Untitled

2020

Annual report

Financial information Financial statements Corporate Governance Statement Information for shareholdersGeneral

Table of contents

Scanfil provides services

ranging from product

design to product

manufacturing, material

procurement and

logistics solutions.

FINANCIAL STATEMENT

Consolidated income statement 34

Consolidated statement of financial position 35

Consolidated statement of cash flow 36

Consolidated statement of changes in equity 37

Accounting principles for consolidated

financial statements 38

Notes to consolidated financial statements 42

Parent company income statement 75

Parent company balance sheet 76

Parent company cash flow statement 78

Parent company’s accounting principles 79

Notes to the parent company’s

financial statements 79

Board of Directors’ proposal for the distribution

of profit and signatures

Report on the audit of the financial statements 87

Corporate governance statement 91

Board of Directors

Management Team 100

Information to shareholders 102

Auditor’s report on ESEF financial statements 103

GENERAL

Scanfil in brief

Year 2020 in brief 4

Key figures 2020 5

CEO’s review 6

Customer segments and factory network 8

Strategy, values and mission 10

Responsibility at Scanfil 12

Responsibility of offering 14

Social responsibility 16

Responsibility for partners 18

Environmental responsibility 20

FINANCIAL INFORMATION

Board of Directors’ report

Shares and shareholders 30

Key ratios 32

Definitions of key ratios 33

ANNUAL REPORT 20202 |

Financial statements Corporate Governance Statement Information for shareholdersGeneral Financial informationGeneral

Scanfil is a global

manufacturing partner

for the electronics industry

10 factories

in 7 countries

on 3 continents

Speed,

flexibility,

reliability

Over

40 years of

experience

Scanfil plc is a global manufacturing partner and system supplier for

the electronics industry. Its customers include international operators

in the automation, energy, data transmission and health technology

sectors, among other industries, and companies operating in fields

related to urbanisation including products used by consumers.

Scanfil has a total of 3,200 employees and ten factories in seven countries on three con-

tinents. Its factories in Finland, Sweden and Germany are located close to the R&D units

of its customers, whereas its factories in Estonia, Poland, China and the USA are close to

customer markets.

Scanfil provides its customers with an extensive array of services, ranging from product

design which is done with cooperation partners to product manufacturing, material pro-

curement and logistics solutions. These provide a solid foundation for Scanfil’s competitive

advantages: speed, flexibility and reliability.

Scanfil’s shares are listed on the Nasdaq Helsinki stock exchange (SCANFL).

ANNUAL REPORT 2020 | 3| 3ANNUAL REPORT 2020

Financial information Financial statements Corporate Governance Statement Information for shareholdersGeneral

The year 2020 brought with it an unprecedented challenge as in the beginning of

the year the rapidly spread COVID-19 virus caused a pandemic. Scanfil quickly took

actions to ensure the health and safety of its personnel and stakeholders as well

as the functioning of its supply chain and production. The implementation of the

strategy was continued by concentrating the factory network in both Germany and

China. Scanfil’s turnover rose to EUR 595 million and profitability improved signifi

cantly as operating profit rose to EUR 44.4 million.

Solid performance in

challenging circumstances

THE HAMBURG FACTORY WILL BE CLOSED

Scanfil decided to close its Hamburg factory to concentrate production at the

Wutha factory in Germany and the Sieradz factory in Poland. The measures are

estimated to be ready by the end of the third quarter of 2021. The Wutha factory

is located close to Central European customers and is a “high mix – low volume”

manufacturing unit with strong engineering expertise. The Sieradz factory in cen-

tral Poland is a large-scale electronics factory that acts as an efficient production

unit for higher-volume products.

THE HANGZHOU FACTORY WAS SOLD

Scanfil’s factory, focused on sheet metal mechanics, in Hangzhou, China, was

divested for a selling price of EUR 18.4 million to the Chinese mechanical man-

ufacturer Cabinet Technology Co., Ltd. The entire personnel of the Hangzhou

factory continued to be employed by the new owner after the transaction was

completed. As a result of the transaction, Scanfil centralised its Chinese opera-

tions at its Suzhou factory. Scanfil will continue to use the mechanical services

of the Hangzhou factory.

ANNUAL REPORT 2020

Scanfil’s turnover

rose and profitability

improved significantly

regardless of the

pandemic.

ANNUAL REPORT 20204 |

Financial statements Corporate Governance Statement Information for shareholdersGeneral Financial informationGeneral

100

200

300

400

500

600

700

202020192018201720162015201420132012

595

579

563

530

508

37 7

215

189

181

0.1 0

0.0

0.1

0.2

0.3

0.4

0.5

0.6

20202019201820172016

0.44

0.4 5

0.40

0.5 7

0.5

Key figures 2020

*The increase in net debt is due to

the adaption of IFRS 16.

Return on investment Equity ratio Net debt

EUR million% %

20202019201820172016

1 7.0

20.2

19.4

4.6

19.5

20202019201820172016

49.1

47.7

40.740.7

54.3

20202019201820172016

46.2*

28.2

40.7

40.0

18 .1

Turnover Operating profit & operating profit %

EUR million %EUR million

Operating

profit

Operating profit,

adjusted

Operating profit %,

adjusted

202020192018201720162015201420132012

39.1

39.4

35.3

3 7. 8

22.3

7. 2

19.6

14.4

16.2

11.8

8.1

4.5 %

6.3 %

7.6 %

4.4 %

5.2 %

5.9 %

6.7 %

6.8 %

6.6 %

44.4

31.3

Compound annual growth rate (CAGR) 16% between 2012–2020. Compound annual growth rate (CAGR) 24% between 2012–2020.

Personnel per country 31.12.2020

Poland China Estonia

Sweden Finland Germany

USA

Earnings per share

EUR

EPS EPS, adjusted

0.00

0.05

0.10

0.15

0.20

20202019201820172016

0.1 5

0.1 3

0.1 1

0.09

0.1 7

Dividend per share

EUR

Board’s proposal

Compound annual growth rate (CAGR)

22% between 2012–2020.

Compound annual growth rate (CAGR)

20% between 2012–2020.

36%

16%

14%

11%

10%

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Financial information Financial statements Corporate Governance Statement Information for shareholdersGeneral

CEO’s review

ANNUAL REPORT 20206 | 6 | ANNUAL REPORT 2020

Financial statements Corporate Governance Statement Information for shareholdersGeneral Financial informationGeneral

Our operational performance during 2020 was strong

despite the unusually challenging conditions and an indi-

cation of the abilities of Scanfil’s personnel and the flex-

ibility of Scanfil’s cost structure. The year was charac-

terised by the coronavirus pandemic, and our operations

focused strongly on the health of our personnel and the

smooth completion of customer deliveries. Our counter-

measures to coronavirus were successful, our employees

mainly stayed healthy, and the performance of our facto-

ries was good. Our turnover in 2020 was EUR 595.3 mil-

lion, and our adjusted operating profit was EUR 39.1 mil-

lion, or 6.6% of turnover.

The Hangzhou factory was sold in July, and Scanfil will

now focus on the manufacture of electronics and integrated

products at the Suzhou factory in China. In December, we

decided to close the Hamburg factory and continue its pro-

duction at other Scanfil factories in Germany and Poland.

Production is expected to be transferred from Hamburg,

and the factory shut down, by the end of the third quarter

of 2021, and the arrangement is expected to result in annual

cost savings of around EUR 2.5 million. The purpose of

these measures is to secure and further improve the perfor-

mance and competitiveness of Scanfil’s factory network,

and further sharpen Scanfil’s strategy and position as a

manufacturing partner for electronics and complicated

integrated products.

The reported operating profit for 2020 of EUR 44.4 mil-

ion includes sales gains from the Hangzhou factory and

adjustments related to the closure of the Hamburg factory.

The most significant investments

in 2020 were made in

electronics manufacturing lines and testing equipment at

the Sieradz, Malmö, Wutha and Suzhou factories and in

updating the painting line in Myslowice. The integration

of the manufacturing execution system (MES) continued

at the Sieradz factory. Scanfil’s “smart manufacturing”

project (production and warehouse automation, data sys-

tems and digitalisation) accounted for roughly one third

of our full-year investments. We expect these investments

to significantly increase our productivity already in 2021.

We aim to accelerate the organic growth of our turno-

ver and expand our customer base. Our strategic goal is

to increase our market share, especially in Germany and

more broadly in Central Europe. The region has highly

attractive contract manufacturing markets, offering huge

growth potential for Scanfil. The purpose is to provide our

customers with a local manufacturing partnership with our

Wutha factory in Germany, as well as with Scanfil’s global

partnership, factory network and service range. We made

good progress in terms of these goals during the year, our

turnover developed positively in Central Europe, and we

signed new global agreements with our current local cus-

tomers in the region. In addition to Central Europe, we

have increased our sales efforts in the Nordic countries,

China and the USA.

We are approaching 2021 with confidence.

Our customers’

forecasts for the year are mainly showing growth, and we

are seeking to increase our turnover and operating profit.

However, it is also obvious that this year includes some

uncertainties: the coronavirus pandemic is still here, and

there are also signs of risks associated with the availability

of certain materials. We have identified these risks and

defined and launched appropriate risk mitigation measures.

Our long-term target for 2023 is to achieve a turnover

of EUR 700 million and an operating profit rate of 7%.

We are also actively investigating possibilities for corpo-

rate acquisitions, especially in the Nordic countries and

Central Europe.

Overall, I am satisfied with our performance in 2020.

I would like to thank our committed personnel and our

customers and other stakeholders for your trust.

PETTERI JOKITALO

CEO

In addition to Central

Europe, we have

increased our sales

efforts in the Nordic

countries, China

and the USA.

ANNUAL REPORT 2020 | 7

Financial information Financial statements Corporate Governance Statement Information for shareholdersGeneral

Customer Segments

and Factory Network

TYPICAL PRODUCTS OF THE DIFFERENT CUSTOMERS SEGMENTS ARE AS FOLLOWING

Scanfil has a vast variety of customers from different

industries. They are typically technology leaders of their field.

Scanfil grows in all of its market areas: the Nordics, Central

Europe, the USA and China.

Scanfil has a wide range of customers from small/mid-size to

large. Scanfil divides its existing customers into the following

customer segments: Communication, Consumer Applications,

Energy & Automation, Industrial, and MedTec & Life Science.

Communication segment includes base

stations, exchanges and amplifiers, as well as

different camera and radio systems.

Consumer Applications segment’s products

are used by consumers. These include e.g.

reverse vending machines and machines for

self-service laundromats.

Energy & Automation segment’s products

include frequency converters, inverters,

switches and automation systems.

Industrial segment’s products are used in

industrial applications, such as forklift guidance

systems and smart lighting systems.

Medtec & Life Science segment’s products

are e.g. dental chairs, analysers, mass spectro-

meters and cloud height indicators.

Atlanta, USA

Communication 14 %

Consumer Applications 19 %

Energy & Automation 19 %

Industrial 30 %

Medtec & Life Science 19 %

Communication 14 %

Consumer Applications 19 %

Energy & Automation 19 %

Industrial 30 %

Medtec & Life Science 19 %

Communication

Consumer Applications

Energy & Automation

Industrial

Medtec & Life Science

15%

21%

31%

18%

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Service offering

Close to the customer R&D

Close to customer market

Pärnu, Estonia

Sievi, Finland

Åtvidaberg, Sweden

Malmö, Sweden

Sieradz, Poland

Myslowice, Poland

Suzhou, China

Hampuri, Germany

Wutha, Germany

Scanfil offers its customers services that cover the entire product life cycle,

and helps them productise the idea and bring the product to market.

Supplier network Scanfil services Complete product

Design Electronics Integration

Cable

assemblies

Testing

Mechanics

ANNUAL REPORT 2020 | 9

Financial information Financial statements Corporate Governance Statement Information for shareholdersGeneral

Strategy, values and mission

VISION

We are a trusted partner.

MISSION

Scanfil enables customers to succeed by providing effective

and innovative solutions that bring products to life and to

market.

STRATEGY AND GOALS

Scanfil’s goal is to help its customers in product design, in

industrial and manufacturing processes, and in the launch

of finished products within an optimal time. Our excellent

performance, continuous improvement and demanding

goals are visible in everything we do.

Scanfil mainly serves its global customers from factories

that are located close to customer markets. These facto-

ries are located in Poland, Estonia, China and the USA. In

Finland, Sweden and Germany, Scanfil serves customers

whose R&D units are close to our factories.

Our new customer acquisition focuses on the Ger-

man-speaking Central Europe, the Nordic countries, China

and the USA. Our goal is to be the market leader in the

Nordic countries and gain a significant market share in

the German-speaking Central Europe.

The goal is to pay one third of our annual results to our

shareholders in dividends.

LONGTERM TARGET

In 2023, Scanfil is organically aiming for EUR 700 million

turnover and 7% operating profit level.

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Leader in the Nordics

Strong in Central Europe

Enhanced sales globally

Local customers

New customer

Factories close to

customer R&D

Global customers

Factories close to

customer market

OUR COMPETITIVE ADVANTAGES

Scanfil’s strengths are agile operating culture, fast decision

making and implementation, global factory network and

broad service offering. Scanfil’s high-quality and cost-

efficient vertically integrated production is one of its key

competitive factors. Effective and measurable processes

offer standardised operating methods for Scanfil’s global

plant network.

SCANFIL VALUES

We believe that companies and people need well designed

and built products made in a sustainable way by valuing the

people who make them. Our working culture is grounded

on four guiding principles.

Customer focused

Everything we do adds value for our customers. We aim to

exceed our customers’ expectations. We build long-term

partnerships with our customers.

Achieving together

We are one team, globally. We share ideas and respect

and rely on each other. We are open and straight with our

communications and provide feedback on short notice. We

recognise and celebrate achievements.

Proactive

We continuously improve our competencies and capabil-

ities to stay one step ahead. We proactively support our

business partners.

Engaged to perform

We enjoy challenges and keep our promises. We always act

ethically and we are efficient in everything we do.

BESTINCLASS

PERFORMANCE

SCALE UP

Our excellent

performance, continuous

improvement and

demanding goals

are visible in

everything we do.

ANNUAL REPORT 2020 | 11

Financial information Financial statements Corporate Governance Statement Information for shareholdersGeneral

Responsibility at Scanfil

MANAGEMENT

The Board of Directors and members of the management

of Scanfil are responsible for the management of corporate

responsibility. In terms of its governance, Scanfil complies

with Finnish laws and regulations, its Articles of Asso-

ciation, Nasdaq Helsinki’s rules and guidelines, and the

Finnish Corporate Governance Code. In practical work,

responsibility perspectives are guided by the Group’s Code

of Conduct. In addition, the policies and ethical operating

principles approved by the Board of Directors or the Man

agement Team guide operations.

KEY THEMES IN CORPORATE RESPONSIBILITY

Ensuring and developing the responsibility of operations

is vitally important for Scanfil’s success. The monitor-

ing and continuous development of corporate responsi-

bility serves the needs of all Scanfil’s stakeholders. Scan-

fil has defined key factors for its corporate responsibility

and divided them into responsible offering, responsibility

for partners and the community, social responsibility and

responsibility for the environment.

In responsible offering, attention is paid to the develop-

ment of customer satisfaction, compliance with the law and

ethical principles throughout the supply chain, the preven-

tion of corruption and bribery, product quality, delivery

reliability, and continuous development. All the company’s

factories operate a quality control system observing the

ISO 9001 criteria.

In responsibility for partners and the community,

the focus

is on profitability, ethical values and the transparency of

operations.

The focus areas for

environmental responsibility are the

efficient use of raw materials, the control and reduction of

energy and water consumption, as well as the management

and reduction of waste, and the reduction of the carbon

footprint.

Social responsibility focuses on competence develop-

ment, occupational safety and health, and the development

of the motivation and work satisfaction of the personnel.

The ISO 45001 occupational health and safety management

standard is being used at all Scanfil’s factories. Scanfil’s

objective is to be an excellent place to work.

Ensuring and

developing the

responsibility of

operations is vitally

important for

Scanfil’s success.

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Responsibility of offering

Customer satisfaction is one of the company’s core val-

ues, and everybody at Scanfil understands that success

depends on satisfied and loyal customers. Maintaining

active contacts regarding the customer’s requirements and

Scanfil’s plans is an essential element of cooperation. It

allows the correct business decisions to be made and the

competitiveness and responsibility of production services

to be developed. Continuous development of operations in

cooperation with customers is in both parties’ best interest.

Continuous contact with customers is based on the key

account management model. It includes a plan on cooper-

ation, systematic and regular meetings at several levels,

and a standardised reporting model presenting the most

important key performance indicators (KPIs). Develop-

ment projects are also implemented on the basis of customer

feedback. They may be related to quality matters or the

expansion of the service offering, for example. High-qual-

ity and cost-effective production is one of Scanfil’s key

competitive advantages. The continuous development of

production processes, utilisation of the right technologies

and verified quality of the materials used are key factors in

the continuous improvement of competitiveness.

HIGH LEVEL OF CUSTOMER SATISFACTION

Scanfil changed the way it measures customer satisfaction

in 2019. Customer satisfaction is measured regularly by

conducting a customer satisfaction survey twice a year.

Feedback helps us to monitor our operational perfor-

mance in terms of our delivery capacity and our ability

to produce quality, as well as our flexibility, competitive

prices, the organisation’s ability to react, and the coverage

and performance of our services. Based on the survey, we

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

programme, including relevant measures. These measures

will be monitored actively in cooperation with customers.

Scanfil’s customer satisfaction improved further in 2020.

The Net Promoter Score (NPS), which shows the probability

of our customers recommending Scanfil as a manufactur-

ing partner, increased significantly from the previous year.

NPS-scale from -100 to +100.

How probable is it that you would recommend

Scanfil’s services?

Q2 2019 Q4 2019 Q2 2020 Q4 2020

NPS Score 21 22 38 37

Development of customer

quality / PPM

(Parts Per Million)

200

400

600

800

1000

1200

1400

20202019201820172016

Reliability of delivery

100

20202019201820172016

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Scanfil received the best ratings for the quality of ser-

vices (including the rate of response), continuous devel-

opment and problem-solving ability. Respondents to the

survey felt that positive development had taken place in

proactivity, test planning, and in how Scanfil supported its

customers regarding new business opportunities. Although

there has been a marked improvement both in proactivity

and product design, investment in these areas will continue.

The survey also included a question about how well we have

performed during the coronavirus pandemic. Feedback was

positive; customers thanked Scanfil’s way of informing

them about the targeted measures and proactivity relative

to future situations.

QUALITY AND PERFORMANCE MEASURED

All Scanfil’s factories operate a quality control system

observing the ISO 9001 criteria. In addition, certain fac-

tories have other certified quality management systems

applicable to certain industries.

All Scanfil’s factories observe the Lean Six Sigma pro

cess development methodology and analysis (FMEA) that

identifies the risks in the supply chain and production.

The objective is to identify the deficiencies and risks in

processes and production at an early stage, continuously

make improvements, and carry out preventive measures.

Performance is measured by KPIs, the most important

being delivery punctuality and customer quality, measured

as Defective Parts Per Million (DPPM).

During 2020, the KPIs describing quality and delivery

reliability remained at the same excellent level as in 2019.

GOOD CORPORATE CITIZEN

Scanfil has operations in seven countries, and it co-oper-

ates with suppliers and subcontractors around the world.

Scanfil is committed to being a good corporate citizen both

internationally and locally, which is why all its functions

must respect different cultures and cultural heritages, as

well as local methods of operations compliant with laws.

Scanfil’s Code of Conduct defines the ethical principles

and commitment to anti-bribery, honesty and fair methods

of operation, as well as the behavior expected of Scan-

fil’s employees business partners and other stakeholders.

Human rights and equal treatment are basic values in Scan-

fil’s operations, and they cannot be compromised. People

must be treated with dignity and respect in the manner

approved by the international community.

Plant ISO 9001:2015

Quality

management

system

ISO 14001:2015

Environmental

management

system

ISO 13485:2016

Medical equipment

OHSAS 18001:2007/45001

Occupational health and

safety assessment system

IATF 16949:2016

Quality system standard for

the automobile industry,

conformity document

Atlanta ● ● ● ●

Hamburg ● ● ●

Hangzhou ● ● ●

Malmö ● ● ● ●

Myslowice ● ● ● ●

Pärnu ● ● ●

Sieradz ● ● ● ● Will be introduced in 2022

Sievi ● ● ● ●

Suzhou ● ● ● ● ●

Wutha ● ● ● ● ●

Åtvidaberg ● ● ● ●

Certificates of Scanfil’s plants

ANNUAL REPORT 2020 | 15

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Social responsibility

Development of job satisfaction results

20202019201820172016

Job satisfaction and motivation Commitment

At Scanfil, social responsibility focuses on competence

development, occupational safety and health, and the devel-

opment of the personnel’s motivation and work satisfaction.

Scanfil’s aim is to be a reliable employer and an encour-

aging working community where every individual has the

opportunity to develop their personal skills and abilities.

Scanfil has prepared HR and work environment poli-

cies, as well as the Code of Conduct, to guide the daily

work of the management and other employees. The Code

of Conduct describes in detail the ethical and sustainable

methods of operation compliant with Scanfil’s values. A

thorough review of the Code of Conduct is part of the induc-

tion process. To update the Code of Conduct, development

ideas were listed during 2020, and they are planned to be

implemented during 2021.

2020 was characterised by the global coronavirus pan-

demic, due to which extensive measures were taken to pro-

tect the safety and health of Scanfil’s personnel, customers

and partners. The Group adopted various measures consid-

ering country-specific restrictions and recommendations.

The annual shutdown of Scanfil’s factories in China was

extended by more than a week in February due to official

regulations, and the Myslowice factory in Poland was also

stopped for two weeks due to COVID-19 infections and the

quarantine of employees potentially exposed to corona-

virus. In addition, Scanfil has paid particular attention to

the coping of the personnel and the maintenance of their

work motivation to avoid any exhaustion resulting from

remote working.

In 2020, the Group’s sick leave rate was 3.6%, while the

target is less than 3%. This was partly affected by the pan-

demic during the year. There were 54 occupational acci-

dents, while the corresponding figure in 2019 was 41. Com-

petence development continued at a global level and in local

units under different programmes. A total of 58,575 working

hours were used in the Group for training in 2020.

Scanfil continued to improve the efficiency of its factory

network by divesting the Hangzhou factory in July. The

factory and all of its roughly 400 employees continued in

the new owner’s name. Scanfil also completed the consul

tation process regarding the Hamburg factory and decided

to close the factory in Hamburg and transfer its production

to other factories in Central Europe.

The response rate to the annual personnel survey was

88% (2019: 90%). Despite the uncertainties resulting from

the coronavirus pandemic and rearrangements within the

company (the divestment of the Hangzhou factory and the

plan to close the Hamburg factory), employees’ job satis

faction, motivation and engagement were at the previous

year’s level. On the basis of the results, the Group decided

to keep key development areas unchanged: support from

the nearest supervisor, zero tolerance of discrimination,

bullying and harassment, and reputation. Based on the sur-

vey, nearly 500 local development actions were registered.

DIGITALISATION TO HELP THE PERSONNEL

The digitalisation of HR processes was a key development

area in 2020. Scanfil SMART is a development programme

that aims to utilise the benefits of digitalisation, techno-

logical development and automation in all of Scanfil’s

functions. During 2020, tools based on SMART were also

introduced in HR management. Now, employees can take

care of their daily HR processes such as making holiday

requests and reporting absences to supervisors via an elec-

tronic system. This also facilitates supervisors’ work. In

addition, the system provides support in working hours

monitoring. As a result of an ongoing development project,

upcoming internal training material is made available to

all employees online. The next goal is to deploy a tool to

support competence evaluations and performance apprais-

als, improve communication channels and enable mobile

services for employees.

In addition, Scanfil will invest in a new e-learning plat

form. This will further strengthen Scanfil Academy and

enable individual studies flexibly, independent of time

and place. The significance of this has become even more

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KUVA

emphasised during the pandemic.

During the year, Scanfil made significant investments

in the development of supervisors. The company believes

that the nearest supervisors have a major impact on the

personnel’s efficiency and work motivation and further

on the company’s results.

CERTIFICATES FOR OCCUPATIONAL SAFETY

Scanfil improves occupational safety by continuous active

measures. The work environment must always be safe and

healthy. The ISO 45001 occupational health and safety

management standard is being used at all Scanfil’s facto-

ries. The development of safety is also monitored by the

Safety Council, which meets four times a year and consists

of the HR managers of each factory. Scanfil uses the Safety

Book, in which information on occupational accidents

occurring during a year is recorded. Scanfil reacts to all

occupational accidents and near-miss incidents appropri-

ately to prevent them from recurring. In addition, the Lean

Manufacturing and Process Engineering teams participate

in ensuring the safety and efficiency of production areas.

Most accidents are related to the handling of materials in

production areas and the use of tools at workstations. In

assembly and office work, difficult postures and extended

sedentary work present a challenge. Their negative impact

is avoided by means of high ergonomics.

Scanfil’s factories are actively involved in charitable

activities, and Scanfil supports UNICEF at group level.

HUMAN RIGHTS

In terms of its social responsibility, Scanfil focuses on

competence development, occupational safety and health,

and the development of employees’ motivation and work

satisfaction. The company ensures the fulfilment of its

social responsibility through fair working conditions and

practices in its Code of Conduct. Human rights and equal

treatment are basic values in Scanfil’s operations, and here

no compromises can ever be made. Besides the personnel,

they concern all partners, and they define, among other

things, the principles of respecting individuals, as well as

those of preventing forced labuor, child labour and human

trafficking.The Code of Conduct also includes instruc-

tions on reporting possible or suspected unethical or illegal

actions. Scanfil’s personnel survey also includes questions

about any unwelcome behavior. Scanfil has a whistleblow-

ing channel to which the company’s personnel and part-

ners can anonymously report any misconduct or suspected

misconduct regarding human rights, corruption, bribery

or the Code of Conduct.

The company aims to ensure compliance with the Code

of Conduct in supply chain management by carrying out

audits. Compliance with the law and ethical principles is

also monitored in internal control and audits. During 2020,

no non-conformities pursuant to corporate governance

were identified in Scanfil’s global whistleblowing channels.

Five cases of bullying or harassment were reported in local

HR organisations. These were investigated thoroughly by

local management teams, and the resulting actions were

reported in the global HR organisation.

In early 2021, Scanfil joined the United Nations Global

Compact initiative. The companies involved in the Global

Compact are committed to the ten principles of human

rights, labour standards, the environment and the eradi-

cation of corruption.

During the year,

Scanfil made significant

investments in the

development of supervisors.

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Financial information Financial statements Corporate Governance Statement Information for shareholdersGeneral

Responsibility for partners

BUSINESS PARTNERS AND SOCIETY

Scanfil’s sales to customers totalled EUR 595 million,

of which purchases from external suppliers accounted for

EUR 465 million. The difference, EUR 131 million, was the

added value produced by Scanfil. The added value produced

decreased by EUR 3 million (2%) from the previous year.

Scanfil produces added value for employees, creditors and

shareholders, and for the company’s further development.

Most of the added value was produced by the employees.

During the year, Scanfil had an average of 3,387 employees

Distribution of added value, EUR million

and paid them EUR 73 million in salaries and wages. Sala-

ries and wages decreased by EUR 1 million, or -1%, year-

on-year. The value added and the salaries were reduced due

to sale of the Hangzhou factory on July 14, 2021.

Scanfil paid a total of EUR 22 million in other statutory

staff costs and income taxes. The company’s subsidiaries

are located in seven different countries. The location of

these companies is based purely on business-related fac-

tors, such as the customers’ market areas or their research

and development centres.

Scanfil is committed to paying taxes and other statutory

expenses in each of its countries of operation.

Scanfil has solvent financial partners. The company’s

financial position is strong. The company’s credit and

financial expenses totalled EUR 3 million, slightly more

than in the previous year.

The company aims to pay a third of its net result as

annual dividends. In keeping with this principle, Scanfil

paid EUR 11 million in dividends in 2019. The dividend

per share paid by the company has increased every year

for the last eight years.

Correspondingly, the company aims to use two thirds of

its result for investments, future growth and the general

development of business. The company’s return on equity

was 21.1% in 2019, which clearly shows that the investments

made in the company have repaid themselves well.

Scanfil value add creation 2020, EUR million

Sales to customer

595

(2019: 579)

Purchases from suppliers

465

(446)

Value add

131

(133)

Salaries and wages 73 (2019: 74)

Other staff costs and taxes 22 (26)

Creditors 3 (1)

Shareholders 11 (10)

Funds reserved for investments 22 (22)

ANNUAL REPORT 202018 |

Financial statements Corporate Governance Statement Information for shareholdersGeneral Financial informationGeneral

BROAD SUPPLIER NETWORK

Procurement makes up approximately two thirds of turn-

over, which is why efficient procurement is a significant

competition factor for Scanfil. Scanfil has a broad network

of local, regional and international suppliers and part-

ners, which it seeks to develop to ensure good quality and

cost-effectiveness.

CAREFUL SELECTION OF SUPPLIERS

Scanfil requires that all its partners comply with the

law and agreements and that they operate in accord

ance with Scanfil’s Code of Conduct. The Supplier Code

of Conduct constitutes part of purchase agreements signed

with major suppliers. In addition, the Code of Conduct is

signed with all suppliers when operating in the Asian market.

Scanfil selects its suppliers carefully, and cooperation

with its key suppliers is long-term. During 2020, Scanfil

automated the supplier selection process. Scanfil only uses

approved suppliers that fulfil Scanfil’s strict criteria in

terms of quality, delivery reliability and cost-efficiency.

Scanfil audits its suppliers systematically and monitors

their compliance with the terms and conditions of agree-

ments. It also prevents any misconduct through the verifi-

cation of orders and training.

Once cooperation has started, quality assurance is car-

ried out continuously. This means that incoming material

is inspected, any non-conformities are kept under control,

any errors in quality are corrected and the general perfor

mance of suppliers is evaluated. When new components or

materials enter in production, Scanfil always uses a sepa-

rate inspection process to ensure quality. Making use of

Scanfil’s global position and volume in procurement pro-

cesses helps to maintain competitive prices and control

the supplier network. This is why Scanfil aims to focus its

purchases on a few selected suppliers.

ANTICORRUPTION AND ANTIBRIBERY

MEASURES

As part of its corporate responsibility management, Scan

fil is also developing its activities to fight corruption and

bribery. Compliance with corporate responsibility is raised

more often than previously in talks with customers. Scanfil

has defined responsible operating guidelines that cover, for

example, the equal treatment of people and prohibit cor-

ruption and bribery. The Group’s operating methods, such

as transparent and cost-based pricing, reduce the possibil-

ity of non-compliant activities. No deviations from Scan-

fil’s Code of Conduct were identified in 2020.

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Financial information Financial statements Corporate Governance Statement Information for shareholdersGeneral

Environmental responsibility

Scanfil produces extensive services for its customers,

ranging from product design and development to product

manufacture, material procurement and logistics solutions.

Products are designed and manufactured on the basis of

customers’ requirements, which means that the design pro-

cess starts with product data provided by each customer.

Accurate data and careful design allow a more efficient man-

ufacturing process and a reduction in the environmental

impacts of production. The efficiency of resource utilisation

and the environmental friendliness of raw materials and

products throughout their lifespans are analysed in detail.

Environmental impacts are taken into account throughout

Scanfil’s value chain, ranging from the procurement of raw

materials to production, distribution and recycling.

Scanfil promotes sustainable development by identify-

ing, measuring and reporting the environmental impact

caused by its activities. The goal is to reduce the impact

to the environment. Scanfil’s aspiration is to consider the

environmental impact throughout the value chain, rang-

ing from the procurement of raw materials to production,

distribution and recycling possibilities. All Scanfil’s fac-

tories have a certified ISO 14001-compliant environmental

management system. In its production, Scanfil mainly uses

metals, components and chemicals. It prefers recyclable

materials and eco-friendly products. Part of the materials

to be used are chosen by customers. The utilisation rate of

all raw materials is optimised to ensure the efficient use

of resources and decrease the amount of waste created.

Waste materials are recycled if they cannot be re-used in

the company’s own production. Steel is the most important

raw material used by Scanfil. Its effective use is closely

monitored in the production process.

The risks associated with chemicals are analysed before

their deployment, and they are handled following precise

instructions and precautions. In addition, proper training

and drills are arranged to prepare for any accidents.

Scanfil consumes energy in the heating, cooling and

lighting of its production facilities and in the use of pro-

duction machinery. In 2020, Scanfil’s total energy con-

sumption was 28.9 million kWh, having been 28.7 million

kWh in the previous year. Energy consumption increased

by 0.9% year-on-year.

