ORIOLA
Financial review 2020
22
Table of contents
Report of the Board of Directors ........... 3
1. Business review ...................................................... 3
2. Risk review ................................................................ 7
3. Governance .............................................................. 9
4. Remuneration ......................................................... 15
5. Non-financial information .................................. 17
Information on shares .................................... 20
Shares and shareholders ......................................... 20
Share-related key figures ....................................... 21
Largest shareholders ................................................ 23
Financial indicators and
performance measures ................................. 24
Financial indicators 2016–2020 ............................ 24
Alternative performance measures .................... 26
Financial statements 2020 .......................... 27
Consolidated statement
of comprehensive income (IFRS) ......................... 28
Consolidated statement
of financial position (IFRS) ...................................... 29
Consolidated statement of cash flows (IFRS) .... 30
Consolidated statement
of changes in equity (IFRS) ..................................... 31
Notes to the consolidated
financial statements .................................................. 32
1. Basic information on the company ............... 32
2. Basis of presentation ............................................ 32
3. Use of estimates and judgement ................... 32
4. Operating result .................................................... 33
4.1. Segment reporting ..................................... 33
4.2. Net sales and other
operating income ........................................ 35
4.3. Operating expenses .................................. 36
4.4. Employee benefits ..................................... 37
5. Working capital ...................................................... 41
5.1. Trade and other receivables ................... 41
5.2. Inventories ..................................................... 41
5.3. Trade payables and other liabilities .... 42
5.4. Provisions ....................................................... 42
6. Tangible and intangible assets and other
non-current assets ............................................... 43
6.1. Property, plant and equipment ............ 43
6.2. Goodwill and other intangible assets ... 44
6.3. Other non-current assets ........................ 46
7. Leases ........................................................................ 47
7.1. Leases in the statement
of financial position ..................................... 48
7.2. Leases in the statement
of comprehensive income ........................ 48
8. Capital structure .................................................... 49
8.1. Financial income and expenses ........... 49
8.2. Financial assets and liabilities ................ 49
8.3. Financial risk management .................... 52
8.4. Equity, shares and authorisations ......... 55
8.5. Earnings per share, dividend and
other equity distribution .......................... 57
9. Income taxes ........................................................... 58
9.1. Taxes recognised in the comprehensive
income for the period ................................ 58
9.2. Deferred tax assets and liabilities ........ 58
10. Group structure ................................................... 60
10.1. Subsidiaries ................................................ 60
10.2. Related party transactions ................... 60
11. Unrecognised items .......................................... 61
11.1. Commitments and
contingent liabilities ................................ 61
11.2. Future lease payments .......................... 61
11.3. Litigation....................................................... 61
11.4. Events after the balance sheet date .. 61
12. Other notes ........................................................... 61
12.1. Application of new
and amended IFRS standards
and IFRIC interpretations ....................... 61
Parent company financial statements ............... 62
Parent company income statement (FAS) ... 62
Parent company balance sheet (FAS) ............ 62
Parent company cash flow statement (FAS) .. 63
Notes to the parent company
financial statements (FAS) .................................. 63
The Board of Directors’ proposal
for the profit distribution
and Auditor’s Note ........................................... 68
Auditor’s report ................................................... 69
Auditor's assurance report on
ESEF Financial Statements .......................... 73
Basis for preparation
The accounting principles are presented in the
relevant parts of the notes to the financial state-
ments in order to make the report more user-
friendly. The basis for preparation part of the
note is highlighted.
Use of estimates and judgement
If the accounting area presented in the note involves
estimates and judgement, those estimates and judge-
ments are described separately in the relevant note.
The description of the use of estimate and judgement
in the note is marked with italic font and highlighted.
Non-financial information
Oriola gives the non-financial information accord-
ing to the Finnish Accounting Act and using the
Nasdaq ESG Reporting Guide as appropriate in the
Report of the Board of Directors. The non-financial
information and related key performance indica-
tors are presented in chapter 5. Non-financial in-
formation of the Report of the Board of Directors.
Report of the Board of Directors
Oriola Financial review 2020
33
1. Business review
Operating environment
During 2020, the COVID-19 pandemic has rapidly changed Oriola’s
operating environment, as the restrictions set by authorities exten-
sively impacted the functions of public healthcare and consumer
behaviour. The second wave of the pandemic, which started to ac-
celerate towards the end of the reporting period, intensified again
these impacts especially in Sweden. The pandemic has weakened
the operating conditions of healthcare and the pharmaceutical
volumes have declined. In addition, the demand for health and
wellbeing products has declined due to the citizens’ decreased mo-
bility, and the share of online sales of the market has increased sig-
nificantly. The continuation of the pandemic increase uncertainty in
both the Finnish and the Swedish markets.
The pandemic has increased society's preparedness for securing
availability of pharmaceuticals and other healthcare products. The
demand for many pandemic-related products that promote health
safety, such as face masks and services, has increased. The impor-
tance of high-quality pharmaceutical availability compliant with
regulations, and particularly expertise in cold chain management,
has been highlighted during the pandemic.
In Sweden, a proposed bill has been drawn up to strengthen the se-
curity of supply of pharmaceuticals. As a temporary solution, to en-
sure the availability of pharmaceuticals during the pandemic, some
regions have set up the obligatory stock for certain pharmaceuti-
cals together with pharmaceutical wholesalers, like Oriola. In Fin-
land, similar obligatory stock system is already in place.
Ageing population and growth in speciality pharmaceuticals are
driving the long-term growth of the pharmaceutical market in both
of Oriola’s operating countries. In 2020 the pharmaceutical vol-
umes declined due to the pandemic. In January–December 2020,
the pharmaceutical wholesale market value grew by 5.1% (7.6%) in
Report of the Board of Directors
Sweden (source:IQVIA) and 2.1% (5.2%) in Finland in local curren-
cies (source: LTK), mainly due to the significant increase in phar-
maceutical sales in the first quarter. Parallel imports’ share of the
Swedish pharmaceutical market was 9.8% (9.2%) (source: Apoteks-
förening).
Health and wellbeing trends, as well as the growth in e-commerce
are increasing the pharmacy business in Sweden. The pharmacy
market is experiencing a digital transformation driven by fast grow-
ing e-commerce, which accelerated in 2020 due to the pandemic.
Online sales accounts already for 18% (12%) of the total pharma-
cy market in Sweden by the end of December 2020. The pharmacy
market in Sweden grew by 4.6% (4.0%) in Swedish krona driven by
strong increase in online market (source: Apoteksförening). At the
end of December, there were 1,433 (1,426) pharmacies in Sweden.
The pharmacy network in Finland has remained unchanged and
the share of online sales is small. There are 819 pharmacy outlets
in Finland and 132 service points of pharmacies. Pharmacies are
owned by approximately 600 proprietary pharmacists and the two
Universities of Helsinki and Kuopio.
Strategic programmes
Oriola has published two group-wide strategic programmes: one
focusing on cost savings and operational excellence, and the oth-
er one on strengthening and developing customer experience.
The strategic programme 20by20 Excellence focuses on Oriola’s
efficiency and profitability. The target was to deliver EUR 20 mil-
lion annualised savings by the end of the year 2020 compared to
the 2018 cost level.
The 20by20 Excellence programme continued systematically
throughout the year 2020 but slowed down due to the COVID-19
pandemic. By the end of 2020, approximately 75% or approximately
EUR 15 million of the savings target was reached. The main savings
have realised in logistics operations in Finland, personnel costs, IT
costs, changes in loyalty programme, as well as direct and indirect
purchasing. As part of the programme, Oriola has closed 9 pharma-
cies in Sweden during 2019–2020.
The slowdown of the programme due to the pandemic has led to
the decision to continue the 20by20 programme in 2021. Cost ef-
ficiency is the key target for the company in 2021.
The strategic programme Customer Experience focuses on devel-
oping and implementing more customer-oriented processes and
tools, organisation and culture. The target for the programme is
to strengthen customer trust and satisfaction in Oriola’s B2B busi-
ness. The company’s activities are customer-oriented also during
the pandemic. Customer communication and collaboration has
been lifted as one of the key activities to ensure timely informa-
tion flow and the influencing opportunities between all stake-
holders during the pandemic. . The Net Promoter Score (NPS),
measuring customer satisfaction, continued to develop positively,
especially in Finland.
Report of the Board of Directors
Oriola Financial review 2020
44
Net financial expenses were EUR 6.0 (5.2) million. Profit for the pe-
riod was EUR 11.3 (8.0) million. Income taxes for January–Decem-
ber were EUR 3.1 (2.1) million, which corresponds to an effective tax
rate of 21.3% (20.8%). Earnings per share were EUR 0.06 (0.04).
For more information on the Group’s financial performance, please
see the section Financial indicators 2016-2020.
Consumer
Consumer business area offers products and services for health and
wellbeing for customers through Kronans Apotek, the third largest
pharmacy chain in Sweden.
Market environment
The COVID-19 pandemic has affected the pharmacy business espe-
cially through accelerated online sales, but also as health security
measures for employees and customers in pharmacies. The pan-
demic has decreased the mobility of people. Visits to pharmacies
have declined and the demand for OTC has weakened, especially
in the second half of the year. The pandemic has also opened new
business opportunities, for example the antibody testing in phar-
macies, and increased demand for protective gear.
The pharmacy market in Sweden grew by 4.6% (4.0%) in Swedish
krona (source: Apoteksförening) and the number of pharmacies in-
creased by 6 in 2020.
Online sales in the Swedish pharmacy market continued to grow
fast and reached approximately 18% (12%) of the pharmacy market
by the end of December 2020.
Oriola’s market share in the pharmacy market in Sweden in Janu-
ary–December 2020 was 16.6% (16.9%) (source: Apoteksförening).
The relative share of OTC and traded goods from the net sales was
25.0% (25.0%). At the end of 2020, Oriola had 325 (324) pharmacies
in Sweden. Oriola established 5 new pharmacies and closed 4 phar-
macies during the reporting period.
Key figures Change
EUR million 2020 2019 %
Invoicing 798.2 768.1 3.9
Net sales 780.7 750.1 4.1
Adjusted EBIT 14.4 11.7 22.8
EBIT 15.3 5.3 188.4
Adjusted EBIT % 1.8 1.6
EBIT % 2.0 0.7
Number of personnel
at the end of period 1,621 1,692
1
The figures in 2016-2018 have been restated due to an error related to previous periods.
The restatement had an impact on inventories, deferred tax assets and retained earnings
in the consolidated statement of financial position and on material purchases and income
taxes in the consolidated statement of comprehensive income. More information on
correction of the error is presented in the notes to the Financial statements 2019.
The Group’s financial performance
for January–December 2020
Invoicing and net sales
Invoicing increased by 0.9% (increased 6.1%). On a constant curren-
cy basis invoicing increased by 0.1% (increased 8.4%).
Net sales increased by 4.6% (increased 10.9%) to EUR 1,800.8
(1,721.3) million. On a constant currency basis net sales increased by
3.8% (increased 13.6%), driven by the value growth in the pharma-
ceutical market, changes in the distribution agreements for pharma-
ceuticals and increased sales of the health and wellbeing products.
Profitability
Adjusted EBIT increased by 2.6% (decreased 40.6%) to EUR 21.0 (20.5)
million. The profit was burdened by changes in customer agreements,
decreased volumes in brick-and-mortar as well as operative costs re-
lated to the ramp-up phase of the Swedish distribution centre and
additional costs caused by the COVID-19 pandemic. Dose dispensing
business developed well and had a positive impact on the result. In ad-
dition, cost savings improved profitability. In Sweden, Oriola received
government compensations for socials costs, sick leaves and short-
term lay-offs totalling EUR 1.5 million to cover the negative impacts of
the pandemic. The compensations are reported as a reduction of per-
sonnel expenses in the consolidated statement of comprehensive in-
come. Adjusting items totalled EUR -0.6 (-5.1) million, and the EBIT was
EUR 20.4 (15.3) million. The adjusted EBIT on a constant currency basis
was EUR 20.8 million.
2016 2017 2018 2019 2020
4,000
3,000
2,000
1,000
0
3,364
3,336
3,518
3,733
Invoicing
EUR million
3 765
2016 2017 2018 2019 2020
Adjusted EBIT
1
EUR million
60
40
20
0
58.7
39.0
34.4
20.5
21,0
Swedish pharmacies
Market share
Kronans Apotek
Others
17%
83%
Report of the Board of Directors
Oriola Financial review 2020
55
2.8
BEUR
Oriola Others
42%
58%
Finland
Retail
Retail business area offers a wide range of health and wellbeing prod-
ucts to pharmacies, groceries, veterinarians, private and public health-
care operators and retailers, as well as services for pharmacies, including
staffing and dose-dispensing services.
Market environment
In Retail business, Oriola offers a wide range of healthcare prod-
ucts both in traded goods and in OTC pharmaceuticals. Traded
goods are sold through pharmacies and grocery stores. The COV-
ID-19-pandemic has increased the demand of pandemic-related
health security products such as hand sanitizers and face masks.
On the other hand, the decline in pharmacy visits have reduced
demand for pharmacy staffing business and wellbeing products.
Consumer´s purchasing power has been reflected positively in gro-
cery stores and the importance of grocery stores as a sales channel
has increased. In addition, the growing number of pets has created
potential for animal product category in both operating countries.
In Sweden, the traded goods and OTC pharmaceuticals market
grew by 7.7% (6.2%) in 2020.
In dose-dispensing business, Oriola offers pharmaceuticals and
dose dispensing for private and public healthcare sectors. The total
market size for dose dispensing is approximately 230,000 patients
in Sweden and 60,000 patients in Finland. Oriola is the market lead-
er in Sweden serving over 97,000 patients. In Finland, Oriola serves
approximately 23,000 patients.
In staffing business in Finland, 272 pharmacies out of 819 pharma-
cies were using Oriola’s services during the year 2020.
Key figures Change
EUR million 2020 2019 %
Invoicing 486.7 456.9 6.5
Net sales 484.9 455.5 6.5
Adjusted EBIT 2.0 -0.9
EBIT 0.9 -1.4
Adjusted EBIT % 0.4 -0.2
EBIT % 0.2 -0.3
Number of personnel
at the end of period 583 590
Financial performance
The net sales increased by 4.1% (decreased 0.2%) to EUR 780.7
(750.1) million. On a constant currency basis net sales increased by
3.1% (increased 3.0%). Oriola’s online sales grew by 85%, faster than
the market (+59%), and it accounts for 6.6% (3.7%) of Oriola’s Con-
sumer sales in Sweden.
Adjusted EBIT increased by 22.8% (decreased 28.2%) to EUR 14.4
(11.7) million. Cost savings had a positive impact on profitability.
The restricted consumer mobility caused by the COVID-19 pandem-
ic has impacted the demand especially in shopping centres. The
negative impact of the pandemic was partly offset by government
compensations totalling EUR 1.0 million, received in Sweden. Ad-
justing items totalled EUR 0.9 (-6.4) million, and EBIT was EUR 15.3
(5.3) million.
Pharma
Pharma business area provides tailored logistics, expert and advi-
sory services for pharmaceutical companies, as well as a wide range
of pharmaceutical products for pharmacies, hospital pharmacies
and veterinarians.
Key figures Change
EUR million 2020 2019 %
Invoicing 2,906.0 2,910.6 -0.2
Net sales 961.2 918.1 4.7
Adjusted EBIT 12.8 17.7 -27. 8
EBIT 12.4 17.1 -27.8
Adjusted EBIT % 1.3 1.9
EBIT % 1.3 1.9
Number of personnel
at the end of period 448 468
Market environment
The availability of pharmaceuticals in the both operating countries has
remained good during the COVID-19 pandemic. Extensive industry
co-operation has supported the availability of pharmaceuticals, for ex-
ample so-called green line for the free movement of pharmaceuticals
within the EU was established fast in the spring. During the pandemic,
there have been pharmaceutical hoarding, elective healthcare in hospi-
tals have stopped, and obligatory stock of selected pharmaceuticals has
been set up in Sweden. The pandemic has also increased the demand for
pharmaceutical storage space in both Oriola's operating countries.
Wholesale - market share %
Oriola Others
47%
53%
49
BSEK
Sweden
The pharmaceutical market value at wholesale prices in Sweden
grew by 5.1% (7.6%) in Swedish krona in 2020 (source: IQVIA). Ac-
cording to Oriola’s estimate, Oriola’s share of the Swedish pharma-
ceutical wholesale market was approximately 47% (44%).
The Finnish pharmaceutical market value at wholesale prices grew
by 2.1% (5.2%) in 2020 (source: LTK). According to Oriola’s estimate,
Oriola’s share of the Finnish pharmaceutical wholesale market was
approximately 42% (46%).
Financial performance
Invoicing decreased by 0.2% (increased 7.9%) to EUR 2,906.0
(2,910.6) million compared to previous year. On a constant curren-
cy basis invoicing decreased by 0.8% (increased 10.0%). Net sales
increased by 4.7% (increased 22.4%) to EUR 961.2 (918.1) million,
and on a constant currency basis, net sales increased by 4.0% (in-
creased 24.8%). This was driven by the sales growth in expensive
prescription pharmaceuticals as well as changes in the distribu-
tion agreements for pharmaceuticals.
Adjusted EBIT decreased by 27.8% (decreased 16.3%) to EUR 12.8
(17.7) million. Changes in customer agreements as well as op-
erative costs related to the ramp-up phase of the Swedish dis-
tribution centre and additional costs caused by the COVID-19
pandemic had a negative impact on Pharma’s result. The good
development in expert services offered to pharmaceutical com-
panies impacted the result positively during the reporting period.
Adjusting items totalled EUR -0.4 (-0.5) million, and EBIT was EUR
12.4 (17.1) million.
Report of the Board of Directors
Oriola Financial review 2020
66
for EUR 4.0 (26.5) million. Net cash flow from investing activities
was EUR -31.4 (-21.8) million. Net cash flow from financing activi-
ties was EUR 70.4 (-57.6) million.
At the end of December 2020, interest-bearing debt was EUR 295.3
(190.3) million. During the second quarter of 2020, Oriola Corpora-
tion prepared for the instability in the financing markets caused by the
COVID-19 pandemic by drawing term-loans totalling EUR 70 million.
The non-current interest-bearing liabilities amounted to EUR 127.8
(123.6) million and current interest-bearing liabilities amounted to
EUR 167.4 (66.8) million. Non-current interest-bearing liabilities mainly
consist of loans from financial institutions totalling EUR 65.9 (57.8) mil-
lion and non-current lease liabilities totalling EUR 61.9 (65.7) million.
Current interest-bearing liabilities mainly consist of commercial paper
issues of EUR 78.6 (35.0) million, advance payments from Finnish phar-
macies totalling EUR 17.0 (13.2) million, loans from financial institutions
totalling EUR 52.0 (0.0) million and current lease liabilities totalling EUR
19.8 (18.6) million. Interest-bearing net debt was EUR 127.1 (119.6) mil-
lion and gearing 75.0% (76.1%).
The non-recourse trade receivables sales programmes are in use in
Sweden. At the end of December 2020, a total of EUR 179.6 (166.5) mil-
lion in trade receivables had been sold. The average interest rate on the
interest-bearing liabilities excluding lease liabilities was 1.09% (0.97%).
The committed long-term revolving credit facility of EUR 100.0 million
and the credit limits totalling EUR 35.0 million were unused at the end
of December 2020.
At the end of the reporting period Oriola’s equity ratio was 14.8%
(15.5%). Return on capital employed was 5.0% (4.1%) and return on eq-
uity 6.9% (4.9%).
For more information on the Group’s balance sheet and cash flow and
related key figures, see the section Financial indicators 2016–2020.
Investments and depreciation
Gross investments in January–December 2020 totalled EUR 32.8
(21.8) million and consisted mainly of investments in logistics, infor-
mation systems, and renewal of pharmacies as well as an additional
investment totalling EUR 4.8 million in Doktor.se, a leading Swed-
ish e-health provider, in their latest investment round. The new in-
vestment does not have a significant effect on Oriola’s ownership,
which is currently approximately 14% of Doktor.se.
Depreciation, amortisation and impairment amounted to EUR 41.6
(45.3) million. In 2020, impairment charges totalling EUR 0.6 million
were recognised relating to the Swedish Retail business. In 2019, im-
pairment charges totalling EUR 3.5 million were recognised relating to
restructurings and the renewal of the Swedish pharmacy online shop.
Personnel
At the end of December 2020, Oriola had 2,730 (2,818) employees, 59%
(60%) of whom worked in Consumer, 16% (17%) in Pharma, and 21%
(21%) in Retail. The Group administration employed 3% (2%) of the total
number of employees. The average number of personnel in January–De-
cember 2020 was 2,687 (2,800). Personnel numbers consist of members
of staff in active employment calculated as full-time equivalents.
The total amount of wages, salaries and bonuses in 2020 was EUR
126.7 million (EUR 127.5 million in 2019 and EUR 121.4 million in 2018).
For more information about the employee benefits please refer to note
4.4. Employee benefits in the Consolidated Financial Statements.
Financial performance
Net sales increased by 6.5% (increased 6.0%) to EUR 484.9 (455.5)
million. On a constant currency basis net sales increased by 5.5% (in-
creased 8.9%), mainly driven by the growth in dose-dispensing sales
in Sweden as well as increase in demand for COVID-19 pandemic re-
lated products.
Adjusted EBIT increased to EUR 2.0 (-0.9) million, which was main-
ly due to the positive development of dose-dispensing business.
However, in Sweden the result was burdened by the operative
costs related to the ramp-up phase of the Swedish distribution
centre and additional costs caused by the COVID-19 pandemic.
Adjusting items totalled EUR -1.1 (-0.5) million, and EBIT was EUR
0.9 (-1.4) million.
Oriola Others
Oriola Others
Sweden Finland
Dose dispensing - market share
43%
57%
40%
60%
Balance sheet, cash flow and financing
Oriola’s total assets at the end of December 2020 were EUR
1,165.6 (1,030.6) million. Equity attributable to the equity hold-
ers was EUR 169.6 (157.2) million. The change in fair value of the
financial assets measured at fair value through other comprehen-
sive income increased the equity during the reporting period by
EUR 8.0 million. The translation differences increased equity by
EUR 9.8 million. The equity was decreased by the dividend of EUR
16.3 million distributed to the shareholders in April 2020. Cash
and cash equivalents totalled EUR 168.2 (70.8) million. Net cash
flow from operating activities in January–December 2020 was EUR
58.3 (84.4) million, of which changes in working capital accounted
Net cash flow from operating activities
EUR million
Q1
2019
Q2
2019
Q3
2019
Q4
2019
Q1
2020
Q2
2020
Q3
2020
Q4
2020
80
60
40
20
0
-20
-40
9
70
4
13
-0
-25
27
46
Report of the Board of Directors
Oriola Financial review 2020
77
The Board of Directors proposes to the Annual General Meeting
that a dividend of EUR 0.03 (0.09) per share is paid for 2020. The
Board of Directors further proposes that the remaining non-restrict-
ed equity, EUR 320,201,301.18 be retained and carried forward. In
addition, it is proposed that the Annual General Meeting would au-
thorise the Board of Directors to decide at its discretion on the pay-
ment of dividend up to a maximum of EUR 0.03 per share.
Annual General Meeting 2021
Oriola Corporation's Annual General Meeting will be held on 16
March 2021. The matters specified in article 10 of the Articles of
Association and other proposals of the Board of Directors, if any,
will be dealt with at the meeting. The notice to convene will be
available on the company’s website at www.oriola.com on 23 Feb-
ruary 2021 at the latest.
2. Risk review
Strategic and financial risks
Oriola has specified the company’s risk management model, principles,
organisation and process in its Risk management policy. The Group’s
risk management seeks to identify, measure and manage risks that may
have an adverse or beneficial impact on Oriola’s operations and achieve-
ment of the set goals. The Group also has a Code of Conduct policy and
a Treasury policy covering compliance and financial risks. The internal
control and risk management systems related to Oriola’s financial report-
ing are aimed at ensuring the reliability of the company's financial state-
ments and financial reporting, as well as the company's compliance with
legislation and generally approved operating principles.
Oriola operates in regulated pharmaceutical distribution and retail
markets monitored by authorities in both operating countries. The
main megatrends impacting Oriola’s business environment are age-
ing of the population, increased spending on health and wellbeing,
growth in speciality pharmaceuticals, the digitalisation of the retail
trade and services, sustainability as well as possible pandemics.
Oriola has identified the following principal strategic and operational
risks that may have an adverse impact on the results: Changes in the
Jan–Dec 2020 Jan–Dec 2019
Trading of shares class A class B class A class B
Trading volume, million 3.3 48.6 3.8 24.1
Trading volume, EUR million 6.7 92.6 7.7 50.9
Highest price, EUR 2.25 2.27 2.56 2.53
Lowest price, EUR 1.62 1.52 1.86 1.86
Closing quotation,
end of period, EUR 1.99 1.90 2.02 2.03
In January–December 2020, the traded volume of Oriola Corpo-
ration shares, excluding treasury shares, corresponded to 28.6%
(15.3%) of the total number of shares.
At the end of 2020, the company had a total of 181,486,213
(181,486,213) shares, of which 53,748,313 (55,434,273) were class
A shares and 127,737,900 (126,051,940) were class B shares. The
company held a total of 173,206 (84,903) treasury shares, of which
63,650 (-) were class A shares and 109,556 (84,903) were class B
shares. The treasury shares held by the company account for 0.10%
(0.05%) of the company's shares and 0.11% (0.01%) of the votes.
Under Article 3 of the Articles of Association, a shareholder may de-
mand conversion of class A-shares into class B shares. During the
first quarter of 2020, 306,960 class A shares were converted into
class B shares. The conversion was entered into the Trade Register
on 3 February 2020. During the second quarter of 2020, 1,379,000
class A shares were converted into class B shares. The conversion
was entered into the Trade Register on 11 June 2020. After the con-
versions there are 53,748,313 class A shares and 127,737,900 class
B shares in the company. The total number of shares is 181,486,213
and the total number of votes is 1,202,704,160.
More information on shares and shareholders is given in the sec-
tion entitled Information on shares.
Flagging announcements
Oriola Corporation received on 15 May 2020 from Heikki Herlin a dis-
closure under Chapter 9, Section 5 of the Securities Markets Act, ac-
Oriola Corporation shares
Oriola Corporation's market capitalisation on 31 December 2020
was EUR 349.9 (367.2) million.
cording to which the control of Mariatorp Oy has been transferred to
Heikki Herlin after the distribution of inheritance of Niklas Herlin.
Mariatorp Oy’s (business ID 2690035-7) ownership of Oriola Cor-
poration's share capital is 11.0% and total share of voting rights is
10.9% comprising a total of 20,000,000 shares of which 6,000,000 A
shares and 14,000,000 B shares.
Business outlook for 2021
The adjusted EBIT on a constant currency basis levelstays on the
same level or increases from the 2020 level.
The COVID-19 pandemic is expected to continue during 2021. Se-
verity and duration of the pandemic remain unclear in Oriola’s op-
erating environment. Oriola’s business outlook for 2021 is based on
external market forecasts, agreements with pharmaceutical compa-
nies and pharmacies, and management assessments.
Events after the reporting period
After the reporting period, on 27 January the Shareholders’ Nomi-
nation Board of Oriola Corporation presented its proposal to the
2021 Annual General Meeting concerning the composition of the
Board of Directors. The proposal has been presented under section
Governance.
After the reporting period, on 1 February 2021, Oriola announced,
that Robert Andersson leaves his position as President and CEO as
of 1 February2021 and continues as an adviser to the Board of Di-
rectors until 31 July 2021. The recruitment process to find a new
CEO has been started. Juko Hakala, currently a member of Oriola’s
Board of Directors, has been appointed CEO on an interim basis for
the period until a new permanent CEO is appointed.
Profit distribution proposal
Oriola Group’s parent company is Oriola Corporation, whose dis-
tributable funds according to the balance sheet as at 31 December
2020 were EUR 325.6 (335.2) million. Oriola Corporation’s result for
the financial year 2020 was EUR 6.9 (8.2) million. Earnings per share
of the Oriola Group were EUR 0.06 (0.04).
Report of the Board of Directors
Oriola Financial review 2020
88
During 2020, the COVID-19 pandemic has rapidly changed Oriola’s
operating environment as the restrictions set by the authorities and
consumer caution impacted the consumer behaviour. The measures
caused by the pandemic have led to the decrease of healthcare servic-
es as well as affected the demand for pharmaceuticals and health and
wellbeing products. This has inevitably also had an impact on Oriola’s
business. As the pandemic continues, Oriola’s business environment
stays volatile, which may have an impact on Oriola’s net sales and prof-
itability. The impacts of the pandemic on the valuation of Oriola’s as-
sets are closely monitored. Based on the assessments, COVID-19 pan-
demic is currently not expected to have such long-term impacts on
Oriola’s financial performance, that would require adjustments to the
carrying amounts of the assets.
Oriola is prepared for the risks caused by the COVID-19 pandemic.
In the contingency planning, the company has considered espe-
cially securing the health of its personnel, availability of workforce,
safety in distribution centres and pharmacies as well as growing
need for pharmaceutical stocking. In addition, Oriola is actively dis-
cussing with both customers and authorities about quickly chang-
ing needs and their management. Oriola has also increased its
readiness and competencies related to remote work and meeting
customers remotely.
Oriola is from time to time involved in legal actions, claims and oth-
er proceedings. It is Oriola’s policy to provide for amounts related to
the proceedings if liability is probable and such amounts can be es-
timated with reasonable accuracy. Taking into account all available
information to date, the legal actions, claims and other proceedings
are not expected to have material impact on the financial position
of the Group.
pharmaceutical market regulation and related licences, pricing, par-
allel import and public reimbursement, as well as increased competi-
tion through the growing number of companies and pharmacies in
e-commerce, the decreasing share of single channel distribution in
public healthcare, and the loss of several key pharmaceutical com-
pany agreements. In addition, the changes in the resources of public
healthcare as well as restrictions set by the authorities on companies’
businesses and citizens’ mobility caused by the pandemic may have
an adverse impact on Oriola’s result.
Swedish medicine agency (Läkemedelsverket) and eHealth author-
ity (E-hälsomyndigheten) have suggested new fee for pharmacy
and wholesaler licenses as well as for prescription system. If the
proposal realises in full and there will not be sufficient compensa-
tion for the fees from the Swedish medicine compensation author-
ity (Tandvårds- och läkemedelsförmånsverket, TLV), the annual cost
for Oriola will be notable.
In its report, TLV presents a monthly list of generic pharmaceuticals
to be introduced in Swedish dose distribution operations as well. The
final report will be presented during 2021 and the new legislation is
expected to enter into force in 2022 at the earliest. The change would
have a negative impact on Oriola's dose distribution margins and oper-
ating costs. In Oriola's view, it is possible to control the possible effects.
In Finland, the Ministry of Social Affairs and Health published at the
beginning of 2019 a roadmap for overall reform of pharmaceutical
matters for the following government terms. In 2020 the Ministry
published three main themes to be advanced in the government
term 2019–2023. These themes are 1) pharmacological treatment
guidelines and finance, 2) pharmacy economy and the pharmaceuti-
cal distribution and 3) data management and digital tools develop-
ment. The pandemic has accelerated the need to find savings from
the area of the Ministry of Social Affairs and Health to be able to cov-
er costs caused by the pandemic, on top of the earlier pressure for
savings. The government has stated the total cost of pharmaceutical
treatment to be as one of the targets. The saving measures are not
expected to have a direct impact on Oriola's business.
The overall reform of social and healthcare (Sote), which was not
completed by the last government, has moved to parliament. When
completed, the reform will affect public and private healthcare pro-
viders. The impact of these possible changes on Oriola´s pharma-
ceutical distribution in Finland or other activities are largely un-
known, but according to the company´s estimation, not material.
The pandemic has increased the demand of authorities for both
ensuring the availability of the pharmaceuticals as well as manag-
ing pharmaceutical availability information. The revised Medicines
Act came into force in the summer of 2020 and increased, among
other things, the obligation for pharmaceutical companies to report
disruptions in the availability of pharmaceuticals. Pharmaceutical
wholesalers were also required to report on availability of pharma-
ceuticals. In addition, the new Medicines Act required pharmacies
to maintain a minimum of three weeks of pharmaceutical stocks in
proportion to the size of the population in the area. For Oriola, the
changes have been minor.
Oriola assesses ESG-related (Environment, Social and Governance)
risks as part of the regular risk management process. A more detailed
description of ESG risks can be found in section 5 of this report: Non-
financial information.
The main financial risks for Oriola involve currency rate, liquidity, inter-
est rate and credit risks. Changes in the value of the Swedish krona have
an impact on Oriola’s net sales, earnings and consolidated statement of
financial position. Changes in cash flow forecasts may cause impairment
of goodwill. More information about financial risk management can be
found in note 8.3. in the notes to the Consolidated Financial Statements.
Near-term risks and uncertainty factors
Oriola’s strategic development projects involve operational risks
which may have an effect on the profitability when realised. Oriola
has several significant IT system projects ongoing. The company has
defined separate risk management plans for all IT projects and aims
to ensure the seamless go-lives of the systems through thorough
planning. The ramp-up of the expansion and automation of the dis-
tribution centre in Sweden was completed in the last quarter of 2020.
