Report by the Board of Directors

REPORT BY THE BOARD OF DIRECTORS

|AUDITED FINANCIAL STATEMENTS2

Report by the Boardof Directors

1 Jan–31 Dec 2025

CONTENTS

cash flow

in business operations

Board of Directors

for profit distribution and the Annual General Meeting 2026

year

and alternative performance measures

figures and ratios

by the Board of Directors and the financial statements

T

his ESEF report is a translation and has been published voluntarily.

REPORT BY THE BOARD OF DIRECTORS

|AUDITED FINANCIAL STATEMENTS3

Report by the Boardof Directors

1 Jan–31 Dec 2025

The operating environment

According to the Finnish Institute for Health and Welfare, the finan-

cial situation of the wellbeing services counties has moved in a more

positive direction. The reform measures and adjustment solutions

adopted by the wellbeing services counties are reflected in an im-

provement in their economic situation. Structural reforms and the

implementation of service networks are progressing unevenly across

the counties. Finland’s population is ageing rapidly and becoming in-

creasingly concentrated in regional urban centres. By the year 2040,

the number of people aged over 85 will almost double. The demo-

graphic shift, the growing need for services, and delays in structural

reforms are slowing the efforts to balance the finances of the wellbe-

ing services counties.

The wellbeing services counties must be able to cover their deficits by

the 2026 deadline. However, the Finnish Government has proposed a

legislative amendment that would allow counties which fully balance

their finances to cover their deficits only by the end of 2027 or 2028.

The evaluation procedures initiated in the wellbeing services counties

of East Uusimaa, Central Finland and Lapland are continuing. Amend-

ments to the Act on the Funding of Wellbeing Services Counties are

also being proposed, in line with the Government Programme, to fur-

ther develop the funding model from the beginning of 2027. A draft

for the Government’s legislative proposal is undergoing a public con-

sultation during February–March.

Queues for non-urgent specialised medical care have remained long

nationwide, and Valvira has issued an order to HUS Helsinki Univer-

sity Hospital and nine wellbeing services counties requiring them to

ensure access to non-urgent specialised care meets statutory stand-

ards by 30 April 2026 at the latest. A substantial region-specific pen-

alty has been set to enforce compliance.

Kela’s freedom-of-choice pilot for people aged 65 and over began in

September 2025, and its utilisation rate increased sharply towards

the end of the year. Under the pilot, people aged 65 or over are reim-

bursed by Kela for appointments with a general practitioner in the

private sector at a price that is equal to the customer fee in public

primary care. There are more than 1.3 million people over the age of

65 in Finland, and according to Kela, only 3.3 per cent had received

reimbursements for doctor’s visits under the pilot by the end of the

year. A change to Kela reimbursements forother private healthcare

doctor’s appointments took effect at the beginning of 2026. The re-

imbursement for a doctor’s visit decreased from EUR 30 to EUR 8,

and the same reimbursement level applies to remote appointments.

According to Statistics Finland, in December 2025 consumers’ assess-

ments of their current financial situation improved slightly compared

with the same period the year before. However, consumer confi-

dence in the economy remains low. Statistics Finland reports that in

December 2025 there were 51,000 more unemployed people than in

December 2024. Unemployment is now at its highest level since

2009.

The collective agreement period in the private social services sector

ended on 31 December 2025. Negotiations for a new agreement have

been ongoing since November, but employee organisations an-

nounced at the end of January that the talks had been suspended

without results. The collective bargaining agreement for private

healthcare service sector is valid until 30 April 2026. Wages in social

and healthcare services in the private sector have increased faster

than the general development of earnings between 2023 and 2024.

The private sector produces more than half of all appointments with

physicians. According to the occupational health statistics of Kela, ap-

proximately 2.1 million workers are covered by occupational

healthcare services, and private clinics are the most significant pro-

viders of occupational healthcare services. According to the health in-

surance statistics of the financial sector, over 1.3 million Finns have

private medical expenses insurance.

Pihlajalinna’s outlook for 2026

Pihlajalinna’s revenue declines as expected by approximately EUR 83

million from 2025 levels due to the expiry of outsourcing agreements

and the divestment of residential care units.

In 2026, Pihlajalinna will focus on organic growth and further im-

provement in profitability. The new operating model which entered

into effect at the beginning of the year, will ensure that development

and growth align with our strategy and respond to the transformation

of our business.

●

The Group estimates revenue to be approximately EUR 570-

600 million (EUR 652.3 million in 2025).

●

The Group estimates the adjusted operating profit before the

amortisation and impairment of in-tangible assets (EBITA) to

be 9-10 per cent of revenue (10,0 per cent of revenue in

2025).

Development in demand and general economic environment may

have a more significant impact on Pihlajalinna’s financial result than

currently expected.

Pihlajalinna’s medium-term strategic objectives

In 2025, Pihlajalinna published an updated strategy, according to

which Pihlajalinna’s ambition is to be a healthcare reformer that suc-

ceeds together with its partners and professionals. Pihlajalinna

achieves this by building more effective care pathways and fostering

a human-oriented work community. Pihlajalinna’s medium-term stra-

tegic objectives are:

●

Revenue at least EUR 700 million

●

Adjusted EBITA 12 per cent of revenue

●

Net debt/adj. EBITDA ratio below 2.5x

●

N

et Promoter Score (NPS) continues to be over 80

REPORT BY THE BOARD OF DIRECTORS

|AUDITED FINANCIAL STATEMENTS4

●

Employee Net Promoter Score (eNPS) exceeds 30

●

A dividend at least 1/3 of the annual earnings per share, taking

into consideration the company's financial position and financial

needs.

Consolidated revenue and result

Revenue

Pihlajalinna’s revenue was EUR 652.3 (704.4) million, a decrease of -

7.4 per cent. In Public Services, changes in outsourcing agreements

and the divestments of residential care units decreased revenue by a

total of EUR -49,4 million. Pihlajalinna’s comparable organic revenue

1)

decrease was EUR -1.4 million, or -0.2 per cent.

¹

)

Changes in outsourcing agreements and divestments have been ex-

cluded from the comparison period revenue.

Profitability

Adjusted operating profit before amortisation and impairment of in-

tangible assets (EBITA) was EUR 65.3 (55.2) million. Adjusted EBITA

margin was 10.0 (7.8) per cent. Net adjustments to EBIT amounted to

EUR 5.9 (-0.8) million. Profitability improved due to enhanced service

processes and strong offering in Private Healthcare Services and in

Public Services, profitability increased due to clarification of contract

obligations and the implementation of improvement measures.

In May, Pihlajalinna divested four special housing service units to Es-

peri Care Oy, in September,two residential care units to Mehiläinen

and in October-November, three smaller residential care units to At-

tendo. These transactions resulted in a sales gain of EUR 8.5 million,

which has been recognised as an adjustment item in EBITDA.

Profitability was negatively affected by a total of EUR 5.3 million in

non

‑

recurring costs related to the operating model renewal and the

associated change negotiations, EUR 4.0 million in write-downs re-

lated to premises, EUR 2.5 million in write-downs of tangible assets

and by EUR 1.5 million in provisions for renovation and maintenance

responsibilities recognised based on management’s assessment, total

of EUR 13.3 million. These items have been treated as adjustments to

both EBITDA and operating profit.

Pihlajalinna’s EBIT was EUR 52.7 (48.5) million, an increase of 8.7 per

cent.

The Group’s net financial expenses amounted to EUR -7.0 (-9.8) mil-

lion. Profit before taxes was EUR 45.8 (38.6) million.

Profit for the financial year was EUR 38.6 (30.2) million. Earnings per

share (EPS) was EUR 1.58 (1.13). Earnings per share was increased by

the sales gain from the divestment of residential care units, changes

in non-controlling interests and previously unrecognised deferred tax

assets from tax losses and net interest expenses.

Reporting segments

Pihlajalinna has two reportable segments: Private Healthcare Services

and Public Services. The reporting structure follows Pihlajalinna’s

business model and organisational structure.

The Private Healthcare Services operating segment consists of private

clinic, diagnostics, hospital, occupational healthcare, remote and fit-

ness center services. These comprehensive care path services are pro-

vided by Pihlajalinna to corporate customers, insurance companies,

the public sector, and private customers through its nationwide net-

work of medical centers and diverse digital channels.

The Public Services operating segment consists of social and

healthcare services produced primarily for the public sector, which in-

clude outsourcing and housing services, mainly remotely produced

responsible doctor services, as well as a wide range of staffing and re-

cruitment services.

Private Healthcare Services

Revenue

Revenue from Private Healthcare Services was EUR 465.2 (451.5) mil-

lion, an increase of 3.0 per cent. Revenue increased especially among

insurance company customers and occupational healthcare services.

Exceptionally low procurement volumes from the public sector de-

creased revenue. The number of doctor visits under Kela’s freedom-

of-choice pilot exceeded our average market share. Appointment vol-

umes at Pihlajalinna’s private clinics increased by 0.7 per cent.

Profitability

Adjusted EBITA was EUR 38.6 (33.6) million, an increase of 14.7 per

cent. The adjusted EBITA margin was 8.3 (7.4) per cent. Profitability

improved due to enhanced efficiency in service processes and the

successful expansion of the service offering. Profitability was chal-

lenged by low public-sector procurement volumes, generally weak

demand and the high utilisation rate of fixed-price occupational

healthcare agreements. Conversion, defined as the ratio of diagnos-

tics revenue to revenue from appointments, decreased slightly from

the comparison financial year. Net adjustments totalled EUR 6.2 (0.7)

million.

Profitability was negatively affected by a total of EUR 3.6 million in

non

‑

recurring costs related to the operating model renewal and the

associated change negotiations, as well as EUR 2.5 million in write-

downs of tangible assets recognised based on management’s assess-

ment. These items have been treated as adjustments to both EBITDA

and operating profit.

Operating profit (EBIT) was EUR 26.0 (25.8) million, an increase of 0.6

per cent.

Public Services

Revenue

Revenue from Public Services was EUR 199.2 (267.6) million, a de-

crease of -25.6 per cent. Changes in outsourcing agreements and the

divestments of residential care units decreased revenue by a total of

EUR -49.4 million. Revenue from responsible physician services and

workforce services also decreased. Comparable organic revenue

1)

in

Public Services decreased by -8.2 per cent.

Profitability

Adjusted EBITA was EUR 26.7 (21.5) million, an increase of 23.9 per

cent. Adjusted EBITA margin was 13.4 (8.0) per cent. Profitability in-

creased due to clarification of contract obligations and the implemen-

tation of improvement measures. Net adjustments totalled EUR -0.3

(-1.5) million.

In May, Pihlajalinna divested four special housing service units to Es-

peri Care Oy; in September, two residential care units to Mehiläinen;

and in October-November, three smaller residential care units to At-

tendo. These transactions resulted in a sales gain of EUR 8.5 million,

which has been recognised as an adjustment item in EBITDA.

Profitability was negatively affected by a total of EUR 1.8 million in

non

‑

recurring costs related to the operating model renewal and the

associated change negotiations, EUR 4.0 million in write-downs re-

lated to premises and by provisions of EUR 1.5 million for renovation

and maintenance responsibilities recognised based on management’s

assessment, total of EUR 7.3 million. These items have been treated

as adjustments to both EBITDA and operating profit.

EBIT amounted to EUR 26.7 (22.7) million, an increase of 17.9 per

cent.

REPORT BY THE BOARD OF DIRECTORS

|AUDITED FINANCIAL STATEMENTS5

¹

)

Changes in outsourcing agreements and divestments have been ex-

cluded from the comparison period revenue.

Consolidated statement of financial position and

cash flow

Statement of financial position

Pihlajalinna Group’s total statement of financial position was EUR

598.1 (630.2) million. Consolidated cash and cash equivalents were

EUR 30.7 (30.9) million. Consolidated net debt totalled EUR 271.7

(296.6) million. Net debt to adjusted EBITDA was 2.5 (2.9).Net debt

to adjusted EBITDA excluding IFRS 16 was 1.0 (1.46). The Group’s eq-

uity ratio was 32.2 (26.8) per cent.

Cash flow

Net cash flow from operating activities was EUR 75.6 (100.8) million.

The change in net working capital was EUR -18.4 (-2.1) million. Trans-

fer of outsourcing agreements to the wellbeing services counties in

Public Services has changed the Group’s working capital structure.

Compared to Public Services, Private Healthcare Services tie up signif-

icantly more working capital in accounts receivable.

Net cash flow from investing activities was EUR -5.7 (-12.3) million. In-

vestments in tangible and intangible assets were EUR -16.5 (-11.0)

million. The divestment of residential care units improved cash flow

from investing activities by EUR 8.4 million during the financial year.

The Group’s cash flow after investments (free cash flow) was EUR

69.9 (88.6) million.

Net cash flow from financing activities was EUR -70.1 (-82.2) million.

The change in financial liabilities, including changes in credit limits,

was EUR -12.8 (-32.6) million. During the financial year, Pihlajalinna

amortised its long-term loan by a total of EUR 10.0 (30.0) million. Dur-

ing the financial year, Pihlajalinna paid hybrid bond interests of EUR -

2.4 (-2.4) million which have been recognised as a deduction from re-

tained earnings, net of tax. Interest paid and other financial expenses

amounted to EUR -9.3 (-11.9) million. Due to refinancing, the financial

e

xpenses paid in the comparison period were increased by non-recur-

ring expenses and interest payments.

Financing arrangements

Pihlajalinna Group’s financing arrangement comprises a EUR 100 mil-

lion long-term loan and a EUR 60 million revolving credit facility for

general financing needs. The financing agreement negotiated in 2024

was originally for three years, maturing in June 2027, with two option

years. In June 2025, Pihlajalinna exercised one of the option years,

and the loan will now mature in June 2028. The agreement also in-

cludes the possibility of one further option year.

The financing arrangement includes customary financial covenants,

namely leverage (ratio of net debt to pro forma EBITDA) and gearing.

IFRS 16 lease liabilities are excluded from the covenant calculations.

At the end of the financial year, the Group met all financial covenants

under the agreement.

The loan margin of the financing arrangement is also linked to Pihla-

jalinna’s key sustainability targets: patient satisfaction, access to sur-

gical treatment and employee satisfaction. These sustainability objec-

tives have a minor impact on the loan margin depending on the num-

ber of targets achieved. The sustainability targets for 2025 were met,

resulting in loan margin reduction also for the next 12 months.

At the end of the financial year, Pihlajalinna had EUR 70 million in un-

used committed credit limits, consisting of a EUR 10 million credit

limit agreement and a EUR 60 million unused revolving credit facility.

The Group has an interest rate swap agreement with a nominal value

of EUR 65 million to convert the floating interest rate of the financing

arrangement to a fixed rate. Cash flow hedge accounting is applied to

the interest rate swap, meaning that the effective portion of the

change in fair value is recognised in other comprehensive income.

The interest rate swap began in March 2023 and remains valid until

25 March 2027.

Hybrid bond

On 27 March 2023, Pihlajalinna issued a hybrid bond of EUR 20 mil-

lion. The hybrid bond bears a fixed interest rate of 12.00 percent per

annum until 27 March 2026 (Reset Date), and from the Reset Date,

the interest rate will be floating as defined in the terms and condi-

tions of the hybrid bond.

The hybrid bond is an instrument subordinated to the company’s

other debt obligations. The hybrid bond does not have a specified

maturity date. Pihlajalinna is entitled to redeem the hybrid bond on

the Reset Date and thereafter on each interest payment date. The hy-

brid bond will be treated as equity in Pihlajalinna’s IFRS consolidated

financial statements. The hybrid bond does not confer to its holders

the rights of a shareholder or dilute the holdings of the current share-

holders.

Acquisitions and capital expenditure

Gross investments, including acquisitions, totalled EUR 46.6 (31.3)

million. Gross investments consisting of development, additional and

replacement investments, amounted to EUR 13.9 (14.0) million. Gross

investments in right-of-use assets were EUR 32.3 (14.0) million, and

gross investments in M&A transactions amounted to EUR 0.3 (3.1)

million.

The divestments of Pihlajalinna’s residential care units decreased

right

‑

of

‑

use assets by EUR 8.6 million.

Investment commitments for the Group’s development, additional

and replacement investments amounted to approximately EUR 4.7

(3.5) million. The commitments relate to business premises as well as

additional and replacement investments in clinical equipment and in-

formation system projects.

Personnel

At the end of the financial year, the number of personnel amounted

to 4,540 (6,493), a decrease of -30 per cent. The Group’s average per-

sonnel as full-time equivalents were 3,928 (4,416), a decrease of -11

per cent. In Public Services the transfer of outsourcing agreements to

the wellbeing services counties, particularly the transfer of Kuusi-

olinna Tervey's social services on 1 September 2025, and the divest-

ments of residential care units reduced the Group’s number of per-

sonnel.

At the end of the reporting period, Public Services employed 1,648

(3,428) people and Private Healthcare Services 2,856 (3,065) people.

Converted into average full-time equivalents, Public Services em-

ployed 1,824 (2,417) people and Private Healthcare Services 2,104

(1,999) people.

In September, Pihlajalinna initiated a Group-wide reform to renew its

operational model, and the related change negotiations began simul-

taneously. The negotiations ended in October, and a total of 88 roles,

primarily administrative, were reduced from the Group and 92 posi-

tions were subject to substantial changes.

The Group’s employee benefit expenses totalled EUR 289.6 (321.2)

million, a decrease of EUR -31.6 million.

During the financial year, the sickness-related absences rate among

personnel was 5.4 (5.6) per cent.

REPORT BY THE BOARD OF DIRECTORS

|AUDITED FINANCIAL STATEMENTS6

During the financial year the number of practitioners was 2 251 (2

145).

Share-based incentive schemes

Performance Share Plan (PSP)

Pihlajalinna's Board of Directors has established a long-term share-

based incentive plan for key employees of the Group. The Perfor-

mance Share Plan 2025–2029 consists of three performance periods,

covering the financial years 2025–2027, 2026–2028 and 2027–2029.

The Board of Directors decides annually on the commencement and

details of every performance period. One performance period under

the programme, covering 2025–2027, has been commenced. The po-

tential rewards will be paid partly in Pihlajalinna shares and partly in

cash. The programme is accounted for in full as an equity-settled

share-based payment.

The target group for the 2025–2027 performance period consists of

approximately 24 key employees, including the members of the

Group Management Team and the CEO. The performance criteria for

the 2025–2027 period are relative Total Shareholder Value (rTSR), an-

nual revenue growth, return on capital employed and the rate of sick-

ness-related absences. The value of the rewards to be paid under the

plan corresponds to a maximum total of 553,000 Pihlajalinna shares

including the proportion payable cash.

Research and development

Increases to intangible assets totalled EUR 5.6 (2.0) million during the

financial year. In 2025, Pihlajalinna made substantial progress in the

development of its IT and digital capabilities, focusing on service

modernisation and the strengthening of data-driven management.

Customer journeys for insurance partners were further developed to

better support business and customer requirements. In addition, the

s

ervice portal for organisational customers was renewed and intro-

duced in a pilot phase. As part of this renewal, data-driven manage-

ment tools for occupational health services were comprehensively re-

designed for use by both customers and professionals.

During the year, Pihlajalinna’s data lakewas completed and achieved

Class B certification as a patient information system. This significantly

enhances data governance and enables broader and more systematic

utilisation of data in service development. Information security was

further reinforced through technical and administrative measures,

and employee information security training was updated to address

increasing regulatory and operational requirements.

In 2026, development efforts will increasingly focus on data-driven

operational improvement and enhancement of the user experience

of digital services. The scope and utilisation of the data lake will be

expanded, and data and artificial intelligence will be leveraged to

support the automation of value-based care pathways and to im-

prove process efficiency. Key priorities include improving customer

journeys, particularly for individual customers, and strengthening co-

operation with insurance partners to enhance the efficiency and con-

tinuity of customer pathways.

Furthermore, in 2026 the data-driven management tools offered to

organisational customers will be expanded to support collaboration

with wellbeing services counties and work ability management. The

systematic development of information security capabilities will con-

tinue.

Pihlajalinna’s key intangible assets are a highly skilled, motivated, and

well

‑

being-oriented workforce, as well as customer satisfaction and

partnerships with suppliers that have been built over many years.

These resources enable Pihlajalinna to maintain its competitive ad-

vantage and are a central part of the Pihlajalinna’s strategy.

Risk management, risks and uncertainties in busi-

ness operations

Pihlajalinna’s risk management goals, principles and operating meth-

ods are described as a part of the Corporate Governance Statement

in section

As part of sustainability reporting, the

management of Pihlajalinna's significant impacts, risks, and opportu-

nities (IRO) can be found on section

General disclosures

(ESRS2).

Pihlajalinna’s operations are subject to strategic, operational, finan-

cial and damage-related risks. The aim of Pihlajalinna’s risk manage-

ment is to operate as systematically as possible and to integrate risk

management into normal business processes. The Group invests in

quality management systems and in managing occupational safety

and work ability risks. Pihlajalinna seeks to limit potential adverse im-

pacts, and the assessment of sustainability-related risks plays an im-

portant role in risk management.

Pihlajalinna operates only in Finland. Uncertainty in world politics has

indirect impacts on the Group’s operations through slowing economic

growth, potential supply-chain disruptions, inflation and changes in

market interest rates.

In all its operations, Pihlajalinna takes data protection, information

security and related requirements into account. Information security

incidents or compromised data protection may lead to significant rep-

utational harm and claims for compensation, among other conse-

quences.

The company has identified uncertainties related to the availability of

personnel in the social and healthcare sector, the development of

wages and wage harmonisation. In addition, a high level of sick-ness-

related absences among personnel may reduce the company’s profit-

ability and complicate the provision of services.

Pihlajalinna has identified risks related to growth projects, including

acquisitions, digital development, and information system projects.

Successful implementation of these projects is a prerequisite for prof-

itable growth in line with the company’s strategy.

Monitoring and forecasting compliance with the covenants of the

company’s financing agreements form a significant part of the com-

pany’s risk management.

General cost inflation and wage inflation affect the cost level and,

consequently, Pihlajalinna’s business operations and profitability.In

addition, inflation and changes in interest rates influence consumers'

disposable income and employment trends, which in turn affect the

demand for private healthcare services. Increases in prices and

changes in terms of private medical expense insurance may also af-

fect demand for private healthcare services.

The most significant risks and uncertainties in social and healthcare

services are linked to the policies and legislation implemented in the

Finnish society.

The tax audit concerning the compensation scheme has been com-

pleted during the financial year. The company was ordered to pay a

total of EUR 0.7 million in late-payment interest and other penalty

charges. The company has appealed against the decision. Also a tax

audit related to value-added taxation is ongoing in the Pihlajalinna

Group. Companies subject to the tax audit have received tax audit re-

ports at the beginning of the year. Responses have been submitted,

and appeals will be made.

REPORT BY THE BOARD OF DIRECTORS

|AUDITED FINANCIAL STATEMENTS7

Changes to complete outsourcing agreements and to resi-

dential care services

Jämsän Terveys Oy’s agreement with the Wellbeing Services County

of Central Finland expired in August 2025. The expiration of the ser-

vice agreement decreased the Group’s revenue by approximately

EUR 19 million from 2024 levels.

The primary and specialised care services provided by Jokilaakson

Terveys Oy at Jokilaakso Hospital ended in accordance with the sub-

contracting agreement in August 2025. The expiration of the service

agreement decreased the Group’s revenue by approximately EUR 4

million from 2024 levels.

