Responsible growth with partners

Transcription

1 Responsible growth with partners Tesi s corporate responsibility report 2016 From the left: Communications Manager Satu Holm-Jumppanen, Investment Director Riitta Jääskeläinen, Director (Growth Investments) Jan Sasse and Investment Analyst (Venture Capital Investments) Tony Nysten (seated).

2 Content of report Page... 1 CEO s Review...1 Principles and material aspects of corporate responsibility...4 Development and targets...5 Stakeholder collaboration Personnel and corporate culture...6 Operating principles...8 Responsible investment... 9 Corporate responsibility in figures Economic responsibility and impact...11 Financial statements...11 Tax footprint...13 Report profile (GRI)...14 Tesi in brief... 17

3 Record amount of investments and a good operating result We believe that responsibility is a competitive advantage for companies and a requirement for long-term success. President & CEO Martin Backman Fundraising, new investments and exits have continued at a good level in Finland as well as in the international venture capital and private equity market for several years now. Finnish startups receive the most venture capital investments in Europe per GDP. In 2016, Finnish companies raised a record-setting 17 venture capital rounds of over 5 million euros, compared to just 5 10 rounds each year during In the later-stage growth funds, exit activity in particular has remained active. In the current environment of low interest rates, this is supported by the global trend of capital seeking higher risk and higher yield expectation asset categories, such as venture capital and private equity. Tesi is an investment company that accelerates companies growth stories by investing in them directly and via funds. We invest in venture capital and growth funds and directly in fast-growing SMEs and industrial investments together with our co-investors. We have succeeded in our work when companies value us as an owner and our activities are recognised also internationally. We work according to our values; we boldly seek solutions together. And we have achieved great results! For Tesi, 2016 can be described by the growth in investment volume, international investors interest in Finnish companies, the growth of our portfolio companies, and a strong financial result. We made investments totalling 165 million euros. We made commitments of 102 million euros in venture capital and later-stage growth funds, like Creandum, Northzone and Folmer, and we invested 63 million euros in growth companies like Optofidelity, Vexve and Touhula. The most notable exits were the divestments of the cleantech company Eniram to Wärtsilä and the software company Rightware to the Chinese Thundersoft. Our international partners are actively seeking new success stories in Finland. Last year international investors participated in 14 of Tesi s direct investments, investing a total of 140 million euros into these companies. It is noteworthy also that Tesi s international portfolio funds invested 28 million euros in eight Finnish companies. In addition to capital, international investors bring expertise to the boards of the companies as well as valuable connections to international markets. At the same time, Finland s venture capital market keeps on developing and becoming more international. 1

4 We are now an investor, directly or via funds, in more than 700 companies. Actively pursuing potential companies and partners, participating in the development of portfolio companies, and successful exits have required a lot of skilful work and it also bears fruit. In recent years, our portfolio companies have grown clearly faster than companies on average: in 2016, the turnover of our direct portfolio companies increased by an average of 17%. The growth and profitability of portfolio companies and the positive valuation of funds contributed to Tesi s financial profit of 45 million euros. The good return on investment gives Tesi the opportunity to put the capital back into circulation and thus accelerate the international growth of new companies has started with good momentum. We have made two new fund commitment decisions. In direct investments, we received excellent news from Uusikaupunki as the Chinese company Contemporary Amperex Technology Limited became a minority shareholder in our portfolio company Valmet Automotive. In the same conjunction, Valmet Automotive signed an agreement to acquire the Swedish Semcon s automotive engineering service operations in Germany. Now Valmet Automotive aims to be a key provider of engineering services for the automotive industry in Europe and is building a strong position particularly in the fast-growing electric vehicle market. In Finland, we need to renew economic structures and continuously develop expertise in order to succeed in the international arena. Even though Finland s venture capital market has gone forward in recent years, there is still a way to go to match the figures of peer countries. Increasing the supply of equity-based funding for SMEs enables them to accelerate growth and expand to new markets. Tesi participates in this through its investment activities together with partners and portfolio companies. In 2017 responsibility is in even sharper focus at Tesi, and we are a more active owner. We invest in growthseeking companies and contribute to their value creation. We believe that responsibility is a competitive advantage for companies and a requirement for long-term success. I want to thank Tesi s professional and enthusiastic team for the hard work they are doing. The results are visible in successful financing rounds and exits as well as in the financial development of both the portfolio companies and Tesi. Let s keep up the good work! Martin Backman Investments under management as of 31 Dec 2016 (986m) 1% Venture Capital funds 215m 19% 28% 6% 22% 24% Later-stage growth funds 236m Buyout funds 63m KRR I & KRR II 274m Direct investments 190m Start Fund I 8m 2