The process optimisation and efficiency improvements will continue in
this area. The continuation of the pandemic might slow down the pro-
gress in these.
Report of the Board of Directors
Oriola Financial review 2020
99
Governing structures of Oriola
SHAREHOLDERS' MEETING
BOARD OF DIRECTORS
CEO
CFO GROUP MANAGEMENT TEAM
CONSUMER
BUSINESS AREA
PHARMA
BUSINESS AREA
Compensation and Human
Resources Committee
Reports
Elects
Supervises
Controls
Elects Elects
Establishes
Submits
auditors
report
Proposes Board composition
and remuneration
Audit Committee
RETAIL
BUSINESS AREA
AUDITOR
INTERNAL AUDIT
NOMINATION
BOARD
3. Governance
Corporate governance statement 2020
This Corporate governance statement has been prepared in accord-
ance with the Finnish Corporate Governance Code 2020 (the “Corpo-
rate Governance Code”) and chapter 7, section 7 of the Finnish Secu-
rities Markets Act.
Oriola Corporation (hereinafter “Oriola” or “the company”) complies
with the provisions of its Articles of Association, the Finnish Compa-
nies Act, the Finnish Securities Markets Act and other similar legisla-
tion. The company also complies with the rules and regulations ap-
plying to listed companies issued by Nasdaq Helsinki Ltd (Helsinki
Exchange) and the Finnish Financial Supervisory Authority. The com-
pany’s head office is located in Espoo, Finland.
Oriola applies the Corporate Governance Code in its entirety without
any exceptions. The information required by the Corporate Govern-
ance Code is also available on the company’s website www.oriola.
com. An unofficial English translation of the Corporate Governance
Code 2020 is in the public domain and available on the Securities
Market Association’s website at www.cgfinland.fi.
Oriola prepares its consolidated financial statements and interim re-
ports in accordance with the EU-approved IFRS reporting standards,
the Securities Markets Act, applicable Financial Supervisory Author-
ity standards and the rules issued by Nasdaq Helsinki Ltd. The Report
of the Board of Directors and the parent company’s financial state-
ments have been prepared in accordance with the Finnish Account-
ing Act and the guidelines and statements of the Accounting Board.
The auditor’s report covers the Report of the Board of Directors, the
consolidated financial statements and the parent company’s finan-
cial statements.
Report of the Board of Directors
Oriola Financial review 2020
1010
• adoption of the financial statements;
• use of the profit shown on the balance sheet;
• election of the members of the Board of Directors and the
decision on their fees;
• discharging from liability for the members of the Board of
Directors and the President and CEO;
• election of the auditor and the decision on compensation, and
• proposals made by the Board of Directors and shareholders to
the Annual General Meeting (e.g. amendments to the Articles
of Association, repurchase of the company’s own shares, share
issue, giving special authorisations).
Annual General Meeting 2020
The Annual General Meeting of Oriola, held on 17 March 2020,
adopted the financial statements and discharged the members of
the Board of Directors and the President and CEO from liability for
the financial year ending 31 December 2019. According to the de-
cision of the Annual General Meeting, a dividend of EUR 0.09 per
share was paid on the basis of the balance sheet adopted for the fi-
nancial year ending 31 December 2019.
The Annual General Meeting resolved, in accordance with Chapter
3, Section 14 a, subsection 3 of the Finnish Companies Act, on the
forfeiture of the rights to all the shares entered in the joint account
as well as the rights attached to such shares. This concerned, under
Chapter 3, Section 14 a, subsection 3 of the Finnish Companies Act,
the rights to all such Oriola Corporation’s shares entered in the joint
account that had not been requested to be registered in the book-
entry system in accordance with Chapter 6, Section 3 of the Act on
the Book-Entry System and Settlement Activities prior to the reso-
lution concerning the matter by the Annual General Meeting. On
24 August 2020, a total of 63,650 class A shares and 59,900 class B
shares on the Joint Account became the company’s treasury shares.
The provisions of the Finnish Companies Act on treasury shares ap-
ply to the shares that became the company’s treasury shares.
Authorisations
The Annual General Meeting authorised the Board to decide on
a share issue against payment in one or more issues, including
the right to issue new shares or to assign treasury shares held by
the company. The authorisation covers a combined maximum of
5,500,000 class A shares and 12,500,000 class B shares of the com-
pany and includes the right to derogate from the shareholders'
pre-emptive subscription right. The authorisation is in force for 18
months following the decision of the Annual General Meeting.
The Board was also authorised to decide on a share issue against
payment of class B shares in one or more issues including the right
to issue new class B shares or assign class B treasury shares held by
the company. The authorisation covers a combined maximum of
18,000,000 class B shares of the company including the right to der-
ogate from the shareholders’ pre-emptive subscription right. The
authorisation is in force for a maximum of 18 months following the
decision of the Annual General Meeting.
The Annual General Meeting authorised the Board to decide on a
share issue of class B shares without payment to the Company and
on a directed share issue of class B shares in order to execute the
share-based incentive plan for Oriola Group's executives and the
share savings plan for Oriola Group's key personnel. The maximum
number of new class B shares to be issued under this authorisation
is 250,000, which represents of 0.14 % of all shares in the Company.
The authorisation is in force for eighteen (18) months from the deci-
sion of the Annual General Meeting.
The Annual General Meeting authorised the Board to decide on re-
purchasing up to 18,000,000 of the company’s own class B shares.
Shares may be repurchased also in a proportion other than in which
shares are owned by the shareholders. The authorisation is in force
for a maximum of 18 months following the decision of the Annual
General Meeting.
All decisions of the Annual General Meeting 2020 are available on
the company's website www.oriola.com.
Shareholders' Nomination Board
The Shareholders' Nomination Board consists of five members ap-
pointed by the shareholders. In addition, the Chairman of the Board
of Directors acts as an expert member of the Nomination Board.
The Chairman of the Board of Directors annually arranges a meet-
ing to which the Chairman invites the company’s 20 largest share-
General meeting of shareholders
The general meeting of shareholders decides on the matters that
under the Companies Act and the Articles of Association of Oriola
are within its purview. Each shareholder is entitled to attend gen-
eral meetings. Each class A share carries 20 votes and each class B
share 1 vote at General Meetings. According to the Articles of Asso-
ciation, no shareholder may vote using an amount of votes that ex-
ceeds 1/20 of the total number of votes carried by the shares of dif-
ferent share classes represented at the general meeting.
The Board of Directors convenes a general meeting of shareholders.
The notice of general meeting is published on the company's web-
site or in one daily newspaper in Finland’s capital city no earlier than
2 months and no later than 21 days prior to the meeting. Oriola also
publishes the notice of general meeting as a stock exchange release.
The documents to be submitted to the general meeting and the draft
resolutions to the general meeting are available on the company’s
website. The notice of the general meeting contains the proposed
agenda for the meeting.
A shareholder has the right to have matters that under the Compa-
nies Act fall within the competence of the general meeting dealt with
by the general meeting, if the shareholder so demands in writing to
the Board of Directors well in advance of the meeting so that the mat-
ter can be included in the notice of general meeting. The demand shall
be considered to have arrived in time, when the Board of Directors has
been informed about the demand at the latest four weeks in advance
of the publication of the notice of the general meeting.
The basis of the company is that the chairman of the Board of Direc-
tors, a sufficient number of members of the Board of Directors and
its committees, the President and CEO, and the auditor attend the
general meeting. A person proposed for the first time as member of
the Board of Directors shall be present at the general meeting that
decides on his or her election unless there are well-founded rea-
sons for absence.
The shareholders shall according to law and the articles of associa-
tion exercise their power of decision at the general meeting. The An-
nual General Meeting is held by the end of May each year. The duties
of the Annual General Meeting include:
Report of the Board of Directors
Oriola Financial review 2020
1111
On 27 January 2021, the Shareholders’ Nomination Board submit-
ted its proposal to the 2021 Annual General Meeting concerning
the composition of the Board of Directors as follows: The number of
members of the Board of Directors would be six. The present mem-
bers of the Board of Directors Juko-Juho Hakala, Anja Korhonen, Eva
Nilsson Bågenholm, Harri Pärssinen, Lena Ridström and Panu Routila
would be re-elected. Panu Routila would be re-elected as Chairman
of the Board of Directors. Current member of the Board of Directors
Mariette Kristenson has informed the Nomination Board that she is
not available for re-election to the Board of Directors.
The biographical details of the proposed Board members are pre-
sented on the company’s website.
Board of Directors
The Board of Directors is responsible for the administration of the
company and the appropriate organisation of its operations.
The Board of Directors is responsible for managing and supervising
the company’s operations in accordance with the law, governmen-
tal regulations and the articles of association. The Board also en-
sures that good corporate governance is complied with throughout
the Oriola Group.
The members of the Board of Directors are elected by the gener-
al meeting of shareholders. The Board of Directors uses the highest
decision-making power in the Oriola Group between the general
meetings of Shareholders. Pursuant to the articles of association, the
Board of Directors consists of no fewer than five and no more than
eight members. The term of the members of the Board of Directors
expires at the end of the next Annual General Meeting following their
election. The chairman of the Board of Directors is elected by the
general meeting of shareholders. The vice chairman of the Board is
elected by the Board of Directors from among its members.
The Board of Directors convenes in accordance with a timetable
agreed in advance and also convenes as required. In addition to
making decisions, the Board of Directors also receives during its
meetings current information about the operations, finances and
risks of the Group. Board meetings are also attended by the Presi-
dent and CEO, the CFO and the General Counsel (who acts as sec-
retary to the Board). Members of the Group Management Team
attend Board meetings at the invitation of the Board. Minutes are
kept of all meetings.
Main tasks of the Board of Directors
The main tasks to be dealt with by the Board of Directors are listed in
the Board’s rules of procedure. Accordingly, these are among others:
• approving the company’s strategy;
• approving financial targets, budgets, major investments and risk
management principles;
• appointment and dismissal of the company’s President and CEO;
• consideration and decision of all significant matters concerning
the operations of the Group and the business segments; and
• approving the charters of the Audit Committee and the
Compensation and Human Resources Committee.
Diversity on the Board
The ultimate goal in electing members to the Board of Direc-
tors is to ensure that the Board of Directors as a collegium has
a competence profile which supports Oriola’s existing and fu-
ture business. Diversity supports the overall goal that the Board
of Directors has an optimal competence profile to support the
company’s business and is viewed as an integral part and a suc-
cess factor enabling the achievement of Oriola’s strategic goals.
Important factors for the diversity of Oriola’s Board of Directors
are the mutually complementary expertise of the members, their
education and experience in different professional areas and in-
dustrial sectors, businesses in various stages of development,
leadership experience, as well as their personal capacities. The
diversity of the Board of Directors is supported by experience in
operating environments and industries relevant to the company
as well as different cultures and by consideration of the age and
gender breakdown of the members.
Oriola’s Board of Directors has approved the diversity policy of the
Board of Directors in December 2016. According to the diversi-
ty policy of the Board of Directors Oriola’s objective is to maintain
an appropriate balance of representation of both genders on the
Board of Directors.
holders, by votes, registered as shareholders in the company’s
shareholders’ register maintained by Euroclear Finland Ltd by 31
August preceding the Annual General Meeting. The meeting of
the 20 largest shareholders, by votes, elects the members of the
Shareholders’ Nomination Board. One of the members is elected
to serve as the Chairman of the Shareholders’ Nomination Board.
The term of office of the members of the Shareholders’ Nomina-
tion Board expires the year following the appointment upon the
appointment of the new members of the Shareholders’ Nomina-
tion Board pursuant to the rules of procedure of the Shareholders’
Nomination Board.
The Shareholders’ Nomination Board is established to exist and
serve until the Annual General Meeting decides otherwise.
The Nomination Board shall prepare a proposal concerning the com-
position of the Board of Directors for the company’s Annual General
Meeting. The Nomination Board must submit its proposals to the
Board of Directors no later than on the first day of February preced-
ing the Annual General Meeting. The proposals are published as a
stock exchange release and included in the invitation to the Annual
General Meeting. The Nomination Board shall also present and pro-
vide grounds for its proposals to the Annual General Meeting.
The rules of procedure of the Shareholders’ Nomination Board are
available on the Company’s website www.oriola.com.
The largest shareholders of Oriola Corporation elected on 24 Sep-
tember 2020 the following persons as members of the Nomina-
tion Board:
Mikael Aro
Annika Ekman
Peter Immonen
Pekka Pajamo
Into Ylppö
Pekka Pajamo was elected Chairman of the Nomination Board.
Panu Routila, Chairman of the Board of Directors of Oriola, serves as
an expert member of the Nomination Board.
Report of the Board of Directors
Oriola Financial review 2020
1212
The company has upheld the requirements set for diversity in the
composition of the Board of Directors. Oriola’s Board of Directors
2020 represents diversity related of nationalities, professional com-
petencies and genders.
Board of Directors 2020–2021
The Annual General Meeting of Oriola held on 17 March 2020 con-
firmed that the Board of Directors of Oriola shall have seven mem-
bers and elected the following persons as chairman and members
of the Board of Directors:
Name
Year of
birth
Education and
independence
Attendance
at Board
Meetings
Attendance
at Committee
Meetings
Panu Routila
(Chairman) 1964
M.Sc. (Economics),
independent
member of the
Board 18/18
Compensa-
tion and HR
Committee
9/10 and Audit
Committee
5/5
Juko-Juho
Hakala 1970
M.Sc. (Economics),
independent
member of the
Board 21/21
Compensation
and HR
Committee
14/14
Anja Korhonen 1953
M.Sc. (Economics),
independent
member of the
Board 21/21
Audit
Committee
6/6
Mariette
Kristenson 1977
M.Sc. (Economics),
independent
member of the
Board 19/21
Compensation
and HR
Committee
11/14
Eva Nilsson
Bågenholm
(Vice Chairman) 1960
Physician,
independent
member of the
Board 21/21
Compensation
and HR
Committee
14/14
Lena Ridström 1965
M.Sc. (Economics),
independent
member of the
Board 21/21
Audit
Committee
6/6
Harri Pärssinen 1963
M.Sc. (Economics),
independent
member of the
Board 21/21
Audit
Committee
6/6
Name
Year of
birth
Education and
independence
Attendance
at Board
Meetings
Attendance
at Committee
Meetings
Anssi Vanjoki
(Chairman) 1956
M.Sc. (Economics),
independent
member of the
Board 3/3 -/-
The Board of Directors has evaluated the independence of its mem-
bers and determined that all members are independent of the
company and its major shareholders. The Board has also conducted
an assessment of its activities and working practices.
In 2020, the Board of Directors of Oriola convened 21 times, of
which 1 was a per capsulam meeting.
Board committees
The Board of Directors has an Audit Committee and a Compen-
sation and Human Resources Committee. The committees’ char-
ters are confirmed by the Board. The committees are preparato-
ry bodies that submit proposals to the Board on matters within
their purview. Minutes are kept of the committees’ meetings.
The committees report to the Board at regular intervals. The
committees do not have independent decision-making powers.
Their task is to submit recommendations to the Board on mat-
ters under consideration.
In its constitutive meeting, held after the Annual General Meet-
ing, the Board of Directors appoints, from among its members, the
members and chairman of the Audit Committee and the Compen-
sation and Human Resources Committee.
In addition to the Audit Committee and Compensation and Human
Resources Committee, the Board of Directors may appoint ad hoc
committees for preparing specific matters. Such committees do not
have Board-approved charters and the Board does not release in-
formation on their term, composition, the number of meetings or
the members’ attendance rates. In its constitutive meeting held later the same day, the Board of Di-
rectors elected Eva Nilsson Bågenholm as its Vice Chairman.
Members of Oriola’s Board of Directors 1 January–17 March 2020:
Audit Committee
The task of the Audit Committee is to enhance the control of the
company’s operations and financial reporting. According to the
charter, the following in particular shall be addressed and prepared
by the Audit Committee:
• reviewing the consolidated financial statements and interim
reports, together with the auditor;
• reviewing together with the auditor any deficiencies in the
supervision systems observed in control inspections and any
other deficiencies reported by auditors;
• reviewing any deficiencies in the control system observed in
internal audit and other observations and recommendations
made;
• reviewing the plans of action for the control inspection and
internal audit and giving recommendations to company
management on focus areas for internal audits; and
• evaluating the appropriateness of the supervision of company
administration and risk management and reviewing changes in
the principles of company accounting and external reporting
prior to their introduction.
In addition, the Audit Committee’s duties include preparatory work
on the decision of electing the auditor, evaluation of the independ-
ence of the auditor, taking into account particularly the effect of the
provision of related services on the independence, and carrying out
any other tasks assigned to it by the Board. The Audit Committee
has at least three members.
As of 17 March 2020, the Chairman of the Audit Committee is Anja
Korhonen and the other members are Harri Pärssinen, Lena Rid-
ström and Panu Routila. The members of the Audit Committee are
independent of the company and its major shareholders.
Compensation and Human Resources Committee
According to the charter, the Compensation and Human Resources
Committee reviews management and personnel remuneration pol-
icies and issues related to management appointments and makes
proposals on such matters to the Board of Directors. The Commit-
tee’s responsibilities include:
Report of the Board of Directors
Oriola Financial review 2020
1313
• Developing and monitoring effective compensation principles
that promote achievement of the goals of the company
• Making proposals to the Board on compensation and incentive
schemes for management and other key personnel
• Evaluating performance management, succession planning and
talent development processes and programmes
• Considering and preparing appointments of top management to
be decided by the Board. Supporting and advising the President
and CEO in the appointments of the Group Management Team
• Monitoring and evaluating the performance of the President
and CEO
• Monitoring and evaluating the performance of the members of
the Group Management Team based on the CEO´s proposal.
The Compensation and Human Resources Committee has four
members. As of 17 March 2020, the Chairman of the Committee
is Eva Nilsson Bågenholm and the other members are Juko-Juho
Hakala, Mariette Kristenson and Panu Routila. The members of the
Compensation and Human Resources Committee are independent
of the company and its major shareholders.
President and CEO and deputy to CEO
The Board of Directors appoints and dismisses the President and
CEO of Oriola and decides on the terms of his/her employment. At
the end of 2020 the President and CEO of the company is Robert
Andersson, M.Sc., MBA, born in 1960. Oriola announced on 1 Feb-
ruary, that Robert Andersson leaves his position as President and
CEO. For the period until a new permanent CEO is appointed Juko
Hakala, a member of Oriola’s Board of Directors, M.Sc., born in 1970
serves as the President and CEO.
In accordance with the Companies Act, the President and CEO is
responsible for the day to day executive management of the com-
pany in accordance with the instructions and orders given by the
Board of Directors. In addition, the President and CEO also ensures
that accounts of the company comply with Finnish law and that its
financial affairs have been arranged in a reliable manner. The terms
and conditions of the President and CEO’s employment are speci-
fied in a written service contract approved by the Board.
The Board of Directors also appoints, as necessary, a deputy to the
President and CEO. At the end of the year 2020 the Company does
not have an appointed deputy to the President and CEO.
Group Management Team
The Group Management Team consists of the President and CEO
of Oriola as Chairman and persons appointed by the Board. At the
end of the year 2020, the Group Management Team consisted of
ten members, including the President and CEO, to whom the other
Group Management Team members report.
The Group Management Team meets regularly to address matters
concerning the entire Group. The Group Management Team is not a
decision-making body. It assists the President and CEO in the imple-
mentation of Group strategy and in operational management and
facilitates the group-wide distribution of information concerning
the entire Group.
The following persons were members of Oriola’s Group Manage-
ment Team on 31 December 2020:
• Robert Andersson, President and CEO
• Helena Kukkonen, CFO
• Katarina Gabrielson, Vice President, Retail business area
• Anne Kariniemi, Vice President, Operations
• Tuula Lehto, Vice President, Communications and Sustainability
• Charlotta Nyström, CIO
• Fredrik Pamp, Vice President, Pharma business area
• Petter Sandström, General Counsel
• Teija Silver, Vice President, Human Resources
• Anders Torell, Vice President, Consumer business area
Descriptions of internal control procedures and the
main features of risk management systems
The risk management systems and internal control procedures re-
lated to Oriola’s financial reporting aim to ensure a reasonable cer-
tainty of the reliability of the company's financial statements and
financial reporting, as well as the company's compliance to legisla-
tion and generally approved accounting principles.
Financial reporting
The Board of Directors and the President and CEO have the overall
responsibility for organising the internal control and risk manage-
ment systems pertaining to financial reporting. The President and
CEO, the members of the Group Management Team and the heads
of the business units are responsible for the accounting and admin-
istration of the areas within their spheres of responsibility com-
plying with legislation, the Group's operating principles, and the
guidelines and instructions issued by Oriola's Board of Directors.
The organising and leading of the financial reporting in the Group
has been centralised under the subordination of the CFO.
Oriola Group follows the International Financial Reporting Stand-
ards (IFRS) approved for application within the European Union. In-
structions and accountancy principles for financial reporting are col-
lected in an accounting manual that is updated as soon as standards
change, as well as in the financial department's instructions that are
followed in all Group companies. Group accounting is responsible for
following and keeping up to date with financial statement standards,
upholding the principles concerning financial reporting and distrib-
uting information about these to the business units.
Measurement and follow-up
The performance of the Group is monitored in the Group Manage-
ment Team with monthly reports as well as in the monthly opera-
tional reviews of the business segments. The financial situation of
the Group is also monitored in the meetings of the Board of Direc-
tors. The Audit Committee and the Board of Directors examine the
interim reports and financial statements before their publication.
Monitoring of the monthly reports also ensures the effectiveness of
internal supervision. Each business segment must ensure effective
supervision of its own operations as part of Group-level internal su-
pervision. The business segments and the Group Finance organi-
sation are responsible for the evaluation of the processes cover-
ing financial reporting. The evaluations must contain balances and
analyses, which are compared with budgets, assessments and vari-
ous economic indicators.
Report of the Board of Directors
Oriola Financial review 2020
1414
Internal control
Internal control forms an essential part of the company's govern-
ance and management systems. It covers all of the Group's func-
tions and organisational levels. The purpose of internal control is
to ensure a sufficient certainty that the company will be able to
carry out its strategy. Internal control is not a separate process but a
procedural measure covering all Group-wide operating principles,
guidelines and systems.
The purpose of Oriola’s internal supervision system is to support
the implementation of the Group strategy and to ensure that rules
and regulations are observed. The company’s internal supervision is
based on a Group structure, in which the Group’s operations are or-
ganised into Business Areas and Group functions. Group functions
issue Group-level guidelines laying down the operational frame-
work and the persons responsible for the process. The guidelines
cover such areas as accounting, reporting, financing, investments
and business principles.
The guidelines aim to ensure that all risks connected to the achieve-
ment of the company’s objectives can be identified and managed.
The control measures cover all Group levels and functions. All new
instructions and guidelines are published on the company’s inter-
nal website and staff members can provide feedback to the man-
agement and anonymously report any questionable activities
through the company intranet.
Risk management
The Board of Directors of Oriola approves the company’s risk man-
agement policy in which the risk management operating model,
principles, responsibilities and reporting are specified. The Board as-
sess the Company’s long-term strategic risks and oversees the effec-
tiveness of the risk management. The Board-appointed Audit Com-
mittee regularly reviews and monitors the implementation of the risk
management policy in the Group and the risk management process.
Oriola has specified the company’s risk management model, prin-
ciples, organisation and process in the Group Risk Management
Policy. The Group Risk Management Policy defines the enterprise
risk management system, objectives, roles and responsibilities
within Oriola in order to identify and manage risks related to ex-
ecution of the Company’s strategy and operations. The Group Risk
Management Policy is the main risk management document with-
in Oriola and must be followed by all Oriola business units, subsid-
iaries and entities. Additionally, the Group has a Code of Conduct
policy, a Treasury policy and an Approval policy covering compli-
ance and financial risks. Oriola’s risks are classified as strategic, op-
erational, financial and hazard risks. Risk assessment and manage-
ment are key elements in the strategic planning, operations and
daily decision making in the company.
Risk management and the most significant risks are described on
the company’s website at www.oriola.com.
Other information to be provided in the CG statement
Internal audit
Oriola uses an outsourced internal audit function for the purpose
of fulfilling its internal audit requirements. The outsourced internal
audit function is an independent and objective assurance activity
reporting directly to the Audit Committee of the Board of Directors.
The internal audit assignments are carried out on the basis of an In-
ternal Audit Charter approved by the Board of Directors as well as
an Internal Audit Plan annually reviewed and approved by the Au-
dit Committee.
Insider management
Oriola complies with the insider holding guidelines issued by Nas-
daq Helsinki Ltd (January 1, 2021) and the Market Abuse Regulation
(596/2014, “MAR”). Oriola has issued its insider guidelines (“Guide-
lines”) which are based on applicable EU and Finnish legislation (es-
pecially MAR and the Securities Markets Act 746/2012), the insider
guidelines of Nasdaq Helsinki Ltd, and the regulations and guide-
lines of the European Securities Markets Authority and the Finnish
Financial Supervisory Authority.
Members of the company’s Board of Directors, the President and
CEO, the members of the Group Management Team that have opera-
tional responsibilities leading a business area of the company as well
as the CFO, CIO and Vice President Operations are considered the
management of the company (“Management”). Management and
their related parties shall notify all transactions with the company’s
securities or financial instruments made on his or her own account
to the company and the Finnish Financial Supervisory Authority with-
out delay and three working days from the execution of the trans-
action at the latest. The guidelines set trade restrictions prohibiting
Management and the persons who participate in the preparation of
interim and annual financial statements of Oriola from making trans-
actions with the company’s securities or financial instruments related
to them during a closed period of no less than 30 days before a finan-
cial report of Oriola is made public (closed period).
Oriola is obliged to draw up the insider lists and keep them up-to-
date. For the time being, Oriola has determined not to include any
persons as permanent insiders. Consequently, all persons with in-
side information will be included in the event-based insider list for
relevant insider projects. Oriola instructs the persons entered in the
event-based insider list on their obligations and any possible con-
sequences. In addition, Oriola monitors and supervises the proper
management of insider issues.
Related party transactions
Oriola abides by applicable legislation concerning related party
transactions. Oriola’s related parties are the related parties of a list-
ed company in accordance with the Companies Act and IAS 24. The
related parties include Management, their close family members
as well as companies in which the individuals mentioned, alone or
jointly with others, exercise control. Oriola maintains a list of parties
that are related to the company.
Oriola assesses and monitors transactions to be made with related
parties to ensure compliance with applicable laws and regulations,
including the Corporate Governance Code, e.g. to safeguard that
potential conflicts of interest are adequately taken into account in
the company’s decision making.
Management of the company has confirmed for 2020 that neither
they nor their related parties have engaged in business transactions
with Oriola during the year in question.
Report of the Board of Directors
Oriola Financial review 2020
1515
External audit
The company has one auditor, which must be a firm of authorised pub-
lic accountants. The auditor is elected annually by the Annual General
Meeting for a term that expires at the end of the next Annual General
Meeting following the election. The task of the auditor is to audit the
consolidated financial statements, the financial statements of the par-
ent company, the accounting of the Group and the parent company
and the administration of the parent company. The company’s auditor
submits the auditor’s report to the shareholders in connection with the
annual financial statements, as required by law, and submits regular re-
ports on its observations to the Board’s Audit Committee.
The Board of Directors and the Audit Committee are responsible for
monitoring the independence of the auditor. For this reason, the
company has implemented a policy covering the provision of non-
audit services by the elected auditors.
The Annual General Meeting of Oriola held on 17 March 2020 re-
elected KPMG Oy Ab, a firm of authorised public accountants, as
the company’s auditor, with Kirsi Jantunen, Authorised Public Ac-
countant, KHT, as the principal auditor. The fees for the statutory au-
dit paid to the member firms of KPMG network in 2020 totalled EUR
226,553. In addition, EUR 58,704 was paid for other consultation
provided to Group companies.
4.Remuneration
Remuneration and other benefits of the members of
the Board of Directors
The Annual General Meeting decides annually on the remuneration
payable to members of the Board of Directors for their term of of-
fice. The Shareholders’ Nomination Board prepares a proposal con-
cerning the composition of the Board of Directors for the compa-
ny’s Annual General Meeting.
On 17 March 2020, the Annual General Meeting confirmed that the
fee for the term of office of the Chairman of the Board of Directors
is EUR 60,000, the fee for the term of office of the Vice Chairman of
the Board of Directors and for the Chairman of the Board's Audit
Committee is EUR 36,000 and the fee for the term of office of other
members of the Board of Directors is EUR 30,000. The Chairman of
the Board of Directors receives an attendance fee of EUR 1,000 per
meeting and the other members EUR 500 per meeting. Attendance
fees are correspondingly also paid to the chairmen and members of
Board and company committees. Travel expenses are compensated
in accordance with the travel policy of the company.
In accordance with the decision of the Annual General Meeting,
60% of the annual remuneration was paid in cash and 40% in class B
shares. Oriola Corporation class B shares were acquired on the market
for the Board members as follows: Panu Routila 11,265 shares, Anja
Korhonen 6,759 shares, Mariette Kristenson 5,632 shares, Juko-Juho
Hakala 5,632 shares, Eva Nilsson Bågenholm 6,759 shares, Lena Rid-
ström 5,632 shares and Harri Pärssinen 5,632 shares.
Restriction periods are not included in the remuneration paid in
Oriola Corporation class B shares. The members of the Board of Di-
rectors have not received any share-based rights as remuneration.
They are not included in the company’s share incentive scheme.
The company has not granted any loans to Board members nor giv-
en guarantees on their behalf.
The total fees and other benefits of the Board members for 2020
and shareholdings in the company on 31 December 2020 are avail-
able in notes 4.4. and 8.4. to the Consolidated Financial Statements
and Remuneration report (http://www.oriola.com/investors/corpo-
rate-governance/remuneration-statement).
Main principles and decision-making process
on the remuneration of the President and CEO
and other executives
The salary of the President and CEO and other members of the
Group Management Team consists of a fixed base salary, fringe
benefits, a short-term performance bonus and a long-term share in-
centive plan. The remuneration commits management to develop
the company and its financial success in the long-term. The devel-
opment stage and strategy of the company are considered when
determining the principles for remuneration.
In accordance with its charter approved by the Board of Directors, the
Compensation and Human Resources Committee monitors the ef-
fectiveness of the incentive schemes to ensure that the schemes pro-
mote the achievement of the company’s short-term and long-term
goals. According to the charter, the Compensation and Human Re-
sources Committee reviews management and personnel remunera-
tion policies and issues related to management appointments and
makes proposals on such matters to the Board of Directors. More in-
formation about the Compensation and Human Resources Commit-
tee can be found in the Corporate Governance statement.
The Board of Directors reviews and decides annually on the remuner-
ation and benefits of the President and CEO and other members of
the Group Management Team, and the underlying criteria thereof.
The Board of Directors decides annually on the earnings criteria and
the determination of the performance bonuses based on the pro-
posal of the Compensation and Human Resources Committee.
The company has not granted any loans to the President and CEO or
to the members of the Group Management Team, nor given guar-
antees on their behalf. The company has no share option scheme in
place. The President and CEO and the members of the Group Man-
agement Team have no supplementary pension scheme, except the
Vice President Consumer business area, the Vice President Pharma
business area and the Vice President Retail business area, who have a
defined contribution pension benefit typically applied in Sweden.
Short-term performance bonuses
The performance bonus is based on the achievement of the com-
pany’s financial targets and personal targets. The maximum per-
formance bonus in 2020 for the President and CEO was 85% of the
annual salary and for the other Group Management Team members
60% of the annual base salary. The Board of Directors decides annu-
ally on the earnings criteria and the determination of the perfor-
mance bonuses based on the proposal of the Compensation and
Human Resources Committee.
Share-based incentive programmes
The members of Oriola’s Group Management Team are part of the
company’s long-term share incentive scheme. The scheme unites
the objectives of shareholders and key personnel to increase the
value of the company, commits the key personnel to the company,
Report of the Board of Directors
Oriola Financial review 2020
1616
and offers key personnel a competitive remuneration system based
on ownership of shares in the company.
Executive incentive plan 2019 - 2023
On 14 December 2018 The Board of Directors of Oriola Corporation
resolved to establish a new share-based long-term incentive plan
2019–2023 directed to the Group’s key personnel. The long-term in-
centive plan arrangement has three three-year performance periods
2019–2021, 2020–2022 and 2021–2023. The Board of Directors of the
Company will resolve on the plan's performance criteria and on the re-
quired performance level for each criterion at the beginning of a per-
formance period. Approximately 30 key persons, including the mem-
bers of the Group Management Team, belong to the target group of
the plan. The prerequisite for participation in the plan and for receipt
of reward on the basis of the plan is that the key person has enrolled in
the key personnel share savings plan and makes the monthly saving
from his or her fixed gross monthly salary, in accordance with the rules
of the key personnel share savings plan in force during the first year of
the three-year performance period. A member of the Group Manage-
ment Team must hold 50% of the net shares given on the basis of the
long-term incentive plans, until his or her shareholding in the Compa-
ny in total equals the value of his or her gross annual salary. Such num-
ber of shares must be held as long as the key person holds a position
as a Group Management Team member.