Kuusiolinna Terveys Oy’s agreement with the Wellbeing Services

County of South Ostrobothnia expired in December 2025. It was

agreed with the Wellbeing Services County of South Ostrobothnia

that the services would gradually transfer to the wellbeing services

county during 2025. This change and other changes in the service

agreement during 2025 decreased the Group’s revenue by approxi-

mately EUR 19 million from 2024 levels.

Pihlajalinna and the Wellbeing Services County of Pirkanmaa have

agreed that the service production of Kolmostien Terveys will con-

tinue until the end of April 2026. Pihlajalinna was selected as the ser-

vice provider for the complete outsourcing of services in Northern

Pirkanmaa starting from April 2026.

The expiration of contracts and the commencement of the Northern

Pirkanmaa complete outsourcing arrangement will, on a net basis, re-

duce the Group’s revenue by approximately EUR 72 million from the

2025 levels.

In addition, the divestments of Pihlajalinna’s residential care units

during the 2025 financial year will reduce the Group’s revenue by ap-

proximately EUR 11 million from the 2025 levels.

Pending legal proceedings

Pihlajalinna is involved in certain pending legal proceedings concern-

i

ng employment relationships and other matters, but they are not ex-

pected to have a significant financial impact on the Group.

The company's subsidiary Jämsän Terveys Oy has taken legal action in

the district court against the City of Jämsä, a former client. The dis-

pute concerns mainly COVID-19-related costs which the City of Jämsä

failed to pay in breach of the service agreement. The District Court of

Central Finland considered the case and rendered its decision in late

December 2024. The court ruled the City of Jämsä must pay Jämsän

Terveys the claimed COVID-19-related costs, with interest. Other as-

pects of the dispute, such as the impact of the transfer of personnel

on the annual fee, were settled by the parties before the court hear-

ing. The City of Jämsä appealed the decision to the Vaasa Court of Ap-

peal, which granted the City permission to proceed further. Accord-

ingly, the decision of the District Court of Central Finland is not legally

binding. The Court of Appeal issued its decision in the dispute on 17

February 2026. The Court of Appeal dismissed the appeal lodged by

the City of Jämsä against the District Court’s decision with respect to

the main claim.

Shareholders’ Nomination Board

The Shareholders’ Nomination Board is comprised of Chair Sari Hei-

nonen (LocalTapiola-Group), Mikko Wirén (MWW Yhtiö Oy), Hanna

Hartikainen (Fennia Mutual Insurance Company) and Carl Petterson

(Elo Mutual Pension Insurance Company). The Chair of the Board of

Directors of Pihlajalinna Plc Jukka Leinonen participated in the work

of the Nomination Board as an expert.

Board of Directors

The Annual General Meeting on 24 April 2025 resolved that the num-

ber of the members of the Board of Directors shall be fixed at six

members instead of the previous seven. Kim Ignatius, Heli Iisakka, Ti-

ina Kurki, Jukka Leinonen, Leena Niemistö and Mikko Wirén were re-

elected to serve as members of the Board of Directors until the next

Annual General Meeting. The Annual General Meeting elected Jukka

Leinonen as the Chair of the Board and Leena Niemistö as the Vice-

Chair of the Board.

Committees nominated by the Board

Pihlajalinna Plc Board of Directors appointed the following members

to its committees:

●

Audit Committee: Kim Ignatius (chair), Heli Iisakka and Tiina

Kurki

●

People and Sustainability Committee: Leena Niemistö (chair),

Jukka Leinonen and Mikko Wirén.

It was agreed that all members of the Board of Directors may join any

of the committee meetings.

Remuneration of the members of the Board of Di-

rectors

The Annual General Meeting of 24 April 2025 resolved that the fol-

lowing annual remuneration will be paid to the members of the Board

of Directors elected for the term of office ending at the 2026 Annual

General Meeting: EUR 66,000 per year to the Chair of the Board of Di-

rectors, EUR 44,000 per year to the Vice-Chair and to the Chair of the

Audit Committee and to the Chair of the People and Sustainability

Committee, and EUR 33,000 per year to the other members.

The AGM resolved that annual remuneration shall be paid in com-

pany shares and in cash, with approximately 40 per cent of the remu-

neration used to acquire shares in the name and on behalf of the

members of the Board of Directors, and the remainder paid in cash.

The remuneration could be paid either entirely or partially in cash if

the member of the Board of Directors was, on the day of the AGM, 24

April 2025, in possession of over EUR 1,000,000 worth of company

shares. The company was responsible for the expenses and transfer

tax arising from the acquisition of the shares. If the term of a Board

member ends before the Annual General Meeting of 2026, the Board

is entitled to decide on the possible recovery of the remuneration in a

manner it deems appropriate.

The AGM further decided that Chair of the Board shall be paid a

meeting fee of EUR 1,000 in cash for each meeting of the Board of Di-

rectors and its committees, and that the other members of the Board

shall be paid EUR 660 per meeting. In addition, reasonable travel ex-

penses will also be reimbursed to the members of the Board in ac-

cordance with the company’s travel policy.

Board authorisations

The Annual General Meeting of 24 April 2025 authorised the Board of

Directors to decide on the acquisition of a maximum of 2,260,000

shares, which is approximately 10 per cent of the Group’s current

number of shares. Own shares may be repurchased based on the au-

thorisationonly by using unrestricted equity. Targetedshare acquisi-

tion is possible. The authorisation is effective until the next Annual

General Meeting, or until 30 June 2026 at the latest.

The Annual General Meeting also authorised the Board of Directors to

decide on a share issue and other special rights conferring an entitle-

ment to shares under Chapter 10, Section 1 of the Limited Liability

Companies Act. The number of shares to be issued cannot exceed

2,260,000 shares, which corresponds to approximately 10 per cent of

REPORT BY THE BOARD OF DIRECTORS

|AUDITED FINANCIAL STATEMENTS8

a

ll the shares in the Group. The authorisation concerns both the issu-

ance of new shares and the sale or transfer of the Group’s own

shares. The authorisation permits a targeted share issue. The authori-

sation is effective until the next Annual General Meeting, or until 30

June 2026 at the latest.

Repurchase and transfer of own shares

In March and May 2025, Pihlajalinna conveyed a total of 101,236 own

shares without consideration to key persons based on the perfor-

mance-based earning period 2024 of the share-based incentive pro-

gramme in accordance with the terms and conditions of the plan.

In May, Pihlajalinna conveyed a total of 7,114 of its own shares to the

members of the Board of Directors as part of their annual remunera-

tion.

With the authorisation of the Annual General Meeting 2025, Pihla-

jalinna started repurchasing its own shares on 19 June 2025 and com-

pleted the repurchase on 16 July 2025. The shares were repurchased

for use as part of the remuneration payments under the Group’s in-

centive programme and for the annual remuneration of the members

of the Board of Directors. During the period, Pihlajalinna acquired a

total of 107,235 own shares for an average price of EUR 15.8529 per

share. The total amount used for the repurchase was EUR 1.7 million.

Following the repurchase of shares and transfer of shares mentioned

above, Pihlajalinna held 140,050 own shares on 31 December 2025,

corresponding to 0.62 per cent of the total number of shares.

During the financial year, a subsidiary of the Pihlajalinna Group repur-

chased its own shares worth EUR 1.4 million. The repurchased shares

were cancelled during the financial year.

Shares and shareholders

Pihlajalinna’s share is listed in the Nasdaq Helsinki main market under

the trading code PIHLIS. The total number of shares in the Group is

22,620,135. On 31 December 2025, 22,480,085 of the shares were

outstanding and 140,050 were held by the company which corre-

sponds to 0.62 per cent of all shares and votes. At the end of the fi-

nancial year, the company had 16,322 (15,202) shareholders.

REPORT BY THE BOARD OF DIRECTORS

|AUDITED FINANCIAL STATEMENTS9

Distribution of shareholding by size

range, 31 Dec 2025

Private companies

Financial and insurance institutions

Public entities

Households

Non-profit organisations

Nominee registered

Distribution of shareholding by sector 31 Dec 2025

Number of

shareholders

% of shareholders

Number of shares

Percentage of

shares, %

Private companies

448

2.7 %

3,997,438

17.7 %

Financial and insurance institutions

29

0.2 %

9,660,813

42.7 %

Public entities

6

0.0 %

2,134,175

9.4 %

Households

15,754

96.6 %

4,815,141

21.3 %

Non-profit organisations

43

0.3 %

132,331

0.6 %

Foreign shareholders

33

0.2 %

12,330

0.1 %

Total

16,313

100.0 %

20,752,228

91.7 %

Nominee registered

9

1,867,907

8.3 %

Outstanding shares

22,620,135

100.0 %

S

hare-related information, outstanding shares

2025

2024

No. of shares outstanding at end of period

22,480,085

22,478,951

Average no. of shares outstanding during period

22,514,581

22,511,765

Highest price, EUR

17.30

11.85

Lowest price, EUR

10.00

6.88

Average price, EUR ¹⁾

14.50

8.29

Closing price, EUR

14.60

10.50

Share turnover, 1,000 shares

4,785

3,184

Share turnover, %

21.3

14.1

Market capitalisation at end of period, EUR million

328.2

236.0

¹⁾ average rate weightedby trading level

REPORT BY THE BOARD OF DIRECTORS

|AUDITED FINANCIAL STATEMENTS10

Distribution of shareholding by size range, 31 Dec 2025

Shares per shareholder

Number of shareholders

% of shareholders

Number of shares

Percentage of shares, %

1 - 100

9,965

61.1 %

394,760

1.7 %

101 - 1 000

5,621

34.4 %

1,847,804

8.2 %

1 001 - 10 000

659

4.0 %

1,842,897

8.1 %

10 001 - 100 000

59

0.4 %

1,560,186

6.9 %

100 001 - 500 000

10

0.1 %

2,100,580

9.3 %

500 001 -

8

0.0 %

14,873,908

65.8 %

Total

16,322

100.0 %

22,620,135

100.0 %

of which nominee-registered

shares

8

1,867,907

8.3 %

Outstanding shares

22,620,135

100.0 %

Shares and shareholders

Distribution of shareholding by size

range, 31 Dec 2025

1

̶

100

Shares per shareholder

101

̶̶

1 000

1 001

̶̶

10 000

10 001

̶̶

100 000

100 001

̶̶

500 000

500 001 ̶̶

M

ajor shareholders 31 Dec 2025

Number of shares

Percentage of shares and votes

1

LOCALTAPIOLAGENERAL MUTUAL INSURANCE COMPANY

3,809,028

16.8 %

2

FENNIA MUTUAL INSURANCE COMPANY

2,357,965

10.4 %

3

MWW YHTIÖ LTD

2,319,010

10.3 %

4

LOCALTAPIOLAMUTUAL LIFE INSURANCE COMPANY

2,291,385

10.1 %

5

SKANDINAVISKA ENSKILDA BANKEN AB (PUBL) HELSINKI BRANCH

1,290,047

5.7 %

6

ELO MUTUAL PENSION INSURANCE COMPANY

1,267,161

5.6 %

7

ILMARINEN MUTUAL PENSION INSURANCE COMPANY

828,431

3.7 %

8

NIEMISTÖ LEENA KATRIINA

710,881

3.1 %

9

VIPUNEN CAPITAL OY

360,000

1.6 %

10

NORDEA LIFE ASSURANCE FINLAND LTD

352,266

1.6 %

10 largest, total

15,586,174

68.9 %

Other shareholders

7,033,961

31.1 %

Total

22,620,135

100.0 %

REPORT BY THE BOARD OF DIRECTORS

|AUDITED FINANCIAL STATEMENTS11

The Board of Directors’ proposal for profit distri-

b

ution and the Annual General Meeting 2026

The parent company’s total distributable funds amount to EUR

213,414,518.25 of which the profit for the financial year 2025 is EUR

6,877,277.88. The Board of Directors proposes that a dividend of EUR

0.53 per share be paid for the financial year ended on 31 December

2025. On the financial statement date, 31 January 2025, the total

number of outstanding shares was 22,480,085. In accordance with

the Board of Directors’ proposal, the total dividend would be EUR

11,914,445.05.

No material changes have taken place in the company’s financial posi-

tion after the end of the financial year. The company’s liquidity posi-

tion is good and, in the view of the Board of Directors, the proposed

distribution does not jeopardise the company’s ability to fulfil its obli-

gations.

Earnings per share for the financial year was EUR 1.58. The proposed

dividend of EUR 0.53 per share corresponds to 33 per cent of earnings

per share and to an effective dividend yield of 3.63 per cent.

Pihlajalinna Plc’s Annual General Meeting is planned to be held on 31

March 2026 in Tampere. The Board of Directors will decide on the no-

tice of the General Meeting and the included proposals later.

Calculation of the parent company's distributable funds:

EUR

31 Dec 2025

Reserve for invested unrestricted equity

183,190,483.50

Retained earnings

23,346,756.87

Result for the period

6,877,277.88

Total

213,414,518.25

Events after the balance sheet date

On 12 February 2026, Pihlajalinna announced that it will exercise its

right to redeem the EUR 20 million hybrid bond issued on 27 March

2023. The hybrid bond will be redeemed in full in accordance with its

terms on the redemption date, 27 March 2026.

On 12 February 2026, Pihlajalinna announced that its Board of Direc-

tors has decided to launch a new earnings period for the Group’s

long-term incentive programme for key employees covering 2026–

2028. The earning period is part of the company’s ongoing incentive

programme. The performance criteria for the 2026–2028 earning pe-

riod are tied to relative Total Shareholder Value(rTSR), annual reve-

nue growth, return on capital employed and the rate of sickness-re-

lated absence.

On 12 February 2026, Pihlajalinna announced that Heikki Tarkkila

(Lic.Med.) has been appointed Chief Commercial Officer and a mem-

ber of the Group Management Team. Tarkkila assumed his role on 1

March 2026.

REPORT BY THE BOARD OF DIRECTORS

|AUDITED FINANCIAL STATEMENTS12

Calculation of key financial figures and alternative performance measures

Key figures

Earnings per share (EPS)

Profit for the financial period attributable

to owners of the parent company - Hy-

brid bond interest expenses net of tax

Average number of shares during the fi-

nancial year

Alternative performance measures

Equity per share

Equity attributable to owners of the par-

ent company

Number of shares at the end of the finan-

cial period

Dividend per share

Dividend distribution for the financial

year (or proposal)

Number of shares at the end of the finan-

cial period

Dividend/result, %

Dividend per share

x 100

Earnings per share (EPS)

Effective dividend yield, %

Dividend per share

x 100

Closing price for the financial year

P/E ratio

Closing price for the financial year

Earnings per share (EPS)

Share turnover, %

Number of shares traded during the pe-

riod

x 100

Average number of shares

Return on equity (ROE), %

Profit for the period

x 100

Return on equity indicates how much re-

turn on equity has been accumulating dur-

ing the financial year. It reflectsthe com-

pany’s ability to manage the capital in-

vested in the company by the owners.

Equity (average)

Return on capital employed, %

(ROACE)

Profit before taxes + financial expenses

x 100

Return on capital employed measures the

relative profitability of the company,that

is the return that has been obtained for

the capital invested in the company that

requires interest or other returns.

Total statementof financial position –

non-interest-bearing liabilities (average)

Equity ratio, %

Equity

x 100

Equity ratio measures the company’ssol-

vency, loss tolerance and the abilityto

cope with commitments in the long term.

It reflects how much of the company’s as-

s

ets have been financed with equity.

Total statementof financial position –

prepayments received

Gearing, %

Interest-bearing net debt – cash and cash

equivalents

x 100

Gearing describes the indebtedness of the

company. It reflects whatthe ratio of the

owners’ own capital invested in the com-

pany is and the interest-bearing debts bor-

rowed from financiers.

Equity

EBITDA

Operating profit + depreciation, amorti-

sation and impairment

EBITDA shows how much of the com-

pany’s revenue is left over afterdeducting

operating expenses. Assessments of

whether EBITDA is sufficiently high should

consider the company’s financial ex-

penses, depreciation requirements and in-

tended profit distribution.

EBITDA, %

Operating profit + depreciation, amorti-

sation and impairment

x 100

Revenue

Adjusted EBITDA¹⁾

Operating profit + depreciation, amorti-

sation and impairment + adjustment

items

Adjusted EBITDA provides significant addi-

tional information on profitability by elimi-

nating items that do not necessarily reflect

the profitability of the company’s opera-

tive business. Adjusted EBITDA improves

comparability between periods.

Adjusted EBITDA, % ¹⁾

Operating profit + depreciation, amorti-

sation and impairment + adjustment

items

x 100

Revenue

Adjusted operating profit be-

fore the amortisation and im-

pairment of intangible assets

(EBITA)¹⁾

Operating profit + adjustment items +

amortisation

and impairment of intangible assets

Adjusted EBITA, %¹⁾

Adjusted operating profit beforethe

amortisation and impairment of intangi-

ble assets (EBITA)

x 100

Revenue

Net debt/Adjusted EBITDA¹⁾

Interest-bearing net debt - cash and cash

equivalents

The key figure describes how quickly the

company would get its financial liabilities

paid at the current rate of earnings, if the

EBITDA were used in full to pay the finan-

cial liabilities, if the company does not, for

example, invest or distribute dividends.

Adjusted EBITDA

Cash flow after investments

Net cash flow from operating activities +

net cash flow from investing activities

REPORT BY THE BOARD OF DIRECTORS

|AUDITED FINANCIAL STATEMENTS13

Adjusted operating profit

(EBIT)¹⁾

Operating profit + adjustment items

Adjusted operating profit provides signifi-

cant additional information on profitability

by eliminating items that do not neces-

sarily reflect the profitability of the com-

pany’s operating business. Adjusted oper-

ating profit improves comparability be-

tween periods.

Adjusted operating profit, % ¹⁾

Adjusted operating profit (EBIT)

x 100

Revenue

Profit before taxes

Profit for the financial year + income tax

Gross investments

Increase in tangible and intangible assets

and in right of-use assets

Comparable revenue for the

previous period

Revenue from the previous period

- items affecting comparability

Comparable organic revenue

growth

Revenue for the period

- comparable revenue for the previous

period

x 100

Organic growth of revenue refersto the

growth of existing business that has not

been achieved through mergers or acquisi-

tions. Comparable organic growth is calcu-

lated excluding changes in outsourcing

agreements and divestments.

Comparable organic revenue

growth, %

Organic comparable revenue growth

x 100

Comparable revenue for the previous pe-

riod

¹⁾ Pihlajalinna has changed the definition of adjustment items affectingcomparability effective from 1 January 2025. The change simplifies the previous definition.The comparison figures have not been adjusted, as the change does not materiallyaffect the adjusted key figures reported for the year

2024.

Pihlajalinna's definition of adjustment items affecting comparabilityeffective from 1 January 2025:

Items affecting comparability are non-recurring and materialevents that are not part of normal day-to-day operations.Items affecting comparability include, among other items, costsrelated to business acquisitions, costs related to restructuring measures,impairment of assets, and gains and

losses arising from the sale or dis-continuation of business operations. Itemsaffecting comparability only include events with an impact on profit or lossof more than EUR 0.1 million.

Pihlajalinna’s definition of adjustment items affectingcomparability that was used until 31 December 2024:

Significant transactions that are not part of the normal course of business, arerelated to business acquisition costs (IFRS 3), are infrequentlyoccurring events or valuation items that do not affect cash floware treated as adjustment items affecting comparabilitybetween review periods. According

to Pihlajalinna’s definition, such items include, for example,restructuring measures, impairment of assets and the remeasurement of previous assets held bysubsidiaries, the costs of closing businesses and business locations, gains and losses on the saleof businesses, costs arising from operational

restructuring and the integration of acquired businesses, costs relatedto the termination of employment relationships as well as fines and correspondingcompensationpayments. Pihlajalinna has also presented costs according to the IFRS InterpretationsCommittee’s Agenda Decision concerning

cloud computing arrangements, and reversals of amortisation,as adjustment items. Cloud computing arrangements costs and reversalsof amortisation according to the IFRS Interpretations Committee’sAgenda Decision has not been presented as adjustment itemssince 1 Jan 2024.

A

ccording to the updated definition, adjusted operating profitbefore amortisation of intangible assets (EBITA)for the financial year 1 January–31 December 2024 would have been EUR 54.4 million.

REPORT BY THE BOARD OF DIRECTORS

|AUDITED FINANCIAL STATEMENTS14

Key financial figures

Scope of operations

2025

2024

2023

2022

2021

Revenue, EUR million

652.3

704.4

720.0

690.5

577.8

Change, %

-7.4

-2.2

4.3

19.5

13.6

Organic revenue growth, EUR million*

-1.4

50.9

75.4

34.9

58.1

Change, %

-0.2

7.8

12.0

6.0

11.4

Gross investments, EUR million*

46.6

31.1

66.4

234.5

44.8

% of revenue

7.1

4.4

9.2

34.0

7.8

Employee benefit expenses, EUR million

289.6

321.2

322.8

296.6

255.2

Personnel at the end of the period (NOE)

4,540

6,493

6,880

7,016

6,297

Average number of personnel (FTE)

3,928

4,416

4,821

4,851

4,746

Profitability

2025

2024

2023

2022

2021

EBITDA, EUR million

109.3

101.5

72.5

54.4

62.6

EBITDA, %

16.8

14.4

10.1

7.9

10.8

Adjusted EBITDA, EUR million*

108.6

100.7

80.6

64.2

65.3

Adjusted EBITDA, %

16.7

14.3

11.2

9.3

11.3

Operating profit (EBIT), EUR million

52.7

48.5

20.6

8.9

27.9

Operating profit, %

8.1

6.9

2.9

1.3

4.8

Adjusted operating profit before the amortisation and im-

pairment of intangible assets (EBITA), EUR million*

65.3

55.2

37.8

26.7

37.3

Adjusted EBITA, %

10.0

7.8

5.2

3.9

6.5

Net financial expenses, EUR million

-7.0

-9.8

-12.4

-7.4

-3.7

% of revenue

-1.1

-1.4

-1.7

-1.1

-0.6

Profit before tax, EUR million

45.8

38.6

8.2

1.5

24.2

% of revenue

7.0

5.5

1.1

0.2

4.2

Income tax, EUR million

-7.2

-8.5

-3.6

6.1

-

5.1

Profit for the period

38.6

30.2

4.6

7.7

19.1

Cash flow after investments, EUR million

69.9

88.6

0.0

-18.6

24.9

Return on equity (ROE), %*

21.3

19.2

3.4

6.2

16.1

Return on capital employed (ROCE), %*

10.9

9.7

4.0

2.3

8.8

Financing and financial position

2025

2024

2023

2022

2021

Interest-bearing net financial debt, EUR million

271.7

296.6

352.7

385.7

194.7

% of revenue

41.6

42.1

49.0

55.9

33.7

Equity ratio, %*

32.2

26.8

22.0

18.6

26.9

Gearing, %*

141.1

175.5

243.9

313.8

158.8

Net debt/adjusted EBITDA*

2.5

2.9

4.4

6.0

3.0

Share related information

2025

2024

2023

2022

2021

Earnings per share (EPS)

1.58

1.13

0.19

0.42

0.89

Equity per share, EUR*

8.48

7.59

6.56

5.50

5.27

Dividend per share, EUR

(board proposal)

0.53

0.38

0.07

0.30

Dividend per share, %*

33.5

33.6

37.3

33.7

Effective dividend yield, %*

3.63

3.62

0.99

2.37

Number of shares at year-end

22,480,085

22,478,951

22,566,155

22 549 644

22,594,235

Average number of shares

22,514,581

22,511,765

22,557,957

22 560 271

22,589,383

Market capitalisation, EUR million

328.2

236.0

159.3

192.1

285.6

Dividends paid, EUR million

(board proposal)

11.9

8.5

1.6

6.8

P/E ratio*

9.22

9.29

37.60

20.19

14.21

Closing price at year-end, EUR

14.60

10.50

7.06

8.52

12.64

* Alternative performance measure

REPORT BY THE BOARD OF DIRECTORS

|AUDITED FINANCIAL STATEMENTS15

Reconciliations with alternative key figures and ratios

Pihlajalinna publishes a wide range of alternative performance measures, i.e. key figures that are not based

on financial reporting standards, because they are considered to be significant for investors, the manage-

ment and the Board of Directors in assessing the group’s financial position and profitability. The alternative

performance measures should not be considered to be replacements for the key figures defined in IFRS

standards. The table below presents the reconciliation calculations for the alternative performance

measures and the justifications for their presentation.

