Annual Report (ESEF) • Feb 28, 2024
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Download Source FileL&T is a service company that is making the circular economy a reality. The Group operates in the circular economy and facility services businesses. All of L&T’s business operations build future sustainable growth for the circular economy and are based on the opportunities it creates.
By investing in the sustainable solutions of the circular economy, L&T aims to create increasing value for all of its key stakeholders.
The business environment remained challenging throughout the year and became increasingly tough towards the end of the year as the general economic outlook deteriorated. In 2023, the general rise in costs levelled off as far as energy prices were concerned. Nevertheless inflation was reflected in the wage decisions negotiated in the labour market. Compared to their predecessors, the two-year wage decisions in Finland were expensive and front-loaded, but L&T was able to pass their cost impacts on to customer prices. The sickness rate was still at a high level in the early part of the year due to various respiratory infections, but the situation returned to normal towards the end of the year.
The 2021 reform of the Waste Act entered into effect in Finland with regard to the separate collection of consumer packaging. Municipalities organised the collection operations by dividing them into dozens of contracts that were put out to tender. L&T had good success in the tendering processes and strengthened its market position in the segment in question. Nevertheless, this change caused service disruptions, increased total logistics costs and weakened the operating conditions for local and regional operators. In L&T’s assessment, the net impacts of the reform are negative for the industry as a whole.
Finland’s new Government Programme strengthens the operating conditions for the recycling industry and, on the whole, is aligned with L&T’s objectives. The Government Programme will reduce the public sector’s role in waste management, restrict the activities public sector organisations in the waste management market and promote the development of the market for recycled raw materials by means of various market-based instruments. Finland is far behind the EU’s minimum target level with regard to the recycling of municipal waste and the recycling rate of materials. The current waste policy has created excess incineration capacity in Finland, which jeopardises recycling and hinders innovation. There is a need for effective market-based instruments in Finland to ensure the primacy of recycling and curb the incineration of waste.
The EU has continued the purposeful implementation of the European Green Deal under challenging circumstances. It appears that all of the key reforms will be completed during the term of the current European Commission. The extensive legislative reforms included in the European Green Deal will have a substantial impact on L&T’s business environment, and they support L&T’s business objectives in the medium and long term. Climate and energy policy have been increasingly complemented by initiatives to protect biodiversity, such as the Nature Restoration Law and the net zero emissions plan. The circular economy plays a central and critical role in both initiatives. Circular economy solutions promote the sustainable use of natural resources and thereby contribute not only to the mitigation of climate emissions but also the effort to curb biodiversity loss. L&T broadly supports the reforms related to the green transition and puts them into practice through the solutions it provides. From the perspective of business impacts, the key issue is how the reforms related to the green transition will be managed and implemented in Finland. The predictability and consistency of regulation has considerable significance for the industry as a whole.
The EU’s circular economy policy has also moved in the right direction as the focus of regulation has shifted to sustainable product design in the early stages of the value chain on the one hand, and strengthening the markets for recycled raw materials on the other hand. At present, the use of recycled raw materials is primarily voluntary, which means that recycled raw materials need to compete with virgin raw materials while having a very different cost structure.# Lassila & Tikanoja Annual Report 2023
Green transition initiatives and measures set more ambitious targets for the sustainability of business activities. The Corporate Sustainability Reporting Directive will increase the significance and weight of sustainability efforts for businesses. Sustainability requirements will be integrated into companies’ operating models, processes and reporting. Ensuring regulatory compliance will become an increasingly important criterion in procurement in the future. L&T takes a favourable stance towards these developments. They will improve the quality of sustainability efforts and enhance the comparability of sustainability between companies.
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Lassila & Tikanoja’s mission is to make the circular economy a reality. The company helps its customers achieve their sustainability goals. Climate change and biodiversity loss are megatrends and the mitigation of them creates business opportunities for L&T. Mitigating climate change and biodiversity loss requires circular economy actions from society, businesses and individuals. Businesses need responsible partners to support the transition to a circular economy and to improve the energy efficiency of properties. Cities continue to grow, and the expectations concerning the built environment are increasing, which creates demand for L&T’s services. Properties are expected to have long life spans, and changes in needs and the use of buildings over the years must be taken into account in maintenance and new construction.
L&T’s strategy, “A leader of the regenerative society”, is guiding the Group’s operations during the 2022–2026 strategy period. In October 2023, the Board of Directors of Lassila & Tikanoja completed a review of the company’s strategy. According to the revised strategy, the Environmental Services and Industrial Services divisions will seek growth especially by focusing on business opportunities related to the circular economy of materials. Growth will be sought through organic development and potential selected acquisitions. The Environmental Services division’s strong market position, broad customer base and significant material volumes provide a good basis for growing the materials business. As for material streams, the division will continue to focus on plastic, wood waste and metals, but opportunities related to other streams are also being explored. In the Industrial Services division, new business opportunities are emerging around the processing and value increase of industrial side streams, as well as the restoration of the built environment. Growth is also being sought in the Swedish market in industrial services and material value chains.
Facility Services Finland and Facility Services Sweden will focus on improving profitability. The company’s Board of Directors has decided to evaluate the strategic alternatives for Facility Services Finland and Facility Services Sweden as part of the company’s business portfolio development. All potential options are being considered, including a potential sale of the divisions.
The Group’s strong balance sheet and the favourable development of the contract portfolio in all business segments are creating excellent conditions for organic and inorganic growth during the strategy period. L&T wants to be the best sustainability partner for its customers and an excellent workplace for the best experts in its field. During the strategy period, L&T will invest in the renewal of operating models, which will enable even more cost-efficient service production. The company is continuously developing its material processing capabilities and the competence of its personnel in accordance with the principles of the circular economy.
L&T measures the success of its strategy by financial, sustainability and stakeholder targets.
Financial targets
| Indicator | Target 2023 | 2022 | 2023 |
|---|---|---|---|
| Annual growth in net sales, % | 5 | -5.0 | 3.9 |
| Return on capital employed, % (ROCE) | 15 | 10.3 | 10.4 |
| Gearing, % | Less than 125% | 69.3 | 75.9 |
Sustainability and stakeholder targets
| Measure | Target | 2022 | 2023 |
|---|---|---|---|
| Net Promoter Score, NPS | >50 by 2026 | 35 | 26 |
| Employee Net Promoter Score, eNPS | >50 by 2026 | 21 | 24 |
| Carbon footprint | -50% by 2030, using 2018 as the baseline | -36 % | -26 % |
L&T updated its environmental sustainability target in October 2023. The target is to halve the emissions of L&T’s own operations by 2030 from the level of 2018 and to reduce indirect (Scope 3) emissions by 18% by 2030 from the level of 2022. The company has set a target of net-zero emissions by 2045. The monitoring of the target will start from the beginning of 2024.
KEY FIGURES
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Healthy personnel
Responsible products and services
Emissions
Impacts
Employment and prevention of marginalisation
Mitigating climate change and biodiversity loss
Economic prosperity
People and management
Environment and production
Finances and governance
We make circular economy a reality
5 A performer of day-to-day services
We help make day-to-day life run more effectively
Builder and developer of the circular economy
We help to develop business operations and find new circular economy solutions
Change agent
We help society as a whole to advance towards full circularity
Lassila & Tikanoja Annual Report 2023
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We combat climate change, bring forward new solutions for the circular economy and promote social responsibility through employment.
We take care of our personnel and provide them with meaningful work and opportunities for development.
We aim for rapid growth in our business operations promoting sustainable development with our unique competence in the circular economy. In addition to pursuing organic growth, we invest in the markets of the future.
We support our customers’ responsibility, create excellent customer experiences and develop the best services in our industry.
We increase our customers’ properties value and user satisfaction
We recycle the materials of society
We improve energy efficiency
We utilize the side streams of industry and society
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Group net sales and financial performance
Net sales for 2023 amounted to EUR 802.1 million (844.1), a decrease of 5.0% year-on-year. Excluding the effect of the renewable energy sources business, net sales were on a par with the comparison period and the rate of organic growth was -0.9%.# FINANCIAL STATEMENTS
Adjusted operating profit was EUR 39.0 million (40.9), representing 4.9% (4.8%) of net sales. Operating profit was EUR 38.4 million (42.9), or 4.8% (5.1%) of net sales. Earnings per share were EUR 0.79 (0.83). Net sales increased in Industrial Services and decreased in the other divisions. Operating profit improved in Industrial Services and Facility Services Finland, and declined in Environmental Services and Facility Services Sweden. The result for the financial year was affected positively by the fair value of EUR 1.3 million of an interest rate swap being recognised in financial items due to the termination of the interest rate swap. The result for the period was also affected positively by L&T’s EUR 3.6 million (0.7) share of the profit of the joint venture Laania Oy. The operating profit for the comparison year was improved by a gain of EUR 4.3 million from the sale of the renewable energy sources business.
The full-year net sales of the Environmental Services division decreased to EUR 283.7 million (321.2) in 2023. Operating profit was EUR 27.1 million (30.3). Excluding the effect of the renewable energy sources business, net sales decreased by 1.2%. The renewable energy sources business was reported as a part of the Environmental Services division until the end of the second quarter of 2022. The focus of the Environmental Services division is heavily on corporate customers and producer responsibility organisation customers, and their number grew in the beginning of the year and stabilised during the fourth quarter. In the Environmental Services division, the decline in general economic activity was reflected in lower waste volumes and the prices of recycled raw materials throughout the year. The decrease in the prices and volumes of recycled raw materials burdened the net sales of the division and had a negative effect of EUR 4.5 million on the operating profit.
The Finnish Waste Act was amended in July 2021. Under the reform, municipalities take on a larger role in organising the collection of packaging material waste and biowaste from housing properties. As a consequence of the reform, L&T’s direct customer agreements with residential properties on the separate collection of packaging waste and biowaste are being transferred to municipalities for competitive bidding gradually between 1 July 2022 and 1 July 2025. As a result of municipalisation, EUR 40 million of the Finnish waste management market was moved out of the scope of free competition to municipal waste companies during 2022–2023. L&T estimates that based on decisions made by the end of year 2023, a further EUR 30 million will be moved out of the scope of free competition to municipal waste companies between 2024 and 2026. In the latter half of the year, the collection of packaging waste from residential properties was transferred to municipal waste companies in several geographical areas that are significant to L&T. L&T participates in the competitive tendering of municipal contracts. During 2023, the competitive tendering of municipal contracts is estimated to have amounted to EUR 15–20 million and the Group won municipal contracts amounting to EUR 8 million. Nevertheless, the change decreased additional sales and reduced the efficiency of L&T’s waste collection logistics increasing production costs. The change had a total negative impact of approximately EUR 2.5 million on operating profit in 2023. L&T aims to compensate for the impacts of municipalisation by growing the corporate customer business and continuing to improve the efficiency of operations during the next three years.
In the division, measures to improve operating efficiency and profitability were initiated during the latter half of the year. The employment relationship of approximately 50 salaried employees are being terminated as a result of change negotiations and other jointly agreed measures at the latest by the end of the first quarter of 2024. The division aims to shift its focus increasingly to the materials business in the circular economy value chain. Related assessments were initiated in the latter part of the year.
There is a significant systems renewal project under way in Environmental Services, which will also include the deployment of a new ERP system. The systems renewal project increased the division’s fixed costs throughout the year. The supplier of the ERP system was changed in 2022 and, during the period under review, the previous supplier paid a one-off compensation relating to the termination of the co-operation. Expenses capitalised during the co-operation with the previous supplier were written down on the balance sheet during the review period. The one-off compensation and the related costs and write-down did not have a significant effect on the division’s operating profit. The system is scheduled to enter the deployment stage in the second half of 2024. The total investment in the system projects is estimated at approximately EUR 16.9 million, approximately EUR 14.2 million of which was realised by the end of 2023.
The Industrial Services division’s full-year net sales in 2023 grew to EUR 141.0 million (132.0). Adjusted operating profit was EUR 14.0 million (13.6). Operating profit was EUR 13.8 million (12.7). Operating profit was reduced by a change of EUR 0.2 million in the fair value of the deferred consideration related to the acquisition of Sand & Vattenbläst i Tyringe AB (“SVB”) recognised in the fourth quarter of 2023. The change in the fair value is due to SVB’s improved result which increases the final acquisition price recognised as liability. In the comparison period, the fair value change recognised in the deferred consideration related to the acquisition reduced operating profit by EUR 0.8 million. Demand was strong in all the Industrial Services division’s business lines. The environmental construction business line was highlighted as a focus area in L&T’s renewed strategy in the autumn, and several large customer projects were carried out in the business line during the period under review. The business line has a strong position particularly in the market for demanding industrial soil remediation projects. The customer volume increased in hazardous waste services. In process cleaning in Finland, the demand related to annual maintenance breaks was strong, and the resource allocation was successful. Business operations in Sweden developed favorably despite the challenging market environment.
The full-year net sales of the Environmental Services division decreased to EUR 250.0 million (256.3) in 2023. Operating profit improved to EUR 4.4 million (-0.5). In Facility Services Finland, the measures initiated in the second half of 2022 to streamline the cost structure and improve operational efficiency continued in the division throughout the period under review. In the division, the efficiency of production improved and personnel turnover decreased in cleaning services. Good progress was achieved in digitalisation with the number of sites within the scope of data-driven cleaning increasing in 2023. In building technology services, the demand for energy efficiency services increased during the period under review. The rising costs caused by high inflation were, for the most part, passed on to customer prices.
The net sales of Facility Services Sweden amounted to EUR 133.2 million (140.4) in 2023. The decrease in net sales was due to the depreciation of the Swedish krona. Net sales denominated in Swedish krona increased. Operating profit declined to EUR -3.7 million (0.4). Operating profit before the amortisation of purchase price allocations of acquisitions was EUR -2.5 million (2.2).
| MEUR | 2023 | 2022 | Change % |
|---|---|---|---|
| Net sales | |||
| Environmental Services | 283.7 | 321.2 | -11.7 |
| Industrial Services | 141.0 | 132.0 | 6.8 |
| Facility Services Finland | 250.0 | 256.3 | -2.5 |
| Facility Services Sweden | 133.2 | 140.4 | -5.1 |
| Interdivisional net sales | -5.8 | -6.0 | |
| The Group total | 802.1 | 844.1 | -5.0 |
| Operating profit | |||
| Environmental Services | 27.1 | 30.3 | -10.6 |
| Industrial Services | 13.8 | 12.7 | 8.2 |
| Facility Services Finland | 4.4 | -0.5 | |
| Facility Services Sweden | -3.7 | 0.4 | |
| Group administration and others | -3.2 | 0.1 | |
| The Group total | 38.4 | 42.9 | -10.6 |
| Adjusted operating profit | |||
| Environmental Services | 27.1 | 30.3 | -10.6 |
| Industrial Services | 14.0 | 13.6 | 3.1 |
| Facility Services Finland | 4.4 | -0.5 | |
| Facility Services Sweden | -3.7 | 0.4 | |
| Group administration and others | -2.8 | -2.8 | |
| The Group total | 39.0 | 40.9 | -4.7 |
8 Lassila & Tikanoja Annual Report 2023
| % | 2023 | 2022 |
|---|---|---|
| Operating margin | ||
| Environmental Services | 9.5 | 9.4 |
| Industrial Services | 9.8 | 9.6 |
| Facility Services Finland | 1.8 | -0.2 |
| Facility Services Sweden | -2.8 | 0.3 |
| The Group total | 4.8 | 5.1 |
| Adjusted operating margin | ||
| Environmental Services | 9.5 | 9.4 |
| Industrial Services | 9.9 | 10.3 |
| Facility Services Finland | 1.8 | -0.2 |
| Facility Services Sweden | -2.8 | 0.3 |
| The Group total | 4.9 | 4.8 |
| MEUR | 2023 | 2022 |
|---|---|---|
| Gross capital expenditure | ||
| Environmental Services | 40.9 | 20.3 |
| Industrial Services | 17.5 | 34.6 |
| Facility Services Finland | 1.0 | 1.5 |
| Facility Services Sweden | 0.5 | 0.4 |
| Group administration and others | 1.2 | 1.3 |
| The Group total | 61.1 | 58.2 |
| MEUR | 2023 | 2022 |
|---|---|---|
| Capital employed | ||
| Environmental Services | 208.9 | 197.3 |
| Industrial Services | 92.2 | 95.2 |
| Facility Services Finland | 21.7 | 28.3 |
| Facility Services Sweden | 59.9 | 62.1 |
| Group administration and others | 43.2 | 54.4 |
| The Group total | 425.9 | 437.2 |
| % | 2023 | 2022 |
|---|---|---|
| Return on capital employed (ROCE) | ||
| Environmental Services | 13.5 | 14.4 |
| Industrial Services | 14.7 | 15.6 |
| Facility Services Finland | 19.4 | -0.8 |
| Facility Services Sweden | -5.9 | 0.8 |
| The Group total | 10.3 | 10.4 |
In 2023, net cash flow from operating activities amounted to EUR 93.6 million (71.8). Net cash flow after investments came to EUR 50.9 million (41.1). In the comparison period, net cash flow after investments was reduced by acquisitions, which had a total impact of approximately EUR 13 million. A total of EUR 5.1 million in working capital was released (EUR 6.2 million committed). At the end of the financial year, interest-bearing liabilities amounted to EUR 193.7 million (216.8). Net interest-bearing liabilities totalled EUR 160.9 million (167.3). The average interest rate on long-term loans, excluding lease liabilities, with interest rate hedging, was 4.0% (2.5%).
In the second quarter, the company refinanced a EUR 50 million bank loan that would have matured in the third quarter of 2024. The new bank loan is in the amount of EUR 40 million and will mature in the third quarter of 2026. In addition to the usual financial covenants, the new bank loan is linked to sustainability targets, namely L&T’s carbon footprint and accident frequency. The interest rate swap used by the company to convert part of the EUR 50 million bank loan into a fixed interest loan was terminated in connection with the refinancing of the bank loan. The fair value of the interest rate swap, EUR 1.3 million, was recognised in financial income in the second quarter. The company had no interest rate swaps at the end of the financial year.
In the third quarter, the company repaid the remaining amount of EUR 17.7 million of the bond issued in 2018. The EUR 100.0 million commercial paper programme was unused at the end of the financial year, as was the case in the comparison period. The account limit totalling EUR 10.0 million and the committed credit limit totalling EUR 40.0 million were not in use, as was the case in the comparison period.
Net financial expenses amounted to EUR -6.3 million (-5.8). Net financial expenses were increased by the rise in the general interest rate level, which was compensated by the fair value of EUR 1.3 million of an interest rate swap being recognised due to the termination of the interest rate swap. The effect of exchange rate changes on net financial expenses was EUR -0.0 million (-0.2). Net financial expenses were 0.8% (0.7%) of net sales. The equity ratio was 36.8% (34.3%) and the gearing ratio was 69.3% (75.9%). The Group’s total equity was EUR 232.2 million (220.4). Cash and cash equivalents amounted to EUR 32.9 million (49.5) at the end of the financial year.
Gross capital expenditure for 2023 came to EUR 61.1 million (58.2). The capital expenditure consisted primarily of machine and equipment purchases, as well as investments in information systems. Acquisitions accounted for approximately EUR 21 million of the gross capital expenditure in the comparison period.
Related-party transactions are accounted for in Note 5.4 Related-party transactions.
Net sales in 2024 are estimated to be at the same level as in the previous year, and operating profit is estimated to be at the same level or better compared to the previous year.
KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT
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FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT
Through sustainable circular economy solutions, L&T strengthens its competitiveness and creates diverse value for its key stakeholders. For L&T, sustainability means supporting customers’ sustainability efforts, reducing the environmental impacts of the Group’s own operations, promoting employee well-being and diversity, and ensuring the sustainability of L&T’s value chain. L&T’s business model, value creation and strategy are described in more detail on pages 3–4.
L&T is committed to supporting key declarations and agreements, such as:
* UN sustainable development principles since 2018
* Global Compact principles since 2018
* ILO Declaration on Fundamental Principles and Rights at Work
* Universal Declaration of Human Rights
* Commitments to sustainable development by societies
We have also set scientific climate targets approved by the Science Based Targets initiative and made a commitment to reducing the emissions generated by our own operations by 2030 in line with the target. We also encourage our partners to set their own emission reduction targets.
L&T updated its environmental sustainability target in October 2023. The target is to halve the emissions of our own operations by 2030 from the level of 2018 and to reduce indirect (Scope 3) emissions by 18% by 2030 from the level of 2022. The company has set a target of net-zero emissions by 2045. We are also committed to reporting on the climate impacts of our operations in accordance with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. Our report in accordance with the TCFD recommendations is provided on page 14 under “Risks and opportunities of climate change”.
At L&T, sustainability is integrated into the Group’s strategy. The Board of Directors monitors the progress of the Sustainability Programme annually through the Personnel and Sustainability Committee of the Board of Directors. The Committee discusses sustainability issues at least three times per year. The Personnel and Sustainability Committee met four times in 2023. In autumn 2023, the Board of Directors updated the charters of the Board’s committees with regard to sustainability issues. In 2024, the monitoring and evaluation of the development of sustainability in the Group and the results of the Group’s ESG assessments and analyses are new items on the charter of the Audit Committee.
The Personnel and Sustainability Committee focuses on monitoring and evaluating the development of the business environment and regulation, as well as stakeholder support. The committee monitors and evaluates sustainability-related target setting in the short and long term and discusses and prepares environmental, personnel-related and governance-related issues in the sustainability programme.
The Group Executive Board steers the implementation of the Sustainability Programme and monitors it quarterly. Development primarily takes place in business-driven working groups, but the Senior Vice President of Corporate Relations and Sustainability and the communications and sustainability organisation operating under his supervision are in charge of the practical coordination and reporting of sustainability efforts. The businesses and other functions are in charge of the responsibility and compliance of their operations in accordance with the Group’s management system. L&T’s management system has been certified in accordance with the ISO 9001, ISO 14001 and ISO 45001 standards. L&T’s policies and principles cover the environmental, ethical and social perspectives that the Group observes in both its own operations as well as in the services it produces for customers. The policies and principles are available to stakeholders on L&T’s website.
L&T takes an uncompromising approach to ensuring the compliance and sustainability of its operations. L&T observes its obligations regarding the environment and as an employer, and minimises the negative environmental impacts of its operations. L&T requires that its suppliers operate in accordance with the laws, regulations and its sustainability principles.
The development of L&T’s sustainability is driven by the Group’s sustainability programme. Approved by the Board of Directors, the programme takes into account the material aspects of L&T’s sustainability and sets measurable targets to be monitored. The focus areas of the programme have been determined based on the impacts of L&T’s operations, the expectations of key stakeholders and the Group’s strategic priorities. L&T has also taken into account the special characteristics of the operations and business environment of a service company in the environmental sector as well as the UN’s Sustainable Development Goals and the objectives of the Global Compact initiative. The key sustainability targets laid out in the sustainability programme, meaning the Group’s climate impacts, customer satisfaction and employee recommendation rate, have been incorporated into L&T’s long-term strategic goals.
In its decision-making and administration, Lassila & Tikanoja complies with the Finnish Companies Act, other regulations governing listed companies, the Articles of Association of Lassila & Tikanoja plc, the charter of L&T’s Board of Directors and its committees, and the rules and guidelines of Nasdaq Helsinki Ltd. L&T’s operations are also guided by the policies and operating principles approved by the Board of Directors or the Group Executive Board.# Sustainable development and statement of non-financial information
KEY FIGURES
FINANCIAL STATEMENTS
REPORT BY THE BOARD OF DIRECTORS
CORPORATE GOVERNANCE
REMUNERATION REPORT
SUSTAINABILITY REPORT
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FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
REMUNERATION REPORT
SUSTAINABILITY REPORT
To ensure compliance in its operations, L&T has documented its ethical princi- ples in its Code of Conduct for the company’s personnel and contract suppliers. People managers and supervisors are responsible for ensuring the personnel’s familiarity with the Code of Conduct and monitoring compliance with the guide- lines. Violations of the Code of Conduct are primarily reported to one’s immediate supervisor, who assists in the interpretation of the code in ambiguous situations. Employees, suppliers and subcontractors can also send a message to a con- fidential whistleblowing channel. The channel is available in all of the Group’s operating countries. L&T responds to all incidents of non-compliance without delay, in accordance with a jointly agreed process.
Managing sustainability-related risks is part of L&T’s comprehensive risk man- agement. The risk management process is described in the Corporate Govern- ance Statement on pages 97–103, and the key risks are explained under “Risks and risk management” on pages 15–17.
L&T reports on its sustainability efforts and related progress quarterly in con- nection with interim reports and more extensively on an annual basis in the sus- tainability report published as part of the Annual Report. The sustainability report for 2023 has been drawn up in accordance with GRI (Global Reporting Initiative) standards. The key performance indicators for environmental responsibility and respon- sibility for personnel that are reported in the sustainability report are verified by a third party. L&T’s sustainability report starts on page 81 and is also available at vuosikertomus.lt.fi/en.
The focus of L&T’s public affairs activities is on ensuring the operating condi- tions of the circular economy. L&T is a member of nearly a hundred local, regional, national and EU-level interest organisations. More information on the organisa- tions, programmes, projects and networks L&T participates in is provided on our website at https://www.lt.fi/en/responsibility/managing-sustainability/activi- ties-in-organisations.
A materiality analysis determines the focus areas of L&T’s sustainability pro- gramme and sustainability efforts and guides the Group’s work and actions related to sustainability. The assessment of materiality is an ongoing process. The material aspects of L&T’s sustainability are based on the key impacts of the Group’s operations and the expectations of stakeholders. In 2022 and 2023, L&T assessed its key stakeholders’ – including employees, customers and communities – expectations and views concerning the Group’s sustainability efforts.
GOOD GOVERNANCE
We act responsibly and transparently throughout the value chain.
TOGETHER TOWARDS FULL CIRCULARITY
Together with our customers, we work to mitigate climate change and the loss of biodiversity. Our job is to keep the materials in circulation for as long as possible and to introduce solutions for the sustainable use of the built environment.
EMPLOYED BY TOMORROW
At L&T, everyone is free to be themselves. We treat each other and our suppliers fairly. We want our employees to enjoy good health and well-being, which is why we invest in well-being at work and occupational safety.
WE MAKE CIRCULAR ECONOMY A REALITY
| CUSTOMERS | OWN OPERATIONS | SUPPLY CHAIN |
|---|---|---|
| KEY FIGURES | FINANCIAL STATEMENTS | REPORT BY THE BOARD OF DIRECTORS |
| CORPORATE GOVERNANCE | REMUNERATION REPORT | SUSTAINABILITY REPORT |
11 Lassila & Tikanoja Annual Report 2023
FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
REMUNERATION REPORT
SUSTAINABILITY REPORT
| Stakeholder | Key areas of interest in 2023 | Responding to expectations # SUSTAINABILITY REPORT
L&T’s stakeholder engagement is focused on the stakeholders who are the most affected by the impacts of our operations and whose actions have the greatest influence on the achievement of our business objectives and sustainability targets. Stakeholder expectations are taken into account in L&T’s strategy development and business choices. Our key stakeholders include our customers, current and potential employees, and investors, as well as national and regional policymakers and influencers, non-governmental organisations, the media and suppliers and subcontractors. We engage in active dialogue with our key stakeholders. We regularly measure stakeholder support, as well as customer satisfaction and employee satisfaction, for example. Through dialogue and measurements, we identify stakeholder expectations and determine what development measures are necessary. We have summarised our stakeholder expectations in three key perspectives.
L&T’s environmental responsibility is realised particularly through the services it produces for customers. The primary goal is always to direct materials collected from customers towards reuse or recycling, guided by the order of priority as stipulated by law and the circular economy approach. L&T requires the sustainable management of environmental issues of its partners and suppliers. This requirement is factored into the procurement process, for example in the form of self-assessments. Waste is only handed over to operators that are authorised to receive or process it. Acquisitions are subject to detailed due diligence processes. L&T’s goal is to improve its customers’ energy and material efficiency and to increase the carbon handprint of its operations. This is achieved when customers replace primary raw materials with secondary raw materials as well as fossil fuels with solid recovered fuels (SRF). As the carbon handprint of L&T’s operations increases, the carbon footprint of its customers decreases. L&T thereby supports its customers in reaching their environmental goals.
In 2023, the focus of L&T’s environmental efforts was on the climate impacts of the supply chain and preparations for the EU’s Corporate Sustainability Reporting Directive. Good progress was made towards the Group’s climate targets for its own operations in spite of the challenging business environment. During the year, investments were made in low-emission vehicles, and route optimisation and driving style training were continued. The use of renewable fuels was significantly increased. Transport operations account for 97 per cent of the emissions generated by L&T’s own operations.
Professional waste treatment operations are subject to environmental permits and regulatory compliance. In 2023, L&T had 54 (53) environmental permits that determined how the Group managed and monitored environmental matters. Facilities subject to environmental permits have contingency plans and rescue plans that specify how they are prepared for significant environmental incidents. Environmental issues are also covered in regularly conducted internal audits. L&T’s objective is that no serious incidents of environmental damage result from the Group’s own operations. This target was achieved in 2023.
To reduce the environmental impact of the materials collected from customers and to promote the circular economy, L&T strives to find new solutions to recover materials at the highest possible refining rate and in accordance with the order of priority in waste management. L&T updated the climate targets for the supply chain and set separate emission reduction targets for subcontracted transport operations in spring 2022. The Group continued to communicate these targets to the supply chain in 2023. The target is to reduce the transport emissions of subcontracted operations by 30 per cent by 2030, using 2020 as the baseline. At the same time, L&T continued to engage the supply chain in the pursuit of the science-based emission reduction target. The target is for 70 per cent of the largest suppliers and subcontractors (based on spending) to set targets for reducing their emissions by 2025.
TCFD reporting is provided on page 14. Environmental risks and their management are described in more detail under “Risks and risk management”. More information on L&T’s environmental responsibility is provided in the sustainability report on page 81.
| Full-time and part-time, total | 2023 | 2022 |
|---|---|---|
| Finland | 6,891 | 7,020 |
| Sweden | 1,268 | 1,351 |
| Total | 8,159 | 8,371 |
As a major employer and service enterprise, the focus of L&T’s social responsibility is on the Group’s employees. The material aspects of L&T’s responsibility for its employees include increasing job satisfaction, strengthening the work ability of the personnel, developing diversity and improving occupational safety. The Group also wants to actively work to promote the employment of special groups, such as people with reduced work ability.
L&T does not tolerate any kind of discrimination, harassment, bullying, racism or inappropriate treatment or the use of child labour, any form of forced labour or any other practices in violation of basic human rights in its own operations or as part of its supply chain. L&T observes the Universal Declaration of Human Rights, workers’ rights as defined by the International Labour Organisation, and international agreements. National legislation, agreements and other obligations are applied in employment relationships. L&T respects its employees’ freedom to unionise. L&T monitors compliance with collective agreements, environmental legislation, labour law, occupational safety legislation and regulations pertaining to financial management. L&T is also compliant with the applicable legislation governing contractors’ obligations and liability, and requires the same of its suppliers. The operations are guided by the Group’s personnel policy, the ISO 45001-certified management system, the principles governing occupational safety management and the Code of Conduct.
L&T’s strategic objective is to increase the Employee Net Promoter Score (eNPS) to 50 by 2026. Employee satisfaction is measured by means of a personnel satisfaction survey which goes by the name Fiilinki in Finland and Pulsen in Sweden. As part of work ability management, L&T’s targets are to reduce sickness-related absences to 4.5 per cent and achieve an employee health rate of 45 per cent. To achieve the target set for sickness-related absences, L&T will continue the purposeful implementation of the action plan for promoting health. In occupational safety, L&T pursues continuous improvement with an ultimate goal of zero accidents. L&T will continue its purposeful development efforts to engage employees in the promotion of safety. There were no reported fatal accidents and no occupational disease diagnoses at L&T in 2023.
