Trusted manufacturing partner
ANNUAL REPORT 2021/2 ANNUAL REPORT 2021/2
Table of contents
Annual review ........................................... 3
Scanfil in brief .................................................. 3
CEO’s review ................................................... 4
Strategy ........................................................ 5
Customer segments and growth drivers .......................... 6
Investor information ............................................ 8
Sustainability report ................................... 10
Sustainability at Scanfil .......................................... 11
Enviromental responsibility ..................................... 13
Social responsibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Good corporate governance .................................... 19
Financial review ...................................... 23
Board of Directors’ Report ...................................... 24
Condolidated financial statements (IFRS) ........................ 32
Financial statements of the parent company (FAS) ............... 71
Auditor’s report ....................................... 82
Governance .......................................... 85
Corporate governance statement ............................... 85
Remuneration report ........................................... 90
The Board of Directors’ and
the management team ................................ 94
Independent Auditor’s Reasonable Assurance
Report on Scanfil Plc’s ESEF Financial Statements ......98
Scanfil enables customers to
succeed by providing effective
and innovative solutions that
bring products to life and to
market.
Turnover
696 €M
Personnel
3,300
Adjusted
EBIT
40 €M
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Close to the customer R&D
Close to customer market
Atlanta, USA
Pärnu, Estonia
Myslowice, Poland
Sieradz, Poland
Suzhou, China
29.4%
4.8%
1.5%
Advanced Consumer Applications
Automation & Saftey
Connectivity
Energy & Cleantech
Medtec & Life Science
Discontinued*
* Discontinued was an intermediary trading segment.
38.0%
9.5%
4.2%
11.1%
Poland
China
Estonia
Sweden
Finland
Germany
USA
16.3%
13.9%
Scanfi
l in brief
Scanfil is a trusted manufacturing partner and system supplier with over
45 years of experience in demanding manufacturing. Scanfil provides its
customers an extensive array of services, ranging from product design
to product manufacturing, material procurement, and logistics solutions.
Scanfil’s competitive advantages are speed, flexibility and reliability.
Scanfil has a strong focus on sustainability and responsibility. We are
committed to UN Global Compact and have identified eight key UN
Sustainable Development Goals. In 2021, we were awarded with the
EcoVadis rating. Read more about our sustainability (link to sustainability
report).
Factory network
Scanfil has a global factory network with different roles: close to
customer
R&D and close to customer market. All factories are self-
governing and
profit and loss responsible but benefits from the group
operations such as
sales, global sourcing, financial resources, IT
systems, unified machinery,
and processes. This enables us to react
fast to changing customer
needs and benefit from our scale in
procurement and investments.
Close to customer R&D factories are sites with low volumes
and
located close to customers’ R&D functions. Physical closeness
enables
fast product development and rapid prototyping.
Production can be
transferred to close customer market factories
when the product has matured and reached higher volume needs.
Close to customer market factories are in or close the
customers’
geographical end market. This enables lower
transportation costs and
time, enhanced market understanding,
and possible benefits from
avoiding some import-related costs
such as customs.
Turnover Personnel
EUR 695.7 million 3,300
20.8%
26.2%
17.3%
7.0%
Malmö, Sweden
Wutha, Germany
Åtvidaberg, Sweden
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CEO’s review
“Driven by the strong customer demand, the year 2021 became a record
year of growth and turnover. This all despite the pandemic and the
challenges of material availability. Turnover increased by 16.9% to EUR
696 million. We nearly reached the target of EUR 700 million set for
2023 - two years ahead of schedule!
Adjusted operating profit in 2021 was EUR 40.3 million, 5.8% of turnover,
and falling short of the long-term target level of 7%.
The biggest negative effects on operating profit for the period were
caused by material availability challenges, abnormal high prices paid for
spot market purchases, and the relocation of production of the Hamburg
factory. The challenging material situation hampered us, especially in
the second half of the year. The product transfer from Hamburg was
completed by the end of the third quarter, and operations at the Hamburg
factory ended during the fourth quarter.
Net cash flow from operating activities in 2021 was EUR 12.5 million
negative, mainly due to a strong increase in inventories. The increase
in inventories was affected by rising customer demand as well as a
slowdown in inventory turnover caused by challenging material availability
situation and higher material costs. Inventory management will continue
to be the focus area in 2022.
Scanfil’s balance sheet is still strong, with an equity ratio of 45.3%
and a gearing of 28.9%, enabling the necessary investments and the
implementation of a dividend policy. The Board of Directors proposes a
dividend of EUR 0.19 per share for 2021, an increase of 11.8% compared
to a year ago. If implemented, Scanfil’s dividend will increase for the
ninth year in a row.
The demand outlook for Scanfil’s customers is strong for 2022, and our
focus is very clear: we continue to respond to our customer demand,
organic growth and turning our profitability to the target we have set.
The short-term challenges and risks are mainly related to the availability
of materials, especially semiconductors, which we believe will continue
to be challenging at least in the first half of the year.
We expect our turnover continues to grow, being EUR 710–760 million
this year, and operating profit to increase to EUR 43–48 million euros.
We aim for organic annual growth of 5–7% and an operating profit level
of 7% in the longer term. To reach our growth target, we have acquired
more production space at our Atlanta and Wutha factories, and started
planning expansion options at our Suzhou factory. In the long run, we
see North America and Asian markets as interesting expansion areas.
The year 2021 was strongly two-folded: strong customer demand
combined with material availability challenges, the pandemic, and
the relocation of production of Hamburg was very demanding on our
personnel. I want to thank our dedicated employees for their perseverance
and good work, as well as the support and trust of our customers.”
PETTERI JOKITALO
CEO
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Strategy
Scanfil was founded in 1976. Throughout the decades, we have adjusted
our strategy according to the prevailing market situation, but the focus
remains the same – manufacturing of products with electronics.
We pursue profitable growth in our key market areas: Nordics, Central
Europe, The USA, and China.
Customers
Scanfil serves a wide range of customers from start-ups to global leaders.
The focus is on industrial and medtech customers, which are the perfect
fit for Scanfil’s production and service platform. They tend to have lower
production volumes than those in consumer markets and product life
cycles even decades-long with refurbishing and modernization needs.
Our aim is to be customers’ preferred manufacturing partner. Our goal
is to build long-term relations, and we have succeeded well: Scanfil’s
longest existing customer relationships have lasted over 40 years.
Services
Our services cover product design and development to production
and end-of-life. One of the key success factors for both Scanfil and its
customers is the close collaboration in the early phases of the product
design. Continuous cooperation enables customers to reduce time-
to-market and costs by choosing the best materials and production
technologies.
The wide spectrum of services enables Scanfil also to take full
responsibility for another company’s production. We are a reliable
partner for companies to outsource their production to. Especially,
brand owners can benefit from production outsourcing with low or no
investments needed into production, flexibility when customer pays
only for the manufactured products and production can be scaled up
or down to correspond to the prevailing demand.
Technology
We have systematically invested in reassuring our technological
leadership through a five-year program. SMART technology program
has been set for 2019-2023, and it aims at fast digitalization and
automation. Within the program, we have, e.g., adopted the state-of-
the-art Manufacturing Execution System (MES), automated our material
flow at factories, taken cobots, machine learning and AI into broader use.
Our offer throughout customers product’s life cycle
Product Design
Services
Industrialisation
Services
Manufacturing
Services
Product
Maintenance
Services
End of life
Services
Product Develpment
DFM/DFA-analysis
Rapid Prototyping
Test Development
Supply Chain Design
Value stream mapping
Quality assurance
Weak point analysis
Ramp up planning
Repairs & Refubrish
Face lifts
Value Engineering /
Value Analysis
Distribution Services
Order Fulfillment
Spare Part Handling
Material Obsolecence
Product Maintenance
LTB-services
Supply chain
Management
Sheet metal
production
Cable
manufacturing
System
Integration
Box-build
PCBA
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Customer segments and growth drivers
Scanfil has five customer segments that typically have different business
cycles, and therefore, it balances changes in demand. We have identified
Energy & Cleantech and Medtech & Life Science as high-growth potential
customer segments.
Advanced Consumer Applications
End products and solutions are often used in public places. End products
are ,e.g., self-service applications, handover automation (e.g. parcel
lockers for logistic services) and elevators.
Automation & Safety
End products in this segment are, e.g., cameras for network video
solutions, access control systems and automation systems.
Connectivity
End products in this segment are, e.g. , wireless connectivity modules
and radio systems.
4.8%
TK Elevator
Driving megatrends
• Industrial automation
• Robotics
• Sustainability
Driving megatrends
• Digitalization
• Increasing significance and use of information in society
• 5G and wireless solutions
• Industrial internet
Driving megatrends
• Urbanization
• Growing middle class
• Modernization of households
29.4%
20.8%
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Energy & Cleantech
End products in this segment are, e.g., reverse vending machines, air
and water cleaners, indoor climate control systems, energy systems
and automated collection and sorting solutions.
Medtech & Life Science
End products for the segment are, e.g., dental chairs, analyzers, mass
spectrometers and solutions for environmental measuring.
Growth drivers
Historical growth of the relevant Electronics Manufacturing Services
(EMS) market to Scanfil has been 3-6% p.a. Scanfil aims to grow faster
than the market and has set the annual organic growth target of turnover
to 5-7%.
Mergers and acquisitions have been part of our tool box for decades. We
are actively looking for EMS companies with a complementary customer
base and geographical reach.
Read more about Scanfil’s history
Driving megatrends
• Ageing population
• The increasing needs for healthcare and
technology in emerging markets
• Climate change and need to predict weather phenomena
Driving megatrends
• Energy efficiency, renewable energy production
and solutions for circular economy
• Urbanization particularly in emerging markets
• Monitoring, controlling and cleaning of water and air quality
20021976 2012 2015 2019
Rapid internationalization
to developing countries
Focus on Industrial
Electronics customers
Expansion of
customer base
Merger with
Wecan Electronics
Scanfil Oy
was founded
Industrial electronics
represented 75% of the sales
Acquisition
PartnerTech
Acquisition
HASEC
26.2%
17.3%
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Investor information
0
250
500
750
20212020201920182017
595
696
579
563
529
Turnover Operating profit & operating profit %, adj. Scanfil share price
EUR million
EUR/share
EUR million
0,0
0,1
0,2
0,3
0,4
0,5
20212020201920182017
0.50
0.45
0.44
0.40
0.50
Earnings per share, adj.
EUR
0,00
0,05
0,10
0,15
0,20
20212020201920182017
0.1 7
0.1 5
0.1 3
0.1 1
0.1 9
Dividend per share
EUR
Board’s proposal
%
Return on investment
0
5
10
15
20
25
20212020201920182017
1 7.0
15,3
19,5
20.2
19.4
19.5
%
Equity ratio
0
10
20
30
40
50
60
20212020201920182017
49.1
54,3
47.7
40.7
45,3
*The increase in net debt is due to
the adaption of IFRS 16.
Net debt
EUR million
0
10
20
30
40
50
60
20212020201920182017
46.2*
28.2
40.7
59,9
18.1
2
4
6
8
10
1.1.2017 1.1.2018 1.1.2019 1.1.2020 1.1.2021 31.12.2021
%
Operating profit, adjusted
Operating profit %, adjusted Scanfil plc, EUR OMX Helsinki PI Index
0
10
20
30
40
50
20212020201920182017
35.3
3 7. 8
5.9 %
6.7 %
6.8 %
6.6 %
5.8 %
39.1
40.3
1
2
3
4
5
6
7
8
31.3
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Scanfil as an investment
Scanfil is a company with strong culture and values. The company has
been profitable since the beginning. It is a preferred manufacturing
partner and systems supplier for industrial customers The company
has earned a reputation for building long-term partnerships based on
a mutual passion for success.
Profitable operations in all situations have made it possible to invest
and secure the company’s future.
Solvent and financially reliable partner
Scanfil is a solvent and financially reliable partner for its customers,
suppliers, shareholders and employees.
Scanfil’s goal is to work in sustainable, long-term cooperation with its
customers. Like its customers, the company operates internationally,
and its customers include numerous significant international automation,
clean energy, recycling and health technology providers, as well as
companies operating in the field of urbanization. Scanfil is the market
leader in the Nordic countries, among the largest companies in its sector
in Europe, and a household name in the global market.
Long-term targets
Scanfil is organically aiming for 5-7% annual turnover growth and 7%
operating profit level.
Outlook for 2022
Scanfil estimates that its turnover for 2022 will be EUR 710–760 million,
and its adjusted operating profit will be EUR 43–48 million.
The guidance is based on customer forecasts and Scanfil’s normal
forecasting process. Outlook involves uncertainty arising from the
potential negative impact of the availability and prices of certain materials,
especially semiconductors, and supply chains delivery capability. In
addition, the COVID-19 pandemic might have a negative impact on
customer demand and the supply chain.
Dividend
Scanfil aims to pay an increasing dividend of approximately 1/3 of the
earnings per share. The level of dividends paid and the date of payment
are affected by the result, financial position, need for capital and other
possible factors.
The Board of Directors proposes to the Annual General Meeting
that a dividend of EUR 0.19 (0.17) per share be paid for a total of EUR
12,316,038.45 for the financial year ending on 31 December 2021. The
dividend matching day is 25 April 2022 and the dividend payment date
2 May 2022. The dividend will be paid to shareholders registered in the
Register of Shareholders maintained by Euroclear Finland Ltd on the
matching date.
Annual General Meeting
Scanfil plc’s Annual General Meeting (AGM) will be held on 21 April
2022 at the premises of Borenius Attorneys Ltd, at Eteläesplanadi
2, 00130 Helsinki, Finland. Shareholders of the company and their
proxy representatives may participate in the meeting and exercise
shareholder rights only through voting in advance as well as by making
counterproposals and presenting questions in advance. People may
not participate in the meeting in person at the venue. More information
here (linkki)
Financial publications in 2022
• Interim report for January–March, 22 April 2022
• Interim report for January–June, 5 August 2022
• Interim report for January–September, 26 October 2022
The financial publications are released in Finnish and English languages.
They will be available on the company’s website at scanfil.com.
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Sustainability Report
Scanfil plc is committed to developing its sustainability, sustainability targets, and its
reporting and measuring. This sustainability report has been approved by the Board
of Directors, and it has been compiled according to the EU’s other than non-financial
information reporting directive.
EU Taxonomy Regulation
As a listed company with more than 500 employees, we are in the scope of the
EU Taxonomy Regulation. As an electronic manufacturing service (EMS) company,
Scanfil belongs to the manufacturing sector and is more specifically under electronics
manufacturing. We do not currently consider our core economic activities to be in
the scope of the EU Taxonomy Regulation’s technical annexes on climate change
mitigation and climate change adaptation. The manufacturing sector is expected to
be more broadly included in the upcoming objectives of 3-6. Based on our current
understanding, available data, and assessment of requirements, we have zero eligible
activities to report on within revenue, Opex, and Capex. We note that the EU Taxonomy
Regulation will keep evolving and that we will continue to consider its impact and future
reporting obligations.
We contribute to the following UN Sustainable Development Goals
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Sustainability at Scanfil
Scanfil is a trusted manufacturing partner and system supplier for the electronics industry
with over 40 years of experience in demanding manufacturing. Scanfil provides its
customers with an extensive array of services, ranging from product design to product
manufacturing, material procurement, and logistics solutions. Scanfil’s competitive
advantages are speed, flexibility, and reliability. More information about the company,
its services and operations is found from the beginning of the Annual Report and the
company webpages.
Scanfil has a clear focus on sustainability and responsibility. Scanfil is committed
to UN Global Compact and has identified eight key UN Sustainable Development
Goals from the company perspective. In 2021 company was awarded the EcoVadis
rating. EcoVadis methodology measures the quality of a company’s sustainability
management system through its policies, actions, and results. The assessment focuses
on 21 sustainability criteria grouped into four themes: Environment, Labor & Human
Rights, Ethics and Sustainable Procurement. Scanfil is also a signatory of United Nations
Women Empowerment Principles (WEPs).
Management
The Board of Directors and members of the management of Scanfil are responsible
for the management of corporate responsibility. In terms of its governance, Scanfil
complies with Finnish laws and regulations, its Articles of Association, Nasdaq Helsinki’s
rules and guidelines, and the Finnish Corporate Governance Code. In practical work,
responsibility perspectives are guided by the Group’s Code of Conduct. Furthermore,
in each country Scanfil has operations, it follows the national laws of that area. In
addition, the policies and other ethical operating principles are approved by the Board
of Directors or the Management Team.
Ensuring and developing the
sustainability of operations is
vitally important for Scanfil’s
success.
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Sustainability risks
This section describes Scanfil’s most important sustainability risks.
Supply chain
Scanfil’s global supply chain includes procurement from countries
with different risk levels. Potential risks in the supply chain include, e.g.,
compromising human rights or labor rights, risks to occupational health
and safety, and causing environmental damage. Scanfil suppliers can
cause notable reputation or business risks to Scanfil if they engage in
such unethical behavior.
To effectively manage risks in the supply chain, Scanfil has a broad
supplier evaluation process, and each supplier is committed to commit
to Scanfil’s Supplier Code of Conduct.
Health and safety
In our own operations, the greatest threats to employee health and safety,
such as work-related illnesses and accidents, arise from a working
culture where our health and safety processes are not followed, and
risks in the work environment are not controlled or even recognized.
Our employees are involved in health and safety decisions through
consultation and cooperation. We comply with legal requirements and
develop and implement appropriate health and safety procedures and
working practices.
Scanfil has formed Safety Council, which monitors all work safety
aspects. Safety Council gathers quarterly to review corrective actions
and preventive best practices. In addition to that, sick leaves, accidents/
injuries and, serious accidents are monitored monthly.
The occupational risk analyses are performed regularly at all locations
to verify if any potential occupational diseases may result from our
operations.
Unethical behavior
Employee-related risks may also arise from violations of Scanfil’s Code
of Conduct and related principles, such as practices related to bribery,
fraud, corruption, and misconduct, which could impact the company’s
reputation and its financial position.
Climate-related physical risks
Due to climate change e.g., extreme weather conditions are becoming
more common. For example, floods or tornadoes could pose a threat
to the continuity of Scanfil’s operations. The company has business
continuity plans in place in all factories to manage possible impacts.
Key themes in corporate responsibility
Ensuring and developing the sustainability of operations is vitally important
for Scanfil’s success. The monitoring and continuous development of
corporate sustainability serve the needs of all Scanfil’s stakeholders.
Scanfil has defined key factors for its corporate responsibility and divided
them into Environmental (Responsible consumption and Climate action),
Social (Heath and safety, Employee Satisfaction, equality and non-
discrimination), and Good Corporate Governance (Customer focused,
and fairness in all business relations).
The focus areas for environmental responsibility are the efficient
use of raw materials, the control and reduction of energy and water
consumption, as well as the management and reduction of waste,
recycling, and the reduction of the carbon footprint. All sites within
Scanfil are certified according to ISO 14001.
Social responsibility focuses on competence development, occupational
health and safety, the development of the motivation and work satisfaction
of the personnel, and equal treatment of the people. The ISO 45001
occupational health and safety management standard is being used at all
Scanfil’s factories. Scanfil’s objective is to be an excellent place to work.
Good Governance includes the development of customer satisfaction,
product quality, delivery reliability, continuous development of the
community, compliance with the law and ethical principles throughout
the supply chain, the prevention of corruption and bribery, and the focus
is on profitability, ethical values and the transparency of operations. All
the company’s factories operate a quality control system observing
the ISO 9001 criteria.
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Responsible Consumption
Scanfil produces extensive services for its customers, ranging from product design and development
to product manufacture, material procurement, and logistics solutions. Products are designed and
manufactured based on customers’ requirements, which means that the design process starts with
product data provided by each customer. Accurate data and careful design allow a more efficient
manufacturing process and a reduction in the environmental impacts of production. It is generally
estimated that approximately 80% of a product’s negative environmental impacts are determined in the
product design phase. As circular economy aims to circulate products and materials at their highest value,
it is essential that products have been designed with their eventual circulation in mind. The efficiency of
resource utilization and the environmental friendliness of raw materials and products throughout their
lifespans are analyzed in detail. Environmental impacts are taken into account throughout Scanfil’s
value chain, ranging from the procurement of raw materials to production, distribution, and recycling.
Scanfil promotes sustainable development by identifying, measuring and reporting the environmental
impact caused by its activities. The goal is to reduce negative impacts on the environment. Scanfil’s
aspiration is to consider the environmental impact throughout the value chain, ranging from the
procurement of raw materials to production, distribution, and recycling possibilities. All Scanfil’s factories
have a certified ISO 14001-compliant environmental management system. In its production, Scanfil mainly
uses metals, components, and chemicals. It prefers recyclable materials and eco-friendly products. Part
of the materials to be used are chosen by customers. The utilization rate of all raw materials is optimized
to ensure the efficient use of resources and decrease the amount of waste created. Waste materials are
recycled if they cannot be re-used in the company’s own production. Steel is an important raw material
used by Scanfil. Its effective use is closely monitored in the production process.
Scanfil promotes sustainable
development by identifying,
measuring and reporting the
environmental impact caused by
its activities.
Environmental
responsibility
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The risks associated with chemicals are analyzed before their
deployment, and they are handled following precise instructions and
precautions. In addition, proper training and drills are arranged to prepare
for any accidents.
Reduce carbon footprint
Scanfil commits to reducing its carbon footprint by 35% from 2020 to
2030 assuming that its organic growth remains at the current yearly
level. This means a reduction of carbon footprint average of 4.2% from
the baseline year 2020 (based on 5-7% organic growth). In 2021 the
result was a 4.4% reduction of CO2 emission in total.
The company also commits that its energy consumption is 50% fossil-
free by 2030. As an internationally operating company, employees’
business travel is necessary, while the company seeks to reduce it, for
example, by utilizing the possibilities of the latest technology and by
favoring virtual meetings. The travel practice always guides the employees
to choose the most environmentally friendly alternative for travel and
meetings. Emissions from daily commuting have been reduced by
organizing bus transportation for personnel at several Scanfil factories.
The company’s updated vehicle policy favors low-emission cars, such
as hybrid models.
Due to travel restrictions imposed because of the outbreak of the
coronavirus pandemic at the beginning of 2020, there were significant
decreases in travel, and meetings between customers and partners
were primarily held via remote connections. Employees who were able
to work without needing to be in the workplace started to work remotely.
As a result, emissions from commuting decreased.
Increasing usage of fossil-free energy
Scanfil commits that its energy consumption will be more than 50%
fossil-free by 2030. This target is set from a baseline of the year 2020
(based on 5-7% organic growth). The result of 2021 was a 5% increase
of fossil-free energy consumption.
Scanfil consumes energy in the heating, cooling and lighting of its
production facilities, and in the use of production machinery. In 2021,
Scanfil’s total energy consumption was 29.07 million kWh, having been
28.79 million kWh in the previous year. Energy consumption increased
by 0.3% year-on-year.
Most of the increase in energy consumption came from Sieradz, Pärnu,
and Suzhou factories, where production volumes increased due to higher
customer demand during 2021. The increase in production resulted in a
larger number of machines installed and in more shifts when the factory
operated during evenings and weekends.
The coronavirus countermeasures, e.g., longer opening hours of the
factories and more shifts introduced as general risk control measures
to prevent the spread of coronavirus, resulted in longer production
periods which had an impact to energy consumption.
In 2021, all factories carried out an energy reduction program to reduce
energy consumption by 3%, divided by added value. Target was met
with a -5.4% decrease. The energy consumption is followed up on the
group level.
Water and Waste
Water is used in facility maintenance, production, and sanitary facilities.
Total water consumption was 47,479 m
3
(44,875 m
3
in 2021). Water
consumption increased by 5.8%, but a decrease divided by added value
was -0.3%. The increase in water consumption is distributed across all
factories and is in relation to the production volume increases.
There was no big difference in the amount of waste between 2020 and
2021. There were some differences between factories due to changes in
production and different product ranges. In total, an increase of waste
created by 3.1%, related to production increase, but a decrease of waste
divided by added value was -2.8%.
Energy consumption kWh / value add
Water consumption m
3
/ value add
12
15
18
21
24
27
30
33
36
202120202019201820172016
0
10
20
30
40
50
60
70
80
202120202019201820172016
Added value = turnover - purchases
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Environmental certificate held by all
All Scanfil’s factories have a certified ISO 14001:2015 -compliant
environmental management system that verifies the measurement and
improvement of environmental impacts on the company’s management
and employees, as well as on its external stakeholders. The company’s
management monitors the implementation of environmental practices,
as well as the development of key indicators and the goals set, both
locally and at group level. In addition, the employees are provided
with the necessary knowledge and training to ensure they can work in
accordance with the objectives of our environmental practices.
The most important actions taken in 2021 to support the above
targets
• All factories have reviewed their energy agreements and the
possibilities for fossil-free energy consumption for heating,
cooling and electricity
• New energy agreement in Sievi factory for 100% green
electricity
• All new equipment takes into account energy consumption
• Establish a full Material Declaration process
• Factory activities in following areas:
- Lights - Vehicles
- Heating & Cooling - Compressed air
The most important actions to be taken in 2022 to support
the above target
• Transfer of production from Hamburg factory to other
factories. Hamburg factory closes
• New energy agreement in Sieradz factory with 100 % fossil-
free energy consumption
• Overview of factories using natural gas for heating for
biofuel possibilities
• Energy reduction activities in all factories
Factory ISO 9001:2015
Quality management system
ISO 14001:2015
Environmental management system
ISO 13485:2016
Medical equipment
ISO 45001:2018
Occupational health and
safety assessment system
IATF 16949:2016
Quality system standard for
the automobile industry, conformity
document
Atlanta
● ● ● ●
Hamburg (closed September 2021)
● ● ●
Malmö
● ● ● ●
Myslowice
● ● ● ●
Pärnu
● ● ●
Sieradz
● ● ● ●
Sievi
● ● ● ●
Suzhou
● ● ● ● ●
Wutha
● ● ● ● ●
Åtvidaberg
● ● ● ●
Certificates of Scanfil’s factories
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At Scanfil, social responsibility focuses on its employees’ competence development,
occupational health and safety, as well as the development of the personnel’s motivation
and work satisfaction. Scanfil aims to be a reliable employer and an encouraging working
community where every individual has the opportunity to develop their personal skills
and abilities. Scanfil aims to be among the highest quarter of its industry.
In 2021 Scanfil joined the UN initiative “Global Compact” to enhance responsible
business practices. The principles are based on the UN Declaration of Human Rights,
the ILO Fundamental Conventions on Human Rights at Work, the Rio Declaration, and
the UN Convention against Corruption. By this, Scanfil has the use of Global Compact
best practice guidance, tools, resources ,and training.
Scanfil has prepared HR and work environment policies and the Code of Conduct to
guide the daily work of the management and other employees. The Code of Conduct
describes in detail the ethical and sustainable methods of operation compliant with
Scanfil’s values. Any updates of the Code of Conduct are consulted with all subsidiaries,
also involving their non-managerial employees, in order to get full alignment and
contribution from differentiated communities. A thorough review of the Code of Conduct
is part of the induction process. Scanfil’s Code of Conduct was updated in 2021, and
the training to personnel was carried out in all factories.
Scanfil improves occupational
safety by continuous active
measures.
Social Responsibility
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Occupational health and safety
2021 was characterized by the global coronavirus pandemic, due
to which extensive measures were taken to protect the safety and
health of Scanfil’s personnel, customers, and partners. The Group
adopted various measures considering country-specific restrictions and
recommendations. Scanfil has paid particular attention to the coping
of the personnel and the maintenance of their work motivation to avoid
any exhaustion resulting from remote working. In 2022 the focus will be
on promoting enhanced employee well-being.
In 2021, the Group’s sick leave rate was 3.6%, while the target was less
than 3%. This was mainly affected by the pandemic during the year. Due
to Covid-19, employees’ awareness grew, and they stayed at home also
when having other mild flu-like symptoms.
There were 43 occupational accidents, while the corresponding figure
in 2020 was 54. Competence development continued at a global level
and in local units under different programs.
Scanfil improves occupational safety by continuous active measures.
The work environment must always be safe and healthy. The ISO 45001
occupational health and safety management standard is used at all
Scanfil’s factories. The development of safety is also monitored by
the Safety Council, which meets four times a year and consists of the
HR Managers and Safety Officers of each factory. In 2021 one serious
accident requiring hospital care was reported.
Scanfil uses the Safety Book, in which information on occupational
accidents occurring during a year is recorded. Scanfil reacts to all
occupational accidents and near-miss incidents appropriately to prevent
them from recurring. In addition, the Lean Manufacturing and Process
Engineering teams participate in ensuring the safety and efficiency
of production areas. Most accidents are related to the handling of
materials in production areas and the use of tools at workstations.
Challenging postures and extended sedentary work present a challenge
in assembly and office work. Their negative impact is avoided through
high ergonomics.
The response rate to the annual personnel survey was 87% (2020: 88%).
Despite the uncertainties resulting from the coronavirus pandemic
and rearrangements within the company, employees’ job satisfaction,
motivation and loyalty increased. The area that came out in the survey
was office workers’ workload — the workload driven by remote work and
market situations. On top of the rising market demand, the availability
of certain components, mainly semiconductors, added the workload of
those employees responsible for customers and purchases. Therefore
Group’s focus on 2022 will be on white-collars workload. In addition, all
factories have defined the top three areas to focus on locally. Based on
the survey, over 450 development actions were registered within Scanfil.
Development of job satisfaction results
0
10
20
30
40
50
60
70
80
20212020201920182017
Job satisfaction and motivation Commitment
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Human rights
The company ensures the fulfillment of its social responsibility through
fair working conditions and practices, with an exclusive focus on human
rights as expressed in its Code of Conduct. Scanfil uses Corporate
Human
Rights Benchmark (CHRB) as a benchmark tool for measuring
human rights.
Human rights and equal treatment are fundamental values in Scanfil’s
operations, and here no compromises can ever be made. Besides the
personnel, they concern all partners, and they define, among other things,
the principles of respecting individuals, as well as those of preventing
forced labor, child labor, and human trafficking. The Code of Conduct
also includes instructions on reporting possible or suspected unethical
or illegal actions. Scanfil’s personnel survey also includes questions
about any unwelcome behavior.
Scanfil has a whistleblowing channel through which the company’s
personnel and partners can anonymously report any observed or
suspected misconduct regarding corruption, bribery, or rules described
in the Code of Conduct. The company aims to ensure compliance with
the Code of Conduct in its supply chain by carrying out audits and
increasing supplier’s awareness in this field. Compliance with the law
and ethical principles is also monitored in internal control and audits.
