Martela Oyj

Annual Report (ESEF) • Mar 13, 2025

Martela Oyj Annual Report 2024 MARTELA ANNUAL REPORT 2024 2 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Martela in brief ………………………………………………………………………3 Martela 2024 ……………………………………………………………………………4 Highlights of 2024 ………………………………………………………………… 5 CEO’s review ……………………………………………………………………………6 Strategy ……………………………………………………………………………………… 8 Operating environment ……………………………………………………… 9 Board of Director’s Report ……………………………………………… 12 Financial Statements ………………………………………………………… 19 Auditor’s report …………………………………………………………………… 56 Independent Auditor’s report on the ESEF consolidated financial statements Martela Oyj …… 59 Corporate governance statement ……………………………… 61 Board of Directors ……………………………………………………………… 65 Management team ……………………………………………………………… 67 Information for shareholders ………………………………………… 69 Contents MARTELA ANNUAL REPORT 2024 3 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Martela is a Nordic leader specialising in user- centric working and learning environments. We create the best places to work and support our customers’ business with Martela Lifecycle solutions, which enable furniture and their related services to be integrated into a seamless whole. Martela is a family company founded in 1945, and its shares are quoted on the OMX Nordic Exchange Helsinki. Our main market areas are Finland, Sweden and Norway, and our solutions are also sold globally through our network of dealers. Our production facilities are located in Finland and Poland. In 2024, the Martela Group’s revenue was EUR 86.7 million and it employed an average of 372 employees. Martela in brief MARTELA ANNUAL REPORT 2024 4 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Unfavourable market situation in the industry continued, and organisational decision-making was cautious, with some office development projects being postponed to future years. Year 2024 Office property occupancy rates were at a lower level in all of Martela’s main market areas, and export sales were affected by customers’ increased inventory levels. Martela’s deliveries decreased compared to the previous year, and the competitive situation in the shrinking market weakened margins and profitability. In Finland, sales of removal and installation services decreased slightly, while the share of the revenue of the Workplace as a Service model increased. Sales to companies and government sector in Finland remained stable in a challenging market. Martela invested in its strategic focus areas to ensure growth and profitability in the future. Martela improved the customer experience by developing its digital services in particular and strengthened its ability to utilise the circular economy model and produce even more sustainable products and services. REVENUE (EUR MILLION) 86.7 OPERATING PROFIT (EUR MILLION) -6.5 PERSONNEL (AVERAGE) 372 REVENUE BY COUNTRY (EUR MILLION) TOTAL 86.7 0 10 20 30 2022 2023 2024 EQUITY RATIO (%) Finland 66,2 Sweden 8,6 Norway 4,8 Other 7,1 MARTELA ANNUAL REPORT 2024 5 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Highlights of 2024 MARTELA LEADING THE HYBRID WORK TRANSITION Finland leads Europe in remote work, and its impacts on organisational culture and work practices are widely discussed. Companies are now investing in the quality of the interior as the importance of working in the office is increasing. Martela has been actively building dialogue on work environments among various stakeholders at numerous events and has provided design and consultancy services for over 400 assignments in 2024. READ MORE SOLUTIONS FOR RENEWED ENVIRONMENTS FOR COLLABORATION AND MEETINGS Martela was selected as the loose furniture supplier for the Helsinki Chamber of Commerce when new workspaces were designed for the chamber. Active dialogue between the client, designer, and Martela enabled close cooperation, resulting in the best possible solutions for the intended use of the spaces, from supplying new furniture to maintaining and refurbishing used furniture. READ MORE AGAIN ECOVADIS GOLD RATING FOR SUSTAINABILITY EcoVadis, the world’s most trusted provider of business sustainability ratings, awarded Martela a gold medal in its 2024 assessment. With this gold medal, Martela ranks in the top five per cent of all companies assessed by EcoVadis. The ratings provide evidence-based analysis of a company’s performance and a practical roadmap for continuous improvement. READ MORE FURNITURE FOR EVOLVING DEMANDS AT XAMK’S KOTKA CAMPUS A key principle for the new building project at South- Eastern Finland University of Applied Sciences was flexibility; the spaces needed to be adaptable to meet the evolving demands of the future. Martela’s extensive product range met the needs of the project and designers – a diverse, curated selection that allowed for the cohesive, architecturally harmonious setup. Along with compatibility across the furniture families, feedback from the students and personnel on test furniture played a role in the selection process. READ MORE BEST CORPORATE IMAGE IN NATIONAL SURVEY In the nationwide Work Life Decision Makers (TEP, Työelämän päättäjät) survey commissioned by Taloustutkimus Oy, decision makers rate major Finnish companies from various industries. A total of 150 different companies from eleven different industries were evaluated in the TEP 2024 survey. Martela received the best overall rating in its sector and Martela’s recommendation index (NPS, Net Promoter Score) was also the highest. This is the 10th time in a row that Martela has achieved first place in the overall rating! READ MORE MARTELA ANNUAL REPORT 2024 6 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Improving end of the year after a quiet start The year 2024 was extremely challenging due to an unfavourable market situation. Weak economic development in the Nordic countries combined with uncertainty in interest rate trends caused caution in organisations’ procurement decisions, leading to several projects being postponed to future years. Employment development was weak, especially in Finland and Sweden, and occupancy rates in the office property market were relatively low. In addition, customers’ increased inventory levels decreased export sales. During the latter part of the year, market demand increased after a quiet start. In the second half of the year, Martela’s new orders increased by 19 per cent compared to the same period the previous year. Due to the weak performance in the first half of the year, new orders for the entire year 2024 grew by only 2 per cent compared to the previous year. In the second half of the year, we won several significant office development projects. For 2025, we expect a slight strengthening of demand due to increased pent-up demand. The need for workplace changes arises as ways of working evolve. Meeting this need will also increase demand for Martela’s services and furniture in the future. Working environments are being further modified to meet the needs of multi-location hybrid work, with a focus on their functionality and attractiveness. The upcoming economic recovery in key market areas is expected to strengthen organisations’ willingness to invest in office environment. The importance of on- site working for the competitiveness and operations of organisations is widely recognised in key market areas, but it is likely that the relative share of remote work in the Nordic countries will remain higher than in Central Europe in the coming years. Profitability put to the test Our revenue decreased by 8.2 per cent to €86.7 million, and our operating result was a loss of €6.5 million. The result for 2024 was particularly burdened by the low level of revenue and the tight competitive situation in the market leading in weaker margin levels in the second half of the year. Additionally, profitability in the early part of the year was affected by labour market disruptions in Finland and structural changes implemented in Finland, Sweden and Norway, which temporarily reduced operational efficiency and caused additional costs. We achieved our efficiency and savings targets in the second half of the year, but due to the weak market framework, the structural changes were not sufficient to turn the second half of the year into a profitable one. We have responded to the weak market situation by announcing plans for new efficiency measures in early 2025. There is still uncertainty related to market development, and therefore we must continue to adjust our cost levels to the prevailing circumstances. The structural organisational changes and efficiency improvements in early 2024 were mainly implemented during the first quarter, and at the same time, we naturally aimed to strengthen Martela’s customer service experience. In 2024, both domestic sales and especially export sales declined. Our removal and installation MARTELA ANNUAL REPORT 2024 7 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE service sales remained at the previous year’s level, and our unique Workplace as a Service (WaaS) model increased its share of our revenue. In Finland, our sales to companies and the government sector remained stable compared to the market and decreased slightly in the municipal and school sectors. Our export level was lower than the previous year in both other Nordic countries and Central Europe. This was partly due to the some customers’ increased inventory levels. We continue to concentrate on the focus areas of our strategy Despite the challenging market situation, the year was a time of strong development at Martela. We invested in our strategic focus areas to ensure long- term growth and profitability in the future. We strengthened our leadership in utilising the circular economy by joining the Nordic Circular Design Program, and this development work will be reflected in even more sustainably manufactured products and lifecycle services for our customers. Sustainability has been part of Martela’s operations throughout our history. We strive to create sustainable and durable products that withstand the test of time from both design perspective and technical endurance. Our entire business model is based on the lifecycle thinking of the work environment, where sustainability is taken into account at every stage, and the circular economy plays a crucial role. I am proud that the results of a decade of sustainability work were rated worthy of the EcoVadis Gold rating in 2024. The emphasis on utilising the circular economy model has further accelerated the demand and recognition of our Workplace as a Service (WaaS) model. Investing in the customer experience has always been important to Martela. In the nationwide Work Life Decision Makers (TEP, Työelämän päättäjät) survey commissioned by Taloustutkimus Oy, decision makers rate major Finnish companies in various industries. In 2024, Martela received the best overall rating in its sector and also had the highest Net Promoter Score (NPS) among all surveyed companies in the sector. Martela achieved the first place in the overall rating for the 10th consecutive time! This indicates that we have been able to support organisations in the right way during the significant changes in working life. A warm thank you to our customers for their trust and to all Martela employees and partners for their excellent work! Priorities for 2025 In the coming year, we will focus strongly on improving profitability and cash flow. On January 3, 2025, we announced the start of a new planning process aimed at improving efficiency and profitability, and concrete results are expected already in the first half of 2025. We will continue to invest in active customer work and to work closely with our value chain partners. We will continue to develop our service channels and maintain our circular economy service model and the offering of the sustainably designed products. I sincerely thank Martela’s staff for a busy year! The year was much more challenging than expected, but our investments in business development and the positive feedback received from customers create confidence in the future. The work for the best working environments continues. Ville Taipale CEO MARTELA ANNUAL REPORT 2024 8 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Martela’s existence is based on the fact that we are experts in creating a better work culture and our task is to create user-centric work environments. Our strategy is based on a strong understanding of the needs and problematic areas of organisations and the trends in the way of working. Our updated vision “We create the best places to work” emphasises the constantly changing ways of working and the diversity of work environments, from offices to home offices and other places where work is done. Our strategy “We support our customers’ business with Martela Lifecycle solutions” combines furniture and related services into a seamless whole. Martela’s high-quality and timeless design enable a long lifecycle for products. The furniture selection is constantly optimised to support multi-location work. Strategy VISION We Create the Best Places to Work STRATEGY We support our customers’ business with Martela Lifecycle solutions MARTELA ANNUAL REPORT 2024 9 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Operating environment Economic development and market situation In 2024, economic development in the Nordic countries and Europe remained modest. Although inflation slowed and interest rates began to fall, companies were cautious with their investments. This was reflected in the office space market and furniture acquisitions, where there was even stronger emphasis on flexibility, cost-efficiency and sustainability. The weak market situation in the industry also increased price competition and lowered average sales margins. The geopolitical situation remained unstable, creating uncertainty about the availability and price development of raw materials. On the other hand, energy price fluctuations and supply chain disruptions decreased, which stabilised production costs. The changes in the way people work continued, and companies reassessed their office space needs with new criteria. There was still demand for Martela’s change and furniture services as companies and organisations adapted their work environments to meet the needs of hybrid work. The focus on customer-oriented, sustainable, and flexible solutions strengthened the company’s position in the market. Office space market and changes in work Changes in ways of working were clearly visible in the development of office spaces in 2024. Companies focused on optimising their office spaces and increasingly adopted the hybrid work model, where workdays are divided between the office, remote work, and shared spaces. Space efficiency and comfort became key selection criteria. Office spaces were reduced in size, but investment was made in its quality and functionality. The demand for Martela’s solutions grew, particularly for adaptable and ergonomic work environments. Special solutions were still needed for work requiring concentration, teamwork, and creative encounters, and the office’s role in strengthening collaboration and corporate culture remained. Sustainability and circular economy guided choices In 2024, companies placed even greater emphasis on sustainability and the circular economy in office space design. The EU’s tightening regulations and companies’ sustainability reporting obligations encouraged organisations to choose sustainable and recyclable furniture and services based on lifecycle thinking. Martela has invested in sustainability for decades, and the company’s business model is based on the circular economy and lifecycle thinking. The Workplace as a Service (WaaS) model meets companies’ needs to extend the lifecycle of furniture and reduce the challenges associated with ownership. The Martela Outlet chain enables the easy acquisition of used and refurbished furniture and supports the sensible use of resources. High-quality design and customer experience Martela’s furniture is designed to withstand time and use. In 2024, the importance of sustainable and timeless design was further emphasised as companies invested in long-lasting and versatile furniture solutions. To ensure safety and durability, Martela’s products are tested according to European EN standards in an accredited testing laboratory before being introduced to market. Customer experience remained a key competitive factor, and digital services became an increasingly important part of the procurement process. The development of e-commerce and digital design services enabled a smoother customer experience. The focus on services and listening to customers’ needs paid off. Martela achieved the highest customer satisfaction in its industry for the 10th consecutive time in Work Life Decision Makers (TEP, Työelämän päättäjät) survey commissioned by Taloustutkimus Oy. MARTELA ANNUAL REPORT 2024 10 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE MARTELA’S FURNITURE IN SSAB RAAHE’S MODERN PREMISES Industrial group SSAB constructed a new 7,800 square metre building at its Raahe production site, housing office spaces and a research centre with laboratories. The design of the spaces was guided by user-centricity, solutions supporting modern working methods, and high- quality, sustainable furniture choices. The participatory design of the new building’s spaces was handled by interior architecture company Kakadu, while Martela was responsible for supply and installation of the furniture. The building’s facade features impressive COR-TEN steel, which is manufactured by SSAB. The muted red COR-TEN steel is also present in the interiors as perforated panel surfaces, creating a cohesive visual connection between facade and interior. READ MORE High-quality furniture Furniture choices emphasise authenticity and quality. Martela’s products have been used in the spaces, such as wooden chairs and bar stools from the Ella series in the cafe, and Sola chair series in the conference rooms. In addition to Martela’s furniture, products from its partners such as &Tradition, Avoline, Inno, HAY, Vitra, and Vivero were chosen for the spaces. Additionally, a unique custom-made conference table from Kidex Oy is featured in the premises. The participatory method enabled staff to smoothly transition from traditional office rooms to a shared multi-space office model. Informative signage effectively supports use and utilisation of different spaces. The stylish and impressive interior design features oak wood surfaces as a warm contrast to metal elements, while muted red and blue tones create a balanced and fresh colour scheme. MARTELA ANNUAL REPORT 2024 11 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Board of Directors’ Report and Financial Statements Board of Directors’ Report ………………………………………… 12 Consolidated financial statements, IFRS ……………… 19 Parent company financial statements, FAS ………… 47 Auditor’s report …………………………………………………………………56 MARTELA ANNUAL REPORT 2024 12 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Key figures The Group’s revenue for the financial year was EUR 86.7 million (94.4). The operating result for the year was EUR -6.5 million (-2.4). Earnings per share were EUR -1.87 (-0.77). Cash flow from operating activities totalled EUR 0.1 million (0.3). The equity-to-assets ratio was 2.5 per cent (20.0) and gearing was 1,455.2 per cent (137.2). The return on investment for the year was -25.4 per cent (-7.5). Description of the business Martela is one of the Nordic leaders in the workplace industry. Martela designs and implements best workplace and learning environments. Martela supplies user-centric solutions into today’s workplaces – mobile work and activity based offices. Martela also offers the widest selection of services supporting changes in interior planning as well as supporting maintenance. Our total offering comprises of the change of the whole workplace from its specification and planning to implementation and maintenance. Martela’s offering and product development In line with its Lifecycle strategy Martela creates high-quality services for workplaces and learning environments along the full lifecycle. Our offering includes workplace and learning environment specification and planning, implementation and Board of Directors’ report furnishing as well as continuous measurement and optimisation. Martela’s service model related to furnishings and changes in premises responds to the constantly growing need for flexibility. Increasingly, instead of large one-off investments, space changes are under more process-like development. In this change, Martela has highlighted the circular economy model, flexible Workplace as a Service and development of digital sales channels, as strategic focus areas. Throughout the year, several new products and updates to existing products were introduced. The popular Sola product family, designed by Antti Kotilainen, welcomed a new member with the launch of the Sola Meet & Work hybrid chair. As the name suggests, the chair is intended for use both at workstations and in meeting rooms, and its soft design enhances comfort in any space. Additionally, the Sola product family expanded in the later part of the year with the modular Sola sofa, which follows the design language of the previously launched Sola lounge chairs. The charming Hubbe lounge chair, launched for lobbies and waiting areas, introduced new young designers to Martela’s design team, as the chair, designed by Timo Hoisko and Matti Korpela from KO-HO Industrial Design, became part of Martela’s standard collection. EUR -1.3 (-1.6) million has been entered in the Group profit and loss statement as reasearch and development expenses. Market situation Economic development in the Nordic countries has been weak in 2023 and 2024, which has been reflected in caution among Martela’s customers when making purchasing decisions. Economic growth is expected to improve in 2025 compared to 2024, but the market situation is still expected to remain somewhat uncertain in 2025. However, for 2025 and the years ahead, demand is expected to strengthen, partly due to the increased pent-up need. The uncertainty in the markets, combined with changes in how work is being done, is also creating demand for Martela’s transformation services, even though office occupancy rates have not yet returned to pre-pandemic levels. Workspaces are being adapted to meet the needs of multi-location hybrid work, with more focus being placed on their attractiveness than before. Group structure There was no changes in the group structure in 2024. Revenue and operating result The January–December 2024 revenue was EUR 86.7 million (94.4), a decrease of -8.2 per cent from previous year. Compared to the previous year, revenues decreased by area as follows; in Sweden -10.0 per cent in Finland -1.7 per cent in Norway -31.1 per cent and in Other countries -32.7 per cent. The Group’s operating result for the January– December was EUR -6.5 million (-2.4). The January– December result before taxes was EUR -8.2 million (-3.3). Financial position The cash flow from operating activities in January–December was EUR 0.1 million (0.3). At the end of the period, interest-bearing liabilities stood at EUR 20.8 million including EUR 16.3 million lease liabilities according to IFRS 16. At the end of comparison period the interest bearing liabilities stood at EUR 18.2 million including EUR 16.8 million lease liabilities according to IFRS 16. Net liabilities were EUR 16.9 million (13.1). At the end of the period, short-term limits of EUR 0.0 million were in use (0.0). Short-term cash limits of EUR 0.3 million (0.3) would have been available for utilisation. The gearing ratio at the end of the period was 1,455.2 per cent (137.2 per cent) and the equity ratio was 2.5 per cent (20.0 per cent). Financial income and expenses were EUR -1.7 million (-0.9). The balance sheet total stood at EUR 54.7 million (55.7) at the end of the period. Capital expenditure The Group’s gross capital expenditure for January–December came to EUR 0.4 million (2.3). MARTELA ANNUAL REPORT 2024 13 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Changes in the Group Management Team There were no changes in the composition of the Group’s Management Team during 2024. Personnel The Group employed an average of 372 people (403, change -7.7 per cent). Personnel on average employed in Finland was 302 (326), in Sweden 25 (29), in Norway 14 (15) and in group other countries 31 (33). The number of employees in the Group was 360 (386) at the end of the review period. Personnel costs in January–December totalled EUR 22.3 million (23.0). Non financial information MANAGEMENT OF CORPORATE RESPONSIBILITY Sustainability is an important part of Martela’s strategy and operations. The group’s sustainability, quality and environmental management, as well as occupational health and safety systems, are overseen by the VP, Human Resources and Sustainability. The responsibility for guiding sustainability in operations lies with the Sustainability Steering Group, which consists of members of the executive team, with the Sustainability Director acting as the secretary. More detailed information about the group’s sustainability aspects, goals, and achievements can be found in the separate sustainability report, which is published annually. The Global Reporting Initiative (GRI) indicators related to the 2024 sustainability reporting will be published after the annual report. For 2025, Martela falls under the CSRD reporting obligation and has therefore begun the DMA phase of the reporting process during 2024. Through the DMA process, no significant new aspects have emerged compared to the long-established GRI- based reporting that has been published annually. Already since 2011, Martela’s corporate responsibility has been guided by the Martela Corporate Code of Conduct approved and annually reviewed by the Board of Directors. The principles contain references to international corporate responsibility commitments. The company has engaged itself in the UN Global Compact challenge, which aims at promoting human rights, rights in working life, environmental protection and the eradication of corruption and bribery. As Martela operates in an international market, it also takes into account any international treaties, commitments and recommendations that concern its work. The most important ones are: • The UN Universal Declaration of Human Rights • OECD Guidelines for Multinational Enterprises • The ILO Declaration on Fundamental Principles and Rights at Work and other ILO conventions related to its activities Since 2011, the practical activities of the company have been guided by the corporate responsibility policies approved by the Group Management Team concerning matters related to personnel, the environment and supply chain management. The principles and policies published on Martela’s website www.martela.com/about-us/sustainability/ corporate-responsibility are reviewed and, when necessary, updated annually under the coordination of the Sustainability Steering Group. The principles and policies cover social and employee matters and matters related to respecting human rights and eradication of corruption and bribery. DESCRIPTION OF THE BUSINESS OPERATING MODEL The Martela Lifecycle model takes into account the entire life cycle of the workplace. Martela supports the sustainability of its client companies by offering REVENUE (EUR MILLION) 0 50 100 150 2020 2021 2022 2023 2024 OPERATING PROFIT (EUR