oras invest AnnuAl REPORT 2009

Transcription

1 oras invest Annual Report 2009

2 Contents Oras Invest in brief 1 Message from CEO 2 Oras Invest Ltd key figures Strategy and goals 4 Portfolio companies Oras 6 Uponor 7 Kemira 8 Financial statements Board of Directors report 10 Consolidated income statement 16 Consolidated balance sheet 17 Consolidated cash flow statement 18 Parent company s income statement 19 Parent company s balance sheet 20 Parent company s cash flow statement 21 Notes to the financial statements 22 Auditors report 30 Corporate governance 31 Board of Directors 32

3 1 Oras Invest in brief Oras Invest is a family company with 65 years of tradition in industrial entrepreneurship. Its current industrial holdings include Oras, Uponor and Kemira. At the end of 2009 the net asset value of Oras Invest totaled EUR 507 million. Oras Invest focuses its ownership in industrial com panies, in which it has a substantial understanding of the industry, business characteristics and development potential. We develop our companies through active board work and close cooperation with the management. The aim is to create long-term sustainable value growth. Values Ownership is an intrinsic value and a way of life. Ownership cannot be claimed without an honest, open and responsible approach; respect for work and fair play. Vitality Commitment Endurance

4 2 Message from CEO Persistence through challenging times In 2009, Oras Invest continued its work as an industrial owner who actively and persistently develops the companies in its ownership. This phase in the history of our family business started ten years ago when Oras Ltd bought a 16 per cent share of Uponor Corporation. It was our first major investment that did not directly involve Oras business operations. This was a beginning of a new era, the launch of Oras Invest. The next big step for Oras Invest was the purchase of the largest share of Kemira from the Finnish State in And now, as announced, Tikkurila will leave Kemira to become an independent stock exchange company with Oras Invest as its biggest shareholder. The past ten years during which we have established our position as an industrial owner have been described as the lost decade in terms of economy. Stock prices have progressed marginally almost throughout the entire Western economic system. Despite this, Oras Invest has been able to double its net assets. The report year 2009 was extremely demanding for all businesses and especially so for the Finnish technology industry. The order volume in the construction industry dropped or nearly died down altogether and sales shrank dramatically. Many companies adjusted their operations to the weak market situation. Oras Ltd, Uponor and Kemira successfully continued their determined efforts to intensify operations. All three companies have effectively and significantly improved their efficiency, trimmed their organizations, operations and practices and also increased their impact in their markets. In this way they have created a strong basis for their future prospects when the global economy and international demand start to recover. This has been a performance which has demanded much skill, determination and patience, true enthusiasm for renewal, leadership capability and dedicated personnel. The year 2009 started on the downside for Oras Ltd due to a collapse in demand. The company immediately initiated firm cost cuts which were met with a constructive spirit by the staff. This, in addition to the stabilized demand throughout the year, helped the company through the worst times. Oras continued its product development without compromise and as a result they were able to introduce a new range of competitive lever faucets and showers. The company already introduced its state-of-the-art technology and design for saving water and energy 33 years ago when these important aims had not yet reached presentday global interest. The recession in construction decreased the demand for Uponor s products. The company adjusted its operations and increased its flexibility. These moves, which led to a 20 per cent staff cut, are now mainly completed. Efficiency and managing costs paid off, and organization, especially in Europe, was tightened and unified. Uponor's pioneering work on developing and popularizing their comfortable underfloor heating has won the public s approval and made the company the number one innovator in the field. This position brings along expectations to be able to respond to the demands of the market for energy-efficient and sustainable solutions. Uponor is a market leader in indoor climate and plumbing systems for buildings, which creates a strong basis for prosperous innovations. Kemira has successfully carried through its new strategy focusing on water, providing water quality and quantity management for water intensive customer industries. The global company has operations in approximately 40 countries. In 2009, the demand in some customer groups diminished significantly but, at the same time, municipal water treatment levels remained steady. Kemira went ahead with considerable cost cuts with determination and intensified all its operations. The incurrence of debts reduced significantly. In December, Kemira launched a successful share issue in which shareholders invested EUR 200 million. The year 2009 was demanding for Tikkurila, which will be listed on the stock exchange at the end of the first quarter of During the recession, net revenue and operat-

5 3 ing profit diminished. However, relative profitability grew. The company clarified its strategy. In addition to strong brands, the strength of Tikkurila is their extensive service concepts. In Russia, Tikkurila continues its strong growth, which is already accumulating to nearly a third of the company's net revenue. The company is also pursuing growth especially in other CIS countries and central-eastern Europe. The increase in environmental awareness and the customers' desire to do business with a strong partner are trends that favor Tikkurila. The market values of the stock exchange companies owned by Oras Invest grew strongly. The value of Uponor shares rose 95 per cent and the value of Kemira shares 92 per cent during the report year. By the end of the year, the market value of Oras Invest s Uponor holding was EUR 249 million and the equivalent figure for Kemira was EUR 269 million. At the same time, the estimated market value for Oras Ltd was EUR 189 million. Consequently, the combined market value of the shares of Oras Invest rose up to EUR 707 million while the equivalent value by the end of 2008 was EUR 464 million. In 2009, Oras Invest earned EUR 55 million in dividends and group contributions. The profit of the company soared to nearly EUR 50 million (EUR 37 million in 2008). The Total Shareholder Return (TSR) was 125 per cent ( 49 per cent in 2008). The relation between debt and the market value of the ownership eased to 30 per cent (49 per cent in 2008). Most economic indicators show that recovery is on its way. However, risks still lie ahead and the transition will be long and slow. In times like these, we must create new business models and industrial innovations. This requires a good balance between taking and managing risks. It is obvious that issues such as scarcity of water, water treatment, and supplying clean water will, in future, become more and more important for the whole of humankind. The meaning and value of water will only grow, and this is where Oras Invest companies have a real role to play. The year 2010 will be demanding, but our four companies are in for many great opportunities. For the time being, we are concentrating on these companies. My sincere thanks go to their management and personnel for their efforts and commitment during the very challenging year February 2010 Jari Paasikivi

