Martela Oyj

Annual Report

2023

Contents

Martela in brief .............................................................................................................................. 3

Martela 2023 ................................................................................................................................... 4

Highlights of 2023 .....................................................................................................................5

CEO’s review ..................................................................................................................................... 6

Operating environment ........................................................................................................... 7

Martela Lifecycle .........................................................................................................................9

Board of Director’s Report and Financial Statements ........................10

Corporate governance statement 2023 ............................................................ 62

Information for shareholders ........................................................................................ 71

2Martela 2023 CEO’s review

MARTELA ANNUAL REPORT 2023

Operating environment Financial statements Governance

Martela is a Nordic leader specialising in user-cen-

tric working and learning environments. We cre-

ate the best places to work and support our cus-

tomers’ business with Martela Lifecycle solutions,

which enable furniture and their related services

to be integrated into a seamless whole. Martela is

a family company founded in 1945 and its shares

are quoted on the OMX Nordic Exchange Helsinki.

Our main market areas are Finland, Sweden and

Norway, and our solutions are also sold globally

through our network of dealers. Our production fa-

cilities are located in Finland and Poland. In 2023,

the Martela Group’s revenue was EUR 94.4 million

and it employed an average of 403 employees.

Martela

in brief

3Martela 2023 CEO’s review

MARTELA ANNUAL REPORT 2023

Operating environment Financial statements Governance

Martela 2023 CEO’s review Operating environment Financial statements Governance

The year 2023 was challenging for Martela. Weak

general economic development and rising interest

rates made organisations cautious about making

purchasing decisions. Our revenue decreased and

our operating result was a loss. We improved our

efficiency and adjusted our cost level in form of

lay-off procedures, among other things.

Our exports grew, even though the domestic

market was challenging. The sales of our removal

and installation services increased, and the Work-

place as a Service model produced a greater share

of our revenue. Our sales to companies and schools

remained stable in relation to the market.

We expect the demand to grow, as our custom-

ers’ need for space changes has increased as hy-

brid work has become more common. Adaptabil-

ity, sustainability and circular economy thinking

will continue to be emphasised in workplace plan-

ning. Our change services and responsible prod-

ucts meet these needs.

We invested in our strategic focus areas to

ensure growth and profitability in the future. We

strengthened our ability to utilise the circular econ-

omy and produce more responsibly manufactured

products and life cycle services for our customers.

We invested in the customer experience by improv-

ing our digital services in particular.

94.4

-2.4

403

20232021 2022

Equity ratio (%)

24.7

20.0

22.2

Revenue by country

(EUR million)

Finland 67.3

Norway 7.0

Sweden 9.6

Other 10.5

94.4

Total

Martela 2023

Revenue

(EUR million)

Operating profit

(EUR million)

Personnel

(average)

Revenue by country

(EUR million)

Equity ratio

(%)

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

Highlights of 2023

Ella – our modern classic

The biggest product launch of the

year was the versatile Ella chair fam-

ily, which was launched in the spring.

Ella is designed by Antti Kotilainen.

With its timeless design and mate-

rial options, Ella is ideal for offices,

cafés and other public spaces. Ella

chairs are made from carefully select-

ed materials with a long useful life.

The recycling and reuse of materials

is taken into account right from the

start of the production process. Ella

has been a hit with users, influenc-

ers and journalists alike, and is set to

become a modern classic in Martela’s

collection.

Martela as number one

for the ninth consecutive

year!

Every year, the Taloustutkimus mar-

ket research firm commissions the

TEP survey, in which business deci-

sion-makers assess various business

image factors. Martela achieved the

top ranking for its overall score for

the ninth time in a row! In addition

to the overall score, Martela achieved

the two top spots in the NPS ranking:

Martela came first and Martela Out-

let second! The value of the feedback

is further enhanced as Martela come

first in the comparison of all the in-

dustries surveyed.

We launched our new

online store

We are investing in digital service

channels and in late 2023 we launched

a new online store for our business

customers in Finland on our website.

Our website is an important platform

for purchasers and designers, and we

have been focusing on making it easier

to find products and on comprehensive

product information for a long time.

Online purchasing is easy and products

are always delivered ready to use. We

will continue to actively develop the

website and online store and informa-

tion on user experience will be collect-

ed to support the development work.

Year of circular economy

development

We participated in the year-long Circu-

lar Design programme, a unique inter-

national training programme for com-

panies to develop circular design skills.

Through the programme, we sought

new networks and insights for the

further development of our life cycle

model based on the circular economy.

Martela will use the knowledge gained

through the programme to enhance the

sustainability of the workplaces of its

customer companies.

Preserving the unique

spirit of Orion’s

headquarters

The Orion pharmaceutical company’s

renovated headquarters reflect the

original spirit and architecture of the

building. The planning of the furnish-

ing of the headquarters was guided by

quality, timelessness and Finnish origin,

and the furniture is intended to last for

decades. In addition to Martela’s own

furniture, the furniture of a wide net-

work of partners was selected for the

attractive office – the design was car-

ried out by Interior Architects Gullstén

& Inkinen Oy.

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

The year 2023 was challenging due to the uncer-

tain market situation, which made organisations

cautious about making purchasing decisions. Infla-

tion weighed on the result in the first half of the

year but started to ease in the second half. How-

ever, there is a growing and pent-up need in the

market for space modifications as a result of the

change in the ways we work. This need has be-

come more tangible and it will continue to increase

the demand for Martela’s services and furniture.

Workspaces are being adapted to meet the needs

of multi-location hybrid work and companies are

focusing on attractive premises.

Our revenue decreased by 12 per cent to EUR

94,4 million, and our operating result was a loss

of EUR -2,4 million. The result for 2023 was par-

ticularly affected by the low level of revenue in the

first half of the year. In addition, profitability in the

first half of the year was burdened by investments

in development projects. We responded to the

challenging market situation by adjusting our cost

level and achieved a positive operating profit level

of EUR 2,4 million in the second half of the year.

The measures to improve efficiency were mainly

in for form of lay-off procedures and other cost-sav-

ing measures. These measures will continue in ear-

ly 2024, including through organisational changes.

CEO’s review

It is unclear how long the market uncertainty will

persist, so we must continue to be able to adjust

our cost levels to the prevailing conditions.

Our domestic market was challenging, but ex-

ports continued to grow strongly. The sales of our

removal and installation services also grew, and

our unique Workplace as a Service model pro-

duced a greater share of our revenue. Our sales to

companies and schools remained stable in relation

to the market, and the most significant decline in

sales was in the municipal and government sec-

tors. There was a weak start to the year in terms

of new orders, but the gap with the previous year

narrowed significantly with every quarter.

We will continue to concentrate on

the focus areas of our strategy

Despite the challenging market situation,

the year was a period of strong development at

Martela. We concentrated on our strategic focus

areas to ensure growth and profitability also in

the future. We strengthened our leadership in the

circular economy by participating in the first year-

long Circular Design programme. Our customers

will benefit from this development work in the

form of more sustainably manufactured products

and lifecycle services.

The emphasis on the circular economy has fur-

ther boosted demand for our Workplace as a Ser-

vice (WaaS) model. The active development of the

product range continued throughout the year with

new products and product updates. In the spring

we launched the Ella chair family, which has the

potential to become one of our classics.

We received a tangible reward for our commit-

ment to customer experience when we achieved

the top ranking in the industry for the ninth time

in a row in the TEP survey conducted by Talous-

tutkimus! On top of that, we achieved the top rank-

ing for our overall score among 163 Finnish com-

panies across all industries. This shows that we

have been able to support organisations in the

right way, even during this time of major change

in the way we work. A warm thank you to our cus-

tomers for your trust and to all Martela personnel

and partners for your excellent work!

In the People Spirit survey, which measures

employee experience, we maintained our good AA

score for the second year in a row. Our strong

culture of working together is also experienced

by our customers and contributes to a great cus-

tomer experience. A corporate culture of serving

and supporting others is part of Martela’s DNA

and values.

In 2024, we will continue to concentrate on

the focus areas of our strategy and on the bene-

fits created by the development work undertaken

during 2023. We will continue to focus on active

customer engagement and work closely with the

partners in our value chain. We will continue to de-

velop our digital service channels and accelerate

the development of our circular economy service

model and sustainably designed products.

I would like to thank Martela’s employees for a

busy year! The year was more challenging than ex-

pected, but our investment in developing our busi-

ness and the positive feedback received for this

from our customers provides us with confidence

in the future. We will continue to promote the best

work environments!

Ville Taipale

CEO

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

Operating environment

Economic growth in the Nordic countries was modest in 2023, which also meant

Martela’s customers were cautious about making purchasing decisions.

High interest rates and weakened international

demand are expected to maintain uncertainty in

2024. On the other hand, the upward pressure on

prices and challenges in the availability of raw ma-

terials caused by the war in Ukraine have eased

and the economic outlook is expected to improve

in the second half of the year.

Market uncertainty combined with the changes

in the way people work also create new demand

for Martela’s change services. Workspaces are be-

ing adapted to meet the needs of multi-location

hybrid work and customers are focusing on mak-

ing them attractive.

Our products have also attracted interest in

the export market. Martela’s quality and service

are appreciated beyond Finland, and we believe

our exports will continue to grow in the future.

By developing our digital services, we are further

improving our services and laying the foundations

for future growth.

Multi-location work and a focus on

sustainability are driving the indus-

try’s development

The work ecosystem has expanded and many

people work from home and in co-working spaces

for part of the week. Both individuals and compa-

nies are still seeking the right balance between re-

mote working and office work. Many organisations

are considering smaller premises, and the need for

space is assessed not only in terms of savings but

also in terms of sustainability.

As the surface area of offices decreases, the

importance of quality increases. The key criteria

for an office are good location, functionality, ad-

aptability and comfort. A homelike feel is an im-

portant requirement for all workplaces. Work re-

quiring concentration, teamwork and spontaneous

meetings all require their own spaces.

Considering and enabling the circular econo-

my are increasingly important purchasing crite-

ria when designing working and learning envi-

ronments. At Martela, sustainability has been an

important consideration for decades and since

the 2010s, when our new strategy was implement-

ed, our entire business model has been based on

workplace lifecycle thinking. We take sustainabil-

ity into account at every stage, and the circular

economy plays an important role.

We comply with the continuously evolving acts

and regulations that are related to sustainability in

all our operations. We have also defined specific

management principles to guide our corporate re-

sponsibility work and our Code of Conduct is our

most important guideline. In 2023, we focused on

developing the sustainability competence of our

employees and our customers and the other stake-

holders in our value chain.

The need for flexible solutions has grown signif-

icantly as the way we work has changed. This need

has also boosted the growth of our Workplace as

a Service (WaaS) model. There is no correspond-

ing, equally comprehensive service available on

the market. The WaaS model is an effortless way

for customers to ensure that their workspace is

responsible and up-to-date, without the need for

large one-off investments.

Used and refurbished furniture has become a

natural part of the furnishing of working and learn-

ing environments. More and more organisations

are realising the value of their existing furniture,

either for their own use or for the use of others.

Our Martela Outlet chain meets this need and re-

furbishes and recycles furniture for the next users.

Martela Outlet is one of the largest refurbished

and recycled furniture chains in Finland.

Organisations value good customer

experience

In our industry, a growing share of purchasing is

done through digital channels. We continued to de-

velop our services and opened a new online store

for our Finnish customers at the end of the year.

The online store will be further developed and ex-

tended to more customer segments in 2024.

In numerous customer encounters, we have

supported organisations in finding flexible and

sustainable solutions for multi-location working.

Our commitment to customer experience was re-

warded when we achieved the top ranking in the

industry for the ninth time in a row in the TEP sur-

vey conducted by Taloustutkimus!

Our industry will continue to change, and 2024

should see the release of the pent-up need to make

changes to offices. The way we work has changed,

so we need to look at workplaces with fresh eyes.

Those who listen carefully to their customers and

offer them solutions that take flexibility and sus-

tainability into account will succeed in meeting

this need.

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

ADAPTABILITY AT

WOLT’S PACE

In summer 2023, Finnish tech-

nology company Wolt moved to new premis-

es in Kamppi, Helsinki. The employees want-

ed their new headquarters to be home-like

and cosy, in contrast to the cold appearance

of their old office. The criterion was that the

premises had to be able to change “at Wolt’s

pace”, and Wolt chose Martela’s flexible Work-

place as a Service solution as the main furni-

ture sourcing method. This circular economy

rental model also means future changes to the

space are easy, as furniture can be replaced,

recycled and added to in a sustainable way.

The users feel right at home and the num-

ber of people working at the office has doubled

compared to before! More furniture has been

added since the summer to meet the needs.

“We had a million ideas and needed a part-

ner who was able to take control and bring

everything together. The project progressed

rapidly and we adapted our plans as we went

along. Everything went really well,” says Susan

Vättö, the HQ Project Lead at Wolt.

The facilities will continue to be developed

flexibly as part of the agreed service model,

and Martela will carry out regular visits to en-

sure functionality.

www.martela.com/cases/wolt

CASE

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

The Martela Lifecycle strategy is based on lifecy-

cle thinking, the core of which is high-quality and

timelessly designed furniture. Martela’s furniture is

designed according to circular economy principles

to withstand time and circulation from one user to

another. Before entering the market, our furniture

is also tested in an accredited testing laboratory

in accordance with European EN standards. The

testing simulates at least ten years of use.

High-quality design enables easy maintenance

and restoration of the furniture, extending their life

cycle. When choosing materials, we prefer sustain-

able, recyclable and responsibly produced materi-

als. Durable furniture has many lives, and timeless

products can be passed down from generation to

generation.

A FLEXIBLE RENTAL SERVICE BASED ON

THE CIRCULAR ECONOMY

In a rapidly changing world, the needs of

tomorrow are difficult to predict. Marte-

la’s circular economy-based Workplace as

a Service model is a smart way to prepare

for long-term changes as well.

Thanks to the service model, the work

environment is always up-to-date and the

organisation only pays a monthly fee for

what it really needs. This eliminates the

problems associated with owning furniture, and

the work environment can be flexibly updated as

needs change. The service also includes a furniture

maintenance service to extend the lifecycle and a

follow-up survey on user experiences. In addition to

the company’s premises, the service is suitable for

the development of, for example, ergonomic home

offices and flexible co-working spaces.

In accordance with our Waste Nothing circular

economy principle, furniture that is no longer need-

ed but that is still in a good condition will be sold

responsibly through the Martela Outlet stores or

online shop. Some furniture are serviced and/or

reupholstered before they are sold. The materials

of furniture that are not suitable for refurbishing

are used either as parts of used furniture, as sec-

ondary raw materials or in energy production.

Time- and cycle-resistant design

Case Staria: One year after the new

premises were taken into use, more

than 84% of respondents felt that the

workplace promotes wellbeing at work.

MARTELA ANNUAL REPORT 2023

Board of Directors’

Report and

Financial Statements

Board of Directors’ Report ....................................................................................11

Consolidated Financial Statements, IFRS ............................................. 19

Parent company nancial statements, FAS ........................................48

Auditor’s report .............................................................................................................. 59

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

Board of directors’ report

Key figures

The Group’s revenue for the financial year was EUR 94.4 million (106.7). The operating result for the year

was EUR -2.4 million (2.5). Operating result of the comparison period includes nonrecurring gain EUR 1.5

million from the sale and leaseback agreement regarding Nummela production and logistic centre, tak-

ing into account the cost of sales. Earnings per share were EUR -0.77 (0.57). Cash flow from operating

activities totalled EUR 0.3 (2.1) million. The equity-to-assets ratio was 20.0 per cent (24.7) and gearing

was 137.2 per cent (58.6). The return on investment for the year was -7.5 per cent (9.1).

Description of the business

Martela is one of the Nordic leaders in the workplace industry. Martela designs and implements best

workplace and learning environments. Martela supplies user-centric solutions into today’s workplaces

– mobile work and activity based offices. Martela also offers the widest selection of services support-

ing changes in interior planning as well as supporting maintenance. Our total offering comprises of the

change of the whole workplace from its specification and planning to implementation and maintenance.

Martela’s offering and product development

In line with its Lifecycle strategy Martela creates high-quality services for workplaces and learning en-

vironments along the full lifecycle. Our offering includes workplace and learning environment specifica-

tion and planning, implementation and furnishing as well as continuous measurement and optimization.

Martela’s service model related to furnishings and changes in premises responds to the constantly

growing need for flexibility. Increasingly, instead of large one-off investments, space changes are under

more process-like development. In this change, Martela has highlighted the circular economy model, flex-

ible Workplace as a Service and development of digital sales channels, as strategic focus areas.

The biggest product launch of the year was the versatile Ella chair family, launched in the spring. Ella

was designed by Antti Kotilainen and is, among others, a natural complement to the popular Sola chair

family. Due to its timeless design and material options, Ella is suitable for offices, cafés and other pub-

lic spaces. Ella chairs are made of carefully selected materials with a long service life. The recycling and

reuse of materials has been taken into account in the manufacturing process from the very beginning.

Ella has aroused admiration among users, influencers and suppliers and is becoming a modern classic

in Martela’s selection. In addition to Ella, the height-adjustable Jojo table designed by Iiro Viljanen was

launched on the market, which increases ergonomics, especially in learning environments, and the Sola

product family grew with the hefty Sola Grande armchair.

EUR -1.6 (-1.6) million has been entered in the Group profit and loss statement as research and devel-

opment expenses.

Market situation

Economic development in the Nordic countries was modest in 2023, which was also reflected as cau-

tiousness in Martela’s customers’ purchasing decisions. Market conditions are expected to remain un-

certain in 2024 due to inflation and interest rate developments, and the resulting caution. On the other

hand, the upward pressure on prices caused by the war in Ukraine and challenges in the availability of

raw materials have eased.

However, market uncertainty and simultaneous changes in the way of working is likely to create de-

mand for Martela’s change services. Premises will be modified to meet the needs of multi-location hybrid

work and investments will be made in their attractiveness.

Group structure

There was no changes in the group structure in 2023.

Revenue and operating result

The January–December 2023 revenue was EUR 94.4 million (106.7), a decrease of -11.5% from previous

year. Compared to the previous year, revenues decreased by area as follows; in Sweden -14.3 % in Finland

-9.6 % in Norway -7.7 % and in Other countries -21.9 %.

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

The Group’s operating result for the January-December was EUR -2.4 million (2.5). The January–De-

cember result before taxes was EUR -3.3 million (1.3).

Financial position

The cash flow from operating activities in January–December was EUR 0.3 million (2.1).

At the end of the period, interest-bearing liabilities stood at EUR 18.2 million including EUR 16.8 mil-

lion lease liabilities according to IFRS 16. At the end of comparison period the interest bearing liabilities

stood at EUR 19.4 million including EUR 17.6 million lease liabilities according to IFRS 16. Net liabilities

were EUR 13.1 million (8.1). At the end of the period, short-term limits of EUR 0.0 million were in use (0.0).

Short-term cash limits of EUR 0.3 million (0.3) would have been available for utilization.

In 2022 the impact of the sale and leaseback agreement, regarding Nummela production and logis-

tic center, on lease liabilities according to IFRS 16 was, at the moment of registration, EUR 13.0 million.

Selling price of the asset was EUR 15 million.

150

100

20232019 2020 2021 2022

REVENUE (EUR MILLION)

91.9

106.7

94.4

106.2

88.4

-1

-2

-3

-4

-5

2022 20232019 2020 2021

OPERATING PROFIT (EUR MILLION)

-1.3

2.5

-2.0

-2.4

-4.0

2022 20232019 2020 2021

CAPITAL EXPENDITURE AND

DEPRECIATIONS (EUR MILLION)

Capital expenditure Depreciations

202320202019 2021 2022

EARNINGS/SHARE AND DIVIDENDS

2.0

1.5

1.0

0.5

-0.5

-1.0

-1.5

Earnings/share (EUR/share)

Dividends paid (EUR million)

The gearing ratio at the end of the period was 137.2 % (58.6%) and the equity ratio was 20.0% (24.7%).

Financial income and expenses were EUR -0.9 million (-1.1).

The balance sheet total stood at EUR 55.7 million (62.3) at the end of the period.

Capital expenditure

The Group’s gross capital expenditure for January–December came to EUR 2.3 million (0.9).

Changes in the group management team

VP Sales and Marketing and member of the Management Team Johan Westerlund resigned and left his

position at the end of January 2023. Kimmo Hakkala was appointed VP Sales and Marketing and member

of the Management Team. Hakkala started in his position on 1.2.2023. Suvi-Maarit Kario was appointed

Martela Corporation’s VP Human Resources and Sustainability and a member of the Management Team.

Kario started in her position on 7.8.2023. Kalle Lehtonen, CFO and member of the Management Team,

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

resigned and left his position on 24.8.2023. Henri Berg was appointed CFO and member of the Manage-

ment Team. Berg started in his position on 2.10.2023. From this moment onwards Group Management

Team has consisted of CEO Ville Taipale, CFO Henri Berg, VP Sales and Marketing Kimmo Hakkala, VP

Operations Kalle Sulkanen, VP Human Resources and Sustainability, VP Brand & Design Kari Leino and

VP Design Studio Eeva Terävä.

Personnel

The Group employed an average of 403 people (403), being at the same level as last year. Personnel on

average employed in Finland was 326 (328), in Sweden 29 (27), in Norway 15 (14) and in group other

countries 33 (34).

The number of employees in the Group was 386 (400) at the end of the review period. Personnel costs

in January–December totalled EUR 23.0 million (23.6).

Non financial information

MANAGEMENT OF CORPORATE RESPONSIBILITY

Responsibility forms an integral part of Martela’s strategy and operations. The VP, Human Resources and

Sustainability is responsible for the corporate responsibility as well as quality, environmental and occu-

pational health and safety management system of the Group. Sustainability Steering Group supervises

corporate responsibility with members from the Management Team and the Sustainability Director as

the secretary.

More detailed information on the Group’s corporate responsibility principles, goals and achievements

can be found in a separate Sustainability Report published annually. The 2023 GRI indicators connected

sustainability reporting will be published after the annual report.

Already since 2011, Martela’s corporate responsibility has been guided by the Martela Corporate Code

of Conduct approved and annually reviewed by the Board of Directors. The principles contain referenc-

es to international corporate responsibility commitments. The company has engaged itself in the UN

Global Compact challenge, which aims at promoting human rights, rights in working life, environmental

protection and the eradication of corruption and bribery.

