Annual Report • Mar 5, 2015
Annual Report
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Financial Statements 2014
Vaisala is a global leader in environmental and industrial measurement. Building on almost 80 years of experience, Vaisala contributes to a better quality of life by providing a comprehensive range of innovative observation and measurement products and services for chosen weather-related and industrial markets. Headquartered in Finland, the company employs over 1,600 professionals worldwide and is listed on the NASDAQ OMX Helsinki stock exchange.
www.vaisala.com
| CEO's Review | 4–5 |
|---|---|
| Key Figures | 6 |
| Board of Directors' Report 2014 | 7–17 |
| Financial Ratios | 18 |
|---|---|
| Share Figures | 19 |
| Calculation of Financial Ratios | 20 |
| Five Years in Figures | 21 |
| Consolidated Statement of Income | 22 |
|---|---|
| Consolidated Statement of Financial Position | 23–24 |
| Consolidated Statement of Changes in Shareholders' Equity | 25 |
| Consolidated Cash Flow Statement | 26 |
| Notes to the Consolidated Financial Statements | 27– 59 |
| Parent Company Income Statement | 60 |
|---|---|
| Parent Company Balance Sheet | 61–62 |
| Parent Company Cash Flow Statement | 63 |
| Notes to the Parent Company Financial Statements | 64–74 |
| Shares and Shareholders | 75–76 |
| Board fo Directors' Proposal for Distribution of Earnings | 77 |
| Signing of the Board of Directors' Report and Financial Statements | 77 |
| Auditor's Report | 78 |
| Corporate Governance Statement | 80 |
| Information for Shareholders | 94 |
The papers used for the printed publication are Curious Matter 270g/m2 and Galerie Art Volume 115g/m2.
After a slow start of the year, Vaisala performed well in 2014 despite challenging market conditions. Our order intake was strong throughout the year and order book at the end of the year achieved EUR 129.2 million. Net sales growth was very strong during the second half of the year reaching Vaisala's highest ever full year net sales of EUR 299.7 million. Vaisala net sales increased 10% from 2013 and the growth was equally good in both Weather and Controlled Environment business areas. In Vaisala's renewable energy effort, the integration of the acquired businesses, 3TIER and Second Wind did progress well but the sales performance did not yet meet our expectations. Controlled Environment Business Area's net sales growth was strongest in the Life Science customer group. The changes implemented in Controlled Environment Business Area's operating model a year ago have proven to bring expected results and the business is back on track for growth.
Vaisala's net sales in 2014 grew in all geographical areas and especially in APAC and EMEA. Our gross margin improved by almost two percent points to 51.1% as a result of volume growth and related scale economies. The operating result was EUR 26.4 million, increasing 46% which is quite an achievement taking into account higher investments in R&D in both business areas as well as in the sales force in Controlled Environment Business Area.
In 2014, we continued the investments in strategic growth areas in both business areas. R&D spending was increased by EUR 5 million to 11.3% of net sales to support the growth initiatives, to renew the portfolio and to improve competitiveness. Observation Network Manager, which enables customers to easily monitor their weather observation network, and a new version of Vaisala´s decision support system for road maintenance are notable examples of successful software development in Vaisala. In addition, an innovative carbon dioxide probe for incubators, a new high-end HVAC wall transmitter, and a new digital humidity module for OEM applications are excellent development results built on Vaisala's superb proprietary technology. In weather radars, we launched a new antenna mounted receiver which enables our customers to upgrade existing single polarization weather radar to dual polarization by adding one compact unit.
Weather Business Area continued to build new business around information services, further extending the offering to renewable energy, aviation, and roads customers. As a result of business development together with customers we signed first contracts for aircraft deicing optimization with three airlines in Europe and the USA. The most important achievement in building the foundation for our renewable energy business unit was the integration and alignment of three organizations: Vaisala, Second Wind and 3TIER. Also building our new offering for renewable energy customers, gaining industry acceptance of the existing product portfolio and gaining general industry recognition progressed well in 2014.
Controlled Environment Business Area continued to accelerate growth in the industrial businesses; targeted industrial applications and life science, by enhancing the offering and developing the sales channel. We invested in regional expansion by contracting new distributors in over 10 countries with high industrial potential.
The steady progress in strategy implementation was also reflected in our financial performance. We achieved 10% net sales growth, the average annual target being 5%. It's noteworthy that this growth came from all regions and from most customer groups. The EBIT was 9% of net sales, the target being 15% towards the end of period 2014–2018.
I want to thank all Vaisala employees for the excellent result which was achieved by strong and competent teams, excellent co-operation and driving continuous renewal.
We have systematically developed our sustainability performance and reporting, and therefore I am very pleased that in 2014 Vaisala was awarded a position on CDP's (formerly the Carbon Disclosure Project) prestigious A list of the Global Climate Performance Leadership Index and on the Nordic Climate Disclosure Leadership Index. The performance score assesses the level of action on climate change mitigation, adaptation and transparency. Vaisala was assessed under Information Technology sector, which is widely understood to be one of the fundamental driving forces of change in the business and consumer societies. Delivering innovation to meet product efficiency regulations is another well-reported opportunity which we are demonstrating through our technology, solution and product offering.
Vaisala will contribute humidity, temperature, and carbon dioxide measurement instruments to the new children's hospital to be constructed in Helsinki, Finland in 2017. The estimated value of this equipment is 225,000 euros and it will be integrated into the hospital's building automation solution.
The market conditions that Vaisala faces in different markets vary significantly. Competition in the weather observation market is expected to continue intensifying. The market for industrial measurement and life science solutions is expected to remain favorable in the Americas while other markets will remain flat. The Russian economy is expected to continue weakening. The Chinese market is expected to be somewhat slow during 2015.
On January 27, 2015, we announced our plans to restructure Vaisala's business in order to strengthen the capability to implement our strategy and to increase agility. An integral part of our strategy is to drive efficiency through simplification both in the way we operate and develop our organization. By the planned consolidation of Weather Business Area into three business units and by making services an integral part of our Weather Business Area we can increase both our efficiency and customer focus. Controlled Environment Business Area is planned to be organized around three regions with full business responsibility. The aim is to increase customer focus and agility in this fast moving business. This will be further enhanced by accelerated portfolio renewal. The planned restructuring is a vital part of our strategy implementation, aiming to reach our long-term financial targets.
We estimate our full year 2015 net sales to be in the range of EUR 285–315 million and the operating profit (EBIT) in the range of EUR 20–30 million.
Operating Result (M€) Operating Result, M€
Net Sales by Business Area Net Sales by Business Area 2014
Net Sales by Region Net Sales by Region 2014
For financial ratios and five year development, see pages 18–21.
Macroeconomic conditions started to improve in the second half of 2013, and this was gradually reflected in weather observation, industrial measurement and life science solution markets during 2014. Both Vaisala's business areas increased their net sales in all geographic areas during 2014.
In EMEA weather observation market conditions were solid, especially European market performed well. Economic weakness and currency depreciation in Russia as well as conflicts in the Middle East had an unfavorable impact on weather observation market activity in these regions. Demand for industrial measurement and life science solutions improved towards the end of the year.
In Americas weather observation market was still suffering from repercussions of USA government budget sequestration measures during the first half of 2014. However, market activity improved significantly during the second half of the year. Also industrial measurement and life science solutions market started to pick up in the end of first half of the year and business environment of second half was favorable.
In APAC weather observation market remained active, although signs of cooling off were registered in China in the second half of 2014. Demand for industrial measurement and life science solutions improved towards the end of the year.
| Orders received | |||
|---|---|---|---|
| EUR million | 2014 | 2013 | Change, % |
| Weather | 215.2 | 208.3 | 3 |
| Controlled Environment |
79.8 | 74.6 | 7 |
| Total | 295.0 | 282.9 | 4 |
| Order book | |||
| EUR million | 2014 | 2013 | Change, % |
| Weather | 123.7 | 116.2 | 7 |
| Controlled Environment |
5.5 | 5.8 | -5 |
In January-December 2014, orders received were EUR 295.0 (282.9) million and increased by 4% compared to the previous year. The growth came mainly from APAC and Europe. Weather Business Area's orders received were EUR 215.2 (208.3) million and increased by 3%. The growth came from all other customer groups except Meteorology. Controlled Environment Business Area's orders received were EUR 79.8 (74.6) million and increased by 7%. Orders received increased in both customer groups.
The order book was EUR 129.2 (122.0) million at the end of December and increased by 6% compared to end of December 2013. Of the order book EUR 55.1 (39.4) million will be delivered in 2016 or later. The order book includes also a positive correction of EUR 11.9 million to opening order books of 3TIER Inc. and Second Wind Systems Inc., which were acquired during the second half of 2013.
| EUR million | 2014 | 2013 | Change, % |
|---|---|---|---|
| Weather | 219.6 | 200.0 | 10 |
| Controlled Environment |
80.2 | 73.2 | 9 |
| Total | 299.7 | 273.2 | 10 |
| EUR million | 2014 | 2013 | Change, % |
|---|---|---|---|
| EMEA | 111.8 | 98.6 | 13 |
| Americas | 112.1 | 107.8 | 4 |
| APAC | 75.9 | 66.9 | 14 |
| Total | 299.7 | 273.2 | 10 |
In January-December 2014, Vaisala's net sales were EUR 299.7 (273.2) million and increased by 10% compared to the previous year. Weather Business Area's net sales were EUR 219.6 (200.0) million and increased by 10%. The growth came from all customer groups except Airports. Weather Business Area improved its net sales in project and services businesses and in all geographical areas. Controlled Environment Business Area's net sales were EUR 80.2 (73.2) million and increased by 9%. The growth came from both customer groups and from all geographical areas.
In January-December 2014, net sales in EMEA were EUR 111.8 (98.6) million and increased by
13% compared to the previous year, in the Americas EUR 112.1 (107.8) million and increased by 4% and in APAC EUR 75.9 (66.9) million and increased by 14%.
At comparable exchange rates the net sales would have been EUR 300.7 (273.2) million and increase would have been EUR 27.5 million or 10% from previous year. The negative exchange rate effect was EUR 1.0 million, which was mainly caused by JPY and AUD exchange rate fluctuations.
Operations outside Finland accounted for 97% (97%) of net sales.
Gross margin was 51.1% (49.2%). The increase was mainly due to decreased unit costs, which is a result of increased net sales and related scale economies as well as further optimized supply chain.
| EUR million | 2014 | 2013 | Change, % |
|---|---|---|---|
| Weather | 17.0 | 14.5 | 17 |
| Controlled Environment |
12.1 | 4.0 | 201 |
| Eliminations and other |
-2.8 | -0.4 | -576 |
| Total | 26.4 | 18.1 | 46 |
In January-December 2014, operating result was EUR 26.4 (18.1) million. The increase was mainly due to increased net sales and better gross margins in both business areas, whereas operating result for 2013 decreased due to the impairment charge of EUR 4.3 million recognized in Controlled Environment Business Area. The impairment charge was related to goodwill and intangible assets originating from the acquisition of Veriteq Instruments Inc. in 2010. Operating expenses were EUR 127.2 (113.6) million and increased by 12% compared to the previous year. The increase was mainly due to consolidation of operating expenditures of 3TIER Inc. and Second Wind Systems Inc., which were acquired during the second half of 2013 as well as investments in R&D related to new offering development and renewing instrument portfolio.
Financial income and expenses were EUR 2.6 (-1.0) million for the period of January-December 2014. The increase is mainly due to foreign exchange gains related to valuation of USD denominated receivables.
Profit before taxes was EUR 29.1 (17.2) million for the period of January-December 2014. Income taxes were EUR 5.7 (6.2) million. Effective tax rate of 19.5% (36.4%) is lower than in previous year because income tax rate in Finland changed from 24.5% to 20% and reassessment of deferred tax assets. Effective tax rate of 2013 was also high mainly due to non-tax deductibility of the impairment charge of EUR 4.3 million recognized in
Controlled Environment Business Area. Net result was EUR 23.4 (10.9) million.
Earnings per share for January-December 2014 were EUR 1.30 (0.60).
Vaisala's financial position remained strong at the end of the December 2014. Cash and cash equivalents amounted to EUR 47.6 (45.8) million at the end of December 2014 and Vaisala did not have any material interest bearing liabilities.
The statement of financial position total was EUR 244.6 (225.6) million. The solvency ratio at the end of the December 2014 was 71% (72%).
In January-December 2014, Vaisala's cash flow from operating activities was EUR 23.8 (28.2) million. The decrease was mainly due to cash tied in working capital, as high net sales at the end of 2014 increased accounts receivable and component purchases for long life cycle products increased the inventory.
Gross capital expenditure totaled EUR 7.9 (7.1) million for January-December 2014. Depreciation was EUR 15.2 (14.8) million.
| EUR million | 2014 | 2013 | Change, % |
|---|---|---|---|
| Orders received | 215.2 | 208.3 | 3 |
| Order book | 123.7 | 116.2 | 7 |
| Net sales, total | 219.6 | 200.0 | 10 |
| Products | 92.1 | 97.3 | -5 |
| Projects | 83.8 | 70.0 | 20 |
| Services | 43.7 | 32.7 | 34 |
| Operating result | 17.0 | 14.5 | 17 |
In January-December 2014, Weather Business Area's orders received were EUR 215.2 (208.3) million and increased by 3% compared to the previous year. Orders increased in all other customer groups except in Meteorology. The order book was EUR 123.7 (116.2) million at the end of December and increased by 7% compared to end of December 2013. Of the order book EUR 53.7 (39.1) million will be delivered in 2016 or later.
In January-December 2014, Weather Business Area's net sales were EUR 219.6 (200.0) million and increased by 10% compared to the previous year. The growth came from all customer groups except Airports. The highest growth came from New Weather Markets customer group. Weather Business Area improved its net sales in project
and services businesses and in all geographical areas. At comparable exchange rates the net sales would have been EUR 219.4 (200.0) million and increase would have been EUR 19.4 million or 10% from previous year. The positive exchange rate effect was EUR 0.2 million, which was mainly caused by USD and GBP exchange rate fluctuations.
In January-December 2014, Weather Business Area's operating result was EUR 17.0 (14.5) million and increased by 17% compared to the previous year. The increase was due to improved net sales and gross margins. Operating expenses increased compared to the previous year mainly due to consolidation of operating expenditures of 3TIER Inc. and Second Wind Systems Inc., which were acquired during the second half of 2013 as well as investments in R&D related to new offering development and renewing instrument portfolio.
| EUR million | 2014 | 2013 | Change, % |
|---|---|---|---|
| Orders received | 79.8 | 74.6 | 7 |
| Order book | 5.5 | 5.8 | -5 |
| Net sales, total | 80.2 | 73.2 | 9 |
| Products | 70.7 | 64.2 | 10 |
| Services | 9.4 | 9.0 | 5 |
| Operating result | 12.1 | 4.0 | 201 |
In January-December 2014, Controlled Environment Business Area's orders received were EUR 79.8 (74.6) million and increased by 7% compared to the previous year. Orders received increased in both customer groups. At the end of December 2014 the order book was EUR 5.5 (5.8) million and decreased by 5% compared to the previous year. Of the order book EUR 1.4 (0.3) million will be delivered in 2016 or later.
In January-December 2014, Controlled Environment Business Area's net sales were EUR 80.2 (73.2) million and increased by 9% compared to the previous year. Net sales increased in both customer groups, mainly in Life Science. Net sales increased in all geographical areas. At comparable exchange rates the net sales would have been EUR 81.4 (73.2) million and increase would have been EUR 8.2 million or 11% from previous year. The negative exchange rate effect was EUR 1.2 million, which was mainly caused by JPY exchange rate fluctuations.
In January-December 2014, Controlled Environment Business Area's operating result was EUR 12.1 (4.0) million and increased by 201% compared to the previous year. The increase was mainly due to improved net sales and gross margins, whereas operating result for 2013 decreased due to the impairment charge of EUR 4.3 million.
The impairment charge was related to goodwill and intangible assets originating from the acquisition of Veriteq Instruments Inc. in 2010. Operating expenses increased compared to the previous year mainly due to higher sales and marketing expenses as well as investments in R&D related to new offering development.
In January-December 2014, research and development (R&D) expenses amounted to EUR 34.0 (28.9) million, representing 11.3% (10.6%) of net sales. The increase was mainly due to R&D expenses of the acquired companies, as well as investments in new offering development and renewing instrument portfolio.
| EUR million | 2014 | 2013 | Change, % |
|---|---|---|---|
| Weather | 25.7 | 22.4 | 15 |
| Controlled Environment |
8.2 | 6.5 | 27 |
| Total | 34.0 | 28.9 | 18 |
Weather Business Area R&D expenses were 11.7% (11.2%) of net sales. Controlled Environment Business Area R&D expenses were 10.3% (8.9%) of net sales.
Vaisala made several product and software releases in 2014 and the most important ones are listed below. More details concerning the new products and software can be found at www.vaisala.com.
Weather business continued the 4th generation soundings release program by launching ozone sounding capability for RS41 radiosonde and a new model RS41-SGP, which includes pressure sensor for direct atmospheric pressure measurement. In Weather radars the new antenna mounted receiver AMR enables customers to upgrade existing single polarization weather radar to dual polarization by installing one compact unit. Vaisala launched also IRIS Vision, a new, easy to use web display for weather radars. Other key software launches for Weather business were Avicast, a decision support system for airports, Observation Network Manager NM10, which enables customers to easily monitor their weather observation network and a new version of RoadDSS, a decision support system for road maintenance. RoadDSS was followed by first RWS200 launch. RWS200 is a new flexible weather station for Vaisala road maintenance customers.
Controlled Environment business area launched a heat sterilization durable instrument, the GMP231, with CARBOCAP® technology for measuring chamber and incubator carbon dioxide levels. GMP231 can resist temperatures as high as 180 degrees of Celsius making it optimal
for environments where heat sterilization is needed. Also, HMM105 – a HUMICAP® powered digital humidity module for OEM applications – was launched for the same application and can be integrated to environmental chambers and incubators for measuring the humidity for example in microbiological environments. For building automation market Vaisala launched the Vaisala HUMICAP® HMDW110 Series Humidity and Temperature Transmitters. The HMDW110 series transmitters feature high measurement accuracy and are intended for demanding heating, ventilation and air conditioning systems and life sciences cleanroom applications. For hand-held instrument market Vaisala launched HM42/46 models for popular HM40 hand-held humidity and temperature meter.
Vaisala has been an active member in the society and very committed to the scientific community and the universities throughout its 78 years history.
Vaisala collaborates in several projects with leading research institutes in the field, such as the National Oceanic and Atmospheric Administration (NOAA), Colorado State University, University of Massachusetts, and the US National Center for Atmospheric Research (NCAR) in the United States. In Finland, Vaisala collaborates with VTT Technical Research Centre of Finland, University of Helsinki and Aalto University. In Asia Vaisala is working in many projects together with Shanghai Meteorological Service and the Nanjing University for Information Science and Technology (NUIST). In addition, Vaisala gives research grants to universities, students and researchers in the USA, Finland and China.
Vaisala collaborates closely with a number of national meteorological offices around the world and is an active participant in UN's World Meteorological Organization (WMO). Vaisala also collaborates with Finnish Meteorological Institute on several projects.
Vaisala funds two annually granted Professor Vilho Väisälä Awards. The award for the Outstanding Research Paper on Instruments and Methods of Observation was established in1985 and it is administered and granted by the World Meteorological Organization. This award has been granted already 24 times and in 2014 it was given to four specialists from the Netherlands. The award for the Development and Implementation of Instruments and Methods of Observation has been awarded four times but in 2014 it was not granted to anyone.
Vaisala supports The Millennium Technology Prize, which is Finland's tribute to innovations for a better life. The prize is awarded for groundbreaking technological innovations that enhance the quality of people's lives in a sustainable
manner and for innovations which stimulate further cutting edge research and development in science and technology. Prof. Stuart Parkin received the 2014 Prize in recognition of his discoveries, which have enabled a thousand-fold increase in the storage capacity of magnetic disk drives.
Vaisala is CLEEN Oy's partner and member of the Board ofDirectors. CLEEN Oy is a cluster for energy and environment that maintains and develops a world-class open innovation platform for market-driven joint research between industry and academia. Vaisala also partners with Technology Academy Finland.
Vaisala participates in the Distinguished Professor Program (Finland) by supporting scientists at the Finnish Meteorological Institute and University of Helsinki.
Vaisala's representatives are also members of the Board of the Federation of Finnish Technology Industries and in its committees, such as the Environmental Committee.
In the United States, Vaisala is an active member of the Board of Trustees at the University Corporation for Atmospheric Research (UCAR), the Industrial Advisory Board of the Center for Adaptive Sensing of the Atmosphere, and the Dean's Advisory Board to the College of Engineering at Colorado State University and an advisory committee for the University of Arizona's Atmospheric Sciences Department. Vaisala also is a member of the Board of CO-LABS in the state of Colorado, USA and on the Environmental Information Services Working Group of the NOAA Science Advisory Board, as well as on the Executive Committee of the Weather Coalition in the US. In addition Vaisala serves on the Science Steering Committee of the Weather and Climate Enterprise Commission of the American Meteorological Society. Vaisala is a member of the American Meteorological Society's Scientific and Technological Activities Commission's Committee on Atmospheric Electricity.
Vaisala was a member of the Science Program Committee of the upcoming World Weather Open Science Conference which was held in Montreal, Canada in August 2014, an event organized by the World Meteorological Organization, Environment Canada, the International Council for Scientific Unions, and the National Research Council of Canada.
Vaisala is also a participant in the International Electrotechnical Commission's Committee on Lightning Protection, which includes Lightning Location Systems and Lightning Warning Systems.
Vaisala's competence development is steered by business strategies. Vaisala continued to invest in digitalization capabilities and competencies to further improve customer experience especially in Vaisala's online services and customer communication activities. Customer and application knowledge has increasing importance for Vaisala strategy implementation. To support the capability to argument customer value of solutions we continued to execute Vaisala tailored Value-selling training sessions. Renewable energy industry competence has been mainly developed through acquisitions and recruitments.
Vaisala's approach to competence development combines internal and external learning programs, co-operation with universities and researchers, job-rotation, international assignments, mentoring and coaching processes. In 2014 Vaisala launched a comprehensive e-learning platform to complement other learning initiatives. Vaisala online eLearning environment hosts currently over 40 interactive modules.
LEAD program for managers and Expert Lead program for key experts focused on further developing Vaisala's leadership and collaboration culture and competences. The ninth global Vaisala Business Learning Program started in fall 2014 extending leadership skills especially in strategy, customer focus and financial performance. Quality Lead training was launched for all Vaisala managers in May 2014. Cross-functional Reliable Customer Experience workshops in all Vaisala offices enhanced customer focused mindset and process thinking.
Aligned with 'Well-being at work' theme all Finland based managers participated in an interactive training session. Occupational Health and Safety Awareness training was renewed during the year 2014.
Global values dialogue process started after the strategy renewal was finalized in May 2014. All Vaisala employees were invited to discuss Vaisala's values in online and team sessions. Vaisala's values are Customer Focus, Innovation and Renewal, Strong Together, and Integrity.
On December 31, 2014, the number of Group employees was 1,613 (December 31, 2013: 1,563). The average number of personnel employed in Vaisala in January-December 2014 was 1,617 (1,485). The number of employees increased due to strengthening the company's research and development as well as sales activities.
On December 31, 2014, 64% (66%) of employees were located EMEA, 27% (25%) in the Americas and 9% (9%) in APAC. 43% (41%) of employees were based outside Finland. At the end of the year 22% (19%) of employees were employed in the company's research and development activities.
| December 31, 2014 |
December 31, 2013 |
Change, % | |
|---|---|---|---|
| Finland | 917 | 893 | 3 |
| EMEA (excluding Finland) |
123 | 120 | 3 |
| Americas | 438 | 428 | 2 |
| APAC | 135 | 122 | 11 |
| Total | 1,613 | 1,563 | 3 |
On May 3, 2012 the Board of Directors resolved for the Group key employees a share-based incentive plan that is based on the development of Group's profitability in calendar year 2012 and it will be paid partly in the Company's series A shares and partly in cash in spring 2015. The cash proportion will cover taxes and tax-related costs arising from the reward to a key employee. No reward will be paid, if a key employee's employment or service ends before the reward payment date. Maximum amount corresponding to 142,200 shares will be paid depending on the number of entitled persons in the company at the end of vesting period. In 2014 EUR 0.7 million and in 2013 EUR 0.6 million was expensed for the share-based incentive plan (EUR 0.4 million in 2012).
On February 6, 2013 the Board of Directors resolved for the Group key employees a sharebased incentive plan that is based on the development of Group's profitability in calendar year 2013 and it will be paid partly in the Company's series A shares and partly in cash in spring 2016. The cash proportion will cover taxes and tax-related costs arising from the reward to a key employee. No reward will be paid, if a key employee's employment or service ends before the reward payment date. Maximum amount corresponding to 150,000 shares will be paid depending on the number of entitled persons in the company at the end of vesting period. In 2013 no expense was recognized as the criteria was not met.
On February 10, 2014 the Board of Directors resolved for the Group key employees a sharebased incentive plan that is based on the development of Group's profitability in calendar year 2014 and it will be paid partly in the Company's series A shares and partly in cash in spring 2017. The cash proportion will cover taxes and tax-related costs arising from the reward to a key employee. No reward will be paid, if a key employee's employment or service ends before the reward payment date. Maximum amount corresponding to 147,000 shares will be paid depending on the number of entitled persons in the company at the end of vesting period. In 2014 EUR 0.2 million was expensed for the share-based incentive plan.
The total personnel expenses in 2014 were EUR 116.3 (104.7) million.
