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Martela Oyj
Annual Report • Mar 8, 2024
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Annual Report
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Annual Report 2023
| Martela in brief3 | |
|---|---|
| Martela 20234 | |
| Highlights of 20235 | |
| CEO's review6 | |
| Operating environment7 | |
| Martela Lifecycle9 | |
| Board of Director's Report and Financial Statements 10 |
|
| Corporate governance statement 2023 | 62 |
| Information for shareholders | 71 |
Martela is a Nordic leader specialising in user-cen tric working and learning environments. We cre ate the best places to work and support our cus tomers' business with Martela Lifecycle solutions, which enable furniture and their related services to be integrated into a seamless whole. Martela is a family company founded in 1945 and its shares are quoted on the OMX Nordic Exchange Helsinki. Our main market areas are Finland, Sweden and Norway, and our solutions are also sold globally through our network of dealers. Our production fa cilities are located in Finland and Poland. In 2023, the Martela Group's revenue was EUR 94.4 million and it employed an average of 403 employees.
Martela in brief
The year 2023 was challenging for Martela. Weak general economic development and rising interest rates made organisations cautious about making purchasing decisions. Our revenue decreased and our operating result was a loss. We improved our efficiency and adjusted our cost level in form of lay-off procedures, among other things.
Our exports grew, even though the domestic market was challenging. The sales of our removal and installation services increased, and the Workplace as a Service model produced a greater share of our revenue. Our sales to companies and schools remained stable in relation to the market.
We expect the demand to grow, as our customers' need for space changes has increased as hybrid work has become more common. Adaptability, sustainability and circular economy thinking will continue to be emphasised in workplace planning. Our change services and responsible products meet these needs.
We invested in our strategic focus areas to ensure growth and profitability in the future. We strengthened our ability to utilise the circular economy and produce more responsibly manufactured products and life cycle services for our customers. We invested in the customer experience by improving our digital services in particular.
94.4
-2.4
403
Equity ratio (%) Equity ratio (%)
Martela 2023
Revenue by country (EUR million) Revenue by country (EUR million)
Revenue (EUR million)
Operating profit (EUR million)
Personnel (average)
Highlights of 2023
Ella – our modern classic
The biggest product launch of the year was the versatile Ella chair family, which was launched in the spring. Ella is designed by Antti Kotilainen. With its timeless design and material options, Ella is ideal for offices, cafés and other public spaces. Ella chairs are made from carefully selected materials with a long useful life. The recycling and reuse of materials is taken into account right from the start of the production process. Ella has been a hit with users, influencers and journalists alike, and is set to become a modern classic in Martela's collection.
Martela as number one for the ninth consecutive year!
We launched our new online store
Every year, the Taloustutkimus market research firm commissions the TEP survey, in which business decision-makers assess various business image factors. Martela achieved the top ranking for its overall score for the ninth time in a row! In addition to the overall score, Martela achieved the two top spots in the NPS ranking: Martela came first and Martela Outlet second! The value of the feedback is further enhanced as Martela come first in the comparison of all the industries surveyed. We participated in the year-long Circular Design programme, a unique international training programme for companies to develop circular design skills. Through the programme, we sought new networks and insights for the further development of our life cycle model based on the circular economy. Martela will use the knowledge gained through the programme to enhance the sustainability of the workplaces of its customer companies.
We are investing in digital service channels and in late 2023 we launched a new online store for our business customers in Finland on our website. Our website is an important platform for purchasers and designers, and we have been focusing on making it easier to find products and on comprehensive product information for a long time. Online purchasing is easy and products are always delivered ready to use. We will continue to actively develop the website and online store and information on user experience will be collected to support the development work.
Year of circular economy development
Preserving the unique spirit of Orion's headquarters
The Orion pharmaceutical company's renovated headquarters reflect the original spirit and architecture of the building. The planning of the furnishing of the headquarters was guided by quality, timelessness and Finnish origin, and the furniture is intended to last for decades. In addition to Martela's own furniture, the furniture of a wide network of partners was selected for the attractive office – the design was carried out by Interior Architects Gullstén & Inkinen Oy.
The year 2023 was challenging due to the uncertain market situation, which made organisations cautious about making purchasing decisions. Inflation weighed on the result in the first half of the year but started to ease in the second half. However, there is a growing and pent-up need in the market for space modifications as a result of the change in the ways we work. This need has become more tangible and it will continue to increase the demand for Martela's services and furniture. Workspaces are being adapted to meet the needs of multi-location hybrid work and companies are focusing on attractive premises.
Our revenue decreased by 12 per cent to EUR 94,4 million, and our operating result was a loss of EUR -2,4 million. The result for 2023 was particularly affected by the low level of revenue in the first half of the year. In addition, profitability in the first half of the year was burdened by investments in development projects. We responded to the challenging market situation by adjusting our cost level and achieved a positive operating profit level of EUR 2,4 million in the second half of the year.
The measures to improve efficiency were mainly in for form of lay-off procedures and other cost-saving measures. These measures will continue in early 2024, including through organisational changes.
CEO's review
It is unclear how long the market uncertainty will persist, so we must continue to be able to adjust our cost levels to the prevailing conditions.
Our domestic market was challenging, but exports continued to grow strongly. The sales of our removal and installation services also grew, and our unique Workplace as a Service model produced a greater share of our revenue. Our sales to companies and schools remained stable in relation to the market, and the most significant decline in sales was in the municipal and government sectors. There was a weak start to the year in terms of new orders, but the gap with the previous year narrowed significantly with every quarter.
We will continue to concentrate on the focus areas of our strategy
Despite the challenging market situation, the year was a period of strong development at Martela. We concentrated on our strategic focus areas to ensure growth and profitability also in the future. We strengthened our leadership in the circular economy by participating in the first yearlong Circular Design programme. Our customers will benefit from this development work in the form of more sustainably manufactured products and lifecycle services.
The emphasis on the circular economy has further boosted demand for our Workplace as a Service (WaaS) model. The active development of the product range continued throughout the year with new products and product updates. In the spring we launched the Ella chair family, which has the potential to become one of our classics.
We received a tangible reward for our commitment to customer experience when we achieved the top ranking in the industry for the ninth time in a row in the TEP survey conducted by Taloustutkimus! On top of that, we achieved the top ranking for our overall score among 163 Finnish companies across all industries. This shows that we have been able to support organisations in the right way, even during this time of major change in the way we work. A warm thank you to our customers for your trust and to all Martela personnel and partners for your excellent work!
In the People Spirit survey, which measures employee experience, we maintained our good AA score for the second year in a row. Our strong culture of working together is also experienced by our customers and contributes to a great customer experience. A corporate culture of serving and supporting others is part of Martela's DNA and values.
In 2024, we will continue to concentrate on the focus areas of our strategy and on the benefits created by the development work undertaken during 2023. We will continue to focus on active customer engagement and work closely with the partners in our value chain. We will continue to develop our digital service channels and accelerate the development of our circular economy service model and sustainably designed products.
I would like to thank Martela's employees for a busy year! The year was more challenging than expected, but our investment in developing our business and the positive feedback received for this from our customers provides us with confidence in the future. We will continue to promote the best work environments!
Ville Taipale CEO
Operating environment
Economic growth in the Nordic countries was modest in 2023, which also meant Martela's customers were cautious about making purchasing decisions.
High interest rates and weakened international demand are expected to maintain uncertainty in 2024. On the other hand, the upward pressure on prices and challenges in the availability of raw materials caused by the war in Ukraine have eased and the economic outlook is expected to improve in the second half of the year.
Market uncertainty combined with the changes in the way people work also create new demand for Martela's change services. Workspaces are being adapted to meet the needs of multi-location hybrid work and customers are focusing on making them attractive.
Our products have also attracted interest in the export market. Martela's quality and service are appreciated beyond Finland, and we believe our exports will continue to grow in the future. By developing our digital services, we are further improving our services and laying the foundations for future growth.
Multi-location work and a focus on sustainability are driving the industry's development
The work ecosystem has expanded and many
people work from home and in co-working spaces for part of the week. Both individuals and companies are still seeking the right balance between remote working and office work. Many organisations are considering smaller premises, and the need for space is assessed not only in terms of savings but also in terms of sustainability.
As the surface area of offices decreases, the importance of quality increases. The key criteria for an office are good location, functionality, adaptability and comfort. A homelike feel is an important requirement for all workplaces. Work requiring concentration, teamwork and spontaneous meetings all require their own spaces.
Considering and enabling the circular economy are increasingly important purchasing criteria when designing working and learning environments. At Martela, sustainability has been an important consideration for decades and since the 2010s, when our new strategy was implemented, our entire business model has been based on workplace lifecycle thinking. We take sustainability into account at every stage, and the circular economy plays an important role.
We comply with the continuously evolving acts
and regulations that are related to sustainability in all our operations. We have also defined specific management principles to guide our corporate responsibility work and our Code of Conduct is our most important guideline. In 2023, we focused on developing the sustainability competence of our employees and our customers and the other stakeholders in our value chain.
The need for flexible solutions has grown significantly as the way we work has changed. This need has also boosted the growth of our Workplace as a Service (WaaS) model. There is no corresponding, equally comprehensive service available on the market. The WaaS model is an effortless way for customers to ensure that their workspace is responsible and up-to-date, without the need for large one-off investments.
Used and refurbished furniture has become a natural part of the furnishing of working and learning environments. More and more organisations are realising the value of their existing furniture, either for their own use or for the use of others. Our Martela Outlet chain meets this need and refurbishes and recycles furniture for the next users. Martela Outlet is one of the largest refurbished
and recycled furniture chains in Finland.
Organisations value good customer experience
In our industry, a growing share of purchasing is done through digital channels. We continued to develop our services and opened a new online store for our Finnish customers at the end of the year. The online store will be further developed and extended to more customer segments in 2024.
In numerous customer encounters, we have supported organisations in finding flexible and sustainable solutions for multi-location working. Our commitment to customer experience was rewarded when we achieved the top ranking in the industry for the ninth time in a row in the TEP survey conducted by Taloustutkimus!
Our industry will continue to change, and 2024 should see the release of the pent-up need to make changes to offices. The way we work has changed, so we need to look at workplaces with fresh eyes. Those who listen carefully to their customers and offer them solutions that take flexibility and sustainability into account will succeed in meeting this need.
ADAPTABILITY AT WOLT'S PACE
In summer 2023, Finnish tech nology company Wolt moved to new premis es in Kamppi, Helsinki. The employees want ed their new headquarters to be home-like and cosy, in contrast to the cold appearance of their old office. The criterion was that the premises had to be able to change "at Wolt's pace", and Wolt chose Martela's flexible Work place as a Service solution as the main furni ture sourcing method. This circular economy rental model also means future changes to the space are easy, as furniture can be replaced, recycled and added to in a sustainable way.
The users feel right at home and the num ber of people working at the office has doubled compared to before! More furniture has been added since the summer to meet the needs.
"We had a million ideas and needed a part ner who was able to take control and bring everything together. The project progressed rapidly and we adapted our plans as we went along. Everything went really well," says Susan Vättö, the HQ Project Lead at Wolt.
The facilities will continue to be developed flexibly as part of the agreed service model, and Martela will carry out regular visits to en sure functionality. Read more:
CASE
The Martela Lifecycle strategy is based on lifecycle thinking, the core of which is high-quality and timelessly designed furniture. Martela's furniture is designed according to circular economy principles to withstand time and circulation from one user to another. Before entering the market, our furniture is also tested in an accredited testing laboratory in accordance with European EN standards. The testing simulates at least ten years of use.
High-quality design enables easy maintenance and restoration of the furniture, extending their life cycle. When choosing materials, we prefer sustainable, recyclable and responsibly produced materials. Durable furniture has many lives, and timeless products can be passed down from generation to generation.
A FLEXIBLE RENTAL SERVICE BASED ON THE CIRCULAR ECONOMY
In a rapidly changing world, the needs of tomorrow are difficult to predict. Martela's circular economy-based Workplace as a Service model is a smart way to prepare for long-term changes as well.
Thanks to the service model, the work environment is always up-to-date and the organisation only pays a monthly fee for what it really needs. This eliminates the problems associated with owning furniture, and the work environment can be flexibly updated as needs change. The service also includes a furniture maintenance service to extend the lifecycle and a follow-up survey on user experiences. In addition to the company's premises, the service is suitable for the development of, for example, ergonomic home offices and flexible co-working spaces.
In accordance with our Waste Nothing circular economy principle, furniture that is no longer needed but that is still in a good condition will be sold responsibly through the Martela Outlet stores or online shop. Some furniture are serviced and/or reupholstered before they are sold. The materials of furniture that are not suitable for refurbishing are used either as parts of used furniture, as secondary raw materials or in energy production.
Time- and cycle-resistant design
Case Staria: One year after the new premises were taken into use, more than 84% of respondents felt that the workplace promotes wellbeing at work.
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Board of Directors' Report and Financial Statements
Board of Directors' Report....................................................................................11 Consolidated Financial Statements, IFRS.............................................19 Parent company financial statements, FAS........................................48 Auditor's report..............................................................................................................59
Board of directors' report
Key figures
The Group's revenue for the financial year was EUR 94.4 million (106.7). The operating result for the year was EUR -2.4 million (2.5). Operating result of the comparison period includes nonrecurring gain EUR 1.5 million from the sale and leaseback agreement regarding Nummela production and logistic centre, taking into account the cost of sales. Earnings per share were EUR -0.77 (0.57). Cash flow from operating activities totalled EUR 0.3 (2.1) million. The equity-to-assets ratio was 20.0 per cent (24.7) and gearing was 137.2 per cent (58.6). The return on investment for the year was -7.5 per cent (9.1).
Description of the business
Martela is one of the Nordic leaders in the workplace industry. Martela designs and implements best workplace and learning environments. Martela supplies user-centric solutions into today's workplaces – mobile work and activity based offices. Martela also offers the widest selection of services supporting changes in interior planning as well as supporting maintenance. Our total offering comprises of the change of the whole workplace from its specification and planning to implementation and maintenance.
Martela's offering and product development
In line with its Lifecycle strategy Martela creates high-quality services for workplaces and learning environments along the full lifecycle. Our offering includes workplace and learning environment specification and planning, implementation and furnishing as well as continuous measurement and optimization.
Martela's service model related to furnishings and changes in premises responds to the constantly growing need for flexibility. Increasingly, instead of large one-off investments, space changes are under more process-like development. In this change, Martela has highlighted the circular economy model, flexible Workplace as a Service and development of digital sales channels, as strategic focus areas.
The biggest product launch of the year was the versatile Ella chair family, launched in the spring. Ella was designed by Antti Kotilainen and is, among others, a natural complement to the popular Sola chair family. Due to its timeless design and material options, Ella is suitable for offices, cafés and other public spaces. Ella chairs are made of carefully selected materials with a long service life. The recycling and reuse of materials has been taken into account in the manufacturing process from the very beginning. Ella has aroused admiration among users, influencers and suppliers and is becoming a modern classic in Martela's selection. In addition to Ella, the height-adjustable Jojo table designed by Iiro Viljanen was launched on the market, which increases ergonomics, especially in learning environments, and the Sola product family grew with the hefty Sola Grande armchair. EUR -1.6 (-1.6) million has been entered in the Group profit and loss statement as research and development expenses.
Market situation
Economic development in the Nordic countries was modest in 2023, which was also reflected as cautiousness in Martela's customers' purchasing decisions. Market conditions are expected to remain uncertain in 2024 due to inflation and interest rate developments, and the resulting caution. On the other hand, the upward pressure on prices caused by the war in Ukraine and challenges in the availability of raw materials have eased. However, market uncertainty and simultaneous changes in the way of working is likely to create demand for Martela's change services. Premises will be modified to meet the needs of multi-location hybrid work and investments will be made in their attractiveness.
Group structure
There was no changes in the group structure in 2023.
Revenue and operating result
The January–December 2023 revenue was EUR 94.4 million (106.7), a decrease of -11.5% from previous year. Compared to the previous year, revenues decreased by area as follows; in Sweden -14.3 % in Finland -9.6 % in Norway -7.7 % and in Other countries -21.9 %.
The Group's operating result for the January-December was EUR -2.4 million (2.5). The January–December result before taxes was EUR -3.3 million (1.3).
Financial position
The cash flow from operating activities in January–December was EUR 0.3 million (2.1).
At the end of the period, interest-bearing liabilities stood at EUR 18.2 million including EUR 16.8 million lease liabilities according to IFRS 16. At the end of comparison period the interest bearing liabilities stood at EUR 19.4 million including EUR 17.6 million lease liabilities according to IFRS 16. Net liabilities were EUR 13.1 million (8.1). At the end of the period, short-term limits of EUR 0.0 million were in use (0.0). Short-term cash limits of EUR 0.3 million (0.3) would have been available for utilization.
In 2022 the impact of the sale and leaseback agreement, regarding Nummela production and logistic center, on lease liabilities according to IFRS 16 was, at the moment of registration, EUR 13.0 million. Selling price of the asset was EUR 15 million.
EARNINGS/SHARE AND DIVIDENDS
The gearing ratio at the end of the period was 137.2 % (58.6%) and the equity ratio was 20.0% (24.7%). Financial income and expenses were EUR -0.9 million (-1.1).
The balance sheet total stood at EUR 55.7 million (62.3) at the end of the period.
Capital expenditure
The Group's gross capital expenditure for January–December came to EUR 2.3 million (0.9).
Changes in the group management team
VP Sales and Marketing and member of the Management Team Johan Westerlund resigned and left his position at the end of January 2023. Kimmo Hakkala was appointed VP Sales and Marketing and member of the Management Team. Hakkala started in his position on 1.2.2023. Suvi-Maarit Kario was appointed Martela Corporation's VP Human Resources and Sustainability and a member of the Management Team. Kario started in her position on 7.8.2023. Kalle Lehtonen, CFO and member of the Management Team,
resigned and left his position on 24.8.2023. Henri Berg was appointed CFO and member of the Management Team. Berg started in his position on 2.10.2023. From this moment onwards Group Management Team has consisted of CEO Ville Taipale, CFO Henri Berg, VP Sales and Marketing Kimmo Hakkala, VP Operations Kalle Sulkanen, VP Human Resources and Sustainability, VP Brand & Design Kari Leino and VP Design Studio Eeva Terävä.
Personnel
The Group employed an average of 403 people (403), being at the same level as last year. Personnel on average employed in Finland was 326 (328), in Sweden 29 (27), in Norway 15 (14) and in group other countries 33 (34).
The number of employees in the Group was 386 (400) at the end of the review period. Personnel costs in January–December totalled EUR 23.0 million (23.6).
Non financial information
MANAGEMENT OF CORPORATE RESPONSIBILITY
Responsibility forms an integral part of Martela's strategy and operations. The VP, Human Resources and Sustainability is responsible for the corporate responsibility as well as quality, environmental and occupational health and safety management system of the Group. Sustainability Steering Group supervises corporate responsibility with members from the Management Team and the Sustainability Director as
the secretary.
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More detailed information on the Group's corporate responsibility principles, goals and achievements can be found in a separate Sustainability Report published annually. The 2023 GRI indicators connected sustainability reporting will be published after the annual report.
Already since 2011, Martela's corporate responsibility has been guided by the Martela Corporate Code of Conduct approved and annually reviewed by the Board of Directors. The principles contain references to international corporate responsibility commitments. The company has engaged itself in the UN Global Compact challenge, which aims at promoting human rights, rights in working life, environmental protection and the eradication of corruption and bribery.
As Martela operates in an international market, it also takes into account any international treaties, commitments and recommendations that concern its work. The most important ones are:
• The UN Universal Declaration of Human Rights
• OECD Guidelines for Multinational Enterprises
• The ILO Declaration on Fundamental Principles and Rights at Work and other ILO conventions related to its activities
Since 2011, the practical activities of the company have been guided by the corporate responsibility policies approved by the Management Group concerning matters related to personnel, the environment and supply chain management. The principles and policies published on Martela's website www.martela.com/ about-us/sustainability/corporate-responsibility are reviewed and, when necessary, updated annually under the coordination of the Sustainability Steering Group. The principles and policies cover social and employee matters and matters related to respecting human rights and eradication of corruption and bribery.
DESCRIPTION OF THE BUSINESS OPERATING MODEL
The Martela Lifecycle model takes into account the entire life cycle of the workplace. Martela supports the sustainability of its client companies by offering workplace solutions based on circular economy principles.
EQUITY RATIO
The Group units have the ISO 9001 quality, ISO 14001 environmental and ISO 45001 occupational health and safety management system certifications, granted by an independent party, to ensure continuous improvement, meeting customer expectations and that environmental and work safety aspects are controlled.
In the manufacturing process, there is an emphasis on a strong supplier chain. Martela's own manufacturing is focused on final assembly and remanufacturing production at its logistics centre in Nummela, Finland, which also houses most of the company's R&D and purchasing. The assembly of upholstery components takes place at Martela's own plant in Poland. The manufacture of table top and storage components takes place mainly at Kidex Oy, Martela's subsidiary located in Kitee, Finland.
The Martela headquarters in Otaniemi, Espoo, houses sales and support functions in addition to the Group administration. Martela has several sales offices in Finland, Sweden and Norway. In other countries, the sale of Martela's products takes place mostly through a dealer network.
The purchasing of products and services from service providers accounts for more than 70% of Martela Group's turnover. A network of around hundred reliable suppliers delivers materials and components for Martela labelled products.
Around a quarter of the Group's turnover goes on salaries and social security payments. Martela values local manufacturing and employment. As the share of its service business is growing, the company will keep creating more new jobs close to its markets. The distribution of financial value will be discussed in further detail in the forthcoming Sustainability Report.
ENVIRONMENTAL MATTERS
Martela's Environmental Policy, approved by the Group Management Team, aims to decrease the company's environmental impacts and promote recycling. The policy gives instructions on taking environmental matters into account in the development of its offering, through which the company will also have an indirect impact on the environmental effects of its customers.
The essential environmental aspects in Martela's operations are presented in the materiality assessment found in the Sustainability Report. Martela has the best opportunities to influence the reduction of greenhouse gas emissions and energy use in its market area through its customers' premises. Martela is constantly working to help its customers create facilities that support knowledge work and improve space efficiency. Therefore, Martela's most important environmental goal is to offer its customers the Martela Lifecycle model, which supports customers' space efficiency.
Sustainability reporting focuses on the direct and indirect impacts of its own operations, because
Martela does not have the means to measure the effects of improved space efficiency and reduced en-
ergy use among its customers. Martela's most significant climate impact arises from the use of materials related to products and services offered to customers. Martela's greenhouse gas emissions decreased from previous year and totalled 8.3 million kilos during 2022. Of these emissions, 75% were related to the use of materials purchased for products delivered to customers (scope 3), 4% arose from the indirect use of energy (scope 2) and 9% were related to the delivery of finished products to customers (scope 1). The energy intensity per turnover within the scope of Martela's calculation was less than 300 GJ/million € in year 2022. The durability, recyclability and recycling of furniture are at the heart of Martela's operations. Martela's furniture has been designed to be refurbished and restored, and their materials can be recycled or used to produce energy. As part of its comprehensive service, Martela also offers a furniture recycling service to its customer companies. When designing new facility solutions for customers, their old furniture can either be included in the new design or recycled responsibly through Martela. Used furniture in good condition is cleaned and refurbished at the Nummela remanufacturing facility and then made available to corporate and private customers through the Martela Outlet online service and shops. In 2022, around 23,700 pieces of used furniture found new homes through the Martela Outlet chain.
PERSONNEL BY AREAS, ON AVERAGE 2022 PERSONNEL BY AREAS, ON AVERAGE 2023
There are no significant environmental risks in Martela's own operations, but global changes in, for example, energy sources, pricing, availability of materials and changes in the way of working may affect Martela's operations in the future.
