund for invested unrestricted equity , ,
Retained earnings ,
Profit/loss for the period , ,
Total retained earnings 109,854 43,819
EUR thousand 2021 2020
Other accrued income
Accrued income from Group
companies
,
Total 34,156 517
Holding 2021 2020
Sitowise Holding II Oy *) % %
Sitowise Oy % %
Infracontrol AB % %
*) Company merged with Sitowise Group Plc on December , .
11 CURRENT RECEIVABLES
EUR thousand 2021 2020
Share capital at the beginning of the
financial period
Increase in share capital
80 3
Fund for invested unrestricted equity , ,
Increase ,
97,360 40,663
Retained earnings at the beginning
of the financial period
,
Distribution of dividends - -
Share repurchase -
2,837 64
Profit/loss for the period 9,658 3,092
Subordinated loan ,
Total shareholders’ equity 109,934 57,967
Subordinated loans granted to the Group in 2021 total EUR 0
(14,145,180).
SITOWISE GROUP PLC
Board of Directors’ Report and Consolidated Financial Statements 2021 47
14 GUARANTEES AND CONTINGENT
LIABILITIES
No pledges or real collateral have been provided as a guarantee
for the financing agreement negotiated in connection with the
listing. In 2020, Sitowise Holding I Oy had pledged its receivables
from the Group companies as collateral for the Group companies’
financing loans.
Assets pledged and o-balance sheet commitments and arrangements on
behalf of own and Group companies’ obligations, EUR thousand 2021 2020
Assets pledged by type:
For own debt
For Group company’s debt ,
Pledged shares at book value
Sitowise Holding II Oy, shares - ,
Non-current liabilities,
EUR thousand 2021 2020
Loans from financial institutions ,
Transfer to short-term loans -,
Total 49,000
EUR thousand 2021 2020
Repayment instalments of
long-term loans
,
Accounts payable
Accounts payable Group
Interest debt
Corporate tax accrual
Other current liabilities Group
Other accrued expenses ,
Total 2,398 2,310
13 LIABILITIES
Board of Directors’ Report and Consolidated Financial Statements 2021
SITOWISE GROUP PLC
48
GROUP KEY FIGURES
ITEMS AFFECTING COMPARABILITY
EUR thousand 2021 2020
Net sales , ,
Increase in net sales, % .% .%
Adjusted organic increase in net sales, % % %
EBITA, adjusted , ,
% of net sales .% .%
EBITA , ,
Operating profit (EBIT) , ,
% of net sales .% .%
Balance sheet total , ,
Cash and cash equivalents , ,
Net debt , ,
Cash flow from operating activities before financing items and taxes , ,
Earnings per share (EUR) . .
Diluted earnings per share (EUR) . .
Earnings per share, continuing operations (EUR) . .
Diluted earnings per share, continuing operations (EUR) . .
Return on equity (ROE), % .% .%
Return on capital employed (ROCE), % .% .%
Equity ratio, % .% .%
Net debt / EBITDA, adjusted .x .x
Gearing, % .% .%
Average number of personnel , ,
Full-time equivalent (FTE) on average , ,
Utilization rate .% .%
EUR thousand 2021 2020
Restructuring expenses
Integration expenses
Mergers and acquisitions and associated expenses , -
Listing expenses
Others
Items aecting comparability, expenses 2,615 1,098
Items aecting comparability, depreciation
SITOWISE GROUP PLC
Board of Directors’ Report and Consolidated Financial Statements 2021 49
FORMULAS FOR THE KEY FIGURES
Adjusted organic increase in net sales =
Growth in net sales excluding acquisitions and divestments and taking into account the
number of working days and the impact of exchange rates
EBITA = Operating result + amortization of intangible assets
EBITA, adjusted = EBITA + items aecting comparability
EBITDA, adjusted =
EBITDA + items aecting comparability, in addition all lease liabilities are treated as
operating leases, so lease expenses on the whole aect EBITDA
Items aecting comparability =
Items aecting comparability are mainly related to M&A and integration costs,
restructuring costs and IPO readiness costs
Net debt =
Loans from financial institutions – cash and cash equivalents (Net debt does not include
lease liabilities)
Return on equity (ROE), % =
Profit for the period for the previous months
Total shareholders’ equity, average
Return on capital employed (ROCE), % =
(Profit before taxes + financial expenses) for the previous months
(Balance sheet total – non-interest-bearing liabilities), average
Equity ratio, % =
Total shareholders’ equity
Balance sheet total
Net debt / EBITDA, adjusted =
Net debt
EBITDA, adjusted
Gearing, % =
Net debt
Total shareholders’ equity
Earnings per share =
(Profit for the period – non-controlling interest – dividend for the financial period to be
distributed, taking the tax eect into consideration)
Average weighted number of shares
Diluted earnings per share =
(Profit for the period – non-controlling interest – dividend for the financial period to be
distributed, taking the tax eect into consideration)
Average diluted weighted number of shares
Earnings per share
(continuing operations)
=
(Profit from continuing operations for the period – non-controlling interest – dividend for
the financial period to be distributed, taking the tax eect into consideration)
Average weighted number of shares
Diluted earnings per share
(continuing operations)
=
(Profit from continuing operations for the period – non-controlling interest – dividend for
the financial period to be distributed, taking the tax eect into consideration)
Average diluted weighted number of shares
Full-time equivalent (FTE) on average = Group personnel, full-time equivalent average during the period
Utilization rate = Number of charged hours worked relative to the number of hours worked
Board of Directors’ Report and Consolidated Financial Statements 2021
SITOWISE GROUP PLC
50
SIGNATURES OF THE BOARD OF DIRECTORS
AND AUDITOR’S NOTE
BOARD OF DIRECTORS’ PROPOSAL FOR THE DISTRIBUTION OF PROFIT
The parent company's profit for the financial period is EUR 9,657,719 and the company's distributable funds total EUR 109,854,282.
