Lassila & Tikanoja Oyj

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Report by the Board of Directors and Financial statements 2023 Lassila & Tikanoja plc LEADER OF THE REGENERATIVE SOCIETY Lassila & Tikanoja Annual Report 2023 1 KEY FIGURES REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORT SUSTAINABILITY REPORT FINANCIAL STATEMENTS Contents Report by the Board of Directors . . . . . . . . . . . . . . . . . . . 2 Key figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Key figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Calculation of key figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Consolidated income statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Consolidated statement of comprehensive income . . . . . . . . . 29 Consolidated statement of financial position . . . . . . . . . . . . . . . . 30 Consolidated statement of cash flows . . . . . . . . . . . . . . . . . . . . . . 31 Consolidated statement of changes in equity . . . . . . . . . . . . . . . 32 Notes to the consolidated financial statements . . . . . . . . . . . . 33 Financial statements of the parent company . . . . . . . . . . . . . . . . 67 Proposal by the Board of Directors for distribution of profit and Auditor’s Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 2 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Business model ..........................................................................3 Business environment ...................................................................3 Strategy .................................................................................4 Financial performance and division review .............................................7 Outlook ...................................................................................8 Sustainable development and statement of non-financial information ................9 Risks and risk management ............................................................14 Shares and shareholders ...............................................................18 EU taxonomy ............................................................................20 Report by the Board of Directors KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 3 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Business model L&T is a service company that is making the circular economy a reality. The Group operates in the circular economy and facility services businesses. All of L&T’s business operations build future sustainable growth for the circular economy and are based on the opportunities it creates. • Environmental Services keeps its customers’ materials efficiently in circula- tion and with the highest possible degree of processing. • Industrial Services develops ways to effectively utilise the side streams of industry and society according to the principles of the circular economy. Industrial Services also includes soil remediation, process cleaning and sewer maintenance services. The division operates in Finland and Sweden. • Facility Services in Finland and Sweden improve the value of customers’ properties and aim for the continuous improvement of energy efficiency in line with the goal of a circular economy. By investing in the sustainable solutions of the circular economy, L&T aims to create increasing value for all of its key stakeholders. Business environment The business environment remained challenging throughout the year and became increasingly tough towards the end of the year as the general economic outlook deteriorated. In 2023, the general rise in costs levelled off as far as energy prices were con- cerned. Nevertheless inflation was reflected in the wage decisions negotiated in the labour market. Compared to their predecessors, the two-year wage deci- sions in Finland were expensive and front-loaded, but L&T was able to pass their cost impacts on to customer prices. The sickness rate was still at a high level in the early part of the year due to various respiratory infections, but the situation returned to normal towards the end of the year. The 2021 reform of the Waste Act entered into effect in Finland with regard to the separate collection of consumer packaging. Municipalities organised the collection operations by dividing them into dozens of contracts that were put out to tender. L&T had good success in the tendering processes and strengthened its market position in the segment in question. Nevertheless, this change caused service disruptions, increased total logistics costs and weakened the operating conditions for local and regional operators. In L&T’s assessment, the net impacts of the reform are negative for the industry as a whole. Finland’s new Government Programme strengthens the operating conditions for the recycling industry and, on the whole, is aligned with L&T’s objectives. The Government Programme will reduce the public sector’s role in waste man- agement, restrict the activities public sector organisations in the waste man- agement market and promote the development of the market for recycled raw materials by means of various market-based instruments. Finland is far behind the EU’s minimum target level with regard to the recycling of municipal waste and the recycling rate of materials. The current waste policy has created excess incineration capacity in Finland, which jeopardises recycling and hinders innovation. There is a need for effec- tive market-based instruments in Finland to ensure the primacy of recycling and curb the incineration of waste. The EU has continued the purposeful implementation of the European Green Deal under challenging circumstances. It appears that all of the key reforms will be completed during the term of the current European Commission. The exten- sive legislative reforms included in the European Green Deal will have a sub- stantial impact on L&T’s business environment, and they support L&T’s business objectives in the medium and long term. Climate and energy policy have been increasingly complemented by initiatives to protect biodiversity, such as the Nature Restoration Law and the net zero emissions plan. The circular economy plays a central and critical role in both initiatives. Circular economy solutions promote the sustainable use of natural resources and thereby contribute not only to the mitigation of climate emissions but also the effort to curb biodiversity loss. L&T broadly supports the reforms related to the green transition and puts them into practice through the solutions it provides. From the perspective of business impacts, the key issue is how the reforms related to the green transi- tion will be managed and implemented in Finland. The predictability and consist- ency of regulation has considerable significance for the industry as a whole. The EU’s circular economy policy has also moved in the right direction as the focus of regulation has shifted to sustainable product design in the early stages of the value chain on the one hand, and strengthening the markets for recycled raw materials on the other hand. At present, the use of recycled raw materials is primarily voluntary, which means that recycled raw materials need to compete with virgin raw materials while having a very different cost structure. Green transition initiatives and measures set more ambitious targets for the sustainability of business activities. The Corporate Sustainability Reporting Directive will increase the significance and weight of sustainability efforts for businesses. Sustainability requirements will be integrated into companies’ operating models, processes and reporting. Ensuring regulatory compliance will become an increasingly important criterion in procurement in the future. L&T takes a favourable stance towards these developments. They will improve the quality of sustainability efforts and enhance the comparability of sustainability between companies. Report by the Board of Directors KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 4 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 4 Strategy Lassila & Tikanoja’s mission is to make the circular economy a reality. The com- pany helps its customers achieve their sustainability goals. Climate change and biodiversity loss are megatrends and the mitigation of them creates business opportunities for L&T. Mitigating climate change and biodi- versity loss requires circular economy actions from society, businesses and individuals. Businesses need responsible partners to support the transition to a circular economy and to improve the energy efficiency of properties. Cities continue to grow, and the expectations concerning the built environ- ment are increasing, which creates demand for L&T’s services. Properties are expected to have long life spans, and changes in needs and the use of buildings over the years must be taken into account in maintenance and new construc- tion. L&T’s strategy, “A leader of the regenerative society”, is guiding the Group’s operations during the 2022–2026 strategy period. In October 2023, the Board of Directors of Lassila & Tikanoja completed a review of the company’s strategy. According to the revised strategy, the Environmental Services and Industrial Ser- vices divisions will seek growth especially by focusing on business opportuni- ties related to the circular economy of materials. Growth will be sought through organic development and potential selected acquisitions. The Environmental Services division’s strong market position, broad customer base and significant material volumes provide a good basis for growing the materials business. As for material streams, the division will continue to focus on plastic, wood waste and metals, but opportunities related to other streams are also being explored. In the Industrial Services division, new business opportunities are emerging around the processing and value increase of industrial side streams, as well as the restoration of the built environment. Growth is also being sought in the Swedish market in industrial services and material value chains. Facility Services Finland and Facility Services Sweden will focus on improving profitability. The company’s Board of Directors has decided to evaluate the stra- tegic alternatives for Facility Services Finland and Facility Services Sweden as part of the company’s business portfolio development. All potential options are being considered, including a potential sale of the divisions. The Group’s strong balance sheet and the favourable development of the contract portfolio in all business segments are creating excellent conditions for organic and inorganic growth during the strategy period. L&T wants to be the best sustainability partner for its customers and an excellent workplace for the best experts in its field. During the strategy period, L&T will invest in the renewal of operating models, which will enable even more cost-efficient service produc- tion. The company is continuously developing its material processing capabili- ties and the competence of its personnel in accordance with the principles of the circular economy. Targets for the strategy period L&T measures the success of its strategy by financial, sustainability and stake- holder targets. Financial targets Indicator Target 2023 2022 Annual growth in net sales, % 5 -5.0 3.9 Return on capital employed, % (ROCE) 15 10.3 10.4 Gearing, % Less than 125% 69.3 75.9 Sustainability and stakeholder targets Measure Target 2023 2022 Net Promoter Score, NPS >50 by 2026 35 26 Employee Net Promoter Score, eNPS >50 by 2026 21 24 Carbon footprint -50% by 2030, using 2018 as the baseline -36 % -26 % L&T updated its environmental sustainability target in October 2023. The target is to halve the emissions of L&T’s own operations by 2030 from the level of 2018 and to reduce indirect (Scope 3) emissions by 18% by 2030 from the level of 2022. The company has set a target of net-zero emissions by 2045. The moni- toring of the target will start from the beginning of 2024. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 5 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Outputs Healthy personnel • Employee Net Promoter Score (eNPS) 21 • Sickness-related absences 5.1% • Retirement age 64.6 years • Health rate 41% • Accident frequency (TRIF) 23 • Over 42,000 hours of training on average per year • Code of Conduct training for employees Responsible products and services • Reuse and recycling rate of customer materials 57.8%. • Containers emptied nearly 13 million times • More than 780,000 maintenance actions and over 3,000 energy efficiency proposals in Finland • 55,700 tonnes of waste rendered nonhazardous • Over 500,000 tonnes of soil and side streams delivered for material recycling • Promoting biodiversity in the built environment Emissions • Carbon footprint intensity of own operations per kilometre driven 613 gCO 2 e, -36% compared to the previous year • Water treated by the Industrial Services division 156,130 m  Impacts Employment and prevention of marginalisation • Salaries, fees and social security contributions paid MEUR 352.8 • Employees with a high level of wellbeing and commitment as well as a capable organisation • Impacts of well-being, injuries and illnesses on the health of personnel • Providing a first job for people regardless of their background • 37% of supervisors, managers and leaders are women Mitigating climate change and biodiversity loss • Carbon handprint of operations 457.2 million tCO 2 e • Conservation of virgin raw materials • Promoting sustainability and the external recognition of these efforts, e.g. EcoVadis Platinum, CDP, Financial Times Diversity Leaders and Climate Leaders reports Economic prosperity • Added value created MEUR 448 • Taxes: MEUR 5.7 • Dividends MEUR 17.9 Resources People and management • 8,160 L&T employees in Finland and Sweden • 13.6 million hours worked • Investments in safety, work ability and well-being • Benefits paid from the sickness fund MEUR 2.0 • Quality and management systems and certificates (ISO 9001, ISO 14001 and ISO 45001) • Comprehensive training opportunities • Employment opportunities for special groups Environment and production • 52 recycling plants, terminals and transfer stations • Development of methods and new recycling solutions • 1.2 million tonnes of material collected from customers • 10,500 properties under maintenance (Finland) • Climate targets throughout the chain Finances and governance • Promoting human rights and a sustainable supply chain • Over 700 suppliers, mostly small companies in different parts of Finland and Sweden • Equity MEUR 232.2 • Net interest-bearing liabilities MEUR 160.9 • Capital expenditure MEUR 61.1 • Over 24,900 shareholders L&T’S VALUE CREATION IN 2023 Activities We make circular economy a reality 5 A performer of day-to-day services We help make day-to-day life run more effectively Builder and developer of the circular economy We help to develop business operations and find new circular economy solutions Change agent We help society as a whole to advance towards full circularity Lassila & Tikanoja Annual Report 2023 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 6 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT WE MAKE A REALITY C I R C U L A R E C O N O M Y W E C R E A T E C I R C U L A R E C O N O M Y M O R E V A L U E W I T H TO SOCIETY We combat climate change, bring forward new solutions for the circular economy and promote social responsibility through employment. TO EMPLOYEES We take care of our personnel and provide them with meaningful work and opportunities for development. TO OWNERS We aim for rapid growth in our business operations promoting sustainable development with our unique competence in the circular economy. In addition to pursuing organic growth, we invest in the markets of the future. TO CUSTOMERS We support our customers’ responsibility, create excellent customer experiences and develop the best services in our industry. We increase our customers’ properties value and user satisfaction We recycle the materials of society We improve energy eﬃciency We utilize the side streams of industry and society KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 7 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Financial performance and division review Financial performance Group net sales and financial performance Net sales for 2023 amounted to EUR 802.1 million (844.1), a decrease of 5.0% year-on-year. Excluding the effect of the renewable energy sources business, net sales were on a par with the comparison period and the rate of organic growth was -0.9%. Adjusted operating profit was EUR 39.0 million (40.9), repre- senting 4.9% (4.8%) of net sales. Operating profit was EUR 38.4 million (42.9), or 4.8% (5.1%) of net sales. Earnings per share were EUR 0.79 (0.83). Net sales increased in Industrial Services and decreased in the other divisions. Operating profit improved in Industrial Services and Facility Services Finland, and declined in Environmental Services and Facility Services Sweden. The result for the financial year was affected positively by the fair value of EUR 1.3 million of an interest rate swap being recognised in financial items due to the termination of the interest rate swap. The result for the period was also affected positively by L&T’s EUR 3.6 million (0.7) share of the profit of the joint venture Laania Oy. The operating profit for the comparison year was improved by a gain of EUR 4.3 million from the sale of the renewable energy sources business. Division reviews Environmental Services The full-year net sales of the Environmental Services division decreased to EUR 283.7 million (321.2) in 2023. Operating profit was EUR 27.1 million (30.3). Excluding the effect of the renewable energy sources business, net sales decreased by 1.2%. The renewable energy sources business was reported as a part of the Environmental Services division until the end of the second quarter of 2022. The focus of the Environmental Services division is heavily on corporate cus- tomers and producer responsibility organisation customers, and their number grew in the beginning of the year and stabilised during the fourth quarter. In the Environmental Services division, the decline in general economic activity was reflected in lower waste volumes and the prices of recycled raw materials throughout the year. The decrease in the prices and volumes of recycled raw materials burdened the net sales of the division and had a negative effect of EUR 4.5 million on the operating profit. The Finnish Waste Act was amended in July 2021. Under the reform, municipali- ties take on a larger role in organising the collection of packaging material waste and biowaste from housing properties. As a consequence of the reform, L&T’s direct customer agreements with residential properties on the separate collec- tion of packaging waste and biowaste are being transferred to municipalities for competitive bidding gradually between 1 July 2022 and 1 July 2025. As a result of municipalisation, EUR 40 million of the Finnish waste management market was moved out of the scope of free competition to municipal waste companies during 2022–2023. L&T estimates that based on decisions made by the end of year 2023, a further EUR 30 million will be moved out of the scope of free competition to municipal waste companies between 2024 and 2026. In the latter half of the year, the collection of packaging waste from residential properties was transferred to municipal waste companies in several geograph- ical areas that are significant to L&T. L&T participates in the competitive ten- dering of municipal contracts. During 2023, the competitive tendering of munic- ipal contracts is estimated to have amounted to EUR 15–20 million and the Group won municipal contracts amounting to EUR 8 million. Nevertheless, the change decreased additional sales and reduced the efficiency of L&T’s waste collection logistics increasing production costs. The change had a total negative impact of approximately EUR 2.5 million on operating profit in 2023. L&T aims to compensate for the impacts of municipalisation by growing the corporate customer business and continuing to improve the efficiency of opera- tions during the next three years. In the division, measures to improve operating efficiency and profitability were initiated during the latter half of the year. The employment relationship of approximately 50 salaried employees are being ter- minated as a result of change negotiations and other jointly agreed measures at the latest by the end of the first quarter of 2024. The division aims to shift its focus increasingly to the materials business in the circular economy value chain. Related assessments were initiated in the latter part of the year. There is a significant systems renewal project under way in Environmental Services, which will also include the deployment of a new ERP system. The sys- tems renewal project increased the division’s fixed costs throughout the year. The supplier of the ERP system was changed in 2022 and, during the period under review, the previous supplier paid a one-off compensation relating to the termination of the co-operation. Expenses capitalised during the co-operation with the previous supplier were written down on the balance sheet during the review period. The one-off compensation and the related costs and write-down did not have a significant effect on the division’s operating profit. The system is scheduled to enter the deployment stage in the second half of 2024. The total investment in the system projects is estimated at approximately EUR 16.9 million, approximately EUR 14.2 million of which was realised by the end of 2023. Industrial Services The Industrial Services division’s full-year net sales in 2023 grew to EUR 141.0 million (132.0). Adjusted operating profit was EUR 14.0 million (13.6). Operating profit was EUR 13.8 million (12.7). Operating profit was reduced by a change of EUR 0.2 million in the fair value of the deferred consideration related to the acqui- sition of Sand & Vattenbläst i Tyringe AB (“SVB”) recognised in the fourth quarter of 2023. The change in the fair value is due to SVB’s improved result which increases the final acquisition price recognised as liability. In the comparison period, the fair value change recognised in the deferred consideration related to the acquisition reduced operating profit by EUR 0.8 million. Demand was strong in all the Industrial Services division’s business lines. The environmental construction business line was highlighted as a focus area in L&T’s renewed strategy in the autumn, and several large customer projects were carried out in the business line during the period under review. The business line MEUR 2023 2022 Change % Net sales Environmental Services 283.7 321.2 -11.7 Industrial Services 141.0 132.0 6.8 Facility Services Finland 250.0 256.3 -2.5 Facility Services Sweden 133.2 140.4 -5.1 Interdivisional net sales -5.8 -6.0 The Group total 802.1 844.1 -5.0 Operating proﬁt Environmental Services 27.1 30.3 -10.6 Industrial Services 13.8 12.7 8.2 Facility Services Finland 4.4 -0.5 Facility Services Sweden -3.7 0.4 Group administration and others -3.2 0.1 The Group total 38.4 42.9 -10.6 Adjusted operating proﬁt Environmental Services 27.1 30.3 -10.6 Industrial Services 14.0 13.6 3.1 Facility Services Finland 4.4 -0.5 Facility Services Sweden -3.7 0.4 Group administration and others -2.8 -2.8 The Group total 39.0 40.9 -4.7 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 8 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT % 2023 2022 Operating margin Environmental Services 9.5 9.4 Industrial Services 9.8 9.6 Facility Services Finland 1.8 -0.2 Facility Services Sweden -2.8 0.3 The Group total 4.8 5.1 Adjusted operating margin Environmental Services 9.5 9.4 Industrial Services 9.9 10.3 Facility Services Finland 1.8 -0.2 Facility Services Sweden -2.8 0.3 The Group total 4.9 4.8 MEUR 2023 2022 Gross capital expenditure Environmental Services 40.9 20.3 Industrial Services 17.5 34.6 Facility Services Finland 1.0 1.5 Facility Services Sweden 0.5 0.4 Group administration and others 1.2 1.3 The Group total 61.1 58.2 MEUR 2023 2022 Capital employed Environmental Services 208.9 197.3 Industrial Services 92.2 95.2 Facility Services Finland 21.7 28.3 Facility Services Sweden 59.9 62.1 Group administration and others 43.2 54.4 The Group total 425.9 437.2 % 2023 2022 Return on capital employed (ROCE) Environmental Services 13.5 14.4 Industrial Services 14.7 15.6 Facility Services Finland 19.4 -0.8 Facility Services Sweden -5.9 0.8 The Group total 10.3 10.4 has a strong position particularly in the market for demanding industrial soil remediation projects. The customer volume increased in hazardous waste ser- vices. In process cleaning in Finland, the demand related to annual maintenance breaks was strong, and the resource allocation was successful. Business oper- ations in Sweden developed favorably despite the challenging market environ- ment. Facility Services Finland The full-year net sales of the Environmental Services division decreased to EUR 250.0 million (256.3) in 2023. Operating profit improved to EUR 4.4 million (-0.5). In Facility Services Finland, the measures initiated in the second half of 2022 to streamline the cost structure and improve operational efficiency continued in the division throughout the period under review. In the division, the efficiency of production improved and personnel turnover decreased in cleaning services. Good progress was achieved in digitalisation with the number of sites within the scope of data-driven cleaning increasing in 2023. In building technology services, the demand for energy efficiency services increased during the period under review. The rising costs caused by high infla- tion were, for the most part, passed on to customer prices. Facility Services Sweden The net sales of Facility Services Sweden amounted to EUR 133.2 million (140.4) in 2023. The decrease in net sales was due to the depreciation of the Swedish krona. Net sales denominated in Swedish krona increased. Operating profit declined to EUR -3.7 million (0.4). Operating profit before the amortisation of pur- chase price allocations of acquisitions was EUR -2.5 million (2.2). Customer agreements in the Swedish business are mostly fixed-price con- tracts, and the division has not been able to pass the increased production costs on to customer prices. In the fourth quarter, the uncertainty in the busi- ness environment was reflected in customer demand, and fewer new projects were started than in the comparison period. The division has a programme under way to simplify operating models and adapt them to the changed business envi- ronment. The results are expected to become visible by the end of 2024. Financing and capital expenditure In 2023, net cash flow from operating activities amounted to EUR 93.6 million (71.8). Net cash flow after investments came to EUR 50.9 million (41.1). In the comparison period, net cash flow after investments was reduced by acquisi- tions, which had a total impact of approximately EUR 13 million. A total of EUR 5.1 million in working capital was released (EUR 6.2 million committed). At the end of the financial year, interest-bearing liabilities amounted to EUR 193.7 million (216.8). Net interest-bearing liabilities totalled EUR 160.9 million (167.3). The average interest rate on long-term loans, excluding lease liabilities, with interest rate hedging, was 4.0% (2.5%). In the second quarter, the com- pany refinanced a EUR 50 million bank loan that would have matured in the third quarter of 2024. The new bank loan is in the amount of EUR 40 million and will mature in the third quarter of 2026. In addition to the usual financial covenants, the new bank loan is linked to sustainability targets, namely L&T’s carbon foot- print and accident frequency. The interest rate swap used by the company to convert part of the EUR 50 million bank loan into a fixed interest loan was ter- minated in connection with the refinancing of the bank loan. The fair value of the interest rate swap, EUR 1.3 million, was recognised in financial income in the second quarter. The company had no interest rate swaps at the end of the finan- cial year. In the third quarter, the company repaid the remaining amount of EUR 17.7 million of the bond issued in 2018. The EUR 100.0 million commercial paper programme was unused at the end of the financial year, as was the case in the comparison period. The account limit totalling EUR 10.0 million and the committed credit limit totalling EUR 40.0 million were not in use, as was the case in the comparison period. Net financial expenses amounted to EUR -6.3 million (-5.8). Net financial expenses were increased by the rise in the general interest rate level, which was compensated by the fair value of EUR 1.3 million of an interest rate swap being recognised due to the termination of the interest rate swap. The effect of exchange rate changes on net financial expenses was EUR -0.0 million (-0.2). Net financial expenses were 0.8% (0.7%) of net sales. The equity ratio was 36.8% (34.3%) and the gearing ratio was 69.3% (75.9%). The Group’s total equity was EUR 232.2 million (220.4). Cash and cash equiva- lents amounted to EUR 32.9 million (49.5) at the end of the financial year. Gross capital expenditure for 2023 came to EUR 61.1 million (58.2). The capital expenditure consisted primarily of machine and equipment purchases, as well as investments in information systems. Acquisitions accounted for approxi- mately EUR 21 million of the gross capital expenditure in the comparison period. Loans, liabilities and contingent liabilities to related parties Related-party transactions are accounted for in Note 5.4 Related-party transac- tions. Outlook Net sales in 2024 are estimated to be at the same level as in the previous year, and operating profit is estimated to be at the same level or better compared to the previous year. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 9 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Sustainability is an integral aspect of L&T’s strategy, decision-making and day-to-day business. Through sustainable circular economy solutions, L&T strengthens its competitiveness and creates diverse value for its key stake- holders. For L&T, sustainability means supporting customers’ sustainability efforts, reducing the environmental impacts of the Group’s own operations, promoting employee well-being and diversity, and ensuring the sustainability of L&T’s value chain. L&T’s business model, value creation and strategy are described in more detail on pages 3–4. Commitment to national and international objectives L&T is committed to supporting key declarations and agreements, such as: • UN sustainable development principles since 2018 • Global Compact principles since 2018 • ILO Declaration on Fundamental Principles and Rights at Work • Universal Declaration of Human Rights • Commitments to sustainable development by societies We have also set scientific climate targets approved by the Science Based Tar- gets initiative and made a commitment to reducing the emissions generated by our own operations by 2030 in line with the target. We also encourage our part- ners to set their own emission reduction targets. L&T updated its environmental sustainability target in October 2023. The target is to halve the emissions of our own operations by 2030 from the level of 2018 and to reduce indirect (Scope 3) emissions by 18% by 2030 from the level of 2022. The company has set a target of net-zero emissions by 2045. We are also committed to reporting on the climate impacts of our operations in accordance with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. Our report in accordance with the TCFD recommenda- tions is provided on page 14 under “Risks and opportunities of climate change”. Managing sustainability At L&T, sustainability is integrated into the Group’s strategy. The Board of Direc- tors monitors the progress of the Sustainability Programme annually through the Personnel and Sustainability Committee of the Board of Directors. The Com- mittee discusses sustainability issues at least three times per year. The Per- sonnel and Sustainability Committee met four times in 2023. In autumn 2023, the Board of Directors updated the charters of the Board’s committees with regard to sustainability issues. In 2024, the monitoring and evaluation of the development of sustainability in the Group and the results of the Group’s ESG assessments and analyses are new items on the charter of the Audit Committee. The Personnel and Sustainability Committee focuses on mon- itoring and evaluating the development of the business environment and reg- ulation, as well as stakeholder support. The committee monitors and evaluates sustainability-related target setting in the short and long term and discusses and prepares environmental, personnel-related and governance-related issues in the sustainability programme. The Group Executive Board steers the implementation of the Sustainability Programme and monitors it quarterly. Development primarily takes place in busi- ness-driven working groups, but the Senior Vice President of Corporate Rela- tions and Sustainability and the communications and sustainability organisation operating under his supervision are in charge of the practical coordination and reporting of sustainability efforts. The businesses and other functions are in charge of the responsibility and compliance of their operations in accordance with the Group’s management system. L&T’s management system has been certified in accordance with the ISO 9001, ISO 14001 and ISO 45001 standards. L&T’s policies and principles cover the environmental, ethical and social perspectives that the Group observes in both its own operations as well as in the services it produces for customers. The poli- cies and principles are available to stakeholders on L&T’s website. L&T takes an uncompromising approach to ensuring the compliance and sus- tainability of its operations. L&T observes its obligations regarding the environ- ment and as an employer, and minimises the negative environmental impacts of its operations. L&T requires that its suppliers operate in accordance with the laws, regulations and its sustainability principles. Sustainability Programme The development of L&T’s sustainability is driven by the Group’s sustainability programme. Approved by the Board of Directors, the programme takes into account the material aspects of L&T’s sustainability and sets measurable tar- gets to be monitored. The focus areas of the programme have been determined based on the impacts of L&T’s operations, the expectations of key stakeholders and the Group’s strategic priorities. L&T has also taken into account the special characteristics of the operations and business environment of a service company in the environmental sector as well as the UN’s Sustainable Development Goals and the objectives of the Global Compact initiative. The key sustainability targets laid out in the sustainability programme, meaning the Group’s climate impacts, customer satisfaction and employee rec- ommendation rate, have been incorporated into L&T’s long-term strategic goals. Operating principles concerning sustainability In its decision-making and administration, Lassila & Tikanoja complies with the Finnish Companies Act, other regulations governing listed companies, the Articles of Association of Lassila & Tikanoja plc, the charter of L&T’s Board of Directors and its committees, and the rules and guidelines of Nasdaq Helsinki Ltd. L&T’s operations are also guided by the policies and operating principles approved by the Board of Directors or the Group Executive Board. Sustainable development and statement of non-financial information Managing sustainability at L&T Board of Directors Confirms and approves the sustainability programme and long-term objectives President and CEO + Group Executive Board Manages the development of the sustainability of business operations, sets targets and monitors Group functions Develop, coordinate and steer the Group’s approach to sustainability and support its practical implementation. Personnel and Sustainability Committee monitors and evaluates the development of sustainability with respect to the sustainability programme. Business operations implement the sustainability programme and monitor its implementation with the support of the Group functions. Everyone at L&T is responsible for ensuring that they work in line with our sustainability commitments at all times. Audit Committee monitors the effectiveness of risk management systems and ensures compliance. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 10 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT To ensure compliance in its operations, L&T has documented its ethical princi- ples in its Code of Conduct for the company’s personnel and contract suppliers. People managers and supervisors are responsible for ensuring the personnel’s familiarity with the Code of Conduct and monitoring compliance with the guide- lines. Violations of the Code of Conduct are primarily reported to one’s immediate supervisor, who assists in the interpretation of the code in ambiguous situations. Employees, suppliers and subcontractors can also send a message to a con- fidential whistleblowing channel. The channel is available in all of the Group’s operating countries. L&T responds to all incidents of non-compliance without delay, in accordance with a jointly agreed process. Managing sustainability-related risks is part of L&T’s comprehensive risk man- agement. The risk management process is described in the Corporate Govern- ance Statement on pages 97–103, and the key risks are explained under “Risks and risk management” on pages 15–17. Sustainability reporting L&T reports on its sustainability efforts and related progress quarterly in con- nection with interim reports and more extensively on an annual basis in the sus- tainability report published as part of the Annual Report. The sustainability report for 2023 has been drawn up in accordance with GRI (Global Reporting Initiative) standards. The key performance indicators for environmental responsibility and respon- sibility for personnel that are reported in the sustainability report are verified by a third party. L&T’s sustainability report starts on page 81 and is also available at vuosikertomus.lt.fi/en. Activities in organisations The focus of L&T’s public affairs activities is on ensuring the operating condi- tions of the circular economy. L&T is a member of nearly a hundred local, regional, national and EU-level interest organisations. More information on the organisa- tions, programmes, projects and networks L&T participates in is provided on our website at https://www.lt.fi/en/responsibility/managing-sustainability/activi- ties-in-organisations. Materiality guides our sustainability efforts and stakeholder relations A materiality analysis determines the focus areas of L&T’s sustainability pro- gramme and sustainability efforts and guides the Group’s work and actions related to sustainability. The assessment of materiality is an ongoing process. The material aspects of L&T’s sustainability are based on the key impacts of the Group’s operations and the expectations of stakeholders. In 2022 and 2023, L&T assessed its key stakeholders’ – including employees, customers and communities – expectations and views concerning the Group’s sustainability efforts. GOOD GOVERNANCE We act responsibly and transparently throughout the value chain. TOGETHER TOWARDS FULL CIRCULARITY Together with our customers, we work to mitigate climate change and the loss of biodiversity. Our job is to keep the materials in circulation for as long as possible and to introduce solutions for the sustainable use of the built environment. EMPLOYED BY TOMORROW At L&T, everyone is free to be themselves. We treat each other and our suppliers fairly. We want our employees to enjoy good health and well-being, which is why we invest in well-being at work and occupational safety. WE MAKE CIRCULAR ECONOMY A REALITY CUSTOMERS OWN OPERATIONS SUPPLY CHAIN KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 11 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Stakeholder Key areas of interest in 2023 Responding to expectations Interaction Customers Customer service and satisfaction, operating quality, the circular economy, recycling, soil remediation, and sustainabil- ity. We developed new sustainability services in collaboration with our customers. We developed the eﬀectiveness of our digital service channels. We took business-spe- ciﬁc measures to improve services and the customer experience. A customer survey (NPS) to measure how likely our corporate customers are to recommend us, as well as several cus- tomer-speciﬁc surveys. Customer service (telephone, digital service channels) and dialogue with key account managers and sales. Marketing communications, webcasts and events. Personnel The employees’ physical and mental well-being, workload, training and competence development, as well as job satisfaction and the employee experience. L&T provided diverse physical and mental well-being services to employees along with learning-on-the-job opportunities, career paths and training. We revised and expanded our training oﬀering and took business-speciﬁc measures to improve the employee experience. Feedback and development discussions, Fiilinki personnel surveys, co-operation and European Works Council activities, workshops, digital events and other events as well as internal communication channels such as the intranet and Teams. Potential employees Employer brand and the employee experience. We made extensive use of digital avenues to reach potential job applicants and share information working at L&T. We also partic- ipated in various career and recruitment events. Co-operation with educational institutions, recruitment and career events, develop- ment of the employer brand and sharing information through social media channels. Investors and shareholders Financial performance and strategy execution, sustainability and ESG ratings, customer satisfaction and employee satisfaction. We participated in several ESG surveys and expanded our sustainability reporting. We engaged in active dialogue with investors on ESG issues. We organised a Capital Mar- kets Day. At the event, we discussed sus- tainability from various perspectives. Stock exchange releases, ﬁnancial reviews, annual reporting, Group website, webcasts, regular investor meetings, Capital Markets Day and the Annual General Meeting. Decision-makers and influ- encers (including national and regional decision-makers), industry organisations and employer organisations Circular economy and climate change mitigation, employment We participated in the activities of industry and labour market organisations. We promoted initiatives aimed at promoting the green transi- tion and developing the labour market. In Finland, we took new initiatives to accelerate the circular economy, develop job opportunities for people with reduced work ability and pro- mote employment-based immigration. Participation in associations, dialogue with the public authorities and decision-makers, co-operation projects, other projects, responding to surveys, Group website and annual reporting. Media and non-governmental organisations Practical steps related to the circular economy, actions to promote biodiversity. We published numerous press releases and participated in several interviews. We engaged in dialogue and surveyed expecta- tions in connection with updating the sus- tainability programme. Press releases, interviews, publications, media events, Group website and social media channels. Suppliers and subcontractors The circular economy, quality, sustainability in the supply chain. We engaged in dialogue, conducted audits and self-assessments. Dialogue, responding to surveys, audits and self-assessments. During the process, L&T identified the key sustainability aspects of its opera- tions and then focused the actual stakeholder dialogue on those topics. Meg- atrends, a number of sustainability frameworks, regulatory changes and L&T’s strategy were taken into account. L&T assessed sustainability-related expectations by means of an extensive online survey. We also interviewed key stakeholder representatives and special- ists from our business areas to obtain in-depth information on expectations and development areas concerning L&T’s sustainability efforts. Based on the results of the assessment process, we identified our nine most important sustainability topics. We will continue to work to reduce emissions in our own operations and promote the circular economy of our customers. We will also promote the diversity of our personnel and focus on occupational well- being and occupational safety. In the future, we will deepen our sustainability work in the supply chain to mit- igate climate change and enhance human rights. We also identified the promo- tion of biodiversity, including the responsibility of water use, as a new key theme. The results of the materiality analysis have been assessed in relation to the long-term targets and performance indicators of the sustainability programme, taking into account our mission: “We make the circular economy a reality”. The results of the materiality assessment and the targets and performance indica- tors of the sustainability programme have been discussed by the Group Exec- utive Board and the Personnel and Sustainability Committee of the Board of Directors. In 2023, L&T carried out a double materiality assessment, which was com- pleted in the latter part of the year. The assessment will guide L&T’s sustaina- bility efforts and reporting from the beginning of 2024 onwards. Stakeholder expectations L&T’s stakeholder engagement is focused on the stakeholders who are the most affected by the impacts of our operations and whose actions have the greatest influence on the achievement of our business objectives and sustainability tar- gets. Stakeholder expectations are taken into account in L&T’s strategy develop- ment and business choices. Our key stakeholders include our customers, current and potential employees, and investors, as well as national and regional policymakers and influencers, non-governmental organisations, the media and suppliers and subcontractors. We engage in active dialogue with our key stakeholders. We regularly measure stakeholder support, as well as customer satisfaction and employee satisfac- tion, for example. Through dialogue and measurements, we identify stakeholder expectations and determine what development measures are necessary. We have summarised our stakeholder expectations in three key perspectives. • A leader in sustainability: As a leader in its field, L&T is expected to develop the entire industry in the right direction for society and to conduct itself correctly and sustainably in environmental matters. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 12 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT • A good employer: As a large employer and service company, we are expected to be a responsible employer that looks after the well-being of its personnel and treats them responsibly and fairly while exercising special care with regard to the employment of people who are in vulnerable posi- tions. • A useful partner: L&T is expected to be a useful partner to its customers, developing new services and supporting the customers in their work towards their goals as well as keeping its promises. Environmental responsibility L&T’s environmental responsibility is realised particularly through the services it produces for customers. The primary goal is always to direct materials collected from customers towards reuse or recycling, guided by the order of priority as stipulated by law and the circular economy approach. L&T requires the sustainable management of environmental issues of its part- ners and suppliers. This requirement is factored into the procurement process, for example in the form of self-assessments. Waste is only handed over to oper- ators that are authorised to receive or process it. Acquisitions are subject to detailed due diligence processes. L&T’s goal is to improve its customers’ energy and material efficiency and to increase the carbon handprint of its operations. This is achieved when cus- tomers replace primary raw materials with secondary raw materials as well as fossil fuels with solid recovered fuels (SRF). As the carbon handprint of L&T’s operations increases, the carbon footprint of its customers decreases. L&T thereby supports its customers in reaching their environmental goals. In 2023, the focus of L&T’s environmental efforts was on the climate impacts of the supply chain and preparations for the EU’s Corporate Sustainability Reporting Directive. Good progress was made towards the Group’s climate targets for its own operations in spite of the challenging business environment. During the year, investments were made in low-emission vehicles, and route optimisation and driving style training were continued. The use of renewable fuels was signifi- cantly increased. Transport operations account for 97 per cent of the emissions generated by L&T’s own operations. Professional waste treatment operations are subject to environmental per- mits and regulatory compliance. In 2023, L&T had 54 (53) environmental permits that determined how the Group managed and monitored environmental matters. Facilities subject to environmental permits have contingency plans and rescue plans that specify how they are prepared for significant environmental incidents. Environmental issues are also covered in regularly conducted internal audits. L&T’s objective is that no serious incidents of environmental damage result from the Group’s own operations. This target was achieved in 2023. To reduce the environmental impact of the materials collected from cus- tomers and to promote the circular economy, L&T strives to find new solutions to recover materials at the highest possible refining rate and in accordance with the order of priority in waste management. L&T updated the climate targets for the supply chain and set separate emis- sion reduction targets for subcontracted transport operations in spring 2022. The Group continued to communicate these targets to the supply chain in 2023. The target is to reduce the transport emissions of subcontracted operations by 30 per cent by 2030, using 2020 as the baseline. At the same time, L&T con- tinued to engage the supply chain in the pursuit of the science-based emission reduction target. The target is for 70 per cent of the largest suppliers and subcontractors (based on spending) to set targets for reducing their emissions by 2025. TCFD reporting is provided on page 14. Environmental risks and their manage- ment are described in more detail under “Risks and risk management”. More information on L&T’s environmental responsibility is provided in the sustaina- bility report on page 81. Personnel and other social responsibility issues Full-time and part-time, total 2023 2022 Finland 6,891 7,020 Sweden 1,268 1,351 Total 8,159 8,371 As a major employer and service enterprise, the focus of L&T’s social responsi- bility is on the Group’s employees. The material aspects of L&T’s responsibility for its employees include increasing job satisfaction, strengthening the work ability of the personnel, developing diversity and improving occupational safety. The Group also wants to actively work to promote the employment of special Non-financial performance indicators Indicator Target 2023 2022 Environmental matters Carbon footprint (SBT) Scope 1 & 2 (gCO 2 -ekv/km) -50% by 2030, using 2018 as the base- line -36% -26% Carbon handprint intensity (tCO 2 -ekv/MEUR) Grows faster than net sales -570 -633 Recycling rate (reporting covers municipal waste collected from corporate customers, hazardous waste, industrial waste and construction waste in Finland.) 60% by 2026 57.8% 59.4% Social Employee Net Promoter Score, eNPS >50 by 2026 21 (October) 24 (October) responsibility Sickness-related absences, % 4.5% by 2026 5.1 5.6 Total recordable incident frequency (TRIF) 20 by 2026 23 23 Governance Code of Conduct training for L&T employees All new L&T employees complete Code of Conduct training during their trial period 94% of salaried employees (Fin- land), 616 per- sons (Sweden) 58% of salaried employees (Fin- landi), 675 per- sons (Sweden) groups, such as people with reduced work ability. L&T does not tolerate any kind of discrimination, harassment, bullying, racism or inappropriate treatment or the use of child labour, any form of forced labour or any other practices in violation of basic human rights in its own operations or as part of its supply chain. L&T observes the Universal Declaration of Human Rights, workers’ rights as defined by the International Labour Organisation, and international agreements. National legislation, agreements and other obligations are applied in employ- ment relationships. L&T respects its employees’ freedom to unionise. L&T mon- itors compliance with collective agreements, environmental legislation, labour law, occupational safety legislation and regulations pertaining to financial management. L&T is also compliant with the applicable legislation governing contractors’ obligations and liability, and requires the same of its suppliers. The operations are guided by the Group’s personnel policy, the ISO 45001-certified management system, the principles governing occupational safety manage- ment and the Code of Conduct. L&T’s strategic objective is to increase the Employee Net Promoter Score (eNPS) to 50 by 2026. Employee satisfaction is measured by means of a per- sonnel satisfaction survey which goes by the name Fiilinki in Finland and Pulsen in Sweden. As part of work ability management, L&T’s targets are to reduce sickness-re- lated absences to 4.5 per cent and achieve an employee health rate of 45 per cent. To achieve the target set for sickness-related absences, L&T will continue the purposeful implementation of the action plan for promoting health. In occupational safety, L&T pursues continuous improvement with an ultimate goal of zero accidents. L&T will continue its purposeful development efforts to KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 13 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT engage employees in the promotion of safety. There were no reported fatal acci- dents and no occupational disease diagnoses at L&T in 2023. Anti-corruption, anti-bribery and human rights L&T aims to ensure that no violations occur in its activities, and the Group emphasises the importance of regulatory compliance in its business operations. L&T is committed to supporting the UN Global Compact initiative and its anti-cor- ruption principles. The prevention of corruption and bribery is based on national legislation and agreements. Internally, operations are guided by L&T’s Code of Conduct, which include anti- bribery and corruption guidelines related to, among other things, accepting and offering gifts and hospitality, as well as the avoidance of conflicts of interest. L&T’s goal is for all employees to complete Code of Conduct training within their trial period. An online course has been created to support the effective implementation of the Code of Conduct for employees. All salaried employees complete the course at two-year intervals, and new employees complete the course during their trial period. The online course is available in Finnish, Swedish and English. The Swedish-language online course is aimed at the Swedish market, and it has been adapted where necessary to correspond to Swedish legislation and issues relevant to our business operations in Sweden. A separate version of the Code of Conduct course has been created for field employees, and was updated in 2023 to better suit mobile devices. Completion of the Code of Conduct course is monitored particularly in pro- curement, sales and business leaders, as having a good grasp of ethical busi- ness principles is considered particularly important for those roles. L&T regularly assesses the risks related to its operations, including risks related to corruption. Bribery and corruption-related risks are assessed on a pro- cess-specific basis, and the risk assessments cover most of our business lines. The assessment of risks of Code of Conduct violations places special emphasis on provisions whose violation may lead to significant negative consequences, such as human rights violations and serious financial and reputational risks. The notification form concerning secondary occupations and activities has been updated and the related internal processing procedures have been devel- oped. Our aim is to identify employee-related conflicts of interest as early as possible. Employees must report violations of the Code of Conduct primarily to their immediate supervisor, who assists in the interpretation of the Code of Con- duct in ambiguous situations. L&T employees are aware of L&T’s anti-corruption guidelines, and they occasionally request more detailed information from the Legal Affairs department regarding the receiving of gifts, for example. L&T’s personnel and other stakeholders can also report suspected violations of the Code of Conduct and other rules and regulations, as well as suspected incidents of discrimination, via the Group’s independent whistleblowing channel. The reports can be submitted via the intranet or website at any time. The whistleblowing channel can be used to report incidents in various categories, including corruption, bribery, competition law, data protection, environmental issues, human rights, and conflicts of interest. Reports received via the whistleblowing channel are handled confidentially by a separately designated individual in the Legal Affairs department. The reports are also discussed with L&T’s President and CEO and reported to the Audit Com- mittee of the Board of Directors. The internal audit function supports the man- agement in the development and monitoring of risk management, internal con- trol and corporate governance. Purchases made by L&T’s personnel are guided by a procurement policy. Man- dates and the limits for decision-making in terms of procurement are defined in L&T’s guidelines on authorisation on the basis of position. In the case of potential conflicts of interests in procurement processes, the persons concerned are disqualified from the decision-making. Supplier co-oper- ation must not involve any bribery or the kind of hospitality or exchange of gifts that could influence procurement decisions. L&T’s procurement processes are transparent, and procurement decisions are based on competitive supply contracts. L&T’s Code of Conduct for employees is complemented by the Supplier Code of Conduct, which is available in Finnish, Swedish and English. The Supplier Code of Conduct sets out requirements for suppliers. Among other topics, it covers legal compliance, ethical conduct, zero tolerance for bribery and corruption, and requirements concerning work and human rights, health and safety, and the environment. If a supplier violates the Supplier Code of Conduct, L&T may terminate its agreement with that supplier. L&T requires its suppliers to adhere to the Supplier Code of Conduct in all of their operations with L&T, their own employees and sub- contractors, and third parties. New contract suppliers are required to sign the Supplier Code of Conduct. Service providers operating in Finland must be regis- tered with the Vastuu Group service. Compliance with the Supplier Code of Conduct is monitored by means of a separate self-assessment survey. We revised the self-assessment model in 2023 and piloted it among our significant suppliers (over 100 suppliers in Finland and 200 in Sweden). In L&T’s self-assessment model, the supplier assesses its performance in terms of corporate ethics, occupational safety, the environment, quality and supply chain sustainability practices, taking into account not only policies and principles but also measures to promote progress in these areas. The self-assessment survey also covers zero-tolerance issues pertaining to the use of child labour and forced labour and commitment to the principles laid out in L&T’s Code Of Conduct. Any deviations concerning the zero tolerance ques- tions always require further action in co-operation with the supplier in question. The self-assessment survey was completed by 76% of all suppliers in Finland and 27% of all suppliers in Sweden. No violations were identified on the basis of the survey. A discussion to obtain more detailed information was held with one supplier. L&T mainly operates with local partners in Finland and Sweden, which improves visibility with respect to its partners’ sustainability. L&T’s purchases in 2023 were focused on domestic companies. In both Finland and Sweden, 96 per cent of purchases were made from companies operating in the country in ques- tion. Operations with significant suppliers are managed through regular supplier co-operation and monitored according to separately agreed performance indi- cators. We ensure the sustainability of our suppliers’ operating methods through self-assessment surveys, supplier audits, analyses of suppliers’ financial circum- stances and other appropriate means. Our primary assurance measures are targeted at our most significant sup- pliers. L&T’s whistleblowing channel is available on the Group website. The rep- resentatives of suppliers and subcontractors can use it to submit reports either anonymously or under their own name. L&T adheres to a separately defined permit procedure to ensure that all cus- tomer events are appropriate and that all sponsorships and supporting mar- keting operations are transparent. In 2023, a total of 9 (2022: 9) reports were received via the whistleblowing channel. Of the reports, 78% concerned HR matters, 11% suppliers operating models and 11% traffic behavior. The reports required further investigation but did not lead to corrective action. Nevertheless, L&T’s operating models were fur- ther specified as a result. The reports received via the whistleblowing channel did not include observa- tions or suspicions of violations against anti-bribery or anti-corruption guide- lines at L&T. There were no reported incidents of bribery or corruption at L&T in 2023. The reports received via the whistleblowing channel have been discussed with L&T’s President and CEO and reported to the Audit Committee of the Board of Directors. Risks related to human rights have been assessed at L&T as part of the risk management process that is described in more detail on page 14. L&T mainly operates in Finland and Sweden with local partners. These countries are signa- tories to the ILO conventions on human rights, including child labour and forced labour, and the conventions have been transposed into national law. No signifi- cant risks related to human rights have been identified in the L&T’s operations. The Group does not tolerate any kind of discrimination, harassment, bullying, racism or inappropriate treatment, or the use of child labour, any form of forced labour, trafficking in human beings or any other practices in violation with basic human rights, in its own operations or as part of its supply chain. Human rights are included in the Code of Conduct and the Supplier Code of Conduct attachment to agreements, which must be observed by all subcontrac- tors and suppliers. Furthermore, human rights are assessed as a part of supplier self-assessment. We prevent the use of child labour by means of our centralised HR processes and reporting. Forced labour is prevented by, for example, our centralised pay- roll system, which ensures that we pay all employees in accordance with the collective labour agreements applicable to us. The salary is always paid to the employee’s personal bank account. There were no confirmed grievances related to human rights at L&T in 2023. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 14 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT L&T has a defined risk management process that includes a review of finan- cial, strategic, operational and damage-related risks. L&T has also assessed cli- mate-related risks and opportunities as part of the risk management system in accordance with TCFD reporting. Key risk management principles Risk management at L&T aims to identify significant risk factors, prepare for them and manage them in an optimal way so that the Group’s strategic and financial objectives are achieved. Comprehensive risk management endeavours to manage the Group’s risk as a whole, not just individual risk factors. The risk management process also aims to assess the opportunities associated with risks. Responsibilities The principles of L&T’s risk management are approved by the company’s Board of Directors. The Board monitors the implementation of risk management and assesses the efficiency of the methods employed. The President and CEO is responsible for the organisation and implementation of risk management. Risk management at L&T Group is controlled by the risk management and insurance policy confirmed by L&T’s Board of Directors. The policy specifies the objec- tives and principles, organisation and responsibilities, and procedures of the Group’s risk management. The Group’s financing policy confirmed by L&T’s Board of Directors is followed in the management of financial risks. The principles for insurance risk management are specified in the Risk Management and Insur- ance Policy. Identification, assessment and reporting of risks Risks are surveyed regularly and systematically at both division and company level and in central functions considered to be critical. The significance of risks is assessed using a risk matrix. Measures for managing and minimising the iden- tified risks are prepared, and responsibility for these measures is allocated to specified individuals or units. The impact of risks is analysed in terms of their effects on EBIT, among other things, and the assessment of the probability of the realisation of the risks takes into account the nature of operations and the risk mitigation measures taken by the Group. The most significant identified risks, and the preparations for those risks, are regularly reported to the President and CEO and the Board of Directors. Risk analysis The section Strategic and operative risks describes the most important stra- tegic, operational and damage-related risks of L&T’s business which, if realised, can endanger or prevent the achievement of business objectives. Financial risks and their management are described in note 4.2 to the consolidated financial statements. Report of the risks and opportunities of climate change in accordance with TCFD L&T reports on the risks and opportunities related to climate change in accord- ance with the TCFD (Task Force for Climate-related Financial Disclosures) rec- ommendations. Due to the nature of our operations, L&T plays a significant role in the mitigation of climate change and the transition towards a low-carbon cir- cular economy. Our operations have a large carbon handprint, which means that we generate significant emission reductions for our customers. TCFD reporting has been taken into account in our review in accordance with the table provided on this page. Risks and risk management TCFD information Report contents Governance Board of Directors’s duties related to managing risks and opportuni- ties related to climate change Risks and risk management, pp. 14–15 Scenario analysis is part of the strategy process, p. 15 The management’s duties related to managing risks and opportuni- ties related to climate change Sustainability management, p. 9 Risks and risk management, pp. 14–15 Strategy Climate-related risks and opportunities in the short, medium and long term Climate-related risks and opportunities, pp. 14–15 The impacts of climate-related risks and opportunities on business operations, strategy and financial planning Strategy, p. 4 Climate-related risks and opportunities, pp. 14-15 The flexibility of the strategy with regard to different climate scenarios Scenario analysis is part of the strategy process, p. 15 Risk management Processes for the identification and assessment of climate-related risks Scenario analysis is part of the strategy process, p. 15 Climate risk management methods Scenario analysis is part of the strategy process, p. 15 How are the identification, assessment and management of cli- mate-related risks connected to the organisation’s other risk man- agement activities Climate-related risks and opportunities, pp. 14–15 Indicators and targets Indicators used to assess climate risks and opportunities Statement of non-financial information, p. 9 onwards Sustainability report, pp. 81–86 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 15 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Climate-related risks and opportunities The mitigation of climate change is a strategic priority for L&T. Our businesses produce solutions that facilitate the transition towards a low-carbon cir- cular economy, promote the sustainable use of materials, energy and natural resources as well as reduce the volume of waste generated and energy con- sumed. We support our customers by enhancing the use of energy and materials and by replacing fossil fuels with solid recovered fuels. Furthermore, we support our customers in the mitigation of climate impacts by optimising the use of prop- erties and their technical systems. L&T has the strong market position required for the implementation of such changes in all of its business areas. In assessing climate-related risks, L&T has evaluated its transition risks (regulatory, technolo- gy-related and reputational risks) and physical risks, as well as their impacts on the Group’s operations. The most significant transition risks concern changes that affect carbon neutrality targets for transport or the promotion of the cir- cular economy. The assessment takes into account, for example, the development of prices for emission rights and carbon emissions, different scenarios of the integration of bioeconomy and low-carbon economy, the EU’s circular economy package, changes in national waste legislation, national recycling and reuse goals by industrial sector and waste fraction as well as the planned investments in the energy sector. The impacts of changes in weather on occupational safety, for example, have been assessed in general as part of physical risks. L&T’s mission is to make the circular economy a reality. Transitioning to a resource-efficient circular economy is essential for the mitigation of global warming. We support this transition by improving the material, energy and cost effi- ciency of our customers and by ensuring that materials and the built environ- ment retain their value. Our solutions enable our customers to reduce their waste volumes, extend the life-cycle of their properties, recycle and reuse materials, reduce the consump- tion of natural resources, fossil fuels and energy and thereby reduce their emis- sions. We research new technologies and solutions that allow our customers to reduce their climate impacts even more efficiently. New projects that increase the processing rate of various material flows promote the circular economy and improve the carbon handprint of L&T’s operations. Scenario analysis is part of the strategy process The monitoring of the outcomes of climate change related to our business oper- ations is integrated in L&T’s strategy process. We have assessed the impacts of climate change on L&T’s business operations both during the five-year strategy period and in the long term until 2035. The assessment method is based on the qualitative evaluation of uncertainties in our business environments and the creation of qualitative scenarios about our business environment based on the changes with the highest degree of uncertainty and the financial impact. In addition, we have applied the IPCC scenarios of climate warming of 1.5°C, less than 2°C and 4°C by the end of the century (RCP 2.6 and RCP 6.0), which have been assessed in relation to the latest climate research data on changes in weather in Finland. We have also applied the International Energy Agency’s (IEA) background data (IEA 2DS, NZE2050 and STEPS). L&T is able to change its business model flexibly according to the different climate scenarios. The reference scenario was a business environment where the status quo supports the 1.5°C climate path in the short term. In connection with our strategy review, we increased the ambition of L&T’s climate targets in autumn 2023. Our long-term climate target is net zero emissions by 2045. The business effects of climate change were assessed in the different sce- narios through aspects of change in the industry related to regulation, the busi- ness model and technological development. The assessment indicated that L&T’s updated climate targets, the actions aimed at achieving the targets and the separate climate targets set for the supply chain are in line with the observations made in the scenario analysis. L&T manages transition risks by assessing market changes and responding to them in a timely manner. In addition, we take a proactive approach to influencing regulatory developments in their preparatory stages through the industry’s key advocacy organisations, for example. The alternative strategic scenarios were presented to the Board of Directors as a part of the strategy process. The mitigation of climate change provides L&T’s business operations with strategic development opportunities. Near-term risks and uncertainties General economic uncertainty may affect the level of economic activity among customers, which may reduce the demand for L&T’s services. Higher costs, such as the rising prices of fuel and energy, and potential changes in interest rates may have an impact on the company’s financial perfor- mance. The Finnish Waste Act was amended in July 2021. Under the reforms to the Waste Act, municipalities take on a larger role in organising the collection of packaging waste materials and biowaste from residential properties. As a con- sequence of the reform, L&T’s direct customer agreements with residential properties on the separate collection of packaging waste and biowaste will be transferred to municipalities for competitive bidding gradually between 1 July 2022 and 1 July 2025. As a result of municipalisation, approximately EUR 30 mil- lion of the Finnish waste management market will be moved out of the scope of free competition and to municipally owned companies between the years 2024- 2026. The Environmental Services division participates in competitive tendering for municipal contracts and is a significant player in municipal contracts, but the Group estimates that the overall impact of the change will be negative. The company has several ERP system renewal projects under way. Temporary additional costs arising from system deployments and establishing the oper- ating model may weigh down the company’s result. Production costs may be increased by challenges related to employee turn- over and labour availability. The geopolitical situation involves continued uncertainty due to Russia’s war of aggression. The indirect impacts on overall economic activity in Finland and Sweden may have a negative impact on net sales and profit. The Group company Lassila & Tikanoja FM AB is a claimant and a defendant in legal proceedings in Sweden concerning unpaid receivables invoiced from a former customer of the Group. In June 2022, Lassila & Tikanoja FM AB took legal action in the District Court of Solna against the former customer company of L&T, demanding payment for unpaid receivables. At the balance sheet date, the carrying amount of the receivables in the Company’s balance sheet was approx- imately EUR 1.5 million. L&T’s former customer company in question has rejected Lassila & Tikanoja FM AB’s claims and the payment obligation, and brought a counterclaim demanding compensation totalling approximately SEK 116 million from Lassila & Tikanoja FM AB. The dispute is still pending. Lassila & Tikanoja con- siders the counterclaim to be without merit and has not recognised any provi- sions in relation to it. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 16 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Strategic, operative and sustainability risks Strategic risks Risk Risk description Risk management Markets • The general economic development of L&T’s operating countries, changes in the competitive landscape and the functioning of the ﬁnancial markets have an impact on the Group’s business operations. • Changes in markets and the market environment, such as market changes pertaining to secondary raw materials may have an unfavourable eﬀect on the Group’s business operations and business growth. • Geopolitical conﬂicts may cause uncertainty, which can have an eﬀect on the general level of economic activity and industrial production capacity, thereby reducing the demand for L&T’s services. • The development of the market prices of emission rights, secondary raw materials, electricity and oil products may increase production costs. • Creating and regularly updating scenarios, regular assessment, sharpening and updating of the strategy, taking industry hanges into account and recognising the need for renewal as part of the continuous strategy process. • Continuous monitoring and analysis of market development and the business environment. • L&T is independent of large individual customers and has a diverse service oﬀering. • Development of new service products. Regulation • The political environment in L&T’s operating countries aﬀects the Group’s business operations, and changes in regulation, such as the municipalisation of waste management for certain waste fractions in the residential segment, may have a nega- tive impact on L&T’s businesses. • Active monitoring of legislative developments, anticipating future changes in a timely manner, and dialogue with the public authorities and legislators. Technology • The competitiveness of L&T’s oﬀering inﬂuences the Group’s future growth. The Group’s proﬁtability may be adversely aﬀected by errors in judgement when it comes to technology choices concerning service production and the ﬂeet. • Continuous monitoring and analysis of the business environment pertaining to L&T’s operations and ﬂeet. • Temporal diversiﬁcation of ﬂeet purchases. Employees • Challenges related to the availability of labour and employee turnover may complicate service production. • The potential reduction of employee satisfaction may aﬀect L&T’s competitive advantage, which is largely based on the work of skilled and motivated personnel. • A permanent increase in sickness rates and the personnel’s disability and accident pension costs may aﬀect L&T’s competitiveness and proﬁtability. • Improving the employee experience by developing induction training and supervisory work as well as by promoting job rotation and career advancement opportunities for employees. • Co-operation with municipal employment services, central government organisations and various educational institutions to ensure the availability of labour. • Promoting work-based immigration and the employment of special groups. • Regularly conducted job-speciﬁc and site-speciﬁc risk assessments and workplace surveys, and supporting the employees’ work ability and capacity to cope with the demands of work through activities that promote work ability. • L&T’s own sickness fund, which supports L&T’s work ability management and complements occupational health care. • The Suitable Work model, which supports the rehabilitation and employment of people at risk of disability pension. Strategic development projects • Strategic development projects are under way in L&T’s divisions to improve operational eﬃciency and operating models. Some of the projects also involve the renewal of key IT systems. Slower-than-expected progress or other challenges with the projects may weaken L&T’s competitiveness. • Strategic development projects aimed at growth, if delayed, may lead to an inadequate renewal of business operations, thereby slowing L&T’s future growth. • Responsibilities have been assigned for the regular monitoring of the implementation of strategic projects, and corrective action is taken as necessary. Alternative paths forward are assessed as part of the projects. • L&T continuously evaluates and develops the capabilities required for the implementation of strategic development projects and, where necessary, acquires the necessary capabilities from external partners. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 17 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Operational risks Risk Risk description Risk management ICT systems, data security and data protection • Disruptions, delays and functional challenges related to information and communications systems and their deployment may aﬀect L&T’s operations and customer service. • The renewal of business-critical systems may cause disruptions in service production. • Cyber-crime may pose risks to L&T’s data security and business continuity. • Developing the systems environment and ensuring the reliability of the ICT environment by, for example, identifying which systems are critical to operations and deﬁning the allocation of responsibilities between the system vendors and L&T. • Comprehensive planning of the deployment of new systems and related operating models. • Data security guidelines and employee training. Damage- related risks • A ﬁre at a recycling plant may result in a momentary or extended interruption of the plant’s operations. The signiﬁcance of the risk of ﬁre is reduced by the fact that individual plants or production lines have no substantial impact on L&T’s overall proﬁtability. • Business continuity planning, developing ﬁrst-hand ﬁre extinguishing preparedness and training employees on how to respond to a ﬁre or other hazardous situations. • Continuous insurance cover that extends to all of the Group’s operating countries and subsidiaries and that includes policies for injuries, property damage, business interruption, third-party liability, environmental damage and transport damage, for example. Procurement risks • Rising fuel, electricity and other procurement costs may have a negative impact on L&T’s proﬁtability. • Supply chain management, the diversiﬁcation of propulsion sources and the improvement of eﬃciency. Acquisitions • The success of acquisitions may aﬀect the achievement of the Group’s growth and proﬁtability targets. Failures in acquisitions may impact the Group’s competitiveness and proﬁtability and change the Group’s risk proﬁle. • Acquisition agreements, the strategic and ﬁnancial analysis of potential acquirees’ business operations, comprehensive due diligence. • Eﬀectively executed business integration programmes. Financing risks • Potential interest rate hikes may increase the company’s interest costs. • More information can be found on note 4.2 to the consolidated financial statements. Sustainability risks Risk Risk description Risk management Environmen- tal risks • Extreme weather phenomena, such as substantial increases in annual rainfall and snowfall, may lead to higher costs due to complications in service production. • Changes in regulations concerning environmental sustainability, such as changes to the carbon neutrality targets for transport or the promotion of the circular economy, or changes in the interpretation of regulations, may increase produc- tion costs or weaken customer demand. • L&T’s business includes the collection and transport of non-hazardous and hazardous waste, as well as their processing at the Group’s own plants. Incorrect handling of hazardous waste or damage to equipment may result in harmful sub- stances being released into the environment. L&T may become liable for damages due to this. • L&T’s own climate targets, the actions aimed at achieving the targets and the separate climate targets set for the supply chain are in line with the observations made in the scenario analysis. L&T manages transition risks by assessing market changes and responding to them in a timely manner. In addition, we take a proactive approach to inﬂuencing regulatory developments in their preparatory stages through the industry’s key advocacy organisations, for example. • Systematic environmental surveys of plants, preventive maintenance plans for equipment, audits and the long-term training of personnel. • Insurance. Social risks • Safety is a key priority in work at L&T, and potential accidents are among the most signiﬁcant social risks. • Possible cases of deﬁciences in respecting human rights, such as inappropriate behaviour, harassment, unequal operat- ing practices, working conditions and all types of discrimination on L&T’s own operation may lead to court proceedings, liability to damages and create a reputation risk. • Comprehensive training, communication, safety management guidelines and principles, as well as regular safety surveys and proactive safety eﬀorts. • Diversity training and other training for supervisors, process and instructions related to the prevention of harassment and discrimination. • Compliance with legislation and collective agreements. Careful evaluation of risks and preventive measures that are conducted based on risk assessment. Ethical business • Possible deﬁciencies related to human rights, such as deﬁciencies in working conditions, harassment, racism, discrimi- nation and other unethical conduct in L&T’s supply chain may create a reputation risk. • Careful compliance with legislation and collective agreements. • Whistleblowing channel available on the intranet and the Group website. • L&T mainly operates in Finland and Sweden with local partners, and the risk of human rights violations is low in these countries. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 18 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Shares and shareholders Share capital and number of shares There were no changes in Lassila & Tikanoja’s share capital and number of shares in 2023. The registered share capital of the company is EUR 19,399,437. The number of shares is 38,798,874. The average number of shares excluding the shares held by the company was 38,126,791. Each share carries one vote. The Articles of Association do not set an upper limit on the share capital and number of shares. A share has neither a nominal value nor a book equivalent value. The company’s shares are included in the book-entry system of securities maintained by Euroclear Finland Ltd. Euroclear Finland maintains the company’s official list of shareholders. Shareholders At the end of the review period, the company had 24,959 (24,956) shareholders. Nominee-registered holdings accounted for 10.2% (7.0%) of the total number of shares. Holdings of the Board of Directors, the President and CEO and the Executive Board The members of the Board, the President and CEO and the Executive Board, and organisations under their control held a total of 178,860 shares in the company on 31 December 2023, representing 0.5 per cent of the total number of shares and votes. Lassila & Tikanoja plc transferred 8,484 shares to the members of the Board of Directors as a part of their annual fee based on a decision made by the Annual General Meeting on March 23, 2023. Share-based incentive plans In December 2022, the Board of Directors of Lassila & Tikanoja Plc decided to establish two new long-term share-based incentive plans for the Group’s key employees. The aim of the new plans is to align the objectives of the company, shareholders and key employees in order to increase the value of the company in the long term, to retain the key employees at the company and to offer them competitive reward plans that are based on earning and accumulating the com- pany’s shares as well as on appreciation of the share price. The Performance Share Plan 2023–2027 comprises three (3) three-year (3) performance periods covering the calendar years 2023–2025, 2024–2026 and 2025–2027. During the performance period 2023–2025, the earning of rewards is based on the Number of shareholders Percentage Number of shares Percentage of shares and votes Breakdown of shareholding by sector on 31 December 2023 Corporations and housing associations 969 3.9 3,313,983 8.5 Financial and insurance corporations 52 0.2 8,038,704 20.7 General government 18 0.1 2,870,789 7.4 Households 23,616 94.6 16,373,171 42.2 Non-profit institutions serving households 228 0.9 6,536,627 16.9 Foreign shareholders 76 0.3 980,300 2.5 Shares not transferred to the book-entry securities system 0 40,528 0.1 Own shares 1 644,772 1.7 Total 24,960 100 38,798,874 100 Nominee-registered 10 3,955,057 10.2 Breakdown of shareholding by size of holding on 31 December 2023 Number of shares 1–1 000 22,419 89.8 4,863,609 12.5 1,001–5,000 2,081 8.3 4,435,768 11.4 5,001–10,000 241 1.0 1,732,461 4.5 10,001–100,000 183 0.7 5,127,604 13.2 100,001–500,000 21 0.1 4,243,534 10.9 over 500,000 13 0.1 17,710,598 45.7 Shares not transferred to the book-entry securities system 0 40,528 0.1 Own shares 1 644,772 1.7 Total 24,960 100 38,798,874 100 Nominee-registered 10 3,955,057 10.2 Major shareholders on 31 December 2023, excluding nominee-registered shares Shareholder Number of shares Percentage of shares and votes 1 Evald ja Hilda Nissi’s Foundation 3,496,487 9.0 2 Nordea Funds Ltd 1,685,538 4.3 3 Mandatum Life Insurance Company Limited 1,547, 264 4.0 4 Maijala Juhani 1, 529,994 3.9 5 Stiftelsen för Åbo Akademi 1,066,282 2.8 6 Bergholm Heikki 875,000 2.3 7 Ilmarinen Mutual Pension Insurance Company 790,000 2.0 8 Varma Mutual Pension Insurance Company 729,791 1.9 9 Maijala Mikko 720,000 1.9 10 Lassila & Tikanoja plc 644,772 1.7 11 Elo Mutual Pension Insurance Company 538,000 1.4 12 The State Pension Fund 512,000 1.3 13 Turjanmaa Kristiina 505,310 1.3 14 Kaleva Mutual Pension Insurance Company 400,000 1.0 15 Seligson & Co. Investment Funds 382,783 1.0 16 Oy Chemec Ab 356,320 0.9 17 Maijala Eeva 346,000 0.9 18 Samfundet folkhälsan i Svenska Finland rf 336,800 0.9 19 Security Trading Oy 240,000 0.6 20 OP-Pohjola Group 196,933 0.5 20 largest owners total 16,899,274 43.6 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 19 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT following performance criteria: return on capital employed (ROCE), total share- holder return (TSR) and reduction of the carbon footprint (ESG). The target group of the Performance Share Plan during the performance period 2023–2025 con- sists of approximately 38 key employees, including the Group’s President and CEO and the Group Executive Board. During the performance period 2024–2026, the earning of rewards is based on the following performance criteria: return on capital employed (ROCE), total shareholder return (TSR) and reduction of the carbon footprint (ESG). The target group of the Performance Share Plan during the performance period 2024–2026 consists of approximately 50 key employees, including the Group’s President and CEO and the Group Executive Board. The transitional share-based incentive scheme 2023–2026 consists of two (2) earnings periods of one (1) year each, corresponding to the calendar years 2023 and 2024. The earnings period is followed by a two-year commitment period. The aim of the scheme is to support the transition from the old share- based incentive scheme to the new share-based incentive scheme. The earning of rewards for the 2023 and 2024 earnings periods is based the return on cap- ital employed (ROCE) and the reduction of the carbon footprint (ESG). The target group of the transitional share-based incentive scheme for the earnings periods 2023 and 2024 consists of approximately 10 key employees, including the Group’s President and CEO and the Group Executive Board. Trading in shares in 2023 The company’s shares are quoted on the mid-cap list of Nasdaq Helsinki Oy in the Industrials sector. The trading code is LAT1V and the ISIN code is FI0009010854. The volume of trading in 2023 was 5.6 million shares, which is 14.8% (24.7%) of the average number of outstanding shares. The value of trading was EUR 57.1 million (104.9). The highest share price was EUR 11.84 and the lowest EUR 9.00. The closing price was EUR 9.80. At the end of the financial year, the market capitalisation excluding the shares held by the company was EUR 373.9 million (405.9). Own shares At the end of the period, the company held 644,772 of its own shares, repre- senting 1.7% of all shares and votes. Flagging notifications On 26 June 2023, Lassila & Tikanoja plc received a notification indicating that Mandatum Life Insurance Company Limited’s shareholding in Lassila & Tikanoja fell below the 5% threshold on 26 June 2023. Resolutions by the Annual General Meeting The Annual General Meeting of Lassila & Tikanoja plc, which was held on 23 March 2023, adopted the financial statements and consolidated financial state- ments for the financial year 2022, discharged the members of the Board of Directors and the President and CEO from liability and adopted the remuneration report for the company’s governing bodies. The Annual General Meeting resolved on the use of the profit shown on the balance sheet and the payment of divi- dend, the composition and remuneration of the Board of Directors, the election and remuneration of the auditor, amendment of Articles of Association, and authorising the Board of Directors to decide on the repurchase of the company’s own shares and on a share issue and the issuance of special rights entitling to shares. The Annual General Meeting resolved that a dividend of EUR 0.47 per share be paid on the basis of the balance sheet to be adopted for the financial year 2022. It was decided that the dividend be paid on 3 April 2023. The Annual General Meeting confirmed the number of members of the Board of Directors as six in accordance with the proposal of the Shareholders’ Nom- ination Board. Teemu Kangas-Kärki, Laura Lares, Sakari Lassila, Jukka Leinonen and Pasi Tolppanen were re-elected, and Anni Ronkainen was elected as a new member, to the Board for a term ending at the conclusion of the next Annual General Meeting. Jukka Leinonen was elected as the Chairman of the Board and Sakari Lassila was elected as the Vice Chairman. The Annual General Meeting elected PricewaterhouseCoopers Oy, Authorised Public Accountants, as the company’s auditor. PricewaterhouseCoopers Oy has announced that it will name Samuli Perälä, Authorised Public Accountant, as the principal auditor. The Annual General Meeting resolved to amend Article 10 of the Articles of Association to enable the holding of a general meeting without a meeting venue, as a remote meeting. The resolutions of the Annual General Meeting were announced in more detail in a stock exchange release on 23 March 2023. Authorisations for the Board of Directors The Annual General Meeting held on 23 March 2023 authorised Lassila & Tikanoja plc’s Board of Directors to decide on the repurchase of the company’s own shares using the company’s unrestricted equity. In addition, the Annual Gen- eral Meeting authorised the Board of Directors to decide on a share issue and the issuance of special rights entitling their holders to shares. The Board of Directors is authorised to purchase a maximum of 2,000,000 company shares (5.2% of the total number of shares). The repurchase authori- sation is effective for 18 months. The Board of Directors is authorised to decide on the issuance of new shares or shares that may be held by the company through a share issue and/or issu- ance of option rights or other special rights conferring entitlement to shares, referred to in Chapter 10, Section 1 of the Finnish Companies Act, so that under the authorisation, a maximum of 2,000,000 shares (5.2% of the total number of shares) may be issued and/or conveyed. The authorisation is effective for 18 months. Events after the financial year On 11 January 2024, the company announced that Lassila & Tikanoja’s Share- holders’ Nomination Board proposes to the Annual General Meeting to be held on 21 March 2024 that the Board of Directors have seven (7) members. The Nom- ination Board proposes that Teemu Kangas-Kärki, Laura Lares, Sakari Lassila, Jukka Leinonen, Anni Ronkainen and Pasi Tolppanen be re-elected to the Board of Directors and that Juuso Maijala be elected as a new member. A presentation of Juuso Maijala is available on L&T’s website. In addition, the Nomination Board proposes that Jukka Leinonen be elected as Chairman of the Board of Directors and Sakari Lassila as Vice Chairman. Changes in the Group Executive Board On 31 March 2023, the company announced that Tina Hellstadius, the Senior Vice President for Facility Services Sweden, would leave Lassila & Tikanoja on 31 March 2023. On 18 April 2023, the company announced that Mikko Taipale (Master of Laws) had been appointed Senior Vice President, Facility Services Sweden and a member of the Group Executive Board effective from 19 April 2023. Dividend policy The amount of dividend is tied to the results for the financial year. Profits not considered necessary for ensuring the healthy development of the company are distributed to shareholders. Proposal for profit distribution In 2023, the Group’s earnings per share were EUR 0.79 (0.83) and net cash flow from operating activities after investments per share amounted to EUR 1.33 (1.08). The Board of Directors will propose a dividend of EUR 0.49 per share to the Annual General Meeting to be held on 21 March 2024. A dividend of EUR 0.47 per share was paid for the financial year 2022. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 20 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT The EU taxonomy is a classification system for environmentally sustainable eco- nomic activities. It is a framework for channelling investments into more sustain- able activities through technical assessment criteria, environmental objectives, Do No Significant Harm (DNSH) criteria and minimum safeguards. In this section, Lassila & Tikanoja will publish information in accordance with the following regulation; Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facil- itate sustainable investment, and amending Regulation (EU) 2019/2088 (Tax- onomy Regulation). The implementation of the Taxonomy Regulation is taking place over several stages. The first Delegated Act, namely the Climate Act, was implemented in 2021, and it sets out technical screening criteria for two environmental objec- tives: climate change mitigation and climate change adaptation, which have been described in the taxonomy. In their reporting on 2021, companies were required to publish information on taxonomy-eligible economic activities’ share of net sales, capital expenditure (investments) and operating expenditure. Tax- onomy eligibility applies to activities that are within the scope of the Climate Act. In the 2022 reporting, companies had to assess taxonomy alignment. Tax- onomy alignment requires that taxonomy-eligible activities meet the detailed technical screening criteria, DNSH criteria and meet the minimum safeguards specified in the Taxonomy Regulation. In 2023, the European Commission published new classification system activi- ties for the four remaining environmental objectives. In this regard, L&T will report on taxonomy eligibility and, on a voluntary basis, taxonomy alignment in 2023. This compliant and voluntary data is presented in the same table. According to the Taxonomy Regulation, the companies that are required to report in accordance with the Non-Financial Reporting Directive (2014/95/EU) must comply with the reporting requirements of the Taxonomy Regulation. This requirement applies to L&T. L&T and EU taxonomy L&T has assessed the taxonomy eligibility and taxonomy alignment of its activi- ties. The EU taxonomy assessment has been conducted for net sales generated by business operations (note 1.2 to the financial statements), capital expendi- ture and operating expenditure related to climate change mitigation, the tran- sition to a circular economy, the sustainable use and protection of water and marine resources, and pollution prevention and control. The financial indicators concerning the taxonomy are based on figures extracted from L&T’s financial management systems and ERP systems. For capital expenditure and operating expenditure, data from 2023 was analysed and compared to the screening criteria. Capital expenditure takes into account L&T’s gross capital expenditure. Taxonomy eligibility and alignment assessments have taken into account only those capital expenditures that meet the technical requirements for the activity. Operating expenses include fixed and variable costs, including depreciation, personnel and other business expenses. Taxonomy eligibility and alignment assessments have taken into account only those oper- ating and capital costs that meet the technical criteria for the activity. In 2023, in addition to the previous objective of climate change mitigation, the reporting has been extended to three new environmental objectives, which has had a downward impact on the performance indicators related to climate change mitigation, as some of the activities previously reported in these indica- tors have been included under other environmental objectives. L&T reports on taxonomy at the Group level. The assessment was carried out in cooperation with the industry specialists and business representatives. The assessment and its results are based on current knowledge and the available interpretations of the legislation. L&T’s taxonomy eligibility has been assessed on the basis of the descriptions of economic activities and related NACE codes provided in the European Com- mission’s Delegated Regulations. L&T does not have activities related to nuclear energy or fossil gas. The assessment of taxonomy alignment is based on the industry-specific technical screening criteria described in the Taxonomy Regulation and the DNSH criteria. At L&T, climate-related DNSH criteria are assessed as part of L&T’s risk management process through the TCFD framework. In addition, the taxonomy evaluation has taken into account activity-specific technical criteria for opera- tions. L&T’s operations are regulated and require separate environmental permits that specify environmental requirements for water, soil contamination and nature. The practices and procedures are described in more detail in the sus- tainability report. The EHSQ management model ensures that L&T’s operations comply with the permit conditions, and they are monitored and reported on reg- ularly. L&T also strives to manage and reduce the environmental impacts of its activities through training and technical solutions. The technical screening cri- teria have been examined side by side in order to achieve the greatest possible consistency in reporting and to avoid double accounting. In addition to technical criteria, the Taxonomy Regulation provides for min- imum safeguards that L&T has assessed at the Group level. L&T’s commitment to respecting human rights and due diligence is included in L&T’s Code Of Conduct and Supplier Code of Conduct. L&T has due diligence processes in place with regard to taxation, anti-corruption, anti-bribery and fair competition. The Group- EU taxonomy level policies apply to all of L&T’s business operations in Finland and Sweden. L&T does not have separate capital or operating expenditure plans for taxonomy. For taxonomy-eligible and taxonomy-aligned activities, the business opera- tions of the Environmental Services division include, for example, the collection and transport of non-hazardous waste in waste fractions and the recovery and processing of materials from non-hazardous waste. For taxonomy-eligible and taxonomy-aligned activities, the business operations of the Industrial Services division include, for example, the renewal of wastewater collection and treat- ment, the collection, transport and processing and recycling of hazardous waste, as well as environmental construction services with regard to new material recycling solutions. These circular economy activities include activities related to climate change mitigation 5.5 (Collection and transport of non-hazardous waste in source seg- regated fractions) and 5.9 (Material recovery from non-hazardous waste), the circular economy activities 2.3 (Collection and transport of non-hazardous and hazardous waste); 2.4 (Hazardous waste treatment) and 2.7 (Non-hazardous waste sorting and material recovery), as well as activities for water 2.2 (Urban waste water treatment ) and pollution prevention and control activities 2.1 (Col- lection and transport of hazardous waste). For taxonomy-eligible and taxonomy-aligned activities, the business opera- tions of the Facility Services Finland and Sweden divisions include, for example, the installation, maintenance and repair of energy efficiency equipment and renewable energy technology, as well as the installation, maintenance and repair of instruments and devices for measuring, regulating and controlling the energy performance of buildings. The business operations also include expert services related to improving the energy efficiency of buildings. Taxonomy reporting has taken into account climate change related activities 4.16 (Installation and operation of electric heat pumps); 7.3 (Installation, mainte- nance and repair of energy efficiency equipment); 7.4 (Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces attached to buildings)); 7.5 (IInstallation, maintenance and repair of instruments and devices for measuring, regulation and controlling energy per- formance of buildings); 7.6 (IInstallation, maintenance and repair of renewable energy technologies) and 9.3 (Professional services related to energy perfor- mance of buildings). KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 21 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Proportion of turnover from products or services associated with Taxonomy-aligned economic activities Financial year N 2023 Substantial Contribution Criteria DNSH criteria (‘Does Not Significantly Harm’) Economic Activities Code Turnover (MEUR) Proportion of Turnover (%) Climate Change Mitigation Y; N; N/A Climate Change Adaptation Y; N; N/A Water Y; N; N/A Pollution Y; N; N/A Circular Economy Y; N; N/A Biodiversity and ecosystems Y; N; N/A Climate Change Mitigation Y/N Climate Change Adaptation Y/N Water Y/N Pollution Y/N Circular Economy Y/N Biodiversity and ecosystems Y/N Minimum Safeguard Y/N Taxonomy aligned (A.1.) or eligible (A.2.) proportion of turnover, year 2022 (%) Category (enabling activity) E Category (transitional activity) T A. TAXONOMY-ELIGIBLE ACTIVITIES A.1. Environmentally sustainable activities (Taxonomy-aligned) Installation and operation of electric heat pumps CCM 4.16 0.7 0.1 % Y N/A N/A N/A N/A N/A Y Y Y Y Y Y Y 0.1% Collection and transport of non-hazardous waste in source segregated fractions CCM 5.5 11.3 1.4 % Y N/A N/A N/A N/A N/A Y Y Y Y Y Y Y 5.9% Material recovery from non-hazardous waste CCM 5.9 3.7 0.5 % Y N/A N/A N/A N/A N/A Y Y Y Y Y Y Y 4.2% Installation, maintenance and repair of energy efficiency equipment CCM 7.3 14.5 1.8 % Y N/A N/A N/A N/A N/A Y Y Y Y Y Y Y 1.2% E Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces attached to buildings) CCM 7.4 0.5 0.1 % Y N/A N/A N/A N/A N/A Y Y Y Y Y Y Y E Installation, maintenance and repair of instruments and devices for measuring, regulation and controlling energy performance of buildings CCM 7.5 2.9 0.4 % Y N/A N/A N/A N/A N/A Y Y Y Y Y Y Y 0.5% E Installation, maintenance and repair of renewable energy technologies CCM 7.6 2.3 0.3 % Y N/A N/A N/A N/A N/A Y Y Y Y Y Y Y 0.6% E Professional services related to energy performance of buildings CCM 9.3 6.4 0.8 % Y N/A N/A N/A N/A N/A Y Y Y Y Y Y Y 0.4% E Urban Waste Water Treatment WTR 2.2 0.9 0.1 % N/A N/A Y N/A N/A N/A Y Y Y Y Y Y Y Collection and transport of hazardous waste PPC 2.1 16.7 2.1 % N/A N/A N/A Y N/A N/A Y Y Y Y Y Y Y Collection and transport of non-hazardous and hazardous waste CE 2.3 50.7 6.3 % N/A N/A N/A N/A Y N/A Y Y Y Y Y Y Y Treatment of hazardous waste CE 2.4 3.6 0.5 % N/A N/A N/A N/A Y N/A Y Y Y Y Y Y Y Sorting and material recovery of non-hazardous waste CE 2.7 20.6 2.6 % N/A N/A N/A N/A Y N/A Y Y Y Y Y Y Y Turnover of environmentally sustainable activities (Taxonomy-aligned) (A.1) 134.7 16.8% 5.3% 0.0% 0.1% 2.1% 9.3% 0.0% Y Y Y Y Y Y Y 12.9% Of which Enabling 26.6 3.3% 3.3% 0.0% 0.0% 0.0% 0.0% 0.0% Y Y Y Y Y Y Y 2.7% E Of which Transitional 0 % % Y Y Y Y Y Y Y 0% A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL Material recovery from non-hazardous waste CCM 5.9 0.9 0.1 % EL N/EL N/EL N/EL N/EL N/EL 0.4% Installation, maintenance and repair of energy efficiency equipment CCM 7.3 2.9 0.4 % EL N/EL N/EL N/EL N/EL N/EL 0.4% Collection and transport of hazardous waste PPC 2.1 2.5 0.3 % N/EL N/EL N/EL EL N/EL N/EL 0.0% Treatment of hazardous waste CE 2.4 0,01 0,5 % N/EL N/EL N/EL N/EL N/EL N/EL 0.0% Renewal of waste water collection and treatment CCM 5.4 0.0 0.0 % N/EL N/EL N/EL N/EL N/EL N/EL 0.1% Collection and transport of non-hazardous waste in source segregated fractions CCM 5.5 0.0 0.0 % N/EL N/EL N/EL N/EL N/EL N/EL 0.2% Installation, maintenance and repair of instruments and devices for measuring, regulation and controlling energy performance of buildings CCM 7.5 0.0 0.0 % N/EL N/EL N/EL N/EL N/EL N/EL 0.4% Turnover of Taxonomyeligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 6.4 1.2% 1 0.5% 0.0% 0.0% 0.3% 0.5% 0.0% 1.5% A. Turnover of Taxonomy eligible activities (A.1 + A.2) 141.0 18.0% 5.7% 0.0% 0.1% 2.4% 1 9.8% 0.0% 14.4% 1 CCM = Climate Change Mitigation, WTR = Water, CE = Circular Economy, PPC = Pollution Prevention and Control, N/A - not applicable, Taxonomy non-eligible activity for the relevant objective, EL - Taxonomy eligible activity for the relevant objective, N/EL - Taxonomy non-eligible activity for the relevant objective 1 The sum of the individual figures does not add up to the total due to rounding. B. TAXONOMY-NON ELIGIBLE ACTIVITIES Turnover Proportion of Turnover Turnover of Taxonomy-non-eligible activities 661.1 82.0 % TOTAL 802.1 100% KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 22 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Proportion of CapEx from products or services associated with Taxonomy-aligned economic activities Financial year N 2023 Substantial Contribution Criteria DNSH criteria (‘Does Not Significantly Harm’) Economic Activities Code Turnover (MEUR) Proportion of Turnover (%) Climate Change Mitigation Y; N; N/A Climate Change Adaptation Y; N; N/A Water Y; N; N/A Pollution Y; N; N/A Circular Economy Y; N; N/A Biodiversity and ecosystems Y; N; N/A Climate Change Mitigation Y/N Climate Change Adaptation Y/N Water Y/N Pollution Y/N Circular Economy Y/N Biodiversity and ecosystems Y/N Minimum Safeguard Y/N Taxonomy aligned (A.1.) or eligible (A.2.) proportion of turnover, year 2022 (%) Category (enabling activity) E Category (transitional activity) T A. TAXONOMY-ELIGIBLE ACTIVITIES A.1. Environmentally sustainable activities (Taxonomy-aligned) Collection and transport of non-hazardous waste in source segregated fractions CCM 5.5 0.8 1.3 % Y N/A N/A N/A N/A N/A Y Y Y Y Y Y Y 6.0% Material recovery from non-hazardous waste CCM 5.9 1.7 2.8 % Y N/A N/A N/A N/A N/A Y Y Y Y Y Y Y 3.6% Professional services related to energy performance of buildings CCM 9.3 0.03 0.1 % Y N/A N/A N/A N/A N/A Y Y Y Y Y Y Y 0.1% E Collection and transport of hazardous waste PPC 2.1 2.8 4.6 % N/A N/A N/A Y N/A N/A Y Y Y Y Y Y Y Collection and transport of non-hazardous and hazardous waste CE 2.3 3.8 6.2 % N/A N/A N/A N/A Y N/A Y Y Y Y Y Y Y Treatment of hazardous waste CE 2.4 0.4 0.6 % N/A N/A N/A N/A Y N/A Y Y Y Y Y Y Y Sorting and material recovery of non-hazardous waste CE 2.7 1.5 2.5 % N/A N/A N/A N/A Y N/A Y Y Y Y Y Y Y Turnover of environmentally sustainable activities (Taxonomy-aligned) (A.1) 11.0 18.0 % 1 4.1 % 0.0 % 0.0 % 4.6 % 9.2 % 0.0 % Y Y Y Y Y Y Y 9.7% Of which Enabling 0.03 0.1 % 0.1 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % Y Y Y Y Y Y Y 0.1% E Of which Transitional 0 0.0% 0.0% Y Y Y Y Y Y Y 0.0% A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL Collection and transport of non-hazardous waste in source seg- regated fractions CCM 5.5 0 0.0 % N/EL N/EL N/EL N/EL N/EL N/EL 2.1% Material recovery from non-hazardous waste CCM 5.9 0 0.0 % N/EL N/EL N/EL N/EL N/EL N/EL 0.2% Professional services related to energy performance of buildings CCM 9.3 0 0.0 % N/EL N/EL N/EL N/EL N/EL N/EL 0.3% Turnover of Taxonomyeligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 0 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 2.6% A. Turnover of Taxonomy eligible activities (A.1 + A.2) 11.0 18.0% 1 4.1% 0.0% 0.0% 4.6% 9.2% 0.0% 12.3% CCM = Climate Change Mitigation, WTR = Water, CE = Circular Economy, PPC = Pollution Prevention and Control, N/A - not applicable, Taxonomy non-eligible activity for the relevant objective, EL - Taxonomy eligible activity for the relevant objective, N/EL - Taxonomy non-eligible activity for the relevant objective 1 The sum of the individual figures does not add up to the total due to rounding. B. TAXONOMY-NON ELIGIBLE ACTIVITIES Turnover Proportion of Turnover Turnover of Taxonomy-non-eligible activities 50.1 82.0% TOTAL 61.1 100% KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 23 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Proportion of OpEx from products or services associated with Taxonomy-aligned economic activities Financial year N 2023 Substantial Contribution Criteria DNSH criteria (‘Does Not Significantly Harm’) Economic Activities Code Turnover (MEUR) Proportion of Turnover (%) Climate Change Mitigation Y; N; N/A Climate Change Adaptation Y; N; N/A Water Y; N; N/A Pollution Y; N; N/A Circular Economy Y; N; N/A Biodiversity and ecosystems Y; N; N/A Climate Change Mitigation Y/N Climate Change Adaptation Y/N Water Y/N Pollution Y/N Circular Economy Y/N Biodiversity and ecosystems Y/N Minimum Safeguard Y/N Taxonomy aligned (A.1.) or eligible (A.2.) proportion of turnover, year 2022 (%) Category (enabling activity) E Category (transitional activity) T A. TAXONOMY-ELIGIBLE ACTIVITIES A.1. Environmentally sustainable activities (Taxonomy-aligned) Installation and operation of electric heat pumps CCM 4.16 0.3 0.0% Y N/A N/A N/A N/A N/A Y Y Y Y Y Y Y 0.1% Collection and transport of non-hazardous waste in source segregated fractions CCM 5.5 7.6 1.0% Y N/A N/A N/A N/A N/A Y Y Y Y Y Y Y 5.9% Material recovery from non-hazardous waste CCM 5.9 1.9 0.2% Y N/A N/A N/A N/A N/A Y Y Y Y Y Y Y 4.2% Installation, maintenance and repair of energy efficiency equipment CCM 7.3 14.1 1.8% Y N/A N/A N/A N/A N/A Y Y Y Y Y Y Y 1.2% E Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces attached to buildings) CCM 7.4 0.5 0.1% Y N/A N/A N/A N/A N/A Y Y Y Y Y Y Y 0.0% E Installation, maintenance and repair of instruments and devices for measuring, regulation and controlling energy performance of buildings CCM 7.5 1.9 0.2% Y N/A N/A N/A N/A N/A Y Y Y Y Y Y Y 0.5% E Installation, maintenance and repair of renewable energy technologies CCM 7.6 1.7 0.2% Y N/A N/A N/A N/A N/A Y Y Y Y Y Y Y 0.6% E Professional services related to energy performance of buildings CCM 9.3 4.8 0.6% Y N/A N/A N/A N/A N/A Y Y Y Y Y Y Y 0.4% E Urban Waste Water Treatment WTR 2.2 0.5 0.1% N/A N/A Y N/A N/A N/A Y Y Y Y Y Y Y Collection and transport of hazardous waste PPC 2.1 10.6 1.4% N/A N/A N/A Y N/A N/A Y Y Y Y Y Y Y Collection and transport of non-hazardous and hazardous waste CE 2.3 33.5 4.3% N/A N/A N/A N/A Y N/A Y Y Y Y Y Y Y Treatment of hazardous waste CE 2.4 2.0 0.3% N/A N/A N/A N/A Y N/A Y Y Y Y Y Y Y Sorting and material recovery of non-hazardous waste CE 2.7 13.6 1.8% N/A N/A N/A N/A Y N/A Y Y Y Y Y Y Y Turnover of environmentally sustainable activities (Taxonomy-aligned) (A.1) 93.0 12.1% 1 4.3% 0.0% 0.1% 1.4% 6.4% 0.0% Y Y Y Y Y Y 12.9% 12.9% 1 Of which Enabling 23.0 3.0% 3.0% 0% 0% 0% 0% 0% Y Y Y Y Y Y 2.7% 2.7% E Of which Transitional 0 0.0% 0.0% 0.0 % A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL Renewal of waste water collection and treatment CCM 5.4 0.0 0.0% EL N/EL N/EL N/EL N/EL N/EL 0.1% Collection and transport of non-hazardous waste in source segregated fractions CCM 5.5 0.0 0.0% EL N/EL N/EL N/EL N/EL N/EL 0.2% Material recovery from non-hazardous waste CCM 5.9 0.0 0.0% EL N/EL N/EL N/EL N/EL N/EL 0.4% Installation, maintenance and repair of energy efficiency equipment CCM 7.3 0.0 0.0% EL N/EL N/EL N/EL N/EL N/EL 0.4% Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces attached to buildings) CCM 7.5 0.0 0.0% EL N/EL N/EL N/EL N/EL N/EL 0.4 % Turnover of Taxonomyeligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 0.0 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 1.5 % A. Turnover of Taxonomy eligible activities (A.1 + A.2) 93.0 12.1% 1 4.3% 0.0% 0.1% 1.4% 6.4% 0.0% 14.5 % CM = Climate Change Mitigation, WTR = Water , CE = Circular Economy, PPC = Pollution Prevention and Control, N/A - not applicable, Taxonomy non-eligible activity for the relevant objective, EL - Taxonomy eligible activity for the relevant objective, N/EL - Taxonomy non-eligible activity for the relevant objective 1 The sum of the individual figures does not add up to the total due to rounding. B. TAXONOMY-NON ELIGIBLE ACTIVITIES Turnover Proportion of Turnover Turnover of Taxonomy-non-eligible activities 676.9 87.9% TOTAL 769.9 100% 24 Lassila & Tikanoja Annual Report 2023 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 24 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Key figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Calculation of key figures . . . . . . . . . . . . . . . . . . . . . 