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Realizing smart society essentials

Annual report 2018

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Contents

CEO’s Review 2018

Key figures

Empower in Brief

Focus areas

2018 Highlights

Sustainability

Group Executive Team

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Report by the Board of Directors and Financial Statements 2018

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

Index to Notes to the Consolidated Financial Statements

Financial Statements of the Parent Company

Auditor’s Report

Annual review Financial Statements

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Empower Group’s EBITDA for the financial year 2018 amounted to EUR 8.9 million, which was slightly below our target. The start of significant new service agreements called for rapid growth in operations, which presented challenges concerning profitability. Furthermore, the unfa-vorable competitive climate in our personnel-intensive businesses had an impact on our EBITDA.

The Group’s order book strengthened during the financial year and we were able to enter 2019 with a positive outlook, as our order book already covered more than 80 percent of our turnover target for 2019.

Empower Group’s business developed favorably

in 2018, although growth also brought challenges.

The Group’s turnover increased by 3.0% during the

financial year 2018 on the strength of our competitive

service and product portfolio, with growth achieved

in nearly all of our business areas. The only exception

was Smart Industry, where turnover declined due to

the expiration of a long-term service agreement.

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CEO’s review 2018

The Group’s order book strengthened during the financial year and we were able to enter 2019 with a positive outlook, as our order book already covered more than 80 percent of our turnover target for 2019.

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We are building a smart society In the Power business, demand was particularly focused on renewable energy projects. Empower was chosen to implement the first wind farms in Finland to be developed fully on market terms and our renewable energy project portfolio grew significantly in both Finland and Sweden. We also secured major power transmission construction projects in Sweden as well as the delivery of the first digital electrical substation in the Finnish main grid.

In the Connectivity business, Empower strengthened its leading position in Finland, with the delivery of new significant customer contracts commencing during the first quarter of the financial year. This called for rapid growth in operations, which presented challenges related to profitability as well as customer satisfaction. The fully digital delivery process implemented in the Connectivity business supported the quality of deliveries, while a partnership with a vendor known for space technology enabled Empower to add AR-based remote collaboration to its service selection.

In the Smart Industry business, our efforts to develop digital products produced good results. Demand for our digital products was robust among both existing and new customers, and we piloted IoT-based maintenance and service operations at several production facilities. We also established a Smart Factory in Hamina and transferred maintenance center and workshop operations there from other locations. In the Smart Factory, conventional industry will operate using the possibilities provided by state-of-the art technology, such as IoT and 5G solutions. The transparency of the operations provides up-to-date information for everyone to use from every level of the in-house organization to customers and subcontractors. It provides almost limitless opportunities for improving the efficiency of operations and optimizing production conditions.

We also made strong progress in the Energy Intelligence business, strength-ening our market-leading position in Finland and improving our position in the other Nordic countries. The development of the EnerimCIS platform continued

according to plan, with several new modules made available to our customers and contracts signed on the delivery of the platform in Sweden and Norway. The demand for Energy Intelligence services also grew significantly during the financial year. Among other things, we increased the volume of our remote reading and metering data management service by more than 20 percent.

Investments in a digital futureOne of our fastest-growing business areas is digital solutions, which we provide for both industrial customers and the energy sector. We expanded our IoT technology expertise in early 2018 by acquiring TreLab’s technology solutions. In line with our strategy, we will continue to make significant investments in building a smarter society and developing digitalization

solutions. From the customer perspective, this means further improvements in Empower’s technology competencies and a broader capacity to solve customers’ maintenance-related challenges by making use of analytics and the entire organization’s professional expertise.

We significantly strengthened our R&D organization in 2018 and invested EUR 8.7 million in product development, which corresponds to 3.4% of the Group compa-nies’ total turnover. Going forward, we will continue to allocate R&D investments to, among other things, the development of information systems related to energy metering and invoicing, work planning and control systems related to the installation and maintenance of telecom and power networks as well as digital products and solutions that improve safety and production efficiency.

Big enough to deliver, respectful enough to careEmpower’s constitutive meeting took place on December 15, 1998, at the Pohjolan Voima head office on Mikonkatu in Helsinki. As 2018 drew to a close, we invited all Empower employees to celebrate the 20th anniversary of our Group by getting together for coffee and cake at our construction sites and offices in Finland, Sweden and the Baltic countries. Empower will have its 21st year of operations in 2019, which speaks to our Group’s capacity for renewal and an attractive service portfolio that stands the test of time.

Recognizing that our employees are our most important resource, we allo-cated our 20th anniversary donations to charities chosen by our personnel. Empower’s operations have a significant impact on energy efficiency and climate affairs, and the choices made by our employees reflected these themes. We made donations to support WWF Finland’s climate efforts, spon-sored Koodikerho coding club activities for 60 children and helped increase awareness of the energy industry by providing two energy-related learning packages for use in basic education, enabling students to learn about the production, storage and use of renewable energy.

I want to take this opportunity to thank our customers for successful cooper-ation as well as our personnel and partners for ensuring our success. At the end of 2018, our Group’s order book is very good and covers several future years, which gives us bright future prospects. Our aim in 2019 is to again grow in a controlled manner to ensure quality and efficiency. We want to build a smart society by combining the industry expertise we have accumulated over the years with the opportunities presented by the digital transformation.

Jari Onniselkä

CEO, Empower Group

Our aim in 2019 is to again grow in a controlled manner to ensure quality and efficiency. We want to build a smart society by combining the industry expertise we have accumulated over the years with the opportunities presented by the digital transformation.

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Key Figures 2018

Business Work Safety

Customer satisfaction

Personnel

8,7M€ 5,4 1700 44,6

252,7M€ 5853pcs

8,9M€

3,1%

7/10

pcs/million hour

Turnover HSE observations Sex ratio

EBITDA

Absence rate

Work satisfaction

R&D Lost workday injury frequency (LWIF) Empoloyees

Average age

men

women

87%

13%

NPS

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Connectedness

SmartEnergy

Smart Society

Planetecological sustainability

The essence of

Peoplegood quality of life

Profitseconomical growth

and stabilityPerformance

functioning of society

Industry 4.0

Smart Transportation

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We provide our customers with a unique combination of specialized industry expertise gained over the years, digitalized processes and tools and modern modular technology platforms, which process enormous volumes of real time Big Data. We are big enough to deliver and respectful enough to care. This is our promise to our customers, our personnel and our partners.

Act as an example

Build winning attitude

Build trust and show respect

Communicate openly

Take responsibility and deliver

Empower in briefA smart society is constantly evolving with the digitalization of the environment. Empower

envisions that a smart society will grow fast and is committed to working for this vision.

We realize smart society essentials and keep a pulse on them 24/7. We operate in the

Nordic and Baltic countries.

Our values

Our work has a great significance for everyone: not only for our company and our customers but also for the entire planet, humankind, economy and the functional-ity of society. Our mission guides us in our day-to-day operations, in which we concentrate especially on our four focus areas: sustainable energy, hyper connectivity, smart manufacturing and data-driven operations.

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Hyper connectivityTalk on the street is about 5g networks and micro- operators.

A hyper connected society is one of ubiquity, of embed-dedness, a society in which the connectivity is becoming “like electricity”, a core essential. Speed and resiliency of connectivity becomes crucial in our daily lives and fuel for innovations and disruptive services.

Focus areas

Sustainable energy supply Energy communities paving the road less traveled.

A smart grid revolution is well underway. Three major mega trends:

• The rise of Renewable energy• Life on the grid edge and• Electrification of the society

are all driving investments to redesign, build and oper-ate smarter grid and related operational services.

Smart manufacturingThe world of autonomous operations and cyber- physical systems

Industry 4.0 introduces what has been called the “smart factory,” in which cyber-physical systems control and monitor processes, make decentralized decisions and workflows are digitized and data driven. Benefits are clear. In very challenging working environments, the health and safety of human workers could be improved dramatically.

Intelligent dataFrom Big data monetisation to data driven automatisation.

The Data Economy, is a new way of doing business by using information and technology as facilitators of communication, data transfer and commercial transactions.

The “Networked” Business models as core of the Digital Economy. Platforms beat pipelines.

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Empower is fully engaged in the 5G development, offering

its unique ICT expertise to customers. During the past ten

years, Empower has executed thousands of mobile network

base station installations and implementations in Finland;

in 2018 alone, approximately 2,000 base stations were

taken into use.

Empower’s extensive team of experts ensures that customers can move smoothly from the 4G world to the 5G world. In late 2018, Empower joined a collaborative network called 5G Momentum, the goal of which is to make Finland the 5G technology leader.

– In 5G installation, Finland is on the crest of the wave. There are great expec-tations for the sector as the construction of 5G connections is only just begin-ning. However, 5G is already taken into account in building construction, in fiber

routing, for instance, says Heidi Paukkunen Empower’s Area Manager in Oulu.

Studies show that Finns are the most active users of mobile data in the world. Nowadays, the speed and reliability of data transfer are important as our everyday actions and ever more versatile smart devices rely on network connections to an increasing extent. A huge number of connected devices requires 5G, which is considered the next technological revolution.

Empower cooperates actively in ICT construction with Nokia. For several years, Empower has done mobile base station installations at Nokia’s plant in Oulu. Empower’s installers have extensive expertise and experience in working in high base station towers, required for installation tasks, and the work is mainly carried out by a team of three or four installers. Empower receives individual mobile installation work requests constantly and installation projects usually last one or two days.

– Empower’s installers work briskly and diligently. In connection with installation work, we are often provided with suggestions for improvements related to device

design and mounting that are very useful for us, describes Risto Martikkala, 5G Beam Forming and Field Test Specialist at Nokia.

In addition to test tower installation projects, Empower was involved in the construction of the Oritkari 5G base station, carried out for a Finnish operator in cooperation with Nokia. The project started in early summer and ended in late autumn and Empower’s assignment consisted mainly of design and installation work. The project was executed successfully and on schedule. All in all, both Empower’s personnel and the customer think that 5G work in the Oulu region has been successful.

– We are extremely satisfied with Empower’s performance. I believe that we will cooperate actively in the future, too. As we already know each other well, cooperation is effortless, Martikkala says in conclusion.

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Empower accelerates the adoption of 5G technology

In 5G installation, Finland is on the crest

of the wave. There are great expectations

for the sector as the construction of

5G connections is only just beginning.

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AR technology to improve service process efficiency

In 2018, the development of digital solutions took giant leaps forward. A good example of this is the inclusion of an AR remote collaboration application called Pointr in Empower’s service portfolio. Our partner in the adoption of AR technology has been Delta Cygni Labs, the company that developed the Pointr application.

Pointr is a communications tool that uses augmented reality and is mainly based on video streaming. It is optimized for technical troubleshooting when parties are in different locations. Applications for the tool can be found in Empower’s own processes, too, in improving the efficiency of repairs, field inspections and design work, for instance. With the aid of Pointr and Empower’s field personnel, Empower’s customers can visit their sites or infrastructure installations remotely. The principal benefits of this technology are reduced need to travel, better utilization of working hours and faster troubleshooting.

Empower forms the basis for its customers’ reliable internal network connections throughout Finland. Year 2018 included numerous cabling projects for Valtori’s (Government ICT Centre) sites and the hospital for children and adolescents that is part of the Tays front yard project, for instance.

– Internal networks are naturally very significant for companies and public organizations in society today. When building ICT connections, future data transfer needs are taken into account. Especially in hospitals, well-functioning connections are crucial. In hospitals a key role in the data transfer among many systems and a lot of attention is paid to their reliability, says Simo Roihu, General Project Manager in Charge at Empower in the Pirkanmaa region.

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Harku-Sindi power line bringing independency and enabling renewable energy production for the Baltic region

Estonia fulfilled its’ renewable energy targets for 2020 already a couple of years back and has already set its’ sight towards 2030 targets.

Empower is constructing a 330 kV high voltage power line between the Estonian towns of

Harku, Lihula and Sindi for the Estonian transmission system operator Elering. The design

phase started already during 2017 and year 2018 the laying of foundations and erecting

towers were started close to the town of Sindi. The project is scheduled for completion by

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– We believe that project will be completed on time despite there were some delays during preparations and we were not able to begin the construction exactly as initially scheduled. Currently all the materials are already delivered on site and we have a lot of resources from the Baltics to work on the project. Altogether there are eight parts in the project. The first four of them are proceeding rapidly and in the latter four parts the work is continuing with for example the land agreements and building permits, describes Jaanis Järvet, Manager at Empower.

Elering has been satisfied with the cooperation and quality of work at Empower– Our cooperation with Empower has long history and with our trustworthy relationship we feel confident about the project. For us and Estonians in general it is important to finalize everything on time, as this power line is a part of the third interconnection between Estonia and Latvia, which enables the Baltic countries to become less dependent from Russia’s electricity network and connects us to the continental European network, explains Kalle Kilk, Member of Board at Elering.

Currently Estonia is exporting energy, but this is changing in the near future as the country is shifting its’ energy production towards less emission releas-ing production. Estonia fulfilled its’ renewable energy targets for 2020 already a couple of years back and has already set its’ sight towards 2030 targets.

– Quite soon there will be some old production units shut down permanently, so we need new production to replace this. We see that renewable energy has increasing competitiveness on the market and the

decisions to build additional RES generation will become less dependent on subsidies. Therefore Harku-Sindi power line plays an important role not only reaching the renewable energy 2030 targets but also supporting the investments into Estonian power generation in general, as it enables renewable energy production like wind in the coastline and inland solar power to be connected to our production network, Kilk continues.

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Empower contributing to the electric traffic revolution

The number of electric vehicles is increasing rapidly and national programs aim at the reduction of carbon dioxide emissions generated by traffic. The first high-power EV charging station in Finland opened in November 2018, with Empower responsible for the station’s installation and connections to the grid. Charging an electric vehicle typically takes so long that you have time to eat lunch, but the new high-power station shortens the charging time to a cup of coffee – provided that the vehicle’s battery allows faster charging.

The charging station is the first of its kind in Finland so everything was completely new for Empower during the installation phase.

– It is a valuable experience to take part in pioneering projects and learn new things. In this case, too, we created installation instructions and developed operating procedures in cooperation with the supplier of the charging station, to ensure that our future projects together will run even more smoothly, says Christer Sundholm, Business Unit Manager at Empower.

Summer 2018 was exceptionally warm in Finland. Following an extended period of hot weather, the use of air conditioning and cooling meant that electricity consumption was at a reasonably high level. In July 2018, an equipment malfunction at Fingrid’s Olkiluoto substation caused a fire and damaged the control cabling, which resulted in Teollisuuden Voima’s Olkiluoto 2 electricity production being disconnected from the grid. With Olkiluoto 1 also disconnected from the grid shortly thereafter, a sixth of Finland’s entire electricity production capacity went offline unexpectedly.

Empower played a key role in the repairs at the substation to ensure the adequate supply of electricity. The transmission system was kept well-balanced during the disruption and the quick response meant that the situation was resolved without having to start up reserve power plants. Arto Pahkin, Main Grid Control Center Manager at Fingrid, is satisfied with Empower’s response at the site.

- This exceptional incident occurred in the middle of the busiest summer holiday season, but Empower’s professionals were quick to respond and they showed an excellent level of commitment to resolving the situation. The work was efficiently managed and Empower demonstrated its high level of professional expertise by highlighting solutions and ideas at the site. Even though there were people from nearly ten different organizations at the site, they all worked together in an exemplary fashion. The positive atmosphere between everyone involved made it easier to deal with the long days. The power plants were reconnected to the transmission system within a couple of days of the incident, Pahkin concludes.

Empower helpes ensure the availability of electricity

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EnerimCIS frees up time for customer work

Oulun Sähkönmyynti Oy is responsible for electricity sales in

the Oulun Energia Group and provides customer service for

the other Group companies and the Northern Power cooper-

ation companies. Empower has been Oulun Sähkönmyynti

Oy’s partner in customer information systems for a long

time. In 2018, the system was updated to the Empower-

developed EnerimCIS, which can be adapted to many kinds

of customer needs, thanks to its modularity.

Oulun Sähkönmyynti Oy’s CEO Tiina Lyyra is satisfied with the EnerimCIS system.

– Our expectation was that the EnerimCIS system would make our billing more efficient and free up our personnel’s time for customer work. For us, the customer is the most important driver of development and our final goal in adopting the new system was to ensure that our customers are the ones that benefit from this the most. EnerimCIS makes it possible to provide our customers with convenient and efficient service in the channels they choose – telephone call, online service or, for example, with an electricity bill, says Lyyra, shedding light on their reasons for choosing EnerimCIS.

The successful adoption of EnerimCIS also encouraged other customers that Oulun Sähkönmyynti Oy provides with customer service to move over to the

same system and a more extensive implementation project was launched in late 2018.

– Our personnel have also given positive feedback on the usability of the system – it has been easy to learn. Our customer service must be familiar with the special characteristics of the energy services in the Oulu and Sea Lapland regions to ensure that the customer’s service experience is successful. We expect that, in the future, the orientation of new employees can focus more on learning the special expertise of the field instead of just learning to use the system. At the same time, the duration of the actual orientation training may become shorter as the system’s built-in processes guide even a new user in acting intuitively, notes Lyyra.

EnerimCIS makes it possible to provide our customers with convenient and efficient service in the channels they choose – telephone call, online service or, for example, with an electricity bill.

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Customer-oriented energy market service in the Nordic and Baltic countries

Axpo started expanding their energy sales business from Central Europe to the Nordic countries in 2004. Cooperation with Empower started in 2006. As we were selected as the implementing partner for physical electricity sales in the Nordic countries, responsible for IT solutions and energy market and billing services related to the physical delivery of electricity in various countries. Axpo Finland was established in 2009 to strengthen Axpo’s market position in the Nordic and Baltic countries. As business processes in the electricity retail market move to data hubs in the 2020s, a system update will be required. For this reason, Axpo selected Empower to implement Nordic data hub integrations with EnerimCIS.

– When the cooperation originally started, Empower had no clear market competitors that would have been able to offer equivalent energy market services in the Nordic countries. Empower’s abil-ity to understand our needs and provide solutions for them has been the corner-stone for our cooperation and we appre-ciate the customer-oriented service we have received from Empower, explains Kimmo Tyni, responsible for business development and new services at Axpo.

– For us, Empower is an important part-ner with a unique service package – there exist no similar companies that produce energy market services as a neutral party in the Nordic and Baltic countries. Empower is also capable of offering flexibility in service production, which is an absolute requirement for success due to the cyclical nature of our business, says Tyni in conclusion.

Savon Voima selected Empower as the producer of its measurement services in summer 2018. The tightly scheduled project was completed on time, with measurement data management and imbalance settlement services being launched at the beginning of March 2019. In the project, the Savon Voima Group renewed its measurement data management infrastructure by transferring the Group’s 120,000 electricity and district heating measurement points to Empower’s EnerimSMP platform. At the same time, data hub capabilities were created and preparations were made for future changes in the energy sector, such as the requirements set by the adoption of a 15-minute imbalance settlement period.

In addition to the collection of measurement data, Empower also takes care of the further processing and quality management of the data before it is delivered to Savon Voima’s customer information system to serve as a basis for billing.

– Data hub adoption in Finland will happen in the 2020s, requiring electricity distribution companies to submit validated and high-quality measurement data to the hub. When a measuring service collects raw data from measuring devices, quality control and management naturally depend on how successful data collection has been. When Empower takes care of both of these, it is easier for us to locate errors and faster to fix them – and it is, of course, simpler for the customer to assess the success of the overall service, concludes Juha Kiukas, Sales Manager at Empower, member of the Steering Group Team.

A seamless package of measurement data management and quality management services

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For us, Empower is an important partner with a unique service package – there exist no similar companies that produce energy market services as a neutral party in the Nordic and Baltic countries.