MILLION) INVESTMENTS AND DEPRECIATIONS (EUR MILLION) EARNINGS/SHARE AND DIVIDENDS -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 2 020 2021 2 022 2 023 2 024 0 1 2 3 4 5 6 7 8 2020 2021 2022 2 023 2024 -2 -1,5 -1 -0,5 0 0,5 1 1,5 2 2020 2021 2022 2023 2024 Capital expenditure excluding leases Depreciations Earnings/share Dividends paid (EUR million) MARTELA ANNUAL REPORT 2024 14 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE workplace solutions based on circular economy principles. The Group units have the ISO 9001 quality, ISO 14001 environmental and ISO 45001 occupational health and safety management system certifications, granted by an independent party, to ensure continuous improvement, meeting customer expectations and that environmental and work safety aspects are controlled. In the manufacturing process, there is an emphasis on a strong supplier chain. Martela’s own manufacturing is focused on final assembly and remanufacturing production at its logistics centre in Nummela, Finland, which also houses most of the company’s R&D and purchasing. The assembly of upholstery components takes place at Martela’s own plant in Poland. The manufacture of table top and storage components takes place mainly at Kidex Oy, Martela’s subsidiary located in Kitee, Finland. The Martela headquarters in Otaniemi, Espoo, houses sales and support functions in addition to the Group administration. Martela has several sales offices in Finland, Sweden and Norway. In other countries, the sale of Martela’s products takes place mostly through a dealer network. The purchasing of products and services from service providers accounts for more than 70 per cent of Martela Group’s turnover. A network of around hundred reliable suppliers delivers materials and components for Martela labelled products. Around a quarter of the Group’s turnover goes on salaries and social security payments. Martela values local manufacturing and employment. As the share of its service business is growing, the company will keep creating more new jobs close to its markets. The distribution of financial value will be discussed in further detail in the forthcoming Sustainability Report. ENVIRONMENTAL MATTERS Martela’s Environmental Policy, approved by the Group Management Team, aims to decrease the company’s environmental impacts and promote recycling. The policy gives instructions on taking environmental matters into account in the development of its offering, through which the company will also have an indirect impact on the environmental effects of its customers. The essential environmental aspects in Martela’s operations are presented in the materiality assessment found in the Sustainability Report. Martela has the best opportunities to influence the reduction of greenhouse gas emissions and energy use in its market area through its customers’ premises. Martela is constantly working to help its customers create facilities that support knowledge work and improve space efficiency. Therefore, Martela’s most important environmental goal is to offer its customers the Martela Lifecycle model, which supports customers’ space efficiency. Sustainability reporting focuses on the direct and indirect impacts of its own operations, because Martela does not have the means to measure the effects of improved space efficiency and reduced energy use among its customers. Martela’s most significant climate impact arises from the material usage associated with the products and services provided to customers. Martela calculated its greenhouse gas emissions for 2023 using updated factors, and the scope of the calculations was expanded, which resulted in an increase in total emissions to 17.7 million kilograms compared to the previous year. Of the greenhouse gas emissions, 80 per cent came from the materials purchased for products delivered to customers (scope 3), 2 per cent from indirect energy use (scope 2), and 4 per cent from the distribution of finished products to customers (scope 1). The energy intensity within Martela’s calculations, relative to revenue, was 303 GJ/million euros. The durability, recyclability and recycling of furniture are at the heart of Martela’s operations. Martela’s furniture has been designed to be refurbished and restored, and their materials can be recycled or used to produce energy. As part of its comprehensive service, Martela also offers a furniture recycling service to its customer companies. When designing new facility solutions for customers, their old furniture can either be included in the new design or recycled responsibly through Martela. Used furniture in good condition is cleaned and refurbished at the Nummela remanufacturing facility and then made available to corporate and private customers through the Martela Outlet online service and shops. In 2023, around 23,140 pieces of used furniture found new homes through the Martela Outlet chain. There are no significant environmental risks in Martela’s own operations, but global changes in, for example, energy sources, pricing, availability of materials and changes in the way of working may affect Martela’s operations in the future. Environmental goals, their realisation and more detailed environmental metrics are published annually in the Sustainability Report. PERSONNEL AND SOCIAL MATTERS Martela’s vision is to create the best places to work. This goal is enabled by competent and committed personnel who feel good. Martela’s people management principles are based on company values and responsible management and leadership practices. The key objectives of personnel competence development is to develop customer excellence and experience in every touch point and to improve operational performance. During 2024 the cooperation between the functions and the related processes were crystallised to enhance the order- delivery efficiency. Hybrid work in expert positions continues to evolve in organisations. Also in Martela. The rules of hybrid work has been specified to better support different ways of working, taking into account both individual and teamwork needs. The principle of flexible working is to provide the balance between office work and remote work, and employees are encouraged to work in different places depending on suitability for completing the task. The new premises at Martela’s head office meet the needs of hybrid work and support working together, a sense of community and work that requires concentration. EQUITY RATIO 0 2 5 50 75 100 0 2 0 40 60 80 2 020 2 021 202 2 2 023 2024 (%)eur million Balance sheet total Equity Equity ratio (%) MARTELA ANNUAL REPORT 2024 15 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE A safe working environment and working conditions are of primary importance for the well- being of the personnel. The basis of a safe work environment is adequate familiarisation with work tasks, up-to-date instructions and the necessary safety training. Martela’s personnel will have safety training relevant to their work, enabling them to perform their work in a professional and safe manner. Working safely is important in all kind of work but its importance is emphasised especially in production, removal and installation services. Employees are encouraged to actively report all safety near misses and incidents as they provide valuable information to improve occupational safety. During 2024, personnel’s well-being, functional capacity and coping at work were further enhanced by piloting mental well-being support services for everyday challenges. The job satisfaction of the personnel and the effectiveness of the actions chosen to improve the same are measured with annual People Spirit survey. The survey measures, among other things, job motivation, commitment, leadership and operative culture, and employer image. Despite the prevailing uncertainty and challenging environment, the personnel’s job satisfaction and engagement improved compared to the previous survey result. Clear strengths are the meaningfulness of one’s own work, received feedback and pride over Martela’s products and services. The management and operating culture as well as the employer image have also developed positively. Although the personnel’s possibility to participate in developing processes and availability of information have improved since the previous survey, there is room for improvement compared to the benchmark norm. Overall, the results show that the measures to strengthen job satisfaction as well as leadership and operative culture are on the right path. Martela’s Sustainability Report contains a comprehensive description of the social and people related matters. RESPECTING HUMAN RIGHTS Matters related to respecting human rights are discussed in, for example, the company’s People Policy and Sustainability Policy for Supply Chain. The main principle is to offer equal opportunities to all of employees and to treat each employee fairly. In the requirements for the suppliers, the focus is on observing national legislation and ILO conventions, depending on which of them is found more demanding from the viewpoint of employee rights. No breaches of respecting human rights have been observed in Martela’s operations or supply chain. Martela’s products are manufactured on the basis of customer orders, which means that the supply chains are short and that the acquisitions mainly take place from the neighbouring areas and from elsewhere in Europe. In Europe, where there is a long tradition of follow-up of working conditions and labour legislation, the risks related to respecting human rights are smaller. The social risks of Martela’s suppliers have been thoroughly investigated and are always reviewed when selecting new suppliers and in conjunction with supplier evaluation. Analysis of sustainability aspects is an important part of continuous interaction with suppliers. In Martela’s sustainability policy for the supply chain updated at the end of 2023, the definitions of social responsibility were further specified. The policy is communicated with each purchase order. Additionally, for the most important suppliers, compliance is checked on a risk-based basis. Martela annually assesses the risks of social responsibility in its supply chain through country- specific sustainability indicators and, on the basis of these, plans the necessary measures for verifying social responsibility on a supplier-by-supplier basis. In recent years, Martela has regularly participated PERSONNEL BY AREAS, ON AVERAGE 2023 TOTAL 403 TOTAL 372 PERSONNEL BY AREAS, ON AVERAGE 2024 in the EcoVadis assessment. In the 2023 and 2024 evaluations, Martela was awarded the EcoVadis Gold Medal. EcoVadis is the world’s largest sustainability rating agency. Its assessment includes 21 sustainability criteria, which are grouped into four themes: environment, labour and human rights, ethics, and sustainable procurement. The rating criteria are based on international sustainability standards, such as the UN Global Compact’s ten principles, the International Labour Organization (ILO) conventions, the Global Reporting Initiative (GRI) standards, and the ISO 26000 standard. The 2024 sustainability training was conducted in the fall, with 89 per cent of the staff participating. The training aimed to assess Martela employees’ commitment to the principles of responsible business practices and their awareness of the appropriate actions to take if they observe activities contrary to these principles. The survey showed that 100 per cent of the respondents were committed to these principles, and nearly 90 per cent knew how to act if they encountered behaviour that violated these principles. During 2024, Martela’s Whistleblowing portal was opened 82 times. Of these, two contained actual reports of suspected wrongdoing, leading the company to take the necessary internal actions. PREVENTION OF CORRUPTION AND BRIBERY Matters related to prevention of corruption and bribery are discussed in, for example, the Corporate Code of Conduct and Sustainability Policy for Supply Chain. Martela does not accept bribery in any form in its business in any of its market areas. Giving or receiving bribes is not permitted under any circumstances. All transactions are recorded through the financial management/bookkeeping of each Finland OtherScandinavia Finland OtherScandinavia MARTELA ANNUAL REPORT 2024 16 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE subsidiary. Martela’s and all its subsidiaries bookkeeping and transactions are subject to an annual statutory audit. The bookkeeping is transparent to the CFO of the Group. Share Martela has two share series, A and K, with each K share entitling its holder to 20 votes at the Annual General Meeting and each A share entitling its holder to one vote. Private holders of K shares have shareholder agreement that restricts the sale of K shares to any party outside the existing holders of K shares. There is a total of 604,800 K shares and a total of 4,034,412 A series, together 4,639,212 shares. In January–December, a total of 1,962,972 (1,122,349) of the company’s series A shares were traded on the NASDAQ OMX Helsinki exchange, corresponding to 48.7 per cent (28.3 per cent) of the total number of series A shares. The value of trading turnover was EUR 2.2 million (2.1), and the share price was EUR 0.85 at the end of the period (1.28). During January–December the share price was EUR 1.59 at its highest and EUR 0.81 at its lowest. At the end of December, equity per share was EUR 0.25 (2.09). During 2024 Martela has received three notifications in accordance with the Finnish Securities Market Act Chapter 9, Section 5. On September 18, 2024 Martela received an announcement from Isku Yhtymä Oy that the total number of Martela Corporation shares owned by Isku-Yhtymä Oy has decreased below 5 per cent and 10 per cent of the share capital in Martela plc, as a result of share transactions concluded on September 17, 2024. On September 18, 2024 Martela received an announcement from Isku Inspira Oy that the total number of Martela Corporation shares owned by Isku Inspira Oy has increased above 5 per cent of the share capital in Martela plc, as a result of share transactions concluded on September 17, 2024. On October 11, 2024, Martela received an announcement from Isku Inspira Oy, according to which the total number of Martela Corporation shares owned by Isku Inspira Oy has increased above 10 per cent of the shares in Martela plc, as a result of share transactions concluded on October 10, 2024. During 2023, Martela did not receive any notifications pursuant to Chapter 9, Section 5 of the Finnish Securities Markets Act. More information on the Martela Corporation shares and shareholders can be found under note 27 of the Notes to the financial statements. TREASURY SHARES Martela did not purchase any of its own shares in January–December 2024. Based on the share issue authorisation granted by the Annual General Meeting on 29.3.2023, the Board of Directors of Martela Corporation has decided to issue 53,881 new series A shares to the company itself without consideration. The shares issued by the company have been used to pay rewards according to the company’s Performance- based Matching Share Plan 2021-2023, announced on March 23, 2021, for 32 key individuals, based on the earning period of 2022. On December 31, 2024, Martela owns a total of 1,425 Martela A shares and its holding of treasury shares amounted to 0.03 per cent of all shares and 0.01 per cent of all votes. Out of the shares, 379 were purchased at an average price of EUR 10.65 and 1,046 were transferred from Martela Corporation’s joint account to the treasury shares. BOARD AND MANAGEMENT SHAREHOLDINGS OF MARTELA OYJ Members of the Board, CEO and Management Team hold at 31.12.2024 total of 147,622 Martela Oyj A -shares and 2,673 K -shares, which represents 3.2 per cent of the total amount of shares and 1.2 per cent of the voting rights. Share-based incentive programme THE OLD SHARE-BASED INCENTIVE PLAN In the effective Performance-based Share Plan 2021– 2023, there were three earning periods, which were financial years 2021, 2022 and 2023. The prerequisite for participating in the new plan was that a participant acquires the company´s series A shares up to the number determined by the Board of Directors. Approximately 40 key employees, including the CEO and other Martela’s Management Team members, were belonging to the target group of the share-based incentive plan. In the plan, the target group was given an opportunity to earn Martela Corporation series A shares based on performance and on their personal investment in Martela Corporation series A shares. The Board of Directors decided the earning criteria and the goals for each criterion of the plan at the beginning of each earning period. 53,881 additional shares based on the program were paid as rewards in 2023 and 11,657 in 2022. In 2024, no reward will be paid on the basis of the plan, because the goals of the earning period 2023 were not achieved. THE NEW SHARE-BASED INCENTIVE PLAN On March 13, 2024, Martela Oyj’s Board of Directors decided on a new share-based incentive plan for the group’s key employees. The new system largely follows the principles of the old system. Participating in the new plan requires that the participant acquire new or transfer already acquired company A shares up to the amount decided by the Board of Directors. In order to implement the plan, the Board of Directors decided on April 29, 2024, on a share issue of 65,717 company A shares aimed at the target group of the plan. In addition to this, the employees who participated in the old plan have transferred 172,644 of the company’s A shares from their investments in the old plan to the new plan. The new shares were entered into the Trade Register on 4 June 2024 and trading on the new shares at the Main market administered by Nasdaq Helsinki Ltd began on 5 June 2024. In the plan, it is possible for the target group to earn Martela Oyj’s A shares based on performance and personal investment in Martela Oyj’s A shares. The Board decides the earning criteria of the plan and the goals set for each earning criterion at the beginning of the earning period. The rewards paid based on the plan are estimated to correspond to a maximum of 712,000 Martela Oyj’s A shares, including the portion paid in cash. 37 people, including the CEO and other members of Martela’s Management Team, were part of the plan’s target group when the plan started. The new performance-based additional share plan 2024—2026 has three earning periods, the fiscal years 2024, 2025 and 2026. In the earning period 2024, the rewards are based on the group’s operating profit (EBIT). In 2025, no reward shall be paid based on the program, as the targets for the 2024 earning period were not achieved. The rewards will be paid partly in Martela Corporation series A shares and partly in cash. The cash proportions of the rewards are intended for covering taxes and tax-related expenses arising from the rewards to the participants. As part of the implementation of the MARTELA ANNUAL REPORT 2024 17 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE performance-based share plan, the Board of Directors granted interest-bearing loans of EUR 42,100 to persons participating in the program to finance the acquisition of the company’s shares. With the loans in question, the participants financed the acquisition of 65,717 of the company’s A shares in the above-mentioned share issue. The maximum amount of the loans in question is 70 percent of the participant’s share investment. In addition to this, for persons who participated in the old plan and have transferred to the new plan, the Bord of Directors has decided to extend the maturity of the loans granted in 2021 by two years until the end of 2027. 2024 Annual General Meeting Martela Corporation’s Annual General Meeting was held on Friday, April 5, 2024. The Meeting approved the financial statements, discharged the members of the Board of Directors and CEO’s from liability for the year of 2023 and approved remuneration report and new remuneration policy. The Board of Directors proposal that no dividends would be paid was approved. The Annual General Meeting confirmed that the Board of Directors will consist of six members and Mr. Eero Martela, Ms. Hanna Mattila, Mr. Jan Mattsson, Mr. Johan Mild and Ms. Anni Vepsäläinen be re-elected as members of the Board of Directors and a new member Mr. Jacob Kragh was elected to replace Ms. Katarina Mellström. The Annual General Meeting resolved a monthly compensation of EUR 3,700 be paid for the Chairman of the Board and EUR 1,850 for the Board Members, and an additional compensation of EUR 1,600 per year to the Board members belonging to a committee. Authorised Public Accountant Ernst & Young Oy was elected as the company’s auditor. The remuneration of the auditor will be paid according to the invoice that has been accepted by the Audit Committee of the company. Ernst & Young Oy has informed that Authorised Public Accountant Mr. Osmo Valovirta will act as the principal auditor. The Annual General Meeting authorised the Board in accordance with the proposal of the Board of Directors to decide on the repurchase and/ or accepted as pledge of a maximum of 450,000 Company’s own A shares in one or several occasions. Own shares will be repurchased in public trading maintained by Nasdaq Helsinki Ltd at the market price of the shares as per the time of repurchase or otherwise at a price formed on the market. Own shares may be repurchased when necessary as a part of the Company’s salary and incentive scheme, for use in conjunction with corporate acquisitions and other business arrangements, if the Board deems this is in the interest of the shareholders in light of the company’s share indicators, or if the Board deems it is an economical way of using liquid assets, or for some other similar purpose. Own shares repurchased to the Company may be retained in the possession of the Company, cancelled or transferred further. The Board of Directors resolves how own shares are repurchased and/or accepted as pledge. The authorisation grants the Board of Directors the right to resolve on all other terms of the repurchase and/or acceptance as pledge of the own shares. Thus, this share repurchase authorisation includes the right to repurchase shares otherwise than in proportion of the shareholdings (directed repurchase). The authorisation cancels any previous unused authorisations to repurchase the Company’s own shares. This share repurchase authorisation will be valid until the closing of the next Annual General Meeting, however, no longer than until 30 June 2025. The Annual General Meeting authorised the Board of Directors to decide upon the issuance of shares and the issuance of special rights entitling to shares as referred to in Chapter 10 Section 1 of the Companies Act in one or several tranches, either against payment or without payment. The aggregate number of shares to be issued, including the shares to be received based on special rights, cannot exceed 450 000 of the Company’s A-series shares. The Board of the Directors may resolve to issue new shares or to transfer own shares possibly held by the company. The maximum amount of the authorisation corresponds to approximately 10 per cent of all shares in the Company. The Board of Directors is authorised to decide on all other matters related to the issuance of shares and special rights entitling to shares, including the right to deviate from the pre-emptive right of shareholders to subscribe for shares to be issued. The authorisation is proposed to be used for the purposes of paying purchase prices of corporate acquisitions, share issues and issues of option rights and other special rights entitling to shares. This authorisation remains valid until the closing of the next Annual General Meeting, however, no longer than until 30 June 2025. The Board of Directors elected by Martela Corporation’s Annual General Meeting had its organisational meeting after the Annual General Meeting and elected from among its members Johan Mild as the Chairman and Anni Vepsäläinen as the Vice Chairman of the Board. Administration Martela Corporation is a Finnish limited liability company that is governed in its decision-making and management by Finnish legislation, especially the Finnish Limited Liability Companies Act, by other regulations concerning public listed companies, and by its Articles of Association. The company complies with the NASDAQ OMX Guidelines for Insiders and the Corporate Governance Code 2020 for Finnish listed companies published by the Securities Market Association. Company has published its Corporate Governance report as a separate document in company’s website. More information on Martela’s governance can be found on the company’s website. Martela Sustainability Report includes extensively the non-financial information (NFI) required by the accounting law. The Sustainability Report of 2024 will be published after the Annual Report. Risks and uncertainties The principal risk regarding profit performance relates to the general economic uncertainty and the consequent effects on the overall demand in Martela’s operating environment. In addition to general economic development, changes related to working life trends, such as the evolving relationship between remote work and on-site work, also affect the overall demand in the business environment and the product-specific focus areas of demand. The aforementioned changes in working life trends create risks for performance development and its forecasting, and due to the project-based nature of the industry, short-term predictability is generally challenging. According to Martela’s risk management model, risks are classified and addressed in various ways. Company regularly evaluates and monitors the financing need of its operations in order to secure sufficient liquid funds to run the operations and to facilitate other liabilities, like long-term rental agreements related payments. Sudden negative changes in the demand of company’s products and services or changes in the overall market MARTELA ANNUAL REPORT 2024 18 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE environment can however cause that companys liquid funds will not be sufficient to finance the operations. This risk is managed, among other measures, by adjusting costs and increasing operational efficiency. Additionally, efforts are made to raise product margins whenever possible without reducing the overall volume of revenue. Furthermore, the group aims to accelerate the turnover of working capital by lowering inventory levels and increasing billing frequency through advance invoicing. Additional funding opportunities are also evaluated regularly. If the challenging market situation were to persist unusually long, and the group could not sufficiently mitigate its effects through the aforementioned actions, there is a risk that weakened liquidity could jeopardise the group’s ability to continue its operations. Production of Martela’s products is based on orders placed by customers, supply chain is short and purchases are mainly from neighbouring area and from other parts of Europe. Extensive warehousing is not necessary for products other than the most common product lines, where the delivery speed has been prioritised. The product manufacturing is automated and based on component subcontracting and on assembly carried out by Martela. Risks of damage are covered with appropriate insurance and this provides