In 2021, no non-conformities pursuant to corporate governance were
identified in Scanfil’s global whistleblowing channels. Three cases of
bullying or harassment were reported in local HR organizations. These
were investigated thoroughly by local management teams, and the
resulting actions were reported in the global HR organization.
In early 2021, Scanfil joined the United Nations Global Compact initiative.
The companies involved in the Global Compact are committed to the
ten principles of human rights, labor standards, the environment, and
the eradication of corruption. In the latter part of 2021, Scanfil became
United Nations Women Empowerment Principles (WEPs) Signatory. As
a member of the WEPs community of companies, industry associations,
and chambers of commerce, Scanfil is committed to making a difference
for gender equality and women’s empowerment in the workplace,
marketplace, and community.
In 2021 Scanfil established Conflict Mineral Policy. Scanfil, together with
its subsidiaries, is committed to corporate responsibility and respecting
human rights in its operations and global supply chain. Therefore, we are
committed to working with our customers and suppliers to responsibly
source the materials and components we use in manufacturing our
customers’ products that may contain these minerals.
Scanfil is committed to ethical practices and compliance with all
applicable laws and regulations. While we do not source these metals
directly, they may exist in the materials and components we source.
Scanfil’s factories are actively involved in charitable activities, and Scanfil
supports UNICEF at the Group level.
Non-discrimination and diversity
We believe that the broader the pool of talent open to an employer, the
greater the chance of finding the optimum person for the job. Innovation
and agility are seen as the great benefits of diversity, and there is an
increasing awareness of what has come to be known as ‘the power of
difference.’ Scanfil employs around 50 different nationalities. We have
over 70 employees with disabilities. The average age of our employees
is 40 years, and the ratio between women and men is 45% to 55%.
Board and management diversity is handled in the Scanfil’s Board of
Directors Report.
The most important actions taken in 2021:
• Scanfil CEO Statement of Support for the Women’s Empowerment
Principles
• Secure overall Human Rights
• Strengthen Scanfil Code of Conduct and train all personnel
• Strengthen Scanfil Web
• Establish Mineral Conflict Policy
The most important actions to be taken in 2022:
• Continuously improve employee satisfaction, including employee
well-being and white-collar workload
• Sustainable Procurement – assessment of 80% most spend
suppliers, preferred suppliers, and selected suppliers with an
increased risk profile by EcoVadis assessment platform
• Scanfil uses UNGP (UN guiding principles on business and human
rights) as a benchmark tool for measuring human rights
• Conduct human rights impact assessment
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Scanfil’s governance is divided into good and sustainable business practices, customer satisfaction,
and a sustainable supply chain. Topics concerning Board and Management are handled in the Board
of Directors Report and in addition to this in the Remuneration report.
Good corporate citizen
Scanfil has operations in seven countries, and it co-operates with suppliers and subcontractors around
the world. Scanfil is committed to being a good corporate citizen both internationally and locally, which
is why all its functions must respect different cultures and cultural heritage, as well as local methods
of operations compliant with national laws. Scanfil’s Code of Conduct defines the ethical principles
and commitment to anti-bribery, honesty, fair methods of operation, and the behavior expected of
Scanfil’s employees business partners and other stakeholders. Human rights and equal treatment
are basic values in Scanfil’s operations, and they cannot be compromised. People must be treated
with dignity and respect in the manner approved by the international community.
Anti-corruption and anti-bribery measures
As part of its corporate responsibility management, Scanfil is also developing its activities to fight
corruption and bribery. Compliance with corporate responsibility is raised more often than previously
in talks with customers. Scanfil has defined responsible operating guidelines in its’ Code of Conduct.
This covers, for example, the equal treatment of people and prohibits corruption and bribery. The
Group’s operating methods, such as transparent and cost-based pricing, reduce the possibility of
non-compliant activities. No deviations from Scanfil’s Code of Conduct were identified in 2021.
Good governance
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Whistleblowing
Scanfil has a whistleblowing channel through which the company’s
personnel and partners can anonymously report any observed or
suspected misconduct regarding corruption, bribery, or rules described
in the Code of Conduct. More information about Whistleblowing is found
in the Social Responsibility section.
Anti-Competitive
Scanfil is committed to not take part in decisions and practices that
are anti-competitive. These actions are, e.g., price-fixing, bid-rigging,
market sharing, production controlling, or miss-use of market power.
Facilitating Customer sustainability
Customer satisfaction is one of the company’s core values, and
everybody at Scanfil understands that success depends on satisfied
and loyal customers. Maintaining active contacts regarding the
customer’s requirements and Scanfil’s plans is an essential element
of cooperation. It allows the correct business decisions to be made
and the competitiveness and responsibility of production services to
be developed. Continuous development of operations in cooperation
with customers is in both parties’ best interest.
Continuous contact with customers is based on the key account
management model. It includes a plan on cooperation, systematic
and regular meetings at several levels, and a standardized reporting
model presenting the most important key performance indicators
(KPIs). Development projects are also implemented based on customer
feedback. For example, they may be related to quality matters or the
expansion of the service offering. High-quality and cost-effective
production is one of Scanfil’s key competitive advantages. The
continuous development of production processes, utilization of the
right technologies, and verified quality of the materials used are key
factors in the continuous improvement of competitiveness.
Satisfied customers
Scanfil changed the way it measures customer satisfaction in 2019.
Customer satisfaction (Net promoter score) is measured regularly
by conducting a customer satisfaction survey twice a year. Feedback
helps us to monitor our operational performance in terms of our delivery
capacity and our ability to produce quality, as well as our flexibility,
competitive prices, the organization’s ability to react, and the coverage
and performance of our services. Based on the survey, we will define
a factory- and/or function-specific development program, including
relevant measures. These measures will be monitored actively in
cooperation with customers. The Net Promoter Score (NPS), which
shows the probability of our customers recommending Scanfil as a
manufacturing partner, decreased from the previous year. This was
mainly due to challenging material situations and not being able to live
up to customers’ expectations on-time delivery.
Development of customer quality / PPM
(Parts Per Million)
0
200
400
600
800
1000
1200
1400
202120202019201820172016
Reliability of delivery
%
60
70
80
90
100
202120202019201820172016
NPS-scale from -100 to +100.
How probable is it that you would recommend
Scanfil’s services?
Q2 2020 Q4 2020 Q2 2021 Q4 2021
NPS Score 38 37 25 22
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Supplier selection and Supplier Code of Conduct
Scanfil requires that all its partners comply with the law and agreements
and operate according to Scanfil’s Code of Conduct. Scanfil Supplier
Code of Conduct sets the standards we expect our suppliers to follow.
It is the starting point for any new or existing business relationship,
and it covers areas such as health and safety, child and forced labor,
human rights, anti-corruption, compliance with laws and regulations,
environment and climate change, and more. We expect our suppliers
to make every effort to comply with our Supplier Code of Conduct.
The Supplier Code of Conduct constitutes part of purchase agreements
signed with major suppliers. In addition, the Code of Conduct is signed
with all suppliers when operating in the Asian market. Scanfil selects
its suppliers carefully, and cooperation with its key suppliers is long-
term. Scanfil has an automated the supplier selection process. Scanfil
only uses approved suppliers that fulfill Scanfil’s strict criteria in terms
of quality, delivery reliability and cost-efficiency. Scanfil audits its
suppliers systematically and monitors their compliance with the terms
and conditions of agreements. It also prevents any misconduct through
the verification of orders and training. Once cooperation has started,
quality assurance is carried out continuously. This means that incoming
material is inspected, any non-conformities are kept under control, any
errors in quality are corrected and the general performance of suppliers is
evaluated. When new components or materials enter production, Scanfil
always uses a separate inspection process to ensure quality. Making use
of Scanfil’s global position and volume in procurement processes helps
to maintain competitive prices and control the supplier network. This
is why Scanfil aims to focus its purchases on a few selected suppliers.
The most important actions taken in 2021:
• Strengthen Scanfil Code of Conduct
• Create a common group level Supplier Code of Conduct
The most important actions to be taken in 2022:
• Sustainable Procurement – assessment of 80% most spend
suppliers, preferred suppliers and selected suppliers with an
increased risk profile
• Awareness training performed to prevent corruption and bribery
• Corruption risk assessments performed
• Awareness training performed to prevent anti-competitive
practices
• Anti-competitive practices risk assessments performed
• Continuous development of operations
• Continuous development of production processes
• Continuous improvement of competitiveness
Quality and performance
All Scanfil’s factories operate a quality control system observing the ISO
9001 criteria. In addition, certain factories have other certified quality
management systems applicable to specific industries. All Scanfil’s
factories observe the Lean Six Sigma process development methodology
and analysis (FMEA) that identifies the risks supply chain and production
risks. The objective is to identify the deficiencies and risks in processes
and production at an early stage, continuously make improvements,
and carry out preventive measures. Performance is measured by KPIs,
the most important being delivery punctuality and customer quality,
measured as Defective Parts Per Million (DPPM). In 2021, the KPIs
describing the quality and delivery reliability remained at the same
excellent level as in 2020.
Scanfil is committed to continuously develop its operation. The company’s
SMART program is an enabler of this. The company has made significant
investments in the digitalization and automation of its operations. The
technology investments have been made to further develop production
processes and by that improve company’s competitiveness. Scanfil
investments totaled 2.5% of company’s turnover.
Towards Sustainable Supply Chain
Procurement makes up approximately two-thirds of turnover, which is
why efficient procurement is a significant competitive factor for Scanfil.
Scanfil has a broad network of local, regional, and international suppliers
and partners, which it seeks to develop to ensure good quality and
cost-effectiveness.
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Business partners and society
Scanfil’s sales to customers totaled EUR 696 million, of which purchases
from external suppliers accounted for EUR 558 million. The difference,
EUR 138 million, was the added value produced by Scanfil. The added
value produced increased by EUR 7 million (+5%) from the previous year.
Scanfil produces added value for employees, creditors, shareholders,
and for the company’s further development. Most of the added value was
produced by the employees. During the year, Scanfil had an average of
3,300 employees and paid them EUR 78 million in salaries and wages.
Distribution of added value, EUR million Salaries and wages increased
by EUR 4 million, or 6%, year-on-year. Scanfil paid a total of EUR 26
million in other statutory staff costs and income taxes.
The company’s subsidiaries are located in seven different countries.
The location of these companies is based purely on business-related
factors, such as the customers’ market areas or their research and
development centers. Scanfil is committed to paying taxes and other
statutory expenses in each of its countries of operation. Scanfil has
solvent financial partners. The company’s financial position is strong.
The company’s credit and financial expenses totaled EUR 2 million,
slightly less than in the previous year. The company aims to pay a third
of its net result as annual dividends. In keeping with this principle,
Scanfil paid EUR 11 million in dividends in 2021. The dividend per share
paid by the company has increased every year for the last nine years.
Correspondingly, the company aims to use two-thirds of its result for
investments, future growth and the general development of business.
The company’s return on equity was 15.2% in 2021, which clearly shows
that the investments made in the company have repaid themselves well.
Scanfil value add creation 2021, EUR million
Sales to customer
696
(2020: 595)
Purchases from suppliers
558
(465)
Value add
138
(131)
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TABLE OF CONTENTS
BOARD OF DIRECTORS’ REPORT ............................................................................24
SHARES AND SHAREHOLDERS
...............................................................................28
KEY RATIOS
...................................................................................................................
Definitions of key ratios
................................................................................................... 31
CONSOLIDATED FINANCIAL STATEMENT, IFRS
...................................................32
Consolidated income statement
................................................................................. 32
Consolidated statement of financial position
.......................................................... 33
Consolidated statement of cash flow
......................................................................... 34
Consolidated statement of changes in equity
......................................................... 35
Accounting principles for consolidated
financial statements
........................................................................................................ 36
Notes to consolidated financial statements
............................................................. 39
1. ITEMS AFFECTING THE RESULT
1.1 Turnover and details of business segments .................................................. 39
1.2 Other operating income ..................................................................................... 43
1.3 Use of materials and supplies ........................................................................... 43
1.4 Employee benefit expenses .............................................................................. 43
1.5 Other operating expenses ................................................................................. 45
1.6 Income taxes .........................................................................................................46
1.7 Earnings per share ............................................................................................... 48
2. NET WORKING CAPITAL
2.1 Net working capital ..............................................................................................48
2.2 Inventories ............................................................................................................. 49
2.3 Trade and other receivables .............................................................................. 49
2.4 Trade and other liabilities ................................................................................... 50
3. NON-CURRENT ASSETS
3.1 Goodwill ................................................................................................................... 51
3.2 Other intangible assets ....................................................................................... 52
3.3 Property, plant and equipment .......................................................................... 54
3.4 Right-of-use assets ............................................................................................. 55
3.5 Depreciation, amortisation and impairment .................................................. 58
4. CAPITAL STRUCTURE
4.1 Cash and cash equivalents ................................................................................ 59
4.2 Financial income and expenses ....................................................................... 59
4.3 Financial liabilities ................................................................................................ 60
4.4 Book values and fair values of financial assets and liabilities ................... 60
4.5 Derivative financial instruments and hedge accounting ............................ 61
4.6 Hierarchy of fair values ........................................................................................ 63
4.7 Financial risk management ................................................................................ 64
4.8 Shareholders’ equity .............................................................................................67
4.9 Management of capital structure ..................................................................... 68
5. OTHER NOTES
5.1 Provisions ............................................................................................................... 69
5.2 Securities provided, contingent liabilities and other liabilities .................. 69
5.3 Details of related parties and Group structure .............................................. 70
5.4 Events after the reporting period ..................................................................... 70
PARENT COMPANY FINANCIAL STATEMENT, FAS
................................................
Parent company income statement
..............................................................................71
Parent company balance sheet
..................................................................................... 72
Parent company cash flow statement
......................................................................... 74
Notes to the parent company’s
financial statements
......................................................................................................... 75
The parent company’s accounting principles
...........................................................75
1. Personnel expenses .....................................................................................75
2. Other operating expenses ......................................................................... 76
3. Depreciation and amortisation ................................................................. 76
4. Contributions from Group companies ..................................................... 76
5. Income taxes ................................................................................................ 76
6. Intangible assets ..........................................................................................77
7. Tangible assets .............................................................................................77
8. Holdings in Group companies ................................................................... 78
9. Receivables from Group companies ........................................................ 78
10. Cash and cash equivalent .......................................................................... 78
11. Equity ............................................................................................................. 79
12. Depreciation difference .............................................................................. 79
13. Loans from financial institutions ............................................................... 79
14. Liabilities to Group companies .................................................................80
15. Accrued liabilities ........................................................................................80
16. Commitments and contingencies ............................................................80
17. Derivative contracts ....................................................................................80
18. Other rental contracts ..................................................................................81
19. Management’s employment-related benefits ......................................... 81
BOARD OF DIRECTORS’ PROPOSAL FOR THE DISTRIBUTION
OF PROFIT AND SIGNATURES
...................................................................................81
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BOARD OF DIRECTORS’ REPORT
Scanfil plc is an international listed (Nasdaq Helsinki, SCANFL) manufacturing
partner and system supplier for the electronic industry, with more than 45 years
of experience in demanding contract manufacturing. Overall management is one
of the Group’s strengths. Its services range from product design and production
suitability planning to prototype and pre-serial production, the volume manufacturing
of products and aftersales services such as maintenance and spare parts
services. On December 31, 2021, the Group employed some 3,300 people. At the end
of 2021, Scanfil had a total of nine factories in seven countries on three continents.
Key elements of Scanfil’s operations include a vertically integrated production
system and the provision of services and supply chain management for customers
over the entire lifecycle of products. These provide a solid foundation for Scanfil’s
competitive advantages: speed, flexibility and reliability. The company’s customers
include international operators in sectors such as automation, energy, cleantech,
and health technology, and companies operating in fields related to urbanization.
Year 2021
Strong customer demand and material availability challenges were characteristic for
the year 2021. Customer demand remained strong throughout the whole year, and
it became a year of record-high growth and turnover for Scanfil. Turnover increased
by 16.9% compared to the previous year, and it was EUR 695.7 million. Scanfil nearly
reached the target of EUR 700 million set for 2023, two years ahead of schedule.
Challenges in material availability affected Scanfil in two ways: first of all, material
shortages reduced the labour productivity by causing breaks and delays in planned
production. Secondly, Scanfil was forced to purchase materials from the spot
market with higher than planned prices, which were mainly invoiced from customers
without material margin.
During the year, one factory was closed down in Hamburg, Germany. Production
of the factory was transferred to factories in Wutha, Germany and Sieradz, Poland.
Production transfer and closure of the factory caused EUR 0.7 million costs during
the year in addition to the provision of EUR 6.1 million.
In 2020 started COVID-19 pandemic has only minor effects on turnover and operating
profit. The effects were mainly related to costs of preventative actions, sick leaves
and quarantine of exposed personnel. The effects are explained in the section of
”The effects of the COVID-19-pandemic during the financial year”.
Scanfil has a SMART technology program set for 2019–2023 years, which aims to
secure the company’s position as a technological forerunner. In 2021 investments
in production processes and the automation of material handling and digitalization
continued according to the SMART program. Scanfil invested in e.g., in a new
SMT line in Suzhou, a new soldering machine in Sieradz and in a new testing
solution which was taken into use in several different factories. In addition, the
company invested in a new punching-, laser- and pressing automation in the
factories of Pärnu, Sievi and Myslowice.
Turnover and result
The Group’s turnover for January–December was EUR 695.7 (595.3) million, an
increase of 16.9% compared to the previous year. Turnover includes EUR 42.5
million of low-margin invoicing, of which EUR 32.0 million was separately agreed
purchases related to securing the availability of materials needed for production.
These purchases related to securing deliveries were usually spot market purchases
of materials and special freights. This invoicing was no or low margin for Scanfil in
2021. Turnover excluding invoicing of separately agreed purchases was EUR 663.7
million, an increase of 11.7% compared to the previous year. In addition, turnover
included EU 10.5 million of low-margin intermediary trading.
The Group’s operating profit for January–December was EUR 39.6 (44.4) million,
5.7% (7.5%) of turnover. The operating profit for 2021 includes an adjustment of
EUR -0.7 million related to the closure of the Hamburg factory. The operating profit
for the comparison year includes adjustments of EUR +11.4 million related to the
divestment of the Hangzhou factory and EUR -6.1 million related to the closure of
the Hamburg factory. The adjusted operating profit was EUR 40.3 (39.1) million,
representing 5.8% (6.6%) of turnover. The operating profit was positively affected
by the increase in customer demand but received a negative impact from the
Hamburg production transfer as well as inefficiency caused by material shortages.
In addition, the transitory low margin invoicing of EUR 42.5 million lowered the
profit margin. The negative impact raising from these was approximately EUR 5.0
million, i.e., 0.7% of turnover.
The net profit for the review period was EUR 29.8 (36.9) million. The adjusted net
profit was EUR 32.0 (32.5) million.
Earnings per share for the review period were EUR 0.46 (0.57). The adjusted
earnings per share were EUR 0.50 (0.50). Return on investment was 15.3% (19.5%).
The Group’s effective tax rate was 21.0% (11.7%). The comparison figure was affected
by the low tax on sales gains from the Chinese subsidiary Scanfil (Hangzhou) Co., Ltd.
and the tax relief related to investments made in Poland’s special economic zone.
The Group’s key figures over five years are presented under “The Group’s key
figures” in the financial statements.
Financing position and investments
The Group has a stable financing position. In total, the consolidated balance sheet
was EUR 473.8 (339.2) million at the end of the review period. Cash and cash
equivalents totalled EUR 25.3 (25.8) million. Liabilities amounted to EUR 266.4 (156.3)
million, of which non-interest-bearing liabilities totalled EUR 181.2 (112.3) million and
interest-bearing liabilities totalled EUR 85.2 (44.0) million. Interest-bearing liabilities
consisted of EUR 62.1 (24.4) million of financial liabilities and EUR 23.1 (19.6) million of
leasing liabilities. The increase in non-interest bearing liabilities was caused by the
increase in current assets, which rose due to an increase in turnover, the slowdown
of inventory rotation caused by material availability challenges and an increase in
material prices. The interest-bearing liabilities were increased by the long-term
debt of EUR 30.0 million, drawn in November 2021. The equity ratio was 45.3%
(54.3%), and net gearing was 28.9% (9.9%). Equity per share was EUR 3.19 (2.82).
The Group’s financial arrangement includes discharge covenants related to equity
ratio and interest-bearing net debt/EBITDA ratio. The terms of the covenants are
reviewed quarterly. At the end of the period under review, the terms have been
clearly complied with.
The net cash flow from operating activities for the review period January–
December was EUR -12.5 (35.2) million. The change in net working capital during the
period amounted to EUR -52.7 (-8.0) million. The change in working capital consists
of the following items: short-term non-interest-bearing receivables increased by EUR
34.6 (17.5) million; inventories increased by EUR 88.3 (6.6) million, and short-term non-
interest-bearing liabilities increased by EUR 70.3 (16.1) million.
The net cash flow from investing activities was EUR -12.5 (4.1) million. The cash flow
from financing activities was EUR 24.3 (-33.3) million, including a EUR 11.0 (9.6) million
dividend payment, 6.0 (6.0) million in repayments of long-term loans, and change
in overdraft facility EUR 13.9 (13.2) million.
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Gross investments in January–December totalled EUR 15.5 (9.4) million, which
was 2.2% (1.6%) of the turnover. The investments mainly include the acquisition
of machinery and equipment. Depreciation including impairments totalled EUR
15.4 (16.1) million.
The impact of COVID-19 during the review period
The COVID-19 pandemic had only a small negative impact on the Group’s productivity
and operating profit. The impacts mainly arose from costs related to preventive
actions at the factories.
COVID-19 did not have any significant negative impact on the Group’s cash flow
during January–December nor on the Group’s financial structure or costs. The
pandemic had no impact on balance sheet valuations, such as inventories, fixed
assets or goodwill.
Factories have factory-specific measures to prevent the spread of COVID-19 in
accordance with the prevailing situation and instructions given by the authorities.
These measures include e.g., shift changes being undertaken so that employees
working different shifts do not meet one another during shift changes; the enhanced
cleaning of work facilities; the restriction of travel and visits, remote work when
possible; the use of protective equipment and safety distances; and hygiene
guidelines for employees.
The situation might change rapidly, and the company management is conscious of
the importance of active monitoring and quick response.
The Board of Directors’ authorizations
Scanfil plc’s Annual General Meeting was held on April 22, 2021, at the premises
of Borenius Attorneys Ltd. Due to the COVID-19 pandemic, shareholders and their
proxies had to vote in advance and physical attendance at the Meeting was not
possible.
The Meeting authorized the Board of Directors to decide on the acquisition of the
company’s own shares and to decide on share issues through one or more issues.
The Board of Directors’ proposals to the General Meeting and the minutes of the
Annual General Meeting are available on the company website at scanfil.com/agm.
Option schemes
The Group has two valid option schemes. On April 12, 2016, the Annual General
Meeting accepted Scanfil plc’s 2016 option scheme (A)–(C), and on April 24, 2019,
the Annual General Meeting accepted the 2019 option scheme (A–C) On the basis of
the 2016 option scheme, a maximum of 900,000 option rights can be granted, while
on the basis of the 2019 option scheme, a maximum of 900,000 option rights can be
granted. Each option right enables its holder to subscribe to one Scanfil plc share.
During the period under review, a total of 290,000 treasury shares were subscribed
under Scanfil Plc’s stock options 2016B (160,000 shares with EUR 571,200) and
2016C (130,000 shares with EUR 582,400). The whole subscription price of EUR
1,153,600 for subscriptions made with the stock options was recognized in the
company’s reserve for invested unrestricted equity.
Share
Scanfil plc has a total of 64,959,993 shares. The company’s registered share
capital is EUR 2,000,000. The company has one series of shares, and each share
entitles the holder to one vote and an equal right to receive dividends. Scanfil plc’s
shares are quoted on Nasdaq Helsinki Ltd. The shares have been publicly traded
since January 2, 2012. The trading code of the shares is SCANFL. The shares are
included in the book-entry securities system maintained by Euroclear Finland Oy.
Members of the Board of Directors of Scanfil plc, the CEO and members of the
Group’s Management Team held a total of 19,089,657 shares on December 31,
2021, comprising 29.4% of the company’s shares and votes. A total of 800,000
option rights has been granted for the CEO and members of the Group’s
Management Team, on the basis of which a maximum of 800,000 treasury shares
can be subscribed, of which 630,000 are still unsubscribed. The total of 800,000
corresponds 1.2% of all shares in Scanfil plc.
The highest trading price during the financial year was EUR 9.02, and the lowest
was EUR 6.24, with the closing price for the period standing at EUR 7.46. A total
of 4,414,796 shares were traded during the period, corresponding to 6.8% of the
total number of shares. As of December 31, 2021, the market value of the shares
was EUR 484.6 million.
More detailed information on the distribution of shareholdings, shareholders and
the share price development is presented under “Shares and shareholders” in the
financial statements.
Own shares
On December 31, 2021, the company owned 158,738 of its own shares, representing
0.3% of all shares.
Personnel
At the end of the financial period, the Group employed 3,282 (3,211) people, of whom
2,970 (2,898) worked outside Finland and 312 (313) in Finland. The average number
of Group employees during the financial period was 3,267 (3,387) people. Change
is mainly attributable to the sale of the Hangzhou factory. Personnel by country on
December 31, 2021: Poland 1,247, China 535, Estonia 455, Sweden 364, Finland 311,
Germany 230 and USA 139.
PERSONNEL, AVARAGE 2021 2020 2019
Parent company 13 13 13
The Group 3,267 3,387 3,530
PAID SALARIES, WAGES AND FEES
EUR MILLION
2021 2020 2019
Parent company 1.8 1.7 1.6
The Group 77.8 77.3 74.1
Board of Directors and CEO
At the Annual General Meeting on April 22, 2021, Harri Takanen, Jarkko Takanen,
Bengt Engström, Christina Lindstedt and Juha Räisänen were re-elected to
the Board of Directors. At its organising meeting on April 22, 2021, the Board of
Directors elected Harri Takanen as its chair.
In addition, the Board of Directors made the following decisions on the
organisation of committees: the members of the Audit Committee are Jarkko
Takanen, Harri Takanen and Christina Lindstedt, and the members of the
Nomination and Remuneration Committee are Harri Takanen, Jarkko Takanen and
Bengt Engström.
Petteri Jokitalo (b. 1963), M.Sc. (Tech.), served as the company’s CEO between
January 1 and December 31, 2021.
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ANNUAL REPORT 2021/26
Risks
Scanfil has determined the most significant risks in its operations. Risks related
to sustainability have been discussed in the Sustainability Report. The Group
monitors and follows all identified and potential risks. The Board of Directors
steers the risk management processes and Audit Committee supervises the
implementation. Operative management of the risk management is led by CFO.
More information can be found in the Corporate Governance Statement’s risk
management section.
Near-future business risks and uncertainties
Scanfil is exposed to many risks that may have a significant impact on the Group’s
operations. This section dis-cusses the most essential risk factors, which may have
a material impact on Scanfil’s ability to achieve targets set by the Group and means
to manage related risks. Scanfil seeks actively to reduce the impact of these risk
factors by preventive actions. If preventative actions are not possible, risks can be
managed by hedging or using insurances. Many risks might have both positive and
negative effects. The most significant risks are associated with the order-supply
chain and the suppliers’ ability to fulfill their business commitments.
STRATEGIC RISKS
The Group pursues for profitable growth in its key market areas: Nordics, Central
Europe, The USA and China. The turnover target for the year 2023 has been EUR
700 million and an operating profit margin of 7%. In a recent update, the annual
turnover growth target has been set to 5%-7% and operating profit margin target
of 7%. It is possible that the profitability and growth target will not be achieved.
RISKS RELATED TO BUSINESS CYCLES
The Group has a global business and therefore the weakening of the economic cycle
and the declining demand of investment goods might have a negative impact on
the development of business of Scanfil’s customers and weak-en the demand in
the contract manufacturing market.
GEOGRAPHICAL RISK
Scanfil has a global business. Changes in international trade agreements and
an increase in international trade restrictions might raise the uncertainty of the
development of the global economy and have a direct or indirect impact on Scanfil
or its customers’ business and profit.
OPERATIONAL RISKS
The vast part of materials and components used in the supply chain are purchased
from external suppliers or subcontractors. This exposes the Group to the
availability and costs related to materials, components and other subcontracted
products in addition to the contingency of the business relationship. Possible
challenges in purchasing these components or issues in quality might cause
disturbance in production and increase costs.
RISKS RELATED TO ACCIDENTS AND DISTURBANCES AT THE FACTORIES
The Group has nine factories in seven countries: Finland, Sweden, Estonia, Germany,
Poland, The USA and China. Continuous care taking and maintenance investments
are an essential part of technical development and produc-tion ensurance at the
factories. Scanfil prevents disturbances and cut-offs with a developed means of
management and procedures, service plans and employee trainings.
CUSTOMER RISKS
The Group has approximately 150 active customers. The largest customers are
Nordic leaders of their line of busi-ness. Customer companies are well-diversified
across different business areas and geographies. In general, their business is not
especially sensitive to changes in business cycles and product life cycles are long,
which creates possibilities to less volatile service and refurbishing businesses. In
2021, the largest customer accounted for approximately 18% (15%) of the turnover
and the ten largest accounted for 55% (59%) of the turnover.
EXCHANGE RATE RISKS
Scanfil operates globally, and therefore it is exposed to exchange rate risks in
several currencies. The Group’s ex-change rate risks consist of transaction risks
associated with accounts receivable and payable, translation risks associated with
foreign subsidiaries, and financial risks resulting from exchange rate changes.
Forward foreign exchange contracts can be used to hedge against transaction risks.
The parent company is responsible for the level of hedging. Investments in foreign
subsidiaries have not been hedged.
INTEREST RATE RISK
The interest rate risk is associated with return on financial investments and
interest-bearing liabilities. Any changes in interest rates have an impact on the Group’s
results. The interest rate risk of loans can be controlled with swap agreements and
by adjusting the proportion between variable rate and fixed-interest loans.
CREDIT RISK
Credit risks are associated with accounts receivable from customers. The largest
customers of the Group are sol-vent Nordic market leaders in their line of business.
The due accounts receivables are monitored on a monthly basis on the Group level.