The potential reward from the performance period 2019–2021 will
be based on the Group's earnings per share (EPS) and Group’s total
shareholder return (TSR). The rewards to be paid on the basis of the
performance period 2019-2021 correspond to the value of an ap-
proximate maximum total of 1,700,000 Oriola Corporation Class B
shares including also the proportion to be paid in cash. The potential
reward will be paid partly in Oriola Corporation Class B shares and
partly in cash in spring 2022 after the end of the performance period.
The potential reward from the performance period 2020–2022 will
be based on the Group's earnings per share (EPS) and Group’s total
shareholder return (TSR). The rewards to be paid on the basis of the
performance period 2020-2022 correspond to the value of an ap-
proximate maximum total of 1,820,000 Oriola Corporation Class B
shares including also the proportion to be paid in cash. The potential
reward will be paid partly in Oriola Corporation Class B shares and
partly in cash in spring 2023 after the end of the performance period.
The potential reward from the performance period 2021–2023 will
also be based on the Group's earnings per share (EPS) and Group’s
total shareholder return (TSR). The rewards to be paid on the basis
of the performance period 2021-2023 correspond to the value of an
approximate maximum total of 2,700,000 Oriola Corporation Class B
shares including also the proportion to be paid in cash. The potential
reward will be paid partly in Oriola Corporation Class B shares and
partly in cash in spring 2024 after the end of the performance period.
The cash proportion is intended to cover taxes and tax-related costs
arising from the reward to a key person.
One-off incentive plan 2019 - 2020
On 14 December 2018 The Board of Directors of Oriola Corporation
resolved to establish a two-year one-off incentive plan 2019-2020
directed to the Group’s key personnel to enable the prolonging of
the long-term incentive plan performance period to three years and
with that change better answer to the requirements of the investors
and corporate governance and to be more aligned with the market
practice. The one-off long-term incentive plan had a two-year per-
formance period 2019–2020. The Board of Directors of the Company
resolved on the plan's performance criteria and on the required per-
formance level for each criterion at the beginning of a performance
period. Approximately 30 key persons, including the members of the
Group Management Team, belonged to the target group of the plan.
The prerequisite for participation in the plan and for receipt of reward
on the basis of the plan is that a key person has enrolled in the key
personnel share savings plan and makes the monthly saving from his
or her fixed gross monthly salary, in accordance with the rules of the
key personnel share savings plan in force.
The potential reward from the performance period 2019-2020 was
based on the Group's earnings per share (EPS) and separately defined
two-year strategic projects. The performance criteria for the plan was
not met, and thus there will be no payment based on the plan.
Share savings plans
Oriola Corporation has had a key personnel share savings plan in
force since 2013. The Board of Directors of Oriola Corporation always
decides on the launch of a new savings period in the plan sepa-
rately. According to the rules of the share savings plan in force, the
maximum monthly saving is 8.3% and the minimum is 2% of each
participant's fixed monthly gross salary. The accumulated savings
will be used for purchasing Oriola Corporation class B shares for the
participants at the market price quarterly. In return, each participant
will receive two free class B matching shares for every three acquired
savings shares if the participant holds the acquired shares from the
savings period until the end of the designated holding period and if
his or her employment with a company has not been terminated on
bad leaver terms. The matching shares are paid partly in Oriola’s class
B shares and partly in cash. The cash proportion is intended to cover
taxes and tax-related costs arising from the reward to a key person.
Approximately 40 key employees participated in the share sav-
ings plan for the savings period 1 January – 31 December 2017. The
matching shares transferred to eligible participants in May 2019
corresponded to the value of 40,398 Oriola Class B shares, including
the proportion paid in cash.
Approximately 50 key employees participated in the Oriola Cor-
poration key personnel share savings plan for the savings period 1
January – 31 December 2018. The matching shares transferred to
eligible participants in February 2020 corresponded to the value of
78,295 Oriola Class B shares, including the proportion paid in cash.
Approximately 55 key employees participated in the share sav-
ings plan for the savings period 1 January – 31 December 2019. The
holding period ended on the publication date of the Oriola’s Finan-
cial Statements Release 1 January – 31 December 2020. The match-
ing shares will be transferred to eligible participants in 2021.
Approximately 59 key employees participated in the share sav-
ings plan for the savings period 1 January – 31 December 2020.
The holding period will end on the publication date of the Orio-
la’s Financial Statements Release 1 January – 31 December 2021.
The matching shares will be transferred to eligible participants
in 2022.
Approximately 60 key employees will participate in the share sav-
ings plan for the savings period 1 January – 31 December 2021.
The holding period will end on the publication date of the Oriola’s
Financial Statements Release 1 January – 31 December 2022. The
matching shares will be transferred to eligible participants in 2023.
Report of the Board of Directors
Oriola Financial review 2020
1717
Financial benefits of the President and CEO in 2020
The salary and other remuneration, including fringe benefits, paid
in 2020 to the President and CEO Robert Andersson, amounted to a
total of EUR 776,954 as follows:
Fixed base salary of EUR 624,080;
Fringe benefits of EUR 25,601;
Performance bonus of EUR 104,009; and
Share-based payments of EUR 23,265.
Financial benefits of other Group Management
Team members 2020
The salaries and other remuneration, including fringe benefits, paid
in 2020 to the members of the Group Management Team totalled
EUR 1,779,699 as follows:
Fixed base salaries totalling EUR 1,442,023;
Fringe benefits totalling EUR 114,665;
Performance bonuses totalling EUR 175,292; and
Share-based payments totalling EUR 47,719.
The members of the Group Management Team are included in the
company’s share-based incentive scheme. Shareholdings of the
members of the Group Management Team in the company are
available in note 8.4. to the Consolidated Financial Statements and
in the Remuneration report on the company web site.
5. Non-financial information
Oriola´s sustainability work is based on a stakeholder material-
ity assessment conducted in 2018 to ensure that the company´s
sustainability programme focuses on material topics. Oriola's
sustainability programme has three themes: society, people and
planet.
Oriola´s sustainability strategy was completed in 2019 and at the
same time the company´s long-term sustainability goals were de-
fined: improving people´s health, best-in-class employee engage-
ment and carbon neutrality by 2030. The achievement of these
goals is guided by the KPIs defined for the strategy period:
1) Society: Improving people´s health
• Development of new health-promoting services
• High-quality pharmaceutical deliveries
• Number of sustainable products within our own brands
2) People: Best-in-class employee engagement
• Employee engagement
• Employee turnover
3) Planet: Carbon neutrality by 2030
• Renewable energy
• Recycling rate
The sustainability information for 2020 will be reported in two
parts. This non-financial information included in the Board of Direc-
tors’ report covers sustainability key themes according to the Finn-
ish Accounting Act. Later in the second quarter of 2021, key sustain-
ability data and time series will be reported in compliance with the
GRI (Global Reporting Initiative) core level. The environmental data
published in this non-financial information and in the GRI report
has been assured by a third party (limited assurance).
Oriola is committed to UN´s Sustainable Development Goals as well
as Global Compact´s principles for responsible business. Oriola re-
ports on risk management and management practices related to
climate change in CDP's climate change programme. In 2020, Oriola
received recognition for its environmental work by achieving CDP´s
best leadership level with score A-.
Business model
Oriola operates in the health and wellbeing market in Sweden and
in Finland. Oriola serves the customers in three business areas:
Consumer, Pharma and Retail. In addition, Group-level Operations
function serves all business areas and includes logistics operations,
operational sourcing and dose manufacturing. Oriola employs ap-
proximately 4,300 people in Finland and Sweden.
Oriola serves the health and wellbeing market with a modern and
customer-focused assortment and services, and connects all actors
within the field, from pharmaceutical companies to pharmacies and
consumers. Oriola promotes wellbeing by ensuring that pharma-
ceuticals as well as health and wellbeing products are delivered in a
safe and customer-friendly manner. Oriola’s wide range of services
help pharmaceutical companies, pharmacies and other operators
in the healthcare sector to succeed and promotes a healthier life for
people. Oriola does not have product manufacturing of its own.
In 2020, health and wellbeing became a global topic with the COV-
ID-19 pandemic. Oriola's key task is to secure pharmaceutical logis-
tics in the company's operating countries, and to ensure the avail-
ability of pharmaceuticals and advice in its own pharmacy chain in
Sweden. The company contributes to ensuring the obligatory stock
of critical pharmaceuticals in Finland. Also, in Sweden, after the out-
break of the pandemic, an obligatory stock of critical pharmaceu-
ticals was set up in cooperation with the authorities. Oriola brings
protective equipment such as face masks, protective gloves and
hand disinfectants to the market. Oriola also offers citizens health
promoting services in its pharmacies. During the pandemic, the
company has supported healthcare´s carrying capacity for example
with COVID-19 antibody testing.
Quality management and compliance with pharmaceutical sector
regulations are the foundation for the company´s operations. Oriola’s
business is regulated by numerous international and national phar-
maceutical sector laws and regulations. The pandemic has increased
stakeholder dialogue in the healthcare industry to ensure patient
safety and pharmaceutical availability. In addition, the preparation and
implementation of regulatory projects related to pharmaceutical avail-
ability has accelerated. This has been the case, for example, with infor-
mation sharing, regulations on the storage of pharmaceuticals in phar-
macies or, in Sweden, with pharmacies in sparsely populated areas.
Oriola creates value for different stakeholders, from suppliers to
consumers and owners. More detailed value creation framework
with inputs, outputs and impacts is described in Oriola’s value crea-
tion model available on the company´s website.
Purpose, values and Code of Conduct
Oriola´s purpose “Health for life” steers the company´s activities and
provides it with a meaning. According to its vision, Oriola promotes
a healthier tomorrow. Oriola’s values: “we are open”, “we take re-
sponsibility”, “we work together” and “we take initiative”, reflect on
all Oriola’s business operations.
The Oriola Group Code of Conduct guides management and person-
nel. The Code of Conduct presents Oriola´s way of working, which is
Report of the Board of Directors
Oriola Financial review 2020
1818
based on law and good corporate governance, openness, fairness
and confidentiality. The Code of Conduct contains the company's
commitment to fighting bribery and corruption, compliance with all
competition laws, and engaging in collaboration and dialogue with
stakeholders. Oriola promotes equality. For example, the recruitment
of new employees is based on their expertise and skills, regardless
of cultural background, age, gender or religion. The company also
requires all employees to commit to confidentiality obligations and
avoiding conflicts of interest. Oriola has a confidential whistleblow-
ing channel for reporting actions that are suspected to be in violation
of the Code of Conduct. The company's Board of Directors monitors
compliance with the Code of Conduct. The training has been com-
pleted by over 3 500 employees from the end of the year 2017. Train-
ing is part of onboarding process for all employees.
ESG risk management
Oriola assesses ESG risks (environment, social and governance) as
part of the regular risk management process. Oriola has identified
the following most significant ESG risks: information security, and
transition risks related to climate change, such as changes in fossil
fuel pricing, environmental regulation becoming stricter, as well as
consumers' increasing demands for ethical, transparent and envi-
ronmentally sustainable products and services.
Oriola responds to these challenges and sees business opportu-
nities in systematic development of environmental work. Oriola
follows the development of environmental legislation. Commit-
ment to reducing CO2 emissions is a selection criterion for Oriola’s
transport partners. Oriola evaluates product sustainability in its as-
sortment decisions and develops its own products to meet the in-
creasing demands of consumers. In addition, Oriola develops con-
sumer-oriented health services in its pharmacies in Sweden.
In Finland, Oriola has developed Real World Evidence research,
which combines health data from national registers with patient
experience information. Information is collected from patients on a
research platform developed by the company, based on a fair data
economy. The research platform has been developed as part of The
Finnish Innovation Fund Sitra's IHAN® project on Fair Data Economy,
which creates new services and solutions by utilising personal infor-
mation with the permission of the users.
Environmental responsibility
Oriola´s environmental work is based on the ISO 14 001 framework
for environmental management, which, as part of Oriola's com-
mon management system, creates consistent ways of working for
the entire company. In Sweden, Oriola Sweden AB and Svensk Dos
AB are functions that have been certified according to the environ-
mental management standard. Oriola´s Environmental Policy out-
lines the commitment to reduce the environmental impacts of the
company’s operations and steers decision-making.
One of Oriola´s long-term sustainability goal is to become a carbon-
neutral company by 2030. Carbon neutrality means reducing the
company’s carbon emissions to zero. Oriola´s carbon footprint con-
sists of three emission groups: direct emissions, which include for
example, own fuel use and refrigerant leaks, emissions from pur-
chased energy, and other emissions in the supply chain. The carbon
footprint has been calculated in accordance with the Greenhouse
Gas Protocol accounting principles and covers the entire company.
Environmental responsibility: targets and results
Oriola´s intermediate targets for environmental responsibility are,
that by 2022 all energy used in the company's properties is renew-
able and at least 85% of all non-pharmaceutical waste is recycled.
In 2020, the company took a significant leap in renewable energy uti-
lisation, as the Mankkaa property in Finland switched to the use of re-
newable district heating. With the change, 92% of the energy used by
the Oriola comes from renewable sources (77%/2019). The transition
to district heating also had a significant impact on the company's to-
tal CO2 emissions.
Oriola’s operations aim at reducing waste, using materials effective-
ly and ensuring that the recycling rate is as high as possible. Oriola
delivers products from its distribution centres to recipients mainly
in reusable transport boxes. This way, the company contributes to
minimising the amount of packaging waste in the logistics chain of
the products it distributes.
Most of the waste generated in Oriola's operations comes from the
packaging materials of the goods arriving at its warehouses and distri-
bution centres. Enhancing waste recycling is one of the key initiatives
of Oriola’s environmental work. Possibilities to sort waste have been
systematically increased in the recent years, and in 2020, the company
started for example collecting plastic packaging in Finnish office prem-
ises and recycling the wooden pallets at the Swedish central ware-
house. As a result, Oriola's recycling rate increased from 71% to 74%.
Transport is Oriola's largest source of indirect emissions, as suppli-
ers are responsible for the entire transport network. Close coopera-
tion with transport partners makes it possible to reduce emissions by
optimising routes, using capacity efficiently and expanding the use of
alternative fuels, among other things. The emissions can also be im-
pacted at distribution centres, for example, by improving the filling
rate of transport boxes, which reduces the number of boxes delivered
to customers. The company monitors transport emissions by requiring
transport partners to report the emissions on regular basis. Transport
emissions account for nearly 30% of Oriola’s total CO2 emissions.
Social responsibility
Ensuring pharmaceutical safety and the availability of pharmaceuti-
cals is the highest priority in Oriola’s operations and the company´s
most societally significant task. Pharmaceuticals must be delivered
safely and on-time irrespective of external conditions. Oriola’s opera-
tions are designed to ensure that pharmaceuticals with marketing
authorisation are continuously available and that they are handled in
a manner compliant with the pharmaceutical sector's regulatory re-
quirements. Oriola’s pharmacy chain Kronans Apotek in Sweden, as
well as the company´s comprehensive patient support services and
dose-dispensing services promote safe usage of pharmaceuticals.
Oriola´s long-term sustainability goal is to improve people´s health.
To achieve this goal, the company has set the intermediate targets
of developing new health-promoting services, ensuring high-quali-
ty pharmaceutical deliveries in its operating countries, and extend-
ing the range of sustainable products to cover 20% of the private
label assortment in Sweden by 2022.
In 2020, advancing this goal became a special priority due to the
COVID-19 pandemic. The pandemic that hit the company's operating
countries in March has created an unprecedented need for health se-
curity. Oriola has been able to bring services to the market, especially
through its own Kronans Apotek pharmacy chain, that have helped
Report of the Board of Directors
Oriola Financial review 2020
1919
citizens in these challenging times. For example, COVID-19 antibody
testing was initiated in the second quarter of the year, and by the end
of the year more than 70,000 citizens had been tested.
During the pandemic, the seamless availability of pharmaceuticals
and their high-quality transport have become a central matter to the
society. Oriola delivers pharmaceuticals within 24 hours of ordering
to all pharmacies and hospital pharmacies, as well as other health-
care units in Sweden and Finland. Citizens' pharmaceutical hoarding
experienced in March 2020 initiated a close cooperation across the
industry, that continued throughout the year, including cooperation
with authorities to ensure access to pharmaceuticals in all circum-
stances. Pharmaceutical deliveries have been managed to secure in
this challenging year in both operating countries. Oriola is develop-
ing a standard quality measure for pharmaceutical deliveries.
The sustainability criteria for Oriola's private label pharmacy prod-
ucts were defined during 2020, and 18% of the range is sustain-
ably classified, for example, products that have received the Nordic
Swan Ecolabel or another well-known eco-label.
Personnel responsibility
Oriola employs approximately 4,300 pharmaceutical professionals
in numerous positions in pharmacies, logistics centres and various
expert roles. Employees are the company's most important asset:
their expertise and know-how are a prerequisite for an excellent
customer experience, responsible business and for meeting the
strict quality requirements of the pharmaceutical industry. Invest-
ing in personnel development and wellbeing also build Oriola's
competitiveness in a rapidly changing market. We want to offer our
employees the most diverse career paths in the industry and an
equal and fair workplace.
In 2020, the COVID-19 pandemic affected Oriola's personnel in
many ways. Since March, office personnel have largely been work-
ing remotely, while the pharmacy and production staff have con-
tinued their work protected by new comprehensive health safety
guidelines, to meet customer needs. Oriola has introduced protec-
tive equipment as well as practices that minimise staff encoun-
ters. In addition, extensive mass testing for COVID-19 infections has
been conducted, especially in Swedish production sites. Oriola's
precautionary measures and work have always been guided by the
company's objective to ensure patient safety without compromis-
ing the health safety of its personnel.
Oriola´s long-term sustainability goals is best-in-class employee
engagement. The company has set the intermediate targets for an
employee engagement index of at least 80 and employee turnover
of maximum 12% by 2022. In 2020, the employee engagement in-
dex was 78 (77 in 2019) and employee turnover 10.2% (9.2 in 2019).
As part of strategy work, the company has defined Oriola's strate-
gic capabilities, which guide the development of employees. Lead-
ing change is one of the key areas for development, as the business
environment, culture and ways of working are undergoing a strong
change - which has been further accelerated by the pandemic. The
quality of management and staff satisfaction are measured as part
of an employee engagement survey twice a year. The employee en-
gagement survey serves as a leadership tool, and the planning of
activities to increase employee engagement and wellbeing is based
on its results.
All of Oriola´s employees are subject to annual development discus-
sions, which set personal goals to guide the work and on the other
hand, map out each person's own development goals and measures.
Governance
Oriola operates on a regulated market. The company’s quality man-
agement is based on laws and regulatory requirements applicable
in the pharmaceutical sector, as well as Oriola's common manage-
ment system, which provides a framework for common operating
and governance practices. Pharmaceutical distribution and whole-
sale are regulated by Good Distribution Practice (GDP) of the Euro-
pean Medicines Agency (EMA). In Finland, compliance with the GDP
is monitored by the Finnish Medicines Agency FIMEA and in Swe-
den by the Medical Product Agency (MPA). GDP defines the com-
mon rules for handling pharmaceuticals. Where applicable, Oriola’s
operations are also guided by Good Manufacturing Practices (GMP)
and other regulation concerning products that come under regula-
tory control, such as food and cosmetics regulation.
Tax footprint
Oriola supports a transparent company culture and publishes its tax
footprint, which consists of income taxes and other taxes, as well as cor-
responding charges related to business operations. Oriola pays taxes to
each country in which it operates in accordance with local legislation.
Oriola does not have subsidiaries in countries seen as tax havens. Oriola´s
tax footprint can be found on the company’s website www.oriola.com.
Supply chain management
The company's procurement policy defines responsible procure-
ment principles, that are ethical, meet quality criteria and respect
supplier cooperation. Procurement principles, as well as supplier
selection and approval processes are important to Oriola, and they
assess the business partners’ way of operating to meet the require-
ments set by Oriola, in particular to ensure patient safety. Oriola
considers its suppliers’ active environmental work as important, and
the sustainability criteria will be emphasised increasingly as the
company further develops its supplier assessment.
Oriola promotes adherence with ethical principles among its busi-
ness partners and suppliers by requiring suppliers and other business
partners to commit to Oriola Business Partner Code of Conduct. Busi-
ness Partner Code of Conduct covers principles related to fighting
bribery, corruption and discrimination, respecting labour and human
rights, and promotion of occupational safety and health.
In 2020, Oriola continued the alignment of procurement practices
and the implementation of Business Partner Code of Conduct with
direct and indirect product suppliers. The company has conducted
a geographical risk assessment of direct non-pharmaceutical prod-
ucts and suppliers. The main part of Oriola's direct non-pharmaceu-
tical product purchases come from Europe. By the end of 2020, 232
out of 360 identified direct product suppliers have been bench-
marked against Oriola’s supplier practices included in the Oriola
Business Partner Code of Conduct (223/385 by the end of 2019).
Espoo, 18 February 2021
Oriola Corporation
Board of Directors
Report of the Board of Directors
Oriola Financial review 2020
2020
Information on shares
Shares and shareholders
Shareholders by type of owner, 31 December 2020
Shareholders % of shareholders % of shares
A shares B shares Total A shares B shares Total A shares B shares Total
Individuals 12,566 26,911 35,033 97. 0 95.9 96.1 45.1 38.1 40.1
Corporations and partnerships 242 742 920 1.9 2.6 2.5 27. 2 24.8 25.5
Banks and insurance companies 15 42 46 0.1 0.2 0.1 3.1 7.9 6.5
Public entities 6 14 17 0.0 0.1 0.0 14.8 6.8 9.2
Non-profit institutions 66 228 267 0.5 0.8 0.7 4.7 2.2 2.9
Foreign shareholders 64 128 164 0.5 0.5 0.4 0.3 0.6 0.5
Total 12,959 28,065 36,447 100.0 100.0 100.0 95.1 80.3 84.7
Nominee registrations 4.9 19.7 15.3
Shareholders by number of shares held, 31 December 2020
Shareholders % of shareholders
Number of shares A shares B shares Total A shares B shares Total
1–100 2,636 3,615 5,379 20.3 12.9 14.8
101–1,000 6,597 14,867 18,900 50.9 53.0 51.9
1,001–10,000 3,345 8,755 10,913 25.8 31.2 29.9
10,001–100,000 340 758 1,152 2.6 2.7 3.2
over 100,001 41 70 103 0.3 0.2 0.3
Total 12,959 28,065 36,447 100.0 100.0 100.0
Of which nominee registered 9 11 11
Shares % of shares
Number of shares A shares B shares Total A shares B shares Total
1-100 131,189 198,604 329,793 0.2 0.2 0.2
101-1,000 2,828,035 6,781,064 9,609,099 5.3 5.3 5.3
1,001-10,000 9, 411,56 6 24,928,186 34,339,752 17. 5 19.5 18.9
10,001-100,000 8,691,155 17, 802, 590 26,493,745 16.2 13.9 14.6
over 100,001 32,686,368 78,027,456 110,713,824 60.8 61.1 61.0
Total 53,748,313 127,737,90 0 181,486,213 100.0 100.0 100.0
Of which nominee registered 2,633,514 25,125,336 27,75 8 , 850 4.9 19.7 15.3
Total number of shares 53,748,313 127,737,900 181,486,213 100.0 100.0 100.0
Information on shares
Oriola Financial review 2020
2121
Share-related key figures
2020 2019 2018 2017 2016
Earnings per share
2
EUR 0.06 0.04 0.06 0.14 0.23
Earnings per share, continuing operations
2
EUR 0.06 0.04 0.06 0.14 0.23
Equity per share
2
EUR 0.94 0.87 0.98 1.08 1.13
Total dividends EUR million 5.4
1
16.3 16.3 16.3 25.4
Dividend per share EUR 0.03
1
0.09 0.09 0.09 0.14
Payout ratio
2
% 48.2
1
203.5 151.7 63.9 60.5
Dividend yield A % 1.51
1
4.46 4.57 3.00 3.29
Dividend yield B % 1.58
1
4.44 4.55 3.21 3.25
P/E ratio, continuing operations
2
A 31.97 45.67 33.20 21.58 18.83
P/E ratio, continuing operations
2
B 30.55 45.78 33.37 20.14 19.10
Share price on 31 Dec A EUR 1.99 2.02 1.97 3.00 4.25
Share price on 31 Dec B EUR 1.90 2.03 1.98 2.80 4.31
Average share price A EUR 2.01 2.10 2.82 3.79 4.16
Average share price B EUR 1.93 2.11 2.72 3.66 4.20
Lowest share price A EUR 1.62 1.86 1.92 2.96 3.70
Lowest share price B EUR 1.52 1.86 1.94 2.77 3.65
Highest share price A EUR 2.25 2.56 3.38 4.53 4.50
Highest share price B EUR 2.27 2.53 3.17 4.43 4.65
Market capitalisation EUR million 349.9 367. 2 358.8 519.2 778.9
Trading volume
A shares pc 3,320,057 3,758,001 3,067,789 2,703,394 1,893,721
% of average number of A shares % 6.1 6.8 5.5 4.9 3.4
B shares pc 48,554,934 24,054,806 40,993,419 41,746,627 22,488,841
% of average number of B shares % 38.2 19.1 32.5 33.2 17.9
% of average number of all shares % 28.6 15.3 24.3 24.5 13.4
Number of shares 31 Dec A pcs 53,748,313 55,434,273 55,434,273 55,434,273 55,484,648
Number of shares 31 Dec B pcs 127,737,90 0 126,051,940 126,051,940 126,051,940 126,001,565
Total number of shares 31 Dec pcs 181,486,213 181,486,213 181,486,213 181,486,213 181,486,213
Total number of A shares, annual average pcs 54,390,973 55,434,273 55,434,273 55,434,825 55,484,648
Total number of B shares, annual average pcs 127,095, 24 0 126,051,940 126,051,940 126,051,388 126,001,565
Total number of shares, annual average pcs 181,486,213 181,486,213 181,486,213 181,486,213 181,486,213
1
Proposal by the Board of Directors. In addition, it is proposed that the Annual General Meeting would authorise the Board of Directors to decide at its discretion on the payment of dividend up to a maximum of EUR 5.4 million, EUR 0.03 per share.
2
The figures in 2016-2018 have been restated due to an error related to previous periods. The restatement had an impact on inventories, deferred tax assets and retained earnings in the consolidated statement of financial position and on material purchases and income taxes
in the consolidated statement of comprehensive income. More information on correction of the error is presented in the notes to the Financial statements 2019.
Information on shares
Oriola Financial review 2020
2222
Calculation of share related key figures
Earnings per share (EPS), EUR
=
Profit attributable to shareholders of the parent company
Average number of shares during the period excluding treasury shares
Equity per share, EUR
=
Equity attributable to shareholders of the parent company
Number of shares at the end of the period
Dividend per share, EUR
=
Dividends paid for the financial period
Number of shares at the end of the period
Payout ratio, %
=
Dividend per share
x 100
Earnings per share
Effective dividend yield, %
=
Dividend per share
x 100
Closing price on the last trading day of the financial period
Price/Earnings ratio (P/E)
=
Closing price on the last trading day of the financial period
Earnings per share
Average price of share, EUR
=
Trading volume, EUR
Average number of shares traded during the financial period
Market capitalisation, EUR
= Number of shares at the end of the financial period x closing price on the last trading day of the financial period
Information on shares
Oriola Financial review 2020
2323
Largest shareholders, 31 December 2020
By number of shares held A shares B shares Total shares % of total shares Votes % of total votes
1. Mariatorp Oy 6,000,000 14,000,000 20,000,000 11.02 134,000,000 11.14
2. Wipunen Varainhallinta Oy 2,600,000 6,250,000 8,850,000 4.88 58,250,000 4.84
3. Varma Mutual Pension Insurance Company 4,320,600 3,273,000 7,593,600 4.18 89,685,000 7.46
4. Ilmarinen Mutual Pension Insurance Company 3,606,414 2,299,018 5,905,432 3.25 74 , 427, 29 8 6.19
5. Mandatum Life Insurance Company Limited 973,500 3,810,523 4,784,023 2.64 23,280,523 1.94
6. Fennia Life Insurance Company Limited 214,000 2,372,385 2,586,385 1.43 6,652,385 0.55
7. Medical Investment Trust Oy 181,000 1,889,540 2,070,540 1.14 5,509,540 0.46
8. The Land and Water Technology Foundation 2,041,832 0 2,041,832 1.13 40,836,640 3.40
9. The Social Insurance Institution of Finland, KELA 0 1,991,481 1,991,481 1.10 1,991,481 0.17
10. Tukinvest Oy 1,983,526 0 1,983,526 1.09 39,670,520 3.30
11. Ylppö Jukka 1,496,562 286,992 1,783,554 0.98 30,218,232 2.51
12. Säästöpankki Kotimaa 619,649 876,939 1,496,588 0.82 13,269,919 1.10
13. Kaleva Mutual Insurance Company 27 7,9 42 1,200,000 1,47 7,9 42 0.81 6,758,840 0.56
14. Säästöpankki Pienyhtiöt 162,253 1,100,000 1,262,253 0.70 4,345,060 0.36
15. Ylppö Into 693,522 240,200 933,722 0.51 14,110,6 4 0 1.17
16. Laakkonen Mikko 196,320 689,080 885,400 0.49 4,615,480 0.38
17. Ehrnrooth Helene 0 804,333 804,333 0.44 804,333 0.07
18. Drumbo Oy 0 800,000 800,000 0.44 800,000 0.07
19. Paloniemi Jari 0 800,000 800,000 0.44 800,000 0.07
20. The State Pension Fund 0 800,000 800,000 0.44 800,000 0.07
Total 25,367,120 43,483,491 68,850,611 37.9 4 550,825,891 45.80
Nominee registred 2,633,514 25,125,336 27,75 8 , 8 5 0 15.30 77,795, 616 6.47
Oriola Corporation 63,650 109,556 173,206 0.10 1,382,556 0.11
Other 25,684,029 59,019,517 84,703,546 46.67 572,700,097 47.62
All shareholders total 53,748,313 127,737,900 181,486,213 100.00 1,202,704,160 100.00
Information on shares
Oriola Financial review 2020
2424
Financial indicators and performance measures
Financial indicators 2016-2020
Consolidated income statement
1
2020 2019
5
2018 restated
4
2017 restated
4
2016 restated
4
Net sales EUR million 1,800.8 1,721.3 1,552.2 1, 527.7 1,588.6
Adjusted EBIT EUR million 21.0 20.5 34.4 39.0 58.7
% of net sales % 1.2 1.2 2.2 2.6 3.7
EBIT EUR million 20.4 15.3 19.5 36.9 56.5
% of net sales % 1.1 0.9 1.3 2.4 3.6
Financial income and expenses EUR million -6.0 -5.2 -3.0 -3.9 -4.7
% of net sales % -0.3 -0.3 -0.2 -0.3 -0.3
Profit before taxes EUR million 14.3 10.1 16.6 32.9 51.8
% of net sales % 0.8 0.6 1.1 2.2 3.3
Profit for the period EUR million 11.3 8.0 10.8 25.2 40.9
% of net sales % 0.6 0.5 0.7 1.7 2.6
Consolidated balance sheet EUR million 2020 2019
5
2018 restated
4
2017 restated
4
2016 restated
4
Non-current assets 537.3 509.9 440.0 446.6 437.4
Goodwill 278.7 270.5 274.3 282.7 286.8
Current assets 628.3 520.7 484.2 474.2 487.1
Inventories 250.1 234.2 209.6 205.7 198.3
Equity attributable to the parent company shareholders 169.6 157. 2 177.9 196.1 204.3
Liabilities total 996.0 873.4 746.2 724.7 720.3
Interest-bearing liabilities 295.3 190.3 129.4 127.2 133.1
Non-interest-bearing liabilities 700.8 683.1 616.8 597. 5 587. 2
Total assets 1,165.6 1,030.6 924.2 920.8 924.5
Financial indicators and performance measures
Oriola Financial review 2020
2525
Key figures 2020 2019
5
2018 restated
4
2017 restated
4
2016 restated
4
Equity ratio % 14.8 15.5 19.5 21.7 22.6
Equity per share EUR 0.94 0.87 0.98 1.08 1.13
Return on capital employed (ROCE)
2
% 5.0 4.1 6.2 11.4 17. 5
Return on equity
2
% 6.9 4.9 5.8 12.8 21.0
Net interest-bearing debt EUR million 127.1 119.6 63.6 110. 2 72.3
Gearing % 75.0 76.1 35.8 56.2 35.4
Earnings per share from continuing operations EUR 0.06 0.04 0.06 0.14 0.23
Earnings per share incl. discontinued operations EUR 0.06 0.04 0.06 0.14 0.23
Average number of shares
3
pcs 181,388,782 181,394,589 181,360,503 181,328,408 181,389,391
Average number of personnel from continuing operations, full time equivalents pers. 2,687 2,800 2,699 2,686 2,425
Gross capital expenditure incl. discontinued operations EUR million 32.8 21.8 39.6 46.2 88.8
Adjusted EBIT
1
EUR million
Net sales
EUR million
2016 2017 2018 2019 2020
80
60
40
20
0
59
39
34
20
21
2016 2017 2018 2019 2020
1 800
1 600
1 200
800
400
0
1,589
1,528
1,552
1,721
1,801
1
The figures in 2016-2018 have been restated due to an error related to previous
periods. The restatement had an impact on inventories, deferred tax assets and
retained earnings in the consolidated statement of financial position and on material
purchases and income taxes in the consolidated statement of comprehensive income.
