Oras Invest in brief Key figures Portfolio companies Summary of Financial Statements Corporate Governance < > Annual Review 2017

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2 Oras Invest in brief Vision... 2 Oras Invest key figures... 3 Message from the CEO... 4 Purpose... 8 Values... 9 Oras Invest strategy Portfolio companies Oras Group Uponor Tikkurila Kemira Creating wealth to the society Summary of Financial Statements Parent company income statement Parent company balance sheet Parent company cash flow statement.. 26 Corporate Governance Board of Directors Management Personnel photos Mika Malo Art work in the photos Erkki Paasikivi, original photos by Milla-Kariina Oja Graphic design and layout Kreab contents Oras Invest Ltd s Annual Review and full Financial Report 2017 are available in PDF-format in English and Finnish on the company website orasinvest.fi

3 1 Oras Invest in brief Oras Invest is a family-owned company with over 70 years of industrial entrepreneurship tradition. Its current industrial holdings are Oras Group, Uponor, Kemira and Tikkurila. At the end of 2017 the net asset value of Oras Invest totaled EUR 892 million. Oras Invest holdings Oras Group 100% Since 1945 Uponor 23% Since 1999 Tikkurila 18% Since 2010 Kemira 18% Since 2007 Aggregate key figures 2017 Net sales EUR 4.5 billion People 13,283 Operating in 40 countries

4 2 vision Oras Invest is and will remain in family ownership. We aspire to be the best owner of selected industrial companies, with long-term commitment. The companies under our ownership are the best long-term performers in their industries. They attract the most competent people and a committed owner base.

5 Key figures 3 Oras Invest key figures Net profit, EUR million Shareholders equity, EUR million Balance sheet total, EUR million Equity-to-assets ratio 93% 89% Gearing 6% 12% Net asset value (NAV), EUR million Total shareholder return (TSR) 5% 19% Loan-to-value ratio 5% 7%

6 Message from the CEO 4 We have taken the final steps in preparation for a generation shift in the operative leadership of Oras Invest. Jari Paasikivi Welcoming the new CEOs Most of our companies main markets developed favourably in The construction market was vibrant across most of Europe and North America, and the same applies to stock market development. The positive mood led to high performance expectations, which were reflected in overall company valuations. No universally applicable comments or judgements can be made on our companies performances in Tikkurila and Oras Group performed disappointingly, while Kemira s development was below expectations. Uponor demonstrated another year of good performance on its way towards achieving its long-term value creation targets. Since no transactions were performed at the level of Oras Invest during 2017, our focus was on supporting the long-term strategic development of our four companies in the building and water industries. We continued as the largest owner of the listed companies Uponor, Kemira and Tikkurila, and as the 100% owner of Oras Group. Oras Invest s net asset value declined by 6%, to EUR 892 million (EUR 945 million in 2016), and its total shareholder return was 5% (19%). We expect an incoming dividend stream of around EUR 34 million (36) from The decline in the net asset value can mainly be attributed to the fall in profitability of the fully owned Oras Group and its consequently lower intrinsic value. There were no significant changes in the listed companies market capitalisation values in Kemira and Uponor managed to grow their intrinsic values, while Tikkurila s intrinsic value dropped dramatically. Oras Invest s balance sheet continued to strengthen, with gearing falling to 6% (12%) and our loan to value ratio, measured at year-end market values, settling at 5% (7%).

