Scanfil Oyj

Trusted manufacturing partner

Annual Report

ANNUAL REPORT 2023/2 /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

EU Taxonomy .................................................. 22

Financial review ....................................... 29

Board of Directors’ Report ...................................... 30

Consolidated financial statements (IFRS) ........................ 38

Financial statements of the parent company (FAS) ............... 76

Auditor’s report ........................................87

Governance ...........................................90

Corporate governance statement ............................... 90

Remuneration report ........................................... 96

Independent Auditor’s Reasonable Assurance

Report on Scanfil Plc’s ESEF Financial Statements .....100

Turnover

902 M€

Personnel

3,600

EBIT

61 €M

Scanfil enables customers to

succeed by providing effective

and innovative solutions that

bring products to life and to

market.

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Atlanta, USA

Sievi, Finland

Pärnu, Estonia

Myslowice, Poland

Sieradz, Poland

Suzhou, China

23%

Advanced Consumer Applications

Automation & Safety

Connectivity

Energy & Cleantech

Medtec & Life Science

39%

13%

Poland

China

Estonia

Sweden

Finland

Germany

USA

14%

Scanfil 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 a global factory network, speed,

flexibility, reliability, and capability to manufacture complex system

integration products.

Scanfil has a strong focus on sustainability and responsibility. We are

committed to UN Global Compact and have identified seven key UN

Sustainable Development Goals. In 2023, Scanfil started to prepare for

the European Sustainability Reporting Standards (ESRS), which comes

into force in 2024.

Factory network

Scanfil has a global factory network of nine factories. 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,

and processes. This enables us to react fast to changing customer needs

and benefit from our scale in procurement and investments.

Some factories are located in or close to customers’ geographical end-

markets. This enables lower transportation costs and time, good market

knowledge and possible benefits from avoiding some import-related

costs such as customs.

Turnover Personnel

EUR 902 million 3,700

21%

34%

17%

Malmö, Sweden

Wutha, Germany

Åtvidaberg, Sweden

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ANNUAL REPORT 2023/4

CEO’s review

“After my first full quarter at Scanfil, I am happy to present the financial results

for October–December 2023, the quarter that ended our record year. I am also

pleased to give you some insight into the period where we have been active

on many fronts, from internal to external stakeholders and from operational

matters to strategy.

The year 2023 was a record year. The turnover growth, excluding spot-market

purchases, was 15.6%. The total revenue was over EUR 900 million, and the

organic growth was 6.9%. Strong figures demonstrate the quality of our

customer portfolio and the solid performance of our factories. Operating

profit also reached a record level of EUR 61.3 million and the operating margin

reached the strong level of 6.8%. In 2023, our customer segments showed

their growth potential and Scanfil grew to a new level.

In the fourth quarter, as expected, overall demand growth for the EMS market

returned to historical levels. The turnover growth excluding spot-market

purchases was 4.9%. The overall turnover decreased by 0.7% compared to

the fourth quarter of 2022.

Despite a flattish market, our largest customer segment, Energy & Cleantech,

grew by 26.8% in 2023 and kept a strong momentum during the fourth quarter

with a growth of 21.9%. Energy transformation and sustainability drives the

market. Growth figures showcase Scanfil’s good positioning in the customer

segment with leading companies. I have met many customers with our teams

and focused on deepening our partnership. We inaugurated a new electronics

assembly line in Atlanta with many of our key customers present and showing

strong interest in the site’s new capability. In 2023, our customer satisfaction

improved significantly compared to the previous year.

In the fourth quarter, profitability improved compared to the fourth quarter of

last year. Reported operating profit was EUR 13.4 million, with an operating

margin of 6.1%, compared to 6.0% last year. During that quarter demand

was flattening out and we focused on efficiency improvements. When fully

implemented, the improvement plan will generate EUR 1.7 million in annual

savings, and support Scanfil’s competitiveness. Excluding one-off costs for

the efficiency improvement, customer settlement, spot-market purchases

and other material invoicing the operating margin was 6.7%.

Our financial position is strong, gearing was 19.4%, and equity ratio was

53.7%. Our solid balance sheet enables us to make the investments required

to develop our business. Our net cash flow from operating activities was at an

all-time high. In the fourth quarter, it was EUR 34.8 million, and EUR 68.9 million

for the full year. Scanfil is well-positioned and very capable of financing the

potential expansion of its operations. The company’s ability to pay dividends

is at a good level and the Board proposes a dividend of 0.23 euro per share.

We continued our good development towards more sustainable manufacturing.

In 2023, we got the honor of being recognized by two of our customers for

our sustainability work. The share of fossil-free energy used by us compared

to overall energy consumption achieved a 50% milestone and it was 52.4%.

The 2030 target for the share of fossil-free energy consumption is 60%. To

further drive this change, we are taking the next steps and investing in solar

panels and geothermal energy in the Sieradz factory expansion.

Our solid performance in the fourth quarter reflects Scanfil’s robust operations

and solid customer demand. We continue to rebalance our customer mix

and seek growth from faster-growing segments. During the quarter, the

Management Team and the Board of Directors have been very active. We are

now finalizing our strategy update, and it will be presented at Capital Markets

Day on the 5th of March in Stockholm with other topical and interesting subjects.

I would like to thank all our employees, customers, and other business partners

for our successful collaboration. The company’s current situation emphasizes

our strong position and gives us confidence to continue building our success.”

CHRISTOPHE SUT

CEO

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ANNUAL REPORT 2023/5

Strategy

Scanfil was founded in 1976. Throughout the decades, we have adjusted

our strategy according to the prevailing market situation, but the focus

remained in the manufacturing of products with electronics.

We pursue profitable growth in our key market areas: Central Europe,

The USA, and the Asia outside of China.

Customers

Scanfil serves a wide range of customers from start-ups to global leaders.

The focus is on industrial, energy & cleantech and medtech customers,

which fit 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

At the beginning of 2023, Scanfil started the Scanfil Dream Factory program,

whose goal is to develop the most efficient and best factories in the industry,

where IT, data, people, processes and technology work seamlessly together.

We invested in the production development e.g. in Atlanta in The USA,

Malmö in Sweden, and Wutha in Germany. We also started a large

expansion and technology investment in Sieradz, Poland. The program

runs until 2028.

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

Component engineering

Supply Chain Design

Value stream mapping

Design for Manufacturing

Ramp up planning

Quality assurance

Repairs & Refubrish

Face lifts

Value Engineering /

Value Analysis

Distribution Services

Order Fulfillment

Spare Part Handling

Product Maintenance

Component availability

management

Supply chain

Management

Sheet metal

production

Cable

manufacturing

PCBA

Box-build

System

Integration

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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

Medtech & Life Science and Energy & Cleantech 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.

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

23%

21%

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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

Historically, the annual growth of the Electronics Manufacturing Service

market (EMS market) relevant to Scanfil has been 3-6%. Scanfil aims

for faster growth than the market. In 2023, the company’s goal was an

organic turnover growth rate of 5%-7%, which the company achieved.

Turnover increased by 6.9% compared to 2022.

Scanfil has identified Energy & Cleantech and Medtech & Life Science

customer segments, and geographically Central Europe, The USA, and

Asia outside of China as high-growth potential areas.

Mergers and acquisitions have been part of Scanfil’s growth strategy

for decades. We are actively looking for acquisition targets 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

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 of

Schaltex Systems

Acquisition

HASEC

34%

17%

20021976 2012 20152014 2019 2023

Turnover

>900 MEUR

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Investor information

300

600

900

20232022202120202019

844

902

696

595

579

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

0,6

0,7

20232022202120202019

0.54

0.5 0

0.50

0.44

0. 74

Earnings per share, adj.

EUR

0,00

0,05

0,10

0,15

0,20

0,25

20232022202120202019

0.21

0.1 9

0.1 7

0.1 5

0.23

Dividend per share

EUR

Board’s proposal

Return on investment

20232022202120202019

15.3

14.6

19.5

1 7.0

19.4

Equity ratio

20232022202120202019

45.3

54.3

49.1

53.7

Net debt

EUR million

100

20232022202120202019

18 .1

46.2*

51.7

85.6

59.9

1.1.2019 1.1.2020 1.1.2021 1.1.2022 1.1.2023 31.12.2023

Operating profit, adjusted

Operating profit %, adjusted

Scanfil plc, EUR OMX Helsinki PI Index

20232022202120202019

40.3

39.1

6.8 %

6.6 %

5.8 %

5.4 %

45.4

61.3

39.4

6.8 %

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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. Profitability has made it possible

for Scanfil to invest and secure its future.

Scanfil is its’ customers preferred manufacturing partner and systems

supplier. The company has earned a reputation for building long-term

partnerships based on a mutual passion for success.

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,

cleantech, recycling and health technology providers, as well as

companies operating in the field of urbanization. Scanfil is one of the

market leaders in the Nordic countries, among the largest companies

in its sector in Europe, and a household name in the global market.

Long-term targets

In the reporting year 2023, Scanfil was organically aiming for 5-7%

annual organic turnover growth and 7% operating profit level. Organic

turnover growth in 2023 was 6.9% and operating profit margin at 6.8%.

Outlook for 2024

Scanfil estimates that its turnover for 2024 will be EUR 820–900 million,

and its adjusted operating profit will be EUR 57–65 million.

The guidance is based on customer forecasts and Scanfil’s normal

forecasting process. The outlook is associated with uncertainty related

to global economic development.

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 0.23 (0.21) per share be paid for a total of EUR

15,012,098.39 for the financial year ending on 31 December 2023. The

dividend matching day is 29 April 2024 and the dividend payment date

7 May 2024. The dividend will be paid to shareholders registered in the

matching date.

Annual General Meeting

Scanfil plc’s Annual General Meeting (AGM) will be held on 25 April 2024

without a meeting venue using remote connection in real time. More

information www.scanfil.com/agm

Financial publications in 2024

• Interim report for January–March, 24 April 2024

• Interim report for January–June, 6 August 2024

• Interim report for January–September, 25 October 2024

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 is a trusted manufacturing partner and system supplier for the electronics

industry with over 45 years of experience. Scanfil provides its customers with an

extensive array of services, ranging from product design to product manufacturing,

material procurement, logistics solutions, and refurbish and end-of-life services.

Sustainability is essential to Scanfil. Scanfil wants to preserve the earth for

future generations and be an excellent and responsible business partner for

its customers and suppliers, and a reliable employer. Scanfil is committed to

UN Global Compact and has identified seven key UN Sustainable Development

Goals from the company perspective.

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.

The company continued to prepare for the EU Corporate Sustainability Regulation

Directive (CSRD) and European Sustainability Reporting Standards (ESRS), which

comes into force in 2024. In its preparation work, Scanfil finalized double materiality

assessment survey to be able to fullfill the forthcoming ESRS requirments and

started to adopt a new ESG data collection tool.

We contribute to the following UN Sustainable Development Goals.

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Sustainability at Scanfil

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.

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 (Good Health, Gender

Equality, Good Jobs and Reduce Inequalitites), and Governance (Peace, Justice

and Strong Institutions).

“Our ESG is a continuous

process in which we align our

operations and targets with

our values as a company”,

Christophe Sut the CEO of

Scanfil plc.

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Sustainability risks

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

unethical behavior.

To effectively manage risks in the supply chain, Scanfil has a supplier

evaluation process, and each supplier is committed to Scanfil’s Supplier

Code of Conduct.

Health and safety

In our operations, the greatest threats to employee health and safety,

such as work-related illnesses and accidents, arise when Scanfil’s health

and safety processes are not followed, and risks in the work environment

are not recognized and controlled.

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 a Safety Council, which monitors all work safety aspects.

Safety Council convenes quarterly to share and decide on corrective

actions and preventive best practices. In addition, sick leaves, accidents,

and lost time resulting from these are monitored monthly.

The occupational risk analyses are performed regularly at all locations

to prevent health and safety incidents related to 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.

Environmental

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 throughout the

value chain. All sites within Scanfil are certified according to ISO 14001.

Social

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.

Governance

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 material procurement, product manufacturing and distribution. It is generally estimated that

approximately 80% of a product’s negative environmental impacts are determined in the product

design phase. 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, electronic and plastic 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.

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.

Scanfil promotes sustainable

development by identifying,

measuring and reporting the

environmental impact caused by

its activities.

Environmental

responsibility

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Reduce carbon footprint

Scanfil commits to reducing its carbon footprint by 50% from 2020

16,853 tCO2e to 2030 10,000 tCO2e. This means on average 4.2%

annual actual reduction in carbon footprint until 2030 and is in line with

the temperature target of the Paris Agreement. In 2023, the result was

a 47% reduction in CO2 emission from the baseline in 2020. However,

the target is challenging with the annual organic turnover growth rate

target of 5 - 7%.

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 and

electric cars.

Increasing usage of fossil-free energy

The company also commits that its energy consumption is 60% fossil-

free by 2030. Target was increased from the previous 50% to 60% in

2023. In 2023, the share of fossil-free energy increased to 52.4% from

the baseline of 28% in 2020. Scanfil uses energy in heating, cooling,

lighting, and production machinery. In 2023, Scanfil’s electricity energy

consumption was 27 million kWh and the total energy consumption was

41,6 million kWh. The total energy consumption includes the combustion

of fossil fuels in on-site boilers, furnaces, vehicles, purchased electricity,

district heating, and cooling. The total energy consumption increased by

1,5 % year-on-year. This is due to higher customer demand and volumes in

2023. The total energy consumption per value-added decreased by 17%.

Most of the increase in energy consumption came from Suzhou and

Sieradz which are the largest production units at Scanfil. The increase

in production resulted in a larger number of machines installed and in

more shifts when the factory operated during evenings and weekends.

It is also notable, that climate change has increased the need for air

cooling in several factories and increased energy consumption during

the summer.

In 2023, electrical energy consumption divided by value-added

decreased by 19%. Value add increased at a higher pace than electricity

consumption.

Water and waste

Water is used in facility cooling and maintenance, production, and

sanitary facilities. Total water consumption was 66,985 (55,065) m3.

Water consumption increased by 22% and increase divided by added

value was 0.4%. The main reason for the increased water consumption

is the galvanic line in the Pärnu factory and the introduction of the

overflow system in the rinsing baths. In Suzhou, rainwater recycling

for cooling tower and production building toilets was installed and the

Suzhou factory reduced water consumption by 14%. The increase in

water consumption is also distributed across all factories in relation to

the increase in production volume.

The amount of waste created increased by 3.8% in 2023 compared to

2022. There were some differences between factories due to changes

in production and different product ranges, but majority of the increase

came from increased volumes. Waste divided by value-added improved

from 2022 by 15%.

Energy consumption kWh / value add

Water consumption m

/ value add

20232022202120202019

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 2023 to support the above targets

• Energy saving activities in all factories e.g. automated power

switches, runtime optimization and led lightning

• New energy agreements in Wutha and Pärnu factories

• Logistics and transportation optimization

The most important actions to be taken in 2024 to support

the above target

• Full climate Scope 3 reporting

• Energy saving and transportation optimization to continue

• Further development with fossil-free energy consumption

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

● ● ● ●

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 employee satisfaction. Scanfil aims to be a responsible

employer and an encouraging working community where every individual has the

opportunity to develop their personal skills and abilities. Scanfil aims to improve

the employee satisfaction to the top quartile among all companies covered by

our employee satisfaction survey service partner.

Scanfil joined the UN initiative “Global Compact” in 2021 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. Being part of the “Global

Compact” initiative, Scanfil uses the best practice guidance, tools, resources,

and training provided.

Scanfil has 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 core 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 improves occupational

safety by continuous active

measures.

Social responsibility

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Occupational health and safety

The Group’s sick leave rate was 4.2% (2022: 4.4).

There were 33 (2022: 30) occupational accidents. which resulted in

sick leave. The accident rate calculated as a percentage of accidents

vs active workforce changed from 0,68% (2022) to 0,70%.

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.

Scanfil uses a Safety Book to record occurred occupational accidents

during the year. The organization reacts to all occupational accidents

and near-miss incidents to prevent them from recurring. Most accidents

in 2023 were related to handling of materials and machines operating.

Owing to Safety Council solutions sharing, factories have opportunity to

take into use the preventive measures implemented at sister sites. There

is a lot of focus on personal well-being’s self-awareness and employees

are being equipped with hints and instructions on how to stay focused

and avoid risks while performing work.

The annual practice of gathering employees’ opinions in the employee

engagement survey has proven to be highly appreciated as the response

rate increased again and resulted in 91% (2022: 89%). The survey’s

main measures evaluating employees’ satisfaction and motivation, and

loyalty show a positive trend for eight consecutive years. The scores

are above the weighted external benchmark, which proves that the

development activities taken during past years were effective and drove

Scanfil towards the desired top quartile. To continue this positive trend,

all units prepare own plans and almost 500 development actions were

defined within Scanfil.

Development of employee satisfaction results

20232022202120202019

Empoloyee satisfaction and motivation Loyalty

Human rights

The company ensures its social responsibility through fair working

conditions and practices, with an exclusive focus on human rights as

expressed in Scanfil’s Code of Conduct.

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 includes questions about

any unwanted behavior.

Scanfil has a whistleblowing channel through which the company’s

personnel and partners can report any observed or suspected

misconduct regarding corruption, bribery, or rules described in the

Code of Conduct. In 2024, Scanfil is upgrading its whistleblowing channel

and operating tool available to all external (www.scanfil.com) and internal

(Intranet) stakeholders. This will be replacing the mailbox-based channel

(report.codeofconduct@scanfil.com and whistleblowing@scanfil.com).

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 2023, no non-conformities pursuant to

corporate governance were identified in Scanfil’s global whistleblowing

channels. There were ten cases reported by employees when they

perceived themselves to be exposed to discrimination or mobbing. These

were in detail investigated thoroughly by global authorized personnel

together with local management representatives. Most of them occurred

not to be justified, and thus Scanfil acknowledges the need to improve

misconduct awareness in the organization. The actions to enhance it

were started in 2023 with DEI (Diversity Equity Inclusion) global training.

Next activities are planned for 2024. In those cases where misbehavior

was found to be true, the individual disciplinary conversations and

consequences took place.

During 2024, Scanfil will enhance the Succession planning process.

This will, in addition to designed in 2023 Talent management process,

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The most important actions taken in 2023:

• Continuously improve employee satisfaction, including employee

well-being as well as leadership practices to enable better support

• Kick-off of DEI (Diversity Equity Inclusion) Forum

• Performing DEI training for while collars

• Safety Council workshop summarizing 2023 best preventive

actions and brainstorming on safety culture roll-out initiatives

The most important actions to be taken in 2024:

• Enhance diversity & inclusion by cascading down the diversity

targets, include diversity dimension in the succession planning

• Introduce advanced digital whistleblowing reporting channel

• Perform ScanfilWay Culture roll-out (updated CoreValues,

leadership and collaboration practices)

• Safety-first campaign and trainings

help to further develop diversity in all management levels. The Scanfil

Women Appreciation Team collaborates closely with Diversity Equity

Inclusion forum to strengthen the workforce potential. Scanfil will also

start implementation of a system which will support pay transparency

and its improvements.

Scanfil’s factories are actively involved in charity activities like occasional

gift gatherings (for Christmas, for child’s days, etc.), charity sports events,

supporting orphanage. Additionally, Scanfil sponsors youth sports teams

and clubs. Scanfil also 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 focuses a lot on diversity, equity, and inclusion. After Women

Appreciation Team started operating in 2022 to enhance gender equity,

the next step was taken in 2023. That was quarterly DEI forum kick-off

of which was hosted by the CEO. DEI community works to foster desired

attitudes and behaviors.

Scanfil employs around 50 different nationalities. We have over 70

employees with disabilities. The average age of our employees is 41

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. Group Senior Management diversity ratio became

one of the strategic targets and is now monitored quarterly, including

Global Management Team, Factory Local Management Teams and

Global Functions’ Directors and Heads. Women representation in the

Senior Management stands for 20% in the end of 2023.

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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 equal and fair to its stakeholders 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, for example, 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 in these areas were identified in 2023.

Good governance

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Whistleblowing

Scanfil has a whistleblowing channel through which the company’s

personnel and partners can 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.

Scanfil works actively together with its customers to improve the

sustainability activities of the entire supply chain and industry. In 2023,

Vaisala awarded Scanfil as the most responsible supplier of the year, and

at ThermoFisher’s supplier days, Scanfil was facilitating together with

the customer responsible business practices and recommendations

to other suppliers.

Satisfied customers

Customer satisfaction (Net Promoter Score, NPS) 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

NPS-scale from -100 to +100.

How probable is it that you would recommend

Scanfil’s services?

