M-Brain Oy Consolidated Financial Statements 31.12.2016

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M-Brain Consolidated Financial Statements 31.12.2016

Table of Contents Report of the Board of Directors ...................................................................................... 2

Consolidated Statement of Comprehensive Income (IFRS) ............................................. 7

Consolidated Statement of Financial Position (IFRS) ...................................................... 8

Consildiated Statement of Changes in Equity (IFRS) ...................................................... 9

Consolidated Statement of Cash Flows (IFRS) ............................................................. 10

Notes to the Consolidated Financial Statements ........................................................... 12

Parent Company Financial Statements (FAS) ............................................................... 44

Parent Company Income Statement (FAS) ................................................................... 44

Parent Company Balance Sheet (FAS) ......................................................................... 45

Parent Company Cash Flow Statement (FAS) .............................................................. 46

Notes to the Parent Company Financial Statements ..................................................... 47

Signatures…………… ................................................................................................... 52

Auditor’s Note................................................................................................................ 52

List of Bookkeeping Books and Vouchers Types ........................................................... 53

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Report of the Board of Directors

M-Brain is a global information services, technology and consulting company with offices in thirteen countries. The Company helps its clients to navigate the turbulent and ever expanding business environment by offering crucial external business information, and advices in its efficient management and utilization. The Company analyzes and turns information into actionable insights for decision-making and strategic planning. Key Figures

Group IFRS 2016 2015 2014

1000 EUR 1-12 1-12 1-12

Revenue 35,616 30,341 23,518

EBITDA 2,611 2,591 922

EBITDA % of revenue 7.3 8.5 3.9

Operating profit 869 1,284 -26

Operating profit % of revenue 2.4 4.2 -0.1

Profit for the period -789 -395 -769

Total assets 44,032 35,042 35,330

Return on equity (ROE), % -5.5 -3.4 -7.9

Equity ratio, % 40.1 34.9 35.1

Personnel (FTE) at the end of period 456 393 345

Key figures are calculated as follows: Return on equity % = Profit before tax / Average shareholders’ equity x 100 Equity ratio % = Shareholders’ equity / (Total assets – prepayments received) x 100

The acquisition of Opoint improved the overall growth of the revenue. The figures of Opoint are consolidated into M-Brain Group as of April 2016. The Finnish market remained challenging due to the general economic situation and the decline in the traditional business caused by the media revolution in Finland. M-Brain completed the co-operative negotiations announced in the first half of the year in Finland in June and the remaining planned actions were completed in the other Nordic and Baltic region during the second half of the year.

EBITDA of the review period includes approximately EUR 616 (2015: 752; 2014: 1,253) thousand of items affecting comparability consisting mainly of restructuring costs and expenses relating to Opoint acquisition.

M-Brain has a bond listed on First North Bond Market Finland market place. The EUR 15 million unsecured bond is subject to a fixed interest rate of 8 percent and its due date is 17 June 2017. The company has initiated a process for arranging refinancing.

Key ratios describing M-Brain Oy’s financial position and profitability:

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Changes in Group structure

M-Brain Group includes parent company M-Brain Oy and M-Brain Insight Oy and its subsidiaries. On 6 April 2016 M-Brain Insight Oy signed an agreement for the acquisition of the entire share capital of a Norwegian Opoint Holding AS. Opoint Holding AS is a company providing media monitoring and analysis with operations in Norway, Sweden and Estonia. In order to simplify the Group structure, the following actions were undertaken during the financial year:

The name of Global Intelligence Alliance Asia-Pacific Pte. Ltd was changed into M-

Brain Singapore Pte. Ltd.

The name of Global Intelligence Alliance Business Consulting (Shanghai) Co., Ltd. was

changed into M-Brain China Co., Ltd.

Global Intelligence Alliance Germany GmbH was merged into M-Brain GmbH

M-Brain AB and M-Brain Sverige AB were merged into Opoint AB on 31 December

2016. Opoint AB has changed its name into M-Brain AB in January 2017

Shares in Global Intelligence Alliance Estratégia e Consultoria em Marketing Ltda were

sold to the management of the company

Shares in a dormant Global Intelligence Benelux B.V. were sold in order to be liquidated

Description of the scope of the research and development activities Group’s research and development activities have been concentrated in M-Brain Insight Oy. M-Brain has developed a production architecture, that combines human intelligence with a scalable technology platform. The Company has continued to expand its services through further development of SaaS-tools (M-Adaptive) and through the development of a new SaaS product (M-Live) and further developed both technology platform and products which combine human intelligence with automation. The Group published a new version of the portal solution product (Plaza 7.6) and standardized its SharePoint version. The platformization of the Company’s technology base was boosted through pilot projects in which companies from other business sectors take advantage of M-Brain’s technology platform in order to support their business operations. M-Brain Insight Oy participated in a leading role in a significant Tivit/Tekes-financed Big Data –program: Data to Intelligence in which M-Brain Insight Oy was also a business partner receiving support. The central goal of the Data to Intelligence-project is to develop intelligent methods and tools to further process data. In addition, M-Brain Insight Oy,

Parent Company (FAS) 2016 2015 2014

1000 EUR 1-12 1-12 1-12

Revenue 1,064 1,731 1,372

Operating profit -1,501 -705 -427

Operating profit % of revenue -141.0 -40.7 -31.1

Return on equity (ROE), % -17.7 -14.5 5.4

Equity ratio, % 41.5 36.7 41.5

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supported by Tekes, joined a pioneering joint cooperative research consortium between Finland and the USA named CVDI (Center for Visualization and Decision Informatics). In this framework predictive analytics is being developed under M-Brain’s guidance. In addition, M-Brain Insight Oy participated in two other Big Data research programs: Revolution of Knowledge Work and Scalable Probabilistic Analytics –project. Research and development expenses in 2016 totaled EUR 1,765 thousand in 2016 which corresponds to 5.0 % of the Group’s revenue (2015: EUR 1,166 thousand, 3.8% of Group revenue; 2014: EUR 1,339 thousand, 5.7% of Group revenue).

Personnel, management and administration

The average number of personnel in M-Brain Group during the review period was 455 (2015: 393; 2014: 345) full-time employees. Employee benefit expenses amounted to EUR 20,429 (2015: 16,816; 2014: 14,710) thousand. The parent company M-Brain Oy is responsible for Group Management. The average number of employees during the period in the parent company was 14 persons (2015: 13 persons; 2014: 9 persons).

M-Brain Oy Board of Directors:

Kim Nyberg, Chairman

Marjukka Nyberg

Petri Laine

Robert Ingman

Tage Lindberg

Matti Rusanen

Krista Karli (as of 7 June 2016)

The CEO of the parent company until 16 January 2016 was Sirpa Ojala and as of 16 January 2016 Kim Nyberg.

M-Brain Oy’s auditor is Deloitte & Touche Oy, principal auditor Authorized Public Accountant Hannu Mattila. The Group’s Finnish subsidiaries have the same auditor. Authorizations The AGM authorized the Board of Directors to decide on a stock option grant to the key personnel of the company, deviating from the shareholders’ privileged subscription right so that a maximum amount of 1,000 new shares or treasury shares held by the company can be subscribed with the stock options. The subscription price per share is EUR 1,350 and the subscription period is up to 36 months from the day of the AGM decision.

M-Brain Oy shares

At 31 December 2016 the Company had 28,193 (23,593) registered shares. The Company has not acquired or sold own shares during the financial year. The Company owns 100 of its own shares. They account for 0.35 (0.42) per cent of the votes.

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During the first half of the year 2016, M-Brain organized a share issue totaling EUR 6.2 million, which was fully subscribed by the current M-Brain shareholders. 4,600 shares were issued and the issue price was EUR 1,350.00 per share. The issue price was based on the fair value of the Company’s shares. The proceeds from the share issue were recorded in the reserve for invested non-restricted equity.

Events after the review period After the end of the financial year, Opoint AS, a subsidiary of Opoint Holding AS acquired in April 2016 by M-Brain Insight Oy, has received a legal claim. Opoint AS has denied the claim. Majority of the claim for damages is based on the pre-acquisition period. If on the contrary to Opoint AS expectations the claim results in significant costs, the Company will take action to recover the costs from Opoint Holding AS sellers, based on the warranties given by the seller.

Assessment of major operative risks and uncertainties Technological development in M-Brain’s field of business is extremely fast. In accordance with its strategy, the Company has made significant investments in its own product development to improve its competitiveness compared to its competitors. The core operations of the Group are insured against accidental damages and interruptions. Accounts receivables is a significant balance sheet item. Credit risk related to accounts receivables is managed by consistent credit policy and efficient credit management. Credit risk is also reduced by the large number of clients and by the fact that the receivables are allocated to a number of different industries. M-Brain Group prepares goodwill impairment testing annually, in accordance with the timetable of its planning process or more frequently if there are indications that the value of the asset may be impaired. Changes in cash flow forecasts based on strategic plans, or in the discount rate or perpetuity growth rate, can cause a goodwill write-off, which would weaken M-Brain's result. M-Brain’s EUR 15 million bond listed on First North Bond Market Finland market place is due on 17 June 2017. The company has initiated processes with various parties for arranging refinancing and based on management assessment it is very likely that refinancing will be arranged as planned. Without the accomplishment of the refinancing arrangements under negotiation, the Company does not have adequate working capital for the next twelve months and the Company is not able to repay the bond as part of the course of ordinary business operations. The Group’s loan financing involves covenants agreed with the lenders to which the Company is committed. Fulfillment of the covenants with regard to the key figures are reviewed in connection with the preparation of half year report and annual accounts. Proposal for profit distribution The distributable funds of the parent company M-Brain Oy at 31 December 2016 totaled EUR 17,461,887.35, of which the loss for the period in 2016 was EUR 1,214,193.36. The

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Board of Directors proposes to the Annual General Meeting that dividends are not distributed and the loss for the period is recognized in equity.

Outlook for the year 2017 The Company expects the good development of the second half of 2016 to continue and estimates its full-year 2017 revenue and EBITDA to increase from the previous year. This view is based on the Board of Directors’ best belief in the light of currently available information.

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Consolidated Statement of Comprehensive Income (IFRS)

1000 EUR Note 1.1.2016-

31.12.2016 1.1.2015-

31.12.2015

REVENUE 2 35 615,62 30 341,27

Other operating income 3 164,2 94,0

Material and services -5 433,3 -4 106,1

Employee benefits expense 4 -20 429,1 -16 816,0

Depreciation and amortisation 9,10 -1 742,5 -1 307,0

Other operating expenses 5 -7 306,3 -6 922,7

OPERATING PROFIT 868,6 1 283,6

Financing income 6 120,4 290,0

Financing expenses 6 -1 736,7 -1 842,4

PROFIT/LOSS BEFORE TAX -747,6 -268,8

Tax on income from operations 7 -41,8 -125,8

PROFIT/LOSS FOR THE PERIOD -789,5 -394,6

Other comprehensive income:

Exchange differences on translating foreign operations 13 292,8 93,7

Items that may be reclassified subsequently to profit or loss 292,8 93,7

292,8 93,7

TOTAL COMPREHENSIVE INCOME -496,6 -300,9

Profit attributable to:

Owners of the parent company -789,5 -394,6

Non-controlling interests 0,0 0,0

-789,5 -394,6

Total comprehensive income attributable to:

Owners of the parent company -496,6 -300,9

Non-controlling interests 0,0 0,0

-496,6 -300,9

The notes on pages 12 – 43 are an integral part of these consolidated financial statements.