6 4 Water as common denominator Oras Invest is a family company and an industrial owner. We develop our companies through active board work together with the management. The aim is to create long-term sustainable value growth. STRATEGY Good owner structure is essential for our value creating approach. We aim to be the largest owner in our listed companies and the majority owner in our unlisted companies in order to have the opportunity for active, constructive and long-term development and enhancement of the value of our ownerships. In addition, we may also acquire varying stakes in non-core companies, which may develop into core companies in the future. Good corporate governance is inherent to us and we pay a lot of attention to good board practice. Continuous renewal of companies through active board work with the management ensures long-term value growth. LONG-TERM GOALS The total shareholder return is generated by the increase of net asset value and dividend yields. Oras Invest aims to reach total shareholder return in excess of the cost of capital over a business cycle. Key figures 2009 Net profit EUR 49.8 million Shareholders equity EUR million Balance sheet total EUR million Equity-to-assets ratio 62% (EUR 36.9 million) (EUR million) (EUR million) (56%) Net asset value (NAV)* EUR 507 million Total shareholder return (TSR) 125% Debts-to-investments at market value -ratio 30% * NAV = Market value of Uponor and Kemira on December 31, Oras EBITDA 8 (EUR 249 million) ( 49%) 3-year average 18% (49%) net debt

7 5 Uponor Kemira Oras oras invest 100% Since % Since % Since 2007

8 6 Oras develops, manufactures and markets user-friendly, water and energy saving sanitary fittings. Oras is the market leader in Northern Europe, and the main goal of the Group is to develop into one of the world s leading companies in its field. The Group has production facilities in Finland, Poland and Norway plus sales offices or agencies in most European countries. Group Headquarters are located in Rauma, Finland. quickly, and our farsighted and pioneering product development efforts are yielding competitive advantages. The new year will see us introducing electronic faucets with new properties and designs, as well as yet new products for our shower set selection. SUMMARY OF 2009 PERFORMANCE The net sales of Oras Group dropped by 15.1 percent to EUR (145.2) million. Due to the financial crisis, we focused our attention on optimizing costs and increasing efficiency alongside vigorous sales efforts. The Group adopted an emergency plan in January 2009, which meant that all units had to take a new approach to spending, abide by restrictions in recruitment, and limit investments strictly to new product development and health and safety, amongst other control measures. Our operating profit percentage rose from the previous year thanks to improved efficiency and the control measures taken, amounting to 16.3% (14.3). The year 2009 showed just how agile our organization is, as our reaction speed helped us survive these unusual circumstances. A new shower set range called Oras Hydra was launched in May. It is the first shower set that delivers a deluxe shower experience with limited water consumption and reflects our values perfectly by combining user-friendliness with low water and energy consumption. In our key markets, our relative position improved especially thanks to our competitive product selection and unfazed sales organization. Average prices continued to increase, which boosted our strategic position as a supplier of the most user-friendly products. FUTURE OUTLOOK Despite the enduring economic uncertainty, the new decade will be an extremely interesting one as we continue to develop our company. During the fall months, the Group s Executive Committee drafted a strategic plan that will enable us to further strengthen our position with the help of our flagship products, which are perfect for current demand, and to target our resources increasingly efficiently. Our organization has proven its ability to adjust Development of Oras Group s turnover EUR million oras in brief Net sales: EUR million Operating profit: EUR 20.1 million Average number of personnel: 1,033 CEO: Pekka Kuusniemi Chairman: Jukka Paasikivi Oras Invest Ltd s holding in Oras Ltd Since 1945 Share of share capital: 100% (Oras Ltd) Share of voting rights: 100% (Oras Ltd) Market value of holding: EUR 189 million

9 7 Uponor is a market leader in indoor climate and plumbing systems for buildings. Uponor offers technically advanced and energy-efficient solutions which add to comfort, save in costs and are easy to control and maintain. Uponor s indoor climate, plumbing and infrastructure systems are suitable for new constructions as well as for renovations in small and large building projects. Summary of 2009 performance The year 2009 was a challenging one for Uponor. The construction industry experienced an unparalleled downturn in all its major markets, which led to a sharp decline in demand for products and services. Uponor s strategy of managing costs, maintaining a steady cash flow and improving efficiency proved successful. At the same time, a new organization was mobilized in Europe in order to further unify the Group and establish a foundation for growth in upcoming years. The net sales for Uponor s continuing operations dropped to EUR million (2008: 949.2). The decline was similar in all segments, which reflects the strong impact of weakening demand in all the main markets. The operating profit for continuing operations was EUR 41.2 (51.2) million. Profitability measured by the operating profit margin improved slightly and rose to 5.6 (5.4) per cent of net sales. Many of Uponor s product systems experienced a positive market share development in Heating and cooling systems especially benefited from the high energy prices and increasingly positive attitudes to environmental issues. Future outlook The downward trend in the construction markets, which started in the fall 2007, has lately begun to settle. The decline in demand has partially been alleviated and some areas have even experienced growth. However, the growth prospects of national economies are still weak and the demand in the field of construction in Uponor s key geographical areas is not expected to change for the better in Most significant structural changes to adjust Uponor s operations to the present level of demand have been concluded but normal development work will be actively continued. Uponor's net sales in 2010 are expected to remain level with 2009 and operating profit is expected to improve from last year's reported operating profit. UPONOR IN BRIEF Net sales: EUR million Operating profit: EUR 41.2 million * Average number of personnel: 3,426 * CEO: Jyri Luomakoski Chairman: Jari Paasikivi * continuing operations Oras Invest Ltd s holding in Uponor, as per December 31, 2009 Since 1999 Share of share capital: 22.6% (Uponor Corporation) Share of voting rights: 22.6% (Uponor Corporation) Market value of holding: EUR 249 million Distribution of the largest shareholders in Uponor as per December 31, % Oras Invest Ltd (22.6%) Varma Mutual Pension Insurance Company (7.1%) Mandatum Life Insurance Company (2.2%) Tapiola Mutual Pension Insurance Company (1.9%) Ilmarinen Mutual Pension Insurance Company (1.8%) Others (64.4%)

