Siili Solutions. Result Comment 16 August VALA Group acquisition boosts outlook , 1

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1 , 1 14/08/17 14/10/17 14/12/17 14/02/18 14/04/18 14/06/18 14/08/18 SHARE Company Price 11,75 Price as of High/Low 12m 13,48 / 10,25 COMPANY DATA Market Cap. Current 82 EV current 79 No. of shares (out) 7,0 No. of shares (dil) 7,0 SHAREHOLDERS Erina Oy 12 % Elo 10 % Lamy Oy 7 % Ilmarinen 5 % Freefloat 100 % STOCK DATA Bloomberg SIILI FH CALENDAR Next report date 2019 AGM SHARE PRICE HEX Porfolio ANALYST Aaron Kaartinen aaron.kaartinen@fim.com Fleminginkatu HELSINKI Dealing (09) VALA Group acquisition boosts outlook ( Siili ) first half growth was close to our estimate but profitability fell short of our estimate. However, employee churn was lower and headcount was above our estimate fueling growth outlook for the second half. VALA Group acquisition supports outlook for 2019 and beyond. Siili revenue in H1/2018 was 34,2 million somewhat below our estimate of 34,6 million. Organic growth picked up to above 12% with strong 43% YoY growth in automotive. Employee churn was 25% lower YoY and headcount of 636 was above our estimate (630) fueling H2 revenue outlook. Our preferred profitability metric EBITDA came in at 2,3 million vs. our estimate of 2,9 million. The miss resulted from one-off cost related to ERP & accounting information systems implementation and employee stock savings plan (approx. 0,3 million). Furthermore, lower than expected utilization rate resulted in unexpected decline in revenue per employee. Management see this as an organizational problem with remedies implemented in the strategy update. According to management the demand outlook is strong. Siili announced a strategy update and a new organizational structure in June Current centrally led matrix organization is replaced with several independent business segments by the end of Decision making is moved closer to clients and employees. Synergies between segments arise from centralized support functions (Sales, HR, admin). These changes are aiming to accelerate growth and improve profitability from 2019 onwards. Siili acquired 60% of VALA Group a Helsinki based software service company specialized in software quality assurance and software automation. Both parties have the right to execute the trade of the remaining 40% of VALA Group s shares, however, earliest in the beginning of Debt free purchase price was 6 million implying 2017 EV/EBITDA of 7,1x. We consider this value creating with strong track record of profitable growth of VALA Group. VALA Group is operating in niche with good demand outlook (software automation). Based on current employee count of 80 we estimate that strong growth will continue in 2018 and beyond with good demand pull (45% growth in 2018). International business (mainly automotive digital clusters) growth was 43% YoY and close to our estimate of 45% YoY. Management expects the growth to exceed domestic growth in 2018 and we continue to expect it to be close to 45% in We find that the 2019 EV/EBITDA multiple for most relevant peers (Vincit, Gofore, KnowIT, HiQ and Acando) is in the range of 10x. Siili has above peer group growth, but risks relate to smaller size, VALA Group performance and new organizational structure. We consider 2019 EV/EBITDA 9,5x multiple to reflect the value of Siili. Taking into account the effect of minority interest in VALA Group to Siili EBITDA the resulting multiple imply price of approximately 13,4 per share. Figures in m e 2019e 2020e Sales 29,5 41,9 48,4 57,8 71,8 88,1 99,9 Sales growth 56,9 % 42,0 % 15,6 % 19,4 % 24,2 % 22,7 % 13,3 % EBITDA 3,0 4,0 4,8 5,8 7,2 9,9 10,9 EBITDA margin 10,3 % 9,6 % 9,9 % 10,0 % 10,1 % 11,2 % 10,9 % EBIT 1,8 3,5 4,1 5,0 6,3 9,1 10,1 EBIT margin 