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Consolidated Statement of Financial Position (IFRS)

1000 EUR Note 31.12.2016 31.12.2015

ASSETS

NON-CURRENT ASSETS

Intangible assets 9 7 127,8 4 611,6

Goodwill 8 25 152,6 21 976,5

Tangible assets 10 497,7 590,8

Other non-current financial assets 147,7 17,0

Non-current trade and other receivables 11 23,0 0,0

Deferred tax asset 14 1 984,7 470,2

NON-CURRENT ASSETS 34 933,5 27 665,9

CURRENT ASSETS

Trade receivables and other receivables 11 7 121,5 5 381,1

Tax Receivable, income tax 191,5 45,2

Other current financial assets 2,4 2,4

Cash and cash equivalents 12 1 782,8 1 947,2

CURRENT ASSETS 9 098,2 7 375,8

ASSETS 44 031,7 35 041,8

EQUITY AND LIABILITIES

Owners of the parent company

Share capital 13 215,5 215,5

Share premium 13 247,2 247,2

Unrestricted equity reserve 13 18 620,9 12 410,9

Treasury shares 13 -118,7 -118,7

Accumulated earnings 13 -1 828,6 -1 112,3

Owners of the parent company 17 136,4 11 642,6

EQUITY 17 136,4 11 642,6

NON-CURRENT LIABILITIES

Deferred tax liability 14 1 089,2 596,4

Non-current liabilities, interest-bearing 15 287,8 15 263,7

Liabilities from defined benefit plan 4 133,0 106,8

NON-CURRENT LIABILITIES 1 510,1 15 966,8

CURRENT LIABILITIES

Current interest-bearing liabilities 15 16 603,4 510,2

Trade Payables and Other Liabilities 16 8 692,0 6 415,9

Tax liability, income tax 89,8 506,3

Current provisions 0,0 0,0

CURRENT LIABILITIES 25 385,3 7 432,4

Liabilities 26 895,3 23 399,2

EQUITY AND LIABILITIES 44 031,7 35 041,8

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Consolidated Statement of Changes in Equity (IFRS)

1000 EUR Note

Share

capital

Share

premium

Unrestricted

equity reserve

Treasury

shares

Retained

earnings Total

EQUITY 1.1.2015 215,5 247,2 12 410,9 -118,7 -895,4 11 859,5

Comprehensive income

Profit/loss for the period -394,6 -394,6

Other comprehensive income:

Translation differences 0,0 0,0 0,0 0,0 93,7 93,7

0,0 0,0 0,0 0,0 -300,9 -300,9

Transactions with owners

Share-based payments 19 0,0 0,0 0,0 0,0 84,0 84,0

Total transactions with owners 0,0 0,0 0,0 0,0 84,0 84,0

TOTAL EQUITY 31.12.2015 215,5 247,2 12 410,9 -118,7 -1 112,3 11 642,6

1000 EUR Note

Share

capital

Share

premium

Unrestricted

equity reserve

Treasury

shares

Retained

earnings Total

EQUITY 1.1.2016 215,5 247,2 12 410,9 -118,7 -1 112,3 11 642,6

Comprehensive income

Profit/loss for the period -789,5 -789,5

Other comprehensive income:

Translation differences 0,0 0,0 0,0 0,0 292,8 292,8

0,0 0,0 0,0 0,0 -496,6 -496,6

Transactions with owners

Share issue 13 0,0 0,0 6 210,0 0,0 6 210,0

Share-based payments 19 0,0 0,0 0,0 0,0 -217,7 -217,7

Total transactions with owners 0,0 0,0 6 210,0 0,0 -217,7 5 992,3

Other changes 0,0 0,0 0,0 0,0 -1,9 -1,9

TOTAL EQUITY 31.12.2016 215,5 247,2 18 620,9 -118,7 -1 828,6 17 136,4

TOTAL COMPREHENSIVE INCOME

TOTAL COMPREHENSIVE INCOME

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Consolidated Statement of Cash Flows (IFRS)

1000 EUR 1.1.2016-31.12.2016 1.1.2015-31.12.2015

Cash flows from operating activities

PROFIT/LOSS FOR THE PERIOD -789,5 -394,6

Depreciation, amortisation & impairment 1 742,5 1 307,0

Gains and losses of disposals of fixed assets and other non-current assets -58,8 0,0

Unrealised foreign exchange gains and losses 156,0 101,8

Other non-cash items 0,0 84,0

Financial income and expenses 1 460,0 1 468,4

Tax on income from operations 41,8 125,8

Other adjustments -550,3 -330,0

2 001,7 2 362,4

Working capital changes

Increase /decrease in trade and other receivables -11,5 518,4

Increase / decrease in trade payables -823,8 -82,7

-835,3 435,7

Interest paid -1 403,1 -1 409,7

Interest received 5,6 6,9

Income taxes paid -987,1 -178,5

-2 384,5 -1 581,3

Net cash from operating activities -1 218,1 1 216,8

Cash flows from investing activities

Purchase of tangible and intagible assets -1 371,6 -905,8

Acquisition of subsidiaries, net of cash acquired -1 872,3 0,0

Loans granted -130,8 0,0

Net cash used in investing activities -3 374,8 -905,8

Cash flows from financing activities

Proceeds from issue of share capital 6 210,0 0,0

Proceeds from current borrowings 1 112,1 139,9

Repayment of current borrowings -2 818,0 -104,6

Payment of finance lease liabilities -75,6 0,0

Net cash used in financing activities 4 428,5 35,3

Net change in cash and cash equivalents -164,4 346,3

Cash and cash equivalents at the beginning of the period 1 947,2 1 601,0

Cash and cash equivalents at the end of the period 1 782,8 1 947,2

M-Brain Oy

IFRS Consolidated Financial Statements 31.12.2016

Notes the financial statements

Notes to the Consolidated Financial Statements .......................................................................... 12

1. Significant Accounting policies ............................................................................................ 12 1.1. Basis of preparation ................................................................................................... 12 1.2. Going concern ............................................................................................................ 12 1.3. Basis of consolidation ................................................................................................ 13 1.4. Business combinations (Note 23) .............................................................................. 13 1.5. Revenue recognition .................................................................................................. 13 1.6. Leasing (Note 15) ....................................................................................................... 14 1.7. Foreign currencies ..................................................................................................... 14 1.8. Government grants .................................................................................................... 15 1.9. Employee benefits (Note 4) ........................................................................................ 15 1.10. Share-based payment arrangements (Note 19) ........................................................ 16 1.11. Taxation (Note 7, 14) ................................................................................................. 16 1.12. Intangible assets (Note 8, 9) ...................................................................................... 17 1.13. Impairment of tangible and intangible assets other than goodwill ............................. 18 1.14. Provisions ................................................................................................................... 18 1.15. Financial instruments ................................................................................................. 18 1.16. New and amended IFRSs adopted in 2016 ............................................................... 20 1.17. New and amended IFRSs to be adopted in subsequent periods ............................. 21 1.18. Critical accounting judgements and key sources of estimation uncertainty .............. 22

2. Revenue .............................................................................................................................. 23

3. Other operating income ....................................................................................................... 23

4. Personnel expenses ............................................................................................................ 24

5. Other operating expenses .................................................................................................... 26

6. Finance income and expenses ............................................................................................ 26

7. Income taxes ....................................................................................................................... 26

8. Goodwill ............................................................................................................................... 27

9. Other intangible assets ........................................................................................................ 29

10. Property, plant and equipment ............................................................................................ 30

11. Trade and other receivables ................................................................................................ 31

12. Cash and cash equivalents ................................................................................................. 31

13. Equity ……………………………………………………………………………………………….31

14. Deferred tax receivables and liabilities ................................................................................ 32

15. Financial liabilities................................................................................................................ 34

16. Trade and other payables ................................................................................................... 35

17. Fair value of Financial Instrucments and Fair Value Hierarchy .......................................... 35

18. Financial risk management instruments .............................................................................. 37

19. Share-based payments ....................................................................................................... 40

20. Related party transactions ................................................................................................... 40

21. Subsidiaries ......................................................................................................................... 41

22. Contingent liabilities, contingent assets and commitments ................................................. 41

23. Business combinations ........................................................................................................ 42

24. Events after the reporting period ......................................................................................... 43

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Notes to the Consolidated Financial Statements

General

M-Brain Group (“the Group”) is a European information services company with operations in 13 countries. The Group specialises in media and online monitoring and analyses. The Group monitors social and editorial media online as well as traditional printed media, radio and television. The Group’s parent company is M-Brain Oy (“the Company”). The parent company is domiciled in Finland and its registered address is Kuortaneenkatu 1, 00520 Helsinki. A copy of the consolidated financial statements can be obtained from the official company web pages www.m-brain.com.

1. Significant Accounting policies

1.1. Basis of preparation

The Consolidated Financial Statements have been prepared in accordance with lnternational Financial Reporting Standards ('IFRS’), effective on 31 December 2016. ln the Finnish Accounting Act and the statutes under it, lnternational Financial Reporting Standards refer to the endorsed standards and their interpretations under the European Union regulation no. 1606/2002, regarding the adoption of the lnternational Financial Reporting Standards applicable within EU. The Notes to the Consolidated Financial Statements also comply with the requirements of the Finnish accounting and corporate legislation, which supplement the IFRS regulations. The consolidated financial statements have been prepared on historical cost basis unless otherwise stated in the following accounting policies. They are presented in thousands and in euro, which is the parent company's functional currency. The Company's fiscal year end is December 31. The Board of Directors of M-Brain Oy have authorized these financial statements for publication at its meeting on 21 March 2017. According to the Finnish Companies' Act, the shareholders have a right to either adopt or reject the financial statements in the Annual General Meeting. The AGM can also request changes to the financial statements. 1.2. Going concern

The financial statements for 2016 have been prepared on a going concern basis. In its assessment, the management of the Company has considered the financial forecasts available, sources of finance available to it as well as risks related to refinancing and liquidity. The Company has EUR 15 million unsecured bond listed on the First North Bond Market Finland market place which is due on 17 June 2017. The company has initiated processes with various parties for arranging refinancing and based on management assessment it is very likely that refinancing will be arranged as planned. Without the accomplishment of the refinancing arrangements under negotiation, the Company does not have adequate working capital for the next twelve months and the Company is not able to repay the bond as part of the course of ordinary business operations.