More information on correction of the error is presented in the notes to the Financial
statements 2019.
.
Refer to section Alternative performance measures, for definitions of key figures.
1
Continuing operations.
2
The comparative figures 2016-2017 include discontinued operations.
3
Company-owned treasury shares are not included.
4
The figures in 2016-2018 have been restated due to an error related to previous periods. The restatement had an impact on inventories, deferred tax assets and retained earnings in the consolidated statement of financial position and on material purchases
and income taxes in the consolidated statement of comprehensive income. More information on correction of the error is presented in the notes to the Financial statements 2019.
5
The Group applied IFRS 16 Leases with the date of initial application of 1 January 2019. The standard has a significant impact on the Group's non-current assets, interest-bearing liabilities and key figures.
Financial indicators and performance measures
Oriola Financial review 2020
2626
Alternative performance measures
In order to reflect the underlying business performance and to en-
hance comparability between financial periods Oriola discloses
certain performance measures of historical performance, financial
position and cash flows, as permitted in “Alternative performance
measures” guidance issued by the European Securities and Mar-
kets Authority (ESMA). These measures should not be considered
as a substitute for measures of performance in accordance with the
IFRS. These alternative performance measures are described in the
following tables:
Reconciliation of alternative performance measures to IFRS
Invoicing
EUR million 2020 2019
Net sales 1,800.8 1,721.3
+ Acquisition cost of consignment stock 1,945.9 1,993.2
+ Cash discounts 18.1 18.6
+ Exchange rate differences on sales 0.1 0.0
Invoicing 3,764.9 3,733.1
Adjusted EBIT
EUR million 2020 2019
EBIT 20.4 15.3
- Adjusting items included in EBIT 0.6 5.1
Adjusted EBIT 21.0 20.5
Calculation of alternative performance measures
Alternative performance measures on a constant currency basis
EUR million 2020 2019
Invoicing 3,764.9 3,733.1
Translation difference -26.3 82.0
Invoicing calculated on a constant
currency basis 3,738.6 3,815.1
Net sales 1,800.8 1,721.3
Translation difference -13.7 42.1
Net sales calculated on a constant
currency basis 1,787.1 1,763.4
Adjusted EBIT 21.0 20.5
Translation difference -0.2 0.4
Adjusted EBIT calculated on a constant
currency basis 20.8 20.9
Alternative performance measure Definitions
Reason for use of the alternative performance
measure
Invoicing =
Net sales + acquisition cost of consignment stock + cash discounts
+ exchange rate differences on sales
Invoicing describes the volume of the busi-
ness.
EBIT =
Net sales less material purchases and exchange differences on sales
and purchases, less employee benefit expenses and other opera-
ting expenses, less depreciation, amortisation and impairment plus
other operating income plus share of results in joint venture
EBIT shows result generated by the business.
Adjusted EBIT = EBIT excluding adjusting items Oriola discloses adjusted EBIT in order to reflect
the underlying business performance and
to enhance comparability between financial
periods.
Adjusting items
Adjusting items include gains or losses from the sale or discontinua-
tion of business operations or assets, gains or losses from restruc-
turing business operations, and impairment losses of goodwill and
other non-current assets, or other income or expenses arising from
rare events, and changes in estimates regarding the realisation
of contingent consideration arising from business acquisitions.
Adjusting items are specified in note 4.1. Segment reporting.
Invoicing calculated on a constant
currency basis
Invoicing calculated with the average exchange rate
of the corresponding period of the comparative year.
Invoicing, net sales, and adjusted EBIT on a
constant currency basis describe the develop-
ment of the business without changes due to
fluctuating foreign exchange rates and thus
enhance the comparability between financial
periods.
Net sales calculated on a constant
currency basis
Net sales calculated with the average exchange rate
of the corresponding period of the comparative year.
Adjusted EBIT calculated on a
constant currency basis
Adjusted EBIT calculated with the average exchange rate of the
corresponding period of the comparative year.
Net debt = Interest-bearing liabilities – cash and cash equivalents
Net debt is an indicator to measure the total
external debt financing of the company.
Investments =
Capitalised investments in property, plant and equipment and in
intangible assets including goodwill arising from business combi-
nations, as well as investments in associates and joint ventures.
Investments provide additional information of
the cash flow need of the business operations.
Investments by business area are presented in
note 4.1. Segment reporting.
Return on capital employed
(ROCE), % =
=
EBIT
x 100
Return on capital employed measures how
efficiently the Group generates profits from its
capital employed.
Total assets – Non-interest-bearing liabilities (average between the
beginning and the end of the year)
Return on equity (ROE), % =
Profit for the period
x 100
Return on equity measures the Group's profi-
tability by showing how much profit is gene-
rated with the funds invested to the Group by
the shareholders.
Equity total (average between the beginning and the end of the
year)
Gearing, % =
Net debt
x 100
Gearing provides information of the Group's
financial risk level and the level on the Group's
indebtedness.
Equity total
Equity ratio, % =
Equity total
x 100
Equity ratio provides information on the
Group's financial risk level and the level of the
Group's capital used in operations.
Total assets – Advances received
Financial indicators and performance measures
Oriola Financial review 2020
Financial Statements 2020
Oriola Financial review 2020
28
Consolidated statement of comprehensive income (IFRS)
EUR million Note 2020 2019
Net sales 4.2. 1,800.8 1,721.3
Other operating income 4.2. 9.5 11.1
Materials and supplies 4.3. -1,438.7 -1,364.5
Employee benet expenses 4.4. -172.3 -173.4
Other operating expenses 4.3. -137. 2 -133.9
Depreciation, amortisation and impairments 6.1./6.2. -41.6 -45.3
EBIT 20.4 15.3
Financial income and expenses 8.1. -6.0 -5.2
Prot before taxes 14.3 10.1
Income taxes 9.1. -3.1 -2.1
Prot for the period 11. 3 8.0
Other comprehensive income
Items which may be reclassied subsequently to prot or loss:
Translation dierences recognised in comprehensive income during the reporting period 9.8 -4.4
Translation dierences reclassied to prot and loss during the reporting period - 0.0
Cash ow hedge 8.3. -0.2 0.2
Income tax relating to other comprehensive income 9.1. 0.0 -0.0
Items which will not be reclassied to prot or loss:
Financial assets recognised at fair value through other comprehensive income 8.2. 8.0 -
Actuarial gains/losses on dened benet plans 4.4. -0.4 -2.8
Income tax relating to other comprehensive income 9.1. 0.0 0.6
7.6 -2.2
Total comprehensive income for the period 28.6 1.6
Prot attributable to
Parent company shareholders 11. 3 8.0
Total comprehensive income attributable to
Parent company shareholders 28.6 1.6
Earnings per share attributable to parent company shareholders, EUR:
Basic 8.5. 0.06 0.04
Diluted 8.5. 0.06 0.04
28
Financial statements 2020
Oriola Financial review 2020
29
Consolidated statement of nancial position (IFRS)
EUR million Note 31 Dec 2020 31 Dec 2019
ASSETS
Non-current assets
Property. plant and equipment 6.1. 162.2 158. 3
Goodwill 6.2. 278.7 270.5
Other intangible assets 6.2. 69.8 66.9
Other non-current assets 6.3. 22.3 9.7
Deferred tax assets 9.2. 4.4 4.5
Non-current assets total 537. 3 509.9
Current assets
Inventories 5.2. 250.1 234.2
Trade receivables 5.1. 188.6 187.4
Income tax receivables 5.1. 3.4 6.1
Other receivables 5.1. 18.1 22.2
Cash and cash equivalents 8.2. 168.2 70.8
Current assets total 628.3 520.7
ASSETS TOTAL 1,165.6 1,030.6
EUR million Note 31 Dec 2020 31 Dec 2019
EQUITY AND LIABILITIES
Equity
Share capital 36.2 36.2
Fair value reserve 7.7 -0.1
Contingency fund 19.4 19.4
Invested unrestricted equity reserve 74.8 74.8
Other reserves 0.1 0.1
Translation dierences -23.1 -32.9
Retained earnings 54.5 59.7
Equity attributable to the parent company shareholders 8.4. 169.6 157. 2
Non-current liabilities
Deferred tax liabilities 9.2. 13.9 14.3
Pension obligations 4.4. 18.9 17.1
Interest-bearing liabilities 8.2. 127. 8 123.6
Other non-current liabilities 5.3. 0.9 0.7
Non-current liabilities total 161.6 155.7
Current liabilities
Trade payables 5.3. 620.3 606.7
Provisions 5.4. 0.8 2.8
Interest-bearing liabilities 8.2. 167. 4 66.8
Income tax payables 5.3. - 1.0
Other current liabilities 5.3. 45.9 40.4
Current liabilities total 834.5 717.7
EQUITY AND LIABILITIES TOTAL 1,165.6 1,030.6
29
Financial statements 2020
Oriola Financial review 2020
30
Consolidated statement of cash ows (IFRS)
EUR million Note 2020 2019
Net cash ow from operating activities
Prot for the period 11. 3 8.0
Adjustments
Depreciation and amortisation 6.1./6.2. 41.2 41.8
Impairment 6.1./6.2. 0.5 3.5
Financial income and expenses 8.1. 6.0 5.2
Income taxes 9.1. 3.1 2.1
Change in pension asset and pension obligation 0.7 0.7
Other adjustments -2.0 1.0
Change in working capital
Change in current receivables increase (-)/ decrease (+) 9.1 -15.1
Change in inventories increase (-)/ decrease (+) -8.6 -27.2
Change in non-interest-bearing current liabilities
increase (+)/ decrease (-) 3.6 68.7
Interest paid and other nancial expenses -3.1 -3.7
Interest received and other nancial income 0.4 0.6
Income taxes paid -3.6 -1.2
Net cash ow from operating activities 58.3 84.4
Net cash ow from investing activities
Investments in property, plant and equipment and intangible assets 6.1./6.2. -27.1 -21.2
Proceeds from sales of property, plant and equipment
and intangible assets 6.1./6.2. 0.3 0.1
Investments in joint ventures 6.3. - -0.7
Investments in other shares and shareholdings 6.3. -4.8 -0.0
Proceeds from other shares and shareholdings 6.3. 0.2 -
Net cash ow from investing activities -31.4 -21.8
EUR million Note 2020 2019
Net cash ow from nancing activities
Proceeds from long-term loans 30.0 27. 5
Repayments of long-term loans -1.1 -28.2
Proceeds from short-term loans 40.0 -
Repayments of short-term loans -10.0 -
Change in other current nancing
1
47.4 -21.2
Amortisations of lease liabilities -19.6 -19.3
Purchasing of own shares -0.1 -0.1
Dividends paid -16.3 -16.3
Net cash ow from nancing activities 70.4 -57.6
Net change in cash and cash equivalents 97. 3 5.0
Cash and cash equivalents at the beginning of the period 70.8 65.8
Translation dierences 0.1 -0.0
Net change in cash and cash equivalents 97. 3 5.0
Cash and cash equivalents at the end of the period 8.2. 168.2 70.8
1
Includes cash ows from commercial papers.
30
Financial statements 2020
Oriola Financial review 2020
31
Consolidated statement of changes in equity (IFRS)
EUR million Note Share capital Funds
Translation
dierences
Retained
earnings Equity total
Equity 1 January 2019 36.2 94.0 -28.6 76.3 177.9
Adjustment of adoption of IFRS 16
1
- - - -6.3 -6.3
Restated equity 1 January 2019 36.2 94.0 -28.6 70.0 171.6
Comprehensive income for the period
Net prot for the period - - - 8.0 8.0
Other comprehensive income:
Cash ow hedge 8.3. - 0.2 - - 0.2
Actuarial gains and losses 4.4. - - - -2.8 -2.8
Income tax relating to
other comprehensive income 9.1. - -0.0 - 0.6 0.6
Translation dierence - - -4.4 - -4.4
Translation dierence
reclassied to prot and loss - - 0.0 - 0.0
Comprehensive income for the period, total - 0.1 -4.4 5.8 1.6
Transactions with owners
Dividend distribution 8.5. - - - -16.3 -16. 3
Share-based incentive 4.4. - - - 0.4 0.4
Purchase of own shares - - - -0.1 -0.1
Transactions with owners, total - - - -16.1 -16.1
Equity 31 December 2019 36.2 94.2 -32.9 59.7 157.2
Comprehensive income for the period
Net prot for the period - - - 11. 3 11.3
Other comprehensive income:
Financial assets recognised at fair value
through other comprehensive income 8.2. - 8.0 - - 8.0
Cash ow hedge 8.3. - -0.2 - - -0.2
Actuarial gains and losses 4.4. - - - -0.4 -0.4
Income tax relating to other
comprehensive income 9.1. - 0.0 - 0.0 0.1
Translation dierence - - 9.8 - 9.8
Comprehensive income for the period, total - 7. 8 9.8 10.9 28.6
Transactions with owners
Dividend distribution 8.5. - - - -16.3 -16. 3
Share-based incentive 4.4. - - - 0.2 0.2
Purchase of own shares - - - -0.1 -0.1
Transactions with owners, total - - - -16.2 -16.2
Equity 31 December 2020 36.2 102.0 -23.1 54.5 169.6
1
Net of tax
31
Financial statements 2020
Oriola Financial review 2020
32
Notes to the consolidated nancial
statements
1. Basic information on the company
in Espoo , Finland. Oriola and its subsidiaries together form the con-
solidated Oriola Group. The consolidated nancial statements were
approved for publication by the Board of Directors of Oriola Corpo-
ration on 18 February 2021. In accordance with Finland’s Limited Li-
ability Companies Act, the shareholders have the right to approve
or reject the nancial statements at the General Meeting held after
their publication. The General Meeting may also decide to make
amendments to the nancial statements. The company’s business
ID is 1999215-0. Copies of the consolidated nancial statements of
the Oriola Group are available from the head oce of Oriola Cor-
poration at the following address: Orionintie 5, FI-02200 Espoo, Fin-
2. Basis of presentation
fair value through other comprehensive income, deriva-
tives and share-based payments. The Group has applied
the standards and interpretations published by the Inter-
national Accounting Standards Board (IASB) that are man-
datory as of 1 January 2020. These standards did not have
a signicant impact on the Group in the current reporting
period and they are not expected to have a material im-
pact on the Group in the current or future reporting peri-
ods and on foreseeable future transactions.
3. Use of estimates and judgement
Item Uncertainty Note
Dened benets Discount factor 4.4.
Provisions Recognition / Estimate 5.4.
Impairment testing
Projection parameters /
Estimate 6.2.
Other non-current assets Valuation / Estimate 6.3.
Lease liabilities Lease term / Estimate 7.1.
Deferred tax assets Recognition / Estimate 9.2.
The preparation of consolidated nancial statements in ac-
cordance with IFRS requires the application of judgement by
management in making estimates and assumptions. Such
estimates and assumptions have an impact on the assets and
liabilities reported as at the end of the reporting period, and
on the presentation of contingent assets and liabilities in the
notes to the consolidated nancial statements as well as on
the income and expenses reported for the nancial year. The
estimates are based on the management’s best knowledge
about the facts and as such actual results may dier from the
estimates and assumptions used. Estimates have been used in
determining the amount of items reported in the consolidated
nancial statements, such as possible impairment of goodwill
and other assets, determination of pension assets and pension
obligations related to dened benet pension plans, economic
lives of tangible and intangible assets, lease liabilities, provi-
sions and income taxes. The application of accounting princi-
ples also requires judgement.
The consolidated nancial statements are prepared in ac-
cordance with International Financial Reporting Standards
(IFRSs) including the IAS and IFRS standards as well as the
SIC and IFRIC interpretations valid as at 31 December 2020.
The International Financial Reporting Standards refer to
standards and interpretations that have been approved for
application in the EU in the Finnish Accounting Act and the
provisions issued pursuant to it according to the proce-
dures provided for in EU regulation (EC) No. 1606/2002.
The consolidated nancial statements are presented for
the 12-month period 1 January – 31 December 2020.
The nancial statements are presented in EUR million
and they have been prepared under the historical cost
convention, except for nancial assets recognised at fair
value through prot or loss, nancial assets recognised at
During 2020, the COVID-19 pandemic has rapidly changed Orio-
la’s operating environment as the restrictions set by the authori-
ties and consumer caution impacted the consumer behaviour.
The measures caused by the pandemic have led to the decrease
of healthcare services as well as aected the demand for pharma-
ceuticals and health and wellbeing products. This has inevitably
also had an impact on Oriola’s business.
In Sweden, Oriola has received government compensations for
socials costs, sick leaves and short-term lay-os totalling EUR 1.5
million to cover the negative impacts of the pandemic. The com-
pensations are reported as a reduction of personnel expenses in
the consolidated statement of comprehensive income.
The impacts of the pandemic on the valuation of Oriola’s assets
have been closely monitored during the reporting period. Based on
the assessments, COVID-19 pandemic is currently not expected to
have such long-term impacts on Oriola’s nancial performance, that
would require adjustments to the carrying amounts of the assets.
During the second quarter of 2020, Oriola Corporation pre-
pared for the instability in the nancing markets caused by the
COVID-19 pandemic by drawing term-loans totalling EUR 70 mil-
lion. At the end of the reporting period, the nancial covenants
included in the agreements with the nancial institutions were
fullled.
Key estimates and judgement which are material to the reported
results and nancial position are presented in the following notes:
32
Financial statements 2020
Oriola Financial review 2020
33
20
-0
21
3
3
-5
In order to reect the underlying business performance and to en-
hance comparability between nancial periods Oriola discloses Ad-
justed EBIT as permitted in ESMA (European Securities and Markets
Authority) guidelines on Alternative Performance Measures. These
measures should not be considered as a substitute for measures of
performance in accordance with the IFRS. The reporting segments’
EBIT is reported excluding adjusting items. In addition, Oriola uses
“Invoicing” as the measure to describe the business volume.
Adjusted EBIT excludes gains or losses from the sale or discontinua-
tion of business operations or assets, gains or losses from restruc-
turing business operations, and impairment losses of goodwill and
other non-current assets, or other income or expenses arising from
rare events and changes in estimates regarding the realisation of
contingent consideration arising from business acquisitions.
Oriola’s agreements with pharmaceutical companies are either
wholesale agreements where Oriola buys the products into own
stock or agreements where Oriola delivers the products from con-
signment stock. Oriola reports invoicing of both type of agree-
ments as it describes the volume of the business.
4. Operating result
4.1. Segment reporting
Oriola’s operating and reporting segments consist of busi-
ness areas and are reported as in internal reporting provided
to the Chief Executive Ocer, the chief operating decision
maker responsible for allocating resources and assessing
performance of the business areas.
The assets and liabilities of reporting segments include
items directly attributable to a segment and items which
can be allocated to segments. Group items include nan-
cial items as well as items related to corporate functions.
Intra-segment pricing is determined on an arm’s length
basis.
Oriola's business areas and operating and reporting segments are
Consumer, Pharma and Retail.
Consumer business area oers products and services for health and
wellbeing for customers through Kronans Apotek, the third largest
pharmacy chain in Sweden.
Pharma business area provides tailored logistics, expert and advi-
sory services for pharmaceutical companies, as well as a wide range
of pharmaceutical products for pharmacies, hospital pharmacies
and veterinarians.
Retail business area oers a wide range of health and wellbeing
products to pharmacies, groceries, veterinarians, private and public
healthcare operators and retailers, as well as services for pharma-
cies, including stang and dose dispensing services.
The geographical areas of Oriola are Finland, Sweden and other
countries. Net sales are divided by the countries in which the cus-
tomers are located. Assets and investments are divided according
to the country in which they are located.
2016 2017 2018 2019 2020
4,000
3,000
2,000
1,000
0
3,364
3,336
3,518
3,733
Invoicing
EUR million
Adjusted EBIT
EUR million
2019 Consumer Pharma Retail Group items 2020
25
20
15
10
5
0
3,765
33
Financial statements 2020
Oriola Financial review 2020
34
Reporting segments
EUR million
2020 Note Consumer Pharma Retail Group items Total
External invoicing 798.1 2,662.8 304.0 - 3,764.9
Internal invoicing 0.1 243.2 182.7 -426.0 -
Invoicing 798.2 2,906.0 486.7 -426.0 3,764.9
Sales to external customers 780.6 718.0 302.2 - 1,800.8
Sales to other segments 0.1 243.2 182.7 -426.0 -
Net sales 4.2. 780.7 961.2 484.9 -426.0 1,800.8
EBIT 15.3 12.4 0.9 -8.2 20.4
Adjusted EBIT 14.4 12.8 2.0 -8.2 21.0
Assets 442.3 374.1 132.5 216.7 1,165.6
Liabilities 123.4 586.6 67.0 219.1 996.0
Investments 6.1./6.2. 13.0 9.1 4.9 5.9 32.8
Depreciation, amortisation and impairments 6.1./6.2. 26.7 8.4 6.5 0.1 41.6
Average number of personnel, full time equivalents 1,596 451 562 77 2,687
2019
External invoicing 767.9 2,680.5 284.8 - 3,733.1
Internal invoicing 0.2 230.2 172.1 -402.5 -
Invoicing 768.1 2,910.6 456.9 -402.5 3,733.1
Sales to external customers 750.0 6 87.9 283.4 - 1,721.3
Sales to other segments 0.2 230.2 172.1 -402.5 -
Net sales 4.2. 750.1 918.1 455.5 -402.5 1,721.3
EBIT 5.3 17.1 -1.4 -5.7 15.3
Adjusted EBIT 11.7 17.7 -0.9 -8.1 20.5
Assets 426.3 356.5 138.5 109.2 1,030.6
Liabilities 119.1 594.4 47.7 112.1 873.4
Investments 6.1./6.2. 9.2 6.1 5.8 0.7 21.8
Depreciation, amortisation and impairments 6.1./6.2. 31.3 8.2 5.7 0.1 45.3
Average number of personnel, full time equivalents 1,674 486 570 70 2,800
Refer to section Alternative performance measures for denitions of key gures and reconciliation to measures presented in the consolidat-
ed income statement and balance sheet prepared in accordance with IFRS.
Adjusting items
Adjusting items included in EBIT
EUR million 2020 2019
Restructuring costs 0.8 -5.1
Costs and impairment charges relating
to Hehku 0.1 2.4
Costs and impairment charges relating
to onerous contract -1.2 -
Impairment of other intangible assets - -2.5
Other -0.4 -
Total -0.6 -5.1
Adjusting items in 2020 consist of changes in restructuring provi-
sions, restructuring costs related to the changes in the Group Man-
agement Team, costs relating to an onerous contract in Retail busi-
ness area, an adjustment to current liabilities related to the Swedish
Consumer business as well as proceeds related to Hehku. Adjusting
items in 2019 consist of restructuring costs including impairment
charges totalling EUR 1.0 million, impairment charges on intangible
assets related to the Consumer business in Sweden as well as a pro-
vision release relating to Hehku.
Geographical information
EUR million
2020 Sweden Finland
Other
countries Total
Sales to external customers 1,275.6 404.7 120.5 1,800.8
Assets 784.6 381.1 - 1,165.7
Investments 21.9 10.9 - 32.8
Average number of personnel,
full time equivalents 2,084 603 - 2,687
2019
Sales to external customers 1,218.8 407.9 94.6 1,721.3
Assets 760.5 270.1 - 1,030.6
Investments 18.1 3.8 - 21.8
Average number of personnel,
full time equivalents 2,097 701 1 2,800
34
Financial statements 2020
Oriola Financial review 2020
35
• Stang: The Group oers stang services to
pharmacies and pharmaceutical companies. The
performance obligation is the delivery of the stang
services. The transaction price is the hourly based price
according to work performed. The revenue is recognised
over the period during which the service is performed.
• Sale of other services: The Group sells logistics, web
and other value-added services to pharmaceutical
companies, retailers and hospitals. The performance
obligation is sales of services, which is based on a
contract for delivering services to the customer. The
revenue is recognised over the period during which the
service is performed at the amount totalling the price of
service performed less any possible discounts.
Net sales by currency
2020 2019
Million SEK EUR SEK EUR
Sweden 14,549.8 1,387. 7 13,821.1 1,305.2
Finland 413.1 416.1
Total 1,800.8 1,721.3
Disaggregation of revenue
In the following table, the Group's external revenue is disaggregat-
ed by the Group's major revenue streams and reconciled with the
Group's reportable segments.
EUR million
2020 Consumer Pharma Retail Total
Wholesale - 658.0 166.3 824.3
Retail sale 780.6 - - 780.6
Services - 60.0 135.9 195.9
Total 780.6 718.0 302.2 1,800.8
2019 Consumer Pharma Retail Total
Wholesale - 623.8 166.6 790.4
Retail sale 750.0 - - 750.0
Services - 64.2 116 .7 180.9
Total 750.0 687.9 283.4 1,721.3
4.2. Net sales and other operating income
The Group’s net sales include income from the sale of goods,
distribution fees and the sale of services adjusted with indi-
rect taxes, discounts and currency translation dierences re-
sulting from sales in foreign currencies. Revenue is measured
based on the consideration specied in a contract with a
customer and excludes amounts collected on behalf of third
parties. The Group recognises revenue when it transfers con-
trol over a product or service to a customer.
Oriola’s agreements with pharmaceutical companies are ei-
ther wholesale agreements where Oriola buys the prod-
ucts into own stock or agreements where Oriola delivers the
products from consignment stock. Oriola reports invoicing
of both type of agreements as it describes the volume of the
business. The denition of invoicing is described in section
Alternative performance measures. Invoicing by business
area is presented in note 4.1. Segment reporting.
The Group’s revenues derive from the following revenue
streams: Wholesale, retail sale, sale of logistics services, dose
dispensing, stang and sale of other services. In the following
section the principal activities of the dierent revenue streams
are described as well as the nature of performance obligations.
Wholesale: The Group sells pharmaceutical products and
traded goods to pharmacies, veterinarians, hospitals and
other retailers. The performance obligation is sale of goods,
which is based on sales order. The transaction price is the
price of goods. Revenue is recognised when the Group
transfers control of goods to customer at the amount
which the Group expects to be entitled, i.e. the price of
goods sold less any possible discounts.
Retail sale: The Group has retail pharmacies that sell phar-
maceuticals and healthcare products to private customers.
The performance obligation is sale of goods. The perfor-
mance obligation is satised, when the products are sold to
customers in pharmacies. The Group has a customer loyalty
bonus discount programme related to the non-prescription
retail sale in Sweden. In the customer loyalty programme
the customers earn customer loyalty points based on their
purchases of non-prescription products. The points are con-
verted to digital vouchers, which the customers can use to
pay for their purchases. The points provide a material right to
customers that they would not receive without entering into
a contract. Therefore, the promise to provide digital vouchers
to the customer is a separate performance obligation. The
points expire in one year from purchase if not converted to
digital vouchers. The digital vouchers expire in two months,
if not used before that. The net sales are adjusted with cus-
tomer loyalty points earned by the customers. A contract lia-
bility is recognised for the points customers in the customer
loyalty programme have earned based on their purchases
and for the outstanding digital vouchers. The contract liabil-
ity is recognised until the points are redeemed or expire.
Services: The Group oers a variety of services to the cus-
tomers. These services can be divided to the following rev-
enue streams: Sale of logistics services, dose dispensing,
stang and sale of other services.
• Sales of logistics services: The Group has contracts
based on consignment inventory with pharmaceutical
companies. In such contracts the Group acts as an agent
between the pharmaceutical company and the end-
customer and the performance obligation is sale of
logistics and transportation services to pharmaceutical
companies. The revenue is recognised on a net basis as a
fee or commission.
• Dose dispensing: The Group oers dose dispensing
services to pharmacies in Sweden and Finland and county
councils in Sweden. The performance obligation is sale
of dose dispensed goods. The transaction price includes
the price of goods sold and the price of dose dispensing.
The revenue is recognised when the control of the dose
dispensed goods is transferred to the customer.
35
Financial statements 2020
Oriola Financial review 2020
36
Contract balances
The Group has recognised the following liabilities related to con-
tracts with customers:
EUR million 31 Dec 2020 31 Dec 2019
Contract liabilities
(included in other current liabilities)
- Customer loyalty programme 2.0 2.3
- Advances received related to other services 0.0 0.1
Total 2.1 2.4
The amount of EUR 2.4 million recognised in contract liabilities at
the beginning of the period has been recognised as revenue for the
period ended 31 December 2020.
No revenue was recognised in the reporting period from perfor-
mance obligations satised (or partially satised) in previous periods.
No information is provided about remaining performance obliga-
tions at the end of the reporting period that have an original ex-
pected duration of one year or less.
Other operating income
EUR million 2020 2019
Gains on sales of tangible
and intangible assets 0.1 0.0
Rental income 0.2 0.2
Service charges 0.1 0.3
Marketing contribution 8.4 9.2
Other operating income 0.7 1.3
Total 9.5 11.1
4.3. Operating expenses
Operating expenses include material purchases, employee benet
expenses and other operating expenses as presented on the face
of the statement of comprehensive income. Employee benet ex-
penses are specied in note 4.4. Employee benets.
Materials and supplies
Materials and supplies include materials, procurement and
other costs related to manufacturing and procurement.
Materials and supplies
EUR million 2020 2019
Purchases during the period 1,447.1 1,386.7
Change in inventories -8.6 -22.3
Products for own use -0.1 -0.2
Foreign exchange dierences 0.4 0.2
Total 1,438.7 1,364.5
2020
Million SEK EUR
Sweden 11,508 .1 1,097. 6
Finland 341.1
Total 1,438.7
Other operating expenses
EUR million 2020 2019
Freights and other variable costs 39.3 34.6
Marketing 12.4 13.5
Information management 19.7 19.3
Premises 10.1 12.0
External services 32.6 31.3
Other operating expenses 23.1 23.2
Total 137.2 133.9
Other operating expenses in 2019 include restructuring costs total-
ling EUR 2.3 million as well as a provision release totalling EUR 2.4
million relating to Hehku.
Audit fees
EUR million 2020 2019
To member rms of KPMG network
Audit related services 0.2 0.2
Tax and other non-audit services 0.1 0.0
Total 0.3 0.2
The member rms of KPMG network have provided non-audit servic-
es to entities of Oriola Group in total EUR 58.7 (17.7) thousand during
the nancial year 2020.
2019
Million SEK EUR
Sweden 10,921.6 1,031.4
Finland 333.1
Total 1,364.5
Materials and supplies by currency
36
Financial statements 2020
Oriola Financial review 2020
37
Consumer Pharma Retail Group administration
Employees by business area
1
1
At year-end, full time equivalents
Sweden Finland
Employees by country
1
1
At year-end, full time equivalents
In 2020, Oriola has received in Sweden government compensa-
tions for socials costs, sick leaves and short-term lay-os totalling
EUR 1.5 million to cover the negative impacts of the COVID-19
pandemic. The compensations are reported as a reduction of per-
sonnel expenses in the consolidated statement of comprehensive
income.
4.4. Employee benets
The Group’s employee benets include wages, salaries
and bonuses paid to employees, pension benets, other
long-term employee benets and share-based payments.
Pension benets: The Group’s pension arrangements are
in compliance with each country’s local regulations and
practices. The pension arrangements of the Group compa-
nies comprise both dened contribution plans and dened
benet plans. The payments to the dened contribution
plans are recognised as expenses in the statement of com-
prehensive income in the period in which they incur. Under
a dened benet pension plan, the Group’s obligation is
not limited to the payments made under the plan but also
includes the actuarial and investment risks related to the
pension plan in question.
The pension expenses related to dened benets have
been calculated using the projected unit credit method.
Pension expenses are recognised as expenses by distribut-
ing them over the estimated period of service of the per-
sonnel concerned. The amount of the pension obligation is
the present value of the estimated future pensions payable.
Other long-term employee benets consist of a long-
service benet scheme operated by the Group. The long-
service benet scheme is presented as other non-current
liabilities in the statement of nancial position.
Share-based payments: Share incentive plans are meas-
ured at fair value at the grant date, and are recognised as
expenses within the vesting period. The fair value of the
share is the share price on the date at which the target
group has agreed to the conditions of the plan reduced by
the estimated dividends. The fair value of the cash part is
measured at each balance sheet date until the end of the
Employee benet expenses
EUR million 2020 2019
Wages, salaries and bonuses 126.7 127.5
Share-based payments 0.3 0.4
Pension costs
Dened contribution plans 11.4 12.3
Dened benet plans 0.7 0.7
Other personnel expenses 33.1 32.5
Total 172.3 173.4
vesting period based on the share price at the end of the
reporting period. Both the equity-settled component and
the unpaid cash-settled part are credited to retained earn-
ings.