Q2 2022 Q4 2022 Q2 2023 Q4 2023

NPS Score 5 -5 7 22

will define a factory- and/or function-specific development program,

including relevant measures. These measures will be monitored actively

in cooperation with customers. NPS, which shows the probability of

our customers recommending Scanfil as a manufacturing partner,

increased significantly from the previous year. This was thanks to a

positive development in both customer quality and delivery punctuality.

The increase in the NPS score shows that the measures implemented

have had a positive effect and that they had a great impact on the

customer experience.

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 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. The numbers of continuous improvements

are measured in all factories and in 2023, a total of 7 685 continuous

improvements where implemented and documented. Performance is

measured by KPIs, the most important being delivery punctuality and

customer quality, measured as Defective Parts Per Million (DPPM). In

2023, both customer quality and the delivery punctuality significantly

improved.

Scanfil is committed to continuously develop its operational performance.

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’s gross investments totaled 2.5%

of company’s turnover.

Towards sustainable supply chain

Material purchases represent 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,

cost-effectiveness and a responsible sustainability approach throughout

the whole value chain.

Sustainability evaluation of suppliers

Scanfil requests our preferred and key suppliers to undergo a

sustainability assessment by a reputable third-party provider, such as

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EcoVadis or similar. EcoVadis is the chosen third-party assessment

provider by Scanfil. The result of such an assessment will be part of

Scanfil’s strategic purchasing decisions.

By continuously working to consolidate purchasing volumes with our

preferred and key suppliers and proactively requesting sustainability

assessments, we will ensure that our supply chain is aligned with Scanfil’s

sustainability objectives.

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 comply with our Supplier Code of Conduct and be transparent in

their ESG. Scanfil strongly recommends all its suppliers and business

partners to use the EcoVadis platform.

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 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 2023:

• Preparation for EU level CSRD and EU taxonomy

• Start of Scope 3 measurement

• Roll out of Scanfil sustainable procurement program

• Code of Conduct online training

The most important actions to be taken in 2024:

• CSRD driven double materiality assessment and actions based on

the results

• Full reporting from factory level according to ESRS

• Validation of science based target near-term targets ready

• Commitment of science based target long-term targets to achieve

net-zero 2050

• Achieving EcoVadis Gold

Business partners and society

Scanfil’s sales to customers totaled EUR 902 million, of which purchases

from external suppliers accounted for EUR 719 million. The difference,

EUR 182 million, was the added value produced by Scanfil. The

added value produced increased by EUR 33 million (+21,9%) 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 3,670 employees and paid them EUR 96 million in

salaries and wages. Salaries and wages increased by EUR 13 million,

or 15,8%, year-on-year. Scanfil paid a total of EUR 39 million in other

statutory staff costs and income taxes.

The company’s subsidiaries are located in seven different countries.

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 net financial

expenses totaled EUR 0 (2022: 4) million. The company aims to pay

approximately a third of its net result as annual dividends. In keeping

with this principle, Scanfil paid EUR 14 million in dividends in 2023. The

dividend per share paid by the company has increased every year since

2012. 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 19.6% in 2023, which clearly shows

that the investments made in the company have repaid themselves well.

Scanfil value add creation 2023, EUR million

Sales to customer

902

(2022: 844)

Purchases from suppliers

719

(694)

Value add

182

(149)

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The EU taxonomy is a classification system for sustainable economic

activities. It aims to provide robust definitions and transparent reporting

to support increased finance for activities that substantially contribute

to solving the climate and environmental crisis.

The EU taxonomy is reported in financial terms as the proportion of

economic activities that are determined non-eligible, eligible and aligned

in turnover, Capital Expenditure (CapEx) and Operating Expenditure

(OpEx).

The EU taxonomy is intended to encourage financial markets to invest

and finance more sustainably and avoid green washing. It sets the criteria

for activities that the EU has classified as environmentally sustainable.

Activities that are described in the taxonomy are referred to as eligible

activities. Eligible activities that also meet set criteria are referred to as

aligned activities in the taxonomy.

How Scanfil is affected by the EU Taxonomy

Scanfil is an electronics manufacturing service (“EMS”) company that

almost exclusively produces according to the customers’ specifications,

with little control over how the specifications are developed. Since most

of its operations fall under NACE code 26 (Manufacturing of computers

and electronic and optical products), sold as components for further

assembly and manufacturing, Scanfil does not always know what the

produced components are used for by the customer in the final product

or application. Components may be used for Taxonomy eligible or non-

eligible, aligned and non-aligned economic activities and it can be

difficult to assess and influence usage in detail.

That said, Scanfil works in close collaboration with its customers to the

greatest extent possible to ensure that its products are of the highest

quality and contribute substantially to achieving the environmental

objectives defined in Article 9 of Regulation (EU) 2020/852.

In accordance with Article 10 on Substantial contribution to climate

change mitigation, Scanfil contributes substantially by enabling the

activities listed in points (a) to (h). These are economic activities that

qualify as substantially stabilizing the concentrations of greenhouse

gas in the atmosphere at a level that prevents dangerous anthropogenic

interference with the climate system consistent with the long-term

temperature goal of the Paris Agreement. Scanfil’s EU Taxonomy

aligned customers’ main contribution via a) generating, transmitting,

storing, distributing, or using renewable energy in line with Directive (EU)

2018/2001, including through using innovative technology with a potential

for significant future savings or through necessary reinforcement or

extension of the grid; (b) improving energy efficiency, except for power

generation activities as referred to in Article 19(3).

As described in Article 16, enabling activities are defined as those

which contribute substantially to one or more of the environmental

objectives and:

(a) does not lead to a lock-in of assets that undermine long-

term environmental goals, considering the economic

lifetime of those assets; and:

(b) has a substantial positive environmental impact, based on

life-cycle considerations

Scanfil has activities that qualify as environmentally sustainable according

to the EU Taxonomy as per EU Regulation 2020/852. Scanfil has activities

that are in the scope of Technical Screening Criteria (TSC) 3.1 Manufacture

of renewable energy technologies, 3.4 Manufacture of batteries and 3.5

Manufacture of energy efficiency equipment for buildings.

Assessment of compliance with the taxonomy

regulation

Scanfil has carried out an assessment regarding its economic activities

against the EU Sustainable Finance Taxonomy’s first Delegated Act on

Climate, as required by the Delegated Act on Article 8. The purpose of

this assessment was to define the taxonomy-eligibility and alignment.

Scanfil’s approach to identifying and reporting sustainable economic

activities consisted of:

1. Eligibility assessment: mapping of economic activities to taxonomy

activity descriptions and NACE codes.

2. Substantial contribution assessment: screening of activities against

technical screening criteria.

3. Do no significant harm (DNSH) assessment: screening of Scanfil’s

procedures to ensure that our operations do not cause significant

harm to relevant environmental objectives. Screening conducted at

an appropriate level for each environmental objective. The company

has established management procedures that address different

environmental issues, including waste disposal and pollution control.

These procedures are primarily carried out using environmental

management systems that are certified by ISO 14001.

EU taxonomy

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4. Minimum safeguards assessment: A review of Scanfil’s social

safeguards to ensure that our operating instructions, company policies,

and management system are compliant with the UN Declaration of

Human Rights, the ILO Fundamental Conventions on Human Rights at

Work, the Rio Declaration, and the UN Convention against Corruption.

Scanfil works with the requirements for minimum safeguards by

assessing and managing the risk and impact of their business activities

on people, society, and the environment. These requirements are met

by ensuring compliance with its Code of Conduct (CoC). Internally this

means that all employees are required to participate in a course to

make sure their behaviors are in line with the values of Scanfil. For its

upstream activities, Scanfil works to ensure that its suppliers comply

with their supplier CoC. As part of its minimum requirement, 100% of

all new suppliers have signed Scanfil’s supplier CoC. Scanfil has a risk

assessment process for all new suppliers that results in a score card.

Suppliers are categorized and assessed according to a three-point

criteria containing of business and customer needs, and regulatory

requirements. Scanfil conducts an in-depth audit for these suppliers.

To ensure its sustainability in procurement Scanfil uses EcoVadis to

assess its suppliers. Scanfil requests specific measures from suppliers

who cannot meet with the required minimum rating score. If insufficient

measures are implemented to raise their score, Scanfil may phase out

these suppliers.

Human rights impact assessments are part of broader efforts to promote

corporate social responsibility, sustainable development, and ethical

business practices. They contribute to the protection and promotion

of human rights by proactively identifying and addressing potential

risks and impacts associated with various activities. Scanfil requires

the commitment of the Supplier Code of Conduct for the approval of all

new suppliers. This is in combination with a “Due Diligence procedure”,

where criteria for sustainability are included.

To meet the increased demands on the due diligence process for

human rights impact assessment, Scanfil continuously develops its

processes including the implementation of new tools. The goal is to

have the opportunity in 2024 to cover the entire supplier base from

both a risk perspective, but also for the introduction of new suppliers.

Scanfil promotes and supports sustainable and ethical business

practices. To enforce business conduct policy against corruption and

misconduct, Scanfil uses a whistleblower service that allows everybody

to speak up. The purpose is to ensure that no acts of bribery, anti-

competitiveness and harassment occurs at Scanfil. Cases reported

via the whistleblower service are handled by an internal council. On a

monthly basis, any and all reported cases are assessed with consequent

follow-ups as needed.

As a result of the 2023 assessment, the following economic activities

were identified as taxonomy eligible and aligned for Scanfil with the

objective of Climate Change Mitigation (CCM) according to the Technical

Screening Criteria of 3.1 Manufacture of renewable energy technologies,

3.4 Manufacture of batteries and 3.5 Manufacture of energy efficiency

equipment for buildings.

Scanfil Taxonomy KPIs for the year 2023 are presented in the tables of

the following pages.

Double counting has been avoided by classifying external revenue

streams into taxonomy-eligible economic activities only once. The shares

of eligible and aligned net sales have been used as key to calculate

eligible and aligned Opex and Capex.

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Turnover

Scanfil is an electronics manufacturing service (“EMS”) company. It

manufactures components and products for its customers. Most of

Scanfil’s operations fall under NACE code 26 (Manufacturing of computers

and electronic and optical products), which is currently not covered in

the first Delegated Act on Climate. Scanfil has approximately 160 active

customers and it manuafactures approximately 10,000 different products

annually. To describe the complexity, customers’ end products can vary

from heat pumps and recycling solutions to elevators and industrial

pumps and frequency converters. For now, Scanfil’s taxonomy-eligible

and aligned economic activities are conducted predominantly in the

Energy & Cleantech segment customers while other businesses are

currently not described in the Taxonomy Regulation. Only customers

and their line of business is assessed.

Capital Expenditure

The idea of an EMS company is to share assets in the production with

other customers e.g. SMT lines are used for multiple customers and

therefore identifying or separating investments in these assets based

on taxonomy eligibility or alignment cannot be done. In cases, where

assets cannot be shared i.e. they are customer specific, customer

typically owns the assets.

Taxonomy CapEx is presented and measured in line with the CapEx

presented in the Group’s financial statements. It consists of purchases

of property, plant and equipment, and intangible assets and right-of-

use assets.

Breakdown of CapEx KPI

MEUR

Additions to property, plant and equipment 19

Additions to intangible assets 2

Additions to capitalized right-of-use assets 3

Total 24

Operating Expenditure

The Taxonomy regulation’s definition of OpEx relates to assets and

economic activities that generate taxonomy eligible net sales. It consists

of expenses relating directly to maintenance and servicing of assets

including e.g., facility improvements. Scanfil has applied a conservative

interpretation of the Taxonomy OpEx definition. Raw materials, and

salaries of employees performing repairs, maintenance, and services

of eligible fixed assets, are excluded.

Breakdown of OpEx KPI

MEUR

Costs of maintenance, repair and equipment 10

Total 10

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Financial year 2023 2023 Substantial contribution criteria

DNSH criteria

(Does Not Significantly Harm)

Economic activities Code Turnover

Proportion of

turnover, year 2023

Climate change

mitigation

Climate change

adaptation

Water

Pollution

Circular

economy

Biodiversity

Climate change

mitigation

Climate change

adaptation

Water

Pollution

Circular

economy

Biodiversity

Minimum

safeguards

Proportion of

Taxonomy-aligned

(A.1.) or -eligible

turnover, year

2022 (A.2.)

Category

enabling

activity

Category

transitional

activity

MEUR % Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T

A. TAXONOMY-ELIGIBLE ACTIVITIES

A.1. Environmentally sustainable activities (Taxonomy-aligned)

Manufacturer of renewable energy technologies CCM 3.1 6 0.6% Y N/EL N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y 0.5% E

Manufacturer of batteries CCM 3.4 19 2.1% Y N/EL N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y 1.5% E

Manufacturer of energy efficiency

equipment for buildings CCM 3.5 76 8.4% Y N/EL N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y 6.0% E

Turnover of environmentally sustainable

activities (Taxonomy-aligned) (A.1.) 101 11.1% 11.1% 0% 0% 0% 0% 0% Y Y Y Y Y Y Y 8.0%

Of which enabling 101 11.1% 11.1% 0% 0% 0% 0% 0% Y Y Y Y Y Y Y E

Of which transitional 0.0% 0%

A.2 Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activites)

Manufacturer of renewable energy technologies CCM 3.1 3 0.4% EL N/EL N/EL N/EL N/EL N/EL 0.4%

Turnover of Taxonomy eligible but not environmentally

sustainable activities (not Taxonomy-aligned activities (A.2) 3 0.4% 0.4% 0% 0% 0% 0% 0% 0.4%

A. Turner of Taxonomy-eligible activities (A.1 + A.2) 104 11.5% 8.4%

B. TAXONOMY-NON-ELIGIBLE ACTIVITIES

Turnover of Taxonomy-non-eligible activities 798 88.5%

TOTAL 902 100.0%

Scanfil plc’s principles for defining turnover, capital expenditure and operating expenditure can be found in notes 1.1., 1.5., 3.2., 3.3. and 3.4. in the Financial Statements.

A.1.

Y – Yes, Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective

N – No, Taxonomy-eligible but not Taxonomy-aligned activity with the relevant environmental objective

N/EL – Not eligible, Taxonomy-non-eligible activity for the relevant environmental objective

A.2

EL – Taxonomy-eligible activity for the relevant objective

N/EL – Taxonomy-non-eligible activity for the relevant objective

Proportion of turnover from products or services associated with Taxonomy-aligned economic activities - disclosure covering year 2023

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Financial year 2023 2023 Substantial contribution criteria

DNSH criteria

(Does Not Significantly Harm)

Economic activities Code CapEx

Proportion of

CapEx, year 2023

Climate change

mitigation

Climate change

adaptation

Water

Pollution

Circular

economy

Biodiversity

Climate change

mitigation

Climate change

adaptation

Water

Pollution

Circular

economy

Biodiversity

Minimum

safeguards

Proportion of

Taxonomy-

aligned (A.1.) or

-eligible CapEx

year 2022 (A.2.)

Category

enabling

activity

Category

transitional

activity

MEUR % Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T

A. TAXONOMY-ELIGIBLE ACTIVITIES

A.1. Environmentally sustainable activities (Taxonomy-aligned)

Manufacturer of renewable energy technologies CCM 3.1 0.2 0.6% Y N/EL N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y 0.5% E

Manufacturer of batteries CCM 3.4 0.5 2.1% Y N/EL N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y 1.5% E

Manufacturer of energy efficiency

equipment for buildings CCM 3.5 2.0 8.4% Y N/EL N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y 6.0% E

CapEx of environmentally sustainable

activities (Taxonomy-aligned) (A.1.) 2.6 11.1% 11.1% 0% 0% 0% 0% 0% Y Y Y Y Y Y Y 8.0%

Of which enabling 2.6 11.1% 11.1% 0% 0% 0% 0% 0% Y Y Y Y Y Y Y E

Of which transitional 0,0% 0%

A.2 Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activites)

Manufacturer of renewable energy technologies CCM 3.1 0.1 0.4% EL N/EL N/EL N/EL N/EL N/EL 0.4%

CapEx of Taxonomy eligible but not environmentally

sustainable activities (not Taxonomy-aligned activities (A.2) 0.1 0.4% 0.4% 0% 0% 0% 0% 0% 0.4%

A. CapEx of Taxonomy-eligible activities (A.1 + A.2) 2.7 11.5% 8.4%

B. TAXONOMY-NON-ELIGIBLE ACTIVITIES

CapEx of Taxonomy-non-eligible activities 21.3 88.5%

TOTAL 24.0 100.0%

Scanfil plc’s principles for defining turnover, capital expenditure and operating expenditure can be found in notes 1.1., 1.5., 3.2., 3.3. and 3.4. in the Financial Statements.

Proportion of CapEx from products or services associated with Taxonomy-aligned economic activities - disclosure covering year 2023

A.1

Y – Yes, Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective

N – No, Taxonomy-eligible but not Taxonomy-aligned activity with the relevant environmental objective

N/EL – Not eligible, Taxonomy-non-eligible activity for the relevant environmental objective

A.2

EL – Taxonomy-eligible activity for the relevant objective

N/EL – Taxonomy-non-eligible activity for the relevant objective

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ANNUAL REPORT 2023/27

Financial year 2023 2023 Substantial contribution criteria

DNSH criteria

(Does Not Significantly Harm)

Economic activities Code OpEx

Proportion of

OpEx, year 2023

Climate change

mitigation

Climate change

adaptation

Water

Pollution

Circular

economy

Biodiversity

Climate change

mitigation

Climate change

adaptation

Water and

marine

resources

Pollution

Circular

economy

Biodiversity

Minimum

safeguards

Proportion of

Taxonomy-aligned

(A.1.) or -eligible Opex

year 2022 (A.2.)

Category

enabling

activity

Category

transitional

activity

MEUR % Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T

A. TAXONOMY-ELIGIBLE ACTIVITIES

A.1. Environmentally sustainable activities (Taxonomy-aligned)

Manufacturer of renewable energy technologies CCM 3.1 0.1 0.6% Y N/EL N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y 0.5% E

Manufacturer of batteries CCM 3.4 0.2 2.1% Y N/EL N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y 1.5% E

Manufacturer of energy efficiency

equipment for buildings CCM 3.5 0.8 8.4% Y N/EL N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y 6.0% E

OpEx of environmentally sustainable

activities (Taxonomy-aligned) (A.1.) 1.1 11.1% 11.1% 0% 0% 0% 0% 0% Y Y Y Y Y Y Y 8.0%

Of which enabling 1.1 11.1% 11.1% 0% 0% 0% 0% 0% Y Y Y Y Y Y Y E

Of which transitional 0.0% 0%

A.2 Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activites)

Manufacturer of renewable energy technologies CCM 3.1 0.0 0.4% EL N/EL N/EL N/EL N/EL N/EL 0.4%

OpEx of Taxonomy eligible but not environmentally

sustainable activities (not Taxonomy-aligned activities (A.2) 0.0 0.4% 0,4% 0% 0% 0% 0% 0% 0.4%

A. OpEx of Taxonomy-eligible activities (A.1 + A.2) 1.1 11.5% 8.4%

B. TAXONOMY-NON-ELIGIBLE ACTIVITIES

OpEx of Taxonomy-non-eligible activities 8.9 88.5%

TOTAL 10.0 100.0%

Scanfil plc’s principles for defining turnover, capital expenditure and operating expenditure can be found in notes 1.1., 1.5., 3.2., 3.3. and 3.4. in the Financial Statements.

Proportion of OpEx from products or services associated with Taxonomy-aligned economic activities - disclosure covering year 2023

A.1.

Y – Yes, Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective

N – No, Taxonomy-eligible but not Taxonomy-aligned activity with the relevant environmental objective

N/EL – Not eligible, Taxonomy-non-eligible activity for the relevant environmental objective

A.2

EL – Taxonomy-eligible activity for the relevant objective

N/EL – Taxonomy-non-eligible activity for the relevant objective

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ANNUAL REPORT 2023/28

Nuclear energy related activities

The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of

innovative electricity generation facilities that produce energy from nuclear processes with minimal waste from the fuel

cycle.

The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear installations to

produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydro-

gen production, as well as their safety upgrades, using best available technologies.

The undertaking carries out, funds or has exposures to safe operation of existing nuclear installations that produce elec-

tricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production

from nuclear energy, as well as their safety upgrades.

Fossil gas related activities

The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities that

produce electricity using fossil gaseous fuels.

The undertaking carries out, funds or has exposures to construction, refurbishment, and operation of combined heat/

cool and power generation facilities using fossil gaseous fuels.

The undertaking carries out, funds or has exposures to construction, refurbishment and operation of heat generation

facilities that produce heat/cool using fossil gaseous fuels.