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Empower opened a new Smart Factory in Hamina

The Smart Factory being completed in Hailikari in Hamina,

Southeast Finland, significantly strengthens Empower’s

position as an enabler of a smart society and the trail-

blazer in its sector. The factory provides centralized

maintenance services for different industrial sectors

using the latest in IoT technology and data collection.

– We will also consolidate the development of digital smart technology products and services in Hamina. Our factory in Hamina is a state-of-the-art “laboratory”, or a model factory, where we apply the services we have developed and where conventional industry exploits the latest technological advances. Smart ERP influences everything that takes place in the factory, says Vesa Ikonen, Director, Empower’s Smart Industry business.

Real-time data collection and operational transparency provide up-to-date data for every level of our own organization as well as for customers and subcontractors. The opportunities for improving the efficiency of operations and optimizing production conditions are almost limitless.

– We want our new factory to be an unparalleled example of a modern smart factory that serves customers transparently, providing high quality, and that encourages everyone to make use of the latest opportunities offered by the IoT. A modern smart factory is never fully completed: with smart systems collecting data, operations can be constantly developed, adds Ikonen.

At the same time, a safe, ergonomic and modern working environment enhances employee wellbeing. The principles of sustainable development are at center stage in our operations – after all, they are closely linked with economical operations and competitiveness.

Smart ERP system

PRODUCTION PROCESS

RELATED OPERATIONS ANALYTICS AND CUSTOMER

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people

Safety

Monitoring physical safety (EmSafe)

Optimization of ergonomics and conditions

Monitoring and ensuring data security

Production monitoring

Production conditions control

Supervisors are able to monitor and optimize the process flow and the employee situation

Customer connections

Real-time connections with the customer accounting and billing

Analysis and development

Production analysis and development

Planning

Overall view for production planning and optimization

Maintenance forecasting

Self-steering

Work orders on a terminal device

Option to select the order of work

Display of the overall situation (work phases, raw materials, maintenance)

Logistics optimization

Efficient management of material flows

Up-to-date warehousing and transport

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Koskienergia produces renewable energy

Koskienergia Oy is a company producing electricity with hydroelectric power. Together with its subsidiary Koskienergia Koskivoima Oy, it has 30 small power plants around Finland. They generate CO2-free electricity that is sold to end customers through the companies owning Koskienergia.

Empower has established a long-term customer relationship with Koskienergia and currently, Empower takes care of the service, mainte-nance and monitoring of Koskienergia’s 23 power plants. According to Hannu Ruotsalainen, CEO of Koskienergia, cooperation has been smooth.

– Since our company reached its current form in 2012, we have developed maintenance cooperation to enable us to excel at the achievement of safety, environmental and efficiency targets. In five years, we have reached a level at which operational development and 24/7 monitoring processes work seamlessly.

Annual maintenance for Fortum’s Loviisa nuclear power plant

Empower’s long-term service agreement for line work associated with the annual maintenance of Fortum’s Loviisa nuclear power plant was continued. Starting from August, the power plant carried out the largest safety and production renovations in its history. The Loviisa 2 power plant underwent alteration and renovation work as well as the regular inspections conducted every eight years.

Empower contributed to this extensive investment work. Empower partic-ipated in line work associated with the annual maintenance by servicing main circulation pumps, sea water pumps and other pump units as well as electric automation systems, among other things.

– Empower is a long-term partner for us and our cooperation has been very smooth, says Markku Riekkinen, Group Leader at Fortum, with satisfaction.

Annual maintenance work and associated investments are part of the nuclear power plant’s operating life management that ensures the reliable power generation and safe operation of both plant units now and in the future.

Unique hydroelectric power plant services for Vattenfall

Empower’s multi-year service agreement with Vattenfall will be contin-ued. Empower will provide Vattenfall with the local operating and maintenance services of all Vattenfall’s nine hydroelectric power plants in Finland. These services include, for instance, the weekly, monthly and annual maintenance of the power plants, centralized 24/7 control room services and services of the local operating and maintenance personnel working near the power plants.

– Hydroelectric power generation is increasingly based on the deployment of outsourced maintenance services, which is why smooth cooperation is so important. Empower can provide us with a service package that covers both control room services and continuous maintenance services – something that no one else in the Finnish market can offer. The fact that Empower is thoroughly familiar with our plants is also a distinct advantage. Thanks to good preventive maintenance, there are very few disturbances and failure calls, and the availability of our power plants is extremely high, says Erik Mälkki, Director of Hydro Fleet Management at Vattenfall.

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Business Ethical business

Coverage of Code of Conduct training:Target 100 %

Sustainable supply chainNumber of supplier audits:

Target 48

InnovationIdeas related to sustainable development:

Target 200

PeopleSafety at workTotal recordable incident frequency (TRIF): Target -20 %

Number of serious incidents:Target 0

Well-being at workHealth percentage:Target > 50 %

Sickness absenteeism:Target < 3 %

EnvironmentClimateFossil CO2 emissions per turnover:Target -10 %

Renewable energy usage:Target 100 % own properties, and as high as possible in rental properties

Circular economyRecycling percentage:Target 80 %

Coverage of Environment training:Target 100 %

SmartSociety

Ecological sustainability

Functioning of society

Good quality of life

Economical growthand stability

SustainabilitySustainability is at the core of Empower’s strategy and the cornerstones of sustainability goals – Business, People and Environment – support the realization of a smart society. In 2018, Empower committed to the UN’s Sustainable Development Goals (SDGs), which support and promote the achievement of the Group’s sustainability goals.

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Due to the nature of Empower’s business, one of the key sustainability themes is procurement sustainability. It is important for Empower that each partner of the company is committed to maintaining the highest legal and ethical standards in their business practices. Empower also sees to this by auditing its partners regularly. Inspection visits conducted under mutual understanding are a good means for developing operations and identifying shared interests.

Vendor audit to the supplier of pylons

Empower operates in crucial areas of society. Therefore, the quality and safety of operations are important strategic priorities. - The suppliers of materials and services are part of Empower’s service chain, and so we make sure they meet our criteria, says Veli-Matti Sääski, Procurement Director at Empower.

– We categorize our suppliers according to their business, sustainability and information security needs. Our suppliers must meet the requirements of Empower’s Supplier Code of Conduct and The Subscriber’s Accountability Code. Depending on the classification, we carry out a wide range of audits, such as HSEQ® (Health, Safety, Environment, Quality), industry-specific audit-ing and so-called UPA auditing (Safety audit made by Finnish Centre for Occupational Safety).

Baoding Mast Import & Export Company Limited (BMC) was established in 1998 in Quanzhou City, South China. Their main products are pylons and masts. Empower carried out an audit at their factory last summer when we started a supplier collaboration with them. In this way, we verified the standard of

products, production, operation and quality system of our important new supplier.

The manager Mr. Niu Hanjun from BMC is satisfied with the cooperation. – It is our pleasure to be Empower’s supplier. We have ISO 9000 quality system and CE certifi-cate in our company. Empower’s supplier audit for us is an honor for us. Empower is one of most important clients to us. We will do our best to improve our service and quality in the long run so that we can be a reliable supplier to Empower, says Niu Hanjun.

Supply chain transparency

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InnovationEmSightSDM makes monitoring easier at Stora Enso’s millStora Enso is a global provider of renewable solutions in packaging, biomaterials, wooden constructions and paper. The Lahti mill of the company’s Packaging Solutions division produces fiber-based, corrugated cardboard packaging products for a wide range of customers. Renewable, high-end and innovative solutions create added value for customers in retail trade, e-commerce, industry, transport and sales promotion, for instance.

Empower has had a maintenance agreement with the mill for a long time. In addition, Empower installed two EmSightSDM systems based on sensor technology at the mill in 2018. The intelligent product, developed by Empower for the measurement and optimization of production conditions, collects data with wireless sensors. Through a base station and cloud service, data is transferred in real time to a mobile application for employees and supervisors to monitor, and to a data system for potential further analysis.

Roope Laaksonen, Production Manager at Stora Enso, is satisfied with the cooperation with Empower and the opportunities offered by the installed EmSightSDM systems.

“The system has proven to be particularly useful when meas-urements made it possible to trace deficiencies and to detect a malfunction in air humidifier equipment. The data collected by the sensors enables us to monitor warehouse humidity easily and to react to potential deviations in production conditions quickly,” says Laaksonen.

Energy flexibility – a tool for responsible use of energyThe Energy Authority, a promoter of the functionality of the Finnish electricity market, chose Empower to investigate the impact of a 15-minute imbalance settlement period on the various actors in the electricity market and to create guidelines and a timetable for the possible transition to the finer time resolution. Empower carried out the study in cooperation with Valor Partners. The study iden-tified tools and evaluated potential problems and challenges and their impact on the implementation schedule for the transition to a 15-minute imbalance settlement period.

The goal of the transition to 15-minute imbalance settlement period, instead of the current 1-hour period, is to get a more accurate price of electricity for 15-minute periods, as it is assumed to guide energy consumption and offset consumption peaks.

The transition to a 15-minute imbalance settlement period is expected to increase the demand response of electricity and to encourage companies to ivnest in new technologies. With the help of information and automation, energy consumption can be shifted on the basis of pricing and reduced during peak price times.

In the near future, the need for flexibility in energy markets will grow, due to the EU’s target of increasing the share of renewable energy production. In practice, this means that the amount of energy production that varies heavily according to weather conditions, such as solar and wind power, will continue to increase while more control-lable energy production, such as thermal power production, will be removed from the market.

Empower has systematically invested in R&D and created technological innovations related to safety and optimal production. In 2018, Empower accelerated its IoT technology development by acquiring real-time measuring technology solutions developed by TreLab. The acquisition strengthened Empower’s digital solutions for industry and led to the development of new services utilizing the IoT technology. Our digital products contribute to the sustainability of our customers’ business.

During 2018, Empower created five new MVP products, and development teams continue to work on several ideas – the company’s target for 2019 is to find 200 new ideas supporting sustainable development. In addition, Empower’s own R&D activities adopted the Agile model and related work methodologies and the supporting infrastructure was taken into use throughout the entire Group. Our profound energy sector expertise is in high demand and we participate in the coordination of both national and international development projects related to the transformation of the energy sector.

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Empower Digital Site facilitates smart site management

Digital Site is Empower’s digital service that creates a digital twin by combin-ing a model representing an unstaffed technical space with documentation and real time status information. A virtual or digital twin is a data-based model of its physical counterpart and supports different phases of opera-tions. The model helps its user to understand past events and the current situation and to predict the future, enabling the owner to make the right decisions on use optimization and maintenance work, for instance, from the perspective of the entire life cycle. Potential application sites of Digital Site include a telecommunications room, an electrical substation or even a power plant, among other sites.

A Digital Site model can be created as a 360° virtual tour, a 3D model or their combination. Documentation associated with the service and the monitoring of conditions and operational situation is embedded in the model in a manner that enables the user to understand which part of the space or which device the data in question is related to. Conditions and operational situation can be analyzed with data provided by Empower’s proprietary EmSDM IoT solu-tion or measurement devices operating in a LoRaWAN network, for instance.

– We started the development of Digital Site a couple of years ago as we realized that documentation of IT spaces in particular is largely deficient or difficult to use. We considered the solution to be a 360° virtual tour, which we tested for the first time in documenting a server room located at Empower’s Harjavalta site, says Joonas Koivuniemi, Head of Operational Excellence and New Business Development at Empower.

In 2018, Digital Site was piloted in telecommunications in Helsinki and Jyväskylä. The aim of the pilot project was to determine the product’s poten-tial and guidelines for R&D. The customer feedback indicated the product was considered useful, and we now have a clearer direction for the further development of the product. In the ICT environment, potential can be found especially in maintaining photographic documentation of technical spaces and in achieving notably better usability than with current models.

Documentation

Real time analytics

Visual model

Sustainability advantages was another aspect that came up in relation to ICT infrastructure. – The adoption of Digital Site may reduce travelling to the sites covered by the service when the planning of alteration work, for instance, can be done with the digital twin. In addition, the analysis of conditions and operational situation helps optimize the space heating solution and consequently reduces energy consumption and lengthens device life cycles. Positive environmental impacts include reduced traffic emissions, reduced need for energy for heating and reduced demand for batteries, for instance, says Koivuniemi in conclusion.

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SafetyIn safety matters, the year 2018 was very good for Empower and we proceeded briskly towards our targets. We focused on rooting the HSE culture more deeply by organizing culture workshops, where we established a shared baseline of what a good HSE culture is. The workshop participants also got a good understanding of Empower’s current level of safety and paths to further improvement.

In 2018, Empower’s target was to reduce the frequency of lost time accidents (<5), and we nearly reached this target with the full-year LWIF (lost workday injury frequency) of 5.4. Empower’s goal is to improve safety in the coming year, too. According to the principles of continuous improvement, each year we keep some of the previous year’s indicators and develop some new indica-tors to supplement them. Empower’s numerical LWIF target for 2019 is below 4. In addition, our aim is to reduce the total recordable incident frequency (TRIF) by 20%. Small accidents have the potential to become serious accidents, so a thorough investigation of all incidents is crucial.

Empower celebrated the fifth Zero Accident year at the Anjalankoski millsEmpower has been responsible for maintenance and project planning at Stora Enso’s Anjalankoski mills since 2008. During this time, significant investments have been made in the development of work safety and on April 30, 2018, the Anjalankoski mills achieved the milestone of 5 years without lost time occupational accidents. Everyone is proud of this accomplishment because the entire personnel worked for this achievement.

When Empower became Stora Enso’s partner at the Anjalankoski mills, occupational accident statistics were completely different: the total number of accidents per year was approximately 35. In 2010, the mills started using the current statistics compilation method that categorizes accidents into lost time accidents (LTAs) and total recordable incidents (TRIs).

“In these five years, our way of working has changed consid-erably as now our personnel is fully committed to work safety and everyone understands its significance. Now, before any work starts, we consider potential risks and observe the working environment regularly on the basis of instructions. The number of our safety observations has increased steadily as our personnel has gained a better understanding of what kinds of things can cause risks,” says Matti Saarainen, Unit Manager at Empower.

Empower and Stora Enso, the owner of the Anjalankoski mills, also encourage employees to make observations. Every month, both the best safety observation and the employee who has made the most observations are rewarded

in Anjalankoski. Of course, the entire personnel celebrate Zero Accident milestones – there have been many celebrations during the past five years.

Now, before any work starts, we consider potential risks and observe the working environment regularly on the basis of instructions.

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The well-being of the personnel is an asset for Empower and the focus of projects increasing work capacity has shifted every year from reac-tive treatment of illnesses to proactive prevention. As a whole, this work has yielded good results: 58% of Empower employees stayed healthy throughout the year without any sick leave absences and our sick leave percentage was generally low, 3.1%. The management of absences due to musculoskeletal disorders and symptoms succeeded particularly well in 2018 and we managed to reduce these absences by 20% compared to the previous year.

Omavalmentaja improves work capacityTogether with Terveystalo, Empower launched the Omavalmentaja (My Coach) program to prevent and reduce musculoskeletal symp-toms. In the program, occupational health care professionals assess the employee’s health, goals and willingness to change and direct the employee to training provided by an occupational physiotherapist and a nutritionist, if they consider this necessary. Empower’s program is targeted at persons in physically demanding work who can influence their own well-being and ability to function by increasing the amount of physical exercise and whose health and work capacity clearly benefit from increased physical exercise.

Aalto and Hintsa Performance – researching better life at EmpowerAalto University and Hintsa Performance are conducting a research project called “Parempi elämä ja suorituskyky” (Better life and performance) in 2018–2020 to find out how the well-being of an organization’s management is reflected in the well-being of the organization. According to Juha Äkränen, responsible for the research project at Hintsa Performance, scientific research has proven that the personnel’s well-being and performance are closely related. Healthy and happy employees in an empowering and encouraging organization may achieve peak performance and are also a guarantee of customer satisfaction.

Empower was one of the first companies to participate in the research project. Its aim was to find tools for understanding and developing the personnel’s well-being. Comprehensive comparison results will be available only at the beginning of 2020 but Empower’s results already show that the organization is led with so-called servant leadership, which supports self-steering teams. The relations between managers

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Well-being

Leadership is about caring for people and, on the other hand, the opportunity to offer an environment nurturing development and success.

“A total of 30 employees from different functions were selected for the program,” says Laura Ahlblad, HR Business Partner at Empower. “On the basis of the results of this pilot project launched in 2018, we will evaluate whether the Omavalmentaja program could be established as a permanent operating model. Feedback from active participants indicates that the program has yielded benefits and participants have a good motivation to make changes. The reward for small changes is a better general energy level and a better ability to cope.”

and employees function well and the culture has a strong atmosphere of expertise – a sign of an expert organization with talents that want to develop.

“Leadership is about caring for people and, on the other hand, the opportunity to offer an environment nurturing development and success. The research project confirmed the conception that we have many experienced and competent employees who have a good self-confidence and are willing to exercise influence. As the energy sector is undergoing a significant transformation, we can offer our experts challenges and responsibilities: they have the chance to develop future energy ecosystems and play a key role in creating energy-efficient and climate neutral solutions. It is characteristic of our culture to share information among people and to offer a safe environment for challenging the status quo and for developing,” says Mika Yletyinen, President, Energy Intelligence.

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Climate

Empower’s efforts to reduce CO2 emissions yielded

results in 2018. Due to the nature of the work, a large

share of the company’s CO2 emissions is generated by

traffic. For this reason, Empower has especially moni-

tored the development of the emission levels of vehicles

used in production for several years now. The emis-

sions target of production vehicles for 2018 was reached

towards the end of the year when Empower’s CO2 emis-

sions per vehicle were 180 g per kilometer.

The average emissions of Empower’s vehicles has continued to decline significantly in recent years and the target is to keep on reducing CO2 emissions in 2019, too. In the coming year, the CO2 emissions target is determined in relation to turnover and the aim is to reduce emissions by 10%. Another target is to update the electricity agreements in all of the company’s own properties, and in as many rental properties as possible, to use CO2-free electricity from renewable sources.

CO2 emissions target reachedIn 2018, Empower had nearly 400 vehicles used in production. That year, the company’s fleet was renewed actively and old vehicles were replaced with lower-emission alternatives. Emissions have also been reduced by car manufacturers themselves as well as by external requirements set for them, reducing emissions in new car models.

CO2 emission/vehicle/km

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Empower’s 20th anniversary in December 2018 was celebrated by making donations to causes chosen by the personnel. One of the most popular causes in the personnel’s vote was WWF’s climate work, which was considered particularly important and urgent.

The aim of WWF’s climate work is to stop climate change and to prevent the risks it causes to humans and the environment. The main goal is to limit climate warming to less than 1.5 degrees. To reach this goal, the increase of global greenhouse emissions must be stopped and turned to a steeply downward path as soon as possible.

Empower’s personnel strongly supports the visibility of climate matters and sustainability in the company’s operations. When making the dona-tion decision, it was emphasized that our business operations should be solidly based on fostering values that are essential for the environment. In 2018, Empower specified environmental sustainability targets in further detail and development work will continue in 2019, too.

WWF’s climate work as the recipient of the 20th anniversary donation

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More efficient recycling with the circular economy modelThe appropriate sorting and recycling of waste is a natural part of Empower’s operations. For instance, all sites of Connectivity business collect construction waste generated on their construction sites and ensure, on behalf of our customer Telia, that waste is processed appro-priately. The waste is delivered to Kuusakoski for recycling. Kuusakoski unloads the waste and waste volumes are reported by category to Empower and Telia.

The purpose of sorting is to increase waste recovery and reduce the negative environmental and health effects that would result if waste was disposed of inappropriately. Waste collected from the field and delivered to Kuusakoski includes waste electrical and electronic equip-ment (WEEE), metals, wood materials, construction and cable waste and industrial batteries.

External and internal waste management requirements serve as a guideline in recycling.