Environmental goals, their realisation and more detailed environmental metrics are published annually in the Sustainability Report.
PERSONNEL AND SOCIAL MATTERS
Martela's vision is to create the best places to work. This goal is enabled by competent and committed personnel who feel good. Martela's people management principles are based on company values and responsible management and leadership practices.
The key objectives of personnel competence development is to develop customer excellence and experience in every touch point and to improve operational performance. From supply chain view point, during 2023 the cooperation between the functions and the related processes were crystallized to enhance the order-delivery efficiency.
Hybrid work under expert professions is still in transition phase in organizations. So too in Martela. The rules of hybrid work has been specified to better support different ways of working, taking into account both individual and teamwork needs. The principle of the flexible working is to provide the balance between in-office and remote work and employees are encouraged to work in different places in accordance with the nature of work. The new premises at Martela's head office meet the needs of hybrid work and support working together, a sense of community and work that requires concentration.
A safe working environment and working conditions are of primary importance for the well-being of the personnel. The basis of a safe work environment is adequate familiarization with work tasks, up-todate instructions and the necessary safety training. Martela's personnel will have safety training relevant to their work, enabling them to perform their work in a professional and safe manner. Working safely is important in all kind of work but its importance is emphasized especially in production, removal and installation services. Employees are encouraged to actively report all safety near misses and incidents as they provide valuable information to improve occupational safety. During 2023, personnel's well-being, functional capacity and coping at work were further enhanced by piloting mental well-being support services for everyday challenges.
The job satisfaction of the personnel and the effectiveness of the actions chosen to improve the same are measured with annual People Spirit survey. The survey measures, among other things, job motivation, commitment, leadership and operative culture, and employer image. Despite the prevailing uncertainty and challenging environment, the personnel's job satisfaction and engagement improved compared to the previous survey result. Clear strengths are the meaningfulness of one's own work, received feedback and pride over Martela's products and services. The management and operating culture as well as the employer image have also developed positively. Although the personnel's possibility to participate in developing processes and availability of information have improved since the previous survey, there is room for improvement compared to the benchmark norm. Overall, the results show that the measures to strengthen job satisfaction as well as leadership and operative culture are on the right path. Martela's Sustainability Report contains a comprehensive description of the social and people related matters.
RESPECTING HUMAN RIGHTS
Matters related to respecting human rights are discussed in, for example, the company's People Policy and Sustainability Policy for Supply Chain. The main principle is to offer equal opportunities to all of employees and to treat each employee fairly. In the requirements for the suppliers, the focus is on observing national legislation and ILO conventions, depending on which of them is found more demanding from the viewpoint of employee rights. No breaches of respecting human rights have been observed in Martela's operations or supply chain.
Martela's products are manufactured on the basis of customer orders, which means that the supply chains are short and that the acquisitions mainly take place from the neighbouring areas and from elsewhere in Europe. In Europe, where there is a long tradition of follow-up of working conditions and labour legislation, the risks related to respecting human rights are smaller. The social risks of Martela's suppliers have been thoroughly investigated and are always reviewed when selecting new suppliers and in conjunction with supplier evaluation.
Analysis of sustainability aspects is an important part of continuous interaction with suppliers. In Martela's sustainability policy for the supply chain updated at the end of 2023, the definitions of social responsibility were further specified. The policy is communicated with each purchase order. Additionally, for the most important suppliers, compliance is checked on a risk-based basis. Martela annually assesses the risks of social responsibility in its supply chain through country-specific sustainability indicators and, on the basis of these, plans the necessary measures for verifying social responsibility on a supplier-by-supplier basis.
In recent years Martela has regularly participated in the EcoVadis evaluation. In 2022, Martela was awarded the EcoVadis Gold rating. The results of the next assessment will be completed in February-March 2024. EcoVadis is the world's largest sustainability rating agency. Its assessment includes 21 sustainability criteria grouped into four themes: environment, labour and human rights, ethics and sus-
tainable procurement. The rating criteria are based on international sustainability standards, such as the ten principles of the UN Global Compact, the International Labour Organisation (ILO) Conventions, the Global Reporting Initiative (GRI) standards and the ISO 26000 standard.
The 2023 sustainability training was implemented in the autumn and was attended by 83% of the personnel. The training was used to study the employees commitment to Martela's Code of Conduct and awareness of the procedures when noticing behaviour against its principles. Study showed 99% commitment to the principles and almost 90% of respondents were aware of procedures when noticing actions against the principles. No communication on grievance was received during 2023 through any available Martela whistleblowing channel.
PREVENTION OF CORRUPTION AND BRIBERY
Matters related to prevention of corruption and bribery are discussed in, for example, the Corporate Code of Conduct and Sustainability Policy for Supply Chain. Martela does not accept bribery in any form in its business in any of its market areas. Giving or receiving bribes is not permitted under any circumstances.
All transactions are recorded through the financial management/bookkeeping of each subsidiary. Martela's and all its subsidiaries bookkeeping and transactions are subject to an annual statutory audit. The bookkeeping is transparent to the CFO of the Group.
Share
Martela has two share series, A and K, with each K share entitling its holder to 20 votes at a General Meeting and each A share entitling its holder to one vote. Private holders of K shares have shareholder agreement that restricts the sale of K shares to any party outside the existing holders of K shares. There is a total of 604,800 K shares and a total of 3,968,695 A series, together 4,573,495 shares.
In January–December, a total of 1,122,349 (2,286,583) of the company's series A shares were traded on the NASDAQ OMX Helsinki exchange, corresponding to 28.3% (58.4) of the total number of series A shares.
The value of trading turnover was EUR 2.1 million (6.5), and the share price was EUR 1.28 at the end of the period (2.45). During January–December the share price was EUR 2.72 at its highest and EUR 1.22 at its lowest. At the end of December, equity per share was EUR 2.09 (3.07).
During 2023, Martela did not receive any notifications pursuant to Chapter 9, Section 5 of the Finnish Securities Markets Act.
During 2022 Martela has received one notification in accordance with the Finnish Securities Market Act Chapter 9, Section 5. On March 10, 2022, Martela received an announcement from Isku Yhtymä Oy, according to which the total number of Martela Corporation shares owned by Isku Yhtymä Oy has increased above 10% of the shares in Martela plc, as a result of share transactions concluded on March 10, 2022. More information on the Martela Corporation shares and shareholders can be found under note 27 of the Notes to the financial statements.
TREASURY SHARES
Martela did not purchase any of its own shares in January–December 2023.
Based on the share issue authorization granted by the Annual General Meeting on March 29, 2023, the Board of Directors of Martela Corporation has decided to issue 53,881 new series A shares to the company itself without consideration. The shares issued by the company have been used to pay rewards according to the company's Performance-based Matching Share Plan 2021-2023, announced on March 23, 2021, for 32 key individuals, based on the earning period of 2022.
A total of 11,657 of Martela shares held by the company have been conveyed on May 23, 2022, without consideration to the 34 key individuals participating in the Performance-based Matching Share Plan 2021-2023, announced on March 23, 2021. Conveyance of the shares relates to the earning period 2021. On December 31, 2023, Martela owns a total of 1,425 Martela A shares and its holding of treasury shares amounted to 0.03% of all shares and 0.01% of all votes. Out of the shares, 379 were purchased at an average price of EUR 10.65 and 1 046 were transferred from Martela Corporation's joint account
to the treasury shares.
BOARD AND MANAGEMENT SHAREHOLDINGS OF MARTELA OYJ
Members of the Board, CEO and Management Team hold at 31.12.2023 total of 106,518 Martela Oyj A -shares and 2,673 K -shares, which represents 2.4% of the total amount of shares and 1.0% of the voting
rights.
SHARE-BASED INCENTIVE PROGRAMME
Board of directors decided on March 18, 2021 on new share based incentive plan directed to key employees of the company. Purpose of the plan is to unite shareholders and key employees objectives on longterm basis as well as to commit key employees to execute company's strategy. Plan's objective is to offer to key employees competitive model to earn company's shares.
The new Performance-based Matching Share Plan 2021–2023 consists of three performance periods, covering the financial years of 2021, 2022 and 2023, respectively. The rewards to be paid based on the plan will amount to an approximate maximum total of 718,000 Martela Corporation series A shares in-
cluding also the proportion to be paid in cash. Approximately 40 persons, including the CEO and other Martela's Management Team members, were belonging to the target group of the plan. The rewards will be paid partly in Martela Corporation series A shares and partly in cash. The cash proportions of the rewards are intended for covering taxes and tax-related expenses arising from the rewards to the participants. In general, no reward is paid if the participant's employment or director contract terminates before the reward payment. The reward to be paid on the basis of the plan will be capped if the limits set by the Board of Directors for the share price are reached. During the performance periods 2021 and 2022 and 2023, the rewards were based on the Group's Earnings before Interest and Taxes (EBIT).
As part of the implementation of the Performance-based Matching Share Plan 2021—2023, the Board of Directors have resolved on March 18, 2021 a directed share issue to persons participating to the plan. Decision on the share issue is based on the authorization given by annual general meeting on March 18,2021. Total number of shares subscribed was 305 700 A -shares with a subscription price of EUR 2.73 per share. On June 23, 2022 the Board of Directors resolved new directed share issue to a new member of the group management team, where total number of shares subscribed was 11 574 A -shares with a subscription price of EUR 2.88 per share. Decision on the share issue was based on the authorization given by annual general meeting on March 17, 2022.
As part of the implementation of the Performance-based Matching Share Plan 2021—2023, the Board of Directors has resolved to grant plan participants interest-bearing loans in the maximum total amount of 686,000 euros to finance the acquisition of the company's shares. The maximum amount of the loan is 70 per cent of the participant´s investment in shares. The loans will be repaid in full on 31 December 2025, at the latest.
In 2023 total number of shares distributed based on the rewards of the programme was 53 881 and in year 2022 the number of the distributed shares were 11 657.
2023 Annual general meeting
Martela Corporation's Annual General Meeting was held on Wednesday, March 29, 2023. The Meeting approved the Financial Statements, discharged the members of the Board of Directors and CEO from liability for the year of 2023 and approved remuneration report for 2023. The Annual General Meeting resolved, in accordance with the proposal of the Board of Directors, to distribute a dividend of EUR 0.10 per share.
The Annual General Meeting confirmed that the Board of Directors will consist of six members and Mr. Jan Mattsson, Mr. Eero Martela, Ms Hanna Mattila, Ms. Katarina Mellström, Mr. Johan Mild and Ms. Anni Vepsäläinen be re-elected as members of the Board of Directors. The Annual General Meeting resolved a monthly compensation of EUR 3,700 be paid for the Chairman of the Board and EUR 1,850 for the Board Members, and an additional compensation of EUR 1,600 per year to the Board members be-
longing to a committee. mittee of the company.
Authorized Public Accountant Ernst & Young Oy was re-elected as the company's auditor. The remuneration of the auditor will be paid according to the invoice that has been accepted by the Audit Com-
The Board of Directors proposal that the Company's articles of association are amended so that the domicile of the Company is changed to Espoo and that an addition is made to the articles of association concerning possible remote participation in the general meeting as an alternative or without convening a physical meeting were approved.
The Annual General Meeting authorized the Board in accordance with the proposal of the Board of Directors to decide on the repurchase of a maximum of 450,000 Company's own A shares in one or several occasions. Own shares will be repurchased in public trading maintained by Nasdaq Helsinki Ltd at the market price of the shares as per the time of repurchase or otherwise at a price formed on the market. Own shares may be repurchased when necessary as a part of the Company's salary and incentive scheme, for use in conjunction with corporate acquisitions and other business arrangements, if the Board deems this is in the interest of the shareholders in light of the company's share indicators, or if the Board deems it is an economical way of using liquid assets, or for some other similar purpose. The share repurchase authorization includes the right to repurchase shares otherwise than in proportion of the shareholdings. The authorization cancels any previous unused authorizations to repurchase the Company's own shares. This share repurchase authorization will be valid until the closing of the next Annual General Meeting, however, no longer than until 30 June 2024.
The General Meeting authorized the Board of Directors to decide upon the issuance of shares and the issuance of special rights entitling to shares as referred to in Chapter 10 Section 1 of the Companies Act in one or several tranches, either against payment or without payment. The aggregate number of shares to be issued, including the shares to be received based on special rights, cannot exceed 450 000 of the Company's A-series shares. The Board of the Directors may resolve to issue new shares or to transfer own shares possibly held by the company. The maximum amount of the authorization corresponds to approximately 10 per cent of all shares in the Company. The Board of Directors is authorized to decide on all other matters related to the issuance of shares and special rights entitling to shares, including the right to deviate from the pre-emptive right of shareholders to subscribe for shares to be issued. The authorization is proposed to be used for the purposes of paying purchase prices of corporate acquisitions, share issues and issues of option rights and other special rights entitling to shares. This authorization remains valid until the closing of the next Annual General Meeting, however, no longer than until 30 June 2024.
The Board of Directors elected by Martela Corporation's Annual General Meeting had its organizational meeting after the Annual General Meeting and elected from among its members Johan Mild as the Chairman and Katarina Mellström as the Vice Chairman of the Board.
Administration
Martela Corporation is a Finnish limited liability company that is governed in its decision-making and management by Finnish legislation, especially the Finnish Limited Liability Companies Act, by other regulations concerning public listed companies, and by its Articles of Association. The company complies with the NASDAQ OMX Guidelines for Insiders and the Corporate Governance Code 2020 for Finnish listed companies published by the Securities Market Association. Company has published its Corporate Governance report as a separate document in company's website. More information on Martela's governance can be found on the company's website.
Martela Responsibility Report includes extensively the non-financial information (NFI) required by the accounting law. The Responsibility Report of 2023 will be published after the Annual Report.
Risks and uncertainties
The principal risk regarding profit performance relates to the general economic uncertainty and the consequent effects on the overall demand in Martela's operating environment. Due to the project-based nature of the sector, forecasting short-term developments is challenging. In accordance with Martela's risk management model, the risks are classified and guarded against in different ways.
Company regularly evaluates and monitors the financing need of its operations in order to secure sufficient liquid funds to run the operations and to facilitate other liabilities, like long-term rental agreements related payments. Sudden negative changes in the demand of company's products and services or changes in the overall market environment can however cause that companys liquid funds will not be sufficient to finance the operations.
Production of Martela's products is based on orders placed by customers, supply chain is short and purchases are mainly from neighbouring area and from other parts of Europe. Extensive warehousing is not needed. The product assembly is automated and based on component subcontracting and on assembly carried out by Martela.
Risks of damage are covered with appropriate insurance and this provides comprehensive coverage
for property, business interruption, supplier interruption loss and loss liability risks. The services of an external partner are used in insurance as well as in legal matters. Finance risks are discussed in note 22 of the notes to the financial statements.
SHORT-TERM RISKS
The principal risk regarding profit performance and liquidity development relates to the general economic uncertainty and the consequent effects on the overall demand in Martela's operating environment. The market situation continues to be negatively affected by uncertainty about the development of inflation and interest rates. Due to the project-based nature of the sector, forecasting short-term development is challenging in normal circumstances. This challenge is further accentuated by the increased economic uncertainty.
Events after the end of the financial year
On January 3, 2024, the company announced plans to streamline and reorganize its operations to mitigate the adverse effects of the market situation and adjust its cost structure to the prevailing circumstances. The reorganisation also aims to improve the service experience of Martela's customers. The planned organisational changes and other cost-saving measures are estimated to result in annual cost savings of approximately EUR 2 million. The majority of these are expected to be realized by 2024 and the full savings targets would be achieved by 2025. At the same time, the company announced that it will continue to invest in strategic key areas such as workplace services, digitalization, circular economy and internationalization. No other significant events requiring reporting have taken place since the January–December period.
Outlook for 2024
Martela anticipates its revenue to increase in full-year 2024 compared to previous year and operating result to be positive.
Proposal of the board of directors for distribution of profit
The Board of Directors proposes to the Annual General Meeting that no dividend will be distributed for
2023.
Annual general meeting
Martela Corporation's AGM is planned to be held on Friday 5 April 2024. The notice of the Annual General Meeting will be published in a separate release.
Consolidated comprehensive income statement
| (EUR 1000) | Note | 1 Jan–31 Dec 2023 |
1 Jan–31 Dec 2022 |
|
|---|---|---|---|---|
| Revenue | 1 | 94,389 | 106,710 | ASSETS |
| Other operating income | 2 | 149 | 2,293 | Non-current assets |
| Changes of inventories of finished goodsand work in progress | 1,420 | 3,516 | ||
| Raw material and consumables used | -56,219 | -69,548 | ||
| Production for own use | 513 | 2,506 | ||
| Employee benefits expenses | 3 | -22,995 | -23,557 | |
| Other operating expenses | 4 | -12,865 | -13,639 | |
| Depreciation and impairment | 5 | -6,773 | -5,790 | |
| Operating profit (-loss) | -2,380 | 2,491 | Current assets | |
| Financial income | 7 | 645 | 126 | |
| Financial expenses | 7 | -1,557 | -1,268 | |
| Profit (-loss) before taxes | -3,292 | 1,349 | ||
| Income taxes | 8 | -222 | 1,205 | |
| Profit (-loss) for the financial year | -3,514 | 2,554 | ||
| Other comprehensive income: | ||||
| Items that will not later be recognised through profit or loss | ||||
| Items resulting from remeasurement of the net debt related to defined bene fit plans |
45 | 103 | ||
| Taxes from items that will not later be recognised through profit or loss | 0 | -22 | ||
| Items that may later be recognised through profit or loss | ||||
| Translation differences | -415 | 190 | ||
| Other comprehensive income for the period | -370 | 270 | ||
| Total comprehensive income | - 3 884 | 2,824 | ||
| Allocation of profit (-loss) for the financial year | ||||
| Equity holders of the parent | -3,514 | 2,554 | ||
| Allocation of total comprehensive income | ||||
| Equity holders of the parent | -3,884 | 2,824 | ||
| Earnings per share of the profit attributable to | ||||
| the equity holders of the parent | ||||
| Basic earnings/share, EUR | 9 | -0.77 | 0.57 | |
| Diluted earnings/share, EUR | 9 | -0.77 | 0.57 |
Consolidated balance sheet
| Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
| 10 | 4,334 | 4,278 |
| 11 | 14,408 | 13,312 |
| 12 | 539 | 553 |
| 13 | 3,003 | 2,860 |
| 22,283 | 21,003 | |
| 14 | 9,235 | 11,781 |
| 12,15 | 19,115 | 18,248 |
| 5,053 | 11,295 | |
| 33,403 | 41,324 | |
| 55,686 | 62,327 | |
Consolidated cash flow statement
| (EUR 1 000) | Note | 31 Dec 2023 | 31 Dec 2022 | (EUR 1 000) | Note | 1 Jan–31 Dec 2023 | 1 Jan–31 Dec 2022 |
|---|---|---|---|---|---|---|---|
| EQUITY AND LIABILITIES | Cash flows from operating activities | ||||||
| Equity attributable to holders of the parent | 16 | Cash flow from sales | 94,980 | 113,434 | |||
| Share capital | 7,000 | 7,000 | Cash flow from other operating income | 144 | 282 | ||
| Share premium account | 1,116 | 1,116 | Payments on operating costs | -93,128 | -110,881 | ||
| Reserve for invested unrestricted equity | 995 | 995 | Net cash from operating activities before financial items and taxes | 1,996 | 2,835 | ||
| Other reserves | -9 | -9 | |||||
| Treasury shares* | -4 | -4 | Interest paid | -784 | -472 | ||
| Translation differences | -1,071 | -655 | Interest received | 29 | 23 | ||
| Retained earnings | 1,530 | 5,406 | Other financial items | -244 | 4 | ||
| Equity, total | 9,558 | 13,849 | Dividends received | 0 | 0 | ||
| Taxes paid | -677 | -319 | |||||
| Non-current liabilities | Net cash from operating activities (A) | 320 | 2,072 | ||||
| Pension obligations | 19 | 105 | 115 | ||||
| Financial liabilities | 12,18 | 13,812 | 14,686 | Cash flows from investing activities | |||
| Provisions | 20 | 269 | 229 | ||||
| Non-current liabilities, total | 14,187 | 15,030 | Capital expenditure on tangible and intangible assets | -2,332 | -902 | ||
| Proceeds from sale of tangible and intangible assets | 0 | 11,124 | |||||
| Current liabilities | Net cash used in investing activities (B) | -2,332 | 10,222 | ||||
| Financial liabilities | 12,18 | 4,287 | 4,612 | ||||
| Advances received | 21 | 7,850 | 6,278 | Cash flows form financing activities | |||
| Trade payables | 12,21 | 9,440 | 9,569 | ||||
| Accrued liabilities and prepaid income | 12,21 | 6,789 | 7,893 | Proceeds from short-term loans | 0 | 33 | |
| Income tax payable | 0 | 1,213 | Repayments of short-term loans | 18 | -417 | -5,000 | |
| Other current liabilities | 12,21 | 3,507 | 3,824 | Repayments of lease liabilities | -3,457 | -2,728 | |
| Provisions | 20 | 67 | 57 | Proceeds from long-term lease liabilies | 0 | 4,000 | |
| Non-interest-bearing current liabilities, total | 31,941 | 33,447 | Repayment of long-term loans | 18 | 0 | -1,900 | |
| Cash proceeds from issuing shares | 0 | 10 | |||||
| LIABILITIES, TOTAL | 46,128 | 48,477 | Dividends paid | -452 | 0 | ||
| Net cash used in financing activities (C) | -4,326 | -5,586 | |||||
| EQUITY AND LIABILITIES, TOTAL | 55,686 | 62,327 | |||||
| Change in cash and cash equivalents (A+B+C), increase +, decrease - | -6,338 | 6,708 | |||||
| * The treasury shares acquired for and assigned to share-based incentive scheme are shown in accounting terms | |||||||
| as treasury shares. | Cash and cash equivalents at the beginning of year | 11,295 | 4,926 | ||||
| See notes 16. | Translation differences | 96 | -339 | ||||
| Cash and cash equivalents at the end of year | 5,053 | 11,295 |
Statement of changes in equity
| Equity attributable to equity holders of the parent (EUR 1 000) | Share capital | Share premium account |
Reserve for invested unrestricted equity |
Other reserves | Treasury shares | Translation diff. | Retained earnings | Equity total |
|---|---|---|---|---|---|---|---|---|
| Equity 1 Jan 2022 | 7,000 | 1,116 | 962 | -9 | -128 | -846 | 2,665 | 10,761 |
| Profit (-loss) for the financial year | 2,554 | 2,554 | ||||||
| Other items of comprehensive income adjusted by tax effects | ||||||||
| Translation differences | 190 | 190 | ||||||
| Items resulting from remeasurement of the net debt related to defined benefit plans (incl. Deferred taxes) |
80 | 80 | ||||||
| Other comprehensive income for the period | 190 | 80 | 270 | |||||
| Total comprehensive income | 190 | 2,634 | 2,824 | |||||
| Share issue | 33 | 33 | ||||||
| Share-based incentives | 124 | 107 | 231 | |||||
| Equity 31 Dec 2022 | 7,000 | 1,116 | 995 | -9 | -4 | -656 | 5,406 | 13,849 |
| Equity 1 Jan 2023 | 7,000 | 1,116 | 995 | -9 | -4 | -656 | 5,406 | 13,849 |
| Profit (-loss) for the financial year | -3,514 | -3,514 | ||||||
| Other items of comprehensive income adjusted by tax effects | ||||||||
| Translation differences | -415 | -415 | ||||||
| Items resulting from remeasurement of the net debt related to defined benefit plans (incl. Deferred taxes) |
45 | 45 | ||||||
| Other comprehensive income for the period | -415 | 45 | -370 | |||||
| Total comprehensive income | -415 | -3,469 | -3,884 | |||||
| Share issue | 0 | |||||||
| Share-based incentives | 44 | 44 | ||||||
| Dividends paid | -452 | -452 | ||||||
| Equity 31 Dec 2023 | 7,000 | 1,116 | 995 | -9 | -4 | -1,071 | 1,530 | 9,558 |
| Equity attributable to equity holders of the parent (EUR 1 000) | Share capital | account | unrestricted equity | Other reserves | Treasury shares | Translation diff. | Retained earnings | Equity total |
|---|---|---|---|---|---|---|---|---|
| Equity 1 Jan 2022 | 7,000 | 1,116 | 962 | -9 | -128 | -846 | 2,665 | 10,761 |
| Profit (-loss) for the financial year | 2,554 | 2,554 | ||||||
| Other items of comprehensive income adjusted by tax effects | ||||||||
| Translation differences | 190 | 190 | ||||||
| Items resulting from remeasurement of the net debt related to defined benefit plans (incl. Deferred taxes) |
80 | 80 | ||||||
| Other comprehensive income for the period | 190 | 80 | 270 | |||||
| Total comprehensive income | 190 | 2,634 | 2,824 | |||||
| Share issue | 33 | 33 | ||||||
| Share-based incentives | 124 | 107 | 231 | |||||
| Equity 31 Dec 2022 | 7,000 | 1,116 | 995 | -9 | -4 | -656 | 5,406 | 13,849 |
| Equity 1 Jan 2023 | 7,000 | 1,116 | 995 | -9 | -4 | -656 | 5,406 | 13,849 |
| Profit (-loss) for the financial year | -3,514 | -3,514 | ||||||
| Other items of comprehensive income adjusted by tax effects Translation differences |
-415 | -415 | ||||||
| Items resulting from remeasurement of the net debt related to defined benefit plans (incl. Deferred taxes) |
45 | 45 | ||||||
| Other comprehensive income for the period | -415 | 45 | -370 | |||||
| Total comprehensive income | -415 | -3,469 | -3,884 | |||||
| Share issue | 0 | |||||||
| Share-based incentives | 44 | 44 | ||||||
| Dividends paid | -452 | -452 | ||||||
| Equity 31 Dec 2023 | 7,000 | 1,116 | 995 | -9 | -4 | -1,071 | 1,530 | 9,558 |
More information in Notes 16 Equity and 17 share-based payments.