Credit information of all new customers are checked and only normal payment
terms are committed to customers. Customers’ credit ratings are monitored, and
the most of Scanfil’s largest customers have high ratings. Accounts receivable do
not involve any significant credit loss risk.
FINANCING RISKS
Scanfil Group is exposed to many financial risks in its operations. The Group’s
financing and risks control are central-ized and taken care of according to the
policies approved by the parent company’s Board of Directors. Scanfil’s financing
function is a part of the Group’s financial operations, which offers financing services
and takes care of the financial transactions on behalf of all Group companies. Target
is to have cost-efficient risk management and optimisation of cash flow.
PANDEMIC RISKS
After 2020, when the COVID-19 pandemic started, it and similar epidemics might
have an impact on the Group’s business operations. The effects could be e.g.,
closings of factories, increase in employees’ sick leaves and quarantines, costs
related to preventative actions and even temporary stops in production and/or
delays in materials and delay in deliveries of manufactured products.
MATERIAL RISKS
The Group is dependent on materials and components delivered by its business
partners. Materials and compo-nents, such as sheet metals and semiconductors,
availability might weaken significantly and/or their market prices could increase
sharply. The Group has a global procurement function responsible for the
availability of these materials by founding and using trusted partners. Scanfil has the
purchasing power and organization with what it can affect on partners reliability on
supply and pricing to a reasonable extent. In 2021, when the semiconductor shortage
escalated, the Group has not been fully able to fulfil the demand what customers’
production required. In addition, obsolete materials and components can create a
financial risk which is limited to their book-value to the Group.
RISK IN FALLING BEHIND IN TECHNOLOGICAL DEVELOPMENT
Scanfil is dependent on adopting technologies needed for customer production in
an efficient manner as an integral part of its operations. It is possible, that the Group
cannot develop its production with a tight schedule and products manufactured
on behalf of its customers are not competitive, which might cause its customers
to change the manufacturing partner. Scanfil has systematically responded to this
challenge with e.g., through its technology program SMART and by investing in new
competitive machines and equipment. The five-year program for com-petitiveness
and technological forerunner runs 2019-2023.
The company’s risks and risk management are described in greater detail on
the company’s website under “Corporate Governance” and in the notes to the
consolidated financial statement.
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ANNUAL REPORT 2021/27
Changes in the Group structure
There have been no changes in the Group structure during the reporting period.
Research and development
As a result of the nature of the company’s business operations, R&D activities
are primarily carried out with customers, and the company’s R&D activities do not
account for any significant part of the company’s cost structure.
Proposals by the Board of Directors
to the Annual General Meeting
Scanfil plc’s Annual General Meeting has been planned to be held on April 21, 2022,
as a remote meeting in ac-cordance with the temporary legislative act.
Dividend for 2021
The parent company’s distributable assets total EUR 64,773,284.67, including
undistributed profits of EUR 31,264,893.13. The Board of Directors proposes to
the Annual General Meeting that a dividend of EUR 0.19 (0.17) per share, totalling
EUR 12,316,038.45 be paid for the financial year ending on December 31, 2021. The
dividend will be paid to shareholders, who are recorded on April 25, 2022, in the
company’s list of shareholders maintained by Euroclear Finland Oy. The dividend
will be paid on May 2, 2022.
No significant changes have taken place in the company’s financial position since
the end of the financial year. In the view of the Board of Directors, the proposed
dividend pay-out will not put the company’s liquidity at risk.
The proposal of Scanfil plc’s nomination committee to the General Meeting for the
composition of Scanfil plc’s Board of Directors will be published in connection with
the invitation to the General Meeting.
Future Outlook
Scanfil estimates that its turnover for 2022 will be EUR 710–760 million, and its
adjusted operating profit will be EUR 43–48 million.
The guidance is based on customer forecasts and Scanfil’s normal forecasting
process. Outlook involves uncertainty arising from the potential negative impact
of the availability and prices of certain materials, especially semiconductors, and
supply chains delivery capability. In addition, the COVID-19 pandemic might have a
negative impact on customer demand and supply chain.
Long-term targets
Scanfil is organically aiming for 5%-7% annual turnover growth and 7% operating
profit level. Scanfil aims to pay an increasing dividend of approximately 1/3 of the
earnings per share.
Events after the reporting period
No material events to be reported have occurred after the reporting period.
Corporate Governance Statement
The Corporate Governance Statement will be published with the financial statements
separately from the annual report.
Report on non-financial information
Scanfil reports its non-financial information as a part of its sustainability report,
which will be published as a part of the annual report.
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GovernanceFinancial reviewAnnual review
ANNUAL REPORT 2021/28
SHARES AND SHAREHOLDERS
Shares and share capital
Scanfil plc has a total of 64,959,993 shares. The company’s registered share capital
is EUR 2,000,000. The company has one series of shares, and each share entitles
the holder to one vote and an equal right to receive dividends.
Scanfil plc’s shares are quoted on Nasdaq Helsinki Ltd. The shares have been publicly
traded since January 2, 2012. The trading code of the shares is SCANFL. The shares
are included in the book-entry securities system maintained by Euroclear Finland Ltd.
Board’s authorisations in force
At the end of the financial period, the Board of Directors of Scanfil plc did not have
any share issue authorisations or authorisations to issue convertible bonds or
bonds with warrants.
The Annual General Meeting of Scanfil plc held on April 22, 2021 authorised the Board
of Directors to decide on the acquisition of at most 5,000,000 treasury shares. The
authorization will remain in force for 18 months after its issuance.
On April 22, 2021, the AGM authorised the Board of Directors to decide on share
issues and the issue of special rights entitling their holders to shares. No more
than thirteen million (13,000,000) shares may be issued under the authorisation.
The Board of Directors decides on the terms and conditions of share issues and
the issuance of special rights entitling their holders to shares. The authorisation
concerns both the issue of new shares and the transfer of treasury shares. Shares
and special rights entitling their holders to shares can be issued in deviation from
the shareholders’ pre-emptive rights (directed issue). The authorisation will remain
in force until June 30, 2022.
On April 24, 2019, Scanfil plc’s AGM authorised the Board of Directors to decide
on granting options rights to certain key personnel of Scanfil Group. At most
900,000 option rights can be issued, and they entitle their holders to subscribe to a
combined total of 900,000 of the company’s new shares or shares in its possession.
Own shares
The company held 158,738 of its own shares on December 31, 2021.
Dividend distribution policy
The company aims to pay dividends annually. The level of dividends paid and the
date of payment are affected, inter alia, by the group’s results, financial position,
need for capital and other possible factors. The aim is to distribute approximately
one-third of the Group’s annual profit as dividend to shareholders.
Dividend
The Board of Directors proposes to the Annual General Meeting that a dividend
of EUR 0.19 per share, totalling EUR 12,316,038.45, be paid for the financial year
ending on December 31, 2021.
Share price development, trading and market value
During 2021, the number of Scanfil plc shares traded on Nasdaq Helsinki Ltd was
4,414,796, comprising 6.8% of all outstanding shares. The value of shares traded was
EUR 33.6 million and the average price was EUR 7.61. The market value of the share
capital was EUR 484.6 million on December 31, 2021. The highest trading price was
EUR 9.02 and the lowest EUR 6.24. The closing price was EUR 7.46.
Information on shareholders
On December 31, 2021, Scanfil plc had a total of 7,003 shareholders, 83.1% of
whom owned a maximum of 1,000 shares in the company. The ten major share-
holders owned 72.7% of the shares. Nominee-registered shares accounted for
3.6% of the shares.
Shares held by management
Members of the Board of Directors of Scanfil plc, the CEO and members of the
Group’s Management Team held a total of 19,079,657 shares on December 31,
2021, comprising 29.4% of the company’s shares and votes.
SHARE PRICE DEVELOPMENT IN COMPARED TO THE GENERAL INDEX
5,0
5,5
6,0
6,5
7,0
7, 5
8,0
8,5
9,0
9,5
3.12.20214.11.20214.10.20216.9.20214.8.20215.7.20214.6.20214.5.20216.4.20214.3.20214.2.2021
9,5
9
8,5
8
7,5
7
6,5
6
5,5
5
2.1. 2.2. 2.3. 2.4. 2.5. 2.6. 2.7. 2.8. 2.9. 2.10. 2.11. 2.12.
Scanfil plc
OMX Helsinki Index
ANNUAL REPORT 2021/29
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GovernanceFinancial reviewAnnual review
BREAKDOWN OF SHARE OWNERSHIP
BREAKDOWN OF SHARE OWNERSHIP BY NUMBER OF SHARES HELD ON DECEMBER ,
INFORMATION ON SHAREHOLDERS
MAJOR SHAREHOLDERS ON DECEMBER ,
Number of shares
Number
of shares
pcs
Percentage
of owners
%
Total number
of shares
and votes
pcs
Percentage
of shares
and votes
%
1–100 1,927 27.52 96,944 0.15
101–1,000 3,895 55.62 1,515,716 2.33
1,001–10,000 1,019 14.55 2,806,426 4.32
10,001–100,000 130 1.86 4,040,888 6.22
100,001–9,999.999 32 0.46 56,500,019 86.98
Total 7,003 100.00 64,959,993 100.00
Number of
shareholders Share %
Number
of shares Share %
Corporations 256 3.66 9,315,031 14.34
Financial and insurance institutions 27 0.39 5,740,180 8.84
Public entities 5 0.07 1,808,883 2.78
Non-profit-making organisations 20 0.29 2,090,774 3.22
Households 6,672 95.27 45,737,299 70.41
Non-Finnish owners 23 0.33 267,826 0.41
Total 7,003 100.00 64,829,993 100.00
Of which nominee-registered 10 2,366,796 3.64
BREAKDOWN OF SHARE OWNERSHIP BY OWNER CATEGORY ON DECEMBER ,
pcs
Share %
of shares
and votes
1. Takanen Harri 9,913,146 15.26
2. Takanen Jarkko 8,596,169 13.23
3. Varikot Oy 7,606,442 11.71
4. Takanen Jorma Jussi 6,129,305 9.44
5. Tolonen Jonna 3,351,950 5.16
6. Pöllä Reijo 3,328,745 5.12
7. Laakkonen Mikko 2,531,187 3.90
8. Takanen Martti 1,947,018 3.00
9. Sijoitusrahasto Aktia Captial 1,918,000 2.95
10. Riitta ja Jorma J. Takasen säätiö 1,900,000 2.92
ANNUAL REPORT 2021/30
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GovernanceFinancial reviewAnnual review
2021 2020 2019 2018 2017 2016
Financial key ratios
Turnover, EUR m 695.7 595.3 579.4 563.0 529.9 508.0
Turnover, growth from previous year, % 16.9 2.7 2.9 6.3 4.3 34.6
Operating profit, EUR m 39.6 44,4 35.3 37.8 31.3 7.2
Operating profit, % of turnover 5.7 7.5 6.1 6.7 5.9 1.4
Profit/loss for the period, EUR m 29.8 36,9 28.1 28.9 25.8 0.1
Profit/loss for the period, % of turnover 4.3 6.2 4.8 5.1 4.9 0.0
Return on equity, % 15.2 21.1 18.0 21.5 22.2 0.1
Return on investment, % 15.3 19.5 17.0 20.2 19.4 4.6
Interest-bearing liabilities, EUR m 85.2 44.0 66.6 47.3 61.3 60.1
Gearing, % 28.9 9.9 27.7 19.5 32.6 36.9
Equity ratio, % 45.3 54.3 49.1 47.7 40.7 40.7
Gross investments in fixed assets, EUR m 15.5 9.4 21.1 10.1 18.6 5.5
Gross investments in fixed assets, % of turnover 2.2 1.6 3.6 1.8 3.5 1.1
Average number of employees for the period 3,267 3,387 3,530 3,414 3,254 3,483
2021 2020 2019 2018 2017 2016
Key indicators per share
Earnings per share, EUR 0.46 0.57 0.44 0.45 0.40 0.00
Shareholders’ equity per share, EUR 3.18 2.82 2.58 2.26 1.95 1.70
Dividend per share, EUR 0.19 0.17 0.15 0.13 0.11 0.09
Dividend per earnings, % 41.3 29.8 34.3 28.7 27.2 6118.9
Effective dividend yield, % 2.55 2.61 3.07 3.47 2.59 2.58
Price-to-earnings ratio (P/E) 16.2 11.4 11.2 8.3 10.5 2,372.8
Share trading
No. of shares traded, thousands 4,415 6,290 3,526 3,341 3,296 9,424
Percentage of total shares, % 6.8 9.7 5.4 5.2 5.2 14.8
Share performance
Lowest price for year, EUR 6.24 3.26 3.73 3.45 3.42 2.86
Highest price for year, EUR 9.02 6.70 4.96 5.16 4.53 3.80
Average price for year, EUR 7.61 5.07 4.16 4.44 3.92 3.41
Price at the end of year, EUR 7.46 6.52 4.89 3.75 4.25 3.49
Market value of share capital on 31 Dec, EUR m 484.6 422.7 316.4 240.1 271.6 222.2
Share-issue adjusted number of shares
Share-issue adjusted number of shares
at the end of the period, thousands
64,960 64,830 64,700 64,035 63,895 63,670
On average during the period, thousands 64,701 64,387 64,296 63,945 63,757 62,423
KEY RATIOS
The adoption of IFRS 16 in 2019 has affected the comparability of some key figures. The effect mainly concerns the equity ratio and gearing ratio.
ANNUAL REPORT 2021/31
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Return on equity, % Net profit for the period x 100
Shareholders’ equity (average)
Adjusted return on equity, % Adjusted net profit for the period x 100
Adjusted shareholders’ equity (average)
Return on investment, % (Profit before taxes + interest and other financial expenses) x 100
Balance sheet total - non-interest-bearing liabilities (average)
Gearing (%) (Interest-bearing liabilities - cash and other liquid financial assets)
Shareholders’ equity
Equity ratio (%) Shareholders’ equity x 100
Balance sheet total - advance payments received
Earnings per share Net profit for the period
Average adjusted number of shares during the year
Shareholders’ equity per share Shareholders’ equity
Adjusted number of shares at the end of the financial period
Dividend per share Dividend to be distributed for the period (Board’s proposal)
Number of shares at the end of year
Dividend per earnings (%) Dividend per share x 100
Earnings per share
Effective dividend yield (%) Dividend per share x 100
Share price at the end of year
Price-to-earnings ratio (P/E) Share price at the end of year
Earnings per share
Average share price Total share turnover
Number of shares traded
Market capitalization Number of shares x last trading price of the financial period
Adjusted item A non-recurring significant item that deviates from normal business
operations, which affects the comparability between different periods
DEFINITIONS OF KEY RATIOS
ANNUAL REPORT 2021/32
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CONSOLIDATED FINANCIAL STATEMENT, IFRS
EUR THOUSAND Note 1.1.-31.12.2021 1.1.–31.12.2020
Turnover 1.1 695,735 595,347
Other operating income 1.2 1,167 12,384
Changes in inventories of finished goods
and work in progress
Manufacturing for own use 25
Use of materials and supplies 1.3 -491,339 -410,335
Employee benefit expenses 1.4 -97,474 -95,496
Depreciation and amortisation 3.5 -15,376 -16,088
Other operating expenses 1.5 -56,108 -43,896
Operating profit 39,583 44,372
Financial income 4.2 61 292
Financial expense 4.2 -1,988 -2,871
Profit before tax 37,656 41,793
Income tax 1.6 -7,901 -4,895
Net profit for the period 29,756 36,898
Attributable to:
The parent company owners 29,756 36,898
Earnings per share calculated on the profit attributable
to shareholders of the parent company:
undiluted earnings per share 1.7 0.46 0.57
diluted earnings per share 1.7 0.46 0.57
EUR THOUSAND Note 1.1.-31.12.2021 1.1.–31.12.2020
Net profit for the period 29,756 36,898
Other comprehensive income
Items that may later be recognised in profit or loss
Translation differences 4.8 3,706 -2,789
Cash flow hedges 4.8 488 -727
Other comprehensive income,
net of tax 4,194 -3,516
Total comprehensive income 33,950 33,382
Total comprehensive income attributable to:
The parent company owners 33,950 33,382
Consolidated Income Statement Consolidated Statement of Comprehensive Income
ANNUAL REPORT 2021/33
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EUR THOUSAND Note 31.12.2021 31.12.2020
ASSETS
Non-current assets
Property, plant and equipment 3.3 49,792 46,356
Right-of-use-assets 3.4 22,240 18,125
Goodwill 3.1 8,166 8,304
Other intangible assets 3.2 12,906 14,260
Other investments 4.6 535 535
Deferred tax assets 1.6 8,501 6,884
Current assets
Inventories 2.2 193,358 103,254
Trade and other receivables 2.3 149,027 113,305
Advance payments 1,303 562
Current tax 2,641 1,761
Cash and cash equivalents 4.1 25,345 25,845
Total assets 473,814 339,191
EUR THOUSAND Note 31.12.2021 31.12.2020
EQUITY AND LIABILITIES
Shareholder's equity and liabilities 4.8
Share capital 2,000 2,000
Reserve for invested unrestricted equity fund 33,165 31,832
Fair Value Reserve -71 -558
Other reserves 2,650 2,650
Translation differences -2,357 -6,063
Retained earnings 172,043 153,015
Total equity 207,430 182,876
Non-current liabilities
Provisions 5.1 665 553
Interest bearing liabilities 4.3 42,078 18,242
Lease liabilities 4.3 19,903 15,905
Deferred tax liabilities 1.6 5,290 5,711
Current liabilities
Trade and other liabilities 2.4 172,290 100,104
Current tax 1,376 1,770
Provisions 5.1 1,560 4,183
Interest bearing liabilities 4.3 20,041 6,188
Lease liabilities 4.3 3,182 3,659
Total liabilities 266,385 156,315
Total shareholder's equity and liabilities 473,814 339,191
Consolidated Statement of Financial Position
ANNUAL REPORT 2021/34
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EUR THOUSAND Note 1.1.–31.12.2021 1.1.–31.12.2020
Cash flow from operating activities
Net profit 29,756 36,898
Adjustments for the net profit
Transactions without payment:
Change in provisions -2,506 4,164
Transactions from the sale of a subsidiary -11,387
Capital gain / loss for fixed assets -289 -18
Exchange rate differences 37 -1,380
Other adjustments 301 202
Depreciation and amortisation 15,376 16,088
Financial income -61 -3,940
Financial expenses 1,988 6,520
Taxes 7,859 4,907
Change in net working capital:
Change in accounts receivable and other receivables -34,644 -17,471
Change in inventories -88,340 -6,606
Change in accounts payable and other liabilities 70,292 16,050
Change in net working capital total -52,692 -8,026
Paid interests and other financial expenses -1,046 -1,708
Interest received 44 158
Taxes paid -11,304 -7,283
Net cash from operating activities -12,537 35,194
EUR THOUSAND Note 1.1.–31.12.2021 1.1.–31.12.2020
Cash flow from investing activities
Sale of subsidiary less cash at the time of sale 13,059
Investments in tangible and intangible assets 3.2, 3.3 -12,901 -9,355
Sale of tangible and intangible assets 356 301
Received dividends 100
Net cash from investing activities -12,546 4,105
Cash flow from financing activities
Share subscriptions based on stock options 1.4 1,333 858
Purchase of own shares -755
Proceeds from short-term loans 13,851 1,246
Repayment of short-term loans -161 -15,070
Proceeds from long-term loans 30,000
Repayment of long-term loans -6,000 -6,000
Repayment of lease liabilities -3,742 -3,990
Paid dividends -10,987 -9,637
Net cash from financing activities 24,293 -33,347
Net increase/decrease in cash and cash equivalents -789 5,952
Cash and cash equivalents at beginning of period 25,845 20,353
Changes in exchange rates 290 -460
Cash and cash equivalents at end of period 25,345 25,845
Consolidated Statement of Cash Flow
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Consolidated Statement of Changes in Equity
Equity attributable to equity holders of the parent company
EUR THOUSAND
Share
capital
Reserve for
invested
unrestricted
equity fund
Fair
value
reserve
Other
reserves
Translation
differences
Retained
earnings
Equity
total
Equity 1.1.2021 2,000 31,832 -558 2,650 -6,063 153,015 182,876
Comprehensive income
Net profit for the period 29,756 29,756
Other comprehensive income (net of tax)
Translation differences 3,706 3,706
Cash flow hedges 488 488
Total comprehensive income 488 3,706 29,756 33,950
Transactions with owners
Option Scheme 259 259
Paid dividends -10,987 -10,987
Share options exercised 1,333 1,333
Equity 31.12.2021 2,000 33,165 -71 2,650 -2,357 172,043 207,430
Equity attributable to equity holders of the parent company
EUR THOUSAND
Share
capital
Reserve for
invested
unrestricted
equity fund
Fair
value
reserve
Other
reserves
Translation
differences
Retained
earnings
Equity
total
Equity 1.1.2020 2,000 30,974 168 6,910 4,600 122,035 166,688
Comprehensive income
Net profit for the period 36,898 36,898
Other comprehensive income (net of tax)
Translation differences -2,789 -2,789
Cash flow hedges -727 -727
Total comprehensive income -727 -2,789 36,898 33,382
Sale of subsidiary -4,260 -7,875 4,260 -7,875
Transactions with owners
Purchase of own shares -755 -755
Option Scheme 214 214
Paid dividends -9,637 -9,637
Share options exercised 858 858
Equity 31.12.2020 2,000 31,832 -558 2,650 -6,063 153,015 182,876
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Accounting principle Note IFRS standard
Turnover and details of business segments 1.1 IFRS 15, IFRS 8, IAS 18
Employee benefit expenses 1.4 IAS 19, IFRS 2
Income taxes and deferred taxes 1.6 IAS 12
Inventories 2.2 IAS 2
Goodwill and impairment testing 3.1 IAS 36
Intangible assets 3.2 IAS 38, IFRS 3
Property, plant and equipment 3.3 IAS 16, IAS 23
Right-of-use-assets 3.4 IFRS 16
Financial income and expenses 4.2 IFRS 9, IAS 32, IAS 39, IFRS 7
Financial liabilities and Cash and cash equivalents 4.1, 4.3 IFRS 9, IAS 32, IAS 39, IFRS 7, IFRS 13
Provisions 5.1 IAS 37
ACCOUNTING PRINCIPLES FOR CONSOLIDATED
FINANCIAL STATEMENTS
Basic details of the group
Scanfil plc is a Finland-based public limited company domiciled in Sievi. Theparent
company Scanfil plc and the subgroups Scanfil EMS Oy, Scanfil Sweden AB and
Scanfil Holding Germany GmbH make up Scanfil Group (hereinafter ‘Scanfil’ or ‘the
group’). The shares of parent company Scanfil plc have been quoted on the Main
List of Nasdaq Helsinki Ltd since January 2, 2012.
Scanfil is an international contract manufacturer and system supplier for the
electronics industry with over 45 years of experience in demanding contract
manufacturing. Scanfil provides its customers with an extensive array of services,
ranging from product design to product manufacturing, material procurement and
logistics solutions. Typical Scanfil products include automation system modules,
frequency converters, elevator control systems, analysers, various vending machines,
and devices related to medical technology and meteorology. Scanfil’s network of
factories consists of 9 production units in Europe, Asia and North America. The total
number of employees is approximately 3,300.
Accounting principles
Scanfil’s consolidated financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRS), applying the IAS and IFRS
effective on December 31, 2021, as well as the SIC and IFRIC interpretations. “IFRS”
refers to the standards and their interpretations in the Finnish Accounting Act and the
provisions issued thereunder in accordance with the Regulation (EC) No 1606/2002
of the European Parliament and of the Council on the application of international
accounting standards within the Community. The notes to the consolidated financial
statements are also in compliance with Finnish accounting and corporate legislation.
The consolidated financial statements have been prepared for the period January 1 –
December 31, 2021. In its meeting held on February 21, 2022, the Board of Directors of
Scanfil plc approved the consolidated financial statements for publication. According
to the Finnish Limited Liability Companies Act, the ordinary general meeting has
the right to adopt, reject or amend the financial statements after their publication.
Unless otherwise stated, the financial statements are presented in thousands
of euros, and the information is based on historical costs of transactions, unless
otherwise stated in the accounting principles.
All individual figures and totals presented in the financial statements have been
rounded, due to which the total sum of single figures may differ from the sum
presented. The key figures were calculated using precise values.
Accounting principles for consolidated
financial statements
The general accounting principles used for consolidated financial statements are
described in this section. More detailed accounting principles are shown below in
connection with each item.
The table below shows the accounting principles used for the consolidated financial
statements of Scanfil plc, the associated notes and references to the most important
IFRS regulating the financial statement items.
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SUBSIDIARIES’ COMBINATION PRINCIPLES
Subsidiaries are companies controlled by the group. Control emerges when the group
controls more than one half of the votes or otherwise has control. The group has
controlling interest in an entity when it has the right and ability to control significant
operations in the entity and when it is exposed to or has the right to variable returns
from the entity through its power over the entity. The existence of potential voting
rights is also taken into account when estimating the criteria for control when the
instruments entitling to potential voting rights can be realised at the time of the
assessment. In Scanfil Group, all subsidiaries are wholly-owned, and control is
created by the voting powers.
Intra-group shareholdings have been eliminated using the acquisition cost method.
Consideration transferred and the identifiable assets and assumed liabilities of
the acquired company are measured at fair value at the time of the acquisition.
Acquisition-related expenses, apart from expenses related to the issue of debt
or equity securities, have been recorded as expenses. Consideration transferred
does not include business operations handled separately from the acquisition. Their
impact has been taken into account in connection with the acquisition through profit
or loss. Any conditional additional purchase price is measured at fair value at the
time of the acquisition and classified as either debt or equity. Additional purchase
price classified as debt is measured at fair value at the balance sheet date of each
reporting period, and the resulting profit or loss is recognised through profit or loss.
Additional purchase price classified as equity is not re-valued.
Acquired subsidiaries are consolidated from the moment the group has gained
control, and divested subsidiaries until control ceases to exist. All intra-group
transactions, receivables, liabilities and unrealised gains and internal profit distribution
are eliminated upon preparing the consolidated financial statements. Unrealised
losses are not eliminated when the loss is due to impairment. Shareholders’ equity
attributable to non-controlling interest is presented as a separate item under
shareholders’ equity in the balance sheet. There were no non-controlling interests
during the financial periods 2020 and 2021. Should the group lose control of a
subsidiary, the remaining holding is measured at fair value on the date of losing
control, and the resulting difference is recognised through profit or loss. Acquisitions
made prior to January 1, 2010 are handled in accordance with the regulations
effective at the time.
CONVERSION OF ITEMS IN FOREIGN CURRENCY
The figures concerning the result and financial position of group units are measured
in the currency that is the currency of each unit’s main operating environment (the
operating currency). The consolidated financial statements are presented in euros,
which is the operating and reporting currency of the group’s parent company.
Foreign currency-denominated transactions are recorded in the operating currency
using the foreign exchange rates on the transaction date. In practice, a rate that
is sufficiently close to the rate of the transaction date is often used. The resulting
exchange rate differences are recognised through profit or loss. Foreign exchange
gains and losses related to business operations are recognised as adjusted sales
and purchase items. Rate differences in financing are presented under financial
income and expenses.
In the consolidated financial statements, the income statements of foreign group
companies are translated into euros using the average annual rates published by
the European Central Bank. The companies’ balance sheets are translated into
euros using the rates in force on the balance sheet date.
Translation differences owing to the different exchange rates used in the income
statement and balance sheet as well as translation differences attributable to the
use of the acquisition method and equity balances accrued after the acquisition
have been recorded in group equity, and the change in translation difference are
presented in the statement of comprehensive income.
NONCURRENT ASSETS CLASSIFIED AS HELD FOR
SALE AND DISCONTINUED OPERATIONS
The assets and liabilities of major operations that are classified as held for sale
or to be discontinued are presented separately in the balance sheet. The net
operating result for discontinued operations and the net result arising from their
sale or discontinuation are shown in the income statement separately from the
profit or loss for continued operations. Non-current assets classified as held for
sale or groups of assets to be disposed of are measured at the lower of carrying
amount and fair value less costs to sell. The group did not have such items for the
financial periods 2020 and 2021.
OPERATING PROFIT
IAS 1 Presentation of Financial Statements does not specify the concept of operating
profit. The group has defined it as follows: operating profit is the net sum of turnover
plus other operating income less acquisition costs adjusted for the change in
inventories of finished goods and work in progress as well as costs arising from
production for own use, less employee benefit expenses, depreciation and any
impairment losses and other operating expenses. All of the items in the income
statement apart from those specified above are presented under operating profit.
Exchange rate differences are included in the operating profit if they arise from
operations-related items; otherwise, they are recognised in financial items..
DIVIDEND
The dividend proposed to the Annual General Meeting by the Board of Directors has
not been deducted from distributable equity prior to the AGM’s approval.
ACCOUNTING PRINCIPLES REQUIRING THE DISCRETION
OF MANAGEMENT AND MAJOR UNCERTAINTY
FACTORS ASSOCIATED WITH THE ESTIMATES
The preparation of financial statements in accordance with international accounting
standards requires the company’s management to make estimates and assumptions
that affect the contents of the financial statements. The estimates and assumptions
made are based on previous experience and assumptions, which in turn are based
on the circumstances prevailing at the time the financial statements are prepared
and future prospects. Even though the estimates are based on the most recent
information available and the management’s best judgment, the actual outcome may
differ from the estimates. COVID-19 pandemic caused uncertainty during the financial
period but it has not remarkable impact on management assessment and estimates.
The following lists the most significant items that require the management’s
assessment.
The group annually performs testing for impairment of goodwill and other intangible
rights. The recoverable amounts for cash-generating units have been determined
with calculations based on value in use. These calculations require the use of
estimates from the management. More information on impairment testing of goodwill
is available in Note 3.1, “Goodwill”.
Potential obsolescence included in the value of inventories is regularly examined
and, if necessary, the value of inventories is depreciated to match their net realisable
value. These examinations require estimates on the future demand for products.
Inventories are presented in Note 2.2, “Inventories”.
Estimates are also required when assessing the amount of provisions associated
with business operations. Note 5.1, “Provisions”, presents the provisions made
within the group.
Estimates by the management are also included in the assessment of possible
credit loss risks included in trade receivables.
Furthermore, the management also uses its discretion when recognising and
measuring deferred tax assets.
