Report on State Annual Accounts 2017 Annex 4

eoto tt nulAcut 07 ne State corporate holdings Annex 4 on State AnnualReport Accounts 2017

Government of Finland publication series 23 | 2018

REPORT ON STATE SNELLMANNINKATU 1, HELSINKI PO BOX 23, 00023 GOVERNMENT, FINLAND valtioneuvosto. /en/ julkaisut.valtioneuvosto. ANNUAL ACCOUNTS 2017 ISBN: 978-952-287-658-4 PDF ISBN: 978-952-287-659-1 printed ISSN: 2489-8015 PDF ISSN: 2489-6993 printed Annex 4 State corporate holdings oeneto iln ulcto eis 23 Government of Finland publication series | 2018

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Report on State Annual Accounts 2017 Annex 4

State corporate holdings

Government of Finland publication series 23/2018 ISBN printed 978-952-287-659-1 ISSN printed 2489-6993

ISBN PDF 978-952-287-658-4 ISSN PDF 2489-8015 Grano Oy 2018 Description sheet

Published by Prime Minister’s Office July 2018

Authors Prime Minister’s Office, Ministry of Finance

Report on State Annual Accounts 2017 Annex 4 State corporate holdings Title of publication Hallituksen vuosikertomuksen 2017 liite 4 Valtion yhtiöomistus Series and publication Finnish government publication series 23/2018 number

ISBN (printed) 978-952-287-659-1 ISSN (printed) 2489-6993

ISBN PDF 978-952-287-658-4 ISSN (PDF) 2489-8015

Website address http://urn.fi/URN:ISBN:978-952-287-658-4 (URN)

Pages 79 Language English

Keywords state annual accounts, financial statements

Abstract

As provided in section 46 of the Constitution, the Government submits to Parliament a report on the State annual accounts and information on the management of government finances and compliance with the budget including measures taken by the Government in response to the resolutions passed by Parliament.

More detailed provisions on the report on the State annual accounts are set out in section 9a of the Government Act (715/2003) and sections 17 and 18 of the State Budget Act (42371988). Section 18 of the State Budget Act stipulates that the State annual accounts and information on the central government finances and the State’s financial management and operative performance included in the report on the State annual accounts shall provide true and fair information on compliance with the budget, State revenues and expenditure, the State’s financial position, and performance (true and fair view). Legislatively, the contents of the report are more specifically governed by the requirements laid down in the State Budget Decree (1243/1992). The statutory regulation of the report on the State annual accounts was updated by an amendment to the the State Budget Decree (118/2016) effective as of February 2016.

The 2017 report on the State annual accounts issued by the Government consists of five sections, the actual report and four annexes:

Annex 1 Financial performance by ministries

Annex 2 Financial statements

Annex 3 Measures taken in response to statements and opinions issued by Parliament

Annex 4 State corporate holdings

Publisher Prime Minister’s Office

Printed by Grano Ltd., 2018 (place and time) Distributed by/ Online version: julkaisut.valtioneuvosto.fi Publication sales Publication sales: julkaisutilaukset.valtioneuvosto.fi Kuvailulehti

Julkaisija Valtioneuvoston kanslia Heinäkuu 2018

Tekijät Valtioneuvoston kanslia, valtiovarainministeriö

Report on State Annual Accounts 2017 Annex 4 State corporate holdings Julkaisun nimi Hallituksen vuosikertomuksen 2017 liite 4 Valtion yhtiöomistus Julkaisusarjan nimi Valtioneuvoston julkaisusarja 23/2018 ja numero

Diaari/hankenumero VNK/1681/05/2016 Teema

ISBN painettu 978-952-287-659-1 ISSN painettu 2489-6993

ISBN PDF 978-952-287-658-4 ISSN PDF 2489-8015

URN-osoite http://urn.fi/URN:ISBN:978-952-287-658-4

Sivumäärä 79 Kieli suomi

Asiasanat vuosikertomus, tilinpäätös

Tiivistelmä

Valtioneuvosto antaa eduskunnalle hallituksen vuosikertomuksen perustuslain 46 §:ssä säädettynä kertomuksena hallituksen toiminnasta, valtiontalouden hoidosta ja talousarvion noudattamisesta sekä niistä toimista, joihin hallitus on eduskunnan päätösten johdosta ryhtynyt.

Hallituksen vuosikertomuksesta säädetään tarkemmin valtioneuvostosta annetun lain (175/2003) 9 a §:ssä sekä valtion talousarviosta annetun lain (423/1988) 17 ja 18 §:ssä. Talousarviolain 18 §:ssä edellytetään, että hallituksen vuosikertomukseen otettavien valtiontalouden ja valtion taloudenhoidon sekä toiminnan tuloksellisuuden kuvausten tulee antaa oikeat ja riittävät tiedot talousarvion noudattamisesta, valtion tuotoista ja kuluista, valtion taloudellisesta asemasta sekä tuloksellisuudesta (oikea ja riittävä kuva). Säädöstasolla kertomuksen sisältöä määrittävät erityisesti myös valtion talousarviosta annetun asetuksen (1243/1992) vaatimukset. Hallituksen vuosikertomusta koskeva asetustasoinen sääntely on uudistettu helmikuussa 2016 voimaan tulleella valtion talousarviosta annetun asetuksen muutoksella (118/2016).

Hallituksen vuosikertomus vuodelta 2017 muodostuu viidestä osasta, itse vuosikertomuksesta sekä neljästä liitteestä:

Liite 1 Ministeriöiden tuloksellisuuden kuvaukset

Liite 2 Tilinpäätöslaskelmat

Liite 3 Toimenpiteet eduskunnan lausumien ja kannanottojen johdosta

Liite 4 Valtion yhtiöomistus

Kustantaja Valtioneuvoston kanslia

Painopaikka ja vuosi Grano Oy, 2018

Julkaisun myynti/ Sähköinen versio: julkaisut.valtioneuvosto.fi jakaja Julkaisumyynti: julkaisutilaukset.valtioneuvosto.fi Contents

1 Key indicators...... 7 2 Events in 2017...... 8 3 Ownership steering exercised by the State...... 10 4 Remuneration...... 11 5 Board appointments...... 12 6 Corporate social responsibility...... 13 7 Tax footprint...... 14 8 Facts on portfolio companies...... 16

9 Movement in the value of the State’s portfolio of listed equities...... 18

10 Direct state holdings...... 23 Finnair Plc...... 23 Fortum Corporation...... 24 Neste Corporation...... 25

11 Non-listed commercial companies...... 26 Altia Plc...... 26 Arctia Ltd...... 27 Boreal Plant Breeding Ltd...... 28 Cinia Oy...... 29 Finavia Corporation...... 30 Fingrid Oyj...... 31 Gasum Corporation...... 32 Kemijoki Oy...... 33 Leijona Catering Oy...... 34 Meritaito Ltd...... 35 Motiva Oy...... 36 Nordic Morning Plc...... 37 Patria Plc...... 38 Posti Group Corporation...... 39 Raskone Ltd...... 40 Suomen Lauttaliikenne Oy...... 41 Mint of Finland Ltd...... 42 Finnish Seed Potato Centre Ltd...... 43 Suomen Viljava Oy...... 44 Tapio Ltd...... 45 Vapo Oy...... 46 VR-Group Ltd...... 47 12 Special assignment companies...... 48 Air Navigation Services Finland Oy...... 48 A-Kruunu Oy...... 49 Alko Inc...... 50 Baltic Connector Oy...... 51 CSC - IT Center for Science Ltd...... 52 Finnpilot Pilotage Ltd...... 53 Finnvera plc ...... 54 Finpro Oy (as of 1 Jan 2018 Business Finland Oy)...... 55 Finrail Oy ...... 56 Governia Group...... 57 Hansel Ltd ...... 58 HAUS Finnish Institute of Public Management Ltd...... 59 Horse Institute Ltd ...... 60 National ICT service center for counties Vimana Oy...... 61 Municipality Finance Plc ...... 62 Solidium Oy...... 63 SoteDigi Oy ...... 64 STUK International Ltd...... 65 State Security Networks Ltd ...... 66 Finnish Aviation Academy Ltd...... 67 Finnish Industry Investment Ltd ...... 68 University Properties of Finland Ltd...... 69 VTT Technical Research Centre of Finland Ltd ...... 70 Finnish Fund for Industrial Cooperation Ltd (Finnfund)...... 71 Terrafame Group Ltd ...... 72 Tietokarhu Oy...... 73 State Business Development Company Vake Oy...... 74 Veikkaus Ltd...... 75 Yleisradio Oy...... 76

13 Sources of data and formulae for calculating key financial indicators...... 77 14 Corporate interests and parliamentary authorisations 31 Dec 2017...... 78 1 Key indicators

Figure 1. State’s corporate holdings by sector and key financial indicators in 2017

asic industr industrial Transport and logistics 7% goods and services 1% Infrastructure % Information technolog Financing 17 % and telecommunications %

Services 2% Consumer goods 33 and services 3% Portfolio value, EURb*

Energ 4%

86,6 11,7 7,9 Net sales, EURb Operating income, EURb Tax footprint, EURb 7,8 216 000 Investments, EURb Number of personnel

Figure 2. Net sales and operating income of State-owned and portfolio companies

Majority-owned listed companies Non-listed commercial companies Special assignment companies*

Net sales, EURb OperatingNet sales, income, EURb EURb OperatingNet sales, income, EURb EURb Operating income, EURb 2 8 0,8 0,8 2 8 0, 0,3 20,3 7 ,1 6,6 6, 6,7 7 6,0 6,3 1,60 20 17,6 0, 1, 17,1 ,7 1,26 1,29 1 4 0,4 3 4 2,6 0,3 4 1 10 3 1,9 3 2 0,2 2 0, 2 1 1 0,1 1 0 0 0 0 0 0 201 201 2017 201201 201201 20172017 201201 201201 20172017 201 201 2017

Net sales, EURb OperatingNet sales, income, EURb EURb OperatingNet sales, income, EURb EURb Operating income, EURb 2 8 0, 8 0,8 0,8 2 ,1 6,7 7 0,36,3 1,60 20,3 7 6,6 6, 0, 6,0 20 17,1 17,6 1, 1,26 1,29 ,7 1 4 0,4 3 4 2,6 0,3 4 1 10 3 1,9 3 2 0,2 2 0, 2 1 1 0,1 1 0 0 0 0 0 0 201 201 2017 201201 201201 20172017 201201 201201 20172017 201 201 2017

* The year 2015 is not comparable. Veikkaus in its present form is not included 10,6 6,7 in the 2015 figures ROI % (8,0) ROI % (7,2)

7 2 Events in 2017

Announcement of Altia’s listing In October, the Government announced that it will look into the possibility of listing Altia Plc, expand the domestic ownership base and reduce state interests in this wholly state-owned company. Listing is a natural step on the company’s growth path and development in Finland and abroad. As a responsible owner, the State needs to make the owner’s potential fully available to the company. Listing gives Altia access to the capital markets, expands its ownership base, offers the public the opportunity to invest in the company and increases the transpar- ency of its operations while promoting public awareness of and fostering stakeholder interest in the company. After the end of the reporting period in February 2018, the Government announced the listing, and trading began on 19 April 2018. As a result, the state interest in the company was reduced to 36.2 per cent.

SoteDigi established SoteDigi Oy, a limited liability company included in the State Business Development Compa- ny Vake Oy’s balance sheet, was founded in August. The company’s mission is to develop nationwide customer and patient data systems and other digital solutions for the social services and healthcare sector. The company’s EUR 90 million share capital and other establishment costs were paid out of the funds of Vake Oy that it had received from the sale of Ekokem Cor- poration. The shares in SoteDigi were relinquished by Vake and returned to the State as a repayment of capital. Responsibility for the management of shares and ownership steering in respect of the company was assumed by the Ministry of Finance.

Rail passenger traffic opens up for competition The Government has decided to open rail passenger traffic to commercial competition. In real terms, this means that VR’s exclusive right to operate across the Finnish railway network will be terminated in the next decade, which will allow other operators to enter the passenger traffic market. The first traffic area to be put out to open tender will be commuter- traf fic in southern Finland. The project is being prepared jointly by the Ownership Steering De- partment in the Prime Minister’s Office, the Ministry of Transport and Communications and VR-Group Ltd.

Parliament reduced the ownership interest limit for Neste and Vapo Parliament has approved the Government’s proposal to lower the minimum state ownership in Neste Corporation and Vapo Oy from 50.1 to 33.4 per cent. The proposal was presented as part of the first 2017 supplementary budget effective as of July. The lowered minimum holdings limit allows the Government to transfer any interests exceeding 33.4 per cent to the wholly state-owned State Business Development Company Vake Oy in accordance with the resolution on state ownership policy.

8 The State signed Neste shares over to Itla As part of the legislative initiative of MPs adopted by Parliament and Finland’s centennial year, the Government plenary session resolved in January 2018 after the end of the reporting period to donate state-held Neste shares to a maximum value of EUR 50 million to Itla, a children’s foundation established in connection with the centennial. As a result of the donation, the State’s voting power generated by its holding in Neste Corporation fell to 49.7 per cent.

9 3 Ownership steering exercised by the State

The decision-making powers in ownership steering are exercised by Parliament. All decisions on incorporation including acquisitions and divestments are made by the Government plenary session. Issues related to ownership policy and steering are addressed by the Ministeri- al Committee on Economic Policy. The Ownership Steering Department in the Prime Minis- ter’s Office is responsible for ownership steering at government level, and in this capacity it is primarily concerned with commercial companies. Responsibility for ownership steering in respect of special-assignment companies rests mostly with other ministries.

The year 2016 saw the establishment of the State Business Development Company Vake Oy under the auspices of the Ownership Steering Department. Its mission is to circulate the capital invested by the State in state-owned companies more effectively and to support new and existing business. In the same year, the State’s holdings in Ekokem Corporation were transferred to Vake Oy, which sold the shares to Fortum.

Government-issued guidelines for Vake’s operations are effective as of 2017. They govern Vake’s activities and decision-making procedures. Vake is governed by the Limited Liability Compa- nies Act, the Securities Market Act and the Act on State Shareholdings and Ownership Steering.

SoteDigi Oy, a limited liability company included in the State Business Development Com- pany Vake Oy’s balance sheet, was founded in autumn 2017 to develop nationwide customer and patient data systems and other digital solutions for the social services and healthcare sector. The company’s EUR 90 million share capital and other establishment costs were paid out of Vake’s funds received from the sale of Ekokem Corporation. Subsequently, Vake’s interest in SoteDigi was transferred to the State. Responsibility for the management of shares and ownership steering in respect of the company was assumed by the Ministry of Finance.

A board of directors consisting of external experts was appointed for Vake in March 2018. Ac- tual operations will commence during 2018.

Figure 3. Government ownership steering

Parliament Government Plenary session Cabinet Committee on Economic Policy

Minister responsible for Other responsible ownership steering Coordination and ministers Prime Minister’s O ce company reporting Other ministries

Advisory committee for state ownership steering with members from all parties in the parliament

Solidium State Business Development Direct interests / Direct interests / others Company Vake Oy Prime Minister’s O ce

10 4 Remuneration

The single most important development governing the remuneration of executive management in limited liability companies is the Shareholder Rights Directive and its implementation. It was issued in spring 2017, and the period of time allowed for implementation by Member States will end in June 2019. The directive obligates listed companies to report on their remuneration policies and criteria for variable remuneration.

The State was a forerunner in extending both requirements to all state-owned companies in its resolution on ownership policy issued in May 2016. For the first time, all the companies presented the requisite reports at the 2017 annual general meetings of shareholders (AGM). In particular, the remuneration reports of Finnair, Fortum and Neste, all directly held listed companies, were of exceptionally high standard. Similarly, the largest non-listed companies submitted satisfactory reports. However, the reports of the smallest companies, notably special assignment companies, fell short of the required quality. The reports presented at the 2018 AGMs after the reporting period were better in terms of quality. The Ownership Steer- ing Department is of the opinion that, with the Shareholder Rights Directive, reporting by state-owned companies has reached a satisfactory standard of quality.

In 2017, the overall level of executive remuneration remained more or less unchanged compared with the previous year. Executive remuneration at large companies is increasingly following international trends, and it continued to diverge from that of companies operating mainly in the domestic market. Currently, there is greater emphasis on actual duties rather than general comparisons within individual sectors. The effect of the overall economic development was reflected in companies’ financial performance, which, in turn, affected the remuneration levels. Generally, this led to a slight increase in the level of remuneration under both short- and long-term incentive plans. Basic salaries remained unchanged in the broad view. On the whole, the remuneration of executives in state-owned companies followed the general market trends.

As a shareholder, the State seeks to take a pragmatic view of remuneration with due regard to market developments. In its remuneration policy, the State recognises the differences in the requirements imposed on listed, non-listed and special assignment companies. Executive and staff remuneration is a tool used by the board of directors for the purpose of increasing the company’s value. When efforts to increase the company’s value are rewarded in recognition of the at- tainment of long-term objectives, the interests of the company and shareholders coincide. To be able to operate in an intensely competitive market, state-owned companies need to be able to hire executives and staff on competitive terms. State ownership may not generate any special rights or privileges for companies, nor impose any additional obligations or restrictions compared with privately owned companies. The remuneration of executive management and employees is determined by the board of directors. As an owner, the State does not make any decisions on remuneration.

11 5 Board appointments

In 2017, the Ownership Steering Department in the Prime Minister’s Office proposed candidates for board membership to the AGMs or nomination committees of 31 companies. All in all, there were a total of 187 members on these boards, of whom the State had appointed 166. Of all State-appointed members, women accounted for about 43 per cent of the total in 2017. During 2018, the Ownership Steering Department has or will propose candidates to the AGMs or nomination committees of 31 companies. All in all, these boards of directors have 185 members, of whom the State may appoint 163. Of the appointees, 25 will begin their first term on the board of directors of a state-owned company; of these 11 are women and 15 men. The wholly state-owned investment company Solidium Oy is active in the nomination committees of its portfolio companies and not included in the above figures.

During 2017, the State proposed candidates to boards of directors at a total of over 60 AGMs. This includes companies in respect of which ownership steering is exercised by the Prime Min- ister’s Office and other ministries. The total number of board members was over 300. Of all the State-appointed members, women accounted for more than 40 per cent of the total in 2017.

The State’s objective is that neither gender should have less than 40 per cent of the State’s board appointments. Failure to meet this objective can usually be explained by the total number of board positions available or the number of members that the State is authorised to appoint under shareholder agreements.

With board members appointed on proposal from the State, the preferred duration of the term is 5–7 years. The members of the boards of directors are appointed by the general meeting of shareholders, which often also elects the chair of the board. At the AGMs, the State is repre- sented by either the minister responsible for ownership steering or a designated government official. When identifying potential candidates for board membership, the State draws on a resource pool maintained by an external expert. At many of the companies of which the State is not the sole owner, the largest shareholders form a nomination committee to prepare issues related to the composition and remuneration of the board and to propose candidates for board membership to the meeting of shareholders.

Key criteria for board membership include experience and expertise, assurance of the capacity for cooperation and diversity of competence, and compliance with the gender equality objectives established by the Government. Board appointments offer a way of ensuring that the State’s objectives are achieved as effectively as possible. When officials responsible for ownership steering are appointed to the boards of directors of state-owned companies, steps must be taken to ensure that such officials are not disqualified when preparing decisions affecting state ownership or exercising other shareholder control or powers.

12 6 Corporate social responsibility

Over the past few years, the State’s expectations have increased from mere reporting to more strategic requirements regarding corporate social responsibility in recognition of the overall development of society and stakeholder concerns. A sustainable competitive advantage can only be achieved through responsible action. Consequently, the promotion of corporate social responsibility is part of the toolkit of active owners in their efforts to increase shareholder value. As de- clared in the government resolution, the State expects every company to establish measureable objectives for corporate social responsibility and report on its CRS performance, actions taken and goals for the coming years to the AGMs. This type of reports were submitted to the AGMs for the first time in spring 2017.

Agenda 2030 In 2015, the UN nations agreed on a plan of action for sustainable development called Agenda 2030, which specifies 17 Sustainable Development Goals shared by all participating countries. The Finnish Government prepared its own national action plan and presented it to Parlia- ment in February 2017 in the form of a report. The Government’s plan is based on a national society’s commitment to sustainable development representing a national interpretation of Agenda 2030. In the government resolution on ownership policy, companies were urged to use society’s commitment to create a tangible, transformative and measurable commitment to action. To date, 16 state-owned companies have made such a commitment. All in all, about 350 companies in Finland have followed suit. Agenda 2030, now a couple of years in effect, has given Finnish companies a global frame of reference for sustainability efforts. It has provided the terminology and tools for attaining the objectives and improving efficiency in implementing the measures in collaboration with stakeholders. Once again, the State urges companies to seize these opportunities to develop their business, identify new partnerships and growth drivers and enhance cooperation with stakeholders.

Carbon footprint The carbon footprint of listed companies in which the State holds direct interests is greater than the average footprint of other companies listed in the Nasdaq Omx Helsinki Stock Ex- change. This is because the energy sector accounts for almost half of the value of the State’s share portfolio. Moreover, Finnair’s carbon dioxide emissions are substantial because of the line of business in which it is engaged. For listed companies with direct state holdings, the changes brought about by climate change present both risks and opportunities that also need to be considered from the shareholders’ point of view. Shareholders assess companies’ carbon risk and CO2 intensity as part of their ownership strategies. For owners, it is important that companies have clear-cut strategies and ambitious goals for reducing CO2 emissions with due regard to the weight of the sector in the portfolio. Neste, Fortum and Finnair have all develop their business in a more low-carbon direction making active efforts to reduce emissions.

13 7 Tax footprint

The Government resolution on ownership policy (13 May 2016) states that taxes should be paid to the country in which the profits are earned. Minimisation of taxes through the use of tax havens is unacceptable.

As of 2017, the parent companies of major corporations with an annual revenue of at least EUR 750 million are required to report on their international taxes country-by-country to the tax authorities of the state in which they are based. The report must include information on financial performance, taxes paid, number of employees and certain balance sheet items.

In the same vein, the Commission of the European Union has proposed a directive that would obligate major companies to issue a public county-by-country tax report. In terms of content, this report would probably be less extensive than the report to be submitted to the tax authorities. Public country-by-country tax reporting will not commence until 2019 at the earliest.

The Ownership Steering Department in the Prime Minister’s Office has been urging state- owned companies to publicly disclose their tax information since 2014. The 2017 tax data was gathered on all state-owned companies. Their total tax footprint was EUR 7.9 billion. The companies ownership-steered by the Prime Minister’s Office have several years’ experience of public tax reporting and have taken steps to develop their reporting further.

Figure 4. Taxes paid and accounted for by companies in 2017

uut 7 % Finnair 1 % Fingrid 1 % Gasum 3 % eiaus 4 % R 4 % Posti 4 % Neste 48 % Altia 8 %

Alo 8 % Total EUR 7 billion

Fortum 12 %

14 In 2017, total tax revenues of companies ownership-steered by the Prime Minister’s Office amounted in 2017 to approximately EUR 7.0 (6.3) billion of which Finland accounted for EUR 5.1 (4.7) billion, slightly more than in the previous year. The biggest source of tax revenues was excise duties, followed by valued added taxes (net), taxes on earned income and employer contributions.

The aggregate profit of all the companies combined amounted to EUR 3.9 (1.8) billion before taxes. For Finland’s part, the companies showed an aggregate taxable profit of EUR 2.6 (0.8) billion. A total of 71 (69) per cent of the reported net sales of the companies was generated in Finland and 76 (73) per cent of the employees worked in Finland.

Of the aggregate of accrued taxes paid by all the companies, the countries for which no specific figures were provided accounted for 11 (12) per cent of the total. Profit before taxes was disclosed for 22 (45) per cent of these countries. They accounted for 5 (12) per cent of the total income taxes paid. Of the combined net sales of all the companies, 21 (22) per cent was generated in countries for which no specific reports were provided. Of all the personnel, 6 (8) per cent were employed in these countries.