27 Key figures 25 Lassila & Tikanoja Annual Report 2023 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 25 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Key ﬁgures Key figures on shares 2023 2022 2021 2020 2019 Earnings per share (EPS), EUR 0.79 0.83 0.90 0.50 0.90 Earnings per share (EPS), diluted, EUR 0.79 0.83 0.90 0.50 0.90 Equity per share, EUR 6.09 5.78 5.52 5.05 5.33 Dividend per share, EUR 0.49 1 0.47 0.46 0.40 0.92 Payout ratio, % 62.1 1 56.9 51.0 79.7 101.7 Effective dividend yield, % 5.0 1 4.4 3.4 2.7 5.8 P/E ratio 12.4 12.9 14.9 30.0 17.4 Net cash flow from operating activities after investments per share, EUR 1.33 1.08 0.05 1.15 1.81 Share price adjusted for issues: lowest, EUR 9.00 9.72 12.82 10.06 12.92 highest, EUR 11.84 13.62 16.10 16.76 16.40 average, EUR 10.11 11.16 14.31 13.55 14.41 closing, EUR 9.80 10.64 13.44 15.06 15.74 Market capitalisation 31 December, MEUR 373.9 405.9 512.2 573.9 610.7 Number of shares adjusted for issue, 1,000 pcs average during the year 38,127 38,116 38,111 38,103 38,354 at year end 38,154 38,146 38,112 38,105 38,094 average during the year, diluted 38,232 38,128 38,127 38,118 38,368 Adjusted number of shares traded during the year, 1,000 pcs 5,649 9,397 9,615 12,266 8,172 As a percentage of the average 14.8 24.7 25.2 32.2 21.3 Volume of shares traded, MEUR 57.1 104.9 137.6 166.1 122.3  2023 proposal by the Board of Directors Key figures on financial performance 2023 2022 2021 2020 2019 Net sales, MEUR 802.1 844.1 812.5 751.9 784.3 Operating profit, MEUR 38.4 42.9 42.2 28.2 45.0 % of net sales 4.8 5.1 5.2 3.8 5.7 Adjusted operating profit, MEUR 39.0 40.9 42.4 39.7 40.5 % of net sales 4.9 4.8 5.2 5.3 5.2 EBITDA, MEUR 95.8 98.3 95.1 85.2 99.4 % of net sales 11.9 11.6 11.7 11.3 12.7 Result before taxes, MEUR 35.7 37.8 39.0 23.3 42.0 % of net sales 4.5 4.5 4.8 3.1 5.4 Result for the period, MEUR 30.1 31.5 34.4 19.0 34.7 % of net sales 3.8 3.7 4.2 2.5 4.4 Cash flow from operating activities, MEUR 93.6 71.8 65.6 83.0 94.5 Balance sheet total, MEUR 649.9 660.5 632.3 596.6 583.6 Return on equity, % (ROE) 13.3 14.6 17.1 9.6 16.8 Capital employed, MEUR 425.9 437.2 406.0 379.2 380.5 Return on capital employed, % (ROCE) 10.3 10.4 10.8 7.5 12.4 Equity ratio, % 36.8 34.3 34.2 33.0 35.6 Gearing, % 69.3 75.9 79.4 70.9 66.8 Net interest-bearing liabilities, MEUR 160.9 167.3 167.1 136.5 135.6 Gross capital expenditure, MEUR 61.1 58.2 72.3 48.2 46.1 % of net sales 7.6 6.9 8.9 6.4 5.9 Average number of employees in full-time equivalents 6,743 6,820 7,319 7,197 7,308 Total number of full-time and part-time employees at year end 8,159 8,371 8,171 8,139 8,207  The calculation of the average number of employees in full-time equivalents was re-defined in 2023. The figure for 2022 has been adjusted accordingly. 26 Lassila & Tikanoja Annual Report 2023 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 26 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Reconciliation of alternative performance measures The company discloses certain other widely used performance measures that can for the most part be derived from the income statement and balance sheet. The formulas for these performance measures are provided in the section Calculation of key figures. In the company’s view, these measures clarify the result of operations and financial position based on the income statement and balance sheet. Reconciliation of the adjusted operating proﬁt to the operating proﬁt 1 January - 31 December MEUR 2023 2022 Operating profit 38.4 42.9 Items affecting comparability: - costs arising from the discontinuation of business - -0.2 - costs arising from business restructurings 0.3 - - gains or losses arising from divestments 1 - -4.3 - costs arising from acquisitions 0.3 2.5 Adjusted operating profit 39.0 40.9 1 In 2022, Lassila & Tikanoja ja Neova merged their fuel wood businesses into a joint venture na- med Laania. The transaction was finalised in the fourth quarter of year 2022 and L&T recognised a gain totalling EUR 4.3 million from the transaction. Reconciliation of gross capital expenditure 1 January - 31 December MEUR 2023 2022 Intangible and tangible assets from business acquisitions - 22.9 - increases to right-of-use assets excl. heavy vehicles from business acquisitions - -1.4 Other increases to intangible and tangible assets 81.1 55.2 - increases to right-of-use assets excl. heavy vehicles -18.1 -15.8 - other adjustments -2.0 -2.7 Gross capital expenditure 61.1 58.2 Return on capital employed (ROCE), %, by segment 1 1 January - 31 December 2023 2022 Environmental Services Capital employed (MEUR), average of the beginning and the end of the period 203.1 211.3 Operating profit 27.1 30.3 + financial income 0.3 0.1 Return on capital employed, MEUR 27.4 30.4 Return on capital employed (ROCE), % 13.5 14.4 Industrial Services Capital employed (MEUR), average of the beginning and the end of the period 93.7 81.7 Operating profit 13.8 12.7 + financial income 0.0 0.0 Return on capital employed, MEUR 13.8 12.8 Return on capital employed (ROCE), % 14.7 15.6 Facility Services Finland Capital employed (MEUR), average of the beginning and the end of the period 25.0 28.4 Operating profit 4.4 -0.5 + financial income 0.4 0.3 Return on capital employed, MEUR 4.8 -0.2 Return on capital employed (ROCE), % 19.4 -0.8 Facility Services Sweden Capital employed (MEUR), average of the beginning and the end of the period 61.0 64.6 Operating profit -3.7 0.4 + financial income 0.1 0.1 Return on capital employed, MEUR -3.6 0.5 Return on capital employed (ROCE), % -5.9 0.8 1 From 2023 onwards, the allocation of assets and liabilities to the reporting segments has been adjusted. The comparative figures have been updated accordingly. 27 Lassila & Tikanoja Annual Report 2023 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 27 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Calculation of key ﬁgures Key figures on shares Earnings per share (EPS) = Result attributable to equity holders of the parent company Adjusted average basic number of shares Earnings per share (EPS), diluted = Result attributable to equity holders of the parent company Adjusted average diluted number of shares Equity per share = Equity attributable to equity holders of the parent company Adjusted basic number of shares at the balance sheet date Dividend per share 1 = Dividend for the financial period Adjusted basic number of shares at the balance sheet date Payout ratio, % 1 = Dividend per share Earnings per share Effective dividend yield, % 1 = Dividend per share Closing price of the financial period P/E ratio = Closing price of the financial period Earnings per share Cash flow from operating activities after investments per share = Cash flows from operating activities after investments as in the cash flow statement Adjusted average basic number of shares Market capitalization = Basic number of shares at the balance sheet date excluding treasury shares x closing price of the financial period 1 The calculations are also applied with capital repayment. Key figures on financial performance Adjusted operating profit = Operating profit +/- items affecting comparability Items affecting comparability = Substantial costs arising from business restructurings or acquisitions, gains and losses from divestments and costs arising from the discontinua- tion of businesses EBITDA = Operating profit + depreciation, amortisation and impairment Return on equity, % (ROE) = Result for the period Equity (average of the end and of the beginning of the period) Capital employed = Equity + Interest-bearing financial liabilities Return on capital employed, % (ROCE) = Operating profit + financial income + share of results in associated companies and joint ventures Equity + Interest-bearing financial liabilities (average of the end and of the beginning of the period) Equity ratio, % = Equity Balance sheet total - advances received Gearing, % = Net interest-bearing liabilities Equity Net interest-bearing liabilities = Interest-bearing liabilities - cash and cash equivalents Gross capital expenditure = Investments in intangible and tangible assets excluding right-of-use as- sets and other adjustments including leased heavy vehicles and assets acquired through acquisitions Organic growth, % = Net sales for the reporting period - net sales from business acquisitions during previous 12 months - net sales for the comparative period + net sa- les from divestments during previous 12 months Net sales for the comparative period - net sales from divestments during previous 12 months x 100 x 100 x 100 x 100 x 100 x 100 x 100 28 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORT Proposal by the Board of Directors SUSTAINABILITY REPORT Lassila & Tikanoja Annual Report 2023 Financial statements Consolidated income statement .......................................29 Consolidated statement of comprehensive income ..................29 Consolidated statement of financial position .........................30 Consolidated statement of cash flows ................................ 31 Consolidated statement of changes in equity ........................32 Notes to the consolidated financial statements ......................33 Financial statements of the parent company .........................67 Proposal by the Board of Directors for distribution of profit and Auditor’s Note ............................................... 75 1 Financial result 1.1 Segment reporting ...........................................................................35 1.2 Revenue from contracts with customers ........................36 1.3 Employee beneﬁt expenses .......................................................38 1.4 Other operating income and expenses ..............................38 1.5 Share-based payments ................................................................39 1.6 Expenses related to leases ....................................................... 40 1.7 Depreciation, amortisation and impairments ............... 40 1.8 Financial income and expenses ...............................................41 1.9 Income taxes ........................................................................................41 2 Operational assets and liabilities 2.1 Trade and other receivables .................................................44 2.2 Inventories .......................................................................................44 2.3 Trade and other current payables .....................................45 2.4 Other non-current liabilities ..................................................45 2.5 Provisions .........................................................................................45 2.6 Retirement beneﬁt obligations ............................................ 46 3 Intangible and tangible assets and other non-current assets 3.1 Goodwill and other intangible assets ..............................49 3.2 Goodwill impairment testing .................................................50 3.3 Tangible assets ..............................................................................51 3.4 Right-of-use assets and lease liabilities ........................52 3.5 Other non-current assets .......................................................53 4 Financial risks and capital structure 4.1 Financial assets and liabilities .............................................55 4.2 Financial risk management .................................................... 57 4.3 Equity ..................................................................................................60 4.4 Earnings per share and dividend per share ..................61 4.5 Commitments and contingent liabilities .........................61 5 Consolidation and other notes 5.1 Consolidation .................................................................................63 5.2 Group companies .........................................................................63 5.3 Business acquisitions and disposals and assets and liabilities classiﬁed as held for sale ........64 5.4 Related-party transactions ................................................... 65 5.5 Auditing costs ................................................................................ 66 5.6 Events after the balance sheet date ...............................66 29 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORT Proposal by the Board of Directors SUSTAINABILITY REPORT Lassila & Tikanoja Annual Report 2023 Consolidated income statement 1 January - 31 December MEUR 2023 2022 Note Net sales 802.1 844.1 1.2 Other operating income 6.2 8 .7 1.4 Materials and services -2 46.5 -286. 7 Employee benefit expenses -352.8 -353.1 1.3 Other operating expenses -113.1 -114. 7 1.4 Depreciation, amortisation and impairment -57 .4 -55.4 1.7 Operating profit 38.4 42.9 Financial income 2.5 0.4 Financial expenses -8. 7 -6.0 Exchange rate differences (net) -0.0 -0.2 Financial income and expenses -6.3 -5.8 1.8 Share of the result of associated companies and joint ventures 3.6 0.7 Result before taxes 35. 7 3 7. 8 Income taxes -5. 7 -6.3 1.9 Result for the period 30.1 31.5 Attributable to: Equity holders of the company 30.1 31.5 Earnings per share attributable to the equity holders of the parent company: Earnings per share, EUR 0. 79 0.83 4.4 Diluted earnings per share, EUR 0. 79 0.83 4.4 Consolidated statement of comprehensive income 1 January - 31 December MEUR 2023 2022 Note Result for the period 30.1 31.5 Other comprehensive income, net of tax Items not to be recognised through profit or loss Items arising from re-measurement of defined benefit plans -0.0 0.2 2.6 Items not to be recognised through profit or loss, total -0.0 0.2 Items potentially to be recognised through profit or loss Hedging reserve, change in fair value 0.1 1.3 4.2 Change in fair value of interest rate swap, reclassified to profit and loss -1.0 - 4.2 Currency translation differences 0.1 -5. 7 Currency translation differences recognised through profit or loss - 0.1 Items potentially to be recognised through profit or loss, total -0.9 -4.3 Other comprehensive income, total -0.9 -4.1 Total comprehensive income, after tax 29.2 27 .4 Attributable to: Equity holders of the company 29.2 27 .4 More information on taxes in consolidated statement of comprehensive income is presented in note 1.9 Income taxes. 30 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORT Proposal by the Board of Directors SUSTAINABILITY REPORT Lassila & Tikanoja Annual Report 2023 Consolidated statement of ﬁnancial position 31 December MEUR 2023 2022 Note ASSETS Non-current assets Intangible assets 3.1 Goodwill 180.8 180. 7 Other intangible assets 38.2 36.5 219.0 21 7 .2 Tangible assets 166.0 155.3 3.3 Right-of-use assets 76.0 71.2 3.4 2 42.0 226.6 Other non-current assets Shares in associated companies and joint ventures 1 7. 6 14.0 3.5 Other shares and holdings 0.2 0.2 3.5 Deferred tax assets 3.1 1.9 1.9 Other receivables 1.5 1.9 3.5 22.5 1 7. 9 Total non-current assets 483.5 461. 7 Current assets Inventories 7. 8 7. 8 2.2 Trade receivables 85.9 91.0 2.1, 4.1 Contract assets 30.8 30.8 1.2, 2.1, 4.1 Income tax receivables 1.2 8 .7 2.1 Other receivables 7. 9 11.0 2.1, 4.1 Cash and cash equivalents 32.9 49.5 4.1 Total current assets 166.5 198.8 TOTAL ASSETS 649.9 660.5 31 December MEUR 2023 2022 Note EQUITY AND LIABILITIES Equity Equity attributable to equity holders of the parent company 4.3 Share capital 19.4 19.4 Other reserves -11.5 -10.6 Invested unrestricted equity reserve 0.6 0.6 Retained earnings 223.6 211.0 Total equity 232.2 220.4 Liabilities Non-current liabilities Deferred tax liabilities 28.5 28.1 1.9 Retirement benefit obligations 1.2 1.2 2.6 Provisions 7. 2 7. 4 2.5 Financial liabilities 17 1 . 7 17 7. 5 4.1 Other liabilities 13.2 13.3 2.4 221. 7 227 .5 Current liabilities Financial liabilities 22.1 39.3 4.1 Trade and other payables 1 72.8 1 70.5 2.3, 4.1 Income tax liabilities 0.3 1.0 2.3 Provisions 0.9 1 .7 2.5 196.1 212.6 Total liabilities 4 1 7. 7 440.1 TOTAL EQUITY AND LIABILITIES 649.9 660.5 31 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORT Proposal by the Board of Directors SUSTAINABILITY REPORT Lassila & Tikanoja Annual Report 2023 Consolidated statement of cash ﬂows 1 January - 31 December MEUR 2023 2022 Note Cash flows from operating activities Result for the period 30.1 31.5 Adjustments Income taxes 5 .7 6.3 1.9 Depreciation, amortisation and impairment 57 .4 55.4 1.7 Financial income and expenses 6.3 5.8 1.8 Gains and losses on sale of tangible and intangible assets -1.6 -1.2 Share of result of associated companies and joint ventures -3.6 -0. 7 3.5 Gain from sale of subsidiary's net assets to joint venture - -4.3 5.3 Impact of the discontinuation of Russian operations - -0.2 Other Net cash generated from operating activities before change -0.5 -0. 7 in working capital 93.6 91.9 Change in working capital Change in trade and other receivables 7. 2 -7. 0 Change in inventories 0.0 -0.8 Change in trade and other payables -2.1 1.7 Change in working capital 5.1 -6.2 Interest and other financial expenses paid -8.2 -4.8 Interest and other financial income received 2.5 0.4 Income taxes paid 0.5 -9.6 Net cash from operating activities 93.6 71.8 1 January - 31 December MEUR 2023 2022 Note Cash flows from investing activities Acquisitions of subsidiaries and businesses, net of cash acquired - -13.2 5.3 Proceeds from sale of subsidiaries and businesses, net of sold cash - -2.0 5.3 Purchases of property, plant and equipment and intangible assets -44.9 -33.8 Proceeds from sale of property, plant and equipment and intangible assets 2.2 2.0 Repayment of loan receivables from joint venture - 16.4 Change in other non-current investments - 0.0 Net cash from investing activities -42. 7 -30.6 Net cash from operating and investing activities 50.9 41.1 Net cash from financing activities Proceeds from short-term borrowings 10.0 35.0 4.1 Repayments of short-term borrowings -10.0 -35.0 4.1 Proceeds from long-term borrowings 40.0 75.0 4.1 Repayments of long-term borrowings -68.4 -58.1 4.1 Repayments of lease liabilities -21.2 -19.4 Dividends paid -1 7. 9 -1 7. 5 Net cash from financing activities -67 .5 -20.1 Net change in cash and cash equivalents -16.6 21.0 Cash and cash equivalents at the beginning of the period 49.5 28.6 Effect of changes in foreign exchange rates 0.0 -0.1 Cash and cash equivalents at the end of the period 3 2.9 49.5 4.1 32 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORT Proposal by the Board of Directors SUSTAINABILITY REPORT Lassila & Tikanoja Annual Report 2023 Consolidated statement of changes in equity 1 1 Invested Share Currency translation Hedging unrestricted Retained Total MEUR capital differences reserve equity reserve earnings equity Note Equity on 1 January 2022 19.4 -5.9 -0.4 0.6 196. 7 210.4 Total comprehensive income Result for the period 31.5 31.5 Other comprehensive income items -5.6 1.3 0.2 -4.1 Total comprehensive income - -5.6 1.3 - 31. 7 27 .4 Transactions with shareholders Share-based benefits 0.2 0.2 1.5 Dividends paid -1 7. 5 -1 7. 5 Returned dividends 0.0 0.0 Transactions with shareholders, total - - - - -1 7. 3 -1 7. 3 Equity on 31 December 2022 19.4 -11.5 0.9 0.6 211.0 220.4 Total comprehensive income Result for the period 30.1 30.1 Other comprehensive income items 0.1 -0.9 -0.0 -0.9 Total comprehensive income - 0.1 -0.9 - 30.1 29.2 Transactions with shareholders Share-based benefits 0.5 0.5 1.5 Dividends paid -1 7. 9 -1 7. 9 Returned dividends 0.0 0.0 Transactions with shareholders, total - - - - -1 7. 4 -1 7. 4 Equity on 31 December 2023 19.4 -11.5 - 0.6 223.6 232.2 1 Included in other reserves of equity in the consolidated statement of financial position. For more information on equity please refer to note 4.3 Equity, and on taxes recognised in equity to note 1.9 Income taxes. Lassila & Tikanoja Annual Report 2023 33 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 2. 3. 4. 5. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORT Proposal by the Board of Directors SUSTAINABILITY REPORT 1. Notes to the consolidated ﬁnancial statements General information The Lassila & Tikanoja Group specialises in environmental management and property and plant support services. The Group has business operations in Finland and Sweden. The Group’s parent company is Lassila & Tikanoja plc (business identity code 1680140-0). Lassila & Tikanoja plc is a Finnish public limited liability company domiciled in Helsinki, Finland. The registered address of the Company is Valimotie 27, 00380 Helsinki, Finland. Lassila & Tikanoja plc is listed on the Nasdaq Helsinki. The consolidated financial statements are available on the company website at www.lt.fi/en or from the parent company’s head office, address Valimotie 27, 00380 Helsinki, Finland. These consolidated financial statements have been approved for issue by the Board of Directors of Lassila & Tikanoja plc on 20 February 2024. Basis of preparation The consolidated financial statements have been prepared in accordance with the IFRS Accounting Standards as adopted by the EU. In the Finnish Accounting Act and regulations enacted by virtue of it, International Financial Reporting Standards refer to standards and related interpretations approved for adop- tion within the EU according to the procedure described in regulation (EC) 1606/2002. The notes to the consolidated financial statements also comply with the Finnish accounting and community legislation supplementing the IFRS regu- lations. Figures in these financial statements are presented in millions of euros, unless otherwise stated. Application of new or amended IFRS standards New and amended standards adopted in 2023 The Group has applied the new standards and interpretations published by IASB with the effective date 1 January 2023. These standards, amendments and interpretations did not have material impact on the entity in the current period, and they are not expected to have any material impact on the entity in the future reporting periods and on foreseeable future transactions. New or amended IFRS standards and interpretations to be applied in future financial periods The Group applies new standards and interpretations from the effective date. If the effective date is other than the first day of a financial year, the Group applies the standard or interpretation from the beginning of the following financial year. On 31 October 2022, IASB issued amendments ”Non-current liabilities with covenants” to IAS 1 ”Presentation of financial statements”. The amendments are effective for annual reporting periods beginning on or after 1 January 2024 and override the previous amendments. Early application of the amendments is allowed. The new amendments clarify that covenants of loan arrangements which an entity must comply with only after the reporting date would not affect classification of a liability as current or non-current at the reporting date. How- ever, those covenants that an entity is required to comply with on or before the reporting date would affect classification as current or non-current, even if the covenant is only assessed after the entity’s reporting date. The Group applies the amendments from the effective date, i.e. for annual reporting periods begin- ning on or after 1 January 2024. The company does not expect the amendments to change its classification of liabilities as current or non-current from the current guidance. However, the new ammendments will increase the amount of disclosure information relating to the covenants. The impact from any other new and amended standards issued but not yet effective is not considered to be material to the Group’s financial reporting. Critical judgements by Management When preparing IFRS financial statements, the Group management must make estimates and assumptions concerning the future, the outcome of which may differ from the estimates and assumptions made. The management also has to use judgement when making decisions on the selection and application of accounting principles. Considerations based on discretion apply, in particular, to cases where the applicable IFRS standards provide for alternative methods of recognition, measurement or presentation. The preparation of financial statements requires the management to make estimates and assumptions that affect the carrying amounts of assets and lia- bilities on the balance sheet date and the amounts of income and expenses. The estimates and assumptions reflect the management’s best understanding on the balance sheet date, based on previous experience and assumptions about the future that are considered to have the highest probability on the balance sheet date. The most significant area where management has used the judgement described above relates to the measurement of assets and liabilities of acquired business operations. Key assumptions regarding the future and key uncertainty factors related to estimates on the closing date that involve a significant risk of causing a material adjustment to the carrying amounts of the Group’s assets and liabilities within the next financial year are described in the following notes: 1.2 Revenue from contracts with customers 1.9 Income taxes 2.4 Other non-current liabilities 2.5 Provisions 3.2 Goodwill impairment testing 3.4 Right-of-use assets and lease liabilities 5.3 Business acquisitions and disposals and assets and liabilities classiﬁed as held for sale Lassila & Tikanoja Annual Report 2023 34 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORT Proposal by the Board of Directors SUSTAINABILITY REPORT 1 Financial result 1.1 Segment reporting ................................................................................35 1.2 Revenue from contracts with customers ..............................36 1.3 Employee benefit expenses ............................................................38 1.4 Other operating income and expenses ..................................... 38 1.5 Share-based payments .....................................................................39 1.6 Expenses related to leases ............................................................. 40 1.7 Depreciation, amortisation and impairments ...................... 40 1.8 Financial income and expenses .....................................................41 1.9 Income taxes .............................................................................................41 Lassila & Tikanoja Annual Report 2023 35 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORT Proposal by the Board of Directors SUSTAINABILITY REPORT 1.1 Segment reporting Accounting policy Segment information is reported to the highest operational decision- maker, consistent with internal reporting. The highest operational decision-maker is Lassila & Tikanoja plc’s President and CEO. Segment assets are those operating assets that are employed by a segment in its operating activities and that can be allocated to the segment on a reasonable basis. Items reported under Group adminis- tration and other include items related to Group level functions such as expenses associated with Group management, as well as costs incurred from operating as a public company and the corresponding assets and liabilities. Lease liabilities and eliminations are also included in Group Administration and other . The Group’s operating segments The Group has four reportable segments, which are the Group’s business divisions - Environmental Services, Industrial Services, Facility Services Finland and Facility Services Sweden. Environmental Services division consists of the waste management and recycling business, selling of waste containers and their maintenance, and new circular economy solutions. The division operates only in Finland. On December 17, 2021, Lassila & Tikanoja Plc and Neova Oy signed an agreement to merge their fuel wood businesses. According to the agreement, Neova’s fuel wood business will be transferred to L&T Biowatti Oy. On 1 July 2022, Neova’s fuel wood business was transferred to L&T Biowatti Oy. With the merger the company continued as an independent limited company called Laania Oy. L&T Biowatti Oy was reported as part of Environmental Services segment until the merger. For more information on the joint venture, please refer to note 3.5 Other long-term assets. Industrial Services division covers solutions for industrial material flows and their utilisation, industrial process cleaning solutions, collection and disposal of hazardous waste and sewer system maintenance and repair. The division has operations both in Finland and in Sweden. Facility Services Finland division provides cleaning and other support services for facilities, property maintenance and technical maintenance, including energy management. Facility Services Sweden division provides cleaning and other support services for cleaning facilities and technical maintenance. 2023 MEUR Environmental Services Industrial Services Facility Services Finland Facility Services Sweden Group administration and other Group External net sales 282.1 138.8 247.9 133.2 - 802.1 Inter-division net sales 1.5 2.2 2.1 0.0 -5.8 - Total net sales 283.7 141.0 250.0 133.2 -5.8 802.1 Operating profit 27.1 13.8 4.4 -3.7 -3.2 38.4 Operating margin, % 9.5 9.8 1.8 -2.8 4.8 Adjusted operating profit 1 27.1 14.0 4.4 -3.7 -2.8 39.0 Adjusted operating margin, % 1 9.5 9.9 1.8 -2.8 4.9 Financial income and expenses -6.3 Share of result in associated companies and joint ventures 3.6 Profit before tax 35.7 Income taxes -5.7 Profit for the period 30.1 Assets 291.6 151.0 78.7 83.5 45.1 649.9 Liabilities 82.7 60.2 56.9 23.6 194.3 417.7 Capital expenditure 40.9 17.5 1.0 0.5 1.2 61.1 Depreciation, amortisation and impairments 30.4 12.8 8.1 5.0 1.0 57.4 2022 MEUR Environmental Services Industrial Services Facility Services Finland Facility Services Sweden Group administration and other Group External net sales 319.7 129.8 254.1 140.4 - 844.1 Inter-division net sales 1.5 2.2 2.2 0.0 -6.0 - Total net sales 321.2 132.0 256.3 140.4 -6.0 844.1 Operating profit 30.3 12.7 -0.5 0.4 0.1 42.9 Operating margin, % 9.4 9.6 -0.2 0.3 5.1 Adjusted operating profit 1 30.3 13.6 -0.5 0.4 -2.8 40.9 Adjusted operating margin, % 1 9.4 10.3 -0.2 0.3 4.8 Financial income and expenses -5.8 Share of result in associated companies and joint ventures 0.7 Profit before tax 37.8 Income taxes -6.3 Profit for the period 31.5 Assets 2 278.6 145.3 84.5 88.4 63.7 660.5 Liabilities 2 81.3 52.2 56.2 26.4 224.0 440.1 Capital expenditure 20.3 34.6 1.5 0.4 1.3 58.2 Depreciation, amortisation and impairments 26.9 12.3 9.1 5.9 1.3 55.4  Unaudited¹ Unaudited 2 From 2023 onwards, the allocation of assets and liabilities to the reporting segments has been adjusted. The comparative figures have been updated accordingly. Lassila & Tikanoja Annual Report 2023 36 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORT Proposal by the Board of Directors SUSTAINABILITY REPORT Geographical segments Accounting policy The Group operates in Finland and Sweden. Net sales of geographical areas are reported based on the geographical location of the customer, and assets are reported by geographical location of the assets. MEUR 2023 2022 Net sales Finland 645.3 682.3 Sweden 150.1 156.6 Other countries 6.8 5.2 Total 802.1 844.1 Assets Finland 602.0 604.4 Sweden 47.9 56.1 Total 649.9 660.5 Capital expenditure Finland 58.4 41.6 Sweden 2.6 16.6 Total 61.1 58.2 1.2 Revenue from contracts with customers Accounting policy Revenue from contracts with customers is recognised when or as the performance obligation is satisfied by transferring a promised good or service to the customer. A good or a service is transferred when the cus- tomer obtains control of the good or service. Revenue is recognised based on the transaction price to which L&T expects to be entitled in exchange for transferring the good or service. The Group acts as a principal in all of its contracts with customers. The Group applies the practical expedient and does not disclose the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period. This is because the contract period in the Group’s cus- tomer contracts for project deliveries, is typically short. However, in long-term service agreements the contract period can be several years. For these contracts the Group applies the practical exedient according to which the Group is entitled to a consideration from the customer that corresponds directly with the value to the customer from Groups per- formance completed to date. In these contracts the Group recognises revenue for the amount that it is entitled to invoice. Services business Services business comprises of long-term service agreements and separately ordered services. Long-term service agreements include for example waste management and recycling services which is part of Environmental Services as well as cleaning and property maintenance services included in Facility Services. Long-term service agreements include one or more performance obligations depending on the amount of distinct services provided to the customer. A typical charac- teristic of long-term services is that services are delivered evenly throughout the contract term. With one contract customer can order for example inside cleaning services, outside cleaning and upkeep services and property main- tenance services that are distinct performance obligations. Each service is a distinct performance obligation as the customer can benefit from the services on its own and could order the services from different service providers. If a contract contains more than one distinct performance obligation, the transac- tion price is allocated to each performance obligation based on the stand-alone selling prices. In addition to the long-term service agreements, L&T offers services which are separately ordered as part of Industrial Services and Facility Services. Compared to the long-term service agreements, services that are ordered sepa- rately are typically short-term in nature and they are provided either occasionally or on a non-recurring basis. Revenue from services business is recognised over time, as the customer simultaneously receives and consumes the benefits from the services provided. Revenue from services that are invoiced with a fixed monthly fee is recognised evenly over the contract term as also the work is performed evenly over the term. Revenue from services that are invoiced based on hourly fees is recog- nised based on the work performed. The management has identified that there may be seasonal fluctuation especially in the long-term service agreements of Facility Services as the work performed differs between seasons during the year. Management has estimated that the costs for these services incur evenly throughout the period and, thus, revenue is recognised evenly over the period. Industrial Services receives contaminated soil from customers, for which the performance obligation is the receipt and processing of soil. Measuring progress towards complete satisfaction of the performance obligation is based on the output method. Revenue is recognised based on the amount of processed soil. Customer is invoiced when soil is received and the payment received from the customer is treated as a contract liability. Project business Project business includes for example projects for industrial process cleaning and closing of landfills which are part of Industrial Services business and renova- tion and building technology projects as well as refrigeration and cooling service projects for retailers and energy management projects included in Facility Ser- vices. In project business the customer orders the entire project at once and the project is considered as a single performance obligation. In some cases, a con- tract can also consist of several different locations and each location creates a distinct performance obligation. If the contract contains more than one distinct performance obligation, the transaction price is allocated to each performance obligation based on the stand-alone selling prices. Revenue from project business is recognised over time as the projects mainly relate to enhancing an asset that the customer controls. In project business the input method based on costs incurred is used for measuring the progress towards complete satisfaction of the performance obligation. The management has estimated that the costs incurred for a project can be determined reliably. Also, due to the contract structure in project business the management has determined that L&T has an enforceable right to payment for performance com- pleted to date. In project business invoicing is typically made based on a prede- termined payment schedule. Sale of equipment and materials Sale of equipment consists of sale of compactors and balers to customers included in Environmental Services business. Sale of materials consists of sale Lassila & Tikanoja Annual Report 2023 37 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORT Proposal by the Board of Directors SUSTAINABILITY REPORT of wood-based fuels and recycled fuels as well as of sale of other recycled raw materials in Environmental Services business. Each equipment or material delivery creates a distinct performance obligation in the sale of equipment and materials. The equipment delivered by the Group does not involve any additional warranties that would be considered as a distinct performance obligation. Control of the delivered product is transferred when the physical possession of the product has been transferred to the customer, which typically occurs at delivery. Environmental Services business delivers wood-based fuels and recy- cled fuels to customers. The consideration received from a customer is based on the amount of delivered fuel and the energy level of the fuel or on the amount of the delivered material. In some cases, the final transaction price is determined after the customer has measured the amount of fuel delivered, and, thus, there is uncertainty relating to the amount of final transaction price. Management has estimated that the level of uncertainty related to the transaction price is low and any adjustments to be made to the transaction price when the uncertainty is resolved are not considered to be material. Lease income In addition to the sale of compactors and balers, customers can also lease the equipment through an external financing company. The agreement made between the Group and the financing company includes a repurchase obliga- tion at the end of the lease period with a predetermined residual value. Due to the repurchase obligation management has determined that all the risks and rewards incidental to ownership of the assets are not transferred substantially to the customer and, thus, the leased equipment is treated as tangible assets. At the inception of the lease, advances received from the financing company as well as the residual value of the asset are recognised as a liability in the balance sheet. Lease income is recognised monthly during the lease term. Management has estimated that the amount of payment received from the financing com- pany does not Include a significant financing component. Estimating variable consideration The contracts with customers may include components of variable consider- ations, such as bonuses and penalties for delay. Management has determined that the level of uncertainty relating to the variable consideration is typically low. The estimate of the amount of variable considerations is reassessed at the end of each reporting period. Contract balances Contract assets and trade receivables A contract asset is a right to consideration in exchange for goods or services that are transferred to a customer. If goods or services are transferred to a cus- tomer before the invoice is sent to the customer, the amount is recognised as a contract asset. If the company has an unconditional right to the consideration, a trade receivable is recognised in the statement of financial position. Contract assets and trade receivables are assessed for impairment in accord- ance with IFRS 9. The general payment term for customers is 14 days, but it can vary depending on the specific case. Contract liabilities A contract liability is an obligation to transfer goods or services to a customer for which L&T has received consideration from the customer. If a customer pays consideration before goods or services are transferred to the customer, a con- tract liability is recognised in the statement of financial position when the pay- ment is made by the customer. Incremental costs of obtaining a contract The company does not have material incremental costs to obtain a contract. The company applies a practical expedient which allows the costs to obtain a con- tract to be recognised when they occur. Disaggregation of revenue Net sales consist of services for which revenue is recognised over time, prod- ucts for which revenue is recognised at a point in time as well as lease income. Services for which revenue is recognised over time include sales revenue from long-term service agreements, separately ordered services and the project busi- ness. Services for which revenue is recognised at a point in time include revenue from the sale of equipment and materials. Critical judgements by Management The amount and timing of revenue recognition involves management’s judgement especially in the following areas: • Identification of performance obligations for services business • Timing of revenue recognition in services and project business • Treatment of repurchase agreements relating to compactors and balers in Environmental Services business including the assessment of the materiality of the financing component • Measurement of variable consideration These judgements have been described in more detail in the description relating to revenue recognition. 