The Group’s loan financing involves a bi-annually tested financial covenant relating to net debt to EBITDA ratio. The company has met the terms of the financial covenant. In addition, the Company

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has performed the interest payment obligations of the bond and other loan repayment obligations during the bond listing period.

1.3. Basis of consolidation The consolidated financial statements incorporate the entities in which the Group has more than half of the voting power or where it exercises control over the operations of the subsidiary. Subsidiaries are consolidated from the date on which control is obtained by the Group and are deconsolidated from the date that control ceases. All intra-group transactions, receivables, payables and internal distribution of profits are eliminated on consolidation. Unrealised losses are not eliminated in case they arise from impairment. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group's accounting policies.

1.4. Business combinations (Note 23)

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred, including deferred consideration and the identifiable assets and assumed liabilities of the acquiree are measured at fair value at the acquisition date. Acquisition-related costs are recognised in profit or loss, except if they relate to issue of equity or debt instruments. Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. lf the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer's previously held interest in the acquiree, the excess is recognised in profit or loss as a bargain purchase gain. When a business combination is achieved in stages, the Group's previously held equity interest in the acquiree is remeasured to its acquisition-date fair value and the resulting gain or loss is recognised in profit or loss. When the Group ceases to control a subsidiary, the remaining ownership interest is measured at fair value and the resulting difference is recognised in profit or loss.

1.5. Revenue recognition

Revenue (Note 2)

The Group produces media and information services for clients based on monthly service arrangements for longer time periods or based on one-time orders. Revenue is recognised when the services are delivered to the client. Revenue from services is measured at fair value net of value added taxes, discounts and exchange differences.

Dividend and interest income

Dividend income from investments is recognised when the right to receive payment is established. lnterest income is recognised on a time apportionment basis, using the effective interest method by reference to the principal outstanding and at the effective interest rate applicable. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition.

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1.6. Leasing (Note 15)

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The Group as a lessee

Assets held under finance leases are initially recognised at fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the annual statement of financial position as a finance lease liability. Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Group's general policy on borrowing costs. Contingent rentals are recognised as expenses in the periods in which they are incurred.

Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

1.7. Foreign currencies

The consolidated financial statements are presented in euro which is the functional and the presentation currency of the parent company of the Group. ln preparing the separate company financial statements, the transactions of the Group entities in currencies other than each entity's functional currency, are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured at historical cost are measured at the rates prevailing at the date of transaction. For the purposes of presenting consolidated financial statements, transactions of entities reporting in a currency other than the Group’s functional currency are translated into euro using the exchange rates prevailing at the dates of the transactions. In preparing consolidated financial statements, income statements and items reported within other comprehensive income are translated into euro using the weighted average rate of exchange of the financial year and the statements of financial position using the rates of exchange as at the balance sheet date. Differences resulting from the translation of the result for the period at a different rate on the income statement and on the statement of financial position are recognised as a separate item within consolidated statement of comprehensive income in the period during which they have occurred. Goodwill and fair value adjustments to identifiable assets acquired and liabilities assumed through acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and are translated in the consolidated financial statements into euro using the exchange rate prevailing at

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the balance sheet date. Exchange differences arising are recognised in other comprehensive income. 1.8. Government grants

Government grants are recognised when there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received. Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognizes as expenses the related costs for which the grants are intended to compensate. Government grants related to development of internally-generated intangible assets are recognised as deductions from the carrying amount of the assets in question in the consolidated statement of financial position.

1.9. Employee benefits (Note 4) The cost of short-term employee benefits payable within 12 months after the service is rendered, such as paid vacation leave and sick leave, bonuses, and non-monetary benefits such as medical care, are recognised in the period in which the service is rendered and are not discounted. The expected cost of employee incentives and bonus payments is recognised as an expense when there is a legal or constructive obligation to make such payments as a result of past performance. A liability for a termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognises any related restructuring costs. The Group operates both defined contribution and defined benefit pension plans. In Finland and in the majority of Group’s other countries of operation the pension plans are defined contribution plans. Payments to defined contribution retirement plans are recognised as an expense when employees have rendered service entitling them to the contributions. In defined contribution plans, the Group does not have a legal or constructive obligation to make additional payments, in case the payment recipient is unable to pay the retirement benefits. In defined benefit plans, after the Group has paid the amount for the period, an excess or deficit may result. The pension obligation represents the present value of future cash flows from payable benefits. The present value of pension obligations has been calculated using the Project Unit Credit Method. Defined benefit pension costs are expensed during employees’ service lives based on actuarial calculations. The calculations are based on assumptions about the discount rate, expected returns on plan assets, future pay increases, inflation and the personnel age structure. The discount rate assumed in calculating the present value of the pension obligations is the market yield of high-quality bonds issued by companies. Their maturity substantially corresponds to the maturity of the calculated pension liability. The assets corresponding to the pension obligation of the retirement benefit plan are carried at fair values at the balance sheet date. Actuarial gains and losses are recognised in the income statement during the period in which they are incurred. Prior service costs are expensed in the income statement on the earlier of when the plan is amended or curtailed or when the restructuring expenses or termination benefits relating to the plan are recognized.

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1.10. Share-based payment arrangements (Note 19) Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at the grant date. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.

1.11. Taxation (Note 7, 14)

Taxes presented in the consolidated income statement include the Group companies’ taxes on current net profits on an accrual basis, prior period tax adjustments and changes in deferred taxes. Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity. Taxes relating to items of other comprehensive income or directly to equity are recognised in other comprehensive income or directly in equity respectively.

Current tax The taxes of the Group companies have been calculated based the taxable profit of each Group company determined in accordance with the local tax legislation. The current tax based on the taxable profit of the Group companies is determined based on the statutory tax rate applicable in each country a Group company is located in. The Group's current income tax assets and liabilities are offset when, and only when, the Group has legally enforceable right to offset the recognised items and the Group has intention to settle the on net basis or to realize the asset and to settle the liability simultaneously.

Deferred tax Deferred tax assets and liabilities are recognised for all temporary differences between the tax bases and carrying amounts of assets and liabilities. Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Deferred tax liabilities have not, however, been recognized on initial recognition of goodwill. Deferred tax has also not been recognised if it arises from the initial recognition, other than in a business combination, of assets and liabilities in a transaction that at the time of occurrence affects neither the accounting profit nor the taxable profit. Deferred tax has been measured based on the tax rates that are applicable at the reporting date and when there is a change in the tax rates, based on the new tax rate that has been enacted or substantively enacted by the end of the reporting period.

17

1.12. Intangible assets (Note 8, 9)

An intangible asset is recognised when it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the cost of the asset can be measured reliably. lntangible assets with finite useful lives are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimates on residual value and on useful life are reviewed at the end of each reporting period. The most commonly applied useful lives are as follows:

Item Useful life Computer software 3 - 5 years Customer Relationships 7-10 years Development costs 5 years Other intangible assets 3 - 5 years

An intangible asset is derecognised on disposal, or when no future economic benefits are expected from its use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is derecognised.

Goodwill

Goodwill arising on an acquisition of a business is carried at cost as recognized at the date of acquisition of the business less accumulated impairment losses, if any. For the purposes of impairment testing, goodwill is allocated to the Group's cash-generating units that are expected to benefit from the synergies of the business combination. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is indication that the unit may be impaired. lf the recoverable amount of the cash-generating unit is less than its carrying amount, an impairment loss is recognised. The impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. An impairment loss recognized in prior years for another asset than goodwill is reversed if the estimates used in the determination of the recoverable amount are changed. Any impairment loss for goodwill is recognised directly in profit or loss and is never reversed in subsequent periods.

Research and development costs

Expenditure on research activities is recognised as an expense in the period in which it is incurred. An internally-generated intangible asset arising from development is recognised, if completing the asset is considered technically feasible, there is intention and adequate technical, financial and other resources available to complete the asset and ability to use it, future economic benefits are probable and the expenditure attributable to the asset during development can be measured reliably. Development costs previously recognized as an expense are not recognized as an asset in subsequent periods. Capitalized development costs are subsequently measured at cost less accumulated amortizations and impairments. Amortization of assets begin when the asset is ready for its intended use.

18

1.13. Impairment of tangible and intangible assets other than goodwill

At the end of each reporting period, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets may be impaired. lf any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. lntangible assets with indefinite useful lives and intangible assets under construction are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired. Recoverable amount is the higher of fair value less costs to sell and value in use. ln assessing value in use, the estimated future cash flows are discounted to their present value. The used discount rate is a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. lf the recoverable amount of an asset (or a cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or the cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss. lf the impairment loss is subsequently reversed, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or the cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

1.14. Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions for restructuring costs, onerous contracts, and legal claims are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated. Provisions are not recognised for future operating losses. 1.15. Financial instruments

Financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual provisions of the instruments and they are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss, "FVTPL") are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of FVTPL financial assets or financial liabilities are recognised immediately in profit or loss. The fair values of financial instruments have been determined using available market information or other appropriate valuation methodologies.

19

Financial assets

Financial assets are classified into the following specified categories: fair value through profit or loss financial assets, held-to-maturity investments, available-for-sale financial assets and loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. The Group does not currently have any held-to maturity investments. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.

Financial assets at FVTPL include derivatives that are not designated and effective as hedging instruments. Financial assets at FWPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss excludes any dividend or interest earned on the financial asset which are included in the "finance income" or "finance costs" line items. Fair value is determined in the manner described in note 17.

AFS financial assets are non-derivatives that are either designated as AFS or are not classified as (a) loans and receivables, (b) held-to-maturity investments or (c) financial assets at fair value through profit or loss. Fair value is determined in the manner described in note 17. Changes in the carrying amount of AFS monetary financial assets relating to changes in foreign currency rates, interest income calculated using the effective interest method and dividends on AFS equity investments are recognised in profit or loss. Other changes in the carrying amount of available for sale financial assets are recognised in other comprehensive income and accumulated under the heading of investments revaluation reserve. When the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated in the investments revaluation reserve is reclassified to profit or loss.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables include trade and other receivables, bank balances and cash. They are subsequently measured at amortised cost, using the effective interest method, less accumulated impairment losses. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These are initially and subsequently recorded at fair value. Impairment of financial assets Financial assets, other than those at FWPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been decreased.