5 DARE TO GROW VENTURE CAPITAL & PRIVATE EQUITY INVESTOR ACCELERATING THE GROWTH OF FINNISH COMPANIES WHAT WE AIM AT WE WANT TO BE A PREFERRED PARTNER to our portfolio companies and CO-INVESTORS IN FINLAND AND ABROAD % % WHAT WE WANT TO ACHIEVE MORE: INTERNATIONAL CAPITAL AND EXPERTISE COURAGEOUS COMPANIES HOW WE DO IT WE OFFER COMPANIES: NETWORKS % EXPORTS A B C CAPITAL EXPERTISE THROUGH WHICH COMPANIES CAN Market-driven, responsible, profitable together with private investors LARGER FUNDS EXPAND INVEST RECRUIT OUR INVESTMENTS 2016 OUR RESULT A TOTAL OF OUR INTERNATIONAL PARTNERS INVESTED IN FINNISH COMPANIES IN 10 FUNDS IN 25 COMPANIES 723 PORTFOLIO COMPANIES FINANCIAL RESULT BRAVE RESULTS TOGETHER 3

6 Responsible growth with partners Jan Sasse, Director, Growth Investments For Tesi, corporate responsibility means the desire to promote sustainability and responsible business operations in collaboration with its partners, in order to identify growth opportunities for portfolio companies as well as to avoid risks arising from neglecting responsibility. Jan Sasse, Director of Growth Investments, Investment Director Riitta Jääskeläinen and Communications Manager Satu Holm-Jumppanen ponder on everyday realities which are related to corporate responsibility. Read the interview» PRINCIPLES OF CORPORATE RESPONSIBILITY Responsibility is one of our operating principles. It is an integral part of our investment and decision-making processes, and an underlying element in creating value over the long term in our portfolio companies and funds. For us, that means long-term and reliable ownership as a responsible corporate citizen. We expect this also from our portfolio companies and co-investors. We invest in improving the skills and wellbeing of our personnel and we continuously develop our activities and procedures. We try to create a working environment in which we produce good results by making our offices pleasant, functional and environmentally friendly. For us responsibility also means transparency in our activities, by always providing up-to-date information, communicating openly and cooperating smoothly, both within Tesi and with our partners. Tesi s Board of Directors approves the corporate responsibility policy and monitors compliance with it. Tesi s CEO is responsible for managing corporate responsibility and all personnel are responsible for implementing it in their own work. The material aspects of corporate responsibility were defined in a materiality analysis, which was based on feedback from stakeholders and on the company s own views. They are: motivated and committed personnel responsible operation and corporate governance responsible investment economic impact and sustainable profitability We are open-minded in seeking solutions and we open up opportunities 4