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Financial statements Corporate Governance Statement Information for shareholdersGeneral Financial informationGeneral

Most of the increase in energy consumption came from

the Myslowice factory, where production increased dur-

ing 2020. The increase in production resulted in a larger

number of machines installed and in more shifts when the

factory operated during evenings and weekends.

The coronavirus countermeasures, e.g., longer open-

ing hours of the factory and new air-conditioning system,

increased Suzhou’s energy consumption. More shifts were

introduced as general risk control measures to prevent the

spread of coronavirus, as a result of which production peri-

ods were longer.

At the Sieradz factory, energy consumption decreased by

7%. Optimised electronics production, standardised oper-

ations and harmonised machine and equipment set up had a

significant impact on the decrease in energy consumption.

In 2020, all factories carried out an energy reduction

programme to reduce energy consumption by 3 percent

divided by add-value. Target was not met due to mitigation

activities due to coronavirus. The energy consumption is

followed up on the group level.

Water is used in facility maintenance, production and

sanitary facilities. Total water consumption was 44,875

m (56,349 m in 2019). Water consumption decreased by

20.4%. This decrease in water consumption resulted from

measures carried out at factories. The most significant

results were achieved in Sieradz, where optimised machine

and equipment set up led to a 15% decrease in water con-

sumption. The divestment of the Hangzhou factory also had

a significant impact on the decrease in water consumption.

There was no big difference in the amount of waste

between 2019 and 2020. There were some differences

between factories due to changes in production and dif-

ferent product ranges. Changes in the factory network

and the factories’ new way of calculating waste made it

somewhat difficult to compare the amount of waste on an

annual basis.

ENVIRONMENTAL CERTIFICATE HELD BY ALL

All Scanfil’s factories have a certified ISO 14001:2005

-comp liant environmental management system that veri-

fies the measurement and improvement of environmental

impacts on the company’s management and employees, as

well as on its external stakeholders. The company’s man-

agement monitors the implementation of environmental

practices, as well as the development of key indicators and

the goals set, both locally and at group level. The employ-

ees are provided with the necessary knowledge and training

to ensure they can work in accordance with the objectives

of our environmental practices.

REDUCE IN CARBON FOOTPRINT

Scanfil also seeks to reduce its carbon footprint in other

activities, such as travel and mobility. As an internationally

operating company, employees’ business travel is neces-

sary, while the company seeks to reduce it, for example,

by utilising the possibilities of modern technology and

by favouring virtual meetings. The travel practice always

guides the employees to choose the most environmentally

friendly alternative for travel and meetings. Emissions

from daily commuting have been reduced by organising bus

transportation for personnel at several Scanfil factories.

The company’s updated vehicle policy favours low-emis-

sion cars, such as hybrid models.

Due to travel restrictions imposed because of the outbreak

of the coronavirus pandemic at the beginning of 2020, there

were significant decreases in travel, and meetings between

customers and partners were primarily held via remote con-

nections. Employees who were able to work without needing

to be in the workplace started to work remotely. As a result,

emissions from commuting decreased.

Energy consumption gWh/added value

Water consumption tm/added value

20202019201820172016

Added value = turnover - purchases

Scanfil measurers

and reports the

environmental impact

caused by its activities.

ANNUAL REPORT 2020 | 21

Financial information Financial statements Corporate Governance Statement Information for shareholdersGeneral

TABLE OF CONTENTS

BOARD OF DIRECTORS’ REPORT  23

SHARES AND SHAREHOLDERS 30

KEY RATIOS 32

Definitions of key ratios 33

CONSOLIDATED INCOME STATEMENT, IFRS 34

Consolidated income statement 34

Consolidated statement of financial position 35

Consolidated statement of cash flow 36

Consolidated statement of changes in equity 37

Accounting principles for consolidated

financial statements 38

Notes to consolidated financial statements 42

. ITEMS AFFECTING THE RESULT

1.1 Turnover and details of business segments 42

1.2 Other operating income 45

1.3 Use of materials and supplies 46

1.4 Employee benefit expenses 46

1.5 Other operating expenses 48

1.6 Income taxes 48

1.7 Earnings per share 50

. NET WORKING CAPITAL

2.1 Net working capital 50

2.2 Inventories 51

2.3 Trade and other receivables 51

2.4 Trade and other liabilities 52

. NONCURRENT ASSETS

3.1 Goodwill 53

3.2 Other intangible assets 54

3.3 Property, plant and equipment 56

3.4 Right-of-use assets 57

3.5 Depreciation, amortisation and impairment 60

3.6 Acquired business 61

. CAPITAL STRUCTURE

4.1 Cash and cash equivalents 62

4.2 Financial income and expenses 63

4.3 Financial liabilities 63

4.4 Book values and fair values of

financial assets and liabilities 64

4.5 Derivative financial instruments and

hedge accounting 65

4.6 Hierarchy of fair values 66

4.7 Financial risk management 67

4.8 Shareholders’ equity 71

4.9 Management of capital structure 72

. OTHER NOTES

5.1 Provisions 72

5.2 Securities provided, contingent liabilities

and other liabilities 73

5.3 Details of related parties and

group structure 73

5.4 Events after the reporting period 74

PARENT COMPANY FINANCIAL STATEMENT, FAS

Parent company income statement 75

Parent company balance sheet 76

Parent company cash flow statement 78

Notes to the parent company’s

financial statements 79

The parent company’s accounting principles 79

1. Personnel expenses 79

2. Other operating expenses 80

3. Depreciation and amortisation 80

4. Contributions from Group companies 80

5. Income taxes 80

6. Intangible assets 81

7. Tangible assets 81

8. Holdings in Group companies 82

9. Receivables from Group companies 82

10. Cash and equivalent 82

11. E quity 83

12. Loans from financial institutions 83

13. Liabilities to Group companies 84

14. Accrued liabilities 84

15. Commitments and contingencies 84

16. Derivative contracts 85

17. Other rental contracts 85

18. Management’s employment-related benefits 85

BOARD OF DIRECTORS’ PROPOSAL

FOR THE DISTRIBUTION OF PROFIT

AND SIGNATURES

REPORT ON THE AUDIT OF

THE FINANCIAL STATEMENTS

CORPORATE GOVERNANCE STATEMENT 91

BOARD OF DIRECTORS 98

MANAGEMENT TEAM 100

INFORMATION TO SHAREHOLDERS 102

AUDITOR’S REPORT ON

ESEF FINANCIAL STATEMENTS

103

ANNUAL REPORT 202022 |

Financial statements Corporate Governance Statement Information for shareholdersGeneral Financial information

BOARD OF DIRECTORS’ REPORT 

Scanfil plc is an international listed (Nasdaq Helsinki,

SCANFL) contract manufacturer and system supplier for

the electronic industry, with more than 40 years’ experi-

ence in demanding contract manufacturing. Overall man-

agement is one of the Group’s strengths, and its services

range from product design and production suitability plan-

ning to prototype and pre-serial production, the volume

manufacturing of products and aftersales services such

as maintenance and spare parts services. On December 31,

2020, the Group employed some 3,200 people. At the end

of 2020, Scanfil had a total of ten factories in seven coun

tries on three continents.

Key elements of Scanfil’s operations include a vertically

integrated production system and the provision of services

and supply chain management for customers over the entire

lifecycle of products. These provide a solid foundation

for Scanfil’s competitive advantages: speed, flexibility

and reliability. The company’s customers include inter-

national operators in sectors such as automation, energy,

ICT and health technology, and companies operating in

fields related to urbanisation.

Year 2020

Despite the highly challenging operating environment due

to the coronavirus pandemic, Scanfil was able to increase

its turnover to EUR 595.3 (579.4) million. The increase in

turnover mainly resulted from the acquisition of the oper

ations of HASEC-Elektronik GmbH in the previous year.

The adjusted operating profit remained at the previous

year’s level at EUR 39.1 (39.4) million, representing 6.6%

(6.8%) of turnover. The divestment of the Hangzhou sub

sidiary had a particular impact on the slight decrease in

operating profit, as a result of which part of the Commu-

nication segment’s turnover consisted of intermediate

sales with low profitability. The coronavirus pandemic

also reduced productivity and resulted in additional costs.

Of all customer segments, turnover increased from the

previous year in the Communication, Energy & Automa-

tion and Industrial segments. The turnover of the Medtec

& Life Science segment remained at the previous year’s

level. The turnover of the Consumer Applications segment

decreased from the previous year. The negative impact of

the coronavirus pandemic was particularly reflected in this

segment’s full-year demand, even though demand picked

up significantly during the final quarter.

Scanfil streamlined its factory network and divested all

shares in its Chinese subsidiary Scanfil (Hangzhou) Co.,

Ltd., and initiated a consultation process concerning the

shutdown of the Hamburg factory of its German subsidi-

ary Scanfil GmbH with the factory personnel.

The divestment of the Hangzhou subsidiary was com-

pleted on July 14, 2020, and its positive impact on the oper

ating profit was EUR 11.4 million, of which EUR 7.9 million

consisted of equity translation differences.

The consultation process concerning the personnel of

the Hamburg factory was completed on December 17, 2020,

and Scanfil GmbH decided to close the Hamburg factory.

Production will be transferred to the Wutha factory in Ger-

many and the Sieradz factory in Poland. This arrangement

is expected to result in non-recurring expenses of approxi-

mately EUR 6.1 million, recognised for the final quarter of

2020. The arrangement is expected to result in annual cost

savings of around EUR 2.5 million. These steps are expected

to be completed by the end of the third quarter of 2021.

The impact of the coronavirus pandemic is described

under “Impact of the coronavirus pandemic during the

review period” in this annual report.

The majority of investments completed during the year

were made in production machinery and equipment. For

example, a new electronics surface mounting line was

acquired at the Sieradz factory, and a new environmen-

tally friendly pre-treatment line for powder painting was

acquired in Myslowice. Investments were also continued

in the automation of production processes and material

management at several factories. The digitalisation of pro-

duction was also continued in accordance with investment

plans through the deployment of IoT solutions and Manu-

facturing Execution System (MES) software in production.

Turnover and result

The Group’s turnover for January–December was EUR

595.3 (579.4) million, showing an increase of 2.7% from

the previous year. The increase in turnover is mainly attrib-

utable to the acquisition of the operations of HASEC dur-

ing the second quarter of 2019.

The Group’s operating profit for January–December

was EUR 44.4 (35.3) million, representing 7.5% (6.1%) of

turnover. The result for the period under review was EUR

36.9 (28.1) million. Earnings per share for the period under

review were EUR 0.57 (0.44). Return on investment (ROI)

was 19.5% (17.0%), and return on equity (ROE) was 21.1%

(18.0%). The increase in the key figures is mainly attrib

utable to the adjustments described below.

The adjusted operating profit was EUR 39.1 (39.4) mil-

lion, representing 6.6% (6.8%) of turnover. The adjusted

operating profit decreased by 0.7% year-on-year. As a

ANNUAL REPORT 2020 | 23

Financial statements Corporate Governance Statement Information for shareholdersGeneral Financial information

result of the divestment of the Hangzhou subsidiary, part

of the Communication segment’s turnover consisted of

intermediate sales with low profitability, which reduced

total profitability.

The operating profit includes a total of EUR 5.3 million

of adjustments, consisting of sales gains from the divest

ments of all shares in Chinese subsidiary Scanfil (Hang-

zhou) Co. Ltd. and costs arising from the shutdown of the

Hamburg factory of German subsidiary Scanfil GmbH.

The Group’s low effective tax rate of 11.6% primarily

results from the low tax on sales gains from Chinese subsid-

iary Scanfil (Hangzhou) Co., Ltd. and the tax relief related

to investments made in Poland’s special economic zone.

The Group’s key figures over six years are presented

under “The Group’s key figures” in the financial statements.

Financing position and investments

The Group has a stable financing position. The consoli-

dated balance sheet total was EUR 339.2 (340.0) million.

The Group’s cash and cash equivalents were EUR 25.8 (20.4)

million. Liabilities amounted to EUR 156.3 (173.3) million,

of which non-interest-bearing liabilities were EUR 112.3

(106.7) million and interest-bearing liabilities were EUR

44.0 (66.6) million. Interest-bearing liabilities consisted

of EUR 24.4 (44.2) million of financial liabilities and EUR

19.6 (22.3) million of leasing liabilities. The equity ratio was

54.3% (49.1%), and net gearing was 9.9% (27.7%). Equity

per share was EUR 2.82 (2.58). The improvement in the

key figures is mainly attributable to the adjustment items

mentioned above and a high net cash flow from operat-

ing activities.

The Group’s financing arrangements include termination

covenants related to the equity ratio and the ratio between

interest-bearing net liabilities and the operating margin.

The terms of the covenants are monitored on a quarterly

basis. The covenant terms were clearly fulfilled by the end

of the review period.

Net cash flow from operating activities for January–

December was EUR 35.2 (35.9) million. The change in

working capital during the review period was EUR -8.0

(-7.6) million. The change in working capital in January–

December 2020 compared to the end of the previous year

consists of the following items: current non-interest-bearing

accounts receivable increased by EUR 17.5 million; inven

tories increased by EUR 6.6 million; and current non-in-

terest-bearing liabilities increased by EUR 16.1 million.

Net cash flow from investing activities was EUR +4.1

(-17.6) million. The current year’s net cash flow includes

the impact of the divestment of the Hangzhou subsidiary

in China on cash flow (EUR 13.1 million), and investments

in tangible and intangible assets (EUR -9.4 million). The

previous year’s cash flow includes the impact of the acqui-

sition of HASEC-Elektronik GmbH on cash flow (EUR -7.5

million) and other investments (EUR -10.6 million).

Net cash flow from financing activities was EUR -33.3

(-17.1) million. A total of EUR 9.6 million was paid in divi-

dends. Long-term loan repayments totalled EUR 6.0 mil-

lion, and the use of the overdraft facility decreased by EUR

13.2 million compared to the end of last year.

Gross investments in January–December were EUR 9.4

(21.1) million, representing 1.6% (3.6%) of turnover. The

investments were mainly acquisitions of machinery and

equipment. The previous year’s investments include the

purchase price of shares in HASEC-Elektronik GmbH

(EUR 10.3 million). Depreciation excluding impairment

was EUR 15.1 (14.1) million.

The impact of the coronavirus pandemic

during the review period

The coronavirus pandemic had a slightly negative impact

on the Group’s turnover, and thereby on its productivity

and operating profit. Unit-specific impact depended on the

customer base and product mix of each unit.

The Group has received approximately EUR 2.5 million

of different government subsidies, primarily for compen-

sation for employees’ working hours and pension contri-

butions. These have partly compensated for decreases in

productivity.

In addition, the pandemic had the following impact on

operating profit:

•

Factory shutdowns due to regulations imposed by the

Chinese authorities: EUR -0.5 million

•

The shutdown of the Myslowice factory in April: EUR

-0.5 million

•

Extraordinary costs caused by the pandemic concerning

freight, protective equipment and other special arrange-

ments: EUR -1.3 million

The impact of the aforementioned expense items, exclud-

ing the decrease in productivity due to losses of turnover,

totalled EUR 2.3 million.

The Group’s financing position continued to improve

during 2020. Between January and December, the pan-

demic had no significant negative impact on the Group’s

cash flow or the Group’s financing structure or costs. The

Group’s current and non-current financial liabilities are

significantly lower than at the end of the previous year.

Dividends and investments have been financed through

net cash flow from operating activities.

Customer risks are monitored regularly. Special attention

has been paid to the collection of trade receivables, and the

total overdue trade receivables are at the level preceding

the pandemic. At present, the pandemic has had no impact

on other balance sheet values such as inventories, fixed

assets or goodwill.

The company has universal guidelines for all facto-

ries to prevent the spread of COVID-19 infections. These

measures include shift changes being undertaken so that

the employees working in different shifts do not meet dur-

ing the changes, the enhanced cleaning of work facilities,

restrictions on travel and visits, remote working as far as

possible, the use of protective equipment, maintaining safe

distances, and providing hygiene guidelines for employees.

Apart from the two-week shutdown of the Myslowice

factory in April and the shutdowns of factories in China in

February following regulations imposed by the local author-

ities, Scanfil has avoided any disruptions in its production

operations and any extensive infections among employees.

The guidance issued by the company is based on customer

forecasts and Scanfil’s normal forecast process. However,

the guidance for 2021 continues to involve uncertainties over

customer demand and the delivery capacity of the supply

chain as a result of any negative impact of the coronavirus

pandemic. During 2020, the accuracy of forecasts did not

deviate from the norm.

ANNUAL REPORT 202024 |

Financial statements Corporate Governance Statement Information for shareholdersGeneral Financial information

The Board of Directors’ authorisations

Scanfil plc’s Annual General Meeting was held at the com-

pany’s head office in Sievi on April 23, 2020.

The AGM authorised the Board of Directors to decide

on the acquisition of treasury shares and share issues as

proposed by the Board of Directors.

Decisions made at the AGM were published in a stock

exchange release, which is available on the company’s web-

site at www.scanfil.com.

Option schemes

The Group has two valid option schemes. On April 12, 2016,

the Annual General Meeting accepted Scanfil plc’s 2016

option scheme (A)–(C), and on April 24, 2019, the Annual

General Meeting accepted the 2019 option scheme (A–C) On

the basis of the 2016 option scheme, a maximum of 900,000

option rights can be granted, while on the basis of the 2019

option scheme, a maximum of 900,000 option rights can be

granted. Each option right enables its holder to subscribe to

one Scanfil plc share. The 2013 option scheme ended dur-

ing the review period after a total of 90,000 shares were

subscribed to using the remaining 2013(C) option rights.

During the period under review, a total of 250,000 treas-

ury shares were subscribed under Scanfil Plc’s stock options

2016(A) and 2016(B). Of these shares, 130,000 were new

shares and 120,000 were treasury shares held by the com-

pany and transferred on the basis of subscriptions. The

whole subscription price of EUR 858,300 for subscriptions

made with the stock options was recognised in the compa-

ny’s reserve for invested unrestricted equity.

The new shares subscribed under the stock options have

been entered in the Trade Register. The new shares pro-

vide their holders with shareholder rights starting from

their registration date. Following the registration of the

new shares, the number of Scanfil Plc shares is 64,829,993

in total. The shares are traded on the main list of Nasdaq

Helsinki Ltd. Following the transfer of the treasury shares,

the company holds 358,738 treasury shares.

Scanfil plc has a total of 64,829,993 shares. The compa-

ny’s registered share capital is EUR 2,000,000. The com-

pany has one series of shares, and each share entitles the

holder to one vote and an equal right to receive dividends.

Scanfil plc’s shares are quoted on Nasdaq Helsinki Ltd.

The shares have been publicly traded since January 2, 2012.

The trading code of the shares is SCANFL. The shares are

included in the book-entry securities system maintained

by Euroclear Finland Oy.

Members of the Board of Directors of Scanfil plc, the

CEO and members of the Group’s Management Team held

a total of 19,096,450 shares on December 31, 2020, com-

prising 29.5% of the company’s shares and votes. A total

of 800,000 option rights has been granted for the CEO

and members of the Group’s Management Team, on the

basis of which a maximum of 800,000 treasury shares

can be subscribed to, corresponding to 1.2% of all shares

in Scanfil plc.

The highest trading price during the financial period was

EUR 6.70, and the lowest price was EUR 3.26, with trad-

ing closing at EUR 6.52 at the end of the period. A total

of 6,289,025 shares was traded during the review period,

corresponding to 9.7.% of the total number of shares The

market value of the share capital was EUR 422.7 million

on December 31, 2020.

More detailed information on the distribution of share

holdings, shareholders and the development of the share

price is presented under “Shares and shareholders” in the

financial statements.

Treasury shares

On December 31, 2020, the company owned 358,738 treas-

ury shares, representing 0.6% of all shares.

Personnel

At the end of the financial period, the Group employed

3,211 (3,474) people, of whom 2,898 (3,163) worked outside

Finland, and 313 (311) in Finland. The average number of

Group employees during the financial period was 3,387

(3,530) people.

Personnel by country on December 31, 2020: China 518,

Poland 1,164, Sweden 339, Germany 291, Finland 313, Hun-

gary 2, USA 128 and Estonia 456

PERSONNEL, AVERAGE 2020 2019 2018

Parent company 13 13 13

Group 3,387 3,530 3,414

PAID SALARIES, WAGES AND FEES

EUR MILLION 2020 2019 2018

Parent company 1.7 1.6 1.8

Group 77.3 74.1 67.4

Board of Directors and CEO

At the Annual General Meeting on April 23, 2020, Harri

Takanen, Jarkko Takanen, Christer Härkönen, Bengt Eng-

ström and Christina Lindstedt were re-elected to the Board

of Directors, and Juha Räisänen was elected as a new mem-

ber. At its organising meeting on April 23, 2020, the Board

of Directors elected Harri Takanen as its chair.

In addition, the Board of Directors made the following

decisions on the organisation of committees: the members

of the Audit Committee are Jarkko Takanen, Harri Taka-

nen and Christina Lindstedt, and the members of the Nom-

ination and Remuneration Committee are Harri Takanen,

Jarkko Takanen and Bengt Engström.

Petteri Jokitalo (b. 1963), M.Sc. (Tech.), served as the

company’s CEO between January 1 and December 31, 2020.

Near-future business risks and uncertainties

The Board of Directors of Scanfil plc is responsible for

ensuring the appropriate organisation of the Group’s risk

management and internal control and audit. The goal of

the company’s risk management activities is to identify and

analyse factors that have a negative impact on achieving

the company’s goals in the short and long term, as well as

to initiate measures to minimise and postpone or eliminate

these risks. Risk management is part of the normal busi-

ness processes and management system controlled by the

Audit Committee of the Board of Directors.

ANNUAL REPORT 2020 | 25

Financial statements Corporate Governance Statement Information for shareholdersGeneral Financial information

STRATEGIC RISKS

The weakening of the global economy and the decrease

in international demand for investment commodities may

have a negative impact on the development of the business

operations of Scanfil’s customers, and weaken demand in

the contract manufacturing market. In particular, changes

in international trade agreements and an increase in inter-

national trade restrictions could lead to growing uncertain-

ties about the development of the global economy.

OPERATIONAL RISKS

The majority of the components used in the supply chain

are acquired from external suppliers or subcontractors.

This exposes the company to risks associated with the

availability of components and subcontracted products,

costs and the continuity of partnerships. Any difficulties

in the procurement of these components or any quality

issues related to these components could cause disruptions

in business operations and increase costs.

EXCHANGE RATE RISKS

The Group’s exchange rate risks consist of transaction risks

associated with accounts receivable and payable, transla-

tion risks associated with foreign subsidiaries, and finan-

cial risks resulting from exchange rate changes. Forward

foreign exchange contracts can be used to hedge against

transaction risks. The parent company is responsible for

the level of hedging. Investments in foreign subsidiaries

have not been hedged.

INTEREST RATE RISK

The interest rate risk is associated with return on financial

investments and interest-bearing liabilities. Any changes

in interest rates have an impact on the Group’s results. The

interest rate risk of loans can be controlled with the pro-

portion between variable rate and fixed-interest loans.

CREDIT RISKS

Credit risks are associated with accounts receivable from

customers. Accounts receivable do not involve any signif

icant credit loss risk.

NEAR-FUTURE RISKS

The negative impact of the coronavirus pandemic will con-

tinue to cause uncertainties this year. In addition, risks

will be associated with the availability of certain mate-

rials, semiconductors in particular, during the first half

of the year.

Scanfil Group’s financial risk management is described

in Note 4.7 to the consolidated financial statements.

The company’s risks and risk management are described

in greater detail on the company’s website under “Cor-

porate Governance” and in the notes to the consolidated

financial statements.

Changes in the Group structure

On June 29, 2020, the Board of Directors of Scanfil EMS

Oy, a subsidiary of Scanfil Plc, sold all shares in Chinese

subsidiary Scanfil (Hangzhou) Co., Ltd. The regular terms

and conditions of the transaction were fulfilled on July 14,

2020, on which date the transaction entered into force.

Research and development

As a result of the nature of the company’s business oper-

ations, R&D activities are primarily carried out with cus-

tomers, and the company’s R&D activities do not account

for any significant part of the company’s cost structure.

REPORT ON NONFINANCIAL

INFORMATION

DESCRIPTION OF BUSINESS OPERATIONS

Scanfil is a manufacturing partner and system supplier for

the electronics industry. It manufactures products based

on product details and requirements specified by its cus-

tomers. The company provides extensive services for its

customers, ranging from product design and development

to product manufacture, material procurement and logis

tics solutions. Key elements of the company’s operations

include a vertically integrated production system and the

provision of services and supply chain management for

customers over the entire lifecycle of products. The com-

pany’s customers include international operators in sectors

such as automation, energy, data transmission and health

technology, and companies operating in fields related to

urbanisation.

Scanfil has factories in Suzhou, China, in Sieradz and

Myslowice, Poland, in Malmö and Åtvidaberg, Sweden, in

Hamburg and Wutha-Farnroda, Germany, in Sievi, Finland,

in Atlanta, USA, and in Pärnu, Estonia. During 2020, Scan-

fil divested its factory operating in Hangzhou, China, and

decided to discontinue production at its Hamburg factory,

which will be completed by the end of the third quarter in

2021. On December 31, 2020, the division of employees by

country was as follows: China 518, Poland 1,164, Sweden

339, Germany 291, Finland 313, Hungary 2, USA 128 and

Estonia 456. At the end of 2020, Scanfil employed a total

of 3,211 professionals.

PRINCIPLES OF CORPORATE RESPONSIBILITY

Ensuring and developing the responsibility of operations

is vitally important for Scanfil’s success. The monitoring

and continuous development of corporate responsibility

serves the needs of all of Scanfil’s stakeholders. Scanfil

has defined key factors for its corporate responsibility

and divided them into responsible offering, responsibility

for partners and the community, social responsibility and

responsibility for the environment.

In responsible offering, attention is paid to the develop-

ment of customer satisfaction, compliance with the law and

ethical principles throughout the supply chain, the preven-

tion of corruption and bribery, product quality, delivery

reliability, and continuous development. In responsibility

for partners and the community, the focus is on profita-

bility, ethical values and the transparency of operations.

The focus areas for environmental responsibility are the

efficient use of raw materials, the control and reduction of

energy and water consumption, as well as the management

and reduction of waste, and the reduction of the carbon foot-

print. Social responsibility focuses on competence develop-

ment, occupational safety and health, and the development

of the motivation and work satisfaction of the personnel.

ANNUAL REPORT 202026 |

Financial statements Corporate Governance Statement Information for shareholdersGeneral Financial information

The Board of Directors and members of the management

of Scanfil are responsible for the management of corporate

responsibility. In terms of its governance, Scanfil complies

with Finnish laws and regulations, its Articles of Asso-

ciation, Nasdaq Helsinki’s rules and guidelines, and the

Finnish Corporate Governance Code. In practical work,

responsibility perspectives are guided by the Group’s Code

of Conduct. In addition, the policies and ethical operating

principles approved by the Board of Directors or the Man-

agement Team guide operations.

Scanfil also requires that all its partners comply with

the law and agreements, and that they operate in accord-

ance with Scanfil’s Code of Conduct. The Supplier Code

of Conduct constitutes part of purchase agreements signed

with major suppliers. When operating in Asian markets, the

Code of Conduct must be signed by all suppliers.

The development of Scanfil’s operations and Scanfil’s

achievements in the area of corporate responsibility are

discussed in more detail in the first sections of the annual

report.

THE ENVIRONMENT

Scanfil promotes sustainable development by identifying,

measuring and reporting the environmental impact caused

by its activities and by attempting to minimise such impact.

The aim is to consider environmental impact throughout

the value chain, ranging from the procurement of raw mate-

rials to production, distribution and recycling possibilities.

All Scanfil’s factories have a certified ISO 14001-compli-

ant environmental management system. In its production,

Scanfil mainly uses metals, components and chemicals. It

prefers recyclable materials and eco-friendly products. Part

of the materials to be used are chosen by customers. The

utilisation rate of all raw materials is optimised to ensure

the efficient use of resources and decrease the amount of

waste created. Waste materials are recycled if they cannot

be re-used in the company’s own production. Steel is the

most important raw material used by Scanfil. Its effective

use is closely monitored in the production process.

The risks associated with chemicals are analysed before

their deployment, and they are handled following precise

instructions and precautions. In addition, proper training

and drills are arranged to prepare for any accidents.

Scanfil consumes energy in the heating, cooling and

lighting of its production facilities, and in the use of pro-

duction machinery. In 2020, Scanfil’s total energy con-

sumption was 28.9 million kWh, having been 28.7 million

kWh in the previous year. Energy consumption increased

by 0.9% year-on-year.

Most of the increase in energy consumption came from

the Myslowice factory, where production increased during

2020. The increase in production resulted in a larger num-

ber of machines installed, and in more shifts when the fac-

tory operated during evenings and weekends.

The utilisation rate also increased in the Suzhou fac-

tory area, resulting in higher energy consumption. A new

air conditioning system was deployed to purify the air

and prevent the spread of coronavirus. More shifts were

introduced as general risk control measures to prevent

the spread of coronavirus, as a result of which production

periods were longer.

At the Sieradz factory, energy consumption decreased

by 7%. Optimised electronics production, standardised

operations and harmonised machining had a significant

impact on the decrease in energy consumption.

During 2020, an energy savings programme was imple

mented at all factories to achieve savings of 3% relative to

added value. The Group will monitor the achievement of

this goal on the basis of reported results and best practices.

Water is used in facility maintenance, production and

sanitary facilities. Total water consumption was 44,875 m³

(56,349 m³ in 2019). Water consumption decreased by 20.4%.

This decrease in water consumption resulted from meas-

ures carried out at factories. The most significant results

were achieved in Sieradz, where optimised machining led

to a 15% decrease in water consumption. The divestment

of the Hangzhou factory also had a significant impact on

the decrease in water consumption.

There were no major differences in waste volumes

between 2019 and 2020. However, there were slight dif-

ferences between factories due to production changes and

different product ranges. Changes in the factory network

and the new waste calculation method at factories made

it slightly more difficult to compare waste volumes at an

annual level.

Scanfil also seeks to reduce its carbon footprint in other

activities, such as travel and mobility. As an internationally

operating company, employees’ business travel is neces-

sary, while the company seeks to reduce it, for example,

by utilising the possibilities of modern technology and

by favouring virtual meetings. The travel practice always

guides the employees to choose the most environmentally

friendly alternative for travel and meetings. Emissions

from daily commuting have been reduced by organising bus

transportation for personnel at several Scanfil factories.

The company’s updated vehicle policy favours low-emis-

sion cars, such as hybrid models.

Due to travel restrictions imposed due to the outbreak of

the coronavirus pandemic at the beginning of 2020, there

were significant decreases in travel, and meetings between

customers and partners were primarily held via remote con-

nections. Employees who were able to work without need-

ing to be in the workplace started to work remotely. As a

result, emissions from commuting decreased.

SOCIAL AND EMPLOYEERELATED MATTERS

At Scanfil, social responsibility focuses on competence

development, occupational safety and health, and the

development of the personnel’s motivation and work sat-

isfaction. Scanfil’s aim is to be a reliable employer and an

encouraging working community where every individual

has the opportunity to develop their personal skills and

abilities. The personnel and associated key figures, as well

as the salaries and wages paid to the personnel of the parent

company and the Group, are described in the “Personnel”

section of the Board of Directors’ Report.

Scanfil has prepared HR and work environment policies,

as well as the Code of Conduct, to guide the daily work of

the management and other employees. The Code of Con

duct describes in detail the ethical and sustainable methods

of operation compliant with Scanfil’s values. A thorough

review of the Code of Conduct is part of the induction pro-

ANNUAL REPORT 2020 | 27

Financial statements Corporate Governance Statement Information for shareholdersGeneral Financial information

cess. To update the Code of Conduct, development ideas

were listed during 2020, and they are planned to be imple-

mented during 2021.

The year 2020 was characterised by the global coronavi-

rus pandemic, due to which extensive measures were taken

to protect the safety and health of Scanfil’s personnel, cus-

tomers and partners. The Group adopted various measures

considering country-specific restrictions and recommenda-

tions. The annual shutdown of Scanfil’s factories in China

was extended by more than a week in February due to offi-

cial regulations, and the Myslowice factory in Poland was

also stopped for two weeks due to COVID-19 infections

and the quarantine of employees potentially exposed to

coronavirus. In addition, Scanfil has paid particular atten-

tion to the coping of the personnel and the maintenance of

their work motivation to avoid any exhaustion resulting

from remote working.

In 2020, the Group’s sick leave rate was 3.6%, while

the target is less than 3%. This was partly affected by the

pandemic during the year. There were 54 occupational

accidents, while the corresponding figure in 2019 was 41.

Competence development continued at a global level and in

local units under different programmes. A total of 58,575

working hours were used in the Group for training in 2020.