Government grants received to compensate costs are
recognised in the statement of comprehensive income as
reduction of expenses in the reporting period, for which
the compensation is received.
1,621
1,692
468
448
590
583
68
78
2020
2019
2,138
2,165
653
592
2020
2019
37
Financial statements 2020
Oriola Financial review 2020
38
Change in dened benet obligation and plan assets:
EUR million
Present
value of
funded
obligation
Fair value
of plan
assets Total
1 Jan 2019 16.2 -2.3 13.9
Current service cost 0.7 - 0.7
Interest cost or income 0.3 -0.0 0.3
17. 3 -2.3 14.9
Remeasurements
Actuarial gains (-) and losses (+)
arising from changes in nancial
assumptions 3.2 -0.3 3.0
Experience prots (-) or losses (+) -0.2 - -0.2
20.3 -2.6 17.7
Dierences in foreign exchange rates -0.2 - -0.2
Contributions
Plan participants - -0.0 -0.0
Expenses arising from the plans
Benets paid -0.5 0.2 -0.3
31 Dec 2019 19.5 -2.4 17.1
Current service cost 0.8 - 0.8
Interest cost or income 0.2 -0.0 0.2
20.6 -2.4 18.1
Remeasurements
Actuarial gains (-) and losses (+)
arising from changes in nancial
assumptions 1.3 -0.1 1.2
Experience prots (-) or losses (+) -0.8 - -0.8
21.0 -2.5 18.5
Dierences in foreign exchange rates 0.7 - 0.7
Contributions
Plan participants - -0.0 -0.0
Expenses arising from the plans
Benets paid -0.5 0.2 -0.3
31 Dec 2020 21.3 -2.3 18.9
Signicant actuarial assumptions 31 Dec: 2020 2019
Discount rate (%) 0.20-0.95 0.40-1.45
Salary increases (%) 1.20-3.25 1.40-3.45
Mortality assumptions are made on the basis of actuarial guidelines
and they are founded on statistics published in each region and on
experience.
Sensitivity of the dened benet obligation to changes in the most sig-
nicant assumptions:
Assumption
Change in
assumption as
percentage point
Eect of change
in assumption %
Decrease in discount rate -0.5 increase by 12.2
Increase in discount rate +0.5 reduce by 10.5
Increase in salaries +0.5 increase by 4.4
Increase in benets +0.5 increase by 11.8
The table presents a sensitivity analysis for the most signicant ac-
tuarial assumptions, showing the eect of any change in actuarial
assumptions on the dened benet pension obligation.
The eects of the above sensitivity analysis have been calculated so
that when the eect of the change in the assumption is calculated all
other assumptions are expected to remain unchanged. This is unlike-
ly to happen and in some assumptions changes may correlate with
each other. The sensitivity of the dened benet obligation has been
calculated using the same method as in the calculation of the pen-
sion obligation to be entered in the statement of nancial position
(the current value of the dened benet obligation at the end of the
reporting period using the projected unit credit method).
The most signicant risks arising from dened benet pension plans:
Life expectancy: Most of the plan obligations are connected with
generating life-long benets for employees and for this reason a
higher life expectancy will mean more obligations under the plan.
Ination risk: Some of the Group’s pension obligations are linked to
ination, and higher ination will lead to higher liabilities.
Changes in bond yields: A decrease in bond yields will increase plan
liabilities, although this will be partially oset by an increase in the
value of the plans’ assets.
Net dened benet liability in the statement of nancial position
is dened as follows:
EUR million 2020 2019
Present value of funded obligations 21.3 19.5
Fair value of plan assets -2.3 -2.4
Decit/surplus 18.9 17.1
Net liability(+) / assets (-) in the state-
ment of nancial position 18.9 17.1
Post-employment benets
The Oriola Group has dened benet pension plans in Finland and
Sweden.
In Finland, the dened benets plans consist of a voluntary insur-
ance plan, which is a nal average pay pension plan concerning ad-
ditional pensions. The benets are insured with OP Life Assurance.
In Sweden, some of the oce employees are covered by the de-
ned benet plan ITP 2 and others by the dened contribution plan
ITP 1. The employees have a dened contribution plan according
to local legislation. In ITP 2, the company can recognise the old age
pension liabilities in its statement of nancial position or, alterna-
tively, pay the pension expenses to the pension insurance company
Alecta. Oriola Sweden AB has recognised its ITP 2 old age pension
liabilities in full in its statement of nancial position. Oriola Swe-
den AB’s old age pension benets other than ITP 2 are insured with
Alecta. All Kronans Droghandel Apotek AB’s pension benets are
based on dened contribution and insured with Alecta.
Employer contributions to post-employment benefit plans are
expected to be EUR 0.4 million during 2021 financial year. The
weighted average duration of the defined benefit obligation is
22.1 years.
All plan assets of the Group relate to the Finnish voluntary insur-
ance plan and are held by the insurance company. They are part of
the insurance company’s investment assets and are considered to
be unquoted.
38
Financial statements 2020
Oriola Financial review 2020
39
performance period 2019-2021 correspond to the value of an ap-
proximate maximum total of 1,700,000 Oriola Corporation Class B
shares including also the proportion to be paid in cash. The potential
reward will be paid partly in Oriola Corporation Class B shares and
partly in cash in spring 2022 after the end of the performance period.
The potential reward from the performance period 2020–2022 will
be based on the Group's earnings per share (EPS) and Group’s total
shareholder return (TSR). The rewards to be paid on the basis of the
performance period 2020-2022 correspond to the value of an ap-
proximate maximum total of 1,820,000 Oriola Corporation Class B
shares including also the proportion to be paid in cash. The potential
reward will be paid partly in Oriola Corporation Class B shares and
partly in cash in spring 2023 after the end of the performance period.
The potential reward from the performance period 2021–2023 will
also be based on the Group's earnings per share (EPS) and Group’s
total shareholder return (TSR). The rewards to be paid on the basis
of the performance period 2021-2023 correspond to the value of an
approximate maximum total of 2,700,000 Oriola Corporation Class B
shares including also the proportion to be paid in cash. The potential
reward will be paid partly in Oriola Corporation Class B shares and
partly in cash in spring 2024 after the end of the performance period.
The cash proportion is intended to cover taxes and tax-related costs
arising from the reward to a key person.
Expenses recognised for the incentive plan were EUR 0.2 (0.0) million
in 2020.
One-o incentive plan 2019 - 2020
On 14 December 2018 The Board of Directors of Oriola Corporation
resolved to establish a two-year one-o incentive plan 2019-2020
directed to the Group’s key personnel to enable the prolonging of
the long-term incentive plan performance period to three years
and with that change better answer to the requirements of the in-
vestors and corporate governance and to be more aligned with the
market practice. The one-o long-term incentive plan had a two-
year performance period 2019–2020. The Board of Directors of the
Company resolved on the plan's performance criteria and on the
required performance level for each criterion at the beginning of a
performance period. Approximately 30 key persons, including the
members of the Group Management Team, belonged to the target
group of the plan. The prerequisite for participation in the plan and
for receipt of reward on the basis of the plan was that a key person
has enrolled in the key personnel share savings plan and makes the
monthly saving from his or her xed gross monthly salary, in ac-
cordance with the rules of the key personnel share savings plan in
force.
The potential reward from the performance period 2019-2020 was
based on the Group's earnings per share (EPS) and separately dened
two-year strategic projects. The performance criteria for the plan was
not met, and thus there will be no payment based on the plan.
Expenses recognised for the incentive plan were EUR -0.1 (0.1) million
in 2020.
Share savings plan
Oriola Corporation has had since 2013 a key personnel share sav-
ings plan in force. The Board of Directors of Oriola Corporation always
decides on the launch of a new savings period in the plan sepa-
rately. According to the rules of the share savings plan in force, the
maximum monthly saving is 8.3% and the minimum is 2% of each
participant's xed monthly gross salary. The accumulated savings
will be used for purchasing Oriola Corporation class B shares for the
participants at the market price quarterly. In return, each participant
will receive two free class B matching shares for every three acquired
savings shares if the participant holds the acquired shares from the
savings period until the end of the designated holding period and if
his or her employment with a company has not been terminated on
bad leaver terms. The matching shares are paid partly in Oriola’s class
B shares and partly in cash. The cash proportion is intended to cover
taxes and tax-related costs arising from the reward to a key person.
Approximately 40 key employees participated in the share sav-
ings plan for the savings period 1 January – 31 December 2017. The
matching shares transferred to eligible participants in May 2019 cor-
responded to the value of 40,398 Oriola Class B shares, including the
proportion paid in cash.
Approximately 50 key employees participated in the Oriola Corpora-
tion key personnel share savings plan for the savings period 1 Janu-
Use of estimates: The discounted value of the pension obli-
gation is based on several actuarial assumptions. Changes in
the assumptions have an impact on the carrying amount of the
pension obligation. Discount rate used is one of the assump-
tions used. The interest rate used is determined at the date of
measurement by reference to the maturity of corporate bonds
issued by nancially sound companies that is similar to that of
the pension obligation. Other key assumptions impacting pen-
sion liabilities are based on the circumstances valid at the time.
Share-based payments
Executive incentive plan 2019 - 2023
On 14 December 2018 The Board of Directors of Oriola Corporation
resolved to establish a new share-based long-term incentive plan
2019–2023 directed to the Group’s key personnel. The long-term
incentive plan arrangement has three three-year performance pe-
riods 2019–2021, 2020–2022 and 2021–2023. The Board of Direc-
tors of the Company will resolve on the plan's performance criteria
and on the required performance level for each criterion at the be-
ginning of a performance period. Approximately 30 key persons,
including the members of the Group Management Team, belong
to the target group of the plan. The prerequisite for participation
in the plan and for receipt of reward on the basis of the plan is that
the key person has enrolled in the key personnel share savings plan
and makes the monthly saving from his or her xed gross month-
ly salary, in accordance with the rules of the key personnel share
savings plan in force during the rst year of the three-year perfor-
mance period. A member of the Group Management Team must
hold 50% of the net shares given on the basis of the long-term in-
centive plans, until his or her shareholding in the Company in total
equals the value of his or her gross annual salary. Such number of
shares must be held as long as the key person holds a position as a
Group Management Team member.
The potential reward from the performance period 2019–2021 will
be based on the Group's earnings per share (EPS) and Group’s total
shareholder return (TSR). The rewards to be paid on the basis of the
39
Financial statements 2020
Oriola Financial review 2020
40
Key management benets
EUR thousand 2020 2019
Robert Andersson
Basic salary 649.7 646.5
Bonuses 127.3 44.4
Pension expenses (statutory) 117. 2 125.1
Total 894.1 815.9
Employee benets to President and CEO
EUR thousand 2020 2019
Basic salary 1,556.7 1,543.2
Bonuses 223.0 98.2
Termination expenses
1
86.2 -
Pension expenses (statutory) 281.0 301.9
Pension expenses (voluntary) 57. 3 57.6
Total 2,204.3 2,000.9
1
Termination expenses include the severance pay equal to 6 months' salary.
The total benets of the President and CEO of the Group and the
Group Management Team include a supplementary health insur-
ance. The President and CEO of the Group and the Group Manage-
ment Team participate in statutory pension schemes. Three Group
Management Team members participate in a voluntary dened con-
tribution plan.
Salaries and benets of the members of the Board of Directors
EUR thousand 2020 2019
Panu Routila, Chairman
1
85.0 -
Eva Nilsson Bågenholm, Vice Chairman 60.0 48.0
Juko-Juho Hakala 47.0 38.5
Anja Korhonen 52.0 48.0
Mariette Kristenson 44.5 37. 0
Harri Pärssinen
2
43.0 37. 5
Lena Ridström 43.0 39.0
Anssi Vanjoki, Chairman
3
2.0 72.0
Staan Simberg
4
- 1.5
Total 376.5 321.5
Of the Board of Directors' annual fee, 60% is paid in cash and 40% in
the Company's class B shares. For the apportionment paid in shares,
an expense of EUR 0.1 (0.1) million was recognised in 2020.
Employee benets to other members of the Group Management Team
1
from 17 March 2020
2
from 19 March 2019
3
until 17 March 2020
4
until 19 March 2019
ary – 31 December 2018. The matching shares transferred to eligible
participants in February 2020 corresponded to the value of 78,295
Oriola Class B shares, including the proportion paid in cash.
Approximately 55 key employees participated in the share savings
plan for the savings period 1 January – 31 December 2019. The hold-
ing period ended on the publication date of the Oriola’s Financial
Statements Release 1 January – 31 December 2020. The matching
shares will be transferred to eligible participants in 2021.
Approximately 59 key employees participated in the share savings
plan for the savings period 1 January – 31 December 2020. The hold-
ing period will end on the publication date of the Oriola’s Financial
Statements Release 1 January – 31 December 2021. The matching
shares will be transferred to eligible participants in 2022.
Approximately 60 key employees will participate in the share savings
plan for the savings period 1 January – 31 December 2021. The hold-
ing period will end on the publication date of the Oriola’s Financial
Statements Release 1 January – 31 December 2022. The matching
shares will be transferred to eligible participants in 2023.
The expenses recognised for the share savings plans were EUR 0.2
(0.2) million in 2020.
40
Financial statements 2020
Oriola Financial review 2020
41
As a part of managing liquidity risk Oriola has open-ended frame
agreements in Sweden that allows the company to sell trade receiva-
bles relating to Swedish retail and wholesale businesses to the nancial
institutions on non-recourse basis. Sold non-recourse trade receiva-
Ageing and impairment of trade receivables at the closing date
2020 2019
EUR million Gross Impairment Gross Impairment
Not past due 181.6 -0.0 162.8 -0.0
Past due 1 - 30 days 6.8 -0.0 19.1 -0.0
Past due 31 - 180 days 0.4 -0.0 5.2 -0.2
Past due more
than 180 days -0.1 0.0 0.7 -0.3
Total 188.7 -0.1 187.9 -0.5
The inventories as at 31 December 2020 included pharmaceuticals
and health related products. In 2020, a write-o from inventories to-
talling EUR 0.1 million was recognised related to an onerous contract
in Retail business area. The write-o is included in adjusting items of
the reporting period.
EUR million 2020 2019
Raw materials and consumables 0.1 0.1
Work in progress 0.7 0.5
Finished goods 249.4 233.6
Total 250.1 234.2
5.2. Inventories
Inventories are presented in the consolidated statement
of nancial position at the lower of cost and net realisa-
ble value. The net realisable value is the estimated selling
price in the ordinary course of business less the estimated
costs of completion and the estimated necessary direct
costs of sale. The cost of inventories is determined on the
basis of FIFO principle. If the net realisable value is lower
than cost, a valuation allowance is recognised for inven-
tory obsolescence.
bles were EUR 179.6 (166.5) million on the balance sheet date. No sig-
nicant changes are anticipated in the scope of the agreements to sell
trade receivables in 2021.
The credit risk in Finland is reduced by interest-bearing advance pay-
ments from pharmacies. These interest-bearing advance payments
are presented as current interest-bearing liabilities in the statement of
nancial position. On the balance sheet date, the amount of prepay-
ments was EUR 17.0 (13.2) million. Additional information on the inter-
est-bearing advance payments can be found in note 8.2. Financial as-
sets and liabilities.
Information about the Group’s exposure to credit and market risks, and
impairment losses for trade receivables is included in note 8.3. Finan-
cial risk management.
5. Working capital
5.1 Trade and other receivables
Trade receivables are amounts due from customers for
goods sold or services performed in the ordinary course of
business. Trade receivables are initially recognised when
they are originated and subsequently carried at their antici-
pated realisable value, which is the original invoice amount
less than estimated valuation allowance for the impair-
ment of these receivables. A valuation allowance for im-
pairment of trade receivables is recognised when there is
objective evidence that the Group will not be able to col-
lect all amounts due according to the original terms of the
receivables. The Group applies the simplied approach to
providing for expected credit losses, which permits the use
of the lifetime expected loss provision for all trade receiva-
bles. Trade receivables are measured at amortised cost. The
part of the trade receivables, which is held for sale, is clas-
sied to measurement category fair value through prot
and loss.
EUR million 2020 2019
Trade receivables 188.6 187.4
Income tax receivables 3.4 6.1
Prepaid expenses and accrued income 2.0 2.2
VAT receivables 12.7 16.2
Rental prepayments 0.1 0.4
Prepayments 1.8 1.9
Other receivables 1.4 1.6
Total 210.0 215.7
The book value of trade and other receivables corresponds to the
maximum amount of credit risk relating to them at the balance
sheet date.
Use of estimates: The Group assesses the value of inventories
regularly for any indication of obsolescence. A corresponding
write-o from inventories is recognised when needed. This as-
sessment requires the management to use judgement when
estimating the sales prices of products and inventory turnover.
Changes in these estimates may cause impairment of invento-
ries in future reporting periods.
41
Financial statements 2020
Oriola Financial review 2020
42
5.3. Trade payables and other liabilities
EUR million 2020 2019
Trade payables 620.3 606.7
Income tax payables - 1.0
Accrued liabilities 36.7 31.9
Derivatives designated as hedges - 0.2
Derivatives measured at fair value
through prot and loss 0.1 -
VAT liabilities 5.6 6.0
Other current liabilities 3.6 2.3
Total 666.3 648.1
Material items included in accrued liabilities
EUR million 2020 2019
Accrued wages, salaries
and social security payments 24.3 23.0
Other accrued liabilities 12.4 8.9
Total 36.7 31.9
Other non-current liabilities
EUR million 2020 2019
Derivatives 0.4 0.2
Other non-current liabilities
1
0.5 0.5
Total 0.9 0.7
1
Other non-current liabilities include long-service benet liability.
EUR million
2020
Restructuring
provisions
Other
provisions Total
Carrying amount
1 Jan 2020 2.8 - 2.8
Increases 0.5 0.5 1.0
Used -1.8 -0.0 -1.9
Reversed -1.2 - -1. 2
Foreign exchange
rate dierences 0.1 - 0.1
Carrying amount
31 Dec 2020 0.3 0.5 0.8
2019
Carrying amount
1 Jan 2019 0.1 3.1 3.3
Increases 4.5 - 4.5
Used -1.5 -0.7 -2.2
Reversed -0.5 -2.4 -2.9
Foreign exchange
rate dierences 0.1 - 0.1
Carrying amount
31 Dec 2019 2.8 - 2.8
5.4. Provisions
A provision is recognised in the consolidated statement
of nancial position when the Group has a present legal
or contractual obligation as a result of a past event and it
is probable that an outow of resources embodying eco-
nomic benets will be required to settle the obligation and
a reliable estimate can be made of the amount of the obli-
gation.
A restructuring provision is recognised when the Group has
a detailed, formal restructuring plan, has started the imple-
mentation of the plan or has informed those aected by
the plan. No provision related to costs for continuing op-
erations is recognised.
At the end of 2020 the Group’s provisions in the consolidated state-
ment of nancial position totalled EUR 0.8 (2.8) million.
Restructuring provisions in 2020 are related to co-operation negoti-
ations in 2019 aiming to improve operational eciency and contin-
ue re-organising operations in Finland and in Sweden as well as to
changes in the Group Management Team. Restructuring provisions
in 2019 are related to co-operation negotiations aiming to improve
operational eciency and continue re-organising operations in Fin-
land and in Sweden.
Other provisions in 2020 are related to an onerous contract in Retail
business area. Other provisions in 2019 consisted of liabilities relat-
ing to Hehku.
Use of estimates: Provisions for present obligations require
management to assess the best estimate of the expenditure
needed to settle the present obligation at the end of the re-
porting period. The actual amount and timing of the expendi-
ture might dier from the estimates made.
42
Financial statements 2020
Oriola Financial review 2020
43
EUR million
2020
Land and
water
Buildings and
constructions
Machinery and
equipment
Right-of-use
assets
1
Other
tangible
assets
2
Advance payments
and construction
in progress
3
Total
Historical cost 1 Jan 2020 1.9 58.0 95.2 222.0 36.3 2.3 415.7
Increases - 0.0 2.2 14.9 3.8 9.7 30.6
Decreases - - -1.9 -0.2 - -0.0 -2.1
Reclassications - 0.4 2.6 - 0.5 -3.5 -0.1
Foreign exchange rate dierences 0.0 0.8 3.2 8.8 1.5 0.1 14.3
Historical cost 31 Dec 2020 1.9 59.2 101.3 245.5 42.1 8.5 458.4
Accumulated depreciation 1 Jan 2020 - -37. 4 -60.2 -139.3 -20.4 - -257.4
Accumulated depreciation related to decreases
and reclassications - - 1.6 0.2 0.1 - 1.9
Depreciation for the nancial year - -1.8 -6.7 -18.8 -3.7 - -31.0
Impairments - - - - 0.1 - 0.1
Foreign exchange rate dierences - -0.3 -2.2 -6.2 -1.0 - -9.8
Accumulated depreciation 31 Dec 2020 - -39.6 -67.6 -164. 2 -24.9 - -296.3
Carrying amount 1 Jan 2020 1.9 20.6 35.0 82.7 15.9 2.3 158.3
Carrying amount 31 Dec 2020 1.9 19.6 33.7 81.2 17.2 8.5 162.2
2019
Historical cost 1 Jan 2019 1.9 49.7 85.4 - 33.7 21.0 191.8
Adjustment of adoption of IFRS 16 1 Jan 2019 - - -8.5 222.9 - - 214.4
Increases - 0.0 4.0 6.4 2.5 6.8 19.8
Decreases - - -0.5 -3.3 -0.1 -0.0 -3.9
Reclassications - 8.5 15.9 - 0.7 -25.2 -0.2
Foreign exchange rate dierences -0.0 -0.2 -1.1 -3.9 -0.6 -0.4 -6.2
Historical cost 31 Dec 2019 1.9 58.0 95.2 222.0 36.3 2.3 415.7
Accumulated depreciation 1 Jan 2019 - -35.5 -62.9 - -16.2 - -114.6
Adjustment of adoption of IFRS 16 1 Jan 2019 - - 7. 5 -125.5 - - -118 .0
Accumulated depreciation related to decreases
and reclassications - - 0.5 2.9 0.1 - 3.4
Depreciation for the nancial year - -2.0 -6.1 -18.7 -3.5 - -30.3
Impairments - - - - -1.0 - -1.0
Foreign exchange rate dierences - 0.1 0.7 2.0 0.2 - 3.1
Accumulated depreciation 31 Dec 2019 - -37.4 -60.2 -139.3 -20.4 - -257.4
Carrying amount 1 Jan 2019 1.9 14.2 21.6 97.3 17. 5 21.0 173.6
Carrying amount 31 Dec 2019 1.9 20.6 35.0 82.7 15.9 2.3 158.3
1
For more details about the right-of-use assets please refer to section 7. Leases.
2
The most signicant share of other tangible assets is made up by refurbishment expenditures for rented premises.
3
The most signicant part of advance payments and construction in progress is related to renewal of warehouse premises.
Property, plant and equipment
6. Tangible and intangible assets and other
non-current assets
6.1. Property, plant and equipment
Tangible assets are initially recognised at historical cost and
they are subsequently measured at historical cost less de-
preciation and impairment losses. The assets are depreci-
ated over their estimated useful life using the straight-line
method. The useful life of assets is reviewed at least annual-
ly, and it is adjusted if necessary. The estimated useful lives
are as follows:
• Buildings 20–50 years
• Machinery and equipment 5–10 years
• Other tangible assets 3–10 years
Land areas are not subject to depreciation. Repair and
maintenance costs are recognised as expenses for the pe-
riod. Improvement investments are capitalised providing
they are expected to generate future economic benets.
Gains and losses resulting from the disposal of tangible as-
sets are recognised as other operating income or expense
in the statement of comprehensive income.
43
Financial statements 2020
Oriola Financial review 2020
44
6.2. Goodwill and other intangible assets
Goodwill: Goodwill arising from business combinations is
recognised as the amount by which the aggregate of the
fair value of the consideration transferred, the acquisition
date fair value of any previously held interest and any non-
controlling interest exceeds the fair value of the net assets
acquired.
Goodwill is not amortised but is tested for impairment at
least annually according to the business structure in force
at the time of impairment testing. For impairment testing,
goodwill is allocated to cash-generating units. Goodwill is
measured at cost less accumulated impairment losses. Im-
pairment losses are recognised in the statement of com-
prehensive income.
Other intangible assets: Other intangible assets are initially
recognised at historical cost and they are subsequently meas-
ured at historical cost less depreciation and impairment losses.
Other intangible assets include sales licences, trademarks, pat-
ents, software licences and product and marketing rights. As-
sets with nite useful life are depreciated over their useful life,
using the straight-line method. Research and development
costs are normally expensed as other operating expenses for
the reporting period in which they are incurred. Expenditures
on development is capitalised only when it relates to new
products or services that are technically and commercially
feasible. The majority of the Group’s development expendi-
ture does not meet the criteria for capitalisation and are rec-
ognised as expenses as incurred. The estimated useful lives of
other intangible assets are as follows:
• Intangible rights
• Patents and trademarks 10 years
• Software 5–10 years
• Other intangible assets 3–10 years
EUR million
2020 Goodwill Intangible rights
Other
intangible assets
1
Advance payments and
construction in progress
2
Total
Historical cost 1 Jan 2020 270.5 103.8 29.9 9.8 414.0
Increases - 1.4 0.3 10.6 12.3
Decreases - -0.4 - - -0.4
Reclassications - 0.9 2.2 -3.1 0.1
Foreign exchange rate dierences 8.2 3.9 - 0.1 12.2
Historical cost 31 Dec 2020 278.7 109.6 32.5 17.4 438.2
Accumulated amortisation 1 Jan 2020 - - 67. 0 -9.5 - -76.6
Accumulated amortisation related to
decreases and reclassications - 0.4 - - 0.4
Amortisation for the nancial year - -7. 3 -2.9 - -10.1
Impairments - -0.6 - - -0.6
Foreign exchange rate dierences - -2.8 - - -2.8
Accumulated amortisation 31 Dec 2020 - -77. 2 -12.4 - -89.7
Carrying amount 1 Jan 2020 270.5 36.7 20.4 9.8 337. 5
Carrying amount 31 Dec 2020 278.7 32.3 20.1 17.4 348.5
2019
Historical cost 1 Jan 2019 274.3 101.4 27. 8 9.3 412.7
Increases - 1.9 0.6 4.2 6.7
Decreases - -0.1 - - -0.1
Reclassications - 2.3 1.5 -3.6 0.2
Foreign exchange rate dierences -3.7 -1.7 - -0.0 -5.5
Historical cost 31 Dec 2019 270.5 103.8 29.9 9.8 414.0
Accumulated amortisation 1 Jan 2019 - -57.0 -6.4 - -63.4
Accumulated amortisation related
to decreases and reclassications - 0.5 -0.5 - 0.0
Amortisation for the nancial year - -8.8 -2.7 - -11. 5
Impairments - -2.5 - - -2.5
Foreign exchange rate dierences - 0.8 - - 0.8
Accumulated amortisation 31 Dec 2019 - - 67.0 -9.5 - -76.6
Carrying amount 1 Jan 2019 274.3 44.3 21.5 9.3 349.4
Carrying amount 31 Dec 2019 270.5 36.7 20.4 9.8 337. 5
Goodwill and other intangible assets
1
Other intangible assets include signicant expenses for installation and specialist work related to the implementation of computer software.
2
Advance payments and construction in progress include mainly costs related to software.
44
Financial statements 2020
Oriola Financial review 2020
45
Projection parameters applied
2020 Consumer Pharma Retail
Post-tax discount rate % 6.1 6.1 6.1
Pre-tax discount rate % 7.0 7. 2 7.3
EBIT %
1
2.4 3.8 4.5
Terminal growth 2.0 2.0 2.0
Net sales growth
2
1.9 4.9 0.7
2019 Consumer Pharma Retail
Post-tax discount rate % 6.7 6.9 6.8
Pre-tax discount rate % 7.9 8.2 8.3
EBIT %
1
2.3 3.1 4.7
Terminal growth % 2.0 2.0 2.0
Net sales growth %
2
4.2 3.3 7.5
1
Average EBIT percentage over a three-year period
2
CAGR (compound annual growth rate) over a three-year-period
Goodwill, carrying amount of assets and value in use
A percentage point change in projection parameters that causes the re-
coverable amount equal to book value
1
2020 Consumer Pharma Retail
Goodwill 214.6 33.0 31.1
Carrying amount of assets 320.6 34.0 45.2
Value in use 434.2 476.7 98.0
2019 Consumer Pharma Retail
Goodwill 206.5 33.0 31.0
Carrying amount of assets 329.7 34.1 43.3
Value in use 401.0 380.5 81.0
2020 Consumer Pharma Retail
Discount rate change % 1.7 n/a 6.0
EBIT percentage change % -0.7 -3.9 -2.1
Terminal growth change % -2.0 n/a -7.6
Net sales growth change % -2.9 -33.7 -7. 5
2019 Consumer Pharma Retail
Discount rate change % 1.1 n/a 7. 5
EBIT percentage change % -0.5 -3.5 -1.6
Terminal growth change % -1.3 n/a -16.3
Net sales growth change % -2.0 -38.4 -4.8
1
A greater percentage point change in the parameter would result in a partial
impairment of goodwill, providing other key assumptions remain unchanged
The recoverable amount of the cash-generating units in impairment
testing was based on value-in-use calculations. Value-in-use has
been determined based on discounted cash ows (DCF-model). The
cash ow forecasts are based on three-year strategic plans approved
by the management, which are consistent with the current business
structure. The most important assumptions in the strategic plans are
estimates of overall long-term growth in the market and the market
position as well as the protability of the Group businesses. The for-
eign exchange rates used in converting the calculations into euros
are those prevailing at the time of testing.
Impairments
Impairment of tangible and intangible assets: The
Group assesses at each reporting date whether there is any
indication that an asset may be impaired. If any indication
exists, the Group estimates the asset’s recoverable amount.
The recoverable amount is the higher of the net sales price
or value in use, which is the present value of the expected
future cash ows expected to be derived from the asset.
The impairment loss is recognised in the statement of
comprehensive income if the carrying amount of the as-
set exceeds the recoverable amount. An impairment loss is
reversed if there is a change in the circumstances and the
recoverable amount exceeds the carrying amount. The re-
versal of impairment loss cannot exceed the asset’s carry-
ing amount without any impairment loss.
Allocation and impairment testing of goodwill: The
goodwill impairment test is conducted at least annually or
more frequently if there is any indication that goodwill may
be impaired. Impairment testing is conducted according
to the business structure in force at the time of impairment
testing. Impairment is recognised in the statement of com-
prehensive income under Depreciation, amortisation and
impairments. Goodwill impairment losses are not reversed.
The main parameters used in the impairment testing are net sales
growth percentage, EBIT percentage, terminal growth percentage
and discount rate.
The three-year net sales forecasts are based on the management's
assessment of the net sales growth, market development forecasts
available from external information sources and sales growth based
on the Group’s actions.
The terminal growth rate used in the calculations is based on the man-
agement’s assessments of the long-term growth in cash ows. In esti-
mating the terminal growth rate, both country-specic and business
sector growth forecasts available from external information sources
as well as the characteristic features of each operating segment and
cash generating unit are considered. Terminal growth rate for both
the Finnish and Swedish cash generating units was 2.0% from the year
2023. The discount rate used in the calculation is based on the Group’s
weighted average cost of capital, taking into account the industry
and country specic risks in each of the Group's operating segment.
The most important component in dening the discount rate is the
long-term risk-free interest rate in the operating country. The risk-free
interest rate used for the Finnish cash generating units is 0.2% (0.2%).
The risk-free interest rate of the Swedish cash generating units is 0.4%
(0.2%). When dening the discount rates, Oriola has acquired the nec-
essary information from an external information source.
Result of goodwill impairment testing
The impairment testing result shows that the “value in use” in the
tested cash generating units exceeds the book value of the tested
assets, and thus no impairment of goodwill was recognised in 2020.
45
Financial statements 2020
Oriola Financial review 2020
46
Use of estimates: The Group’s assets with an indenite use-
ful life are subject to annual impairment testing and any in-
dication of impairment of assets is assessed using informa-
tion from external sources on market development as well as
information from internal sources on business performance
and estimates. When analysing these sources and informa-
tion and making conclusions, estimates are used. The re-
coverable values used in impairment testing are discounted
future cash ows that can be obtained through usage and
possible sale of the assets. If the carrying amount of the asset
exceeds either its recoverable amount or fair value, the dier-
ence is recognised as an impairment charge. The prepara-
tion of such calculations requires the use of estimates. Dur-
ing 2020, the management has followed closely the impacts
of the COVID-19 pandemic on the Group’s business perfor-
mance and estimates. At the moment the pandemic is not
expected to have signicant long-term impacts on Oriola’s
business performance.