15 8 Facts on portfolio companies

Table 1. Key financial indicators for listed companies in 2017

Return on Operating Operating Total Equity Return on invest- Number of Listed companies Net sales income margin % assets ratio % Gearing % equity % ment % personnel Finnair Plc 2568,4 224,8 8,8 2887 42 70 18,1 13,6 5918 Fortum Corporation 4520,0 1158,0 25,6 21753 61 7 6,5 7,1 8785 Neste Corporation 13217,0 1171,0 8,9 7793 56 9 22,6 21,8 5297

Table 2. Key financial indicators for non-listed companies in 2017 Return on Operating Operating Total Equity Return on invest- Number of Non-listed companies Net sales income margin % assets ratio % Gearing % equity % ment % personnel Altia Plc 359,0 26,1 7,3 398,4 34 35 11,1 12,5 762 Arctia Ltd 48,9 0,1 0,3 274,5 50 70 -1,0 0,1 268 Boreal Plant Breeding Ltd 9,5 0,2 2,0 11,4 70 -24 1,0 2,2 70 Cinia Oy 40,6 1,8 4,4 108,4 38 73 1,0 1,9 231 Finavia Corporation 373,6 54,4 14,6 1074,5 58 47 6,2 6,1 2172 Fingrid Oyj 672,0 184,8 27,5 2113,3 38 125 16,7 10,0 352 Gasum Corporation 925,0 114,2 12,3 1421,2 42 99 14,7 10,6 409 Kemijoki Oy 42,4 -6,4 -15,1 480,3 12 698 1,2 -1,4 36 Leijona Catering Oy 71,0 2,8 3,9 26,2 70 -64 11,2 14,1 442 Meritaito Ltd 31,2 -3,7 -11,7 32,5 27 178 -37,6 -13,1 219 Motiva Oy 6,2 0,1 1,1 3,8 58 -87 3,5 3,8 58 Nordic Morning 93,4 5,9 6,3 48,6 47 12 22,5 23,3 548 Patria Plc 467,7 33,9 7,2 486,3 54 28 11,2 11,9 2762 Posti Group Corporation 1647,0 -27,5 -1,7 1092,9 46 -9 -8,0 -3,5 16932 Raskone Ltd 60,7 0,4 0,7 19,9 18 156 8,9 4,0 466 Suomen Lauttaliikenne Oy 52,1 9,3 18,0 61,7 75 -33 16,8 21,0 309 Mint of Finland Ltd 85,0 -1,8 -2,1 59,4 44 87 -8,0 -3,4 169 Finnish Seed Potato 3,2 0,0 0,0 3,4 62 52 -2,6 -1,0 14 Centre Ltd Suomen Viljava Oy 16,7 4,4 26,5 27,2 74 23 18,4 18,6 62 Tapio Ltd 9,8 0,7 7,4 15,2 65 -56 6,6 7,6 57 Vapo Oy 392,1 20,0 5,1 812,4 43 79 2,6 3,0 776 VR-Group Ltd 1251,5 110,3 8,8 1817,8 67 6 6,1 7,4 7540

16 Table 3. Key financial indicators for special assignment companies in 2017

Return on Operating Operating Total Equity Return on invest- Number of Net sales income margin % assets ratio % Gearing % equity % ment % personnel Air Navigation Services Finland Oy 63,9 9,3 14,5 38,6 42,8 -9,1 42,9 44,5 402 A-Kruunu Oy 3,6 0,8 23,5 128,4 24,1 200,0 0,9 0,9 8 Alko Inc. 1174,8 52,6 4,5 271,2 31,7 -147,4 50,2 65,2 1870 Baltic Connector Oy 0,0 -1,1 42,6 78,6 -102,5 -4,9 -4,7 12 CSC - IT Center for Science Ltd 40,5 1,6 3,9 26,4 27,6 -314,0 39,9 49,6 310 Finnpilot Pilotage Ltd 38,1 2,6 6,9 27,5 69,4 -34,3 11,0 13,0 315 Finnvera Plc 0,0 109,0 27,2 10337,0 12,7 8,5 367 Finpro Oy 59,2 -0,2 -0,3 21,5 55,3 -5,9 3,4 3,4 281 Finrail Oy 36,0 2,4 6,5 12,5 37,2 -170,7 49,7 60,9 419 Governia Group 44,8 12,7 28,4 190,8 65,5 13,7 7,8 6,4 23 Hansel Ltd 10,4 0,2 1,9 19,3 84,4 -97,1 1,1 1,4 83 HAUS Finnish Institute of Public 6,1 0,1 1,7 4,1 51,6 -143,1 9,5 8,0 30 Management Ltd Horse Institute Ltd 7,2 0,0 0,2 4,6 76,0 -38,9 0,7 1,0 79 National ICT service center for 0,0 -0,2 0,0 0,2 20,3 -371,0 -425,0 -425,0 5 counties Vimana Oy Municipality Finance Plc 204,1 198,4 97,2 34738,1 3,9 12,6 134 Solidium Oy 89,1 4650,1 91,0 1,0 0,4 0,4 11 STUK International Ltd 0,6 -0,1 -17,6 9,0 74,1 -118,1 -18,3 -10,8 1 State Security Networks Group 93,2 5,9 6,3 263,8 85,7 -11,0 1,9 2,6 318 Finland Finnish Aviation Academy Ltd 9,5 0,5 4,8 19,0 95,4 -34,8 2,0 2,7 41 Finnish Industry Investment Ltd 0,0 80,2 1020,3 95,9 -46,2 6,9 8,4 32 University Properties of Finland Ltd 150,9 38,8 25,7 1268,8 47,7 103,5 3,6 3,2 36 VTT Technical Research Centre of 153,2 -18,2 -11,9 243,5 58,5 -60,8 -13,9 -14,2 1919 Finland Ltd Finnish Fund for Industrial 0,0 -10,2 463,7 52,6 68,7 0,8 13,4 76 Cooperation Ltd Terrafame Group Ltd 220,0 -7,9 -3,6 694,5 53,3 -14,7 -5,2 1,6 656 Tietokarhu Oy 29,1 4,6 15,7 16,2 25,1 0,0 98,8 122,6 160 State Business Development 198,0 0,0 0,0 4,5 100,0 -100,0 -7,9 0,2 0 Company Vake Oy Veikkaus Ltd 3230,9 1021,3 31,6 1344,8 87,5 -8,6 69,8 69,9 2039 Yleisradio Oy 472,3 7,0 1,5 249,2 54,1 4,6 5,3 4,1 2786

17 9 Movement in the value of the State’s portfolio of listed equities

Directly held listed companies The market capitalisation of the State’s listed portfolio companies increased by 32 per cent in 2017. Much of the increase was due to excellent financial performance by Finnair and Neste. Neste’s share price increased by 46 per cent in 2017 thanks to hefty profits. Over the same period, Finnair’s share price went up by 218 per cent and Fortum’s by 13 per cent. The total return on the portfolio was 39.8 per cent. In 2017, the general index of the Nasdaq OMX Helsinki Stock Exchange increased by 6.4 per cent and the return index by 10.7 per cent. Consequently, the portfolio performed well compared with the overall market developments. The companies also outperformed their benchmark indexes.

Table 4. Movement in the market capitalisation of the State’s listed share portfolio, EUR million

Ownership share % 2013 2014 2015 2016 2017 Finnair Plc 55,8 198 177 388 288 917 Fortum Corporation 50,8 7 499 8 103 6 277 6 570 7440 Neste Corporation 50,1 1 846 2 577 3 549 4 689 6853 Total 9 543 10 858 10 215 11 547 15210 Total interests held by Solidium Oy 8 172 7 616 6 835 7 848 8538 Total 17 715 18 474 17 050 19 395 23 748

Table 5. Capital return performance of companies Return Benchmark Return Benchmark % 1y index 1y % 5y* index 5y* Finnair Plc 225,7 68,8 41,9 22,5 Fortum Corporation 22,8 9,6 11,2 6,8 Neste Corporation 51,4 3,3 45,4 4,8 Total 39,8 10,7 21 15,1 * Annualised

Figure 5. Movement in the share price of listed companies with direct state holdings

18 The dividend yield from directly held listed companies at 2017 year-end prices was 4.8 (5.8) per cent. The dividend yield of companies listed at the Nasdaq OMX Helsinki Exchange at 2017 year-end prices was 4.6 (4.4) per cent.

The state-owned earned the State a total of EUR 1,845 (935) million in dividends and capital repayments in 2017. The figure was increased by Solidium’s EUR 278 million dividends for the financial year 2015/2016, which were exceptionally paid during 2017, as well as by the extraordinary dividends and capital repayments made by a number of companies. The dividends and capital repayments by non-listed commercial companies reached an all-time high of EUR 444 (255) million.

Figure 6. Dividends received by the State and proceeds from the sale of shares on cash basis

EURb 2 000

1 00

1 000

0 2013 2014 201 201 2017 Sales of shares ividend and capital repament from nonlisted commercial companies Special assignment companies ividend and capital irect state holdings in listed companies repament from Solidium

19 Solidium-held companies

Table 6. Solidium Oy’s investment portfolio on 31 Dec 2017

Solidium - all investments in shares € million % of the company % of the portfolio Sampo 3 053 12,0 36 Stora Enso* 1 282 12,3 15 Outokumpu 736 22,8 9 SSAB** 677 17,1 8 Metso 637 14,9 7 Elisa 550 10,0 6 Telia Company 511 3,2 6 Kemira 298 16,7 3 Valmet 274 11,1 3 Outotec 194 14,9 2 Tieto 193 10,0 2 Konecranes 125 4,2 1 Ahtium 10 7,6 0 Solidium – all investments in shares 8 538 100 Investment distribution € million of the portfolio Solidium – all investments 8 847 100 Solidium – all investments in shares 8 538 97 Solidium – all investments in fixed income 309 3 instruments * Solidium holds 12.3% of all Stora Enso shares and 27.3% of all votes ** Solidium holds 17.1% of all SSAB shares and 11.0% of all votes

On 31 December 2017, equity investments accounted for approximately 97 per cent of Solid- ium’s portfolio. The greatest weight in equities was in Sampo, which accounted for 36 (36) per cent of the total.

Solidium’s money market investments stood at EUR 309 (688) million.

Table 7. Solidium Oy’s return on money market investments

Return, % 1 year Return, % since the beginning*

Company Index Company Index Ahtium -46,4 -5,8 Elisa 10,8 0,2 21,6 8,1 Kemira -0,8 11,0 18,2 12,4 Konecranes 2,0 12,5 Metso 8,9 17,8 22,7 12,5 Outokumpu -8,0 17,7 -2,6 0,4 Outotec 42,2 17,8 -0,7 11,1 Sampo 13,2 6,3 20,8 18,9 SSAB 24,7 17,7 -0,7 0,4 Stora Enso 32,1 11,3 13,3 11,7 Telia Company 1,4 0,2 6,0 6,7 Tieto 5,8 17,2 12,6 13,1 Valmet 21,0 17,8 29,1 6,1 Total return of the portfolio 12,9 11,5 13,2 14,5 Investments in fixed income instruments 0,4 0,5 Return on investments 12,2 12,9

* Since the beginning of operations (11 December 2008), except for Elisa (11 June 2009), Outotec (14 December 2011), Tieto (1 January 2010), Ahtium (1 June 2011), Valmet (2 January 2014) and Konecranes (24 May 2017) 20 The total return on Solidium’s equity portfolio slightly exceeded the weight-limited OMX Hel- sinki Cap GI gross index over the past 12 months. The overall return on the portfolio since So- lidium’s establishment fell short of the benchmark index.

The best performance during the calendar year was put in by Outotec, Stora Enso, SSAB and Valmet whereas Outokumpu and Kemira gave a negative return.

During the reporting period, Solidium sold equities for a total of EUR 197 million. The transactions consisted of two deals on Outokumpu shares worth EUR 130 million and the sale of Class R shares in Stora Enso for EUR 67 million. Additionally, at the beginning of 2018, Solidium sold its Class B shares in SSAB for EUR 151 million, all its interests in Telia Company for EUR 517 million and part of its holdings in Sampo for EUR 466 million.

During the reporting period, Solidium bought equities for a total of EUR 191 million by acquiring shares in Konecranes for EUR 122 million and Class A shares in Stora Enso for EUR 69 million. In other words, Solidium sold Class R shares in Stora Enso and as a replacement bought Class A shares that carry more votes. During early 2018, Solidium has bought equities for a total of EUR 887 million, of which EUR 43 million was used to buy shares in Kone- cranes and EUR 887 million to buy shares in Nokia.

Two new companies, Konecranes and Nokia, were added to Solidium’s portfolio during the reporting period whereas all interests in Telia Company were divested. Konecranes was added to the portfolio in spring 2017 and Nokia in March 2018.

All the remaining interests in Telia Company were sold in February 2018.

During the calendar year, the market capitalisation of Solidium’s equity portfolio increased by EUR 690 million to EUR 8,538 (7,848) million. Over the same period, Solidium’s proceeds from the sale of shares exceeded the cost of share purchases by EUR 6 million.

Figure 7. Solidium Oy’s purchases and sales of shares in 2107

EURb 200 2010 2011 2012 2013 2014 201 201 2017 1332018 3 000 2 000 1 000 0 1 000 2 000 3 000 4 000 000 Total investments in shares, EUR 2,4 million Total sales of shares, EUR 4,887 million

21 The dividend yield from Solidium’s equity portfolio calculated at 2017 year-end share prices was 4.5 (4.5) per cent and the payout ratio 109 (79) per cent. The dividend yield of companies listed at the Nasdaq OMX Helsinki Stock Exchange at 2017 year-end prices was 4.6 (4.4) per cent and the payout ratio 78 (81) per cent.

Since 2008, Solidium has received a total of EUR 3.1 billion in dividend income. The State, in turn, has received capital repayments and dividends from Solidium to the tune of EUR 5.0 billion. Consequently, Solidium has paid the State some EUR 1.9 billion more than it has received in dividends. This was made possible by the sale of shares by Solidium, as a result of which its annual dividend income has decreased from about EUR 400 million to about EUR 300 million.

Figure 8. Dividends paid by Solidium Oy’s portfolio companies

EURb

Sampo

Stora Enso Telia Compan Elisa

etso

emira

Tieto

Outoumpu

almet onecranes* 0 Outotec 0 SSA 0 Talvivaara 0 0 2 0 7 100 12 10 17 201201 2012017 *) Investment as made in 2017

22 10 Direct state holdings

Finnair Plc

Finnair is a network airline specialising in A year of profitable growth scheduled services between Asia and Euro- Strong demand for air travel services combined with increased capacity as a result of the modern- pe. Finnair flies to 19 destinations in Asia, 3 isation of the fleet greatly increased Finnair’s net in Northern America and over 100 destina- sales. The number of passengers grew by over one tions in Europe. In 2017, the company car- million reaching an all-time high during the re- ried close to 12 million passengers and 157 porting period. Except for domestic flights, the million kilograms of cargo. passenger load factor improved in all operating areas. Similarly, the cargo load factor increased.

Approximately 79 per cent of net sales was gener- FINNAIR PLC ated by passenger traffic revenues that increased State shareholding in all operating areas. At the same time, sales of 55,8 % other products, such as cargo and travel servic- Ownership steering es, increased. The company’s comparable operat- Prime Minister’s Office ing income improved in each quarter year-on-year Strategic interest of ownership reaching EUR 170 million.

To develop Finland as a hub of international air traffic. The company updated its strategic objectives to Board of Directors on 20 March 2018 double the volume of the Asian traffic by 2018 rel- Jouko Karvinen (Chair), Colm Barrington, Montie Brewer, ative to the 2010 level, when previously the goal Mengmeng Du, Maija-Liisa Friman, Henrik Kjellberg, Jonas Mårtensson, Jaana Tuominen was to achieve this by 2020. Efforts will also be made to double ancillary sales by 2020 relative to Chief Executive Officer the 2016 volumes. The number of passengers is to Pekka Vauramo increase to 20 million by 2030. Key financial indicators 2017 2016 Net sales EURm 2568,4 2316,8 Operating income EURm 224,8 116,3 Improvements in fuel efficiency Operating margin % 9 5 As a result of the excellent performance and im- Total assets EURm 2887,1 2527,6 proved utilisation rate of the A350 aircraft, over- Equity ratio % 42 41 all fuel efficiency improved by 6.7 per cent. Abso- Gearing* % 69,9 78,3 Return on equity % 18,1 10,8 lute emissions due to the company’s operations Return on investment % 13,6 8,9 % increased clearly less than available tonne-kilo- Total dividends paid EURm 38 13 metres. Dividends received by the State EURm 21 7 As a result of accelerated growth, the company re- Investments EURm 397,4 486 cruited one thousand new employees and invested Personnel, total, 31 Dec 5918 4838 EUR 10 million in staff training. At the same time, Personnel, Finland, 31 Dec 5406 4423 the company focused on wellness at work, which Gender composition of the w/m 4/5 4/5 management team was reflected in reduced absence from work and Gender composition of the accident frequency. w/m 3/5 3/4 Board of Directors Total tax footprint EURm 90,1 89,8 The company’s continual efforts to enhance the Tax footprint in Finland EURm 89,4 89,1 customer experience led to improved customer satisfaction. * Includes estimated leasing payments over the next seven years.

23 Fortum Corporation

Fortum Corporation is an energy compa- A clear improvement in financial performance ny whose strategy aims for a low-emission Fortum’s financial performance improved in several business areas. Its comparable operating in- energy system and optimum use of resour- come increased by 26 per cent to EUR 811 mil- ces. In 2017, the company made tangible lion, partly due to a relatively good market situa- progress in the implementation of this stra- tion. The improvement was greatest in the Russia tegy in many business areas. division whose comparable operating income increased to EUR 296 million (191). The Generation division also showed profitable growth. The finan- FORTUM CORPORATION cial performance of the Consumer Solutions divi- State shareholding sion was slightly impaired by intense competition. 50,8 % Ownership steering Prime Minister’s Office Tangible progress in the implementation of Strategic interest of ownership strategy To secure adequate supply of energy also under exceptional The company’s first and foremost strategic goal is circumstances to improve productivity and update structures in Board of Directors on 28 March 2018 the energy production sector. A second goals is to Matti Lievonen (Chair), Heinz-Werner Binzel, Eva Hamilton, grow by offering sustainable energy solutions to Kim Ignatius, Essimari Kairisto, Klaus-Dieter Maubach, cities. Third and fourth, the company seeks to se- Anja McAlister, Veli-Matti Reinikkala cure its long-term competitiveness in future en- Chief Executive Officer ergy systems by increasing the share of solar and Pekka Lundmark wind power and creating new energy solutions. To- Key financial indicators 2017 2016 wards the end of 2017, Fortum Corporation an- Net sales EURm 4520 3632 nounced its bid to buy Uniper. In February 2018, Operating income EURm 1158 633 the 47.12 per cent of Uniper’s shareholders had ac- Operating margin % 26 17 cepted the bid. As Fortum sees it, the energy tran- Total assets EURm 21753 21964 sition calls for a reduction in emissions as well as Equity ratio % 61 62 concrete steps to secure supply. Fortum expects Gearing % 7,4 -0,3 the investment in Uniper to generate a steady re- Return on equity % 6,5 3,6 turn that will help pursue a sustainable dividend Return on investment % 7,1 4,0 policy and facilitate investments in new energy so- Total dividends paid EURm 977 977 lutions. During the reporting period, Fortum also Dividends received by the State EURm 496 496 rearranged its holdings in Hafslund and invested Investments EURm 1629 1294 in solar and wind power. The plan is to increase Personnel, total, 31 Dec 8785 8108 wind and solar energy production to the GW class. Personnel, Finland, 31 Dec 2165 2029 Capacity increased to 295 (58) MW. As an ener- Gender composition of the w/m 2/8 2/9 management team gy producer, Fortum Corporation has one of the Gender composition of the w/m lowest emissions in Europe. In 2017, the compa- 3/5 3/5 Board of Directors ny’s CO2-free production accounted for 61 (62) per Total tax footprint EURm 966 741 cent of the total. Fortum achieved its objectives re- Tax footprint in Finland EURm 199 213 garding specific emissions and improved energy efficiency. Occupational safety was impaired by -ac quisitions, which made it impossible to attain the safety objectives in all respects.

24 Neste Corporation

Neste was successful in implementing its Excellent financial performance strategy. The company aims to grow in the Neste achieved a historical comparable operating income of EUR 1,101 (983) million in 2017. As in global renewables markets and be the num- 2016, the financial result for renewable products ber one operator in the Baltic Sea region. accounted for most of the operating income, earn- Neste put in an excellent financial perfor- ing a comparable operating income of EUR 561 mance, the best in its history, and was ran- (469) million. Oil Products also improved perfor- ked second in the Global 100 list of the most mance by generating a comparable operating income of EUR 495 (453) million. Marketing & Ser- sustainable companies. vices performed less well with EUR 68 (90) million. NESTE CORPORATION Neste achieved its financial objectives. Its return State shareholding on investment clearly exceed the 15 per cent tar- 50.1% (49.7% as of 4 Jan 2018) get. The excellent financial performance and sol- Ownership steering id cash flow strengthened the company’s balance Prime Minister’s Office sheet. Liabilities accounted for 8.7 (15.4) per cent Strategic interest of ownership of total capital reserves while the company’s strategic objective is to keep it under 40 per cent. To secure nationwide fuel supply with due regard to the maintenance of emergency stocks of critical supplies. Board of Directors on 5 April 2018 Matti Kähkönen (Chair), Elizabeth (Elly) Burghout, Martina Flöel, Neste’s strategy Laura Raitio, Jean-Baptiste Renard, Jari Rosendahl, Willem Schoeber, Marco Wiren Neste pursues two strategic objectives: to achieve global growth in Renewable Products and to be Chief Executive Officer the number one operator in the Baltic Sea region. Matti Lievonen, Peter Vanacker as of 1 November 2018. Key financial indicators 2017 2016 In Renewable Products, the company will focus on Net sales EURm 13 217 11 689 making waste raw material available worldwide, Operating income EURm 1171 1155 introducing its MY diesel globally and develop- Operating margin % 8,9 9,9 ing renewable chemicals. The company has an- Total assets EURm 7 793 7 443 nounced that it has selected Singapore as the site Equity ratio % 55,8 50,6 for the renewable production facility. The compa- Gearing % 9,5 18,2 ny’s goal is to make the investment decision dur- Return on equity % 22,6 27,5 ing 2018 so as to permit a production start at the Return on investment % 21,8 22,7 new facility by 2022 as planned. Total dividends paid EURm 436 333 Dividends received by the State EURm 218 167 In the Baltic Sea region, Neste will aim for a high Investments EURm 472 407 level of customer satisfaction and establish itself Personnel, total, 31 Dec 5339 5001 as the number one operator in the region by im- Personnel, Finland, 31 Dec 3581 3399 proving operational efficiency and upgrading its Gender composition of the w/m 2/9 2/8 refineries. Neste was able to successfully complete management team the combination of the Finnish refinery operations Gender composition of the w/m 3/4 3/4 Board of Directors in 2017. Total tax footprint EURm 3826 3598 Neste’s operational environment is very much af- Tax footprint in Finland EURm 3162 2987 fected by regulation. One example of this is the in- troduction of global restrictions regulating the sul- phur content of marine fuels.

25 11 Non-listed commercial companies

Altia Plc

Altia is a leading Nordic alcohol compa- Profitability improved for the fourth consecutive ny operating in the Nordic countries, Es- year In 2017, Altia’s net sales grew moderately by 0.7 per tonia and Latvia. Altia also has producti- cent. The growth was due to the strong demand for on in Cognac, France. The company produ- industrial products and the continued good sales ces, imports, markets, sells and distributes performance of Altia’s own key brands and major its own brands and partner products and partner products. Comparable EBITDA and operat exports alcoholic beverages to approxima- ing income increased due to growth in net sales and efficiency improvement measures and focusing tely 30 countries. measures. In 2016, the operating income included items affecting comparability for a total of EUR 19.9 ALTIA PLC million.

State shareholding In 2018, the positive development of Altia’s key 100% (36.2%, 19 April 2018) brands is expected to continue. Cost pressures on Ownership steering key raw materials and increased exports affect the Prime Minister’s Office development of profitability. Comparable EBITDA Strategic interest of ownership is expected to improve or remain at 2017 level.