Scanfil continued to improve the efficiency of its factory

network by divesting the Hangzhou factory in July. The

factory and all of its roughly 400 employees continued in

the new owner’s name. Correspondingly, Scanfil decided

to close its Hamburg factory in 2021 and to transfer its pro-

duction to other factories in Central Europe. The resulting

negotiations have been started with the personnel.

The response rate to the annual personnel survey was

88% (2019: 90%). Despite the uncertainties resulting from

the coronavirus pandemic and rearrangements within the

company (the divestment of the Hangzhou factory and the

plan to close the Hamburg factory), employees’ job satis-

faction, motivation and engagement were at the previous

year’s level. On the basis of the results, the Group decided

to keep key development areas unchanged: support from

the nearest supervisor, zero tolerance of discrimination,

bullying and harassment, and reputation. Based on the sur-

vey, nearly 500 local development actions were registered.

The digitalisation of HR processes was a key develop-

ment area in 2020. Scanfil SMART is a development pro-

gramme that aims to utilise the benefits of digitalisation,

technological development and automation in all of Scan

fil’s functions. During 2020, tools based on SMART were

also introduced in HR management. Now, employees can

take care of their daily HR processes such as making holi-

day requests and reporting absences to supervisors via an

electronic system. This also facilitates supervisors’ work.

In addition, the system provides support in working hours

monitoring. As a result of an ongoing development project,

upcoming internal training material is made available to all

employees online. The next goal is to deploy a tool to sup-

port competence evaluations and performance appraisals,

improve communication channels and enable mobile ser-

vices for employees.

In addition, Scanfil will invest in a new e-learning plat-

form. This will further strengthen Scanfil Academy and

enable individual studies flexibly, independent of time

and place. The significance of this has become even more

emphasised during the pandemic.

During the year, Scanfil made significant investments

in the development of supervisors. The company believes

that immediate managers have a major impact on the per

sonnel’s efficiency and work motivation, and further on

the company’s results.

Scanfil uses the ISO 45001 occupational safety and health

standards at all its factories. The development of safety is

also monitored by the Safety Council, which meets four

times a year and consists of the HR managers of each fac-

tory. Scanfil also uses the Safety Book, in which informa-

tion on occupational accidents occurring during a year is

recorded. Scanfil reacts to all occupational accidents and

near-miss incidents appropriately to prevent them from

recurring. In addition, the Lean Manufacturing and Pro-

cess Engineering teams participate in the work to ensure

the safety and efficiency of production areas. Most acci-

dents are related to the handling of materials in produc-

tion areas and the use of tools at workstations. In assembly

and office work, difficult postures and extended sedentary

work present a challenge. Their negative impact is avoided

by means of high ergonomics.

HUMAN RIGHTS

In terms of its social responsibility, Scanfil focuses on com-

petence development, occupational safety and health, and

the development of employees’ motivation and work satis

faction. The company ensures the fulfilment of its social

responsibility through its ethical principles, fair working

conditions and practices. Human rights and equal treatment

are basic values in Scanfil’s operations, and here no com-

promises can ever be made. Besides the personnel, they con-

cern all partners, and they define, among other things, the

principles of respecting individuals, as well as those of pre-

venting forced labour, child labour and human trafficking.

The ethical principles also contain instructions for report-

ing possible or suspected unethical or illegal actions. Scan

fil’s personnel survey also includes questions about any

unwelcome behavior. Scanfil has a whistleblowing channel

to which the company’s personnel and partners can anon-

ymously report any misconduct or suspected misconduct

regarding human rights, corruption, bribery or the Code

of Conduct.

The company aims to ensure compliance with the Code

of Conduct in supply chain management by carrying out

audits. Compliance with the law and ethical principles is

also monitored in internal control and audits. During 2020,

no non-conformities pursuant to corporate governance

were identified in Scanfil’s global whistleblowing channels.

ANTICORRUPTION AND ANTIBRIBERY MEASURES

As part of its corporate responsibility management, Scan

fil is also developing its activities to fight corruption and

bribery. Compliance with corporate responsibility is raised

more often than previously in talks with customers. Scanfil

has defined responsible operating guidelines that cover, for

example, the equal treatment of people, and prohibit cor-

ruption and bribery. The Group’s operating methods, such

ANNUAL REPORT 202028 |

Financial statements Corporate Governance Statement Information for shareholdersGeneral Financial information

as transparent and cost-based pricing, reduce the possibil-

ity of non-compliant activities. No deviations from Scan-

fil’s Code of Conduct were identified in 2020.

Scanfil selects its suppliers carefully and aims to engage

in long-term cooperation with its key suppliers. Scanfil

only uses approved suppliers that fulfil Scanfil’s strict cri-

teria in terms of quality, delivery reliability and cost-ef-

ficiency. In addition to these factors, Scanfil ensures that

its suppliers fulfil their financial and administrative obli

gations. Scanfil audits its suppliers systematically and

monitors their compliance with the terms and conditions

of agreements and the Code of Conduct. It aims to prevent

any misuse through the verification of orders, training and

work rotation.

RISKS

Scanfil has determined the most significant risks in its

operations, and they are described in more detail in the

Board of Directors’ report under “Near-future business

risks and uncertainties”. Risks associated with corporate

responsibility have not been separately specified. Scanfil

observes and monitors all potential risks. The most signif-

icant risks are associated with the order-supply chain and

the suppliers’ ability to be responsible for the actions of

their own suppliers, for example, with respect to honoring

human rights, fair pay and provision of appropriate work-

ing conditions, as well as to anti-corruption and anti-brib-

ery activities. The most significant risks in Scanfil’s own

operations are associated with occupational safety in the

handling of hazardous materials and in the use of tools,

for example. Furthermore, unethical conduct by Scan-

fil’s employees, such as corruption or bribery, may harm

Scanfil’s reputation, in addition to which it may also have

financial implications.

THE BOARD OF DIRECTORS’

PROPOSALS FOR THE ANNUAL

GENERAL MEETING

Scanfil plc’s Annual General Meeting will be held on Thurs-

day 22 April 2021 at the Borenius Attorneys Ltd. premises

Eteläesplanadi 2, Helsinki, Finland. Shareholders of the

company and their proxy representatives may participate

in the meeting and exercise shareholder rights only through

voting in advance as well as by making counterproposals

and presenting questions in advance. People may not par

ticipate the meeting in person at the venue.

Dividend for 2020

The parent company’s distributable assets total EUR

73,734,335.62, including undistributed profits of EUR

41,558,335.08. The Board of Directors proposes to the

Annual General Meeting that a dividend of EUR 0.17

(0.15) per share, totalling EUR 10,960,113.35, be paid for

the financial year ending on December 31, 2020. The divi-

dend will be paid to shareholders who are recorded in the

company’s list of shareholders maintained by Euroclear

Finland Oy on the record date of the dividend payment.

The dividend will be paid on May 3, 2021.

After the financial period, there have not been any signif-

icant changes in the company’s financial position. Accord-

ing to the Board of Directors, the proposed distribution of

profit does not endanger the company’s capital adequacy.

The proposal of Scanfil plc’s Nomination Committee to

the Annual General Meeting for the composition of Scanfil

plc’s Board of Directors has been published on March 25,

2021 in conjunction with the invitation to the AGM.

Future outlook

Scanfil estimates that its turnover for 2021 will be EUR

600–640 million and its adjusted operating profit will be

EUR 40–44 million.

The guidance for 2021 still involves uncertainty arising

from the potential negative impact of the coronavirus pan-

demic on customer demand and the delivery ability of the

procurement chain.

Long-term targets

Scanfil aims to organically reach a turnover of EUR 700

million and an operating profit rate of 7% by 2023. In addi-

tion, Scanfil is also actively investigating possibilities for

business acquisitions, especially in the Nordic countries

and Central Europe.

Events after the reporting period

No material events to be reported have occurred after the

reporting period.

Corporate Governance Statement

The Corporate Governance Statement will be published

with the financial statements separately from the annual

report.

ANNUAL REPORT 2020 | 29

Financial statements Corporate Governance Statement Information for shareholdersGeneral Financial information

Shares and share capital

Scanfil plc has a total of 64,829,993 shares. The compa-

ny’s registered share capital is EUR 2,000,000. The com-

pany has one series of shares, and each share entitles the

holder to one vote and an equal right to receive dividends.

Scanfil plc’s shares are quoted on Nasdaq Helsinki Ltd.

The shares have been publicly traded since January 2, 2012.

The trading code of the shares is SCANFL. The shares are

included in the book-entry securities system maintained

by Euroclear Finland Ltd.

Board’s authorisations in force

At the end of the financial period, the Board of Directors

of Scanfil plc did not have any share issue authorisations

or authorisations to issue convertible bonds or bonds with

warrants.

The Annual General Meeting of Scanfil plc held on April

23, 2020 authorised the Board of Directors to decide on the

acquisition of at most 5,000,000 treasury shares. The author-

isation will remain in force for 18 months after its issuance.

On April 23, 2020, the AGM authorised the Board of

Directors to decide on share issues and the issue of special

rights entitling their holders to shares. No more than thir-

teen million (13,000,000) shares may be issued under the

authorisation. The Board of Directors decides on the terms

and conditions of share issues and the issuance of special

rights entitling their holders to shares. The authorisation

concerns both the issue of new shares and the transfer of

treasury shares. Shares and special rights entitling their

holders to shares can be issued in deviation from the share-

holders’ pre-emptive rights (directed issue). The authori-

sation will remain in force until June 30, 2021.

On April 24, 2019, Scanfil plc’s AGM authorised the Board

of Directors to decide on granting options rights to certain

key personnel of Scanfil Group. At most 900,000 option

rights can be issued, and they entitle their holders to sub

scribe to a combined total of 900,000 of the company’s

new shares or shares in its possession.

Own shares

The company held 358,738 of its own shares on Decem-

ber 31, 2020.

Dividend distribution policy

The company aims to pay dividends annually. The level of

dividends paid and the date of payment are affected, inter

alia, by the group’s results, financial position, need for

capital and other possible factors. The aim is to distribute

approximately one-third of the group’s annual profit as

dividend to shareholders.

Dividend

The Board of Directors proposes to the Annual General

Meeting that a dividend of EUR 0.17 per share, totalling

EUR 10,960,113.35, be paid for the financial year ending

on December 31, 2020.

Share price development, trading and

market value

During 2020, the number of Scanfil plc shares traded on

Nasdaq Helsinki Ltd was 6,289,025, comprising 9.4% of all

outstanding shares. The value of shares traded was EUR

31.9 million and the average price was EUR 5.07. The mar-

ket value of the share capital was EUR 422.7 million on

December 31, 2020. The highest trading price was EUR 6.70

and the lowest EUR 3.26. The closing price was EUR 6.52.

SHARE PRICE DEVELOPMENT IN  COMPARED TO THE GENERAL INDEX

SHARES AND SHAREHOLDERS

6,5

5,5

4,5

3,5

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

Scanfil plc

OMX Helsinki Index

ANNUAL REPORT 202030 |

Financial statements Corporate Governance Statement Information for shareholdersGeneral Financial information

Information on shareholders

On December 31, 2020, Scanfil plc had a total of 6,535

shareholders, 81.1% of whom owned a maximum of 1,000

shares in the company. The ten major shareholders owned

72.5% of the shares. Nominee-registered shares accounted

for 2.7% of the shares.

Shares held by management

Members of the Board of Directors of Scanfil plc, the CEO

and members of the group’s Management Team held a total

of 19,096,450 shares on December 31, 2020, comprising

29.5% of the company’s shares and votes.

BREAKDOWN OF SHARE OWNERSHIP

BREAKDOWN OF SHARE OWNERSHIP BY NUMBER OF SHARES HELD ON DECEMBER , 

Information on shareholders

MAJOR SHAREHOLDERS ON DECEMBER , 

Number of shares

Number

of shares

pcs

Percentage

of owners

Total number

of shares

and votes

pcs

Percentage

of shares

and votes

1–100 1,559 23.86 83,033 0.13

101–1,000 3,740 57.23 1,519,686 2.34

1,001–10,000 1,074 16.43 3,008,408 4.64

10,001–100,000 129 1.97 4,030,447 6.22

100,001–9,999.999 33 0.50 56,188,419 86.67

Total 6,535 100.00 64,829,993 100.00

Number of

shareholders Share %

Number

of shares Share %

Corporations 253 3.87 9,367,723 14.45

Financial and insurance institutions 26 0.40 5,284,018 8.15

Public entities 5 0.08 1,810,383 2.79

Non-profit-making organisations 22 0.34 2,117,768 3.27

Households 6,207 94.98 46,143,911 71.18

Non-Finnish owners 22 0.34 106,190 0.16

Total 6,535 100.00 64,829,993 100.00

Of which nominee-registered 11 1,777,665 2.74

pcs

Share %

of shares

and votes

1. Takanen Harri 9,913,146 15.29

2. Takanen Jarkko 8,596,169 13.26

3. Varikot Oy 7,606,442 11.73

4. Takanen Jorma Jussi 6,129,305 9.45

5. Tolonen Jonna 3,351,950 5.17

6. Pöllä Reijo 3,328,745 5.13

7. Laakkonen Mikko 2,531,187 3.90

8. Takanen Martti 1,947,018 3.00

9. Foundation of Riitta ja Jorma J. Takanen 1,900,000 2.93

10. UCITS Fund Aktia Capital 1,688,000 2.60

BREAKDOWN OF SHARE OWNERSHIP BY OWNER CATEGORY ON DECEMBER , 

ANNUAL REPORT 2020 | 31

Financial statements Corporate Governance Statement Information for shareholdersGeneral Financial information

2020 2019 2018 2017 2016

Financial key ratios

Turnover, EUR m 595,3 579,4 563,0 529,9 508,0

Turnover, growth from previous year, % 2.7 2.9 6.3 4.3 34.6

Operating profit, EUR m 44,4 35,3 37,8 31,3 7,2

Operating profit, % of turnover 7.5 6.1 6.7 5.9 1.4

Profit/loss for the period, EUR m 36,9 28,1 28,9 25,8 0,1

Profit/loss for the period, % of turnover 6.2 4.8 5.1 4.9 0.0

Return on equity, % 21.1 18.0 21.5 22.2 0.1

Return on investment, % 19.5 17.0 20.2 19.4 4.6

Interest-bearing liabilities, EUR m 44,0 66,6 47,3 61,3 60,1

Gearing, % 9.9 27.7 19.5 32.6 36.9

Equity ratio, % 54.3 49.1 47.7 40.7 40.7

Gross investments in fixed assets, EUR m 9,4 21,1 10,1 18,6 5,5

Gross investments in fixed assets, % of turnover 1.6 3.6 1.8 3.5 1.1

Average number of employees for the period 3,387 3,530 3,414 3,254 3,483

Key indicators per share

Earnings per share, EUR 0.57 0.44 0.45 0.40 0.00

Shareholders’ equity per share, EUR 2.82 2.58 2.26 1.95 1.70

Dividend per share, EUR 0.17 0.15 0.13 0.11 0.09

Dividend per earnings, % 29.8 34.3 28.7 27.2 6,118.9

Effective dividend yield, % 2.61 3.07 3.47 2.59 2.58

Price-to-earnings ratio (P/E) 11.4 11.2 8.3 10.5 2,372.8

Share trading

No. of shares traded, thousands 6,290 3,526 3,341 3,296 9,424

Percentage of total shares, % 9.7 5.4 5.2 5.2 14.8

Share performance

Lowest price for year, EUR 3.26 3.73 3.45 3.42 2.86

Highest price for year, EUR 6.70 4.96 5.16 4.53 3.80

Average price for year, EUR 5.07 4.16 4.44 3.92 3.41

Price at the end of year, EUR 6.52 4.89 3.75 4.25 3.49

Market value of share capital at 31 Dec. 2020, EUR m 422.7 316.4 240.1 271.6 222.2

Share-issue adjusted number of shares

at the end of the period, thousands

64,830 64,700 64,035 63,895 63,670

On average during the period, thousands 64,387 64,296 63,945 63,757 62,423

KEY RATIOS

The adoption of IFRS 16 in 2019 has affected the comparability of some key figures. The effect mainly concerns the equity ratio

and gearing ratio.

ANNUAL REPORT 202032 |

Financial statements Corporate Governance Statement Information for shareholdersGeneral Financial information

Return on equity, % Net profit for the period x 100

Shareholders’ equity (average)

Adjusted return on equity, % Adjusted net profit for the period x 100

Adjusted shareholders’ equity (average)

Return on investment, % (Profit before taxes + interest and other financial expenses) x 100

Balance sheet total - non-interest-bearing liabilities (average)

Gearing (%) (Interest-bearing liabilities - cash and other liquid financial assets)

Shareholders’ equity

Equity ratio (%) Shareholders’ equity x 100

Balance sheet total - advance payments received

Earnings per share Net profit for the period

Average adjusted number of shares during the year

Shareholders’ equity per share Shareholders’ equity

Adjusted number of shares at the end of the financial period

Dividend per share Dividend to be distributed for the period (Board’s proposal)

Number of shares at the end of year

Dividend per earnings (%) Dividend per share x 100

Earnings per share

Effective dividend yield (%) Dividend per share x 100

Share price at the end of year

Price-to-earnings ratio (P/E) Share price at the end of year

Earnings per share

Average share price Total share turnover

Number of shares traded

Market capitalisation Number of shares x last trading price of the financial period

Adjusted item A non-recurring significant item that deviates from normal business

operations, which affects the comparability between different periods

DEFINITIONS OF KEY RATIOS

ANNUAL REPORT 2020 | 33

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

CONSOLIDATED INCOME STATEMENT

EUR THOUSAND Note 1.1.-31.12.2020 1.1.–31.12.2019

Turnover 1.1 595,347 579,416

Other operating income 1.2 12,384 995

Changes in inventories of

finished goods and work in progress 2,431 810

Manufacturing for own use 25 34

Use of materials and supplies 1.3 -410,335 -389,776

Employee benefit expenses 1.4 -95,496 -94,021

Depreciation and amortisation 3.5 -16,088 -17,734

Other operating expenses 1.5 -43,896 -44,378

Operating profit 44,372 35,346

Financial income 4.2 3,940 5,418

Financial expense 4.2 -6,520 -6,724

Profit before tax 41,793 34,039

Income tax 1.6 -4,895 -5,950

Net profit for the period 36,898 28,090

Attributable to:

The parent company owners 36,898 28,090

Earnings per share calculated on the profit attributable to shareholders of the parent company:

undiluted earnings per share 1.7 0.57 0.44

diluted earnings per share 1.7 0.57 0.43

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Net profit for the period 36,898 28,090

Other comprehensive income

Items that may later be recognised in profit or loss

Translation differences 4.8 -2,789 344

Cash flow hedges 4.8 -727 394

Other comprehensive income,

net of tax -3,516 738

Total comprehensive income 33,382 28,827

Total comprehensive income attributable to:

The parent company owners 33,382 28,827

CONSOLIDATED FINANCIAL STATEMENT, IFRS

ANNUAL REPORT 202034 |

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

EUR THOUSAND Note 1.12.2020 31.12.2019

ASSETS

Non-current assets

Property, plant and equipment 3.3 46,356 50,677

Right-of-use-assets 3.4 18,125 20,959

Goodwill 3.1 8,304 8,046

Other intangible assets 3.2 14,260 16,792

Other investments 4.6 535 534

Deferred tax assets 1.6 6,884 5,714

94,464 102,722

Current assets

Inventories 2.2 103,254 101,897

Trade and other receivables 2.3 113,305 112,056

Advance payments 562 532

Current tax 1,761 2,441

Cash and cash equivalents 4.1 25,845 20,353

244,727 237,279

Total assets 339,191 340,000

EQUITY AND LIABILITIES

Shareholder's equity and liabilities 4.8

Share capital 2,000 2,000

Reserve for invested unrestricted equity fund 31,832 30,974

Fair Value Reserve -558 168

Other reserves 2,650 6,910

Translation differences -6,063 4,600

Retained earnings 153,015 122,035

182,876 166,688

Total equity 182,876 166,688

Non-current liabilities

Provisions 5.1 553 427

Interest bearing liabilities 4.3 18,242 24,704

Lease liabilities 4.3 15,905 18,803

Deferred tax liabilities 1.6 5,711 6,958

40,411 50,892

Current liabilities

Trade and other liabilities 2.4 100,104 96,127

Current tax 1,770 3,031

Provisions 5.1 4,183 179

Interest bearing liabilities 4.3 6,188 19,548

Lease liabilities 4.3 3,659 3,534

115,904 122,420

Total liabilities 156,315 173,313

Total shareholder's equity and liabilities 339,191 340,000

ANNUAL REPORT 2020 | 35

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

CONSOLIDATED STATEMENT OF CASH FLOW

EUR THOUSAND Note 1.1.–31.12.2020 1.1.–31.12.2019

Cash flow from operating activities

Net profit 36,898 28,090

Adjustments for the net profit

Transactions without payment:

Change in provisions 4,164 190

Transactions from the sale of a subsidiary -11,387

Capital gain / loss for fixed assets -18 -137

Exchange rate differences -1,380 467

Other adjustments 202 123

Depreciation and amortisation 16,088 17,734

Financial income -3,940 -5,418

Financial expenses 6,520 6,724

Taxes 4,907 5,907

Change in net working capital:

Change in accounts receivable and other receivables -17,471 -3,942

Change in inventories -6,606 5,498

Change in accounts payable and other liabilities 16,050 -9,157

Change in net working capital total -8,026 -7,601

Paid interests and other financial expenses -1,708 -2,327

Interest received 158 266

Taxes paid -7,283 -8,168

Net cash from operating activities 35,194 35,851

Cash flow from investing activities

Acquisition of subsidiary less cash and cash equivalents

at the time of acquisition

3.6

-7,456

Sale of subsidiary less cash at the time of sale 13,059

Investments in tangible and intangible assets 3.2, 3.3 -9,355 -10,648

Sale of tangible and intangible assets 301 472

Received dividends 100

Net cash from investing activities 4,105 -17,631

Cash flow from financing activities

Share subscriptions based on stock options 1.4 858 363

Purchase of own shares -755 -1,239

Proceeds from short-term loans 1,246 5,250

Repayment of short-term loans -15,070 -16,094

Proceeds from long-term loans 30,000

Repayment of long-term loans -6,000 -23,750

Repayment of lease liabilities -3,990 -3,347

Paid dividends -9,637 -8,325

Net cash from financing activities -33,347 -17,142

Net increase/decrease in cash and cash equivalents 5,952 1,079

Cash and cash equivalents at beginning of period 20,353 19,153

Changes in exchange rates -460 122

Cash and cash equivalents at end of period 25,845 20,353

ANNUAL REPORT 202036 |

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

Equity attributable to equity holders of the parent company

EUR THOUSAND

capital

Reserve for

invested

unrestricted

equity fund

Fair

value

reserve

Other

reserves

Translation

differences

Retained

earnings

Equity

total

Equity 1.1.2020 2,000 30,974 168 6,910 4,600 122,035 166,688

Comprehensive income

Net profit for the period 36,898 36,898

Other comprehensive income

(net of tax)

Translation differences -2,789 -2,789

Cash flow hedges -727 -727

Total comprehensive income -727 -2,789 36,898 33,382

Sale of subsidiary -4,260 -7,875 4,260 -7,875

Transactions with owners

Purchase of own shares -755 -755

Option Scheme 214 214

Paid dividends -9,637 -9,637

Share issue 439 439

Share options exercised 419 419

Equity 31.12.2020 2,000 31,832 -558 2,650 -6,063 153,015 182,876

Equity attributable to equity holders of the parent company

EUR THOUSAND

capital

Reserve for

invested

unrestricted

equity fund

Fair

value

reserve

Other

reserves

Translation

differences

Retained

earnings

Equity

total

Equity 1.1.2019 2,000 28,443 -225 6,706 4,257 103,564 144,744

Comprehensive income

Net profit for the period 28,090 28,090

Other comprehensive income (net of tax)

Translation differences 344 344

Cash flow hedges 394 394

Total comprehensive income 394 344 28,090 28,827

Sale of subsidiary

Transactions with owners 204 -204 0

Purchase of own shares -1,239 -1,239

Option Scheme 149 149

Paid dividends -8,325 -8,325

Share issue 2,167 2,167

Share options exercised 363 363

Equity 31.12.2019 2,000 30,974 168 6,910 4,600 122,035 166,688

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

In the line sale of subsidiary, changes in other reserves and retained earnings result from previous transfers of profits from the

subsidiary to other reserves.

ANNUAL REPORT 2020 | 37

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

ACCOUNTING PRINCIPLES FOR

CONSOLIDATED FINANCIAL

STATEMENTS

tations in the Finnish Accounting Act and the provisions

issued thereunder in accordance with the Regulation (EC)

No 1606/2002 of the European Parliament and of the Coun-

cil on the application of international accounting stand-

ards within the Community. The notes to the consolidated

financial statements are also in compliance with Finnish

accounting and corporate legislation.

The consolidated financial statements have been pre-

pared for the period January 1 – December 31, 2020. In its

meeting held on February 17, 2021, the Board of Directors

of Scanfil plc approved the consolidated financial state-

ments for publication. According to the Finnish Limited

Liability Companies Act, the ordinary general meeting has

the right to adopt, reject or amend the financial statements

after their publication.

Unless otherwise stated, the financial statements are pre-

sented in thousands of euros, and the information is based

on historical costs of transactions, unless otherwise stated

in the accounting principles.

All individual figures and totals presented in the finan

cial statements have been rounded, due to which the total

sum of single figures may differ from the sum presented.

The key figures were calculated using precise values.

Accounting principles for consolidated

financial statements

The general accounting principles used for consolidated

financial statements are described in this section. More

detailed accounting principles are shown below in con-

nection with each item.

The table below shows the accounting principles used

for the consolidated financial statements of Scanfil plc,

the associated notes and references to the most important

IFRS regulating the financial statement items.

Accounting principle Note IFRS standard

Net sales and details of business segments 1.1 IFRS 15, IFRS 8, IAS 18

Employee benefit expenses 1.4 IAS 19, IFRS 2

Income taxes and deferred taxes 1.6 IAS 12

Inventories 2.2 IAS 2

Goodwill and impairment testing 3.1 IAS 36

Intangible assets 3.2 IAS 38, IFRS 3

Property, plant and equipment 3.3 IAS 16, IAS 23

Right-of-use-assets 3.4 IFRS 16

Acquired business 3.7 IFRS 3

Financial income and expenses 4.2 IFRS 9, IAS 32, IAS 39, IFRS 7

Financial liabilities and Cash and cash equivalents 4.1, 4.3 IFRS 9, IAS 32, IAS 39, IFRS 7, IFRS 13

Provisions 5.1 IAS 37

ACCOUNTING PRINCIPLES FOR CONSOLIDATED FINANCIAL STATEMENTS

Basic details of the group

Scanfil plc is a Finland-based public limited company

domiciled in Sievi. The parent company Scanfil plc and

the subgroups Scanfil EMS Oy, Scanfil Sweden AB and

Scanfil Holding Germany GmbH make up Scanfil Group

(hereinafter ‘Scanfil’ or ‘the group’). The shares of parent

company Scanfil plc have been quoted on the Main List of

Nasdaq Helsinki Ltd since January 2, 2012.

Scanfil is an international contract manufacturer and

system supplier for the electronics industry with over 40

years of experience in demanding contract manufacturing.

Scanfil provides its customers with an extensive array of

services, ranging from product design to product manu-

facturing, material procurement and logistics solutions.

Typical Scanfil products include mobile and communica-

tions network devices, automation system modules, fre-

quency converters, elevator control systems, analysers,

various slot and vending machines, and devices related to

medical technology and meteorology. Scanfil’s network

of factories consists of 10 production units in Europe,

Asia and North America. The total number of employees

is approximately 3,200.

Accounting principles

Scanfil’s consolidated financial statements have been pre-

pared in accordance with International Financial Reporting

Standards (IFRS), applying the IAS and IFRS effective on

December 31, 2020, as well as the SIC and IFRIC interpre

tations. “IFRS” refers to the standards and their interpre-

ANNUAL REPORT 202038 |

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

SUBSIDIARIES’ COMBINATION PRINCIPLES

Subsidiaries are companies controlled by the group. Con-

trol emerges when the group controls more than one half

of the votes or otherwise has control. The group has con-

trolling interest in an entity when it has the right and ability

to control significant operations in the entity and when it

is exposed to or has the right to variable returns from the

entity through its power over the entity. The existence of

potential voting rights is also taken into account when esti-

mating the criteria for control when the instruments enti-

tling to potential voting rights can be realised at the time

of the assessment. In Scanfil Group, all subsidiaries are

wholly-owned, and control is created by the voting powers.

Intra-group shareholdings have been eliminated using the

acquisition cost method. Consideration transferred and the

identifiable assets and assumed liabilities of the acquired

company are measured at fair value at the time of the acqui-

sition. Acquisition-related expenses, apart from expenses

related to the issue of debt or equity securities, have been

recorded as expenses. Consideration transferred does not

include business operations handled separately from the

acquisition. Their impact has been taken into account in

connection with the acquisition through profit or loss.

Any conditional additional purchase price is measured at

fair value at the time of the acquisition and classified as

either debt or equity. Additional purchase price classified

as debt is measured at fair value at the balance sheet date

of each reporting period, and the resulting profit or loss

is recognised through profit or loss. Additional purchase

price classified as equity is not re-valued.

Acquired subsidiaries are consolidated from the moment

the group has gained control, and divested subsidiaries until

control ceases to exist. All intra-group transactions, receiv-

ables, liabilities and unrealised gains and internal profit

distribution are eliminated upon preparing the consolidated

financial statements. Unrealised losses are not eliminated

when the loss is due to impairment. Shareholders’ equity

attributable to non-controlling interest is presented as a sep-

arate item under shareholders’ equity in the balance sheet.

There were no non-controlling interests during the finan-

cial periods 2019 and 2020. Should the group lose control

of a subsidiary, the remaining holding is measured at fair

value on the date of losing control, and the resulting dif

ference is recognised through profit or loss. Acquisitions

made prior to January 1, 2010 are handled in accordance

with the regulations effective at the time.

CONVERSION OF ITEMS IN FOREIGN CURRENCY

The figures concerning the result and financial position of

group units are measured in the currency that is the cur-

rency of each unit’s main operating environment (the oper-

ating currency). The consolidated financial statements are

presented in euros, which is the operating and reporting

currency of the group’s parent company.

Foreign currency-denominated transactions are recorded

in the operating currency using the foreign exchange rates

on the transaction date. In practice, a rate that is sufficiently

close to the rate of the transaction date is often used. The

resulting exchange rate differences are recognised through

profit or loss. Foreign exchange gains and losses related to

business operations are recognised as adjusted sales and

purchase items. Rate differences in financing are presented

under financial income and expenses.

In the consolidated financial statements, the income

statements of foreign group companies are translated

into euros using the average annual rates published by the

European Central Bank. The companies’ balance sheets

are translated into euros using the rates in force on the

balance sheet date.

Translation differences owing to the different exchange

rates used in the income statement and balance sheet as

well as translation differences attributable to the use of

the acquisition method and equity balances accrued after

the acquisition have been recorded in group equity, and

the change in translation difference are presented in the

statement of comprehensive income.

NONCURRENT ASSETS CLASSIFIED AS HELD FOR SALE

AND DISCONTINUED OPERATIONS

The assets and liabilities of major operations that are

classified as held for sale or to be discontinued are pre-

sented separately in the balance sheet. The net operating

result for discontinued operations and the net result arising

from their sale or discontinuation are shown in the income

statement separately from the profit or loss for continued

operations. Non-current assets classified as held for sale

or groups of assets to be disposed of are measured at the

lower of carrying amount and fair value less costs to sell.

The group did not have such items for the financial peri-

ods 2019 and 2020.

OPERATING PROFIT

IAS 1 Presentation of Financial Statements does not specify

the concept of operating profit. The group has defined it

as follows: operating profit is the net sum of turnover plus

other operating income less acquisition costs adjusted for

the change in inventories of finished goods and work in

progress as well as costs arising from production for own

use, less employee benefit expenses, depreciation and any

impairment losses and other operating expenses. All of the

items in the income statement apart from those specified

above are presented under operating profit. Exchange rate

differences are included in the operating profit if they arise

from operations-related items; otherwise, they are recog-

nised in financial items.

DIVIDEND

The dividend proposed to the Annual General Meeting by

the Board of Directors has not been deducted from distrib-

utable equity prior to the AGM’s approval.