7 5 Oras Group had a difficult year, resulting in a disappointing performance. Net sales grew by 1.7% to EUR million (245.3), while the comparable operating profit declined to EUR 17.4 million (25.2). The post-acquisition integration of Hansa into Oras Group is still incomplete in terms of manufacturing efficiency and product portfolio consolidation, causing a temporary additional cost burden and delivery challenges. In mid-june, Oras Group s CEO Pekka Kuusniemi announced his resignation. Dr Markus Lengauer was appointed CEO and President of Oras Group as of 1 November In 2018, the company s focus will be on fixing its internal efficiency to ensure a return to normalised profitability levels. Uponor reported net sales growth of 6.5%, at EUR 1,170.4 million (EUR 1,099.4). Uponor s comparable operating profit improved to EUR 97.2 million (90.7). All three business segments contributed to the growth and were able to improve their profitability. The rate of forward-looking strategic investment in Uponor was high for the second year running. The investments include digitalisation initiatives and two capacity extensions in the Building Solutions North America segment. In addition, Uponor has consciously increased its R&D spending to 2% of net sales. Kemira s net sales increased by 5% compared to the previous year, totalling EUR 2,486.0 million (2,363.3), and its comparable operating profit remained at the previous year s level at EUR million (170.1) in absolute terms, but declining slightly in relative terms. The growth was mainly driven by the recovery in the North American oil and gas markets. In 2017, Kemira consolidated its organisation from three into two segments: Pulp & Paper and Industry & Water. Tikkurila had another challenging year. Net sales grew by 1.8% to EUR million (572.0) but the comparable operating profit declined to EUR 28.8 million (54.0), an unacceptable level of 4.9% of net sales. Sales price increases could only partially offset the increased cost burden of raw materials and the ramping up of a new ERP system. During the second half of the year, Tikkurila launched a programme to boost profitability to achieve savings of at least EUR 30 million. Tikkurila s CEO, Erkki Järvinen, left the company in September and CFO Jukka Havia was appointed interim CEO. In February 2018, the company announced the appointment of Elisa Markula as the new CEO. She will assume her new responsibilities in April During 2017, Oras Invest completed a major strategy review to determine its way forward for the next 10 years. We have taken the final steps in preparation for a generation shift in the operative leadership of Oras Invest. Oras Invest s owners have been very clear about their long-term vision of being a family company and keeping the business strongly under the family s leadership, while relying on the support of our close network of trusted professionals. In April 2018, the board of directors of Oras Invest decided to appoint Annika Paasikivi as the CEO of Oras Invest. At the same time, the Annual General Meeting of shareholders decided that I would assume the Chairmanship of the Board as of 16 April Consequently, our long-term Chairman and the architect of Oras Invest s industrial owner business model, Pekka Paasikivi, will step down. He has worked with the family company throughout his entire professional career. During his tenure and since we became the largest owner of Uponor in 1999 our net asset value has quadrupled. I would like to express my warmest thanks to each and every one of the 13,283 people working with and for our companies worldwide, for their commitment and efforts during 2017 and for sharing our journey towards long-term value creation. In addition, I would like to thank all of our board and nomination committee members for their continuous support and foresight, and all of our partners and stakeholders for their trust and consistent support. April, 2018 Jari Paasikivi

8 Message from the CEO 6 Dear Oras Invest Partners and Friends, It is with a long-term mission that I take up my duties as CEO of our family company. Our owners have set the value-creation target of doubling Oras Invest s net asset value on a rolling ten year basis, while maintaining a balanced industrial portfolio. Our strategy work, which was completed last year, confirms our confidence in the fact that our current portfolio can deliver most of the long-term value creation we are seeking. Going forward, our first priority will therefore be on further developing Oras Group, Uponor, Kemira and Tikkurila as high-quality companies. Oras Invest s ownership steering seeks to provide platforms for healthy balance sheets and continuous profitability improvement, which will enable organic growth. We drive for clearly understandable business models and consistent dividend development. Simultaneously, the core businesses of our companies are under continuous scrutiny. Increasing pace of change accelerates business model life-cycles too. We regularly evaluate our own operations, to ensure that we can justifiably claim to be the best owner for our companies.

9 7 All of our companies are in the business of industrial manufacturing, and offer concrete products and solutions. In the current era of exponential technological advancement, it is of the utmost importance that our companies keep upgrading their capabilities. This means people. Although digitalisation and artificial intelligence will be a great help in making manufacturing, sales and marketing more efficient, human intelligence will prevail in fulfilling customer and other stakeholder expectations. Consequently, we need to do more than upgrade our tools; we must also ensure that our organisations are in continuous learning mode in order to foster progressive competence. At Oras Invest, we will do so by strengthening our operative organisation and intensifying our industrial ownership. We are already working closely with the boards and top management teams of our companies, but we can build a more systematic approach to support long-term value creation. When we talk about our closest network, we are mainly referring to the nomination board members, members of the boards of directors, and the executive committees of our companies. The management and careful cultivation of this large group of professional individuals is our most important daily work. In the medium term, Oras Invest will be looking for opportunities to facilitate the growth of our portfolio companies, as well as opportunities to expand our ownership. We will limit our interest to our current industry sectors, because these are what we know best. We put all of our effort into continuously learning and understanding how the dynamics of the building and water industries develop. Our industry focus is what differentiates Oras Invest from investment companies. We are interested in opportunities where our industrial ownership model can add value and where we can gain proprietary access to potential deals. I believe that the best business opportunities can be found in the products, services and applications that will help to solve some of the global challenges we face today. All of our current companies are already working in this direction. Our first priority will be on further developing Oras Group, Uponor, Kemira and Tikkurila as high-quality companies. Annika Paasikivi Annika Paasikivi CEO as of 16 April 2018

10 Purpose 8 Purpose Oras Invest focuses its ownership on industrial companies, which operate in the building and water industries. We develop our companies through active Board work and close cooperation with the management and other owners. Our aim is to create long-term sustainable value, which we measure by the development of our net asset value.