L&T aims to ensure that no violations occur in its activities, and the Group emphasises the importance of regulatory compliance in its business operations. L&T is committed to supporting the UN Global Compact initiative and its anti-corruption principles. The prevention of corruption and bribery is based on national legislation and agreements.
| Indicator | Target | 2023 | 2022 |
|---|---|---|---|
| Environmental matters | |||
| Carbon footprint (SBT) Scope 1 & 2 (gCO 2 -ekv/km) | -50% by 2030, using 2018 as the baseline | -36% | -26% |
| Carbon handprint intensity (tCO 2 -ekv/MEUR) | Grows faster than net sales | -570 | -633 |
| Recycling rate (reporting covers municipal waste collected from corporate customers, hazardous waste, industrial waste and construction waste in Finland.) | 60% by 2026 | 57.8% | 59.4% |
| Social | |||
| Employee Net Promoter Score, eNPS | >50 by 2026 | 21 (October) | 24 (October) |
| Sickness-related absences, % | 4.5% by 2026 | 5.1 | 5.6 |
| Total recordable incident frequency (TRIF) | 20 by 2026 | 23 | 23 |
| Governance | |||
| Code of Conduct training for L&T employees | All new L&T employees complete Code of Conduct training during their trial period | 94% of salaried employees (Finland), 616 persons (Sweden) | 58% of salaried employees (Finlandi), 675 persons (Sweden) |
KEY FIGURES
FINANCIAL STATEMENTS
REPORT BY THE BOARD OF DIRECTORS
CORPORATE GOVERNANCE
REMUNERATION REPORTSUSTAINABILITY REPORT
14 Lassila & Tikanoja Annual Report 2023
FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
REMUNERATION REPORTSUSTAINABILITY REPORT
L&T has a defined risk management process that includes a review of financial, strategic, operational and damage-related risks. L&T has also assessed climate-related risks and opportunities as part of the risk management system in accordance with TCFD reporting. Key risk management principles Risk management at L&T aims to identify significant risk factors, prepare for them and manage them in an optimal way so that the Group’s strategic and financial objectives are achieved. Comprehensive risk management endeavours to manage the Group’s risk as a whole, not just individual risk factors.# Risks and Opportunities
The risk management process also aims to assess the opportunities associated with risks.
The principles of L&T’s risk management are approved by the company’s Board of Directors. The Board monitors the implementation of risk management and assesses the efficiency of the methods employed. The President and CEO is responsible for the organisation and implementation of risk management. Risk management at L&T Group is controlled by the risk management and insurance policy confirmed by L&T’s Board of Directors. The policy specifies the objectives and principles, organisation and responsibilities, and procedures of the Group’s risk management. The Group’s financing policy confirmed by L&T’s Board of Directors is followed in the management of financial risks. The principles for insurance risk management are specified in the Risk Management and Insurance Policy.
Risks are surveyed regularly and systematically at both division and company level and in central functions considered to be critical. The significance of risks is assessed using a risk matrix. Measures for managing and minimising the identified risks are prepared, and responsibility for these measures is allocated to specified individuals or units. The impact of risks is analysed in terms of their effects on EBIT, among other things, and the assessment of the probability of the realisation of the risks takes into account the nature of operations and the risk mitigation measures taken by the Group. The most significant identified risks, and the preparations for those risks, are regularly reported to the President and CEO and the Board of Directors.
The section Strategic and operative risks describes the most important strategic, operational and damage-related risks of L&T’s business which, if realised, can endanger or prevent the achievement of business objectives. Financial risks and their management are described in note 4.2 to the consolidated financial statements.
L&T reports on the risks and opportunities related to climate change in accordance with the TCFD (Task Force for Climate-related Financial Disclosures) recommendations. Due to the nature of our operations, L&T plays a significant role in the mitigation of climate change and the transition towards a low-carbon circular economy. Our operations have a large carbon handprint, which means that we generate significant emission reductions for our customers. TCFD reporting has been taken into account in our review in accordance with the table provided on this page.
| Risks and risk management | TCFD information | Report contents |
|---|---|---|
| Governance | Board of Directors’s duties related to managing risks and opportunities related to climate change | Risks and risk management, pp. 14–15 |
| Scenario analysis is part of the strategy process | p. 15 | |
| The management’s duties related to managing risks and opportunities related to climate change | Sustainability management, p. 9 | |
| Risks and risk management, pp. 14–15 | ||
| Strategy | Climate-related risks and opportunities in the short, medium and long term | Climate-related risks and opportunities, pp. 14–15 |
| The impacts of climate-related risks and opportunities on business operations, strategy and financial planning | Strategy, p. 4 | |
| Climate-related risks and opportunities, pp. 14-15 | ||
| The flexibility of the strategy with regard to different climate scenarios | Scenario analysis is part of the strategy process, p. 15 | |
| Risk management | Processes for the identification and assessment of climate-related risks | Scenario analysis is part of the strategy process, p. 15 |
| Climate risk management methods | Scenario analysis is part of the strategy process, p. 15 | |
| How are the identification, assessment and management of climate-related risks connected to the organisation’s other risk management activities | Climate-related risks and opportunities, pp. 14–15 | |
| Indicators and targets | Indicators used to assess climate risks and opportunities | Statement of non-financial information, p. 9 onwards |
| Sustainability report, pp. 81–86 |
15 Lassila & Tikanoja Annual Report 2023
The mitigation of climate change is a strategic priority for L&T. Our businesses produce solutions that facilitate the transition towards a low-carbon circular economy, promote the sustainable use of materials, energy and natural resources as well as reduce the volume of waste generated and energy consumed. We support our customers by enhancing the use of energy and materials and by replacing fossil fuels with solid recovered fuels. Furthermore, we support our customers in the mitigation of climate impacts by optimising the use of properties and their technical systems. L&T has the strong market position required for the implementation of such changes in all of its business areas.
In assessing climate-related risks, L&T has evaluated its transition risks (regulatory, technology-related and reputational risks) and physical risks, as well as their impacts on the Group’s operations. The most significant transition risks concern changes that affect carbon neutrality targets for transport or the promotion of the circular economy. The assessment takes into account, for example, the development of prices for emission rights and carbon emissions, different scenarios of the integration of bioeconomy and low-carbon economy, the EU’s circular economy package, changes in national waste legislation, national recycling and reuse goals by industrial sector and waste fraction as well as the planned investments in the energy sector. The impacts of changes in weather on occupational safety, for example, have been assessed in general as part of physical risks.
L&T’s mission is to make the circular economy a reality. Transitioning to a resource-efficient circular economy is essential for the mitigation of global warming. We support this transition by improving the material, energy and cost efficiency of our customers and by ensuring that materials and the built environment retain their value. Our solutions enable our customers to reduce their waste volumes, extend the life-cycle of their properties, recycle and reuse materials, reduce the consumption of natural resources, fossil fuels and energy and thereby reduce their emissions. We research new technologies and solutions that allow our customers to reduce their climate impacts even more efficiently. New projects that increase the processing rate of various material flows promote the circular economy and improve the carbon handprint of L&T’s operations.
The monitoring of the outcomes of climate change related to our business operations is integrated in L&T’s strategy process. We have assessed the impacts of climate change on L&T’s business operations both during the five-year strategy period and in the long term until 2035. The assessment method is based on the qualitative evaluation of uncertainties in our business environments and the creation of qualitative scenarios about our business environment based on the changes with the highest degree of uncertainty and the financial impact. In addition, we have applied the IPCC scenarios of climate warming of 1.5°C, less than 2°C and 4°C by the end of the century (RCP 2.6 and RCP 6.0), which have been assessed in relation to the latest climate research data on changes in weather in Finland. We have also applied the International Energy Agency’s (IEA) background data (IEA 2DS, NZE2050 and STEPS). L&T is able to change its business model flexibly according to the different climate scenarios. The reference scenario was a business environment where the status quo supports the 1.5°C climate path in the short term. In connection with our strategy review, we increased the ambition of L&T’s climate targets in autumn 2023. Our long-term climate target is net zero emissions by 2045. The business effects of climate change were assessed in the different scenarios through aspects of change in the industry related to regulation, the business model and technological development. The assessment indicated that L&T’s updated climate targets, the actions aimed at achieving the targets and the separate climate targets set for the supply chain are in line with the observations made in the scenario analysis. L&T manages transition risks by assessing market changes and responding to them in a timely manner. In addition, we take a proactive approach to influencing regulatory developments in their preparatory stages through the industry’s key advocacy organisations, for example. The alternative strategic scenarios were presented to the Board of Directors as a part of the strategy process. The mitigation of climate change provides L&T’s business operations with strategic development opportunities.
General economic uncertainty may affect the level of economic activity among customers, which may reduce the demand for L&T’s services. Higher costs, such as the rising prices of fuel and energy, and potential changes in interest rates may have an impact on the company’s financial performance. The Finnish Waste Act was amended in July 2021. Under the reforms to the Waste Act, municipalities take on a larger role in organising the collection of packaging waste materials and biowaste from residential properties. As a consequence of the reform, L&T’s direct customer agreements with residential properties on the separate collection of packaging waste and biowaste will be transferred to municipalities for competitive bidding gradually between 1 July 2022 and 1 July 2025.# KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT
As a result of municipalisation, approximately EUR 30 million of the Finnish waste management market will be moved out of the scope of free competition and to municipally owned companies between the years 2024-2026. The Environmental Services division participates in competitive tendering for municipal contracts and is a significant player in municipal contracts, but the Group estimates that the overall impact of the change will be negative. The company has several ERP system renewal projects under way. Temporary additional costs arising from system deployments and establishing the operating model may weigh down the company’s result. Production costs may be increased by challenges related to employee turnover and labour availability. The geopolitical situation involves continued uncertainty due to Russia’s war of aggression. The indirect impacts on overall economic activity in Finland and Sweden may have a negative impact on net sales and profit. The Group company Lassila & Tikanoja FM AB is a claimant and a defendant in legal proceedings in Sweden concerning unpaid receivables invoiced from a former customer of the Group. In June 2022, Lassila & Tikanoja FM AB took legal action in the District Court of Solna against the former customer company of L&T, demanding payment for unpaid receivables. At the balance sheet date, the carrying amount of the receivables in the Company’s balance sheet was approximately EUR 1.5 million. L&T’s former customer company in question has rejected Lassila & Tikanoja FM AB’s claims and the payment obligation, and brought a counterclaim demanding compensation totalling approximately SEK 116 million from Lassila & Tikanoja FM AB. The dispute is still pending. Lassila & Tikanoja considers the counterclaim to be without merit and has not recognised any provisions in relation to it.
| Risk | Risk description | Risk management # KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT
There were no changes in Lassila & Tikanoja’s share capital and number of shares in 2023. The registered share capital of the company is EUR 19,399,437. The number of shares is 38,798,874. The average number of shares excluding the shares held by the company was 38,126,791. Each share carries one vote. The Articles of Association do not set an upper limit on the share capital and number of shares. A share has neither a nominal value nor a book equivalent value. The company’s shares are included in the book-entry system of securities maintained by Euroclear Finland Ltd. Euroclear Finland maintains the company’s official list of shareholders.
At the end of the review period, the company had 24,959 (24,956) shareholders. Nominee-registered holdings accounted for 10.2% (7.0%) of the total number of shares.
The members of the Board, the President and CEO and the Executive Board, and organisations under their control held a total of 178,860 shares in the company on 31 December 2023, representing 0.5 per cent of the total number of shares and votes. Lassila & Tikanoja plc transferred 8,484 shares to the members of the Board of Directors as a part of their annual fee based on a decision made by the Annual General Meeting on March 23, 2023.
In December 2022, the Board of Directors of Lassila & Tikanoja Plc decided to establish two new long-term share-based incentive plans for the Group’s key employees. The aim of the new plans is to align the objectives of the company, shareholders and key employees in order to increase the value of the company in the long term, to retain the key employees at the company and to offer them competitive reward plans that are based on earning and accumulating the company’s shares as well as on appreciation of the share price.
The Performance Share Plan 2023–2027 comprises three (3) three-year (3) performance periods covering the calendar years 2023–2025, 2024–2026 and 2025–2027. During the performance period 2023–2025, the earning of rewards is based on the following performance criteria: return on capital employed (ROCE), total shareholder return (TSR) and reduction of the carbon footprint (ESG). The target group of the Performance Share Plan during the performance period 2023–2025 consists of approximately 38 key employees, including the Group’s President and CEO and the Group Executive Board.
During the performance period 2024–2026, the earning of rewards is based on the following performance criteria: return on capital employed (ROCE), total shareholder return (TSR) and reduction of the carbon footprint (ESG). The target group of the Performance Share Plan during the performance period 2024–2026 consists of approximately 50 key employees, including the Group’s President and CEO and the Group Executive Board.
The transitional share-based incentive scheme 2023–2026 consists of two (2) earnings periods of one (1) year each, corresponding to the calendar years 2023 and 2024. The earnings period is followed by a two-year commitment period. The aim of the scheme is to support the transition from the old share-based incentive scheme to the new share-based incentive scheme. The earning of rewards for the 2023 and 2024 earnings periods is based the return on capital employed (ROCE) and the reduction of the carbon footprint (ESG). The target group of the transitional share-based incentive scheme for the earnings periods 2023 and 2024 consists of approximately 10 key employees, including the Group’s President and CEO and the Group Executive Board.
The company’s shares are quoted on the mid-cap list of Nasdaq Helsinki Oy in the Industrials sector. The trading code is LAT1V and the ISIN code is FI0009010854. The volume of trading in 2023 was 5.6 million shares, which is 14.8% (24.7%) of the average number of outstanding shares. The value of trading was EUR 57.1 million (104.9). The highest share price was EUR 11.84 and the lowest EUR 9.00. The closing price was EUR 9.80. At the end of the financial year, the market capitalisation excluding the shares held by the company was EUR 373.9 million (405.9).
At the end of the period, the company held 644,772 of its own shares, representing 1.7% of all shares and votes.
On 26 June 2023, Lassila & Tikanoja plc received a notification indicating that Mandatum Life Insurance Company Limited’s shareholding in Lassila & Tikanoja fell below the 5% threshold on 26 June 2023.
The Annual General Meeting of Lassila & Tikanoja plc, which was held on 23 March 2023, adopted the financial statements and consolidated financial statements for the financial year 2022, discharged the members of the Board of Directors and the President and CEO from liability and adopted the remuneration report for the company’s governing bodies.
| Number of shareholders | Percentage | Number of shares | Percentage of shares and votes | |
|---|---|---|---|---|
| Corporations and housing associations | 969 | 3.9 | 3,313,983 | 8.5 |
| Financial and insurance corporations | 52 | 0.2 | 8,038,704 | 20.7 |
| General government | 18 | 0.1 | 2,870,789 | 7.4 |
| Households | 23,616 | 94.6 | 16,373,171 | 42.2 |
| Non-profit institutions serving households | 228 | 0.9 | 6,536,627 | 16.9 |
| Foreign shareholders | 76 | 0.3 | 980,300 | 2.5 |
| Shares not transferred to the book-entry securities system | 0 | 40,528 | 0.1 | |
| Own shares | 1 | 644,772 | 1.7 | |
| Total | 24,960 | 100 | 38,798,874 | 100 |
| Nominee-registered | 10 | 3,955,057 | 10.2 |
| Number of shares | Percentage | Number of shares | Percentage of shares and votes | |
|---|---|---|---|---|
| 1–1 000 | 22,419 | 89.8 | 4,863,609 | 12.5 |
| 1,001–5,000 | 2,081 | 8.3 | 4,435,768 | 11.4 |
| 5,001–10,000 | 241 | 1.0 | 1,732,461 | 4.5 |
| 10,001–100,000 | 183 | 0.7 | 5,127,604 | 13.2 |
| 100,001–500,000 | 21 | 0.1 | 4,243,534 | 10.9 |
| over 500,000 | 13 | 0.1 | 17,710,598 | 45.7 |
| Shares not transferred to the book-entry securities system | 0 | 40,528 | 0.1 | |
| Own shares | 1 | 644,772 | 1.7 | |
| Total | 24,960 | 100 | 38,798,874 | 100 |
| Nominee-registered | 10 | 3,955,057 | 10.2 |
| Shareholder | Number of shares | Percentage of shares and votes | |
|---|---|---|---|
| 1 | Evald ja Hilda Nissi’s Foundation | 3,496,487 | 9.0 |
| 2 | Nordea Funds Ltd | 1,685,538 | 4.3 |
| 3 | Mandatum Life Insurance Company Limited | 1,547,264 | 4.0 |
| 4 | Maijala Juhani | 1,529,994 | 3.9 |
| 5 | Stiftelsen för Åbo Akademi | 1,066,282 | 2.8 |
| 6 | Bergholm Heikki | 875,000 | 2.3 |
| 7 | Ilmarinen Mutual Pension Insurance Company | 790,000 | 2.0 |
| 8 | Varma Mutual Pension Insurance Company | 729,791 | 1.9 |
| 9 | Maijala Mikko | 720,000 | 1.9 |
| 10 | Lassila & Tikanoja plc | 644,772 | 1.7 |
| 11 | Elo Mutual Pension Insurance Company | 538,000 | 1.4 |
| 12 | The State Pension Fund | 512,000 | 1.3 |
| 13 | Turjanmaa Kristiina | 505,310 | 1.3 |
| 14 | Kaleva Mutual Pension Insurance Company | 400,000 | 1.0 |
| 15 | Seligson & Co. Investment Funds | 382,783 | 1.0 |
| 16 | Oy Chemec Ab | 356,320 | 0.9 |
| 17 | Maijala Eeva | 346,000 | 0.9 |
| 18 | Samfundet folkhälsan i Svenska Finland rf | 336,800 | 0.9 |
| 19 | Security Trading Oy | 240,000 | 0.6 |
| 20 | OP-Pohjola Group | 196,933 | 0.5 |
| 20 largest owners total | 16,899,274 | 43.6 |
• L&T’s own climate targets, the actions aimed at achieving the targets and the separate climate targets set for the supply chain are in line with the observations made in the scenario analysis. L&T manages transition risks by assessing market changes and responding to them in a timely manner. In addition, we take a proactive approach to influencing regulatory developments in their preparatory stages through the industry’s key advocacy organisations, for example.
• Systematic environmental surveys of plants, preventive maintenance plans for equipment, audits and the long-term training of personnel.
• Insurance.
• Safety is a key priority in work at L&T, and potential accidents are among the most significant social risks.
• Possible cases of deficiencies in respecting human rights, such as inappropriate behaviour, harassment, unequal operating practices, working conditions and all types of discrimination on L&T’s own operation may lead to court proceedings, liability to damages and create a reputation risk.
• Comprehensive training, communication, safety management guidelines and principles, as well as regular safety surveys and proactive safety efforts.
• Diversity training and other training for supervisors, process and instructions related to the prevention of harassment and discrimination.
• Compliance with legislation and collective agreements. Careful evaluation of risks and preventive measures that are conducted based on risk assessment.
• Possible deficiencies related to human rights, such as deficiencies in working conditions, harassment, racism, discrimination and other unethical conduct in L&T’s supply chain may create a reputation risk.
• Careful compliance with legislation and collective agreements.
• Whistleblowing channel available on the intranet and the Group website.
• L&T mainly operates in Finland and Sweden with local partners, and the risk of human rights violations is low in these countries.# Annual General Meeting resolutions
The Annual General Meeting resolved on the use of the profit shown on the balance sheet and the payment of dividend, the composition and remuneration of the Board of Directors, the election and remuneration of the auditor, amendment of Articles of Association, and authorising the Board of Directors to decide on the repurchase of the company’s own shares and on a share issue and the issuance of special rights entitling to shares.
The Annual General Meeting resolved that a dividend of EUR 0.47 per share be paid on the basis of the balance sheet to be adopted for the financial year 2022. It was decided that the dividend be paid on 3 April 2023.
The Annual General Meeting confirmed the number of members of the Board of Directors as six in accordance with the proposal of the Shareholders’ Nomination Board. Teemu Kangas-Kärki, Laura Lares, Sakari Lassila, Jukka Leinonen and Pasi Tolppanen were re-elected, and Anni Ronkainen was elected as a new member, to the Board for a term ending at the conclusion of the next Annual General Meeting. Jukka Leinonen was elected as the Chairman of the Board and Sakari Lassila was elected as the Vice Chairman.
The Annual General Meeting elected PricewaterhouseCoopers Oy, Authorised Public Accountants, as the company’s auditor. PricewaterhouseCoopers Oy has announced that it will name Samuli Perälä, Authorised Public Accountant, as the principal auditor.
The Annual General Meeting resolved to amend Article 10 of the Articles of Association to enable the holding of a general meeting without a meeting venue, as a remote meeting. The resolutions of the Annual General Meeting were announced in more detail in a stock exchange release on 23 March 2023.
The Annual General Meeting held on 23 March 2023 authorised Lassila & Tikanoja plc’s Board of Directors to decide on the repurchase of the company’s own shares using the company’s unrestricted equity. In addition, the Annual General Meeting authorised the Board of Directors to decide on a share issue and the issuance of special rights entitling their holders to shares.
The Board of Directors is authorised to purchase a maximum of 2,000,000 company shares (5.2% of the total number of shares). The repurchase authorisation is effective for 18 months.
The Board of Directors is authorised to decide on the issuance of new shares or shares that may be held by the company through a share issue and/or issuance of option rights or other special rights conferring entitlement to shares, referred to in Chapter 10, Section 1 of the Finnish Companies Act, so that under the authorisation, a maximum of 2,000,000 shares (5.2% of the total number of shares) may be issued and/or conveyed. The authorisation is effective for 18 months.
On 11 January 2024, the company announced that Lassila & Tikanoja’s Shareholders’ Nomination Board proposes to the Annual General Meeting to be held on 21 March 2024 that the Board of Directors have seven (7) members. The Nomination Board proposes that Teemu Kangas-Kärki, Laura Lares, Sakari Lassila, Jukka Leinonen, Anni Ronkainen and Pasi Tolppanen be re-elected to the Board of Directors and that Juuso Maijala be elected as a new member. A presentation of Juuso Maijala is available on L&T’s website. In addition, the Nomination Board proposes that Jukka Leinonen be elected as Chairman of the Board of Directors and Sakari Lassila as Vice Chairman.
On 31 March 2023, the company announced that Tina Hellstadius, the Senior Vice President for Facility Services Sweden, would leave Lassila & Tikanoja on 31 March 2023. On 18 April 2023, the company announced that Mikko Taipale (Master of Laws) had been appointed Senior Vice President, Facility Services Sweden and a member of the Group Executive Board effective from 19 April 2023.
The amount of dividend is tied to the results for the financial year. Profits not considered necessary for ensuring the healthy development of the company are distributed to shareholders.
In 2023, the Group’s earnings per share were EUR 0.79 (0.83) and net cash flow from operating activities after investments per share amounted to EUR 1.33 (1.08). The Board of Directors will propose a dividend of EUR 0.49 per share to the Annual General Meeting to be held on 21 March 2024. A dividend of EUR 0.47 per share was paid for the financial year 2022.
20 Lassila & Tikanoja Annual Report 2023
FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
REMUNERATION REPORT
SUSTAINABILITY REPORT
The EU taxonomy is a classification system for environmentally sustainable economic activities. It is a framework for channelling investments into more sustainable activities through technical assessment criteria, environmental objectives, Do No Significant Harm (DNSH) criteria and minimum safeguards.
In this section, Lassila & Tikanoja will publish information in accordance with the following regulation; Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (Taxonomy Regulation).
The implementation of the Taxonomy Regulation is taking place over several stages. The first Delegated Act, namely the Climate Act, was implemented in 2021, and it sets out technical screening criteria for two environmental objectives: climate change mitigation and climate change adaptation, which have been described in the taxonomy. In their reporting on 2021, companies were required to publish information on taxonomy-eligible economic activities’ share of net sales, capital expenditure (investments) and operating expenditure. Taxonomy eligibility applies to activities that are within the scope of the Climate Act.
In the 2022 reporting, companies had to assess taxonomy alignment. Taxonomy alignment requires that taxonomy-eligible activities meet the detailed technical screening criteria, DNSH criteria and meet the minimum safeguards specified in the Taxonomy Regulation.
In 2023, the European Commission published new classification system activities for the four remaining environmental objectives. In this regard, L&T will report on taxonomy eligibility and, on a voluntary basis, taxonomy alignment in 2023. This compliant and voluntary data is presented in the same table.
According to the Taxonomy Regulation, the companies that are required to report in accordance with the Non-Financial Reporting Directive (2014/95/EU) must comply with the reporting requirements of the Taxonomy Regulation. This requirement applies to L&T.
L&T has assessed the taxonomy eligibility and taxonomy alignment of its activities. The EU taxonomy assessment has been conducted for net sales generated by business operations (note 1.2 to the financial statements), capital expenditure and operating expenditure related to climate change mitigation, the transition to a circular economy, the sustainable use and protection of water and marine resources, and pollution prevention and control.
The financial indicators concerning the taxonomy are based on figures extracted from L&T’s financial management systems and ERP systems. For capital expenditure and operating expenditure, data from 2023 was analysed and compared to the screening criteria. Capital expenditure takes into account L&T’s gross capital expenditure. Taxonomy eligibility and alignment assessments have taken into account only those capital expenditures that meet the technical requirements for the activity.
Operating expenses include fixed and variable costs, including depreciation, personnel and other business expenses. Taxonomy eligibility and alignment assessments have taken into account only those operating and capital costs that meet the technical criteria for the activity.
In 2023, in addition to the previous objective of climate change mitigation, the reporting has been extended to three new environmental objectives, which has had a downward impact on the performance indicators related to climate change mitigation, as some of the activities previously reported in these indicators have been included under other environmental objectives.
L&T reports on taxonomy at the Group level. The assessment was carried out in cooperation with the industry specialists and business representatives. The assessment and its results are based on current knowledge and the available interpretations of the legislation.
L&T’s taxonomy eligibility has been assessed on the basis of the descriptions of economic activities and related NACE codes provided in the European Commission’s Delegated Regulations. L&T does not have activities related to nuclear energy or fossil gas.
The assessment of taxonomy alignment is based on the industry-specific technical screening criteria described in the Taxonomy Regulation and the DNSH criteria. At L&T, climate-related DNSH criteria are assessed as part of L&T’s risk management process through the TCFD framework. In addition, the taxonomy evaluation has taken into account activity-specific technical criteria for operations.
L&T’s operations are regulated and require separate environmental permits that specify environmental requirements for water, soil contamination and nature. The practices and procedures are described in more detail in the sustainability report. The EHSQ management model ensures that L&T’s operations comply with the permit conditions, and they are monitored and reported on regularly. L&T also strives to manage and reduce the environmental impacts of its activities through training and technical solutions.# SUSTAINABILITY REPORT
The technical screening criteria have been examined side by side in order to achieve the greatest possible consistency in reporting and to avoid double accounting. In addition to technical criteria, the Taxonomy Regulation provides for minimum safeguards that L&T has assessed at the Group level. L&T’s commitment to respecting human rights and due diligence is included in L&T’s Code Of Conduct and Supplier Code of Conduct. L&T has due diligence processes in place with regard to taxation, anti-corruption, anti-bribery and fair competition. The Group-EU taxonomy level policies apply to all of L&T’s business operations in Finland and Sweden. L&T does not have separate capital or operating expenditure plans for taxonomy. For taxonomy-eligible and taxonomy-aligned activities, the business operations of the Environmental Services division include, for example, the collection and transport of non-hazardous waste in waste fractions and the recovery and processing of materials from non-hazardous waste. For taxonomy-eligible and taxonomy-aligned activities, the business operations of the Industrial Services division include, for example, the renewal of wastewater collection and treatment, the collection, transport and processing and recycling of hazardous waste, as well as environmental construction services with regard to new material recycling solutions. These circular economy activities include activities related to climate change mitigation 5.5 (Collection and transport of non-hazardous waste in source segregated fractions) and 5.9 (Material recovery from non-hazardous waste), the circular economy activities 2.3 (Collection and transport of non-hazardous and hazardous waste); 2.4 (Hazardous waste treatment) and 2.7 (Non-hazardous waste sorting and material recovery), as well as activities for water 2.2 (Urban waste water treatment ) and pollution prevention and control activities 2.1 (Collection and transport of hazardous waste). For taxonomy-eligible and taxonomy-aligned activities, the business operations of the Facility Services Finland and Sweden divisions include, for example, the installation, maintenance and repair of energy efficiency equipment and renewable energy technology, as well as the installation, maintenance and repair of instruments and devices for measuring, regulating and controlling the energy performance of buildings. The business operations also include expert services related to improving the energy efficiency of buildings. Taxonomy reporting has taken into account climate change related activities 4.16 (Installation and operation of electric heat pumps); 7.3 (Installation, maintenance and repair of energy efficiency equipment); 7.4 (Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces attached to buildings)); 7.5 (Installation, maintenance and repair of instruments and devices for measuring, regulation and controlling energy performance of buildings); 7.6 (Installation, maintenance and repair of renewable energy technologies) and 9.3 (Professional services related to energy performance of buildings).