Vaisala is in a unique position to promote sustainable development through the technologies it offers to its customers. Through its weather solutions, Vaisala safeguards lives and property and reduces environmental impacts. Industrial instruments bring efficiencies and reduce energy and material consumption in customer operations.
Vaisala pays special attention to the objectives of UN Global Compact in the areas of human and labor rights, the environment, and anti-corruption. For Vaisala sustainability is more than just reducing our own impacts. It is about giving our customers tools to succeed in their sustainability actions. On a grander scale Vaisala provides means for assessing the state of the environment and climate. Based on this strategic approach Vaisala was awarded a position on CDP's (formerly the Carbon Disclosure Project) prestigious A list of the Global Climate Performance Leadership Index (Global CPLI) and on the Nordic Climate Disclosure Leadership Index (CDLI). The performance score assesses the level of action on climate change mitigation, adaptation and transparency. Vaisala was assessed under Information technology sector, which is widely understood to be one of the fundamental driving forces of change in the business and consumer societies. Delivering innovation to meet product efficiency regulations is another well-reported opportunity which Vaisala is demonstrating through its technology, solution and product offering.
Further information about Vaisala's sustainability is available on the company website at www.vaisala.com/sustainability.
The Annual General Meeting held on March 26, 2014 confirmed that the number of Board members is seven. Mikko Niinivaara and Raimo Voipio were re-elected and Petra Lundström and Pertti Torstila were elected as new members of the Board of Directors.
Members of the Board of Directors on December 31, 2014
Vaisala's headquarters are located in Vantaa, Finland. On December 31, 2014, the company has subsidiaries in Australia, Brazil, Canada, China, Germany, France, India, Japan, Malaysia, United
Kingdom and United States. Further, the company has permanent establishments in Sweden and Kuwait, and regional offices in India, South Korea and the United Arab Emirates. The subsidiary in Panama was liquidated during 2014. Subsidiary in United Kingdom 3TIER (Europe) Limited was merged to Vaisala Limited and subsidiaries in United States 3TIER Inc. and Second Wind Systems Inc. were merged to Vaisala Inc.
Vaisala's Board of Directors confirmed the 2014–2018 strategy in May 12, 2014. Vaisala's goal of profitable growth will be achieved through the implementation of the strategic themes: creation of customer value, reliability, and simplification.
In Weather Business Area additional customer value will be created by building new business around decision support services that are offered to renewable energy, aviation and roads customers. Controlled Environment Business Area will focus on enhancing offering and developing the sales channel for life science and industrial customers in order to create value for customers' operations.
Reliability will create customer satisfaction and loyalty. High quality of products and services, well-functioning customer service and on-time actions will deliver reliable customer experience.
Simplification will create operational efficiency. Optimized global networks, streamlined supply chains, common capabilities and continual improvement in all functions will ensure increased efficiency of Vaisala's operations.
Growth: Vaisala targets an average annual growth of 5%. In selected growth businesses such as renewable energy and life science the target is to exceed 10% annual growth.
Profitability: Vaisala's objective is profitable growth and the target is to achieve 15% operating profit (EBIT) margin towards the end of the period.
Vaisala does not consider the long-term financial targets as market guidance for any given year.
In 2014, Vaisala continued the investments in strategic growth areas in Weather and Controlled Environment Business Areas according to the strategy. Vaisala also increased the R&D spending by EUR 5 million to 11.3% of net sales to support the growth initiatives, to renew the portfolio and to improve competitiveness.
Weather Business Area continued to build new business around information services to be offered to renewable energy, aviation, and roads customers.
In 2013, Vaisala acquired two companies, 3TIER Inc. and Second Wind Systems Inc., to take a leap forward in Weather Business Area's renewable energy strategy. Year 2014 focused on building a solid basis for the renewable energy business by redefining unit's strategy and most importantly the integration and alignment between the three organizations. Building new offering and gaining industry acceptance of the existing product portfolio progressed well as Vaisala continued to gain industry recognition. Vaisala had a good progress in strengthening its presence in focused countries, however, the sales performance did not yet meet the set expectations.
Other initiatives for the information service strategy implementation progressed well and Vaisala signed first contracts for aircraft deicing optimization with three airlines in Europe and USA.
In 2014, Vaisala launched several new advanced products and software for the weather markets to enhance growth as well as to replace existing products. The main launches were a completely renewed road weather station, RWS200, combined with sophisticated decision support software. Another key launch was a new antenna-mounted receiver for weather radars that allows customers to upgrade, rather than completely replace, their existing single-polarization weather radars into modern dual-polarization radars.
Controlled Environment Business Area continued to accelerate growth in the industrial businesses; targeted industrial applications and life science by enhancing the offering and developing the sales channel. Controlled Environment Business Area invested in regional expansion by contracting new distributors in over 10 countries with high industrial potential. Vaisala's instruments are now available to current and new customers through the company's own sales channels, local distributors as well as the online store which is currently available in close to 100 countries around the world.
Vaisala built industrial business also by driving growth in life science monitoring systems. Industrial instruments were provided to wide variety of industries and new products were introduced e.g. for the building automation industry amending the portfolio with new generation products incorporating the new generation Vaisala CARBOCAP® carbon dioxide sensing technology.
In 2014, Vaisala continued its efforts to improve the quality and delivery capabilities of products and services to fulfill the high customer expectations. The main actions included development of the quality of product design, manufacturing and service deliveries. Special attention was paid to corrective and preventive actions to improve quality of subcontractor deliveries.
Vaisala continued its efforts also in on-time delivery accuracy and reduction of lead times throughout a variety of products, projects and services. Good progress was achieved by utilizing lean practices to improve the end-to-end material flow and throughput time of deliveries. Delivery times are especially important for Vaisala's many industrial customers.
Vaisala also continued its actions to improve and optimize ERP system, core processes, global supply and delivery networks.
The objective of Vaisala's risk management is to identify and manage material risks related to strategy implementation and business operations. Vaisala has a risk management policy which has been approved by the Board of Directors, and which covers the Company's business, operational, hazard, and financial risks. The policy aims at ensuring the safety of the Company's personnel, operations and products, as well as the continuity and compliance of business operations.
The Board of Directors defines and approves risk management principles and policies, and assesses the effectiveness of risk management. The Audit Committee reviews compliance with risk management policy and processes.
Vaisala's Risk Management Steering Group comprises key internal stakeholders. The Steering Group is responsible for the operational oversight of the risk management process and assuring that all significant risks are identified and reported, and risks are acted upon on all necessary organizational levels and geographical locations.
Risk management is integrated into key business processes and operations. This is accomplished by incorporating applicable risk identification, assessment, management and risk reporting actions into the core processes. The most significant risks are reported to the Vaisala Management Group and the Audit Committee annually.
Vaisala's business is exposed to changes in the global economy, politics, conflicts, policies, regulations, Vaisala's supply chain and distribution channels, and accidents as well as natural disasters and epidemics, which may affect business e.g. through order cancellations, disturbance in logistics, travel restrictions, and loss of market potential. Vaisala's capability to successfully complete investments, acquisitions, divestments
and restructurings on a timely basis and to achieve related financial and operational targets represent a risk which may impact revenue and profitability.
The most significant near-term risks and uncertainties that may affect both revenue and profitability relate to the company's ability to maintain its delivery capability, availability of critical components, interruptions in manufacturing or IT systems, changes in the global economy, western sanctions against Russia, spreading of epidemics, continuing conflicts in the Middle East and Africa, currency exchange rates, customers' financing capability, changes in customers' purchasing or investment behavior, and delays or cancellations of orders. Changes in the competition may affect the volume and profitability of business through introduction of new competitors and price erosion in areas which traditionally have been strong for Vaisala. Changes in subcontractor relations, their operations or operating environment as well as the quality of the deliverables may have a negative impact on Vaisala's business.
A significant part of Vaisala's business is project business. Project business performance and schedules have dependencies to third parties, which may impact profitability and timing of revenue recognition. Assumptions regarding new project and service business opportunities constitute a risk for both revenue and profitability.
The importance of information services and decision support systems is increasing in Vaisala's weather business. These Internet-based online services are potential subjects to a variety of cyber risks.
Interest rate risk arises from the effects of interest rate changes on interest-bearing receivables and liabilities in different currencies. Vaisala does not have significant interest-bearing liabilities or receivables and in addition to cash at hand therefore interest rate risk is immaterial. A change of one percent point in the interest rate would affect the company's result after taxes and equity by around EUR 0.2 (EUR 0.3) million.
Vaisala operates globally and is exposed to foreign exchange transaction and translation risks in many currencies. Transaction risk relates to currency flows from revenues and expenses and translation risk relates translation of statement of income and balance sheet or foreign subsidiaries into euros.
The sales takes place in various currencies. From the Group's sales 48% is in EUR, 36% in USD, 4% in JPY, 4% in GBP and 4% in CNY. The cost and purchases occur mostly in Euros and US dollars. The group policy is to hedge a position that in maximum consists of order book, purchase orders and net receivables with currency forwards.
Vaisala does not apply hedge accounting in accordance with IFRS.
Group's internal loans and deposits are primarily initiated in the local currencies of the subsidiaries. Vaisala does not hedge internal loans, deposits or equities of the subsidiaries. Translation of subsidiaries' balance sheets into euros caused translation difference of EUR 3.4 (-3.4) million. The most significant translation risk exposures are in US dollars.
The foreign exchange sensitivity analysis in line with IFRS 7 has been calculated for the foreign currency nominated receivables, loans, cash and liabilities of group companies. The calculation does not include internal loans, order book or forecasted cash flows but it includes foreign exchange forwards. 10% strengthening of currencies against EUR would have had EUR -0.8 (-1.4) million impact on Vaisala's profit after taxes as well as equity. The following table presents the most significant foreign exchanges exposures against EUR.
| EUR million | 2014 | 2013 |
|---|---|---|
| USD | -11.9 | -14.6 |
| CAD | 0.7 | -0.9 |
| AUD | -0.7 | -1.3 |
| JPY | -0.9 | -1.2 |
Vaisala's cash at hand amounted to EUR 47.6 (45.8) million at the end of 2014. The parent company has also EUR 20 million uncommitted credit loan limit, which is currently unused. Additionally, the subsidiaries have EUR 1.6 million credit limit, which can be used either as guarantees or as loans. Currently, EUR 0.0 (0.0) million has been draw from this facility. Vaisala does not have any other material external interest bearing liabilities.
Vaisala cash at hand amounted to EUR 47.6 (45.8) million at the end of 2014, which exposes Vaisala to financial counterparty risk. Vaisala deposits its cash only to counterparties with good credit worthiness and which have been approved by the Board of Directors. Counterparty creditworthiness is evaluated constantly. The maturity of cash deposits is less than one month as of December 31, 2014.
Credit risks are hedged by using letters of credit, advance payments and bank guarantees as terms of payment. According to Group management, the company has no material credit risk concentrations, because no individual customer or customer group represents an excessive risk, resulting from global diversification of the company's customer pool. Total credit losses arising from trade receivables and recognized for the financial year amounted to EUR 0.1 million (-0.7). Bad debts are written off when official announcement of receivership, liquidation or bankruptcy is received confirming that the receivable will not be honored.
Annual General Meeting was held on Wednesday, March 26, 2014 at Vaisala's head office in Finland. The meeting approved the financial statements and discharged the members of the Board of Directors and the President and CEO from liability for the financial period January 1–December 31, 2013.
The Annual General Meeting decided a dividend of EUR 0.90 per share, corresponding to the total of EUR 16,253,292.60. The record date for the dividend payment was March 31, 2014 and the payment date was April 7, 2014.
The Annual General Meeting decided that the annual fee payable to the Board members for the term until the close of the Annual General Meeting in 2015 is: the Chairman of the Board of Directors EUR 45,000 and each Board member EUR 35,000. Approximately 40 percent of the annual remuneration will be paid in Vaisala Corporation's A shares acquired from the market and the rest in cash.
In addition, the Annual General Meeting decided that the compensation per attended meeting for the Chairman of the Audit Committee is EUR 1,500 and EUR 1,000 for each member of the Audit Committee for the term until the close of the Annual General Meeting in 2015. The compensation per attended meeting for the Chairman and each member of the Remuneration and HR Committee and any other committee established by the Board of Directors is EUR 1,000 for the term until the close of the Annual General Meeting in 2015.
The Annual General Meeting confirmed that the number of Board members is seven. Mikko Niinivaara and Raimo Voipio were re-elected for the term until the close of the Annual General Meeting in 2017. Petra Lundström and Pertti Torstila were elected as new members of the Board of Directors. Due to stipulations of the Articles of Association concerning the term of the members of the Board of Directors Petra Lundström was elected for the term until the close of the Annual General Meeting in 2015. Pertti Torstila was elected for the term until the close of the Annual General Meeting in 2017.
The Annual General Meeting elected Deloitte & Touche Oy, Authorized Public Accountants, as auditor of the Company until the close of the Annual General Meeting in 2015. Deloitte & Touche Oy has informed that APA Merja Itäniemi will act as the auditor with the principal responsibility. The Auditor's fee is paid according to their reasonable invoice presented to the company.
The Annual General Meeting authorized the Board of Directors to decide on the directed acquisition of a maximum of 160,000 of the Company's own A shares in one or more instalments with funds belonging to the Company's unrestricted equity. The new authorization replaces the previous one and is valid until the closing of the Annual General Meeting in 2015, however, no longer than September 26, 2015.
The Annual General Meeting authorized the Board of Directors to decide on the transfer of a maximum of 319,150 own A shares. The transfer of own shares may be carried out in deviation from the shareholders' pre-emptive rights and may be transferred as a directed issue without payment as part of the Company's share based incentive plan. The authorization can also be used to grant special rights entitling subscription of own shares, and the subscription price of the shares can instead of cash also be paid in full or in part as contribution in kind. The new authorization replaces the previous one and is valid until March 26, 2019.
The Annual General Meeting authorized the Board of Directors to decide on donations of maximum EUR 250,000. The authorization is valid until the close of the Annual General Meeting in 2015.
At its organizing meeting held after the Annual General Meeting, the Board elected Raimo Voipio to continue as the Chairman of the Board of Directors and Yrjö Neuvo to continue as the Vice Chairman.
The composition of the Board committees was decided to be as follows:
Maija Torkko was elected as the Chairman and Petra Lundström and Mikko Niinivaara as members of the Audit Committee. The Chairman and all members of the Audit Committee are independent both of the Company and of significant shareholders.
Raimo Voipio was elected as the Chairman and Yrjö Neuvo and Maija Torkko as members of the Remuneration and Human Resources Committee. Raimo Voipio is independent of the Company. Yrjö Neuvo and Maija Torkko are independent both of the Company and of significant shareholders.
Vaisala's share capital totaled EUR 7,660,808 on December 31, 2014. On December 31, 2014, Vaisala had 18,218,364 shares, of which 3,389,351 are series K shares and 14,829,013 are series A shares. The K shares and A shares are differentiated by the fact that each K share entitles its owner to 20 votes at a General Meeting of Shareholders while each A share entitles its owner to 1 vote. The A shares represent 81.4% of the total number of shares and 17.9% of the total votes. The K shares represent 18.6% of the total number of shares and 82.1% of the total votes.
The Annual General Meeting 2014 authorized the Board of Directors to decide on the directed acquisition of a maximum of 160,000 of the Company's own A shares in one or more instalments with funds belonging to the Company's unrestricted equity. The new authorization replaces the previous one and is valid until the closing of the Annual General Meeting in 2015, however, no longer than September 26, 2015. The Board of Directors did not use the authorization during 2014.
The Annual General Meeting authorized the Board of Directors to decide on the transfer of a maximum of 319,150 own A-shares. The transfer of own shares may be carried out in deviation from the shareholders' pre-emptive rights and may be transferred as a directed issue without payment as part of the Company's share based incentive plan. The authorization can also be used to grant special rights entitling subscription of own shares, and the subscription price of the shares can instead of cash also be paid in full or in part as contribution in kind. The new authorization replaces the previous one and is valid until March 26, 2019. The Board of Directors did not use the authorization during 2014.
Apart from the above, the Board of Directors has no other authorizations to issue shares, convertible bonds or warrants programs.
The Annual General Meeting authorized the Board of Directors to decide on donations of maximum EUR 250,000. The authorization is valid until the close of the Annual General Meeting in 2015. The Board of Directors did use the authorization during 2014. Vaisala will contribute humidity, temperature, and carbon dioxide measurement instruments to the new children's hospital to be constructed in Helsinki, Finland in 2017.
The estimated value of this equipment is 225,000 euros and it will be integrated into the hospital's building automation solution.
In 2014, a total of 1,110,337 (2,876,861) Vaisala shares with a value totaling EUR 25.1 (56.5) million were traded on the NASDAQ OMX Helsinki Ltd.
The closing price of the Vaisala Corporation share on the NASDAQ OMX Helsinki Ltd stock exchange in 2014 was EUR 21.89 (23.21). Vaisala's share price declined by 6% (increase 46%) during the year while OMX Helsinki Cap index increased by 6% (26%). Shares registered a high of EUR 24.98 (23.47) and a low of EUR 19.40 (16.04). The average share price was EUR 22.60 (19.88).
The market value of Vaisala's A shares on December 31, 2014 was EUR 321.1 (344.2) million, excluding the Company's treasury shares. Valuing the K shares – which are not traded on the stock market – at the rate of the A share's closing price on the last day of December, the total market value of all the A and K shares together was EUR 395.3 million (419.2), excluding the Company's treasury shares.
At the end of December, Vaisala Corporation had 7,302 (7,708) registered shareholders. Ownership outside of Finland and nominee registrations represented 16.3% (14.1%) of the company's shares. Households owned 45.7% (46.6%), private companies 13.5% (14.3%), financial and insurance institutions 11.7% (11.6%), non-profit organizations 8.2% (8.8%) and public sector organizations owned 4.6% (4.6%).
Vaisala Corporation's Board of Directors held and controlled 657,470 A shares on December 31, 2014 and 546,968 K shares. The Board of Directors' A and K shares accounted for 14.0% of the total votes.
The company's President and CEO held and controlled 2,720 A shares and no K shares on December 31, 2014. Other Management Group members held and controlled 2,463 Vaisala A shares and no K shares.
At the end of December, the Company held a total of 159,150 (159,150) Vaisala A shares, which represented 0.9% (0.9%) of the share capital and 0.2% (0.2%) of the votes. The consideration paid for these shares was EUR 2,527,160 (2,527,160).
More information about Vaisala's share and shareholders are presented on the website, www.vaisala.com/investors.
On January 27, 2015, Vaisala announced plans to restructure its business in order to strengthen the capability to implement its strategy and to increase agility. Vaisala continues to invest in its growth businesses and to develop products and services which combine customers' business expertise and Vaisala's technology leadership. The goal of the planned restructuring is to strengthen customer focus across all functions and to ensure operational efficiency through simplification. The proposed new organization is planned to be effective on April 1, 2015.
During the restructuring Vaisala will adhere to the local legislation and practices in each country. In Finland, Vaisala initiated co-operation negotiations related to the restructuring on February 2, 2015. The planned reorganization is expected to lead to a reduction in personnel. The reduction of employees is estimated to total 60 full-time equivalents out of which about 25 are estimated to be in Finland.
In October-December 2014 several economic indicators trended slightly downwards. However, supported by well-performing U.S. economy 2015 growth forecasts still refer to moderate development and Vaisala is expecting demand for weather observation, industrial measurement and life science solutions to remain at current level. Differences in demand and business conditions between customer groups and geographical areas are significant. Renewable energy and life science markets and weather radars have the most promising outlook. In weather observations market forecasting customers' timing for decision making and acceptance of larger customer projects continues to be challenging and competition is intensifying.
In EMEA demand for weather observation solutions is expected to be constrained by economic weakness and currency depreciation in Russia and its neighboring countries as well as conflicts in the Middle East. Weather observation market outlook in Europe is solid. Market environment for industrial measurement and life science solutions is expected to remain stable.
In Americas weather observation market outlook is stable. Market environment for industrial measurement and life science solutions is expected to remain favorable.
In APAC demand for weather observation solutions is expected to cool off slightly in 2015, driven by the Chinese market. Market outlook for industrial measurement and life science solutions in APAC is solid.
Vaisala estimates its full year 2015 net sales to be in the range of EUR 285–315 million and the operating result (EBIT) in the range of EUR 20–30 million.
In January-December 2014, Vaisala's net sales were EUR 299.7 million and operating result (EBIT) was EUR 26.4 million.
The parent company's distributable earnings amount to EUR 145,261,073.88, of which the net result for the period is EUR 16,661,786.74.
The Board of Directors proposes to the Annual General Meeting that dividend of EUR 0.90 per share be paid out of distributable earnings totaling approximately EUR 16.4 million and the rest to be carried forward in the shareholders' equity.
No dividend will be paid for treasury shares held by the company.
There have been no significant changes to the company's financial position since the close of the financial period. According to the Board of Directors, the proposed dividend distribution does not endanger the company's financial standing.
The Board of Directors proposes that the Annual General Meeting authorize the Board of Directors to decide on donations of maximum EUR 250,000. The donations may be granted in one or several payments. The Board of Directors decides on the related payments. It is proposed that the authorization is valid until the close of the Annual General Meeting in 2016.
Vaisala's Annual General Meeting will be held on Tuesday, March 31, 2015 at 6 p.m. at Vaisala Corporation's head office, Vanha Nurmijärventie 21, 01670 Vantaa.
Vantaa, February 12, 2015
Vaisala Corporation Board of Directors
The forward-looking statements in this report are based on the current expectations, known factors, decisions and plans of Vaisala's management. Although the management believes that the expectations reflected in these forward-looking statements are reasonable, there is no assurance that these expectations would prove to be correct. Therefore, the results could differ materially from those implied in the forward-looking statements, due to for example changes in the economic, market and competitive environments, regulatory or other government-related changes, or shifts in exchange rates.
| IFRS 2014 |
IFRS 2013 |
IFRS 2012 |
IFRS 2011 |
IFRS 2010 |
|
|---|---|---|---|---|---|
| Net sales, EUR million | 299.7 | 273.2 | 293.3 | 273.6 | 253.2 |
| Exports and international operations, % | 97.0 | 97.1 | 98.3 | 98.2 | 97.4 |
| Operating profit, EUR million | 26.4 | 18.1 | 30.2 | 16.1 | 11.8 |
| % of net sales | 8.8 | 6.6 | 10.3 | 5.9 | 4.7 |
| Profit before taxes, EUR million | 29.1 | 17.2 | 29.1 | 16.1 | 14.0 |
| % of net sales | 9.7 | 6.3 | 9.9 | 5.9 | 5.5 |
| Return on equity (ROE), % | 14.3 | 6.3 | 11.7 | 5.7 | 5.6 |
| Solvency ratio, % | 70.6 | 71.6 | 74.9 | 73.7 | 76.0 |
| Gross capital expenditure, EUR million | 7.9 | 7.1 | 5.4 | 16.7 | 30.1 |
| % of net sales | 2.6 | 2.6 | 1.8 | 6.1 | 11.9 |
| R&D expenditure, EUR million | 34.0 | 28.9 | 28.0 | 28.0 | 31.4 |
| % of net sales | 11.3 | 10.6 | 9.5 | 10.2 | 12.4 |
| Order book on Dec. 31, EUR million | 129.2 | 122.0 | 105.6 | 134.3 | 129.0 |
| Average personnel | 1,617 | 1,485 | 1,422 | 1,386 | 1,408 |
| IFRS 2014 |
IFRS 2013 |
IFRS 2012 |
IFRS 2011 |
IFRS 2010 |
|
|---|---|---|---|---|---|
| Earnings/share (EPS), EUR | 1.30 | 0.60 | 1.20 | 0.57 | 0.56 |
| Earnings/share (EPS), diluted, EUR | 1.29 | 0.60 | 1.19 | 0.57 | 0.56 |
| Cash flow from business operations/share, EUR |
1.32 | 1.55 | 2.66 | 2.06 | 1.39 |
| Shareholders' equity/share, EUR | 9.41 | 8.80 | 10.48 | 10.02 | 10.02 |
| Dividend/share, EUR | * 0.90 | 0.90 | 0.90 | 0.65 | 0.65 |
| Dividend/earnings, % | ** 69.0 | 150.0 | 75.0 | 114.2 | 116.1 |
| Effective dividend yield, % | 4.1 | 3.9 | 5.7 | 4.0 | 3.2 |
| Price/earnings (P/E) | 16.84 | 38.68 | 13.29 | 28.80 | 36.61 |
| A-share trading, EUR | |||||
| highest | 24.98 | 23.47 | 17.71 | 24.80 | 25.77 |
| lowest | 19.40 | 16.04 | 14.48 | 15.56 | 18.52 |
| weighted average | 22.60 | 19.88 | 15.97 | 20.56 | 21.33 |
| at balance sheet date | 21.89 | 23.21 | 15.90 | 16.40 | 20.50 |
| Market capitalization at balance sheet date, EUR million *** |
395.3 | 419.2 | 287.1 | 298.6 | 373.3 |
| A-shares traded | |||||
| Traded, pcs | 1,110,337 | 2,876,861 | 1,018,902 | 878,205 | 2,415,565 |
| % of entire series | 7.5 | 19.4 | 6.9 | 5.9 | 16.3 |
| Adjusted number of shares, pcs | 18,218,364 | 18,218,364 | 18,218,364 | 18,218,364 | 18,209,214 |
| A-shares, pcs | 14,829,013 | 14,829,013 | 14,829,013 | 14,829,013 | 14,828,680 |
| K-shares, pcs | 3,389,351 | 3,389,351 | 3,389,351 | 3,389,351 | 3,389,684 |
| Number of shares outstanding at Dec. 31, | |||||
| pcs | 18,059,214 | 18,059,214 | 18,059,214 | 18,209,214 | 18,209,214 |
* Proposal by the Board of Directors.