6,0 % 8,4 % 8,6 % 8,7 % 8,8 % 10,3 % 10,1 % PTP 1,8 3,2 4,0 5,0 6,3 9,1 10,1 EPS 0,67 1,22 0,46 0,57 0,68 0,94 1,04 DPS 0,47 0,70 0,30 0,39 0,55 0,70 0,90 Yield 3,4 % 2,9 % 3,6 % 3,5 % 4,7 % 6,0 % 7,7 % P/E 20,3 19,7 18,0 19,5 17,2 12,5 11,3 EV/EBIT 13,5 13,5 11,7 13,8 12,2 8,1 7,1 EV/EBITDA 7,8 11,8 10,2 12,0 10,7 7,5 6,5 EV/Sales 0,8 1,1 1,0 1,2 1,1 0,8 0,7 P/B 2,8 4,3 3,2 3,7 3,6 3,2 2,9 ROE 18 % 24 % 22 % 20 % 23 % 30 % 30 % ROCE 22 % 27 % 25 % 25 % 28 % 37 % 37 % Net Gearing -21 % -9 % -47 % -39 % -22 % -32 % -39 % FCF/share 0,49 0,01 0,56 0,23 0,79 1,03 1,16 Source: Bloomberg, Siili, S-Bank (FIM). Financials for 2014 based on Finnish GAAP

2 , 2 Sales was 34,2 million somewhat below our estimates. EBITDA was 2,3 million and below our estimate. This related mainly to lower than expected utilization rates and approximately 0,3 million of additional costs (employee stock savings plan and new ERP) Deviation table Deviation 1H18 1H18e Actual vs. 2018e 2018 Actual FIM FIMe FIM Guidance Sales 34,2 34,6-1 % 71, EBITDA 2,3 2,9-20 % 7,2 6,6-7,6 EBITDA-% 6,7 % 8,3 % -1,6ppt 10,1 % EBIT 1,7 2,5-32 % 6,3 EBIT-% 5,0 % 7,3 % -30,8 % 8,8 % PTP 1,7 2,5-33 % 6,3 EPS 0,19 0,29-33 % 0,68 DPS 0,39 0,39 0 % 0,55 Source: S-Bank(FIM) Estimates We made significant revisions to our 2019 estimates due to VALA Group acquisition Estimate changes Estimate revisions 2018e 2018e Chg. 2019e 2019e Chg. m Old New % Old New % Sales 69,7 71,8 3 % 78,8 88,1 12 % EBITDA 7,2 7,2 1 % 8,1 9,9 22 % EBITDA-% 10,3 % 10,1 % -0,2 pp 10,3 % 11,2 % 0,9 pp EBIT 6,4 6,3-2 % 7,2 9,1 26 % EBIT-% 9,2 % 8,8 % -0,4 pp 9,2 % 10,3 % 1,2 pp PTP 6,4 6,3-2 % 7,2 9,1 26 % EPS 0,74 0,68-7 % 0,83 0,94 14 % Source: S-Bank (FIM) Estimates Guidance for 2018 is inline with our revenue and EBITDA estimates Guidance for 2018 Outlook for 2018 is the following. Net sales in 2018 estimated to reach million euro and EBITDA 6,6 7,2 million euro. Guidance for 2018 is in line with our estimates. Source: Bloomberg, Siili, S-Bank (FIM)

3 , 3 VALA Group in brief VALA Group Ltd is an engineering company specialized in software quality assurance and software automation. Keys services are test automation, software testing, quality assurance process consultation and quality driven software development. The company was established in Helsinki in Customers range from SMEs to major publicly listed companies. Most of projects are done in following domains: financial, telecom, electronics and medical. Projects vary from embedded systems to web-based services with emphasis on innovative solutions and excellent quality. The company was 100% owned by its employees. Headquarters is located in Helsinki, while operating also in Germany and Romania as well. Oyj acquired 60% of VALA Group shares. VALA is reported as part of Siili from VALA will continue its operations autonomously and with its current brand. Purchase price for 60% of shares was 7,2 million including 1,2 million remuneration for VALA cash balance. Debt free purchase price was 6 million implying 2017 EV/EBITDA of 7,1x. We consider this value creating with VALA Group strong track record of profitable growth. Both Siili and the sellers have the right to execute a trade for the remaining 40% of VALA Group shares from start of year 2021 and onwards. The price for the remaining shares are determined by VALA Group future revenue and profitability. Detailed terms have not been published. VALA Group has a very strong track record of profitable growth with CAGR of 50% between with improving profitability resulting in EBIT margin of 25% in VALA Group is operating in niche with good demand outlook (software automation). Based on current employee count of 80 we estimate that strong growth will continue in 2018 and beyond with good demand pull (45% in 2018, 30%% in 2019 and 25% in 2020). We estimate slightly declining margins in coming years. Historical and estimated financials of VALA Group Source: Asiakastieto, VALA Group, Siili, S-Bank (FIM)