11 Values 9 Taking the long view, with sustainable values Oras Invest values By VITALITY we demonstrate our aim to develop the business by seeking re-generation and innovative ownership ideas. VITALITY OWNERSHIP cannot be claimed without an open and honest approach, respect for work and fair play. The responsibilities of ownership are greater than its priviledges. OWNERSHIP COMMITMENT ENDURANCE Good ownership is a value and way of life understood by Oras Invest. It requires an honest, open and responsible approach, respect for work, and fair play. As an active industrial owner, we look beyond economic fluctuations. Vitality, commitment and endurance form the basis for Oras Invest s continuous, long-term value creation. We ensure that the companies we own are proactive and able to renew themselves. Our commitment to their long-term development is tangible. We put our competence and experience at our companies disposal. We take responsibility for ensuring that our companies have solid ownership structures, as well as great Boards of Directors and CEOs. These are the basic prerequisites for solid value creation and constant improvement. A company will only be able to fulfil its social responsibility if it operates profitably on a solid base and creates value. By COMMITMENT we express our long-term commitment to our companies and stakeholders; and to our family. By ENDURANCE we state that there is continuity and competence in our work and we are driven by sustainable value creation.

12 Strategy 10 An active owner s strategy Committed ownership, long-term development and value growth are permanent factors of our strategy. We look beyond economic trends and work in close cooperation with the other owners, Boards, management and all interest groups. In the case of listed companies, it is our goal to be the largest owner, while in other cases we aim for majority ownership. Our family business background has had a strong influence in defining the nature and objectives of our company as an industrial owner. We have built a long-term commitment to our companies and want to develop them in a determined manner. Our strategy is guided by sustainable value creation throughout economic fluctuations, and when necessary, bold moves and preparation for challenging times. To us, active industrial ownership is long-term development of the companies we own. This means continuous dialogue with the other owners of our companies and our closest stakeholders. We direct our earned dividends on growing our Net Asset Value and strengthening our balance sheet. We strive towards value growth, which requires active work by the Boards, and constructive cooperation with the management of our companies. It is in the interest of all owners that our companies Boards have the competence to form a clear conception of the companies business ideas, strategies, management teams, and risks.

13 11 Basic business principles and continuous renewal Sustainable growth Profitability Business competence Foundation In the case of listed companies, it is our goal to be the largest owner, while in the case of unlisted companies we aim for majority ownership. We comply with good corporate governance practices. As an industrial owner, we are in a decision-making position and exert influence in general meetings of shareholders, Boards of Directors and nomination Boards. We participate in ensuring that the capital structures of our companies remain healthy, giving them strength for development and renewal, and for building a sustainable future. We monitor the overall development of the building and water industries, as well as the long-term socioeconomic trends shaping the fields that our companies are active in. We assess the development opportunities and value creation abilities of our companies, while also evaluating their management s competences.

14 Portfolio companies 12 Oras Group is a significant European provider of sanitary fittings: it is the market leader in the Nordics and a leading company in Continental Europe. The company s mission is to make the use of water easy and sustainable, and its vision is to become the European leader of advanced sanitary fittings. Oras Group operates with its own staff in twenty European markets. Overview of 2017 The net sales of Oras Group totalled EUR million (EUR million). The comparable operating profit was EUR 17.4 million, or 7.0% of net sales (EUR 25.2 million and 10.3%). The overall market situation remained (and remains) positive in almost all markets in which Oras Group was active in In the Nordic region the main area for the Strategic Business Unit Oras the markets continued to expand, showing notable growth in Sweden. The markets also grew in Finland, Norway and Denmark, but at a lower rate. In Central Europe, where the Strategic Business Unit Hansa has a strong market position, both Germany and Austria reported that market demand for sanitary goods was slightly behind demand for installation material. However, the market situation can be viewed as very solid. The ISH fair in Frankfurt was one of the highlights of Oras Group s sales, marketing and product development activities in the spring of A high number of new products were launched and feedback on innovation was very positive. However, an initially high order intake for the novelties, combined with productivity and quality challenges in production, mainly related to the ramp-up of new products, led to extended delivery times and higher production costs. These issues had a negative impact on Oras Group s profitability and cash flow in The Group s balance sheet remained very strong and healthy. Oras Invest s ownership 100% Since 1945 Net sales EUR million

