Tikkurila Oyj : Sustainability Report

Sustainability Report 2020

2 | TIKKURIL A SUSTAINABILIT Y REPORT 2020	Tikkurilas approach to sustainability	Soucing sustainability	Operations sustainability	Products and services sustainability	People sustainability	GRI index

Contents

About this report	3
Tikkurila and year 2020 in brief	4
CEO's and sustainability team's interview	7
Tikkurila's strategy	10
Value creation model	11
Operating environment	12
Tikkurila's approach to sustainability	13
Goals and commitments	15
Main sustainability focus areas	18
A Colourful Tomorrow - our sustainability programme	20
Corporate sustainability management	21
Principles guiding sustainability	22
Stakeholder relations	23
Sourcing sustainability	24
Operations sustainability	27
Products and services sustainability	32
People sustainability	37
Tikkurila's governance structure	42
Annexes	44
GRI content index	52
Independent accountant's assurance report	55

Tikkurila's sustainability report 2020 outlines the key aspects and impact of the company's responsibility actions.

This report is assured by an independent third party and the review includes the financial, social, and environmental responsibility indicators presented in this report.

3 | TIKKURIL A SUSTAINABILIT Y REPORT 2020	Tikkurilas approach to sustainability	Soucing sustainability	Operations sustainability	Products and services sustainability	People sustainability	GRI index

About this report

Tikkurila's Sustainability Report 2020 outlines the key aspects and impact of the company's responsibility actions and details the progress made by the 'A Colourful Tomorrow' programme within various areas of corporate responsibility. Tikkurila's corporate responsibility work is also described in the Annual Review and the Board of Directors' Report.

REPORT STRUCTURE

The primary stakeholders in this report are our customers, em- ployees, and owners. In the beginning of the report, Tikkurila as a company is briefly introduced and our value creation model and core messages are outlined. The report moves on to describe the goals, how they are integrated into our strategy, and the management model of responsibility work as well as the sustainability programme. Finally the report sums up the development of responsibility and presentation of the results achieved are cate- gorised using recognised key areas of sustainable development. These are grouped according to the governance model into the following sustainable development value chain areas: sustainability of sourcing, sustainability of own operations, and sustainable development of products. At the end of the report, the content is summarised in a GRI table along with the statement of the external assessor.

REPORTING PRINCIPLES AND PRACTICES

This report is not intended to be compliant with the complete Global Reporting Initiative (GRI) Standards, but it references selected GRI Standards. The report is based on published data and any GRI indicators mentioned can be found in the GRI content index. Adjustments to data are mentioned. The information is published in accordance with Finnish Accounting Standards, Accounting Standards Board's General Guidelines for the Presentation of Environmental Issues in Financial Statements, and the company's internal accounting standards.

The figures in the report cover either the entire Tikkurila Group or individual Strategic Business Units according to segment division

(SBU East and SBU West). Figures for joint ventures, subsidiaries, and similar organisations are reported in proportion to ownership and are included in the figures for the Group or the SBU. Inclusion of subsidiaries necessitates ownership exceeding 50 percent.

The Sustainability Report reflects the scope of the organisation. Data related to dissolved business units have not been removed from historical data, and acquired units are included from the acquisition date onwards unless otherwise stated. Environmental indicators cover production facilities and main distribution centres. Figures for subcontractors have not been included in the report. The reporting period is January 1 - December 31.

INDEPENDENT ASSURANCE OF THE REPORT

Tikkurila's Sustainability Report is assured by an independent third party. The Sustainability Report 2020 has been assured by Ernst & Young Oy. Their review includes the financial, social, and environmental responsibility indicators contained in this report. The independent assurance statement can be found at the end of the report (p. 55).

PUBLICATION OF THE REPORT

The annual report is published in Finnish and English as a pdf document on the company website (www.tikkurilagroup.com)under Sustainability. It is not published in print, though it has been optimised for printing. The 2020 Report was published in March 2021. Contact point for questions regarding the report: www.tikkurilagroup.com/sustainability.

4 | TIKKURIL A SUSTAINABILIT Y REPORT 2020	Tikkurilas approach to sustainability	Soucing sustainability	Operations sustainability	Products and services sustainability	People sustainability	GRI index

Tikkurila and year 2020 in brief

SwedenFinland

Production, distribution centre, sales

Distribution centre, sales

Training centre

Norway

Latvia

Russia

Estonia

TIKKURILA IN BRIEF

Tikkurila is the leading paint industry company in the Nordic countries, known for its high-quality surface treatment products and expert services. We offer consumers, pro- fessionals, and industry operators paint and coating products, as well as coating systems for interior and exterior surfaces. Our product and service range covers colours and tints, painting instructions, as well as expert and training services. Our goal is to provide the best customer and user experience on the market. With decades of experience, we are developing products and services that provide our customers with sustainable quality that lasts from year to year and in all seasons and weather.

Our main competitive advantages are our portfolio of strong brands, a service culture, sustainable solutions for protecting and decorating surfaces, and market lead- ership. Our largest markets are Finland, Sweden, Russia, Poland, and the Baltic countries. Our products are available in more than 40 countries around the world.

We have operations in 11 countries, and our 2,422 employees are committed to creating a sustainable future through meaningful surfaces. Tikkurila Oyj is a limited liabilities company headquartered in Vantaa Finland, Heidehofintie 2, P.O.Box 53 Vantaa, Finland. Tikkurila Oyj is listed on Nasdaq Helsinki.

Denmark

Customer segments %

NET SALES

582.0

EUR million (2019: 563.8), growth +3.2 percent

Lithuania

Poland

Kazakhstan

INDUSTRIAL 16%

	Tikkurila's
	products are
	available in
CONSUMERS &	more than 40
PROFESSIONALS	countries.
84%

ADJUSTED OPERATING PROFIT

63.8

EUR million (2019: 46.4), growth +37.5 percent

China

PERSONNEL

2,422

(2019: 2,607)

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A LEADER IN DECORATIVE PAINTS

Finland	Sweden	Russia	Poland	Baltics
1st	1st	1st	4th	1st

KEY FIGURES

EUR million	1-12/2020	1-12/2019	Change %
Revenue	582.0	563.8	+3.2
Excl. FX, divestments, and closures	-	+41.4	+7.3
Operating result (EBIT)	61.1	43.9	+39.1
Operating result (EBIT) margin, %	10.5	7.8	+2.7-p
Adjusted operating result	63.8	46.4	+37.5
Adjusted operating result margin, %	11.0	8.2	+2.7-p
Profit before taxes	54.9	44.2	+24.2
Net result for the period	43.1	33.2	+29.6
Earnings per share (EPS), EUR	0.98	0.75	+29.6
Net interest-bearing liabilities (at period-end)	12.1	78.4	-84.5
Total equity (at period-end)	181.4	171.9	+5.5
Total assets (at period-end)	441.6	437.1	+1.0
Equity ratio, %	41.1	39.3
Gearing	6.7	45.6
ROCE, %, rolling	24.0	15.4
Cash flow after capital expenditure	92.0	52.7	+74.4

Source: In decorative paints Finland (VTY), Sweden (SVEFF) and Poland (GFK Poland) 2020. Russia (Chem Courier) 2019. Baltic countries 2020, Tikkurila's estimate.