Accounting principles for the consolidated financial statements
Martela Group
Martela Corporation supplies ergonomic and innovative furniture solutions and provides interior planning services.
The Group's parent company is Martela Oyj, a Finnish public limited company domiciled in Espoo, street address Miestentie 1, 02150 Espoo. The company's A shares are listed on Nasdaq Helsinki.
The Group's financial statements are available online at Martela's home pages www.martela.com.
These financial statements were authorized for issue by the Board of Directors of Martela Oyj on February 13, 2024. The Finnish Limited Liability Companies Act permits the shareholders to approve or reject the financial statements in the general meeting that is held after publishing the financial statements. As well, the general meeting has a possibility to amend the financial statements.
BASIS OF PREPARATION
Martela's consolidated financial statements are prepared in accordance with the International Financial Reporting Standards (IFRS) as on December 31, 2023. As referred to in the Finnish Accounting Act and in ordinances issued pursuant to the provisions of this Act, the International Financial Reporting Standards refer to the standards and their interpretations adopted in accordance with the procedure laid down in Regulation (EC) No 1606/2002 of the EU. The notes to the consolidated financial statements also conform with additional requirements of the Finnish accounting and company legislation.
The consolidated financial statements are presented in thousands of euros and have been prepared on the historical cost basis except as disclosed in the accounting policies. All presented figures have been rounded, which is why the sum of individual figures might deviate from the presented sum. The key financial indicators have been calculated using exact figures. Martela's consolidated financial statements cover the full calendar year, and this represents the financial period for the parent company and the Group companies.
USE OF ESTIMATES nificant effect.
The preparation of the financial statements in conformity with IFRS requires Group management to make certain estimates and to use judgement when applying accounting policies. The section "Accounting policies requiring management's judgement and key sources of estimation uncertainty" refers to the judgements made by management and those financial statement items on which judgements have a sig-
Principles of consolidation
The consolidated financial statements include the parent company, Martela Oyj, and all the subsidiaries in which the parent company controls, directly or indirectly, more than 50 per cent of the voting power of the shares, or otherwise has control. Martela is considered to be in control of a subsidiary when it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. Subsidiaries are included in the consolidated financial statements by using the acquisition method. The intra-group transactions, unrealised margins on intra-group deliveries, intra-group receivables and liabilities and profit distribution are eliminated.
Items denominated in foreign currency
Transactions in foreign currencies are translated at the exchange rate prevailing on the date of the transaction – in practice, for transactions taking place within any given month, a rate is used that approximates the rate of the transaction date. At the end of the reporting period, the monetary assets and liabilities are translated into functional currencies at the exchange rate at the end of the reporting period. Exchange rate gains and losses related to business operations are treated as adjustments to the purchases and sales. Exchange rate gains and losses in financing are treated as adjustments to financial income and expenses. The statements of comprehensive income and cash flows of foreign subsidiaries for the period are
translated into euros at the average rates for the financial year, and the balance sheets at the average rates of the European Central Bank at the end of the reporting period. The translation of the profit or loss and comprehensive income for the period at different exchange rates in the statement of comprehensive income and in the balance sheet causes a translation difference which is recognised in other comprehensive income. The exchange rate differences arising from the elimination of the cost of the foreign subsidiaries and the exchange rate differences arising from the translation of post-acquisition equity are also recognised in other comprehensive income. Similar treatment is applied to intra-group non-current loans which in substance are equity and form a part of the net investment in the operation in question. When a subsidiary is disposed of, all or in part, the accumulated translation differences are reclassified to profit and loss as part of the gain or loss on disposal.
Revenue recognition principles
Furniture is mainly delivered as installed at customer. The control of the furniture is transferred to the customer when the deliverables form the contract are fulfilled, i.e. the furniture is delivered and installed at customer and the customer has approved the delivery. The significant risks and rewards of ownership of the furniture is also transferred to the buyer through the approval of the delivery. Revenue from sold goods is recognised as the control of the goods is transferred to the buyer according to the agreement. The normal warranty for standard Martela produced products in normal use is five years and for other standard products two years.
Consultative services consist of workshops and interviews for specification of the demands placed on the work environment and interior planning services. The deliverable is fulfilled and the control is transferred to the customer as the product of the service is delivered to the customer. Revenue from consultative services is recognised as the deliverable is fulfilled.
In removals services the value of the service is received by the customer as Martela provides the service. In such cases the revenue is recognised over time. The removal services provided by Martela are mainly short in duration. In case a removal services project lasts for several months is the revenue recognised based on either invoicing of the achieved project milestones or based on actual work hours registered for the project.
The transaction prices for the sold goods and services are defined for each deliverable on the sales orders and no variable considerations are in use. Martela does not have capitalized costs for obtaining or of fulfilling customer contracts. Sales receivables are typically due latest within two months from invoicing. The customer contracts do not include significant financing components provided by Martela.
Revenue consists of income from customer contracts according to IFRS 15 and income from custom-
er contracts that are classified as leases based on the contract contents, and are treated in accordance
to IFRS 16. Leases in which substantially all the risks and rewards incidental to ownership of an asset remain with the lessor are classified as operative lease contracts and recognised as revenue in the statement of comprehensive income on a straight-line basis over the lease term.
Employee benefits
PENSION LIABILITIES The Group has arranged defined contribution plans and defined benefit plans for retirement. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined benefit plan is a pension plan that is not a defined contribution plan. Contributions made to defined contribution plans are recognised in profit or loss as an expense as incurred.
The obligations of defined benefit plans are calculated separately for each plan. The projected unit credit method is used in the calculation. Pension costs are recognised as an expense over the service period of personnel based on calculations performed by qualified actuaries. In calculating the present value of a pension obligation, the market yield of corporate high-grade bonds or the interest rate of government bonds are used as the discount rate. Their maturity corresponds to a significant extent with the maturity of the computed pension liability.
Pension expenses (service cost in the period) and the net interest for the net debt related to the defined benefit pension plan are recognised through profit or loss. Pension expenses are included in employee benefit expenses. Items resulting from the remeasurement of the net debt (or net asset) related to the defined benefit plan are recorded in items of other comprehensive income in the financial period during which they emerge. These include actuarial gains and losses and returns on assets included in the plan, among other items. Past service costs are recognised in expenses through profit or loss on the earlier of the following dates: the date when the plan is amended or reduced, or the date when the entity recognises the reorganisation expenses related to this or the benefits related to the termination of the employment relationship.
SHARE-BASED PAYMENTS
In the Group's share-based incentive system, with vesting periods 2021, 2022 and 2023, payments are made in a combination of shares and cash. Share rewards are measured at fair value at the grant date
and recognised as expenses over the vesting period. The vesting conditions are taken into account in the number of shares which are expected to vest by the end of the validity period. Measurements are adjusted at the end of each reporting period and the settlement is recognised under equity. The expense determined at the time of granting the share-based incentives is based on the Group's estimate of the number of shares which are expected to vest by the end of the vesting period. The assumed vesting takes account of the maximum incentive, the assumed achievement of non-market-based earnings targets and the reduction of persons participating the plan. The Group updates the estimate of the final number of shares at the end of each reporting period. Their impact on profit or loss is presented in the statement of comprehensive income under employment benefits expenses.
OPERATING PROFIT (LOSS)
Operating profit is the Group's profit from operations before financial items and income taxes. Exchange rate differences arisen in the translation of trade receivables and payables denominated in foreign currencies are included in operating profit.
INCOME TAXES
The taxes recognised in the consolidated statement of comprehensive income include current tax based on the taxable income of the Group companies for the financial year, taxes for previous years and the change in deferred taxes. For transactions and other events recognised in profit or loss, any related tax effects are also recognised in profit or loss. For transactions and other events recognised outside profit or loss (either in other comprehensive income or directly in equity), any related tax effects are also recognised either in other comprehensive income or directly in equity, respectively.
Deferred tax assets and liabilities are recognised on temporary differences between the tax bases and IFRS carrying values of assets and liabilities in the financial statements. A deferred tax asset is recognised only to the extent that it is probable that taxable profit will be available against which it can be used. Deferred tax liabilities are recognised to the full extent in the balance sheet. Deferred taxes are measured by using the tax rates enacted or substantively enacted by the end of the reporting period.
Intangible assets
GOODWILL
Goodwill resulting from business combinations represents the excess of the consideration transferred over the fair value of the net identifiable assets acquired.
Goodwill is tested annually or more frequently if there are indications that the value might be impaired. Testing is performed at least at the end of each financial year. For this purpose goodwill is allocated to cash generating units. An impairment loss is recognised whenever the carrying amount of cash-generating unit exceeds the recoverable amount. Impairment losses are recognised in the comprehensive income statement. An impairment loss in respect of goodwill is never reversed.
RESEARCH AND DEVELOPMENT
Research and development is active and continuous in the Group and if individual development projects are of such a scope in relation to operations and if the capitalization criteria are fulfilled these projects are capitalized. Research expenditure is recognised as an expense when incurred. R&D-related equipment is capitalised in machinery and equipment. There has been no development costs that met the capitalization criteria during the financial year.
OTHER INTANGIBLE ASSETS
An intangible asset is initially capitalized in the balance sheet at cost if the cost can be measured reliably and it is probable that the expected future economic benefits that are attributable to the asset will flow to the Group. Other intangible assets include software licences, IT-programmes, patents and other corresponding rights. Patents, licences and other rights are measured at historical cost, less amortisation and any impairment.
The useful lives of intangible assets are as follows:
| Licences_____3 – 5 years | |
|---|---|
| IT-programmes______3 – 10 years | |
| Customer ship____4 years | |
| Brands____6 years | |
| Patents and other corresponding rights´___10 years |
Amortisation is recognised using the straight-line method.
Tangible assets
Land, buildings, machinery and equipment constitute the majority of tangible assets. They are measured in the balance sheet at historical cost, less accumulated depreciation and any impairment.
When a part of an item of property, plant and equipment (accounted for as a separate asset) is renewed, the expenditure related to the new item is capitalised and the possibly remaining balance sheet value removed from the balance sheet. Other expenditure arising later is capitalised only when future economic benefits will flow to the Group. Other expenditure for repairs or maintenance is expensed when it is incurred. Those borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset.
Depreciation is calculated on a straight-line basis over the estimated useful life of the asset. A tangible asset once classified as held for sale is not depreciated. Land is not depreciated. The estimated depreciation periods are as follows:
| Buildings_____ 15–30 years | |
|---|---|
| Machinery and equipment______ 3–8 years |
The residual values and useful lives of tangible assets are reviewed at least at each financial year-end and, if necessary, are adjusted to reflect changes in the expected future economic benefits.
Gains and losses from the sale or disposal of tangible assets are recognised in profit and loss and presented under other operating income or other operating expenses.
IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS
The carrying amounts of assets are assessed at the end of each reporting period to observe whether there are any indications that an asset may be impaired. If such indications exist, the recoverable amount of the asset will be estimated at the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised if the balance sheet value of an asset or a cash-generating unit exceeds the recoverable amount of it. Impairment losses are recognised in the statement of comprehensive income.
If there are indications that impairment losses no longer exist or that they have diminished, the recoverable amount is estimated. An impairment loss previously recognised in the statement of comprehensive income is reversed if the estimates used in measuring the recoverable income have changed. However, an impairment loss cannot be reversed to an extent more than what the carrying amount of the asset or cash-generating unit would be without recognition of an impairment loss.
Leases
Martela's lease contracts consist mainly of office spaces, cars and IT-equipment. The lease contracts of cars and IT-equipment are time limited whereas the contracts for office spaces are open ended as well
as time limited. The lease contracts do not include variable lease payments.
Lease agreements, for which the lease period is beyond 12 months, are according to IFRS 16 recognised on the balance sheet as a right-of-use assets and lease liabilities. The right-of-use assets decreased with the accumulated depreciations are recognised as tangible assets. The right-of-use assets are depreciated over the lease period or an estimated period if longer. Estimated rental periods, are used for lease agreements of indefinite duration. The estimated rental periods are 2 years for rented offices and sales facilities and 1 year for warehouses. Martela applies the exemptions to IFRS 16 and does not apply IFRS 16 to short-term leases for which the lease term ends within 12 months and leases of low-value assets, which are not offices or warehouses in use by Martela. The payments for these are recognised as equal instalments over the rental period in the consolidated statement of comprehensive income.
The lease liabilities have been discounted at the borrowing rate.
Company also operates as lessor of furniture. Accounting principles of these are described under revenue recognition principles.
Martela Oyj has, during the comparison year, signed an sale and leaseback agreement regarding the Nummela production and logistic centre. A sales and leaseback transaction is an operation, in which the Group sells an asset, and simultaneously enters into a lease agreement with the buyer-lessor regarding the right to use the building. If the buyer-lessor has gained control over the asset subject to the agreement and the transfer is classified as an IFRS 15 sale, The Group recognises the fixed asset item arising from the lease to the amount, which is the relative share of the asset's previous book value related to the rights of use retained by it. The profit is limited to the share of the total profit that is related to the rights transferred to the
buyer-lessor.
Inventories
Inventories are measured at the lower of cost and net realisable value. The value of inventories is determined by using weighted average purchase prices and it includes all direct expenditure incurred by acquiring the inventories and also a part of the production overhead costs. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Inventory value includes adjustments caused by obsolescence.
Financial assets
Group's financial assets are classified into the following groups: financial assets at fair value through
profit or loss, financial assets at fair value through other comprehensive income and financial assets measured at amortised costs. The classification depends on the purpose of acquiring the financial assets, and they are classified at the time of initial acquisition. All purchases and sales of financial assets are recognised and derecognised on the trade date. The Group derecognises financial assets when it has lost its right to receive the cash flows or when it has transferred substantially all the risks and rewards to an external party.
Financial assets measured at amortised costs include assets that are held in a business model whose object is achieved by holding the assets and collecting contractual cash flows until the due date. The cash flow from the assets consists of solely payments of principal and interest on the principal amount outstanding. They are originally recognised at fair value and subsequently measured at amortised cost. The group recognises a deduction in the financial assets recognised at amortised cost based on expected credit losses. These assets are included in either current or non-current financial assets (they are included in the latter if they mature over 12 months later). The category includes loan, trade and other receivables that are not derivatives.
Cash and cash equivalents comprise cash in hand, in banks and in demand bank deposits, as well as other current, very liquid investments. Items qualifying as cash and cash equivalents have original maturities of three months or less from the date of acquisition.
IMPAIRMENT OF FINANCIAL ASSETS
At the end of each reporting period, the Group assesses whether objective evidence exists of the impairment of an individual financial asset or a group of financial assets. Impairment will be recognised through profit or loss.
A simplified model according to IFRS 9 is used in assessing the expected credit losses on trade receivables: credit losses are recognised to an amount that represents the expected credit losses for the full lifetime. The expected credit losses are assessed based on historical information on credit losses and on the information on the future financial circumstances available on the review date.
FINANCIAL LIABILITIES
The Group classifies its financial liabilities as financial liabilities measured at amortised cost (mainly includes borrowings from financial institutions, IFRS 16 lease liabilities and trade payables) .
Financial liabilities are initially recognised at fair value and are subsequently measured either at amortised cost or at fair value, based on the classification made. Financial liabilities are included in current and non-current liabilities and they can be interest-bearing or non-interest-bearing. Bank overdrafts are included in current interest-bearing liabilities. Financial liabilities are regarded as current, unless the Group has an absolute right to postpone the repayment of the debt until a minimum of 12 months after the end of the reporting period. Financial liabilities (in full or in part) are not eliminated from the balance sheet until the debt has ceased to exist – in other words, when the obligation specified in the agreement has been fulfilled or rescinded or ceases to be valid.
The Group uses derivative financial instruments, to hedge its electricity price risk. The Group doesn't apply hedge accounting, but derivatives are recognized at fair value through the statement of profit or loss at each balance sheet date according to the closing rate of the period. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. The change in fair value is recognised in income statement in raw material and consumables used.
Share capital
Outstanding ordinary shares are shown as share capital. The share capital consists of K and A series shares. The shares of both series have identical dividend rights but K series shares confer 20 votes and A series shares 1 vote at general meetings of shareholders.
Expenses related to the issuance and acquisition of own equity instruments are presented as deductions from equity. If Martela Oyj buys back its own equity instruments, their cost is deducted from equity.
DIVIDENDS Dividends proposed by the Board of Directors are not recorded in the financial statements but the related liability is only recognised when approved by a general meeting of shareholders.
Provisions
A provision is recognised when the Group has a legal or constructive obligation as a result of a past event, it is probable that on outflow of economic benefits will be required to settle the obligation and the amount can be estimated reliably. The amount recognised as a provision is equal to the best estimate of the expenditure required to settle the present obligation at the end of the reporting period.
Accounting policies requiring management's judgement and key sources of estimation uncertainty
In preparing the financial statements it is necessary to make forward-looking estimates and assumptions which may not, in fact, turn out to be true. In addition, it is necessary to use judgement in apply-
ing accounting policies to the financial statements. The foremost estimates concern the utilisation of deferred tax assets against future taxable income and the assumptions used in the impairment testing. Other estimates requiring management's judgement mainly concerns the amount of non-marketable inventories, impairment of trade receivables, the amount of guarantee provisions and the definition of the lease period in lease contracts of indefinite duration under IFRS 16. Estimates and assumptions are based on management's current best knowledge at the end of the reporting period, reflecting historical experience and other reasonable assumptions.
Impairment testing
The carrying amounts of non-current assets are assessed at the end of each reporting period to observe whether there are any indications that the balance sheet value of an asset or a cash-generating unit exceeds the recoverable amount of it.
If such indications exist, the recoverable amount of the asset will be estimated at the higher of its fair value less costs to sell and its value in use. Value in use is calculated based on discounted forecast cash flows. An impairment loss is recognised if the balance sheet value of an asset or a cash-generating unit exceeds the recoverable amount of it. Impairment losses are recognised in the statement of comprehensive income.
If there are indications that impairment losses no longer exist or that they have diminished, the recoverable amount is estimated. An impairment loss previously recognised in the statement of comprehensive income is reversed if the estimates used in measuring the recoverable income have changed. However, an impairment loss cannot be reversed to an extent more than what the carrying amount of the asset or cash-generating unit would be without recognition of an impairment loss.
Goodwill is tested for impairment annually regardless of whether there is any indication of impairment. An impairment loss in respect of goodwill is never reversed. (Note 10)
The recoverable amounts of cash generating units have been determined using calculations based on value in use. In the calculations, forecast cash flows are based on financial plans approved by management, covering a period of five years. The central assumptions concern development of growth and profitability. The cash flows beyond the five-year period are estimated based on 1,5% growth.
Deferred tax receivables
The prerequisites for recognition of deferred tax receivables are assessed at the end of each reporting period. Assumptions made by the managers of the Group companies on taxable income in future financial periods have been taken into account when evaluating the amount of deferred tax assets. Various internal and external factors can have a positive or negative effect on deferred tax assets. These include restructuring in the Group, amendments to tax laws (such as changes to tax rates or a change to the period of utilisation of confirmed deductible tax losses) and changes to the interpretations of tax regulations. Deferred tax assets recognised in an earlier reporting period are recognised in expenses in the consolidated statement of comprehensive income if the unit in question is not expected to accumulate sufficient taxable income to be able to utilise the temporary differences, such as confirmed tax losses, on which the deferred tax assets are based. Deferred tax assets are not recorded for taxation losses in subsidiaries.
Financial Statement prepared in ESEF Format
Financial Statements in Annual Report are prepared in ESEF format, in which it is marked up with XBRL tags according to ESEF taxonomy. The machine readable material is not audited.
New and amended IFRS-standards and interpretations effective from 2023 onwards
In 2023 and thereafter, the Group has adopted the following new and revised standards and interpretations issued by the IASB:
Amendments to the standard IAS 12 Income Taxes: Deferred taxes on transactions for which companies recognise both an asset and a liability. Amendment specifies how company account for deferred tax on transactions such as leases.
Amendments to IAS 1 Presentation of financial statements: The amendment clarifies when the change in accounting policy is material and how entities apply the concept of materiality in making decisions about accounting policy disclosures. The changes did not have a significant impact on the consolidat-
ed financial statements.
Amendments to the standard IAS 8, Accounting principles, changes and errors in accounting estimates: Definition of accounting estimates. The change clarifies the definition and application of the accounting estimate. The changes did not have a significant impact on the consolidated financial statements. Amendments to IAS 12 Income Taxes – Pillar 2: The model rules regarding Pillar 2 will enter into force
in Finland on January 1, 2024 with the new legislation on corporate minimum tax, which will bring into force the Council directive on ensuring a global minimum tax level for multinational corporations and large domestic corporations (Pillar 2). Martela Oyj is not covered by the legislation.
NEW IFRS STANDARDS, AMENDMENTS TO STANDARDS AND IFRIC INTERPRETATIONS THAT HAVE NOT YET BEEN IMPLEMENTED
Amendments to the standard IAS 1, Classification of liabilities into current and non-current. The standard change clarifies how debts should be classified as short-term or long-term when the company has the right to postpone the payment of the debt for at least 12 months.
Amendments to the IFRS16 standard Leases: lease liabilities in sales and leasebacks. The change requires the seller-lessee to subsequently value the lease liabilities arising from the sublease in a way that does not record any part of the profit or loss related to the seller-lessee's right of use. The new requirements do not prevent the seller-lessee from recording a profit or loss in the income statement related to the partial or complete termination of the lease agreement.