The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.10 per share be paid and that the remaining
distributable funds be retained in unrestricted equity.
Eero Heliövaara
Chair of the Board
SIGNATURES TO THE FINANCIAL STATEMENTS AND BOARD OF DIRECTORS’ REPORT
Espoo, March 1, 2022
Pekka Eloholma
CEO
Leif Gustafsson Taina Kyllönen
Mirel Leino-Haltia Elina Piispanen
Petri Rignell Tomi Terho
Auditor’s note
A report on the audit has been issued today.
Helsinki, March 1, 2022
KPMG Oy Ab
Audit firm
Turo Koila
Authorized Public Accountant (KHT)
SITOWISE GROUP PLC
Board of Directors’ Report and Consolidated Financial Statements 2021 51
AUDITING
AUDITOR’S REPORT
To the Annual General Meeting of Sitowise Group Plc
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Sitowise Group Plc
(2767842-8) for the year ended 31 December 2021. The financial
statements comprise the consolidated statement of financial
position, statement of comprehensive income, statement of
changes in equity, cash flow statement and notes, including a
summary of significant accounting policies, as well as the parent
company’s balance sheet, profit and loss account, cash flow
statement and notes.
In our opinion
• the consolidated financial statements give a true and fair
view of the group’s financial position, financial performance
and cash flows in accordance with International Financial
Reporting Standards (IFRS) as adopted by the EU
• the financial statements give a true and fair view of the parent
company’s financial performance and financial position in
accordance with the laws and regulations governing the
preparation of financial statements in Finland and comply with
statutory requirements.
Our opinion is consistent with the additional report submitted to
the Audit Committee.
Basis for Opinion
We conducted our audit in accordance with good auditing
practice in Finland. Our responsibilities under good auditing
practice are further described in the Auditor’s Responsibilities for
the Audit of the Financial Statements section of our report.
We are independent of the parent company and of the group
companies in accordance with the ethical requirements that are
applicable in Finland and are relevant to our audit, and we have
fulfilled our other ethical responsibilities in accordance with these
requirements.
In our best knowledge and understanding, the non-audit
services that we have provided to the parent company and group
companies are in compliance with laws and regulations applicable
in Finland regarding these services, and we have not provided
any prohibited non-audit services referred to in Article 5(1) of
regulation (EU) 537/2014. The non-audit services that we have
provided have been disclosed in note 2.4.1 to the consolidated
financial statements.
We believe that the audit evidence we have obtained is sucient
and appropriate to provide a basis for our opinion
Materiality
The scope of our audit was influenced by our application
of materiality. The materiality is determined based on our
professional judgement and is used to determine the nature,
timing and extent of our audit procedures and to evaluate the
eect of identified misstatements on the financial statements as a
whole. The level of materiality we set is based on our assessment
of the magnitude of misstatements that, individually or in
aggregate, could reasonably be expected to have influence on
the economic decisions of the users of the financial statements.
We have also taken into account misstatements and/or possible
misstatements that in our opinion are material for qualitative
reasons for the users of the financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period. These matters were addressed
in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a
separate opinion on these matters. The significant risks of material
misstatement referred to in the EU Regulation No 537/2014 point
(c) of Article 10(2) are included in the description of key audit
matters below.
We have also addressed the risk of management override of
internal controls. This includes consideration of whether there
was evidence of management bias that represented a risk of
material misstatement due to fraud.