6.3. Other non-current assets
EUR million
2020
Joint
ventures
Other shares
and share-
holdings
Other
non-current
assets Total
Carrying amount
1 Jan 2020 - 9.4 0.3 9.7
Increases - 4.8 - 4.8
Decreases - -0.0 -0.2 -0.2
Changes in fair value - 8.0 - 8.0
Foreign exchange rate
dierences - 0.0 0.0 0.0
Carrying amount
31 Dec 2020 - 22.2 0.1 22.3
2019
Carrying amount
1 Jan 2019 - 9.4 0.3 9.7
Increases 0.7 0.0 - 0.7
Impairment -0.7 - - -0.7
Foreign exchange rate
dierences - -0.0 -0.0 -0.0
Carrying amount
31 Dec 2019 - 9.4 0.3 9.7
Use of estimates: The management has to evaluate at each
balance sheet date whether there have been any changes to
the fair value of the shares measured at fair value through
other comprehensive income. The applied valuation method
for the shares in Doktor.se is based on realised transactions
and the present value of discounted cash ows. The valuation
model requires management judgement concerning the es-
timate of the cash ows and interest rates at the end date of
each reporting period.
Joint ventures
The business of Hehku Kauppa Oy, a joint venture established by
Oriola Corporation and Kesko Corporation in 2017, was closed
down in 2018, and in 2019 Oriola sold its share in Hehku to Kesko
Corporation. The impact related to Hehku is reported as adjusting
items to EBIT. The accounting principles for joint ventures are pre-
sented in section 10. Group Structure.
Other shares and shareholdings
In 2018 Oriola Corporation invested EUR 9.4 million in the Swed-
ish online medical centre Doktor.se. In the second quarter of 2020,
Oriola made an additional investment totalling EUR 4.8 million in
Doktor.se. Oriola’s ownership at the end of the reporting period was
approximately 14% of the total number of shares in Doktor.se. Dok-
tor.se oers personal digital healthcare services to its customers.
Doktor.se has a comprehensive organisation with specialist nurses,
doctors and psychologists.
Oriola’s share of the voting rights in Doktor.se is approximate-
ly 14%. Management has analysed possible indicators of signi-
cant inuence. Based on the analysis the management is of the
view that Oriola does not have such control over the company on
its own, that it would result in signicant inuence, even though
Oriola has a right to appoint two members to the Board of Direc-
tors of Doktor.se. As a result, the investment is accounted for as a
nancial asset. Oriola classies the shares of Doktor.se as the in-
vestment in Doktor.se is seen as strategic investment, which sup-
ports Oriola’s business operations. The shares are presented in the
consolidated statement of nancial position as part of other non-
current assets. Possible changes in fair value of the investment
are recognised in other comprehensive income and they shall not
subsequently be transferred to prot and loss. Possible dividends
are recognised as dividend income in the prot and loss.
In the second quarter of 2020, an increase of EUR 8.0 million
was recognised to the value of the investment. The increase
was based on realised transactions and the present value of dis-
counted cash flows.
46
Financial statements 2020
Oriola Financial review 2020
47
the right to control the use of an identied asset for a peri-
od of time in exchange for consideration. In order to assess
whether a contract conveys the right to control the use of
an identied asset, it is assessed whether:
• The contract involves the use of an identied asset
• Oriola has the right to obtain substantially all of the
economic benets from the use of the asset throughout
the period of use
• Oriola has the right to direct the use of the asset.
The right-of-use asset is initially measured at cost, which
comprises:
• The initial amount of lease liability
• Any lease payments made at or before the
commencement date
• Any initial direct costs incurred by Oriola
• An estimate of costs to be incurred by Oriola in
dismantling and removing the underlying assets or
restoring the site on which the assets are located
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commence-
ment date. The lease payments included in the measure-
ment of the lease liability include the following:
• Fixed payments, including in-substance xed payments
• Variable lease payments that depend on an index or a
rate, initially measured using the index or the rate as at
the commencement date
• Amounts expected to be payable under a residual value
guarantee
• The exercise price of a purchase option that Oriola is
reasonably certain to exercise
• Penalties for early termination of a lease if the termination
is taken into account in determining lease period.
The lease payments included in the measurement of lease
liability exclude variable elements which are dependent
on external factors such as e.g. sales volume in pharmacies.
Variable payments not included in the initial measurement
of the lease liability are recognised as an expense over the
lease term.
The lease payments are discounted using the interest rate
implicit in the lease or, if that rate cannot be readily de-
termined, the incremental borrowing rate. The incremen-
tal borrowing rate is the rate of interest that a lessee would
have to pay to borrow over a similar term, and with a similar
security, the funds necessary to obtain an asset of a similar
value to the right of use asset in a similar economic environ-
ment. At Oriola, the incremental borrowing rates are dened
for the lease terms of 1, 3, 5 and 10 years. The components
of the incremental borrowing rate are:
• Risk free rate which reect the dierent jurisdictions and
currencies: SEK and EUR swap rates for 1 to 3 years and
Government bonds for Finland and Sweden for 5 to 10
years
• Oriola’s internal credit rating for the parent company as
a company specic margin. As all the Group’s treasury
functions are centralized to the parent company and all
funding for the Group is managed centrally by the parent
company resulting in the parent providing a guarantee of
the lease payments to the lessor, the pricing of the lease is
more signicantly inuenced by the credit standing of the
parent than that of the subsidiary.
• The incremental borrowing rates are reviewed monthly
The lease term comprises of:
• Non-cancellable period of lease contract
• Periods covered by an option to extend the lease if Oriola
is reasonably certain to exercise that option
7. Leases
Leases: The Group leases various assets, which are divided
into following asset classes:
• Real estate
• IT equipment
• Vehicles
• Other machinery and equipment
The Group’s real estate leases include leases of pharma-
cies, oce premises and warehouse premises. Also leases
for parking space as well as machinery and equipment of
buildings is included the real estate class. The Group has a
signicant portfolio of lease contracts for pharmacy prem-
ises in Sweden. The usual duration of the leases is 3 years,
and the contracts are regularly renewed for the next lease
period. For most of the contracts the lease payments are
adjusted every year based on the change of the consumer
price index.
The Group leases of vehicles consist of company cars,
which are used as part of employee benets and forklifts,
which are used in warehouses. The lease period for the
company cars is usually 3 years and for forklifts 3-5 years.
The Group leases IT equipment such as servers, printers
and laptops. The lease period for IT equipment is usually
3-5 years.
Leases of other machinery and equipment include waste
presses in the warehouses and dose dispensing equipment,
containers, furniture and other machinery and equipment
such as franking machines and coee machines.
At inception of a contract it is assessed whether a contract
contains a lease. A contract contains a lease if it conveys
47
Financial statements 2020
Oriola Financial review 2020
48
• Periods covered by an option to terminate the lease if the
lessee is reasonably certain not to exercise that option.
The exemption for short term leases is applied to real-es-
tate leases and the exemption for low-value assets is ap-
plied to leases of IT equipment and other machinery and
equipment. For short term leases of real-estate leases that
have a lease term of 12 months or less and for low-value
leases of IT equipment and other machinery equipment
the right-of-use asset and lease liability is not recognised.
The lease payments associated with these leases are rec-
ognised as an expense on a straight-line basis over the
lease term. An asset is considered to be a low-value as-
set, if the value of the asset when it is new is less than EUR
5,000 or SEK 50,000.
The right-of-use asset is subsequently measured at cost less
accumulated depreciation and less any accumulated impair-
ment losses and adjusted for any remeasurements of the
lease liability. Depreciation is calculated using the straight-
line method from the commencement date to the earlier of
the end of useful life of the right-of-use asset or the end of
the lease term. The estimated useful lives of right-of-use as-
sets are determined on the same basis as those of property,
plant and equipment.
The lease liability is measured at amortised cost using the
eective interest method. It is remeasured when there is a
change in future lease payments arising from a change in an
index or a rate, if there is a change in Oriola’s estimate of the
amount expected to be payable under a residual value guar-
antee, or if Oriola changes its assessment of whether it will
exercise a purchase, extension or termination option. When
the lease liability is remeasured, a corresponding adjustment
is made to the carrying amount of the right-of-use asset or is
recognised in the prot or loss if the carrying amount of the
right-of-use asset has been reduced to zero.
The right-of-use assets are presented in property, plant and
equipment and the lease liabilities in interest-bearing liabili-
ties in the statement of nancial position. The lease liabilities
with the maturity of more than 12 months are presented in
the non-current interest-bearing liabilities and the lease li-
abilities with the maturity of 12 months or less are presented
in the current interest-bearing liabilities.
The depreciations of right-of-use assets are presented in de-
preciation, amortisation and impairments in the statement
of comprehensive income. The interest expense on the lease
liability is presented within the nancial expenses. The lease
payments of low-value assets and short-term leases are in-
cluded in other operating expenses in the statement of com-
prehensive income.
In the statement of cash ows the cash payments for the
principal portion of the lease liability are presented within
nancing activities. The cash payments for the interest por-
tion of the lease liability as well as short term lease payments,
payments for leases of low-value assets and variable lease
payments not included in the measurement of the lease li-
abilities are presented within operating activities.
Use of estimates: In determining the lease term, management
considers all facts and circumstances that create an economic in-
centive to exercise an extension option, or not to exercise a termina-
tion option. Extension options (or periods after termination options)
are only included in the lease term if the lease is reasonably certain
to be extended (or not terminated). In Sweden the leasing contracts
for pharmacy premises are usually automatically renewed for the
next lease period if not terminated by Oriola. For such contracts
Oriola has to use management judgement in determining, whether
it will renew the contracts or terminate them. For those pharmacies,
which are in attractive locations, which are or are expected to be
protable and which support the Groups strategy, Oriola considers
it is reasonably certain to exercise the renewal option.
7.1. Leases in the statement of nancial position
The Group has recognised following amounts in the statement of -
nancial position relating to leases:
Right-of-use assets
EUR million 2020 2019
Real estate 79.6 80.9
IT equipment 0.3 0.7
Vehicles 1.3 1.1
Other machinery and equipment 0.0 0.0
Total 81.2 82.7
Lease liabilities
EUR million 2020 2019
Current 19.8 18.6
Non-current 61.9 65.7
Total 81.7 84.3
Additions to the right-of-use assets during year 2020 were EUR 14.9
(6.4) million.
7.2. Leases in the statement of comprehensive income
The Group has recognised following amounts in the statement
of comprehensive income relating to leases:
EUR million 2020 2019
Depreciation charge of right-of-use assets
Real estate -17.8 -17.6
IT equipment -0.4 -0.6
Vehicles -0.7 -0.5
Other machinery and equipment -0.0 -0.0
Total depreciation -18.8 -18.7
Interest expense (included in nancial
expenses) -1.7 -2.0
Expense relating to short-term leases
(included in other operating expenses) - 0.1 -0.3
Expense relating to leases of low-value assets
(included in other operating expenses) -0.4 -0.3
Gains from changes in leases
(included in other operating income) 0.1 0.2
The total cash outow for leases in 2020 was EUR 21.7 (21.9) million.
48
Financial statements 2020
Oriola Financial review 2020
49
8.2. Financial assets and liabilities
Classication and measurement: Financial assets and li-
abilities are recognised at the fair value at the settlement
date except derivatives, which are recognised at the trade
date in the statement of nancial position. The Group’s -
nancial assets and liabilities include cash and cash equiva-
lents, loans and other nancial receivables, trade receiva-
bles, trade payables, loans and derivatives.
Financial assets and liabilities are classied into the follow-
ing measurement categories:
• Fair value through prot and loss
• Fair value through other comprehensive income
• Amortised cost
The classication of nancial assets into dierent measure-
ment categories depends on the business model for manag-
ing the nancial asset and the contractual cash ow charac-
teristics of the nancial asset. The classication of nancial
liabilities into dierent measurement categories depends on
the purpose for which the nancial liabilities were initially ac-
quired. The measurement category for nancial assets and
liabilities is determined at the acquisition date. Financial as-
sets are derecognised when the Group loses the rights to
receive the contractual cash ows on the nancial asset or
it transfers substantially all the risks and rewards of owner-
ship outside the Group. Financial liabilities are derecognised
when the obligation specied in the contract is discharged
or cancelled or expires.
Financial assets measured at fair value through prot
and loss: Money market investments, trade receivables
held for sale and derivatives which are not designated as
hedges are measured at fair value through prot and loss.
Assets within this category are short-term assets with a
maturity of less than 12 months and are measured at fair
value using the market price on the balance sheet date.
Both realised and unrealised gains and losses arising from
the changes in fair value are recognised in the consolidated
statement of comprehensive income for the nancial pe-
riod during which they incurred.
Financial assets measured at amortised cost: Cash and
cash equivalents consist of cash in hand and cash at the
bank accounts. Items classied as cash and cash equiva-
lents have a maturity of less than 3 months from the acqui-
sition date. The used credit limits are included in current
interest-bearing liabilities.
Loans and other receivables are measured at amortised cost.
Receivables are classied as current nancial assets unless
their maturity date is more than 12 months from the balance
sheet date. Trade and other receivables are included in this
category except for trade receivables held for sale, which are
measured at fair value through prot and loss. Trade receiva-
bles are recognised at their original book value. A valuation
allowance for impairment of trade receivables is recognised
when there is objective evidence that the Group will not
be able to collect all amounts due according to the original
terms of the receivables. Signicant nancial diculties of
the debtor, the probability of the debtor’s bankruptcy, failure
to pay and signicant delay of payments are considered to
be justied reasons for the impairment of trade receivables.
The Group applies the simplied approach to providing for
expected credit losses, which permits the use of the lifetime
expected loss provision for all trade receivables. Impairments
are recognised as an expense in the consolidated statement
of comprehensive income. Sold non-recourse trade receiva-
bles’ credit risk and contractual rights are transferred from
the Group on the selling date and related expenses are rec-
ognised as nancial expenses. Information about the Group’s
exposure to credit and market risks, and impairment losses
for trade receivables is included in note 8.3. Financial risk
management.
EUR million 2020 2019
Financial income
Interest income on nancial assets measured at
amortised cost 0.4 0.1
Interest income on nancial assets
and liabilities recognised at fair value 0.0 -
Foreign exchange rate gains from nancial assets
and liabilities recognised at fair value, net 0.1 -
Foreign exchange rate gains on nancial assets
and liabilities measured at amortised cost, net - 0.0
Other nancial income 0.0 0.0
Total 0.5 0.1
Financial expenses
Interest expenses on nancial assets and liabilities
recognised at fair value - 0.0
Interest expenses on interest rate swaps 0.2 0.3
Interest expenses on nancial liabilities
at amortised cost 2.5 1.3
Interest expenses on leases 1.7 2.0
Foreign exchange rate losses on nancial assets
and liabilities recognised at fair value, net - 0.1
Foreign exchange rate losses on nancial assets
and liabilities measured at amortised cost, net 0.0 -
Other nancial expenses 2.1 1.5
Total 6.5 5.3
Financial income and expenses, total -6.0 -5.2
8. Capital structure
8.1. Financial income and expenses
Interest income and expenses: Interest income and ex-
penses are recognised on a time-proportion basis using the
eective interest method.
The average interest rate on the interest-bearing liabilities exclud-
ing lease liabilities was 1.09% (0.97%) in 2020.
Financial income and expenses
49
Financial statements 2020
Oriola Financial review 2020
50
Financial assets measured at fair value through other
comprehensive income: In 2018 and 2020, Oriola Corpora-
tion invested a total of EUR 14.2 million in the Swedish on-
line medical centre Doktor.se. The investment is accounted
for as a nancial asset. Oriola classies the shares of Doktor.
se as fair value through other comprehensive income. The in-
vestment in Doktor.se is seen as strategic investment, which
supports Oriola’s business operations. The purchase price of
the shares is recognised in the consolidated statement of -
nancial position in other non-current assets. Possible chang-
es in fair value of the investment are recognised in other
comprehensive income and they shall not subsequently be
transferred to prot and loss. The applied valuation method
for the shares in Doktor.se is based on realised transactions
and the present value of discounted cash ows. Possible div-
idends are recognised as dividend income in the prot and
loss. More information on the investment in Doktor.se can be
found in note 6.3. Other non-current assets.
Financial liabilities measured at amortised cost: Finan-
cial liabilities measured at amortised cost are recognised in
the consolidated statement of nancial position at the net
value received on the date of acquisition. Transaction costs
are included in the original carrying amount of nancial li-
abilities. Financial liabilities are subsequently measured at
amortised cost using the eective interest method. Interest
expenses are recognised in the statement of comprehen-
sive income using the eective interest method. Financial
liabilities that expire within 12 months from the balance
sheet date, including bank overdrafts in use, are recognised
within current interest-bearing liabilities, and those expir-
ing in a period exceeding 12 months, are recognised within
non-current interest-bearing liabilities.
Financial liabilities measured at fair value through prot
and loss: The Group’s nancial liabilities measured at fair
value through prot and loss include derivatives which are
not designated as hedges. More information on measure-
ment of derivatives can be found from note 8.3. Financial risk
management.
Financial assets and liabilities by category
2020 2019
EUR million Note Fair value Book value Hierarchy Fair value Book value Hierarchy
Derivatives designated as hedges 8.3. - - Level 2 0.0 0.0 Level 2
Financial assets recognised at fair value
through prot and loss
Derivatives measured at fair value through prot
and loss 8.3. 0.1 0.1 Level 2 0.0 0.0 Level 2
Other investments measured at fair value
through OCI 6.3. 22.2 22.2 Level 3 9.4 9.4 Level 3
Trade receivables for sale 5.1. 15.1 15.1 Level 2 15.6 15.6 Level 2
Loans and other receivables
Cash equivalents 168.2 168.2 Level 2 70.8 70.8 Level 2
Trade receivables and other receivables 5.1. 176.9 176.9 Level 2 175. 5 175. 5 Level 2
Financial assets, total 382.4 382.4 271.4 271.4
Derivatives designated as hedges 8.3. 0.4 0.4 Level 2 0.2 0.2 Level 2
Financial liabilities recognised at fair value
through prot and loss
Derivatives measured at fair value through prot
and loss 8.3. 0.1 0.1 Level 2 0.1 0.1 Level 2
Financial liabilities measured at amortised cost
Non-current interest-bearing liabilities 127.8 127.8 Level 2 123.6 123.6 Level 2
Current interest-bearing liabilities 167. 4 167.4 Level 2 66.8 66.8 Level 2
Trade payables and other current liabilities 5.3. 660.6 660.6 Level 2 640.8 640.8 Level 2
Financial liabilities, total 956.3 956.3 831.4 831.4
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: Inputs for the asset or liability that are not based on observable market data (i.e. unobservable inputs).
Reconciliation of nancial assets recognised at fair value according
to the level 3
EUR million 2020 2019
Carrying amount 1 Jan 9.4 9.4
Acquisition of shares 4.8 -
Change in fair value 8.0 -
Carrying amount 31 Dec 22.2 9.4
Financial assets recognised at fair value through other comprehensive
income (level 3) include Oriola’s holding in the Swedish online medical
centre Doktor.se. In the second quarter of 2020, an increase of EUR 8.0
million was recognised to the value of the shares. More information on
the investment in Doktor.se and its valuation can be found in note 6.3.
Other non-current assets.
Cash and cash equivalents
EUR million 2020 2019
Cash and cash equivalents 168.2 70.8
Total 168.2 70.8
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Financial statements 2020
Oriola Financial review 2020
51
Interest-bearing liabilities
Non-current
EUR million 2020 2019
Loans from nancial institutions 65.9 57. 8
Lease liabilities 61.9 65.7
Total 127. 8 123.6
Current
EUR million 2020 2019
Loans from nancial institutions 52.0 0.0
Issued commercial papers 78.6 35.0
Advances received from pharmacies 17.0 13.2
Lease liabilities 19.8 18.6
Total 167.4 66.8
Maturity of non-current interest-bearing liabilities
EUR million 2020 2019
1–5 years 116.7 111. 5
More than ve years 11.1 12.0
Total 127. 8 123.6
Interest-bearing liabilities by currency
EUR million 2020 2019
EUR 186.3 80.5
SEK 108.9 109.9
Total 295.3 190.3
Net debt
EUR million 2020 2019
Loans from nancial institutions 65.9 57. 8
Lease liabilities 61.9 65.7
Non-current interest-bearing liabilities 127.8 123.6
Loans from nancial institutions 52.0 0.0
Issued commercial papers 78.6 35.0
Advances received from pharmacies 17.0 13.2
Lease liabilities 19.8 18.6
Current interest-bearing liabilities 167. 4 66.8
Interest-bearing liabilities, total 295.3 190.3
Cash and cash equivalents 168.2 70.8
Net debt 127.1 119.6
Change in net debt
2020
Loans from
nancial
institutions
Commercial
papers
Advances from
pharmacies
Lease
liabilities
Cash
and cash
equivalents Total
Carrying value, at 1 January 2020 -57. 8 -35.0 -13.2 -84.3 70.8 -119.6
Change in net debt, cash:
Proceeds from non-current loans -30.0 - - - - -30.0
Repayments of non-current loans 1.1 - - - - 1.1
Proceeds from current loans -40.0 - - - - -40.0
Repayments of current loans
10.0
- - - - 10.0
Repayments of lease liabilities - - - 19.6 - 19.6
Change in other current liabilities - -43.6 -274.8 - - -318.4
Change in cash and cash equivalents - - - - 97. 3 97. 3
Cash ows, total -58.9 -43.6 -274.8 19.6 97. 3 -260.5
Change in net debt, non-cash:
Change in lease liabilities - - - -13.8 - -13.8
Settled against trade receivables - - 271.0 - - 271.0
Foreign exchange adjustments -1.1 - - -3.1 0.1 -4.2
Non-cash movements, total -1.1 - 271.0 -17.0 0.1 253.0
Carrying value, at 31 December 2020 -117.9 -78.6 -17. 0 -81.7 168.2 -127.1
2019
Loans from
nancial
institutions
Commercial
papers
Advances from
pharmacies
Finance
lease liabilities
Cash
and cash
equivalents Total
Carrying value, at 1 January 2019 -59.0 -57.0 -12.4 -1.0 65.8 -63.6
Change in net debt, cash:
Proceeds from non-current loans -27.5 - - - - -27. 5
Repayments of non-current loans 28.2 - - - - 28.2
Repayments of lease liabilities - - - 19.3 - 19.3
Change in current liabilities - 22.0 -335.7 - - -313.7
Change in cash and cash equivalents - - - - 5.0 5.0
Cash ows total 0.7 22.0 -335.7 19.3 5.0 -288.8
Change in net debt, non-cash:
Change due to application of IFRS 16 - - - -99.7 - -99.7
Change in lease liabilities - - - -4.7 - -4.7
Settled against trade receivables - - 334.9 - - 334.9
Foreign exchange adjustments 0.5 - - 1.8 -0.0 2.3
Non-cash movements, total 0.5 - 334.9 -102.6 -0.0 232.8
Carrying value, at 31 December 2019 -57. 8 -35.0 -13. 2 -84.3 70.8 -119.6
EUR million
51
Financial statements 2020
Oriola Financial review 2020
52
8.3. Financial risk management
The nancial risks relating to the business operations of the Oriola
Group are managed in accordance with the treasury policy ap-
proved by the Board of Directors. Oriola's centralised Group Treas-
ury is responsible for implementing, monitoring and reporting of
the treasury policy.
Oriola’s Group Treasury’s main objectives are to maintain solid long-
term nancial position and secure daily liquidity of the Group and
to eciently manage currency and interest rate risks.
The objective of nancial risk management is to hedge against un-
favourable changes in the nancial markets and to minimise the
impact of foreign exchange, interest rate, renancing and liquidity
risks on the Group’s cash reserves, prots and shareholders’ equity.
Approved hedging instruments are set in the treasury policy.
Currency risk: The most important country-specic operating cur-
rencies for the Oriola Group are the euro (EUR) and the Swedish
krona (SEK). A substantial proportion of procurements and sales are
conducted in the reporting currency of the subsidiaries, which con-
siderably reduces the currency risk. In accordance with its treasury
policy, Oriola's internal loans and deposits are denominated in the
local currency of each subsidiary.
Transaction risk: Transaction risks arise from commercial and -
nance-related transactions and payments made by the business
units, which are denominated in a currency other than the unit’s re-
porting currency. Due to the nature of business operations, Oriola’s
transaction risks are minor. In accordance with its treasury policy,
Oriola's internal loans and deposits are denominated in the local cur-
rency of each subsidiary, mainly in Swedish krona. In addition, Oriola
Corporation had an EUR 28.9 (27.8) million Swedish krona denomi-
nated external loan on the balance sheet date. In accordance of the
treasury policy, transaction risk arising from the items in the state-
ment of nancial position recognised in the statement of compre-
hensive income is aimed to be fully hedged with derivatives. On the
balance sheet date Swedish krona denominated open transaction
position was EUR 0.0 (0.3) million.
Translation risk: Oriola’s most signicant translation risk concerns
items in Swedish krona. Translation risks arise from capital invest-
ments and goodwill in foreign subsidiaries. On the balance sheet
date Oriola had not hedged the equity-related translation risks. On
the balance sheet date Swedish krona denominated translation risk
position was EUR 256.1 (227.5) million. Translation risk sensitivity: A
10% weakening/strengthening of Swedish krona would have an im-
pact of EUR -/+23.3 (-/+20.7) million in the Group’s equity.
Liquidity risk: The objective of liquidity risk management is to
maintain adequate liquid assets and revolving credit facilities so
that Oriola is able to meet all of its nancial obligations. The Group’s
liquidity management is based on 12-month cash ow forecasts
and 4-week rolling cash ow forecasts drawn up on a weekly basis.
Oriola has diversied its renancing risk among several dierent
counterparties and various nancing sources.
Oriola has a revolving credit facility of EUR 100 million, which will
mature during the second quarter of 2022, and short-term uncom-
mitted credit account limits of EUR 35.0 (14.8) million. Facilities
were unused on the balance sheet date. In addition, Oriola has a
EUR 200 (200) million uncommitted commercial paper programme
of which EUR 78.6 (35.0) million had been issued on the balance
sheet date. During the second quarter of 2020, Oriola Corporation
prepared for the instability in the nancing markets caused by the
COVID-19 pandemic by drawing term-loans totalling EUR 70 mil-
lion. Maturity distribution of nancial liabilities is presented on
page 54. Oriola’s cash and cash equivalents at the end of 2020 to-
talled EUR 168.2 (70.8) million.
Oriola’s nancial agreements include nancial covenants that are
maximum net debt to EBITDA -ratio of 3.0 and maximum net debt
to equity ratio of 100%. Regarding the standard IFRS 16 Leases, the
Group has agreed with nancial institutions on applying the nan-
cial reporting standards in force at the end of 2018 to all of the cur-
rent long-term agreements. At the end of the reporting period the
nancial covenants were fullled.
Oriola’s net working capital was EUR -181.6 (-185.1) million on the
balance sheet date. Oriola’s net working capital was negative on the
balance sheet date owing to the terms of payment dened in prin-
cipal and customer agreements and to the non-recourse factoring
programmes used in the retail and wholesale businesses in Swe-
den. The Group’s principal and customer agreements are based on
established, long-term agreements, and no signicant changes are
anticipated in them during 2021.
Oriola has open-ended frame agreements in Sweden that allow
the company to sell trade receivables relating to Swedish retail and
wholesale businesses to the nancial institutions on a non-recourse
basis. Sales of trade receivables were EUR 179.6 (166.5) million in to-
tal on the balance sheet date. No signicant changes are anticipat-
ed in the scope of the agreements to sell trade receivables in 2021.
Interest rate risk: Interest rate risk arise from changes in interest
payments of oating rate loans due to changes in market interest
rates and market value changes of nancial instruments (price risk).
The objective of the interest rate risk management is to minimise
the impact of interest rate uctuations on the statement of compre-
hensive income. The interest rate risk is evaluated using sensitivity
analysis and interest rate duration.
On the balance sheet date, Oriola’s interest rate risk consisted of
EUR 168.2 (70.8) million in cash assets, EUR 295.3 (190.3) million in
interest-bearing liabilities, and EUR 179.6 (166.5) million from sales
of non-recourse trade receivables in Sweden. The interest-bearing
liabilities at the end of 2020 include lease liabilities totalling EUR
81.7 (84.3) million. On the balance sheet date, a total of EUR 71.7
(49.8) million of the interest rate risk was hedged. The average in-
terest rate on interest-bearing liabilities excluding lease liabilities
and including the sale of receivables on a non-recourse basis and
interest rate hedges, was 1.09% (0.97%), and the interest rate du-
ration was 8 (8) months. One of the interest rate hedges will ma-
ture during the third quarter of 2021, the other ones are long-term
contracts. Oriola applies hedge accounting for part of interest rate
swaps hedging cash ows relating to selling of non-recourse trade
receivables.
52
Financial statements 2020
Oriola Financial review 2020
53
Based on the gross debt on the balance sheet date and assum-
ing that the trade receivables sales programmes will continue as
normal in Sweden, the eect of a one percentage point increase
in market interest rates on the Group’s annual earnings after taxes
would be EUR -1.2 (-0.8) million (including derivatives) and on eq-
uity EUR 1.3 (1.1) million (including derivatives).
Credit and counterparty risks: A credit risk arises from the pos-
sibility of a counterparty failing to meet its contractual payment
obligations or nancial institutions failing to meet their obligations
relating to deposits and derivatives trading. Oriola’s treasury policy
provides the framework for credit-, investment- and counterparty
risk management.
Credit limits are determined for investments and derivative agree-
ment counterparties on the basis of creditworthiness and solidity
and are monitored and updated on a regular basis.
Business areas are responsible for the credit risk management aris-
ing from commercial receivables. The Finnish and Swedish whole-
sale business is based on well-established customer relationships
and contractual terms generally observed within the industry,
which signicantly reduces the credit risk associated with trade re-
ceivables. Due to the nature of the operations there are no signi-
cant credit risks associated with the Swedish retail business. The
credit risk related to the wholesale business in Finland is reduced
by interest-bearing advance payments from pharmacies. These
interest-bearing advance payments are presented as current inter-
est-bearing liabilities in the statement of nancial position. In the
wholesale and retail business in Sweden, the credit risk is reduced
by the sale of non-recourse receivables to nancial institutions and
by the usage of credit loss insurances.
The Group applies the simplied approach to providing for expect-
ed credit losses, which permits the use of the lifetime expected loss
provision for all trade receivables. The Group uses a provision ma-
trix for loss allowance provision. The matrix is based on historical
observed default rates and incorporates forward looking informa-
tion. On that basis, the loss allowance for trade receivables as at 31
December 2020 was determined as follows:
Expected credit losses
Expected credit losses matrix 31 Dec 2020 Current
1–30 days
past due
31–180 days
past due
>180 days
past due Total
Expected loss rate 0.01 0.13 0.45 3.03
Carrying amount 31 Dec 2020, EUR million 181.6 6.8 0.3 -0.1 188.6
Expected credit losses 31 Dec 2020, EUR million 0.0 0.0 0.0 0.0 0.0
Expected credit losses matrix 31 Dec 2019 Current
1–30 days
past due
31–180 days
past due
>180 days
past due Total
Expected loss rate 0.01 0 .11 0.64 10.93
Carrying amount 31 Dec 2019, EUR million 162.8 19.1 5.1 0.5 187.5
Expected credit losses 31 Dec 2019, EUR million 0.0 0.0 0.0 0.1 0.1
Credit losses recognised in the statement of comprehensive income
for the nancial year totalled EUR -0.1 (0.4) million. The ageing of
trade receivables is presented in more detail in note 5.1. Trade and
other receivables.
Capital management: Oriola’s aim is to have an ecient capital
structure that allows the company to manage its ongoing obliga-
tions and enables cost-eective operations under all circumstances.
The return on capital employed (ROCE) and the gearing ratio are the
measurements for monitoring capital structure.
Oriola’s long-term nancial targets are based on growth, protabil-
ity and key gures related to the statement of nancial position. The
Group’s long-term targets are to grow at the rate of the market, an-
nual EPS growth over 5% (without adjusting items), return on capital
employed of over 20% and adjusted gearing ratio lower than 70%.
Non-recourse trade receivables are added to the net debt for adjust-
ed gearing. In addition, Oriola’s aim is to pay out an increasing annual
dividend of at least 50% of its earnings per share. The targets have
been calculated excluding the impact of application of IFRS 16.
For a denition of key gures, please see the section Alternative per-
formance measures.