Reading notes:

/ divide by the next number/numbers

- deduct the next number/numbers

+ add the next number/numbers

Return on equity (ROE), %

EUR million

1–12/2025

1–12/2024

Profit for period

38.6

30.2

Equity (average) x 100

180.8

156.8

Return on equity (ROE), %

21.3

19.2

Return on capital employed (ROACE), %

EUR million

1–12/2025

1–12/2024

Profit before taxes +

45.8

38.6

Financial expenses

8.0

10.9

Profit before taxes + financial expenses

53.8

49.6

Total statement of financial position - non-interest-bearing liabilities

(average of beginning and end of the period)

495.7

509.1

Return on capital employed (ROACE), %

10.9

9.7

Equity ratio, %

EUR million

1–12/2025

1–12/2024

Equity/

192.6

169.0

Total statement of financial position -

598.1

630.2

Equity ratio, %

32.2

26.8

Gearing, %

EUR million

1–12/2025

1–12/2024

Interest-bearing financial liabilities –

302.3

327.5

Cash and cash equivalents/

30.7

30.9

Equity x 100

192.6

169.0

Gearing, %

141.1

175.5

Net debt/adjusted EBITDA

EUR million

1–12/2025

1–12/2024

Interest-bearing financial liabilities -

302.3

327.5

Cash and cash equivalents

30.7

30.9

Net debt/

271.7

296.6

Adjusted EBITDA

108.6

100.7

Net debt/adjusted EBITDA

2.5

2.9

EBITDA and Adjusted EBITDA

EUR million

1–12/2025

1–12/2024

Profit for period

38.6

30.2

Income tax

-7.2

-8.5

Financial expenses

-8.0

-10.9

Financial income

1.1

1.1

Depreciation, amortisation and impairment

-56.6

-53.0

EBITDA

109.3

101.5

IFRS 3 costs –

1.0

0.0

Other EBITDA adjustments

-1.7

-0.8

Total EBITDA adjustments

-0.7

-0.8

Adjusted EBITDA

108.6

100.7

REPORT BY THE BOARD OF DIRECTORS

|AUDITED FINANCIAL STATEMENTS16

EBITDA, %

EUR million

1–12/2025

1–12/2024

EBITDA/

109.3

101.5

Revenue x 100

652.3

704.4

EBITDA, %

16.8

14.4

Adjusted EBITDA, %

EUR million

1–12/2025

1–12/2024

Adjusted EBITDA/

108.6

100.7

Revenue x 100

652.3

704.4

Adjusted EBITDA, %

16.7

14.3

Operating profit (EBIT) and Adjusted operating profit (EBIT)

EUR million

1–12/2025

1–12/2024

Profit for the period

38.6

30.2

Income tax

-7.2

-8.5

Financial expenses

-8.0

-10.9

Financial income

1.1

1.1

Operating profit (EBIT)

52.7

48.5

Adjustments to amortisation and impairment

6.6

0.0

Total EBITDA adjustments

-0.7

-0.8

Total operating profit (EBIT) adjustments

5.9

-0.8

Adjusted operating profit (EBIT)

58.6

47.7

PPA amortisation

1.7

2.1

Amortisation and impairment of other intangible assets

5.0

5.3

Adjusted operating profit before the amortisation and

impairment of intangible assets (EBITA)

65.3

55.2

Operating profit (EBIT), %

EUR million

1–12/2025

1–12/2024

Operating profit/

52.7

48.5

Revenue x 100

652.3

704.4

Operating profit (EBIT), %

8.1

6.9

Adjusted operating profit (EBIT), %

EUR million

1–12/2025

1–12/2024

Adjusted operating profit/

58.6

47.7

Revenue x 100

652.3

704.4

Adjusted operating profit (EBIT), %

9.0

6.8

Adjusted operating profit before the amortisation and

impairment of intangible assets (EBITA), %

EUR million

1–12/2025

1–12/2024

Adjusted operating profit before the amortisation and

impairment of intangible assets (EBITA) /

65.3

55.2

Revenue x 100

652.3

704.4

Adjusted (EBITA), %

10.0

7.8

Cash flow after investments

EUR million

1–12/2025

1–12/2024

Net cash flow from operating activities

75.6

100.8

Net cash flow from investing activities

-5.7

-12.3

Cash flow after investments

69.9

88.6

REPORT BY THE BOARD OF DIRECTORS

|AUDITED FINANCIAL STATEMENTS17

Profit before taxes

EUR million

1–12/2025

1–12/2024

Profit for period

38.6

30.2

Income tax

-7.2

-8.5

Profit before taxes

45.8

38.6

Gross investments

EUR million

1–12/2025

1–12/2024

Property, plant and equipment at end of period

52.3

62.8

Transfer to investment properties

0.8

Right-of-use assets at end of period

174.8

185.1

Other intangible assets at end of period

14.8

15.7

Goodwill at end of period

253.8

254.9

Depreciation, amortisation and impairment for the period

56.6

53.0

Property, plant and equipment at beginning of period

62.8

65.8

Right-of-use assets at beginning of the period

185.1

203.9

Other intangible assets at beginning of period

15.7

21.1

Goodwill at beginning of period

254.9

251.8

Proceeds from sale of tangible assets during period

-12.7

-1.6

Gross investments

46.6

31.3

Organic revenue growth, %

EUR million

1–12/2025

1–12/2024

Revenue for previous period

704.4

720.0

The impact of divestments on revenue during the period -

-7.4

-4.8

Contractual changes in complete outsourcing agreements -

-42.1

-62.5

Covid-19 services and write-downs of revenue -

0.0

0.7

Other

-1.3

0.0

Comparable revenue for previous period (B)

653.7

653.3

Revenue from M&A transactions during period (C)

0.0

0.0

Revenue growth due to M&A transactions, %

0.0

0.0

Revenue for period (A)

652.3

704.4

Comparable organic revenue growth (A-B-C)

-1.4

51.1

Organic revenue growth, %

-0.2

7.8

Revenue change

52.1

-15.5

Revenue change, %

-7.4

-2.2

REPORT BY THE BOARD OF DIRECTORS

|AUDITED FINANCIAL STATEMENTS18

Description of adjustment items applied to adjusted EBITDA and ad-

justed operating profit

EUR million

1–12/2025

1–12/2024

EBITDA

109.3

101.5

Adjustments to EBITDA

Dismissal-related expenses

0.7

Costs related to restructuring measures

5.3

Classification of receivables as contingent assets according to IAS 37 /

return as receivables

-1.5

Gains on the sale of businesses

-8.5

IFRS 3 costs

1.0

0.0

Provisions for property renovation and maintenance responsibilities

1.5

Other items with cash flow effect

0

.1

Other items with no cash flow effect

-0.1

Adjustments to EBITDA in total

-0.7

-0.8

Adjusted EBITDA

108.6

100.7

Depreciation, amortisation and impairment

-56.6

-53.0

Adjustments to depreciation, amortisation and impairment

Right-of-use premises write-downs

1.8

Property and land areas write downs

2.2

Write-downs on property, plant and equipment

2.5

Adjustments to depreciation, amortisation and impairment in total

6.6

Adjustments to operating profit in total

5.9

-0.8

Adjusted operating profit (EBIT)

58.6

47.7

PPA amortisation

1.7

2.1

Other amortisation and impairment of intangible assets

5.0

5.3

Adjusted operating profit before the amortisation and impairment

of intangible assets (EBITA)

65.3

55.2

Operating profit (EBIT)

52.7

48.5

The adjustment items are presented in the income statement items as fol-

lows:

EUR million

1–12/2025

1–12/2024

Revenue

-1.5

Other operating income

-8.5

-0.1

Materials and services

Employee benefit expenses

2.4

0.7

Other operating expenses

5.4

0.2

Share of profit in associated companies and joint ventures

EBITDA adjustment items total

-0.7

-0.8

Depreciation, amortisation and impairment

6.6

Operating profit (EBIT) adjustment items total

5.9

-0.8

REPORT BY THE BOARD OF DIRECTORS

| CORPORATE GOVERNANCE STATEMENT20

CorporateGovernance Statement

I INTRODUCTION

The Corporate Governance of Pihlajalinna Plc (the Company) is based

on applicable legislation, the Company’s Articles of Association and

the rules and regulations applied to companies listed on Nasdaq Hel-

sinki. The Company complies with the Finnish Corporate Governance

Code 2025 issued by the Securities Market Association. The Finnish

Corporate Governance Code is available on the www.cgfinland.fi/en

website maintained by the Securities Market Association.

Pihlajalinna did not depart from the recommendations of the Corpo-

rate Governance Code in 2025.

This Corporate Governance Statement was approved by Pihlajalinna

Plc’s Audit Committee on 3 March 2026 and by the Board of Directors

on 5 March 2026.

II CORPORATE GOVERNANCE

General Meeting

The General Meeting is Pihlajalinna’s highest decision-making body.

According to the Company’s Articles of Association, the Annual Gen-

eral Meeting is held annually within six (6) months of the end of the

financial year. The Annual General Meeting decides on the matters

determined by the Limited Liability Companies Act and the Articles of

Association. These matters include, among other things, the approval

of the Financial Statements, the distribution of profit shown in the

Balance Sheet and the election of members of the Board of Directors,

the Auditor and Sustainability Reporting Assurer and their remunera-

tion. The Annual General Meeting of Shareholders also decides upon

discharge of the Board of Directors and of the CEO from liability.

The Board of Directors is responsible for the invitations to the Gen-

eral Meeting and decides its venue and timing.

According to the Articles of Association, the notice of a General Meet-

ing shall be delivered to shareholders no earlier than three (3)

months and no later than three (3) weeks prior to the date of the

M

eeting, but no later than nine (9) days prior to the record date of

the Meeting. The notice shall be delivered to shareholders by sending

the notice by post to their addresses registered in the Company’s reg-

ister of shareholders or by publishing a notice on the website of the

Company or in at least one national daily newspaper determined by

the Board of Directors. The notice of the General Meeting will be pub-

lished as a separate release. The Agenda, the proposals of the Board

of Directors and other General Meeting material will be available on

the Company’s website at least three weeks prior to the General

Meeting.

Each shareholder has the right to have a matter within the remit of a

General Meeting, under the Limited Liability Companies Act, to be

discussed by the General Meeting if he or she requests this in writing

from the Board of Directors by the date announced on the Company

website. The date will be announced on the Company’s website no

later than by the end of the financial year preceding the Annual Gen-

eral Meeting.

The Company’s Chair of the Board, members of the Board of Direc-

tors, the CEO and the Auditor attend the General Meeting. In addi-

tion, any candidates for the Board of Directors attend the General

Meeting that decides on their election. If a member of the Board of

Directors or a candidate is not present at the General Meeting, the

Company informs the General Meeting of their absence at the begin-

ning of the Meeting.

After the General Meeting, its decisions are published in a stock ex-

change release. The minutes of the General Meeting are published on

the Company’s website within two weeks of the General Meeting.

The documents of the General Meeting must be kept on the Com-

pany’s website for at least five years from the Meeting.

Pihlajalinna’s Articles of Association are available on the Company’s

website a

t https://www.pihlajalinna.fi/en/investors/corporate-gov-

ernance/articles-of-association

. Any amendments to the Articles of

Association require the decision of the General Meeting.

Pihlajalinna Plc’s Annual General Meeting 2025 was held on 24 April

2025. The General Meeting was attended by 81 shareholders in per-

son or by proxy. Approximately 65 per cent of the Company’s shares

and votes were represented in the meeting.

Board of Directors

The composition and election procedure of the Board of Di-

rectors

The Board of Directors is elected on an annual basis by the Annual

General Meeting. According to the Company’s Articles of Association,

the General Meeting shall appoint a minimum of four (4) and a maxi-

mum of ten (10) members on the Board of Directors.

The General Meeting shall elect the Chair and Vice-Chair of the Board

of Directors. The term of office of a member of the Board of Directors

shall expire at the close of the first Annual General Meeting following

the election. In case the Chair and Vice-Chair of the Board of Directors

resign or become otherwise unable to act as chair during their term

of office, the Board of Directors may elect a new Chair from among its

members for the remaining term of office.

Shareholders’ Nomination Board

The Shareholders’ Nomination Board is tasked with preparing future

proposals on the election and remuneration of the members of the

Board of Directors to the General Meetings.

The Nomination Board consists of four members nominated by the

shareholders of the Company. In addition, the Chair of the Board of

Directors of the Company participates in the work of the Nomination

Board as an expert. The right to nominate members is vested with the

four shareholders of the Company having the largest share of the

votes represented by all the shares in the Company annually on 1

September based on the Company's shareholders' register held by

Euroclear Finland Ltd. However, if a shareholder who has distributed

his/her holdings e.g. into several funds and has an obligation under

the Finnish Securities Markets Act to take these holdings into account

when disclosing changes in his/her share of ownership makes a writ-

ten request to such effect to the Chair of the Board of Directors no

later than on 31 August. Such shareholder’s holdings in several funds

or registers will be combined when calculating the share of votes that

determines the nomination right. Should a shareholder not wish to

exercise his/her nomination right, the right shall be transferred to the

REPORT BY THE BOARD OF DIRECTORS

| CORPORATE GOVERNANCE STATEMENT21

next largest shareholder who otherwise would not be entitled to

nominate a member.

The Chair of the Board of Directors shall, on 1 September each year,

request the four largest shareholders of the Company, based on their

shareholding, to nominate one member each to the Nomination

Board. The Nomination Board elects a Chair from among its mem-

bers. The term of office of the members of the Nomination Board ex-

pires annually when the new Nomination Board has been appointed.

The Charter of the Shareholders’ Nomination Board is available on

the Company’s

website at https://www.pihlajalinna.fi/en/inves-

tors/corporate-governance/nomination-board.

The four largest registered shareholders of Pihlajalinna Plc (based on

the shareholders’ register held by Euroclear Finland Ltd on 1 Septem-

ber 2025) appointed the following representatives to the Sharehold-

ers’ Nomination Board:

●

Sari Heinonen,President, appointed by LocalTapiola General

Mutual Insurance Company and LocalTapiola Mutual Life Insur-

ance Company

●

Hanna Hartikainen,Chief Executive Officer, appointed by Fennia

Mutual Insurance Company

●

Mikko Wirén, Managing Director, appointed by MWW Yhtiö Oy

●

Carl Pettersson, Chief Executive Officer,appointed by Elo Mutual

Pension Insurance Company.

The Shareholders’ Nomination Board elected Sari Heinonen as its

Chair. Jukka Leinonen, Chair of Pihlajalinna Plc’s Board of Directors,

served on the Shareholders’ Nomination Board as an expert.

The Shareholders’ Nomination Board convened 3 times in 2025. The

attendance rate was 100 %. The Nomination Board submitted 19 Jan-

uary 2026 its proposal to Pihlajalinna’s Board of Directors for presen-

tation at the Annual General Meeting. The proposals have been pub-

lished in a stock exchange release.

The qualifications and independence of the Board

members and the diversity of the Board of Direc-

tors

The Board of Directors shall have sufficient and versatile expertise

and experience with respect to its duties. In preparing a proposal for

the composition of the Board of Directors, attention shall be paid to

the requirements placed by the Company’s operations and its devel-

opment stage. A person to be elected to the Board of Directors shall

have the qualifications required by the duties and the possibility to

devote a sufficient amount of time to the work. The number of the

members and the composition of the Board of Directors shall make it

possible for the Board of Directors to fulfil its duties in an efficient

manner.

For the versatile support and development of the Company’s busi-

ness, the composition of the Company’s Board of Directors should be

sufficiently diverse. The Company’s objective is that women and men

are equally represented on the Board of Directors as defined in the

Corporate Governance Code. The overall aim of the Board composi-

tion is to achieve sufficiently extensive qualifications, expertise and

experience. The sufficient diversity of the Board of Directors, includ-

ing age and gender, as well as educational and professional back-

ground, is considered in the preparation of a proposal for the compo-

sition of the Board of Directors.

The majority of the members of the Board of Directors must be inde-

pendent of the Company. In addition, at least two of the members

representing this majority shall be independent of major sharehold-

ers of the Company. The members of the Board of Directors must

provide the Board of Directors with sufficient information for the

evaluation of their qualifications and independence and inform the

Board of Directors about any changes in this information. The mem-

bers of the Board shall not act as representatives of persons who

have proposed them to the Board or who otherwise belong to their

interest groups.

The duties and responsibilities of the Board of Directors are defined

in the Limited Liability Companies Act, the Company’s Articles of As-

sociation and the Charter of the Board of Directors. The Board of Di-

rectors conducts an annual evaluation of its operations and working

methods and updates its Charter as needed.

Any matters that are far-reaching from the viewpoint of the Com-

pany’s business shall be considered and decided by the Board of Di-

rectors. According to its Charter, the Board of Directors, amongother

things:

•

reviews and decides on the Group’s strategy,annual plan and

budget, as well as the related targets, and monitors their imple-

mentation;

•

decides on the Company’s dividend policy;

•

approves the Group’s key policies, including remuneration, risk

management and disclosure policies, insider and related-party

guidelines, the code of conduct as well as the Group’s govern-

ance framework and monitors compliance therewith;

•

reviews and approves the Company’s financial statements and

the Board of Directors’ report (including the Corporate Govern-

ance Statement and the Sustainability Report) for the financial

year, as well as the half-year financial report and interim reports

for the relevant periods;

•

reviews and approves the remuneration report for the financial

year;

•

reviews and approves the Group’s significant investments and

corporate transactions;

•

approves the Group’s external financing agreements and issu-

ances of debt instruments;

•

confirms the principles of the Company’s internal control and

risk management;

•

reviews the material risks affecting the Company’s operations

and their management, and supervises the adequacy, relevance

and efficiency of the Company’s administrative processes;

•

appoints and dismisses the CEO and any possible deputy CEO

and decides on the terms of their employment;

•

confirms, based on the CEO’s proposal, the members of the

Group’s Management Team;

•

approves the incentive schemes of the CEO and other manage-

ment and the Company’s remuneration principles;

•

convenes the General Meeting.

The members of the Board of Directors are provided with sufficient

information on the Group’s operations, operating environment and

financial position, and new Board members must be introduced to

the Company’s operations at the beginning of their term. The Board

of Directors is regularly informed of matters considered by Pihla-

jalinna Group’s Management Team,receives profit and loss reports

and auditor’s reports and regularly (at least once a year) hears the au-

ditor’s opinions of the Company’s financial situation and its develop-

ments.

The Board of Directors convenes regularly. The timing of the Board

Meetings will be confirmed in advance for the Board’s entire term of

office. When necessary, the Board holds additional meetings that can

be organised as conference calls. At least one of the meetings is a

strategy meeting and in at least one meeting the Board meets the

Company’s auditor.In meetings marked on the annual calendar, the

Board of Directors conducts an internal discussion without the pres-

ence of management.

The proposal for the composition of the Board of Directors was pre-

p

ared by the Company’s largest shareholders in 2025. Represented

REPORT BY THE BOARD OF DIRECTORS

| CORPORATE GOVERNANCE STATEMENT22

on the Nomination Board were the LocalTapiola Group, Fennia Mu-

tual Insurance Company,MWW Yhtiö Oy (Mikko Wirén) and Elo Mu-

tual Pension Insurance Company, which together represented ap-

proximately 48 per cent of the Company’s shares.

The principles regarding the composition of the Board of Directors

were observed in the Board of Directors elected in 2025. The Board of

Directors has three female Board members and three male Board

members (four male members until 24 April 2025). The members of

the Board represent versatile experience from managerial and board

duties. All members of the Board elected in 2025 hold a master’s de-

gree and one has a doctoral degree. The members of the Board of Di-

rectors have versatile industry-specific expertise as well as economic

and business skills. Their age distribution is from 53 to 69 years.

Members of the Board of Directors in the finan-

cial year 2025

The members of the Board of Directors up to the Annual General

Meeting of 24 April 2025 were Jukka Leinonen (Chair), Leena Nie-

mistö (Vice-Chair), Kim Ignatius, Heli Iisakka, Hannu Juvonen, Tiina

Kurki ja Mikko Wirén.

The Annual General Meeting 2025 decided that the number of mem-

bers of the Board of Directors shall be six (6). The following individu-

als were elected as members of the Board of Directors: Kim Ignatius,

Heli Iisakka, Tiina Kurki, Jukka Leinonen, Leena Niemistö and Mikko

Wirén. The General Meeting elected Jukka Leinonen as the Chair of

Pihlajalinna Plc’s Board of Directors and Leena Niemistö as the Vice-

Chair.

During the financial year 2025, the Board of Directors convened 13

times. The average attendance rate during the period was 100 %.

Members of the Board of Directors

JUKKA LEINONEN

Chair of the Board since 2023

M.Sc. (Eng.)

Finnishcitizen, b.1962

Independent of the Company and its major shareholders

Principal occupation: Board Professional

LEENA NIEMISTÖ

Member of the Board since 2014

Vice-Chair of the Board until 2018 and again since 2019

D.Med.Sc., Specialist in Physiatrics

Finnish citizen, b. 1963

Independent of the Company and its major shareholders

principal occupation: Board Professional

KIM IGNATIUS

Member of the Board since 2023

M.Sc. (Econ)

Finnish citizen, b. 1956

Independent of the Company and its major shareholders

Principal occupation: Board Professional

HELI IISAKKA

Member of the Board since 2022

M.Sc. (Econ.)

Finnish citizen, b. 1968

Independent of the Company and its major shareholders

Principal occupation: Colliers Finland Oy, Chief Financial Officer

TIINA KURKI

Member of the Board since 2023

M.Sc. (Econ)

Finnishcitizen, b.1970

Independent of the Company and its major shareholders

Principal occupation: Alma Media Plc, Executive Vice President, Alma

Media Solutions

MIKKO WIRÉN

Member of the Board since 2016

Chair of the Board 2016-2023

Lic.Med.

Finnish citizen, b. 1972

Not independent of the Company, not independent

of major shareholders

Principal occupation: MWW Yhtiö Oy, CEO

More information on the Members of the Board of Directors is

availa-

ble in the Investors section of the Pihlajalinna website at

https://www.pihlajalinna.fi/en/investors/corporate-govern-

ance/board-of-directors.

Information on the remuneration of the members of the Board of Di-

rectors is presented in a separate Remuneration Report for Governing

Bodies.

