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Non-Financial Information (Bookkeeping Act 3a)

This statement describes how Tecnotree manages environmental matters, respect for human rights, anti-corruption and bribery matters, and employee well-being in its business activities. This statement has been compiled in order to fulfil the reporting requirements on non-financial information as outlined in Chapter 3a, Sections 1-6 of the Finnish Accounting Act. Tecnotree continues to develop suitable non-financial indicators during the year 2019. Tecnotree’s governance model has been described in Tecnotree Corporation’s Corporate Governance Statement for 2018.

Responsible operating principles

Tecnotree adheres to all relevant laws and regulations in its operations, as well as to best practices in business, included in the company’s guidelines. The company constantly develops its operations to correspond with the current operating environment and possible risks.

Tecnotree's business model

Tecnotree is a global supplier of telecom IT software products and solutions, for charging, billing, customer care, messaging and content management services. The company’s product portfolio comprises virtually the full range (order-to-cash) of business management solutions for telecom operators, with standard solutions for fixed networks, mobile services and broad band and for managing subscriptions, services and cash flows for prepaid and post-paid customers.

Going forward in 2019 and beyond, we continue our transformation to a product company, with deep telecom experience, engaged in creating a continuous customer experience with signature Finnish design and quality excellence.

Our cloud enabled micro-services based interoperable products helps our customers to create a “digital marketplace” of their offerings, and an ecosystem of partner products and services that fosters true business value for subscribers.

Tecnotree’s cutting-edge products enable communication service providers to expand their footprint and transform their business into that of a digital service provider, thus helping expand and increase their value to their large customer base.

Tecnotree’s business is based on our product licenses, professional services for customization of our products, and maintenance and support services on our products to a global customer base. Tecnotree has an especially strong footprint in developing markets such as Americas, Africa and the Middle East, serving more than 700 million subscribers worldwide and supporting more than 65 operators/CSPs worldwide.Tecnotree’s share is quoted on the NASDAQ OMX Helsinki Ltd.

Risk management

The goal of Tecnotree’s risk management is to offer the Board of Directors and Management Board reasonable certainty on the achievement of the company’s strategic and operative objectives, reliability and accuracy of financial reporting as well as compliance with regulations and internal guidelines. Tecnotree’s general annual assessments of external risks assessed by the Management Board define the biggest risks. These assessments are made by evaluating the probability and the impact of the different risks, and based on this, a risk map is comprised. Actions and persons in charge are defined for each significant risk. The Board approves the significant principles of risk management. The Management Board handles risks and risk management in its meetings on a regular basis. The CEO reports these to the Board of Directors.

Sufficiency of funds has been one of the significant risks in the company. The district court of Espoo confirmed the amended corporate restructuring programme on 15 November 2016. Along with the decision, the restructuring proceedings of Tecnotree came to an end. Payments under the payment programme will end on 20 June 2025.

Tecnotree’s corporate governance is implemented through documented policies. The main policies are policy for making sales agreements, credit policy, cash management policy, policy for hedging against currency risks, policy for making purchase agreements and approval policy.

Currently, the company’s most significant risks are related to the development of net sales, projects and their timing, trade receivables and changes in exchange rates. On September 3, 2018, Tecnotree published an offer made by Fitzroy Investments Limited, regarding an equity investment of up to EUR 5 million in Tecnotree. The arrangement will strengthen Tecnotree’s balance sheet and financial position significantly.

In order to mitigate the risks related to sales, Tecnotree has uniform principles and practices in bid reviews. The subsidiaries and foreign offices of the parent company have issued guidelines and policies for their own specific purposes that are in line with the Group level policies. The company has defined its Code of Conduct.

The risks pertaining to the financial reporting are mitigated by the methods in financial reporting and control of the group. The Group companies utilize a common chart of accounts and IFRS principles as well as common systems with comprehensive database. Treasury and financing have been centralised in the Group administration, and contracts and policies are stored in an easy-to access archive. The Group’s financial management is responsible for managing foreign exchange, interest rate and liquidity risks and for taking out insurance against operational risks.

Due to the nature of Tecnotree's business, the company estimates its environmental impact to be relatively low. The company’s Management Board is responsible for the management of environmental risks and takes proactive action to prevent them.