Board of Directors’ Report and Consolidated Financial Statements 2021
SITOWISE GROUP PLC
52
THE KEY AUDIT MATTER HOW THE MATTER WAS ADDRESSED IN THE AUDIT
Net sales (Accounting principles and note 2.1 to the consolidated financial statements)
Revenues arise from provision of services to customers in accordance with
customer contracts, with the total net sales of EUR million. Revenue
reporting involves the risk of inappropriate timing or amount of revenue
recognition due to management estimates and the large number of
invoicing transactions.
The -step model is applied to revenue recognition, which identifies the
contract and performance obligations, determines the transaction price and
allocates it to the performance obligations. Revenue is recognized as the
performance obligation is satisfied and only in an amount that reflects the
consideration to which the Group expects to be entitled in exchange for the
services provided to the customer.
We evaluated the company's revenue recognition and accounting policies
in relation to the principles defined under IFRS standards.
We tested the eectiveness of key internal controls aimed at ensuring the
completeness and appropriate timing of revenue reporting.
We compared the total revenue estimates for the customer projects
accounted for on the basis of progress measurement with the underlying
customer contracts. In addition, we analyzed forecast and actual project
costs and project margins. We also considered the process of updating cost
estimates and completion rates, and assessed its appropriateness.
Furthermore, we performed substantive audit procedures related to the
completeness and timing of revenue recognition.
Valuation of goodwill (Accounting principles and note 3.2 to the consolidated financial statements)
Goodwill of EUR million represents a significant part, %, of the
consolidated balance sheet total.
Goodwill is tested for impairment annually and whenever there is any
indication that the goodwill may be impaired. If any such indication
exists, the recoverable amount of the asset is estimated. The recoverable
amount is determined based on value in use. The preparation of goodwill
impairment testing requires estimates be made about the future.
Management estimates and associated critical uncertainties relate to the
components of the calculation of recoverable amount, which include the
discount rate, terminal growth rate, and the development of net sales and
operating profit, including cost levels for the company.
Due to the significance of the carrying amount and significant
management judgments involved in the forecasts, valuation of goodwill is
considered a key audit matter.
We critically assessed the management fundamentals and assumptions
underlying the cash flow projections for the coming years.
We utilised our own valuation specialists that assessed the appropriateness
of the discount rate, the technical accuracy of the calculations and the
assumptions used in relation to market and industry information.
In addition, we considered the appropriate presentation of the disclosures
on goodwill impairment testing in the financial statements.
Responsibilities of the Board of Directors and the Managing
Director for the Financial Statements
The Board of Directors and the Managing Director are responsible
for the preparation of consolidated financial statements that give
a true and fair view in accordance with International Financial
Reporting Standards (IFRS) as adopted by the EU, and of financial
statements that give a true and fair view in accordance with
the laws and regulations governing the preparation of financial
statements in Finland and comply with statutory requirements.
The Board of Directors and the Managing Director are also
responsible for such internal control as they determine is
necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, the Board of Directors
and the Managing Director are responsible for assessing the
parent company’s and the group’s ability to continue as a going
concern, disclosing, as applicable, matters relating to going
concern and using the going concern basis of accounting. The
financial statements are prepared using the going concern basis
of accounting unless there is an intention to liquidate the parent
company or the group or cease operations, or there is no realistic
alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial
Statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with good auditing practice will always
detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on
the basis of the financial statements.
As part of an audit in accordance with good auditing practice,
we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the
financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain
audit evidence that is sucient and appropriate to provide
a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal control.
• Identify and assess the risks of material misstatement of the
SITOWISE GROUP PLC
Board of Directors’ Report and Consolidated Financial Statements 2021 53
financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain
audit evidence that is sucient and appropriate to provide
a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal control.
• Obtain an understanding of internal control relevant to the
audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an
opinion on the eectiveness of the parent company’s or the
group’s internal control.
• Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and related
disclosures made by management.
• Conclude on the appropriateness of the Board of Directors’
and the Managing Director’s use of the going concern basis of
accounting and based on the audit evidence obtained, whether
a material uncertainty exists related to events or conditions
that may cast significant doubt on the parent company’s or the
group’s ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in
the financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the parent
company or the group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the
financial statements, including the disclosures, and whether
the financial statements represent the underlying transactions
and events so that the financial statements give a true and fair
view.
• Obtain sucient appropriate audit evidence regarding the
financial information of the entities or business activities within
the group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision
and performance of the group audit. We remain solely
responsible for our audit opinion.
We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement
that we have complied with relevant ethical requirements
regarding independence, and communicate with them all
relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the financial statements of the current
period and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences
of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
Other Reporting Requirements
Information on our audit engagement
We were first appointed as auditors by the Annual General
Meeting in 2018, and our appointment represents a total period
of uninterrupted engagement of 4 years.