15 13 Building on the work of previous years, Oras Group s long-term product portfolio development and consolidation continued during 2017 as planned. Product development was guided by the new product philosophy. Novelties launched during the year strengthened the competitiveness of Oras Group among installers, as well as in the area of advanced sanitary fittings. Outlook Construction activities in Oras Group s key markets remained at a healthy level in 2017 and will provide a solid basis for a strong demand pattern in the future. Key markets are therefore expected to grow further in To build a solid basis for further profitable growth, projects in various fields have been started to secure a strong foundation before refocusing on growth. Despite this, there are plans to invest more in sales and marketing activities than before. This will enable the forthcoming opportunities provided by digitalisation to be actively addressed. However, the professional sales channel will remain the preferred and exclusive route to the markets. In addition, investments in the field of production are planned to be on a higher level than in previous years. This will facilitate greater automation and help to keep production costs competitive. facts & figures Development of Oras Group s net sales EUR million Oras Group in brief 2017 Net sales: EUR million Comparable operating profit: EUR 17.4 million Average number of personnel: 1,405 Members of the Board: Jari Paasikivi (Chairman), Nils Lüssem, Annika Paasikivi, Risto Paasikivi, Hannu Paitula and Pirjo Väliaho President & CEO: Dr. Markus Lengauer EUR million EUR million EUR million EUR million

16 Portfolio companies 14 Uponor is a leading international provider of systems and solutions for safe drinking water delivery, energy-efficient radiant heating and cooling, and reliable infrastructure. Uponor operates in three segments: Building Solutions Europe, Building Solutions North America, and Uponor Infra. These serve a variety of building markets, including those in the residential, commercial, and industrial and civil engineering sectors. Oras Invest s ownership 23% Since 1999 Overview of 2017 The last two years have been years of change in the Building Solutions Europe segment. The Europe-wide transformation programme, which started at the end of 2015, was successfully finalised in After major changes, the segment s manufacturing footprint in Europe offers greater capabilities and capacity than ever before. As a result, cost competitiveness, product features and availability will be geared to satisfy increasing customer demand in both the traditional residential and the commercial segments of the market. The segment was able to increase sales of prefabricated solutions in the commercial sector. Prefabrication fulfils the key needs of the commercial building environment very well, alleviating the chronic shortage of qualified installers, providing safe industrially manufactured solutions, being easy and quick to install, while providing lower costs and higher quality for the customer. The segment continued to strengthen its competencies in smart, hygienic water installations, which drove demand and helped to increase net sales. Building Solutions North America realised healthy growth in 2017, by following its strategy and refocusing its efforts beyond its residential roots towards emerging commercial opportunities. In response to growing demand for capacity, the segment announced two major expansion projects in First, there was the construction of a 5,400 square-metre manufacturing facility and the tenth expansion in Apple Valley, Minnesota. Forecasting continued long-term growth in commercial and residential construction in North America, in July 2017 Uponor announced the purchase of a 22,000 square-metre factory in Hutchinson, Minnesota. Operations will begin there in the summer of Net sales EUR 1,170.4 million

17 15 Building Solutions North America aims to solidify its position as the market leader focusing on innovations in materials, mechanical and smart-connection features, and digitalisation related to pipe, fitting and installation solutions. As part of this process, Phyn Plus was introduced to the U.S. markets in early Phyn Plus is a residential smart water monitoring and shut-off device, developed in partnership with Belkin. Uponor Infra maintained a strong market position alongside large wholesaler customers in the Nordic countries, where the company has continuously succeeded in introducing new solutions to the infrastructure pipe markets. Since its establishment in 2013, Uponor Infra has executed several restructuring programmes to streamline its production footprint and increase its operational efficiency. The latest initiative in the Europe-wide transformation programme, involving the moving of plastic pipe production from Vaasa to Nastola, Finland, was finalised during the first half of Outlook Uponor has strengthened its operations in several respects in recent years. Uponor s business segments are more streamlined, more efficient and have a competitive supply chain and manufacturing network. Uponor s sales and marketing functions have been reorganised and refocused to align with customer needs and the company s strategic ambitions. In North America, it is determinedly building its capacity and capabilities which have been a bottleneck inhibiting growth in recent years to meet growing customer demand. Uponor remains committed and is working hard to be at the forefront of the digitalisation and sustainability trends in its industry. The company has already launched new, unique offerings in areas such as the niche sector of smart water technology. facts & figures Largest shareholders 31 Dec 2017 Nordea Bank Ab (publ). Suomen Sivuliike 16.0% Skandinaviska Enskilda Banken Ab (publ) Helsinki Branch 7.5% Varma Mutual Pension Insurance Company 5.3% Nordea Nordic Small Cap Fund 3.8% Ilmarinen Mutual Pension Insurance Company 2.5% Oras Invest Oy 22.6% Others 42.3% Uponor in brief 2017 Net sales: EUR 1,170.4 million Comparable operating profit: EUR 97.2 million Average number of personnel: 3,990 Members of the Board: Jorma Eloranta (chairman), Pia Aaltonen-Forsell, Markus Lengauer, Eva Nygren, Annika Paasikivi and Jari Rosendal President & CEO: Jyri Luomakoski Oras Invest s holding in Uponor Since 1999 Proportion of share capital: 22.6% Proportion of voting rights: 22.6% Market value of ownership: EUR 278 million