4 , 4 New organizational structure Siili announced a strategy update and a new organizational structure in June The old centrally led matrix organization is replaced with several independent business segments by the end of the year. Siili is moving the decision making closer to clients and employees. Synergies between segments arise from centralized support functions (Sales, HR, admin). These changes are aiming to accelerate growth and improve profitability from 2019 onwards. As a first step the new Siili business segments (as of ) are: 1. Key Account covering most of current business in digital services development and maintenance 2. Automotive aiming for rapid growth as automotive developer partner 3. New Solutions platform for new client focused business areas 4. Expert Agency professionals for client led projects 5. Cloud Managed Services expand and improve client applications and IT-infrastructure by utilizing cloud platforms Most of the current business is in Key Account and Expert Agency segments with approximately two thirds of employees. Automotive headcount is approximately 15%. New Solutions has a headcount below 10% of employees and Cloud Managed Services has below 5%. New Solutions is developing new business in co-operation with clients. New Solutions is aiming to develop new business by enabling employees to implement new technology solutions with clients. Siili requires that the funding for the project is based on client billings. Management sees good opportunities and the leading new business is currently based around open source Robot Framework. The idea is to repeat the success of Automotive segment i.e. creating a fast growing stand-alone business segment. Cloud Managed Services seeks growth opportunities in low risk maintenance environment in modern cloud based applications and IT-infrastructure. This is a growing market as legacy systems are replaced by modern cloud based infrastructure. Siili business segments (as of ) Key Account Automotive New Solutions Expert Agency Cloud Managed Services Source: Siili, S-Bank (FIM)

5 , 5 Peer group valuation Siili has relatively few close listed peers in Finnish stock exchange. We find the closest peers to be Vincit and Gofore which are IT service providers focused mainly in Technology segment of digitalization (limited Design and Data). We find the other close peers listed in Stockholm including KnowIt, HiQ and Acando. KnowIT is a consultancy firm focused in digitalization. KnowIt has competencies in IT, design & communication and management consultancy. It is operating in Sweden, Norway and Finland with 2017 revenue of approximately 275 million. HiQ is a IT service provider with focus broad focus on digitalization and technology. HiQ is operating in Sweden and Finland. HiQ annual revenue was 185 million in Acando is a consulting company offering management consulting, enterprise business systems, digital and application services. Acando operates in Sweden, Norway and Germany with delivery center in Latvia revenue was approximately 250 million. Swedish peers are larger in size but the broad offering and operations mainly in Nordics offer a good fit. We estimate Siili growth to reach double digits vs. high single digit of the Swedish peers. Profitability as measured by EBITDA margin is similar to Siili highlighting the comparability of the business model. Luxoft is a Swiss based US listed company that offers mainly experienced Eastern European IT professionals. Luxoft main customer segments are Finance, Automotive and Telecommunication. We consider Luxoft a relevant peer as it operates