ANNUAL REPORT 2020 | 39

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

ACCOUNTING PRINCIPLES REQUIRING THE DISCRETION

OF MANAGEMENT AND MAJOR UNCERTAINTY FACTORS

ASSOCIATED WITH THE ESTIMATES

The preparation of financial statements in accordance with

international accounting standards requires the company’s

management to make estimates and assumptions that affect

the contents of the financial statements. The estimates and

assumptions made are based on previous experience and

assumptions, which in turn are based on the circumstances

prevailing at the time the financial statements are prepared

and future prospects. Even though the estimates are based

on the most recent information available and the manage-

ment’s best judgment, the actual outcome may differ from

the estimates. COVID-19 pandemic caused uncertainty dur-

ing the financial period but it has not remarkable impact

on management assessment and estimates.

The following lists the most significant items that require

the management’s assessment.

The group annually performs testing for impairment

of goodwill and other intangible rights. The recoverable

amounts for cash-generating units have been determined

with calculations based on value in use. These calculations

require the use of estimates from the management. More

information on impairment testing of goodwill is availa

ble in Note 3.1, “Goodwill”.

Potential obsolescence included in the value of inven-

tories is regularly examined and, if necessary, the value

of inventories is depreciated to match their net realisable

value. These examinations require estimates on the future

demand for products. Inventories are presented in Note

2.2, “Inventories”.

Estimates are also required when assessing the amount

of provisions associated with business operations. Note 5.1,

“Provisions”, presents the provisions made within the group.

Estimates by the management are also included in the

assessment of possible credit loss risks included in trade

receivables.

Furthermore, the management also uses its discretion

when recognising and measuring deferred tax assets.

New and amended standards applied during

the financial year

Scanfil Group has observed the following new and amended

standards from the beginning of 2020:

* = not yet endorsed for use by the European Union as of

December 31, 2020.

•

Amendments to References to Conceptual Framework

in IFRS Standards (effective for financial years begin-

ning on or after 1 January 2020)

The revised Framework codifies IASB’s thinking adopted

in recent standards. The Conceptual Framework primar-

ily serves as a tool for the IASB to develop standards and

to assist the IFRS Interpretations Committee in inter-

preting them. It does not override the requirements of

individual IFRSs.

•

Definition of a Business – Amendments to IFRS 3 Busi-

ness Combinations (effective for financial years begin-

ning on or after 1 January 2020)

The amendments narrowed and clarified the definition

of a business. They also permit a simplified assessment

of whether an acquired set is a group of assets rather

than a business.

•

Definition of Material – Amendments to IAS 1 Presenta-

tion of Financial Instruments and IAS 8 Accounting

Policies, Changes in Accounting Estimates and Errors

(effective for financial years beginning on or after 1 Jan-

uary 2020)

The amendments clarify the definition of material and

include guidance to help improve consistency in the

application of that concept across all IFRS Standards.

In addition, the explanations accompanying the defini-

tion have been improved.

• Interest Rate Benchmark Reform – Phase 1 – Amend

ments to IFRS 9 Financial Instruments, IAS 39 Finan-

cial Instruments: Recognition and Measurement and

IFRS 7 Financial Instruments: Disclosures (effective

for financial years beginning on or after 1 January 2020)

Amendments have been issued to address uncertainties

related to the reform of interbank offered rates (IBOR).

The amendments provide targeted relief for financial

instruments qualifying for hedge accounting in the lead

up to IBOR reform.

ANNUAL REPORT 202040 |

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

•

COVID-19-Related Rent Concessions – Amendment to

IFRS 16 Leases (effective for financial years beginning

on or after 1 June 2020)

The amendment allows the lessees not to account for rent

concessions as lease modifications if the concessions are

a direct consequence of the COVID-19 pandemic and only

if certain conditions are met.

Above mentioned amended standards have no impact on

Scanfil plc’s financial statements.

Adoption of new and amended standards

in future financial years

Scanfil has not yet applied the following new or revised

standards and interpretations already published by the

IASB. The group will adopt them as of the effective date

of each standard and interpretation, or if the effective date

is not the first day of the financial period, as of the begin-

ning of the first financial period after the effective date.

• Interest Rate Benchmark Reform – Phase 2 – Amend

ments to IFRS 9 Financial Instruments, IAS 39 Finan-

cial Instruments: Recognition and Measurement, IFRS

7 Financial Instruments: Disclosures, IFRS 4 Insur-

ance Contracts and IFRS 16 Leases* (to be applied from

1 January 2021)

Amendments address issues affecting financial statements

when changes are made to contractual cash flows and

hedging relationships as a result of interest rate bench-

mark reform. Amendments assist companies in provid-

ing useful information about the effects of interest rate

benchmark reform on financial statements.

•

Property, Plant and Equipment — Proceeds before

Intended Use – Amendments to IAS 16 Property, Plant

and Equipment* (to be applied from 1 January 2022)

Under the amendments, proceeds from selling items

before the related item of PPE is available for use should

be recognised in profit or loss, together with the costs of

producing those items.

•

Onerous Contracts – Costs of Fulfilling a Contract –

Amendments to IAS 37 Provisions, Contingent Liabil-

ities and Contingent Assets* (to be applied from 1 Jan-

uary 2022)

When an onerous contract is accounted for based on the

costs of fulfilling the contract, the amendments clarify

that these costs comprise both the incremental costs and

an allocation of other direct costs.

Annual Improvements to IFRS Standards 2018–2020*

(to be applied from 1 January 2022)

The annual improvements process provides a mecha-

nism for minor and non-urgent amendments to IFRSs to

be grouped together and issued in one package annually.

The amendments clarify the following standards:

•

IFRS 1 First-time Adoption of International Financial

Reporting Standards – Subsidiary as a first-time adopter:

This amendment simplifies the application of IFRS 1 for

a subsidiary that becomes a first-time adopter later than

its parent – a subsidiary may elect to measure cumulative

translation differences at amounts included in the con-

solidated financial statements of the parent.

• IFRS 9 Financial Instruments – Fees in the ‘10 per cent’

test for derecognition of financial liabilities: This amend-

ment clarifies that – for the purpose of performing the

‘10 per cent test’ for derecognition of financial liabilities

– in determining those fees paid net of fees received, a

borrower includes only fees paid or received between the

borrower and the lender, including fees paid or received

by either the borrower or lender on the other’s behalf.

•

IFRS 16 Leases – Lease incentives – Example 13. The

amendment removes the illustration of payments from

the lessor relating to leasehold improvements. The

example was not clear as to why such payments are not

a lease incentive.

Classification of Liabilities as Current or Non-current

– Amendments to IAS 1 Presentation of Financial State-

ments* (to be applied from 1 January 2023)

The amendments are to promote consistency in applica-

tion and clarify the requirements on determining if a lia-

bility is current or non-current.

ANNUAL REPORT 2020 | 41

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

1.1 Turnover and details of business segments

ACCOUNTING PRINCIPLE

Revenue recognition

The group’s turnover mainly consists of customer agree-

ments that only include the sale of goods. Typical prod-

ucts manufactured by Scanfil include video surveillance

systems and equipment, communications network device,

audio communications products, health technology devices

and systems, electricity and automation system modules,

renewable energy production converters and inverters, fre-

quency converters, lift control systems, analysers, various

slot and vending machines, defense industry devices and

meteorological instruments.

Revenue is recognised when a company transfers con-

trol of goods or services to a customer either over time

or at a point in time. The group mainly fulfils the perfor-

mance obligation at a certain point in time when control

of an asset item is transferred to the customer. Typically,

control is transferred when goods are delivered in compli-

ance with the terms of delivery. Revenue arising from the

sale of products is recognised when the significant risks

and rewards of ownership, right of possession and actual

control of the products sold have been transferred to the

buyer. A small part of the group’s turnover comes from

service sales. Service sales include prototype manufac-

turing, productisation, component, storage and logistics

services, as well as after-sales services, including repair

and updating services for products. Some revenue from

services is recognised over time in accordance with the

completion of the services.

With regard to customers’ consignment stocks, revenue

is recognised when control is transferred to the customer,

i.e. when goods are transferred to the consignment stock.

Variable considerations include cash and quantity dis-

counts and consequences of delayed deliveries. Variable

considerations are included in the performance obligation

sales price of the receivable.

Scanfil provides a product warranty on the basis of cus-

1. ITEMS AFFECTING THE RESULT

tomer contracts. The warranty period typically ranges from

12 to 24 months, and it can be at most 36 months. The war-

ranty is not a separate performance obligation. Payment

terms are customer-specific, ranging from 30 to 90 days.

Scanfil reports single business segment.

TURNOVER

The company’s customers include international operators

in the automation, energy, data transmission and health

technology sectors, among other industries, and compa-

nies operating in fields related to urbanisation.

Markets and customer segments

Scanfil has divided its customers into segments on the basis

of their respective fields of activity and monitors the devel-

opment of sales by customer segment.

The customers are divided into the following segments:

• Communication

• Consumer Applications

• Energy & Automation

• Industrial

• Medtech & Life Science

Typical products of the customers in the Communication

segment include base stations, exchanges and amplifiers,

as well as different camera and radio systems. Products of

the customers in the Consumer Applications segments are

typically used by consumers. These include reverse vend

ing machines, slot machines, machines for self-service

laundromats and photo booths, for example. Products of

the customers in the Energy & Automation segment include

frequency converters, inverters, switches and automation

systems. Products of the customers in the Industrial seg-

ment are used in industrial applications, such as forklift

guidance systems and smart lighting systems. Products of

the customers in the Medtec & Life Science segment include

dental chairs, analysers, mass spectrometers and cloud

height indicators.

NOTES TO CONSOLIDATED FINANCIAL

STATEMENTS

ANNUAL REPORT 202042 |

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

Medtec & Life Science 18 %

Industrial 31 %

Energy & Automation 21 %

Consumer Applications 15 %

Communication 15 %

Turnover by customer segment and quarter

EUR MILLION 2019 Q1/2020 Q2 /2020 Q3/2020 Q4/2020 2020

% of turnover

2020

Communication 79.4 22.4 28.9 20.7 19.5 91.4 15.3%

Consumer Applications 107.3 18.7 20.3 21.3 27.5 87.8 14.7%

Energy & Automation 111.3 30.7 32.6 28.9 34.6 126.7 21.3%

Industrial 173.3 45.6 48.5 44.7 43.2 182.0 30.6%

Medical & Life Science 108.1 26.7 25.3 26.1 29.3 107.4 18.0%

Total 579.4 144.1 155.6 141.6 154.1 595.3 100.0%

In 2020, the group’s turnover increased by EUR 15.9 million,

2.7% compared to the previous year. The turnover increased

mainly due to the acquisition of the operations of HASEC

Elektronik GmbH during the second quarter of 2019.

Turnover by customer segment developed as follows: The

turnover of the Communication segment increased by EUR

12.0 million (15.0%) as a result of positive demand for base

station products at the beginning of the year. Furthermore,

the divestment of the Hangzhou plant in July had no sig-

nificant impact annually on the Communication segment’s

turnover, because customers transferred their orders partly

to other Scanfil units. This sale was mainly intermediate

sales, which had not significant impact on result.

The Consumer Applications segment’s turnover decreased

by EUR 19.5 million (18.1%) year-on-year. The negative

impact of the coronavirus pandemic was particularly

reflected in this segment’s full-year demand, even though

demand picked up clearly during the final quarter.

The Energy and Automation segment’s turnover increased

by EUR 15.4 million (13.8%). The growth came broadly

from the segment’s customer base.

The turnover of the Industrial segment increased by EUR

8.8 million (5.1%), primarily as a result of the HASEC busi-

ness acquisition completed during the second quarter of 2019.

The turnover of the Medtec & Life Science segment

remained annually at the previous year’s level.

In 2020, the largest customer accounted for about 15%

(14%) of turnover and the top ten customers accounted for

about 59% (56%) of turnover.

The impact of COVID-19 pandemic during the review period

The COVID-19 pandemic had a somewhat negative impact

on the Group’s turnover and thereby on its productivity and

operating profit. The factory-specific effects depended on

the factory’s customer base and product mix. For exam-

ple, with the pandemic escalating, the use of self-service

equipment for consumers decreased significantly in the

early part of the year, and customers reacted quickly by

cutting their forecasts and orders. However, the segment’s

sales picked up significantly during the fourth quarter and

therefore the impact was minor.

Apart from the two-week shutdown at the Myslowice

factory in April and shutdown at factories in China in

February following orders by the authorities, Scanfil has

avoided disruptions in its production operations and wider

personnel illnesses.

BREAKDOWN OF TURNOVER BY CUSTOMER SEGMENT IN  AND 

2020

Communication 15%

Consumer Applications 15%

Energy & Automation 21%

Industrial 31%

Medtech & Life Science 18%

Medtec & Life Science 19 %

Industrial 30 %

Energy & Automation 19 %

Consumer Applications 19 %

Communication 14 %

2019

Communication 14%

Consumer Applications 19%

Energy & Automation 19%

Industrial 30%

Medtech & Life Science 19%

ANNUAL REPORT 2020 | 43

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

Contractual amounts recognised on the balance sheet

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

EUR THOUSAND 2020 2019

Trade receivables, which are included in ”Trade and other receivables” 105,661 102,297

Contract assets 161 582

Contract liabilities 2,371 172

Non-current 126

Current 105,822 102,753

Total 105,822 102,879

Trade and other receivables

EUR THOUSAND

2020

Contract assets

2020

Contract liabilities

Transferred to trade receivables -371

Recognised in Profit and loss -172

Increase in advances received from customer 2,371

Significant changes in the contract assets and the contract liabilities balances during the period are as follows:

Major customers

The same customers are not necessarily shown in the table above for the reporting period and for the comparison period.

EUR THOUSAND 2020 % of turnover 2019 % of turnover

Customer 1 89,392 15% 82,614 14%

Customer 2 54,510 9% 60,443 10%

Customer 3 42,201 7% 41,689 7%

Total 186,103 184,745

2020 2019

EUR MILLION Good Services Total Good Services Total

Customer Segments

Communication 80.1 11.3 91.4 66.9 12.5 79.4

Consumer Applications 84.0 3.8 87.8 103.2 4.1 107.3

Energy & Automation 119.2 7.6 126.7 105.7 5.7 111.3

Industrial 174.7 7.4 182.0 161.9 11.3 173.3

Medtec & Life Science 101.1 6.3 107.4 100.9 7.2 108.1

Total 559.0 36.3 595.3 538.6 40.8 579.4

Timing of revenue recognition

Goods and services transferred at a point of time 559.0 34.3 593.4 538.6 37.3 575.9

Services transferred over time 2.0 2.0 3.5 3.5

Total 559.0 36.3 595.3 538.6 40.8 579.4

Grouping of revenue

Revenue is grouped into product and service sales by customer segment. The majority, more than 90%, of the company’s

revenue comes from sales of manufactured products.

ANNUAL REPORT 202044 |

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

Information about the whole entity

Of the segment information, the assets are shown by their

location and distribution of sales is shown by the location

of customers.

Distribution of segment assets

The segment assets mainly consist of goodwill, intangible

and tangible assets, inventories, trade receivables as well

as cash and cash equivalents.

Assets on geographical areas

EUR THOUSAND 2020 2019

Domicile

Finland 51,343 24,359

Sweden 47,552 58,885

Poland 89,708 92,292

China 56,380 76,769

Germany 35,744 31,063

Estonia 37,418 36,204

USA 14,035 14,382

Other 126 122

Total 332,307 334,075

Turnover by location of customers (delivery address)

EUR THOUSAND 2020 2019

Domicile

Finland 102,248 107,467

Sweden 126,024 131,061

Germany 77,543 66,193

Poland 18,504 15,585

Rest of Europe 142,188 123,679

Asia 75,799 87,988

USA 49,947 45,559

Other 3,095 1,884

Total 595,347 579,416

OTHER OPERATING INCOME, EUR THOUSAND 2020 2019

Proceeds from sale of property, plant and equipment 37 150

Gain on sale of subsidiary 11,540

Allowances and compensations 283 484

Rental income 213 85

Other 311 276

Total 12,384 995

ACCOUNTING PRINCIPLE

Income other than that associated with actual business

operations is recognised under other operating income.

Such items include capital gains from the sales of tangi-

ble fixed assets, rental income, insurance compensation

payments and public subsidies. As an exception, subsidies

received from governments concerning COVID-19 pan-

demic are posted to net cost accounts of which the subsidy

1.2 Other operating income

relates. Rental income mainly consists of rents from busi-

ness premises in China.

Government grants related to tangible and intangible

assets are deducted from an asset’s acquisition cost, and

the net acquisition cost is capitalised on the balance sheet.

Other financial contributions are recognised in other oper-

ating income through profit or loss.

ANNUAL REPORT 2020 | 45

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

1.3 Use of materials and supplies

USE OF MATERIALS AND SUPPLIES, EUR THOUSAND 2020 2019

Materials, supplies and goods

Purchases during the period 410,180 382,587

Change in inventories 155 7,189

Total 410,335 389,776

1.4 Employee benefit expenses

Employee benefits

Employee benefits include short-term employee benefits,

post-employment benefits and share-based payments.

Short-term employee benefits are posted as expense for

the financial period during which the work was performed.

ACCOUNTING PRINCIPLE

Short-term employee benefits

Short-term employee benefits include salaries and fringe

benefits, annual holidays and performance bonuses.

Post-employment benefits

Pension arrangements related to post-employment bene-

fits are classified as defined benefit or defined contribution

plans. The group does not have significant defined bene

fit pension plans. Most of Scanfil’s obligations towards its

employees are comprised of various defined contribution

pension plans. The pension contributions for defined con-

tribution pension plans are posted as expense for the finan-

cial period during which they were accrued. In Finland, the

defined contribution pension plans are based on the Employ-

ees Pensions Act, according to which the pension contribu-

tions are based directly on the beneficiary’s earnings.

There is a multi-employer supplementary defined bene

fit pension plan for employees in industry and commerce

secured by Alecta in Sweden. Because Alecta is unable to

furnish Scanfil with information that would enable the plan

to be reported as a defined benefit plan in accordance with

IAS 19 Employee Benefits, it is reported as a defined con-

tribution plan.

PERSONNEL EXPENSES, EUR THOUSAND 2020 2019

Salaries, wages and fees 76,892 74,118

Options implemented and paid in shares 366 124

Pension costs – defined-contribution schemes 9,505 11,256

Other indirect employee expenses 8,733 8,523

Total 95,496 94,021

Scanfil has decided to close Scanfil GmbH’s factory in Hamburg. In relation to the arrangement, EUR 3.9 million in severance pay

associated with the discharge of the personnel has been recognised in employee expenses. Regarding the coronavirus pandemic,

the Group has received a total of EUR 2.5 million in various government subsidies, primarily for compensation for employees’ working

hours and pension contributions. These have been recognised as decreases in employee expenses.

Management’s employee benefits are reported in note 5.4, “Details of related parties and Group structure”.

Scanfil EMS Oy, a subsidiary of Scanfil plc, divested all its

shares in the Chinese subsidiary Scanfil (Hangzhou) Co.,

Ltd. on July 14, 2020. The purchase price of EUR 18.4 mil

lion was paid in cash. The subsidiary’s cash and cash equiv-

alents totalled EUR 2.3 million on the transaction date. The

subsidiary’s assets, excluding cash and cash equivalents,

were EUR 24.4 million, and its liabilities were EUR 11.7

million. The sales gains of EUR 11.5 million include equity

translation differences of EUR 7.9 million.

AVERAGE NUMBER OF GROUP EMPLOYEES DURING THE PERIOD 2020 2019

Europe 331 335

Abroad 3,056 3,195

Total 3,387 3,530

ANNUAL REPORT 202046 |

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

Share-based payments

ACCOUNTING PRINCIPLE

The group has two option schemes in place. Option rights

are valued at their fair value at the time they were granted

and recognised as an expense in the income statement

under employee benefits in equal portions during the vest-

ing period. The expense defined at the time the options

were granted is based on the group’s estimate of the amount

of options assumed to be vested at the end of the vesting

period. The fair value of options has been defined based

on the Black-Scholes pricing model. Assumptions con-

cerning the final amount of options are updated on each

reporting date. Changes in the estimates are recognised in

profit or loss. When option rights are exercised, proceeds

from share subscriptions, adjusted with potential transac

tion costs, are entered under equity.

Option schemes

On April 12, 2016, the Annual General Meeting accepted

Scanfil plc’s 2016 option scheme (A)–(C) and on April 24,

2019, the Annual General Meeting accepted the 2019 option

scheme (A)–(C). On the basis of the 2016 and 2019 option

schemes, maximum of 900,000 option rights per option

scheme can be granted. Each option right enables its holder

to subscribe one Scanfil plc share. The start of the option

rights subscription period requires that the group’s pro-

duction and financial goals and conditions specifically

determined by the Board for exercising the option rights

are met. The subscription price of shares is determined on

the basis of the Company’s trading volumeweighted aver-

age share price in Nasdaq Helsinki Ltd during the period

March 1 to March 31 three years before start of the option

rights subscription period.

On the basis of the authorisation granted by the Annual

General Meeting, the Board of Directors decides on pro-

viding option rights to the group’s President and to the

members of the Management Team.

In 2020, the expense recognition of the option scheme

was EUR 214,404 (EUR 149,226 in 2019).

In 2020, a total of 180,000 new shares were subscribed

under option rights 2016(A). The subscription price of EUR

608,400 of subscriptions made under the option rights has

been recognised in the invested unrestricted equity fund.

The total of 130,000 new shares subscribed under the option

rights were entered in the trade register on May 8, 2020,

and the Company transferred a total of 50,000 treasury

shares held by the company to the subscribers.

In 2020, a total of 70,000 new shares were subscribed

under option rights 2016(B). The subscription price of EUR

249,900 of subscriptions made under the option rights has

been recognised in the invested unrestricted equity fund.

Scanfil transferred 70,000 treasury shares held by the com-

pany to subscribers on the basis of the subscriptions made

under the option rights.

OPTION ARRANGEMENT .. 2019B 2019A 2016C 2016B 2016A

Grant date 27.10.2020 27.11.2019 26.6.2019 21.11.2017 8.12.2016

Amount of granted instruments (pcs) 220,000 210,000 210,000 250,000 250,000

Subscription price (EUR) 4.34 4.04 4.48 3.57 3.38

Fair value (EUR) 1.79 1.08 0.54 1.12 0.74

Share price at time of granting (EUR) 5.16 4.42 3.88 4.15 3.36

Term of validity (years) 4.5 4.4 3.9 4.4 4.4

Subscription period

1.5.2023-

30.4.2025

1.5.2022-

30.4.2024

1.5.2021-

30.4.2023

1.5.2020-

30.4.2022

1.5.2019-

30.4.2021

Excercised options, pcs 70,000 210,000

Returned options to company, pcs 20,000 40,000

Number of options outstanding 220,000 210,000 210,000 160,000 0

PERSONNEL BY COUNTRY ON DECEMBER , , IN TOTAL, , EMPLOYEES

Unkari 2

USA 128

Saksa 291

Suomi 313

Ruotsi 339

Viro

Kiina 518

Puola 1164

2020

Germany 291

USA 128

Hungary 2

Poland 1,164

China 518

Estonia 456

Sweden 339

Finland 313

ANNUAL REPORT 2020 | 47

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

1.5 Other operating expenses

EUR THOUSAND 2020 2019

Hired labour 11,699 11,808

Subcontracting 2,169 1,906

Sales freight 4,465 3,511

Energy 3,332 3,378

Tools & repair and maintenance of tools 5,611 5,697

Rents 507 367

Maintenance expenses 3,274 3,397

Travel, marketing and vehicle expenses 1,316 2,706

Other employee expenses 2,828 3,028

Bought services 3,864 3,813

ICT expenses 2,138 1,687

Other operating expenses 2,693 3,079

Total 43,896 44,378

Other operating expenses include the following significant items:

Travel, marketing and vehicle expenses decreased clearly due to COVID-19 pandemic. Travelling was limited after March 2020.

During the 2020 financial period, the company’s main auditor was the auditing firm KPMG Oy Ab.

Services other than auditing services carried out by KPMG Oy Ab totalled EUR 65 thousand during the 2020 financial period.

AUDITOR’S REMUNERATION, EUR THOUSAND

2020

Fees to

KPMG

2020

Fees to

other auditors

2029

Fees to

KPMG

2019

Fees to

other auditors

Audit fees 310 1 319 1

Tax consulting 23 42

Other services 53 169

Total 386 1 530 1

ACCOUNTING PRINCIPLE

Income taxes

The taxes of the consolidated income statement include

taxes based on the results of the group companies and cal-

culated in accordance with local tax laws and tax rates. The

taxes in the income statement also include the change in

deferred tax assets and liabilities.

Deferred tax assets or liabilities are calculated on tem

porary differences between taxation and financial state-

ments and differences due to group eliminations based on

tax rates for the following year confirmed by the report-

ing date. Temporary differences arise from intercompany

profits on inventories, depreciation differences and provi-

sions, among others.

Deferred tax liabilities are recognised in full. Deferred

tax assets are recognised only when it is probable that

receivables can be utilised against the taxable income of

future financial periods.

1.6 Income taxes

The purpose of the company’s management assessment is

to identify the company’s tax positions for which the related

tax legislation is open to interpretation. An adjustment is

recorded on uncertain tax positions identified on the basis

of the estimate if it is expected that the tax authorities will

challenge the management’s interpretation. The amount

of the reservation is based on the estimated final tax cost.

Use of estimates

The management uses its discretion in determining the

amount of income taxes and in recognizing deferred tax

assets. Deferred tax assets are recognised for taxable losses

and for the temporary differences between the taxation val-

ues and book values of assets and liabilities. Deferred tax

assets are recognised to the extent that the group probably

accumulates, according to the assessment by the manage-

ment, enough taxable income against which the deferred

tax assets can be utilised.

ANNUAL REPORT 202048 |

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

INCOME TAXES, EUR THOUSAND 2020 2019

Current tax 7,977 4,621

Tax expense of previous years -265 -177

Deferred taxes -2,816 1,505

Total 4,895 5,950

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

IN FINLAND OF % % IN 

Earnings before taxes, EUR thousand 41,793 34,039

Taxes calculated at domestic tax rate 8,359 6,808

Different tax rates of foreign subsidiaries -1,148 -11

Tax at source on dividends paid in China 105 418

Tax at source on dividends paid in Estonia 802 625

Witholding tax of unpaid dividends -430 110

Unrecorded deferred tax assets from tax losses 18 53

Use of unrecognised losses in previous years -2,137

Tax benefit of investment in Polish subsidiary -761 -520

Impairment of goodwill 720

Taxes on the sale of a subsidiary 889

Tax free income from the sale of a subsidiary -2,239

Tax free items -258

Other -177 61

Taxes from previous years -265 -177

Taxes in income statement 4,895 5,950

Scanfil Kft, Scanfil EMS Oy’s subsidiary in Hungary,

merged into its parent company Scanfil EMS Oy through

a cross-border subsidiary merger in 2018. Scanfil Kft has

confirmed losses of EUR 8.1 million, which Scanfil EMS

Oy has deducted from its taxable income for 2018 and 2019.

The Tax Recipients’ Legal Services Unit has presented a

claim for adjustment in a case concerning the finality and

deductibility of losses. The case is still being processed by

the Finnish Tax Administration.

Scanfil Sweden AB’s English subsidiary Scanfil Ltd

discontinued operations in 2016 and has been dissolved

by voluntary clearing procedure. The company had con-

firmed losses of EUR 6.6 million, which Scanfil Sweden

AB deducted from its taxable income for 2019. Swedish

Tax Office has refunded EUR 1.2 million to Scanfil Swe-

den AB according to the tax declaration.

EUR THOUSAND 1.1.2020

Recognised

through

profit and loss

Recognised

under other

comprehensive

income

Sold

businesses

Translation

differences 31.12.2020

Deferred tax assets:

Investment grant to Poland 3,427 -1,153 -198 2,075

Inventories 307 185 -73 -12 408

Provisions 432 79 -31 481

Fixed assets 605 66 -20 -11 641

Other 943 421 140 -122 1,382

Losses 1,897 1,897

Total 5,714 1,496 140 -92 -374 6,884

Deferred tax liabilities:

Long-term customer relationships -2,532 421 -46 -2,157

Unpaid dividends -2,602 430 -2,172

Fixed assets -1,481 199 40 -1,242

Other -344 186 43 -26 -140

Total -6,958 1,320 43 -32 -5,711

DEFERRED TAX ASSETS AND LIABILITIES

ANNUAL REPORT 2020 | 49

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

Other items include EUR 0.7 million for deferred tax assets

related to Polish non-deductible intra-group charges.

Scanfil Poland Sp. z o.o has submitted an application

for an Advance Pricing Agreement (APA) to the Polish

Ministry of the Finance in 2018. The process is ongoing.

The company considers that the costs can be reduced for

tax purposes over the coming financial periods.

On December 31, 2020, the group had confirmed losses of

EUR 11.2 million from the Norwegian company PartnerTech

AS, of which no deferred tax receivables have been recog-

nised. The company was discontinued in 2016 and placed

into voluntary liquidation. The company was dissolved on

January 27, 2021.

The group is investigating opportunities to use these

taxable losses in the year 2021 taxation of Scanfil Sweden

AB, the Swedish parent company.

ACCOUNTING PRINCIPLE

Earnings per share

Earnings per share are calculated by dividing the profit

for the period attributable to equity holders of the parent

company with the weighted average number of outstand-

ing shares during the financial period. For the earnings

1.7 Earnings per share

per share adjusted for the dilution effect, the impact of

possible share-based incentive schemes and option rights

is taken into account. The exercise of options is not con-

sidered when calculating earnings per share if the share

subscription price using the option exceeds the average

market price of the share during the period.

EARNINGS PER SHARE, EUR THOUSAND 2020 2019

Net profit for the period attributable to equity holders of the parent company 36,898 28,090

Number of shares, undiluted (1,000 pcs) 64,387 64,296

Earnings per share, undiluted, EUR 0.57 0.44

Dilution effect of stock options (1,000 pcs) 800 830

Number of shares, diluted (1,000 pcs) 65,187 65,126

Earnings per share, diluted, EUR 0.57 0.43

2.1 Net working capital

The company includes the following items in its net work-

ing capital: of current assets, inventories, trade receiva-

bles and other receivables, advance payments as well as

deferred tax assets based on the taxable income for the

financial period, and of current liabilities, trade payables

2. NET WORKING CAPITAL

and other liabilities as well as deferred tax liabilities based

on the taxable income for the financial period.

The group monitors on a monthly basis the ratio of net

working capital to the turnover for the previous 12 months.

Net working capital was 20.1% of net sales, compared to

20.3% at the end of the previous year.

EUR THOUSAND 1.1.2019

Recognised

through

profit and loss

Recognised

under other

comprehensive

income

Business

combination

Translation

differences 31.12.2019

Deferred tax assets:

Investment grant to Poland 2,866 526 35 3,427

Inventories 277 48 -18 307

Provisions 357 74 2 432

Fixed assets 347 171 88 605

Other 587 383 -27 943

Total 4,433 1,201 80 5,714

Deferred tax liabilities:

Long-term customer relationships -1,800 365 -1,134 37 -2,532

Unpaid dividends -2,492 -110 -2,602

Fixed assets -1,549 89 -21 -1,481

Other -130 2 -43 -231 58 -344

Total -5,970 346 -43 -1,365 74 -6,958

ANNUAL REPORT 202050 |

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

ACCOUNTING PRINCIPLE

Trade receivables

Trade receivables are created when Scanfil invoices prod-

ucts and services delivered to customers. Trade receivables

are measured at the original invoiced amount. For uncer-

tain receivables, impairment is recognised on the basis of

case-specific risk assessments.

According to the new impairment model, impairment

provisions must be recognised on the basis of expected

credit losses. A simplified model must be applied to trade

receivables, in which the estimated amount of credit losses

2.3 Trade and other receivables

is based on percentages defined on the basis of the age dis-

tribution of the receivables. These percentages are based

on the estimated probability of credit losses and histori-

cal information.

Use of estimates

Estimates by the management are included in the assess-

ment of possible credit loss risks included in the trade

receivables. According to the view of the group’s manage-

ment, the company has no significant credit loss risks.

Net working capital, EUR THOUSAND 2020 2019

Net working capital

Inventories 103,254 101,912

Trade receivables 105,661 102,297

Accrued income, other receivables and income tax receivables 9,405 12,041

Advance payments 562 532

Trade payables -76,153 -72,897

Accrued expenses, other liabilities and income tax liabilities -23,350 -26,269

Total 119,379 117,616

Net working capital, % of turnover 20.1% 20.3%

TRADE AND OTHER RECEIVABLES, EUR THOUSAND 2020 2019

Trade receivables 105,661 102,297

Accrued income 6,050 8,569

Value-added tax receivables 1,088 849

Other receivables 506 340

Total 113,305 112,056

ACCOUNTING PRINCIPLE

Inventories

Inventories are measured at the acquisition cost and net

realisable value, whichever is lower. The acquisition cost

is determined on a weighted-average basis. The cost of raw

materials includes the expenses incurred for purchasing

and putting them into storage. The cost of finished goods

and work in progress includes raw materials, direct labour

costs and other direct expenditure as well as a proportion

of fixed costs.