Delegated Regulation 2022/1214

Most of Scanfil’s operations fall in under NACE code 26, Manufacturer

of computer, electronic and optical products, in accordance with the

statistical classification of economic activities established by regulation

(EC) no 1893/2006. As an electronics manufacturing service (“EMS”)

Scanfil has customers in the Energy & Cleantech segment but rarely

with knowledge of in-depth energy related activities.

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ANNUAL REPORT 2023/29

TABLE OF CONTENTS

BOARD OF DIRECTORS’ REPORT ............................................................................30

SHARES AND SHAREHOLDERS ...............................................................................34

KEY RATIOS ................................................................................................................... 

Definitions of key ratios ...................................................................................................37

CONSOLIDATED FINANCIAL STATEMENT, IFRS ................................................... 38

Consolidated income statement ................................................................................. 38

Consolidated statement of financial position .......................................................... 39

Consolidated statement of cash flow ......................................................................... 40

Consolidated statement of changes in equity .......................................................... 41

Accounting principles for consolidated

financial statements ........................................................................................................ 42

Notes to consolidated financial statements ............................................................. 45

. ITEMS AFFECTING THE RESULT

1.1 Turnover and details of business segments .................................................. 45

1.2 Other operating income ..................................................................................... 49

1.3 Use of materials and supplies ........................................................................... 49

1.4 Employee benefit expenses .............................................................................. 49

1.5 Other operating expenses .................................................................................. 51

1.6 Income taxes ......................................................................................................... 52

1.7 Earnings per share ............................................................................................... 54

. NET WORKING CAPITAL

2.1 Net working capital .............................................................................................. 54

2.2 Inventories ............................................................................................................. 55

2.3 Trade and other receivables .............................................................................. 55

2.4 Trade and other liabilities ................................................................................... 56

. NONCURRENT ASSETS

3.1 Goodwill ...................................................................................................................57

3.2 Other intangible assets ....................................................................................... 58

3.3 Property, plant and equipment .......................................................................... 60

3.4 Right-of-use assets .............................................................................................. 61

3.5 Depreciation, amortisation and impairment .................................................. 63

. CAPITAL STRUCTURE

4.1 Cash and cash equivalents ................................................................................ 64

4.2 Financial income and expenses ....................................................................... 64

4.3 Financial liabilities ................................................................................................ 65

4.4 Book values and fair values of financial assets and liabilities ................... 65

4.5 Derivative financial instruments and hedge accounting ........................... 66

4.6 Hierarchy of fair values ........................................................................................68

4.7 Financial risk management ................................................................................ 69

4.8 Shareholders’ equity ............................................................................................. 72

4.9 Management of capital structure ......................................................................73

. OTHER NOTES

5.1 Provisions ................................................................................................................74

5.2 Securities provided, contingent liabilities and other liabilities ................... 74

5.3 Details of related parties and Group structure ...............................................75

5.4 Events after the reporting period ......................................................................75

PARENT COMPANY FINANCIAL STATEMENT, FAS ............................................... 

Parent company income statement .............................................................................76

Parent company balance sheet ..................................................................................... 77

Parent company cash flow statement .........................................................................79

Notes to the parent company’s

financial statements ........................................................................................................ 80

The parent company’s accounting principles .......................................................... 80

1. Personnel expenses ....................................................................................80

2. Other operating expenses ..........................................................................81

3. Depreciation and amortisation ..................................................................81

4. Income taxes ................................................................................................. 81

5. Intangible assets ......................................................................................... 82

6. Tangible assets ............................................................................................ 82

7. Holdings in Group companies ................................................................... 83

8. Receivables from Group companies ........................................................ 83

9. Cash and cash equivalent .......................................................................... 83

10. Equity ............................................................................................................. 84

11. Depreciation difference ..............................................................................84

12. Loans from financial institutions ...............................................................84

13. Liabilities to Group companies ................................................................. 85

14. Accrued liabilities ........................................................................................ 85

15. Commitments and contingencies ............................................................ 85

16. Derivative contracts ....................................................................................85

17. Other rental contracts .................................................................................86

18. Management’s employment-related benefits ........................................ 86

BOARD OF DIRECTORS’ PROPOSAL FOR

THE DISTRIBUTION OF PROFIT ................................................................................86

SIGNATURES TO THE BOARD OF DIRECTORS’

REPORT AND FINANCIAL STATEMENTS ................................................................86

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ANNUAL REPORT 2023/30

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, 2023, the Group employed some 3,600 people. At the end

of 2023, 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 2023

The strong growth that started in 2021-2022 slowly folded towards the end of 2023.

Despite the waning of strong demand, full-year turnover growth was 6.9% compared

to 2022, and totaled in EUR 901,6 (843,8) million. In 2023, the goal of 5–7% annual

revenue growth in accordance with the long-term financial goals was met.

The previously challenging material situation began to ease towards the end of

2022, which increased the factories' productivity during 2023 when production

interruptions and delays caused by material shortages decreased. In addition, due

to material shortages, low-margin or no-margin spot market purchases of materials

had to be made significantly less, which increased the operating profit margin.

At the beginning of 2023, Scanfil started the new Scanfil Dream Factory development

program. The goal is to create a factory concept where IT, data, people, processes

and technology work seamlessly together. Investments according to the concept

were made during the year at several factories.

Turnover and result

The turnover for 2023 was EUR 901.6 (843.8) million, an increase of 6.9% compared

to 2022. Turnover includes EUR 19.3 (80.7) million invoicing of spot-market purchases.

The turnover excluding the spot-market purchases increased by 15.6%.

The operating profit for 2023 was EUR 61.3 (45.4) million, 6.8% (5.4%) of turnover. The

operating profit was positively affected by good customer demand and increased

productivity, which was supported by improved component availability. The operating

margin in 2023 was negatively affected by spot-market purchases and excluding

them it was 6.9%. The operating profit in 2022 was negatively affected by EUR -2.5

million of foreign exchange rates changes. In addition, operating margin in 2022

was negatively affected by high value of spot-market purchases.

The net profit for 2023 was EUR 48.2 (35.0) million, an increase of 37.6%. Earnings

per share were EUR 0.74 (0.54). Return on investment was 19.4% (14.6%).

The effective tax rate in 2023 was 21.7% (16.0%). The tax rate was impacted negatively

by taxes of intercompany dividends. In 2022, taxes of intercompany dividends had

a slightly positive impact.

The Group’s key figures over five years are presented under “The Group’s key

figures” in the financial statements.

Financing position and investments

Scanfil’s financial position improved significantly during 2023. The consolidated

balance sheet total was EUR 518.0 (525.5) million at the end of the review period.

Cash and cash equivalents totaled EUR 21.2 (20.8) million. Liabilities amounted

to EUR 252.0 (298.9) million, of which non-interest-bearing liabilities totaled EUR

179.0 (192.6) million and interest-bearing liabilities totaled EUR 73.0 (106.3) million.

Interest-bearing liabilities consisted of EUR 50.4 (81.5) million in financial liabilities

and EUR 22.6 (24.8) million in leasing liabilities. The Group has EUR 83.4 million in

unused credit facilities.

The equity ratio at the end of the period was 53.7% (45.3%), and net gearing was

19.4% (37.8%). Equity per share was EUR 4.08 (3.49).

The Group’s financial arrangement includes discharge covenants related to equity

ratio and interest-bearing net debt/EBITDA ratio. Compliance with 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 January–December was at an all–time

high EUR 68.9 (10.2) million. The high cash flow was driven by good profitability as

well as positive working capital development.

The net cash flow from investing activities in January–December was EUR -21.9

(-18.5) million.

Free cash flow was positive at EUR 47.0 (-8.3) million.

The cash flow from financing activities was EUR -46.4 (3.9) million, including a EUR

-13.6 (-12.3) million dividend payment, EUR -6.0 (-6.0) million repayments of long-

term loans and change in overdraft facility EUR -23.9 (25.9) million.

Gross investments in January–December totaled EUR 22.2 (19.0) million, which

was 2.5% (2.3%) of the turnover. Approximately 50% of the investments were

made for increase the electronics manufacturing capacity especially in Poland and

the USA. The rest of the investments were in information technology, productivity

development and capacity replacements. Depreciations, including impairments,

totaled EUR 19.1 (17.5) million.

The Board of Directors’ authorizations

Scanfil plc’s Annual General Meeting was held on April 27, 2023 as a remote meeting

in accordance with the law.

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 24, 2019, the Annual General

Meeting accepted the 2019 option scheme (A–C) and on April 21, 2022 the Annual

General Meeting authorized the Board to decide on the issue of option rights to

the Scanfil Group ‘s key personnel and to decide on the terms and conditions of

the option scheme. Based on the authorization on 27 October 2022, the Board

decided on the option scheme 2022 (AI/AII) – (CI/CII). ) On the basis of the 2019

option scheme, a maximum of 900,000 option rights can be granted and on the

basis of the 2022 option scheme, a maximum of 1,200,000 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 330,000 shares were subscribed

under Scanfil Plc’s stock options 2019(A) and 2019(B). Based on the

subscriptions the company issued 310,000 new shares and 20,000 treasury

shares were transferred to subscribers. The whole subscription price of EUR

1,381,200 for subscriptions made with the stock options was recognized in the

company’s reserve for invested unrestricted equity.

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ANNUAL REPORT 2023/31

Scanfil plc has a total of 65,269,993 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 10,197,800 shares on December 31,

2023, comprising 15.6% of the company’s shares and votes. A total of 1,256,000

stock options have been granted to the current CEO Christophe Sut and to the CEO

Petteri Jokitalo, who stepped down on September 1, 2023, and to the members of

the group's management team, of which 976,000 are unvested. A total of 206,000

2022 (AI/AII) and (BI/BII) option rights have been granted to other key personnel.

The total number of unsubscribed option rights, 1,182,000, corresponds to 1.8% of

the total number of shares in Scanfil plc.

The highest trading price during the financial year was EUR 11.58, and the lowest

was EUR 6.40, with the closing price for the period standing at EUR 7.83. A total of

6,730,900 shares were traded during the period, corresponding to 10% of the

total number of shares. As of December 31, 2023, the market value of the shares

was EUR 511.1 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, 2023, the company owned 78,738 of its own shares, representing

0.1% of all shares.

Personnel

At the end of the financial period, the Group employed 3,642 (3,497) people, of whom

3,356 ( 3,189) worked outside Finland and 286 (308) in Finland.

PERSONNEL, AVARAGE 2023 2022 2021

Parent company 13 13 13

The Group 3,671 3,403 3,267

PAID SALARIES, WAGES AND FEES

EUR MILLION

2023 2022 2021

Parent company 2.3 1.9 1.8

The Group 95.6 82.5 77.8

Board of Directors and CEO

On April 27, 2023, the Annual General Meeting re-elected Harri

Takanen, Bengt Engström, Christina Lindstedt and Juha Räisänen as

Board members, and Thomas Dekorsy and Minna Yrjönmäki as new

members. At its organizing meeting on April 27, 2023, the Board of

Directors elected Harri Takanen as its chair.

In addition, the Board of Directors made the following decisions on the

organization of committees: the members of the Audit Committee are Juha

Räisänen (chair), Christina Lindstedt and Minna Yrjönmäki, and the members of the

Nomination and Remuneration Committee are Harri Takanen (chair) and Bengt

Engström.

Christophe Sut (1973) served as the CEO of the company as of September 31 and

Petteri Jokitalo (1963) January 1 - August 31, 2023.

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

In this section, the most essential risk factors, that may have an impact on Scanfil’s

ability to achieve its targets and means to manage related risks, are discussed briefly.

Scanfil seeks actively to reduce the impact of these risk factors by preventive actions.

STRATEGIC RISKS

The weakening of the global economy and the declining demand of investment

goods might have a negative impact on the development of business of Scanfil’s

customers and weaken the demand in the contract manufacturing market.

Scanfil doesn’t have sales to Russia or material purchases from Russia and therefore

the war in Ukraine doesn’t have direct impact on Scanfil revenue or profitability.

However, the continuation and expansion of conflicts in Ukraine and the Middle East

may have an impact on the business environments of Scanfil and its customers.

Also, political and trade political tense and related actions may impact on the Scanfil

business environment. This risk is eliminated by Scanfil’s global factory network

and its development.

OPERATIONAL RISKS

The vast majority of materials and components used in the supply chain are

purchased from external suppliers or subcontractors. This exposes the Group to the

availability and cost risks related to materials, components and other subcontracted

products in addition to the contingency of the business relationship.

The group has a global procurement unit whose task is to ensure the availability

of materials using trusted suppliers. With its purchasing power and procurement

department, Scanfil is able to influence suppliers’ delivery reliability and pricing to

a reasonable extent.

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ANNUAL REPORT 2023/32

There was challenges in the availability of certain materials, especially semiconductors,

in 2021-2022. The situation improved significantly during 2023, although availability

challenges related to certain materials are still visible.

Obsolete materials and components may create a financial risk for the group limited

to their book value. Material responsibilities are agreed upon in customer contracts.

Scanfil needs electricity and heat in its production. The risk of rising energy availability

and costs is believed to be small in the short term in Europe, and will not have a

significant impact on short-term revenue or profitability expectations. In the longer

term, there may still be risks to the availability of energy.

CUSTOMER RISKS

The Group has approximately 160 active customers, of which the largest customers

are Nordic companies that are leaders in their respective industries. The client

companies are spread over several different industries and geographical areas. In

general, the business of the Group’s key customers is not particularly sensitive to

economic cycles and the life cycles of products are often long. During 2023, the

largest customer’s share of turnover was 13% (19%), and the ten largest customers’

share of turnover was approximately 55% (55%).

FINANCIAL AND EXCHANGE RATE RISKS

Scanfil operates internationally and is thus exposed to exchange rate risks. The

group’s exchange rate risks consist of transaction risks related to business and

financing cash flows, translation risks related to foreign subsidiaries, and financial

risks caused by exchange rate changes. Currency forwards are used to hedge the

transaction risk. Investments in foreign subsidiaries are not protected.

Interest rate risk is included in the return on financial investments and interest-

bearing debts. Changes in the interest rate have an impact on the Group’s result.

The interest rate risk of loans can be managed with credit swaps and by adjusting

the relative shares of fixed and variable rate loans. The prevailing interest rate risk

is moderate with current contracts and credit levels.

Credit risks are related to trade receivables from customers. The Group’s largest

customers are solvent Nordic market leaders in their industries. Overdue trade

receivables are monitored regularly on a monthly basis at the Group level. The

creditworthiness of new customers is checked and only standard payment terms

are granted to customers. The customers’ credit ratings are monitored and most

of Scanfil’s largest customers have a good credit rating. Trade receivables do not

include significant credit loss risk.

Financial risk is mainly related to securing the Group’s financing. The management

of the Group’s finances and the management of financial risks are managed in

accordance with the principles approved by the Board of the Group’s parent company.

Scanfil’s finance function, which is part of the Group’s financial administration,

is responsible for ensuring that financial services and financial transactions are

carried out in a way that aims to enable the availability of sufficient funding under

all circumstances. Scanfil’s debt level is moderate and the credit rating is good.

INFLATION RISK

Overall inflation has an impact on the Group’s cost structure. Inflation has slowed

down, but the future development is uncertain.

PANDEMIC RISKS

Pandemics could affect the Group’s business. The effects can include, for example,

factory closings, increased staff sick leave and quarantines, the costs of protective

measures, even a temporary stoppage of production and/or delays in the delivery

of materials and manufactured products.

CYBER SECURITY RISK

Cyber security is recognized as a growing risk. Scanfil continuously monitors and

develops the ICT environment and systems to reduce risks.

The Group’s risks and risk management are described in more detail on the company’s

website in the Corporate Governance section and in the notes to the consolidated

financial statements.

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ANNUAL REPORT 2023/33

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 25, 2024.

Dividend for 2023

The parent company’s distributable assets total EUR 60,942,965.89 including

undistributed profits of EUR 25,793,374.35. The Board of Directors proposes to the

Annual General Meeting that a dividend of EUR 0.23 (0.21) per share, in total EUR

14,993,988.65 to be paid for the financial year ending on December 31, 2023. The

dividend will be paid to shareholders, who are recorded on April 29, 2024, in the

company’s list of shareholders maintained by Euroclear Finland Oy. The dividend

will be paid on May 7, 2024.

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 2024 will be EUR 820–900 million, and its

adjusted operating profit will be EUR 57–65 million.

The outlook is based on customer forecasts and Scanfil’s normal forecasting

process. The outlook is associated with uncertainty related to the economy, customer

destocking and end-demand.

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

There were no significant events after the reporting perriod.

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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ANNUAL REPORT 2023/34

SHARES AND SHAREHOLDERS

Shares and share capital

Scanfil plc has a total of 65,269,993 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 authorizations in force

The Scanfil plc’s Board of Directors did not have any authorizations to issue

convertible bonds or bonds with warrants.

The Annual General Meeting (“AGM”) of Scanfil plc held on April 27, 2023 authorized

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 27, 2023 the AGM meeting authorized the board of directors to decide on

share issue and on the granting of special rights entitling to shares. The number of

shares to be issued based on the authorization can be no more than 12,000,000

shares. The board of directors decides on all share issues and special rights entitling

to shares and their conditions. The authorization applies to both the issuance of new

shares and own shares transfer of shares. Share issues and special rights entitling

to shares issuing may take place in deviation from the shareholders' pre-emptive

right (directed issue). The authorization is valid until 30 June 2024.

Own shares

The company held 78,738 of its own shares on December 31, 2023.

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 0.23 per share, totalling EUR

14,993,988,65

be paid for the financial year

ending on December 31, 2023.

Share price development, trading and market value

During 2023, the number of Scanfil plc shares traded on Nasdaq Helsinki Ltd was

6,730,900 comprising 10% of all outstanding shares. The value of shares traded

was EUR 57.9 million and the average price was EUR 8.60. The market value of the

share capital was EUR 511.1 million on December 31, 2023. The highest trading price

was EUR 11.58 and the lowest EUR 6.4. The closing price was EUR 7.83.

Information on shareholders

On December 31, 2023, Scanfil plc had a total of 8,302 shareholders, 86,1% of

whom owned a maximum of 1,000 shares in the company. The ten major share-

holders owned 71.0% of the shares. Nominee-registered shares accounted for

5.5% 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 10,197,800 shares on December 31,

2023, comprising 15.6% of the company’s shares and votes.

SHARE PRICE DEVELOPMENT IN 2022 COMPARED TO THE GENERAL INDEX

3.12.20214.11.20214.10.20216.9.20214.8.20215.7.20214.6.20214.5.20216.4.20214.3.20214.2.2021

2.1. 2.2. 2.3. 2.4. 2.5. 2.6. 2.7. 2.8. 2.9. 2.10. 2.11. 2.12.

31.12.