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New and amended standards applied
during the financial year
Scanfil Group has observed the following new and amended standards from the
beginning of 2021:
Covid-19-Related Rent Concessions beyond 30 June 2021 – Amendment to
IFRS 16 Leases (effective from 1 April 2021 for financial years starting, at the
latest, on or after 1 January 2021)
The amendments allow the lessees not to account for rent concessions as
lease modifications if the concessions are a direct consequence of the Covid-19
pandemic and only if certain conditions are met.
Interest Rate Benchmark Reform – Phase 2 – Amendments to IFRS 9 Financial
Instruments, IAS 39 Financial Instruments: Recognition and Measurement,
IFRS 7 Financial Instruments: Disclosures, IFRS 4 Insurance Contracts and
IFRS 16 Leases (effective for financial years beginning on or after 1 January 2021)
Amendments address issues affecting financial statements when changes are
made to contractual cash flows and hedging relationships as a result of interest
rate benchmark reform. Amendments assist companies in providing useful
information about the effects of interest rate benchmark reform on financial
statements.
Above mentioned amended standards have no impact on Scanfil plc’s financial
statements.
Adoption of new and amended standards
in future financial years
Scanfil has not yet applied the following new or revised standards and interpretations
already published by the IASB. The group will adopt them as of the effective date of
each standard and interpretation, or if the effective date is not the first day of the
financial period, as of the beginning of the first financial period after the effective date.
* = not yet endorsed for use by the European Union as of 31 December 2021
Costs of Fulfilling a Contract – Amendments to IAS 37 Provisions, Contingent
Liabilities and Contingent Assets (effective for financial years beginning on or
after 1 January 2022)
When an onerous contract is accounted for based on the costs of fulfilling the
contract, the amendments clarify that these costs comprise both the incremental
costs and an allocation of other direct costs.
Annual Improvements to IFRS Standards 2018–2020 (effective for financial years
beginning on or after 1 January 2022)
The annual improvements process provides a mechanism for minor and non-urgent
amendments to IFRSs to be grouped together and issued in one package annually.
The amendments clarify the following standards:
• IFRS 9 Financial Instruments – Fees in the ‘10 per cent’ test for derecognition of
financial liabilities: This amendment clarifies that – for the purpose of performing
the ‘’10 per cent test’ for derecognition of financial liabilities – in determining those
fees paid net of fees received, a borrower includes only fees paid or received
between the borrower and the lender, including fees paid or received by either
the borrower or lender on the other’s behalf.
• IFRS 16 Leases – Lease incentives – Example 13. The amendment removes the
illustration of payments from the lessor relating to leasehold improvements.
The example was not clear as to why such payments are not a lease incentive.
Property, Plant and Equipment — Proceeds before Intended Use – Amendments
to IAS 16 Property, Plant and Equipment (effective for financial years beginning on
or after 1 January 2022)
Under the amendments, proceeds from selling items before the related item of
PPE is available for use should be recognized in profit or loss, together with the
costs of producing those items.
Reference to the Conceptual Framework — Amendments to IFRS 3 Business
Combinations (effective for financial years beginning on or after 1 January 2022)
The amendments update a reference in IFRS 3 and made further reference related
amendments.
Classification of Liabilities as Current or Non-current - Amendments to IAS 1
Presentation of Financial Statements * (effective for financial years beginning on
or after 1 January 2023, early application is permitted)
The amendments are to promote consistency in application and clarify the
requirements on determining if a liability is current or non-current.
Disclosure of Accounting Policies – Amendments to IAS 1 Presentation of Financial
Statements and IFRS Practice Statement 2 Making Materiality Judgements *
(effective for financial years beginning on or after 1 January 2023, early application
is permitted)
The amendments clarify the application of materiality to disclosure of accounting
policies.
Definition of Accounting Estimates – Amendments to IAS 8 Accounting Policies,
Changes in Accounting Estimates and Errors * (effective for financial years beginning
on or after 1 January 2023, early application is permitted)
The amendments clarify how companies should distinguish changes in accounting
policies from changes in accounting estimates, with a primary focus on the definition
of and clarifications on accounting estimates.
Deferred Tax related to Assets and Liabilities arising from a Single Transaction
– Amendments to IAS 12 Income Taxes * (effective for financial years beginning on
or after 1 January 2023, early application is permitted)
The amendments narrow the initial recognition exemption (IRE) and clarify that the
exemption does not apply to transactions such as leases and decommissioning
obligations which give rise to equal and offsetting temporary differences.
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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
1. ITEMS AFFECTING THE RESULT
1.1 Turnover and details of business segments
ACCOUNTING PRINCIPLE
Revenue recognition
The Group’s turnover mainly consists of customer agreements that only include
the sale of goods. Typical Scanfil products include automation system modules,
frequency converters, elevator control systems, analysers, various vending machines,
and devices related to medical technology and meteorology.
Revenue is recognised when a company transfers control of goods or services
to a customer either over time or at a point in time. The Group mainly fulfils the
performance obligation at a certain point in time when control of an asset item
is transferred to the customer. Typically, control is transferred when goods are
delivered in compliance with the terms of delivery. Revenue arising from the sale of
products is recognised when the significant risks and rewards of ownership, right
of possession and actual control of the products sold have been transferred to the
buyer. A small part of the group’s turnover comes from service sales. Service sales
include prototype manufacturing, productisation, component, storage and logistics
services, as well as after-sales services, including repair and updating services for
products. Some revenue from services is recognised over time in accordance with
the completion of the services.
With regard to customers’ consignment stocks, revenue is recognised when control is
transferred to the customer, i.e. when goods are transferred to the consignment stock.
Variable considerations include cash and quantity discounts and consequences
of delayed deliveries. Variable considerations are included in the performance
obligation sales price of the receivable.
Scanfil provides a product warranty on the basis of customer contracts. The warranty
period typically ranges from 12 to 24 months, and it can be at most 36 months. The
warranty is not a separate performance obligation. Payment terms are customer-
specific, ranging from 30 to 90 days.
Scanfil reports single business segment.
TURNOVER
The company’s customers include international operators in the automation, energy,
data transmission and health technology sectors, among other industries, and
companies operating in fields related to urbanisation.
Markets and customer segments
Scanfil has divided its customers into segments on the basis of their respective fields
of activity and monitors the development of sales by customer segment. Scanfil
renewed its customer segments at the beginning of 2021 to better correspond to
the current customer structure.
The customers are divided into the following segments:
•
Advanced Consumer Applications: End products and solutions are often used
in public places. End products are e.g. self-service applications, handover
automation (e.g. parcel lockers for logistic services) and elevators.
•
Automation & Safety: End products in this segment are e.g. cameras for network
video solutions, access control systems and automation systems.
•
Connectivity: End products in this segment are e.g. wireless connectivity modules
and radio systems.
•
Energy & Cleantech: End products in this segment are e.g. reverse vending
machines, air and water cleaners, indoor climate control systems, energy systems
and automated collection and sorting solutions.
• Medtech & Life Science: End products for the segment are e.g. dental chairs,
analysers, mass spectrometers and solutions for environmental measuring.
Medtech & Life Science
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Turnover by customer segment and quarter
EUR MILLION 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 2021 % of turnover 2021
Advanced Consumer Applications 151.3 42.9 53.4 55.4 52.9 204.6 29.4
Automation & Safety 142.1 34.5 36.8 32.5 41.1 144.9 20.8
Connectivity 28.6 8.1 7.3 7.3 10.4 33.0 4.8
Energy & Cleantech 135.6 40.3 44.8 43.5 53.4 182.1 26.2
Medtech & Life Science 107.8 29.1 28.5 29.1 33.9 120.6 17.3
Discontinued 29.9 8.5 2.0 0.0 0.0 10.5 1.5
Total 595.3 163.3 172.9 167.8 191.7 695.7 100.0
In 2021, the Group’s turnover was EUR 695.7 (595.3) million, an increase of 16.9%
compared to the previous year.
Turnover includes EUR 42.5 million of low margin invoicing, of which EUR 32.0 million
was separately agreed purchases related to securing the availability of materials
needed for production. These purchases related to securing deliveries were usually
spot market purchases of materials and special freights. This invoicing was no or
low margin for Scanfil in 2021. Turnover excluding invoicing of separately agreed
purchases was EUR 663.7 million, an increase of 11.7% compared to the previous year.
In addition, turnover included EUR 10.5 million of low-margin intermediary trading.
BREAKDOWN OF TURNOVER BY CUSTOMER SEGMENT IN AND
Discontinued
Medtech & Life Science
Energy & Cleantech
Connectivity
Automation & Safety
Advanced Consumer Applications
Discontinued
Medtech & Life Science
Energy & Cleantech
Connectivity
Automation & Safety
Advanced Consumer Applications
2021
2020
Advanced Consumer Applications 29%
Automation & Safety 21%
Connectivity 5%
Energy & Cleantech 26%
Medtech & Life Science 17%
Discontinued 2%
Advanced Consumer Applications 25%
Automation & Safety 24%
Connectivity 5%
Energy & Cleantech 23%
Medtech & Life Science 18%
Discontinued 5%
Turnover by customer segment developed as follows:
Advanced Consumer Applications: Turnover increased by EUR 53.4 million (35.3%)
compared to the previous year. The key drivers behind this strong growth were new
customer ramp-ups and good demand in elevator products and hand-over solutions.
Invoicing related to securing deliveries was EUR 14.6 million.
Automation & Safety: Turnover increased by EUR 2.8 million (2.0%). The development
has been steady. Invoicing related to securing deliveries was s EUR 4.9 million.
Connectivity: Turnover increased by EUR 4.4 million (15.5%). Invoicing related to
securing deliveries was EUR 0.1 million.
Energy & Cleantech: Turnover increased compared to the previous year by EUR
46.5 million (34.3%). The key drivers behind this strong growth were good demand
in recycling and energy systems. Invoicing related to securing deliveries was EUR
8.9 million.
Medtech & Life Science: Turnover increased by EUR 12.8 million (11.8%). Invoicing
related to securing deliveries was EUR 3.5 million.
Turnover of “Discontinued” was EUR 10.5 million and consisted only low margin
intermediary trading.
In 2021, the largest customer accounted for about 18% (15%) of turnover and the
top ten customers accounted for about 55% (59%) of turnover.
The impact of COVID-19 pandemic during the review period
The COVID-19 pandemic had only a small negative impact on the Group’s productivity
and operating profit. The impacts mainly arose from costs related to preventive
actions at the factories.
Factories have factory-specific measures to prevent the spread of COVID-19 in
accordance with the prevailing sit-uation and instructions given by the authorities.
These measures include e.g., shift changes being undertaken so that employees
working different shifts do not meet one another during shift changes; the enhanced
cleaning of work facilities; the restriction of travel and visits, remote work when
possible; the use of protective equipment and safety distances; and hygiene
guidelines for employees.
The situation might change rapidly, and the company management is conscious of
the importance of active monitoring and quick response.
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Grouping of revenue
Revenue is grouped into product and service sales by customer segment. The majority, more than 90%, of the company’s
revenue comes from sales of manufactured products.
2021 2020
EUR MILLION Good Services Total Good Services Total
Customer Segments
Advanced Consumer Applications 197.5 7.1 204.6 146.5 4.7 151.3
Automation & Safety 124.6 20.3 144.9 120.6 21.5 142.1
Connectivity 30.7 2.4 33.0 28.1 0.5 28.6
Energy & Cleantech 177.8 4.3 182.1 132.8 2.8 135.6
Medtec & Life Science 114.9 5.7 120.6 101.3 6.6 107.8
Discontinued 10.5 0.0 10.5 29.7 0.2 29.9
Total 655.9 39.8 695.7 559.0 36.3 595.3
Timing of revenue recognition
Goods and services transferred at a point of time 655.9 37.3 693.2 559.0 34.3 593.4
Services transferred over time 2.5 2.5 2.0 2.0
Total 655.9 39.8 695.7 559.0 36.3 595.3
Major customers
EUR THOUSAND 2021 % of turnover 2020 % of turnover
Customer 1 122,210 18% 89,392 15%
Customer 2 57,681 8% 54,510 9%
Customer 3 48,396 7% 42,201 7%
Total 228,287 186,103
Contractual amounts recognised on the balance sheet
The table below presents contractual receivables, assets and liabilities recognised on the balance sheet.
EUR THOUSAND 2021 2020
Trade receivables, which are included in ”Trade and other receivables” 132,613 105,661
Contract assets 161
Contract liabilities 15,498 2,371
Current 132,613 105,822
Total 132,613 105,822
Trade and other receivables
EUR THOUSAND
2021
Contract assets
2021
Contract liabilities
Transferred to trade receivables -161
Recognised in Profit and Loss -2,371
Increase in advances received from customer 15,498
EUR THOUSAND
2020
Contract assets
2020
Contract liabilities
Transferred to trade receivables -371
Recognized in Profit and loss -172
Increase in advances received from customer 2,371
Significant changes in the contract assets and the contract liabilities balances during the period are as follows:
The same customers are not necessarily shown in the table above for the reporting period and for the comparison period.
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Information about the whole entity
Of the segment information, the assets are shown by their location and distribution of sales is shown by the location of customers.
Distribution of segment assets
The segment assets mainly consist of goodwill, intangible and tangible assets, inventories, trade receivables as well as cash
and cash equivalents.
Assets on geographical areas
EUR THOUSAND 2021 2020
Domicile
Finland 38,030 51,343
Sweden 55,903 47,552
Poland 153,512 89,708
China 110,570 56,380
Germany 37,514 35,744
Estonia 52,498 37,418
USA 17,163 14,035
Other 123 126
Total 465,313 332,307
Turnover by location of customers (delivery address)
EUR THOUSAND 2021 2020
Domicile
Finland 111,038 102,248
Sweden 129,094 126,024
Germany 95,282 77,543
Poland 22,765 18,504
Rest of Europe 157,759 142,188
Asia 116,934 75,799
USA 57,907 49,947
Other 4,956 3,095
Total 695,735 595,347
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1.2 Other operating income
ACCOUNTING PRINCIPLE
Income other than that associated with actual business operations is recognised under other operating income. Such items
include capital gains from the sales of tangible fixed assets, rental income, insurance compensation payments and public
subsidies. Rental income mainly consists of rents from business premises in China.
Government grants related to tangible and intangible assets are deducted from an asset’s acquisition cost, and the net
acquisition cost is capitalised on the balance sheet. Other financial contributions are recognised in other operating income
through profit or loss.
In the year 2020 Scanfil EMS Oy, a subsidiary of Scanfil plc, divested all its shares in the Chinese subsidiary Scanfil (Hangzhou)
Co., Ltd. The purchase price was EUR 18.4 million. The sales gains of EUR 11.5 million include equity translation differences
of EUR 7.9 million.
OTHER OPERATING INCOME, EUR THOUSAND 2021 2020
Proceeds from sale of property, plant and equipment 306 37
Gain on sale of subsidiary 11,540
Allowances and compensations 246 283
Rental income 185 213
Other 429 311
Total 1,167 12,384
1.3 Use of materials and supplies
USE OF MATERIALS AND SUPPLIES, EUR THOUSAND 2021 2020
Materials, supplies and goods
Purchases during the period 543,913 410,180
Change in inventories -52,574 155
Total 491,339 410,335
1.4 Employee benefit expenses
Employee benefits
Employee benefits include short-term employee benefits, post-employment benefits and share-based payments. Short-term
employee benefits are posted as expense for the financial period during which the work was performed.
ACCOUNTING PRINCIPLE
Short-term employee benefits
Short-term employee benefits include salaries and fringe benefits, annual holidays and performance bonuses.
Post-employment benefits
Pension arrangements related to post-employment benefits are classified as defined benefit or defined contribution plans.
The group does not have significant defined benefit pension plans. Most of Scanfil’s obligations towards its employees are
comprised of various defined contribution pension plans. The pension contributions for defined contribution pension plans
are posted as expense for the financial period during which they were accrued. In Finland, the defined contribution pension
plans are based on the Employees Pensions Act, according to which the pension contributions are based directly on the
beneficiary’s earnings.
There is a multi-employer supplementary defined benefit pension plan for employees in industry and commerce secured by
Alecta in Sweden. Because Alecta is unable to furnish Scanfil with information that would enable the plan to be reported as a
defined benefit plan in accordance with IAS 19 Employee Benefits, it is reported as a defined contribution plan.
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PERSONNEL EXPENSES, EUR THOUSAND 2021 2020
Salaries, wages and fees 76,769 76,892
Options implemented and paid in shares 1,010 366
Pension costs – defined-contribution schemes 10,950 9,505
Other indirect employee expenses 8,745 8,733
Total 97,474 95,496
Management’s employee benefits are reported in note 5.3, “Details of related parties and Group structure”.
AVERAGE NUMBER OF GROUP EMPLOYEES DURING THE PERIOD 2021 2020
Europe 321 331
Abroad 2,946 3,056
Total 3,267 3,387
PERSONNEL BY COUNTRY ON DECEMBER , , IN TOTAL, , EMPLOYEES
Yhdysvallat
Saksa
Suomi
Ruotsi
Viro
Kiina
Puola
2021
Finland 10%
Germany 7%
USA 4%
Poland 38%
China 16%
Estonia 14%
Sweden 11%
Share-based payments
ACCOUNTING PRINCIPLE
The Group has two option schemes in place. Option rights are valued at their fair value at the time they were granted and
recognised as an expense in the income statement under employee benefits in equal portions during the vesting period. The
expense defined at the time the options were granted is based on the group’s estimate of the amount of options assumed
to be vested at the end of the vesting period. The fair value of options has been defined based on the Black-Scholes pricing
model. Assumptions concerning the final amount of options are updated on each reporting date. Changes in the estimates
are recognised in profit or loss. When option rights are exercised, proceeds from share subscriptions, adjusted with potential
transaction costs, are entered under equity.
Option schemes
On April 12, 2016, the Annual General Meeting accepted Scanfil plc’s 2016 option scheme (A)–(C) and on April 24, 2019, the
Annual General Meeting accepted the 2019 option scheme (A)–(C). On the basis of the 2016 and 2019 option schemes,
maximum of 900,000 option rights per option scheme can be granted. Each option right enables its holder to subscribe one
Scanfil plc share. The start of the option rights subscription period requires that the group’s production and financial goals
and conditions specifically determined by the Board for exercising the option rights are met. The subscription price of shares
is determined on the basis of the Company’s trading volume weighted average share price in Nasdaq Helsinki Ltd during the
period March 1 to March 31 three years before start of the option rights subscription period.
On the basis of the authorisation granted by the Annual General Meeting, the Board of Directors decides on providing option
rights to the group’s President and to the members of the Management Team.
In 2021, the expense recognition of the option scheme was EUR 259,201 (EUR 214,404 in 2020).
In 2021, a total of 160,000 Company’s shares were subscribed under option rights 2016(B). The subscription price of EUR 571,200
of subscriptions made under the option rights has been recognised in the invested unrestricted equity fund. Scanfil transferred
160,000 treasury shares held by the company to subscribers on the basis of the subscriptions made under the option rights.
In 2021, a total of 170,000 Company’s shares were subscribed under option rights 2016(C). The subscription price of EUR
761,600 of subscriptions made under the option rights has been recognised in the invested unrestricted equity fund. The
total of 130,000 new shares subscribed under the option rights were entered in the trade register on May 28, 2021, and the
Company transferred a total of 40,000 treasury shares held by the company to the subscribers.
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OPTION ARRANGEMENT
.. 2019C 2019B 2019A 2016C 2016B A
Grant date 25.10.2021 27.10.2020 27.11.2019 26.6.2019 21.11.2017 8.12.2016
Amount of granted
instruments (pcs)
200,000 200,000 190,000 210,000 250,000 250,000
Subscription price (EUR) 7,73 4,34 4,04 4,48 3,57 3,38
Fair value (EUR) 1,66 1,79 1,08 0,54 1,12 0,74
Share price at time of
granting (EUR)
7,74 5,16 4,42 3,88 4,15 3,36
Term of validity (years) 4,5 4,5 4,4 3,9 4,4 4,4
Subscription period
1.5.2024-
30.4.2026
1.5.2023-
30.4.2025
1.5.2022-
30.4.2024
1.5.2021-
30.4.2023
1.5.2020-
30.4.2022
1.5.2019-
30.4.2021
Excercised options, pcs 170,000 230,000 210,000
Returned options to
company, pcs
20,000 40,000
Number of options
outstanding
200,000 200 000 190,000 40,000 0 0
1.5 Other operating expenses
Other operating expenses include the following significant items:
OTHER OPERATING EXPENSES, EUR THOUSAND 2021 2020
Hired labour 19,514 11,699
Subcontracting 1,531 2,169
Sales freight 5,771 4,465
Energy 3,647 3,332
Tools & repair and maintenance of tools 6,812 5,611
Rents 853 507
Maintenance expenses 3,482 3,274
Travel, marketing and vehicle expenses 2,133 1,316
Other employee expenses 3,161 2,828
Bought services 3,940 3,864
ICT expenses 2,367 2,138
Other operating expenses 2,898 2,693
Total 56,108 43,896
The use of hired labor increased compared to the previous year mainly due to the increase in demand.
During the 2021 and 2020 financial periods, the company’s main auditor was the auditing company KPMG Oy Ab.
AUDITOR’S REMUNERATION, EUR THOUSAND
2021
Fees to
KPMG
2021
Fees to
other auditors
2020
Fees to
KPMG
2020
Fees to
other auditors
Audit fees 323 1 310 1
Tax consulting 54 23
Other services 2 53
Total 379 1 386 1
Services other than auditing services carried out by KPMG Oy Ab totalled EUR 25 thousand during the 2021 financial period.
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1.6 Income taxes
ACCOUNTING PRINCIPLE
Income taxes
The taxes of the consolidated income statement include taxes based on the results of the group companies and calculated
in accordance with local tax laws and tax rates. The taxes in the income statement also include the change in deferred tax
assets and liabilities.
Deferred tax assets or liabilities are calculated on temporary differences between taxation and financial statements and
differences due to group eliminations based on tax rates for the following year confirmed by the reporting date. Temporary
differences arise from intercompany profits on inventories, depreciation differences and provisions, among others.
Deferred tax liabilities are recognised in full. Deferred tax assets are recognised only when it is probable that receivables can
be utilised against the taxable income of future financial periods.
The purpose of the company’s management assessment is to identify the company’s tax positions for which the related tax
legislation is open to interpretation. An adjustment is recorded on uncertain tax positions identified on the basis of the estimate
if it is expected that the tax authorities will challenge the management’s interpretation. The amount of the reservation is based
on the estimated final tax cost.
Use of estimates
The management uses its discretion in determining the amount of income taxes and in recognizing deferred tax assets.
Deferred tax assets are recognised for taxable losses and for the temporary differences between the taxation values and
book values of assets and liabilities. Deferred tax assets are recognised to the extent that the group probably accumulates,
according to the assessment by the management, enough taxable income against which the deferred tax assets can be utilized.
INCOME TAXES, EUR THOUSAND 2021 2020
Current tax 8,709 7,977
Tax expense of previous years 1,443 -265
Deferred taxes -2,252 -2,816
Total 7,901 4,895
RECONCILIATION OF TAX EXPENSE IN THE INCOME STATEMENT AND TAXES CALCULATED AT THE TAX RATE
APPLICABLE IN FINLAND OF % % IN
Earnings before taxes 37,656 41,793
Taxes calculated at domestic tax rate 7,531 8,359
Different tax rates of foreign subsidiaries -765 -1,148
Tax at source on dividends paid in China 105
Tax at source on dividends paid in Estonia 576 802
Witholding tax of unpaid dividends 140 -430
Unrecorded deferred tax assets from tax losses 18
Use of unrecognised losses in previous years -1,057
Tax benefit of investment in Polish subsidiary -761
Taxes on the sale of a subsidiary 889
Tax free income from the sale of a subsidiary -2,239
Tax free items -59 -258
Other 92 -177
Taxes from previous years 1,443 -265
Taxes in income statement 7,901 4,895
Use of unrecognised losses in the previous years are related to the use of losses of Scanfil Sweden AB’s Norwegian subsidiary
PartnerTech AS. The operations of PartnerTech AS was ceased in 2016 and the company was resolved in voluntary liquidation
proceedings in 2016. The company had EUR 11.8 million of unrealized losses of which Scanfil Sweden AB has deducted EUR 5.1
million from the taxable income of the year 2021 based on the legislation regarding the Group contribution. The corresponding
deduction has been previously accepted concerning the losses of Scanfil Sweden AB’s British subsidiary.
Taxes from previous years include a tax adjustment related to the losses of EUR 8.1 million of Scanfil EMS Oy’s Hungarian
subsidiary. The subsidiary was merged into the parent company in 2018 and based on the realized losses the parent company
made tax deductions in 2018 and 2019. On 28 September 2021 Finnish tax authorities resolved this matter against the company
interest. The company has appealed on Assessment Adjustment Board’s decision to Northern Finland’s administrative court
in January 2022.
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EUR THOUSAND 1.1.2020
Recognised
through
profit and loss
Recognised
under other
comprehen-
sive income
Sold
businesses
Translation
differences 31.12.2020
Deferred tax assets:
Investment grant to Poland 3,427 -1,153 -198 2,075
Inventories 307 185 -73 -12 408
Provisions 432 79 -31 481
Fixed assets 605 66 -20 -11 641
Other 943 421 140 -122 1,382
Losses 1,897 1,897
Total 5,714 1,496 140 -92 -374 6,884
Deferred tax liabilities:
Long-term customer relationships -2,532 421 -46 -2,157
Unpaid dividends -2,602 430 -2,172
Fixed assets -1,481 199 40 -1,242
Other -344 186 43 -26 -140
Total -6,958 1,320 43 -32 -5,711
EUR THOUSAND 1.1.2021
Recognised
through
profit and loss
Recognised
under other
comprehensive
income
Translation
differences 31.12.2021
Deferred tax assets:
Investment grant to Poland 2,075 -1,264 -8 803
Inventories 408 260 1 669
Provisions 481 214 -5 689
Fixed assets 641 -12 1 629
Other 1,382 2,115 -122 -23 3,351
Losses 1,897 462 2,360
Total 6,884 1,774 -122 -35 8,501
Deferred tax liabilities:
Long-term customer relationships -2,157 376 22 -1,759
Unpaid dividends -2,172 -140 -2,312
Fixed assets -1,242 150 -79 -1,172
Other -140 92 0 -48
Total -5,711 477 -57 -5,290
DEFERRED TAX ASSETS AND LIABILITIES
Other items include EUR 0.9 (0.7) million for deferred tax assets related to Polish non-deductible intra-group charges. Scanfil
Poland Sp. z o.o has submitted an application for an Advance Pricing Agreement (APA) to the Polish Ministry of the Finance in
2018. The process is still ongoing. The company considers that the costs can be reduced for tax purposes over the coming
financial periods.
In addition other items include EUR 1.4 (0.2) for deferred tax assets related to cost accruals in Poland.
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1.7 Earnings per share
ACCOUNTING PRINCIPLE
Earnings per share
Earnings per share are calculated by dividing the profit for the period attributable to equity holders of the parent company with
the weighted average number of outstanding shares during the financial period. For the earnings per share adjusted for the
dilution effect, the impact of possible share-based incentive schemes and option rights is taken into account. The exercise
of options is not considered when calculating earnings per share if the share subscription price using the option exceeds the
average market price of the share during the period.
EARNINGS PER SHARE, EUR THOUSAND 2021 2020
Net profit for the period attributable to equity holders
of the parent company
29,756 36,898
Number of shares, undiluted (1,000 pcs) 64,701 64,387
Earnings per share, undiluted, EUR 0.46 0.57
Dilution effect of stock options (1,000 pcs) 630 800
Number of shares, diluted (1,000 pcs) 65,331 65,187
Earnings per share, diluted, EUR 0.46 0.57
2. NET WORKING CAPITAL
2.1 Net working capital
The company includes the following items in its net working capital: of current assets, inventories, trade receivables and other
receivables, advance payments as well as deferred tax assets based on the taxable income for the financial period, and of
current liabilities, trade payables and other liabilities as well as deferred tax liabilities based on the taxable income for the
financial period.
The group monitors on a monthly basis the ratio of net working capital to the turnover for the previous 12 months. Net working
capital was 27.0% of net sales, compared to 20.1% at the end of the previous year. In general, turnover growth increased the
working capital. The increase in inventories was driven also by a slowdown in inventory turnover due to material availability
challenges and increased material prices.
NET WORKING CAPITAL, EUR THOUSAND 2021 2020
Net working capital
Inventories 193,358 103,254
Trade receivables 132,613 105,661
Accrued income, other receivables and income tax receivables 19,054 9,405
Advance payments 1,303 562
Trade payables -127,256 -76,153
Accrued expenses, other liabilities and income tax liabilities -30,912 -23,350
Total 188,161 119,379
Net working capital, % of turnover 27.0% 20.1%
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2.2 Inventories
ACCOUNTING PRINCIPLE
Inventories
Inventories are measured at the acquisition cost and net realisable value, whichever is lower. The acquisition cost is determined
on a weighted-average basis. The cost of raw materials includes the expenses incurred for purchasing and putting them
into storage. The cost of finished goods and work in progress includes raw materials, direct labour costs and other direct
expenditure as well as a proportion of fixed costs.
The impairment due to obsolescence, based on the management’s estimate of probable net realisable value, is taken into
account when determining the value of inventories. The net realisable value is the estimated selling price less sale-related costs.
Use of estimates
Potential obsolescence included in the value of inventories is regularly examined and, if necessary, the value of inventories
is depreciated to match their net realisable value. These examinations require estimates on the future demand for products.
INVENTORIES, EUR THOUSAND 2021 2020
Materials and supplies 164,549 81,947
Work in progress 16,852 10,747
Finished goods 11,957 10,560
Total 193,358 103,254
2.3 Trade and other receivables
ACCOUNTING PRINCIPLE
Trade receivables
Trade receivables are created when Scanfil invoices products and services delivered to customers. Trade receivables are
measured at the original invoiced amount. For uncertain receivables, impairment is recognised on the basis of case-specific
risk assessments.
According to the new impairment model, impairment provisions must be recognised on the basis of expected credit losses.
A simplified model must be applied to trade receivables, in which the estimated amount of credit losses is based on percentages
defined on the basis of the age distribution of the receivables. These percentages are based on the estimated probability of
credit losses and historical information.
Use of estimates
Estimates by the management are included in the assessment of possible credit loss risks included in the trade receivables.
According to the view of the group’s management, the company has no significant credit loss risks.