21 Lassila & Tikanoja Annual Report 2023
Proportion of turnover from products or services associated with Taxonomy-aligned economic activities
Financial year N 2023
| Economic Activities Code | Turnover (MEUR) | Proportion of Turnover (%) | Climate Change Mitigation | Climate Change Adaptation | Water | Pollution | Circular Economy | Biodiversity and ecosystems | Climate Change Mitigation | Climate Change Adaptation | Water | Pollution | Circular Economy | Biodiversity and ecosystems | Minimum Safeguard | Taxonomy aligned (A.1.) or eligible (A.2.) proportion of turnover, year 2022 (%) | Category (enabling activity) | Category (transitional activity) |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CCM 4.16 | 0.7 | 0.1 % | Y | N/A | N/A | N/A | N/A | N/A | Y | Y | Y | Y | Y | Y | Y | 0.1% | ||
| CCM 5.5 | 11.3 | 1.4 % | Y | N/A | N/A | N/A | N/A | N/A | Y | Y | Y | Y | Y | Y | Y | 5.9% | ||
| CCM 5.9 | 3.7 | 0.5 % | Y | N/A | N/A | N/A | N/A | N/A | Y | Y | Y | Y | Y | Y | Y | 4.2% | ||
| CCM 7.3 | 14.5 | 1.8 % | Y | N/A | N/A | N/A | N/A | N/A | Y | Y | Y | Y | Y | Y | Y | 1.2% | E | |
| CCM 7.4 | 0.5 | 0.1 % | Y | N/A | N/A | N/A | N/A | N/A | Y | Y | Y | Y | Y | Y | Y | E | ||
| CCM 7.5 | 2.9 | 0.4 % | Y | N/A | N/A | N/A | N/A | N/A | Y | Y | Y | Y | Y | Y | Y | 0.5% | E | |
| CCM 7.6 | 2.3 | 0.3 % | Y | N/A | N/A | N/A | N/A | N/A | Y | Y | Y | Y | Y | Y | Y | 0.6% | E | |
| CCM 9.3 | 6.4 | 0.8 % | Y | N/A | N/A | N/A | N/A | N/A | Y | Y | Y | Y | Y | Y | Y | 0.4% | E | |
| WTR 2.2 | 0.9 | 0.1 % | N/A | N/A | Y | N/A | N/A | N/A | Y | Y | Y | Y | Y | Y | Y | Y | ||
| PPC 2.1 | 16.7 | 2.1 % | N/A | N/A | N/A | Y | N/A | N/A | Y | Y | Y | Y | Y | Y | Y | Y | ||
| CE 2.3 | 50.7 | 6.3 % | N/A | N/A | N/A | N/A | Y | N/A | Y | Y | Y | Y | Y | Y | Y | Y | ||
| CE 2.4 | 3.6 | 0.5 % | N/A | N/A | N/A | N/A | Y | N/A | Y | Y | Y | Y | Y | Y | Y | Y | ||
| CE 2.7 | 20.6 | 2.6 % | N/A | N/A | N/A | N/A | Y | N/A | Y | Y | Y | Y | Y | Y | Y | Y | ||
| Turnover of environmentally sustainable activities (Taxonomy-aligned) (A.1) | 134.7 | 16.8% | Y | Y | Y | Y | Y | Y | Y | Y | Y | Y | Y | Y | Y | 12.9% | ||
| Of which Enabling | 26.6 | 3.3% | 3.3% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | Y | Y | Y | Y | Y | Y | Y | 2.7% | E | |
| Of which Transitional | 0 | % | Y | Y | Y | Y | Y | Y | Y | 0% | T | |||||||
| CCM 5.9 | 0.9 | 0.1 % | EL | N/EL | N/EL | N/EL | N/EL | N/EL | 0.4% | |||||||||
| CCM 7.3 | 2.9 | 0.4 % | EL | N/EL | N/EL | N/EL | N/EL | N/EL | 0.4% | |||||||||
| PPC 2.1 | 2.5 | 0.3 % | N/EL | N/EL | N/EL | EL | N/EL | N/EL | 0.0% | |||||||||
| CE 2.4 | 0.01 | 0.5 % | N/EL | N/EL | N/EL | N/EL | EL | N/EL | 0.0% | |||||||||
| CCM 5.4 | 0.0 | 0.0 % | N/EL | N/EL | N/EL | N/EL | N/EL | N/EL | 0.1% | |||||||||
| CCM 5.5 | 0.0 | 0.0 % | N/EL | N/EL | N/EL | N/EL | N/EL | N/EL | 0.2% | |||||||||
| CCM 7.5 | 0.0 | 0.0 % | N/EL | N/EL | N/EL | N/EL | N/EL | N/EL | 0.4% | |||||||||
| Turnover of Taxonomyeligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) | 6.4 | 1.2% | 1 | 0.5% | 0.0% | 0.0% | 0.3% | 0.5% | 1.5% | |||||||||
| A. Turnover of Taxonomy eligible activities (A.1 + A.2) | 141.0 | 18.0% | 5.7% | 0.0% | 0.1% | 2.4% | 1 | 9.8% | 0.0% | 14.4% |
CCM = Climate Change Mitigation, WTR = Water, CE = Circular Economy, PPC = Pollution Prevention and Control, N/A - not applicable, Taxonomy non-eligible activity for the relevant objective, EL - Taxonomy eligible activity for the relevant objective, N/EL - Taxonomy non-eligible activity for the relevant objective
1 The sum of the individual figures does not add up to the total due to rounding.
| Turnover (MEUR) | Proportion of Turnover (%) | Climate Change Mitigation | Climate Change Adaptation | Water | Pollution | Circular Economy | Biodiversity and ecosystems | Climate Change Mitigation | Climate Change Adaptation | Water | Pollution | Circular Economy | Biodiversity and ecosystems | Minimum Safeguard | Taxonomy aligned (A.1.) or eligible (A.2.) proportion of turnover, year 2022 (%) | Category (enabling activity) | Category (transitional activity) | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| B. TAXONOMY-NON ELIGIBLE ACTIVITIES | ||||||||||||||||||
| Turnover of Taxonomy-non-eligible activities | 661.1 | 82.0 % | ||||||||||||||||
| TOTAL | 802.1 | 100% |
22 Lassila & Tikanoja Annual Report 2023
Proportion of CapEx from products or services associated with Taxonomy-aligned economic activities
Financial year N 2023
| Economic Activities Code | Turnover (MEUR) | Proportion of Turnover (%) | Climate Change Mitigation | Climate Change Adaptation | Water | Pollution | Circular Economy | Biodiversity and ecosystems | Climate Change Mitigation | Climate Change Adaptation | Water | Pollution | Circular Economy | Biodiversity and ecosystems | Minimum Safeguard | Taxonomy aligned (A.1.) or eligible (A.2.) proportion of turnover, year 2022 (%) | Category (enabling activity) | Category (transitional activity) |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CCM 5.5 | 0.8 | 1.3 % | Y | N/A | N/A | N/A | N/A | N/A | Y | Y | Y | Y | Y | Y | Y | 6.0% | ||
| CCM 5.9 | 1.7 | 2.8 % | Y | N/A | N/A | N/A | N/A | N/A | Y | Y | Y | Y | Y | Y | Y | 3.6% | ||
| CCM 9.3 | 0.03 | 0.1 % | Y | N/A | N/A | N/A | N/A | N/A | Y | Y | Y | Y | Y | Y | Y | 0.1% | E | |
| PPC 2.1 | 2.8 | 4.6 % | N/A | N/A | N/A | Y | N/A | N/A | Y | Y | Y | Y | Y | Y | Y | |||
| CE 2.3 | 3.8 | 6.2 % | N/A | N/A | N/A | N/A | Y | N/A | Y | Y | Y | Y | Y | Y | Y | |||
| CE 2.4 | 0.4 | 0.6 % | N/A | N/A | N/A | N/A | Y | N/A | Y | Y | Y | Y | Y | Y | Y | |||
| CE 2.7 | 1.5 | 2.5 % | N/A | N/A | N/A | N/A | Y | N/A | Y | Y | Y | Y | Y | Y | Y | |||
| Turnover of environmentally sustainable activities (Taxonomy-aligned) (A.1) | 11.0 | 18.0 % | 1 | 4.1 % | 0.0 % | 0.0 % | 4.6 % | 9.2 % | 0.0 % | Y | Y | Y | Y | Y | Y | 9.7% | ||
| Of which Enabling | 0.03 | 0.1 % | 0.1 % | 0.0 % | 0.0 % | 0.0 % | 0.0 % | 0.0 % | E |
23 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT
| Financial year | N 2023 |
|---|---|
| Economic Activities | Code | Turnover (MEUR) | Proportion of Turnover (%) | Climate Change Mitigation Y; N; N/A | Climate Change Adaptation Y; N; N/A | Water Y; N; N/A | Pollution Y; N; N/A | Circular Economy Y; N; N/A | Biodiversity and ecosystems Y; N; N/A | Climate Change Mitigation Y/N | Climate Change Adaptation Y/N | Water Y/N | Pollution Y/N | Circular Economy Y/N | Biodiversity and ecosystems Y/N | Minimum Safeguard Y/N | Taxonomy aligned (A.1.) or eligible (A.2.) proportion of turnover, year 2022 (%) | Category (enabling activity) E | Category (transitional activity) T |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| A. TAXONOMY-ELIGIBLE ACTIVITIES | |||||||||||||||||||
| A.1. Environmentally sustainable activities (Taxonomy-aligned) | |||||||||||||||||||
| Installation and operation of electric heat pumps | CCM 4.16 | 0.3 | 0.0% | Y | N/A | N/A | N/A | N/A | N/A | Y | Y | Y | Y | Y | Y | Y | 0.1% | ||
| Collection and transport of non-hazardous waste in source segregated fractions | CCM 5.5 | 7.6 | 1.0% | Y | N/A | N/A | N/A | N/A | N/A | Y | Y | Y | Y | Y | Y | Y | 5.9% | ||
| Material recovery from non-hazardous waste | CCM 5.9 | 1.9 | 0.2% | Y | N/A | N/A | N/A | N/A | N/A | Y | Y | Y | Y | Y | Y | Y | 4.2% | ||
| Installation, maintenance and repair of energy efficiency equipment | CCM 7.3 | 14.1 | 1.8% | Y | N/A | N/A | N/A | N/A | N/A | Y | Y | Y | Y | Y | Y | Y | 1.2% | E | |
| Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces attached to buildings) | CCM 7.4 | 0.5 | 0.1% | Y | N/A | N/A | N/A | N/A | N/A | Y | Y | Y | Y | Y | Y | Y | 0.0% | E | |
| Installation, maintenance and repair of instruments and devices for measuring, regulation and controlling energy performance of buildings | CCM 7.5 | 1.9 | 0.2% | Y | N/A | N/A | N/A | N/A | N/A | Y | Y | Y | Y | Y | Y | Y | 0.5% | E | |
| Installation, maintenance and repair of renewable energy technologies | CCM 7.6 | 1.7 | 0.2% | Y | N/A | N/A | N/A | N/A | N/A | Y | Y | Y | Y | Y | Y | Y | 0.6% | E | |
| Professional services related to energy performance of buildings | CCM 9.3 | 4.8 | 0.6% | Y | N/A | N/A | N/A | N/A | N/A | Y | Y | Y | Y | Y | Y | Y | 0.4% | E | |
| Urban Waste Water Treatment | WTR 2.2 | 0.5 | 0.1% | N/A | N/A | Y | N/A | N/A | N/A | Y | Y | Y | Y | Y | Y | Y | 12.9% | ||
| Collection and transport of hazardous waste | PPC 2.1 | 10.6 | 1.4% | N/A | N/A | N/A | Y | N/A | N/A | Y | Y | Y | Y | Y | Y | Y | 12.9% | ||
| Collection and transport of non-hazardous and hazardous waste | CE 2.3 | 33.5 | 4.3% | N/A | N/A | N/A | N/A | Y | N/A | Y | Y | Y | Y | Y | Y | Y | 0.1% | ||
| Treatment of hazardous waste | CE 2.4 | 2.0 | 0.3% | N/A | N/A | N/A | N/A | Y | N/A | Y | Y | Y | Y | Y | Y | Y | 1.4% | ||
| Sorting and material recovery of non-hazardous waste | CE 2.7 | 13.6 | 1.8% | N/A | N/A | N/A | N/A | Y | N/A | Y | Y | Y | Y | Y | Y | Y | 6.4% | ||
| Turnover of environmentally sustainable activities (Taxonomy-aligned) (A.1) | 93.0 | 12.1% | 0.0% | ||||||||||||||||
| Of which Enabling | 23.0 | 3.0% | Y | Y | Y | Y | Y | Y | Y | 3.0% | |||||||||
| Of which Transitional | 0 | 0.0% | 0.0% | ||||||||||||||||
| A.2. Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) | EL; N/EL | EL; N/EL | EL; N/EL | EL; N/EL | EL; N/EL | EL; N/EL | |||||||||||||
| Renewal of waste water collection and treatment | CCM 5.4 | 0.0 | 0.0% | EL | N/EL | N/EL | N/EL | N/EL | N/EL | 0.1% | |||||||||
| Collection and transport of non-hazardous waste in source segregated fractions | CCM 5.5 | 0.0 | 0.0% | EL | N/EL | N/EL | N/EL | N/EL | N/EL | 0.2% | |||||||||
| Material recovery from non-hazardous waste | CCM 5.9 | 0.0 | 0.0% | EL | N/EL | N/EL | N/EL | N/EL | N/EL | 0.4% | |||||||||
| Installation, maintenance and repair of energy efficiency equipment | CCM 7.3 | 0.0 | 0.0% | EL | N/EL | N/EL | N/EL | N/EL | N/EL | 0.4% | |||||||||
| Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces attached to buildings) | CCM 7.5 | 0.0 | 0.0% | EL | N/EL | N/EL | N/EL | N/EL | N/EL | 0.4% | |||||||||
| Turnover of Taxonomyeligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) | 0.0 | 0.0% | 1.5 % | ||||||||||||||||
| A. Turnover of Taxonomy eligible activities (A.1 + A.2) | 93.0 | 12.1% | 14.5 % |
CCM = Climate Change Mitigation, WTR = Water , CE = Circular Economy, PPC = Pollution Prevention and Control, N/A - not applicable, Taxonomy non-eligible activity for the relevant objective, EL - Taxonomy eligible activity for the relevant objective, N/EL - Taxonomy non-eligible activity for the relevant objective
1 The sum of the individual figures does not add up to the total due to rounding.
| Turnover | Proportion of Turnover (%) | Turnover of Taxonomy-non-eligible activities | |
|---|---|---|---|
| TOTAL | 769.9 | 100% |
24 Lassila & Tikanoja Annual Report 2023
KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT
24 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Calculation of key figures . . . . . . . . . . . . . . . . . . . . . 27
25 Lassila & Tikanoja Annual Report 2023
KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT
25 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT
| 2023 | 2022 | 2021 | 2020 | 2019 | |
|---|---|---|---|---|---|
| Earnings per share (EPS), EUR | 0.79 | 0.83 | 0.90 | 0.50 | 0.90 |
| Earnings per share (EPS), diluted, EUR | 0.79 | 0.83 | 0.90 | 0.50 | 0.90 |
| Equity per share, EUR | 6.09 | 5.78 | 5.52 | 5.05 | 5.33 |
| Dividend per share, EUR | 0.49 1 | 0.47 | 0.46 | 0.40 | 0.92 |
| Payout ratio, % | 62.1 1 | 56.9 | 51.0 | 79.7 | 101.7 |
| Effective dividend yield, % | 5.0 1 | 4.4 | 3.4 | 2.7 | 5.8 |
| P/E ratio | 12.4 | 12.9 | 14.9 | 30.0 | 17.4 |
| Net cash flow from operating activities after investments per share, EUR | 1.33 | 1.08 | 0.05 | 1.15 | 1.81 |
| Share price adjusted for issues: | |||||
| lowest, EUR | 9.00 | 9.72 | 12.82 | 10.06 | 12.92 |
| highest, EUR | 11.84 | 13.62 | 16.10 | 16.76 | 16.40 |
| average, EUR | 10.11 | 11.16 | 14.31 | 13.55 | 14.41 |
| closing, EUR | 9.80 | 10.64 | 13.44 | 15.06 | 15.74 |
| Market capitalisation 31 December, MEUR | 373.9 | 405.9 | 512.2 | 573.9 | 610.7 |
| Number of shares adjusted for issue, 1,000 pcs | |||||
| average during the year | 38,127 | 38,116 | 38,111 | 38,103 | 38,354 |
| at year end | 38,154 | 38,146 | 38,112 | 38,105 | 38,094 |
| average during the year, diluted | 38,232 | 38,128 | 38,127 | 38,118 | 38,368 |
| Adjusted number of shares traded during the year, 1,000 pcs | 5,649 | 9,397 | 9,615 | 12,266 | 8,172 |
| As a percentage of the average | 14.8 | 24.7 | 25.2 | 32.2 | 21.3 |
| Volume of shares traded, MEUR | 57.1 | 104.9 | 137.6 | 166.1 | 122.3 |
2023 proposal by the Board of Directors
| 2023 | 2022 | 2021 | 2020 | 2019 | |
|---|---|---|---|---|---|
| Net sales, MEUR | 802.1 | 844.1 | 812.5 | 751.9 | 784.3 |
| Operating profit, MEUR | 38.4 | 42.9 | 42.2 | 28.2 | 45.0 |
| % of net sales | 4.8 | 5.1 | 5.2 | 3.8 | 5.7 |
| Adjusted operating profit, MEUR | 39.0 | 40.9 | 42.4 | 39.7 | 40.5 |
| % of net sales | 4.9 | 4.8 | 5.2 | 5.3 | 5.2 |
| EBITDA, MEUR | 95.8 | 98.3 | 95.1 | 85.2 | 99.4 |
| % of net sales | 11.9 | 11.6 | 11.7 | 11.3 | 12.7 |
| Result before taxes, MEUR | 35.7 | 37.8 | 39.0 | 23.3 | 42.0 |
| % of net sales | 4.5 | 4.5 | 4.8 | 3.1 | 5.4 |
| Result for the period, MEUR | 30.1 | 31.5 | 34.4 | 19.0 | 34.7 |
| % of net sales | 3.8 | 3.7 | 4.2 | 2.5 | 4.4 |
| Cash flow from operating activities, MEUR | 93.6 | 71.8 | 65.6 | 83.0 | 94.5 |
| Balance sheet total, MEUR | 649.9 | 660.5 | 632.3 | 596.6 | 583.6 |
| Return on equity, % (ROE) | 13.3 | 14.6 | 17.1 | 9.6 | 16.8 |
| Capital employed, MEUR | 425.9 | 437.2 | 406.0 | 379.2 | 380.5 |
| Return on capital employed, % (ROCE) | 10.3 | 10.4 | 10.8 | 7.5 | 12.4 |
| Equity ratio, % | 36.8 | 34.3 | 34.2 | 33.0 | 35.6 |
| Gearing, % | 69.3 | 75.9 | 79.4 | 70.9 | 66.8 |
| Net interest-bearing liabilities, MEUR | 160.9 | 167.3 | 167.1 | 136.5 | 135.6 |
| Gross capital expenditure, MEUR | 61.1 | 58.2 | 72.3 | 48.2 | 46.1 |
| % of net sales | 7.6 | 6.9 | 8.9 | 6.4 | 5.9 |
| Average number of employees in full-time equivalents | 6,743 | 6,820 | 7,319 | 7,197 | 7,308 |
| Total number of full-time and part-time employees at year end | 8,159 | 8,371 | 8,171 | 8,139 | 8,207 |
The calculation of the average number of employees in full-time equivalents was re-defined in 2023. The figure for 2022 has been adjusted accordingly.
26 Lassila & Tikanoja Annual Report 2023
KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT
26 Lassila & Tikanoja Annual Report 2023 FINANCIAL STATEMENTS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT
The company discloses certain other widely used performance measures that can for the most part be derived from the income statement and balance sheet. The formulas for these performance measures are provided in the section Calculation of key figures.# In the company’s view, these measures clarify the result of operations and financial position based on the income statement and balance sheet.
| 1 January - 31 December | MEUR | 2023 | 2022 |
|---|---|---|---|
| Operating profit | 38.4 | 42.9 | |
| Items affecting comparability: | |||
| - costs arising from the discontinuation of business | -0.2 | - | |
| - costs arising from business restructurings | 0.3 | - | |
| - gains or losses arising from divestments¹ | - | -4.3 | |
| - costs arising from acquisitions | 0.3 | 2.5 | |
| Adjusted operating profit | 39.0 | 40.9 |
¹ In 2022, Lassila & Tikanoja ja Neova merged their fuel wood businesses into a joint venture named Laania. The transaction was finalised in the fourth quarter of year 2022 and L&T recognised a gain totalling EUR 4.3 million from the transaction.
| 1 January - 31 December | MEUR | 2023 | 2022 |
|---|---|---|---|
| Intangible and tangible assets from business acquisitions | - | 22.9 | |
| - increases to right-of-use assets excl. heavy vehicles from business acquisitions | - | -1.4 | |
| Other increases to intangible and tangible assets | 81.1 | 55.2 | |
| - increases to right-of-use assets excl. heavy vehicles | -18.1 | -15.8 | |
| - other adjustments | -2.0 | -2.7 | |
| Gross capital expenditure | 61.1 | 58.2 |
| 1 January - 31 December | 2023 | 2022 |
|---|---|---|
| Environmental Services | ||
| Capital employed (MEUR), average of the beginning and the end of the period | 203.1 | 211.3 |
| Operating profit | 27.1 | 30.3 |
| + financial income | 0.3 | 0.1 |
| Return on capital employed, MEUR | 27.4 | 30.4 |
| Return on capital employed (ROCE), % | 13.5 | 14.4 |
| Industrial Services | ||
| Capital employed (MEUR), average of the beginning and the end of the period | 93.7 | 81.7 |
| Operating profit | 13.8 | 12.7 |
| + financial income | 0.0 | 0.0 |
| Return on capital employed, MEUR | 13.8 | 12.8 |
| Return on capital employed (ROCE), % | 14.7 | 15.6 |
| Facility Services Finland | ||
| Capital employed (MEUR), average of the beginning and the end of the period | 25.0 | 28.4 |
| Operating profit | 4.4 | -0.5 |
| + financial income | 0.4 | 0.3 |
| Return on capital employed, MEUR | 4.8 | -0.2 |
| Return on capital employed (ROCE), % | 19.4 | -0.8 |
| Facility Services Sweden | ||
| Capital employed (MEUR), average of the beginning and the end of the period | 61.0 | 64.6 |
| Operating profit | -3.7 | 0.4 |
| + financial income | 0.1 | 0.1 |
| Return on capital employed, MEUR | -3.6 | 0.5 |
| Return on capital employed (ROCE), % | -5.9 | 0.8 |
¹ From 2023 onwards, the allocation of assets and liabilities to the reporting segments has been adjusted. The comparative figures have been updated accordingly.
27 Lassila & Tikanoja Annual Report 2023
KEY FIGURES
FINANCIAL STATEMENTS
REPORT BY THE BOARD OF DIRECTORS
CORPORATE GOVERNANCE
REMUNERATION REPORT
SUSTAINABILITY REPORT
27 Lassila & Tikanoja Annual Report 2023
FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
REMUNERATION REPORT
SUSTAINABILITY REPORT
¹ The calculations are also applied with capital repayment.
28
Financial statements of the parent company
Primary financial statements of the Group
Notes to the consolidated financial statements
1.
2.
3.
4.
5.
KEY FIGURES
FINANCIAL STATEMENTS
REPORT BY THE BOARD OF DIRECTORS
CORPORATE GOVERNANCE
REMUNERATION REPORT
Proposal by the Board of Directors
SUSTAINABILITY REPORT
Lassila & Tikanoja Annual Report 2023
Financial statements
1 Financial result
1.1 Segment reporting ...........................................................................35
1.2 Revenue from contracts with customers ........................36
1.3 Employee benefit expenses .......................................................38
1.4 Other operating income and expenses ..............................38
1.5 Share-based payments ................................................................39
1.6 Expenses related to leases ....................................................... 40
1.7 Depreciation, amortisation and impairments ............... 40
1.8 Financial income and expenses ...............................................41
1.9 Income taxes ........................................................................................41
2 Operational assets and liabilities
2.1 Trade and other receivables .................................................44
2.2 Inventories .......................................................................................44
2.3 Trade and other current payables .....................................45
2.4 Other non-current liabilities ..................................................45
2.5 Provisions .........................................................................................45
2.6 Retirement benefit obligations ............................................ 46
3 Intangible and tangible assets and other non-current assets
3.1 Goodwill and other intangible assets ..............................49
3.2 Goodwill impairment testing .................................................50
3.3 Tangible assets ..............................................................................51
3.4 Right-of-use assets and lease liabilities ........................52
3.5 Other non-current assets .......................................................53
4 Financial risks and capital structure
4.1 Financial assets and liabilities .............................................55
4.2 Financial risk management .................................................... 57
4.3 Equity ..................................................................................................60
4.4 Earnings per share and dividend per share ..................61
4.5 Commitments and contingent liabilities .........................61
5 Consolidation and other notes
5.1 Consolidation .................................................................................63
5.2 Group companies .........................................................................63
5.3 Business acquisitions and disposals and assets and liabilities classified as held for sale ........64
5.4 Related-party transactions ................................................... 65
5.5 Auditing costs ................................................................................ 66
5.6 Events after the balance sheet date ...............................66
29
Financial statements of the parent company
Primary financial statements of the Group
Notes to the consolidated financial statements
1.
2.
3.
4.
5.
KEY FIGURES
FINANCIAL STATEMENTS
REPORT BY THE BOARD OF DIRECTORS
CORPORATE GOVERNANCE
REMUNERATION REPORT
Proposal by the Board of Directors
SUSTAINABILITY REPORT
Lassila & Tikanoja Annual Report 2023
| 1 January - 31 December | MEUR | 2023 | 2022 | Note |
|---|---|---|---|---|
| Net sales | 802.1 | 844.1 | 1.2 | |
| Other operating income | 6.2 | 8.7 | 1.4 | |
| Materials and services | -246.5 | -286.0 |
The Lassila & Tikanoja Group specialises in environmental management and property and plant support services. The Group has business operations in Finland and Sweden. The Group’s parent company is Lassila & Tikanoja plc (business identity code 1680140-0). Lassila & Tikanoja plc is a Finnish public limited liability company domiciled in Helsinki, Finland. The registered address of the Company is Valimotie 27, 00380 Helsinki, Finland. Lassila & Tikanoja plc is listed on the Nasdaq Helsinki. The consolidated financial statements are available on the company website at www.lt.fi/en or from the parent company’s head office, address Valimotie 27, 00380 Helsinki, Finland. These consolidated financial statements have been approved for issue by the Board of Directors of Lassila & Tikanoja plc on 20 February 2024.
The consolidated financial statements have been prepared in accordance with the IFRS Accounting Standards as adopted by the EU. In the Finnish Accounting Act and regulations enacted by virtue of it, International Financial Reporting Standards refer to standards and related interpretations approved for adoption within the EU according to the procedure described in regulation (EC) 1606/2002. The notes to the consolidated financial statements also comply with the Finnish accounting and community legislation supplementing the IFRS regulations. Figures in these financial statements are presented in millions of euros, unless otherwise stated.
The Group has applied the new standards and interpretations published by IASB with the effective date 1 January 2023.
1 January - 31 December
MEUR
| 2023 | 2022 | Note | |
|---|---|---|---|
| Result for the period | 30.1 | 31.5 | |
| Other comprehensive income, net of tax | |||
| Items not to be recognised through profit or loss | |||
| Items arising from re-measurement of defined benefit plans | -0.0 | 0.2 | 2.6 |
| Items not to be recognised through profit or loss, total | -0.0 | 0.2 | |
| Items potentially to be recognised through profit or loss | |||
| Hedging reserve, change in fair value | 0.1 | 1.3 | 4.2 |
| Change in fair value of interest rate swap, reclassified to profit and loss | -1.0 | -4.2 | |
| Currency translation differences | 0.1 | -5.7 | |
| Currency translation differences recognised through profit or loss | -0.1 | ||
| Items potentially to be recognised through profit or loss, total | -0.9 | -4.3 | |
| Other comprehensive income, total | -0.9 | -4.1 | |
| Total comprehensive income, after tax | 29.2 | 27.4 | |
| Attributable to: | |||
| Equity holders of the company | 29.2 | 27.4 |
More information on taxes in consolidated statement of comprehensive income is presented in note 1.9 Income taxes.
31 December
MEUR
| 2023 | 2022 | Note | |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Intangible assets | |||
| Goodwill | 180.8 | 180.7 | 3.1 |
| Other intangible assets | 38.2 | 36.5 | |
| 219.0 | 217.2 | ||
| Tangible assets | 166.0 | 155.3 | 3.3 |
| Right-of-use assets | 76.0 | 71.2 | 3.4 |
| 242.0 | 226.6 | ||
| Other non-current assets | |||
| Shares in associated companies and joint ventures | 17.6 | 14.0 | 3.5 |
| Other shares and holdings | 0.2 | 0.2 | 3.5 |
| Deferred tax assets | 3.1 | 1.9 | 1.9 |
| Other receivables | 1.5 | 1.9 | 3.5 |
| 22.5 | 17.9 | ||
| Total non-current assets | 483.5 | 461.7 | |
| Current assets | |||
| Inventories | 7.8 | 7.8 | 2.2 |
| Trade receivables | 85.9 | 91.0 | 2.1, 4.1 |
| Contract assets | 30.8 | 30.8 | 1.2, 2.1, 4.1 |
| Income tax receivables | 1.2 | 8.7 | 2.1 |
| Other receivables | 7.9 | 11.0 | 2.1, 4.1 |
| Cash and cash equivalents | 32.9 | 49.5 | 4.1 |
| Total current assets | 166.5 | 198.8 | |
| TOTAL ASSETS | 649.9 | 660.5 | |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Equity attributable to equity holders of the parent company | |||
| Share capital | 19.4 | 19.4 | |
| Other reserves | -11.5 | -10.6 | |
| Invested unrestricted equity reserve | 0.6 | 0.6 | |
| Retained earnings | 223.6 | 211.0 | |
| Total equity | 232.2 | 220.4 | |
| Liabilities | |||
| Non-current liabilities | |||
| Deferred tax liabilities | 28.5 | 28.1 | 1.9 |
| Retirement benefit obligations | 1.2 | 1.2 | 2.6 |
| Provisions | 7.2 | 7.4 | 2.5 |
| Financial liabilities | 171.7 | 177.5 | 4.1 |
| Other liabilities | 13.2 | 13.3 | 2.4 |
| 221.7 | 227.5 | ||
| Current liabilities | |||
| Financial liabilities | 22.1 | 39.3 | 4.1 |
| Trade and other payables | 172.8 | 170.5 | 2.3, 4.1 |
| Income tax liabilities | 0.3 | 1.0 | 2.3 |
| Provisions | 0.9 | 1.7 | 2.5 |
| 196.1 | 212.6 | ||
| Total liabilities | 417.7 | 440.1 | |
| TOTAL EQUITY AND LIABILITIES | 649.9 | 660.5 |
1 January - 31 December
MEUR
| 2023 | 2022 | Note | |
|---|---|---|---|
| Cash flows from operating activities | |||
| Result for the period | 30.1 | 31.5 | |
| Adjustments | |||
| Income taxes | 5.7 | 6.3 | 1.9 |
| Depreciation, amortisation and impairment | 57.4 | 55.4 | 1.7 |
| Financial income and expenses | 6.3 | 5.8 | 1.8 |
| Gains and losses on sale of tangible and intangible assets | -1.6 | -1.2 | |
| Share of result of associated companies and joint ventures | -3.6 | -0.7 | 3.5 |
| Gain from sale of subsidiary's net assets to joint venture | - | -4.3 | 5.3 |
| Impact of the discontinuation of Russian operations | - | -0.2 | |
| Other | -0.5 | -0.7 | |
| Net cash generated from operating activities before change | 93.6 | 91.9 | |
| in working capital | |||
| Change in working capital | |||
| Change in trade and other receivables | 7.2 | -7.0 | |
| Change in inventories | 0.0 | -0.8 | |
| Change in trade and other payables | -2.1 | 1.7 | |
| Change in working capital | 5.1 | -6.2 | |
| Interest and other financial expenses paid | -8.2 | -4.8 | |
| Interest and other financial income received | 2.5 | 0.4 | |
| Income taxes paid | 0.5 | -9.6 | |
| Net cash from operating activities | 93.6 | 71.8 | |
| Cash flows from investing activities | |||
| Acquisitions of subsidiaries and businesses, net of cash acquired | - | -13.2 | 5.3 |
| Proceeds from sale of subsidiaries and businesses, net of sold cash | - | -2.0 | 5.3 |
| Purchases of property, plant and equipment and intangible assets | -44.9 | -33.8 | |
| Proceeds from sale of property, plant and equipment and intangible assets | 2.2 | 2.0 | |
| Repayment of loan receivables from joint venture | - | 16.4 | |
| Change in other non-current investments | - | 0.0 | |
| Net cash from investing activities | -42.7 | -30.6 | |
| Net cash from operating and investing activities | 50.9 | 41.1 | |
| Net cash from financing activities | |||
| Proceeds from short-term borrowings | 10.0 | 35.0 | 4.1 |
| Repayments of short-term borrowings | -10.0 | -35.0 | 4.1 |
| Proceeds from long-term borrowings | 40.0 | 75.0 | 4.1 |
| Repayments of long-term borrowings | -68.4 | -58.1 | 4.1 |
| Repayments of lease liabilities | -21.2 | -19.4 | |
| Dividends paid | -17.9 | -17.5 | |
| Net cash from financing activities | -67.5 | -20.1 | |
| Net change in cash and cash equivalents | -16.6 | 21.0 | |
| Cash and cash equivalents at the beginning of the period | 49.5 | 28.6 | |
| Effect of changes in foreign exchange rates | 0.0 | -0.1 | |
| Cash and cash equivalents at the end of the period | 32.9 | 49.5 | 4.1 |
MEUR
| Invested unrestricted equity reserve | Retained earnings | Total equity | |
|---|---|---|---|
| Equity on 1 January 2022 | 0.6 | 196.7 | 210.4 |
| Total comprehensive income | |||
| Result for the period | 31.5 | 31.5 | |
| Other comprehensive income items | -5.6 | -5.6 | |
| Total comprehensive income | 25.9 | 25.9 | |
| Transactions with shareholders | |||
| Share-based benefits | 0.2 | 0.2 | |
| Dividends paid | -17.5 | -17.5 | |
| Returned dividends | 0.0 | 0.0 | |
| Transactions with shareholders, total | -17.3 | -17.3 | |
| Equity on 31 December 2022 | 0.6 | 211.0 | 220.4 |
| Total comprehensive income | |||
| Result for the period | 30.1 | 30.1 | |
| Other comprehensive income items | -0.9 | -0.9 | |
| Total comprehensive income | 29.2 | 29.2 | |
| Transactions with shareholders | |||
| Share-based benefits | 0.5 | 0.5 | |
| Dividends paid | -17.9 | -17.9 | |
| Returned dividends | 0.0 | 0.0 | |
| Transactions with shareholders, total | -17.4 | -17.4 | |
| Equity on 31 December 2023 | 0.6 | 223.6 | 232.2 |
1 Included in other reserves of equity in the consolidated statement of financial position. For more information on equity please refer to note 4.3 Equity, and on taxes recognised in equity to note 1.9 Income taxes.
The Lassila & Tikanoja Group specialises in environmental management and property and plant support services. The Group has business operations in Finland and Sweden. The Group’s parent company is Lassila & Tikanoja plc (business identity code 1680140-0). Lassila & Tikanoja plc is a Finnish public limited liability company domiciled in Helsinki, Finland. The registered address of the Company is Valimotie 27, 00380 Helsinki, Finland. Lassila & Tikanoja plc is listed on the Nasdaq Helsinki. The consolidated financial statements are available on the company website at www.lt.fi/en or from the parent company’s head office, address Valimotie 27, 00380 Helsinki, Finland. These consolidated financial statements have been approved for issue by the Board of Directors of Lassila & Tikanoja plc on 20 February 2024.
The consolidated financial statements have been prepared in accordance with the IFRS Accounting Standards as adopted by the EU. In the Finnish Accounting Act and regulations enacted by virtue of it, International Financial Reporting Standards refer to standards and related interpretations approved for adoption within the EU according to the procedure described in regulation (EC) 1606/2002. The notes to the consolidated financial statements also comply with the Finnish accounting and community legislation supplementing the IFRS regulations. Figures in these financial statements are presented in millions of euros, unless otherwise stated.
The Group has applied the new standards and interpretations published by IASB with the effective date 1 January 2023.