Scanfil plc

OMX Helsinki Index

ANNUAL REPORT 2023/35

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BREAKDOWN OF SHARE OWNERSHIP

BREAKDOWN OF SHARE OWNERSHIP BY NUMBER OF SHARES HELD ON DECEMBER 31, 2023

INFORMATION ON SHAREHOLDERS

MAJOR SHAREHOLDERS ON DECEMBER 31, 2023

Number of

shareholders Share %

Number

of shares Share %

Corporations 290 3.49 9,060,169 13.88

Financial and insurance institutions 30 0.36 6,044,324 9.26

Public entities 5 0.06 2,246,038 3.44

Non-profit-making organisations 33 0.40 2,093,146 3.21

Households 7,916 95.35 45,288,619 69.39

Non-Finnish owners 28 0.34 537,697 0.82

Total 8,302 100.00 65,269,993 100.00

BREAKDOWN OF SHARE OWNERSHIP BY OWNER CATEGORY ON DECEMBER 31, 2023

Percentage

of shares

and votes, %

1. Takanen Harri 9,913,146 15.19

2. Takanen Jarkko 8,251,169 12.64

3. Varikot Oy 7,606,442 11.65

4. Takanen Jorma Jussi 6,474,305 9.92

5. Tolonen Jonna 3,351,950 5.14

6. Pöllä Reijo 3,328,745 5.10

7. Laakkonen Mikko 2,531,187 3.88

8. Riitta ja Jorma J. Takasen säätiö 1,900,000 2.91

9. Takanen Martti 1,647,018 2.52

10. Sijoitusrahasto Aktia Capital 1,366,203 2.09

Ten largest shareholders, in total 46,370,165 71.04

Number of shares

Number

of shares

pcs

Percentage

of owners

Total number

of shares

and votes

pcs

Percentage

of shares

and votes

1–100 2,958 35.63 127,231 0.19

101–1,000 4,187 50.43 1,608,271 2.46

1,001–10,000 1,004 12.09 2,705,338 4.14

10,001–100,000 117 1.41 3,694,753 5.66

100,001–9,999.999 36 0.43 57,134,400 87.54

Total 8,302 100.00 65,269,993 100.00

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2023 2022 2021 2020 2019

Financial key ratios

Turnover, EUR m 901.6 843.8 695.7 595.3 579.4

Turnover, growth from previous year, % 6.9 21.3 16.9 2.7 2.9

Operating profit, EUR m 61.3 45.4 39.6 44.4 35.3

Operating profit, % of turnover 6.8 5.4 5.7 7.5 6.1

Profit/loss for the period, EUR m 48.2 35.0 29.8 36.9 28.1

Profit/loss for the period, % of turnover 5.3 4.2 4.3 6.2 4.8

Return on equity, % 19.6 16.1 15.2 21.1 18.0

Return on investment, % 19.4 14.6 15.3 19.5 17.0

Interest-bearing liabilities, EUR m 73.0 106.3 85.2 44.0 66.6

Gearing, % 19.5 37.8 28.9 9.9 27.7

Equity ratio, % 53.7 45.3 45.3 54.3 49.1

Gross investments in fixed assets, EUR m 22.2 19.0 15.5 9.4 21.1

Gross investments in fixed assets, % of turnover 2.5 2.3 2.2 1.6 3.6

Average number of employees for the period 3,671 3,403 3,267 3,387 3,530

2023 2022 2021 2020 2019

Key indicators per share

Earnings per share, EUR 0.74 0.54 0.46 0.57 0.44

Shareholders’ equity per share, EUR 4.08 3.49 3.18 2.82 2.58

Dividend per share, EUR 0.23 0.21 0.19 0.17 0.15

Dividend per earnings, % 31.1 38.9 41.3 29.8 34.3

Effective dividend yield, % 2.94 3.19 2.55 2.61 3.07

Price-to-earnings ratio (P/E) 10.6 12.2 16.2 11.4 11.2

Share trading

No. of shares traded, thousands 6,731 4,166 4,415 6,290 3,526

Percentage of total shares, % 10.0 6.4 6.8 9.7 5.4

Share performance

Lowest price for year, EUR 6.40 4.90 6.24 3.26 3.73

Highest price for year, EUR 11.58 8.06 9.02 6.70 4.96

Average price for year, EUR 8.60 6.59 7.61 5.07 4.16

Price at the end of year, EUR 7.83 6.58 7.46 6.52 4.89

Market value of share capital at the end of financial

year, EUR million

511.1 427.4 484.6 422.7 316.4

Share-issue adjusted number of shares

At the end of the period, thousands 65,270 64,960 64,960 64,830 64,700

On average during the period, thousands 64,864 64,830 64,701 64,387 64,296

KEY RATIOS

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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

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CONSOLIDATED FINANCIAL STATEMENT, IFRS

EUR THOUSAND Note 1.1.-31.12.2023 1.1.-31.12.2022

Turnover 1.1 901,564 843,756

Other operating income 1.2 861 855

Changes in inventories of finished goods

and work in progress

-275 273

Use of materials and supplies 1.3 -631,601 -610,201

Employee benefit expenses 1.4 -120,845 -104,045

Depreciation and amortisation 3.5 -19,104 -17,456

Other operating expenses 1.5 -69 285 -67 801

Operating profit 61,314 45,381

Financial income 4.2 4,013 366

Financial expense 4.2 -3,713 -4,033

Profit before tax 61,614 41,714

Income tax 1.6 -13,399 -6,670

Net profit for the period 48,215 35,044

Attributable to:

The parent company owners 48,215 35,044

Earnings per share calculated on the profit attributable

to shareholders of the parent company:

undiluted earnings per share 1.7 0.74 0.54

diluted earnings per share 1.7 0.74 0.54

EUR THOUSAND Note 1.1.-31.12.2023 1.1.-31.12.2022

Net profit for the period 48,215 35,044

Other comprehensive income

Items that may later be recognised in profit or loss

Translation differences 4.8 2,972 -5,203

Cash flow hedges 4.8 -35 1,029

Other comprehensive income, net of tax 2,937 -4,173

Total comprehensive income 51,152 30,871

Total comprehensive income attributable to:

The parent company owners 51,152 30,871

Consolidated Income Statement Consolidated Statement of Comprehensive Income

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EUR THOUSAND Note 31.12.2023 31.12.2022

ASSETS

Non-current assets

Property, plant and equipment 3.3 62,697 55,564

Right-of-use-assets 3.4 22,616 24,141

Goodwill 3.1 7,678 7,664

Other intangible assets 3.2 10,391 10,799

Other investments 4.6 529 529

Deferred tax assets 1.6 7,694 7,843

111,605 106,540

Current assets

Inventories 2.2 209,003 229,291

Trade and other receivables 2.3 173,504 164,817

Advance payments 923 2,292

Current tax 1,770 1,776

Cash and cash equivalents 4.1 21,222 20,779

406,423 418,954

Total assets 518,027 525,494

EUR THOUSAND Note 31.12.2023 31.12.2022

EQUITY AND LIABILITIES

Shareholder's equity and liabilities 4.8

Share capital 2,000 2,000

Reserve for invested unrestricted equity fund 34,806 33,425

Fair Value Reserve 924 959

Other reserves 2,650 2,650

Translation differences -4,588 -7,560

Retained earnings 230,246 195,120

266,038 226,594

Total equity 266,038 226,594

Non-current liabilities

Provisions 5.1 1,105 801

Interest bearing liabilities 4.3 36,000

Lease liabilities 4.3 18,606 20,439

Deferred tax liabilities 1.6 5,703 4,615

25,414 61,854

Current liabilities

Trade and other liabilities 2.4 166,750 183,685

Current tax 4,886 3,084

Provisions 5.1 578 378

Interest bearing liabilities 4.3 50,413 45,538

Lease liabilities 4.3 3,948 4,360

226,575 237,046

Total liabilities 251,989 298,900

Total shareholder's equity and liabilities 518,027 525,494

Consolidated Statement of Financial Position

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EUR THOUSAND Note 1.1.-31.12.2023 1.1.-31.12.2022

Cash flow from operating activities

Net profit 48,215 35,044

Adjustments for the net profit

Transactions without payment:

Change in provisions 413 -1,031

Capital gain / loss for fixed assets -16 -169

Exchange rate differences 2,518 -2,311

Other adjustments 540 395

Depreciation and amortisation 19,104 17,456

Financial income -3,959 -366

Financial expenses 3,659 4,033

Taxes 13,391 6,624

Change in net working capital:

Change in accounts receivable and other receivables -6,491 -18,099

Change in inventories 24,002 -39,584

Change in accounts payable and other liabilities -20,078 14,568

Change in net working capital total -2,566 -43,115

Paid interests and other financial expenses -3,644 -2,304

Interest received 493 364

Taxes paid -9,212 -4,431

Net cash from operating activities 68,936 10,189

EUR THOUSAND Note 1.1.-31.12.2023 1.1.-31.12.2022

Cash flow from investing activities

Investments in tangible and intangible assets 3.2, 3.3 -22,168 -18,975

Sale of tangible and intangible assets 258 461

Net cash from investing activities -21,909 -18,515

Cash flow from financing activities

Share subscriptions based on stock options 1.4 1,381 260

Proceeds from short-term loans 25,917

Repayment of short-term loans -23,994 -190

Repayment of long-term loans -6,000 -6,000

Repayment of lease liabilities -4,185 -3,742

Paid dividends -13,621 -12,316

Net cash from financing activities -46,419 3,929

Net increase/decrease in cash and cash equivalents 608 -4,397

Cash and cash equivalents at beginning of period 20,779 25,345

Changes in exchange rates -165 -169

Cash and cash equivalents at end of period 21,222 20,779

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 Note

capital

Reserve for

invested

unrestricted

equity fund

Fair

value

reserve

Other

reserves

Translation

differ-

ences

Retained

earnings

Equity

total

Equity 1.1.2023 2,000 33,425 959 2,650 -7,560 195,120 226,594

Comprehensive income

Net profit for the period 48,215 48,215

Other comprehensive income

(net of tax)

Translation differences 4.8 2,972 2,972

Cash flow hedges 4.5, 4.8 -35 -35

Total comprehensive income -35 2,972 48,215 51,152

Transactions with owners

Option Scheme 532 532

Paid dividends -13,621 -13,621

Share options exercised 1,381 1,381

Equity 31.12.2023 2,000 34,806 924 2,650 -4,588 230,246 266,038

Equity attributable to equity holders of the parent company

EUR THOUSAND Note

capital

Reserve for

invested

unrestricted

equity fund

Fair

value

reserve

Other

reserves

Translation

differences

Retained

earnings

Equity

total

Equity 1.1.2022 2,000 33,165 -71 2,650 -2,357 172,043 207,430

Comprehensive income

Net profit for the period 35,044 35,044

Other comprehensive income

(net of tax)

Translation differences 4.8 -5,203 -5,203

Cash flow hedges 4.5, 4.8 1,029 1,029

Total comprehensive income 1,029 -5,203 35,044 30,871

Transactions with owners

Option Scheme 349 349

Paid dividends -12,316 -12,316

Share options exercised 260 260

Equity 31.12.2022 2,000 33,425 959 2,650 -7,560 195,120 226,594

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Accounting principle Note IFRS standardTurnover and details of business segments 1.1 IFRS 15, IFRS 8Employee benefit expenses 1.4 IAS 19, IFRS 2Income taxes and deferred taxes 1.6 IAS 12Inventories 2.2 IAS 2Goodwill and impairment testing 3.1 IAS 36Intangible assets 3.2 IAS 38, IFRS 3Property, plant and equipment 3.3 IAS 16, IAS 23Right-of-use-assets 3.4 IFRS 16Financial income and expenses 4.2 IFRS 9, IAS 32, IAS 39, IFRS 7Financial liabilities and Cash and cash equivalents 4.1, 4.3 IFRS 9, IAS 32, IAS 39, IFRS 7, IFRS 13Provisions 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. The parent

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 3,600.

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, 2023, 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.

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.

The consolidated financial statements have been prepared for the period January

1 – December 31, 2023.

In its meeting held on February 22, 2024, 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.

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ANNUAL REPORT 2023/43

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 2023 and 2022.

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.

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.

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. The war in Ukraine causes uncertainty, but it does not

have a significant impact on the management’s judgment 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 corporate tax and deferred tax assets.

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ANNUAL REPORT 2023/44

New and amended standards applied in the financial year

ended 31 December 2023

Scanfil Group has observed the following new and amended standards from the

beginning of 2023:

Disclosure of Accounting Policies – Amendments to IAS 1 Presentation of Finan-

cial Statements and IFRS Practice Statement 2 Making Materiality Judgements

(effective for financial years beginning on or after 1 January 2023)

The amendments clarify the application of materiality to disclosure of account-

ing policies.

Definition of Accounting Estimates – Amendments to IAS 8 Accounting Policies,

Changes in Accounting Estimates and Errors (effective for financial years begin-

ning on or after 1 January 2023)

The amendments clarify how companies should distinguish changes in accounting

policies from changes in accounting estimates, with a primary focus on the defini-

tion of and clarifications on accounting estimates.

Amendment to standard had no impact on Scanfil plc’s financial statements.

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)

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.

As a result of the amendment in the standard, Scanfil Oyj has presented separate

deferred tax assets and liabilities of leases in the notes of the consolidated finan-

cial statements.

International Tax Reform — Pillar Two Model Rules – Amendments to IAS 12 Income

Taxes (the temporary mandatory exception is effective immediately upon publica-

tion on 28 May 2023; disclosures requirements are effective for annual reporting

periods beginning on or after 1 January 2023).

The amendments give relief from accounting for deferred taxes arising from the

OECD’s (Organisation for Economic Co-operation and Development) international

tax reform and require new disclosures to compensate for the potential loss of

information resulting from the relief.

Amendment to standard had 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

Amendments to IAS 1 Presentation of Financial Statements *: Classification of

Liabilities as Current or Non-current Date; Classification of Liabilities as Current

or Non-current – Deferral of Effective Date; Non-current Liabilities with Covenants

(effective for financial years beginning on or after 1 January 2024, early application

is permitted)

The amendments are to promote consistency in application and clarify the

requirements for determining if a liability is current or non-current. The amendments

specify that covenants to be complied with after the reporting date do not affect

the classification of debt as current or non-current at the reporting date. The

amendments require to disclose information about these covenants in the notes

to the financial statements. The amendments also clarify transfer of a company’s

own equity instruments is regarded as settlement of a liability. Liability with any

conversion options might affect classification as current or non-current unless

these conversion options are recognized as equity under IAS 32.

Supplier Finance Arrangements – Amendments to IAS 7 Statement of Cash

Flows and IFRS 7 Financial Instruments: Disclosures * (effective for financial years

beginning on or after 1 January 2024, early application is permitted)

The amendments enhance the transparency of supplier finance arrangements and

their effects on a company’s liabilities, cash flows and exposure to liquidity risk.

Amendments require to disclose quantitative and qualitative information about

supplier finance programs.

Lack of Exchangeability – Amendments to IAS 21 The Effects of Changes in Foreign

Exchange Rates * (effective for financial years beginning on or after 1 January 2025,

early application is permitted)

The amendments require to apply a consistent approach in assessing whether a

currency can be exchanged into another currency and, when it cannot, in determining

the exchange rate to use and the disclosures to provide.

Sale or Contribution of Assets between an Investor and its Associate or Joint

Venture – Amendments to IFRS 10 Consolidated Financial Statements and IAS

28 Investments in Associates and Joint Ventures * (available for optional adoption,

effective date deferred indefinitely)

The amendments address the conflict between the existing guidance on consolidation

and equity accounting and require the full gain to be recognised when the assets

transferred meet the definition of a ‘business’ under IFRS 3 Business Combinations.

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NOTES TO CONSOLIDATED FINANCIAL

STATEMENTS

1. ITEMS AFFECTING THE RESULT

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.

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.

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

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

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.

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In 2023, the Group’s turnover was EUR 901.6 (843.8) million, an increase of 6.9%

compared to the previous year. Turnover includes EUR 19.3 (80.7) million of spot-

market purchases and some other costs related to securing customer deliveries. In

order to ensure the availability of materials and components and reliability of delivery,

the company had to buy especially semiconductor components at a significantly

higher price than the normal price on the spot market. The extra costs incurred have

been invoiced to the customers. This invoicing was low-margin or no-margin for

Scanfil. Profit is realized at a point of time, when the products in which the materials

have been used are transferred to the customer’s ownership.

Turnover by customer segment developed as follows:

ADVANCED CONSUMER APPLICATIONS

Turnover in 2023 was EUR 211.5 (247.8) million, an increase of 14.6% compared to

previous year. The turnover in 2022 was heavily increased by spot-market operations.

Separately agreed customer invoicing was EUR 4.3 (36.1) million.

AUTOMATION & SAFETY

Turnover in 2023 was EUR 186.7 (183.8) million, an increase of 1.6% compared to

previous year. Separately agreed customer invoicing was EUR 4.7 (12.0) million.

CONNECTIVITY

Turnover in 2023 was EUR 48.7 (38.5) million, an increase of 26.5% compared to

previous year. Demand increased, especially for advanced hearing protection.

Separately agreed customer invoicing for the segment was EUR 0.5 (1.2) million.

ENERGY & CLEANTECH

Turnover in 2023 was EUR 301.8 (222.4) million, an increase of 35.7% compared to

previous year. Demand was good for recycling, green energy, and energy efficiency

solutions. Separately agreed customer invoicing was EUR 6.7 (18.4) million.

MEDTECH & LIFE SCIENCE

Turnover in 2023 was EUR 152.9 (151.2) million, an increase of 1.1% compared to

previous year. Separately agreed customer invoicing was EUR 3.1 (13.0) million.

In 2023, the largest customer accounted for about 13% (19%) of turnover and the

top ten customers accounted for about 55% (55%) of turnover.

Impact of the war in Ukraine and Middle East conflict in the

financial year

Scanfil doesn’t have sales to Russia or material purchases from Russia and therefore

the war in Ukraine did not have direct impact on Scanfil revenue or profitability.

Conflict in the Middle East had no significant impact on the group's turnover or

profitability in the financial year of 2023.

BREAKDOWN OF TURNOVER BY CUSTOMER SEGMENT IN 2023 AND 2022

2023

Advanced Consumer Applications 23 %

Automation & Safety 21 %

Connectivity 5 %

Energy & Cleantech 34 %

Medtech & Life Science 17 %

2022

Advanced Consumer Applications 29 %

Automation & Safety 22 %

Connectivity 5 %

Energy & Cleantech 26 %

Medtech & Life Science 18 %

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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.

2023 2022EUR MILLION Goods Services Total Goods Services TotalCustomer SegmentsAdvanced Consumer Applications 205.9 5.7 211.5 241.7 6.1 247.8Automation & Safety 158.9 27.8 186.7 157.4 26.4 183.8Connectivity 47.4 1.3 48.7 35.0 3.5 38.5Energy & Cleantech 297.0 4.8 301.8 218.3 4.2 222.4Medtec & Life Science 145.2 7.7 152.9 142.3 8.9 151.2Total 854.4 47.2 901.6 794.7 49.1 843.8

Timing of revenue recognitionGoods and services transferred at a point of time 854.4 44.6 899.0 794.7 44.9 839.5Services transferred over time 2.6 2.6 4.2 4.2Total 854.4 47.2 901.6 794.7 49.1 843.8

Major customersEUR THOUSAND 2023 % of turnover 2022 % of turnoverCustomer 1 116,090 13 % 157,835 19 %Customer 2 78,392 9 % 71,078 8 %Customer 3 76,506 8 % 53,775 6 %Total 270,989 282,688

Contractual amounts recognised on the balance sheet

The table below presents contractual receivables, assets and liabilities recognised on the balance sheet. Contract liabilities

are advances received from customers.

EUR THOUSAND 2023 2022Trade receivables, which are included in ”Trade and other receivables” 158,956 149,576Contract assets 143Contract liabilities 22,692 25,029

Current 158,956 149,576Total 158,956 149,576

Trade and other receivables

EUR THOUSAND 2023 2022Contract assetsTransferred to trade receivables -139 -87Contract liabilitiesRecognised in Profit and Loss -25,029 -15,498Increase in advances received from customer 22,692 25,029

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 areasEUR THOUSAND 2023 2022DomicileFinland 28,491 27,616Sweden 74,028 65,937Poland 183,530 181,921China 101,038 114,423Germany 41,985 45,664Estonia 54,850 60,974USA 26,257 20,985Hungary 156 131Total 510,333 517,652

Turnover by location of customers (delivery address)EUR THOUSAND 2023 2022DomicileFinland 121,900 123,421Sweden 209,407 151,724Germany 104,295 101,373Poland 60,446 32,016Rest of Europe 207,470 201,864Asia 121,426 159,341USA 73,335 68,917Other 3,284 5,099Total 901,564 843,756

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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.

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.

OTHER OPERATING INCOME, EUR THOUSAND 2023 2022Proceeds from sale of property, plant and equipment 28 169Allowances and compensations 491 381Rental income 2 20Other 340 285Total 861 855

1.3 Use of materials and supplies

USE OF MATERIALS AND SUPPLIES, EUR THOUSAND 2023 2022Purchases during the period 616,322 621,193Change in inventories 15,279 -10,992Total 631,601 610,201

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 2023 2022Salaries, wages and fees 95,047 82,182Taxable income from option scheme 532 349Pension costs - defined-contribution schemes 14,352 12,508Other indirect employee expenses 10,914 9,007Total 120,845 104,045

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 2023 2022Europe 302 312Abroad 3,369 3,091Total 3,671 3,403

PERSONNEL BY COUNTRY ON DECEMBER 31, 2023, IN TOTAL, 3,642 EMPLOYEES

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 scheme 2019

On April 24, 2019, the Annual General Meeting accepted the 2019 option scheme (A)–(C). Based on the 2019 option scheme,

maximum of 900,000 option rights 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 based on 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. Based on 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. All option rights granted from the 2016 option program have been marked.

Option scheme 2022

On 21 April 2022, the Annual General Meeting of Scanfil plc decided to authorize the Board of Directors to decide on granting

stock options rights to key personnel of the Scanfil Group and to decide on the terms and conditions of the maximum amount

of 1,200,000 option rights. Based on the authorization, the Board of Directors has on 28 October 2022 decided on general

terms and conditions of option plan (“Option plan 2022”) and issuing 1,200,000 option rights. The total amount of the option

program is a maximum of 1,200,000 option rights and they are given free of charge. Of these options, 400,000 will be marked

with the codes 2022AI and 2022AII, 400,000 2022BI and 2022BII and 400,000 2022CI and 2022CII. The options entitle the

holder to subscribe for a maximum of 1,200,000 of the company’s new or existing shares. The option rights whose goals are

not met will expire as determined by the Board.