No strategic interest The new Alcohol Act, which entered into force on Board of Directors on 1 March 2018: 1 January 2018, provides Altia with the opportuni- Sanna Suvanto-Harsaae (Chair), Kim Henriksson, Annikka ty to expand its product portfolio to grocery stores Hurme, Tiina Lencioni, Jukka Ohtola, Torsten Steenholt, Kai which can now sell premixes made of spirits using Telanne the brands of spirits. Altia can also present spirits in Chief Executive Officer places such as its online product catalogue and pub- Pekka Tennilä lish basic product information and pictures of spir- Key financial indicators 2017 2016 its on its websites. Net sales EURm 359,0 356,6 Operating income EURm 26,1 46,3 Modern and responsible drinking culture Operating margin % 7,3 13,0 Total assets EURm 398,4 438,6 Corporate responsibility is a strategic issue of ma- Equity ratio % 34 44 jor importance to Altia. Energy and environmental Gearing % 34,9 2,5 considerations are taken into account in produc- Return on equity % 11,1 19,0 tion processes and investments. Altia is committed Return on investment % 12,5 17,6 to the ethical principles of BSCI in its operation and Total dividends paid EURm 0,0 70,5 that of the entire supply chain. Altia has a goal of ze- Dividends received by the State EURm 0,0 70,5 ro accidents in its production facilities. Investments EURm 11,9 8,7 Personnel, total, 31 Dec 703 797 The operations of the Koskenkorva plant are based Personnel, Finland, 31 Dec 411 448 on a circular economy: the locally produced bar- Gender composition of the ley used as a raw material is completely used up in w/m 3/3 2/5 management team the production of various products for Altia’s own Gender composition of the w/m 3/4 3/4 needs and those of its industrial clients, and ulti- Board of Directors mately at the bio-fuel power plant located next to Total tax footprint EURm 607,5 648,3 the Koskenkorva plant. Tax footprint in Finland EURm 301,3 332,9

26 Arctia Ltd

Arctia is a specialised shipping company Economically tight year that offers icebreaking and offshore servi- For icebreaking, the number of operating days increased in 2017 despite the mild winter. The num- ces as well as harbour assistance services ber of accumulated operating days was 447 (385). in Finland and abroad. The technical problems of the fleet’s newest ship Polaris in the early season increased the number ARCTIA LTD of off-hire days, but in terms of icebreaking efficiency this ship proved to be the best one. The ice- State shareholding breaking service level remained high throughout 100 % the icebreaking season. Ownership steering Prime Minister’s Office Arctia’s net sales decreased during the financial year, mainly due to less activity in internation- Strategic interest of ownership al operations compared to previous years. The To ensure winter navigation capabilities in order to serve the needs of Finnish business and industry Group’s net sales totalled EUR 48.9 (60.7) million and the operating income was marginally positive. Board of Directors on 9 March 2018 Because of financial expenses, the Group showed Pertti Saarela (Chair), Pirjo Kiiski, Hanna Masala, Ilpo Nuutinen, Antti Pankakoski a loss for the financial year. The company’s bal- Chief Executive Officer ance sheet and financial position remained stable at the previous year’s level. The offshore business Tero Vauraste decreased to EUR 13.6 (28.3) million, resulting in Key financial indicators 2017 2016 the operating income showing a loss of EUR 7.2 Net sales EURm 48,9 60,7 (+5.9). In the spring, the multi-purpose icebreak- Operating income EURm 0,1 12,9 er Nordica was chartered to Russia. The market Operating margin % 0,3 21,2 situation in North America was challenging and Total assets EURm 274,5 287,4 new constraints were imposed on marine energy Equity ratio % 50,1 49,9 production. The challenging situation has caused Gearing % 70,4 62,5 the company to increase its efforts to diversify its Return on equity % -1 6,4 Return on investment % 0,1 5,8 service offerings. Total dividends paid EURm 1,5 4,6 Dividends received by the State EURm 1,5 4,6 Investments EURm 5,7 131,6 Focus on increasing the utilisation rate Personnel, total, 31 Dec 268 265 The company’s strategy aims to increase the utili- Personnel, Finland, 31 Dec 268 265 sation rate, which is a prerequisite for improving Gender composition of the w/m 2/5 2/6 profitability in the offshore business. In the future, management team the importance of investment planning and cash Gender composition of the w/m 2/3 2/3 Board of Directors flow management will continue to increase. Arctia Total tax footprint EURm 4,2 6,4 is constantly striving to diversify its range of ser- Tax footprint in Finland EURm 4,2 6,4 vices to include, for instance, research and keeping international trade routes open during the winter. During the year under review, the company invested heavily in sales and marketing.

Arctia’s goal is to reduce its carbon dioxide emissions. The new icebreaker Polaris is the world’s first LNG icebreaker. The use of LNG significantly reduces icebreaker emissions. The security of services and, more broadly, maritime safety is the most important single area ofresponsibility for Arctia.

27 Boreal Plant Breeding Ltd

Boreal Plant Breeding Ltd breeds and mar- Boreal is involved in forward-looking product kets productive and high-quality varieties development Boreal’s net sales decreased by 3.2 per cent from of field crops for professional farmers ope- the previous year. The decrease was due to the de- rating in the harsh growing conditions pre- crease in royalties and the decrease in license fees vailing in northern climate. In its field, Bo- for the use of the farm’s own seeds. Competition real is a strong market leader in Finland. has also intensified as the supply of foreign varieties continues to grow. In the export market, however, the positive development continued, BOREAL PLANT BREEDING LTD even though the share of exports of total revenue State shareholding is still minor. 60,75 % Operating income dropped considerably from the Ownership steering previous year. The growing season was exception- Prime Minister’s Office ally cold and rainy. Profitability of agriculture con- Strategic interest of ownership tinued to be weak and the cultivated land for cere- To ensure the continued breeding of production plant species al crops continued to decline. suitable for the northern climate necessary for proper functioning of the markets and to retain ownership of the breeding material. Availability of the necessary species is important to security of In terms of cultivated area, the market share of supply. Boreal’s cereal varieties is 53 per cent and that of Board of Directors on 21 March 2018 forage grasses about 70 per cent. In 2017, 11 new Riitta Mynttinen (Chair), Jaakko Halkilahti, Jyrki Lepistö, crop varieties bred by Boreal were accepted onto Birgitta Vainio-Mattila, Petri Vihervuori the Finnish list of plant varieties. Chief Executive Officer The largest investments were made in the renova- Jyrki Lepistö tion of greenhouses and their connection to green- Key financial indicators 2017 2016 house automation and geothermal systems, as well Net sales EURm 9,5 9,8 as in the acquisition of an experimental field and Operating income EURm 0,2 0,7 farm equipment. Operating margin % 2 ,0 7,2 Total assets EURm 11,4 11,0 Equity ratio % 70 80 Responsibility in food production has gained Gearing % -24,0 -21,3 importance Return on equity % 1,0 5,2 Plant breeding plays a key role in the adaptation Return on investment % 2,2 8,3 to climate change. The importance of local breed- Total dividends paid EURm 0,3 0,3 ing is underlined in borderlands of cultivation like Dividends received by the State EURm 0,2 0,2 Finland. Boreal is in a key position when the prior- Investments EURm 0,7 0,6 ities of agricultural production change, for exam- Personnel, total, 31 Dec 70 62 Personnel, Finland, 31 Dec 70 62 ple when the cultivation of peas and horse beans is Gender composition of the expanded to increase self-sufficiency in proteins. w/m 3/3 2/5 management team Gender composition of the w/m 3/4 3/4 Board of Directors Total tax footprint EURm 2,7 2,9 Tax footprint in Finland EURm 2,7 2,9

28 Cinia Oy

Cinia Oy is a telecommunication and IT Development of operations in 2017 conglomerate providing network, softwa- Cinia Oy (formerly known as Cinia Group Oy) is a state majority-owned limited liability company re and cloud services. Cinia operates its own under the ownership steering of the Ministry of telecommunication networks and those of Transport and Communications. In addition to its clients. Cinia’s clients are primarily pro- Cinia, the Group also includes C-Lion1 Oy (99.9%) ducers of critical services for society. and Cinia Cloud GmbH (100%) which are held directly by the parent company.

CINIA OY The group structure of Cinia was streamlined in

State shareholding 2017. In this connection, the subsidiaries Cinia One Oy, Cinia Cloud Oy and Cinia Solutions Oy 77,5 % were merged with the parent company Cinia Oy. Ownership steering State shareholding in Cinia Oy or C-Lion1 Oy has Ministry of Transport and Communications not changed. Strategic interest of ownership Promoting socially significant high-capacity telecommunications The company’s net sales in 2017 were EUR 40.6 million (EUR 36.3 million in 2016) and operating Board of Directors in 2018 income EUR 1.8 million (EUR 1.4 million in 2016). Esko Aho, Chair (as of 17 October 2017), Karri Alameri, Heidi Koskinen (as of 17 October 2017), Hanna Sievinen, The Group’s total net sales increased by approxi- Janne Yli-Äyhö (as of 17 October 2017) mately EUR 4.3 million (+12%) compared to 2016. Chief Executive Officer There was growth in almost all services, but es- Ari-Jussi Knaapila pecially in international connectivity services and software services. The investment in the C-Lion1 Key financial indicators 2017 2016 submarine cable system between 2015 and 2017 Net sales EURm 40,6 36,3 forms an essential part of the international con- Operating income EURm 1,8 1,4 nectivity services. Operating margin % 4,4 3,9 Total assets EURm 108,4 111,3 Equity ratio % 38,3 37,5 Corporate social responsibility Gearing % 72,7 113,4 Cinia’s objective is to bring social responsibility Return on equity % 1,0 1,6 into the daily business: leadership, development Return on investment % 1,9 1,6 and client solutions. The company feels that it is Total dividends paid EURm 0,1 0,3 important to act in an environmentally sustainable Dividends received by the State EURm 0,1 0,2 way and pays continuous attention to its own en- Investments EURm 6,9 22 ergy consumption and materials efficiency. Since Personnel, total, 31 Dec 231 215 2016, Cinia has employed a sustainable manage- Personnel, Finland, 31 Dec 231 215 ment model based on the UN’s sustainable devel- Gender composition of the w/m management team 1/6 1/5 opment goals. Gender composition of the w/m Board of Directors 2/3 1/6 Total tax footprint EURm 13,5 12,5 Tax footprint in Finland EURm 13,5 12,5

29 Finavia Corporation

The company maintains and develops the Record-breaking passenger volumes Helsinki-Vantaa Airport and an airport Finavia’s profitable growth continued in 2017. A total of 22.7 million passengers (20.8) travelled network covering the entire country. The through the airports of the company. The growth Group has two business areas, the Helsinki- was particularly high in international traffic which Vantaa Airport and the airport network. In increased by 11.7 per cent. addition, the company’s air transport ser- The number of passengers at the Helsinki-Vantaa vices were supplemented by its subsidiaries Airport reached a new record high of 18.9 million Airpro and Lentoasemakiinteistöt. (17.2), which was 9.9 per cent more than in the previous year. The total number of passengers at Finavia’s other airports was 3.8 million, up by 5.7 FINAVIA CORPORATION per cent on the previous year. State shareholding 100 % The net sales of Finavia Group decreased by 1.9 per Ownership steering cent in 2017. The reason for the decline was the incorporation of the air traffic control business -in Prime Minister’s Office to ANS Finland Oy as of 1 April 2017. Comparable Strategic interest of ownership net sales increased by 10.3 per cent to EUR 373.6 Preparation work related to strategic interest in progress million (338.6). Board of Directors on 19 March 2018 Harri Sailas (Chair), Katja Keitaanniemi, Annaleena Kiikonen, The Helsinki-Vantaa development programme Nina Kiviranta, Esko Pyykkönen, Erkka Valkila, Stefan Wentjärvi costing a total of EUR 900 million and extending Chief Executive Officer until the early 2020s continued as planned. Kimmo Mäki Key financial indicators 2017 2016 Sustainability efforts form a chain of good things Net sales EURm 373,6 380,9 Finavia’s sustainability efforts form a package in Operating income EURm 54,4 42,3 which all the details need to be in order. This re- Operating margin % 14,6 11,1 sults in safe and high-quality services as well as a Total assets EURm 1 074,5 1 000,9 world-class service experience. Equity ratio % 58,4 58,9 Gearing % 47,2 38,8 Safety is fundamental to all Finavia operations. Return on equity % 6,2 4,9 In environmental work, the company sets goals Return on investment % 6,1 5,1 as high as possible. Smooth travel and high-qual- Total dividends paid EURm 8,0 0 ity service are absolute goals. The company op- Dividends received by the State EURm 8,0 0 erates on a long-term basis in order to build Fin- Investments EURm 181,8 182,8 land’s competitiveness in a sustainable manner. Personnel, total, 31 Dec 2 696 2 995 The company must operate profitably. Personnel, Finland, 31 Dec 2 696 2 995 Gender composition of the The Helsinki-Vantaa Airport has been carbon neu- w/m 2/8 1/9 management team tral since August 2017. Gender composition of the w/m 3/7 3/4 Board of Directors Personnel development focussed on improving the Total tax footprint EURm 77,0 85,8 quality of management and supervision as well as Tax footprint in Finland EURm 77,0 85,8 change management and customer experience training.

30 Fingrid Oyj

The company’s main strategic objectives Review of events in 2017 are to secure the provision of reliable elect- The company’s financial year 2017 was operation- ally and financially very good from the perspective ricity and effective markets for society as of society, customers, finances and owners, inter- well as the provision of affordable services nal processes and personnel. satisfying the needs of customers. In 2017, the transmission capacity of the grid was in Grid transmission reliability was 99.9997 per cent; disturbances caused an average of 2.2 minutes of effective use and the transmission reliabili- no electricity at the connection points. Among ty remained at an excellent level. European companies with a corresponding infrastructure, Fingrid’s grid pricing was one of the lowest. The rating of customer satisfaction was 3.9 FINGRID OYJ (on a scale of 1-5), and the landowners’ feedback State shareholding on the operation was also good. 53.1% (28.2% MF, 24.9% National Emergency Supply Agency) Ownership steering The reliability of direct current lines important for the electricity market and the Finnish electricity Ministry of Finance price rose to the best level ever. During the year, Strategic interest of ownership several investment decisions were made regard- To secure the usability and trouble-free operation of electricity ing the maintenance and development of the grid. transmission and the power system in all conditions. Board of Directors on 28 March 2018 Management of the grid assets is among the best in Järvi Juhani (Chair), Anu Hämäläinen, Päivi Nerg, Sanna Syri, the world. In the spring, Fingrid ranked top in the Esko Torsti International Transmission Asset Management Chief Executive Officer Study (ITAMS) on asset management efficiency, Jukka Ruusunen as it has done in many years previously. Key financial indicators 2017 2016 Responsibility is one of the company’s values and Net sales EURm 672,0 586,1 shows in everything it does. Corporate responsi- Operating income EURm 184,8 192,0 bility is managed as an integrated part of Fingrid’s Operating margin % 27,5 32,8 management system. Total assets EURm 2113 2101 Equity ratio % 37,8 36,4 Gearing % 125,2 134,2 Return on equity % 16,7 18,8 Return on investment % 10,0 10,4 Total dividends paid* EURm 173,5 98 Dividends received by the State EURm 64,3 35,3 Investments EURm 107 142 Personnel, total, 31 Dec 355 334 Personnel, Finland, 31 Dec 355 334 Gender composition of the w/m 3/6 2/6 management team Gender composition of the w/m 2/3 2/3 Board of Directors Total tax footprint EURm 93 77 Tax footprint in Finland EURm 93 77

* The dividend will be paid in two instalments. The second instalment of a total of EUR 50.1 million will be paid if the Board of Directors so decides after the semi- annual report has been adopted.

31 Gasum Corporation

Gasum is an energy company that imports Acquisitions boost its market position natural gas to Finland for use in energy Financially speaking, the year 2017 was a success for Gasum. Its net sales increased by 10 per cent. production, industry, homes and land and The growth in net sales was supported by the posi- maritime transports. Additionally, the com- tive development of the LNG and biogas business- pany produces biogas. es. The LNG and biogas businesses account for 26 per cent of Gasum’s total net sales. In 2017, Gasum expanded into the Swedish biogas market and con- GASUM CORPORATION tinued to develop circular economy solutions. State shareholding 26.5% of Class A shares, 50.2% of voting rights (Gasonia 73.5% The rise in natural gas prices continued steadily of Class A shares, 49.8% of voting rights) throughout the year 2017. Natural gas volumes fell Ownership steering by 6 per cent due to the warm weather. Prime Minister’s Office The growth of the LNG market continued in 2017. Strategic interest of ownership The growth was strongest in maritime transport To ensure the operation of the gas transmission and supply where Skangas sales increased by about 40 per system under all circumstances cent from the previous year. In the LNG business, Board of Directors on 13 April 2018 Gasum increased its holding in the Nordic LNG Juha Rantanen (Chair), Stein Dale, Elina Engman, Timo Koponen, company Skangas to 70 per cent in June 2017. The Päivi Pesola, Elisabet Salander Björklund, Jarmo Väisänen net sales of the LNG business unit increased by 20 Chief Executive Officer per cent. The increase in volumes contributed to Johanna Lamminen the increase in net sales. The company has com- Key financial indicators 2017 2016 pleted its main investments in the LNG business, Net sales EURm 925,0 843,3 which means that growth can be expected to con- Operating income EURm 114,2 124,8 tinue in the coming years. Operating margin % 12,4 14,8 Total assets EURm 1421,2 1461,5 The production capacity in the biogas business Equity ratio % 41,6 40,8 doubled in January 2017 with the acquisition of Gearing % 99,2 102 Swedish Biogas International, which also doubled Return on equity % 14,7 19,2 the net sales of the business. Return on investment % 10,6 11,5 Total dividends paid EURm 33 50 The new Natural Gas Market Act entered into force Dividends received by the State EURm 33 50 at the beginning of 2018. The company will contin- Investments EURm 23 137 ue to prepare for the opening of the wholesale and Personnel, total, 31 Dec 409 375 retail gas market at the beginning of 2020 together Personnel, Finland, 31 Dec 288 309 with customers and stakeholders, and it is prepar- Gender composition of the w/m 3/5 3/6 ing for the separation of gas sales and distribution. management team Gender composition of the w/m 3/4 2/3 Board of Directors Total tax footprint EURm 208 195 Gasum aims for a carbon neutral future Tax footprint in Finland EURm 203 177 The pursuit of transport and industrial emissions targets is likely to increase the role of gas as a low- emission fuel. In terms of corporate responsibility, the company also invested in the harmonisation of security-related practices in various businesses and updated its corporate responsibility programme.

32 Kemijoki Oy

Kemijoki Oy produces about a third of Fin- The main economic objective of Kemijoki is cost nish hydroelectric power. Hydroelectric po- efficiency The total availability of power plants remained wer will secure Finnish energy supply in the good in 2017, at the level of 97 per cent. Thanks era of renewable energy. Kemijoki produces to abundant rain and good total availability, the approximately one third of Finnish hydropower production was 4,891 GWh which repre- electric power at 20 power plants. The elect- sented 33 per cent of the hydropower produced ricity produced by the company is sold at in Finland. At the end of the year, the water reserves were 77 per cent full which is slightly above cost to its shareholders, and the company the average. does not seek profit. The detailed preparation of the Sierilä hydroelectric power plant continued throughout the year, KEMIJOKI OY and the Supreme Administrative Court confirmed State shareholding the water use permit for the project. Kemijoki al- 50,1 % so continued the renovation of power plants and Ownership steering environmental investments as planned. Prime Minister’s Office Strategic interest of ownership Hydropower is the main form of renewable No strategic interest electricity and plays a key role in the mitigation of Board of Directors on 6 April 2018 climate change Tiina Tuomela (Chair), Risto Andsten, Elina Engman, Tapio In addition to its good qualities, hydropower also Jalonen, Tapio Korpeinen, Pekka Manninen, Jukka Ohtola has adverse environmental impacts arising from Chief Executive Officer the construction of new power plants, the regu- Tuomas Timonen lated use of current power plants and the regula- Key financial indicators 2017 2016 tion of waters. In 2017, a total of EUR 3.7 million Net sales EURm 42,4 44 was used for environmental management to mit- Operating income EURm -6,4 -5 igate the adverse environmental impacts. Out of Operating margin % -15 -11 this, the fisheries’ obligations accounted for EUR Total assets EURm 480,3 477 2.7 million. Equity ratio % 12 15 Gearing % 698,5 534,2 Kemijoki launched a Corporate Responsibility Li- Return on equity % 1,2 1,3 cense implemented in a digital learning environ- Return on investment % -1,4 -1,1 ment. By the end of 2017, all company employees Total dividends paid EURm 0,8 0,8 had been licensed. The Corporate Responsibility Dividends received by the State EURm 0,4 0,4 License was also published as the company’s con- Investments EURm 22,1 16,5 tribution to the Commitment to Sustainable De- Personnel, total, 31 Dec 36 38 velopment 2050 initiative. Personnel, Finland, 31 Dec 36 38 Gender composition of the w/m 3/3 2/5 management team Gender composition of the w/m 3/4 3/4 Board of Directors Total tax footprint EURm 26,4 27,5 Tax footprint in Finland EURm 26,4 27,5

33 Leijona Catering Oy

Leijona Catering Oy is a Finnish compa- Over 70,000 meals a day throughout Finland with ny specialising in personnel catering and the highest degree of domestic origin According to the signed contract, Leijona Catering supplementary services. Leijona Catering provides the Defence Forces with catering servic- focuses on a strategic partnership with the es in all readiness conditions. The new contract is Finnish Defence Forces and security-critical for ten years and cannot be terminated before 31 functions specifically designated by the sta- December 2027. The strategic partnership is based te administration. on close co-operation. In 2017, the company dis- continued its private-sector business.

LEIJONA CATERING OY Leijona Catering’s business continued to be profitable in 2017. The company continued its long- State shareholding term efforts to improve customer orientation and 100 % operational efficiency as well as to promote skills Ownership steering development. Prime Minister’s Office The net sales of Leijona Catering in 2017 were al- Strategic interest of ownership most at the previous year’s level and the operating To secure the operation of the Defence Forces by providing essential food services under all conditions income improved. The company’s investments totalled EUR 2.2 (1.3) million. Board of Directors on 16 March 2018 Riitta Laitasalo (Chair), Sinikka Mustakari, Teemu Penttilä, Leijona Catering expects its net sales to fall in the Juha Rannikko, Katri Westerberg, Anton Westermarck current financial year. One of the reasons for the Chief Executive Officer decline in net sales is the discontinuation of pri- Ritva Paavonsalo vate-sector business. However, the profitability is Key financial indicators 2017 2016 assumed to remain sound. Net sales EURm 71 71,1 Operating income EURm 2,8 2,5 Development of sustainable practices continued Operating margin % 4 4 Total assets EURm 26,2 28,7 Corporate social responsibility is one of Leijona Equity ratio % 70 75 Catering’s values and an integral part of the com- Gearing % -64,4 -81,2 pany’s strategy and management. The sustaina- Return on equity % 11,2 12,1 ble practices of Leijona Catering satisfy the re- Return on investment % 14,1 9,8 quirements of the ISO 14001 and OHSAS 18001 Total dividends paid EURm 5 5 standards. Ethical guidelines, subcontractors’ eth- Dividends received by the State EURm 5 5 ical guidelines, environmental policy, and occu- Investments EURm 2,2 1,3 pational health and safety systems concretise the Personnel, total, 31 Dec 442 468 company’s corporate responsibility, which in turn Personnel, Finland, 31 Dec 442 468 is guided by the company’s values and strategy. Gender composition of the w/m 3/2 2/3 Among other things, the company has set clear tar- management team gets for reducing losses and bio-waste. Gender composition of the w/m 3/3 3/3 Board of Directors As a financially strong company, Leijona Cater- Total tax footprint EURm 7,7 7,8 ing was able to take responsibility for the envi- Tax footprint in Finland EURm 7,7 7,8 ronment, to meet customer needs and to cater for the staff.

34 Meritaito Ltd

Meritaito’s field of activity comprises wa- Operating environment and challenges terway management; operation and main- Meritaito has operated in a fully competitive market since 2013. The company is the market leader tenance of canals; duties related to the pre- in its field in Finland. Meritaito has sought growth vention and mitigation of environmental from international projects, especially in hydro- damage; hydraulic engineering; design graphic surveying and selling spar buoys. During and specialist services; hydrographic sur- the course of 2017, the company carried out hy- veying; and other duties related to water- drographic surveying projects for the Norwegian and Swedish hydrographic surveying authorities. ways and construction. In 2017, the major risks and uncertainties associated with operations were related, in particular, MERITAITO LTD to the profitable outcome of international projects State shareholding and the dependence of net sales on major clients in 100 % Finland, as well as overall cost control. The compa- Ownership steering ny’s business was unprofitable despite the increase Prime Minister’s Office in net sales. The loss was increased by one-time Strategic interest of ownership costs related to business development. Also, the large vessel investments carried out in 2015 and To provide hydrographic surveying services necessary for naval preparedness under all circumstances 2016 in relation to hydrographic surveying pro- Board of Directors on 22 March 2018 jects had an impact on the result. Mats Rosin (Chair), Heikki Martela, Sinikka Mustakari, Kari Savolainen, Sanna Sonninen Systematic efficiency measures were launched during 2017. The development and efficiency Chief Executive Officer measures focused on critical business areas and Hannu Ylärinne as of 24 July 2017 processes, including procurement, tendering and Key financial indicators 2017 2016 project monitoring. Efforts are being made to use Net sales EURm 31,2 28,3 the company’s resources efficiently and to devel- Operating income EURm -3,7 -5,0 op the practices and processes. The goal is to meet Operating margin % -11,9 -17,7 customers’ needs in a cost-effective way. Total assets EURm 32,5 34,7 Equity ratio % 26,5 39,0 The new CEO, Hannu Ylärinne, started in July Gearing % 177,9 109,6 2017. Return on equity % neg. neg. Return on investment % neg. neg. Total dividends paid EURm 0 0 Meritaito’s outlook Dividends received by the State EURm 0 0 Meritaito aims to become the leading cleantech Investments EURm 0,4 6,3 company in the Baltic Sea basin. The company’s Personnel, total, 31 Dec 219 232 Personnel, Finland, 31 Dec 219 232 objective is to keep the volume of hydrographic Gender composition of the surveying and waterway management as high as w/m 1/5 0/6 management team possible. At the same time, the company is refin- Gender composition of the w/m 2/3 2/3 ing its core services and customer relationships Board of Directors and developing new intelligent solutions for the Total tax footprint EURm 6,5 6,3 protection, surveying and observation of the ma- Tax footprint in Finland EURm 6,5 rine environment under the cleantech umbrella. In the international market, the company operates under the brand name Seahow.