10 8 Kemira is a global 2.5 billion euro chemicals company that is focused on serving customers in water-intensive industries. The company offers water quality and quantity management that improves customers energy, water, and raw material efficiency. Kemira s vision is to be a leading water chemistry company. Its paints and coatings business, Tikkurila, aims to be the leading paint company in the Nordic countries, and in Eastern Europe including Russia. Kemira s Board of Directors proposes to the Annual General Meeting to be held March 16, 2010 that 86% of the shares of Tikkurila be distributed as dividend to Kemira s shareholders. Tikkurila s shares are expected to be listed on the official list of NASDAQ OMX Helsinki Ltd in March strong know-how in water quality and quantity management. Increasing water shortage, tightening legislation and customers needs to increase operational efficiency create opportunities for Kemira to develop new water applications for both new and current customers. In 2010, Kemira expects demand to develop favorably as the economic situation improves, even though there s still uncertainty with the development of the demand. In the first quarter of the year, Kemira s operating profit excluding non-recurring items is expected to increase from the corresponding period in Summary of 2009 performance 2009 was a very good year for Kemira, considering the weakened global economy. Even though the market situation was challenging and demand weakened in several customer industries, the decline in Kemira s revenue was moderate. During the year, Kemira continued its work, started in 2008, of improving operational efficiency. The main focus areas were improving profitability and strengthening cash flow and balance sheet. All of Kemira's segments reported strong cash flow and improved their operative profitability in Kemira s operating profit grew 113%. The result was supported by efficiency measures, lower costs and higher sales prices, in particular in the first half of the year. The extremely strong cash flow and successful rights offering cut Kemira s gearing from 107% to 53%, well within Kemira s target of 40 80%. Implementation of Kemira s strategy focusing on water has progressed very well. The company that used to be rather fragmented is rapidly becoming a uniform Kemira that focuses on full utilization of its water expertise. Furthermore, Kemira has improved operational efficiency. The balance sheet is stronger and Tikkurila will be separated. The separation of Tikkurila will make Kemira an even more focused water chemistry company. Future outlook Kemira will continue to focus on improving profitability and reinforcing positive cash flow, but the company will increase its actions to boost growth. The basis for growth are the growing water chemicals markets and Kemira s KEMIRA IN BRIEF Net sales: EUR 2,500.1 million Operating profit: EUR million Average number of personnel: 8,843 CEO: Harri Kerminen Chairman: Pekka Paasikivi Oras Invest Ltd s holding in Kemira, as per December 31, 2009 Since 2007 Share of share capital: 16.7% Share of voting rights: 16.7% Market value of holding: EUR 269 million Distribution of the largest shareholders in Kemira, as per December 31, % Oras Invest Ltd 16.7% Solidium Oy 16.7% Varma Mutual Pension Insurance Company 9.8% Ilmarinen Mutual Pension Insurance Company 5.9% Kemira Oyj 2.5% Others 48.4%

11 Financial statements 2009 Board of Directors report 10 Consolidated income statement 16 Consolidated balance sheet 17 Consolidated cash flow statement 18 Parent company s income statement 19 Parent company s balance sheet 20 Parent company s cash flow statement 21 Notes to the financial statements 22 Auditors report 30 Corporate governance 31 Board of Directors 32

12 10 Board of Directors report Group structure The Oras Invest Group consists of the parent company Oras Invest Ltd, the 100% owned Oras Ltd and the associated company Uponor Corporation (22.6%). The Oras Invest Group also owns a significant part of Kemira Oyj (16.7%). In the Group s financial statements for 2009, the subsidiary Oras Ltd is consolidated and the Uponor Corporation is accounted for as an associated company. The financial statements have been prepared according to FAS, Finnish Accounting Standards. Shares and ownership In 2009, Oras Invest participated in Kemira's share issue, and acquired 5,176,755 new shares. At the end of the year 2009, Oras Invest acquired 49,847 Kemira shares from the market, registered in Kemira Oyj s shareholder register in January During the year Oras Invest sold 900,000 shares of Uponor Corporation as a part of cash management. The shares of Kemira Oyj and Uponor Corporation in Oras Invest Ltd s non-current assets are valued at cost, see notes on page 22. Net sales and operating result Oras Invest Ltd continued to charge patent fees from Oras Ltd. The patent fees are based on the utility value of each patent. On an annual level, this generated net sales of EUR 1.4 million (1.4). The net sales of the parent company during the financial period were EUR 1.6 million (1.7). The net sales of the entire Group were EUR million (145.2). Oras Invest Ltd s income from dividends during the financial period was EUR 45.1 million. During 2009, Uponor Corporation paid a dividend of EUR 0.85 per share, which means that Oras Invest received EUR 14.8 million (24.5). Kemira Oyj paid a dividend of EUR 0.25 per share, which means that the total amount of dividends from Kemira was EUR 5.2 million (10.4). Oras Ltd paid out EUR 25.1 million (2.0) in dividends and EUR 8.5 million (11.1) as group contribution. The result of the parent company for the financial period was EUR 49.8 million (36.9). The result of the Group for the financial period was EUR 15.2 million (28.0). Financial status and financing The Group s liquid assets on December 31, 2009 were EUR 29.4 million (53.7). The balance sheet total was EUR million (578.8) for the Oras Invest Group and EUR million (531.0) for the parent company. The shareholders equity was EUR million (294.0) in the Group and EUR million (297.8) in the parent company. Dividends distributed totaled EUR 7.0 million (7.0). At the end of 2009, Oras Invest Ltd's total loans amounted to EUR 210 million (228), of which EUR 97 million was a bullet loan and the rest a fixed amortization loan. Investments and R & D In addition to the new product introductions in the Oras Group, focus was placed on the further development of main touchless faucet modules and new applications for residential use. A new Bidetta function for touchless faucets was developed, and in January 2010 the first touchless Bidetta was launched. Technology and product know-how was successfully improved in the Polish plant. A new way of managing development processes was introduced, improving the cooperation between different functions, ensuring the quality and yield, speeding up the ramp-up process and reducing the total cost and time to the market. There are 24 persons (25) working on product development. Personnel Several actions to adjust the capacity to the market situation were implemented in the Oras Group s all manufacturing units. The main actions were pension arrangements, temporary lay-offs and utilizing the holiday bonus as additional vacation days. In the Polish plant 25 employment contracts were terminated in January. Occupational safety remained a focus area in all units. Attention was paid to continuous improvement and safety training. Results of the actions were already visible: in the Rauma plant the accident frequency (LTA) of the year 2009 was 57% lower than during the year 2008, and new records were made in the number of initiatives, near-miss reports and suggestions for continuous improvement.

13 11 Board of Directors report ORAS INVEST LTD KEY FIGURES Net sales EUR million Operating profit EUR million Profit for the financial period EUR million Shareholders equity EUR million Total assets EUR million Shareholders equity/total assets % Average number of personnel Cash flow from operations EUR million ORAS INVEST GROUP KEY FIGURES Net sales EUR million Operating profit EUR million Profit for the financial period EUR million Shareholders equity EUR million Total assets EUR million Shareholders equity/total assets % Average number of personnel 1,036 1,132 1,183 Cash flow from operations EUR million In 2009, the Oras Invest Group had an average of 1,036 employees (1,132) of which 621 worked in Finland and 415 in foreign units. There are equal numbers of women and men working in the Group and the employment relationships are typically long-term. At the end of the financial period, the number of employees was 992. The salaries and fees, including other personnel costs, in the Group were EUR 35.0 million (37.6). Environment Increasing investment on water and energy saving products in the Oras Group is achieving results, and the share of electronic products of the total portfolio continues to increase. During the year Oras joined in the Finnish Technology Industry's voluntary energy efficiency program, and has already invested in projects improving the long-term efficiency. In addition to this, the personnel are encouraged to make proposals to improve the efficiency. The emissions in the air and water were substantially below the allowed limits in all manufacturing units, but the ambition is still to reduce the emission levels. A major effort during the year was harmonizing the Oras Management System. It combines the quality, environmental and safety management systems. The safety management system was certified in February MAIN EVENTS AFTER THE YEAR-END The Kemira shares acquired at the end of the year 2009 (49,847 shares) were registered in the shareholder register of Kemira Oyj in January The Board of Directors of Kemira Oyj proposes to the Annual General Meeting that 86% of the shares of Tikkurila be distributed as dividend to Kemira's shareholders. The dividend is proposed to be paid on March 26, 2010.