7 DEVELOPING CORPORATE RESPONSIBILITY At the end of 2016 we launched a long-term project aimed at expanding the reach of our corporate responsibility concept to make it even more comprehensive. The members of the working party for the project represent all functions in the company and they report to the Team. The project goal is to incorporate responsibility issues as an integrated element of our business activities, and the working party s mission is to identify practical methods for achieving this goal over the next three years. During 2017 we are focusing particularly on integrating corporate responsibility into all phases of the investment process and embedding it in our portfolio management and active ownership processes. The development of corporate responsibility is now added to the agenda in our portfolio companies board meetings, and we continue to work proactively to promote responsible operation in funds and their portfolio companies. We are also updating our Code of Conduct, corporate responsibility policy and responsible investment principles. We will give sharper focus to the responsibilities and reporting associated with managing and implementing corporate responsibility. We will also define the targets and performance indicators for corporate responsibility in The Finnish government s ownership steering policies also guide the development of our operations The government has made social responsibility a core value in its ownership steering policy for state-owned companies. Being a responsible corporate citizen is based on the principle that a company is a part of society and therefore fares better if the society around it prospers. The government s underlying aims in target-setting and ownership steering are economic growth, improved wellbeing and the renewal of business structures. We influence and develop actively and boldly PARTNERS AND STAKEHOLDER COLLABORATION We create results together Our main stakeholders are our portfolio companies and funds, personnel, the state as owner, Finnish and international co-investors, consultants and other partners, and the media. The corporate image and customer satisfaction survey regularly maps out stakeholders' expectations for the company's operations as well the company s perceived strengths and development needs. The next survey will be conducted in spring We always invest on market terms, hand-in-hand with private investors on the same terms as them and with the same expectations for returns. Our co-investors are Finnish and international private equity and venture capital companies, pension funds, industrial investors, family offices and private investors. As an active minority owner, we promote sustainable development and responsibility in business operations in collaboration with our partners and portfolio companies. We are in regular contact with funds in our portfolio, we monitor development of the fund manager s corporate responsibility and responsible investment policies, and we engage in active dialogue about these aspects. We are a member of the Finnish Venture Capital Association (FCVA) and of Invest Europe. We are also a member of Finsif Finland's Sustainable Investment Forum as well as of FiBS, Finland's leading corporate responsibility network. We follow the guidelines of these associations concerning ethics, responsible investment and corporate governance. The Investment Council appointed by Tesi s Board of Directors and representing our main stakeholders acts as an advisory body and enhances our company s public affairs. We also belong to the Team Finland network, which promotes Finland and the success of Finnish companies abroad. We cooperate with European Investment Fund (EIF) and other institutional investors, holding regular discussions with them that address, inter alia, responsible practices and taxation in fund investments. We also belong to the Cleantech Scandinavia network, which promotes collaboration between investors, enterprises and public sector players in the Nordic cleantech sector. In addition, we are actively involved in the Network for Sustainable Mining. 5

8 PERSONNEL AND CORPORATE CULTURE During 2016 we formulated a new vision and strategy, and we redefined the values that guide our operations. We want to be an investor of international repute and an active owner respected by our portfolio companies. To achieve our common goals, we must be bold, solutionoriented and responsible in the way we work together. Our personnel s commitment and motivation strongly depend on employees being able to use and develop their skills and expertise in a versatile way. In autumn 2016 we launched a wide-ranging personnel development project aimed both at improving the skills of individuals and at enhancing the work community s interaction and cooperation. To develop individual skills, we arranged specialised training in legal expertise and value creation, to supplement the coaching project we launched earlier. The main development themes for business operations in 2017 are corporate responsibility, media skills, and also project management. Achieving our mutual goals requires bold, solution-oriented and responsible way of working from us all. Anna Kilpi, Director, HR, Communications and Compliance Our personnel at the end of 2016: altogether 34 permanent employees, of which one is part-time 15 women, 19 men total personnel increased by three employees compared to 2015 personnel turnover 14% average length of employment 7.1 years 90% of personnel have one or more higher academic degrees Board of directors: altogether 7 members 3 women, 4 men Number of personnel Men Women Age structure of personnel (31 Dec 2016) % 6% 6% % %

9 Target-setting and remuneration Solutions, Spirit & Guts, Together All our personnel took part in interviews and workshops, as a result of which we reformulated the values guiding our operations and activities: We are open-minded in seeking solutions and we open up opportunities. We continually challenge ourselves and our portfolio companies and funds to find better solutions. We keep our eyes open for interesting phenomena and new ways of working. We influence and develop actively and boldly. We are proactive in developing portfolio companies and improving Finland s venture capital and private equity market. We have expertise and a bold approach to work. We create results together. We connect entrepreneurs with the best partners for them. We learn from each other and make things happen. We conduct target-setting and feedback discussions annually with all our employees. These discussions help us to tangibly implement and guide our strategic objectives at both the team and individual level. In matters of remuneration, we apply the principles embodied in the government opinion on management remuneration in state-owned companies (Cabinet Committee on Economic Policy, ). The remuneration system applies to all permanent employees of the company. The remuneration system is developed in line with evolving company objectives, in order to effectively support our business operations. Remuneration consists of basic pay plus an annual bonus: Basic pay is the total pay including monetary salary and any fringe benefits. A job-specific salary is based on how demanding the job is and on work performance. Annual bonus is determined on the basis of how well the remuneration targets set for the year are achieved. Remuneration is based on criteria specified in advance. Bonuses for 2015 paid to all personnel in 2016 amounted to 706,762. remuneration remuneration in 2016 was: CEO: 287,759 Other Team members: 1,374,118 Board of Directors, total: 168,500 Equality and equal opportunities Job satisfaction We have conducted regular surveys of our personnel s work satisfaction since The results of these surveys are used to identify any development needs. Measures to meet these are then planned interactively with personnel. The 2016 survey returned a very good overall result. Altogether 72% of the ratings given by respondents were positive (4 and 5) and 5% were critical (1 and 2). More particularly, Tesi staff s commitment to the employer received high ratings, as also did communications, gender equality, the usefulness of target-setting and development discussions, Tesi s ability to develop and renew, supervisory work, fair work distribution and inter-team cooperation. Personnel were consulted when we reviewed how to entrench our new values, develop a dynamic and constructive feedback culture, and improve the attention given to employees. The guiding principle in equal opportunity activities is fair and equal treatment for all employees. Equality in the workplace is reviewed through personnel surveys. The results of the job satisfaction survey conducted in 2016 showed that ensuring employee wellbeing and gender equality contribute significantly to Tesi personnel s commitment, and also that these aspects are being implemented very well in our company. The personnel survey results for these aspects were on a scale of 1 5. Wellbeing at work and occupational health An occupational health service action plan has been prepared with an occupational health service provider. A priority for the occupational health service is preventive healthcare; for example, in the form of ergonomic studies and medical examinations. We also promote wellbeing at work with annual events. Absence rate due to sickness in 2016 was approximately 1.1%, well below the average (3.7%) for the financial services sector in Finland. 7