Amendments to the IAS 7 standard Cash flow statement and to the IFRS 7 standard Financial instruments: Delivery financing arrangements. The aim of the change is to provide additional information on the use of supplier financing arrangements, which will allow investors to assess the effects on the company's debts, cash flows and liquidity risk. The change gives instructions to identify a situation in which the currency cannot be considered as freely exchangeable and instructs in these situations to take this into account in the exchange rate used in reporting and to provide additional information on the matter.
The new IFRS standards, changes to standards and IFRIC interpretations listed above that come into effect on or after 1 January 2024 are not estimated to have a material impact.
1. Segment reporting
As a result of harmonising and combining processes, the organisation, reporting and systems, as of 2017 the company reports consolidated figures as a single segment and in addition reports revenue by country. Revenue will be reported by the location of a customer in following countries: Finland, Sweden, Norway and Other countries..
| 1 Jan–31 Dec 2023 | 1 Jan–31 Dec 2022 | |
|---|---|---|
| 67,313 | 74,501 | |
| 9,561 | 11,155 | |
| 6,992 | 7,575 | |
| 10,523 | 13,479 | |
| 94,389 | 106,710 | |
| 77,653 | 91,615 | |
| 16,736 | 15,095 | |
| 94,389 | 106,710 | |
Assets
| Information about geographical regions Non-current assets (EUR 1000) |
Intangible assets 31 Dec 2023 |
Tangible assets 31 Dec 2023 |
|---|---|---|
| Finland | 4,334 | 14,093 |
| Sweden | 0 | 106 |
| Other regions | 0 | 208 |
| Total | 4,334 | 14,408 |
| Non-current assets | Intangible assets 31 Dec 2022 |
Tangible assets 31 Dec 2022 |
|---|---|---|
| Finland | 4,278 | 13,025 |
| Sweden | 0 | 150 |
| Other regions | 0 | 138 |
| Total | 4,278 | 13,312 |
| (EUR 1 000) | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
| Assests and liabilities from contracts with customers | ||
| Trade receivables | 16,218 | 15,810 |
| Accrued income based on customer contracts | 281 | 933 |
| Prepayments based on customer contracts | 7,850 | 6,278 |
Revenue includes EUR 4 287 thousand (2 228) income from furniture which is based on customer agreements and is classified as rental income.
Comparison year figure has been corrected. Previously released figure was EUR 1 327 thousand.
2. Other operating income
| (EUR 1 000) | 1 Jan–31 Dec 2023 | 1 Jan–31 Dec 2022 |
|---|---|---|
| Gains on sale of tangible assets | 0 | 69 |
| Gain on the sale and leaseback agreement | 0 | 1,930 |
| Rental income | 58 | 239 |
| Public subsidies | 6 | 13 |
| Other income from operations | 85 | 43 |
| Total | 149 | 2,293 |
3. Employee benefits expenses 4. Other operating expenses
5. Depreciation and impairment
| (EUR 1 000) | 1 Jan–31 Dec 2023 | 1 Jan–31 Dec 2022 | |
|---|---|---|---|
| Salaries and wages | -18,505 | -18,933 | |
| Pension expenses, defined contribution plans | -2,876 | -2,949 | |
| Pension expenses, defined benefit plans | -70 | -105 | |
| Expenses of matching share plan | -275 | -297 | |
| Other salary-related expenses | -1,270 | -1,273 | |
| Personnel expenses in the income statement | -22,995 | -23,557 | |
| Other fringe benefits | -499 | -381 | |
| Total | -23,494 | -23,938 |
| (EUR 1000) | 1 Jan–31 Dec 2023 | 1 Jan–31 Dec 2022 |
|---|---|---|
| Freight | -1,237 | -1,465 |
| Travel | -611 | -561 |
| Administration | -2,041 | -2,582 |
| IT | -3,217 | -2,768 |
| Marketing | -640 | -862 |
| Electricity and heating | -330 | -311 |
| Unrealised loss of electricity derivatives | -52 | -78 |
| Other real estate | -1,089 | -1,053 |
| Royalties | -646 | -850 |
| Other | -3,002 | -3,107 |
| Total | -12,865 | -13,639 |
| Auditors' fees | 1 Jan–31 Dec 2023 | 1 Jan–31 Dec 2022 |
| Auditing | -173 | -129 |
| Other services | -18 | -15 |
| Total | -191 | -144 |
| (EUR 1 000) | 1 Jan–31 Dec 2023 | 1 Jan–31 Dec 2022 |
|---|---|---|
| Depreciation | ||
| Intangible assets | -1,267 | -1,005 |
| Tangible assets | ||
| Buildings and structures | -170 | -324 |
| Machinery and equipment | -1,273 | -936 |
| Depreciation, total | -2,710 | -2,265 |
| Depreciation of right-of-use assets according to IFRS 16 | ||
| Buildings and structures | -2,628 | -2,157 |
| Machinery and equipment | -1,435 | -1,369 |
| Depreciation, total | -4,063 | -3,526 |
| Personnel | 2023 | 2022 |
|---|---|---|
| Personnel on average, workers | 194 | 200 |
| Personnel on average, officials | 209 | 203 |
| Personnel on average, total | 403 | 403 |
| Personnel at year-end | 386 | 400 |
| Personnel on average in Finland | 326 | 328 |
| Personnel on average in Sweden | 29 | 27 |
| Personnel on average in Norway | 15 | 14 |
| Personnel on average in Poland | 33 | 34 |
| Total | 403 | 403 |
A total of EUR 769 thousand for 2023 and EUR 1 142 thousand from 2022 were recognised in the result from the incentives and salary-related expenses associated with the incentive scheme. Salaries and fees and share-based payments are presented in more detail under note 24 Related-party transactions.
More information about share-based incentive programme is in note 17.
Auditors' fees are included in administration expenses.
Other operating expenses are reported by type of expense.
6. Research and development expenses
The income statement includes research and development expenses of EUR -1,573 thousand (EUR -1,625 thousand 2022). Comparison year figure has been corrected. Previously published figure was -2,475.
The company has no diluting instruments December 31, 2023 or December 31, 2022. For more information on weighted average number of shares see note 16.
7. Financial income and expenses
8. Income taxes
| (EUR 1 000) | 1 Jan–31 Dec 2023 | 1 Jan–31 Dec 2022 |
|---|---|---|
| Financial income | ||
| Interest income on loans and other receivables | 29 | 23 |
| Foreign exchange gain on loans and other receivables | 615 | 103 |
| Other financial income | 1 | 0 |
| Total | 645 | 126 |
| Financial expenses | ||
| Interest expenses from financial liabilities measured at amortised cost | -25 | -166 |
| Foreign exchange losses on loans and other receivables | -533 | -327 |
| Interest expenses of lease liabilities according to IFRS 16 | -694 | -387 |
| Other financial expenses | -304 | -389 |
| Total | -1,557 | -1,268 |
| Financial income and expenses, total | -912 | -1,142 |
| Total exchange rate differences affecting profit and loss are as follows: | ||
| Exchange rate differences, sales (included in revenue) | -39 | -347 |
| Exchange rate differences, purchases (included in adj. of purchases) | -81 | 23 |
| Exchange rate differences, financial items | 81 | -224 |
| Exchange rate differences, total | -38 | -548 |
| (EUR 1 000 ) |
|---|
| Profit before taxes | -3,292 | 1,349 |
|---|---|---|
| Taxes calculated using the domestic corporation tax rate | -658 | 270 |
| Deferred taxes | -39 | -2,705 |
| Different tax rates of subsidiaries abroad | -17 | -36 |
| Taxes for previous years | 86 | 116 |
| Recognition of unused tax losses not booked earlier | 0 | 1,089 |
| Tax-exempt income | 6 | 3 |
| Non-deductible expenses | 58 | -504 |
| Unbooked deferred tax assets on losses in taxation | 838 | 356 |
| Other items | -51 | 207 |
| Income taxes for the year in the p/l (+ = expense, - = profit) | 222 | -1,205 |
| (EUR 1 000 ) | 1 Jan–31 Dec 2023 | 1 Jan–31 Dec 2022 |
|---|---|---|
| Income taxes, financial year | -175 | -1,385 |
| Taxes for previous years | -86 | -116 |
| Change in deferred tax liabilities and assets | 39 | 2,705 |
| Total | -222 | 1,205 |
9. Earnings per share
The basic earnings per share is calculated dividing the profit attributable to equity holders of the parent by the weighted average number of shares outstanding during the year.
| (EUR 1 000) | 1 Jan–31 Dec 2023 | 1 Jan–31 Dec 2022 |
|---|---|---|
| Profit attributable to equity holders of the parent | -3,514 | 2,554 |
| Weighted average number of shares (1,000) | 4,572 | 4,518 |
| Basic earnings per share (EUR/share) | -0,77 | 0,57 |
Reconciliation between the income statement's tax expense and the income tax expense calculated using the Martela Group's domestic corporation tax rate 20.0%.
Income taxes in the comparison year in income statement are positive, due to use of confirmed losses, for which deferred tax assets have not been recognised previous periods, as well as a realised sale and leaseback transaction that took place during the period, for which deferred tax receivable has been recognised.
10. Intangible assets
| (EUR 1 000) | 1 Jan–31 Dec 2023 Intangible assets |
Goodwill | Work in progress | Total | 1 Jan–31 Dec 2022 Intangible assets |
Goodwill | Work in progress | Total |
|---|---|---|---|---|---|---|---|---|
| Acquisition cost 1 Jan | 15,479 | 883 | 724 | 17,086 | 15,360 | 883 | 159 | 16,402 |
| Increases | 926 | 2,166 | 3,092 | 227 | 2,424 | 2,652 | ||
| Decreases | -1,769 | -1,769 | -108 | -1,860 | -1,968 | |||
| Acquisition cost 31 Dec | 16,405 | 883 | 1,121 | 18,409 | 15,479 | 883 | 724 | 17,086 |
| Accumulated depreciation 1 Jan | -12,808 | 0 | 0 | -12,808 | -11,814 | 0 | 0 | -11,814 |
| Depreciation for the year | -1,267 | -1,267 | -994 | -994 | ||||
| Exchange rate differences | ||||||||
| Accumulated depreciation 31 dec | -14,075 | 0 | 0 | -14,075 | -12,808 | 0 | 0 | -12,808 |
| Carrying amount 1 Jan | 2,671 | 883 | 724 | 4,278 | 3,546 | 883 | 159 | 4,588 |
| Carrying amount 31 Dec | 2 330 | 883 | 1,121 | 4,334 | 2,671 | 883 | 724 | 4,278 |
Goodwill
The Group's Goodwill EUR 883 thousand (EUR 883 thousand 2022) relates to the Grundell acquisition Martela made December 31, 2011. The expected future cash flows will be generated through more extensive service solutions encompassing also products and the already implemented profit improving actions. The revenue growth is also supported by the renewed strategy of Martela that increases the emphasis on service within the Group.
Impairment testing
Goodwill is tested annually or more frequently if there are indications that the amount might be impaired. In assessing whether goodwill has been impaired, the carrying value of the cash generating unit Muuttopalvelu Grundell Oy has been compared to the recoverable amount of the cash carrying unit.
The recoverable amount of the goodwill is determined based on the value in use calculations. The value in use is calculated based on the discounted forecast cash flows. The cash flow forecasts rely on the plans approved by the management concerning profitability and the growth rate of revenue. The plans cover a five-year period taking into account the recent development of the business.
In impairment testing the average growth is estimated to be 1.5% and EBIT 9.9%. The use of testing model requires making estimates and assumptions concerning market growth and general interest rate level. The used post-tax discount rate is 10.0% (9.6%) which equals the weighted average cost of capital.
The cash flows after the five-year period have been forecasted by estimating the future growth rate of revenue to be 1.5%. Based on the impairment test there is no need to recognise an impairment loss.
Sensitivity analysis of impairment testing
The carrying value of the cash generating unit is EUR 13.1 million higher than the book value according to the performed impairment test. No predictible changes in any assumpions, have any significant impact on the result of the goodwill testing.
| 3 | ||
|---|---|---|
11. Tangible assets
| 1 Jan–31 Dec 2023 | Land areas | Buildings | Buildings IFRS 16 | Machinery and equipment |
Machinery and equipment IFRS 16 |
Machinery and equip ment IFRS 16 WAAS* |
Other tangible assets |
Work in progress | Total |
|---|---|---|---|---|---|---|---|---|---|
| Acquisition cost 1 jan | 4 | 23,616 | 12,407 | 34,075 | 2,691 | 7,839 | 23 | 1 | 80,656 |
| Increases | 13 | 1,272 | 586 | 1,536 | 3,918 | 7,325 | |||
| Decreases | 0 | -9 | 0 | -102 | -1,373 | -1 | -1,486 | ||
| Exchange rate differences | -43 | -43 | |||||||
| Acquisition cost 31 Dec | 4 | 23,620 | 13,636 | 34,661 | 4,124 | 10,383 | 23 | 0 | 86,452 |
| Accumulated depreciation 1 Jan | 0 | -23,003 | -8,214 | -32,865 | -1,853 | -1,407 | 0 | 0 | -67,343 |
| Accumulated depreciation, decreases | 0 | 0 | 93 | 672 | 0 | 0 | 765 | ||
| Depreciation for the year | 0 | -170 | -1,795 | -359 | -834 | -2,348 | 0 | 0 | -5,506 |
| Exchange rate differences | 48 | -8 | 0 | 0 | 40 | ||||
| Accumulated depreciation 31 Dec | 0 | -23,173 | -9,961 | -33,224 | -2,601 | -3,083 | 0 | 0 | -72,044 |
| Carrying amount 1 Jan | 4 | 614 | 4,193 | 1,210 | 838 | 6,430 | 23 | 0 | 13,312 |
| Carrying amount 31 Dec | 4 | 448 | 3,676 | 1,437 | 1,523 | 7,298 | 23 | 0 | 14,408 |
| 1 Jan–31 Dec 2022 | Land areas | Buildings | Buildings IFRS 16 | Machinery and equipment |
Machinery and equipment IFRS 16 |
Machinery and equip ment IFRS 16 WAAS* |
Other tangible assets |
Work in progress | Total |
|---|---|---|---|---|---|---|---|---|---|
| Acquisition cost 1 Jan | 83 | 24,046 | 9,099 | 33,645 | 2,814 | 2,421 | 35 | 77 | 72,220 |
| Increases | 103 | 3,565 | 475 | 162 | 6,070 | 10,375 | |||
| Decreases | -80 | -533 | -257 | -45 | -285 | -653 | -11 | -76 | -1,940 |
| Exchange rate differences | 0 | ||||||||
| Acquisition cost 31 Dec | 4 | 23,616 | 12,407 | 34,075 | 2,691 | 7,839 | 24 | 1 | 80,656 |
| Accumulated depreciation 1 Jan | 0 | -22,670 | -6,212 | -32,251 | -1,563 | -558 | 0 | 0 | -63,253 |
| Accumulated depreciation, decreases | 0 | 176 | 24 | 261 | 236 | 0 | 0 | 698 | |
| Depreciation for the year | 0 | -332 | -2,178 | -639 | -550 | -1,086 | 0 | 0 | -4,787 |
| Exchange rate differences | 0 | 0 | 0 | ||||||
| Accumulated depreciation 31 Dec | 0 | -23,003 | -8,214 | -32,865 | -1,853 | -1,407 | 0 | 0 | -67,343 |
| Carrying amount 1 Jan | 83 | 1,376 | 2,887 | 1,395 | 1,250 | 1,863 | 35 | 77 | 8,967 |
| Carrying amount 31 Dec | 4 | 614 | 4,193 | 1,210 | 838 | 6,430 | 23 | 0 | 13,312 |
*WAAS, Workplace as a Service-business area assets, that are classified as operative leasing contracts according to IFRS 16 and in which company according to the standard operates as lessor.
*WAAS, Workplace as a Service-business area assets, that are classified as operative leasing contracts according to IFRS 16 and in which company according to the standard operates as lessor.
12. Book values of financial assets and liabilities by group
| (EUR 1 000) | Financial assets measured at amortised costs |
Financial liabilities measured at amortised cost |
Financial assets measured at fair value through profit or loss |
Book values of balance sheet items |
Fair value |
Hierarchy level |
Note |
|---|---|---|---|---|---|---|---|
| 2023 BALANCE SHEET ITEMS | |||||||
| Non-current financial assets | |||||||
| Loan receivables | 532 | 532 | 532 | 2 | |||
| Current financial assets | |||||||
| Trade and other receivables | 16,218 | 16,218 | 16,218 | 2 | 15 | ||
| Book value by group | 16,750 | 16,750 | 16,750 | ||||
| Non-current financial liabilities | |||||||
| Interest-bearing liabilities | 13,776 | 13,776 | 13,776 | 2 | 18 | ||
| Derivatives designated as hedging instruments | 36 | 36 | 36 | 1 | |||
| Current financial liabilities | |||||||
| Interest-bearing liabilities | 4,272 | 4,272 | 4,272 | 2 | 18 | ||
| Derivatives designated as hedging instruments | 15 | 15 | 15 | 1 | |||
| Trade payables and other liabilities | 12,947 | 12,947 | 12,947 | 2 | 21 | ||
| Book value by group | 30,995 | 52 | 31,046 | 31,046 | |||
| Financial assets measured at |
Financial liabilities measured at |
Financial assets measured at fair | Book values of balance sheet |
Fair | Hierarchy | ||
|---|---|---|---|---|---|---|---|
| (EUR 1 000) | amortised costs | amortised cost | value through profit or loss | items | value | level | Note |
| 2022 BALANCE SHEET ITEMS | |||||||
| Non-current financial assets | |||||||
| Loan receivables | 546 | 546 | 546 | 2 | |||
| Current financial assets | |||||||
| Trade and other receivables | 15,810 | 15,810 | 15,810 | 2 | 15 | ||
| Book value by group | 16,356 | 16,356 | 16,356 | ||||
| Non-current financial liabilities | |||||||
| Interest-bearing liabilities | 14,678 | 14,678 | 14,678 | 2 | 18 | ||
| Derivatives designated as hedging instruments | 8 | 8 | 8 | 1 | 18 | ||
| Current financial liabilities | |||||||
| Interest-bearing liabilities | 4,542 | 4,542 | 4,542 | 2 | 18 | ||
| Derivatives designated as hedging instruments | 70 | 70 | 70 | 1 | 18 | ||
| Trade payables and other liabilities | 13,393 | 13,393 | 13,393 | 2 | 21 | ||
| Book value by group | 32,613 | 78 | 32,691 | 32,691 | |||
Derivatives designated as hedging instruments have been bought in order to manage the risk concerning the electricity price.
Other financial assets include investments in unlisted equities. They have been measured at acquisition cost as fair value cannot be assessed reliably. The book values of trade receivables and receivables other than those based on derivatives are estimated to essentially correspond to their fair values due to the short maturity of the receivables.
The book values of debts are estimated to correspond to their fair values. Interest rate level has no material effect.
The book values of trade and other non-interest-bearing liabilities are also estimated to correspond to their fair values. Discounting has no material effect.
Fair values of each financial asset and liability group are presented in more detail under the note indicated in the table above.
Assets and liabilities recognised at fair value in the financial statements are categorised into three levels in the fair value hierarchy based on the inputs used in the valuation technique to determine their fair value. The three levels are:
Level 1. Quoted prices(unadjusted) in active markets for identical assets or liabilities.
Level 2. Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly e.g. discounted cash flows or valuation models.
Level 3. Inputs for the asset or liability that are not based on observable market data and the fair value determination is widely based on management's judgement and the use of that in commonly approved valuation models.
13. Deferred tax assets and liabilities
| Changes in deferred taxes during 2023 (EUR 1 000) | 1 Jan 2023 | Recognised in the income statement |
Recognised in the other comprehensive income |
Recognised in the retained earnings |
31 Dec 2023 |
|---|---|---|---|---|---|
| Deferred tax assets | |||||
| Right of use asset | 2,454 | 0 | 2,454 | ||
| Pension obligations | 3 | 0 | -12 | -9 | |
| Other temporary differences | 425 | 212 | 0 | 116 | 753 |
| Total | 2,882 | 212 | -12 | 116 | 3,198 |
| Deferred tax liabilities | |||||
| Right of use asset | 7 | 184 | 191 | ||
| On buildings measured at the fair value of the transition date | 16 | -12 | 0 | 0 | 4 |
| Total | 23 | 172 | 0 | 0 | 195 |
| Deferred tax assets and liabilities, total | 2,859 | 40 | -12 | 116 | 3,003 |
| Changes in deferred taxes during 2022 (EUR 1 000) | 1 Jan 2022 | Recognised in the income statement |
Recognised in the other comprehensive income |
Recognised in the retained earnings |
31 Dec 2022 |
|---|---|---|---|---|---|
| Deferred tax assets | |||||
| Right of use asset | 28 | 2,426 | 2,454 | ||
| Pension obligations | 26 | 0 | -22 | 0 | 3 |
| Other temporary differences | 287 | 165 | 0 | -27 | 425 |
| Total | 340 | 2,591 | -22 | -27 | 2,883 |
| Deferred tax liabilities | |||||
| Right of use asset | 5 | 2 | 7 | ||
| On buildings measured at the fair value of the transition date | 132 | -116 | 0 | 0 | 16 |
| Total | 137 | -116 | 0 | 0 | 23 |
| Deferred tax assets and liabilities, total | 204 | 2,707 | -22 | -27 | 2,860 |
Deferred tax assets have not been recognised on unused tax losses that probably cannot be utilised in the future against taxable income. The amount of such losses is EUR 22.1 million (21.8 in 2022) including current year results.
According to current knowledge these losses have no expiration date. The losses mainly originate from foreign subsidiaries.
14. Inventories
15. Current trade receivables and other receivables
| (EUR 1 000) | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
| Raw materials and consumables | 7,777 | 10,060 |
| Work in progress | 399 | 1,281 |
| Finished goods | 1,059 | 440 |
| Total | 9,235 | 11,781 |
| Age distribution of trade receivables (EUR 1 000) |
2023 | Incl. credit loss provision |
2022 | provision |
|---|---|---|---|---|
| Undue | 12,279 | 74 | 12,608 | 101 |
| 0-6 months overdue | 3,723 | 97 | 2,877 | 17 |
| 6-12 months overdue | 128 | 299 | 142 | 2 |
| 12-24 months overdue | 74 | 50 | 89 | 5 |
| Over 24 months overdue | 14 | 64 | 94 | 5 |
| Total | 16,218 | 584 | 15,810 | 129 |
| (EUR 1 000) | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
| Trade receivables | 16,218 | 15,810 |
| Accrued income and prepaid expenses of | ||
| Personnel expenses | 91 | 99 |
| Uninvoiced revenue | 445 | 1,115 |
| Prepaid expenses | 1,869 | 927 |
| Tax receivables | 491 | 297 |
| Accrued income and prepaid expenses total | 2,897 | 2,438 |
| Total | 19,115 | 18,248 |
| Region (EUR 1 000) | 2023 | 2022 |
|---|---|---|
| Finland | 9,704 | 9,827 |
| Scandinavia | 5,188 | 4,689 |
| Other European countries | 1,256 | 1,241 |
| Other regions | 70 | 53 |
| Total | 16,218 | 15,810 |
The value of inventories has been written down by -381 thousand (-430 thousand 2022) due to obsolescence.