18 Portfolio companies 16 Tikkurila is a Nordic paint company whose products are manufactured from carefully chosen raw materials that meet the highest quality standards. The company develops premium products and services that provide customers with quality that will stand the test of time and the weather. Tikkurila relies on strong brands and sustainable products which support its life cycle philosophy. A strong quality image and market leadership are the company s key competitive advantages. Tikkurila was established in 1862, and its shares have been listed on Nasdaq Helsinki since Overview of 2017 In 2017, Tikkurila s net sales equalled the comparison period s level at EUR million (572.0). Due to challenges involved in deploying the ERP system and securing raw materials, the company was unable to fully meet market demand in the Nordic countries. Business operations also developed favourably in Russia, where the stronger exchange rate of the rouble had a positive impact. Tikkurila s adjusted operating profit decreased to EUR 28.8 million (54.0). Profitability was particularly weak due to high costs: on the one hand, these involved the cost of deploying the new ERP system, and on the other, a major rise in raw material and packaging material prices. Operations were also affected by the destruction of a factory, belonging to one of Tikkurila s key raw material suppliers, by fire in January, and certain other problems with availability. Deployment of the ERP system posed challenges that had a negative impact on Tikkurila s operations, particularly in Sweden. In the autumn of 2017, Tikkurila launched an extensive programme to boost profitability by achieving savings of at least EUR 30 million and improving cost competitiveness. As part of the programme, Tikkurila announced the divestment of its unprofitable business operations in the Balkans and Germany. In addition, the company is preparing to optimise its future production and logistics network in all operating countries. Oras Invest s ownership 18% Since 2010 Net sales EUR million

19 17 Tikkurila s strategy was updated for The company is committed to improving the overall user experience of its customers and its internal efficiency. Tikkurila is creating value through its customer promise: Nordic quality from start to finish. Tikkurila offers an extensive range of products for protecting and decorating surfaces for consumers, construction professionals, and selected industrial customers. Tikkurila s main markets are Russia, Sweden and Finland, where the company is the market leader in decorative paints. Tikkurila has production in eight countries and most of its sales consist of premium products. Outlook The market outlook for 2018 is relatively good, although uncertainty has grown in the Swedish housing market in recent months. Economic growth is anticipated in Tikkurila s key markets and consumer confidence is strong. The main challenge lies in the likely further rises in raw material and packaging material prices during To compensate for higher costs, Tikkurila will continue to increase its sales prices and take further action to boost profitability. In 2018, the focus will be on improving profitability and enhancing the reliability of deliveries. facts & figures Largest shareholders 31 Dec 2017 Oras Invest Oy 18.1% Others 68.4% Varma Mutual Pension Insurance Company 5.7% Mandatum Life Insurance Company Ltd. 3.7% Ilmarinen Mutual Pension Insurance Company 2.6% Kaleva Mutual Insurance Company 1.5% Tikkurila in brief 2017 Net sales: EUR million Comparable operating profit: EUR 28.8 million Average number of personnel: 3,107 Members of the Board of Directors: Jari Paasikivi (Chairman), Eeva Ahdekivi, Harri Kerminen, Riitta Mynttinen, Pia Rudengren and Petteri Walldén President & CEO: Erkki Järvinen until September 21, 2017, Interim CEO Jukka Havia as of September 21, 2017 Oras Invest s holding in Tikkurila Since 2010 Proportion of share capital: 18.1% Proportion of voting rights: 18.1% Market value of ownership: EUR 142 million

20 Portfolio companies 18 Kemira is a global chemicals company serving customers in water intensive industries. It provides expertise, application know-how and chemicals that improve its customers product quality, process and resource efficiency. Kemira focuses on pulp & paper, oil & gas and water treatment. In 2017, Kemira had annual net sales of around EUR 2.5 billion and 4,781 employees. Overview of 2017 The year 2017 was marked by net sales growth, driven mainly by an uptick in the oil and gas markets, investments in new capacity, and operational efficiency measures. During the year, Kemira consolidated its organisation from three into two segments: Pulp & Paper and Industry & Water. Markets remained volatile, with currency movements depressing net sales and higher raw material prices burdening profitability. Despite these turbulent circumstances including hurricanes, snowstorms and a shortage of some relevant raw materials Kemira was able to grow its business and improve its operative EBITDA in 2017, with the second half of the year being clearly better than the first. The group s organic growth was 6% and operative EBITDA increased to EUR 311 million. In Pulp & Paper, healthy growth in volumes of 2% continued and the segment achieved its target of growing faster than the market. Growth in the use of pulp & paper chemicals is driven by higher production volumes for board and tissue grades. Kemira has unique expertise in chemical applications, and is well-placed to help pulp & paper-producing customers to innovate and continuously improve their operational efficiency and end-product quality. Kemira started up a new bleaching chemical line in Finland ahead of the initial schedule and the ramp-up was successful. Kemira also signed an agreement to form a new joint venture in China; this will secure the supply of a key raw material for AKD wax Oras Invest s ownership 18% Since 2007 Net sales EUR 2,486.0 million