As Martela operates in an international market, it also takes into account any international treaties,

commitments and recommendations that concern its work. The most important ones are:

• The UN Universal Declaration of Human Rights

• OECD Guidelines for Multinational Enterprises

• The ILO Declaration on Fundamental Principles and Rights at Work and other ILO conventions relat-

ed to its activities

Since 2011, the practical activities of the company have been guided by the corporate responsibility pol-

icies approved by the Management Group concerning matters related to personnel, the environment and

supply chain management. The principles and policies published on Martela’s website www.martela.com/

about-us/sustainability/corporate-responsibility are reviewed and, when necessary, updated annually un-

der the coordination of the Sustainability Steering Group. The principles and policies cover social and em-

ployee matters and matters related to respecting human rights and eradication of corruption and bribery.

DESCRIPTION OF THE BUSINESS OPERATING MODEL

The Martela Lifecycle model takes into account the entire life cycle of the workplace. Martela supports the

sustainability of its client companies by offering workplace solutions based on circular economy principles.

-10

150

100

-50

2023

20202019 2021 2022

GEARING

Interest-bearing net debt

Gearing (%)

Equity

EUR million

20232019 2020 2021 2022

100

EQUITY RATIO

Balance sheet total

Equity ratio (%)

Equity

%EUR million

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

The Group units have the ISO 9001 quality, ISO 14001 environmental and ISO 45001 occupational

health and safety management system certifications, granted by an independent party, to ensure con-

tinuous improvement, meeting customer expectations and that environmental and work safety aspects

are controlled.

In the manufacturing process, there is an emphasis on a strong supplier chain. Martela’s own manu-

facturing is focused on final assembly and remanufacturing production at its logistics centre in Numme-

la, Finland, which also houses most of the company’s R&D and purchasing. The assembly of upholstery

components takes place at Martela’s own plant in Poland. The manufacture of table top and storage

components takes place mainly at Kidex Oy, Martela’s subsidiary located in Kitee, Finland.

The Martela headquarters in Otaniemi, Espoo, houses sales and support functions in addition to the

Group administration. Martela has several sales offices in Finland, Sweden and Norway. In other coun-

tries, the sale of Martela’s products takes place mostly through a dealer network.

The purchasing of products and services from service providers accounts for more than 70% of Mar-

tela Group’s turnover. A network of around hundred reliable suppliers delivers materials and components

for Martela labelled products.

Around a quarter of the Group’s turnover goes on salaries and social security payments. Martela values

local manufacturing and employment. As the share of its service business is growing, the company will

keep creating more new jobs close to its markets. The distribution of financial value will be discussed

in further detail in the forthcoming Sustainability Report.

ENVIRONMENTAL MATTERS

Martela’s Environmental Policy, approved by the Group Management Team, aims to decrease the compa-

ny’s environmental impacts and promote recycling. The policy gives instructions on taking environmental

matters into account in the development of its offering, through which the company will also have an

indirect impact on the environmental effects of its customers.

The essential environmental aspects in Martela’s operations are presented in the materiality assess-

ment found in the Sustainability Report. Martela has the best opportunities to influence the reduction

of greenhouse gas emissions and energy use in its market area through its customers’ premises. Martela

is constantly working to help its customers create facilities that support knowledge work and improve

space efficiency. Therefore, Martela’s most important environmental goal is to offer its customers the

Martela Lifecycle model, which supports customers’ space efficiency.

Sustainability reporting focuses on the direct and indirect impacts of its own operations, because

Martela does not have the means to measure the effects of improved space efficiency and reduced en-

ergy use among its customers.

Martela’s most significant climate impact arises from the use of materials related to products and

services offered to customers. Martela’s greenhouse gas emissions decreased from previous year and

totalled 8.3 million kilos during 2022. Of these emissions, 75% were related to the use of materials pur-

chased for products delivered to customers (scope 3), 4% arose from the indirect use of energy (scope

2) and 9% were related to the delivery of finished products to customers (scope 1). The energy intensi-

ty per turnover within the scope of Martela’s calculation was less than 300 GJ/million € in year 2022.

The durability, recyclability and recycling of furniture are at the heart of Martela’s operations. Marte-

la’s furniture has been designed to be refurbished and restored, and their materials can be recycled or

used to produce energy. As part of its comprehensive service, Martela also offers a furniture recycling

service to its customer companies. When designing new facility solutions for customers, their old furni-

ture can either be included in the new design or recycled responsibly through Martela. Used furniture in

good condition is cleaned and refurbished at the Nummela remanufacturing facility and then made avail-

able to corporate and private customers through the Martela Outlet online service and shops. In 2022,

around 23,700 pieces of used furniture found new homes through the Martela Outlet chain.

PERSONNEL BY AREAS, ON AVERAGE 2022

Finland 328 Other 34Scandinavia 41

TOTAL

403

PERSONNEL BY AREAS, ON AVERAGE 2023

Finland 326

Other 33

Scandinavia 44

TOTAL

403

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

There are no significant environmental risks in Martela’s own operations, but global changes in, for

example, energy sources, pricing, availability of materials and changes in the way of working may affect

Martela’s operations in the future.

Environmental goals, their realisation and more detailed environmental metrics are published annually

in the Sustainability Report.

PERSONNEL AND SOCIAL MATTERS

Martela’s vision is to create the best places to work. This goal is enabled by competent and committed

personnel who feel good. Martela’s people management principles are based on company values and re-

sponsible management and leadership practices.

The key objectives of personnel competence development is to develop customer excellence and ex-

perience in every touch point and to improve operational performance. From supply chain view point,

during 2023 the cooperation between the functions and the related processes were crystallized to en-

hance the order-delivery efficiency.

Hybrid work under expert professions is still in transition phase in organizations. So too in Martela.

The rules of hybrid work has been specified to better support different ways of working, taking into ac-

count both individual and teamwork needs. The principle of the flexible working is to provide the balance

between in-office and remote work and employees are encouraged to work in different places in accord-

ance with the nature of work. The new premises at Martela’s head office meet the needs of hybrid work

and support working together, a sense of community and work that requires concentration.

A safe working environment and working conditions are of primary importance for the well-being of

the personnel. The basis of a safe work environment is adequate familiarization with work tasks, up-to-

date instructions and the necessary safety training. Martela’s personnel will have safety training relevant

to their work, enabling them to perform their work in a professional and safe manner. Working safely is

important in all kind of work but its importance is emphasized especially in production, removal and in-

stallation services. Employees are encouraged to actively report all safety near misses and incidents as

they provide valuable information to improve occupational safety. During 2023, personnel’s well-being,

functional capacity and coping at work were further enhanced by piloting mental well-being support

services for everyday challenges.

The job satisfaction of the personnel and the effectiveness of the actions chosen to improve the same

are measured with annual People Spirit survey. The survey measures, among other things, job motivation,

commitment, leadership and operative culture, and employer image. Despite the prevailing uncertainty

and challenging environment, the personnel’s job satisfaction and engagement improved compared to

the previous survey result. Clear strengths are the meaningfulness of one’s own work, received feed-

back and pride over Martela’s products and services. The management and operating culture as well as

the employer image have also developed positively. Although the personnel’s possibility to participate in

developing processes and availability of information have improved since the previous survey, there is

room for improvement compared to the benchmark norm. Overall, the results show that the measures to

strengthen job satisfaction as well as leadership and operative culture are on the right path.

Martela’s Sustainability Report contains a comprehensive description of the social and people relat-

ed matters.

RESPECTING HUMAN RIGHTS

Matters related to respecting human rights are discussed in, for example, the company’s People Policy

and Sustainability Policy for Supply Chain. The main principle is to offer equal opportunities to all of

employees and to treat each employee fairly. In the requirements for the suppliers, the focus is on ob-

serving national legislation and ILO conventions, depending on which of them is found more demanding

from the viewpoint of employee rights. No breaches of respecting human rights have been observed in

Martela’s operations or supply chain.

Martela’s products are manufactured on the basis of customer orders, which means that the sup-

ply chains are short and that the acquisitions mainly take place from the neighbouring areas and from

elsewhere in Europe. In Europe, where there is a long tradition of follow-up of working conditions and

labour legislation, the risks related to respecting human rights are smaller. The social risks of Martela’s

suppliers have been thoroughly investigated and are always reviewed when selecting new suppliers and

in conjunction with supplier evaluation.

Analysis of sustainability aspects is an important part of continuous interaction with suppliers. In

Martela’s sustainability policy for the supply chain updated at the end of 2023, the definitions of social

responsibility were further specified. The policy is communicated with each purchase order. Additionally,

for the most important suppliers, compliance is checked on a risk-based basis. Martela annually assess-

es the risks of social responsibility in its supply chain through country-specific sustainability indicators

and, on the basis of these, plans the necessary measures for verifying social responsibility on a suppli-

er-by-supplier basis.

In recent years Martela has regularly participated in the EcoVadis evaluation. In 2022, Martela was

awarded the EcoVadis Gold rating. The results of the next assessment will be completed in Febru-

ary-March 2024. EcoVadis is the world’s largest sustainability rating agency. Its assessment includes 21

sustainability criteria grouped into four themes: environment, labour and human rights, ethics and sus-

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

tainable procurement. The rating criteria are based on international sustainability standards, such as the

ten principles of the UN Global Compact, the International Labour Organisation (ILO) Conventions, the

Global Reporting Initiative (GRI) standards and the ISO 26000 standard.

The 2023 sustainability training was implemented in the autumn and was attended by 83% of the

personnel. The training was used to study the employees commitment to Martela’s Code of Conduct and

awareness of the procedures when noticing behaviour against its principles. Study showed 99% commit-

ment to the principles and almost 90% of respondents were aware of procedures when noticing actions

against the principles. No communication on grievance was received during 2023 through any available

Martela whistleblowing channel.

PREVENTION OF CORRUPTION AND BRIBERY

Matters related to prevention of corruption and bribery are discussed in, for example, the Corporate Code

of Conduct and Sustainability Policy for Supply Chain. Martela does not accept bribery in any form in its

business in any of its market areas. Giving or receiving bribes is not permitted under any circumstances.

All transactions are recorded through the financial management/bookkeeping of each subsidiary.

Martela’s and all its subsidiaries bookkeeping and transactions are subject to an annual statutory audit.

The bookkeeping is transparent to the CFO of the Group.

Martela has two share series, A and K, with each K share entitling its holder to 20 votes at a General

Meeting and each A share entitling its holder to one vote. Private holders of K shares have shareholder

agreement that restricts the sale of K shares to any party outside the existing holders of K shares. There

is a total of 604,800 K shares and a total of 3,968,695 A series, together 4,573,495 shares.

In January–December, a total of 1,122,349 (2,286,583) of the company’s series A shares were traded

on the NASDAQ OMX Helsinki exchange, corresponding to 28.3% (58.4) of the total number of series A

shares.

The value of trading turnover was EUR 2.1 million (6.5), and the share price was EUR 1.28 at the end

of the period (2.45). During January–December the share price was EUR 2.72 at its highest and EUR

1.22 at its lowest. At the end of December, equity per share was EUR 2.09 (3.07).

During 2023, Martela did not receive any notifications pursuant to Chapter 9, Section 5 of the Finnish

Securities Markets Act.

During 2022 Martela has received one notification in accordance with the Finnish Securities Market

Act Chapter 9, Section 5. On March 10, 2022, Martela received an announcement from Isku Yhtymä Oy, ac-

cording to which the total number of Martela Corporation shares owned by Isku Yhtymä Oy has increased

above 10% of the shares in Martela plc, as a result of share transactions concluded on March 10, 2022.

More information on the Martela Corporation shares and shareholders can be found under note 27 of

the Notes to the financial statements.

TREASURY SHARES

Martela did not purchase any of its own shares in January–December 2023.

Based on the share issue authorization granted by the Annual General Meeting on March 29, 2023,

the Board of Directors of Martela Corporation has decided to issue 53,881 new series A shares to the

company itself without consideration. The shares issued by the company have been used to pay rewards

according to the company’s Performance-based Matching Share Plan 2021-2023, announced on March

23, 2021, for 32 key individuals, based on the earning period of 2022.

A total of 11,657 of Martela shares held by the company have been conveyed on May 23, 2022, with-

out consideration to the 34 key individuals participating in the Performance-based Matching Share Plan

2021-2023, announced on March 23, 2021. Conveyance of the shares relates to the earning period 2021.

On December 31, 2023, Martela owns a total of 1,425 Martela A shares and its holding of treasury

shares amounted to 0.03% of all shares and 0.01% of all votes. Out of the shares, 379 were purchased

at an average price of EUR 10.65 and 1 046 were transferred from Martela Corporation’s joint account

to the treasury shares.

BOARD AND MANAGEMENT SHAREHOLDINGS OF MARTELA OYJ

Members of the Board, CEO and Management Team hold at 31.12.2023 total of 106,518 Martela Oyj A

-shares and 2,673 K -shares, which represents 2.4% of the total amount of shares and 1.0% of the voting

rights.

SHARE-BASED INCENTIVE PROGRAMME

Board of directors decided on March 18, 2021 on new share based incentive plan directed to key employ-

ees of the company. Purpose of the plan is to unite shareholders and key employees objectives on long-

term basis as well as to commit key employees to execute company’s strategy. Plan’s objective is to offer

to key employees competitive model to earn company’s shares.

The new Performance-based Matching Share Plan 2021–2023 consists of three performance periods,

covering the financial years of 2021, 2022 and 2023, respectively. The rewards to be paid based on the

plan will amount to an approximate maximum total of 718,000 Martela Corporation series A shares in-

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

cluding also the proportion to be paid in cash. Approximately 40 persons, including the CEO and other

Martela’s Management Team members, were belonging to the target group of the plan. The rewards will

be paid partly in Martela Corporation series A shares and partly in cash. The cash proportions of the

rewards are intended for covering taxes and tax-related expenses arising from the rewards to the par-

ticipants. In general, no reward is paid if the participant’s employment or director contract terminates

before the reward payment. The reward to be paid on the basis of the plan will be capped if the limits

set by the Board of Directors for the share price are reached. During the performance periods 2021 and

2022 and 2023, the rewards were based on the Group’s Earnings before Interest and Taxes (EBIT).

As part of the implementation of the Performance-based Matching Share Plan 2021—2023, the Board

of Directors have resolved on March 18, 2021 a directed share issue to persons participating to the plan.

Decision on the share issue is based on the authorization given by annual general meeting on March

18,2021. Total number of shares subscribed was 305 700 A -shares with a subscription price of EUR 2.73

per share. On June 23, 2022 the Board of Directors resolved new directed share issue to a new member

of the group management team, where total number of shares subscribed was 11 574 A -shares with a

subscription price of EUR 2.88 per share. Decision on the share issue was based on the authorization

given by annual general meeting on March 17, 2022.

As part of the implementation of the Performance-based Matching Share Plan 2021—2023, the Board

of Directors has resolved to grant plan participants interest-bearing loans in the maximum total amount

of 686,000 euros to finance the acquisition of the company’s shares. The maximum amount of the loan

is 70 per cent of the participant´s investment in shares. The loans will be repaid in full on 31 December

2025, at the latest.

In 2023 total number of shares distributed based on the rewards of the programme was 53 881 and

in year 2022 the number of the distributed shares were 11 657.

2023 Annual general meeting

Martela Corporation’s Annual General Meeting was held on Wednesday, March 29, 2023. The Meeting ap-

proved the Financial Statements, discharged the members of the Board of Directors and CEO from liability

for the year of 2023 and approved remuneration report for 2023. The Annual General Meeting resolved,

in accordance with the proposal of the Board of Directors, to distribute a dividend of EUR 0.10 per share.

The Annual General Meeting confirmed that the Board of Directors will consist of six members and

Mr. Jan Mattsson, Mr. Eero Martela, Ms Hanna Mattila, Ms. Katarina Mellström, Mr. Johan Mild and Ms.

Anni Vepsäläinen be re-elected as members of the Board of Directors. The Annual General Meeting re-

solved a monthly compensation of EUR 3,700 be paid for the Chairman of the Board and EUR 1,850 for

the Board Members, and an additional compensation of EUR 1,600 per year to the Board members be-

longing to a committee.

Authorized Public Accountant Ernst & Young Oy was re-elected as the company’s auditor. The remu-

neration of the auditor will be paid according to the invoice that has been accepted by the Audit Com-

mittee of the company.

The Board of Directors proposal that the Company’s articles of association are amended so that the

domicile of the Company is changed to Espoo and that an addition is made to the articles of association

concerning possible remote participation in the general meeting as an alternative or without convening

a physical meeting were approved.

The Annual General Meeting authorized the Board in accordance with the proposal of the Board of

Directors to decide on the repurchase of a maximum of 450,000 Company’s own A shares in one or

several occasions. Own shares will be repurchased in public trading maintained by Nasdaq Helsinki Ltd

at the market price of the shares as per the time of repurchase or otherwise at a price formed on the

market. Own shares may be repurchased when necessary as a part of the Company’s salary and incen-

tive scheme, for use in conjunction with corporate acquisitions and other business arrangements, if the

Board deems this is in the interest of the shareholders in light of the company’s share indicators, or if

the Board deems it is an economical way of using liquid assets, or for some other similar purpose. The

share repurchase authorization includes the right to repurchase shares otherwise than in proportion of

the shareholdings. The authorization cancels any previous unused authorizations to repurchase the Com-

pany’s own shares. This share repurchase authorization will be valid until the closing of the next Annual

General Meeting, however, no longer than until 30 June 2024.

The General Meeting authorized the Board of Directors to decide upon the issuance of shares and

the issuance of special rights entitling to shares as referred to in Chapter 10 Section 1 of the Compa-

nies Act in one or several tranches, either against payment or without payment. The aggregate num-

ber of shares to be issued, including the shares to be received based on special rights, cannot exceed

450 000 of the Company’s A-series shares. The Board of the Directors may resolve to issue new shares

or to transfer own shares possibly held by the company. The maximum amount of the authorization cor-

responds to approximately 10 per cent of all shares in the Company. The Board of Directors is authorized

to decide on all other matters related to the issuance of shares and special rights entitling to shares,

including the right to deviate from the pre-emptive right of shareholders to subscribe for shares to be

issued. The authorization is proposed to be used for the purposes of paying purchase prices of corpo-

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

rate acquisitions, share issues and issues of option rights and other special rights entitling to shares.

This authorization remains valid until the closing of the next Annual General Meeting, however, no longer

than until 30 June 2024.

The Board of Directors elected by Martela Corporation’s Annual General Meeting had its organization-

al meeting after the Annual General Meeting and elected from among its members Johan Mild as the

Chairman and Katarina Mellström as the Vice Chairman of the Board.

Administration

Martela Corporation is a Finnish limited liability company that is governed in its decision-making and

management by Finnish legislation, especially the Finnish Limited Liability Companies Act, by other reg-

ulations concerning public listed companies, and by its Articles of Association. The company complies

with the NASDAQ OMX Guidelines for Insiders and the Corporate Governance Code 2020 for Finnish

listed companies published by the Securities Market Association. Company has published its Corporate

Governance report as a separate document in company’s website. More information on Martela’s govern-

ance can be found on the company’s website.

Martela Responsibility Report includes extensively the non-financial information (NFI) required by the

accounting law. The Responsibility Report of 2023 will be published after the Annual Report.

Risks and uncertainties

The principal risk regarding profit performance relates to the general economic uncertainty and the

consequent effects on the overall demand in Martela’s operating environment. Due to the project-based

nature of the sector, forecasting short-term developments is challenging. In accordance with Martela’s

risk management model, the risks are classified and guarded against in different ways.

Company regularly evaluates and monitors the financing need of its operations in order to secure

sufficient liquid funds to run the operations and to facilitate other liabilities, like long-term rental agree-

ments related payments. Sudden negative changes in the demand of company’s products and services

or changes in the overall market environment can however cause that companys liquid funds will not be

sufficient to finance the operations.

Production of Martela’s products is based on orders placed by customers, supply chain is short and

purchases are mainly from neighbouring area and from other parts of Europe. Extensive warehousing

is not needed. The product assembly is automated and based on component subcontracting and on as-

sembly carried out by Martela.

Risks of damage are covered with appropriate insurance and this provides comprehensive coverage

for property, business interruption, supplier interruption loss and loss liability risks. The services of an

external partner are used in insurance as well as in legal matters.

Finance risks are discussed in note 22 of the notes to the financial statements.

SHORT-TERM RISKS

The principal risk regarding profit performance and liquidity development relates to the general economic

uncertainty and the consequent effects on the overall demand in Martela’s operating environment. The

market situation continues to be negatively affected by uncertainty about the development of inflation

and interest rates. Due to the project-based nature of the sector, forecasting short-term development is

challenging in normal circumstances. This challenge is further accentuated by the increased economic

uncertainty.

Events after the end of the financial year

On January 3, 2024, the company announced plans to streamline and reorganize its operations to miti-

gate the adverse effects of the market situation and adjust its cost structure to the prevailing circum-

stances. The reorganisation also aims to improve the service experience of Martela’s customers. The

planned organisational changes and other cost-saving measures are estimated to result in annual cost

savings of approximately EUR 2 million. The majority of these are expected to be realized by 2024 and

the full savings targets would be achieved by 2025. At the same time, the company announced that it

will continue to invest in strategic key areas such as workplace services, digitalization, circular economy

and internationalization.

No other significant events requiring reporting have taken place since the January–December period.

Outlook for 2024

Martela anticipates its revenue to increase in full-year 2024 compared to previous year and operating

result to be positive.

Proposal of the board of directors for distribution of profit

The Board of Directors proposes to the Annual General Meeting that no dividend will be distributed for

2023.

Annual general meeting

Martela Corporation’s AGM is planned to be held on Friday 5 April 2024. The notice of the Annual Gen-

eral Meeting will be published in a separate release.