Board Committees

The Board of Directors may appoint committees and other perma-

nent or temporary bodies to perform duties specified by the Board of

Directors. The Board of Directors confirms the charters of its commit-

tees as well as the guidelines and authorisations of any other bodies

appointed by the Board of Directors. The Board of Directors has es-

tablished from among its members an Audit Committee and a People

and Sustainability Committee. These committees have written char-

ters approved by the Board of Directors.

Audit Committee

Pihlajalinna Plc’s Board of Directors has established from among its

members an Audit Committee which monitors the Company’s report-

ing process of financial statements and the efficiency of the Com-

pany’s internal control, potential internal audit and risk management

systems. The Audit Committee also reviews the description of the

main features of the internal control and risk management systems in

relation to the financial reporting process, which is included in the

Company’s Corporate Governance Statement, monitors the statutory

audit of the financial statements and consolidated financial state-

ments and evaluates the independence of the statutory auditor or au-

dit firm, particularly the provision of related services to the Company.

The members of the Audit Committee must have the expertise and

experience necessary to perform the responsibilities of the Commit-

tee and at least one of the members must have special expertise in

accounting or auditing.

The Audit Committee comprises three to five members who are

elected from among the members of the Board of Directors. The ma-

jority of the members of the Audit Committee must be independent

of the Company, and at least one member must be independent of

major shareholders of the Company.

The Board of Directors has confirmed a written Charter for the Audit

Committee, according to which the Committee has the following du-

ties, among other things:

●

to monitor the Company’s financial standing and financing situa-

tion;

●

to evaluate the effects of exceptional or extensive business

transactions;

REPORT BY THE BOARD OF DIRECTORS

| CORPORATE GOVERNANCE STATEMENT23

●

to review significant changes to recognition principles and items

recognized in the balance sheet;

●

to monitor the quality and reliability of the Company’s financial

statements reporting process, the financial statements and

other financial reports;

●

to evaluate the use and presentation of alternative performance

measures;

●

to monitor the Company’s financial reporting process and M&A

processes;

●

to engage in quarterly discussions with the financial manage-

ment and the auditors on the Company’s financial results and

stock exchange release before the approval of the Board of Di-

rectors;

●

to discuss significant financial risks and the management’s

measures regarding the monitoring, management and reporting

of risks;

●

to monitor the Company’s internal control, potential internal au-

dit and risk management systems, plans and reports as well as

the efficiency of these functions;

●

to familiarize itself with the principles concerning the monitoring

and assessment of related party transactions;

●

to review the Corporate Governance Statement, including the

description of the main features of the internal control and risk

management systems related to the financial reporting process;

●

To support the Company’s Board of Directors in the appropriate

management of functions related to sustainability and ESG crite-

ria, as well as the management of ESG risks;

●

to regularly review sustainability-related reporting and pro-

cesses, as well as risks and controls relating to sustainability;

●

to monitor the statutory audit of the financial statements and

consolidated financial statements and the assurance of the sus-

tainability report;

●

to evaluate the independence of the statutory auditor or audit

firm and sustainability reporting auditor and the provision of re-

lated services;

●

to evaluate the auditor’s qualifications and performance;

●

to prepare a proposal for a resolution on the election of the au-

d

itor and sustainability reporting auditor;

●

to maintain communication with the auditor and sustainability

reporting auditor and review the reports prepared by the audi-

tor for the Audit Committee and the management’s responses

to the reports;

●

to monitor compliance with laws and regulations and the Com-

pany’s policies, as well as the effectiveness of the Company’s

compliance system;

●

to monitor and evaluate the development of sustainability

(CSRD obligations and the EU Taxonomy);

●

to review the Board of Directors’ report in its entirety;

●

to monitor and evaluate the results of the Group’s ESG assess-

ments and analyses (EcoVadis, COP,etc.).

The Audit Committee regularly provides the Board of Directors with a

summary of matters considered by the Committee.

Work on the committee is subject to remuneration as determined by

the General Meeting.

On 24 April 2025, the Board elected Kim Ignatius (Chair),Heli Iisakka

and Tiina Kurki as the members of the Audit Committee.

The Audit Committee convened six times during the financial year

2025. The attendance rate of the Committee members was 100 %.

People and Sustainability Committee

Pihlajalinna Plc’s Board of Directors has established from among its

members a People and Sustainability Committee, which assists the

Board by preparing matters pertaining to the remuneration and nom-

ination of the Company’s CEO and other management, as well as the

Company’s remuneration principles. The Committee also prepares

matters concerning organisational development and sustainability for

the Board.

The People and Sustainability Committee comprises three to five

members who are elected from among the members of the Board of

Directors. The majority of the members of the Committee must be in-

dependent of the Company. The CEO or other executives of the Com-

pany may not be appointed to the People and Sustainability Commit-

tee.

The Board of Directors has confirmed a written Charter for the People

and Sustainability Committee, according to which the Committee has

the following duties, among other things:

●

to prepare matters related to the remuneration and other finan-

cial benefits of the CEO and other management;

●

to prepare proposals related to the Company’s incentive plans;

●

to evaluate the remuneration of the CEO and other manage-

ment and to ensure the appropriateness of the Company’s re-

muneration systems;

●

to answer any questions at the General Meeting that are related

to the remuneration report and within the scope of the People

and Sustainability Committee’s duties;

●

to prepare matters related to the nomination of the CEO and

other management and to look for prospective successors for

them and specify the personal profiles;

●

to plan the remuneration of other personnel and organisational

development;

●

to review the results of personnel surveys and monitor the di-

versity of the personnel;

●

to steer and evaluate the process of talent identification and de-

velopment;

●

to monitor and evaluate the development of the operating envi-

ronment, regulations and stakeholder support;

●

to monitor and evaluate sustainability-related target setting in

the short and long term;

●

to review and prepare personnel-related matters for the sus-

tainability programme, including issues relating to occupational

safety, work ability,equality and diversity;

●

to review and prepare other matters of relevance to the sustain-

ability programme, including quality, impact, data protection

and the environment;

●

to review and prepare matters pertaining to corporate govern-

ance;

●

to monitor and evaluate the results of the Group’s ESG assess-

ments and analyses (EcoVadis, COP,etc.).

Work on the committee is subject to remuneration as determined by

the General Meeting.

On 24 April 2025, the Board of Directors elected Leena Niemistö

(Chair), Jukka Leinonen and Mikko Wirén as the members of the Peo-

ple and Sustainability Committee.

The People and Sustainability Committee convened five times during

the financial year 2025. The attendance rate of the Committee mem-

bers was 100 %.

REPORT BY THE BOARD OF DIRECTORS

| CORPORATE GOVERNANCE STATEMENT24

Attendance at Meetings by the Board of Directorsand Com-

mittee Members in 2025:

Name

Board

meetings

(1

Audit

Committee

meetings

(1

People and

Sustainability

Committee

meetings

(1

Kim Ignatius

Board member

13/13

6/6

-

Heli Iisakka

Board member

13/13

6/6

-

Hannu Juvonen

(2

Board member

3/3

-

2/2

Tiina Kurki

Board member

13/13

6/6

-

Jukka Leinonen

Chair

13/13

-

5/5

Leena Niemistö

Vice-chair

13/13

-

5/5

Mikko Wirén

Board member

13/13

-

5/5

1) Attendance rates cover meetings held during each member’s term of office.

2) Member of the Board of Directors until 24 April 2025.

Pihlajalinna holdings of the members of Pihlajalinna Plc’s

Board of Directors on 31 December 2025:

Number of

Shares

Mikko Wirén, total

2 326 271

MWW Yhtiö Oy

2 319 010

Mikko Wirén

7 261

Leena Niemistö

710 881

Jukka Leinonen

17 158

Heli Iisakka

4 528

Kim Ignatius

4 332

Tiina Kurki

3 579

Hannu Juvonen (until 24 April 2025)

0

CEO

The Board of Directors appoints the Chief Executive Officer and de-

cides on the terms and conditions of his or her service contract. The

CEO is in charge of the Company’s operational management and

Pihlajalinna Group’s business in accordance with the instructions and

orders issued by the Board of Directors. The CEO is responsible for

ensuring that the Company’s accounting practices comply with the

law and that the financial matters are handled in a reliable manner.

The Management Team assists the CEO in leading the Company’s op-

erations.

Tuomas Hyyryläinen was the CEO of Pihlajalinna Plc during the finan-

cial year 2025. Pihlajalinna Plc does not have a Deputy CEO.

Group Management Team

Pihlajalinna Group’s Management Teamassists the CEO in operative

business management. The Management Team prepares and steers

the development of the Group’s business, processes and joint Group

functions and promotes cooperation and the flow of information be-

tween the various parts of the organisation. It also prepares the

Group’s strategic planning and budgeting, monitors the implementa-

tion of plans and reporting and prepares acquisitions and other major

investments. In addition, the Management Team monitors and evalu-

ates the profitability of the Company’s businesses as well as the func-

tioning of its internal control and reporting systems. The Manage-

ment Team convenes regularly by invitation of the CEO. The Manage-

ment Team regularly evaluates its operations and working methods.

Group Management Team(31 December 2025):

Tuomas Hyyryläinen

b. 1977, M.Sc. (Econ.)

employed by the Company since 2023

Chief Executive Officer

Heikki Färkkilä

b. 1980, M.Sc. (Technology)

employed by the Company since 2024

EVP, Strategyand Group Operations

Seppo Kariniemi

b. 1983, MBA

employed by the Company since 2022

EVP, Public Services

Tuula Lehto

b. 1973, M.Sc. in Political Science

employed by the company since 2022

EVP, Communications and Sustainability

Jaakko Liljeroos

b. 1979, LL.M

employed by the company since 2024

EVP, Chief LegalOfficer

Lauri Muhonen

b. 1984, eMBA

employed by the company since 2024

EVP, Chief Information Officer

Tarja Rantala

b. 1972, M.Sc. (Econ.)

employed by the Company since 2014

EVP, Chief Financial Officer

Sari Riihijärvi

b. 1977, D.Med.Sc., Specialist

employed by the Company since 2021

EVP, Chief Medical Officer

Mika Videman

b. 1967, Master of Science,

Employed by the Company since 2024

EVP, Peopleand Culture

In 2025, the Group Management Team also included Anu Kallio, Chief

Operating Officer, Private Healthcare Services (until 18 September

2025).

REPORT BY THE BOARD OF DIRECTORS

| CORPORATE GOVERNANCE STATEMENT25

The Management Team has met regularly, on a weekly basis. The ta-

ble below presents the direct and indirect Pihlajalinna shareholdings

of the CEO and other members of Pihlajalinna Group’s Management

Team (31 December 2025).

Number of

shares

Tuomas Hyyryläinen, CEO

46 232

Tarja Rantala

23 805

Seppo Kariniemi, total

11 349

Seppo Kariniemi

8 549

SSK Sijoitus Oy

2 800

Sari Riihijärvi

9 346

Heikki Färkkilä

7 181

Tuula Lehto

7 017

Jaakko Liljeroos

4 000

Lauri Muhonen

4 000

Mika Videman, total

1 374

Videman Renewal Oy

1 374

III INTERNAL CONTROL AND RISK MANAGEMENT

MECHANISMS

Internal Control

The purpose of the Group's internal control systems is to ensure that

the Company's operations comply with the applicable laws and regu-

lations and the Company's business principles. The goal of internal

control associated with the financial reporting process is to ensure

that the financial reports published by the Company are prepared in

accordance with the accounting principles applied by the Company

and that they provide materially correct information regarding the

Group’s financial position and that financial reporting is accurate and

reliable.

The Group’s financial development is monitored by Group-wide re-

porting systems. The systems cover financial information, the budget

approved by the Board of Directors, monthly financial forecasts and

operational performance indicators. The Group Management Team

analyses the result and deviations, is responsible for budgeting and

forecasting together with the CEO, monitors the integration and de-

velopment of completed M&A transactions and other investments.

The business controller function and financial management analyse

a

nd produce financial reports as well as prepare separate analyses for

use by the management, the Audit Committee and the Board of Di-

rectors. The Group’s financing is centralized.

The Group’s financial management issues guidelines and instructions

on the preparation of the financial statements and interim financial

statements and, together with the Group communications function

and the Chief Legal Officer, is responsible for the Group’sregular dis-

closure obligations.

Pihlajalinna’s financial and HR management functions have defined

and documented control targets and control points (process-specific

control catalogues) related to financial management, reporting and

HR administration processes. The appropriateness and effectiveness

of control targets and control points are evaluated at least once a

year in cooperation with auditors. Internal control observations are

analysed and, as a result, guidelines, practices and potentially also

control points are updated.

The control measures consist of automated and manual reconciliation

of processes, controls, analytical checks and instructions aimed at en-

suring the accuracy of financial reporting. Further key control mecha-

nisms include the administration of access rights to information sys-

tems and reporting systems as well as the controlled implementation

of authorisations and changes to systems. The financial management

function processes and regularly reports to the Board of Directors on

exceptional items and items subject to management judgment and

analyses the underlying reasons behind changes to forecasts.

The CEO and the chief executives of the subsidiaries are in charge of

ensuring that accounting and administration in the areas they are re-

sponsible for comply with the law and that the Group’s guidelines are

adhered to. The Group’s legal department is in charge of issuing oper-

ational guidelines and instructions in its area of responsibility. The au-

ditors audit the accounting and administration of the parent company

and the subsidiaries annually. In all Group companies, auditing is con-

ducted by a firm of authorised public accountants. The auditor of the

parent company is responsible for the coordination of audit focus ar-

eas, the analysis of audit observations from the point of view of the

consolidated financial statements and communication with the

Group’s financial management and the CEO. The detailed auditing re-

sults are reported annually to the Group management, the Audit

Committee and the Board of Directors.

The Audit Committee verifies that accounting, financial administra-

tion, finance, the internal audit and auditing are organised appropri-

ately. The Board of Directors reviews and approves half-yearreports,

interim reports and financial statements bulletins.

Internal controls related to sustainability reporting are described in

more detail in the Board of Directors report as a part of the sustaina-

bility statement in section

General Information (ESRS2).

Internal audit

The purpose of Pihlajalinna’s internal audit is to assess the appropri-

ateness and performance of the Company’s internal control system,

risk management, management processes and administrative pro-

cesses. The internal audit supports organisational development and

enhances the fulfilmentof the Board of Directors’ supervisory duty.

The internal audit assists the organisation in achieving its objectives

by evaluating and surveying its functions and supervising compliance

with Company guidelines and instructions. To this end, the internal

audit produces analyses, estimates, recommendations and infor-

mation for use by the Board of Directors and senior management.

The assessments are reported upon completion to the CEO, the CFO

and the management in charge of the function being assessed. They

are also reported regularly to the Board’s Audit Committee.

The internal audit function is based on internal standards (IIA). The in-

ternal audit function is independent of the rest of the organisation.

The point of departure for the internal audit is primarily manage-

ment-oriented, and the work is coordinated in cooperation with the

external audit. The annual audit plan and audit report are presented

to the Audit Committee. The internal audit function also audits other

areas by request of the Board of Directors and Pihlajalinna’s Manage-

ment Team.

Pihlajalinna’s internal audit activities continued in 2025 in accordance

with the cooperation previously organised with PwC. PwC’s follow

‑

up

audit again focused on information security. The audit evaluated the

identified information security management systems and security

controls.

Risk management

Pihlajalinna’s Risk Management Policy defines the goals, principles,

operating methods and responsibilities of risk management. Risk

management at Pihlajalinna has been carried out at the Group, busi-

ness unit, service and process level in accordance with the Risk Man-

agement Policy approved by Pihlajalinna’s Board of Directors. Fur-

thermore, the Group invests in the management of occupational

safety and health risks and in quality management systems, such as

ISO 9001 and ISO14001.

REPORT BY THE BOARD OF DIRECTORS

| CORPORATE GOVERNANCE STATEMENT26

The goal of Pihlajalinna’s risk management is to promote the achieve-

ment the Group’s strategic and operational targets, customer and pa-

tient safety, shareholder value, the Group’soperational profitability

and the realisation of responsible operating methods. Risk manage-

ment is used to ensure that the risks affecting the Company’s opera-

tions are known, assessed and monitored, and that measures are im-

plemented to control the risks. Internal risk reporting is included in

the regular business reporting as well as in business planning and de-

cision-making. The material risks and their management are reported

to stakeholders regularly and, when necessary, on a case-by-case ba-

sis.

The assessment of sustainability-related risks plays an important role

in risk management. This component has covered the identification

and assessment of impacts and risks in terms of business risk assess-

ment, human rights risk assessment, and double materiality assess-

ment (DMA). These areas will be integrated into the Group's general

risk management process in the coming financial years.

Pihlajalinna’s risk management principles emphasise the necessary

obligations related to operations and the resulting opportunities for

organising risk management, standard-based quality management

tools and self-monitoring. Risk management supports the manage-

ment system and the day-to-day management of services. Risk man-

agement is integrated into the service processes and the process

owner is responsible for the risk management. The aim is to minimise

the impact on Pihlajalinna's operations in the event of a risk material-

ising.

In 2025, Pihlajalinna’s Management Team evaluated risk manage-

ment processes and the need for their updates, considering the pre-

vailing risk environment as well as the new operating model that en-

tered into force on 1 January 2026.

In 2025, Pihlajalinna’s risk management project identified the key tar-

gets of risk management measures to be the changing operating envi-

ronment in normal and exceptional circumstances, resources and su-

pervisory work, organisation, strategy and prioritisation, systems and

processes and their development, personnel availability and work

ability, data protection, information security,particularly from the

perspective of cybersecurity, and patient safety,particularly from the

perspective of self-monitoring.

Group management and operative management are responsible for

risk management according to their reporting responsibilities. In addi-

tion, risk management specialists guide and develop the group’s risk

m

anagement. The Group Management Team regularly discusses the

key risks related to the Group’s business operations. Everyone work-

ing at Pihlajalinna must also know and manage risks related to their

responsibilities. The appropriateness and effectiveness of the com-

pany’s risk management are evaluated as part of the company’s an-

nual risk management process.

IV OTHER INFORMATION REQUIRED

Insider administration and principles

Pihlajalinna Plc complies with the Nasdaq Helsinki Ltd Guidelines for

Insiders in effect at any given time, subject to the additional specifica-

tions concerning Pihlajalinna and referred to in Pihlajalinna’s Insider

Guidelines. The Pihlajalinna insider guidelines, which specifythe in-

sider guidelines of Nasdaq Helsinki Ltd, are approved annually by the

Board of Directors.

The Company’s insider information and the managers’ and their re-

lated parties’ transactions in Company’s financial instruments are ad-

ministered according to applicable legislation and the Insider Guide-

lines of the Company. When necessary, the Company sets up project-

specific insider lists which includes every person who receives pro-

ject-specific inside information.

The insider lists are not public. The Company’s insider lists are main-

tained in the Insider Elements by Euroclear service provided by Euro-

clear Finland Ltd.

In addition to the insider lists, the Company creates and maintains a

list of persons discharging managerial responsibilities and related par-

ties (natural or legal persons) who have the duty to notify their trans-

actions related to Company’s financial instruments to the Company

and the Financial Supervisory Authority within three businessdays af-

ter the transaction. The company publishes the notified transactions

in a release no later than two business days after receiving the notifi-

cation from a person discharging managerial responsibilities or a per-

son closely associated with them. Persons discharging managerial re-

sponsibilities include Pihlajalinna’s members of the Board of Directors

and members of the Management Team.

Executives at Pihlajalinna and non-executive persons defined by the

Company are prohibited from all trading in the Company’s securities

or related derivatives and other financial instruments on their own

account or for the account of a third party during the period of 30 cal-

endar days before the publication of the Company’s annual financial

statements, interim report and half year financial report (closed win-

dow) or on the publication date of the aforementioned information.

Pihlajalinna Plc has published its insider principles (insider and related

party principles) on the Company’s website.

Related parties and principles for related party

transactions

Pihlajalinna complies with the legislation pertaining to related party

transactions and, in accordance with the Corporate Governance Code

for listed companies, ensures compliance with the requirements for

the monitoring, assessment, decision-making and disclosure of re-

lated party transactions. Pihlajalinna’s Guidelines on Related Party

Transactions, which describe the principles for the monitoring and as-

sessment of related party transactions, is approved annually by Pihla-

jalinna’s Board of Directors, which is responsible for monitoring and

assessing related party transactions.

The purpose of Pihlajalinna Plc’s Guidelines on Related Party Transac-

tions is to ensure that any business transactions involving persons be-

longing to the Company’s related parties are made independently

and based on market terms. The Company assesses and verifies that

any related party transactions are in the best interests of the Com-

pany overall and that any conflicts of interest are duly taken into ac-

count when making decisions on related party transactions. The prin-

ciples of the Guidelines on Related Party Transactions are observed

throughout the Group and in the decision-making concerning all of

the Group companies.

Pihlajalinna Plc’s related parties include the Group’s executives, such

as the members, deputy members (if any) and secretary of the Board

of Directors, the CEO, Deputy CEO and members of the Management

Team, and the aforementioned persons’ spouses and common-law

spouses and other people living in the same household. In addition,

related parties include organisations in which an above-mentioned

related party, either alone or together with other related parties, ex-

ercises significant influence or control. Related parties also include

the Company’s subsidiaries, associated companies and joint ventures

and their CEOs, Board members and potential deputy members, as

well as organisations controlled by any of these parties.

Pihlajalinna Plc maintains a related party register of major business

transactions between the Company and its related parties, the parties

involved and the key terms of such transactions. The information en-

tered in the register is collected annually from the persons belonging

to the Company’s related parties by means of control surveys. The

Company’s related party register is not public, and any information

entered in it will not be disclosed to third parties, with the exception

REPORT BY THE BOARD OF DIRECTORS

| CORPORATE GOVERNANCE STATEMENT27

o

f any authorities and the auditor entitled to receive such infor-

mation. People considered as related parties are obliged to notify the

Company’s related party administration of any related party transac-

tions which are being planned, or which have come to their

knowledge. Such notification must be made without delay after re-

ceiving such information. The results of the monitoring of related

party transactions are regularly reported to the Board’s Audit Com-

mittee.

Pihlajalinna may carry out transactions with related parties provided

that the transactions are part of Pihlajalinna’s ordinary course of busi-

ness and implemented under arms-length terms in compliance with

the decision-making procedure specified in Pihlajalinna’s internal poli-

cies and guidelines. Related party transactions that are not part of

Pihlajalinna’s ordinary course of business or are not implemented un-

der arms-length terms are decided on by Pihlajalinna’s Board of Di-

rectors, with due consideration given to the regulations concerning

conflicts of interest.

Any related party transactions will be processed in accordance with

the Guidelines on Related Party Transactions approved by Pihla-

jalinna’s Board of Directors. Any major transactions to be executed

with Pihlajalinna’s management and its related parties shall always be

approved by the Board of Directors.

Pihlajalinna reports on related party transactions annually in its finan-

cial statements. Related party transactions that are of material signifi-

cance from the shareholder’s perspective and are not part of the

Company’s ordinary course of business or are not implemented under

arms-length terms are disclosed in accordance with the Securities

Markets Act and the rules of the Nasdaq Helsinki Ltd stock exchange.

Pihlajalinna Plc has published its principles concerning related party

transactions (insider and related party principles) on the Company’s

website.

Auditors and auditing

According to the Articles of Association, the Company shall have one

(1) Auditor that shall be a firm of authorised public accountants with

an APA-certified Auditor acting as the Auditor with principal responsi-

bility.