comprehensive coverage for property, business interruption, supplier interruption loss and loss liability risks. The services of an external partner are used in insurance as well as in legal matters. Finance risks are discussed in note 22 of the notes to the financial statements. SHORT-TERM RISKS The company’s most significant individual risks affecting operations in the short-term are related to earnings development and, consequently, to the evolution of liquidity. The key risks to earnings development and liquidity are related to general economic uncertainty and its impact on the overall demand for Martela’s business environment, as well as Martela’s relative performance in the total market. Additionally, the decline of the overall market in recent years has increased price competition within the industry, which has pressured profitability. These factors together increase uncertainty regarding overall demand and margins, making the demand for Martela’s products and margins less predictable. Due to the project-based nature of the industry, forecasting in the near term has been challenging, and the difficulties in forecasting are further amplified in times of economic uncertainty. Events after the end of the financial year On January 3, 2025, the company announced that it was planning to streamline its operations. According to the release, the challenging market conditions in the industry over the past few years have affected Martela’s operating environment, weakening business volume and profitability. The ongoing economic recovery is positively impacting the industry situation, but there are still uncertainties regarding the strength of the recovery in key market areas. For the reasons mentioned above, Martela is planning to streamline and reorganise its operations in order to mitigate the negative effects caused by the market situation, adjust its cost structure to match the prevailing conditions, and bring flexibility to the uncertainty driven by demand. The planned personnel savings and other cost-saving measures are expected to result in annual cost savings of approximately EUR 1.5 to 2.0 million. According to the preliminary estimate, the planned actions could lead to a permanent reduction of around 20 job positions. The planned measures will affect Martela Group’s employees in Finland, Sweden, and Norway. Additionally, there are plans to use layoff procedures to achieve the necessary temporary flexibility. Martela is in close discussions with employees and employee representatives regarding the changes. The negotiation processes and their timelines will vary by country. On January 17, 2025, the company announced preliminary information about its revenue and operating profit for 2024. The company stated that, according to preliminary unaudited financial statements, Martela Group’s operating profit for the full year 2024 did not meet the level outlined in the guidance provided on December 11, 2024. According to the preliminary unaudited financial statements, both revenue and operating profit for the full year 2024 declined compared to the previous year. Revenue was approximately 87 million euros (94.4), and the operating loss was between EUR 6.3 and 6.7 million (-2.4). On January 30, 2025, the company announced that it would streamline the composition of its executive team. The goal of the change is to enhance operations, standardise the development of Martela’s products and services, and strengthen the position of Martela’s products in the market. As part of this, technical product development will move from the Product & Design unit to the Operations business unit, and product portfolio management will be transferred to a new Brand, Products & Services unit. These changes will lead to adjustments in the group’s executive team. Eeva Terävä will begin as the leader of the new Brand, Products & Services unit on February 1, 2025. Kari Leino, who previously led the Product & Design unit, will continue as the product portfolio and design director in the Brand, Products & Services unit starting from February 1, 2025. There are no other significant events to report after the period from January to December 2024, and operations have continued as planned. Outlook for 2025 Martela anticipates its revenue to increase in full- year 2025 compared to previous year and and comparable operating profit close to zero result. Proposal of the Board of Directors for distribution of profit The Board of Directors proposes to the Annual General Meeting that no dividend will be distributed for 2024. Annual General Meeting Martela Corporation’s Annual General Meeting is planned to be held on Monday April 7, 2025. The notice of the Annual General Meeting will be published in a separate release. MARTELA ANNUAL REPORT 2024 19 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Consolidated comprehensive income statement (EUR 1000) Note 1 Jan–31 Dec 2024 1 Jan–31 Dec 2023 Revenue 1 86,668 94,389 Other operating income 2 148 149 Changes of inventories of finished goodsand work in progress 4,572 1,420 Raw material and consumables used -56,618 -56,219 Production for own use 326 513 Employee benefits expenses 3 -22,300 -22,995 Other operating expenses 4 -12,216 -12,865 Depreciation and impairment 5 -7,114 -6,773 Operating profit (-loss) -6,533 -2,380 Financial income 7 163 645 Financial expenses 7 -1,839 -1,557 Profit (-loss) before taxes -8,210 -3,292 Income taxes 8 -482 -222 Profit (-loss) for the financial year -8,692 -3,514 Other comprehensive income: Items that will not later be recognised through profit or loss Items resulting from remeasurement of the net debt related to defined benefit plans 15 45 Taxes from items that will not later be recognised through profit or loss 0 0 Items that may later be recognised through profit or loss Translation differences 192 -415 Other comprehensive income for the period 207 -370 Total comprehensive income -8,485 -3,884 Allocation of profit (-loss) for the financial year Equity holders of the parent -8,692 -3,514 Allocation of total comprehensive income Equity holders of the parent -8,485 -3,884 Earnings per share of the profit attributable to the equity holders of the parent Basic earnings/share, EUR 9 -1.87 -0.77 Diluted earnings/share, EUR 9 -1.87 -0.77 Consolidated balance sheet (EUR 1000) Note 31.12.2024 31.12.2023 ASSETS Non-current assets Intangible assets 10 3,337 4,334 Tangible assets 11 14,707 14,408 Non-current financial assets 12 567 539 Deferred tax assets 13 2,631 3,003 Non-current assets, total 21,242 22,283 Current assets Inventories 14 10,879 9,235 Trade receivables and other receivables 12, 15 18,645 19,115 Cash and cash equivalents 3,903 5,053 Current assets, total 33,426 33,403 ASSETS, TOTAL 54,668 55,686 MARTELA ANNUAL REPORT 2024 20 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Consolidated cash flow statement (EUR 1000) Note 1 Jan–31 Dec 2024 1 Jan–31 Dec 2023 Cash flows from operating activities Profit/loss before taxes -8,210 -3,292 Depreciation and impairment 7,114 6,773 Unrealized exchange rate gains and losses 106 -141 Financial income and expenses 1,677 912 Other adjustments and income and expense non-cash ) -1,886 -2,841 Cash flow before change in working capital -1,199 1,411 Change in working capital Non-interest-bearing receivables, increase (-) / decrease (+) 395 -786 Inventories, increase (-) / decrease (+) -1,644 2,546 Non-interest-bearing liabilities, increase (+) / decrease (-) 4,735 -1,181 Cash flow before financial items and taxes 2,287 1,991 Interest and other financial items paid -827 -330 Interest and other financial items received 35 29 Interest on lease liabilities -673 -694 Income tax paid -711 -677 Net cash from operating activities (A) 111 320 Cash flows from investing activities Capital expenditure on tangible and intangible assets -387 -2,332 Proceeds from sale of tangible and intangible assets 24 0 Cash flow from investing activities (B) -363 -2,332 Cash flows form financing activities Proceeds from short-term loans 3,198 0 Repayments of short-term loans 18 0 -417 Repayments of lease liabilities -3,979 -3,457 Dividends paid and other profit distribution 0 -452 Cash proceeds from issuing shares 43 0 Net cash used in financing activities (C) -738 -4,326 Change in cash and cash equivalents (A+B+C), increase +, decrease - -990 -6,338 Cash and cash equivalents at the beginning of year 5,053 11,295 Translation differences -160 96 Cash and cash equivalents at the end of year 3,903 5,053 ) The amount includes netted cash flows adjusting revenue and purchases related to the rental service model. (EUR 1000) Note 31 Dec 2024 31 Dec 2023 EQUITY AND LIABILITIES Equity attributable to holders of the parent 16 Share capital 7,000 7,000 Share premium account 1,116 1,116 Reserve for invested unrestricted equity 1,080 995 Other reserves -9 -9 Treasury shares) -4 -4 Translation differences -878 -1,071 Retained earnings -7,147 1,530 Equity, total 1,159 9,558 Non-current liabilities Pension obligations 19 77 105 Financial liabilities 12, 18 13,504 13,812 Provisions 20 292 269 Non-current liabilities, total 13,873 14,187 Current liabilities Financial liabilities 12, 18 7,247 4,287 Advances received 21 8,524 7,850 Trade payables 12, 21 14,368 9,440 Accrued liabilities and prepaid income 12, 21 6,366 6,789 Other current liabilities 12, 21 3,057 3,507 Provisions 20 73 67 Current liabilities, total 39,636 31,941 LIABILITIES, TOTAL 53,509 46,128 EQUITY AND LIABILITIES, TOTAL 54,668 55,686 )The treasury shares acquired for and assigned to share-based incentive scheme are shown in accounting terms as treasury shares. See notes 16. MARTELA ANNUAL REPORT 2024 21 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Statement of changes in equity Equity attributable to equity holders of the parent (EUR 1000) Share capital Share premium account Reserve for invested unrestricted equity Other reserves Treasury shares Translation diff. Retained earnings Equity total Equity 1 Jan 2023 7,000 1,116 995 -9 -4 -655 5,406 13,850 Profit (-loss) for the financial year -3,514 -3,514 Translation differences -415 -415 Items resulting from remeasurement of the net debt related to defined benefit plans (incl. Deferred taxes) 45 45 Other comprehensive income for the period -415 45 -370 Total comprehensive income -415 -3,469 -3,884 Share issue 0 Share-based incentives 44 44 Dividends paid -452 -452 Equity 31 Dec 2023 7,000 1,116 995 -9 -4 -1,071 1,530 9,558 Equity 1 Jan 2024 7,000 1,116 995 -9 -4 -1,071 1,530 9,558 Profit (-loss) for the financial year -8,692 -8,692 Translation differences 192 192 Items resulting from remeasurement of the net debt related to defined benefit plans (incl. Deferred taxes) 15 15 Other comprehensive income for the period 192 15 207 Total comprehensive income 192 -8,677 -8,485 Share issue 85 85 Share-based incentives 0 Dividends paid 0 Equity 31 Dec 2024 7,000 1,116 1,080 -9 -4 -878 -7,147 1,159 More information in Notes 16 Equity and 17 share-based payments. MARTELA ANNUAL REPORT 2024 22 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Accounting principles for the consolidated financial statements Martela Group Martela Corporation supplies ergonomic and innovative furniture solutions and provides interior planning services. The Group’s parent company is Martela Oyj, a Finnish public limited company domiciled in Espoo, street address Miestentie 1, 02150 Espoo. The company’s A shares are listed on Nasdaq Helsinki. The Group’s financial statements are available online at Martela’s home pages www.martela.com. These financial statements were authorised for issue by the Board of Directors of Martela Oyj on February 11, 2025. The Finnish Limited Liability Companies Act permits the shareholders to approve or reject the financial statements in the Annual General Meeting that is held after publishing the financial statements. As well, the Annual General Meeting has a possibility to amend the financial statements. BASIS OF PREPARATION Martela’s consolidated financial statements are prepared in accordance with the International Financial Reporting Standards (IFRS) as on December 31, 2024. As referred to in the Finnish Accounting Act and in ordinances issued pursuant to the provisions of this Act, the International Financial Reporting Standards refer to the standards and their interpretations adopted in accordance with the procedure laid down in Regulation (EC) No 1606/2002 of the EU. The notes to the consolidated financial statements also conform with additional requirements of the Finnish accounting and company legislation. The consolidated financial statements are presented in thousands of euros and have been prepared on the historical cost basis except as disclosed in the accounting policies. All presented figures have been rounded, which is why the sum of individual figures might deviate from the presented sum. The key financial indicators have been calculated using exact figures. Martela’s consolidated financial statements cover the full calendar year, and this represents the financial period for the parent company and the Group companies. USE OF ESTIMATES The preparation of the financial statements in conformity with IFRS requires Group management to make certain estimates and to use judgement when applying accounting policies. The section “Accounting policies requiring management’s judgement and key sources of estimation uncertainty” refers to the judgements made by management and those financial statement items on which judgements have a significant effect. Principles of consolidation The consolidated financial statements include the parent company, Martela Oyj, and all the subsidiaries in which the parent company controls, directly or indirectly, more than 50 per cent of the voting power of the shares, or otherwise has control. Martela is considered to be in control of a subsidiary when it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. Subsidiaries are included in the consolidated financial statements by using the acquisition method. The intra-group transactions, unrealised margins on intra-group deliveries, intra-group receivables and liabilities and profit distribution are eliminated. Items denominated in foreign currency Transactions in foreign currencies are translated at the exchange rate prevailing on the date of the transaction – in practice, for transactions taking place within any given month, a rate is used that approximates the rate of the transaction date. At the end of the reporting period, the monetary assets and liabilities are translated into functional currencies at the exchange rate at the end of the reporting period. Exchange rate gains and losses related to business operations are treated as adjustments to the purchases and sales. Exchange rate gains and losses in financing are treated as adjustments to financial income and expenses. The statements of comprehensive income and cash flows of foreign subsidiaries for the period are translated into euros at the average rates for the financial year, and the balance sheets at the average rates of the European Central Bank at the end of the reporting period. The translation of the profit or loss and comprehensive income for the period at different exchange rates in the statement of comprehensive income and in the balance sheet causes a translation difference which is recognised in other comprehensive income. The exchange rate differences arising from the elimination of the cost of the foreign subsidiaries and the exchange rate differences arising from the translation of post- acquisition equity are also recognised in other comprehensive income. Similar treatment is applied to intra-group non-current loans which in substance are equity and form a part of the net investment in the operation in question. When a subsidiary is disposed of, all or in part, the accumulated translation differences are reclassified to profit and loss as part of the gain or loss on disposal. Revenue recognition principles Furniture is mainly delivered as installed at customer. MARTELA ANNUAL REPORT 2024 23 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE The control of the furniture is transferred to the customer when the deliverables form the contract are fulfilled, i.e. the furniture is delivered and installed at customer and the customer has approved the delivery. The significant risks and rewards of ownership of the furniture is also transferred to the buyer through the approval of the delivery. Revenue from sold goods is recognised as the control of the goods is transferred to the buyer according to the agreement. The normal warranty for standard Martela produced products in normal use is five years and for other standard products two years. Consultative services consist of workshops and interviews for specification of the demands placed on the work environment and interior planning services. The deliverable is fulfilled and the control is transferred to the customer as the product of the service is delivered to the customer. Revenue from consultative services is recognised as the deliverable is fulfilled. In removals services the value of the service is received by the customer as Martela provides the service. In such cases the revenue is recognised over time. The removal services provided by Martela are mainly short in duration. In case a removal services project lasts for several months is the revenue recognised based on either invoicing of the achieved project milestones or based on actual work hours registered for the project. The transaction prices for the sold goods and services are defined for each deliverable on the sales orders and no variable considerations are in use. Martela does not have capitalised costs for obtaining or of fulfilling customer contracts. Sales receivables are typically due latest within two months from invoicing. The customer contracts do not include significant financing components provided by Martela. Revenue consists of income from customer contracts according to IFRS 15 and income from customer contracts that are classified as leases based on the contract contents, and are treated in accordance to IFRS 16. Leases in which substantially all the risks and rewards incidental to ownership of an asset remain with the lessor are classified as operative lease contracts and recognised as revenue in the statement of comprehensive income on a straight- line basis over the lease term. Employee benefits PENSION LIABILITIES The Group has arranged defined contribution plans and defined benefit plans for retirement. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined benefit plan is a pension plan that is not a defined contribution plan. Contributions made to defined contribution plans are recognised in profit or loss as an expense as incurred. The obligations of defined benefit plans are calculated separately for each plan. The projected unit credit method is used in the calculation. Pension costs are recognised as an expense over the service period of personnel based on calculations performed by qualified actuaries. In calculating the present value of a pension obligation, the market yield of corporate high-grade bonds or the interest rate of government bonds are used as the discount rate. Their maturity corresponds to a significant extent with the maturity of the computed pension liability. Pension expenses (service cost in the period) and the net interest for the net debt related to the defined benefit pension plan are recognised through profit or loss. Pension expenses are included in employee benefit expenses. Items resulting from the remeasurement of the net debt (or net asset) related to the defined benefit plan are recorded in items of other comprehensive income in the financial period during which they emerge. These include actuarial gains and losses and returns on assets included in the plan, among other items. Past service costs are recognised in expenses through profit or loss on the earlier of the following dates: the date when the plan is amended or reduced, or the date when the entity recognises the reorganisation expenses related to this or the benefits related to the termination of the employment relationship. SHARE-BASED PAYMENTS In the Group’s share-based incentive system, with vesting periods 2024, 2025 and 2026, payments are made in a combination of shares and cash. Share rewards are measured at fair value at the grant date and recognised as expenses over the vesting period. The vesting conditions are taken into account in the number of shares which are expected to vest by the end of the validity period. Measurements are adjusted at the end of each reporting period and the settlement is recognised under equity. The expense determined at the time of granting the share-based incentives is based on the Group’s estimate of the number of shares which are expected to vest by the end of the vesting period. The assumed vesting takes account of the maximum incentive, the assumed achievement of non-market-based earnings targets and the reduction of persons participating the plan. The Group updates the estimate of the final number of shares at the end of each reporting period. Their impact on profit or loss is presented in the statement of comprehensive income under employment benefits expenses Operating profit (loss) Operating profit is the Group’s profit from operations before financial items and income taxes. Exchange rate differences arisen in the translation of trade receivables and payables denominated in foreign currencies are included in operating profit. Income taxes The taxes recognised in the consolidated statement of comprehensive income include current tax based on the taxable income of the Group companies for the financial year, taxes for previous years and the change in deferred taxes. For transactions and other events recognised in profit or loss, any related tax effects are also recognised in profit or loss. For transactions and other events recognised outside profit or loss (either in other comprehensive income or directly in equity), any related tax effects are also recognised either in other comprehensive income or directly in equity, respectively. Deferred tax assets and liabilities are recognised on temporary differences between the tax bases and IFRS carrying values of assets and liabilities in the financial statements. A deferred tax asset is recognised only to the extent that it is probable that taxable profit will be available against which it can be used. Deferred tax liabilities are recognised to the full extent in the balance sheet. Deferred taxes are measured by using the tax rates enacted or substantively enacted by the end of the reporting period. MARTELA ANNUAL REPORT 2024 24 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Intangible assets GOODWILL Goodwill resulting from business combinations represents the excess of the consideration transferred over the fair value of the net identifiable assets acquired. Goodwill is tested annually or more frequently if there are indications that the value might be impaired. Testing is performed at least at the end of each financial year. For this purpose goodwill is allocated to cash generating units. An impairment loss is recognised whenever the carrying amount of cash-generating unit exceeds the recoverable amount. Impairment losses are recognised in the comprehensive income statement. An impairment loss in respect of goodwill is never reversed. RESEARCH AND DEVELOPMENT Research and development is active and continuous in the Group and if individual development projects are of such a scope in relation to operations and if the capitalisation criteria are fulfilled these projects are capitalised. Research expenditure is recognised as an expense when incurred. R&D-related equipment is capitalised in machinery and equipment. There has been no development costs that met the capitalisation criteria during the financial year. OTHER INTANGIBLE ASSETS An intangible asset is initially capitalised in the balance sheet at cost if the cost can be measured reliably and it is probable that the expected future economic benefits that are attributable to the asset will flow to the Group. Other intangible assets include software licences, IT-programmes, patents and other corresponding rights. Patents, licences and other rights are measured at historical cost, less amortisation and any impairment. The useful lives of intangible assets are as follows: Licences ……………………………………………………………………… 3–5 years IT-programmes ………………………………………………………3–10 years Customer ship ………………………………………………………………… 4 years Brands …………………………………………………………………………………6 years Patents and other corresponding rights ………………………………………………………………………………… 10 years Amortisation is recognised using the straight-line method. Tangible assets Land, buildings, machinery and equipment constitute the majority of tangible assets. They are measured in the balance sheet at historical cost, less accumulated depreciation and any impairment. When a part of an item of property, plant and equipment (accounted for as a separate asset) is renewed, the expenditure related to the new item is capitalised and the possibly remaining balance sheet value removed from the balance sheet. Other expenditure arising later is capitalised only when future economic benefits will flow to the Group. Other expenditure for repairs or maintenance is expensed when it is incurred. Those borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset. Depreciation is calculated on a straight-line basis over the estimated useful life of the asset. A tangible asset once classified as held for sale is not depreciated. Land is not depreciated. The estimated depreciation periods are as follows: Buildings ……………………………………………………………… 15–30 years Machinery and equipment ……………………………… 3–8 years The residual values and useful lives of tangible assets are reviewed at least at each financial year-end and, if necessary, are adjusted to reflect changes in the expected future economic benefits. Gains and losses from the sale or disposal of tangible assets are recognised in profit and loss and presented under other operating income or other operating expenses. IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS The carrying amounts of assets are assessed at the end of each reporting period to observe whether there are any indications that an asset may be impaired. If such indications exist, the recoverable amount of the asset will be estimated at the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised if the balance sheet value of an asset or a cash-generating unit exceeds the recoverable amount of it. Impairment losses are recognised in the statement of comprehensive income. If there are indications that impairment losses no longer exist or that they have diminished, the recoverable amount is estimated. An impairment loss previously recognised in the statement of comprehensive income is reversed if the estimates used in measuring the recoverable income have changed. However, an impairment loss cannot be reversed to an extent more than what the carrying amount of the asset or cash-generating unit would be without recognition of an impairment loss. Leases Martela’s lease contracts consist mainly of office spaces, cars and IT-equipment. The lease contracts of cars and IT-equipment are time limited whereas the contracts for office spaces are open ended as well as time limited. The lease contracts do not include variable lease payments. Lease agreements, for which the lease period is beyond 12 months, are according to IFRS 16 recognised on the balance sheet as a right-of-use assets and lease liabilities. The right-of-use assets decreased with the accumulated depreciations are recognised as tangible assets. The right-of-use assets are depreciated over the lease period or an estimated period if longer. Estimated rental periods, are used for lease agreements of indefinite duration. The estimated rental periods are 2 years for rented offices and sales facilities and 1 year for warehouses. Martela applies the exemptions to IFRS 16 and does not apply IFRS 16 to short-term leases for which the lease term ends within 12 months and leases of low-value assets, which are not offices or warehouses in use by Martela. The payments for these are recognised as equal instalments over the rental period in the consolidated statement of comprehensive income. The lease liabilities have been discounted at the borrowing rate. Company also operates as lessor of furniture. Accounting principles of these are described under revenue recognition principles. Inventories Inventories are measured at the lower of cost and net realisable value. The value of inventories is determined by using weighted average purchase prices and it includes all direct expenditure incurred by acquiring the inventories and also a part of the production overhead costs. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Inventory value includes adjustments caused by obsolescence. MARTELA ANNUAL REPORT 2024 25 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Financial assets Group’s financial assets are classified into the following groups: financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income and financial assets measured at amortised costs. The classification depends on the purpose of acquiring the financial assets, and they are classified at the time of initial acquisition. All purchases and sales of financial assets are recognised and derecognised on the trade date. The Group derecognises financial assets when it has lost its right to receive the cash flows or when it has transferred substantially all the risks and rewards to an external party. Financial assets measured at amortised costs include assets that are held in a business model whose object is achieved by holding the assets and collecting contractual cash flows until the due date. The cash flow from the assets consists of solely payments of principal and interest on the principal amount outstanding. They are originally recognised at fair value and subsequently measured at amortised cost. The group recognises a deduction in the financial assets recognised at amortised cost based on expected credit losses. These assets are included in either current or non-current financial assets (they are included in the latter if they mature over 12 months later). The category includes loan, trade and other receivables that are not derivatives. Cash and cash equivalents comprise cash in hand, in banks and in demand bank deposits, as well as other current, very liquid investments. Items qualifying as cash and cash equivalents have original maturities of three months or less from the date of acquisition. IMPAIRMENT OF FINANCIAL ASSETS At the end of each reporting period, the Group assesses whether objective evidence exists of the impairment of an individual financial asset or a group of financial assets. Impairment will be recognised through profit or loss. A simplified model according to IFRS 9 is used in assessing the expected credit losses on trade receivables: credit losses are recognised to an amount that represents the expected credit losses for the full lifetime. The expected credit losses are assessed based on historical information on credit losses and on the information on the future financial circumstances available on the review date. FINANCIAL LIABILITIES The Group classifies its financial liabilities as financial liabilities measured at amortised cost (mainly includes borrowings from financial institutions, IFRS 16 lease liabilities and trade payables). Financial liabilities are initially recognised at fair value and are subsequently measured either at amortised cost or at fair value, based on the classification made. Financial liabilities are included in current and non-current liabilities and they can be interest-bearing or non-interest-bearing. Bank overdrafts are included in current interest- bearing liabilities. Financial liabilities are regarded as current, unless the Group has an absolute right to postpone the repayment of the debt until a minimum of 12 months after the end of the reporting period. Financial liabilities (in full or in part) are not eliminated from the balance sheet until the debt has ceased to exist – in other words, when the obligation specified in the agreement has been fulfilled or rescinded or ceases to be valid. The Group uses derivative financial instruments, to hedge its electricity price risk. The Group doesn’t apply hedge accounting, but derivatives are recognised at fair value through the statement of profit or loss at each balance sheet date according to the closing rate of the period. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. The change in fair value is recognised in income statement in raw material and consumables used. Share capital Outstanding ordinary shares are shown as share capital. The share capital consists of K and A series shares. The shares of both series have identical dividend rights but K series shares confer 20 votes and A series shares 1 vote at Annual General Meetings of shareholders. Expenses related to the issuance and acquisition of own equity instruments are presented as deductions from equity. If Martela Oyj buys back its own equity instruments, their cost is deducted from equity. DIVIDENDS Dividends proposed by the Board of Directors are not recorded in the financial statements but the related liability is only recognised when approved by the Annual General Meeting of shareholders. Provisions A provision is recognised when the Group has a legal or constructive obligation as a result of a past event, it is probable that on outflow of economic benefits will be required to settle the obligation and the amount can be estimated reliably. The amount recognised as a provision is equal to the best estimate of the expenditure required to settle the present obligation at the end of the reporting period. Accounting policies requiring management’s judgement and key sources of estimation uncertainty In preparing the financial statements it is necessary to make forward-looking estimates and assumptions which may not, in fact, turn out to be true. In addition, it is necessary to use judgement in applying accounting policies to the financial statements. The foremost estimates concern the utilisation of deferred tax assets against future taxable income and the assumptions used in the impairment testing. Other estimates requiring management’s judgement mainly concerns the amount of non-marketable inventories, impairment of trade receivables, the amount of guarantee provisions and the definition of the lease period in lease contracts of indefinite duration under IFRS 16. Estimates and assumptions are based on management’s current best knowledge at the end of the reporting period, reflecting historical experience and other reasonable assumptions. Going concern assumption The financial statements for the financial year 2024 have been prepared on a going concern basis, which assumes that Martela will be able to meet its liabilities and obligations arising from its operations in the foreseeable future as part of its normal business operations. When assessing the going concern assumption, Martela’s management has taken into account the uncertainties and risks related to the business environment, the company’s available funding sources, and the cash flow forecasts of the various group companies’ operations over the next 12 months. The company’s long-term and short-term financial liabilities are mainly deferred lease commitments, which are amortised in monthly rent payments and do not MARTELA ANNUAL REPORT 2024 26 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE involve any covenants or other maturity terms. The company’s most significant lease agreements are long-term. The business environment has been extremely challenging in recent years, and as a result, the group’s liquidity situation has weakened, especially during 2024. The risk related to liquidity is managed, among other things, by adjusting costs and increasing operational efficiency. In addition, the aim is to increase product margins as much as possible without reducing the total volume of turnover. In addition, the aim is to accelerate the turnover rate of working capital, for example by reducing inventory levels and increasing the invoicing frequency through advance invoicing. The company is also exploring opportunities for using new sources of financing. The company has taken structural adjustment and efficiency measures in the early part of 2024, which will be fully reflected in 2025. In addition, the new adjustment measures initiated in early 2025 aim to improve the company’s cost-efficiency for the most part in 2025 and fully in 2026. The assumption of continuity of operations is related to the above-mentioned uncertainties mainly caused by the unfavourable market situation, as well as risks mainly related to liquidity, which Martela’s management estimates can be controlled with the measures initiated and planned by the company. In the opinion of the company’s management and the Board of Directors, the 2024 financial statements do not involve significant uncertainty regarding the going concern assumption in accordance with the IFRS standard. Impairment testing The carrying amounts of non-current assets are assessed at the end of each reporting period to observe whether there are any indications that the balance sheet value of an asset or a cash-generating unit exceeds the recoverable amount of it. If such indications exist, the recoverable amount of the asset will be estimated at the higher of its fair value less costs to sell and its value in use. Value in use is calculated based on discounted forecast cash flows. An impairment loss is recognised if the balance sheet value of an asset or a cash-generating unit exceeds the recoverable amount of it. Impairment losses are recognised in the statement of comprehensive income. If there are indications that impairment losses no longer exist or that they have diminished, the recoverable amount is estimated. An impairment loss previously recognised in the statement of comprehensive income is reversed if the estimates used in measuring the recoverable income have changed. However, an impairment loss cannot be reversed to an extent more than what the carrying amount of the asset or cash-generating unit would be without recognition of an impairment loss. Goodwill is tested for impairment annually regardless of whether there is any indication of impairment. An impairment loss in respect of goodwill is never reversed. (Note 10) The recoverable amounts of cash generating units have been determined using calculations based on value in use. In the calculations, forecast cash flows are based on financial plans approved by management, covering a period of five years. The central assumptions concern development of growth and profitability. The cash flows beyond the five-year period are estimated based on 1,5 per cent growth. Deferred tax receivables The prerequisites for recognition of deferred tax receivables are assessed at the end of each reporting period. Assumptions made by the managers of the Group companies on taxable income in future financial periods have been taken into account when evaluating the amount of deferred tax assets. Various internal and external factors can have a positive or negative effect on deferred tax assets. These include restructuring in the Group, amendments to tax laws (such as changes to tax rates or a change to the period of utilisation of confirmed deductible tax losses) and changes to the interpretations of tax regulations. Deferred tax assets recognised in an earlier reporting period are recognised in expenses in the consolidated statement of comprehensive income if the unit in question is not expected to accumulate sufficient taxable income to be able to utilise the temporary differences, such as confirmed tax losses, on which the deferred tax assets are based. Deferred tax assets are not recorded for taxation losses in subsidiaries. Financial Statement prepared in ESEF Format Financial Statements in Annual Report are prepared in ESEF format, in which it is marked up with XBRL tags according to ESEF taxonomy. The machine readable material is audited. New and amended IFRS-standards and interpretations effective from 2024 onwards In 2024 and thereafter, the Group has adopted the following new and revised standards and interpretations issued by the IASB: Amendments to the standard IAS 1, Classification of liabilities into current and non-current. The standard change clarifies how debts should be classified as short-term or long-term when the company has the right to postpone the payment of the debt for at least 12 months. Amendments to the IFRS16 standard Leases: lease liabilities in sales and leasebacks. The change requires the seller-lessee to subsequently value the lease liabilities arising from the sublease in a way that does not record any part of the profit or loss related to the seller-lessee’s right of use. The new requirements do not prevent the seller-lessee from recording a profit or loss in the income statement related to the partial or complete termination of the lease agreement. Amendments to the IAS 7 standard Cash flow statement and to the IFRS 7 standard Financial instruments: Disclosures: Supplier Finance Arrangements. The amendment provides additional disclosures about supplier finance arrangements that enable investors to assess the effects on a company’s debts, cash flows and exposure to liquidity risk. The amendments did not have any significant impact on the consolidated financial statements. NEW IFRS STANDARDS, AMENDMENTS TO STANDARDS AND IFRIC INTERPRETATIONS THAT HAVE NOT YET BEEN IMPLEMENTED IAS 21 Lack of Exchangeability – The Amendments introduce requirements to assess when a currency is exchangeable into another currency and when it is not. The Amendments require an entity to estimate the spot exchange rate when it concludes that a currency is not exchangeable into another currency. The new IFRS standards, changes to standards and IFRIC interpretations listed above that come into force on or after 1 January 2025 are not estimated to have a material impact on the group. MARTELA ANNUAL REPORT 2024 27 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE The IFRS18 Information presented in the financial statements standard may have a significant impact on the information presented in the group’s financial statements in the future. Events after the end of the financial year On January 3, 2025, the company announced that it was planning to streamline its operations. According to the release, the challenging market conditions in the industry over the past few years have affected Martela’s operating environment, weakening business volume and profitability. The ongoing economic recovery is positively impacting the industry situation, but there are still uncertainties regarding the strength of the recovery in key market areas. For the reasons mentioned above, Martela is planning to streamline and reorganise its operations in order to mitigate the negative effects caused by the market situation, adjust its cost structure to match the prevailing conditions, and bring flexibility to the uncertainty driven by demand. The planned personnel savings and other cost-saving measures are expected to result in annual cost savings of approximately EUR 1.5 to 2.0 million. According to the preliminary estimate, the planned actions could lead to a permanent reduction of around 20 job positions. The planned measures will affect Martela Group’s employees in Finland, Sweden, and Norway. Additionally, there are plans to use layoff procedures to achieve the necessary temporary flexibility. Martela is in close discussions with employees and employee representatives regarding the changes. The negotiation processes and their timelines will vary by country. On January 17, 2025, the company announced preliminary information about its revenue and operating profit for 2024. The company stated that, according to preliminary unaudited financial statements, Martela Group’s operating profit for the full year 2024 did not meet the level outlined in the guidance provided on December 11, 2024. According to the preliminary unaudited financial statements, both revenue and operating profit for the full year 2024 declined compared to the previous year. Revenue was approximately 87 million euros (94.4), and the operating loss was between EUR 6.3 and 6.7 million (-2.4). On January 30, 2025, the company announced that it would streamline the composition of its executive team. The goal of the change is to enhance operations, standardise the development of Martela’s products and services, and strengthen the position of Martela’s products in the market. As part of this, technical product development will move from the Product & Design unit to the Operations business unit, and product portfolio management will be transferred to a new Brand, Products & Services unit. These changes will lead to adjustments in the group’s executive team. Eeva Terävä will begin as the leader of the new Brand, Products & Services unit on February 1, 2025. Kari Leino, who previously led the Product & Design unit, will continue as the product portfolio and design director in the Brand, Products & Services unit starting from February 1, 2025. There are no other significant events to report after the period from January to December 2024, and operations have continued as planned. MARTELA ANNUAL REPORT 2024 28 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE 1. Segment reporting As a result of harmonising and combining processes, the organisation, reporting and systems, as of 2017 the company reports consolidated figures as a single segment and in addition reports revenue by country. Revenue will be reported by the location of a customer in following countries: Finland, Sweden, Norway and Other countries. REVENUE(EUR 1000)1 Jan–31 Dec 2024 1 Jan–31 Dec 2023Revenue by areaFinland66,162 67,313Sweden8,605 9,561Norway4,8196,992Other areas7,08210,523Total86,66894,389Income from the sale of goods71,45377,653Income from the sale of services15,21516,736Total86,66894,389 Revenue includes EUR 4,583 thousand (4,287) income from furniture which is based on customer agreements and is classified as rental income. (EUR 1000)31.12.202431.12.2023Assets and liabilities from contracts with customersTrade receivables16,55716,218Accrued income based on customer contracts420281Prepayments based on customer contracts8,5247,850 ASSETSInformation about geographical regionsIntangible assetsTangible assetsNon-current assets (EUR 1000)31 Dec 202431 Dec 2024Finland3,337 14,455Sweden0 75Other regions0 177Total3,337 14,707 Intangible assetsTangible assets Non-current assets31 Dec 202331 Dec 2023Finland4,33414,093Sweden0106Other regions0208Total4,33414,408 2. Other operating income (EUR 1000)1 Jan–31 Dec 2024 1 Jan–31 Dec 2023Gains on sale of tangible assets 240Rental income51 58Public subsidies3 6Other income from operations7085Total148149 3. Employee benefits expenses (EUR 1000)1 Jan–31 Dec 2024 1 Jan–31 Dec 2023Salaries and wages -18,326-18,505Pension expenses, defined contribution plans-2,827 -2,876Pension expenses, defined benefit plans-74 -70Expenses of matching share plan0-275Other salary-related expenses-1,073-1,270Personnel expenses in the income statement-22,300-22,995Other fringe benefits-287-499Total-22,586-23,494 A total of EUR 400 thousand for 2024 and EUR 769 thousand from 2023 were recognised in the result from the incentives and salary-related expenses associated with the incentive scheme. Salaries and fees and share-based payments are presented in more detail under note 24 Related-party transactions. More information about share-based incentive programme is in note 17. Personnel20242023Personnel on average, workers182194Personnel on average, officials190209Personnel on average, total372403Personnel at year-end360386Personnel on average in Finland302326Personnel on average in Sweden2529Personnel on average in Norway1415Personnel on average in Poland3133Total372403 MARTELA ANNUAL REPORT 2024 29 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE 4. Other operating expenses Other operating expenses are reported by type of expense. (EUR 1000)1 Jan–31 Dec 2024 1 Jan–31 Dec 2023Freight -1,308-1,237Travel-499 -611Administration-1,725 -2,041IT-3,585-3,217Marketing-716-640Electricity and heating -479 -330Unrealised loss of electricity derivatives-58-52Other real estate-923-1,089Royalties-587-646Other-2,334-3,002Total-12,216-12,865 Auditors' fees1 Jan–31 Dec 20241 Jan–31 Dec 2023Auditing-184-173Other services-19-18Total-203-191 Auditors’ fees are included in administration expenses. 5. Depreciation and impairment (EUR 1000)1 Jan–31 Dec 2024 1 Jan–31 Dec 2023DepreciationIntangible assets-850 -1,267Tangible assetsBuildings and structures-46 -170Machinery and equipment-753-359Depreciation, total -1,649 -1,796Depreciation of right-of-use assets according to IFRS 16Buildings and structures-1,843-1,795Machinery and equipment-3,621-3,182Depreciation, total-5,464-4,977 6. Research and development expenses The income statement includes research and development expenses of EUR -1,329 thousand (EUR -1,573 thousand 2023). 7. Financial income and expenses (EUR 1000)1 Jan–31 Dec 2024 1 Jan–31 Dec 2023Financial incomeInterest income on loans and other receivables 3429Foreign exchange gain on loans and other receivables127 615Other financial income1 1Total163645 Financial expensesInterest expenses from financial liabilities measured at amortised cost-12-25Foreign exchange losses on loans and other receivables-331-533Interest expenses of lease liabilities according to IFRS 16-673-694Other financial expenses-823-304Total-1,839-1,557Financial income and expenses, total-1,677-912 Total exchange rate differences affecting profit and loss are as follows:Exchange rate differences, sales (included in revenue)-129-39Exchange rate differences, purchases (included in adj. of purchases)43-81Exchange rate differences, financial items-20481Exchange rate differences, total-289-38 8. Income taxes (EUR 1000)1 Jan–31 Dec 2024 1 Jan–31 Dec 2023Income taxes, financial year -112-175Taxes for previous years0 -86Change in deferred tax liabilities and assets-370 39Total-482-222 Reconciliation between the income statement’s tax expense and the income tax expense calculated using the Martela Group’s domestic corporation tax rate 20.0%. 1 Jan–31 Dec 2024 1 Jan–31 Dec 2023Profit before taxes -8,210 -3,292Taxes calculated using the domestic corporation tax rate-1,642-658Different tax rates of subsidiaries abroad-22-17Taxes for previous years086Tax-exempt income-836Non-deductible expenses7258Unbooked deferred tax assets on losses in taxation2,023838Other items135-90Income taxes for the year in the p/l (+ = expense, - = profit)482222 MARTELA ANNUAL REPORT 2024 30 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE 9. Earnings per share The basic earnings per share is calculated dividing the profit attributable to equity holders of the parent by the weighted average number of shares outstanding during the year. (EUR 1000)1 Jan–31 Dec 2024 1 Jan–31 Dec 2023Profit attributable to equity holders of the parent -8,692-3,514Weighted average number of shares (1,000)4,638 4,572Basic earnings per share (EUR/share)-1.87 -0.77 The company has no diluting instruments December 31, 2024 or December 31, 2023. For more information on weighted average number of shares see note 16. 