7 Employee benefit expenses -352.8 -353.1 1.3 Other operating expenses -113.1 -114. 7 1.4 Depreciation, amortisation and impairment -57 .4 -55.4 1.7 Operating profit 38.4 42.9 Financial income 2.5 0.4 Financial expenses -8. 7 -6.0 Exchange rate differences (net) -0.0 -0.2 Financial income and expenses -6.3 -5.8 1.8 Share of the result of associated companies and joint ventures 3.6 0.7 Result before taxes 35. 7 3 7. 8 Income taxes -5. 7 -6.3 1.9 Result for the period 30.1 31.5 Attributable to: Equity holders of the company 30.1 31.5 Earnings per share attributable to the equity holders of the parent company: Earnings per share, EUR 0. 79 0.83 4.4 Diluted earnings per share, EUR 0. 79 0.83 4.4# Accounting Policies, Critical Judgements and Estimates
These standards, amendments and interpretations did not have material impact on the entity in the current period, and they are not expected to have any material impact on the entity in the future reporting periods and on foreseeable future transactions.
The Group applies new standards and interpretations from the effective date. If the effective date is other than the first day of a financial year, the Group applies the standard or interpretation from the beginning of the following financial year.
On 31 October 2022, IASB issued amendments ”Non-current liabilities with covenants” to IAS 1 ”Presentation of financial statements”. The amendments are effective for annual reporting periods beginning on or after 1 January 2024 and override the previous amendments. Early application of the amendments is allowed. The new amendments clarify that covenants of loan arrangements which an entity must comply with only after the reporting date would not affect classification of a liability as current or non-current at the reporting date. However, those covenants that an entity is required to comply with on or before the reporting date would affect classification as current or non-current, even if the covenant is only assessed after the entity’s reporting date.
The Group applies the amendments from the effective date, i.e. for annual reporting periods beginning on or after 1 January 2024. The company does not expect the amendments to change its classification of liabilities as current or non-current from the current guidance. However, the new amendments will increase the amount of disclosure information relating to the covenants.
The impact from any other new and amended standards issued but not yet effective is not considered to be material to the Group’s financial reporting.
When preparing IFRS financial statements, the Group management must make estimates and assumptions concerning the future, the outcome of which may differ from the estimates and assumptions made. The management also has to use judgement when making decisions on the selection and application of accounting principles. Considerations based on discretion apply, in particular, to cases where the applicable IFRS standards provide for alternative methods of recognition, measurement or presentation.
The preparation of financial statements requires the management to make estimates and assumptions that affect the carrying amounts of assets and liabilities on the balance sheet date and the amounts of income and expenses. The estimates and assumptions reflect the management’s best understanding on the balance sheet date, based on previous experience and assumptions about the future that are considered to have the highest probability on the balance sheet date.
The most significant area where management has used the judgement described above relates to the measurement of assets and liabilities of acquired business operations. Key assumptions regarding the future and key uncertainty factors related to estimates on the closing date that involve a significant risk of causing a material adjustment to the carrying amounts of the Group’s assets and liabilities within the next financial year are described in the following notes:
Lassila & Tikanoja Annual Report 2023 34
Financial statements of the parent companyPrimary financial statements of the Group
Notes to the consolidated financial statements
1. KEY FIGURES
2. FINANCIAL STATEMENTS
3. REPORT BY THE BOARD OF DIRECTORS
4. CORPORATE GOVERNANCE
5. REMUNERATION REPORT
Proposal by the Board of Directors
SUSTAINABILITY REPORT
1 Financial result
1.1 Segment reporting ................................................................................35
1.2 Revenue from contracts with customers ..............................36
1.3 Employee benefit expenses ............................................................38
1.4 Other operating income and expenses ..................................... 38
1.5 Share-based payments .....................................................................39
1.6 Expenses related to leases ............................................................. 40
1.7 Depreciation, amortisation and impairments ...................... 40
1.8 Financial income and expenses .....................................................41
1.9 Income taxes .............................................................................................41
Lassila & Tikanoja Annual Report 2023 35
Financial statements of the parent companyPrimary financial statements of the Group
Notes to the consolidated financial statements
1. KEY FIGURES
2. FINANCIAL STATEMENTS
3. REPORT BY THE BOARD OF DIRECTORS
4. CORPORATE GOVERNANCE
5. REMUNERATION REPORT
Proposal by the Board of Directors
SUSTAINABILITY REPORT
Segment information is reported to the highest operational decision-maker, consistent with internal reporting. The highest operational decision-maker is Lassila & Tikanoja plc’s President and CEO. Segment assets are those operating assets that are employed by a segment in its operating activities and that can be allocated to the segment on a reasonable basis. Items reported under Group administration and other include items related to Group level functions such as expenses associated with Group management, as well as costs incurred from operating as a public company and the corresponding assets and liabilities. Lease liabilities and eliminations are also included in Group Administration and other.
The Group’s operating segments
The Group has four reportable segments, which are the Group’s business divisions - Environmental Services, Industrial Services, Facility Services Finland and Facility Services Sweden.
Environmental Services division consists of the waste management and recycling business, selling of waste containers and their maintenance, and new circular economy solutions. The division operates only in Finland. On December 17, 2021, Lassila & Tikanoja Plc and Neova Oy signed an agreement to merge their fuel wood businesses. According to the agreement, Neova’s fuel wood business will be transferred to L&T Biowatti Oy. On 1 July 2022, Neova’s fuel wood business was transferred to L&T Biowatti Oy. With the merger the company continued as an independent limited company called Laania Oy. L&T Biowatti Oy was reported as part of Environmental Services segment until the merger. For more information on the joint venture, please refer to note 3.5 Other long-term assets.
Industrial Services division covers solutions for industrial material flows and their utilisation, industrial process cleaning solutions, collection and disposal of hazardous waste and sewer system maintenance and repair. The division has operations both in Finland and in Sweden.
Facility Services Finland division provides cleaning and other support services for facilities, property maintenance and technical maintenance, including energy management.
Facility Services Sweden division provides cleaning and other support services for cleaning facilities and technical maintenance.
| 2023 MEUR | Environmental Services | Industrial Services | Facility Services Finland | Facility Services Sweden | Group administration and other | Group | |
|---|---|---|---|---|---|---|---|
| External net sales | 282.1 | 138.8 | 247.9 | 133.2 | - | 802.1 | |
| Inter-division net sales | 1.5 | 2.2 | 2.1 | 0.0 | -5.8 | - | |
| Total net sales | 283.7 | 141.0 | 250.0 | 133.2 | -5.8 | 802.1 | |
| Operating profit | 27.1 | 13.8 | 4.4 | -3.7 | -3.2 | 38.4 | |
| Operating margin, % | 9.5 | 9.8 | 1.8 | -2.8 | 4.8 | ||
| Adjusted operating profit 1 | 27.1 | 14.0 | 4.4 | -3.7 | -2.8 | 39.0 | |
| Adjusted operating margin, % 1 | 9.5 | 9.9 | 1.8 | -2.8 | 4.9 | ||
| Financial income and expenses | -6.3 | - | |||||
| Share of result in associated companies and joint ventures | 3.6 | - | |||||
| Profit before tax | 35.7 | - | |||||
| Income taxes | -5.7 | - | |||||
| Profit for the period | 30.1 | - | |||||
| Assets | 291.6 | 151.0 | 78.7 | 83.5 | 45.1 | 649.9 | |
| Liabilities | 82.7 | 60.2 | 56.9 | 23.6 | 194.3 | 417.7 | |
| Capital expenditure | 40.9 | 17.5 | 1.0 | 0.5 | 1.2 | 61.1 | |
| Depreciation, amortisation and impairments | 30.4 | 12.8 | 8.1 | 5.0 | 1.0 | 57.4 |
| 2022 MEUR | Environmental Services | Industrial Services | Facility Services Finland | Facility Services Sweden | Group administration and other | Group | |
|---|---|---|---|---|---|---|---|
| External net sales | 319.7 | 129.8 | 254.1 | 140.4 | - | 844.1 | |
| Inter-division net sales | 1.5 | 2.2 | 2.2 | 0.0 | -6.0 | - | |
| Total net sales | 321.2 | 132.0 | 256.3 | 140.4 | -6.0 | 844.1 | |
| Operating profit | 30.3 | 12.7 | -0.5 | 0.4 | 0.1 | 42.9 | |
| Operating margin, % | 9.4 | 9.6 | -0.2 | 0.3 | 5.1 | ||
| Adjusted operating profit 1 | 30.3 | 13.6 | -0.5 | 0.4 | -2.8 | 40.9 | |
| Adjusted operating margin, % 1 | 9.4 | 10.3 | -0.2 | 0.3 | 4.8 | ||
| Financial income and expenses | -5.8 | - | |||||
| Share of result in associated companies and joint ventures | 0.7 | - | |||||
| Profit before tax | 37.8 | - | |||||
| Income taxes | -6.3 | - | |||||
| Profit for the period | 31.5 | - | |||||
| Assets 2 | 278.6 | 145.3 | 84.5 | 88.4 | 63.7 | 660.5 | |
| Liabilities 2 | 81.3 | 52.2 | 56.2 | 26.4 | 224.0 | 440.1 | |
| Capital expenditure | 20.3 | 34.6 | 1.5 | 0.4 | 1.3 | 58.2 | |
| Depreciation, amortisation and impairments | 26.9 | 12.3 | 9.1 | 5.9 | 1.3 | 55.4 |
Unaudited¹ Unaudited
2 From 2023 onwards, the allocation of assets and liabilities to the reporting segments has been adjusted. The comparative figures have been updated accordingly.
Lassila & Tikanoja Annual Report 2023 36
Financial statements of the parent companyPrimary financial statements of the Group
Notes to the consolidated financial statements
1. KEY FIGURES
2. FINANCIAL STATEMENTS
3. REPORT BY THE BOARD OF DIRECTORS
4. CORPORATE GOVERNANCE
5. REMUNERATION REPORT
Proposal by the Board of Directors
SUSTAINABILITY REPORT
The Group operates in Finland and Sweden. Net sales of geographical areas are reported based on the geographical location of the customer, and assets are reported by geographical location of the assets.MEUR
| | 2023 | 2022 |
|---|---|---|
| Net sales | | |
| Finland | 645.3 | 682.3 |
| Sweden | 150.1 | 156.6 |
| Other countries | 6.8 | 5.2 |
| Total | 802.1 | 844.1 |
| Assets | | |
| Finland | 602.0 | 604.4 |
| Sweden | 47.9 | 56.1 |
| Total | 649.9 | 660.5 |
| Capital expenditure | | |
| Finland | 58.4 | 41.6 |
| Sweden | 2.6 | 16.6 |
| Total | 61.1 | 58.2 |
Revenue from contracts with customers is recognised when or as the performance obligation is satisfied by transferring a promised good or service to the customer. A good or a service is transferred when the customer obtains control of the good or service. Revenue is recognised based on the transaction price to which L&T expects to be entitled in exchange for transferring the good or service. The Group acts as a principal in all of its contracts with customers.
The Group applies the practical expedient and does not disclose the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period. This is because the contract period in the Group’s customer contracts for project deliveries, is typically short. However, in long-term service agreements the contract period can be several years. For these contracts the Group applies the practical exedient according to which the Group is entitled to a consideration from the customer that corresponds directly with the value to the customer from Groups performance completed to date. In these contracts the Group recognises revenue for the amount that it is entitled to invoice.
Services business comprises of long-term service agreements and separately ordered services. Long-term service agreements include for example waste management and recycling services which is part of Environmental Services as well as cleaning and property maintenance services included in Facility Services. Long-term service agreements include one or more performance obligations depending on the amount of distinct services provided to the customer. A typical characteristic of long-term services is that services are delivered evenly throughout the contract term. With one contract customer can order for example inside cleaning services, outside cleaning and upkeep services and property maintenance services that are distinct performance obligations. Each service is a distinct performance obligation as the customer can benefit from the services on its own and could order the services from different service providers. If a contract contains more than one distinct performance obligation, the transaction price is allocated to each performance obligation based on the stand-alone selling prices.
In addition to the long-term service agreements, L&T offers services which are separately ordered as part of Industrial Services and Facility Services. Compared to the long-term service agreements, services that are ordered separately are typically short-term in nature and they are provided either occasionally or on a non-recurring basis.
Revenue from services business is recognised over time, as the customer simultaneously receives and consumes the benefits from the services provided. Revenue from services that are invoiced with a fixed monthly fee is recognised evenly over the contract term as also the work is performed evenly over the term. Revenue from services that are invoiced based on hourly fees is recognised based on the work performed. The management has identified that there may be seasonal fluctuation especially in the long-term service agreements of Facility Services as the work performed differs between seasons during the year. Management has estimated that the costs for these services incur evenly throughout the period and, thus, revenue is recognised evenly over the period.
Industrial Services receives contaminated soil from customers, for which the performance obligation is the receipt and processing of soil. Measuring progress towards complete satisfaction of the performance obligation is based on the output method. Revenue is recognised based on the amount of processed soil. Customer is invoiced when soil is received and the payment received from the customer is treated as a contract liability.
Project business includes for example projects for industrial process cleaning and closing of landfills which are part of Industrial Services business and renovation and building technology projects as well as refrigeration and cooling service projects for retailers and energy management projects included in Facility Services. In project business the customer orders the entire project at once and the project is considered as a single performance obligation. In some cases, a contract can also consist of several different locations and each location creates a distinct performance obligation. If the contract contains more than one distinct performance obligation, the transaction price is allocated to each performance obligation based on the stand-alone selling prices.
Revenue from project business is recognised over time as the projects mainly relate to enhancing an asset that the customer controls. In project business the input method based on costs incurred is used for measuring the progress towards complete satisfaction of the performance obligation. The management has estimated that the costs incurred for a project can be determined reliably. Also, due to the contract structure in project business the management has determined that L&T has an enforceable right to payment for performance completed to date. In project business invoicing is typically made based on a predetermined payment schedule.
Sale of equipment consists of sale of compactors and balers to customers included in Environmental Services business. Sale of materials consists of sale Lassila & Tikanoja Annual Report 2023 37 Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORT Proposal by the Board of Directors SUSTAINABILITY REPORT of wood-based fuels and recycled fuels as well as of sale of other recycled raw materials in Environmental Services business. Each equipment or material delivery creates a distinct performance obligation in the sale of equipment and materials. The equipment delivered by the Group does not involve any additional warranties that would be considered as a distinct performance obligation. Control of the delivered product is transferred when the physical possession of the product has been transferred to the customer, which typically occurs at delivery.
Environmental Services business delivers wood-based fuels and recycled fuels to customers. The consideration received from a customer is based on the amount of delivered fuel and the energy level of the fuel or on the amount of the delivered material. In some cases, the final transaction price is determined after the customer has measured the amount of fuel delivered, and, thus, there is uncertainty relating to the amount of final transaction price. Management has estimated that the level of uncertainty related to the transaction price is low and any adjustments to be made to the transaction price when the uncertainty is resolved are not considered to be material.
In addition to the sale of compactors and balers, customers can also lease the equipment through an external financing company. The agreement made between the Group and the financing company includes a repurchase obligation at the end of the lease period with a predetermined residual value. Due to the repurchase obligation management has determined that all the risks and rewards incidental to ownership of the assets are not transferred substantially to the customer and, thus, the leased equipment is treated as tangible assets. At the inception of the lease, advances received from the financing company as well as the residual value of the asset are recognised as a liability in the balance sheet. Lease income is recognised monthly during the lease term. Management has estimated that the amount of payment received from the financing company does not include a significant financing component.
The contracts with customers may include components of variable considerations, such as bonuses and penalties for delay. Management has determined that the level of uncertainty relating to the variable consideration is typically low. The estimate of the amount of variable considerations is reassessed at the end of each reporting period.
A contract asset is a right to consideration in exchange for goods or services that are transferred to a customer. If goods or services are transferred to a customer before the invoice is sent to the customer, the amount is recognised as a contract asset. If the company has an unconditional right to the consideration, a trade receivable is recognised in the statement of financial position. Contract assets and trade receivables are assessed for impairment in accordance with IFRS 9. The general payment term for customers is 14 days, but it can vary depending on the specific case.
A contract liability is an obligation to transfer goods or services to a customer for which L&T has received consideration from the customer. If a customer pays consideration before goods or services are transferred to the customer, a contract liability is recognised in the statement of financial position when the payment is made by the customer.
The company does not have material incremental costs to obtain a contract. The company applies a practical expedient which allows the costs to obtain a contract to be recognised when they occur.# Disaggregation of revenue
Net sales consist of services for which revenue is recognised over time, prod- ucts for which revenue is recognised at a point in time as well as lease income. Services for which revenue is recognised over time include sales revenue from long-term service agreements, separately ordered services and the project busi- ness. Services for which revenue is recognised at a point in time include revenue from the sale of equipment and materials.
The amount and timing of revenue recognition involves management’s judgement especially in the following areas:
* Identification of performance obligations for services business
* Timing of revenue recognition in services and project business
* Treatment of repurchase agreements relating to compactors and balers in Environmental Services business including the assessment of the materiality of the financing component
* Measurement of variable consideration
These judgements have been described in more detail in the description relating to revenue recognition.
| 2023 MEUR | ||||||
|---|---|---|---|---|---|---|
| Long-term service agreements | Separately ordered services | Project business | Sales of equipment and materials | Lease income | Total net sales | |
| Environmental Services | 229.6 | 50.5 | 3.5 | 283.7 | ||
| Industrial Services | 65.5 | 58.5 | 11.8 | 5.2 | 141.0 | |
| Facility Services Finland | 181.5 | 64.2 | 4.3 | 250.0 | ||
| Facility Services Sweden | 56.1 | 74.0 | 3.1 | 133.2 | ||
| Total | 532.6 | 196.8 | 19.2 | 55.7 | 3.5 | 807.9 |
| Interdivision | -5.8 | |||||
| External net sales | 802.1 |
| 2022 MEUR | ||||||
|---|---|---|---|---|---|---|
| Long-term service agreements | Separately ordered services | Project business | Sales of equipment and materials | Lease income | Total net sales | |
| Environmental Services | 225.3 | 92.7 | 3.3 | 321.2 | ||
| Industrial Services | 57.7 | 59.0 | 9.7 | 5.6 | 132.0 | |
| Facility Services Finland | 182.3 | 68.8 | 5.2 | 256.3 | ||
| Facility Services Sweden | 61.1 | 74.9 | 4.4 | 140.4 | ||
| Total | 526.4 | 202.7 | 19.4 | 98.3 | 3.3 | 850.0 |
| Interdivision | -6.0 | |||||
| External net sales | 844.1 |
Lassila & Tikanoja Annual Report 2023 38
Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements
1. KEY FIGURES
2. FINANCIAL STATEMENTS
3. REPORT BY THE BOARD OF DIRECTORS
4. CORPORATE GOVERNANCE
5. REMUNERATION REPORT
Proposal by the Board of Directors
SUSTAINABILITY REPORT
| MEUR | 2023 | 2022 |
|---|---|---|
| Trade receivables | 85.9 | 91.0 |
| Contract assets | 30.8 | 30.8 |
| Contract liabilities | 8.9 | 7.2 |
Contract assets consist of uninvoiced sales, which will be invoiced during the following reporting period. Contract liabilities are mainly related to the long-term service agreements and are recognised as revenue entirely during the following period. Contract liabilities are included in the balance sheet item Trade and other payables. No revenue was recognised in the reporting period from performance obligations satisfied (or partially satisfied) in previous periods.
The Group’s employee benefits include wages, salaries and bonuses paid to employees, post-employment benefits (defined contribution plans and defined benefit plans), share-based payments and other personnel expenses (statutory social security costs). Details on share-based payments are disclosed in note 1.5 Share-based payments. The employee benefits of the top management are disclosed in note 5.4 Related-party transactions. Details on the items of defined benefit pension plans in the consolidated statement of financial position are shown in note 2.6 Retirement benefit obligations.
| MEUR | 2023 | 2022 |
|---|---|---|
| Wages and salaries | 282.8 | 282.4 |
| Pension costs | ||
| - Defined contribution plans | 60.8 | 60.9 |
| - Defined benefit plans | 0.0 | 0.0 |
| Share-based payments | 0.5 | 0.1 |
| Other personnel expenses | 8.7 | 9.7 |
| Total | 352.8 | 353.1 |
Average number of employees in full-time equivalents¹
| 2023 | 2022 | |
|---|---|---|
| Finland | 5,608 | 5,655 |
| Sweden | 1,135 | 1,165 |
| Total | 6,743 | 6,820 |
¹ The calculation of the average number of employees in full-time equivalents was re-defined in 2023. The figures for 2022 has been adjusted accordingly.
Other operating income includes items that are not considered as being directly related to the Group’s normal business, such as gains from sales of assets and business activities and received compensations. Other operating expenses include, for instance, fees for expert and consulting services, losses from sales of assets and business activities, bad debts and changes in allowances for credit losses, expenses related to the use of vehicles and machinery, ICT costs, voluntary social security costs, travel costs, real estate costs and implementation costs of cloud computing arrangements.
Government grants or other grants relating to actual costs are recognised in the income statement when the Group complies with the conditions attached to them and there is reasonable assurance that the grants will be received. They are presented in other operating income. Government grants directly associated with the recruitment of personnel, such as employment grants, apprenticeship grants and the like, are recognised as reductions in personnel expenses. Grants for acquisition of property, plant and equipment are recognised as deductions of historical cost. The grant is recognised as income over the economic life of a depreciable asset, by way of a reduced depreciation charge.
| Other operating income | MEUR | |
|---|---|---|
| 2023 | 2022 | |
| Gains on sales of property, plant and equipment | 1.7 | 1.7 |
| Gain from sale of subsidiary's net assets to joint venture | - | 4.3 |
| Reimbursements and government grants¹ | 2.0 | 0.6 |
| Other | 2.4 | 2.1 |
| Total | 6.2 | 8.7 |
¹ The figure in 2023 includes a compensation totalling EUR 1.6 million paid by the previous supplier of a new ERP system relating to the termination of the co-operation.
| Other operating expenses | MEUR | |
|---|---|---|
| 2023 | 2022 | |
| ICT costs | 16.8 | 16.6 |
| Travel costs | 9.0 | 8.0 |
| Bad debts and changes in allowances for impairment | 1.0 | 0.4 |
| Fuels for vehicles and machinery | 27.8 | 29.6 |
| Maintenance and repair of vehicles and machinery | 29.6 | 26.7 |
| Insurances | 3.1 | 4.2 |
| Property maintenance costs | 5.0 | 5.0 |
| Expert fees¹ | 6.9 | 7.5 |
| Voluntary social security costs | 6.8 | 7.6 |
| Marketing costs | 1.6 | 2.1 |
| Losses on sales of intangible and tangible assets | 0.1 | 0.5 |
| Discontinuation of Russian operations | - | -0.2 |
| Other² | 5.1 | 6.7 |
| Total | 113.1 | 114.7 |
¹ The figure in 2023 includes a compensation totalling EUR 0.9 million paid by the previous supplier of a new ERP system relating to the termination of the co-operation.
² The figure in 2023 includes a compensation totalling EUR 0.5 million paid by the previous supplier of a new ERP system relating to the termination of the co-operation.
Lassila & Tikanoja Annual Report 2023 39
Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements
1. KEY FIGURES
2. FINANCIAL STATEMENTS
3. REPORT BY THE BOARD OF DIRECTORS
4. CORPORATE GOVERNANCE
5. REMUNERATION REPORT
Proposal by the Board of Directors
SUSTAINABILITY REPORT
The Group has several incentive arrangements for which payments are made either as equity instruments or cash. The benefits granted under the arrangements are measured at fair value on the grant date and recognised as expense evenly over the vesting period. The effect of the arrangement on profit and loss is recognised under employee benefit expenses.
Lassila & Tikanoja plc’s Board of Directors decided at a meeting held on 27 January 2021 on a new share-based incentive programme. Potential rewards were based on the EVA result and the carbon handprint of the Group. Based on the programme a maximum of 37,300 shares of the company could be granted. Based on the decision by the board of directors a total of 24,522 Lassila & Tikanoja plc’s shares were granted in 2022 from the share-based incentive programme of year 2021. The programme covered 9 persons.
Lassila & Tikanoja plc’s Board of Directors decided at a meeting held on 26 January 2022 on a new share-based incentive programme. Potential rewards are based on the EVA result and the carbon handprint of the Group. Based on the programme a maximum of 37,300 shares of the company could be granted. The performance criteria for the share-based incentive programme 2022 were not met, and no Lassila & Tikanoja plc’s shares were granted from the share- based incentive programme. The programme covered 9 persons.
Lassila & Tikanoja plc’s Board of Directors decided at a meeting held on 14 December 2022 on a new share-based incentive programme. The Performance Share Plan 2023–2027 comprises three three-year performance periods cov- ering the calendar years 2023–2025, 2024–2026 and 2025–2027. The Board of Directors decides on the performance criteria of the plan and the performance levels to be set for each performance criterion at the beginning of a perfor- mance period. The rewards to be paid based on the performance period 2023–2025 corre- spond to the value of approximately 202,067 Lassila & Tikanoja plc shares in maximum total, also including the portion to be paid in cash. The target group of the Performance Share Plan during the performance period 2023–2025 con- sists of approximately 38 key employees, including the Group’s President and CEO and the Group Executive Board. Potential rewards of performance period 2023-2025 will be based on return on capital employed (ROCE), total share- holder return (TSR) and reduction of the carbon footprint (ESG) during the period 2023-2025. The rewards to be paid based on the performance period 2024–2026 corre- spond to the value of approximately 249,900 Lassila & Tikanoja plc shares in maximum total, also including the portion to be paid in cash. The target group of the Performance Share Plan during the performance period 2024–2026 con- sists of approximately 50 key employees, including the Group’s President and CEO and the Group Executive Board.# Lassila & Tikanoja Annual Report 2023 40
The Group leases production and office premises including related land areas, vehicles and ICT equipment. At the commencement date of a lease contract, a right-of-use asset and a lease liability, measured as the present value of the remaining lease payments, is recognised in the statement of financial position. The right-of use asset is subsequently measured at cost less accumulated depreciation and less any accumulated impairment losses and adjusted for any remeasurements of the lease liability. Depreciation is calculated using the straight-line method from the commencement date to the earlier of the end of the lease term or the end of the useful life of the right-of-use asset. The depreciations of right-of-use assets are presented in depreciation, amortisation and impairments in the income statement. The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or price level or if the Group changes its assessment of whether it will exercise a purchase, extension or termination option. The interest expense on the lease liability is included in the financial income and expenses in the income statement. In the statement of cash flows, the amortisation of lease liabilities is presented in the cash flows from financing activities and the interest paid in the cash flows from operating activities. The Group applies the exemption for short-term leases to production and office premises leases and the exemption for low-value assets to leases of ICT equipment. For these leases, the right-of-use asset and lease liability is not recognised. The lease payments of low-value assets and short-term leases are included in Other operating expenses and Materials and services in the income statement.
| MEUR | 2023 | 2022 |
|---|---|---|
| Depreciation expense of right-of-use assets | -21.6 | -19.5 |
| Interest expenses on lease liabilities | -2.4 | -1.5 |
| Expenses related to leases of low-value assets | -4.2 | -4.3 |
| Total | -28.2 | -25.3 |
In 2023, the cash flows related to leases totalled EUR -27.8 million (-25.3).
Depreciation and amortisation are recognised on a straight-line basis over the economic useful lives of the assets, or over the lease contract periods, when applicable, if shorter.
Goodwill is not amortised, but is tested annually for impairment during the last quarter. Goodwill is presented in the statement of financial position at historical cost less impairment losses, if any. For completed landfills the Group applies the units of production method, which involves depreciation on the basis of the volume of waste received. Land is not depreciated.
On each balance sheet date, the Group assesses the carrying amounts of its assets for any impairment. If any indication of impairment exists, an estimate of the asset’s recoverable amount is made. The recoverable amount is the higher of an asset’s fair value less selling costs and its value-in-use. Value-in-use refers to the estimated future net cash flows available from an asset, discounted to the present value. The discount rate used is the pre-tax rate, which reflects the market view of the time value of money and the risks associated with the asset. An impairment loss is recognised in the income statement when an asset’s carrying amount exceeds its recoverable amount. Impairment losses attributable to a cash-generating unit are used for deducting first the goodwill allocated to the cash-generating unit and, thereafter, the other assets of the unit on an equal basis. Intangible assets under construction are software projects that cannot be tested separately for impairment, as they do not generate separate cash flows. There is no need for impairment if, at the end of the financial period, it is clear that the projects will be completed and the software will be introduced. Intangible assets under construction are, however, tested for impairment as part of the cash generating unit to which they belong. An impairment loss for an asset other than goodwill recognised in prior periods is reversed if there is a change in circumstances and the recoverable amount has changed. An impairment loss recognised for goodwill is not reversed. Goodwill impairment testing is described in note 3.2.
Gains and losses on sales and disposal of assets are recognised through profit or loss and are presented in other operating income or expenses.
| MEUR | 2023 | 2022 |
|---|---|---|
| Depreciation and amortisation | ||
| Intangible assets | -6.8 | -7.8 |
| Buildings | -5.5 | -6.2 |
| Machinery and equipment | -21.6 | -21.8 |
| Right-of-use assets | -21.6 | -19.5 |
| Other tangible assets | -0.0 | -0.0 |
| Total | -55.5 | -55.4 |
| Impairments | ||
| Intangible assets | -1.9 | -1.9 |
| Total | -1.9 | -1.9 |
| Gains / losses on sales of intangible and tangible assets | ||
| Gain on sales of intangible and tangible assets | 1.7 | 1.7 |
| Loss on sales of intangible and tangible assets | -0.1 | -0.5 |
| Total | 1.6 | 1.2 |
Lassila & Tikanoja Annual Report 2023 41
Exchange rate gains and losses arising from foreign-currency transactions and the translation of monetary items are recognised in the income statement. Foreign exchange gains and losses on business transactions are included in the respective items above operating profit. Foreign exchange gains and losses on financial assets and liabilities are included in financial income and costs. Borrowing costs are recognised as expenses in the period in which they arise. Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset shall be included in the acquisition cost of that asset. There were no such costs capitalised at the end of the reporting period. Transaction costs directly attributable to borrowing are included in the historical cost of the liability and recognised as an interest expense during the expected life of the liability applying the effective interest method.
Potential rewards of performance period 2024-2026 will be based on return on capital employed (ROCE), total shareholder return (TSR) and reduction of the carbon footprint (ESG) during the period 2024-2026.
Bridge Plan 2023–2026
Lassila & Tikanoja plc’s Board of Directors decided at a meeting held on 14 December 2022 on a new share-based incentive programme. The Bridge Plan 2023–2026 has two (2) one-year (1) performance periods covering the calendar years 2023 and 2024. A performance period is followed by a two-year retention period. The aim of the plan is to support the transition from the old Performance Share Plan to the new Performance Share Plan.
The Board of Directors decides on the performance criteria of the plan and the performance levels to be set for each performance criterion at the beginning of a performance period.
The rewards to be paid based on the performance period 2023 correspond to the value of approximately 83,800 Lassila & Tikanoja plc shares in maximum total, also including the portion to be paid in cash. The target group of the Bridge Plan during the performance period 2023 consists of approximately 10 key employees, including the Group’s President and CEO and the Group Executive Board. Potential rewards of performance period 2023 will be based on return on capital employed (ROCE) and reduction of the carbon footprint (ESG) in 2023.
The rewards to be paid based on the performance period 2024 correspond to the value of approximately 83,800 Lassila & Tikanoja plc shares in maximum total, also including the portion to be paid in cash. The target group of the Bridge Plan during the performance period 2024 consists of approximately 10 key employees, including the Group’s President and CEO and the Group Executive Board. Potential rewards of performance period 2024 will be based on return on capital employed (ROCE) and reduction of the carbon footprint (ESG) in 2024.