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

Consolidated comprehensive income statement

(EUR 1000) Note

1 Jan–31 Dec

2023

1 Jan–31 Dec

2022

Revenue 1 94,389 106,710

Other operating income 2 149 2,293

Changes of inventories of finished goodsand work in progress 1,420 3,516

Raw material and consumables used -56,219 -69,548

Production for own use 513 2,506

Employee benefits expenses 3 -22,995 -23,557

Other operating expenses 4 -12,865 -13,639

Depreciation and impairment 5 -6,773 -5,790

Operating profit (-loss) -2,380 2,491

Financial income 7 645 126

Financial expenses 7 -1,557 -1,268

Profit (-loss) before taxes -3,292 1,349

Income taxes 8 -222 1,205

Profit (-loss) for the financial year -3,514 2,554

Other comprehensive income:

Items that will not later be recognised through profit or loss

Items resulting from remeasurement of the net debt related to defined bene-

fit plans

45 103

Taxes from items that will not later be recognised through profit or loss 0 -22

Items that may later be recognised through profit or loss

Translation differences -415 190

Other comprehensive income for the period -370 270

Total comprehensive income - 3 884 2,824

Allocation of profit (-loss) for the financial year

Equity holders of the parent -3,514 2,554

Allocation of total comprehensive income

Equity holders of the parent -3,884 2,824

Earnings per share of the profit attributable to

the equity holders of the parent

Basic earnings/share, EUR 9 -0.77 0.57

Diluted earnings/share, EUR 9 -0.77 0.57

Consolidated balance sheet

(EUR 1 000) Note 31 Dec 2023 31 Dec 2022

ASSETS

Non-current assets

Intangible assets 10 4,334 4,278

Tangible assets 11 14,408 13,312

Non-current financial assets 12 539 553

Deferred tax assets 13 3,003 2,860

Non-current assets, total 22,283 21,003

Current assets

Inventories 14 9,235 11,781

Trade receivables and other receivables 12,15 19,115 18,248

Cash and cash equivalents 5,053 11,295

Current assets, total 33,403 41,324

ASSETS, TOTAL 55,686 62,327

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

(EUR 1 000) Note 31 Dec 2023 31 Dec 2022

EQUITY AND LIABILITIES

Equity attributable to holders of the parent 16

Share capital 7,000 7,000

Share premium account 1,116 1,116

Reserve for invested unrestricted equity 995 995

Other reserves -9 -9

Treasury shares* -4 -4

Translation differences -1,071 -655

Retained earnings 1,530 5,406

Equity, total 9,558 13,849

Non-current liabilities

Pension obligations 19 105 115

Financial liabilities 12,18 13,812 14,686

Provisions 20 269 229

Non-current liabilities, total 14,187 15,030

Current liabilities

Financial liabilities 12,18 4,287 4,612

Advances received 21 7,850 6,278

Trade payables 12,21 9,440 9,569

Accrued liabilities and prepaid income 12,21 6,789 7,893

Income tax payable 0 1,213

Other current liabilities 12,21 3,507 3,824

Provisions 20 67 57

Non-interest-bearing current liabilities, total 31,941 33,447

LIABILITIES, TOTAL 46,128 48,477

EQUITY AND LIABILITIES, TOTAL 55,686 62,327

* The treasury shares acquired for and assigned to share-based incentive scheme are shown in accounting terms

as treasury shares.

See notes 16.

Consolidated cash flow statement

(EUR 1 000) Note 1 Jan–31 Dec 2023 1 Jan–31 Dec 2022

Cash flows from operating activities

Cash flow from sales 94,980 113,434

Cash flow from other operating income 144 282

Payments on operating costs -93,128 -110,881

Net cash from operating activities before financial items and taxes 1,996 2,835

Interest paid -784 -472

Interest received 29 23

Other financial items -244 4

Dividends received 0 0

Taxes paid -677 -319

Net cash from operating activities (A) 320 2,072

Cash flows from investing activities

Capital expenditure on tangible and intangible assets -2,332 -902

Proceeds from sale of tangible and intangible assets 0 11,124

Net cash used in investing activities (B) -2,332 10,222

Cash flows form financing activities

Proceeds from short-term loans 0 33

Repayments of short-term loans 18 -417 -5,000

Repayments of lease liabilities -3,457 -2,728

Proceeds from long-term lease liabilies 0 4,000

Repayment of long-term loans 18 0 -1,900

Cash proceeds from issuing shares 0 10

Dividends paid -452 0

Net cash used in financing activities (C) -4,326 -5,586

Change in cash and cash equivalents (A+B+C), increase +, decrease - -6,338 6,708

Cash and cash equivalents at the beginning of year 11,295 4,926

Translation differences 96 -339

Cash and cash equivalents at the end of year 5,053 11,295

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

Statement of changes in equity

Equity attributable to equity holders of the parent (EUR 1 000) Share capital

Share premium

account

Reserve for invested

unrestricted equity Other reserves Treasury shares Translation diff. Retained earnings Equity total

Equity 1 Jan 2022 7,000 1,116 962 -9 -128 -846 2,665 10,761

Profit (-loss) for the financial year 2,554 2,554

Other items of comprehensive income adjusted by tax effects

Translation differences 190 190

Items resulting from remeasurement of the net debt related to defined benefit plans

(incl. Deferred taxes)

80 80

Other comprehensive income for the period 190 80 270

Total comprehensive income 190 2,634 2,824

Share issue 33 33

Share-based incentives 124 107 231

Equity 31 Dec 2022 7,000 1,116 995 -9 -4 -656 5,406 13,849

Equity 1 Jan 2023 7,000 1,116 995 -9 -4 -656 5,406 13,849

Profit (-loss) for the financial year -3,514 -3,514

Other items of comprehensive income adjusted by tax effects

Translation differences -415 -415

Items resulting from remeasurement of the net debt related to defined benefit plans

(incl. Deferred taxes)

45 45

Other comprehensive income for the period -415 45 -370

Total comprehensive income -415 -3,469 -3,884

Share issue 0

Share-based incentives 44 44

Dividends paid -452 -452

Equity 31 Dec 2023 7,000 1,116 995 -9 -4 -1,071 1,530 9,558

More information in Notes 16 Equity and 17 share-based payments.

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

Accounting principles for the consolidated

financial statements

Martela Group

Martela Corporation supplies ergonomic and innovative furniture solutions and provides interior plan-

ning services.

The Group’s parent company is Martela Oyj, a Finnish public limited company domiciled in Espoo, street

address Miestentie 1, 02150 Espoo. The company’s A shares are listed on Nasdaq Helsinki.

The Group’s financial statements are available online at Martela’s home pages www.martela.com.

These financial statements were authorized for issue by the Board of Directors of Martela Oyj on

February 13, 2024. The Finnish Limited Liability Companies Act permits the shareholders to approve or

reject the financial statements in the general meeting that is held after publishing the financial state-

ments. As well, the general meeting has a possibility to amend the financial statements.

BASIS OF PREPARATION

Martela’s consolidated financial statements are prepared in accordance with the International Financial

Reporting Standards (IFRS) as on December 31, 2023. As referred to in the Finnish Accounting Act and

in ordinances issued pursuant to the provisions of this Act, the International Financial Reporting Stand-

ards refer to the standards and their interpretations adopted in accordance with the procedure laid

down in Regulation (EC) No 1606/2002 of the EU. The notes to the consolidated financial statements

also conform with additional requirements of the Finnish accounting and company legislation.

The consolidated financial statements are presented in thousands of euros and have been prepared

on the historical cost basis except as disclosed in the accounting policies. All presented figures have

been rounded, which is why the sum of individual figures might deviate from the presented sum. The

key financial indicators have been calculated using exact figures. Martela’s consolidated financial state-

ments cover the full calendar year, and this represents the financial period for the parent company and

the Group companies.

USE OF ESTIMATES

The preparation of the financial statements in conformity with IFRS requires Group management to

make certain estimates and to use judgement when applying accounting policies. The section “Account-

ing policies requiring management’s judgement and key sources of estimation uncertainty” refers to the

judgements made by management and those financial statement items on which judgements have a sig-

nificant effect.

Principles of consolidation

The consolidated financial statements include the parent company, Martela Oyj, and all the subsidiaries

in which the parent company controls, directly or indirectly, more than 50 per cent of the voting power

of the shares, or otherwise has control. Martela is considered to be in control of a subsidiary when it is

exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to

affect those returns through its power over the subsidiary. Subsidiaries are included in the consolidated

financial statements by using the acquisition method. The intra-group transactions, unrealised margins

on intra-group deliveries, intra-group receivables and liabilities and profit distribution are eliminated.

Items denominated in foreign currency

Transactions in foreign currencies are translated at the exchange rate prevailing on the date of the trans-

action – in practice, for transactions taking place within any given month, a rate is used that approxi-

mates the rate of the transaction date. At the end of the reporting period, the monetary assets and lia-

bilities are translated into functional currencies at the exchange rate at the end of the reporting period.

Exchange rate gains and losses related to business operations are treated as adjustments to the pur-

chases and sales. Exchange rate gains and losses in financing are treated as adjustments to financial

income and expenses.

The statements of comprehensive income and cash flows of foreign subsidiaries for the period are

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Martela 2023 CEO’s review Operating environment Financial statements Governance

translated into euros at the average rates for the financial year, and the balance sheets at the average

rates of the European Central Bank at the end of the reporting period. The translation of the profit or

loss and comprehensive income for the period at different exchange rates in the statement of compre-

hensive income and in the balance sheet causes a translation difference which is recognised in other

comprehensive income. The exchange rate differences arising from the elimination of the cost of the

foreign subsidiaries and the exchange rate differences arising from the translation of post-acquisition

equity are also recognised in other comprehensive income. Similar treatment is applied to intra-group

non-current loans which in substance are equity and form a part of the net investment in the operation

in question. When a subsidiary is disposed of, all or in part, the accumulated translation differences are

reclassified to profit and loss as part of the gain or loss on disposal.

Revenue recognition principles

Furniture is mainly delivered as installed at customer. The control of the furniture is transferred to the

customer when the deliverables form the contract are fulfilled, i.e. the furniture is delivered and installed

at customer and the customer has approved the delivery. The significant risks and rewards of ownership

of the furniture is also transferred to the buyer through the approval of the delivery. Revenue from sold

goods is recognised as the control of the goods is transferred to the buyer according to the agreement.

The normal warranty for standard Martela produced products in normal use is five years and for other

standard products two years.

Consultative services consist of workshops and interviews for specification of the demands placed

on the work environment and interior planning services. The deliverable is fulfilled and the control is

transferred to the customer as the product of the service is delivered to the customer. Revenue from

consultative services is recognised as the deliverable is fulfilled.

In removals services the value of the service is received by the customer as Martela provides the

service. In such cases the revenue is recognised over time. The removal services provided by Martela

are mainly short in duration. In case a removal services project lasts for several months is the revenue

recognised based on either invoicing of the achieved project milestones or based on actual work hours

registered for the project.

The transaction prices for the sold goods and services are defined for each deliverable on the sales

orders and no variable considerations are in use. Martela does not have capitalized costs for obtaining

or of fulfilling customer contracts. Sales receivables are typically due latest within two months from in-

voicing. The customer contracts do not include significant financing components provided by Martela.

Revenue consists of income from customer contracts according to IFRS 15 and income from custom-

er contracts that are classified as leases based on the contract contents, and are treated in accordance

to IFRS 16.

Leases in which substantially all the risks and rewards incidental to ownership of an asset remain

with the lessor are classified as operative lease contracts and recognised as revenue in the statement

of comprehensive income on a straight-line basis over the lease term.

Employee benefits

PENSION LIABILITIES

The Group has arranged defined contribution plans and defined benefit plans for retirement. A defined

contribution plan is a pension plan under which the Group pays fixed contributions into a separate enti-

ty. The Group has no legal or constructive obligations to pay further contributions if the fund does not

hold sufficient assets to pay all employees the benefits relating to employee service in the current and

prior periods. A defined benefit plan is a pension plan that is not a defined contribution plan. Contribu-

tions made to defined contribution plans are recognised in profit or loss as an expense as incurred.

The obligations of defined benefit plans are calculated separately for each plan. The projected unit

credit method is used in the calculation. Pension costs are recognised as an expense over the service

period of personnel based on calculations performed by qualified actuaries. In calculating the present

value of a pension obligation, the market yield of corporate high-grade bonds or the interest rate of gov-

ernment bonds are used as the discount rate. Their maturity corresponds to a significant extent with

the maturity of the computed pension liability.

Pension expenses (service cost in the period) and the net interest for the net debt related to the de-

fined benefit pension plan are recognised through profit or loss. Pension expenses are included in em-

ployee benefit expenses. Items resulting from the remeasurement of the net debt (or net asset) related

to the defined benefit plan are recorded in items of other comprehensive income in the financial period

during which they emerge. These include actuarial gains and losses and returns on assets included in

the plan, among other items. Past service costs are recognised in expenses through profit or loss on the

earlier of the following dates: the date when the plan is amended or reduced, or the date when the en-

tity recognises the reorganisation expenses related to this or the benefits related to the termination of

the employment relationship.

SHARE-BASED PAYMENTS

In the Group’s share-based incentive system, with vesting periods 2021, 2022 and 2023, payments are

made in a combination of shares and cash. Share rewards are measured at fair value at the grant date

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Martela 2023 CEO’s review Operating environment Financial statements Governance

and recognised as expenses over the vesting period. The vesting conditions are taken into account in

the number of shares which are expected to vest by the end of the validity period. Measurements are

adjusted at the end of each reporting period and the settlement is recognised under equity. The expense

determined at the time of granting the share-based incentives is based on the Group’s estimate of the

number of shares which are expected to vest by the end of the vesting period. The assumed vesting

takes account of the maximum incentive, the assumed achievement of non-market-based earnings tar-

gets and the reduction of persons participating the plan. The Group updates the estimate of the final

number of shares at the end of each reporting period. Their impact on profit or loss is presented in the

statement of comprehensive income under employment benefits expenses.

OPERATING PROFIT (LOSS)

Operating profit is the Group’s profit from operations before financial items and income taxes. Exchange

rate differences arisen in the translation of trade receivables and payables denominated in foreign cur-

rencies are included in operating profit.

INCOME TAXES

The taxes recognised in the consolidated statement of comprehensive income include current tax based

on the taxable income of the Group companies for the financial year, taxes for previous years and the

change in deferred taxes. For transactions and other events recognised in profit or loss, any related tax

effects are also recognised in profit or loss. For transactions and other events recognised outside profit

or loss (either in other comprehensive income or directly in equity), any related tax effects are also rec-

ognised either in other comprehensive income or directly in equity, respectively.

Deferred tax assets and liabilities are recognised on temporary differences between the tax bases

and IFRS carrying values of assets and liabilities in the financial statements. A deferred tax asset is

recognised only to the extent that it is probable that taxable profit will be available against which it can

be used. Deferred tax liabilities are recognised to the full extent in the balance sheet. Deferred taxes are

measured by using the tax rates enacted or substantively enacted by the end of the reporting period.

Intangible assets

GOODWILL

Goodwill resulting from business combinations represents the excess of the consideration transferred

over the fair value of the net identifiable assets acquired.

Goodwill is tested annually or more frequently if there are indications that the value might be impaired.

Testing is performed at least at the end of each financial year. For this purpose goodwill is allocated to

cash generating units. An impairment loss is recognised whenever the carrying amount of cash-generat-

ing unit exceeds the recoverable amount. Impairment losses are recognised in the comprehensive income

statement. An impairment loss in respect of goodwill is never reversed.

RESEARCH AND DEVELOPMENT

Research and development is active and continuous in the Group and if individual development projects

are of such a scope in relation to operations and if the capitalization criteria are fulfilled these projects

are capitalized. Research expenditure is recognised as an expense when incurred. R&D-related equipment

is capitalised in machinery and equipment. There has been no development costs that met the capitali-

zation criteria during the financial year.

OTHER INTANGIBLE ASSETS

An intangible asset is initially capitalized in the balance sheet at cost if the cost can be measured relia-

bly and it is probable that the expected future economic benefits that are attributable to the asset will

flow to the Group. Other intangible assets include software licences, IT-programmes, patents and other

corresponding rights. Patents, licences and other rights are measured at historical cost, less amortisa-

tion and any impairment.

The useful lives of intangible assets are as follows:

Licences_______________________3 – 5 years

IT-programmes__________________3 – 10 years

Customer ship______________________4 years

Brands____________________________6 years

Patents and other corresponding rights´___10 years

Amortisation is recognised using the straight-line method.

Tangible assets

Land, buildings, machinery and equipment constitute the majority of tangible assets. They are measured

in the balance sheet at historical cost, less accumulated depreciation and any impairment.

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Martela 2023 CEO’s review Operating environment Financial statements Governance

When a part of an item of property, plant and equipment (accounted for as a separate asset) is re-

newed, the expenditure related to the new item is capitalised and the possibly remaining balance sheet

value removed from the balance sheet. Other expenditure arising later is capitalised only when future

economic benefits will flow to the Group. Other expenditure for repairs or maintenance is expensed when

it is incurred. Those borrowing costs directly attributable to the acquisition, construction or production

of a qualifying asset are capitalised as part of the cost of that asset.

Depreciation is calculated on a straight-line basis over the estimated useful life of the asset. A tan-

gible asset once classified as held for sale is not depreciated. Land is not depreciated. The estimated

depreciation periods are as follows:

Buildings_________________ 15–30 years

Machinery and equipment ______ 3–8 years

The residual values and useful lives of tangible assets are reviewed at least at each financial year-end

and, if necessary, are adjusted to reflect changes in the expected future economic benefits.

Gains and losses from the sale or disposal of tangible assets are recognised in profit and loss and

presented under other operating income or other operating expenses.

IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS

The carrying amounts of assets are assessed at the end of each reporting period to observe whether

there are any indications that an asset may be impaired. If such indications exist, the recoverable amount

of the asset will be estimated at the higher of its fair value less costs to sell and its value in use. An im-

pairment loss is recognised if the balance sheet value of an asset or a cash-generating unit exceeds the

recoverable amount of it. Impairment losses are recognised in the statement of comprehensive income.

If there are indications that impairment losses no longer exist or that they have diminished, the recov-

erable amount is estimated. An impairment loss previously recognised in the statement of comprehensive

income is reversed if the estimates used in measuring the recoverable income have changed. However,

an impairment loss cannot be reversed to an extent more than what the carrying amount of the asset

or cash-generating unit would be without recognition of an impairment loss.

Leases

Martela’s lease contracts consist mainly of office spaces, cars and IT-equipment. The lease contracts of

cars and IT-equipment are time limited whereas the contracts for office spaces are open ended as well

as time limited. The lease contracts do not include variable lease payments.

Lease agreements, for which the lease period is beyond 12 months, are according to IFRS 16 recognised

on the balance sheet as a right-of-use assets and lease liabilities. The right-of-use assets decreased with

the accumulated depreciations are recognised as tangible assets. The right-of-use assets are depreci-

ated over the lease period or an estimated period if longer. Estimated rental periods, are used for lease

agreements of indefinite duration. The estimated rental periods are 2 years for rented offices and sales

facilities and 1 year for warehouses. Martela applies the exemptions to IFRS 16 and does not apply IFRS

16 to short-term leases for which the lease term ends within 12 months and leases of low-value assets,

which are not offices or warehouses in use by Martela. The payments for these are recognised as equal

instalments over the rental period in the consolidated statement of comprehensive income.

The lease liabilities have been discounted at the borrowing rate.

Company also operates as lessor of furniture. Accounting principles of these are described under rev-

enue recognition principles.

Martela Oyj has, during the comparison year, signed an sale and leaseback agreement regarding the

Nummela production and logistic centre. A sales and leaseback transaction is an operation, in which the

Group sells an asset, and simultaneously enters into a lease agreement with the buyer-lessor regarding

the right to use the building. If the buyer-lessor has gained control over the asset subject to the agree-

ment and the transfer is classified as an IFRS 15 sale, The Group recognises the fixed asset item arising

from the lease to the amount, which is the relative share of the asset’s previous book value related to

the rights of use retained by it.

The profit is limited to the share of the total profit that is related to the rights transferred to the

buyer-lessor.

Inventories

Inventories are measured at the lower of cost and net realisable value. The value of inventories is deter-

mined by using weighted average purchase prices and it includes all direct expenditure incurred by ac-

quiring the inventories and also a part of the production overhead costs. Net realisable value is the es-

timated selling price in the ordinary course of business less the estimated costs of completion and the

estimated costs necessary to make the sale.

Inventory value includes adjustments caused by obsolescence.

Financial assets

Group’s financial assets are classified into the following groups: financial assets at fair value through

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

profit or loss, financial assets at fair value through other comprehensive income and financial assets

measured at amortised costs. The classification depends on the purpose of acquiring the financial as-

sets, and they are classified at the time of initial acquisition. All purchases and sales of financial assets

are recognised and derecognised on the trade date. The Group derecognises financial assets when it

has lost its right to receive the cash flows or when it has transferred substantially all the risks and re-

wards to an external party.

Financial assets measured at amortised costs include assets that are held in a business model whose

object is achieved by holding the assets and collecting contractual cash flows until the due date. The

cash flow from the assets consists of solely payments of principal and interest on the principal amount

outstanding. They are originally recognised at fair value and subsequently measured at amortised cost.

The group recognises a deduction in the financial assets recognised at amortised cost based on expect-

ed credit losses. These assets are included in either current or non-current financial assets (they are

included in the latter if they mature over 12 months later). The category includes loan, trade and other

receivables that are not derivatives.

Cash and cash equivalents comprise cash in hand, in banks and in demand bank deposits, as well as

other current, very liquid investments. Items qualifying as cash and cash equivalents have original ma-

turities of three months or less from the date of acquisition.

IMPAIRMENT OF FINANCIAL ASSETS

At the end of each reporting period, the Group assesses whether objective evidence exists of the im-

pairment of an individual financial asset or a group of financial assets. Impairment will be recognised

through profit or loss.

A simplified model according to IFRS 9 is used in assessing the expected credit losses on trade re-

ceivables: credit losses are recognised to an amount that represents the expected credit losses for the

full lifetime. The expected credit losses are assessed based on historical information on credit losses

and on the information on the future financial circumstances available on the review date.

FINANCIAL LIABILITIES

The Group classifies its financial liabilities as financial liabilities measured at amortised cost (mainly in-

cludes borrowings from financial institutions, IFRS 16 lease liabilities and trade payables) .