10. Intangible assets (EUR 1000)1 Jan–31 Dec 2024 1 Jan–31 Dec 2023Intangible assets Goodwill Work in progress Total Intangible assets Goodwill Work in progress TotalAcquisition cost 1 Jan 16,405 8831,121 18,409 15,479 883 724 17,086Increases 869212 1,081 926 2,166 3,092Decreases-1,229 -1,229 -1,769 -1,769Acquisition cost 31 Dec 17,274 883104 18,261 16,405 883 1,121 18,409Accumulated depreciation 1 Jan -14,07500 -14,075 -12,808 0 0 -12,808Depreciation for the year -850 -850 -1,267 -1,267Accumulated depreciation 31 dec -14,92500 -14,925 -14,075 0 0 -14,075Carrying amount 1 Jan 2,3308831,121 4,334 2,671 883 724 4,278Carrying amount 31 Dec 2,349883104 3,337 2,330 883 1,121 4,334 Goodwill The Group’s Goodwill EUR 883 thousand (EUR 883 thousand 2023) relates to the Grundell acquisition Martela made December 31, 2011. The expected future cash flows will be generated through more extensive service solutions encompassing also products and the already implemented profit improving actions. The revenue growth is also supported by the renewed strategy of Martela that increases the emphasis on service within the Group. Impairment testing Goodwill is tested annually or more frequently if there are indications that the amount might be impaired. In assessing whether goodwill has been impaired, the carrying value of the cash generating unit Muuttopalvelu Grundell Oy has been compared to the recoverable amount of the cash carrying unit. The recoverable amount of the goodwill is determined based on the value in use calculations. The value in use is calculated based on the discounted forecast cash flows. The cash flow forecasts rely on the plans approved by the management concerning profitability and the growth rate of revenue. The plans cover a five-year period taking into account the recent development of the business. In impairment testing the average growth is estimated to be 1.5% and EBIT 9.9%. The use of testing model requires making estimates and assumptions concerning market growth and general interest rate level. The used post-tax discount rate is 10.0% (10.0%) which equals the weighted average cost of capital. The cash flows after the five-year period have been forecasted by estimating the future growth rate of revenue to be 1.5%. Based on the impairment test there is no need to recognise an impairment loss. Sensitivity analysis of impairment testing The carrying value of the cash generating unit is EUR 15.7 million higher than the book value according to the performed impairment test. No predictible changes in any assumpions, have any significant impact on the result of the goodwill testing. MARTELA ANNUAL REPORT 2024 31 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE 11. Tangible assets (EUR 1000)Machinery and Machinery and Buildings Machinery and equipment equipment Other Work in 1 Jan–31 Dec 2024Land areas BuildingsIFRS 16equipmentIFRS 16IFRS 16 WAAStangible assetsprogress TotalAcquisition cost 1 jan 4 23,62013,636 34,661 4,124 10,383 23 0 86,452Increases 01,626 115 1,652 3,582 241 7,216Decreases 0 -82-690 0 -780 -848 -159 -2,558Exchange rate differences-70 -34 -104Acquisition cost 31 Dec 4 23,53814,502 34,776 4,963 13,118 23 82 91,006Accumulated depreciation 1 Jan 0-23,173-9,961 -33,224 -2,601 -3,083 0 0 -72,043Accumulated depreciation, decreases 0 690 0 758 460 0 0 1,908Depreciation for the year 0-46-1,843 -753 -1,020 -2,601 0 0 -6,264Exchange rate differences 59 41 0 0 100Accumulated depreciation 31 Dec 0-23,219-11,054 -33,977 -2,823 -5,225 0 0 -76,299Carrying amount 1 Jan 44483,676 1,437 1,523 7,298 23 0 14,408Carrying amount 31 Dec 43203,448 799 2,140 7,891 23 82 14,707 WAAS, Workplace as a Service-business area assets, that are classified as operative leasing contracts according to IFRS 16 and in which company according to the standard operates as lessor. -1,373 -1 -1,486 (EUR 1000)Machinery and Machinery and Machinery and equipment equipment Other Work in 1.1.2023–31.12.2023Land areas Buildings Buildings IFRS 16equipmentIFRS 16IFRS 16 WAAStangible assetsprogress TotalAcquisition cost 1 Jan 4 23,61612,407 34,075 2,691 7,839 23 1 80,656Increases 131,272 586 1,536 3,918 7,325Decreases 0 -90 -102 Exchange rate differences-43 -43Acquisition cost 31 Dec 4 23,62013,636 34,661 4,124 10,383 23 0 86,452Accumulated depreciation 1 Jan 0-23,003-8,214 -32,865 -1,853 -1,407 0 0 -67,343Accumulated depreciation, decreases 0 0 93 672 0 0 765Depreciation for the year 0-170-1,795 -359 -834 -2,348 0 0 -5,506Exchange rate differences 48 -8 0 0 40Accumulated depreciation 31 Dec 0-23,173-9,961 -33,224 -2,601 -3,083 0 0 -72,044Carrying amount 1 Jan 46144,193 1,210 838 6,430 23 0 13,312Carrying amount 31 Dec 44483,676 1,437 1,523 7,298 23 0 14,408 WAAS, Workplace as a Service-business area assets, that are classified as operative leasing contracts according to IFRS 16 and in which company according to the standard operates as lessor. MARTELA ANNUAL REPORT 2024 32 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE 12. Book values of financial assets and liabilities by group Financial assets Financial assets Financial liabilities measured atBook values measured at measured at fair value through of balance Hierarchy (EUR 1000)amortised costsamortised costprofit or losssheet items Fair valuelevel Note2024 balance sheet itemsNon-current financial assetsLoan receivables 567567 567 2Current financial assetsTrade and other receivables 16,55716,557 16,557 2 15Book value by group 17,123 17,123 17,123Non-current financial liabilitiesInterest-bearing liabilities13,44613,446 13,446 2 18Derivatives designated as hedging 58 58 58 1instrumentsCurrent financial liabilitiesInterest-bearing liabilities7,2477,247 7,247 2 18Derivatives designated as hedging instruments 1Trade payables and other liabilities17,42617,426 17,426 2 21Book value by group38,11858 38,177 38,177 Financial assets Financial assets Financial liabilities measured at Book values measured at measured at fair value through of balance Hierarchy (EUR 1000)amortised costsamortised costprofit or losssheet items Fair valuelevel Note2023 balance sheet itemsNon-current financial assetsLoan receivables 532532 532 2Current financial assetsTrade and other receivables 16,21816,218 16,218 2 15Book value by group 16,750 16,750 16,750Non-current financial liabilitiesInterest-bearing liabilities13,77613,776 13,776 2 18Derivatives designated as hedging 36 36 36 1instrumentsCurrent financial liabilitiesInterest-bearing liabilities4,2724,272 4,272 2 18Derivatives designated as hedging 15 15 15 1instrumentsTrade payables and other liabilities12,94712,947 12,947 2 21Book value by group30,99552 31,046 31,046 Derivatives designated as hedging instruments have been bought in order to manage the risk concerning the electricity price. Other financial assets include investments in unlisted equities. The have been measured at acquisition cost as fair value cannot be assessed reliably. The book values of trade receivables and receivables other than those based on derivatives are estimated to essentially correspond to their fair values due to the short maturity of the receivables. The book values of debts are estimated to correspond to their fair values. Interest rate level has no material effect. The book values of trade and other non-interest-bearing liabilities are also estimated to correspond to their fair values. Discounting has no material effect. Fair values of each financial asset and liability group are presented in more detail under the note indicated in the table above. Assets and liabilities recognised at fair value in the financial statements are categorised into three levels in the fair value hierarchy based on the inputs used in the valuation technique to determine their fair value. The three levels are: Level 1. Quoted prices(unadjusted) in active markets for identical assets or liabilities. Level 2. Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly e.g. discounted cash flows or valuation models. Level 3. Inputs for the asset or liability that are not based on observable market data and the fair value determination is widely based on management’s judgement and the use of that in commonly approved valuation models. MARTELA ANNUAL REPORT 2024 33 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE 13. Deferred tax assets and liabilities Recognised in the Recognised in the other Recognised in the Changes in deferred taxes during 2024 (EUR 1000)1 Jan 2024income statementcomprehensive incomeretained earnings 31 Dec 2024Deferred tax assetsRight of use asset 2,4540 0 4 2,458Pension obligations -90 -10 -19Other temporary differences 753-1740 0 579Total 3,198-174-10 4 3,018Deferred tax liabilitiesRight of use asset 191196387On buildings measured at the fair value of the transition date 400 -4 0Total 1951960 -4 387Deferred tax assets and liabilities, total 3,003-370-10 8 2,631 Recognised in the Recognised in the other Recognised in the Changes in deferred taxes during 2023 (EUR 1000)1 Jan 2023income statementcomprehensive incomeretained earnings 31 Dec 2023Deferred tax assetsRight of use asset 2,4540 2,454Pension obligations 30 -12 -9Other temporary differences 4252120 116 753Total 2,882212-12 116 3,198Deferred tax liabilitiesRight of use asset 7184191On buildings measured at the fair value of the transition date 16-120 0 4Total 231720 0 195Deferred tax assets and liabilities, total 2,85940-12 116 3,003 Deferred tax assets have not been recognised on unused tax losses that probably cannot be utilised in the future against taxable income. The amount of such losses is EUR 34.9 million (25.1 in 2023) including current year results. Of these losses 11.3 million will expire starting from year 2033 and according to our current knowledge rest of the losses have no expiration date. The losses mainly originate from foreign subsidiaries and parent company. MARTELA ANNUAL REPORT 2024 34 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE 14. Inventories (EUR 1000)31 Dec 2024 31 Dec 2023Raw materials and consumables 6,9497,777Work in progress743 399Finished goods3,186 1,059Total10,8799,235 15. Current trade receivables and other receivables (EUR 1000)31 Dec 2024 31 Dec 2023Trade receivables 16,55716,218Accrued income and prepaid expenses ofPersonnel expenses81 91Uninvoiced revenue420 445Prepaid expenses1,173 1,869Tax receivables415 491Accrued income and prepaid expenses total2,089 2,897Total18,64519,115 A provision is made to the trade receivables according to following, unless it is highly likely to receive payment for the receivable: undue receivables 0.5%, 0-6 months overdue 2%, 6-12 months overdue 10%, 12-24 months overdue 50% and over 24 months overdue 100%. The age distribution of Group trade receivables on the balance sheet date 31 December is presented in the following table Age distribution of trade receivables Incl. credit loss Incl. credit loss (EUR 1000)2024provision 2023provisionUndue 13,363 46 12,279740-6 months overdue2,238 38 3,723 976-12 months overdue294 28 128 29912-24 months overdue140 73 74 50Over 24 months overdue522 435 14 64Total16,557 622 16,218 584 At the end of the financial year, there were a total of EUR 622 thousand in provisions for bad debts, of which the group’s EUR 290 thousands is related to the bankruptcy of a Norwegian customer. The sales invoices are interest-free and the most general payment term is 14 days, while the payment term in the biggest invoices is 30 days. The maximum trade receivable credit risk amount on the balance sheet date 31 December by country or region: Region (EUR 1 000)2024 2023Finland 11,002 9,704Scandinavia4,713 5,188Other European countries813 1,256Other regions29 70Total16,557 16,218 Credit risks from trade receivables are not concentrated. In 2024 credit losses of EUR -37 thousand (EUR -535 thousand 2023) has been recognised as expenses and are presented in other operating expenses. The value of inventories has been written down by -488 thousand (-381 thousand 2023) due to obsolescence. In the valuation of inventories the fair value of an item as well as its usage in current product portfolio offered is monitored. Should the current product portfolio no longer carry the product to which the item is used the item is written down. If the product is still on sale but there has been decision to finish its selling, it will be written down to equal half of its value. MARTELA ANNUAL REPORT 2024 35 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE 16. Equity Share capital The paid share capital entered in the Trade register is EUR 7,000,000. The counter value of a share is 1.51 (1.53). The K shares carry 20 votes at the annual general meeting and the A-shares 1 vote each. Both share series have the same dividend rights. Reserve forNumber of sharesShare premium invested Changes in share capital (1 000 eurA shares K shares Share capitalaccountunrestricted equity Treasury shares Total1 Jan 2023 3,913,389 604,8007,000 1,116 995 -4 9,108Shares of directed share issue 53,881031 Dec 2023 3,967,270 604,8007,000 1,116 995 -4 9,108Shares of directed share issue 65,71785 8531 Dec 2024 4,032,987604,8007,000 1,116 1,080 -4 9,192 Martela Oyj owns 1,425 (1,425) A-shares purchased at an average price of 10.65. The number of treasury shares is equivalent to 0.03% (0.03) of all shares and 0.01% (0.01) of all votes. The subscription price of the directed share issue has been registered in reserve for invested unrestricted equity Company has decided on a paid direct share issue April 5, 2024, in which 65,717 of series A shares have been subscribed. The share subscription price EUR 85 thousand, has been credited to the company’s reserve for invested unrestricted equity. Company has decided on a paid directed share issue March 29, 2023, in which 53,881 of series A shares have been subscribed without consideration. The shares issued to the company have been used to pay incentives according to the company’s incentive plan. Acquisition of shares for the share-based incentive scheme and the management of the scheme have been outsourced to an external service provider. Translation differences in equity comprises translation differences of financial statements of foreign subsidiaries when translated into euros and of investments in foreign units. Other reserves consists of reserve funds. The share premium account is a fund established in accordance with the previous Finnish Companies Act. According to the present Liability Companies Act (effective from September 1, 2006) it is included in restricted shareholders’ equity and can no longer be accumulated. The share premium account can be reduced in accordance with the regulations on the reduction of share capital, and it can be used as a fund increase to increase share capital. The acquisition cost of treasury shares is deducted from shareholders’ equity (including the related transaction costs). The parent company’s distributable equity was EUR 7,136 thousand on December 31, 2024. MARTELA ANNUAL REPORT 2024 36 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE ProgramShare-based incentive programme 2024–2026TypeShareInstrumentEarning period 2024 Earning period 2025 Earning period 2026Issuing date 14.3.2024 14.3.202414.3.2024Maximum amount, pcs 1,400,000 1,400,0001,400,000Dividend adjustment No NoNoGrant date 14.3.2024 14.3.202414.3.2024Beginning of earning period 1.1.20241.1.20251.1.2026End of earning period 31.12.202431.12.202531.12.2026End of restriction period 31.5.202531.5.202631.5.2027Vesting conditions Share ownership, employment until the end of vesting date, EBITMaximum contractual life, yrs 1.41.41.4Remaining contractual life, yrs 0.41.42.4Number of persons at the end of reporting year 373737Payment method Cash & EquityCash & EquityCash & Equity 17. Share-based payments Share-based incentive plan for the group’s key employees 2024, 2025 and 2026 The prerequisite for participating in the plan is that a participant acquires the company´s series A shares up to the number determined by the Board of Directors. In order to implement the plan, the Board of Directors decided on a share issue against payment directed to the target group. Approximately 40 persons, including the CEO and other Martela’s Management Team members, belong to the target group of the plan. In total, Changes during the period 2024Earning period 2024 Earning period 2025 Earning period 20261 Jan Outstanding at the beginning of the reporting period, pcsChanges during the periodGranted 237,316 237,316237,316ForfeitedShares givenLost during the periodOutstanding at the end of the period 237,316237,316237,316Effects from the share based incentive programme on the financial year (EUR 1 000)20242023Expenses for the financial year, share-based payments, equity settled0 43,612 IFRS 2 requires an entity to measure the award at its fair value and recognised over the vesting period. The award is recognised in equity in its full extent. The fair value of the share-based scheme when granted was the value of a company’s share, EUR 1.33 per share (14.3.2024). 37 people participated in the new plan. The Performance-based Matching Share Plan 2024–2026 consists of three performance periods, covering the financial years of 2024, 2025 and 2026, respectively. In the plan, the target group is given an opportunity to earn Martela Corporation series A shares based on performance and on their personal investment in Martela Corporation series A shares. The Board of Directors decides on the plan’s performance criteria and targets to be set for each criterion at the beginning of a performance period. During the performance period 2024, the rewards are based on the Group’s Earnings before Interest and Taxes (EBIT). The potential rewards based on the plan will be paid after the end of each performance period. The rewards to be paid based on the plan 2024-2026 will amount to an approximate maximum total of 1,400,000 Martela Corporation series A shares including also the proportion to be paid in cash. The cash proportions of the rewards are intended for covering taxes and tax-related expenses arising from the rewards to the participants. MARTELA ANNUAL REPORT 2024 37 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE ProgramShare-based incentive programme 2021–2023TypeShareInstrumentEarning period 2021 Earning period 2022 Earning period 2023Issuing date 6.5.2021 6.5.20216.5.2021Maximum amount, pcs 718,000 718,000718,000Dividend adjustment No NoGrant date 18.3.2021 18.3.202118.3.2021Beginning of earning period 1.1.20211.1.20221.1.2023End of earning period 31.12.202131.12.202231.12.2023End of restriction period 31.5.202231.5.202331.5.2024Vesting conditions Share ownership, Share ownership, Share ownership, employment until the end of employment until the end of employment until the end of vesting date, EBITvesting date, EBITvesting date, EBITMaximum contractual life, yrs 1.41.41.4Remaining contractual life, yrs 0.00.00.0Number of persons at the end of 36350reporting yearPayment method Cash & EquityCash & EquityCash & Equity 17. Share-based payments Share-based incentive plan for the group’s key employees 2021, 2022 and 2023 The prerequisite for participating in the plan is that a participant acquires the company´s series A shares up to the number determined by the Board of Directors. In order to implement the plan, the Board of Directors decided on a share issue against payment directed to the target group. Approximately 40 persons, including the CEO and other Martela’s Management Team members, belong to the target group of the plan. The Changes during the period 2023Earning period 2021 Earning period 2022 Earning period 20231 Jan 2023 Outstanding at the beginning of the 153,014 154,486157,046reporting period, pcsChanges during the periodGrantedForfeited46,742Shares given 23,305107,744Lost during the period 129,709 157,046Outstanding at the end of the period 000Effects from the share based incentive programme on the financial year 2022 (EUR 1 000)20232022Expenses for the financial year, share-based payments, equity settled43,612231,460 IFRS 2 requires an entity to measure the award at its fair value and recognised over the vesting period. The award is recognised in equity in its full extent. The fair value of the share-based scheme when granted was the value of a company’s share, EUR 2.85 per share (6.5.2021) and EUR 2.71 per share (23.6.2022). Performance-based Matching Share Plan 2021–2023 consists of three performance periods, covering the financial years of 2021, 2022 and 2023, respectively. In the plan, the target group is given an opportunity to earn Martela Corporation series A shares based on performance and on their personal investment in Martela Corporation series A shares. The Board of Directors decides on the plan’s performance criteria and targets to be set for each criterion at the beginning of a performance period. During the performance period 2023, the rewards are based on the Group’s Earnings before Interest and Taxes (EBIT). The potential rewards based on the plan will be paid after the end of each performance period. The rewards to be paid based on the plan will amount to an approximate maximum total of 718,000 Martela Corporation series A shares including also the proportion to be paid in cash. The cash proportions of the rewards are intended for covering taxes and tax-related expenses arising from the rewards to the participants. MARTELA ANNUAL REPORT 2024 38 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE 18. Financial liabilities (EUR 1000)31 Dec 2024 31 Dec 2023Non-currentDerivatives designated as hedging instruments58 36Lease liabilities13,446 13,776Total13,50413,812CurrentLoans from financial institutions4,4041,207Derivatives designated as hedging instruments015Lease liabilities2,8433,065Total7,2474,287 Current loans consist of factoring loan in 2024. More information in note 23 Pledges granted and contingent liabilities. More inforamation on Derivatives designated as hedging instruments is given in note 12 and 22. (EUR 1000)31 Dec 202431 Dec 2023Lease liabilities are payable as follows:Lease liabilitiesLease liabilitiesLease liabilities - total amount of minimum lease paymentsNo later than one year3,4223,672Later than one year and no later than five years9,5858,777Later than five years5,7247,246Total18,73119,695Lease liabilities - present value of minimum lease paymentsNo later than one year2,8433,065Later than one year and no later than five years8,1317,159Later than five years5,3146,617Total16,28816,841Unearned finance expense2,4432,854 Non-cash changesFair value of Derivatives designated as Transfer between Lease Lease Changes in net debt 2024 (EUR 1 000)31 Dec 2024 Cash flowshedging instrumentsgroupsliabilities increaseliabilities decrease 31 Dec 2024Long-term liabilities total 13,812 022 -2,634 2,304 0 13,504Short-term liabilities total 4,287 3,198-15 2,624 994 -3,841 7,247Total liabilities from the financing activities 18,099 3,1987 -10 3,298 -3,841 20,751 Non-cash changesFair value of Derivatives Lease designated as Transfer between liabilities Lease liabilities Changes in net debt 20231 Jan 2023 Cash flowshedging instrumentsgroupsincreasedecrease 31 Dec 2023Long-term liabilities total 14,685028 -2,485 1,584 0 13,812Short-term liabilities total 4,612-417-54 2,644 1,063 -3,561 4,287Total liabilities from the financing activities 19,297-417-26 159 2,647 -3,561 18,099 (EUR 1000)31 Dec 2024 31 Dec 2023Amounts recognised in profit or loss (EUR 1 000)Interest on lease liabilities-673 -694Expenses related to short-term leases-1,049 -985 MARTELA ANNUAL REPORT 2024 39 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE 19. Pension obligations Martela’s defined benefit plans concern its operations in Finland. The arrangements are made through insurance companies. The plans are partly funded. On the balance sheet, the commitment to those insured is presented as a pension liability, and the part of this liability that falls under the responsibility of insurance company is presented Changes in defined benefit liabilityPresent value of the defined benefit liability Fair value of the funds included in the plan Net debt of the defined benefit liability(EUR 1000)2024 2023 2024 2023 2024 20231 Jan 1,081 1,380-1,067 -1,364 13 16Recognised in profit or lossService cost in the period 30 4029 40Past service cost 0 00 0Interest expense or income 4151-41 -52 0 -1Settlements -24-35724 35747-266-17 305 29 39Recognised in other comprehensive incomeItems resulting from remeasurement:Gains (-) or losses (+) resulting from changes in demo-graphical assumptions 000 0Actuarial gain (-) and losses (+) resulting from changes in 48-848 -8financial assumptionsExperience based profits (-) or losses (+) 42-1542 -15Return on the funds included in the plan, excluding items in -76 53 -76 53interest expenses or income (+/-)90-23-76 53 15 30Other itemsEmployer's payments (+) 00-65 -71 -65 -71Benefits paid 0-100 10 0 00-10-65 -61 -65 -7131 Dec 1,2181,081-1,225 -1,067 -8 13 The Group anticipates that it will pay a total of EUR 40 thousand to defined benefit pension plans in the financial period of 2025. as an asset. As the funds belong to the insurance companies, they cannot be itemised in Martela’s consolidated financial statements. In insurance arrangements, the amount of funds is calculated using the same discount rate used for the determination of pension liabilities. This means that a change in discount rate does not pose a significant risk. In addition, an increase in life expectancy does not pose a significant risk for Martela, as insurance companies will bear most of the impact of this. The pensions are fixed to 2017 salary levels and accounted for accordingly. Sensitivity analysis The following table illustrates the effects of changes in the most significant actuarial assumptions on the funds related to the defined benefit pension liability and plans. Defined benefit liability Fair value of the funds included in the planEffect of a change in the assumption employed The assumption is The assumption is growinggrowingDiscount rate (0.5% change) -6,0%-5,7%Increase in salaries (0.5% change) N/AN/AMorality rate (a change of 5% points) -0,9%-0,9%The weighted average of the duration of the plans is 13.8 years. MARTELA ANNUAL REPORT 2024 40 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE 20. Provisions (EUR 1000)31 Dec 2024 31 Dec 2023Long-term provisions 292 269Short-term provisions73 67Total366 337Provisions 1 Jan337286Net change in provisions2950Provisions 31 Jan 366337 The normal warranty for standard Martela produced products is five years. The warranty provision has been calculated as an estimate of the five year warranties for Martela products and the sale of Martela products. 21. Current liabilities (EUR 1000)31 Dec 2024 31 Dec 2023Financial liabilities7,247 4,287Advances received8,524 7,850Trade payables14,368 9,440Total30,14021,577 Accrued liabilities and prepaid income ofPersonnel expenses3,9264,243Royalties180214Residual expenses2,2562,331Other41Total6,3666,789Other current liabilities3,5073,507Other3,5073,507Provisions7367Current liabilities39,63631,941 For more information see note 20. 22. Management of financial risks Financial risks are unexpected exceptions relating to exchange rates, liquidity, customer liquidity, investments and interest rates. The objective of financial risk management is to ensure that the company has sufficient financing on a cost-efficient basis and to reduce the adverse effects of financial market fluctuations on the Group’s result and net assets. The general principles of risk management are approved by the Board of Directors and the practical implementation of financial risk management is on the responsibility of the parent company’s financial administration. Market risks Market risks comprise the following three risks: Currency risk, interest rate risk and price risk. The associated fluctuations in exchange rates, market interest rates and market prices may lead to changes in the fair value of financial instruments and in the future cash flows and hence they impact the result and balance sheet of the Group. The increased volatility in electricity price 2023 and 2024 has led to the decision to enter into contracts for electricity derivatives. Currency risks The Group has operations in Finland, Sweden, Norway and Poland and it is therefore exposed to currency that arise in intra-group transactions, exports and imports, the financing of foreign subsidiaries and equity that is denominated in foreign currencies. Translation risks result from incoming cash flows denominated in foreign currencies. Translation risk arise when the value of the capital invested in the parent company’s foreign subsidiaries, annual profits and loans change as a result of exchange rate fluctuations. Transaction risks Martela’s major trading currencies are EUR, SEK, NOK and PLN. The SEK, NOK and PLN currency positions are reviewed mainly on a half-yearly basis. The Group’s policy is to hedge the net positions remaining after reconciliation if seen necessary. The Group has not hedged against transaction risks during the financial periods of 2024 and 2023. The following table presents currency risks per instrument and currency. Transaction risks per instrument and currency 31 Dec 2024(EUR 1000)EUR SEK NOKTrade receivables 02,257 1,743Trade payables 01321 257Total 03,578 2,000 Transaction risks per instrument and currency 31 Dec 2023 (EUR 1 000)EUR SEK NOKTrade receivables 02,2361,702Trade payables 064240Total 02,8781,742 The impact of other currencies is minor. MARTELA ANNUAL REPORT 2024 41 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Analysis of sensitivity to transaction risk The following table presents the average impact of 10% change in exchange rates on 31 December on the company’s financial result before taxes and capital for 2024 (2023). Analysis of sensitivity to transaction risk (EUR 1 000)Impact on result31 Dec 2024EUR+/- 0SEK+/- 358NOK+/- 200 Analysis of sensitivity to transaction risk (EUR 1 000)Impact on result31.12.2023EUR+/- 0SEK+/- 288NOK+/- 174 The estimates are based on the assumption that no other variables change. Interest rate risks The following table presents the distribution of the Group’s financial instruments into fixed interest rate and variable interest rate on the balance sheet date. Financial instruments (EUR 1000)31 Dec 2024 31 Dec 2023Fixed rateLease liabilities 16,28816,841Financial liabilities incl derivatives 4,4621,258Total 20,75118,099 Price risk Available-for-sale shares included in financial assets are not deemed subject to resale price risk. Credit risk Credit risk arises from the possibility that a counterparty will not meet its contractual payment obligations. Hence the seriousness of the risk is determined on the basis of the counterparty’s creditworthiness. The objective of credit risk management is to minimise the losses that would arise should the counterparty not meet its obligations. The turnover and maturity structure of Group’s companies trade receivables are reported monthly and are monitored by the parent company’s financial management. The principles of credit risk management are confirmed by Martela’s Board of Directors. Risk management is based on the authorisations given to the organisation. Credit risks