2023 MEUR Long-term service agreements Separately ordered services Project business Sales of equipment and materials Lease income Total net sales Environmental Services 229.6 50.5 3.5 283.7 Industrial Services 65.5 58.5 11.8 5.2 141.0 Facility Services Finland 181.5 64.2 4.3 250.0 Facility Services Sweden 56.1 74.0 3.1 133.2 Total 532.6 196.8 19.2 55.7 3.5 807.9 Interdivision -5.8 External net sales 802.1 2022 MEUR Long-term service agreements Separately ordered services Project business Sales of equipment and materials Lease income Total net sales Environmental Services 225.3 92.7 3.3 321.2 Industrial Services 57.7 59.0 9.7 5.6 132.0 Facility Services Finland 182.3 68.8 5.2 256.3 Facility Services Sweden 61.1 74.9 4.4 140.4 Total 526.4 202.7 19.4 98.3 3.3 850.0 Interdivision -6.0 External net sales 844.1 Lassila & Tikanoja Annual Report 2023 38 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORT Proposal by the Board of Directors SUSTAINABILITY REPORT Contract balances MEUR 2023 2022 Trade receivables 85.9 91.0 Contract assets 30.8 30.8 Contract liabilities 8.9 7.2 Contract assets consist of uninvoiced sales, which will be invoiced during the following reporting period. Contract liabilities are mainly related to the long-term service agreements and are recognised as revenue entirely during the following period. Contract liabilities are included in the balance sheet item Trade and other payables. No revenue was recognised in the reporting period from performance obligations satisfied (or partially satisfied) in previous periods. 1.3 Employee benefit expenses Accounting policy The Group’s employee benefits include wages, salaries and bonuses paid to employees, post-employment benefits (defined contribution plans and defined benefit plans), share-based payments and other personnel expenses (statutory social security costs). Details on share-based payments are disclosed in note 1.5 Share-based payments. The employee benefits of the top management are disclosed in note 5.4 Related-party transactions. Details on the items of defined benefit pension plans in the consolidated statement of financial position are shown in note 2.6 Retirement benefit obligations. MEUR 2023 2022 Wages and salaries 282.8 282.4 Pension costs Defined contribution plans 60.8 60.9 Defined benefit plans 0.0 0.0 Share-based payments 0.5 0.1 Other personnel expenses 8.7 9.7 Total 352.8 353.1 Average number of employees in full-time equivalentsalents¹ 2023 2022 Finland 5,608 5,655 Sweden 1,135 1,165 Total 6,743 6,820 1 The calculation of the average number of employees in full-time equivalents was re-defined in 2023. The figures for 2022 has been adjusted accordingly. 1.4 Other operating income and expenses Accounting policy Other operating income includes items that are not considered as being directly related to the Group’s normal business, such as gains from sales of assets and business activities and received compensations. Other operating expenses include, for instance, fees for expert and consulting services, losses from sales of assets and business activities, bad debts and changes in allowances for credit losses, expenses related to the use of vehicles and machinery, ICT costs, voluntary social security costs, travel costs, real estate costs and implementation costs of cloud computing arrangements. Government grants Government grants or other grants relating to actual costs are recognised in the income statement when the Group complies with the conditions attached to them and there is reasonable assurance that the grants will be received. They are presented in other operating income. Government grants directly associated with the recruitment of personnel, such as employment grants, apprenticeship grants and the like, are recognised as reductions in personnel expenses. Grants for acquisition of property, plant and equipment are recognised as deductions of historical cost. The grant is recognised as income over the economic life of a depreciable asset, by way of a reduced depreciation charge. Other operating income MEUR 2023 2022 Gains on sales of property, plant and equipment 1.7 1.7 Gain from sale of subsidiary's net assets to joint venture - 4.3 Reimbursements and government grantst grants¹ 2.0 0.6 Other 2.4 2.1 Total 6.2 8.7  ¹ The figure in 2023 includes a compensation totalling EUR 1.6 million paid by the previous supplier of a new ERP system relating to the termination of the co-operation. Other operating expenses MEUR 2023 2022 ICT costs 16.8 16.6 Travel costs 9.0 8.0 Bad debts and changes in allowances for impairment 1.0 0.4 Fuels for vehicles and machinery 27.8 29.6 Maintenance and repair of vehicles and machinery 29.6 26.7 Insurances 3.1 4.2 Property maintenance costs 5.0 5.0 Expert feesees¹ 6.9 7.5 Voluntary social security costs 6.8 7.6 Marketing costs 1.6 2.1 Losses on sales of intangible and tangible assets 0.1 0.5 Discontinuation of Russian operations - -0.2 OtherOther² 5.1 6.7 Total 113.1 114.7  ¹ The figure in 2023 includes a compensation totalling EUR 0.9 million paid by the previous supplier of a new ERP system relating to the termination of the co-operation.  ² The figure in 2023 includes a compensation totalling EUR 0.5 million paid by the previous supplier of a new ERP system relating to the termination of the co-operation. Lassila & Tikanoja Annual Report 2023 39 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORT Proposal by the Board of Directors SUSTAINABILITY REPORT 1.5 Share-based payments Accounting policy The Group has several incentive arrangements for which payments are made either as equity instruments or cash. The benefits granted under the arrangements are measured at fair value on the grant date and recognised as expense evenly over the vesting period. The effect of the arrangement on profit and loss is recognised under employee benefit expenses. Share-based incentive programme 2021 Lassila & Tikanoja plc’s Board of Directors decided at a meeting held on 27 January 2021 on a new share-based incentive programme. Potential rewards were based on the EVA result and the carbon handprint of the Group. Based on the programme a maximum of 37,300 shares of the company could be granted. Based on the decision by the board of directors a total of 24,522 Lassila & Tikanoja plc’s shares were granted in 2022 from the share-based incentive programme of year 2021. The programme covered 9 persons. Share-based incentive programme 2022 Lassila & Tikanoja plc’s Board of Directors decided at a meeting held on 26 January 2022 on a new share-based incentive programme. Potential rewards are based on the EVA result and the carbon handprint of the Group. Based on the programme a maximum of 37,300 shares of the company could be granted. The performance criteria for the share-based incentive programme 2022 were not met, and no Lassila & Tikanoja plc’s shares were granted from the share- based incentive programme. The programme covered 9 persons. Performance Share Plan 2023–2027 Lassila & Tikanoja plc’s Board of Directors decided at a meeting held on 14 December 2022 on a new share-based incentive programme. The Performance Share Plan 2023–2027 comprises three three-year performance periods cov- ering the calendar years 2023–2025, 2024–2026 and 2025–2027. The Board of Directors decides on the performance criteria of the plan and the performance levels to be set for each performance criterion at the beginning of a perfor- mance period. The rewards to be paid based on the performance period 2023–2025 corre- spond to the value of approximately 202,067 Lassila & Tikanoja plc shares in maximum total, also including the portion to be paid in cash. The target group of the Performance Share Plan during the performance period 2023–2025 con- sists of approximately 38 key employees, including the Group’s President and CEO and the Group Executive Board. Potential rewards of performance period 2023-2025 will be based on return on capital employed (ROCE), total share- holder return (TSR) and reduction of the carbon footprint (ESG) during the period 2023-2025. The rewards to be paid based on the performance period 2024–2026 corre- spond to the value of approximately 249,900 Lassila & Tikanoja plc shares in maximum total, also including the portion to be paid in cash. The target group of the Performance Share Plan during the performance period 2024–2026 con- sists of approximately 50 key employees, including the Group’s President and CEO and the Group Executive Board. Potential rewards of performance period 2024-2026 will be based on return on capital employed (ROCE), total share- holder return (TSR) and reduction of the carbon footprint (ESG) during the period 2024-2026. Bridge Plan 2023–2026 Lassila & Tikanoja plc’s Board of Directors decided at a meeting held on 14 December 2022 on a new share-based incentive programme. The Bridge Plan 2023–2026 has two (2) one-year (1) performance periods covering the calendar years 2023 and 2024. A performance period is followed by a two-year retention period. The aim of the plan is to support the transition from the old Performance Share Plan to the new Performance Share Plan.The Board of Directors decides on the performance criteria of the plan and the performance levels to be set for each performance criterion at the beginning of a performance period. The rewards to be paid based on the performance period 2023 correspond to the value of approximately 83,800 Lassila & Tikanoja plc shares in maximum total, also including the portion to be paid in cash. The target group of the Bridge Plan during the performance period 2023 consists of approximately 10 key employees, including the Group’s President and CEO and the Group Executive Board. Potential rewards of performance period 2023 will be based on return on capital employed (ROCE) and reduction of the carbon footprint (ESG) in 2023. The rewards to be paid based on the performance period 2024 correspond to the value of approximately 83,800 Lassila & Tikanoja plc shares in maximum total, also including the portion to be paid in cash. The target group of the Bridge Plan during the performance period 2024 consists of approximately 10 key employees, including the Group’s President and CEO and the Group Executive Board. Potential rewards of performance period 2024 will be based on return on capital employed (ROCE) and reduction of the carbon footprint (ESG) in 2024. Expenses arising from share-based incentive programmes, MEUR 2023 2022 Share component 0.5 0.1 Total 0.5 0.1 Information of the share-based incentive programmes 2023-2027 2023-2026 Share-based incentive programme Performance period 2024-2026 Performance period 2023-2025 Performance period 2024 Performance period 2023 2022 2021 Grant date - 16 Jan 2023 - 16 Jan 2023 26 Jan 2022 27 Jan 2021 Start of the earnings period 1 Jan 2024 1 Jan 2023 1 Jan 2024 1 Jan 2023 1 Jan 2022 1 Jan 2021 End of the earnings period 31 Dec 2026 31 Dec 2025 31 Dec 2024 31 Dec 2023 31 Dec 2022 31 Dec 2021 Average share price at grant date - 11.48 - 11.48 13.06 15.40 Maximum number of shares 249,000 202,067 83,800 83,800 37,300 37,300 Realisation on closing date, shares - 24,522 Returned shares - - Obligation to hold shares, years - - 2 2 2 2 Release date of shares - - 31 Mar 2027 31 Mar 2026 31 Mar 2025 31 Mar 2024 Number of persons included 50 38 10 10 9 9 Lassila & Tikanoja Annual Report 2023 40 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORT Proposal by the Board of Directors SUSTAINABILITY REPORT 1.6 Expenses related to leases Accounting policy The Group leases production and office premises including related land areas, vehicles and ICT equipment. At the commencement date of a lease contract, a right-of-use asset and a lease liability, measured as the present value of the remaining lease payments, is recognised in the statement of financial position. The right-of use asset is subsequently measured at cost less accu- mulated depreciation and less any accumulated impairment losses and adjusted for any remeasurements of the lease liability. Depreciation is calculated using the straight-line method from the commencement date to the earlier of the end of the lease term or the end of the useful life of the right-of-use asset. The depreciations of right-of-use assets are presented in depreciation, amortisation and impairments in the income statement. The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or price level or if the Group changes its assessment of whether it will exercise a purchase, extention or termination option. The interest expense on the lease liability is included in the financial income and expenses in the income statement. In the statement of cash flows, the amortisation of lease liabilites is presented in the cash flows from financing activities and the interest paid in the cash flows from operating activities. The Group applies the exemption for short-term leases to production and office premises leases and the exemption for low-value assets to leases of ICT equipment. For these leases, the right-of-use asset and lease liability is not recognised. The lease payments of low-value assets and short-term leases are included in Other operating expenses and Materials and services in the income statement . MEUR 2023 2022 Depreciation expense of right-of-use assets -21.6 -19.5 Interest expenses on lease liabilities -2.4 -1.5 Expenses related to leases of low-value assets -4.2 -4.3 Total -28.2 -25.3 In 2023, the cash flows related to leases totalled EUR -27.8 million (-25.3). 1.7 Depreciation, amortisation and impairments Accounting policy Depreciation and amortisation Depreciation and amortisation are recognised on a straight-line basis over the ecomomic useful lives of the assets, or over the lease contract periods, when applicable, if shorter. Intangible assets: 5-10 years Intangible assets from acquisitions: 3-13 years Buildings and structures: 5-30 years Vehicles: 6-15 years Machinery and equipment: 4-15 years Goodwill is not amortised, but is tested annually for impairment during the last quarter. Goodwill is presented in the statement of financial position at historical cost less impairment losses, if any. For completed landfills the Group applies the units of production method, which involves depreciation on the basis of the volume of waste received. Land is not depreciated. Impairments On each balance sheet date, the Group assesses the carrying amounts of its assets for any impairment. If any indication of impairment ex- ists, an estimate of the asset’s recoverable amount is made. The recoverable amount is the higher of an asset’s fair value less sell- ing costs and its value-in-use. Value-in-use refers to the estimated future net cash flows available from an asset, discounted to the present val- ue. The discount rate used is the pre-tax rate, which reflects the market view of the time value of money and the risks associated with the asset. An impairment loss is recognised in the income statement when an asset’s carrying amount exceeds its recoverable amount. Impair- ment losses attributable to a cash-generating unit are used for de- ducting first the goodwill allocated to the cash-generating unit and, thereafter, the other assets of the unit on an equal basis. Intangible assets under construction are software projects that cannot be tested separately for impairment, as they do not generate separate cash flows. There is no need for impairment if, at the end of the financial period, it is clear that the projects will be completed and the software will be introduced. Intangible assets under construction are, however, tested for impairment as part of the cash generating unit to which they belong. An impairment loss for an asset other than goodwill recognised in prior periods is reversed if there is a change in circumstances and the recov- erable amount has changed. An impairment loss recognised for goodwill is not reversed. Goodwill impairment testing is described in note 3.2. Gains and losses on sales of assets Gains and losses on sales and disposal of assets are recognised through profit or loss and are presented in other operating income or expenses. MEUR 2023 2022 Depreciation and amortisation Intangible assets -6.8 -7.8 Buildings -5.5 -6.2 Machinery and equipment -21.6 -21.8 Right-of-use assets -21.6 -19.5 Other tangible assets -0.0 -0.0 Total -55.5 -55.4 Impairments Intangible assets 1 -1.9 - Total -1.9 - Gains / losses on sales of intangible and tangible assets Gain on sales of intangible and tangible assets 1.7 1.7 Loss on sales of intangible and tangible assets -0.1 -0.5 Total 1.6 1.2  Impairment o¹ Impairment of intangible assets consists of expenses of the previous supplier of the new ERP system capitalised in prepayments and construction in progress. Lassila & Tikanoja Annual Report 2023 41 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORT Proposal by the Board of Directors SUSTAINABILITY REPORT 1.8 Financial income and expenses Accounting policy Exchange rate gains and losses arising from foreign-currency trans- actions and the translation of monetary items are recognised in the income statement. Foreign exchange gains and losses on business transactions are included in the respective items above operating profit. Foreign exchange gains and losses on financial assets and liabilities are included in financial income and costs. Borrowing costs are recognised as expenses in the period in which they arise. Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset shall be included in the acquisition cost of that asset. There were no such costs capitalised at the end of the reporting period. Transaction costs directly attributable to borrowing are includ- ed in the historical cost of the liability and recognised as an interest expense during the expected life of the liability applying the effective interest method. MEUR 2023 2022 Financial income Interest income on loans and other receivables 1.2 0.2 Interest income from joint ventures - 0.2 Fair value of interest rate swap - transfer from OCIer from OCI¹ 1.3 - Total financial income 2.5 0.4 Financial expenses Interest expenses on borrowings measured at amortised cost 5.7 3.7 Interest expenses on lease liabilitities 2.4 1.5 Other financial expenses 0.5 0.8 Losses on foreign exchange 0.0 0.2 Total financial expenses 8.7 6.2 Financial income and expenses -6.3 -5.8  ¹ The interest rate swap that was used for hedging cash flows related to floating rate loans was terminated in June 2023 in conjunction with the refinancing of the hedged loan. The fair value of the interest rate swap totalling EUR 1.3 million was recognised as financial income in the consolidated income statement. 1.9 Income taxes Accounting policy The Group’s income taxes consist of current tax and deferred tax. Tax expenses are recognised in the income statement, with the exception of items directly recognised in equity or comprehensive result, in which case the tax effect is recognised in the corresponding item. Current tax is determined for the taxable profit for the period according to prevailing tax rates in each country. Taxes are adjusted by current taxes related to previous periods, if any. Deferred tax assets and liabilities are recognised for all temporary differences between the tax bases of assets and liabilities and their carrying amounts. The deferred taxes are determined using tax rates enacted by the balance sheet date and that are expected to apply when the deferred tax asset is realised or liability settled. No deferred tax is recognised for impairment of goodwill that is not tax-deductible. A deferred tax asset is recognised only to the extent that it is probable that taxable profit will be available against which the deferred tax asset can be utilised. The most significant temporary differences arise from fair value measurements related to acquisitions and new intangible assets. Income tax in the income statement MEUR 2023 2022 Income tax for the period -6.3 -5.7 Income tax for previous periods -0.0 -0.0 Change in deferred tax 0.7 -0.6 Total -5.7 -6.3 The reconciliation of income tax expense recognised in the income statement and income tax calculated at the statutory tax rate in Finland MEUR 2023 2022 Profit before tax 35.7 37.8 Income tax at Finnish tax rate 20% -7.1 -7.6 Difference between tax rate in Finland and in other countries 0.0 -0.0 Non-deductible expenses -0.2 -0.3 Tax exempt income 1.2 1.6 Income tax for previous periods -0.1 0.0 Unrecognised deferred tax on loss for the period -0.1 -0.0 Utilisation of previously unrecognised tax losses - 0.1 Other items 0.6 -0.2 Total -5.7 -6.3 Tax effects of components of other comprehensive income 2023 2022 MEUR Before tax Tax expense/ benefit After tax Before tax Tax expense/ benefit After tax Items arising from re-measurement of defined benefit plans -0.0 0.0 -0.0 0.2 -0.0 0.2 Hedging reserve, change in fair value -1.2 0.2 -0.9 1.7 -0.3 1.3 Currency translation differences 0.1 - 0.1 -5.7 - -5.7 Currency translation differences recognised through profit or loss - - - 0.1 - 0.1 Components of other comprehensive income -1.1 0.2 -0.9 -3.7 -0.4 -4.1 Lassila & Tikanoja Annual Report 2023 42 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORT Proposal by the Board of Directors SUSTAINABILITY REPORT Deferred taxes in the statement of ﬁnancial position MEUR 2023 2022 Deferred tax assets 3.1 1.9 Deferred tax liabilities -28.5 -28.1 Deferred taxes, net -25.4 -26.3 At the balance sheet date, the Group companies did not have tax losses, on which no deferred tax asset has been recognised as the realisation of the tax benefit is not considered probable (EUR 0.4 million at the end of 2022). Deferred tax is recognised in the statement of financial position as tax assets and tax liabilities. Deferred tax assets and deferred tax liabilities are set off when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred taxes relate to the same fiscal authority. Critical judgements by Management The recognition of deferred tax assets involves management’s judgement. The appropriateness for recognising deferred tax assets is assessed at each balance sheet date. For this purpose, the Group estimates the probability of subsidiaries generating recoverable taxable income against which unused tax losses and unused tax compensations can be utilised. The factors used in the estimates may differ from the actuals, which may lead to write-down of deferred tax assets. Deferred tax assets and liabilities MEUR At 1 Jan 2023 Recognised in income statement Recognised in equity Exchange rate differences Business acquisitions At 31 Dec 2023 Deferred tax assets Tax losses 1.6 -0.3 0.1 1.4 Pension benefits 0.2 0.0 0.2 Provisions 1.7 0.1 1.8 Unused depreciation 1.4 0.3 1.7 Other temporary differences 2.0 2.7 4.8 Netting of deferred taxes -5.1 -6.6 Total 1.9 2.7 0.0 0.1 - 3.1 Deferred tax liabilities Acquisitions -24.4 -1.7 -0.1 -26.3 Appropriations -7.4 -0.2 -7.6 Fair value adjustments -0.2 0.2 - Other temporary differences -1.1 -0.1 -1.2 Netting of deferred taxes 5.1 6.6 Total -28.1 -2.0 0.2 -0.1 - -28.5 MEUR At 1 Jan 2022 Recognised in income statement Recognised in equity Exchange rate differences Business acquisitions At 31 Dec 2022 Deferred tax assets Tax losses 1.8 -0.0 -0.2 1.6 Pension benefits 0.2 -0.0 0.2 Provisions 2.2 -0.4 1.7 Fair value adjustments 0.1 -0.1 - Unused depreciation 1.3 0.1 1.4 Other temporary differences 0.1 2.0 2.0 Netting of deferred taxes -2.9 -5.1 Total 2.7 1.6 -0.2 -0.2 - 1.9 Deferred tax liabilities Acquisitions -22.6 -1.2 0.3 -0.9 -24.4 Appropriations -6.9 -0.5 -7.4 Fair value adjustments - -0.2 -0.2 Other temporary differences -0.7 -0.4 0.0 -1.1 Netting of deferred taxes 2.9 5.1 Total -27.2 -2.2 -0.2 0.3 -0.9 -28.1 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORT Proposal by the Board of Directors SUSTAINABILITY REPORT Lassila & Tikanoja Annual Report 2023 Lassila & Tikanoja Annual Report 2023 43 Financial statements of the parent company 1. 2. 3. 4. 5. Proposal by the Board of Directors 2 Operational assets and liabilities 2.1 Trade and other receivables............................44 2.2 Inventories .................................................................44 2.3 Trade and other current payables ...............45 2.4 Other non-current liabilities .............................45 2.5 Provisions ..................................................................45 2.6 Retirement benefit obligations ......................46 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORT Proposal by the Board of Directors SUSTAINABILITY REPORT Lassila & Tikanoja Annual Report 2023 Lassila & Tikanoja Annual Report 2023 44 Financial statements of the parent company 1. 2. 3. 4. 5. Proposal by the Board of Directors 2.1 Trade and other receivables Accounting policy Trade receivables are measured at historical cost less expected cred- it losses. The receivables are non-interest bearing and the general payment term for customers is 14 days. Trade receivables are classi- fied as financial assets, that are explained in more detail in notes 4.1 Financial assets and liabilities and 4.2 Financial risk management. A simplified impairment model allowed by IFRS 9 standard is ap- plied to the recognition of expected credit losses. Expected credit loss- es are calculated by dividing trade receivables into categories based on maturity and by multiplying said categories with the credit loss percentages, which are based on historical data on credit losses realised from trade receivables and the outlook for the short-term future. This impairment model covers the company’s trade receivables and contract assets. Based on historical data and the outlook for the short-term future, an allowance for impairment is recognised as follows (credit loss per- centage applied in the previous year in brackets): Trade receivables not past due 0.1 per cent (0.1), past due 1-90 days 0.8 per cent (0.7), past due 91-365 days 11.6-23.1 per cent (8.6-25.0 per cent). Trade receiva- bles due over 360 days are written down completely. If the customer has become insolvent, such as in the case of bankruptcy or debt re- structuring, the trade receivable is written down as a final credit loss when a payment can no longer be expected with reasonable certainty. MEUR 2023 2022 Trade receivables 85.9 91.0 Contract assets 1 30.8 30.8 Accrued income 7.6 9.3 Prepayments 0.3 0.2 Tax receivables 1.2 8.7 Derivative receivables - 1.2 Other receivables 0.0 0.3 Total 125.8 141.6 Specification of accrued income Employees' health care compensation 1.6 1.7 Licences 0.7 0.9 Other 5.4 6.8 Total 7.6 9.3 1 Contract assets consist of uninvoiced sales, which will be invoiced during the following reporting period. Change in allowance for impairment MEUR 2023 2022 Allowance for impairment, 1 January 0.5 0.4 Change in the income statement 0.0 0.1 Allowance for impairment, 31 December 0.5 0.5 Impairment losses and changes in allowance for impairment are presented note 1.4 Other operating income and expenses. Financial assets are not collateralised. No impairment was recognised on other financial assets. 2.2 Inventories Accounting policy Inventories are measured at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. The inventories of Environmental Products in Environmental Services are measured using the weighted average cost method. The value of other inventories is determined using the FIFO method. At its recycling plants, recyclable materials are processesed into secondary raw materials for sale. The cost of the inventories of these materials comprises raw materials, direct labour costs, other direct costs of manufacturing and a proportion of variable and fixed production overheads based on normal operating capacity. MEUR 2023 2022 Raw materials and consumables 3.0 3.0 Finished goods 1.0 1.8 Other inventories 3.8 2.9 Total 7.8 7.8 The carrying value of the inventories was written down to the net realisable value. The expense of EUR 0.0 million (0.0) is included in Materials and services in the income statement. Maturity of trade receivables, contract assests and allowance for impairment 2023 2022 MEUR Trade receivables and contract assets of which the allowance for impairment Trade receivables and contract assets of which the allowance for impairment Trade receivables and contract assets not past due 100.0 0.1 106.5 0.1 Past due 1-90 days 16.3 0.1 14.4 0.1 Past due 91-365 days 0.8 0.1 1.4 0.2 Past due over 365 days 0.2 0.2 0.1 0.1 Total 117.2 0.5 122.4 0.5 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORT Proposal by the Board of Directors SUSTAINABILITY REPORT Lassila & Tikanoja Annual Report 2023 Lassila & Tikanoja Annual Report 2023 45 Financial statements of the parent company 1. 2. 3. 4. 5. Proposal by the Board of Directors 2.3 Trade and other current payables Accounting policy Trade and other current non-interest-bearing liabilities are recognised in the balance sheet at historical cost. The impact of discounting is not essential considering the maturity of the payables. Trade payables are classified as financial liabilities that are presented in notes 4.1 Financial assets and liabilities and 4.2 Financial risk management. MEUR 2023 2022 Advances received 11.2 9.5 Trade payables 63.7 60.1 Current tax liabilities 0.3 1.0 Other liabilities 21.8 25.7 Accrued expenses and deferred income 76.1 75.2 Total 173.1 171.5 Accrued expenses and deferred income Liabilities related to personnel expenses 1 69.5 68.0 Other accrued expenses 6.6 7.2 Total 76.1 75.2 1 Liabilities related to personnel expenses include ordinary accruals for salaries, pensions and other statutory personnel expenses. The advances received include contract liabilities as well as advances received for rental payments. The fair values of trade and other current payables equal their book values. 2.4 Other non-current liabilities MEUR 2023 2022 Advances received 7.2 7.6 Deferred consideration 5.9 5.7 Other liabilities 0.0 0.0 Total 13.2 13.3 Deferred consideration is related to the acquisition of 70 per cent share of Sand & Vattenbläst i Tyringe AB (”SVB”) that offers process cleaning services in Sweden. The acquisition took place on 1 February 2022. SVB is consolidated with 100 per cent share in the Group and, in connection with the arrangement, L&T has recognised in financial liabilities an estimate of the deferred considera- tion for the acquisition. The deferred consideration relates to the acquisition of non-controlling interest and is measured at fair value, which is reflected in the present value of the estimated liability. It will mature on 1 February 2026 at the earliest. In the last quarter of 2023, an increase of EUR 0.2 million was recog- nised in the deferred consideration (increase of EUR 0.8 million). Critical judgements by Management The preparation of calculations used in valuation of the deferred consideration requires the use of management judgement. The EBITDA forecast used in the calculations is based on actual development and management’s view on the growth outlook for the business. Though the assumptions used are appropriate according to the management’s judgement, the EBITDA forecast used in the calculation may fundamentally differ from the actual figures realised in the future. 2.5 Provisions Accounting policy A provision is recognised when the Group has a legal or factual obligation towards a third party resulting from an earlier event, fulfilment of the payment obligation is probable, and its amount can be reliably estimated. Provisions are measured at the current value of the expenditure required to settle the obligation. Increase in provisions due to the passage of time is recognised as interest expense. Changes in provisions are recognised in the income statement in the same item in which the provision is originally recognised. Environmental provisions are recognised when the Group has an existing obligation that is likely to result in a payment obligation, the amount of which can be reliably estimated. Environmental provisions related to the restoration of sites are made at the commencement of each project. The costs recognised as a provision, as well as the original acquisition cost of assets, are depreciated over the useful life of the asset, and provisions are discounted to present value. The most significant provisions recognised in the statement of financial position are the site restoration provisions for landfills and the processing sites for contaminated soil. MEUR 2023 2022 Non-current provisions 7.2 7.4 Current provisions 0.9 1.7 Total 8.1 9.1 Critical judgements by Management Recognition and measurement of provisions require management to assess the best estimate of the expenditure needed to settle the present obligation at the end of the reporting period. The actual amount and timing of the expenditure might differ from the estimates made. The carrying amounts of provisions are reviewed regularly and adjusted when needed to consider changes in cost estimates, regulations, applied technologies and conditions . Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORT Proposal by the Board of Directors SUSTAINABILITY REPORT Lassila & Tikanoja Annual Report 2023 Lassila & Tikanoja Annual Report 2023 46 Financial statements of the parent company 1. 2. 3. 4. 