Expenses arising from share-based incentive programmes, MEUR
| 2023 | 2022 | |
|---|---|---|
| Share component | 0.5 | 0.1 |
| Total | 0.5 | 0.1 |
Information of the share-based incentive programmes
| 2023-2027 | 2023-2026 | 2024-2026 | 2023-2025 | 2024 | 2023 | 2022 | 2021 | |
|---|---|---|---|---|---|---|---|---|
| Share-based incentive programme | ||||||||
| Performance period | ||||||||
| Performance period | 2024 | 2023 | 2022 | 2021 | ||||
| Grant date | - | 16 Jan 2023 | - | 16 Jan 2023 | 26 Jan 2022 | 27 Jan 2021 | ||
| Start of the earnings period | 1 Jan 2024 | 1 Jan 2023 | 1 Jan 2024 | 1 Jan 2023 | 1 Jan 2022 | 1 Jan 2021 | ||
| End of the earnings period | 31 Dec 2026 | 31 Dec 2025 | 31 Dec 2024 | 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2021 | ||
| Average share price at grant date | - | 11.48 | - | 11.48 | 13.06 | 15.40 | ||
| Maximum number of shares | 249,000 | 202,067 | 83,800 | 83,800 | 37,300 | 37,300 | ||
| Realisation on closing date, shares | - | 24,522 | ||||||
| Returned shares | - | - | ||||||
| Obligation to hold shares, years | - | - | 2 | 2 | 2 | 2 | ||
| Release date of shares | - | - | 31 Mar 2027 | 31 Mar 2026 | 31 Mar 2025 | 31 Mar 2024 | ||
| Number of persons included | 50 | 38 | 10 | 10 | 9 | 9 | ||
| ------- | -------- | -------- | ||||||
| Financial income | ||||||||
| Interest income on loans and other receivables | 1.2 | 0.2 | ||||||
| Interest income from joint ventures | - | 0.2 | ||||||
| Fair value of interest rate swap – transfer from OCI¹ | 1.3 | - | ||||||
| Total financial income | 2.5 | 0.4 | ||||||
| Financial expenses | ||||||||
| Interest expenses on borrowings measured at amortised cost | 5.7 | 3.7 | ||||||
| Interest expenses on lease liabilities | 2.4 | 1.5 | ||||||
| Other financial expenses | 0.5 | 0.8 | ||||||
| Losses on foreign exchange | 0.0 | 0.2 | ||||||
| Total financial expenses | 8.7 | 6.2 | ||||||
| Financial income and expenses | -6.3 | -5.8 |
¹ The interest rate swap that was used for hedging cash flows related to floating rate loans was terminated in June 2023 in conjunction with the refinancing of the hedged loan. The fair value of the interest rate swap totalling EUR 1.3 million was recognised as financial income in the consolidated income statement.
The Group’s income taxes consist of current tax and deferred tax. Tax expenses are recognised in the income statement, with the exception of items directly recognised in equity or comprehensive result, in which case the tax effect is recognised in the corresponding item. Current tax is determined for the taxable profit for the period according to prevailing tax rates in each country. Taxes are adjusted by current taxes related to previous periods, if any. Deferred tax assets and liabilities are recognised for all temporary differences between the tax bases of assets and liabilities and their carrying amounts. The deferred taxes are determined using tax rates enacted by the balance sheet date and that are expected to apply when the deferred tax asset is realised or liability settled. No deferred tax is recognised for impairment of goodwill that is not tax-deductible. A deferred tax asset is recognised only to the extent that it is probable that taxable profit will be available against which the deferred tax asset can be utilised. The most significant temporary differences arise from fair value measurements related to acquisitions and new intangible assets.
| MEUR | 2023 | 2022 |
|---|---|---|
| Income tax for the period | -6.3 | -5.7 |
| Income tax for previous periods | -0.0 | -0.0 |
| Change in deferred tax | 0.7 | -0.6 |
| Total | -5.7 | -6.3 |
The reconciliation of income tax expense recognised in the income statement and income tax calculated at the statutory tax rate in Finland
| MEUR | 2023 | 2022 |
|---|---|---|
| Profit before tax | 35.7 | 37.8 |
| Income tax at Finnish tax rate 20% | -7.1 | -7.6 |
| Difference between tax rate in Finland and in other countries | 0.0 | -0.0 |
| Non-deductible expenses | -0.2 | -0.3 |
| Tax exempt income | 1.2 | 1.6 |
| Income tax for previous periods | -0.1 | 0.0 |
| Unrecognised deferred tax on loss for the period | -0.1 | -0.0 |
| Utilisation of previously unrecognised tax losses | - | 0.1 |
| Other items | 0.6 | -0.2 |
| Total | -5.7 | -6.3 |
| MEUR | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
|---|---|---|---|---|---|---|
| Before tax | Tax expense/ benefit | After tax | Before tax | Tax expense/ benefit | After tax | |
| Items arising from re-measurement of defined benefit plans | -0.0 | 0.0 | -0.0 | 0.2 | -0.0 | 0.2 |
| Hedging reserve, change in fair value | -1.2 | 0.2 | -0.9 | 1.7 | -0.3 | 1.3 |
| Currency translation differences | 0.1 | - | 0.1 | -5.7 | - | -5.7 |
| Currency translation differences recognised through profit or loss | - | - | - | 0.1 | - | 0.1 |
| Components of other comprehensive income | -1.1 | 0.2 | -0.9 | -3.7 | -0.4 | -4.1 |
Lassila & Tikanoja Annual Report 2023 42
Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORT Proposal by the Board of Directors SUSTAINABILITY REPORT
| MEUR | 2023 | 2022 |
|---|---|---|
| Deferred tax assets | 3.1 | 1.9 |
| Deferred tax liabilities | -28.5 | -28.1 |
| Deferred taxes, net | -25.4 | -26.3 |
At the balance sheet date, the Group companies did not have tax losses, on which no deferred tax asset has been recognised as the realisation of the tax benefit is not considered probable (EUR 0.4 million at the end of 2022). Deferred tax is recognised in the statement of financial position as tax assets and tax liabilities. Deferred tax assets and deferred tax liabilities are set off when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred taxes relate to the same fiscal authority.
The recognition of deferred tax assets involves management’s judgement. The appropriateness for recognising deferred tax assets is assessed at each balance sheet date. For this purpose, the Group estimates the probability of subsidiaries generating recoverable taxable income against which unused tax losses and unused tax compensations can be utilised. The factors used in the estimates may differ from the actuals, which may lead to write-down of deferred tax assets.
| MEUR | At 1 Jan 2023 | Recognised in income statement | Recognised in equity | Exchange rate differences | Business acquisitions | At 31 Dec 2023 |
|---|---|---|---|---|---|---|
| Deferred tax assets | ||||||
| Tax losses | 1.6 | -0.3 | 0.1 | 1.4 | ||
| Pension benefits | 0.2 | 0.0 | 0.2 | |||
| Provisions | 1.7 | 0.1 | 1.8 | |||
| Unused depreciation | 1.4 | 0.3 | 1.7 | |||
| Other temporary differences | 2.0 | 2.7 | 4.8 | |||
| Netting of deferred taxes | -5.1 | -6.6 | -6.6 | |||
| Total | 1.9 | 2.7 | 0.0 | 0.1 | - | 3.1 |
| Deferred tax liabilities | ||||||
| Acquisitions | -24.4 | -1.7 | -0.1 | -26.3 | ||
| Appropriations | -7.4 | -0.2 | -7.6 | |||
| Fair value adjustments | -0.2 | 0.2 | - | |||
| Other temporary differences | -1.1 | -0.1 | -1.2 | |||
| Netting of deferred taxes | 5.1 | 6.6 | 6.6 | |||
| Total | -28.1 | -2.0 | 0.2 | -0.1 | - | -28.5 |
| MEUR | At 1 Jan 2022 | Recognised in income statement | Recognised in equity | Exchange rate differences | Business acquisitions | At 31 Dec 2022 |
|---|---|---|---|---|---|---|
| Deferred tax assets | ||||||
| Tax losses | 1.8 | -0.0 | -0.2 | 1.6 | ||
| Pension benefits | 0.2 | -0.0 | 0.2 | |||
| Provisions | 2.2 | -0.4 | 1.7 | |||
| Fair value adjustments | 0.1 | -0.1 | - | |||
| Unused depreciation | 1.3 | 0.1 | 1.4 | |||
| Other temporary differences | 0.1 | 2.0 | 2.0 | |||
| Netting of deferred taxes | -2.9 | -5.1 | -5.1 | |||
| Total | 2.7 | 1.6 | -0.2 | -0.2 | - | 1.9 |
| Deferred tax liabilities | ||||||
| Acquisitions | -22.6 | -1.2 | 0.3 | -0.9 | -24.4 | |
| Appropriations | -6.9 | -0.5 | -7.4 | |||
| Fair value adjustments | - | -0.2 | -0.2 | |||
| Other temporary differences | -0.7 | -0.4 | 0.0 | -1.1 | ||
| Netting of deferred taxes | 2.9 | 5.1 | 5.1 | |||
| Total | -27.2 | -2.2 | -0.2 | 0.3 | -0.9 | -28.1 |
Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORT Proposal by the Board of Directors SUSTAINABILITY REPORT Lassila & Tikanoja Annual Report 2023 Lassila & Tikanoja Annual Report 2023 43
Financial statements of the parent company
1. 2. 3. 4. 5. Proposal by the Board of Directors
2 Operational assets and liabilities
2.1 Trade and other receivables............................44
2.2 Inventories .................................................................44
2.3 Trade and other current payables ...............45
2.4 Other non-current liabilities .............................45
2.5 Provisions ..................................................................45
2.6 Retirement benefit obligations ......................46
Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORT Proposal by the Board of Directors SUSTAINABILITY REPORT Lassila & Tikanoja Annual Report 2023 Lassila & Tikanoja Annual Report 2023 44
Financial statements of the parent company
1. 2. 3. 4. 5. Proposal by the Board of Directors
2.1 Trade and other receivables
Trade receivables are measured at historical cost less expected credit losses. The receivables are non-interest bearing and the general payment term for customers is 14 days. Trade receivables are classified as financial assets, that are explained in more detail in notes 4.1 Financial assets and liabilities and 4.2 Financial risk management. A simplified impairment model allowed by IFRS 9 standard is applied to the recognition of expected credit losses. Expected credit losses are calculated by dividing trade receivables into categories based on maturity and by multiplying said categories with the credit loss percentages, which are based on historical data on credit losses realised from trade receivables and the outlook for the short-term future. This impairment model covers the company’s trade receivables and contract assets. Based on historical data and the outlook for the short-term future, an allowance for impairment is recognised as follows (credit loss percentage applied in the previous year in brackets): Trade receivables not past due 0.1 per cent (0.1), past due 1-90 days 0.8 per cent (0.7), past due 91-365 days 11.6-23.1 per cent (8.6-25.0 per cent). Trade receivables due over 360 days are written down completely. If the customer has become insolvent, such as in the case of bankruptcy or debt restructuring, the trade receivable is written down as a final credit loss when a payment can no longer be expected with reasonable certainty.
| MEUR | 2023 | 2022 |
|---|---|---|
| Trade receivables | 85.9 | 91.0 |
| Contract assets ¹ | 30.8 | 30.8 |
| Accrued income | 7.6 | 9.3 |
| Prepayments | 0.3 | 0.2 |
| Tax receivables | 1.2 | 8.7 |
| Derivative receivables | - | 1.2 |
| Other receivables | 0.0 | 0.3 |
| Total | 125.8 | 141.6 |
¹ Contract assets consist of uninvoiced sales, which will be invoiced during the following reporting period.
| MEUR | 2023 | 2022 |
|---|---|---|
| Employees' health care compensation | 1.6 | 1.7 |
| Licences | 0.7 | 0.9 |
| Other | 5.4 | 6.8 |
| Total | 7.6 | 9.3 |
| MEUR | 2023 | 2022 |
|---|---|---|
| Allowance for impairment, 1 January | 0.5 | 0.4 |
| Change in the income statement | 0.0 | 0.1 |
| Allowance for impairment, 31 December | 0.5 | 0.5 |
Impairment losses and changes in allowance for impairment are presented note 1.4 Other operating income and expenses. Financial assets are not collateralised. No impairment was recognised on other financial assets.## 2.2 Inventories
Accounting policy
Inventories are measured at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. The inventories of Environmental Products in Environmental Services are measured using the weighted average cost method. The value of other inventories is determined using the FIFO method. At its recycling plants, recyclable materials are processesed into secondary raw materials for sale. The cost of the inventories of these materials comprises raw materials, direct labour costs, other direct costs of manufacturing and a proportion of variable and fixed production overheads based on normal operating capacity.
| MEUR | 2023 | 2022 |
|---|---|---|
| Raw materials and consumables | 3.0 | 3.0 |
| Finished goods | 1.0 | 1.8 |
| Other inventories | 3.8 | 2.9 |
| Total | 7.8 | 7.8 |
The carrying value of the inventories was written down to the net realisable value. The expense of EUR 0.0 million (0.0) is included in Materials and services in the income statement.
Maturity of trade receivables, contract assets and allowance for impairment
| MEUR | 2023 | 2022 | ||
|---|---|---|---|---|
| Trade receivables and contract assets | of which the allowance for impairment | Trade receivables and contract assets | of which the allowance for impairment | |
| Trade receivables and contract assets not past due | 100.0 | 0.1 | 106.5 | 0.1 |
| Past due 1-90 days | 16.3 | 0.1 | 14.4 | 0.1 |
| Past due 91-365 days | 0.8 | 0.1 | 1.4 | 0.2 |
| Past due over 365 days | 0.2 | 0.2 | 0.1 | 0.1 |
| Total | 117.2 | 0.5 | 122.4 | 0.5 |
Financial statements of the parent company
Primary financial statements of the Group
Notes to the consolidated financial statements
1. KEY FIGURES
2. FINANCIAL STATEMENTS
3. REPORT BY THE BOARD OF DIRECTORS
4. CORPORATE GOVERNANCE
5. REMUNERATION REPORT
Proposal by the Board of Directors
SUSTAINABILITY REPORT
Lassila & Tikanoja Annual Report 2023
Lassila & Tikanoja Annual Report 2023
45
Financial statements of the parent company
1. KEY FIGURES
2. FINANCIAL STATEMENTS
3. REPORT BY THE BOARD OF DIRECTORS
4. CORPORATE GOVERNANCE
5. REMUNERATION REPORT
Proposal by the Board of Directors
Accounting policy
Trade and other current non-interest-bearing liabilities are recognised in the balance sheet at historical cost. The impact of discounting is not essential considering the maturity of the payables. Trade payables are classified as financial liabilities that are presented in notes 4.1 Financial assets and liabilities and 4.2 Financial risk management.
| MEUR | 2023 | 2022 |
|---|---|---|
| Advances received | 11.2 | 9.5 |
| Trade payables | 63.7 | 60.1 |
| Current tax liabilities | 0.3 | 1.0 |
| Other liabilities | 21.8 | 25.7 |
| Accrued expenses and deferred income | 76.1 | 75.2 |
| Total | 173.1 | 171.5 |
Accrued expenses and deferred income
| MEUR | 2023 | 2022 |
|---|---|---|
| Liabilities related to personnel expenses¹ | 69.5 | 68.0 |
| Other accrued expenses | 6.6 | 7.2 |
| Total | 76.1 | 75.2 |
¹ Liabilities related to personnel expenses include ordinary accruals for salaries, pensions and other statutory personnel expenses. The advances received include contract liabilities as well as advances received for rental payments. The fair values of trade and other current payables equal their book values.
| MEUR | 2023 | 2022 |
|---|---|---|
| Advances received | 7.2 | 7.6 |
| Deferred consideration | 5.9 | 5.7 |
| Other liabilities | 0.0 | 0.0 |
| Total | 13.2 | 13.3 |
Deferred consideration is related to the acquisition of 70 per cent share of Sand & Vattenbläst i Tyringe AB (”SVB”) that offers process cleaning services in Sweden. The acquisition took place on 1 February 2022. SVB is consolidated with 100 per cent share in the Group and, in connection with the arrangement, L&T has recognised in financial liabilities an estimate of the deferred considera- tion for the acquisition. The deferred consideration relates to the acquisition of non-controlling interest and is measured at fair value, which is reflected in the present value of the estimated liability. It will mature on 1 February 2026 at the earliest. In the last quarter of 2023, an increase of EUR 0.2 million was recog- nised in the deferred consideration (increase of EUR 0.8 million).
Critical judgements by Management
The preparation of calculations used in valuation of the deferred consideration requires the use of management judgement. The EBITDA forecast used in the calculations is based on actual development and management’s view on the growth outlook for the business. Though the assumptions used are appropriate according to the management’s judgement, the EBITDA forecast used in the calculation may fundamentally differ from the actual figures realised in the future.
Accounting policy
A provision is recognised when the Group has a legal or factual obligation towards a third party resulting from an earlier event, fulfilment of the payment obligation is probable, and its amount can be reliably estimated. Provisions are measured at the current value of the expenditure required to settle the obligation. Increase in provisions due to the passage of time is recognised as interest expense. Changes in provisions are recognised in the income statement in the same item in which the provision is originally recognised. Environmental provisions are recognised when the Group has an existing obligation that is likely to result in a payment obligation, the amount of which can be reliably estimated. Environmental provisions related to the restoration of sites are made at the commencement of each project. The costs recognised as a provision, as well as the original acquisition cost of assets, are depreciated over the useful life of the asset, and provisions are discounted to present value. The most significant provisions recognised in the statement of financial position are the site restoration provisions for landfills and the processing sites for contaminated soil.
| MEUR | 2023 | 2022 |
|---|---|---|
| Non-current provisions | 7.2 | 7.4 |
| Current provisions | 0.9 | 1.7 |
| Total | 8.1 | 9.1 |
Critical judgements by Management
Recognition and measurement of provisions require management to assess the best estimate of the expenditure needed to settle the present obligation at the end of the reporting period. The actual amount and timing of the expenditure might differ from the estimates made. The carrying amounts of provisions are reviewed regularly and adjusted when needed to consider changes in cost estimates, regulations, applied technologies and conditions .
Financial statements of the parent company
Primary financial statements of the Group
Notes to the consolidated financial statements
1. KEY FIGURES
2. FINANCIAL STATEMENTS
3. REPORT BY THE BOARD OF DIRECTORS
4. CORPORATE GOVERNANCE
5. REMUNERATION REPORT
Proposal by the Board of Directors
SUSTAINABILITY REPORT
Lassila & Tikanoja Annual Report 2023
Lassila & Tikanoja Annual Report 2023
46
Financial statements of the parent company
1. KEY FIGURES
2. FINANCIAL STATEMENTS
3. REPORT BY THE BOARD OF DIRECTORS
4. CORPORATE GOVERNANCE
5. REMUNERATION REPORT
Proposal by the Board of Directors
Obligations covered by the environmental provisions
The Group has leased site that it uses as landfill from the city of Kotka. In Varkaus the Group uses a site for intermediate storing, processing and final disposal of contaminated soil. At the expiry of the leases or at the discontinua- tion of operations, the Group is responsible for site restoration comprising land- scaping and post-closure environmental monitoring called for in the terms and conditions of environmental permits. The Munaistenmetsä landfill site in Uusikaupunki serves as a final disposal area for municipal waste, contaminated soil and industrial by-products. After the receipt of a new environmental permit, a construction of a processing site for hazardous waste has been started in the area. The utilisation of the new haz- ardous waste landfill and treatment area will be started in the summer of 2024. The material recycling centre in the landfill area in Oulu receives, processes and recovers various types of waste and side streams, such as industrial waste, contaminated soil, construction and demolition waste as well as municipal waste. The landfill area in Pori receives and processes gypsum, construction and demolition waste as well as contaminated soil and other smaller items. The envi- ronmental impact assessment process for the area has been completed and a reasoned conclusion has been received from the contact authorities.The prepa- ration of an application for a new environmental permit is currently ongoing. With the permit the area will be lisenced for receipt and processing of both normal and hazardous waste.
Other provisions
Other provisions consist mainly of provision for restructuring and accident insurance contribution.
| MEUR | Environmental provisions | Other provisions | Total |
|---|---|---|---|
| Provisions at 1 Jan 2023 | 7.4 | 1.7 | 9.1 |
| Additions | 0.2 | 0.7 | 0.9 |
| Used during the year | -0.3 | -0.7 | -1.0 |
| Reversals | -0.2 | -0.9 | -1.1 |
| Effect of discounting | 0.1 | - | 0.1 |
| Provisions at 31 Dec 2023 | 7.2 | 0.9 | 8.1 |
| MEUR | Environmental provisions | Other provisions | Total |
|---|---|---|---|
| Provisions at 1 Jan 2022 | 8.1 | 2.7 | 10.8 |
| Additions | 0.1 | 0.7 | 0.8 |
| Used during the year | -0.5 | -1.3 | -1.8 |
| Reversals | -0.4 | -0.5 | -0.8 |
| Effect of discounting | 0.1 | - | 0.1 |
| Provisions at 31 Dec 2022 | 7.4 | 1.7 | 9.1 |
Accounting policy
Pension plans are categorised as defined benefit and defined contribution plans. Under defined contribution plans. the Group pays fixed contributions for pensions. and it has no legal or factual obligation to pay further contri- butions. All pension arrangements that do not fulfil these conditions are considered defined benefit plans. The Group operates pension schemes in accordance with local regulations and practices in the countries in which it operates. and these pension schemes are mainly defined contribution plans. Contributions to defined contribution plans are recognised in the income statement in the financial period to which they relate. The company operates a few defined benefit plans originating mainly from business acquisitions. The Group is responsible for some of these defined benefit pension plans. while others are covered by pension insurance. The obligations have been calculated for each plan separately.# Financial statements of the parent company
Lassila & Tikanoja Annual Report 2023
47
The Group uses the projected unit credit method. Pension costs are recognised in the income statement over employees’ periods of service. in accordance with actuarial calculations. When calculating the present value of pension obligations. the discount rate is based on the market yield of the high-quality bonds issued by companies. whose maturity materially corresponds to the estimated maturity of the pension obligation. The risk premium is based on bonds issued by companies with an AA credit rating. The pension plan assets measured at fair value on the balance sheet date are deducted from the present value of the pension obligation to be recognised in the statement of financial position. The net liability (or asset) associated with a defined benefit pension plan is recognised in the statement of financial position. The current service cost (pension expense) and the net interest of the defined benefit plan’s net debt are recognised in the income statement and included in employee benefit expenses. Items (such as actuarial gains and losses and return on funded defined benefit plan assets. except items related to net interest) arising from the revaluation of the net liabilities (or assets) associated with a defined benefit plan are recognised in other comprehensive income in the period in which they arise. Past service costs are recognised as expenses through profit or loss at the earlier of the following: when the plan is rearranged or downsized or when the entity recognises the related restructuring expenses or benefits related to the termination of employment. The Group has in Sweden pension deposits concerning a few people. The Group has no legal or factual obligation to pay further contributions to these arrangements. The value of the deposits is recognised in other non-current receivables and a corresponding liability is recognised in pension liabilities.
| MEUR | 2023 | 2022 |
|---|---|---|
| Amounts recognised in the statement of financial position | ||
| Present value of funded obligations | 0.3 | 0.3 |
| Fair value of plan assets | -0.3 | -0.3 |
| 0.0 | 0.0 | |
| Present value of unfunded obligations | 0.5 | 0.5 |
| Liability related to pension deposits | 0.6 | 0.7 |
| Closing net liability | 1.2 | 1.2 |
| Changes in present value of obligation | ||
| Opening defined benefit obligation | 1.5 | 1.7 |
| Current service cost | 0.0 | 0.0 |
| Interest cost | 0.0 | 0.0 |
| Actuarial gain (-) and loss (+) on obligation | 0.0 | -0.2 |
| Benefits paid | -0.1 | -0.1 |
| Change in liability related to pension deposits | -0.1 | 0.0 |
| Closing value of obligation | 1.4 | 1.5 |
| Changes in fair value of plan assets | ||
| Opening fair value of plan assets | 0.3 | 0.3 |
| Interest income | 0.0 | 0.0 |
| Employers' contributions | 0.0 | 0.0 |
| Actuarial gain (+) and loss (-) | 0.0 | -0.0 |
| Benefits paid | -0.0 | -0.0 |
| Closing fair value of plan assets | 0.3 | 0.3 |
Lassila & Tikanoja Annual Report 2023
48
| MEUR | 2023 | 2022 |
|---|---|---|
| Movements in the liability recognised in the statement of financial position | ||
| Opening liability | 1.2 | 1.4 |
| Expense recognised in the income statement | 0.0 | 0.0 |
| Employers' contributions | 0.0 | 0.0 |
| Actuarial gain (-) and loss (+) | 0.0 | -0.2 |
| Contributions paid | -0.1 | -0.0 |
| Change in liability related to pension deposits | -0.1 | 0.0 |
| Closing liability | 1.2 | 1.2 |
| Amounts recognised in the statement comprehensive income | ||
| Current service cost | 0.0 | 0.0 |
| Interest cost | 0.0 | 0.0 |
| Interest income | -0.0 | -0.0 |
| Actuarial gain (-) and loss (+) | 0.0 | -0.2 |
| Total | 0.1 | -0.2 |
The Group estimates that it will contribute EUR 60 thousand to defined benefit plans in 2024.
| MEUR | 2023 | 2022 |
|---|---|---|
| Present value of obligation | 1.4 | 1.5 |
| Fair value of plan assets | -0.3 | -0.3 |
| Deficit | 1.2 | 1.2 |
| % | 2023 | 2022 |
|---|---|---|
| Discount rate | 4.0 | 3.8 |
| Expected rate of return on plan assets | 2.7 | 2.6 |
| Expected rate of salary increase | 3.7 | 4.9 |
| Expected rate of inflation | 2.5 | 2.4 |
| MEUR | 2023 | 2022 |
|---|---|---|
| Maturity of less than one year | 0.1 | 0.1 |
| 1-5 years | 0.3 | 0.2 |
| 5-10 years | 0.3 | 0.3 |
| 10-15 years | 0.2 | 0.2 |
| 15-20 years | 0.2 | 0.2 |
| 20-25 years | 0.1 | 0.1 |
| 25-30 years | 0.1 | 0.1 |
| over 30 years | 0.1 | 0.1 |
| Total | 1.3 | 1.2 |
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49
3 Intangible and tangible assets and other non-current assets
3.1 Goodwill and other intangible assets ....................... 49
3.2 Goodwill impairment testing ................................ 50
3.3 Tangible assets ...............................................51
3.4 Right-of-use assets and lease liabilities .................... 52
3.5 Other non-current assets ................................... 53
Lassila & Tikanoja Annual Report 2023
50
Goodwill represents the portion of the acquisition cost by which the aggregate of the consideration given, the share of non-controlling owners in the acquired entity and the previously owned share exceed the fair value of the acquired net assets at the time of acquisition. Goodwill is not amortised, but is tested annually for impairment during the last quarter of the financial year. Goodwill is measured at historical cost less impairment losses, if any. Intangible assets acquired in a business combination are measured at fair value. The useful lives of intangible assets are estimated to be either finite or indefinite. In L&T, the intangible assets recognised in business combinations include mainly customer relationships. The amorti- sation period for customer relationships is on average 10 years. Other intangible assets are recognised at historical cost less accumulated amortisation and impairment losses. The costs of software projects are recognised in other intangible assets starting from the time when the projects move out of the research phase into the development phase and the outcome of a project is an identifiable intangible asset. Such an intangible asset must provide L&T with future economic benefit that exceeds the costs of its development. The cost comprises all directly attributable costs necessary for preparing the asset to be capable of operating in the manner intended by the management. The largest cost items are consultancy fees paid to third parties. The depreciation period for computer software and software licences is five to ten years. Goodwill impairment testing is described in note 3.2 and amortisation and impairment of other intangible assets is described in note 1.7.
| MEUR | Goodwill | Customer relationships arising from acquisitions | Agreements on prohibition of competition arising from acquisitions | Other intan- gible assets arising from acquisitions | Intangible rights | Other intangible assets | Prepayments and construction in progress | Total |
|---|---|---|---|---|---|---|---|---|
| Acquisition cost, 1 Jan 2023 | 194.6 | 59.1 | 24.2 | 10.0 | 9.5 | 31.8 | 8.2 | 337.4 |
| Additions | 0.4 | 0.0 | 0.0 | 10.1 | 10.6 | 0.0 | 0.0 | 21.1 |
| Disposals | -22.7 | -0.1 | -15.2 | -38.0 | 0.0 | 0.0 | 0.0 | -76.0 |
| Impairments | -1.9 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | -1.9 |
| Transfers between items | 1.6 | -1.8 | -0.1 | 0.0 | 0.0 | 0.0 | 0.0 | -0.3 |
| Exchange differences | 0.1 | 0.0 | 0.0 | 0.0 | 0.0 | 0.1 | 0.1 | 0.3 |
| Acquisition cost, 31 Dec 2023 | 194.7 | 59.1 | 1.5 | 10.1 | 9.8 | 18.4 | 14.6 | 308.2 |
| Accumulated depreciation, 1 Jan 2023 | -13.9 | -39.7 | -24.0 | -9.8 | -6.6 | -26.2 | -120.2 | -214.2 |
| Accumulated amortisation on disposals and transfers | 22.7 | 0.1 | 15.1 | 37.9 | 0.0 | 0.0 | 0.0 | 75.8 |
| Amortisation charge | -3.3 | -0.1 | -0.1 | -0.7 | -2.6 | -6.8 | 0.0 | -13.6 |
| Exchange differences | 0.0 | -0.1 | -0.0 | -0.0 | -0.0 | -0.1 | -0.2 | -0.4 |
| Accumulated depreciation, 31 Dec 2023 | -13.9 | -43.1 | -1.4 | -9.8 | -7.2 | -13.8 | -89.2 | -178.4 |
| Carrying amount at 31 Dec 2023 | 180.8 | 16.1 | 0.1 | 0.2 | 2.6 | 4.6 | 14.6 | 219.0 |
Other intangible assets arising from acquisitions include mainly environmental permits. Other intangible assets consist primarily of software and software licences. Contractual commitments related to intangible assets totalled EUR 0.0 million (1.0).
| MEUR | Goodwill | Customer relationships arising from acquisitions | Agreements on prohibition of competition arising from acquisitions | Other intan- gible assets arising from acquisitions | Intangible rights | Other intangible assets | Prepayments and construction in progress | Total |
|---|---|---|---|---|---|---|---|---|
| Acquisition cost, 1 Jan 2022 | 186.6 | 55.4 | 24.1 | 10.1 | 9.3 | 32.7 | 3.5 | 321.8 |
| Additions | 0.5 | 0.1 | 0.0 | 6.5 | 7.1 | 0.0 | 0.0 | 14.2 |
| Business acquisitions | 11.5 | 5.4 | 0.1 | 0.0 | 17.0 | 0.0 | 0.0 | 34.0 |
| Disposals | -0.1 | -2.7 | -2.8 | -0.0 | 0.0 | 0.0 | 0.0 | -5.6 |
| Transfers between items | 1.8 | -1.8 | -0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Exchange differences | -3.6 | -1.6 | -0.1 | -0.0 | -0.3 | -0.0 | -0.0 | -5.7 |
| Acquisition cost, 31 Dec 2022 | 194.6 | 59.1 | 24.2 | 10.0 | 9.5 | 31.8 | 8.2 | 337.4 |
| Accumulated depreciation, 1 Jan 2022 | -14.6 | -37.2 | -24.0 | -9.8 | -5.8 | -25.7 | -117.1 | -234.2 |
| Accumulated amortisation on disposals and transfers | 0.0 | 2.7 | 2.7 | 0.0 | 0.0 | 0.0 | 0.0 | 5.4 |
| Amortisation charge | -3.5 | -0.1 | -0.1 | -0.9 | -3.2 | -7.8 | 0.0 | -15.6 |
| Exchange differences | 0.6 | 1.1 | 0.1 | 0.0 | 0.2 | 0.0 | 0.0 | 2.0 |
| Accumulated depreciation, 31 Dec 2022 | -13.9 | -39.7 | -24.0 | -9.8 | -6.6 | -26.2 | -120.2 | -214.2 |
| Carrying amount at 31 Dec 2022 | 180.7 | 19.4 | 0.2 | 0.3 | 2.9 | 5.6 | 8.2 | 217.2 |
Lassila & Tikanoja Annual Report 2023
50
The goodwill impairment testing is conducted at least annually or more frequently if there is any indication that goodwill maybe impaired. Impairment testing is conducted according to the business structure in force at the time of the impairment testing. In impairment testing, recoverable amounts are estimated on the basis of an asset’s value-in-use. Future cash flows are based on annual estimates of income statements and maintenance investments made by the management in connection with the strategy process for a four- year period. The management bases its estimates on actual development and views on the growth outlook for the industry (general market development and unit profitability, pricing, municipalisation decisions, personnel costs and raw material costs). Approved investment decisions are taken into account in the growth estimates. Cash flows extending beyond the four-year forecast period are calculated using the so-called terminal value method. The growth rates used in the calculations are based on the management’s estimates of long-term growth and development of profitability.
The preparation of value-in-use based calculations used in goodwill impairment testing requires the use of management judgement. The future cash flows are based on forecasts for the strategy period approved by the Board of Directors. These forecasts are based on actual development and management’s view on the growth outlook for the industry. The terminal growth rate is based on the management’s view on the long-term growth outlook for the business. The discount rates used reflect the best estimate of the weighted average cost of capital. Though the assumptions used are appropriate according to the manage- ment’s judgement, the estimated cash flows may fundamentally differ from those realised in the future.
