CEO’s greeting

CEO TOMMI KAJASOJA COMMENTS ON THE INTERIM FINANCIAL STATEMENTS JANUARY-JUNE 2021

“The second quarter was two-fold with high activity levels across the Group but with very disappointing earnings due to execution issues in one large customer site. While we missed the second quarter profit target considerably due to this one specific site, and are not likely to recover that gap in the second half, we still expect the full year operating profit to improve from last year.

In Cleaning Services, we delivered the highest quarterly revenue of all time, driven by the large shutdown service in Finland. Unfortunately, the challenging execution environment, to some degree affected by coronavirus restrictions and related lowered productivity, resulted in labour cost overruns and consumed the expected higher margins. Due to the challenges and extensive scope requirements we had to subcontractwork more than expected. We will reassess and improve our operating models to ensure better outcome in future shutdowns of this size. I am pleased to note that the other Cleaning Service business is growing and performing well, especially in Sweden with new sizable customers gained recently, giving us confidence going forward.

I am also very pleased with Recycling Services’ development, with net sales growing by 10% and EBITDA by 23% in the second quarter, continuing on a good track as expected after process improvements and investments made last year. Operations at our main recycling plant in Tampere, Finland, are functioning well, and the improved REF market in combination with well secured incineration exit capacity will enable further controlled and profitable growth. We have recently invested in improving our waste and sustainability reporting capabilities to support our customers’ needs, and will continue to do.

Implemention the new strategy after the Demolition Services divestment is progressing well, including the ongoing cost base restructuring, which will be more visible in the second half result after our recent ICT systems change in Finland. The focus on growing our service business is gaining traction, further fuelled with recent investments in reinforcing our commercial capability and customer service level improvement efforts. In spite of the current insecurity due to the pandemic, we feel that the market is recovering well in both our business areas and we have managed to gain new customers and contracts to support our continuing growth beyond 2021.

We anticipate the coronavirus impact on our business to gradually ease up, but we will continue to enforce tight cost and cash flow controls and prepare ourselves for quick manoeuvring with health & safety as well as efficiency aspects in mind, should the pandemic related issues further interfere with the planned assignments going forward. We will continue to follow the health & safety precautions every day, protecting not only our employees but also our customers and partners with whom we are in contact.”