21 19 and further strengthen the company s position in the pulp and paper chemicals market. In Industry & Water, net sales grew organically by 12% thanks to the recovery in the North American shale oil & gas market, as well as growth in new areas such as Chemical Enhanced Oil Recovery and oil sands. The water treatment business also grew. The water treatment market is driven by tightening regulation. Kemira is the only manufacturer offering a full product portfolio of coagulants, polyacrylamide polymers and other water treatment chemicals. In oil & gas, Kemira is well-positioned in the shale industry and growing fast in water treatment related to unconventional oil recovery in Canada, and polymers used to extract more oil from existing reservoirs (Chemical Enhanced Oil Recovery). In October, Kemira announced an investment of EUR 30 million in polymer technology for CEOR, based on an anticipated uptick in customer demand. Outlook Both segments, Pulp & Paper and Industry & Water, operate in growing markets with a combined expected annual market growth rate of 3% until Kemira is targeting mid- to long-term, above-market growth. Market growth is being driven by multiple global trends, for example: E-commerce is driving the need for packaging material A growing middle class, increased standards of living and urbanisation is leading to higher usage of water, energy, tissue, and board Recycling and use of renewables is leading to e.g. higher usage of strength chemicals Regulation is increasing water treatment Scarcity of resources is accelerating the need to produce more with less In 2018, Kemira expects its operative EBITDA to increase from the prior year (2017: EUR million). Kemira s mid- and long-term financial targets: Kemira aims for above-market net sales growth based on an operative EBITDA margin of 14 16%. Its gearing target is below 60%. facts & figures Largest shareholders 31 Dec 2017 Kemira in brief 2017 Net sales: EUR 2,486.0 million Comparable operating profit: EUR million Average number of personnel: 4,781 Members of the Board: Jari Paasikivi (Chairman), Wolfgang Büchele, Shirley Cunningham, Kaisa Hietala, Timo Lappalainen and Kerttu Tuomas President and CEO: Jari Rosendal Oras Invest s holding in Kemira Since 2007 Proportion of share capital: 18.2% Proportion of voting rights: 18.2% Market value of ownership: EUR 325 million Solidium 16.7% Varma Mutual Pension Insurance Company 3.4% Ilmarinen Mutual Pension Insurance Company 2.1% Kemira Oyj 1.9% Oras Invest Oy 18.2% Others 57.7%

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23 21 Creating long-term wealth to the society The aggregate contributions of our holdings in 2017 Net sales from customers EUR billion The aggregate net sales of our companies was 4.5 billion, and they employed 13,283 people in 40 countries. EUR billion EUR 662 million EUR 155 million EUR 38 million SUPPLIERS OF RAW MATERIALS, GOODS & SERVICES EMPLOYEES SOCIETY BANKS Dividends EUR 159 million to 74,877 shareholders

24 22 Summary of Financial Statements

25 Summary of Financial Statements Parent company income statement FAS Oras Invest Ltd (EUR) 1 Jan 31 Dec Jan 31 Dec 2016 Net sales 124, , Other operating income 78, Personnel expenses 809, , Depreciation 107, , Other operating expenses 1,485, , Operating profit 2,198, ,528, Financial income and expenses 32,691, ,342, Profit before appropriations and taxes 30,492, ,813, Appropriations 2,508, ,900, Income taxes 13, , Profit for the financial period 32,988, ,716,032.01

26 Summary of Financial Statements Parent company balance sheet FAS Oras Invest Ltd (EUR) ASSETS 31 Dec Dec 2016 Non-current assets Intangible assets Tangible assets 1,199, ,110, Investments in Group companies 21,942, ,942, Other investments 605,460, ,460, Other non-current receivables 23, , ,625, ,536, Current assets Current receivables 1,673, ,510, Cash and cash equivalents 7,566, , ,240, ,542, Total assets 637,866, ,079,431.42

27 Summary of Financial Statements 25 Oras Invest Ltd (EUR) 31 Dec Dec 2016 SHAREHOLDERS EQUITY AND LIABILITIES Shareholders equity Share capital 6,520, ,520, Retained earnings 553,075, ,859, Profit for the year 32,988, ,716, ,584, ,095, Accumulated appropriations 41, Liabilities Non-current liabilities 45,000, ,000, Current liabilities 240, ,983, ,240, ,983, Total equity and liabilities 637,866, ,079,431.42