The auditor will annually submit an auditor’s report to Pihlajalinna’s

Annual General Meeting. When the Company’s Board of Directors re-

views the financial statements, the principal auditor provides a state-

ment on the implementation of the audit and on their audit observa-

tions.

Pihlajalinna Plc’s Annual General Meeting on 24 April 2025 resolved,

in accordance with the Board’s proposal, to appoint Ernst & Young Oy

as the Company’s auditor for a term ending at the conclusion of the

Annual General Meeting 2026. The responsible auditor appointed by

Ernst & Young was Johanna Winqvist-Ilkka, APA.

Ernst & Young Oy has been the auditor of Group companies during

the financial year 2025. The following fees have been paid to the au-

ditor (amounts in thousands of euros):

Auditor’s fees

2025

2024

(1

Auditing,Ernst & Young Oy

360

328

Statements,Ernst & Young Oy

90

64

Non-audit services, Ernst & Young Oy

0

48

Total

450

441

1)

The Company’s auditor for the financial year 2024 was KPMG Oy

Ab.

S

ustainability Statement

REPORT BY THE BOARD OF DIRECTORS

| SUSTAINABILITY STATEMENT29

General disclosures(ESRS 2)

Basis for preparation of the sustainability state-

ment (BP-1)

Pihlajalinna Plc’s sustainability statement has been prepared in ac-

cordance with the requirements laid down in chapter 7 of the Ac-

counting Act and the European Sustainability Reporting Standards

(ESRS). The 2025 statement covers the period from 1 January to 31

December 2025, and is consolidated with the 2025 financial state-

ments, applying the same consolidation scope. The Group companies

are listed in the notes to the consolidated financial statements.

No information related to industrial design or copyright, know-how or

innovation results has been omitted. The targets and metrics pre-

sented in the report have not been validated by a third party other

than the assurance provider. The sustainability topics and KPIs re-

ported in the sustainability statement are based on the requirements

of the ESRSs and Pihlajalinna’s double materiality assessment (DMA),

conducted in late 2023 and updated in spring 2025 in connection with

Pihlajalinna’s new strategy.Pihlajalinna’s Board of Directors has ap-

proved the material themes and sustainability topics based on the

DMA. The DMA includes impacts, risks and opportunities which cover

Pihlajalinna’s own operations and the material parts of the upstream

and downstream value chain. The policies, actions, targets, and met-

rics extending to Pihlajalinna’s value chain are described in the sec-

t

ions connected to the relevant standards. More detailed information

on Pihlajalinna’s DMA process and its results is provided in section

ESRS 2, under IRO-1: Process to identify and assess material impacts,

risks, and opportunities.

Coverage of the upstream and downstream value chain

The data in the sustainability statement is reported for the entire

Pihlajalinna Group, covering Pihlajalinna’s own operations and par-

tially the upstream and downstream value chain. Pihlajalinna’s mate-

rial sustainability topics extend to consumers and end-users. The sus-

tainability topics extend to upstream and downstream value chain

workers through service providers and suppliers. The material sus-

tainability topics extend to consumers in the downstream value chain

through Pihlajalinna’s own services and service partners. The sustain-

ability topics extend to the environment in the upstream and down-

stream value chain through the personnel, individual customers, and

procurement activities through the supply chains of suppliers and ser-

vice providers. The sustainability statement covers the material sus-

tainability topics in the value chain.

Boundaries and foundations of reporting (BP-2)

Time horizons

This sustainability statement complies with the time horizons defined

by the ESRS standards. Short term (1 year) describes the current fi-

nancial year, medium term the following 1–5 years and long term the

period beyond 5 years.

Value chain estimation sources and outcome uncertainty

Pihlajalinna Group’s sustainability statement for 2025 has been pre-

pared following the structures and principles of the ESRSs. Compara-

tive information on the disclosure requirements related to the mate-

rial sustainability matters is presented for the first reporting period,

2024. Changes to the previous sustainability statement are related to,

among other things, the update of the DMA. Information concerning

this is provided in IRO-1: Process to identify and assess material im-

pacts, risks, and opportunities. In addition, with regard to the ESRS 2

SBM-3 disclosure requirement, the relevant topic-specific information

is presented in connection with the reporting on the topical stand-

ards.

Pihlajalinna’s energy and greenhouse gas (GHG) calculations and

measurement are based on the GHG Protocol Corporate Standard

REPORT BY THE BOARD OF DIRECTORS

| SUSTAINABILITY STATEMENT30

(version 2004) and GHG Protocol Corporate Value Chain (Scope 3) Ac-

counting and Reporting Standard (version 2011). The consolidation

approach to emissions accounting is operational control. Accordingly,

the energy-related emissions of leased facilities are included in Pihla-

jalinna’s Scope 1 and 2 emissions. Pihlajalinna’s emissions accounting

includes estimated and indirect data, with the most significant uncer-

tainties arising from spend-based procurement emissions and esti-

mates of individual customers’travel and personnel commuting.

These categories represent over two-thirds of the total emissions,

which is why the reported total emissions involve material uncer-

tainty. These metrics are partially based on proxies, sector averages,

and internal assumptions, increasing measurement uncertainty. Key

sources of uncertainty include limited data availability, spend-based

modelling limitations, and variability in survey data. Preparing the es-

timates required assumptions about the emission intensity of service

purchases, customer travel behaviour, and personnel commuting pat-

terns. Accuracy will improve as data collection becomes more precise

and spend-based accounting develops. Key development actions in-

clude improving data accuracy and availability, especially in the up-

stream value chain. Development measures concerning emissions ac-

counting will be specified further during future financial years. A

more detailed description of emissions accounting in section E1, un-

der E1-6: Gross Scopes 1, 2, 3 and Total GHG emissions.

Changes and corrections to the preparation and presentation

of sustainability information

The completion rate of Pihlajalinna’s Code of Conduct training cov-

ered in 2024 all employees and practitioners. In 2025, the reporting

practice was revised so that the completion rate only includes em-

ployees in permanent, full-time or part-time employment. The

change was made because the boundary provides more accurate in-

formation on the effectiveness of the training. The completion rate

reported in 2024 was 59 per cent. The restated comparison figures

are presented in section G1, table G1: Targets and metrics related to

business conduct.

Effective from 2025, the basis of preparation regarding work-related

accidents has been changed. Incidents rejected by the occupational

accident insurance company and incidents for which no compensa-

tion was paid are eliminated from the figures. The figure reported for

work-related accidents for 2024 was 319 accidents. The figure re-

ported for 2024 was based on all incidents reported to the insurance

company. The restated comparison figures are presented in section

S1, under S1-14: Health and safety metrics.

ESRS content index

ESRS Standard

Disclosure requirement (DR)

Sustainability statement sections

ESRS2

General

disclosures

BP-1

General basis for preparationof sustainability statements

Basis for preparation of the sustainabilitystatement (BP-1)

BP-2

Disclosures in relation to specific circumstances

Boundaries and foundations of reporting (BP-2)

GOV-1

The role of the administrative, managementand supervisory bodies

The role of senior management in sustainabilitymanagement (GOV-1)

GOV-2

Information provided to and sustainabilitymatters addressed by the administrative,management

and supervisory bodies

Information provided to and sustainabilitymatters addressed by the administrative,management and supervi-

sory bodies (GOV-2)

GOV-3

Integration of sustainability-relatedperformance in incentive schemes

Integration of sustainability-relatedperformance in incentive schemes (GOV-3)

GOV-4

Statement on due diligence

Statement on sustainability due diligence(GOV-4)

GOV-5

Risk management and internal controlsover sustainability reporting

Risk management and internal controlsover sustainability reporting (GOV-5)

SBM-1

Strategy, businessmodel and value chain

Strategy, businessmodel and value chain (SBM-1)

SBM-2

Interests and views of stakeholders

Interests and views of stakeholders(SBM-2)

SBM-3

Material impacts, risks and opportunities andtheir interaction with strategy andbusiness model

Material sustainability topics in Pihlajalinna'sactivities and their interaction with strategy(SBM-3)

IRO-1

Description of the processes to identify andassess material impacts, risks and opportunities

Process to identify and assess materialimpacts, risks and opportunities (IRO-1)

IRO-2

Disclosure requirements in ESRScovered by the undertaking’ssustainability statement

List of disclosure requirements in ESRS(IRO-2)

Table: Management of Pihlajalinna'smaterial impacts, risks and opportunities (IRO)

The basis of preparation concerning the median annual wage was

changed in 2025 to take into account employment relationships that

began and ended mid-year and annualising the wage so that the me-

dian reflects the wage level more accurately. In calculating the me-

dian wage for 2024, wages were not annualised, and the reported

median wage of employees was EUR 33,942.75. The restated compar-

ison figures are presented in section S1, under S1-16: Compensation

metrics.

The basis of preparation for the employee turnover rate was changed

in 2025 to also include employment relationships for which the rea-

son for termination is “fixed-term employment ends” to better reflect

the change in the number of employees, including changes in fixed-

term employment relationships in connection with the transfersof

outsourcing arrangements to wellbeing services counties. For the pre-

vious financial year, the reported turnover rate was 10.7 per cent and

the number of terminated employment relationships was 1,148. The

restated comparison figures are presented in section S1, under S1-6:

Characteristics of the undertaking’s employees.

The number of patient injury notices (0.04) and the number of cases

of patient injury subject to compensation (0) reported for 2024 have

been restated. This is due to a change in Pihlajalinna’s patient insur-

ance. The restated comparison figures are presented in section S4, ta-

ble S4: Targets and metrics related to consumers and end-users.

The GHG emissions Pihlajalinna reported for 2024 have been re-

stated. This applies to Scope 1 (446.09 tCO2eq), Scope 2 location-

based (2,841.64 tCO2eq), Scope 2 market-based (1,899.38 tCO2eq),

Scope 3 (27,769.23 tCO2eq) emissions,Scope 3 biogenic emissions

(55.66 tCO2eq) and the emissions intensity based on location-based

(44.6 t CO2eq / MEUR) and market-based (42.8 tCO2eq / MEUR)

emissions.This is due to refinement in the Pihlajalinna emissions cal-

culation method. The restated comparison figures are presented in

section E1, under E1-6: Gross Scopes 1, 2, 3 and Total GHG emissions.

REPORT BY THE BOARD OF DIRECTORS

| SUSTAINABILITY STATEMENT31

ESRS E1

Climate change

ESRS 2, GOV-3

Integration of sustainability-related performance in incentiveschemes

Integration of sustainability-related performance in incentiveschemes (GOV-3)

ESRS 2, IRO-1

A description of relevant climate-relatedimpacts, risks and opportunities

identification and assessment processes

Description of the processes to identify andassess material impacts, risks and opportunities related

to climate change (IRO-1)

ESRS 2, SBM-3

Material impacts, risks and opportunities andtheir interaction with strategy andbusiness model

Material impacts, risks and opportunities relatedto climate change and their management

(SBM-3)

E1-1

Transition plan for climatechange mitigation

Transition plan for climatechange mitigation (E1-1)

E1-2

Policies related to climate changemitigation and adaptation

Policies related to climate changemitigation and adaptation (E1-2)

E1-3

Actions and resources in relation to climatechange policies

Actions and resources in relation to climatechange policies (E1-3)

E1-4

Targets relatedto climate change mitigationand adaptation

Targets relatedto climate change mitigationand adaptation (E1-4)

E1-5

Energy consumption and mix

Energy consumption and mix (E1-5)

E1-6

Gross Scopes 1, 2, 3 and TotalGHG emissions

Gross Scopes1, 2, 3 and Total GHG emissions(E1-6)

ESRS S1 Own

workforce

ESRS 2, SBM-2

Interests and views of stakeholders

Interests and views of stakeholders(SBM-2)

ESRS 2, SBM-3

Material impacts, risks and opportunities andtheir interaction with strategy andbusiness model

Material impacts, risks and opportunities relatedto own workforce and their management(SBM-3)

S1-1

Policies related to own workforce

Management of material topics andpolicies (S1-1)

S1-2

Processes for engaging with ownworkers and workers’representatives about impacts

Engaging with own workforce (S1-2)

S1-3

Processes to remediate negativeimpacts and channels for own workersto raise concerns

Processes to remediate negativeimpacts and channels for own workforceto raise concerns (S1-3)

S1-4

Taking action on materialimpacts on own workforce, andapproaches to mitigating material risks

and pursuing material opportunities relatedto own workforce, and effectivenessof those actions

Actions (S1-4)

S1-5

Targets relatedto managing material negativeimpacts, advancing positive impacts, andmanaging

material risks and opportunities

Targets and metrics(S1-5)

S1-6

Characteristics of the undertaking’semployees and S1-7 – Characteristicsof non-employee workers

in the undertaking’s ownworkforce

Characteristics of the undertaking’semployees (S1-6)

S1-9

Diversity metrics

Diversity metrics (S1-9)

S1-10

Adequate wages

Adequate wages (S1-10)

S1-14

Health and safety metrics

Health and safety metrics (S1-14)

S1-16

Compensation metrics (pay gap andtotal compensation)

Compensation metrics (S1-16)

S1-17

Incidents, complaints and severe humanrights impacts

Incidents, complaints and serious human rightscomplaints (S1-17)

ESRS S4

Consumers and

end-users

ESRS 2, SBM-2

Interests and views of stakeholders

Interests and views of stakeholders(SBM-2)

ESRS 2, SBM-3

Material impacts, risks and opportunities andtheir interaction with strategy andbusiness model

Material impacts, risks and opportunities relatedto consumers and end-usersand their manage-

ment (SBM-3)

S4-1

Policies related to consumersand end-users

Management of material topics andpolicies (S4-1)

S4-2

Processes for engaging with consumersand end-users about impacts

Engaging with consumers and end-users(S4-2)

S4-3

Processes to remediate negativeimpacts and channels for consumersand end-users to raise con-

cerns

Processes to remediate negativeimpacts and channels for consumersand end-users to raise con-

cerns (S4-3)

S4-4

Taking action on materialimpacts on consumers and end-users,and approaches to managing mate-

rial risks and pursuing material opportunitiesrelated to consumers andend-users, and effectiveness

of those actions

Actions (S4-4)

S4-5

Targets relatedto managing material negativeimpacts, advancing positive impacts, andmanaging

material risks and opportunities

Targets and metrics(S4-5)

ESRS G1

Business

conduct

ESRS 2, GOV-1

The role of the administrative, supervisoryand management bodies

The role of the administrative, managementand supervisory bodies (ESRS2 GOV-1)

ESRS 2, IRO-1

Description of the processes to identify andassess material impacts, risks and opportunities

Description of the processes to identify andassess material impacts, risks, and opportunitiesrelated

to business conduct (IRO-1)

G1-1

Corporate culture and businessconduct policies and corporate culture

Business conduct policies and corporateculture (G1-1)

G1-5

Political influence and lobbying activities

Political influence and lobbying activities (G1-5)

Table: Policies

REPORT BY THE BOARD OF DIRECTORS

| SUSTAINABILITY STATEMENT32

The role of senior management in sustainability

management (GOV-1)

By managing sustainability consistently, Pihlajalinna wants to ensure

that the Group operates sustainably and ethically while also promot-

ing and enabling the achievement of its sustainability targets. In addi-

tion to legislation, the charters of the Board of Directors and its com-

mittees define their responsibilities in addressing sustainability

themes and the related impacts, risks, and opportunities. The CEO,

supported by the Management Team, oversees the company’s day-

to-day management in line with the instructions and orders issued by

the Board.

The Board of Directors and senior management play a key role in re-

sponsible governance, oversight, and regulatory compliance of the

business. Good governance competencies are an essential part of the

expertise of Board members, gained through board roles and execu-

tive positions in large companies and in highly regulated industries. In

addition, the Board of Directors and senior management have broad

experience of the Group’s material sustainability topics and of as-

sessing related risks and opportunities.

The Group Management Team discussed in 2024 and 2025, together

with the Group’s shop stewards, ways to increase employee repre-

sentation in the Group’s senior administration. As of the end of 2025,

the matter remains under consideration by the shop stewards, and a

decision will be made in the following financial years.

Board of Directors

Board's gender distribution and diversity

2025

%

2024

%

Non-executive members

6

100

7

100

Male

3

50

4

57

Female

3

50

3

43

Other

0

0

0

0

Other members

0

0

0

0

Representation of employees

0

0

0

0

Board's gender distribution (ratio offemale to male members)

1.0

0.75

Percentage of Board memberswho are independent

83

86

At the end of the financial year (31 December 2025), Pihlajalinna’s

Board of Directors had six members: Jukka Leinonen (Chair), Leena

N

iemistö (Vice Chair), Kim Ignatius, Heli Iisakka, Tiina Kurki and Mikko

Wirén. The regular secretary of the Board of Directors was Chief Legal

Officer Jaakko Liljeroos.

Pihlajalinna’s Board of Directors has extensive and diverse expertise

in management in several sectors, including the social and healthcare

sector and medicine. The Board members also have backgrounds in

public healthcare administration and advocacy organisations. Several

of the members also serve on the boards of other listed companies,

which provides additional expertise in environmental and social re-

sponsibility and corporate governance. The Board of Directors is well-

versed in sustainability and the requirements of sustainability report-

ing from the perspectives of different industries, such as telecommu-

nications, the food industry, environmental and property business,

retail, pharmaceuticals and logistics. Although Pihlajalinna operates

only in Finland, the members of the Board also have experience in in-

ternational business and its management.

Pihlajalinna’s Board of Directors is the highest body responsible for

sustainability themes. The Board of Directors approves the Group’s

key policies and principles guiding the Group’s operations and inter-

nal control, such as the Pihlajalinna Code of Conduct, human rights

principles, anti-corruption and bribery policies, the Personnel Policy,

the Non-Discrimination Policy, the Risk Management Policy and the

Environmental Policy. It reviews and approves the keytargets and

outcomes related to sustainable business. The principles, policies and

targets are regularly reviewed and updated as necessary when the

operating environment changes. The Board approves the sustainabil-

ity programme and strategic sustainability targets and monitors their

progress through regular reviews. The Board of Directors approves

the sustainability statement and is the highest body responsible for

sustainability-related impacts, risks and opportunities. The double

materiality assessment, which was updated in spring 2025, was re-

viewed by the Audit Committee.

The Executive Vice President, Communications and Sustainability reg-

ularly updates the Board of Directors on the progress of sustainability

targets related impacts, risks and opportunities. In addition, the

Board reviews the Group’s key risks and their control at least once a

year and reviews the big picture annually.

Board diversity and assessment of independence

To

diversely support and develop Pihlajalinna’s business, the Group’s

Board of Directors must have be sufficiently diverse. The overall aim

of the Board composition is to achieve sufficiently extensive qualifica-

tions, skills and experience. The sufficient diversity of the Board of Di-

rectors, including age and gender, as well as educational and profes-

sional background, is taken into account in the preparation of a pro-

posal for the composition of the Board. When the proposal is pre-

pared, each Board member candidate confidentially provides the in-

formation required for assessing their qualifications and time use, in

accordance with instructions provided by the Group.

The proposal concerning the composition of the Board of Directors is

prepared by the Shareholders' Nomination Board, which consists of

representatives appointed by the largest shareholders. The Board is

responsible for assessing the independence of its members. Accord-

ing to the Finnish Corporate Governance Code, a majority of the

members shall be independent of the company and its significant

shareholders. Independence during this financial year was 83 per

cent. At least two independent Board members must also be inde-

pendent of the company’s significant shareholders. Kim Ignatius, Heli

Iisakka, Tiina Kurki, Jukka Leinonen and Leena Niemistö are independ-

ent of the company and its significant shareholders.

Committees

The Board of Directors has two committees: the Audit Committee and

the People and Sustainability Committee. The committees have a

clear division of responsibilities in their agendas in the whole of sus-

tainable development and sustainability. The Audit Committee is re-

sponsible for sustainability reporting as well as its oversight and de-

velopment. The Committee reviews the Board of Directors’ report, in-

cluding the sustainability statement, in its entirety. The People and

Sustainability Committee is responsible for monitoring developments

in the operating environment and for guiding and overseeing the

Group’s sustainability programme and its targets.

REPORT BY THE BOARD OF DIRECTORS

| SUSTAINABILITY STATEMENT33

Group Management Team

Management Team's gender distribution and diversity

2025

%

2024

%

Pihlajalinna Group Management Team

9

100

10

100

Male

6

67

6

60

Female

3

33

4

40

Other

0

0

0

0

Other members

0

0

0

0

Representation of employees

0

0

0

0

Management Team'sgender distribution

0.5

0.66

All of the quantitative data relating to senior management concern

the composition as of 31 December 2025. In addition to the CEO, the

Management Team has representation of the Group’sbusinesses and

corporate functions.

Pihlajalinna’s operations focus on Finland, and the Management

Team has extensive experience in the conduct of business in Finland

and abroad. The Management Team also has extensive industry,

product and service expertise from Finnish and international busi-

ness. Pihlajalinna’s Management Team has comprehensive expertise

and skill with regard to key areas relating to business and sustainabil-

ity. The skills are at a high level in terms of quality, clinical value, ethi-

cal business, data protection and personnel, for example.

At Pihlajalinna, the CEO is responsible for ensuring that the impacts,

risks, and opportunities of Pihlajalinna’s material sustainability topics

are monitored and implemented as planned. The CEO, together with

the Management Team is responsible for setting Pihlajalinna’s sus-

tainability targets, monitoring progress and supervising operating

practices that address the material impacts, risks and opportunities.

In addition, the Management Team reviews the overall progress of

sustainability efforts and sustainability-related topics at least twice a

year. Sustainability-relatedmatters are presented by the Executive

Vice President, Communications and Sustainability, who is a member

of the Management Team. The Management Teamalso supervises

the implementation of approved sustainability actions. No separate

procedures are used for managing impacts, risks and opportunities;

supervision is part of normal risk management and internal control.

The Executive Vice President, Communications and Sustainability is

responsible for the implementation of sustainability matters and pro-

vides the Board of Directors or its committees with updates on the

progress of sustainability targets and sustainability-related impacts,

risks and opportunities. In addition, the director in charge of the rele-

vant area is responsible for the control of the impacts, risks and op-

portunities of different areas of sustainability topics. The Executive

Vice President, Communications and Sustainability is responsible for

sustainability reporting and strategic-level progress. Personnel well-

being is overseen by the Executive Vice President, People and Culture,

while the Chief Medical Officer is responsible for the health and

safety of customers and the Chief Legal Officer is responsible for eth-

ics-related matters.

Information provided to and sustainability mat-

ters addressed by the administrative, manage-

ment and supervisory bodies (GOV-2)

Management and subject matter experts present different aspects of

sustainability to the Board of Directors and its committees. The re-

views provide information about the most material sustainability im-

pacts, risk and opportunities, as well as up-to-date insights about sus-

tainability and related regulations. The Executive Vice President,

Communications and Sustainability, who is a member of the Manage-

ment Team, is responsible for presenting sustainability-related mat-

ters to the Board of Directors, its committees and the Management

Team. A presentation is given to the Board of Directors at least once a

year, to the People and Sustainability Committee and the Manage-

ment Team at least twice a year,and to the Audit Committee on a

quarterly basis.