14 12 Board of Directors report Oras Group s strategic plan was rolled out, and the management responsibilities were reorganized to support the long-term objectives. As a part of the intensified actions and focus in the market, the activities in France and Italy were restructured in January This resulted in the layoff of 8 persons. The one time costs are not substantial compared with the size of the operations, and they are shown in the costs of the year SHARES The share capital of the company is as follows: A shares (1 vote/share) 217, ,350 All shares have an equal right to dividends and the company s assets. OUTLOOK 2010 Even though there are already positive signals in the market, the outlook for the year 2010 is still cautious. Tikkurila Oyj will become the fourth core holding of Oras Invest in the spring. The arrangement will clarify the role of both Tikkurila and Kemira as a part of Oras Invest s investments in the building industry and water chemicals. The liquidity of Oras Invest is expected to remain on a good level. Dividend proposal The Board of Directors proposes that Oras Invest Ltd distributes a EUR 4.60 dividend per share, totaling EUR 999,810. The remainder of the profit for the year will remain in retained earnings. No material changes have taken place in the company s financial position after the balance sheet date. The liquidity of the company is good and the proposed dividend does not endanger the cash position of the company. RISKS The main identified risks at Oras Invest Ltd arise from the long-term ownership in the core investments. As there is a high exposure to specific industry, the changed market conditions may have an effect on the profitability of the owned companies. As a result of changing conditions in the financial market it may happen that new funding is not available or its cost is increasing. The interest rate risk is managed with derivative contracts. The normal risks related to the industrial operation and product liability of the Oras Group are covered by insurance. There are no ongoing litigations in Oras Ltd or the Oras Group that could result in significant liability for damages. ORGANIZATION, MANAGEMENT AND AUDITORS OF THE COMPANY The Board of Directors Pekka Paasikivi (chairman), Ulla Litzén, Annika Paasikivi, Jukka Paasikivi and Vesa Puttonen CEO Jari Paasikivi Auditors APA Pekka Luoma (Ernst & Young Oy) and Ernst & Young Oy with APA Tapani Kulmala as the responsible auditor

15 13 Report on the situation of the owned companies ORAS GROUP Net sales equaled EUR million (2008: 145.2) Equity ratio was 46.7 % (51.7 %) Activities were adjusted to the level of the demand New enterprise resource planning system was commissioned (OraPro) Focus and positive development in occupational safety It was known that the year would be challenging, but the first quarter of the year especially was more volatile than anticipated. The demand increased gradually, but was still cautious at the end of the year. The net sales decreased compared with the previous year, but the trends in different markets showed considerable variation. In the key markets the relative position of Oras improved thanks to the competitive product selection and the good performance of the sales organization. In March Oras re-launched the whole Safira series, which is positioned in the lower mid-price segment, and in May the new Hydra shower set was launched. The most important internal development measures were the introduction of the new enterprise resource planning system in May and the integration of the quality, environment and health and safety systems into a single management system. As the result of cost savings the operating profit was equal to that of the previous year. The difficult market situation had an effect on the suppliers as well, and this caused some temporary delivery disruptions. The raw material prices remained stable in the beginning of the year, but increased during the latter half of the year. The operating profit of Oras Group was EUR 20.1 million (20.7), and the operating profit percentage was 16.3 (14.3). The operating profit of Oras Ltd was EUR 15.3 million (16.4) and the operating profit percentage was 13.8 (12.7). The profit for the financial period increased from EUR 5.7 million in the year 2008 to EUR 8.9 million in The profit for the financial period 2009 in the Group includes an EUR 8.5 million group contribution to Oras Invest Ltd (11.1) ORAS GROUP key figures Net sales EUR million Operating profit EUR million Profit for the financial period EUR million Shareholders equity EUR million Total assets EUR million Shareholders equity/total assets % Average number of personnel 1,033 1,129 1,180 The change in the inventory valuation principles improves the operating profit for the year 2009 with EUR 1.5 million. The Board of Directors of Oras Ltd proposes to the Annual General Meeting that a dividend of EUR 7.0 million will be distributed.

16 14 Report on the situation of the owned companies UPONOR GROUP Performance impacted by the continued decline in the building sector in all markets Net sales for continuing operations at EUR million (2008: 949.2) Operating profit for continuing operations at EUR 41.2 million (51.2) Cash flow before financing at EUR 60.6 million, an improvement in comparable terms Earnings per share EUR 0.16 (0.99) Demand in the construction markets throughout Uponor s main geographies reached a historical low, except for Germany, where the markets also weakened but remained at a reasonable level. Uponor carried out extensive savings, cost-efficiency and development projects to successfully secure control over its cost development. Uponor s net sales for continuing operations fell to EUR million (in 2008: 949.2). Net sales decreased in all segments, reflecting the overall weakening of demand. Uponor s consolidated gross profit from continuing operations came to EUR million (341.8). Despite the decrease in net sales, the gross profit margin improved from the previous year. Continuing operations generated an operating profit of EUR 41.2 million (51.2), while the operating profit margin rose to 5.6 (5.4) per cent of net sales. As a result of savings, streamlining and cost reduction measures carried out over the last year, costs were reduced in warehousing, marketing and administration. These efficiency initiatives incurred a non-recurring expense of EUR 12.5 million. Consolidated cash flow from operations was EUR 78.8 million (95.4) while cash flow before financing came to EUR 60.6 million (133.6). Eliminating the disposal proceeds of 2008, cash flow before financing improved despite the non-recurring items in Focusing on advanced indoor climate, plumbing and infrastructure systems, Uponor s vision is to enrich people s way of life. Uponor targets organic growth in its current main markets in Europe and North America, in new geographic areas as well as in new segments of the market. Uponor focuses on businesses and geographic areas where it has or can achieve a strong market position. The company s leadership position in the single-family segment provides it with a good platform for entering also the commercial and public building sectors of the market. Uponor offers a wide range of products for these applications, meeting the requirements of the building industry professional, the infrastructure and the consumer in an ecological, functional and reliable way KEY FIGURES OF THE UPONOR GROUP Net sales EUR million ,047.4 Operating profit *) EUR million Profit for the financial period EUR million Shareholders equity EUR million Total assets EUR million Shareholders equity/total assets % Average number of personnel 3,426 4,211 4,497 *) continuing operations The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.50/share will be distributed, totaling EUR 36.5 million.