** Calculated according to the proposal by the Board of Directors.
*** Value of A and K shares is here calculated to be equal.
| Profit before taxes less taxes | |||
|---|---|---|---|
| Return on equity, ROE (%) | = | Shareholders' equity plus non-controlling interest (average) | x 100 |
| Shareholders' equity plus non-controlling interest | x 100 | ||
| Solvency ratio, (%) | = | Balance sheet total less advance payments | |
| Profit before taxes less taxes +/- non-controlling interest | |||
| Earnings / share, EUR | = | Average number of shares, adjusted | |
| Cash flow from business | Cash flow from business operations | ||
| operations / share, EUR | = | Number or shares at balance sheet date | |
| Equity / share, EUR | = | Shareholders' equity | |
| Number of shares at balance sheet date, adjusted | |||
| Dividend | |||
| Dividend / share, EUR | = | Number of shares at balance sheet date, adjusted | |
| Dividend / earnings, (%) | = | Dividend | x 100 |
| Profit before taxes less taxes +/- non-controlling interest | |||
| Effective dividend yield, (%) | = | Dividend / share | x 100 |
| Share price at balance sheet date | |||
| Price / earnings, EUR | = | Share price at balance sheet date | |
| Earnings / share | |||
| Market capitalization, EUR million |
= | Share price at balance sheet date times number of shares |
| Consolidated statement of income EUR million |
IFRS 2014 |
IFRS 2013 |
IFRS 2012 |
IFRS 2011 |
IFRS 2010 |
|---|---|---|---|---|---|
| Net sales | 299.7 | 273.2 | 293.3 | 273.6 | 253.2 |
| Other operating income | 0.5 | 1.8 | 0.5 | 2.1 | 1.8 |
| Costs | 258.6 | 237.8 | 247.9 | 245.0 | 229.0 |
| Depreciation, amortization and | |||||
| impairment charges | 15.2 | 19.1 | 15.8 | 14.7 | 14.1 |
| Operating profit | 26.4 | 18.1 | 30.2 | 16.1 | 11.8 |
| Financial income and expenses | 2.7 | -1.0 | -1.0 | 0.1 | 2.2 |
| Profit before tax | 29.1 | 17.2 | 29.1 | 16.1 | 14.0 |
| Income taxes | -5.7 | -6.2 | -7.4 | -5.8 | -3.8 |
| Net profit for the period | 23.4 | 10.9 | 21.7 | 10.4 | 10.2 |
| Consolidated statement of financial position EUR million |
Dec. 31 2014 |
Dec. 31 2013 |
Dec. 31 2012 |
Dec. 31 2011 |
Dec. 31 2010 |
|---|---|---|---|---|---|
| Assets | |||||
| Non-current assets | 91.5 | 92.5 | 88.3 | 101.0 | 100.2 |
| Inventories | 33.9 | 28.6 | 29.8 | 33.4 | 36.8 |
| Current assets | 119.2 | 104.6 | 138.9 | 116.4 | 111.7 |
| Statement of financial position, | |||||
| total | 244.6 | 225.6 | 257.0 | 250.8 | 248.7 |
| Shareholders' equity and liabilities | |||||
| Equity attributable to equity | |||||
| holders of the parent | 170.0 | 158.9 | 189.1 | 182.5 | 182.4 |
| Liabilities, total | 74.6 | 66.8 | 67.9 | 68.3 | 66.4 |
| Interest bearing | 0.0 | 0.0 | 0.6 | 0.5 | 0.5 |
| Non-interest bearing | 74.6 | 66.8 | 67.3 | 67.8 | 65.8 |
| Statement of financial position, total |
244.6 | 225.6 | 257.0 | 250.8 | 248.7 |
| EUR million | Notes | Jan. 1–Dec. 31, 2014 |
Jan. 1–Dec. 31, 2013 |
||
|---|---|---|---|---|---|
| Net sales | 2, 3 | 299.7 | 273.2 | ||
| Cost of sales | 7 | -146.6 | -138.9 | ||
| Gross profit | 153.1 | 51.1% | 134.3 | 49.2% | |
| Sales, marketing and administrative costs | 7, 8 | -93.2 | -84.7 | ||
| Research and development costs | 7, 8, 9 | -34.0 | -28.9 | ||
| Other operating income and expenses | 6 | 0.5 | -2.6 | ||
| Operating profit (loss) | 26.4 | 8.8% | 18.1 | 6.6% | |
| Share of result in associated companies | 16 | 0.1 | 0.1 | ||
| Financial income and expenses, net | 10 | 2.6 | -1.0 | ||
| Profit (loss) before taxes | 29.1 | 9.7% | 17.2 | 6.3% | |
| Income taxes | 11 | -5.7 | -6.2 | ||
| Profit (loss) for the period | 23.4 | 7.8% | 10.9 | 4.0% | |
| Earnings per share for profit attributable to the equity holders of the parent |
|||||
| Earnings per share, EUR | 12 | 1.30 | 0.60 | ||
| Diluted earnings per share, EUR | 1.29 | 0.60 | |||
| Consolidated Statement of Comprehensive Income EUR million |
|||||
| Items that will not be reclassified to profit or loss | |||||
| Actuarial loss on post-employment benefits * | 22 | -0.5 | -0.1 | ||
| Total | -0.5 | -0.1 | |||
| Items that may be reclassified subsequently to profit or loss | |||||
| Currency translation differences | 3.5 | -3.2 | |||
| Total | 3.5 | -3.2 | |||
| Total other comprehensive income | 3.0 | -3.3 | |||
| Total comprehensive income | 26.4 | 7.6 |
* The figures are presented net of taxes.
The notes constitute an essential part of the financial statements.
| EUR million | |||
|---|---|---|---|
| Assets | Notes | Dec. 31, 2014 | Dec. 31, 2013 |
| Non-current assets | |||
| Intangible assets | 14 | 37.1 | 35.9 |
| Property, plant and equipment | 15 | 44.2 | 46.8 |
| Investments | 0.1 | 0.1 | |
| Investments in associated companies | 16 | 0.8 | 0.7 |
| Long-term receivables | 17 | 0.3 | 0.9 |
| Deferred tax assets | 11 | 8.9 | 8.0 |
| 91.5 | 92.5 | ||
| Current assets | |||
| Inventories | 18 | 33.9 | 28.6 |
| Trade and other receivables | 19 | 70.5 | 57.4 |
| Income tax receivables | 1.1 | 1.4 | |
| Cash and cash equivalents | 20 | 47.6 | 45.8 |
| 153.1 | 133.2 | ||
| Total assets | 244.6 | 225.6 |
The notes constitute an essential part of the financial statements.
| EUR million Shareholders' equity and liabilities |
Notes | Dec. 31, 2014 | Dec. 31, 2013 |
|---|---|---|---|
| Shareholders' equity | 21 | ||
| Share capital | 7.7 | 7.7 | |
| Other reserves | 2.5 | 1.5 | |
| Cumulative translation adjustment | -0.2 | -3.6 | |
| Treasury shares | -2.5 | -2.5 | |
| Retained earnings | 162.6 | 155.9 | |
| 170.0 | 158.9 | ||
| Total equity | 21 | 170.0 | 158.9 |
| Non-current liabilities | |||
| Interest-bearing liabilities | 25 | 0.0 | 0.0 |
| Post-employment benefit obligations | 22 | 1.3 | 0.7 |
| Deferred tax liabilities | 11 | 5.3 | 5.2 |
| Provisions for other liabilities and charges | 23 | 0.2 | - |
| Other non-current liabilities | 25 | 2.9 | 2.1 |
| 9.7 | 8.0 | ||
| Current liabilities | |||
| Interest-bearing liabilities | 25 | 0.0 | 0.0 |
| Advances received | 3.9 | 3.7 | |
| Income tax liabilities | 1.5 | 0.3 | |
| Provisions for other liabilities and charges | 1.4 | - | |
| Trade and other payables | 24 | 58.1 | 54.8 |
| 64.9 | 58.7 | ||
| Total liabilities | 74.6 | 66.8 | |
| Total shareholders' equity and liabilities | 244.6 | 225.6 |
The notes constitute an essential part of the financial statements.
| EUR million | Share capital |
Share premium reserve |
Other reserves |
Treasury shares |
Translation differences |
Retained earnings |
Total equity |
|
|---|---|---|---|---|---|---|---|---|
| Balance at Jan 1, 2013 | Note | 7.7 | 22.3 | 0.8 | -2.5 | -0.5 | 161.4 | 189.1 |
| Profit for the year | 21 | 10.9 | 10.9 | |||||
| Other comprehensive income | 21 | -0.0 | -3.1 | -0.1 | -3.3 | |||
| Dividend paid | 21 | -16.2 | -16.2 | |||||
| Reclassification | 21 | -22.3 | 22.4 | -0.1 | - | |||
| Return of capital | 21 | -22.2 | -22.2 | |||||
| Share-based payment | 8, 21 | 0.6 | 0.6 | |||||
| Balance at Dec. 31, 2013 | 7.7 | - | 1.5 | -2.5 | -3.6 | 155.9 | 158.9 | |
| Profit for the year | 21 | 23.4 | 23.4 | |||||
| Other comprehensive income | 21 | 0.0 | 3.5 | -0.5 | 3.0 | |||
| Dividend paid | 21 | -16.3 | -16.3 | |||||
| Reclassification | 21 | -0.0 | 0.0 | 0.0 | ||||
| Correction | 21 | 0.0 | 0.0 | |||||
| Share-based payment | 8, 21 | 1.0 | 1.0 | |||||
| Balance at Dec. 31, 2014 | 7.7 | 2.5 | -2.5 | -0.2 | 162.6 | 170.0 |
| Jan. 1–Dec. 31, 2013 | ||
|---|---|---|
| 282.8 | ||
| 0.4 | 0.2 | |
| -260.3 | -246.3 | |
| 10 | 1.3 | -0.8 |
| 11 | -4.5 | -7.7 |
| 23.8 | 28.2 | |
| -12.3 | ||
| -7.1 | ||
| 2.6 | ||
| -16.8 | ||
| 21 | - | -22.2 |
| 21 | -16.2 | -16.2 |
| -0.1 | -0.1 | |
| 25 | 0.0 | -0.6 |
| -16.3 | -39.1 | |
| Change in cash and cash equivalents (A+B+C) increase (+) / decrease (-) | 0.9 | -27.7 |
| 74.8 | ||
| -27.7 | ||
| -1.3 | ||
| 45.8 | ||
| Note 2, 3 4 14, 15 20 |
Jan. 1–Dec. 31, 2014 287.0 - -7.9 1.3 -6.6 45.8 0.9 0.9 47.6 |
Vaisala is a global leader in environmental and industrial measurement. Building on 75 years of experience, Vaisala contributes to a better quality of life by providing a comprehensive range of innovative observation and measurement products and services for chosen weather-related and industrial markets.
The Group's parent company, Vaisala Corporation, is a Finnish public limited company established under Finnish law, its domicile is Vantaa and its registered address in Vanha Nurmijärventie 21, FI-01670 Vantaa (P.O. Box 26, FI-00421 Helsinki). The company's Business ID is 0124416-2. Vaisala has offices and business operations in Finland, Brazil, United States of America, Canada, France, the UK, Germany, China, South-Korea, Sweden, Malaysia, India, United Arab Emirates, Japan, Australia and Panama.
Copies of the consolidated financial statements can be obtained from the internet address www.vaisala.com or from the Group's head office at the address Vanha Nurmijärventie 21, FI-01670 Vantaa (P.O. Box 26, FI-00421 Helsinki).
At its meeting on February 12, 2015, the Board of Directors of Vaisala Corporation has approved these financial statements for publication. Under the Finnish Companies Act, shareholders have an opportunity to confirm or leave unconfirmed the financial statements in the Annual General Meeting to be held after their publication. The Annual General Meeting also has an opportunity to make a decision amending the financial statements.
Vaisala's consolidated financial statements have been prepared according to the International Financial Reporting Standards (IFRS) and in their preparation all the obligatory IAS and IFRS standards as well as the SIC and IFRIC interpretations in effect on December 31, 2014 have been followed. By international financial statement standards is meant standards approved for application in the EU, and interpretations issued about them, according to the procedure prescribed in Finnish law and provisions enacted thereon in EU Regulation (EC) No. 1606/2002. The notes to the consolidated financial statements are also in accordance with Finnish accounting and corporate law.
Financial statement data are presented in millions of euros and they are based on original acquisition costs if not otherwise stated in the accounting principles outlined below.
The preparation of financial statements in accordance with IFRS standards requires Group management to make certain estimates and to exercise discretion in applying the accounting principles. Information about the discretion exercised by management in applying the accounting principles followed by the Group and that which has most impact on the figures presented in the financial statements has been presented in the item 'Accounting principles that require management discretion and main uncertainty factors relating to estimates'.
The company has a market segment based reporting model. Operating segments are reported in a manner consistent with the internal reporting provided for the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing the performance of the operating segments, is the company's management group.
The business segments consist of business operations whose resources to be allocated and profits company's management group reviews based on a measure of adjusted operating result. Pricing between segments takes place at the fair market price.
Weather segment is a leading provider of reliable weather technology. Segment serves selected weather-dependent markets where weather data is essential to run efficient operations like meteorological institutes, roads and rail authorities, airport organizations, defense forces, energy and maritime.
Controlled Environment segment serves customers who operate in tightly controlled and demanding areas where the measurement of precise environmental conditions is required to increase operational quality, productivity and energy savings.
The consolidated financial statements include the parent company Vaisala Corporation and all subsidiaries in which it directly or indirectly owns more than 50% of the votes or in which the parent company otherwise exercises control. The existence of potential voting rights has been taken into account when assessing the terms of control when instruments conferring entitlement to potential control are presently exercisable. Subsidiaries acquired or founded during the financial period are consolidated from the date on which the Group has acquired control and are no longer consolidated from the date that control ceases.
Acquisition of subsidiaries is handled by the acquisition cost method. The acquisition cost is the fair value of transferred assets, issued equity instruments and liabilities arising or assumed. All transaction costs are expensed. Identifiable acquired assets as well as assumed liabilities and contingent liabilities are valued initially at their fair values on the date of acquisition, irrespective of whether there are minority interests or not. The amount by which the acquisition cost exceeds the Group share of the fair value of the acquired identifiable net assets is recognized as goodwill. If the acquisition cost is lower than the acquired subsidiary's net assets, the difference is entered directly into the statement of income. Changes in contingent liabilities after initial recognition are recognized in profit and loss as other operating income or cost.
Intra-Group transactions, unrealized margins on internal deliveries, internal receivables and liabilities, and the Group's internal distribution of profit are eliminated. Unrealized losses on intra-Group transactions are also eliminated unless costs are not recoverable or the loss results from an impairment. The consolidated financial statements are prepared applying consistent accounting principles to the same transactions and other events which are implemented under the same conditions.
The share of profits or losses of associated companies, i.e. companies of which Vaisala owns between 20% and 50% and over which it has significant influence, are included in the consolidated financial statements using the equity method. If Vaisala's share of an associated company's losses exceeds the book value of the investment, the investment is entered in the statement of financial position at zero value and further losses are not recognized unless the Group has incurred obligations on behalf of the associated company. Unrealized gains on transactions between the Group and its associated companies have been eliminated to the extent of the Group's interest in the associated companies. The Group's investment in associated companies includes goodwill on acquisition.
The Group's share of associated companies' results is presented in the statement of income as a separate item before 'financial income and expenses'. Investments in associated companies are originally entered into the accounts at their acquisition cost and the book value increased or decreased by the share of post-acquisition profits or losses. Distribution of profit received from an investment reduces the book value of the investment.
Items relating to the consolidated result and financial position are measured using the currency which is the main currency of each entity's operating environment "functional currency". The consolidated financial statements have been presented in euros, which is the Group parent company's functional and presentation currency
Transactions in foreign currencies are recognized at the rates of exchange on the date of transaction. Receivables and payables in foreign currency have been valued at the exchange rates quoted by the European Central Bank on the closing date. Exchange rate differences resulting from the settlement of monetary items or from the presentation of items in the financial statements at different exchange rates from which they were originally recognized during the financial period, or presented in the previous financial statements, are recognized as income or expenses in the statement of income group 'financial income and expenses' in the financial period in which they arise.
Items relating to the result and financial position of each entity of the Group are measured using the currency which is the main currency of each entity's operating environment. Balance sheets of Group companies outside the euro zone have been translated into euros using the official mid-market exchange rates of the European Central Bank on the closing date. In translating statement of incomes, mid-market exchange rates have been used. Exchange rate differences resulting from the translation of statement of income items at mid-market exchange rates and from the translation of balance sheet items at exchange rates on the closing date have been recognized as translation differences in shareholders' equity. Translation gains and losses which arose in the elimination of the shareholders' equity of subsidiaries have been recognized as a separate item under comprehensive income. When a foreign subsidiary or associated company is sold, the accumulated translation difference is recognized in the statement of income as part of the gain or loss on the sale.
Goodwill or fair value adjustments arising on the acquisition of an independent foreign entity are treated as that entity's foreign currency assets and liabilities and are translated at the period end rate.
Property, plant and equipment comprise mainly land and buildings as well as machinery and equipment. The asset values are based on original acquisition cost less accumulated depreciation and amortization as well as possible impairment losses. The cost of self-constructed assets includes materials and direct work as well as a proportion of overhead costs attributable to construction work. If a tangible asset consists of several parts which have useful lives of different lengths, the parts are treated as separate assets. Accordingly, expenses relating to the renewal of a part are capitalized and the part remaining in connection with the renewal is recognized as an expense. In other cases, expenditures that arise later are included in the carrying amount of the tangible assets only if it is probable that the future financial benefit connected with the asset is for the benefit of the Group and that the asset's acquisition cost can be reliably determined. Other repair and maintenance expenses are recognized through profit and loss, when they are realized.
Depreciation is calculated using the straightline method and is based on the estimated useful life of the asset. Land is not depreciated. Estimated useful lives for various assets are:
| Buildings and structures | 5–40 years |
|---|---|
| Machinery and equipment | 3–10 years |
| Other tangible assets | 5–15 years |
The residual value, depreciation method and useful life of assets are checked in connection with each financial statement and if necessary adjusted to reflect changes in the expectation of economic benefit. Gains and losses on disposals are determined by comparing the disposal proceeds with the carrying amount and are included in the operating profit.
Public grants received for tangible asset investments are recognized as a reduction in the carrying amounts of tangible assets. Grants are recognized in the form of smaller depreciations during the useful life of the asset.
Depreciation of a tangible asset is discontinued when the tangible asset is classified as being for sale in accordance with the IFRS 5 standard Non-Current Assets Held for Sale and Discontinued Operations.
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net assets of the acquired subsidiary/ associated company at the date of acquisition. Goodwill is calculated in the currency of the operating environment of the acquired entity. If the acquisition cost is lower than the value of the
acquired subsidiary's net asset value the difference is entered directly into the statement of income.
Goodwill is not amortized, rather it is tested annually for any impairment. For this purpose goodwill has been attributed to cash generating units. Goodwill is valued at acquisition cost less impairment losses. Impairment costs are expensed.
Other intangible assets are e.g. patents and trademarks as well as software licenses. They are valued at their original acquisition cost and amortized using the straight-line method over their useful life. Intangible assets that have an indefinite useful life are not amortized, rather they are tested for impairment annually. Intangible assets of the acquired subsidiaries are valued at their fair values at the date of acquisition.
Estimated useful lives for intangible assets are:
| Intangible rights | at most 5 years |
|---|---|
| Other intangible assets | at most 10 years |
| Software | 3–5 years |
Research and development expenditures have been recognized as expenses in the financial period in which they were incurred, except for machinery and equipment acquired for research and development use, which are amortized using the straight-line method. Costs relating to the development of new products and processes are not capitalized because the future earnings obtained from them are only assured when the products come to market. According to IAS 38 an intangible asset is entered in the statement of financial position only when it is probable that the company will derive financial benefit from the asset. Moreover, it is typical of the industry that it is not possible to distinguish the research stage of an internal project that aims to create an asset from its development stage.
The group capitalizes borrowing costs that relate to qualifying assets directly attributable to acquisition, construction or production of the assets as part of the cost of the asset in question. Other borrowing costs are recognized as an expense. At the moment, the group does not have capitalized borrowing costs.
Inventories are valued at the lower of acquisition cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the costs of completion and selling expenses. The cost of finished goods and work in progress comprises raw materials, direct labor costs, other direct costs and an appropriate proportion of variable and fixed production overheads based on normal operating capacity. Acquisition cost is determined using the weighted average method, whereby the cost is determined as the weighted average of similar inventory items which were held at the beginning of the financial period and those bought or produced during the financial period.
Lease agreements of tangible assets where the Group has a substantial part of the risks and rewards of ownership are classified as finance leases. Finance leases are entered into tangible assets at the start of the lease term at the lower of the fair value of the leased property and the present value of the minimum lease payments. The asset acquired under a finance lease is depreciated over the shorter of the asset's useful life and the lease term. Lease payments are allocated between the liability and finance charges so as to achieve a constant interest rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in interest-bearing liabilities.
Lease agreements where the lessor retains a significant portion of the risks and rewards of ownership are treated as other leases. Payments made under other leases are charged to the statement of income on a straight-line basis over the period of the lease.
On every closing date the Group reviews asset items for any indication of impairment losses. The need for impairment is examined at the cash generating unit level, i.e. at the lowest unit level which is mainly independent of other units and whose cash flows are separate and highly independent from the cash flows of other, corresponding, units. If there are such indications, the amount recoverable from the said asset item is assessed. The recoverable amount is also assessed annually for the following asset items irrespective of whether there are indications of impairment: goodwill, intangible assets which have an indefinite useful life as well as incomplete intangible assets.
The recoverable amount is the higher of the asset item's fair value less the cost arising from disposal and its value in use. When determining value in use, the expected future cash flows are discounted based on their present values at discount interest rates which reflect the average capital cost before taxes of the
country and business sector in question (WACC = weighted average cost of capital). The special risks of the assets in question are also taken into account in the discount interest rates. In terms of individual asset items which do not independently generate future cash flows, the recoverable amount is determined for the cash generating unit to which the said asset item belongs.
An impairment loss is recognized in the statement of income when the carrying amount is greater than the recoverable amount. The impairment loss is reversed if a change in conditions has occurred and the recoverable amount of the asset has changed since the date when the impairment loss was recognized. The impairment loss is not reversed, however, by more than that which the carrying amount of the asset (less depreciation) would be without the recognition of the impairment loss. Impairment losses recognized for goodwill are not reversed under any circumstances.
IAS 39 classifies a group's financial assets into the following categories: financial assets measured at fair value through profit and loss, heldto-maturity investments, loans and receivables, and available-for-sale financial assets. Categorization is made on the basis of the purpose for which the financial assets were acquired and they are categorized in connection with the original acquisition. Transaction costs have been included in the original carrying amount of the financial assets when the item in question is not valued at fair value through profit and loss. All purchases and sales of financial assets are recognized on the clearance date.
Derecognition of financial assets takes place when the Group has lost a contractual right to receive the cash flows or when it has transferred substantially the risks and rewards outside the Group. On every closing date the Group assesses whether there is objective evidence that the value of a financial asset item or group of asset items has been impaired. If such evidence exists, the impairment is recognized in the statement of income item financial expenses.
The recoverable amount of financial assets is either the fair value or the present value of expected future cash flows discounted at the original effective interest rate. Short-term receivables are not discounted.
Financial assets held for trading purposes such as derivative instruments to which the Group does not apply hedge accounting under IAS 39 as well as income fund investments consisting of the short-term investment of liquid assets have been categorized as financial assets recognized at fair value through profit and loss. The fair value of income fund investments has been determined based on price quotations published in an active market, namely the bid quotations on the closing
date. Realized and unrealized gains and losses arising from changes in fair value are recognized in the statement of income in the period in which they arise. Financial assets held for trading as well as those maturing within 12 months are included in current assets.
Loans and other receivables are assets not belonging to derivative assets whose payments are fixed and quantifiable and which are not quoted on an active market and which the company does not hold for trading purposes. This category includes Group financial assets which have arisen through the transfer of money, goods or services to debtors. They are valued at amortized cost and they include short-term and long-term financial assets, the latter if they mature after more than 12 months. If there are indications of value impairment, the carrying amount is estimated and reduced immediately to correspond with the recoverable amount.
Trade receivables are valued initially at fair value and thereafter at their anticipated realizable value, which is the original invoicing value less the estimated impairment of these receivables. An impairment for trade receivables is made when there are good grounds to expect that the Group will not receive all its receivables on original terms. A debtor's significant financial difficulties, probability of bankruptcy, default on payments, or a more than 180 day delay in the making of payments are evidence of an impairment of trade receivables. The magnitude of the impairment loss to be recognized in the statement of income is determined as the difference of the carrying amount of receivables and the present value of estimated future cash flows. If the amount of impairment loss falls in some later financial period and the reduction can be objectively considered to be related to an event after the recognition of the impairment, the recognized loss is reversed through profit and loss.
Cash and cash equivalents are carried in the statement of financial position at original cost. Cash and cash equivalents comprise cash on hand and deposits held at call with banks.
Financial liabilities are recognized at fair value on the basis of the original consideration received. Transactions costs have been included in the original carrying amount of the financial liabilities. Later, all financial liabilities are valued at amortized cost using the effective yield method. Financial liabilities include long-term and short-term liabilities and they can be interestbearing or non-interest-bearing.