The subscription period for option right 2022AI and 2022AII is 1 May 2025 – 30 April 2027, for option right 2022BI and 2022BII

1 May 2026 – 30 April 2028, and for option right 2022CI and 2022CII 1 May 2027 – 30 April 2029. The share subscription price

for 2022AI and 2022AII are the Company’s trading volume weighted by the Company’s average share price on the Nasdaq

Helsinki 1 November 2022 – 30 November 2022, for option rights 2022BI and 2022BII the trading volume weighted by the

Company’s average share price on the Nasdaq Helsinki 1 November 2023 – 30 November 2023, and for 2022CI and 2022CII

the trading volume weighted by the Company’s average share price on the Nasdaq Helsinki 1 November 2024 – 30 November

2024. The share subscription price is entered in the Company’s reserve for invested non-restricted equity.

The board decides on the granting of stock options and all related conditions.

On 27 October 2023 Scanfil plc’s Board of Directors decided on granting 324,000 stock option rights to key personnel of

the Scanfil Group. Granted option rights shall be marked as “2022BI” and “2022BII”. Each option right entitles its holder

to subscribe for one (1) of the company’s new shares or shares in its possession. The subscription period for option rights

2023

Finland 8 %

Germany 7 %

USA 5 %

Poland 39 %

China 14 %

Estonia 14 %

Sweden 13 %

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OPTION ARRANGEMENT 31.12.2023 2022BI and 2022BII 2022AI and 2022AII 2019C 2019B 2019AGrant date 27.10.2023 27.10.2022 25.10.2021 27.10.2020 27.11.2019Amount of granted 324,000 316,000 220,000 200,000 190,000instruments (pcs)Subscription price (EUR) 7.81 6.12 7.37 4.34 4.04Fair value (EUR) 1.91 1.64 1.66 1.79 1.08Share price at time of 8.04 5.98 7.74 5.16 4.42granting (EUR)Term of validity (years) 4.5 4.5 4.5 4.5 4.41.5.2026-1.5.2025-1.5.2024-1.5.2023-1.5.2022-Subscription period30.4.202830.4.202730.4.202630.4.202530.4.2024Excercised options, pcs 160,000 190,000Returned options to company, pcsNumber of options 324,000 316,000 220,000 40,000 0outstanding

1.5 Other operating expenses

Other operating expenses include the following significant items:

OTHER OPERATING EXPENSES, EUR THOUSAND 2023 2022Hired labour 23,998 23,881Subcontracting 2,114 1,736Sales freight 4,266 5,603Energy 5,125 4,589Tools & repair and maintenance of tools 7,618 7,319Rents 1,373 1,315Maintenance expenses 5,015 4,539Travel, marketing and vehicle expenses 3,146 2,461Other employee expenses 4,612 4,079Bought services 3,610 5,558ICT expenses 3,727 3,257Other operating expenses 4,682 3,464Total 69,285 67,801

During the 2023 and 2022 financial periods, the company’s main auditor was the auditing company KPMG Oy Ab.

Services other than auditing services carried out by KPMG Oy Ab totalled EUR 27 thousand during the 2023 financial period.

2022BI and 2022BII is 1 May 2026 – 30 April 2028. The subscription price of option rights 2022BI and 2022BII is the trade

volume weighted average price of the Scanfil plc share on Nasdaq Helsinki Ltd during the period of 1– 30 November 2023.

On 27 October 2022 Scanfil plc’s Board of Directors decided on granting 316,000 stock option rights to key personnel of

the Scanfil Group. Granted option rights shall be marked as “2022AI” and “2022AII”. Each option right entitles its holder

to subscribe for one (1) of the company’s new shares or shares in its possession. The subscription period for option rights

2022AI and 2022AII is 1 May 2026 – 30 April 2027. The subscription price of option rights 2022BI and 2022BII is the trade

volume weighted average price of the Scanfil plc share on Nasdaq Helsinki Ltd during the period of 1– 30 November 2022.

In 2023, the expense recognition of the option scheme was EUR 532 (349) thousand.

In 2023, a total of 170,000 new shares were subscribed under option rights 2019(A). The subscription price of EUR 686,800

of subscriptions made under the option rights has been recognised in the invested unrestricted equity fund. The shares

subscribed with the stock options have been registered with the Trade Register on 29.5.2023.

In 2023, a total of 20,000 Company’s shares were subscribed under option rights 2019(B). The subscription price of EUR 86,800

of subscriptions made under the option rights has been recognised in the invested unrestricted equity fund. Scanfil transferred

20,000 treasury shares held by the company to subscribers on the basis of the subscriptions made under the option rights.

In 2023, a total of 140,000 new shares were subscribed under option rights 2019(B). The subscription price of EUR 607,600

of subscriptions made under the option rights has been recognised in the invested unrestricted equity fund. The shares

subscribed with the stock options have been registered with the Trade Register on 29.5. and 7.6.2023.

AUDITOR’S REMUNERATION, EUR THOUSAND 2023 2022Audit fees 386 381Auditors statement 10 17Tax consulting 36 47Total 432 445

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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.

INCOME TAXES, EUR THOUSAND 2023 2022Current tax 11,546 7,263Tax expense of previous years 365 -251Deferred taxes 1,488 -343Total 13,399 6,670

RECONCILIATION OF TAX EXPENSE IN THE INCOME STATEMENT AND TAXES CALCULATED AT THE TAX RATE

APPLICABLE IN FINLAND OF 20% (20% IN 2022)

Earnings before taxes 61,614 41,714Taxes calculated at domestic tax rate 12,323 8,343Different tax rates of foreign subsidiaries -663 -608Tax at source on dividends paid in China 457Witholding tax of unpaid dividends 1,637Cancelling witholding tax of unpaid dividends -790Tax free items 0 -39Other 10 0Taxes from previous years -365 -251Taxes in income statement 13,399 6,670Effective tax rate, % 21.7 16.0Tax rate of the parent company, % 20.0 20.0

Scanfil operates in jurisdictions which implement the international tax reform known as OECD Pillar Two.

Pillar Two regulations are effective from 1 January 2024, and for the year ended 31 December 2023 Scanfil has applied the

mandatory exception to recognizing and disclosing information about deferred tax assets and liabilities arising from Pillar

Two income taxes.

Scanfil has assessed the impacts of Pillar Two regulation in relation to the taxation of its subsidiaries. In most of the jurisdictions

Scanfil operates in the effective tax rate clearly exceeds the 15 % threshold. Therefore, Scanfil does not expect material

top-up tax payments to arise from these jurisdictions. An exception to this is Estonia, where corporate income tax is paid in

connection with profit distribution. For this reason it is possible that the group will be subject to top-up taxes in financial years

taking place after 31 December 2023.

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.

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DEFERRED TAX ASSETS AND LIABILITIES

* The Group has applied the amendment to IAS 12 Income Taxes that entered into force on 1 January 2023.

As a result of the amendment to the standard, Scanfil Oyj has presented in the notes to the consolidated financial statements

a separate deferred tax assets and deferred tax liabilities from their leases.

Other items include EUR 1.6 million for deferred tax assets related to cost accruals in Poland.

RecognisedRecognised under other through comprehensive Translation EUR THOUSAND 1.1.2023profit and lossincomedifferences 31.12.2023Deferred tax assets:Investment grant to Poland 397 19 416Inventories 891 -123 32 800Provisions 757 82 63 902Fixed assets 569 39 9 617Rental agreements * 5,001 -491 -109 4,401Other 2,396 -863 38 1,571Losses 3,127 37 3,164Net against deferred tax liabilities -4,823 527 119 -4,176Total 7,918 -395 171 7,694Deferred tax liabilities:Long-term customer relationships -1,335 345 12 -977Rental agreements * -4,823 527 119 -4,176Unpaid dividends -1,522 -1,637 -3,159Fixed assets -1,084 31 40 -1,013Other -674 168 6 -54 -554Net against deferred tax assets 4,823 -527 -119 4,176Total -4,615 -1,093 6 -1 -5,703

RecognisedRecognised under other through comprehensive Translation EUR THOUSAND 1.1.2022profit and lossincomedifferences 31.12.2022Deferred tax assets:Investment grant to Poland 803 -788 -15 0Inventories 669 231 -9 891Provisions 689 80 -12 757Fixed assets 629 42 1 672Other 3,351 -864 -18 -74 2,396Losses 2,360 767 3,127Total 8,501 -531 -18 -110 7,843Deferred tax liabilities:Long-term customer relationships -1,759 364 60 -1,335Unpaid dividends -2,312 790 -1,522Fixed assets -1,172 95 -7 -1,084Other -48 -375 -237 -14 -674Total -5,290 874 -237 39 -4,615

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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 2023 2022Net profit for the period attributable to equity holders 48,215 35,044of the parent companyNumber of shares, undiluted (1,000 pcs) 64,864 64,830Earnings per share, undiluted, EUR 0.74 0.54Dilution effect of stock options (1,000 pcs) 172 157Number of shares, diluted (1,000 pcs) 65,036 65,987Earnings per share, diluted, EUR 0.74 0.54

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 23.7% of net sales, compared to 25.1% at the end of the previous year. The net working capital

percentage decreased compared to the previous year due to the decrease in the value of inventories.

NET WORKING CAPITAL, EUR THOUSAND 2023 2022Net working capital Inventories 209,003 229,291 Trade receivables 158,956 149,576 Accrued income, other receivables and income tax receivables 16,318 17,017 Advance payments 923 2,292 Trade payables -111,842 -129,003 Advances received -22,692 -25,029 Accrued expenses, other liabilities and income tax liabilities -37,101 -32,738Total 213,565 211,405Net working capital, % of turnover 23.7 % 25.1 %

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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 2023 2022Materials and supplies 178,039 197,243Work in progress 18,660 19,188Finished goods 12,304 12,859Total 209,003 229,291

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 group’s management, there is no significant credit loss risk in trade receivables. The group has approximately

110 active customers, of which the largest customers are Nordic market leaders in their industries. The client companies are

spread over several different industries and geographical areas. In general, the business of the Group’s key customers is not

particularly sensitive to economic cycles and the life cycles of products are often long. Overdue accounts receivable are regularly

monitored and actively collected. The creditworthiness of new customers is checked and only standard payment terms are

granted to customers. Neither the war in Ukraine nor the general uncertain economic situation has had a significant impact.

TRADE AND OTHER RECEIVABLES, EUR THOUSAND 2023 2022Trade receivables 158,956 149,576Accrued income 10,422 9,263Value-added tax receivables 3,068 3,394Other receivables 1,057 2,585Total 173,504 164,817

Impairment losses on inventories during the financial year amounted to EUR 3.3 (3.6) million.

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AGE DISTRIBUTION OF TRADE RECEIVABLES, EUR THOUSAND 2023 2022Unmatured 134,019 123,191Matured1–30 days 21,295 20,89531–90 days 2,544 3,16891–180 days 880 1,420181–365 days 343 791Over 365 days 38 193Provision for bad debt -163 -83Total 158,956 149,576

Book value Estimated credit Bad debt 2023, EUR THOUSAND(gross)lossesprovisionUnmatured 134,019 0.01 % 14Matured1 - 30 days 21,295 0.02 % 431 - 90 days 2,544 0.50 % 1391 - 180 days 880 2.00 % 18181 - 365 days 343 25.00 % 86Over 365 days 38 75.00 % 29Total 159,119 163

Expected credit losses

At the end of the financial period, the credit loss provision recognised for covering uncertain receivables stood at EUR 163 (83) thousand.

During the financial period, credit losses recognised from trade receivables were EUR 197 (47) thousand.

Scanfil Group's credit risk is described in note 4.7.

TRADE AND OTHER PAYABLES, EUR THOUSAND 2023 2022Trade payables 111,842 129,003Accrued liabilities 22,181 22,104Advance payments received 22,692 25,029Other creditors 10,034 7,549Total 166,750 183,685The most significant items included in accrued liabilities:Employee expenses 14,550 12,090Interests 161 98Financial derivatives 476 893Other accrued liabilities 6,994 9,024Total 22,181 22,104

2.4 Trade and other liabilities

Book value Estimated credit Bad debt 2022, EUR THOUSAND(gross)lossesprovisionUnmatured 123,191 0.01 % 12Matured1 - 30 days 20,895 0.02 % 431 - 90 days 3,168 0.50 % 1691 - 180 days 1,420 2.00 % 28181 - 365 days 791 25.00 % 9Over 365 days 193 75.00 % 13Total 149,659 83

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3. NON-CURRENT ASSETS

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.

GOODWILL, EUR THOUSAND 2023 2022Cost at 1 Jan. 7,664 8,166Exchange rate differences 14 -502Carrying amount at 31 Dec. 7,678 7,664

DISCOUNT RATE OF CASH FLOWS BEFORE TAXES 2023 2022Scanfil Electronics GmbH 10.0 % 12.2 %Scanfil Poland Sp. z o.o. 13.6 % 19.8 %Scanfil Malmö Ab 9.4 % 11.2 %Scanfil Åtvidaberg AB 9.4 % 11.1 %

ALLOCATION OF GOODWILL TO CASH-GENERATING UNITS, EUR THOUSAND 2023 2022Scanfil Oü 111 111Scanfil Poland Sp. z o.o. 3,136 3,129Scanfil Malmö Ab 1,184 1,181Scanfil Åtvidaberg AB 1,598 1,594Scanfil Electronics GmbH 1,649 1,649Total 7,678 7,664

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.

Impairment testing

No depreciation is made of goodwill; instead, goodwill is tested at least annually for possible impairment. For that, goodwill is

allocated to five 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 2023 and 2022, no goodwill impairments were recorded.

3.1 Goodwill

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20232022SENSITIVITY ANALYSISChange % unitsChange % unitsDiscount rate before taxesScanfil Poland Sp. z o.o. + 9.6 + 4.8Scanfil Malmö Ab +37.9 +18.7Scanfil Åtvidaberg AB +21.2 +18.6Scanfil Electronics GmbH + 3.6 + 1.9Profitability (EBITDA %) Scanfil Poland Sp. z o.o. - 4.2 - 1.9Scanfil Malmö Ab - 7.4 - 5.3 Scanfil Åtvidaberg AB - 5.5 - 5.5Scanfil Electronics GmbH - 2.6 - 1.3Terminal growth rateScanfil Poland Sp. z o.o. - 35.6 - 29.3Scanfil Malmö Ab N/A N/AScanfil Åtvidaberg AB N/A N/AScanfil Electronics GmbH - 4.2 - 4.9

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.

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.

According to the sensitivity analysis the first impairment loss would take place in Scanfil GmbH if the EBITDA % of the CGU was reduced by 2.6

percentage units or the discount rate was raised by 3.6 percentage units. The book value of Scanfil GmbH assets in the sensitivity calculation

was EUR 32.1 million.

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 yearsIntangible rights 3–10 yearsOther intangible assets 3–10 yearsRight 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.

Cloud service arrangements

The accounting treatment of cloud service arrangements depends on whether the cloud-based software is classified as an

intangible asset or a service contract. Those arrangements in which the company does not have control over the software

in question are treated in accounting as service contracts, which give the group the right to use the cloud service provider’s

application software during the contract period. The ongoing license fees for the application software, as well as the configuration

or customization costs related to the software, are recorded in the income statement when the services are received.

Regarding Scanfil Malmö Ab and Scanfil Åtvidaberg AB, changes in terminal growth are not significant (N/A).

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Other OTHER INTANGIBLE ASSETS, Customer Intangible long-term Advance Intangible EUR THOUSANDrelationshipsrightsexpensespaymentsassets totalAcquisition at 1 Jan. 2023 15,370 9,658 3,601 174 28,803Additions 515 149 663Reductions 44 -7 -160 -122Transfers between items 163 1,670 -4 1,829Exchange rate differences 27 -267 8 -11 -243Acquisition at 31 Dec. 2023 15,397 10,114 5,420 0 30,931Accumulated depreciations at 1 Jan. 2023 -10,015 -5,624 -2,364 -18,004Depreciations -1,501 -572 -381 -2,453Reductions 7 7Exchange rate differences -59 -18 -12 -89Accumulated depreciations at 31 Dec. 2023 -11,575 -6,214 -2,751 -20,540Carrying amount at 1 Jan. 2023 5,354 4,034 1,236 174 10,799Carrying amount at 31 Dec. 2023 3,822 3,900 2,670 0 10,391

Other OTHER INTANGIBLE ASSETS, Customer Intangible long-term Advance Intangible EUR THOUSANDrelationshipsrightsexpensespaymentsassets totalAcquisition at 1 Jan. 2022 16,355 8,611 3,227 385 28,579Additions 425 140 -211 354Deductions 462 5Exchange rate differences -985 160 229 -597Acquisition at 31 Dec. 2022 15,370 9,658 3,601 174 28,336Accumulated depreciations at 1 Jan. 2022 -9,119 -4,824 -1,729 -15,672Depreciations -1,591 -573 -401 -2,565Exchange rate differences 694 -227 -234 233Accumulated depreciations at 31 Dec. 2022 -10,015 -5,624 -2,364 -18,004Carrying amount at 1 Jan. 2022 7,236 3,787 1,498 385 12,906Carrying amount at 31 Dec. 2022 5,354 4,034 1,236 174 10,799

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.

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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 yearsMachinery and equipment 3–10 yearsOther 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”.

Advance payments Buildings Machinery Other and con-PROPERTY, PLANT AND EQUIPMENT, and con-and equip-tangible structions in Tangible EUR THOUSAND Landstructionsmentsassetsprogressassets totalAcquisition cost at 1 Jan. 2023 1,006 29,640 104,237 856 2,438 138,176Additions 190 11,429 110 8,573 20,301Deductions -1,595 -1,595Transfers between items 79 6,013 25 -7,946 -1,829Exchange rate differences 47 197 -99 -7 98 237Acquisition cost at 31 Dec. 2023 1,053 30,107 119,985 983 3,163 155,290Accumulated depreciations at 1 Jan. 2023 -17,265 -64,854 -493 -82,612Depreciations -1,503 -10,404 -56 -11,963Deductions 1,506 1,506Exchange rate differences 143 326 7 476Accumulated depreciations at 31 Dec. 2023 -18,625 -73,426 -543 -92,593Carrying amount at 1 Jan. 2023 1,006 12,376 39,383 362 2,438 55,564Carrying amount at 31 Dec. 2023 1,053 11,482 46,559 441 3,163 62,697

Gross investments in tangible and intangible assets totalled EUR 22.2 million, which is 2.5% of net sales. The most significant

investments focused at electronics production capacity in Atlanta USA and in Sieradz Poland, where we also started factory

expancion project. In addition in Malmö Sweden and in Wutha Germany we made investments to production according to

our Dream Factory -concept. Rest of the investments focused at IT and general improvement of factories and increase of

production capacity.

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Gross investments in tangible and intangible assets totalled EUR 19.0 million, which is 2.3% of net sales. The most significant

investments in the electronics manufacturing were the SMT line in Suzhou, THT line and soldering line in Sieradz, and the

investments in growing the SMT line capacity in Sieradz. In addition, the investments include testing solutions in different

factories. A significant investment in production, warehouse and office space reorganizations was made in Suzhou. The most

significant investments in mechanics were painting line renewals in Pärnu and Myslowice and automatic punching and folding

machines. In addition, the factories invested in smart warehouse and logistics solutions and cobots

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 two 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.

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.

Advance payments Buildings Machinery Other and con-PROPERTY, PLANT AND EQUIPMENT, and con-and equip-tangible structions in Tangible EUR THOUSAND Landstructionsmentsassetsprogressassets totalAcquisition cost at 1 Jan. 2022 984 29,122 89,438 588 3,193 123,326Additions 219 900 11,470 179 5,378 18,145Deductions -19 -959 -978Transfers between items -191 22 5,539 189 -6,081 -523Exchange rate differences -7 -385 -1,251 -99 -52 -1,795Acquisition cost at 31 Dec. 2022 1,006 29,640 104,237 856 2,438 138,176Accumulated depreciations at 1 Jan. 2022 -15,968 -56,994 -571 -73,534Depreciations -1,491 -9,220 -22 -10,734Deductions 693 693Exchange rate differences 195 669 99 963Accumulated depreciations at 31 Dec. 2022 -17,265 -64,854 -493 -82,612Carrying amount at 1 Jan. 2022 984 13,154 32,444 17 3,193 49,792Carrying amount at 31 Dec. 2022 1,006 12,376 39,383 362 2,438 55,564

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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.