17 15 Report on the situation of the owned companies KEMIRA GROUP Revenue in 2009: EUR 2,500.1 million (2008: 2,832.7) Operating profit: EUR million (74.0) Cash flow after investments EUR million (2.7) Gearing 53% (107%) Earnings per share: EUR 0.61 ( 0.01) In 2009, Kemira continued its work, started in 2008, of improving operational efficiency. The main focus areas were improving profitability and strengthening cash flow and balance sheet. Even though the market situation was challenging and demand weakened in several customer industries, the decline in Kemira s revenue was moderate. Revenue from continuing business operations decreased by 7% from Operating profit excluding non-recurring items rose 32% to EUR million (132.6). The operating profit margin excluding non-recurring items rose from 4.7% to 7.0%. The result was supported by efficiency measures, lower costs and higher sales prices, in particular in the first half of the year. The annual savings target of Kemira s global cost savings program started in 2008 is more than EUR 85 million, with Tikkurila (paints and industrial coatings) accounting for EUR 25 million. The savings have materialized faster than planned: by the end of 2009, 80% of the targeted savings had been achieved. The full annual impact is expected to be felt from 2011 onwards. Cash flow after investments grew significantly to EUR million (2.7). Cash flow increased due to higher EBITDA, effective working capital management and smaller gross capital expenditure. Strong cash flow and the rights offering completed at the end of the year strengthened the balance sheet and gearing fell to 53% (December 31, 2008: 107%), well within Kemira s target of 40 80%. Kemira s vision is to be a leading water chemistry company. Kemira will continue to focus on improving profitability and reinforcing positive cash flow, but the company will increase its actions to boost growth. The basis for growth are the growing water chemicals markets and Kemira s strong know-how in water quality and quantity management. Increasing water shortage, tightening legislation and customers needs to increase operational efficiency create opportunities for Kemira to develop new water applications for both new and current customers. Investment in research and development is a central part of Kemira s strategy. The focus of Kemira s research and development activities is on the development and commercialization of new innovative technologies for Kemira s customers globally and locally KEY FIGURES OF THE KEMIRA GROUP Net sales EUR million 2, , ,810.2 Operating profit EUR million Profit for the financial period EUR million Shareholders equity EUR million 1, ,087.3 Total assets EUR million 2, , ,827.9 Shareholders equity/total assets % Average number of personnel 8,843 9,954 10,008 Due to the rights offering, historical per share key figures have been adjusted with the following calculation formula: average number of shares x 1.1 The Board proposes to the Annual General Meeting that 86% of the shares of Tikkurila be distributed as dividend to Kemira s shareholders. Tikkurila s shares are expected to be listed on NASDAQ OMX Helsinki Ltd in March The Board also proposes that the Annual General Meeting authorize the Board to decide upon a dividend payable in cash of a maximum of EUR 0.27 per share (0.25). According to the proposal, the authorization is valid until May 31, 2010.

18 16 Oras Invest Ltd Consolidated income statement (EUR 1,000) 1 Jan Dec Jan Dec Net Sales 123, ,175 Change in inventories of finished goods 588 1,282 Other operating income Materials and services 39,360 52,276 Personnel expenses 34,998 37,586 Depreciation 4,264 4,174 Other operating expenses 25,122 31,624 Operating profit 20,462 21,328 Share from profit / loss of associated company 18,342 12,598 Financial income and expenses 16,635 21,519 Profit before extraordinary items 18,755 30,249 Extraordinary income Profit before appropriations and taxes 18,843 30,414 Income taxes 3,597 2,400 Profit for the financial period 15,246 28,014

19 17 Consolidated balance sheet (EUR 1,000) 31 Dec Dec Assets Non-current assets Intangible assets Tangible assets 26,272 28,050 Investments 461, ,848 Total non-current assets 488, ,370 Current assets Inventories 17,753 18,459 Long-term receivables 1,040 1,350 Trade receivables 25,597 22,885 Cash and cash equivalent 29,422 53,713 Total current assets 73,812 96, , ,777 Equity and liabilities Shareholders equity Share capital 6,521 6,521 Restricted funds 3,218 2,292 Retained earnings 277, ,174 Profit (Loss) for the year 15,246 28,014 Total shareholders equity 302, ,001 Liabilities Non-current liabilities 230, ,519 Current liabilities 29,503 48,257 Total liabilities 259, , , ,777

20 18 Consolidated cash flow statement (EUR 1,000) 1 Jan Dec Jan Dec Cash flow from operations Profit before extraordinary items 18,755 30,250 Adjustments for Depreciation 4,264 4,174 Other non-cash items Financial income and expenses 1,707 8,921 Other adjustments Cash flow from operations before change in working capital 25,053 25,720 Changes in net working capital Decrease/Increase in trade and other receivables, interest free (+/ ) 1, Decrease/Increase in inventories (+/ ) 2, Decrease/Increase in current liabilities, interest free ( /+) 4,654 7,294 Cash flow from operations before financial items and taxes 21,018 17,829 Interests paid and other financial items 8,773 9,929 Interest received 760 2,948 Dividends received 20,062 34,871 Taxes paid 1, Cash flow from operations 31,796 44,772 Cash flow from investments Investments in tangible and intangible assets 2,576 5,936 Proceeds from sale of intangible and tangible assets Other investments 34,167 0 Decrease in other long-term receivables Proceeds from sale of other investments 12, Cash flow from investments 24,248 5,331 Cash flow from financing Increase in long-term loans 0 25,000 Repayment of long-term loans 25,415 21,278 Dividends paid 6,955 6,955 Cash flow from financing 32,370 3,233 Net change in cash and cash equivalents (+ / ) 24,822 36,208 Cash and cash equivalents at the beginning of the period 53,713 18,408 Exchange rate differences Cash and cash equivalents at the end of the period 29,422 53,713

21 19 Parent company s income statement 1 Jan Jan (EUR 1,000) 31 Dec Dec Net Sales 1,600 1,700 Personnel expenses Depreciation Other operating expenses Operating profit Financial income and expenses 41,053 25,065 Profit before extraordinary items 41,374 25,705 Extraordinary income 8,500 11,100 Profit before appropriations and taxes 49,874 36,805 Appropriations 48 4 Income taxes Profit for the financial period 49,840 36,916