TRADE AND OTHER RECEIVABLES, EUR THOUSAND 2021 2020
Trade receivables 132,613 105,661
Accrued income 5,425 6,050
Value-added tax receivables 3,360 1,088
Other receivables 7,629 506
Total 149,027 113,305
Impairment losses on inventories during the financial year amounted to EUR 2.1 (3.6) million.
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AGE DISTRIBUTION OF TRADE RECEIVABLES, EUR THOUSAND 2021 2020
Unmatured 115,286 91,073
Matured
1–30 days 14,094 10,856
31–90 days 2,383 3,474
91–180 days 780 257
181–365 days 100 35
Over 365 days 34
Provision for bad debt -30 -70
Total 132,613 105,661
, EUR THOUSAND
Book value
(gross)
Estimated credit
losses
Bad debt
provision
Unmatured 115,286 0.01 % 12
Matured
1–30 days 14,094 0.02 % 2
31–90 days 2,383 0.21 % 5
91–180 days 780 0.87 % 7
Over 365 days 100 3.7 % 4
Total 132,643 30
Expected credit losses, December 31, 2021
, EUR THOUSAND
Book value
(gross)
Estimated credit
losses
Bad debt
provision
Unmatured 91,073 0.01% 9
Matured
1–30 days 10,856 0.02% 2
31–90 days 3,474 0.50% 17
91–180 days 257 2.00% 5
181–365 days 35 25.0% 9
Over 365 days 34 81.3% 28
Total 105,731 70
At the end of the financial period, the credit loss provision recognised for covering uncertain receivables stood at EUR 30 (70) thousand. During
the financial period, credit losses recognised from trade receivables were EUR 2 (2) thousand.
TRADE AND OTHER PAYABLES, EUR THOUSAND 2021 2020
Trade payables 127,256 76,153
Accrued liabilities 23,158 16,124
Advance payments received 15,498 2,371
Other creditors 6,378 5,456
Total 172,290 100,104
The most significant items included in accrued liabilities:
Employee expenses 11,807 11,388
Interests 90 2
Financial derivatives 88 698
Other accrued liabilities 11,173 4,036
Total 23,158 16,124
2.4 Trade and other liabilities
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3. NON-CURRENT ASSETS
3.1 Goodwill
ACCOUNTING PRINCIPLE
Goodwill
Business combinations are treated using the acquisition method. Goodwill is recognised at the amount by which the acquisition
cost exceeds the group’s share of the value of acquired assets and liabilities at the time of acquisition. Goodwill is created
in corporate transactions, and it reflects the value of the acquired business, market share and synergies. The book value of
goodwill is tested by impairment testing. The group’s goodwill mainly consists of the acquisition of PartnerTech AB group in
2015 and the acquisition of German HASEC-Elektronik GmbH in 2019.
Impairment testing
No depreciation is made of goodwill; instead, goodwill is tested at least annually for possible impairment. For that, goodwill
is allocated to cash generating units (CGUs). The recoverable amount of the CGU is calculated with value in use calculations.
An impairment loss is recognised when the book value of an asset exceeds its recoverable amount. Impairment losses are
immediately recognised as expenses in the income statement. Impairment losses recognised for goodwill cannot be later
reversed. In 2020 and 2021, no goodwill impairments were recorded.
GOODWILL, EUR THOUSAND 2021 2020
Cost at 1 Jan. 8,304 8,046
Exchange rate differences -138 258
Carrying amount at 31 Dec. 8,166 8,304
DISCOUNT RATE OF CASH FLOWS BEFORE TAXES 2021 2020
Scanfil Electronics GmbH 9.9% 12.2%
ScanfilPoland Sp. z o.o. 11.2% 12.2%
Scanfil Vellinge AB 10.9% 11.6%
Scanfil Åtvidaberg AB 11.0% 11.6%
ALLOCATION OF GOODWILL TO CASHGENERATING UNITS,
EUR THOUSAND 2021 2020
Scanfil Oü 111 111
ScanfilPoland Sp. z o.o. 3,395 3,468
Scanfil Vellinge AB 1,281 1,309
Scanfil Åtvidaberg AB 1,730 1,767
Scanfil Electronics GmbH 1,649 1,649
Total 8,166 8,304
The recoverable amount of a CGU is based on the value in use of a cash-generating unit, which is the present value of the future
cash flows the CGU is expected to accumulate. Determination of the value in use is based on the conditions and expectations
in force at the time of testing. Future cash flows are determined for a five-year forecast period, and for the period following
that, a growth rate of 2% has been assumed for cash flows.
Preparing impairment testing calculations requires estimates of future cash flows. The turnover and profitability assumptions
used for the forecasts are based on customer-specific forecasts and the management’s estimates of the development of
demand and markets.
The weighted average cost of capital (WACC) for the CGU has been used as the discount rate for cash flows. The risk-free
interest rate, risk factor (beta) and risk premium parameters used for determining the discount rate of interest are based on
information obtained from the market.
No need for impairment of goodwill was detected based on the impermanent testing. The recoverable amounts of all CGUs
exceed their book values.
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As regards Scanfil Poland Sp. z.o.o., Scanfil Vellinge AB and Scanfil Åtvidaberg AB, changes in terminal growth are not significant (N/A).
SENSITIVITY ANALYSIS
2021
Change % units
2020
Change % units
Discount rate before taxes
ScanfilPoland Sp. z o.o. + 9.3 +6.7
Scanfil Vellinge AB +12.7 +14.2
Scanfil Åtvidaberg AB +13.9 +16.3
Scanfil Electronics GmbH +2.2 +2.0
Profitability (EBITDA %)
ScanfilPoland Sp. z o.o. -4.0 -2.9
Scanfil Vellinge AB -4.9 -4.7
Scanfil Åtvidaberg AB -3.7 -5.0
Scanfil Electronics GmbH -1.6 -1.3
Terminal growth rate
ScanfilPoland Sp. z o.o. N/A N/A
Scanfil Vellinge AB N/A N/A
Scanfil Åtvidaberg AB N/A N/A
Scanfil Electronics GmbH -7.0 -4.3
3.2 Other intangible assets
ACCOUNTING PRINCIPLE
Other intangible assets
Intangible assets are recognised at historical cost in the balance sheet, if the cost can be reliably determined and it is likely
that the financial benefit from the asset benefits the group. Intangible assets are recognised in the income statement using
straight-line depreciation within their expected useful life.
Other intangible assets include long-term customer relationships, software suites and right to land use of Chinese subsidiaries
THE DEPRECIATION PERIODS ARE:
Long-term customer relationships 10 years
Intangible rights 3–10 years
Other intangible assets 3–10 years
Right to land use in China 50 years
The balance sheet value of an asset is always assessed for establishing possible impairment whenever there are any indications
that the value of some asset has been impaired.
Long-term customer relationships
In connection with the allocation of the purchase price related to the acquisition of PartnerTech AB in 2015 and HASEC-Elektronik
GmbH in 2019, the group has allocated part of the purchase price to long-term customer relationships. Following the initial
recognition, customer relationships are measured at cost less accrued depreciation and impairment.
Research and development costs
Research and development costs are recognised as expenses through profit or loss. Development costs as per IAS 38
Intangible Assets are capitalised and amortised over their useful lives. The group has no capitalised development costs.
Impairment
The balance sheet values of fixed assets are assessed for establishing possible impairment on the balance sheet date and
whenever there are any indications that the value of some asset has been impaired. The recoverable amount for the asset in
question is assessed in the impairment tests. The recoverable amount is the fair value of the asset less its disposal costs, or
its value of use, whichever is higher. An impairment loss is recognised in the income statement, if the book value of an asset
exceeds its recoverable amount. The impairment loss is included in the income statement item Depreciation, amortisation
and impairment. An impairment loss related to property, plant and equipment is reversed if there has been a material change
in the estimates used to determine the recoverable amount. An impairment loss is only reversed up to the asset’s book value
which it would have net of depreciation, if no impairment loss had been recognised in earlier years.
Sensitivity analysis
A sensitivity analysis was performed for CGUs by changing calculation assumptions. The table below shows the change in
assumption that would be required to make the recoverable amount equal to its book value.
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OTHER INTANGIBLE ASSETS,
EUR THOUSAND
Customer
relationships
Intangible
rights
Other
long-term
expenses
Advance
payments
Intangible
assets total
Acquisition at 1 Jan. 2021 16,626 8,260 2,913 8 27,808
Additions 149 583 385 1,117
Deductions -278 -292 -8 -578
Exchange rate differences -271 479 23 232
Acquisition at 31 Dec. 2021 16,355 8,611 3,227 385 28,579
Accumulated depreciations at 1 Jan. 2021 -7,632 -4,272 -1,643 -13,548
Depreciations -1,648 -682 -355 -2,686
Deductions 278 292 570
Exchange rate differences 162 -147 -23 -9
Accumulated depreciations at 31 Dec. 2021 -9,119 -4,824 -1,729 -15,672
Carrying amount at 1 Jan. 2021 8,994 3,988 1,270 8 14,260
Carrying amount at 31 Dec. 2021 7,236 3,787 1,498 385 12,906
OTHER INTANGIBLE ASSETS,
EUR THOUSAND
Customer
relationships
Intangible
rights
Other
long-term
expenses
Advance
payments
Intangible
assets total
Acquisition at 1 Jan. 2020 16,119 7,958 2,959 834 27,869
Additions 536 827 8 1 371
Deductions -753 -137 -834 -1,724
Transfers between items 668 -722 -54
Exchange rate differences 507 -148 -14 346
Acquisition at 31 Dec. 2020 16,626 8,260 2,913 8 27,808
Accumulated depreciations at 1 Jan. 2020 -5,741 -3,866 -1,452 -11,060
Depreciations -1,607 -704 -336 -2,648
Decreases in value -49 -49
Deductions 326 135 461
Transfers between items -31 31 0
Exchange rate differences -283 52 -21 -252
Accumulated depreciations at 31 Dec. 2020 -7,632 -4,272 -1,643 -13,548
Carrying amount at 1 Jan. 2020 10,377 4,092 1,507 834 16,810
Carrying amount at 31 Dec. 2020 8,994 3,988 1,270 8 14,260
The deductions line includes the carrying amount of EUR 0.4 million arising from the sale of the Chinese subsidiary Scanfil (Hangzhou) Co., Ltd.
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3.3 Property, plant and equipment
ACCOUNTING PRINCIPLE
Property, plant and equipment
The main items included in this category are buildings, machinery, equipment, fixtures and fittings. They are stated in the
balance sheet at historical cost less depreciation and any impairment losses. Depreciation is calculated from historical cost
on a straight-line basis over the expected useful lives of the assets. No depreciation is made for land areas. The repair and
maintenance costs of tangible fixed assets are recognised through profit or loss.
The residual values and useful lives of assets are reviewed annually and adjusted, if appropriate, to indicate changes in
expected financial benefits.
An item of property, plant and equipment will no longer be depreciated when such an item is considered as being held for sale
in accordance with IFRS 5, “Non-current Assets Held for Sale and Discontinued Operations”.
THE DEPRECIATION PERIODS ARE:
Buildings and structures 10–25 years
Machinery and equipment 3–10 years
Other tangible assets 5–10 years
Regarding machinery and equipment, a depreciation period of 8–10 years is generally used for heavy machinery (such as sheet
metalwork centers) and production lines (such as surface mounting lines). Otherwise, the depreciation period for machinery
and equipment is usually five years. Production tools are depreciated over three years.
The capital gains from property, plant and equipment are included in other operating income while the corresponding capital
losses are included in other operating expenses.
Government grants related to tangible and intangible assets are deducted from an asset’s acquisition cost, and the net
acquisition cost is capitalised on the balance sheet.
Impairment
The principle for determining impairment is shown in note 3.2, “Other intangible assets”.
PROPERTY, PLANT AND EQUIPMENT,
EUR THOUSAND Land
Buildings
and con-
structions
Machinery
and equip-
ments
Other
tangible
assets
Advance
payments
and con-
structions
in progress
Tangible
assets total
Acquisition cost at 1 Jan. 2021 797 28,389 80,218 582 1,845 111,831
Additions 191 96 10,057 3,011 13,355
Deductions -3,236 -1,643 -4,879
Transfers between items 13 13
Exchange rate differences -3 624 2,400 5 -20 3,006
Acquisition cost at 31 Dec. 2021 984 29,122 89,438 588 3,193 123,326
Accumulated depreciations at 1 Jan. 2021 -14,082 -50,827 -566 -65,475
Depreciations -1,417 -7,525 -8,941
Deductions 2,608 2,608
Exchange rate differences -469 -1,251 -5 -1,725
Accumulated depreciations at 31 Dec. 2021 -15,968 -56,994 -571 -73,534
Carrying amount at 1 Jan. 2021 -797 -14,307 -29,391 -17 -1,845 46,356
Carrying amount at 31 Dec. 2021 984 13,154 32,444 17 3,193 49,792
Gross investments in tangible and intangible assets totalled EUR 15.5 million, which is 2.2% of net sales. Most of the investments
were made in production machinery and equipment. Main investments in electronics manufacturing were new surface assembly
line in Suzhou, new wave soldering machine in Sieradz and testing systems for different sites. Main investments in mechanical
manufacturing were new punching, laser and bending technic to Myslowice, Parnu and Sievi. Investment in sites continued in
order to automatize manufacturing processes and material handling and to digitalize production.
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PROPERTY, PLANT AND EQUIPMENT,
EUR THOUSAND Land
Buildings
and con-
structions
Machinery
and equip-
ments
Other
tangible
assets
Advance
payments
and con-
structions
in progress
Tangible
assets total
Acquisition cost at 1 Jan. 2020 824 33,846 82,479 570 1,790 119,510
Additions 471 8,243 3,595 12,308
Deductions -4,362 -8,856 -3,469 -16,688
Transfers between items -520 -520
Exchange rate differences -28 -1,046 -1,647 12 -71 -2,780
Acquisition cost at 31 Dec. 2020 797 28,389 80,218 582 1,845 111,831
Accumulated depreciations at 1 Jan. 2020 -16,056 -52,223 -554 -68,833
Depreciations -1,624 -7,046 -8,670
Decreases in value -611 -611
Deductions 2,897 8,106 11,003
Transfers between items 391 391
Exchange rate differences 311 947 -12 1,245
Accumulated depreciations at 31 Dec. 2020 -14,082 -50,827 -566 -65,475
Carrying amount at 1 Jan. 2020 824 17,790 30,256 17 1,790 50,677
Carrying amount at 31 Dec. 2020 797 14,307 29,391 17 1,845 46,356
Gross investments in tangible and intangible assets totalled EUR 9.4 million, which is 1.6% of net sales. Most of the investments
were made in production machinery and equipment, including a new electronics surface assembly line at the Sieradz plant and
a new environmentally friendly powder coating pre-treatment line in Myslowice. Investments were also continued in several
factories to automate production processes and material management. The digitalisation of production was also continued
in accordance with the investment plans with the introduction of production IoT solutions and MES (Manufacturing Execution
System) software.
The deductions line includes deductions from the sale of the Chinese subsidiary Scanfil (Hangzhou) Co., Ltd with a book
value of EUR 2.0 million.
3.4 Right-of-use assets
ACCOUNTING PRINCIPLE
When an agreement enters into force, the group will determine whether it is a lease agreement or whether it includes a lease
agreement. An agreement is a lease agreement or includes a lease agreement if it provides the right to control the use of a
specific asset item for compensation for a specific period.
The group as a lessee
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use asset is initially
measured at the original acquisition cost, including an amount equal to the original valuation of the lease liability, rents paid until the
start date of the agreement and expenses for returning the right-of-use asset to its original state, less any rent incentives received.
The group leases production and office facilities. A typical lease for production facilities covers five to eight years. Five of the
Group’s nine production plants operate in leased premises. Some lease agreements include options to extend the lease period
or to terminate the agreement before the end of the lease period. When a lease period starts, the group assesses whether it is
reasonably certain to exercise different options. The group will reassess whether it is reasonably certain to exercise different
options if there are changes in circumstances under its control or if significant event takes place. The group has recognised
extension options based on lease agreements totalling three to four years.
In addition, the group has lease agreements on cars and other vehicles (mainly forklifts) and equipment. Lease agreements
typically cover one to four years. With regard to vehicle leases, the group processes components other than lease agreement
components as separate, including servicing.
Right-of-use asset items is subsequently depreciated using straight-line method, starting from the commencement date of
the lease agreement until the end of the lease period or until the end of the expected useful life of each right-of-use asset,
depending on which is shorter. The expected useful life of each right-of-use asset is determined using the same principles that
are used to determine the depreciation periods of owned properties and equipment. In addition, right-of-use asset is reduced
by impairment losses, if any, and adjustments resulting from the remeasurement of the lease liability.
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The lease liability is recognised at the current value of upcoming rents using the interest rate of incremental borrowing rate as
the discount rate, in which case the value of the right-of-use asset corresponds with the amount of the lease liability on the
commencement date of the lease agreement.
The lease liability is measured using the effective interest method. Lease liability is remeasured if there are changes in upcoming
rents due to changes in index or interest rates, if the estimated residual value guarantee to be paid changes, or if the estimate
of exercising the extension or termination option changes. When lease liability is remeasured as described above, the book
value of the right-of-use asset will be adjusted correspondingly or the impact of the change will be recognised through profit
and loss, provided that the book value of the right-of-use asset has decreased to zero.
Short-term lease agreements and leases of low-value assets
The group applies recognition exemptions concerning short-term lease agreements of at most 12 months and assets with a
low value of at most EUR 5,000. As an exception to the application of exemptions, the exemption of 12 months does not apply
to leasing vehicles. Expenses related to short-term lease agreements and asset items with a low value are recognised on a
straight-line basis in other operating expenses over the lease period.
Lease agreements previously classified as finance leases in accordance with IAS 17
Lease agreements that were previously classified as finance leases in accordance with IAS 17 are included in right-of-use
asset and lease liability in accordance with IFRS 16, starting from January 1, 2019.
EUR THOUSAND Land
Buildings and
constructions
Machinery and
equipments
Right-of-use
assets total
Acquisition cost at 1 Jan. 2021 276 24,349 2,681 27,306
Additions -198 8 482 525 8 809
Deductions -270 -4 528 -104 -4 902
Exchange rate differences 7 57 -36 27
Acquisition cost at 31 Dec. 2021 -185 28,359 3,066 31,239
Accumulated depreciations at 1 Jan. 2021 -63 -7,716 -1,402 -9,181
Depreciations -36 -2,963 -749 -3,749
Deductions 270 3,386 95 3,751
Exchange rate differences 15 145 20 179
Accumulated depreciations at 31 Dec. 2021 185 -7,148 -2,037 -9,000
Carrying amount at 1 Jan. 2021 213 16,633 1,279 18,125
Carrying amount at 31 Dec. 2021 0 21,211 1,029 22,240
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The deductions include deductions related to the closure of the German Scanfil GmbH plant with a book value of EUR 1.2 million. Decreases in
value EUR 0.4 million is related to the revaluation of the lease agreement in the event of plant closure..
AMOUNTS RECOGNISED IN PROFIT AND LOSS, EUR THOUSAND 2021 2020
Interest on lease liabilities 552 690
Expenses relating to short-term leases 142 122
Expenses relating to leases of low-value assets, excluding
short-term leases of low-value assets
101 67
Total 795 879
LEASE LIABILITIES, EUR THOUSAND 2021 2020
Maturity analysis – contractual undiscounted cash flows
Within one year 3,859 4,237
In one to two years 12,523 13,113
More than five years 9,618 4,419
Total 26,000 21,768
CARRYING AMOUNT OF LEASE LIABILITIES AT THE END OF THE
FINANCIAL YEAR 2021 2020
Long-term liabilities 19,903 15,905
Short-term liabilities 3,182 3,659
Total 23,085 19,565
The group as a lessor
The group has leased out one of its office buildings and classified this lease agreement as an operational lease agreement.
The group therefore recognises rents received under this agreement as income on a straight-line basis throughout the lease
period under “other operating income.” The group has no other agreements in the role of a lessor.
LEASE INCOME, EUR THOUSAND 2021 2020
Maturity analysis – contractual undiscounted cash flows
Within one year 66 59
In one to two years 17 74
Total undiscounted lease income at 31 December 83 134
Operating lease agreement
EUR THOUSAND Land
Buildings and
constructions
Machinery and
equipments
Right-of-use
assets total
Acquisition cost at 1 Jan. 2020 292 24,772 2,138 27,203
Additions 3 1,726 825 2,554
Deductions -19 -2,344 -251 -2,615
Transfers between items 520 520
Exchange rate differences -324 -31 -355
Acquisition cost at 31 Dec. 2020 276 24,349 2,681 27,306
Accumulated depreciations at 1 Jan. 2020 -42 -5,315 -887 -6,244
Depreciations -39 -2,948 -758 -3,745
Deductions 1,084 208 1,291
Decreases in value -365 -365
Transfers between items -391 -391
Exchange rate differences 18 220 35 273
Accumulated depreciations at 31 Dec. 2020 -63 -7,716 -1,402 -9,181
Carrying amount at 1 Jan. 2020 251 19,457 1,251 20,959
Carrying amount at 31 Dec. 2020 213 16,633 1,279 18,125
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3.5 Depreciation, amortisation and impairment
ACCOUNTING PRINCIPLE
The determination principles are shown in note 3.1 “Goodwill”, 3.2 “Other intangible assets”, 3.3 “Tangible assets” and 3.4
”Right-of-use assets”.
DEPRECIATION BY ASSET CLASS, EUR THOUSAND 2021 2020
Intangible assets
Intangible rights 682 704
Other long-term expenses 355 336
Long-term customer relationships 1,648 1,607
Total 2,686 2,648
Property, plant and equipment
Buildings 1,417 1,624
Machinery and equipment 7,530 7,046
Total 8.946 8,670
Right-of-use-assets
Land 36 39
Buildings 2,959 2,948
Machinery and equipment 749 758
Total 3,745 3,745
Total depreciation 15,376 15,063
Depreciation and amortisation
AMORTISATION BY ASSET CLASS, EUR THOUSAND 2021 2020
Intangible assets
Intangible rights 49
Total 49
Property, plant and equipment
Machinery and equipment 611
Total 611
Right-of-use-assets
Buildings 365
Total 365
Total amortisation 1,025
Total depreciation and amortisation 15,376 16,088
The decision of closing German subsidiary Scanfil GmbH’s factory was made in 2020. Impairments of EUR 1.0 million related
to machinery, equipment and the property have been recognised in intangible assets related to the shutdown of the factory
and the discontinued operations.
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4. CAPITAL STRUCTURE
Financial items
ACCOUNTING PRINCIPLE
Financial assets and liabilities
The company classifies the Group’s financial assets as financial assets recognised at amortised cost, financial assets recognised
at fair value through profit or loss, or financial assets recognised at fair value in other comprehensive income items. Financial
assets are classified based on the purpose of their acquisition, and they are classified at the time of their original acquisition.
The classification is based on the company’s business goals and agreement-based cash flows of financial assets, or it is
carried out by applying the fair value option in conjunction with the original acquisition.
Financial assets recognised at amortized cost mainly consist of trade receivables. Assets classified in this group are valued at
amortised cost using the effective interest method. According to the Group’s business model, trade receivables are intended to
be maintained in accordance with original agreements, and cash flows related to them and based only on capital and interest
are to be collected. Trade receivables are current assets that the company intends to keep for a maximum of 12 months after
the end of the reporting period. The carrying amount of current trade receivables is considered to materially correspond to
their fair value. The accounting of impairments is described in Note 4.7 “Credit risk”.
Financial assets recognised at fair value through profit or loss include financial assets acquired to be held for trading or
classified as items recognised at fair value during initial recognition. Financial assets included in this item are non-quoted
shares. Investments in non-quoted shares are stated at the lower of historical cost and probable realisable value because
their fair values cannot be determined reliably. Quoted shares are measured at fair value, which is the market price of the date
of the financial statement. This item also includes derivatives to which hedge accounting does not apply. In the 2021 financial
statements, the group had no investments in non-quoted shares.
Financial assets entered at fair value in other comprehensive income are derivatives that are subject to hedge accounting.
On the date of the financial statements, the group’s financial assets are evaluated to see if there are indications that the value
of any of the assets might be impaired.
Cash and cash equivalents include cash at bank and in hand as well as short-term bank deposits, which can easily be
exchanged for an amount known in advance and for which there is little risk of changes in value. Items classified as cash
and cash equivalents have a maximum maturity of three months from the time of acquisition. Cash and cash equivalents are
included in the item of financial assets recognised at amortized cost.
The group’s financial liabilities are recognised at amortised cost.
The financial assets and liabilities are recognised on the value date, apart from derivative contracts, which are recognised
on the transaction date.
4.1 Cash and cash equivalents
CASH AND CASH EQUIVALENTS, EUR THOUSAND 2021 2020
Cash and cash equivalents 25,345 25,845
Total 25,345 25,845
4.2 Financial income and expenses
ACCOUNTING PRINCIPLE
Interest income is recognised using the effective interest method and dividend income when the right to a dividend
was created.
FINANCING INCOMES AND EXPENSES, EUR THOUSAND 2021 2020
Financing incomes
Dividends 100
Interest income from other financial assets 7 11
Exchange rate gains 18
Other financial income 37 181
Financing incomes total 61 292
Financing expenses
Interest expenses 1,123 1,205
Exchange rate losses 473 1,277
Translation differences recognised through profit or loss 103
Other financial expenses 392 286
Financing expenses total 1,988 2,871
Financing incomes and expenses -1,926 -2,579
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Exchange rate gains and losses have arisen from the translation of transactions and monetary items into euro. The exchange
rate items are shown under financial income and expenses as their net amount, EUR 0.5 (-1.3) million. The operating profit
includes a total of EUR -2.0 (-1.3) million of exchange rate losses.
The translation differences related to discontinued units have been transferred from equity to financial income and recognised
through profit or loss. The translation differences are presented in note 4.8, Shareholders’ equity.
Interest expenses consist of interest for financial liabilities, EUR 0.2 (0.3) million, interest expenses for leases EUR 0.6 (0.6)
million and interest expenses for using the overdraft facility, EUR 0.2 (0.1) million. Other financial expenses include financial
liabilities commissions and loan withdrawal fees of EUR 0.3 (0.2) million.
4.3 Financial liabilities
FINANCIAL LIABILITIES, EUR THOUSAND 2021 2020
Long-term liabilities recognised at amortised cost
Financial institutions 42,078 18,242
Lease liability 19,903 15,905
Total 61,981 34,147
Short-term liabilities recognised at amortised cost
Financial institutions 6,190 6,188
Drawdowns from credit facilities 13,851
Lease liability 3,182 3,659
Total 23,224 9,847
In 2021, Scanfil plc raised a long-term loan of EUR 30 million from Nordea Bank Finland Plc. The loan due date is November
15, 2024.
In 2019, Scanfil plc raised a long-term loan of EUR 30 million from Nordea Bank Finland Plc. The loan is repayable in every
six months, and the first instalment of EUR 3.0 million was paid on March 27, 2020 and the last instalment will be paid on
September 27, 2024. In addition, Nordea’s Multicurrency Global Cash Pool is available with an overdraft facility of EUR 50 million.
The Group’s financing arrangements includes termination covenants related to the equity ratio and the ratio between interest-
bearing net liabilities and the operating margin. The terms of the covenants are monitored on a quarterly basis. The Group
fulfilled the covenant terms during the financial periods of 2020 and 2021.
4.4 Book values and fair values of financial assets and liabilities
BALANCE SHEET ITEM,
EUR THOUSAND
Derivatives in
cash flow
hedging
Recognised at
fair value through
profit or loss
Financial assets
and liabilities
recognised at
amortised cost
Balance sheet
items total
2021
Non-current assets
Equity investments 535 535
Current assets
Trade receivables 132,613 132,613
Cash and cash equivalents 25,345 25,345
Total financial assets 535 157,958 158,493
Non-current financial liabilities
Interest-bearing liabilities from financial institutions 42,078 42,078
Lease liabilities 19,903 19,903
Current financial liabilities
Interest-bearing liabilities from financial institutions 6,190 6,190
Drawdowns from credit facilities 13,851 13,851
Lease liabilities 3,182 3,182
Derivatives, hedging 88 88
Trade payables 127,256 127,256
Total financial liabilities 88 212,461 212,549
The fair values of financial assets and liabilities do not differ from their book values.
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4.5 Derivative financial instruments and hedge accounting
ACCOUNTING PRINCIPLE
Derivative financial instruments and hedge accounting
Derivative financial instruments are initially recognised in accounting at fair value on the date when the group becomes a party
to the related contract and later further valued at fair value. For derivative financial instruments to which hedge accounting is
not applied, changes in value are immediately recognised through profit or loss. For derivative financial instruments to which
hedge accounting is applied and which are considered effective hedging instruments, the impact on the result of changes in
value is presented according to the hedge accounting model employed.
The Group applies cash flow hedge accounting to currency derivatives and the interest swap used to hedge a variable-rate
loan. When initiating hedge accounting, the Group documents the relationship between the hedged item and the hedging
instruments, together with the Group’s risk management objectives and hedging strategy. When initiating hedge accounting,
the group documents the relationship between the hedged item and the hedging instruments, together with the group’s
risk management objectives and hedging strategy. When initiating hedging and at least every time when preparing financial
statements and interim financial statements, the group documents and evaluates the effectiveness of the hedging relationships
by examining the ability of the hedging instrument to negate changes in the fair value or cash flows of the hedged item. Any
change in the fair value of the effective portion of derivative financial instruments fulfilling the conditions of a cash flow hedge
is recognised under other comprehensive income and presented in equity hedging reserve with tax consequence considered
(included in “Fair value reserves”). Profits and losses accumulated from the hedging instrument to equity are recognised through
profit or loss when the hedged item affects profit or loss.
Interest swap
The Group uses an interest swap to hedge a loan. The purpose of the hedge is to offer protection against interest rate fluctuations
related to the variable-rate loan. Through hedging, the interest payments of the variable-rate euro-denominated loan are
changed to have a fixed rate. Scanfil pays a fixed rate of 0.15% every quarter, in addition to the bank’s rate. The objective of
the hedge is compliant with the Group’s risk management principles.
The effectiveness of the hedge can be reliably measured, and the hedge is expected to remain fully effective throughout the
validity of the hedge. The terms and conditions of the hedged object and the hedging instrument correspond to each other.
Effectiveness is evaluated every quarter, and the hedge has remained effective. The impact of the derivative on results is
expected to materialise during the validity of the loan.