The Executive Vice President, Communications and Sustainability and

the experts responsible for the risk management process, report an-

nually to the Board of Directors and quarterly to the Management

Team on Pihlajalinna’s risk management results, including material

sustainability risks, as part of the normal risk management and self-

monitoring process. During 2025, the Executive Vice President, Com-

munications and Sustainability and subject

‑

matter experts reported

to the administrative, management and supervisory bodies on the re-

sults and effectiveness of the approved policies, actions, metrics and

targets related to material impacts, risks and opportunities. Such re-

views are held twice a yea

r.

During the reporting period, Pihlajalinna continued the systematic in-

tegration of human rights perspectives into the Group’s broader risk

management process. This work will continue systematically in the

coming financial years. The aim is to ensure that human rights im-

pacts are identified, prevented and managed as part of the com-

pany’s normal business operations. This supports the strengthening

REPORT BY THE BOARD OF DIRECTORS

| SUSTAINABILITY STATEMENT34

of sustainability and improves comprehensive risk management. Re-

garding the themes presented in this report and to be developed fur-

ther, as well as the results and effectiveness of the policies, actions,

metrics and targets set for them, the Board of Directors will receive

updates from the Executive Vice President, Communications and Sus-

tainability twice a year moving forward.

Impacts, risks and opportunities concerning the Group have been

taken into account as part of strategy work, the risk management

process and major business decisions by discussing them at the level

of the Management Team and Board of Directors and its committees

in the processes of preparing the strategy and business decisions.

More information is provided under SBM-1: Strategy, business model

and value chain, SBM-2: Interests and views of stakeholders, and

SBM-3: Material sustainability topics in Pihlajalinna’s activities and

their interaction with strategy. The overall frameworkwill be further

systematised, and the annual action calendars are being refined, tak-

ing into account the Group

‑

wide operating model change that en-

tered into effect on 1 January 2026.

Sustainability topics discussed in the meetings of the Board of

Directors, its committees and the Group Management Team

in the financial year 2025:

•

Update of the double materiality assessment

•

Sustainability reporting and related regulatory development

•

Verification of sustainability reporting

•

Emissions accounting and transition plan draft

•

Customer experience and satisfaction

•

Personnel wellbeing, development and results of the personnel

survey

•

Data protection and information security

•

Risk management

•

Internal control and internal audit

•

Remuneration and the Remuneration Policy

•

Reports made via the whistleblowing channel

•

Sickness-related absences

•

Targeting of Pihlajalinna's own occupational healthcare

Integration of sustainability-related performance

in incentive schemes (GOV-3)

Pihlajalinna’s Remuneration Policy describes the principles of remu-

neration and the total remuneration of the administrative, manage-

ment and supervisory bodies. The Remuneration Policy and any mate-

rial amendments to it are prepared by the People and Sustainability

Committee of Pihlajalinna’s Board of Directors. Pihlajalinna’s updated

Remuneration Policy was approved by the Annual General Meeting

on 24 April 2025. The Board of Directors reviews and approves the

Remuneration Policy to be presented to the General Meeting and any

material amendments to it. The Board of Directors of Pihlajalinna de-

cides on the remuneration paid to the CEO in accordance with the Re-

muneration Policy. The People and Sustainability Committee prepares

remuneration-related matters, if necessary, with the assistance of in-

dependent external experts.

The maximum level of remuneration available under the CEO’s short-

term remuneration scheme in 2025 was 60 per cent of the fixed an-

nual salary (2024: 60 per cent). The remuneration is based on Pihla-

jalinna’s adjusted EBITAwith a weight of 60 per cent (60 per cent), or-

ganic revenue growth with a weight of 30 per cent (30 per cent) and

personnel satisfaction, as measured by the eNPS, with a weight of 10

per cent (10 per cent). In addition, the CEO takes part in the long-

term share-based incentive plan, in which the remuneration available

is tied from 2025 onwards to Pihlajalinna’s Return on capital em-

ployed (ROCE) with a weight of 40 per cent, Total Shareholder Value

(rTSR) with a weight of 30 per cent, annual revenue growth with a

weight of 20 per cent and the development of the sickness absence

per cent with a weight of 10 per cent.

For the other members of the Management Team, the remuneration

available in the long-term share-based incentive plan is tied to the

same metrics as used for the CEO. The maximum level of remunera-

tion available under the short-term remuneration scheme in 2025

was 35–40 per cent (25–40 per cent) of fixed annual salary. The remu-

neration is based, on a weighted basis, on the Group’s adjusted EBITA

and organic revenue growth and personnel satisfaction. In addition,

there are targets related to the respective areas of responsibility, and

of these, customer satisfaction (NPS), sickness-related absence rate

(SPO) and personnel satisfaction (eNPS) are linked to sustainability.

These targets are also used to assess the management’s perfor-

mance, and they are key metrics from the point of view of Pihla-

jalinna’s material sustainability topics (S4 Consumers and end-users

and S1 Own workforce). For the members of Pihlajalinna’s Manage-

m

ent Team, the share of variable remuneration components linked to

sustainability-related targets was 10 per cent (10 per cent) in the

short-term remuneration scheme and 10 per cent (40 per cent) in the

long-term remuneration scheme. Climate-related perspectives have

not been integrated into the remuneration of the administrative,

management and supervisory bodies.

Description and implementation of the remuneration of the

Board of Directors

Pihlajalinna’s General Meeting decides on the fees paid to the mem-

bers of Pihlajalinna Plc’s Board of Directors. The proposal for the re-

muneration of the Board members is prepared by the Shareholders’

Nomination Board. Board members can be paid annual or monthly

fees, for instance, and a meeting fee for meetings of the Board of Di-

rectors or its committees. In 2025 and 2024, the remuneration of the

Board of Directors was paid in shares and in cash. No sustainability-

related metrics have been integrated into the remuneration of the

members of the Board of Directors.

Description of the remuneration of the CEO

Pihlajalinna’s Board of Directors appoints the Chief Executive Officer

and decides on the terms and conditions of their service contract. Be-

fore decision-making by the Board, the matter is prepared by the

People and Sustainability Committee of the Board of Directors. The

CEO is not a member of the People and Sustainability Committee and

does not take part in decision-making in matters concerning their re-

muneration. In accordance with the Remuneration Policy, the remu-

neration of the CEO is based on a fixed monthly salary including fringe

benefits and separately decided variable remuneration components,

such as a long-term share-based incentive plan and a short-term in-

centive plan, for example.

Follow-up

The Board of Directors' People and Sustainability Committee moni-

tors the implementation of the Remuneration Policy and, if neces-

sary, submits proposals for actions to the Board to ensure its effective

execution. The Board of Directors submits the Remuneration Policy to

the General Meeting for review as necessary, however at least once

every four years. In addition, the Board of Directors annually presents

the Annual General Meeting with a remuneration report, enabling

shareholders to assess the implementation of the Remuneration Pol-

icy within Pihlajalinna. The General Meeting decides on the approval

of the Remuneration Report. The decision of the General Meeting re-

garding the remuneration report is of an advisory nature.

REPORT BY THE BOARD OF DIRECTORS

| SUSTAINABILITY STATEMENT35

Statement on sustainability due diligence

(GOV-4)

Pihlajalinna’s due diligence is part of the Group’s operating and gov-

ernance practices. With regard to governance, the process sets re-

quirements for the transparency of the organisation, ethical manage-

ment and stakeholder engagement in decision-making. In addition,

Pihlajalinna’s due diligence process has been expanded into safe-

guarding human rights so as to prevent activities infringing funda-

mental rights. This includes working conditions, prevention of dis-

crimination and prevention of other human rights infringements. Dur-

ing the reporting period, progress was made with the integration

Core elements of

due diligence

Sections in the sustainability statement

a) Embedding due diligence in

governance, strategy and busi-

ness model

ESRS 2 GOV-4: Statementon sustainability due diligence

ESRS 2 SBM-1: Strategy,business model and value chain

b) Engaging with affected stake-

holders in all key steps of the

due diligence

ESRS 2 SBM-2: Interests and viewsof stakeholders

ESRS 2 IRO-1: Process to identify andassess material impacts, risks and opportunities

S1-2: Engaging with own workforce

S4-2: Engaging with consumers and end-users

G1-5: Political influence and lobbying activities

c) Identifying and assessing ad-

verse impacts

ESRS 2 IRO-1: Process to identify andassess material impacts, risks and opportunities

ESRS 2 SBM-3: Material sustainabilitytopics in Pihlajalinna's activities and their link withthe strategy,and topic-specific SBM-3

GOV-5: Risk management andinternal controls over sustainabilityreporting

S1-3: Processes to remediate negativeimpacts and channels for ownworkforce to raise concerns

S4-3: Processes to remediate negativeimpacts and channels for consumersand end-users to raise concerns

d) Taking actions to address

those adverse impacts

E1-3: Actions and resources in relationto climate change policies

S1-3: Processes to remediate negativeimpacts and channels for ownworkforce to raise concerns

S1-4: Actions

S4-3: Processes to remediate negativeimpacts and channels for consumersand end-users to raise concerns

G1-1: Business conduct policies and corporateculture

e) Tracking the effectivenessof

these efforts and communicating

ESRS 2 SBM-2: Interests and viewsof stakeholders

S1-5: Targets and metrics

S4-5: Targets and metrics

of

human rights perspectives into the Group’s risk management process,

and with the more detailed specification of remedies and monitoring

metrics, among other things. The development efforts will continue in

a planned and systematic manner in the coming financial years, and

the aim is to strengthen the management of human rights impacts as

part of comprehensive risk management. The attached table outlines

the stages of the due diligence process and indicates where each of

them is described in the sustainability report.

Risk management and internal controls over sus-

tainability reporting (GOV-5)

Sustainability reporting follows Pihlajalinna’s statutory reporting, risk

management and internal control principles. The sustainability team

under Group services is centrally responsible for sustainability report-

ing. Sustainability reporting is carried out by persons specialising in

sustainability reporting and reporting standards. In order to ensure

the accuracy and timeliness of the reported data, Pihlajalinna has de-

ployed a governance model that defines the roles and responsibilities

for sustainability reporting. The capabilities required for producing

data have been identified and defined in the different areas of Pihla-

jalinna’s operations so that all reported areas are covered at a suffi-

cient level. Experts from finance, HR, procurement, medical services,

legal and IT, among others, contribute to the process.

The Board of Directors has the ultimate responsibility for the appro-

priateness of internal control related to reporting. It prepares and an-

nually approves the financial statements and the Board of Directors’

report, including the sustainability statement. The Audit Committee

a

ssists in monitoring the effectiveness of the principles of internal

control and risk management. The Audit Committee supervises the fi-

nancial statements as well as financial and sustainability reporting

processes to ensure high quality and integrity. Pihlajalinna’s Board of

Directors assesses the level of internal control at least once a year.

The Board of Directors may also use an external service provider for

separate internal audit assignments.

The internal control of sustainability reporting is based on risk identi-

fication, analysis and focusing control on the most material identified

risks, and best practices of internal control. The reporting data is gen-

erated within business processes, and all participants are responsible

for its accuracy. Reporting-related risks and their prioritisation have

been assessed through the findings of the process participants, and

any risks have been addressed immediately. No critical risks emerged

during the reporting process.

Pihlajalinna’s sustainability reporting involves risks related to the ac-

curacy and interpretation of data, human error and the correctness

and repeatability of reported data, which may be affected by incom-

plete data, manual work stages, unclear responsibilities or inadequate

documentation. The reporting schedule may involve risks related to

insufficient resources, for example. Risks are mitigated and managed

by following the principles of internal control and the sustainability

reporting governance model, which clearly define the roles and re-

sponsibilities related to the process, as well as the identified risks and

their management. Pihlajalinna has deployed a reporting system that

supports the management and traceability of reported data. Operat-

ing practices related to the reporting process, progress monitoring

and reviews by the Audit Committee support the management of

schedules. Resource needs are taken into account in the planning of

the process and the engagement of internal stakeholders. Pihlajalinna

has identified the increasing need for new expertise also with regard

to other responsibility topics and sustainability reporting and has sys-

tematically increased operational resources in these areas.

The business areas and Group functions are responsible for ensuring

transparency in the data required for reporting. The governance

model roles ensure data accuracy, compliance with schedules and

submission to the person responsible for sustainability reporting in

the business areas and Group functions. Accuracy and timeliness are

ensured by internal controls that are embedded in common business

processes and the systematic monitoring of which is part of internal

control reporting. Sustainability reporting risks and findings have so

far been handled separately and not yet integrated into the Group’s

broader risk management processes. Alignment of the Group’s risk

management and sustainability reporting processes and risks is re-

REPORT BY THE BOARD OF DIRECTORS

| SUSTAINABILITY STATEMENT36

viewed as part of continuous development efforts, and the develop-

ment will continue in the coming financial years. The Executive Vice

President, Communications and Sustainability reports to the Audit

Committee and Management Team on sustainability reporting and

potential risk observations as necessary in connection with the

presentation of sustainability topics.

Strategy,business model and value chain (SBM-1)

Pihlajalinna is a private social and healthcare service provider. The

Group offers private clinic and hospital services, as well as services re-

lated to occupational healthcare and insurance cooperation. Pihla-

jalinna offers social and healthcare service production models for

wellbeing services counties. Individual customers use Pihlajalinna’s

services either directly or through partners, i.e. corporate customers,

insurance companies or the public sector, and they are provided with

a wide range of on-site, remote and digital services.

Pihlajalinna’s shares are listed on Nasdaq Helsinki Ltd, and 91.7 per

cent (98.5 per cent) of the shares are held by Finnish shareholders. All

the Group’s business operations are in Finland. Pihlajalinna pays all of

its taxes to Finland. Pihlajalinna’s head office is located in Tampere.

At the end of the financial year 2025, the Group had 4,540 (6,493)

employees and 2,251 (2,145) practitioners. The decrease in the num-

ber of personnel is mainly due to the gradual transfers of outsourcing

arrangements to wellbeing services counties and the divestment of

service housing units, in connection with which employees have been

transferred to the service of a new employer. Pihlajalinna’svalues are

energy, ethics and open-mindedness. Pihlajalinna wants to be a

value-based and responsible industry pioneer that offers quick and

high-quality care. This goal is promoted by developing multichannel

services.

In 2025, Pihlajalinna concentrated on developing its business and fur-

ther strengthening profitability in accordance with its strategy. There

were no significant changes in Pihlajalinna’s services, markets served

or customer groups during the reporting period. In 2025, Pihlajalinna

divested part of its housing and care services business. More infor-

mation is provided in the consolidated financial statements in note

28: Acquired business operations and divestments.

Private clinic and hospital services

Pihlajalinna’s private clinic and hospital network covers all of Finland,

focusing on the biggest regional centres. In addition to general practi-

tioners, specialists and nurses’ appointments and emergency and on-

c

all services, the services offered include, among other things, surgi-

cal operations, physiotherapy and examination services.

Occupational health services

For corporate customers in occupational healthcare, Pihlajalinna of-

fers services that help maintain work ability with the aim of support-

ing organisations and helping them achieve their goals. In addition to

statutory preventive services, Pihlajalinna offers medical care ser-

vices. The services are provided at Pihlajalinna’s private clinics and

hospitals and through remote service channels.

Examinations

Pihlajalinna provides an extensive range of laboratory and imaging

services. Imaging examinations include, for example, magnetic, X-ray

and ultrasound examinations. The services also cover clinical physio-

logical examinations.

Remote services

Pihlajalinna invests in multichannel services. Remote services equalise

regional differences and bring cost efficiency. Pihlajalinna’s remote

services include assessment of the need for care, general practitioner

and medical specialist services and various service concepts, such as a

national disease clinic (Kansantautiklinikka), responsible doctor ser-

vices and mental health Mielen Pihlajalinna.

Fitness centre services

Forever fitness centres offer diverse wellbeing services. Fitness centre

services complement Pihlajalinna’s preventive occupational

healthcare services and rehabilitation services carried out after spe-

cialised care procedures.

Services for the public sector

Pihlajalinna produces value-based social and healthcare services for

wellbeing services counties. Outsourcing services include care units,

health centres and complete and partial outsourcings and remote ser-

vices, such as responsible doctor services. In addition, Pihlajalinna of-

fers outsourced service production, such as services produced with

service vouchers and procurement packages that cover a specified

number of surgical procedures.

The link between the impacts, risks and opportunities with the

Group’s business model and value chain is described in more detail in

section ESRS 2, under SBM-3: Material sustainability topics in Pihla-

jalinna’s activities and their interaction with strategy,and in the fig-

ure: Pihlajalinna’s value chain. The cost structure and revenues of the

business segments in accordance with the IFRS 8 disclosure require-

ments are described in the consolidated financial statements, in note

1: Segment information, and note 2: Revenue from contracts with

customers.

Targets relatedto sustainability

Pihlajalinna has set targets for promoting sustainable development.

Private clinic and hospital services aim at quick, needs-based and

high-quality care for individual customers. High-quality assessment of

need for care facilitates the optimum use of healthcare resources. Oc-

cupational health services focus on maintaining the work ability of

companies’ employees and providing cost-effective solutions for com-

panies. Extensive geographical coverage aims for equality of services

between regions. Pihlajalinna wants to be the most committed part-

ner for insurance companies’, corporate customers’and the public

sector’s success. Insurance company collaboration, for example, fo-

cuses particularly on cooperation to achieve mutual goals and contin-

uously improve value-based services, to ensure quick and appropriate

care for individual customers as well as cost-effective solutions.

Pihlajalinna wants to be the most desirable workplace for healthcare

professionals, where the best talent in the industry has a high level of

job satisfaction and to which they want to make a long-term commit-

ment. Pihlajalinna’s aim is to reduce GHG emissions, improve energy

efficiency and develop stakeholder dialogue, as well as create targets

and measures with supplier partners to reduce emissions from pro-

curement.

Pihlajalinna’s sustainability-related targets are described in the fol-

lowing subsections: E1-4: Targets related to climate change mitigation

and adaptation, S1-5: Targets and metrics, and S4-5: Targetsand met-

rics. Pihlajalinna’s current services support sustainability-related tar-

gets by promoting access to care, reducing emissions and strengthen-

ing preventive healthcare. Partners’ needs guide the development of

services towards more value-based and equal promotion of health.

Strategy

Pihlajalinna’s view is that the healthcare sector needs to shift its focus

from service volumes to overall cost-effectiveness and new types of

care pathways which, through cooperation with partners, namely in-

surance companies, companies and the public sector, deliver the

greatest possible health benefits at the most reasonable total cost.

The ageing of the population and the increasing prevalence of chronic

diseases drive up the demand for healthcare services, which increases

the importance of cost management.

Pihlajalinna’s strategy is based on reforming customer-driven and re-

sults-oriented care pathways as well as developing value-based ser-

vices aimed at improving the quality and outcomes of care. Value-

REPORT BY THE BOARD OF DIRECTORS

| SUSTAINABILITY STATEMENT37

based care pathways are medically necessary and timely, enabling op-

timised and resource-efficient care. Pihlajalinna’s strategy emphasises

that the Group’s success is built in cooperation with partners and pro-

fessionals. Pihlajalinna wants to be the most desirable workplace for

the professionals in the industry. The aim is to offer smooth daily life

and a predictable customer flow, and to build an attractive corporate

culture founded on human

‑

centred leadership and shared principles.

Ambition

We are a reformer of healthcare. We thrive with our partners and our

professionals. We succeed by building more value-based care path-

ways and a human-oriented work community.

Focus areas

Partnerships: The most committed partner for insurance companies’,

corporate customers’ and the public sector’s success

Value-based care pathways: Reformer of customer-driven, effective

care pathways

The most desirable work community: The most attractive corporate

culture in the industry

Enablers

Operational quality and productivity

Service and commercial development

Offering and network

Digital and data

Pihlajalinna’s sustainability programme

Pihlajalinna’s sustainability work is grounded in the UN Sustainable

Development Goals, international commitments, the business strat-

egy and the company’s values. Based on these, Pihlajalinna has estab-

lished the sustainability programme’s focus areas, which guide practi-

cal measures and development efforts.

One key tool of sustainability work is the double materiality assess-

ment, which combines stakeholder views and an assessment of the

impacts of business operations. This approach ensures that sustaina-

bility efforts are focused on themes that are both externally and in-

ternally material and significant. The DMA is updated regularly, at in-

tervals of 2–3 years, to ensure that it corresponds to changes in the

operating environment and supports strategic decision-making. Sus-

tainability work is not separate from Pihlajalinna’s other operations.

Instead, it is overarching and guiding work.

Pihlajalinna’s sustainability programme outlines the key themes of

sustainability, for which concrete metrics and targets have been set.

The progress of the targets and actions is monitored by means of

management reviews, for example. The three main themes of the

sustainability programme support the business strategy and Sustaina-

ble Development Goals:

Value-based health

Value-based health means that Pihlajalinna’s high-quality and cost-ef-

fective healthcare services are accessible to everyone. Clinical quality

and value are Pihlajalinna’s key strategic priorities.

Pihlajalinna professionals with a high level of wellbeing

Behind the wellbeing of Pihlajalinna professionals is meaningful work

in a work community that is managed with high quality and has a high

level of wellbeing. At Pihlajalinna, professionals are treated equally

a

nd fairly, and their personal and professional development is en-

sured.

Sustainable business

Sustainable business means sustainably produced healthcare services

and that investing in sustainable development promotes the wellbe-

ing of individual customers, the personnel and the environment.

Sustainable Development Goals

Pihlajalinna is committed to upholding the UN Sustainable Develop-

ment Goals (SDGs) in its activities. Of the 17 SDGs, Pihlajalinna has

identified the four that are the most material to its operations. Pihla-

jalinna promotes these four goals in a purposeful manner as part of

its sustainability programme. Progress related to the targets and ac-

tions is monitored by means of management reviews. The selected

SDGs are as follows:

Good health and wellbeing (SDG 3)

in the context of Pihlajalinna’s

operations means strengthening value-based healthcare services by

providing high-quality social, health and wellbeing services through

Pihlajalinna’s private clinics, hospitals, fitness centres and housing

services across Finland.

Decent work and economic growth (SDG 8).

Pihlajalinna’s actions to

promote this goal include ensuring labour rights and occupational

safety, the appropriate management of human rights risks in the

Group’s own operations and in its partner network, and developing

diversity, equity and inclusion and increasing awareness in all activi-

ties, including training and recruitment.

Climate action (SDG 13)

includes actions such as setting emission re-

duction targets and guiding personnel and customers towards more

sustainable procedures and practices, such as digital solutions, sus-

tainable procurement practices and stakeholder engagement.

Partnerships for the goals (SDG 17).

Pihlajalinna is committed to cre-

ating value for its partners by developing healthcare services that are

cost-effective from an overall perspective, and developing service

models that enable timely care, the efficient allocation of resources

and effective management of the total costs of healthcare.

REPORT BY THE BOARD OF DIRECTORS

| SUSTAINABILITY STATEMENT38

Pihlajalinna’s value chain is illustrated in the figure below. The figure shows the main features of the upstream and downstreamvalue chain and as well as the location of material impacts, risks, and opportunities within the

value chain. Activities relatedto the Pihlajalinna’s own operations have been described earlier in this section.