35 Motiva Oy

Motiva is an expert company that encou- Motiva engages in experimental activity and rages the efficient and sustainable use of coordinates a competence centre Motiva’s net sales decreased by 3.5 per cent from energy and materials. Motiva provides go- the previous year. The adjustment measures which vernment agencies, companies, municipa- started in the previous financial year were com- lities and consumers with information, so- pleted and the operating income became positive. lutions and services to enable them to make Motiva’s solvency and liquidity have remained resource-efficient, effective and sustainab- good. Motiva pays dividends of EUR 100,000 for the financial year that has ended. le choices. The Prime Minister’s Office and Motiva will -to gether work on ways to promote experimentation MOTIVA OY using the ‘Kokeilun paikka’ platform. Motiva has State shareholding also been appointed coordinator in the Keino pro- 100 % ject, a new networked competence centre for sus- Ownership steering tainable and innovative public procurement. Prime Minister’s Office Strategic interest of ownership Motiva joins the Society’s Commitment to To ensure impartial expert services for promoting energy efficiency, renewable energy and resource efficiency. Sustainable Development Board of Directors on 22 March 2018 Motiva is a state-owned company committed to Anja Kahri (Chair), Petteri Kuuva, Jukka Ohtola, Timo Tähtinen, sustainable development which encourages the ef- Eeva Vakkilainen ficient and sustainable use of energy and materi- Chief Executive Officer als. Motiva has joined the Society’s Commitment Hille Hyytiä to Sustainable Development. The commitment in- volves boosting Finland’s resource-wise economy Key financial indicators 2017 2016 through material efficiency agreements. Motiva Net sales EURm 6,2 6,5 Services Oy has been awarded the Swan Label and Operating income EURm 0,1 -0,2 Operating margin % 1 -3 the EU Ecolabel which show that it has commit- Total assets EURm 3,8 3,6 ted itself to sustainable municipal procurement. Equity ratio % 58 54 Energy and material efficiency are key ways to curb Gearing % -86,8 -84,2 climate change in the national economy, business- Return on equity % 3,5 -9,1 es and households. Motiva plays a key role in the Return on investment % 3,8 -8,9 improvement of the society’s resource efficiency Total dividends paid EURm 0,1 0 and, consequently, the competitiveness of com- Dividends received by the State EURm 0,1 0 panies. Investments EURm 0,0 0,0 Personnel, total, 31 Dec 58 64 Personnel, Finland, 31 Dec 58 64 Gender composition of the w/m 3/3 2/5 management team Gender composition of the w/m 3/4 3/4 Board of Directors Total tax footprint EURm 1,9 2,2 Tax footprint in Finland EURm 1,9 2,2

36 Nordic Morning Plc

The three new business areas established New business structure under the new strategy of Nordic Morning The new business structure is divided into three business areas, of which the Nordic Morning Group are Nordic Morning, Edita Prima business area includes several companies. Nordic and Edita Publishing. The Nordic Morning Morning Finland, Nordic Morning Sweden, Otto- business area includes one company in Fin- boni Sweden, Nordic Morning Data-Driven Con- land and several companies in Sweden. The tent, Mods Graphic Studio and CountQuest In- companies for the other two business areas, teractive all operate in the business area. Nordic Morning creates digital business solutions and da- Edita Prima Oy and Edita Publishing Oy, ta-based marketing and services. The goal is to cre- are in Finland. ate growth and customer loyalty for the client.

Edita Prima provides personalised printing servic- NORDIC MORNING PLC es to enable automated customer communication State shareholding and sales support material. 100 % Edita Publishing develops intelligent learning Ownership steering methods and information services using digital Prime Minister’s Office means and content in a new way. Strategic interest of ownership No strategic interest Anne Årneby started as the new CEO on 1 Janu- ary 2017. Board of Directors on 21 March 2018 Per Sjödell (Chair), Ingrid Jonasson Blank, Pekka Hurtola, Anni Korkiakoski, Anni Ronkainen, Jukka Ruuska Chief Executive Officer Financial performance improved Anne Årneby Nordic Morning Group’s net sales decreased in 2017 to EUR 93.4 (103.4) million. In Finland, how- Key financial indicators 2017 2016 ever, the net sales increased to EUR 45.0 (41.1) Net sales EURm 93,4 103,4 million. In Sweden, the net sales fell to EUR 47.8 Operating income EURm 5,9 -14,3 Operating margin % 6 -14 (61.7) million. In Sweden, the focus was on im- Total assets EURm 48,6 54,6 proving profitability by closing unprofitable busi- Equity ratio % 46,8 36,6 nesses and reorganising the printing business. Be- Gearing % 12,1 30,7 cause of the reorganisation, the number of person- Return on equity % 22,5 -53,5 nel decreased by about 100 persons. Return on investment % 23,3 -37,6 The Group’s reported operating income improved Total dividends paid EURm 2 2 significantly reaching EUR 5.9 (-14.3) million. The Dividends received by the State EURm 2 2 Investments EURm 0,7 0,7 improvement was EUR 20.2 million compared to Personnel, total, 31 Dec 548 653 the previous year. The result for 2017 was im- Personnel, Finland, 31 Dec 258 263 proved by non-recurring items amounting to EUR Gender composition of the 2.9 (-12.4) million. Thus, the compound effect of w/m 4/7 management team non-recurring items on the improved result was Gender composition of the w/m 3/3 3/3 EUR 15.3 million. Board of Directors Total tax footprint EURm 25,8 33 The improved financial performance together with Tax footprint in Finland EURm 8,8 9,9 non-recurring items also strengthened the Group’s balance sheet. The equity ratio rose by 11 percent- age points reaching 47 (36) per cent.

37 Patria Plc

Patria is an international provider of de- Business operations and order stock fence, security and aviation life-cycle sup- Patria Group’s new orders in the financial year 2017 amounted to EUR 309.5 million (EUR 268.5 port services and technology solutions. The million in 2016), of which 33 per cent (41 per cent) company’s products include flight training; came from outside Finland. intelligence, control and management systems; armoured wheeled vehicles; mor- The Group's R&D expenditure for the financial year was EUR 9.4 (7.3) million, representing 2.0 tar systems and composite structures for (1.5) per cent of net sales. aviation The objective is to further extend the life-cycle support services to the defence sector and to pro- PATRIA PLC vide helicopter maintenance services internation- State shareholding ally. The second growth direction is systems and 50,1 % integration business, especially intelligence, con- Ownership steering trol and management system products and services. Prime Minister’s Office Strategic interest of ownership Significant events during the financial year To secure the operation of the Defence Forces by producing essential military equipment and services in all conditions During the review period, Patria played an im- Board of Directors on 23 March 2018 portant role as a strategic partner to the Finnish Christer Granskog (Chair), Harald Aarø, Eirik Lie, Päivi Marttila, Defence Forces in connection with the HX fight- Jarle Næss, Ari Puheloinen, Gyrid Skalleberg Ingerø, er project and the preparations for the ‘Squadron Kimmo Viertola 2020’ project. Chief Executive Officer Olli Isotalo Pilot Training agreed to continue cooperation with the Finnish Aviation Academy in the new training Key financial indicators 2017 2016 centre at the Tampere-Pirkkala Airport. Net sales EURm 467,7 489,9 Operating income EURm 33,9 74,6 The Norwegian Defence Logistics Organisation Operating margin % 7,2 15,2 chose Patria to service the NH90 and Bell 412 hel- Total assets EURm 486,3 491,7 icopters of the Norwegian Defence Forces. Equity ratio % 54,0 58,3 Gearing % 27,6 8,9 Patria was awarded the Innovation of the Year Return on equity % 11,2 28,0 Award for its Patria Nemo Container solution at Return on investment % 11,9 27,7 the Future Mortar Systems conference in London. Total dividends paid EURm 16,7 31,2 Dividends received by the State EURm 8,3 15,6 Investments EURm 15,1 12,6 Events after the financial year Personnel, total, 31 Dec 2762 2750 Patria signed an agreement on the renovation and Personnel, Finland, 31 Dec 2605 2631 mid-life update of the Hamina-class missile boats Gender composition of the w/m 3/9 2/7 for about EUR 170 million. management team Gender composition of the w/m 2/8 2/6 In February, an error was found in international Board of Directors Total tax footprint EURm 78,3 77,1 marketing. As a result, several remedial measures Tax footprint in Finland EURm 73,0 77,5 were launched in the company to clarify international marketing practices.

38 Posti Group Corporation

Posti Group is a service company that pro- Financial performance in 2017 vides logistics and postal services to pri- In 2017, Posti Group’s net sales grew by 2.5 percent and stood at EUR 1,647.0 (1,607.6) million. vate individuals and the public sector. The The company’s reported operating income was company’s vision is to be the customer’s first negative at EUR -27.5 (30.7) million. Special items choice in postal, logistics and e-commerce reduced the result by EUR 69.9 (16.4) million. The services. special items include a provision of EUR 18.2 million for the lease agreements of warehouses to be closed in Russia and a write-down of EUR 33.9 POSTI GROUP CORPORATION million based on an estimate made in connection State shareholding with the restructuring of OpusCapita. The adjust- 100 % ed operating income was EUR 42.4 (47.1) million.

Ownership steering The Group’s cash flow from operating activities im- Prime Minister’s Office proved in 2017 reaching EUR 96.0 million (EUR Strategic interest of ownership 63.1 million). Posti Group paid a dividend of EUR To provide postal services throughout Finland 60.0 million in 2017 for the previous year’s result. Board of Directors on 27 March 2018 The consolidated balance sheet remained strong and the gearing ratio was -8.8 (-13.6) per cent. Markku Pohjola (Chair), Eero Hautaniemi, Petri Järvinen, Frank Marthaler, Pertti Miettinen, Marja Pokela, Suvi-Anne Siimes, Per Sjödell, Arja Talma Consignments subject to the universal service ob- Chief Executive Officer ligation accounted for 5.5 (5.6) per cent of all consignments handled by Posti Group. Operations Heikki Malinen subject to the universal service obligation account- Key financial indicators 2017 2016 ed for EUR 136.7 (135.9) million or 8.3 (8.5) of the Net sales EURm 1 647,0 1 607,6 consolidated net sales. Operating income EURm -27,5 30,7 Operating margin % -1,7 1,9 Total assets EURm 1 092,9 1 185,6 Equity ratio % 46,2 54,1 Posti Group’s operating environment and strategy Gearing % -8,8 -13,6 Posti Group’s operating environment is undergo- Return on equity % -8,0 3,9 ing major changes. Changes in consumer behav- Return on investment % -3,5 5,4 iour, increasing digitalisation, trade transforma- Total dividends paid EURm 40 60 tion, rapid growth in online commerce, tight com- Dividends received by the State EURm 40 60 petition and technological development challenge Investments EURm 77,0 92,2 Posti Group. It is important for the company to Personnel, total, 31 Dec 16 932 18 519 continuously improve the quality of customer sat- Personnel, Finland, 31 Dec 13 592 14 140 isfaction and experience. It is also important for Gender composition of the w/m 3/6 3/7 securing competitiveness and profitability. Con- management team Gender composition of the tinuous renewal is indispensable as traditional w/m 3/6 4/4 Board of Directors postal deliveries decrease. Total tax footprint EURm 312,7 354,8 Tax footprint in Finland EURm 267,8 308,0 The Board of Directors of Posti Group adopted a new strategy for 2018-2020. At the heart of the strategy, there are four goals that the company aims to achieve to deal with the ongoing transformation in the postal sector. These four goals are: success in online commerce, retaining the importance of letters to the customer, reforming the service culture of Posti Group and using digitalisation to improve Posti Group’s services.

39 Raskone Ltd

Raskone Ltd provides its customers with li- Operating profit improved even though net sales fe-cycle services for utility vehicles, and it declined Raskone’s net sales in 2017 were about seven per is Finland’s leading company specialising cent less than in the previous year. The main rea- in the servicing and maintenance of uti- son for the decline in net sales was the sale of the lity vehicles. Raskone operates in 19 loca- business of a repair shop at the Helsinki-Van- tions in Finland. The business is based on taa Airport to the repair shop’s largest customer, the company’s ability to service vehicles and Swissport Oy. machinery of all makes. Despite the decline in net sales, the company was able to increase its operating profit. The result for the financial year includes non-recurring items RASKONE LTD amounting to EUR 0.6 million. State shareholding 85 % (Governia Oy 15 %) Transport performance, a key indicator for Ras kone’s business, grew by about five per cent dur- Ownership steering ing the year. Prime Minister’s Office Strategic interest of ownership The state gave up its ownership of Raskone None. With the arrangement completed in March 2018, Board of Directors on 28 February 2018 the state gave up its ownership of Raskone Ltd. Kai-Petteri Purhonen (Chair), Sinikka Mustakari, Ilpo Nuutinen, Anu Ora, Klaus Sundström The company was sold to Lease Deal Group Plc, a Finnish conglomerate. At the same time, the gov- Chief Executive Officer ernment-owned special-purpose company Gover- Timo Seppä nia Oy gave up its ownership of Raskone. Key financial indicators 2017 2016 Net sales EURm 60,7 65,5 Operating income EURm 0,4 0,1 Operating margin % 0,7 0,1 Total assets EURm 19,9 21,7 Equity ratio % 18,3 15,4 Gearing % 156,0 145,5 Return on equity % 8,9 1,1 Return on investment % 4,0 1,3 Total dividends paid EURm 0 0 Dividends received by the State EURm 0 0 Investments EURm 1,0 0,6 Personnel, total, 31 Dec 466 492 Personnel, Finland, 31 Dec 466 492 Gender composition of the w/m 1/5 1/4 management team Gender composition of the w/m 2/3 2/3 Board of Directors Total tax footprint EURm 20,7 23,0 Tax footprint in Finland EURm 20,7 23,0

40 Suomen Lauttaliikenne Oy

Suomen Lauttaliikenne Oy is responsible Steady profit performance continued for both cable ferry and ferry services along The company’s business continued to be stable and profitable as in previous years. The compa- a total of 44 routes in different parts of Fin- ny increased its net sales slightly and the operat- land. In 2017, the company transported ing income remained almost at the previous year’s about 4 million vehicles. The company’s lar- level. The company’s investments in environmen- gest client is Southwest Finland ELY Cent- tal responsibility and the responsible renewal of its re, which is responsible for the tendering of fleet concretised when the hybrid ferry Elektra began operating on the route from Parainen to Nau- the routes. vo. The company will also continue to develop the use of electricity as an energy source for cable fer- SUOMEN LAUTTALIIKENNE OY ries. The average age of the company’s fleet is relatively high, so controlled renewal of the fleet is State shareholding still at the heart of the company’s business devel- 100 % opment. In 2017, the company’s investments to- Ownership steering talled EUR 6.7 (10.4) million. Prime Minister’s Office Strategic interest of ownership During the company’s history, the order backlog has always been strong and therefore business has To secure cable ferry and ferry services as part of the public road network been very profitable and stable. However, the com- Board of Directors on 22 March 2018 pany’s contract portfolio has been reduced, which Juha Heikinheimo (Chair), Pekka Hurtola, Kati Niemelä, means that the development of new service con- Matti Pajula, Annika Parkkonen cepts and the improvement of internal efficien- Chief Executive Officer cy will considerably increase in importance. The Mats Rosin bridge decisions made will also contribute to the decline in company profits in the coming years. Key financial indicators 2017 2016 Strengthening competition is one of the company’s Net sales EURm 52,1 50,8 main challenges. The company updated its strat- Operating income EURm 9,3 9,4 egy to meet future opportunities and challenges. Operating margin % 18 19 Total assets EURm 61,7 58,9 At present, the Southwest Finland ELY Centre is Equity ratio % 75 76 responsible for the tendering of routes, but the re- Gearing % -33 -34 gional government reform may bring about major Return on equity % 16,8 17,9 changes in the route tendering process and lead Return on investment % 21,0 22,1 to fragmentation of the contracting organisation. Total dividends paid EURm 6 6 Dividends received by the State EURm 6 6 Investments EURm 6,7 10,4 Personnel, total, 31 Dec 309 301 Development of environmental friendliness Personnel, Finland, 31 Dec 309 301 In the case of Suomen Lauttaliikenne, corporate Gender composition of the responsibility focusses on vessel and passenger w/m 2/5 2/6 management team safety, high quality and reliability as well as envi- Gender composition of the w/m 2/3 2/3 ronmental friendliness. The company has particu- Board of Directors Total tax footprint EURm 20,5 21,1 larly invested in the environmental responsibili- Tax footprint in Finland EURm 20,5 21,1 ty of the fleet and ECO driving training. It is likely that future bidding competitions will increase the emphasis on environmental considerations and energy efficiency, which will turn the company’s expertise and fleet into a competitive advantage.

41 Mint of Finland Ltd

Mint of Finland manufactures circulation Financial performance in 2017 and commemorative coins as well as coin The Group’s net sales increased on the previous year. In 2017, the net sales reached EUR 85.0 blanks. The bulk of production is exported. (66.6) million. The operating income before de- The main market areas include Europe, preciation on consolidated goodwill was positive, Asia, Africa and Latin America. The com- but the operating showed a loss of EUR -1.9 (-1.6) pany is one of the world’s leading coin ex- million. Depreciation on consolidated goodwill is porters. The customers include the central EUR 1.9 million per year and the Group’s goodwill on the balance sheet is EUR 5.9 million. The banks of various countries and mints on a consolidated result for the period showed a loss of global scale. EUR -2.3 (-2.2) million.

Despite the Group’s negative result, the company’s MINT OF FINLAND LTD equity ratio remained at a satisfactory level of 44 State shareholding (45) per cent. This was partly due to the balance 100 % sheet reduction which, however, is not a viable so- Ownership steering lution. The company’s investments totalled EUR Prime Minister’s Office 1.2 (2.2) as foreseen. To improve its business results, Mint of Finland will continue to implement Strategic interest of ownership its reform programme. No strategic interest Board of Directors on 28 March 2018 Operating environment Kaisa Vikkula (Chair), Pekka Leskinen, Päivi Nerg, Petri Vihervuori, Ari Viinikkala Competition is fierce in the industry, which has a Chief Executive Officer negative impact on margins. New players are en- tering the blanks business particularly in the inter- Jonne Hankimaa national market, from China, for instance, which Key financial indicators 2017 2016 will further increase competition. The blanks mar- Net sales EURm 85,0 66,6 ket has overcapacity and demand peaks can cause Operating income EURm -1,8 -1,6 bottlenecks. In the circulation coin business, the Operating margin % -2,1 -2,5 variation in capacity utilisation reflects the cyclical Total assets EURm 59,4 64,8 nature of the industry, which is due to the purchas- Equity ratio % 44,3 45,0 ing cycles of central banks. The business of Mint Gearing % 86,5 78,9 of Finland is highly project-related. Global overca- Return on equity % -8,0 -7,4 Return on investment % -3,4 -2,9 pacity and the different circumstances of the play- Total dividends paid EURm 0 0 ers make the business challenging. Dividends received by the State EURm 0 0 Due to the international operating environment, Investments EURm 1,2 2,2 sustainability is emphasized in Mint of Finland op- Personnel, total, 31 Dec 174 173 erations. The company has customers on four con- Personnel, Finland, 31 Dec 62 65 tinents and an active network of representatives Gender composition of the w/m 3/3 4/2 management team close to customers. In addition, the company buys Gender composition of the raw materials from selective suppliers around the w/m 2/3 3/3 Board of Directors world. Mint of Finland has a Business Code of Con- Total tax footprint EURm -2,0 0,9 duct. Sustainability requirements on partners are Tax footprint in Finland EURm -1,7 0,2 recorded in the Business Partner Code of Conduct.

42 Finnish Seed Potato Centre Ltd

The Finnish Seed Potato Centre Ltd (SPK) is Commercialisation of new methods a Finnish seed potato-producing enterprise The main production area of the Seed Potato Cen- tre covers the municipalities of Tyrnävä and Lim- whose field of activity comprises the clea- inka. The area is in the High-Grade quality zone of ning and maintenance of seed material as seed potatoes recognised by the European Union. well as the production, packaging and mar- In addition, the Seed Potato Centre has its produc- keting of basic and certified seed grades. tion at carefully chosen contract farms throughout Finland.

FINNISH SEED POTATO CENTRE LTD SPK’s net sales for the financial year from 1 August

State shareholding 2016 to 31 July 2017 increased by 14.5 per cent from the previous year which was because the pre- 22 % vious financial year was only 8 months. The oper- Ownership steering ating income showed a loss. Prime Minister’s Office Strategic interest of ownership The company’s outlook is stable, but margins are The promotion of plant health and the maintenance of security small. The company’s earnings are entirely de- of supply by providing seed potato material that is healthy and pendent on the potato growing season and the de- suitable for Finnish conditions. velopment of the market price of different varie- Board of Directors on 1 March 2018: ties. SPK will seek to increase net sales and im- Ossi Paakki (Chair), Lars Jussila, Antti Lavonen, Pentti prove profitability with new methods. Lähteenoja, Kauko Matinlauri, Jyrki Siira Chief Executive Officer The company has continued the development and Paula Ilola commercialisation of the aeroponic method related to seed potato production. Thanks to the new Key financial indicators 2017 2016 method, new and promising potato varieties are Net sales EURm 3,2 2,8 introduced faster onto the Finnish market from Operating income EURm 0,0 0,1 Operating margin % 0,0 3,7 domestic seeds, thus reducing the dependency on Total assets EURm 3,4 3,3 foreign registered seeds. The method has also at- Equity ratio % 62,1 66,2 tracted a lot of international attention. Gearing % 52,1 41,4 Return on equity % -2,6 6,5 Return on investment % -1,0 5,1 Prevention of plant diseases and security of Total dividends paid EURm 0,0 0,0 supply Dividends received by the State EURm 0,0 0,0 SPK seeks to attain corporate responsibility Investments EURm 0,0 0,0 through the prevention of plant diseases and the Personnel, total, 31 Dec 14 14 promotion of supply security. The company is in- Personnel, Finland, 31 Dec 14 14 volved in regional and nationwide research con- Gender composition of the w/m 4/3 4/3 cerning potato planting and plant diseases. management team Gender composition of the w/m 0/6 0/6 Board of Directors Total tax footprint EURm 0,0 0,0 Tax footprint in Finland EURm 0,0 0,0

43 Suomen Viljava Oy

Suomen Viljava Oy is Finland’s largest com- The company seeks growth pany specialising in the handling and stora- During 2017, Suomen Viljava completed the largest investments in the company’s 15-year history. ge of cereals and agribulk raw materials. It The investments of EUR 7 million were the larg- provides storage and handling services for est in the company’s history. These investments companies in Finland and those operating reflect customer expectations and market chang- in the export, import and transit business. es and improve readiness for national emergency situations. The investments focused on more efficient ship loading equipment, new storage capac- SUOMEN VILJAVA OY ity and drying services. State shareholding Harbour and loading investments will satisfy mar- 100 % ket needs as the size of ships increase with in- Ownership steering creased exports to North Africa and the Far East. Prime Minister’s Office The increase in the Finnish farm size requires Strategic interest of ownership more drying services. To ensure the functioning of the cereal storage and handling market in a manner that is neutral in terms of competition and to Suomen Viljava wants to invest in growth by in- secure the undisturbed execution of tasks related to the supply security of the food chain and EU intervention operations. creasing its market share in cereal exports and imports as well as the storage and handling of bi- Board of Directors on 29 March 2018 oenergy products. In addition, the company re- Petri Alava (Chair), Thomas Isaksson, Esko Pyykkönen, Helena Tammi, Tanja Viljanen sponds to the growing demand for vegetable protein-based foods by investing in the production of Chief Executive Officer horse bean and pea protein products. Pasi Lähdetie Key financial indicators 2017 2016 Net sales EURm 16,7 17,5 Suomen Viljava’s financial performance Operating income EURm 4,4 4,0 During 2015 and 2016, the emergency stocks of Operating margin % 26,5 22,9 grain were significantly reduced by a Government Total assets EURm 27,2 25,2 decision. The impact of the decreased volume in Equity ratio % 74,2 78,6 emergency stocks on Viljava’s net sales are ap- Gearing % 23,1 0,0 Return on equity % 18,4 16,6 proximately EUR 2 million annually (more than Return on investment % 18,6 17,9 10 per cent of net sales). The company’s net sales Total dividends paid EURm 3,3 3,3 fell by -4.6 (-11.1) per cent during the 2017 finan- Dividends received by the State EURm 3,3 3,3 cial year. The company strives to increase its net Investments EURm 7,6 4,2 sales through targeted investments. The decline in Personnel, total, 31 Dec 62 74 net sales has been offset by improved profitability. Personnel, Finland, 31 Dec 62 74 The company’s operating margin was 26.3 (22.9) Gender composition of the and the return on equity more than 15 per cent. w/m 1/2 1/2 management team Gender composition of the Although the company’s investment rate was over w/m 2/3 2/3 Board of Directors 40 per cent in 2017, the company’s balance sheet Total tax footprint EURm 4,4 5,4 remained very strong. Suomen Viljava’s equity ra- Tax footprint in Finland EURm 4,4 5,4 tio was 74.3 (78.6) per cent. The company distributes 89.8 (100.6) per cent of the profit for the financial year as dividends.