related to the company’s trade and other receivables are minimised by using short terms of payment, effective collection measures and accounting for the counterparty’s creditworthiness. Supply agreements are used when the customer company is unknown and the available credit information is insufficient. In this context a supply agreement is an agreement which secures and receivables arising from an order by withholding the right of ownership with Martela Oyj until the customer has paid the sale price in full. Supply agreements are only used in sales in Finland. A customer may also be required to make prepayment before sold products are delivered if it is considered necessary in light of the potential credit risk associated with the customer. Counterparties may also be granted to credit limits. The creditworthiness of customers is monitored regularly on the basis of payment history and credit rating. Collateral may be required from certain customers based on their creditworthiness and in the case of exports, for example, Martela may use confirmed irrevocable Letters of Credit. The book value of financial assets corresponds to the maximum amount of the credit risk. The maximum financial asset credit risk amount on the balance sheet date 31 December is presented in the following table: Maximum financial asset credit risk (EUR 1 000))2024 2023Non-current loan receivables 567532Trade receivables and other receivables 18,64519,115Cash and cash equivalents 3,9035,053Total 23,11424,700 See note 15 for additional information on trade receivables and the related credit loss provisions. MARTELA ANNUAL REPORT 2024 42 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Liquidity risks The group aims to constantly evaluate and monitor the amount of financing required by the business, so that the group has enough liquid assets to finance operations, including long-term commitments - such as leases - to fulfill obligations. In addition, the group aims to continuously maintain sufficient liquid assets with the help of effective cash management solutions, such as cash reserve and working capital optimization. The refinancing risk is managed in part by using several leasing and rental contract partners in financing operations. Sudden changes in the financial market or in Martela’s operating environment may negatively affect the group’s liquidity and how the company is able to meet its payment obligations. In addition, the profitability of the group’s business and the cash flow of the business affect the development of the group’s liquidity. Cash and cash equivalent at the year-end 2024 were EUR 3,903 thousand. Contractual cash flows mature as follows (EUR 1 000):2025 2026 2027 2028 2029 Later Total Balance sheet valueLease liabilities 3,4222,912 2,648 2,313 1,712 5,724 18,731 16,288Trade payables 14,36814,368 14,368Total 17,7902,912 2,648 2,313 1,712 5,724 33,099 Cash and cash equivalent at the year-end 2023 were EUR 5,053 thousand. Contractual cash flows mature as follows (EUR 1 000):2024 2025 2026 2027 2028 Later Total Balance sheet valueLease liabilities 3,6722,698 2,171 2,009 1,900 7,246 19,695 16,841Trade payables 9,4409,440 9,440Total 13,1122,698 2,171 2,009 1,900 7,246 29,135 The business environment has been very challenging in 2023 and 2024. As a result the profitability and cash flow has been weak and the liquidity situation has tightened, especially in the last half of 2024. The group has systematically implemented measures to improve profitability and cash flow.The efficiency of the group’s working capital circulation has begun to be improved, Management of capital structure It is the Group’s objective to ensure an effective capital structure that will secure its operating capacity in the capital markets in all circumstances irrespective of volatility. The Group’s Board of Directors assess the capital structure on a regular basis, The Group uses the equity ratio to monitor its capital structure. The equity ratio formula is presented in the following table: Equity ratio31 Dec 2024 31 Dec 2023Shareholders' equity1,159 9,558Balance sheet total - advance payments46,143 47,836Equity to assets ratio %2.5 20.0 with the aim of e.g. increasing the turnover rate of inventories and accelerating the invoicing frequency. Improving the circulation of working capital supports operational profitability. However the risks related to liquidity have increased compared to the previous year. MARTELA ANNUAL REPORT 2024 43 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Holding (%) Of votes (%) Production Group structureDomicile31 Dec 202431 Dec 2024 Sales companyFinland x xcompanyParent companyMartela Oyj100 100 x xSubsidiariesKidex OyFinlandMuuttopalvelu Grundell OyFinland100 100 xMartela AB, NässjöSweden100 100 xAski Avvecklingsbolag AB, MalmöSweden100 100Martela AS, OsloNorway100 100 x x100 100 xTehokaluste OyMartela Sp.z o.o., VarsovaPoland 24. Related party transactions Martela Group’s related party transactions comprise the CEO, members of the Board and the Group Management Team, as well as their family members. Martela Group’s related parties also include a shareholder who holds at least 20% of the company’s total number of votes. Members of the Board own a total of 18,142 shares (18,142) and hold a total of 0.4% (0.4%) of the shares and 0.4% (0.4%) of the votes. Persons in the management own a total of 150,295 (109,191) Martela Corporation shares as at December 31, 2024. As part of the implementation of the Performance-based Matching Share Plan, described in note 17, the Board of Directors has resolved to grant plan participants interest-bearing loans to finance the acquisition of the company’s shares. Maximum amount of the loan is 70% of the participant´s investment in shares. Loan is to be repaid the latest by December 31, 2027 and interest is 12-month Euribor, however not below 0%. Management has been granted loan in total EUR 173,927.66 (137,888.02), of which EUR 81,889.99 (69,999.93) has been granted to CEO and other management EUR 92,037.67 (67,888.09). Management employee benefits The Group has determined key persons in management to be: Members of the Board of Directors CEO Group’s Management Team (EUR 1000)2024 2023Management employee benefitsSalaries and other short-term employee benefits-1,175 -1,184Share-based benefits0 -121Total-1,175 -1,305Salaries and feesthe Board members-167 -162CEO-240 -314the Management Team members (excl. CEO)-768 -829Total-1,175 -1,305 Fees paid to the Board members:2024 2023Martela Eero -23.8 -23.4Mattsson Jan-23.8 -23.4Mellström Katarina )- 7. 9 -23.4Mild Johan-46.0 -45.1Vepsäläinen Anni -23.8 -23.4Mattila Hanna-23.8 -23.4Jacob Kragh )-17.9 0.0Total-167.0 -161.9 *)Member of the Board until Q1 2024. )Member of the Board from Q2 2024. Fees based on the Board membership are not paid to members employed by the company. Salaries, fees and pension commitment to CEO2024 2023Salaries and fees-240 -314Statutory earnings-related pension payment (TyEL) on salaries-58 -65 Salaries include also share-based incentives. The period of notice is 6 months with respect to both the present CEO and the company, and in the event of dismissal by the company, the CEO is entitled, besides of the notice period, to a lump-sum compensation equalling hies salary for 6 months. CEO and the Group Management Team has long term share-based incentive programme, in which is possible to receive Martela A shares when the set targets are met. More information in note 17 Share-based payments. 23. Pledges granted and contingent liabilities (EUR 1000)31 Dec 2024 31 Dec 2023Debts secured by mortgages0 0Corporate mortgages9,809 9,895Total mortgages9,809 9,895Other pledgesGuarantees as security for rents898854CommitmentsRent commitments323589Factoring debts which customer receivables as guarantee4,4041,207Factoring receivables as guarantee5,0951,608 The table below presents the employee benefits received by key persons in management. Employee benefits are presented with the accrual method. MARTELA ANNUAL REPORT 2024 44 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE 25. Key financial indicators for the Group Martela Group 2020-2024 2024 2023 2022 2021 2020 Revenue meur 86.7 94.4 106.7 91.9 88.4 Change in revenue % -8.2 -11.5 16.1 4.0 -16.8 Export and operations outside Finland meur 20.5 27.1 34.5 22.1 16.3 In relation to revenue % 23.7 28.8 32.3 24.1 18.5 Exports from Finland meur 20.1 2 7. 7 34.2 21.9 16.1 Gross capital expenditure meur 0.4 2.3 0.9 0.4 1.2 In relation to revenue % 0.4 2.4 0.8 0.4 1.4 Depreciation meur 7. 1 6.8 5.8 5.4 6.5 Research and development ) meur 1.3 1.6 1.6 1.6 1.4 In relation to revenue ) % 1.5 1.7 1.5 1.7 1.6 Personnel on average 372 403 403 419 451 Change in personnel % - 7. 7 0.0 -3.9 -7.1 -8.7 Personnel at the end of year 360 386 400 400 435 of which in Finland 302 312 324 326 362 Profitability Operating profit meur -6.5 -2.4 2.5 -1.3 -4.0 In relation to revenue % -7.5 -2.5 2.3 -1.4 -4.5 Profit before taxes meur -8.2 -3.3 1.3 -2.3 -4.8 In relation to revenue % -9.5 -3.5 1.3 -2.5 -5.4 Profit for the year meur -8.7 -3.5 2.6 -2.4 -4.8 In relation to revenue % -10.0 -3.7 2.4 -2.6 -5.4 Revenue / employee teur 233 234 265 219 196 Return on equity % -362.6 -31.3 20.8 -21.3 -34.7 Return on investment % -25.4 -7.5 9.1 -4.7 -13.2 Finance and financial position Balance sheet total meur 54.7 55.7 62.3 51.1 52.1 Equity meur 1.2 9.6 13.9 10.8 11.6 Interest-bearing net liabilities meur 16.9 13.1 8.1 8.1 4.3 In relation to revenue % 19.5 13.9 7. 5 8.8 4.9 Equity ratio % 2.5 20.0 24.7 22.2 23.3 Gearing % 1,455.2 137.2 58.6 74.8 36.5 Net cash flow from operations meur 0.1 0.3 2.1 -3.4 5.7 Dividends paid meur 0.0 0.5 0.0 0.0 0.0 ) The figures for the comparison years 2020-2022 have been adjusted in relation to the previously published due to reclassification. 26. Key share-related figures 2024 2023 2022 2021 2020Earnings per share EUR-1.87 -0.77 0.57 -0.53 -1.16Earnings per share (diluted) EUR-1.87 -0.77 0.57 -0.53 -1.16Share par value EUR1.51 1.53 1.55 1.55 1.68Dividend EUR0.00) 0.00 0.10 0.000.00Dividend/earnings per share %0.00) 0.00 17.69 0.000.00Effective dividend yield %0.00 0.00 0.04 0.000.00Equity per share EUR0.25 2.09 3.07 2.392.81Price of A share 31 Dec EUR 0.85 1.28 2.45 2.29 3.09Share issue-adjusted number of shares tpcs4,639.21 4,573.50 4,519.61 4,508.044,155.60Average share-issue adjusted number of shares tpcs4,639.21 4,573.50 4,519.61 4,508.044,155.60Price/earnings ratio-0.45 -1.67 4.34 -4.32-2.66Market value of shares ) meur3.94 5.85 11.07 10.2912.80 ) Proposal by the Board of Directors for year 2024 ) Price of A shares used as value of K shares MARTELA ANNUAL REPORT 2024 45 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Formulas to key figures Earnings / share = Profit attributable to equity holders of the parent Average share issue-adjusted number of shares Price /earnings multiple (P/E) = Share issue-adjusted share price at year-end Earnings / share Equity / share, EUR = Equity attributable to the equity holders of the parent Share issue-adjusted number of shares at year-end Dividend / share, EUR = Dividend for the financial year Share issue-adjusted number of shares at year-end Dividend / earnings, % = Dividend / share x 100 Earnings / share Effective dividend yield, % = Share issue-adjusted dividend / share x 100 Share issue-adjusted share price at the year-end Market value of shares, EUR = Total number of shares at year end x share price on the balance sheet date Return on equity, % = Profit/loss for the financial year x 100 Equity (average during the year) Return on investment, % = (Pre-tax profit/loss + interest expenses + other financial items) x 100 Balance sheet total - Non-interest-bearing liabilities (average during the year) Equity ratio, % = Equity x 100 Balance sheet total - advances received Gearing, % = Interest-bearing liabilities - cash, cash equivalents and liquid asset securities x 100 Equity Personnel on average = Month-end average number of personnel in active employment Interest-bearing net debt = Interest-bearing debt - cash and other liquid financial assets 27. Shares and shareholders Share capital The number of registered Martela Oyj shares on December 31, 2024 was 4,639,212. The shares are divided into A and K shares. Each A share carries 1 vote and each K share 20 votes in annual general shareholders’ meeting. Both share series have the same dividend rights. Martela Oyj’s shares were entered in the book-entry register on February 10, 1995. The counter-book value of each share is EUR 1.51. (1.55). The A shares are quoted on the Small Cap list of Nasdaq Helsinki. % of Share Distribution of shares 31 Dec 2024Number, pcs Total EURCapital Votes % of votesK shares 604,800912,569 13 12,096,000 75A shares 4,034,4126,087,431 87 4,034,412 25Total 4,639,2127,000,000 100 16,130,412 100 7. 3 6.1 The largest shareholders by number of shares K series A series Total number Number % of total 31 Dec 2024sharessharesof shares % of votesvotesMarfort Oy 292,000 232,574524,574 11.3 6,072,574 37.6Isku Inspira Oy 0 481,193481,193 10.4 481,193 3.0Martela Heikki Juhani 52,122 130,942183,064 3.9 1,173,382 Palsanen Leena Maire Sinikka 6,785 131,148137,933 3.0 266,848 1.7Palsanen Jaakko Antero 1,600 132,140133,740 2.9 164,140 1.0Aurasmaa Artti Eljas Henrikki 0 114,223114,223 2.5 114,223 0.7Kelhu Markku Juhani 0 100,000100,000 2.2 100,000 0.6Seflo Ab 0 91,76091,760 2.0 91,760 0.6Meissa-Capital Oy 0 86,48786,487 1.9 86,487 0.5Sr Nordea Nordic Small Cap 0 76,28676,286 1.6 76,286 0.5Lindholm Tuija Elli Annikki 43,122 28,22171,343 1.5 890,661 5.5Martela Pekka Kalevi 69,274 869,282 1.5 1,385,488 8.6Väätäjä Kaj Tapani 0 66,65466,654 1.4 66,654 0.4Taipale Ville Juhani 0 61,00061,000 1.3 61,000 0.4Tuuli Markku Juhani 0 60,70660,706 1.3 60,706 0.4Andersson Minna Sinikka 49,200 049,200 1.1 984,000 Martela Mari Kaarina 20,219 9,59629,815 0.6 413,976 2.6Martela Ille Ilari 13,218 8,36821,586 0.5 272,728 1.7Other shareholders 57,260 2,223,1062,280,366 49.2 3,368,306 20.9Total 604,800 4,034,4124,639,212 100 16,130,412 100 The list includes all shareholders holding over 1% of the shares or votes. The Board of Directors hold 0.4% of shares and 0.2% of votes. Martela Oyj owns 1,425 pcs A shares. Out of the shares 379 were purchased at an average price of EUR 10.65 and 1,046 were transferred from Martela Corporation’s joint account to the treasury shares reserve based on the decision by the Annual General Meeting on March 13, 2018. The number of treasury shares is equivalent to 0.03% of all shares and 0.01% of all votes. The Annual General Meeting has in 2024 re-authorised the Board of Directors to decide, for the following year, on share issue, on acquiring and/or disposing of the company’s shares in deviation from the pre-emptive rights of shareholders. The Annual General Meeting approved the Board of Directors’ proposals, detailed in the meeting notice, to authorise the Board to acquire and/or dispose of Martela shares. The authorisation is for a maximum 450,000 of the company’s A series shares. MARTELA ANNUAL REPORT 2024 46 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Breakdown of share ownership by number of shares held 31 Dec 2024 Number of % of total Number Number Shares, pcsshareholdersshareholdersof shares %of votes % of Votes1–500 2,241 78.1271,597 5.9 279,197 1.7501–1,000 269 9.4217,244 4.7 221,044 1.41,001–5,000 247 8.6606,018 13.1 838,578 5.2Over 5,000 112 3.93,533,153 76.2 14,567,593 90.3Total 2,869 100.04,628,012 99.8 15,906,412 98.6of which nominee-registered 7128,058 2.8 128,058 0.8In the waiting list and collective account 611,200 0.2 224,000 1.4Total4,639,212 100.0 16,130,412 100.0 Breakdown of shareholding by sector 31 Dec 2024 Number of % of total Number Number shareholdersshareholdersof shares %of votes % of VotesPrivate companies 93 3.21,520,919 32.8 7,068,919 43.8Financial and insurance institutions 10 0.3114,452 2.5 222,951 1.4Non-profit entities 5 0.23,161 0.1 3,161 0.0Households 2,750 95.92,851,067 61.5 8,581,467 53.2Foreign investors 11 0.410,355 0.2 29,914 0.2Total 2,869 100.04,499,954 97.0 15,906,412 98.6of which nominee-registered 7128,058 2.8 128,058 0.8In the waiting list and collective account 611,200 0.2 224,000 1.4Total4,639,212 100.0 16,130,412 100.0 MARTELA ANNUAL REPORT 2024 47 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Parent Company Income Statement (EUR 1000) Note 1 Jan–31 Dec 2024 1 Jan–31 Dec 2023 Revenue 1 85,112 93,038 Change in inventories of finished goods and work in progress 3 1,784 289 Production for own use 317 425 Other operating income 2 666 761 Materials and services 3 -70,384 -71,696 Personnel expenses 4 -12,420 -12,956 Other operating expenses 5 -11,642 -11,889 Depreciation and impairment 6 -2,438 -2,534 Operating profit (-loss) -9,004 -4,563 Financial income and expenses 7 -1,918 -2,931 Profit (-loss) before appropriations and taxes -10,922 -7,494 Group contributions 8 1,600 2,000 Depreciation difference and Group contributions 1,600 2,000 Income taxes 9 0 25 Profit (-loss) for the financial year -9,322 -5,470 MARTELA ANNUAL REPORT 2024 48 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Parent Company Balance Sheet (EUR 1000) Note 31 Dec 2024 31 Dec 2023 ASSETS NON-CURRENT ASSETS Intangible assets 10 Intangible rights 1,512 1,254 Goodwill 390 520 Other long-term expenditure 612 902 Advance payments 98 1,008 2,612 3,685 Tangible assets 11 Buildings and structures 11 12 Machinery and equipment 2,371 3,011 Other tangible assets 23 23 Advance payments 82 116 2,488 3,162 Investments 12 Share is subsidiaries 9,417 9,324 Receivables from subsidiaries 3,760 3,760 Other shares and participations 0 7 13,177 13,091 CURRENT ASSETS Inventories Materials and supplies 5,215 6,338 Work in progress 329 237 Finished goods 3,427 1,735 Advances paid to suppliers 335 146 9,306 8,455 Non-current receivables 13 Loan receivables 567 532 Current receivables 13 Trade receivables 16,685 17,416 Loan receivables 1,600 2,000 Prepaid expenses 356 406 Accrued income 1,523 2,329 20,165 22,152 Cash and cash equivalents 3,541 4,771 51,856 55,845 (EUR 1000) Note 31 Dec 2024 31 Dec 2023 EQUITY AND LIABILITIES SHAREHOLDERS' EQUITY Shareholders' equity 14 Share capital 7,000 7,000 Share premium account 1,116 1,116 Reserve fund 11 11 Invested unrestricted equity fund 1,081 995 Retained earnings 15,377 20,847 Profit for the year -9,322 -5,470 Total 15,263 24,500 Compulsory reservations Other compulsory reservations 366 269 LIABILITIES Non-current 15 Accrued liabilities and prepaid income 143 128 143 128 Current 16 Loans from financial institutions 4,404 1,207 Advances received 524 289 Trade payables 22,083 18,070 Accrued liabilities and prepaid income 6,194 7,874 Other current liabilities 2,880 3,508 36,085 30,947 Liabilities, total 36,227 31,076 51,856 55,845 MARTELA ANNUAL REPORT 2024 49 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Parent Company’s Cash Flow Statement (EUR 1000) 1 Jan–31 Dec 2024 1 Jan–31 Dec 2023 CASH FLOW FROM OPERATING ACTIVITIES Profit (-loss) before appropriations and taxes -10,922 -7,494 Depreciation and impairment 2,438 2,534 Unrealized exchange rate gains and losses 161 107 Financial income and expenses 1,979 3,054 Other adjustments and income and expense non-cash -255 -24 Cash flow before change in working capital -6,600 -1,823 Change in working capital Non-interest-bearing receivables, increase (-) / decrease (+) 562 -704 Inventories, increase (-) / decrease (+) -851 1,833 Non-interest-bearing liabilities, increase (+) / decrease (-) 3,733 -1,742 Cash flow before financial items and taxes -3,156 -2,436 Interest and other financial items paid -659 -286 Interest and other financial items received 35 31 Income tax paid 0 -157 Net cash from operating activities (A) -3,781 -2,848 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditure on tangible and intangible assets -377 -2,166 Investments on subsidiary shares -314 -132 Net Cash used in investing activities (B) -690 -2,298 CASH FLOWS FROM FINANCING ACTIVITIES Paid share issue 43 0 Proceeds from current loans 3,198 0 Repayments of current loans 0 -417 Dividends and other profit distribution 0 -452 Net cash used in financing activities (C) 3,241 -869 CHANGE IN CASH AND CASH EQUIVALENTS (A+B+C) (+ increase, - decrease) -1,230 -6,016 Cash and cash equivalent at the beginning of financial year ) 4,771 10,787 Cash and cash equivalent at the end of financial year ) 3,541 4,771 *) Includes cash and bank receivables MARTELA ANNUAL REPORT 2024 50 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Accounting policies for the parent company financial statements Martela Oyj’s financial statements have been prepared in accordance with Finnish Accounting Standards (FAS). Items in the financial statements have been recognised at cost. No assets have been recorded to appreciated values, unless separately mentioned. Items denominated in foreign currency Transactions denominated in foreign currencies are recognised at the rate of exchange on the date of their occurrence. Receivables and liabilities in the balance sheet are translated at the average rate on the balance sheet date. Exchange rate differences arising from trade receivables are recognised in revenue and those of trade payables in adjustment items for purchases. Exchange rate differences arising from balance sheet financial items, such as loans, are recognised in exchange rate differences of finance. Shareholders loans denominated in foreign currency to subsidiaries are considered as investments. Currency exchange rate differences are hence not recognised in parent company financial statements. Exchange rate differences related to shareholder loans are recognised in the Consolidated financial statements. Intangible assets Intangible assets are reported in the balance sheet at cost and depreciated according to the plan (by straight line method). Intangible assets are depreciated according to their estimated useful life in 3–10 years. Goodwill is depreciated by straight- line method in 10 years. Tangible assets Buildings, machinery, equipment and other tangible assets are reported in the balance sheet at cost. No depreciation is recognised on revaluations of buildings or on land areas. Otherwise, depreciation is calculated on a straight line basis according to the estimated useful life. The change in accumulated depreciation difference is presented as a separate item in the parent company’s profit and loss statement and the accumulated depreciation difference as a separate item in the balance sheet. DEPRECIATION PERIODS FOR TANGIBLE ASSETS Buildings and structures ………………………………20-30 years Machinery and equipment ………………………………… 4-8 years Other tangible assets ………………………………………… 3-5 years Impairment testing of long-term assets Goodwill and investments in subsidiaries are tested for impairment annually regardless if there are any indications that the amount might be impaired. The recoverable cash amount from the subsidiaries is based on value in use calculations in the testing. The forecasted cash flows are based on 5-year financial plans approved by management. The central assumptions of the plans comprise of subsidiary growth- and profitability assumptions. The cash flows beyond the five-year period is estimated based on 1,5 per cent growth. Inventories Inventories are recognised at weighted average purchase prices. The value of inventories is reduced with respect to nonmarketable items. The cost of goods includes also a share of the overhead costs of production. Income tax The company income taxes are recognised on accrual basis and are calculated according to local tax legislation with adjustments from previous financial years. In the financial statements the company does not recognise deferred tax receivables or deferred tax liabilities. The amount of the unrecorded deferred tax asset arising from the loss to be confirmed for the financial year is EUR 1,544 thousand. Revenue and recognition policies Revenue is recognised on accrual basis. Direct taxes, discounts and exchange rate differences are deducted from sales income in calculating revenue. Research and development Research and development expenses are recognised normally in profit or loss in the year they arise. Research and development-related equipment is capitalised in machinery and equipment. Other operating income and expenses Proceeds from sale of assets, public subsidies and other income (rent income) are recognised in ”Other operating income”. Losses from disposal of assets and other costs are recognised in ”Other operating expenses”. Operating leases All leasing payments are reported as rent expenses. Share-based payments In the effective share-based incentive programme there are three earning periods, which are 2024, 2025 and 2026, and payment are made as a combination of shares and cash. Treasury shares The treasury shares held by the parent company are reported as a deduction from equity. Other compulsory reservations The normal warranty for standard Martela produced products is five years. The warranty provision (EUR 366 thousand) has been calculated as an estimate of the five-year warranties for Martela products and the sale of Martela products. MARTELA ANNUAL REPORT 2024 51 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE 1. Breakdown of revenue by market area, % of revenue % of revenue 2024 2023 Finland 76 71 Scandinavia 16 18 Other 8 11 Total 100 100 2. Other operating income (EUR 1000) 2024 2023 Rental income 43 50 Other operating income 30 77 Other operating income, Group 593 634 Total 666 761 3. Materials and services (EUR 1000) 2024 2023 Purchasing during the financial year -50,862 -52,534 Change in inventories of materials and suppliers -1,123 -2,121 External services -16,614 -16,752 Materials and supplies, total -68,600 -71,408 4. Personnel expenses and number of personnel (EUR 1000) 2024 2023 Salaries, CEO -240 -314 Pension expenses -58 -65 Salaries of the Board and directors -167 -162 Salaries of the Board and directors and managing director, total -465 -541 Other salaries -9,967 -10,277 Pension expenses -1,749 -1,756 Other salary-related expenses -240 -383 Personnel expenses in the income statement -12,420 -12,956 Fringe benefits -122 -253 Total -12,542 -13,209 Personnel Personnel on average, workers 44 49 Personnel on average, officials 136 148 Personnel on average, total 180 197 Personnel at the year end 179 192 Salaries of the Board and directors are not income subject to pension. 5. Other operating expenses (EUR 1000) 2024 2023 Auditor's fees Auditing -184 -173 Other services 0 -18 Auditor's fees, total -184 -191 6. Depreciation and write-down (EUR 1000) 2024 2023 Depreciation according to plan Intangible assets -1,230 -1,412 Tangible assets Buildings and structures -2 -1 Machinery and equipment -1,207 -1,121 Depreciation according to plan, total -2,438 -2,534 Depreciations and impairments, total -2,438 -2,534 7. Financial income and expenses (EUR 1000) 2024 2023 Financial income and expenses Interest income from short-term investments 35 29 Interest income from short-term investments from Group companies 0 3 Foreign exchange gains 96 549 Interest expenses -255 -131 Dividends from Group companies received 361 0 Losses on foreign exchange -289 -448 Other financial expenses -344 -147 Impairment -1,523 -2,785 Total -1,918 -2,931 Based on the goodwill testing write-down of Martela AB shares EUR 842 thousand and Martela AS shares EUR 674 thousand. 