28 Summary of Financial Statements Parent company cash flow statement FAS Oras Invest Ltd (EUR 1,000) Cash flow from operations 1 Jan 31 Dec Jan 31 Dec 2016 Profit before appropriations and taxes 30,493 24,814 Adjustments Depreciation and impairment Financial income and expense 32,692 26,343 Other adjustmets 59 Cash flow from operations before change in working capital 2,150 1,438 Change in trade and other non-interest bearing receivables ( /+) 38 8 Change in trade and other non-interest bearing liabilities (+/ ) Cash flow from operations before financial items and taxes 2,169 1,464 Interests paid and other financial items 628 3,036 Interests received Dividends received 32,987 28,655 Income taxes paid Cash flow from operations 30,520 24,956

29 Summary of Financial Statements 27 Oras Invest Ltd (EUR 1,000) 1 Jan 31 Dec Jan 31 Dec 2016 Cash flow from investments Investments in intangible and tangible assets Proceeds from sale of intangible and tangible assets 92 Change in other non-current receivables 23 Cash flow from investments Cash flow from financing Repayment of non-current loans 15,000 Repayment of current loans 22,748 11,805 Group contribution 2,400 3,850 Dividends paid 2,499 2,000 Cash flow from financing 22,847 24,955 Net change in cash and cash equivalents 7, Cash and cash equivalents at 1 January Cash and cash equivalents at 31 December 7, Oras Invest Ltd s Annual Review and full Financial Report 2017 are available in PDF-format in English and Finnish on the company website orasinvest.fi

30 Corporate Governance 28 Corporate Governance Oras Invest Ltd (the Company) is a private limited company registered in Finland. The company follows good corporate governance practices based on the Finnish Companies Act and the company s Articles of Association. The Company is the parent company of Oras Invest Group. In such capacity, it is responsible for the development of the management of the Group, prepares the Group s financial reporting and supports the Group in financial, legal and management issues. The Group consists of a number of independent subgroups and separate companies. Decisions regarding their operations are taken by each company s own decision-making bodies. Oras Invest exercises its ownership through representatives elected by its Board of Directors in the decision making bodies of its subsidiaries, associated companies and other investments. General Meeting of Shareholders The highest decision-making authority in the Company is exercised by the shareholders at the General Meeting of shareholders. According to the Finnish Companies Act and the Articles of Association, the General Meeting of shareholders decides on the following issues: Amendments to the Articles of Association Adoption of the annual accounts Dividend distribution Appointment and compensation of the Owners Board members Appointment and compensation of the Board of Directors Appointment of the Company s auditor and decision on audit fees The General Meeting also elects the Chairman of the Board of Directors and the Vice Chairman of the Board of Directors. Owners Board The Owners Board prepares all matters that are brought to be decided by the General Meeting and decides on all such owner matters which are not brought to the General Meeting. The Owners Board is responsible for the ownership steering of the Company and determines the long-term will and vision of the owners. The Owners Board works in close cooperation with the Company s Board of Directors.

31 29 The Owners Board consists of four (4) to seven (7) members, who elect a chairperson among themselves. Members of the Owners Board are appointed annually at the General Meeting. The Owners Board works according to a charter, which describes the role and functions of the Owners Board in detail. The Owners Board decides on the proposal for the appointment of members to the Company s Board of Directors, which is brought to the Annual General Meeting. Nomination Committee The task of the Nomination Committee is to find the best possible members to the Board of Directors of the Company and to prepare the proposal regarding their remuneration. The Owners Board elects a chairman for the Nomination Committee among its members; in addition to which the chairman of the Board of Directors will act as adviser to the Nomination Committee. The Nomination Committee submits its proposal to the Owners Board, and the Owners Board decides on the proposal for appointment of members to the Board of Directors, to be brought to the Annual General Meeting. The Nomination Committee submits its proposal regarding matters related to remuneration to the Annual General Meeting. The Board of Directors In accordance with the Finnish Companies Act, the Board of Directors is responsible for the governing of the Company and the appropriate organisation of its operations. The Board s main duty is to direct the Company s strategy so as to advance the benefit of all shareholders in the long term, while taking into account the expectations of various stakeholders. The Board further monitors and supervises the executive management of the Company, and appoints and dismisses the Chief Executive Officer. The Board also oversees that the Company acts in accordance with its values. Pursuant to the Articles of Association, the Board of Directors of the Company comprises a minimum of three (3) and a maximum of seven (7) members, appointed for a term starting at the close of the General Meeting at which they were appointed, and expiring at the close of the following Annual General Meeting. Members of the Board of Directors can also be appointed mid-term, at Extraordinary General Meetings. The Board of Directors shall comprise of competent members with diverse expertise from various fields. At least two (2) independent members and at least one (1) owner must be appointed as members of the Board. The Board evaluates its work on an annual basis and reports on this to the Nomination Committee. Chief Executive Officer The Chief Executive Officer (CEO) is appointed by the Board of Directors. The CEO plans and manages the Company s operations and is responsible for its executive management in accordance with the instructions and orders given by the Board of Directors. It is the CEO s duty to ensure that the Company s accounts are in compliance with the law and its financial affairs have been arranged in a reliable manner. Compensation The Nomination Committee proposes the remuneration of members of the Board of Directors. The General Meeting of shareholders shall annually decide on the remuneration of members of the Board of Directors and the Owners Board. The Board of Directors decides on the CEO s salary and benefits and confirms the salaries and benefits of the executive committee members. Supervision Pursuant to the Articles of Association registered on August 3, 2017, the Company has one auditor and a deputy auditor. In case an Authorised Public Accountants Community is elected as an auditor, a deputy auditor shall not be elected. The Board of Directors proposes auditors for election to the General Meeting which appoints them annually. The auditors provide the Company s shareholders with the statutory auditor s report. Auditors duties are regulated by statutory law and other sources. Together with the Chief Executive Officer, the Board of Directors of the Company is responsible for arranging appropriate internal supervision.