44 Tapio Ltd

Tapio offers solutions for sustainable, res- A clear improvement in financial performance ponsible and versatile use of forests and After a few fairly weak years in terms of profitability, the company aimed to improve the profitabil- natural resources. In addition to the pa- ity of all its business areas and reduce fixed costs. rent company, which provides expert ser- The company managed to increase its net sales as vices for the State, the Tapio Group is also well as cut costs, which resulted in the operating comprised of Metsäkustannus Oy and Tapio income showing a clear profit. To improve perfor- Silva Ltd, which also includes a seed pro- mance, the company also started to consolidate the Group structure. The company’s development duction business in addition to the provisi- has been supported by the favourable operating on of expert services. environment of forest bioeconomy. Challenges to the operating environment include increased com-

TAPIO LTD petition and pressures related to the development of public funding. State shareholding 100 % The company also updated its strategy, which is Ownership steering heavily based on digitalisation. The company iden- Prime Minister’s Office tified four key business areas; consulting, digital solutions, seed production and media. Tapio will Strategic interest of ownership continue to invest heavily in product and service To ensure the use of good quality forest seed material suitable for Finnish conditions accounting for long-term security of supply development and aims for profitable growth and expanding its customer base. Digitalisation will Board of Directors on 23 March 2018 strongly shape the forest sector and forestry prac- Timo Piekkari (Chair), Harri Lauslahti, Tuula-Riitta Markkanen, Matti Mäkelä, Marja Pokela tices. The Media business accounts for 43 per cent of Tapio’s net sales, which means that being in the Chief Executive Officer forefront of digitalisation is necessary for future Panu Kallio success also from the shareholders’ point of view. Key financial indicators 2017 2016 In addition to media, digitalisation is evident, for Net sales EURm 9,8 9,0 example in the use of open forest resources and ge- Operating income EURm 0,7 -0,4 ographic data, as well as in the digitalisation of the Operating margin % 7 -5 forest management recommendations. Total assets EURm 15,2 14,7 Equity ratio % 65,0 62,5 Gearing % -55,6 -39,8 Importance of sustainable development increases Return on equity % 6,6 -4,9 in the operating environment Return on investment % 7,6 -3,9 Tapio’s environmental impacts are mainly indi- Total dividends paid EURm 0,3 0 rect. Such impacts include the mitigation of cli- Dividends received by the State EURm 0,3 0 mate change and increasing the sustainable use Investments EURm 0,1 0,3 of wood, as well as minimising the environmental Personnel, total, 31 Dec 57 56 impacts of forestry. The company’s own sustaina- Personnel, Finland, 31 Dec 57 56 bility objectives focused on improving the custom- Gender composition of the w/m 3/3 3/3 er experience and the development and welfare of management team Gender composition of the the personnel. Customer satisfaction and employ- w/m 3/2 3/1 Board of Directors ee satisfaction remained at a good level. Total tax footprint EURm 1,9 1,3 Tax footprint in Finland EURm 1,9 1,3

45 Vapo Oy

Vapo is an expert organisation that supplies Fuel stocks have been sufficient peat and wood-based fuels to its energy cus- During the financial year from 1 May 2016 to 30 April 2017, Vapo’s profitability improved and the tomers. Vapo itself also produces heat and measures to improve the balance sheet succeed- electricity from these local raw materials. ed, which was reflected in its strong cash flow. This Vapo’s product range also includes Kekkilä was also supported by reduced stocks of pellets and Hasselfors Garden products and envi- and forest chips as well as the smaller than expect- ronmental business solutions. ed stocks of energy peat due to poor peat production during the summer.

VAPO OY During the financial year which started on 1 May 2017, Vapo’s net sales are expected to exceed the State shareholding comparable net sales for the previous year. Op- 100 % erating profit is expected to improve clearly from Ownership steering the comparison year if the heating season contin- Prime Minister’s Office ues as normal. New business operations will not Strategic interest of ownership generate significant revenue during the current fi- To ensure the availability of domestic fuels for energy production nancial year. in all circumstances. Vapo’s business operations are based on three Board of Directors on 9 October 2017 business areas, namely Energy, Grow & Care and Jan Lång (Chair), Tuomas Hyyryläinen, Juhani Järvelä, Risto Kantola, Pirita Mikkanen, Minna Pajumaa, Minna Smedsten, New Businesses. Of the new business operations, Markus Tykkyläinen Vapo Fibers uses peat to develop future materials Chief Executive Officer for the needs of, for example, the packaging and Vesa Tempakka construction industry. Vapo Carbons uses peat Key financial indicators 2017 2016 to produce activated carbon in a new production Net sales EURm 392,1 459,8 plant. Operating income EURm 20,0 8,6 The sale of Vapo’s additional land assets, which Operating margin % 5,1 1,9 started in late 2017, has got off to a good start. Total assets EURm 812,4 795,0 Equity ratio % 43,0 37,6 Gearing % 79,4 127,2 Corporate responsibility - part of everyday Return on equity % 2,6 -1,5 business Return on investment % 3,0 1,7 Total dividends paid EURm 4,0 4,0 Vapo’s corporate responsibility focuses on envi- Dividends received by the State EURm 2,0 2,0 ronmental responsibility and measures used by Investments EURm 39,6 38,5 the company to minimise impacts on the environ- Personnel, total, 31 Dec 776 916 ment and waters. Personnel, Finland, 31 Dec 516 654 Vapo’s goal is to minimise occupational accidents. Gender composition of the w/m 2/9 2/11 management team During the financial year, the number of accidents Gender composition of the in proportion to working hours was halved and the w/m 3/5 2/4 Board of Directors number of occupational safety observations more Total tax footprint EURm 40,5 35,6 than doubled. Tax footprint in Finland EURm 28,7 23,2 Vapo is a leading bioenergy developer in Finland and in the Baltic Sea region. Imported fuels account for approximately 70 per cent of the energy used in Finland. Peat accounts for about 4 per cent of the total energy used in Finland, which makes it an important source of domestic energy.

46 VR-Group Ltd

VR is a service company for travel, logistics Net sales picked up and infrastructure that operates not only in VR’s efforts to increase the popularity of rail travel were reflected in the increase in travel volumes. Finland, but also in other countries such as The increase in domestic long-distance traffic was Sweden and Russia. The company operates 8 per cent. The net sales of passenger services grew in three segments: VR, providing passenger by more than 9 per cent due to solid demand. The services; VR Transpoint, providing logistics growth of revenue in other business areas was ap- services; and VR Track, specialising in inf- proximately 3 per cent. rastructure construction. Passenger servi- The Group’s operating income improved clearly ces include bus and coach services in addi- from the previous year. The improvement in the tion to rail traffic. performance of passenger services was based on the increase in travel volumes and the resulting improvement in the train filling rate. In logistics, VR-GROUP LTD the price level declined which led to a slight de- State shareholding crease in profitability despite higher transport vol- 100 % umes. VR Track improved its profitability considerably following the completion of the restructur- Ownership steering ing programme for the Swedish business that per- Prime Minister’s Office formed weakly in the previous year. VR invested Strategic interest of ownership almost EUR 80 million to new rolling stock. The Ensuring the future of rail transport main investments concerned control carriages Board of Directors on 12 April 2018 for passenger traffic, double-decker carriages and Hannu Syrjänen (Chair), Heikki Allonen, Pekka Hurtola, electric locomotives. The Group’s balance sheet Roberto Lencioni, Tuija Soanjärvi, Kirsi Sormunen, and financial position remained strong. Maija Strandberg Chief Executive Officer Rolf Jansson Passenger rail transport will be opened for Key financial indicators 2017 2016 competition Net sales EURm 1251,5 1186,7 In late summer, the Ministry of Transport and Operating income EURm 110,3 43,3 Communications stated that the passenger trans- Operating margin % 8,8 3,6 port system will open for competition in an accel- Total assets EURm 1817,8 2002,2 erated timetable. The first traffic area to be put out Equity ratio % 67,4 68,8 to open tender will be commuter traffic in southern Gearing % 5,9 -1,7 Finland. The previously announced tendering of Return on equity % 6,1 1,5 commuter rail services in the Helsinki Metropoli- Return on investment % 7,4 3,0 tan Area will proceed under the leadership of Hel- Total dividends paid EURm 100 190* sinki Regional Transport Authority (HSL), so that Dividends received by the State EURm 100 190* the tendered services will be operational in 2021. Investments EURm 129,0 101,4 Personnel, total, 31 Dec 7540 7898 As an essential part of the preparation of the ten- Personnel, Finland, 31 Dec 7113 7428 dering by the Ministry of Transport and Communi- Gender composition of the w/m cations, the intention is to separate operations re- management team 1/8 3/7 lated to real estate, maintenance and rolling stock Gender composition of the w/m Board of Directors 3/4 3/4 into special-purpose companies. When complete, Total tax footprint EURm 306,4 301,8 these corporate arrangements will have a signifi- Tax footprint in Finland EURm 293,5 291,6 cant impact on the VR-Group. VR continued its determined efforts to develop responsibility. Cus- * Includes a capital repayment of EUR 100 million tomer orientation is the key theme of responsibility in all business areas. Development of environmental promises and security has been steady.

47 12 Special assignment companies

Air Navigation Services Finland Oy

Air Navigation Services Finland Oy (ANS Development of operations in 2017 Finland) is responsible for the manage- ANS Finland is a wholly state-owned limited liability company in respect of which ownership steer- ment of Finland’s airspace including route ing is exercised by the Ministry of Transport and and air navigation services at the airports Communications. in Lappeenranta, Seinäjoki and Mikkeli owned by Finavia. Additionally, the com- The company commenced operations on 1 April 2017 when Finavia Corporation’s all air navigation pany carries out air rescue and territorial operations and Avia College, an institution provid- surveillance duties. ing air navigation training, were taken over by this new company.

AIR NAVIGATION SERVICES FINLAND OY The company’s net sales in 2017 were EUR 63.9 State shareholding million and operating income EUR 9.3 million. 100 % During its first year of operation, ANS Finland suc- Ownership steering cessfully continued the efforts to improve produc- Ministry of Transport and Communications tivity: at the end of 2017, the company employed Strategic interest of ownership 435 people while a couple of years earlier, a total To maintain and develop Finland’s air route system, provide short- of over 600 employees were needed to carry out range and approach control services for civil and military aviation the same duties. The improved productivity is al- as well as offer air navigation services in Finland and abroad. so reflected in customer fees. Board of Directors in 2018 Pertti Korhonen, Chair (as of 10 Oct 2017), In November 2017, ANS Finland adopted a new Teemu Penttilä (as of 17 March 2017), strategy to which the company staff made a sig- Asta Sihvola-Punkka (as of 17 March 2017) nificant contribution. As foreseen in the strate- Chief Executive Officer gy, the company seeks to expand its business by Raine Luojus developing the existing products and engaging in Key financial indicators 2017 2016 more intensive sales efforts, improving cost effi- Net sales EURm 63,9 ciency and offering new business opportunities to Operating income EURm 9,3 other operators. Operating margin % 14,5 Total assets EURm 38,6 ANS Finland’s objective regarding the standard of Equity ratio % 42,8 service is to ensure its air traffic control system does Gearing % -9,1 not cause any delays. This goal was achieved in 2017. Return on equity % 42,9 Return on investment % 44,5 Total dividends paid EURm 0 Corporate social responsibility Dividends received by the State EURm 0 Due to the nature of ANS Finland’s operations, Investments EURm 7,9 corporate social responsibility is an inherent part Personnel, total, 31 Dec 456 of the corporate culture and identity. In concrete Personnel, Finland, 31 Dec 456 terms, the CSR efforts are governed by the compa- Gender composition of the w/m 0/9 management team ny’s values, strategy, risk management policy, the Gender composition of the guidelines issued by the Government and interna- w/m 1/2 Board of Directors tional regulation of the air navigation sector. The Total tax footprint EURm 19,6 company’s remuneration policies are consistent Tax footprint in Finland EURm 19,6 with the remuneration guidelines for state-owned companies issued by the Government.

48 A-Kruunu Oy

A-Kruunu Oy is a wholly state-owned not- Development of operations in 2017 for-profit company engaged in the construc- The company’s net sales in 2017 reached EUR 3.6 (1.9) million and total assets EUR 128.4 (87.9) tion of rental housing. Its construction ma- million, and its operations have been expanding nagement operations commenced in 2014. rapidly. During the reporting period, the compa- At the end of 2017, the company owned 497 ny launched the construction of 374 new housing affordable housing units. Its objective is to units with 215 units completed over the same pe- commission the construction of some 400 riod. The company will focus on acquiring plots to enable construction in the coming years. low-cost rental units in the Helsinki region every year. Management of the special assignment

A-KRUUNU OY The company’s mission is to build and own state- subsidised rental housing in the Helsinki region at State shareholding a reasonable cost and rent level. In 2017, A-Kruunu 100 % commissioned the construction of 374 rental units Ownership steering with long-term interest subsidies while the total Ministry of the Environment number of equivalent units to be built in the Hel- Strategic interest of ownership sinki region amounted to approximately 1,800. To build and own state-subsidised rental housing in the Helsinki A-Kruunu accounted for some 20 per cent of the region at a reasonable cost and rent level. building starts. A-Kruunu has been engaged in the Board of Directors on 15 March 2018 construction of affordable housing across the Hel- Hannu Puttonen (Chair), Ari Eschner, Sinikka Mustakari, sinki region, having currently projects in 13 of the Eero Saastamoinen region’s 14 municipalities either completed, un- Chief Executive Officer der construction or being planned. The demand Jari Mäkimattila for the housing units is intense with an occupan- Key financial indicators 2017 2016 cy rate of 99.5 per cent. Net sales EURm 3,6 1,9 The company is actively involved in the efforts to Operating income EURm 0,8 0,2 develop housing. Currently, it is engaged in an Operating margin % 23,5 10,1 experimental project to compare timber and con- Total assets EURm 128,4 87,9 crete as construction materials. Other projects in- Equity ratio % 24,1 34,8 clude a multistorey residential building for urban Gearing % 200,0 85,9 families with children and a group rental hous- Return on equity % 0,9 0,5 ing concept. Return on investment % 0,9 0,4 Total dividends paid EURm 0 0 A-Kruunu’s resident governance system was de- Dividends received by the State EURm 0 0 signed and adopted in 2017. The tenant turnover Investments EURm 48,7 43,4 was 12.3 per cent and the score in the resident sat- Personnel, total, 31 Dec 10 6 isfaction survey 3.99 out of 5. Personnel, Finland, 31 Dec 10 6 Gender composition of the w/m management team 2/3 1/2 Gender composition of the w/m Board of Directors 1/3 1/3 Total tax footprint EURm 5,2 5,7 Tax footprint in Finland EURm 5,2 5,7

49 Alko Inc.

The monopoly in the retail sale of alcohol In Alko's stores visited 57.3 million customers in 2017. According to the National Customer Service is designed to restrict the availability of al- Survey, the company has provided the best cus- coholic beverages while not compromising tomer service since 2012 and it held its ranking customer service. Alko Inc’s online store as the first retail company also in 2017 (Talous- and retail network of 355 outlets covers the tutkimus Oy). whole of Finland. Additionally, there are 60 A total of 4.6 million presented proof of age when pick-up points to complement the network requested at the outlets. Additionally, the compa- of shops. ny carried out 0.67 million checks on suspicion of intoxication in connection with purchases and 0.39 million checks on suspicion of procurement ALKO INC. for others. The score in the mystery shopping test State shareholding measuring the success of age checks by outlets was 100 % 95 pre cent, exceeding the 91 per cent target.

Ownership steering Sixty per cent of Finns consider Alko’s retail mo- Ministry of Social Affairs and Health nopoly as a positive way of containing the ill-ef- Special assignment fects of alcohol (Kantar TNS Oy and the National Special assignment defined in section 23 of the Alcohol Act Institution for Health and Welfare 2018). (1102/2017). Board of Directors in 2018 In accordance with the plan of action adopted by its Supervisory Board, Alko works in close collab- Board of Directors (26 April 2018) Harri Sailas (Chair), Juhani Eskola, Kuisma Niemelä, oration with various organisations to alleviate al- Ulrika Romantschuk, Kirsi Varhila, Pekka Perttula, cohol-related problems. Alko continued its efforts Kirsi Paakkari, Mikko Eronen (staff representative), Riina Väntsi (staff representative) under the “Selvästi hyvää työtä” (Sober at Work) Chief Executive Officer and “Lasten seurassa” (With Children) campaigns in 2017. One of the most important projects in Leena Laitinen the first-mentioned programme was the training Key financial indicators 2017 2016 course for supervisors organised by the A-Clinic Net sales EURm 1174,8 1162,8 Foundation encouraging them to address drink Operating income EURm 52,6 47,3 problems at work. The highlight of the With Chil- Operating margin % 4,5 4,1 dren programme was the “Et ole yksin” (You are Total assets EURm 271,2 258,4 not alone) workshop focusing on the problems ex- Equity ratio % 31,7 29,4 perienced by the near relatives as a result of the Gearing % -147,4 -143,5 Return on equity % 50,2 50,8 misuse of alcohol. Performances of the Fragile play Return on investment % 65,2 63,4 dealing with alcoholism in the family continued. Total dividends paid EURm 32 30 Dividends received by the State EURm 32 30 Investments EURm 7,9 7,4 Personnel, total, 31 Dec 2646 2655 Personnel, Finland, 31 Dec 2646 2655 Gender composition of the w/m 5/3 5/3 management team Gender composition of the w/m 3/4 3/4 Board of Directors Total tax footprint EURm 644,7 645 Tax footprint in Finland EURm 644,7 645

50 Baltic Connector Oy

Baltic Connector Oy is a state-owned com- Balticconnector project pany responsible for constructing Finland’s The project foresees the construction of a natural gas pipeline between Inkoo, Finland, and Paldis- part of the Balticconnector gas pipeline bet- ki, Estonia, including the above-ground pipelines ween Finland and Estonia. Once completed, in Estonia to link Balticconnector to the gas trans- Balticconnector will link the natural gas mission networks of the two countries. Twenty one networks of Finland and the Baltic count- kilometres of the pipeline will be laid in Finland, 77 ries and make it possible to open the gas km under water and 55 km in Estonia. Addition- ally, compressor stations will be built in Finland markets in Finland. and Estonia. The two-way pipeline is capable of carrying 7.2 cubic metres of gas per day. EU fund- BALTIC CONNECTOR OY ing will account for 75 per cent of the project costs.

State shareholding 100 % Ownership steering Operations during the reporting period Ministry of Economic Affairs and Employment Detailed design of the subsea pipe, above-ground pipe and compressor stations is practically com- Special assignment pleted. All the most important licenses have been To build a gas transmission pipeline connecting the natural gas networks of Finland and Estonia issued by the authorities. The biggest procurement projects have been launched and many of them al- Board of Directors on 21 March 2018 ready completed. The key suppliers have been se- Esa Härmälä (Chair), Päivi Janka, Antero Jännes, Jarmo Väisänen lected in a bidding process consistent with EU leg- islation. Chief Executive Officer Herkko Plit Terrain surveys were commenced last autumn and Key financial indicators 2017 2016 actual construction will commence in spring 2018. Net sales EURm 0 0 Due consideration in determining the location of Operating income EURm -1,1 -0,4 the pipeline has been given to current and future Operating margin % 0 0 land use, zoning and environmental considera- Total assets EURm 42,6 31,2 tions. At the same time, efforts have been made to Equity ratio % 78,6 76,3 minimise in-service harmful impacts on people, Gearing % -102,5 -167,5 organisms and the environment. Return on equity % -4,9 -2,7 Return on investment % -4,7 -2,7 The company has also been involved in the efforts Total dividends paid EURm 0 0 to develop the Finnish and Baltic gas markets in Dividends received by the State EURm 0 0 collaboration with stakeholders. Investments EURm 17,7 5,0 Personnel, total, 31 Dec 12 11 Personnel, Finland, 31 Dec 12 11 Gender composition of the w/m management team 3/3 2/3 Gender composition of the w/m Board of Directors 1/3 1/2 Total tax footprint EURm -1,3 -0,2 Tax footprint in Finland EURm -1,3 -0,2

51 CSC - IT Center for Science Ltd

CSC is a Finnish centre of information Solutions for research and education technology expertise which provides world- CSC offers a wide range of scientific calculation, data management, analysis and research manage- class ICT services for research, education, ment services and customer training. culture and public administration for the benefit of society at large. The demand for services required for research purposes continued to grow. Service development efforts focused on the services required for artificial CSC - IT CENTER FOR SCIENCE LTD intelligence research and the processing of sensitive State shareholding research data. A pilot project was launched to ensure 70 % the long-term availability of research findings. The Open Science and Research project launched by the Ownership steering Ministry of Education and Culture was successfully Ministry of Education and Culture completed, to be followed by FAIRDATA services. Special assignment Interaction with research institutes was intensified To maintain and develop a centralised IT infrastructure for the to make it possible to extend service offerings and ex- provision of nationwide IT services pert assistance to new areas of research. Board of Directors on 5 May 2017 Mirjami Laitinen (Chair), Mika Hannula, Anu Harkki, In 2017, preparations were made to procure the Pentti Heikkinen, Heikki Mannila, Jouko Paaso infrastructure required for the Data Management Chief Executive Officer and Calculation project under the DL2021 Devel- Kimmo Koski opment Programme, to carry out a mid-life up- Key financial indicators 2017 2016 grade of the Funet research and teaching network Net sales EURm 40,5 36,8 and develop the range of services. Operating income EURm 1,6 0,3 CSC’s nationwide solutions facilitate practical ar- Operating margin % 3,8 0,7 rangements in cooperation in training and educa- Total assets EURm 26,4 17,4 tion transcending organisational boundaries. In Equity ratio % 27,6 27,9 2017, an increasing number of people were able to Gearing % -314,0 -301,5 benefit from digitisation using the solutions devel- Return on equity % 39,9 8,0 oped by CSC for all levels of the educational system. Return on investment % 49,6 10,7 Total dividends paid EURm 0 0 Dividends received by the State EURm 0 0 Investments EURm 0,2 0,3 Solutions in support of digitisation in public Personnel, total, 31 Dec 317 289 administration Personnel, Finland, 31 Dec 317 289 CSC provides a complete range of data management Gender composition of the w/m and utilisation solutions in support of interopera- management team 2/4 2/10 bility and knowledge-intensive management. Gender composition of the w/m Board of Directors 2/4 3/4 CSC’s role as a partner in government-launched Total tax footprint EURm 15,5 12,7 development projects was further strengthened Tax footprint in Finland EURm 15,5 12,7 by the schemes to centralise the system for applying for state subsidies; collect financial statistics on municipalities and counties; explore the potential of harnessing data analysis, reporting and artificial intelligence; as well as to contribute to the eFinland projects and the planning of the genome centre. Pilot projects were launched to design a stronger authentication system to improve the management of identities and access rights and develop the MPASSid authentication solution intended for basic education.