The carrying amounts of goodwill are allocated to cash-generating units in accordance with the table below:
| MEUR | 2023 | 2022 |
|---|---|---|
| Environmental Services | 87.6 | 87.6 |
| Industrial Services | 30.6 | 30.6 |
| Facility Services, Finland | 28.6 | 28.6 |
| Facility Services, Sweden | 34.0 | 33.9 |
| Total | 180.8 | 180.7 |
The goodwill generated from the acquisition of Sand & Vattenbläst i Tyringe AB in the first quarter of 2022 is included in the goodwill allocated to Industrial Services.
The goodwill impairment testing has been prepared based on value-in-use calculations in which future cash flows are discounted to net present value. The terminal growth rate used in the value-in-use calculations of cash-gen- erating units is 2.0 per cent, which corresponds to the mid-term inflation goal of the European Central Bank. The same terminal growth rate is used in all cash-generating units based on similar business environment. The discount rates used in calculations are based on the Group’s weighted average cost of capital (WACC). Factors in WACC are risk-free interest rate, market risk premium, company-specific beta, cost of capital as well as the ratio between equity and liabilities. A discount rate has been defined for each cash generating unit.
| Discount rates used in the calculations (pre tax) % | 2023 | 2022 |
|---|---|---|
| Environmental Services | 9.4 | 8.5 |
| Industrial Services | 9.4 | 8.5 |
| Facility Services, Finland | 9.3 | 8.4 |
| Facility Services, Sweden | 9.3 | 8.5 |
According to the impairment testing, the value in use of all the cash generating units in the Group exceeded the carrying amounts of the tested assets. Thus, no impairments were recognised in 2023.
A sensitivity analysis of each cash-generating unit was performed, during which the key calculation assumptions were tested. The key assumptions used in the testing were discount rate and EBITDA per cent used in calculation of the terminal value. The EBITDA per cent was based on the historical development of the cash-generating unit. In the sensitivity analysis, a key assumption was tested by changing the threshold values to a value at which the value-in-use would equal the carrying amount. In Facility Services Sweden, a decrease of EBITDA per cent by 0.9 percentage points or an increase of discount rate by 1.8 percentage point would result in the value-in-use of Facility Services Sweden equaling the carrying amount of the tested assets. At the time of the testing, the difference between the value-in-use and the carrying amount of Facility Services Sweden was EUR 16.3 million and the EBITDA per cent in the forecast period was 5.5 per cent. Regarding the other cash-generating units, any change in the key assumptions which would be considered as somewhat likely could not result in the carrying amount of the cash-generating unit exceeding the value-in-use.
Lassila & Tikanoja Annual Report 2023 51
Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5.
Proposal by the Board of Directors
KEY FIGURES
FINANCIAL STATEMENTS
REPORT BY THE BOARD OF DIRECTORS
CORPORATE GOVERNANCE
REMUNERATION REPORT
SUSTAINABILITY REPORT
Tangible assets are recognised at historical cost less accumulated depreciation and impairment losses. The historical cost includes expenditure that is directly attributable to the acquisition of the asset. Borrowing costs immediately arising from the acquisition, construction or manufacture of tangible assets that meet the conditions are capitalised as part of the asset’s acquisition cost. Possible restoration costs are also included in the acquisition cost. In business combinations, tangible assets are measured at fair value on the acquisition date. In the statement of financial position, tangible assets are shown less accumulated depreciation and impairment, if any. Tangible assets are depreciated using the straight-line method over their expected useful lives, excluding new landfills. For completed landfills the Group applies the units of production method, which involves depre- ciation on the basis of the volume of waste received. The expected useful lives are reviewed on each balance sheet date, and, if expectations differ materially from previous estimates, the depreciation periods are adjusted to reflect the changes in expectations of future economic benefits. Depreciation in the financial statements is based on the following expected useful lives:
When an asset included in tangible assets consists of several components with different estimated useful lives, each component is treated as a separate asset. Ordinary repair and maintenance costs are recognised in the income statement during the period in which they are incurred. Costs of significant modification and improvement projects are capitalised if it is probable that the projects will result in future economic benefits to the Group. Gains and losses on sales and disposal of tangible assets are recognised through profit or loss and are presented in other operating income or expenses. Accounting policy for depreciations and impairments is presented in note 1.7.
| MEUR | Land | Buildings | Machinery and equipment | Other | Prepayments and construction in progress | Total |
|---|---|---|---|---|---|---|
| Acquisition cost, 1 Jan 2023 | 8.2 | 141.6 | 416.1 | 0.3 | 9.0 | 575.1 |
| Additions | 0.0 | 0.7 | 15.2 | 0.0 | 22.4 | 38.3 |
| Disposals | -0.5 | -0.1 | -26.4 | -0.0 | -27.0 | |
| Transfers between items | 4.0 | 11.5 | -15.4 | 0.1 | ||
| Exchange differences | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Acquisition cost, 31 Dec 2023 | 7.7 | 146.1 | 416.4 | 0.3 | 16.0 | 586.5 |
| Accumulated depreciation, 1 Jan 2023 | -0.5 | -108.4 | -310.8 | -0.1 | -419.8 | |
| Accumulated depreciation on disposals and transfers | 0.5 | 0.1 | 25.8 | 26.4 | ||
| Depreciation for the period | -5.5 | -21.6 | -0.0 | -27.1 | ||
| Exchange differences | -0.0 | -0.0 | -0.0 | -0.0 | -0.0 | |
| Accumulated depreciation, 31 Dec 2023 | -113.8 | -306.6 | -0.1 | -420.6 | ||
| Carrying amount at 31 Dec 2023 | 7.7 | 32.3 | 109.8 | 0.2 | 16.0 | 166.0 |
The carrying amount of machinery and equipment includes EUR 13.0 million (12.6) of compactors and balers sold through an external financing company. Due to the repurchase obligation the leased equipment is treated as tangible assets. Contractual commitments related to property, plant and equipment totalled EUR 14.0 million (19.7).
| MEUR | Land | Buildings | Machinery and equipment | Other | Prepayments and construction in progress | Total |
|---|---|---|---|---|---|---|
| Acquisition cost, 1 Jan 2022 | 7.4 | 138.9 | 408.9 | 0.1 | 10.1 | 565.4 |
| Additions | 0.8 | 0.6 | 12.8 | 0.1 | 12.4 | 26.7 |
| Business acquisitions | 0.2 | 4.3 | 0.1 | 4.6 | ||
| Disposals | -0.1 | -1.7 | -19.6 | -0.0 | -0.1 | -21.5 |
| Transfers between items | 3.6 | 9.9 | -13.5 | 0.0 | ||
| Exchange differences | -0.0 | -0.1 | -0.0 | -0.2 | ||
| Acquisition cost, 31 Dec 2022 | 8.2 | 141.6 | 416.1 | 0.3 | 9.0 | 575.1 |
| Accumulated depreciation, 1 Jan 2022 | -0.5 | -103.8 | -308.0 | -0.1 | -412.4 | |
| Accumulated depreciation on disposals and transfers | 0.6 | 18.6 | 19.3 | |||
| Depreciation for the period | -6.2 | -21.8 | -0.0 | -28.1 | ||
| Exchange differences | 1.1 | 0.4 | 0.0 | 1.5 | ||
| Accumulated depreciation, 31 Dec 2022 | -0.5 | -108.4 | -310.8 | -0.1 | -419.8 | |
| Carrying amount at 31 Dec 2022 | 7.7 | 33.2 | 105.3 | 0.2 | 9.0 | 155.3 |
Lassila & Tikanoja Annual Report 2023 52
Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5.
Proposal by the Board of Directors
KEY FIGURES
FINANCIAL STATEMENTS
REPORT BY THE BOARD OF DIRECTORS
CORPORATE GOVERNANCE
REMUNERATION REPORT
SUSTAINABILITY REPORT
A right-of-use asset is recognised from a lease contract at the commencement date of the lease, which is the date that the underlying asset is made available for use. Right-of-use assets are measured at cost less any cumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liability.The cost of the right-of-use asset includes the amount of lease liability recognised, any initial direct costs incurred and lease payments made at or before the commencement date less any lease incentives received. Possible restoration obligations are also considered in the cost of the right-of-use asset. At each balance sheet date, the carrying amounts of right-of-use assets are assessed for any impairment, as described in note 1.7. The lessee recognises the lease liability at the inception of the contract by discounting the future minimum lease payments to the present value. Since the interest rate implicit in the lease is not readily available in most of the Group’s lease contracts, the future minimum lease payments are discounted using The Group’s incremental borrowing rate. According to the standard, the incremental borrowing rate is the interest rate that the lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic situation. The Group has determined the incremental borrowing rate taking into consideration the lease term and the financial environment of the lease. The Group’s lease liability covers the lease liabilities of commodities leased through a financial company as well as the lease liabilities of other lease agreements excluding the short-term leases or leases for low-value assets, for which the right-of-use asset and lease liability is not recognised.
| MEUR | Land | Buildings and constructions | Machinery and equipment | Total |
|---|---|---|---|---|
| Acquisition cost, 1 Jan 2023 | 16.4 | 55.1 | 67.8 | 139.2 |
| Additions | 1.2 | 11.0 | 20.0 | 32.2 |
| Disposals | -2.4 | -6.9 | -6.1 | -15.5 |
| Exchange differences | - | 0.0 | 0.0 | 0.0 |
| Acquisition cost, 31 Dec 2023 | 15.1 | 59.2 | 81.7 | 155.9 |
| Accumulated depreciation, 1 Jan 2023 | -3.7 | -28.3 | -36.0 | -68.0 |
| Accumulated depreciation on disposals and transfers | 0.2 | 4.4 | 5.2 | 9.8 |
| Depreciation for the period | -1.0 | -9.6 | -10.9 | -21.6 |
| Exchange differences | -0.1 | -0.1 | -0.1 | -0.1 |
| Accumulated depreciation, 31 Dec 2023 | -4.5 | -33.6 | -41.8 | -79.9 |
| Carrying amount at 31 Dec 2023 | 10.6 | 25.6 | 39.9 | 76.0 |
| MEUR | Land | Buildings and constructions | Machinery and equipment | Total |
|---|---|---|---|---|
| Acquisition cost, 1 Jan 2022 | 12.9 | 47.7 | 60.4 | 121.1 |
| Additions | 3.4 | 10.2 | 9.2 | 22.7 |
| Disposals | 0.1 | -2.4 | -1.1 | -3.5 |
| Exchange differences | - | -0.4 | -0.7 | -1.1 |
| Acquisition cost, 31 Dec 2022 | 16.4 | 55.1 | 67.8 | 139.2 |
| Accumulated depreciation, 1 Jan 2022 | -2.6 | -20.5 | -28.1 | -51.3 |
| Accumulated depreciation on disposals and transfers | 1.4 | 0.7 | 2.2 | - |
| Depreciation for the period | -1.0 | -9.4 | -9.1 | -19.5 |
| Exchange differences | - | 0.2 | 0.5 | 0.6 |
| Accumulated depreciation, 31 Dec 2022 | -3.7 | -28.3 | -36.0 | -68.0 |
| Carrying amount at 31 Dec 2022 | 12.7 | 26.8 | 31.8 | 71.2 |
On the balance sheet date, no new lease agreements are known which will become valid in the coming financial years that would have a significant impact on the amount of debt resulting from a right-of-use asset or a lease agreement. Lease liabilities and their maturity have been presented in notes 4.1 Financial assets and liabilities and 4.2 Financial risk management. For more information about the expenses related to leases, please refer to note 1.6.
The Group has lease contracts relating mainly to real estate and land areas which are valid until further notice. For such contracts, the management evaluates the lease term on a lease-by-lease basis. In evaluating the lease term the Group considers e.g. any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the importance of the underlying asset to the Group’s operations taking into account, for example, whether the underlying asset is a specialised asset, the location of the underlying asset and the availability of suitable alternatives. The lease term is reassesed in future periods to ensure that the lease term reflects the current circumstances.
Lassila & Tikanoja Annual Report 2023 53
Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements
1. 2. 3. 4. 5. Proposal by the Board of Directors
KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT
The Group’s other non-current assets consist of shares in associated companies and joint ventures as well as other shares and holdings. The Group’s interests in associated companies and joint ventures are accounted for using the equity method of accounting. The Group’s share of its associated companies’ or joint ventures’ post-acquisition profits or losses after tax are recognised in the income statement and as adjustment to investment in associated companies or joint ventures in the balance sheet accordingly. When the Group’s share of losses in an associated company or a joint venture equals or exceeds its interest in the associated company or joint venture, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associated company or joint venture. Other shares and holdings include shares in a few smaller companies as well as golf shares, and they are measured at fair value through profit or loss. Other receivables mainly include deposits related to pension obligations in Sweden as well as non-current advance payments.
| MEUR | Shares in associated and joint venture companies | Other shares and holdings | Other receivables |
|---|---|---|---|
| Acquisition cost, 1 Jan 2023 | 14.0 | 0.2 | 1.9 |
| Additions | - | - | 0.0 |
| Disposals | - | - | -0.3 |
| Share of the result of associated companies and joint ventures | 3.6 | - | - |
| Exchange differences | - | - | 0.0 |
| Acquisition cost, 31 Dec 2023 | 17.6 | 0.2 | 1.5 |
| MEUR | Shares in associated and joint venture companies | Other shares and holdings | Other receivables |
|---|---|---|---|
| Acquisition cost, 1 Jan 2022 | 0.0 | 0.2 | 2.0 |
| Additions | 13.3 | 0.0 | 0.5 |
| Disposals | - | -0.0 | -0.6 |
| Share of the result of associated companies and joint ventures | 0.7 | - | - |
| Exchange differences | - | - | -0.1 |
| Acquisition cost, 31 Dec 2022 | 14.0 | 0.2 | 1.9 |
| Name | Domicile | Direct ownership (%) 2023 | Direct ownership (%) 2022 |
|---|---|---|---|
| Laania Oy | Helsinki | 55 | 55 |
| MEUR | 2023 | 2022 |
|---|---|---|
| Intangible and tangible assets | 3.3 | 3.3 |
| Right-of-use assets | 2.4 | 2.4 |
| Other non-current receivables | 0.0 | 0.0 |
| Inventories | 40.7 | 51.4 |
| Trade and other receivables | 40.2 | 27.3 |
| Assets total | 86.7 | 84.4 |
| Non-current interest bearing liabilities | 22.4 | 32.5 |
| Trade payables | 14.4 | 11.6 |
| Other current payables | 17.9 | 15.1 |
| Liabilities total | 54.8 | 59.1 |
| Net sales | 153.4 | 89.7 |
| Depreciation and amortisation | -1.4 | -0.8 |
| Financial income and expenses | -1.2 | -0.5 |
| Income taxes | -1.6 | -0.3 |
| Result for the period | 6.5 | 1.3 |
The reconciliation of the joint venture’s financial information to the Group’s book value:
The Group's ownership, % | 55.0
The Group's share of net assets | 17.6
The value of the joint venture in the consolidated statement of financial position | 17.6
The Group's ownership, % | 55.0
The Group's share of net assets | 14.0
The value of the joint venture in the consolidated statement of financial position | 14.0
For more information on the joint venture please refer to note 5.3.
Lassila & Tikanoja Annual Report 2023
Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements
1. 2. 3. 4. 5. Proposal by the Board of Directors
54
KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT
Lassila & Tikanoja Annual Report 2023
Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements
1. 2. 3. 4. 5. Proposal by the Board of Directors
55
KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT
The Group’s financial assets and liabilities include cash and cash equivalents, trade and other receivables, trade and other payables, bank loans, bonds, commercial papers, lease liabilities and derivatives. Financial assets and liabilities are classified into following measurement categories:
This classification is performed when the asset or liability is acquired. The classification of financial assets into different measurement categories depends on the business model for managing the financial asset and the contractual cash flow characteristics of the financial asset acquired. The classification of financial liabilities into different measurement categories depends on the purpose for which the financial liabilities were initially acquired. A financial asset is derecognised when the rights to the cash flows from the asset expire, or when all material risks and rewards of the ownership of the asset have been transferred outside the Group. A financial liability is derecognised when the obligation specified in the contract is discharged or cancelled or expires.
Cash and cash equivalents consist of cash on hand, bank deposits redeemable on demand and other short-term liquid investments. Their maturity is no longer than three months from the acquisition date.They are recognised as of the settlement date and measured at historical cost. Foreign currency transactions are translated into euros using the exchange rates prevailing on the balance sheet date. The used credit limits are included in current interest-bearing liabilities. Trade and other receivables are measured at amortised cost. Receivables are classified as current financial assets unless their maturity date is more than 12 months from the balance sheet date. Trade and other receivables are recognised at historical cost less allowances for impairment. A valuation allowance for impairment of trade receivables is recognised when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. The Group applies the simplified approach to providing for expected credit losses, which permits the use of the lifetime expected loss provision for all trade receivables. Impairments are recognised as an expense in the income statement. Sold non-recourse trade receivables’ credit risk and contractual rights are transferred from the Group on the selling date and related expenses are recognised as financial expenses. More information about allowance for impairment of trade receivables is presented in note 2.1.
Derivatives which are not designated as hedges as well as deferred considerations related to acquisitions are measured at fair value through profit and loss. Derivatives within this category are short-term liabilities with a maturity of less than 12 months and are measured at fair value using the market price on the balance sheet date. Deferred considerations are recognised in the balance sheet on group level only. They are usually non-current liabilities with maturity more than 12 months. Measurement of fair value of the deferred considerations depends on the sale and purchase agreement. Both realised and unrealised gains and losses arising from the changes in fair value are recognised in the income statement for the financial period during which they incurred.
Financial liabilities measured at amortised cost are recognised in the statement of financial position on the settlement date at fair value, on the basis of the consideration received. Transaction costs directly attributable to the acquisition or issue of a loan are included in the original carrying amount of financial liabilities. Financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expenses are recognised in the income statement using the effective interest rate method. Financial liabilities that expire within 12 months from the balance sheet date, including bank overdrafts in use, are recognised within current interest-bearing liabilities, and those expiring in a period exceeding 12 months, are recognised within non-current interest-bearing liabilities.
Fair values of interest rate swaps are valued using a technique based on present value of future cash flows, which is supported by market interest rates at the balance sheet date. Fair values describe the prices that the Group would gain or should pay, if the derivative financial instruments were cancelled at the balance sheet date. At the balance sheet date the company did not have any interest rate swaps.
Fair value of lease liabilities is calculated by discounting future cash flows using the incremental borrowing rate. More information on the accounting policies for lease liabilities is presented in note 3.4.
Financial assets and liabilities recognised at fair value must be categorised by using a three-level fair value hierarchy that reflects the significance of the input data used in fair value measurement. Hierarchy level 1 includes such financial instruments, whose fair value is directly based on quoted prices in active markets. Financial instruments of hierarchy level 2 include over-the-counter (OTC) derivatives as well as loan receivables and loans measured at amortised cost. A financial instrument is categorised to level 3 if its fair value cannot be determined based on observable market information. In the Group, derivatives and deferred consideration relating to acquisitions are recognised at fair value. Derivatives, which comprise interest rate swaps are categorised in hierarchy level 2. The fair values of financial instruments are based on prices derived from prices quoted in an active market or generally accepted valuation models that are, to a significant degree, based on verifiable market data. The fair value of the deferred consideration is categorised in hierarchy level 3. Its valuation is described in more detail on the following page.
Lassila & Tikanoja Annual Report 2023
Financial statements of the parent companyPrimary financial statements of the Group
Notes to the consolidated financial statements
1. 2. 3. 4. 5.
Proposal by the Board of Directors
56
KEY FIGURES
FINANCIAL STATEMENTS
REPORT BY THE BOARD OF DIRECTORS
CORPORATE GOVERNANCE
REMUNERATION REPORT
SUSTAINABILITY REPORT
| MEUR | 2023 | 2022 |
|---|---|---|
| Carrying amount 1 Jan | 5.7 | - |
| Deferred consideration at the date of the acquisition | - | 5.1 |
| Change in fair value | 0.2 | 0.8 |
| Exchange differences | 0.0 | -0.2 |
| Carrying amount 31 Dec | 5.9 | 5.7 |
Deferred consideration is related to the acquisition of 70 per cent share of Sand & Vattenbläst i Tyringe AB ("SVB") that offers process cleaning services in Sweden. The acquisition took place on 1 February 2022. SVB is consolidated with 100 per cent share in the Group and, in connection with the arrangement, L&T has recognised in financial liabilities an estimate of the deferred consideration for the acquisition. The deferred consideration relates to the acquisition of non-controlling interest and is measured at fair value, which is reflected in the present value of the estimated liability. It will mature on 1 February 2026 at the earliest. The valuation of the deferred consideration is based on the shareholder agreement and is affected by the acquired company’s balance sheet structure and EBITDA forecast for 2025. More information on the deferred consideration is presented in note 2.4.
| MEUR | 2023 | 2022 |
|---|---|---|
| Loans from financial institutions | 40.8 | 51.4 |
| Bonds | 74.7 | 74.6 |
| Lease liabilities | 56.1 | 51.5 |
| Non-current interest-bearing liabilities | 171.7 | 177.5 |
| Bonds | - | 17.7 |
| Lease liabilities | 21.5 | 21.0 |
| Current loans | 0.6 | 0.7 |
| Current interest-bearing liabilities | 22.1 | 39.3 |
| Total interest-bearing liabilities | 193.7 | 216.8 |
| Cash and cash equivalents | 32.9 | 49.5 |
| Net interest-bearing liabilities | 160.9 | 167,3 |
| 2023 | 2022 | |
|---|---|---|
| Amortised cost | Derivatives under hedge accounting | |
| Fair value through profit or loss | Carrying amounts by balance sheet item | |
| Fair value hierarchy level | Note | Amortised cost |
| Derivatives under hedge accounting | ||
| Fair value through profit or loss | ||
| Carrying amounts by balance sheet item | ||
| Non-current financial assets | ||
| Other receivables | 1.3 | 1.3 |
| 1.4 | 1.4 | |
| Current financial assets | ||
| Trade and other receivables | 85.9 | 85.9 |
| 91.3 | 91.3 | |
| Derivative receivables | 2 | 4.2 |
| - | 1.2 | |
| 1.2 | ||
| Cash and cash equivalents | 32.9 | 32.9 |
| 49.5 | 49.5 | |
| Total financial assets | 120.1 | 1.2 |
| - | 143.3 | |
| Non-current financial liabilities | ||
| Borrowings | 115.5 | 115.5 |
| 126.0 | 126.0 | |
| Lease liabilities | 2 | |
| 56.1 | 56.1 | |
| 51.5 | 51.5 | |
| Deferred consideration | 4.2 | |
| 5.9 | 5.9 | |
| 5.7 | 5.7 | |
| Current financial liabilities | ||
| Borrowings | 3 | |
| 0.6 | 0.6 | |
| 18.3 | 18.3 | |
| Lease liabilities | 2 | |
| 21.5 | 21.5 | |
| 21.0 | 21.0 | |
| Trade and other payables | 4.2 | |
| 69.4 | 69.4 | |
| 65.8 | 65.8 | |
| Total financial liabilities | 2.3 | |
| 263.1 | 5.9 | |
| 269.1 | 282.6 | |
| - | 5.7 | |
| 288.3 |
Non-current other liabilities do not include advances received. Trade and other receivables do not include tax receivables and accruals, and trade and other payables do not include statutory liabilities (e.g. tax liabilities), accrued expenses and deferred income. The fair values of balance sheet items do not differ significantly from the carrying amounts of the balance sheet items.
Lassila & Tikanoja Annual Report 2023
Financial statements of the parent companyPrimary financial statements of the Group
Notes to the consolidated financial statements
1. 2. 3. 4. 5.
Proposal by the Board of Directors
57
KEY FIGURES
FINANCIAL STATEMENTS
REPORT BY THE BOARD OF DIRECTORS
CORPORATE GOVERNANCE
REMUNERATION REPORT
SUSTAINABILITY REPORT
The principles for L&T’s financial risk management are defined in the treasury policy approved by the Board of Directors. The purpose of financial risk management is to mitigate significant financial risks and strive to reduce the unfavourable effects of fluctuations in the financial market and other risk factors on the Group’s result. The Group’s financing and liquidity management are handled centrally by the Group’s finance function, which is managed by the CFO. Transactions related to financial risk management are carried out by the Group’s finance function.
The Group consists of a parent company operating in Finland and subsidiaries operating in Finland and Sweden. The parent company’s and the Finnish subsidiaries’ functional and reporting currency is the euro. The foreign subsidiaries’ functional and reporting currency is the currency of their country of location. Thus, changes in foreign exchange rates have impact on the Group’s result and equity.
The exposure to translation risk consists of net investments in foreign subsidiaries, which include equity investments and retained earnings. The position of net investments in foreign subsidiaries is not hedged, as these holdings are considered long-term strategic investments.In 2023, translation differences totalling EUR 0.1 million (-5.6) were accumulated in the equity due to the fluctuations of currency rates. The translation difference is totally related to the Swedish business. At the balance sheet date, the Swedish krona denominated translation position was EUR 67.3 million (69.8).
The business operations of the Group’s foreign subsidiaries are carried out almost completely in their functional currency and thus does not cause any transaction risk. Group companies operating in Finland use euro as the invoicing currency for sales almost exclusively. Financing for subsidiaries is mainly provided through intra-Group loans that are denominated in the functional currency of each subsidiary. The amount of the internal loans within the Group is small, and thus does not cause significant transaction risk. The company has recognised in financial liabilities an estimate of a deferred consideration related to the acquisition of Sand&Vattenbläst i Tyringe AB. The Swedish krona denominated deferred consideration exposes the company to a translation risk.
| MEUR | 2023 | 2022 |
|---|---|---|
| Loans from financial institutions | ||
| Bonds | ||
| Lease liabilities | ||
| Cash and cash equivalents | ||
| Total | ||
| Carrying amount on 1 Jan | -167.3 | -167.1 |
| Change in net interest-bearing liabilities, cash: | ||
| Proceeds from non-current loans | -40.0 | -75.0 |
| Repayments of non-current loans | 50.7 | 68.4 |
| Proceeds from current loans | -10.0 | -35.0 |
| Repayments of current loans | 10.0 | 35.0 |
| Repayments of lease liabilities | 21.2 | 19.4 |
| Change in cash and cash equivalent | -16.6 | 21.0 |
| Total cash flows | 33.0 | 23.6 |
| Change in net interest-bearing liabilities, non-cash: | ||
| Change in lease liablities | -26.4 | -21.1 |
| Other changes | -0.1 | -0.1 |
| Total non-cash movements | -26.5 | -23.9 |
| Carrying amount on 31 Dec | -160.9 | -167.3 |
Lassila & Tikanoja Annual Report 2023
Financial statements of the parent companyPrimary financial statements of the Group
Notes to the consolidated financial statements
1.
2.
3.
4.
5.
Proposal by the Board of Directors
58
KEY FIGURES
FINANCIAL STATEMENTS
REPORT BY THE BOARD OF DIRECTORS
CORPORATE GOVERNANCE
REMUNERATION REPORTSUSTAINABILITY REPORT
The Group has not invested in listed securities, the value of which changes as the market prices change, and is thus not exposed to securities price risk. The Group has a 55% holding in Laania Oy, a joint venture established on 1 July 2022 with Neova. The investment in the joint venture is accounted for using the equity method of accounting, and it’s carrying amount in the balance sheet was EUR 17.6 million (14.0) at the end of the reporting period. More information on the joint venture and its measurement can be found in note 3.5. The Group’s other holdings in unlisted shares are not material, and there is no substantial price risk related to these shares.
The fluctuations of the world market price of crude oil are reflected in the price of fuel used in production equipment as well as in the purchase prices of environmental products through oil-based raw materials. In waste management, some customer contracts specify such invoicing periods and contract terms that the sales prices cannot be raised monthly. This means that the rise in fuel prices is passed on to service prices with a delay. The Group manages the raw material price risk for environmental products through fixing sales prices for a period not exceeding the period for which the suppliers’ purchase prices are valid.
The Group’s interest rate risk is primarily related to borrowings, which are tied to variable interest rates and create cash flows that vary with the interest rate level. The Group seeks to keep interest costs steady. As a result, the aim is to tie over 50 per cent of the company’s borrowings to fixed interest rates. When necessary, part of the cash flows associated with variable-rate borrowings is hedged against interest rate risk with interest rate swaps. During the reporting period, the interest rate swap used for hedging cash flows related to floating rate loan was terminated. After this, the interest rate risk was still according to the Company’s treasury policy. At the balance sheet date, the Group did not have interest rate swaps. At end of the financial period, 65 per cent (86) of the company’s borrowings were either fixed interest rate borrowings or hedged with interest rate swaps. Variable-rate borrowings accounted for 35 per cent (14). Therefore changes in the interest rate level will not impact interest costs in full. The average interest rate of long-term loans, excluding lease liabilities, with interest rate hedging, was 4.0 per cent (2.5). Most of the Group’s net sales are generated by long-term service agreements. Due to good cash flow predictability, the Group’s treasury policy specifies that the company shall seek to ensure adequate level of liquid assets in proportion to the current short-term financing requirements.
Financial instruments involve the risk of the counterparty being unable to fulfil its contractual commitments. Counterparty risk is managed by making financial and derivative contracts with major Nordic banks only. The Group has a wide customer base consisting of companies, industrial plants, office and business properties, institutional property owners, housing corporations, public sector organisations and households. Its accounts receivable consist mostly of a high number of relatively small receivables and there are no significant concentrations of credit risk. The Group has credit control guidelines to ensure that services and products are sold only to customers with an appropriate credit standing or, if a customer’s creditworthiness is inadequate, prepayment is required. Most customer relationships are based on long-term service contracts, and customers are not generally required to provide collateral. A simplified credit loss model is used for trade receivables and contract assets. The amount of expected credit losses is based on the lifetime expected credit losses of receivables. The model is based on historical observed default amounts over the expected life of the trade receivables and is adjusted for forward-looking estimates depending on the overdue of the receivables. More information on allowance for expected credit losses can be found in note 2.1. With regard to Finnish trade receivables, collection operations are managed centrally by the finance function. The foreign subsidiaries manage the collection of their trade receivables locally.
| MEUR | 2023 | 2022 |
|---|---|---|
| Other non-current receivables | 1.3 | 1.4 |
| Trade receivables | 85.9 | 91.0 |
| Other current receivables | 0.0 | 0.2 |
| Derivative receivables | - | 1.2 |
| Cash and cash equivalents | 32.9 | 49.5 |
Liquidity risk management ensures that the Group continuously will be able to answer for its financial obligations associated with operations at the lowest possible cost. The Group seeks to maintain good liquidity through efficient cash management. The liquidity situation is monitored in real time and predicted using cash flow forecasts. The Group uses a group bank account system which facilitates the management of cash funds. To ascertain the availability of funding, the Group uses several banks in its financial operations. Refinancing risk is managed by a broad-based maturity profile of loans and by maintaining the level of the average duration of the loan portfolio for at least two years. The Group seeks to keep its cash assets fairly small, while ensuring sufficient credit limits for liquidity management purposes. To meet any temporary need for cash arising from cash flow fluctuations, the Group has an EUR 10 million account limit and a committed credit limit totalling EUR 40 million. The account limit as well as the committed credit limit were not in use, as was the case in the comparison period. In addition the Group has commercial paper programme totalling EUR 100 million which was all unused (comparison period: all unused). At the end of the financial period, the Group’s liquid assets amounted to EUR 32.9 million (49.5). In the second quarter of 2023, the company refinanced a EUR 50 million bank loan that would have matured in the third quarter of 2024. The new bank loan totalling EUR 40 million will mature in the third quarter of 2026. The interest rate swap used by the company to convert part of the EUR 50 million bank loan into a fixed interest loan was terminated in conjunction with the refinancing of the bank loan. The fair value of the interest rate swap, EUR 1.3 million, was recognised as financial income in the consolidated income statement. During the third quarter of 2023, the Company repaid the the remaining EUR 17.7 million of the bond issued in 2018. The new bank loan totalling EUR 40 million includes following financial covenants: equity ratio and net debt to EBITDA ratio. These covenants restrict giving of collaterals to other financiers and discontinuance or disposal of present business. A breach of the covenants may lead to the early termination of the loan. At the end of the reporting period, the financial covenants were fulfilled. The company excepts them to be fulfilled also after the following 12 months.In addition to financial covenants, the expenses of the committed credit limit and the senior unsecured sustainability-linked notes issued in May 2022 as well as the new bank loan totalling EUR 40 million are linked to sustainability targets, namely carbon footprint and accident frequency. The following table shows the Group’s financial liabilities classified according to contractual maturity dates at the balance sheet date. The figures shown are undiscounted contractual cash flows.