In the valuation of inventories the fair value of an item as well as its usage in current product portfolio offered is monitored. Should the current product portfolio no longer carry the product to which the item is used the item is written down. If the product is still on sale but there has been decision to finish its selling, it will be written down to equal half of its value. A provision is made to the trade receivables according to following, unless it is highly likely to receive payment for the receivable:
undue receivables 0.5%, 0-6 months overdue 2%, 6-12 months overdue 10%, 12-24 months overdue 50% and over 24 months over-
At the end of the financial year, there were a total of EUR 584 thousand in provisions for bad debts, of which the group's EUR 290 thousands is related to the bankruptcy of a Norwegian customer.
due 100%. es is 30 days.
The sales invoices are interest-free and the most general payment term is 14 days, while the payment term in the biggest invoic-
The maximum trade receivable credit risk amount on the balance sheet date 31 December by country or region:
The age distribution of Group trade receivables on the balance sheet date 31 December is presented in the following table:
Credit risks from trade receivables are not concentrated.
In 2023 credit losses of EUR -535 thousand (EUR -192 thousand 2022) has been recognised as expenses and are presented in
other operating expenses.
16. Equity
Share capital
The paid share capital entered in the Trade register is EUR 7,000,000. The counter value of a share is 1.53 (1.55). The K shares carry 20 votes at the annual general meeting and the A-shares 1 vote each. Both share series have the same dividend rights.
Changes in share capital
| Changes in share capital | A shares | K shares | Share capital |
Share premium account |
Reserve for invest ed unre stricted |
Treasury shares |
Total |
|---|---|---|---|---|---|---|---|
| 1 Jan 2022 | 3,890,158 | 604,800 | 7,000 | 1,116 | 962 | -128 | 8,950 |
| Shares of directed share issue | 11,574 | 33 | 124 | 157 | |||
| 31 Dec 2022 | 3,913,389 | 604,800 | 7,000 | 1,116 | 995 | -4 | 9,108 |
| Shares of directed share issue | 53,881 | ||||||
| 31 Dec 2023 | 3,967,270 | 604,800 | 7,000 | 1,116 | 995 | -4 | 9,108 |
Martela Oyj owns 1,425 (1,425) A-shares purchased at an average price of 10.65. The number of treasury shares is equivalent to 0.03% (0.03) of all shares and 0.01% (0.01) of all votes.
A total of 11,657 of Martela shares held by the company have been conveyed without consideration to the 34 key individuals participating in the Performance-based Matching Share Plan 2021—2023, announced on March 23, 2021.
The subscription price of the directed share issue has been registered in reserve for invested unrestricted equity. Company has decided on a paid directed share issue March 17, 2022, in which 11,574 of series A shares have been subscribed. The share subscription price TEUR 33, has been credited to the company's reserve for invested unrestricted equity.
Company has decided on a paid directed share issue March 29, 2023, in which 53,881 of series A shares have been subscribed without consideration. The shares issued to the company have been used to pay incentives according to the company's incentive plan. Acquisition of shares for the share-based incentive scheme and the management of the scheme have been outsourced to an external service provider.
Translation differences in equity comprises translation differences of financial statements of foreign subsidiaries when translated into euros and of investments in foreign units. Other reserves consists of reserve funds.
The share premium account is a fund established in accordance with the previous Finnish Companies Act. According to the present Liability Companies Act (effective from September 1, 2006) it is included in restricted shareholders' equity and can no longer be accumulated. The share premium account can be reduced in accordance with the regulations on the reduction of share capital, and it can be used as a fund increase to increase share capital. The acquisition cost of treasury shares is deducted from shareholders' equity (including the related transaction costs).
The parent company's distributable equity was 16,372 thousand on December 31, 2023.
Expenses for the financial year, share-based payments, equity settled 43,612 231,460
IFRS 2 requires an entity to measure the award at its fair value and recognised over the vesting period. The award is recognised in equity in its full extent. The fair value of the share-based scheme when granted was the value of a company's share, EUR 2.85 per share (6.5.2021) and EUR 2.71 per share (23.6.2022).
17. Share-based payments
Share-based incentive plan for the group's key employees 2021, 2022 and 2023
The prerequisite for participating in the plan is that a participant acquires the company´s series A shares up to the number determined by the Board of Directors. In order to implement the plan, the Board of Directors decided on a share issue against payment directed to the target group. Approximately 40 persons, including the CEO and other Martela's Management Team members, belong to the target group of the plan. The Performance-based Matching Share Plan 2021–2023 consists of three performance periods, covering the financial years of 2021, 2022 and 2023, respectively.
In the plan, the target group is given an opportunity to earn Martela Corporation series A shares based on performance and on their personal investment in Martela Corporation series A shares.
The Board of Directors decides on the plan's performance criteria and targets to be set for each criterion at the beginning of a performance period. During the performance period 2022 and 2023, the rewards are based on the Group's Earnings before Interest and Taxes (EBIT). The potential rewards based on the plan will be paid after the end of each performance period.
| Type | Share | ||
|---|---|---|---|
| Instrument | Earning period 2021 | Earning period 2022 | Earning period 2023 |
| Issuing date | 6.5.2021 | 6.5.2021 | 6.5.2021 |
| Maximum amount, pcs | 718,000 | 718,000 | 718,000 |
| Dividend adjustment | No | No | No |
| Grant date | 18.3.2021 | 18.3.2021 | 18.3.2021 |
| Beginning of earning period | 1.1.2021 | 1.1.2022 | 1.1.2023 |
| End of earning period | 31.12.2021 | 31.12.2022 | 31.12.2023 |
| End of restriction period | 31.5.2022 | 31.5.2023 | 31.5.2024 |
| Vesting conditions | Share ownership, employment until the end of vesting date,EBIT |
Share ownership, employment until the end of vesting date,EBIT |
Share ownership, employment until the end of vesting date,EBIT |
| Maximum contractual life, yrs | 1.4 | 1.4 | 1.4 |
| Remaining contractual life, yrs | 0.0 | 0.4 | 1.4 |
| Number of persons at the end of reporting year |
36 | 35 | 30 |
| Payment method | Cash & Equity | Cash & Equity | Cash & Equity |
| Changes during the period 2023 | Earning period 2021 | Earning period 2022 | Earning period 2023 |
| 1 Jan 2023 | |||
| Outstanding at the beginning of the reporting period, pcs |
153,014 | 154,486 | 157,046 |
| Changes during the period | |||
| Granted | 0 | 0 | |
| Forfeited | 46,742 | 45,410 | |
| Shares given | 23,305 | 107,744 | |
| Lost during the period | 129,709 | ||
| Outstanding at the end of the period | 0 | 0 | 111,636 |
| Effects from the share based incentive programme on the financial year (EUR 1 000) |
2023 | 2022 |
The rewards to be paid based on the plan will amount to an approximate maximum total of 718,000 Martela Corporation series A shares including also the proportion to be paid in cash. The cash proportions of the rewards are intended for covering taxes and tax-related expenses arising from the rewards to the participants.
Program Share-based incentive programme 2021–2023
Vesting conditions
1 Jan 2023
18. Financial liabilities
| (EUR 1 000) | 31 Dec 2023 | 31 Dec 2022 | Lease liabilities are payable as follows: | 31 Dec 2023 Lease liabilities |
31 Dec 2022 Lease liabilities |
|
|---|---|---|---|---|---|---|
| Non-current | Lease liabilities - total amount of minimum lease payments | |||||
| Derivatives designated as hedging instruments | 36 | 8 | No later than one year | 3,672 | 3,756 | |
| Lease liabilities | 13,776 | 14,678 | Later than one year and no later than five years | 8,777 | 8,771 | |
| Total | 13,812 | 14,686 | Later than five years | 7,246 | 9,637 | |
| Total | 19,695 | 22,165 | ||||
| Current | ||||||
| Loans from financial institutions | 1,207 | 1,624 | Lease liabilities - present value of minimum lease payments | |||
| Derivatives designated as hedging instruments | 15 | 70 | No later than one year | 3,065 | 2,896 | |
| Lease liabilities | 3,065 | 2,918 | Later than one year and no later than five years | 7,159 | 6,882 | |
| Total | 4,287 | 4,612 | Later than five years | 6,617 | 7,818 | |
| Total | 16,841 | 17,596 | ||||
| Current loans consist of factoring loan in 2023. | Unearned finance expense | 2,854 | 4,569 |
| Amounts recognised in profit or loss (EUR 1 000) | 31 Dec 2023 | 31 Dec 2022 | ||
|---|---|---|---|---|
| Interest on lease liabilities | -694 | -387 | ||
| Expenses related to short-term leases | -985 | -1063 |
| Non-cash changes | ||||||||
|---|---|---|---|---|---|---|---|---|
| Changes in net debt 2023 | 1 Jan 2023 |
Cash flows |
Fair value of Derivatives designated as hedging instruments |
Transfer between groups |
Lease liabilities increase |
Lease liabilities decrease |
31 Dec 2023 |
|
| Long-term liabilities total | 14,685 | 0 | 28 | -2,485 | 1,584 | 0 | 13,812 | |
| Short-term liabilities total | 4,612 | -417 | -54 | 2,644 | 1,063 | -3,561 | 4,287 | |
| Total liabilities from the financing activities | 19,297 | -417 | -26 | 159 | 2,647 | -3,561 | 18,099 |
More information in note 23 Pledges granted and contingent liabilities.
More inforamation on Derivatives designated as hedging instruments is given in note 12 and 22.
| Non-cash changes | |||||||
|---|---|---|---|---|---|---|---|
| Changes in net debt 2022 | 1 Jan 2022 |
Cash flows |
Fair value of Derivatives designated as hedging instruments |
Transfer between groups |
Lease liabilities increase |
Lease liabilities decrease |
31 Dec 2022 |
| Long-term liabilities total | 1,790 | -1,900 | 8 | 1,900 | 12,886 | 0 | 14,685 |
| Short-term liabilities total | 10,952 | -4,967 | 70 | -1,900 | 3,467 | -3,011 | 4,612 |
| Total liabilities from the financing activities | 12,743 | -6,867 | 78 | 0 | 16,354 | -3,011 | 19,297 |
19. Pension obligations
Martela's defined benefit plans concern its operations in Finland. The arrangements are made through insurance companies. The plans are partly funded.
On the balance sheet, the commitment to those insured is presented as a pension liability, and the part of this liability that falls under the responsibility of insurance company is presented as an asset. As the funds belong to the insurance companies, they cannot be itemised in Martela's consolidated financial statements.
| Changes in defined benefit liability | Present value of the defined benefit liability | Fair value of the funds included in the plan | Net debt of the defined benefit liability | |||
|---|---|---|---|---|---|---|
| (EUR 1 000) | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
| 1 Jan | 1,380 | 2,597 | -1,364 | -2,469 | 16 | 128 |
| Recognised in profit or loss | ||||||
| Service cost in the period | 40 | 79 | 40 | 79 | ||
| Past service cost | 0 | 0 | 0 | 0 | ||
| Interest expense or income | 51 | 26 | -52 | -25 | -1 | 1 |
| Settlements | -357 | -613 | 357 | 613 | ||
| -266 | -508 | 305 | 588 | 39 | 80 | |
| Recognised in other comprehensive income | ||||||
| Items resulting from remeasurement: | ||||||
| Gains (-) or losses (+) resulting from changes in demographical assumptions | 0 | 0 | 0 | 0 | ||
| Actuarial gain (-) and losses (+) resulting from changes in financial assumptions | -8 | -717 | -8 | -717 | ||
| Experience based profits (-) or losses (+) | -15 | 8 | -15 | 8 | ||
| Return on the funds included in the plan, excluding items in interest expenses or income (+/-) | 53 | 607 | 53 | 607 | ||
| -23 | -709 | 53 | 607 | 30 | -102 | |
| Other items | ||||||
| Employer's payments (+) | 0 | 0 | -71 | -89 | -71 | -89 |
| Benefits paid | -10 | 0 | 10 | 0 | 0 | 0 |
| -10 | 0 | -61 | -89 | -71 | -89 | |
| 31 Dec | 1,071 | 1,380 | -1,067 | -1,364 | 13 | 16 |
| Defined benefit liability | Fair value of the funds included in the plan | |
|---|---|---|
| Effect of a change in the assumption employed | The assumption is growing | The assumption is growing |
| Discount rate (0.5% change) | -6.5% | 6.0% |
| Increase in salaries (0.5% change) | N/A | N/A |
| Mortality rate (a change of 5% points) | -0.9% | -0.8% |
In insurance arrangements, the amount of funds is calculated using the same discount rate used for the determination of pension liabilities. This means that a change in discount rate does not pose a significant risk. In addition, an increase in life expectancy does not pose a significant risk for Martela, as insurance companies will bear most of the impact of this. The pensions are fixed to 2017 salary levels and accounted for accordingly.
The Group anticipates that it will pay a total of EUR 30 thousand to defined benefit pension plans in the financial period of 2024.
Sensitivity analysis
The following table illustrates the effects of changes in the most significant actuarial assumptions on the funds related to the defined benefit pension liability and plans.
The weighted average of the duration of the plans is 14.2 years.
20. Provisions 22. Management of financial risks
21. Current liabilities
| (EUR 1 000) | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
| Long-term provisions | 269 | 229 |
| Short-term provisions | 67 | 57 |
| Total | 337 | 286 |
| Provisions 1 Jan | 286 | 295 |
| Net change in provisions | 50 | -9 |
| Provisions 31 Jan | 337 | 286 |
The normal warranty for standard Martela produced products is five years. The warranty provision has been calculated as an estimate of the 5-year warranties for Martela products and the sale of Martela products.
*For more information see note 20.
Financial risks are unexpected exceptions relating to exchange rates, liquidity, customer liquidity, investments and interest rates. The objective of financial risk management is to ensure that the company has sufficient financing on a cost-efficient basis and to reduce the adverse effects of financial market fluctuations on the Group's result and net assets. The general principles of risk management are approved by Board of Directors and the practical implementation of financial risk management is on the responsibility of the parent company's financial administration.
| (EUR 1 000) | 31 Dec 2023 | 31 Dec 2022 | |
|---|---|---|---|
| Financial liabilities | 4,287 | 4,612 | Transaction risks |
| Advances received | 7,850 | 6,278 | |
| Trade payables | 9,440 | 9,569 | |
| Total | 21,577 | 20,459 | |
| Accrued liabilities and prepaid income of | |||
| Personnel expenses | 4,243 | 4,431 | |
| Royalties | 214 | 205 | |
| Residual expenses | 2,331 | 3,251 | |
| Tax liability based on taxable income for the period | 0 | 1,213 | |
| Other | 1 | 6 | |
| Total | 6,789 | 9,106 | |
| Other current liabilities | 3,507 | 3,824 | |
| Other | 3,507 | 3,824 | |
| Provisions* | 6 | 57 | |
| Current liabilities | 31,941 | 33,447 | |
Market risks
Market risks comprise the following three risks: Currency risk, interest rate risk and price risk. The associated fluctuations in exchange rates, market interest rates and market prices may lead to changes in the fair value of financial instruments and in the future cash flows and hence they impact the result and balance sheet of the Group.
The increased volatility in electricity price 2022 and 2023 has led to the decision to enter into contracts for electricity deriva-
tives.
Currency risks
The Group has operations in Finland, Sweden, Norway and Poland and it is therefore exposed to currency that arise in intra-group transactions, exports and imports, the financing of foreign subsidiaries and equity that is denominated in foreign currencies. Translation risks result from incoming cash flows denominated in foreign currencies. Translation risk arise when the value of the capital invested in the parent company's foreign subsidiaries, annual profits and loans change as a result of exchange rate fluctuations.
Martela's major trading currencies are EUR, SEK, NOK and PLN. The SEK, NOK and PLN currency positions are reviewed mainly on a half-yearly basis. The Group's policy is to hedge the net positions remaining after reconciliation if seen necessary. The Group has not hedged against transaction risks during the financial periods of 2023 and 2022.
The following table presents currency risks per instrument and currency.
Transaction risks per instrument and currency 31 Dec 2023 (EUR 1 000)
| EUR | SEK | NOK | |
|---|---|---|---|
| Trade receivables | 0 | 2,236 | 1,702 |
| Trade payables | 0 | 642 | 40 |
| Total | 0 | 2,878 | 1,742 |
| EUR | SEK | NOK | |
|---|---|---|---|
| Trade receivables | 0 | 2,398 | 2,437 |
| Trade payables | 0 | 216 | 57 |
| Total | 0 | 2,613 | 2,494 |
Transaction risks per instrument and currency 31 Dec 2022 (EUR 1 000)
The impact of other currencies is minor.
Analysis of sensitivity to transaction risk
The following table presents the average impact of 10 per cent change in exchange rates on 31 December on the company's financial result before taxes and capital for 2023 (2022). The estimates are based on the assumption that no other variables change.
Price risk
Available-for-sale shares included in financial assets are not deemed subject to resale price risk.
Credit risk
Credit risk arises from the possibility that a counterparty will not meet its contractual payment obligations. Hence the seriousness of the risk is determined on the basis of the counterparty's creditworthiness. The objective of credit risk management is to minimise the losses that would arise should the counterparty not meet its obligations. The turnover and maturity structure of Group's companies trade receivables are reported monthly and are monitored by the par-
ent company's financial management.
The principles of credit risk management are confirmed by Martela's Board of Directors. Risk management is based on the authorisations given to the organisation.
Credit risks related to the company's trade and other receivables are minimised by using short terms of payment, effective collection measures and accounting for the counterparty's creditworthiness. Supply agreements are used when the customer company is unknown and the available credit information is insufficient. In this context a supply agreement is an agreement which secures and receivables arising from an order by withholding the right of ownership with Martela Oyj until the customer has paid the sale price in full.
Supply agreements are only used in sales in Finland. A customer may also be required to make prepayment before sold products are delivered if it is considered necessary in light of the potential credit risk associated with the customer. Counterparties may also be granted to credit limits. The creditworthiness of customers is monitored regularly on the basis of payment history and credit rating.
Collateral may be required from certain customers based on their creditworthiness and in the case of exports, for example, Martela may use confirmed irrevocable Letters of Credit. The book value of financial assets corresponds to the maximum amount of the credit risk.
The maximum financial asset credit risk amount on the balance sheet date 31 December is presented in the following table:
Interest rate risks
The following table presents the distribution of the Group's financial instruments into fixed interest rate and variable interest rate on the balance sheet date.
| Analysis of sensitivity to transaction risk (EUR 1 000) | Impact on result |
|---|---|
| 31 Dec 2023 | |
| EUR | +/-0 |
| SEK | +/-288 |
| NOK | +/-174 |
| Analysis of sensitivity to transaction risk (EUR 1 000) | Impact on result |
|---|---|
| 31 Dec 2022 | |
| EUR | +/-0 |
| SEK | +/-261 |
| NOK | +/-249 |
| Financial instruments (EUR 1000) | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
| Fixed rate | ||
| Lease liabilities | 16,841 | 17,596 |
| Financial liabilities incl derivatives | 1,258 | 1,702 |
| Total | 18,099 | 19,297 |
| Maximum financial asset credit risk (EUR 1 000) | 2023 | 2022 |
|---|---|---|
| Financial assets measured at fair value through profit or loss | 7 | 7 |
| Non-current loan receivables | 532 | 546 |
| Trade receivables and other receivables | 19,115 | 18,248 |
| Cash and cash equivalents | 5,053 | 11,295 |
| Total | 24,707 | 30,096 |
See note 15 for additional information on trade receivables and the related credit loss provisions.
Liquidity risks
The group aims to constantly evaluate and monitor the amount of financing required by the business, so that the group has enough liquid assets to finance operations, including long-term commitments - such as leases - to fulfill obligations. In addition, the group aims to continuously maintain sufficient liquid assets with the help of effective cash management solutions, such as cash reserve and working capital optimization. The refinancing risk is managed in part by using several leasing and rental con-
Management of capital structure
It is the Group's objective to ensure an effective capital structure that will secure its operating capacity in the capital markets in all circumstances irrespective of volatility. The Group's Board of Directors assess the capital structure on a regular basis, The Group uses the equity ratio to monitor its capital structure.
The equity ratio formula is presented in the following table:
tract partners in financing operations. Sudden changes in the financial market or in Martela's operating environment may negatively affect the group's liquidity and how the company is able to meet its payment obligations. In addition, the profitability of the group's business and the cash flow of the business affect the development of the group's liquidity.
Cash and cash equivalent at the year-end 2022 were EUR 11,295 thousand.
| Contractual cash flows mature as follows (EUR 1 000): | 2024 | 2025 | 2026 | 2027 | 2028 | Later | Total | Balancesheet value |
|---|---|---|---|---|---|---|---|---|
| Lease liabilities | 3,672 | 2,698 | 2,171 | 2,009 | 1,900 | 7,246 | 19,695 | 16,841 |
| Trade payables | 9,440 | 9,440 | 9,440 | |||||
| Total | 13,112 | 2,698 | 2,171 | 2,009 | 1,900 | 7,246 | 29,135 |
| Contractual cash flows mature as follows (EUR 1 000): | 2023 | 2024 | 2025 | 2026 | 2027 | Later | Total | Balancesheet value |
|---|---|---|---|---|---|---|---|---|
| Lease liabilities | 3,756 | 2,889 | 2,135 | 1,896 | 1,852 | 9,637 | 22,165 | 17,596 |
| Trade payables | 9,569 | 9,569 | 9,569 | |||||
| Total | 13,325 | 2,889 | 2,135 | 1,896 | 1,852 | 9,637 | 31,734 |
| Equity ratio | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
| Shareholders' equity | 9,558 | 13,850 |
| Balance sheet total - advance payments | 47,836 | 56,049 |
| Equity to assets ratio % | 20.0 | 24.7 |
Cash and cash equivalent at the year-end 2023 were EUR 5,053 thousand.
23. Pledges granted and contingent liabilities
24. Related party transactions
| (EUR 1 000) | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
| Debts secured by mortgages | ||
| Corporate mortgages | 9,895 | 9,888 |
| Total mortgages | 9,895 | 9,888 |
| Other pledges | ||
| Guarantees as security for rents | 854 | 892 |
| Commitments | ||
| Rental commitments | 589 | 527 |
| (EUR 1 000) | 2023 | 2022 |
|---|---|---|
| Management employee benefits | ||
| Salaries and other short-term employee benefits | -1,184 | -1,140 |
| Share-based benefits | -121 | -36 |
| Total | -1,305 | -1,176 |
| Salaries and fees | ||
| Board members | -162 | -152 |
| CEO | -314 | -288 |
| Management team members (excl. CEO) | -829 | -736 |
| Total | -1,305 | -1,176 |
| Andersson Mir |
|---|
| Martela Eero |
| Mattson Jan |
| Mellström Kata |
| Mild Johan |
| Vepsäläinen Ar |
| Mattila Hanna* |
| Total |
| Fees paid to Board members: | 2023 | 2022 |
|---|---|---|
| Andersson Minna* | 0.0 | -5.5 |
| Martela Eero | -23.4 | -22.0 |
| Mattson Jan | -23.4 | -22.0 |
| Mellström Katarina | -23.4 | -22.0 |
| Mild Johan | -45.1 | -42.4 |
| Vepsäläinen Anni | -23.4 | -22.0 |
| Mattila Hanna** | -23.4 | -16.5 |
| Total | -161.9 | -152.4 |
| Group structure | Domicile | Holding (%) 31 Dec 2023 |
Of votes (%) 31 Dec 2023 |
Sales company |
Production company |
|---|---|---|---|---|---|
| Parent company | |||||
| Martela Oyj | Finland | x | x | ||
| Subsidiaries | |||||
| Kidex Oy | Finland | 100 | 100 | x | x |
| Muuttopalvelu Grundell Oy | Finland | 100 | 100 | x | |
| Martela AB, Nässjö | Sweden | 100 | 100 | x | |
| Aski Avvecklingsbolag AB, Malmö | Sweden | 100 | 100 | ||
| Martela AS, Oslo | Norway | 100 | 100 | x | |
| Martela Sp.z o.o., Varsova | Poland | 100 | 100 | x | x |
| Tehokaluste Oy | Finland | 100 | 100 | x |
Martela Group's related party transactions comprise the CEO, members of the Board and the Group's management team, as well as their family members. Martela Group's related parties also include a shareholder who holds at least 20% of the company's total number of votes. Members of the Board own a total of 18,142 shares (18,009) and hold a total of 0.4% (0,4%) of the shares and 0.4% (0,4%) of the votes. Persons in the management own a total of 109,191 (134,251) Martela Corporation shares as at December 31, 2023. As part of the implementation of the Performance-based Matching Share Plan 2021-2023, described in note 17, Board of Directors has resolved to grant plan participants interest-bearing loans to finance the acquisition of the company's shares. Maximum amount of the loan is 70 per cent of the participant´s investment in shares. Loan is to be repaid the latest by December 31, 2025 and interest is 12-month Euribor, however not below 0%. Management has been granted loan in total EUR 137,888.02 (256,107.95), of which EUR 69,999.93 (69,999.93) has been granted to CEO and other management EUR 67,888.09 (186,108.02).