The impairment due to obsolescence, based on the man-

2.2 Inventories

agement’s estimate of probable net realisable value, is

taken into account when determining the value of inven-

tories. The net realisable value is the estimated selling

price less sale-related costs

Use of estimates

Potential obsolescence included in the value of invento-

ries is regularly examined and, if necessary, the value

of inventories is depreciated to match their net realisa-

ble value. These examinations require estimates on the

future demand for products.

INVENTORIES, EUR THOUSAND 2020 2019

Materials and supplies 81,947 79,603

Work in progress 10,747 11,515

Finished goods 10,560 10,779

Total 103,254 101,897

Impairment losses on inventories during the financial year amounted to EUR 3.6 (2.7) million.

ANNUAL REPORT 2020 | 51

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

AGE DISTRIBUTION OF TRADE RECEIVABLES, EUR THOUSAND 2020 2019

Unmatured 91,073 88,893

Matured

1–30 days 10,856 12,380

31–90 days 3,474 979

91–180 days 257 51

181–365 days 35 31

Over 365 days 34 6

Provision for bad debt -70 -42

Total 105,661 102,297

, EUR THOUSAND

Book value

(gross)

Estimated credit

losses

Bad debt

provision

Unmatured 88,893 0.01% 10

Matured

1–30 days 12,380 0.02% 2

31–90 days 979 0.50% 5

91–180 days 51 12.5% 6

181–365 days 31 37.5% 12

Over 365 days 6 100.0% 6

Total 102,339 42

, EUR THOUSAND

Book value

(gross)

Estimated credit

losses

Bad debt

provision

Unmatured 91,073 0.01% 9

Matured

1–30 days 10,856 0.02% 2

31–90 days 3,474 0.50% 17

91–180 days 257 2.00% 5

181–365 days 35 25.0% 9

Over 365 days 34 81.3% 28

Total 105,731 70

Expected credit losses, December 31, 2020

TRADE AND OTHER PAYABLES, EUR THOUSAND 2020 2019

Trade payables 76,153 72,897

Accrued liabilities 16,124 17,428

Advance payments received 2,371 172

Other creditors 5,456 5,630

Total 100,104 96,127

The most significant items included in accrued liabilities:

Employee expenses 11,388 12,749

Interests 2 9

Financial derivatives 698

Other accrued liabilities 4,036 4,671

Total 16,124 17,428

At the end of the financial period, the credit loss provision recognised for covering uncertain receivables stood at EUR 70 (42)

thousand. During the financial period, credit losses recognised from trade receivables were EUR 2 (2) thousand.

2.4 Trade and other liabilities

ANNUAL REPORT 202052 |

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

ACCOUNTING PRINCIPLE

Goodwill

Business combinations are treated using the acquisition

method. Goodwill is recognised at the amount by which

the acquisition cost exceeds the group’s share of the value

of acquired assets and liabilities at the time of acquisi-

tion. Goodwill is created in corporate transactions, and it

reflects the value of the acquired business, market share

and synergies. The book value of goodwill is tested by

impairment testing. The group’s goodwill mainly consists

of the acquisition of PartnerTech AB group in 2015 and the

acquisition of German HASEC-Elektronik GmbH in 2019.

The acquisition calculation of HASEC-Elektronik GmbH

is presented in Note 3.6 ”Acquired Business”.

3. NON-CURRENT ASSETS

3.1 Goodwill

Impairment testing

No depreciation is made of goodwill; instead, goodwill is

tested at least annually for possible impairment. For that,

goodwill is allocated to cash generating units (CGUs). The

recoverable amount of the CGU is calculated with value in

use calculations. An impairment loss is recognised when

the book value of an asset exceeds its recoverable amount.

Impairment losses are immediately recognised as expenses

in the income statement. Impairment losses recognised for

goodwill cannot be later reversed.

The business operations of Scanfil GmbH, a German

subsidiary acquired in 2014, did not develop predictably,

and as a consequence, based on impairment testing, the

group recorded a decrease of EUR 3.6 million in the good-

will related to the acquisition in 2019. In 2020, no goodwill

impairments were recorded.

GOODWILL, EUR THOUSAND 2020 2019

Cost at 1 Jan. 8,046 10,117

Business combinations 1,649

Impairment -3,602

Exchange rate differences 258 -118

Carrying amount at 31 Dec. 8,304 8,046

DISCOUNT RATE OF CASH FLOWS BEFORE TAXES 2020 2019

Scanfil Electronics GmbH 12.2% 12.0%

ScanfilPoland Sp. z o.o. 12.2% 12.1%

Scanfil Vellinge AB 11.6% 11.2%

Scanfil Åtvidaberg AB 11.6% 11.2%

ALLOCATION OF GOODWILL AND GOODWILL ON CONSOLIDATION

TO CASHGENERATING UNITS,

EUR THOUSAND 2020 2019

Scanfil Oü 111 111

ScanfilPoland Sp. z o.o. 3,468 3,331

Scanfil Vellinge AB 1,309 1,257

Scanfil Åtvidaberg AB 1,767 1,697

Scanfil Electronics GmbH 1,649 1,649

Total 8,304 8,046

The recoverable amount of a CGU is based on the value in

use of a cash-generating unit, which is the present value of

the future cash flows the CGU is expected to accumulate.

Determination of the value in use is based on the condi-

tions and expectations in force at the time of testing. Future

cash flows are determined for a five-year forecast period,

and for the period following that, a growth rate of 2% has

been assumed for cash flows.

Preparing impairment testing calculations requires esti-

mates of future cash flows. The turnover and profitability

assumptions used for the forecasts are based on custom-

er-specific forecasts and the management’s estimates of

the development of demand and markets.

The weighted average cost of capital (WACC) for the

CGU has been used as the discount rate for cash flows. The

risk-free interest rate, risk factor (beta) and risk premium

ANNUAL REPORT 2020 | 53

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

parameters used for determining the discount rate of inter-

est are based on information obtained from the market.

No need for impairment of goodwill was detected based

on the impermanent testing. The recoverable amounts of

all CGUs exceed their book values.

As regards Scanfil Poland Sp. z.o.o., Scanfil Vellinge AB and Scanfil Åtvidaberg AB, changes in terminal growth are not significant (N/A).

IMPAIRMENT TESTING

2020

Change % units

2019

Change % units

Discount rate before taxes

ScanfilPoland Sp. z o.o. +7.5 +8.0

Scanfil Vellinge AB +15.7 +14.2

Scanfil Åtvidaberg AB +18.2 +19.8

Scanfil Electronics GmbH +3.6 +2.3

Profitability (EBITDA %)

ScanfilPoland Sp. z o.o. -3.1 -2.9

Scanfil Vellinge AB -4.9 -4.9

Scanfil Åtvidaberg AB -5.1 -6.0

Scanfil Electronics GmbH -2.0 -1.4

Terminal growth rate

ScanfilPoland Sp. z o.o. N/A N/A

Scanfil Vellinge AB N/A N/A

Scanfil Åtvidaberg AB N/A N/A

Scanfil Electronics GmbH -10.2 -5.3

ACCOUNTING PRINCIPLE

Other intangible assets

Intangible assets are recognised at historical cost in the

balance sheet, if the cost can be reliably determined and it

is likely that the financial benefit from the asset benefits

the group. Intangible assets are recognised in the income

statement using straight-line depreciation within their

expected useful life.

Other intangible assets include long-term customer rela-

tionships, software suites and right to land use of Chinese

subsidiaries.

THE DEPRECIATION PERIODS ARE:

Long-term customer relationships 10 years

Intangible rights 3–10 years

Other intangible assets 3–10 years

Right to land use in China 50 years

3.2 Other intangible assets

The balance sheet value of an asset is always assessed for

establishing possible impairment whenever there are any

indications that the value of some asset has been impaired.

Long-term customer relationships

In connection with the allocation of the purchase price

related to the acquisition of PartnerTech AB in 2015 and

HASEC-Elektronik GmbH in 2019, the group has allocated

part of the purchase price to long-term customer relation-

ships. Following the initial recognition, customer rela-

tionships are measured at cost less accrued depreciation

and impairment.

Research and development costs

Research and development costs are recognised as

expenses through profit or loss. Development costs as per

IAS 38 Intangible Assets are capitalised and amortised

over their useful lives. The group has no capitalised devel-

opment costs.

Sensitivity analysis

A sensitivity analysis was performed for CGUs by chang-

ing calculation assumptions. The table below shows the

change in assumption that would be required to make the

recoverable amount equal to its book value.

ANNUAL REPORT 202054 |

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

Impairment

The balance sheet values of fixed assets are assessed for

establishing possible impairment on the balance sheet date

and whenever there are any indications that the value of

some asset has been impaired. The recoverable amount for

the asset in question is assessed in the impairment tests.

The recoverable amount is the fair value of the asset less

its disposal costs, or its value of use, whichever is higher.

An impairment loss is recognised in the income state-

ment, if the book value of an asset exceeds its recoverable

amount. The impairment loss is included in the income

statement item Depreciation, amortisation and impairment.

An impairment loss related to property, plant and equip-

ment is reversed if there has been a material change in the

estimates used to determine the recoverable amount. An

impairment loss is only reversed up to the asset’s book

value which it would have net of depreciation, if no impair-

ment loss had been recognised in earlier years.

OTHER INTANGIBLE ASSETS,

EUR THOUSAND

Customer

relationships

Intangible

rights

Other

long-term

expenses

Advance

payments

Intangible

assets total

Acquisition at 1 Jan. 2020 16,119 7,958 2,910 834 27,820

Additions 536 827 8 1,371

Deductions -753 -137 -834 -1,724

Transfers between items 668 -722 -54

Exchange rate differences 507 -148 -14 346

Acquisition at 31 Dec. 2020 16,626 8,260 2,864 8 27,759

Accumulated depreciations at 1 Jan. 2020 -5,741 -3,866 -1,421 -11,028

Depreciations -1,607 -704 -336 -2,648

Decreases in value -49 -49

Deductions 326 135 461

Transfers between items -31 31 0

Exchange rate differences -283 52 -21 -252

Accumulated depreciations at 31 Dec. 2020 -7,632 -4,272 -1,612 -13,517

Carrying amount at 1 Jan. 2020 10,377 4,092 1,489 834 16,792

Carrying amount at 31 Dec. 2020 8,994 3,988 1,252 8 14,242

The deductions line includes the carrying amount of EUR 0.4 million arising from the sale of the Chinese subsidiary Scanfil (Hangzhou)

Co., Ltd.

OTHER INTANGIBLE ASSETS,

EUR THOUSAND

Customer

relationships

Intangible

rights

Other

long-term

expenses

Advance

payments

Intangible

assets total

Acquisition cost at 1 Jan. 2019 12,570 6,750 1,921 21,241

Additions 889 1,068 834 2,792

Business combinations 3,780 290 156 4,225

Deductions -3 -234 -237

Exchange rate differences -231 32 -2 -201

Acquisition cost at 31 Dec. 2019 16,119 7,958 2,910 834 27,820

Accumulated depreciations at 1 Jan. 2019 -4,399 -3,302 -1,293 -8,994

Depreciations -1,406 -556 -343 -2,306

Deductions 218 218

Exchange rate differences 64 -9 -2 54

Accumulated depreciations at 31 Dec. 2019 -5,741 -3,866 -1,421 -11,028

Carrying amount at 1 Jan. 2019 8,170 3,448 628 0 12,246

Carrying amount at 31 Dec. 2019 10,377 4,092 1,489 834 16,792

Other intangible assets include the right to land use in China, having a book value of EUR 0.4 million.

ANNUAL REPORT 2020 | 55

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

ACCOUNTING PRINCIPLE

Property, plant and equipment

The main items included in this category are buildings,

machinery, equipment, fixtures and fittings. They are

stated in the balance sheet at historical cost less depre-

ciation and any impairment losses. Depreciation is cal-

culated from historical cost on a straight-line basis over

the expected useful lives of the assets. No depreciation is

made for land areas. The repair and maintenance costs of

tangible fixed assets are recognised through profit or loss.

The residual values and useful lives of assets are reviewed

annually and adjusted, if appropriate, to indicate changes

in expected financial benefits.

An item of property, plant and equipment will no longer

be depreciated when such an item is considered as being

held for sale in accordance with IFRS 5, Non-current Assets

Held for Sale and Discontinued Operations.

THE DEPRECIATION PERIODS ARE:

Buildings and structures 10–25 years

Machinery and equipment 3–10 years

Other tangible assets 5–10 years

3.3 Property, plant and equipment

Regarding machinery and equipment, a depreciation period

of 8–10 years is generally used for heavy machinery (such as

sheet metalwork centers) and production lines (such as sur-

face mounting lines). Otherwise, the depreciation period

for machinery and equipment is usually five years. Pro-

duction tools are depreciated over three years.

The capital gains from property, plant and equipment are

included in other operating income while the correspond-

ing capital losses are included in other operating expenses.

Government grants related to tangible and intangible assets

are deducted from an asset’s acquisition cost, and the net

acquisition cost is capitalised on the balance sheet.

Impairment

The principle for determining impairment is shown in note

3.2, “Other intangible assets”.

PROPERTY, PLANT AND EQUIPMENT,

EUR THOUSAND Land

Buildings and

constructions

Machinery and

equipments

Other

tangible assets

Advance

payments and

constructions

in progress

Tangible

assets total

Acquisition cost at 1 Jan. 2020 824 33,846 82,479 570 1,790 119,510

Additions 471 8,243 3,595 12,308

Deductions -4,362 -8,856 -3,469 -16,688

Transfers between items -520 -520

Exchange rate differences -28 -1,046 -1,647 12 -71 -2,780

Acquisition cost at 31 Dec. 2020 797 28,389 80,218 582 1,845 111,831

Accumulated depreciations at 1 Jan. 2020 -16,056 -52,223 -554 -68,833

Depreciations -1,624 -7,046 -8,670

Decreases in value -611 -611

Deductions 2,897 8,106 11,003

Transfers between items 391 391

Exchange rate differences 311 947 -12 1,245

Accumulated depreciations at 31 Dec. 2020 -14,082 -50,827 -566 -65,475

Carrying amount at 1 Jan. 2020 824 17,790 30,256 17 1,790 50,677

Carrying amount at 31 Dec. 2020 797 14,307 29,391 17 1,845 46,356

Gross investments in tangible and intangible assets totalled

EUR 9.4 million, which is 1.6% of net sales. Most of the

investments were made in production machinery and equip-

ment, including a new electronics surface assembly line at

the Sieradz plant and a new environmentally friendly pow-

der coating pre-treatment line in Myslowice. Investments

were also continued in several factories to automate pro-

duction processes and material management. The digital-

isation of production was also continued in accordance

with the investment plans with the introduction of pro-

duction IoT solutions and MES (Manufacturing Execution

System) software.

The deductions line includes deductions from the sale of

the Chinese subsidiary Scanfil (Hangzhou) Co., Ltd with a

book value of EUR 2.0 million.

ANNUAL REPORT 202056 |

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

PROPERTY, PLANT AND EQUIPMENT,

EUR THOUSAND Land

Buildings and

constructions

Machinery and

equipments

Other

tangible assets

Advance

payments and

constructions

in progress

Tangible

assets total

Acquisition cost at 1 Jan. 2019 820 37,808 73,457 576 1,230 113,891

Additions 371 7,407 1,730 9,508

Deductions -16 -1,825 -1,485 -3,327

Business combinations 3,502 293 3,795

Reclassification -4,509 -338 -4,847

Exchange rate differences 4 193 276 -6 22 489

Acquisition cost at 31 Dec. 2019 824 33,846 82,479 570 1,790 119,510

Accumulated depreciations at 1 Jan. 2019 -16,579 -47,641 -560 -64,780

Depreciations -1,899 -6,363 -8,262

Deductions 7 1,515 1,522

Reclassification 2,466 202 2,668

Exchange rate differences -51 64 6 19

Accumulated depreciations at 31 Dec. 2019 -16,056 -52,223 -554 -68,833

Carrying amount at 1 Jan. 2019 820 21,229 25,816 17 1,230 49,111

Carrying amount at 31 Dec. 2019 824 17,790 30,256 17 1,790 50,677

ACCOUNTING PRINCIPLE

The group adopted the new IFRS 16 standard starting from

January 1, 2019, and applied the simplified approach to

its adoption. At the time of the transition, the Group used

exemptions concerning short-term lease agreements of at

most 12 months and assets with a maximum value of EUR

5,000, apart from leasing cars, for example, to which the

12-month exemption does not apply. Therefore, nearly all

lease agreements were recognised on the balance sheet at

the time of the transition. The interest rate applied to the

Group’s additional loan was used as the discount rate. The

cumulative effect of the deployment is presented on the

opening balance sheet on January 1, 2019.

When an agreement enters into force, the group will deter-

mine whether it is a lease agreement or whether it includes

a lease agreement. An agreement is a lease agreement or

includes a lease agreement if it provides the right to con

trol the use of a specific asset item for compensation for

a specific period.

3.4 Right-of-use assets

The group as a lessee

The Group recognises a right-of-use asset and a lease lia-

bility at the lease commencement date. Right-of-use asset

is initially measured at the original acquisition cost, includ-

ing an amount equal to the original valuation of the lease

liability, rents paid until the start date of the agreement and

expenses for returning the right-of-use asset to its original

state, less any rent incentives received.

The group leases production and office facilities. A typi-

cal lease for production facilities covers five to eight years.

Six of the Group’s eleven production plants operate in leased

premises. Some lease agreements include options to extend

the lease period or to terminate the agreement before the end

of the lease period. When a lease period starts, the group

assesses whether it is reasonably certain to exercise differ-

ent options. The group will reassess whether it is reasona-

bly certain to exercise different options if there are changes

in circumstances under its control or if significant event

takes place. The group has recognised extension options

The reclassification includes a transfer of a finance lease

asset in accordance with IAS 17 to be presented in note 3.4

”Right-of-use assets”.

Gross investments totalled EUR 21.1 million and rep-

resents 3.6% of net sales. The investments include the

acquisition price of HASEC-Elektronik GmbH shares of

EUR 10.3 million. Otherwise, they are mainly machinery

and equipment purchases. During the year, equipment

and automation investments were made in the electronics

manufacturing lines in locations including Malmö and

Pärnu, mechanics manufacturing in Myslowice and col-

laboration robots (Cobots), automated intelligent vehicles

(AIV) and warehouse automation in several factories. At

the Suzhou and Sieradz plants, investments concerned the

digitalisation of production using a manufacturing execu-

tion system (MES).

ANNUAL REPORT 2020 | 57

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

based on lease agreements totalling three to four years.

In addition, the group has lease agreements on cars and

other vehicles (mainly forklifts) and equipment. Lease agree-

ments typically cover one to four years. With regard to vehi-

cle leases, the group processes components other than lease

agreement components as separate, including servicing.

Right-of-use asset items is subsequently depreciated using

straight-line method, starting from the commencement date

of the lease agreement until the end of the lease period or

until the end of the expected useful life of each right-of-

use asset, depending on which is shorter. The expected

useful life of each right-of-use asset is determined using

the same principles that are used to determine the depreci-

ation periods of owned properties and equipment. In addi-

tion, right-of-use asset is reduced by impairment losses,

if any, and adjustments resulting from the remeasurement

of the lease liability.

The lease liability is recognised at the current value of

upcoming rents using the interest rate of incremental borrow-

ing rate as the discount rate, in which case the value of the

right-of-use asset corresponds with the amount of the lease

liability on the commencement date of the lease agreement.

The lease liability is measured using the effective interest

method. Lease liability is remeasured if there are changes in

upcoming rents due to changes in index or interest rates, if

The deductions include deductions related to the closure of the German Scanfil GmbH plant with a book value of EUR 1.2 million.

Decreases in value EUR 0.4 million is related to the revaluation of the lease agreement in the event of plant closure.

the estimated residual value guarantee to be paid changes,

or if the estimate of exercising the extension or termina-

tion option changes. When lease liability is remeasured as

described above, the book value of the right-of-use asset

will be adjusted correspondingly or the impact of the change

will be recognised through profit and loss, provided that the

book value of the right-of-use asset has decreased to zero.

Short-term lease agreements and leases of

low-value assets

The group applies recognition exemptions concerning

short-term lease agreements of at most 12 months and

assets with a low value of at most EUR 5,000. As an excep-

tion to the application of exemptions, the exemption of 12

months does not apply to leasing vehicles. Expenses related

to short-term lease agreements and asset items with a low

value are recognised on a straight-line basis in other oper-

ating expenses over the lease period.

Lease agreements previously classified as finance

leases in accordance with IAS 17

Lease agreements that were previously classified as finance

leases in accordance with IAS 17 are included in right-of-

use asset and lease liability in accordance with IFRS 16,

starting from January 1, 2019.

EUR THOUSAND Land

Buildings and

constructions

Machinery and

equipments

Tangible

assets total

Acquisition cost at 1 Jan. 2020 292 24,772 2,138 27,203

Additions 3 1,726 825 2,554

Deductions -19 -2,344 -251 -2,615

Transfers between items 520 520

Exchange rate differences -324 -31 -355

Acquisition cost at 31 Dec. 2020 276 24,349 2,681 27,306

Accumulated depreciations at 1 Jan. 2020 -42 -5,315 -887 -6,244

Depreciations -39 -2,948 -758 -3,745

Deductions 1,084 208 1,291

Decreases in value -365 -365

Transfers between items -391 -391

Exchange rate differences 18 220 35 273

Accumulated depreciations at 31 Dec. 2020 -63 -7,716 -1,402 -9,181

Carrying amount at 1 Jan. 2020 251 19,457 1,251 20,959

Carrying amount at 31 Dec. 2020 213 16,633 1,279 18,125

ANNUAL REPORT 202058 |

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

AMOUNTS RECOGNISED IN PROFIT AND LOSS, EUR THOUSAND 2020 2019

Interest on lease liabilities 690 608

Expenses relating to short-term leases 122 130

Expenses relating to leases of low-value assets, excluding short-term leases of low-value

assets

67 15

Total 879 753

The group as a lessor

The group has leased out one of its office buildings and clas-

sified this lease agreement as an operational lease agree-

ment. The group therefore recognises rents received under

this agreement as income on a straight-line basis through-

out the lease period under “other operating income.” The

group has no other agreements in the role of a lessor.

LEASE INCOME, EUR THOUSAND

2020 2019

Maturity analysis – contractual undiscounted cash flows

Within one year 59 61

In one to two years 74 61

More than five years 77

Total undiscounted lease income at 31 December 134 199

Operating lease agreement

EUR THOUSAND Land

Buildings and

constructions

Machinery and

equipments

Tangible

assets total

Acquisition cost at 1 Jan. 2019 285 17,841 1,559 19,685

Additions 4 1,733 123 1,860

Business combinations 5,959 675 6,634

Deductions -768 -219 -987

Exchange rate differences 3 7 0 10

Acquisition cost at 31 Dec. 2019 292 24,772 2,138 27,203

Accumulated depreciations at 1 Jan. 2019 -2,466 -202 -2,668

Depreciations -39 -2,809 -716 -3,564

Deductions 29 40 69

Exchange rate differences -3 -69 -9 -81

Accumulated depreciations at 31 Dec. 2019 -42 -5,315 -887 -6,244

Carrying amount at 1 Jan. 2019 285 15,376 1,357 17,017

Carrying amount at 31 Dec. 2019 251 19,457 1,251 20,959

LEASE LIABILITIES, EUR THOUSAND  2019

Maturity analysis – contractual undiscounted cash flows

Within one year 4,237 4,213

In one to two years 13,113 14,923

More than five years 4,419 6,076

Total 21,768 25,212

CARRYING AMOUNT OF LEASE LIABILITIES AT THE END OF THE FINANCIAL YEAR  2019

Long-term liabilities 15,905 18,893

Short-term liabilities 3,659 3,439

Total 19,565 22,332

Consolidation of business operations includes a right-of-use asset of EUR 0.6 million on the balance sheet on the acquisition date of

HASEC-Elektronik GmbH and right-of-use asset of EUR 5.3 million recognised for the group in accordance with IFRS 16.

ANNUAL REPORT 2020 | 59

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

ACCOUNTING PRINCIPLE

The determination principles are shown in note 3.1 “Goodwill”, 3.2 “Other intangible assets”, 3.3 “Tangible assets” and

3.4 ”Right-of-use assets”.

3.5 Depreciation, amortisation and impairment

AMORTISATION BY ASSET CLASS, EUR THOUSAND 2020 2019

Intangible assets

Intangible rights 49

Goodwill 3,602

Total 49 3,602

Property, plant and equipment

Machinery and equipment 611

Total 611

Right-of-use-assets

Buildings 365

Total 365

Total amortisation 1,025 3,602

Scanfil has decided to close German subsidiary Scanfil

GmbH’s factory in Hamburg. Impairments of EUR 1.0 mil-

lion related to machinery, equipment and the property have

been recognised in intangible assets related to the shut-

down of the factory and the discontinued operations.

DEPRECIATION BY ASSET CLASS, EUR THOUSAND 2020 2019

Intangible assets

Intangible rights 704 556

Other long-term expenses 336 343

Long-term customer relationships 1,607 1,406

Total 2,648 2,306

Property, plant and equipment

Buildings 1,624 1,899

Machinery and equipment 7,046 6,363

Total 8,670 8,262

Right-of-use-assets

Land 39 39

Buildings 2,948 2,809

Machinery and equipment 758 716

Total 3,745 3,564

Total depreciation 15,063 14,132

Depreciation and amortisation

In the previous year, based on impairment testing, the

Group has recorded an impairment of goodwill related to the

acquisition of Scanfil GmbH, EUR 3.6 million. euros. More

information on goodwill is provided in Note 3.1 “Goodwill”.

ANNUAL REPORT 202060 |

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

During the financial year 202, no new businesses were

acquired.

Scanfil plc acquired the entire share capital of the Ger

man contract manufacturer HASEC-Elektronik GmbH

(now known as Scanfil Electronics GmbH) on 17 June 2019.

The purchase price was EUR 10.3 million. The company

3.6 Acquired business

paid EUR 8.1 million of the purchase price in cash and the

remaining EUR 2.2 million by issuing a share issue to the

owners of HASEC-Elektonik GmbH as part of the purchase

price payment. Acquisition related costs of EUR 0.4 mil-

lion are mainly comprised of advisory fees and due dili-

gence expenses and is included in other operating expenses.

EUR THOUSAND Note Booked value

Tangible assets 3.3, 3.4 4,443

Long-term customer relationships 3.2 3,780

Other tangible assets 3.2 450

Shares in associated companies 502

Inventories 8,001

Trade and other receivables 1,478

Cash and cash equivalents 595

Total assets 19,248

Deferred tax liabilities 1,204

Non-current interest bearing liabilities 4,518

Trade and other liabilities 3,882

Equity loan 1,044

Total liabilities 10,648

Net assets 8,600

Goodwill arising on acquisition

Acquisition cost 10,217

Goodwill 3.1 -1,617

Purchase price in cash 8,050

Cash and cash equivalents of the acquired company 595

Cash flow 7,455

According to the acquisition cost calculation, EUR 3.8 mil-

lion was allocated to long-term customer relationships. The

deferred tax liability is EUR 1.1 million. EUR 1.6 million

of unallocated goodwill was recognised from the acquisi-

tion. EUR -0.6 million was allocated to property, plant and

equipment. The deferred tax asset is EUR 0.1 million. Scan-

fil Electronics GmbH has been consolidated into Scanfil

Group as of 17 June 2019. The effect on the Group’s turn-

over for the year 2019 was EUR 19.9 million and on net

profit for the year EUR -0.1 million. Scanfil’s turnover for

January-December 2019 would have been EUR 595.0 mil

lion and net profit for the period EUR 28.4 million if the

business acquired during the financial year had been con-

solidated as of January 1, 2019.

ANNUAL REPORT 2020 | 61

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

ACCOUNTING PRINCIPLE

Financial assets and liabilities

The company classifies the Group’s financial assets as

financial assets recognised at amortised cost, financial

assets recognised at fair value through profit or loss, or

financial assets recognised at fair value in other compre-

hensive income items. Financial assets are classified based

on the purpose of their acquisition, and they are classified

at the time of their original acquisition. The classifica-

tion is based on the company’s business goals and agree-

ment-based cash flows of financial assets, or it is carried

out by applying the fair value option in conjunction with

the original acquisition.

Financial assets recognised at amortised cost mainly

consist of trade receivables. Assets classified in this group

are valued at amortised cost using the effective interest

method. According to the Group’s business model, trade

receivables are intended to be maintained in accordance

with original agreements, and cash flows related to them

and based only on capital and interest are to be collected.

Trade receivables are current assets that the company

intends to keep for a maximum of 12 months after the end

of the reporting period. The carrying amount of current

trade receivables is considered to materially correspond to

their fair value. The accounting of impairments is described

in Note 4.7 “Credit risk”.

Financial assets recognised at fair value through profit

or loss include financial assets acquired to be held for trad-

ing or classified as items recognised at fair value during

4. CAPITAL STRUCTURE

Financial items

initial recognition. Financial assets included in this item

are non-quoted shares. Investments in non-quoted shares

are stated at the lower of historical cost and probable real-

isable value because their fair values cannot be determined

reliably. Quoted shares are measured at fair value, which is

the market price of the date of the financial statement. This

item also includes derivatives to which hedge accounting

does not apply. In the 2020 financial statements, the group

had no investments in non-quoted shares.

Financial assets entered at fair value in other compre-

hensive income are derivatives that are subject to hedge

accounting.

On the date of the financial statements, the group’s finan-

cial assets are evaluated to see if there are indications that

the value of any of the assets might be impaired.

Cash and cash equivalents include cash at bank and in

hand as well as short-term bank deposits, which can eas

ily be exchanged for an amount known in advance and for

which there is little risk of changes in value. Items classi

fied as cash and cash equivalents have a maximum matu-

rity of three months from the time of acquisition. Cash

and cash equivalents are included in the item of financial

assets recognised at amortised cost.

The group’s financial liabilities are recognised at amor-

tised cost.

The financial assets and liabilities are recognised on the

value date, apart from derivative contracts which are rec-

ognised on the transaction date.

EUR THOUSAND 2020 2019

Cash and cash equivalents 25,845 20,353

Total 25,845 20,353

4.1 Cash and cash equivalents

ANNUAL REPORT 202062 |

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

Exchange rate gains and losses have arisen from the trans-

lation of transactions and monetary items into euro. The

exchange rate items are shown under financial income and

expenses as their net amount, EUR 1.3 (0.5) million. The

operating profit includes a total of EUR -1.3 (-0.4) million

of exchange rate losses.

The translation differences related to discontinued units

have been transferred from equity to financial income and

recognised through profit or loss. The translation differ-

ences are presented in note 4.8, Shareholders’ equity.

Interest expenses consist of interest for financial liabil

ities, EUR 0.3 (0.5) million interest expenses for leases,

EUR 0.6 (0.6) million and interest expenses for using the

overdraft facility, EUR 0.1 (0.4) million. Other financial

expenses include financial liabilities commissions and

loan withdrawal fees of EUR 0.2 (0.2) million.

In 2019, Scanfil plc raised a long-term loan of EUR 30 mil

lion from Nordea Bank Finland Plc. The loan is repayable

in every six months, and the first instalment of EUR 3.0

million was paid on March 27, 2020 and the last instalment

will be paid on September 27, 2024. In addition, Nordea’s

Multicurrency Global Cash Pool is available with an over

draft facility of EUR 50 million, which was entirely unused

4.3 Financial liabilities

on December 31, 2020

The group’s financing arrangements includes termination

covenants related to the equity ratio and the ratio between

interest-bearing net liabilities and the operating margin.

The terms of the covenants are monitored on a quarterly

basis. The group fulfilled the covenant terms during the

financial periods of 2019 and 2020.

FINANCIAL LIABILITIES, EUR THOUSAND 2020 2019

Long-term liabilities recognised at amortised cost

Financial institutions 18,242 24,704

Lease liability 15,905 18,803

Total 34,147 43,508

Short-term liabilities recognised at amortised cost

Financial institutions 6,188 6,364

Drawdowns from credit facilities 13,184

Lease liability 3,659 3,534

Total 9,847 23,083

FINANCING INCOMES AND EXPENSES, EUR THOUSAND 2020 2019

Financing incomes

Dividends 100

Interest income from other financial assets 11 35

Exchange rate gains 3,648 5,130

Translation differences recognised through profit or loss 19

Other financial income 181 234

Financing incomes total 3,940 5,418

Financing expenses

Interest expenses 1,205 1,445

Exchange rate losses 4,925 4,634

Translation differences recognised through profit or loss 103

Other financial expenses 286 645

Financing expenses total 6,520 6,724

Financing incomes and expenses -2,579 -1,307

ACCOUNTING PRINCIPLE

Interest income is recognised using the effective interest method and dividend income when the right to a dividend

was created.