Financial liabilities are initially recognised at fair value and are subsequently measured either at am-

ortised cost or at fair value, based on the classification made. Financial liabilities are included in current

and non-current liabilities and they can be interest-bearing or non-interest-bearing. Bank overdrafts are

included in current interest-bearing liabilities. Financial liabilities are regarded as current, unless the Group

has an absolute right to postpone the repayment of the debt until a minimum of 12 months after the end

of the reporting period. Financial liabilities (in full or in part) are not eliminated from the balance sheet

until the debt has ceased to exist – in other words, when the obligation specified in the agreement has

been fulfilled or rescinded or ceases to be valid.

The Group uses derivative financial instruments, to hedge its electricity price risk. The Group doesn’t

apply hedge accounting, but derivatives are recognized at fair value through the statement of profit or

loss at each balance sheet date according to the closing rate of the period. Derivatives are carried as fi-

nancial assets when the fair value is positive and as financial liabilities when the fair value is negative.

The change in fair value is recognised in income statement in raw material and consumables used.

Share capital

Outstanding ordinary shares are shown as share capital. The share capital consists of K and A series

shares. The shares of both series have identical dividend rights but K series shares confer 20 votes and

A series shares 1 vote at general meetings of shareholders.

Expenses related to the issuance and acquisition of own equity instruments are presented as deduc-

tions from equity. If Martela Oyj buys back its own equity instruments, their cost is deducted from equity.

DIVIDENDS

Dividends proposed by the Board of Directors are not recorded in the financial statements but the re-

lated liability is only recognised when approved by a general meeting of shareholders.

Provisions

A provision is recognised when the Group has a legal or constructive obligation as a result of a past

event, it is probable that on outflow of economic benefits will be required to settle the obligation and the

amount can be estimated reliably. The amount recognised as a provision is equal to the best estimate of

the expenditure required to settle the present obligation at the end of the reporting period.

Accounting policies requiring management’s judgement and key sources

of estimation uncertainty

In preparing the financial statements it is necessary to make forward-looking estimates and assump-

tions which may not, in fact, turn out to be true. In addition, it is necessary to use judgement in apply-

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

ing accounting policies to the financial statements. The foremost estimates concern the utilisation of

deferred tax assets against future taxable income and the assumptions used in the impairment test-

ing. Other estimates requiring management’s judgement mainly concerns the amount of non-marketable

inventories, impairment of trade receivables, the amount of guarantee provisions and the definition of

the lease period in lease contracts of indefinite duration under IFRS 16. Estimates and assumptions are

based on management’s current best knowledge at the end of the reporting period, reflecting historical

experience and other reasonable assumptions.

Impairment testing

The carrying amounts of non-current assets are assessed at the end of each reporting period to observe

whether there are any indications that the balance sheet value of an asset or a cash-generating unit ex-

ceeds the recoverable amount of it.

If such indications exist, the recoverable amount of the asset will be estimated at the higher of its

fair value less costs to sell and its value in use. Value in use is calculated based on discounted forecast

cash flows. An impairment loss is recognised if the balance sheet value of an asset or a cash-gener-

ating unit exceeds the recoverable amount of it. Impairment losses are recognised in the statement of

comprehensive income.

If there are indications that impairment losses no longer exist or that they have diminished, the recov-

erable amount is estimated. An impairment loss previously recognised in the statement of comprehensive

income is reversed if the estimates used in measuring the recoverable income have changed. However,

an impairment loss cannot be reversed to an extent more than what the carrying amount of the asset

or cash-generating unit would be without recognition of an impairment loss.

Goodwill is tested for impairment annually regardless of whether there is any indication of impairment.

An impairment loss in respect of goodwill is never reversed. (Note 10)

The recoverable amounts of cash generating units have been determined using calculations based

on value in use. In the calculations, forecast cash flows are based on financial plans approved by man-

agement, covering a period of five years. The central assumptions concern development of growth and

profitability. The cash flows beyond the five-year period are estimated based on 1,5% growth.

Deferred tax receivables

The prerequisites for recognition of deferred tax receivables are assessed at the end of each reporting

period. Assumptions made by the managers of the Group companies on taxable income in future finan-

cial periods have been taken into account when evaluating the amount of deferred tax assets. Various

internal and external factors can have a positive or negative effect on deferred tax assets. These include

restructuring in the Group, amendments to tax laws (such as changes to tax rates or a change to the

period of utilisation of confirmed deductible tax losses) and changes to the interpretations of tax regu-

lations. Deferred tax assets recognised in an earlier reporting period are recognised in expenses in the

consolidated statement of comprehensive income if the unit in question is not expected to accumulate

sufficient taxable income to be able to utilise the temporary differences, such as confirmed tax losses,

on which the deferred tax assets are based.

Deferred tax assets are not recorded for taxation losses in subsidiaries.

Financial Statement prepared in ESEF Format

Financial Statements in Annual Report are prepared in ESEF format, in which it is marked up with XBRL

tags according to ESEF taxonomy. The machine readable material is not audited.

New and amended IFRS-standards and interpretations effective from

2023 onwards

In 2023 and thereafter, the Group has adopted the following new and revised standards and interpreta-

tions issued by the IASB:

Amendments to the standard IAS 12 Income Taxes: Deferred taxes on transactions for which com-

panies recognise both an asset and a liability. Amendment specifies how company account for deferred

tax on transactions such as leases.

Amendments to IAS 1 Presentation of financial statements: The amendment clarifies when the change

in accounting policy is material and how entities apply the concept of materiality in making decisions

about accounting policy disclosures. The changes did not have a significant impact on the consolidat-

ed financial statements.

Amendments to the standard IAS 8, Accounting principles, changes and errors in accounting estimates:

Definition of accounting estimates. The change clarifies the definition and application of the account-

ing estimate. The changes did not have a significant impact on the consolidated financial statements.

Amendments to IAS 12 Income Taxes – Pillar 2: The model rules regarding Pillar 2 will enter into force

in Finland on January 1, 2024 with the new legislation on corporate minimum tax, which will bring into

force the Council directive on ensuring a global minimum tax level for multinational corporations and

large domestic corporations (Pillar 2). Martela Oyj is not covered by the legislation.

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Martela 2023 CEO’s review Operating environment Financial statements Governance

NEW IFRS STANDARDS, AMENDMENTS TO STANDARDS AND IFRIC INTERPRETATIONS

THAT HAVE NOT YET BEEN IMPLEMENTED

Amendments to the standard IAS 1, Classification of liabilities into current and non-current. The stand-

ard change clarifies how debts should be classified as short-term or long-term when the company has

the right to postpone the payment of the debt for at least 12 months.

Amendments to the IFRS16 standard Leases: lease liabilities in sales and leasebacks. The change re-

quires the seller-lessee to subsequently value the lease liabilities arising from the sublease in a way that

does not record any part of the profit or loss related to the seller-lessee’s right of use. The new require-

ments do not prevent the seller-lessee from recording a profit or loss in the income statement related

to the partial or complete termination of the lease agreement.

Amendments to the IAS 7 standard Cash flow statement and to the IFRS 7 standard Financial instru-

ments: Delivery financing arrangements. The aim of the change is to provide additional information on

the use of supplier financing arrangements, which will allow investors to assess the effects on the com-

pany’s debts, cash flows and liquidity risk. The change gives instructions to identify a situation in which

the currency cannot be considered as freely exchangeable and instructs in these situations to take this

into account in the exchange rate used in reporting and to provide additional information on the matter.

The new IFRS standards, changes to standards and IFRIC interpretations listed above that come into

effect on or after 1 January 2024 are not estimated to have a material impact.

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

1. Segment reporting

As a result of harmonising and combining processes, the organisation, reporting and systems, as of 2017 the company reports

consolidated figures as a single segment and in addition reports revenue by country. Revenue will be reported by the location of a

customer in following countries: Finland, Sweden, Norway and Other countries..

Revenue (EUR 1 000) 1 Jan–31 Dec 2023 1 Jan–31 Dec 2022Revenue by areaFinland 67,313 74,501Sweden 9,561 11,155Norway 6,992 7,575Other areas 10,523 13,479Total 94,389 106,710Income from the sale of goods 77,653 91,615Income from the sale of services 16,736 15,095Total 94,389 106,710

Assets Information about geographical regionsIntangible assetsTangible assetsNon-current assets (EUR 1000)31 Dec 202331 Dec 2023Finland 4,334 14,093Sweden 0 106Other regions 0 208Total 4,334 14,408Intangible assetsTangible assetsNon-current assets31 Dec 202231 Dec 2022Finland 4,278 13,025Sweden 0 150Other regions 0 138Total 4,278 13,312

(EUR 1 000) 31 Dec 2023 31 Dec 2022Assests and liabilities from contracts with customersTrade receivables 16,218 15,810Accrued income based on customer contracts 281 933Prepayments based on customer contracts 7,850 6,278

Revenue includes EUR 4 287 thousand (2 228) income from furniture which is based on customer agreements and is classified as

rental income.

Comparison year figure has been corrected. Previously released figure was EUR 1 327 thousand.

2. Other operating income

(EUR 1 000) 1 Jan–31 Dec 2023 1 Jan–31 Dec 2022Gains on sale of tangible assets 0 69Gain on the sale and leaseback agreement 0 1,930Rental income 58 239Public subsidies 6 13Other income from operations 85 43Total 149 2,293

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Martela 2023 CEO’s review Operating environment Financial statements Governance

3. Employee benefits expenses 4. Other operating expenses

5. Depreciation and impairment

(EUR 1 000) 1 Jan–31 Dec 2023 1 Jan–31 Dec 2022Salaries and wages -18,505 -18,933Pension expenses, defined contribution plans -2,876 -2,949Pension expenses, defined benefit plans -70 -105Expenses of matching share plan -275 -297Other salary-related expenses -1,270 -1,273Personnel expenses in the income statement -22,995 -23,557Other fringe benefits -499 -381Total -23,494 -23,938

(EUR 1000) 1 Jan–31 Dec 2023 1 Jan–31 Dec 2022Freight -1,237 -1,465Auditing -173 -129Travel -611 -561Other services -18 -15Administration -2,041 -2,582Total -191 -144IT -3,217 -2,768Marketing -640 -862Electricity and heating -330 -311Unrealised loss of electricity derivatives -52 -78Other real estate -1,089 -1,053Royalties -646 -850Other -3,002 -3,107Total -12,865 -13,639Auditors' fees 1 Jan–31 Dec 2023 1 Jan–31 Dec 2022

(EUR 1 000) 1 Jan–31 Dec 2023 1 Jan–31 Dec 2022DepreciationIntangible assets -1,267 -1,005Tangible assetsBuildings and structures -170 -324Machinery and equipment -1,273 -936Depreciation, total -2,710 -2,265Depreciation of right-of-use assets according to IFRS 16Buildings and structures -2,628 -2,157Machinery and equipment -1,435 -1,369Depreciation, total -4,063 -3,526

Personnel 2023 2022Personnel on average, workers 194 200Personnel on average, officials 209 203Personnel on average, total 403 403Personnel at year-end 386 400Personnel on average in Finland 326 328Personnel on average in Sweden 29 27Personnel on average in Norway 15 14Personnel on average in Poland 33 34Total 403 403

A total of EUR 769 thousand for 2023 and EUR 1 142 thousand from 2022 were recognised in the result from the incentives and

salary-related expenses associated with the incentive scheme. Salaries and fees and share-based payments are presented in more

detail under note 24 Related-party transactions.

More information about share-based incentive programme is in note 17.

Auditors’ fees are included in administration expenses.

Other operating expenses are reported by type of expense.

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Martela 2023 CEO’s review Operating environment Financial statements Governance

6. Research and development expenses

The income statement includes research and development expenses of EUR -1,573 thousand (EUR -1,625 thousand 2022). Com-

parison year figure has been corrected. Previously published figure was -2,475.

The company has no diluting instruments December 31, 2023 or December 31, 2022. For more information on weighted average num-

ber of shares see note 16.

7. Financial income and expenses

8. Income taxes

(EUR 1 000) 1 Jan–31 Dec 2023 1 Jan–31 Dec 2022Financial incomeInterest income on loans and other receivables 29 23Foreign exchange gain on loans and other receivables 615 103Other financial income 1 0Total 645 126Financial expensesInterest expenses from financial liabilities measured at amortised cost -25 -166Foreign exchange losses on loans and other receivables -533 -327Interest expenses of lease liabilities according to IFRS 16 -694 -387Other financial expenses -304 -389Total -1,557 -1,268Financial income and expenses, total -912 -1,142Total exchange rate differences affecting profit and loss are as follows:Exchange rate differences, sales (included in revenue) -39 -347Exchange rate differences, purchases (included in adj. of purchases) -81 23Exchange rate differences, financial items 81 -224Exchange rate differences, total -38 -548

(EUR 1 000 )Profit before taxes -3,292 1,349Taxes calculated using the domestic corporation tax rate -658 270Deferred taxes -39 -2,705Different tax rates of subsidiaries abroad -17 -36Taxes for previous years 86 116Recognition of unused tax losses not booked earlier 0 1,089Tax-exempt income 6 3Non-deductible expenses 58 -504Unbooked deferred tax assets on losses in taxation 838 356Other items -51 207Income taxes for the year in the p/l (+ = expense, - = profit) 222 -1,205

(EUR 1 000 ) 1 Jan–31 Dec 2023 1 Jan–31 Dec 2022Income taxes, financial year -175 -1,385Taxes for previous years -86 -116Change in deferred tax liabilities and assets 39 2,705Total -222 1,205

9. Earnings per share

The basic earnings per share is calculated dividing the profit attributable to equity holders of the parent by the weighted average

number of shares outstanding during the year.

(EUR 1 000) 1 Jan–31 Dec 2023 1 Jan–31 Dec 2022Profit attributable to equity holders of the parent -3,514 2,554Weighted average number of shares (1,000) 4,572 4,518Basic earnings per share (EUR/share) -0,77 0,57

Reconciliation between the income statement’s tax expense and the income tax expense calculated using the Martela Group’s do-

mestic corporation tax rate 20.0%.

Income taxes in the comparison year in income statement are positive, due to use of confirmed losses, for which deferred tax as-

sets have not been recognised previous periods, as well as a realised sale and leaseback transaction that took place during the

period, for which deferred tax receivable has been recognised.

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Martela 2023 CEO’s review Operating environment Financial statements Governance

10. Intangible assets

1 Jan–31 Dec 2023 1 Jan–31 Dec 2022(EUR 1 000)Intangible assets Goodwill Work in progress TotalIntangible assets Goodwill Work in progress TotalAcquisition cost 1 Jan 15,479 883 724 17,086 15,360 883 159 16,402Increases 926 2,166 3,092 227 2,424 2,652Decreases -1,769 -1,769 -108 -1,860 -1,968Acquisition cost 31 Dec 16,405 883 1,121 18,409 15,479 883 724 17,086Accumulated depreciation 1 Jan -12,808 0 0 -12,808 -11,814 0 0 -11,814Depreciation for the year -1,267 -1,267 -994 -994Exchange rate differencesAccumulated depreciation 31 dec -14,075 0 0 -14,075 -12,808 0 0 -12,808Carrying amount 1 Jan 2,671 883 724 4,278 3,546 883 159 4,588Carrying amount 31 Dec 2 330 883 1,121 4,334 2,671 883 724 4,278

Goodwill

The Group’s Goodwill EUR 883 thousand (EUR 883 thousand 2022) relates to the Grundell acquisition Martela made December

31, 2011. The expected future cash flows will be generated through more extensive service solutions encompassing also products

and the already implemented profit improving actions. The revenue growth is also supported by the renewed strategy of Martela

that increases the emphasis on service within the Group.

Impairment testing

Goodwill is tested annually or more frequently if there are indications that the amount might be impaired. In assessing whether

goodwill has been impaired, the carrying value of the cash generating unit Muuttopalvelu Grundell Oy has been compared to the

recoverable amount of the cash carrying unit.

The recoverable amount of the goodwill is determined based on the value in use calculations. The value in use is calculated

based on the discounted forecast cash flows. The cash flow forecasts rely on the plans approved by the management concerning

profitability and the growth rate of revenue. The plans cover a five-year period taking into account the recent development of the

business.

In impairment testing the average growth is estimated to be 1.5% and EBIT 9.9%. The use of testing model requires making esti-

mates and assumptions concerning market growth and general interest rate level. The used post-tax discount rate is 10.0% (9.6%)

which equals the weighted average cost of capital.

The cash flows after the five-year period have been forecasted by estimating the future growth rate of revenue to be 1.5%.

Based on the impairment test there is no need to recognise an impairment loss.

Sensitivity analysis of impairment testing

The carrying value of the cash generating unit is EUR 13.1 million higher than the book value according to the performed impair-

ment test. No predictible changes in any assumpions, have any significant impact on the result of the goodwill testing.

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11. Tangible assets

Machinery and Machinery and Machinery and equip-Other tangible 1 Jan–31 Dec 2023 Land areas Buildings Buildings IFRS 16equipmentequipment IFRS 16ment IFRS 16 WAAS*assets Work in progress TotalAcquisition cost 1 jan 4 23,616 12,407 34,075 2,691 7,839 23 1 80,656Increases 13 1,272 586 1,536 3,918 7,325Decreases 0 -9 0 -102 -1,373 -1 -1,486Exchange rate differences -43 -43Acquisition cost 31 Dec 4 23,620 13,636 34,661 4,124 10,383 23 0 86,452Accumulated depreciation 1 Jan 0 -23,003 -8,214 -32,865 -1,853 -1,407 0 0 -67,343Accumulated depreciation, decreases 0 0 93 672 0 0 765Depreciation for the year 0 -170 -1,795 -359 -834 -2,348 0 0 -5,506Exchange rate differences 48 -8 0 0 40Accumulated depreciation 31 Dec 0 -23,173 -9,961 -33,224 -2,601 -3,083 0 0 -72,044Carrying amount 1 Jan 4 614 4,193 1,210 838 6,430 23 0 13,312Carrying amount 31 Dec 4 448 3,676 1,437 1,523 7, 298 23 0 14,408

Machinery and Machinery and Machinery and equip-Other tangible 1 Jan–31 Dec 2022 Land areas Buildings Buildings IFRS 16equipmentequipment IFRS 16ment IFRS 16 WAAS*assets Work in progress TotalAcquisition cost 1 Jan 83 24,046 9,099 33,645 2,814 2,421 35 77 72,220Increases 103 3,565 475 162 6,070 10,375Decreases -80 -533 -257 -45 -285 -653 -11 -76 -1,940Exchange rate differences 0Acquisition cost 31 Dec 4 23,616 12,407 34,075 2,691 7,839 24 1 80,656Accumulated depreciation 1 Jan 0 -22,670 -6,212 -32,251 -1,563 -558 0 0 -63,253Accumulated depreciation, decreases 0 176 24 261 236 0 0 698Depreciation for the year 0 -332 -2,178 -639 -550 -1,086 0 0 -4,787Exchange rate differences 0 0 0Accumulated depreciation 31 Dec 0 -23,003 -8,214 -32,865 -1,853 -1,407 0 0 -67,343Carrying amount 1 Jan 83 1,376 2,887 1,395 1,250 1,863 35 77 8,967Carrying amount 31 Dec 4 614 4,193 1,210 838 6,430 23 0 13,312

*WAAS, Workplace as a Service-business area assets, that are classified as operative leasing contracts according to IFRS 16 and in which company according to the standard operates as lessor.

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12. Book values of financial assets and liabilities by group

Financial assets Financial liabilities Book values of measured at measured at Financial assets measured at fair balance sheet Fair Hierarchy (EUR 1 000)amortised costsamortised costvalue through profit or lossitems valuelevel Note2023 BALANCE SHEET ITEMSNon-current financial assetsLoan receivables 532 532 532 2Current financial assetsTrade and other receivables 16,218 16,218 16,218 2 15Book value by group 16,750 16,750 16,750Non-current financial liabilitiesInterest-bearing liabilities 13,776 13,776 13,776 2 18Derivatives designated as hedging instruments 36 36 36 1Current financial liabilitiesInterest-bearing liabilities 4,272 4,272 4,272 2 18Derivatives designated as hedging instruments 15 15 15 1Trade payables and other liabilities 12,947 12,947 12,947 2 21Book value by group 30,995 52 31,046 31,046

Financial assets Financial liabilities Book values of measured at measured at Financial assets measured at fair balance sheet Fair Hierarchy (EUR 1 000)amortised costsamortised costvalue through profit or lossitems valuelevel Note2022 BALANCE SHEET ITEMSNon-current financial assetsLoan receivables 546 546 546 2Current financial assetsTrade and other receivables 15,810 15,810 15,810 2 15Book value by group 16,356 16,356 16,356Non-current financial liabilitiesInterest-bearing liabilities 14,678 14,678 14,678 2 18Derivatives designated as hedging instruments 8 8 8 1 18Current financial liabilitiesInterest-bearing liabilities 4,542 4,542 4,542 2 18Derivatives designated as hedging instruments 70 70 70 1 18Trade payables and other liabilities 13,393 13,393 13,393 2 21Book value by group 32,613 78 32,691 32,691

Derivatives designated as hedging instruments have been

bought in order to manage the risk concerning the electricity

price.

Other financial assets include investments in unlisted equi-

ties. They have been measured at acquisition cost as fair

value cannot be assessed reliably. The book values of trade

receivables and receivables other than those based on deriva-

tives are estimated to essentially correspond to their fair val-

ues due to the short maturity of the receivables.

The book values of debts are estimated to correspond to their

fair values. Interest rate level has no material effect.

The book values of trade and other non-interest-bearing liabil-

ities are also estimated to correspond to their fair values. Dis-

counting has no material effect.

Fair values of each financial asset and liability group are pre-

sented in more detail under the note indicated in the table

above.

Assets and liabilities recognised at fair value in the financial

statements are categorised into three levels in the fair value

hierarchy based on the inputs used in the valuation technique

to determine their fair value. The three levels are:

Level 1. Quoted prices(unadjusted) in active markets for iden-

tical assets or liabilities.

Level 2. Inputs other than quoted prices included within Level

1 that are observable for the asset or liability either directly or

indirectly e.g. discounted cash flows or valuation models.

Level 3. Inputs for the asset or liability that are not based on

observable market data and the fair value determination is

widely based on management’s judgement and the use of that

in commonly approved valuation models.