22 20 Parent company s balance sheet (eur 1,000) 31 Dec Dec Assets Non-current assets Intangible assets Tangible assets Investments 541, ,013 Total non-current assets 542, ,525 Current assets Trade receivables 238 2,422 Cash and cash equivalent 9,566 13,037 Total current assets 9,804 15, , ,984 Equity and liabilities Shareholders equity Share capital 6,521 6,521 Retained earnings 284, ,321 Profit (Loss) for the year 49,840 36,916 Total shareholders equity 340, ,758 Accumulated appropriations 0 47 Liabilities Non-current liabilities 209, ,500 Current liabilities 2,132 23,679 Total liabilities 211, , , ,984

23 21 Parent company s cash flow statement (EUR 1,000) 1 Jan Dec Jan Dec Cash flow from operations Profit before extraordinary items 41,374 25,705 Adjustments for Depreciation Other non-cash items Financial income and expenses 41,053 25,065 Other adjustments 12 0 Cash flow from operations before change in working capital Changes in net working capital Decrease/Increase in trade and other receivables, interest free (+ / ) 1, Decrease/Increase in current liabilities, interest free ( / +) 4,703 1,820 Cash flow from operations before financial items and taxes 3, Interests paid and other financial items 7,698 9,292 Interest received 56 2,287 Dividends received 45,145 36,841 Income taxes paid Cash flow from operations 34,409 29,248 Cash flow from investments Investments in tangible and intangible assets Proceeds from sale of intangible and tangible assets 18 0 Other investments 34,167 0 Decrease in other long-term receivables Proceeds from sale of other investments 12, Cash flow from investments 21, Cash flow from financing Decrease in long-term loans 18,750 19,950 Group contribution received 9,600 10,000 Dividends paid 6,955 6,955 Cash flow from financing 16,105 16,905 Net change in cash and cash equivalents (+ / ) 3,471 12,666 Cash and cash equivalents at the beginning of the period 13, Cash and cash equivalents at the end of the period 9,566 13,037

24 22 Notes to consolidated financial statements and parent company s financial statements CONSOLIDATED FINANCIAL STATEMENTS AND ACCOUNTING POLICIES Oras Invest Ltd is the parent company of Oras Invest Group and includes Oras Group as a subgroup. Consolidated financial statements comprise of Oras Invest Ltd, Oras Group and Oras Invest Group s associated companies. Holding in associated company Uponor Corporation (ownership share 22.64%) has been consolidated using the equity method. The financial statements of Uponor have been prepared according to IFRS. Uponor s expected future income does not warrant changing the depreciation plan of acquisition goodwill. The consolidated financial statements of Oras subgroup comprise Oras Ltd as parent company and its subsidiaries. Oras Group s share of Koy Rauman Kaivopuiston Teknologiakylä (40%) has been consolidated using the equity method. The consolidated financial statements have been prepared by using the acquisition accounting method. Intragroup transactions, internal contribution margins, internal receivables and payables, and internal distribution of profits have been eliminated from the consolidated financial statements. There are no minority shares in the Group. During the fiscal year the valuation principle of the inventories was changed in Oras Ltd and accordingly, in addition to the cost of materials and direct labour, an appropriate proportion of production overheads are included in the inventory value of finished products and work in progress. The change improves the operating profit of Oras Group with teur. Uponor Corporation s net income used in consolidation has in previous years been adjusted with the proportion of production overheads included in the Uponor Corporation s inventory value. Due to change in Oras Ltd s inventory valuation principle, consolidation of Uponor Corporation previous years has been adjusted. The effect of this correction to Oras Invest Group s equity was 685 teur. The income statements of foreign Group companies have been translated into Euro by using the average exchange rate of the financial year, while the balance sheets have been translated into Euro by using the exchange rate of the closing date. The exchange rate differences arising from elimination of subsidiaries equity in the subgroup have been included in other funds in shareholders equity. VALUATION POLICIES Valuation of non-current assets Non-current and current assets are stated at a residual of acquisition cost deducted by depreciations according to plan. The depreciations according to plan have been calculated on a straight-line basis according to asset s estimated economic life. The shares of Kemira Oyj and Uponor Corporation have been stated at the original acquisition cost based on expectations for future income. Depreciation according to plan Consolidation goodwill Other long-term expenditure Buildings Constructions Machinery and equipment 10 years 4 10 years years 10 years 4 10 years Valuation of inventories Inventories are valued according to FIFO principle at cost, at repurchase price or at realizable value, if lower than costs. In addition to the cost of materials and direct labour, an appropriate proportion of production overheads are included in the inventory value of finished products and work in process. Valuation of financial assets The final assets have been valued at their acquisition cost or at the lower market value. Pension plan The Group s pension schemes comply with each country s local rules and regulations. Pensions are based on actual calculations or actual payments to insurance companies. In Finland, white-collar employees who started their employment in the Group before 1981 are entitled to a supplementary pension. The supplementary pension contributions are paid to the insurance company Mandatum Life. Derivative contracts and hedging accounting Oras Invest Ltd is exposed to fluctuations in interest rates as the company has floating rate loans. The objective of managing interest rate risk is to eliminate or reduce the effect of interest rate fluctuations on the company s result and cash flow. To manage the risk, the company has entered into interest rate swap contracts to change floating rates into fixed rates or to change the interest period. Fair value of interest swaps are calculated as a present value of future cash flows. The company applies cash flow hedge accounting for interest rate swaps. Accrued gain and losses of the hedging instrument are recorded through profit and loss concurrently with the underlaying transaction being hedged. Fair values of the interest rate swaps not yet realized and recorded are presented on page 29, under Collateral and contingent liabilities. In order to manage the risk of volatility of electricity prices, Oras Ltd has entered into commodity derivates for years Accrued gain and losses of the instruments are recorded through profit and loss concurrently with the underlying transaction being hedged. Fair values of the commodity instruments not yet realized and recorded as of December 31, 2009 was 11 teur. ITEMS IN FOREIGN CURRENCY Receivables and liabilities from the Group companies in foreign currencies have been translated into Euro using the exchange rate on the closing date.