All derivative contracts are initially recognized at cost and subsequently remeasured at their fair value. Forward foreign exchange contracts are valued at their fair value using the market prices of forward contracts at the closing date. Derivatives are included in the statement of financial
position as other receivables and payables. Unrealized and realized gains and losses arising from changes in fair value are recognized in the statement of income in 'financial income and expenses' in the period during which they arise. The Group has sales in a number of foreign currencies, of which the most significant are the US dollar, the Japanese yen and the British pound. The Group does not apply hedge accounting under IAS 39 to forward foreign exchange contracts that hedge sales in foreign currencies. The Group has a number of investments in foreign subsidiaries whose net assets are exposed to foreign currency risk. The Group does not hedge the foreign exchange risk of subsidiaries' net assets.
Unrealized and realized gains and losses arising from changes in fair value are recognized in the statement of income in 'financial income and expenses" in the period during which they arise.
Non-current asset is classified as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. Sale is considered highly probable when group management is committed to a plan to sell the asset, asset can be sold immediately in its current condition with general and common terms and sale will be completed within one year from the date of classification.
Before classification as held for sale, assets are measured according to the IFRS standard applying for them. After classification they are stated at the lower of carrying amount and fair value less costs to sell. These assets are not depreciated after classification. Non-current assets classified as held for sale are presented separately from other assets in the statement of financial position.
The Group has a number of pension schemes in different parts of the world which are based on local conditions and practices. These pension schemes are classified as either defined-contribution or defined-benefit schemes. Under definedcontribution plans, expenses are recognized in the statement of financial position in the financial period in which the contribution is payable.
In defined benefit pension plans, the liability recognized from the plan is the present value of the defined benefit obligation as of the period end date and it is adjusted by the fair value of the plan assets and by the unamortized portion of past service cost. Actuaries, who are independent from Vaisala, calculate the defined benefit obligation by applying the projected unit credit method
under which the estimated future cash flows are discounted to their present value using the interest rates approximating high quality corporate bonds. The cost of retirement is charged in the statement of income concurrently with the service rendered by the personnel. Actuarial gains and losses are recognized in comprehensive statement of income.
Provisions are recognized when the Group has a present legal or constructive obligation as the result of a past event, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are valued at the present value of expenses required to cover the obligation. The discount factor used in calculating present value is selected so that it reflects the market view of the time value of money and the risks related to the obligations at the time of examination. If it is possible that the Group will be reimbursed for part of the obligation by some third party, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The amount of provisions is estimated at each closing date and the amount is changed to correspond to the best estimate at the given time. A provision is cancelled when the probability of financial settlement has been removed. A change in provisions is recognized in the same item of the statement of income in which the provision was originally recognized.
Provisions can be related to the restructuring of operations, loss-making agreements, legal disputes and other commitments. Restructuring provisions are recognized when a detailed and appropriate plan relating to them has been prepared and the company has begun to implement the plan or has announced it will do so. Restructuring provisions generally comprise lease termination penalties and employee termination payments.
A provision for a loss-making agreement is recognized when unavoidable expenditure required to fulfil obligations exceeds the benefits obtainable from the agreement.
The tax item in the statement of income comprises tax based on taxable income for the financial year, adjustments to tax accruals related to previous years and the change in deferred taxes. Tax based on taxable income for the financial year is calculated for taxable income on the basis of each country's current tax rate.
Deferred taxes are calculated for all temporary differences between the carrying amount of an asset or liability and its tax base. The largest temporary differences arise from amortization of fixed assets, defined-benefit pension schemes
and unused tax losses. In taxation deferred tax is not recognized for non-deductible goodwill impairment and deferred tax is not recognized for distributable earnings of subsidiaries where it is probable that the difference will not reverse in the foreseeable future. The Group's deferred tax assets and liabilities relating to the same tax recipient are stated net.
Deferred taxes have been calculated using tax rates prescribed by the closing date.
Deferred tax assets are recognized to the extent that it is probable that future taxable profit, against which the temporary differences can be utilized, will be available.
The Board of Directors' proposal for dividend distribution has not been recognized in the financial statements: the dividends are recognized only on the basis of the Annual General Meeting's approval.
Shares issued by the company are presented as share capital. Expenses related to the issue or acquisition of shareholders' equity instruments are presented as a shareholders' equity reduction item. If the company buys back its shareholders' equity instruments, the consideration paid for them including direct costs is deducted from shareholders' equity.
Revenue from the sale of goods is recognized when significant risks and rewards of owning the goods are transferred to the buyer. Revenue recognition generally takes places when the transfer has taken place. Revenue for rendering of services is recognized when the service has been performed. When recognizing net sales, indirect taxes and discounts, for example, have been deducted from sales revenue. Possible exchange rate differences are recognized in the financial income and expenses.
Revenues from long-term projects are recognized using the percentage of completion method, when the outcome of the project can be estimated reliably. The stage of completion is determined for each project by reference to the relationship between the costs incurred for work performed to date and the estimated total costs of the project or the relationship between the working hours performed to date and the estimated total working hours.
Expenses related to a project whose revenue is not yet recognized are entered as long-term projects in progress in inventories. If expenses arising and gains recognized are larger than the
sum invoiced for the project, the difference is presented in the statement of financial position item "trade and other receivables". If expenses arising and gains recognized are smaller than the sum invoiced for the project, the difference is presented in the item "trade and other payables".
When the outcome of a long-term project cannot be estimated reliably, project costs are recognized as expenses in the same period when they arise and project revenues only to the extent of project costs incurred where it is probable that those costs will be recoverable. When it is probable that total costs necessary to complete the project will exceed total project revenue, the expected loss is recognized as an expense immediately.
Revenue arising from rents is recognized on an accrual basis in accordance with the substance of the relevant agreements. Interest income is recognized on a time-proportion basis, taking account of the effective yield of the asset item, and dividend income is recognized when the Group's right to receive payment is established.
Gains on the disposal of assets as well as income that are not relating to actual performance-based sales are recognized as other operating income.
Losses on the disposal of assets as well as expenses that are not relating to actual performance-based sales are recognized as other operating income. In addition, assets impairments are recognized into other operating income and expense.
Grants received from the state or another party are recognized in the statement of income at the same time as expenses are recognized as a deduction of the related expense group. Grants relating to asset acquisition are presented as an adjustment to the acquisition cost of the asset and they are recognized in the form of smaller depreciations over the useful life of the asset.
Share based payments are recognized as costs during the vesting period in line with IFRS 2. The costs are based on the estimate of the amount of shares to be paid at the end of vesting period. Assumptions that estimates are based on shall be updated at every period end date and cost effect of assumptions are recognized through statement of income.
The preparation of financial statements requires the use of estimates and assumptions relating to the future and the actual outcomes may differ from the estimates and assumptions made. In addition, discretion has to be exercised in applying the accounting principles of the financial statements. Estimates made and discretion exercised are based on previous experience and other factors, such as assumptions about future events. Estimates made and discretion exercised are examined regularly. The key areas in which estimates have been made and discretion has been exercised are outlined below. The biggest impact of these on the figures presented is reflected through impairment testing. Other estimates are connected mainly with environmental, litigation and tax risks, the determination of pension obligations as well as the utilization of deferred tax assets against future taxable income.
IFRS 3 requires the acquirer to recognize an intangible asset separately from goodwill, if the recognition criteria are fulfilled. Recognition of an intangible asset at fair value requires management estimates of future cash flows. Where possible, management has used available market values as the basis of acquisition cost recognition in determining fair values. When this is not possible, which is typical particularly with intangible assets, valuation is based principally on the historic cost of the asset item and its intended use in business operations. Valuations are based on discounted cash flows as well as estimated disposal and repurchase prices and require management estimates and assumptions about the future use of asset items and the effect on the company's financial position. Changes in the emphasis and direction of company operations can in future result in changes to the original valuation.
The Group uses the percentage of completion method in recognizing revenue for long-term projects. Revenue recognition according to percentage of completion is based on estimates of expected revenue and costs as well as on a determination of the progress of the percentage of completion. Changes can arise to recognized revenue and profit if estimates of a project's total costs and total income are adjusted. The cumulative effect of adjusted estimates is recognized in the period in which the change becomes probable and it can be estimated reliably. Further information on long-term projects is given in Note 5. Long-term projects.
The Group tests goodwill annually for possible impairment and reviews whether there are indications of impairment according to the accounting principle presented above. The recoverable amounts of cash generating units have been determined in calculations based on value in use. Although assumptions used according to the view of the company's management are appropriate, the estimated recoverable amounts might differ substantially from those realized in future. Further information on recoverable amount sensitivity to changes in the assumptions used is given in Note 14. Intangible assets.
A management principle is to recognize an impairment for slowly moving and outdated inventories based on the management's best possible estimate of possibly unusable inventories in the Group's possession at the closing date. Management bases its estimates on systematic and continuous monitoring and evaluations. Further information on inventories is given in Note 18. Inventories.
The following new and revised IFRSs have been adopted in these consolidated financial statements. The application of these new and revised IFRSs has not had any material impact on the amounts reported for the current and prior years unless specifically noted below but may affect the accounting for future transactions and events.
IFRS 10 Consolidated Financial Statements. The standard establishes control as the base for consolidation. Additionally, the standard provides further guidance on how to apply principles of control when it is challenging to assess.
IFRS 11 Joint Arrangements. The standard emphases the rights and obligations of the joint arrangement rather than its legal form in the accounting. The arrangements are divided into two: joint operations and joint ventures. The standard requires joint ventures to be accounted for using equity method of accounting. Proportional consolidation of joint ventures is no longer allowed.
IFRS 12 Disclosure of Interests in Other Entities.The standard includes disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other, off balance sheet vehicles.
IAS 27 (revised 2011) Separate Financial Statements. The revised standard includes the requirements for separate financial statements that are left after the control provisions of IAS 27 have been included in the new IFRS 10.
IAS 28 (revised 2011) Investments in Associates and Joint Ventures. The revised standard includes requirements for both joint operations and associates to be accounted by using equity method of accounting after IFRS 11 was issued.
Amendment to IAS 32 Financial instruments: Presentation. The amendment clarifies the conditions for net presentation of financial assets and liabilities and introduces some additional application guidance.
Amendment to IAS 36 Impairment of Assets: Recoverable Amount Disclosures for Non-Financial Assets. The overall effect of the amendments is to clarify the disclosure requirements on those cash generating units which have been subject to impairment.
Amendments to IAS 39 Financial Instruments: Recognition and Measurement: Novation of Derivatives and Continuation of Hedge Accounting. The amendments allow the continuation of hedge accounting under IAS 39 when a derivative is novated to a clearing counterparty and certain conditions are met.
Amendment to IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities. The amendment provides additional transition relief by limiting the requirement to provide adjusted comparative information to only the preceding comparative period.
Amendment to IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities and IAS 27 Separate Financial Statements. The amendment provides 'investment entities' (as defined) an exemption from the consolidation of particular subsidiaries and instead require that an investment entity measure the investment in each eligible subsidiary at fair value through profit or loss in accordance with IFRS 9 or IAS 39.
IASB has published the following new or revised standards and interpretations which the Group has not yet adopted and which may have an effect on the consolidated financial statements of the Group. The Group will adopt each standard and interpretation as from the effective date, or if the effective date is other than the first day of the reporting period, from the beginning of the next reporting period after the effective date. The effects of these new and amended standards and interpretations are under investigation.
IFRS 9 Financial Instruments (effective for reporting periods beginning on or after January 1, 2018). IFRS 9 is a several phase project which aims to replace IAS 39 with a new standard. According to the finalised classification and measurement part of IFRS 9, financial assets are classified and measured based on entity's business model and the contractual cash flow characteristics of the financial asset. Classification and measurement of financial liabilities is mainly based on the current IAS 39 principles. The new impairment model reflects an expected credit loss model, as opposed to incurred credit losses model under IAS 39. The finalised general hedge accounting model of IFRS 9 allows reporters to
reflect risk management activities in the financial statements more closely as it provides more opportunities to apply hedge accounting. The standard has not yet been endorsed by EU.
IFRS 15 Revenue from Contracts with Customers (effective for reporting periods beginning on or after January 1, 2017). IFRS 15 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Its core principle is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. IFRS 15 will supersede the current revenue recognition guidance including IAS 18 Revenue, IAS 11 Construction Contracts and the related Interpretations. The standard has not yet been endorsed by EU. The Group is currently assessing the possible impact of this new standard.
Amendment to IFRS 11 Joint Arrangements (effective for reporting periods beginning on or after January 1, 2016). The amendments to IFRS 11 provide guidance on how to account for the acquisition of an interest in a joint operation in which the activities constitute a business as defined in IFRS 3 Business Combinations. The amendment has not yet been endorsed by EU.
Amendments to IAS 16 Property, Plant and Equipment and IAS 38 Tangible Assets: Clarification of Acceptable Methods of Depreciation and Amortisation (effective for reporting periods beginning on or after January 1, 2016). The amendments to IAS 16 prohibit entities from using a revenuebased depreciation method for items of property, plant and equipment. The amendments to IAS 38 introduce a rebuttable presumption that revenue is not an appropriate basis for amortisation of an intangible asset. The amendments have not yet been endorsed by EU.
Amendments to IAS 16 Property, Plant and Equipment and IAS 41 Agriculture: Bearer Plants (effective for reporting periods beginning on or after January 1, 2016). The amendments define a bearer plant and require biological assets that meet the definition of a bearer plant to be accounted for as property, plant and equipment in accordance with IAS 16, instead of IAS 41. The amendments have not yet been endorsed by EU.
Amendments to IAS 19 Defined Benefit Plans: Employee Contributions (effective for reporting periods beginning on or after 1 July 2014). The amendments to IAS 19 clarify how an entity should account for contributions made by employees or third parties that are linked to services to defined benefit plans, based on whether those contributions are dependent on the number of years of service provided by the employee. Retrospective application is required. The amendment has not yet been endorsed by EU.
Annual Improvements to IFRSs 2010–2012 and 2011–2013 (both effective for reporting periods beginning on or after 1 July 2014) and Annual Improvements to IFRSs 2012-2014 (effective for reporting periods beginning on or after 1 January 2016). In the annual improvement process the non-urgent but necessary amendments to IFRS are collected and issued annually. The nature of the improvements depends on the standards, but they do not have material impact on the consolidated financial statements. The amendments have not yet been endorsed by EU.
IFRIC 21 Levies (effective for reporting periods beginning on or after January 1, 2014). The interpretation provides guidance on when to recognise a liability for a levy imposed by a government. The interpretation has been endorsed by the EU on 14 June 2014.
The objective of Vaisala's risk management is to identify and manage material risks related to strategy implementation and business operations. Vaisala has a risk management policy which has been approved by the Board of Directors, and which covers the Company's business, operational, hazard, and financial risks. The policy aims at ensuring the safety of the Company's personnel, operations and products, as well as the continuity and compliance of business operations.
The Board of Directors defines and approves risk management principles and policies, and assesses the effectiveness of risk management. The Audit Committee reviews compliance with risk management policy and processes.
Vaisala's Risk Management Steering Group comprises key internal stakeholders, and the Group is responsible for the operational oversight of the risk management process and assuring that all significant risks are identified and reported, and risks are acted upon on all necessary organizational levels and geographical locations.
Risk management is integrated into key business processes and operations. This is accomplished by incorporating applicable risk identification, assessment, management and risk reporting actions into the core processes. The most significant risks are reported to the Vaisala Management Group and the Audit Committee annually.
Vaisala's business is exposed to changes in the global economy, politics, conflicts, policies, regulations, Vaisala's supply chain and distribution channels, and accidents as well as natural disasters and epidemics, which may affect business e.g. through order cancellations, disturbance in logistics, travel restrictions, and loss of market potential. Vaisala's capability to successfully complete investments, acquisitions, divestments and restructurings on a timely basis and to achieve
related financial and operational targets represent a risk which may impact revenue and profitability.
The most significant near-term risks and uncertainties that may affect both revenue and profitability relate to the company's ability to maintain its delivery capability, availability of critical components, interruptions in manufacturing or IT systems, changes in the global economy, western sanctions against Russia, spreading of epidemics, continuing conflicts in the Middle East and Africa, currency exchange rates, customers' financing capability, changes in customers' purchasing or investment behavior, and delays or cancellations of orders. Changes in the competition may affect the volume and profitability of business through introduction of new competitors and price erosion in areas which traditionally have been strong for Vaisala. Changes in subcontractor relations, their operations or operating environment as well as the quality of the deliverables may have a negative impact on Vaisala's business.
A significant part of Vaisala's business is project business. Project business performance and schedules have dependencies to third parties, which may impact profitability and timing of revenue recognition. Assumptions regarding new project and service business opportunities constitute a risk for both revenue and profitability.
The importance of information services and decision support systems is increasing in Vaisala's weather business. These Internet-based online services are potential subjects to a variety of cyber risks.
Interest rate risk arises from the effects of interest rate changes on interest-bearing receivables and liabilities in different currencies. Vaisala does not have significant interest-bearing liabilities or receivables and in addition to cash at hand therefore interest rate risk is immaterial. A change of one percent point in the interest rate would affect the company's result after taxes and equity by around EUR 0.2 (EUR 0.3) million.
Vaisala operates globally and is exposed to foreign exchange transaction and translation risks in many currencies. Transaction risk relates to currency flows from revenues and expenses and translation risk relates translation of statement of income and balance sheet or foreign subsidiaries into euros.
The sales takes place in various currencies. From the Group's sales 48% is in EUR, 36% in USD, 4% in JPY, 4% in GBP and 4% in CNY. The cost and purchases occurs mostly in Euro and US dollars. The group policy is to hedge maximum of position that consist of order book, purchase orders and net receivables with currency forwards. Vaisala does not apply hedge accounting in accordance with IFRS.
Group internal loans and deposits are primarily initiated in the local currencies of subsidiaries. Vaisala does not hedge internal loans, deposits or equities of foreign subsidiaries. Translation of subsidiaries' balance sheets into euros caused translation difference of EUR 3.4 (-3.4) million. The most significant translation risk exposures are in US dollars.
The foreign exchange sensitivity analysis in line with IFRS 7 has been calculated to the most important foreign currency nominated receivables, loans, cash and liabilities of group companies. The calculation does not include internal loans, order book or forecasted cash flows but include foreign exchange forwards. 10% strengthening of currencies against EUR has an effect of EUR -0.8 (-1.4) million on Vaisala profit after taxes and equity. In the following table are the most significant foreign exchanges exposures against EUR.
| M€ | 2014 | 2013 |
|---|---|---|
| USD | -11.9 | -14.6 |
| CAD | 0.7 | -0.9 |
| AUD | -0.7 | -1.3 |
| JPY | -0.9 | -1.2 |
Vaisala cash at hand amounts to EUR 47.6 (45.8) million. The parent company has also EUR 20 million uncommitted credit loan limit, which is currently unused. Additionally, the subsidiaries have EUR 1.6 million credit loan limit, which can be drawn either guarantees or loans. Currently, EUR 0.0 (0.0) million has been draw from this facility. Vaisala does not have any other material external interest bearing liabilities
Vaisala cash at hand amounts to EUR 47.6 (45.8) million, which exposes Vaisala to financial counterparty risk. Vaisala invest cash only to counterparties with good credit worthiness. All the cash investment counterparties are approved by Board of Directors. Counterparty creditworthiness is evaluated constantly. The maturity of cash investments are less than one month as of December 31, 2014.
Credit risks are hedged by using letters of credit, advance payments and bank guarantees as terms of payment. According to Group management, the company has no material credit risk concentrations, because no individual customer or customer group represents an excessive risk, resulting from global diversification of the company's customer pool. Total credit losses arising from trade receivable and recognized for the financial year amounted to EUR 0.1 million (-0.7). Bad debts are written off when official announcement of receivership, liquidation or bankruptcy is received confirming that the receivable will not be honored.
| WEA * | CEN * | Other operations | Group |
|---|---|---|---|
| 162.8 | |||
| 83.8 | |||
| 43.7 | 9.4 | 53.1 | |
| 219.6 | 80.2 | 0.0 | 299.7 |
| 17.0 | 12.1 | -2.8 | 26.4 |
| 0.1 | |||
| 2.6 | |||
| 29.1 | |||
| -5.7 | |||
| 23.4 | |||
| 92.1 83.8 |
70.7 | 0.0 |
* WEA = Weather
* CEN = Controlled Environment
| 2013 EUR million |
WEA * | CEN * | Other operations | Group |
|---|---|---|---|---|
| Products | 97.3 | 64.2 | 0.1 | 161.6 |
| Projects | 70.0 | 70.0 | ||
| Services | 32.7 | 9.0 | 41.7 | |
| Net sales | 200.0 | 73.2 | 0.1 | 273.2 |
| Operating profit | 14.5 | 4.0 | -0.4 | 18.1 |
| Share of result in associated companies | 0.1 | |||
| Financial income and expenses | -1.0 | |||
| Profit before taxes | 17.2 | |||
| Income taxes | -6.2 | |||
| Profit for the financial year | 10.9 |
* WEA = Weather
* CEN = Controlled Environment
The Group has three geographical segments, EMEA, Americas and APAC.
| 2014 EUR million |
Net sales, by destination country 1) |
Net sales, by location country 2) |
Non-current assets 2) |
|---|---|---|---|
| EMEA | 111.8 | 232.0 | 43.0 |
| of which Finland | 9.0 | 210.2 | 42.5 |
| Americas | 112.1 | 111.6 | 39.0 |
| of which United States | 86.5 | 106.2 | 38.2 |
| APAC | 75.9 | 35.8 | 0.6 |
| Group eliminations | -79.7 | ||
| Total | 299.7 | 299.7 | 82.5 |
1) Sales to external customers have been presented as net sales by destination country.
2) Net sales and non-current assets have been presented by the Group's and associated companies' countries of location.
| 2013 EUR million |
Net sales, by destination country 1) |
Net sales, by location country 2) |
Non-current assets 2) |
|---|---|---|---|
| EMEA | 98.6 | 208.4 | 46.3 |
| of which Finland | 8.0 | 189.9 | 45.4 |
| Americas | 107.8 | 105.1 | 37.5 |
| of which United States | 80.1 | 100.3 | 37.2 |
| APAC | 66.9 | 31.8 | 0.6 |
| Group eliminations | -72.0 | ||
| Total | 273.2 | 273.2 | 84.5 |
1) Sales to external customers have been presented as net sales by destination country.
2) Net sales and non-current assets have been presented by the Group's and associated companies' countries of location.
In 2014 there were no business combinations.
On August 14, 2013 Vaisala acquired Second Wind Systems Inc., a company located in Newton Massachusetts, USA. Second Wind is a global leader in remote sensing technology and data services for the wind energy industry. Second Wind Systems Inc. reached EUR 7.0 million net sales in 2012. The company employs 34 persons. Vaisala's ownership of Second Wind after the acquisition is 100%.
Net sales of the acquired company between August 15, 2013 and December 31, 2013 were EUR 2.9 million and operating profit EUR 0.1 million. Had the acquisition taken place on January 1, 2013, the group net sales would have been EUR 278.7 million and operating profit EUR 16.8 million.
The acquisition of Second Wind fits well Vaisala's strategic goal to expand Vaisala's presence in the renewable energy markets. The acquisition makes Vaisala a trusted wind energy application provider.
Vaisala incurred acquisition-related costs of EUR 0.1 million mainly related to external legal fees. The costs have been included in the other operating expenses in the consolidated statement of income.
The total final consideration of the transaction is EUR 1.4 million. No goodwill was recognized.
The values of the assets and liabilities arising from the acquisition were as follows:
| EUR million | Fair value recognized on acquisition |
|---|---|
| Technology (incl. in intangible assets) | 3.3 |
| Other intangible assets | 0.4 |
| Property, plant and equipment | 0.4 |
| Non-current receivables | 0.0 |
| Inventories | 0.6 |
| Trade and other receivables | 1.1 |
| Cash and cash equivalents | 0.2 |
| Total assets | 6.0 |
| Deferred tax liabilities | 0.9 |
| Interest-bearing liabilities | 0.1 |
| Advances received | 2.2 |
| Trade payables | 0.5 |
| Other liabilities | 0.9 |
| Total liabilities | 4.6 |
| Net assets | 1.4 |
| Cash flow on acquisition | |
| Purchase price paid in cash | -1.4 |
| Cash and cash equivalents in acquired subsidiary | 0.2 |
| Total net cash outflow on acquisition | -1.2 |
On December 17, 2013 Vaisala acquired 3TIER Inc. located in Seattle, USA. 3TIER provides project feasibility, asset management and forecasting services to companies operating in the renewable energy market globally. 3TIER reached EUR 6.3 million net sales in 2012. The company employed 55 persons on December 17, 2013. Vaisala's ownership of 3TIER after the acquisition is 100%.
Net sales of the acquired company between December 17, 2013 and December 31, 2013 were EUR 0.2 million and operating profit EUR 0.0 million. Had the acquisition taken place on January 1, 2013, the group net sales would have been EUR 279.8 million and operating profit EUR 16.1 million.
The acquisition of 3TIER fits well with Vaisala's strategic intent to build a stronger position in the renewable energy market.
Vaisala incurred acquisition-related costs of EUR 0.2 million mainly related to external legal fees. The costs have been included in the other operating expenses in the consolidated statement of income.
The total financial consideration of the transaction is EUR 11.5 million. No goodwill was recognized.