4.2 Financial income and expenses

ANNUAL REPORT 2020 | 63

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

4.4 Book values and fair values of financial assets and liabilities

BALANCE SHEET ITEM, EUR THOUSAND

Derivatives in

cash flow

hedging

Recognised at

fair value through

profit or loss

Financial assets and

liabilities recognised

at amortised cost

Balance sheet

items total

2020

Non-current assets

Equity investments 535 535

Current assets

Trade receivables 105,661 105,661

Cash and cash equivalents 25,845 25,845

Total financial assets 535 131,506 132,040

Non-current financial liabilities

Interest-bearing liabilities 18,242 18,242

Lease liabilities 15,905 15,905

Current financial liabilities

Interest-bearing liabilities 6,188 6,188

Lease liabilities 3,659 3,659

Derivatives, hedging 698 698

Trade payables 76,154 76,154

Total financial liabilities 698 120,148 120,846

BALANCE SHEET ITEM, EUR THOUSAND

Derivatives in

cash flow

hedging

Recognised at

fair value through

profit or loss

Financial assets and

liabilities recognised

at amortised cost

Balance sheet

items total

2019

Non-current assets

Equity investments 534 534

Current assets

Derivatives, hedging 212 212

Trade receivables 102,297 102,297

Cash and cash equivalents 20,353 20,353

Total financial assets 212 534 122,650 123,396

Non-current financial liabilities

Interest-bearing liabilities 24,704 24,704

Lease liabilities 18,803 18,803

Current financial liabilities

Interest-bearing liabilities 6,364 6,364

Drawdowns from credit facilities 13,184 13,184

Lease liabilities 3,534 3,534

Derivatives, hedging 54 54

Trade payables 72,897 72,897

Total financial liabilities 54 139,488 139,542

The fair values of financial assets and liabilities do not differ from their book values.

ANNUAL REPORT 202064 |

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

ACCOUNTING PRINCIPLE

Derivative financial instruments and hedge accounting

Derivative financial instruments are initially recognised

in accounting at fair value on the date when the group

becomes a party to the related contract and later further

valued at fair value. For derivative financial instruments to

which hedge accounting is not applied, changes in value are

immediately recognised through profit or loss. For deriv-

ative financial instruments to which hedge accounting is

applied and which are considered effective hedging instru-

ments, the impact on the result of changes in value is pre-

sented according to the hedge accounting model employed.

The Group applies cash flow hedge accounting to cur-

rency derivatives and the interest swap used to hedge a

variable-rate loan. When initiating hedge accounting, the

Group documents the relationship between the hedged item

and the hedging instruments, together with the Group’s

risk management objectives and hedging strategy. When

initiating hedge accounting, the group documents the rela-

tionship between the hedged item and the hedging instru-

ments, together with the group’s risk management objec-

tives and hedging strategy. When initiating hedging and at

least every time when preparing financial statements and

interim financial statements, the group documents and

evaluates the effectiveness of the hedging relationships by

examining the ability of the hedging instrument to negate

changes in the fair value or cash flows of the hedged item.

Any change in the fair value of the effective portion of

derivative financial instruments fulfilling the conditions

of a cash flow hedge is recognised under other compre-

hensive income and presented in equity hedging reserve

with tax consequence considered (included in “Fair value

reserves”). Profits and losses accumulated from the hedg-

ing instrument to equity are recognised through profit or

loss when the hedged item affects profit or loss.

Interest swap

The Group uses an interest swap to hedge a loan. The pur-

pose of the hedge is to offer protection against interest

rate fluctuations related to the variable-rate loan. Through

hedging, the interest payments of the variable-rate euro-de-

nominated loan are changed to have a fixed rate. Scanfil

pays a fixed rate of 0.15% every quarter, in addition to the

bank’s rate. The objective of the hedge is compliant with

the Group’s risk management principles.

The effectiveness of the hedge can be reliably measured,

and the hedge is expected to remain fully effective through-

out the validity of the hedge. The terms and conditions of

the hedged object and the hedging instrument correspond

to each other. Effectiveness is evaluated every quarter,

and the hedge has remained effective. The impact of the

derivative on results is expected to materialise during the

validity of the loan.

On December 31, 2020, the rated amount of the interest

swap was EUR 24.0 million, and it will expire on Septem

ber 27, 2024. The fair value of the derivative was EUR -0.1

million, including accumulated interest. The interest flows

of the derivative will materialise at the same time as the

interest flows of the loan.

Forward exchange contracts

The group uses forward exchange contracts for hedging

against currency risks. The group applies cash flow hedge

accounting to currency derivative contracts prepared for

hedging purposes. Changes in fair value are recognised in

other comprehensive income items adjusted for deferred

taxes and presented in the fair value reserve under equity.

4.5 Derivative financial instruments and hedge accounting

The company uses forward exchange contracts for hedging against currency risk and interest swaps for managing the interest rate

risk. The table shows the interest rate derivatives at net values and currency derivatives at gross values.

EUR THOUSAND Positive Negative Net

Nominal

value

Book value,

liabilities

Changes in

fair values

(used in effi-

ciency testing)

2020

Interest rate swaps -66 -66 24,000 -66 -53

Forward exchange contracts, hedge accounting 38 -670 -632 24,381 -632 -674

Total -698 48,381 -698

EUR THOUSAND Positive Negative Net

Nominal

value

Book value,

liabilities

Changes in

fair values

(used in effi-

ciency testing)

2019

Interest rate swaps -54 -54 13,250 -54

Forward exchange contracts, hedge accounting 302 -90 212 23,465 212 251

Total 158 23,465 158

Interest and currency derivatives

ANNUAL REPORT 2020 | 65

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

CASH FLOW HEDGING, EUR THOUSAND

Hedging instrument

nominal value

Hedging instrument book

value, liabilities

Hedging instrument included

in balance sheet item

2020

Interest rate swaps 24,000 -66 Other liabilities

Forward exchange contracts, hedge accounting 24,381 -632 Other assets

Total 48,381 -698

CASH FLOW HEDGING, EUR THOUSAND

Hedging instrument

nominal value

Hedging instrument

book value, liabilities

Hedging instrument included

in balance sheet item

2019

Interest rate swaps 13,250 -54 Other liabilities

Forward exchange contracts, hedge accounting 23,465 212 Other assets

Total 36,715 158

CASH FLOW HEDGING, EUR THOUSAND

Cash flow hedging,

share of fair value reserve

2019

Forward exchange contracts, hedge accounting 251

Total 251

CASH FLOW HEDGING, EUR THOUSAND

Hedging item value,

liabilities

Hedging items included

in balance sheet item

Cash flow hedging,

share of fair value reserve

2020

Interest rate swaps, hedge accounting 24,000 Financial liabilities -53

Forward exchange contracts, hedge accounting -674

Total 24,000 -727

Forward exchange contracts are used to hedge expenses denominated in Polish zloty.

4.6 Hierarchy of fair values

EUR THOUSAND Level 2 Level 3

2020

Assets measured at fair value

Recognised at fair value through profit or loss

Equity investments 535

Liabilities measured at fair value

Financial liabilities at fair value through profit or loss

Derivatives 698

Liabilities recognised at amortised cost

Financing loan 24,429

EUR THOUSAND Level 2 Level 3

2019

Assets measured at fair value

Recognised at fair value through profit or loss

Equity investments 534

Assets measured at fair value

Derivatives, hedging 212

Liabilities measured at fair value

Financial liabilities at fair value through profit or loss

Derivatives 54

Liabilities recognised at amortised cost

Financing loan 31,068

ANNUAL REPORT 202066 |

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

The fair values of Tier 2 instruments are to a significant

extent based on data that can be observed indirectly (e.g.

derived from the prices) for the asset or liability in ques-

tion. When determining the fair value of these instru-

ments, the group utilises widely accepted measurement

models whose input data, however, is significantly based

on observable market data.

In the comparison year 2019, the increase in financial assets

measured at fair value consists of shares of IMG Electronic

& Power Systems GmbH and EMS-Electra SRL, owned by

Scanfil Electronics GmbH. Other financial assets meas-

The fair values of Tier 3 instruments are based on input

data concerning the asset that are not based on observable

market data but significantly on the estimates of the man-

agement and their use in widely accepted measurement

models. Tier 3 items are unlisted shares.

There were no transfers between tiers during the finan

cial period.

ured at fair value include golf club shares and shares in an

employee brokerage agency. These are included in finan

cial assets recognised at fair value through profit or loss.

4.7 Financial risk management

In its business operations, Scanfil Group is exposed to dif-

ferent financial risks. The group’s treasury operations and

financial risks are managed centrally in compliance with

the principles approved by the parent company’s Board of

Directors. Scanfil’s financial function, part of the group’s

financial management, provides the financial services and

handles financing transactions centrally for all group com-

panies. The goal is cost-efficient risk management and

optimisation of cash flows.

Currency risk

Scanfil has international operations and is therefore

exposed to transaction and translation risks in several

currencies. The transaction risk consists of operating and

financing cash flows denominated in foreign currencies.

The translation risk is related to the conversion of foreign

subsidiaries’ income statements and balance sheets into

euro.

Transaction risk

The group’s operating currency is the euro. Scanfil’s turn-

over is mainly generated in EUR, RMB, USD and SEK. Half

of the group’s turnover is generated in the group’s oper-

ating currency.

FINANCIAL ASSETS AT FAIR VALUE, EUR THOUSAND 2020 2019

Cost at 1 Jan. 534 33

Additions 502

Exchange rate differences 1 0

Cost at 31 Dec. 535 534

Carrying amount at 31 Dec. 535 534

Tier 3 reconciliation item

BREAKDOWN OF TURNOVER BY CURRENCY

SEK 13 %

CNY 15 %

USD 16 %

EUR 56 %

SEK 13 %

CNY 15 %

USD 17 %

EUR 55 %

2020 2019

EUR 56%

USD 16%

CNY 15%

SEK 13%

EUR 55%

USD 17%

CNY 15%

SEK 13%

ANNUAL REPORT 2020 | 67

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

A significant part of the business is done in local operating

currencies, which does therefore not create any transaction

risk. In addition to the above currencies, the most signifi-

cant transaction risk associated with the business concern

the Polish zloty. Very little sales revenues are created in

local currency in Poland, but the local expenses, such as

salaries, taxes, etc. are zloty-denominated.

The purpose of currency risk management is to mit-

igate the uncertainty created by exchange rate fluctua-

tions regarding the group’s financial results, cash flows

The net positions associated with financial assets and net working capital are shown below in euros for the main currencies.

and balance sheet. Currency risks can be hedged with for

ward exchange contracts. The group’s financial function

is responsible for all hedging actions.

The financial statements of December 31, 2020 include

outstanding EUR/PLN and PLN/SEK forward exchange

contracts made for hedging purposes. Their nominal

value is EUR 24.4 (23.5) million, and the group applies

hedge accounting to them. Forward contracts are made

on a monthly basis, and the final contract will expire on

December 29, 2021.

TRANSACTION RISK, EUR THOUSAND 2020

Foreign currency USD USD SEK EUR PLN EUR EUR USD CNY

Reporting currency EUR CNY EUR SEK EUR PLN CNY SEK EUR

Cash and cash equivalents 53 42 1 616 1,087 48

Trade receivables 891 2,291 2,228 17,935 4,514 585 9,173

Trade payables -3,009 -3,908 -146 -3,455 -141 -9,325 -2,377 -2,336 -1,898

Global Cash Pool 816 5,068 3,832

Net position -1,250 -1,576 4,922 -1,227 3,693 9,225 3,223 -1,751 7,323

TRANSACTION RISK, EUR THOUSAND 2019

Foreign currency USD USD SEK EUR PLN EUR EUR USD CNY

Reporting currency EUR CNY EUR SEK EUR PLN CNY SEK EUR

Cash and cash equivalents 97 520 48 632

Trade receivables 93 4,758 2,483 14,913 4,252 1,120

Trade payables -1,309 -5,468 -161 -3,139 5 -7,681 -2,401 -2,506

Global Cash Pool 4,804 188 -3,652

Net position 3,685 -189 27 -656 -3,647 7,280 2,483 -1,386 0

TRANSACTION RISK: NET POSITION

EUR THOUSAND

2020

2019

EUR CNY EUR SEK EUR PLN CNY SEK EUR

USD USD SEK EUR PLN EUR EUR USD CNY

, , , , , , , , ,

,    , , , , 

Net position 2020

Net position 2019

-4000

-2000

2000

4000

6000

8000

10000

EUR-CNYSEK-USDCNY-EURPLN-EUREUR-PLNSEK-EUREUR-SEKCNY-USDEUR-USD

ANNUAL REPORT 202068 |

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

The impact on the group’s result of a change of 10% in the exchange rate of a foreign currency relative to the euro is shown

below. Tax consequences have not been considered.

Translation risk

The translation risk consists of the equities of foreign sub-

sidiaries. The policy regarding the translation risk is that

equity is not hedged.

The group’s translation position per currency and a sensi-

tivity analysis, presenting the impact of a change of 10% in

the exchange rate of a foreign currency, are presented below.

Sensitivity analysis +/- 10%

TRANSLATION RISK, EUR THOUSAND 2020 2019 2020 2019

CNY 35,267 45,336 +/- 3,526 +/- 4,534

HUF 1,446 1,443 +/- 145 +/- 144

NOK -27 -50 -/+ 3 -/+ 5

PLN 40,896 34,318 +/- 4,090 +/- 3,432

SEK 60,896 53,819 +/- 6,090 +/- 5,382

USD 6,791 5,194 +/- 679 +/- 519

Total 145,270 140,059

Interest rate risk

The interest rate risk is associated with interest-bearing lia-

bilities. Changes in the interest rates mainly affect the fair

values of interest-bearing liabilities in the balance sheet

and the interest payments associated with these liabilities.

Interest swaps are used for managing the interest rate risk.

The Group took out a loan in 2019, of which EUR 24.0

million was outstanding on December 31, 2020. The loan

was hedged with an interest swap on December 28, 2020.

On the basis of the interest swap, Scanfil receives a vari-

able Euribor three-month rate and pays a fixed five-year

rate. The loan interest margin includes covenant condi-

tions. Depending on the development of the interest cov-

enant condition (interest-bearing liabilities/EBITDA), the

interest rate of the loan can increase by a maximum of 0.35

percentage points.

Credit risk

The group’s credit risk is associated with the trade receiv-

ables from its customers. Overdue trade receivables are

regularly monitored at the group level on a monthly basis.

The group companies are responsible for the credit risks

of trade receivables, and they monitor trade receivables

on a customer-specific basis in compliance with the group

guidelines. The creditworthiness of new customers is

checked, and the customers are only granted normal pay-

ment terms. Scanfil monitors the credit rating of its custom-

ers. Most of Scanfil’s major customers have a good credit

rating. The group’s management is of the opinion that the

company does not have any significant concentration of

credit risks. The largest customer’s share of the turnover

in 2020 was 15.0% (14.3% in 2019), and that of the ten larg-

est customers was 58.6% (55.8%).

Special attention has been paid to the collection of trade

receivables during the pandemic, and the total overdue trade

receivables are at the level before the pandemic. Customer

risks are monitored regularly. The coronavirus pandemic

has affected the solvency of some smaller customers, but the

related risks are moderate and under control. With regard

to identified risk-bearing customers, not even a realised

credit loss would endanger the Group’s operations.

Trade receivables are measured at acquisition cost less

the provision of any expected impairment losses. Accord-

ing to IFRS 9, impairment provisions must be recognised

on the basis of expected credit losses. A simplified model

must be applied to trade receivables, in which the estimated

amount of credit losses is based on percentages defined on

the basis of the age distribution of the receivables. These

percentages are based on the estimated probability of credit

losses and historical information. Impairment losses are

recorded as expenses in the income statement. At the end

of the financial period, the expected credit loss provision

stood at EUR 70 (42) thousand. During the financial period,

credit losses recognised from trade receivables were EUR

2 (2) thousand.

The age distribution of trade receivables is shown in note

2.3, “Trade and other receivables.”

The counterparty risk associated with investments in

financial markets is managed by only accepting banks with

high credit ratings as counterparts.

Liquidity risk

The purpose of cash and liquidity management is to con-

centrate the group’s management of cash and cash equiv-

alents, thus ensuring efficient use of the funds. The group

has a Multicurrency Global Cash Pool arrangement in place

Foreign currency USD USD SEK EUR PLN EUR EUR USD CNY

Reporting currency EUR CNY EUR SEK EUR PLN CNY SEK EUR

Change in currency % +/- 10

Year 2020, EUR THOUSAND +/- 125 +/- 158 +/- 492 +/- 123 +/- 369 +/- 923 +/- 322 +/- 175 +/- 732

USD USD SEK EUR PLN EUR EUR USD CNY

EUR CNY EUR SEK EUR PLN CNY SEK EUR

Change in currency %

Year 2019, EUR THOUSAND +/- 368 +/- 19 +/- 3 +/- 66 +/- 365 +/- 728 +/- 248 +/- 139 +/- 0

ANNUAL REPORT 2020 | 69

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

Changes not affecting cash flow

EUR THOUSAND 1.1.2020 Cash flows

Changes in

IFRS 16

Changes in

exchange rates

Changes in

fair values 31.12.2020

Long-term loans 24,704 -6,463 18,242

Short-term loans 19,548 -13,361 6,188

Lease liabilities 22,338 -3,990 1,328 -110 19,565

Derivative assets hedging

long-term loans 54 -54 66 66

Total liabilities in financial operations 66,645 -23,868 1,328 -110 66 44,060

Changes not affecting cash flow

EUR THOUSAND 1.1.2019 Cash flows

Changes in

IFRS 16

Date of

acquisition

Changes in

exchange rates

Changes in

fair values 31.12.2019

Long-term loans 23,750 -1,671 2,625 24,704

Short-term loans 19,865 -2,923 2,607 0 19,548

Lease liabilities 18,562 -3,347 7,249 -126 22,338

Derivative assets hedging

long-term loans 196 -142 54

Total liabilities in financial operations 62,372 -7,941 7,249 5,232 -126 -142 66,645

The opening balance of lease liabilities includes EUR 14.8 million entered in the introduction of the IFRS 16 standard and the financial

lease liabilities of the reference year of EUR 3.7 million, which were previously included in short-term loans.

Reconciliation of changes in financial liabilities with cash flows from financing

.., EUR THOUSAND

Balance

sheet value Cash flow 0–6 months

2021

6 months–

1 year

2022

1–2 years

2023-2025

2–5 years

2026–

more than 5

years

Loans from financial institutions 24,429 24,850 3,193 3,181 6,294 12,182

Finance lease 19,565 21,768 2,180 2,057 3,504 9,609 4,419

Derivatives 66 66 66

Derivatives, hedging 632

Cash flow due 24,381 17,804 6,577

Available cash flow -23,749 -17,330 -6,420

Trade payables 76,154 76,154 76,154

Total 120,846 123,470 82,067 5,395 9,798 21,791 4,419

.., EUR THOUSAND

Balance

sheet value Cash flow 0–6 months

2020

6 months–

1 year

2021

1–2 years

2022-2024

2–5 years

2025–

more than 5

years

Loans from financial institutions 31,068 31,817 3,504 3,411 6,395 18,506

Finance lease 22,338 25,212 2,192 2,021 3,946 10,977 6,076

Overdraft facility 13,184 13,184 13,184

Derivatives 55 55 55

Derivatives, hedging -212

Cash flow due 23,465 17,448 6,016

Available cash flow -23,676 -17,632 -6,045

Trade payables 72,894 72,894 72,894

Total 139,328 142,950 91,646 5,404 10,341 29,483 6,076

Maturity analysis based on debt agreements

for ensuring the efficient use of cash and cash equivalents.

On December 31, 2020, liquid assets stood at EUR 25.8

(20.4 in 2019) million. In addition, the group has an EUR

50.0 million credit limit which was unused at the end of

the year. Considering the group’s balance sheet structure,

the liquidity risk is small and the COVID-19 pandemic has

not had a negative impact on the Group’s liquidity. The

Group’s financial position has improved compared to the

pre-pandemic period due to e.g. the sale of the subsidiary.

The group’s financing arrangements include usual loan

covenant terms. The group has fulfilled the financing-related

covenant terms during the financial periods of 2019 and 2020.

Maturity analysis based on debt agreements

The figures are undiscounted and include the interest pay-

ments and repayments of capital based on the agreements.

ANNUAL REPORT 202070 |

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

4.8 Shareholders’ equity

Shares and share capital

Scanfil plc has a total of 64,829,993 shares. The compa-

ny’s registered share capital is EUR 2,000,000.00. The

company has one series of shares, and all shares belong

to the same class. Each share entitles the holder to one

vote and equal entitlement to dividends. The share has no

nominal value.

Currency translation differences

Currency translation differences include differences aris-

ing from the conversion of the financial statements of for-

eign companies. On December 31, 2020, translation differ-

ences stood at EUR -6.1 million (EUR 4.6 million in 2019),

of which EUR 2.1 (11.2) million was created by the exchange

rate changes of the Chinese RMB, -4.9 (-9.3) Swedish krone

and -2.5 (2.7) Polish zloty. The translation difference, EUR

-2.8 million (0.3 million) during the financial period, is

Fair value reserve

The fair value reserve includes the change in value of the

interest rate derivable due to cash flow hedging and the

changes in fair value of currency derivatives concluded for

Scanfil plc’s shares are quoted on Nasdaq Helsinki Oy.

The trading code of the shares is SCANFL. The shares are

included in the book-entry securities system maintained

by Euroclear Finland Ltd.

The company has acquired its own shares during the

financial year. On December 31, 2020, the company held

358,738 of its own shares

mainly made up by the exchange rate changes of the Swed-

ish currency, EUR -4.4 (-1.2) million, and Polish currency,

EUR -5.2 (1.1) million.

Related to the sale of the Chinese subsidiary, EUR 7.9

million of the translation differences have been transferred

from equity to be recognised through profit or loss. The

translation differences of discontinued units EUR -0.1 (0.0)

million have been transferred from equity to be recognised

through profit or loss.

hedging purposes. The derivative instruments recorded in

the fair value reserve are discussed in closer detail in note

4.5, Derivative financial instruments and hedge account-

ing.

NUMBER OF SHARES 2020

Number of shares at 1 Jan. 2020 64,699,993

Share subscription under option rights 2016A on May 4 and 5, 2020 130,000

Number of shares at 31 Dec. 2020 64,829,993

NUMBER OF SHARES 2019

Number of shares at 1 Jan. 2019 64,035,439

Share issue 544,554

Share subscription under option rights 2013C on July 4, 2019 90,000

Share subscription under option rights 2016A on December 12, 2019 30,000

Number of shares at 31 Dec. 2019 64,699,993

EUR THOUSAND RMB SEK NOK USD PLN HUF Total

1.1.2020 11,175 -9,292 0 63 2,705 -50 4,601

Recorded in comprehensive

income items

-1,166 4,391 -103 -592 -5,229 -137 -2,836

Transferred to be recognised

through profit or loss

-7,931 103 -7,828

31.12.2020 2,079 -4,901 0 -529 -2,524 -187 -6,063

FAIR VALUE RESERVE, EUR THOUSAND 2020 2019

1.1. 168 -225

Interest rate derivatives, change -53 143

Currency derivatives, change -674 251

Total -558 168

Of the derivative financial instruments, EUR 3 (17) thousand has been recognised through profit or loss.

ANNUAL REPORT 2020 | 71

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

Other reserves

Other reserves include a reserve that includes transfers

from retained earnings in accordance with the Articles of

Association of foreign companies.

Reserve for invested unrestricted equity

The reserve for invested unrestricted equity includes other

equity investments and the subscription price of shares

to the extent that it is not recognised in share capital pur-

suant to a specific decision. The payments received from

share subscriptions made on the basis of option schemes

are recorded in their entirety in the reserve for invested

unrestricted equity.

Dividend

In 2020, dividends of EUR 0.15 per share were paid, in total

EUR 9,659,998.95.

After the reporting date, the Board of Directors has pro-

posed a dividend of EUR 0.17 per share to be distributed,

in total EUR 10,960,113.35.

4.9 Management of capital structure

The objective of the group’s capital management is to ensure

normal prerequisites for business operations. Development

of the group’s capital structure is monitored through net

gearing. The capital structure is regularly reviewed. The

shareholders’ equity on the consolidated balance sheet is

managed as capital. No external capital requirements are

applied to the group.

The group’s long-term goal is that net gearing does not

exceed 50%.

NET LIABILITIES, EUR THOUSAND 2020 2019

Interest-bearing liabilities 43,994 66,590

Cash assets -25,845 -20,353

Net liabilities 18,149 46,238

Equity total 182,876 166,688

Gearing, % 9.9 27.7

ACCOUNTING PRINCIPLE

A provision is recognised in the balance sheet when a past

event has created an obligation that will probably be real

ised and when the amount of the obligation can be relia-

bly estimated.

5. OTHER NOTES

5.1 Provisions

Use of estimates

Estimates are required when assessing the amount of pro-

visions associated with business operations.

PROVISIONS, EUR THOUSAND

Reclamation and

quarantee

Pension

provision

Other

provisions

Restructuring

provisions Total

1.1.2020 179 90 336 606

Exchange rate differences -5 -6 -22 -34

Additions 64 34 121 3,983 4,201

Cancellation of unused provisions -38 -38

31.12.2020 199 118 435 3,983 4,736

2020 2019

Non-current provisions 553 427

Current provisions 4,183 179

Total 4,736 606

The complaint and warranty provision includes the esti-

mated cost of repairing defective products that is related

to customer complaints and warranty obligations and any

fees resulting from delayed deliveries. Other provisions

are related to a benefit payable on the basis of years of ser-

vice, which was locally agreed in Poland and is applicable

to employees with a long history of service in the company.

Restructuring provision includes the closing cost of the

Scanfil GmbH Hamburg factory and is mainly related to

personnel expenses.

ANNUAL REPORT 202072 |

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

The increase in the amount of bank guarantees during the

year 2019 is mainly due to guarantees given to a customer

in relation to a storage arrangement. In addition to the

aforementioned commitments, the following guarantees

have been given:

Scanfil plc has given absolute guarantees to Nordea Bank

AB (publ) as security for payment of the liabilities which

Scanfil Sweden AB has created from time to time towards

Nordea Bank AB (publ) on the basis of derivative contracts

concluded, as well as to Skandinaviska Enskilda Banken

AB as a replacement for the securities earlier provided by

Scanfil Sweden AB. The maximum liability to Skandina

viska Enskilda Banken AB is EUR 3.6 million. Scanfil plc

has given a guarantee to its subsidiary Scanfil Inc regard

ing lease liabilities.

Scanfil EMS Oy has provided a guarantee of any obliga-

tions arising from the subsidiary’s delivery contracts with

its customers. The guarantee is limited to a maximum of

EUR 7.5 million and will expire seven years after the end

of the last product agreement.

Securities provided

BUSINESS MORTGAGES, EUR THOUSAND 2020 2019

Total 10,000

GUARANTEES GIVEN, EUR THOUSAND

On behalf of own company 671 8,399

On behalf of Group company 175 188

Total 846 8,587

5.2 Securities provided, contingent liabilities and other liabilities

The management includes the parent company’s Board of Directors, CEO and Management Team members.

One of the Board members has a valid voluntary pension insurance policy on a payment basis.

EMPLOYEE BENEFITS FOR MEMBERS OF THE MANAGEMENT, EUR THOUSAND 2020 2019

Salaries and other short-term employee benefits 1,364 1,812

Options implemented and paid in shares 366 124

Post-employment benefits 2

Total 1,731 1,938

SALARIES PAID TO THE PRESIDENT, EUR THOUSAND 2020 2019

Salaries and other short-term employee benefits 387 541

Options implemented and paid in shares 132 71

Total 519 612

STATUTORY PENSION EXPENDITURE, TYEL 2020 2019

Petteri Jokitalo 72 101

The group’s related parties include, in addition to group companies, the key members of management, i.e., the members

of the parent company’s Board of Directors and the group’s Management Team.

5.3 Details of related parties and group structure

ANNUAL REPORT 2020 | 73

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

The salary information is payment-based.

SALARIES PAID TO THE BOARD MEMBERS, EUR THOUSAND 2020 2019

Harri Takanen 51 49

Jarkko Takanen 32 30

Bengt Engström 30 28

Christer Härkönen 28 26

Christina Lindstedt 30 29

Juha Räisänen 17

Total salaries of the Board Members 187 162

Leases to related parties

Scanfil plc’s subsidiary Scanfil EMS Oy has leased office

premises from Kiinteistö Oy Pilot 1. The main shareholder

of Jussi Real Estate Oy, the owner of Kiinteistö Oy Pilot 1,

is Jussi Capital Oy. The main shareholders of Jussi Capi-

tal Oy are Scanfil plc’s Board members Harri Takanen and

Jarkko Takanen. In 2020, the market rents paid totalled

EUR 27,360 (EUR 26,300 in 2019).

A consulting agreement dated 30 November 2020 has

been signed between Valuenode GmbH, a company con-

trolled by Juha Räisänen, a member of Scanfil plc’s Board

of Directors, on the analysis and development project of

the Scanfil Group’s procurement operations. Based on the

consulting agreement, Scanfil plc will pay approximately

EUR 50,000 of consulting fees during 2021.

Group companies Domicile

Group’s

ownership Share of vote

Parent company´s

ownership

Scanfil plc, parent company; Finland

Scanfil EMS Oy Finland 100% 100% 100%

Scanfil GmbH Germany 100% 100% 100%

Scanfil Electronics GmbH Germany 100% 100% 100%

Scanfil Holding Germany GmbH Germany 100% 100% 100%

Scanfil Oü Estonia 100% 100% 100%

Scanfil (Suzhou) Co., Ltd. China 100% 100% 100%

ScanfilPoland Sp. z o.o. Poland 100% 100% 100%

Scanfil Sweden AB Sweden 100% 100% 100%

Scanfil Vellinge AB Sweden 100% 100% 100%

Scanfil Åtvidaberg AB Sweden 100% 100% 100%

Scanfil Atlanta Inc. USA 100% 100% 100%

Scanfil Business Services Kft Hungary 100% 100% 100%

PartnerTech AS Norway 100% 100% 100%

HASEC-Elektronik Sp. Z o.o. Poland 100% 100% 100%

No material events to be reported have occurred after the

reporting period.