20

For available-for-sale equity investments, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment. When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss in the period. Trade receivables are assessed for impairment on a collective basis even if they were assessed not to be impaired individually. For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets. For financial assets measured at amortised cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

ln respect of AFS equity securities, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive income and accumulated under the heading of investments revaluation reserve. ln respect of AFS debt securities, impairment losses are subsequently reversed through profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss. Financial liabilities (Note 15) At initial recognition, financial liabilities are measured at fair value. For financial liabilities measured at amortised cost, the transaction costs are included into the carrying amount at initial recognition. Financial liabilities, excluding derivative liabilities, are subsequently measured at amortised cost using the effective interest method. Debt and equity instruments issued by a group entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities. Financial liabilities at FVTPL include derivatives that are not designated and effective as hedging instruments. Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the "other gains and losses" line item. Fair value is determined in the manner described in note 17. 1.16. New and amended IFRSs adopted in 2016

The Group has adopted the changes to IFRS standards and interpretations applicable to the Group. The changes have not had a material impact on the Group’s profits, financial position or presentation of financial statements.

21

1.17. New and amended IFRSs to be adopted in subsequent periods IASB has published the following new or revised standards and interpretations which the Group has not yet adopted and which are expected to have a material effect on the consolidated financial statements of the Group. The Group will adopt each standard and interpretation as from the effective date, or if the effective date is other than the first day of the reporting period, from the beginning of the next reporting period after the effective date. The effects of these new and amended standards and interpretations are under investigation.

IFRS 9 Financial Instruments (effective for reporting periods beginning on or after January 1,

2018). IFRS 9 is a several phase project which aims to replace IAS 39 with a new standard.

According to the finalised classification and measurement part of IFRS 9, financial assets are

classified and measured based on entity’s business model and the contractual cash flow

characteristics of the financial asset. Classification and measurement of financial liabilities is

mainly based on the current IAS 39 principles. The finalised general hedge accounting model

of IFRS 9 allows reporters to reflect risk management activities in the financial statements

more closely as it provides more opportunities to apply hedge accounting. In addition, testing

hedge effectiveness has been renewed and replaced with the principle of “financial relation”.

IFRS 9 impairment model reflects an expected credit loss model, as opposed to incurred

credit losses model under IAS 39. It is no longer necessary to wait for the credit loss event

in order to recognize a credit loss. Instead, following any changes in the credit risk,

companies recognize expected credit losses and any changes thereto at each closing date

following the initial recognition. The standard will also add new disclosure requirements

regarding risk management.

IFRS 15 Revenue from Contracts with Customers (effective for reporting periods beginning

on or after January 1, 2017). IFRS 15 establishes a single comprehensive model for entities

to use in accounting for revenue arising from contracts with customers. The customer is a

party that in exchange for consideration has entered into an agreement with the company in

order to obtain goods or services produced as part of the company's normal operations. Its

core principle is that an entity should recognise revenue to depict the transfer of promised

goods or services to customers in an amount that reflects the consideration to which the

entity expects to be entitled in exchange for those goods or services. The standard includes

a considerable amount of disclosure requirements. Companies may choose to apply the

standard either retrospectively or by applying the standard only to contracts which are open

at the date of transition. The standard is not expected to have a material impact on the

consolidated financial statements because the current revenue recognition principal reflects

the transfer of the performance obligation from Group to the customer.

IFRS 16 Leases issued in January 2016 (effective for annual periods beginning on or after 1 January 2019). IFRS 16 specifies the recognition, measurement, presentation and disclosure requirements on leases. The standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance, with IFRS 16’s approach to lessor accounting substantially unchanged from the current standards. The adoption of the new standard will have an impact on the way leases are presented by the Group. The standard has not yet been endorsed by the EU.

22

1.18. Critical accounting judgements and key sources of estimation uncertainty

ln the application of the Group's accounting policies the directors of the Group are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. The critical judgements, part from those involving estimations, that the directors have made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in the consolidated financial statements include:

Capitalization of development costs ln applying its accounting policy for costs incurred during the development phase for new or improved software, the Group must determine whether the criteria for capitalization have been met. To support this judgement, the directors have established a procedure of selecting and approving development projects that proceed to the development phase. Each project is also reviewed on a monthly basis to identify possible risks and any changes affecting the assumptions made. More details on the capitalized development costs can be found in note 9.

ldentification of intangible assets in business combinations The judgements required in accounting for business combinations relate mainly to the identification of unrecognised intangible assets and to the allocation of the consideration paid based on the fair values of all identified assets and liabilities. The Group may use external advisors and benchmarking to support this process. Purchase price allocations of the Group's most recent acquisitions are presented in note 23.

Key assumptions concerning the future and other key sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities comprise:

M-Brain’s EUR 15 million bond listed on First North Bond Market Finland market place is due on 17 June 2017. The company has initiated processes with various parties for arranging refinancing and based on management assessment it is very likely that refinancing will be arranged as planned. Without the accomplishment of the refinancing arrangements under negotiation, the Company does not have adequate working capital for the next twelve months and the Company is not able to repay the bond as part of the course of ordinary business operations.

Recoverability of internally generated intangible assets The Group had capitalized internal development expenses relating to software development, which are included in the consolidated statement of financial position at 31 December 2016 with a carrying amount of EUR 1,824.7 (1,491.2) thousand. The most

23

difficult and subjective estimate relating to the capitalisation of internally generated intangible assets is whether a project will generate probable future economic benefits. Management considers all appropriate facts and circumstances in making this assessment including historical experience, expected market demand, costs and future economic conditions.

lmpairment of goodwill Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating unit. The value in use calculation requires the directors to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. Where the actual future cash flows are less than expected, a material impairment loss may arise. The carrying amount of goodwill at 31 December 2016 was EUR 25,152.6 (21,976.5) thousand. Details of the impairment loss calculation are set out in note 8.

2. Revenue

The company’s revenue consists of business intelligence services.

As the Group has only one operating segment, business intelligence services, separate segment information is not presented. Revenue from transactions with any single external customer do not exceed 10 % of Group’s revenue.

3. Other operating income

000 euros 2016 2015

Finland 11 912,9 13 376,9

EU countries 12 838,9 8 602,6

Other countries 10 863,9 8 361,8

Total 35 615,6 30 341,3

000 euros 2016 2015

Government grants 15,6 79,0

Other 148,7 15,0

Total 164,2 94,0

24

4. Personnel expenses

Average number of personnel was 455 in 2016 (393 in 2015).

Defined benefit pension plans M-Brain SARL, a group company located in France, has a defined benefit pension arrangement, which covers retirement pensions. Employees included to the arrangement have a right to retire in the age of 65–67. The employer finances the arrangement by payments. The arrangement is administered by French legislation and regulations. The Group does not have expected payments to the defined benefit pension arrangement in 2017.

The defined benefit pension liability recognized in statement of financial position

2016 2015

Present value of unfunded obligations

133,0 106,8

Deficit / surplus 0,0 0,0

Other change in defined benefit obligation

0,0 0,0

Recognized net amount of the liability

133,0 106,8

The defined benefit pension expense recognized in the income statement

2016 2015

Current service cost 17,5 128,0

Interest costs 2,4 1,9

Actuarial gains (-) and losses (+)

6,2 -23,1

Gains / losses on plan curtailment

0,0 0,0

Other expenses related to the defined pension benefit liability

0,0 0,0

0,0

Total 26,2 106,8

000 euros 2016 2015

Wages and salaries 16 747,6 13 938,5

Pensions – defined contribution

plans 1 532,7 1 463,0

Pensions – defined benefit plans 26,2 106,8

Other statutory employer costs 2 122,6 1 307,6

Total 20 429,1 16 816,0

25

Changes in the defined benefit pension liability during the financial period

2016 2015

Opening defined benefit obligation

106,8 105,9

Translation differences 0,0 0,0

Interest costs 2,4 1,9

Pension expenses 17,5 22,1

Actuarial gains (-) / losses (+) 0,0 -23,1

Remeasurement gains/losses on defined benefit pension liability net-of-tax

0,0 0,0

Gains / losses on plan curtailment

6,2 0,0

Benefits paid 0,0 0,0

Other change in defined benefit obligation

0,0 0,0

Closing defined benefit obligation

133,0 106,8

Expected maturity analysis of undiscounted pension liabilities

During one year

Over one year and at most two years

Over two years and at most five years

Pension liabilities 0 0,0 133,0

Actuarilal assumptions applied 31.12.2016 31.12.2015

Retirement age, years 65-67 65-67

Inflation, percent 0,0 0,0

Social security contribution,

percent42,0 42,0

Future salary increases low low

Turnover of personnel low low

Discount rate, percent 1,42 2,3

Percentage of voluntary leave 100,0 100,0

26

5. Other operating expenses

Other operating expenses consists mostly of external services, office expenses, car expenses and expenses related to Opoint acquisition. Principal independent auditor’s audit fees amounted to EUR 116.0 (2015: 74.6) thousand. Other fees of principal independent auditor amounted to EUR 82.6 (2015: 93.6) thousand.

6. Finance income and expenses

7. Income taxes

000 euros 2016 2015

Tax expense -451,9 -501,7

Deferred taxes 410,1 375,9

Total income tax -41,8 -125,8

000 euros 2016 2015

External services 1 628,7 1 751,4

Office and other rents 1 595,4 1 321,0

Advertising and marketing

expenses635,9 574,7

IT expenses 1 764,7 681,8

Personnel expenses 534,1 472,4

Travel expenses 475,4 563,7

Other operating expenses 672,1 1 557,5

Total 7 306,3 6 922,7

000 euros 2016 2015

Foreign exchange gains 114,9 284,2

Other finance income 5,5 5,8

Total interest and other finance income 120,4 290,0

Interest expense from the bond -1 200,0 -1 200,0

Foreign exchange losses -368,7 -324,9

Other finance expense -168,0 -317,4

Total interest and other finance expense -1 736,7 -1 842,3

Finance costs (net) -1 616,3 -1 552,4

27

8. Goodwill

Impairment of goodwill Determining whether goodwill is impaired is estimated based on value-in-use of the cash generating units to which goodwill has been allocated. Goodwill has been allocated to on cash generating unit. The value-in-use is the present value of future cash flows discounted by using an appropriate discount rate. 000 euros 2016 2015

Acquisition cost at 1.1 21 976,5 21 976,5

Acquisitions through business combinations during the financial year (note 25)

2 927,8 0,0

Translation differences 248,3

Acquisition cost at 31.12. 25 152,6 21 976,5

Accumulated impairment 1.1.

Impairment during the period

Accumulated impairment at 31.12. 0,0 0,0

Carrying amount at 31.12. 25 152,6 21 976,5

The value-in-use impairment testing for all cash generating units was based on the following assumptions:

The increase in revenue is mainly driven by business acquisition made in 2016.