52 Finnpilot Pilotage Ltd

Finnpilot Pilotage provides pilotage servi- Growth in traffic volumes generated revenues ces to ensure safety at sea and prevent any After a prolonged recession, export and import volumes started growing, which increased pilot- environmental damage caused by shipping. age assignments by 3.4 per cent. The number of About every third vessel calling in Finnish nautical miles under pilotage grew by 4.6 per cent. ports makes use of Finnpilot’s services. The company was able to handle 99.9 (99.8) per cent of the pilotage assignments within the target service hours. FINNPILOT PILOTAGE LTD

State shareholding Financially, 2017 was a successful year for the 100 % company. This was mainly due to the increase in pilotage assignments and successful containment Ownership steering of costs. Pilotage fees were increased as of the be- Prime Minister’s Office ginning of 2017 by 1.4 per cent. As a decision was Special assignment made to keep the pilotage fees unchanged in 2018, To provide pilotage services and discharge other functions and cost efficiency, process flow and improved over- duties specified in the Finnish Pilotage Act in the water areas defined in said act all efficiency will continue to play a key role in the Board of Directors on 21 March 2018 future.

Seija Turunen (Chair), Johanna Karppi, Tuula-Riitta Markkanen, The company’s Chief Executive Officer and Pilot- Petri Peltonen, Kimmo Viertola, Jouni Räty age Director were replaced during the reporting Chief Executive Officer period, and the company updated it strategy based Kari Kosonen on harnessing digitisation in shipping. Finnpilot Key financial indicators 2017 2016 is making determined efforts to network with the Net sales EURm 38,1 36,5 developers of new waterborne traffic technologies. Operating income EURm 2,6 1,5 An important role in the company’s development Operating margin % 6,9 4,2 work is played by the ePilotage experiment due for Total assets EURm 27,5 29,6 completion in 2020. It calls for broad-based coop- Equity ratio % 69,4 70,9 eration with other maritime operators. Gearing % -34,3 -34 Return on equity % 11,0 4,6 The company’s financial year was overshadowed Return on investment % 13,0 7,1 by a fatal accident in Emäsalo, which will lead to Total dividends paid EURm 4,7* 4 vessel modifications and a review of operating pro- Dividends received by the State EURm 4,7* 4 cedures. Investments EURm 2,1 2,4 Personnel, total, 31 Dec 315 327 ePilotage experiment in sight Personnel, Finland, 31 Dec 315 327 Gender composition of the The Ministry of Transport and Communications is w/m management team 2/3 1/4 drafting an amendment to the Pilotage Act, which Gender composition of the w/m would allow Finnpilot to experiment with pilot- Board of Directors 3/3 3/3 ing with the pilot outside the vessel. Digitisation Total tax footprint EURm 12,9 13,1 in shipping will call for new operating models and Tax footprint in Finland EURm 12,9 13,1 skills development. The new strategy underlines

* Includes a capital repayment of EUR 3.6 million the importance of human resources. Aside from developing and applying new insights, the company will focus on promoting wellness at work and occupational safety.

53 Finnvera plc

Finnvera is a state-owned specialised finan- Finnvera put in good performance cing company and the official Export Credit At the end of 2017, Finnvera had 27,300 customers and its liabilities in SME and midcap financing Agency of Finland. Finnvera seeks to crea- amounted to EUR 2.5 (2.6) billion. Export cred- te favourable conditions for Finnish compa- its and special guarantees on behalf of large cap nies and improve their competitiveness by companies inclusive of liabilities and bidding com- offering loans, guarantees and export cre- mitments were EUR 22.2 (18.1) billion. During dits and providing coverage for political or 2017, Finnvera provided financing to over 3,400 start-ups and more than 2,100 (SME and midcap) commercial risks associated with exports. growth companies, contributing to the creation of more than 9,100 new jobs. Export financing was FINNVERA PLC provided for the shipbuilding, IT, forest and energy sectors. Finnvera is expected to be self-financ- State shareholding ing and cover its operational costs by business rev- 100 % enues in the long term. The Group’s operating in- Ownership steering come in 2017 was EUR 107 million and cost to in- Ministry of Economic Affairs and Employment come ratio 27.2 per cent. Finnvera is exempted Special assignment from business income tax. Of the eight business Finnvera is a state-owned specialised financing company and the objectives established for Finnvera by the Minis- official Export Credit Agency (ECA) of Finland. try of Economic Affairs and Employment, six were Board of Directors on 16 March 2018 achieved fully and two partly. Pentti Hakkarainen (Chair), Terhi Järvikare, Kirsi Komi, Ritva Laukkanen, Pirkko Rantanen-Kervinen, Pekka Timonen, Antti Zitting Finnvera’s liabilities increased Chief Executive Officer Pauli Heikkilä To safeguard its risk-bearing capacity and keep a lid on the cost of acquiring financing, Finnvera Key financial indicators 2017 2016 must be able to maintain a sufficient solvency ratio Net sales EURm (minimum 12 per cent). At the end of 2017, Finnve- Operating income EURm 109 69 ra Group’s solvency ratio was 25.3 (22.4) per cent. Cost to income ratio % 27,2 27,0 No solvency ratio target applies to export financ- Total assets EURm 10 337 9 498 ing. Instead, the ministry monitors the equity re- Equity ratio % 12,7 12,7 quirement which makes allowance for operational Solvency ratio, Tier 1 % 25,3 22,4 risks, notably credit risks. The equity requirement Return on equity % 8,5 6,0 in respect of credit risks takes account of the funds Return on all assets % 1,1 0,8 Total dividends paid EURm 0 0 of the export credit and special guarantee opera- Dividends received by the State EURm 0 0 tions and the State Guarantee Fund. Buffer funds Investments EURm are deemed to cover the equity requirement. Sol- Personnel, total, 31 Dec 371 376 vency computation in respect of export financing Personnel, Finland, 31 Dec 371 376 is being developed further in the ICAAP frame- Gender composition of the work. More information on this subject for Finn- w/m 6/6 6/6 management team vera Plc’s part is provided in section 3.8 of the Re- Gender composition of the w/m Board of Directors 4/3 4/3 port of the Board. Total tax footprint EURm 9,8 11,2 Tax footprint in Finland EURm 9,8 11,2

54 Finpro Oy (as of 1 Jan 2018 Business Finland Oy)

Finpro’s mission is to generate economic Export Finland activities growth in Finland. The company employs Export Finland activities focus on assisting company clusters by means of a growth programme experts across Finland and over 40 count- model that has been successful in generating busi- ries worldwide. Finpro manages growth ness for Finnish companies and advancing the in- programme projects to promote interna- ternationalisation of entire industries. A prime ex- tionalisation in select sectors in collabora- ample is the Food from Finland programme, which tion with companies. Finpro is a key player has helped diversify food exports both in terms of target countries and the range of export products. in the Team Finland network. Wood from Finland, in turn, has substantially increased exports to countries like China. FINPRO OY (AS OF 1 JAN 2018 BUSINESS FINLAND OY) The framework of the assistance offered to indi- State shareholding vidual companies is based on Team Finland’s ser- 100 % vice proposals that draw on the expertise of a wide Ownership steering range of specialists. Additionally, Finpro’s inter- Ministry of Economic Affairs and Employment national network is constantly scanning the mar- Special assignment kets for new attractive business opportunities to be proposed directly to companies or published Finpro’s mission is to help Finnish companies grow internationally, attract foreign investments and increase the flow of foreign in the media. tourists to Finland. Board of Directors on 21 March 2018 Invest in Finland activities Marianna Jalovaara (Chair), Mirja Huovinen, Maija Lönnqvist The international network focusing on attracting Chief Executive Officer investments has been expanding for a couple of The company has no Chief Executive Officer. years. The impact of these activities in monitored Key financial indicators 2017 2016 in terms of the increase in investments in euros Net sales EURm 59,2 63,9 and the increase in the number of new or saved Operating income EURm -0,2 0,0 jobs. The objectives for the number of jobs was Operating margin % -0,3 0,0 exceeded in 2017. Total assets EURm 21,5 21,9 Efforts have been made in the IFF growth pro- Equity ratio % 55,3 52,1 Gearing % -5,9 -43,0 grammes to intensify networking and exchange Return on equity % 3,4 1,8 of information between local operators. Investor Return on investment % 3,4 1,8 events have been organised to encourage active Total dividends paid EURm 0 0 participation by companies in the programmes Dividends received by the State EURm 0 0 focusing on direct investments. Investments EURm 2,0 10,1 Personnel, total, 31 Dec 281 293 Personnel, Finland, 31 Dec 184 190 Visit Finland activities Gender composition of the w/m The year 2017 was excellent for the Finnish tour- management team 3/6 3/6 ist industry with a record-high inflow of visitors. Gender composition of the w/m Board of Directors 4/6 4/6 As before, the primary bottleneck is flight connec- Total tax footprint EURm 0,08 0,130 tions to destination across Finland. New services Tax footprint in Finland EURm 0,01 0,002 and routes were opened during 2017.

The travel growth programmes have been focusing on stop-over customers to encourage transit passengers to stay a little longer in Finland. The Finnish archipelago and coastal areas are also being promoted to increase tourist appeal.

55 Finrail Oy

Finrail Oy’s line of business includes rail Development of operations in 2017 traffic control services, passenger informa- Finrail Oy is a wholly state-owned limited liability company in respect of which ownership steer- tion services, coordination of track work ing is exercised by the Ministry of Transport and and traffic, electrified railway control cent- Communications. Aside from Finrail Oy, the Fin- re operations and value-added services re- rail Group includes its wholly owned subsidiary lated to rail traffic management. Finlogic Oy.

The company’s net sales in 2017 were EUR FINRAIL OY 36.0(36.6) million and operating income EUR

State shareholding 2.4 (1.9) million. The Group achieved its target: the operating margin increased from 5.3 to 6.5 per 100 % cent. The company improved its operational effi- Ownership steering ciency by growing new business and saving on per- Ministry of Transport and Communications sonnel cost. Special assignment To ensure the provision of rail traffic control services on an equal The expansion of the company’s operations to en- basis sure competition neutrality continued in 2017 in Board of Directors in 2018 accordance with its growth strategy. Towards the Pertti Korhonen (Chair as of 10 Oct 2017) , Pia Björk, end of the year, Finrail Oy assumed responsibility Kimmo Mäki, Yrjö Poutiainen, Kaija Sellman, Pekka Timonen for the Ilmala shunting yard as well as traffic con- (as of 6 March 2017) trol on the Kotka-Hamina-Kuusankoski section. Chief Executive Officer Additionally, a project was initiated to transfer Pertti Saarela traffic control in the Riihimäki shunting yard to Key financial indicators 2017 2016 Finrail. Net sales EURm 36,0 36,6 Operating income EURm 2,4 1,9 Operating margin % 6,5 5,3 Corporate social responsibility Total assets EURm 12,5 9,3 A key element of Finrail Oy’s corporate social re- Equity ratio % 37,2 33,0 sponsibility is to ensure safety on rails. During Gearing % -170,7 -245,6 2017, not a single collision, derailing or other seri- Return on equity % 49,7 60,5 ous accident took place in the state-owned rail net- Return on investment % 60,9 74,8 work due to Finrail Oy’s traffic control operations. Total dividends paid EURm 0 0 At the same time, CSR means that the company as- Dividends received by the State EURm 0 0 sumes responsibility for personnel, stakeholders, Investments EURm 0,2 0 the environment and financial performance. The Personnel, total, 31 Dec 414 430 company’s CSR policy is determined by its values, Personnel, Finland, 31 Dec 414 430 Gender composition of the strategy, risk management policy and the guide- w/m management team 2/6 2/5 lines for CSR reporting issued by the Government. Gender composition of the w/m All of Finrail’s corporate taxes were paid to Fin- Board of Directors 2/4 2/3 land. Women account for 20.5 per cent of all the Total tax footprint EURm 14,7 15,0 personnel, 25 per cent of the management team Tax footprint in Finland EURm 14,7 15,0 and 33 per cent of all board members.

A range of efforts were made in 2017 to develop occupational health and wellness of the personnel, among them two projects: Wellnes at Work at Finrail and Vitality Management at Finrail. Coop- eration with Terveystalo was continue to prevent musculo-skeletal disorders and manage the challenges of shift work.

56 Governia Group

Governia Oy is a wholly state-owned spe- Changes in ownership cial assignment company whose balance During the reporting period, the Group included also Cinia Group Oy, which was taken over by the sheet is deployed to restructure ownership State in June 2017 and is now ownership-steered outside stock exchanges. Additionally, the by the Ministry of Transport and Communica- company’s mission is to develop its portfolio tions, and Turun telakkakiinteistöt Oy, which was companies. At the end of the financial year, divested in May 2017. the Group included Kruunuasunnot Oy, In spring 2017, a town plan was adopted for the GoK Oy and OOO Suomi Talo. Kuninkaantammi district in Helsinki developed by GoK. Kruunusasunnot continued to develop its housing stock in accordance with its strategy by GOVERNIA GROUP launching new building starts and developing the State shareholding existing properties. It put in a sound financial per- 100 % formance aided by a higher-than-foreseen occu- Ownership steering pancy rate and successful cost management. The Prime Minister’s Office fall in net sales was mainly due to the sale of hous- Special assignment ing units to Senate Properties. Other sales of units failed to materialise in 2107. The number of dwell- To serve as a state investment company for special ownership restructuring purposes ings rented to the Finnish Defence Forces contin- Board of Directors on 28 March 2018 ued to decline. This was a foreseen development Petri Vihervuori (Chair), Ilkka Salonen, Taina Susiluoto, and the company succeeded in keeping the occu- Helena Tarkka pancy rate steady. Chief Executive Officer The company made preparations for the purchase Timo Kankuri of Suomi Talo (Finland House) in St. Petersburg Key financial indicators 2017 2016 and began developing a business concept for it. Net sales EURm 44,8 90,6 Governia will buy Suomi Talo in spring 2018 based Operating income EURm 12,7 8,0 on a treaty signed by Finland and the Russian Fed- Operating margin % 28 8,8 eration. Future efforts will focus on developing a Total assets EURm 191 314 sound business concept for it and improving the Equity ratio % 65 50 occupancy rate. Gearing % 13,7 52 Return on equity % 7,8 1,1 Governia Group’s financial performance was aid- Return on investment % 6,4 3,3 ed by one-off items due to the transfer of Cinia to Total dividends paid EURm 0 0 state ownership. For the parent company, the sin- Dividends received by the State EURm 0 0 gle most important source of revenue was finan- Investments EURm 2,9 29 cial income, which remained steady. Governia’s fi- Personnel, total, 31 Dec 23 234 nancial position is sound. Personnel, Finland, 31 Dec 23 234 Gender composition of the w/m n/a n/a management team Good results with the sustainable management Gender composition of the w/m Board of Directors 2/2 2/3 system Total tax footprint EURm 5,1 18 Governia Group applies a sustainable manage- Tax footprint in Finland EURm 5,1 18 ment system the adoption of which has given good results in the subsidiaries. Kruunuasunnot has in- corporated CRS issues into its strategy, management and operations. Measurable objectives have been established for CSR performance.

57 Hansel Ltd

Hansel’s operations continue to expand. In Review of events in 2017 2017, it was involved in purchases with a to- The volume of joint procurement projects continued to increase reaching EUR 826 million. In euro tal value of EUR 1.3 billion (joint procure- terms, the biggest purchases were made in energy, ment and expert services). IT hardware, HR and healthcare services.

The savings achieved in 2017 through centralised HANSEL LTD purchasing are estimated at EUR 286 million. State shareholding Sales of expert services increased to EUR 1.5 mil- 100 % lion. For customers, the purchase value of all the Ownership steering projects put out to open tender reached approxi- Ministry of Finance mately EUR 500 million.

Special assignment Customer satisfaction was high. Hansel’s commis- Hansel Ltd is a joint procurement unit whose mission is to improve sion was further reduced to 1.03 (1.06) per cent. productivity in government purchasing and update the system. Hansel has consolidated its position as the devel- Board of Directors on 1 January 2018 oper of the government purchasing system and Timo Laitinen (Chair), Anna-Maija Karjalainen, Jukka Hämäläinen, provider of digital purchasing services. Katariina Kemppainen, Rami Metsäpelto Chief Executive Officer Hansel is closely involved in the Handi project to Anssi Pihkala digitise government procurement managed by the Key financial indicators 2017 2016 Ministry of Finance. As part of this project, Hansel continued to develop its procurement data servic- Net sales EURm 10,4 9,6 es and released in September the State’s AP mate- Operating income EURm 0,2 0,5 rial in the form open data, which is now available Operating margin % 1,9 4,7 Total assets EURm 19,3 19,1 at Tutkihankintoja.fi. Equity ratio % 84,4 83,9 Corporate social responsibility is an important val- Gearing % -97,1 -98,1 ue to Hansel and plays an important part in all as- Return on equity % 1,1 2,6 pects of its operations. Hansel is engaged in regu- Return on investment % 1,4 3,3 lar cooperation with the joint procurement units Total dividends paid EURm 0 0 of other European countries. Dividends received by the State EURm 0 0 Investments EURm 0,1 0,07 Personnel, total, 31 Dec 94 75 Personnel, Finland, 31 Dec 94 75 Gender composition of the w/m management team 3/2 3/2 Gender composition of the w/m Board of Directors 2/3 2/3 Total tax footprint EURm 3,7 3,5 Tax footprint in Finland EURm 3,7 3,5

58 HAUS Finnish Institute of Public Management Ltd

HAUS has announced a new strategy that Review of events in 2017 highlights the importance of partnerships in As foreseen in its new strategy, HAUS Finnish In- stitute of Public Management Ltd focused in 2017 customer relationship management and de- on developing its domestic training activities. velopment efforts. Provision of training and The objective was to increase volume and impact services for customers in Finland increased and develop customer relationships towards a a as planned and major progress was made partnership model. At the same time, the strate- especially in the eHAUS project. gy called for more extensive and closer partnering with universities.

HAUS FINNISH INSTITUTE OF PUBLIC The most important development project launched MANAGEMENT LTD during 2017 was the eHAUS project being imple- State shareholding mented in collaboration with the Ministry of Fi- 100 % nance and designed to build a shared eOppiva e- learning platform for central and regional gov- Ownership steering ernment. The first year saw the establishment of Ministry of Finance the framework for the eOppiva platform followed Special assignment by further preparations and the first pilot pro- HAUS Finnish Institute of Public Management Ltd’s mission is grammes. to provide training and development services for government officials and promote government business. HAUS supports government administration and agencies in implementing reforms HAUS continued to serve as a key Finnish player while consolidating its position as a key expert in management in implementing the EU’s Twinning projects com- and skills development. pleted in Balkan countries, among others. Addi- Board of Directors on 1 January 2018 tionally, HAUS served as a close partner in the For- Hannu Mäkinen (Chair), Päivi Nerg, Pauli Forma, eign Minister’s development projects. Susanna Niinistö-Sivuranta, Petri Virtanen Chief Executive Officer Anneli Temmes Key financial indicators 2017 2016 Net sales EURm 6,1 6,0 Operating income EURm 0,1 0,3 Operating margin % 1,7 5,3 Total assets EURm 4,1 5,4 Equity ratio % 51,6 52,6 Gearing % -143,1 -180,2 Return on equity % 9,5 37,2 Return on investment % 8,0 29,7 Total dividends paid EURm 0 0 Dividends received by the State EURm 0 0 Investments EURm 0 0 Personnel, total, 31 Dec 30 30 Personnel, Finland, 31 Dec 28 25 Gender composition of the w/m management team 3/2 3/0 Gender composition of the w/m Board of Directors 2/3 2/3 Total tax footprint EURm 1,2 1,2 Tax footprint in Finland EURm 1,2 1,2

59 Horse Institute Ltd

Horse Institute Ltd’s special assignment is Reform of vocational upper secondary education to maintain a vocational equestrian col- As a vocational upper secondary education provider, the Horse Institute, like other educational insti- lege, organise and develop training in the tutes, prepared for the reform of vocational upper field, maintain a national coaching cent- secondary education. The finances were balanced re for equestrian sports and promote hor- to address the changes in funding, and in teaching, se breeding. in addition to the training of the personnel, investments were made in digital solutions and in expanding the ‘Guild’ school operating model. In fu- HORSE INSTITUTE LTD ture, the reform of vocational upper secondary ed- State shareholding ucation enables more personal study paths and, at 25 % best, earlier graduation. 2017 was marked by Fin- Ownership steering land’s 100th anniversary festivities in which the Ministry of Education and Culture institute contributed by arranging festive events at Ypäjä and by performing in various types of shows. Special assignment An international conference in equestrian teach- To maintain a vocational equestrian college and national coaching centre for equestrian sports. ing, among other things, was arranged in Ypäjä, attracting 180 visitors from 14 different countries. Board of Directors on 51 May 2017 Laura Airaksinen (Chair), Anu Junikka-Saltevo, Jouni Kangasniemi, Vesa Mäkinen, Kirsti Piminäinen, Jarmo Pynnönen, Fred Sundwall National coaching centre Chief Executive Officer The Ministry of Education and Culture award- Pauliina Mansikkamäki ed the Horse Institute with the official status of National Coaching Centre for Equestrian Sports Key financial indicators 2017 2016 and the special assignment to promote equestri- Net sales EURm 7,20 8,1 an sport. The coaching centre services provided by Operating income EURm 0 -0,5 the Horse Institute are intended for those involved Operating margin % 0 -6,3 in competitive sport, enthusiasts and profession- Total assets EURm 4,6 5,1 als working in the equestrian field, by promot- Equity ratio % 76,0 68,8 Gearing % -38,9 -36,6 ing their expertise through training and courses. Return on equity % 0,7 -9,3 The coaching centre had a very active year. Train- Return on investment % 1,0 -7,8 ing, courses and competitions were arranged for Total dividends paid EURm 0 0 nearly 300 days in total. Sports areas were refur- Dividends received by the State EURm 0 0 bished to improve the coaching conditions of na- Investments EURm -0,1 -0,2 tional teams and to prepare for the Nordic-Baltic Personnel, total, 31 Dec 79 96 Eventing Championships held in 2018. The Horse Personnel, Finland, 31 Dec 79 96 Institute has already served as the national coach- Gender composition of the w/m ing and training centre for the Equestrian Federa- management team 5/2 4/2 tion of Finland, but with its national role, its oper- Gender composition of the w/m Board of Directors 3/4 3/4 ations will now expand to more clearly cover har- Total tax footprint EURm 0,8 0,9 ness racing as well. Tax footprint in Finland EURm 0,8 0,9

60 National ICT service center for counties Vimana Oy

Established in 2017, the national ICT servi- Commencement of operations ce center for counties Vimana Oy is respon- The national ICT service center for counties Vima- na Oy was established on 29 June 2017. Vimana sible for the execution of projects and pro- Oy is tasked with providing information manage- curements related to basic ICT and joint in- ment, development and integration as well as data formation system services and for develo- system and ICT services. The key objective is to im- ping support for them. prove the effectiveness and productivity of services and to unify and integrate operating processes.