5.4 Events after the reporting period

ANNUAL REPORT 202074 |

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

PARENT COMPANY

FINANCIAL STATEMENTS, FAS

PARENT COMPANY INCOME STATEMENT

EUR THOUSAND Note 1.1.–31.12.2020 1.1.–31.12.2019

Other operating income 1,924 2,335

Personnel expenses 1

Wages, salaries and fees -1,669 -1,624

Pensions and statutory indirect employee costs

Pensions -217 -258

Statutory indirect employee costs -55 -45

Personnel expenses total -1,941 -1,927

Depreciation and reduction in value

Depreciation according to plan 3 -40 -29

Depreciation and reduction in value total -40 -29

Other operating expenses 2 -782 -710

Operating profit -839 -330

Financial income and expenses

Financial income from Group 40,000 11,000

Other interest and financial income

From Group 801 1,024

From other 2,005 544

Interest expenses and financial expenses

To Group -71 -246

To other -3,161 -1,360

Financial income and expenses total 39,574 10,962

Profit before appropriations and taxes 38,735 10,632

Appropriations

Depreciation difference increase

Group contribution 4 1,000 1,000

Appropriations total 1,000 1,000

Profit before tax 39,735 11,632

Income taxes 5

Income taxes 6 -139

Deferred taxes 41 11

Income taxes total 47 -128

Net profit for the period 39,782 11,504

ANNUAL REPORT 2020 | 75

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

PARENT COMPANY BALANCE SHEET

EUR THOUSAND Note 31.12.2020 31.12.2019

ASSETS

Non-current assets

Intangible assets

Immaterial rights 6 18 25

Other non-current assets 146 7

Intangible assets total 164 33

Tangible assets

Plant and equipment 67

Other tangible assets 7 17 17

Tangible assets total 83 17

Investments

Holdings in Group companies 8 61,535 61,469

Investments total 61,535 61,469

Total non-current assets 61,782 61,519

Current assets

Long-term receivables

Loan receivables from Group companies 9 33,141 25,389

Deferred tax assets 178 11

Long-term receivables total 33,320 25,400

Short-term receivables

Receivables from Group companies 9 12,504 50,869

Accrued income 174 207

Short-term receivables total 12,678 51,076

Cash and cash equivalents 10 19,183 0

Total current assets 65,181 76,477

Total assets 126,963 137,995

ANNUAL REPORT 202076 |

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

PARENT COMPANY BALANCE SHEET

EUR THOUSAND Note 31.12.2020 31.12.2019

SHAREHOLDER’S EQUITY AND LIABILITIES

Equity

Share capital 11 2,000 2,000

Other reserves

Fair value reserve -506 113

Reserve for invested unrestricted equity fund 32,176 31,317

Retained earnings 1,777 665

Profit for the period 39,782 11,504

Total Equity 75,229 45,599

Non-current liabilities

Financing loan 12 18,000 24,000

Deferred tax liabilities 28

Non-current liabilities total 18,000 24,028

Current liabilities

Financing loans 12 6,000 19,184

Financial loans from Group companies 4,780

Trade liabilities 82 217

Liabilities to Group companies 13 26,093 43,212

Other creditors 66 96

Accrued liabilities 14 1,493 880

Current liabilities total 33,734 68,368

Total liabilities 51,734 92,396

Total equity and liabilities 126,963 137,995

ANNUAL REPORT 2020 | 77

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

PARENT COMPANY CASH FLOW STATEMENT

EUR THOUSAND 1.1.–31.12.2020 1.1.–31.12.2019

Cash flow from operating activities

Profit for the period 39,782 11,504

Adjustments

Depreciation according to plan 40 29

Financial income and expenses -39,574 -10,962

Other income and expenses without payment

Tax accrual -47 128

Group contributions received -1,000 -1,000

Exchange rate differences -634 147

Changes in working capital

Inc(-)/dec(+) in short-term non-interest bearing receivables 321 88

Inc(+)/dec(-) in short-term non-interest-bearing liabilities -7 -191

Interest received 756 943

Interest paid -618 -1,273

Income taxes paid -131 -119

Net cash flow from operating activities -1,111 -707

Cash flow from investing activities

Investments in tangible and intangible assets -238

Paid loans -4,780

Investments in subsidiary shares -66 -8,467

Granted loans -15,000 -12,000

Received loan payments 4,250

Net cash flow from investing activities -15,834 -20,467

Cash flow from financing activities

Received group contributions 1,000 1,500

Dividents received 51,000 8,000

Related party investments to company shares 858 363

Share repurchase -755 -1,239

Changes in group financing -339 14,624

Drawdown of short-term loans 5,250

Repayment of short-term loans -5,250

Drawdown of long-term loans 30,000

Repayment of long-term loans -6,000 -23,750

Dividends paid -9,637 -8,325

Net cash flow from financing activities 36,127 21,174

Net increase/decrease in cash and cash equivalents 19,183 0

Cash and cash equivalents Jan 1. 0 0

Cash and cash equivalents Dec 31. 19,183 0

Changes in group financing are presented in net and are related to the group’s Cash Pool.

ANNUAL REPORT 202078 |

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

Pension costs are based on defined contribution schemes.

Management’s employee benefits are reported in note 18.

Scanfil plc is a Finland-based public limited company dom-

iciled in Sievi. The company’s shares are quoted on the

Main List of Nasdaq Helsinki Ltd. The financial statements

of Scanfil plc have been prepared in accordance with the

Finnish Accounting Act and other legislation and regula-

tions in force in Finland.

MEASUREMENT AND RECOGNITION PRINCIPLES

AND METHODS

Fixed assets

Fixed assets are measured at historical cost less accumu-

lated depreciation and impairment. Depreciation is cal-

culated on a straight-line basis over the expected useful

lives of the assets.

THE DEPRECIATION PERIODS FOR FIXED ASSETS ARE AS FOLLOWS:

Intellectual property rights 5 years

Other long-term expenses 5 years

Machinery and equipment 3–5 years

Subsidiary company shares

Shares in subsidiaries have been measured at the acqui-

sition cost, which is adjusted by impairment if the future

returns on the investment are expected to be permanently

lower than the acquisition cost.

EUR THOUSAND 2020 2019

Salaries, wages and fees 1,669 1,624

Pension costs 217 258

Other indirect employee expenses 55 45

Total 1,941 1,927

Fringe benefits (taxable value) 38 41

AVERAGE NUMBER OF EMPLOYEES DURING THE PERIOD 2020 2019

Clerical employees 13 13

Total 13 13

1. Personnel expenses

NOTES TO FINANCIAL STATEMENTS, FAS

Financial instruments

Financial assets and liabilities are measured at the lower

of cost and probable realisable value.

The group’s bank account system

The assets and liabilities of the subsidiaries included in

Scanfil plc’s group account systems are shown as offset at

Scanfil plc, either as cash and bank receivables or as short-

term financial liabilities and short-term receivables from

group companies or as short-term debts to group companies.

Turnover

The parent company’s operations consist of group func-

tions, and income from the sale of services is presented

as turnover.

Pension costs

The pension cover of employees is provided by pension

insurance companies. Pension expenses are recognised

as expenses for the year during which they are accrued.

Foreign currency items

Foreign currency-denominated transactions are recognised

during the financial period using the exchange rates on the

transaction date. Any foreign currency-denominated bal-

ance sheet items remaining outstanding on the closing date

are measured at the exchange rate valid on the closing date.

The parent company’s accounting principles

ANNUAL REPORT 2020 | 79

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

Other operating costs mainly consist of legal and consultation expenses, travelling expenses and statutory expenses of a listed

company.

OTHER OPERATING EXPENSES INCLUDE THE FOLLOWING SIGNIFICANT EXPENSE ITEMS,

EUR THOUSAND 2020 2019

Other operating expenses 782 710

Total 782 710

EUR THOUSAND 2020 2019

Group contribution from Scanfil EMS Oy 1,000 1,000

Total 1,000 1,000

2. Other operating expenses

3. Depreciation and amortisation

4. Contributions from Group companies

5. Income taxes

AUDITOR’S REMUNERATION, EUR THOUSAND

Auditor's remunerations of the Chartered Accountants 57 42

Tax advisor 9 17

Other services 55 165

Total 120 224

EUR THOUSAND 2020 2019

Income taxes from group contribution 200 200

Income taxes from actual operations -252 -63

Income taxes from previous years -6 2

Change in deferred taxes 11 -11

Total -47 128

DEPRECIATION BY ASSET CLASS, EUR THOUSAND 2020 2019

Intangible assets

Intangible rights 18 22

Other long-term expenses 13 6

Plant and equipment 9

Total 40 29

Total depriciation 40 29

ANNUAL REPORT 202080 |

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

6. Intangible assets

7. Tangible assets

EUR THOUSAND

Intangible

rights

Other long-term

expenses

Intangible assets

total

Acquisition cost Jan 1, 2020 110 32 143

Additions 11 152 163

Acquisition cost Dec 31, 2020 121 184 305

Accumuled depreciations Jan 1, 2020 -85 -25 -110

Deprecions -18 -13 -31

Accumuled depreciations Dec 31, 2020 -103 -38 -141

Carrying amount Jan 1, 2020 25 7 33

Carrying amount Dec 31, 2020 18 146 164

EUR THOUSAND

Intangible

rights

Other long-term

expenses

Intangible assets

total

Acquisition cost Jan 1, 2019 110 32 143

Additions

Acquisition cost Dec 31, 2019 110 32 143

Accumulated depreciations Jan 1, 2019 -63 -18 -81

Depreciations -22 -6 -29

Accumulated depreciations Dec 31, 2019 -85 -25 -110

Carrying amount Jan 1, 2019 48 14 61

Carrying amount Dec 31, 2019 25 7 33

EUR THOUSAND

Plant and

equipment

Other

tangible assets

Tangible assets

total

Acquisition cost Jan 1, 2020 17 17

Additions 76 76

Acquisition cost Dec 31, 2020 76 17 92

Accumuled depreciations Jan 1, 2020

Depreciations 9 9

Accumuled depreciations Dec 31, 2020 9 9

Carrying amount Jan 1, 2020 17 17

Carrying amount Dec 31, 2020 67 17 83

EUR THOUSAND

Other

tangible assets

Tangible assets

total

Acquisition cost Jan 1, 2019 17 17

Acquisition cost Dec 31, 2019 17 17

Carrying amount Jan 1, 2019 17 17

Carrying amount Dec 31, 2019 17 17

ANNUAL REPORT 2020 | 81

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

8. Holdings in Group companies

9. Receivables from Group companies

10. Cash and equivalent

EUR THOUSAND 2020 2019

Total in the beginning of period 61,469 61,444

Scanfil Holding Germany GmbH, additions 66 25

Total at the end of period 61,535 61,469

Carrying amount at 31 Dec. 61,535 61,469

EUR THOUSAND 2020 2019

Long-term receivables

Loan receivables 33,141 25,389

Total 33,141 25,389

Short-term receivables

Prepayments and accrued income 1,177 12,000

Global Cash Pool receivables 6,269 36,255

Loan receivables 5,000 2,000

Other receivables 58 614

Total 12,504 50,869

Prepayments and accrued income

Interest income from group 177 124

Group contribution from subsidiaries 1,000 1,000

Dividends from group 11,000

Total 1,177 12,000

EUR THOUSAND 2020 2019

Cash and bank balances 19,183 0

Total 19,183 0

GROUP COMPANIES, EUR THOUSAND Domicile

Group

share %

Parent company

share %

Parent company

book value

Scanfil EMS Oy Finland 100 100 12,621

Scanfil Sweden AB Sweden 100 100 48,823

Scanfil Holding Germany GmbH Germany 100 100 91

Total 61,535

ANNUAL REPORT 202082 |

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

11. Equity

12. Loans from financial institutions

EUR THOUSAND 2020 2019

Share capital

Share capital Jan 1. 2,000 2,000

Share capital Dec 31. 2,000 2,000

Fair Value Reserve -506 113

Total restricted shareholder's equity 1,494 2,113

Reserve for invested unrestricted equity fund

Reserve for invested unrestricted equity fund Jan 1. 31,317 28,787

Addition of equity 2,167

Options 858 363

Reserve for invested unrestricted equity fund Dec 31. 32,176 31,317

Retained earnings

Retained earning Jan 1. 12,168 10,229

Retained earnings, purchase of own shares -755 -1,239

Paid dividends -9,637 -8,325

Retained earnings Dec 31. 1,777 665

Profit for the period 39,782 11,504

Total unrestricted equity 73,734 43,486

Total equity 75,229 45,599

Calculation of distributable funds Dec 31.

Reserve for invested unrestricted equity fund 32,176 31,317

Retained earnings 1,777 665

Profit for the period 39,782 11,504

Total 73,734 43,486

EUR THOUSAND 2020 2019

Non-current

Financial Institutions 18,000 24,000

Current

Financial Institutions 6,000 6,000

Credit facility 13,184

Total 24,000 43,184

Interest-bearing liabilities will mature as follows:

Year 2020 6,000

Year 2021 6,000 6,000

Year 2022 6,000 6,000

Year 2023 6,000 6,000

Year 2024 6,000 6,000

24,000 30,000

ANNUAL REPORT 2020 | 83

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

13. Liabilities to Group companies

14. Accrued liabilities

15. Commitments and contingencies

EUR THOUSAND 2020 2019

Short-term liabilities to Group companies

Accounts payable 37 5

Loans 26,056 43,197

Other liabilities 9

Total 26,093 43,212

EUR THOUSAND 2020 2019

The most significant items included in accrued liabilities

Employee expenses 660 600

Interests 2 9

Other accrued liabilities 831 271

Total 1,493 880

In 2019, Scanfil plc withdrew a long-term loan of EUR 30

million from Nordea Bank Finland Plc. The loan is amor

tised every six months. The first instalment of EUR 3.0

million was paid on March 27, 2020, and it will be entirely

repaid on September 27, 2024. In addition, Nordea’s Mult

icurrency Global Cash Pool is available with an overdraft

facility of EUR 50 million, which was entirely unused on

Scanfil plc has given absolute guarantees to Nordea Bank

AB (publ) as security for payment of the liabilities which

Scanfil Sweden AB has created from time to time towards

Nordea Bank AB (publ) on the basis of derivative contracts

concluded, as well as to Skandinaviska Enskilda Banken

December 31, 2020.

The group’s financing arrangements include termination

covenants related to the equity ratio and the ratio between

interest-bearing net liabilities and the operating margin.

The terms of the covenants are monitored on a quarterly

basis. During the 2018 and 2019 financial periods, the group

fulfilled the covenant terms.

AB as a replacement for the securities earlier provided by

Scanfil Sweden AB. The maximum liability to Skandina

viska Enskilda Banken AB is EUR 3.6 million. Further-

more, Scanfil plc has issued a guarantee for the obliga-

tions of the lease agreement of the subsidiary Scanfil Inc.

EUR THOUSAND 2020 2019

Guarantees given

On behalf of group company 175 188

Total 175 188

ANNUAL REPORT 202084 |

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

16. Derivative contracts

18. Management’s employment-related benefits

SALARIES AND OTHER SHORTTERM EMPLOYEE BENEFITS, EUR THOUSAND 2020 2019

Salaries and bonuses of the President

Salaries, wages and fees 387 541

Shares and options 132 71

Salaries and bonuses of the Board members

Jarkko Takanen 32 30

Harri Takanen 51 49

Bengt Engström 30 28

Christer Härkönen 28 26

Christina Lindstedt 30 29

Juha Räisänen 17

Total salaries of the Board Members 187 162

INTEREST DERIVATIVES, EUR THOUSAND 2020 2019

Interest swap agreements, hedging

Fair value -66 -54

Rated value of underlying asset 24,000 13,250

HEDGE ACCOUNTING, EUR THOUSAND 2020 2019

Forward exchange contracts, hedge accounting

Fair value -632 142

Rated value of underlying asset 24,381 15,012

In 2019, Scanfil plc withdrew a long-term loan which con-

tains an interest swap agreement to hedge the loan as of

Dec 28, 2020. The purpose of the hedge is to offer protec-

tion against interest rate fluctuations related to the vari-

able-rate loan. Through hedging, the interest payments

of the variable-rate euro-denominated loan are changed

to have a fixed rate. Scanfil pays quarterly a fixed rate of

0.15%, in addition to the rate of the bank. The objective

of the hedge is in accordance with the Group’s risk man-

agement principles.

The effectiveness of the hedge can be reliably meas-

ured, and the hedge is expected to remain fully effective

17. Other rental contracts

EUR THOUSAND 2020 2019

To be paid next accounting period 23 30

To be paid later 31 2

Total 54 32

Rent liabilities do not include VAT.

throughout the validity of the hedge. The terms are corre-

sponding to each other, regarding the hedged item and the

hedging instrument. Effectiveness is quarterly evaluated

and the hedge has remained effective. The impact of the

derivative on results is expected to materialise during the

validity of the loan.

The nominal amount of the interest rate swap agreement

on December 31, 2020 was EUR 24.0 million, and maturity

27 September 2024. The fair value of the derivative was

EUR -0.1 million, including accrued interest. The inter-

est flows of the derivative occur simultaneously with the

interest flows of the loan.

ANNUAL REPORT 2020 | 85

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

The parent company’s distributable funds total EUR 73,734,35.62, including undistributed profits of EUR 41,558,744.08.

The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.17 per share be paid, total-

ling EUR 10,960,113.35 for the financial year ending on December 31, 2020.

Signatures to the board of directors’ report and financial statements

Sievi, February 17, 2021

Harri Takanen Jarkko Takanen

Chairman of the Board Member of the Board

Christer Härkönen Bengt Engström

Member of the Board Member of the Board

Christina Lindstedt Juha Räisänen

Member of the Board Member of the Board

Petteri Jokitalo

CEO

BOARD OF DIRECTORS’ PROPOSAL FOR THE DISTRIBUTION OF PROFIT

ANNUAL REPORT 202086 |

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

BOARD OF DIRECTORS’ PROPOSAL FOR THE DISTRIBUTION OF PROFIT

To the Annual General Meeting of Scanfil Plc

REPORT ON THE AUDIT OF

THE FINANCIAL STATEMENTS

Opinion

We have audited the financial statements of Scanfil Plc

(business identity code 2422742-9) for the year ended

December 31, 2020. The financial statements comprise

the consolidated income statement, statement of compre-

hensive income, balance sheet, statement of changes in

equity, statement of cash flows and notes, including a sum-

mary of significant accounting policies, as well as the par-

ent company’s income statement, balance sheet, statement

of cash flows and notes.

In our opinion

•

the consolidated financial statements give a true and fair

view of the group’s financial position, financial perfor-

mance and cash flows in accordance with International

Financial Reporting Standards (IFRS) as adopted by the EU

•

the financial statements give a true and fair view of the

parent company’s financial performance and financial

position in accordance with the laws and regulations gov-

erning the preparation of financial statements in Finland

and comply with statutory requirements.

Our opinion is consistent with the additional report sub-

mitted to the Audit Committee and Board of Directors.

Basis for Opinion

We conducted our audit in accordance with good auditing

practice in Finland. Our responsibilities under good audit-

ing practice are further described in the Auditor’s Respon-

sibilities for the Audit of the Financial Statements section

of our report.

We are independent of the parent company and of the

group companies in accordance with the ethical require-

ments that are applicable in Finland and are relevant to our

audit, and we have fulfilled our other ethical responsibil-

ities in accordance with these requirements.

In our best knowledge and understanding, the non-audit

services that we have provided to the parent company and

group companies are in compliance with laws and regula

tions applicable in Finland regarding these services, and

we have not provided any prohibited non-audit services

referred to in Article 5(1) of regulation (EU) 537/2014. The

non-audit services that we have provided have been dis-

closed in note 1.5 to the consolidated financial statements.

We believe that the audit evidence we have obtained is suf-

ficient and appropriate to provide a basis for our opinion.

Materiality

The scope of our audit was influenced by our application

of materiality. The materiality is determined based on our

professional judgement and is used to determine the nature,

timing and extent of our audit procedures and to evaluate

the effect of identified misstatements on the financial state-

ments as a whole. The level of materiality we set is based

on our assessment of the magnitude of misstatements that,

individually or in aggregate, could reasonably be expected

to have influence on the economic decisions of the users of

the financial statements. We have also taken into account

misstatements and/or possible misstatements that in our

opinion are material for qualitative reasons for the users

of the financial statements.

Key Audit Matters

Key audit matters are those matters that, in our profes-

sional judgment, were of most significance in our audit

of the financial statements of the current period. These

matters were addressed in the context of our audit of the

financial statements as a whole, and in forming our opin

ion thereon, and we do not provide a separate opinion on

these matters. The significant risks of material misstate

ment referred to in the EU Regulation No 537/2014 point

audit matters below.

We have also addressed the risk of management override

of internal controls. This includes consideration of whether

there was evidence of management bias that represented a

risk of material misstatement due to fraud.

ANNUAL REPORT 2020 | 87

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

The number of sales transactions processed in the IT sys-

tems is significant and pricing responsibilities for products

and services are decentralised.

Due to the nature of the industry, the effectiveness of

the internal controls over the IT systems and pricing are

critical in respect of the accuracy of revenue recognition.

Revenue is recognised when Scanfil has satisfied perfor-

mance obligations in the contract either at a point in time

or over the time for services. As the revenue of the group

consists mainly of the sale of products the revenue is rec

ognised at a point in time when the control is transferred

to a customer in accordance with the terms and conditions

of the agreement.

Application of consistent revenue recognition principles

is considered a key audit matter.

Inventory management, stocktaking routines and determi-

nation of cost are the key elements of inventory valuation.

The Group’s carrying values of inventories amounted to

EUR 103.3 million representing 30 percent of the consoli-

dated total assets as at December 31, 2020.

Inventory valuation involves the exercise of judgement

by management in respect of determination of cost and any

impaired inventories.

Due to management judgments and the significant car

rying amount involved, valuation of inventories is consid-

ered a key audit matter.

We assessed the appropriateness of the inventory valu

ation principles applied.

Our audit procedures comprised testing of controls

over inventory management and the accuracy of inven-

tory amounts. We also performed substantive procedures

to evaluate the accuracy of inventory valuation.

We followed the execution of certain stocktaking rou-

tines in order to assess the effectiveness of the process.

We assessed the appropriateness of the revenue recog-

nition principles applied.

As part of our audit procedures we tested internal controls

over registration of sales transactions, recording related

revenues and approval of changes.

Our substantive procedures included testing of recog-

nition of relevant transactions in the appropriate period,

comparing invoice details to the received payments and

assessing the appropriateness of the bad debt provision

recognised.

Valuation of inventories (Refer to Accounting principles for consolidated financial statements and note 2.2)

Revenue recognition (Refer to Accounting principles for consolidated financial statements and note 1.1)

THE KEY AUDIT MATTER HOW THE MATTER WAS ADDRESSED IN THE AUDIT

Valuation of goodwill and acquisition-related customer relationships (Refer to Accounting

principles for consolidated financial statements and note 3.1 and 3.2)

Goodwill and acquisition-related customer relationships

amounted to EUR 17.3 million.

Goodwill is not amortised, instead it is tested for impair-

ment at least on an annual basis. Impairment tests are based

on future cash flow forecasts and determining the underlying

key assumptions require management judgment.

Scanfil’s acquisition-related long-term customer relation-

ships have finite useful lives that are estimated by manage-

ment through the application of judgement.

Due to the high level of judgment related to the forecasts

used in goodwill impairment tests and the significant carry-

ing amounts involved, impairment of goodwill and acquisi-

tion-related customer relationships are considered key judg-

mental areas that our audit is focused on.

We assessed the key assumptions used in the calculations,

such as growth of turnover, profitability and discount rate,

with relation to the original forecast presented to the Board

of Directors, external references and our own views.

We involved KPMG valuation specialists when assessing

the technical accuracy of the calculations and comparing the

assumptions used with external market and industry data.

In respect of acquisition-related customer relationships,

we evaluated the recoverability of these assets by inspect-

ing the associated calculations and underlying assumptions.

In addition, we considered the appropriateness of the

Group’s disclosures in respect of goodwill, acquisition-re-

lated customer relationships and impairment testing.

ANNUAL REPORT 202088 |

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

Responsibilities of the Board of Directors and the

Managing Director for the Financial Statements

The Board of Directors and the Managing Director are

responsible for the preparation of consolidated financial

statements that give a true and fair view in accordance

with International Financial Reporting Standards (IFRS)

as adopted by the EU, and of financial statements that give

a true and fair view in accordance with the laws and regu-

lations governing the preparation of financial statements

in Finland and comply with statutory requirements. The

Board of Directors and the Managing Director are also

responsible for such internal control as they determine

is necessary to enable the preparation of financial state-

ments that are free from material misstatement, whether

due to fraud or error.

In preparing the financial statements, the Board of Direc-

tors and the Managing Director are responsible for assessing

the parent company’s and the group’s ability to continue as

a going concern, disclosing, as applicable, matters relat-

ing to going concern and using the going concern basis of

accounting. The financial statements are prepared using the

going concern basis of accounting unless there is an inten-

tion to liquidate the parent company or the group or cease

operations, or there is no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Financial

Statements

Our objectives are to obtain reasonable assurance about

whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error, and

to issue an auditor’s report that includes our opinion. Rea-

sonable assurance is a high level of assurance but is not a

guarantee that an audit conducted in accordance with good

auditing practice will always detect a material misstate-

ment when it exists. Misstatements can arise from fraud

or error and are considered material if, individually or in

the aggregate, they could reasonably be expected to influ

ence the economic decisions of users taken on the basis of

the financial statements.

As part of an audit in accordance with good auditing

practice, we exercise professional judgment and maintain

professional skepticism throughout the audit. We also:

•

Identify and assess the risks of material misstatement of

the financial statements, whether due to fraud or error,

design and perform audit procedures responsive to those

risks, and obtain audit evidence that is sufficient and

appropriate to provide a basis for our opinion. The risk

of not detecting a material misstatement resulting from

fraud is higher than for one resulting from error, as fraud

may involve collusion, forgery, intentional omissions,

misrepresentations, or the override of internal control.

•

Obtain an understanding of internal control relevant

to the audit in order to design audit procedures that are

appropriate in the circumstances, but not for the purpose

of expressing an opinion on the effectiveness of the par-

ent company’s or the group’s internal control.

•

Evaluate the appropriateness of accounting policies

used and the reasonableness of accounting estimates and

related disclosures made by management.

•

Conclude on the appropriateness of the Board of Directors’

and the Managing Director’s use of the going concern basis

of accounting and based on the audit evidence obtained,

whether a material uncertainty exists related to events or

conditions that may cast significant doubt on the parent

company’s or the group’s ability to continue as a going con-

cern. If we conclude that a material uncertainty exists, we

are required to draw attention in our auditor’s report to the

related disclosures in the financial statements or, if such

disclosures are inadequate, to modify our opinion. Our

conclusions are based on the audit evidence obtained up

to the date of our auditor’s report. However, future events

or conditions may cause the parent company or the group

to cease to continue as a going concern.

ANNUAL REPORT 2020 | 89

Financial information Information for shareholdersGeneral Corporate Governance StatementFinancial statements

•

Evaluate the overall presentation, structure and content

of the financial statements, including the disclosures, and

whether the financial statements represent the underlying

transactions and events so that the financial statements

give a true and fair view.

• Obtain sufficient appropriate audit evidence regarding

the financial information of the entities or business activ-

ities within the group to express an opinion on the con-

solidated financial statements. We are responsible for

the direction, supervision and performance of the group

audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance

regarding, among other matters, the planned scope and

timing of the audit and significant audit findings, includ-

ing any significant deficiencies in internal control that we

identify during our audit.

We also provide those charged with governance with

a statement that we have complied with relevant ethical

requirements regarding independence, and communicate

with them all relationships and other matters that may rea-

sonably be thought to bear on our independence, and where

applicable, related safeguards.

From the matters communicated with those charged with

governance, we determine those matters that were of most

significance in the audit of the financial statements of the

current period and are therefore the key audit matters. We

describe these matters in our auditor’s report unless law

or regulation precludes public disclosure about the matter

or when, in extremely rare circumstances, we determine

that a matter should not be communicated in our report

because the adverse consequences of doing so would rea-

sonably be expected to outweigh the public interest bene-

fits of such communication.

Other Reporting Requirements

Information on our audit engagement

We have acted as auditors appointed by the Annual Gen-

eral Meeting as of January 1, 2012, at which point the par-

ent company was established as a result of a demerger of

Sievi Capital Plc. Since 1999 we have acted as auditors in

Sievi Capital Plc, which became a public interest entity as

a result of a listing in 2000.

Other Information

The Board of Directors and the Managing Director are

responsible for the other information. The other infor-

mation comprises the report of the Board of Directors

and the information included in the Annual Report, but

does not include the financial statements and our auditor’s

report thereon. We have obtained the report of the Board

of Directors prior to the date of this auditor’s report, and

the Annual Report is expected to be made available to us

after that date. Our opinion on the financial statements

does not cover the other information.

In connection with our audit of the financial statements,

our responsibility is to read the other information identi-

fied above and, in doing so, consider whether the other

information is materially inconsistent with the financial

statements or our knowledge obtained in the audit, or oth-

erwise appears to be materially misstated. With respect to

the report of the Board of Directors, our responsibility also

includes considering whether the report of the Board of

Directors has been prepared in accordance with the appli-

cable laws and regulations.

In our opinion, the information in the report of the Board

of Directors is consistent with the information in the finan-

cial statements and the report of the Board of Directors

has been prepared in accordance with the applicable laws

and regulations.

If, based on the work we have performed on the other

information that we obtained prior to the date of this audi-

tor’s report, we conclude that there is a material misstate-

ment of this other information, we are required to report

that fact. We have nothing to report in this regard.

Helsinki February 25, 2021

KPMG OY AB

Kirsi Jantunen

Authorised Public Accountant, KHT

ANNUAL REPORT 202090 |

Financial information Financial statementsGeneral Information for shareholdersCorporate Governance Statement

Scanfil plc is a publicly listed company, managed in accord-

ance with the company’s Articles of Association, the Finn

ish Companies Act and other legislation relating to the com-

pany. In addition, the Company complies with the Finn-

ish Corporate Governance Code (2020) published by the

Securities Market Association and entered into force on

January 1, 2020.

The Board of Directors has evaluated the independence

of its members according to which the majority of members

are independent of the company (Jarkko Takanen, Bengt

Engström, Christina Lindstedt, Christer Härkönen (since 29

April 2020) and Juha Räisänen (during 23 April–30 November

2020) and independent of the significant shareholders of the

company (Christer Härkönen, Bengt Engström, Christina

Lindstedt and Juha Räisänen). The majority of the members

of Board’s two committees are independent of the company

and one member of the Audit Committee is independent of

the significant shareholders of the company.

This statement has been reviewed by Scanfil plc’s Board

of Directors. Scanfil plc’s auditing firm has verified that

the summary description of the internal control and risk

management associated with the financial reporting pro-

cess is consistent with the financial statements.

This Corporate Governance Statement is available on

the company website at www.scanfil.com under Investors.

The Finnish Corporate Governance Code is available to the

public at www.cgfinland.fi.

BOARD OF DIRECTORS

Under the Companies Act, the Board of Directors is respon-

sible for the management of the company and the proper

organisation of operations. The members of the Board

of Directors are elected by the Annual General Meeting.

According to the Articles of Association, Scanfil plc’s

Board of Directors shall include a minimum of three and

a maximum of seven regular members. The Board of Direc-

tors elects a Chairman from among its members. The Board

of Directors is responsible for deciding on the business

strategy, significant matters related to investments, organ-

isation and finance, as well as supervising the company’s

management and operations. The Board of Directors shall

also ensure that supervision of the company’s accounts and

asset management is properly organised.

Composition of the Board of Directors

The following Board members were elected by the Annual

General Meeting held on April 23, 2020.

Harri Takanen

Chairman of the Board of Directors. Born 1968, M.Sc.

(Tech.). Member of the Board of Directors of Scanfil plc

since April 18, 2013. Professional board member. Not inde-

pendent of the company and its major shareholders. Holds

9,913,146 shares in Scanfil plc.

Jarkko Takanen

Member of the Board since January 1, 2012. Born 1967, B.Sc.

(Prod.Eng.), Commercial College Diploma in Management

Accountancy. CEO of Jussi Capital Oy. Independent of the

company, not independent of major shareholders. Holds

8,596,169 shares in Scanfil plc.

Christer Härkönen

Member of the Board since April 8, 2014. Born 1957, M.Sc.

(Tech.). CEO of DimWei Group Oy.

Independent of the company since 29 April 2020, inde

pendent of its major shareholders. Christer Härkönen has

been involved in the Scanfil and PartnerTech integration

process between 1 January and 30 April 2017 on Group level

project tasks. Does not hold Scanfil plc shares.

Bengt Engström

Member of the Board since August 20, 2015. Born 1953,

M.Sc. (Eng.). Has held several management-level positions

in Sweden and internationally, including Whirlpool, Bofors

AB, Duni AB and Fujitsu. Independent of the company and

major shareholders. Holds 12,829 shares in Scanfil plc.

Christina Lindstedt

Member of the Board since April 12, 2016. Born 1968,

holds a Master’s Degree of Business Administration and

Commercial law. CEO of QleanAir Scandinavia AB. Back-

ground from several international business leadership roles

at AB Electrolux and Sony, based in Sweden and interna-

tionally. Independent of the company and major sharehold-

ers. Holds 6,000 shares in Scanfil plc.

Juha Räisänen

Member of Board since 2020. Born 1958, M.Sc. (Tech.).

Managing Partner at Valuenode GmbH. Juha Räisänen has

held a number of executive positions globally at ICL-Fu-

jitsu, Nokia, SanDisk, KONE and Aliaxis. Independent

of the major shareholders. Independent of the company

during 23 April–30 November 2020. Not independent of

the company as of 30 November 2020 due to a consulting

assignment between the company and related party of a

Board Member based on which the Board Member receives

or has received compensation for non-board services dur-

ing the past year. Does not hold Scanfil plc shares.

CORPORATE GOVERNANCE

STATEMENT 

ANNUAL REPORT 2020 | 91

Financial information Financial statementsGeneral Information for shareholdersCorporate Governance Statement

The entities over which the Board members exercise con-

trol do not own Scanfil shares.

The term of office of the Board members expires at the

close of the first Annual General Meeting following the

one in which they were elected.

Activity of the Board

The Board of Directors had a total of 18 meetings in 2020,

some of which were remote meetings. The members’ aver-

age attendance rate for meetings was 100%.