“The key waste management requirements originate from the Waste Act and the Government Decree on Waste. In addition to them, Empower’s own instructions and our part-ners’ quality management systems control the realization of sustainability. A key principle for Empower is that waste will no longer be delivered to a landfill; instead, the aim is to recycle all waste generated by our operations,” says Hannu Jaakkola, Account Manager at Empower.

Circular economyAt Empower, circular economy plays a key role in achieving the sustain-able development goals. In 2018, Empower’s sustainability program was launched and Empower recognized the UN’s five Sustainable Development Goals (SDGs) that the company is committed to promoting in its operations.

“One of the goals is to ensure responsible consumption, which is monitored with the recycling percentage, among other means. In 2019, our target is to achieve an 80% recycling rate. We continue our work to integrate the concept of circular economy into our business processes and we have already succeeded in this in our digitality-based products,” says Vesa Rapo, Head of HSE at Empower.

This approach is supported by the circular economy model that is based on a comprehensive philosophy of product and raw material life cycles. The aim is to keep materials circulating for as long as possible to preserve their value and to reduce their negative environmental impact.

A key principle for Empower is that waste will no longer be delivered to a landfill; instead, the aim is to recycle all waste generated by our operations.

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Juha Silvola President, Power

Ari Vänttinen Chief Marketing Officer

Heikki Hiltunen Chief Legal Officer and

interim HR Director

Harri Leiviskä Chief Financial Officer

Johanna Nurkkala Senior Legal Councel

Johan Fagerström Chief Technology Officer

Jari Onniselkä CEO and President,

Empower Group

Eero Paunonen Chief Business Development Officer

Mikko Vaahersalo President, Connectivity and Smart Industry

Mika Yletyinen President, Energy Intelligence

Empower Group Executive Team

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Empower Oyj Consolidated financial statements

2018

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Empower Oyj is the parent company of the Empower Group, and it started operating in December 2015 in connection with the corporate restructuring of the Group. Empower Group was established in 1998 in connection with the incorporation of PVO’s network construction and maintenance functions.

Empower Oyj applies IFRS accounting principles in its consolidated financial statements.

Review of the company’s business operations, financial position, results and other factors that have an effect on business developmentEmpower is an international service and digital platform provider that is realizing a smart society.

Our business consists of maintaining power plants and factories, executing energy market operations and building and maintaining smart power networks and telecommunications connections. We develop digital solutions based on our long-term experience in the above-mentioned businesses. We also develop modular software and provide services that help our energy sector customers manage their data flows and Big Data. We operate in the Nordic and Baltic countries.

In the financial period 2018, the Empower Group’s turnover grew by 3.0 percent.

MEUR 2018 2017 CHANGE %

Finland 178.0 194.3 -8.4

Estonia 35.5 23.2 53.1

Sweden 24.0 17.9 34.0

Latvia 13.2 14.0 -6.1

Lithuania 2.0 2.8 -26.6

Other 0.0 -6.8

Group 252.7 245.3 3.0

MEUR 2018 2017 CHANGE %

Power 120.9 111.8 8.1

Connectivity 59.2 47.5 24.5

Smart Industry 47.3 67.8 -30.3

Energy Intelligence 25.2 25.0 1.1

Other 0.0 -6.8

Group 252.7 245.3 3.0

Turnover per country

Turnover per business area

The turnover of the Power, Connectivity and Energy Intelligence business areas grew due to our competitive service and product portfolio. The decrease in turnover of the Smart Industry business area was due to the expiry of one outsourcing contract. The Group’s order book strengthened further during the financial period, and at the beginning of the 2019 financial period, the order book already covered more than 80 percent of the turnover target for 2019.

Empower Group’s EBITDA for the financial period 2018 amounted to EUR 8.9 million, decreasing slightly year-on-year.

Report by the Board of Directors and Financial Statements 2018

The turnover by country and business area is shown in the tables below.

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The change in EBITDA was due to slimmer project margins than expected in parts of the projects Connectivity and Power business areas. In addition, the unfavorable competitive market situation impacted the EBITDA of the Power and Connectivity business areas. The EBITDA of the Connectivity business areas was also impacted by a quick expansion of business required by new significant contracts. In the Smart Industry and Energy Intelligence business areas, EBITDA was at a satisfactory level. The EBITDA outlook for 2019 is more favorable in all business areas than in 2018.

A loss of EUR 2.6 million was recorded in the Empower Group’s profit and loss statement for 2018 due to the completion of projects in the discontinued oper-ations. The incoming and outgoing cash flows of the discontinued operations were low at the end of 2018, so their separate reporting was discontinued at the end of the financial period.

Projects progressing slowly during the first months of the year due to the cyclical nature of the business and the impact of discontinued operations reduced the Group’s cash flow in the financial period 2018, which tightened the companies’ liquidity and lead to breaches of covenants in the Group’s financing agreements. The cash situation was brought to a manageable level by the end of the year due to EUR 8 million of senior loan funding granted to the Group in May and systematic program to increase cash flow efficiency that continued throughout the financial period. The stable and growing order book and the continuation of future megatrends contributed to the recovery of the cash situation through profitable business operations.

MEUR 2018 2017

Turnover 252.7 245.3

EBITDA 8.9 16.4

Continuing operations, profit for the period -6.8 0.5

Discontinued operations, profit for the period -2.6 3.2

Profit for the period -9.5 3.6

2018 2017

CHANGE € 1,000 €1,000 €

% OF TURNOVER 1,000 €

% OF TURNOVER

Finland 6,754 3.8 14,613 7.5 -7,859

Sweden -757 -2.1 1,488 6.4 -2,245

Estonia 920 3.8 -600 -3.4 1,520

Latvia 1,788 13.6 703 5.0 1,085

Lithuania 245 12.0 193 6.9 52

Other -45

Group 8,905 3.5 16,397 6.7 -7,492

2018 2017

CHANGE € 1 000 €1,000 €

% OF TURNOVER 1,000 €

% OF TURNOVER

Power 994 0.8 3,701 3.3 -2,707

Connectivity -1 817 -3.1 1,266 2.7 -3,082

Smart Industry 3,797 8.0 6,479 9.6 -2,682

Energy Intelligence 5,231 20.7 4,989 20.0 243

Other 699 -38 737

Group 8,905 3.5 16,397 6.7 -7,492

EBITDA per business area

EBITDA per country

EBITDA by country and business area is shown in the tables below.

The Group’s key figures

Significant events during and after the financial period During 2018, Empower’s business operations developed favorably. The order book realizing in and after 2019 grew in all business areas. The expansion and diversification of the customer base continued, too. On the basis of the feedback surveys conducted, Empower’s customer satisfaction and loyalty was good.

The renewable energy megatrend that supports growth in the Power business areas continued to be very strong globally. In particular, the increase in the indirect demand for wind power in both corporate and consumer sectors was clearly reflected in a significant increase in wind farm construction projects. Also, the payback times and returns of wind power have financially overcome many non-renewable energy sources. Empower was selected to construct the first completely market-term wind farms in Finland, and the company’s renew-able energy project portfolio also grew significantly in Sweden. Moreover, the company secured major power transmission construction projects in Sweden and agreed on the delivery of the first digital electrical substation in the Finnish main grid.

In the Connectivity business, Empower strengthened its leading position in Finland, with the delivery of new significant customer contracts commenc-ing during the first quarter of the financial period. The position was further strengthened with the expansion of Empower’s customer agreements. The fully digital delivery process solidified quality leadership, and a partnership with a vendor known for space technology introduced AR remote work to Empower’s operations.

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In the Smart Industry operations, the work for developing digital products yielded good results. The company established a Smart Factory in Hamina, and the company’s maintenance center and workshop operations were transferred there from other locations. In the Smart Factory, conventional industry will operate using the possibilities provided by state-of-the art technology, such as IoT and 5G solutions. The transparency of the operations provides up-to-date information for everyone to use from every level of the in-house organization to customers and subcontractors. It provides almost limitless opportunities for improving the efficiency of operations and optimizing production condi-tions. In addition, several digital offers and pilots were made for old and new customers to further strengthen the maintenance and service operations for production plants. Regional services managed to grow their business, with the exception of the expiry of one outsourcing contract.

The Energy Intelligence business strengthened its position as the market leader in Finland. The market position expanded in the Nordic countries with a significant CIS delivery in Sweden and Norway, for example. The develop-ment of the Enerim platform proceeded as expected, making several new modules available to our customers. Empower’s market share continued to grow strongly with the acquisition of new customers in customer information system deliveries to energy companies. The demand for Energy Intelligence services increased significantly during the financial period and customer loyalty remained extremely high.

Empower has made significant investments in developing both functional processes and new service offering using digitalization and new technological innovations. Examples of the investments made are the fully digital delivery process supporting quality leadership in the Connectivity business area, the establishment of the Smart Factory in Hamina, our safety solution EmSafe that has attracted international interest, and the EmTEM solution for manag-ing the grounding of power networks during work.

Research and developmentservice development in the future as well, the Empower Group significantly strengthened its R&D organization and will continue the development of a secure and reliable technology platform for future customer needs.

The Empower Group’s companies carried out platform-related R&D projects in the development of information systems related to energy measurements and invoicing as well as in the work planning and control systems related to the installation and maintenance of telecom and power networks. The company also invested heavily in digital products and solutions that enhance safety and production efficiency.

During the financial period 2018, the R&D costs of the Group’s companies stood at EUR 8.7 million (EUR 7.9 million), comprising 3.4 per cent (3.2 percent) of their turnover.

InvestmentsDuring the financial period, the information system, maintenance and annual investments of the Empower Group’s companies totaled EUR 12.5 million (EUR 7.5 million).

2018 2017

Number of personnel average

Continued business 1,629 1,661

Discontinued business 14 22

Salaries and wages 70,833 73,475

Personnel

Estimate of future development and business outlookAt the end of 2018, the Group’s order book was very good and distributed over several future years. The outlook concerning profitability is good in the Smart Industry and Energy Intelligence business areas. As a result of programs launched to improve efficiency and improving market situation, profitability is expected to increase in the Power and Connectivity business areas. Turnover is expected to grow moderately to ensure quality and efficiency.

Estimate of risksThe Group’s financial performance is influenced by the sector risks of the largest customer segments. Should these risks materialise, they may reduce demand for the services of Empower Group’s companies.

The Empower Group’s companies have some large solvent customers, and their purchasing behaviour may have a significant impact on the result of the sectors of the business operations in question.

The price risk of material and equipment purchases is minimised through agreements. Salary, service and material purchase costs can be transferred to sales prices, partially or with a delay.

The company has large projects in which incidents in the subcontracting and material chain are possible due to qualitative or functional issues, for instance.

The Group companies have insurance policies for liability for damage or loss to material or property.

Risks associated with the sufficiency of the Group’s financing are discussed below under “Going concern”, but in general, risks associated with financing and liquidity are possible because the company’s project business requires millions of euros of capital. The company is also exposed to SEK/EUR currency risk, mainly regarding the SEK net exposures of the Power business area, which are regularly hedged with a time horizon of 6–12 months, but as the projects last for up to more than 3 years, fully solid hedging is not possible or finan-cially feasible. The SEK hedging has commenced in the first quarter in 2019.

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Going concernThe company’s mezzanine financiers converted a total of EUR 28.25 million of their receivables into the company’s equity as Class B shares. This share capital increase was subscribed for in December 2017 and registered in April 2018. Along with the conversion, the Empower Group’s equity turned positive in first half of 2018, but returned negative by 31.12.2018. An agreement was concluded in March 2018 by which the previous loan period of the bank loans received by the company from the financing companies was extended until the end of July 2019. At the end of 2018, the loans were accounted for as current liabilities, and their restructuring is due in July 2019. The company is not aware of any threatening legal action or ending customer agreement which could materially reduce EBITDA or cash flow.

The Group’s balance sheet structure is indebted and the Group is engaged in continuous discussions with its financiers in order to improve the situation. As result of these negotiations, 5M€ loan arrangement was agreed with senior lender in June 2019 in order to ensure going concern. The Group’s current senior loans become due during July and August 2019. The going concern is depended on the related financing negotiations and the Group expects these negotiations to be successful and as consequence resulting to extension of the financing with improved terms. On the other hand, the development of the profitability of the Group’s continuing operations is expected to improve, which will have a further positive impact on cash flow. The Group’s liquid-ity is therefore expected to develop positively and in accordance with the normal seasonal variation, particularly during the second half of the year. The company keeps its financiers regularly up to date by means of reports and negotiations and, according to the company’s understanding, the finan-ciers are well aware of the status and outlook of the company’s business operations. The financiers have had a consistent stand on the company’s continuing covenant breaches.

The company’s sharesThe parent company has a total of 1,600,000 shares, divided into 1,000,000 A shares which include a right to vote and 600,000 B shares without a right to vote. The B shares have a priority over A shares to dividends, as described in more detail in the Articles of Association.

Legal disputesIn 2013, the Finnish Competition and Consumer Authority conducted an inves-tigation in the Group’s subsidiary Empower IN Oy and the Group’s then parent company TPI Holding Oy to find out whether Empower IN Oy (formerly Empower Oy) had participated in actions in breach of competition law in Finland in the business of constructing and designing of high voltage transmission lines during the previous decade. The investigation was initiated by Empower IN Oy as it had been made aware of such claims. The companies belonging to the Empower Group, including Empower Oyj, are therefore released from paying any fines. With its (non-final) decision of 30 March 2016, the Market Court rejected the Finnish Competition and Consumer Authority’s claim for a fine as statute-barred. The authority has appealed to the Supreme Administrative Court. If the Supreme Administrative Court concludes in a final decision that Empower IN Oy (formerly Empower Oy) is guilty of having acted in breach of competition law, this may lead to claims for damages. Based on the infor-mation available at this stage, the company’s Board of Directors does not consider it necessary to make a related provision in the annual accounts.

The company’s managementMembers of Empower Oyj’s Board of Directors during the financial period were:

Ordinary members:

Bo Elisson (Chair) Johan Bjurström Rainer Häggblom Matti Manninen Kristofer Runnquist (Jan 1–May 29, 2018) Tommy Wikström (May 29–Dec 31, 2018)

President and CEO:

Jari Onniselkä

Auditors:

Ernst & Young Oy, authorized public accountants, with Anders Svennas acting as the principal auditor.

Proposals of the Board of Directors to the Annual General MeetingThe Board of Directors proposes to the Annual General Meeting that the company’s loss for the period, EUR -6 658 830.13, be transferred to retained earnings on the balance sheet and that no dividend be distributed.

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1,000 € NOTE 1.1–31.12.2018 1.1–31.12.2017

Continued business

REVENUE 5A 252,653 245,322

Change in inventories of finished goods and work in progress 1,176 575

Work performed for own purposes and capitalised 5,063 4,425

Other operating income 5B 1,076 1,055

Share of profit/loss accounted for using the equity method 657 0

Material and services 5C -131,301 -116,524

Employee benefits expense 5E -86,706 -87,556

Depreciation and amortisation 5D -6,464 -5,975

Impairment 5D -16 -24

Other operating expenses 5B -33,714 -30,937

Loss on disposal of discontinued operations and revaluation to fair value 0 0

OPERATING PROFIT 2,425 10,361

Finance income 5F 34 13

Finance expense 5F -9,311 -9,444

PROFIT/LOSS BEFORE TAX -6,852 930

Tax on income from operations 19 -425

Profit/loss from continuing operations -6,833 504

Discontinued business

Profit/loss from discontinued operations 4A -2,640 3,108

PROFIT/LOSS FOR THE PERIOD -9,473 3,613

1,000 € NOTE 1.1–31.12.2018 1.1–31.12.2017

Other comprehensive income:

Items that will not be reclassified to profit or loss 133 227

Remeasurement of defined benefit plan 133 227

Items that may be reclassified subsequently to profit or loss 338 865

Exchange differences on translating foreign operations 338 865

TOTAL COMPREHENSIVE INCOME -9,002 4,704

Profit attributable to:

Owners of the parent company -9,653 3,451

Non-controlling interests 180 162

Total comprehensive income attributable to:

Owners of the parent company -9,182 4,542

Non-controlling interests 180 162

Consolidated Statement of Comprehensive Income

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Consolidated Statement of Financial Position

1,000 € NOTE DEC 31, 2018 DEC 31, 2017

NON-CURRENT ASSETS

Intangible assets 6B 50,504 48,014

Goodwill 6B 78,263 78,263

Property, plant, equipment 6A 10,237 6,776

Investments accounted for using the equity method 657 0

Other non-current financial assets 3 1

Non-current trade and other receivables 6C 1,033 2,876

Deferred tax asset 6J 948 1,166

Non-current assets 141,645 137,096

CURRENT ASSETS

Inventories 6D 6,739 5,592

Trade receivables and other receivables 6E 24,981 22,157

Tax Receivable, income tax 6J 20 10

Cash and cash equivalents 6F 3,066 1,763

Current assets 34,806 29,522

ASSETS 176,451 166,617

1,000 € NOTE DEC 31, 2018 DEC 31, 2017

Owners of the parent company

Share capital 80 80

Rights issue 0 29,012

Unrestricted equity reserve 91,462 62,450

Translation differences 259 -79

Accumulated earnings -100,234 -89,682

Owners of the parent company -8,433 1,781

Non-controlling interests 605 543

EQUITY -7,828 2,323

NON-CURRENT LIABILITIES

Deferred tax liability 6J 5,489 5,784

Non-current liabilities, interest-bearing 6C 4,857 49,807

Non-current interest-free liabilities 6C 0 2 090

Non-current provisions 6G 4,525 5,222

Liabilities from defined benefit plan 6H 424 570

NON-CURRENT LIABILITIES 15,295 63,473

CURRENT LIABILITIES

Current interest-bearing liabilities 6C 86,043 27,762

Trade Payables and Other Liabilities 6I 82,913 72,958

Tax liability, income tax 6J 28 100

CURRENT LIABILITIES 168,984 100,820

Liabilities 184,279 164,294

EQUITY AND LIABILITIES 176,451 166,617

Assets

Equity and liabilities

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Consolidated statement of changes in equityAttributable to owners of the Company

1,000 €SHARE

CAPITALUNRESTRICTED

EQUITY RESERVETRANSLATION DIFFERENCES

RETAINED EARNINGS TOTAL

NON-CONTROLLING INTERESTS TOTAL EQUITY

EQUITY 1.1.2017 80 62,450 -596 -93,104 -31,170 618 -30 552

Restatement & new standards 0 0 0 0 0 -61 -61

Adjusted equity 80 62,450 -596 -93,104 -31,170 557 -30 613

Comprehensive income

Profit/loss for the period 0 0 0 3 451 3 451 162 3 613

Other comprehensive income: 0 0 0 0 0 0

Remeasurement of defined benefit plan 0 0 0 227 227 0 227

Translation differences 0 0 517 348 865 0 865

TOTAL COMPREHENSIVE INCOME 517 4,025 4,542 162 4 704

Transactions with owners

Dividend distribution 0 0 0 0 -176 -176

Rights issue 29,012 0 0 0 29,012 0 29 012

TOTAL TRANSACTIONS WITH OWNERS 29,012 0 0 0 29,012 -176 28 836

Changes in ownership interests in subsidiaries

Changes with change in control 0 0 0 -604 -604 0 -604

TOTAL EQUITY 31.12.2017 29,092 62,450 -79 -89,682 1,780 543 2 323

EQUITY 1.1.2018 29,092 62,450 -79 -89,682 1,780 543 2 323

Restatement & new standards 0 0 0 -1,026 -1,026 0 -1 026

Adjusted equity 29,092 62,450 -79 -90,709 754 543 1 296

Comprehensive income 0 0 0 0 0 0 0

Profit/loss for the period 0 0 0 -9,653 -9,653 180 -9 473

Other comprehensive income: 0 0 0 0 0 0 0

Remeasurement of defined benefit plan 0 0 0 133 133 0 133

Translation differences 0 0 338 0 338 0 338

TOTAL COMPREHENSIVE INCOME 0 0 338 -9,520 -9,182 180 -9 002

Transactions with owners

Dividend distribution 0 0 0 0 0 -115 -115

Reclassifications -29,012 29,012 0 0 0 0 0

Other changes 0 0 0 -5 -5 -2 -7

TOTAL TRANSACTIONS WITH OWNERS -29,012 29,012 0 -5 -5 -117 -123

TOTAL EQUITY 31.12.2018 80 91,462 259 -100,234 -8,434 606 -7 828

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Cash flows from operating activities 1.1.–31.12.2018 1.1.–31.12.2017