Lassila & Tikanoja Annual Report 2023
Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements
1. 2. 3. 4. 5. Proposal by the Board of Directors 59
KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT
The following sensitivity analysis illustrates the sensitivity of the Group’s profit for the period and equity to changes in the interest rate level with regard to financial instruments in the statement of financial position, including financial assets and liabilities as well as derivative contracts. Changes in the fair value of derivative contracts under hedge accounting are assumed to be allocated entirely to equity. The following assumptions have been used in calculating sensitivity to changes in the interest rate level:
| 2023 | ||||
|---|---|---|---|---|
| MEUR | Profit after tax | Equity | Profit after tax | |
| Floating rate loans: | + 1.0% | -0.3 | -0.4 | |
| - 1.0% | 0.3 | 0.4 | ||
| Hedging instruments: | + 1.0% | - 0.3 | - | |
| - 1.0% | - | -0.3 |
In accordance with L&T’s financing policy, derivative agreements are used for the reduction of financial risks related to changes in market interest rates. At the beginning of the financial period, the Group had one interest rate swap, which had been implemented to protect the cashflows of floating rate loans from the interest rate risk. This interest rate swap was prematurely terminated in June 2023. Derivatives are recognised in the balance sheet initially at fair value. After the acquisition they will, however, be recognised at the fair value applicable on the balance sheet date. The fair values are based on market prices on the balance sheet date. Any profits and losses from the meas- urement at fair value are processed in the accounting according to the purpose of use of the derivative agreement. All interest hedges meet the requirements of effective hedging stated in the L&T’s risk management. Any profits and losses resulting from derivatives under hedge accounting are recognised in line with the under- lying asset. Hedge accounting is applied to all interest swap agreements. The efficiency of hedging relationships is registered initially and in conjunction with each interim report by evaluating the hedging instrument’s ability to reverse the changes in the cashflow of the hedged item. If the hedging is effective, the changes in the fair value of hedging instruments are recognised in the hedging reserve under capital and reserves. When a hedging instrument matures, it is sold or when the criteria for hedge accounting no longer meet the Group’s risk management requirements, the profit or loss generated from the hedging instrument remains in equity until the hedged cash flow is realised. If the hedged cash flow is no longer expected to become realised, the profit or loss generated from the hedging instrument is immediately recognised in the income statement. Any ineffective part of a hedging relationship is also immediately recognised in the income statement. The positive fair values of all derivatives are recognised in the balance sheet as derivative receivables. Correspondingly, the negative fair values of derivatives are recognised as derivative liabilities. All fair values of derivatives are included in short-term assets or liabilities. At the balance sheet date the company did not have any interest rate swaps.
| MEUR | 2023 | 2022 | |
|---|---|---|---|
| Nominal value | Fair value | Nominal value | |
| Maturity of interest rate swaps under hedge accounting | |||
| Not later than one year | - | - | - |
| Later than one year and not later than two years | - | - | 30.0 |
| Yhteensä | - | - | 30.0 |
The interest rate swap that was used for hedging cash flows related to floating rate loans was terminated in June 2023 in conjunction with the refinancing of the hedged loan. The fair value of the interest rate swap totalling EUR 1.3 million was recognised as financial income in the consolidated income statement. In the comparison period, the hedge was effective, and the changes in the fair value of interest rate swap were presented in other comprehensive income for the period. The fair value of the swap contract was based on the market data on the balance sheet date. The fixed interest rate of the interest rate swap at 31 December 2022 was 0.8 per cent. The floating interest rate was 6-month Euribor.
| MEUR | 2023 | Contractual cash flows | ||||||
|---|---|---|---|---|---|---|---|---|
| Carrying amount | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 and later | ||
| Loans from credit institutions | 41.4 | 46.7 | 2.6 | 2.1 | 42.0 | - | - | |
| Bonds | 74.7 | 87.7 | 2.5 | 2.5 | 2.5 | 2.5 | 77.5 | |
| Lease liabilities | 77.6 | 81.6 | 22.4 | 18.8 | 8.5 | 6.2 | 5.3 | 20.4 |
| Trade and other payables | 69.4 | 69.4 | 69.4 | - | - | - | - | - |
| Total | 263.1 | 285.4 | 96.9 | 23.4 | 53.1 | 8.7 | 82.9 | 20.4 |
| MEUR | 2022 | Contractual cash flows | ||||||
|---|---|---|---|---|---|---|---|---|
| Carrying amount | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 and later | ||
| Loans from credit institutions | 52.0 | 52.5 | 1.6 | 50.9 | - | - | - | |
| Bonds | 92.3 | 108.2 | 20.5 | 2.5 | 2.5 | 2.5 | 2.5 | 77.5 |
| Lease liabilities | 72.5 | 80.0 | 21.4 | 17.9 | 11.8 | 4.9 | 3.0 | 21.0 |
| Trade and other payables | 65.8 | 65.8 | 65.8 | - | - | - | - | - |
| Total | 282.6 | 306.5 | 109.3 | 71.4 | 14.3 | 7.4 | 5.6 | 98.5 |
| MEUR | 2023 | In use | Undrawn | Total | 2022 | In use | Undrawn | Total |
|---|---|---|---|---|---|---|---|---|
| Loans from financial institutions and pension loans | 41.4 | - | 41.4 | 52.0 | - | 52.0 | ||
| Bonds | 74.7 | - | 74.7 | 92.3 | - | 92.3 | ||
| Account limit | - | 10.0 | 10.0 | - | 10.0 | 10.0 | ||
| Committed credit facility | - | 40.0 | 40.0 | - | 40.0 | 40.0 | ||
| Commercial paper programme | - | 100.0 | 100.0 | - | 100.0 | 100.0 | ||
| Lease liabilities from financial institutions | 32.8 | 17.2 | 50.0 | 26.0 | 24.0 | 50.0 | ||
| Other lease liabilities | 44.9 | - | 44.9 | 46.5 | - | 46.5 | ||
| Total | 193.7 | 167.2 | 360.9 | 216.8 | 174.0 | 390.8 |
Lassila & Tikanoja Annual Report 2023
Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements
1. 2. 3. 4. 5. Proposal by the Board of Directors 60
KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT
Ordinary shares are presented as share capital. Any expenses arising from the issue or acquisition of treasury shares are presented as a valuation allowance within equity. If the Group repurchases any equity instruments, the acquisition cost of such instruments is deducted from equity. Lassila & Tikanoja plc has one share series. There is no maximum to the number of the shares and the share capital in the Articles of Association. A share has neither a nominal value nor a book equivalent value. All issued shares have been paid for in full. The Annual General Meeting held on 23 March 2023 authorised Lassila & Tikanoja plc’s Board of Directors to make decisions on the repurchase of the company’s own shares using the company’s unrestricted equity. In addition, the Annual General Meeting authorised the Board of Directors to decide on a share issue and the issuance of special rights entitling their holders to shares. The Board of Directors is authorised to purchase a maximum of 2,000,000 company shares (5.2 per cent of the total number of shares). The repurchase authorisation is effective for 18 months. During the reporting period, the authori- sation was not used. At the end of the financial year 2023, the company held 644,772 treasury shares (653,256) representing 1.7 per cent (1.7) of all shares and votes.
Invested non-restricted equity reserve includes other equity type investments and share subscription prices to the extent that they are not expressly desig- nated to be included in the share capital.
Translation differences arise from the translation of the equity and earnings of foreign subsidiaries into euros.
Hedging reserve includes effective changes in the fair values of derivative instruments used for hedging of cash flows.
| MEUR | Number of outstanding shares, 1,000 shares | Share capital | Invested non-restricted equity reserve | Own shares | Total |
|---|---|---|---|---|---|
| At 1 Jan 2023 | 38,146 | 19.4 | 0.6 | -10.1 | 9.9 |
| 8 May 2023 Transfer of own shares | 8 | 0.1 | 0.1 | ||
| At 31 Dec 2023 | 38,154 | 19.4 | 0.6 | -10.0 | 10.1 |
| MEUR | Number of outstanding shares, 1,000 shares | Share capital | Invested non-restricted equity reserve | Own shares | Total |
|---|---|---|---|---|---|
| At 1 Jan 2022 | 38,112 | 19.4 | 0.6 | -10.6 | 9.4 |
| 25 February 2022 Transfer of own shares | 25 | 0.4 | 0.4 | ||
| 2 May 2022 Transfer of own shares | 9 | 0.1 | 0.1 | ||
| At 31 Dec 2022 | 38,146 | 19.4 | 0.6 | -10.1 | 9.9 |
Lassila & Tikanoja Annual Report 2023
Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements
1. 2. 3. 4. 5. Proposal by the Board of Directors 61
KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT
The objective of the Group’s capital management is to secure the continuity of operations and maintain an optimal capital structure to enable investments, taking the cost of capital into account.The capital includes equity and liabilities less advances received. The amount of annual dividend is linked to earnings. Profits not considered necessary for ensuring the healthy development of the company are distributed to shareholders. The development of the capital structure is monitored quarterly using the equity ratio and gearing.
| MEUR | 2023 | 2022 |
|---|---|---|
| Equity in the consolidated statement of financial position | 232.2 | 220.4 |
| Equity and liabilities total | 649.9 | 660.5 |
| Current advances received | -11.2 | -9.5 |
| Non-current advances received | -7.2 | -7.6 |
| Total | 631.5 | 643.4 |
| Equity ratio, % | 36.8 | 34.3 |
| MEUR | 2023 | 2022 |
|---|---|---|
| Equity in the consolidated statement of financial position | 232.2 | 220.4 |
| Non-current financial liabilities | 171.7 | 177.5 |
| Current financial liabilities | 22.1 | 39.3 |
| Cash and cash equivalents | -32.9 | -49.5 |
| Net interest-bearing liabilities | 160.9 | 167.3 |
| Gearing, % | 69.3 | 75.9 |
Accounting policy
Basic earnings per share is calculated by dividing the result for the period attributable to equity holders of the parent company by the adjusted weighted average number of ordinary shares outstanding during the period excluding ordinary shares purchased by the company and held as treasury shares. Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to asume conversion of all dilutative potential ordinary shares.
| 2023 | 2022 | |
|---|---|---|
| Result attributable to equity holders of the company, MEUR | 30.1 | 31,5 |
| Adjusted weighted average number of ordinary shares outstanding during the year, million shares | 38.1 | 38,1 |
| Earnings per share, EUR | 0.79 | 0,83 |
| Dilutive effect of the share-based incentive programme, million shares | 0.1 | 0,0 |
| Adjusted average number of shares during the period, diluted, million shares | 38.2 | 38,1 |
| Earnings per share, diluted, EUR | 0.79 | 0,83 |
At the Annual General Meeting on 21 March 2024, the Board of Directors will propose that a dividend of EUR 0.49 per share be paid for the 2023 financial year. On the basis of a decision taken by the Annual General Meeting, the company paid a dividend of EUR 0.4 7 per share for 2022.
| MEUR | 2023 | 2022 |
|---|---|---|
| Collaterals for own commitments | ||
| Mortgages on rights of tenancy | 0.1 | 0.1 |
| Company mortgages | 0.5 | 2.0 |
| Other securities | 0.0 | 0.0 |
| Bank guarantees required for environmental permits | 26.6 | 17.4 |
| Other bank guarantees | 6.5 | 5.8 |
| Mortgages under own control | ||
| Company mortgages | 0.2 | 0.3 |
| Liabilities on behalf of the joint venture | ||
| Account limit | 2.8 | 2.8 |
| Bank guarantees | 16.5 | 16.5 |
| Term loan facility guarantee | 11.0 | 16.5 |
| Revolving credit facility | 5.5 | - |
| Future lease payments | ||
| Within one year | 0.9 | 0.9 |
| Over one year | 0.7 | 0.9 |
Other securities are guarantee deposits. The Group has a 55% holding in Laania Oy, a joint venture established on 1 July 2022 together with Neova. The amount of the liabilities on behalf of the joint venture is disclosed as the Group’s share of the maximum amount of liability, in relation to the Group’s holding. Future lease payments consist of minimum leasing commitments related to lease agreements for low-value assets, to which the Group has elected to apply recognition exemption permitted by IFRS 16. For more information on leases please refer to notes 1.6 and 3.4.
The Group company Lassila & Tikanoja FM AB is a claimant and a defendant in legal proceedings in Sweden concerning unpaid receivables invoiced from a former customer of the Group. In June 2022, Lassila & Tikanoja FM AB took legal action in the District Court of Solna against the former customer company of L&T, demanding payment for unpaid receivables. At the balance sheet date, the carrying amount of the receivables in the Company’s balance sheet was approximately EUR 1.5 million. The former L&T customer company in question has rejected Lassila & Tikanoja FM AB’s claims and the payment obligation, and brought a counterclaim demanding compensation totalling approximately SEK 116 million from Lassila & Tikanoja FM AB. The dispute is still pending. L&T considers the counterclaim to be without merit and has not recognised any provisions relating to it. In addition to the above mentioned dispute, Lassila & Tikanoja plc is party to a few disputes related to the Group’s ordinary business operations. The outcome of these disputes are not expected to have a material effect on the Group’s financial position.
Lassila & Tikanoja Annual Report 2023
Financial statements of the parent companyPrimary financial statements of the Group
Notes to the consolidated financial statements
1. 2. 3. 4. 5.
Proposal by the Board of Directors
62
KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT
5 Consolidation and other notes
5.1 Consolidation ......................................................................................... 63
5.2 Group companies ................................................................................ 63
5.3 Business acquisitions and disposals and assets and liabilities classified as held for sale ............... 64
5.4 Related-party transactions .......................................................... 65
5.5 Auditing costs ....................................................................................... 66
5.6 Events after the balance sheet date ...................................... 66
Lassila & Tikanoja Annual Report 2023
Financial statements of the parent companyPrimary financial statements of the Group
Notes to the consolidated financial statements
1. 2. 3. 4. 5.
Proposal by the Board of Directors
63
KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT
The consolidated financial statements include the parent company Lassila & Tikanoja plc and all subsidiaries in which the Group exercises control. The cri- teria for control are fulfilled when the Group is exposed, or has rights, to variable returns from its involvement with an entity and has the ability to affect those returns through its power over the entity. Intra-Group shareholdings have been eliminated using the acquisition method. Consideration given and the identifiable assets and liabilities of an acquired company are recognised at fair value on the date of acquisition. Any costs asso- ciated with the acquisition, with the exception of costs arising from the issuance of debt securities or equity instruments, have been recognised as expenses. Any conditional additional sale price has been measured at fair value on the date of the acquisition and classified as a liability or as equity. Additional sales price classified as a liability is measured at fair value on the closing day of each reporting period, and the resulting gains or losses are recognised through profit or loss. Additional sales price classified as equity will not be re-measured. Any non-controlling interests in the acquired entity are recognised either at fair value or at the proportionate share of non-controlling interests in the acquired entity’s net identifiable assets. The principle applied in measurement is speci- fied separately for each acquisition. The treatment of goodwill from acquisition of subsidiaries is explained in note 3.1 Goodwill and other intangible assets.
The subsidiaries are fully consolidated from the date on which control is transferred to the Group until the date that control ceases. The profit or loss for the period and the comprehensive income are attributed to the parent company’s shareholders and non-controlling interests, even if this would result in the non-controlling interest being negative. Equity attributable to non-controlling interests is presented as a separate item in the statement of financial position, as an equity component. Changes in the parent company’s holdings in the subsidiary not resulting in loss of controlling interest are recog- nised as equity transactions. The Group has no non-controlling interests. In an acquisition achieved in stages, the previous holdings are measured at fair value and the resulting gains or losses are recognised through profit or loss. If the Group loses its controlling interest in the subsidiary, its remaining holdings are measured at fair value on the date when control ceases, and the difference is recognised through profit or loss.
All intra-Group transactions, receivables, liabilities and unrealised gains, as well as distribution of profits within the Group, are eliminated in the consoli- dated financial statements. Unrealised losses due to impairment of assets are not eliminated. The distribution of profit or loss for the period between equity holders of the parent company and the non-controlling interest is presented in a separate income statement and the statement of comprehensive income, and the share of equity belonging to the non-controlling interest is presented as a separate item in the consolidated statement of financial position under equity.
Associates companies are entities over which the Group has significant influ- ence but no control. L&T has significant influence when it holds more than 20% of the voting rights or otherwise has significant influence but a non-controlling interest. Joint ventures are arrangements in which the Group has joint control. The Group’s interests in associated companies and joint ventures are accounted for using the equity method of accounting. Investments in associated companies and joint ventures are initially measured at fair value. The Group’s share of its associated companies’ or joint ventures’ post-acquisition profits or losses after tax are recognised in the income statement.# Notes to the consolidated financial statements
When the Group’s share of losses in an associated company or a joint venture equals or exceeds its interest in the associated company or joint venture, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associated company or joint venture.
Figures indicating the performance and financial position of the Group entities are specified in the currency of the economic operating environment in which the entity primarily operates (functional currency). The consolidated financial statements are presented in euros, which is the parent company’s functional and presentation currency. Any transactions in foreign currencies have been recognised in the functional currency using the exchange rate in effect on the transaction date. In practice, it is customary to use a rate that is close enough to the transaction day rate. Monetary assets denominated in foreign currency are translated into euros using the exchange rates in effect on the balance sheet date. Non-monetary assets are translated using the exchange rate in effect on the transaction date. The Group has no non-monetary assets denominated in foreign currency that are measured at fair value. Exchange rate gains and losses arising from foreign-currency transactions and the translation of monetary items are recognised in the income statement. Foreign exchange gains and losses on business transactions are included in the respective items above operating profit. Foreign exchange gains and losses on financial assets and liabilities are included in financial income and costs. The income statements of the Group entities whose functional currency is not the euro are translated into euros at average exchange rates for the period, and the statements of financial position at the exchange rates in effect on the balance sheet date. The difference in exchange rates applicable to the translation of profit in the income statement and statement of comprehensive income result in a translation difference recognised in the translation reserve within equity. Translation differences arising from the elimination of the acquisition cost of foreign subsidiaries, as well as translation differences in equity items accumulating after the acquisition, are recognised in the translation difference reserve. Goodwill and fair value adjustments to the carrying amounts of the assets and liabilities arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated into euros at the closing rate.
The Group’s holding of shares and votes, %
| The Group’s parent company | |
|---|---|
| Lassila & Tikanoja plc | |
| Finnish subsidiaries | |
| L&T Toimi Oy, Helsinki | 100.0 |
| L&T Kiinteistöhuolto Oy, Helsinki | 100.0 |
| L&T Kiinteistötekniikka Oy, Helsinki | 100.0 |
| L&T Siivous Oy, Helsinki | 100.0 |
| L&T Ympäristöpalvelut Oy, Helsinki | 100.0 |
| L&T Teollisuuspalvelut Oy, Helsinki | 100.0 |
| Foreign subsidiaries | |
| Lassila & Tikanoja FM AB, Stockholm, Sweden | 100.0 |
| Lassila & Tikanoja Service AB, Stockholm, Sweden | 100.0 |
| Sand & Vattenbläst i Tyringe AB, Hässleholm, Sweden | 70.0 |
| Cisternservice i Hässleholm AB, Hässleholm, Sweden | 70.0 |
| Joint ventures | |
| Laania Oy, Helsinki | 55.0 |
| Associated companies | |
| Suomen Keräystuote Oy, Helsinki | 40.0 |
¹ Information on the joint venture is disclosed in note 3.5
Other non-current assets
During the reporting period, Turun Seudun Hyötykuljetus Oy was merged to L&T Ympäristöpalvelut Oy and L&T Työllistämispalvelut Oy was merged to Lassila & Tikanoja plc and L&T Hankinta Ky, Sihvari Oy and Spectra Yhtiöt Oy were liquidated.
Lassila & Tikanoja Annual Report 2023
Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements
1. 2. 3. 4. 5. Proposal by the Board of Directors
64
KEY FIGURES
FINANCIAL STATEMENTS
REPORT BY THE BOARD OF DIRECTORS
CORPORATE GOVERNANCE
REMUNERATION REPORTSUSTAINABILITY REPORT
Accounting policy
In business combinations, all property, plant and equipment acquired is measured at fair value on the basis of the market prices of similar assets, taking into account the age of the assets, wear and tear and similar factors. Tangible assets will be depreciated over their useful life according to the management’s estimate, taking into account the depreciation principles followed within the Group. Intangible assets arising from business combinations are recognised separately from goodwill at fair value at the time of acquisition if they are identifiable. In connection with acquired business operations, the Group mostly has acquired agreements on prohibition of competition and customer relationships as well as environmental permits. The fair value of customer agreements and customer relationships associated with them has been determined on the basis of estimated duration of customer relationships and discounted net cash flows arising from current customer relationships. The value of agreements on prohibition of competition is calculated in a similar manner through cash flows over the duration of the agreement. Intangible assets are amortised over their useful life according to the agreement or the management’s estimate. Assets and liabilities held for sale are measured at lower of the carrying amount and fair value less costs to sell, if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and their sale is highly probable. The non-current assets classified as held for sale are not depreciated.
Critical judgements by Management
Assets and liabilities acquired in business combinations as well as assets and liabilities classified as held for sale are measured at fair value. Whenever possible, the management uses available market values when determining the fair values. When this is not possible, the measurement is based on the historical income from the asset. In particular, the measurement of intangible assets is based on discounted cash flows and requires the management to make estimates on future cash flows. Although these estimates are based on the management’s best knowledge, actual results may differ from the estimates. The carrying amounts of assets are reviewed continuously for impairment. More information on this is provided in note 1.7.
Business acquisitions 2023
There were no business acquisitions in 2023.
Business acquisitions 2022
On 1 February 2022, Lassila & Tikanoja’s Industrial Services division acquired 70 per cent of the shares of Sand & Vattenbläst i Tyringe AB (“SVB”), a company that provides process cleaning services in Sweden. The transaction also includes Cisternservice i Hässleholm AB, owned by SVB. Through the acquisition, L&T’s Industrial Services division entered the Swedish process cleaning market. In the fair value measurement, intangible assets based on customer relationships with a value of EUR 2.8 million, agreements on prohibition of competition with a value of EUR 0.1 million, as well as goodwill with a value of EUR 8.3 million were identified. The goodwill is mainly based on the strong regional position of the acquired business and its future development prospects. 100 per cent share of SVB is consolidated in the L&T Group and, in connection with the arrangement, L&T has recognised in the financial liabilities an estimate of the deferred consideration related to the acquisition of the non-controlling interest. The deferred consideration is measured at fair value through profit or loss. An increase of EUR 0.2 million (increase of EUR 0.8 million) was recognised in the deferred consideration in the final quarter of 2023. L&T acquired the business operations of Fortum Waste Solutions Oy’s small and medium-sized business segment for hazardous and non-hazardous waste on 1 February 2022. Through the acquisition, L&T received new customers across Finland. In 2022 business acquisitions had an EUR 19.9 million million impact on the Group’s net sales for the financial period and EUR 2.5 million on operating profit. If the acquisitions in 2022 had been completed on 1 January 2022, the Groups net sales would be approximately EUR 844.9 million and operating profit approximately EUR 43.0 million. In 2022, expenses totalling EUR 0.4 million related to the acquisitions were recognised in the income statement. The initial accounting of the businesses acquired in 2022 is final. The figures for such acquired businesses, that are not material to the Group when considered separately, are stated in aggregate.
Business acquisitions
| Fair value, MEUR | 2023 | 2022 |
| :--------------- | :--- | :--- |
| Intangible assets | - | 5.6 |
| Property, plant and equipment | - | 4.9 |
| Right-of-use assets | - | 1.4 |
| Inventories | - | 0.1 |
| Receivables | - | 1.8 |
| Cash and cash equivalents | - | 1.2 |
| Total assets | - | 15.0 |
| Other liabilities | - | 6.4 |
| Deferred tax liabilities | - | 1.0 |
| Total liabilities | - | 7.4 |
| Net assets acquired | - | 7.6 |
| Total consideration | - | 19.6 |
| Goodwill | - | 11.9 |
Impact on cash flow
| Total consideration | -19.6 | - |
| Deferred consideration | 5.1 | - |
| Consideration paid in cash | -14.4 | - |
| Cash and cash equivalents of the acquired company | 1.2 | - |
| Total impact on cash flow | -13.2 | - |
In 2023, L&T did not have any business disposals or assets or liabilities classified as held for sale. On December 17, 2021, Lassila & Tikanoja plc and Neova Oy signed an agreement to merge their fuel wood businesses. According to the agreement, Neova’s fuel wood business was transferred to L&T Biowatti Oy on 1 July 2022. After the merger, the company continued as an independent limited company called Laania Oy. L&T’s share of the joint venture is 55 per cent and Neova’s 45 per cent, but based on the agreement both parties have joint control over the joint venture. In the first half of 2022, the business was reported as part of Environmental Services.# Notes to the consolidated financial statements
The related parties of the Lassila & Tikanoja Group are the senior management (members of the Board of Directors, President and CEO of the Lassila & Tikanoja plc and the other members of the Group Executive Board) and the immediate family of the senior management and companies controlled by the aforemen- tioned persons, the Group’s subsidiaries, the associated company (Suomen Keräystuote Oy), the joint venture (Laania Oy) and the L&T sickness fund. Lists of the Group’s parent and subsidiary relationships, associated companies and joint ventures are presented in note 5.2. Group companies.
The contributions paid by the group companies to the L&T sickness fund during the financial year amounted to EUR 1.0 million (1.0).
The Group’s business transactions with Laania Oy are presented in the following table. In addition to the ordinary business transactions, Laania paid loans total- ling EUR 16.4 million to L&T in the final quarter of 2022. The Group has also pro- vided guarantees for Laania’s financing arrangements, which are specified in note 4.5.
| MEUR | 2023 | 2022 |
|---|---|---|
| Net sales | 2.2 | 0.6 |
| Other operating income | - | 0.3 |
| Purchases of materials and services | -1.3 | -0.7 |
| Trade and other receivables | 0.0 | 0.0 |
| TEUR | 2023 | 2022 |
|---|---|---|
| Salaries and other short-term employee benefits | 466.8 | 458.6 |
| Bonuses | 63.9 | 157.2 |
| Share-based payments | - | 265.1 |
| Pension expenses, statutory | 45.9 | 53.3 |
| Total | 576.6 | 934.3 |
| TEUR | 2023 | 2022 |
|---|---|---|
| Salaries and other short-term employee benefits | 1,697.8 | 1,570.8 |
| Bonuses | 136.5 | 225.0 |
| Share-based payments | - | 304.9 |
| Pension expenses, statutory | 198.9 | 198.8 |
| Total | 2,033.3 | 2,299.6 |
| TEUR | 2023 | 2022 |
|---|---|---|
| Jukka Leinonen, Chairman of the Board | 76 | 73 |
| Sakari Lassila, Deputy Chairman of the Board | 52 | 53 |
| Teemu Kangas-Kärki | 39 | 39 |
| Laura Lares | 38 | 39 |
| Pasi Tolppanen | 39 | 39 |
| Anni Ronkainen | 1 | 37 |
| Heikki Bergholm | 2 | - |
| Laura Tarkka | 3 | 38 |
1 Board member since 23 March 2023
2 Board member and the Chairman of the Board until 17 March 2022
3 Board member until 23 March 2023
In 2023, no shares were transferred to the President and CEO and the members of the Group Executive Board from the share-based incentive programmes (in 2022, 24,522 shares were transferred). On 8 May 2023, 8,484 shares were transferred to the members of the Board of Directors as part of the remuneration of the Board (2 May 2022: 8,618). The members of the Board of Directors, the President and CEO or other members of the Group Executive Board have no pension contracts with the company. In 2023, the company sold services included in normal business operations at market price to parties related to the key personnel for a total amount of EUR 7 thousand (25). The members of the Board are not included in the share-based incentive programmes. No loans were granted and no guarantees nor other securities given to persons belonging to the related parties.
| MEUR | 2023 | 2022 |
|---|---|---|
| PwC | ||
| Auditing | 0.3 | 0.3 |
| Other assignments in accordance with the auditing act | 0.0 | 0.0 |
| Tax consulting services | 0.0 | 0.0 |
| Other services | 0.0 | 0.2 |
| Total | 0.4 | 0.4 |
| KPMG | ||
| Auditing | - | 0.1 |
| Other assignments in accordance with the auditing act | - | 0.0 |
| Tax consulting services | - | 0.0 |
| Total | - | 0.1 |
Non-audit services performed by the statury auditor PricewaterhouseCoopers Oy in the financial year 2023 totalled EUR 71.1 thousand (EUR 166.6 thousand in 2022).
On 11 January 2024, the company announced that Lassila & Tikanoja’s Share- holders’ Nomination Board proposes to the Annual General Meeting to be held on 21 March 2024 that the Board of Directors have seven (7) members. The Nomi- nation Board proposes that all of the current members of the Board of Directors – Teemu Kangas-Kärki, Laura Lares, Sakari Lassila, Jukka Leinonen, Anni Ronka- inen and Pasi Tolppanen – be re-elected to the Board of Directors and that Juuso Maijala be elected as a new member. A presentation of Juuso Maijala is available on Lassila & Tikanoja’s website. In addition, the Nomination Board proposes that Jukka Leinonen be elected as Chairman of the Board of Directors and Sakari Las- sila as Vice Chairman.
Income statement ..........................................................68
Balance sheet ...................................................................68
Cash flow statement ....................................................69
Accounting policies ...................................................... 69
Notes to the financial statements ....................... 70
| EUR Thousand | 2023 | 2022 | Note |
|---|---|---|---|
| Net sales | 24,741.6 | 23,281.0 | 1 |
| Other operating income | 375.6 | 141.6 | 4 |
| Employee benefit expenses | -10,377.5 | -9,698.4 | 2 |
| Other operating expenses | -16,458.1 | -18,658.9 | 3,4 |
| Depreciation, amortisation and impairment | -904.3 | -902.7 | |
| Operating result | -2,622.8 | -5,837.3 | |
| Financial income and expenses | -13,729.0 | -2,541.6 | 5 |
| Result before appropriations and taxes | -16,351.8 | -8,378.9 | |
| Appropriations | 6 | ||
| Increase/decrease in accumulated depreciation difference | 270.2 | 209.5 | |
| Group contribution | 28,168.0 | 23,550.0 | |
| 28,438.2 | 23,759.5 | ||
| Income taxes | -4,666.3 | -3,434.1 | 7 |
| Result for the period | 7,420.0 | 11,946.6 |
| EUR Thousand | 2023 | 2022 | Note |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Intangible assets | 8 | ||
| Intangible rights | 15.6 | 36.4 | |
| Other intangible assets | 1,576.6 | 1,738.6 | |
| Advance payments and construction in progress | 1,364.7 | 832.4 | |
| 2,957.0 | 2,607.4 | ||
| Tangible assets | 9 | ||
| Buildings and constructions | 144.6 | 165.2 | |
| Machinery and equipment | 59.1 | 117.2 | |
| Other tangible assets | 42.2 | 42.2 | |
| Advance payments and construction in progress | - | - | |
| 245.9 | 324.6 | ||
| Investments | 10 | ||
| Shares in group companies | 159,081.9 | 181,590.5 | |
| Shares in joint venture | 9,946.8 | 9,946.8 | |
| Other shares and holdings | 170.8 | 170.8 | |
| 169,199.5 | 191,708.1 | ||
| Total non-current assets | 172,402.4 | 194,640.0 | |
| Current assets | |||
| Non-current receivables | |||
| Loan receivables from group companies | 766.0 | - | |
| Prepaid expenses and accrued income | 307.7 | 378.8 | |
| Other non-current receivables | 139.5 | 299.9 | |
| Deferred tax assets | 96.5 | 480.2 | 12 |
| 1,309.7 | 1,158.8 | ||
| Current receivables | |||
| Receivables from group companies | 33,380.4 | 40,400.8 | 11 |
| Trade receivables from joint venture | - | 6.6 | |
| Trade receivables | 7.1 | - | |
| Other receivables | 111.9 | 114.4 | |
| Prepaid expenses and accrued income | 1,042.5 | 1,827.1 | 11 |
| 34,542.0 | 42,349.0 | ||
| Cash and cash equivalents | 30,437.3 | 46,921.0 | |
| Total current assets | 66,289.1 | 90,428.8 | |
| Total assets | 238,691.4 | 285,068.8 |
| EUR Thousand | 2023 | 2022 | Note |
|---|---|---|---|
| SHAREHOLDERS’ EQUITY AND LIABILITIES | |||
| Shareholders’ equity | 13 | ||
| Share capital | 19,399.4 | 19,399.4 | |
| Invested non-restricted equity reserve | 727.1 | 727.1 | |
| Retained earnings | 43,188.0 | 49,045.9 | |
| Profit for the period | 7,420.0 | 11,946.6 | |
| 70,734.6 | 81,119.0 | ||
| Accumulated appropriations | |||
| Depreciation difference | 179.9 | 450.1 | |
| Obligatory provisions | 14 | ||
| Non-current | 261.4 | 273.4 | |
| Current | 50.1 | 609.0 | |
| 311.5 | 882.4 | ||
| Liabilities | 15 | ||
| Non-current | |||
| Loans from credit institutions | 40,000.0 | 50,000.0 | |
| Bonds | 75,000.0 | 75,000.0 | |
| 115,000.0 | 125,000.0 | ||
| Current | |||
| Bonds | - | 17,730.0 | |
| Trade |
| EUR Thousand | 2023 | 2022 |
|---|---|---|
| Operating activities | ||
| Profit (+) / loss (-) before appropriations and taxes | -16,351.8 | -8,378.9 |
| Adjustments: | ||
| Depreciation, amortisation and impairments | 904.3 | 902.7 |
| Financial income and expenses | 2,280.4 | 2,541.6 |
| Impairment of investments held as non-current assets | 11,448.6 | - |
| Provisions | -558.9 | -651.3 |
| Other adjustments¹ | -18.0 | 2,069.1 |
| Cash flow before change in working capital and change in cash pool account balance | -2,295.3 | -3,516.9 |
| Change in working capital | ||
| Increase/decrease in current non-interest-bearing receivables | 1,010.8 | 1,298.1 |
| Increase/decrease in current non-interest-bearing liabilities | 174.9 | -478.2 |
| Cash flow from operations before financial income/expenses and tax | -1,109.6 | -2,697.0 |
| Change in cash pool account balance | 3,934.4 | -3,777.6 |
| Interest expenses and other financial expenses paid | -5,349.3 | -3,100.5 |
| Interest received from operations | 3,426.9 | 1,060.1 |
| Direct taxes paid | -4,359.9 | -6,363.9 |
| Cash flow from operating activities | -3,457.5 | -14,878.8 |
| Investing activities | ||
| Increase in loan receivables from subsidiaries | -719.3 | - |
| Capital repayment | 11,000.0 | - |
| Investments in tangible and intangible assets | -1,234.0 | -1,306.3 |
| Repayment of loan receivables from joint venture | - | 16,391.3 |
| Proceeds from sale of tangible and intangible assets | 16.5 | - |
| Change in other non-current receivables | - | 2.4 |
| Cash flow from investing activities | 9,063.3 | 15,087.4 |
| EUR Thousand | 2023 | 2022 |
|---|---|---|
| Financing activities | ||
| Paid Group contributions | - | -4,300.0 |
| Received Group contributions | 23,550.0 | 24,840.0 |
| Proceeds from short-term borrowings | 10,000.0 | 35,000.0 |
| Repayments of short-term borrowings | -10,000.0 | -35,000.0 |
| Proceeds from long-term borrowings | 40,000.0 | 75,000.0 |
| Repayments of long-term borrowings | -67,730.0 | -57,270.0 |
| Dividends paid | -17,909.4 | -17,543.0 |
| Cash flow from financing activities | -22,089.4 | 20,727.0 |
| Change in cash and cash equivalents | -16,483.6 | 20,935.5 |
| Cash and cash equivalents at 1 January | 46,921.0 | 25,985.4 |
| Cash and cash equivalents at 31 December | 30,437.3 | 46,921.0 |
| Cash and cash equivalents at 31 December | ||
| Cash and cash equivalents | 30,437.3 | 46,921.0 |
¹ The figure in 2022 includes an adjustment for merger loss totalling EUR 1,942.5 thousand.