Together with HR, the company’s Management Board administers and develops management and prevention of risks related to employee well-being, human rights and social responsibility. Tecnotree also enforces internal processes that are meant to minimize and transfer risks, should it not be possible to avoid them. The personnel’s annual performance reviews are a key element in supporting employee well-being.

There are some malpractice and fraud risks related to personnel and external parties which the company does, however, estimate to be low. Tecnotree’s personnel is encouraged to report any found or suspected violations either personally or anonymously, and all reported instances are investigated.

Information security

Tecnotree operates in an industry that is subject to particularly large number of risks related to information security and privacy. The management and staff of Tecnotree are committed to the company’s information security policy that covers the principles of careful risk management, protection of intellectual property, and the processing of customer, vendor, partner and employee related information assets.

Environmental responsibility

Tecnotree follows the applicable environmental laws in its business operations and expects all its partners to equally do so. The company follows and develops business processes that support compliance with environmental laws, regulations and policies.

Due to the nature of Tecnotree's business, the company estimates its environmental impact to be relatively low. Tecnotree seeks to prevent environmental damage by, for example, reducing business travel by using electronic conferencing tools and other technologies, reducing electricity and water consumption, and reducing waste volumes with proper treatment of waste.

Tecnotree’s business traveling was reduced by 1.6 million euros or 29% in 2018 compared to 2017.

Employee wll-being, human rights and social reposnibility

Tecnotree has defined its Code of Conduct to be followed by each employee. The subsidiaries and foreign offices of the parent company have issued guidelines and policies for their own specific purposes that are in line with the Group level policies. Impacts related to staff and working conditions are managed and developed in accordance with Tecnotree's personnel policy.

At the end of December 2018 Tecnotree employed 543 (666) persons, of whom 56 (67) worked in Finland and 487 (599) elsewhere. The company employed on average 604 (727) people during the financial period.

Tecnotree’s goal is to provide its employees a safe and healthy working environment that offers everyone the opportunity to develop. Tecnotree’s senior management is committed to maintain employee well-being in all organization levels and locations. All the physical safety elements including occupational safety plans, emergency plans, etc. are based on local laws and practices in each country. Tecnotree does not tolerate employee harassment at any organization levels.

Tecnotree emphasises employee equality. Employees are not discriminated against based on their race, colour, age, gender, sexual orientation, religion, political affiliation, union membership, disability or ethnicity. In 2018, no human rights violations were detected.

Tecnotree seeks to make a contribution to the surrounding communities in all regions it operates. Other than pure financial benefit from business operations, Tecnotree seeks to contribute to the society by engaging different partners in collaboration, participating in discussion on economic and social issues, offering employment to students or other people in need of jobs, and by creating and participating in campaigns and activities that drive the development and vitality of the local business ecosystem.

Quality and customer satisfaction

Tecnotree’s business is based on offering products, services and solutions to a large customer base. The company strives for the highest possible customer satisfaction, where the quality of products and services plays a key role. The goal is to provide agile, customer-oriented and high-quality services and to develop new competitive innovations. The quality of products and services is supported by a comprehensive quality management system. Quality is also bolstered by respecting customers, partners and employees in all interactions. Customer satisfaction is measured annually. On a scale of 1 to 5, the overall customer satisfaction rating in February 2018 was 3.7 (3.4 in 2017).

The company audits its operations on a regular basis. Tecnotree is ISO 9001:2015 (Quality Management System) and ISO 27001:2013 (Information Security Management System) standard certified. ISO 9001:2015 standard was re-certified in year 2018, and it is valid until 2021. ISO 27001:2013 standard was re-certified in 2017, and it is valid until 2020.

Anti-corruption and anti-bribery

Tecnotree's anti-corruption and anti-bribery methods are described in the company’s Code of Conduct. All employees are required to familiarize themselves with the Code of Conduct. Tecnotree adheres to responsible business practices in all areas of its operations.

Tecnotree requires its employees to follow laws and regulations as well as generally accepted best practices and standards related to business ethics in all their actions. Employee representatives shall not receive gifts that influence business solutions or have significant monetary value. No nepotism in business decisions, corruption or bribery of any kind shall be tolerated. All of the company’s business dealings are transparently performed and accurately reflected on Tecnotree’s financial books and records. Tecnotree has a whistleblowing channel through which it is possible to report any suspicions of misconduct or policy violations for internal investigation within the company. In 2018, no cases of corruption or bribery were detected.