REPORT BY THE BOARD OF DIRECTORS

| SUSTAINABILITY STATEMENT39

Stakeholder

Interests and views of stakeholders

Purpose and development areas

Engagement channels

Individual

customers

High-quality and value-based treatment and

care

Highly skilled and professional healthcareper-

sonnel

Versatile remote services

Smooth service process

Reliability and data protection

Professional expertise and trainingof the personnel

Development of multi-channel services

Extensive and up-to-date dataprocessing and infor-

mation security

Quality certifications

Development of new services

Interaction in service delivery

Customer service channels

Customer and patient satisfactionsur-

veys

Feedback channels

Social media

Partners: public

sector entities,

insurance compa-

nies and corporate

customers

Effective assessment of needfor care

Cost management

High-quality and value-based services

Data protection and informationsecurity

Partnership models

Professional expertise and trainingof the personnel

Adequate resources

Continuous development of remote channels

Providing solutions in response to changesin the

operating environment

Value-based treatment andservice models

Personal interaction

Customer satisfaction surveys

Co-creation

Personnel

Clear job descriptions and targets

Excellent leadership and supervisory work

Collaboration in statutory employer-employee

cooperation

Management of wellbeing at work andoccu-

pational safety and health

Diversity, equity andinclusion

High-quality tools and equipment

Top-quality facilities

Motivating remuneration model

Target-settingand development discussions at the

individual and team level

Development of leadership and supervisory work

Active communication and open dialogue

Personnel, non-discrimination and equalitypolicies

Development of tools and equipment

Personal interaction

Personnel briefings

Target-settingand development discus-

sions

Training and coaching

Intranet

Pihlis Pulse personnel survey

Statutory employer-employee coopera-

tion, occupational safety and health

meetings and the Kimpassa forum

Pihlajalinna Academy training portal

Anonymous whistleblowing channel

HSE Lite occupational safety and health

reporting system

Shareholders

The company’s strategicmanagement and in-

creasing shareholder value

Transparent andregular communication

Sharing insights on changes in the operating

environment and their impacts

Risk management

Advancing sustainability

Reliable sustainability reporting (CSDR)

Timely and reliable financial reporting

Effective leadership,driving profitability and growth

Consistent strategy and agoal-oriented roadmap

Active communication on businessand strategy de-

velopment and progress

Extensive monitoring and analysis of the operating

environment

Comprehensive risk management process

Advancing sustainability efforts

Quarterly and annual reporting

Quarterly results release webcasts

Stock exchange announcementsand

corporate website

Investor relations meetings

Annual General Meeting

Media

Reliability, transparency,timeliness, and speed

of communication

Timely responses to media inquiries

Assigning the right experts for interviews

Active dialogue

Ensuring communication resources andexpertise

Disclosure Policy

Trained spokespersons

Stock exchange and pressreleases

E-mails and phone calls

Social media

Media meetings

Authorities and

industry

organisations

S

eamless cooperation supporting sharedin-

dustry goals

Broad sharing of expertise

Open dialogue on industry-related topics

Cooperation with the public authorities

Sharing current themes and ideas

Corporate websites

Active participation in networks

Responding to information requests

Personal meetings

Interests and views of stakeholders (SBM-2)

Pihlajalinna provides social and healthcare services in Finland. The

Group has various stakeholders whose expectations it aims to meet

through open dialogue. Engagement with different stakeholders is

ensured by using diverse communication channels. Important stake-

holders include insurance companies, companies, consumers and the

public sector. With professional and skilled personnel, Pihlajalinna

can respond to the expectations of other stakeholders. Operating in

the social services and healthcare sector also requires close engage-

ment with the public authorities, decision-makers and industry organ-

isations. As a listed company, Pihlajalinna creates value for its share-

holders and engages in open dialogue with the media and the ana-

lysts and investors that follow the Group.

Pihlajalinna engages in active dialogue with various industry opera-

tors through meetings and its own channels. Pihlajalinna is a member

of the Finnish Association of Private Care Providers (Hali), which rep-

resents companies and organisations that produce social and

healthcare services. Hali is a member of the Confederation of Finnish

Industries EK. Pihlajalinna is also a member of the industry association

Lääkäripalveluyhdistys LPY.

Stakeholder views were collected in connection with the double ma-

teriality assessment carried out in 2023, supplementing the under-

standing of the impacts on stakeholders and the kind of information

expected by stakeholders as the basis of their own decision-making.

In addition to the Group’s own personnel, the stakeholders that re-

sponded to the survey included individual customers, shareholders,

the public authorities and decision-makers, partners and media.

The Executive Vice President, Communications and Sustainability, the

Sustainability Manager, and the persons in charge of different func-

tions, such as representatives of HR, inform the administrative, man-

agement and supervisory bodies of the views of affected stakeholders

and Pihlajalinna’s sustainability-related impacts. Pihlajalinna has not

changed its business or strategy on the basis of the stakeholder analy-

sis during the reporting period.

The strategy and business model play a significant role in the wellbe-

ing of Pihlajalinna’s own workforce. For example, growing the busi-

ness and improving the efficiency of operations can, at least tempo-

rarily, have the effect of increasing the workload, but the strategic fo-

cus on wellbeing at work, competence development and the quality

of leadership help to mitigate those effects. These efforts

REPORT BY THE BOARD OF DIRECTORS

| SUSTAINABILITY STATEMENT40

are reflected in day-to-day operations in the adaptation of operating

practices, for example, and they are monitored in section S1, under

S1-2: Engaging with own workforce, and S1-3: Processes to remediate

negative impacts and channels for own workforce to raise concerns,

in accordance with the described processes.

Pihlajalinna’s own personnel is the most essential group of the af-

fected stakeholders. Pihlajalinna has integrated the UN Guiding Prin-

ciples on Business and Human Rights into its Code of Conduct. The or-

ganisation is committed to respecting and promoting the rights of

Pihlajalinna professionals, including non-discrimination, occupational

health and safety, and freedom of association. These principles have

been integrated into the Personnel Policy, and they guide both strate-

gic decision-making and operational activities. The views, interests

and rights of the personnel have a direct effect on strategic choices

and the business model. Employee engagement takes place through

personnel surveys, workshops and dialogue organised in connection

with strategy processes, among other contexts. These mechanisms

help to ensure that the views of personnel are taken into account in

business development and decision-making.

One of the focus areas of Pihlajalinna’s new strategy is to be the most

desirable work community. The employee Net Promoter Score (eNPS)

is one of Pihlajalinna’s medium-term strategic targets. The aim is to

be an attractive workplace where the personnel have a high level of

job satisfaction and opportunities for professional development.

More information on how Pihlajalinna’s strategy and business model

take into account the rights, views and wellbeing of its own work-

force, and the impacts of the strategy and business model on person-

nel, is provided in section S1, especially under SBM-3: Material im-

pacts, risks and opportunities related to own workforce and their

management, S1-1: Management of material topics and policies, and

S1-2: Engaging with own workforce.

The strategy and business model play a significant role in relation to

consumers and end-users in that the availability, quality and safety of

services, for example, may have a direct impact on the wellbeing and

rights of individual customers. The strategy and business model sup-

port the mitigation and prevention of potential negative impacts on

the one hand, and the strengthening of positive impacts through a fo-

cus on customer orientation, value-based care pathways and the of-

fering and networks. This is reflected in the quality of services, for ex-

ample, and performance in these focus areas is monitored through

p

atient safety feedback channels and customer feedback. Individual

customers are engaged in the development of operations, and en-

gagement data is collected from them for use in individual develop-

ment projects, and it will be used more extensively in the future.

One of the focus areas of Pihlajalinna’s new strategy is value-based

care pathways. The customer experience target (NPS) for the Group’s

healthcare services is one of Pihlajalinna’s medium-term strategic tar-

gets. More information on how Pihlajalinna’s strategy and business

model take into account the rights, views and wellbeing of individual

customers, and the impacts of the strategy and business model on in-

dividual customers is provided in section S4, especially under SBM-3:

Material impacts, risks and opportunities related to consumers and

end-users and their management, S4-1: Management of material top-

ics and policies, and S4-2: Engaging with consumers and end-users.

Material sustainability topics in Pihlajalinna’s ac-

tivities and their interaction with strategy

(SBM-3)

The material impacts, risks and opportunities identified in Pihla-

jalinna’s double materiality assessment are presented under the ESRS

standards E1 (Climate change), S1 (Own workforce), S4 (Consumers

and end-users) and G1 (Business conduct) in this sustainability state-

ment. Based on the results of the double materiality analysis, Pihla-

jalinna’s material sustainability impacts are presented in the material-

ity matrix on the next page. The material impacts, risks and opportu-

nities are also described in more detail in the figure: Pihlajalinna’s

value chain, and the table: Management of Pihlajalinna’s material im-

pacts, risks and opportunities (IRO). The management of the material

impacts, risks and opportunities is described in more detail in each

section of the sustainability statement.

The following were assessed to be non-material topics:

•

ESRS E2 Pollution

•

ESRS E3 Water and marine resources

•

ESRS E4 Biodiversity and ecosystems

•

ESRS E5 Resource use and circular economy

•

ESRS S2 Workers in the value chain

•

ESRS S3 Affected communities

The connection between the impacts, risks and opportunities

and the strategy and business model

Pihlajalinna’s material impacts, risks and opportunities are taken into

account in the development of the strategy, business model, value

chain and decision-making, as they are closely linked to Pihlajalinna’s

day-to-day operations and the monitored metrics and targets. Pihla-

jalinna operates in a target-oriented manner in a changing operating

environment in which maintaining personnel resources, skills and

wellbeing is of paramount importance. The personnel are Pihla-

jalinna’s most valuable asset, and the ambition of being the most de-

sirable work community is one of the focus areas of Pihlajalinna’s

strategy. Monitoring and managing the impacts, risks and opportuni-

ties related to Pihlajalinna’s own workforce is important for ensuring

business continuity.

The health, privacy and equality of consumers and end-users are at

the core of Pihlajalinna’s strategy.Pihlajalinna wants to be a reformer

of customer-driven and value-based care pathways and the most

committed partner for insurance companies', corporate customers'

and the public sector’s success. This means that impacts, risks and op-

portunities associated with consumers and end-users can influence

the success of the strategy. The current and anticipated impacts of

Pihlajalinna’s emissions do not affect its strategy or business model.

Corporate governance and ethical business conduct guide decision-

making and strengthen sustainability throughout the value chain. Cor-

porate culture and political engagement can support sustainable busi-

ness and strengthen stakeholder relations, and taking these factors

into account is essential for Pihlajalinna to respond to the expecta-

tions of its stakeholders and adapt to the changing operating environ-

ment.

Currently, none of Pihlajalinna’s material impacts, risks and opportu-

nities require immediate changes to the strategy, business, value

chains or decision-making. Instead, they are taken into account as

part of responsible management and operations. Pihlajalinna actively

monitors changes in the operating environment and assesses the de-

velopment of impacts, risks and opportunities as part of its opera-

tional activities, so that it can proactively update its strategy and busi-

ness model as necessary and take advantage of new opportunities.

Pihlajalinna’s material negative impacts may,for example, weaken

the wellbeing or working conditions of the personnel, and make cli-

mate change mitigation more difficult. As regards consumers and

end-users, the material negative impacts are related to limitations in

the availability of services, data protection or the weakening of pa-

tient safety, for example.

At the same time, the positive impacts support the wellbeing at work,

competence development and equality of the personnel, and pro-

mote end-user health and safety. Positive impacts from the perspec-

tive of the environment can be reflected in sustainable procurement

and emission reductions, for example. The positive impacts of corpo-

REPORT BY THE BOARD OF DIRECTORS

| SUSTAINABILITY STATEMENT41

rate culture and political engagement are reflected in both the per-

sonnel and business relationships, and they promote sustainable and

transparent operations throughout the value chain.

Pihlajalinna’s material impacts are closely linked to its strategy and

business model. Choices on service models, channels andgrowth may

affect individual customers, personnel wellbeing and operational

emissions. Strategic focus areas, such as value-based care pathways

and investments in personnel, promote positive impacts for individual

customers and the work community. Pihlajalinna strives to actively

identify and manage the negative impacts that are typical of its indus-

try, such as the personnel’s workload and challenges related to well-

being at work, by developing the working conditions, supporting the

personnel’s ability to cope with the demands of work and focusing on

good leadership. At the same time, Pihlajalinna strengthens its posi-

tive impacts by, for example, promoting the competence and wellbe-

ing of the personnel, developing customer-oriented services and com-

plying with the Code of Conduct and transparency in its operations.

Pihlajalinna is connected to its material impacts through its activities

and business relationships. Climate-related impacts arise particularly

through procurement and travel by individual customers, generating

emissions across the value chain as well as in Pihlajalinna’s own oper-

ations, such as personnel’s commuting. The material impacts on per-

sonnel stem mainly from Pihlajalinna’s own operations, as personnel

are central to the Group’s core activities and working conditions di-

rectly affect them. The impacts on consumers and end-users mainly

arise through Pihlajalinna’s own services, although business relation-

ships, such as insurance company partners, may also influence cus-

tomer satisfaction. Corporate culture and political engagement form

a part of Pihlajalinna’s operations, but their implementation and im-

pacts also extend to value chain actors and cooperation partners.

Pihlajalinna’s operations involve material risks and opportunities re-

lated to, for example, the wellbeing of its workforce, the health of

consumers and end-users, data protection and information security,

and political engagement. These may have direct or indirect impacts

on Pihlajalinna’s financial position, result and cash flows.

During the financial year, no individual incidents were identified that

would have led to material changes in Pihlajalinna’s financial position

o

r adjustments to the financial statements. However, some of the

material risks and opportunities may materialise as part of normal

business operations, for example through changes in wages, respond-

ing to customer requirements or changes in the regulatory environ-

ment. These may have impacts on personnel expenses, revenue or in-

vestments in future financial years, for example. Pihlajalinna monitors

these risks and opportunities and assesses their potential impacts on

financial statement items as part of continuous risk management.

Pihlajalinna has assessed the capacity of its strategy and business

model to address material impacts, risks and opportunities related to

sustainability perspectives. The assessment covers the short, medium

and long term and is integrated into strategic planning. Developments

are examined continuously, especially in connection with the annual

planning of operations. The strategy demonstrates a strong capacity

for managing risks and taking advantage of opportunities, and it is as-

sessed qualitatively and quantitatively in relation to changes in the

operating environment, such as climate change, regulation, customer

behaviour and technological development.

Scenario thinking is utilised in strategy work to assess alternative di-

rections of development and their impacts on the business. The credi-

bility and competitiveness of the strategy are key from the perspec-

tive of stakeholders, such as personnel, individual customers and fi-

nancing providers. The strategy emphasises partner value creation,

being the most desirable work community and overall cost-effective-

ness, which supports the resilience of the organisation and respond-

ing to the industry’s sustainability challenges.

Risks or opportunities related to climate change mitigation or adapta-

tion did not emerge as material in the DMA. In 2025, Pihlajalinna

identified climate risks and opportunities related to the organisation’s

REPORT BY THE BOARD OF DIRECTORS

| SUSTAINABILITY STATEMENT42

operations and assessed the climate resilience of Pihlajalinna’s strat-

egy and business model by means of scenario analysis. Based on both

the 1.5°C and 4.5°C scenarios, Pihlajalinna is subject to limited physi-

cal climate risks and transition risks in the short term but, in the

longer term, the amount of physical climate risks increases, particu-

larly in the 4.5°C scenario. More information is provided in section E1,

under SBM-3: Material impacts, risks and opportunities related to cli-

mate change and their management.

Changes to material sustainability topics

The double materiality assessment conducted in 2023 and the mate-

rial impacts, risks and opportunities reported based on that assess-

ment were re-evaluated in spring 2025. Pihlajalinna also switched to a

new reporting platform and, in connection with this transition, an up-

dated methodology was adopted for the DMA. This is described in

IRO-1: Process to identify and assess material impacts, risks and op-

portunities. Changes were made to some of the sustainability topics

as a consequence of these processes. The descriptions of all impacts,

risks and opportunities were reviewed and specified further.

In the re-evaluation of the DMA, attention was paid to the E1 stand-

ard’s precise definition of climate change adaptation, and it was

noted that, at present, no significant climate-related risks have been

identified that would threaten Pihlajalinna’s operations, and Pihla-

jalinna does not have material adaptation processes that could have

impacts on people or nature.

The stability of the employment relationships of own workforce was

not considered to be associated with a material risk, as Pihlajalinna

offers permanent employment contracts where possible, and the

original risk was associated with sickness-related absences. In addi-

tion, the risk associated with the health and safety of Pihlajalinna’s

own workforce was divided into short, and medium to long-term

risks. The potential negative impact related to the work-life balance

of Pihlajalinna’s own workforce was categorised as material in the re-

evaluation. In addition, incidents of violence and unauthorised pres-

ence were identified as significant drivers in incident reports, and

they were categorised as material impacts on Pihlajalinna’s own per-

sonnel.

The impacts, risks and opportunities related to consumers and end-

u

sers were also re-evaluated and, consequently, certain topics are no

longer reported as material in 2025. These topics include the security

of consumers and end-users, freedom of expression, access to quality

information, protection of children and responsible marketing prac-

tices. Moving forward, the material topics of the security of person

and protection of children will be integrated into the sustainability

topics of privacy, health and safety,as threats to the fundamental

rights of individual customers have a direct impact on their wellbeing

and privacy. Due to the changes in business operations, the freedom

of expression of consumers and end-users is not a material topic as,

at the end of 2025, it only concerns a limited number of services and

thus a limited number of individual customers. Consumers' and end-

users' access to quality information is addressed under the sustaina-

bility topic of privacy regarding patient data and under the sustaina-

bility topic of health and safety regarding care; service information is

openly available on the website, and professionals share relevant in-

formation in interactions with customers. Pihlajalinna does not focus

on consumer marketing, and it is not among the focus areas of the

new strategy. Consequently,the impacts, risks and opportunities re-

lated to responsible marketing practices did not emerge as material in

2025. Risks and opportunities related to non-discrimination of con-

sumers and end-users were not material in 2025, although they are

important. Regarding the health and safety of consumers and end-us-

ers, Pihlajalinna’s services and their development and the health ben-

efits obtained from them were categorised as a material opportunity.

Process to identify and assess material impacts,

risks and opportunities (IRO-1)

Pihlajalinna carried out its first double materiality assessment in

2023. The assessment was reviewed and partially updated in spring

2025. Changes to the strategy and business were taken into consider-

ation in updating the assessment, and special attention was paid to

interpreting the definitions set out in the standard. The methodology

of the DMA was also partially updated.

The materiality assessment did not focus on specific measures, busi-

ness relationships or geographical areas; instead, the assessment cov-

ered all Pihlajalinna’s own operations and the value chain. As part of

the double materiality assessment, Pihlajalinna identified impacts,

risks and opportunities, taking into account the entire Group’s loca-

tion, activities, sector, value chain and business structure. The nature

of operations affects the identified impacts, risks and opportunities

with regard to patient safety, the quality of care and the workload of

the personnel, for example. Industry regulation guides the assess-

ment, particularly from the perspective of data protection, patient

rights and ethical policies. When examining the business structure, at-

tention has been paid to, for example, outsourcing arrangements and

changes thereto, as well as working with cooperation partners. The

impacts caused by the Group’s own operations and value chain have

been assessed separately for each topic. Thus, the assessment takes

into account impacts in which Pihlajalinna is involved through its own

operations and as a result of its business relationships.

Geographic location was used as a criterion in assessing regional dif-

ferences in the accessibility of services, access to care and the availa-

bility of resources across Finland. Pihlajalinna operates only in Fin-

land, so all the impacts are concentrated in Finland. Primarily, the im-

pacts take place in a similar manner in all facilities, but there is slight

variation depending on whether they are an office, private clinic, hos-

pital, service housing unit or a fitness centre. Pihlajalinna’s business

operations are described in more detail in SBM-1: Strategy, business

model and value chain. For example, employee workload is most

prevalent in care services rather than in standard office work. The im-

pacts related to end-users materialise in both remote and on-site ser-

vices. Themes related to climate change and business conduct have

similar impacts across the entire Group’s activities.

The DMA carried out in 2023 consisted of several phases. In the pre-

liminary assessment, potential sustainability matters were screened

on the basis of the ESRS standards and scientific research and nar-

rowed down to a short list to be assessed by experts. The material

sustainability topics identified in the assessment were described in

detail and their materialities were assigned numerical values using

the materiality assessment calculation model described in the ESRS 1

standard. A stakeholder survey was also carried out in 2023, with the

participants including the Group’s own personnel, individual custom-

ers, partners, shareholders, the public authorities and decision-mak-

ers, suppliers and media, among others. The results of the expert as-

sessment were discussed with Pihlajalinna experts in a workshop and

a double materiality assessment was conducted based on it, identify-

ing the sustainability themes material to Pihlajalinna.

The update in 2025 was focused on reviewing the material impacts,

risks and opportunities, but the evaluation also covered the prelimi-

nary assessment conducted in 2023 and the short list from which the

material topics were identified. Short workshops were held regarding

the impacts, risks and opportunities for which possible changes were

identified, together with Pihlajalinna’s internal experts, due to rein-

terpretation of the definitions in the reporting standard, the strategy

update or changes in business operations, for example. The descrip-

tions and scoring of certain impacts, risks and opportunities were

specified further or revised. In 2025, it was not deemed necessary to

carry out a new stakeholder survey. Instead, in updating the DMA,

the results obtained in 2023 were utilised, along with signals received

through active stakeholder dialogue during these years.

REPORT BY THE BOARD OF DIRECTORS

| SUSTAINABILITY STATEMENT43

Pihlajalinna’s Board of Directors has approved the choice of material

topics, and the Group’s sustainability reporting is verified by Ernst &

Young Oy.

As part of the double materiality assessment, Pihlajalinna identified

impacts, risks and opportunities related to the environment, taking

into account the Group’s location, activities, sector and business

structure. Pihlajalinna operates in Finland and its sites are located in

urban environments, mainly in office buildings and commercial prem-

ises. Pihlajalinna does not have its own production, construction, agri-

culture or forestry activities, and the Group’s own operations, which

consist of the production of social and healthcare services and fitness

centre services, are not linked to significant water withdrawal or ex-

traction of natural resources.

Based on the assessment, Pihlajalinna’s impacts on pollution, water

and marine resources, biodiversity and ecosystems are minor in its

own operations. Potential impacts may occur in the upstream value

chain, but Pihlajalinna is not aware of any significant environmental

impacts in the supply chain. Waste volumes, including hazardous

waste generated in the provision of healthcare services, have been

assessed as non-material. The assessment is based on existing waste

management data and general industry practices. Separate consulta-

tions with affected communities have not been organised for the

time being.

Impact identification and assessment

The materiality assessment and its update have been prepared in ac-

cordance with the requirements of ESRS 1, using the criteria and time

horizons defined in the standard. Based on the pre-screening, the ma-

teriality assessment determined which topics are likely to be material,

and a numerical assessment was made. Impact materiality and finan-

cial materiality have been assessed for each topic. The topics have

not been directly listed in order of priority, but the order can be de-

termined on the basis of the materiality scores assigned to them.

In assessing the materiality of a negative impact, its scale, scope and

irremediable character were assessed if the impact is potential. To-

gether, these constitute the severity of the impact. The average se-

verity of the impact is calculated based on this severity by dividing it

by three. In assessing the materiality of a positive impact, its scale

a

nd scope were assessed, and the average of the scale and scope was

divided by two to obtain the severity score. The severity score was

combined with the likelihood assigned to it in a 5x5 matrix. The

threshold value is defined in the matrix as a line above which the im-

pacts are considered material. If the severity of an impact is very high,

it is considered material regardless of its likelihood. This means that

unlikely but severe impacts are also material.