PROFIT/LOSS FOR THE PERIOD -9,472,939.66 3,612,570.94

Depreciation, amortisation and impairment 6,492,810.34 6,085,685.06

Gains and losses of disposals of fixed assets and other non-current assets -282,888.39 -271,277.53

Share of profit/loss accounted for using the equity method -657,107.56 0.00

Unrealised foreign exchange gains and losses -14,360.06 -16,637.56

Financial income and expenses 9,521,723.72 17,110,278.31

Tax on income from operations -96,343.19 -160,815.76

Other adjustments -15,768,139.10

Working capital changes

Increase / decrease in inventories -1,146,532.08 3,176,846.14

Increase /decrease in trade and other receivables -2,002,902.05 -3,810,246.78

Increase / decrease in trade payables 6,747,145.45 5,791,262.51

Change in provisions -1,453,363.10 -1,360,168.70

Interest paid -5,240,687.85 -7,489,364.69

Dividends received 4,762.16 118.56

Interest received 119,927.70 16,095.42

Other financial items -1,302,000.06 -1,228,757.47

Income taxes paid -118,022.00 -150,501.00

Loans granted -130,000.00

Repayments of loan receivables 40,000.00

Net cash from operating activities 1,099,223.38 5,446,948.32

Cash flows from investing activities 1.1.–31.12.2018 1.1.–31.12.2017

Purchase of tangible and intangible assets -7,733,556.02 -6,988,812.17

Proceeds from sale of tangible and intan-gible assets 317,117.69 686,049.74

Disposal of subsidiaries 6,591.36

Purchase of investments -1,250.00 0.00

Proceeds from sale of investments -5,207.09

NET CASH USED IN INVESTING ACTIVITIES -7,417,689.34 -6,301,378.16

Cash flows from financing activities 1.1.–31.12.2018 1.1.–31.12.2017

Proceeds from current borrowings 8,673,135.34 0,00

Repayment of current borrowings -279,275.07 -2 490,789.86

Addition / deduction of current borrowings 546,256.22 -26,053.91

Proceeds from non-current borrowings 669,585.76 2 872,285.72

Payment of lease liabilities -745,162.26 -222,927.36

Payment of Installment liability -1 063,117.24

Dividends paid -175,440.40 -176,184.32

NET CASH USED IN FINANCING ACTIVITIES 7,625,982.35 -43,669.73

NET CHANGE IN CASH AND CASH EQUIVALENTS

1,307,516.39 -898,099.57

Cash and cash equivalents 1,763,422.42 3,220,658.01

Net change in cash and cash equivalents 1,307,516.39 -898,100.29

Effects of exchange rate fluctuations on cash held -4,856.85 -17,177.78

Cash , discontinued subsiadiary -541,957.72

Cash and cash equivalents 3,066,081.93 1,763,422.42

Consolidated statement of cash flow Key ratios Profit and loss statement 1.1–31.12.

2018 IFRS€ 000

2017 IFRS€ 000

Net result 252,653 245,322

EBITDA 8,905 16,360

EBITDA, % 3.5% 6.7%

Operating profit 2,425 10,361

Operating profit, % 1.0% 4.2%

Net result before taxes -6,852 930

% of net result -2.7% 0.4%

Profit/loss for the period -9,473 3,613

% of profit/loss for the period -3.7% 1.5%

Balance sheetEquity and liabilities 176,451 166,617

Net debt with interest -87,834 -75,806

Key figures and other informationNumber of personnel, average

Continued business 1,629 1,661

Discontinued business 14 22

Operating profit + depreciation and amortization

Interest-bearing debt – cash and cash equivalents

Average of the number of personnel at the end of each reporting period

Net debt

Number of personnel,

average

EBITDA

Definitions and key ratios

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Index to notes to the consolidated financial statements

Section 1: Corporate information1A. Corporate information

Section 2: Basis of preparation and other significant accounting policies

2A. Basis of preparation

2B. Standards issued but not yet effective

2C. Basis of consolidation and financial information on material partly-owned subsidiaries

Section 3: Financial instruments risk management objectives and policies

3A.1. Market risk

3A.2. Interest rate risk

3A.3. Foreign currency risk

3A.4. Liquidity risk

3A.5. Capital management

Section 4: Significant transactions and events during and after the end of reporting period

4A. Discontinued operations

4B. Goodwill and intangible assets with indefinite lives

4C. Related party disclosures

4D. Events after the reporting period

Section 5: Detailed information on statement of profit or loss and OCI items

5A. Revenues

5B. Other operating income and expenses

5C. Materials and services

5D. Depreciation, amortisation and impairment

5E. Employee benefits expenses

5F. Finance income and expenses

5G. Research and development costs

Section 6: Detailed information on statement of financial position items

6A. Tangible assets

6B. Intangible assets

6C. Financial assets and financial liabilities

6D. Inventories

6E. Trade and other receivables

6F. Cash and short-term deposits

6G. Provisions

6H. Pensions and other post-employment benefit plans

6I. Trade and other liabilities

6J. Income tax

Section 7: Commitments and contingencies

7A. Leases

7B. Guarantees

7C. Other contingent liabilities

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NOTE 1: Corporate information 1A Corporate Information Empower Plc (the Company) through its subsidiaries (together the Group) conducts service business in power networks, tele networks, information management and industrial sectors in Finland and in the Baltic countries, and to smaller extent in Sweden, Norway and Denmark. The Group’s parent company Empower Plc business consists of administrative and financial services to the group. Information on the group companies is provided in Principles of consolidation. Information on other related party relationships of the Group is provided in Note 4C.

The parent company of the Group, Empower Plc, is a limited liability company established under the law of Finland. The company is domiciled in Helsinki, Finland and its registered address is Valimotie 9–11, 00380 Helsinki.

The financial statements of Empower Plc Group for the financial year ending 31.12.2018 were approved for publication by its Board of Directors at its meet-ing on 25.06.2019. According to the Finnish Limited Liability Companies Act, shareholders have an opportunity to adopt or reject financial statements at an annual general meeting held after the publication of the financial state-ments. Copies of the consolidated financial statements are available from the headquarters of the company at Valimotie 9-11, 00380 Helsinki.

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NOTE 2: Significant accounting policies

2A Basis of preparation The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) and the appli-cable IAS and IFRS standards and SIC and IFRIC interpretations that were valid on 31.12.2018.

The International Financial Reporting Standards and interpretations that have been accepted or adopted by the EU under the procedure provided in Regulation (EC) No 1606/2002 and are in accordance with the regulations of the Finnish Accounting Act and Limited Liability Companies Act that comple-ment the IFRS requirements.

The consolidated financial statements are presented in thousands of euros (EUR 1 000), unless otherwise stated, and individual figures and sums of indi-vidual figures are rounded. Consequently there can be rounding differences. Financial statements information is based on historical cost basis, with the exception of derivative contracts, which are measured at fair value. The financial statements are presented by type of expense income statement and balance sheet format. In addition, the Group presents an additional statement of financial position at the beginning of the preceding period when there is a retrospective application of an accounting policy, a retrospective restatement, or a reclassification of items in financial statements.

Principles of consolidation

The consolidated financial statements include the parent company Empower Oyj and all companies in which, at the end of the financial year, Empower Oyj exercises control, i.e. subsidiary companies. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:

• Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee)

• Exposure, or rights, to variable returns from its involvement with the investee

• The ability to use its power over the investee to affect its returns Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

• The contractual arrangement(s) with the other vote holders of the investee

• Rights arising from other contractual arrangements• The Group’s voting rights and potential voting rights

Subsidiaries are consolidated from the date on which control is transferred to the Group and disposed subsidiaries are consolidated up to their date of disposal. The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consol-idated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

Associated companies are entities over which the Group has significant influence, but not control, generally accompanied by a shareholding giving rise to voting rights of 20% and above but not exceeding 50%. Investments

in associated companies are accounted for in the consolidated financial statements using the equity method of accounting less impairment losses, if any. Investments in associated companies are initially recognized at cost. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Goodwill on associated companies represents the excess of the cost of acquisition of the associate over the Group’s share of the fair value of the identifiable net assets of the associate and is included in the carrying amount of the investments.

In applying the equity method of accounting, the Group’s share of its associ-ated companies’ post-acquisition profits or losses are recognized in profit or loss and its share of post-acquisition other comprehensive income is recog-nized in other comprehensive income. These post-acquisition movements and distributions received from the associated companies are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associated company equals or exceeds its interest in the associated company, including any other unsecured non-current receivables, the Group does not recognize further losses, unless it has obligations or has made payments on behalf of the associated company.

Profit or loss and each component of OCI are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When neces-sary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies.

If the Group loses control over a subsidiary, it derecognizes the related assets (including goodwill), liabilities, non-controlling interest and other components of equity, while any resultant gain or loss is recognized in profit or loss. Any investment retained is recognized at fair value. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

Inter-company transactions, receivables and liabilities are eliminated in full on consolidation. Non-controlling interest is presented separately from the net profit and disclosed as a separate item in the equity.

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Summary of other significant accounting policies

Current versus non-current classification

The Group presents assets and liabilities in the statement of financial position based on current/non-current classification. An asset is current when it is:

• Expected to be realised or intended to be sold or consumed in the normal operating cycle

• Held primarily for the purpose of trading• Expected to be realised within twelve months after the reporting period

Or• Cash or cash equivalent unless restricted from being exchanged or used

to settle a liability for at least twelve months after the reporting period

All other assets are classified as non-current.

A liability is current when:• It is expected to be settled in the normal operating cycle• It is held primarily for the purpose of trading• It is due to be settled within twelve months after the reporting period

Or• There is no unconditional right to defer the settlement of the liability

for at least twelve months after the reporting period

The Group classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as non-current assets and liabilities.

Foreign currency translation

Functional and presentation currency

Items included in the financial statements of each of the Group companies are measured using the currency of the primary economic environment in which the company operates (the functional currency). The consolidated financial statements are presented in Euros, which is the functional and presentation currency of the parent company and the presentation currency of the Group.

Foreign currency transactions

Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional currency spot rates at the date the transaction first qualifies for recognition.

At the end of each reporting period foreign currency monetary items are trans-lated using the closing rate. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction and non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured.

Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements are recognized in profit or loss in the period in which they arise. Exchange rate gains and losses on business operations are recognized in respective items in income statement.

Foreign subsidiaries

Income statement and cash flow statements of foreign subsidiaries are translated into Euros at the average exchange rates for each month and the balance sheets are translated using the exchange rates prevailing at the balance sheet date. Exchange differences arising from the translation are recognized in other comprehensive income. When a subsidiary is partially disposed or sold, exchange differences that were recorded in equity are recognized in the income statement as part of the gain or loss on the sale.

Revenue recognition

Group recognizes revenue according to IFRS 15 starting from the annual reporting period beginning on 1 January 2017.

Group recognizes revenue when (or as) the entity satisfies a performance obligation by transferring a promised good or service to a customer. An asset

is transferred when (or as) the customer obtains control of that asset. For each performance obligation identified, Group determines at contract inception whether it satisfies the performance obligation over time or satisfies the perfor-mance obligation at a point in time. If Group does not satisfy a performance obligation over time, the performance obligation is satisfied at a point in time.

Performance obligations satisfied over time

Group transfers control of a good or service over time and, therefore, satisfies a performance obligation and recognizes revenue over time, if one of the following criteria is met:

(a) the customer simultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs;

(b) Group’s performance creates or enhances an asset (for example, work in progress) that the customer controls as the asset is created or enhanced; or

(c) Group’s performance does not create an asset with an alternative use to the Group and the Group has an enforceable right to payment for performance completed to date.

For each performance obligation satisfied over time, Group shall recognize revenue over time by measuring the progress towards complete satisfaction of that performance obligation. The objective when measuring progress is to depict Group’s performance in transferring control of goods or services promised to a customer.

Group determines progress as share of the costs incurred against the total estimated costs of the project. Cost estimates require estimate of the final outcome of the project and the actual future outcome may deviate from the estimate.

If the outcome of a project cannot be estimated reliably, revenue is recognized only to the extent of contract costs incurred that are likely to recoverable and project costs are recognized as an expense in which they are incurred. An expected loss on the project is recognizes as an expense immediately.

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Performance obligations satisfied at a point in time

If a performance obligation is not satisfied over time, Group satisfies the performance obligation at a point in time. To determine the point in time at which a customer obtains control of a promised asset and the Group satisfies a performance obligation, Group shall consider the requirements for control. In addition, Group considers indicators of the transfer of control, which include, but are not limited to, the following:

(a) Group has a present right to payment for the asset.

(b) The customer has legal title to the asset.

(c) Group has transferred physical possession of the asset.

(d) The customer has the significant risks and rewards of ownership of the asset.

(e) The customer has accepted the asset.

Main revenue streams and revenue recognition:

• Long-term maintenance service: In the long-term maintenance service contract Group provides maintenance services to the customer at the customer’s plant.

- The overtime recognition criteria (a) was met as the customer simultaneously receives and consumes the benefits while Empower provides the services to the customer.

• Frame contracts with individual purchase orders: The services Group provides under the frame agreements are services in which Group creates or enhances an asset that the customer controls as Group provides the services.

- These assets include assets such as customer’s telecommunications networks and power networks. Group provides services both in renewal and maintenance of the networks. The overtime recognition criteria (b) is met.

• Turnkey projects: In turnkey projects Group’s promise to the customer is to provide an operating asset that is customised to that specific customer. Group’s performance does not create an asset that has alter-native use to Group. The industry specific terms and conditions (YSE) ensure that Group has the right to payment for performance completed to date. The overtime recognition criteria (c) is met.

Discontinued operations

The Group classifies non-current assets and disposal groups as held for distribu-tion to equity holders of the parent if their carrying amounts will be recovered principally through a distribution rather than through continuing use. Such non-current assets and disposal groups classified as held for distribution are measured at the lower of their carrying amount and fair value less costs to distribute. Costs to distribute are the incremental costs directly attributable to the distribution, excluding finance costs and income tax expense.

The criteria for held for distribution classification is regarded as met only when the distribution is highly probable and the asset or disposal group is available for immediate distribution in its present condition. Actions required to complete the distribution should indicate that it is unlikely that significant changes to the distribution will be made or that the decision to distribute will be withdrawn. Management must be committed to the distribution expected within one year from the date of the classification.

Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for distribution.

A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held for sale, and:

• been disposed of, or is classified as held for sale, and: • Represents a separate major line of business or geographical area of

operations • Is part of a single co-ordinated plan to dispose of a separate major

line of business or geographical area of operations Or

• Is a subsidiary acquired exclusively with a view to resale.

Discontinued operations are excluded from the results of continuing opera-tions and are presented as a single amount as profit or loss after tax from discontinued operations in the statement of profit or loss. All other notes to the financial statements include amounts for continuing operations, unless otherwise mentioned. Additional disclosures are provided in Note 4A.

Goodwill and other intangible assets

Business combinations

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, which is measured at acquisition date fair value, and the amount of any non-controlling interests in the acquiree. For each business combi-nation, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred and included in administrative expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.

Any contingent consideration to be transferred by the acquirer will be recog-nized at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of IFRS 9, is measured at fair value with the changes in fair value recognized in the statement of profit or loss.

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Goodwill

Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interests and any previous interest held over the net identifiable assets acquired and liabilities assumed). If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognized at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognized in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combi-nation, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Where goodwill has been allocated to a cash-generating unit (CGU) and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained.

Other intangible assets

Intangible assets are capitalized if they are controlled by the Group as a result of past events and from which future economic benefits are expected to flow to the Group. Intangible assets are measured initially at cost. After initial recognition, an intangible asset shall be carried at its cost less any accumulated amortization and any accumulated impairment losses. The depreciable amount of an intangible asset with a finite useful life shall be allocated on a systematic basis over its useful life. Internally generated intangibles, excluding capitalized development costs, are not capitalized and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred. The useful lives of intangible assets are assessed as either finite or indefinite. Intangible

assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statement of profit or loss in the expense category that is consistent with the function of the intangible assets.

Group has assessed the following useful lives for each intangible asset line item:

• Intangible assets 5–10 years• Development expenditure 3–5 years• Other long-term expenditure 5–10 years• Customer relations 5–20 years

The Group expenses expenditures on research when they incur. An intangible asset arising from development (or from the development phase of an internal project) is recognized if, and only if, Group can demonstrate all of the following:

• the technical feasibility of completing the intangible asset so that it will be available for use or sale

• its intention to complete the intangible asset and use or sell it; its ability to use or sell the intangible asset;

• how the intangible asset will generate probable future economic bene-fits; among other things, the entity can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset;

• the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset;

• its ability to measure reliably the expenditure attributable to the intan-gible asset during its development.

Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortization and accumulated impairment losses. Amortization of the asset begins when development is complete and the asset is available for use. It is amortized over the period of expected future benefit. Amortization is recorded in cost of sales. During the period of development, the asset is tested for impairment annually.

Impairments

Assets that have an indefinite useful life, for example goodwill, are not subject to amortization but are tested annually for impairment. In addition, other assets are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

For the purposes of assessing impairment, assets are grouped at lowest levels for which there are separately identifiable cash flows and which are independent.

IAS 36 defines recoverable amount as the higher of an asset’s or cash-gener-ating unit’s fair value less costs of disposal and its value in use. Value-in-use is the present value of the future cash flows expected to be derived from an asset or cash-generating unit.

An asset is impaired when its carrying amount exceeds its recoverable amount. Impairment loss is recognized in the income statement. The Group assesses at the end of each reporting period whether there is any indication that an impairment loss recognized in prior periods for an asset other than goodwill may no longer exist or may have decreased. If any such indication exists, the Group estimates the recoverable amount of that asset. An impairment loss recognized for goodwill are not reversed in a subsequent periods.

Intangible asset with an indefinite useful life to be tested for impairment annually by comparing its carrying amount with its recoverable amount, irrespective of whether there is any indication that it may be impaired. In addition to goodwill and brand, the Group does not have any assets that have an indefinite useful life.

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Property, plant and equipment

Non-current assets are recognized in the balance sheet at original purchase cost less depreciation according to plan and accumulated impairment losses, if any. Costs capitalized as part of acquisition cost comprises of the variable costs attributable to the purchase. Depreciations according to plan are calcu-lated using the straight-line method based on the estimated useful lives. An item of property, plant and equipment and any significant part initially recog-nized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit or loss when the asset is derecognized.

The residual value and the useful life of an asset is reviewed at least at each financial year-end and, if expectations differ from previous estimates, the change shall be accounted for as a change in an accounting estimate in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.

Estimated useful lives of assets for all group companies are the following:

• Machinery and equipment 3–15 years• Buildings and structures 10–30 years• Other tangible assets 3–5 years

Government grants

Empower Group recognizes government grants when there is reasonable assurance that the grants will be received (that is, e.g. when the approval has been received), and that the entity will comply with the conditions attaching to the grants. Government grants are recognized in profit or loss on a systematic basis over the periods in which Empower Group recognizes as expenses the related costs for which the grants are intended to compensate. Grants related to income or expenses are presented as part of profit or loss as ‘Other income’ separately of other items.