On December 31, 2021, the rated amount of the interest swap was EUR 18.0 million, and it will expire on September 27, 2024. The
fair value of the derivative was EUR -12.009, including accumulated interest. The interest flows of the derivative will materialise
at the same time as the interest flows of the loan.
Forward exchange contracts
The group uses forward exchange contracts for hedging against currency risks. The group applies cash flow hedge accounting
to currency derivative contracts prepared for hedging purposes. Changes in fair value are recognised in other comprehensive
income items adjusted for deferred taxes and presented in the fair value reserve under equity.
BALANCE SHEET ITEM,
EUR THOUSAND
Derivatives in
cash flow
hedging
Recognised at
fair value through
profit or loss
Financial assets
and liabilities
recognised at
amortised cost
Balance sheet
items total
2020
Non-current assets
Equity investments 535 535
Current assets
Trade receivables 105,661 105,661
Cash and cash equivalents 25,845 25,845
Total financial assets 535 131,506 132,040
Non-current financial liabilities
Interest-bearing liabilities from financial institutions 18,242 18,242
Lease liabilities 15,905 15,905
Current financial liabilities
Interest-bearing liabilities from financial institutions 6,188 6,188
Lease liabilities 3,659 3,659
Derivatives, hedging 698 698
Trade payables 76,154 76,154
Total financial liabilities 698 120,148 120,846
The fair values of financial assets and liabilities do not differ from their book values.
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EUR THOUSAND Positive Negative Net
Nominal
value
Book value,
liabilities
Changes in fair
values (used
in efficiency
testing)
2021
Interest rate swaps -12 -12 18,000 -12 43
Forward exchange contracts 120 -197 -76 30,547 -76 444
Total -88 48,547 -88
The company uses forward exchange contracts for hedging against currency risk and interest swaps for managing the interest rate risk.
The table shows the interest rate derivatives at net values and currency derivatives at gross values.
EUR THOUSAND Positive Negative Net
Nominal
value
Book value,
liabilities
Changes in fair
values (used
in efficiency
testing)
2020
Interest rate swaps -66 -66 24,000 -66 -53
Forward exchange contracts 38 -670 -632 24,381 -632 -674
Total -698 48,381 -698
CASH FLOW HEDGING, EUR THOUSAND
Hedging instrument
nominal value
Hedging instrument
book value, liabilities
Hedging instrument
included in balance
sheet item
2021
Interest rate swaps 18,000 -12 Other liabilities
Forward exchange contracts 30,547 -76 Other assets
Total 48,547 -88
CASH FLOW HEDGING, EUR THOUSAND
Hedging instrument
nominal value
Hedging instrument
book value, liabilities
Hedging instrument
included in balance
sheet item
2020
Interest rate swaps 24,000 -66 Other liabilities
Forward exchange contracts 24,381 -632 Other assets
Total 48,381 -698
CASH FLOW HEDGING, EUR THOUSAND
Hedging item value,
liabilities
Hedging items included
in balance sheet item
Cash flow hedging,
share of fair value
reserve
2021
Interest rate swaps 18,000 Financial liabilities -9
Forward exchange contracts -61
Total 18,000 -70
CASH FLOW HEDGING, EUR THOUSAND
Hedging item value,
liabilities
Hedging items included
in balance sheet item
Cash flow hedging,
share of fair value
reserve
2020
Interest rate swaps 24,000 Financial liabilities -53
Forward exchange contracts -674
Total 24,000 -727
Forward exchange contracts are used to hedge expenses denominated in Polish zloty.
Forward exchange contracts are used to hedge expenses denominated in Polish zloty.
Interest and currency derivatives
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4.6 Hierarchy of fair values
EUR THOUSAND Level 2 Level 3
2021
Assets measured at fair value
Recognised at fair value through profit or loss
Equity investments 535
Liabilities measured at fair value
Financial liabilities at fair value through profit or loss
Derivatives 88
Liabilities recognised at amortised cost
Financing loan 62,119
EUR THOUSAND Level 2 Level 3
2020
Assets measured at fair value
Recognised at fair value through profit or loss
Equity investments 535
Liabilities measured at fair value
Financial liabilities at fair value through profit or loss
Derivatives 698
Liabilities recognised at amortised cost
Financing loan 24,429
The fair values of Tier 2 instruments are to a significant extent based on data that can be observed indirectly (e.g. derived from
the prices) for the asset or liability in question. When determining the fair value of these instruments, the group utilises widely
accepted measurement models whose input data, however, is significantly based on observable market data.
The fair values of Tier 3 instruments are based on input data concerning the asset that are not based on observable market
data but significantly on the estimates of the management and their use in widely accepted measurement models. Tier 3
items are unlisted shares.
There were no transfers between tiers during the financial period.
FINANCIAL ASSETS AT FAIR VALUE, EUR THOUSAND 2021 2020
Cost at 1 Jan. 535 534
Exchange rate differences -0 1
Cost at 31 Dec. 535 535
Carrying amount at 31 Dec. 535 535
Tier 3 items
Financial assets measured at fair value mainly consist of shares held by Scanfil Electronics GmbH in IMG Electronic & Power
Systems GmbH and EMS-Electra SRL. Other financial assets measured at fair value include golf club shares and shares in an
employee brokerage agency. These are included in financial assets recognised at fair value through profit or loss.
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In its business operations, Scanfil Group is exposed to different financial risks. The group’s treasury operations and financial
risks are managed centrally in compliance with the principles approved by the parent company’s Board of Directors. Scanfil’s
financial function, part of the group’s financial management, provides the financial services and handles financing transactions
centrally for all group companies. The goal is cost-efficient risk management and optimisation of cash flows.
Currency risk
Scanfil has international operations and is therefore exposed to transaction and translation risks in several currencies. The
transaction risk consists of operating and financing cash flows denominated in foreign currencies. The translation risk is related
to the conversion of foreign subsidiaries’ income statements and balance sheets into euro..
Transaction risk
The group’s operating currency is the euro. Scanfil’s turnover is mainly generated in EUR, RMB, USD and SEK. Half of the
group’s turnover is generated in the group’s operating currency.
4.7 Financial risk management
BREAKDOWN OF TURNOVER BY CURRENCY
SEK 12 %
CNY 17 %
USD 15 %
EUR 56 %
2021
EUR 56%
USD 15%
CNY 17%
SEK 12%
SEK 13 %
CNY 17 %
USD 16 %
EUR 55 %
2020
EUR 56%
USD 16%
CNY 15%
SEK 13%
A significant part of the business is done in local operating currencies, which does therefore not create any transaction risk.
In addition to the above currencies, the most significant transaction risk associated with the business concern the Polish
zloty. Very little sales revenues are created in local currency in Poland, but the local expenses, such as salaries, taxes, etc.
are zloty-denominated.
The net positions associated with financial assets and net working capital are shown below in euros for the main currencies.
TRANSACTION RISK, EUR THOUSAND 2021
Foreign currency USD USD SEK EUR PLN EUR EUR USD USD
Reporting currency EUR CNY EUR SEK EUR PLN CNY SEK EUR
Cash and cash equivalents 4 16 470 674 61
Trade receivables 324 7,613 2,042 35,238 4,354 993 7,050
Trade payables -7,003 -8,686 -68 -4,380 -147 -18,629 -3,745 -4,653 -22,716
Global Cash Pool 1,292 2,303 4,425
Net position -5,383 -1,057 2,235 -2,338 4,278 17,079 1,283 -3,660 -15,605
TRANSACTION RISK, EUR THOUSAND 2020
Foreign currency USD USD SEK EUR PLN EUR EUR USD USD
Reporting currency EUR CNY EUR SEK EUR PLN CNY SEK PLN
Cash and cash equivalents 53 42 1 616 1,087 19
Trade receivables 891 2,291 2,228 17,935 4,514 585 7,722
Trade payables -3,009 -3,908 -146 -3,455 -141 -9,325 -2,377 -2,336 -7,177
Global Cash Pool 816 5,068 3,832
Net position -1,250 -1,576 4,922 -1,227 3,693 9,225 3,223 -1,751 564
The purpose of currency risk management is to mitigate the uncertainty created by exchange rate fluctuations regarding the
group’s financial results, cash flows and balance sheet. Currency risks can be hedged with forward exchange contracts. The
group’s financial function is responsible for all hedging actions.
The financial statements of December 31, 2021 include outstanding EUR/PLN and PLN/SEK forward exchange contracts made
for hedging purposes. Their nominal value is EUR 30.5 (24.4) million, and the group applies hedge accounting to them. Forward
contracts are made on a monthly basis, and the final contract will expire on December 27, 2022.
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TRANSACTION RISK: NET POSITION
EUR THOUSAND
2021
2020
EUR CNY EUR SEK EUR PLN CNY SEK EUR
USD USD SEK EUR PLN EUR EUR USD CNY
-5 383 -1 057 2 235 -2 338 4 278 17 079 1 283 -3 660 -15 605
-1 250 -1 576 4 922 -1 227 3 693 9 225 3 223 -1 751 564
Net position 2021
Net position 2020
-18000
-13000
-8000
-3000
2000
7000
12000
17000
PLN-USDSEK-USDCNY-EURPLN-EUREUR-PLNSEK-EUREUR-SEKCNY-USDEUR-USD
The impact on the group’s result of a change of 10% in the exchange rate of a foreign currency relative to the euro is shown
below. Tax consequences have not been considered.
Foreign currency USD USD SEK EUR PLN EUR EUR USD USD
Reporting currency EUR CNY EUR SEK EUR PLN CNY SEK PLN
Change in currency
% +/- 10
Year 2021,
EUR THOUSAND
+/- 538 +/- 106 +/- 224 +/- 234 +/- 428
+/- 1
708
+/- 128 +/- 366 +/- 1 561
USD USD SEK EUR PLN EUR EUR USD USD
EUR CNY EUR SEK EUR PLN CNY SEK PLN
Change in currency %
Year 2020,
EUR THOUSAND
+/- 125 +/- 158 +/- 492 +/- 123 +/- 369 +/- 923 +/- 322 +/- 175 +/- 56
Translation risk
The translation risk consists of the equities of foreign subsidiaries. The policy regarding the translation risk is that equity is
not hedged.
The Group’s translation position per currency and a sensitivity analysis, presenting the impact of a change of 10% in the
exchange rate of a foreign currency, are presented below.
Sensitivity analysis +/- 10%
TRANSLATION RISK, EUR THOUSAND 2021 2020 2021 2020
CNY 47,483 35,267 +/- 4,748 +/- 3,526
HUF 1,455 1,446 +/- 146 +/- 145
NOK -27 -/+ 3
PLN 53,817 40,896 +/- 5,382 +/- 4,090
SEK 64,750 60,896 +/- 6,475 +/- 6,090
USD 10,619 6,791 +/- 1,062 +/- 679
Total 178,124 145,270
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Interest rate risk
The interest rate risk is associated with interest-bearing liabilities. Changes in the interest rates mainly affect the fair values
of interest-bearing liabilities in the balance sheet and the interest payments associated with these liabilities. Interest swaps
are used for managing the interest rate risk.
The Group took out a loan in 2021 of EUR 30.0 million. The loan interest rate is fixed for the whole loan period. The Group took
out a loan in 2019, of which EUR 18.0 million was outstanding on December 31, 2021. The loan was hedged with an interest
swap on December 28, 2020. On the basis of the interest swap, Scanfil receives a variable Euribor three-month rate and pays
a fixed five-year rate.
Both of the loan interest margin includes covenant conditions. Depending on the development of the interest covenant
condition (interest-bearing liabilities/EBITDA), the interest rate of the loan can increase by a maximum of 0.35 percentage points.
Credit risk
The group’s credit risk is associated with the trade receivables from its customers. Overdue trade receivables are regularly
monitored at the group level on a monthly basis. The group companies are responsible for the credit risks of trade receivables,
and they monitor trade receivables on a customer-specific basis in compliance with the group guidelines. The creditworthiness
of new customers is checked, and the customers are only granted normal payment terms. Scanfil monitors the credit rating
of its customers. Most of Scanfil’s major customers have a good credit rating. The group’s management is of the opinion that
the company does not have any significant concentration of credit risks. The largest customer’s share of the turnover in 2021
was 17.6% (15.0% in 2020), and that of the ten largest customers was 55.2% (58.6%).
Special attention has been paid to the collection of trade receivables during the pandemic, and the total overdue trade
receivables are at the level before the pandemic. Customer risks are monitored regularly. The coronavirus pandemic did not
cause any bad debt during the financial period.
Trade receivables are measured at acquisition cost less the provision of any expected impairment losses. According to IFRS
9, impairment provisions must be recognised on the basis of expected credit losses. A simplified model must be applied to
trade receivables, in which the estimated amount of credit losses is based on percentages defined on the basis of the age
distribution of the receivables. These percentages are based on the estimated probability of credit losses and historical
information. Impairment losses are recorded as expenses in the income statement. At the end of the financial period, the
expected credit loss provision stood at EUR 70 (42) thousand. During the financial period, credit losses recognised from trade
receivables were EUR 2 (2) thousand.
The age distribution of trade receivables is shown in note 2.3, “Trade and other receivables.”
The counterparty risk associated with investments in financial markets is managed by only accepting banks with high credit
ratings as counterparts.
Liquidity risk
The purpose of cash and liquidity management is to concentrate the group’s management of cash and cash equivalents, thus
ensuring efficient use of the funds. The group has a Multicurrency Global Cash Pool arrangement in place for ensuring the
efficient use of cash and cash equivalents.
On December 31, 2021, liquid assets stood at EUR 25.3 (25.8 in 2020) million. In addition, the group has an EUR 50.0 million
credit limit which was unused at the end of the year. Considering the group’s balance sheet structure, the liquidity risk is small
and the COVID-19 pandemic has not had a negative impact on the Group’s liquidity.
The group’s financing arrangements include usual loan covenant terms. The group has fulfilled the financing-related covenant
terms during the financial periods of 2020 and 2021.
Maturity analysis based on debt agreements
The figures are undiscounted and include the interest payments and repayments of capital based on the agreements.
.., EUR THOUSAND
Balance
sheet value Cash flow 0–6 months
2022
6 months–
1/2-1 year
2023
1–2years
2024-2026
2–5 years
2027–
more than 5
years
Loans from financial institutions 48,268 48,788 3,260 3,174 6,245 36,109
Finance lease 23,085 25,511 1,702 1,974 3,809 8,555 9 472
Overdraft facility 13,851 13,851 13,851
Derivatives 12 12 12
Derivatives, hedging 76
Cash flow due 30,547 22,064 8,483
Available cash flow -30,471 -22,004 -8,467
Trade payables 127,256 127,256 127,256
Total 212,549 215,495 146,141 5,164 10,054 44,664 9,472
.., EUR THOUSAND
Balance
sheet value Cash flow 0–6 months
2021
6 months–
1 year
2022
1–2 years
2023-2025
2–5 years
2026–
more than 5
years
Loans from financial institutions 24,429 24,850 3,193 3,181 6,294 12,182
Finance lease 19,565 21,768 2,180 2,057 3,504 9,609 4,419
Derivatives 66 66 66
Derivatives, hedging 632
Cash flow due 24,381 17,804 6,577
Available cash flow -23,749 -17,330 -6,420
Trade payables 76,154 76,154 76,154
Total 120,846 123,470 82,067 5,395 9,798 21,791 4,419
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Changes not affecting cash flow
EUR THOUSAND 1.1.2021 Cash flows
Changes in
IFRS 16
Changes in
exchange
rates
Changes in
fair values 31.12.2021
Long-term loans 18,242 23,836 42,078
Short-term loans 6,188 13,854 20,041
Lease liabilities 19,565 -3,742 9,489 -2,226 23,085
Derivative assets hedging
long-term loans
66 -66 0
Total liabilities in financial operations 44,060 33,948 9,489 -2,226 -66 85,204
Changes not affecting cash flow
EUR THOUSAND 1.1.2020 Cash flows
Changes in
IFRS 16
Changes in
exchange
rates
Changes in
fair values 31.12.2020
Long-term loans 24,704 -6,463 18,242
Short-term loans 19,548 -13,361 6,188
Lease liabilities 22,338 -3,990 1,328 -110 19,565
Derivative assets hedging
long-term loans
54 -54 66 66
Total liabilities in financial operations 66,645 -23,868 1,328 -110 66 44,060
Reconciliation of changes in financial liabilities with cash flows from financing
4.8 Shareholders’ equity
Shares and share capital
Scanfil plc has a total of 64,959,993 shares. The company’s registered share capital is EUR 2,000,000.00. The company has
one series of shares, and all shares belong to the same class. Each share entitles the holder to one vote and equal entitlement
to dividends. The share has no nominal value.
Scanfil plc’s shares are quoted on Nasdaq Helsinki Oy. The trading code of the shares is SCANFL. The shares are included in
the book-entry securities system maintained by Euroclear Finland Ltd.
The company has acquired its own shares during the financial year. On December 31, 2021, the company held 158,738 of its
own shares
NUMBER OF SHARES 2021
Number of shares at 1 Jan. 2021 64,829,993
Share subscription under option rights 2016C on May 5 and 18, 2021 130,000
Number of shares at 31 Dec. 2021 64,959,993
NUMBER OF SHARES 2020
Number of shares at 1 Jan. 2020 64,699,993
Share subscription under option rights 2016A on May 4 and 5, 2020 130,000
Number of shares at 31 Dec. 2020 64,829,993
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Currency translation differences
Currency translation differences include differences arising from the conversion of the financial statements of foreign
companies. On December 31, 2021, translation differences stood at EUR -2.4 million (EUR -6.1 million in 2020), of which EUR
6.5 (2.1) million was created by the exchange rate changes of the Chinese RMB, -6.2 (-4.9) Swedish krone and -2.6 (2.5) Polish
zloty. The translation difference, EUR 3.7 million (-2.8 million) during the financial period, is mainly made up by the exchange
rate changes of the Chinese currency 4.4 (-1.2) million and the Swedish currency, EUR -1.3 (4.4) million.
The translation differences of discontinued units EUR 0.0 (-0.1) million have been transferred from equity to be recognised
through profit or loss.
EUR THOUSAND RMB SEK NOK USD PLN HUF Total
1.1.2021 2,079 -4,901 -529 -2 524 -187 -6,063
Recorded in comprehensive
income items
4,445 -1,339 -18 698 -77 -22 3,689
Transferred to be recognised
through profit or loss
18 18
31.12.2021 6,524 -6,240 0 169 -2,602 -209 -2,357
Fair value reserve
The fair value reserve includes the change in value of the interest rate derivable due to cash flow hedging and the changes in
fair value of currency derivatives concluded for hedging purposes. The derivative instruments recorded in the fair value reserve
are discussed in closer detail in note 4.5, Derivative financial instruments and hedge accounting.
FAIR VALUE RESERVE, EUR THOUSAND 2021 2020
1.1. -558 168
Interest rate derivatives, change 43 -53
Currency derivatives, change 444 -674
Total -71 -558
Of the derivative financial instruments, EUR 0 (3) thousand has been recognised through profit or loss.
Other reserves
Other reserves include a reserve that includes transfers from retained earnings in accordance with the Articles of Association
of foreign companies.
Reserve for invested unrestricted equity
The reserve for invested unrestricted equity includes other equity investments and the subscription price of shares to the extent
that it is not recognised in share capital pursuant to a specific decision. The payments received from share subscriptions made
on the basis of option schemes are recorded in their entirety in the reserve for invested unrestricted equity..
Dividend
In 2021, dividends of EUR 0.17 per share were paid, in total EUR 10,987,313.35.
After the reporting date, The Board of Directors has proposed a dividend of EUR 0.19 per share to be distributed, in total
EUR 12,316,038.45.
4.9 Management of capital structure
The objective of the group’s capital management is to ensure normal prerequisites for business operations. Development of
the group’s capital structure is monitored through net gearing. The capital structure is regularly reviewed. The shareholders’
equity on the consolidated balance sheet is managed as capital. No external capital requirements are applied to the group.
The group’s long-term goal is that net gearing does not exceed 50%.
NET LIABILITIES, EUR THOUSAND 2021 2020
Interest-bearing liabilities 85,204 43,994
Cash assets -25,345 -25,845
Net liabilities 59,859 18,149
Equity total 207,430 182,876
Gearing, % 28.9 9.9
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5. OTHER NOTES
5.1 Provisions
ACCOUNTING PRINCIPLE
A provision is recognised in the balance sheet when a past event has created an obligation that will probably be realised and
when the amount of the obligation can be reliably estimated.
Use of estimates
Estimates are required when assessing the amount of provisions associated with business operations.
PROVISIONS, EUR THOUSAND
Reclamation and
quarantee
Pension
provision
Other
provisions
Restructuring
provisions Total
1.1.2021 199 118 435 3,983 4,736
Exchange rate differences -1 -1 -4 -6
Additions 8 20 97 246 371
Used provisions -2,795 -2,795
Cancellation of unused provisions -80 -1 -81
31.12.2021 126 137 528 1,434 2,224
2021 2020
Non-current provisions 665 553
Current provisions 1,560 4,183
Total 2,224 4,736
The complaint and warranty provision includes the estimated cost of repairing defective products that is related to customer
complaints and warranty obligations and any fees resulting from delayed deliveries. Other provisions are related to a benefit
payable on the basis of years of service, which was locally agreed in Poland and is applicable to employees with a long history
of service in the company.
Restructuring provision includes the closing cost of the Scanfil GmbH Hamburg factory and is mainly related to personnel
expenses.
5.2 Securities provided, contingent liabilities and other liabilities
BANK GUARANTEES GIVEN, EUR THOUSAND 2021 2020
On behalf of own company 670 671
On behalf of Group company 1,669 175
Total 2,339 846
In addition to the aforementioned commitments, the following guarantees have been given:
Scanfil plc has given absolute guarantees to Nordea Bank AB (publ) as security for payment of the liabilities which Scanfil
Sweden AB has created from time to time towards Nordea Bank AB (publ) on the basis of derivative contracts concluded, as
well as to Skandinaviska Enskilda Banken AB as a replacement for the securities earlier provided by Scanfil Sweden AB. The
maximum liability to Skandinaviska Enskilda Banken AB is EUR 3.6 million.
Scanfil plc has given a guarantee for the lease obligations of its subsidiary Scanfil Inc
Scanfil EMS Oy has given a guarantee of any obligations arising from the subsidiary’s delivery contracts with its customers. The
guarantee is limited to a maximum of EUR 7.5 million and will expire seven years after the end of the last product agreement.
Scanfil EMS Oy has given a guarantee to Nordea Bank AB Shanghai Branch of any obligations arising from a loan facility of
CNY 137 million between the subsidiary Scanfil (Suzhou) Co., Ltd. and the Nordea Bank AB Shanghai Branch.
Scanfil Sweden AB has given a guarantee to the lessor as security for the liabilities under the lease contract regarding the
premises leased by the Polish subsidiary Scanfil Poland Sp. z o.o.
On behalf of the group companies may be given usual parent company guarantees from time to time as security for the
fulfillment of their customer agreement obligations.
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EMPLOYEE BENEFITS FOR MEMBERS OF THE MANAGEMENT, EUR THOUSAND 2021 2020
Salaries and other short-term employee benefits 1,440 1,364
Options implemented and paid in shares 1,010 366
Total 2,450 1,731
The management includes the parent company’s Board of Directors, CEO and Management Team members.
SALARIES PAID TO THE PRESIDENT, EUR THOUSAND 2021 2020
Salaries and other short-term employee benefits 415 387
Options implemented and paid in shares 631 132
Total 1,046 519
One of the Board members has a valid voluntary pension insurance policy on a payment basis.
STATUTORY PENSION EXPENDITURE, TYEL, EUR THOUSAND 2021 2020
Petteri Jokitalo 77 72
The salary information is payment-based.
SALARIES PAID TO THE BOARD MEMBERS, EUR THOUSAND 2021 2020
Harri Takanen 54 51
Jarkko Takanen 35 32
Bengt Engström 34 30
Christer Härkönen 11 28
Christina Lindstedt 34 30
Juha Räisänen 31 17
Total salaries of the Board Members 199 187
Group companies Domicile
Group’s
ownership Share of vote
Parent company´s
ownership
Scanfil plc, parent company; Finland
Scanfil EMS Oy Finland 100% 100% 100%
Scanfil GmbH Germany 100% 100% 100%
Scanfil Electronics GmbH Germany 100% 100% 100%
Scanfil Holding Germany GmbH Germany 100% 100% 100%
Scanfil Oü Estonia 100% 100% 100%
Scanfil (Suzhou) Co., Ltd. China 100% 100% 100%
ScanfilPoland Sp. z o.o. Poland 100% 100% 100%
Scanfil Sweden AB Sweden 100% 100% 100%
Scanfil Vellinge AB Sweden 100% 100% 100%
Scanfil Åtvidaberg AB Sweden 100% 100% 100%
Scanfil Atlanta Inc. USA 100% 100% 100%
Scanfil Business Services Kft Hungary 100% 100% 100%
Leases to related parties
Scanfil plc’s subsidiary Scanfil EMS Oy has leased office premises from Kiinteistö Oy Pilot 1. The main shareholder of Jussi
Real Estate Oy, the owner of Kiinteistö Oy Pilot 1, is Jussi Capital Oy. The main shareholders of Jussi Capital Oy are Scanfil plc’s
Board members Harri Takanen and Jarkko Takanen. In 2021, the market rents paid totalled EUR 27,579 (EUR 27,360 in 2020).
A consulting agreement dated 30 November 2020 has been signed between Valuenode GmbH, a company controlled by
Juha Räisänen, a member of Scanfil plc’s Board of Directors, on the analysis and development project of the Scanfil Group’s
procurement operations. Based on the consulting agreement, Scanfil plc has paid EUR 52,500 of consulting fees during 2021.
5.4 Events after the reporting period
No material events to be reported have occurred after the reporting period.
5.3 Details of related parties and group structure
The Group’s related parties include, in addition to group companies, the key members of management, i.e., the members
of the parent company’s Board of Directors and the group’s Management Team.
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PARENT COMPANY FINANCIAL STATEMENTS, FAS
EUR THOUSAND Note 1.1.–31.12.2021 1.1.–31.12.2020
Other operating income 2,152 1,924
Personnel expenses 1
Wages, salaries and fees -1,768 -1,669
Pensions and statutory indirect employee costs
Pensions -268 -217
Statutory indirect employee costs -37 -55
Personnel expenses total -2,074 -1,941
Depreciation and reduction in value
Depreciation according to plan 3 -61 -40
Depreciation and reduction in value total -61 -40
Other operating expenses 2 -759 -782
Operating profit -742 -839
Financial income and expenses
Financial income from Group 40,000
EUR THOUSAND Note 1.1.–31.12.2021 1.1.–31.12.2020
Other interest and financial income
From Group 762 801
From other 901 2,005
Interest expenses and financial expenses
To Group -71
To other -1 541 -3,161
Financial income and expenses total 122 39,574
Profit before appropriations and taxes -620 38,735
Appropriations
Depreciation difference increase -13
Group contribution 4 1,500 1,000
Appropriations total 1,487 1,000
Profit before tax 867 39,735
Income taxes 5
Income taxes -285 163
Deferred taxes 111 -116
Income taxes total -173 47
Net profit for the period 693 39,782
Parent Company Income Statement
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EUR THOUSAND Note 31.12.2021 31.12.2020
ASSETS
Non-current assets
Intangible assets
Immaterial rights 6 7 18
Other non-current assets 153 146
Intangible assets total 159 164
Tangible assets
Plant and equipment 52 67
Other tangible assets 17 17
Advance payments and construction in progress 7 87
Tangible assets total 155 83
Investments
Holdings in Group companies 8 61,535 61,535
Investments total 61,535 61,535
Total non-current assets 61,849 61,782
EUR THOUSAND Note 31.12.2021 31.12.2020
ASSETS
Current assets
Long-term receivables
Loan receivables from Group companies 9 23,389 33,139
Other reveivables from Group companies 9 6 2
Deferred tax assets 67 178
Long-term receivables total 23,463 33,320
Short-term receivables
Receivables from Group companies 9 43,917 12,504
Accrued income 158 174
Short-term receivables total 44,075 12,678
Cash and cash equivalents 10 12,789 19,183
Total current assets 80,327 65,181
Total assets 142,176 126,963
Parent Company Balance Sheet
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EUR THOUSAND Note 31.12.2021 31.12.2020
SHAREHOLDER’S EQUITY AND LIABILITIES
Equity
Share capital 11 2,000 2,000
Other reserves
Fair value reserve -61 -506
Reserve for invested unrestricted equity fund 33,508 32,176
Retained earnings 30,571 1,777
Profit for the period 693 39,782
Total Equity 66,712 75,229
Appropriations
Cumulative accelerated depreciation 12 13
Total Appropriations 13
EUR THOUSAND Note 31.12.2021 31.12.2020
Non-current liabilities
Financing loan 13 42,000 18,000
Non-current liabilities total 42,000 18,000
Current liabilities
Financing loans 13 6,000 6,000
Trade liabilities 113 82
Liabilities to Group companies 14 26,244 26,093
Other creditors 131 66
Accrued liabilities 15 963 1,493
Current liabilities total 33,451 33,734
Total liabilities 75,451 51,734
Total equity and liabilities 142,176 126,963
Parent Company Balance Sheet
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EUR THOUSAND 1.1.–31.12.2021 1.1.–31.12.2020
Cash flow from operating activities
Profit for the period 693 39,782
Adjustments
Depreciation according to plan 61 40
Financial income and expenses -122 -39,574
Other income and expenses without payment
Tax accrual 186 -47
Group contributions received -1,500 -1,000
Exchange rate differences -153 -634
Changes in working capital
Inc(-)/dec(+) in short-term non-interest bearing receivables -269 321
Inc(+)/dec(-) in short-term non-interest-bearing liabilities -59 -7
Interest received 633 756
Interest paid -479 -618
Income taxes paid -17 -131
Net cash flow from operating activities -1,027 -1,111
Cash flow from investing activities
Investments in tangible and intangible assets -128 -238
Paid loans -4,780
Investments in subsidiary shares -66
Granted loans -15,000
Received loan payments 7,250 4,250
Net cash flow from investing activities 7,122 -15,834
EUR THOUSAND 1.1.–31.12.2021 1.1.–31.12.2020
Cash flow from financing activities
Received group contributions 1,000 1,000
Dividents received 51,000
Related party investments to company shares 1,333 858
Share repurchase -755
Changes in group financing -27,834 -339
Drawdown of long-term loans 30,000
Repayment of long-term loans -6,000 -6,000
Dividends paid -10,987 -9,637
Net cash flow from financing activities -12,489 36,127
Net increase/decrease in cash and cash equivalents -6,394 19,183
Cash and cash equivalents Jan 1. 19,183 0
Cash and cash equivalents Dec 31. 12,789 19,183
Parent Company Cash Flow Statement
Changes in group financing are presented in net and are related to the group’s Cash Pool.