* Member of Board until Q1 2022. ** Member of Board from Q2 2022.
Fees based on board membership are not paid to members employed by the company.
Management employee benefits
The Group has determined key persons in management to be: Members of the Board of Directors
CEO Group's Management Team
The table below presents the employee benefits received by key persons in management. Employee benefits are presented with the accrual method.
| Salaries, fees and pension commitment to CEO | 2023 | 2022 |
|---|---|---|
| Salaries and fees | -314 | -288 |
| Statutory earnings-related pension payment (TyEL) on salaries | -65 | -49 |
Salaries include also share-based incentives.
The period of notice is 6 months with respect to both the present CEO and the company, and in the event of dismissal by the company, the CEO is entitled, besides of the notice period, to a lump-sum compensation equalling hies salary for 6 months. CEO and the Group management team has long term share-based incentive programme, in which is possible to receive Martela A shares when the set targets are met.
More information in note 17 Share-based payments.
25. Key financial indicators for the Group
| Martela Group 2019-2023 | 2023 | 2022 | 2021 | 2020 | 2019 | |
|---|---|---|---|---|---|---|
| Revenue | MEUR | 94.4 | 106.7 | 91.9 | 88.4 | 106.2 |
| Change in revenue | % | -11.5 | 16.1 | 4.0 | -16.8 | 3.0 |
| Export and operations outside Finland | MEUR | 27.1 | 34.5 | 22.1 | 16.3 | 23.1 |
| In relation to revenue | % | 28.8 | 32.3 | 24.1 | 18.5 | 21.7 |
| Exports from Finland | MEUR | 27.7 | 34.2 | 21.9 | 16.1 | 22.7 |
| Gross capital expenditure | MEUR | 2.3 | 0.9 | 0.4 | 1.2 | 2.3 |
| In relation to revenue | % | 2.4 | 0.8 | 0.4 | 1.4 | 2.1 |
| Depreciation | MEUR | 6.8 | 5.8 | 5.4 | 6.5 | 4.9 |
| Research and development *) | MEUR | 1.6 | 1.6 | 1.6 | 1.4 | 1.6 |
| In relation to revenue *) | % | 1.7 | 1.5 | 1.7 | 1.6 | 1.5 |
| Personnel on average | 403 | 403 | 419 | 451 | 494 | |
| Change in personnel | % | 0.0 | -3.9 | -7.1 | -8.7 | -3.1 |
| Personnel at the end of year | 386 | 400 | 400 | 435 | 464 | |
| of which in Finland | 312 | 324 | 326 | 362 | 385 | |
| Profitability | ||||||
| Operating profit | MEUR | -2.4 | 2.5 | -1.3 | -4.0 | -2.0 |
| In relation to revenue | % | -2.5 | 2.3 | -1.4 | -4.5 | -1.9 |
| Profit before taxes | MEUR | -3.3 | 1.3 | -2.3 | -4.8 | -2.7 |
| In relation to revenue | % | -3.5 | 1.3 | -2.5 | -5.4 | -2.5 |
| Profit for the year * | MEUR | -3.5 | 2.6 | -2.4 | -4.8 | -2.5 |
| In relation to revenue | % | -3.7 | 2.4 | -2.6 | -5.4 | -2.4 |
| Revenue / employee | TEUR | 234 | 265 | 219 | 196 | 215 |
| Return on equity | % | -31.3 | 20.8 | -21.3 | -34.7 | -14.7 |
| Return on investment | % | -7.5 | 9.1 | -4.7 | -13.2 | -6.4 |
| Finance and financial position | ||||||
| Balance sheet total | MEUR | 55.7 | 62.3 | 51.1 | 52.1 | 55.9 |
| Equity | MEUR | 9.6 | 13.9 | 10.8 | 11.6 | 16.1 |
| Interest-bearing net liabilities | MEUR | 13.1 | 8.1 | 8.1 | 4.3 | 5.0 |
| In relation to revenue | % | 13.9 | 7.5 | 8.8 | 4.9 | 4.7 |
| Equity ratio | % | 20.0 | 24.7 | 22.2 | 23.3 | 28.8 |
| Gearing | % | 137.2 | 58.6 | 74.8 | 36.5 | 31.5 |
| Net cash flow from operations | MEUR | 0.3 | 1.9 | -3.4 | 5.7 | 6.3 |
| Dividends paid | MEUR | 0.5 | 0.0 | 0.0 | 0.0 | 0.4 |
*) The figures for the comparison years 2019-2022 have been adjusted in relation to the previously published due to reclassification
26. Key share-related figures
| 2023 | 2022 | 2021 | 2020 | 2019 | |||
|---|---|---|---|---|---|---|---|
| Earnings per share | EUR | -0.77 | 0.57 | -0.53 | -1.16 | -0.61 | |
| Earnings per share (diluted) | EUR | -0.77 | 0.57 | -0.53 | -1.16 | -0.61 | |
| Share par value | EUR | 1.53 | 1.55 | 1.55 | 1.68 | 1.68 | |
| Dividend | EUR | 0.00*) | 0.10 | 0.0 | 0.0 | 0.0 | |
| Dividend/earnings per share | % | 0.00*) | 17.7 | 0.0 | 0.0 | 0.0 | |
| Effective dividend yield | % | 0.00 | 0.04 | 0.0 | 0.00 | 0.00 | |
| Equity per share | EUR | 2.09 | 3.07 | 2.39 | 2.81 | 3.80 | |
| Price of A share 31 Dec | EUR | 1.28 | 2.45 | 2.29 | 3.09 | 3.36 | |
| Share issue-adjusted number of shares | tpcs | 4,573.50 | 4,519.61 | 4,508.04 | 4,155.60 | 4,155.60 | |
| Average share-issue adjusted number of shares | tpcs | 4,573.50 | 4,519.61 | 4,508.04 | 4,155.60 | 4,155.60 | |
| Price/earnings ratio | -1.67 | 4.34 | -4.32 | -2.66 | -5.48 | ||
| Market value of shares **) | MEUR | 5.85 | 11.07 | 10.29 | 12.80 | 13.92 |
*) Proposal by the Board of Directors for year 2023
**) Price of A shares used as value of K shares
Formulas to key figures
| = | Profit attributable to equity holders of the parent | |||||||
|---|---|---|---|---|---|---|---|---|
| Earnings / share | Average share issue-adjusted number of shares | |||||||
| Price /earnings multiple (P/E) | = | Share issue-adjusted share price at year-end | ||||||
| Earnings / share | ||||||||
| Equity / share, EUR | = | Equity attributable to the equity holders of the parent | ||||||
| Share issue-adjusted number of shares at year-end | ||||||||
| Dividend / share, EUR | Dividend for the financial year | |||||||
| = | Share issue-adjusted number of shares at year-end | |||||||
| Dividend / earnings, % | = | Dividend / share x 100 | ||||||
| Earnings / share | ||||||||
| Effective dividend yield, % | Share issue-adjusted dividend / share x 100 | |||||||
| = | Share issue-adjusted share price at the year-end | |||||||
| Market value of shares, EUR | = | Total number of shares at year end x share price on the balance sheet date | ||||||
| Profit/loss for the financial year x 100 | ||||||||
| Return on equity, % | = | Equity (average during the year) | ||||||
| = | (Pre-tax profit/loss + interest expenses + other financial items) x 100 | |||||||
| Return on investment, % | Balance sheet total - Non-interest-bearing liabilities (average during the year) | |||||||
| Equity x 100 | ||||||||
| Equity ratio, % | = | Balance sheet total - advances received | ||||||
| Gearing, % | Interest-bearing liabilities - cash, cash equivalents and liquid asset securities x 100 | |||||||
| Equity | ||||||||
| Personnel on average | = | Month-end average number of personnel in active employment | ||||||
| Interest-bearing net debt | = | Interest-bearing debt - cash and other liquid financial assets |
27. Shares and shareholders
| % of Share | |||||
|---|---|---|---|---|---|
| Distribution of shares 31 Dec 2023 | Number, pcs | Total EUR | Capital | Votes | % of votes |
| K shares | 604,800 | 925,682 | 13 | 12,096,000 | 75 |
| A shares | 3,968,695 | 6,074,318 | 87 | 3,968,695 | 25 |
| Total | 4,573,495 | 7,000,000 | 100 | 16,064,695 | 100 |
| Breakdown of share ownership by number of shares held 31 Dec 2023 Shares, pcs |
Number of share holders |
% of total share holders |
Number of shares | % | Number of votes |
% of Votes |
|---|---|---|---|---|---|---|
| 1-500 | 2,373 | 79.1 | 294,236 | 6.4 | 301,836 | 1.9 |
| 501-1,000 | 269 | 9.0 | 216,205 | 4.7 | 220,005 | 1.4 |
| 1,001-5,000 | 254 | 8.5 | 610,892 | 13.4 | 843,452 | 5.3 |
| Over 5,000 | 104 | 3.5 | 3,440,962 | 75.2 | 14,475,402 | 90.1 |
| Total | 3,000 | 100.0 | 4,562,295 | 99.8 | 15,840,695 | 98.6 |
| of which nominee-registered | 9 | 71,253 | 1.6 | 71,253 | 0.4 | |
| In the waiting list and collective account |
6 | 11,200 | 0.2 | 224,000 | 1.4 | |
| Total | 4,573,495 | 100,0 | 16,064,695 | 100,0 | ||
| reakdown of | |||||
|---|---|---|---|---|---|
| actor on Doo |
| Breakdown of shareholding by sector 31 Dec 2023 |
Number of share holders |
% of total share holders |
Number of shares | % | Number of votes |
% of Votes |
|---|---|---|---|---|---|---|
| Private companies | 97 | 3.2 | 1,417,829 | 31.0 | 6,965,829 | 43.4 |
| Financial and insurance institutions | 11 | 0.4 | 112,987 | 2.5 | 158,855 | 1.0 |
| Non-profit entities | 5 | 0.2 | 3,161 | 0.1 | 3,161 | 0.0 |
| Households | 2,875 | 95.8 | 2,946,703 | 64.4 | 8,677,103 | 54.0 |
| Foreign investors | 12 | 0.4 | 10,362 | 0.2 | 35,747 | 0.2 |
| Total | 3,000 | 100.0 | 4,491,042 | 98.2 | 15,840,695 | 98.6 |
| of which nominee-registered | 9 | 71,253 | 1.6 | 71,253 | 0.4 | |
| In the waiting list and collective account |
6 | 11,200 | 0.2 | 224,000 | 1.4 | |
| Total | 4,573,495 | 100,0 | 16,064,695 | 100,0 |
| The largest shareholders by number of shares 31 Dec 2023 |
K series shares |
A series shares |
Total number of shares |
% | Number of votes |
% of total votes | |
|---|---|---|---|---|---|---|---|
| Marfort Oy | 292,000 | 232,574 | 524,574 | 11.5 | 6,072,574 | 37.8 | |
| Isku-Yhtymä Oy | 0 | 452,900 | 452,900 | 9.9 | 452,900 | 2.8 | |
| Kelhu Markku Juhani | 0 | 200,000 | 200,000 | 4.4 | 200,000 | 1.2 | |
| Martela Heikki Juhani | 52,122 | 130,942 | 183,064 | 4.0 | 1,173,382 | 7.3 | |
| Palsanen Leena Maire Sinikka | 6,785 | 131,148 | 137,933 | 3.0 | 266,848 | 1.7 | |
| Palsanen Jaakko Antero | 1,600 | 132,140 | 133,740 | 2.9 | 164,140 | 1.0 | |
| Aurasmaa Artti Eljas Henrikki | 0 | 114,223 | 114,223 | 2.5 | 114,223 | 0.7 | |
| Seflo Ab | 0 | 91,760 | 91,760 | 2.0 | 91,760 | 0.6 | |
| Meissa-Capital Oy | 0 | 86,487 | 86,487 | 1.9 | 86,487 | 0.5 | |
| Nordea Nordic Small Cap Fund | 0 | 76,286 | 76,286 | 1.7 | 76,286 | 0.5 | |
| Lindholm Tuija Elli Annikki | 43,122 | 28,221 | 71,343 | 1.6 | 890,661 | 5.5 | |
| Lehtonen Kari Heikki Juhani | 0 | 70,000 | 70,000 | 1.5 | 70,000 | 0.4 | |
| Martela Pekka Kalevi | 69,274 | 8 | 69,282 | 1.5 | 1,385,488 | 8.6 | |
| Väätäjä Kaj Tapani | 0 | 66,654 | 66,654 | 1.5 | 66,654 | 0.4 | |
| Tuuli Markku Juhani | 0 | 54,349 | 54,349 | 1.2 | 54,349 | 0.3 | |
| Andersson Minna Sinikka | 49,200 | 0 | 49,200 | 1.1 | 984,000 | 6.1 | |
| Taipale Ville Juhani | 0 | 47,934 | 47,934 | 1.0 | 47,934 | 0.3 | |
| Lehtonen Kalle Petteri | 0 | 46,032 | 46,032 | 1.0 | 46,032 | 0.3 | |
| Martela Mari Kaarina | 20,219 | 9,596 | 29,815 | 0.7 | 413,976 | 2.6 | |
| Martela Ille Ilari | 13,218 | 8,368 | 21,586 | 0.5 | 272,728 | 1.7 | |
| Other shareholders | 57,260 | 1,989,073 | 2,046,333 | 44.7 | 3,134,273 | 19.5 | |
| Total | 604,800 | 3,968,695 | 457,395 | 100 | 16,064,695 | 100 |
Share capital
The number of registered Martela Oyj shares on December 31, 2023 was 4,573,495. The shares are divided into A and K shares. Each A share carries 1 vote and each K share 20 votes in annual general shareholders' meeting. Both share series have the same dividend rights.
Martela Oyj's shares were entered in the book-entry register on February 10, 1995. The counter-book value of each share is EUR 1.53 (1.55). The A shares are quoted on the Small Cap list of Nasdaq Helsinki.
The list includes all shareholders holding over 1% of the shares or votes.
The Board of Directors hold 0.4% of shares and 0.4% of votes.
Martela Oyj owns 1,425 pcs A shares. Out of the shares 379 were purchased at an average price of EUR 10.65 and 1,046 were transferred from Martela Corporation's joint account to the treasury shares reserve based on the decision by AGM on March 13, 2018. The number of treasury shares is equivalent to 0.03% of all shares and 0.01% of all votes.
The Annual General Meeting has in 2023 re-authorised the Board of Directors to decide, for the following year, on share issue, on acquiring and/or disposing of the company's shares in deviation from the pre-emptive rights of shareholders.
The AGM approved the Board of Directors' proposals, detailed in the meeting notice, to authorise the Board to acquire and/or dispose of Martela shares. The authorisation is for a maximum 450,000 of the company's A series shares.
Parent Company Income Statement
| (EUR 1 000) | Note | 1 Jan–31 Dec 2023 | 1 Jan–31 Dec 2022 |
|---|---|---|---|
| Revenue | 1 | 93,038 | 107 311 |
| Change in inventories of finished goods and work in progress | 3 | 289 | -1,525 |
| Production for own use | 425 | 2,382 | |
| Other operating income | 2 | 761 | 14,078 |
| Materials and services | 3 | -71,696 | -82,878 |
| Personnel expenses | 4 | -12,956 | -12,944 |
| Other operating expenses | 5 | -11,889 | -11,974 |
| Depreciation and impairment | 6 | -2,534 | -6,640 |
| Operating profit (-loss) | -4,563 | 7,809 | |
| Financial income and expenses | 7 | -2,931 | -595 |
| Profit (-loss) before appropriations and taxes | -7,494 | 7,214 | |
| Group contributions | 8 | 2,000 | -3,135 |
| Depreciation difference and Group contributions | 2,000 | -3,135 | |
| Income taxes | 9 | 25 | -179 |
| Profit (-loss) for the financial year | -5,470 | 3,900 |
| (EUR 1 000) Note |
31 Dec 2023 | 31 Dec 2022 | (EUR 1 000) | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|---|---|---|
| ASSETS | EQUITY AND LIABILITIES | |||||
| NON-CURRENT ASSETS | SHAREHOLDERS' EQUITY | |||||
| Intangible assets 10 |
Shareholders' equity | 14 | ||||
| Intangible rights | 1,254 | 925 | Share capital | 7,000 | 7,000 | |
| Goodwill | 520 | 650 | Share premium account | 1,116 | 11,16 | |
| Other long-term expenditure | 902 | 1,597 | Reserve fund | 11 | 11 | |
| Advance payments | 1,121 | 724 | Invested unrestricted equity fund | 995 | 995 | |
| 3,798 | 3,896 | Retained earnings | 20,847 | 17,398 | ||
| Tangible assets 11 |
Profit for the year | -5,470 | 3,900 | |||
| Buildings and structures | 12 | 0 | Total | 24,500 | 30,421 | |
| Machinery and equipment | 3,011 | 2,868 | ||||
| Other tangible assets | 23 | 23 | Compulsory reservations | |||
| 3,046 | 2,892 | Other compulsory reservations | 269 | 229 | ||
| Investments 12 |
LIABILITIES | |||||
| Share is subsidiaries | 9,324 | 10,907 | Non-current | 15 | ||
| Receivables from subsidiaries | 3,760 | 3,895 | Accrued liabilities and prepaid income | 128 | 108 | |
| Other shares and participations | 7 | 7 | 128 | 108 | ||
| 13,091 | 14,809 | Current | 16 | |||
| Loans from financial institutions | 1,207 | 1,624 | ||||
| CURRENT ASSETS | 1,207 | 1,624 | ||||
| Inventories | Advances received | 289 | 369 | |||
| Materials and supplies | 6,338 | 8,459 | Trade payables | 18,070 | 17,834 | |
| Work in progress | 237 | 923 | Accrued liabilities and prepaid income | 7,874 | 10,039 | |
| Finished goods | 1,735 | 760 | Other current liabilities | 3,508 | 3,448 | |
| Advances paid to suppliers | 146 | 35 | 30,947 | 31,689 | ||
| 8,455 | 10,177 | Liabilities, total | 31,076 | 33,420 | ||
| Non-current receivables 13 |
55,845 | 64,071 | ||||
| Loan receivables | 532 | 546 | ||||
| Current receivables 13 |
||||||
| Trade receivables | 17,416 | 17,880 | ||||
| Loan receivables | 2,000 | 0 | ||||
| Prepaid expenses | 406 | 1,013 | ||||
| Accrued income | 2,329 | 2,071 | ||||
| 22,152 | 20,964 | |||||
| Cash and cash equivalents | 4,771 | 10,787 | ||||
| 55,845 | 64,071 |
Parent Company Balance Sheet
| (EUR 1 000) | 1 Jan–31 Dec 2023 | 1 Jan–31 Dec 2022 |
|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | ||
| Cash flows from sales | 97,236 | 108,725 |
| Cash flow from other operating income | 711 | 1,158 |
| Payments on operating costs | -100,445 | -107,988 |
| Net cash from operating activities before financial items and taxes | -2,498 | 1,895 |
| Interests paid and other financial payments | -74 | -408 |
| Interests received | 31 | 44 |
| Other financial icomes and expenses | -151 | -247 |
| Taxes paid | -157 | 0 |
| Cash flow due to extraordinary items (net) | -351 | -611 |
| Net cash from operating activities (A) | -2,849 | 1,284 |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||
| Capital expenditure on tangible and intangible assets | -2,166 | -422 |
| Proceeds from sale of tangible and intangible assets | 0 | 15,117 |
| Investments on subsidiary shares | 0 | -3,002 |
| Loans granted to subsidiaries | -132 | 0 |
| Net Cash used in investing activities (B) | -2,298 | 11,693 |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||
| Repayments of current loans | -417 | -6,900 |
| Paid share issue | 0 | 10 |
| Dividends paid | -452 | 0 |
| Net cash used in financing activities (C) | -869 | -6,890 |
| CHANGE IN CASH AND CASH EQUIVALENTS (A+B+C) (+ increase, - decrease) | -6,016 | 6,087 |
| Cash and cash equivalent at the beginning of financial year* | -10,787 | 4,700 |
| Cash and cash equivalent at the end of financial year* | 4,771 | 10,787 |
Parent Company's Cash Flow Statement
* Includes cash and bank receivables
Accounting Policies for the Parent Company Financial Statements
Martela Oyj's financial statements have been prepared in accordance with Finnish Accounting Standards (FAS). Items in the financial statements have been recognised at cost. No assets have been recorded to appreciated values, unless separately mentioned.
Items denominated in foreign currency:
Transactions denominated in foreign currencies are recognised at the rate of exchange on the date of their occurrence. Receivables and liabilities in the balance sheet are translated at the average rate on the balance sheet date. Exchange rate differences arising from trade receivables are recognised in revenue and those of trade payables in adjustment items for purchases. Exchange rate differences arising from balance sheet financial items, such as loans, are recognised in exchange rate differences of finance. Shareholders loans denominated in foreign currency to subsidiaries are considered as investments. Currency exchange rate differences are hence not recognised in parent company financial statements. Exchange rate differences related to shareholder loans are recognised in the Consolidated financial statements.
Intangible assets:
Intangible assets are reported in the balance sheet at cost and depreciated according to the plan (by straight line method). Intangible assets are depreciated according to their estimated useful life in 3–10 years. Goodwill is depreciated by straight-line method in 10 years. Martela AB goodwill depreciation time has been changed from ten to five years based on the impairment test and the goodwill is fully depreciated.
Tangible assets:
Buildings, machinery, equipment and other tangible assets are reported in the balance sheet at cost. No depreciation is recognised on revaluations of buildings or on land areas. Otherwise, depreciation is calculated on a straight line basis according to the estimated useful life. The change in accumulated depreciation difference is presented as a separate item in the parent company's profit and loss statement and the accumulated depreciation difference as a separate item in the balance sheet.
Depreciation periods for tangible assets:
| Buildings and structures______20–30 years | |
|---|---|
| Machinery and equipment_______4–8 years | |
| Other tangible assets_____3–5 years |
Impairment testing of long-term assets
Goodwill and investments in subsidiaries are tested for impairment annually regardless if there are any indications that the amount might be impaired. The recoverable cash amount from the subsidiaries is based on value in use calculations in the testing. The forecasted cash flows are based on 5-year financial plans approved by management. The central assumptions of the plans comprise of subsidiary growthand profitability assumptions. The cash flows beyond the five-year period is estimated based on 1,5 % growth.