10 OPERATING PRINCIPLES Our operations are regulated by law. Our operations are guided by the industrial policy and ownership steering objectives set annually by the Ministry of Employment and the Economy as well as by an investment plan, the company s risk management policy, Impartiality Instruction, Insider Instruction, Instruction for Notification of a Concentration, and responsible investment principles. Good corporate governance is a high priority in our internal procedures. In our operating activities we follow the Finnish Venture Capital Association's Code of Conduct and its guidelines for transparency and openness, in addition to well-documented internal instructions. Instructions Impartiality Instruction: In line with good corporate governance, our operations must be transparent, in order to preserve their credibility, and managed so that external players retain their trust in the company's operations. These aspects are particularly important in a state-owned company. We have instructions containing guidelines for the impartial and ethical behaviour of our personnel and Board of Directors. In compliance with good governance, any persons handling a matter must be independent and unbiased in all aspects of the matters they handle. Insider Instruction: Aimed at enhancing public trust in investment, the instruction is based on Finland s Securities Markets Act and on the instructions and regulations supplementing it. Proper instructions also increase the knowledge of company personnel and other persons working within the company s sphere of interest, so that regulations are not unwittingly contravened. The Insider Instruction applies to all people employed by the company. Although Tesi is not itself a listed company, we often handle information classified as insider knowledge. Therefore, it is important to define procedures enabling us to ensure that people working in the company are aware of their insider status, and that they know how to manage insider information and the trading limitations for those with insider information. Instruction for Notification of a Concentration: Our investments can make it necessary to file notification of a concentration and to obtain the permission of the Finnish Competition Authority. Instructions issued to personnel describe operating models for ensuring that the duty to notify authorities and to obtain permissions in merger and acquisition cases is properly handled. Risk management policy The risk management policy, confirmed by the Board of Directors, sets out the principles for risk management, specifies risk definitions and risk classifications, and also defines the main roles and divisions of responsibilities as well as the monitoring and reporting procedures. With risk management we ensure that risks borne in the company are commensurate with our risk-bearing capability. The risks affecting the company, and the management of those risks, are described in more detail in the notes to the company s IFRS accounts. Procurement The majority of the company's procurement consists of purchases of consultancy services. Sizeable investments and large service procurements are planned in advance when preparing the budget and business plan for the following year. Each year the company's Board of Directors decides on the budget and business plan for the next year. The operative management decides on the implementation of procurements included in the budget. The President & CEO can decide on individual ex-budget procurements. Large procurements are subject to competitive bidding and are prepared by a number of people. Green Office We received WWF Green Office certification in Our objective for the Green Office initiative is continuous improvement of our environmental management system and heightened personnel awareness of environmental aspects. We promote sustainable development in our operations. The eco-friendliness of our activities and procedures are monitored by measuring customary consumption, work-related travel, paper consumption, and electricity usage. We report this data to the WWF each year. 8