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NOTES TO FINANCIAL STATEMENTS, FAS
The parent company’s accounting principles
Scanfil plc is a Finland-based public limited company domiciled in Sievi. The company’s shares are quoted on the Main List
of
Nasdaq Helsinki Ltd. The financial statements of Scanfil plc have been prepared in accordance with the Finnish
Accounting Act and other legislation and regulations in force in Finland.
MEASUREMENT AND RECOGNITION PRINCIPLES AND METHODS
Fixed assets
Fixed assets are measured at historical cost less accumulated depreciation and impairment. Depreciation is calculated on a
straight-line basis over the expected useful lives of the assets.
The depreciation periods for fixed assets are as follows:
Intellectual property rights 5 years
Other long-term expenses 5 years
Machinery and equipment 3–5 years
Subsidiary company shares
Shares in subsidiaries have been measured at the acquisition cost, which is adjusted by impairment if the future returns on
the investment are expected to be permanently lower than the acquisition cost.
Financial instruments
Financial assets and liabilities are measured at the lower of cost and probable realisable value.
The group’s bank account system
The assets and liabilities of the subsidiaries included in Scanfil plc’s group account systems are shown as offset at Scanfil plc,
either as cash and bank receivables or as short-term financial liabilities and short-term receivables from group companies or
as short-term debts to group companies.
Turnover
The parent company’s operations consist of group functions, and income from the sale of services is presented as turnover.
Pension costs are based on defined contribution schemes. Management’s employee benefits are reported in note 18.
EUR THOUSAND 2021 2020
Salaries, wages and fees 1,768 1,669
Pension costs 268 217
Other indirect employee expenses 37 55
Total 2,074 1,941
Fringe benefits (taxable value) 693 38
AVERAGE NUMBER OF EMPLOYEES DURING THE PERIOD 2021 2020
Clerical employees 13 13
Total 13 13
1. Personnel expenses
Pension costs
The pension cover of employees is provided by pension insurance companies. Pension expenses are recognised as expenses
for the year during which they are accrued.
Foreign currency items
Foreign currency-denominated transactions are recognised during the financial period using the exchange rates on the
transaction date. Any foreign currency-denominated balance sheet items remaining outstanding on the closing date are
measured at the exchange rate valid on the closing date.
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Other operating costs mainly consist of legal and consultation expenses, travelling expenses and statutory expenses of a listed company.
OTHER OPERATING EXPENSES INCLUDE THE FOLLOWING SIGNIFICANT
EXPENSE ITEMS, EUR THOUSAND 2021 2020
Other operating expenses 759 782
Total 759 782
2. Other operating expenses
AUDITOR’S REMUNERATION, EUR THOUSAND 2021 2020
Auditor's remunerations of the Chartered Accountants 58 57
Tax advisor 23 9
Other services 2 55
Total 83 120
3. Depreciation and amortisation
DEPRECIATION BY ASSET CLASS, EUR THOUSAND 2021 2020
Intangible assets
Intangible rights 12 18
Other long-term expenses 34 13
Plant and equipment 15 9
Total 61 40
Total depriciation 61 40
EUR THOUSAND 2021 2020
Group contribution from Scanfil EMS Oy 1 500 1,000
Total 1 500 1,000
4. Contributions from Group companies
5. Income taxes
EUR THOUSAND 2021 2020
Income taxes from group contribution 300 200
Income taxes from actual operations -15 -357
Income taxes from previous years -6
Change in deferred taxes -111 116
Total 173 -47
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6. Intangible assets
EUR THOUSAND
Intangible
rights
Other long-term
expenses
Intangible assets
total
Acquisition cost Jan 1, 2021 121 184 305
Additions 41 41
Acquisition cost Dec 31, 2021 121 225 346
Accumuled depreciations Jan 1, 2021 -103 -38 -141
Deprecions -12 -34 -46
Accumuled depreciations Dec 31, 2021 -115 -72 -187
Carrying amount Jan 1, 2021 18 146 164
Carrying amount Dec 31, 2021 7 153 159
EUR THOUSAND
Intangible
rights
Other long-term
expenses
Intangible assets
total
Acquisition cost Jan 1, 2020 110 32 143
Additions 11 152 163
Acquisition cost Dec 31, 2020 121 184 305
Accumuled depreciations Jan 1, 2020 -85 -25 -110
Deprecions -18 -13 -31
Accumuled depreciations Dec 31, 2020 -103 -38 -141
Carrying amount Jan 1, 2020 25 7 33
Carrying amount Dec 31, 2020 18 146 164
7. Tangible assets
EUR THOUSAND
Plant and
equipment
Other
tangible assets
Advanced
payments and
construction in
progress
Tangible assets
total
Acquisition cost Jan 1, 2021 76 17 92
Additions 87 87
Acquisition cost Dec 31, 2021 76 17 87 179
Accumuled depricions Jan 1, 2021 -9 -9
Deprecions -15 -15
Accumuled depricions Dec 31, 2021 -24 -24
Carrying amount Jan 1, 2021 67 17 83
Carrying amount Dec 31, 2021 52 17 87 155
EUR THOUSAND
Plant and
equipment
Other
tangible assets
Tangible assets
total
Acquisition cost Jan 1, 2020 17 17
Additions 76 76
Acquisition cost Dec 31, 2020 76 17 92
Accumuled depricions Jan 1, 2020
Deprecions 9 9
Accumuled depricions Dec 31, 2020 9 9
Carrying amount Jan 1, 2020 17 17
Carrying amount Dec 31, 2020 67 17 83
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8. Holdings in Group companies
EUR THOUSAND 2021 2020
Total in the beginning of period 61,535 61,469
Scanfil Holding Germany GmbH, additions 66
Total at the end of period 61,535 61,535
Carrying amount at 31 Dec. 61,535 61,535
GROUP COMPANIES, EUR THOUSAND Domicile
Group
share %
Parent company
share %
Parent company
book value
Scanfil EMS Oy Finland 100 100 12,621
Scanfil Sweden AB Sweden 100 100 48,823
Scanfil Holding Germany GmbH Germany 100 100 91
Total 61,535
9. Receivables from Group companies
EUR THOUSAND 2021 2020
Long-term receivables
Loan receivables 23,389 33,141
Other receivables 6 2
Total 23,389 33,141
Short-term receivables
Prepayments and accrued income 1,809 1,177
Global Cash Pool receivables 34,269 6,269
Loan receivables 7,500 5,000
Other receivables 339 58
Total 43,917 12,504
Prepayments and accrued income
Interest income from group 309 177
Group contribution from subsidiaries 1,500 1,000
Total 1,809 1,177
10. Cash and equivalent
EUR THOUSAND 2021 2020
Cash and bank balances 12,789 19,183
Total 12,789 19,183
ANNUAL REPORT 2021/79
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11. Equity
13. Loans from financial institutions
12. Depreciation difference
EUR THOUSAND 2021 2020
Non-current
Financial Institutions 42,000 18,000
Current
Financial Institutions 6,000 6,000
Total 48,000 24,000
Interest-bearing liabilities will mature as follows:
Year 2021 6,000
Year 2022 6,000 6,000
Year 2023 6,000 6,000
Year 2024 36,000 6,000
Total 48,000 24,000
EUR THOUSAND 2021 2020
Depreciation difference 13
Total 13
In 2021, Scanfil plc withdrew a long-term loan of EUR 30 million from Nordea Bank Finland Plc. The loan due date is November
15, 2024.
In 2019, Scanfil plc withdrew a long-term loan of EUR 30 million from Nordea Bank Finland Plc. The loan is amortised every
six months. The first instalment of EUR 3.0 million was paid on March 27, 2020, and it will be entirely repaid on September 27,
2024. In addition, Nordea’s Multicurrency Global Cash Pool is available with an overdraft facility of EUR 50 million, which was
entirely unused on December 31, 2020.
The group’s financing arrangements include termination covenants related to the equity ratio and the ratio between interest-
bearing net liabilities and the operating margin. The terms of the covenants are monitored on a quarterly basis. During the
2020 and 2021 financial periods, the group fulfilled the covenant terms.
EUR THOUSAND 2021 2020
Share capital
Share capital Jan 1. 2,000 2,000
Share capital Dec 31. 2,000 2,000
Fair Value Reserve -61 -506
Total restricted shareholder's equity 1,939 1,494
Reserve for invested unrestricted equity fund
Reserve for invested unrestricted equity fund Jan 1. 32,176 31,317
Options 1,333 858
Reserve for invested unrestricted equity fund Dec 31. 33,508 32,176
Retained earnings
Retained earning Jan 1. 41,559 12,168
Retained earnings, purchase of own shares -755
Paid dividends -10,987 -9,637
Retained earnings Dec 31. 30,571 1,777
Profit for the period 693 39,782
Total unrestricted equity 64,773 73,734
Total equity 66,712 75,229
Calculation of distributable funds Dec 31.
Reserve for invested unrestricted equity fund 33,508 32,176
Retained earnings 30,571 1,777
Profit for the period 693 39,782
Total 64,773 73,734
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14. Liabilities to Group companies
EUR THOUSAND 2021 2020
Short-term liabilities to Group companies
Accounts payable 22 37
Other liabilities 26,222 26,056
Total 26,244 26,093
15. Accrued liabilities
EUR THOUSAND 2021 2020
The most significant items included in accrued liabilities
Employee expenses 635 660
Interests 11 2
Other accrued liabilities 316 831
Total 963 1,493
16. Commitments and contingencies
EUR THOUSAND 2021 2020
Guarantees given
On behalf of group company 1,669 175
Total 1,669 175
Scanfil plc has given absolute guarantees to Nordea Bank AB (publ) as security for payment of the liabilities which Scanfil
Sweden AB has created from time to time towards Nordea Bank AB (publ) on the basis of derivative contracts concluded, as
well as to Skandinaviska Enskilda Banken AB as a replacement for the securities earlier provided by Scanfil Sweden AB. The
maximum liability to Skandinaviska Enskilda Banken AB is EUR 3.6 million. Furthermore, Scanfil plc has issued a guarantee
for the obligations of the lease agreement of the subsidiary Scanfil Inc.
On behalf of the group companies may be given usual parent company guarantees from time to time as security for the
fulfillment of their customer agreement obligations.
17. Derivative contracts
INTEREST DERIVATIVES, EUR THOUSAND 2021 2020
Interest swap agreements
Fair value -12 -66
Rated value of underlying asset 18,000 24,000
HEDGE ACCOUNTING, EUR THOUSAND 2021 2020
Forward exchange contracts
Fair value -76 -632
Rated value of underlying asset 30,547 24,381
In 2019, Scanfil plc withdrew a long-term loan which contains an interest swap agreement to hedge the loan as of Dec 28,
2020. The purpose of the hedge is to offer protection against interest rate fluctuations related to the variable-rate loan.
Through hedging, the interest payments of the variable-rate euro-denominated loan are changed to have a fixed rate. Scanfil
pays quarterly a fixed rate of 0.15%, in addition to the rate of the bank. The objective of the hedge is in accordance with the
Group’s risk management principles.
The effectiveness of the hedge can be reliably measured, and the hedge is expected to remain fully effective throughout the
validity of the hedge. The terms are corresponding to each other, regarding the hedged item and the hedging instrument.
Effectiveness is quarterly evaluated and the hedge has remained effective. The impact of the derivative on results is expected
to materialise during the validity of the loan.
The nominal amount of the interest rate swap agreement on December 31, 2021 was EUR 18.0 million, and maturity 27 September
2024. The fair value of the derivative was EUR -12,009, including accrued interest. The interest flows of the derivative occur
simultaneously with the interest flows of the loan.
ANNUAL REPORT 2021/81
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18. Other rental contracts
EUR THOUSAND 2021 2020
To be paid next accounting period 32 23
To be paid later 33 31
Total 65 54
Rent liabilities do not include VAT.
19. Management’s employment-related benefits
SALARIES AND OTHER SHORTTERM EMPLOYEE BENEFITS,
EUR THOUSAND 2021 2020
Salaries and bonuses of the President
Salaries, wages and fees 415 387
Shares and options 631 132
Salaries and bonuses of the Board members
Jarkko Takanen 35 32
Harri Takanen 54 51
Bengt Engström 34 30
Christer Härkönen 11 28
Christina Lindstedt 34 30
Juha Räisänen 31 17
Total salaries of the Board Members 199 187
BOARD OF DIRECTORS’ PROPOSAL FOR THE DISTRIBUTION OF PROFIT
The parent company’s distributable funds total EUR 64,773,284.67, including undistributed profits of EUR 31,264,893.13.
The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.19 per share be paid, totalling
EUR 12,316,038.45 for the financial year ending on December 31, 2021.
Signatures to the board of directors’ report and financial statements
Vantaa, February 21, 2022
Harri Takanen Jarkko Takanen
Chairman of the Board Member of the Board
Bengt Engström Christina Lindstedt
Member of the Board Member of the Board
Juha Räisänen Petteri Jokitalo
Member of the Board CEO
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ANNUAL REPORT 2021/82
To the Annual General Meeting of Scanfil Plc
REPORT ON THE AUDIT OF
THE FINANCIAL STATEMENTS
Opinion
We have audited the financial statements of Scanfil Plc (business identity code
2422742-9) for the year ended December 31, 2021. The financial statements comprise
the consolidated income statement, statement of comprehensive income, balance
sheet, statement of changes in equity, statement of cash flows and notes, including a
summary of significant accounting policies, as well as the parent company’s income
statement, balance sheet, statement of cash flows and notes.
In our opinion
•
the consolidated financial statements give a true and fair view of the group’s financial
position, financial performance and cash flows in accordance with International
Financial Reporting Standards (IFRS) as adopted by the EU
•
the financial statements give a true and fair view of the parent company’s financial
performance and financial position in accordance with the laws and regulations
governing the preparation of financial statements in Finland and comply with
statutory requirements.
Our opinion is consistent with the additional report submitted to the Audit Committee
and Board of Directors.
Basis for Opinion
We conducted our audit in accordance with good auditing practice in Finland. Our
responsibilities under good auditing practice are further described in the Auditor’s
Responsibilities for the Audit of the Financial Statements section of our report.
We are independent of the parent company and of the group companies in
accordance with the ethical requirements that are applicable in Finland and are
relevant to our audit, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
In our best knowledge and understanding, the non-audit services that we have
provided to the parent company and group companies are in compliance with laws
and regulations applicable in Finland regarding these services, and we have not
provided any prohibited non-audit services referred to in Article 5(1) of regulation
(EU) 537/2014. The non-audit services that we have provided have been disclosed
in note 1.5 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.
Materiality
The scope of our audit was influenced by our application of materiality. The materiality
is determined based on our professional judgement and is used to determine
the nature, timing and extent of our audit procedures and to evaluate the effect
of identified misstatements on the financial statements as a whole. The level of
materiality we set is based on our assessment of the magnitude of misstatements
that, individually or in aggregate, could reasonably be expected to have influence on
the economic decisions of the users of the financial statements. We have also taken
into account misstatements and/or possible misstatements that in our opinion are
material for qualitative reasons for the users of the financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the financial statements of the current period. These
matters were addressed in the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters. The significant risks of material misstatement referred to in the
EU Regulation No 537/2014 point (c) of Article 10(2) are included in the description
of key audit matters below.
We have also addressed the risk of management override of internal controls. This
includes consideration of whether there was evidence of management bias that
represented a risk of material misstatement due to fraud.
AUDITOR’S REPORT
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THE KEY AUDIT MATTER HOW THE MATTER WAS ADDRESSED IN THE AUDIT
Valuation of goodwill and acquisition-related customer
relationships (Refer to Accounting principles for consolidated
financial statements and note 3.1. and 3.2.)
Valuation of inventories (Refer to Accounting principles for
consolidated financial statements and note 2.2.)
Revenue recognition (Refer to Accounting principles for
consolidated financial statements and note 1.1.)
Goodwill and acquisition-related customer relationships amounted to EUR 15.4
million.
Goodwill is not amortized, instead it is tested for impairment at least on an annual
basis. Impairment tests are based on future cash flow forecasts and determining
the underlying key assumptions require management judgment.
Scanfil’s acquisition-related long-term customer relationships have finite useful
lives that are estimated by management through the application of judgement.
Due to the high level of judgment related to the forecasts used in goodwill impairment
tests and the significant carrying amounts involved, impairment of goodwill and
acquisition-related customer relationships are considered key judgmental areas
that our audit is focused on.
We assessed the key assumptions used in the calculations, such as growth of
turnover, profitability and discount rate, with relation to the original forecast presented
to the Board of Directors, external references and our own views.
We involved KPMG valuation specialists when assessing the technical accuracy
of the calculations and comparing the assumptions used with external market
and industry data.
In respect of acquisition-related customer relationships, we evaluated the
recoverability of these assets by inspecting the associated calculations and
underlying assumptions.
In addition, we considered the appropriateness of the Group’s disclosures in respect
of goodwill, acquisition-related customer relationships and impairment testing.
Inventory management, stocktaking routines and determination of cost are the
key elements of inventory valuation. The Group’s carrying values of inventories
amounted to EUR 193.4 million representing 41 percent of the consolidated total
assets as at December 31, 2021.
Inventory valuation involves the exercise of judgement by management in respect
of determination of cost and any impaired inventories.
Due to management judgments and the significant carrying amount involved,
valuation of inventories is considered a key audit matter.
We assessed the appropriateness of the inventory valuation principles applied.
Our audit procedures comprised testing of controls over inventory management
and the accuracy of inventory amounts. We also performed substantive procedures
to evaluate the accuracy of inventory valuation.
We followed the execution of certain stocktaking routines in order to assess the
effectiveness of the process.
The number of sales transactions processed in the IT systems is significant and
pricing responsibilities for products and services are decentralized.
Due to the nature of the industry, the effectiveness of the internal controls over the
IT systems and pricing are critical in respect of the accuracy of revenue recognition.
Revenue is recognized when Scanfil has satisfied performance obligations in the
contract either at a point in time or over the time for services. As the revenue of the
group consists mainly of the sale of products the revenue is recognized at a point
in time when the control is transferred to a customer in accordance with the terms
and conditions of the agreement.
Application of consistent revenue recognition principles is considered a key audit
matter.
We assessed the appropriateness of the revenue recognition principles applied.
As part of our audit procedures we tested internal controls over registration of sales
transactions, recording related revenues and approval of changes.
Our substantive procedures included testing of recognition of relevant transactions
in the appropriate period, comparing invoice details to the received payments and
assessing the appropriateness of the bad debt provision recognized.
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Responsibilities of the Board of Directors and the
Managing Director for the Financial Statements
The Board of Directors and the Managing Director are responsible for the preparation
of consolidated financial statements that give a true and fair view in accordance
with International Financial Reporting Standards (IFRS) as adopted by the EU, and
of financial statements that give a true and fair view in accordance with the laws and
regulations governing the preparation of financial statements in Finland and comply
with statutory requirements. The Board of Directors and the Managing Director are
also responsible for such internal control as they determine is necessary to enable
the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the Board of Directors and the Managing
Director are responsible for assessing the parent company’s and the group’s
ability to continue as a going concern, disclosing, as applicable, matters relating
to going concern and using the going concern basis of accounting. The financial
statements are prepared using the going concern basis of accounting unless there
is an intention to liquidate the parent company or the group or cease operations, or
there is no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud
or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance but is not a guarantee that an audit conducted
in accordance with good auditing practice will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of the financial
statements.
As part of an audit in accordance with good auditing practice, we exercise
professional judgment and maintain professional skepticism throughout the audit.
We also:
•
Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsive
to those risks, and obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
•
Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the parent company’s
or the group’s internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness
of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of the Board of Directors’ and the Managing
Director’s use of the going concern basis of accounting and based on the audit
evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the parent company’s or the group’s
ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related
disclosures in the financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future events or conditions may
cause the parent company or the group to cease to continue as a going concern.
•
Evaluate the overall presentation, structure and content of the financial
statements, including the disclosures, and whether the financial statements
represent the underlying transactions and events so that the financial statements
give a true and fair view.
•
Obtain sufficient appropriate audit evidence regarding the financial information
of the entities or business activities within the group to express an opinion on
the consolidated financial statements. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible
for our audit opinion.
We communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify during
our audit.
We also provide those charged with governance with a statement that we have
complied with relevant ethical requirements regarding independence, and
communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine
those matters that were of most significance in the audit of the financial statements
of the current period and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of
such communication.
Other Reporting Requirements
Information on our audit engagement
We have acted as auditors appointed by the Annual General Meeting as of January 1,
2012, at which point the parent company was established as a result of a demerger
of Sievi Capital Plc. Since 1999 we have acted as auditors in Sievi Capital Plc,
which
became a public interest entity as a result of a listing in 2000.
Other Information
The Board of Directors and the Managing Director are responsible for the other
information. The other information comprises the report of the Board of Directors
and the information included in the Annual Report, but does not include the financial
statements and our auditor’s report thereon. We have obtained the report of the
Board of Directors prior to the date of this auditor’s report, and the Annual Report
is expected to be made available to us after that date. Our opinion on the financial
statements does not cover the other information.
In connection with our audit of the financial statements, our responsibility is to read
the other information identified above and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge
obtained in the audit, or otherwise appears to be materially misstated. With respect
to the report of the Board of Directors, our responsibility also includes considering
whether the report of the Board of Directors has been prepared in accordance with
the applicable laws and regulations.
In our opinion, the information in the report of the Board of Directors is consistent
with the information in the financial statements and the report of the Board of
Directors has been prepared in accordance with the applicable laws an d 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 March 1, 2022 Kirsi Jantunen
KPMG OY AB Authorised Public Accountant, KHT
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ANNUAL REPORT 2021/85
Scanfil plc is a publicly listed company, managed in accordance with the company’s
Articles of Association, the Finnish Companies Act and other legislation relating
to the company. In addition, the Company complies with the Finnish Corporate
Governance Code (2020) published by the Securities Market Association and
entered into force on January 1, 2020.
The Board of Directors has evaluated the independence of its members according
to which the majority of members are independent of the company (Jarkko Takanen,
Bengt Engström and Christina Lindstedt) and independent of the significant
shareholders of the company (Bengt Engström, Christina Lindstedt and Juha
Räisänen). The majority of the members of Board’s two committees are independent
of the company and one member of the Audit Committee is independent of the
significant shareholders of the company.
This statement has been reviewed by Scanfil plc’s Board of Directors. Scanfil plc’s
auditing firm has verified that the summary description of the internal control and
risk management associated with the financial reporting process is consistent with
the financial statements.
This Corporate Governance Statement is available on the company website at
scanfil.com under Investors. The Finnish Corporate Governance Code is available
to the public at cgfinland.fi.
Board of Directors
Under the Companies Act, the Board of Directors is responsible for the management
of the company and the proper organization of operations. The members of the Board
of Directors are elected by the Annual General Meeting. According to the Articles of
Association, Scanfil plc’s Board of Directors shall include a minimum of three and
a maximum of seven regular members. The Board of Directors elects a Chairman
from among its members. The Board of Directors is responsible for deciding on
the business strategy, significant matters related to investments, organization and
finance, as well as supervising the company’s management and operations. The
Board of Directors shall also ensure that supervision of the company’s accounts
and asset management is properly organized.
Composition of the Board of Directors
The following Board members were elected by the Annual General Meeting held
on Apri 22, 2021:
Harri Takanen
Chairman of the Board of Directors. Born 1968, M.Sc. (Tech.). Member of the Board
of Directors of Scanfil plc since April 18, 2013. Professional board member and the
CEO of Jussi Capital Oy as of 15 December 2021. Not independent of the company
and its major shareholders. Holds 9,913,146 shares in Scanfil plc.
Jarkko Takanen
Member of the Board since January 1, 2012. Born 1967, B.Sc.(Prod.Eng.), Commercial
College Diploma in Management Accountancy. The CEO of Jussi Capital Oy until
14 December 2021. Independent of the company, not independent of major
shareholders. Holds 8,596,169 shares in Scanfil plc.
Bengt Engström
Member of the Board since August 20, 2015. Born 1953, M.Sc. (Eng.). Has held several
management-level positions in Sweden and internationally, including Whirlpool,
Bofors AB, Duni AB and Fujitsu. Independent of the company and major shareholders.
Holds 12,929 shares in Scanfil plc.
Christina Lindstedt
Member of the Board since April 12, 2016. Born 1968, holds a Master’s Degree of
Business Administration and Commercial law. CEO of QleanAir Scandinavia AB.
Background from several international business leadership roles at AB Electrolux
and Sony, based in Sweden and internationally. Independent of the company and
major shareholders. Holds 6,000 shares in Scanfil plc.
Juha Räisänen
Member of Board since 2020. Born 1958, M.Sc. (Tech.). Managing Partner at
Valuenode GmbH. Juha Räisänen has held a number of executive positions globally
e.g. at ICL-Fujitsu, Nokia, SanDisk, KONE and Aliaxis. Not Independent of the company
in 2021., but independent of the major shareholders. Does not hold Scanfil plc shares.
Christer Härkönen
Member of Board May 8, 2014 - May 22, 2021
The entities over which the Board members exercise control do not own Scanfil
shares.
The term of office of the Board members expires at the close of the first Annual
General Meeting following the one in which they were elected.
Activity of the Board
The Board of Directors had a total of 15 meetings in 2021. The members’ average
attendance rate for meetings was 100%.
The duties and responsibilities of the Board of Directors of Scanfil plc are based on
the Finnish Limited Liability Companies Act, other applicable legislation, the Articles
of Association, good governance recommendations and the Board’s charter. The
Board carries out an annual review of its operations and regular reviews of the work
of the CEO and the Management Team. The Scanfil Board of Directors has confirmed
the charter, which lists the following key duties for the Board:
•
confirming the company’s business strategy and monitoring its implementation
•
confirming the annual key business targets and monitoring Scanfil Group’s
performance
• deciding on strategically significant investments in the Group
• discussing and approving financial statements and interim reports
•
appointing and dismissing the CEO and determining their terms of employment
and remuneration
• deciding on incentive systems for managers and employees
• monitoring the company’s key operational risks and their management
• confirming the company’s values and operating principles.
CORPORATE GOVERNANCE STATEMENT
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ANNUAL REPORT 2021/86
Diversity Princi
ples for the Board of Directors
Scanfil plc operates in the international contract manufacturing market and
its
customers include global companies in various industries. For the Board to
be
effective, its members must possess experience from several different
industries, be
well versed in international business and have insight into the global
trends that affect
the development of the contract manufacturing market. The
Nomination Committee
should consider the education and professional and
international experience of the
candidates, as well as their individual
characteristics, when preparing the proposal
for the Board’s composition. The
aim is to form a diverse Board with a sufficient
number of members, who are able
to take responsibility for developing the company’s
operations and strategy in its
line of business, and who are competent to manage the duties and
responsibilities of the Board. Scanfil plc aims to have a sufficiently diverse
gender and age distribution of the Board of Directors.
The Annual General Meeting held on April 22, 2021, elected five (5) members to
the
Board, four of whom are men and one woman. Board members have either
technical
or business degree. In addition, the above-mentioned factors and
characteristics relevant to the diversity of the Board were represented in the
composition of the Board in 2021.
Board Committees
The Board of Directors has established two committees: a Nomination
and
Remuneration Committee and an Audit Committee.
The task of the Nomination and Remuneration Committee is to prepare
matters
related to the appointment and remuneration of the members of the
Board of
Directors and, when necessary, find suitable members for it. The
Committee has three
members: Harri Takanen (Chair), Jarkko Takanen and Bengt
Engström. The committee
convened four times in 2021. The attendance rate of its
members was 100%.
The Audit Committee is responsible for monitoring the financial reporting process and
the reporting of financial statements and interim reports, as well as monitoring the
functionality of internal control and risk management in the company. It also
evaluates
the appropriateness of auditing and prepares the proposal for the
appointment
of an auditor. The committee has three members: Jarkko
Takanen (chair), Harri
Takanen and Christina Lindstedt. The committee
convened four times in 2021. The attendance rate of its members was 100%.
CEO
The Board of Directors decides on the appointment and dismissal of the CEO and
the terms and conditions of his employment.
The CEO is covered by the performance and profit bonus systems decided upon
separately by the Board of Directors. Petteri Jokitalo, M.Sc. (Eng.), has been the
CEO of the company since April 1, 2013. Petteri Jokitalo holds (31 Dec. 2021) 312,000
shares in Scanfil plc and he has the following option rights: option program 2019(A)
for 110,000 shares, 2019(B) for 120,000 shares and 2019(C) for 120,000 shares.
The CEO’s duties are determined in accordance with the Companies Act. The
CEO is in charge of the company’s operative management in accordance with
the guidelines and orders given by the Board of Directors. The CEO shall ensure
that the company’s accounting practices comply with legislation and that asset
management is organized in a reliable manner. The CEO is the chairman of the
company’s Management Team.
The CEO has a separate service contract that is valid until further notice with a mutual
notice period of six months. Should the company terminate the service contract made
with the CEO, an amount equivalent to the monetary salary of 12 months will be paid
to the CEO as a severance package in accordance with the terms and conditions
of his service contract. The CEO’s retirement age is the statutory retirement age.
Other management
The principal duty of the Management Team is to assist the CEO in the company’s
operative management. The Team’s other duties include matters relating to long-
term planning, the planning and monitoring of investments and the allocation of
resources to key operations.
Riku Hynninen, Chief Operating Officer
Riku Hynninen (b. 1972), M.Sc. (Mech.Eng.) was responsible for factories’ financial and
operational performance and development, global sourcing and supply chain. Chief
Development Officer as of January 1, 2022. He holds (31 Dec 2021) 26,150 shares in
Scanfil plc and has the following option rights: option program 2019(A) for 20,000
shares, 2016(B) for 20,000 shares and 2019(C) for 20,000 shares.
Markku Kosunen, Chief Technology Officer
Markku Kosunen (b. 1967), technology undergraduate, was responsible for ICT,
ERP, Quality processes and systems, production technology and investments.
Chief Procurement Officer as of January 1, 2022. He holds (31 Dec. 2021) 52,763
shares in Scanfil plc and has the following option rights: option program 2016(C)
for 20,000 shares, 2019(A) for 20,000 for shares, 2091(B) for 20,000 shares and
2091(C) for 20,000 shares.