The values of the assets and liabilities arising from the acquisition were as follows:
| EUR million | Fair value recognized on acquisition |
|---|---|
| Technology (incl. in intangible assets) | 3.9 |
| Customer relationships | 6.2 |
| Other fixed assets | 0.6 |
| Trade and other receivables | 3.0 |
| Deferred tax assets | 3.0 |
| Cash and cash equivalents | 0.4 |
| Total assets | 17.2 |
| Deferred tax liabilities | 3.9 |
| Other liabilities | 1.8 |
| Total liabilities | 5.6 |
| Net assets | 11.5 |
| Cash flow on acquisition | |
| Purchase price paid in cash | -11.5 |
| Cash and cash equivalents in acquired subsidiary | 0.4 |
| Total net cash outflow on acquisition | -11.1 |
| EUR million | 2014 | 2013 |
|---|---|---|
| Net sales recognized as revenue according to percentage of completion (in financial period) |
3.0 | 2.8 |
| Amount recognized as revenue during the financial year and previous years for long-term project in progress |
12.8 | 26.3 |
| Total costs of incomplete long-term projects | 7.6 | 20.1 |
| Net amount of recognized costs, profits and losses from long-term projects |
5.1 | 6.3 |
| Order backlog | 4.0 | 6.1 |
| Specification of balances in the statement of financial position | ||
| Materials and supplies in inventory | 0.1 | 0.1 |
| Prepayments and accrued income recognized | 1.1 | 0.5 |
| Deferred income recognized | 0.2 | 0.2 |
| Advances received | 0.9 | 1.2 |
Accounting principles for long-term projects are presented in the note Accounting Principles.
| EUR million | 2014 | 2013 |
|---|---|---|
| Gains on the disposal of fixed assets | 0.2 | 1.5 |
| Other | 0.4 | 0.3 |
| Total | 0.5 | 1.8 |
Other operating income year 2013 includes the gain of road transportation product line divestment.
| Other operating expenses EUR million |
2014 | 2013 |
|---|---|---|
| Loss on the disposal of fixed assets | 0.1 | 0.1 |
| Impairment of intangible assets | - | 4.3 |
| Other operating expenses | 0.0 | - |
| Total | 0.1 | 4.4 |
| EUR million | ||
|---|---|---|
| Depreciation, amortization and impairments by function | 2014 | 2013 |
| Procurement and production | 4.9 | 4.9 |
| Sales, marketing and administration | 9.8 | 9.4 |
| Research and development | 0.4 | 0.5 |
| Other income and expenses | - | 4.3 |
| Total | 15.2 | 19.1 |
| Depreciation and amortization by asset group | ||
| Intangible assets | ||
| Intangible rights | 4.4 | 5.3 |
| Other intangible assets | 1.4 | 0.3 |
| Total | 5.8 | 5.5 |
| Property, plant and equipment | ||
| Buildings and structures | 2.1 | 2.3 |
| Machinery and equipment | 7.1 | 6.9 |
| Total | 9.2 | 9.3 |
| Impairments by asset group | ||
| Goodwill | - | 3.5 |
| Intangible rights | - | 0.8 |
| Other intangible assets | 0.0 | - |
| Buildings and structures | 0.0 | - |
| Machinery and equipment | 0.1 | - |
| Total | 0.2 | 4.3 |
| Total | 15.2 | 19.1 |
| EUR million | 2014 | 2013 |
|---|---|---|
| Salaries | 94.9 | 84.7 |
| Share-based payment | 1.0 | 0.6 |
| Social costs | 9.8 | 8.8 |
| Pensions | ||
| Defined-benefit pension schemes | 0.1 | 0.0 |
| Defined-contribution pension schemes | 10.6 | 10.6 |
| Total | 116.3 | 104.7 |
| Expenses arising from employee benefits by function | ||
| EUR million | 2014 | 2013 |
| Procurement and production | 40.7 | 37.5 |
| Sales, marketing and administration | 50.2 | 44.5 |
| Research and development | 25.4 | 22.7 |
| Total | 116.3 | 104.7 |
| Group personnel, average during the financial year | ||
| by business unit | 2014 | 2013 |
| Weather | 515 | 462 |
| Controlled Environment | 191 | 169 |
| Other operations | 911 | 854 |
| Total | 1,617 | 1,485 |
| In Finland | 916 | 862 |
| Outside Finland | 701 | 623 |
| Total | 1,617 | 1,485 |
On May 3, 2012 the Board of Directors resolved for the Group key employees a share-based incentive plan that is based on the development of Group's profitability in calendar year 2012 and it will be paid partly in the Company's series A shares and partly in cash in spring 2015. The cash proportion will cover taxes and tax-related costs arising from the reward to a key employee. No reward will be paid, if a key employee's employment or service ends before the reward payment date. Maximum amount corresponding to 142,200 shares will be paid depending on the number of entitled persons in the company at the end of vesting period. In 2014 EUR 0.7 million and in 2013 EUR 0.6 million was expensed for the share-based incentive plan (EUR 0.4 million in 2012).
On February 6, 2013 the Board of Directors resolved for the Group key employees a share-based incentive plan that is based on the development of Group's profitability in calendar year 2013 and it will be paid partly in the Company's series A shares and partly in cash in spring 2016. The cash proportion will cover taxes and tax-related costs arising from the reward to a key employee. No reward will be paid, if a key employee's employment or service ends before the reward payment date. Maximum amount corresponding to 150,000 shares will be paid depending on the number of entitled persons in the company at the end of vesting period. In 2013 no expense was recognized as the criteria was not met.
On February 10, 2014 the Board of Directors resolved for the Group key employees a share-based incentive plan that is based on the development of Group's profitability in calendar year 2014 and it will be paid partly in the Company's series A shares and partly in cash in spring 2017. The cash proportion will cover taxes and tax-related costs arising from the reward to a key employee. No reward will be paid, if a key employee's employment or service ends before the reward payment date. Maximum amount corresponding to 147,000 shares will be paid depending on the number of entitled persons in the company at the end of vesting period. In 2014 EUR 0.2 million was expensed for the share-based incentive plan.
The statement of income includes research and development expenditure of EUR 34.0 million recognized as an expense in 2014 (EUR 28.9 million in 2013).
| Financial income | 2014 | 2013 |
|---|---|---|
| Dividend income | 0.1 | 0.0 |
| Other interest and financial income | 0.4 | 0.5 |
| Realized and unrealized gains arising from changes in fair value of | ||
| derivative contracts and hedging activities | 0.6 | 1.8 |
| Other foreign exchange gains | 7.3 | 2.9 |
| Total | 8.4 | 5.2 |
| Financial expenses | 2014 | 2013 |
| Interest expenses | ||
| Short- and long-term liabilities | -0.0 | -0.1 |
| Finance lease agreements | -0.0 | -0.0 |
| Other financial expenses | -0.3 | -0.4 |
| Realized and unrealized losses arising from changes in fair value of | ||
| derivative contracts and hedging activities | -3.0 | -0.6 |
| Other foreign exchange losses | -2.5 | -5.2 |
| Total | -5.8 | -6.3 |
Other foreign exchange gains and losses arise from the business transactions.
| EUR million | 2014 | 2013 |
|---|---|---|
| Tax based on taxable income for the financial year | 6.2 | 6.1 |
| Taxes from previous financial years | -0.1 | 0.6 |
| Change in deferred tax assets and liabilities | -0.4 | -0.4 |
| Total | 5.7 | 6.2 |
| EUR million | 2014 | 2013 |
|---|---|---|
| Profit before taxes | 29.1 | 17.2 |
| Taxes calculated at Finnish tax rate | 5.8 | 4.2 |
| Effect of foreign subsidiaries' tax rates | 0.7 | 0.9 |
| Non-deductible expenses and tax-free revenue | 0.1 | 0.2 |
| Impairment of goodwill | - | 0.9 |
| Taxes from previous years | -0.1 | 0.6 |
| Other direct taxes | 0.1 | 0.0 |
| Tax losses for which no deferred income tax asset was recognized | - | 0.1 |
| Deferred tax adjustment | -0.9 | -0.3 |
| Re-measurement of deferred tax - change in the Finnish corporate tax rate | - | -0.3 |
| Other | -0.0 | -0.0 |
| Tax in the statement of income | 5.7 | 6.2 |
| Effective tax rate | 19.5% | 36.4% |
| Deferred taxes in statement of financial position EUR million |
2014 | 2013 |
|---|---|---|
| Deferred tax assets | 8.9 | 8.0 |
| Deferred tax liabilities | -5.3 | -5.2 |
| Deferred tax asset, net | 3.7 | 2.8 |
| Gross change in deferred taxes recognized in statement of financial position: |
||
| EUR million | 2014 | 2013 |
| Deferred taxes Jan. 1 | 2.8 | 4.1 |
|---|---|---|
| Items recognized in statement of income | 0.4 | 0.4 |
| Translation differences | -0.3 | -0.1 |
| Business combinations | 0.7 | -1.7 |
| Items recognized in statement of comprehensive income | 0.1 | -0.0 |
| Deferred tax asset, net | 3.7 | 2.8 |
At December 31, 2014 the French subsidiary has EUR 1.5 million loss carried forward. In 2014 EUR 0.1 million deferred taxes were recognized for the losses.
| Recognized | Recognized in statement of |
||||
|---|---|---|---|---|---|
| Changes in deferred taxes during 2014 EUR million |
Jan. 1, 2014 |
in statement of income |
Translation differences |
comprehensive income |
Dec. 31, 2014 |
| Deferred tax assets: | |||||
| Internal margin of inventories and fixed assets | 0.6 | -0.0 | 0.6 | ||
| Employee benefits | 1.0 | 0.2 | 1.2 | ||
| Unused tax losses | 3.5 | -0.4 | 3.1 | ||
| Timing difference of depreciation on | |||||
| intangible items | 1.1 | -1.0 | 0.5 | 0.6 | |
| Other temporary timing differences* | 1.8 | 1.0 | 0.5 | 0.1 | 3.4 |
| Total | 8.0 | -0.1 | 0.9 | 0.1 | 8.9 |
| Deferred tax liabilities: | |||||
| Timing difference between accounting | |||||
| and taxation | 0.6 | 0.1 | 0.7 | ||
| Timing difference of depreciation on | |||||
| intangible items | 4.6 | -0.7 | 0.6 | 4.6 | |
| Other | 0.0 | 0.0 | 0.0 | ||
| Total | 5.2 | -0.5 | 0.6 | 5.3 | |
| Deferred tax asset, net | 2.8 | 0.4 | 0.4 | 0.1 | 3.7 |
| Recognized in | ||||||
|---|---|---|---|---|---|---|
| Changes in deferred taxes during 2013 EUR million |
Jan. 1, 2013 |
Recognized in statement of income |
Translation differences |
Acquired subsidiaries |
statement of comprehensive income |
Dec. 31, 2013 |
| Deferred tax assets: | ||||||
| Internal margin of inventories | ||||||
| and fixed assets | 0.2 | 0.4 | 0.6 | |||
| Employee benefits | 0.7 | 0.3 | 1.0 | |||
| Unused tax losses | 0.2 | 0.3 | 3.0 | 3.5 | ||
| Timing difference of | ||||||
| depreciation on intangible items | 1.9 | -0.8 | 1.1 | |||
| Other temporary timing | ||||||
| differences * | 2.1 | -0.2 | -0.1 | 1.8 | ||
| Total | 5.1 | 0.0 | -0.1 | 3.0 | 8.0 | |
| Deferred tax liabilities: | ||||||
| Timing difference between | ||||||
| accounting and taxation | 1.0 | -0.4 | 0.6 | |||
| Timing difference of | ||||||
| depreciation on intangible items | 4.6 | 4.6 | ||||
| Other | 0.0 | 0.0 | 0.0 | |||
| Total | 1.0 | -0.4 | 4.6 | 0.0 | 5.2 | |
| Deferred tax asset, net | 4.1 | 0.4 | -0.1 | -1.7 | -0.0 | 2.8 |
* Other temporary differences consist of intercompany sales, credit losses, inventory valuation and other temporary differences.
The undiluted earnings per share figure is calculated by dividing the profit for the financial year belonging to the parent company's shareholders by the weighted average number of shares outstanding during the financial year.
| 2014 | 2013 | |
|---|---|---|
| Profit attributable to shareholders of the parent company, undiluted, EUR million | 23.4 | 10.9 |
| Weighted average number of shares outstanding, 1,000 pcs | 18,059 | 18,059 |
| Earnings per share, EUR | 1.30 | 0.60 |
| Profit attributable to shareholders of the parent company, diluted, EUR million | 23.4 | 10.9 |
| Weighted average number of shares outstanding, diluted, 1,000 pcs | 18,234 | 18,187 |
| Earnings per share, diluted, EUR | 1.29 | 0.60 |
In year 2014 and 2013 dilution is due to share-based payment.
For 2013 a dividend of 0.90 euros per share was paid.
At the Annual General Meeting to be held on March 31, 2015 the payment of a dividend of 0.90 euros per share will be proposed, representing a total dividend of approximately EUR 16.4 million. The proposed dividend has not been recognized as a dividend liability in these financial statements.
| EUR million | Intangible | Other intangible |
||
|---|---|---|---|---|
| Intangible assets | rights * | Goodwill | assets | Total |
| Acquisition cost Jan. 1, 2014 | 48.2 | 12.7 | 13.2 | 74.1 |
| Translation difference | 2.6 | 1.7 | 1.8 | 6.1 |
| Increases | 2.6 | 0.6 | 3.3 | |
| Decreases | -4.8 | -0.2 | -5.0 | |
| Transfers between items | 0.4 | -0.3 | 0.0 | |
| Acquisition cost Dec. 31, 2014 | 49.0 | 14.4 | 15.1 | 78.4 |
| Accumulated amortization and impairment Jan. 1, 2014 | 35.4 | 2.7 | 38.1 | |
| Translation difference | 1.8 | 0.3 | 2.2 | |
| Accumulated amortization of decreases and transfers | -4.8 | -0.2 | -5.0 | |
| Amortization in financial year | 4.5 | 1.4 | 5.9 | |
| Impairments in financial year | 0.0 | 0.0 | ||
| Accumulated amortization and impairment Dec. 31, 2014 | 37.0 | 4.3 | 41.3 | |
| Carrying amount Dec. 31, 2014 | 12.0 | 14.4 | 10.8 | 37.1 |
| Other | ||||
|---|---|---|---|---|
| Intangible assets | Intangible rights * |
Goodwill | intangible assets |
Total |
| Acquisition cost Jan. 1, 2013 | 46.8 | 17.9 | 3.3 | 68.0 |
| Translation difference | 1.5 | -0.8 | -0.1 | 0.7 |
| Increases | 0.3 | 0.1 | 0.5 | |
| Business combinations | 3.6 | 10.1 | 13.7 | |
| Decreases | -4.1 | -4.4 | -0.3 | -8.8 |
| Transfers between items | 0.0 | -0.0 | 0.0 | |
| Acquisition cost Dec. 31, 2013 | 48.2 | 12.7 | 13.2 | 74.1 |
| Accumulated amortization and impairment Jan. 1, 2013 | 32.1 | 2.8 | 34.9 | |
| Translation difference | 0.5 | -0.1 | 0.4 | |
| Accumulated amortization of decreases and transfers | -3.3 | -3.5 | -0.3 | -7.0 |
| Amortization in financial year | 5.3 | 0.3 | 5.5 | |
| Impairments in financial year | 0.8 | 3.5 | 4.3 | |
| Accumulated amortization and impairment Dec. 31, 2013 | 35.4 | 0.0 | 2.7 | 38.1 |
| Carrying amount Dec. 31, 2013 | 12.8 | 12.7 | 10.5 | 35.9 |
* Intangible rights contain patents, trademarks and software licenses.
Vaisala assesses the value of goodwill for impairment annually or more frequently in case facts and circumstances indicate a risk of impairment. The assessment is done using discounted cash flow methodology which is applied to five year forecasts that are approved by Vaisala management. The recoverable amount of cash generating unit is based on value in use calculations.
In Weather cash generating unit recoverable amount exceeds book value by EUR 260 million. Weather business sales are expected to grow annually 4–7% next five years. Terminal growth rate is based on 2% growth assumption and Weighted Average Costs of Capital (WACC) is 11.2%. Calculations show that with other assumptions unchanged cash generating unit can withstand sales deteriorating 17%, profitability deteriorating 11% or discount rate increase 22%.
| EUR million | Land and | Buildings and |
Machinery and |
Other tangible |
Advance payments and construction |
|
|---|---|---|---|---|---|---|
| Property, plant and equipment | waters | structures | equipment | assets | in progress | Total |
| Acquisition cost Jan. 1, 2014 | 2.7 | 49.0 | 75.7 | 0.0 | 4.0 | 131.5 |
| Translation difference | 0.2 | 0.5 | 2.5 | -0.0 | 3.1 | |
| Increases | 0.2 | 2.4 | 3.3 | 5.9 | ||
| Decreases | -0.0 | -9.4 | 0.0 | -9,4 | ||
| Transfers between items | 0.5 | 3.6 | -4.1 | -0.0 | ||
| Acquisition cost Dec. 31, 2014 | 2.9 | 50.1 | 74.8 | 0.0 | 3.2 | 131.1 |
| Accumulated depreciation and | ||||||
| impairment Jan. 1, 2014 | 25.7 | 59.0 | 84.7 | |||
| Translation difference | 0.3 | 2.2 | 2.4 | |||
| Accumulated depreciation of | ||||||
| decreases and transfers | -0.0 | -9.4 | -9.4 | |||
| Depreciation in financial year | 2.1 | 7.0 | 9.1 | |||
| Write-downs in financial year | 0.0 | 0.1 | 0.1 | |||
| Accumulated depreciation | ||||||
| Dec. 31, 2014 | 28.0 | 58.9 | 86.9 | |||
| Carrying amount Dec. 31, 2014 | 2.9 | 22.1 | 15.9 | 0.0 | 3.2 | 44.2 |
The carrying amount of machinery and equipment used in production was EUR 11.5 million on December 31, 2014 (EUR 11.3 million on December 31, 2013).
| Advance | ||||||
|---|---|---|---|---|---|---|
| Buildings | Machinery | Other | payments and | |||
| Property, plant and equipment | Land and waters |
and structures |
and equipment |
tangible assets |
construction in progress |
Total |
| Acquisition cost Jan. 1, 2013 | 2.8 | 49.4 | 70.9 | 0.0 | 3.5 | 126.6 |
| Translation difference | -0.1 | -0.2 | 1.9 | -0.1 | 1.6 | |
| Increases | 0.0 | 3.0 | 0.0 | 4.1 | 7.1 | |
| Business combinations | 2.2 | 2.2 | ||||
| Decreases | -0.5 | -5.5 | -0.0 | -6.0 | ||
| Transfers between items | 0.1 | 3.3 | -3.5 | -0.0 | ||
| Acquisition cost Dec. 31, 2013 | 2.7 | 49.0 | 75.7 | 0.0 | 4.0 | 131.5 |
| Accumulated depreciation and | ||||||
| impairment Jan. 1, 2013 | 23.5 | 54.0 | 77.5 | |||
| Translation difference | -0.1 | 1.9 | 1.8 | |||
| Accumulated depreciation of | ||||||
| decreases and transfers | -0.1 | -3.8 | -3.9 | |||
| Depreciation in financial year | 2.3 | 6.9 | 9.3 | |||
| Accumulated depreciation | ||||||
| Dec. 31, 2013 | 25.7 | 59.0 | 84.7 | |||
| Carrying amount Dec. 31, 2013 | 2.7 | 23.3 | 16.7 | 0.0 | 4.0 | 46.8 |
| 2014 EUR million |
Machinery and equipment |
|---|---|
| Acquisition cost | 0.1 |
| Accumulated depreciation | -0.0 |
| Carrying amount Dec. 31, 2014 | 0.0 |
| 2013 | |
| EUR million | Machinery and equipment |
| Acquisition cost | 0.1 |
| Accumulated depreciation | -0.0 |
Carrying amount Dec. 31, 2013 0.0
During 2013 Vaisala Corporation bought out the computers on finance lease. At December 31, 2014 the remaining assets on finance lease are leased forklift trucks.
| EUR million | 2014 | 2013 |
|---|---|---|
| Acquisition cost Jan. 1 | 0.7 | 0.8 |
| Share of result | 0.1 | 0.1 |
| Reclassification | - | -0.1 |
| Translation differences | 0.0 | -0.1 |
| Associated company investments, total Dec. 31 | 0.8 | 0.7 |
The carrying amount of associated companies does not include goodwill.
| Associated companies 2014 EUR million |
Domicile | Assets | Liabilities | Net sales | Profit/loss | Holding |
|---|---|---|---|---|---|---|
| Meteorage SA, France | Cedex | 4.1 | 1.9 | 2.7 | 0.2 | 35% |
The information presented in the table is based on the latest available financial statements.
| Associated companies 2013 EUR million |
Domicile | Assets | Liabilities | Net sales | Profit/loss | Holding |
|---|---|---|---|---|---|---|
| Meteorage SA, France | Cedex | 4.0 | 1.9 | 3.3 | 0.3 | 35% |
The information presented in the table is based on the latest available financial statements.
Associated company Meteorage SA maintains lightning detection networks and sales information related to lightning detection.
| 2014 | 2013 | |||
|---|---|---|---|---|
| Values in statement of | Values in statement of | |||
| EUR million | financial position | Fair values | financial position | Fair values |
| Loan receivables | 0.0 | 0.0 | 0.7 | 0.7 |
| Other receivables | 0.3 | 0.3 | 0.2 | 0.2 |
| Total | 0.3 | 0.3 | 0.9 | 0.9 |
| EUR million | 2014 | 2013 |
|---|---|---|
| Materials, supplies and finished goods | 29.4 | 24.8 |
| Project inventories | 4.5 | 3.8 |
| Total | 33.9 | 28.6 |
An expense of EUR 79.8 million (EUR 79.2 million in 2013) was recognized in the financial period.
Vaisala wrote down inventories and recognized excess and obsolescence allowances for slow moving and old inventory to their estimated net realizable value which resulted a loss of EUR 4.5 million in year 2014 (EUR 4.8 million in year 2013).
| EUR million | 2014 | 2013 |
|---|---|---|
| Trade receivables | 56.2 | 45.8 |
| Loan receivables | 0.0 | 0.2 |
| Advances paid | 0.3 | 0.4 |
| Value-added tax receivables | 4.0 | 2.8 |
| Other receivables | 1.6 | 1.3 |
| Receivables from long-term project customers | 1.1 | 0.5 |
| Derivative contracts | 0.0 | 0.6 |
| Other prepaid expenses and accrued income | 7.3 | 5.8 |
| Total | 70.5 | 57.4 |
Fair values of trade and other receivables materially corresponds to book values.
| EUR million | 2014 | Provision | Net 2014 | 2013 | Provision | Net 2013 |
|---|---|---|---|---|---|---|
| Invoices not due | 38.8 | 38.8 | 31.7 | 31.7 | ||
| Due less than 30 days | 9.6 | 9.6 | 8.3 | 8.3 | ||
| Due 31–90 days | 4.0 | 4.0 | 4.4 | 4.4 | ||
| Due over 90 days | 4.9 | 1.0 | 3.9 | 2.7 | 1.3 | 1.4 |
| Total | 57.2 | 1.0 | 56.2 | 47.0 | 1.3 | 45.8 |
In 2014 impairments of trade receivables were EUR 0.1 million negative (EUR 0.7 million positive in 2013).
The carrying amounts of group's trade receivables are denominated in the following currencies:
| EUR million | 2014 | 2013 |
|---|---|---|
| EUR | 21.3 | 17.7 |
| USD | 25.5 | 21.2 |
| GBP | 4.5 | 2.9 |
| JPY | 2.2 | 2.0 |
| AUD | 1.1 | 0.7 |
| CNY | 0.4 | 0.2 |
| Others | 1.2 | 1.1 |
| Total | 56.2 | 45.8 |
| EUR million | 2014 | 2013 |
|---|---|---|
| Cash and bank deposits | 47.6 | 45.8 |
The values of cash and cash equivalents are equivalent to their carrying amounts.
Vaisala applies the insider rules of the Helsinki Stock Exchange.
Vaisala has 18,218,364 shares, of which 3,389,351 are K shares and 14,829,013 are A shares. The shares do not have nominal value. Vaisala's maximum share capital is EUR 28,800,000. A maximum of 68,490,017 shares shall be K shares and a maximum of 68,490,017 shares shall be A shares, with the provision that the total number of shares shall be at least 17,122,505 and not more than 68,490,017. The K shares and A shares are differentiated by the fact that each K share entitles its owner to 20 votes at a General Meeting of Shareholders while each A share entitles its owner to 1 vote. The shares have the same rights to dividend. K shares can be converted to A shares according to specific rules stated in the Articles of Association.
The group equity consists of the share capital, reserve fund, fund of invested non-restricted equity, translation differences and retained earnings.
| EUR million | Number of shares 1,000 |
Share capital |
Share premium fund |
Other reserves |
Treasury shares |
Total |
|---|---|---|---|---|---|---|
| December 31, 2012 | 18,059 | 7.7 | 22.3 | 0.8 | -2.5 | 28.2 |
| Transfer | -22.3 | 22.4 | 0.1 | |||
| Return of capital | -22.2 | -22.2 | ||||
| Share-based compensation | 0.6 | 0.6 | ||||
| Translation differences | -0.0 | -0.0 | ||||
| December 31, 2013 | 18,059 | 7.7 | - | 1.5 | -2.5 | 6.6 |
| Share-based compensation | 1.0 | 1.0 | ||||
| Transfer | 0.0 | 0.0 | ||||
| Translation differences | 0.0 | 0.0 | ||||
| Correction | -0.0 | -0.0 | ||||
| December 31, 2014 | 18,059 | 7.7 | - | 2.5 | -2.5 | 7.6 |
| Own shares held by company | 159 |
|---|---|
| Total | 18,218 |
Other reserves consist of the reserve fund and the fund of invested non-restricted equity.
Reserve fund, EUR 0.4 million, contains items based on the local rules of other Group companies. Restrictions based on local rules apply to the distributability of the reserve fund.
The fund of invested non-restricted equity includes funds transferred from the share premium fund. On December 31, 2014 the balance was EUR 0.1 million (December 31, 2013: EUR 0.1 million).