8. Depreciations and Group contributions (EUR 1000) 2024 2023 Appropriations Group contributions, received 1,600 2,000 Group contributions total 1,600 2,000 Appropriations, total 1,600 2,000 MARTELA ANNUAL REPORT 2024 52 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE 10. Intangible assets 1 Jan–31 Dec 2024 (EUR 1000) Intangible rights Goodwill Other long- term expenses Work in progress Intangible assets total Acquisition cost 1 Jan 6,338 9,200 12,471 1,008 29,018 Increases 1,067 0 0 212 1,279 Decreases 0 0 0 -1,122 -1,122 Acquisition cost 31 Dec 7,405 9,200 12,471 98 29,174 Accumulated depreciation 1 Jan -5,086 -8,680 -11,567 0 -25,333 Depreciation for the year 1 Jan 31 Dec -810 -130 -290 0 -1,230 Accumulated depreciation 31 Dec -5,895 -8,810 -11,856 0 -26,563 Carrying amount 1 Jan 1,254 520 902 1,008 3,685 Carrying amount 31 Dec 1,512 390 612 98 2,612 1 Jan–31 Dec 2023 (EUR 1000) Intangible rights Goodwill Other long- term expenses Work in progress Intangible assets total Acquisition cost 1 Jan 5,425 9,200 12,471 636 27,732 Increases 914 0 0 2,071 2,985 Decreases 0 0 0 -1,698 -1,698 Acquisition cost 31 Dec 6,338 9,200 12,471 1,008 29,018 Accumulated depreciation 1 Jan -4,501 -8,550 -10,872 0 -23,923 Depreciation for the year 1 Jan–31 Dec -585 -130 -695 0 -1,409 Accumulated depreciation 31 Dec -5,086 -8,680 -11,567 0 -25,332 Carrying amount 1 Jan 925 650 1,597 636 3,808 Carrying amount 31 Dec 1,254 520 902 1,008 3,685 9. Income taxes (EUR 1000) 2024 2023 Income taxes from operations 0 0 Taxes from previous years -25 25 Total -25 25 Deferred tax liabilities and assets are not included in the income statement or balance sheet. The total deferred tax asset arising from confirmed losses is EUR 518 thousand. 11. Tangible assets 1 Jan–31 Dec 2024 (EUR 1000) Buildings Machinery and equipment Other tangible assets Work in progress Total Acquisition cost 1 Jan 8,784 17,210 23 116 26,133 Increases 0 567 0 126 693 Decreases 0 -137 0 -159 -137 Acquisition cost 31 Dec 8,784 17,640 23 82 26,529 Accumulated depreciation 1 Jan -8,771 -14,198 0 0 -22,970 Accumulated depreciation on decreases 0 137 0 137 Depreciation for the year 1 Jan–31 Dec -2 -1,207 0 0 -1,208 Accumulated depreciation 31 Dec -8,773 -15,268 0 0 -24,041 Carrying amount 1 Jan 12 3,011 23 116 3,163 Carrying amount 31 Dec 11 2,371 23 82 2,488 1 Jan–31 Dec 2023 (EUR 1000) Buildings Machinery and equipment Other tangible assets Work in progress Total Acquisition cost 1 Jan 8,770 15,943 23 88 24,825 Increases 13 1,267 0 95 1,374 Decreases 0 0 0 -68 -68 Acquisition cost 31 Dec 8,784 17,210 23 115 26,132 Accumulated depreciation 1 Jan -8,770 -13,074 0 0 -21,845 Depreciation for the year 1 Jan–31 Dec -1 -1,124 0 0 -1,125 Accumulated depreciation 31 Dec -8,771 -14,198 0 0 -22,970 Carrying amount 1 Jan 0 2,869 23 88 2,980 Carrying amount 31 Dec 12 3,011 23 116 3,163 Carrying amount of production machinery and equipment in 2024 was EUR 20 thousand (28 in 2023). MARTELA ANNUAL REPORT 2024 53 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE 12. Investments 1 Jan–31 Dec 2024 (EUR 1000) Subsidiary shares Other shares and participations Share- holder loan receivables Total Balance sheet value at beginning of year 9,324 7 3,760 13,091 Increases 1,609 0 0 1,609 Decreases / Impairment -1,516 -7 0 -1,523 Balance sheet value at end of year 9,417 0 3,760 13,177 1 Jan–31 Dec 2023 (EUR 1000) Subsidiary shares Other shares and participations Share- holder loan receivables Total Balance sheet value at beginning of year 10,907 7 3,895 14,809 Increases 1,202 0 0 1,202 Decreases / Impairment -2,785 0 -135 -2,920 Balance sheet value at end of year 9,324 7 3,760 13,091 Subsidiary shares Parent company’s holding, % Of total votes, % Number of shares Par value (1,000) Book value (EUR 1,000) Kidex Oy Suomi 100 100 200 2,208 teur 2,208 Muuttopalvelu Grundell Oy Suomi 100 100 100 8 teur 4,440 Martela AB, Nässjö Ruotsi 100 100 50,000 10,000 tsek 584 Aski avvecklingsbolag AB, Malmö Ruotsi 100 100 12,500 1,250 tsek 48 Martela AS, Oslo Norja 100 100 200 13,700 tnok 2,002 Martela Sp.z o.o., Varsova Puola 100 100 3,483 3,483 tpln 135 Tehokaluste Oy Suomi 100 100 1 0 teur 0 Total 9,417 Other shares and participations 0 Shareholder loan receivable Martela AB EUR 3,760 thousand. Write-down Martela AB shares EUR 842 thousand and Martela AS shares EUR 674 thousand. 13. Receivables (EUR 1000) 2024 2023 Non-current receivables Loan receivables 567 532 Current receivables Receivables from Group companies Trade receivables 781 1,756 Loan receivables 1,600 2,000 Prepaid expenses 356 406 Receivables from others Trade receivables 15,905 15,660 Accrued income and prepaid expenses 1,523 2,329 Current receivables, total 20,165 22,152 Accrued income and prepaid expenses, main items 2024 2023 Related to personnel expenses 84 92 Related to payments in advance 539 1,422 Other accrued income or prepaid expenses 391 446 Periodization of revenue 510 369 Accrued income and prepaid expenses total 1,523 2,329 Related party loan 2024 2023 Loan 1 Jan 138 256 Increases 36 0 Decreases 0 -118 Loan 31 Dec 174 138 The Board of Directors has decided to grant an interest-bearing loan to finance the acquisition of the company’s shares. The maximum amount of the loan is 70% of the investment in shares. The loan will be repaid in full on 31 December 2027, at the latest. The interest rate is 12 months euribor but not below 0%. The loan granted to the Board of Directors is EUR 174 thousand (138 thousand), of which the CEO loan EUR 82 thousand and others EUR 92 thousand (138 thousand). MARTELA ANNUAL REPORT 2024 54 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE 14. Changes in shareholders’ equity Distribution of shares 31 Dec 2024 Number of shares Total EUR % of share capital Votes % of Votes K-shares (20 votes/share) 604,800 925,682 13 12,096,000 75 A-shares (1 vote/share) 4,034,412 6,074,318 87 4,034,412 25 Total 4,639,212 7,000,000 100 16,130,412 100 Treasury shares 1,425 Number of shares outstanding 4,637,787 Shareholders' equity 2024 2023 Restricted equity Share capital 1 Jan and 31 Dec 7,000 7,000 Share premium account 1 Jan and 31 Dec 1,116 1,116 Unrestricted equity Reserve fund 1 Jan and 31 Dec 11 11 Invested unrestricted equity fund 1 Jan 995 962 Share issue 85 0 Invested unrestricted equity fund 31 Dec 1,081 995 Retained earnings 1 Jan 15,377 21,298 Profit (-loss) for the year -9,322 -5,470 Dividends paid 0 -452 Retained earnings 31 Dec 6,055 15,377 Shareholders' equity total 15,263 24,500 15. Non-current liabilities (EUR 1000) 2024 2023 Accrued expenses 143 128 Total 143 128 Accrued expenses Related to the personnel expenses 84 92 The company has purchased electricity derivatives, of which long-term liabilities 2024 amount to EUR 58 thousand (EUR 36,5 thousand) and short-term liabilities amount to EUR 0 thousand (EUR 15 thousand). 16. Current liabilities (EUR 1000) 2024 2023 Current liabilities Liabilities to Group companies Trade payables to Group companies 11,350 11,028 Accrued liabilities to Group companies 2,048 1,768 Other current liabilities Group companies 1,283 3,283 Total 14,681 16,079 Other current liabilities Loans from financial institutions 4,404 1,207 Advances received 524 289 Trade payables 10,732 7,042 Other current liabilities 2,880 3,508 Accrued liabilities 2,863 2,824 Total 21,404 14,869 Current liabilities, total 36,085 30,947 Current liabilities are specified in notes because items are combined in Balance sheet. (EUR 1000) 2024 2023 Personnel expenses 1,710 1,819 Royalties 151 175 Residual expenses 1,002 829 Accrued liabilities, total 2,863 2,824 The distributable equity of the parent company is EUR 7,136 thousand in 2024. Treasury shares held by Martela Oyj are reported as a deduction from retained earnings. Martela Oyj owns 1,425 A shares (1,425). Out of the shares 379 were purchased at an average price of EUR 10.65 and 1,046 were transferred from Martela Corporation’s joint account to the treasury shares reserve based on the decision by the Annual General Meeting on March 13, 2018. Market value of treasury shares on December 31, 2024 was EUR 0.85 per share (1.28), a total of EUR 1.2 thousand (1.8). The subscription price of the directed share issue has been registered in reserve for invested unrestricted equity Company has decided on a paid direct share issue April 5, 2024, in which 65,717 of series A shares have been subscribed. The share subscription price TEUR 85, has been credited to the company’s reserve for invested unrestricted equity. Company has decided on a paid directed share issue March 29, 2023, in which 53,881 of series A shares have been subscribed without consideration. The shares issued to the company have been used to pay incentives according to the company’s incentive plan. MARTELA ANNUAL REPORT 2024 55 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE 17. Pledges granted and contingent liabilities (EUR 1000) 2024 2023 Debts secured by mortgages 0 0 Corporate mortgages 7,191 7,191 Shares pledged 7,191 7,191 Other pledges Guarantees as security for rents 898 854 Total 898 854 Other liabilities Residual value liabilities related to the service business 3,111 2,715 Total 3,111 2,715 Leasing commitments Falling due within 12 months 541 764 Falling due after 12 months 2,127 1,085 Total 2,668 1,849 Rent commitments 14,886 16,970 Factoring debts which customer receivables as guarantee 4,404 1,207 Factoring receivables as guarantee 5,095 1,608 Company has signed premises lease contract on May 24, 2021. Contract is valid at least until March 31, 2029, and the monthly rent is EUR 38,655. Company has signed Nummela property sale and leaseback contract on August 3, 2022. Contract is valid untill April 31, 2033, and the monthly rent is EUR 130,086. MARTELA ANNUAL REPORT 2024 56 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Auditor’s report (Translation of the Finnish original) To the Annual General Meeting of Martela Oyj Report on the Audit of the Financial Statements OPINION We have audited the financial statements of Martela Oyj (business identity code 0114891-2) for the year ended 31 December, 2024. The financial statements comprise the consolidated balance sheet, statement of comprehensive income, statement of changes in equity, statement of cash flows and notes, including material accounting policy information, as well as the parent company’s balance sheet, income statement, statement of cash flows and notes. In our opinion • the consolidated financial statements give a true and fair view of the group’s financial position, financial performance and cash flows in accordance with IFRS Accounting Standards as adopted by the EU. • the financial statements give a true and fair view of the parent company’s financial performance and financial position in accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with statutory requirements. Our opinion is consistent with the additional report submitted to the Audit Committee. BASIS FOR OPINION We conducted our audit in accordance with good auditing practice in Finland. Our responsibilities under good auditing practice are further described in the Auditor’s Responsibilities for the Audit of the Financial Statement s section of our report. We are independent of the parent company and of the group companies in accordance with the ethical requirements that are applicable in Finland and are relevant to our audit, and we have fulfilled our other ethical responsibilities in accordance with these requirements. In our best knowledge and understanding, the non- audit services that we have provided to the parent company and group companies are in compliance with laws and regulations applicable in Finland regarding these services, and we have not provided any prohibited non-audit services referred to in Article 5(1) of regulation (EU) 537/2014. The non-audit services that we have provided have been disclosed in note 4 to the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. KEY AUDIT MATTERS Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements. We have also addressed the risk of management override of internal controls. This includes consideration of whether there was evidence of management bias that represented a risk of material 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 Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Board of Directors and the Managing Director are responsible for assessing the parent company’s and the group’s ability to continue as going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting. The financial statements are prepared using the going concern basis of accounting unless there is an intention to liquidate the parent company or the group or cease operations, or there is no realistic alternative but to do so. MARTELA ANNUAL REPORT 2024 57 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS Our objectives are to obtain reasonable assurance on whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with good auditing practice will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. As part of an audit in accordance with good auditing practice, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the parent company’s or the group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of the Board of Directors’ and the Managing Director’s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the parent company’s or the group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the parent company or the group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events so that the financial statements give a true and fair view. • Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the group as a basis for forming an opinion on the group financial statements. We are responsible for the direction, supervision and review of the audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should Key Audit Matter How our audit addressed the Key Audit Matter Revenue Recognition We refer to the Group’s accounting policies and note 1. Our audit procedures to address the risk of material misstatement in respect of revenue recognition included among others: The Group’s revenue includes mainly sale of furniture and, to a lesser extent, sale of services and leasing of furniture. In furniture deliveries the Group fulfills its contractual performance obligations at a point in time and the revenue is recognized when control is transferred to a customer. Revenue recognition is considered as a key audit matter because revenues are a key performance measure which could create an incentive for revenue to be recognized prematurely. Revenue recognition was also determined to be a significant risk of material misstatement referred to in EU Regulation No 537/2014, point (c) of Article 10(2). • We assessed the appropriateness of the group’s accounting policies over revenue recognition compared to IFRS standards. • We assessed the group’s processes and controls over timing of revenue recognition. • We tested the correct timing of revenue recognition by using analytical procedures and transaction level testing. Our procedures included data analytics, obtaining external confirmations and transaction level testing before and after the balance sheet date as well as inspection of credit notes prepared after the balance sheet date. • We considered the appropriateness of the group’s disclosures in respect of revenues. Valuation of subsidiary shares and receivable in parent company’s balance sheet We refer to parent company’s accounting policies a nd notes 7 and 12. Our audit procedures to address the risk of material misstatement in respect of valuation of subsidiary shares and receivable included among others: As of balance sheet date December 31, 2024 the subsidiary shares and receivable amounted to 13,2 M€ corresponding to 25% of parent company’s total assets and 54% of parent company’s equity. The management of the parent company prepares annually impairment calculation for balance sheet value of the investments based on their value in use. These calculations include significant management judgements, like forecasted revenue growth, EBITDA and discount rate used in discounting cash flows. Based on the calculation a write down amounting to 0,8 M€ was recorded to Swedish subsidiary shares and a write down amounting to 0,7 M€ was recorded to Norwegian subsidiary shares in the financial statements 2024. • We assessed the basis and appropriateness of the forecasts used in the impairment calculations, like revenue growth, EBITDA and discount rate. • We tested the mathematical accuracy of the calculations. • We involved our valuation specialists to assist us in evaluating the methodologies and assumptions in relation to market and industry information. This matter was also determined to be a significant risk of material misstatement referred to in EU Regulation No 537/2014, point (c) of Article 10(2). MARTELA ANNUAL REPORT 2024 58 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Other reporting requirements INFORMATION ON OUR AUDIT ENGAGEMENT We were first appointed as auditors by the Annual General Meeting on March 12, 2020, and our appointment represents a total period of uninterrupted engagement of five years. OTHER INFORMATION The Board of Directors and the Managing Director are responsible for the other information. The other information comprises the report of the Board of Directors and the information included in the Annual Report, but does not include the financial statements and our auditor’s report thereon. We have obtained the report of the Board of Directors prior to the date of this auditor’s report, and the Annual Report is expected to be made available to us after that date. Our opinion on the financial statements does not cover the other information. In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. With respect to report of the Board of Directors, our responsibility also includes considering whether the report of the Board of Directors has been prepared in compliance with the applicable provisions. In our opinion, the information in the report of the Board of Directors is consistent with the information in the financial statements and the report of the Board of Directors has been prepared in compliance with the applicable provisions. 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. Espoo 11.2.2025 Ernst & Young Oy Authorized Public Accountant Firm Osmo Valovirta Authorized Public Accountant MARTELA ANNUAL REPORT 2024 59 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Independent Auditor’s report on the ESEF consolidated financial statements of Martela Oyj (Translation of the Finnish original) To the Board of Directors of Martela Oyj We have performed a reasonable assurance engagement on the financial statements 743700M4EIEVD61PNN55-2024-12-31-fi.zip of Martela Oyj (y-identifier: 0114891-2) that have been prepared in accordance with the Commission’s regulatory technical standard for the financial year ended 31.12.2024. RESPONSIBILITIES OF THE BOARD OF DIRECTORS AND THE MANAGING DIRECTOR The Board of Directors and the Managing Director are responsible for the preparation of the company’s report of Board of Directors and financial statements (the ESEF financial statements) in such a way that they comply with the requirements of the Commission’s regulatory technical standard. This responsibility includes: • preparing the ESEF financial statements in XHTML format in accordance with Article 3 of the Commission’s regulatory technical standard • tagging the primary financial statements, notes and company’s identification data in the consolidated financial statements that are included in the ESEF financial statements with iXBRL tags in accordance with Article 4 of the Commission’s regulatory technical standard and • ensuring the consistency between the ESEF financial statements and the audited financial statements The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of ESEF financial statements in accordance the requirements of the Commission’s regulatory technical standard. AUDITOR’S INDEPENDENCE AND QUALITY MANAGEMENT We are independent of the company in accordance with the ethical requirements that are applicable in Finland and are relevant to the engagement we have performed, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The firm applies International Standard on Quality Management (ISQM) 1, which requires the firm to design, implement and operate a system of quality management including policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. AUDITOR’S RESPONSIBILITIES Our responsibility is to, in accordance with Chapter 7, Section 8 of the Securities Markets Act, provide assurance on the financial statements that have been prepared in accordance with the Commission’s technical regulatory standard. We express an opinion on whether the consolidated financial statements that are included in the ESEF financial statements have been tagged, in all material respects, in accordance with the requirements of Article 4 of the Commission’s regulatory technical standard. Our responsibility is to indicate in our opinion to what extent the assurance has been provided. We conducted a reasonable assurance engagement in accordance with International Standard on Assurance Engagements (ISAE) 3000. THE ENGAGEMENT INCLUDES PROCEDURES TO OBTAIN EVIDENCE ON: • whether the primary financial statements in the consolidated financial statements that are included in the ESEF financial statements have been tagged, in all material respects, with iXBRL tags in accordance with the requirements of Article 4 of the Commission’s regulatory technical standard and • whether the notes and company’s identification data in the consolidated financial statements that are included in the ESEF financial statements have been tagged, in all material respects, with iXBRL tags in accordance with the requirements of Article 4 of the Commission’s regulatory technical standard and • whether there is consistency between the ESEF financial statements and the audited financial statements. MARTELA ANNUAL REPORT 2024 60 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE The nature, timing and extent of the selected procedures depend on the auditor’s judgement. This includes an assessment of the risk of material deviations due to fraud or error from the requirements of the Commission’s technical regulatory standard. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. OPINION Our opinion pursuant to Chapter 7, Section 8 of the Securities Markets Act is that the primary financial statements, notes and company’s identification data in the consolidated financial statements that are included in the ESEF financial statements of Martela Oyj 743700M4EIEVD61PNN55-2024-12-31-fi. zip for the financial year ended 31.12.2024 have been tagged, in all material respects, in accordance with the requirements of the Commission’s regulatory technical standard. Our opinion on the audit of the consolidated financial statements of Martela Oyj for the financial year ended 31.12.2024 has been expressed in our auditor’s report dated 11.2.2025. With this report we do not express an opinion on the audit of the consolidated financial statements nor express another assurance conclusion. Helsinki 12.3.2025 Ernst & Young Oy Authorized Public Accountant Firm Osmo Valovirta Authorized Public Accountant MARTELA ANNUAL REPORT 2024 61 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Corporate governance statement 2024 Governance Martela Corporation is a Finnish limited liability company that is governed in its decision-making and management by Finnish legislation, especially the Finnish Limited Liability Companies Act, by other regulations concerning public listed companies, and by its Articles of Association. The company complies with the NASDAQ OMX Guidelines for Insiders and the Finnish Corporate Governance Code 2025 published by the Securities Market Association. Corporate Governance code is available at www.cgfinland.fi/en/corporate- governance-code/. Martela complies with all of the Code’s guidelines. Organisation The Group is managed according to both its operational organisation and legal Group organisation. The Group’s management is based primarily on an operational matrix organisation. In 2024 The Group was organised in units as: • Customer Success, which is responsible for customer relationships, sales, workplace services and marketing. • Operations, which is responsible for after-sales activities, including sourcing, production, removal services, product development, quality assurance, the research laboratory, planning of material flows and logistics and as well as IT matters. • People and sustainability, which is responsible for the human resource administration, sustainability management and internal communication. • Finance, which is responsible for the Group’s financial planning and reporting, investor relations as well as legal matters. • Products and Design, which is responsible for brand and product portfolio management. • Services and Concepts, which is responsible for the planning and development of work and learning environment projects. • Services and Concepts unit and Products and Design unit were merged into Brand, Products & Services unit as of February 1, 2025. Annual General Meeting The General Meeting is the company’s supreme decision-making body. The Annual General Meeting must be held within six months of the end of the financial year. The financial statements, Board of Directors’ report and the auditor’s report are presented at the Annual General Meeting. The Meeting decides on the approval of the financial statements, use of the profit shown on the balance sheet, discharging the members of the Board of Directors and the CEO from liability, the fees of the Board members and auditors and the number of members on the Board. The General Meeting also elects the Directors of the Board and the auditor. Other matters on the agenda of the General Meeting are mentioned in the notice of meeting. Shares Martela has two share series (K shares’ and A shares), with each K share entitling its holder to 20 votes at a General Meeting and each A share entitling its holder to one vote. The redeeming of K shares is referred to in the Articles of Association. Private owners of K shares have a valid shareholder agreement that restricts the sale of these shares to other than existing holders of K shares. The company’s total share capital on 31 December 2024 was EUR 7 million. Board of Directors The Board of Directors, elected by the Annual General Meeting each year, is responsible for the management and proper arrangement of the operations of the company in compliance with the Limited Liability Companies Act and the Articles of Association. Preparations concerning the composition of the Board of Directors are carried out by the principal shareholders, who propose Board candidates to the Annual General Meeting based on their preparatory work. In accordance with the Articles of Association, the Board of Directors consists of no less than five and no more than nine members. There may be no more than two deputy members. The Board of Directors elects from among its members a Chairman and Vice Chairman to serve until the end of the next Annual General Meeting. According to the principles of the Board diversity, the members of the Board of Directors must have sufficient and complementary experience and expertise in Martela’s most important business sectors and markets. The Board must have equal representation of both sexes and a diverse age distribution. Board members should have sufficiently diverse professional and educational background, strategy development and implementation skills, economic expertise, experience in managing companies at various stages of