Sitowise Group Plc has been a public interest entity since 25
March 2021.
Other Information
The Board of Directors and the Managing Director are responsible
for the other information. The other information comprises the
report of the Board of Directors and the information included in
the Annual Report, but does not include the financial statements
and our auditor’s report thereon. We have obtained the report of
the Board of Directors prior to the date of this auditor’s report, and
the Annual Report is expected to be made available to us after
that date. Our opinion on the financial statements does not cover
the other information.
In connection with our audit of the financial statements, our
responsibility is to read the other information identified above
and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to be
materially misstated. With respect to the report of the Board of
Directors, our responsibility also includes considering whether the
report of the Board of Directors has been prepared in accordance
with the applicable laws and regulations.
In our opinion, the information in the report of the Board of
Directors is consistent with the information in the financial
statements and the report of the Board of Directors has been
prepared in accordance with the applicable laws and regulations.
If, based on the work we have performed on the other information
that we obtained prior to the date of this auditor’s report, we
conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing
to report in this regard.
Helsinki, 1 March 2022
KPMG OY AB
Turo Koila
Authorised Public Accountant, KHT
Board of Directors’ Report and Consolidated Financial Statements 2021
SITOWISE GROUP PLC
54
INDEPENDENT AUDITOR’S REASONABLE ASSURANCE REPORT ON SITOWISE GROUP PLC ESEF
FINANCIAL STATEMENTS
To the Board of Directors of Sitowise Group PLC
We have undertaken a reasonable assurance engagement on the
iXBRL marking up of the consolidated financial statements for the
year ended 31 December, 2021, included in the Sitowise Group
PLC digital files [743700HOHMOHAANHFF73-2021-12-31-fi.zip]
prepared in accordance with the requirements of Article 4 of EU
Delegated Regulation 2018/815 (ESEF RTS).
The Responsibility of the Board of Directors and Managing
Director
The Board of Directors and Managing Director are responsible
for preparing the report of the Board of Directors and financial
statements (ESEF financial statements) that comply with the
requirements of ESEF RTS. This responsibility includes:
• preparation of ESEF financial statements in XHTML format in
accordance with Article 3 of the ESEF RTS
• marking up the consolidated financial statements included in
the ESEF financial statements with iXBRL tags in accordance
with Article 4 of the ESEF RTS; and
• ensuring consistency between ESEF financial statements and
audited financial statements.
The Board of Directors and the Managing Director are also
responsible for such internal control as they deem necessary to
prepare the ESEF financial statements in accordance with the
requirements of the ESEF RTS.
Auditor’s Independence and Quality Control
We are independent of the company in accordance with the
ethical requirements applicable in Finland, which apply to the
engagement we have performed, and we have fulfilled our other
ethical obligations in accordance with these requirements.
The auditor applies International Standard on Quality Control 1
and accordingly maintains a comprehensive system of quality
control including documented policies and procedures regarding
compliance with ethical requirements, professional standards and
applicable legal and regulatory requirements.
Auditor’s Responsibility
In accordance with the Engagement Letter our responsibility
is to express an opinion on whether the marking up of the
consolidated financial statements included in the ESEF financial
statements comply in all material respects with the Article 4 of the
ESEF RTS. We conducted our reasonable assurance engagement
in accordance with International Standard on Assurance
Engagements 3000.
The engagement involves procedures to obtain evidence
whether;
• the consolidated financial statements included in the ESEF
financial statements are, in all material respects, marked up
with iXBRL tags in accordance with Article 4 of the ESEF RTS,
and;
• the ESEF financial statements and the audited financial
statements are consistent with each other.
The nature, timing and the extent of procedures selected depend
on practitioner’s judgement. This includes the assessment of the
risks of material departures from the requirements set out in the
ESEF RTS, whether due to fraud or error.
We believe that the evidence we have obtained is sucient and
appropriate to provide a basis for our opinion.
Opinion
In our opinion, the consolidated financial statements included in
the ESEF financial statements of Sitowise Group PLC identified
as [743700HOHMOHAANHFF73-2021-12-31-fi.zip] for the year
ended 31 December, 2021 are marked up, in all material respects,
in compliance with the ESEF Regulatory Technical Standard.
Our audit opinion relating to the consolidated financial statements
of Sitowise Group PLC for the year ended 31 December, 2021
is set out in our Auditor’s Report dated 1 March, 2022. In this
report, we do not express an audit opinion, review conclusion
or any other assurance conclusion on the consolidated financial
statements.
Helsinki 25 March, 2022
KPMG OY AB
Turo Koila
Authorised Public Accountant, KHT
SITOWISE GROUP PLC
Board of Directors’ Report and Consolidated Financial Statements 2021 55