5. Proposal by the Board of Directors Obligations covered by the environmental provisions The Group has leased site that it uses as landfill from the city of Kotka. In Varkaus the Group uses a site for intermediate storing, processing and final disposal of contaminated soil. At the expiry of the leases or at the discontinua- tion of operations, the Group is responsible for site restoration comprising land- scaping and post-closure environmental monitoring called for in the terms and conditions of environmental permits. The Munaistenmetsä landfill site in Uusikaupunki serves as a final disposal area for municipal waste, contaminated soil and industrial by-products. After the receipt of a new environmental permit, a construction of a processing site for hazardous waste has been started in the area. The utilisation of the new haz- ardous waste landfill and treatment area will be started in the summer of 2024. The material recycling centre in the landfill area in Oulu receives, processes and recovers various types of waste and side streams, such as industrial waste, contaminated soil, construction and demolition waste as well as municipal waste. The landfill area in Pori receives and processes gypsum, construction and demolition waste as well as contaminated soil and other smaller items. The envi- ronmental impact assessment process for the area has been completed and a reasoned conclusion has been received from the contact authorities.The prepa- ration of an application for a new environmental permit is currently ongoing. With the permit the area will be lisenced for receipt and processing of both normal and hazardous waste. Other provisions Other provisions consist mainly of provision for restructuring and accident insurance contribution. MEUR Environmental provisions Other provisions Total Provisions at 1 Jan 2023 7.4 1.7 9.1 Additions 0.2 0.7 0.9 Used during the year -0.3 -0.7 -1.0 Reversals -0.2 -0.9 -1.1 Effect of discounting 0.1 - 0.1 Provisions at 31 Dec 2023 7.2 0.9 8.1 MEUR Environmental provisions Other provisions Total Provisions at 1 Jan 2022 8.1 2.7 10.8 Additions 0.1 0.7 0.8 Used during the year -0.5 -1.3 -1.8 Reversals -0.4 -0.5 -0.8 Effect of discounting 0.1 - 0.1 Provisions at 31 Dec 2022 7.4 1.7 9.1 2.6 Retirement benefit obligations Accounting policy Pension plans are categorised as defined benefit and defined contribution plans. Under defined contribution plans. the Group pays fixed contributions for pensions. and it has no legal or factual obligation to pay further contri- butions. All pension arrangements that do not fulfil these conditions are considered defined benefit plans. The Group operates pension schemes in accordance with local regulations and practices in the countries in which it operates. and these pension schemes are mainly defined contribution plans. Contributions to defined contribution plans are recognised in the income statement in the financial period to which they relate. The company operates a few defined benefit plans originating mainly from business acquisitions. The Group is responsible for some of these defined benefit pension plans. while others are covered by pension insurance. The obligations have been calculated for each plan separately. using the projected unit credit method. Pension costs are recognised in the income statement over employees’ periods of service. in accordance with actuarial calculations. When calculating the present value of pension obligations. the discount rate is based on the market yield of the high-quality bonds issued by companies. whose maturity materially corresponds to the estimated maturity of the pension obligation. The risk premium is based on bonds issued by companies with an AA credit rating. The pension plan assets measured at fair value on the balance sheet date are deducted from the present value of the pension obligation to be recognised in the statement of financial position. The net liability (or asset) associated with a defined benefit pension plan is recognised in the statement of financial position. The current service cost (pension expense) and the net interest of the defined benefit plan’s net debt are recognised in the income statement and included in employee benefit expenses. Items (such as actuarial gains and losses and return on funded defined benefit plan assets. except items related to net interest) arising from the revaluation of the net liabilities (or assets) associated with a defined benefit plan are recognised in other comprehensive income in the period in which they arise. Past service costs are recognised as expenses through profit or loss at the earlier of the following: when the plan is rearranged or downsized or when the entity recognises the related restructuring expenses or benefits related to the termination of employment. The Group has in Sweden pension deposits concerning a few people. The Group has no legal or factual obligation to pay further contributions to these arrangements. The value of the deposits is recognised in other non-current receivables and a corresponding liability is recognised in pension liabilities. MEUR 2023 2022 Amounts recognised in the statement of financial position Present value of funded obligations 0.3 0.3 Fair value of plan assets -0.3 -0.3 0.0 0.0 Present value of unfunded obligations 0.5 0.5 Liability related to pension deposits 0.6 0.7 Closing net liability 1.2 1.2 Changes in present value of obligation Opening defined benefit obligation 1.5 1.7 Current service cost 0.0 0.0 Interest cost 0.0 0.0 Actuarial gain (-) and loss (+) on obligation 0.0 -0.2 Benefits paid -0.1 -0.1 Change in liability related to pension deposits -0.1 0.0 Closing value of obligation 1.4 1.5 Changes in fair value of plan assets Opening fair value of plan assets 0.3 0.3 Interest income 0.0 0.0 Employers' contributions 0.0 0.0 Actuarial gain (+) and loss (-) 0.0 -0.0 Benefits paid -0.0 -0.0 Closing fair value of plan assets 0.3 0.3 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORT Proposal by the Board of Directors SUSTAINABILITY REPORT Lassila & Tikanoja Annual Report 2023 Lassila & Tikanoja Annual Report 2023 47 Financial statements of the parent company 1. 2. 3. 4. 5. Proposal by the Board of Directors MEUR 2023 2022 Movements in the liability recognised in the statement of financial position Opening liability 1.2 1.4 Expense recognised in the income statement 0.0 0.0 Employers' contributions 0.0 0.0 Actuarial gain (-) and loss (+) 0.0 -0.2 Contributions paid -0.1 -0.0 Change in liability related to pension deposits -0.1 0.0 Closing liability 1.2 1.2 Amounts recognised in the statement comprehensive income Current service cost 0.0 0.0 Interest cost 0.0 0.0 Interest income -0.0 -0.0 Actuarial gain (-) and loss (+) 0.0 -0.2 Total 0.1 -0.2 The Group estimates that it will contribute EUR 60 thousand to defined benefit plans in 2024. MEUR 2023 2022 Present value of obligation 1.4 1.5 Fair value of plan assets -0.3 -0.3 Deficit 1.2 1.2 Principal actuarial assumptions used. % Discount rate 4.0 3.8 Expected rate of return on plan assets 2.7 2.6 Expected rate of salary increase 3.7 4.9 Expected rate of inflation 2.5 2.4 Defined contribution maturity of the obligation MEUR 2023 2022 Maturity of less than one year 0.1 0.1 1-5 years 0.3 0.2 5-10 years 0.3 0.3 10-15 years 0.2 0.2 15-20 years 0.2 0.2 20-25 years 0.1 0.1 25-30 years 0.1 0.1 over 30 years 0.1 0.1 Total 1.3 1.2 Lassila & Tikanoja Annual Report 2023 48 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 3 Intangible and tangible assets and other non-current assets 3.1 Goodwill and other intangible assets ....................... 49 3.2 Goodwill impairment testing ................................ 50 3.3 Tangible assets ...............................................51 3.4 Right-of-use assets and lease liabilities .................... 52 3.5 Other non-current assets ................................... 53 Lassila & Tikanoja Annual Report 2023 49 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 3.1 Goodwill and other intangible assets Accounting policy Goodwill represents the portion of the acquisition cost by which the aggregate of the consideration given, the share of non-controlling owners in the acquired entity and the previously owned share exceed the fair value of the acquired net assets at the time of acquisition. Goodwill is not amortised, but is tested annually for impairment during the last quarter of the financial year. Goodwill is measured at historical cost less impairment losses, if any. Intangible assets acquired in a business combination are measured at fair value. The useful lives of intangible assets are estimated to be either finite or indefinite. In L&T, the intangible assets recognised in business combinations include mainly customer relationships. The amorti- sation period for customer relationships is on average 10 years. Other intangible assets are recognised at historical cost less accumulated amortisation and impairment losses. The costs of software projects are recognised in other intangible assets starting from the time when the projects move out of the research phase into the development phase and the outcome of a project is an identifiable intangible asset. Such an intangible asset must provide L&T with future economic benefit that exceeds the costs of its development. The cost comprises all directly attributable costs necessary for preparing the asset to be capable of operating in the manner intended by the management. The largest cost items are consultancy fees paid to third parties. The depreciation period for computer software and software licences is five to ten years. Goodwill impairment testing is described in note 3.2 and amortisation and impairment of other intangible assets is described in note 1.7. MEUR Goodwill Customer relationships arising from acquisitions Agreements on prohibition of competition arising from acquisitions Other intan- gible assets arising from acquisitions Intangible rights Other intangible assets Prepayments and construction in progress Total Acquisition cost, 1 Jan 2023 194.6 59.1 24.2 10.0 9.5 31.8 8.2 337.4 Additions 0.4 0.0 10.1 10.6 Disposals -22.7 -0.1 -15.2 -38.0 Impairments -1.9 -1.9 Transfers between items 1.6 -1.8 -0.1 Exchange differences 0.1 0.0 0.0 0.0 0.0 0.1 0.2 Acquisition cost, 31 Dec 2023 194.7 59.1 1.5 10.1 9.8 18.4 14.6 308.2 Accumulated depreciation, 1 Jan 2023 -13.9 -39.7 -24.0 -9.8 -6.6 -26.2 -120.2 Accumulated amortisation on disposals and transfers 22.7 0.1 15.1 37.9 Amortisation charge -3.3 -0.1 -0.1 -0.7 -2.6 -6.8 Exchange differences 0.0 -0.1 -0.0 -0.0 -0.0 -0.1 -0.2 Accumulated depreciation, 31 Dec 2023 -13.9 -43.1 -1.4 -9.8 -7.2 -13.8 -89.2 Carrying amount at 31 Dec 2023 180.8 16.1 0.1 0.2 2.6 4.6 14.6 219.0 Other intangible assets arising from acquisitions include mainly environmental permits. Other intangible assets consist primarily of software and software licences. Contractual commitments related to intangible assets totalled EUR 0.0 million (1.0). MEUR Goodwill Customer relationships arising from acquisitions Agreements on prohibition of competition arising from acquisitions Other intan- gible assets arising from acquisitions Intangible rights Other intangible assets Prepayments and construction in progress Total Acquisition cost, 1 Jan 2022 186.6 55.4 24.1 10.1 9.3 32.7 3.5 321.8 Additions 0.5 0.1 6.5 7.1 Business acquisitions 11.5 5.4 0.1 0.0 17.0 Disposals -0.1 -2.7 -2.8 Transfers between items 1.8 -1.8 -0.0 Exchange differences -3.6 -1.6 -0.1 -0.0 -0.3 -0.0 -5.7 Acquisition cost, 31 Dec 2022 194.6 59.1 24.2 10.0 9.5 31.8 8.2 337.4 Accumulated depreciation, 1 Jan 2022 -14.6 -37.2 -24.0 -9.8 -5.8 -25.7 -117.1 Accumulated amortisation on disposals and transfers 0.0 2.7 2.7 Amortisation charge -3.5 -0.1 -0.1 -0.9 -3.2 -7.8 Exchange differences 0.6 1.1 0.1 0.0 0.2 0.0 2.0 Accumulated depreciation, 31 Dec 2022 -13.9 -39.7 -24.0 -9.8 -6.6 -26.2 -120.2 Carrying amount at 31 Dec 2022 180.7 19.4 0.2 0.3 2.9 5.6 8.2 217.2 Lassila & Tikanoja Annual Report 2023 50 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 3.2 Goodwill impairment testing Accounting policy The goodwill impairment testing is conducted at least annually or more frequently if there is any indication that goodwill maybe impaired. Impairment testing is conducted according to the business structure in force at the time of the impairment testing. In impairment testing, recoverable amounts are estimated on the basis of an asset’s value-in-use. Future cash flows are based on annual estimates of income statements and maintenance investments made by the management in connection with the strategy process for a four- year period. The management bases its estimates on actual development and views on the growth outlook for the industry (general market development and unit profitability, pricing, municipalisation decisions, personnel costs and raw material costs). Approved investment decisions are taken into account in the growth estimates. Cash flows extending beyond the four-year forecast period are calculated using the so-called terminal value method. The growth rates used in the calculations are based on the management’s estimates of long-term growth and development of profitability . Critical judgements by Management The preparation of value-in-use based calculations used in goodwill impairment testing requires the use of management judgement. The future cash flows are based on forecasts for the strategy period approved by the Board of Directors. These forecasts are based on actual development and management’s view on the growth outlook for the industry. The terminal growth rate is based on the management’s view on the long-term growth outlook for the business. The discount rates used reflect the best estimate of the weighted average cost of capital. Though the assumptions used are appropriate according to the manage- ment’s judgement, the estimated cash flows may fundamentally differ from those realised in the future. Goodwill allocation The carrying amounts of goodwill are allocated to cash-generating units in accordance with the table below: MEUR 2023 2022 Environmental Services 87.6 87.6 Industrial Services 30.6 30.6 Facility Services, Finland 28.6 28.6 Facility Services, Sweden 34.0 33.9 Total 180.8 180.7 The goodwill generated from the acquisition of Sand & Vattenbläst i Tyringe AB in the first quarter of 2022 is included in the goodwill allocated to Industrial Services. Goodwill Impairment testing in 2023 The goodwill impairment testing has been prepared based on value-in-use calculations in which future cash flows are discounted to net present value. The terminal growth rate used in the value-in-use calculations of cash-gen- erating units is 2.0 per cent, which corresponds to the mid-term inflation goal of the European Central Bank. The same terminal growth rate is used in all cash-generating units based on similar business environment. The discount rates used in calculations are based on the Group’s weighted average cost of capital (WACC). Factors in WACC are risk-free interest rate, market risk premium, company-specific beta, cost of capital as well as the ratio between equity and liabilities. A discount rate has been defined for each cash generating unit. Discount rates used in the calculations (pre tax) % 2023 2022 Environmental Services 9.4 8.5 Industrial Services 9.4 8.5 Facility Services, Finland 9.3 8.4 Facility Services, Sweden 9.3 8.5 According to the impairment testing, the value in use of all the cash generating units in the Group exceeded the carrying amounts of the tested assets. Thus, no impairments were recognised in 2023. Sensitivity analyses of impairment testing A sensitivity analysis of each cash-generating unit was performed, during which the key calculation assumptions were tested. The key assumptions used in the testing were discount rate and EBITDA per cent used in calculation of the terminal value. The EBITDA per cent was based on the historical development of the cash-generating unit. In the sensitivity analysis, a key assumption was tested by changing the threshold values to a value at which the value-in-use would equal the carrying amount. In Facility Services Sweden, a decrease of EBITDA per cent by 0.9 percentage points or an increase of discount rate by 1.8 percentage point would result in the value-in-use of Facility Services Sweden equaling the carrying amount of the tested assets. At the time of the testing, the difference between the value-in-use and the carrying amount of Facility Services Sweden was EUR 16.3 million and the EBITDA per cent in the forecast period was 5.5 per cent. Regarding the other cash-generating units, any change in the key assumptions which would be considered as somewhat likely could not result in the carrying amount of the cash-generating unit exceeding the value-in-use. Lassila & Tikanoja Annual Report 2023 51 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 3.3 Tangible assets Accounting policy Tangible assets are recognised at historical cost less accumulated depreciation and impairment losses. The historical cost includes expenditure that is directly attributable to the acquisition of the asset. Borrowing costs immediately arising from the acquisition, construction or manufacture of tangible assets that meet the conditions are capitalised as part of the asset’s acquisition cost. Possible restoration costs are also included in the acquisition cost. In business combinations, tangible assets are measured at fair value on the acquisition date. In the statement of financial position, tangible assets are shown less accumulated depreciation and impairment, if any. Tangible assets are depreciated using the straight-line method over their expected useful lives, excluding new landfills. For completed landfills the Group applies the units of production method, which involves depre- ciation on the basis of the volume of waste received. The expected useful lives are reviewed on each balance sheet date, and, if expectations differ materially from previous estimates, the depreciation periods are adjusted to reflect the changes in expectations of future economic benefits. Depreciation in the financial statements is based on the following expected useful lives: Buildings and structures 5–30 years Vehicles 6–15 years Machinery and equipment 4–15 years Land is not depreciated. When an asset included in tangible assets consists of several components with different estimated useful lives, each component is treated as a separate asset. Ordinary repair and maintenance costs are recognised in the income statement during the period in which they are incurred. Costs of significant modification and improvement projects are capitalised if it is probable that the projects will result in future economic benefits to the Group. Gains and losses on sales and disposal of tangible assets are recognised through profit or loss and are presented in other operating income or expenses. Accounting policy for depreciations and impairments is presented in note 1.7. MEUR Land Buildings Machinery and equipment Other Prepayments and construction in progress Total Acquisition cost, 1 Jan 2023 8.2 141.6 416.1 0.3 9.0 575.1 Additions 0.0 0.7 15.2 0.0 22.4 38.3 Disposals -0.5 -0.1 -26.4 -0.0 -27.0 Transfers between items 4.0 11.5 -15.4 0.1 Exchange differences 0.0 0.0 0.0 0.0 0.0 Acquisition cost, 31 Dec 2023 7.7 146.1 416.4 0.3 16.0 586.5 Accumulated depreciation, 1 Jan 2023 -0.5 -108.4 -310.8 -0.1 -419.8 Accumulated depreciation on disposals and transfers 0.5 0.1 25.8 26.4 Depreciation for the period -5.5 -21.6 -0.0 -27.1 Exchange differences -0.0 -0.0 -0.0 -0.0 Accumulated depreciation, 31 Dec 2023 - -113.8 -306.6 -0.1 -420.6 Carrying amount at 31 Dec 2023 7.7 32.3 109.8 0.2 16.0 166.0 The carrying amount of machinery and equipment includes EUR 13.0 million (12.6) of compactors and balers sold through an external financing company. Due to the repurchase obligation the leased equipment is treated as tangible assets. Contractual commitments related to property, plant and equipment totalled EUR 14.0 million (19.7). MEUR Land Buildings Machinery and equipment Other Prepayments and construction in progress Total Acquisition cost, 1 Jan 2022 7.4 138.9 408.9 0.1 10.1 565.4 Additions 0.8 0.6 12.8 0.1 12.4 26.7 Business acquisitions 0.2 4.3 0.1 4.6 Disposals -0.1 -1.7 -19.6 -0.0 -0.1 -21.5 Transfers between items 3.6 9.9 -13.5 0.0 Exchange differences -0.0 -0.1 -0.0 -0.2 Acquisition cost, 31 Dec 2022 8.2 141.6 416.1 0.3 9.0 575.1 Accumulated depreciation, 1 Jan 2022 -0.5 -103.8 -308.0 -0.1 -412.4 Accumulated depreciation on disposals and transfers 0.6 18.6 0.0 19.3 Depreciation for the period -6.2 -21.8 -0.0 -28.1 Exchange differences 1.1 0.4 0.0 1.5 Accumulated depreciation, 31 Dec 2022 -0.5 -108.4 -310.8 -0.1 -419.8 Carrying amount at 31 Dec 2022 7.7 33.2 105.3 0.2 9.0 155.3 Lassila & Tikanoja Annual Report 2023 52 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 3.4 Right-of-use assets and lease liabilities Accounting policy A right-of-use asset is recognised from a lease contract at the commencement date of the lease, which is the date that the underlying asset is made available for use. Right-of-use assets are measured at cost less any cumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liability. The cost of the right-of-use asset includes the amount of lease liability recognised, any initial direct costs incurred and lease payments made at or before the commencement date less any lease incentives received. Possible restoration obligations are also considered in the cost of the right-of-use asset. At each balance sheet date, the carrying amounts of right-of-use assets are assessed for any impairment, as described in note 1.7. The lessee recognises the lease liability at the inception of the contract by discounting the future minimum lease payments to the present value. Since the interest rate implicit in the lease is not readily available in most of the Group’s lease contracts, the future minimum lease payments are discounted using The Group’s incremental borrowing rate. According to the standard, the incremental borrowing rate is the interest rate that the lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic situation. The Group has determined the incremental borrowing rate taking into consideration the lease term and the financial environment of the lease. The Group’s lease liability covers the lease liabilities of commodities leased through a financial company as well as the lease liabilities of other lease agreements excluding the short-term leases or leases for low-value assets, for which the right-of-use asset and lease liability is not recognised. MEUR Land Buildings and constructions Machinery and equipment Total Acquisition cost, 1 Jan 2023 16.4 55.1 67.8 139.2 Additions 1.2 11.0 20.0 32.2 Disposals -2.4 -6.9 -6.1 -15.5 Exchange differences - 0.0 0.0 0.0 Acquisition cost, 31 Dec 2023 15.1 59.2 81.7 155.9 Accumulated depreciation, 1 Jan 2023 -3.7 -28.3 -36.0 -68.0 Accumulated depreciation on disposals and transfers 0.2 4.4 5.2 9.8 Depreciation for the period -1.0 -9.6 -10.9 -21.6 Exchange differences -0.1 -0.1 -0.1 Accumulated depreciation, 31 Dec 2023 -4.5 -33.6 -41.8 -79.9 Carrying amount at 31 Dec 2023 10.6 25.6 39.9 76.0 MEUR Land Buildings and constructions Machinery and equipment Total Acquisition cost, 1 Jan 2022 12.9 47.7 60.4 121.1 Additions 3.4 10.2 9.2 22.7 Disposals 0.1 -2.4 -1.1 -3.5 Exchange differences - -0.4 -0.7 -1.1 Acquisition cost, 31 Dec 2022 16.4 55.1 67.8 139.2 Accumulated depreciation, 1 Jan 2022 -2.6 -20.5 -28.1 -51.3 Accumulated depreciation on disposals and transfers 1.4 0.7 2.2 Depreciation for the period -1.0 -9.4 -9.1 -19.5 Exchange differences - 0.2 0.5 0.6 Accumulated depreciation, 31 Dec 2022 -3.7 -28.3 -36.0 -68.0 Carrying amount at 31 Dec 2022 12.7 26.8 31.8 71.2 On the balance sheet date, no new lease agreements are known which will become valid in the coming financial years that would have a significant impact on the amount of debt resulting from a right-of-use asset or a lease agreement. Lease liabilities and their maturity have been presented in notes 4.1 Financial assets and liabilities and 4.2 Financial risk management. For more information about the expenses related to leases, please refer to note 1.6. Critical judgements by Management The Group has lease contracts relating mainly to real estate and land areas which are valid until further notice. For such contracts, the management evaluates the lease term on a lease-by-lease basis. In evaluating the lease term the Group considers e.g. any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the importance of the underlying asset to the Group’s operations taking into account, for example, whether the underlying asset is a specialised asset, the location of the underlying asset and the availability of suitable alternatives. The lease term is reassesed in future periods to ensure that the lease term reflects the current circumstances. Lassila & Tikanoja Annual Report 2023 53 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 3.5 Other non-current assets Accounting policy The Group’s other non-current assets consist of shares in associated companies and joint ventures as well as other shares and holdings. The Group’s interests in associated companies and joint ventures are accounted for using the equity method of accounting. The Group’s share of its associated companies’ or joint ventures’ post-acquisition profits or losses after tax are recognised in the income statement and as adjustment to investment in associated companies or joint ventures in the balance sheet accordingly. When the Group’s share of losses in an associated company or a joint venture equals or exceeds its interest in the associated company or joint venture, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associated company or joint venture. Other shares and holdings include shares in a few smaller companies as well as golf shares, and they are measured at fair value through profit or loss. Other receivables mainly include deposits related to pension obligations in Sweden as well as non-current advance payments. MEUR Shares in associated and joint venture companies Other shares and holdings Other receivables Acquisition cost, 1 Jan 2023 14.0 0.2 1.9 Additions - - 0.0 Disposals - - -0.3 Share of the result of associated companies and joint ventures 3.6 - - Exchange differences - - 0.0 Acquisition cost, 31 Dec 2023 17.6 0.2 1.5 MEUR Shares in associated and joint venture companies Other shares and holdings Other receivables Acquisition cost, 1 Jan 2022 0.0 0.2 2.0 Additions 13.3 0.0 0.5 Disposals - -0.0 -0.6 Share of the result of associated companies and joint ventures 0.7 - - Exchange differences - - -0.1 Acquisition cost, 31 Dec 2022 14.0 0.2 1.9 Information about the substantial joint venture company Name Domicile Direct ownership (%) 2023 2022 Laania Oy Helsinki 55 55 Financial information about the substantial joint venture company MEUR 2023 2022 Intangible and tangible assets 3.3 3.3 Right-of-use assets 2.4 2.4 Other non-current receivables 0.0 0.0 Inventories 40.7 51.4 Trade and other receivables 40.2 27.3 Assets total 86.7 84.4 Non-current interest bearing liabilities 22.4 32.5 Trade payables 14.4 11.6 Other current payables 17.9 15.1 Liabilities total 54.8 59.1 Net sales 153.4 89.7 Depreciation and amortisation -1.4 -0.8 Financial income and expenses -1.2 -0.5 Income taxes -1.6 -0.3 Result for the period 6.5 1.3 The reconciliation of the joint venture’s financial information to the Group’s book value: The Group's ownership, % 55.0 55.0 The Group's share of net assets 17.6 14.0 The value of the joint venture in the consolidated statement of financial position 17.6 14.0 For more information on the joint venture please refer to note 5.3. Lassila & Tikanoja Annual Report 2023 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors 54 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 4 Financial risks and capital structure 4.1 Financial assets and liabilities ...............................................................55 4.2 Financial risk management ......................................................................57 4.3 Equity ....................................................................................................................60 4.4 Earnings per share and dividend per share ..................................... 61 4.5 Commitments and contingent liabilities ...........................................61 Lassila & Tikanoja Annual Report 2023 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors 55 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 4.1 Financial assets and liabilities Accounting policy The Group’s financial assets and liabilities include cash and cash equiva- lents, trade and other receivables, trade and other payables, bank loans, bonds, commercial papers, lease liabilities and derivatives. Financial as- sets and liabilities are classified into following measurement categories: Fair value through profit and loss • Derivatives • Deferred considerations relating to acquisitions Amortised cost • Cash and cash equivalents • Trade and other receivables • Interest-bearing liabilities, such as bank loans, bonds, commercial papers, lease liabilities • Trade and other payables This classification is performed when the asset or liability is acquired. The classification of financial assets into different measurement categories depends on the business model for managing the financial asset and the contractual cash flow characteristics of the financial asset acquired. The classification of financial liabilities into different measurement categories depends on the purpose for which the financial liabilities were initially acquired. A financial asset is derecognised when the rights to the cash flows from the asset expire, or when all material risks and rewards of the ownership of the asset have been transferred outside the Group. A financial liability is derecognised when the obligation specified in the contract is discharged or cancelled or expires. Financial assets measured at amortised cost Cash and cash equivalents consist of cash on hand, bank deposits redeemable on demand and other short-term liquid investments. Their maturity is no longer than three months from the acquisition date. They are recognised as of the settlement date and measured at historical cost. Foreign currency transactions are translated into euros using the exchange rates prevailing on the balance sheet date. The used credit limits are included in current interest-bearing liabilities. Trade and other receivables are measured at amortised cost. Receivables are classified as current financial assets unless their maturity date is more than 12 months from the balance sheet date . Trade and other receivables are recognised at historical cost less allowances for impairment. A valuation allowance for impairment of trade receivables is recognised when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. The Group applies the simplified approach to providing for expected credit losses, which permits the use of the lifetime expected loss provision for all trade receivables. Impairments are recognised as an expense in the income statement. Sold non-recourse trade receivables’ credit risk and contractual rights are transferred from the Group on the selling date and related expenses are recognised as financial expenses. More information about allowance for impairment of trade receivables is presented in note 2.1 . Financial liabilities measured at fair value through profit or loss Derivatives which are not designated as hedges as well as deferred considerations related to acquisitions are measured at fair value through profit and loss. Derivatives within this category are short-term liabilities with a maturity of less than 12 months and are measured at fair value using the market price on the balance sheet date. Deferred considerations are recognised in the balance sheet on group level only. They are usually non-current liabilities with maturity more than 12 months. Measurement of fair value of the deferred considerations depends on the sale and purchase agreement. Both realised and unrealised gains and losses arising from the changes in fair value are recognised in the income statement for the financial period during which they incurred. Financial liabilities measured at amortised cost Financial liabilities measured at amortised cost are recognised in the statement of financial position on the settlement date at fair value, on the basis of the consideration received. Transaction costs directly attributable to the acquisition or issue of a loan are included in the original carrying amount of financial liabilities. Financial liabilities are subsequently measured at amortised cost using the effective inter- est method. Interest expenses are recognised in the income state- ment using the effective interest rate method. Financial liabilities that expire within 12 months from the balance sheet date, including bank overdrafts in use, are recognised within current interest-bearing liabilities, and those expiring in a period exceeding 12 months, are recognised within non-current interest-bearing liabilities. Interest rate swaps Fair values of interest rate swaps are valued using a technique based on present value of future cash flows, which is supported by market interest rates at the balance sheet date. Fair values describe the prices that the Group would gain or should pay, if the derivative financial instruments were cancelled at the balance sheet date. At the balance sheet date the company did not have any interest rate swaps. Lease liabilities Fair value of lease liabilities is calculated by discounting future cash flows using the incremental borrowing rate. More information on the accounting policies for lease liabilities is presented in note 3.4. Fair value hierarchy of financial assets and liabilities measured at fair value Financial assets and liabilities recognised at fair value must be categorised by using a three-level fair value hierarchy that reflects the significance of the input data used in fair value measurement. Hierarchy level 1 includes such financial instruments, whose fair value is directly based on quated prices in active mar- kets. Financial instruments of hierarchy level 2 include over-the-counter (OTC) derivatives as well as loan receivables and loans measured at amortised cost. A financial instrument is categorised to level 3 if it’s fair value cannot be deter- mined based on observable market information. In the Group, derivatives and deferred consideration relating to acquisitions are recognised at fair value. Derivatives, which comprise interest rate swaps are categorised in hierarchy level 2. The fair values of financial instruments are based on prices derived from prices quoted in an active market or generally accepted valuation models that are, to a significant degree, based on verifiable market data. The fair value of the deferred consideration is categorised in hier- archy level 3. Its valuation is described in more detail on the following page. Lassila & Tikanoja Annual Report 2023 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors 56 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Reconciliation of financial liabilities recognised at fair value according to the level 3 MEUR 2023 2022 Carrying amount 1 Jan 5.7 - Deferred consideration at the date of the acquisition - 5.1 Change in fair value 0.2 0.8 Exchange differences 0.0 -0.2 Carrying amount 31 Dec 5.9 5.7 Deferred consideration is related to the acquisition of 70 per cent share of Sand & Vattenbläst i Tyringe AB (”SVB”) that offers process cleaning services in Sweden. The acquisition took place on 1 February 2022. SVB is consolidated with 100 per cent share in the Group and, in connection with the arrangement, L&T has recognised in financial liabilities an estimate of the deferred considera- tion for the acquisition. The deferred consideration relates to the acquisition of non-controlling interest and is measured at fair value, which is reflected in the present value of the estimated liability. It will mature on 1 February 2026 at the earliest. The valuation of the deferred consideration is based on the shareholder agreement and is affected by the acquired company’s balance sheet structure and EBITDA forecast for 2025. More information on the deferred consideration is presented in note 2.4. Net interest-bearing liabilities MEUR 2023 2022 Loans from financial institutions 40.8 51.4 Bonds 74.7 74.6 Lease liabilities 56.1 51.5 Non-current interest-bearing liabilities 171.7 177.5 Bonds - 17.7 Lease liabilities 21.5 21.0 Current loans 0.6 0.7 Current interest-bearing liabilities 22.1 39.3 Total interest-bearing liabilities 193.7 216.8 Cash and cash equivalents 32.9 49.5 Net interest-bearing liabilities 160.9 167,3 2023 2022 MEUR Amortised cost Derivatives under hedge accounting Fair value through profit or loss Carrying amounts by balance sheet item Amortised cost Derivatives under hedge accounting Fair value through profit or loss Carrying amounts by balance sheet item Fair value hierarchy level Note Non-current financial assets Other receivables 1.3 1.3 1.4 1.4 Current financial assets Trade and other receivables 85.9 85.9 91.3 91.3 2.1 Derivative receivables - 1.2 1.2 2 4.2 Cash and cash equivalents 32.9 32.9 49.5 49.5 Total financial assets 120.1 - - 120.1 142.1 1.2 - 143.3 Non-current financial liabilities Borrowings 115.5 115.5 126.0 126.0 2 Lease liabilities 56.1 56.1 51.5 51.5 4.2 Deferred consideration 5.9 5.9 5.7 5.7 3 Current financial liabilities Borrowings 0.6 0.6 18.3 18.3 2 Lease liabilities 21.5 21.5 21.0 21.0 4.2 Trade and other payables 69.4 69.4 65.8 65.8 2.3 Total financial liabilities 263.1 - 5.9 269.1 282.6 - 5.7 288.3 Non-current other liabilities do not include advances received. Trade and other receivables do not include tax receivables and accruals, and trade and other payables do not include statutory liabilities (e.g. tax liabilities), accrued expenses and deferred income. The fair values of balance sheet items do not differ significantly from the carrying amounts of the balance sheet items. Lassila & Tikanoja Annual Report 2023 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors 57 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 4.2 Financial risk management The principles for L&T’s financial risk management are defined in the treasury policy approved by the Board of Directors. The purpose of financial risk manage- ment is to mitigate significant financial risks and strive to reduce the unfavour- able effects of fluctuations in the financial market and other risk factors on the Group’s result. The Group’s financing and liquidity management are handled centrally by the Group’s finance function, which is managed by the CFO. Transactions related to financial risk management are carried out by the Group’s finance function. Foreign exchange risk The Group consists of a parent company operating in Finland and subsidiaries operating in Finland and Sweden. The parent company’s and the Finnish sub- sidiaries’ functional and reporting currency is the euro. The foreign subsidiaries’ functional and reporting currency is the currency of their country of location. Thus, changes in foreign exchange rates have impact on the Group’s result and equity. Translation risk The exposure to translation risk consists of net investments in foreign subsid- iaries, which include equity investments and retained earnings. The position of net investments in foreign subsidiaries is not hedged, as these holdings are con- sidered long-term strategic investments. In 2023, translation differences totalling EUR 0.1 million (-5.6) were accumu- lated in the equity due to the fluctuations of currency rates. The translation dif- ference is totally related to the Swedish business. At the balance sheet date, the Swedish krona denominated translation position was EUR 67.3 million (69.8). Transaction risk The business operations of the Group’s foreign subsidiaries are carried out almost completely in their functional currency and thus does not cause any transaction risk. Group companies operating in Finland use euro as the invoicing currency for sales almost exclusively. Financing for subsidiaries is mainly pro- vided through intra-Group loans that are denominated in the functional currency of each subsidiary. The amount of the internal loans within the Group is small, and thus does not cause significant transaction risk. The company has recognised in financial liabilities an estimate of a deferred consideration related to the acquisition of Sand&Vattenbläst i Tyringe AB. The Swedish krona denominated deferred consideration exposes the company to a translation risk. Change in net interest-bearing liabilities 2023 2022 MEUR Loans from financial institutions Bonds Lease liabilities Cash and cash equivalents Total Loans from financial institutions Bonds Lease liabilities Cash and cash equivalents Total Carrying amount on 1 Jan -52.0 -92.3 -72.5 49.5 -167.3 -74.9 -49.9 -70.9 28.6 -167.1 Change in net interest-bearing liabilities, cash: Proceeds from non-current loans -40.0 -40.0 -75.0 -75.0 Repayments of non-current loans 50.7 17.7 68.4 25.9 32.3 58.1 Proceeds from current loans -10.0 -10.0 -35.0 -35.0 Repayments of current loans 10.0 10.0 35.0 35.0 Repayments of lease liabilities 21.2 21.2 19.4 19.4 Change in cash and cash equivalent -16.6 -16.6 21.0 21.0 Total cash flows 10.7 17.7 21.2 -16.6 33.0 25.9 -42.7 19.4 21.0 23.6 Change in net interest-bearing liabilities, non-cash: Change in lease liablities -26.4 -26.4 -21.1 -21.1 Other changes 0.0 -0.1 0.0 -0.1 -3.0 0.3 -0.1 -2.8 Total non-cash movements 0.0 -0.1 -26.4 0.0 -26.5 -3.0 0.3 -21.1 -0.1 -23.9 