Inventories:
Inventories are recognised at weighted average purchase prices. The value of inventories is reduced with respect to nonmarketable items. The cost of goods includes also a share of the overhead costs of production.
Income tax:
The company income taxes are recognised on accrual basis and are calculated according to local tax legislation with adjustments from previous financial years. In the financial statements the company does not recognise deferred tax receivables or deferred tax liabilities. The amount of the unrecorded deferred tax asset arising from the loss to be confirmed for the financial year is EUR 496 thousand.
Revenue and recognition policies:
Revenue is recognised on accrual basis. Direct taxes, discounts and exchange rate differences are deducted from sales income in calculating revenue.
Research and development:
Research and development expenses are recognised normally in profit or loss in the year they arise. Research and development-related equipment is capitalised in machinery and equipment.
Other operating income and expenses:
Proceeds from sale of assets, public subsidies and other income (e.g. rent income) are recognised in "Other operating income". Losses from disposal of assets and other costs are recognised in "Other operating expenses".
Operating leases:
All leasing payments are reported as rent expenses.
Share-based payments:
In the effective share-based incentive programme there are three earning periods, which are 2021, 2022 and 2023, and payment are made as a combination of shares and cash.
Treasury shares:
The treasury shares held by the parent company are reported as a deduction from equity.
Other compulsory reservations
The normal warranty for standard Martela produced products is five years. The warranty provision (EUR 337 thousand) has been calculated as an estimate of the five-year warranties for Martela products and the sale of Martela products.
| % of revenue | 2023 | 2022 |
|---|---|---|
| Finland | 71 | 69 |
| Scandinavia | 18 | 19 |
| Other | 11 | 12 |
| Total | 100 | 100 |
| (EUR 1 000) | 2023 | 2022 |
|---|---|---|
| Salaries, CEO | -314 | -288 |
| Pension expenses | -65 | -49 |
| Salaries of Board and directors | -162 | -152 |
| Salaries of Board and directors and managing director, total | -541 | -489 |
| Other salaries | -10,277 | -10,295 |
| Pension expenses | -1,756 | -1,791 |
| Other salary-related expenses | -383 | -369 |
| Personnel expenses in the income statement | -12,956 | -12,944 |
| Fringe benefits | -253 | -184 |
| Total | -13,209 | -13,128 |
| Personnel | ||
| Personnel on average, workers | 49 | 49 |
| Personnel on average, officials | 148 | 146 |
| Personnel on average, total | 197 | 196 |
| Personnel at the year end | 192 | 194 |
| (EUR 1 000) | 2023 | 2022 |
|---|---|---|
| Rental income | 50 | 233 |
| Other operating income | 77 | 360 |
| Sale profit of Nummela property | 0 | 12,870 |
| Other operating income, Group | 634 | 615 |
| Total | 761 | 14,078 |
| (EUR 1 000) | 2023 | 2022 | |
|---|---|---|---|
| Purchasing during the financial year | -52,534 | -67,384 | |
| Change in inventories of materials and suppliers | -2,121 | 453 | |
| External services | -16,752 | -17,473 | |
| Materials and supplies, total | -71,408 | -84,404 |
Auditor's fees
| (EUR 1 000) | 2023 | 2022 |
|---|---|---|
| Auditor's fees | ||
| Auditing | -173 | -113 |
| Other services | -18 | -14 |
| Auditor's fees, total | -191 | -127 |
1. Breakdown of revenue by market area 4. Personnel expenses and number of personnel
2. Other operating income
3. Materials and services
5. Other operating expenses
Salaries of Board and directors are not income subject to pension.
| (EUR 1 000) | 2023 | 2022 |
|---|---|---|
| Financial income and expenses | ||
| Interest income from short-term investments | 29 | 21 |
| Interest income from short-term investments from Group companies | 3 | 23 |
| Foreign exchange gains | 549 | 22 |
| Interest expenses | -131 | -351 |
| Losses on foreign exchange | -448 | -166 |
| Other financial expenses | -147 | -145 |
| Impairment | -2,785 | 0 |
| Total | -2,931 | -595 |
| (EUR 1 000) 1 Jan–31 Dec 2023 |
Intangible rights |
Goodwill | Other long-term expenses |
Work in progress |
Intangible assets total |
|---|---|---|---|---|---|
| Acquisition cost 1 Jan | 5,425 | 9,200 | 12,471 | 724 | 27,820 |
| Increases | 914 | 0 | 0 | 2,166 | 3,080 |
| Decreases | 0 | 0 | 0 | -1,769 | -1,769 |
| Acquisition cost 31 Dec | 6,338 | 9,200 | 12,471 | 1,121 | 29,131 |
| Accumulated depreciation 1 Jan | -4,501 | -8,550 | -10,872 | 0 | -23,924 |
| Depreciation for the year 1 Jan 31 Dec | -585 | -130 | -695 | 0 | -1,409 |
| Accumulated depreciation 31 Dec | -5,086 | -8,680 | -11,567 | 0 | -25,333 |
| Carrying amount 1 Jan | 925 | 650 | 1,597 | 724 | 3,898 |
| Carrying amount 31 Dec | 1,254 | 520 | 902 | 1,121 | 3,798 |
| Acquisition cost 1 Jan 5,404 9,200 12,535 158 Increases 128 0 104 2,633 Decreases -108 0 -167 -2,068 Acquisition cost 31 Dec 5,425 9,200 12,471 724 Accumulated depreciation 1 Jan -4,043 -3,680 -10,309 0 Depreciation for the year 1 Jan–31 Dec -458 -4,870 -564 0 Accumulated depreciation 31 Dec -4,501 -8,550 -10,872 0 Carrying amount 1 Jan 1,362 5,520 2,224 158 |
|---|
| Carrying amount 31 Dec 925 650 1,597 724 |
| (EUR 1 000) | 2023 | 2022 |
|---|---|---|
| Appropriations | ||
| Group contributions, received | 2,000 | 0 |
| Group contributions, given - /received + | 0 | -3,135 |
| Group contributions total | 2,000 | -3,135 |
| Appropriations, total | 2,000 | -3,135 |
| (EUR 1 000) | 2023 | 2022 |
|---|---|---|
| Income taxes from operations | 0 | -179 |
| Taxes from previous years | 25 | 0 |
| Total | 25 | -179 |
7. Financial income and expenses
10. Intangible assets
8. Depreciations and Group contributions
9. Income Taxes
| (EUR 1 000) | 2023 | 2022 |
|---|---|---|
| Depreciation according to plan | ||
| Intangible assets | -1,412 | -5,893 |
| Tangible assets | ||
| Buildings and structures | -1 | -2 |
| Machinery and equipment | -1,121 | -744 |
| Depreciation according to plan, total | -2,534 | -6,640 |
| Depreciations and impairments, total | -2,534 | -6,640 |
6. Depreciation and write-down
Based on the goodwill testing write-down (impairment) of Martela AB's shares EUR 2,785 thousand.
| (EUR 1 000) 1 Jan–31 Dec 2023 |
Land areas | Buildings | Machinery and equipment |
Other tangible assets |
Total | (EUR 1 000) |
|---|---|---|---|---|---|---|
| Acquisition cost 1 Jan | 0 | 8,770 | 15,943 | 23 | 24,737 | |
| Increases | 0 | 13 | 1,267 | 0 | 1,280 | |
| Decreases | 0 | 0 | 0 | 0 | 0 | |
| Acquisition cost 31 Dec | 0 | 8,784 | 17,210 | 23 | 26,016 | |
| Accumulated depreciation 1 Jan | 0 | -8,770 | -13,074 | 0 | -2,1845 | |
| Depreciation for the year 1 Jan–31 Dec | 0 | -1 | -1,124 | 0 | -1,125 | |
| Accumulated depreciation 31 Dec | 0 | -8,771 | -14,198 | 0 | -22,970 | |
| Carrying amount 1 Jan | 0 | 0 | 2,869 | 23 | 2,892 | |
| Carrying amount 31 Dec | 0 | 12 | 3,011 | 23 | 3,046 | |
| Machinery and | Other tangible | |||
|---|---|---|---|---|
| Land areas | Buildings | equipment | assets | Total |
| 80 | 10,632 | 13,435 | 23 | 24,170 |
| 0 | 0 | 2,508 | 0 | 2,508 |
| 0 | 8,770 | 15,943 | 23 | 24,737 |
| 0 | -8,769 | -12,328 | 0 | -21,096 |
| 0 | -2 | -746 | 0 | -748 |
| 0 | -8,770 | -13,074 | 0 | -21,845 |
| 80 | 1,864 | 1,107 | 23 | 3,074 |
| 0 | 0 | 2,869 | 23 | 2,892 |
11. Tangible assets
Carrying amount of production machinery and equipment in 2023 was EUR 28 thousand (58 in 2022). Nummela property has been sold 3 August 2022. Shareholder loan receivable Martela AB EUR 3,760 thousand.
Write down Martela AB shares EUR 2,785 thousand.
| (EUR 1 000) 1 Jan–31 Dec 2023 |
Subsidiary shares | Other shares and participations |
Shareholder loan receivables |
Total |
|---|---|---|---|---|
| Balance sheet value at beginning of year |
10,907 | 7 | 3,895 | 14,809 |
| Increases | 1,202 | 0 | 0 | 1,202 |
| Decreases / Impairment | -2,785 | 0 | -135 | -2,920 |
| Balance sheet value at end of year | 9,324 | 7 | 3,760 | 13,091 |
| 1 Jan–31 Dec 2022 | Subsidiary shares | Other shares and | participations | Shareholder loan receivables |
Total | |
|---|---|---|---|---|---|---|
| Balance sheet value at beginning of year |
7,405 | 7 | 4,396 | 11,808 | ||
| Increases | 3,501 | 0 | 500 | 4,001 | ||
| Decreases / Impairment | 0 | 0 | -1,001 | -1,001 | ||
| Balance sheet value at end of year | 10,907 | 7 | 3,895 | 14,809 | ||
| Subsidiary shares | Parent company's holding, % |
Of total votes, % |
Number of shares |
Par value (1,000) |
Book value (EUR 1,000) |
|
| Kidex Oy | Finland | 100 | 100 | 200 | 2,208 EUR | 2,208 |
| Muuttopalvelu Grundell Oy | Finland | 100 | 100 | 100 | 8 EUR | 4,440 |
| Martela AB, Nässjö | Sweden | 100 | 100 | 50,000 | 5,000 SEK | 426 |
| Aski avvecklingsbolag AB, Malmö | Sweden | 100 | 100 | 12,500 | 1,250 SEK | 48 |
| Martela AS, Oslo | Norway | 100 | 100 | 200 | 200 NOK | 2,066 |
| Martela Sp.z o.o., Varsova | Poland | 100 | 100 | 3,483 | 3,483 PLN | 135 |
| Tehokaluste Oy | Finland | 100 | 100 | 1 0 EUR |
0 | |
| Total | 9,324 | |||||
| Other shares and participations | 7 |
12. Investments
| (EUR 1 000) | 2023 | 2022 |
|---|---|---|
| Non-current receivables | ||
| Loan receivables | 532 | 546 |
| Current receivables | ||
| Receivables from Group companies | ||
| Trade receivables | 1,756 | 2,665 |
| Loan receivables | 2,000 | 0 |
| Prepaid expenses | 406 | 1,013 |
| Receivables from others | ||
| Trade receivables | 15,660 | 15,215 |
| Accrued income and prepaid expenses | 2,329 | 2,071 |
| 22,152 | 20,964 | |
| 2023 | 2022 | |
| 92 | 99 | |
| 1,422 | 613 | |
| 446 | 280 | |
| 369 | 1,079 | |
| 2,329 | 2,071 | |
| 2023 | 2022 | |
| 256 | 223 | |
| 0 | 33 | |
| Current receivables, total Accrued income and prepaid expenses, main items Related to personnel expenses Related to payments in advance Other accrued income or prepaid expenses Periodization of revenue Accrued income and prepaid expenses total Related party loan Loan 1 Jan Increases Decreases |
-118 | 0 |
13. Receivables
| Distribution of shares 31 Dec 2023 | shares 604,800 3,968,695 |
Total EUR 925,682 |
share capital 13 |
Votes | % of Votes |
|---|---|---|---|---|---|
| K-shares (20 votes/share) | |||||
| 12,096,000 | 75 | ||||
| A-shares (1 vote/share) | 6,074,318 | 87 | 3,968,695 | 25 | |
| Total | 4,573,495 | 7,000,000 | 100 | 16,064,695 | 100 |
| Treasury shares | 1,425 | ||||
| Number of shares outstanding | 4,572,070 | ||||
| Shareholders' equity | 2023 | 2022 | |||
| Restricted equity | |||||
| Share capital 1 Jan and 31 Dec | 7,000 | 7,000 | |||
| Share premium account 1 Jan and 31 Dec | 1,116 | 1,116 | |||
| Unrestricted equity | |||||
| Reserve fund 1 Jan and 31 Dec | 11 | 11 | |||
| Invested unrestricted equity fund 1 Jan | 995 | 962 | |||
| Share issue | 0 | 33 | |||
| Invested unrestricted equity fund 31 Dec | 995 | 995 | |||
| Retained earnings 1 Jan | 21,298 | 17,398 | |||
| Profit (-loss) for the year | -5,470 | 3,900 | |||
| Dividends paid | -452 | 0 | |||
| Retained earnings 31 Dec | 15,377 | 21,298 | |||
| Shareholders' equity total | 24,500 | 30,421 | |||
14. Changes in shareholders' equity
The distributable equity of the parent company is EUR 16,372 thousand in 2023.
A total of 11,657 of Martela shares held by the company have been conveyed without consideration to the 34 key individuals participating in the Performance-based Matching Share Plan 2021—2023, announced on March 23, 2021. Conveyance of the shares relates to the earning period 2021. Following the directed share issue on March 23, 2022, the number of treasury shares
Treasury shares held by Martela Oyj are reported as a deduction from retained earnings. Martela Oyj owns 1,425 A shares (1,425 in 2022). Out of the shares 379 were purchased at an average price of EUR 10.65 and 1,046 were transferred from Martela Corporation's joint account to the treasury shares reserve based on the decision by AGM on March 13, 2018. Market value of treasury shares on December 31, 2023 was EUR 1.28 per share (2.45), a total of EUR 1.8 thousand (3.5 thousand in 2022) Company has executed right issue (March 17, 2022) in which 11,574 pcs new A shares has been subscribed. Issue price of new shares, in total EUR 33 thousand, has been booked in invested unrestricted equity fund.
stands at 1,425 shares incentive plan.
Company has decided on a paid directed share issue (March 29, 2023) in which 53,881 of series A shares have been subscribed without consideration. The shares issued to the company have been used to pay incentives according to the company's
The Board of Directors has decided to grant an interest-bearing loan to finance the acquisition of the company's shares. The maximum amount of the loan is 70 per cent of the investment in shares. The loan will be repaid in full on 31 December 2025, at the latest. The interest rate is 12 months euribor but not below 0%.
The loan granted to the board of directors is EUR 138 thousand (256 thousand in 2022), of which the CEO loan EUR 70 thousand and others EUR 68 thousand (153 thousand in 2022).
| (EUR 1 000) | 2023 | 2022 |
|---|---|---|
| Accrued expenses | 128 | 108 |
| Total | 128 | 108 |
| Accrued liabilities | ||
| Related to the personnel expenses | 92 | 100 |
| (EUR 1 000) | 2023 | 2022 |
|---|---|---|
| Current liabilities | ||
| Liabilities to Group companies | ||
| Trade payables to Group companies | 11,028 | 10,219 |
| Accrued liabilities to Group companies | 1,768 | 1,622 |
| Other current liabilities Group companies | 3,283 | 3,635 |
| Total | 16,079 | 15,476 |
| Other current liabilities | ||
| Loans from financial institutions | 1,207 | 1,624 |
| Advances received | 289 | 369 |
| Trade payables | 7,042 | 7,614 |
| Other current liabilities | 3,508 | 3,448 |
| Accrued liabilities | 2,824 | 4,782 |
| Total | 14,869 | 17,837 |
| Current liabilities, total | 30,947 | 33,313 |
| Essential items of accrued liabilities | 2023 | 2022 |
|---|---|---|
| Personnel expenses | 1,819 | 1,871 |
| Royalties | 175 | 176 |
| Taxes from accounting period | 0 | 182 |
| Residual expenses | 829 | 2,553 |
| Accrued liabilities, total | 2,824 | 4,782 |
15. Non-current liabilities 16. Current liabilities
Current liabilities are specified in notes because items are combined in Balance sheet.
The company has purchased electricity derivatives, of which long-term liabilities 2023 amount to EUR 36,5 thousand (EUR 8 thousand) and short-term liabilities amount to EUR 15 thousand (EUR 69,5 thousand)..
| (EUR 1 000) | 2023 | 2022 |
|---|---|---|
| Debts secured by mortgages | ||
| Factoring loan | 1,207 | 1,624 |
| Corporate mortgages | 7,191 | 7,191 |
| Shares pledged | 7,191 | 7,191 |
| Other pledges | ||
| Guarantees as security for rents | 854 | 892 |
| Total | 854 | 892 |
| Other liabilities | ||
| Residual value liabilities related to the service business | 2,715 | 1,809 |
| Total | 2,715 | 1,809 |
| Leasing commitments | ||
| Falling due within 12 months | 764 | 692 |
| Falling due after 12 months | 1,085 | 642 |
| Total | 1,849 | 1,334 |
| Rent commitments | 16,970 | 17,927 |
17. Pledges granted and contingent liabilities
Company has signed new premises lease contract on May 24, 2021 which estimated starting date is April 1, 2022. Contract is valid at least until March 31, 2029, and the monthly rent is EUR 37,823.
Company has signed Nummela property sale and leaseback contract on August 3, 2022. Contract is valid untill April 31, 2033, and the monthly rent is EUR 124,082.
Auditor's report (translation of the Finnish original)
To the Annual General Meeting of Martela Oyj
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Martela Oyj (business identity code 0114891-2) for the year ended 31 December, 2023. The financial statements comprise the consolidated balance sheet, statement of comprehensive income, statement of changes in equity, statement of cash flows and notes, including material accounting policy information, as well as the parent company's balance sheet, income statement, statement of cash flows and notes.
In our opinion
- the consolidated financial statements give a true and fair view of the group's financial position as well as its financial performance and its cash flows in accordance with IFRS Accounting Standards as adopted by the EU.
- the financial statements give a true and fair view of the parent company's financial performance and financial position in accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with statutory requirements.
Our opinion is consistent with the additional report submitted to the Audit Committee.
Basis for Opinion
We conducted our audit in accordance with good auditing practice in Finland. Our responsibilities under good auditing practice are further described in the Auditor's Responsibilities for the Audit of Financial Statements section of our report.
We are independent of the parent company and of the group companies in accordance with the ethical requirements that are applicable in Finland and are relevant to our audit, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
In our best knowledge and understanding, the non-audit services that we have provided to the parent company and group companies are in compliance with laws and regulations applicable in Finland regarding these services, and we have not provided any prohibited non-audit services referred to in Article 5(1) of regulation (EU) 537/2014. The non-audit services that we have provided have been disclosed in note 4. to the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We have fulfilled the responsibilities described in the Auditor's responsibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial statements. ment due to fraud.
We have also addressed the risk of management override of internal controls. This includes consideration of whether there was evidence of management bias that represented a risk of material misstate-
Key Audit Matter How our audit addressed the Key Audit Matter
REVENUE RECOGNITION
We refer to the Group's accounting policies and note 1
The Group's revenue includes mainly sale of furniture and, to a lesser extent, sale of services and
leasing of furniture. In furniture deliveries the Group fulfills its contractual performance obligations at a point in time and the revenue is recognized when control is transferred to a customer.
Revenue recognition is considered as a key audit matter because revenues are a key performance measure which could create an incentive for revenue to be recognized prematurely. Revenue recognition was also determined to be a significant risk of material misstatement referred to in EU Regulation No 537/2014, point (c) of Article 10(2).
Our audit procedures to address the risk of material misstatement in respect of revenue recognition included among others:
- We assessed the appropriateness of the group's accounting policies over revenue recognition compared to IFRS standards.
- We assessed the group's processes and controls over timing of revenue recognition.
- We tested the correct timing of revenue recognition by using analytical procedures and transaction level testing. Our procedures included data analytics, obtaining external confirmations and transaction level testing before and after the balance sheet date as well as inspection of credit notes prepared after the balance sheet date.
- We considered the appropriateness of the group's disclosures in respect of revenues
VALUATION OF SUBSIDIARY SHARES AND RECEIVABLE IN PARENT COMPANY'S BALANCE SHEET
We refer to parent company's accounting policies and notes 6, 10 and 12
As of balance sheet date December 31, 2023 the subsidiary shares and receivable amounted to 13,1 M€ corresponding to 23 % of parent company's total assets and 53 % of parent company's equity.
The management of the parent company prepares annually impairment calculation for balance sheet value of the investments based on their value in use. These calculations include significant management judgements, like forecasted revenue growth, EBITDA and discount rate used in discounting cash flows. Based on the calculation a write down amounting to x M€ was recorded to Swedish subsidiary shares in the financial statements 2023.
This matter was also determined to be a significant risk of material misstatement referred to in EU Regulation No 537/2014, point (c) of Article 10(2).
Our audit procedures to address the risk of material misstatement in respect of valuation of subsidiary shares and receivable included among others:
- We assessed the basis and appropriateness of the forecasts used in the impairment calculations, like revenue growth, EBITDA and discount rate.
- We tested the mathematical accuracy of the calculations.
- We involved our valuation specialists to assist us in evaluating the methodologies and assumptions in relation to market and industry information.
Responsibilities of the Board of Directors and the Managing Director for the Financial Statements
The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, and of financial statements that give a true and fair view in accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with statutory requirements. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors and the Managing Director are responsible for assessing the parent company's and the group's ability to continue as going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting. The financial statements are prepared using the going concern basis of accounting unless there is an intention to liquidate the parent company or the group or cease operations, or there is no realistic alternative
but to do so.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance on whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with good auditing practice will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. As part of an audit in accordance with good auditing practice, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the parent company's or the group's internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
- Conclude on the appropriateness of the Board of Directors' and the Managing Director's use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the parent company's or the group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the parent company or the group to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events so that the financial statements give a true and fair view.
- Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so
would reasonably be expected to outweigh the public interest benefits of such communication.
Other Reporting Requirements
INFORMATION ON OUR AUDIT ENGAGEMENT
We were first appointed as auditors by the Annual General Meeting on March 12, 2020, and our appointment represents a total period of uninterrupted engagement of four years.
OTHER INFORMATION
The Board of Directors and the Managing Director are responsible for the other information. The other information comprises the report of the Board of Directors and the information included in the Annual Report but does not include the financial statements and our auditor's report thereon. We have obtained the report of the Board of Directors prior to the date of this auditor's report, and the Annual Report is expected to be made available to us after that date. Our opinion on the financial statements does not cover the other information.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. With respect to report of the Board of Directors, our responsibility also includes considering whether the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations.
In our opinion, the information in the report of the Board of Directors is consistent with the information in the financial statements and the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations.
If, based on the work we have performed on the other information that we obtained prior to the date of this auditor's report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Helsinki 13.2.2024
Ernst & Young Oy Authorized Public Accountant Firm
Osmo Valovirta, Authorized Public Accountant
Corporate governance statement 2023
Governance
Martela Corporation is a Finnish limited liability company that is governed in its decision-making and management by Finnish legislation, especially the Finnish Limited Liability Companies Act, by other regulations concerning public listed companies, and by its Articles of Association.
The company complies with the NASDAQ OMX Guidelines for Insiders and the Finnish Corporate Governance Code 2020 published by the Securities Market Association. Corporate Governance code is available at https://cgfinland.fi/en/corporate-governance-code/. Martela complies with all of the Code's guidelines.