The translation differences fund contains translation differences arising from the conversion of the financial statements of foreign units. The profit for the financial year is entered in retained earnings.
On March 26, 2013 Vaisala Corporation's Annual General Meeting decided to decrease the share premium fund presented in the company's statement of financial position on December 31, 2012 by EUR 22,3 million by transferring all the funds in the share premium fund into the invested non-restricted equity fund. The Meeting also decided that of the funds transferred into the invested non-restricted equity funds EUR 1.23 per share will be distributed to the shareholders as a return of capital, which equals to approximately EUR 22.2 million return of capital.
The own shares (treasury shares) fund includes the acquisition cost of own shares held by the Group, and it is presented as a reduction in shareholders' equity.
| Number of shares | Purchase price EUR million |
|
|---|---|---|
| Company's treasury shares on Dec. 31, 2011 | 9,150 | 0.3 |
| May, 2012 | 139,379 | 2.1 |
| June, 2012 | 10,621 | 0.2 |
| Company's treasury shares on Dec. 31, 2012 | 159,150 | 2.5 |
| Company's treasury shares on Dec. 31, 2013 | 159,150 | 2.5 |
| Company's treasury shares on Dec. 31, 2014 | 159,150 | 2.5 |
On December 31, 2014, the Group had 159,150 treasury A shares (159,150 A shares on December 31, 2013) in its possession that represent approximately 0.9% of share capital and 0.2% of voting rights. The considerations paid for the A shares were EUR 2,527,160.
Treasury shares are to be used for share based incentive plan (note 8).
The Group has a number of pension schemes, which have been classified as either defined-contribution or defined-benefit schemes. Under defined-contribution plans, contributions made are recognized as an expense in the statement of income of the financial period in which the contributions are payable. TyEL pension cover managed in an insurance company are definedcontribution schemes.
The defined-benefit schemes are in Finland. The supplementary pension benefits managed in the Vaisala Pension Fund have been treated as defined-benefit pension schemes. The Pension Fund's obligations were transferred to a pension insurance company on December 31, 2005. The company retains, however, an obligation under IFRS 19 for future index and salary increases in terms of individuals covered by the Pension Fund who are employed by the company.
On January 1, 2013 the Group adopted the revised IAS 19 standard. The impact of the adoption is described in the Accounting Principles.
| EUR million | 2014 | 2013 |
|---|---|---|
| Fair value of funded obligations | 1.7 | 1.5 |
| Fair value of assets | -0.5 | -0.9 |
| Deficit/surplus | 1.2 | 0.6 |
| Net liability in the statement of financial position | 1.2 | 0.6 |
| EUR million | 2014 | 2013 |
|---|---|---|
| Current service cost | 0.0 | 0.0 |
| Interest | 0.0 | 0.0 |
| Expense recognized in the statement of income | 0.1 | 0.0 |
| Net actuarial loss (+) / gain (-) in other comprehensive income | 0.6 | 0.2 |
| Total recognized in the statement of income and the statement of | ||
| other comprehensive income | 0.6 | 0.2 |
Defined-benefit pension schemes has been allocated to administration function.
| EUR million | 2014 | 2013 |
|---|---|---|
| Present value of obligation Jan. 1 | 1.5 | 1.4 |
| Current service cost | 0.0 | 0.0 |
| Interest cost | 0.1 | 0.0 |
| Settlement and curtailments | -0.4 | - |
| Remeasurements | ||
| Actuarial gain (-) loss(+) arising from changes in financial assumptions | 0.4 | 0.1 |
| Experience adjustment | 0.2 | 0.1 |
| Benefits paid | -0.1 | -0.1 |
| Present value of obligation on Dec. 31 | 1.7 | 1.5 |
| EUR million | 2014 | 2013 |
|---|---|---|
| Fair value of plan assets Jan. 1 | 0.9 | 0.9 |
| Interest income on assets | 0.0 | 0.0 |
| Settlements | -0.4 | - |
| Net return on plan assets | 0.0 | 0.0 |
| Benefits paid | -0.1 | -0.1 |
| Contributions | 0.1 | 0.0 |
| Fair value of plan assets Dec. 31 | 0.5 | 0.9 |
| EUR million | 2014 | 2013 |
|---|---|---|
| At beginning of financial year | 0.6 | 0.5 |
| Expense (+) / income (-) recognized in statement of income | 0.1 | 0.0 |
| Total recognized in other comprehensive income | 0.6 | 0.2 |
| Contributions paid | -0.1 | - |
| At end of financial year | 1.2 | 0.6 |
| Actuarial assumptions used: | 2014 | 2013 |
| Discount rate | 1.80% | 3.30% |
| Expected yield from assets belonging to the scheme | 3.00% | 3.25% |
| Rate of inflation | 2.00% | 2.00% |
| Annual adjustments to pensions | 2.10% | 2.10% |
| Assumption | Change in assumption |
Increase in assumption |
Decrease in assumption |
|---|---|---|---|
| Discount rate | 0.25% | 2.67% decrease | 2.81% increase |
| Salary increase rate | 0.25% | 0.51% increase | 0.51% decrease |
| Pension increase rate | 0.25% | 15.89% increase | 14.31% decrease |
| Increase | Decrease |
| by one year | by one year | |
|---|---|---|
| Life expectancy at birth | 3.11% increase | 3.02% decrease |
The above analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the net liability using the above assumptions the same method has been applied as when measuring the net liability in the statement of financial position.
| Long term | 2014 | 2013 |
|---|---|---|
| Provisions Jan. 1 | - | 0.1 |
| Increase in provisions | 0.2 | - |
| Decrease in provisions | - | -0.1 |
| Provisions Dec. 31 | 0.2 | - |
In 2014 Vaisala recognized a provision for a donation to the New Children's hospital in Helsinki, Finland.
| Short term | 2014 | 2013 |
|---|---|---|
| Provisions Jan.1 | - | 0.9 |
| Increase in provisions | 1.4 | - |
| Used provisions | - | -0.9 |
| Provisions Dec. 31 | 1.4 | - |
The provision recognized in 2014 is related to a legal dispute.
| EUR million | 2014 | 2013 |
|---|---|---|
| Trade payables | 12.9 | 10.1 |
| Salary and social cost allocations | 18.2 | 14.9 |
| Financial derivatives | 1.4 | 0.0 |
| Other accrued expenses and deferred income | 21.0 | 25.1 |
| Other short-term liabilities | 4.7 | 4.7 |
| Total | 58.1 | 54.8 |
The fair value of the trade payables and other liabilities is equivalent to their carrying amounts.
| EUR million | Assets/liabilities recognized at fair value through profit and loss and derivatives used for hedging |
Loans and receivables |
Financial liabilities at amortized cost |
Carrying amount of statement of financial position items |
Fair value |
Note |
|---|---|---|---|---|---|---|
| Financial assets | ||||||
| Long-term receivables | 0.3 | 0.3 | 0.3 | 17 | ||
| Trade receivables and other | ||||||
| receivables | 0.0 | 70.5 | 70.5 | 70.5 | 19 | |
| Cash and cash equivalents | 47.6 | 47.6 | 47.6 | 20 | ||
| Total | 0.0 | 118.3 | 118.4 | 118.4 | ||
| Liabilities | ||||||
| Interest-bearing long-term liabilities | 0.0 | 0.0 | 0.0 | 25 | ||
| Interest-bearing short-term liabilities | 0.0 | 0.0 | 0.0 | 25 | ||
| Trade payables and other liabilities | 1.4 | 56.7 | 58.1 | 58.1 | 24 | |
| Total | 1.4 | 56.8 | 58.1 | 58.1 |
| EUR million | Assets/liabilities recognized at fair value through profit and loss and derivatives used for hedging |
Loans and receivables |
Financial liabilities at amortized cost |
Carrying amount of statement of financial position items |
Fair value |
Note |
|---|---|---|---|---|---|---|
| Financial assets | ||||||
| Long-term receivables | 0.9 | 0.9 | 0.9 | 17 | ||
| Trade receivables and other | ||||||
| receivables | 0.6 | 56.7 | 57.4 | 57.4 | 19 | |
| Cash and cash equivalents | 45.8 | 45.8 | 45.8 | 20 | ||
| Total | 0.6 | 103.4 | 104.1 | 104.1 | ||
| Financial liabilities | ||||||
| Interest-bearing long-term liabilities | 0.0 | 0.0 | 0.0 | 25 | ||
| Interest-bearing short-term liabilities | 0.0 | 0.0 | 0.0 | 25 | ||
| Trade payables and other liabilities | 0.0 | 54.8 | 54.8 | 54.8 | 24 | |
| Total | 0.0 | 54.8 | 54.8 | 54.8 |
At the end of year 2014 and 2013 the Group did not have any interest bearing loans. The company has no loans that would mature after five years or a longer period. Other non-interest bearing long-term liabilities comprise of long-term part of trade payable of ASIC-circuits EUR 0.7 million (EUR 1.1 million). Circuits are Vaisala's property and they will be paid according to the use of current circuits during the years 2012 to 2016. The liability is interest-free. Non-interest bearing long-term liabilities also include an EUR 0.6 million trade payable for computer software.
| EUR million | 2014 | 2013 |
|---|---|---|
| Finance lease liabilities - total amount of minimum lease payments | ||
| Up to 1 year | 0.0 | 0.0 |
| 1–5 years | 0.0 | 0.0 |
| 0.0 | 0.0 | |
| Future financial expenses | 0.0 | 0.0 |
| Present value of finance lease liabilities | 0.0 | 0.0 |
| Present value of minimum payments of finance lease liabilities | ||
| Up to 1 year | 0.0 | 0.0 |
| 1–5 years | 0.0 | 0.0 |
| Total | 0.0 | 0.0 |
During 2013 Vaisala Corporation bought out the finance leases relating to computers.
| EUR million | 2014 | 2013 |
|---|---|---|
| Capital value of off-balance sheet contracts made to | ||
| hedge against exchange rate and interest rate risks | ||
| Currency forwards | 20.0 | 19.7 |
| Capital value, total | 20.0 | 19.7 |
| 2014 | 2013 | |||
|---|---|---|---|---|
| Currency million | EUR million | Currency million | EUR million | |
| USD | 22.5 | 17.2 | 22.5 | 16.8 |
| AUD | 2.0 | 1.4 | 2.0 | 1.4 |
| JPY | 165.0 | 1.2 | 165.0 | 1.2 |
| GBP | 0.3 | 0.3 | 0.3 | 0.3 |
| Total | 20.0 | 19.7 |
| EUR million | 2014 | 2013 |
|---|---|---|
| Less than 90 days | 9.2 | 9.8 |
| Over 90 days and less than 120 days | 2.6 | 2.6 |
| Over 120 days and less than 330 days | 8.2 | 7.4 |
| Total | 20.0 | 19.7 |
| EUR million | 2014 | 2013 |
|---|---|---|
| Currency forwards | -1.3 | 0.6 |
| Fair value, total | -1.3 | 0.6 |
Fair value of the derivative contracts are based on information that are observable for the assets or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). In addition to the quoted prices the group will prepare own assessment using commonly acceptable valuation techniques. Hence group's derivative contracts belongs to the level 2. There were no transfers between the hierarchy levels during the financial period.
26 Contingent Liabilities and Pledges Given
| EUR million | 2014 | 2013 |
|---|---|---|
| For own loans/commitments | ||
| Guarantees | 11.6 | 8.9 |
| Other own liabilities | ||
| Pledges given | 0.1 | 0.1 |
| Other leases | 9.0 | 6.5 |
| Contingent liabilities and pledges given, total | 20.7 | 15.5 |
The lease agreements are based on common market terms in each country.
Related parties of Vaisala group are group companies, associated companies, members of Board and Management Group.
| Group | Share of | ||
|---|---|---|---|
| Company | ownership % | votes % | |
| Parent company Vaisala Corporation | Finland | ||
| Vaisala Limited | United Kingdom | 100% | 100% |
| Vaisala Pty Ltd. | Australia | 100% | 100% |
| Vaisala GmbH | Germany | 100% | 100% |
| Vaisala KK | Japan | 100% | 100% |
| Vaisala Holding Inc. | United States | 100% | 100% |
| Vaisala Inc. | United States | 100% | 100% |
| Vaisala China Ltd | China | 100% | 100% |
| Vaisala Canada Inc. | Canada | 100% | 100% |
| Tycho Technology Inc. | United States | 100% | 100% |
| Vaisala S.A. | Argentina | 100% | 100% |
| Vaisala SAS | France | 100% | 100% |
| Vaisala Sdn Bhd | Malaysia | 100% | 100% |
| Vaisala Servicos De Marketing Ltda | Brazil | 100% | 100% |
| 3TIER R&D India Pvt Ltd | India | 100% | 100% |
| 3TIER (Europe) Limited | United Kingdom | 100% | 100% |
| Associated companies | |||
| Meteorage SA | France | 35% | 35% |
Related party transactions are based on market price of goods and services and common market terms. Related party information is presented only to extent it is not eliminated in group consolidation.
Transactions with related parties and related party receivables and liabilities:
| 2014 EUR million |
Sales | Receivables |
|---|---|---|
| Associated companies | 0.5 | 0.2 |
| 2013 EUR million |
Sales | Receivables |
| Associated companies | 0.5 | 0.0 |
| Employee benefits of management | ||
|---|---|---|
| EUR million | 2014 | 2013 |
| Salary and bonuses of the President and CEO | ||
| Forsén Kjell | ||
| Salary | 0.5 | 0.5 |
| Bonuses | 0.1 | 0.1 |
| Share-based payment | 0.1 | 0.1 |
| Obligatory pension | 0.1 | 0.1 |
| Voluntary pension | 0.1 | 0.1 |
| Total | 0.9 | 0.8 |
| Other group management | ||
| Salary | 1.3 | 1.0 |
| Bonuses | 0.2 | 0.2 |
| Share-based payment | 0.3 | 0.2 |
| Obligatory pension | 0.3 | 0.2 |
| Voluntary pension | 0.2 | 0.2 |
| Total | 2.3 | 1.9 |
| Remuneration to members of the Board of Directors 2014 EUR 1,000 |
Annual remuneration |
Compensation, audit committee |
Compensation, remuneration and human resources committee |
Total | |
|---|---|---|---|---|---|
| Lappalainen Timo | Member of the Board | 9 | 1 | 10 | |
| Lundström Petra | Member of the Board | 26 | 4 | 30 | |
| Neuvo Yrjö | Vice Chairman of the Board | 35 | 5 | 40 | |
| Niinivaara Mikko | Member of the Board | 35 | 5 | 40 | |
| Torkko Maija | Member of the Board | 35 | 8 | 5 | 48 |
| Torstila Pertti | Member of the Board | 26 | 26 | ||
| Voipio Mikko | Member of the Board | 35 | 35 | ||
| Voipio Raimo | Chairman of the Board | 45 | 5 | 50 | |
| Total | 246 | 18 | 15 | 279 |
| Remuneration to members of the Board of Directors 2013 EUR 1,000 |
Annual remuneration |
Compensation, audit committee |
Compensation, remuneration and human resources committee |
Total | |
|---|---|---|---|---|---|
| Lappalainen Timo | Member of the Board | 33 | 7 | 40 | |
| Neuvo Yrjö | Vice Chairman of the Board | 33 | 5 | 38 | |
| Niinivaara Mikko | Member of the Board | 33 | 7 | 40 | |
| Torkko Maija | Member of the Board | 33 | 11 | 5 | 48 |
| Voipio Mikko | Member of the Board | 33 | 33 | ||
| Voipio Raimo | Chairman of the Board | 43 | 5 | 48 | |
| Total | 205 | 25 | 15 | 245 |
Age of retirement for the President and CEO is 62 years. The President and CEO has a compensation based retirement plan. Notice period, severance pay and conditions of other severance compensations: 6 months for the employee, 12 months for the employer, compensation equal to the salary.
Vaisala Corporation's Board of Directors held and controlled 1,204,438 shares on December 31, 2014, accounting for 14.1% of the total votes. A regularly updated table reporting the holdings of public insiders is available on www.vaisala.com.
The company's President and CEO held and controlled 2,720 A shares on December 31, 2014 (2013: 2,720 A Shares).
Other members of Vaisala Management Group held and controlled 2,463 Vaisala shares on December 31, 2014 accounting for 0.0% of total votes. (In 2013 other members of the Management Group held 4,463 shares and 0.0% voting rights.)
The President and CEO and the members of the Board have not been granted loans nor have guarantees or commitments been given on their behalf.
| EUR million | 2014 | 2013 |
|---|---|---|
| Auditor's fees | 0.2 | 0.3 |
| Tax advice | 0.1 | 0.0 |
| Statements | 0.0 | 0.0 |
| Other fees | 0.0 | 0.0 |
| Total | 0.4 | 0.3 |
On January 27, 2015, Vaisala announced plans to restructure its business in order to strengthen the capability to implement its strategy and to increase agility. Vaisala continues to invest in its growth businesses and to develop products and services which combine customers' business expertise and Vaisala's technology leadership. The goal of the planned restructuring is to strengthen customer focus across all functions and to ensure operational efficiency through simplification. The proposed new organization is planned to be effective on April 1, 2015.
During the restructuring Vaisala will adhere to the local legislation and practices in each country. In Finland, Vaisala initiated co-operation negotiations related to the restructuring on February 2, 2015. The planned reorganization is expected to lead to a reduction in personnel. The reduction of employees is estimated to total 60 full-time equivalents out of which about 25 are estimated to be in Finland.
| EUR million | Note | Jan. 1–Dec. 31, 2014 |
Jan. 1–Dec. 31, 2013 |
||
|---|---|---|---|---|---|
| Net sales | 2 | 210.2 | 189.7 | ||
| Cost of production and procurement | 5, 6 | -111.8 | -103.9 | ||
| Gross profit | 98.4 | 85.8 | |||
| Cost of sales and marketing Cost of administration |
5, 6 | -21.1 | -20.6 | ||
| Development costs | 5, 6 | -23.9 | -22.0 | ||
| Other administrative costs | 5, 6 | -31.6 | -55.5 | -27.0 | -49.0 |
| Other operating income | 4 | 0.0 | 0.0 | ||
| Other operating costs | 4 | - | -0.3 | ||
| Operating profit | 21.8 | 15.9 | |||
| Financial income and expenses | 7 | 0.7 | 14.1 | ||
| Profit before appropriations and taxes | 22.5 | 30.0 | |||
| Appropriations | 8 | -0.5 | 1.1 | ||
| Profit before taxes | 22.1 | 31.1 | |||
| Direct taxes | 9 | -5.4 | -4.0 | ||
| Net profit for the financial year | 16.7 | 27.1 |
| EUR million Assets |
Note | Dec. 31, 2014 | Dec. 31, 2013 |
|---|---|---|---|
| Non-current assets | |||
| Intangible assets | 10 | ||
| Intangible rights | 7.9 | 8.5 | |
| Other long-term expenditure | 0.2 | 0.3 | |
| 8.1 | 8.7 | ||
| Property, plant and equipment | 10 | ||
| Land and waters | 1.3 | 1.3 | |
| Buildings | 25.9 | 27.0 | |
| Machinery and equipment | 10.2 | 10.2 | |
| Other tangible assets | 0.0 | 0.0 | |
| Advance payments and construction in progress | 2.6 | 3.8 | |
| 40.0 | 42.3 | ||
| Investments | 10 | ||
| Shares in subsidiaries | 19.0 | 30.4 | |
| Other shares | 0.1 | 0.1 | |
| Receivables from subsidiaries | 19 | 24.5 | 25.6 |
| 43.6 | 56.1 | ||
| Total non-current assets | 91.7 | 107.1 | |
| Current assets | |||
| Inventories | |||
| Materials, consumables and finished goods | 22.9 | 19.5 | |
| Project inventories | 2.8 | 3.1 | |
| 25.8 | 22.6 | ||
| Receivables | |||
| Trade receivables | 19 | 26.5 | 29.2 |
| Loan receivables | 19 | 11.9 | 4.9 |
| Other receivables | 11 | 2.8 | 1.7 |
| Prepaid expenses and accrued income | 12, 19 | 8.3 | 6.0 |
| 49.6 | 41.8 | ||
| Cash and bank balances | 13 | 38.5 | 26.8 |
| Total current assets | 113.8 | 91.2 | |
| Total assets | 205.5 | 198.3 |
| EUR million Shareholders' equity and liabilities |
Note | Dec. 31, 2014 | Dec. 31, 2013 |
|---|---|---|---|
| Shareholders' equity | 16 | ||
| Share capital | 7.7 | 7.7 | |
| Fund of invested non-restricted equity | 0.1 | 0.1 | |
| Retained earnings | 128.5 | 117.7 | |
| Profit for the financial year | 16.7 | 27.1 | |
| 152.9 | 152.5 | ||
| Total shareholders' equity | 152.9 | 152.5 | |
| Appropriations | |||
| Accumulated depreciation difference | 14 | 3.3 | 2.9 |
| Provisions | 15 | 1.5 | - |
| Liabilities | |||
| Non-current | |||
| Other non-current liabilities | 17 | 1.3 | 0.8 |
| Current | |||
| Advances received | 3.3 | 3.2 | |
| Trade payables | 19 | 11.5 | 10.3 |
| Current loans | 19 | 1.1 | - |
| Other current liabilities | 2.3 | 1.8 | |
| Accrued expenses and deferred income | 18, 19 | 28.2 | 27.0 |
| 46.4 | 42.1 | ||
| Total liabilities | 47.7 | 42.9 | |
| Total shareholders' equity and liabilities | 205.5 | 198.3 |
| EUR million | Note | Jan. 1–Dec. 31, 2014 |
Jan. 1–Dec. 31, 2013 |
|---|---|---|---|
| Cash flow from operating activities | |||
| Cash receipts from customers | 207.8 | 195.2 | |
| Other income from business operations | 0.0 | 0.0 | |
| Cash paid to suppliers and employees | -180.4 | -171.3 | |
| Cash flow from business operations before financial items and taxes | 27.4 | 23.9 | |
| Interest received | 7 | 1.0 | 0.9 |
| Interest paid | 7 | -0.0 | -0.0 |
| Other financial items, net | 7 | 1.1 | -1.7 |
| Dividend received from business operations | 7 | 7.3 | 14.6 |
| Direct tax paid | 9 | -3.7 | -4.3 |
| Cash flow from business operations (A) | 33.0 | 33.3 | |
| Cash flow from investing activities | |||
| Investments in intangible assets | 10 | -1.6 | -0.6 |
| Investments in property, plant and equipment | 10 | -3.4 | -4.1 |
| Loans granted | 19 | -3.8 | -24.7 |
| Other investments | 10 | 0.0 | - |
| Repayments on loan receivables | 19 | 2.7 | 9.1 |
| Cash flow from investing activities (B) | -6.1 | -20.3 | |
| Cash flow from financing activities | |||
| Return of capital | 16 | - | -22.2 |
| Dividend paid | 16 | -16.2 | -16.2 |
| Cash flow from financing activities (C) | -16.2 | -38.5 | |
| Change in liquid funds (A+B+C) increase (+) / decrease (-) | 10.7 | -25.4 | |
| Liquid funds at the beginning of period | 13 | 26.8 | 52.2 |
| Liquid funds at end of period | 13 | 38.5 | 26.8 |
The financial statements of the parent company have been prepared according to the Finnish accounting standards (FAS). Financial statement data are based on original acquisition costs if not otherwise stated in the accounting principles outlined below. Revaluations are not taken into account if not separately mentioned.
The balance sheet values of fixed assets are stated at historical cost, less accumulated depreciation and amortization, with the exception of the office and factory premises in Vantaa, which were revalued in previous years by a total of EUR 5.7 million. Despite of the revaluations, the asset value is significantly less than the market value of the office and factory premises. The cost of self-constructed assets also includes overhead costs attributable to construction work. Interest is not capitalized on fixed assets. Depreciation and amortization is calculated on a straight-line basis over the expected useful lives of the assets, except for land, which is not depreciated. Estimated useful lives for various assets are:
| Intangible rights | 3–5 years |
|---|---|
| Buildings and structures | 5–40 years |
| Machinery and equipment | 3–10 years |
| Other tangible assets | 5–15 years |
The cost of inventories comprises all costs of purchase. Finished goods produced include also fixed and variable production overheads. Inventories are valued using the average cost method.
Transactions in foreign currencies are recorded at the rates of exchange prevailing at the date of transaction. Receivables and payables in foreign currency are valued at the exchange rates quoted by the European Central Bank at the balance sheet date. All foreign exchange gains and losses, including foreign exchange gains and losses on trade receivables and payables, are recorded as financial income and expenses.
Pension costs are recorded according to the Finnish regulations. The additional pension coverage of parent company personnel is arranged by the Vaisala Pension Fund (closed on January 1,
1983). The pension liability of the fund is fully covered.
Except for investments in machinery and equipment, which are amortized on a straight line basis over a period of five years, research and development costs are expensed in the financial period in which they occurred.
Income taxes consist of current and deferred tax. Current taxes in the income statement include estimated taxes payable or refundable on tax returns for the financial year and adjustments to tax accruals related to previous years. The deferred taxes in the income statement represent the net change in deferred tax liabilities and assets during the year.
Sales of goods and services rendered Revenue from the sale of goods is recognized when significant risks and rewards of owning the goods are transferred to the buyer. Revenue recognition generally takes place when the transfer has taken place. Revenue for rendering of services is recognized when the service has been performed. When recognizing net sales, indirect taxes and discounts, for example, have been deducted from sales revenue. Possible exchange rate differences are recognized in the financial income and expenses.