Identification and assessment of risks and opportunities

The assessment process also included an examination of how the

identified negative and positive impacts, and dependencies with re-

gard to the personnel, finances and nature, influence the sustainabil-

ity risks and opportunities. In addition, a stakeholder consultation

was carried out in 2023 at a general level in order to understand

where the impacts occur. For the time being, sustainability-related

risks have not been listed in order of priority relative to other risks.

The financial effects of risks and opportunities and the likelihood of

the materialisation of the risks were also assessed in line with the

methodology of the ESRS 1 standard. The financial assessment has

considered the euro-denominated business risks and opportunities of

different sustainability matters and topics, and the assessment has

been verified by external experts. The financial significance was first

assessed on a scale of 0–5 and then combined with the likelihood in a

5x5 matrix. The materiality threshold was defined in the matrix as a

line above which risks and opportunities are considered material. The

line is set so that the largest financial effects, as well as less significant

but more likely risks and opportunities, are taken into account.

Level of detail in the materiality assessment

The DMA and its update were carried out generally at the standard

level. With regard to the key topics, the impacts were detailed further

to the sub-topic and sub-sub-topic level, and their materiality assess-

ment was calculated. The analysis covers key functions and business

relationships throughout the organisation, and the assumptions have

been made with appropriate detail to ensure reliability. In future

years, Pihlajalinna will deepen the assessment at the level of sub-

topic, sub-sub-topic as well as individual impacts, and more thor-

oughly in its value chain. Pihlajalinna has used the science-based and

generally accepted Sixth Assessment Report of the IPPC (2023) as its

primary data source and sector-specific sources but intends to use

sources even more comprehensively going forward.

Pihlajalinna conducted the 2023 double materiality assessment and

the 2025 update to it in accordance with the ESRS reporting require-

ments and reports on material sustainability matters starting from

2025, using data on the year 2024. In the analysis, Pihlajalinna has uti-

lised EFRAG guidelines and a clear process that includes an accurate

scoring logic and assessed material sustainability topics with the help

of experts. Material topics are classified into environmental, social

and governance themes in accordance with the ESRS.

The methods used include assessments of impacts and dependencies,

surveys of risks and opportunities, and materiality scoring. The as-

sumptions have been defined at an appropriate level of accuracy, and

they are based on available data, industry-specific practices and the

observations and experience of the experts involved.

Decision-making process

Pihlajalinna implemented the materiality assessment in cooperation

with internal and external experts. Significant weight is assigned to

the knowledge and experience of internal experts in the materiality

scoring. Persons familiar with sustainability reporting, including the

Sustainability Manager and the Executive Vice President, Communica-

tions and Sustainability, ensure that the reporting requirements are

complied with and the scoring is carried out consistently for all topics.

Pihlajalinna’s Board of Directors has approved the results of the dou-

ble materiality assessment. Internal control procedures, such as spec-

ifying the responsible roles and the documentation of the assessment

process, enhance the transparency, consistency and reliability of the

double materiality assessment process.

Impacts, opportunities and risks as part of risk management

and management processes

Pihlajalinna has a business risk management plan in place. The owner

of the Group’s risk management is the Executive Vice President, Strat-

egy and Group Operations. The participants in risk management in-

clude a comprehensive range of persons serving in managerial posi-

tions in different Group functions. Pihlajalinna has surveyed the im-

pacts, risks and opportunities, as well as risk management practices

and tools and the content of the ISO quality management standards

regarding risk management. The risk management principles and pol-

icy have been prepared based on them.

The Management Team reviews the Group’sRisk Management Policy

annually and presents the matter to the Group’s Board of Directors.

Pihlajalinna’s Board of Directors has approved the Risk Management

Policy and the risks and opportunities annually presented by the Man-

agement Team. The Risk Management Policy defines the goals, objec-

tives, procedures, principles and responsibilities of Pihlajalinna’s risk

management. The results of the regularly conducted risk analysis are

reviewed by the Group Management Team.

REPORT BY THE BOARD OF DIRECTORS

| SUSTAINABILITY STATEMENT44

As the risk management framework, Pihlajalinna uses the risk classifi-

cation used in social and healthcare services, which defines the exter-

nal and internal risks and risks caused to third parties. In addition, the

individual customer, professionals, health, finances and environment

are key considerations in accordance with Pihlajalinna’s value crea-

tion model. The impact assessment of risks uses a five-step likelihood

assessment that is reflected on the five-step risk impact scale in the

themes finances, reputation, customer, personnel and data protec-

tion. The risk management measures and risk owners are always

identified as part of the risk work to ensure risk management in the

area of each operational responsibility. Risk management at Pihla-

jalinna has traditionally been carried out at the Group, business unit,

service and process level. The key risks and disturbances are regularly

identified and assessed, and continuity plans have been prepared for

them so that if the risk materialises, Pihlajalinna’s operations will con-

tinue with minimum disturbance.

T

he goal of Pihlajalinna’s risk management is to promote the achieve-

ment the Group’s strategic and operational targets, the profitability

of business operations, sustainability and shareholder value. Risk

management seeks to ensure that the risks affecting the Group’s

business operations are known, assessed and monitored, and the

necessary practical measures are taken. The continuous anticipation

of risks and the mitigation or reduction of adverse impacts are also

part of the process.

The Group’s general risk management principles have been approved

by the Board of Directors. The Group’s Chief Financial Officer,in con-

junction with the operative management, is responsible for identify-

ing financial risks and for practical risk management. The goal of the

Group’s financial risk management is to ensure sufficient liquidity,

minimise financing costs and regularly produce information for the

management about the Group’s financial position and risks.

Pihlajalinna’s process for identifying, assessing and managing impacts,

risks and opportunities has been developed during the financial year.

The risk management process has covered the identification and as-

sessment of impacts regarding business risk assessment, human

rights risk assessment and DMA as part of the big picture. These areas

will be harmonised with the Group’s general risk management pro-

cess during future financial years. The opportunity identification, as-

sessment and management process has not yet been systematically

integrated into Pihlajalinna’s general management process during the

reporting period. Nevertheless, the identified opportunities are an in-

tegral part of business planning and strategy work.

Changes to the double materiality assessment methodology

Pihlajalinna partially updated the methodology of its DMA in spring

2025. The change mainly concerns the determination of the material-

ity threshold and the scores that the impact, risk or opportunity must

be assigned to exceed these thresholds.

The update in 2025 was focused on reviewing the material impacts,

risks and opportunities, but the evaluation also covered the prelimi-

nary assessment conducted in 2023 and the short list from which the

material topics were identified. Short workshops were held regarding

the impacts, risks and opportunities for which possible changes were

identified, together with Pihlajalinna’s internal experts, due to rein-

terpretation of the definitions in the reporting standard, the strategy

update or changes in business operations, for example.

In 2023, the severity scores were multiplied by the likelihood to ob-

tain a final impact materiality value between 0 and 5. The materiality

threshold was 3. In the updated methodology, likelihood scores are

assigned in a matrix to the severity scores given to each impact, risk

and opportunity, and the impact, risk or opportunity must exceed the

likelihood score to be considered material. This way, even unlikelybut

severe impacts, such as the risk of a data breach, are better taken

into account, which supports comprehensive impact assessment and

preparedness. In addition, this change in methodology improves the

integration of impacts, risks and opportunities into Pihlajalinna’s risk

management framework.

Description of the processes to identify and as-

sess material impacts, risks, and opportunities re-

lated to business conduct (G1 IRO-1)

The materiality assessment process and the process for managing im-

pacts, risks and opportunities, also with regard to business conduct, is

described in more detail in section ESRS 2, under IRO-1: Process to

identify and assess material impacts, risks and opportunities.

Description of the processes to identify and as-

sess material impacts, risks and opportunities re-

lated to climate change (E1 IRO-1)

Pihlajalinna Group’s impacts on climate change and GHG emissions

are described in section E1, under E1-6: Gross Scopes 1, 2, 3 and Total

GHG emissions. Pihlajalinna’s impacts on the environment and soci-

ety were identified in the DMA. The assessment took into account the

special characteristics of Pihlajalinna’s business model and value

chain. The identified material negative impacts include GHG emis-

sions, which are caused particularly by commuting by the personnel,

travel by individual customers, and procurement. Risks or opportuni-

ties related to climate change mitigation or adaptation did not

emerge as material in the DMA. In 2025, Pihlajalinna identified cli-

mate risks and opportunities related to its operations and assessed

the climate resilience of Pihlajalinna’s strategy and business model by

means of scenario analysis. Based on both the 1.5°C and 4.5°C scenar-

ios, Pihlajalinna is subject to limited physical climate risks and transi-

tion risks in the short term but, in the longer term, the amount of

physical climate risks increases, particularly in the 4.5°C scenario.

More information is provided in section E1, under SBM-3: Material

impacts, risks and opportunities related to climate change and their

management.

REPORT BY THE BOARD OF DIRECTORS

| SUSTAINABILITY STATEMENT45

List of disclosure requirements in ESRS (IRO-2)

Pihlajalinna has reported all mandatory disclosure requirements related to material sustainability topics in accordance with the ESRS. The ESRS content index is presented at the beginning of this sustainability statement.

Datapoints in cross-cutting and topical standards thatderive from other EU legislation

The table below presents the datapoints of ESRS 2 and topical ESRSs derived from other European Union (EU) legislation in accordance with ESRS 2, Appendix B. The table indicates the location of the material datapoints in

the sustainability statement and which datapoints are not material. The materiality assessment process and criteria is described in its entirety, including the evaluation of impacts, risks, and opportunities in section ESRS 2,

under IRO-1: Process to identify and assess material impacts, risks and opportunities.

Disclosure

requirement

Datapoint

SFDR

reference

Pillar

3

reference

Climate

Benchmark

Standards

Regulation reference

EU

Climate

Law reference

Materiality

ESRS 2 GOV-1

21 d

Board’s gender distribution

X

X

The role of senior management in sustainabilitymanagement

(GOV-1)

ESRS 2 GOV-1

21 e

Percentage of board memberswho are independent

X

The role of senior management in sustainabilitymanagement

(GOV-1)

ESRS 2 GOV-4

30

Statement on due diligence

X

Statement on sustainability due diligence(GOV-4)

ESRS 2 SBM-1

40 d i

Involvement in activities relatedto fossil fuel activities

X

X

X

Non-material

ESRS 2 SBM-1

40 d ii

Involvement in activities relatedto chemical produc-

tion

X

X

Non-material

ESRS 2 SBM-1

40 d iii

Involvement in activities relatedto controversial weap-

ons

X

X

Non-material

ESRS 2 SBM-1

40 d iv

Involvement in activities relatedto cultivation and pro-

duction of tobacco

X

Non-material

ESRS E1-1

14

Transition plan to reachclimate neutrality by 2050

X

Transition plan for climatechange mitigation (E1-1)

ESRS E1-1

16 g

Undertakings excluded from Paris-aligned Benchmarks

X

X

Transition plan for climatechange mitigation (E1-1)

ESRS E1-4

34

GHG emission reduction targets

X

X

X

Targets relatedto climate change mitigationand adaptation

(E1-4)

ESRS E1-5

38

Energy consumption from fossil sources,disaggregated

by source (only high climate impact sectors)

X

Non-material

ESRS E1-5

37

Energy consumption and mix

X

Energy consumption and mix (E1-5)

ESRS E1-5

40-43

Energy intensity associated with activitiesin high cli-

mate impact sectors

X

Non-material

ESRS E1-6

44

Gross Scopes 1, 2, 3 and TotalGHG emissions

X

X

X

Gross Scopes1, 2, 3 and Total GHG emissions(E1-6)

ESRS E1-6

53-55

Gross GHG emissions intensity

X

X

X

Gross Scopes1, 2, 3 and Total GHG emissions(E1-6)

ESRS E1-7

56

GHG removals and carbon credits

X

Non-material

ESRS E1-9

66

Exposure of the benchmark portfolio to climate-related

physical risks

X

Transitional provisionapplied

ESRS E1-9

66 a

66 c

Disaggregation of monetary amounts byacute and

chronic physical risk; Location ofsignificant assets at

material physical risk

X

Transitional provisionapplied

ESRS E1-9

67 c

Breakdown of the carrying value ofits real estate as-

sets by energy-efficiency classes

X

Transitional provisionapplied

E

SRS E1-9

69

Degree of exposure of the portfolioto climate-related

opportunities

X

Transitional provisionapplied

ESRS E2-4

28

Amount of each pollutant listed in AnnexII of the E-

PRTR Regulation (European PollutantRelease and

Transfer Register)emitted to air,water and soil

X

Non-material

REPORT BY THE BOARD OF DIRECTORS

| SUSTAINABILITY STATEMENT46

ESRS E3-1

9

Water and marine resources

X

Non-material

ESRS E3-1

13

Dedicated policy

X

Non-material

ESRS E3-1

14

Sustainable oceans and seas

X

Non-material

ESRS E3-4

28 c

Total waterrecycled and reused

X

Non-material

ESRS E3-4

29

Total waterconsumption in m3 per net revenueof own oper-

ations

X

Non-material

ESRS 2 SBM3 - E4

16 a i

Activities negatively affecting biodiversity-sensitive areas

X

Non-material

ESRS 2 SBM3 - E4

16 b

Material negative impacts with regardsto land degradation,

desertification or soil sealing

X

Non-material

ESRS 2 SBM3 - E4

16 c

Operations that affect threatened species

X

Non-material

ESRS E4-2

24 b

Sustainable land / agriculture practicesor policies

X

Non-material

ESRS E4-2

24 c

Sustainable oceans / seas practices orpolicies

X

Non-material

ESRS E4-2

24 d

Policies to address deforestation

X

Non-material

ESRS E5-5

37 d

Non-recycled waste

X

Non-material

ESRS E5-5

39

Hazardous waste and radioactivewaste

X

Non-material

ESRS 2 SBM3-S1

14 f

Risk of incidents of forced labour

X

Material impacts, risks and opportunities relatedto

own workforce and their management(S1 SBM-3)

ESRS 2 SBM3-S1

14 g

Risk of incidents of child labour

X

Material impacts, risks and opportunities relatedto

own workforce and their management(S1 SBM-3)

ESRS S1-1

20

Human rights policy commitments

X

Policies

ESRS S1-1

21

Due diligence policies on issues addressed by the fundamen-

tal International Labor OrganisationConventions

X

Policies

ESRS S1-1

22

Processes and measures for preventingtrafficking in human

beings

X

Policies

ESRS S1-1

23

Workplace accident preventionpolicy or management system

X

Health and safety metrics (S1-14)

ESRS S1-3

32 c

Grievance/complaints handling mechanisms

X

Processes to remediate negativeimpacts and chan-

nels for own workforceto raise concerns (S1-3)

ESRS S1-14

88 b, c

Number of fatalities and number andrate of work-related ac-

cidents

X

X

Health and safety metrics (S1-14)

ESRS S1-14

88 e

Number of days lost to injuries, accidents,fatalities or illness

X

Transitional provisionapplied

ESRS S1-16

97 a

Unadjusted gender pay gap

X

X

Compensation metrics (S1-16)

ESRS S1-16

97 b

Excessive CEO pay ratio

X

Compensation metrics (S1-16)

ESRS S1-17

103 a

Incidents of discrimination

X

Incidents, complaints and serious human rightscom-

plaints (S1-17)

ESRS S1-17

104 a

Non-respect of UNGPs on Business andHuman Rights princi-

ples and OECD guidelines

X

X

Incidents, complaints and serious human rightscom-

plaints (S1-17)

ESRS 2 SBM3-S2

11 b

Significant risk of child labour or forcedlabour in the value

chain

X

Non-material

ESRS S2-1

17

Human rights policy commitments

X

Non-material

ESRS S2-1

18

Policies related to value chainworkers

X

Non-material

ESRS S2-1

19

Non-respect of UNGPs on Business andHuman Rights princi-

ples or OECD guidelines

X

X

Non-material

ESRS S2-1

19

Due diligence policies on issues addressed by the fundamen-

tal International Labor OrganisationConventions

X

Non-material

ESRS S2-4

36

Human rights issues and incidents connectedto upstream and

downstream value chain paragraph36

X

Non-material

REPORT BY THE BOARD OF DIRECTORS

| SUSTAINABILITY STATEMENT47

ESRS S3-1

16

Human rights policy commitments

X

Non-material

ESRS S3-1

17

Non-respect of UNGPs on Business andHuman Rights,

ILO principles or OECD guidelines

X

X

Non-material

ESRS S3-4

36

Human rights issues and incidents

X

Non-material

ESRS S4-1

16

Policies related to consumersand end-users

X

Management of material topics andpolicies (S4-1)

ESRS S4-1

17

Non-respect of UNGPs on Business andHuman Rights

principles or OECD guidelines

X

X

Management of material topics andpolicies (S4-1)

ESRS S4-4

35

Human rights issues and incidents

X

Management of material topics andpolicies (S4-1)

ESRS G1-1

10 b

United Nations Convention againstCorruption

X

Policies

ESRS G1-1

10 d

Protection of whistle-blowers

X

Non-material

ESRS G1-4

24 a

Fines for violation of anti-corruptionand anti-bribery

laws

X

X

Non-material

ESRS G1-4

24 b

Standards of anti-corruption andanti-bribery

X

Non-material

REPORT BY THE BOARD OF DIRECTORS

| SUSTAINABILITY STATEMENT48

Table: Management of Pihlajalinna’smaterial impacts, risks and opportunities (IRO)

Sustainability

matter

IRO name

Type

(Location in

value chain)

Description

Management lever

E1 Climate change

Climate change

mitigation

Greenhouse

gas emissions

Actual negative

impact

(Whole value

chain)

Pihlajalinna’s activities cause GHGemissions that negatively impact

the climate and the environment. Emissionsfrom own operations in-

clude, among other sources, business traveland energy use. In the

value chain emissions are caused by,for example, customer and per-

sonnel travel as well as procurement.

Enhancing remote service provision reducesemissions caused by customer travel.Pihlajalinna engages in dialogue

with suppliers to reduce procurement-related emissions. The approval ofthe transition plan draft (alignedwith the

SBTi framework) together withthe management and monitoring of the effectivenessof actions are and will remain

key actions for controlling emissions.

S1 Own workforce

Secure

employment for

own workforce

Stability of

employment

and practicing

a profession

Actual positive

impact

(Own operations)

Pihlajalinna provides its personnel with stableemployment relation-

ships and the opportunity to practice theirprofession. This supports

professional identity,which can promote wellbeing at workas well as

job satisfaction.

Employees are hired on fixed-term contractsonly when there is a legally valid andverifiable basis for doing so. Su-

pervisors are supported in employment mattersthrough centralised HR advisory services.Targeted trainingis pro-

vided to strengthen supervisors’ leadershipskills, for example in employmentlaw and work ability management.

This enhances their ability to support employeesin demanding work situations. Pihlajalinna offersextensive oppor-

tunities for operating as a practitioner,especially as a doctor.The work can be customised flexibly basedon the

doctor’s own interests,and work is supported by doctor customeraccount managers who support indaily opera-

tions and practical arrangements.Pihlajalinna is committed to the continuousdevelopment of digital tools to sup-

port smooth day

‑

to

‑

day operations.

Reputation as

a stable

employer

Opportunity

(Own operations)

A stable employment relationshipsupports personnel commitment,

motivation and the development of professionalcompetence. This

can improve productivity and reduceemployee turnover,resulting in

savings in Pihlajalinna’s recruitmentand onboarding costs.

Working time of

own workforce

Workload

from shift

work

Actual negative

impact

(Own operations)

Shift and night work can increase workload,make it harder to balance

work and personal life, and impair recovery.These factors can nega-

tively affect personnel’swellbeing and work ability.

Pihlajalinna conducts initial health checks as wellas periodic medical checks for workthat involves a particular risk

of illness. To ensurethat these examinations are carriedout, Pihlajalinna uses a monitoring system.The Group ap-

plies an active caring model. Pihlajalinna complieswith labour legislation and collective agreements.Supervisors

are offered support in employment-related matters throughcentralised HR advisory services. Targetedtraining is

provided to strengthen supervisors’knowledge of employment-related mattersand work ability management.

Opportunities

from flexible

working

hours

Opportunity

(Own operations)

Flexible working time arrangements, implementedwhenever feasible,

support personnel in balancing work and personallife, help maintain

work ability, and promotejob satisfaction. This can extendworking

careers and reduce costsrelated to absences and employee turnover.

Reduced working hours to supportlonger working careers are arrangedwhenever feasible, considering the re-

quirements of the job. Flexible working hoursare available in some functions within thePihlajalinna Group. In ad-

dition, duties that do not require physicalpresence at the workplace can be performedremotely.

Costs of

burdensome

working

hours

Risk

(Own operations)

Shift and night work can, in some cases,lead to prolonged sick leaves

and increasedemployee turnover.This increases recruitment and

onboarding costs and places additional strainon the broader team,

which can reduce efficiency andincrease absences. Combined, these

factors can weakenPihlajalinna’s short-term profitability.

Pihlajalinna conducts initial health checks as wellas periodic medical checks for workthat involves a particular risk

of illness. To ensurethat these examinations are carriedout, Pihlajalinna uses a monitoring system.The Group ap-

plies an active caring model, which all supervisors havebeen trained to apply.This enables the early identification

of reduced work ability and timely support.Occupational safety risk managementidentifies work-related hazards,

risks, and adverse effects,and aims to eliminate or mitigatethem in a systematic way.Workplace risks are as-

sessed in Pihlajalinna’s units at leastonce a year and whenever significantchanges occur.

Adequate wages

for own

workforce

Competitive

wages

Opportunity

(Own operations)

Adequate and competitive wages supportpersonnel commitment, re-

duces employee turnover and strengthensthe employer brand. This

can increase work motivation andproductivity, fosteringPihla-

jalinna’s robust businessgrowth.

Pihlajalinna complies with labour legislation andcollective agreements. Pihlajalinna has a rolearchitecture for em-

ployees on a monthly salary contract.The wages of employees are basedon, in addition to collective agreements,

on the level of requirements of each role,the employee’s competenceand performance as well as the principles of

equal treatment. Pihlajalinna recognisesand rewards exemplary performanceand significant achievements

through various forms of rewarding.In addition, personnel benefits are offeredto support wellbeing and job satis-

faction.

Costs of wage

increases

Risk

(Own operations)

Increasing wages raises personnelcosts and may affect Pihlajalinna’s

short-term profitability at the unit level.

Pihlajalinna complies with labour legislation andcollective agreements, creating a predictablebasis for managing

payroll costs and enabling preparationfor future wage developments.

REPORT BY THE BOARD OF DIRECTORS

| SUSTAINABILITY STATEMENT49

Sustainability

matter

IRO name

Type (Location in

value chain)

Description

Management lever

S1 Own workforce

Health and safety

of own workforce

Sick leave

Actual negative

impact

(Own operations)

In the social and health care sector,work can be both physically and mentally

demanding, increasing the risk of long-term sick leave.Musculoskeletal disor-

ders (MSDs) are common due to physicalstrain, such as moving patients and

working long shifts. Pihlajalinna’soperations include a significant amount ofex-

pert work, where musculoskeletal symptomsoften stem from staticcomputer-

based tasks. The hectic nature of the workand time pressures cause psychologi-

cal strain, which can increasemental health–related absences.

The wellbeing of personnel is supported throughhigh-quality day-to-day management.At

Pihlajalinna, the management of people’swellbeing is integrated intoall management prac-

tices. Occupational health care is based on preventivemeasures and the active caring model,

through which supervisors are trainedto address employees’ work ability concernsas early as