25 23 Notes to the consolidated income statement (Eur 1,000) Group 2009 Group 2008 Parent company 2009 Parent company 2008 Net sales by market area EU area 95, ,185 1,600 1,700 Other countries 27,745 33, Total 123, ,175 1,600 1,700 Other operating income Profit from sales of fixed assets Other operating income Total Materials and services Raw materials and consumables Purchases during the financial period 34,835 48, Change in inventories of finished goods 1, ,613 48, External services 2,747 3, Total 39,360 52, NOTES RELATED TO PERSONNEL AND BOARD OF DIRECTORS WORK Personnel expenses Wages and salaries 28,482 30, Pension expenses 4,797 4, Other personnel expenses 1,719 2, Total 34,998 37, Wages and salaries paid to management and Board of Directors Wages and salaries 1,341 1,334 The average number of personnel during the financial period The Group employed during the financial period approximately White-collar workers Blue-collar workers Total 1,036 1, There are no pension commitments related to the members of the Board of Directors nor the CEO. Auditors fees Auditing Other services

26 24 Notes to the consolidated income statement DEPRECIATION AND VALUE ADJUSTMENTS Group 2009 Group 2008 Parent company 2009 Parent company 2008 Depreciation Intangible assets Intangible rights Other long-term expenditure Tangible assets Buildings and constructions Machinery and equipment 3,097 3, ,029 3, Depreciation and value adjustments total 4,264 4, FINANCIAL INCOME and expense Dividend income From the Group companies ,100 2,000 From others 20,062 34,871 20,045 34,841 Other income from non-current assets From others 4, , Other interest and financial income From the Group companies From others 1,947 2, ,288 Financial income total 26,917 37,997 50,121 39,358 Financial expenses Interest expenses and other financial expenses 10,336 16,104 9,052 13,989 Value adjustments Financial expenses total 10,282 16,478 9,068 14,293 Financial income and financial expenses total 16,635 21,519 41,053 25,065 EXTRAORDINARY ITEMS Extraordinary income Share of the associated company s profit Group contribution 0 0 8,500 11, ,500 11,100

27 25 Notes to the consolidated income statement INCOME TAXES (EUR 1,000) Group 2009 Group 2008 Parent company 2009 Parent company 2008 Income taxes from operations 2,906 1, Change in deferred taxes ,597 2, Notes to the balance sheet Non-current assets (EUR 1,000) ORAS INVEST GROUP Acquisition cost Acquisition cost with the exchange rate on Increases 2009 Decreases 2009 Other transfers and eliminations Acquisition cost Depreciation for the period Accumulated depreciation from divestments Intangible assets Intangible assets 1,116 1, , Other long-term expenditure 1,998 1, , , ,114 3, , , Tangible assets Land 1,072 1, , ,079 Buildings and constructions 22,773 23, , ,352 9,834 Machinery and equipment 63,598 65,181 1, ,359 67,734 3, ,549 53,352 14,382 Other tangible assets 2,981 2, , , Advance payments 1,356 1, , ,780 93,686 2, ,275 4, ,771 69,003 26,272 Investments Shares Shares in associated companies 117, , , , ,976 Other shares 336, ,142 34, , ,823 Receivables Other receivables , ,849 34,686 26, , ,799 Reclassifications Accumulated depreciation Carrying amount Total 548, ,645 37,262 27, ,056 4, ,304 71, ,644

28 26 Notes to the consolidated income statement ORAS INVEST LTD Acquisition cost Increases 2009 Decreases 2009 Non-current assets (EUR 1,000) Other transfers and eliminations Acquisition cost Depreciation for the period Accumulated depreciation from divestments Reclassifications Accumulated depreciation Carrying amount Intangible assets Intangible assets Tangible assets Land Machinery and equipment Other tangible assets Investments Shares Group companies 21, , ,942 Associate company: Uponor Corporation 157, , , ,430 Other shares 335,937 34, , ,618 Receivables Other receivables ,013 34,686 7, , ,990 Total 516,475 34,709 7, , ,434 group companies Group's ownership share % Parent company's ownership share % Share capital (EUR 1,000) Oras Ltd ,868 Oras GmbH & Co KG Armaturen, Germany Oras Armatur Leksvik Fabrikker AS, Norway ,385 Oras Armatur A/S, Denmark N.V. Oras S.A., Belgium Oras Olesno Sp.z o.o, Poland ,515 Oras International Ltd Associated companies Uponor Corporation (financial statements have been prepared according to IFRS) Koy Rauman Kaivopuiston Teknologiakylä 40 0 Associated companies have been consolidated using the equity method.

29 27 Notes to the consolidated balance sheet NON-CURRENT ASSETS (eur 1,000) Group 2009 Group 2008 Parent company 2009 Parent company 2008 Intangible assets Intangible assets Other long-term expenditure Total Tangible assets Land 1,079 1, Buildings and constructions 9,834 10, Machinery and equipment 14,382 14, Other tangible assets Advance payments 291 1, Total 26,272 28, Investments Shares in Group companies ,942 21,942 Shares in associate companies Uponor Oyj, number of shares 16,571, , , , ,003 Share of associated company's profit / loss 58,454 39, Other shares Kemira Oyj, number of shares 25,933, , , , ,829 Other shares Other long-term receivables (Okmetic Oyj) Total 461, , , ,013 CURRENT ASSETS Inventories Raw materials and consumables 6,694 8, Work in progress 5,280 4, Finished products / goods 5,779 5, Total 17,753 18, Receivables Long-term receivables Deferred tax asset 1,040 1, Current receivables from Group companies Loan receivables ,261 Receivables from others Trade receivables 23,602 20, Loan receivables Other receivables 920 1, Prepayments and accrued income 1,058 1, Total 26,637 24, ,422

30 28 Notes to the consolidated income statement EQUITY Group 2009 Group 2008 Parent company 2009 Parent company 2008 Shareholders equity Share capital January 1 6,521 6,521 6,521 6,521 Share capital December 31 6,521 6,521 6,521 6,521 Other funds January 1 2,292 3, Translation differences from holdings 926 1, Changes in reporting principles Other funds December 31 3,218 2, Retained earnings January 1 285, , , ,276 Distribution of dividends 6,956 6,955 6,956 6,955 Correction for previous years Changes in reporting principles Translation and exchange rate differences Retained earnings December , , , ,321 Profit for the financial period 15,246 28,014 49,840 36,916 Distributable funds Retained earnings December , ,321 Profit for the financial period 49,840 36,916 Total December , ,237 Appropriations Parent company: accumulated depreciation differences Group: Equity share of appropriations 3,547 2, LIABILITIES Non-current liabilities Loans from financial institutions 227, , , ,500 Other long term liabilities 1, Deferred tax liability 1,382 1, Total 230, , , ,500 Current liabilities Liabilities to Group companies Liabilities to others than Group companies Installment of loans 6,572 25, ,750 Trade payables 6,172 5, Other short-term liabilities 2,469 1, Accrued expenses and deferred income 14,290 15,207 2,010 4,832 Total 29,503 48,257 2,132 23,679