Revenues from long-term projects are recognized using the percentage of completion method, when the outcome of the project can be estimated reliably. The stage of completion is determined for each project by reference to the relationship between the costs incurred for work performed to date and the estimated total costs of the project or the relationship between the working hours performed to date and the estimated total working hours.
When the outcome of a long-term project cannot be estimated reliably, project costs are recognized as expenses in the same period when they arise and project revenues only to the extent of project costs incurred where it is probable that those costs will be recoverable. When it is probable that total costs necessary to complete
the project will exceed total project revenue, the expected loss is recognized as an expense immediately.
Gains on the disposal of assets as well as income other than that relating to actual performancebased sales, such as rental income, are recognized as other operating income.
Losses on the disposal of assets and expenses other than those relating to actual performancebased sales are included in other operating expenses.
| Net sales by market area EUR million |
Parent Company 2014 |
Parent Company 2013 |
|---|---|---|
| EMEA | 99.3 | 87.9 |
| from which Finland | 8.9 | 8.0 |
| Americas | 50.9 | 48.4 |
| from which United States | 36.5 | 34.1 |
| APAC | 60.0 | 53.4 |
| Total | 210.2 | 189.7 |
| Net sales by function EUR million |
Parent Company 2014 |
Parent Company 2013 |
|---|---|---|
| Weather | 147.1 | 133.5 |
| Controlled environment | 63.1 | 56.2 |
| Total | 210.2 | 189.7 |
| Parent Company | Parent Company | |
|---|---|---|
| EUR million | 2014 | 2013 |
| Net sales recognized as revenue according to percentage of completion (in financial period) |
2.2 | 2.3 |
| Amount recognized as revenue during the financial year and previous years for long-term project in progress |
11.6 | 24.9 |
| Total costs of incomplete long-term projects | 7.0 | 18.6 |
| Net amount of recognized costs, profits and losses from long-term projects |
4.5 | 6.5 |
| Order backlog | 3.9 | 5.3 |
| Specification of balances in the statement of financial position | ||
| Materials and supplies in inventory | 0.1 | 0.1 |
| Prepayments and accrued income recognized | 1.1 | 0.4 |
| Deferred income recognized | 0.2 | 0.2 |
| Advances received | 0.9 | 0.9 |
Accounting principles for long-term projects are presented in the note Accounting Principles.
| EUR million Other operating income |
Parent Company 2014 |
Parent Company 2013 |
|---|---|---|
| Gains on the disposal of fixed assets | 0.0 | 0.0 |
| Other operating income | 0.0 | 0.0 |
| Total | 0.0 | 0.0 |
| Other operating expenses | Parent Company 2014 |
Parent Company 2013 |
|---|---|---|
| Losses from disposal of fixed assets | 0.0 | 0.1 |
| Impairment of intangible assets | 0.0 | 0.3 |
| Total | 0.0 | 0.3 |
| EUR million Personnel costs |
Parent Company 2014 |
Parent Company 2013 |
|---|---|---|
| Wages and salaries | 52.6 | 48.9 |
| Pension costs | 8.8 | 9.0 |
| Other personnel costs Total |
2.5 63.9 |
2.6 60.4 |
| Personnel on average during the year (persons) | ||
| In Finland | 916 | 862 |
| Outside Finland | 10 | 10 |
| Total | 926 | 872 |
| Personnel Dec. 31 | ||
| In Finland | 917 | 871 |
| Outside Finland | 10 | 10 |
| Total | 927 | 881 |
| Management salaries EUR million |
Parent Company 2014 |
Parent Company 2013 |
| Salary and bonuses of the President and CEO | ||
| Forsén Kjell | ||
| Salary | 0.5 | 0.5 |
| Bonuses | 0.1 | 0.1 |
| Share based payment | 0.1 | 0.1 |
| Obligatory pension | 0.1 | 0.1 |
| Voluntary pension | 0.1 | 0.1 |
| Total | 0.9 | 0.8 |
| Remuneration to members of the Board of Directors 2014 | Compensation, remuneration and human |
||||
|---|---|---|---|---|---|
| EUR 1,000 | Annual remuneration |
Compensation, audit committee |
resources committee |
Total | |
| Lappalainen Timo | Member of the Board | 9 | 1 | 10 | |
| Lundström Petra | Member of the Board | 26 | 4 | 30 | |
| Neuvo Yrjö | Vice Chairman of the Board | 35 | 5 | 40 | |
| Niinivaara Mikko | Member of the Board | 35 | 5 | 40 | |
| Torkko Maija | Member of the Board | 35 | 8 | 5 | 48 |
| Torstila Pertti | Member of the Board | 26 | 26 | ||
| Voipio Mikko | Member of the Board | 35 | 35 | ||
| Voipio Raimo | Chairman of the Board | 45 | 5 | 50 | |
| Total | 246 | 18 | 15 | 279 |
| EUR 1,000 | Remuneration to members of the Board of Directors 2013 | Annual remuneration |
Compensation, audit committee |
Compensation, remuneration and human resources committee |
Total |
|---|---|---|---|---|---|
| Lappalainen Timo | Member of the Board | 33 | 7 | 40 | |
| Neuvo Yrjö | Vice Chairman of the Board | 33 | 5 | 38 | |
| Niinivaara Mikko | Member of the Board | 33 | 7 | 40 | |
| Torkko Maija | Member of the Board | 33 | 11 | 5 | 48 |
| Voipio Mikko | Member of the Board | 33 | 33 | ||
| Voipio Raimo | Chairman of the Board | 43 | 5 | 48 | |
| Total | 205 | 25 | 15 | 245 |
Cash loans, securities or contingent liabilities were not granted to the President and CEO or to the members of the Board of Directors.
Age of retirement for the President and CEO is 62 years.
The President and CEO has a compensation based retirement plan. Notice period, severance pay and conditions of other severance compensations: 6 months for the employee, 12 months for the employer, compensation equal to the salary.
| Parent Company | Parent Company | |
|---|---|---|
| EUR million | 2014 | 2013 |
| Amortization on intangible assets | 3.6 | 3.5 |
| Depreciation on property, plant and equipment | 5.7 | 5.8 |
| Impairment on intangible assets | 0.0 | 0.3 |
| Total | 9.4 | 9.5 |
| Parent Company | Parent Company | |
|---|---|---|
| EUR million | 2014 | 2013 |
| Dividend income | ||
| From Group companies | 7.3 | 14.6 |
| From others | 0.0 | 0.0 |
| Write-down of subsidiary shares | -10.4 | - |
| Interest income on long-term investments | ||
| From Group companies | 0.7 | 0.2 |
| Other interest and financial income | ||
| From others | 0.9 | 2.3 |
| Interest and other financial expenses | ||
| From others | -3.1 | -0.7 |
| Foreign exchange gains and losses | 5.4 | -2.3 |
| Total | 0.7 | 14.1 |
Appropriations consist of accumulated depreciation differences.
| EUR million | Parent Company 2014 |
Parent Company 2013 |
|---|---|---|
| Taxes for the financial year | 5.4 | 3.9 |
| Taxes from previous years | -0.0 | 0.1 |
| Total | 5.4 | 4.0 |
| Parent Company 2014 | |||
|---|---|---|---|
| EUR million Intangible assets |
Intangible rights |
Other long-term expenditure |
Total |
| Acquisition cost Jan. 1 | 30.8 | 1.0 | 31.8 |
| Increases | 2.8 | 2.8 | |
| Decreases | -1.6 | -0.0 | -1.6 |
| Transfers between items | 0.2 | 0.2 | |
| Acquisition cost Dec. 31 | 32.2 | 1.0 | 33.2 |
| Accumulated amortization and write-downs Jan. 1 | 22.3 | 0.8 | 23.1 |
| Accumulated amortization of decreases and transfers | -1.6 | -0.0 | -1.6 |
| Amortization for the financial year | 3.6 | 0.0 | 3.6 |
| Impairment | |||
| Accumulated amortization Dec. 31 | 24.3 | 0.8 | 25.1 |
| Balance sheet value Dec. 31, 2014 | 7.9 | 0.2 | 8.1 |
| Parent Company 2013 | ||
|---|---|---|
| -- | --------------------- | -- |
| EUR million Intangible assets |
Intangible rights |
Other long-term expenditure |
Total |
|---|---|---|---|
| Acquisition cost Jan. 1 | 31.9 | 1.0 | 32.9 |
| Increases | 0.6 | 0.6 | |
| Decreases | -1.8 | -1.8 | |
| Transfers between items | 0.0 | 0.0 | |
| Acquisition cost Dec. 31 | 30.8 | 1.0 | 31.8 |
| Accumulated amortization and write-downs Jan. 1 | 20.4 | 0.7 | 21.1 |
| Accumulated amortization of decreases and transfers | -1.8 | -1.8 | |
| Amortization for the financial year | 3.4 | 0.1 | 3.5 |
| Impairment | 0.3 | 0.3 | |
| Accumulated amortization Dec. 31 | 22.3 | 0.8 | 23.1 |
| Balance sheet value Dec. 31, 2013 | 8.5 | 0.3 | 8.7 |
| Parent Company 2014 | Advance payments |
|||||
|---|---|---|---|---|---|---|
| EUR million Property, plant and equipment |
Land and waters |
Buildings | Machinery and equipment |
Other tangible assets |
and construction in progress |
Total |
| Acquisition cost Jan. 1 | 1.2 | 45.0 | 51.6 | 0.0 | 3.8 | 101.5 |
| Increases | 0.2 | 0.4 | 2.8 | 3.4 | ||
| Decreases | -2.2 | -2.2 | ||||
| Transfers between items | 0.5 | 3.7 | -4.0 | 0.2 | ||
| Acquisition cost Dec. 31 | 1.2 | 45.7 | 53.5 | 0.0 | 2.6 | 102.9 |
| Accumulated depreciation and | ||||||
| write-downs Jan. 1 Accumulated depreciation of |
23.6 | 41.3 | 65.0 | |||
| decreases and transfers | -1.9 | -1.9 | ||||
| Depreciation for the financial year | 1.8 | 3.9 | 5.7 | |||
| Write-downs | 0.0 | 0.0 | ||||
| Accumulated depreciation Dec. 31 | 25.4 | 43.3 | 68.8 | |||
| Revaluation | 0.1 | 5.6 | 5.7 | |||
| Balance sheet value Dec. 31, 2014 | 1.3 | 25.9 | 10.2 | 0.0 | 2.6 | 40.0 |
| EUR million Property, plant and equipment |
Land and waters |
Buildings | Machinery and equipment |
Other tangible assets |
Advance payments and construction in progress |
Total |
|---|---|---|---|---|---|---|
| Acquisition cost Jan. 1 | 1.2 | 45.3 | 50.1 | 0.0 | 2.3 | 98.8 |
| Increases | 0.0 | 2.2 | 0.0 | 4.0 | 6.2 | |
| Decreases | -0.5 | -3.0 | -3.5 | |||
| Transfers between items | 0.1 | 2.3 | -2.5 | -0.0 | ||
| Acquisition cost Dec. 31 | 1.2 | 45.0 | 51.6 | 0.0 | 3.8 | 101.5 |
| Accumulated depreciation and | ||||||
| write-downs Jan. 1 | 21.7 | 39.3 | 61.1 | |||
| Accumulated depreciation of | ||||||
| decreases and transfers | -0.1 | -1.7 | -1.9 | |||
| Depreciation for the financial year | 2.0 | 3.7 | 5.8 | |||
| Accumulated depreciation Dec. 31 | 23.6 | 41.3 | 65.0 | |||
| Revaluation | 0.1 | 5.6 | 5.7 | |||
| Balance sheet value Dec. 31, 2013 | 1.3 | 27.0 | 10.2 | 0.0 | 3.8 | 42.3 |
The carrying amount of machinery and equipment used in production was EUR 7.8 million on December 31, 2014 (EUR 7.5 million on December 31, 2013).
| EUR million Investments |
Subsidiary shares |
Other shares and holdings |
Other long-term receivables from Group companies |
Total |
|---|---|---|---|---|
| Acquisition cost Jan. 1 | 30.4 | 0.1 | 25.6 | 56.0 |
| Decreases | -0.0 | -1.0 | -1.0 | |
| Capital return | -1.0 | -1.0 | ||
| Write-downs | -10.4 | -10.4 | ||
| Balance sheet value Dec. 31, 2014 | 19.0 | 0.1 | 24.5 | 43.6 |
| EUR million Investments |
Subsidiary shares |
Other shares and holdings |
Other long-term receivables from Group companies |
Total |
|---|---|---|---|---|
| Acquisition cost Jan. 1 | 30.4 | 0.1 | 9.5 | 40.0 |
| Increases | 22.3 | 22.3 | ||
| Decreases | -6.2 | -6.2 | ||
| Balance sheet value Dec. 31, 2013 | 30.4 | 0.1 | 25.6 | 56.1 |
In 2014 Vaisala GmbH made a capital return of EUR 1.0 million and Vaisala Corporation wrote-down share values of the Canadian and French subsidiaries for a total value of EUR 10.4 million.
| Parent Company | Parent Company | |
|---|---|---|
| EUR million | 2014 | 2013 |
| Advances paid | 0.0 | 0.2 |
| Value added tax receivables | 2.7 | 1.4 |
| Other | 0.1 | 0.1 |
| Total | 2.8 | 1.7 |
| Parent Company | Parent Company | |
|---|---|---|
| EUR million | 2014 | 2013 |
| Tax related deferred assets | 0.4 | 1.4 |
| Deferred revenue | 6.2 | 3.0 |
| Financial derivatives | 0.0 | 0.6 |
| Other deferred assets | 1.7 | 1.0 |
| Total | 8.3 | 6.0 |
| EUR million Cash and bank balances |
Parent Company 2014 |
Parent Company 2013 |
|---|---|---|
| Cash and balance in the bank accounts | 38.5 | 26.8 |
| Total | 38.5 | 26.8 |
Fair value of off-balance sheet contracts made to hedge against exchange rate and interest rate risks
| EUR million | Parent Company 2014 |
Parent Company 2013 |
|---|---|---|
| Financial derivatives | 0.0 | 0.6 |
| Fair value, total | 0.0 | 0.6 |
The change in fair value has been recognized in the income statement group financial income and expenses.
| EUR million Deferred tax assets |
Parent Company 2014 |
Parent Company 2013 |
|---|---|---|
| Deferred depreciation | 0.1 | 0.1 |
| Credit loss provision | 0.1 | 0.1 |
| Provision | 0.0 | - |
| Total | 0.2 | 0.2 |
| Parent Company | Parent Company | |
| Deferred tax liabilities | 2014 | 2013 |
Deferred taxes have not been recognized in the parent company balance sheet. Deferred taxes arising from revaluation have not been recognized. If realized the tax effect of revaluation would be EUR 1,149 thousands at the current 20% tax rate.
Accumulated depreciation differences 0.7 0.6
| EUR million | Parent Company 2014 |
Parent Company 2013 |
|---|---|---|
| Legal dispute | 1.3 | - |
| Donation provision | 0.2 | - |
| Total | 1.5 | - |
In 2014 Vaisala recognized a provision for a legal dispute and for a donation to the New Children's hospital in Helsinki, Finland.
The parent company's shares are divided into series, with 3,389,351 series K shares (20 votes/share) and 14,829,013 series A shares (1 vote/share). In accordance with the Company Articles, series K shares can be converted into series A shares through a procedure defined in detail in the Company Articles.
| EUR million | Parent Company 2014 |
Parent Company 2013 |
|---|---|---|
| Share capital | ||
| Series A Jan.1 | 6.4 | 6.4 |
| Converted from series K to A | - | - |
| Series A Dec.31 | 6.4 | 6.4 |
| Series K Jan.1 | 1.3 | 1.3 |
| Converted from series K to A | - | - |
| Share capital Dec. 31 | 7.7 | 7.7 |
| Reserve fund Jan.1 | - | 22.3 |
| Transfer to fund of invested non-restricted equity | - | -22.3 |
| Reserve fund Dec. 31 | - | - |
| Fund of invested non-restricted equity Jan. 1 | 0.1 | - |
| Transfer from reserve fund | - | 22.3 |
| Return of capital | - | -22.2 |
| Correction | -0.0 | - |
| Fund of invested non-restricted equity Dec. 31 | 0.1 | 0.1 |
| Retained earnings Jan. 1 | 144.8 | 133.9 |
| Dividends paid | -16.3 | -16.3 |
| Retained earnings Dec. 31 | 128.5 | 117.7 |
| Profit for the financial year | 16.7 | 27.1 |
| Total equity | 152.9 | 152.5 |
| Distributable funds | Parent Company | Parent Company |
| EUR million | 2014 | 2013 |
| Retained earnings | 128.5 | 117.7 |
| Profit for the financial year | 16.7 | 27.1 |
| Fund of invested non-restricted equity | 0.1 | 0.1 |
| Total | 145.3 | 144.9 |
The company has no loans that would mature after five years or a longer period.
Other non-interest bearing long-term liabilities EUR 0.7 million (2013: EUR 0.8 million) comprise of long-term part of trade payable of ASIC-circuits. Circuits are Vaisala's property and they will be paid according to the use of current circuits during the years 2012 to 2016. The liability is interest-free. Non-interest bearing long-term liabilities also include an EUR 0.6 million trade payable for computer software.
| Parent Company | Parent Company | |
|---|---|---|
| EUR million | 2014 | 2013 |
| Wages, salaries and wage-related liabilities | 10.0 | 9.7 |
| Deferred revenue | 11.2 | 12.7 |
| Financial derivatives | 1.4 | 0.0 |
| Other accrued expenses and deferred income | 5.6 | 4.6 |
| Total | 28.2 | 27.0 |
| Parent Company | Parent Company | |
|---|---|---|
| EUR million | 2014 | 2013 |
| Non-current loan receivables | 24.5 | 25.6 |
| Current loan receivables | 11.9 | 4.9 |
| Trade receivables | 1.5 | 7.3 |
| Prepaid expenses and accrued income | 3.1 | 1.5 |
| Total receivables | 41.0 | 39.3 |
| Current loans | 1.1 | - |
| Trade payables | 1.5 | 1.8 |
| Accrued expenses and deferred income | 2.3 | 1.6 |
| Total liabilities | 4.9 | 3.4 |
| Parent Company | Parent Company | |
|---|---|---|
| EUR million | 2014 | 2013 |
| For own debt or liability | ||
| Guarantees | 11.6 | 8.9 |
| For Group companies | ||
| Guarantees | 1.1 | 2.0 |
| Other own liabilities | ||
| Pledges given | 0.0 | 0.1 |
| Leasing liabilities | ||
| Payable during the financial year | 0.2 | 0.3 |
| Payable later | 0.1 | 0.3 |
| 0.3 | 0.6 | |
| Total contingent liabilities and pledges given | 13.1 | 11.5 |
| Derivative contracts EUR million |
Parent Company 2014 |
Parent Company 2013 |
|---|---|---|
| Capital of off-balance sheet contracts made to hedge against exchange rate and interest risks |
||
| Currency forwards | 20.0 | 19.7 |
| Total capital | 20.0 | 19.7 |
| Parent Company | Parent Company | |
|---|---|---|
| EUR million | 2014 | 2013 |
| Auditor's fees | 0.1 | 0.1 |
| Statements | 0.0 | 0.0 |
| Tax advice | 0.1 | 0.0 |
| Other fees | 0.0 | 0.0 |
| Total | 0.3 | 0.2 |
On January 27, 2015, Vaisala announced plans to restructure its business in order to strengthen the capability to implement its strategy and to increase agility. Vaisala continues to invest in its growth businesses and to develop products and services which combine customers' business expertise and Vaisala's technology leadership. The goal of the planned restructuring is to strengthen customer focus across all functions and to ensure operational efficiency through simplification. The proposed new organization is planned to be effective on April 1, 2015.
Vaisala initiated co-operation negotiations related to the restructuring on February 2, 2015. The planned reorganization is expected to lead to a reduction in personnel. The reduction of employees is estimated to total about 25.
Vaisala Corporation's A shares are listed on NASDAQ OMX Helsinki since 1994. Vaisala has also K shares which are not listed.
On December 31, 2014, Vaisala had 18,218,364 shares, of which 3,389,351 are series K shares and 14,829,013 are series A shares.
The K shares and A shares are differentiated by the fact that each K share entitles its owner
to 20 votes at a General Meeting of Shareholders while each A share entitles its owner to 1 vote.
The A shares represent 81.4% of the total number of shares and 17.9% of the total votes. The K shares represent 18.6% of the total number of shares and 82.1% of the total votes.
Share Figures can be found on page 19.
| unlisted K shares, December 31, 2014 | Number of shares | % of share capital |
|---|---|---|
| Households | 8,318,722 | 45.66 |
| Nominee registered and direct foreign ownership | 2,977,737 | 16.34 |
| Private companies | 2,455,697 | 13.48 |
| Financial and insurance corporations | 2,135,087 | 11.72 |
| Non-profit organizations | 1,495,501 | 8.21 |
| Public sector organization | 830,760 | 4.56 |
| In the joint book-entry account | 4,860 | 0.03 |
| Total | 18,218,364 | 100.0 |
| Largest shareholders, December 31, 2014 | Share A | Share K | Total Shares | Total Shares % | Total Votes % |
|---|---|---|---|---|---|
| Novametor Oy | 1,389,000 | 466,001 | 1,855,001 | 10.18 | 12.96 |
| Finnish Academy of Science and Letters | 349,400 | 878,880 | 1,228,280 | 6.74 | 21.70 |
| Mandatum Life Insurance Company Ltd. | 629,250 | 137,400 | 766,650 | 4.21 | 4.09 |
| Voipio Hannu | 727,680 | 2,560 | 730,240 | 4.01 | 0.94 |
| Ilmarinen Mutual Pension | |||||
| Insurance Company | 635,000 | 0 | 635,000 | 3.49 | 0.77 |
| Voipio Mikko | 333,000 | 301,156 | 634,156 | 3.48 | 7.69 |
| Caspers Anja | 203,280 | 281,468 | 484,748 | 2.66 | 7.06 |
| Voipio Raimo | 254,080 | 227,148 | 481,228 | 2.64 | 5.81 |
| Voipio Tauno Sakari | 295,760 | 157,652 | 453,412 | 2.49 | 4.17 |
| Voipio Lauri | 279,310 | 41,176 | 320,486 | 1.76 | 1.33 |
| Voipio Riitta Johanna | 279,310 | 41,176 | 320,486 | 1.76 | 1.33 |
| Nordea Fennia Fund | 300,000 | 0 | 300,000 | 1.65 | 0.36 |
| Voipio Mari Leena Johanna | 194,207 | 47,844 | 242,051 | 1.33 | 1.39 |
| Voipio Ville | 194,207 | 47,844 | 242,051 | 1.33 | 1.39 |
| Voipio Timo Olli Johannes | 194,206 | 47,844 | 242,050 | 1.33 | 1.39 |
Each A share conveys 1 vote, each K share conveys 20 votes.
| Number of shares | Number of shareholders |
% of shareholders | Number of shares | % of share capital |
|---|---|---|---|---|
| 1–100 | 3,290 | 45.06 | 185,880 | 1.02 |
| 101–500 | 2,855 | 39.10 | 727,922 | 4.00 |
| 501–1,000 | 593 | 8.12 | 457,891 | 2.51 |
| 1,001–5,000 | 426 | 5.83 | 903,176 | 4.96 |
| 5,001–10,000 | 47 | 0.64 | 315,843 | 1.73 |
| 10,001–50,000 | 53 | 0.73 | 1,382,839 | 7.59 |
| 50,001–100,000 | 8 | 0.11 | 604,374 | 3.32 |
| 100,001–500,000 | 22 | 0.30 | 5,025,193 | 27.58 |
| 500,001– | 8 | 0.11 | 8,610,386 | 47.26 |
| Ownership groups total | 7 302 | 100.00 | 18,213,504 | 99.97 |
| In the joint book-entry account | 4,860 | 0.03 | ||
| Total | 18,218,364 | 100.00 | ||
| Nominee registered | 8 | 2,955,800 |
Series A Share Development, € Series A Share Development, €
More information about Vaisala's share and shareholders are presented on the website, www.vaisala.com/investors.
The parent company's distributable earnings amount to EUR 145,261,073.88, of which the net result for the period is EUR 16,661,786.74.
The Board of Directors proposes to the Annual General Meeting that dividend of EUR 0.90 per share be paid out of distributable earnings totaling approximately EUR 16.4 million and the rest to be carried forward in the shareholders' equity.
No dividend will be paid for own shares held by the company.
There have been no significant changes to the company's financial position since the close of the financial period. According to the Board of Directors, the proposed dividend distribution does not endanger the company's financial standing.
Vantaa, February 12, 2015
Petra Lundström
Yrjö Neuvo Vice Chairman of the Board Mikko Niinivaara
Maija Torkko
Pertti Torstila
Mikko Voipio
Raimo Voipio Chairman of the Board Kjell Forsén President and CEO
We have audited the accounting records, the financial statements, the report of the Board of Directors, and the administration of Vaisala Oyj for the year ended 31 December, 2014. The financial statements comprise the consolidated income statement, statement of comprehensive income, statement of financial position, statement of changes in equity, cash flow statement and notes to the consolidated financial statements, as well as the parent company's income statement, balance sheet, cash flow statement and notes to the financial statements.
The Board of Directors and the Chief Executive Officer are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, as well as for the preparation of financial statements and the report of the Board of Directors that give a true and fair view in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The Board of Directors is responsible for the appropriate arrangement of the control of the company's accounts and finances, and the Chief Executive Officer shall see to it that the accounts of the company are in compliance with the law and that its financial affairs have been arranged in a reliable manner.