Buildings and Machinery and Right-of-use EUR THOUSANDconstructionsequipmentsassets totalAcquisition cost at 1 Jan. 2023 33,946 3,158 37,104Additions 2,435 451 2,886Deductions -594 -1,326 -1,920Exchange rate differences 841 81 922Acquisition cost at 31 Dec. 2023 36,627 2,364 38,991Accumulated depreciations at 1 Jan. 2023 -10,477 -2,486 -12,963Depreciations -4,133 -440 -4,573Deductions 133 1,251 1,385Exchange rate differences -154 -69 -224Accumulated depreciations at 31 Dec. 2023 -14,631 -1,744 -16,375Carrying amount at 1 Jan. 2023 23,469 672 24,141Carrying amount at 31 Dec. 2023 21,996 620 22,616

Buildings and Machinery and Right-of-use EUR THOUSAND Landconstructionsequipmentsassets totalAcquisition cost at 1 Jan. 2022 -185 28,359 3,066 31,239Additions 6,195 230 6,425Deductions 185 55 -79 161Exchange rate differences -664 -58 -722Acquisition cost at 31 Dec. 2022 0 33,946 3,158 37,104Accumulated depreciations at 1 Jan. 2022 185 -7,148 -2,037 -9,000Depreciations -3,586 -572 -4,158Deductions -185 69 -116Exchange rate differences 258 53 311Accumulated depreciations at 31 Dec. 2022 0 -10,477 -2,486 -12,963Carrying amount at 1 Jan. 2022 0 21,211 1,029 22,240Carrying amount at 31 Dec. 2022 0 23,469 672 24,141

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AMOUNTS RECOGNISED IN PROFIT AND LOSS, EUR THOUSAND 2023 2022Interest on lease liabilities 1,029 563Expenses relating to short-term leases 177 272Expenses relating to leases of low-value assets, excluding 71 121short-term leases of low-value assetsTotal 1,276 957

LEASE LIABILITIES, EUR THOUSAND 2023 2022Maturity analysis – contractual undiscounted cash flowsWithin one year 4,912 4,933In one to two years 15,015 13,874More than five years 7,185 8,896Total 27,113 27,703

CARRYING AMOUNT OF LEASE LIABILITIES AT THE END OF THE FINANCIAL YEAR, EUR THOUSAND 2023 2022Long-term liabilities 18,606 20,439Short-term liabilities 3,948 4,360Total 22,554 24,798

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 2023 2022Intangible assetsIntangible rights 572 573Other long-term expenses 432 401Long-term customer relationships 1,501 1,591Total 2,504 2,565Property, plant and equipment Land 63 Buildings 1,503 1,491 Machinery and equipment 10,404 9,220 Other tangible assets 56 22Total 12,026 10,734Right-of-use-assets Buildings 4,133 3,586 Machinery and equipment 440 572Total 4,573 4,158Total depreciation 19,104 17,456

Depreciation and amortisation

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4. CAPITAL STRUCTURE

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”.

4.1 Cash and cash equivalents

CASH AND CASH EQUIVALENTS, EUR THOUSAND 2023 2022Cash and cash equivalents 21,222 20,779Total 21,222 20,779

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 2023 2022Financing incomesDividends 0Interest income from other financial assets 3 4Exchange rate gains 3,520Other financial income 490 362Financing incomes total 4,013 366Financing expensesInterest expenses 3,168 1,827Exchange rate losses 1,719Other financial expenses 544 487Financing expenses total 3,713 4,033Financing incomes and expenses 300 -3,667

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 2023 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.

Financial items

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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 3.5 (-1.7) million. These items include

EUR 2.6 (0.1) million of exchange rate gains from the layered foreign exchange hedging program. Additionally the items include

EUR 0.6 (-0.8) million of exchange rate losses arising from Group’s internal loans. The operating profit includes a total of EUR

-0.2 (-2.5) million of exchange rate losses.

Interest expenses consist of interest for financial liabilities, EUR 0.2 (0.3) million, interest expenses for leases EUR 1.0 (0.6)

million and interest expenses for using the overdraft facility, EUR 1.2 (0.8) million. Other financial expenses include financial

liabilities commissions and overdraft facility extension fee of EUR 0.4 (0.2) million.

4.3 Financial liabilities

FINANCIAL LIABILITIES, EUR THOUSAND 2023 2022Long-term liabilities recognised at amortised costFinancial institutions 36,000Lease liability 18,606 20,439Total 18,606 56,439Short-term liabilities recognised at amortised costFinancial institutions 36,000 6,079Drawdowns from credit facilities 14,413 39,460Lease liability 3,948 4,360Total 54,361 49,898

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 80 million as well as

a working capital facility of CNY 137 million granted to subsidiary Scanfil (Suzhou) Co. Ltd. by Nordea Bank AB Shanghai Branch.

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. The Group

fulfilled the covenant terms during the financial periods of 2023 and 2022.

4.4 Book values and fair values of financial assets and liabilities

Financial assets Derivatives in Recognised at and liabilities BALANCE SHEET ITEM, cash flowfair value through recognised at Balance sheet EUR THOUSAND hedgingprofit or lossamortised costitems total2023Non-current assetsEquity investments 529 529Current assetsTrade receivables 158,956 158,956Derivatives 1,207 328 1,535Cash and cash equivalents 21,222 21,222Total financial assets 1,207 857 180,179 182,243Non-current financial liabilitiesLease liabilities 18,606 18,606Current financial liabilitiesInterest-bearing liabilities from financial institutions 36,000 36,000Drawdowns from credit facilities 14,413 14,413Lease liabilities 3,948 3,948Derivatives 476 476Trade payables 111,842 111,842Total financial liabilities 476 184,809 185,285

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 made for hedging forecasted cash flow and to an interest

rate swap made for hedging 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, 2023 the rated amount of the interest swap was EUR 6.0 million, and it will expire on September 27, 2024.

The fair value of the derivative was EUR 104 thousand, 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. Forward exchange contracts are used both

for hedging of forecasted cash flow and for hedging of accounts receivable and accounts payable. In addition, the Group

hedges internal loans selectively. The Group applies cash flow hedge accounting to currency derivative contracts made

for hedging of forecasted cash flows. Changes in fair value are recognised in other comprehensive income items adjusted

for deferred taxes and presented in the fair value reserve under equity. Forward exchange contracts made for hedging of

accounts receivable, accounts payable and internal loans are outside hedge accounting. Changes in fair value are immediately

recognised through profit or loss.

Financial assets Derivatives in Recognised at and liabilities BALANCE SHEET ITEM, cash flowfair value through recognised at Balance sheet EUR THOUSAND hedgingprofit or lossamortised costitems total2022Non-current assetsEquity investments 529 529Current assetsTrade receivables 149,576 149,576Derivatives 1,189 34 1,223Cash and cash equivalents 20,779 20,779Total financial assets 1,189 562 170,355 172,106Non-current financial liabilitiesInterest-bearing liabilities from financial institutions 36,000 36,000Lease liabilities 20,439 20,439Current financial liabilitiesInterest-bearing liabilities from financial institutions 6,079 6,079Drawdowns from credit facilities 39,460 39,460Lease liabilities 4,360 4,360Derivatives 893 893Trade payables 129,003 129,003Total financial liabilities 893 235,340 236,233The fair values of financial assets and liabilities do not differ from their book values

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The Group uses forward exchange contracts for hedging against currency risk and interest rate swaps for managing interest rate risk. Accounts

receivable and accounts payable are hedged with forward exchange contracts that are not included in hedge accounting. In addition, the

currency derivatives outside hedge accounting include a forward exchange contract made for hedging an internal Polish zloty loan receivable to

the parent company. The table shows the interest rate derivatives at net values and currency derivatives at gross values.

Hedging instrument Hedging instrument Hedging instrument included in balance CASH FLOW HEDGING, EUR THOUSANDnominal valuebook value, liabilitiessheet item2023 Interest rate swaps 6,000 104 Other liabilities Forward exchange contracts 30,408 1,051 Other liabilities Forward exchange contracts, Other assets / 123,574 -96 outside hedge accountingliabilitiesTotal 159,982 1,059

Cash flow hedging, Hedging item value, Hedging items included share of fair value CASH FLOW HEDGING, EUR THOUSANDliabilitiesin balance sheet itemreserve2023Interest rate swaps 6,000 Financial liabilities 82Forward exchange contracts 841Total 6,000 924

Interest and currency derivativesChanges in fair values (used in Nominal Book value, efficiency EUR THOUSAND Positive Negative Netvalueliabilitiestesting)2023 Interest rate swaps 104 104 6,000 104 -206 Forward exchange contracts 1,051 1,051 30,408 1,052 170 Forward exchange contracts,380 -476 -96 123,574 -96 outside hedge accountingTotal 1,059 159,982 1,059

Changes in fair values (used in Nominal Book value, efficiency EUR THOUSAND Positive Negative Netvalueliabilitiestesting)2022 Interest rate swaps 350 350 12,000 350 297 Forward exchange contracts 866 -27 839 34,941 839 732 Forward exchange contracts,900 -1,759 -859 113,316 -859 outside hedge accountingTotal 330 160,257 330

Cash flow hedging, Hedging item value, Hedging items included share of fair value CASH FLOW HEDGING, EUR THOUSANDliabilitiesin balance sheet itemreserve2022Interest rate swaps 12,000 Financial liabilities 288Forward exchange contracts 671Total 12,000 959

Hedging instrument Hedging instrument Hedging instrument included in balance CASH FLOW HEDGING, EUR THOUSANDnominal valuebook value, liabilitiessheet item2022 Interest rate swaps 12,000 350 Other liabilities Forward exchange contracts 34,941 839 Other liabilities Forward exchange contracts, Other assets / 113,316 -859 outside hedge accountingliabilitiesTotal 160,257 330

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4.6 Hierarchy of fair values

EUR THOUSAND Level 2 Level 32023Assets measured at fair valueRecognised at fair value through profit or loss Equity investments 529 Derivatives 1,535Liabilities measured at fair valueFinancial liabilities at fair value through profit or loss Derivatives 476Liabilities recognised at amortised costFinancing loan 50,413

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 2023 2022Cost at 1 Jan. 529 535Exchange rate differences 0 -1Deductions -5Cost at 31 Dec. 529 529Carrying amount at 31 Dec. 529 529

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.

EUR THOUSAND Level 2 Level 32022Assets measured at fair valueRecognised at fair value through profit or loss Equity investments 529 Derivatives 1,223Liabilities measured at fair valueFinancial liabilities at fair value through profit or loss Derivatives 893Liabilities recognised at amortised costFinancing loan 81,538

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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 in compliance with the principles approved by the parent company’s Board of Directors. Scanfil’s treasury

function, part of the Group’s financial management, provides that financial services and financing transactions are carried out

in a manner that enables cost-efficient risk management and optimization of cash flows.

4.7 Financial risk management

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 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

The net positions associated with financial assets and net working capital are shown below in euros for the main currencies.

TRANSACTION RISK, EUR THOUSAND 2023Foreign currency USD USD SEK EUR PLN EUR EUR USD USDReporting currency EUR CNY EUR SEK EUR PLN CNY SEK PLNCash and cash equivalents 51 170 517 34Trade receivables 594 7,951 7,408 46,576 6,816 84 13,856Trade payables -4,091 -8,565 -150 -7,069 -366 -20,874 -2,959 -4,321 -12,788Derivatives 3,553 924 -58 -23,306 -2,700 3,579 -2,224Global Cash Pool 2,498 2,121 3,540Net position 2,555 360 1,971 280 3,174 2,566 1,673 -658 -1,121

Group’s treasury function monitors that all hedging transactions are carried out in accordance with the Group’s hedging policy.

The financial statements of December 31, 2023 include outstanding EUR/PLN forward exchange contracts made for hedging

purposes. Their nominal value is EUR 30.4 (34.9) million, and the Group applies hedge accounting to them. Forward contracts

are made on a monthly basis, and the final contract will expire on November 27, 2024. In addition, the financial statements

include a total nominal value of EUR 123.6 million of forward exchange contracts that are outside hedge accounting and made for

hedging of accounts receivable and accounts payable (EUR 106.4 million) and a Group internal loan receivable (EUR 17.2 million).

BREAKDOWN OF TURNOVER BY CURRENCY

SEK 13 %

CNY 13 %

USD 14 %

EUR 60 %

2023

EUR 60%

USD 14%

CNY 13%

SEK 13%

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, CNY, USD and SEK. Half of the

Group’s turnover is generated in the Group’s operating currency.

SEK 12 %

CNY 17 %

USD 14 %

EUR 56 %

2022

EUR 56%

USD 14%

CNY 17%

SEK 12%

TRANSACTION RISK, EUR THOUSAND 2022Foreign currency USD USD SEK EUR PLN EUR EUR USD USDReporting currency EUR CNY EUR SEK EUR PLN CNY SEK PLNCash and cash equivalents 3 2,085 622 506 103Trade receivables 258 5,401 4,330 41,160 9,122 152 10,388Trade payables -7,611 -11,856 -51 -5,765 -367 -21,091 -4,569 -6,833 -16,425Derivatives 6,548 4,407 678 -20,557 -3,140 4,627 5,665Global Cash Pool -2,060 4,144 4,109Net position -2,862 36 4,093 -756 3,742 134 1,919 -2,054 -269

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TRANSACTION RISK: NET POSITION

EUR THOUSAND

2023

2022

EUR CNY EUR SEK EUR PLN CNY SEK PLN

USD USD SEK EUR PLN EUR EUR USD USD

2,555 360 1,971 280 3,174 2,566 1,673 -658 -1,121

-2,862 36 4,093 -756 3,742 134 1,919 -2,054 -269

Net position 2023

Net position 2022

-6000

-4000

-2000

2000

4000

6000

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 USDReporting currency EUR CNY EUR SEK EUR PLN CNY SEK PLNChange in currency % +/- 10Year 2023, +/- 256 +/- 36 +/- 197 +/- 28 +/- 317 +/- 257 +/- 167 +/- 66 +/- 112EUR THOUSANDUSD USD SEK EUR PLN EUR EUR USD USD EUR CNY EUR SEK EUR PLN CNY SEK PLNChange in currency %Year 2022, +/- 286 +/- 4 +/- 409 +/- 76 +/- 374 +/- 13 +/- 192 +/- 205 +/- 27EUR THOUSAND

In addition, the changes in the value of the EUR/PLN forward contracts made by the group’s parent company and included in hedge accounting, which are presented

above, affect the group’s comprehensive income statement. The impact of a 10% change in the Polish zloty in relation to the currency is EUR +/- 2.2 (2.7) million

based on the situation at the end of the year.

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 2023 2022 2023 2022CNY 48,074 52,841 +/- 4,807 +/- 5,284HUF 1,501 1,456 +/- 150 +/- 146PLN 108,982 68,446 +/- 10,898 +/- 6,845SEK 74,920 64,882 +/- 7,492 +/- 6,488USD 15,585 14,208 +/- 1,559 +/- 1,421Total 249,062 201,833

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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.

Interest rates of Nordea’s Multicurrency Global Cash Pool available to the Group as well as the working capital facility available

to subsidiary Scanfil (Suzhou) Co., Ltd are impacted by currency-specific reference interest rates. Interest rate risk relating

to interest payments of the group’s interest-bearig net debt, caused by a rise of one percentage point in reference interest

rates, was EUR 0.1 million at the end of 2023.

The Group withdrew a loan of EUR 30.0 million in 2021. The loan interest rate is fixed for the whole loan period. Additionally the

Group withdrew a loan in 2019, of which EUR 6.0 million was outstanding on December 31, 2023. The loan was hedged with

an interest swap on December 28, 2020. On the basis of the interest swap, Scanfil pays a fixed interest rate and receives a

variable Euribor three-month rate which is the loan's reference 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.

On December 31, 2023, liquid assets stood at EUR 21.2 (20.8 in 2022) million. The Group also has an EUR 80.0 million overdraft

limit of which EUR 80.0 million was used at the end of the year. EUR 30.0 million of the limit is due on 31 December 2025 and

EUR 50.0 million on 24 May 2026. In addition, EUR 3.5 million of the CNY 137 million working capital facility available to subsidiary

Scanfil (Suzhou) Co., Ltd was unutilized at the end of the year. Considering the Group’s balance sheet structure, the liquidity risk

is small. The Group’s financing arrangements include usual loan covenant terms. The Group has fulfilled the financing-related

covenant terms during the financial periods of 2023 and 2022.

Maturity analysis based on debt agreements

The figures are undiscounted and include the interest payments and repayments of capital based on the agreements.

2029–Balance 20242025 2026-2028more than 5 31.12.2023, EUR THOUSANDsheet value Cash flow 0–6 months year1–2 years2–5 yearsyearsLoans from financial institutions 36,000 36,127 3,081 33,045Finance lease 22,554 27,130 2,522 2,399 4,844 10,180 7,185Overdraft facility 14,413 14,413 14,413Derivatives -104 -104 -104Derivatives, hedging -1,051 Cash flow due 30,408 24,321 6,088 Available cash flow -31,688 -25,373 -6,315Derivatives, 96outside hedge accounting Cash flow due 123,574 123,560 14 Available cash flow -123,349 -123,335 -14Trade payables 111,842 111,842 111,842Total 183,749 188,352 130,926 35,217 4,844 10,180 7,185

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 2023

was 12.9% (18.7% in 2021), and that of the ten largest customers was 55.1% (55.1%).

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 163 (83) thousand. During the financial period, credit losses recognised from

trade receivables were EUR 80 (47) 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.

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Changes not affecting cash flowChanges in Changes in exchange Changes in EUR THOUSAND 1.1.2023 Cash flowsIFRS 16 ratesfair values 31.12.2023Long-term loans 36,000 -36,000 0Short-term loans 45,538 4,874 50,413Lease liabilities 24,798 -4,185 1,693 247 22,554Total liabilities in financial operations 106,337 -35,310 1,693 247 0 72,967

Changes not affecting cash flowChanges in Changes in exchange Changes in EUR THOUSAND 1.1.2022 Cash flowsIFRS 16 ratesfair values 31.12.2022Long-term loans 42,078 -6,078 36,000Short-term loans 20,041 25,497 45,538Lease liabilities 23,085 -3,742 5,739 -283 24,798Total liabilities in financial operations 85,204 15,677 5,739 -283 0 106,337

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 not acquired its own shares during the financial year. On December 31, 2023, the company held 78,738 of

its own shares.

NUMBER OF SHARES, 1000 PCS 2023Number of shares at 1.1.2023 64,960Share subscription under option rights 2019 (A) on May 5, 8, 12 and 16 2023 170Share subscription under option rights 2019 (B) on May 8 and June 7 2023 140Number of shares at 31 Dec. 2023 65,270NUMBER OF SHARES, 1000 PCS 2022Number of shares at 1.1.2022 64,960Number of shares at 31 Dec. 2022 64,960

20232024 2025-2027 2028–Balance 6 months– 1–2years2–5 yearsmore than 5 31.12.2022, EUR THOUSANDsheet value Cash flow 0–6 months1/2-1 yearyearsLoans from financial institutions 42,079 42,452 3,180 3,128 36,143Finance lease 24,798 27,726 2,549 2,394 4,492 9,395 8,896Overdraft facility 39,460 39,460 39,460Derivatives -350 -350 -350Derivatives, hedging -839 Cash flow due 34,941 26,419 8,523 Available cash flow -36,371 -27,379 -8,992Derivatives, 859outside hedge accounting Cash flow due 129,339 129,339 0 Available cash flow -127,686 -127,686 0Trade payables 129,003 129,003 129,003Total 235,010 238,513 174,534 5,053 40,635 9,395 8,896

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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, 2023, translation differences stood at EUR -4.6 million (EUR -7.6 million in 2022), of which EUR

1.8 (4.8) million was created by the exchange rate changes of the Chinese CNY, -12.6 (-10.8) Swedish krone and 6.2 (-2.0) Polish

zloty. The translation difference, EUR 3.0 million (-5.2 million) during the financial period, is mainly made up by the exchange

rate changes of the Polish currency 8.2 (0.6) EUR million and the Chinese currency -3.0 (-1.7) EUR million.

EUR THOUSAND RMB SEK USD PLN HUF Total1.1.2023 4,826 -10,836 791 -2,013 -326 -7,559Recorded in comprehensive -3,048 -1,716 -530 8,209 58 2,972income items31.12.2023 1,777 -12,553 261 6,195 -268 -4,587

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 2023 20221.1. 959 -71Interest rate derivatives, change -206 297Currency derivatives, change 170 732Total 924 959

Of the derivative financial instruments, EUR -1 (2) 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.

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.

NET LIABILITIES, EUR THOUSAND 2023 2022Interest-bearing liabilities 72,967 106,337Cash assets -21,222 -20,779Net liabilities 51,744 85,558Equity total 266,038 226,594Gearing, % 19.4 37.8

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.