Taxes recognized in equity 0,0 0,0

000 euros 2016 2015

Profit (loss) before income tax -747,6 -268,8

Income tax calculated by 20.0% tax rate 149,5 53,8

Deductible items not taken in account by

the consolidation-192,6 -5,9

Foreign subsidiaries' tax rates 1,3 -173,7

Total income tax -41,8 -125,8

31.12.2016 31.12.2015

Revenue growth, fist year 13,4 % 7,4 %

Revenue growth, subsequent years 0,0 % 0,0 %

Operating profit -% 7,3 % 9,8 %

Terminal growth rate 0,0 % 0,0 %

Discount rate 7,9 % 7,7 %

Change in net working capital 0,0 % 0,0 %

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Based on the sensitivity analyses, the key assumptions of the calculations can change as follows in the testing calculation at the time of the testing without an impairment (assuming that other key assumptions are not changed):

The value-in-use is not especially sensitive to changes in discount rates. According to Management assessment, none of reasonably possible change in the key assumptions would not cause the recoverable amount to be lower than the carrying amount of the cash generating units. However, the sustainability of calculated value-in-use levels requires the Group revenue to growth to the acceptable level in accordance with Group's strategy, maintenance of competiveness, realization of synergy benefits and increased cost effectiveness. No goodwill impairment was recognized in 2016 and 2015.

Sensitivity analysis:

31.12.2016 31.12.2015

Annual decrease in revenue 1,1 % 1,5 %

Annual increase in operating expenses 1,2 % 1,7 %

Change in operating profit (decrease) 62,9 % 66,1 %

29

9. Other intangible assets

31.12.2016

000 eurosDevelopment

costs

Immaterial

rights

Other intangible

assets

Advance

payments for

investments

Total

Acquisition cost at 1.1. 3 015,1 3 933,8 308,3 0,0 7 257,2

Additions 901,0 163,2 217,0 113,4 1 394,6

Acquisitions through business

combinations0,0 2 562,2 216,2 0,0 2 778,4

Disposals 0,0 0,0 -123,2 0,0 -123,2

Transfers between items 0,0 0,0 44,7 -44,7 0,0

Translation differences 30,3 8,6 -41,6 0,0 -2,7

Acquisition cost at 31.12. 3 946,4 6 667,9 621,4 68,7 11 304,4

Accumulated amortisation and

impairment 1.1.-1 523,9 -944,1 -177,7 -2 645,6

Accumulated amortisation on business

combinations0,0 0,0 -181,3 0,0 -181,3

Disposals 0,0 0,0 0,8 0,0 0,8

Amortisation -571,9 -762,1 -74,3 0,0 -1 408,3

Impairment 0,0 0,0 0,0 0,0 0,0

Translation differences -25,9 42,5 41,3 0,0 57,9

Accumulated amortisation and

impairment at 31.12.-2 121,7 -1 663,7 -391,1 0,0 -4 176,5

Balance at 31.12. 1 824,7 5 004,2 230,3 68,7 7 127,8

Balance at 1.1. 1 491,2 2 989,7 130,6 0,0 4 611,6

31.12.2015

000 eurosDevelopment

costs

Immaterial

rights

Other intangible

assets

Advance

payments for

investments

Total

Acquisition cost at 1.1. 2 374,6 3 933,5 200,1 6 508,1

Additions 640,5 0,0 109,0 749,6

Acquisitions through business

combinations0,0 0,0 0,0 0,0

Disposals 0,0 0,0 0,0 0,0

Translation differences 0,0 0,4 -0,8 -0,5

Acquisition cost at 31.12. 3 015,1 3 933,8 308,3 7 257,2

Accumulated amortisation and

impairment 1.1.1 035,4 476,3 127,3 1 639,0

Disposals 0,0 0,0 0,0 0,0

Amortisation 488,5 467,8 50,4 1 006,7

Impairment 0,0 0,0 0,0 0,0

Translation differences 0,0 0,0 0,0 0,0

Accumulated amortisation and

impairment at 31.12.1 523,9 944,1 177,7 2 645,6

Balance at 31.12. 1 491,2 2 989,7 130,6 4 611,6

Balance at 1.1. 1 339,1 3 457,2 72,8 0,0 4 869,2

30

10. Property, plant and equipment

31.12.2016

000 eurosMachinery

and equipment

Other tangible

assetsTotal

Acquisition cost at 1.1. 1 481,4 14,4 1 495,8

Additions 148,8 0,0 148,8

Acquisitions through business

combinations763,7 0,0 763,7

Disposals -10,4 0,0 -10,4

Translation differences 152,5 0,0 152,5

Acquisition cost at 31.12. 2 536,0 14,4 2 550,4

Accumulated depreciations and

impairment 1.1.-903,1 -1,9 -905,1

Accumulated depreciation on

business combinations-675,6 0,0 -675,6

Depreciation on disposals 7,5 0,0 7,5

Depreciation for the period -325,0 0,0 -325,0

Translation differences -153,9 -0,6 -154,5

Accumulated depreciations and

impairment at 31.12.-2 050,2 -2,5 -2 052,7

Carrying amount 31.12. 485,8 11,9 497,7

Carrying amount 1.1. 578,3 12,5 590,8

31.12.2015

000 eurosMachinery

and equipment

Other tangible

assetsTotal

Acquisition cost at 1.1. 1 348,8 14,0 1 362,8

Additions 197,2 0,8 198,1

Acquisitions through business

combinations0,0 0,0 0,0

Disposals -69,7 0,0 -69,7

Translation differences 5,1 -0,4 4,6

Acquisition cost at 31.12. 1 481,4 14,4 1 495,8

Accumulated depreciations and

impairment 1.1.641,4 1,5 643,0

Disposals -41,8 0,0 -41,8

Depreciation for the period 299,7 0,6 300,3

Translation differences 3,8 -0,2 3,6

Accumulated depreciations and

impairment at 31.12.903,1 1,9 905,1

Carrying amount 31.12. 578,3 12,5 590,8

Carrying amount 1.1. 707,4 12,5 719,9

31

Property and equipment includes EUR 249.3 (2015: 326.6) thousand of assets acquired with finance leases.

11. Trade and other receivables

000 euros 31.12.2016 31.12.2015

Trade receivables 5 780,6 4 167,9

Other receivables 167,1 382,8

Prepayments and accrued income

1 173,8 869,8

Total trade and other receivables

7 121,5 5 426,3

Trade receivables disclosed above include amounts that are past due at the end of the reporting period for which the Group has not recognised an allowance for doubtful debts because there has not been a significant change in credit quality and the amounts are still considered recoverable.

12. Cash and cash equivalents

For the purposes of the consolidated statement of cash flows, cash and cash equivalents include cash on hand and in banks, net of outstanding bank overdrafts.

13. Equity

Equity consists of share capital, share premium, reserve for invested non-restricted equity, other reserves and retained earnings. Share capital The share capital of M-Brain Oy comprises a single series of shares. The shares have no par value and are fully paid. Each share carries one vote and equal right to dividends.

Age of trade receivables past due but not impaired

000 euros 31.12.2016 31.12.2015

Current 3 964,6 2 507,5

less than 3 months 1 524,4 1 366,3

over 3 months, less than 6 months 162,5 171,2

Over 6 months 129,2 122,9

Total trade receivables 5 780,6 4 167,9

000 eurosNumber of

shares

Share

capital

Share

premium

1.1.2015 23 593 215,5 247,2

31.12.2015 23 593 215,5 247,2

1.1.2016 23 593 215,5 247,2

31.12.2016 28 193 215,5 247,2

32

Share premium The amount exceeding the par value of shares received by the company in connection with share subscriptions is recorded in share premium in cases where options have been granted under the old Limited Liability Companies Act (29 Sept. 19781734). Reserve for invested non-restricted equity The reserve for invested non-restricted equity includes the other equity-related investments and share subscription prices to the extent not designated to be included in share capital. M-Brain Oy issued 4 600 new shares in a share issue in 2016. The share issue was fully subscribed and paid. The subscription price was 1 350 euro per share. The share issue less transaction costs was fully recognized in the reserve for invested non-restricted equity. Translation differences Currency translation reserve in other reserves in equity contains exchange differences relating to the translation of the results and net assets of the Group's foreign operations from their functional currencies to the Group's presentation currency (i.e. euro). Exchange differences previously accumulated in the foreign currency translation reserve are reclassified to profit or loss on the disposal of the foreign operation.

14. Deferred tax receivables and liabilities

000 euros 31.12.2016 31.12.2015

Deferred tax assets to be recovered after

more than 12 months1 984,7 470,2

Deferred tax assets to be recovered within 12

months

Total deferred tax assets 1 984,7 470,2

Deferred tax liability to be recovered after

more than 12 months-1 089,2 -596,4

Deferred tax liability to be recovered within

12 months

Total deferred tax liabilities -1 089,2 -596,4

Deferred taxes (net) 895,5 -126,2

33

000 euros

1.1.2016

Translation differences

+/-

Changes through income

statement

Recorded directly into

equity Other

movements

Changes through business

combinations 31.12.2016

Deferred tax asset

Provisions 0,00 0,00 0,00 0,00 0,00 0,00 0,00

Unused tax losses 396,80 0,00 259,90 0,00 0,00 1 240,97 1 897,66

Other items 73,40 24,04 -10,43 0,00 0,00 0,00 87,01

Total 470,20 24,04 249,47 0,00 0,00 1 240,97 1 984,67

0,00 -0,04 -1 240,97 0,00

000 euros

1.1.2016

Translation differences

+/-

Changes through income

statement

Recorded directly into

equity Other

movements

Changes through business

combinations 31.12.2016

Deferred tax liability

Capitalisation of intangible assets 0,00 0,00 0,00 0,00 0,00 0,00 0,00

Tangible and intangible assets measured at fair value in business combinations 596,40 12,83 -160,59 0,00 0,00 640,56 1 089,19

Held for sale assets 0,00 0,00 0,00 0,00 0,00 0,00 0,00

Other items 0,00 0,00 0,00 0,00 0,00 0,00 0,00

Total 596,40 12,83 -160,59 0,00 0,00 640,56 1 089,19

Deferred tax assets and liabilities

000 euros

1.1.2015

Translation

differences +/-

Changes

through

income

statement

Recorded

directly into

equity

Other

movements

Changes

through

business

combinations 31.12.2015

Deferred tax asset

Provisions 0,00 0,00 0,00 0,00 0,00 0,00 0,00

Unused tax losses 179,50 0,00 217,30 0,00 0,00 0,00 396,80

Other items 2,00 0,00 71,40 0,00 0,00 0,00 73,40

Total 181,50 0,00 288,70 0,00 0,00 0,00 470,20

000 euros

1.1.2015

Translation

differences +/-

Changes

through

income

statement

Recorded

directly into

equity

Other

movements

Changes

through

business

combinations 31.12.2015

Deferred tax liability

Capitalisation of intangible assets 0,00 0,00 0,00 0,00 0,00 0,00 0,00

Tangible and intangible assets measured at fair

value in business combinations 684,10 0,00 -87,70 0,00 0,00 0,00 596,40

Held for sale assets 0,00 0,00 0,00 0,00 0,00 0,00 0,00

Other items 0,00 0,00 0,00 0,00 0,00 0,00 0,00

Total 684,10 0,00 -87,70 0,00 0,00 0,00 596,40

34

15. Financial liabilities

Borrowings

On 25 June 2014 M-Brain Oy listed a bond in in the First North Bond Market Finland -market place. The issued, unsecured EUR 15 million bond has a fixed 8 % interest rate and it matures on 17 June 2017. Finance lease liabilities The Group has acquired lT equipment with finance lease agreements. The average lease term of agreements is 3 years (2015: 3 years). The Group has the option to acquire the equipment at nominal value at the end of the lease term. The Group's obligation under finance leases are secured by the lessor's title to the leased assets.