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13. Deferred tax assets and liabilities

Recognised in the Recognised in the other Recognised in the Changes in deferred taxes during 2023 (EUR 1 000) 1 Jan 2023 income statementcomprehensive income retained earnings 31 Dec 2023Deferred tax assetsRight of use asset 2,454 0 2,454Pension obligations 3 0 -12 -9Other temporary differences 425 212 0 116 753Total 2,882 212 -12 116 3,198Deferred tax liabilitiesRight of use asset 7 184 191On buildings measured at the fair value of the transition date 16 -12 0 0 4Total 23 172 0 0 195Deferred tax assets and liabilities, total 2,859 40 -12 116 3,003

Recognised in the Recognised in the other Recognised in the Changes in deferred taxes during 2022 (EUR 1 000) 1 Jan 2022 income statementcomprehensive income retained earnings 31 Dec 2022Deferred tax assetsRight of use asset 28 2,426 2,454Pension obligations 26 0 -22 0 3Other temporary differences 287 165 0 -27 425Total 340 2,591 -22 -27 2,883Deferred tax liabilitiesRight of use asset 5 2 7On buildings measured at the fair value of the transition date 132 -116 0 0 16Total 137 -116 0 0 23Deferred tax assets and liabilities, total 204 2,707 -22 -27 2,860

Deferred tax assets have not been recognised on unused tax losses that probably cannot be utilised in the future against taxable

income. The amount of such losses is EUR 22.1 million (21.8 in 2022) including current year results.

According to current knowledge these losses have no expiration date. The losses mainly originate from foreign subsidiaries.

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14. Inventories

15. Current trade receivables and other receivables

(EUR 1 000) 31 Dec 2023 31 Dec 2022Raw materials and consumables 7,777 10,060Work in progress 399 1,281Finished goods 1,059 440Total 9,235 11,781

Age distribution of trade receivables Incl. credit loss (EUR 1 000) 2023provision 2022 provisionUndue 12,279 74 12,608 1010-6 months overdue 3,723 97 2,877 176-12 months overdue 128 299 142 212-24 months overdue 74 50 89 5Over 24 months overdue 14 64 94 5Total 16,218 584 15,810 129

(EUR 1 000) 31 Dec 2023 31 Dec 2022Trade receivables 16,218 15,810Accrued income and prepaid expenses ofPersonnel expenses 91 99Uninvoiced revenue 445 1,115Prepaid expenses 1,869 927Tax receivables 491 297Accrued income and prepaid expenses total 2,897 2,438Total 19,115 18,248

Region (EUR 1 000) 2023 2022Finland 9,704 9,827Scandinavia 5,188 4,689Other European countries 1,256 1,241Other regions 70 53Total 16,218 15,810

The value of inventories has been written down by -381 thousand (-430 thousand 2022) due to obsolescence.

In the valuation of inventories the fair value of an item as well as its usage in current product portfolio offered is monitored.

Should the current product portfolio no longer carry the product to which the item is used the item is written down. If the prod-

uct is still on sale but there has been decision to finish its selling, it will be written down to equal half of its value.

A provision is made to the trade receivables according to following, unless it is highly likely to receive payment for the receivable:

undue receivables 0.5%, 0-6 months overdue 2%, 6-12 months overdue 10%, 12-24 months overdue 50% and over 24 months over-

due 100%.

At the end of the financial year, there were a total of EUR 584 thousand in provisions for bad debts, of which the group’s EUR

290 thousands is related to the bankruptcy of a Norwegian customer.

The sales invoices are interest-free and the most general payment term is 14 days, while the payment term in the biggest invoic-

es is 30 days.

The maximum trade receivable credit risk amount on the balance sheet date 31 December by country or region:

The age distribution of Group trade receivables on the balance sheet date 31 December is presented in the following table:

Credit risks from trade receivables are not concentrated.

In 2023 credit losses of EUR -535 thousand (EUR -192 thousand 2022) has been recognised as expenses and are presented in

other operating expenses.

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16. Equity

Share capital

The paid share capital entered in the Trade register is EUR 7,000,000. The counter value of a share is 1.53 (1.55). The K shares

carry 20 votes at the annual general meeting and the A-shares 1 vote each. Both share series have the same dividend rights.

Changes in share capitalReserve Share for invest-Share premium ed unre-Treasury Changes in share capital A shares K sharescapitalaccountstricted shares Total1 Jan 2022 3,890,158 604,800 7,000 1,116 962 -128 8,950Shares of directed share issue 11,574 33 124 15731 Dec 2022 3,913,389 604,800 7,000 1,116 995 -4 9,108Shares of directed share issue 53,88131 Dec 2023 3,967,270 604,800 7,000 1,116 995 -4 9,108

Martela Oyj owns 1,425 (1,425) A-shares purchased at an average price of 10.65. The number of treasury shares is equivalent to

0.03% (0.03) of all shares and 0.01% (0.01) of all votes.

A total of 11,657 of Martela shares held by the company have been conveyed without consideration to the 34 key individuals par-

ticipating in the Performance-based Matching Share Plan 2021—2023, announced on March 23, 2021.

The subscription price of the directed share issue has been registered in reserve for invested unrestricted equity.

Company has decided on a paid directed share issue March 17, 2022, in which 11,574 of series A shares have been subscribed.

The share subscription price TEUR 33, has been credited to the company’s reserve for invested unrestricted equity.

Company has decided on a paid directed share issue March 29, 2023, in which 53,881 of series A shares have been subscribed

without consideration. The shares issued to the company have been used to pay incentives according to the company’s incentive

plan. Acquisition of shares for the share-based incentive scheme and the management of the scheme have been outsourced to an

external service provider.

Translation differences in equity comprises translation differences of financial statements of foreign subsidiaries when translated

into euros and of investments in foreign units. Other reserves consists of reserve funds.

The share premium account is a fund established in accordance with the previous Finnish Companies Act. According to the

present Liability Companies Act (effective from September 1, 2006) it is included in restricted shareholders’ equity and can no

longer be accumulated. The share premium account can be reduced in accordance with the regulations on the reduction of share

capital, and it can be used as a fund increase to increase share capital. The acquisition cost of treasury shares is deducted from

shareholders’ equity (including the related transaction costs).

The parent company’s distributable equity was 16,372 thousand on December 31, 2023.

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IFRS 2 requires an entity to measure the award at its fair value and recognised over the vesting period. The award is recognised

in equity in its full extent. The fair value of the share-based scheme when granted was the value of a company’s share, EUR 2.85

per share (6.5.2021) and EUR 2.71 per share (23.6.2022).

17. Share-based payments

Share-based incentive plan for the group’s key employees 2021, 2022 and 2023

The prerequisite for participating in the plan is that a participant acquires the company´s series A shares up to the number deter-

mined by the Board of Directors. In order to implement the plan, the Board of Directors decided on a share issue against payment

directed to the target group. Approximately 40 persons, including the CEO and other Martela’s Management Team members, be-

long to the target group of the plan. The Performance-based Matching Share Plan 2021–2023 consists of three performance peri-

ods, covering the financial years of 2021, 2022 and 2023, respectively.

In the plan, the target group is given an opportunity to earn Martela Corporation series A shares based on performance and on

their personal investment in Martela Corporation series A shares.

The Board of Directors decides on the plan’s performance criteria and targets to be set for each criterion at the beginning of a

performance period. During the performance period 2022 and 2023, the rewards are based on the Group’s Earnings before Inter-

est and Taxes (EBIT). The potential rewards based on the plan will be paid after the end of each performance period.

The rewards to be paid based on the plan will amount to an approximate maximum total of 718,000 Martela Corporation series

A shares including also the proportion to be paid in cash. The cash proportions of the rewards are intended for covering taxes

and tax-related expenses arising from the rewards to the participants.

Program Share-based incentive programme 2021–2023Type ShareInstrument Earning period 2021 Earning period 2022 Earning period 2023Issuing date 6.5.2021 6.5.2021 6.5.2021Maximum amount, pcs 718,000 718,000 718,000Dividend adjustment No No NoGrant date 18.3.2021 18.3.2021 18.3.2021Beginning of earning period 1.1.2021 1.1.2022 1.1.2023End of earning period 31.12.2021 31.12.2022 31.12.2023End of restriction period 31.5.2022 31.5.2023 31.5.2024Share ownership, Share ownership, Share ownership, Vesting conditionsemployment until the end employment until the end employment until the end of vesting date,EBITof vesting date,EBITof vesting date,EBITMaximum contractual life, yrs 1.4 1.4 1.4Remaining contractual life, yrs 0.0 0.4 1.4Number of persons at the end of 36 35 30reporting yearPayment method Cash & Equity Cash & Equity Cash & EquityChanges during the period 2023 Earning period 2021 Earning period 2022 Earning period 20231 Jan 2023Outstanding at the beginning of the 153,014 154,486 157,046 reporting period, pcsChanges during the periodGranted 0 0Forfeited 46,742 45,410Shares given 23,305 107,744Lost during the period 129,709Outstanding at the end of the period 0 0 111,636Effects from the share based incentive programme on the financial year (EUR 1 000) 2023 2022Expenses for the financial year, share-based pay-43,612 231,460ments, equity settled

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18. Financial liabilities

(EUR 1 000) 31 Dec 2023 31 Dec 2022Non-currentDerivatives designated as hedging instruments 36 8Lease liabilities 13,776 14,678Total 13,812 14,686CurrentLoans from financial institutions 1,207 1,624Derivatives designated as hedging instruments 15 70Lease liabilities 3,065 2,918Total 4,287 4,612

31 Dec 2023 31 Dec 2022Lease liabilities are payable as follows:Lease liabilitiesLease liabilitiesLease liabilities - total amount of minimum lease paymentsNo later than one year 3,672 3,756Later than one year and no later than five years 8,777 8,771Later than five years 7,246 9,637Total 19,695 22,165Lease liabilities - present value of minimum lease paymentsNo later than one year 3,065 2,896Later than one year and no later than five years 7,159 6,882Later than five years 6,617 7,818Total 16,841 17,596Unearned finance expense 2,854 4,569

Amounts recognised in profit or loss (EUR 1 000) 31 Dec 2023 31 Dec 2022Interest on lease liabilities -694 -387Expenses related to short-term leases -985 -1063

Current loans consist of factoring loan in 2023.

More information in note 23 Pledges granted and contingent liabilities.

More inforamation on Derivatives designated as hedging instruments is given in note 12 and 22.

Non-cash changesFair value of Derivatives designated Transfer Lease Lease 1 Jan Cash as hedging between liabilities liabilities 31 Dec Changes in net debt 20232023flows instrumentsgroupsincreasedecrease2023Long-term liabilities total 14,685 0 28 -2,485 1,584 0 13,812Short-term liabilities total 4,612 -417 -54 2,644 1,063 -3,561 4,287Total liabilities from the financing activities 19,297 -417 -26 159 2,647 -3,561 18,099Non-cash changesFair value of Derivatives designated Transfer Lease Lease 1 Jan Cash as hedging between liabilities liabilities 31 Dec Changes in net debt 20222022flows instrumentsgroupsincreasedecrease2022Long-term liabilities total 1,790 -1,900 8 1,900 12,886 0 14,685Short-term liabilities total 10,952 -4,967 70 -1,900 3,467 -3,011 4,612Total liabilities from the financing activities 12,743 -6,867 78 0 16,354 -3,011 19,297

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19. Pension obligations

Martela’s defined benefit plans concern its operations in Finland. The arrangements are made through insurance companies. The

plans are partly funded.

On the balance sheet, the commitment to those insured is presented as a pension liability, and the part of this liability that falls

under the responsibility of insurance company is presented as an asset. As the funds belong to the insurance companies, they

cannot be itemised in Martela’s consolidated financial statements.

Changes in defined benefit liability Present value of the defined benefit liability Fair value of the funds included in the plan Net debt of the defined benefit liability(EUR 1 000) 2023 2022 2023 2022 2023 20221 Jan 1,380 2,597 -1,364 -2,469 16 128Recognised in profit or lossService cost in the period 40 79 40 79Past service cost 0 0 0 0Interest expense or income 51 26 -52 -25 -1 1Settlements -357 -613 357 613-266 -508 305 588 39 80Recognised in other comprehensive incomeItems resulting from remeasurement:Gains (-) or losses (+) resulting from changes in demographical assumptions 0 0 0 0Actuarial gain (-) and losses (+) resulting from changes in financial assumptions -8 -717 -8 -717Experience based profits (-) or losses (+) -15 8 -15 8Return on the funds included in the plan, excluding items in interest expenses or income (+/-) 53 607 53 607-23 -709 53 607 30 -102Other itemsEmployer's payments (+) 0 0 -71 -89 -71 -89Benefits paid -10 0 10 0 0 0-10 0 -61 -89 -71 -8931 Dec 1,071 1,380 -1,067 -1,364 13 16

In insurance arrangements, the amount of funds is calculated using the same discount rate used for the determination of pen-

sion liabilities. This means that a change in discount rate does not pose a significant risk. In addition, an increase in life expectan-

cy does not pose a significant risk for Martela, as insurance companies will bear most of the impact of this.

The pensions are fixed to 2017 salary levels and accounted for accordingly.

The Group anticipates that it will pay a total of EUR 30 thousand to defined benefit pension plans in the financial period of 2024.

Sensitivity analysis

The following table illustrates the effects of changes in the most significant actuarial assumptions on the funds related to the defined benefit pension liability and plans.

Defined benefit liability Fair value of the funds included in the planEffect of a change in the assumption employed The assumption is growing The assumption is growingDiscount rate (0.5% change) -6.5% 6.0%Increase in salaries (0.5% change) N/A N/AMortality rate (a change of 5% points) -0.9% -0.8%The weighted average of the duration of the plans is 14.2 years.

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20. Provisions 22. Management of financial risks

21. Current liabilities

(EUR 1 000) 31 Dec 2023 31 Dec 2022Long-term provisions 269 229Short-term provisions 67 57Total 337 286Provisions 1 Jan 286 295Net change in provisions 50 -9Provisions 31 Jan 337 286

(EUR 1 000) 31 Dec 2023 31 Dec 2022Financial liabilities 4,287 4,612Advances received 7,850 6,278Trade payables 9,440 9,569Total 21,577 20,459Accrued liabilities and prepaid income ofPersonnel expenses 4,243 4,431Royalties 214 205Residual expenses 2,331 3,251Tax liability based on taxable income for the period 0 1,213Other 1 6Total 6,789 9,106Other current liabilities 3,507 3,824Other 3,507 3,824Provisions* 6 57Current liabilities 31,941 33,447

The normal warranty for standard Martela produced products is five years. The warranty provision has been calculated as an esti-

mate of the 5-year warranties for Martela products and the sale of Martela products.

*For more information see note 20.

Financial risks are unexpected exceptions relating to exchange rates, liquidity, customer liquidity, investments and interest rates.

The objective of financial risk management is to ensure that the company has sufficient financing on a cost-efficient basis and

to reduce the adverse effects of financial market fluctuations on the Group’s result and net assets. The general principles of risk

management are approved by Board of Directors and the practical implementation of financial risk management is on the respon-

sibility of the parent company’s financial administration.

Market risks

Market risks comprise the following three risks: Currency risk, interest rate risk and price risk. The associated fluctuations in ex-

change rates, market interest rates and market prices may lead to changes in the fair value of financial instruments and in the fu-

ture cash flows and hence they impact the result and balance sheet of the Group.

The increased volatility in electricity price 2022 and 2023 has led to the decision to enter into contracts for electricity deriva-

tives.

Currency risks

The Group has operations in Finland, Sweden, Norway and Poland and it is therefore exposed to currency that arise in intra-group

transactions, exports and imports, the financing of foreign subsidiaries and equity that is denominated in foreign currencies.

Translation risks result from incoming cash flows denominated in foreign currencies. Translation risk arise when the value of the

capital invested in the parent company’s foreign subsidiaries, annual profits and loans change as a result of exchange rate fluctu-

ations.

Transaction risks

Martela’s major trading currencies are EUR, SEK, NOK and PLN. The SEK, NOK and PLN currency positions are reviewed mainly

on a half-yearly basis. The Group’s policy is to hedge the net positions remaining after reconciliation if seen necessary. The Group

has not hedged against transaction risks during the financial periods of 2023 and 2022.

The following table presents currency risks per instrument and currency.

Transaction risks per instrument and currency 31 Dec 2023 (EUR 1 000)EUR SEK NOKTrade receivables 0 2,236 1,702Trade payables 0 642 40Total 0 2,878 1,742Transaction risks per instrument and currency 31 Dec 2022 (EUR 1 000)EUR SEK NOKTrade receivables 0 2,398 2,437Trade payables 0 216 57Total 0 2,613 2,494

The impact of other currencies is minor.

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Analysis of sensitivity to transaction risk

The following table presents the average impact of 10 per cent change in exchange rates on 31 December on the company’s financial re-

sult before taxes and capital for 2023 (2022). The estimates are based on the assumption that no other variables change.

Price risk

Available-for-sale shares included in financial assets are not deemed subject to resale price risk.

Credit risk

Credit risk arises from the possibility that a counterparty will not meet its contractual payment obligations. Hence the serious-

ness of the risk is determined on the basis of the counterparty’s creditworthiness. The objective of credit risk management is to

minimise the losses that would arise should the counterparty not meet its obligations.

The turnover and maturity structure of Group’s companies trade receivables are reported monthly and are monitored by the par-

ent company’s financial management.

The principles of credit risk management are confirmed by Martela’s Board of Directors. Risk management is based on the au-

thorisations given to the organisation.

Credit risks related to the company’s trade and other receivables are minimised by using short terms of payment, effective col-

lection measures and accounting for the counterparty’s creditworthiness. Supply agreements are used when the customer com-

pany is unknown and the available credit information is insufficient. In this context a supply agreement is an agreement which

secures and receivables arising from an order by withholding the right of ownership with Martela Oyj until the customer has paid

the sale price in full.

Supply agreements are only used in sales in Finland. A customer may also be required to make prepayment before sold products

are delivered if it is considered necessary in light of the potential credit risk associated with the customer. Counterparties may

also be granted to credit limits. The creditworthiness of customers is monitored regularly on the basis of payment history and

credit rating.

Collateral may be required from certain customers based on their creditworthiness and in the case of exports, for example, Mar-

tela may use confirmed irrevocable Letters of Credit.

The book value of financial assets corresponds to the maximum amount of the credit risk.

The maximum financial asset credit risk amount on the balance sheet date 31 December is presented in the following table:

Interest rate risks

The following table presents the distribution of the Group’s financial instruments into fixed interest rate and variable interest rate on

the balance sheet date.

Analysis of sensitivity to transaction risk (EUR 1 000) Impact on result31 Dec 2023EUR +/-0SEK +/-288NOK +/-174Analysis of sensitivity to transaction risk (EUR 1 000) Impact on result31 Dec 2022EUR +/-0SEK +/-261NOK +/-249

Financial instruments (EUR 1000) 31 Dec 2023 31 Dec 2022Fixed rateLease liabilities 16,841 17,596Financial liabilities incl derivatives 1,258 1,702Total 18,099 19,297

Maximum financial asset credit risk (EUR 1 000) 2023 2022Financial assets measured at fair value through profit or loss 7 7Non-current loan receivables 532 546Trade receivables and other receivables 19,115 18,248Cash and cash equivalents 5,053 11,295Total 24,707 30,096

See note 15 for additional information on trade receivables and the related credit loss provisions.

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Liquidity risks

The group aims to constantly evaluate and monitor the amount of financing required by the business, so that the group has

enough liquid assets to finance operations, including long-term commitments - such as leases - to fulfill obligations. In addition,

the group aims to continuously maintain sufficient liquid assets with the help of effective cash management solutions, such as

cash reserve and working capital optimization. The refinancing risk is managed in part by using several leasing and rental con-

Management of capital structure

It is the Group’s objective to ensure an effective capital structure that will secure its operating capacity in the capital markets

in all circumstances irrespective of volatility. The Group’s Board of Directors assess the capital structure on a regular basis, The

Group uses the equity ratio to monitor its capital structure.

The equity ratio formula is presented in the following table:

tract partners in financing operations. Sudden changes in the financial market or in Martela’s operating environment may nega-

tively affect the group’s liquidity and how the company is able to meet its payment obligations. In addition, the profitability of the

group’s business and the cash flow of the business affect the development of the group’s liquidity.

Cash and cash equivalent at the year-end 2022 were EUR 11,295 thousand.

Balancesheet Contractual cash flows mature as follows (EUR 1 000): 2024 2025 2026 2027 2028 Later TotalvalueLease liabilities 3,672 2,698 2,171 2,009 1,900 7,246 19,695 16,841Trade payables 9,440 9,440 9,440Total 13,112 2,698 2,171 2,009 1,900 7,246 29,135

Balancesheet Contractual cash flows mature as follows (EUR 1 000): 2023 2024 2025 2026 2027 Later TotalvalueLease liabilities 3,756 2,889 2,135 1,896 1,852 9,637 22,165 17,596Trade payables 9,569 9,569 9,569Total 13,325 2,889 2,135 1,896 1,852 9,637 31,734

Equity ratio 31 Dec 2023 31 Dec 2022Shareholders' equity 9,558 13,850Balance sheet total - advance payments 47,836 56,049Equity to assets ratio % 20.0 24.7

Cash and cash equivalent at the year-end 2023 were EUR 5,053 thousand.