Our responsibility is to express an opinion on the financial statements, on the consolidated financial statements and on the report of the Board of Directors based on our audit. The Auditing Act requires that we comply with the requirements of professional ethics. We conducted our audit in accordance with good auditing practice in Finland. Good auditing practice requires that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the report of the Board of Directors are free from material misstatement, and whether the members of the Board of Directors of the parent company or the Chief Executive Officer are guilty of an act or negligence which may result in liability in damages towards the company or have violated the Limited Liability
Companies Act or the articles of association of the company.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements and the report of the Board of Directors. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of financial statements and report of the Board of Directors that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements and the report of the Board of Directors.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
In our opinion, the consolidated financial statements give a true and fair view of the financial position, financial performance, and cash flows of the group in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.
In our opinion, the financial statements and the report of the Board of Directors give a true and fair view of both the consolidated and the parent company´s financial performance and financial position in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The information in the report of the Board of Directors is consistent with the information in the financial statements.
We support that the financial statements should be adopted. The proposal by the Board of Directors regarding the use of distributable funds is in compliance with the Limited Liability Companies Act. We support that the Board of Directors of the parent company and the Chief Executive Officer should be discharged from liability for the financial period audited by us.
Vantaa, 12 February 2015
Deloitte & Touche Oy Authorized Public Audit Firm
Merja Itäniemi APA
Vaisala's Corporate Governance Statement has been drawn up in accordance with the recommendation 54 of the Finnish Corporate Governance Code and Chapter 2, section 6, of the Finnish Securities Market Act.
Vaisala Group's corporate governance system is based on the Finnish Limited Liability Companies Act and Vaisala's Articles of Association. The Company complies with the rules and regulations
This Corporate Governance Statement has been drawn up as a document independent of the Board of Director's report and it is available also on the Company's website at www.vaisala.com/investors.
for listed companies issued by NASDAQ OMX Helsinki Ltd and the Finnish Financial Supervisory Authority. Vaisala's A shares are listed on NASDAQ OMX Helsinki Ltd.
Vaisala complies with the Finnish Corporate Governance Code by the Securities Market Association that came into effect on October 1, 2010. However, the Company's policy deviates from the recommendation concerning the term of Board members in accordance with the latter part of the Code's Comply or Explain principle. The code is available on the Securities Market Association website www.cgfinland.fi/en.
The Vaisala Board of Directors has approved this Corporate Governance statement at its meeting on February 12, 2015. The auditing firm Deloitte & Touche Oy, the Company's auditor, has verified that the statement has been issued and that the general description of internal audit and risk management systems associated with the financial reporting process conforms to the financial statements.
The term of the members of Vaisala's Board of Directors deviates from the Recommendation 10 of Corporate Governance Code, which recommends a term of one year. The term of the Company's Board of Directors is determined in accordance with its Articles of Association. Under the Articles of Association, a member's term is three years, beginning at the close of the General Meeting in which the member is elected and
ending at the close of the third subsequent Annual General Meeting. The General Meeting decides on changes to the Articles of Association.
A longer term effectively promotes the commitment of Vaisala's principal shareholders to the Company's long-term development. The longer term practice has worked well and benefited the Company.
The General Meeting of Shareholders, the Board of Directors and the President and CEO, assisted by the Management Group, are responsible for the operations of the Vaisala Corporation.
Vaisala's Board of Directors is responsible for the administration and the proper organization of the operations of the Company. In accordance with Vaisala Corporation's Articles of Association, the Company's Board of Directors comprises at least four and at most eight members. All Board members are appointed by an Annual General Meeting. The Board of Directors elects a Chairman and a Vice Chairman from among its members.
The majority of the Board members must be independent of the Company and at least two members in this majority must be independent of the Company's major shareholders.
The term of the members of Vaisala's Board of Directors deviates from the Recommendation 10 of Corporate Governance Code, which recommends a term of one year. Under the Articles of
Association, the term of the Board members is three years. The term begins at the close of the General Meeting of Shareholders at which the member is elected, and ends at the close of the third subsequent Annual General Meeting following the member's election.
Vaisala's Board of Directors convenes at least six times each year and if otherwise needed. The Group President and CEO and the Chief Financial Officer also attend Board meetings. The other members of the Management Group attend Board meetings as required on the invitation of the Board of Directors.
The Board of Directors may, on the basis of the Chairman's decision, establish working groups from among its members in individual cases in order to prepare the matters allocated for it in order to ensure the effective organization of the Board of Directors' work.
The Vaisala Board of Directors operates in accordance with an approved charter. The principal matters dealt with by the Board of Directors are:
In January 1–March 26 2014, the Vaisala Board of Directors comprised six members. The Chairman of the Board of Directors was Raimo Voipio, the Vice Chairman is Yrjö Neuvo and the members were, Timo Lappalainen, Mikko Niinivaara, Maija Torkko ja Mikko Voipio. The Board of Directors' secretary was AA Matti Kari.
The Annual General Meeting held on March 26, 2014 decided that the number of Board members is seven.
| 2. Mikko Niinivaara | Member | 2017 |
|---|---|---|
| 3. Yrjö Neuvo | Vice Chairman | 2016 |
| 4. Maija Torkko | Member | 2016 |
| 5. Pertti Torstila | Member | 2017 |
| 6. Mikko Voipio | Member | 2015 |
| 7. Raimo Voipio | Chairman | 2017 |
Raimo Voipio is the Chairman of the Board of Directors and Yrjö Neuvo is the Vice Chairman.
All Board members are independent of the Company in accordance with recommendation 15. Yrjö Neuvo, Mikko Niinivaara, Maija Torkko, Petra Lundström and Pertti Torstila are independent of the Company and independent of significant shareholders of the Company. Raimo Voipio, the Chairman, and Mikko Voipio, Board member, are dependent of significant shareholders of the Company. The Board of Directors complies with recommendation 14 concerning the number of independent directors.
The secretary of the Board of Directors is AA Matti Kari.
Raimo Voipio
Mikko Voipio
• Independent of the Company, dependent of significant shareholders of the Company since 1994
• Managerial and R&D positions in software and telecommunications businesses
Petra Lundström
• VTT Technical Research Centre of Finland, Member of Board
Pertti Torstila
• Independent member of the Vaisala Board of Directors since 2014
Mikko Niinivaara
• Helen Oy, Member of the Board
Maija Torkko
The Board of Directors has two permanent committees: an Audit Committee and a Remuneration and HR Committee. The members of the Committees are appointed annually from among the members of the Board of Directors in accordance with the charter of the respective Committee. The Board of Directors may establish Committees for duties assigned by the Board. The Board of Directors also determines the charter for the Committees and defines the rules of conduct for working groups. The Committees have no autonomous decision-making or execution power.
The Audit Committee assists the Board of Directors in fulfilling its oversight responsibilities for matters pertaining to financial reporting and control, risk management as well as to statutory and internal audits. The Audit Committee carries out its tasks in accordance with the charter approved by the Board of Directors, the Finnish Corporate Governance Code and applicable laws and regulations.
The Audit Committee comprises three members, appointed annually by the Board of Directors. The members of the Committee shall be independent of the Company and at least one member shall also be independent of significant shareholders of the Company. The Committee convenes at least five times a year. The Group President and CEO and the Chief Financial Officer also attend the Committee meetings. The other responsible Vaisala employees attend the Committee meetings as required on the invitation of the Committee.
The Audit Committee deals with the following key issues:
to approve statutory audit plan and related cost budget;
to monitor the statutory audit of the financial statements and consolidated financial statements;
In January 1–March 26, 2014, the Audit Committee comprised Maija Torkko (Chairman), Timo Lappalainen and Mikko Niinivaara. The Audit Committee secretary was AA Matti Kari. All the members of the Committee were independent of the Company and also independent of significant shareholders of the Company.
In March 26–December 31, 2014, the Audit Committee comprised Maija Torkko (Chairman), Petra Lundström and Mikko Niinivaara. The Chairman and all members of the Audit Committee were independent both of the Company and of significant shareholders.
The Remuneration and HR Committee is responsible for preparing human resources matters pertaining to the compensation of the President and CEO, and the members of the Management Group, evaluation of the performance of the President and CEO and the members of the Management
Group, Group compensation policies and practices. In addition, the Committee discusses the composition of the Board of Directors and Board nominations.
The Remuneration and HR Committee comprises three members, appointed annually by the Board of Directors. The majority of the members of the Committee shall be independent of the Company. The Committee convenes at least two times a year. The Group President and CEO, Senior Vice President, Human Resources and the Chief Financial Officer also attend the Committee meetings, except when the agenda includes items relating to them. The other responsible Vaisala employees attend the Committee meetings as required on the invitation of the Committee.
In January 1–March 26, 2014, the Remuneration and HR Committee comprised Raimo Voipio (Chairman), Yrjö Neuvo and Maija Torkko. The Remuneration and HR Committee secretary was AA Matti Kari. All the members of the Committee were independent of the Company.
In March 26–December 31, 2014, the Remuneration and HR Committee comprised the same Chairman and members as described above. The Remuneration and HR Committee secretary was AA Matti Kari. All the members of the Committee were independent of the Company.
| Position | Board of Directors meetings |
Audit Committee |
Remuneration and HR Committee |
|
|---|---|---|---|---|
| Raimo Voipio | Chairman of the Board | 11/11 | 5/5 | |
| Yrjö Neuvo | Vice Chairman of the Board | 11/11 | 5/5 | |
| Mikko Niinivaara | Member | 11/11 | 5/5 | |
| Maija Torkko | Member | 11/11 | 5/5 | 5/5 |
| Mikko Voipio | Member | 11/11 | ||
| Petra Lundström (26.3.–31.12.2014) |
Member | 9/9 | 4/4 | |
| Pertti Torstila (26.3.–31.12.2014) |
Member | 8/9 | ||
| Timo Lappalainen (1.1.–26.3.2014) |
Member | 2/2 | 1/1 |
Vaisala Board of Directors convened eleven times during 2014, and the attendance rate of the members was 99%.
Vaisala's President and CEO is appointed by the Board of Directors. The President and CEO manages the Company in accordance with the instructions and orders given by the Board of Directors, and informs the Board of the development of the Company's business and financial situation. The President and CEO is also responsible for arranging the Company's management. The President and CEO is the Chairman of Vaisala's Management Group.
The President and CEO is the Chairman of Vaisala's Management Group. The Management Group has seven members in 2014 and it convenes once a month to execute Vaisala's strategy and take care of the Company's operative management. It consists of the heads of business areas, finance and control, operations, services and human resources.
Kjell Forsén
• JMC Council Center, Members of the Council
More information about Vaisala's Management Group is available on the Company's website at www.vaisala.com/investors, Corporate Governance.
Vaisala's Board of Directors approves the company's bonus plans and their target groups annually. The Board of Directors also decides on the compensation of the President and CEO and approves the compensation of the direct reports of the President and CEO.
The Annual General Meeting held on March 26, 2014 decided that the annual fee payable to the Board members for the term until the close of the Annual General Meeting in 2015 is: the Chairman of the Board of Directors EUR 45,000 and each Board member EUR 35,000. Approximately 40 percent of the annual remuneration will be paid in Vaisala Corporation's A shares acquired from the market and the rest in cash.
In addition, the Annual General Meeting decided that the compensation per attended meeting for the Chairman of the Audit Committee is EUR 1,500 and EUR 1,000 for each member of the Audit Committee for the term until the close of the Annual General Meeting in 2015. The compensation per attended meeting for the Chairman
| EUR 1,000 | 2014 | 2013 |
|---|---|---|
| Timo Lappalainen (January 1–March 26, 2014) | 10 | 40 |
| Petra Lundström (March 26–December 31, 2014) | 30 | - |
| Yrjö Neuvo | 40 | 38 |
| Mikko Niinivaara | 40 | 40 |
| Maija Torkko | 48 | 48 |
| Pertti Torstila (March 26–December 31, 2014) | 26 | - |
| Mikko Voipio | 35 | 33 |
| Raimo Voipio | 50 | 48 |
| Total | 279 | 245 |
| Total number of shares owned, December 31, 2014 | A shares * | K shares |
|---|---|---|
| Petra Lundström | 600 | - |
| Yrjö Neuvo | 34,890 | 18,664 |
| Mikko Niinivaara | 600 | - |
| Maija Torkko | 3,100 | - |
| Pertti Torstila | 600 | - |
| Mikko Voipio | 333,000 | 301,156 |
| Raimo Voipio | 284,680 | 227,148 |
| Total | 657,470 | 546,968 |
* The shareholdings include also shares held by the Board of Directors' interest parties and controlled organizations. More information about Board of Directors' remuneration is presented on page 58.
and each member of the Remuneration and HR Committee and any other committee established by the Board of Directors is EUR 1,000 for the term until the close of the Annual General Meeting in 2015.
The President and CEO is the Chairman of Vaisala's Management Group. The Management Group has seven members and it convenes once a month to execute Vaisala's strategy and take care of the Company's operative management.
The Board of Directors of Vaisala Corporation decides on the remuneration of Vaisala's President and CEO. The overall compensation consists of a monthly salary, fringe benefits, pension plan, a performance bonus, the Share-Based Incentive Plan 2012, Share-Based Incentive Plan 2013 and Share-Based Incentive Plan 2014. The maximum
annual bonus is limited to 72 percent of the President and CEO's annual salary. The President and CEO belongs to a voluntary pension plan which defines the retirement age as 62 years.
The notice period is 6 months for the employee and 12 months for the employer. Severance pay and conditions of other severance compensations are equal to the respective salary.
Vaisala's Board of Directors approves the compensation of the direct reports of the President and CEO.
The overall compensation of the Management Group members consists of a monthly salary, fringe benefits, pension plan, a performance bonus, the Share-Based Incentive Plan 2012, Share-Based Incentive Plan 2013 and Share-Based Incentive Plan 2014. The maximum annual bonus is limited to 60 percent of the annual salary. The Management Group members belong to a voluntary pension plan which defines the optional retirement age as 62 years.
| EUR 1,000 | 2014 | 2013 |
|---|---|---|
| Salary | 479 | 479 |
| Bonuses | 83 | 95 |
| Share-based payment | 119 | 86 |
| Obligatory pension | 96 | 98 |
| Voluntary pension | 114 | 76 |
| Total | 891 | 834 |
| EUR 1,000 | 2014 | 2013 |
|---|---|---|
| Salary | 1,313 | 1,041 |
| Bonuses | 185 | 203 |
| Share-based payment | 349 | 248 |
| Obligatory pension | 256 | 212 |
| Voluntary pension | 187 | 165 |
| Total | 2,289 | 1,869 |
| EUR 1,000 | Salary | Bonuses | Share-based | Obligatory pension |
Voluntary pension |
Total |
|---|---|---|---|---|---|---|
| President and CEO | 479 | 83 | 119 | 96 | 114 | 891 |
| Other Management Group |
1,313 | 185 | 349 | 256 | 187 | 2,289 |
| Total | 1,792 | 268 | 468 | 352 | 301 | 3,180 |
On May 3, 2012 the Board of Directors resolved for the Group key employees a share-based incentive plan that is based on the development of Group's profitability in calendar year 2012 and it will be paid partly in the Company's series A shares and partly in cash in spring 2015. The cash proportion will cover taxes and tax-related costs arising from the reward to a key employee. No reward will be paid, if a key employee's employment or service ends before the reward payment date. Maximum amount of 142,200 shares will be paid depending on the number of entitled persons in the company at the end of vesting period. In 2014 EUR 0.7 million and in 2013 EUR 0.6 million was expensed for the share-based incentive plan (EUR 0.4 million in 2012).
On February 6, 2013 the Board of Directors resolved for the Group key employees a sharebased incentive plan that is based on the development of Group's profitability in calendar year 2013 and it will be paid partly in the Company's series A shares and partly in cash in spring 2016. The cash proportion will cover taxes and tax-related costs arising from the reward to a key employee. No reward will be paid, if a key employee's employment or service ends before the reward payment date. Maximum amount of 150,000 shares will be paid depending on the number of entitled persons in the company at the end of vesting period. In 2013 no expense was recognized as the criteria was not met.
On February 10, 2014 the Board of Directors resolved for the Group key employees a sharebased incentive plan that is based on the development of Group's profitability in calendar year 2014 and it will be paid partly in the Company's series A shares and partly in cash in spring 2017. The cash proportion will cover taxes and tax-related costs arising from the reward to a key employee. No reward will be paid, if a key employee's
employment or service ends before the reward payment date. Maximum amount of 147,000 shares will be paid depending on the number of
A regularly updated table reporting the holdings of public insiders is available on Company's website at www.vaisala.com/investors, Corporate Governance.
Vaisala Corporation's Board of Directors has approved the principles of internal control and risk management to be followed within the Group. The target of Vaisala's internal control is to ensure that Company operations are profitable, compliant with applicable laws, regulations and Company's operating principles and that the financial information is timely, complete, reliable and compliant with the relevant regulations. Internal control aims also to support the fulfillment of the Board of Directors' supervision obligation.
Internal control is a process carried out by Vaisala's Board of Directors, Audit Committee, management and employees.
Vaisala's internal control system consists of:
Significant risks and uncertainties related to Vaisala's business are described in the Board of Directors' Report and at www.vaisala.com/ investors. Financial risk management is described also in Consolidated Financial Statements, note 1.2. entitled persons in the company at the end of vesting period. In 2014 EUR 0.2 million was expensed for the share-based incentive plan.
All Vaisala employees are included in a bonus plan that promotes growth in sales and profits.
The objective of Vaisala's risk management is to identify and manage material risks related to strategy implementation and business operations. Vaisala has a risk management policy which has been approved by the Board of Directors, and which covers the Company's business, operational, hazard, and financial risks. The policy aims at ensuring the safety of the Company's personnel, operations and products, as well as the continuity and compliance of business operations.
The Board of Directors defines and approves risk management principles and policies, and assesses the effectiveness of risk management. The Audit Committee reviews compliance with risk management policy and processes.
Vaisala's Risk Management Steering Group comprises key internal stakeholders, and the Group is responsible for the operational oversight of the risk management process and assuring that all significant risks are identified and reported, and risks are acted upon on all necessary organizational levels and geographical locations.
Risk management is integrated into key business processes and operations. This is accomplished by incorporating applicable risk identification, assessment, management and risk reporting actions into the core processes. The most significant risks are reported to the Vaisala Management Group and the Audit Committee annually.
Correct financial reporting in Vaisala Group means that its financial statements give a true and fair view of the operations and the financial position of the Company, and that these statements do not include intentional or unintentional misstatements or omissions both in respect of the figures and level of disclosure.
All Vaisala Group financial reporting is based on IFRS reporting standards approved by the EU. The financial statements of the Group parent Company are prepared in accordance with the Finnish Accounting Act and the guidelines and statements of the Accounting Board. The Vaisala Accounting Principles are reviewed and maintained by Vaisala Group Accounting and it provides the legal companies with detailed guidelines on the application of these policies. Other internal policies related to financial reporting include Vaisala Group Approval Policy and Vaisala Group Credit Policy. Vaisala financial control framework is built and based on unified global transactional and reporting processes as well as defined control points as described below.
Vaisala Group's financial statements are based on the monthly reporting and forecasting process. This process includes in-depth analyses of deviations between actual performance, previous performance and business forecasts. Analyses cover both the financial information as well as key performance indicators measuring operational performance. The defined control points deal with the analysis, elimination and reconciliation
of figures reported by legal companies as well as information included in financial statements bulletins and other stock exchange releases.
Vaisala has a global enterprise resource planning (ERP) system which is built in accordance with Vaisala Accounting Principles. Financial transactional processing is partially centralized in dedicated Group level teams. Vaisala uses Hyperion Financial Management as financial consolidation and reporting system. This system is built in accordance with IFRS. All major legal Company financials are prepared in the global ERP and transferred to consolidation and reporting system with standard interface. The defined control points in the legal Company transactional processing and reporting include reconciliation, balancing, in-depth analysis, system controls and segregation of duties. Vaisala applies the percentage-of-completion method in long-term projects. The critical control points of such projects include updating and analyzing revenue and cost forecasts of projects as well as project reviews.
Audit Committee reviews interim reports and financial statements. The Vaisala Board of Directors approves interim reports and financial statements.
The Vaisala Board of Directors has the ultimate responsibility for the administration and the proper organization of the operations of the Company. The Board of Directors also ensures that the Company duly endorses the corporate values applied to its operations, approves the internal control, risk management and corporate governance policies. The Board of Directors can assign internal audit assignments to Vaisala's external auditors or other external service providers as needed.
The President and CEO is in charge of the day-to-day management of the Company in accordance with the instructions and orders given by the Board of Directors. The President and CEO establishes the basis for internal control by providing leadership and direction to Management Group members and supervising the way they control the business they are in charge of and by ensuring that the accounting practices of the Company comply with the law and that financial matters are handled in a reliable manner.
The Management Group is responsible for creating detailed internal control policies and procedures in each unit. Finance and control function is of particular significance because its control activities cover all operating and other units of the Company. The head of risk management steers the enterprise risk management process and reports on it both to the Management Group and to the Audit committee as well as follows up the adequacy and effectiveness of control activities on the operative level.
The General Counsel and business area and corporate function directors are responsible for making sure that all units and employees under their responsibility comply with applicable laws, regulations and internal policies.
Vaisala does not have a separate internal audit function. The Audit Committee may engage external specialists to carry out separate evaluations of the control environment or operations. The audit plan of Vaisala's external auditor takes into account the fact that the Company has no internal audit.
During 2014, Vaisala revised the internal control points for both transaction processing as well as financial reporting process with process changes implemented as part of Enterprise Resource Planning (ERP) upgrade project. The changes were effective as of January 1, 2015. Vaisala internal control points as well as related roles and responsibilities are documented as part of Vaisala Global Process Map.
The company has one auditor, who must be a public accountant or auditing corporation authorized by the Central Chamber of Commerce. If an authorized auditing corporation is not chosen to perform the auditing, a deputy auditor must be elected as well. The Auditor is elected at the Annual General Meeting for a term which expires at the end of the following Annual General Meeting.
In January 1–March 26, 2014, PricewaterhouseCoopers Oy was Vaisala's auditor and
audited the fiscal year 2013. APA Hannu Pellinen acted as the auditor with the principal responsibility.
The Annual General Meeting held on March 26, 2014 elected Deloitte & Touche Oy, Authorized Public Accountants, as auditor of the Company until the close of the Annual General Meeting in 2015. APA Merja Itäniemi acts as the auditor with the principal responsibility.
| EUR 1,000 2014 |
2013 |
|---|---|
| Auditor's fees 230 |
269 |
| Tax advice 113 |
34 |
| Statements 9 |
5 |
| Other fees 11 |
33 |
| Total 363 |
342 |
Vaisala Corporation observes the Insiders Guidelines issued by NASDAQ OMX Helsinki Ltd. The Company maintains its public and companyspecific insider registers in the Euroclear Finland Ltd's Sire system. Public insiders and information on their up-to-date ownership, together with transaction history covering 12 months, of Vaisala's shares are disclosed on Vaisala's website www.vaisala.com/investors.
In accordance with the Securities Market Act, Vaisala Corporation's public insiders comprise of the members of the Board of Directors, the President and CEO, the members of the Management Group and the auditors. Those persons, who on the basis of their employment or other contractual relationship with the Company and on account of their position or duties have regular access to insider information, are included in Vaisala's company-specific insider register. Persons to whom the Company discloses insider information related to a specific project are included in Vaisala's project-specific insider register.
Vaisala observes a silent period which starts at the end of the reporting quarter and ends to the publication of the respective quarterly or annual results. During this time, the permanent insiders are prohibited from trading in Vaisala's shares. Project-specific insiders are prohibited from trading in Vaisala's shares until the project in question has been cancelled or disclosed. Vaisala's insider registers are maintained by the Legal department.
A regularly updated table reporting the holdings of public insiders is available on Company's website at www.vaisala.com/ investors.
Vaisala Corporation's Annual General Meeting will be held on Tuesday, March 31, 2015 at 6:00 p.m. Finnish time at Vaisala Corporation's head office, Vanha Nurmijärventie 21, 01670 Vantaa, Finland. The reception of persons who have registered for the meeting will commence at 5:00 p.m.
A shareholder, who wishes to participate in the Annual General Meeting, may register for the Meeting by giving a prior notice of participation no later than on March 26, 2015 at 4:00 p.m. A prior notice of participation can be given:
Possible proxy documents should be delivered in originals to Vaisala Oyj, Päivi Aaltonen, PL 26, 00421 Helsinki, Finland or by email to [email protected] before the end of the registration time.
The Board of Directors proposes to the Annual General Meeting a dividend of EUR 0.90 per share for the fiscal year 2014 to be paid. The dividend would be paid to shareholders registered in the Register of Shareholders held by Euroclear Finland Ltd on the record date of the dividend distribution, April 2, 2015. The Board of Directors proposes that the dividend will be paid on April 14, 2015.
Vaisala's shareholders are kindly requested to report written changes of address to the bank where they have their book entry account.
Vaisala Corporation has two classes of shares: the listed class A shares and the non-listed class K shares. The Vaisala class A shares are listed on the NASDAQ OMX Helsinki and are registered at Euroclear Finland Ltd.
Vaisala Corporation publishes financial information in Finnish and English. All materials are available on Vaisala's website at www.vaisala.com. The printed Financial Statements will be only mailed to those on the company's mailing list. Requests for printed financial reports can be submitted on Vaisala's website at www.vaisala.com.
Vaisala observes a silent period which starts at the end of the reporting quarter and ends to the publication of the respective quarterly or annual results. During this time, Vaisala does not comment on the company's financial situation, markets or future outlook.
The comprehensive investor relations pages and investor relations contact information can be found at www.vaisala.com.
Head Office Vanha Nurmijärventie 21, 01670 Vantaa P.O. Box 26, 00421 Helsinki, Finland Phone: +358 9 89491
www.vaisala.com
www.vaisala.com
B211463EN
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