in similar customer segments as Siili with experienced staff. Although Luxoft is significantly larger it offers similar expected growth profile. We find EBITDA to be the most comparable metric of underlying profitability. EBIT includes amortization of intangibles from acquisitions. Furthermore, investments and depreciations related to fixed assets are limited in service companies. We find that the 2019 EV/EBITDA multiple for most relevant peers (Vincit, Gofore, KnowIT, HiQ and Acando) is in the range of 10x. Siili has above peer group growth but risks relate to smaller size, VALA Group performance and new organizational structure. We consider 2019 EV/EBITDA 9,5x multiple to reflect the value of Siili. Taking into account the effect of minority interest in VALA Group to Siili EBITDA the resulting multiple imply price of approximately 13,4 per share. Peer group grow th and profitability estimates Sales Growth EBITDA % EBIT % Net Income % Peer e 2019e e 2019e e 2019e Vincit Oyj 13 % 13 % 10 % 17 % 16 % 17 % 12 % 16 % 16 % 8 % 17 % 11 % Gofore Oyj 22 % 18 % 16 % 15 % 15 % 15 % 11 % 11 % Nixu Oyj 26 % 20 % 18 % 4 % 4 % 9 % 2 % 4 % 8 % 0 % 2 % 5 % Innofactor Oyj 0 % 8 % -1 % 6 % 5 % 7 % 2 % 2 % 5 % 1 % 0 % 2 % Digia 14 % 5 % 5 % 4 % 8 % 10 % 2 % 6 % 7 % 1 % 5 % 5 % Know It Ab 14 % 6 % 5 % 11 % 11 % 11 % 10 % 10 % 11 % 7 % 8 % 8 % Hiq Intl Ab 5 % 7 % 6 % 13 % 12 % 12 % 12 % 11 % 12 % 9 % 9 % 9 % Acando Ab 14 % 8 % 5 % 11 % 11 % 11 % 10 % 10 % 11 % 7 % 8 % 8 % Luxoft Holding I 20 % 15 % 12 % 17 % 13 % 15 % 14 % 9 % 11 % 13 % 8 % 10 % Upper quartile 16 % 15 % 12 % 14 % 13 % 15 % 12 % 11 % 12 % 8 % 9 % 10 % Median 14 % 8 % 6 % 11 % 11 % 11 % 10 % 10 % 11 % 7 % 8 % 8 % Low er quartile 11 % 7 % 5 % 6 % 8 % 10 % 2 % 6 % 8 % 1 % 5 % 5 % 24 % 23 % 13 % 10 % 10 % 11 % 9 % 9 % 10 % 7 % 7 % 7 % % to med. 72 % 173 % 115 % -6 % -9 % -2 % -13 % -12 % -3 % -5 % -16 % -8 % Peer group valuation EV/EBITDA EV/EBIT P/E EV/Sales P/B Peer e 2019e e 2019e e 2019e 2018e Latest Vincit Oyj 11,9 x 11,0 x 9,4 x 17,4 x 11,4 x 9,8 x 26,5 x 10,7 x 14,3 x 1,8 x 5,8 x Gofore Oyj 12,9 x 10,8 x 13,1 x 11,0 x 19,6 x 16,2 x 2,0 x 6,5 x Nixu Oyj high 45,5 x 20,0 x high 58,3 x 21,5 x high high 35,4 x 2,0 x 5,1 x Innofactor Oyj 10,1 x 12,8 x 7,7 x 33,6 x 31,8 x 11,4 x 30,6 x neg. 15,4 x 0,6 x 1,1 x Digia 25,8 x 10,4 x 8,2 x 49,0 x 13,1 x 10,9 x 78,7 x 15,2 x 12,7 x 0,8 x 1,7 x Know It Ab 11,5 x 10,2 x 9,2 x 12,2 x 10,8 x 9,6 x 16,9 x 14,0 x 12,4 x 1,1 x 3,3 x Hiq Intl Ab 12,9 x 13,4 x 11,8 x 13,7 x 14,3 x 12,4 x 18,3 x 18,9 x 16,3 x 1,6 x 4,0 x Acando Ab 13,6 x 11,5 x 10,2 x 14,5 x 12,4 x 11,0 x 19,6 x 15,9 x 14,2 x 1,3 x 2,7 x Source: Bloomberg, Talouselämä, Siili, S-Bank (FIM) Luxoft Holding I 10,2 x 10,8 x 8,5 x 12,7 x 16,3 x 10,9 x 15,0 x 19,1 x 14,1 x 1,4 x 3,2 x Upper quartile 13,3 x 12,9 x 10,8 x 25,5 x 16,3 x 11,4 x 28,6 x 19,0 x 16,2 x 1,8 x 5,1 x Median 11,9 x 11,5 x 9,4 x 14,5 x 13,1 x 11,0 x 19,6 x 15,9 x 14,3 x 1,4 x 3,3 x Low er quartile 10,8 x 10,8 x 8,5 x 13,2 x 12,4 x 10,9 x 17,6 x 14,6 x 14,1 x 1,1 x 2,7 x 12,0 x 10,7 x 7,5 x 13,8 x 12,2 x 8,1 x 19,5 x 17,2 x 12,5 x 1,1 x 3,6 x % to med. 1 % -7 % -20 % -5 % -7 % -26 % -1 % 8 % -13 % -25 % 10 %

6 , 6 Financials and Estimates GROUP (EURm) H17 2H H18 2H18e 2018e 2019e Net sales 48,4 29,0 28,8 57,8 34,2 37,6 71,8 88,1 Grow th, y/y 15,6 % 21,5 % 17,4 % 19,4 % 17,9 % 30,5 % 24,2 % 22,7 % EBITDA 4,8 2,4 3,4 5,8 2,3 5,0 7,2 9,9 EBITDA margin 9,9 % 8,1 % 11,9 % 10,0 % 6,7 % 13,2 % 10,1 % 11,2 % Depreciation -0,6-0,3-0,4-0,8-0,6-0,3-0,9-0,7 EBIT Adjusted 4,1 2,0 3,0 5,0 1,7 4,6 6,3 9,1 EBIT margin 8,6 % 7,0 % 10,4 % 8,7 % 5,0 % 12,3 % 8,8 % 10,3 % Net financials -0,1 0,0 0,0 0,0 0,0 0,0 0,0 0,0 Associates profit 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 PTP 4,0 2,0 3,0 5,0 1,7 4,6 6,3 9,1 Taxes -0,8-0,5-0,6-1,0-0,3-0,9-1,3-1,8 Minority interest 0,0 0,0 0,0 0,0 0,0-0,3-0,3-0,7 Net profit 3,2 1,5 2,4 4,0 1,3 3,4 4,8 6,6 EPS Adjusted 0,46 0,22 0,35 0,57 0,19 0,49 0,68 0,94 BALANCE SHEET (EURm) Intangibles 1,6 2,0 1,9 1,9 1,9 1,7 1,7 1,3 Goodw ill 8,6 11,1 11,6 11,6 11,6 17,6 17,6 17,6 Tangibles 0,9 1,1 1,2 1,2 1,2 1,3 1,3 1,7 Inventory 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 Receivables 8,8 9,7 9,4 9,4 13,4 12,3 12,3 14,1 Cash 9,7 8,2 9,0 9,0 4,0 5,7 5,7 8,7 Assets 30,6 32,9 33,9 33,9 32,5 39,0 39,0 43,9 Equity 18,0 18,4 20,8 20,8 19,3 22,8 22,8 25,6 Pension liabilities 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 Long non-ib debt 0,4 0,4 0,4 0,4 0,4 0,4 0,4 0,4 Long ib debt 0,8 0,6 0,4 0,4 0,2 0,2 0,2 0,2 Short ib debt 0,4 1,8 0,4 0,4 0,4 0,4 0,4 0,4 Short non-ib debt 11,1 11,8 11,8 11,8 12,2 15,2 15,2 17,3 Advances received 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 Equity and liabilities 30,6 32,9 33,9 33,9 32,5 39,0 39,0 43,9 Equity Ratio 58,9 % 55,7 % 61,4 % 61,4 % 59,5 % 58,5 % 58,5 % 58,3 % Net Gearing -47,5 % -32,1 % -39,2 % -39,2 % -17,5 % -22,2 % -22,2 % -31,9 % Net debt -8,6-5,9-8,1-8,1-3,4-5,1-5,1-8,1 ROE 21,7 % 20,5 % 23,1 % 30,1 % ROCE 24,6 % 24,6 % 28,1 % 36,8 % Source: S-Bank (FIM) Estimates We expect Siili to maintain high organic growth rate and steady profitability. We expect organic domestic sales growth to be approximately 11% in 2018 and continue growing approximately 10% p.a. until 2020 (excluding VALA). Balance Consulting & Valor estimate the market growth to be 10-15% per annum ( ). International sales is expected to be the growth driver with 45% YoY growth in We expect the strong growth to continue due to high level of investments from automotive sector to digital cockpit development. We estimate growth to phase out to 20% YoY by Our confidence arises from exceeding growth target in 2017, setting up new offices, direct contacts with OEMs and Tier1s (=good position in value chain) and high demand of digitalization specialists in automotive sector. VALA Group has a very strong track record of profitable growth with CAGR of 50% between Based on current employee count of 80 we estimate that strong growth will continue in 2018 and beyond with good demand pull (45% in 2018, 30%% in 2019 and 25% in 2020). Siili has a long track record of steady profitability. We see good opportunity to pass on wage increases due to high demand. High organic growth is lowering profitability due to lower utilization of new employees and this is expected to continue in the near future due to continuing growth. Margins in the international operations are expected to be similar to domestic margins and we do not estimate change in profitability due to higher growth in international operations. Consolidation of VALA will increase profitability implying over 10% EBITDA margin for the group. Minority interest in VALA is reflected in the EPS estimates. Dividend payout expected to be high due to strong cash flow due to low investment needs (excluding possible acquisitions) and negative net working capital. Outstanding options Siili has a management incentive program for key personnel. Maximum number of options is with 7,50 strike. Options will vest if the average 60 day volume weighted average price is above 14,50 between Options can be exercised during As Siili share price is currently below the minimum price for vesting the dilution effect is not reflected in the share count.

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8 , 8 Contact information Sales Hans Segercrantz Richard Johansson Kari Lappalainen Jussi Matinlompolo Thomas Pirker FIM Direct, Order Routing Janne Siik Anna Pulkkinen Clearing, Settlement and Custody Services Sanna Kanerva Research Kim Gorschelnik Mika Metsälä Aaron Kaartinen