The Group’s borrowings consist mainly of a bond.

Maturity of loans

000 euros 31.12.2016 31.12.2015

less than 1 year 16 471,6 358,3

1 - less than 2 years 157,4 15 077,6

2 - 5 years 0,0 0,0

Total 16 629,0 15 436,0

000 euros 2016 2015

Minimum lease payments

Less than 1 year 148,7 183,6

1 – 5 years 204,1 227,5

Over 5 years 0,0 0,0

Total 352,9 411,1

Future finance charges -90,6 -73,9

Present value of finance lease

liabilities262,3 337,2

Present value of finance lease

liabilities

Less than 1 year 130,4 151,2

1 - 5 years 131,8 186,0

Over 5 years 0,0 0,0

Total 262,3 337,2

35

16. Trade and other payables

000 euros 31.12.2016 31.12.2015

Trade payables 1 287,5 1 373,7

Other payables 1 452,4 935,8

Accrued liabilities 4 694,7 2 446,7

Advances received 1 257,4 1 659,7

Total trade and other payables 8 692,0 6 415,9

17. Fair value of financial Instruments and Fair Value Hierarchy

ln estimating the fair value of an asset or a liability, the Group uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Group engages third party qualified evaluators to perform the valuation. 31.12.2016

000 euro

Available-for-sale financial assets

Receivables measured at amortized cost

Carrying amount

Fair value Fair value hiearchy

Financial assets

Trade and other receivables 0,0 7 121,5 7 121,5 7 121,5 2

Derivatives

Unlisted shares 16,9 0,0 16,9 16,9 2

Cash and cash equivalents 1 782,8 1 782,8 1 782,8 2

Total financial assets 16,9 8 904,3 8 921,1 8 921,1

Loans measured at amortized cos

Carrying amount

Fair value Fair value hiearchy

Financial liabilities

Borrowings:

Bonds 14 946,4 14 946,4 15 053,7 2

Loans from financial institutions

1 601,6 1 601,6 1 601,6 2

Trade payables, other payables 2 739,9 2 739,9 2 739,9 2

Total financial liabilities 19 288,0 19 288,0 19 395,2

36

31.12.2015

000 euro

Available-for-sale financial assets

Receivables measured at amortized cost

Carrying amount

Fair value Fair value hiearchy

Financial assets:

Trade and other receivables 0,0 5 426,3 5 426,3 5 426,3 2

Derivatives

Unlisted shares 19,4 19,4 19,4 2

Cash and cash equivalents 1 947,2 1 947,2 1 947,2 2

Total financial assets 19,4 7 373,4 7 392,8 7 392,8

Loans measured at amortized cos

Carrying amount

Fair value Fair value hiearchy

Financial liabilities:

Borrowings:

Bonds 14 840,0 14 840,0 15 068,9 2

Loans from financial institutions

933,2 933,2 933,2 2

Trade payables, other payables 2 158,3 2 158,3 2 158,3 2

Total financial liabilities 17 931,5 17 931,5 18 160,4

For financial reporting purposes, fair value measurements are categorised into Level 1 or 2 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

There were no transfers between Level 1 and 2 in the period. The fair values of the financial assets and financial liabilities have been determined in accordance with generally accepted pricing models based on a discounted cash flow analysis, with the most significant inputs being the discount rate that reflects the credit risk of counterparties. Available-for-sale financial assets The unlisted equity investments have been recognized at acquisition cost because it is not possible to determine their fair values using valuation methods. The fair value of these investments is not reliably determinable and the estimates fluctuate significantly or the different valuations in the range have probabilities that are not reasonably determinable to determine their fair values.

37

Trade and other receivables The fair value of trade and other receivables contracts corresponds to their acquisition costs due to the effect of discounting not being material considering the maturity of these receivables. Bonds and bank loans The fair values of borrowings are based on discounted cash flows. The discount rate used corresponds to the rate obtainable for similar bank loans by the Group at the reporting date. The interest rate includes a risk-free rate and a company specific risk premium. The pricing date of loans is 31 December each year, which means that the carrying amounts of the loans correspond to their fair values. Trade and other payables The original acquisition cost of the trade and other payables corresponds to their fair value due to the effect of discounting not being material considering the maturity of these payables.

18. Financial risk management instruments

Risk management

The Group's activities expose it to a variety of financial risks: market risk (including currency risk and interest rate risk), credit risk and liquidity risk. Risk management is carried out by management under policies approved by the board of directors. Management identifies and evaluates the financial risks in co-operation with the operations. The Group's overall risk management approach seeks to minimize potential adverse effects on the Group's financial performance.

Foreign currency risk management The foreign currency risk exposure of the Group is limited. The Group operates through subsidiaries that all have operations only within their domicile countries (mainly United Kingdom, Sweden, Russia, Malaysia, Canada, China and the US outside the euro zone). This leads to transactions within each subsidiary in all material respects being carried out in a single currency. Currently, translation differences only result from consolidation of foreign subsidiaries and the Group does not engage in any currency risk management activities. The Group undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The functional currency of the Group is Euro. Foreign exchange risk arises when the fair value of assets or liabilities or future cash flows are denominated in a currency that is not the entity's functional currency. The Group is mainly exposed to the foreign currency fluctuation of the United States (USD), Canada (CAD), Sweden (SEK), Norway (NOK) and the United Kingdom (GBP). The risk is mainly attributable to the exposure outstanding on foreign exchange receivables and payables in the Group at the end of the reporting period. The company does not hedge foreign currency exposures.

38

Interest rate risk management Group's long-term financing is mainly based on an unsecured euro 15 million bond issued on 25 June 2014, which has fixed 8 % interest rate. The bond is listed in the First North Bond Market Finland -market place and it matures on 17 June 2017. Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties. Continuous credit control is performed on the evaluation of the financial position of accounts receivable. The Group does not have significant credit risk exposure to a single counterparty. The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings. The Group did not have significant receivables overdue with a substantial credit risk at the end of the reporting period.

Liquidity risk management

Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity risk management framework for the management of the Group's short-, medium- and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. The Group's liquidity level was good during the year 2016. In 2016, the Group organised a share issue totaling EUR 6.2 million, which was fully subscribed by the current M-Brain shareholders. The proceeds were used to finance the Opoint acquisition. The Group's management has not identified significant risks to the Group’s liquidity position, however taking into account the information under Capital management below regarding the maturity of the bond. The following table presents the maturity analysis of the company's undiscounted liabilities: 31.12.2016

000 euros Balance

sheet value Total cash

flows Less than

1 year 1 to 2 years

2-5 years

5+ years

Bond 14 946,4 15 600,0 15 600,0 0,0

Borrowings 1 682,5 1 687,1 1 527,3 138,7 21,2 0,0

Finance lease liabilities 262,3 352,9 148,7 148,7 55,4 0,0

Trade payables, other payables 2 739,9 2 739,9 2 739,9 0,0 0,0 0,0

Total 19 631,1 20 379,9 20 015,9 287,4 76,6 0,0

Capital management

The main objective of the capital management activities of the Group is to maintain an optimal capital structure to ensure that entities in the Group will be able to continue as a going concern while maximizing the return to stakeholders in the long-term. The capital structure is managed principally

39

through dividends, subordinated loans and share issues. The Group's overall strategy has remained the same compared to the previous period. The covenants related to the Groups issued bond set requirements on certain key ratios starting from 31 December 2015. The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of net debt (interest-bearing loans offset by cash and bank balances) and equity of the Group (comprising issued capital, reserves and retained earnings). 000 euros 31.12.2016 31.12.2015

Interest-bearing liabilities 16 891,3 15 773,2

Interest-bearing receivables

130,8 0,0

Cash and cash equivalents

1 782,8 1 947,2

Net debt 14 977,6 13 826,1

0,0

Equity 17 136,4 11 642,6

Net debt to equity ratio (gearing)

87,4 % 118,8 %

The capital structure is followed by the Group's management. The Group does not have a target range for the gearing ratio that it would strive to maintain. Availability of capital to fund continuing growth is one of the targets of capital management activities. Group's borrowings include covenant clauses agreed with the lenders which oblige the group companies. Based on Group management evaluation, these covenants do not have a significant impact on the Group's current financial position. The Company has EUR 15 million unsecured bond listed on the First North Bond Market Finland market place which is due on 17 June 2017. The company has initiated processes with various parties for arranging refinancing and based on management assessment it is very likely that refinancing will be arranged as planned. Without the accomplishment of the refinancing arrangements under negotiation, the Company does not have adequate working capital for the next twelve months and the Company is not able to repay the bond as part of the course of ordinary business operations. The Group’s loan financing involves a bi-annually tested financial covenant relating to net debt to EBITDA ratio. The company has met the terms of the financial covenant. In addition, the Company has performed the interest payment obligations of the bond and other loan repayment obligations during the bond listing period.

40

19. Share-based payments

The Group had granted share-options to some key employees on 18 October 2012. A second grant was made in 4 September 2013. The option rights were transferred free of charge and each option gave right to subscribe to one share between 1 January 2016 and 28 February 2016. The exercise price was 750 €. The options expired unsubscribed at the end of subscription period. The number of options outstanding was 605 options.

20. Related party transactions

Balances and transactions between the parent and its subsidiaries have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below. The following transactions were carried out with related parties:

Compensation of key management personnel Key management of the Group includes members of the Executive Committee and Board of Directors.

000 euros 2016 2015

Transactions with companies related to

significant owners:

Purchases of services 394,5 494,5

Receivables 33,1 31,1

Payables 241,9 248,5

000 euros 2016 2015

Salaries and other short-term employee

benefits

CEO 188,7 342,0

Executive Committee 587,2 743,8

Board of Directors 68,7 82,2

Total 844,6 1 168,0

Share-based payments

CEO 0,0 0,0

Executive Committee 0,0 84,0

Board of Directors 0,0 0,0

Total 0,0 84,0

Total compensation of key management

personnel844,6 1 252,0

41

21. Subsidiaries

Changes during 2016 * Global Intelligence Alliance Germany GmbH merged with M-Brain GmbH. ** Global Intelligence Alliance USA Inc. changed its name to M-Brain USA Inc. *** Global Intelligence Alliance Asia-Pacific Pte.LTD changed its name to M-Brain Singapore Pte.LTD. **** GIA Business Consulting (Shanghai) Co.Ltd changed its name to M-Brain China Co.Ltd. ***** M-Brain Ab and M-Brain Sverige Ab merged with Opoint Ab. Opoint Ab changed its name to M-Brain Ab in January 2017. Dormant company Global Intelligence Alliance Benelux BV (the Netherlands) was sold.