The duties and responsibilities of the Board of Directors

of Scanfil plc are based on the Finnish Limited Liability

Companies Act, other applicable legislation, the Articles

of Association, good governance recommendations and the

Board’s charter. The Board carries out an annual review of

its operations and regular reviews of the work of the CEO

and the Management Team. The Scanfil Board of Direc-

tors has confirmed the charter, which lists the following

key duties for the Board:

• confirming the company’s business strategy and moni

toring its implementation

•

confirming the annual key business targets and moni-

toring Scanfil Group’s performance

• deciding on strategically significant investments in the

Group

•

discussing and approving financial statements and in-

terim reports

•

appointing and dismissing the CEO and determining

their terms of employment and remuneration

•

deciding on incentive systems for managers and employ-

ees

•

monitoring the company’s key operational risks and

their management

•

confirming the company’s values and operating prin-

ciples.

a diverse Board with a sufficient number of members, who

are able to take responsibility for developing the company’s

operations and strategy in its line of business, and who are

competent to manage the duties and responsibilities of the

Board. Scanfil plc aims to have a sufficiently diverse gen-

der and age distribution of the Board of Directors.

The Annual General Meeting held on 23 April 2020

elected six (6) members to the Board, five of whom are men

and one woman. Board members have either technical or

business degree. In addition, the above-mentioned factors

and characteristics relevant to the diversity of the Board

were represented in the composition of the Board in 2020.

Board Committees

The Board of Directors has established two committees: a

Nomination and Compensation Committee and an Audit

Committee.

The task of the Nomination and Compensation Com-

mittee is to prepare matters related to the appointment

and remuneration of the members of the Board of Direc-

tors and, when necessary, find suitable members for it.

The Committee has three members: Harri Takanen (Chair-

man), Jarkko Takanen and Bengt Engström. The commit-

tee convened two times in 2020. The attendance rate of its

members was 100%.

The Audit Committee is responsible for monitoring the

financial reporting process and the reporting of financial

statements and interim reports, as well as monitoring the

functionality of internal control and risk management in the

company. It also evaluates the appropriateness of auditing

and prepares the proposal for the appointment of an audi-

tor. The committee has three members: Jarkko Takanen

(chairman), Harri Takanen and Christina Lindstedt. The

committee convened four times in 2020. The attendance

rate of its members was 100%.

CEO

The Board of Directors decides on the appointment and

dismissal of the CEO and the terms and conditions of his

employment. The CEO is covered by the performance and

profit bonus systems decided upon separately by the Board

of Directors. Petteri Jokitalo, M.Sc. (Eng.), has been the

CEO of the company between 1 January and 31 December

2020. Petteri Jokitalo holds (31 Dec. 2020) 312,000 shares

in Scanfil plc and he has the following option rights: option

programme 2016(B) for 110,000 shares, 2016(C) 110,000

shares, 2019(A) 110,000 shares and 2019(B) 120.000 shares.

The CEO’s duties are determined in accordance with the

Companies Act. The CEO is in charge of the company’s

operative management in accordance with the guidelines

Diversity Principles for the Board of Directors

Scanfil plc operates in the international contract manu

facturing market and its customers include global compa-

nies in various industries. For the Board to be effective,

its members must possess experience from several differ-

ent industries, be well versed in international business and

have insight into the global trends that affect the develop-

ment of the contract manufacturing market. The Nomina-

tion Committee should consider the education and profes-

sional and international experience of the candidates, as

well as their individual characteristics, when preparing the

proposal for the Board’s composition. The aim is to form

ANNUAL REPORT 202092 |

Financial information Financial statementsGeneral Information for shareholdersCorporate Governance Statement

and orders given by the Board of Directors. The CEO shall

ensure that the company’s accounting practices comply

with legislation and that asset management is organised

in a reliable manner. The CEO is the chairman of the com-

pany’s Management Team.

The CEO has a separate service contract that is valid until

further notice with a mutual notice period of six months.

Should the company terminate the service contract made

with the CEO, an amount equivalent to the monetary sal

ary of 12 months will be paid to the CEO as a severance

package in accordance with the terms and conditions of

his service contract. The CEO’s retirement age is the stat-

utory retirement age.

OTHER MANAGEMENT

The principal duty of the Management Team is to assist the

CEO in the company’s operative management. The Team’s

other duties include matters relating to long-term planning,

the planning and monitoring of investments and the allo-

cation of resources to key operations.

Timo Sonninen

Vice President, Sales & Global Customers

Timo Sonninen (b. 1966), BSc (Eng.), is responsible for

sales and customer relations development globally, as well

as new and local customer sales outside of Central Europe

with a focus on the Nordic countries, China and the USA.

Timo Sonninen holds (31 Dec. 2020) 128,000 shares in

Scanfil plc and he has the following option rights: option

programme 2016(C) for 20,000 shares and 2019(A) for

20,000 shares and 2019(B) for 20,000 shares.

Kristoffer Asklöv

Vice President, Business Development

& Central European Sales

Kristoffer Asklöv (b. 1977), M.Sc. (Mech.Eng.) is respon-

sible for sales for local customers as well as new sales in

Central Europe. He will also will be in charge of Scanfil’s

global marketing as well as design sales and design strate-

gic partnerships development globally. Kristoffer Asklöv

holds 38,000 shares in Scanfil plc and he has the following

option rights: option programme 2016(B) for 20,000 shares,

2016(C) for 20,000 shares, 2019(A) for 20,000 shares and

2019(B) for 20,000 shares.

Markku Kosunen

CTO

Markku Kosunen (b. 1967), technology undergraduate, is

responsible for ICT and ERP, Quality processes and sys-

tems, production technology and investments. He holds (31

Dec. 2020) 39,156 shares in Scanfil plc and has the following

option rights: option programme 2016(B) for 20,000 shares,

2016(C) for 20,000 shares, 2019(A) for 20,000 shares and

2091(B) for 20,000 shares.

Kai Valo

CFO

Kai Valo (b. 1965), MSc (Economics), Group’s Chief Finan-

cial Officer.

He holds (31 Dec. 2020) 30,000 shares in Scanfil plc, and

has the following option rights: option programme 2016(B)

for 20,000 shares, 2016(C) for 20,000 shares, 2019(A) for

20,000 shares and 2019(B) for 20,000 shares.

Riku Hynninen

COO

Riku Hynninen (1972) is responsible for factories’ finan-

cial and operational performance and development, global

sourcing and supply chain and strategic HR until 1 Novem-

ber 2020.

He holds (31 Dec 2020) 21,150 shares in Scanfil plc and

has the following option rights: option programme 2016(C)

for 20,000 shares, 2016(C) for 20,000 shares, 2019(A) for

20,000 shares and 2019(B) 20,000 shares.

ANNUAL REPORT 2020 | 93

Financial information Financial statementsGeneral Information for shareholdersCorporate Governance Statement

Risk Management

The Board of Directors of Scanfil plc is responsible for

ensuring the appropriate organisation of the Group’s risk

management and internal control and audit. Risk manage-

ment is based on a risk management policy approved by the

Board, aimed at managing risks in a comprehensive and

proactive manner. The assessment of risks is part of the

annual strategy and business planning process. There is

no separate risk management organisation; risk manage-

ment is incorporated into the business processes and the

management system and it is coordinated by the Group’s

CFO. Risk management aims to observe and analyse fac-

tors that might have a negative impact on the achievement

of the company’s goals and to take measures to mitigate or

completely eliminate the risks. The operative units report

on business risks in accordance with the management and

reporting system.

Internal Control

Scanfil plc’s internal control is a continuous process used to

ensure profitable and uninterrupted operation. The control

function aims to minimise risks by ensuring the reliability

of reporting and compliance with laws and regulations.

Internal control is based on the Group’s shared values,

ethical guidelines and industry legislation, from which

the operating principles and guidelines are derived. The

guidelines cover procedures for core operations. Group and

unit management hold the responsibility for the company’s

internal control system. Internal control forms an active

part of the company’s management and administration. The

Group’s operational management holds the responsibility

for developing the harmonised business processes included

in the control system. The Group’s financial administra-

tion co-ordinates the financial management of the Group.

The controls included in Scanfil’s operating processes

form the basis of the company’s financial control. They

enable the company to swiftly identify and react to any

deviations. The management’s monthly reporting is a fun

damental part of financial control. It includes producing a

rolling forecast, the result of business operations carried

out and an analysis of the differences between the forecast

and the actual result. The indicators monitored in monthly

reporting have been set so as to support the achievement of

shared Group-level and unit-specific targets, and to iden-

tify issues that require control measures. An auditing firm

supports the performance of financial control.

The interpretation and application of accounting stand-

ards are carried out centrally by the Group’s financial

administration. These standards form the basis for the

Group’s shared recognition principles and reporting and

accounting standards. In order to ensure reliable financial

reporting, core functions are conducted using a globally

harmonised ERP system and shared reporting tools. The

use of standardised tools enables continuous control and

successful change management.

Internal Audit

The company uses internal auditing that, in co-operation

with other Group functions, handles internal auditing

duties and makes regular reports to the CEO and the Board.

DESCRIPTIONS OF INTERNAL CONTROL

PROCEDURES AND THE MAIN FEATURES

OF RISK MANAGEMENT SYSTEMS RELATED

TO THE FINANCIAL REPORTING PROCESS

BOARD LEVEL

GROUP MANAGEMENT,

SUPPORT FUNCTIONS

Business processes

ERP system

OPERATIONAL

LEVEL

VALUES, ETHICAL GUIDELINES, INDUSTRY LEGISTLATION

Strategy process

Management systems

Management reporting systems

Strategy

Corporate

governance

DESCRIPTION OF THE INTERNAL CONTROL AT SCANFIL PLC

ANNUAL REPORT 202094 |

Financial information Financial statementsGeneral Information for shareholdersCorporate Governance Statement

ject-specific insiders cannot trade in the company’s finan-

cial instruments before the project in question has ended.

In addition, the company has decided that persons who

are party to the preparation and drawing up of the com-

pany’s interim reports and financial statements releases

cannot trade in the company’s financial instruments

during a period before the publication of the company’s

interim reports and financial statements releases, start-

ing 30 days before the publication of the interim reports

and financial statements releases (“expanded closed win-

dow”). The expanded closed window also applies to per-

sons who, as a result of their work-related tasks, have

access to the group’s sales figures or to sales figures of

a business unit that is significant for the total results of

Scanfil Group as a whole.

As a result of the entry into force of MAR, the company

no longer has any public insiders. From July 3, 2016, the

company will publish, in a stock exchange release, all

business activities carried out by managers with a report-

ing obligation and their related parties in the company’s

financial instruments in accordance with MAR.

Related party transactions

Principles of monitoring and assessing Scanfil plc’s related

party transactions

The principles of Scanfil plc’s related party transactions

define the principles and processes by which the company

identifies its related parties and monitors related party

transactions, assesses the nature and terms of business

transactions, and ensures that any conflicts of interest are

addressed appropriately in the company’s decision-making

processes. The Board of Directors monitors and assesses

related party transactions continuously and regularly.

SCANFIL PLC GROUPS STRUCTURE IN 

100 %

Scanfil plc

Sievi, Finland

The ultimate group parent company, listed in Nasdaq Helsinki

100 % 100 %100 %

Scanfil Holding Germany GmbH

Wutha-Famroda, Germany

Scanfil Sweden Ab

Malmö, Sweden

Scanfil (Suzhou)

Co., Ltd

Suzhou, China

Scanfil

Electronics GmbH

Wulha-Farnroda

Germany

Scanfil Business

Services Kft

Biatorbágy, Hungary

Scanfil GmbH

Schenefeld,

Germany

Scanfil OÜ

Pärnu, Estonia

HASEC SP. Z.O.O

Skwierzyna, Poland

Scanfil EMS Oy

Sievi, Finland

Scanfil Sieradz

SP. Z.O.O Sieradz,

Poland (Branch)

Scanfil Inc

Duluth, Atlanta,

USA

Scanfil

Vellinge AB

Malmö, Sweden

Scanfil 

Myslowice SP.

Z.O.O

Myslowic, Poland

Scanfil

Åtvidaberg AB

Åtvidberg, Sweden

100 %100 %

In addition to companies listed above, Scanfil Sweden owns 100% of the following company which did not have

operational activities in 2020 and is under voluntary liquidation to winding-up the company: PartnerTech AS (Norway).

Changes in Group’s structure in 2020

On June 29, 2020, the Board of Directors of Scanfil EMS

Oy, a subsidiary of Scanfil plc, sold all shares in Chinese

subsidiary Scanfil (Hangzhou) Co., Ltd. The regular terms

and conditions of the transaction were fulfilled on July 14,

2020, on which date the transaction entered into force.

Other information to be provided

in the statement

Company insiders and insider administration

In its operations, the company complies with regulation

EU No. 596/2014 on market abuse (MAR) and the Finn-

ish Securities Markets Act, as well as related regulations

and guidelines issued by the European Securities and Mar

kets Authority (ESMA), the Finnish Financial Supervisory

Authority and Nasdaq Helsinki.

The company’s Board of Directors has confirmed the

company’s insider guidelines based on Nasdaq Helsinki’s

guidelines for insiders. The insider guidelines define cer

tain practices and decision-making procedures to ensure

that the company’s insider administration is organised

consistently and reliably.

The company divides insiders into two categories: a)

managers with a reporting obligation; and b) project-spe-

cific insiders. Managers with a reporting obligation include

members of the Board of Directors, the CEO and members of

the group’s Management Team. Managers with a reporting

obligation cannot trade in the company’s financial instru-

ments during a period before the publication of the com-

pany’s interim reports and financial statements releases,

starting 30 days before the publication of the interim reports

and financial statements releases (“closed window”). Pro-

ANNUAL REPORT 2020 | 95

Financial information Financial statementsGeneral Information for shareholdersCorporate Governance Statement

The company’s related parties

The company’s related parties cover individuals and enti-

ties close to the Group’s companies as defined in the Inter-

national Financial Reporting Standards (IFRS), approved in

accordance with the IAS Regulation referred to in Chapter

1, Section 4 d of the Finnish Accounting Act.

The company’s related parties include its subsidiaries and

the company’s key management employees, consisting of

the Board of Directors, the CEO and the Group’s Manage

ment Team, as well as their family members. Related par-

ties also include companies in which the aforementioned

individuals hold control.

List of related parties

The company maintains a list of individuals and entities

regarded as its related parties to identify related party

transactions. The company ensures that the company’s

management is provided with sufficient related party

guidelines.

The company’s internal related parties are identified

by maintaining and updating the list of related parties.

Each individual and entity identified as a related party is

entered in the list of related parties, including details of

their connection to the company as a related party, such

as shareholdings in other entities. Each related party is

required to report or otherwise bring, on their own initia-

tive, potential conflicts of interests to the attention of the

executive management.

Identifying related party transactions

Related party transactions are identified, and a register of

agreed activities is maintained. The following procedures

apply to the identification of related party transactions:

•

The company maintains a list of entities regarded as re-

lated parties.

• The person who approves related party transactions on

the company’s behalf verifies that assessments and de-

cision-making processes regarding related party trans-

actions are in compliance with defined criteria.

•

If it becomes apparent in connection with the preparation

of a related party transaction that the related party trans-

action is not related to the company’s ordinary course of

business or it is not carried out on arm’s-length terms, the

preparation of the transaction is handled by the Group

Administration.

•

In addition to the identification procedures followed

by the company, individuals and entities regarded as

related parties must ensure that related party transac-

tions are entered in the register of related party trans-

actions and carried out following the appropriate deci-

sion-making process.

Monitoring related party transactions

The company monitors and assesses how agreements

and other legal transactions between the company and its

related parties comply with the requirements set for the

ordinary activities and for arms-length terms. Informa-

tion on related party transactions will be requested regu-

larly from related parties at least in conjunction with reg-

ular reporting.

Assessing related party transactions

and decision making

The company’s main criterion for related party transac-

tions is that it is sufficiently ensured that related party

transactions comply with market terms and are favoura-

ble for the company’s business operations.

When preparing decisions on related party transactions,

it must be considered that (a) decisions are based on par-

ticularly careful preparations and appropriate clarifica-

tions and assessments; (b) preparations, decision-making

and the assessment and approval of individual transac-

tions are arranged considering provisions of conflicts of

interests regulations and the appropriate decision-making

body; and/or (c) the identification, reporting and control

related to transactions have been arranged appropriately,

for example, so that the company’s related party transac

tions are monitored in accordance with the reporting prac-

tices followed by the company.

Related party transactions are assessed according to the

categories to which each transaction belongs. These include:

(1) Ordinary related party transactions

As a rule, ordinary related party transactions must be part

of the company’s regular business operations, and they

must be carried out following arms-length terms. Related

party transactions are entered in the register of related

party transactions so that the company can report its

related party transactions as required in IFRS.

The ordinality and arm’s-length terms of the transac-

tion shall be assessed and documented for such ordinary

related party transactions that are not performed on stand-

ard terms or at a standard pricing, or for transactions with

value exceeding EUR 5,000. Ordinary commercial terms

may vary in different situations.

The ordinary nature of related party transactions in rela-

tion to Scanfil Group’s business operations are assessed on

the basis of the company’s purpose, the industry and other

provisions listed in the company’s Articles of Association,

and the company’s actual operations.

Related party transactions that are associated with the

company’s standard agreements or agreements provided

generally for customers within the framework of standard

ANNUAL REPORT 202096 |

Financial information Financial statementsGeneral Information for shareholdersCorporate Governance Statement

pricing and related party transactions that have a value of

less than EUR 5,000 can be approved following the one-

over-one principle. Other ordinary related party transac-

tions must be approved by the CEO unless they are signif-

icant related party transactions, or unusual or far-reach-

ing considering the scope and quality of the activities.

However, any events involving the CEO’s related parties

must always be approved by the chairman of the compa-

ny’s Board of Directors.

(2) Significant related party transactions

Related party transactions that are not part of the com-

pany’s ordinary business operations or that is not carried

out in accordance with arms-length terms are regarded as

significant related party transactions.

The company’s Board of Directors decides on signifi-

cant related party transactions, including agreements or

other legal transactions that the company is engaged in

with related parties, are not part of the company’s ordinary

business operations, and do not follow arms-length terms.

Members of the Board of Directors or the company’s

shareholders cannot participate in the approval of a deci-

sion or voting regarding a decision if they or their related

parties are party to significant related party transactions.

Reporting related party transactions

When preparing and carrying out related party transac-

tions, the company complies with specific reporting and

disclosure obligations regarding related party transactions.

AUDITORS

The Annual General Meeting held on April 23, 2020

selected the auditing firm KPMG Oy Ab to be the compa-

ny’s auditor, and they named Authorised Public Account-

ant Kirsi Jantunen as the main auditor. The audit fees for

the Finnish companies of the Group for the 2020 account-

ing year were EUR 71,680 in total, and the parent compa-

ny’s share was EUR 46,680. The audit fees for the foreign

companies of the Group were EUR 237,846 in total. For

services unrelated to auditing, the auditing company was

paid EUR 64,851.

ANNUAL REPORT 2020 | 97

Financial information Financial statementsGeneral Information for shareholdersCorporate Governance Statement

Jarkko Takanen

Jarkko Takanen (1967), Member of

Board of Directors since 2012, Manag-

ing Director of Jussi Capital Oyj. He

has worked for Sievi Capital Group

during 1995–2004 among others as

Customer Service Manager, Plant

Manager, Quality Manager, IT Man-

ager and Director of Sourcing and

Logistics. As Managing Director of

Bel gian subsidiary Scanfil N.V. he

acted between 1 April 2003 and 30

June 2004. Jarkko Takanen holds

a Bachelor’s Degree in Production

Engineer and a Commercial College

Diploma in Management Account-

ancy. Independent of the company,

not independent of major sharehold-

ers.

•

Holds 8,596,169 shares in Scanfil

plc. (31 Dec. 2020).

Harri Takanen

Chairman of the Board of Directors

Harri Takanen (born 1968), Member

of Board since 2013, Professional

Board Member. Harri Takanen has

worked for Sievi Capital plc as CEO

2007–2011. He was CEO of Scanfil plc

and Scanfil EMS ltd. during 1 Jan.

2012–31 March 2013. He has served

Scanfil Group since 1994, for example

as Director of operations in China,

Scanfil (Hangzhou) Co., Ltd’s Man-

aging Director, Technology Direc-

tor, Director of Customer Relations,

Customer Service Manager and Plant

Manager of Sievi mechanics. Harri

Takanen holds Master’s degree in

Engineering. Not independent of the

company and major shareholders.

•

Holds 9,913,146 shares in Scanfil

plc. (31 Dec. 2020).

•

Chairman of Board of Directors:

Titanium Oyj

•

Member of Board of Directors: Jussi

Capital Oy, WellO2 Oy

SCANFIL PLC BOARD OF DIRECTORS

Bengt Engström

Bengt Engström (born 1953), Member

of the Board since 2015. Bengt Eng-

ström has held a number of executive

positions at several companies, both

in Sweden and globally, for example

at Whirlpool, Bofors AB, Duni AB

and Fujitsu. Bengt Engström holds a

Mechanical Engineer’s degree. Inde

pendent of the company and major

shareholders.

• Holds 12,829 shares in Scanfil plc.

(31 Dec. 2020).

•

Chairman of Board of Directors:

Nordic Flanges, QleanAir AB, BEng-

st röm AB, BEngström Förvalt ning

•

Member of Board of Directors: KTH

Executive School, Bure Equity

AB, ScandiNova Systems AB, Real

Holding AB, Scandinavian Chemo-

tech AB

ANNUAL REPORT 202098 |

Financial information Financial statementsGeneral Information for shareholdersCorporate Governance Statement

Christer Härkönen

Christer Härkönen (born 1957), Mem-

ber of Board since 2014, CEO at Dim-

Wei Group Oy. Christer Härkönen

held executive positions at Oy Fibox

Ab 2013–2017, Sandvik Mining and

Construction in Sweden and Holland

during years 2010–2013. Between

2005–2010 he led the RFID business

of UPM Oyj. Between 1996 and 2005

he worked in executive positions in

Elcoteq Oyj to where he transferred

from Fujitsu ICL. Härkönen started

his career at Nokia in 1984 and moved

in 1991 with the sale of business oper-

ations to Fujitsu ICL. Christer Härkö-

nen holds a Master’s degree in Engi-

neering. Independent of the company

since 29 April 2020 and independent

of major shareholders.

• Does not hold Scanfil plc shares.

• Chairman of Board of Directors at

Valoya Oy

•

Member of Board of Directors at

Arnon Oy

Christina Lindstedt

Christina Lindstedt (born 1968),

Member of the Board since 2016.

CEO in QleanAir Scandinavia AB.

Christina Lindstedt has held a num-

ber of executive positions at AB Elec-

trolux, Sony Ericsson and Sony, both

in Sweden and globally. Primarily

she has served as a Business/Prod

uct area head for businesses such as

e.g. smartphones, washing machines,

automatic lawn mowing and New

Business Areas. In addition, she has

been responsible for establishing

global sourcing operations in China.

Christina Lindstedt holds a Master’s

Degree of Business Administration

and Commercial law. Independent of

the company and major shareholders.

•

Holds 6,000 shares in Scanfil plc.

(31 Dec. 2020).

•

Member of Board of Directors: Han -

di care Group AB (Publ), XPlore-

biz AB

Juha Räisänen

Juha Räisänen (1958), Member of

Board since 2020, Managing Partner

at Valuenode GmbH. Juha Räisänen

has held a number of executive posi-

tions globally at ICL-Fujitsu, Nokia,

SanDisk, KONE and Aliaxis, based

in Finland, Singapore, Hong Kong,

Shanghai, Brussels and currently in

Vienna. Primarily he has served as a

sales, manufacturing, supply chain,

sourcing & procurement, quality and

safety head for businesses such as IT

systems & software, mobile phones,

telecom networks, semiconductors

(NAND flash memory products), ele-

vators, escalators & automatic doors

and plastic pipes & fittings. Juha

Räisänen holds a Master’s Degree of

Industrial Engineering & Manage-

ment. Independent of the major share-

holders. Independent of the company

during 23 April–30 November 2020.

Not independent of the company as of

30 November 2020 due to a consult-

ing assignment between the company

and related party of a Board Member

based on which the Board Member

receives or has received compensa-

tion for non-board services during

the past year.

• Does not hold Scanfil plc shares.

• Member of the Board of Directors:

LumiDental Ltd

ANNUAL REPORT 2020 | 99

SCANFIL PLC MANAGEMENT TEAM

Financial information Financial statementsGeneral Information for shareholdersCorporate Governance Statement

Petteri Jokitalo

CEO

Petteri Jokitalo (1963), company’s

CEO since 1 April 2013. Earlier Petteri

Jokitalo has worked at Scanfil EMS

Oy as Director of Sales and Marketing

2012–2013, at Meka Pro Oy as Man-

aging Director during 2007–2011, at

Scanfil plc in management tasks of

sales and business development dur-

ing 2003–2007 and in international

tasks at Nokia Networks during 1998–

2003. Petteri Jokitalo holds Master’s

Degree in Engineering.

Timo Sonninen

Vice President, Sales

& Global Customers

Timo Sonninen (1966) is responsi-

ble for sales and customer relations

development globally, as well as

new and local customer sales out

side of Central Europe with a focus

on the Nordic countries, China and

the USA since 1 December 2019. Pre-

viously he has worked at Efore Oyj

as Vice President, Operations, in

Suzhou, China 2006–2013. Prior to

that he has worked at Incap Oyj dur-

ing 1991–2006 among others as Direc-

tor of Operations, Business Director

of Electronics Production and Plant

Director of Vuokatti Plant. Timo

Sonninen holds a Bachelor’s Degree

in Engineering.

Kristoffer Asklöv

Vice President, Business Development

& Sales Central Europe

Kristoffer Asklöv (1977) is responsi-

ble for sales for local customers as

well as new sales in Central Europe

since 1 December 2019. He is also in

charge of Scanfil’s global marketing

as well as design sales and design

strategic partnerships development

globally. Before joining Scanfil he

has worked as Managing Director

of PartnerTech’s factory in Åtvid

aberg as well as Operations Man-

ager, Program Manager and Produc-

tion Manager at PartnerTech. Prior

to this he worked for Toyota Material

Handling. Kristoffer Asklöv holds a

Master’s degree in Mechanical Engi-

neering.

ANNUAL REPORT 2020100 |

Financial information Financial statementsGeneral Information for shareholdersCorporate Governance Statement

Markku Kosunen

CTO

Markku Kosunen (1967) is responsible

for ICT and ERP, Quality processes

and systems, production technol-

ogy and investments. Before joining

Scanfil Group he worked at Mecanova

Oy as Vice President of Business

Development 2005–2007, Director

of Operations during 2008–2010 and

in different management positions

at mechanics plants of Flextronics

and Ojala-yhtymä in Finland dur

ing 1993–2005. Markku Kosunen is a

tech nology undergraduate.

Kai Valo

CFO

Mr. Kai Valo (1965) is the Group CFO

since 14 October 2016. During 2015–

2016 Kai was the CFO for Norpe

Group. Prior to that he was at Lite-On

Mobile Group Director of Finance and

Control in Beijing, China 2009–2015.

Before that (during 1999–2008) he had

several finance related management

positions at Perlos. Kai holds a Mas-

ter’s Degree in Economics.

Riku Hynninen

COO

Riku Hynninen (1972) is responsi-

ble for factories financial and opera-

tional performance and development,

global sourcing and supply chain and

until 1.November 2020 strategic HR.

He has previously worked at Nokia

Corporation (1995–2018), in charge

of developing the production tech

nology for mobile network business,

creating new product delivery capa-

bility, and product portfolio lifecy-

cle management (2014–2018). Prior to

that he has been responsible among

others the technical functions of the

Nokia Suzhou factory and the crea-

tion and management of the delivery

capability of several different mobile

network product families in Italy and

Finland. Riku Hynninen holds Mas-

ter’s degree in Industrial Economics

and Engineering.

ANNUAL REPORT 2020 | 101

Financial information Financial statements Corporate Governance StatementGeneral Information for shareholders

Annual General Meeting

Scanfil plc’s Annual General Meeting (AGM) will be held

on Thursday 22 April 2021 at the at the premises of Bore-

nius Attorneys Ltd, at Eteläesplanadi 2, 00130 Helsinki,

Finland. Shareholders of the company and their proxy rep

resentatives may participate in the meeting and exercise

shareholder rights only through voting in advance as well

as by making counterproposals and presenting questions

in advance. People may not participate the meeting in per-

son at the venue. The AGM will discuss the matters listed

in the notice of the meeting, in accordance with the compa-

ny’s Articles of Association. The meeting agenda has been

published on 25 March 2021. The agenda is also available

at company’s website www.scanfil.com.

Distribution of profits

The Board of Directors proposes to the Annual General

Meeting that a dividend of EUR 0.17 per share be paid for a

total of EUR 10,960,113.35 for the financial year ending on

31 December 2020. The dividend matching day is 26 April

2021 and the dividend payment date 3 May 2021. The divi

dend will be paid to shareholders who are registered in the

Ltd on the matching date.

Financial information

In 2021, Scanfil plc will publish the following financial

reviews:

• Financial statements 18 February 2021

• Annual report week 12/2021

• Interim report for January–March 23 April 2021

• Interim report for January–June 6 August 2021

• Interim report for January–September 26 October 2021

Information to shareholders

The financial reviews will be released in Finnish and Eng-

lish. They will be published on the company’s website at

www.scanfil.com.

Each shareholder is requested to notify the bank, broker-

age firm or Euroclear Finland Ltd, which manages the

shareholder’s book entry account, as the account opera-

tor selected by the shareholder of any changes in its name

or address.

Information

to shareholders

ANNUAL REPORT 2020102 |

This document is an English translation of the Finnish

Independent Auditor’s Reasonable Assurance report. Only

the Finnish version of the report is legally binding.

INDEPENDENT AUDITOR’S REASONABLE

ASSURANCE REPORT ON SCANFIL PLC’S

ESEF FINANCIAL STATEMENTS

To the Board of Directors of Scanfil Plc

We have undertaken a reasonable assurance engagement

on the iXBRL marking up of the consolidated financial

statements for the year ended December 31, 2020 included

in the Scanfil Plc’s digital files [7437004XD6U0FF-

DCT507-2020-12-31_eng.zip] prepared in accordance with

the requirements of Article 4 of EU Delegated Regulation

2018/815 (ESEF RTS).

The Responsibility of the Board of Directors

and Managing Director

The Board of Directors and Managing Director are respon-

sible for preparing the report of the Board of Directors

and financial statements (ESEF financial statements) that

comply with the requirements of ESEF RTS. This respon

sibility includes:

•

preparation of ESEF financial statements in XHTML

format in accordance with Article 3 of the ESEF RTS

•

marking up the consolidated financial statements included

in the ESEF financial statements with iXBRL tags in

accordance with Article 4 of the ESEF RTS; and

•

ensuring consistency between ESEF financial statements

and audited financial statements.

The Board of Directors and the Managing Director are also

responsible for such internal control as they deem neces-

sary to prepare the ESEF financial statements in accord-

ance with the requirements of the ESEF RTS.

Auditor’s Independence and Quality Control

We are independent of the company in accordance with the

ethical requirements applicable in Finland, which apply

to the engagement we have performed, and we have ful-

filled our other ethical obligations in accordance with these

requirements.

The auditor applies International Standard on Quality

Control 1 and accordingly maintains a comprehensive

system of quality control including documented policies

and procedures regarding compliance with ethical require-

ments, professional standards and applicable legal and

regulatory requirements.

Auditor’s Responsibility

In accordance with the Engagement Letter our responsibil-

ity is to express an opinion on whether the marking up of

the consolidated financial statements included in the ESEF

financial statements comply in all material respects with

the Article 4 of the ESEF RTS. We conducted our reasona-

ble assurance engagement in accordance with International

Standard on Assurance Engagements 3000.

The engagement involves procedures to obtain evidence

whether;

•

the consolidated financial statements included in the

ESEF financial statements are, in all material respects,

marked up with iXBRL tags in accordance with Article

4 of the ESEF RTS, and;

•

the ESEF financial statements and the audited financial

statements are consistent with each other.

The nature, timing and the extent of procedures selected

depend on practitioner’s judgement. This includes the

assessment of the risks of material departures from the

requirements set out in the ESEF RTS, whether due to fraud

or error.

We believe that the evidence we have obtained is suffi-

cient and appropriate to provide a basis for our opinion.

Opinion

In our opinion, the consolidated financial statements

included in the ESEF financial statements of Scanfil Plc

identified as [7437004XD6U0FFDCT507-2020-12-31_eng.

zip] for the year ended December 31, 2020 are marked up,

in all material respects, in compliance with the ESEF Reg

ulatory Technical Standard.

Our audit opinion relating to the consolidated financial

statements of Scanfil Plc for the year ended December 31,

2020 is set out in our Auditor’s Report dated February 25,

2021. In this report, we do not express an audit opinion,

review conclusion or any other assurance conclusion on

the consolidated financial statements.

Helsinki March 25, 2021

KPMG OY AB

Kirsi Jantunen

Authorized Public Accountant, KHT

ANNUAL REPORT 2020 | 103

Yritystie 6

FI-85410 SIEVI

FINLAND

Tel. +358 8 48 82 111