32 30 Board of Directors The Chairman of the Board Pekka Paasikivi b. 1944, Finnish citizen, B.Sc. (Eng) Board memberships: Chairman of the Board, Oras Invest Ltd, since 2004 Chairman of the Board, Kemira Oyj, Chairman of the Board, Uponor Oyj, From left: Dr. Frank Stangenberg-Haverkamp, Ulf Mattsson, Pekka Paasikivi, Christoph Vitzthum, Robin Lawther and Kaj Paasikivi

33 31 Robin Lawther b. 1961, American and British citizen, BA Honours (Economics), University of North Carolina at Chapel Hill, M.Sc. (Accounting & Finance), London School of Economics Board memberships: Member of the Board, Oras Invest Ltd, since 2016 Member of the Board, Nordea, since Chairman Nordea Remuneration Committee, since 2017 Member of the UK Government Board, UK Government Investments, since 2014 Ulf Mattsson b. 1964, Swedish citizen, BsC in BA and Econ, PMD Harvard Business School Board memberships: Chairman of the Board, Lideta AB, since 2018 Chairman of the Board, VaccinDirekt AB, since 2018 Chairman of the Board, Piveq V AB, since 2017 Chairman of the Board, Crem International AB, since 2012 Member of the Board, Oras Invest Ltd, since 2014 Member of the Board, AddTech AB (publ), since 2012 Senior Advisor, PJT Partners, since 2017 Kaj Paasikivi b. 1968, Finnish citizen, B.Sc. (Business Administration, Woodbury University), MBA (Helsinki School of Economics) Board memberships: Chairman of the Board, NextStone, since 2007 Member of the Board, Oras Invest Ltd, since 2010 Vice Chairman of the Board, Oras Ltd, Member of the Board, Oras Ltd, Dr. Frank Stangenberg- Haverkamp b. 1948, German citizen, University of Freiburg/Germany, M.Sc. (Econ), Ph.D. Board memberships: Chairman of the Executive Board, E. Merck KG, Darmstadt, Germany, since 2014 Chairman of the Board of Travel Asset Group Ltd, London/UK, since 2007 Chairman of the Supervisory Board, Fortas AG, Roesrath/Germany, since 2000 Member of the Board, Oras Invest Ltd, since 2012 Christoph Vitzthum b. 1969, Finnish citizen, M.Sc. (Econ) President and CEO, Oy Karl Fazer Ab since 2013 Board memberships: Chairman of the Board, Konecranes, since 2016 Member of the Board, Nordstjernan AB, since 2017 Member of the Board, Oras Invest Ltd, since 2013

34 Management President and CEO (until 16 April 2018) Jari Paasikivi b. 1954, Finnish citizen, M.Sc. (Econ) Board Memberships: Chairman of the Board, Varma Mutual Pension Insurance Company, since 2017 Chairman of the Board, Kemira Oyj, since 2014 Chairman of the Board, Oras Ltd, since 2013 Chairman of the Board, Tikkurila Oyj, since 2010 COO (until 16 April 2018) Annika Paasikivi b. 1975, Finnish citizen, M.Sc. (Global Politics) Board Memberships: Chair of the Board, Uponor Corporation, since 2018 Vice Chairman of the Board, Oras Ltd, since 2014 Member of the Board, Varova Oy, since 2016 Member of the Board, Directors Institute of Finland, since 2016 CFO Tuula Ylhäinen b. 1955, Finnish citizen, M.Sc. (Econ) Executive Assistant Anniina Myllyperkiö b. 1978, Finnish citizen, BBA

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36 family company & industrial owner ORAS INVEST LTD Fabianinkatu 14 A, 4 th floor FI Helsinki Finland Tel