Global Intelligence Alliance Estretégia e Consultoria em Marketing Ltda (Brazil) was sold.

22. Contingent liabilities, contingent assets and commitments

The group has leased office premises and vehicles, as well as office furniture and equipment with operating lease arrangements. The Group’s head office moved to new premises in April 2015. The new premises have been leased from the same lessor that was leasing the premises of the former head office. ln connection with the signing of the new lease agreement in 2014, it was agreed that the lease liabilities relating to the former premises would expire. The end date of the new head office lease is 30 June 2020 at the earliest. These lease agreements do not provide the Group with any special purchase or continuance options. Minimum lease payments payable based on the non-cancellable lease agreements:

Name of subsidiaryPlace of incorporation

and operation

Proportion of

ownership

interest and

voting power

held by the

Group on 31

December 2016

M-Brain Oy

M-Brain Insight Oy Finland 100 %

M-Brain Inc. USA 100 %

M-Brain GmbH* Germany 100 %

M-Brain Ltd Great Britain 100 %

M-Brain Information Sdn. Bhd. Malaysia 100 %

M-Brain SARL France 100 %

OOO M-Brain Russia 100 %

M-Brain Americas Inc Canada 100 %

M-Brain USA Inc.** USA 100 %

Global Intelligence Alliance UK Ltd. Great Britain 100 %

Continental Group Services Ltd. British Virgin Islands 100 %

M-Brain Singapore Pte. LTD*** Singapore 100 %

M-Brain China Co. Ltd.**** China 100 %

Opoint Holding AS Norway 100 %

Opoint AS Norway 100 %

Opoint AB***** Sweden 100 %

Opoint Eesti Oü Estonia 100 %

42

The Group has paid prepayments as guarantees for lease agreements at the amount EUR 308.4 (229,4) thousand in 2016. The Group has drawn a bank overdraft from the lender bank of EUR 1,444.2 (277.5) thousand and the unused overdraft facility is EUR 55.8 (1,222.5) thousand. The Group has a cash pool arrangement in the lender bank, the arrangement also includes the bank overdraft limit mentioned above. The cash balances in the subaccounts of the subsidiaries of M Brain- Oy which are part of the cash pool, are collateralised as a general guarantee to cover all current and future liabilities and commitments of the company for which it alone, and together with other parties, is liable against the lender bank. The parent company has given a corporate mortgage of EUR 5.4 million and pledged all shares of M-Brain lnsight Oy as collateral for its obligations for the benefit of the lender bank. The subsidiary M-Brain lnsight Oy has given a EUR 0.4 million corporate mortgage as collateral for all current and future obligations of the group companies for the benefit of the lender bank. The bond financing of the Group contains covenants tied to e.g. indebtedness and the amount of net debt to the adjusted EBITDA. Based on the view of the Board of Directors of the Group, the covenants have been met in the assessment of the covenants on 31 December 2016.

23. Business combinations

Acquisition of the Opoint Group in 2016 M-Brain Oy acquired 100 % of Opoint Holding AS’s share capital in April 2016. Opoint is a media intelligence company which was established in 2014. Opoint has operations in Norway, Sweden and Estonia. The acquisition of Opoint increases further the Group's global accessibility. Assets acquired and liabilities recognised at the date of acquisition:

000

euros

Property, Plant and equipment 91,8

Technology 1 150,3

Customer relationships 1 362,4

Other intangible assets 55,6

Deferred tax assets 1 217,0

Investments 29,7

Trade and other receivables 1 742,1

Cash and cash equivalents 634,4

000 euros 2016 2015

Not later than 1 year 1 554,7 817,1

Later than 1 year and not longer than

5 years3 646,6 2 058,6

Later than 5 years 155,8 0,0

Total 5 357,0 2 875,7

43

Total assets 6 283,3

Deferred tax liabilities 628,2

Borrowings 2 765,8

Trade and other payables 3 298,4

Total liabilities 6 692,4

Net assets -409,1

Goodwill arising on acquisition 000 euros

Consideration in cash 2 518,7

Previously held equity interest 0,0

Identifiable net assets acquired -409,1

Goodwill 2 927,8

Transaction costs related to the acquisition, EUR 93.6 thousand are included in "Other operating expenses" in the statement of comprehensive income. The acquisition of Opoint Holding AS resulted goodwill related to expected synergies, increase of revenue, future market development and Opoint personnel. As result of the acquisition, the Group has access to Norwegian and Estonia markets. In addition, the acquisition strengthens the position of the Group in Swedish markets. M-Brain Group statement of comprehensive income 2016 includes EUR 8,195.3 thousand revenue from Opoint companies. If Opoint consolidation had been done starting from January 1st 2016, the Group revenue from continuing operations would be EUR 38,412.5 thousand. Opoint companies’ effect to the total loss for the period 2016 was EUR -264.8 thousand. If Opoint consolidation had been done starting from January 1st 2016, the total loss of for the period from continuing operations would be EUR -735,6 thousand.

24. Events after the reporting period

After the end of the financial year, Opoint AS, a subsidiary of Opoint Holding AS acquired in April 2016 by M-Brain Insight Oy, has received a legal claim. Opoint AS has denied the claim. Majority of the claim for damages is based on the pre-acquisition period. If on the contrary to Opoint AS expectations the claim results in significant costs, the Company will take action to recover the costs from Opoint Holding AS sellers, based on the warranties given by the seller.

M-Brain Oy

IFRS Consolidated Financial Statements 31.12.2016

Notes the financial statements

Parent Company Financial Statements (FAS)

Parent Company Income Statement (FAS)

STATEMENT OF PROFIT OR LOSS 1.1. - 31.12.2016 1.1. - 31.12.2015

REVENUE 1 064 486,2 1 731 186,3

OTHER OPERATING INCOME 239 538,0 723,4

STAFF EXPENSES

Wages and salaries -1 053 117,0 -1 248 581,9

Pension expenses -162 305,3 -196 766,3

Other social security expenses -27 080,2 -31 758,6

STAFF EXPENSES TOTAL -1 242 502,4 -1 477 106,8

DEPRECIATIONS AND AMORTIZATIONS

Depreciation according to plan -168 768,9 -138 326,7

DEPRECIATIONS AND AMORTIZATIONS TOTAL

OTHER OPERATING EXPENSES -1 393 302,4 -821 501,9

OPERATING PROFIT / LOSS -1 500 549,4 -705 025,8

FINANCE INCOME AND COSTS

Finance income

From others 684,4 672,4

Finance costs

To others -1 229 685,9 -1 230 613,1

FINANCE INCOME AND COSTS TOTAL -1 229 001,5 -1 229 940,7

PROFIT (LOSS) BEFORE APPROPRIATIONS AND TAXES

APPROPRIATIONS

Group contribution received 1 515 357,6 1 036 860,0

APPROPRIATIONS TOTAL 1 515 357,6 1 036 860,0

PROFIT (LOSS) FOR THE PERIOD -1 214 193,4 -898 106,6

45

Parent Company Balance Sheet (FAS)

STATEMENT OF FINANCIAL POSITION

ASSETS 31.12.2016 31.12.2015

NON-CURRENT ASSETS

Intangible assets 444 500,2 265 949,2

Tangible assets 23 572,4 27 639,5

Investments total 30 637 549,0 30 696 101,9

TOTAL NON-CURRENT ASSETS 31 105 621,6 30 989 690,7

CURRENT ASSETS

Long-term

Receivables from group companies 205 942,0 205 942,0

Long-term receivables total 205 942,0 205 942,0

Short-term

Trade receivables 28 468,6 4 459,0

Receivables from group companies 11 772 994,7 3 891 216,1

Loan receivables 0,0 26 643,7

Other receivables 11 981,7 49 363,7

Prepayments and accrued income 132 157,4 59 573,4

Short-term receivables total 11 945 602,4 4 031 255,9

Current investments

Current investments 2 411,7 2 411,7

Current investments total 2 411,7 2 411,7

TOTAL CURRENT ASSETS 12 153 956,1 4 239 609,6

TOTAL ASSETS 43 259 577,7 35 229 300,2

EQUITY AND LIABILITIES

EQUITY

Share capital 215 500,0 215 500,0

Share premium 247 169,1 247 169,1

Reserve for invested non-restricted equity 18 587 921,6 12 377 921,6

Retained earnings 95 534,2 993 640,7

Profit (loss) for the period -1 214 193,4 -898 106,6

TOTAL EQUITY 17 931 931,5 12 936 124,8

LIABILITIES

Non-current liabilities

Bonds 0,0 15 000 000,0

Total non-current liabilities 0,0 15 000 000,0

Current liabilities

Bonds 15 000 000,0 0,0

Loans from financial institutions 1 444 224,9 277 462,0

Trade payables 49 448,8 136 814,2

Amounts owed to group companies 8 471 528,8 6 457 403,2

Other liabilities 95 996,0 54 743,7

Accrued liabilities 266 447,6 366 752,3

Total current liabilities 25 327 646,2 7 293 175,4

TOTAL LIABILITIES 25 327 646,2 22 293 175,4

TOTAL EQUITY AND LIABILITIES 43 259 577,7 35 229 300,2

46

Parent Company Cash Flow Statement (FAS)

Statement of cash flow

Cash flows from operating activities 1.1.-31.12.2016 1.1.-31.12.2015

Profit (loss) before appropriations and taxes -2 729 550,9 -1 934 966,6

Adjustments:

Depreciation according to plan 168 768,9 138 326,7

Other income and expenses not involving payment -99 738,2 0,0

Financial income and expenses 1 229 001,5 1 229 940,7

Cash flows before changes in working capital -1 431 518,8 -566 699,1

Changes in working capital:

Current operative receivables -771 215,8 -919 263,9

Current operative payables 298 011,8 2 762 888,1

-473 204,0 1 843 624,1

Cash flows from operating activities before financial -1 904 722,7 1 276 925,0

items and taxes

Interest paid -1 225 165,3 -1 230 613,1

Interest received 684,4 672,3

Financing income from operating activities 0,0 0,0

Income taxes paid 0,0 0,0

Net cash generated by operating activities -3 129 203,6 46 984,3

Net cash generated by operating activities -3 129 203,6 46 984,3

Cash flows from investing activities:

Investments in tangible and intangible assets -277 371,9 -112 616,2

Income from disposal of tangible and intangible assets 0,0 0,0

Loans granted -5 569 220,3 0,0

Repayments of loan receivables 0,0 0,0

Investments in other investments 0,0 0,0

Income from disposal of other investments 0,0 0,0

Net cash generated by investing activities -5 846 592,2 -112 616,2

Cash flow from financing activities:

Increase in equity subject to a charge 6 210 000,0 0,0

Withdrawals of current debt (+) 1 166 762,9 0,0

Repayments of current debt (-) 0,0 0,0

Withdrawals of non-current debt (+) 0,0 65 631,9

Repayments of non-current debt (-) 0,0 0,0

Change in cash pool account 1 599 032,9 0,0

Net cash generated by financing activities 8 975 795,8 65 631,9

Net increase in cash and cash equivalents 0,0 0,0

Cash and cash equivalents at the beginning of the period 0,0 0,0

Cash and cash equivalents at the end of the period 0,0 0,0

47

Notes to the Parent Company Financial Statements

Preparation of the financial statements The presentation of the statement of profit or loss has been revised to conform to the requirements of the new Bookkeeping Act. As a consequence, the group contribution presented in extraordinary items in the 2015 financial statements is now presented as comparative information in “group contribution received” under “appropriations”. The company is using a new chart of accounts due to the change of the accounting program during the financial year, thus causing differences in the comparability of the current and previous financial years. Recognition and measurement principles Property, plant and equipment owned by the Company is depreciated in accordance with a plan. The cost of tangible and intangible assets in the balance sheet is reduced by accumulated depreciations. The carrying amounts include variable costs related to the acquisition. The items are depreciated starting from the month when the item is taken into use. Development costs are normally expensed when they are incurred. Development costs which generate income during 3 or more years are recognized in the balance sheet as development costs and depreciated according to plan. The Company’s development costs have been capitalised under the principle of specific prudence. With its development costs, the Company generates new products and services. The most significant development efforts during the recent years have been related to crystallization, elaboration, classification and enrichment of BI-driven media data.

