Lassila & Tikanoja Oyj : Annual Review 2021

LEADER OF THE REGENERATIVE SOCIETY

Annual review 2021

Lassila & Tikanoja Plc

STRATEGY AND VALUE CREATION

YEAR 2021

SUSTAINABILITY

APPENDICES

Lassila & Tikanoja Annual report 2021 contains two reviews:

Annual review 2021 and Financial review 2021.

The Annual review contains a summary of L&T's business operations, strategy and value creation, and sustainability efforts.The sustainability section is formed based on GRI Standards' reporting principles Core level, and it describes L&T's sustainability efforts and achievements in more detail.

The Financial review contains the report by the Board of Directors, corporate governance statement, remuneration statement and the financial statement.

You can download the reports below.

Contents

L&T in brief	2
CEO's review	3

Strategy and value creation	5
Strategy and value creation	6
Why invest in Lassila & Tikanoja	9
Year 2021	10
2021 in figures	11
Business environment and regulation	13
Business areas	15
Environmental Services	16
Industrial Services	17
Facility Services Finland	18
Facility Services Sweden	19
Sustainability	20

LEADER OF THE

REGENERATIVE

SOCIETY

Annual review 2021

Lassila & Tikanoja Plc

Annual review 2021

LEADER OF THE

REGENERATIVE

SOCIETY

Corporate Governance Statement 2021

Lassila & Tikanoja Plc

Corporate Governance Statement 2021

LEADER OF THE

REGENERATIVE

SOCIETY

Financial review 2021

Lassila & Tikanoja Plc

Financial review 2021

LEADER OF THE

REGENERATIVE

SOCIETY

Remuneration Report 2021

Lassila & Tikanoja Plc

Remuneration

Report 2021

Introduction to sustainability	21
Materiality and stakeholder engagement	24
Circular economy and climate change mitigation	27
A healthy, diverse and productive workplace community	38
Sustainable industry and cities	46
Ensuring compliance with regulations	49
Appendices	53
Tables with more specific information	54
Sustainability reporting principles and GRI index	59

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Annual review 2021

STRATEGY AND VALUE CREATION	YEAR 2021	SUSTAINABILITY	APPENDICES	L&T in brief

L&T in brief

Lassila & Tikanoja is a Finnish service company established in 1905 that is making the circular economy a real- ity.Together with our customers, we keep materials and properties in productive use for as long as possible and increase the efficiency of the use of raw materials and energy. By investing in sustainable circular economy solu- tions, we create value for our customers, personnel, the society in general and our shareholders.

Sustainability is an integral element of our strategy, business and day-to-day work. Our objective is to grow our carbon handprint, which refers to the positive climate impact of our operations. We bear social responsibility by

looking after the work ability of our personnel, promoting diversity in working life, and offering jobs to those who are struggling to find employment. We ensure the compliance of our operations by adhering to our Code of Conduct.

L&T's business operations are divided into four divi- sions: Environmental Services, Industrial Services, Facility Services Finland and Facility Services Sweden. L&T operates in Finland and Sweden.

Our net sales in 2021 amounted to EUR 812.5 million, and we employed 8,389 circular economy professionals. L&T is listed on Nasdaq Helsinki and had 20,732 shareholders at the end of the period under review.

Head office

Locations

Net sales by division

Personnel by country

HELSINKI

STOCKHOLM

812.5

MEUR

Environmental Services 39%

Industrial Services 13%

Facility Services Finland 30%

Facility Services Sweden 18%

8,389

PERSONS

Finland 83.5%

Sweden 16.5%

Lassila &	Tikanoja	2	Annual review 2021

STRATEGY AND VALUE CREATION

YEAR 2021

SUSTAINABILITY

APPENDICES

CEO'S REVIEW

Growth as the markets recovered

CEO's review

The year 2021 was still heavily characterised by the COVID-19 pandemic, and there were many uncertainties in our business environment. In spite of the exceptional cir- cumstances, we achieved most of our non-financial tar- gets, and our net sales increased by 8 per cent, which we can be fairly satisfied with.

Market recovery drove our growth

The markets began to recover in early 2021, and service demand was strong across all services compared to the pandemic-influenced months of the previous year. Cus- tomers' restriction measures to limit the spread of COVID- 19 had a negative impact on a few segments, but the overall effect of the restrictions was substantially smaller than in the previous year.

Production operations went normally in continuous services, but production planning was challenging in one- off work and project work. Annual maintenance breaks in the industrial sector largely took place over a small number months, which increased production costs due to the increased use of subcontracting.

I am particularly pleased to note that all of our businesses achieved organic growth. Our growth was also accelerated by three strategic acquisitions that strengthened our market position in the segments in question.

Our strong growth was also reflected in our financial results, with all of our businesses except Facility Services Finland improving their result.The Industrial Services division, in particular, had an excellent level of profit per- formance.There were major challenges in Finland in property maintenance and technical services throughout the year. In response to this, we simplified and streamlined the structure in the fourth quarter to create the conditions for profitable business development.

At the heart of the green transition

During 2021, we reviewed our strategy in relation to changes in the operating environment.The ongoing green transition strongly supports our business.The circular economy plays an increasingly critical role in combatting climate change and biodiversity loss. We identified lots of growth opportunities in both the materials business and the built environment.The circular economy and the sustainable business solutions that support it are increasingly at the core of Lassila & Tikanoja's strategy.

Strong stakeholder support for our operations

Strong stakeholder support is one of the cornerstones of L&T's strategy implementation. We actively seek feed-

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Annual review 2021

STRATEGY AND VALUE CREATION	YEAR 2021	SUSTAINABILITY	APPENDICES	CEO's review

back from our key stakeholders and steer our operations accordingly. Reputation surveys conducted among the general public and other stakeholders, as well as our customer and personnel surveys, indicated strong support for our operations.

The surveys also highlighted areas for improvement, which have been taken into account in the Group's strategy and annual planning. We set highly ambitious long- term targets for our customer experience and employee experience.

Sustainability is integrated into everything we do

Last year, we took significant steps forward in the development of sustainability.The role of the Board's Personnel Committee was expanded to include sustainability-related matters, and we began to report on sustainability on a quarterly basis alongside our financial results.The same integrated approach was applied to setting our targets for 2022. I am pleased with this development and the manner in which our employees in all parts of the organisation have committed to developing sustainability in their work. Sustainability is increasingly integrated into our leadership, reporting and remuneration. Most impor- tantly, however, it is integrated into the work we do with our customers.

When it comes to sustainability, we focus on impact. Through our solutions, we help our customers achieve their sustainability targets and make a course correction towards a more sustainable future.

Eero Hautaniemi

President and CEO

We support the UN Global

Compact initiative

Lassila & Tikanoja adheres to the principles of the UN Global Compact initiative. "We are committed to operating responsibly, and we engage in active co-operation with our stakeholders to build a more sustainable future," says Eero Hautaniemi, President and CEO of Lassila & Tikanoja plc.

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Annual review 2021