Lassila & Tikanoja plc is the parent company of the Lassila & Tikanoja Group, domiciled in Helsinki. The Company provides to other group companies administrative services, which are centralised to the parent company. The financial statements of Lassila & Tikanoja plc have been prepared in accordance with the Finnish Accounting Standards (FAS). The financial statements are prepared in euros and the items in the financial statements are measured at historical cost. When appropriate, the financial statements of Lassila & Tikanoja plc comply with the Group’s accounting policies based on IFRS. The accounting policies of the consolidated financial statements are presented in the notes to the consolidated financial statements. The accounting policies of Lassila & Tikanoja plc described in the following chapters differ from the accounting policies of the consolidated financial statements.
Subsidiary shares in the balance sheet are measured at historical cost less impairment losses. The carrying amounts of the subsidiary shares are assessed as part of the Group’s impairment testing, where cash flow forecasts based on value-in-use calculations are prepared for the Group’s cash-generating units. In the impairment testing of subsidiary shares, the cash flows are further allocated to subsidiaries’ recoverable amounts. An impairment loss is recognised, if the carrying amount of the subsidiary shares and the amount of net loan receivables from the subsidiary exceed the recoverable amount of the corresponding assets.
The lease payments of the lease contracts are expensed over the rental period, and they are included in other operating expenses. Assets leased and related liabilities are not recognised in the parent company’s balance sheet.
Research and development expenditure is recognised as an expense.
Obligatory provisions in the balance sheet are based on legal or contractual obligations towards third parties, that have not been realised, are related to the past or current financial period and at the balance sheet date it is certain or probable, that the obligation will be realised, but the exact amount and timing are uncertain and the corresponding income from the obligation is neither certain nor probable. The changes in obligatory provisions are included in the income statement.
Most of the company’s pension plans are defined contribution plans, under which the company pays fixed contributions for pensions to insurance companies. These payments are recognised to the income statement in the financial period to which they relate. The defined benefit plans operated by the company are small and concern only a few persons.
| 2023 | % | 2022 | % | |
|---|---|---|---|---|
| Net sales | ||||
| Administrative services, Group Companies | 24,741.6 | 100.0 | 23,281.0 | 100.0 |
| Total | 24,741.6 | 100.0 | 23,281.0 | 100.0 |
| Net sales by market area | ||||
| Finland | 24,741.6 | 100.0 | 23,281.0 | 100.0 |
| Total | 24,741.6 | 100.0 | 23,281.0 | 100.0 |
| 2023 | 2022 | |
|---|---|---|
| Average personnel | ||
| Salaried employees | 102 | 106 |
| Total | 102 | 106 |
| ¹ The calculation of the average number of employees in full-time equivalents was re-defined in 2023. The figure for 2022 has been adjusted accordingly. |
| EUR Thousand | 2023 | 2022 |
|---|---|---|
| Personnel expenses | ||
| Salaries and bonuses | 8,599.7 | 7,991.0 |
| Pension expenditure | 1,461.3 | 1,439.5 |
| Other salary-related expenses | 316.5 | 267.9 |
| Total | 10,377.5 | 9,698.4 |
Salaries, bonuses and pension benefits of the management are described in the note 5.4 Related-party transactions of the consolidated financial statements. No loans were granted to the related parties of the Group Companies.
| EUR Thousand | 2023 | 2022 |
|---|---|---|
| PwC | ||
| Auditing | 57.3 | 53.9 |
| Other assignments in accordance with the auditing act | 1.4 | 2.0 |
| Tax consulting services | 8.3 | 6.5 |
| Other services | 38.1 | 154.4 |
| Total | 105.1 | 216.8 |
| KPMG | ||
| Auditing | - | 11.0 |
| Other assignments in accordance with the auditing act | - | 25.7 |
| Tax consulting services | - | 2.0 |
| Total | - | 38.7 |
| EUR Thousand | 2023 | 2022 |
|---|---|---|
| Other operating income | ||
| From joint ventures | - | 71.1 |
| From others | ||
| Government grants | 20.1 | 37.0 |
| Merger gains | 105.9 | - |
| VAT refund | 232.9 | - |
| Other operating income | 16.6 | 33.5 |
| Total | 375.6 | 141.6 |
| Other operating expenses | ||
| Merger losses | - | 1,942.5 |
| ICT costs | 10,350.6 | 9,975.6 |
| Travel costs | 272.6 | 226.9 |
| Vehicles and machinery | 38.5 | 24.8 |
| Rents and real estate costs | 1,549.7 | 1,487.5 |
| Expert fees | 3,271.3 | 3,129.0 |
| Voluntary social security costs | 444.9 | 924.4 |
| Other | 530.5 | 948.1 |
| Total | 16,458.1 | 18,658.9 |
| EUR Thousand | 2023 | 2022 |
|---|---|---|
| Interest and other financial income | 3,426.9 | 1,836.7 |
| Interest and other financial expenses | -5,707.3 | -4,378.3 |
| Impairment of investments held as non-current assets | -11,448.6 | - |
| Total financial income and expenses | -13,729.0 | -2,541.6 |
| Financial income and expenses include: | ||
| Interest income from group companies | 951.2 | 727.3 |
| from joint ventures | - | 150.8 |
| from others | 1,202.0 | 185.0 |
| Other financial income¹ | ||
| from others | 1,273.7 | - |
| Foreign exchange gains from others | - | 773.6 |
| Interest expenses to group companies | -687.9 | -869.5 |
| to others | -4,640.3 | -2,745.9 |
| Other financial expenses | ||
| to others | -379.0 | -762.9 |
| Impairment of investments held as non-current assets | -11,448.6 | - |
| Total | -13,729.0 | -2,541.6 |
¹ Other financial income consists of the fair value of an interest rate swap, that was recognised in the income statement in June 2023 due to the termination of the swap contract.
| EUR Thousand | 2023 | 2022 |
|---|---|---|
| Increase/decrease in accumulated depreciation difference | ||
| Intangible assets | 270.2 | 209.5 |
| Total | 270.2 | 209.5 |
| Group contribution | ||
| Group contribution received | 31,526.0 | 23,550.0 |
| Group contribution paid | -3,358.0 | - |
| Total group contributions | 28,168.0 | 23,550.0 |
| Total appropriations | 28,438.2 | 23,759.5 |
| EUR Thousand | 2023 | 2022 |
|---|---|---|
| Income taxes on operations for the financial year | 4,516.6 | 3,303.1 |
| Income taxes from previous financial years | -234.8 | -2.0 |
| Change in deferred taxes | 384.5 | 133.0 |
| Total | 4,666.3 | 3,434.1 |
EUR Thousand
| Intangible rights | Goodwill | Other intangible assets | Prepayments and construction in progress | Total | |
|---|---|---|---|---|---|
| Acquisition cost, 1 Jan | 344.6 | - | 22,052.9 | 832.4 | 23,229.9 |
| Additions | - | - | - | 1,191.8 | 1,191.8 |
| Disposals | -37.7 | - | -15,098.0 | - | -15,135.6 |
| Transfers between items | - | - | 659.5 | -659.5 | - |
| Acquisition cost, 31 Dec | 307.0 | - | 7,614.4 | 1,364.7 | 9,286.1 |
| Accumulated amortisation, 1 Jan | -308.2 | - | -20,314.4 | - | -20,622.6 |
| Accumulated amortisation on disposals and transfers | 37.7 | - | 15,098.0 | - | 15,135.6 |
| Amortisation during the period | -20.8 | - | -821.4 | - | -842.2 |
| Accumulated amortisation, 31 Dec | -291.3 | - | -6,037.8 | - | -6,329.1 |
| Total carrying amount, 31 Dec | 15.6 | - | 1,576.6 | 1,364.7 | 2,957.0 |
Other intangible assets includes several ICT projects.
EUR Thousand
| Intangible rights | Goodwill | Other intangible assets | Prepayments and construction in progress | Total | |
|---|---|---|---|---|---|
| Acquisition cost, 1 Jan | 344.6 | 85,394.7 | 21,121.7 | 527.1 | 107,388.2 |
| Additions | - | - | 16.6 | 1,233.7 | 1,250.4 |
| Disposals | -0.0 | -85,394.7 | -13.9 | - | -85,408.6 |
| Transfers between items | - | - | 928.5 | -928.5 | - |
| Acquisition cost, 31 Dec | 344.6 | - | 22,052.9 | 832.4 | 23,229.9 |
| Accumulated amortisation, 1 Jan | -282.4 | -85,394.7 | -19,526.5 | - | -105,203.6 |
| Accumulated amortisation on disposals and transfers | 0.0 | 85,394.7 | 12.5 | - | 85,407.2 |
| Amortisation during the period | -25.8 | - | -800.3 | - | -826.2 |
| Accumulated amortisation, 31 Dec | -308.2 | - | -20,314.4 | - | -20,622.6 |
| Total carrying amount, 31 Dec | 36.4 | - | 1,738.6 | 832.4 | 2,607.4 |
Lassila & Tikanoja Vuosikertomus 2023 72
KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors
EUR Thousand
| Buildings and constructions | Machinery and equipment | Other tangible assets | Advance payments and construction in progress | Total | |
|---|---|---|---|---|---|
| Acquisition cost, 1 Jan | 358.7 | 424.2 | 42.2 | - | 825.1 |
| Disposals | - | -135.2 | - | - | -135.2 |
| Acquisition cost, 31 Dec | 358.7 | 289.0 | 42.2 | - | 689.9 |
| Accumulated depreciation, 1 Jan | -193.5 | -307.0 | - | - | -500.6 |
| Accumulated depreciation on disposals and transfers | - | 118.7 | - | - | 118.7 |
| Depreciation during the period | -20.6 | -41.6 | - | - | -62.1 |
| Accumulated depreciation, 31 Dec | -214.1 | -229.9 | - | - | -444.0 |
| Total carrying amount, 31 Dec | 144.6 | 59.1 | 42.2 | - | 245.9 |
EUR Thousand
| Buildings and constructions | Machinery and equipment | Other tangible assets | Advance payments and construction in progress | Total | |
|---|---|---|---|---|---|
| Acquisition cost, 1 Jan | 358.7 | 680.5 | 22.2 | 12.0 | 1,073.4 |
| Additions | - | 35.2 | 20.0 | 0.7 | 56.0 |
| Disposals | - | -304.2 | - | - | -304.2 |
| Transfers between items | - | 12.8 | - | -12.8 | - |
| Acquisition cost, 31 Dec | 358.7 | 424.2 | 42.2 | - | 825.1 |
| Accumulated depreciation 1 Jan | -172.9 | -555.4 | - | - | -728.3 |
| Accumulated depreciation on disposals and transfers | - | 304.2 | - | - | 304.2 |
| Depreciation during the period | -20.6 | -55.9 | - | - | -76.5 |
| Accumulated depreciation, 31 Dec | -193.5 | -307.0 | - | - | -500.6 |
| Total carrying amount, 31 Dec | 165.2 | 117.2 | 42.2 | - | 324.6 |
Lassila & Tikanoja Vuosikertomus 2023 73
KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors
EUR Thousand
| Shares in Group companies | Shares in joint ventures | Other shares and holdings | Total | |
|---|---|---|---|---|
| 2023 | ||||
| Acquisition cost, 1 Jan | 181,590.5 | 9,946.8 | 170.8 | 191,708.1 |
| Impairments | -11,448.6 | - | - | -11,448.6 |
| Disposals | -11,060.0 | - | - | -11,060.0 |
| Acquisition cost, 31 Dec | 159,081.9 | 9,946.8 | 170.8 | 169,199.5 |
| Total carrying amount, 31 Dec | 159,081.9 | 9,946.8 | 170.8 | 169,199.5 |
| 2022 | ||||
| Acquisition cost, 1 Jan | 126,129.4 | - | 170.8 | 126,300.2 |
| Additions | 75,315.1 | 9,946.8 | - | 85,261.9 |
| Disposals | -19,854.0 | - | - | -19,854.0 |
| Acquisition cost, 31 Dec | 181,590.5 | 9,946.8 | 170.8 | 191,708.1 |
| Total carrying amount, 31 Dec | 181,590.5 | 9,946.8 | 170.8 | 191,708.1 |
The figure includes a capital repayment totalling EUR 11 million from L&T Hankinta Ky, that was liquidated in December 2023.
EUR Thousand
| 2023 | 2022 | |
|---|---|---|
| From Group Companies | ||
| Loan receivables | 1,840.7 | 16,844.4 |
| Trade receivables | 13.6 | 3.4 |
| Group contribution receivable | 31,526.0 | 23,550.0 |
| Prepaid expenses and accrued income | 0.0 | 3.0 |
| Total | 33,380.4 | 40,400.8 |
| Receivables from joint venture | ||
| Trade receivables | - | 6.6 |
| Total | - | 6.6 |
| Prepaid expenses and accrued income | ||
| Employees' health care compensation | 25.6 | 30.5 |
| Annual discounts | - | 5.2 |
| Licences | 653.9 | 896.3 |
| Other | 363.0 | 895.1 |
| Total | 1,042.5 | 1,827.1 |
EUR Thousand
| 2023 | 2022 | |
|---|---|---|
| Unused depreciation | 6.4 | 8.1 |
| Obligatory provisions | 62.3 | 176.5 |
| Impairment of non-current assets | 27.0 | 27.0 |
| From mergers | 0.8 | 268.6 |
| Total | 96.5 | 480.2 |
Holding of shares and votes, %
| Holdings in group companies | |
|---|---|
| L&T Toimi Oy, Helsinki | 100.0 |
| L&T Kiinteistöhuolto Oy, Helsinki | 100.0 |
| L&T Kiinteistötekniikka Oy, Helsinki | 100.0 |
| L&T Siivous Oy, Helsinki | 100.0 |
| L&T Ympäristöpalvelut Oy, Helsinki | 100.0 |
| L&T Teollisuuspalvelut Oy, Helsinki | 100.0 |
| Lassila & Tikanoja Service Ab, Stockholm, Sweden | 100.0 |
| Lassila & Tikanoja FM AB, Stockholm, Sweden | 100.0 |
| Sand & Vattenbläst i Tyringe AB, Hässleholm, Sweden | 70.0 |
| Joint ventures | |
| Laania Oy, Helsinki | 55.0 |
Lassila & Tikanoja Vuosikertomus 2023 74
KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors
EUR Thousand
| 2023 | 2022 | |
|---|---|---|
| Restricted equity | ||
| Share capital at 1 Jan / 31 Dec | 19,399.4 | 19,399.4 |
| Restricted equity, total | 19,399.4 | 19,399.4 |
| Non-restricted equity | ||
| Invested non-restricted equity reserve 1 Jan | 727.1 | 727.1 |
| Invested non-restricted equity reserve 31 Dec | 727.1 | 727.1 |
| Retained earnings at 1 Jan | 60,992.5 | 66,463.7 |
| Dividend distribution | -17,928.4 | -17,543.0 |
| Expired dividends | 36.0 | 37.3 |
| Transfer of treasury shares | 88.0 | 87.9 |
| Retained earnings at 31 Dec | 43,188.0 | 49,045.9 |
| Profit for the period | 7,420.0 | 11,946.6 |
| Non-restricted equity total | 51,335.2 | 61,719.6 |
| Shareholders’ equity at 31 Dec | 70,734.6 | 81,119.0 |
| Distributable funds | ||
| Retained earnings | 43,188.0 | 49,045.9 |
| Profit for the period | 7,420.0 | 11,946.6 |
| Invested non-restricted equity reserve | 727.1 | 727.1 |
| Total distributable funds | 51,335.2 | 61,719.6 |
EUR Thousand
| 2023 | 2022 | |
|---|---|---|
| Pension liabilities | 261.4 | 273.4 |
| Provision for accident insurance contribution | - | 609.0 |
| Restructuring provisions | 50.1 | - |
| Total | 311.5 | 882.4 |
EUR Thousand
| 2026 | 2028 | |
|---|---|---|
| Loans from credit institutions | 40,000.0 | - |
| Bonds | - | 75,000.0 |
| 2023 | 2022 | |
|---|---|---|
| Short term liabilities to Group Companies | ||
| Trade payables | 13.4 | 3.8 |
| Interest-bearing liabilities | 41,995.8 | 53,065.1 |
| Group contribution liabilities | 3,358.0 | - |
| Accrued expenses and deferred income | 71.1 | 0.7 |
| Total | 45,438.3 | 53,069.6 |
| Accrued expenses and deferred income | ||
| Personnel expenses | 2,098.8 | 1,772.1 |
| Interest expenses | 2,264.2 | 1,912.3 |
| Taxes | 48.1 | 126.1 |
| Other expenses | 3.7 | 0.7 |
| Total | 4,414.8 | 3,811.1 |
EUR Thousand
| 2023 | 2022 | |
|---|---|---|
| For own commitments | ||
| Mortgages on rights of tenancy | 121.6 | 121.6 |
| Liabilities related to leasing and leases | ||
| Maturity within 1 year | 1,770.0 | 1,679.7 |
| Maturity in subsequent years | 1,728.4 | 2,677.9 |
| Total | 3,498.4 | 4,357.6 |
| For Group Companies | ||
| Guarantees | 44,000.0 | 44,000.0 |
| For Joint Ventures | ||
| Guarantees | 35,750.0 | 35,750.0 |
| Other bank guarantees | 264.7 | 264.7 |
| Mortgages under own control | ||
| Company mortgages | 210.2 | 210.2 |
TThe figures for the comparative period have been restated. According to the shareholders’ agreement, the Company is committed to acquire the remaining 30 per cent share of Sand & Vattenbläst i Tyringe AB in February 2026 at the earliest. The estimated value of the commitment at the end of the reporting period totalled EUR 5,941.7 thousand.
EUR Thousand
| 2023 | 2022 | |
|---|---|---|
| Nominal value | - | 30,000.0 |
| Fair value | - | 1,210.8 |
The interest rate swap that was used for hedging cash flows related to floating rate loans was terminated in June 2023 in conjunction with the refinancing of the hedged loan. The fair value of the interest rate swap totalling EUR 1,273.7 thousand was recognised as finance income in the income statement. The fair value of the swap contract was based on the market data on the balance sheet date.
75
KEY FIGURES FINANCIAL STATEMENTS REPORT BY THE BOARD OF DIRECTORS CORPORATE GOVERNANCE REMUNERATION REPORTSUSTAINABILITY REPORT Financial statements of the parent companyPrimary financial statements of the Group Notes to the consolidated financial statements 1. 2. 3. 4. 5. Proposal by the Board of Directors
Lassila & Tikanoja Annual Report 2023
Auditor’s Note
We have today submitted our report on the audit conducted by us.
Helsinki on 26 February 2024
PricewaterhouseCoopers Oy
Samuli Perälä APA
According to the financial statements, Lassila & Tikanoja plc’s unrestricted equity amounts to EUR 51,335,173.21, with the result for the period representing EUR 7,420,038.45 of this total. There were no substantial changes in the financial standing of the company after the end of the period, and the solvency test referred to in Chapter 13, Section 2 of the Companies Act does not affect the amount of distributable profits.
The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.49 per share be paid for the financial year 2023. The dividend is to be paid to shareholders included in the company shareholder register maintained by Euroclear Finland Oy on the record date, 25 March 2024. The Board proposes to the Annual General Meeting that the dividend be paid on 3 April 2024. No dividend shall be paid on shares held by the company on the record date of dividend payment, 25 March 2024.On the day the proposal for the distribution of profit was made, the number of shares entitling to dividend was 38,154,102, which means the total amount of the dividend would be EUR 18,695,509.98. To be retained and carried forward EUR 32,639,663.23. Total EUR 51,335,173.21.
Signatures to the Report of the Board of Directors and the Financial Statements for the year 2023
Helsinki on 20 February 2024
Jukka Leinonen
Sakari Lassila
Teemu Kangas-Kärki
Laura Lares
Anni Ronkainen
Pasi Tolppanen
Eero Hautaniemi
President and CEO
76 Lassila & Tikanoja Annual Report 2023
To the Annual General Meeting of Lassila & Tikanoja plc
In our opinion
Our opinion is consistent with the additional report to the Audit Committee.
We have audited the financial statements of Lassila & Tikanoja plc (business identity code 1680140-0) for the year ended 31 December 2023. The financial statements comprise:
We conducted our audit in accordance with good auditing practice in Finland. Our responsibilities under good auditing practice are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the parent company and of the group companies in accordance with the ethical requirements that are applicable in Finland and are relevant to our audit, and we have fulfilled our other ethical responsibilities in accordance with these requirements. To the best of our knowledge and belief, the non-audit services that we have provided to the parent company and group companies are in accordance with the applicable law and regulations in Finland and we have not provided non-audit services that are prohibited under Article 5(1) of Regulation (EU) No 537/2014. The non-audit services that we have provided are disclosed in note 5.5 to the Financial Statements.
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we considered where management made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain.
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for the consolidated financial statements as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the financial statements as a whole.
| Overall group materiality | 5,200,000 euros |
We used a combination of net sales and profit before taxes as benchmarks to determine overall group materiality.
We consider that net sales and profit before taxes provide a suitable representation of the volume and profitability of Lassila & Tikanoja’s operations.
We tailored the scope of our audit, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates. The Group has four reportable segments: Environmental Services, Industrial Services, Facility Services Finland and Facility Services Sweden, its main markets being Finland and Sweden. We have scoped our audit to obtain sufficient audit coverage of Lassila & Tikanoja Group’s consolidated financial statements.
77 Lassila & Tikanoja Annual Report 2023
77
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.
As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.
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 a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting. The financial statements are prepared using the going concern basis of accounting unless there is an intention to liquidate the parent company or the Group or to cease operations, or there is no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. 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 the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
| Key audit matter in the audit of the consolidated financial statements | How our audit addressed the key audit matter |
|---|---|
| Revenue recognition (Refer to note 1.1 and 1.2 in the consolidated financial statements) | The Group’s total net sales amounted to EUR 802 million. Revenue from contracts with customers is generated from multiple revenue streams as described in note 1.2. Revenue recognition principles vary depending on the nature of the revenue stream. Revenue recognition is considered a key audit matter due to the significance of revenue to the financial statements and due to management judgment involved in selecting the appropriate revenue recognition method for the different revenue streams. |
| • We obtained an understanding of the company’s revenue recognition policies and compared these to the respective IFRS standards | |
| • We obtained an understanding of the internal controls that the company uses to assess the completeness, accuracy, and timing of revenues | |
| • We tested revenue transactions on a sample basis | |
| • We tested, on a sample basis, revenue related balance sheet items such as contract assets and liabilities. |
The Group operates in a highly labor-intensive business. Wages, salaries, and other employee benefit expenses form a significant part of the Group’s operating expenses. In 2023 employee benefit expenses were EUR 353 million. Employee benefit expenses is considered a key audit matter due to its significance to the consolidated financial statements. Our audit procedures included, for example, the following:
• We obtained an understanding of the company’s payroll process
• We evaluated and tested the internal controls that the company uses to assess the accuracy of employee benefit expenses
• We performed analytical audit procedures in relation to employee benefit expenses
• We tested on a sample basis employee benefit expenses related accruals.
Refer to note 3.1 and 3.2 in the consolidated financial statements
As of 31.12.2023, Goodwill in the consolidated balance sheet amounted to EUR 181 million. Goodwill is not amortised, but is tested at least annually for impairment. Goodwill impairment testing has been prepared based on value-in-use calculations in which future cash flows are discounted to current value. Value-in-use calculations include significant management judgment in respect of profitability levels, long-term growth rates and discount rates. The valuation of goodwill is considered a key audit matter due to its significance as well as due to the management judgment involved in the impairment testing. Our audit procedures included, for example, the following:
• We obtained an understanding of the methodology and assumptions used in the goodwill impairment testing
• We tested the mathematical accuracy of the calculations
• We assessed the reasonableness of the estimated future profitability levels and their consistency with the budgets and forecasts made by the management in connection with the strategy process
• We assessed the reasonableness of the discount rates, long-term growth rates and certain other assumptions by e.g., comparing the inputs to observable market data
• We assessed management’s sensitivity analysis to ascertain the extent of change in key assumptions that either individually or collectively could result in an impairment of goodwill
• We assessed the adequacy of the disclosures.
| KEY FIGURES | FINANCIAL STATEMENTS | REPORT BY THE BOARD OF DIRECTORS | CORPORATE GOVERNANCE | REMUNERATION REPORT | SUSTAINABILITY REPORT |
|---|---|---|---|---|---|
| 78 | Lassila & Tikanoja Annual Report 2023 | FINANCIAL STATEMENTS | CORPORATE GOVERNANCE | REMUNERATION REPORT | SUSTAINABILITY REPORT |
The investments in shares in group companies amounted to EUR 159 million and current receivables from group companies to EUR 33 million. The valuation of shares in group companies and receivables from group companies is assessed annually and tested for impairment when necessary. Impairment testing is performed using the discounted cash flow model. Valuation of shares in group companies and receivables from group companies is considered a key audit matter in the audit of the parent company due to the significance of these investments to the financial statements and due to management judgment involved in the impairment testing of these investments. Our audit procedures included, for example, the following:
• We assessed the reasonableness of the management estimates by e.g., checking their consistency with the approved budgets and forecasts
• We assessed the methodology used in determining the discount rates and long-term growth rates by e.g., comparing the inputs to observable market data.
There are no significant risks of material misstatement referred to in Article 10(2c) of Regulation (EU) No 537/2014 with respect to the consolidated financial statements or the parent company financial statements. As part of an audit in accordance with good auditing practice, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the parent company’s or the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of the Board of Directors’ and the Managing Director’s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the parent company’s or the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the parent company or the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events so that the financial statements give a true and fair view.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
We were first appointed as auditors by the annual general meeting on 17 March 2022.
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.
| KEY FIGURES | FINANCIAL STATEMENTS | REPORT BY THE BOARD OF DIRECTORS | CORPORATE GOVERNANCE | REMUNERATION REPORT | SUSTAINABILITY REPORT |
|---|---|---|---|---|---|
| 79 | Lassila & Tikanoja Annual Report 2023 | FINANCIAL STATEMENTS | CORPORATE GOVERNANCE | REMUNERATION REPORT | SUSTAINABILITY REPORT |
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. With respect to the report of the Board of Directors, our responsibility also includes considering whether the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations.# Independent Auditor’s Reasonable Assurance Report on Lassila & Tikanoja Oyj’s ESEF Financial Statements
In our opinion, Lassila & Tikanoja Oyj’s ESEF financial statements for the financial year ended 31 December 2023 comply, in all material respects, with the minimum requirements as set out in the ESEF requirements.
Our reasonable assurance report has been prepared in accordance with the terms of our engagement. We do not accept, or assume responsibility to anyone else, except for Lassila & Tikanoja Oyj for our work, for this report, or for the opinion that we have formed.
Helsinki 26 February 2024
PricewaterhouseCoopers Oy
Authorised Public Accountants
Samuli Perälä
Authorised Public Accountant (KHT)
In our opinion • the information in the report of the Board of Directors is consistent with the information in the financial statements • the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
We support the adoption of the financial statements. The proposal by the Board of Directors regarding the treatment of distributable funds is in compliance with the Limited Liability Companies Act. We support that the members of the Board of Directors of the parent company and the President and CEO should be discharged from liability for the financial period audited by us.
Helsinki 26 February 2024
PricewaterhouseCoopers Oy
Authorised Public Accountants
Samuli Perälä
Authorised Public Accountant (KHT)
To the Management of Lassila & Tikanoja Oyj
We have been engaged by the Management of Lassila & Tikanoja Oyj (business identity code 1680140-0) (hereinafter also “the Company”) to perform a reasonable assurance engagement on the Company’s consolidated IFRS financial statements for the financial year 1 January – 31 December 2023 in European Single Electronic Format (“ESEF financial statements”) 743700Z9Z54VGHZA0028-2023-12-31-fi.zip.
The Management of Lassila & Tikanoja Oyj is responsible for preparing the ESEF financial statements so that they comply with the requirements as specified in the Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 (“ESEF requirements”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation of ESEF financial statements that are free from material noncompliance with the ESEF requirements, whether due to fraud or error.
We have complied with the independence and other ethical requirements of the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code), which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. Our firm applies International Standard on Quality Management 1, which requires the firm to design, implement and operate a system of quality management including policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.
Our responsibility is to express an opinion on the ESEF financial statements based on the procedures we have performed and the evidence we have obtained. We conducted our reasonable assurance engagement in accordance with the International Standard on Assurance Engagements (ISAE) 3000 (Revised) Assurance Engagements Other than Audits or Reviews of Historical Financial Information. That standard requires that we plan and perform this engagement to obtain reasonable assurance about whether the ESEF financial statements are free from material noncompliance with the ESEF requirements. A reasonable assurance engagement in accordance with ISAE 3000 (Revised) involves performing procedures to obtain evidence about the ESEF financial statements compliance with the ESEF requirements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material noncompliance of the ESEF financial statements with the ESEF requirements, whether due to fraud or error. In making those risk assessments, we considered internal control relevant to the Company’s preparation of the ESEF financial statements. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
KEY FIGURES
FINANCIAL STATEMENTS
REPORT BY THE BOARD OF DIRECTORS
CORPORATE GOVERNANCE
REMUNERATION REPORT
SUSTAINABILITY REPORT
Lassila & Tikanoja Annual Report 2023 80
LEADER OF THE REGENERATIVE SOCIETY
Lassila & Tikanoja plc
Valimotie 27, 00380 Helsinki
puh. 010 636 111
www.lt.fi
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