11 Responsible investment Our business operations make most impact through responsible investment by encouraging our portfolio companies and funds to exploit the opportunities presented by responsible operation and to avoid the risks attached to neglecting corporate responsibility. We apply responsible investment principles in all our operations: investments in funds direct investments in portfolio companies asset management Tesi s guiding principle for responsible investment is to integrate responsibility aspects in investment processes and active ownership activities, as opposed to excluding certain sectors or companies from the investment focus. When making an investment decision, however, we need to see that the investee company or fund is willing to develop and improve its responsibility, and that we will be able to influence the development of its operations together with our partners. During 2016 corporate responsibility issues precluded an investment being made in several cases. We keep in touch with the funds in our portfolio regularly, also to discuss responsible investment. Riitta Jääskeläinen, Investment Director Responsible investment 9

12 Active interaction We have actively participated in developing the responsible operation of funds. During the review period our representative took part in the FVCA s ESG working party, which is reviewing possible amendments to responsible investment rules and drafting recommendations for managing responsible investment and corporate responsibility. When making a decision on whether to invest in funds, we appraise the management company s approach to responsible investment and corporate responsibility issues. Any avenues for influencing these issues are explored in this early phase. We also look for responsibility in the management company s own corporate activities as well as in its investment operations. Responsible investment principles are presented in contract documentation. We also maintain regular contact with the funds in our portfolio. Such discussions allow us to ascertain the level of responsibility in a fund manager s investment policy, to form a view of any challenging investments in the portfolio, and to encourage any development needed. We monitor developments and practices in the corporate responsibility of the portfolio companies in which we invest directly through board work and other channels of interaction. The Board of Directors is a central forum in which different owners can jointly identify the responsibility goals suitable for each company. We require the companies in which we invest to comply not only with legislation but also with international norms, corporate governance principles, as well as with agreements applicable to labour rights and the environment. Corporate responsibility should be a natural part of a company s values, business management, strategy and value creation. Our primary target is to promote changes that foster corporate responsibility through discussion and encouragement, if any needs for improvement are identified. Our investment focus is on rapidly growing internationalising companies and on the funds investing in them as well as on SMEs seeking growth. Unlike listed companies and large corporations, unlisted SMEs are not obliged to prepare extensive and comprehensive corporate responsibility reports because they do not necessarily have sufficient resources to do so. For unlisted SMEs, therefore, the starting point is an appraisal of the company s existing operations and goal-setting with a view to improving responsibility. Corporate responsibility is a broad concept that covers a variety of aspects, such as: environmental responsibility, responsible personnel policy, responsible data processing, corporate governance, and economic responsibility. The emphasis on each aspect varies for companies operating in different sectors and different geographical areas. The underlying idea is to understand what impacts the company s operations have, how they are managed, what is important and what is not for the particular company. When investing Tesi s liquid assets, a clause stipulating compliance with responsible investment principles (for instance, the UN s PRI) is included in the asset management agreement. Discussions about implementing responsibility in investment operations are also held with asset managers. Read more: Folmer» 3 Step IT» Visedo» Valmet Automotive» Responsible investment 10

13 Corporate responsibility in figures BENEFICIAL AND RESPONSIBLE RISK-TAKING As a state-owned investment company, our mission is not only to be commercially profitable but also to develop Finland s venture capital and private equity market as well as to promote Finnish business and economic growth in Finland. We invest capital where it will produce the most beneficial impact: in the most promising companies so that they grow faster, create new jobs and generate wellbeing. We operate on market terms, hand-in-hand with private investors, on the same terms as them and with the same expectations for returns. Our business operations over the long term have been profitable: The company s cumulative profit from operations, including the figure for 2016 (45m), amounted to 258m. The cumulative total of 655m of investments made by the Finnish government in the company has grown into 912 million of equity. The imputed return on investment (internal rate of interest) for the Finnish government, taken over the company s whole period of operation, has been positive (approx. 3.4% after taxes). We plough the returns from our investments back into new investments. In 2016 we made new investments amounting to 165m. Each year we evaluate the social and economic impacts of our investments. Our portfolio companies have on average clearly outperformed Finland s economy. Tesi s economic impact review, based on the 2015 financial statements, was published in conjunction with the Interim Review for 1 6/2016. Tesi s Economic Impact Review 2015» Financial statements 2016» KEY FIGURES IFRS 2016 IFRS 2015 IFRS 2014 FAS 2013 FAS 2012 FAS 2011 Group s investments and commitments, (m) Portfolio companies, directly and through funds (no.) Consolidated profit/loss Group, shareholders equity New commitments made during financial year Government investments in Tesi since 1995, total Corporate responsibility in figures 11