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

23. Pledges granted and contingent liabilities

24. Related party transactions

(EUR 1 000) 31 Dec 2023 31 Dec 2022Debts secured by mortgagesCorporate mortgages 9,895 9,888Total mortgages 9,895 9,888Other pledgesGuarantees as security for rents 854 892CommitmentsRental commitments 589 527

(EUR 1 000) 2023 2022Management employee benefitsSalaries and other short-term employee benefits -1,184 -1,140Share-based benefits -121 -36Total -1,305 -1,176Salaries and feesBoard members -162 -152CEO -314 -288Management team members (excl. CEO) -829 -736Total -1,305 -1,176

Fees paid to Board members: 2023 2022Andersson Minna* 0.0 -5.5Martela Eero -23.4 -22.0Mattson Jan -23.4 -22.0Mellström Katarina -23.4 -22.0Mild Johan -45.1 -42.4Vepsäläinen Anni -23.4 -22.0Mattila Hanna** -23.4 -16.5Total -161.9 -152.4

Holding (%) Of votes (%) Sales Production Group structure Domicile31 Dec 202331 Dec 2023 companycompanyParent companyMartela Oyj Finland x xSubsidiariesKidex Oy Finland 100 100 x xMuuttopalvelu Grundell Oy Finland 100 100 xMartela AB, Nässjö Sweden 100 100 xAski Avvecklingsbolag AB, Malmö Sweden 100 100Martela AS, Oslo Norway 100 100 xMartela Sp.z o.o., Varsova Poland 100 100 x xTehokaluste Oy Finland 100 100 x

Martela Group’s related party transactions comprise the CEO, members of the Board and the Group’s management team, as well

as their family members. Martela Group’s related parties also include a shareholder who holds at least 20% of the company’s total

number of votes. Members of the Board own a total of 18,142 shares (18,009) and hold a total of 0.4% (0,4%) of the shares and

0.4% (0,4%) of the votes. Persons in the management own a total of 109,191 (134,251) Martela Corporation shares as at December

31, 2023. As part of the implementation of the Performance-based Matching Share Plan 2021-2023, described in note 17, Board

of Directors has resolved to grant plan participants interest-bearing loans to finance the acquisition of the company’s shares.

Maximum amount of the loan is 70 per cent of the participant´s investment in shares. Loan is to be repaid the latest by Decem-

ber 31, 2025 and interest is 12-month Euribor, however not below 0%. Management has been granted loan in total EUR 137,888.02

(256,107.95), of which EUR 69,999.93 (69,999.93) has been granted to CEO and other management EUR 67,888.09 (186,108.02).

* Member of Board until Q1 2022.

** Member of Board from Q2 2022.

Fees based on board membership are not paid to members employed by the company.

Management employee benefits

The Group has determined key persons in management to be:

Members of the Board of Directors

CEO

Group’s Management Team

The table below presents the employee benefits received by key persons in management. Employee benefits are presented with

the accrual method.

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

Salaries, fees and pension commitment to CEO 2023 2022Salaries and fees -314 -288Statutory earnings-related pension payment (TyEL) on salaries -65 -49

Salaries include also share-based incentives.

The period of notice is 6 months with respect to both the present CEO and the company, and in the event of dismissal by the

company, the CEO is entitled, besides of the notice period, to a lump-sum compensation equalling hies salary for 6 months. CEO

and the Group management team has long term share-based incentive programme, in which is possible to receive Martela A

shares when the set targets are met.

More information in note 17 Share-based payments.

25. Key financial indicators for the Group

Martela Group 2019-2023 2023 2022 2021 2020 2019Revenue MEUR 94.4 106.7 91.9 88.4 106.2Change in revenue % -11.5 16.1 4.0 -16.8 3.0Export and operations outside Finland MEUR 27.1 34.5 22.1 16.3 23.1In relation to revenue % 28.8 32.3 24.1 18.5 21.7Exports from Finland MEUR 2 7. 7 34.2 21.9 16.1 22.7Gross capital expenditure MEUR 2.3 0.9 0.4 1.2 2.3In relation to revenue % 2.4 0.8 0.4 1.4 2.1Depreciation MEUR 6.8 5.8 5.4 6.5 4.9Research and development *) MEUR 1.6 1.6 1.6 1.4 1.6In relation to revenue *) % 1.7 1.5 1.7 1.6 1.5Personnel on average 403 403 419 451 494Change in personnel % 0.0 -3.9 -7.1 -8.7 -3.1Personnel at the end of year 386 400 400 435 464of which in Finland 312 324 326 362 385ProfitabilityOperating profit MEUR -2.4 2.5 -1.3 -4.0 -2.0In relation to revenue % -2.5 2.3 -1.4 -4.5 -1.9Profit before taxes MEUR -3.3 1.3 -2.3 -4.8 -2.7In relation to revenue % -3.5 1.3 -2.5 -5.4 -2.5Profit for the year * MEUR -3.5 2.6 -2.4 -4.8 -2.5In relation to revenue % -3.7 2.4 -2.6 -5.4 -2.4Revenue / employee TEUR 234 265 219 196 215Return on equity % -31.3 20.8 -21.3 -34.7 -14.7Return on investment % -7.5 9.1 -4.7 -13.2 -6.4Finance and financial positionBalance sheet total MEUR 55.7 62.3 51.1 52.1 55.9Equity MEUR 9.6 13.9 10.8 11.6 16.1Interest-bearing net liabilities MEUR 13.1 8.1 8.1 4.3 5.0In relation to revenue % 13.9 7. 5 8.8 4.9 4.7Equity ratio % 20.0 24.7 22.2 23.3 28.8Gearing % 137.2 58.6 74.8 36.5 31.5Net cash flow from operations MEUR 0.3 1.9 -3.4 5.7 6.3Dividends paid MEUR 0.5 0.0 0.0 0.0 0.4

*) The figures for the comparison years 2019-2022 have been adjusted in relation to the previously published due to

reclassification

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

26. Key share-related figures

2023 2022 2021 2020 2019Earnings per share EUR -0.77 0.57 -0.53 -1.16 -0.61Earnings per share (diluted) EUR -0.77 0.57 -0.53 -1.16 -0.61Share par value EUR 1.53 1.55 1.55 1.68 1.68Dividend EUR 0.00*) 0.10 0.0 0.0 0.0Dividend/earnings per share % 0.00*) 1 7. 7 0.0 0.0 0.0Effective dividend yield % 0.00 0.04 0.0 0.00 0.00Equity per share EUR 2.09 3.07 2.39 2.81 3.80Price of A share 31 Dec EUR 1.28 2.45 2.29 3.09 3.36Share issue-adjusted number of shares tpcs 4,573.50 4,519.61 4,508.04 4,155.60 4,155.60Average share-issue adjusted number of shares tpcs 4,573.50 4,519.61 4,508.04 4,155.60 4,155.60Price/earnings ratio -1.67 4.34 -4.32 -2.66 -5.48Market value of shares **) MEUR 5.85 11.07 10.29 12.80 13.92

*) Proposal by the Board of Directors for year 2023

**) Price of A shares used as value of K shares

Formulas to key figures

Earnings / share =

Profit attributable to equity holders of the parent

Average share issue-adjusted number of shares

Price /earnings multiple (P/E) =

Share issue-adjusted share price at year-end

Earnings / share

Equity / share, EUR =

Equity attributable to the equity holders of the parent

Share issue-adjusted number of shares at year-end

Dividend / share, EUR =

Dividend for the financial year

Share issue-adjusted number of shares at year-end

Dividend / earnings, % =

Dividend / share x 100

Earnings / share

Effective dividend yield, % =

Share issue-adjusted dividend / share x 100

Share issue-adjusted share price at the year-end

Market value of shares, EUR = Total number of shares at year end x share price on the balance sheet date

Return on equity, % =

Profit/loss for the financial year x 100

Equity (average during the year)

Return on investment, % =

(Pre-tax profit/loss + interest expenses + other financial items) x 100

Balance sheet total - Non-interest-bearing liabilities (average during the year)

Equity ratio, % =

Equity x 100

Balance sheet total - advances received

Gearing, % =

Interest-bearing liabilities - cash, cash equivalents and liquid asset securities x 100

Equity

Personnel on average = Month-end average number of personnel in active employment

Interest-bearing net debt = Interest-bearing debt - cash and other liquid financial assets

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

27. Shares and shareholders

Breakdown of share ownership by Number % of total number of shares held 31 Dec 2023 of share-share-Number of Shares, pcsholdersholders Number of shares %votes % of Votes1-500 2,373 79.1 294,236 6.4 301,836 1.9501-1,000 269 9.0 216,205 4.7 220,005 1.41,001-5,000 254 8.5 610,892 13.4 843,452 5.3Over 5,000 104 3.5 3,440,962 75.2 14,475,402 90.1Total 3,000 100.0 4,562,295 99.8 15,840,695 98.6of which nominee-registered 9 71,253 1.6 71,253 0.4In the waiting list and 6 11,200 0.2 224,000 1.4collective accountTotal 4,573,495 100,0 16,064,695 100,0

Number % of total Breakdown of shareholding by of share-share-Number of sector 31 Dec 2023holdersholders Number of shares %votes % of VotesPrivate companies 97 3.2 1,417,829 31.0 6,965,829 43.4Financial and insurance institutions 11 0.4 112,987 2.5 158,855 1.0Non-profit entities 5 0.2 3,161 0.1 3,161 0.0Households 2,875 95.8 2,946,703 64.4 8,677,103 54.0Foreign investors 12 0.4 10,362 0.2 35,747 0.2Total 3,000 100.0 4,491,042 98.2 15,840,695 98.6of which nominee-registered 9 71,253 1.6 71,253 0.4In the waiting list and 6 11,200 0.2 224,000 1.4collective accountTotal 4,573,495 100,0 16,064,695 100,0

% of Share Distribution of shares 31 Dec 2023 Number, pcs Total EUR Capital Votes % of votesK shares 604,800 925,682 13 12,096,000 75A shares 3,968,695 6,074,318 87 3,968,695 25Total 4,573,495 7,000,000 100 16,064,695 100The largest shareholders by number of K series A series Total number Number of shares 31 Dec 2023sharessharesof shares % votes % of total votesMarfort Oy 292,000 232,574 524,574 11.5 6,072,574 37.8Isku-Yhtymä Oy 0 452,900 452,900 9.9 452,900 2.8Kelhu Markku Juhani 0 200,000 200,000 4.4 200,000 1.2Martela Heikki Juhani 52,122 130,942 183,064 4.0 1,173,382 7. 3Palsanen Leena Maire Sinikka 6,785 131,148 137,933 3.0 266,848 1.7Palsanen Jaakko Antero 1,600 132,140 133,740 2.9 164,140 1.0Aurasmaa Artti Eljas Henrikki 0 114,223 114,223 2.5 114,223 0.7Seflo Ab 0 91,760 91,760 2.0 91,760 0.6Meissa-Capital Oy 0 86,487 86,487 1.9 86,487 0.5Nordea Nordic Small Cap Fund 0 76,286 76,286 1.7 76,286 0.5Lindholm Tuija Elli Annikki 43,122 28,221 71,343 1.6 890,661 5.5Lehtonen Kari Heikki Juhani 0 70,000 70,000 1.5 70,000 0.4Martela Pekka Kalevi 69,274 8 69,282 1.5 1,385,488 8.6Väätäjä Kaj Tapani 0 66,654 66,654 1.5 66,654 0.4Tuuli Markku Juhani 0 54,349 54,349 1.2 54,349 0.3Andersson Minna Sinikka 49,200 0 49,200 1.1 984,000 6.1Taipale Ville Juhani 0 47,934 47,934 1.0 47,934 0.3Lehtonen Kalle Petteri 0 46,032 46,032 1.0 46,032 0.3Martela Mari Kaarina 20,219 9,596 29,815 0.7 413,976 2.6Martela Ille Ilari 13,218 8,368 21,586 0.5 272,728 1.7Other shareholders 57,260 1,989,073 2,046,333 44.7 3,134,273 19.5Total 604,800 3,968,695 457,395 100 16,064,695 100

Share capital

The number of registered Martela Oyj shares on December 31, 2023 was 4,573,495. The shares are divided into A and K shares.

Each A share carries 1 vote and each K share 20 votes in annual general shareholders’ meeting.

Both share series have the same dividend rights.

Martela Oyj’s shares were entered in the book-entry register on February 10, 1995. The counter-book value of each share is EUR

1.53 (1.55). The A shares are quoted on the Small Cap list of Nasdaq Helsinki.

The list includes all shareholders holding over 1% of the shares or votes.

The Board of Directors hold 0.4% of shares and 0.4% of votes.

Martela Oyj owns 1,425 pcs A shares. Out of the shares 379 were purchased at an average price of EUR 10.65 and 1,046 were

transferred from Martela Corporation’s joint account to the treasury shares reserve based on the decision by AGM on March 13, 2018.

The number of treasury shares is equivalent to 0.03% of all shares and 0.01% of all votes.

The Annual General Meeting has in 2023 re-authorised the Board of Directors to decide, for the following year, on share issue, on

acquiring and/or disposing of the company’s shares in deviation from the pre-emptive rights of shareholders.

The AGM approved the Board of Directors’ proposals, detailed in the meeting notice, to authorise the Board to acquire and/or dis-

pose of Martela shares. The authorisation is for a maximum 450,000 of the company’s A series shares.

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

Parent Company Income Statement

(EUR 1 000) Note 1 Jan–31 Dec 2023 1 Jan–31 Dec 2022

Revenue 1 93,038 107 311

Change in inventories of finished goods and work in progress 3 289 -1,525

Production for own use 425 2,382

Other operating income 2 761 14,078

Materials and services 3 -71,696 -82,878

Personnel expenses 4 -12,956 -12,944

Other operating expenses 5 -11,889 -11,974

Depreciation and impairment 6 -2,534 -6,640

Operating profit (-loss) -4,563 7,809

Financial income and expenses 7 -2,931 -595

Profit (-loss) before appropriations and taxes -7,494 7,214

Group contributions 8 2,000 -3,135

Depreciation difference and Group contributions 2,000 -3,135

Income taxes 9 25 -179

Profit (-loss) for the financial year -5,470 3,900

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

(EUR 1 000) Note 31 Dec 2023 31 Dec 2022

ASSETS

NON-CURRENT ASSETS

Intangible assets 10

Intangible rights 1,254 925

Goodwill 520 650

Other long-term expenditure 902 1,597

Advance payments 1,121 724

3,798 3,896

Tangible assets 11

Buildings and structures 12 0

Machinery and equipment 3,011 2,868

Other tangible assets 23 23

3,046 2,892

Investments 12

Share is subsidiaries 9,324 10,907

Receivables from subsidiaries 3,760 3,895

Other shares and participations 7 7

13,091 14,809

CURRENT ASSETS

Inventories

Materials and supplies 6,338 8,459

Work in progress 237 923

Finished goods 1,735 76 0

Advances paid to suppliers 146 35

8,455 10,177

Non-current receivables 13

Loan receivables 532 546

Current receivables 13

Trade receivables 17,416 17,880

Loan receivables 2,000 0

Prepaid expenses 406 1,013

Accrued income 2,329 2,071

22,152 20,964

Cash and cash equivalents 4,771 10,787

55,845 64,071

(EUR 1 000) Note 31 Dec 2023 31 Dec 2022

EQUITY AND LIABILITIES

SHAREHOLDERS' EQUITY

Shareholders' equity 14

Share capital 7,000 7,000

Share premium account 1,116 11,16

Reserve fund 11 11

Invested unrestricted equity fund 995 995

Retained earnings 20,847 17, 3 9 8

Profit for the year -5,470 3,900

Total 24,500 30,421

Compulsory reservations

Other compulsory reservations 269 229

LIABILITIES

Non-current 15

Accrued liabilities and prepaid income 128 108

128 108

Current 16

Loans from financial institutions 1,207 1,624

1,207 1,624

Advances received 289 369

Trade payables 18,070 17,834

Accrued liabilities and prepaid income 7,874 10,039

Other current liabilities 3,508 3,448

30,947 31,689

Liabilities, total 31,076 33,420

55,845 64,071

Parent Company Balance Sheet

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

(EUR 1 000) 1 Jan–31 Dec 2023 1 Jan–31 Dec 2022

CASH FLOWS FROM OPERATING ACTIVITIES

Cash flows from sales 97,236 108,725

Cash flow from other operating income 711 1,158

Payments on operating costs -100,445 -107,988

Net cash from operating activities before financial items and taxes -2,498 1,895

Interests paid and other financial payments -74 -408

Interests received 31 44

Other financial icomes and expenses -151 -247

Taxes paid -157 0

Cash flow due to extraordinary items (net) -351 -611

Net cash from operating activities (A) -2,849 1,284

CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditure on tangible and intangible assets -2,166 -422

Proceeds from sale of tangible and intangible assets 0 15,117

Investments on subsidiary shares 0 -3,002

Loans granted to subsidiaries -132 0

Net Cash used in investing activities (B) -2,298 11,693

CASH FLOWS FROM FINANCING ACTIVITIES

Repayments of current loans -417 -6,900

Paid share issue 0 10

Dividends paid -452 0

Net cash used in financing activities (C) -869 -6,890

CHANGE IN CASH AND CASH EQUIVALENTS (A+B+C) (+ increase, - decrease) -6,016 6,087

Cash and cash equivalent at the beginning of financial year* -10,787 4,700

Cash and cash equivalent at the end of financial year* 4,771 10,787

Parent Company’s Cash Flow Statement

* Includes cash and bank receivables

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

Accounting Policies for the Parent Company

Financial Statements

Martela Oyj’s financial statements have been prepared in accordance with Finnish Accounting Standards

(FAS). Items in the financial statements have been recognised at cost. No assets have been recorded to

appreciated values, unless separately mentioned.

Items denominated in foreign currency:

Transactions denominated in foreign currencies are recognised at the rate of exchange on the date of

their occurrence. Receivables and liabilities in the balance sheet are translated at the average rate on the

balance sheet date. Exchange rate differences arising from trade receivables are recognised in revenue

and those of trade payables in adjustment items for purchases. Exchange rate differences arising from

balance sheet financial items, such as loans, are recognised in exchange rate differences of finance. Share-

holders loans denominated in foreign currency to subsidiaries are considered as investments. Currency

exchange rate differences are hence not recognised in parent company financial statements. Exchange

rate differences related to shareholder loans are recognised in the Consolidated financial statements.

Intangible assets:

Intangible assets are reported in the balance sheet at cost and depreciated according to the plan (by

straight line method). Intangible assets are depreciated according to their estimated useful life in 3–10

years. Goodwill is depreciated by straight-line method in 10 years. Martela AB goodwill depreciation time

has been changed from ten to five years based on the impairment test and the goodwill is fully depre-

ciated.

Tangible assets:

Buildings, machinery, equipment and other tangible assets are reported in the balance sheet at cost. No

depreciation is recognised on revaluations of buildings or on land areas. Otherwise, depreciation is cal-

culated on a straight line basis according to the estimated useful life. The change in accumulated depre-

ciation difference is presented as a separate item in the parent company’s profit and loss statement and

the accumulated depreciation difference as a separate item in the balance sheet.

Depreciation periods for tangible assets:

Buildings and structures____________20–30 years

Machinery and equipment_____________4–8 years

Other tangible assets_________________3–5 years

Impairment testing of long-term assets

Goodwill and investments in subsidiaries are tested for impairment annually regardless if there are any

indications that the amount might be impaired. The recoverable cash amount from the subsidiaries is

based on value in use calculations in the testing. The forecasted cash flows are based on 5-year financial

plans approved by management. The central assumptions of the plans comprise of subsidiary growth-

and profitability assumptions. The cash flows beyond the five-year period is estimated based on 1,5 %

growth.

Inventories:

Inventories are recognised at weighted average purchase prices. The value of inventories is reduced with

respect to nonmarketable items. The cost of goods includes also a share of the overhead costs of pro-

duction.

Income tax:

The company income taxes are recognised on accrual basis and are calculated according to local tax

legislation with adjustments from previous financial years. In the financial statements the company does

not recognise deferred tax receivables or deferred tax liabilities. The amount of the unrecorded deferred

tax asset arising from the loss to be confirmed for the financial year is EUR 496 thousand.

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

Revenue and recognition policies:

Revenue is recognised on accrual basis. Direct taxes, discounts and exchange rate differences are de-

ducted from sales income in calculating revenue.

Research and development:

Research and development expenses are recognised normally in profit or loss in the year they arise. Re-

search and development-related equipment is capitalised in machinery and equipment.

Other operating income and expenses:

Proceeds from sale of assets, public subsidies and other income (e.g. rent income) are recognised in

”Other operating income”. Losses from disposal of assets and other costs are recognised in ”Other op-

erating expenses”.

Operating leases:

All leasing payments are reported as rent expenses.

Share-based payments:

In the effective share-based incentive programme there are three earning periods, which are 2021, 2022

and 2023, and payment are made as a combination of shares and cash.

Treasury shares:

The treasury shares held by the parent company are reported as a deduction from equity.

Other compulsory reservations

The normal warranty for standard Martela produced products is five years. The warranty provision (EUR

337 thousand) has been calculated as an estimate of the five-year warranties for Martela products and

the sale of Martela products.

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

% of revenue 2023 2022

Finland 71 69

Scandinavia 18 19

Other 11 12

Total 100 100

(EUR 1 000) 2023 2022

Salaries, CEO -314 -288

Pension expenses -65 -49

Salaries of Board and directors -162 -152

Salaries of Board and directors and managing director, total -541 -489

Other salaries -10,277 -10,295

Pension expenses -1,756 -1,791

Other salary-related expenses -383 -369

Personnel expenses in the income statement -12,956 -12,944

Fringe benefits -253 -184

Total -13,209 -13,128

Personnel

Personnel on average, workers 49 49

Personnel on average, officials 148 146

Personnel on average, total 197 196

Personnel at the year end 192 194

(EUR 1 000) 2023 2022

Rental income 50 233

Other operating income 77 360

Sale profit of Nummela property 0 12,870

Other operating income, Group 634 615

Total 761 14,078

(EUR 1 000) 2023 2022

Purchasing during the financial year -52,534 -67,384

Change in inventories of materials and suppliers -2,121 453

External services -16,752 -17,473

Materials and supplies, total -71,408 -84,404

(EUR 1 000) 2023 2022

Auditor's fees

Auditing -173 -113

Other services -18 -14

Auditor's fees, total -191 -127

1. Breakdown of revenue by market area 4. Personnel expenses and number of personnel

2. Other operating income

3. Materials and services

5. Other operating expenses

Salaries of Board and directors are not income subject to pension.