31 29 Additional notes COLLATERAL AND CONTINGENT LIABILITIES (eur 1,000) Group 2009 Group 2008 Parent company 2009 Parent company 2008 Collateral on behalf of Oras Ltd / Oras Invest Group Real estate mortgages Counter-guarantee of bank security (Switzerland) Other deposits Total Loans secured by mortgages or shares given as collateral Loans from financial institutions 234, , , ,250 Mortgages given Real-estate mortgages 21,205 21, Corporate mortgages 13,106 13, Carrying amount of shares deposited as pawn 484, , , ,400 Total 518, , , ,400 Other commitments and contingent liabilities Guarantees on behalf of others 1, , Collateral and contingent liabilities total 520, , , ,641 Interest rate swaps Current value 6,273 4,765 6,273 4,765 Value of the underlying instrument 209, , , ,875 Annual closing, signatures Helsinki, March 18, 2010 Pekka Paasikivi Chairman of the Board Ulla Litzén Annika Paasikivi Jukka Paasikivi Vesa Puttonen Jari Paasikivi CEO

32 30 Auditors report To the Annual General Meeting of Oras Invest Ltd We have audited the accounting records, the financial statements, the report of the Board of Directors, and the administration of Oras Invest Ltd for the financial period The financial statements comprise the consolidated and parent company balance sheets, income statements, cash flow statements and notes to the financial statements. The responsibility of the Board of Directors and the Managing Director The Board of Directors and the Managing Director are responsible for the preparation and fair presentation of the financial statements and the report of the Board of Directors in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The Board of Directors is responsible for the appropriate arrangement of the control of the company s accounts and finances, and the Managing Director shall see to it that the accounts of the company are in compliance with the law and that its financial affairs have been arranged in a reliable manner. fair presentation of the financial statements and the report of the Board of Directors in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements and the report of the Board of Directors. The audit was performed in accordance with good auditing practice in Finland. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements and the report of the Board of Directors give a true and fair view of the financial performance and financial position of the group and the parent company in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The information in the report of the Board of Directors is consistent with the information in the financial statements. Auditor s Responsibility Our responsibility is to perform an audit in accordance with good auditing practice in Finland, and to express an opinion on these financial statements and on the report of the Board of Directors based on our audit. Good auditing practice requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements and the report of the Board of Directors are free from material misstatement and whether the members of the Board of Directors and the Managing Director have complied with the Limited Liability Companies Act. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements and the report of the Board of Directors. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and Helsinki, March 18, 2010 Pekka Luoma Authorized Public Accountant Ernst & Young Oy Authorized Public Accountant Firm Tapani Kulmala Authorized Public Accountant

33 31 Corporate governance Oras Invest Ltd is a private limited company registered in Finland. The company follows good corporate governance practices based on the Finnish Limited Liability Companies Act and the company s Articles of Association. Oras Invest Ltd is the parent company of Oras Invest Group. In that capacity, it is responsible for the development of the Group, prepares the Group s financial reporting and supports the Group in financial, legal and management matters. The Group consists of a number of independent subgroups and companies. The 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 decisionmaking bodies of its subsidiaries and associated companies. General Meeting of Shareholders The highest authority in Oras Invest is exercised by the shareholders at general meetings of shareholders. Under the Finnish Limited Liability Companies Act, decisions made by general meetings of shareholders include: Amendments to the Articles of Association Adoption of the annual accounts Dividend distribution Election of members of the Board of Directors and decision on their emoluments Election of the Corporation s auditor and decision on audit fees Pursuant to the Articles of Association, the Board of Directors comprises a minimum of three and maximum of seven members, elected for a one-year term starting at closing of the annual general meeting at which they were elected and expiring at closing of the following annual general meeting. The annual general meeting held in March 2009 elected the following five members to the Board of Directors: Mr Pekka Paasikivi, Ms Ulla Litzén, Ms Annika Paasikivi, Mr Jukka Paasikivi and Mr Vesa Puttonen. Chief Executive Officer The Chief Executive Officer is appointed by the Board of Directors. The CEO plans and manages the company s business operations and bears responsibility for the company s day-to-day management in accordance with the decisions and instructions issued by the Board of Directors. It is the CEO s duty to ensure that the company s accounting procedures comply with the applicable legislation and that the financial management is conducted in a reliable manner. Salaries and Remuneration The annual general meeting of shareholders confirms the remuneration of the members of the Board of Directors for one year at time. The Board of Directors decides on the CEO s salary and benefits and it also confirms the salaries and benefits for the other management. The Board of Directors In accordance with the Finnish Limited Liability Companies Act, the Board of Directors is responsible for the management of the company and the proper organization of its activities. The Board s main duty is to direct the company s operations in such a way that, in the long run, the yield to shareholders is secured, while simultaneously taking the expectations of various stakeholders into account. Supervision Oras Invest s auditors are Ernst & Young Oy, with Tapani Kulmala, Authorized Public Accountant, and Pekka Luo ma, Authorized Public Accountant. The auditors supply the company s shareholders with the statutory auditor s report on the annual financial statements. The auditors also report on their observations to the company s management and Board of Directors.

34 32 Board of Directors Pekka Paasikivi Ulla Litzén Annika Paasikivi Jukka Paasikivi Vesa Puttonen The Board in brief Chairman of the Board Members of the Board Pekka Paasikivi born 1944 Board memberships: Chairman of the Board, Oras Invest since 2004 Chairman of the Board, Kemira, since 2007 Chairman of the Supervisory Board, Varma Mutual Pension Insurance Company since 2005 Member of the Board, East Office of Finnish Industries April 2008 October 2009 Member of the Board, Foundation of Economic Education since 2003 Ulla Litzén born 1956 Board Memberships: Member of the Board, Oras Invest since 2006 Member of the Board, Alfa Laval since 2006 Member of the Board, Atlas Copco since 1999 Member of the Board, Boliden since 2005 Member of the Board, NCC since 2008 Member of the Board, Rezidor Hotel Group, since 2006 Member of the Board, SKF since 1998 Annika Paasikivi born 1975 Board Memberships: Member of the Board, Oras Invest since 2004 Member of the Board, Friitala Fashion since 2009 Jukka Paasikivi born 1946 Board memberships: Chairman of the Board, Oras since 2006 Chairman of the Board, the Supporters Foundation of the Rauma Business School since 2003 Member of the Board, Oras Invest since 2004 Member of the Board, the Turku University Foundation since 2007 Vesa Puttonen born 1966 Board memberships: Member of the Board, Oras Invest since 2006 Member of the Board, Orion Corporation since 2004 Member of the Board, Rocla since 2007 Board s secretary Tuula Ylhäinen, CFO of Oras Invest Ltd.

35 Graphic design, layout and photo manipulation: Kreab Gavin Anderson Photos: Tomi Parkkonen Art work in the pictures: Erkki Paasikivi, from the book Metalli ja vesi (1988). Original photos: Pentti M. Valmunen A.R.P.S Printing: Lönnberg Print, Helsinki 2010