development, innovation, decision-making and questioning skills, and sufficient time for working in the board. The achievement and development of diversity in reaching the goals is assessed in the Board Self-Evaluation Discussion, and diversity has been implemented in accordance with the recommendations. The Board has confirmed a Charter defining the duties of the Board, meeting practices, the matters to be dealt with at meetings, the targets set by the Board for its operations, a self-evaluation of these operations, and the Board’s committees. In addition to the duties mentioned in the Limited Liability Companies Act and the Articles of Association, the Board of Directors is responsible for: MARTELA ANNUAL REPORT 2024 62 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE • deciding on the Group strategy • deciding on the Group structure • approving financial statements, interim financial statements and interim reports • approving the Group’s operating plans, budgets, major investments and donations • deciding on business expansion and reduction, acquisitions and divestments • deciding on the Risk management policy and principles of the internal control • deciding on dividend policy and make a proposal to the Annual General Meeting on the amount of dividend to be paid • deciding on the Treasury policy • approving and dismissing the CEO and to decide on his salary • authorising the Remuneration Committee to decide on the appointments and remuneration of the members of the Group Management Team and the general principles of the Group’s performance bonus scheme • deciding on Management’s share-based incentive schemes • regularly approving and revising corporate governance principles and internal policies • annually approving the company’s internal control and risk management principles and addressing the most significant risks and uncertainties associated with the company’s operations • appointing the Board committees and deciding on their reporting • accepting stock exchange releases related to the Board’s decisions • confirming the principles of the Board diversity • the other statutory provisions of the Limited Liability Companies Act, the Corporate Governance Code or elsewhere The Board of Directors consisted of following members: • Johan Mild, chairman of the Board, born 1974, M.Sc. Accounting, CEO of Plugit Finland Oy. Does not own any company shares • Hanna Mattila, born 1972, D. Sc (Tech), Director of Turku Urban Research Programme, University of Turku, owns 1,600 Martela Oyj K shares • Eero Martela, born 1984, M.Sc Tech., Managing Partner, Columbia Road Oy, owns 6,710 Martela Oyj A shares ja 1,073 K shares • Jan Mattsson, born 1966 M.Sc, Architecture, CEO and partner Tengbomgruppen Ab, owns 6,759 Martela Oyj A shares • Anni Vepsäläinen, born 1963, M.Sc Tech., CEO of Suomen Messut Osuuskunta, owns 2,000 Martela Oyj A shares • Jacob Kragh, born 1970, M.Sc. International Business, CEO of Quooker International B.V. Does not own any company shares The Board convened eight times during the financial year. The average attendance of the Board members was 100 per cent. The Board reviews its own activities annually, either by self-assessment or assessment made by an external consultant. In both cases a summary of the evaluations is jointly discussed at a Board meeting. The Board has evaluated the independence of its members and determined that Hanna Mattila, Eero Martela, Jan Mattsson, Johan Mild, Jacob Kragh and Anni Vepsäläinen are independent of the company. Of the company’s largest share¬holders Jan Mattsson, Jacob Kragh, Johan Mild and Anni Vepsäläinen are independent members of the Board. The Board has formed from among its members a Human Resource and Rewarding Committee and an Audit Committee, which both have written Charters. According to the Charter, the key duties of the Human Resource and Rewarding Committee include: • deciding, with authorisation from the Board, on the remuneration issues and annual performance bonuses of the CEO and the Group Management Team as well as general principles for the Group’s performance bonus scheme for the entire personnel • preparing for the Board the structure, criteria and target levels of the long-term incentive plans for key personnel • processing the appointments of the CEO and Group Management Team members, deputy arrangements and successor issues. • The Compensation Committee also handles remuneration statements in connection with the financial statements The Board’s Human Resource and Rewarding Committee comprises Johan Mild, Jan Mattsson and Jacob Kragh. The Committee convened three times during the financial year. The average attendance of the Committee members was 100 per cent. According to the Charter, the key duties of the Audit Committee include: • monitoring the financial reporting and interim report processes, • supervising the financial reporting process, • monitoring the company’s financial condition, • monitoring the adequacy and effectiveness of the company’s internal control and risk management systems, • processing the description of the internal control and risk management systems related to the financial re¬porting process included in the Corporate Governance Statement, • monitoring the statutory audit of the financial statements and the consolidated financial statements, • observing, together with the auditors and the management of the company, the findings of the auditing carried out and the possible difficulties in carrying out the audit, • assessing the independence of the auditor or the audit firm, and in particular the provision of ancillary services to the company, • evaluating the fees charged on auditing and ancillary services and their criteria, • preparing a proposal for a decision on the election of the auditor, • assessing the compliance process with laws and regulations and respect for ethical principles in the organaisation, • conducting reports on the company’s most significant legal and regulatory procedures The Board’s Audit Committee comprises Anni Vepsäläinen, Eero Martela and Hanna Mattila. The Committee convened four times during the financial year. The average attendance of the Committee members was 100 per cent. The secretary of the Board of Directors is a lawyer from the same company from where other legal services is provided to the Group. The Chairman of the Board is in direct contact with the CFO as necessary. MARTELA ANNUAL REPORT 2024 63 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE CEO The Board appoints Martela Corporation’s CEO and decides on the terms and conditions of his service relationship, which are defined in a written CEO’s service contract. The CEO is responsible for the operational management and supervision of the parent company and the Group according to the guidelines set by the Board. Company CEO is Ville Taipale, born 1971, M.Sc Tech., owns 61,000 Martela Oyj A shares. Group Management Team The Board of Directors and the CEO appoints the members of the Group Management Team. The CEO of Martela Corporation acts as the Chairman of the Group Management Team. The directors responsible for the units and processes are also represented in the Group Management Team. The Group Management Team drafts and reviews strategies, budgets and investment proposals and monitors the financial situation of the Group and its business areas and processes and the attainment of operational targets and plans. The Group Management Team meets once a month. Group Management Team consisted of following members led by Group CEO: • Kimmo Hakkala responsible for Customer Success unit (owns 11,538 Martela Oyj A shares) • Kalle Sulkanen responsible for Operations unit (owns 13,555 Martela Oyj A shares) • Eeva Terävä responsible for Services and Concepts unit (owns 23,016 Martela Oyj A shares) • Suvi-Maarit Kario responsible for People and sustainability unit (owns 1,500 Martela Oyj A shares) • Henri Berg responsible for Finance unit (owns 15,000 Martela Oyj A shares) • Until February 1, 2025, Kari Leino responsible for Products and Design unit (owns 6,544 Martela Oyj A shares) Financial reporting in the Group Martela Corporation’s Board of Directors is provided regularly reports on the financial performance and forecasts of the Group. The reports and forecasts are also presented by the CEO and CFO at the Board meetings, where they are reviewed. The Group Management Team meets at least once a month to evaluate the financial performance, outlook and risks of the Group. Auditing The auditing of Group companies is carried out in accordance with the valid laws in each country and each company’s Articles of Association. The principally responsible auditor of the parent company co-ordinates the auditing of the Group’s subsidiaries together with the Group’s CEO and CFO. The auditors of Martela Corporation and the Group are the authorised public accountants Ernst & Young, with Osmo Valovirta, Authorised Public Accountant, as the principally responsible auditor. All the auditors of the Group’s companies are in the Ernst & Young chain. Internal control The reliability of financial reporting is one of the principal objectives of Martela Corporation’s internal control. The CEO is responsible for the operational management and supervision of the Group according to the guidelines set by the Board. Martela’s strategy is updated and its targets defined on an annual basis. Strategic planning forms the basis of all planning at Martela and is carried out on a rolling basis for the forthcoming period of 2–3 years. Target setting is an internal control prerequisite because the targets of the companies, business areas, functions and supervisors are derived from Group-level targets. For each business area, specific financial and non-financial targets are set in accordance with the business plan, and their attainment is monitored regularly through comprehensive reporting to executive management, for example. The CFO has overall responsibility for financial reporting in the Group. Reporting to executive management is carried out separately and independently of business operations. Controllers and financial managers (controller function) are responsible for Group, company and other financial reporting. At Martela, financial reporting is carried out in compliance with guidelines, laws and regulations in a consistent manner throughout the Group. The reliability of financial reporting depends on the appropriateness and reliability of financial and reporting processes and on the control measures taken to ensure these. During recent years, the internal control has focused among others on sales, quote to cash processes, on management of working capital, on ERP -system implementation, on development of the receivables collection procedures as well as on leasing and service contract management and processes. The CFO is responsible for the maintenance and development of reporting processes and defining and implementing control measures. Control measures include guidelines, matching, management reviews and reporting on deviations. The CFO monitors compliance with defined processes and controls. He also monitors the reliability of financial reporting. The Board of Directors approves Martela’s strategy and annual operating plans. It also approves the principles and rules of risk management, and monitors on a regular basis the effectiveness and sufficiency of the internal control and risk management. Furthermore, the Board is responsible for the internal control of the financial reporting process. Auditors and other external controllers assess the control measures in terms of the reliability of financial reporting. Risk management and internal audit Martela’s Board of Directors has confirmed the principles of risk management. The purpose of risk management is to identify, monitor and manage risks that could pose a threat to business and to the achievement of business objectives. Group management has supreme operational responsibility for risk management policy. In the Group, risks are analysed and decisions are made to manage these risks as a part of the regular monitoring carried out by the Board and the management teams as described above. Risks are also evaluated when planning and making decisions on significant projects and investments. Risk management is integrated with the strategy process as a separate stage of analysis and as part of the process of drawing up annual action plans. There is no separate risk management organisation, but the associated responsibilities are assigned in line with the rest of the business operations and organisation. The company’s Board of Directors has included an annual review of risk management in its schedule of work. Taking into consideration the nature and scope of Martela’s business, the company has not considered it appropriate to form a separate internal audit function. The internal control is carried out in MARTELA ANNUAL REPORT 2024 64 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE the form of controls in business processes, and the company will either make its own or, if necessary, conduct separate internal audit reports with external experts. Risks In accordance with Martela’s risk management model, risks are classified and prepared for in different ways. The manufacture of Martela’s products is largely based on the company performing the final assembly and using subcontractors for components. Production control is based on orders placed by customers, which means that there is no need for any large-scale warehousing. Risks of damage are covered by appropriate insurance policies, and these provide comprehensive coverage for property, business interruption, supplier interruption loss and loss liability risks. Martela uses the services of an external insurance broker to manage insurance matters. The services of an external partner are also used in legal matters. The responsibility perspectives regarding the supply chain are discussed as part of the annual Sustainability Report. Finance risks are discussed in the notes to the financial statements. Management, remuneration, benefits and incentive plans Information on management remuneration and the impact on the result for the financial year can be found in the notes to the financial statements and in the remuneration report, which can be found on the company’s website. Principles regarding related party transactions Martela Oyj follows the recommendations of the Corporate Governance Code 2025 issued by the Securities Market Association. The Company’s related party transactions policy is adopted by the Board of Directors that also has the monitoring and supervision responsibility regarding related party transactions. The up-to-datedness of the related party list is monitored at least on an annual basis. The Chief Financial Officer of the Company is responsible for determining the related parties of the Company and maintaining the related party list. Insider administration Martela complies with the Guidelines for Insiders issued by Nasdaq Helsinki Ltd. In addition, Martela’s Board of Directors has confirmed specific insider guidelines for the company to complement Nasdaq Helsinki Ltd’s Guidelines for Insiders. The company has defined as permanent insiders persons who work at Martela Group and who have access to all inside information concerning Martela due to their position or task. The information in the permanent insider list is not public. In addition to the permanent insider list, non-public project-specific insider lists shall be established, if necessary, as defined in Nasdaq Helsinki Ltd’s Guidelines for Insiders. Permanent insiders are not entered into the project-specific insider lists. The persons discharging managerial responsibilities, other permanent insiders and persons participating in preparing of financial reports of the company must not trade in Martela’s financial instruments prior to the publication of an interim report and financial statement release of the company. The length of the closed period is 30 days at Martela. Martela discloses inside information that directly concerns Martela or its financial instrument as soon as possible, unless the conditions for delay of disclosure of inside information are met. Martela has defined an internal process in order to evaluate and disclose the inside information and to monitor and evaluate the duration and the conditions for the delay. Martela continuously monitors the situation to ensure that the conditions for the delay are met and the company has the ability to publicly disclose the information immediately in the case of a data leakage. In accordance with MAR, Martela has an obligation to disclose transactions with Martela’s financial instru¬ments conducted by persons discharging managerial responsibilities at the company and persons closely associated with them. The obligation to disclose transactions applies to the following persons discharging managerial responsibilities at Martela: • Members of Martela’s Board of Directors and CEO, and • Members of Martela Group’s Management Team. Transactions between companies in the Martela Group conducted by persons discharging managerial responsibilities at Martela and persons closely associated with them are monitored. During 2024, regarding the current management team, the CEO, VP of Customer Success unit, VP of People and Sustainability unit and CFO Finance unit received share rewards based on the share-based incentive plan for key employees. In 2024 there were no other material related party transactions. MARTELA ANNUAL REPORT 2024 65 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Board of Directors Johan Mild CHAIRMAN OF THE BOARD • Born in 1974, M.Sc. (Accounting) • Member of the Board since 2020 • Chairman of the Board since 2021 Other key duties: • CEO, Plugit Finland Oy • Member of the Board, The recycling Industries of Finland (Kierrätysteollisuus ry) Does not own any company shares. Eero Martela BOARD MEMBER • Born in 1984, M.Sc. (Tech.) • Member of the Board since 2015 Other key duties: • Managing partner, Finland, Columbia Road Oy Owns 6,710 Martela Oyj A shares and 1,073 K shares. Hanna Mattila BOARD MEMBER • Born in 1972, D.Sc. (Tech.) • Member of the Board since 2022 Other key duties: • Director of Turku Urban Research Programme, University of Turku Owns 1,600 Martela Oyj K shares. MARTELA ANNUAL REPORT 2024 66 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Jan Mattsson BOARD MEMBER • Born in 1966, M.Sc. (Architecture), KHT Royal Institute of Technology • Member of the Board since 2019 Other key duties: • CEO and partner, Tengbomgruppen AB • Chairman of the Board, Tengbom Oy Owns 6,759 Martela Oyj A shares. Jacob Kragh BOARD MEMBER • Born in 1970, M.Sc. (International Business) • Member of the Board since 2024 Other key duties: • CEO, Quooker International B.V. Does not own any company shares. Anni Vepsäläinen BOARD MEMBER • Born in 1963, M.Sc. (Tech.) • Member of the Board since 2016 Other key duties: • Member of the Board, Cinia Oy • Managing Director, Finnish Fair Corporation • Chairman of the Board, Helsinki Region Chamber of Commerce • Member of the Board, Finnish Chamber of Commerce Owns 2,000 Martela Oyj A shares. MARTELA ANNUAL REPORT 2024 67 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Management team Ville Taipale CHIEF EXECUTIVE OFFICER (CEO) • Born in 1971, M.Sc. (Tech) • Joined the company and has been a member of the management team since 2018, the CEO since 2021 Previous professional experience: • Martela Oyj, Vice President, Operations, 2018–2021 • Patria Land Systems Oy, Vice President, Sourcing and Logistics, 2015–2018 Componenta Oyj, Vice President, Sourcing and Procurement, 2010–2015 • Fiskars Oyj, Director, Sourcing Unit, 2007–2010 Nokia Oyj, Supply chain management and development positions, 1998–2007 • VTT, Researcher, 1997–1998 Owns 61,000 Martela Oyj A shares. Henri Berg CHIEF FINANCIAL OFFICER (CFO) • Born in 1970, M.Sc. (Econ.) • Area of responsibility: Group Finance, Investor Relations and Legal • Joined the company and a member of the management team since 2023 Previous professional experience: • A-Insinöörit Oy AG, CFO, 2021–2023 • Sato Oyj, Head of Financial services, 2017–2021 • Componenta Oyj, several managerial positions in financial administration, 2008–2017 • Stora Enso Oyj, several managerial and specialist positions in financial administration, 1998–2008 Owns 15,000 Martela Oyj A shares. Eeva Terävä VP, BRAND, PRODUCTS & SERVICES • Born in 1983, M.Sc. (Regional Science) & Bachelor of Culture and Arts (Interior Architecture) • Area of responsibility: Design & Development Services of Work and Learning Environments • Joined the company in 2016, a member of the management team since 2021 Previous professional experience: • Martela Oyj, Head of Workplace development, 2018–2021 • Martela Oyj, Workplace Specialist, 2016–2018 • Ramboll Management Consulting Oy, different roles in research and development projects, and project management, 2009–2016 Owns 23,613 Martela Oyj A shares. MARTELA ANNUAL REPORT 2024 68 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Suvi-Maarit Kario VP, HR & SUSTAINABILITY • Born in 1968, M.Soc.Sc. • Area of responsibility: HR, Sustainability and internal communication • Joined the company and a member of the management team since 2023 Previous professional experience: • Puro Tekstiilihuoltopalvelut Oy, HR Director, 2020–2023 • HKScan Oyj, Head of Talent Management & Senior HR Manager 2018–2020 • GS-Hydro Oy, VP, HR and Sustainability, 2012–2017 • Alstom Finland Oy, Country HR Director, 2010–2012 • Destia Oy, Manager, Strategic HR, 2007–2010 • Finnlines Oyj, Human Resources Development Manager, 1997–2007 Owns 1,500 Martela Oyj A shares. Kimmo Hakkala VP, SALES AND MARKETING • Born in 1971, M.Sc. (Agric.) • Area of responsibility: Group Customers, Sales and Marketing in Finland, Sweden & Norway and international dealer Network • Joined the company and a member of the management team since 2023 Previous professional experience: • Berner Oy, Business Unit Director, 2013–2022 • Fiskars Finland Oy Ab, Sales and Marketing Director, 2007–2013 • Kemira Grow-How Oyj, Business and Marketing Manager, 2001–2007 • Kesko Oyj, Product Manager, 1996–2001 Owns 11,538 Martela Oyj A shares. Kalle Sulkanen VP, OPERATIONS • Born in 1978, M.Sc. (Tech.) • Area of responsibility: Group Sourcing, Production, Removal Services, Product Development, Sustainability, Logistics and Quality Control • Joined the company and a member of the management team since 2022 Previous professional experience: • Peab AB, Head of Procurement, 2020–2022 YIT Oyj, Procurement Director, 2019–2020 • AB Enzymes GmbH / Roal Oy, Head of Procurement, 2017–2019 • Componenta Oyj, Sourcing Director and managerial positions, 2011–2017 • Nokia Oyj, Development Manager positions in supply chain, 2001–2011 Owns 13,555 Martela Oyj A shares. MARTELA ANNUAL REPORT 2024 69 MARTELA 2024 CEO’S REVIEW OPERATING ENVIRONMENT FINANCIAL STATEMENTS GOVERNANCE Information for shareholders Annual General Meeting The Annual General Meeting of Martela Oyj will be held on Monday 7 April 2025 at 2 p.m. at Töölönlahdenkatu 2, 00100 Helsinki (Flik eventstudio Eliel, Sanomatalo). A shareholder, who has the right to participate in the Annual General Meeting and whose shares are registered on his/her Finnish book-entry account, may participate in the Annual General Meeting by way of remote access. Shareholder participating via remote access to the Annual General Meeting has voting right and speaking right during the Annual General Meeting. Instructions for shareholders are presented in this notice under section C (Instructions for the participants in the Annual General Meeting) and on the Company’s website www.martela.com/about-us/about-martela/ investors. The names of shareholders wishing to attend the meeting should be entered in the share-holder register at Euroclear Finland Ltd no later than 26 March 2025 and the shareholder should register by email to agm@innovatics.fi, by post to Innovatics Oy, Yhtiökokous / Martela Oyj, Ratamestarinkatu 13 A, 00520 Helsinki, or on the website of the Corporation www.martela.com/about-us/about- martela/investors no later than April 2, 2025 at 4 p.m. Payment of dividends The Board of Directors proposes to the Annual General Meeting that no dividend would be paid for the financial year 1 January 2024 – 31 December 2024. Publication of financial information Martela Corporation’s financial information in 2025 will be published as follows: • January–March (Q1) Financial Review on Wednesday May 7, 2025 • January–June (H1) Half-Year Report on Wednesday August 13, 2025 • January–September (Q3) Financial Review on Wednesday November 12, 2025 Financial reports are available in Finnish and English on the company’s website (www.martela.fi and www.martela.com). Annual reports are available on the company’s website in pdf format. After published, stock exchange releases are available on the company’s website, where you can find all stock exchange releases in chronological order. Contacts FINLAND Martela Oyj Miestentie 1 02150 Espoo Tel. +358 10 345 50 www.martela.com Kidex Oy Savikontie 25 82500 Kitee Tel. +358 10 345 7211 www.kidex.fi Muuttopalvelu Grundell Oy Tikkurilantie 146 01530 Vantaa Tel. +358 10 480 4200 www.martela.com/fi/palvelut/ toteutuspalvelut/muuttopalvelut SWEDEN Martela AB Storgatan 49A 57132 Nässjö Tel. +46 380 37 19 00 www.martela.com/sv NORWAY Martela AS Drammensveien 130 0277 Oslo Tel. +47 23 28 38 50 www.martela.com/no POLAND Martela Sp. z o.o. ul Geodetów 156 05-500 Józefosław www.martela.com 743700M4EIEVD61PNN552024-01-012024-12-31743700M4EIEVD61PNN552023-01-012023-12-31743700M4EIEVD61PNN552024-12-31743700M4EIEVD61PNN552023-12-31743700M4EIEVD61PNN552022-12-31743700M4EIEVD61PNN552022-12-31ifrs-full:IssuedCapitalMember743700M4EIEVD61PNN552023-12-31ifrs-full:IssuedCapitalMember743700M4EIEVD61PNN552022-12-31ifrs-full:SharePremiumMember743700M4EIEVD61PNN552023-12-31ifrs-full:SharePremiumMember743700M4EIEVD61PNN552022-12-31MAR:ReserveForInvestedUnrestrictedEquityMember743700M4EIEVD61PNN552023-12-31MAR:ReserveForInvestedUnrestrictedEquityMember743700M4EIEVD61PNN552022-12-31ifrs-full:OtherReservesMember743700M4EIEVD61PNN552023-12-31ifrs-full:OtherReservesMember743700M4EIEVD61PNN552022-12-31ifrs-full:TreasurySharesMember743700M4EIEVD61PNN552023-12-31ifrs-full:TreasurySharesMember743700M4EIEVD61PNN552022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember743700M4EIEVD61PNN552023-01-012023-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember743700M4EIEVD61PNN552023-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember743700M4EIEVD61PNN552022-12-31ifrs-full:RetainedEarningsMember743700M4EIEVD61PNN552023-01-012023-12-31ifrs-full:RetainedEarningsMember743700M4EIEVD61PNN552023-12-31ifrs-full:RetainedEarningsMember743700M4EIEVD61PNN552024-12-31ifrs-full:IssuedCapitalMember743700M4EIEVD61PNN552024-12-31ifrs-full:SharePremiumMember743700M4EIEVD61PNN552024-01-012024-12-31MAR:ReserveForInvestedUnrestrictedEquityMember743700M4EIEVD61PNN552024-12-31MAR:ReserveForInvestedUnrestrictedEquityMember743700M4EIEVD61PNN552024-12-31ifrs-full:OtherReservesMember743700M4EIEVD61PNN552024-12-31ifrs-full:TreasurySharesMember743700M4EIEVD61PNN552024-01-012024-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember743700M4EIEVD61PNN552024-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember743700M4EIEVD61PNN552024-01-012024-12-31ifrs-full:RetainedEarningsMember743700M4EIEVD61PNN552024-12-31ifrs-full:RetainedEarningsMemberiso4217:EURiso4217:EURxbrli:shares