Organisation
The Group is managed according to both its operational organisation and legal Group organisation. The Group's management is based primarily on an operational matrix organisation.
In 2023 The Group was organised in units as:
Sales and marketing, which is responsible for customer relationships, sales, workplace services and marketing.
Operations, which is responsible for after-sales activities, including sourcing, production, removal services, product development, quality assurance, the research laboratory, planning of material flows and logistics and as well as IT matters.
The Brand and Design, which is responsible for brand and product portfolio management.
Design Studio, which is responsible for the planning and development of work and learning environment projects.
Human resources and sustainability, which is responsible for the human resource administration, sustainability management and internal communication.
Finance, which is responsible for the Group's financial planning and reporting, investor relations as well as legal matters.
Annual general meeting
The General Meeting is the company's supreme decision-making body. The Annual General Meeting must be held within six months of the end of the financial year. The financial statements, Board of Directors' report and the auditor's report are presented at the Annual General Meeting. The Meeting decides on the approval of the financial statements, use of the profit shown on the balance sheet, discharging the members of the Board of Directors and the CEO from liability, the fees of the Board members and auditors and the number of members on the Board. The General Meeting also elects the Directors of the Board and the auditor. Other matters on the agenda of the General Meeting are mentioned in the notice of meeting.
Shares
Martela has two share series ('K shares' and 'A shares'), with each K share entitling its holder to 20 votes at a General Meeting and each A share entitling its holder to one vote. The redeeming of K shares is referred to in the Articles of Association. Private owners of K shares have a valid shareholder agreement that restricts the sale of these shares to other than existing holders of K shares. The company's total share capital on 31 December 2023 was EUR 7 million.
Board of directors
The Board of Directors, elected by the Annual General Meeting each year, is responsible for the management and proper arrangement of the operations of the company in compliance with the Limited Liability Companies Act and the Articles of Association.
Preparations concerning the composition of the Board of Directors are carried out by the principal shareholders, who propose Board candidates to the Annual General Meeting based on their preparatory work. In accordance with the Articles of Association, the Board of Directors consists of no less than
five and no more than nine members. There may be no more than two deputy members. The Board of Directors elects from among its members a Chairman and Vice Chairman to serve until the end of the next Annual General Meeting.
According to the principles of the Board diversity, the members of the Board of Directors must have sufficient and complementary experience and expertise in Martela's most important business sectors and markets.
The Board must have both sexes and a diverse age distribution. Board members should have sufficiently diverse professional and educational background, strategy development and implementation skills, economic expertise, experience in managing companies at various stages of development, innovation, decision-making and questioning skills, and sufficient time for working in the board. The achievement and development of diversity in reaching the goals is assessed in the Board Self-Evaluation Discussion
The Board has confirmed a Charter defining the duties of the Board, meeting practices, the matters to be dealt with at meetings, the targets set by the Board for its operations, a self-evaluation of these operations, and the Board's committees.
In addition to the duties mentioned in the Limited Liability Companies Act and the Articles of Association, the Board of Directors is responsible for:
| • | deciding on the Group strategy | |||
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- deciding on the Group structure
- approving financial statements, interim financial statements and interim reports
- approving the Group's operating plans, budgets, major investments and donations
- deciding on business expansion and reduction, acquisitions and divestments
- deciding on the Risk management policy and principles of the internal control
- deciding on dividend policy and make a proposal to the Annual General Meeting on the amount of dividend to be paid
- deciding on the Treasury policy
- approving and dismissing the CEO and to decide on his salary
- authorising the Remuneration Committee to decide on the appointments and remuneration of the members of the Group Management Team and the general principles of the Group's performance bonus scheme
- deciding on Management's share-based incentive schemes
- regularly approving and revising corporate governance principles and internal policies
- annually approving the company's internal control and risk management principles and addressing
the most significant risks and uncertainties associated with the company's operations
- appointing board committees and deciding on their reporting
- accepting stock exchange releases related to the Board's decisions
- confirming the principles of the Board diversity
- the other statutory provisions of the Limited Liability Companies Act, the Corporate Governance Code or elsewhere
The Board of Directors consisted of following members:
- Johan Mild, chairman of the Board, born 1974, M.Sc., Accounting, CEO of Remeo Oy.
- Does not own any company shares
- Hanna Mattila, born 1972, D.Sc., Tech., Associate Professor Aalborg University,
- Does not own any company shares
- Anni Vepsäläinen, born 1963, M.Sc., Tech., CEO of Suomen Messut Osuuskunta,
- owns 2 000 Martela Oyj A-shares
- owns 1 600 Martela Oyj K -shares
- Eero Martela, born 1984, M.Sc., Tech., Managing partner, Finland, Columbia Road Oy,
- owns 6 710 Martela Oyj A-shares and 1 073 K -shares
- Jan Mattsson, born 1966 M.Sc., Architecture, CEO and partner Tengbom Ab.
- owns 6 759 Martela Oyj A-shares.
- Katariina Mellström, born 1962, M.Sc., Economy, Secretary General, Global Child Forum,
The Board convened eight times during the financial year. The average attendance of the Board mem-
bers was 100 per cent.
The Board reviews its own activities annually, either by self-assessment or assessment made by an external consultant. In both cases a summary of the evaluations is jointly discussed at a Board meeting. The Board has evaluated the independence of its members and determined that Hanna Mattila, Eero
Martela, Jan Mattsson, Katarina Mellström, Johan Mild and Anni Vepsäläinen are independent of the company. Of the company's largest share¬holders Jan Mattsson, Katarina Mellström, Johan Mild and Anni Vepsäläinen are independent members of the Board.
The Board has formed from among its members a Human Resource and Rewarding Committee and an Audit Committee, which both have written Charters.
According to the Charter, the key duties of the Human Resource and Rewarding Committee include:
- deciding, with authorisation from the Board, on the remuneration issues and annual performance bonuses of the CEO and the Group Management Team as well as general principles for the Group's performance bonus scheme for the entire personnel
- preparing for the Board the structure, criteria and target levels of the long-term incentive plans for key personnel
- processing the appointments of the CEO and Group Management Team members, deputy arrangements and successor issues.
- The Compensation Committee also handles remuneration statements in connection with the financial statements.
The Board's Human Resource and Rewarding Committee comprises Johan Mild, Jan Mattsson and Katarina Mellström.
The Committee convened three times during the financial year. The average attendance of the Committee members was 100 per cent.
According to the Charter, the key duties of the Audit Committee include:
- monitoring the financial reporting and interim report processes,
- supervising the financial reporting process,
- monitoring the company's financial condition,
- monitoring the adequacy and effectiveness of the company's internal control and risk management systems,
- processing the description of the internal control and risk management systems related to the financial reporting process included in the Corporate Governance Statement,
- monitoring the statutory audit of the financial statements and the consolidated financial statements,
- observing, together with the auditors and the management of the company, the findings of the auditing carried out and the possible difficulties in carrying out the audit,
- assessing the independence of the auditor or the audit firm, and in particular the provision of ancillary services to the company,
- evaluating the fees charged on auditing and ancillary services and their criteria,
- preparing a proposal for a decision on the election of the auditor,
- assessing the compliance process with laws and regulations and respect for ethical principles in the organisation,
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conducting reports on the company's most significant legal and regulatory procedures .
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The Board's Audit Committee comprises Anni Vepsäläinen, Eero Martela and Hanna Mattila.
- The Committee convened four times during the financial year. The average attendance of the Committee members was 100 per cent.
- The secretary of the Board of Directors is a lawyer from the same company from where other legal services is provided to the Group. The Chairman of the Board is in direct contact with the CFO as necessary.
CEO
The Board appoints Martela Corporation's CEO and decides on the terms and conditions of his service relationship, which are defined in a written CEO's service contract. The CEO is responsible for the operational management and supervision of the parent company and the Group according to the guidelines set by the Board. Company CEO is Ville Taipale, born 1971, M.Sc Tech., owns 47 934 Martela Oyj A-shares.
Group management team
The Board of Directors and the CEO appoints the members of the Group Management Team. The CEO of Martela Corporation acts as the Chairman of the Group Management Team. The directors responsible for the units and processes are also represented in the Group Management Team. The Group Management Team drafts and reviews strategies, budgets and investment proposals and monitors the financial situation of the Group and its business areas and processes and the attainment of operational targets and plans. The Group Management Team meets once a month.
Group Management Team consisted of following members led by Group CEO: • Kimmo Hakkala responsible for Sales & Marketing -unit (does not own any Martela Oyj shares) • Kalle Sulkanen responsible for Operations -unit (owns 13 555 Martela Oyj A-shares) • Kari Leino responsible for Brand & Design -unit (owns 6 544 Martela Oyj A- shares) • Eeva Terävä responsible for Design Studio -unit (owns 23 016 Martela Oyj A-shares) • Suvi-Maarit Kario responsible for Human resources and sustainability -unit (does not own any Martela Oyj shares)
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- Henri Berg responsible for Financial administration -unit (does not own any Martela Oyj shares)
Financial reporting in the group
Martela Corporation's Board of Directors is provided regularly reports on the financial performance and forecasts of the Group. The reports and forecasts are also presented by the CEO and CFO at Board meetings, where they are reviewed.
The Group Management Team meets at least once a month to evaluate the financial performance, outlook and risks of the Group.
Auditing
The auditing of Group companies is carried out in accordance with the valid laws in each country and each company's Articles of Association. The principally responsible auditor of the parent company co-ordinates the auditing of the Group's subsidiaries together with the Group's CEO and CFO. The auditors of Martela Corporation and the Group are the authorised public accountants Ernst & Young, with Osmo Valovirta, Authorised Public Accountant, as the principally responsible auditor. All the auditors of the Group's companies are in the Ernst & Young chain.
Internal control
The reliability of financial reporting is one of the principal objectives of Martela Corporation's internal control.
The CEO is responsible for the operational management and supervision of the Group according to the guidelines set by the Board.
Martela's strategy is updated and its targets defined on an annual basis. Strategic planning forms the basis of all planning at Martela and is carried out on a rolling basis for the forthcoming period of 2–3 years. Target setting is an internal control prerequisite because the targets of the companies, business areas, functions and supervisors are derived from Group-level targets. For each business area, specific financial and non-financial targets are set in accordance with the business plan, and their attainment is monitored regularly through comprehensive reporting to executive management, for example.
The CFO has overall responsibility for financial reporting in the Group. Reporting to executive management is carried out separately and independently of business operations.
Controllers and financial managers (controller function) are responsible for Group, company and other financial reporting. At Martela, financial reporting is carried out in compliance with guidelines, laws and regulations in a consistent manner throughout the Group. The reliability of financial reporting depends on the appropriateness and reliability of financial and reporting processes and on the control measures taken to ensure these. During recent years, the internal control has focused among others on sales, quote to cash processes, on management of working capital, on ERP -system implementation, on development of the receivables collection procedures as well as on leasing and service contract man-
The CFO is responsible for the maintenance and development of reporting processes and defining and implementing control measures. Control measures include guidelines, matching, management reviews and reporting on deviations. The CFO monitors compliance with defined processes and controls. He also monitors the reliability of financial reporting.
agement and processes. nancial reporting.
The Board of Directors approves Martela's strategy and annual operating plans. It also approves the principles and rules of risk management, and monitors on a regular basis the effectiveness and sufficiency of the internal control and risk management. Furthermore, the Board is responsible for the internal control of the financial reporting process.
Auditors and other external controllers assess the control measures in terms of the reliability of fi-
Risk management and internal audit
Martela's Board of Directors has confirmed the principles of risk management. The purpose of risk management is to identify, monitor and manage risks that could pose a threat to business and to the achievement of business objectives. Group management has supreme operational responsibility for risk management policy.
In the Group, risks are analysed and decisions are made to manage these risks as a part of the reg-Taking into consideration the nature and scope of Martela's business, the company has not consid-
ular monitoring carried out by the Board and the management teams as described above. Risks are also evaluated when planning and making decisions on significant projects and investments. Risk management is integrated with the strategy process as a separate stage of analysis and as part of the process of drawing up annual action plans. There is no separate risk management organisation, but the associated responsibilities are assigned in line with the rest of the business operations and organisation. The company's Board of Directors has included an annual review of risk management in its schedule of work. ered it appropriate to form a separate internal audit function. The internal control is carried out in the form of controls in business processes, and the company will either make its own or, if necessary, con-
duct separate internal audit reports with external experts.
Risks
In accordance with Martela's risk management model, risks are classified and prepared for in different ways. The manufacture of Martela's products is largely based on the company performing the final assembly and using subcontractors for components. Production control is based on orders placed by customers, which means that there is no need for any large-scale warehousing. Risks of damage are covered by appropriate insurance policies, and these provide comprehensive coverage for property, business interruption, supplier interruption loss and loss liability risks. Martela uses the services of an external insurance broker to manage insurance matters. The services of an external partner are also used in legal matters. The responsibility perspectives regarding the supply chain are discussed as part of the annual responsibility report. Finance risks are discussed in the notes to the financial statements.
Management, remuneration, benefits and incentive plans
Information on management remuneration and the impact on the result for the financial year can be found in the notes to the financial statements and in the remuneration report, which can be found on the company's website.
Principles regarding related party transactions
Martela Oyj follows the recommendations of the Corporate Governance Code 2020 issued by the Securities Market Association. The Company's related party transactions policy is adopted by the board of directors that also has the monitoring and supervision responsibility regarding related party transactions.
The up-to-datedness of the related party list is monitored at least on an annual basis. The Chief Financial Officer of the Company is responsible for determining the related parties of the Company and maintaining the related party list.
Insider administration
Martela complies with the Guidelines for Insiders issued by Nasdaq Helsinki Ltd. In addition, Martela's Board of Directors has confirmed specific insider guidelines for the company to complement Nasdaq Helsinki Ltd's Guidelines for Insiders.
The company has defined as permanent insiders persons who work at Martela Group and who have access to all inside information concerning Martela due to their position or task. The information in the permanent insider list is not public. In addition to the permanent insider list, non-public project-specific
insider lists shall be established, if necessary, as defined in Nasdaq Helsinki Ltd's Guidelines for Insiders. Permanent insiders are not entered into the project-specific insider lists.
The persons discharging managerial responsibilities, other permanent insiders and persons participating in preparing of financial reports of the company must not trade in Martela's financial instruments prior to the publication of an interim report and financial statement release of the company. The length of the closed period is 30 days at Martela.
Martela discloses inside information that directly concerns Martela or its financial instrument as soon as possible, unless the conditions for delay of disclosure of inside information are met. Martela has defined an internal process in order to evaluate and disclose the inside information and to monitor and evaluate the duration and the conditions for the delay. Martela continuously monitors the situation to ensure that the conditions for the delay are met and the company has the ability to publicly disclose the information immediately in the case of a data leakage.
In accordance with MAR, Martela has an obligation to disclose transactions with Martela's financial instruments conducted by persons discharging managerial responsibilities at the company and persons closely associated with them.
The obligation to disclose transactions applies to the following persons discharging managerial responsibilities at Martela:
• Members of Martela's Board of Directors and CEO, and
• Members of Martela Group's Management Team.
Transactions between companies in the Martela Group conducted by persons discharging managerial responsibilities at Martela and persons closely associated with them are monitored. During 2023, regarding the current management team, the CEO, VP Operations unit, VP Brand & Design unit and VP of the Design Studio unit received share rewards based on the share-based incentive plan for key employees. In 2023 there were no other material related party transactions.
Board of Directors
Eero Martela BOARD MEMBER Born in 1984, M.Sc. (Tech.) Member of the Board since 2015.
Other key duties: Managing partner, Finland, Columbia Road Oy
Owns 6,710 Martela Oyj A shares and 1,073 K shares.
Hanna Mattila
BOARD MEMBER Born in 1972, D.Sc. (Tech.) Member of the Board since 2022.
Other key duties: Associate Professor, Aalborg University, Denmark Visiting Professor, Aalto University, Finland
Owns 1,600 Martela Oyj K shares.
Johan Mild
CHAIRMAN OF THE BOARD Born in 1974, M.Sc. (Accounting) Member of the Board since 2020, Chairman of the Board since 2021.
Other key duties:
CEO, Remeo Oy Member of the Board, The recycling Industries of Finland (Kierrätysteollisuus ry)
Anni Vepsäläinen
BOARD MEMBER Born in 1963, M.Sc. (Tech.) Member of the Board since 2016.
Other key duties:
Member of the Board, Cinia Oy Managing Director, Finnish Fair Corporation Chairman of the Board, Helsinki Region Chamber of Commerce Member of the Board, Finnish Chamber of Commerce
Owns 2,000 Martela Oyj A shares.
Jan Mattsson BOARD MEMBER
Born in 1966, M.Sc. (Architecture), KHT Royal Institute of Technology Member of the Board since 2019.
Other key duties:
CEO and partner, Tengbomgruppen AB Chairman of the Board, Tengbom Oy
Owns 6,759 Martela Oyj A shares.
Katarina Mellström BOARD MEMBER
Born in 1962, M.Sc. (Econ.) Member of the Board since 2018.
Other key duties:
Secretary General, Global Child Forum Member of the Board, Vectura AB
Management team
Henri Berg CHIEF FINANCIAL OFFICER (CFO) Born: 1970 Education: M.Sc., (Econ.) Area of reponsibility: Group Finance, Investor Relations and Legal.
Joined the company and a member of the management team since 2023.
Previous professional experience: A-Insinöörit Oy AG, CFO, 2021–2023 Sato Oyj, Head of Financial services, 2017–2021 Componenta Oyj, several managerial positions in financial administration, 2008–2017 Stora Enso Oyj, several managerial and specialist positions in financial administration, 1998–2008
Does not own any company shares.
Ville Taipale
CHIEF EXECUTIVE OFFICER (CEO) Born: 1971 Education: M.Sc. Joined the company and has been a member of the management team since 2018, the CEO since 2021.
Previous professional experience:
Martela Oyj, Vice President, Operations, 2018–2021 Patria Land Systems Oy, Vice President, Sourcing and Logistics, 2015–2018 Componenta Oyj, Vice President, Sourcing and Procurement, 2010–2015 Fiskars Oyj, Director, Sourcing Unit, 2007–2010 Nokia Oyj, Supply chain management and development positions, 1998–2007 VTT, Researcher, 1997–1998
Owns 47,934 Martela Oyj A shares.
Eeva Terävä VP, DESIGN STUDIO
Born: 1983 Education: M.Sc. (Regional Science) & Bachelor of Culture and Arts (Interior Architecture) Area of responsibility: Design & Development Services of Work and Learning Environments. Joined the company in 2016, a member of the management team since 2021.
Previous professional experience:
Martela Oyj, Head of Workplace development, 2018–2021 Martela Oyj, Workplace Specialist, 2016–2018 Ramboll Management Consulting Oy, different roles in research and development projects, and project management, 2009–2016
Owns 23,016 Martela Oyj A shares.
Suvi-Maarit Kario
VP, HR & SUSTAINABILITY
Born: 1968 Education: M.Soc.Sc. Area of responsibility: HR, Sustainability and internal communication. Joined the company and a member of the management team since 2023.
Previous professional experience:
Puro Tekstiilihuoltopalvelut Oy, 2020–2023 HKScan Oyj, 2018–2020 GS-Hydro Oy, 2012–2017 Alstom Finland Oy, 2010–2012 Destia Oy, 2007–2010 Finnlines Oyj, 1997–2007
Does not own any company shares.
Kimmo Hakkala VP, SALES AND MARKETING Born: 1971 Education: M.Sc. (Agric.) Area of responsibility: Group Customers, Sales and Marketing in Finland, Sweden & Norway
and international dealer Network. Joined the company and a member of the management team since 2023.
Previous professional experience:
Berner Oy, Business Unit Director, 2013–2022 Fiskars Finland Oy Ab, Sales and Marketing Director, 2007–2013 Kemira Grow-How Oyj, Business and Marketing Manager, 2001–2007 Kesko Oyj, Product Manager, 1996–2001
Does not own any company shares.
Kari Leino
VP, BRAND & DESIGN Born: 1965 Education: IDBMpro Area of responsibility: Group Marketing and Product Design. Joined the company in 1987, a member of the management team since 2021.
Previous professional experience:
Martela Oyj, Product & Design Director, 2016–2021 Martela Oyj, Offering Manager, 2002–2016 P. O. Korhonen Oy, Sales & Marketing, 1997–2002 Martela Oyj, Sales, 1987–1997
Owns 6,544 Martela Oyj A shares.
Kalle Sulkanen
VP, OPERATIONS
Born: 1978 Education: M.Sc. (Tech.) Area of responsibility: Group Sourcing, Production, Removal Services, Product Development, Sustainability, Logistics and Quality Control. Joined the company and a member of the management team since 2022.
Previous professional experience:
Peab AB, Head of Procurement, 2020–2022 YIT Oyj, Procurement Director, 2019–2020 AB Enzymes GmbH / Roal Oy, Head of Procurement, 2017–2019 Componenta Oyj, Sourcing Director and managerial positions, 2011–2017 Nokia Oyj, Development Manager positions in supply chain, 2001–2011
Owns 13,555 Martela Oyj A shares.
Information for shareholders
Annual General Meeting
The Annual General Meeting of Martela Oyj will be held on Friday 5 April 2024 at 10 a.m. at Töölönlahdenkatu 2, 00100 Helsinki (Sanomatalo).
A shareholder, who has the right to participate in the Annual General Meeting and whose shares are registered on his/her Finnish book-entry account, may participate in the Annual General Meeting by way of remote access. Shareholder participating via remote access to the Annual General Meeting has voting right and speaking right during the Annual General Meeting. Instructions for shareholders are presented in this notice under section C. (Instructions for the participants in the General Meeting) and on the Company's website www.martela.com/about-us/about-martela/investors.
The names of shareholders wishing to attend the meeting should be entered in the share-holder register at Euroclear Finland Ltd no later than 22 March 2024 and the shareholder should register by email to [email protected], by post to Innovatics Oy, Yhtiökokous / Martela Oyj, Ratamestarinkatu 13 A, 00520 Helsinki, or on the internet site of the Corporation https://www.martela.com/about-us/about-martela/ investors no later than April 2, 2024 at 4 p.m.
Payment of dividends
The Board of Directors proposes to the Annual General Meeting that no dividend would be paid for the financial year 1 January 2023 – 31 December 2023.
Publication of financial information
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Martela Corporation's financial information in 2024 will be published as follows:
• January–March (Q1) Financial Review on Tuesday May 14, 2024 • January–June (H1) Half-Year Report on Friday August 16, 2024 • January–September (Q3) Financial Review on Friday November 8, 2024
Financial reports are available in Finnish and English on the company's website (www.martela.fi and www.martela.com). Annual reports are available on the company's website in pdf format. After published, stock exchange releases are available on the company's website, where you can find all stock exchange releases in chronological order.
FINLAND Martela Oyj Miestentie 1 02150 Espoo Tel. +358 10 345 50 www.martela.com
Kidex Oy Savikontie 25 82500 Kitee Tel. +358 10 345 7211 www.kidex.fi
Muuttopalvelu Grundell Oy Tikkurilantie 146 01530 Vantaa Tel. +358 10 480 4200 www.martela.com/fi/palvelut/ toteutuspalvelut/muuttopalvelut
SWEDEN Martela AB Storgatan 49A 57132 Nässjö Tel. +46 380 37 19 00 www.martela.com/sv
NORWAY Martela AS Drammensveien 130 0277 Oslo Tel. +47 23 28 38 50 www.martela.com/no
POLAND Martela Sp. z o.o. ul Geodetów 156 05-500 Józefosław www.martela.com