53
Financial statements 2020
Oriola Financial review 2020
54
Maturity distribution of nancial liabilities
31 Dec 2020
EUR million 2021 2022 2023 2024> Total
Interest-bearing
Loans from nancial
institutions and commercial
paper loans 130.6 2.0 32.0 31.9 196.5
Lease liabilities 19.8 17.1 14.6 30.2 81.7
Advance payments received 17. 0 - - - 17. 0
Non-interest-bearing
Trade payables and other
current liabilities 660.6 - - - 660.6
Liabilities from interest
rate swaps 0.1 0.2 - 0.2 0.4
Receivables from foreign
currency derivatives -12.8 - - - -12.8
Payables on foreign
currency derivatives 12.8 - - - 12.8
Total 828.0 19.3 46.6 62.3 956.3
31 Dec 2019
EUR million 2020 2021 2022 2023> Total
Interest-bearing
Loans from nancial
institutions and commercial
paper loans 35.0 - - 57.8 92.8
Lease liabilities 18.6 17. 8 15.2 32.8 84.3
Advance payments received 13.2 - - - 13.2
Non-interest-bearing
Trade payables and other
current liabilities 640.8 - - - 640.8
Receivables from interest
rate swaps - - - -0.0 -0.0
Liabilities from interest
rate swaps 0.0 0.1 0.2 - 0.3
Receivables from foreign
currency derivatives -71.9 - - - -71.9
Payables on foreign
currency derivatives 72.1 - - - 72.1
Total 707.7 17.9 15.4 90.5 831.5
Derivatives and hedge accounting
Recognition and measurement: Derivatives are initially
recognised at fair value on the date a derivative contract is
entered into and are subsequently measured to their fair
value at the end of each reporting month. The accounting
for subsequent changes in fair value depends on whether
the derivative is designated as a hedging instrument. De-
rivatives are classied as held for trading and accounted for
at fair value through prot or loss unless they are desig-
nated as hedges. They are presented as current assets or li-
abilities if they are expected to be settled within 12 months
after the end of the reporting period.
Oriola has the following derivative instruments:
• Instruments held for trading: Foreign currency forward
and swap contracts, interest rate swaps
• Cash ow hedges: Interest rate swaps
The change in fair value of derivatives held for trading is
recognised either as other income or expense or as nan-
cial income or expense depending on the underlying item
being hedged.
Hedge accounting: Oriola applies hedge accounting for
part of the interest rate swaps hedging cash ows relating
to selling of non-recourse trade receivables. The uctuat-
ing interest rate has been converted into xed rate using
interest rate swaps. When initiating hedge accounting,
the relationship between the hedged item and the hedg-
ing instrument is documented along with the objectives
of the Group’s risk management. The eective portion of
the changes in the fair value of interest rate swaps that are
designated and qualify as cash ow hedges is recognised
in other comprehensive income and accumulated in the
reserves in equity. The ineective portion, if any, is recog-
nised immediately in the statement of comprehensive in-
come within the nancial items.
The fair value of currency forward and swap contracts is
determined by measuring them at fair value using market
rates on the balance sheet date.
Derivatives
EUR million
2020
Positive fair
value
Negative fair
value
Nominal
value
Derivatives recognised
as cash ow hedges
Interest rate swaps,
in hedge accounting - 0.4 51.8
Interest rate swaps,
not in hedge accounting - 0.1 20.0
Derivatives measured at fair
value through prot and loss
Foreign currency forward
and swap contracts 0.1 0.1 12.8
2019
Derivatives recognised
as cash ow hedges
Interest rate swaps,
in hedge accounting 0.0 0.2 30.6
Interest rate swaps,
not in hedge accounting - 0.1 19.1
Derivatives measured at fair
value through prot and loss
Foreign currency forward
and swap contracts 0.1 0.2 71.9
54
Financial statements 2020
Oriola Financial review 2020
55
8.4. Equity, shares and authorisations
Share capital: Oriola Corporation’s share capital on 31 December
2020 stood at EUR 147,899,766.14. All issued shares have been paid
up in full. There were no changes in share capital in 2020.
Fair value reserve: The fair value reserve includes the change in
fair value of nancial assets measured at fair value through oth-
er comprehensive income as well as the eective portion of the
change in fair value of derivative nancial instruments that are des-
ignated as and qualify for cash ow hedges. At the balance sheet
date, the change in fair value of nancial assets measured at fair
value through other comprehensive income recognised in the fair
value reserve totalled EUR 8.0 million. The change in fair value of
derivative nancial instruments recognised in the reserve totalled
EUR -0.2 million (net of tax).
Contingency fund: The contingency fund is included in the un-
restricted equity of the company. The contingency fund has been
formed in 2006 when Oriola Corporation was entered into the Trade
Register There were no changes in the contingency fund in 2020,
and the fund stood at EUR 19.4 million on 31 December 2020.
Other funds
Invested unrestricted equity reserve: Oriola Corporation ex-
ecuted a directed share issue against payment in June 2009, issuing
9,350,000 new class B shares. The net proceeds received from the
share issue amounted to EUR 20.7 million. The proceeds from the
share issue were credited to the reserve of invested unrestricted eq-
uity. In accordance with the decision of the Annual General Meet-
ing of 6 April 2011, the company distributed on 19 April 2011 EUR
0.13 per share from the reserve of invested unrestricted equity as
repayment of equity, totalling EUR 19.7 million.
Oriola Corporation completed a rights oering in the rst quarter of
2015. The subscription period of the oering ended on 3 March 2015.
In the oering 9,429,742 new A shares and 20,798,643 new B shares
were subscribed and Oriola Corporation raised gross proceeds of
EUR 75.6 million through the oering. Oriola Corporation recognised
gross proceeds and the transaction costs less taxes, totalling EUR
73.7 million, in the invested unrestricted equity fund. There were no
changes in the invested unrestricted equity reserve in 2020, and the
fund stood at EUR 74.8 million on 31 December 2020.
Translation dierences: Translation dierences include translation
dierences arisen from the subsidiaries’ equity translation during
the consolidation, change of the fair values of the net investment in
the foreign subsidiary, and foreign exchange rate dierences arisen
from the conversion of the foreign subsidiaries’ income statements
using the average exchange rate of the reporting period and the
conversion of their balance sheets using the exchange rate quoted
on the balance sheet date.
Shares: Of the total number of shares in the company, a maxi-
mum of 500,000,000 shall be class A shares and a maximum of
1,000,000,000 class B shares. At the end of 2020, the company had a
total of 181,486,213 shares, of which 53,748,313 were class A shares
and 127,737,900 were class B shares. The shares do not have a nom-
inal value.
At General Meetings, each class A share carries 20 votes and each
class B share one vote. No shareholder may vote using a number of
votes that exceeds 1/20 of the total number of votes carried by the
shares of dierent share classes represented at the General Meet-
ing. Both share classes give the shareholder the same rights to the
company’s assets and dividend distribution. Under Article 3 of the
Articles of Association, a shareholder may demand conversion of
class A shares into class B shares.
Oriola Corporation’s class A and B shares are quoted on the main list of
the Nasdaq OMX Helsinki exchange. The company’s eld of business
on the stock exchange on 31 December 2019 was Health Care Distribu-
tors and the company was classied under Health Care. The ticker sym-
bol for the class A shares is OKDAV and for the class B shares OKDBV.
Derivatives that are open on the balance sheet date fall due in the
12-month period except part of the interest rate swaps recognised
as cash ow hedges. Interest rate risk relating to cash ow from sell-
ing of trade receivables has been hedged with interest rate swaps.
The fair value of interest rate derivatives is dened by cash ows
due to contracts. Part of these interest rate swaps are designated as
cash ow hedges and their changes in fair value related to the ef-
fective portion of the hedge are recognised in other comprehensive
income and the potential ineective part is recognised within the
nancial items in the statement of comprehensive income.
Fair values of the derivatives have been recognised in the statement
of nancial position in gross amount as the derivatives contracts are
related to credit events and cannot be netted in nancial statements.
The Group has not given nor received collateral to/from derivatives
counterparties.
Oriola has derivative positions with several banks and related trans-
actions are eected under master derivative agreements. Master
derivative agreements allow settlement on a net basis of all out-
standing items within the scope of the agreements for example in
the event of bankruptcy. On the balance sheet date, the remaining
counterparty risk after net settlement, as allowed in the master de-
rivative agreements, was EUR 0.1 (0.1) for Oriola and EUR 0.5 (0.4)
million for the counterparties.
The nominal amount of foreign currency derivatives is the euro
equivalent of the contracts’ currency denominated amount on the
balance sheet date.
55
Financial statements 2020
Oriola Financial review 2020
56
The Annual General Meeting, held on 17 March 2020, resolved on
the forfeiture of the rights to all the shares entered in the joint ac-
count as well as the rights attached to such shares. This concerned
the rights to all such Oriola Corporation’s shares entered in the joint
account that had not been requested to be registered in the book-
entry system prior to the resolution concerning the matter by the
Annual General Meeting. On 24 August 2020, a total of 63,650 class
A shares and 59,900 class B shares on the Joint Account became the
company’s treasury shares.
2020 2019
B shares B shares
Board of Directors
Panu Routila, Chairman
(from 17 March 2020) 11, 265 -
Eva Nilsson Bågenholm, Vice Chairman 26,299 19,540
Juko-Juho Hakala 26,633 21,001
Anja Korhonen 32,923 26,164
Mariette Kristenson 19,595 13,963
Harri Pärssinen 11,4 47 5,815
Lena Ridström 19,595 13,963
Anssi Vanjoki, Chairman
(until 17 March 2020) - 47,145
President and CEO
Robert Andersson 88,638 55,121
Group Management team
Katarina Gabrielson 41,158 32,814
Anne Kariniemi 15,518 10,134
Helena Kukkonen 19,508 9,868
Tuula Lehto 10,280 4,697
Charlotta Nyström 15,292 7, 353
Fredrik Pamp (from 17 February 2020) 15,465 -
Petter Sandström 19,053 14,384
Teija Silver 75,098 67, 291
Anders Torell 24,644 13,459
Thomas Gawell (until 17 February 2020) - 55,301
Management shareholdings
Authorisations: The Annual General Meeting of Oriola Corpo-
ration held on 17 March 2020 authorised the Board to decide on
a share issue against payment in one or more issues, including
the right to issue new shares or to assign treasury shares held by
the company. The authorisation covers a combined maximum of
5,500,000 class A shares and 12,500,000 class B shares of the com-
pany and includes the right to derogate from the shareholders'
pre-emptive subscription right. The authorisation is in force for 18
months following the decision of the Annual General Meeting.
The Board was also authorised to decide on a share issue against
payment of class B shares in one or more issues including the right
to issue new class B shares or assign class B treasury shares held by
the company. The authorisation covers a combined maximum of
18,000,000 class B shares of the company including the right to der-
ogate from the shareholders’ pre-emptive subscription right. The
authorisation is in force for a maximum of 18 months following the
decision of the Annual General Meeting.
The Annual General Meeting authorised the Board to decide on a
share issue of class B shares without payment to the Company and
on a directed share issue of class B shares in order to execute the
share-based incentive plan for Oriola Group's executives and the
share savings plan for Oriola Group's key personnel. The maximum
number of new class B shares to be issued under this authorisation
is 250,000, which represents of 0.14 % of all shares in the Company.
The authorisation is in force for eighteen (18) months from the deci-
sion of the Annual General Meeting.
The Annual General Meeting authorised the Board to decide on repur-
chasing up to 18,000,000 of the company’s own class B shares. Shares
may be repurchased also in a proportion other than in which shares are
owned by the shareholders. The authorisation is in force for a maximum
of 18 months following the decision of the Annual General Meeting.
All decisions of the Annual General Meeting 2020 are available on
the company's website www.oriola.com.
B shares. During the rst quarter of 2020, 306,960 A-shares were
converted into B-shares. The conversion was entered into the Trade
Register on 3 February 2020. During the second quarter of 2020,
1,379,000 A-shares were converted into B-shares. The conversion
was entered into the Trade Register on 11 June 2020
Management shareholdings: On 31 December 2020, the mem-
bers of the company’s Board of Directors and the President and
CEO, the members of the Group Management Team and the com-
panies controlled by them had a total of 472,411 shares, corre-
sponding to 0.26% of the total number of shares in the company
and 0.04% of the votes.
Treasury shares: Treasury shares acquired by the com-
pany and the related costs are presented as a deduction of
equity. Gain or loss on surrender of treasury shares are rec-
ognised in equity net of tax.
The company holds a total of 173,206 treasury shares, of which
63,650 are class A shares and 109,556 are class B shares. The
treasury shares held by the company account for 0.10% of the
company's shares and 0.11% of the votes.
Share trading and prices: In 2020, the traded volume of Oriola
Corporation shares, excluding treasury shares, corresponded to
28.6% of the total number of shares. The traded volume of class
A shares amounted to 6.1% of the average stock, and that of
class B shares, excluding treasury shares, to 38.2% of the aver-
age stock.
The average share price of Oriola Corporation’s class A shares
was EUR 2.01 and of its class B shares EUR 1.93. The market value
of all Oriola Corporation shares at 31 December 2020 was EUR
349.9 (367.2) million, of which the market value of class A shares
was EUR 107.0 million and of class B shares EUR 243.0 million.
Shareholders: On 31 December 2020 Oriola Corporation had a to-
tal of 36,447 registered shareholders. There were 27,758,850 nom-
inee-registered shares on 31 December 2020, corresponding to
15.3% of all shares and 6.5% of all votes.
Share conversions: Under Article 3 of the Articles of Association,
a shareholder may demand conversion of class A shares into class
56
Financial statements 2020
Oriola Financial review 2020
57
Share capital
Share capital A shares B shares Total
Number of shares 1 Jan 2020 pcs 55,434,273 126,051,940 181,486,213
Conversion of A shares to B shares pcs -1,685,960 1,685,960 0
Number of shares 31 Dec 2020 pcs 53,748,313 127,737,9 00 181,486,213
Treasury shares 31 Dec 2020 pcs 63,650 109,556 173,206
Votes 31 Dec 2020 pcs 1,074,966,260 127,737,90 0 1,202,704,160
Share capital per share class 31 Dec 2020 EUR million 43.8 104.1 147.9
Percentage from the total shares % 29.6 70.4 100.0
Percentage from the total votes % 89.4 10.6 100.0
Number of shares 1 Jan 2019 pcs 55,434,273 126,051,940 181,486,213
Number of shares 31 Dec 2019 pcs 55,434,273 126,051,940 181,486,213
Treasury shares 31 Dec 2019 pcs - 84,903 84,903
Votes 31 Dec 2019 pcs 1,108,685,460 126,051,940 1,234,737,400
Share capital per share class 31 Dec 2019 EUR million 45.2 102.7 147.9
Percentage from the total shares % 30.5 69.5 100.0
Percentage from the total votes % 89.8 10.2 100.0
EUR million 2020 2019
Parent company share capital 31 Dec 147.9 147.9
Elimination of the revaluation of subsidiary shares in the consolidated nancial statements -111.7 -111.7
Consolidated share capital 31 Dec 36.2 36.2
8.5. Earnings per share, dividend and other equity
distribution
Earnings per share: Basic earnings per share is calculated by
dividing the net result attributable to owners of the parent
company by the weighted share issue adjusted average num-
ber of shares outstanding during the period, excluding shares
acquired by the Group and held as treasury shares. When cal-
culating diluted earnings per share, the weighted share-issue
adjusted average number of shares outstanding during the
period is adjusted by the eect of all dilutive potential shares.
Dividend and other equity distribution: Dividends or other
equity distribution includes dividends and other equity distri-
bution approved by the Annual General Meeting. Dividends
and other equity distribution proposed by the Board of Di-
rectors are not recognised in the nancial statements until
they have been approved by the shareholders at the Annual
General Meeting. Dividend and other equity distribution for
shareholders is recognised as a liability in the consolidated
statement of nancial position for the period during which
the dividend is approved by the Annual General Meeting.
Prot for the period
EUR million 2020 2019
Prot attributable to equity owners of
the parent 11. 3 8.0
Average number of outstanding shares
pcs
Basic 181,388,782 181,394,589
Diluted 181,463,779 181,486,213
Earnings per share
EUR
Basic 0.06 0.04
Diluted 0.06 0.04
Dividend policy and distribution proposal: Oriola Corporation will
seek to pay out annually as dividends a minimum 50% of the Group’s
earnings per share. The Company’s strategy and nancial position shall
be taken into consideration when determining the annual dividend
payout ratio. The dividend paid for 2019 was EUR 16.3 million (EUR
0.09 per share) and for 2018 EUR 16.3 million (EUR 0.09 per share). The
Board of Directors proposes to the Annual General Meeting that a divi-
dend of EUR 5.4 million, EUR 0.03 per share is paid for 2020. In addition,
it is proposed that the Annual General Meeting would authorise the
Board of Directors to decide at its discretion on the payment of divi-
dend up to a maximum of EUR 5.4 million, EUR 0.03 per share.
Earnings per share
1
Proposal by the Board of Directors. In addition, it is proposed that the Annual General
Meeting would authorise the Board of Directors to decide at its discretion on the
payment of dividend up to a maximum of EUR 0.03 per share.
2
The gures in 2016-2018 have been restated due to an error related to previous periods.
The restatement had an impact on inventories, deferred tax assets and retained earnings
in the consolidated statement of nancial position and on material purchases and income
taxes in the consolidated statement of comprehensive income. More information on
correction of the error is presented in the notes to the Financial statements 2019.
EPS
2
and dividend
EUR
0.30
0.20
0.10
0.00
EPS, continuing operations Dividend
2016 2017 2018 2019 2020
0.23
0.14
0.090.09
0.09
0.14
0.06
0.04
0.03
1
0.06
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58
9. Income taxes
9.1. Taxes recognised in the comprehensive income
for the period
Tax expense in the consolidated statement of comprehen-
sive income consists of income taxes based on the taxable
prot for the nancial year, prior period adjustments, and
changes in deferred tax assets and liabilities. Income tax for
the taxable prot for the period is calculated based on the
eective income tax rate for each tax jurisdiction. Taxes are
recognised in prot and loss, except when they relate to
items recognised directly in equity or in other comprehen-
sive income, when the taxes are also recognised in equity
or in other comprehensive income respectively.
Income taxes
EUR million 2020 2019
Taxes for current year 3.6 1.8
Taxes for previous years -0.0 -0.0
Deferred taxes -0.5 0.4
Total 3.1 2.1
Taxes related to other comprehensive income
EUR million
2020 Before taxes Tax eect After taxes
Cash ow hedge -0.2 -0.0 -0.2
Financial assets recognised
at fair value through other
comprehensive income 8.0 - 8.0
Actuarial gains and losses -0.4 -0.0 -0.4
Translation dierences 9.8 - 9.8
Total 17. 2 -0.1 17. 3
2019
Cash ow hedge 0.2 0.0 0.1
Actuarial gains and losses -2.8 -0.6 -2.2
Translation dierences -4.4 - -4.4
Total -7. 0 -0.6 -6.4
Tax rate reconciliation
EUR million 2020 2019
Prot before taxes 14.3 10.1
Corporate income taxes
calculated at Finnish tax rate 2.9 2.0
Eect of dierent tax rates
of foreign subsidiaries 0.1 0.0
Non-deductible expenses
and tax-exempt income 0.2 -0.0
Adjustments recognised
for taxes of previous years -0.0 -0.0
Changes in tax rates -0.1 0.1
Other items 0.0 0.0
Income taxes in the income statement 3.1 2.1
Eective tax rate 21.3% 20.8%
Taxes entered with a positive value are recognised as expenses and
taxes entered with a negative value are recognised as income.
The Finnish tax rate used to calculate taxes was 20.0% in the 2020
and 2019 nancial statements. In Sweden the corporate tax rate
will decrease from 21.4% to 20.6% in 2021. The Group has remeas-
ured the deferred tax assets and deferred tax liabilities accordingly.
9.2. Deferred tax assets and liabilities
Deferred tax is calculated on temporary dierences be-
tween the carrying amounts and the taxable values of as-
sets and liabilities and for tax loss carry-forwards to the
extent that it is probable that these can be utilised against
future taxable prots. The Group’s deferred tax assets rec-
ognised on carry forward losses are attributable to Swe-
den. In Sweden the carry forward losses do not expire. The
largest temporary dierences are caused by the deprecia-
tion of property, plant and equipment, the dened pen-
sion benet plans and by unused losses in taxation. The
deferred taxes are determined using tax rates and laws that
have been enacted or substantially enacted by the balance
sheet date and are expected to apply when the related de-
ferred income tax asset is realised, or the deferred income
tax liability is settled. Deferred tax assets and liabilities are
oset when there is a legally enforceable right to oset cur-
rent tax assets against current tax liabilities and when the
deferred taxes relate to the same scal authority.
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59
Deferred tax assets and liabilities
2020 1 Jan
Adjustments to
opening balance
charged to equity
1
Items
recognised
in income
statement
Items
recognised in other
comprehensive
income
Translation
dierences 31 Dec
Deferred tax assets
Conrmed tax losses 0.2 - -0.0 - 0.0 0.2
Inventories 0.2 - 0.0 - 0.0 0.3
Pension liabilities 2.2 - 0.0 0.0 0.1 2.4
Acquisitions 0.0 - -0.0 - 0.0 0.0
Employee benets 0.2 - 0.0 - - 0.2
Lease agreements 1.5 - -0.3 - 0.1 1.3
Other temporary dierences 0.2 - -0.1 - 0.0 0.0
Deferred tax assets, total 4.5 - -0.3 0.0 0.2 4.4
Deferred tax liabilities
Depreciation dierence and
other untaxed reserves 9.2 - -0.3 - 0.3 9.2
Acquisitions 5.0 - -0.7 - 0.2 4.5
Other temporary dierences 0.1 - 0.1 - - 0.1
Deferred tax liabilities, total 14.3 - -0.9 - 0.5 13.9
2019 1 Jan
Adjustments to
opening balance
charged to equity
1
Items
recognised in
income
statement
Items
recognised in other
comprehensive
income
Translation
dierences 31 Dec
Deferred tax assets
Conrmed tax losses 0.3 - - 0.1 - -0.0 0.2
Inventories 1.2 - -1.0 - -0.0 0.2
Pension liabilities 1.6 - 0.1 0.6 -0.0 2.2
Acquisitions 0.0 - -0.0 - -0.0 0.0
Employee benets 0.2 - 0.0 - - 0.2
Lease agreements - 1.7 -0.2 - -0.0 1.5
Other temporary dierences 0.4 - -0.3 - -0.0 0.2
Deferred tax assets, total 3.7 1.7 -1.4 0.6 -0.1 4.5
Deferred tax liabilities
Depreciation dierence and
other untaxed reserves 9.6 - -0.2 - - 0.1 9.2
Acquisitions 6.0 - -0.9 - - 0.1 5.0
Other temporary dierences 0.1 - 0.0 - - 0.1
Deferred tax liabilities, total 15.6 - -1.1 - -0.2 14.3
1
Adjustment due to adoption of IFRS 16
Use of estimates: Management estimates are required in
determining the amount of recognised deferred tax assets and
liabilities. The appropriateness for recognising deferred tax
assets is assessed in connection with the preparation of con-
solidated nancial statements. For this purpose, the Group es-
timates the probability of subsidiaries generating recoverable
taxable income against which unused tax losses and unused
tax compensations can be utilised. Actual results may dier
from the factors used in the estimates, which may lead to the
recognition of tax expenses.
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60
10. Group structure
Consolidation principles: The consolidated nancial state-
ments include Oriola Corporation and those directly or indi-
rectly owned subsidiaries over which Oriola Corporation ex-
ercises control. Control is presumed to exist when the Group
through participation in an investee becomes exposed to
its variable returns or is entitled to its variable returns and is
able to have an inuence on the returns through exercising
power over the investee. Subsidiaries are consolidated from
the date the Group has gained control and divested compa-
nies are consolidated until the date control is lost.
The acquisition method is used in the accounting for the
elimination of internal ownership. All intra-group transac-
tions, as well as intra-group receivables, payables, dividends
and unrealised internal margins, are eliminated. The Group’s
prot for the period is attributed to the equity holders of
the parent and non-controlling interests. Identiable assets
acquired and assumed liabilities of an acquired entity are
measured at their fair value as of the acquisition date. Any
contingent consideration is measured at fair value at the
date of acquisition and classied under other interest-bear-
ing liabilities. Changes in the contingent consideration and
acquisition-related expenses are recognised as an expense in
the statement of comprehensive income.
Changes in the parent’s ownership interest in a subsidiary
that do not result in a loss of control are accounted for as
equity transactions. As at the date when control is lost, any
investment retained in the former subsidiary is recognised
at fair value and the dierence is recorded through the state-
ment of comprehensive income.
Joint ventures are joint arrangements where the Group has
joint control with other parties and the parties have rights to
the arrangement’s net assets. Interests in joint ventures are
accounted for using the equity method of accounting and
are initially recognised at cost after which the Group’s share
of the post-acquisition retained prots and losses is included
as part of investments in joint ventures in the consolidated
statement of nancial position. Under the equity method
the share of prots and losses of joint ventures is presented
separately in the statement of comprehensive income.
Foreign currency denominated items: The consolidated
nancial statements have been presented in euros, which is
the functional and presentation currency of the Group’s par-
ent company. The items included in the nancial statements
of the subsidiaries are valued in the currency, which best de-
scribes the nancial operating conditions of each subsidiary
"functional currency".
Transactions in foreign currencies are translated into func-
tional currency/euro at the rates of exchange prevailing at
the dates of transactions. Monetary items have been trans-
lated into euros using the rates of exchange as at the bal-
ance sheet date and non-monetary items using the rates
of exchange at the dates of transactions, excluding items
measured at fair value, which have been translated using the
rates of exchange on the date of valuation. Gains and losses
arising from the translation are recognised in the prot or
loss. Foreign exchange gains and losses from operations are
included within the corresponding items above EBIT. For-
eign exchange gains and losses from loans denominated in
a foreign currency are included within nancial income and
expenses.
The income statements of foreign group companies outside
the eurozone are translated into euros using the weighted
average rate of exchange of the nancial year and the state-
ments of nancial position using the rates of exchange as at
the balance sheet date. Dierences resulting from the trans-
lation of the result for the period at a dierent rate in the
statement of comprehensive income and in the statement
of nancial position are recognised as a separate item with-
in the consolidated statement of comprehensive income.
Translation dierences arising from the acquisition cost elim-
ination of foreign subsidiaries and from the translation of eq-
uity items accrued after the acquisition date are recognised
in other comprehensive income. When a subsidiary is sold
in full or in part, related translation dierences are included
in the calculation of gain or loss for the sale and recognised
in the prot or loss for the period. The parent company’s re-
ceivables from foreign subsidiaries are considered as part of
the net investment if there is no plan for the repayment and
repayment cannot be reasonably anticipated in the future.
Exchange dierences arising from such receivables are rec-
ognised in the consolidated nancial statements in transla-
tion dierences within equity.
10.1. Subsidiaries
Group Parent company
Subsidiaries Domicile
Owner-
ship %
Share of
votes %
Owner-
ship %
Share of
votes %
Parent company
Oriola Finland Oy Finland 100 100 100 100
Oriola Sweden AB Sweden 100 100 100 100
Kronans
Droghandel
Apotek AB Sweden 100 100 100 100
Svensk dos AB Sweden 100 100 100 100
Pharmaservice Oy Finland 100 100 100 100
Oriola Sweden AB Sweden 100 100 100 100
ICTHS Health
Support AB Sweden 100 100
Changes in group structure: There were no changes in group struc-
ture in 2020.
10.2. Related party transactions
Related parties in the Oriola Group are deemed to comprise the
members of the Board of Directors and the President and CEO of Ori-
ola Corporation, the other members of the Group Management Team
of the Oriola Group (key management), the immediate family of the
aforementioned persons and companies controlled by the aforemen-
tioned persons, the Group’s subsidiaries and joint ventures. The in-
formation on remuneration of key management is presented in note
4.4. Employee benets.
The Group has transactions between the group companies in the
ordinary course of business. The Group has no signicant business
transactions with other related parties.
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61
11. Unrecognised items
11.1. Commitments and contingent liabilities
EUR million 2020 2019
Commitments for own liabilities
Guarantees on behalf of subsidiaries 7.3 7.0
Mortgages on company assets 2.1 2.0
Other guarantees and liabilities 9.9 1.1
Total 19.3 10.1
The most signicant guarantees on behalf of subsidiaries are bank
guarantees against Swedish wholesale company's trade payables. In
addition, Oriola Corporation has granted parent company guaran-
tees of EUR 0.3 (0.4) million against other subsidiaries' trade payables.
11.2. Future lease payments
Committed future minimum lease payments:
EUR million 2020 2019
Within one year 0.6 0.5
One to ve years 0.5 0.4
Total 1.1 0.8
Future payments consist of minimum leasing commitments relat-
ed to low-value assets and short-term leases, to which the Group
elected to apply recognition exemptions permitted by IFRS 16. For
details about leases please refer to section 7. Leases. The leasing ex-
penses related to short-term leases and leases of low-value assets
are presented in note 7.2. Leases in the statement of comprehen-
sive income.
11.3. Litigation
Oriola is from time to time involved in legal actions, claims and other
proceedings. It is Oriola’s policy to provide for amounts related to
the proceedings if liability is probable and such amounts can be es-
timated with reasonable accuracy. Taking into account all available
information to date, the legal actions, claims and other proceedings
are not expected to have material impact on the nancial position of
the Group.
12. Other notes
12.1. Application of new and amended IFRS standards
and IFRIC interpretations
Certain new or revised standards and interpretations have been
published by the International Accounting Standards Board (IASB)
that are not mandatory for 31 December 2020 reporting periods
and have not yet been applied by the Group. These standards are
not expected to have a material impact on the Group in the current
or future reporting periods and on foreseeable future transactions.
The Group will apply each new standard and interpretation from
the eective date. If the eective date is other than the rst day of
a nancial year, the Group will apply the standard or interpretation
from the beginning of the following nancial year.
11.4. Events after the balance sheet date
On 27 January 2021 the Shareholders’ Nomination Board of Oriola
Corporation presented its proposal to the 2021 Annual General Meet-
ing concerning the composition of the Board of Directors as follows:
• The number of members of the Board of Directors would be six.
• The present members of the Board of Directors Juko-Juho
Hakala, Anja Korhonen, Eva Nilsson Bågenholm, Harri Pärssinen,
Lena Ridström and Panu Routila would be re-elected
• Panu Routila would be re-elected Chairman of the Board of
Directors.
Current member of the Board of Directors Mariette Kristenson has
informed the Nomination Board that she is not available for re-elec-
tion to the Board of Directors.
On 1 February 2021, Oriola announced, that Robert Andersson
leaves his position as President and CEO as of 1 February 2021 and
continues as an adviser to the Board of Directors until 31 July 2021.
The recruitment process to nd a new CEO has been started. Juko
Hakala, currently a member of Oriola’s Board of Directors, has been
appointed CEO on an interim basis for the period until a new per-
manent CEO is appointed.
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Financial statements 2020
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62
Parent company financial statements
Parent company income statement (FAS)
EUR thousand Note 2020 2019
Other operating income 2 17, 244.5 16,241.3
Personnel expenses 3 -7,964.4 -7,257. 3
Depreciation, amortisation
and impairment charges 4 -2,885.1 -2,552.9
Other operating expenses 5 -14,973.3 -12,499.4
Operating result -8,578.3 -6,068.3
Financial income and expenses 6 2,075.8 1,236.1
Result before appropriations and taxes -6,502.5 -4,832.2
Appropriations 7 14,320.3 14,480.3
Income taxes 8 -901.8 -1,418.3
Result for the period 6,915.9 8,229.8
Parent company balance sheet (FAS)
EUR thousand Note 31 Dec 2020 31 Dec 2019
ASSETS
Non-current assets
Intangible assets 9
Intangible rights 539.5 648.7
Other intangible assets 19,640.8 19, 827.4
Advance payments
and construction in progress 9,182.4 6,894.8
29,362.8 27, 371.0
Property, plant and equipment 10
Land and water areas 77.4 77.4
Machinery and equipment 67.9 125.2
Other tangible assets 7.5 7.5
152.8 210.1
Investments 11
Holdings in group companies 651,786.6 653,830.3
Other shares 14,186.3 9,418.5
Receivables from group companies 28,900.9 95,244.5
694,873.7 758,493.3
Non-current assets, total 724,389.3 786,074.3
Current assets
Receivables 12
Short-term receivables
Receivables from group companies 14,746.2 15,873. 3
Other receivables 410.0 501.0
Accrued receivables 1,176.8 847.1
16,333.0 17,221.4
Cash and cash equivalents 165,758.4 68,213.9
Current assets, total 182,091.4 85,435.3
Assets total 906,480.7 871,509.6
EUR thousand Note 31 Dec 2020 31 Dec 2019
EQUITY AND LIABILITIES
Equity 13
Share capital 147, 89 9. 8 147, 89 9. 8
Other funds 19,418.7 19,418.7
Invested unrestricted equity reserve 76,957. 5 76 ,957. 5
Retained earnings 222,348.5 230,545.6
Result for the financial year 6,915.9 8,229.8
473,540.5 483,051.4
Appropriations 14 1,595.6 1,288.2
Provisions 15 - 5.0
Liabilities 16
Long-term liabilities
Borrowings 65,900.9 57,759.7
Liabilities to group companies - 63,252.6
Accrued liabilities 395.6 213.8
66,296.5 121,226.1
Short-term liabilities
Borrowings 52,000.0 -
Trade payables 1,274.7 1,858.1
Liabilities to group companies 228,726.5 224,542.5
Other liabilities 80,765.1 37, 016 .5
Accrued liabilities 2,281.7 2,521.7
365,048.1 265,938.9
Liabilities total 431,344.6 387,165.0
Equity and liabilities total 906,480.7 871,509.6
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63
Parent company cash flow statement (FAS)
EUR thousand 2020 2019
Cash flow from operating activities
Result before appropriations and taxes -6,502.5 -4,832.2
Adjustments
Depreciation, amortisation
and impairment charges
2,885.1 2,552.9
Unrealised foreign exchange
gains and losses
2,694.1 2,224.7
Other non-cash items
-40.7 -3,090.3
Financial income and expenses
-4,769.9 -3,460.7
-5,733.9 -6,605.7
Change in working capital
Change in current
non-interest-bearing receivables
-1,433.1 -1,750.2
Change in non-interest-
bearing current liabilities
-1,662.8 1,079.6
-8,829.8 -7, 276. 4
Paid and received other financial expenses
and income 1,795.0 3,577.7
Interest received 2,995.7 2,782.9
Interest paid -2,881.1 -2,179.9
Income taxes paid -2,205.6 -1,170. 3
Cash flow from operating activities -9,125.8 -4,266.0
Cash flow from investing activities
Investments in tangible and intangible assets -4,555.1 -1,589.1
Proceeds from sale of tangible and intangible
assets 48.1 -
Investments to holdings and shares -14,518.2 -725.0
Change in loan receivables 66,343.6 1,783.3
Dividends received 15,000.0 -
Cash flow from investing activities 62,318.4 -530.8
Cash flow from financing activities
Purchase of own shares -100.8 -100.8
Repayments of long-term loans -64,429.3 -27,535.1
Proceeds from long-term loans 30,000.0 27,535.1
Proceeds from short-term loans 40,000.0 -
Repayments of short-term loans -10,000.0 -
Change in other current financing 50,698.0 23, 011. 4
Group contributions received 14,500.0 2,850.0
Dividends paid -16,316.0 -16,238.2
Cash flow from financing activities 44,351.8 9,522.4
Notes to the parent company financial statements (FAS)
1. Accounting principles
Oriola Corporation is the parent company of the Oriola Group,
domiciled in Espoo, Finland. Oriola Corporation provides adminis-
trative services to group companies. These administrative services
are centralised to the parent company. Copies of the consolidated
financial statements of the Oriola Group are available at the head
office of Oriola Corporation, Orionintie 5, FI-02200 Espoo, Finland
(investor[email protected]).