Carrying amount on 31 Dec -41.4 -74.7 -77.6 32.9 -160.9 -52.0 -92.3 -72.5 49.5 -167.3 Lassila & Tikanoja Annual Report 2023 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors 58 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Price risk of investments The Group has not invested in listed securities, the value of which changes as the market prices change, and is thus not exposed to securities price risk. The Group has a 55% holding in Laania Oy, a joint venture established on 1 July 2022 with Neova. The investment in the joint venture is accounted for using the equity method of accounting, and it’s carrying amount in the balance sheet was EUR 17.6 million (14.0) at the end of the reporting period. More information on the joint venture and its measurement can be found in note 3.5. The Group’s other hold- ings in unlisted shares are not material, and there is no substantial price risk related to these shares. Commodity price risk The fluctuations of the world market price of crude oil are reflected in the price of fuel used in production equipment as well as in the purchase prices of envi- ronmental products through oil-based raw materials. In waste management, some customer contracts specify such invoicing periods and contract terms that the sales prices cannot be raised monthly. This means that the rise in fuel prices is passed on to service prices with a delay. The Group manages the raw material price risk for environmental products through fixing sales prices for a period not exceeding the period for which the suppliers’ purchase prices are valid. Interest rate risk The Group’s interest rate risk is primarily related to borrowings, which are tied to variable interest rates and create cash flows that vary with the interest rate level. The Group seeks to keep interest costs steady. As a result, the aim is to tie over 50 per cent of the company’s borrowings to fixed interest rates. When necessary, part of the cash flows associated with variable-rate borrowings is hedged against interest rate risk with interest rate swaps. During the reporting period, the interest rate swap used for hedging cash flows related to floating rate loan was terminated. After this, the interest rate risk was still according to the Company’s treasury policy. At the balance sheet date, the Group did not have interest rate swaps. At end of the financial period, 65 per cent (86) of the company’s borrowings were either fixed interest rate borrowings or hedged with interest rate swaps. Variable-rate borrowings accounted for 35 per cent (14). Therefore changes in the interest rate level will not impact interest costs in full. The average interest rate of long-term loans, excluding lease liabilities, with interest rate hedging, was 4.0 per cent (2.5). Most of the Group’s net sales are generated by long-term service agreements. Due to good cash flow predictability, the Group’s treasury policy specifies that the company shall seek to ensure adequate level of liquid assets in proportion to the current short-term financing requirements. Credit and counterparty risk Financial instruments involve the risk of the counterparty being unable to fulfil its contractual commitments. Counterparty risk is managed by making financial and derivative contracts with major Nordic banks only. The Group has a wide customer base consisting of companies, industrial plants, office and business properties, institutional property owners, housing corporations, public sector organisations and households. Its accounts receiv- able consist mostly of a high number of relatively small receivables and there are no significant concentrations of credit risk.The Group has credit control guidelines to ensure that services and products are sold only to customers with an appropriate credit standing or, if a customer’s creditworthiness is inadequate, prepayment is required. Most customer relationships are based on long-term service contracts, and customers are not generally required to provide collateral. A simplified credit loss model is used for trade receivables and contract assets. The amount of expected credit losses is based on the lifetime expected credit losses of receivables. The model is based on historical observed default amounts over the expected life of the trade receivables and is adjusted for forward-looking estimates depending on the overdue of the receivables. More information on allowance for expected credit losses can be found in note 2.1. With regard to Finnish trade receivables, collection operations are managed centrally by the finance function. The foreign subsidiaries manage the collection of their trade receivables locally. Financial assets and related credit risk MEUR 2023 2022 Other non-current receivables 1.3 1.4 Trade receivables 85.9 91.0 Other current receivables 0.0 0.2 Derivative receivables - 1.2 Cash and cash equivalents 32.9 49.5 Liquidity and refinancing risk Liquidity risk management ensures that the Group continuously will be able to answer for its financial obligations associated with operations at the lowest possible cost. The Group seeks to maintain good liquidity through efficient cash management. The liquidity situation is monitored in real time and predicted using cash flow forecasts. The Group uses a group bank account system which facili- tates the management of cash funds. To ascertain the availability of funding, the Group uses several banks in its financial operations. Refinancing risk is managed by a broad-based maturity profile of loans and by maintaining the level of the average duration of the loan portfolio for at least two years. The Group seeks to keep its cash assets fairly small, while ensuring sufficient credit limits for liquidity management purposes. To meet any temporary need for cash arising from cash flow fluctuations, the Group has an EUR 10 million account limit and a committed credit limit totalling EUR 40 million. The account limit as well as the committed credit limit were not in use, as was the case in the comparison period. In addition the Group has commercial paper programme totalling EUR 100 million which was all unused (comparison period: all unused). At the end of the financial period, the Group’s liquid assets amounted to EUR 32.9 million (49.5). In the second quarter of 2023, the company refinanced a EUR 50 million bank loan that would have matured in the third quarter of 2024. The new bank loan totalling EUR 40 million will mature in the third quarter of 2026. The interest rate swap used by the company to convert part of the EUR 50 million bank loan into a fixed interest loan was terminated in conjunction with the refinancing of the bank loan. The fair value of the interest rate swap, EUR 1.3 million, was recog- nised as financial income in the consolidated income statement. During the third quarter of 2023, the Company repaid the the remaining EUR 17.7 million of the bond issued in 2018. The new bank loan totalling EUR 40 million includes following financial cove- nants: equity ratio and net debt to EBITDA ratio. These covenants restrict giving of collaterals to other financiers and discontinuance or disposal of present busi- ness. A breach of the covenants may lead to the early termination of the loan. At the end of the reporting period, the financial covenants were fulfilled. The company excepts them to be fulfilled also after the following 12 months. In addi- tion to financial covenants, the expenses of the committed credit limit and the senior unsecured sustainability-linked notes issued in May 2022 as well as the new bank loan totalling EUR 40 million are linked to sustainability targets, namely carbon footprint and accident frequency. The following table shows the Group’s financial liabilities classified according to contractual maturity dates at the balance sheet date. The figures shown are undiscounted contractual cash flows. Lassila & Tikanoja Annual Report 2023 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors 59 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Sensitivity to interest rate risks arising from financial instruments The following sensitivity analysis illustrates the sensitivity of the Group’s profit for the period and equity to changes in the interest rate level with regard to financial instruments in the statement of financial position, including financial assets and liabilities as well as derivative contracts. Changes in the fair value of derivative contracts under hedge accounting are assumed to be allocated entirely to equity. The following assumptions have been used in calculating sensitivity to changes in the interest rate level: • The change in the interest rate level is assumed to be a rise of +1.0 percentage point and a decrease of -1.0 percentage point. • The exposure underlying the calculation includes interest-bearing financial liabilities and interest rate swaps. Sensitivity analysis of interest rate risk arising from financial instruments 2023 2022 MEUR Profit after tax Equity Profit after tax Equity Floating rate loans: + 1.0% change in market interest rates -0.3 -0.4 - 1.0% change in market interest rates 0.3 0.4 Hedging instruments: + 1.0% change in market interest rates - 0.3 - 1.0% change in market interest rates - -0.3 Derivative financial instruments and hedge accounting Accounting policy In accordance with L&T’s financing policy, derivative agreements are used for the reduction of financial risks related to changes in market interest rates. At the beginning of the financial period, the Group had one interest rate swap, which had been implemented to protect the cashflows of floating rate loans from the interest rate risk. This interest rate swap was prematurely terminated in June 2023. Derivatives are recognised in the balance sheet initially at fair value. After the acquisition they will, however, be recognised at the fair value applicable on the balance sheet date. The fair values are based on market prices on the balance sheet date. Any profits and losses from the meas - Maturity of financial liabilities MEUR 2023 Carrying amount Contractual cash flows 2024 2025 2026 2027 2028 2029 and later Loans from credit institutions 41.4 46.7 2.6 2.1 42.0 - - - Bonds 74.7 87.7 2.5 2.5 2.5 2.5 77.5 - Lease liabilities 77.6 81.6 22.4 18.8 8.5 6.2 5.3 20.4 Trade and other payables 69.4 69.4 69.4 - - - - - Total 263.1 285.4 96.9 23.4 53.1 8.7 82.9 20.4 MEUR 2022 Carrying amount Contractual cash flows 2023 2024 2025 2026 2027 2028 and later Loans from credit institutions 52.0 52.5 1.6 50.9 - - - - Bonds 92.3 108.2 20.5 2.5 2.5 2.5 2.5 77.5 Lease liabilities 72.5 80.0 21.4 17.9 11.8 4.9 3.0 21.0 Trade and other payables 65.8 65.8 65.8 - - - - - Total 282.6 306.5 109.3 71.4 14.3 7.4 5.6 98.5 Breakdown of borrowings and facilites 2023 2022 MEUR In use Undrawn Total In use Undrawn Total Loans from financial institutions and pension loans 41.4 - 41.4 52.0 - 52.0 Bonds 74.7 - 74.7 92.3 - 92.3 Account limit - 10.0 10.0 - 10.0 10.0 Committed credit facility - 40.0 40.0 - 40.0 40.0 Commercial paper programme - 100.0 100.0 - 100.0 100.0 Lease liabilities from financial institutions 32.8 17.2 50.0 26.0 24.0 50.0 Other lease liabilities 44.9 - 44.9 46.5 - 46.5 Total 193.7 167.2 360.9 216.8 174.0 390.8 Lassila & Tikanoja Annual Report 2023 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors 60 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT urement at fair value are processed in the accounting according to the purpose of use of the derivative agreement. All interest hedges meet the requirements of effective hedging stated in the L&T’s risk management. Any profits and losses resulting from derivatives under hedge accounting are recognised in line with the under- lying asset. Hedge accounting is applied to all interest swap agreements. The efficiency of hedging relationships is registered initially and in conjunction with each interim report by evaluating the hedging instrument’s ability to reverse the changes in the cashflow of the hedged item. If the hedging is effective, the changes in the fair value of hedging instruments are recognised in the hedging reserve under capital and reserves. When a hedging instrument matures, it is sold or when the criteria for hedge accounting no longer meet the Group’s risk management requirements, the profit or loss generated from the hedging instrument remains in equity until the hedged cash flow is realised. If the hedged cash flow is no longer expected to become realised, the profit or loss generated from the hedging instrument is immediately recognised in the income statement. Any ineffective part of a hedging relationship is also immediately recognised in the income statement. The positive fair values of all derivatives are recognised in the balance sheet as derivative receivables. Correspondingly, the negative fair values of derivatives are recognised as derivative liabilities. All fair values of derivatives are included in short-term assets or liabilities. At the balance sheet date the company did not have any interest rate swaps. Interest rate swaps 2023 2022 MEUR Nominal value Fair value Nominal value Fair value Maturity of interest rate swaps under hedge accounting Not later than one year - - - - Later than one year and not later than two years - - 30.0 1.2 Yhteensä - - 30.0 1.2 The interest rate swap that was used for hedging cash flows related to floating rate loans was terminated in June 2023 in conjunction with the refinancing of the hedged loan. The fair value of the interest rate swap totalling EUR 1.3 mil- lion was recognised as financial income in the consolidated income statement. In the comparison period, the hedge was effective, and the changes in the fair value of interest rate swap were presented in other comprehensive income for the period. The fair value of the swap contract was based on the market data on the balance sheet date. The fixed interest rate of the interest rate swap at 31 December 2022 was 0.8 per cent. The floating interest rate was 6-month Euribor. 4.3 Equity Accounting policy Ordinary shares are presented as share capital. Any expenses arising from the issue or acquisition of treasury shares are presented as a valuation allowance within equity. If the Group repurchases any equity instruments, the acquisition cost of such instruments is deducted from equity. Lassila & Tikanoja plc has one share series. There is no maximum to the number of the shares and the share capital in the Articles of Association. A share has neither a nominal value nor a book equivalent value. All issued shares have been paid for in full. The Annual General Meeting held on 23 March 2023 authorised Lassila & Tikanoja plc’s Board of Directors to make decisions on the repurchase of the company’s own shares using the company’s unrestricted equity. In addition, the Annual General Meeting authorised the Board of Directors to decide on a share issue and the issuance of special rights entitling their holders to shares. The Board of Directors is authorised to purchase a maximum of 2,000,000 company shares (5.2 per cent of the total number of shares). The repurchase authorisation is effective for 18 months. During the reporting period, the authori- sation was not used. At the end of the financial year 2023, the company held 644,772 treasury shares (653,256) representing 1.7 per cent (1.7) of all shares and votes. Invested non-restricted equity reserve includes other equity type investments and share subscription prices to the extent that they are not expressly desig- nated to be included in the share capital. Other reserves Translation reserve Translation differences arise from the translation of the equity and earnings of foreign subsidiaries into euros. Hedging reserves Hedging reserve includes effective changes in the fair values of derivative instruments used for hedging of cash flows. MEUR Number of outstanding shares, 1,000 shares Share capital Invested non-restricted equity reserve Own shares Total At 1 Jan 2023 38,146 19.4 0.6 -10.1 9.9 8 May 2023 Transfer of own shares 8 0.1 0.1 At 31 Dec 2023 38,154 19.4 0.6 -10.0 10.1 MEUR Number of outstanding shares, 1,000 shares Share capital Invested non-restricted equity reserve Own shares Total At 1 Jan 2022 38,112 19.4 0.6 -10.6 9.4 25 February 2022 Transfer of own shares 25 0.4 0.4 2 May 2022 Transfer of own shares 9 0.1 0.1 At 31 Dec 2022 38,146 19.4 0.6 -10.1 9.9 Lassila & Tikanoja Annual Report 2023 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors 61 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Capital management The objective of the Group’s capital management is to secure the continuity of operations and maintain an optimal capital structure to enable investments, taking the cost of capital into account. The capital includes equity and liabilities less advances received. The amount of annual dividend is linked to earnings. Profits not considered necessary for ensuring the healthy development of the company are distributed to shareholders. The development of the capital structure is monitored quarterly using the equity ratio and gearing. MEUR 2023 2022 Equity in the consolidated statement of financial position 232.2 220.4 Equity and liabilities total 649.9 660.5 Current advances received -11.2 -9.5 Non-current advances received -7.2 -7.6 Total 631.5 643.4 Equity ratio, % 36.8 34.3 MEUR 2023 2022 Equity in the consolidated statement of financial position 232.2 220.4 Non-current financial liabilities 171.7 177.5 Current financial liabilities 22.1 39.3 Cash and cash equivalents -32.9 -49.5 Net interest-bearing liabilities 160.9 167.3 Gearing, % 69.3 75.9 4.4 Earnings per share and dividend per share Accounting policy Basic earnings per share is calculated by dividing the result for the period attributable to equity holders of the parent company by the adjusted weighted average number of ordinary shares outstanding during the period excluding ordinary shares purchased by the company and held as treasury shares. Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to asume conversion of all dilutative potential ordinary shares. 2023 2022 Result attributable to equity holders of the company, MEUR 30.1 31,5 Adjusted weighted average number of ordinary shares outstanding during the year, million shares 38.1 38,1 Earnings per share, EUR 0.79 0,83 Dilutive effect of the share-based incentive programme, million shares 0.1 0,0 Adjusted average number of shares during the period, diluted, million shares 38.2 38,1 Earnings per share, diluted, EUR 0.79 0,83 At the Annual General Meeting on 21 March 2024, the Board of Directors will propose that a dividend of EUR 0.49 per share be paid for the 2023 financial year. On the basis of a decision taken by the Annual General Meeting, the company paid a dividend of EUR 0.4 7 per share for 2022. 4.5 Commitments and contingent liabilities MEUR 2023 2022 Collaterals for own commitments Mortgages on rights of tenancy 0.1 0.1 Company mortgages 0.5 2.0 Other securities 0.0 0.0 Bank guarantees required for environmental permits 26.6 17.4 Other bank guarantees 6.5 5.8 Mortgages under own control Company mortgages 0.2 0.3 Liabilities on behalf of the joint venture Account limit 2.8 2.8 Bank guarantees 16.5 16.5 Term loan facility guarantee 11.0 16.5 Revolving credit facility 5.5 - Future lease payments Within one year 0.9 0.9 Over one year 0.7 0.9 Other securities are guarantee deposits. The Group has a 55% holding in Laania Oy, a joint venture established on 1 July 2022 together with Neova. The amount of the liabilities on behalf of the joint venture is disclosed as the Group’s share of the maximum amount of liability, in relation to the Group’s holding. Future lease payments consist of minimum leasing commitments related to lease agreements for low-value assets, to which the Group has elected to apply recognition exemption permitted by IFRS 16. For more information on leases please refer to notes 1.6 and 3.4. The Group company Lassila & Tikanoja FM AB is a claimant and a defendant in legal proceedings in Sweden concerning unpaid receivables invoiced from a former customer of the Group. In June 2022, Lassila & Tikanoja FM AB took legal action in the District Court of Solna against the former customer company of L&T, demanding payment for unpaid receivables. At the balance sheet date, the carrying amount of the receivables in the Company’s balance sheet was approximately EUR 1.5 million. The former L&T customer company in question has rejected Lassila & Tikanoja FM AB’s claims and the payment obligation, and brought a counterclaim demanding compensation totalling approximately SEK 116 million from Lassila & Tikanoja FM AB. The dispute is still pending. L&T considers the counterclaim to be without merit and has not recognised any provisions relating to it. In addition to the above mentioned dispute, Lassila & Tikanoja plc is party to a few disputes related to the Group’s ordinary business operations. The outcome of these disputes are not expected to have a material effect on the Group’s financial position. Lassila & Tikanoja Annual Report 2023 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors 62 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 5 Consolidation and other notes 5.1 Consolidation ......................................................................................... 63 5.2 Group companies ................................................................................ 63 5.3 Business acquisitions and disposals and assets and liabilities classified as held for sale ............... 64 5.4 Related-party transactions .......................................................... 65 5.5 Auditing costs ....................................................................................... 66 5.6 Events after the balance sheet date ...................................... 66 Lassila & Tikanoja Annual Report 2023 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors 63 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 5.1 Consolidation Subsidiaries The consolidated financial statements include the parent company Lassila & Tikanoja plc and all subsidiaries in which the Group exercises control. The cri- teria for control are fulfilled when the Group is exposed, or has rights, to variable returns from its involvement with an entity and has the ability to affect those returns through its power over the entity. Intra-Group shareholdings have been eliminated using the acquisition method. Consideration given and the identifiable assets and liabilities of an acquired company are recognised at fair value on the date of acquisition. Any costs asso- ciated with the acquisition, with the exception of costs arising from the issuance of debt securities or equity instruments, have been recognised as expenses. Any conditional additional sale price has been measured at fair value on the date of the acquisition and classified as a liability or as equity. Additional sales price classified as a liability is measured at fair value on the closing day of each reporting period, and the resulting gains or losses are recognised through profit or loss. Additional sales price classified as equity will not be re-measured. Any non-controlling interests in the acquired entity are recognised either at fair value or at the proportionate share of non-controlling interests in the acquired entity’s net identifiable assets. The principle applied in measurement is speci- fied separately for each acquisition. The treatment of goodwill from acquisition of subsidiaries is explained in note 3.1 Goodwill and other intangible assets. The subsidiaries are fully consolidated from the date on which control is transferred to the Group until the date that control ceases. The profit or loss for the period and the comprehensive income are attributed to the parent company’s shareholders and non-controlling interests, even if this would result in the non-controlling interest being negative. Equity attributable to non-controlling interests is presented as a separate item in the statement of financial position, as an equity component. Changes in the parent company’s holdings in the subsidiary not resulting in loss of controlling interest are recog- nised as equity transactions. The Group has no non-controlling interests. In an acquisition achieved in stages, the previous holdings are measured at fair value and the resulting gains or losses are recognised through profit or loss. If the Group loses its controlling interest in the subsidiary, its remaining holdings are measured at fair value on the date when control ceases, and the difference is recognised through profit or loss. All intra-Group transactions, receivables, liabilities and unrealised gains, as well as distribution of profits within the Group, are eliminated in the consoli- dated financial statements. Unrealised losses due to impairment of assets are not eliminated. The distribution of profit or loss for the period between equity holders of the parent company and the non-controlling interest is presented in a separate income statement and the statement of comprehensive income, and the share of equity belonging to the non-controlling interest is presented as a separate item in the consolidated statement of financial position under equity. Associated companies and joint ventures Associates companies are entities over which the Group has significant influ- ence but no control. L&T has significant influence when it holds more than 20% of the voting rights or otherwise has significant influence but a non-controlling interest. Joint ventures are arrangements in which the Group has joint control. The Group’s interests in associated companies and joint ventures are accounted for using the equity method of accounting. Investments in associated companies and joint ventures are initially measured at fair value. The Group’s share of its associated companies’ or joint ventures’ post-acquisition profits or losses after tax are recognised in the income statement. When the Group’s share of losses in an associated company or a joint venture equals or exceeds its interest in the associated company or joint venture, the Group does not rec- ognise further losses, unless it has incurred obligations or made payments on behalf of the associated company or joint venture. Foreign currency translation Figures indicating the performance and financial position of the Group entities are specified in the currency of the economic operating environment in which the entity primarily operates (functional currency). The consolidated financial statements are presented in euros, which is the parent company’s functional and presentation currency. Any transactions in foreign currencies have been recognised in the functional currency using the exchange rate in effect on the transaction date. In practice, it is customary to use a rate that is close enough to the transaction day rate. Mon- etary assets denominated in foreign currency are translated into euros using the exchange rates in effect on the balance sheet date. Non-monetary assets are translated using the exchange rate in effect on the transaction date. The Group has no non-monetary assets denominated in foreign currency that are measured at fair value. Exchange rate gains and losses arising from foreign-cur- rency transactions and the translation of monetary items are recognised in the income statement. Foreign exchange gains and losses on business transactions are included in the respective items above operating profit. Foreign exchange gains and losses on financial assets and liabilities are included in financial income and costs. The income statements of the Group entities whose functional currency is not the euro are translated into euros at average exchange rates for the period, and the statements of financial position at the exchange rates in effect on the bal- ance sheet date. The difference in exchange rates applicable to the translation of profit in the income statement and statement of comprehensive income result in a translation difference recognised in the translation reserve within equity. Translation differences arising from the elimination of the acquisition cost of for- eign subsidiaries, as well as translation differences in equity items accumulating after the acquisition, are recognised in the translation difference reserve. Goodwill and fair value adjustments to the carrying amounts of the assets and liabilities arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated into euros at the closing rate. 5.2 Group companies The Group’s holding of shares and votes, % The Group’s parent company Lassila & Tikanoja plc Finnish subsidiaries L&T Toimi Oy, Helsinki 100.0 L&T Kiinteistöhuolto Oy, Helsinki 100.0 L&T Kiinteistötekniikka Oy, Helsinki 100.0 L&T Siivous Oy, Helsinki 100.0 L&T Ympäristöpalvelut Oy, Helsinki 100.0 L&T Teollisuuspalvelut Oy, Helsinki 100.0 Foreign subsidiaries Lassila & Tikanoja FM AB, Stockholm, Sweden 100.0 Lassila & Tikanoja Service AB, Stockholm, Sweden 100.0 Sand & Vattenbläst i Tyringe AB, Hässleholm, Sweden 70.0 Cisternservice i Hässleholm AB, Hässleholm, Sweden 70.0 Joint ventures Laania Oy, Helsinki 1 55.0 Associated companies Suomen Keräystuote Oy, Helsinki 40.0 1 Information on the joint venture is disclosed in note 3.5 Other non-current assets During the reporting period, Turun Seudun Hyötykuljetus Oy was merged to L&T Ympäristöpalvelut Oy and L&T Työllistämispalvelut Oy was merged to Lassila & Tikanoja plc and L&T Hankinta Ky, Sihvari Oy and Spectra Yhtiöt Oy were liquidated. Lassila & Tikanoja Annual Report 2023 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors 64 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 5.3 Business acquisitions and disposals and assets and liabilities classified as held for sale Accounting policy In business combinations, all property, plant and equipment acquired is measured at fair value on the basis of the market prices of similar assets, taking into account the age of the assets, wear and tear and similar factors. Tangible assets will be depreciated over their useful life according to the management’s estimate, taking into account the depreciation principles followed within the Group. Intangible assets arising from business combinations are recognised separately from goodwill at fair value at the time of acquisition if they are identifiable. In connection with acquired business operations, the Group mostly has acquired agreements on prohibition of competition and cus- tomer relationships as well as environmental permits. The fair value of customer agreements and customer relationships associated with them has been determined on the basis of estimated duration of customer relationships and discounted net cash flows arising from current customer relationships. The value of agreements on prohibition of competition is calculated in a similar manner through cash flows over the duration of the agreement. Intangible assets are amortised over their useful life according to the agreement or the management’s estimate. Assets and liabilities held for sale are measured at lower of the carrying amount and fair value less costs to sell, if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and their sale is highly probable. The non-current assets classified as held for sale are not depreciated. Critical judgements by Management Assets and liabilities acquired in business combinations as well as assets and liabilities classified as held for sale are measured at fair value. Whenever possible, the management uses available market values when determining the fair values. When this is not possible, the measurement is based on the historical income from the asset. In particular, the measurement of intangible assets is based on discounted cash flows and requires the management to make estimates on future cash flows. Although these estimates are based on the management’s best knowledge, actual results may differ from the estimates. The car- rying amounts of assets are reviewed continuously for impairment. More information on this is provided in note 1.7. Business acquisitions 2023 There were no business acquisitions in 2023. Business acquisitions 2022 On 1 February 2022, Lassila & Tikanoja’s Industrial Services division acquired 70 per cent of the shares of Sand & Vattenbläst i Tyringe AB (“SVB”), a company that provides process cleaning services in Sweden. The transaction also includes Cisternservice i Hässleholm AB, owned by SVB. Through the acquisition, L&T’s Industrial Services division entered the Swedish process cleaning market. In the fair value measurement, intangible assets based on customer relationships with a value of EUR 2.8 million, agreements on prohibition of competition with a value of EUR 0.1 million, as well as goodwill with a value of EUR 8.3 million were identi- fied. The goodwill is mainly based on the strong regional position of the acquired business and its future development prospects. 100 per cent share of SVB is consolidated in the L&T Group and, in connection with the arrangement, L&T has recognised in the financial liabilities an estimate of the deferred consideration related to the acquisition of the non-controlling interest. The deferred considera- tion is measured at fair value through profit or loss. An increase of EUR 0.2 million (increase of EUR 0.8 million) was recognised in the deferred consideration in the final quarter of 2023. L&T acquired the business operations of Fortum Waste Solutions Oy’s small and medium-sized business segment for hazardous and non-hazardous waste on 1 February 2022. Through the acquisition, L&T received new customers across Finland. In 2022 business acquisitions had an EUR 19.9 million million impact on the Group’s net sales for the financial period and EUR 2.5 million on operating profit. If the acquisitions in 2022 had been completed on 1 January 2022, the Groups net sales would be approximately EUR 844.9 million and operating profit approxi- mately EUR 43.0 million. In 2022, expenses totalling EUR 0.4 million related to the acquisitions were recognised in the income statement. The initial accounting of the businesses acquired in 2022 is final. The figures for such acquired businesses, that are not material to the Group when consid- ered separately, are stated in aggregate. Business acquisitions Fair value, MEUR 2023 2022 Intangible assets - 5.6 Property, plant and equipment - 4.9 Right-of-use assets - 1.4 Inventories - 0.1 Receivables - 1.8 Cash and cash equivalents - 1.2 Total assets - 15.0 Other liabilities - 6.4 Deferred tax liabilities - 1.0 Total liabilities - 7.4 Net assets acquired - 7.6 Total consideration - 19.6 Goodwill - 11.9 Impact on cash flow Total consideration - -19.6 Deferred consideration - 5.1 Consideration paid in cash - -14.4 Cash and cash equivalents of the acquired company - 1.2 Total impact on cash flow - -13.2 Divested businesses and assets and liabilities classified as held for sale In 2023, L&T did not have any business disposals or assets or liabilities classified as held for sale. On December 17, 2021, Lassila & Tikanoja plc and Neova Oy signed an agree- ment to merge their fuel wood businesses. According to the agreement, Neo- va’s fuel wood business was transferred to L&T Biowatti Oy on 1 July 2022. After the merger, the company continued as an independent limited company called Laania Oy. L&T’s share of the joint venture is 55 per cent and Neova’s 45 per cent, but based on the agreement both parties have joint control over the joint ven- ture. In the first half of 2022, the business was reported as part of Environmental Services. After this, the Group’s share of the joint venture’s net result is recog- nised in the income statement on a separate line. Lassila & Tikanoja Annual Report 2023 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors 65 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Investment in joint venture At the acquisition date, Lassila & Tikanoja’s investment in joint venture totalled EUR 13.3 million. It is recognised on line Shares in associated companies and joint ventures in the consolidated statement of financial position. The transac- tions is valued according to the IAS 28. In the last quarter of 2022, the trans- action was finalised and L&T recognised a gain totalling EUR 4.3 million on the transaction. The gain on sale was included in other operating income in the con- solidated income statement. In 2022, expenses totalling EUR 0.5 million related to the transaction were recognised in the income statement. More information on the joint venture is presented in note 3.5. Net assets disposed of MEUR 2022 Intangible and tangible assets 0.4 Right-of-use assets 0.7 Other non-current receivables 0.3 Inventories 24.7 Trade and other receivables 6.1 Cash and cash equivalents 2.0 Assets Total 34.0 Non-current financial liabilities 14.8 Current financial liabilities 0.1 Trade and other payables 10.1 Liabilities Total 25.0 Net assets disposed of 9.0 Gain on sale MEUR 2022 Fair value of the shares in joint venture received 13.3 Net assets disposed of -9.0 Total 4.3 Cash flow impact MEUR 2022 Consideration received in cash - Cash and cash equivalents of the business sold -2.0 Total -2.0 5.4 Related-party transactions The related parties of the Lassila & Tikanoja Group are the senior management (members of the Board of Directors, President and CEO of the Lassila & Tikanoja plc and the other members of the Group Executive Board) and the immediate family of the senior management and companies controlled by the aforemen- tioned persons, the Group’s subsidiaries, the associated company (Suomen Keräystuote Oy), the joint venture (Laania Oy) and the L&T sickness fund. Lists of the Group’s parent and subsidiary relationships, associated companies and joint ventures are presented in note 5.2. Group companies. The contributions paid by the group companies to the L&T sickness fund during the financial year amounted to EUR 1.0 million (1.0). Transactions with the joint venture The Group’s business transactions with Laania Oy are presented in the following table. In addition to the ordinary business transactions, Laania paid loans total- ling EUR 16.4 million to L&T in the final quarter of 2022. The Group has also pro- vided guarantees for Laania’s financing arrangements, which are specified in note 4.5. MEUR 2023 2022 Net sales 2.2 0.6 Other operating income - 0.3 Purchases of materials and services -1.3 -0.7 Trade and other receivables 0.0 0.0 Employee beneﬁts to the President and CEO TEUR 2023 2022 Salaries and other short-term employee benefits 466.8 458.6 Bonuses 63.9 157.2 Share-based payments - 265.1 Pension expenses, statutory 45.9 53.3 Total 576.6 934.3 Employee beneﬁts to other members of the Group Executive Board TEUR 2023 2022 Salaries and other short-term employee benefits 1,697.8 1,570.8 Bonuses 136.5 225.0 Share-based payments - 304.9 Pension expenses, statutory 198.9 198.8 Total 2,033.3 2,299.6 Salaries and remunerations paid to members of the Board of Directors TEUR 2023 2022 Jukka Leinonen, Chairman of the Board 76 73 Sakari Lassila, Deputy Chairman of the Board 52 53 Teemu Kangas-Kärki 39 39 Laura Lares 38 39 Pasi Tolppanen 39 39 Anni Ronkainen 1 37 - Heikki Bergholm 2 - 20 Laura Tarkka 3 3 38 1 Board member since 23 March 2023 2 Board member and the Chairman of the Board until 17 March 2022 3 Board member until 23 March 2023 In 2023, no shares were transferred to the President and CEO and the members of the Group Executive Board from the share-based incentive programmes (in 2022, 24,522 shares were transferred). On 8 May 2023, 8,484 shares were transferred to the members of the Board of Directors as part of the remuneration of the Board (2 May 2022: 8,618). The members of the Board of Directors, the President and CEO or other members of the Group Executive Board have no pension contracts with the company. In 2023, the company sold services included in normal business operations at market price to parties related to the key personnel for a total amount of EUR 7 thousand (25). The members of the Board are not included in the share-based incentive programmes. No loans were granted and no guarantees nor other securities given to persons belonging to the related parties. Lassila & Tikanoja Annual Report 2023 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors 66 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 5.5 Auditing costs MEUR 2023 2022 PwC Auditing 0.3 0.3 Other assignments in accordance with the auditing act 0.0 0.0 Tax consulting services 0.0 0.0 Other services 0.0 0.2 Total 0.4 0.4 KPMG Auditing - 0.1 Other assignments in accordance with the auditing act - 0.0 Tax consulting services - 0.0 Total - 0.1 Non-audit services performed by the statury auditor PricewaterhouseCoopers Oy in the financial year 2023 totalled EUR 71.1 thousand (EUR 166.6 thousand in 2022). 