Leases – The group acting as lessee

SThe determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset (or assets) and the arrangement conveys a right to use the asset (or assets), even if that asset is (or those assets are) not explicitly specified in an arrangement.

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.

Finance leases are recognized as assets and liabilities in their statements of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. The discount rate to be used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease, if this is practicable to determine; if not, the lessee’s incremental borrowing rate shall be used.

Assets acquired under finance leases are depreciated over the shorter of asset’s useful life and the lease period.

The interest element of the finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. An operating lease is a lease other than a finance lease. Operating lease payments are recognized as an operating expense in the statement of profit or loss on a straight-line basis over the lease term.

Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Initial recognition

The Group initially recognizes trade receivables, trade payables, deposits, loans and borrowings on the date on which they are originated. All other financial instruments are recognized on the trade date, which is the date on which the Group becomes a party to the contractual provisions of the instrument.

On initial recognition, a financial asset or a liability, except for trade receiv-ables, is measured at its fair value plus or minus, in the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability. Trade receivables that do not have a significant financing component are measured at their transaction price.

Financial assets

The Group classifies a financial asset at initial recognition as a financial asset measured at amortized cost, a financial asset measured at fair value through other comprehensive income or a financial asset measured at fair value through profit or loss.

A financial asset is measured at amortized cost when both of the following conditions are met:

• the asset is held within a business model whose objective is to hold financial assets to collect contractual cash flows and

• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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A financial asset is measured at fair value through other comprehensive income when both of the following conditions are met:

• the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and

• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A financial asset is measured at fair value through profit or loss unless it is measured at amortised cost or at fair value through other comprehensive income. On initial recognition of an equity instrument that is not held for trading, the Group may irrevocably elect to present subsequent changes in fair value in other comprehensive income. This election is made on an investment-by-investment basis.

The Group assesses the objective of a business model in which asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to the management. The information considered includes:

• the stated policies and objectives for the portfolio and the operation of those policies in practice. In particular, if the strategy focuses on earning contractual cash flows or realising cash flows through the sale of the assets

• how the performance of the portfolio is evaluated and reported to the Group management and

• the risks that affect the performance of the financial assets held within the that business model and how those risks are managed.

In assessing whether the contractual cash flows are solely payments of princi-pal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition.

Based on analysis of the business model in which the financial assets are held and contractual cash flows of the instruments, financial assets held by the Group comprising of:

• Receivables (arising from mortgages)

• Trade receivables (arising from invoiced goods and services)

• Prepayments and accruals

• Other financial assets

• Cash and cash equivalents (comprising of balances with banks) are clas-sified as measured at amortised cost using effective interest rate (EIR).

Amortised cost is calculated by considering any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the statement of profit or loss.

Financial assets are not reclassified subsequent their initial recognition, except in situation where the business model for managing financial assets is changed.

Impairment of financial assets

The Group recognizes loss allowances for expected credit losses (ECL) on the following financial instruments that are not measured at fair value through profit or loss:

• Trade receivables

• Cash and cash equivalents.

The Group measures loss allowances at an amount equal to lifetime ECL, except for the following for which they are measured as 12-month ECL:

• debt investments in securities that are determined to have a low credit risk a the reporting date and

• other financial instruments on which credit risk has not increased signif-icantly since their initial recognition.

Loss allowances for trade receivables are always measured at an amount equal to lifetime ECL. Lifetime ECL is the portion of ECL that result from all possible default events over the expected life of a financial instrument.

For measurement of ECL for trade receivables the Group uses a provision matrix. The provision matrix is based on historical observed default rates over

the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

Measurement of ECL for the receivables from financial institutions is based on a loss rate approach. The Group has determined that receivables from financial institutions have a low credit risk at the reporting date and therefore 12-month ECL is calculated. 12-month ECL are the portion of ECL that result from default events on a financial instrument that are possible within the 12 months after the reporting date. Loss allowances for ECL are presented in the statement of financial position as a deduction from the gross carrying amount of the assets. In profit or loss, the amount of ECL (or reversal) is recognized as an impairment gain or loss.

Write-off

Trade receivables and receivables from financial institutions are written off, either partially or full, when there is no realistic prospect of recovery. This is generally the case when the Group determines that the counterparty does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off can still be subject to enforcement activities to comply with the Group’s procedures for recovery of amounts due.

Financial liabilities

The Group’s financial liabilities include trade and other payables, loans and borrowings, other financial liabilities, advances received, accrued liabilities and deferred revenue that are classified as measured at amortized cost.

Amortized cost is calculated by considering any discount or premium on acquisition and fees or costs that are an integral part of the EIR. Gains and losses are recognized in profit or loss as financial income or expense when the liabilities are derecognized as well as through the EIR amortization process.Financial liabilities are not reclassified subsequent their initial recognition.

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Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group’s consolidated statement of financial position) when:

• The rights to receive cash flows from the asset have expired

Or

• The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrange-ment; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a passthrough arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of its continuing involvement. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

When the entity’s continuing involvement takes the form of guaranteeing the transferred asset, the extent of the entity’s continuing involvement is the lower of (i) the amount of the asset and (ii) the maximum amount of the consideration received that the entity could be required to repay (‘the guarantee amount’).

A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

Group does not apply hedge accounting according to IFRS 9. Therefore the fair value of derivative instruments shall be recognized through profit and loss.

Fair value measurement

The Group measures financial instruments such as derivatives, and non-fi-nancial at fair value at each balance sheet date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal market at the measurement date under current market conditions (i.e. an exit price) regardless of whether that price is directly observable or estimated using another valuation technique. The Group meas-ures the fair value of an asset or a liability using the assumptions that market participants would use when pricing the asset or liability.

The Group uses valuation techniques that are appropriate in the circum-stances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy based on the lowest level input that is significant to the fair value measurement as a whole. The Group has categorised the assets and liabilities into three levels of fair value hierarchy as follows:

• LEVEL 1 Input: Quoted prices (unadjusted) in active markets. Instruments: No assets or liabilities.

• LEVEL 2 Input: Observable inputs, other than quoted prices included within Level 1. Confirmation of the fair value is received annually from the bank. Instruments: Interest swap.

• LEVEL 3 Input: Unobservable inputs Instruments: No assets or liabilities.

For assets and liabilities that are recognised in the financial statements at fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

Provisions and contingent liabilities

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obliga-tion; and a reliable estimate can be made of the amount of the obligation. The amount of provision is recorded as the best estimate on costs to be incurred to fill the current obligation on reporting date. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

A warranty provision is recognized when there is reasonable assurance that the project will lead to repairs agreed on the sale contract.

A provision for onerous contract is recognized when the costs requires to meet the obligations under the contract exceed the benefits to be received.

A legal provision is recognized when there is reasonable assurance that legal costs will incur relating to on-going litigations.

A provision related to personnel is recognized when there are still some costs to incur relating to restructurings already done.

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A contingent liability is possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or a present obligation that arises from past events but is not recog-nised because: it is not probable that an outflow or resources embodying economic benefits will be required to settle the obligation; or the amount of the obligation cannot be measured with sufficient reliability. Information on contingent liabilities is disclosed in notes.

Inventories

Empower Group measures its inventories at the lower of cost and net realis-able value. These costs include labour and other costs of personnel directly engaged in providing the service, including supervisory personnel, and attrib-utable overheads. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

Pensions and other post-employment benefits

The Group operates a defined benefit pension plan in Mandatum Life and OP Life Insurance, which requires contributions to be made to a separately administered fund.

Remeasurements, comprising of actuarial gains and losses are recognised immediately in the statement of financial position with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.

Past service costs are recognised in profit or loss on the earlier of:

• The date of the plan amendment or curtailment, and

• The date that the Group recognises related restructuring costs

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Group recognises the following changes in the net defined benefit obligation under ‘cost of sales’, ‘administration expenses’

and ‘selling and distribution expenses’ in the consolidated statement of profit or loss (by function):

• Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements

• Net interest expense or income

Group’s defined benefit obligations and the related service cost have been calculated using projected unit credit method. In defined benefit plans, the liability in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date minus the fair value of plan assets. The discount rate has been determined using iBoxx Corporate indices. The estimated duration of the benefit obligation has been taken into consideration. The market based inflation expectations have been determined using inflation-linked swaps.

Taxes

The Group’s income tax expense includes taxes of the group companies based on taxable income and the changes in the deferred taxes. Income tax is recognized in the income statement, except for the items recognized directly in other comprehensive income, when the tax effect is accordingly recognized in other comprehensive income. Income tax expense is based on the effective tax rate in each country. Tax adjustments from previous periods are included in tax expense.

Group recognises a deferred tax liability for all taxable temporary differences, except to the extent that the deferred tax liability arises from the initial recognition of goodwill or the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.

Group recognises a deferred tax asset for all deductible temporary differ-ences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilized, unless the deferred tax asset arises from the initial recognition of an asset or liability

in a transaction that is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).

Deferred income tax is determined using tax rates that have been enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or deferred income tax liability is settled.

Expenses and assets are recognised net of the amount of VAT, except:

• When the VAT incurred on a purchase of assets or services is not recov-erable from the taxation authority, in which case, the VAT is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable

• When receivables and payables are stated with the amount of VAT included

The net amount of VAT recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

Trade receivables

Trade receivables are initially measured at fair value and subsequently at amortised cost less provision for impairment. Group has sold majority (95%) its trade receivables to financial institutions and according to IFRS 9 definitions the Group has transferred cash flows that have not expired; has transferred its rights to receive the cash flows and the risks and rewards have been transferred to the bank.

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Critical accounting estimates and judgements

The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accom-panying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. In the process of applying the Group’s accounting policies, management has made various judgements. Those which management has assessed to have the most significant effect on the amounts recognised in the consolidated financial statements have been discussed in the individual notes of the related financial statement line items..

The key assumptions concerning the future and other key sources of estima-tion uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are also described in the individual notes of the related financial statement line items below. The Group based its assumptions and estimates on parameters available when the consolidated financial state-ments were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

2B Standards issued but not yet effective Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The amendments address the conflict between IFRS 10 and IAS 28 in dealing with the loss of control of a subsidiary that is sold or contributed to an asso-ciate or joint venture. The amendments clarify that the gain or loss resulting from the sale or contribution of assets that constitute a business, as defined in IFRS 3, between an investor and its associate or joint venture, is recognised

in full. Any gain or loss resulting from the sale or contribution of assets that do not constitute a business, however, is recognised only to the extent of unrelated investors’ interests in the associate or joint venture. The IASB has deferred the effective date of these amendments indefinitely, but an entity that early adopts the amendments must apply them prospectively. The Group will apply these amendments when they become effective.

IFRS 16 Leases

IIFRS 16 was issued in January 2017 and it replaces IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model like the accounting for finance leases under IAS 17. The standard includes two recognition exemptions for lessees - leases of ’low-value’ assets (e.g., personal computers) and short-term leases (i.e., leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset. Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognise the amount of the re-measurement of the lease liability as an adjustment to the right-of-use asset. IFRS 16 also requires lessees and lessors to make more extensive disclosures than under IAS 17. IFRS 16 is effective for annual periods beginning on or after 1 January 2019. Early application is permitted, but not before an entity applies IFRS 15. A lessee can choose to apply the standard using either a full retrospective or a modified retrospective approach. The standard’s transition provisions permit certain reliefs. In 2018, the Group plans to assess the potential effect of IFRS 16 on its consolidated financial statements. Empower concludes that the main area affected by IFRS 16 relates to real estate leases which can potentially, but unlikely, have an adverse impact on the financial results. The magnitude and

materiality of the potential effect of the real estate leases of Empower are continuously being evaluated. Empower will apply a modified retrospective method regarding IFRS 16.

2C. Basis of consolidation and financial information on material partly owned subsidiaries

1,000 €

COUNTRY OF INCORPORATION AND OPERATION 2018 2017

PROPORTION OF EQUITY INTEREST HELD BY NON-CONTROLLING INTERESTS:

Empower 4Wind OÜ Estonia 40% 40%

Empower Fidelitas UAB Lithuania 25% 25%

ACCUMULATED BALANCES OF MATERIAL NON-CONTROLLING INTEREST:

Empower 4Wind OÜ 502 453

Empower Fidelitas UAB 103 89

PROFIT ALLOCATED TO MATERIAL NON-CONTROLLING INTEREST:

Empower 4Wind OÜ 140 135

Empower Fidelitas UAB 40 27

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The summarised financial information of these subsidiaries is provided below:

1,000 €EMPOWER 4WIND OÜ

EMPOWER FIDELITAS

Revenue 3,332 3,105

Costs (2,861) (2,872)

Amortisation&depreciation (65) (29)

Finance costs (0) (7)

Profit before tax 406 196

Income tax (57) (35)

Profit for the year from continuing operations 349 162

Total comprehensive income 349 162

Attributable to non-controlling interests 140 40

1,000 €EMPOWER 4WIND OÜ

EMPOWER FIDELITAS

Revenue 2,393 2,777

Cost of Sales (1,931) (2,584)

Amortisation&depreciation (58) (63)

Finance costs (1) (1)

Profit before tax 403 129

Income tax (66) -20

Profit for the year from continuing operations 337 109

Total comprehensive income 337 109

Attributable to non-controlling interests 135 27

Summarised statement of profit or loss for 2018:

Summarised statement of profit or loss for 2017:

1,000 €EMPOWER 4WIND OÜ

EMPOWER FIDELITAS

Property, plant and equipment and other non-current assets (non-current) 1,488 744

Trade and other payables (current) 103 75

Interest-bearing loans and borrowing and deferred tax liabilities (non-current) (331) (396)

Total equity (5) (12)

Attributable to: 1,256 412

Equity holders of parent

Non-controlling interest 754 309

Määräysvallattomien osuus 502 103

1,000 €EMPOWER 4WIND OÜ

EMPOWER FIDELITAS

Inventories and cash and bank balances (current) 1,219 762

Property, plant and equipment and other non-current assets (non-current) 136 84

Trade and other payables (current) (218) (477)

Interest-bearing loans and borrowing and deferred tax liabilities (non-current) (5) (12)

Total equity 1,133 357

Attributable to:

Equity holders of parent 680 268

Non-controlling interest 453 89

Summarised statement of financial position as at 31 December 2018:

Summarised statement of financial position as at 31 December 2017:

1,000 €EMPOWER 4WIND OÜ

EMPOWER FIDELITAS

Operating 70 154

Investing (31) (18)

Financing (229) (160)

Net increase/(decrease) in cash and cash equivalents -190 (24)

1,000 €EMPOWER 4WIND OÜ

EMPOWER FIDELITAS

Operating 499 354

Investing (54) (142)

Financing (279) (175)

Net increase/(decrease) in cash and cash equivalents 166 36

Summarised cash flow information for year ended 31 December 2018:

Summarised cash flow information for year ended 31 December 2017:

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SECTION 3: Financial instruments risk management objectives and policies

The Group is exposed to market risk and liquidity risk. Credit risk is concerned to be low in relation to the customer base and the sale of receivables.

The Group’s senior management oversees the management of these risks. The Group’s senior management makes sure that the Group’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Group’s policies and risk objectives. Financial risk management policies and procedures are reviewed regularly to reflect changes in market conditions and Group’s activities. The financial risk management is focused to minimize the negative effects of the financial risks on the Group’s income and cash flow. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarized below.

Group has identified following financials risks concerning its operations:

• Market risk• Interest risk• Foreign currency risk• Liquidity risk

3A.1 Market risk Market risk is the risk that the fair value or future cash flows of a financial instru-ment will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, deposits, AFS investments and derivative financial instruments. Main market risks of the Group is interest rate risk, other market risks referred above are immaterial to the Group.

3A.2 Interest rate riskInterest rate risk is the risk that the fair value or future cash flows of a finan-cial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long-term debt obligations with floating interest rates. Group has no financial instruments under interest rate hedge accounting.

3A.3 Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities (when revenue or expense is denominated in a foreign currency) and the Group’s net investments in foreign subsidiaries.

Majority of Group’s business is in euros. The currency risk in Nordic Countries is limited as mainly same currency applies to revenues and purchases. As the foreign exchange exposure has been limited, no hedging has been required.Group’s translation risk emerges from translating foreign currency subsidiary’s

profit and loss statement and balance sheet into the Group’s presentation currency upon Group consolidation. Part of Group’s net sales is generated by Swedish subsidiary, which operates in currency other than the Euro (SEK). Power business unit is also exposed to SEK/EUR currency risk, mainly regard-ing the SEK net exposures of the Power business area, which are regularly hedged with a time horizon of 6–12 months, but as the projects last for up to more than 3 years, fully solid hedging is not possible or financially feasible. The SEK hedging has commenced in the first quarter in 2019.

3A.4 Liquidity riskLiquidity risk is the risk that the Group will encounter financial difficulty in meeting its financial obligations. Liquidity risk management’s target is to ensure maintaining the sufficient liquidity reserve to meet its liabilities when they are due. Securing constant sufficient funding is centralized to the Group finance department. Adequate liquidity is maintained by efficient cash management through group level cash pools and related overdraft limits. Cash and cash equivalents consist of cash in hand and deposits.

The Group monitors closely the anticipated cash flows. The cash flow estimations are prepared on weekly level for the next 16 weeks. Main reservations are in the estimations related to the cash flows from the project business.

Group’s Swedish subsidiaries Empower Ab and Empower Industry AB have been placed to a bankruptcy on April 29th 2017. Empower Oyj, the Group’s parent company, has lodged parental company guarantees on behalf of the specific customer and supplier commitments of the Swedish subsidiaries, and these have been realized. According to the company’s view, a sufficient provision to cover the costs arising from the realization of these guarantees has been made in the 2018 financial statements. The cash effect of the realization of these guarantees has been taken into account in the Group’s financing plans and these have been discussed in detail with the Group’s financiers.

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The table below summarizes the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments:

1,000 €LESS THAN

1 YEAR1–3

YEARS3–5

YEARS> 5

YEARS TOTAL

Senior loans 59,472 0 — — 59,472

Loans from capital investors 3,835 0 — — 3,835

Overdraft 19,055 — — — 19,055

Other payables interest-bearing 1,327 420 — — 1,747

Hire and purchace debt 1,788 3,275 — — 5,063

Other payables 56,566 257 — — 56,824

Trade payables 26,347 18 — — 26,365

168,390 3,970 0 0 172,361

1,000 €LESS THAN

1 YEAR1–3

YEARS3–5

YEARS> 5

YEARS TOTAL

Senior loans 6,508 44,629 — — 51,137

Loans from capital investors — 3,750 — — 3,750

Overdraft 18,916 — — — 18,916

Hire and purchace debt 1,794 388 — — 2,182

Other payables 55,340 — — — 55,340

Trade payables 17,618 95 — — 17,713

100,177 48,862 0 0 149,038

3A.5. Capital managementThe Group manages its capital structure and makes rectifications in accord-ance with changes in the financial situation and the requirements of the financing covenants. In order to maintain or rectify the capital structure the Group may make changes to the payment of dividends to the shareholders, return the capital to the shareholders or issue new shares. The Group moni-tors the capital situation by using the net debt/EBITDA ratio. The net debt monitored by the Group includes loans with interest minus cash funds and deposits, excluding terminated operations.

In order to reach this general goal the Group’s capital management aims to ensure, amongst other things, that the covenants linked to loans with interest are met. A breach of the financial covenants would give the bank the option to immediately accelerate the loans.

There were no changes to capital management goals, policies and processes during the years ending in 31 December 2018 and 2017.

The company’s mezzanine financiers converted a total of EUR 28.25 million of their receivables into the company’s equity as Class B shares. This share capital increase was subscribed for in December 2017 and registered in April 2018. Along with the conversion, the Empower Group’s equity turned positive, which has a favorable impact on the company’s business operations and financing position. An agreement was concluded in March 2018 by which the previous loan period of the bank loans received by the company from the financing companies was extended until the end of July 2019, allowing the continuation of the company’s operations. At the end of 2018, the loans were accounted for as current liabilities, and their restructuring is due in July 2019. The company is not aware of any threatening legal action or ending customer agreement which could materially reduce EBITDA or cash flow.