In 2023, dividends of EUR 0.21 per share were paid, in total EUR 13,620,863.55.

After the reporting date, The Board of Directors has proposed a dividend of EUR 0.23 per share to be distributed, in total

EUR 14,993,988.65.

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5. OTHER NOTES

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. The provisions also include a pension provision for staff benefits

and a benefit based on years of service in Poland.

Use of estimates

Estimates are required when assessing the amount of provisions associated with business operations.

Reclamation and Pension Other RestructuringPROVISIONS, EUR THOUSANDquaranteeprovisionprovisionsprovisions Total1.1.2023 370 162 638 8 1,179Exchange rate differences 29 -19 50 60Additions 202 96 178 476Used provisions -23 -8 -3131.12.2023 578 239 867 0 1,6832023 2022Non-current provisions 1,105 801Current provisions 578 378Total 1,683 1,179

The reclamation 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 bonus

agreed upon locally in Poland to be paid on the basis of service years. It applies to employees who have worked in the company

for several years. The restructuring provision were related to the closure of the Scanfil GmbH’s Hamburg factory.

5.2 Securities provided, contingent liabilities and other liabilities

BANK GUARANTEES GIVEN, EUR THOUSAND 2023 2022On behalf of own company 690 861On behalf of Group company 150 758Total 840 1,619

In addition to the aforementioned commitments, the following guarantees have been given:

Scanfil plc has given guarantees to Nordea Bank Abp as security for payment of the liabilities which Scanfil Sweden AB has

created from time to time towards Nordea Bank Abp on the basis of derivative contracts concluded, as well as to Skandinaviska

Enskilda Banken AB replacing the previous liabilities of Scanfil Sweden AB. The maximum liability to Skandinaviska Enskilda

Banken AB is EUR 3.6 million. Scanfil plc has provided a guarantee to Nordea Bank Abp as security for the performance and

payment of obligations under the derivative contracts concluded between Scanfil Electronics GmbH and Nordea Bank Abp.

Scanfil plc has given a guarantee for the lease obligations of its subsidiary Scanfil Inc.

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 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 seven years after the expiry of the last product agreement.

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.

Scanfil EMS Oy and Scanfil Sweden AB have provided guarantees to Nordea Bank Abp and Nordea Bank AB Shanghai Branch

as security for the performance and payment of the obligations under the derivative master agreements entered into between

the Group companies Scanfil Oü, Scanfil Poland Sp. z o.o, Scanfil Åtvidaberg AB, Scanfil Malmö AB, Scanfil (Suzhou) Co., Ltd.

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.

5.1 Provisions

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EMPLOYEE BENEFITS FOR MEMBERS OF THE MANAGEMENT, EUR THOUSAND 2023 2022Salaries and other short-term employee benefits 1,966 1,629Options implemented and paid in shares 1,566 146Total 3,532 1,776

The management includes the parent company’s Board of Directors, CEO and Management Team members.

SALARIES PAID TO THE PRESIDENT, EUR THOUSAND 2023 2022Petteri Jokitalo until 31 August 2023 413 420Christophe Sut since 1 September 2023 116Options exercised and paid in shares, Petteri Jokitalo* 1,111Total 1,640 420

One of the Board members has a valid voluntary pension insurance policy on a payment basis.

* Taxable value of benefit.

STATUTORY PENSION EXPENDITURE, TYEL, EUR THOUSAND 2023 2022Petteri Jokitalo until 31 August 2023 79 78Christophe Sut since 1 September 2023 29

The salary information is payment-based.

SALARIES PAID TO THE BOARD MEMBERS, EUR THOUSAND 2023 2022Harri Takanen 61 61Jarkko Takanen, untill 21 February 2022 9Bengt Engström 39 40Christina Lindstedt 41 37Juha Räisänen 46 38Minna Yrjönmäki, since 27 April 2023 26Thomas Dekorsy, since 27 April 2023 23Total salaries of the Board Members 236 185

Group’sParent company´s Group companies Domicile ownership Share of voteownershipScanfil plc, parent company; FinlandScanfil 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%Scanfil Poland Sp. z o.o. Poland 100% 100% 100%Scanfil Sweden AB Sweden 100% 100% 100%Scanfil Malmö 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. Jarkko Takanen’s board membership ended on 21 February 2022.

In 2023, the market rents paid totalled EUR 29 thousand (EUR 29 thousand in 2022).

5.4 Events after the reporting period

There were no significant events after the reporting perriod.

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.-31.12.2023 1.1.-31.12.2022

Other operating income 2,466 2,265

Personnel expenses 1

Wages, salaries and fees -2,349 -1,866

Pensions and statutory indirect employee costs

Pensions -396 -295

Statutory indirect employee costs -113 -49

Personnel expenses total -2,858 -2,210

Depreciation and reduction in value

Depreciation according to plan 3 -77 -56

Depreciation and reduction in value total -77 -56

Other operating expenses 2 -1,292 -1,165

Operating profit -1,761 -1,166

Financial income and expenses

Financial income from Group 6,000 10,000

Other interest and financial income

From Group 6,215 3,099

From other 3,998 3,435

Interest expenses and financial expenses

To Group -1,680 -921

To other -2,562 -3,147

Financial income and expenses total 11,972 12,466

EUR THOUSAND Note 1.1.-31.12.2023 1.1.-31.12.2022

Profit before appropriations and taxes 10,211 11,300

Appropriations

Depreciation difference increase 5 8

Appropriations total 5 8

Profit before tax 10,215 11,309

Income taxes 4

Income taxes -813 -259

Taxes for previous years 0 65

Deferred taxes -52

Income taxes total -813 -246

Net profit for the period 9,403 11,063

Parent Company Income Statement

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EUR THOUSAND Note 31.12.2023 31.12.2022

ASSETS

Non-current assets

Intangible assets

Immaterial rights 5 2 4

Other non-current assets 239 124

Intangible assets total 241 129

Tangible assets

Plant and equipment 21 36

Other tangible assets 17 17

Advance payments and construction in progress 6 32 133

Tangible assets total 69 186

Investments

Holdings in Group companies 7 68,535 68,535

Investments total 68,535 68,535

Total non-current assets 68,846 68,850

EUR THOUSAND Note 31.12.2023 31.12.2022

ASSETS

Current assets

Long-term receivables

Loan receivables from Group companies 8 25,370 57,026

Long-term receivables total 25,370 57,026

Short-term receivables

Receivables from Group companies 8 42,529 28,541

Accrued income 2,444 1,155

Short-term receivables total 44,974 29,696

Cash and cash equivalents 9 6,173 1

Total current assets 76,516 86,723

Total assets 145,362 155,572

Parent Company Balance Sheet

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EUR THOUSAND Note 31.12.2023 31.12.2022

SHAREHOLDER’S EQUITY AND LIABILITIES

Equity

Share capital 10 2,000 2,000

Other reserves

Fair value reserve 841 671

Reserve for invested unrestricted equity fund 35,150 33,768

Retained earnings 16,391 18,949

Profit for the period 9,403 11,063

Total Equity 63,784 66,451

Appropriations

Cumulative accelerated depreciation 11 5

Total Appropriations 5

EUR THOUSAND Note 31.12.2023 31.12.2022

Non-current liabilities

Financing loan 12 36,000

Deferred tax liabilities 210 168

Non-current liabilities total 210 36,168

Current liabilities

Financing loans 12 36,000 27,432

Trade liabilities 93 239

Liabilities to Group companies 13 43,847 23,948

Other creditors 152 99

Accrued liabilities 14 1,276 1,231

Current liabilities total 81,367 52,949

Total liabilities 81,577 89,117

Total equity and liabilities 145,362 155,572

Parent Company Balance Sheet

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EUR THOUSAND 1.1.-31.12.2023 1.1.-31.12.2022

Cash flow from operating activities

Profit for the period 9,403 11,063

Adjustments

Depreciation according to plan 77 56

Financial income and expenses -11,972 -12,466

Other income and expenses without payment

Deferred taxes 808 238

Exchange rate differences 2,055 -180

Changes in working capital

Inc(-)/dec(+) in short-term non-interest bearing receivables -1,106 -257

Inc(+)/dec(-) in short-term non-interest-bearing liabilities 538 266

Interest received from other financial revenues 4,975 4,185

Interest paid from other financial expenses -2,657 -1,223

Taxes paid -1,032 -160

Net cash flow from operating activities 1,089 1,523

Cash flow from investing activities

Investments in tangible and intangible assets -73 -57

Investments in subsidiary shares -7,000

Granted loans -52,137

Received loan payments 18,523 17,046

Received dividends 6,000 10,000

Net cash flow from investing activities 24,450 -32,148

EUR THOUSAND 1.1.-31.12.2023 1.1.-31.12.2022

Cash flow from financing activities

Received group contributions 1,500

Related party investments to company shares 1,381 260

Changes in Group financing -1,127 34,393

Repayment of long-term loans -6,000 -6,000

Dividends paid -13,621 -12,316

Net cash flow from financing activities -19,367 17,837

Net increase/decrease in cash and cash equivalents 6,172 -12,788

Cash and cash equivalents Jan 1. 1 12,789

Cash and cash equivalents Dec 31. 6,173 1

Parent Company Cash Flow Statement

Changes in Group financing are presented net and 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.

In September 2023, Scanfil Oyj opened a Permanent Establishment in Sweden. The accounts of Scanfil Oyj's Stockholm branch

will be integrated into the accounting records of the parent company.

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.

Derivative contracts

Section 5:2a of the Act on Foreign Exchange Derivatives is applied to currency derivatives, in which changes in the fair value

of currency derivatives are recorded in the fair value reserve for equity less deferred tax liabilities.

Pension costs are based on defined contribution schemes. Management’s employee benefits are reported in note 18.

EUR THOUSAND 2023 2022

Salaries, wages and fees 2,349 1,866

Pension costs 396 295

Other indirect employee expenses 113 49

Total 2,858 2,210

Fringe benefits (taxable value) 1,435 85

AVERAGE NUMBER OF EMPLOYEES DURING THE PERIOD 2023 2022

Clerical employees 13 13

Total 13 13

1. Personnel expenses

Turnover

The parent company’s operations consist of group functions, and income from the sale of services is presented as turnover.

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.

Taxes

Income taxes have been recorded in accordance with Finnish tax legislation. A deferred tax liability or asset is calculated

on temporary differences between accounting and taxation of assets and liabilities at the established tax rate. Deferred tax

liabilities are recognised in full. Deferred tax assets are recognised only when it is probable that the receivable can be utilised

against taxable profit in future periods.

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Other operating costs mainly consist of legal and consultation expenses, travelling expenses and statutory expenses of a listed company.

EUR THOUSAND 2023 2022

Other operating expenses 1,292 1,165

Total 1,292 1,165

2. Other operating expenses

AUDITOR’S REMUNERATION, EUR THOUSAND 2023 2022

Auditor's remunerations of the Chartered Accountants 70 67

Auditor's statements 10 10

Tax advisor 27 47

Total 106 124

3. Depreciation and amortisation

DEPRECIATION BY ASSET CLASS, EUR THOUSAND 2023 2022

Intangible assets

Intangible rights 2 2

Other long-term expenses 60 39

Tangible assets

Plant and equipment 15 15

Total 77 56

Total depriciation 77 56

4. Income taxes

EUR THOUSAND 2023 2022

Income taxes from actual operations 813 259

Income taxes from previous years 0 -65

Change in deferred taxes 52

Total 813 246

Deferred taxes re recognised on currency derivatives under layered hedging program adjusting the fair value reserve on

shareholders equity. In the financial year 2023, deferred tax liabilities were recognised for currency derivatives amounting to

EUR 210 (168) thousand.

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5. Intangible assets

EUR THOUSAND

Intangible

rights

Other long-term

expenses

Intangible assets

total

Acquisition cost Jan 1, 2023 121 235 356

Additions 41 41

Transfers between accounts 133 133

Acquisition cost Dec 31, 2023 121 410 531

Accumuled depricions Jan 1, 2023 -117 -111 -228

Depreciations -2 -60 -62

Accumuled depricions Dec 31, 2023 -119 -171 -290

Carrying amount Jan 1, 2023 4 124 129

Carrying amount Dec 31, 2023 2 239 241

6. Tangible assets

EUR THOUSAND

Plant and

equipment

Other

tangible assets

Advanced

payments and

construction in

progress

Tangible assets

total

Acquisition cost Jan 1, 2023 76 17 133 225

Additions 32 32

Transfer between accounts -133 -133

Acquisition cost Dec 31, 2023 76 17 32 124

Accumuled depricions Jan 1, 2023 -39 -39

Deprecions -15 -15

Accumuled depricions Dec 31, 2023 -54 -54

Carrying amount Jan 1, 2023 36 17 133 186

Carrying amount Dec 31, 2023 21 17 32 69

EUR THOUSAND

Intangible

rights

Other long-term

expenses

Intangible assets

total

Acquisition cost Jan 1, 2022 121 225 346

Additions 10 10

Acquisition cost Dec 31, 2022 121 235 356

Accumuled depreciations Jan 1, 2022 -115 -72 -187

Deprecions -2 -39 -41

Accumuled depreciations Dec 31, 2022 -117 -111 -228

Carrying amount Jan 1, 2022 7 153 159

Carrying amount Dec 31, 2022 4 124 129

EUR THOUSAND

Plant and

equipment

Other

tangible assets

Advanced

payments and

construction in

progress

Tangible assets

total

Acquisition cost Jan 1, 2022 76 17 87 179

Additions 47 47

Acquisition cost Dec 31, 2022 76 17 133 225

Accumuled depricions Jan 1, 2022 -24 -24

Deprecions -15 -15

Accumuled depricions Dec 31, 2022 -39 -39

Carrying amount Jan 1, 2022 52 17 87 155

Carrying amount Dec 31, 2022 36 17 133 186

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7. Holdings in Group companies

EUR THOUSAND 2023 2022

Total in the beginning of period 68,535 61,535

Scanfil Holding Germany GmbH, additions 7,000

Total at the end of period 68,535 68,535

Carrying amount at 31 Dec. 68,535 68,535

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 7,091

Total 68,535

8. Receivables from Group companies

EUR THOUSAND 2023 2022

Long-term receivables

Loan receivables 25,370 57,026

Total 25,370 57,026

Short-term receivables

Prepayments and accrued income 377 215

Global Cash Pool receivables 18,325 18,973

Loan receivables 23,302 8,909

Other receivables 525 444

Total 42,529 28,541

Prepayments and accrued income

Interest income from group 377 215

Total 377 215

9. Cash and equivalent

EUR THOUSAND 2023 2022

Cash and bank balances 6,173 1

Total 6,173 1

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10. Equity

12. Loans from financial institutions

11. Depreciation difference

EUR THOUSAND 2023 2022

Non-current

Financial Institutions 36,000

Current

Financial Institutions 36,000 6,000

Utilized overdraft facility 21,432

Total 36,000 27,432

Interest-bearing liabilities will mature as follows:

Year 2023 6,000

Year 2024 36,000 36,000

Total 36,000 42,000

EUR THOUSAND 2023 2022

Depreciation difference 5

Total 5

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 80 million of which

EUR 80.0 million was unutilized on December 31, 2023.

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

2023 and 2022 financial periods, the Group fulfilled the covenant terms.

EUR THOUSAND 2023 2022

Share capital

Share capital Jan 1. 2,000 2,000

Share capital Dec 31. 2,000 2,000

Fair Value Reserve 841 671

Total restricted shareholder's equity 2,841 2,671

Reserve for invested unrestricted equity fund

Reserve for invested unrestricted equity fund Jan 1. 33,768 33,508

Options 1,381 260

Reserve for invested unrestricted equity fund Dec 31. 35,150 33,768

Retained earnings

Retained earning Jan 1. 30,011 31,265

Paid dividends -13,621 -12,316

Retained earnings Dec 31. 16,391 18,949

Profit for the period 9,403 11,063

Total unrestricted equity 60,943 63,780

Total equity 63,784 66,451

Calculation of distributable funds Dec 31.

Reserve for invested unrestricted equity fund 35,150 33,768

Retained earnings 16,391 18,949

Profit for the period 9,403 11,063

Total 60,943 63,780

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13. Liabilities to Group companies

EUR THOUSAND 2023 2022

Short-term liabilities to Group companies

Accounts payable 302 61

Other liabilities 43,544 23,887

Total 43,847 23,948

14. Accrued liabilities

EUR THOUSAND 2023 2022

The most significant items included in accrued liabilities

Employee expenses 1,083 734

Interests 11 14

Other accrued liabilities 181 483

Total 1,276 1,231

15. Commitments and contingencies

EUR THOUSAND 2023 2022

Guarantees given

On behalf of group company 150 758

Total 150 758

In addition, the following guarantees have been given:

Scanfil plc has given guarantees to Nordea Bank Abp as security for payment of the liabilities which Scanfil Sweden AB has

created from time to time towards Nordea Bank Abp on the basis of derivative contracts concluded, as well as to Skandinaviska

Enskilda Banken AB replacing the previous liabilities of Scanfil Sweden AB. The maximum liability to Skandinaviska Enskilda

Banken AB is EUR 3.6 million. Scanfil plc has provided a guarantee to Nordea Bank Abp as security for the performance and

payment of obligations under the derivative contracts concluded between Scanfil Electronics GmbH and Nordea Bank Abp.

Scanfil plc has given a guarantee for the lease obligations of its subsidiary Scanfil Inc their customer agreement obligations.

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.

16. Derivative contracts

INTEREST DERIVATIVES, EUR THOUSAND 2023 2022

Interest swap agreements, hedging

Fair value 104 350

Rated value of underlying asset 6,000 12,000

HEDGE ACCOUNTING, EUR THOUSAND 2023 2022

Forward exchange contracts, hedge accounting

Fair value 841 671

Rated value of underlying asset 30,408 34,941

Forward exchange contracts, outside of hedge accounting

Other liabilities 52 123

Rated value of underlying asset 17,157 16,023

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, 2023 was EUR 6.0 million, and maturity 27 September

2024. The fair value of the derivative was EUR 104 thousand, including accrued interest. The interest flows of the derivative

occur simultaneously with the interest flows of the loan.

Forward exchange contracts outside hedge accounting consist of a forward exchange contract made for hedging an

internal loan receivable. Changes in fair value are immediately recognised through profit or loss. In line with the International

Accounting Standard, currency derivatives under a layered hedging programme are recognised in accordance with their

own the fair value reserve of capital adjusted for deferred tax. A fair value reserve is adjusted to earnings when a currency

derivative surrendered or due.

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17. Other rental contracts

EUR THOUSAND 2023 2022

To be paid next accounting period 47 22

To be paid later 26 12

Total 73 33

Rent liabilities do not include VAT.

18. Management’s employment-related benefits

SALARIES AND OTHER SHORTTERM EMPLOYEE BENEFITS,

EUR THOUSAND 2023 2022

Salaries and bonuses of the President

Petteri Jokitalo until 31 August 2023 413 420

Christophe Sut since 1 September 2023 116

Shares and options, Petteri Jokitalo* 1,111

Total salaries and bonuses of the President 1,640 420

*Taxable value of the benefit

Salaries and bonuses of the Board members

Harri Takanen 61 61

Jarkko Takanen until 21 February 2022 9

Bengt Engström 39 40

Christina Lindstedt 41 37

Juha Räisänen 46 38

Minna Yrjönmäki since 27 April 2023 26

Thomas Dekorsy since 27 April 2023 23

Total salaries of the Board Members 236 185

BOARD OF DIRECTORS’ PROPOSAL FOR THE DISTRIBUTION OF PROFIT

The parent company’s distributable funds total EUR 60,942,965.89, including undistributed profits of EUR 25,793,374.35.

The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.23 per share be paid, totalling

EUR 14,993,988.65 for the financial year ending on December 31, 2023.

Signatures to the board of directors’ report and financial statements

Sievi, February 22, 2024

Harri Takanen Bengt Engström

Chairman of the Board Member of the Board

Christina Lindstedt Juha Räisänen

Member of the Board Member of the Board

Minna Yrjönmäki Dr. Thomas Dekorsy

Member of the Board Member of the Board

Christophe Sut

CEO

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ANNUAL REPORT 2023/87

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 31 December, 2023. The financial statements comprise

the consolidated balance sheet, income statement, statement of comprehensive

income, statement of changes in equity, statement of cash flows and notes, including

material accounting policy information, as well as the parent company’s balance

sheet, income statement, statement of cash flows and notes.

In our opinion

•

the consolidated financial statements give a true and fair view of the group’s

financial position, financial performance and cash flows in accordance with

IFRS Accounting Standards as adopted by the EU

•

the financial statements give a true and fair view of the parent company’s financial

performance and financial position in accordance with the laws and regulations

governing the preparation of financial statements in Finland and comply with

statutory requirements.