NATIONAL ICT SERVICE CENTER FOR COUNTIES The year 2017 was used for setting up operations. VIMANA OY The company was involved in the preliminary State shareholding study concerning the digital transformation pro- 100 % jects of the regional government reform based on Ownership steering which the company prepared the launching of the following ICT projects for the counties in 2018: Ministry of Finance Special assignment • Access Rights Management Vimana Oy is tasked with promoting the digitalisation of services • Data Networks for the future counties and their affiliated entities in order to • Basic IT Procurements improve effectiveness and productivity and to unify and integrate operating processes. • Case Management Board of Directors on 1 January 2018 • Suomi.fi Mirjami Laitinen (Chair), Tiina Pesonen, Anna-Mari Ahonen, • Online Service Solutions Harri Eskola, Juhani Heikka, Pertti Mäkelä • Organisers’ Tools Chief Executive Officer • Remaining Central Government Systems Kalle Toivonen Key financial indicators 2017 2016 Net sales EURm 0 Operating income EURm -0,2 Operating margin % 0 Total assets EURm 0,2 Equity ratio % 20,3 Gearing % -371 Return on equity % -425 Return on investment % -425 Total dividends paid EURm Dividends received by the State EURm Investments EURm Personnel, total, 31 Dec 5 - Personnel, Finland, 31 Dec 5 - Gender composition of the w/m management team - - Gender composition of the w/m Board of Directors 3/3 Total tax footprint EURm -0,00297 Tax footprint in Finland EURm -0,00297

61 Municipality Finance Plc

Municipality Finance provides financing Development of operations in 2017 services for the municipal sector and sta- Municipality Finance issued a total of EUR 2.4 billion in new loans, and its lending portfolio rose to te-subsidised housing. The company is EUR 21.2 billion. Of the loans, 46 per cent were owned by the municipalities, the Local Go- for housing corporations, 35 per cent for munic- vernment Pensions Institution and the Sta- ipalities and the rest for municipal companies or te. The company’s funding originates from federations. The Municipality Finance Group’s op- international capital markets, its credit ra- erating income before taxes stood at EUR 198.4 million, an increase of 13.9 per cent on the pre- ting is the same as that of the State of Fin- vious year. land, and the company is supervised by the European Central Bank. During the year under review, Municipality Fi- nance defined its principles of responsibility. Re- sponsibility at Municipality Finance is based on MUNICIPALITY FINANCE PLC four principles: providing responsible products State shareholding and services, being a forerunner in sustainabili- 16 % ty, improving well-being at work and strong corporate governance. The company published a re- Ownership steering port on the effects of green financing directed at Ministry of the Environment environmental investments. Special assignment To secure affordable funding for the building and renovation of state-subsidised housing. Management of the special assignment Board of Directors on 28 March 2017 Ownership steering with regards to Municipality Finance is exercised by the Ministry of the Envi- Helena Walldén (Chair), Fredrik Forsell, Minna Helppi, Markku Koponen, Jari Koskinen, Kari Laukkanen, Vivi Marttila, ronment. The special assignment for Municipali- Tuula Saxholm ty Finance is to secure affordable funding for the Chief Executive Officer building and renovation of state-subsidised hous- Esa Kallio ing. In 2017, state-subsidised housing production Key financial indicators 2017 2016 comprised about 8,600 new housing units, which Net sales EURm 204,1 183,7 is 7 per cent higher than the corresponding fig- Operating income EURm 198,4 174,2 ure in 2016. The Housing Finance and Develop- Operating margin % 97,2 94,8 ment Centre of Finland approved new interest- Total assets EURm 34738 34052 subsidy loans totalling EUR 1,162 million. Munic- Equity ratio % 3,9 3,5 ipality Finance’s share of the new loans was about Own funds in relation % 77 per cent, so it plays a key role as a financier of to risk-weighted assets 75,5 66,9 state-subsidised housing production. In new inter- Return on equity % 12,6 12,5 est-subsidy loans for rental and right-of-occupan- Return on investment % 0,5 0,4 cy buildings, the average interest rate of all cred- Total dividends paid EURm 0 0 itors at the beginning of the loan period was 0.82 Dividends received by the State EURm 0 0 per cent, while the interest margin fell slightly on Investments EURm the previous year. Financing for state-subsidised Personnel, total, 31 Dec 134 106 housing production was historically inexpensive, Personnel, Finland, 31 Dec 134 106 Gender composition of the which was primarily due to the low interest rate w/m management team 2/3 2/4 level. Gender composition of the w/m Board of Directors 4/4 4/4 Total tax footprint EURm 19,5 11,1 Tax footprint in Finland EURm 19,5 11,1

62 Solidium Oy

Solidium holds minority interests in listed Financial performance in 2017 companies of national significance. The Solidium’s financial year is from 1 July to 30 June. The company does not generate net sales. The company operates on market terms and on- company’s half-year operating income is mainly ly makes investment decisions when the fi- comprised of a capital gain of EUR 3.9 million on nancial preconditions are met. the disposal of Outokumpu shares worth EUR 36 million and the costs of EUR 1.3 million. EUR 14.1 million in dividends received from Telia Company SOLIDIUM OY were recognised in the financial items. State shareholding 100 % Ownership steering Market operations carried out by Solidium Prime Minister’s Office During the reporting period, Solidium sold equi- Special assignment ties for a total of EUR 197 million. The transactions To reinforce and consolidate domestic ownership in listed consisted of two deals on Outokumpu shares worth companies of national significance, and increase the economic EUR 130 million and the sale of Class R shares in value of assets in the long term. Stora Enso for EUR 67 million. Additionally, in the Board of Directors on 26 September 2017 beginning of 2018, Solidium sold its Class B shares Harri Sailas (Chair), Timo Ahopelto, Eija Ailasmaa, Aaro Cantell, in SSAB for EUR 151 million, as well as all of its in- Markku Hyvärinen, Paula Lehtomäki, Marjo Miettinen terests in Telia Company for EUR 517 million, and Chief Executive Officer part of its holdings in Sampo for EUR 466 million. Antti Mäkinen During the reporting period, Solidium bought eq- 1 Jul to 1 Jul to 1 Jul to Key financial indicators 31 Dec 31 Dec 31 Dec uities for a total of EUR 191 million by acquiring Net sales EURm 0,0 0,0 0,0 shares in Konecranes for EUR 122 million and Operating income EURm 1,7 0,0 89,1 Class A shares in Stora Enso for EUR 69 million. Profit for the financial year EURm 15,1 643,1 1032,6 In other words, Solidium sold Class R shares in Return on investments % Stora Enso and as a replacement bought Class A at fair value 12,2 22,4 32,4 shares that carry more votes. During early 2018, Dividends and capital EURm repayments 14,1 20,9 314 Solidium has bought equities for a total of EUR Administrative cost ratio % 0,06 0,05 0,07 887 million, of which EUR 43 million was used to Net asset value EURm 7 656 7 109 7695 buy shares in Konecranes and EUR 887 million to Shareholders’ equity EURm 4 298 4201 4590 buy shares in Nokia. Financial liabilities EURm 350 350 350 Two new companies, Konecranes and Nokia, were Equity ratio % 92 86 91 added to Solidium’s portfolio during the report- Personnel, total 12 10 11 Profit distribution EURm 307 ing period whereas all interests in Telia Compa- Dividends received by the State EURm 307 ny were divested. Gender composition of the w/m 1/3 1/3 1/3 management team Solidium’s strategy update Gender composition of the w/m Board of Directors 3/4 3/3 3/3 In Solidium’s strategy update, the principal change Total tax footprint EURm -1,7 concerns a more active role as an owner. Solidi- Tax footprint in Finland EURm -7 um applies methods available for a minority owner to support and challenge the portfolio companies to develop and outperform their peers. The goal is for Solidium to have a representative in the Board of Directors of every portfolio company in the long term.

63 SoteDigi Oy

Established at the end of 2017, the SoteDi- Commencement of operations gi development company is responsible for SoteDigi Oy was established on 5 September 2017. SoteDigi Oy is tasked with promoting the digital- the execution of projects and procurements isation and integration of healthcare and social related to the new digital solutions for the welfare services in collaboration with all health- healthcare and social services sector, which care and social welfare service operators. The com- are developed at the national scale, and for pany’s key objective is to improve the productivity, developing support for them. cost-efficiency and cost-effectiveness of the counties, ensuring that the counties can reach the savings targets set for them. SOTEDIGI OY On 28 November 2017, the Government issued State shareholding SoteDigi with guidelines that include the key fi- 100 % nancial and operational targets and starting points Ownership steering and the first tasks of the company’s Board of Di- Ministry of Finance rectors. Following its establishment, the compa- Special assignment ny has initiated the execution of the tasks set out SoteDigi Oy’s is tasked with developing nationwide customer and in the guidelines, organised its administration and patient data systems and other digital solutions for the healthcare elected a CEO. and social services sector. Board of Directors on 1 January 2018 The company has started discussions on the as- Hannu Leskinen (Chair), Siv Schalin, Tapio Niskanen signment of potential new tasks (the ‘Oda’ and Chief Executive Officer ‘Virtual Hospital’ projects) under the company’s responsibility. The company’s representatives Harri Hyvönen as of 1 May 2018 have also engaged in negotiations with Una and Key financial indicators * 2017 2016 Apotti operators as well as the Kanta service to se- Net sales EURm cure development at a national level. Additional- Operating income EURm ly, the company has initiated the preparation of a Operating margin % project portfolio that, among other things, will al- Total assets EURm so include an integration platform and services re- Equity ratio % lated to it. The project portfolio will be complet- Gearing % ed in April 2018. Return on equity % Return on investment % Total dividends paid EURm Dividends received by the State EURm Investments EURm Personnel, total, 31 Dec none - Personnel, Finland, 31 Dec none - Gender composition of the w/m management team none - Gender composition of the w/m Board of Directors 1/2 - Total tax footprint EURm - - Tax footprint in Finland EURm - -

* The company’s first financial year will end on 31 December 2018

64 STUK International Ltd

STUK International Ltd provides expert ser- International expert service vices to promote safety in the use of nuclear The company’s primary purpose is to enable the sale of STUK’s international expert services in a energy and radiation. The company opera- profitable way and in line with market terms. A tes in collaboration with the Finnish Radia- company has an advantage over a government tion and Nuclear Safety Authority (STUK), agency because it can better respond to the com- and its clients include foreign authorities petition in the field, respond to the clients’ needs responsible for radiation and nuclear safe- and commercialise its services. The provision of the company’s expert services is mainly based on ty as well as other public-sector operators subcontracting, the most important partner be- in the field. The company does not operate ing the Finnish Radiation and Nuclear Safety Au- in the Finnish market. thority (STUK). All the services provided have the same quality target – they must be “as if provided by STUK”. This will be given special consid- STUK INTERNATIONAL LTD eration when other subcontractors besides STUK State shareholding are selected. 100 % STUK International Ltd’s ambition is to be inter- Ownership steering nally the most highly esteemed and sought-after Ministry of Social Affairs and Health company that provides governmental organisa- Special assignment tions with expert services to promote safety in the No special assignment use of nuclear energy and radiation. The objective Board of Directors on 19 March 2018 of the sale of services is to generate profit for the Vappu Lindholm (Chair), Kirsi Alm-Lytz, Jorma Aurela, company’ owner, the State of Finland. Consulting Ilpo Nuutinen, Petteri Tiippana tasks in a diverse international setting not only en- Chief Executive Officer hance STUK’s own expertise, but also provide sup- Pekka Ottavainen port for the retention of expertise for the needs of Key financial indicators 2017 2016 Finnish government agencies. Net sales EURm 0,6 In addition to the provision of services related to Operating income EURm -0,1 nuclear energy, special emphasis is also put on the Operating margin % -17,6 export of expertise in the safe use of radiation, en- Total assets EURm 9,0 vironmental radiation monitoring and emergency Equity ratio % 74,1 preparedness and, wherever possible, on consul- Gearing % -118,1 tation tasks related to nuclear safeguards and se- Return on equity % -18,3 curity. The company develops products or repro- Return on investment % -10,8 Total dividends paid EURm duceable service packages for small-scale training Dividends received by the State EURm activities and nuclear waste management. Investments EURm During its first year of operations, the company Personnel, total, 31 Dec 1 already concluded a long-term and extensive co- Personnel, Finland, 31 Dec 1 operation agreement on technical support for the Gender composition of the w/m management team development of independent nuclear authority Gender composition of the w/m operations consistent with international require- Board of Directors ments in Saudi Arabia. Saudi Arabia has passed a Total tax footprint EURm decision on the execution of an extensive nuclear Tax footprint in Finland EURm power plant programme to produce electricity and salt-free water.

65 State Security Networks Ltd

The State Security Networks Group is a sta- Good progress in the collaboration between te-owned company with a special mission security operators The company’s strategy remained unchanged, with to ensure critical management capabilities special emphasis placed on the State Security Net- in times of crisis and to secure the provisi- works’ mission as an enabler for the security oper- on of information society services under all ators’ work. The group operated, and its operations circumstances. were developed, in three service areas: situational awareness services, data communications services and data centre services. In security network op- STATE SECURITY NETWORKS LTD erations, the company particularly focused on the State shareholding development of a process-driven operating mode. 100 % Virve’s operations grew during 2017, and progress Ownership steering was made in the deployment of Virve as a radio sys- Prime Minister’s Office tem for railway traffic. Virve’s user base increased by 4 per cent. Regarding mission-critical wireless Special assignment communications, the most significant change was To construct and operate communications networks used by public administration authorities that are critical to the nation’s the migration of the narrow-bandwidth 2G technol- security as well as other security networks and to provide related ogy to LTE technology. The Cabinet Committee on services and consulting services. Economic Policy reaffirmed in December 2017 that Board of Directors on 26 March 2018 State Security Networks will serve as the security Jarmo Väisänen (Chair), Teemu Anttila, Arja Lehtonen, operators’ service operator. This means that in the Janne Koivukoski, Maria Nikkilä, Sohvi Rajamäki, Esa Rautalinko future, the company will provide the security oper- Chief Executive Officer ators’ wireless broadband services in collaboration Timo Lehtimäki with other operators. This development requires Key financial indicators 2017 2016 defining the role of a virtual operator and intense Net sales EURm 93,2 93,2 collaboration with commercial radio networks. Operating income EURm 5,9 7,2 At the end of the year, State Security Networks Operating margin % 6,3 7,7 acquired the ownership of Deltagon Group Oy, a Total assets EURm 263,8 247,4 Equity ratio % 86 90 Finnish company that provides e-mail and secu- Gearing % -11 -13 rity solutions. With the acquisition, State Securi- Return on equity % 1,9 2,5 ty Networks strengthened its data security compe- Return on investment % 2,6 3,3 tence. Deltagon’s service range matches well with Total dividends paid EURm 0 0 the State Security Networks’ special assignment Dividends received by the State EURm 0 0 and supplements the company’s situational aware- Investments EURm 23,4 20,3 ness and data communications services.In the fu- Personnel, total, 31 Dec 318 308 ture, special emphasis will be placed on the assess- Personnel, Finland, 31 Dec 318 308 ment of the group structure in order to address the Gender composition of the w/m growing security needs and development projects management team 0/7 0/7 in as effective and agile manner as possible. Seek- Gender composition of the w/m Board of Directors 4/3 3/4 ing synergies and increasing cooperation between Total tax footprint EURm 14,7 16,5 business operations will play a key role to this end. Tax footprint in Finland EURm 14,7 16,5 Primary objective in the accomplishment of the special assignment in the security field In addition to the accomplishment of the special assignment, as far as corporate responsibility is concerned, the company’s personnel is of special importance. The company is constantly investigating more environmentally-friendly ways to provide its services.

66 Finnish Aviation Academy Ltd

The Finnish Aviation Academy is a spe- The company addressed the growing need for cial vocational institute that trains profes- pilots The demand for commercial airline pilots has re- sional pilots for Finnish commercial avia- mained at a high level in Finland due to Finnair tion needs and develops aviation training. Plc’s growth strategy. Approximately 100 new pi- The company also sells aviation training lots are needed every year. The Aviation Academy services, as well as other aviation-related started an additional course for 20 students, which services. was arranged by Patria Pilot Training Oy following an open tender procedure. The student appli- cation process that was arranged in collaboration FINNISH AVIATION ACADEMY LTD with Finnair started in August 2017. State shareholding A total of 36 (47) students graduated from the Avi- 49,5 % ation Academy in 2017. The company grew its fleet Ownership steering to make it possible to complete the training of the Prime Minister’s Office larger student volumes within the planned time- Strategic interest of ownership / Special assignment tables. In the fleet procurements, special attention To keep up the institute of education providing aviation training was given to the fuel efficiency of the aircrafts.

Board of Directors on 21 March 2018 The company’s net sales increased by about 8 per Kai-Petteri Purhonen (Chair), Ari Kuutschin, Rita Linna, cent, because the state subsidy based on student Tommi Vänskä work days grew, and customer proceeds were at a Chief Executive Officer good level. Transfers from the State were the com- Juha Siivonen pany’s main source of income, accounting for ap- Key financial indicators 2017 2016 proximately 75 per cent of its net sales. The com- Net sales EURm 9,5 8,8 pany’s operating income improved. Operating income EURm 0,5 0,2 Operating margin % 4,8 2,2 Total assets EURm 19,0 18,8 Responsibility equals safety and environmental Equity ratio % 95,0 93,4 responsibility Gearing % -34,8 -34,8 The corporate responsibility of the Aviation Acad- Return on equity % 2,0 1,1 emy focuses on aviation safety and environmental Return on investment % 2,7 1,1 matters. The company’s aviation safety is at an ex- Total dividends paid EURm 0 0 Dividends received by the State EURm 0 0 cellent level, and the company has a safety man- Investments EURm 1,1 1,1 agement system based on international regula- Personnel, total, 31 Dec 45 40 tions in place, which covers occupational safety Personnel, Finland, 31 Dec 45 40 and environmental risks in addition to flight op- Gender composition of the erations. The main impact on the environment w/m 1/6 1/6 management team comes from the emissions released during flight Gender composition of the w/m Board of Directors 1/3 1/3 training. The company has modernised its fleet and thus significantly reduced its fuel consump- Total tax footprint EURm 2,8 n/a tion. Much of the training takes place in simulators Tax footprint in Finland EURm 2,8 n/a which have virtually no environmental impacts.

67 Finnish Industry Investment Ltd

Finnish Industry Investment Ltd (Tesi) is Venture capital and private equity markets tasked with promoting the growth, compe- developed favourably in 2017 titiveness and internationalisation of Fin- Tesi’s investment commitments in funds and direct investments in portfolio companies in 2017 nish companies as well as the renewal of totalled EUR 149 million. At the end of the year, the structures of trade and industry. Tesi the equity investments managed by the company invests primarily in funds, but also directly amounted to EUR 1,224 million. The investment in companies at the growth and internatio- objects included 91 funds and 42 portfolio companies. nalisation stage. In line with Prime Minister Sipilä's Government Programme, at the end of the year Tesi established FINNISH INDUSTRY INVESTMENT LTD a new fund-of-funds named KRR III in collabora- State shareholding tion with pension and insurance companies that 100 % invest in Finnish venture capital and small buy- Ownership steering out funds. The Fund’s total capital was 150 mil- Ministry of Economic Affairs and Employment lion euros. The assets of KRR II (EUR 130 million) Special assignment were invested in their entirety during 2017. The To develop the capital investment market, effect the renewal of KRR funds have invested in a total of 150 compa- trade and industry and create growth companies. nies since 2014. Of these, the net sales of Finnish Board of Directors on 6 March 2018 companies totalled about EUR 1.6 billion, and the Esa Lager (Chair), Marika af Enehjelm, Kimmo Jyllilä, number of personnel about 13,000. Pauli Kariniemi, Mika Niemelä (vpj), Annamarja Paloheimo, Riitta Tiuraniemi The main objective of Tesi’s investments is to pro- Chief Executive Officer mote the establishment of larger venture capital Jan Sasse funds. At the end of 2017, Tesi made a commitment to Inventure Fund III. The fund is the largest Key financial indicators 2017 2016 (EUR 110 million) Finnish venture capital fund that Net sales EURm invests in Finnish start-up technology companies. Operating income EURm 80,2 55,2 Operating margin % The strategic priorities for the Industrial Renew- Total assets EURm 1020,3 943,0 al programme are cleantech, bioeconomy, health Equity ratio % 95,9 96,8 technology and digitalisation. By the end of 2017, Gearing % -46,2 -44,9 investments in 21 companies amounting to a total Return on equity % 6,9 5,0 of EUR 78.2 million were made through the pro- Return on investment % 8,4 6,2 gramme. Through the International Co-investors Total dividends paid EURm 0 0 programme, a total of EUR 19.4 million was invest- Dividends received by the State EURm 0 0 ed in seven companies. A total of EUR 72 million of Investments EURm 88,2 164,6 international capital was channelled into Finland Personnel, total, 31 Dec 33 34 from Tesi’s international partner network in 2017. Personnel, Finland, 31 Dec 33 34 Gender composition of the w/m management team 2/4 3/4 The number of jobs in Tesi’s portfolio companies Gender composition of the grew by more than 7,500 jobs during 2014–2016. w/m Board of Directors 3/4 3/4 The companies’ net sales in Finland grew by 14 per Total tax footprint EURm 15,0 3,1 cent during 2016. Tax footprint in Finland EURm 15,0 3,1 A long-term profitability target has been set for the company in the Act on Finnish Industry Invest- ment Ltd. Despite the high-risk profile of the investment portfolio, the company’s result has been profitable since 2014. The financial result for 2017 was EUR 66 million.

68 University Properties of Finland Ltd

SYK is an owner and developer of higher Review of events in 2017 education campuses outside the Helsin- University Properties of Finland Ltd managed the universities’ property assets responsibly and in a ki metropolitan area. The company provi- manner that secured the universities’ operation in des its customers with effective and cost-ef- the long term. In addition to renovations, large- ficient facility solutions. scale property development activities were continued in 2017 as well. Financial performance remained solid. UNIVERSITY PROPERTIES OF FINLAND LTD

State shareholding The management of risks inherent to conditions 33,33 % remained at an excellent level. The company made considerable investments in the energy manage- Ownership steering ment of buildings and archived excellent results in Ministry of Finance this regard in 2017. Special assignment To manage and lease buildings and premises mainly for the The company invested heavily in learning envi- purposes of research and training and for business activities to ronments and in increasing business activities on support them in order to safeguard the long-term operation of universities The State’s interest is to ensure that the value and campuses that support the operation of the univer- condition of the building stock is preserved and that the premises sities. In 2017, nearly 10 of the tenants were enti- are secured for their use in higher education as economically as possible. ties other than universities and institutes of high- Board of Directors on 1 January 2018 er education. Petri Lintunen (Chair), Juha Lemström, Essi Kiuru, Matti Paavonsalo, Kalervo Väänänen, Sami Yläoutinen Chief Executive Officer Mauno Sievänen Key financial indicators 2017 2016 Net sales EURm 150,9 148,2 Operating income EURm 38,8 39,9 Operating margin % 25,7 26,9 Total assets EURm 1268,8 1226,8 Equity ratio % 47,7 48,8 Gearing % 103,5 96,2 Return on equity % 3,6 3,9 Return on investment % 3,2 3,4 Total dividends paid EURm 14,9 14,6 Dividends received by the State* EURm 4,9 4,9 Investments EURm 116 95,8 Personnel, total, 31 Dec 35 32 Personnel, Finland, 31 Dec 35 32 Gender composition of the w/m management team 0/5 0/4 Gender composition of the w/m Board of Directors 1/5 1/5 Total tax footprint EURm 20,9 22,3 Tax footprint in Finland EURm 20,9 22,3

* To Senate Properties

69 VTT Technical Research Centre of Finland Ltd

VTT Technical Research Centre of Fin- VTT Ltd’s operations in 2017 land Ltd is one of the leading research and VTT’s operations focus on six strategic priority areas, which are: (i) Future areas of growth, (ii) Cus- technology organisations in Europe that tomer-driven service models, (iii) LEAN at VTT, provides private companies and the public (iv) Management of excellence, (v) Sufficiency of sector with research and innovation servi- financial resources, and (vi) Assessment culture. ces that enhance their competitive edge. VTT helps customers to grow and society to pros- per through applied research. It makes an impact through scientific and technological excellence VTT TECHNICAL RESEARCH CENTRE OF FINLAND LTD and co-development with stakeholders. Strate- State shareholding gic research projects contribute to supporting the 100% Government’s priority areas and key projects (bi- Ownership steering oeconomy, cleantech, digitalisation and health). Ministry of Economic Affairs and Employment The centralisation of operations into entities with a larger impact improves VTT’s ability to succeed Strategic interest of ownership / Special assignment in competitive markets. Economic and innovation policy implementation tasks Board of Directors on 5 April 2018 During 2017, VTT continued its investments in sig- Aaro Cantell, (Chair), Heli Antila, Matti Hietanen, Kari Knuutila, nificant piloting and research projects. The pilot- Harri Leiviskä, Kaija Pehu-Lehtonen, Tuija Pulkkinen ing centre for bio- and circular economy, Bioruuk- Chief Executive Officer ki, is constructed in stages. A test environment for Antti Vasara new textile fibres was completed in the summer of 2017, and the remaining part of the biomass cen- Key financial indicators 2017 2016 tre will be brought to completion by the beginning Net sales EURm 153,2 188,4 of 2018. The Natural Resources Institute of Fin- Operating income EURm -18,2 -0,2 land will also transfer test equipment related to bi- Operating margin % -11,9 -0,1 omass processing to Bioruukki. Bioruukki serves Total assets EURm 243,5 224,4 Equity ratio % 58,5 67,3 as a platform for the Digital Fibre ecosystem that Gearing % -60,8 -51,1 seeks to create an innovation platform for digital Return on equity % -13,9 0,9 bioeconomy. When complete, Bioruukki will pro- Return on investment % -14,2 -0,1 vide companies with a development and piloting Total dividends paid EURm 0 0 environment of international calibre for the new Dividends received by the State EURm 0 0 processes and products of biomass and industri- Investments EURm 22,3 14,3 al and community side and waste streams. Addi- Personnel, total, 31 Dec 2 081 2 128 tional investment in hot cells were made in the Nu- Personnel, Finland, 31 Dec 2 081 2 128 clear Safety House, which is part of VTT’s nucle- Gender composition of the w/m ar safety research area. As part of the Renewal of management team 5/4 6/5 Finnish Electronics initiative, the facilities for re- Gender composition of the w/m Board of Directors 3/4 3/4 search and manufacturing operations will be mod- Total tax footprint EURm 39,5 41,3 ernised and improved at the Espoo cleanroom fa- Tax footprint in Finland EURm 39,5 41,3 cilities (Micronova).