The Group’s balance sheet structure is indebted and the Group is engaged in continuous discussions with its financiers in order to improve the situation. As result of these negotiations, 5M€ loan arrangement was agreed with senior lender in June 2019 in order to ensure going concern. The Group’s current senior loans become due during July and August 2019. The going concern is depended on the related financing negotiations and the Group expects these negotiations to be successful and as consequence resulting to extension of the financing with improved terms. On the other hand, the development of the profitability of the Group’s continuing operations is expected to improve, which will have a further positive impact on cash flow. The Group’s liquidity is therefore expected to develop positively and in accordance with the normal seasonal variation, particularly during the second half of the year. The company keeps its financiers regularly up to date by means of reports and negotiations and, according to the company’s understanding, the financiers are well aware of the status and outlook of the company’s business operations. The financiers have had a consistent stand on the company’s continuing covenant breaches.

1,000 € 2018 2017

EBITDA 8,905 16,360

Interest-bearing loans and borrowings (Note 6D) 90,900 77,569

Less: cash and short-term deposits (Note 6G) (3,066) (1,763)

Net debt 87,834 75,806

Net debt / EBITDA 9.9 4.6

Year ended 31 December 2017

Year ended 31 December 2018

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This section provides additional information which will help users understand how changes in the Group structure has impacted the financial position and performance of the Group as a whole and the significant events that have occurred during the year impacting the financial position and performance of the Group.

4A. Discontinued operations 2018The Group classifies non-current assets and disposal groups as held for distribu-tion to equity holders of the parent if their carrying amounts will be recovered principally through a distribution rather than through continuing use. Such non-current assets and disposal groups classified as held for distribution are measured at the lower of their carrying amount and fair value less costs to distribute. Costs to distribute are the incremental costs directly attributable to the distribution, excluding finance costs and income tax expense.

Following business operations are classified as discontinued business:

a) Discontinued Swedish operations

Empower Oyj group management has made the decision to discontinue Empower AB’s and Empower Industry AB’s operations. Discontinued opera-tions include all business operations that have been performed under these companies ie. major lines of business: tele operations and industry. In 27th of April 2017 both companies were set to bankruptcy. In 2018 few of the old projects started in Empower AB were transferred to Empower PN Filial and Empower IN Oy. This was due to parent company guarantees and to avoid the possible harm to current important customer relationships. Discontinued operation are not reported 2019 as they become insignificant.

1,000 € 2018 2017

Revenue - 128

Expenses - (142)

Operating income - (13)

Finance costs - (2)

Profit/(loss) for the year from discontinued operations - (15)

1,000 € 2018 2017

Operating - (309)

Investing - 259

Financing -

Net cash (outflow) / inflow - (51)

a.1) Empower Industry AB

SECTION 4: Significant transactions and events during and after the end of reporting period

Empower Industry AB was established in 2016.

The major classes of assets and liabilities of Empower Industry AB classified as held for distribution to equity holders of the parent as at 31 December do not exist.

1,000 € 2018 2017

Revenue - 3,478

Expenses - (6,694)

Operating income - (3,216)

Finance costs - (115)

Change in deferred tax asset

Profit/(loss) for the year from discontinued operations

- (3,331)

a.2) Empower AB (Sweden)

The net cash flows incurred by Empower Industry AB are, as follows: The net cash flows incurred by Empower AB are, as follows:

1,000 € 2018 2017

Operating - (1,574)

Investing - 200

Financing - 1,227

Net cash (outflow) / inflow - (147)

The major classes of assets and liabilities of Empower AB classified as held for distribution to equity holders of the parent as at 31 December do not exist.

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1,000 € 2018 2017

ASSETS

Debtors 929 2,848

LIABILITIES

Provisions (1,335) (2,031)

Creditors (2,417) (1,166)

Net assets directly associated with disposal group (2,823) (349)

Projects transferred from Empower AB will contribute a loss and for this reason there has been made a provision of 1,3 million euros in the financial statement.

The major classes of assets and liabilities of Empower PN Filial Sweden classified as held for distribution to equity holders of the parent as at 31 December are, as follows:

1,000 € 2018 2017

Revenue 2,758 6 155

Change in provisions 695 (2,031)

Expenses (6,256) (7,141)

Operating income (2,803) (3,017)

Profit/(loss) for the year from discontinued operations (2,803) (3,017)

a.3) PN Filial Sweden discontinued operations

1,000 € 2018 2017

Revenue 2 236 2 729

Change in provisions 858 (858)

Expenses (2,768) (3,461)

Operating income 326 (1,590)

Profit/(loss) for the year from discontinued operations 326 (1,590)

1,000 € 2018 2017

ASSETS

Debtors - -

LIABILITIES

Provisions - (858)

Creditors - (692)

Net assets directly associated with disposal group

- (1,550)

a.4) Empower IN Oy Swedish discontinued projects

Termination of the project transferred from Empower AB has been finalised in 2018.

The major classes of assets and liabilities of Empower IN discontinued projects classified as held for distribution to equity holders of the parent as at 31 December are, as follows:

The major classes of assets and liabilities of EPC-project classified as held for distribution to equity holders of the parent as at 31 December are, as follows:

1,000 € 2018 2017

Revenue 1,458 10,382

Change in provisions 1,500

Expenses (1,485) (10,986)

Operating income (26) 895

Profit/(loss) for the year from discontinued operations (26) 895

b) EPC-projects

Empower Oyj’s management and the president of Power Network Division are devoted in ending the business unit “Distribution Network Projects”.

The decision to sell this unit has been made in November 2016 and the whole business line has ended its operations during year 2018. Empower PN Oy has made a provision of 280k€ for Distribution Networks Projects for possible future guarantee works.

1,000 € 2018 2017

ASSETS

Debtors 21 2 128

Liabilities

Provisions - -

Creditors (286) (2,277)

Net assets directly associated with disposal group (265) (149)

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1,000 €

BRAND GOODWILL

2018 2017 2018 2017

Connectivity 3,182 3,182 13,472 13,472

Power 7,163 7,163 30,328 30,328

Smart Industry 3,157 3,157 13,366 13,366

Energy Intelligence 4,488 4,488 21,097 21,097

Total 17,990 17,990 78,263 78,263

4B. Goodwill and intangible assets with indefinite livesThe Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs of disposal and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

Goodwill and brand with indefinite live are monitored on operating division level. The values are presented on table below.

As a result of the test made, the recoverable amount of the business exceeds the book value of business including goodwill and brand in each CGUs. No impairment was booked during 2018 (0 meuro in 2017).

Key assumptions used in value in use calculations and sensitivity to changes in assumptions

The calculation of value in use most sensitive to the following assumptions:

• EBITDA- margins • Discount rates • Sales growth rates

EBITDA – margin

EBITDA margin is based on estimations of the market development, material costs, direct and indirect personnel costs and estimation of overhead devel-opment. EBITDA used has been prudent in each CGU. EBITDA in Tele has been evaluated lower to present run rate profitability level as in all other CGUs where the levels used in calculations are below last year level.

Discount rates

Discount rates represent the current market assessment of the risks specific to each CGU, taking into consideration the time value of money and individual risks of the underlying assets that have not been incorporated in the cash flow estimates. The used risk-free rate of returns are historical 10 year government bond rates derived from Bloomberg market database. The discount rate calcu-lation is based on the specific circumstances of the Group and its operating segments and is derived from its weighted average cost of capital (WACC). The WACC takes into account both debt and equity. The cost of equity and debt is e.g. based on the comparable company market information, long term risk-free market interest rates and on specific risk premiums to each CGU. On equity risk premium we have applied market risk premium for mature markets based on professor Damodarans database. Market risk premium has been adjusted upwards with government specific risk premium. The used credit risk premium is industry specific and it is also derived for Damodaran’s database. We have used the credit risk and equity risk premiums close to each acquisition date.

There is also a company specific premium in the rate of return on equity, it is based on investors demanding higher return on lower market value compa-nies. In this premium factor we have used as benchmark the Ibbotsen’s credit risk premiums derived from quoted markets. The cost of debt is based on the interest-bearing borrowings the Group is obliged to service. Division-specific risk is incorporated by applying individual beta factors. The beta factors and the capital structure are evaluated annually based onprofessor Damodaran’s industry specific parameters in Europe. Adjustments to the discount rate are made to factor in the specific amount and timing of the future tax flows in order to reflect a pre-tax discount rate. Discount rates in the assessment calculations varied between 10,2% and 10,88%. Corporation taxes are derived from KPMG’s public list on government tax rates.

Sales growth rates

Sales growth rate reflects historical development, expected market develop-ment considering announcements of capex investments of main customers sectors and expected change in mix. Growth rate for each technical services CGU (Tele, Power and Industry) has been calculated with an average growth of 5% and terminal value of 2%. Energy Intelligence have been calculated with an average of 10% yearly growth and 2% terminal value.

Sensitivity analyses

The value of all operating divisions subject to impairment testing is higher than the book value. A reasonably possible change in the level of revenue, level of profitability or discount rate would generate impairment in Tele and Power sectors. The sensitivity indicators used are an increase of 0,5%-unit in the discount rate, 0,5% lower than estimated terminal growth and 0,5%-units lower than estimated EBITDA.

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4C. Related party disclosures Note 4C provides information about the Group’s structure, including details of the subsidiaries and the holding company. The following table provides the total amount of transactions that have been entered into with related parties for the relevant financial year.

Group companies:

* Empower SIA has been consolidated to Group accounts until 30.11.2016.

NimiPRINCIPAL ACTIVITIES

COUNTRY OF INCORPORATION

% EQUITY INTEREST 2018

% EQUITY INTEREST 2017

Empower Oyj Group Services Finland 100 100

Empower IN Oy Smart Industry Finland 100 100

Empower PN Oy Power Finland 100 100

Empower TN Oy Connectivity Finland 100 100

Empower IM Oy Energy Intelligence Finland 100 100

Empower Invest Oy - Finland 100 100

Empower AB Connectivity Sweden 100 100

Empower Industry AB Smart Industry Sweden 100 100

Empower SIA* Power Latvia 49 49

Empower Fidelitas UAB Power Lithuania 75 75

Empower AS Power Estonia 100 100

Empower 4Wind OÜ Power Estonia 60 60

1,000 €PURCHASES FROM

RELATED PARTIES 2018PURCHASES FROM

RELATED PARTIES 2017

Associate: Empower SIA 1,011 624

1,000 € 2018 2017

Short-term employee benefits 2,236 1,845

Total compensation paid to key management personnel 2,236 1,845

1,000 € SAADUT KOROT LAINAN PÄÄOMA

Associate: Empower SIA2018 82 1,186

2017 2,301

Entity with significant influence over the Group:TPI Holding Oy owns 100% of the shares of Empower Oyj. There were no transactions paid between the Group and TPI Holding Oy for the financial year 2018.

The amounts disclosed in the table are the amounts recognised as an expense during the reporting period related to key management personnel.

4D Events after the reporting periodThe continuing businesses have performed according to expectations in 2019, both sales and EBITDA have developed close to budgeted overall.

Loan to an associateThe loan granted to SIA is intended to finance an acquisition of majority of Empower SIA shares. The loan unsecured and repayable in full on 1 Novemver 2022. Interest is charged at 4%.

Terms and conditions of transactions with related partiesThere were no transactions, loans or guaranteess between Group and the key management personel or the members of the board of diretors.

Entity with significant influence over the Group TPI Holding Oy owns 100% of parent company Empower Oyj’s shares.

Associated companies Empower SIA:sta became an associated company on 21.12.2016. Group’s share of SIA’s equity is 49%.

Loans from/to related parties:

Compensation of key management personnel of the Group

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1,000 € 1.1.-31.12.2018 1.1.-31.12.2017

Revenue / sales 217,479 219,147

Unbilled revenue 9,784 1,715

Percentage of completion method 25,345 24,597

Sales adjusting 45 -137

252,653 245,322

5A. Revenues

5A.1. Revenue

SECTION 5: Detailed information on statement of profit or loss and OCI items

5A.2. Revenue by geographical area, continued business

2018 2017

1,000 €

SMART INDUSTRY POWER CONNECTIVITY

ENERGY INTELLIGENCE

Geographical area

Finland 47,310 46,234 59,234 25,237

Sweden 23,964

Estonia 35,463

Latvia 13,173

Lithuania 2,038

47,310 120,872 59,234 25,237

Revenue recognition

Goods transferred at a point in time 47,310 95,357 59,234 23,492

Services transferred over time

25,514 1,745

47,310 120,872 59,234 25,237

1 000 €

SMART INDUSTRY POWER CONNECTIVITY

ENERGY INTELLIGENCE

Geographical area

Finland 67,201 52,808 45,751 24,802

Sweden 17,890

Estonia 20,785

Latvia 14,023

Lithuania 2,062

67,201 107,568 45,751 24,802

Revenue recognition

Goods transferred at a point in time 67,201 71,904 45,751 22,515

Services transferred over time

35,664 0 2,287

67,201 107,568 45,751 24,802

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5D. Depreciation, amortisation and impairment

5E. Employee benefits expenses

1,000 € 1.1.–31.12.2018 1.1.–31.12.2017

Amortisation, intangibles

Immaterial rights -1,242 -815

Other intangible assets -2,572 -2,662

-3,814 -3,476Impairment

Other intangible assets -16 -24

-16 -24

Depreciation, tangibles

Buildings and structures -65 -66

Depreciation for the period (-), Machinery and equipment -1,755 -1,901

Depreciation for the period (-), Other tangible assets -435 -244

-2,255 -2,211

Depreciation and amortisation, finance lease

Depreciation for the period (-), Machinery and equipment, fin.lease -394 -288

-394 -288

1,000 € 1.1.–31.12.2018 1.1.–31.12.2017

Salaries and fees -70,346 -71 025

Variable pension expenses, defined contribution plans -2,955 -2,694

Variable pension expenses, defined benefit plans -16 -59

Pension expenses, defined contribution plans -3,665 -3,274

Pension expenses, defined contribution plans IN&IM -5,156 -5,338

Other variable employee benefits -1,630 -2,619

Other fixed employee benefits, cash flow -1,525 -2,547

-86,706 -87,556

5F. Financing income and expenses

5G. Research and development expensesGroup investments in research and development were -8.7 million euros in 2018 corresponding 3.4 percent of Group turnover (2017: -7.9 million euros 3.2%).

1,000 € 1.1.–31.12.2018 1.1.–31.12.2017

Financing income

Income from investments 5 0

Long-term interest income from investments 26 9

Foreign exchange gain 3 2

Other financing income 0 1

34 13

Financing expenses

Interest expenses and other financing expenses -8,424 -8,866

Foreign exchange loss -22 -82

Other financing expenses from others -860 -455

Other financing expenses, Pohjola 0 55

Impairment on equity in Group companies 0 -97

Reconciliation entries relating to Internal items -6 1

-9 311 -9 444

1,000 € 1.1–31.12.2018 1.1–31.12.2017

Purchases during the period -46,859 -33,428

Increase / decrease in inventories -179 193

External services -84,263 -83,288

-131,301 -116,524

Audit

To auditor: audit -336 -240

-336 -240

5C. Materials and services

1,000 € 1.1–31.12.2018 1.1–31.12.2017

Other operating income

Rental income 54 102

Grants received 481 451

Gain on disposal of non-current assets 288 219

Other operating income 253 283

1,076 1,055

Other operating expenses

Loss on disposal of non-current assets -5 0

Other variable operating expenses -17,429 -16,478

Other fixed operating expenses -16,280 -14,459

-33,714 -30,937

5B. Other operating income and expenses

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1,000 €BUILDINGS AND

STRUCTURESMACHINERY AND

EQUIPMENT

OTHER TANGIBLE

ASSETS

ADVANCE PAYMENTS

AND WORK IN PROGRESS TOTAL

Cost 1.1.2017 1,692 16,446 883 38 19,059

Translation differences 0 -20 0 0 -20

Additions 0 1,974 476 126 2,576

Disposals 0 -2,412 -32 -62 -2,506

Reclassifications 0 0 0 -102 -102

Cost 31.12.2017 1,692 15,988 1,327 0 19,007

Cumulative amortisation and impairment 1.1.2017 -1,452 -9,710 -669 -11,832

Translation differences 0 16 0 16

Cumulative amortisation on change in ownership, proportional consolidation

0 59 0 59

Cumulative amortisation on disposals and reclassifications 0 2,029 31 2,061

Amortisation -66 -2,221 -250 -2,536

Cumulative amortisation and impairment 31.12.2017 -1,518 -9,826 -888 -12,231

Carrying amount 1.1.2017 240 6,735 214 38 7,227

Carrying amount 31.12.2017 174 6,162 440 0 6,776

1,000 €BUILDINGS AND

STRUCTURESMACHINERY

AND EQUIPMENT

OTHER TANGIBLE

ASSETS

ADVANCE PAYMENTS

AND WORK IN PROGRESS TOTAL

Cost 1.1.2018 1,692 15,988 1,327 0 19,007

Translation differences 0 -2 0 0 -2

Additions 0 5,450 609 65 6,123

Disposals 0 -535 -81 49 -567

Reclassifications 0 -170 173 0 3

Cost 31.12.2018 1,692 20,731 2,027 114 24,565

Cumulative amortisation and impairment 1.1.2018 -1,518 -9,826 -888 -12,231

Cumulative amortisation on disposals and reclassifications 0 554 -2 552

Amortisation -65 -2,149 -435 -2,648

Cumulative amortisation and impairment 31.12.2018 -1,583 -11,421 -1,324 -14,327

Carrying amount 1.1.2018 174 6,162 440 0 6,776

Carrying amount 31.12.2018 109 9,311 703 114 10,237

6A Tangible assets

SECTION 6: Detailed information on statement of financial position items

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6B. Intangible assests

1,000 €DEVELOPMENT

COSTSIMMATERIAL

RIGHTS

OTHER INTANGIBLE

ASSETS

ADVANCE PAYMENTS FOR

INTANGIBLE ASSETS GOODWILL TOTAL

Cost 1.1.2017 2,815 20,590 23,201 11,239 82,636 140,481

Translation differences -25 -4 0 0 -270 -299

Business combinations 0 -14 0 0 0 -14

Additions 0 7,314 652 4,690 0 12,656

Business disposals 0 -717 0 -3 0 -720

Disposals -2,790 -237 -36 -7,607 658 -10,013

Reclassifications 0 147 1 0 0 148

Cost 31.12.2017 0 27,079 23,819 8,319 83,024 142,240

Cumulative amortisation and impairment 1.1.2017 -2,726 -2,007 -6,436 -4,373 -15,724

Translation differences 25 6 0 270 300

Cumulative amortisation on business combinations -5 0 0 0 -5

Cumulative amortisation on business disposals 0 0 0 -658 -658

Cumulative amortisation on disposals and reclassifications 0 42 42 0 84

Amortisation 0 -843 -2,694 0 -3,538

Impairment 2,707 689 0 0 3,396

Cumulative amortisation and impairment 31.12.2017 0 -2,113 -9,089 -4 761 -15,963

Carrying amount 1.1.2017 89 18,402 16,765 11,239 78,263 124,758

Carrying amount 31.12.2017 0 24,966 14,730 8,319 78,263 126,277

1,000 €DEVELOPMENT

COSTSIMMATERIAL

RIGHTS

OTHER INTANGIBLE

ASSETS

ADVANCE PAYMENTS FOR

INTANGIBLE ASSETS GOODWILL TOTAL

Cost 1.1.2018 0 27,079 23,819 8,319 83,024 142,240

Translation differences 0 0 0 0 -358 -358

Additions 0 0 97 6,254 0 6,352

Disposals 0 -72 -53 -5 -650 -780

Reclassifications 0 2,236 777 -3,013 0 0

Cost 31.12.2018 0 29,243 24,640 11,554 82,016 147,454

Cumulative amortisation and impairment 1.1.2018 0 -2,113 -9,089 -4,761 -15,963

Translation differences 0 0 0 358 358

Cumulative amortisation on disposals and reclassifications

0 71 39 650 760

Amortisation 0 -1,242 -2,600 0 -3,842

Cumulative amortisation and impairment 31.12.2018 0 -3,285 -11,649 -3,753 -18,687

