Financial responsibility 2023

Luke is a responsible economic operator and a desired partner, delivering value and solutions to its customers and society through research, both locally and globally. Luke’s financial activities are governed by the State Budget Act and Decree as well as the regulations and guidelines based on them.

Luke’s funding in 2023 totalled EUR 151 million. The state budget framework has required and will continue to require significant financial adaptations.

Strengthening the effectiveness of activities and thereby increasing external funding are central means when adapting finances. The increase in external funding by EUR 4 million (7%) from 2022 was a significant success in 2023, even though the available input decreased by 24 annual work units. Revenue totalled EUR 66.4 million, with external funding covering 44% of total expenditure. Key successes in external funding included the accruals of EUR 8.4 million in paid activities and EUR 9.1 million in EU funding. The target level of EUR 8 million was exceeded for the first time in paid activities.

We support local regions in achieving Finland’s carbon neutrality goals and in developing bioeconomy and circular economy solutions by providing our expertise. Regional funding helps spread our expertise to the business sector, develop local solutions and modernise primary production. The aim is to support sustainable regional growth and reduce disparities in development and prosperity between regions.

Total funding allocated to our regional projects in 2023 was approximately EUR 10.2 million in total. In addition, we launched 50 new regional projects in 2023, for which Luke received EUR 13.2 million in funding.

The most significant funding providers were the ELY Centres of Southwest, Eastern and Northern Finland, as well as the Regional Councils of Eastern and Northern Finland. Main sources of regional funding were the European Regional Development Fund (ERDF), the Just Transition Fund (JTF) and the European Maritime and Fisheries Fund (EMFF). The change of programme periods decelerated regional development as funding decisions for projects under the new programme period were not made until in 2023.

Every year, Luke participates in several international projects, both as a coordinator and as a partner. In 2023, we were very successful in obtaining EU funding which increased the volume of international funding and the number of internationally coordinated projects.

A total of 67 Horizon applications were submitted in 2023, of which 20 were approved for funding, including five coordinated by Luke. The success rate of funding applications was almost 30%. One of the new coordinated projects is a completely new infrastructure project for Luke under Pillar 1 of Horizon Europe, which allows Luke to join European infrastructure networks. Luke received roughly EUR 12 million in new Horizon Europe funding. In 2023, 16 EU projects coordinated by Luke were in progress or under preparation.

We are specialised in providing customised research and expert services that meet the needs of our customers. These sales of research and expert services differ from our other activities as they are based on funding on market terms. Our main focus is on maintaining top expertise in research. While profitability is a key factor in customer activities, it can never take priority over ethical standards and compliance with relevant legal provisions.

We value strong relationships with our customers. Our way of cooperating allows us to have a more in-depth understanding of our customers’ needs and provide customised solutions. To ensure that we can meet our customers’ expectations, we measure their satisfaction every year. The customer satisfaction survey seeks to identify our customers’ willingness to recommend us as a partner based on the projects we have delivered to them.

Luke’s procurement costs in 2023 totalled EUR 56.9 million, of which service purchases covered 41%, rents 25%, purchases of materials and goods 12%, travel expenses 7%, investments 6%, and other expenses 9%.  In 2023, 22 of Luke’s framework arrangement agreements underwent a bidding process to achieve financial savings in procurement activities and processes.

The central government’s common goals to automate orders and purchase invoices were achieved in the order-to-cash process. In 2023, Luke processed 16,000 purchase invoices with an automation rate of 38%. The corresponding figure was 61% in purchase order and contractual invoices.

In 2023, a sustainability group was established in the procurement team to identify sustainability factors and sustainable options. Sustainability criteria were applied to certain procurement processes:

• In printing services, quality criteria covered carbon-neutral products, including business cards and brochures. The requirement for the distribution of printed products was that all products must be delivered to customers using vehicles that meet the EURO VI emission requirements.
• In the bidding process for hydrochemistry analysis services, the supplier to be selected was required to have an accredited laboratory and analyses in accordance with the SFS standard. In addition, the supplier was required to have an environmental management system or standard and an environmental sustainability report.
• In the framework arrangement for laboratory equipment, cold storage equipment was required to have a GWP value of less than 150. In addition, the minimum requirement was a CFC- and HCFC-free insulation material, and suppliers were given a quality score for the energy efficiency of cold storage equipment.

Luke’s facility costs in 2023 were EUR 15.8 million, accounting for 10% of total expenditure. During 2023, decisions on the development of the facility structure were prepared to achieve savings of EUR 1.2 million in facility costs during the next few years. The facility efficiency of offices was 9.2 m² in 2023, falling below the target set in the government’s facility strategy (10 m²).