Timo Sonninen, Vice President, Sales and
Business Development
Timo Sonninen (b. 1966), BSc (Eng.) was in charge of sales and business development
until 17 January 2022. Chief Operating Officer as of January 1, 2022. He holds (31
Dec. 2021) 140,500 shares in Scanfil plc and he has the following option rights:
option program 2019(A) for 20,000 shares, 2019(B) for 20,000 shares and 2019(C)
for 20,000 shares.
Kai Valo, Chief Financial Officer
Kai Valo (b. 1965), MSc (Economics), Group’s Chief Financial Officer. He holds (31
Dec. 2021) 20,000 shares in Scanfil plc, and has the following option rights: option
program 2016(C) for 20,000 shares, 2019(A) for 20,000 shares, 2019(B) for 20,000
shares and 2019(C) for 20,000 shares
Christina Wiklund, Chief Commercial Officer (as of January 17, 2022)
Christina Wiklund (b. 1971), BSc (Soc.) responsible for sales and marketing activities
and customer relations as of 17 January 17, 2022. Did not hold any shares not option
rights on December 31, 2021.
Kristoffer Asklöv, who was in charge of business development and sales in Central
Europe left the company on August 31, 2021.
DESCRIPTIONS OF INTERNAL CONTROL PROCEDURES AND
THE MAIN FEATURES OF RISK MANAGEMENT SYSTEMS
RELATED TO THE FINANCIAL REPORTING PROCESS
Risk Management
The Board of Directors of Scanfil plc is responsible for ensuring the
appropriate
organization of the Group’s risk management and internal control
and audit. Risk
management is based on a risk management policy approved by the
Board, aimed at
managing risks in a comprehensive and proactive manner. The
assessment of risks
is part of the annual strategy and business planning process.
There is no separate
risk management organisation; risk management is
incorporated into the business
processes and the management system and it is
coordinated by the Group’s CFO.
Risk management aims to observe and analyse factors that might have a
negative
impact on the achievement of the company’s goals and to take measures
to mitigate
or completely eliminate the risks. The operative units report on
business risks in
accordance with the management and reporting system.
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Internal Control
Scanfil
plc’s internal control is a continuous process used to ensure profitable and
uninterrupted operation. The control function aims to minimize risks by ensuring
the reliability of reporting and compliance with laws and regulations.
Internal control is based on the Group’s shared values, ethical guidelines and
industry legislation, from which the operating principles and guidelines are derived.
The guidelines cover procedures for core operations. Group and unit management
hold the responsibility for the company’s internal control system. Internal control
forms an active part of the company’s management and administration. The Group’s
operational management holds the responsibility for developing the harmonized
business processes included in the control system. The Group’s financial
administration coordinates the financial management of the Group.
The controls included in Scanfil’s operating processes form the basis of the
company’s financial control. They enable the company to swiftly identify and react
to any deviations. The management’s monthly reporting is a fundamental part of
financial control. It includes producing a rolling forecast, the result of business
operations carried out and an analysis of the differences between the forecast
and the actual result. The indicators monitored in monthly reporting have been set
so as to support the achievement of shared Group-level and unit-specific targets,
and to identify issues that require control measures. An auditing firm supports the
performance of financial control.
The interpretation and application of accounting standards are carried out centrally by
the Group’s financial administration. These standards form the basis for the Group’s
shared recognition principles and reporting and accounting standards. In order to
ensure reliable financial reporting, core functions are conducted using a globally
harmonized ERP system and shared reporting tools. The use of standardized tools
enables continuous control and successful change management.
Internal Audit
The company uses internal auditing that, in co-operation with other Group functions,
handles internal auditing duties and makes regular reports to the CEO and the Board.
Changes in Group’s structure in 2021
DESCRIPTION OF THE INTERNAL CONTROL AT SCANFIL PLC
SCANFIL PLC GROUPS STRUCTURE IN
Scanfil Oyj
Sievi, Finland | The ultimate group parent company, listed in NASDAQ Helsinki
Scanfil EMS Oy
Sievi, Finland
Scanfil Holding Germany GmbH
Wutha-Farnroda, Germany
Scanfil Sweden Ab
Malmö, Sweden
Scanfil
(Suzhou) Co., Ltd
Suzhou, China
Scanfil
Electronics GmbH
Wulha-Farnroda, Germany
Scanfil Business
Services Kft
Biatorbágy, Hungary
Scanfil GmbH
Schenefeld, Germany
Scanfil OÜ
Pärnu, Estonia
Scanfil
Sieradz Sp. z o.o.
Sieradz, Poland (Branch)
Scanfil Inc.
Duluth, Atlanta,
The USA
Scanfil
Vellinge AB
Malmö, Sweden
Scanfil
Myslowice Sp. z o.o.
Myslowice, Poland
Scanfil
Åtvidaberg AB
Åtvidberg, Sweden
Owns 100%
Owns 100%
Owns 100%Owns 100%
VALUES, ETHICAL GUIDELINES, INDUSTRY LEGISLATION
Business processes
ERP system
Strategy
Corporate governance
Strategy process
Management systems
Management reporting systems
GROUP MANAGEMENT
SUPPORT FUNCTIONS
BOARD LEVEL
OPERATIONAL LEVEL
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OTHER INFORMATION TO BE PROVIDED IN THE STATEMENT
Company insiders and insider administration
In its operations, the company complies with regulation EU No. 596/2014 on market
abuse (MAR) and the Finnish Securities Markets Act, as well as related regulations
and guidelines issued by the European Securities and Markets Authority (ESMA),
the Finnish Financial Supervisory Authority and Nasdaq Helsinki.
The company’s Board of Directors has confirmed the company’s insider guidelines
based on Nasdaq Helsinki’s guidelines for insiders. The insider guidelines define
certain practices and decision-making procedures to ensure that the company’s
insider administration is organized consistently and reliably.
The company divides insiders into two categories: a) managers with a reporting
obligation; and b) project-specific insiders. Managers with a reporting obligation
include members of the Board of Directors, the CEO and members of the group’s
Management Team. Managers with a reporting obligation cannot trade in the
company’s financial instruments during a period before the publication of the
company’s interim reports and financial statements releases, starting 30 days
before the publication of the interim reports and financial statements releases
(“closed window”). Project-specific insiders cannot trade in the company’s financial
instruments before the project in question has ended.
In addition, the company has decided that persons who are party to the preparation
and drawing up of the company’s interim reports and financial statements releases
cannot trade in the company’s financial instruments during a period before the
publication of the company’s interim reports and financial statements releases,
starting 30 days before the publication of the interim reports and financial statements
releases (“expanded closed window”). The expanded closed window also applies
to persons who, as a result of their work-related tasks, have access to the group’s
sales figures or to sales figures of a business unit that is significant for the total
results of Scanfil Group as a whole.
As a result of the entry into force of MAR, the company no longer has any public
insiders. From July 3, 2016, the company will publish, in a stock exchange release,
all business activities carried out by managers with a reporting obligation and their
related parties in the company’s financial instruments in accordance with MAR.
Related party transactions
Principles of monitoring and assessing Scanfil plc’s related party transactions
The principles of Scanfil plc’s related party transactions define the principles and
processes by which the company identifies its related parties and monitors related
party transactions, assesses the nature and terms of business transactions, and
ensures that any conflicts of interest are addressed appropriately in the company’s
decision-making processes. The Board of Directors monitors and assesses related
party transactions continuously and regularly.
The company’s related parties
The company’s related parties cover individuals and entities close to the Group’s
companies as defined in the International Financial Reporting Standards (IFRS),
approved in accordance with the IAS Regulation referred to in Chapter 1, Section 4
d of the Finnish Accounting Act.
The company’s related parties include its subsidiaries and the company’s key
management employees, consisting of the Board of Directors, the CEO and the
Group’s Management Team, as well as their family members. Related parties also
include companies in which the aforementioned individuals hold control.
List of related parties
The company maintains a list of individuals and entities regarded as its related parties
to identify related party transactions. The company ensures that the company’s
management is provided with sufficient related party guidelines.
The company’s internal related parties are identified by maintaining and updating
the list of related parties. Each individual and entity identified as a related party
is entered in the list of related parties, including details of their connection to the
company as a related party, such as shareholdings in other entities. Each related
party is required to report or otherwise bring, on their own initiative, potential conflicts
of interests to the attention of the executive management.
Identifying related party transactions
Related party transactions are identified, and a register of agreed activities is
maintained. The following procedures apply to the identification of related party
transactions:
• The company maintains a list of entities regarded as related parties.
• The person who approves related party transactions on the company’s behalf
verifies that assessments and decision-making processes regarding related
party transactions are in compliance with defined criteria.
•
If it becomes apparent in connection with the preparation of a related party
transaction that the related party transaction is not related to the company’s
ordinary course of business or it is not carried out on arm’s-length terms, the
preparation of the transaction is handled by the Group Administration.
•
In addition to the identification procedures followed by the company, individuals
and entities regarded as related parties must ensure that related party transactions
are entered in the register of related party transactions and carried out following
the appropriate decision-making process.
Monitoring related party transactions
The company monitors and assesses how agreements and other legal transactions
between the company and its related parties comply with the requirements set
for the ordinary activities and for arms-length terms. Information on related party
transactions will be requested regularly from related parties, at least in conjunction
with regular reporting.
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Assessing related party transactions and decision making
The company’s main criterion for related party transactions is that it is sufficiently
ensured that related party transactions comply with market terms and are favorable
for the company’s business operations.
When preparing decisions on related party transactions, it must be considered that (a)
decisions are based on particularly careful preparations and appropriate clarifications
and assessments; (b) preparations, decision-making and the assessment and
approval of individual transactions are arranged considering provisions of conflicts
of interests regulations and the appropriate decision-making body; and/or (c) the
identification, reporting and control related to transactions have been arranged
appropriately, for example, so that the company’s related party transactions are
monitored in accordance with the reporting practices followed by the company.
Related party transactions are assessed according to the categories to which each
transaction belongs. These include:
ORDINARY RELATED PARTY TRANSACTIONS
As a rule, ordinary related party transactions must be part of the company’s regular
business operations, and they must be carried out following arms-length terms.
Related party transactions are entered in the register of related party transactions
so that the company can report its related party transactions as required in IFRS.
The ordinality and arm’s-length terms of the transaction shall be assessed and
documented for such ordinary related party transactions that are not performed on
standard terms or at a standard pricing, or for transactions with value exceeding
EUR 5,000. Ordinary commercial terms may vary in different situations.
The ordinary nature of related party transactions in relation to Scanfil Group’s
business operations are assessed on the basis of the company’s purpose, and the
industry and other provisions listed in the company’s Articles of Association, and
the company’s actual operations.
Related party transactions that are associated with the company’s standard
agreements or agreements provided generally for customers within the framework
of standard pricing, and related party transactions that have a value of less than EUR
5,000 can be approved following the one-over-one principle. Other ordinary related
party transactions must be approved by the CEO unless they are significant related
party transactions, or unusual or far-reaching considering the scope and quality of
the activities. However, any events involving the CEO’s related parties must always
be approved by the chairman of the company’s Board of Directors.
SIGNIFICANT RELATED PARTY TRANSACTIONS
Related party transactions that are not part of the company’s ordinary business
operations or that are not carried out in accordance with arms-length terms are
regarded as significant related party transactions.
The company’s Board of Directors decides on significant related party transactions,
including agreements or other legal transactions that the company is engaged in
with related parties, are not part of the company’s ordinary business operations,
and do not follow arms-length terms.
Members of the Board of Directors or the company’s shareholders cannot participate
in the approval of a decision or voting regarding a decision if they or their related
parties are party to significant related party transactions.
Reporting related party transactions
When preparing and carrying out related party transactions, the company complies
with specific reporting and disclosure obligations regarding related party transactions.
Auditors
The Annual General Meeting held on April 22, 2021 selected the auditing firm KPMG
Oy Ab to be the company’s auditor, and they named Authorized Public Accountant
Kirsi Jantunen as the main auditor. The audit fees for the Finnish companies of
the Group for the 2021 accounting year were EUR 87,745 in total, and the parent
company’s share was EUR 57,745. The audit fees for the foreign companies of the
Group were EUR 234,826 in total. For services unrelated to auditing, the auditing
company was paid EUR 25,343.
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1. Introduction
Scanfil plc’s Annual General Meeting held on April 23, 2020 discussed the remuneration policy regarding the company’s
administrative bodies. The objective of the discussed remuneration policy is to promote the long-term financial performance
of the company and development of the shareholder value through the remuneration of the company’s top management by
having the management committed to and motivated in implementing the company’s strategy in line with the interests of all
shareholders of the company. The remuneration policy also aims to provide the CEO with a total remuneration package that
motivates and commits the CEO to the implementation of the company’s long-term strategy and its financial profitability are
concerned.
According to the policy, remuneration of the Board of Directors can consist of one or several elements, such as annual fees
and meeting fees. The fees can be paid in cash, or partly in cash and partly in the company’s shares. Board members are not
covered by the company’s incentive reward schemes. In 2021, the Board’s monthly fees, committee membership fees and
meeting fees were paid in cash.
The remuneration of the CEO consists of a fixed base salary and variable incentives, i.e., performance-based bonuses. The
variable incentive schemes include the annual incentive scheme and the stock option incentive scheme. The variable annual
incentive scheme cannot exceed 100 per cent of the fixed base salary.
Details about the Remuneration policy can be found online.
Element Target group Target Description
Salary CEO (and other
senior management)
Attract, keep and
reward skilled
managers
Number of factors are taken
into account in determining the
basic salary, e.g. market situation,
individual qualities, skill and
experience. The basic salary is
typically reviewed annually.
Fixed remuneration The Board of
Directors
Attract, keep and
reward skilled
Board members
The remuneration of the Board
of Directors is proposed by the
Nomination and Remuneration
Committee to the General
Meeting to decide.
Annual incentive
scheme (short-term)
CEO (and other
senior management)
Encourage, guide
and reward from
achieving short-
term financial,
operational and
strategic targets
The short-term annual incentive
plan is primarily based on one-
year earnings criteria, which are
further based on longer-term
indicators, typically three years
of target settings. Structure
discussed more in details in section
“Remuneration of the CEO in 2021”.
Stock option
incentive scheme
(long-term)
CEO (and other
senior management)
Link management
and their rewarding
to Company’s
shareholders.
The General Meeting decides
on share-based compensation
programs and authorizes the Board
of Directors to decide on the details
and practical implementation of
the compensation programs. More
details in section “Remuneration
of the CEO in 2021”.
KEY ELEMENTS OF REMUNERATION
REMUNERATION REPORT
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Scanfil’s financial and remuneration development over the last five years
Company turnover has increased steadily over the last five years, both organically and through corporate acquisitions. The
turnover increased significantly in 2021 and it was the highest in the company history. Profitability was slightly down due to the
challenges in the supply chain, especially semiconductors.
Financial targets of the company in 2021 was to reach EUR 700 million in 2023 and achieve 7% operating profit margin.
Throughout the period under review, the remuneration of the Board has consisted of the monthly fees and committee membership
fees decided by the General Meeting.
2017 2018 2019 2020 2021
Turnover, EUR million 529.9 563.0 579.4 595.3 695.7
Operating profit, reported, EUR million 31.3 37.8 35.3 44.4 39.6
Operating profit, reported, % 5.9 6.7 6.1 7.5 5.7
Operating profit, adjusted, EUR million 31.3 37.8 39.4 39.1 40.3
Operating profit, adjusted, % 5.9 6.7 6.8 6.6 5.8
Share price change, VWAP, % 15.0 13.3. -6.8 21.9 50.1
EUR THOUSAND 2017 2018 2019 2020 2021
Harri Takanen 37.2 47.4 49.3 51.0 54.1
Jarkko Takanen 24.1 28.8 30.2 31.7 34.9
Bengt Engström 23.1 26.3 27.5 29.5 33.8
Christina Lindstedt 23.6 27.3 28.6 30.1 33.8
Juha Räisänen (as of 23 April 2020) - - - 17.4 33.8
Christer Härkönen (until 22 April 2021) 22.6 24.7 25.9 27.9 11.4
Salaries and fees of the Board of Directors, in total 130.6 154.5 161.5 187.6 198.7
FINANCIAL AND REMUNERATION DEVELOPMENT,
FEES OF THE BOARD OF DIRECTORS
The remuneration of the CEO has consisted of a fixed base salary with fringe benefits and variable incentives. The variable
incentives have included the short-term performance bonus and long-term stock option schemes, with their terms and conditions
determined by the Board.
EUR THOUSAND 2017 2018 2019 2020 2021
Salary 243.5 254.7 269.5 289.7 295.3
Fringe benefits 10.2 13.4 13.6 12.3 14.2
Performance bonus 28.0 168.0 258.0 85.0 105.6
In shares and payable stock options 361.3 35.0 71.2 132.2 631.3
In total 643.0 471.1 612.3 519.2 1,046.4
SALARIES AND FEES OF THE CEO
The development of employees’ remuneration is based on the salaries and wages paid to the personnel less the employer’s
social security contributions divided by the average number of employees during the year.
EUR THOUSAND 2017 2018 2019 2020 2021
In total 19.1 19.6 20.8 22.6 23.2
PAID SALARIES AND WAGES/AVERAGE NUMBER OF EMPLOYEES
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2. Remuneration of the Board of Directors in 2021
The remuneration of the Board members is decided by the General Meeting of Scanfil plc.
On April 22, 2021 the Annual General Meeting decided that:
• Members of the Board are paid EUR 2,600/month
• The Chairman of the Board is paid EUR 4,200/month.
Members of the committees are paid EUR 600/meeting. In addition, a Board member residing outside Finland is paid EUR
200 for each physical meeting.
The travel expenses of Board members will be compensated in accordance with the company’s travel policy. No other benefits
are paid to the members of the Board on the basis of this position.
During the financial year of 2021, members of Scanfil plc’s Board of Directors did not receive any company’s shares or share-
based benefits as remuneration.
EUR THOUSAND Meeting fee Committee fee Fees in total
Harri Takanen 49,460 4,600 54,060
Jarkko Takanen 30,260 4,600 34,860
Bengt Engström 31,460 2,300 33,760
Christina Lindstedt 31,460 2,300 33,760
Juha Räisänen 30,860 - 30,860
Christer Härkönen (until 22 April 2021) 11,360 - 11,360
In total 184,860 13,800 198,660
MEETING AND COMMITTEE FEES PAID TO THE BOARD OF DIRECTORS IN
3. Remuneration of the CEO in 2021
The CEO has a service contract that is valid until further notice with a mutual notice period of six months. Should the company
terminate the service contract made with the CEO, an amount equivalent to the monetary salary of 12 months will be paid to
the CEO as a severance package in accordance with the terms and conditions of his service contract.
The retirement age of the CEO is the statutory retirement age.
In addition, the CEO was paid a performance bonus of EUR 101,352 regarding the year 2021 in 2022.
EUR Fixed Variable
Salary 295,319 -
Fringe benefits 14,167 -
Performance bonus from the year 2020 - 105,620
Stock option scheme - 631,290
In total 309,486 736,910
Salaries and fees in total 1,046,396
SALARIES AND FEES OF THE CEO
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Performance bonus
The CEO is included in the scope of the management’s performance bonus scheme based on the Group’s operating profit and
turnover. The operating profit determines 80% and turnover 20% of the bonus payable to the CEO. The final performance bonus
is determined on the basis of the actual operating profit and turnover in euro compared with the targets set in the previous
three years, each representing one-third of determining the bonus. The Board of Directors decides on the management
remuneration scheme and its terms and conditions for the next three years.
The annual bonus cannot exceed the amount corresponding to 12 months’ salary. The CEO is also included in the scope of
the company’s share-based incentive scheme.
The CEO does not have other benefits.
Stock option scheme
On April 24, 2019, the Scanfil plc General Meeting authorized the Board of Directors to decide on granting stock option rights
to certain key personnel of the company and its subsidiaries and to decide on the terms and conditions of the option scheme.
The total number of stock option rights may not exceed 900,000, and they entitle one to the subscription of a maximum of
900,000 new shares or treasury shares of the company (“Stock Option scheme 2019”).
OPTIONS HELD BY THE
CEO 2016(C) 2019(A) 2019(B) 2019(C)
Number of options 110,000 110,000 120,000 120,000
Subscription period
1 May 2021 -
30 April 2023
1 May 2022 -
30 April 2024
1 May 2023 -
30 April 2025
1 May 2024 -
30 April 2026
Fair value, in total, EUR all subscribed 118,800 214,800 199,200
More details on stock option schemes can be found here.
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SCANFIL PLC BOARD OF DIRECTORS
Harri Takanen
Chair of the Board of Directors
Harri Takanen (born 1968), Member of Board since 2013, Professional Board Member
and CEO of Jussi Capital Oy as of December14, 2021. Harri Takanen has worked
for Sievi Capital plc as CEO 2007–2011 and as the CEO of Scanfil plc and Scanfil
EMS ltd. 2012–2013. He has served Scanfil Group since 1994, e.g. as Director of
operations in China, Scanfil (Hangzhou) Co., Ltd’s Managing Director, Technology
Director, Director of Customer Relations, Customer Service Manager and Plant
Manager of Sievi mechanics. Harri Takanen holds Master’s degree in Engineering.
Not independent of the company and major shareholders.
• Holds 9,913,146 shares in Scanfilplc (31 December 2021)
• Chair of the Board of Directors: Titanium Oyj WellO2 Oy
Jarkko Takanen
Jarkko Takanen (1967) a member of Board of Directors since 2012, Chief Investment
Officer of Jussi Capital Pte. Ltd. (Singapore) as of beginning of 2022. Jarkko Takanen
has worked as the CEO of Jussi Capital Oy since 2008 until December 13, 2021. He
has worked for Sievi Capital Group during 1995–2004. CEO of the Belgian subsidiary
Scanfil N.V. 2003-2004. Jarkko Takanen holds a Bachelor’s Degree in Production
Engineer and a Commercial College Diploma in Management Accountancy.
Independent of the company, not independent of major shareholders.
• Holds 8,596,169 shares in Scanfil plc (31 December 2021)
Bengt Engström
Bengt Engström (born 1953), Member of the Board since 2015. Bengt Engström has
held a number of executive positions at several companies, both in Sweden and
globally, for example at Whirlpool, Bofors AB, Duni AB and Fujitsu. Bengt Engström
holds a Mechanical Engineer’s degree. Independent of the company and major
shareholders.
• Holds 12,929 shares in Scanfil plc (31 December2021)
•
Chair of the Board of Directors: Nordic Flanges, QleanAir AB, Qlosr AB, BEngström
AB and BEngström Förvaltning AB
•
Member of the Board of Directors: KTH Executive School, Bure Equity AB,
ScandiNova Systems AB, Real Fastigheter AB and Scandinavian Chemotech AB
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Christina Lindstedt
Christina Lindstedt (born 1968), Member of the Board since 2016. CEO in QleanAir
Scandinavia AB. Christina Lindstedt has held a number of executive positions at AB
Electrolux, Sony Ericsson and Sony, both in Sweden and globally. Primarily she has
served as a Business/Product area head for businesses such as e.g. smartphones,
washing machines, automatic lawn mowing and New Business Areas. In addition,
she
has been responsible for establishing global sourcing operations in China.
Christina
Lindstedt holds a Master’s Degree of Business Administration and
Commercial law.
Independent of the company and major shareholders.
• Holds 6,000 shares in Scanfil plc (31 December 2021)
• Member of the Board of Directors: XPlorebiz AB
Juha Räisänen
Juha Räisänen (1958), Member of Board since 2020, Managing Partner at Valuenode
GmbH. Juha Räisänen has held a number of executive positions globally at ICL-
Fujitsu, Nokia, SanDisk, KONE and Aliaxis. He has been responsible for sales,
manufacturing, supply chain, sourcing & procurement, quality and safety. Juha
Räisänen holds a Master’s Degree of Industrial Engineering & Management. Not
independent of the company in 2021, independent of the major shareholders.
• Do not hold any shares in Scanfil plc
•
Member of the Board of Directors: LumiDental Ltd, Bluefors Oy and Coolbrook Oy
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SCANFIL PLC MANAGEMENT TEAM
Petteri Jokitalo
CEO
Petteri Jokitalo (1963), company’s CEO since April 1, 2013. Earlier Petteri Jokitalo has
worked in Scanfil EMS Oy as Director of Sales and Marketing 2012–2013, in Meka Pro
Oy as Managing Director during 2007–2011, in Scanfil Oyj in management tasks of
sales and business development during 2003–2007 and in international tasks in Nokia
Networks during 1998–2003. Petteri Jokitalo holds Master’s Degree in Engineering.
Christina Wiklund
CCO (as of January 17, 2022)
Christina Wiklund (1971) is responsible for sales and marketing activities and customer
relations. She started in her position on January 17, 2022. Before joining Scanfil she
worked at GE Additive as Vice President and Head of Sales for EMEA 2018–2021.
Prior to this, she worked at Flex as Vice President of Sales and Account Management
2006–2018. Before that she worked at Solectron 2002–2006 and Ericsson 2000–
2002 in business development and account management roles. Christina Wiklund
hold a Bachelor’s Degree in Sociology.
Riku Hynninen
COO
Riku Hynninen (1972) was responsible for factories’ financial and operational
performance and development, global sourcing and supply chain. Chief Development
Officer as of January 1, 2022. He has previously worked at Nokia Corporation 1995–
2018, in charge of e.g. developing the production technology for mobile network
business, creating new product delivery capability, and product portfolio lifecycle
management 2014–2018. Prior to that he has been responsible among others the
technical functions of the Nokia Suzhou factory and the creation and management
of the delivery capability of several different mobile network product families Riku
Hynninen holds Master’s degree in Industrial Economics and Engineering.
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Markku Kosunen
CTO
Markku Kosunen (1967) was responsible for ICT, ERP, Quality processes and systems,
production technology and investments. Chief Procurement Officer as of January 1,
2022. Before joining Scanfil Group he worked at Mecanova Oy as Vice President of
Business Development 2005–2007, Director of Operations during 2008–2010 and
in different management positions at mechanics plants of Flextronics and Ojala-
yhtymä in Finland during 1993–2005. Markku Kosunen is a technology undergraduate.
Timo Sonninen
Vice President, Sales and Business Development
Timo Sonninen (b. 1966) was in charge of sales and business development until
January 1 2022. Chief Operating Officer as of january 1, 2022. Previously he has
worked at Efore Oyj as Vice President, Operations, in Suzhou, China 2006–2013.
Prior to that he has worked at Incap Oyj during 1991–2006 among others as Director
of Operations, Business Director of Electronics Production and Plant Director of
Vuokatti Plant. Timo Sonninen holds a Bachelor’s Degree in Engineering.
Kai Valo
CFO
Kai Valo (1965) is the Group CFO. During 2015–2016 Kai was the CFO for Norpe
Group. Prior to that he was at Lite-On Mobile Group Director of Finance and Control in
Beijing, China 2009–2015. In 1999–2008 he held several finance related management
positions at Perlos plc. Kai Valo holds a Master’s Degree in Economics.
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To the Board of Directors of Scanfil Plc
INDEPENDENT AUDITOR’S REASONABLE
ASSURANCE REPORT ON SCANFIL PLC’S ESEF
FINANCIAL STATEMENTS
We have undertaken a reasonable assurance engagement on the iXBRL marking
up of the consolidated financial statements for the year ended 31 December, 2021,
included in the Scanfil Plc’s digital files 7437004XD6U0FFDCT507-2021-12-31-en.
zip prepared in accordance with the requirements of Article 4 of EU Delegated
Regulation 2018/815 (ESEF RTS).
The Responsibility of the Board of Directors and Managing Director
The Board of Directors and Managing Director are responsible for preparing the
report of the Board of Directors and financial statements (ESEF financial state-
ments) that comply with the requirements of ESEF RTS. This responsibility includes:
• preparation of ESEF financial statements in XHTML format in accordance with
Article 3 of the ESEF RTS
•
marking up the consolidated financial statements included in the ESEF financial
statements with iXBRL tags in accordance with Article 4 of the ESEF RTS; and
•
ensuring consistency between ESEF financial statements and audited finan-
cial statements.
The Board of Directors and the Managing Director are also responsible for such
internal control as they deem necessary to prepare the ESEF financial statements
in accordance with the requirements of the ESEF RTS.
Auditor’s Independence and Quality Control
We are independent of the company in accordance with the ethical requirements
applicable in Finland, which apply to the engagement we have performed, and we
have fulfilled our other ethical obligations in accordance with these requirements.
The auditor applies International Standard on Quality Control 1 and accordingly
maintains a comprehensive system of quality control including documented poli-
cies and procedures regarding compliance with ethical requirements, professional
standards and applicable legal and regulatory requirements.
Auditor’s Responsibility
In accordance with the Engagement Letter our responsibility is to express an opinion
on whether the marking up of the consolidated financial statements included in the
ESEF financial statements comply in all material respects with the Article 4 of the
ESEF RTS. We conducted our reasonable assurance engagement in accordance
with International Standard on Assurance Engagements 3000.
The engagement involves procedures to obtain evidence whether;
•
the consolidated financial statements included in the ESEF financial statements
are, in all material respects, marked up with iXBRL tags in accordance with Arti-
cle 4 of the ESEF RTS, and;
•
the ESEF financial statements and the audited financial statements are con-
sistent with each other.
The nature, timing and the extent of procedures selected depend on practitioner’s
judgement. This includes the assessment of the risks of material departures from
the requirements set out in the ESEF RTS, whether due to fraud or error.
We believe that the evidence we have obtained is sufficient and appropriate to pro-
vide a basis for our opinion.
Opinion
In our opinion, the consolidated financial statements included in the ESEF financial
statements of Scanfil Plc’s identified as 7437004XD6U0FFDCT507-2021-12-31-en.
zip for the year ended 31 December, 2021 are marked up, in all material respects, in
compliance with the ESEF Regulatory Technical Standard.
Our audit opinion relating to the consolidated financial statements of Scanfil Plc’s for
the year ended 31 December, 2021 is set out in our Auditor’s Report dated 1 March,
2022. In this report, we do not express an audit opinion, review conclusion or any
other assurance conclusion on the consolidated financial statements.
Helsinki March 18, 2022 Kirsi Jantunen
KPMG OY AB Authorised Public Accountant, KHT
ESEF ASSURANCE REPORT
85410 SIEVI
Tel. +358 8 48 82 111
scanfil.com