5.6 Events after the balance sheet date On 11 January 2024, the company announced that Lassila & Tikanoja’s Share- holders’ Nomination Board proposes to the Annual General Meeting to be held on 21 March 2024 that the Board of Directors have seven (7) members. The Nomi- nation Board proposes that all of the current members of the Board of Directors – Teemu Kangas-Kärki, Laura Lares, Sakari Lassila, Jukka Leinonen, Anni Ronka- inen and Pasi Tolppanen – be re-elected to the Board of Directors and that Juuso Maijala be elected as a new member. A presentation of Juuso Maijala is available on Lassila & Tikanoja’s website. In addition, the Nomination Board proposes that Jukka Leinonen be elected as Chairman of the Board of Directors and Sakari Las- sila as Vice Chairman. Lassila & Tikanoja Vuosikertomus 2023 67 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors Financial statements of the parent company Income statement ..........................................................68 Balance sheet ...................................................................68 Cash flow statement ....................................................69 Accounting policies ...................................................... 69 Notes to the financial statements ....................... 70 Lassila & Tikanoja Vuosikertomus 2023 68 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors Income statement of the parent company EUR Thousand 2023 2022 Note Net sales 24,741.6 23,281.0 1 Other operating income 375.6 141.6 4 Employee benefit expenses -10,377.5 -9,698.4 2 Other operating expenses -16,458.1 -18,658.9 3,4 Depreciation, amortisation and impairment -904.3 -902.7 Operating result -2,622.8 -5,837.3 Financial income and expenses -13,729.0 -2,541.6 5 Result before appropriations and taxes -16,351.8 -8,378.9 Appropriations 6 Increase/decrease in accumulated depreciation difference 270.2 209.5 Group contribution 28,168.0 23,550.0 28,438.2 23 759,5 Income taxes -4,666.3 -3,434.1 7 Result for the period 7,420.0 11,946.6 Balance sheet of the parent company EUR Thousand 2023 2022 Note ASSETS Non-current assets Intangible assets 8 Intangible rights 15.6 36.4 Other intangible assets 1,576.6 1,738.6 Advance payments and construction in progress 1,364.7 832.4 2,957.0 2,607.4 Tangible assets 9 Buildings and constructions 144.6 165.2 Machinery and equipment 59.1 117.2 Other tangible assets 42.2 42.2 Advance payments and construction in progress - - 245.9 324.6 Investments 10 Shares in group companies 159,081.9 181,590.5 Shares in joint venture 9,946.8 9,946.8 Other shares and holdings 170.8 170.8 169,199.5 191,708.1 Total non-current assets 172,402.4 194,640.0 Current assets Non-current receivables Loan receivables from group companies 766.0 - Prepaid expenses and accrued income 307.7 378.8 Other non-current receivables 139.5 299.9 Deferred tax assets 96.5 480.2 12 1,309.7 1,158.8 Current receivables Receivables from group companies 33,380.4 40,400.8 11 Trade receivables from joint venture - 6.6 Trade receivables 7.1 - Other receivables 111.9 114.4 Prepaid expenses and accrued income 1,042.5 1,827.1 11 34,542.0 42,349.0 Cash and cash equivalents 30,437.3 46,921.0 Total current assets 66,289.1 90,428.8 Total assets 238,691.4 285,068.8 EUR Thousand 2023 2022 Note SHAREHOLDERS’ EQUITY AND LIABILITIES Shareholders’ equity 13 Share capital 19,399.4 19,399.4 Invested non-restricted equity reserve 727.1 727.1 Retained earnings 43,188.0 49,045.9 Profit for the period 7,420.0 11,946.6 70,734.6 81,119.0 Accumulated appropriations Depreciation difference 179.9 450.1 Obligatory provisions 14 Non-current 261.4 273.4 Current 50.1 609.0 311.5 882.4 Liabilities 15 Non-current Loans from credit intitutions 40,000.0 50,000.0 Bonds 75,000.0 75,000.0 115,000.0 125,000.0 Current Bonds - 17,730.0 Trade payables 2,187.9 2,313.5 Liabilities to group companies 45,438.3 53,069.6 Other liabilities 424.4 693.0 Accrued expenses and deferred income 4,414.8 3,811.1 52,465.4 77,617.3 Total liabilities 167,465.4 202,617.3 Total shareholders’ equity and liabilities 238,691.4 285,068.8 Lassila & Tikanoja Vuosikertomus 2023 69 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors Cash flow statement of the parent company EUR Thousand 2023 2022 Operating activities Profit (+) / loss (-) before appropriations and taxes -16,351.8 -8,378.9 Adjustments: Depreciation, amortisation and impairments 904.3 902.7 Financial income and expenses 2,280.4 2,541.6 Impairment of investments held as non-current assets 11,448.6 - Provisions -558.9 -651.3 Other adjustments 1 -18.0 2,069.1 Cash flow before change in working capital and change in cash pool account balance -2,295.3 -3,516.9 Change in working capital Increase/decrease in current non-interest-bearing re- ceivables 1,010.8 1,298.1 Increase/decrease in current non-interest-bearing lia- bilities 174.9 -478.2 Cash flow from operations before financial income/expen- ses and tax -1,109.6 -2,697.0 Change in cash pool account balance 3,934.4 -3,777.6 Interest expenses and other financial expenses paid -5,349.3 -3,100.5 Interest received from operations 3,426.9 1,060.1 Direct taxes paid -4,359.9 -6,363.9 Cash flow from operating activities -3,457.5 -14,878.8 Investing activities Increase in loan receivables from subsidiaries -719.3 - Capital repayment 11,000.0 - Investments in tangible and intangible assets -1,234.0 -1,306.3 Repayment of loan receivables from joint venture - 16,391.3 Proceeds from sale of tangible and intangible assets 16.5 - Change in other non-current receivables - 2.4 Cash flow from investing activities 9,063.3 15,087.4 EUR Thousand 2023 2022 Financing activities Paid Group contributions - -4,300.0 Received Group contributions 23,550.0 24,840.0 Proceeds from short-term borrowings 10,000.0 35,000.0 Repayments of short-term borrowings -10,000.0 -35,000.0 Proceeds from long-term borrowings 40,000.0 75,000.0 Repayments of long-term borrowings -67,730.0 -57,270.0 Dividends paid -17,909.4 -17,543.0 Cash flow from financing activities -22,089.4 20,727.0 Change in cash and cash equivalents -16,483.6 20,935.5 Cash and cash equivalents at 1 January 46,921.0 25,985.4 Cash and cash equivalents at 31 December 30,437.3 46,921.0 Cash and cash equivalents at 31 December Cash and cash equivalents 30,437.3 46,921.0 1 The figure in 2022 includes an adjustment for merger loss totalling EUR 1,942.5 thousand. Accounting policies of the parent company Basis of preparation Lassila & Tikanoja plc is the parent company of the Lassila & Tikanoja Group, domiciled in Helsinki. The Company provides to other group companies administrative services, which are centralised to the parent company. The financial statements of Lassila & Tikanoja plc have been prepared in accordance with the Finnish Accounting Standards (FAS). The financial statements are prepared in euros and the items in the financial statements are measured at historical cost. When appropriate, the financial statements of Lassila & Tikanoja plc comply with the Group’s accounting policies based on IFRS. The accounting policies of the consolidated financial statements are presented in the notes to the consolidated financial statements. The accounting policies of Lassila & Tikanoja plc described in the following chapters differ from the accounting policies of the consolidated financial statements. Subsidiary shares Subsidiary shares in the balance sheet are measured at historical cost less impairment losses. The carrying amounts of the subsidiary shares are assessed as part of the Group’s impairment testing, where cash flow forecasts based on value-in-use calculations are prepared for the Group’s cash-generating units. In the impairment testing of subsidiary shares, the cash flows are further allocated to subsidiaries’ recoverable amounts. An impairment loss is recognised, if the carrying amount of the subsidiary shares and the amount of net loan receivables from the subsidiary exceed the recoverable amount of the corresponding assets. Leases The lease payments of the lease contracts are expensed over the rental period, and they are included in other operating expenses. Assets leased and related liabilities are not recognised in the parent company’s balance sheet. Research and development expenditure Research and development expenditure is recognised as an expense. Obligatory provisions Obligatory provisions in the balance sheet are based on legal or contractual obligations towards third parties, that have not been realised, are related to the past or current financial period and at the balance sheet date it is certain or probable, that the obligation will be realised, but the exact amount and timing are uncertain and the corresponding income from the obligation is neither certain nor probable. The changes in obligatory provisions are included in the income statement. Pensions Most of the company’s pension plans are defined contribution plans, under which the company pays fixed contributions for pensions to insurance companies. These payments are recognised to the income statement in the financial period to which they relate. The defined benefit plans operated by the company are small and concern only a few persons. Lassila & Tikanoja Vuosikertomus 2023 70 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors Notes to the ﬁnancial statements of the parent company 1. Net sales EUR Thousand 2023 % 2022 % Net sales Administrative services, Group Companies 24,741.6 100.0 23,281.0 100.0 Total 24,741.6 100.0 23,281.0 100.0 Net sales by market area Finland 24,741.6 100.0 23,281.0 100.0 Total 24,741.6 100.0 23,281.0 100.0 2. Personnel and administrative bodies 2023 2022 Average personnel Salaried employees 102 106 Total 102 106 1 The calculation of the average number of employees in full-time equivalents was re-defined in 2023. The figure for 2022 has been adjusted accordingly. EUR Thousand 2023 2022 Personnel expenses Salaries and bonuses 8,599.7 7,991.0 Pension expenditure 1,461.3 1,439.5 Other salary-related expenses 316.5 267.9 Total 10,377.5 9,698.4 Salaries, bonuses and pension benefits of the management are described in the note 5.4 Related-party transactions of the consolidated financial statements. No loans were granted to the related parties of the Group Companies. 3. Auditor’s fees EUR Thousand 2023 2022 PwC Auditing 57.3 53.9 Other assignments in accordance with the auditing act 1.4 2.0 Tax consulting services 8.3 6.5 Other services 38.1 154.4 Total 105.1 216.8 KPMG Auditing - 11.0 Other assignments in accordance with the auditing act - 25.7 Tax consulting services - 2.0 Total - 38.7 4. Other operating income and expenses EUR Thousand 2023 2022 Other operating income From joint ventures - 71.1 From others Government grants 20.1 37.0 Merger gains 105.9 - VAT refund 232.9 - Other operating income 16.6 33.5 Total 375.6 141.6 Other operating expenses Merger losses - 1,942.5 ICT costs 10,350.6 9,975.6 Travel costs 272.6 226.9 Vehicles and machinery 38.5 24.8 Rents and real estate costs 1,549.7 1,487.5 Expert fees 3,271.3 3,129.0 Voluntary social security costs 444.9 924.4 Other 530.5 948.1 Total 16,458.1 18,658.9 5. Financial income and expenses EUR Thousand 2023 2022 Interest and other financial income 3,426.9 1,836.7 Interest and other financial expenses -5,707.3 -4,378.3 Impairment of investments held a non-current assets -11,448.6 - Total financial income and expenses -13,729.0 -2,541.6 Financial income and expenses include: Interest income from group companies 951.2 727.3 from joint ventures - 150.8 from others 1,202.0 185.0 Other financial income 1 from others 1,273.7 - Foreign exchange gains from others - 773.6 Interest expenses to group companies -687.9 -869.5 to others -4,640.3 -2,745.9 Other financial expenses to others -379.0 -762.9 Impairment of investments held a non-current assets -11,448.6 - Total -13,729.0 -2,541.6 1 Other financial income consists of the fair value of an interest rate swap, that was recognised in the income statement in June 2023 due to the termination of the swap contract. Lassila & Tikanoja Vuosikertomus 2023 71 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors 6. Appropriations EUR Thousand 2023 2022 Increase/decrease in accumulated depreciation difference Intangible assets 270.2 209.5 270.2 209.5 Group contribution Group contribution received 31,526.0 23,550.0 Group contribution paid -3,358.0 - Total group contributions 28,168.0 23,550.0 Total appropriations 28,438.2 23,759.5 7. Income taxes EUR Thousand 2023 2022 Income taxes on operations for the financial year 4,516.6 3,303.1 Income taxes from previous financial years -234.8 -2.0 Change in deferred taxes 384.5 133.0 Total 4,666.3 3,434.1 8. Intangible assets 2023 EUR Thousand Intangible rights Goodwill Other intangible assets Prepayments and construction in progress Total Acquisition cost, 1 Jan 344.6 - 22,052.9 832.4 23,229.9 Additions - - - 1,191.8 1,191.8 Disposals -37.7 - -15,098.0 - -15,135.6 Transfers between items - - 659.5 -659.5 - Acquisition cost, 31 Dec 307.0 - 7,614.4 1,364.7 9,286.1 Accumulated amortisation, 1 Jan -308.2 - -20,314.4 -20,622.6 Accumulated amortisation on disposals and transfers 37.7 - 15,098.0 15,135.6 Amortisation during the period -20.8 - -821.4 -842.2 Accumulated amortisation, 31 Dec -291.3 - -6,037.8 -6,329.1 Total carrying amount, 31 Dec 15.6 - 1,576.6 1,364.7 2,957.0 Other intangible assets includes several ICT projects. 2022 EUR Thousand Intangible rights Goodwill Other intangible assets Prepayments and construction in progress Total Acquisition cost, 1 Jan 344.6 85,394.7 21,121.7 527.1 107,388.2 Additions - - 16.6 1,233.7 1 250.4 Disposals -0.0 -85,394.7 -13.9 - -85,408.6 Transfers between items - - 928.5 -928.5 - Acquisition cost, 31 Dec 344.6 - 22,052.9 832.4 23,229.9 Accumulated amortisation, 1 Jan -282.4 -85,394.7 -19,526.5 -105,203.6 Accumulated amortisation on disposals and transfers 0.0 85,394.7 12.5 85,407.2 Amortisation during the period -25.8 - -800.3 -826.2 Accumulated amortisation, 31 Dec -308.2 - -20,314.4 -20,622.6 Total carrying amount, 31 Dec 36.4 - 1,738.6 832.4 2,607.4 Lassila & Tikanoja Vuosikertomus 2023 72 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors 9. Tangible assets 2023 EUR Thousand Buildings and constructions Machinery and equipment Other tangible assets Advance payments and construction in progress Total Acquisition cost, 1 Jan 358.7 424.2 42.2 - 825.1 Disposals - -135.2 - - -135.2 Acquisition cost, 31 Dec 358.7 289.0 42.2 - 689.9 Accumulated depreciation, 1 Jan -193.5 -307.0 -500.6 Accumulated depreciation on disposals and transfers - 118.7 118.7 Depreciation during the period -20.6 -41.6 -62.1 Accumulated depreciation, 31 Dec -214.1 -229.9 -444.0 Total carrying amount, 31 Dec 144.6 59.1 42.2 - 245.9 2022 EUR Thousand Buildings and constructions Machinery and equipment Other tangible assets Advance payments and construction in progress Total Acquisition cost, 1 Jan 358.7 680.5 22.2 12.0 1 073.4 Additions - 35.2 20.0 0.7 56.0 Disposals - -304.2 - - -304.2 Transfers between items - 12.8 - -12.8 - Acquisition cost, 31 Dec 358.7 424.2 42.2 - 825.1 Accumulated depreciation 1 Jan -172.9 -555.4 -728.3 Accumulated depreciation on disposals and transfers - 304.2 304.2 Depreciation during the period -20.6 -55.9 -76.5 Accumulated depreciation, 31 Dec -193.5 -307.0 -500.6 Total carrying amount, 31 Dec 165.2 117.2 42.2 - 324.6 Lassila & Tikanoja Vuosikertomus 2023 73 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors 10. Investments EUR Thousand Shares in Group companies Shares in joint ventures Other shares and holdings Total 2023 Acquisition cost, 1 Jan 181,590.5 9,946.8 170.8 191,708.1 Impairments -11,448.6 - - -11,448.6 Disposals -11,060.0 - - -11,060.0 Acquisition cost, 31 Dec 159,081.9 9,946.8 170.8 169,199.5 Total carrying amount, 31 Dec 159,081.9 9,946.8 170.8 169,199.5 2022 Acquisition cost, 1 Jan 126,129.4 - 170.8 126,300.2 Additions 75,315.1 9,946.8 - 85,261.9 Disposals -19,854.0 - - -19,854.0 Acquisition cost, 31 Dec 181,590.5 9,946.8 170.8 191,708.1 Total carrying amount, 31 Dec 181,590.5 9,946.8 170.8 191,708.1  The figure includes a capital repayment totalling EUR 11 million from L&T Hankinta Ky, that was liquidated in December 2023. 11. Short-term receivables EUR Thousand 2023 2022 From Group Companies Loan receivables 1,840.7 16,844.4 Trade receivables 13.6 3.4 Group contribution receivable 31,526.0 23,550.0 Prepaid expenses and accrued income 0.0 3.0 Total 33,380.4 40,400.8 Receivables from joint venture Trade receivables - 6.6 Total - 6.6 Prepaid expenses and accrued income Employees' health care compensation 25.6 30.5 Annual discounts - 5.2 Licences 653.9 896.3 Other 363.0 895.1 Total 1,042.5 1,827.1 12. Deferred tax assets EUR Thousand 2023 2022 Unused depreciation 6.4 8.1 Obligatory provisions 62.3 176.5 Impairment of non-current assets 27.0 27.0 From mergers 0.8 268.6 Total 96.5 480.2 Holding of shares and votes, % Holdings in group companies L&T Toimi Oy, Helsinki 100.0 L&T Kiinteistöhuolto Oy, Helsinki 100.0 L&T Kiinteistötekniikka Oy, Helsinki 100.0 L&T Siivous Oy, Helsinki 100.0 L&T Ympäristöpalvelut Oy, Helsinki 100.0 L&T Teollisuuspalvelut Oy, Helsinki 100.0 Lassila & Tikanoja Service Ab, Stockholm, Sweden 100.0 Lassila & Tikanoja FM AB, Stockholm, Sweden 100.0 Sand & Vattenbläst i Tyringe AB, Hässleholm, Sweden 70.0 Joint ventures Laania Oy, Helsinki 55.0 Lassila & Tikanoja Vuosikertomus 2023 74 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors 13. Shareholders’ equity EUR Thousand 2023 2022 Restricted equity Share capital at 1 Jan / 31 Dec 19,399.4 19,399.4 Restricted equity, total 19,399.4 19,399.4 Non-restricted equity Invested non-restricted equity reserve 1 Jan 727.1 727.1 Invested non-restricted equity reserve 31 Dec 727.1 727.1 Retained earnings at 1 Jan 60,992.5 66,463.7 Dividend distribution -17,928.4 -17,543.0 Expired dividends 36.0 37.3 Transfer of treasury shares 88.0 87.9 Retained earnings at 31 Dec 43,188.0 49,045.9 Profit for the period 7,420.0 11,946.6 Non-restricted equity total 51,335.2 61,719.6 Shareholders’ equity at 31 Dec 70,734.6 81,119.0 Distributable funds Retained earnings 43,188.0 49,045.9 Profit for the period 7,420.0 11,946.6 Invested non-restricted equity reserve 727.1 727.1 Total distributable funds 51,335.2 61,719.6 14. Obligatory provisions EUR Thousand 2023 2022 Pension liabilities 261.4 273.4 Provision for accident insurance contribution - 609.0 Restructuring provisions 50.1 - Total 311.5 882.4 15. Liabilities Prepayments of non-current liabilities in coming years EUR Thousand 2026 2028 Loans from credit institutions 40,000,0 - Bonds - 75,000,0 EUR Thousand 2023 2022 Short term liabilities to Group Companies Trade payables 13.4 3.8 Interest-bearing liabilities 41,995.8 53,065.1 Group contribution liabilities 3,358.0 - Accrued expenses and deferred income 71.1 0.7 Total 45,438.3 53,069.6 Accrued expenses and deferred income Personnel expenses 2,098.8 1,772.1 Interest expenses 2,264.2 1,912.3 Taxes 48.1 126.1 Other expenses 3.7 0.7 Total 4,414.8 3,811.1 16. Contingent liabilities EUR Thousand 2023 2022 For own commitments Mortgages on rights of tenancy 121.6 121.6 Liabilities related to leasing and leases Maturity within 1 year 1,770.0 1,679.7 Maturity in subsequent years 1,728.4 2,677.9 Total 3,498.4 4,357.6 For Group Companies Guarantees 44,000.0 44,000.0 For Joint Ventures Guarantees 35,750.0 35,750.0 Other bank guarantees 264.7 264.7 Mortgages under own control Company mortgages 210.2 210.2  TThe figures for the comparative period have been restated. According to the shareholders’ agreement, the Company is committed to acquire the remaining 30 per cent share of Sand & Vattenbläst i Tyringe AB in February 2026 at the earliest. The estimated value of the commitment at the end of the reporting period totalled EUR 5,941.7 thousand. 17. Derivatives Interest rate swaps EUR Thousand 2023 2022 Nominal value - 30,000.0 Fair value - 1,210.8 The interest rate swap that was used for hedging cash flows related to floating rate loans was terminated in June 2023 in conjunction with the refinancing of the hedged loan. The fair value of the interest rate swap totalling EUR 1,273.7 thousand was recognised as finance income in the income statement. The fair value of the swap contract was based on the market data on the balance sheet date. 75 KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors Lassila & Tikanoja Annual Report 2023 Auditor’s Note We have today submitted our report on the audit conducted by us. Helsinki on 26 February 2024 PricewaterhouseCoopers Oy Samuli Perälä APA Proposal by the Board of Directors for distribution of proﬁt According to the financial statements, Lassila & Tikanoja plc’s unrestricted equity amounts to EUR 51,335,173.21, with the result for the period representing EUR 7,420,038.45 of this total. There were no substantial changes in the financial standing of the company after the end of the period, and the solvency test referred to in Chapter 13, Section 2 of the Companies Act does not affect the amount of distributable profits. The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.49 per share be paid for the financial year 2023. The dividend is to be paid to shareholders included in the company shareholder register maintained by Euroclear Finland Oy on the record date, 25 March 2024. The Board proposes to the Annual General Meeting that the dividend be paid on 3 April 2024. No dividend shall be paid on shares held by the company on the record date of dividend payment, 25 March 2024. On the day the proposal for the distribution of profit was made, the number of shares entitling to dividend was 38,154,102, which means the total amount of the dividend would be EUR 18,695,509.98 To be retained and carried forward EUR 32,639,663.23 Total EUR 51,335,173.21 Signatures to the Report of the Board of Directors and the Financial Statements for the year 2023 Helsinki on 20 February 2024 Jukka Leinonen Sakari Lassila Teemu Kangas-Kärki Laura Lares Anni Ronkainen Pasi Tolppanen Eero Hautaniemi President and CEO KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 76 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT To the Annual General Meeting of Lassila & Tikanoja plc Report on the Audit of the Financial Statements Opinion In our opinion • the consolidated financial statements give a true and fair view of the group’s financial position, financial performance and cash flows in accord- ance 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 to the Audit Committee. What we have audited We have audited the financial statements of Lassila & Tikanoja plc (business identity code 1680140-0) for the year ended 31 December 2023. The financial statements comprise: • the consolidated statement of financial position, consolidated income state- ment, consolidated statement of comprehensive income, consolidated state- ment of changes in equity, consolidated statement of cash flows and notes to the consolidated financial statements, which include material accounting policy information and other explanatory information, the balance sheet of the parent company, income statement of the parent company, cash flow statement of the parent company, accounting policies of the parent com- pany and notes to the financial statements of the parent company. 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 the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appro- priate to provide a basis for our opinion. Independence 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. To the best of our knowledge and belief, the non-audit services that we have provided to the parent company and group companies are in accordance with the applicable law and regulations in Finland and we have not provided non-audit services that are prohibited under Article 5(1) of Regulation (EU) No 537/2014. The non-audit services that we have provided are disclosed in note 5.5 to the Financial Statements. Our Audit Approach Overview As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we consid- ered where management made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and con- sidering future events that are inherently uncertain. Materiality The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could rea- sonably be expected to influence the economic decisions of users taken on the basis of the financial statements. Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for the consol- idated financial statements as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the financial statements as a whole. Overall group materiality 5,200,000 euros How we determined it We used a combination of net sales and profit before taxes as benchmarks to determine overall group materiality. Rationale for the materiality benchmark applied We consider that net sales and profit before taxes provide a suitable representation of the volume and profitability of Lassila & Tikanoja’s operations. How we tailored our group audit scope We tailored the scope of our audit, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates. The Group has four reportable segments: Environmental Ser- vices, Industrial Services, Facility Services Finland and Facility Services Sweden, its main markets being Finland and Sweden. We have scoped our audit to obtain sufficient audit coverage of Lassila & Tikanoja Group’s consolidated financial statements. Auditor’s Report Materiality Audit Scope Key Audit Matters • We have applied an overall group materiality of 5,200,000 euros. • The group audit scope included the most significant group companies and covered a sufficient share of group’s revenues, assets, and liabilities. • Revenue recognition • Employee beneﬁt expenses • Valuation of goodwill • Valuation of shares in group companies and receivables from group companies in the parent company ﬁnancial statements KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 77 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 77 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 state- ments as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud. 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 IFRS Accounting Standards 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 Man- aging 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 a 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 to 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 about 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. Reason- able 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 mate- rial misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could rea- sonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Key audit matter in the audit of the consolidated financial statements How our audit addressed the key audit matter Revenue recognition Refer to note 1.1 and 1.2 in the consolidated financial statements) The Group’s total net sales amounted to EUR 802 million. Revenue from contracts with customers is generated from multiple revenue streams as described in note 1.2. Revenue recognition principles vary depending on the nature of the revenue stream. Revenue recognition is considered a key audit matter due to the significance of revenue to the financial statements and due to management judgment involved in selecting the appropriate revenue recognition method for the different revenue streams. Our audit procedures included, for example, the following: • We obtained an understanding of the company’s revenue recognition policies and compared these to the respective IFRS standards • We obtained an understanding of the internal controls that the company uses to assess the completeness, accuracy, and timing of revenues • We tested revenue transactions on a sample basis • We tested, on a sample basis, revenue related balance sheet items such as contract assets and liabilities. Employee benefit expenses (Refer to note 1.3 and 5.4 in the consolidated financial statements) The Group operates in a highly labor-intensive business. Wages, salaries, and oth- er employee benefit expenses form a significant part of the Group’s operating expenses. In 2023 employee benefit expenses were EUR 353 million. Employee benefit expenses is considered a key audit matter due to its signifi- cance to the consolidated financial statements. Our audit procedures included, for example, the following: • We obtained an understanding of the company’s payroll process • We evaluated and tested the internal controls that the company uses to assess the accuracy of employee benefit expenses • We performed analytical audit procedures in relation to employee benefit expenses • We tested on a sample basis employee benefit expenses related accruals. Valuation of goodwill Refer to note 3.1 and 3.2 in the consolidated financial statements As of 31.12.2023, Goodwill in the consolidated balance sheet amounted to EUR 181 million. Goodwill is not amortised, but is tested at least annually for impairment. Good- will impairment testing has been prepared based on value-in-use calculations in which future cash flows are discounted to current value. Value-in-use calcula- tions include significant management judgment in respect of profitability levels, long-term growth rates and discount rates. The valuation of goodwill is considered a key audit matter due to its significance as well as due to the management judgment involved in the impairment testing. Our audit procedures included, for example, the following: • We obtained an understanding of the methodology and assumptions used in the goodwill impairment testing • We tested the mathematical accuracy of the calculations • We assessed the reasonableness of the estimated future profitability levels and their consistency with the budgets and forecasts made by the manage- ment in connection with the strategy process • We assessed the reasonableness of the discount rates, long-term growth rates and certain other assumptions by e.g., comparing the inputs to observable market data • We assessed management’s sensitivity analysis to ascertain the extent of change in key assumptions that either individually or collectively could result in an impairment of goodwill • We assessed the adequacy of the disclosures. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 78 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Key audit matter in the audit of the parent company financial statements How our audit addressed the key audit matter Valuation of shares in group companies and receivables from group companies in the parent company financial statements (Refer to the accounting policies of the parent company and note 10 and 11) The investments in shares in group companies amounted to EUR 159 million and current receivables from group companies to EUR 33 million. The valuation of shares in group companies and receivables from group companies is assessed annually and tested for impairment when necessary. Impairment testing is performed using the discounted cash flow model. Valuation of shares in group companies and receivables from group companies is considered a key audit matter in the audit of the parent company due to the significance of these investments to the financial statements and due to management judgment involved in the impairment testing of these investments. Our audit procedures included, for example, the following: • We assessed the reasonableness of the management estimates by e.g., checking their consistency with the approved budgets and forecasts • We assessed the methodology used in determining the discount rates and long-term growth rates by e.g., comparing the inputs to observable market data. There are no significant risks of material misstatement referred to in Article 10(2c) of Regulation (EU) No 537/2014 with respect to the consolidated financial state- ments or the parent company financial statements. As part of an audit in accordance with good auditing practice, we exercise pro- fessional 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 proce- dures 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 reasona- bleness of accounting estimates and related disclosures made by manage- ment. • Conclude on the appropriateness of the Board of Directors’ and the Man- aging 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 com- pany’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 state- ments represent the underlying transactions and events so that the finan- cial statements give a true and fair view. • Obtain sufficient appropriate audit evidence regarding the financial infor- mation 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 to communicate with them all relationships and other matters that may rea- sonably 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 finan- cial 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 Appointment We were first appointed as auditors by the annual general meeting on 17 March 2022. 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 Direc- tors 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. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 79 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT 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 the 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 • 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. Other Opinions We support the adoption of the financial statements. The proposal by the Board of Directors regarding the treatment of distributable funds is in compliance with the Limited Liability Companies Act. We support that the members of the Board of Directors of the parent company and the President and CEO should be dis- charged from liability for the financial period audited by us. Helsinki 26 February 2024 PricewaterhouseCoopers Oy Authorised Public Accountants Samuli Perälä Authorised Public Accountant (KHT) To the Management of Lassila & Tikanoja Oyj We have been engaged by the Management of Lassila & Tikanoja Oyj (busi- ness identity code 1680140-0) (hereinafter also “the Company”) to per- form a reasonable assurance engagement on the Company’s consolidated IFRS financial statements for the financial year 1 January – 31 December 2023 in European Single Electronic Format (“ESEF financial statements”) 743700Z9Z54VGHZA0028-2023-12-31-fi.zip. Management’s Responsibility for the ESEF Financial Statements The Management of Lassila & Tikanoja Oyj is responsible for preparing the ESEF financial statements so that they comply with the requirements as specified in the Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 (“ESEF requirements”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation of ESEF financial statements that are free from material noncompliance with the ESEF require- ments, whether due to fraud or error. Our Independence and Quality Management We have complied with the independence and other ethical requirements of the International Code of Ethics for Professional Accountants (including Interna- tional Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code), which is founded on fundamental princi- ples of integrity, objectivity, professional competence and due care, confidenti- ality and professional behaviour. Our firm applies International Standard on Quality Management 1, which requires the firm to design, implement and operate a system of quality manage- ment including policies or procedures regarding compliance with ethical require- ments, professional standards and applicable legal and regulatory requirements. . Our Responsibility Our responsibility is to express an opinion on the ESEF financial statements based on the procedures we have performed and the evidence we have obtained. We conducted our reasonable assurance engagement in accordance with the International Standard on Assurance Engagements (ISAE) 3000 (Revised) Assurance Engagements Other than Audits or Reviews of Historical Financial Information . That standard requires that we plan and perform this engagement to obtain reasonable assurance about whether the ESEF financial statements are free from material noncompliance with the ESEF requirements. A reasonable assurance engagement in accordance with ISAE 3000 (Revised) involves performing procedures to obtain evidence about the ESEF financial statements compliance with the ESEF requirements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material noncompliance of the ESEF financial statements with the ESEF require- ments, whether due to fraud or error. In making those risk assessments, we con- sidered internal control relevant to the Company’s preparation of the ESEF finan- cial statements. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independent Auditor’s Reasonable Assurance Report on Lassila & Tikanoja Oyj’s ESEF Financial Statements Opinion In our opinion, Lassila & Tikanoja Oyj’s ESEF financial statements for the financial year ended 31 December 2023 comply, in all material respects, with the minimum requirements as set out in the ESEF requirements. Our reasonable assurance report has been prepared in accordance with the terms of our engagement. We do not accept, or assume responsibility to anyone else, except for Lassila & Tikanoja Oyj for our work, for this report, or for the opinion that we have formed. Helsinki 26 February 2024 PricewaterhouseCoopers Oy Authorised Public Accountants Samuli Perälä Authorised Public Accountant (KHT) KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Lassila & Tikanoja Annual Report 2023 80 LEADER OF THE REGENERATIVE SOCIETY Lassila & Tikanoja plc Valimotie 27, 00380 Helsinki puh. 010 636 111 www.lt.ﬁ

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