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

(EUR 1 000) 2023 2022

Financial income and expenses

Interest income from short-term investments 29 21

Interest income from short-term investments from Group companies 3 23

Foreign exchange gains 549 22

Interest expenses -131 -351

Losses on foreign exchange -448 -166

Other financial expenses -147 -145

Impairment -2,785 0

Total -2,931 -595

(EUR 1 000)

1 Jan–31 Dec 2023

Intangible

rights Goodwill

Other long-term

expenses

Work in

progress

Intangible assets

total

Acquisition cost 1 Jan 5,425 9,200 12,471 724 27,820

Increases 914 0 0 2,166 3,080

Decreases 0 0 0 -1,769 -1,769

Acquisition cost 31 Dec 6,338 9,200 12,471 1,121 29,131

Accumulated depreciation 1 Jan -4,501 -8,550 -10,872 0 -23,924

Depreciation for the year 1 Jan 31 Dec -585 -130 -695 0 -1,409

Accumulated depreciation 31 Dec -5,086 -8,680 -11,567 0 -25,333

Carrying amount 1 Jan 925 650 1,597 724 3,898

Carrying amount 31 Dec 1,254 520 902 1,121 3,798

1 Jan–31 Dec 2022

Intangible

rights Goodwill

Other long-term

expenses

Work in

progress

Intangible assets

total

Acquisition cost 1 Jan 5,404 9,200 12,535 158 27,297

Increases 128 0 104 2,633 2,865

Decreases -108 0 -167 -2,068 -2,343

Acquisition cost 31 Dec 5,425 9,200 12,471 724 27,820

Accumulated depreciation 1 Jan -4,043 -3,680 -10,309 0 -18,033

Depreciation for the year 1 Jan–31 Dec -458 -4,870 -564 0 -5,891

Accumulated depreciation 31 Dec -4,501 -8,550 -10,872 0 -23,924

Carrying amount 1 Jan 1,362 5,520 2,224 158 9,266

Carrying amount 31 Dec 925 650 1,597 724 3,896

(EUR 1 000) 2023 2022

Appropriations

Group contributions, received 2,000 0

Group contributions, given - /received + 0 -3,135

Group contributions total 2,000 -3,135

Appropriations, total 2,000 -3,135

(EUR 1 000) 2023 2022

Income taxes from operations 0 -179

Taxes from previous years 25 0

Total 25 -179

7. Financial income and expenses

10. Intangible assets

8. Depreciations and Group contributions

9. Income Taxes

(EUR 1 000) 2023 2022

Depreciation according to plan

Intangible assets -1,412 -5,893

Tangible assets

Buildings and structures -1 -2

Machinery and equipment -1,121 -744

Depreciation according to plan, total -2,534 -6,640

Depreciations and impairments, total -2,534 -6,640

6. Depreciation and write-down

Based on the goodwill testing write-down (impairment) of Martela AB’s shares EUR 2,785 thousand.

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

(EUR 1 000)

1 Jan–31 Dec 2023 Land areas Buildings

Machinery and

equipment

Other tangible

assets Total

Acquisition cost 1 Jan 0 8,770 15,943 23 24,737

Increases 0 13 1,267 0 1,280

Decreases 0 0 0 0 0

Acquisition cost 31 Dec 0 8,784 17,210 23 26,016

Accumulated depreciation 1 Jan 0 -8,770 -13,074 0 -2,1845

Depreciation for the year 1 Jan–31 Dec 0 -1 -1,124 0 -1,125

Accumulated depreciation 31 Dec 0 -8,771 -14,198 0 -22,970

Carrying amount 1 Jan 0 0 2,869 23 2,892

Carrying amount 31 Dec 0 12 3,011 23 3,046

1 Jan–31 Dec 2022 Land areas Buildings

Machinery and

equipment

Other tangible

assets Total

Acquisition cost 1 Jan 80 10,632 13,435 23 24,170

Increases 0 0 2,508 0 2,508

Acquisition cost 31 Dec 0 8,770 15,943 23 24,737

Accumulated depreciation 1 Jan 0 -8,769 -12,328 0 -21,096

Depreciation for the year 1 Jan–31 Dec 0 -2 -746 0 -748

Accumulated depreciation 31 Dec 0 -8,770 -13,074 0 -21,845

Carrying amount 1 Jan 80 1,864 1,107 23 3,074

Carrying amount 31 Dec 0 0 2,869 23 2,892

11. Tangible assets

Carrying amount of production machinery and equipment in 2023 was EUR 28 thousand (58 in 2022).

Nummela property has been sold 3 August 2022.

Shareholder loan receivable Martela AB EUR 3,760 thousand.

Write down Martela AB shares EUR 2,785 thousand.

(EUR 1 000)

1 Jan–31 Dec 2023 Subsidiary shares

Other shares and

participations

Shareholder loan

receivables Total

Balance sheet value at beginning of

year

10,907 7 3,895 14,809

Increases 1,202 0 0 1,202

Decreases / Impairment -2,785 0 -135 -2,920

Balance sheet value at end of year 9,324 7 3, 760 13,091

1 Jan–31 Dec 2022 Subsidiary shares

Other shares and

participations

Shareholder loan

receivables Total

Balance sheet value at beginning of

year

7,405 7 4,396 11,808

Increases 3,501 0 500 4,001

Decreases / Impairment 0 0 -1,001 -1,001

Balance sheet value at end of year 10,907 7 3,895 14,809

Subsidiary shares

Parent

company’s

holding, %

Of total

votes, %

Number of

Par value

(1,000)

Book value

(EUR 1,000)

Kidex Oy Finland 100 100 200 2,208 EUR 2,208

Muuttopalvelu Grundell Oy Finland 100 100 100 8 EUR 4,440

Martela AB, Nässjö Sweden 100 100 50,000 5,000 SEK 426

Aski avvecklingsbolag AB, Malmö Sweden 100 100 12,500 1,250 SEK 48

Martela AS, Oslo Norway 100 100 200 200 NOK 2,066

Martela Sp.z o.o., Varsova Poland 100 100 3,483 3,483 PLN 135

Tehokaluste Oy Finland 100 100 1 0 EUR 0

Total 9,324

Other shares and participations 7

12. Investments

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Martela 2023 CEO’s review Operating environment Financial statements Governance

(EUR 1 000) 2023 2022

Non-current receivables

Loan receivables 532 546

Current receivables

Receivables from Group companies

Trade receivables 1,756 2,665

Loan receivables 2,000 0

Prepaid expenses 406 1,013

Receivables from others

Trade receivables 15,660 15,215

Accrued income and prepaid expenses 2,329 2,071

Current receivables, total 22,152 20,964

Accrued income and prepaid expenses, main items 2023 2022

Related to personnel expenses 92 99

Related to payments in advance 1,422 613

Other accrued income or prepaid expenses 446 280

Periodization of revenue 369 1,079

Accrued income and prepaid expenses total 2,329 2,071

Related party loan 2023 2022

Loan 1 Jan 256 223

Increases 0 33

Decreases -118 0

Loan 31 Dec 138 256

13. Receivables

Distribution of shares 31 Dec 2023

Number of

shares Total EUR

% of

share capital Votes % of Votes

K-shares (20 votes/share) 604,800 925,682 13 12,096,000 75

A-shares (1 vote/share) 3,968,695 6,074,318 87 3,968,695 25

Total 4,573,495 7,000,000 100 16,064,695 100

Treasury shares 1,425

Number of shares outstanding 4,572,070

Shareholders' equity 2023 2022

Restricted equity

Share capital 1 Jan and 31 Dec 7,000 7,000

Share premium account 1 Jan and 31 Dec 1,116 1,116

Unrestricted equity

Reserve fund 1 Jan and 31 Dec 11 11

Invested unrestricted equity fund 1 Jan 995 962

Share issue 0 33

Invested unrestricted equity fund 31 Dec 995 995

Retained earnings 1 Jan 21,298 17,398

Profit (-loss) for the year -5,470 3,900

Dividends paid -452 0

Retained earnings 31 Dec 15,377 21,298

Shareholders' equity total 24,500 30,421

14. Changes in shareholders’ equity

The distributable equity of the parent company is EUR 16,372 thousand in 2023.

A total of 11,657 of Martela shares held by the company have been conveyed without consideration to the 34 key individuals

participating in the Performance-based Matching Share Plan 2021—2023, announced on March 23, 2021. Conveyance of the

shares relates to the earning period 2021. Following the directed share issue on March 23, 2022, the number of treasury shares

stands at 1,425 shares

Treasury shares held by Martela Oyj are reported as a deduction from retained earnings. Martela Oyj owns 1,425 A shares

(1,425 in 2022). Out of the shares 379 were purchased at an average price of EUR 10.65 and 1,046 were transferred from Marte-

la Corporation’s joint account to the treasury shares reserve based on the decision by AGM on March 13, 2018. Market value of

treasury shares on December 31, 2023 was EUR 1.28 per share (2.45), a total of EUR 1.8 thousand (3.5 thousand in 2022)

Company has executed right issue (March 17, 2022) in which 11,574 pcs new A shares has been subscribed. Issue price of new

shares, in total EUR 33 thousand, has been booked in invested unrestricted equity fund.

Company has decided on a paid directed share issue (March 29, 2023) in which 53,881 of series A shares have been sub-

scribed without consideration. The shares issued to the company have been used to pay incentives according to the company’s

incentive plan.

The Board of Directors has decided to grant an interest-bearing loan to finance the acquisition of the company’s shares.

The maximum amount of the loan is 70 per cent of the investment in shares. The loan will be repaid in full on 31 December

2025, at the latest. The interest rate is 12 months euribor but not below 0%.

The loan granted to the board of directors is EUR 138 thousand (256 thousand in 2022), of which the CEO loan EUR 70

thousand and others EUR 68 thousand (153 thousand in 2022).

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

(EUR 1 000) 2023 2022

Accrued expenses 128 108

Total 128 108

Accrued liabilities

Related to the personnel expenses 92 100

(EUR 1 000) 2023 2022

Current liabilities

Liabilities to Group companies

Trade payables to Group companies 11,028 10,219

Accrued liabilities to Group companies 1,768 1,622

Other current liabilities Group companies 3,283 3,635

Total 16,079 15,476

Other current liabilities

Loans from financial institutions 1,207 1,624

Advances received 289 369

Trade payables 7,042 7,614

Other current liabilities 3,508 3,448

Accrued liabilities 2,824 4,782

Total 14,869 17,837

Current liabilities, total 30,947 33,313

Essential items of accrued liabilities 2023 2022

Personnel expenses 1,819 1,871

Royalties 175 176

Taxes from accounting period 0 182

Residual expenses 829 2,553

Accrued liabilities, total 2,824 4,782

15. Non-current liabilities 16. Current liabilities

Current liabilities are specified in notes because items are combined in Balance sheet.

The company has purchased electricity derivatives, of which long-term liabilities 2023 amount to EUR 36,5 thousand

(EUR 8 thousand) and short-term liabilities amount to EUR 15 thousand (EUR 69,5 thousand)..

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

(EUR 1 000) 2023 2022

Debts secured by mortgages

Factoring loan 1,207 1,624

Corporate mortgages 7,191 7,191

Shares pledged 7,191 7,191

Other pledges

Guarantees as security for rents 854 892

Total 854 892

Other liabilities

Residual value liabilities related to the service business 2,715 1,809

Total 2,715 1,809

Leasing commitments

Falling due within 12 months 764 692

Falling due after 12 months 1,085 642

Total 1,849 1,334

Rent commitments 16,970 17,927

17. Pledges granted and contingent liabilities

Company has signed new premises lease contract on May 24, 2021 which estimated starting date is April 1, 2022.

Contract is valid at least until March 31, 2029, and the monthly rent is EUR 37,823.

Company has signed Nummela property sale and leaseback contract on August 3, 2022.

Contract is valid untill April 31, 2033, and the monthly rent is EUR 124,082.

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

Auditor’s report

(translation of the Finnish original)

To the Annual General Meeting of Martela Oyj

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Martela Oyj (business identity code 0114891-2) for the year

ended 31 December, 2023. The financial statements comprise the consolidated balance sheet, statement

of comprehensive income, statement of changes in equity, statement of cash flows and notes, including

material accounting policy information, as well as the parent company’s balance sheet, income statement,

statement of cash flows and notes.

In our opinion

• the consolidated financial statements give a true and fair view of the group’s financial position as

well as its financial performance and its cash flows in accordance with IFRS Accounting Standards

as adopted by the EU.

• the financial statements give a true and fair view of the parent company’s financial performance

and financial position in accordance with the laws and regulations governing the preparation of fi-

nancial statements in Finland and comply with statutory requirements.

Our opinion is consistent with the additional report submitted to the Audit Committee.

Basis for Opinion

We conducted our audit in accordance with good auditing practice in Finland. Our responsibilities under

good auditing practice are further described in the Auditor’s Responsibilities for the Audit of Financial

Statements section of our report.

We are independent of the parent company and of the group companies in accordance with the eth-

ical requirements that are applicable in Finland and are relevant to our audit, and we have fulfilled our

other ethical responsibilities in accordance with these requirements.

In our best knowledge and understanding, the non-audit services that we have provided to the parent

company and group companies are in compliance with laws and regulations applicable in Finland regard-

ing these services, and we have not provided any prohibited non-audit services referred to in Article 5(1)

of regulation (EU) 537/2014. The non-audit services that we have provided have been disclosed in note

4. to the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis

for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our

audit of the financial statements of the current period. These matters were addressed in the context of

our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not pro-

vide a separate opinion on these matters.

We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the

financial statements section of our report, including in relation to these matters. Accordingly, our audit

included the performance of procedures designed to respond to our assessment of the risks of material

misstatement of the financial statements. The results of our audit procedures, including the procedures

performed to address the matters below, provide the basis for our audit opinion on the accompanying

financial statements.

We have also addressed the risk of management override of internal controls. This includes consider-

ation of whether there was evidence of management bias that represented a risk of material misstate-

ment due to fraud.

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

Key Audit Matter How our audit addressed the Key Audit Matter

REVENUE RECOGNITION

We refer to the Group’s accounting policies and note 1

The Group’s revenue includes mainly sale of furniture and, to

a lesser extent, sale of services and

leasing of furniture. In furniture deliveries the Group fulfills

its contractual performance obligations at a point in time

and the revenue is recognized when control is transferred to

a customer.

Revenue recognition is considered as a key audit matter

because revenues are a key performance measure which

could create an incentive for revenue to be recognized

prematurely. Revenue recognition was also determined to be

a significant risk of material misstatement referred to in EU

Regulation No 537/2014, point (c) of Article 10(2).

Our audit procedures to address the risk of material mis-

statement in respect of revenue recognition included among

others:

• We assessed the appropriateness of the group’s

accounting policies over revenue recognition compared to

IFRS standards.

• We assessed the group’s processes and controls over

timing of revenue recognition.

• We tested the correct timing of revenue recognition by

using analytical procedures and transaction level testing.

Our procedures included data analytics, obtaining

external confirmations and transaction level testing

before and after the balance sheet date as well as

inspection of credit notes prepared after the balance

sheet date.

• We considered the appropriateness of the group’s

disclosures in respect of revenues

VALUATION OF SUBSIDIARY SHARES AND RECEIVABLE IN

PARENT COMPANY’S BALANCE SHEET

We refer to parent company’s accounting policies and notes

6, 10 and 12

As of balance sheet date December 31, 2023 the subsidiary

shares and receivable amounted to 13,1 M€ corresponding to

23 % of parent company’s total assets and 53 % of parent

company’s equity.

The management of the parent company prepares annually

impairment calculation for balance sheet value of the invest-

ments based on their value in use. These calculations include

significant management judgements, like forecasted revenue

growth, EBITDA and discount rate used in discounting cash

flows. Based on the calculation a write down amounting to x

M€ was recorded to Swedish subsidiary shares in the finan-

cial statements 2023.

This matter was also determined to be a significant risk

of material misstatement referred to in EU Regulation No

537/2014, point (c) of Article 10(2).

Our audit procedures to address the risk of material mis-

statement in respect of valuation of subsidiary shares and

receivable included among others:

• We assessed the basis and appropriateness of the

forecasts used in the impairment calculations, like

revenue growth, EBITDA and discount rate.

• We tested the mathematical accuracy of the calculations.

• We involved our valuation specialists to assist us in

evaluating the methodologies and assumptions in

relation to market and industry information.

Responsibilities of the Board of Directors and the Managing Director for

the Financial Statements

The Board of Directors and the Managing Director are responsible for the preparation of consolidated

financial statements that give a true and fair view in accordance with International Financial Reporting

Standards (IFRS) as adopted by the EU, and of financial statements that give a true and fair view in

accordance with the laws and regulations governing the preparation of financial statements in Finland

and comply with statutory requirements. The Board of Directors and the Managing Director are also re-

sponsible 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 responsi-

ble for assessing the parent company’s and the group’s ability to continue as going concern, disclosing,

as applicable, matters relating to going concern and using the going concern basis of accounting. The

financial statements are prepared using the going concern basis of accounting unless there is an inten-

tion to liquidate the parent company or the group or cease operations, or there is no realistic alternative

but to do so.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance on whether the financial statements as a whole are

free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that in-

cludes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an

audit conducted in accordance with good auditing practice will always detect a material misstatement

when it exists. Misstatements can arise from fraud or error and are considered material if, individually or

in aggregate, they could reasonably be expected to influence the economic decisions of users taken on

the basis of the financial statements.

As part of an audit in accordance with good auditing practice, we exercise professional judgment and

maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to

fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evi-

dence 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.

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

• Obtain an understanding of internal control relevant to the audit in order to design audit proce-

dures 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 es-

timates 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 un-

certainty exists related to events or conditions that may cast significant doubt on the parent compa-

ny’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 fi-

nancial 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 rel-

evant ethical requirements regarding independence, and communicate with them all relationships and

other matters that may reasonably be thought to bear on our independence, and where applicable, relat-

ed 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 regula-

tion precludes public disclosure about the matter or when, in extremely rare circumstances, we determine

that a matter should not be communicated in our report because the adverse consequences of doing so

would reasonably be expected to outweigh the public interest benefits of such communication.

Other Reporting Requirements

INFORMATION ON OUR AUDIT ENGAGEMENT

We were first appointed as auditors by the Annual General Meeting on March 12, 2020, and our appointment

represents a total period of uninterrupted engagement of four years.

OTHER INFORMATION

The Board of Directors and the Managing Director are responsible for the other information. The other

information comprises the report of the Board of Directors and the information included in the Annual

Report but does not include the financial statements and our auditor’s report thereon. We have obtained

the report of the Board of Directors prior to the date of this auditor’s report, and the Annual Report is

expected to be made available to us after that date.

Our opinion on the financial statements does not cover the other information.

In connection with our audit of the financial statements, our responsibility is to read the other infor-

mation identified above and, in doing so, consider whether the other information is materially inconsist-

ent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be

materially misstated. With respect to report of the Board of Directors, our responsibility also includes

considering whether the report of the Board of Directors has been prepared in accordance with the ap-

plicable laws and regulations.

In our opinion, the information in the report of the Board of Directors is consistent with the informa-

tion in the financial statements and the report of the Board of Directors has been prepared in accord-

ance with the applicable laws and regulations.

If, based on the work we have performed on the other information that we obtained prior to the date

of this auditor’s report, we conclude that there is a material misstatement of this other information, we

are required to report that fact. We have nothing to report in this regard.

Helsinki 13.2.2024

Ernst & Young Oy

Authorized Public Accountant Firm

Osmo Valovirta, Authorized Public Accountant

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

Corporate governance statement 2023

Governance

Martela Corporation is a Finnish limited liability company that is governed in its decision-making and

management by Finnish legislation, especially the Finnish Limited Liability Companies Act, by other reg-

ulations concerning public listed companies, and by its Articles of Association.

The company complies with the NASDAQ OMX Guidelines for Insiders and the Finnish Corporate

Governance Code 2020 published by the Securities Market Association. Corporate Governance code is

available at https://cgfinland.fi/en/corporate-governance-code/. Martela complies with all of the Code’s

guidelines.

Organisation

The Group is managed according to both its operational organisation and legal Group organisation. The

Group’s management is based primarily on an operational matrix organisation.

In 2023 The Group was organised in units as:

Sales and marketing, which is responsible for customer relationships, sales, workplace services and

marketing.

Operations, which is responsible for after-sales activities, including sourcing, production, removal ser-

vices, product development, quality assurance, the research laboratory, planning of material flows and

logistics and as well as IT matters.

The Brand and Design, which is responsible for brand and product portfolio management.

Design Studio, which is responsible for the planning and development of work and learning environ-

ment projects.

Human resources and sustainability, which is responsible for the human resource administration, sus-

tainability management and internal communication.

Finance, which is responsible for the Group’s financial planning and reporting, investor relations as

well as legal matters.

Annual general meeting

The General Meeting is the company’s supreme decision-making body. The Annual General Meeting must

be held within six months of the end of the financial year. The financial statements, Board of Directors’

report and the auditor’s report are presented at the Annual General Meeting. The Meeting decides on

the approval of the financial statements, use of the profit shown on the balance sheet, discharging the

members of the Board of Directors and the CEO from liability, the fees of the Board members and au-

ditors and the number of members on the Board. The General Meeting also elects the Directors of the

Board and the auditor. Other matters on the agenda of the General Meeting are mentioned in the notice

of meeting.

Martela has two share series (‘K shares’ and ‘A shares’), with each K share entitling its holder to 20 votes

at a General Meeting and each A share entitling its holder to one vote. The redeeming of K shares is re-

ferred to in the Articles of Association. Private owners of K shares have a valid shareholder agreement

that restricts the sale of these shares to other than existing holders of K shares. The company’s total

share capital on 31 December 2023 was EUR 7 million.

Board of directors

The Board of Directors, elected by the Annual General Meeting each year, is responsible for the manage-

ment and proper arrangement of the operations of the company in compliance with the Limited Liability

Companies Act and the Articles of Association.

Preparations concerning the composition of the Board of Directors are carried out by the principal

shareholders, who propose Board candidates to the Annual General Meeting based on their preparato-

ry work. In accordance with the Articles of Association, the Board of Directors consists of no less than

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Martela 2023 CEO’s review Operating environment Financial statements Governance

five and no more than nine members. There may be no more than two deputy members. The Board of

Directors elects from among its members a Chairman and Vice Chairman to serve until the end of the

next Annual General Meeting.

According to the principles of the Board diversity, the members of the Board of Directors must have

sufficient and complementary experience and expertise in Martela’s most important business sectors

and markets.