Carrying amount 1.1.2018 0 24,966 14,730 8,319 78,263 126,277

Carrying amount 31.12.2018 0 25,958 12,991 11,554 78,263 128,767

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6C.1 Financial assets 6C.2 Financial liabilities: Interest-bearing loans and borrowings

1,000 € 2018 2017

Financial assets at fair value through profit or loss

Quoted equity shares 3 1

Total financial instruments at fair value 3 1

Financial assets at amortised cost:

Trade receivables and other receivables 24,981 22,157

Non current loan receivables 800 2 701

Other non current receivables 233 174

Total financial assets 26,014 25,032

Total current 24,981 22,157

Total non-current 1,036 2,877

1,000 € INTEREST RATE MATURITY 2018 2017

Non-current interest-bearing loans and borrowings

Obligations under finance leases and hire purchase contracts (Note 7A) 3,44–7,34% 2018–2022 (4,162) (1,333)

Long-term bank loan EURIBOR 1M/6M + 3% July 2019 (0) (44,629)

Long-term loan from State Treasury Basic rate -3%, min. 1% (420) -

Long-term Mezzanine financing EURIBOR 1M/6M + 5,5% December 2019 - (3,750)

Long-term other financing EURIBOR 12M + 3,5% June 2020 (257) -

Long-term trade payables (18) (95)

Total non-current interest-bearing loans and borrowings (4,857) (49,807)

Non-current non-interest-bearing loans and borrowings

Rental deposit - (2,090)

Total non-current non-interest-bearing loans and borrowings - (2,090)

Current interest-bearing loans and borrowings

Rental deposit (727) -

Obligations under finance leases and hire purchase contracts (Note 7A) 3,44–7,34% 2019–2022 (2,354) (2,287)

Bank overdrafts EURIBOR 1M/6M + 3% January 2018 (year 2017) / July 2019 (year 2018) (19,055) (18,916)

Short-term bank loan EURIBOR 1M/6M + 3% 2019–2022 (59,472) (6,508)

Short-term Mezzanine financing EURIBOR 1M/6M + 5,5% December 2019 (3,835) -

Short-term liabilities to others EURIBOR 12M + 3,5% December 2019 (601) (51)

Total current interest-bearing loans and borrowings (86,043) (27,762)

Total interest-bearing loans and borrowings (90,900) (77,569)

Total non-current non-interest-bearing loans and borrowings - (2,090)

6C. Financial assets and financial liabilities

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Fair value assesment

When measuring the financial assets and liabilities, the Group uses market observable data as far as possible. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

• LEVEL 1: quoted prices in active markets for identical assets or liabilities

• LEVEL 2: inputs other than quoted prices included in Level 1 that are observable for the the asset or liability either directly or indirectly

• LEVEL 3: inputs for the asset or liability that are not based on observable market data

For assets and liabilities that are recognised in the financial statements at fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

The management assessed that cash and short-term deposits, trade receiva-bles, trade payables, bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

The fair values of the Group’s interest-bearing borrowings and loans are determined by using the DCF method using discount rate that reflects the issuer’s borrowing rate as at the end of the reporting period. The own non-performance risk as at 31 December 2018 was assessed to be insignif-icant. The difference between carrying amount and fair value is considered to be insignificant because the borrowings and loans are floating rate based and there has been no significant change in the risk premium of the Group.

6C.4 Fair values Set out below is a comparison, by class, of the carrying amounts and fair values of the Group’s financial instruments, other than those with carrying amounts that are reasonable approximations of fair values:

1,000 €

CARRYING AMOUNT/

FAIR VALUE 2018

CARRYING AMOUNT/

FAIR VALUE 2017

FAIR VALUE

HIERARCHY

Financial assets

Loans SIA 1,186 2,301 3

Trade receivables and other receivables 1,033 575

Cash and cash equivalents 3,066 1,763

Total 5,285 4,639

Financial liabilities

Interest-bearing loans and borrowings (84,385) (73,949)

Obligations under finance leases and hire purchase contracts

(6,516) (3,620)

Derivatives not designated as hedges (IRS) - - 2

Trade payables and other payables (82,913) (72,958)

Total (173,814) (150,528)

6C.3. Other financial liabilities

1,000 € 2018 2017

Other financial liabilities at amortised cost, other than interest-bearing loans and borrowings

Trade Payables and Other Liabilities (82,913) (72,958)Total other financial liabilities (82,913) (72,958)Total current (82,913) (72,958)

6D Inventories

During 2018, € 1 176k (2017: € 575k) was recognised as an expense for invento-ries carried at net realisable value. This is recognised in cost of sales.

1,000 € 2018 2017Raw materials and consumables 1,609 1,654

Work in progress 5,121 3,936

Advance payments for inventory 8 2 Inventories 6,739 5,592

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6F. Cash and cash equivalents1,000 € 2018 2017

Cash and bank 3,066 1,763

3,066 1,763

6G. Provisions

1,000 €LEGAL

PROVISONSWARRANTY

PROVISIONSUNPROFITABLE

CONTRACTSPROVISIONS RELATED

TO EMPLOYEES TOTAL

1.1.2018 322 1,505 2,888 506 5,222

Arising during the year 122 160 2,808 143 3,233

Utilised -339 -3,358 -11 -3,708

Remeasurement -223 -223

31.12.2018 444 1,326 2,339 415 4,525

Long-term 444 1,326 2,339 415 4,525

1.1.2017 322 1,840 3,152 1,164 6,479

Arising during the year 0 0 2,888 153 3,041

Utilised 0 -335 -3,152 -647 -4,134

Remeasurement 0 0 0 -165 -165

31.12.2017 322 1,505 2,888 506 5,222

Long-term 322 1,505 2,888 506 5,222

6E. Trade and other receivables

Trade receivables are non-interest bearing and are generally on terms of 30 days. Group has not recognised any material credit losses on trade receivables since it sells on average 95% of its trade receivables to financing companies and the credit risk according to IFRS 9 is transferred to financing company.

1,000 € 2018 2017

Trade receivables 11,316 10,393

Loan receivables 386 (0)

Other receivables 1,059 2,564 Current prepayments and accrued income (from others) 10,465 9,200

Tax Receivable, income tax 20 10

23,247 22,166

NEITHER PAST DUE NOR IMPAIRED

PAST DUE BUT NOT IMPAIRED

1,000 € TOTAL < 30 DAYS 30-60 DAYS 61-90 DAYS 91-120 DAYS > 120 DAYS

2018 11,316 6,566 2,755 976 -190 1 041 168

2017 10,393 5,910 3,109 884 126 112 252

As at 31 December, the ageing analysis of trade receivables is, as follows:

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1,000 €

PENSION COST CHARGED TO PROFIT OR LOSS REMEASUREMENT GAINS/(LOSSES) IN OCI

1.1.2018SERVICE

COSTNET INTEREST

EXPENSE

SUB-TOTAL INCLUDED IN

PROFIT OR LOSSBENEFITS

PAID

RETURN ON PLAN ASSETS (EXCLUDING AMOUNTS INCLUDED

IN NET INTEREST EXPENSE), GAIN (-),

LOSS (+)

ACTUARIAL CHANGES ARISING

FROM CHANGES IN DEMOGRAPHIC

ASSUMPTIONS, GAIN (-), LOSS (+)

ACTUARIAL CHANGES ARISING

FROM CHANGES IN FINANCIAL

ASSUMPTIONS, GAIN (-), LOSS (+)

SUB-TOTAL INCLUDED IN OCI

CONTRIBUTIONS BY EMPLOYER 31.12.2018

Defined benefit 1,819 20 27 47 (50) - - (252) (252) - 1,564

Fair value of plan assets 1,249 - 19 19 (50) 90 - - 90 12 1 140

Defined benefit obligation (570) 20 (8) (28) (100) 90 - (252) (162) 12 (424)

1,000 €

PENSION COST CHARGED TO PROFIT OR LOSS REMEASUREMENT GAINS/(LOSSES) IN OCI

1.1.2017SERVICE

COSTNET INTEREST

EXPENSE

SUB-TOTAL INCLUDED IN

PROFIT OR LOSSBENEFITS

PAID

RETURN ON PLAN ASSETS (EXCLUDING AMOUNTS INCLUDED

IN NET INTEREST EXPENSE), GAIN (-),

LOSS (+)

ACTUARIAL CHANGES ARISING

FROM CHANGES IN DEMOGRAPHIC

ASSUMPTIONS, GAIN (-), LOSS (+)

ACTUARIAL CHANGES ARISING

FROM CHANGES IN FINANCIAL

ASSUMPTIONS, GAIN (-), LOSS (+)

SUB-TOTAL INCLUDED IN OCI

CONTRIBUTIONS BY EMPLOYER 31.12.2017

Eläkevastuu 2,039 39 26 65 (46) - - (239) (239) - 1,819

Järjestelyyn kuuluvien varojen käypä arvo 1,260 - 17 17 (46) (29) - - (29) (11) 1,249

Eläkevastuu (779) 39 (9) (48) (92) (29) - (239) (268) (11) (570)

Defined benefit planChanges in 2018 defined benefit obligation and fair value of plan assets

2017 changes in the defined benefit obligation and fair value of plan assets

6H. Defined benefit plan

1,000 € 2018 2017

Liabilities from defined benefit plan (424) (570)

(424) (570)

6H. 1 Defined benefit plan 6H. 2 Changes in defined benefit obligations

1,000 € 2018 2017

Net benefit expense (recognised in profit or loss)

Current service cost (20) (39)

Interest cost on benefit obligation (8) (9)

Total (28) (48)

1 000 € 2018 2017

Changes in the present value of the defined benefit obligation:

Defined benefit obligation at 1 January 2018 (570)

Interest cost (8)

Current service cost (20)

Benefits paid 12

Acturial changes 162

Defined benefit obligation at 31 December 2018 (424)

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6H.3 Key assuptions and sensitivity analyses 6I. Trade Payables and Other Liabilities

6H.4 Future expected contributions to the defined benefit plans

6J.1 Income tax

6J. Income tax

The principal assumptions used in determining pension benefit obligations:

The following payments are expected contributions to the defined benefit plan in future years:

The average duration of the defined benefit plan obligation at the end of the reporting period is 17 years.

The major components of income tax expense for the years ended 31 December 2018 and 2017 are:

Sensitivity analyses 31.12.2018 and 31.12.2017

2018 2017Discount rate 1,8% 1,5%

Inflation 1,7% 1,8%

Life expectation for pensioners at the age of 65: YEARS YEARS

Male 21.4 21.4

Female 25.4 25.4

1,000 € 2018 2017Trade Payables and Other Liabilities

Current trade payables, interest-free (26,347) (17,618)

Current VAT payables, interest-free (14,507) (7,561)

Current liabilities to others, interest-free (959) (4,072)

Dividend liabilities, interest-free 60

Current interest liabilities, interest-free (4,695) (2,025)

Other current accrued liabilities on income, interest-free (16) (66)

Other current accrued liabilities on expenses, interest-free (1,443) (890)

Accrued liabilities (8,246) (13,577)

Accrued project expenses (10,301) (8,010)

Accrued employee expenses, interest-free (16,460) (19,139)

Trade Payables and Other Liabilities (82,913) (72,958)

1,000 € 2018 2017

Consolidated statement of profit or lossCurrent income tax:

Current income tax charge 0 (280)

Tax for previous accounting periods (35) (191)

Deferred tax:

Change in deferred tax asset (242) (252)

Change in deferred tax liability 296 298

Income tax expense reported in the statement of profit or loss 19 (425)

Consolidated statement of OCI

Deferred tax related to items recognised in OCI during in the year:

Net loss/(gain) on actuarial gains and losses (28) (42)

Deferred tax charged to OCI (28) (42)

ASSUMPTIONS FOR DEFINED BENEFIT PLAN: 2018 2017Future pension cost increase:

0.5% increase 1,680 1,961

0.5% decrease 1,459 1,692

Discount rate:

0.5% increase 1,442 1,667

0.5% decrease 1,702 1,993

1,000 € 2018 2017Within the next 12 months (next annual reporting period) 52 50

Between 2 and 5 years 249 233

Between 5 and 10 years 285 322

Beyond 10 years 1,575 1,818

Total expected payments 2,161 2,423

Impact of defined benefit obligation

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6J.2 Deferred tax

1,000 € 201831.12.2017 (4,619)

Tax income/(expense) during the period recognised in profit or loss 19

Discontinued operation (28)

Deferred taxes related to discontinued businesses 89

31.12.2018 (4,540)

1,000 €

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

2018 2017 2018 2017Acquision of subsidiaries (5,489) (5,784) 296 298

Provisions 905 1 051 (242) (252)

Defined benefit plan 29 114

Other 15

Recognised in the income statement 54 46

Deferred tax liabilities, net (4,540) (4,619)

Deferred tax relates to the following:

Reconciliation of deferred tax liabilities, net

6J.3 Reconciliation of effective tax rate

31.12.2018 31.12.2017Profit/loss before tax -6,851,971.83 929,872.31

Tax at the domestic rate 1,370,394.37 -185,974.46

TAX EFFECT OF THE FOLLOWING ITEMS:

Share of profit of associated companies 131,421.51 0.00

Income on investments (dividends) 33.59 23.71

Other tax-free income included in the accounting profit 48,753.36 -1,404.53

Taxable income not included in the accounting profit (+) -28,649.04 -16,691.75

Depreciation and amortisation -16,198.83 -190,751.57

Representational expenses -8,619.43 -11,366.24

Interest expenses -165,263.88 -387,155.81

Direct taxes 0.00 0.00

Fines and other penalty payments -22,549.76 -215,407.54

Other non-deductible expenses included in the accounting profit 534,301.46 3 175,704.82

Deductible expenses not included in the accounting profit 113,494.90 0.00

Application of loss from previous periods, for which deferred tax asset not recognised 0.00 78,022.29

Loss for the period, for which no deferred tax asset is recognized -2,242,201.10 -2,251,723.77

Effect of different tax rates 338,902.65 -228,040.71

Tax for previous accounting periods -35,200.76 -190,715.22

Tax expense according to the specification above 18,619.03 -425,480.78

The Group has not booked deferred tax receivable for confirmed accounting losses. The presentation of the reconciliation of effective tax rate has been changed that way that profit/loss before tax is included only the profit/loss before tax from continuing operations. The comparative figure have also been changed.

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7A. Leases

7A.1 Operating lease commitment – Group as a lessee

7A.2 Finance lease and hire purchase commitments

Future minimum premises rental payable under non-cancellable operating leases as at 31 December 2017 and 31 December 2018 are as follows;

Operating lease commitments related to vehiclesGroup’s future minimum vehicle rental payable under non-cancellable operating leases as at 31 December are:

The Group has entered into operating leases on rental agreements, with fixed lease terms.

The Group has finance leases and hire purchase contracts for various items of plant and machinery. The Group’s obligations under finance leases are secured by the lessor’s title to the leased assets. Future minimum lease payments under finance leases and hire purchase contracts, together with the present value of the net minimum lease payments are, as follows:

1,000 € 2018 2017

Within one year 231 252

After one year but not more than five years 222 354

More than five years 23 27

476 633

1,000 €

2018 2017

MINIMUM PAYMENTS

PRESENT VALUE OF PAYMENTS

MINIMUM PAYMENTS

PRESENT VALUE OF PAYMENTS

Within one year 2,378 1,688 2,187 2,144

After one year but not more than five years 4,534 4,219 929 883

More than five years - - - -

Total minimum lease payments 6,912 5,907 3,116 3,027

Less amounts representing finance charges (1,005) - (89) -

Present value of minimum lease payments 5,907 5,907 3,027 3,027

1,000 € 2018 2017

Leasing commitments

Falling due within a year 668 1 736

Falling due within 1–5 years 914 1 369

Total 1,582 3,105

SECTION 7: Commitments and contingencies

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1 000 € 2018 2017

COMMITMENTS AND CONTINGENT LIABILITITES

Liabilities secured by pledged mortages and shares

Loans from financial institutions 78,527 70,053

Pledged real estate mortgages 7,200 7,200

Pledged mortgages on company assets 698,800 698,800

Liabilities secured by pledged mortages and shares total 706,000 706,000

The trademark of Empower Ltd has been pledged for loans from financial institutions.

COMMITMENTS ON BEHALF OF GROUP COMPANIES

Guarantees 6,978 5,788

Total 6,978 5,788

OTHER COMMITMENTS

Group has given bank guarantees related to maintanence and warranty guarantees.

Bank guarantees 13,680 13,324

Total 13,680 13,324

LONG-TERM RENTAL COMMITMENTS

Empower Group has fixed term tenancies from its business premises which are falling due at the latest on 16th June 2022.

Rental liabilities due on incoming fiscal year based on indexed rent ( incl. VAT) 231 252

Rental liabilities due on subsequent to incoming fiscal years based on indexed rent (incl. VAT) 245 381

Total 476 633

Empower Group has non-fixed term tenancies from its business premises which have termination period of 1–6 months 557 749

Total 557 749

Other own commitments total 14,713 14,706

7C. Contingent liabilities 7B. Guarantees

The Group recognised a contingent liability of 200 000€ in relation to Empower Oyj at 31.12.2017. At year-end 2018 this contingent liability does not exits anymore.