Property, plant and equipment Useful life Depreciation method

Software 5 years Straigthline depreciation

Development costs 3-5 years Straigthline depreciation

Intangible rights 5 years Straigthline depreciation

Other long-term expenses 3-6 years Straightline depreciation

Machinery and equipment 8-10 years Straightline depreciation and 25% net expenditure

Notes to the statement of profit or loss

Revenue

The company's revenue consists of management services to its subsidiaries.

Other operating income

The Company's other operating income consists mainly of rental income.

PERSONNEL AND MANAGEMENT COMPENSATION

2016 2015

Average number of employees during the financial year 14 16

Remuneration of the Management 2016 2015

48

Remuneration of the CEO and Executive Board 222 805,3 289 390,4

Pension commitments of the CEO and the Executive Board

The CEO and the Executive Board do not have extraordinary pension agreements. OTHER OPERATING EXPENSES

2016 2015

Administration -197 258,3 -132 281,7

Telephone, IT and office -44 284,0 -101 622,5

Marketing -92 017,5 -9 738,2

Travel -43 271,4 -93 652,9

Representation -9 273,9 -15 411,6

Office space -310 600,4 -314 095,7

Other operating expenses -696 597,0 -154 699,4

-1 393 302,4 -821 501,9

AUDITORS FEES 2016 2015

Statutory audit 38 870,0 26 667,0

Assignments (TTL 1.1,2 §) 11 734,6 21 205,0

Tax counselling 0,0 0,0

Other services 4 561,6 0,0

55 166,2 47 872,0

Notes to the statement of financial position

INTANGIBLE AND TANGIBLE ASSETS

Development costs 2016 2015

Book value at the beginning of the period 7 712,5 23 942,5

Additions 7 500,0 0,0

Amortization according to plan -7 837,5 -16 230,0

Book value at the end of the period 7 375,0 7 712,5

Other long-term expenses 2016 2015

Book value at the beginning of the period 258 236,7 267 772,5

Additions 335 752,7 108 195,0

Amortization according to plan -156 864,3 -117 730,8

Book value at the end of the period 437 125,2 258 236,7

Intangible assets total 444 500,16 265 949,21

Machinery and equipment 2016 2015

Book value at the beginning of the period 18 242,3 18 187,1

Additions 0,0 4 421,2

Depreciations according to plan -4 067,1 -4 365,9

Book value at the end of the period 14 175,2 18 242,3

Other tangible assets

2016

2015

Book value at the beginning of the period 9 397,2 9 397,2

Book value at the end of the period 9 397,2 9 397,2

Tangible assets total 23 572,43 27 639,50

49

INVESTMENTS

Holdings in group companies 2016 2015

Carrying amount at the beginning of the period 30 696 101,9 30 696 101,9

Additions 0,0 0,0

Depreciations according to plan -58 552,9 0,0

Carrying amount at the end of the period 30 637 549,0 30 696 101,9

OWNERSHIP IN OTHER COMPANIES

GROUP COMPANIES % of ownership

Company's name and place of business 100

M-Brain Insight Oy, Helsinki

M-Brain Oy has sold its shares in M-Brain Ab to M-Brain Insight Oy's subsidiary Opoint Ab.

RECEIVABLES

NON-CURRENT RECEIVABLES 2016 2015

Non-current receivables from group companies

Other receivables 205 942,0 205 942,0

CURRENT RECEIVABLES

Receivables from group companies 2016 2015

Trade receivables 1 569 258,7 733 821,4

Other receivables 10 143 014,3 3 157 394,8

Accrued income 60 721,6 0,0

Total 11 772 994,7 3 891 216,1

Accrued receivables 2016 2015

Income tax 0,0 0,0

Purchase accruals 129 931,0 59 573,4

Prepayments 0,0 0,0

Other 2 226,4 0,0

Total 132 157,4 59 573,4

EQUITY

Restricted equity 2016 2015

Share capital

Share capital 1 January 215 500,0 215 500,0

Share capital 31 December 215 500,0 215 500,0

Share premium

Share premium 1 January 247 169,1 247 169,1

Share premium 31 December 247 169,1 247 169,1

Total restricted equity 462 669,1 462 669,1

Non-restricted equity

Reserve for invested non-restricted equity 2016 2015

At the beginning of the period 12 377 921,6 12 377 921,6

Additions 6 210 000,0 0,0

50

Total 18 587 921,6 12 377 921,6

Retained earnings 2016 2015

Profit (loss) for previous periods 95 534,2 993 640,7

Profit (loss) for the period -1 214 193,4 -898 106,6

Retained earnings at the end of the period -1 118 659,2 95 534,2

Non-restricted equity total 17 469 262,4 12 473 455,7

Equity 31 December 17 931 931,5 12 936 124,8

Calculation of distributable funds

Reserve for invested non-restricted equity 18 587 921,6 12 377 921,6

Profit (loss) for the previous periods 95 534,2 993 640,7

Profit (loss) for the period -1 214 193,4 -898 106,6

Capitalized development costs -7 375,0 -7 712,5

Total distributable funds 17 461 887,4 12 465 743,2

CURRENT LIABILITIES

Liabilities to group companies 2016 2015

Advances received 62 142,2 0,0

Accounts payable 307 422,4 78 591,8

Other payables 8 097 443,6 6 378 811,4

Accruals and deferred income 4 520,6 0,0

Total 8 471 528,8 6 457 403,2

Accrued payables 2016 2015

Holiday pay accrual 107 551,8 143 483,4

Other statutory employer payment accruals 60 539,0 91 268,9

Income taxes 0,0 0,0

Other accrued payables 98 356,8 132 000,0

Total 266 447,6 366 752,3

COMMITMENTS AND CONTINGENT LIABILITIES

Liabilities and related collaterals by balance sheet item and collateral type 2016 2015

Drawn bank overdraft 1 444 224,9 277 462,0

Undrawn bank overdraft 55 775,1 1 222 538,0

Total 1 500 000,0 1 500 000,0

Collateral

Corporate mortgage collateral value 5 400 000,0 5 400 000,0

Shares of M-Brain Insight Oy book value 30 625 943,4 30 625 943,4

36 025 943,4 36 025 943,4

The Company has a cash pool arrangement in Nordea Pankki Suomi Oyj, which includes the bank overdraft mentioned above. The cash balances in the subaccounts of the subsidiaries of M-Brain Oy, which are part of the cash pool, presentd as internal loan payables in the parent company’s balance sheet, are collateralized as a general guarantee to cover all current and future liabilities and commitments of the company for which it alone, or together with other parties, is liable against Nordea Pankki.

51

Off balance sheet commitments and contingent liabilities

Pension liabilities

The pension liabilities of the Company have been insured in outside pension insurance companies.

Other commitments 2016 2015

To others

Paid lease collaterals 4 209,6 4 209,6

Paid lease guarantee 134 273,8 134 273,8

Total 138 483,4 138 483,4

Lease commitments 2016 2015

Payable within 1 year 436 293,2 433 342,2

Payable later 1 090 733,1 1 515 793,7

NOTES TO FINANCIAL LEASE AGREEMENTS 2016 2015

Payable within 1 year 83 941,4 77 113,7

Total 83 941,4 77 113,7

Payable later 86 338,3 58 339,4

Total 86 338,3 58 339,4

Lease commitments 2016 2015

Payable within 1 year 128 711,7 124 354,2

Payable later 153 755,7 198 903,6

Total 282 467,5 323 257,8

Other commitments The bond financing of the Group contains covenants. The covenants are tied to, among others, additional indebtedness and as financial key figures, the amount of net debt to the adjusted EBITDA. Based on the view of the Board of Directors, the covenants have been met in the assessment of the covenants on 31 December 2016. Compliance with the conditions will continue to be monitored. The bond is due for payment on 17 June 2017 and the company has started negotiations for re-financing.

52

Signatures

Signatures of the financial statements and annual report

Helsinki . . 2017

Kim Nyberg Robert Ingman

Chairman of the Board and CEO Member of the Board

Petri Laine Tage Lindberg

Member of the Board Member of the Board

Marjukka Nyberg Matti Rusanen

Member of the Board Member of the Board

Krista Karli

Member of the Board

Auditor’s Note

A report of the audit performed has been issued today

Helsinki . . 2017

Deloitte & Touche Oy

Authorized Public Accountants

Hannu Mattila

Authorized Public Accountant

53

List of Bookkeeping Books and Vouchers Types

List of accounting books for 2016

Journal Electronic archiving

General ledger Electronic archiving

Salary accounting Electronic archiving

Accounts payable ledger Electronic archiving

Accounts receivable ledger Electronic archiving

Balance book Separately bound

Balance specifications Separately bound

List of vouchers for 2016

PA0000XX Bank vouchers

PM000XX Payment vouchers

CL Closing

OH00XX Purchase credit notes

210XXX Clients

KO Fixed asset vouchers

KOM Fixed asset ledger

MATKALASKU M2 cost bookings

MU Memo vouchers

PALKKA Salaries

200XXX Sales invoices

MH-300XXX Sales credit notes

500XXX Suppliers

V00XXX References

LT Notes vouchers

Storage time of accounting books and vouchers

The balance book and other accounting books of the financial year will be stored until 31 December 2026.

The vouchers will be stored until 31 December 2022.