Our opinion is consistent with the additional report submitted to the Audit Committee

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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ANNUAL REPORT 2023/88

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 11.5 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, 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 impairment testing and acquisition-related customer relationships.

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 209 million representing 40 percent of the consolidated total

assets as at December 31, 2023.

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 and recognition of related revenues.

We have also performed substantive audit procedures relating to completeness

and accuracy of the revenue.

Furthermore, we considered the appropriateness of the Group’s disclosures in

respect of revenue recognition principles and net sales.

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ANNUAL REPORT 2023/89

Responsibilities of the Board of Directors and the

Managing Director for the Financial Statements

The Board of Directors and the Managing Director are responsible for the preparation

of consolidated financial statements that give a true and fair view in accordance with

IFRS Accounting Standards as adopted by the EU, and of financial statements that

give a true and fair view in accordance with the laws and regulations governing the

preparation of financial statements in Finland and comply with statutory requirements.

The Board of Directors and the Managing Director are also responsible for such

internal control as they determine is necessary to enable the preparation of financial

statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Board of Directors and the Managing

Director are responsible for assessing the parent company’s and the group’s

ability to continue as 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 or 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 and

regulations.

If, based on the work we have performed on the other information that we obtained

prior to the date of this auditor’s report, we conclude that there is a material

misstatement of this other information, we are required to report that fact. We

have nothing to report in this regard.

Tampere February 26, 2024 Janna Kivimäki

KPMG OY AB Authorised Public Accountant, KHT

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GovernanceFinancial reviewAnnual review

ANNUAL REPORT 2023/90

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 (Thomas Dekorsy, Bengt Engström, Christina

Lindstedt, Juha Räisänen and Minna Yrjönmäki) are independent of the company and

independent of the significant shareholders of the company. All three members of the

Audit committee are independent of the company and its significant shareholders.

One of the two members of the Nomination and Remuneration Committee is

independent of significant shareholders and the Company (Engström). When

the Company deviates from the Corporate Governance Code with regard to the

Nomination and Remuneration Committee (a) the recommendation regarding the

minimum number of Committee members (3 members) (Recommendation 15) and (b)

the recommendation regarding the minimum number of members independent of the

Company (Recommendation 17-18) : The Company’s Board of Directors has estimated

that two members are sufficient to handle the tasks assigned to the Nomination

and Remuneration Committee. If necessary, other members of the Company’s

Board of Directors can be involved in the Committee’s work. The Company’s Board

of Directors has proposed to the 2024 Annual General Meeting (AGM) to decide

on establishing a Shareholders’ Nomination Board. If AGM decides, it will replace

the Nomination and Remuneration Committee. 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.

CORPORATE GOVERNANCE STATEMENT 

Composition of the Board of Directors

The following Board members were elected by the Annual General Meeting held

on April 27, 2023:

Harri Takanen

Harri Takanen (born 1968, a Finnish citizen),

Member of the Board since April 18, 2013,

Professional Board Member, and Managing

Director of Jussi Capital Oy and Jussi Invest Oy.

Harri Takanen has worked at 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

a Master’s degree in Engineering. Not independent of the company and major

shareholders.

Held 9,913,146 shares in Scanfil plc on December 31, 2023

Chair of the Board of Directors: WellO2 Oy

Member of the Board of Directors: Jussi Capital Oy

Bengt Engström

Bengt Engström (born 1953, a Swedish citizen),

Member of the Board since August 20, 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.

Held 12,929 shares in Scanfil

plc on December 31, 2023

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, Real

Fastigheter AB, Polygienne AB and Scandinavian Chemotech AB

Christina Lindstedt

Christina Lindstedt (born 1968, a Swedish

citizen), Member of the Board since April 12,

2016. Partner at STOAF since 2014. She was

the Senior Advisor, CEO and COO at QleanAir

Scandinavia 2020−2023. 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 has also held a number of board positions

in listed and non-listed companies. Christina Lindstedt holds a Master’s Degree

of Business Administration and Commercial law.Independent of the company and

major shareholders.

Held 7,312 shares in Scanfil plc on December 31, 2023

Member of the Board of Directors: Xplorebiz AB

Juha Räisänen

Juha Räisänen (born 1958, a Finnish citizen),

Member of the Board since 23 April 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. Independent of the

company and major shareholders.

Did not hold any shares in Scanfil plc on December 31, 2023

Member of the Board of Directors: Bluefors Oy and Valuenode GmbH

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ANNUAL REPORT 2023/91

Dr. Thomas Dekorsy

Dr. Thomas Dekorsy (born 1963, a German

citizen) has been elected as a board member

in the Annual General Meeting on 27 April 2023.

He is the CEO of saniXTREME GmbH as of June

2023. He was the Global Head Business Unit

Automotive (ad. interim) of Amann & Sähne

GmbH & Co. KG. He has served in various

leadership roles e.g as the Managing Director

of Prettl Management Services GmbH 2021–

2022, the Chief Operating Officer of Lakesight

Technologies Holding GmbH 2019–2021, the

Chief Sales Officer of Escatec Sdn. Bdh. 2018–2019 and many others since 1989. He

holds a Ph.D. in Engineering. Independent of the company and its major shareholders.

Did not hold any shares in Scanfil plc on December 31, 2023

Minna Yrjönmäki

Minna Yrjönmäki (born 1967, a Finnish citizen)

has been elected as a board member in the

Annual General Meeting on 27 April 2023. She

is the Chief Financial Officer of Wihuri Group as

of October 2023. She was the CFO (ad int.) of

Raute Corporation May 2022–April 2023. She

has served as the CFO of Uponor Corporation

2019–2021, SVP Group Financial Controlling

2016–2019 and SVP Financial Services and

Reporting 2014–2016 at Outokumpu Oyj. Prior

to that, she worked at Ahlstrom Oyj 2004–2014

e.g. as Group and Business Area Controller and as Group Controller and other

financial roles at Huhtamaki Oyj 1991–2004. She holds a Master of Science (Econ.).

Independent of the company and its major shareholders.

Did not hold any shares in Scanfil plc on December 31, 2023

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

Board had 17 meetings in 2023 of which four (4) were written resolutions without

convening a meeting. 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.

Diversity Principles 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 and

Remuneration Committee (or Shareholders’ Nomination Board) 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 on the Board of Directors.

The Annual General Meeting held on April 27, 2023, elected six (6) members to the

Board, four of whom are men and two women. 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 2023.

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 two members: Harri Takanen (chair) and Bengt Engström. The committee

convened four (4) times in 2023. The attendance rate of its members was 100%.

The Board of Directors has proposed to the Annual Meeting 2024 to establish a

permanent Shareholders’ Nomination Board which would replace the Nomination

and Remuneration Committee.

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: Juha Räisänen (chair), Christina

Lindstedt and Minna Yrjönmäki. The committee convened eight (8) times in 2023.

The attendance rate of its members was 100%.

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ANNUAL REPORT 2023/92

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 was the CEO of the company

since April 1, 2013 until August 31, 2023. Christophe Sut was nominated as the CEO

as of September 1, 2023.

Christophe Sut, CEO (as of Septemeber 1, 2023)

Christophe Sut (1973), a French and Swedish

citizen. He was previously the President of the

Manufacturing Solution at Sandvik AB 2021–

2023, Executive Vice President of Global

Solutions 2016–2021 and Vice President of

Business development 2014–2016 at ASSA

ABLOY AB, and the Development Director, EMEA

at CLIQ 2012–2014. Global Strategic Marketing

Manager at Niscayah Group 2010–2012, and

various marketing and development roles at

ASSA ABLOY AB in Sweden and France 2001–

2010. Various marketing roles at ITW Group and SAM Outillage 1997–2001. He holds

a Master’s degree in Marketing and Sales, and a Bachelor’s degree in Languages

and Mathematics.

December 31,2023, Christophe Sut held 5,000 shares in Scanfil plc and he

has option rights 2022(BI) 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, the amount is subject to the duration of the service term and

at the maximum equivalent to the monetary salary of 12 months can be paid to the

CEO as a severance package under 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 Develoment Officer

Riku Hynninen (1972) is responsible for

operational performance development,

combining the power of manufacturing and

information technologies, people and culture,

sustainability, and quality & lean management.

During the years 2018 - 2021, he was leading

the Scanfil operations as COO. Riku Hynninen

has previously worked at Nokia Corporation,

where he was responsible for manufacturing

technology, new product introduction and

lifecycle management for Mobile Networks

product portfolio. He holds a Master’s degree in Engineering.

He held (31 Dec 2023) 56,150 shares in Scanfil plc.

Markku Kosunen, Chief Procurement Officer

Markku Kosunen (1967) is responsible for Global

Sourcing and Supply Chain, including inventory

management. 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. He is an undergraduate of

technology.

He held (31 Dec. 2023) 37,763 shares in Scanfil plc.

Timo Sonninen, Chief Operating Officer

Timo Sonninen (1966) is responsible for the

factories’ operational and financial performance.

He has has previously worked for Efore Oyj as

Vice President, Operations, in Suzhou, China

2006–2013. Prior to that he has worked at

Incap Oyj among others as Vice President,

Manufacturing Services and the Plant Director

of Vuokatti factory. He holds a Bachelor’s degree

of Science.

He held (31 Dec. 2023) 143,500 shares in Scanfil plc.

Kai Valo, Chief Financial Officer

Kai Valo (1965) is responsible for finance,

accounting and risk management. Group’s

Chief Financial Officer. During 2015–2016 Kai

was the CFO at Norpe Group. Prior to that he

was at Lite-On Mobile Group Director of Finance

and Control in Beijing, China 2009–2015. Before

that (during 1999–2008) he had several finance

related management positions in Perlos. He

hold Master’s degree in Economics.

He held (31 Dec. 2023) 20,000 shares in

Scanfil plc.

Christina Wiklund, Chief

Commercial Officer

Christina Wiklund (1971) is responsible for sales

and marketing activities and customer relations

as of January 17, 2022. Christina Wiklund comes

from GE Additive, where she held the Vice

President/Head of Sales EMEA position. Prior to

that she has worked at Flex as Vice President of

sales and account management. Before that she

worked at Solectron and Ericsson in business

development and account management roles.

She holds a Bachelor’s degree of Social Science

and has attended Stanford Graduate School of Business Executive Program.

She held (31 Dec. 2023) 2,000 shares in Scanfil plc.

Petteri Jokitalo, CEO (Apri 1, 2013 - August 31, 2023)

Before starting as the CEO of Scanfil, Petteri Jokitalo worked at Scanfil EMS Oy as

Director of Sales and Marketing 2012–2013, at Meka Pro Oy as Managing Director

during 2007–2011, at Scanfil Oyj in management tasks of sales and business

development during 2003–2007 and in international tasks at Nokia Networks during

1998–2003. Petteri Jokitalo holds a Master’s degree in Engineering.

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ANNUAL REPORT 2023/93

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

Wutha-Farnroda, Germany

Scanfil OÜ

Pärnu, Estonia

Scanfil

Sieradz Sp. z o.o.

Sieradz, Poland (Branch)

Scanfil Inc.

Duluth, Atlanta,

The USA

Scanfil

Malmö AB

Malmö, Sweden

Scanfil 

Myslowice Sp. z o.o.

Myslowice, Poland

Scanfil

Åtvidaberg AB

Åtvidberg, Sweden

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

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.

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.

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ANNUAL REPORT 2023/94

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 transactions with company shares carried out by managers (“PDMR”, person

discharging managerial responsibilities) 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.

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 2023

Scanfil plc did not have any changes in the group structure in 2023.

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ANNUAL REPORT 2023/95

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 27, 2023 selected the auditing firm KPMG

Oy Ab to be the company’s auditor, and they named Authorized Public Accountant

Janna Kivimäki as the main auditor. The audit fees for the Finnish companies of

the Group for the 2023 accounting year were EUR 102,863 in total, and the parent

company’s share was EUR 66,465. The audit fees for the foreign companies of the

Group were EUR 282,734 in total. For other services, the auditing company was

paid EUR 36,555.

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.

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.

ANNUAL REPORT 2023/96

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GovernanceFinancial reviewAnnual review

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 2023, 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 2023”.

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 2023”.

KEY ELEMENTS OF REMUNERATION

REMUNERATION REPORT FOR THE

GOVERNING BODIES 

ANNUAL REPORT 2023/97

Sustainability report

GovernanceFinancial reviewAnnual review

Scanfil’s financial and remuneration development over the last five years

Company turnover increased significantly in 2021-2022, and 2023 it was the highest in the company’s history. Profit margin

recovered when the challenges in the supply chain, especially semiconductors, started to fade out towards the end of 2022.

*No adjustments in the financial reporting period

Scanfil’s financial targets in 2023 were 5%-7% organic annual turnover growth and 7% adjusted operating profit margin. The

turnover target was achived whereas the company fell 0.1% behind in the profit margin target.

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.

2019 2020 2021 2022 2023

Turnover, EUR million 579.4 595.3 695.7 843.8 901.6

Annual turnover growth, % 2.9 2.7 16.9 21.3 6.9

Adjusted operating profit, EUR million 39.4 39.1 40.3 45.4* 61.3*

Adjusted operating profit, % 6.8 6.6 5.8 5.4* 6.8*

Share price change, VWAP, % -6.8 21.9 50.1 -13.4 18.1

,  EUR 2019 2020 2021 2022 2023

Harri Takanen (chair) 49.3 51.0 54.1 61,5 60.7

Thomas Dekorsy (as of 27 April 2023) - - - - 22.8

Bengt Engström 27.5 29.5 33.8 40.0 39.3

Christina Lindstedt 28.6 30.1 33.8 36.8 41.5

Juha Räisänen (as of 23 April 2020) - 17.4 33.8 37.8 45.8

Minna Yrjönmäki - - - - 25.6

Jarkko Takanen (until 2 February 2022) 30.2 31.7 34.9 9.0 -

Christer Härkönen (until 22 April 2021) 25.9 27.9 11.4 - -

Salaries and fees of the Board of Directors, in total 161.5 187.6 198.7 185.0 235.7

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. Petteri Jokitalo acted as the CEO until August 31,2023. Christophe Sut assumed his position as

the CEO September 1, 2023.

, EUR 2019 2020 2021 2022 2023

Salary, in total 269.5 289.7 295.3 304.0 354.2

Petteri Jokitalo 269.5 289.7 295.3 304.0 241.1

Christophe Sut - - - - 113.1

Fringe benefits, in total 13.6 12.3 14.2 14.8 14.5

Petteri Jokitalo 13.6 12.3 14.2 14.8 11.3

Christophe Sut - - - - 3.1

Performance bonus, in total 258.0 85.0 105.6 101.4 160.0

Petteri Jokitalo 258.0 85.0 105.6 101.4 160.0

Christophe Sut - - - - -

In shares and payable stock options, in total 71.2 132.2 631.3 - 1.111.1

Petteri Jokitalo 71.2 132.2 631.3 - 1,111.1

Christophe Sut - - - - -

In total 612.3 519.2 1,046.4 420.1 1,640.2

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 2019 2020 2021 2022 2023

In total 20.8 22.6 23.1 24.0 25.1

PAID SALARIES AND WAGES/AVERAGE NUMBER OF EMPLOYEES

ANNUAL REPORT 2023/98

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GovernanceFinancial reviewAnnual review

2. Remuneration of the Board of Directors in 2023

The remuneration of the Board members is decided by the General Meeting of Scanfil plc.

On April 27, 2023 the Annual General Meeting decided that:

• Members of the Board are paid EUR 3,000/month

• The Chairman of the Board is paid EUR 4,800/month.

Additionally, members of the Committee received a compensation of EUR 700/meeting and the Chair of the Audit Committee

EUR 350/month. In addition, a fee of EUR 350 per face-to-face meeting held outside of the Board Members country of

residence was paid.

The travel expenses of Board members were compensated in accordance with the company’s travel policy. No other benefits

were paid to the members of the Board on the basis of this position.

During the financial year of 2023, members of Scanfil plc’s Board of Directors did not receive any company’s shares or share-

based benefits as remuneration.

EUR Meeting fee Committee fee Fees in total

Harri Takanen 56,790 3,950 60,740

Thomas Dekorsy 22,800 - 22,800

Bengt Engström 36,677 2,650 39,327

Christina Lindstedt 36,677 4,800 41,477

Juha Räisänen 37,027 8,757 45,783

Minna Yrjönmäki 22,100 3,500 25,600

In total 212,069 23,657 235,727

MEETING AND COMMITTEE FEES PAID TO THE BOARD OF DIRECTORS IN 

3. Remuneration of the CEO in 2023

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, the amount is subject to the duration of the service term and at the

maximum equivalent to the monetary salary of 12 months can be paid to the CEO as a severance package under the terms

and conditions of his service contract.

The retirement age of the CEO is the statutory retirement age.

In addition, the former CEO Petteri Jokitalo was paid a performance bonus of EUR 316,224 regarding the year 2023 in 2024,

which was 100% of the maximum.

EUR Fixed Variable

Salary, in total 354,176 -

Petteri Jokitalo ,

Christophe Sut ,

Fringe benefits, in total 14,454 -

Petteri Jokitalo ,

Christophe Sut ,

Performance bonus from the year 2022 (50.8% of the maximum), in total - ,

Petteri Jokitalo  ,

Christophe Sut  

Stock option scheme, in total - 1,111,060

Petteri Jokitalo  ,,

Christophe Sut  

Salaries and fees, in total 368,630 1,271,544

Petteri Jokitalo , 1,271,544

Christophe Sut , 

Salaries and fees in total 1,640,174

SALARIES AND FEES OF THE CEO

ANNUAL REPORT 2023/99

Sustainability report

GovernanceFinancial reviewAnnual review

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”).

On 21 April 2022, the Annual General Meeting of Scanfil plc decided to authorize the Board of Directors to decide on granting

stock options rights to key personnel of the Scanfil Group and to decide on the terms and conditions of the maximum amount

of 1,200,000 option rights (“Stock Option scheme 2022”).

Number of options 120,000 120,000 120,000

Subscription period

1 May 2024 -

30 April 2026

1 May 2025 -

30 April 2027

1 May 2026 -

30 April 2028

Fair value, in total, EUR 199,200 196,800 1229,200

*Concerns CEO Christophe Sut. More details on stock option schemes can be found here.

ANNUAL REPORT 2023/100

Sustainability report

GovernanceFinancial reviewAnnual review

INDEPENDENT AUDITOR’S REASONABLE

ASSURANCE REPORT ON SCANFIL PLC’S ESEF

FINANCIAL STATEMENTS

To the Board of Directors of Scanfil Plc

We have undertaken a reasonable assurance engagement in respect of whether the

consolidated financial statements for the year ended 31 December, 2023 included

in the digital financial statements 7437004XD6U0FFDCT507-2023-12-31-en.zip of

Scanfil Plc (Business 742-9) have been marked up with iXBRL markups 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 primary statements and the notes to the consolidated financial

statements, and the company identification data 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 Management

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 responsibilities in accordance with these requirements.

The auditor applies International Standard on Quality Management ISQM 1, which

requires the firm to design, implement and operate a system of quality manage-

ment including policies or procedures regarding compliance with ethical require-

ments, professional standards and applicable legal and regulations 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 primary statements of the consolidated financial statements included in the

ESEF financial statements are, in all material respects, marked up with iXBRL

tags in accordance with Article 4 of the ESEF RTS, and;

• whether the notes to the consolidated financial statements and the company

identification data included in the ESEF financial statements data, have been

marked up, in all material respects, with iXBRL tags in accordance with Article

4 of the ESEF RTS; and

•

whether the ESEF financial statements and the audited financial statements are

consistent 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 primary statements of the consolidated financial statements,

the notes to the consolidated financial statements and the company identifica-

tion data included in the ESEF financial statements of Scanfil Plc identified as

7437004XD6U0FFDCT507-2023-12-31-en.zip for the year ended 31 December,

2023 are, in all material respects, marked up in compliance with the ESEF Regu-

latory Technical Standard.

Our audit opinion on the audit of the consolidated financial statements of Scanfil Plc

for the year ended 31 December, 2023 is set out in our Auditor’s Report dated 26

February, 2024. In this report, we do not express any audit opinion or other assur-

ance conclusion on the consolidated financial statements.

Helsinki 26 March, 2024 Janna Kivimäki

KPMG OY AB Authorised Public Accountant, KHT

ESEF ASSURANCE REPORT 

Scanfil plc

Yritystie 6, 85410 SIEVI

FINLAND

Tel. +358 8 48 82 111

scanfil.com

Scanfil is a trusted manufacturing partner and system supplier