Oriola Corporation´s financial statements are prepared in euros and
according to Generally Accepted Accounting Principles in Finland
(Finnish GAAP) and according to corporate legislation. The financial
statements are presented in thousand euros.
When appropriate, the financial statements of Oriola Corporation
comply with the Group’s accounting principles based on IFRS. Be-
low are described those accounting principles in which the finan-
cial statements of Oriola Corporation differ from the accounting
principles of the consolidated financial statements. The accounting
principles for the consolidated financial statements are presented
in the notes to the consolidated financial statements.
Financial assets and liabilities: Financial items classified as
loans and receivables or other financial liabilities are carried at
amortised cost.
The change in the fair value of the effective portion of interest
rate derivative agreements under hedge accounting made to
hedge cash flows is directly recognised against the fair value re-
serve included in equity. Derivatives acquired to hedge balance
sheet items like bank accounts, loans and receivables denominat-
EUR thousand 2020 2019
Change in cash and cash equivalents 97,544.5 4,725.6
Cash and cash equivalents at the
beginning of period 68,213.9 63,488.3
Net change in cash and cash equivalents 97,54 4. 5 4,725.6
Cash and cash equivalents at the end of
period 165,758.4 68,213.9
ed in foreign currencies and derivatives made to hedge cash flows
that are not under hedge accounting are recorded in exchange
gains and losses in the financial items.
Share-based payments: The accounting treatment of Oriola Cor-
porations share-based incentive plans is described in the account-
ing principles for the consolidated financial statements. The share
incentive plans of Oriola Corporation are a combination of shares
and a cash payment. The granted amount of the incentive plans,
settled in shares, is measured at share price of the grant date less
expected dividends. The cash-settled part of the plans is meas-
ured at fair value, which is the share price at the end of the report-
ing period. The expenses arising from the incentive plans are rec-
ognised in the income statement over the vesting period. In the
financial statements of the parent company the component set-
tled in shares as well as the cash-settled part are recognised as ac-
crued liability until paid out. When paid out the share settled part
is credited to the equity.
Pension arrangements: The Statutory pension coverage of Oriola
Corporation is provided by Ilmarinen Mutual Pension Insurance
Company. Supplementary pension coverage is provided by OP Life
Assurance Company Ltd. Pension-related payments are recognised
as pension expenses on an accrual basis. No other pension liabilities
arising from pension arrangements are recognised in the balance
sheet except for pension-related accruals.
Leases: The lease agreements of Oriola Corporation consist mainly
of information and communication technology equipment. Lease
payments are expensed over the rental period and they are includ-
ed in other operating expenses. Assets leased and related liabilities
are not recognised in the parent company’s balance sheet.
Subsidiary shares: The carrying amounts of subsidiary shares are
assessed as part of the Group’s impairment testing, where cash flow
forecasts based on value-in-use calculations are prepared for the
Group’s cash-generating units. In the impairment testing of sub-
sidiary shares, the cash flows are further allocated to subsidiaries’
recoverable amounts. The impairment loss is recognised, if the car-
rying amount of the subsidiary shares and the amount of net loan
receivables from the subsidiary exceed the recoverable amount of
the corresponding assets.
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64
2. Other operating income
EUR thousand 2020 2019
Rental income - 11. 0
Other service charges 17,130 .2 16,094.1
Other operating income 114. 3 136.2
Total 17, 24 4. 5 16,241.3
3. Personnel
EUR thousand 2020 2019
Personnel costs
Salaries and fees 6,711.4 6,069.7
Pension costs 986.3 983.2
Other personnel costs 266.6 204.5
Total 7,9 64.4 7, 257. 3
Average number of personnel 73 64
Salaries and bonuses to the Management
CEO and Members of the Board of Directors 1,130.2 1,012.4
Remuneration and pension costs for the CEO and the members of
the Board of Directors are disclosed in the consolidated financial
statement in note 4.4. Employee benefits.
4. Depreciation, amortisation and impairment charges
EUR thousand 2020 2019
Depreciation 2,885.1 2,552.9
Total 2,885.1 2,552.9
Criteria applied for the straight-line depreciation is disclosed in
notes 6.1. and 6.2. to the consolidated financial statement. Depre-
ciation by asset class is presented in notes 9-10.
5. Other operating expenses
EUR thousand 2020 2019
Postage, telephone and banking expenses 192.9 204.3
IT expenses 10,344.3 9,454.5
Travelling and car expenses 131.2 384.1
Administrative consultancy services 2,655.2 2,255.6
Other operating expenses 1,649.8 200.8
Total 14,973.3 12,499.4
Other operating costs are mainly costs related to the ownership.
6. Financial income and expenses
EUR thousand 2020 2019
Income from group companies
Dividend income from group companies 15,000.0 -
Other interest and financial income
Interest income from group companies 2,944.5 2,753.3
Interest income from other companies 51.2 29.6
Other financial income 4,791.1 9, 887. 5
Interest and other financial expenses
Interest expenses to group companies -858.2 -942.6
Interest expenses to other companies -2,368.5 -1,232.2
Other financial expenses -5,690.2 -8,534.5
Impairment on investments
Impairment on investments
in non-current assets -11,79 4.1 -725.0
Total 2,075.8 1,236.1
Financial income and expenses include:
Interest income 2,995.7 2,782.9
Interest expenses -3,226.7 -2,174.9
Exchange rate gains/losses 107.9 -163.7
Audit costs included in
other operating costs 2020 2019
Audit fees 45.6 40.0
Other fees 17.4 7.4
Total 62.9 47.4
7. Appropriations
EUR thousand 2020 2019
Change in depreciation difference -307.4 -19.7
Group contribution received 14,627.7 14,500.0
Total 14,320.3 14,480.3
8. Income taxes
EUR thousand 2020 2019
Income taxes for the financial period 901.8 1, 427. 8
Income taxes for previous financial periods - -9.5
Total 901.8 1,418.3
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65
9. Intangible assets
EUR thousand
2020
Intangible
rights
Other
intangible
assets
Advance
payments and
construction
in progress Total
Historical cost 1 Jan 966.1 24, 217. 8 6,894.8 32,078.8
Increases - 342.9 4,499.2 4,842.1
Reclassifications - 2,211.7 -2,211.7 -
Historical cost 31 Dec 966.1 26,772.4 9,182.4 36,920.9
Accumulated amortisation 1 Jan 317.4 4,390.4 - 4,707. 8
Amortisation for the financial year 109.2 2,741.1 - 2,850.3
Accumulated amortisation 31 Dec 426.6 7,131. 5 - 7,558 .1
Carrying amount 31 Dec 539.5 19,640.9 9,182.4 29,362.8
2019
Historical cost 1 Jan 711.4 23,043.6 6, 611.0 30,366.0
Increases 9.8 626.7 1,200.2 1,836.6
Decreases -123.8 - - -123.8
Reclassifications 368.8 547.6 -916.4 -
Historical cost 31 Dec 966.1 24, 217. 8 6,894.8 32,078.8
Accumulated amortisation 1 Jan 220.8 1,975.8 - 2,196.6
Amortisation for the financial year 96.6 2,414.6 - 2,511.2
Accumulated amortisation 31 Dec 317.4 4,390.4 - 4,707. 8
Carrying amount 31 Dec 648.8 19,827.4 6,894.8 27,371.0
10. Property, plant and equipment
EUR thousand
2020
Land and
water areas
Machinery
and equipment
Other
tangible assets Total
Historical cost 1 Jan 77.4 265.4 7. 5 350.3
Decreases - -105.1 - -105.1
Historical cost 31 Dec 77.4 160.3 7.5 245.2
Accumulated depreciation 1 Jan - 140.3 - 140.3
Accumulated depreciation related to
decreases - -82.6 - -82.6
Depreciation for the financial year - 34.8 - 34.8
Accumulated depreciation 31 Dec - 92.5 - 92.5
Carrying amount 31 Dec 77.4 67.9 7. 5 152.8
2019
Historical cost 1 Jan 77.4 265.4 7. 5 350.3
Historical cost 31 Dec 77.4 265.4 7.5 350.3
Accumulated depreciation 1 Jan - 98.5 - 98.5
Depreciation for the financial year - 41.8 - 41.8
Accumulated depreciation 31 Dec - 140.3 - 140.3
Carrying amount 31 Dec 77.4 125. 2 7.5 210.1
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Oriola Financial review 2020
66
11. Investments
EUR thousand
2020
Holdings in group
companies
Holdings in participating
interest companies Other shares
Receivables from
group companies Total
Historical cost 1 Jan 656,195.8 - 9,418.5 95,244.5 760,858.8
Increases 9,750.4 - 4 ,767.8 153,543.7 168,061.9
Decreases - - - -219,887.3 -219, 887. 3
Historical cost 31 Dec 665,946.2 - 14,186.3 28,900.9 709,033.4
Accumulated impairments 1.1. -2,365.6 - - - -2,365.6
Impairments -11, 79 4.1 - - - -11,79 4.1
Impairment 31 Dec -14,159.7 - - - -14,159.7
Carrying amount 31 Dec 651,786.6 - 14,186.3 28,900.9 694,873.8
2019
Historical cost 1 Jan 656,195.8 10,841.3 9,418.5 97, 027.7 773,483.3
Increases 9, 207.2 725.0 - 143,309.9 153, 267.1
Decreases -9, 207. 2 -11, 591. 3 - -145,093.1 -165,891.6
Historical cost 31 Dec 656,195.8 - 9,418.5 95,244.5 760,858.8
Accumulated impairments 1.1. -2,365.6 -10,841.3 - - -13,206.9
Impairments - -725.0 - - -725.0
Reversed impairments - 11, 591. 3 - - 11, 591. 3
Accumulated depreciation 31 Dec -2,365.6 - - - -2,365.6
Carrying amount 31 Dec 653,830.3 - 9,418.5 95,244.5 758,493.3
12. Receivables
EUR thousand 2020 2019
Receivables from group companies
Short-term receivables
Trade receivables 118.5 314.4
Other receivables - 1,058.9
Accrued income and prepaid expenses 14,627.7 14,500.0
Total 14,746.2 15,873.3
Items included in accrued receivables
Arrangement fees relating to loans 222.3 282.4
Income tax receivables 529.0 -
Exchange rate profit on hedges - 44.5
Compensations not received 13.8 16.4
Group contribution 14,627.7 14,500.0
Other accrued receivables 411.9 503.8
Total 15,804.5 15, 347.1
13. Equity
EUR thousand 2020 2019
Share capital 1 Jan 147, 89 9. 8 147, 899. 8
Share capital 31 Dec 147, 899.8 147,89 9. 8
Restricted equity 147,899. 8 147, 899. 8
Contingency fund 1 Jan 19,418.7 19,418.7
Contingency fund 31 Dec 19,418.7 19,418.7
Invested unrestricted equity reserve 1 Jan 76,957. 5 76,957. 5
Invested unrestricted equity reserve 31 Dec 76 ,957. 5 76,957. 5
Profit/ loss from previous years 1 Jan 238,775.4 246,970.9
Dividend paid -16,326.1 -16,324.4
Share-based compensation -173.6 -138.6
Purchase of own shares
1)
-100.8 -100.8
Delivery of own shares 173.6 138.6
Profit/loss from previous years 31 Dec 222,348.5 230,545.6
Result for the period 6,915.9 8,229.8
Non-restricted equity 325,640.7 335,151.7
Total 473,540.5 483,051.4
Distributable funds 31 Dec 2020 2019
Contingency fund 19,418.7 19,418.7
Invested unrestricted equity reserve 76 ,957. 5 76,957. 5
Profit/ loss from previous years 222,348.5 230,545.6
Net profit for the period 6,915.9 8,229.8
Distributable funds 31 Dec 325,640.7 335,151.7
1
Shares purchased for the share based incentive programme.
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Oriola Financial review 2020
67
14. Appropriations
EUR thousand 2020 2019
Cumulative accelerated depreciation difference 1,595.6 1,288.2
Total 1,595.6 1288.2
15. Provisions
EUR thousand 2020 2019
Other provisions - 5.0
Total - 5.0
Other provisions recognised in 2019 relate to reorganisation of
business functions.
16. Liabilities
EUR thousand 2020 2019
Liabilities to group companies
Long-term liabilities
Other liabilities - 63,252.6
Short term liabilities
Trade payables 4.0 13.8
Other liabilities 228,722.5 224,528.7
Total 228,726.5 287,795.1
Items included in accrued liabilities
Long-term accrued liabilities
Change of fair value for interest rate swap 395.6 213.8
Short-term accrued liabilities
Items related to personnel 1,861.9 1,659.3
Interest 366.6 21.0
Other accrued liabilities 3.0 841.5
Change of fair value for interest rate swap 50.2 -
Total 2,677.4 2,735.5
17. Guarantees, liability engagements and other liabilities
EUR thousand 2020 2019
Guarantees and other liabilities
Guarantees for group companies 342.7 379.8
Other liabilities and engagements 9,000.0 -
Total 9,342.7 379.8
Rental liabilities on real estate
Maturity within one year 33.0 33.0
Total 33.0 33.0
Rental liabilities on machinery and fixtures
Maturity within one year 331.6 308.0
Maturity within 1–5 years 234.9 307. 5
Total 566.5 615.5
18. Derivatives and financial risk management
EUR thousand 2020 2019
Book values of derivative instruments
Interest rate swap agreements 71,753.9 49,776.0
Foreign currency forward and swap contracts - 62,698.6
Total 71,753.9 112 ,474 .6
Fair values of derivative instruments
Interest rate swap agreements -445.9 -213.8
Foreign currency forward and swap contracts - -22.2
Total -445.9 -236.0
Oriola Corporation has interest rate swap agreements hedging the
Oriola Group's cash flows as well as foreign currency forward and
swap contracts with various counterparties. These derivatives are
managed in accordance with the treasury policy approved by the
Oriola Corporation Board of Directors. While the Oriola Group's in-
terest rate risks from Oriola Sweden AB's selling of trade receivables
are hedged with derivative agreements on a group level, the hedg-
ing presents an interest rate risk to Oriola Corporation.
More information on the Oriola Group's financial risk management
and derivatives are presented in note 8.3. Financial Risk Management
in the notes to the consolidated Financial Statements.
19. Ownership in other companies
The Parent company’s ownership in other companies is presented
in the note 10.1. Subsidiaries, in the notes to the Consolidated Fi-
nancial Statements.
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Financial statements 2020
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Signatures for the financial statements and the report of the Board of Directors
Espoo 18 February 2021
Panu Routila Eva Nilsson Bågenholm Juko-Juho Hakala Anja Korhonen
Chairman Vice Chairman President and CEO
Mariette Kristenson Harri Pärssinen Lena Ridström
Auditor’s Note
The Auditor’s report has been issued today.
Helsinki, 18 February 2021
KPMG Oy Ab
Kirsi Jantunen
Authorised Public Accountant
Proposal for the profit distribution
According to the parent company’s balance sheet as at 31 December 2019, the total distributable funds are:
Other funds, EUR 19,418,729.58
Invested unrestricted equity reserve, EUR 76,957,531.72
Retained earnings, EUR 222,348,484.42
Profit for the period, EUR 6,915,945.67
Total distributable funds, EUR 325,640,691.39
The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.03 per share will be distributed to 181,313,007
shares, EUR 5,439,390.21 for year 2020 and EUR 320,201,301.18 will be retained in equity.
In addition, it is proposed that the Annual General Meeting would authorise the Board of Directors to decide at its discretion on the payment
of dividend up to a maximum of EUR 0.03 per share. The authorisation would be valid until the beginning of the next Annual General Meet-
ing of the Company. Unless the Board of Directors decides otherwise for a justified reason, the authorisation will be used to pay dividend in
one instalment during the period of validity of the authorisation. The dividend to be distributed to 181,131,007 shares would total up to a
maximum of EUR 5,439,390.21.
There have been no material changes in the financial position of the company after the end of the financial year.
The Board of Directors’ proposal for the profit
distribution and Auditor’s Note
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The Board of Directors’ proposal for the profit distribution and Auditor’s Note
Oriola Financial review 2020
69
Auditor’s Report
To the Annual General Meeting of Oriola Corporation
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Oriola Corporation (busi-
ness identity code 1999215-0) for the year ended December 31, 2020.
The financial statements comprise the consolidated statement of
financial position, statement of comprehensive income, statement
of changes in equity, statement of cash flows and notes, including
a summary of significant accounting policies, as well as the parent
company’s balance sheet, income statement, statement of cash flows
and notes.
In our opinion
• the consolidated financial statements give a true and fair view
of the group’s financial position, financial performance and cash
flows in accordance with International Financial Reporting Stand-
ards (IFRS) as adopted by the EU
• the financial statements give a true and fair view of the parent
company’s financial performance and financial position in ac-
cordance with the laws and regulations governing the prepara-
tion of financial statements in Finland and comply with statutory
requirements.
Our opinion is consistent with the additional report submitted to
the Audit Committee.
Basis for Opinion
We conducted our audit in accordance with good auditing practice
in Finland. Our responsibilities under good auditing practice are
further described in the Auditor’s Responsibilities for the Audit of the
Financial Statements section of our report.
We are independent of the parent company and of the group com-
panies in accordance with the ethical requirements that are applica-
ble in Finland and are relevant to our audit, and we have fulfilled our
other ethical responsibilities in accordance with these requirements.
In our best knowledge and understanding, the non-audit services
that we have provided to the parent company and group compa-
nies are in compliance with laws and regulations applicable in Fin-
land regarding these services, and we have not provided any pro-
hibited non-audit services referred to in Article 5(1) of regulation
(EU) 537/2014. The non-audit services that we have provided have
been disclosed in note 4.3 to the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Materiality
The scope of our audit was influenced by our application of materi-
ality. The materiality is determined based on our professional judge-
ment and is used to determine the nature, timing and extent of our
audit procedures and to evaluate the effect of identified misstate-
ments on the financial statements as a whole. The level of materi-
ality we set is based on our assessment of the magnitude of mis-
statements that, individually or in aggregate, could reasonably be
expected to have influence on the economic decisions of the users of
the financial statements. We have also taken into account misstate-
ments and/or possible misstatements that in our opinion are material
for qualitative reasons for the users of the financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judg-
ment, were of most significance in our audit of the financial state-
ments of the current period. These matters were addressed in the
context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate
opinion on these matters. The significant risks of material misstate-
ment referred to in the EU Regulation No 537/2014 point (c) of Arti-
cle 10(2) are included in the description of key audit matters below.
We have also addressed the risk of management override of inter-
nal controls. This includes consideration of whether there was evi-
dence of management bias that represented a risk of material mis-
statement due to fraud.
This document is an English translation of the Finnish auditor’s report. Only the Finnish version of the report is legally binding.
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70
The key audit matter How the matter was addressed in the audit
Valuation of goodwill (refer to accounting principles for the consolidated financial statements and note 6.2)
At December 31, 2020, the total carrying value of goodwill amounted to EUR 279 million, representing 24% of the
consolidated total assets.
Goodwill is tested for impairment when indicators of impairment exist, or at least annually. Goodwill impairment
testing is conducted by comparing the carrying value with the recoverable amount. Management estimates the recov-
erable amount using a discounted cash flow model.
Determining the key assumptions used in the impairment tests requires management judgement and estimates espe-
cially relating to long term growth, profitability and discount rates.
Valuation of goodwill is considered a key audit matter due to the significant carrying values and high level of manage-
ment judgement involved.
We obtained an understanding of management’s impairment assessment process and assessed the impair-
ment tests prepared by the Company.
Our detailed audit work with the involvement of KPMG valuation specialists included testing the integrity of
the calculations and the technical model. We challenged the assumptions used by management in respect
of forecasted growth rates and profitability as well as the appropriateness of the discount rates used. We also
validated the assumptions used in relation to market and industry information.
We also evaluated the cash flows used by comparing them to the group’s strategic plans and budget,
external sources and the understanding we gained from our audit.
Furthermore, we considered the appropriateness of the group’s disclosures in respect of goodwill and
impairment testing.
Revenue recognition (refer to accounting principles for the consolidated financial statements and notes 4.2)
Revenue is mainly generated through the sale of goods and services. The revenue earned is recognized when the
control is transferred to the customer in accordance with the terms of delivery or agreement.
In the Pharma segment there are two types of agreements with the pharmaceutical companies in which Oriola acts
either as a principal or an agent. For agreements in which Oriola acts as a principal the legal title, control and payment
liability has been transferred to Oriola and the revenue is recognized on gross basis. For consignment agreements
where Oriola acts as an agent, only the distribution fee is recognized as revenue. Analysis of the agreements and the
related revenue recognition method requires management judgement, considering the various contractual terms.
Due to the large volumes of transactions and management judgement involved revenue recognition has been identi-
fied as an area of focus in the audit.
We obtained an understanding of the revenue recognition processes and evaluated the design and tested the
controls over revenue recognition. With special focus on identifying unusual sales transactions we also performed
substantive procedures such as testing samples of sales agreements and year-end transactions to ensure appro-
priate application of revenue recognition criteria.
For revenue in the Pharma segment, we examined sales contracts to ensure that revenue was recognized in accord-
ance with the terms of the contract and the group’s accounting policy.
Audit procedures were performed over revenue recognition at the group level and at each of the reporting compo-
nents that were in scope for the group audit.
In addition, we have assessed the appropriateness of accounting policy and disclosure information related to
revenue recognition in the financial statements.
Valuation of Inventories (refer to accounting principles for the consolidated financial statements and note 5.2)
The carrying value of inventories amounted to EUR 250 million at the end of the financial year.
Inventory management, stocktaking routines and pricing of inventories are key factors in the valuation of invento-
ries. In the Pharma segment Oriola has different types of contracts with pharmaceutical companies which are either
accounted for as own inventory or consignment stock.
In addition, the valuation of inventories requires management estimates in respect of obsolescence assessment.
Due to management judgement and the significant carrying amount involved, valuation of inventories is determined
a key audit matter that our audit is focused on.
We evaluated the appropriateness of the accounting policies by reference to IFRS standards, as well as the function-
ality of the key IT systems of inventory management.
We tested the controls over inventory management, accuracy of inventory amounts and valuation of inventories.
We performed substantive audit procedures in relation to pricing of inventory and provision for obsolete inventory.
We reviewed a sample of contracts to ensure that inventory is accounted appropriately in line with the terms of the
contract and the group’s accounting policy.
We also attended physical inventory counting at selected locations to assess the appropriateness of stocktaking routines.
Holdings in group companies in the parent company’s financial statements (refer to notes 1 and 11 to the parent company’s financial statements)
After recognizing an impairment amounting to EUR 12 million the parent company has investments in subsidiaries
amounting to 652 million euro at December 31, 2020.
The recoverable amounts for holdings in group companies is tested as part of group impairment testing based on the
discounted cash flow model.
Due to the high level of judgment incorporated in respect of the future cash flows and the significant carrying
amounts involved, this is considered one of the key areas that our audit is focused on.
Our audit procedures with the involvement of KPMG valuation specialists included testing the integrity of the
calculations and the technical model. We challenged the assumptions used by management in respect of fore-
casted growth rates and profitability as well as the appropriateness of the discount rates used. We also validated
the assumptions used in relation to market and industry information.
We evaluated the cash flows used by comparing them to the group’s budgeting process, external sources and the
understanding we gained from our audit.
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71
Responsibilities of the Board of Directors and
the President and CEO for the Financial Statements
The Board of Directors and the President and CEO are responsible
for the preparation of consolidated financial statements that give a
true and fair view in accordance with International Financial Report-
ing Standards (IFRS) as adopted by the EU, and of financial state-
ments that give a true and fair view in accordance with the laws
and regulations governing the preparation of financial statements
in Finland and comply with statutory requirements. The Board of
Directors and the President and CEO are also responsible for such
internal control as they determine is necessary to enable the prepa-
ration of financial statements that are free from material misstate-
ment, whether due to fraud or error.
In preparing the financial statements, the Board of Directors and
the President and CEO are responsible for assessing the parent
company’s and the group’s ability to continue as a going concern,
disclosing, as applicable, matters relating to going concern and us-
ing the going concern basis of accounting. The financial statements
are prepared using the going concern basis of accounting unless
there is an intention to liquidate the parent company or the group
or cease operations, or there is no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit
of the Financial Statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material misstate-
ment, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of
assurance but is not a guarantee that an audit conducted in accord-
ance with good auditing practice will always detect a material mis-
statement when it exists. Misstatements can arise from fraud or er-
ror and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic deci-
sions of users taken on the basis of the financial statements.
As part of an audit in accordance with good auditing practice, we
exercise professional judgment and maintain professional skepti-
cism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the fi-
nancial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a ba-
sis for our opinion. The risk of not detecting a material misstate-
ment resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omis-
sions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the au-
dit 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 parent company’s or the
group’s internal control.
• Evaluate the appropriateness of accounting policies used and
the reasonableness of accounting estimates and related disclo-
sures made by management.
• Conclude on the appropriateness of the Board of Directors’ and
the President and CEO’s use of the going concern basis of ac-
counting and based on the audit evidence obtained, wheth-
er a material uncertainty exists related to events or conditions
that may cast significant doubt on the parent company’s or the
group’s ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw atten-
tion in our auditor’s report to the related disclosures in the finan-
cial statements or, if such disclosures are inadequate, to modify
our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report. However, fu-
ture events or conditions may cause the parent company or the
group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the
financial statements, including the disclosures, and whether the
financial statements represent the underlying transactions and
events so that the financial statements give a true and fair view.
• Obtain sufficient appropriate audit evidence regarding the finan-
cial information of the entities or business activities within the
group to express an opinion on the consolidated financial state-
ments. We are responsible for the direction, supervision and per-
formance of the group audit. We remain solely responsible for
our audit opinion
We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.
We also provide those charged with governance with a statement
that we have complied with relevant ethical requirements regard-
ing independence, and communicate with them all relationships
and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with those charged with govern-
ance, we determine those matters that were of most significance in
the audit of the financial statements of the current period and are
therefore the key audit matters. We describe these matters in our
auditor’s report unless law or regulation precludes public disclo-
sure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such com-
munication.
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72
Other Reporting Requirements
Information on our audit engagement
We were first appointed as auditors by the Annual General Meeting
on March 19, 2018, and our appointment represents a total period
of uninterrupted engagement of 3 years.
Other Information
The Board of Directors and the President and CEO are responsible
for the other information. The other information comprises the re-
port of the Board of Directors and the information included in the
Annual Report, but does not include the financial statements and
our auditor’s report thereon. We have obtained the report of the
Board of Directors prior to the date of this auditor’s report, and the
Annual Report is expected to be made available to us after that
date. Our opinion on the financial statements does not cover the
other information.
In connection with our audit of the financial statements, our re-
sponsibility is to read the other information identified above and,
in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge ob-
tained in the audit, or otherwise appears to be materially misstated.
With respect to the report of the Board of Directors, our responsi-
bility also includes considering whether the report of the Board of
Directors has been prepared in accordance with the applicable laws
and regulations.
In our opinion, the information in the report of the Board of Direc-
tors is consistent with the information in the financial statements
and the report of the Board of Directors has been prepared in ac-
cordance with the applicable laws and regulations.
If, based on the work we have performed on the other information
that we obtained prior to the date of this auditor’s report, we con-
clude that there is a material misstatement of this other informa-
tion, we are required to report that fact. We have nothing to report
in this regard.
Helsinki, February 18, 2021
KPMG OY AB
Kirsi Jantunen
Authorized Public Accountant, KHT
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73
Independent Auditor’s Reasonable Assurance Report on Oriola Corporation’s
ESEF Financial Statements
To the Board of Directors of Oriola Corporation
We have undertaken a reasonable assurance engagement on the iX-
BRL marking up of the consolidated financial statements for the year
ended December 31,2020, included in the Oriola Corporation’s digital
files 549300UWB1AIR85BM957-2020-12-31-eng.zip prepared in ac-
cordance with the requirements of Article 4 of EU Delegated Regula-
tion 2018/815 (ESEF RTS).
The Responsibility of the Board of Directors and Man-
aging Director
The Board of Directors and Managing Director are responsible for
preparing the report of the Board of Directors and financial state-
ments (ESEF financial statements) that comply with the requirements
of ESEF RTS. This responsibility includes:
- preparation of ESEF financial statements in XHTML format in
accordance with Article 3 of the ESEF RTS;
- marking up the consolidated financial statements included in the
ESEF financial statements with iXBRL tags in accordance with
Article 4 of the ESEF RTS; and
- ensuring consistency between ESEF financial statements and au-
dited financial statements.
The Board of Directors and the Managing Director are also responsi-
ble for such internal control as they deem necessary to prepare the
ESEF financial statements in accordance with the requirements of
the ESEF RTS.
Auditor’s Independence and Quality Control
We are independent of the company in accordance with the ethi-
cal requirements applicable in Finland, which apply to the engage-
ment we have performed, and we have fulfilled our other ethical
obligations in accordance with these requirements.
The auditor applies International Standard on Quality Control 1 and
accordingly maintains a comprehensive system of quality control
including documented policies and procedures regarding compli-
ance with ethical requirements, professional standards and applica-
ble legal and regulatory requirements.
Auditor’s Responsibility
In accordance with the Engagement Letter our responsibility is to ex-
press an opinion on whether the marking up of the consolidated fi-
nancial statements included in the ESEF financial statements comply
in all material respects with the Article 4 of the ESEF RTS. We conduct-
ed our reasonable assurance engagement in accordance with Inter-
national Standard on Assurance Engagements 3000.
The engagement involves procedures to obtain evidence whether;
- the consolidated financial statements included in the ESEF finan-
cial statements are, in all material respects, marked up with iXBRL
tags in accordance with Article 4 of the ESEF RTS; and
- the ESEF financial statements and the audited financial state-
ments are consistent with each other.
The nature, timing and the extent of procedures selected depend
on practitioner’s judgement. This includes the assessment of the
risks of material departures from the requirements set out in the
ESEF RTS, whether due to fraud or error.
We believe that the evidence we have obtained is sufficient and ap-
propriate to provide a basis for our opinion.
Opinion
In our opinion, the consolidated financial statements included in
the ESEF financial statements of Oriola Corporation identified as
549300UWB1AIR85BM957-2020-12-31-eng.zip for the year ended
December 31, 2020 are marked up, in all material respects, in com-
pliance with the ESEF Regulatory Technical Standard.
Our audit opinion relating to the consolidated financial statements
of Oriola Corporation for the year ended December 31, 2020 is set
out in our Auditor’s Report dated February 18, 2021. In this report,
we do not express an audit opinion, review conclusion or any other
assurance conclusion on the consolidated financial statements.
Helsinki February 22, 2021
KPMG OY AB
Kirsi Jantunen
Authorized Public Accountant, KHT
This document is an English translation of the Finnish Independent Auditor’s Reasonable Assurance report. Only the Finnish version of the report is legally binding.
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Oriola Corporation
Orionintie 5
P.O. Box 8
FI-02101 Espoo, Finland
www.oriola.com