The Board must have both sexes and a diverse age distribution. Board members should have suffi-

ciently diverse professional and educational background, strategy development and implementation skills,

economic expertise, experience in managing companies at various stages of development, innovation,

decision-making and questioning skills, and sufficient time for working in the board. The achievement

and development of diversity in reaching the goals is assessed in the Board Self-Evaluation Discussion

The Board has confirmed a Charter defining the duties of the Board, meeting practices, the matters

to be dealt with at meetings, the targets set by the Board for its operations, a self-evaluation of these

operations, and the Board’s committees.

In addition to the duties mentioned in the Limited Liability Companies Act and the Articles of Asso-

ciation, the Board of Directors is responsible for:

• deciding on the Group strategy

• deciding on the Group structure

• approving financial statements, interim financial statements and interim reports

• approving the Group’s operating plans, budgets, major investments and donations

• deciding on business expansion and reduction, acquisitions and divestments

• deciding on the Risk management policy and principles of the internal control

• deciding on dividend policy and make a proposal to the Annual General Meeting on the amount of

dividend to be paid

• deciding on the Treasury policy

• approving and dismissing the CEO and to decide on his salary

• authorising the Remuneration Committee to decide on the appointments and remuneration of the

members of the Group Management Team and the general principles of the Group’s performance

bonus scheme

• deciding on Management’s share-based incentive schemes

• regularly approving and revising corporate governance principles and internal policies

• annually approving the company’s internal control and risk management principles and addressing

the most significant risks and uncertainties associated with the company’s operations

• appointing board committees and deciding on their reporting

• accepting stock exchange releases related to the Board’s decisions

• confirming the principles of the Board diversity

• the other statutory provisions of the Limited Liability Companies Act, the Corporate Governance

Code or elsewhere

The Board of Directors consisted of following members:

• Johan Mild, chairman of the Board, born 1974, M.Sc., Accounting, CEO of Remeo Oy.

Does not own any company shares

• Hanna Mattila, born 1972, D.Sc., Tech., Associate Professor Aalborg University,

owns 1 600 Martela Oyj K -shares

• Eero Martela, born 1984, M.Sc., Tech., Managing partner, Finland, Columbia Road Oy,

owns 6 710 Martela Oyj A-shares and 1 073 K -shares

• Jan Mattsson, born 1966 M.Sc., Architecture, CEO and partner Tengbom Ab.

owns 6 759 Martela Oyj A-shares.

• Katariina Mellström, born 1962, M.Sc., Economy, Secretary General, Global Child Forum,

Does not own any company shares

• Anni Vepsäläinen, born 1963, M.Sc., Tech., CEO of Suomen Messut Osuuskunta,

owns 2 000 Martela Oyj A-shares

The Board convened eight times during the financial year. The average attendance of the Board mem-

bers was 100 per cent.

The Board reviews its own activities annually, either by self-assessment or assessment made by an

external consultant. In both cases a summary of the evaluations is jointly discussed at a Board meeting.

The Board has evaluated the independence of its members and determined that Hanna Mattila, Eero

Martela, Jan Mattsson, Katarina Mellström, Johan Mild and Anni Vepsäläinen are independent of the

company. Of the company’s largest share¬holders Jan Mattsson, Katarina Mellström, Johan Mild and Anni

Vepsäläinen are independent members of the Board.

The Board has formed from among its members a Human Resource and Rewarding Committee and

an Audit Committee, which both have written Charters.

According to the Charter, the key duties of the Human Resource and Rewarding Committee include:

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

• deciding, with authorisation from the Board, on the remuneration issues and annual performance

bonuses of the CEO and the Group Management Team as well as general principles for the Group’s

performance bonus scheme for the entire personnel

• preparing for the Board the structure, criteria and target levels of the long-term incentive plans for

key personnel

• processing the appointments of the CEO and Group Management Team members, deputy arrange-

ments and successor issues.

• The Compensation Committee also handles remuneration statements in connection with the finan-

cial statements.

The Board’s Human Resource and Rewarding Committee comprises Johan Mild, Jan Mattsson and Kata-

rina Mellström.

The Committee convened three times during the financial year. The average attendance of the Com-

mittee members was 100 per cent.

According to the Charter, the key duties of the Audit Committee include:

• monitoring the financial reporting and interim report processes,

• supervising the financial reporting process,

• monitoring the company’s financial condition,

• monitoring the adequacy and effectiveness of the company’s internal control and risk management

systems,

• processing the description of the internal control and risk management systems related to the fi-

nancial reporting process included in the Corporate Governance Statement,

• monitoring the statutory audit of the financial statements and the consolidated financial state-

ments,

• observing, together with the auditors and the management of the company, the findings of the au-

diting carried out and the possible difficulties in carrying out the audit,

• assessing the independence of the auditor or the audit firm, and in particular the provision of ancil-

lary services to the company,

• evaluating the fees charged on auditing and ancillary services and their criteria,

• preparing a proposal for a decision on the election of the auditor,

• assessing the compliance process with laws and regulations and respect for ethical principles in

the organisation,

• conducting reports on the company’s most significant legal and regulatory procedures .

The Board’s Audit Committee comprises Anni Vepsäläinen, Eero Martela and Hanna Mattila.

The Committee convened four times during the financial year. The average attendance of the Commit-

tee members was 100 per cent.

The secretary of the Board of Directors is a lawyer from the same company from where other legal ser-

vices is provided to the Group. The Chairman of the Board is in direct contact with the CFO as necessary.

CEO

The Board appoints Martela Corporation’s CEO and decides on the terms and conditions of his service

relationship, which are defined in a written CEO’s service contract. The CEO is responsible for the oper-

ational management and supervision of the parent company and the Group according to the guidelines

set by the Board. Company CEO is Ville Taipale, born 1971, M.Sc Tech., owns 47 934 Martela Oyj A-shares.

Group management team

The Board of Directors and the CEO appoints the members of the Group Management Team. The CEO

of Martela Corporation acts as the Chairman of the Group Management Team. The directors responsible

for the units and processes are also represented in the Group Management Team. The Group Manage-

ment Team drafts and reviews strategies, budgets and investment proposals and monitors the financial

situation of the Group and its business areas and processes and the attainment of operational targets

and plans. The Group Management Team meets once a month.

Group Management Team consisted of following members led by Group CEO:

• Kimmo Hakkala responsible for Sales & Marketing -unit (does not own any Martela Oyj shares)

• Kalle Sulkanen responsible for Operations -unit (owns 13 555 Martela Oyj A-shares)

• Kari Leino responsible for Brand & Design -unit (owns 6 544 Martela Oyj A- shares)

• Eeva Terävä responsible for Design Studio -unit (owns 23 016 Martela Oyj A-shares)

• Suvi-Maarit Kario responsible for Human resources and sustainability -unit

(does not own any Martela Oyj shares)

• Henri Berg responsible for Financial administration -unit (does not own any Martela Oyj shares)

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Martela 2023 CEO’s review Operating environment Financial statements Governance

Financial reporting in the group

Martela Corporation’s Board of Directors is provided regularly reports on the financial performance and

forecasts of the Group. The reports and forecasts are also presented by the CEO and CFO at Board meet-

ings, where they are reviewed.

The Group Management Team meets at least once a month to evaluate the financial performance,

outlook and risks of the Group.

Auditing

The auditing of Group companies is carried out in accordance with the valid laws in each country and

each company’s Articles of Association. The principally responsible auditor of the parent company co-or-

dinates the auditing of the Group’s subsidiaries together with the Group’s CEO and CFO. The auditors

of Martela Corporation and the Group are the authorised public accountants Ernst & Young, with Osmo

Valovirta, Authorised Public Accountant, as the principally responsible auditor. All the auditors of the

Group’s companies are in the Ernst & Young chain.

Internal control

The reliability of financial reporting is one of the principal objectives of Martela Corporation’s internal

control.

The CEO is responsible for the operational management and supervision of the Group according to

the guidelines set by the Board.

Martela’s strategy is updated and its targets defined on an annual basis. Strategic planning forms the

basis of all planning at Martela and is carried out on a rolling basis for the forthcoming period of 2–3

years. Target setting is an internal control prerequisite because the targets of the companies, business

areas, functions and supervisors are derived from Group-level targets. For each business area, specific

financial and non-financial targets are set in accordance with the business plan, and their attainment is

monitored regularly through comprehensive reporting to executive management, for example.

The CFO has overall responsibility for financial reporting in the Group. Reporting to executive man-

agement is carried out separately and independently of business operations.

Controllers and financial managers (controller function) are responsible for Group, company and oth-

er financial reporting. At Martela, financial reporting is carried out in compliance with guidelines, laws

and regulations in a consistent manner throughout the Group. The reliability of financial reporting de-

pends on the appropriateness and reliability of financial and reporting processes and on the control

measures taken to ensure these. During recent years, the internal control has focused among others on

sales, quote to cash processes, on management of working capital, on ERP -system implementation, on

development of the receivables collection procedures as well as on leasing and service contract man-

agement and processes.

The CFO is responsible for the maintenance and development of reporting processes and defining

and implementing control measures. Control measures include guidelines, matching, management reviews

and reporting on deviations. The CFO monitors compliance with defined processes and controls. He also

monitors the reliability of financial reporting.

The Board of Directors approves Martela’s strategy and annual operating plans. It also approves the

principles and rules of risk management, and monitors on a regular basis the effectiveness and sufficien-

cy of the internal control and risk management. Furthermore, the Board is responsible for the internal

control of the financial reporting process.

Auditors and other external controllers assess the control measures in terms of the reliability of fi-

nancial reporting.

Risk management and internal audit

Martela’s Board of Directors has confirmed the principles of risk management. The purpose of risk

management is to identify, monitor and manage risks that could pose a threat to business and to the

achievement of business objectives. Group management has supreme operational responsibility for risk

management policy.

In the Group, risks are analysed and decisions are made to manage these risks as a part of the reg-

ular monitoring carried out by the Board and the management teams as described above. Risks are also

evaluated when planning and making decisions on significant projects and investments. Risk manage-

ment is integrated with the strategy process as a separate stage of analysis and as part of the process

of drawing up annual action plans. There is no separate risk management organisation, but the associ-

ated responsibilities are assigned in line with the rest of the business operations and organisation. The

company’s Board of Directors has included an annual review of risk management in its schedule of work.

Taking into consideration the nature and scope of Martela’s business, the company has not consid-

ered it appropriate to form a separate internal audit function. The internal control is carried out in the

form of controls in business processes, and the company will either make its own or, if necessary, con-

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

duct separate internal audit reports with external experts.

Risks

In accordance with Martela’s risk management model, risks are classified and prepared for in different

ways. The manufacture of Martela’s products is largely based on the company performing the final as-

sembly and using subcontractors for components. Production control is based on orders placed by cus-

tomers, which means that there is no need for any large-scale warehousing. Risks of damage are covered

by appropriate insurance policies, and these provide comprehensive coverage for property, business in-

terruption, supplier interruption loss and loss liability risks. Martela uses the services of an external in-

surance broker to manage insurance matters. The services of an external partner are also used in legal

matters. The responsibility perspectives regarding the supply chain are discussed as part of the annual

responsibility report. Finance risks are discussed in the notes to the financial statements.

Management, remuneration, benefits and incentive plans

Information on management remuneration and the impact on the result for the financial year can be

found in the notes to the financial statements and in the remuneration report, which can be found on

the company’s website.

Principles regarding related party transactions

Martela Oyj follows the recommendations of the Corporate Governance Code 2020 issued by the Securi-

ties Market Association. The Company’s related party transactions policy is adopted by the board of di-

rectors that also has the monitoring and supervision responsibility regarding related party transactions.

The up-to-datedness of the related party list is monitored at least on an annual basis. The Chief Fi-

nancial Officer of the Company is responsible for determining the related parties of the Company and

maintaining the related party list.

Insider administration

Martela complies with the Guidelines for Insiders issued by Nasdaq Helsinki Ltd. In addition, Martela’s

Board of Directors has confirmed specific insider guidelines for the company to complement Nasdaq

Helsinki Ltd’s Guidelines for Insiders.

The company has defined as permanent insiders persons who work at Martela Group and who have

access to all inside information concerning Martela due to their position or task. The information in the

permanent insider list is not public. In addition to the permanent insider list, non-public project-specific

insider lists shall be established, if necessary, as defined in Nasdaq Helsinki Ltd’s Guidelines for Insid-

ers. Permanent insiders are not entered into the project-specific insider lists.

The persons discharging managerial responsibilities, other permanent insiders and persons partici-

pating in preparing of financial reports of the company must not trade in Martela’s financial instruments

prior to the publication of an interim report and financial statement release of the company. The length

of the closed period is 30 days at Martela.

Martela discloses inside information that directly concerns Martela or its financial instrument as

soon as possible, unless the conditions for delay of disclosure of inside information are met. Martela

has defined an internal process in order to evaluate and disclose the inside information and to monitor

and evaluate the duration and the conditions for the delay. Martela continuously monitors the situation

to ensure that the conditions for the delay are met and the company has the ability to publicly disclose

the information immediately in the case of a data leakage.

In accordance with MAR, Martela has an obligation to disclose transactions with Martela’s financial

instruments conducted by persons discharging managerial responsibilities at the company and persons

closely associated with them.

The obligation to disclose transactions applies to the following persons discharging managerial re-

sponsibilities at Martela:

• Members of Martela’s Board of Directors and CEO, and

• Members of Martela Group’s Management Team.

Transactions between companies in the Martela Group conducted by persons discharging managerial

responsibilities at Martela and persons closely associated with them are monitored. During 2023, regard-

ing the current management team, the CEO, VP Operations unit, VP Brand & Design unit and VP of the

Design Studio unit received share rewards based on the share-based incentive plan for key employees.

In 2023 there were no other material related party transactions.

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

Board of Directors

Eero Martela

BOARD MEMBER

Born in 1984, M.Sc. (Tech.)

Member of the Board since 2015.

Other key duties:

Managing partner, Finland, Columbia Road Oy

Owns 6,710 Martela Oyj A shares and

1,073 K shares.

Hanna Mattila

BOARD MEMBER

Born in 1972, D.Sc. (Tech.)

Member of the Board since 2022.

Other key duties:

Associate Professor, Aalborg University, Denmark

Visiting Professor, Aalto University, Finland

Owns 1,600 Martela Oyj K shares.

Johan Mild

CHAIRMAN OF THE BOARD

Born in 1974, M.Sc. (Accounting)

Member of the Board since 2020,

Chairman of the Board since 2021.

Other key duties:

CEO, Remeo Oy

Member of the Board, The recycling

Industries of Finland (Kierrätysteol-

lisuus ry)

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

Anni Vepsäläinen

BOARD MEMBER

Born in 1963, M.Sc. (Tech.)

Member of the Board since 2016.

Other key duties:

Member of the Board, Cinia Oy

Managing Director, Finnish Fair Corporation

Chairman of the Board, Helsinki Region Chamber

of Commerce

Member of the Board, Finnish Chamber of

Commerce

Owns 2,000 Martela Oyj A shares.

Jan Mattsson

BOARD MEMBER

Born in 1966, M.Sc. (Architecture),

KHT Royal Institute of Technology

Member of the Board since 2019.

Other key duties:

CEO and partner, Tengbomgruppen AB

Chairman of the Board, Tengbom Oy

Owns 6,759 Martela Oyj A shares.

Katarina Mellström

BOARD MEMBER

Born in 1962, M.Sc. (Econ.)

Member of the Board since 2018.

Other key duties:

Secretary General, Global Child Forum

Member of the Board, Vectura AB

MARTELA ANNUAL REPORT 2023

Martela 2023 CEO’s review Operating environment Financial statements Governance

Management

team

Henri Berg

CHIEF FINANCIAL OFFICER (CFO)

Born: 1970

Education: M.Sc., (Econ.)

Area of reponsibility: Group Finance,

Investor Relations and Legal.

Joined the company and a member of

the management team since 2023.

Previous professional experience:

A-Insinöörit Oy AG, CFO, 2021–2023

Sato Oyj, Head of Financial services, 2017–2021

Componenta Oyj, several managerial positions

in financial administration, 2008–2017

Stora Enso Oyj, several managerial and specialist

positions in financial administration, 1998–2008

Does not own any company shares.

Ville Taipale

CHIEF EXECUTIVE OFFICER (CEO)

Born: 1971

Education: M.Sc.

Joined the company and has been a member of

the management team since 2018, the CEO since

2021.

Previous professional experience:

Martela Oyj, Vice President, Operations,

2018–2021

Patria Land Systems Oy, Vice President,

Sourcing and Logistics, 2015–2018

Componenta Oyj, Vice President,

Sourcing and Procurement, 2010–2015

Fiskars Oyj, Director, Sourcing Unit, 2007–2010

Nokia Oyj, Supply chain management and

development positions, 1998–2007

VTT, Researcher, 1997–1998

Owns 47,934 Martela Oyj A shares.

Eeva Terävä

VP, DESIGN STUDIO

Born: 1983

Education: M.Sc. (Regional Science) & Bachelor of Culture

and Arts (Interior Architecture)

Area of responsibility: Design & Development Services of

Work and Learning Environments. Joined the company

in 2016, a member of the management team since 2021.

Previous professional experience:

Martela Oyj, Head of Workplace development, 2018–2021

Martela Oyj, Workplace Specialist, 2016–2018

Ramboll Management Consulting Oy, different roles in research

and development projects, and project management, 2009–2016

Owns 23,016 Martela Oyj A shares.

MARTELA ANNUAL REPORT 2023

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Suvi-Maarit Kario

VP, HR & SUSTAINABILITY

Born: 1968

Education: M.Soc.Sc.

Area of responsibility: HR, Sustainability

and internal communication.

Joined the company and a member of

the management team since 2023.

Previous professional experience:

Puro Tekstiilihuoltopalvelut Oy, 2020–2023

HKScan Oyj, 2018–2020

GS-Hydro Oy, 2012–2017

Alstom Finland Oy, 2010–2012

Destia Oy, 2007–2010

Finnlines Oyj, 1997–2007

Does not own any company shares.

Kimmo Hakkala

VP, SALES AND MARKETING

Born: 1971

Education: M.Sc. (Agric.)

Area of responsibility: Group Customers, Sales and Marketing

in Finland, Sweden & Norway

and international dealer Network.

Joined the company and a member of the management

team since 2023.

Previous professional experience:

Berner Oy, Business Unit Director, 2013–2022

Fiskars Finland Oy Ab, Sales and Marketing Director, 2007–2013

Kemira Grow-How Oyj, Business and Marketing Manager,

2001–2007 Kesko Oyj, Product Manager, 1996–2001

Does not own any company shares.

Kari Leino

VP, BRAND & DESIGN

Born: 1965

Education: IDBMpro

Area of responsibility: Group Marketing and

Product Design.

Joined the company in 1987, a member of

the management team since 2021.

Previous professional experience:

Martela Oyj, Product & Design Director, 2016–2021

Martela Oyj, Offering Manager, 2002–2016

P. O. Korhonen Oy, Sales & Marketing, 1997–2002

Martela Oyj, Sales, 1987–1997

Owns 6,544 Martela Oyj A shares.

Kalle Sulkanen

VP, OPERATIONS

Born: 1978

Education: M.Sc. (Tech.)

Area of responsibility: Group Sourcing, Production, Removal Servic-

es, Product Development, Sustainability, Logistics and Quality Control.

Joined the company and a member of the management team since 2022.

Previous professional experience:

Peab AB, Head of Procurement, 2020–2022

YIT Oyj, Procurement Director, 2019–2020

AB Enzymes GmbH / Roal Oy, Head of Procurement, 2017–2019

Componenta Oyj, Sourcing Director and managerial positions, 2011–2017

Nokia Oyj, Development Manager positions in supply chain, 2001–2011

Owns 13,555 Martela Oyj A shares.

MARTELA ANNUAL REPORT 2023

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Information for shareholders

Annual General Meeting

The Annual General Meeting of Martela Oyj will be held on Friday 5 April 2024 at 10 a.m. at Töölönlah-

denkatu 2, 00100 Helsinki (Sanomatalo).

A shareholder, who has the right to participate in the Annual General Meeting and whose shares are

registered on his/her Finnish book-entry account, may participate in the Annual General Meeting by way

of remote access. Shareholder participating via remote access to the Annual General Meeting has voting

right and speaking right during the Annual General Meeting. Instructions for shareholders are present-

ed in this notice under section C. (Instructions for the participants in the General Meeting) and on the

Company’s website www.martela.com/about-us/about-martela/investors.

The names of shareholders wishing to attend the meeting should be entered in the share-holder reg-

ister at Euroclear Finland Ltd no later than 22 March 2024 and the shareholder should register by email

to agm@innovatics.fi, by post to Innovatics Oy, Yhtiökokous / Martela Oyj, Ratamestarinkatu 13 A, 00520

Helsinki, or on the internet site of the Corporation https://www.martela.com/about-us/about-martela/

investors no later than April 2, 2024 at 4 p.m.

Payment of dividends

The Board of Directors proposes to the Annual General Meeting that no dividend would be paid for the

financial year 1 January 2023 – 31 December 2023.

Publication of financial information

Martela Corporation’s financial information in 2024 will be published as follows:

• January–March (Q1) Financial Review on Tuesday May 14, 2024

• January–June (H1) Half-Year Report on Friday August 16, 2024

• January–September (Q3) Financial Review on Friday November 8, 2024

Financial reports are available in Finnish and English on the company’s website (www.martela.fi and

www.martela.com). Annual reports are available on the company’s website in pdf format. After published,

stock exchange releases are available on the company’s website, where you can find all stock exchange

releases in chronological order.

MARTELA ANNUAL REPORT 2023

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FINLAND

Martela Oyj

Miestentie 1

02150 Espoo

Tel. +358 10 345 50

www.martela.com

Kidex Oy

Savikontie 25

82500 Kitee

Tel. +358 10 345 7211

www.kidex.fi

Muuttopalvelu Grundell Oy

Tikkurilantie 146

01530 Vantaa

Tel. +358 10 480 4200

www.martela.com/fi/palvelut/

toteutuspalvelut/muuttopalvelut

SWEDEN

Martela AB

Storgatan 49A

57132 Nässjö

Tel. +46 380 37 19 00

www.martela.com/sv

NORWAY

Martela AS

Drammensveien 130

0277 Oslo

Tel. +47 23 28 38 50

www.martela.com/no

POLAND

Martela Sp. z o.o.

ul Geodetów 156

05-500 Józefosław

www.martela.com

Contacts