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Financial Statements of the Parent Company

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1 € NOTE 1.1.–31.12.2018 1.1.–31.12.2017

REVENUE 1 67,180,420.18 -12,488.88

Change in inventories of finished goods and work in progress 22,849.19 0.00

Work performed for own purposes and capitalised 336,593.64 117,795.77

Other internal operating income 2 17,248,744.52 16,986,172.33

Other operating income 2 237,038.03 206,874.25

Material and services

Raw materials and consumables

Purchases during the period 3 -19,922,859.59 -479.17

External services -41,257,864.25 -61,180,723.84 -24,198.69 -24,677.86

Employee benefits expense

Salaries and fees 4 -3,475,198.03 -4,463,754.37

Social security expenses

Pension expenses 4 -771,560.29 -665,149.78

Other employee benefit 4 -92,839.88 -4,339,598.20 -301,945.28 -5,430,849.43

Depreciation and amortisation 5 -1 666,233.21 -1,678,421.81

Impairment -13,087.16 -1,679,320.37 0.00 -1,678,421.81

Other operating expenses 6 -18,725,391.80 -12,640,939.75

OPERATING PROFIT (LOSS) -899,388,65 -2,476,534.98

Finance income and expense 7 -5,040,400.87 -9,164,273.86

Appropriations 9

Change in cumulative accelerated depreciation -784,771.76 43,125.40

Group contribution 0.00 -784,771.76 3,726,371.00 3,769,496.40

Income taxes 8

Taxes for current and prior periods 65,731.15 65,731.15 0.00 0.00

Equity holders of the parent company -6,658,830.13 -7,871,312.44

Income Statement

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1 € NOTE 31.12.2018 31.12.2017

ASSETS

NON-CURRENT ASSETS

Intangible assets 10

Immaterial rights 134.86 180.34

Other intangible assets 1,408,344.72 2,226,532.05

Advance payments for intangible assets 1,463,447.50 2,871,927.08 758,013.94 2,984,726.33

Tangible assets 11

Machinery and equipment 5,675,881.53 2,536,398.97

Other tangible assets 53,893.45 16,446.10

Advance payments and work in progress 106,114.47 5,835,889.45 0.00 2,552,845.07

INVESTMENTS

Investments in Group companies 12 121,479,383.84 121,479,383.84 121,479,383.84 121,479,383.84

CURRENT ASSETS

Loan receivables, external 13 799,717.98 799,717.98 2,301,102.29 2,301,102.29

Trade receivables, external 14 163,339.89 617.96

Loan receivables 14 386,443.09 -0.31

Receivables from Group companies 15 100,235,788.18 24,977,793.41

Other receivables, external 14 135,709.88 901,289.93

Accruals, external 14 388,222.67 101,309,503.71 423,012.38 26,302,713.37

Cash and bank 9,002.71 9,208.92

ASSETS 232,305,424.77 155,629,980.12

1 € NOTE 31.12.2018 31.12.2017

Share capital 80,000.00 29,091,721.46

Unrestricted equity reserve 91,462,196.83 62,450,475.37

Retained earnings -44,866,035.25 -37,078,181.55

Changes in accounting principles, IAS 8 133,540.69 83,458.74

Profit/loss for the period -6,658,830.13 -7,871,312.84

TOTAL EQUITY 16 40,150,872.14 46,676,161.18

APPROPRIATIONS 17 1,133,169.45 348,397.69

LIABILITIES

Non-current liabilities

Other statutory provisions 18 122,410.91 1,255,580.36 200,000.00 548,397.69

Loans from financial institutions 19 3,474,746.39 30,896,354.96

Other liabilities, external 19 0.01 3,750,000.01

Non-current liabilities to Group companies 19 13,465,050.00 16,939,796.40 14,320,475.64 77,607,781.89

Current liabilities 20

Loans from financial institutions, external 54,534,325.51 20,715,338.40

Trade payables, external 16,550,936.97 1,875,214.34

Liabilities to Group companies 81,201,350.06 28,193,538.12

Other liabilities, external 16,688,023.43 5,058,813.24

Accruals and deferred income, external 4,984,539.90 173,959,175.87 3,595,686.17 59,438,590.27

EQUITY AND LIABILITIES 232,305,424.77 155,629,980.12

Balance SheetAssets Equity and liabilities

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Accounting principles

The financial statements for Empower Plc, the parent company of the Group, have been prepared in accordance with the Finnish Accounting Act (FAS).

Fixed assets

Fixed assets are recognized on the balance sheet at their original acquisition cost less depreciation according to plan.

Depreciation according to plan has been calculated as straight-line depreciation according to the estimated financial service life of assets. Depreciation has been made starting from the activation month of each asset. Service lives are:

Intellectual property rights 5–10 yearsDevelopment expenses 3–5 yearsGoodwill 10 yearsOther long-term expenses 5–10 yearsMachinery and equipment 3–15 yearsOther tangible assets 3–5 years

The financial service life of more than five years for goodwill can be consid-ered to be in line with good accounting practices, due to the related long-term profit expectations.

Inventories

In inventories, materials and supplies are measured in line with the weighted average-cost principle at acquisition cost or at sales value, if lower.

Unfinished work in inventories is measured under variable costs.

Turnover

Sales of products and services have been recognised as income in connection with their transfer, apart from long-term projects that are recognised on the basis of their completion rate. In 2018 majority of procurement was done by parent company.

Research and development

Research costs are recognised as expenses over the financial period. Development costs are activated when it is probable that a development project will produce corresponding financial benefit and the costs can be measured reliably. Development costs activated following particular caution are eliminated during their financial life, and at most in five years.

Pension arrangements

Pension cover has been organised with a Finnish pension insurance company.

Direct taxes

Taxes include estimated taxes corresponding with the company’s profit for the period and adjustments to taxes from previous periods.

Cash and cash equivalents

The Finnish Group companies are using a bank account with a credit facility. This Group account is in Empower Plc’s name and is used for the companies’ payment transactions. The subsidiaries recognise their deposits into the Group account as current receivables from the parent company. Correspondingly, the parent company recognises a liability to the subsidiary. A subsidiary’s Group account balance may also be negative, in which case the related assets and liabilities are reversed. In addition, when the balance is positive, the parent company recognises the total balance of the Group account in cash and

cash equivalents. When the balance is negative, it is recognised in current interest-bearing liabilities.

Continuity of operations

Empower Oyj’s mezzanine financiers converted a total of EUR 28.25 million of their receivables into the company’s equity as Class B shares. This share capital increase was subscribed for in December 2017 and registered in April 2018. Along with the conversion, the Empower Group’s equity turned positive in first half of 2018, but returned negative by 31.12.2018. An agreement was concluded in March 2018 by which the previous loan period of the bank loans received by the company from the financing companies was extended until the end of July 2019. At the end of 2018, the loans were accounted for as current liabilities, and their restructuring is due in July 2019. The company is not aware of any threatening legal action or ending customer agreements which could materially reduce EBITDA or cash flow.

The Group’s balance sheet structure is indebted and the Group is engaged in continuous discussions with its financiers in order to improve the situation. As result of these negotiations, 5M€ loan arrangement was agreed with senior lender in June 2019 in order to ensure going concern. The Group’s current senior loans become due during July and August 2019. The going concern is depended on the related financing negotiations and the Group expects these negotiations to be successful and as consequence resulting to extension of the financing with improved terms. On the other hand, the development of the profitability of the Group’s continuing operations is expected to improve, which will have a further positive impact on cash flow. The Group’s liquidity is therefore expected to develop positively and in accordance with the normal seasonal variation, particularly during the second half of the year. The company keeps its financiers regularly up to date by means of reports and negotiations and, according to the company’s understanding, the financiers are well aware of the status and outlook of the company’s business operations. The financiers have had a consistent stand on the company’s continuing covenant breaches.

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1.1.–31.12.2018 1.1.–31.12.2017

Revenue breakdown

Internal revenue 67,180 -12

Total 67,180 -12

Revenue by countries

Domestic 67,180 -12

Total 67,180 -12

1.1.–31.12.2018 1.1.–31.12.2017

Intangible assets

Amortisation, intangibles (excl. goodwill and lease) -828 -875

Total -828 -875

Tangible assets

Depreciation, tangibles (excl. lease) -669 -713

Depreciation and amortisation, lease (intangibles and tangibles) -170 -90

Total -839 -803

Depreciation and amortisation according to plan -1,666 -1,678

Impairment

Impairment, intangibles (excl. goodwill and lease) -13 0

1.1.–31.12.2018 1.1.–31.12.2017

Purchases during the period -19,923 0

External services -41,258 -24

Total -61,181 -25

1. Revenue

2. Other operating income

3. Material and services

4. Employee benefits expenses

5. Depreciation and amortisation

1.1.–31.12.2018 1.1.–31.12.2017

Rental income 54 102

Other operating income 180 105

Gain on disposal of non-current assets, tangibles 3 0

Other operating income, Group companies 17,249 16,986

Other operating income 17,486 17,193

1.1.–31.12.2018 1.1.–31.12.2017

Salaries and fees -3,475 -4,464

Pension expenses -772 -665

Other employee benefit -93 -302

Total -4,340 -5,431

Average number of personnel

White collar 55 54

Blue collar 1

Total

Management salaries and remunerationWages and salaries for management are not specified separately for each position.(Accounting Act 2:8§ This kind of information is not required if it concerns only one person.)

Notes to income statement (1,000 €)

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1.1.–31.12.2018 1.1.–31.12.2017

Travel expenses -1,105 -182

Leasing expenses -1,244 -1,739

Rental expenses -3,646 -2,478

External services -3,964 -3,165

Other operating expenses -8,765 -5,078

Total -18,725 -12,641

Auditor's fee

To auditor: audit -307 -105

1.1.–31.12.2018 1.1.–31.12.2017

Finance income

Income from investments 75 210

Long-term interest income from others 77 3

Other internal finance income 141 0

Other finance income from others 61 0

Total 354 213

Finance expense

Impairment on securities held as current assets 0 -146

Interest on borrowings from Group entities -47 -76

Financing expenses to others -5,076 -7,782

Other financing expenses -270 -1,372

Total -5,393 -9,377

Financing income and -expenses total -5,039 -9,164

6. Other operating expenses 8. Income tax

9. Appropriations

7. Financing income and -expenses

1.1.–31.12.2018 1.1.–31.12.2017

Tax for previous accounting periods 66 0

Total 66 0

1.1.–31.12.2018 1.1.–31.12.2017

Change in cumulative accelerated depreciation -785 43

Group contribution 0 3,726

Total -785 3,769

Notes to income statement (1,000 €)

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Notes to income statement (1,000 €)

IMMATERIAL RIGHTS

OTHER INTANGIBLE

ASSETS

ADVANCE PAYMENTS FOR

INTANGIBLE ASSETS TOTAL

Cost 1.1.2018 0.47 3,821 758 4 580

Additions 0.00 13 740 753

Disposals 0.00 -36 0 -36

Reclassifications 0.00 34 -34 0

Cost 31.12.2018 0.47 3,833 1,463 5,297

Cumulative amortisation and impairment 1.1.2018 -0.29 -1,595 -1,595

Cumulative amortisation on disposals and reclassifications 0.00 22 22

Amortisation -0.05 -853 -853

Cumulative amortisation and impairment 31.12.2018 -0.34 -2,425 -2,425

Carrying amount 1.1.2018 0.18 2,227 758 2,985

Carrying amount 31.12.2018 0.13 1,408 1,463 2,872

IMMATERIAL RIGHTS

OTHER INTANGIBLE

ASSETS

ADVANCE PAYMENTS FOR

INTANGIBLE ASSETS TOTAL

Cost 1.1.2017 0.47 3,526 502 4,029

Additions 0.00 295 481 776

Disposals 0.00 0 -225 -225

Cost 31.12.2017 0.47 3,821 758 4,580

Cumulative amortisation and impairment 1.1.2017 -0.25 -694 -695

Cumulative amortisation on disposals and reclassifications 0.00 0 0

Amortisation -0.05 -900 -900

Cumulative amortisation and impairment 31.12.2017 -0.29 -1,595 -1,595

Carrying amount 1.1.2017 0.23 2,831 502 3,334

Carrying amount 31.12.2017 0.18 2,227 758 2,985

10. Notes to income statement

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MACHINERY AND EQUIPMENT

OTHER TANGIBLE

ASSETS

ADVANCE PAYMENTS AND

WORK IN PROGRESS TOTAL

Cost 1.1.2018 3,743 25 0 3,769

Additions 3,936 60 106 4,102

Disposals -11 0 0 -11

Cost 31.12.2018 7,668 86 106 7,859

Cumulative amortisation and impairment 1.1.2018 -1,207 -9 -1,216

Amortisation -791 -23 -813

Cumulative amortisation and impairment 31.12.2018 -1,992 -32 -2,023

Carrying amount 1.1.2018 2,536 16 0 2,553

Carrying amount 31.12.2018 5,676 54 106 5,836

MACHINERY AND EQUIPMENT

OTHER TANGIBLE

ASSETS

ADVANCE PAYMENTS AND

WORK IN PROGRESS TOTAL

Cost 1.1.2017 3,057 5 0 3,062

Additions 686 21 62 768

Disposals -11 0 -62 -73

Cost 31.12.2017 3,743 25 0 3,769

Cumulative amortisation and impairment 1.1.2017 -436 -2 -438

Amortisation -771 -7 -778

Cumulative amortisation and impairment 31.12.2017 -1,207 -9 -1,216

Carrying amount 1.1.2017 2,621 3 0 2,624

Carrying amount 31.12.2017 2,536 16 0 2,553

11. Tangible assets

Notes to income statement (1,000 €)

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12. Investments

INVESTMENTS IN GROUP COMPANIES TOTAL

Cost 1.1.2018 121,479 121,479

Cost 31.12.2018 121,479 121,479

Carrying amount 31.12.2018 121,479 121,479

Carrying amount 31.12.2017 121,479 121,479

31.12.2018 31.12.2017

Non-current loan receivables 800 2,301

INVESTMENTS IN GROUP COMPANIES TOTAL

Cost 1.1.2017 121,479 121,479

Cost 31.12.2017 121,479 121,479

Carrying amount 31.12.2017 121,479 121,479

31.12.2018 31.12.2017

Trade receivables 163 1

Loan receivables 386 0

Other receivables 136 901

Current prepayments and accrued income (from others) 388 423

Current receivables from others 1,074 1,325

13. Non-current receivables

14. Current receivables

15. Current receivables, Group companies

31.12.2018 31.12.2017

Internal trade receivables 98,177 19,806

Other internal accruals 494 1,003

Internal loan receivables 1,223 0

Group contribution receivables 0 3,726

Internal account receivables 342 442

Current internal receivables 100,236 24,978

Essential items of prepayments and accrued income

Accruals of personnel expenses, current receivables 0 1

Interest receivables (from others) 0 4

Other prepayments and accrued income on sales (from others) 0 1

Other prepayments and accrued income on expenses (from others) 222 369

Prepayments 5 0

Prepaid expenses and accrued income 161 48

Current prepayments and accrued income (from others) 388 423

Notes to income statement (1,000 €)

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31.12.2018 31.12.2017

Share capital 1.1. 29,092 80

Rights issue 0 29,012

Reclassifications between classes (share capital) -29,012 0

Share capital 31.12. 80 29,092

Unrestricted equity reserve 1.1. 62,450 62,450

Unrestricted equity reserve 31.12. 91,462 62,450

Retained earnings

Earnings (other than defined benefit plan) 1.1. -44,866 -37,078

Edellisen tilikauden virheen oikaisu 134** 83*

Earnings (other than defined benefit plan) 31.12. -44,732 36,995

Retained earnings 31.12. -44,732 -36,995

Profit/loss for the period -6,659 -7,871

31.12.2018 31.12.2017

Cumulative accelerated depreciation 1 133 348

(* The correction is related to wrongly booked interest expense in trade payables – 83,458.74 € in 2016.

(** The correction is related to wrongly booked interest expense – 133,540.69 € in 2017.

31.12.2018 31.12.2017

Restricted equity 80 29,092

Non-restricted equity 40,071 17,584

Distributable to equity holders 31.12.2018

Retained earnings -44,732 -36,995

Profit/loss for the period -6,659 -7,871

Unrestricted equity reserve 91,462 62,450

-capitalized development expenses 0 -1,464

Total 40,071 16,121

16. Equity 17. Appropriations

18. Provisions

19. Non-current liabilities

31.12.2018 31.12.2017

Other provisions 122 200

Non-current provisions 122 200

31.12.2018 31.12.2017

Interest-bearing

Non-current loans from financial institutions, interest-bearing 0 30,451

Non-current loan from state treasury, TEKES 420 0

Non-current lease liability, interest-bearing 110 174

Non-current installment liabilities, interest-bearing 2,945 271

Loans from financial institutions 3,475 30,896

Interest-free

Other non-current debts to others, interest-bearing 0 3,750

Total 0 3,750

Liabilities to Group companies

Other non-current internal debts, interest-bearing 0 855

Other non-current internal debts, interest-free 13,465 13,465

Other liabilities, internal 13,465 14,320

Notes to income statement (1,000 €)

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31.12.2018 31.12.2017

Interest-bearing liabilities to others

Current loans from financial institutions, interest-bearing 33,681 0

Current lease liability, interest-bearing 115 62

Current cheque account with overdraft facility, interest-bearing 19,055 18,916

Current liabilities to others, interest-bearing 3,835 0

Current installment debt 1,684 1,738

Total 58,369 20,715

Interest-bearing liabilities to Group companies

Other current internal liabilities, interest-bearing 120 0

internal (internal bank) liabilities, interest-bearing 81,030 28,158

Total 81,149 28,158

Interest-free liabilities to others

Trade payables 16,551 1,875

Current liabilities to others, interest-free 12,853 5,059

Accrued liabilities 4,985 3,596

Other current liabilities 34,389 10,530

Interest-free liabilities to Group companies

Current internal trade payables, interest-free 44 0

Current accrued internal interest payable, interest-free 7 6

Current accrued internal liabilities, interest-free 0 29

Current internal liabilities 52 35

Essentiel items of accruals and deferred income

Accrued personnel expenses 920 1,584

Current interest liabilities, interest-free 3,308 1,416

Prepaid income and accrued expenses 758 595

Total 4,986 3,596

31.12.2018 31.12.2017

Liabilities secured by pledged mortages and shares

Loans from financial institutions 52,736 49,366

Pledged real estate mortgages

Pledged mortgages on company assets 155,000 155,000

Carrying amount of pledged shares 121,479 121,479

Total 276,479 276,479

The trademark of Empower Ltd has been pledged for loans from financial institutions.

Commitments on behalf of Group companies

Carrying amount of pledged shares 121,479 121,479

Guarantees 6,978 5,788

Mortgages on company assets 155,000 155,000

Total 283,458 282,267

Other own commitments

Hire and purchase commitments included ownership rentention provision

Hire and purchase liabilities total 4,628 2,009

The carrying amount of hire purchase commitments 5,376 2,288

Leasing commitments

Falling due within a year 668 1,102

Falling due within 1-5 years 914 686

Falling due within more than 5 years

Total 1,582 1,788

Other commitments

Bank guarantees 218 673

Limits 12,077 11,686

Total 12,295 12,359

Other own commitments total 18,505 16,156

Long-term rental commitments

Empower Group has fixed term tenancies from its business premises which are falling due at the latest on 16th June 2022.

Rental liabilities due on incoming fiscal year based on indexed rent (incl. VAT) 231 123

Rental liabilities due on subsequent to incoming fiscal years based on indexed rent (incl. VAT) 245 85

Total 476 209

20. Current liabilities

21. Commitments and contingent liabilities

Notes to income statement (1,000 €)

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Helsinki, 25 June 2019

Bo Elisson Chairman of the Board

Tommy Wikström Member of the Board

Rainer Häggblom Member of the Board

The signatures to the board of directors` report and the financial statements

The auditor`s note

Our auditor`s report has been issued today.

Helsinki, 25 June 2019

Ernst & Young Oy Authorised Public Accountants

Anders Svennas, Authorised Public Accountant

Jari Onniselkä CEO

Johan Bjurström Member of the Board

Matti Manninen Member of the Board

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Auditor’s Report (translation of the Finnish original)

To the Annual General Meeting of Empower Oyj

Report on the Audit of Financial Statements

Opinion We have audited the financial statements of Empower Oyj (business iden-tity code 2727327-9) for the year ended 31 December, 2018. The financial statements comprise the consolidated balance sheet, consolidated income statement, statement of comprehensive income, statement of changes in equity, statement of cash flows and notes, including a summary of significant accounting policies, as well as the parent company’s balance sheet, income statement and notes.

In our opinion financial statements give a true and fair view of the group’s and parents financial position as well as its financial performance and their cash flows in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and comply with the statutory requirements.

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 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.

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

Serious uncertainty of the group’s ability to continue as a going concern

We draw attention to the notes in the financial statements regarding the information on uncertainty of the group’s ability to continue as a going concern. The risks described in the notes and the uncertainty concerning the reorganization of financing could have a significant impact on the group’s ability to continue operations and in its ability to pay its debts. Our opinion is not modified in respect of this matter.

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 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 Financial Statements

Our objectives are to obtain reasonable assurance on 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

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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 sufficient 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 effectiveness 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 condi-tions may cause the company 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 state-ments represent the underlying transactions and events so that the financial statements give a true and fair view.

• Obtain sufficient 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.

Other Reporting Requirements

Other informationThe Board of Directors and the Managing Director are responsible for the other information. The other information comprises the report of the Board of Directors.

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 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. 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, we conclude that there is a mate-rial misstatement of the report of the Board of Directors, we are required to report that fact. We have nothing to report in this regard.

Helsinki 25.6.2019

Ernst & Young Oy Authorized Public Accountant Firm

Anders Svennas Authorized Public Accountant

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Realizing smart society essentials

Annual report 2018