14 Tesi has had a considerable impact on the development of Finland s venture capital and private equity market and on the creation of new funds. Our direct economic impacts consist of direct investments and capital calls paid to portfolio companies and funds, payments to suppliers of goods and services, personnel expenses, income taxes paid, and investments. The direct economic impacts on stakeholders are illustrated in the table below. ECONOMIC CAPITAL FLOWS BY STAKEHOLDER GROUP, THOUSANDS IFRS 2016 IFRS 2015 IFRS 2014 FAS 2013 FAS 2012 FAS 2011 FAS 2010 Customers Net sales Portfolio companies Direct investments paid Repayments of direct investments and sales proceeds Portfolio funds Capital calls paid to funds Repayments of principal and profit shares from funds Suppliers of goods and services Other operating expenses Personnel Salaries and fees Pension expenses Other personnel expenses Personnel expenses, total Public sector Direct taxes Charitable bodies Donations given Shareholders Dividends paid to owners Investments Investments in tangible and intangible assets Corporate responsibility in figures 12

15 TAX FOOTPRINT 2016 Transparency in the reporting on taxes and tax-like payments incurred by Tesi s business activities is an element of corporate responsibility and of reporting on corporate responsibility. Tax strategy and operating principles Factors relating to taxation are addressed when planning business activities and in the associated decision- making. Business decisions endeavour to take taxation into account as one factor in achieving the business targets and in ensuring a balanced position in terms of taxation. Tesi s tax strategy aims to support business solutions and to ensure their appropriate implementation also with respect to taxation. Venture capital and private equity investment involves a careful and thorough review of tax-related aspects in the preparation stage of both investments in funds and direct investments. In addition to investing in Finnish funds, we also make investments in international funds. The established practice in the venture capital and private equity industry is that funds are designed to be flow-through entities as regards taxation. This means that the fund itself is not liable to tax, but instead the income the fund generates is taxed at the investor level, according to the investor s own tax status. Under Finnish tax legislation, we pay income taxes to Finland on the income received from foreign funds. This avoids double taxation. In handling Tesi s tax affairs, the thorough completion and timely submission of tax returns are important, as also is fulfilling all other requirements and obligations set by legislation. KEY FIGURES FOR TAXATION, THOUSANDS FINLAND FINLAND FINLAND Net sales * Profit/loss before taxes Number of personnel * Finnish Industry Investment Ltd's group companies do not have any net sales TAXES PAID, THOUSANDS FINLAND FINLAND FINLAND Taxes on income Employer's contributions VAT on services and purchases, not deducted ** Total ** Finnish Industry Investment Ltd's group companies do not have any sales that are subject to value-added tax (VAT). For this reason, these companies cannot deduct or offset VAT from their purchases. TAXES PAYABLE, THOUSANDS FINLAND FINLAND FINLAND Employee tax payments (PAYE) Total Principles applied in tax reporting In this report the essential taxes and tax-like payments are classified by the type of tax. In line with the materiality principle, the following taxes have not been reported owing to their insignificant amount: asset transfer tax, excise duty, tax on certain insurance premiums, and withholding tax. Taxes paid and taxes payable, total Corporate responsibility in figures 13

16 REPORT PROFILE (GRI) The corporate responsibility reporting period covers the financial year The report covers Tesi s own operations, within the limits set by the company as a legal entity, including its subsidiaries (Start Fund Oy, Tesi Fund Oy, Start Fund I Ky, and Tesi Industrial Oy). Tesi has had a majority holding (66.4%) in the capital stock of Aker Arctic Technology Inc. (Aker Arctic) since 17 December Aker Arctic s corporate responsibility data is not included in Tesi's corporate responsibility report. We prepare a Corporate Responsibility Report annually as a section of the Annual Report, which includes the financial statements. Our first Corporate Responsibility Report was published in Tesi also publishes a Corporate Governance Statement (available on the company s website) in conjunction with its corporate responsibility reporting. We use the reporting model that the Finnish government resolution of 3rd November 2011 recommends for unlisted state-owned companies for our reporting. The report is also based on the GRI (Global Reporting Initiative) G4 narrow reporting framework and additionally, when relevant, the indicators specified in GRI s Financial Services Sector Disclosures (FS). The report is not verified, but the economic performance indicators presented in it are derived from audited information. The report is published on the company s website. For further information about the report, please contact Satu Holm-Jumppanen (satu.holm-jumppanen@tesi.fi). LINK COMMENT Strategy and analysis 1. CEO's Review Organisational Profile 3. Name of the organization Tesi in brief 4. Primary brands, products, and/or services Tesi in brief 5. Location of the organization's headquarter Tesi in brief 6. Number of countries where the organization operates, and names of countries where the organization has significant operations Tesi in brief 7. Nature of ownership and legal form Financial statements 8. Markets served Tesi in brief 9. Scale of the reporting organization 10. Total workforce by employment type, employment contract, and region, broken down by gender Tesi in brief 11. Percentage of employees covered by collective bargaining agreements None 12. Supply chain of the reporting organization Tesi in brief 13. Significant changes during the reporting period regarding size, structure, ownership or supply chain No significant changes 14. Explanation of whether and how the precautionary approach or principle is addressed by the organization 15. Externally developed economic, environmental and social charters, principles, or other initiatives to which the organization subscribes or endorses 16. Memberships of associations (such as industry associations) and national or international advocacy organizations Corporate responsibility in figures 14