70 Finnish Fund for Industrial Cooperation Ltd (Finnfund)

Finnfund promotes the economic and social Finnfund’s investments growing development of its target countries by fun- During the year under review, Finnfund’s investment portfolio grew by 10 per cent and its profit ding private sector projects. Finnfund is a also improved compared to 2016. One of the en- venture capital provider that complements ablers for the growth of the investment portfolio commercial financing and directs most of was the convertible loan of EUR 130 million grant- its financing to low-income and lower-mid- ed by the State in late 2016, which strengthened dle-income developing countries. the company’s balance sheet. Finnfund’s share capital was also increased by EUR 10 million during the reporting year. During the year under re- FINNISH FUND FOR INDUSTRIAL COOPERATION LTD view, Finnfund issued 30 new investment deci- (FINNFUND) sions, 25 of which were in developing countries of State shareholding lower-middle-income or lower. 93,8 % Ownership steering Development effects at the centre Ministry for Foreign Affairs Finnfund’s role as an important instrument of Fin- Special assignment land’s development policy was pronounced follow- Finnfund promotes the economic and social development of its ing the additional financing granted during the target countries by funding private sector projects. Government term. The development effects and Board of Directors on 24 April 2018 risks of the investment portfolio are widely moni- Ritva Laukkanen (Chair), Tuukka Andersén, Sinikka Antila, tored by various stakeholders. The company’s ad- Kristiina Kuvaja-Xanthopoulos, Pirita Mikkanen, ministration was strengthened in order to lend Lars-Erik Schöring, Antero Toivainen, Tuula Ylhäinen support to the management of environmental, so- Chief Executive Officer cietal and human rights risks and the evaluation Jaakko Kangasniemi of the developmental effects of the investments. Key financial indicators 2017 2016 Finnfund attained the key targets set by the Min- Net sales EURm 0,0 0,0 istry for Foreign Affairs and exceeded those con- Operating income EURm -10,3 -9,0 Operating margin % cerning positive development effects and cost-ef- Total assets EURm 463,7 406,0 fectiveness of operations. Equity ratio % 52,6 57,4 In the winter of 2017–2018, the Ministry for For- Gearing % 68,7 50,9 eign Affairs commissioned an evaluation of the Return on equity % 0,8 0,1 Special Risk Instrument (SRI) that was in use be- Return on investment % 13,4 2,7 tween the years 2012 and 2015. The purpose of Total dividends paid EURm 0,0 0,0 the evaluation was to share the risks between the Dividends received by the State EURm 0,0 0,0 Investments EURm 0,0 0,2 State and Finnfund when the company’s opera- Personnel, total, 31 Dec 76 64 tions were transferred to poorer countries with a Personnel, Finland, 31 Dec 76 64 higher risk. According to the evaluation, the SRI Gender composition of the was successful and, in accordance with the tar- w/m 2/3 2/3 management team gets set by the Government, operations were more Gender composition of the w/m strongly transferred to projects with increasing- Board of Directors 5/3 6/2 ly far-reaching developmental and environmen- Total tax footprint EURm 0,57 0,02 tal effects. Tax footprint in Finland EURm 0 0

71 Terrafame Group Ltd

In 2015, the State set three goals for Terra- Ramp-up of mining operations has proceeded as fame Group Ltd and its subsidiary Terrafa- planned Terrafame has gained control of the environmental me Ltd: ensuring the environmental safe- challenges related to the Sotkamo mine, the most ty of the Sotkamo mine, securing substan- important of which concerned water management. tial private financing and demonstrating The amount of water on the mining site has been the prerequisites for profitable operations. stabilised to the target level, while only two thirds These goals were attained during 2017. of the sulphate quota for 2017 was used. The condition of adjacent waterbodies is closely monitored, and the condition of Lake Nuasjärvi, for example, TERRAFAME GROUP LTD is good. Terrafame has significantly improved the State shareholding mine’s occupational safety such that the lost-time 100%. The company’s ownership share in Terrafame Ltd is injury frequency rate was 3.5 lost-time injuries per around 77.09% one million person-hours (2016: 8.4 and 2015: Ownership steering 23.3). Ministry of Economic Affairs and Employment Terrafame has demonstrated that it has the prereq- Strategic interest of ownership / Special assignment uisites needed for profitable business. Last year, the The company is responsible for managing the State’s holdings company broke the records in nickel and zinc pro- and using its shareholder power in Terrafame Ltd. duction for the mine’s entire history. The operating Board of Directors on 11 April 2017 margin was positive. The company’s objective is to Janne Känkänen (pj.), Juha Majanen, Minna Pajumaa achieve a positive result and cash flow during the Chief Executive Officer 2018 financial period. Matti Hietanen Key financial indicators 2017 2016 Significant financing arrangements Net sales EURm 153,2 188,4 Private funding for Terrafame has been arranged Operating income EURm -18,2 -0,2 in accordance with the State’s assignment. During Operating margin % -11,9 -0,1 2017, a total of EUR 350 million of private fund- Total assets EURm 243,5 224,4 ing was secured for the company in two different Equity ratio % 58,5 67,3 financing arrangements by the Galena Fund that is Gearing % -60,8 -51,1 part of the Trafigura Group and Sampo Plc. Terra- Return on equity % -13,9 0,9 fame Group has financed Terrafame with a total of Return on investment % -14,2 -0,1 Total dividends paid EURm 0 0 EUR 406.8 million, in addition to which it has giv- Dividends received by the State EURm 0 0 en an investment commitment of EUR 50 million. Investments EURm 22,3 14,3 The concluded financing arrangements will not Personnel, total, 31 Dec 2 081 2 128 only enable the completion of production ramp- Personnel, Finland, 31 Dec 2 081 2 128 up but also the implementation of investments in Gender composition of the w/m management team 5/4 6/5 the production of downstream products. In No- Gender composition of the w/m vember 2017, the company announced its plans to Board of Directors 3/4 3/4 produce a battery chemical plant. The investment Total tax footprint EURm 39,5 41,3 would significantly increase Terrafame’s degree Tax footprint in Finland EURm 39,5 41,3 of processing, and the company would become an important international player in the supply chain of raw materials for electric cars.

72 Tietokarhu Oy

The company’s main task in 2017 was to Review of events in 2017 implement the statutory changes to the da- Despite the gradually declining demand, the company’s financial performance remained good, en- ta systems of the Finnish Tax Administrati- abling additional price reductions for the Finnish on to safeguard the correctness and disrup- Tax Administration. The company’s level of ser- tion-free operation of taxation. Additional- vice remained good, and the measured customer ly, the company supported, for its own part, satisfaction also improved from the already high the deployment of the new Valmis software. figures that clearly outperform those of the reference groups.

TIETOKARHU OY The replacement of the current system of the Finn- ish Tax Administration following the Valmis pro- State shareholding ject will gradually decrease the demand for the 20% (share of votes 80%) company’s services. The number of personnel was Ownership steering adjusted to reflect the actual and foreseen decrease Ministry of Finance in demand. Special assignment As the current systems of the Finnish Tax Admin- Tietokarhu Oy is responsible, for its own part, for the data systems of the Finnish Tax Administration which enable timely and error- istration are approaching the end of their lifecy- free levying of taxes. cle, the company initiated a separate development Board of Directors on 1 January 2018 programme in 2016 to create better preconditions Tomi Hytönen (Chair), Tarja Rautio, Patrik Ekström, Lasse for the personnel for new career paths. The pro- Heinonen, Elina Pylkkänen gramme proceeded more or less according to the Chief Executive Officer plans in 2017. Pekka Liutu Key financial indicators 2017 2016 Net sales EURm 29,1 29 Operating income EURm 4,6 3,8 Operating margin % 15,7 13,2 Total assets EURm 16,2 16,2 Equity ratio % 25,1 21,5 Gearing % 0 0 Return on equity % 98,8 83,9 Return on investment % 122,6 105,8 Total dividends paid EURm 3,7 3,1 Dividends received by the State EURm 0,7 0,6 Investments EURm 0 0 Personnel, total, 31 Dec 164 199 Personnel, Finland, 31 Dec 164 199 Gender composition of the w/m 28,6%/ 33,3%/ management team 71,4% 66,7% Gender composition of the w/m 42,9%/ 40,0%/ Board of Directors 57,1% 60,0% Total tax footprint EURm 7,8 9,3 Tax footprint in Finland EURm 7,8 9,3

73 State Business Development Company Vake Oy

Vake’s task is to circulate the capital inve- SoteDigi established sted in state-owned companies more effec- The State Business Development Company Vake Oy was established in August 2016. The State’s tively and to create value in the companies shareholding in Ekokem Corporation was al- it owns. Under these rules, the business de- so transferred to Vake Oy in August 2016, and velopment company may invest in business Vake carried out the previously agreed-upon sale activities that are deemed necessary to re- of Ekokem shares to Fortum. Vake received pro- new the structure of the economy and ot- ceeds of EUR 198 million from the sale. In Jan- uary 2017, Vake paid EUR 100 million in capital herwise important to the overall develop- repayment to the State. In August 2017, the Gov- ment of society. ernment resolved to establish SoteDigi Oy to develop nationwide customer and patient data sys-

STATE BUSINESS DEVELOPMENT COMPANY VAKE OY tems and other digital solutions for the healthcare and social services sector. The company’s equity State shareholding of EUR 90 million and other establishment costs 100 % were paid out of Vake Oy’s funds, and the shares Ownership steering in SoteDigi Oy were subsequently transferred un- Prime Minister’s Office der direct State ownership and the Ministry of Fi- Special assignment nance’s control and ownership steering by way of Defined in the Government Resolution on State Ownership Policy repayment of equity.

Board of Directors on 1.3.2018 The Government issued guidelines for Vake’s op- Reijo Karhinen (Chair), Paula Laine, Leenä Mörttinen, erations in December 2016. By a Government deci- Maria Ritola, Tuomas Syrjänen, Jarmo Väisänen sion, the State shareholding in the following com- Chief Executive Officer panies can be transferred to the business develop- Taneli Tikka ment company: Altia Plc, Arctia Ltd (interests ex- Key financial indicators 2017* 2016 ceeding 50.1 per cent of share capital), Kemijoki Net sales EURm 198 Oy, Neste Corporation (interests exceeding 33.4 Operating income EURm -0,032 per cent), Nordic Morning Plc, Posti Group Corpo- Operating margin % 0 ration (interests exceeding 50.1 per cent), and Va- Total assets EURm 4,5 po Oy (interests exceeding 33.4 per cent). Equity ratio % 100 Gearing % -100 Operational activities will commence during the Return on equity % -7,9 current year Return on investment % 0,2 Vake’s Board of Directors was appointed at the be- Total dividends paid EURm 100** Dividends received by the State EURm 100** ginning of March 2018, and the Board elected Ta- Investments EURm neli Tikka as the company’s Managing Director. Personnel, total, 31 Dec n/a During the current year, the company is expected Personnel, Finland, 31 Dec n/a to prepare a business plan and investment policy Gender composition of the for the company. Special emphasis on the compa- w/m n/a management team ny’s operations will be placed on the utilisation of Gender composition of the w/m Board of Directors 1/2 the opportunities afforded by platform economy Total tax footprint EURm and artificial intelligence. Tax footprint in Finland EURm

* Exceptional financial year 16 August 2016 – 31 December 2017 ** Capital repayment paid in January 2017

74 Veikkaus Ltd

The new Veikkaus commenced its opera- Monopoly continued with the support of the tions at the beginning of January 2017 fol- gaming system and the Lotteries Act The first year of Veikkaus’ operations was char- lowing the merger of the operations of three acterised by significant investments in the inte- former lottery and gaming operators. In gration of systems and gaming services. Veikkaus’ 2017, the new Veikkaus held a share of about result exceeded the amount to be distributed to 90 percent of the Finnish gaming market. the beneficiaries, which was recorded in the State Gaming is increasingly moving over to di- budget for the beneficiary ministries. gital channels. Measured in terms of the gross gaming revenue, the total Finnish gaming market amounts to about EUR 2.0 billion, of which Veikkaus’ share is about VEIKKAUS LTD 90 percent. There is competition especially in the State shareholding field of digital gaming, where foreign operators are 100 % also active. In 2017, 58.1 per cent of the compa- Ownership steering ny’s net sales came from the retail sales network Prime Minister’s Office and 41.9 per cent came from the digital channels. Special assignment The project to build Finland’s second Casino in Defined in the Lotteries Act the City of Tampere proceeded according to plan. Board of Directors on 27 March 2018 The selling of games in the Åland Islands ended Olli-Pekka Kallasvuo (Chair), Outi Henriksson, Ilkka Kanerva, at the end of 2017, following the amendment of Minna Pajumaa, Tuomo Puumala, Hanna Sievinen, the Åland’s Lotteries Act and the supervision of Jutta Urpilainen, Raimo Vistbacka gaming. Chief Executive Officer Olli Sarekoski In 2017, Veikkaus returned a total of EUR 1,015 Key financial indicators 2017 2016 million to the beneficiary ministries, EUR 537.8 Net sales EURm 3230,9 million to the Ministry of Education and Culture, Operating income EURm 1021,3 EUR 436.3 million to the Ministry of Social Affairs Operating margin % 31,6 and Health, and EUR 40.6 million to the Ministry Total assets EURm 1344,8 of Agriculture and Forestry. Equity ratio % 86,1 Gearing % -8,6 Return on equity % 69,8 Prevention of gambling problems and increasing Return on investment % 69,9 identified gaming Total dividends paid EURm 0 At the end of 2017, Veikkaus had over 2 million Dividends received by the State EURm 0 registered loyal customers. The revised loyal cus- Investments EURm 46,3 tomer programme was supplemented with new Personnel, total, 31 Dec 2039 features supporting responsible gaming. Addition- Personnel, Finland, 31 Dec 2039 ally, new obligatory gaming limits were set for on- Gender composition of the w/m management team 4/6 line gaming, such as a maximum limit for mon- Gender composition of the ey transfers, game or game-group specific gam- w/m 4/4 Board of Directors ing limits, as well as daily and monthly loss limits. Total tax footprint EURm 303,4 Tax footprint in Finland EURm 303,4 Veikkaus also invested significantly in research projects following the development of gambling problems.

75 Yleisradio Oy

Yleisradio Oy’s special assignment is to ma- Development of operations in 2017 ke comprehensive television and radio pro- Yle has continued to carry out content-related and structural reforms to address the changes in me- gramming and related ancillary and extra dia use, technology and working culture. Yle’s new services available for all citizens. Accor- strategy drives its operations strongly towards dig- ding to the Act on Yleisradio Oy, the com- ital renewal. In 2017 Yle invested heavily in the de- pany operates in the administrative sector velopment of online and mobile services and pub- of the Ministry of Transport and Commu- lished more content on Yle Areena. nications, but in practice the Parliament Programming was marked by the municipal elec- and the Supervisory Board elected by the tions, major sports events, Finland’s 100th anni- Parliament have a key role in organising versary and the opening of the drama archives. With the development of content and services, Yle the company’s management, control and succeeded in better reaching the under 45-year- direction. old age groups as well. Yle reached 76 per cent of the population daily, which was more than the YLEISRADIO OY previous year. Weekly reach remained at 93 per cent. Yle reformed its channel structure and im- State shareholding proved the accessibility of content by increasing 99,98 % the amount of subtitling. Yle also increased its pro- Ownership steering gramme purchases from Finnish production com- Administrative Council elected by the Parliament / Mandate of the panies. Ministry of Transport and Communications Special assignment Corporate social responsibility To make comprehensive television and radio programming and related ancillary and extra services available for all citizens Yle executes extensive social responsibility Board of Directors in 2018 through its mission to provide public broadcast- Thomas Wilhelmsson (Chair), Carina Geber-Teir, Paulina Ahokas, ing services and it takes corporate responsibility Kai Huotari, Jussi Karinen, Lauri Kontro, Pauliina Mäkelä, into account in the development of its operations. Arto Nieminen Yle’s versatile content and services support the vi- Chief Executive Officer tality of different population groups, regions, lan- Lauri Kivinen guages and cultures, as well as the citizens’ inclu- Key financial indicators 2017 2016 sion and equality as media users. Responsibility Net sales EURm 472,3 470,9 also includes ethical operating methods, financial Operating income EURm 7,0 -2,9 responsibility for the effective use of the Yle tax Operating margin % 1,5 -0,6 and Yle’s role as a significant employer in the cre- Total assets EURm 249,2 250,5 ative field. Equity ratio % 54,1 51,1 Gearing* % 4,6 13,2 In addition to its mission to provide public broad- Return on equity % 5,3 -2,3 casting services, Yle’s social responsibility is guid- Return on investment % 4,1 -1,3 ed by the company’s values, strategy, risk manage- Total dividends paid EURm 0 0 ment policy and Code of Conduct, which concern Dividends received by the State EURm 0 0 both content production and the company’s other Investments EURm 19,8 25,6 operations. Yle has an environmental responsibil- Personnel, total, 31 Dec 3 360 3506 ity programme in place that pays special attention Personnel, Finland, 31 Dec 3 350 3 496 to energy efficiency, reducing emissions generat- Gender composition of the w/m ed by travel, as well as more efficient waste man- management team 3/5 4/6 agement and recycling. Gender composition of the w/m Board of Directors 3/5 3/5 Total tax footprint EURm 55,9 60,2 Tax footprint in Finland EURm 55,9 60,2

76 13 Sources of data and formulae for calculating key financial indicators

The data provided in this Annex 4 to the State Annual Accounts is based on publicly available information. An attempt has been made to select information on the companies and the share portfolio held by the State that is essential in the eyes of the Ownership Steering Department of the Prime Minister’s Office. The Ownership Steering Department carries out independent analyses of the companies to formulate its own view of their status and performance. Valua- tum Oy’s equity analysis platform is used for the analysis work. The key financial indicators presented in the report are ratios calculated by the Ownership Steering Department using the following formulae. Consequently, the key indicators may differ from those calculated by the companies themselves. One of the reasons for the differences is the items included in the companies’ comparable profit.

Operating margin Operating margin -% = x 100 Net sales

Equity + Minority interest Equity ratio, % = x 100 Balance sheet total – Advances received

profit before taxes + interest and other financial Return on investment, = expenses x 100 % invested capital on average

Net profit Return on equity, % = x 100 Equity (average for the financial year)

Interest-bearing net debts Gearing, % = x 100 Equity

Dividend per share Dividend yield, % = x 100 Share price

Dividend per share Payout ratio, % = x 100 x 100 net earnings per share

Return on all assets, Operating income – Taxes = x 100 % Balance sheet total on average

Total own funds Total own funds in relation to risk- = x 100 weighted assets, % Risk-weighted receivables

77 14 Corporate interests and parliamentary authorisations 31 Dec 2017

Listed companies Ownership Group State shareholding % Minimum level of steering shareholding % Ahtium Oyj Solidium Oy 1a 7,6 0,0 Elisa Oyj Solidium Oy 1a 10,0 0,0 Finnair Plc PMO 1b 55,8 50,1 Fortum Corporation PMO 1b 50,8 50,1 Kemira Oyj Solidium Oy 1a 16,7 0,0 Konecranes Oyj Solidium Oy 1a 4,2 0,0 Metso Oyj Solidium Oy 1a 14,9 0,0 50,1 Neste Corporation PMO 1b 33,4 (49,7 4.1.2018) Outokumpu Oyj Solidium Oy 1a 22,9 0,0 Outotec Oyj Solidium Oy 1a 14,9 0,0 Sampo Oyj Solidium Oy 1a 11,9 0,0 SSAB Solidium Oy 1a 16,6 0,0 Stora Enso Oyj Solidium Oy 1a 12,3 0,0 Telia Company Ab Solidium Oy 1a 3,2 0,0 Tieto Oyj Solidium Oy 1a 10,0 0,0 Valmet Oyj Solidium Oy 1a 11,1 0,0 Total (number) 16

Non-listed commercial Ownership Group State shareholding % Minimum level of companies steering shareholding % 100,0 Altia Plc PMO 1a 0,0 (36,2% 19.4.2018) Arctia Ltd PMO 1b 100,0 50,1 Boreal Plant Breeding Ltd PMO 1b 60,8 50,1 Fingrid Oyj MF 1b 53,1 * 50,1 Gasum Corporation PMO 1b 100,0 50,1 Kemijoki Oy PMO 1a 50,1 0,0 Leijona Catering Oy PMO 1b 100,0 100,0 Meritaito Ltd PMO 1b 100,0 100,0 Motiva Oy PMO 1b 100,0 100,0 Nordic Morning Group Oyj PMO 1a 100,0 0,0 Patria Plc PMO 1b 50,1 50,1 Posti Group Oyj PMO 1b 100,0 50,1 Raskone Ltd PMO 1a 85,0 0,0 Suomen Lauttaliikenne Oy PMO 1b 100,0 100,0 Mint of Finland Ltd PMO 1b 100,0 50,1 Finnish Seed Potato Centre Ltd PMO 1b 22,0 0,0 Suomen Viljava Oy PMO 1b 100,0 100,0 Tapio Ltd PMO 1b 100,0 100,0 Vapo Oy PMO 1b 50,1 33,4 VR-Group Ltd PMO 1b 100,0 100,0 Total (number) 20 Commercial companies in total 36

78 Companies entrusted with Ownership Group State shareholding % Minimum level of special state assignments steering shareholding % Air Navigation Services Finland MTC 2 100,0 % 100,0 % A-Kruunu Oy ME 2 100,0 % 100,0 % Alko Inc. MSAH 2 100,0 % 100,0 % Asset Management Company MF 2 100,0 % 100,0 % Arsenal Ltd1) Baltic Connector Oy MEE 2 100,0 % 0,0 % Cinia Group Ltd MTC 2 77,5 % 50,1 % CSC - IT Center for Science Ltd MEC 2 100,0 % 100,0 % Finavia Corporation PMO 2 100,0 % 100,0 % Finnpilot Pilotage Ltd PMO 2 100,0 % 100,0 % Finnvera Plc MEE 2 100,0 % 100,0 % Finpro Oy MEE 2 100,0 % 100,0 % Finrail Oy MTC 2 100,0 % 100,0 % Gasonia Oy PMO 2 99,0 % 0,0 % Governia Oy PMO 2 100,0 % 100,0 % Hansel Ltd MF 2 100,0 % 100,0 % HAUS Finnish Institute of Public MF 2 100,0 % 100,0 % Management Ltd Horse Institute Ltd MEC 2 25,0 % 0,0 % Municipality Finance Plc ME 2 16,0 % 0,0 % Solidium Oy PMO 2 100,0 % 100,0 % SoteDigi Oy MF 2 100,0 % 100,0 % STUK International Ltd MSAH 2 100,0 % 100,0 % State Security Networks Group PMO 2 100,0 % 100,0 % Finland Finnish Aviation Academy Ltd PMO 2 49,5 % 0,0 % Finnish Industry Investment Ltd MEE 2 100,0 % 100,0 % University Properties of Finland Ltd MF 2 33,3 % .. VTT Technical Research Centre of MEE 2 100,0 % 100,0 % Finland Ltd Finnish Fund for Industrial MFA 2 93,4 % 50,1 % Cooperation Ltd (Finnfund) Terrafame Group Ltd MEE 2 100,0 % 0,0 % Tietokarhu Oy MF 2 20,0 2) % 50,1 % State Business Development PMO 2 100,0 % 100,0 % Company Vake Oy Veikkaus Ltd PMO 2 100,0 % 100,0 % Vimana Oy MF 2 100,0 % 100,0 % Yleisradio Oy MTC 2 100,0 % 100,0 % Total (number) 33 All companies (number) 69

* The State’s share of votes 70.9% 1) In receivership 2) The State's share of votes 80% MTC = Ministry of Transport and Communications, MEC = Ministry of Education and Culture, MSAH = Ministry of Social Affairs and Health, MEAE = Ministry of Economic Affairs and Employment, MFA = Ministry for Foreign Affairs, MF = Ministry of Finance, PMO = Prime Minister’s Office, Ownership Steering Department, ME = Ministry of the Environment Yhtiöryhmä Company Group 1a: The State has exclusively, or almost exclusively, a strong investor interest in the company. When control is exercised through ownership steering, due consideration must be given to the control or influence associated with the State’s holdings as well as the owner’s risk and involvement in decision making based on such holdings. Company Group 1b: Aside form a strong investor interest, the companies in this category involve strategic interests that make it advisable for the State to remain a strong shareholder or take other steps to secure such strategic interests in case its holdings are decreased or relinquished. Company Group 2: As an owner, the State has a special interest in the companies included in this category related to regulation or statutory duties; these companies have a state-defined political or other mission related to business and industry or society, or they play some other special role.

79 eoto tt nulAcut 07 ne State corporate holdings Annex 4 on State AnnualReport Accounts 2017

Government of Finland publication series 23 | 2018