17 Identified material aspects and boundaries 17. List of entities included in the organization's consolidated financial statements Report profile 18. Process for defining report content List of material aspects identified and aspect boundary Report profile 22. Explanation of the effect of any re-statements of information provided in earlier reports Financial statements 23. Significant changes from previous reporting periods in the scope and aspect boundaries No significant changes Stakeholder engagement Stakeholder engagement Corporate responsibility in figures Responsible investment Report profile Report profile Report profile Tesi in brief Governance 34. Governance structure of the organization, including committees Tesi in brief Ethics and integrity 56. Values and codes of conduct of corporate responsibility Corporate responsibility in figures Responsible investment Indicators ECONOMIC RESPONSIBILITY EC1 Direct economic value generated and distributed Financial statements Corporate responsibility in figures EC4 Financial assistance received from government None EC8 Significant indirect economic impacts Corporate responsibility in figures Corporate responsibility in figures 15

18 SOCIAL RESPONSIBILITY Labor practises and decent work LA1 Total number and rates of new employee hires and employee turnover by age group, gender and region LA2 Benefits provided to full-time employees that are not provided to temporary or parttime employees The benefits are the same LA6 Type of injury and rates of injury, occupational diseases, lost days, and absenteeism, and total number of work-related fatalities, by region and by gender LA10 Programs for skills management and lifelong learning LA11 Percentage of employees receiving regular performance and career development reviews LA12 Composition of governance bodies and breakdown of employees per employee category Human rights HR3 Total number of incidents of discrimination and corrective actions taken None Society SO6 Total value of political contributions by country and recipient/beneficiary SO7 Total number of legal actions for anti-competitive behavior, anti-trust, and monopoly practices and their outcomes SO8 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations None None None Product responsibilty PR5 Customer satisfaction GRI Financial services sector disclosures Product portfolio FS6 Percentage of the portfolio for business lines Tesi in brief Corporate responsibility in figures Active ownership FS10 Interaction with portfolio companies on environmental or social issues FS11 Assets subject to positive or negative screening Responsible investment Responsible investment Corporate responsibility in figures 16

19 From the left: Executive Assistant Ulla Lalin, Middle Office Manager Tomi Riihiranta, CFO Marko Häikiö and Director (HR, Communications and Compliance) Anna Kilpi. Tesi in brief Tesi (Finnish Industry Investment Ltd) is a venture capital and private equity company that accelerates companies success stories by investing both in funds and directly in companies. We operate as an active minority owner that possesses business expertise and international networks enabling a company to pursue its growth strategy. Our assets under management amount to 1.1 billion euros and we have a total of 723 portfolio companies. We invest in companies that seek to grow and to expand internationally. We prioritise Finnish firms or companies operating in Finland, but we also invest in foreign companies if the capital is used for business development in Finland. Operating principles Operation on market terms We always invest together with private investors and on the same terms as them. Profitability and economic impact As a state-owned investment company, our mission is not only to be commercially profitable but also to develop Finland s venture capital and private equity market as well as to promote Finnish business and Finland s economic growth. Responsibility Responsibility means long-term and reliable ownership as a responsible corporate citizen, which we also expect from our portfolio companies and co-investors. Organisation Corporate Governance Statement Contact details P.O. Box 685 (Porkkalankatu 1), FI Helsinki, Finland Office: firstname.lastname@tesi.fi Tesi in brief 17